Earnings Call: H1 2021

Jun 8, 2021

Good morning, everybody, and welcome to the half year results of RWS. As you know, we try to avoid financial surprises, and this presentation contains, as far as I'm aware, no financial surprises and very much in line with the trading up extended trading update we gave you in April. However, of course, there is the obvious surprise of the change in CEO, which you may or may not want to talk about at the end of our presentation. So the merger with SDL has delivered the world's leading provider of technology and technology enabled language content and IP services. We have over 7,500 employees spread across the world, and you can see on the map where they're basically positioned. We have rather more offices than we currently need, and that's part of the integration process is we're reducing some of those offices. But as a result of becoming the largest in the world, we have a fantastic customer spread. We have advanced our position. We were probably somewhat lagging behind in life sciences in the number 2 position. We think we're probably up there with the number 1 now and we have by far the strongest financial profile within the language industry, and you'll see more of that as we go through the financial presentation. The first half has been described as robust. I think it's important for you to remember that H120 had 1 month effect from COVID and H1 'twenty one, of course, had the full 6 months and a degree of FX headwinds, which of course have not abated as we've moved on into H2. The effect of COVID is largely being focused on our IP services business, but it extends to any client who sees the need to reduce their requirements for languages because of the working from home phenomenon. Looking at the summary of our first half, dollars 326,000,000 in revenues, that includes 5 months of SDL, adjusted PBT of $50,500,000 basic EPS adjusted 10.5%, up 12%, leading to a proposed final dividend of 2P, which is up 14%, and that's underpinned by a strong balance sheet and the board's confidence in delivering the full year that you guys have built into your models. Gross cash at March 31 at 62,200,000. That's after the heavy half year when we pay our full dividend out. So, dollars 52,200,000 of debt interest acquisition and dividend payments. So a pretty strong, as usual, highly cash generative delivery. Net cash CHF12 1,000,000. So we have turned around from net debt to net cash and we expect that to continue certainly for H2. At this moment in time, we have no major acquisitions schedule for the next 4 months. It's been a transformational period, as you can imagine. I referred in April to the fact that this will become a business school study at some stage that you can take on a business, double your size, and more than double your size in people and still not have been actively in their offices because of COVID and the working from home phenomenon. The former SDL integration is progressing well. You'll see from Des the financial effects, and Richard will take you through the operational integration. But we have identified $33,000,000 of synergies, which I'm afraid analysts always take synergies to be day 1. In this pace. They are definitely not day 1 synergies. There were a number of day 1 synergies, but we think $15,000,000 $16,000,000 will be booked in financial year 'twenty one, and we'll be at north of $33,000,000 by September 'twenty two. As a result of the combination, as I think you now well know, are the leaders in the world in our space. Of the now four divisions, the one that was dragging its feet slightly was the IP Services business. You need to take a line there between 'eighteen, 'nineteen, 'twenty, 'twenty one. We misled everybody because we enjoyed a fantastic '19 without realizing there was a one off effect emanating from the European Patent Office, which was not repeated in '20 and not repeated in 'twenty one. We do hope that sometime, maybe before the end of financial year 'twenty one, but certainly early 'twenty two, there will be a one off effect as the EPO gets back up to speed, but they have definitely been much slower and been giving their staff extra holidays. So that works its way through into our results because we don't do anything until the EPO has granted a patent. In the regulated industries, which is where the former life sciences business of RWS now finds itself, we have had a strong performance from the old life sciences business and we see good prospects in the integration of former SDL in improving the margins that were generated, particularly by the business they bought in 'nineteen, Donnelly. And in language services, the biggest of our divisions, the former Moravia that you will remember has had a good half year, as have the SDL C and E, although of course they were Experia has more impact from COVID-nineteen than the old Moravia business did. In language and content technology, strong H1 performance. And there we've seen some interesting wins. So it's been a busy transformational half year. I'm going to hand over to Des now to take you through the numbers that come out of that. Thanks, Andrew. First thing to note here on Slide 6, where we are now, is the transformative impact of the SDL acquisition on our financials. So I'll make sure to unpack the various components here to highlight both the like for like impact of the acquisition on our numbers, alongside the constant currency impact, this will give a more accurate measure of the underlying performance across our new divisional structure. With that in mind, let's move on. Headline revenues of 126,400,000 that represents an increase of 92% on last year's results. On a like for like basis by adding in the relevant 5 month pre revenues of SDL and then our 2 smaller acquisitions in H2 of last year, Webdunio and Iconic, we can see that like for like revenues are effectively in line with prior year have been impacted by an unfavorable FX headwind. On an underlying constant currency basis, revenues have, in fact, increased by 3%. Gross margin. Gross margins increased from 38.8% to 44.9%. Couple of things at play here, but the main driver clearly the addition of the higher gross margin SDL revenue base, which historically has been around 52% on top of the former RWS gross profit, where gross margins, as you know, I've been close to 40%. So on a like for like basis, gross margins are aligned with the relative change in gross profit mix but have been impacted by FX again. On a constant currency basis, gross margin strengthened this period by 80 basis points. And this primarily reflects an increase in stronger GM in the IP Services division as a result of their rightsizing the business earlier this year in response to last year's drop in revenues. Admit expenses as a percent of revenue have increased from 18% last year 29% in the current year. Again, the main driver here is the acquisition of SDL. SDL had OpEx as a percent of revenue in the low 40s, while standalone RWS was between 18% 19% year on year. It's worth pointing out that in addition to this, OpEx costs benefit from the realization of over £5,000,000 in synergies within the first half of this year. And as Andrew said, on a gross basis, we'd expect that to be around £15,000,000 $16,000,000 for the full year. Net finance costs have increased slightly at $1,700,000 but this masked the fact that our underlying interest cost has continued to fall in line with our debt repayment schedule has been offset by additional IFRS 16 lease interest expense following the acquisition of SDL of roughly $700,000 Brings us to adjusted PBT, Which is $15,500,000 is $0.53 higher than the $33,100,000 recorded last year. At a net margin of 15.5%, that's down from the 19.5% of last year. Of course, this primarily reflects the dilutive impact of the lower net margin SDL business acquired. Also worth pointing out the increase in adjusting items this period, the 2 main increases here are acquisition expenses of £10,600,000 so from just £200,000 last year and primarily reflects costs related to the SDL acquisition, along with the incremental integration costs which were incurred to realize our planned synergies. It's about £6,000,000 In terms of tax, adjusted effective tax rate increased 23.4%. I think we signposted that at the trading update. That's up from 22.4% it's due to a greater proportion of taxable profits of the former SDL business, which are exposed to higher corporation tax regimes. And we'll finish this slide by looking at EPS. Basic EPS has decreased by 42% to £4.2 course, that's been impacted significantly by the large adjusting items this period. Once you adjust for these, we see that the adjusted basic EPS has actually increased from 9.4p £10.5 That is a 12¢ increase over the comparative period. Okay, moving on. Next slide breaks down revenues into new divisional structure. This slide provides a bridge between the headline reported revenues and the underlying revenues of the group, split out in line with the new divisional structure of the combined group. The main headline here is that although like for like revenues are in line this year, they've suffered from a 7,500,000 FX headwind, which when we add back in results in a 3% increase in the underlying group revenues. So moving from left to right, we start with the H120 reported revenues of £169,700,000 to which we need to adjust for pre acquisition revenues, which total $155,500,000 $150,000,000 of which relates to SDR. That leaves us with a like for like revenue number of $325,200,000 We then are back in the constant currency revenue increases by division. In H1, the regulated industries division led the way with underlying revenues increasing by 6,000,000, that's an increase of 9%. Worth noting here that we had a strong performance from both the former RWS Life Sciences division, which increased by over 10%, and former SDL regulated industries division, which was up by 8%. Language services, sales were up by £2,000,000 that represents an increase of 1%. Again, there's a mix here, the increase mainly due to 3% increase in former Moravia, offset by a 1% decrease in the former SDL commercial enterprise revenues. IP services down by 2%. It's very important to point out here that there's renewed momentum in the IP services division and revenues are actually in fact up by 4% from the second half of twenty twenty. Also encouraging is the performance language and content technology division. Underlying revenues have increased by 4%. This largely is a result of the content technology side of this division. So from underlying revenues of $332,900,000 to get to reported revenue for the year, need to abduct the FX headwinds in the period of $7,500,000 which came largely as a result of the $0.05 weakening of the dollar year on year. So it takes us back full circle to the reported revenue figure for this year of $326,400,000 up by $1,200,000 on a like for like basis by £8,700,000 or 3 percent on an underlying constant currency basis. That's our summary balance sheet. Just to draw your attention to a couple of relevant items here, intangible assets, so non current assets here, have increased by £602,000,000 since year end. And this again has been driven by the acquisition of SDL in November. This transaction added about €97,000,000 in non current assets and there's an additional €523,000,000 currently recorded as goodwill that will break down between intangible assets goodwill over the coming weeks as we finalize our purchase price allocation exercise. In addition of SCL, it's also increased our net working capital to 77,000,000 that's an increase of £26,000,000 from the comparative period. And we're also pleased to report continued improvements in our days sales outstanding, so DSO metric, and that's across both RWS and SDL, which now stands at 44 days across the combined business. And you may remember, we reported this metric at 46 days at a year end presentation. So our continued improvement is testament to great work of our credit collections team that they've made over the past year. Finally, you'll see that we've moved into a net cash position this half, close H4 on net cash, excluding IFRS 16, lease liabilities at 11,800,000. That's a 27,000,000 improvement from the net debt reported at year end of 15,100,000 a $46,000,000 increase year on year from the net debt of $34,500,000 that we reported at the end of the first half of fiscal 'twenty. Finished the fiscal year with cash cash equivalents of £62,200,000, up significantly on last year's comp, £28,300,000 and the £51,400,000 we reported last September. The net debt cash bridge. It's effectively a proxy for cash flow since the end of September, the first half of the current fiscal year. Starting with our opening net debt position of 15.1, I'll move quickly left to right across the bridge, takes us to our net cash position at March 31st of 11,800,000. With operating profit of $25,700,000 you'll see that on the face of the statutory P and L. To that, we've added $21,200,000 non cash items. It's mainly £14,300,000 of intangible amortization but also an additional £5,400,000 related to IFRS 16 right of use assets and this £3,000,000 in additional depreciation. It's a £20,200,000 increase in working cap, that splits roughly £9,000,000 increased receivables and £11,000,000 in reduced trade and other payables. Again, worth noting here, the reduction in payables relates to acquisition fees accrued on the opening SDL balance sheet and the payments in March of accrued full year former SDL bonuses for their fiscal 'twenty period. So, the major impact on the numbers in this half. See the $55,000,000 that we inherited from the acquisition of SDL, with CapEx this period of $9,900,000 to $5,500,000 of capitalized software developments across the combined group and other general CapEx of 4,400,000 capex is, as a percentage of revenue, remains below 3% across the group. Tax paid in the period is £10,000,000, so from £8,700,000 in the composite comparative period. Dividends paid this period over $28,200,000 compared to $19,300,000 That reflects the payments of final dividend back in February and obviously the increased number of shares a dividend as a result of the share acquisition of SDL earlier in the period. There's 5.8 of lease payments under IFRS 16 and then finally anticipated 1.4 mil compares to 1,300,000 last year, we covered this earlier, but it reflects the reduced interest costs in our outstanding debt and the offset with the additional IFRS 16 interest payments from SDL. So that brings us back to our fiscal 'twenty one H1 position of net cash of $11,800,000, causing a movement of $27,000,000 in the 1st 6 months of the year. So the final slide in this section is our revised group currency analysis. As we've seen, financial results in this half of the year have been negatively impacted by currency movements and the acquisition of SDL has significantly added to our dollar the currency movements and the acquisition of SDL has significantly added to our dollar surplus cost group. Form our divestment, as you well know, US dollar revenue is close to 70%, well over half of SDL's revenues are also denominated in US dollars. That leaves us in excess of 60% in terms of dollars for the combined group. It's worth noticing, I guess, the key currency pairs movements in the period, the dollar weakened by 5% against GBP, 8.5% against the euro, while the euro in turn strengthened by 3% against GBP. Well, then given our natural balance between euro revenues and cost to cost division, we can focus more on the dollar surplus in terms of the overall financial impact on the group. Coming into this fiscal period, we're already hedged to the transactional level of RWS. The acquisition of SDL has only added to our U. S. Dollar exposure. STL historically did not engage in a hedging program. So since the beginning of the year, we've taken out significant additional dollar forwards to protect against any further weakening in the dollar rate from a transactional basis. Overall, we've hedged over 50 percent of dollar surplus, which covers our transactional requirements. Remaining unhedged translation risk we'll continue to highlight through constant currency recorded the currency flows of the group are evolving. And they've become ever more complex with the acquisition of SGL, but we'll continue to adapt our overall treasury strategy to mitigate currency exposure across the combined group. It's worth noting one of the options that we're currently evaluating is the viability of moving towards reporting in an underlying functional currency of US dollars as it better reflects the underlying business. And then the absence of a strategy of stockpiling sterling may well provide the clearest path to reducing the longer term volatility. Okay. So, yeah, just before I hand over to Richard, I'd like to take the opportunity actually to thank Richard for all of your support and guidance over past 3 years here at RWS spent some incredible amount to me personally. Yeah, so thanks, Richard, and all the best in your next meeting. Oh, geez, Yes, I wasn't expecting that. Thank you. But equally, it's been great working with you. But moving on, good morning, everybody else. So IP Services represents about 17% of the group in this consolidated world with SDL. Sales were down 2% Year on year, but it could have been better. And clearly, the market has stabilized a little bit with revenue up 4% from H2 FY 2020. So there is some improvement there. And if you look at the three parts of the business, we've got the research business, which includes our market leading PAT base. That's up 10% with pack base growing by about 8%, I think it is, despite FX issues. We've got Growth in world file in constant currency and GBP is broadly flat, slightly up a little bit. But obviously there's some growth there, which is good. But as Andrew said, it's in Eurofile where we're still struggling. There are some signs that that will improve and we're hoping it will improve. But at the moment, that's certainly struggling. I think on a brighter note, I think Japan is doing extremely well. Japan in local currency are up 14%, helped by additional sales to a very large consumer and electronics business. And also China is up by 9% and that's been helped by wins this period and also a really big win last period that we previously talked around. So overall sales are not brilliant, but certainly better than they were and moving in the right direction. And the other thing that we should remember is, As Andrew pointed out, we do have a full 6 month worth impact of COVID in this period, whereas we didn't have that last time. So, in terms of new wins in the period, it's been more about expanding sales offerings to existing customers rather than new business wins. So it's spreading rather than new wins. There have been some small wins, medium sized wins, but no real sort of blockbuster names in the period. Cross selling is looking good. We have a number of opportunities within the cross sales, not just within IP services, but particularly in IP services as the sales teams get leads into, former SDL's customer base and they're moving forward nicely. So we're very hopeful on that. In terms of the P and L, we've got slightly stronger gross margin at 43%, overheads were flat. So in fact, at profit level, we would have shown a good result. However, the FX impact on our U. S. Dollar debtors and U. S. Bank account meant that the profit actually fell as well. Outlook, well, the pipeline is pretty good. As I say, there's a number of opportunities there that we're currently working on COVID and the lack of sales travel is making closing those opportunities taking longer than they would normally. But they are moving forward and the opportunities are out there. And we're sure that particularly in America, once the market opens up even further, we will be winning those opportunities. And the other thing I should say is that the ERP project is moving forward nicely to schedule. And that'll be another 18 months, I think, before we get that in, but moving along nicely. Not really impacted by integration in any way because it's pretty much a standalone business apart from the cross selling that we just talked about. So if I move then to language, content and language technology, this division accounts for 15% of the group's revenue now. And as the name suggests, it's made up of 2 parts. Made of content technology and language technology. And the content technology had a good period. And the content technology is Tridion Docs, Tridion sites and also Contenta. And they were up 7% as I think I just said. And that was driven by some really nice wins in the period. On sites they won a hotel chain with docks. We won a large supplier to the semiconductor industry. Also won some sites with a manufacturer of compressed air vacuum products in Germany and also US TechCo on docks. So some nice wins, which has driven that part of the business up 7% on the language technology side. Sales there were flat, and it's a mixed result within there. So machine translation sales, sales of pure machine translations, we're up 3%. Our sale of Language Cloud, which will, over the years, become our flagship machine translation offering or just translation offering in general was also up 3%, but our translation management systems were down 8%. And that's partly because of our push to move customers across the language cloud and start selling software as a service rather than perpetual licenses. So that's definitely something we're doing. We've also The end of sales notice as we'll come on to in a minute when I talk about integration, we've also issued end of sale notice on a number of products, which is also, you know, moving people across to the language cloud And we will see that for a little while to come. Yeah. In terms of the pipeline, we have a number of good opportunities there. We've got some airplane manufacturers, some lovely opportunities there, And also Japanese car opportunities for sites and docks. So good growth, decent opportunities, nice business. In terms of profit, the gross margin improved to 72% from 71%. Overheads were lower by £3,000,000 partly COVID driven, reduced Travel, etcetera, etcetera, but also lower headcount, partly through the changes we're making through the integration, but partly just through good housekeeping. And as you can see, their profit was significantly ahead of the bottom right hand side of the slide. Integration work, what are we doing? We're rationalizing the product range, focusing on language cloud. We currently support over 22 products. As a result of the rationalization, that will reduce significantly. It's going to take us some time to get there because we need to make sure the language cloud is sufficiently good enough. It is good at the moment, but we need to enhance its capabilities so that we start migrating customers across. So it's going to take some time, but it's certainly work in progress. The other things I should mention are that The iconic business that we bought, the Irish business that we bought last year is being merged into the language Weaver as we call it now, which just the machine translation business for SDL. That's going ahead really well. No issues there. And we're also, as I said, we just mentioned Language Weaver. We're also rebranding our Removing SDL and make it a more part of US based. So if I move on again then to Language Services. Language services is the biggest part of our group now with 45% of the revenue. This is a combination of former Moravia and former SDL, CNE. I should have said on language content and language tech, that's pretty much standalone. There's no real, apart from small pieces of iconic, there's no real issues there in terms of integration or whatever. So Language Services, former Moravia and former SDL. And Moravia sales were up 4% to 5% in US dollars. So decent growth there. SDL sales were down 2%. So why is that? Well, in Moravia, very strong growth from our top media company. And what they've done is they've widened the range of languages They want us to translate. And we're also having good progress on the Latte project. Large U. S. Consumer electronics company was flat. Large U. S. Content production company, large drop. They've decided they've changed their policy and stopped checking the quality of language translations, which has meant they've taken work away from us. But net net, Moravia has done pretty well. On the SDL side, as I said, the revenue was down 2%. The other impact that SDL saw in the first half results was a large, the SDL saw in the first half results was a large South Korean conglomerate had an Alexa equivalent which they canned last year. So all of the translation and development work on that, we haven't seen come through. The gross margin for the 2 businesses, Moravia increased from 34% to 36%, which is a mix and volume issue. SDL went from 43% to 40%, which is a volume issue. Overheads, Moravia up 2%, SDL down 6%, which is still higher than they probably should be, but this shows We've made some positive progress. And as you can see on the right hand side, again, we've made some good progress on the profit improvement as well. In terms of integration, talked about And I should just say that we're moving that search company over onto SDL because the customer wanted us to. The other large Moravia customers will stay on the Moravia systems and we won't be touching them. But some of the smaller Moravia customers, we will certainly be looking to utilize SDL's operations and language office and Helix, etcetera. Pipeline for the business is good. We talked about the content production business growing nicely. We've also seen some sports manufacturers doing well with the Olympics, etcetera. So Generally, it's moving in the right direction. Regulated industries, 23% of the business consists of former RWS Life Sciences and former SDL regulated The RWS business was up 9%, 11%, I think it was in local currency and SDL was up 3%. If you look at the former RWS business, we've got our major life sciences customer was up 12%, our linguistic validation was up 9% And the rest of the business, the Life Sciences business is up 12% in local currency. So really strong performance, driven from lots of things. And we're certainly seeing some tailwinds from the work we're doing on COVID. And we expect to see that going for some time because pharma covigilance, which is basically making sure that the or translating documents to make sure the drug is doing what it says it does and monitoring for any variations from that expected performance. We expect that pharmacovigilance to go on some while and this is the first time we've ever done a global vaccination program. So the Life Sciences business is in a good place. The former SDL business, growth there of 3%. They've had some good wins with law firms. They've had some good wins with banks, etcetera, and also seen some growth through the uptick in IPOs, Etcetera. And they've seen some work from legal due diligence and also ESG work. They're seeing some benefits from that. So overall, this business has done extremely well. Gross margin, RWS was flat, former SDL was slightly down, overheads RWS was up By 10%. And that's because we wanted to spend money improving our IT security. We recognize that that division perhaps wasn't quite where it needed to be compared to the others, so we've tightened that up. In former SDL, it's down by 8%. Again, it's headcount driven as we make changes throughout the organization as part of the integration. And just talking about integration, the org structure is now in place. Teams are integrated, embedding in. Work started to move various clients through onto the SDL language office, so using in house translators. The Donnelly, because SDL bought Donnelly a couple of years ago, the integration work there is still to be completed. And that's causing us a little bit of a headache because we need to get that done before we can move on with other stuff. Outlook for the division It's very strong, as I've just said, in terms of sales. The challenge we've got is actually manning up some staffing. The lockdown and working from home is making it easier for our competitors to poach some of our staff. So to address that, we're within linguistic validation. We have set up a center in Poland that's recently become operational, which is good. As I said, pipeline is good. I think one of the surprises Business has been the low margin within the former SDL business. First half last year, they didn't make any profit at all. So then if I look at top customers, as we say in all our publicity now, I think we do, what is it, 90 of the top 100 brands and 80 out of the top 8 out of the top 10 patent filers or something, I don't know. But our coverage is amazing. Our customer list is staggering to who we sell to. And that's justified because of the organization and the quality of work that we deliver. So if I move then on to SDL integration, board management and team was million, that's as we restructure and remove duplicate costs. Sales and marketing was 10, Ditto consolidated team was revised, sales comps back office 5, you know, HR, finance, legal, 3rd party, 3, lots of different cost salary cuts, savings and audits, etcetera. Geographic locations are just 1, and that's relatively low, but that's because we do not include the STL savings that were previously announced. If you remember back about a year ago, they announced a whole set of office closures, so we haven't included that in there. And then tech is 2 and then operations is 6. So that's what gets you to the 33 as we have it today. And it's going to be an iterative process. There's more to come. We keep pushing on several things. So, if I move on to the next slide, as Andrew said, overall, the integration is going well. What we're seeing is sales is much greater sales opportunity through having a wider sales team, wider number of products, wider service range, etcetera. The cross sell scheme is in place and is beginning to yield results. Gross margin opportunities there, reducing the complexity within SDL, better utilizing the SDL's language delivery office and Helix to a degree And enhance relationships with our freelancer community to better buy operational improvements, remove duplication, streamline and simplify. Is a lot of complication within the SDL business that we just need to get to the real core, speed up decision making. They're a bit of a beast is SDL. We need to sort of move that forward as fast as we can and get the staff, every level of staff to question every single item that they spend, you know, cost fee benefit on everything. So a bit of a cultural change there. And finally, what we want to do and it's a great place to end is, you know, be a better place to work for our employees, create better opportunities for them to advance their career, be a fairer workplace. And Andrew will come on and talk to you about some of the things we're doing on ESG and give employees the opportunity to contribute on events and activities that the Group is taking. I think that's it's. So with that, I'll hand over to Andrew. Thank you. Thank you, Richard. So we all know how important ESG has become and how fast it's become important. So of course, we have had to react like everybody else, we have appointed a full time head of ESG and Sustainability. What we've really discovered is that ESG has moved forward so fast that the rating agencies don't appear to look very much further than your annual report. So you have to really cram everything into the annual report. And those of you that have taken the trouble to read our 2020 annual report, which, of course, much fatter than the 2019 report, we'll see the first signs of that. I guess the 'twenty one report is going to be substantially bigger. The first thing we've done is to communicate with our key shareholders. So 80% of the shareholders outside of the director holdings have been approached and have been asked for feedback on what they consider to be important indicators they're expecting us to measure up to. And we have done similar sort of exercise, although it's not complete yet, with selected clients as opposed to shareholders. RWS activities as a group should position us in the top quarter of the SG ratings. There are no smokestacks anywhere that I'm aware of. We operate out of modern offices. Yes, we do a fair amount of traveling in pre COVID times. And, of course, we've got to engage with our employees in terms of the footprint that they are leaving on the planet. But we think that we are, for our size and our reputation, we are certainly moving up the rankings with all of the outside bodies that investors rely on. Richard and his team have put a lot of effort into the social side, especially on COVID-nineteen. Mental health of our employees and their well-being, communication with them has been at a very enhanced level. We're rolling out a new group wide intranet, as you can see. We are also focused on improving our diversity and inclusion. So all of the sort of tick boxes that you would expect as to be focusing on, we are indeed focusing on and you will see a considerably enhanced input into our 2021 annual report, as I said. On the community side, on the next slide, most of you will be aware of the joint venture between myself and progress in terms of language undergraduates at Manchester. We are now taking 20 students in per year in terms of scholarships to underprivileged but bright linguistic students. Unfortunately, we have not been able to benefit from part of the program, which was designed to offer internships to them in the summer, COVID-nineteen has put paid to that. But our own employees are being urged to work both as mentors with those students and with Urban Synergy, which is an East London not for profit that is helping out underprivileged groups from ethnic minorities. And we're also working with and they were quite well advanced in terms of initiatives in the community and we have moved to bolster that and relaunch it as the RWS foundation. On the governance side, at the time of the acquisition completed, we restructured the board and brought over 2 non execs from SDL. Their former Non Exec Chairman, David Clayton, and their most recent, Ned Gordon Stewart. So they joined the RWS board, together with a lady called Frances Earl, ex senior partner in Accenture, who is now the head of Remco. And not only in our annual accounts, but of course, our website is very much enhanced in terms of the amount of disclosure we have across the whole ESG piece. You heard Richard talk about the investment we've been making in data security. We were victims of the Microsoft fall over, but we're pleased to be able to get it back up to speed and with no damage to our client confidentiality at all. So, ESG, you can take it for granted that we are putting substantial effort into it. So moving on, our strategic priorities, this is just pulling together what you've heard in the rest of this presentation. So we want to drive our organic growth. We want to put much increased focus on cross sell and joint sell given the incredible customer base we now have. We merged with SDL in order to access their technology. As a group, we believe we have market leading technology in the language service space, and we will continue to focus there. And you haven't heard much about acquisitions in this presentation. Whilst we do have a strong balance sheet and we have excellent bank facilities and we are seeing a steady flow of opportunities. I did say to you maybe half an hour ago that we are not focused on anything major at the moment. Our top priority remains the integration of SDL. But looking further out, if we come with acquisitions, I would expect them to be in the U. S. Or in Asia Pac. They could be in bolt ons into our existing activities, giving us geographic coverage or customer wider coverage. We could be into the last area that we're not represented in, in languages, language services, namely interpreting, but things, but that would be only if we can find a business of scale with a really good technology platform connecting the freelance interpreters with the clients. We've seen 1 or 2 of those things, but disappointing margins, so we've not been moved to do anything about that. So we move to the last of the slides in this presentation, summary and outlook. I've just said, SDL integration, top priority. Second half, we've continued to drive on from the H1 numbers we've been looking at this morning. COVID is still, although we all know the vaccinations are going to hopefully rescue the Western world at least, we don't see that fully reflected yet. So you've heard where we are in IP. We're hoping that the lifting of all restrictions will improve that, but we're very dependent there on the European Patent Office. Our leading position in the marketplace, number 2 is probably $150,000,000 behind us in overall turnover means that we definitely feel we are being invited into all the important fees and we will be able to capitalize on the fact we are number 1 and that we have the best technology and we have the highest quality. I've talked about the balance sheet. The Board is very confident about the group's future prospects. I would sum up by saying the new enlarged RWS Group sees opportunities wherever we look.