Full Year Results December 2016

1

Andrew Brode

Chairman

Reinhard Ottway

Chief Executive Officer

Richard Thompson

Deputy Chief Executive Officer and

Group Finance Director

A milestone year

Strong Track Record

2

FY Adjusted PBT (£m)*FY Revenue (£m)

27.331.0

35.940.8

46.2

54.1 55.360.6

65.468.8

77.4

93.6 95.2

122.0

0

20

40

60

80

100

120

140

Rev

enu

e (£

m)

5.6 6.07.4

9.0

11.0

13.914.5 14.6

16.217.2

21.022.1

22.7

30.6

0

5

10

15

20

25

30

35

Ad

just

ed P

BT

(£m

)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

• Adjusted profit before tax is before charging ,amortisation of intangible assets, share scheme costs and

exceptional acquisition costs

Sales

£122.0m+ 28%

FY 2015: £95.2m

Adjusted PBT*

£30.6m+ 35%

FY 2015: £22.7m

CTi contribution

11 months $30.5m revenue

FY 2015: $27.0

Adjusted EPS*

10.9p+ 35%

FY 2015: 8.1p

Net debt

£1.5mAfter £47.1m CTi acquisition

FY 2015: Net Cash £30.6m

Total dividend

5.6p+ 15%

FY 2015: 4.88p

* Before amortisation of intangibles, share option costs and exceptional CTi acquisition costs

3

Operating Highlights

4

• Acquisition of CTi, the world’s leading translation company focussing exclusively on life sciences translation and linguistic validation– Excellent eleven-month contribution from CTi

– Integration of Group’s life science activities complete

• Good performance from core patent translation activities:– Enhanced gross margins

– New client wins

– Excellent progress in China

• PatBase revenues advanced by 7%

• Currency tailwinds post Brexit bringing useful gains

• Intellectual property support services accounted for 70%, and life sciences 20% of Group revenues

• Overall Group gross margin improved by 339bp

5%10%

65%

20%

Highly Specialised Services – 90% of revenue

5

Revenue for FY 2015

Patent Translation & Filing

Life SciencesCTi, MTD,

PharmaQuest

Information & PatBase

Commercial Translation

Patent Translation & Filing

Life SciencesMTD,

PharmaQuest

Information & PatBase

Commercial Translation

Revenue for FY 2016

6%

12%

77%

5%

RWS services from Research to IP Protection and beyond

visibility across the value chain

Research and development

Patenting Clinical Trials, Drug Registration

Commercialisation, Litigation

• Patent Search

• Technical Translation

• Life Sciences Translation

• Patent Search

• Patent Translation

• Patent Filing

• Life Sciences Translation

• Linguistic Validation

• Patent Search

• Life Sciences TranslationPharmacovigilance

• Technical, Legal andother Commercial Translations andInterpreting

• Patent Translation

6

Financial Review

7

Currency exposure and revenue analysis

8

Year ended30 September 2016

£m

Year ended30 September 2015

£m

% Increase

Revenue (as reported) 122.0 95.2 +28%

CTi (21.3) - -

Revenue excluding CTi 100.7 95.2 +6%

Revenue Analysis

44%

31%

14%

5%

5%

Revenue split by currency

Euro

USD

GBP

JPY

CHF

Other

1% 26%

29%

35%

5%5%

Expenditure by currency

Euro

USD

GBP

JPY

Other

Exchange rate movements

9

Year ended30 September 2016

£’000

Year ended 30 September 2015

£’000

Net Y on Y Movement

£’000

(Loss)/Profit made on realised forward contracts (339) 960

Estimation of gains due to higher sales as GBP has weakened 1,248

Foreign exchange effect on trading items 909 960 (51)

Exchange effect on assets denominated in foreign currencies 1710 354 1356

Mark to Market on unrealised forward contracts (990) (245) (745)

Total Year on Year Exchange Rate variance 1629 1069 560

Variance analysis – due to exchange rates movements

Income Statement

10

Year ended

30 September 2016

£m

Year ended

30 September 2015

£m

Turnover 122.0 95.2

Gross profit 52.2 37.5

Gross Margin % 42.8% 39.4%

Administrative expenses (20.2) (14.6)

Adjusted operating profit * 32.0 22.9

Net finance cost (1.4) (0.2)

Adjusted profit before tax * 30.6 22.7

Intangibles amortisation (4.6) (1.6)

Exceptional acquisition costs (0.9) -

Share option costs - (0.4)

Profit before tax 25.1 20.7

Taxation expense (5.8) (5.2)

Profit for the year 19.3 15.5

Basic EPS (pence) 9.0 7.3

Adjusted basic EPS* (pence) 10.9 8.1

* Before amortisation of intangibles, share option costs and exceptional CTi acquisition costs

Profit Before Tax Bridge

£m

1.42.2

5.6

(0.1)

(0.5) (0.7)

30.6

0

5

10

15

20

25

30

35

2015 Exchangemovement onbalance sheet

items

Underlyingtrading profit

Net effect ofcurrencytailwind

CTi Result New bankinterest onloan for Cti

Adversemovement on

unrealisedforward

contracts

2016

22.1

22.7

10% growth

5.6

11

Balance SheetAs at

30 September 2016

£m

As at

30 September 2015

£m

Goodwill and acquired intangibles 89.9 38.3

Fixed Assets 17.6 17.7

Deferred tax assets 1.9 0.3

Total non-current assets 109.4 56.3

Cash 27.9 30.6

Other current assets 28.2 18.2

Loan due < 12 months (6.9) -

Other current liabilities (25.7) (17.3)

Net Current Assets 23.5 31.5

Loan due in > 12 months (22.5) -

Provisions and other creditors (0.4) (0.3)

Deferred tax liabilities (1.3) (1.8)

Total net assets 108.7 85.7

12

Cash Flow StatementYear ended

30 September 2016

£m

Year ended

30 September 2015

£m

Cash inflow generated from operations 29.6 24.3

Interest (paid) / received (0.4) 0.1

Taxation paid (5.2) (5.1)

Capital Expenditure (0.9) (1.3)

Acquisition of Corporate Translations Inc (47.1) -

Net cash (outflow)/inflow before financing (24.0) 18.0

Equity dividends paid (10.6) (9.8)

Net movement on bank loan 24.6 -

Proceeds from issue of share capital 5.4 -

Cashflow movement (4.6) 8.2

Opening cash 30.6 22.5

Exchange rate movement 1.9 (0.1)

Closing cash 27.9 30.6

Free cashflow 23.1 18.0

13

Operational Review

14

70

71

72

73

74

75

76

77

78

79

80

FY 15 FY 16

Patent Translation & Filing Revenue (£m)

Patent Translation & Filing• 65% of group sales; revenues grew by 8% driven by:

– Earlier client wins (e.g. Novartis, Broad Institute)

– Organic growth from existing clients

• Winning RFPs

• Selling additional services and to new divisions

• Renewed master service agreements with many of top clients

– Additional strong growth in China

• Into-Chinese operation continues to attract North American and European corporates– Grown the team in China from 63 to 70 in three locations

– Training centres with several Chinese universities underpin lower costs

– Expanded relationship with international patent body

– New sales office in province with major patenting activities

• Successfully targeting Japanese and Chinese corporates filing internationally; to support current and medium term growth respectively

• Comprehensive suite of IP support services, including RWS inovia online platform and filing solutions

73.3

20.4

79.4

73.3

Continuing to exploit global growth potential 15

£m

WIPO11 of the

top 20 applicants at

the World Intellectual

Property Office

EPO12 of the

top 20 applicants at the European Patent Office

GPO17 of the

top 20applicants at the German

Patent Office

19.4 20.4

71.473.3

16

Information & Commercial Translation

Information (5% of Group revenue)

• Revenues up 7% reflecting several client wins, a good renewal rate (PatBase) and successful addition of clients with regular search requirements (Search Group)

• High margin, subscription based PatBase grew by 7.2%– Continue to invest in IT infrastructure, searchability, content, analytics and geographical

coverage

Commercial translation (10% of Group revenue – restated to exclude MTD & Pharmaquest)

• 2% revenue growth in this segment which is most exposed to competition

• Focus on specialist niches and larger projects and process efficiencies to achieve best margins. Facility for handling highly confidential VW documents in Germany. Organic client growth (e.g. Shell) and new client wins (e.g. Enercon)

• Machine translation pilots implemented at Eclipse and RWS Germany. Patent translation facility in Germany now well established

• Eclipse interpreting servicing all Group companies (e.g. BMS for CTi, VW for RWS Germany)

£m

6.0 6.4

0.0

2.0

4.0

6.0

8.0

FY 15 FY 16

Information Revenue (£m)

11.7 11.9

0

5

10

15

FY 15 FY 16

Commercial Revenue

(£m)

£m

Life Sciences• 20% of Group sales

• Excellent eleven month contribution from CTi since acquisition

— $30.5m sales up 13% on the same period in 2015 ($27.0m)

— £5.6m profit in 11 months since acquisition

• $70m acquisition of CTi brought:

— Market leadership in Life Sciences translation and Linguistic Validation services

— Diversified geographical presence and currency exposure

— Specialist services critical to clients' IP development; underpinning attractive margins, albeit less visibility

— Complementary client base

• Integration with other RWS Life Sciences business completed in Aug 16

• Original owners successfully replaced

Established a market leading position in life sciences

Life sciences R&D $162bn market by 2020

+2.4% pa 2013 – 2020(Deloitte: 2016 Global Life Sciences Outlook)

17

£m

4.2

24.4

0

5

10

15

20

25

30

FY 15 FY 16

Life Sciences: Revenue (£m)

Since CTi Acquisition

• Integrated to form specialist life sciences unit:

– Combined with Pharmaquest and Medical Translation Division; remains US headquartered with UK subsidiary

– Retained the team

– Consolidated suppliers to reduce technical costs and improve margins

– Consolidated customers to provide consistent, high level service across US and European operations

– Established common IT systems and processes

• Sheena Dempsey appointed Chief Executive Officer of CTi

– Strong experience in life sciences, formerly Lionbridge

– Reports into the Board via Richard Thompson

• Building on market leading position with major pharmaceutical Groups and contract research

organisations

– Renewed master service agreements with key clients (e.g. Pfizer, Abbott), pilot with significant new European client wins

– Continuing to enhance its sales pipeline

• Identified cross-selling opportunities; beginning to yield positive results

– Cross continent offering following combination of existing medical translation and Pharmaquest services with CTi

– Linguistic validation and life science translation to existing pharmaceutical patent clients

– Introducing CTi clients to patent translation services…

A strong integrated platform from which to grow 18

One Group to cover all requirements

19

Selected shared clients

Patent Translation & Filing & Life Sciences Opportunities with multinational pharma

• Exploiting USP of being a single provider taking care of all language related requirements of pharma multinationals

• Ensuring inclusion of all divisions and maximising competitive edge in worldwide tenders:

₋ RWS IP recently included in a CTi proposal to one of their largest clients and accepted for patent translations

• Exploiting registered supplier status gained by either RWS or CTi throughout the Group.

• Introductions and cross-selling opportunities

₋ RWS IP arranged for CTi presentation to Global Procurement of one of their top 10 clients

Regulatory and Market Update - 1

Unitary Patent (UP)

• Post-Brexit, it was widely expected that the introduction of the UP would be delayed by years, because:

– The UK was needed to ratify it, but it was to leave the EU

– The current system is open to EU members only and UK would have to leave UP on exiting the EU

• On 28 November, against all expert predictions, the UK government confirmed it would ratify in the near future, now leaving two possible outcomes:

– 2 years from March 2017 the UK exits the EU and also the UP system at the same time OR

– During the two year exit negotiation period, all parties agree that non-EU members can be members of the UP - this is more likely to be the intention of the UK, but there are differing opinions on whether this is legally possible

• It is now expected that the UP will be introduced in 2017, but more likely during the second half of the year

• What would determine take-up rates:

– Financially viable: From a pure cost point, the number of countries sought for protection in Europe would determine the route taken:

• <3 – National; 3-5 – European Patent; >4 or 5 – Unitary Patent

• c.50% of granted European patents are currently validated in 3 EU countries or less, 70% in 4 EU countries or less

– Risk of new system: Central litigation has its disadvantages, all or nothing presents a risk which is much higher in a new and untested system. A cautious use of the new system is likely at least in the early days

– Insufficient coverage: Out of the 42 countries potentially covered by the European Patent System, which will remain in force in parallel to the UP, only 28 are EU members, and only 26 are Unitary patent members, with at least 2 more having stated they would not ratify it in the first few years

20

Regulatory and Market Update - 2Brexit• Currency:

– As an exporter with a large cost base in the UK, the Group benefits from a weak Sterling.

• Potential future trade barriers:

– RWS is a global group and if necessary can channel trade and bid for contracts through its substantial subsidiaries and offices located in the EU outside the UK.

• Potential future restriction on freedom of movement:

– RWS employs many non-UK staff both from within and outside the EU and is well equipped to handle all administrative processes which may be required in future.

– After an exit, the availability of high calibre foreign staff seeking employment in the UK may decrease. If necessary, RWS can place staff in its offices in the EU.

Machine Translation• New Neural Machine Translation (NMT) technology:

– In September 2016, Google was the first to launch NMT for selected language pairs, others followed.

– A step change from previous phrase based MT, in particular with much improved word order.

– Does not replace expert translators for critical patent translation and life sciences work and linguistic validation and re-affirms the Group‘s stated strategy of seeking market leadership in highly specialised niche areas, IP and life sciences.

• Group strategy:

– The Group has employed MT in specific workflows for quite some time. We have recently concluded an internal study and will utilise the advanced NMT technology to further improve workflows, efficiencies and margins.

– For searchable machine translated content in PatBase, a new NMT solution is about to be implemented.

21

Key opportunities - priorities

• Life Sciences – Build on combined business to drive sales in Europe and the US

– Expand Life Science reach to Asia with the assistance of existing Group infrastructure

– Explore acquisition opportunities to expand capability and/or geographical presence

• Cross-selling– Harness enhanced service portfolio to retain and win major contracts

– Full service offering in RFPs to major international corporates, especially in the Life Sciences sector

• IP – Online Filing Platform Technology– Continue to enhance IP portal as the go-to platform for IP professionals for IP information, cost calculation, filing and

translation solution; build client-integrated systems

– Drive revenue share of international filings outside Europe

– Build functionality for the new Unitary Patent System to prepare and expand market leading position

– Utilise PatBase technology throughout all internal and external IP related technical solutions

– Continue to integrate platform with additional IP Management Systems

• Translation Technology– Continue to expand implementation of Machine Translation in the production flow in selected offices and sectors

– Neural Machine Translations: A new technology offering substantial improvements. Purchase, implement and train in-house NMT machine translation engines for testing, development and use throughout the group as part of the productionprocess

• Supplier Management– Continue to use combined market share of RWS/inovia/CTi to consolidate supplier network and drive reciprocity 22

A Strong Team to Manage Growth

Role Name Years of Service

Chairman Andrew Brode 21

Chief Executive Reinhard Ottway 23

Group Finance Director Richard Thompson 4

UK MD, Translations Division Charles Sitch 23

UK Deputy MD, Translations Division Neil Simpkin 23

Director, Commercial Translations Division Jo Hindley 17

Business Development Director Caroline Chenique 22

IT Director Roberto Aletto 27

MD, Germany/Switzerland Andreas Siegmund 18

MD, Japan Marie Hara 17

MD, China Weimin Zhang 11

CEO of CTi Sheena Dempsey

Non-Executive Deputy Chairman David Shrimpton

Non-Executive Peter Mountford

Non-Executive Liz Lucas

23

Summary & Outlook

24

Current Trading & Outlook

• A very strong start to the new financial year

– Significant underlying growth in revenues

– Better gross margins

– Currency tailwinds

• Encouraged by opportunities to continue to grow significantly and profitably

– From expanded geographical presence, service range and technology offering

– Particularly build on new leading position in life sciences in the USA

• Strong cash generation and healthy balance sheet positions us well to

– Grow through acquisitions and organic investment

– Maintain our progressive dividend policy

25

Appendix

26

Investment Summary

• Strong track record of sales and underlying profit growth

• Market leading positions across its specialist businesses:

– No 1 position in the worldwide patent translation and PCT filing market

– A leading patent search service with the PatBase database covering over 57 million patent families

– New market leading position in life science translations and linguistic validation following CTi acquisition

• International blue-chip client base

– Well diversified geographically and by sector

• Good visibility of patent filing requirements; strengthened via inovia

• Cash generative with low capex requirements

• Solid balance sheet

• Clear strategy to grow internationally; both organically and by acquisition

• Track record of strong dividend growth and committed to a progressive dividend policy

27

Long Term Growth Market - IP

(US, China, Japan, Korea, Europe):

• Reported a 5.5% growth in patent filings in 2014

• 2.3 million patent applications filed (2.57 million worldwide)

• China showed the highest growth; at 12.5% to 928,000 in 2014 (127,000 of which came from foreign applicants)

Worldwide Patent Application Filings (WIPO World Intellectual Property Indicators 2016)

(1990-2014)

Foreign filing drives IP division growth

• In 2015, the Chinese Patent Office was the first to receive more than a million applications in a single year(1,101,864), almost as many filings as the next three offices combined, US (589,410), Japan (318,721), Korea (213,694).

• US applicants filed the most applications abroad (273,961), marking a 6% increase, followed by those from Japan and Germany.

• Though innovators based in China filed comparatively fewer overseas applications (42,154), that figure has risen steadily over the past two decades and now nearly equals the total of France (46,581).

28

Long Term Growth Market – Life Sciences

(US, China, Japan, Korea, Europe):

• Reported a 5.5% growth in patent filings in 2014

• 2.3 million patent applications filed (2.57 million worldwide)

• China showed the highest growth; at 12.5% to 928,000 in 2014 (127,000 of which came from foreign applicants)

Worldwide clinical trials drive Life Sciences Division growth

• Big pharma companies continue their drug development to find new block busters as curent ones are dropping out of patent protection.

• Increasing trend in new drug application and approval by the FDA, which invariably triggers registration in Europe and Asia.

Current trials in Western European countriesNumber of clinical trials as recorded by ClinicalTrials.gov,

a service of the U.S. National Institutes of Health

29

Overview EP and UP coverage

CroatiaSpain

European Union Members (28)

European Patent Convention (38 + 4 extension)

San Marino

Liechtenstein

Turkey

Serbia

Switzerland

Macedonia

Moldova

Monaco

Norway

Iceland

Bosnia &

Herz’

Albania

Montenegro

Morocco

Greece

30

Denmark

Malta

LuxembourgFrance

BulgariaAustria Finland

Belgium

Netherlands

Portugal

Sweden

Unitary Patent Ratifiers

(13)

Italy

UK

Unitary Patent Members

(26)

GermanyEstonia

Czech Rep.

Cyprus

Hungary

Ireland

Latvia

Lithuania

Poland

Romania Slovakia

Slovenia

Sweden

Greece

Currency on trading items

31

• The average rate used for conversion of the:

– Dollar was 1.40 (2015: 1.47) to the £ a 5% favourable movement

– Japanese Yen was 158.0 (2015: 184.6) to the £ 14% favourable movement

– Euro was 78.1p (2015: 74.0p) 5% favourable movement

• The Group has hedged a portion of its future net trading Euro exposure at an averagerate of 83p from 1 October 2016 to 30 September 2017

• $45m debt for the CTi acquisition provides a natural hedge against the results of theCTi business

Shareholders List

Major Shareholders (as at 23 Nov 2016)

Shareholder Holding (%)

Andrew S Brode 41.8

Liontrust Asset Management 13.0

Octopus Investment 7.1

Investec 4.6

Hargreave Hale 4.0

Charles Stanley 2.0

Invesco Perpetual 1.9

(IHT Funds approximately 20% in aggregate)

32