Well, good morning, everybody, and welcome to the RWS mid-year results for 2024. I'm Ian El-Mokadem, CEO, and I'm joined today by Candida Davies, our CFO. We're going to follow a similar structure to normal, so I'll commence with some opening remarks. I'll then hand over to Candy to go through the financial review. I'll then come back to do a more detailed strategic and operational review, touch on current trading and outlook, and then we can go to questions. So, I know many of you are very familiar with RWS, but a quick reminder of who we are. We're a unique, world-leading provider of technology-enabled language content and IP services, well-diversified with many leading market positions. We operate in a large market with attractive structural demand drivers. We are well-established, founded in 1958, with a large, high-quality customer base across a range of sectors.
Many of those clients are market leaders in their own industries. We've built a unique platform in our industry. We're a market leader with proprietary technologies and deep expertise and a delivery platform that is truly global and capable of delivering on a 24/7, 365 basis. We're going to talk a lot about AI today, but whenever we talk about AI, we also always end up talking about people. And one of the features of our model that we think is of growing significance is our ability to deploy large communities of people with different expertise, linguists, data annotators, and other skills, all of which are both servicing our localization industry through language, but also helping to train our own AI models and, increasingly, through our Train AI service, helping clients to deliver their own AI models for a whole range of different applications.
We'll talk more about that as we go through. We have a strong financial profile, good cash generation, low levels of debt, a progressive dividend policy, and the ability, therefore, to continue to invest in the business both organically and through M&A. What do we do? Well, using that unique combination of technology and human expertise, we support our clients to create, collect, transform, and analyze, launch, and manage content. That helps them to grow by ensuring they are understood anywhere and in any language. To give a bit more detail to that, how do we help our clients? Well, we help them to win customers. We help them to deliver great user experiences to those customers, for example, by making their devices work in different languages or their AI models deliver better user experiences. We often help them to maintain regulatory compliance while we're doing that.
We operate in regulated industries. Increasingly, we help them use our technology and our expertise to gain insights from the huge amounts of content that they are both receiving and creating as organizations themselves. Of course, that content comes in a variety of forms these days, and we can handle content in all of those shapes and sizes. Now, we've had an encouraging period. We're seeing some encouraging trends and a good start to our second half as well, which is supporting our confidence around our full-year performance being in line with market expectations. Some headlines sitting underneath that, in the first half, two of our divisions have returned to constant currency growth. We've seen an improving trend in terms of growth at a group level over the last three halves.
So we went from -7 in FY 2023 first half to -5 in the second half of FY 2023 to -2 in the period we're reporting now. And in quarter two, the group grew on a constant currency basis with continuing encouraging trends into H2. We've seen very encouraging interest in Evolve, our pioneering and patented new linguistic AI solution, with eight clients completing or in the process of going through proof of concept, revenues already being generated from sales of that product, and a pipeline of some GBP 50 million of opportunities. Train AI, our data services proposition, is also having a really strong period, starting to broaden its client base outside of our technology clients who've been in that business for some time.
We've seen good wins that are supporting both the results for the first half, but also increasing momentum that we've guided to in the second. Our language platform, the LXD, is of increasing strategic significance. I'm going to talk more about that. It is a source of competitive advantage both for localization and for AI services. It's been critical to maintaining our gross margin at 45.7%, consistent with the prior period, through a period of volatility in terms of our top line. Our growth initiatives that we started investing in a few years ago are continuing to help and contributing positively in the period. Our shift to SaaS licenses in our software business is also making very good progress, with 18% reported growth in SaaS license revenues in the period.
SaaS is now firmly established as a tailwind for revenues in our software division, having been a headwind in the early days of that transition. Yesterday, we launched HAI, which is our latest AI-powered innovation, a combination again of human and AI expertise, targeting in particular small and medium-sized enterprises. Any of you are welcome to give it a try. It's rwshi.com. And we're very excited about this latest innovation. And our two most recent acquisitions, Propylon and ST Communications, are both performing ahead of our expectations. Critically, AI-related products and services now account for more than a quarter of the group's revenues, and they'd be at typically group average margins. And I think that raises an interesting contrast to maybe smaller AI businesses that could be pre-profit right now and the sort of valuations they are getting when they're out fundraising.
So we're very pleased with the progress that many years of investment in AI is starting to have on our business. So what's our right to win in the AI space? Well, we have deep and long-standing capabilities, deep technical expertise, and a data creation and validation capability, which we think is unrivaled in our industry. We have the ability, as I've mentioned, to deploy large communities for human reinforcement learning to train those AI engines. We have an enviable client set with whom we've been partnering and learning for many years. So we have learned from the best in this space. And as we've said previously, we think in the AI world, partnerships are going to become of increasing significance.
So all of that is enabling us to deliver enterprise-grade solutions across a range of linguistic AI data services and content technologies. And we've talked previously about our ability to help our clients on their journey through AI, from exploring the opportunities that AI may have for their businesses to building AI-related products and services through Train AI, through training platforms that we can supply to them as well for their specific industries. And of course, through using AI for a range of different language and content-related applications. And most recently, in the last sort of 12 months, we've launched two new products now, combining our existing platforms, Language Weaver, our pioneering neural machine translation platform, and Trados, the industry-leading language productivity translation management system.
Evolve combines those tools with a specially trained large language model, securely trained and hosted, which allows us now to do AI-based quality estimation and automatic post-editing, removing some of the human requirement in that process. HAI is a self-service platform, again, powered by both humans and AI to deliver a compelling self-service offering for clients whose needs are a little bit simpler. That is a journey that we're on. We will continue to invest and launch new products based on those platforms. We're also credible in this space because we are a significant user of AI internally. Our language delivery platform is both a big user of these tools, but also is key to training and building those new propositions.
To talk a bit more about the LXD, I mean, those of you who followed the story, this was what used to be called the language office in former SDL days. After the merger, we got really committed to this. We saw it as a great way of leveraging our scale and supporting our gross margin in our localization business. I think what we probably didn't realize fully at the time was the potential the LXD also had to enable us to create and generate and use that content to test and develop new AI models, and increasingly to leverage and build the capability that we have for recruiting and deploying large numbers of people on a global basis to work on projects that are across the AI data training spectrum.
The LXD is now managing some 73% of the business from language services and regulated industries divisions, and since quarter one, has started handling content from IP services as well. It is AI dominant. Some 60% of that content is machine translated first by Language Weaver. And as I've mentioned, it's being used to train other tools. So we're very excited about the LXD. We think it, again, is unique in our industry. No one has a similar platform to our knowledge. And we continue to invest in this platform because we can see it being of real significance moving forward. I'll go through the headlines quickly here, and then I'll hand over to Candy and come back later on. So in the period, revenues of GBP 350.3 million, that was -2% on an OCC basis for the period. But as I mentioned, we grew in quarter two.
You can see there the gross margin being maintained period on period despite the challenging trading conditions that we've been through. I think just down the bottom there, CapEx, very much in line with expectations as we've been sort of moving towards the peak of our transformation program. Candy will talk a little bit more about that in a second. I think the other point I'll just point out here is that ongoing commitment to a progressive dividend with a GBP 0.0245 interim dividend up 2% on the previous period. With that, I will hand over to Candy.
Thanks, Ian. Turning to the numbers in a little bit more detail, reported revenue was down 4% year-on-year. This includes the benefit relating to the acquisition of Propylon, which completed in July 2023. On a like-for-like basis, revenue declined 6%.
We're reporting an organic revenue decline at constant currency of 2%, and we'll provide more details of that at a divisional breakdown on the next slide. Gross margin year-on-year was maintained at 45.7%. This reflects two dynamics at play. Firstly, on a like-for-like basis, the soft activity levels seen in the higher margin business units of RI and technology overall, and some adverse regional mix in language services, which are offset by cost reduction and efficiencies achieved across the business and some small price upside. Secondly, on a reported basis, the addition of Propylon is more than offset by adverse FX trends. If FX had remained at last year's rates, gross profit and margin would show a small year-on-year improvement. Admin expenses before adjusting items of GBP 112 million increased GBP 1 million year-on-year due to the acquisition of Propylon.
As a percentage of gross profit, there has been an increase of 360 basis points, predominantly due to the lower revenue and thus the gross profit realized in the period. Savings and efficiencies from our planned cost reduction program announced last year offset the planned investments in growth capabilities as well as the expected reduction in FX gains. The net result is an adjusted profit before tax of GBP 45.6 million, running at 13% of revenue. There are a number of adjusting items totaling GBP 28.3 million, which are detailed in the accounts.
The main items include the amortization of acquired intangibles of GBP 22 million relating to the past acquisitions of SDL and Moravia. Exceptional items considered one-off in nature, encompassing divestment, integration, transformation, and restructuring costs of GBP 1 million, acquisition-related costs of GBP 4 million, which are primarily the Propylon and Fonto contingent consideration, and share-based payments of GBP 1.7 million.
The reported tax expense for the year was GBP 6.2 million, which results in a headline effective tax rate of 35.8%, an increase from the half-year 2023 rate of 27.2% due to an increase in the amount of non-deductible acquisition and exceptional expenses and the lower profit in H1. Once we've taken account of the adjusting items just mentioned, the adjusted effective tax rate is 25.1%, up from 24.4% in the prior period. This adjusted tax rate is derived from the group's jurisdictional mix of profits, and the increase from prior year is primarily due to the 3% increase in the UK statutory rate from a blended rate of 22% to 25% in the full year 2024. This is consistent with earlier guidance and expectations. Finally, the half-year adjusted EPS came in at 9.1 pence per share, down 14% on the prior year.
As Ian's mentioned, the board has approved an interim dividend of GBP 0.025, which is a 2% increase on last year's interim dividend, supporting the capital allocation policy of a progressive dividend. Looking at revenue in more detail, this slide shows the drivers of the revenue variance from half-year 2023 to 2024. Language services reported a decline of 3%, but at constant currency, a growth of 2% ahead of last year. As previously highlighted in the trading statement, we continue to see strong growth in our data services proposition, TrainAI, and sustain new logo wins across the division, more than offsetting reduced activity from some of our EMEA clients as they continue to adapt their priorities to changes in their end markets. In regulated industries, revenue fell 15%, which at constant currency equates to a decline of 12%.
This contraction is primarily due to the softer trading conditions and spending cuts in life sciences and in the finance and legal sector. It was partly offset by good growth in linguistic validation. On a reported basis, L&CT grew 2%. The like-for-like growth of the division adjusting for Propylon was a decline of 7%. In organic constant currency terms, it declined 3%. SaaS revenues grew at 18% and now represent 39% of total license revenues in the division. The softness mostly came from Trados term license and professional services revenues, as we've seen cautious buying behaviors in light of ongoing macroeconomic uncertainty and the wider AI discussions. In IP services, the growth in reported revenue of 0.4% and 4% on a constant currency basis was in line with our expectations. Increase in revenue included filing as well as renewals and research, especially in China.
As you can see, the year-on-year half-year FX impact has had circa 4% impact on our like-for-like top line results in H1, as the US dollar and euro strengthened against the pound. These divisional OCC revenue dynamics translated into a group year-on-year reduction in volume of 5%, partly offset by price increases of 1%, as well as the sustained performance of our growth levers at 3%. The language services OCC growth was driven primarily by the growth levers. RI suffered adverse volume impact with existing clients outweighing progress on growth levers, new logo, and price. L&CT delivered incremental growth from both pricing and growth levers, but was impacted overall by the softer than expected new logo performance. Lastly, IP services saw positive growth across all drivers, volume, price, and levers. Ian will discuss the business performance in more detail later in the presentation.
Turning to the net cash and cash conversion, group total cash at the end of March was GBP 64.6 million, and net cash after loans and borrowings was a net debt position of GBP 38.9 million. Net cash increased GBP 62.5 million in the half-year. Significant outflows relate to the continued investments as outlined at the CMD in line with our strategy, the full year 2023 final dividend payment of GBP 36 million, tax of GBP 11 million, as well as the completion of the share repurchase program of GBP 30 million in this period.
As was expected, the initial consideration of GBP 25 million for the disposal of our interest in a revenue and cost-sharing arrangement related to PatB ase was received on completion in May. The remaining GBP 5 million is expected in Q1, full year 2025. Regarding cash conversion, the net cash inflow from operating activities in the half came in at GBP 37.4 million.
Cash conversion for the half was 30%, a decline year-on-year driven primarily by the temporary increase in our DSO, and to a lesser degree, the weaker business performance. As planned, we've moved a large part of our finance operations into a shared service center model in half one. As often experienced with these transitions, we have experienced a temporary lengthening of debtor days. I'm pleased to say, however, that we've already seen improvement in the last two months, and the shared service center has a recovery plan in place, which is expected to remediate the position in the second half. Second half profit phasing is also expected to help cash conversion recover to a more normal level by the year end. A final note for information, as is typical, lease liabilities of GBP 29.8 million are not included in these figures.
Moving to the balance sheet, the balance sheet remains strong, and when comparing to September 23, the main changes relate to FX revaluation. The closing rate of the US dollar to GBP at September 30 was 1.220, whereas at 31st of March, it was 1.263. So the goodwill decreased by GBP 15 million due to that FX revaluation. In intangible assets, it was also a decrease of GBP 15 million, the additions of GBP 22 million being more than offset by amortization of GBP 30 million and the FX revaluation impact of GBP 7 million. As mentioned on the previous slide, net working capital increased, and the team will address that in the second half, and we expect it to normalize by year end.
While we have slipped into a net debt position as at 31st of March, this is considered to be the lowest cash position in the year, having completed the share repurchase program, paid the final dividend for last year, and before the PatB ase receipt. After including lease liabilities, the half one balance represents a very modest net debt to adjusted EBITDA ratio of less than 0.5, and 0.3 if lease liabilities are excluded. We have a committed facility of $220 million, of which $85 million remained undrawn as at 31st of March. So now to our key KPIs and calling out just a few that we haven't touched on already in the financials. The NPS metric remains positive, with a slightly lower score being a function of the number of surveys completed in the rolling 12-month period, as opposed to any significant shift in feedback.
For a company of our type, a score of over 30 is generally considered good. Reported repeat revenue shows a decline to 93%, but this is primarily as a result of FX. On an OCC basis, repeat revenue is 97%, demonstrating the strong client relationships and satisfaction RWS maintains, albeit in a challenging environment. The cumulative incremental revenue from our defined growth initiatives now stands at GBP 35 million, showing we continue to see the return of investment in the areas we focused on, with particular progress being made in data services and linguistic validation. We continue to see an expansion of our SaaS license model linked to the sustained R&D investments in our products. As I mentioned earlier, reported SaaS revenues grew 18% over half-year 2023, and as such, now represent 39% of the license revenue reported in our tech division, compared to 33% this time last year.
Excluding the impact of Propylon, the SaaS growth on an OCC basis is 8%. In H1, we observed a notable reduction in our capitalized development spend, which now stands at 7.9% of the total L&CT revenue, down from 12.5% in the full year 2023. This reduction reflects the increased emphasis we've made in the period on upfront research, which isn't capitalizable under IAS 38, targeting our investment in artificial intelligence, performance and security enhancements, and usability improvements. Gross R&D technology spend is, however, in line with prior year. CapEx at 6.9% of revenue is also in line with the investment profile indicated at year-end, as we rephase some initiatives to full year 2024. Spend to date is a combination of the continued investments being made in our software development, as well as the transformation programs, of which I will provide some more detail in a moment.
Finally, from a people perspective, our current level of voluntary attrition is consistent with prior and year-end at 12%, and it's worth noting that the percentage of women in our senior leadership positions remains stable at 39% this year. Ian will cover ESG later in the presentation. Moving to our transformation update and to give a brief, very brief overview of the programs focused on both top-line growth and driving efficient and sustainable operating models, the main takeaway here is we continue to make solid progress in a number of areas, having shifted to a single Microsoft platform for the group, delivered the bulk of the HR replatforming, where some of you may remember we were looking to shift from 12 platforms to a single platform over the course of the program.
We've implemented the first phase of the finance shared service center model, covering a significant proportion of the group. And as Ian mentioned earlier, with the LXD having completed the rationalization and centralization of our freelancer supply chain and continuing to drive the migration of volume from the services divisions, including some early IP services volume. Looking ahead, we will complete these existing programs and will look to new opportunities to drive the business forward, both in terms of harnessing our AI-driven opportunities as well as further simplifying the group. As mentioned previously, we expect total CapEx to represent about 7% of revenue for full year 2024. And then, as the transformation programs complete from full year 2025 onwards, we project this percentage to normalize back towards full year 2023 levels and subsequently to circa 4%. And finally, a reminder of our capital allocation policy.
With a strong balance sheet, good cash generation, and a committed facility with $85 million remaining undrawn at 31st of March, we continue to apply a disciplined approach to our capital allocation. Firstly, our consistent commitment to business as usual spend ensures the ongoing maintenance and improvement of core operations, supporting stability and operational excellence. We continue to make strategic investments aimed at accelerating organic growth, underscoring our dedication to expanding market share, seizing new opportunities in higher growth areas, and leveraging cutting-edge AI capabilities, fostering sustainable long-term value for our stakeholders. Rewarding our investors, we prioritize returning value through regular and progressive dividends, reflecting our confidence in our financial health and commitment to delivering consistent and tangible returns. As you've heard, the board has approved an interim dividend consistent with this philosophy.
Our growth strategy extends beyond organic avenues, and Ian will talk more to our M&A priorities shortly. But finally, a quick word on the share buyback. We successfully completed the GBP 50 million share repurchase program in February. There are currently no plans to initiate another program, but the board will, as they have done previously, continue to consider this option from time to time. And with that, I'll hand back to Ian.
Thanks, Candy. So let's run through the divisions quickly. There's no change to this structure. You can see here the slight shifts in revenue compared to the prior period. Those very observant of you in the audience will notice we now expand the Language eXperience Delivery function covering all four divisions, and that reflects its role not just supporting the language services components of what we do, but also the development of our technology products, as I've already mentioned. If we turn then to our largest division, language services, here we deliver 2% organic growth in constant currency, driven by, in particular, growth in TrainAI with our enterprise technology clients, increasingly benefiting from our data services expertise. And it's been very nice to see a general recovery in that West Coast sort of technology component, which makes up about half of this division.
Eight clients have completed or are in proof of concept with Evolve, with a strong pipeline of opportunities in H2, as I've already mentioned, and we're already seeing revenues off Evolve right now. New client wins have continued, especially in the technology and e-commerce sectors. As I mentioned earlier, we were delighted to launch, HAI, our digital self-service platform for small and medium-sized enterprises yesterday. Also nice to see the profit performance here up 17%, reflecting that top-line revenue growth and the impact of some of the cost actions that we've been taking to drive greater efficiency in this part of the business. Looking to H2, I think the key thing to watch is the further growth momentum around TrainAI, which we have good confidence around given the wins that we've had in H1.
Securing new Evolve wins is also a priority, but in terms of revenue, that's more likely to impact in a material way the next financial year. We will now be rolling out the marketing campaign for HAI, and we'll obviously report on progress with that when we next talk to everybody. If we turn to regulated industries, our second largest business here, as I think everyone knows, this has been much tougher than we expected. We always envisaged a second half weighted plan, and that is what we're seeing, but the first half was harder than we had anticipated. Constant currency organic revenue here declined by 12%, driven by reduced activity in life sciences due to spending cuts with large clients, and an overall also softness in the other part of this business, which serves financial and legal clients.
And to give a bit more color to that part, we didn't see a recurrence of the slight surge of work we saw last year linked to new PRIIPs regulations in financial services. That said, we're delighted to see that some of the work that we've been doing, coupled with a bit of market recovery that we did expect to see, has started to come through in the second half, and we've had two periods of OCC growth in April and May. So encouraging signs of progress there. And in terms of other self-help, I mean, Linguistic Validation, one of our key growth initiatives that we've talked about many times, which was all about shifting more of this business towards the clinical stage of the product life cycle in life sciences, has continued to perform well in the period, and that shift of mix in the business continues.
We've also taken cost actions, which have partially helped to mitigate the impact on profit, but as you can see here, we have taken a hit in terms of operating profit. And that, I guess, what's going on there is the LXD is doing a pretty good job of matching the language talent to the varying mix of revenues, but we do also have some fixed costs in this business, as we do in our other divisions, which we obviously can't vary quite as quickly, but we will continue to make further cost actions to try and recover that position. So H2 focus here, similar to language services, focusing on Evolve wins, sustaining those early signs of revenue improvement in April and May, and as I've mentioned, some further cost actions.
If we turn then to Language and Content Technology, we've had good progress with our AI-centered solutions, Language Weaver and Evolve, and with that shift to SaaS licenses, offset by weaker performance in the Tridion part of our content technology business. So revenue at constant currency here declined by 3%, impacted by lower term and perpetual license sales and renewals and professional services revenues, as Candy's already mentioned. We saw a high level of bookings for Language Weaver, our machine translation platform. Propylon is performing really well and ahead of plan, so a great little addition to the group there. We've seen new logo wins, in particular in financial services, government, media, and retail. We talked about SaaS revenues, which are moving really encouraging in the direction we all plan to.
Adjusted operating profit here reflects some FX, but also that mix of licenses with fewer perp and term licenses and more SaaS being one of the primary factors. In terms of H2 focus, I think that's sustaining that momentum with Language Weaver and Evolve, recovering the sales with Tridion, and we've taken some actions internally to do that. We have exciting new launches coming later this month of both Trados and Tridion Docs, which will further support our expectations of recovery in this sector in the second half.
Last, but by no means least, IP Services, 15% of group revenues, had a really good performance in the first half, 4% organic constant currency revenue growth, Eurofile revenues, really strong and continuing the acceleration that we saw at the end of the last financial year, and the Unitary Patent really not having quite as much impact as we thought it might with a number of clients choosing not to use it a bit more than we thought. IP research also had a good period, returned to growth with several client wins and some good near-term opportunities. And as Candy's already mentioned, we've been making some improvements to the range of products generally in this space. We're really pleased with the drop-through to profit, 9% higher, benefiting from top-line growth, streamlined processes, and cost reductions.
And as we've mentioned, we think the LXD will start to contribute further to that as we start to optimize the processes for the language component of this division business in the second half. And I guess in terms of H2 focus, we'd like to see a bit of improvement in the Worldfile portion of this business. We've mentioned the LXD already, and this will be the first division to see the new finance system deployed early at the beginning of the next financial year. So a lot of excitement here. And if you put IP services together with language services, that's 60% of the group's revenues that have already returned to growth in the period, as I mentioned, the whole group grew in Q2. Turning quickly to M&A, there's really nothing much to say to this slide. Our focus areas remain broadly consistent with previous periods.
We continue to be interested in attractive localization assets, particularly interested in acquisitions in the AI and technology space, and also that their area around data services and AI is also of interest. Our screening criteria haven't changed at all, and we continue to see a reasonably good pipeline of opportunities here. Quickly on ESG, this remains important to many of our colleagues around the world, certainly to the high-quality client base that we serve, and I know to many of our investors as well. Here we're making continued progress on the environment. I think what's very exciting is we've had our science-based targets now approved by SBTi. We've committed to scope 1 and 2 reductions of 54.6% by FY 2033 and scope 3, which is quite significant for us in terms of our supply chain reductions of 61.1% by FY 2033.
So that is the gold standard really around carbon reduction. Our foundation and our social commitments continue, in particular our very wide campus program where we work in partnership with universities around the world to attract talent into our industry and increasingly influence the syllabuses in those universities around the impact of AI for our industry and for people entering it. In terms of governance, I think exciting development is we've joined Meta's Open Loop program, which has the objective of developing effective and evidence-based policies around AI, a fast-evolving area. This is very aligned with our belief that innovation must be balanced with safety and security. And I think one of the things we are very focused on in all of our AI propositions is making sure that we can offer our clients secure and responsible solutions.
So the Open Loop program combines technology businesses, academics, civil society reps, and policymakers with a view to evolving regulation in a sensible way in that space. And it's very pleasing to see that our work continues to be validated externally with a further increase to our EcoVadis score, putting us right at the top of our industry category. Final chart from me on current trading and outlook. As we mentioned, we're quite encouraged by the performance, so we continue to expect revenue to be stronger in the second half, building on that improving OCC trend and driven by some recovery in the higher margin parts of our business. And we've touched on regulated industries in particular there and the impact of wins that we've had in the first half, specifically around TrainAI and Evolve. We will be continuing to invest in our AI capabilities.
I mentioned some of our recent and forthcoming product launches. As Candy's highlighted, our business transformation program that we embarked upon two to three years ago is also making really good progress now, coming towards the end of that investment phase. We're seeing both the growth and the efficiency benefits that we expected from that coming through. In terms of full year, we remain confident in the multiple long-term growth drivers for our products and services. Whilst we're mindful of the wider macroeconomic environment, which remains a little bit complicated, we are pleased that recent trading, including an encouraging start to H2, currently points to a performance in line with market expectations for the full year. With that, I think we can turn to questions. I think we'll start with questions in the room. There's a microphone, I think, somewhere.
And as ever, if you wouldn't mind putting your hand up and saying who you are and where you come from when you get the mic, that would be good. So I think we've got two James' in the front. There we go.
Hi, both. James Bayliss from Berenberg. Three questions, if I may. On HAI, how should we be thinking about the earnings profile from here? You've obviously talked about putting some marketing spend into it to kind of really ramp up recognition of that. Do you have a sense of what revenues look like over the next few years, how that marketing kind of spend phase is appreciating? It is early there, just really what we should be thinking about in terms of contribution to the group over the medium term.
Second question on language and content tech, can you just elaborate a bit more on the actions you've taken to address the Tridion sales performance going into H2? And then question number three, on the IP services piece, you referenced the fact that clients haven't perhaps adopted the Unitary Patent to the extent you expected, which has been positive for you. Is there any risk that those decisions have just been pushed to the right by clients and that could impact growth further down the line? Or do you think you're seeing now kind of the status quo going forward?
Candy, do you want to take the first one? I'll take the other two.
Yeah. So HAI is a digital platform offering. It's very self-service. We're hoping to be able to offer a combination of visibility of a good cost proposal along with the efficiencies that we can drive end-to-end through that proposal. So hopefully it won't make a significant change to margin over time. Clearly, there is some upfront marketing investment, but that has been already included in our investment growth lever profile that we have provided in the past. So there's no adjustment to that.
I think it's a fairly modest impact in H2. We've just launched the product, so it's early days, but I think significant strategically. In terms of Tridion, look, I think we've made some changes to our sales team. I think we are seeing tougher market conditions there, as Candy mentioned.
I think in common with a lot of sort of software businesses, we're seeing clients a little bit slower to make commitments, a little bit concerned about whether they're backing the right horse in an AI, a complex AI environment. So we are getting decisions, but if we looked at our sort of CRM system, we're seeing it takes more conversations than previously to get those products along the line. So I think the combination of improved products, so we've got a Tridion launch later this month with an improved go-to-market and hopefully some relaxation in some of those concerns, we'd expect to see some improvement in the second half. In terms of IP Services, I mean, I think we will. We do think we'll see more clients gradually shifting to the Unitary Patent over time.
It's very hard to tell how quickly or how many, but we really think we're through the, I guess we're all worried collectively that there'd be a sort of big cliff here. And I think what we're seeing is a much more gradual shift. And look, we're still capable of delivering service with the UP as well, of course. Slightly less work for us to do in that environment. But that coupled with other sort of product enhancements and expansion in the IP services business, I think we're not looking at that as a particular principal risk sort of moving forward. James, sorry, yeah.
Cool, thanks. James Bearden, Deutsche Numis, I've got three questions as well, please. Can you give us a little bit more granular detail on what you think's driven that improvement in RI performance in April and May? That was the first question.
Secondly, on this AI business making up sort of circa 25% of group revenues at a sort of roughly group average margin, the group margin profile has trended down over recent periods. So just wondering what your expectations are in terms of the margin dynamics of those AI-adjacent businesses on a medium-term view. Can these businesses help contribute to future margin uplift? And then I guess a slightly related third question in terms of the language and content division, seeing profit and margin pressure coming about, partly because of an impact of that weaker perpetual and term license point. How much of an ongoing margin headwind is the SaaS transition within that division likely to be?
Okay, James. I'll take the first one. Candy, you're ready to take the other two.
So on regulated industries, I think that if you go back to last year, I think we saw we were seeing an impact of sort of regulatory changes slowing down product launches, so in particular, Inflation Reduction Act. And we had expected that to start alleviating this year. We could see at the clinical stage, there was still a lot of activity. And I think what we've started to see, James, is some of that coming through the pipe now. So a bit later and a bit slower than we thought, but we think that's coming through. The other thing that I think surprised in the sector was a number of clients going through sort of cost reduction programs. So if you looked at our top 20 accounts, very high levels of retention.
We haven't lost any of those key clients, but lower levels of spend as a result of some of those internal changes. We're starting to see some of that alleviate as well. I think we've also started to see new business wins pick up in regulated industries. Now, that's had less of an impact on revenue right now, but in terms of forward visibility, that gives us confidence, I think, as we go through the second half and into next year. So not out the woods yet, but we're very pleased to see OCC growth in two months on the trot in that division after what has been quite a tough period. And I think our wider appetite for regulated industries, I mean, life sciences, we think is still a tremendous place to have a presence, as is finance and legal.
I mean, all of those industries have had some market headwinds recently, but the long-term sort of drivers of demand there, we believe, continue to remain very attractive. And we are seeing clients more interested, as we are in other parts of the business, in AI-related solutions where we think we've got some really good offers for them. So look, slow, steady progress there, but hopefully more of the same to come. Candy.
Okay, so the AI-related revenues are primarily made up of our TrainAI business, which is a slightly lower margin than the group average. So as that will accelerate, that will have a slightly diluted impact. Language Weaver, however, is on the tech side of things. SaaS has a much higher margin than the average. So if that grows in line with TrainAI, you would see that offsetting.
And on the localization revenues, I think what we believe is that we have continued opportunity to drive efficiencies to manage that margin as it moves forward. So I think you've got those three areas that probably move in different directions, and it will depend upon very much which one drives the greater volume of revenue as to what the ultimate impact on the margin is. In terms of L&CT, so remind me of the question. Sorry, I've just completely forgot it. The margin mix on SaaS. So we have hosted costs, obviously, within the SaaS license fee. As we grow that proportion of volume, we would hope to be able to drive a better negotiation around those hosted costs and drive economy of scale there, which we would expect to see the SaaS margin, therefore, improve incrementally over time.
But obviously, we will see that continue to have an impact as the perpetual term declines, and then you will land at a steady state. We don't expect to move to 100% of SaaS, and it will kind of stabilize in the next year or so. Some of the products are not SaaS in that space. So there will be a settling, I think. Any other questions in the room? No? Any questions online?
We do have a question from Jeff Jones. Why are you sure that this business is suffering a cyclical downturn rather than losing market share due to other machine translation or AI providers?
Good question. So I mean, I think first of all, we've pointed to our repeat revenue rate, which allowing for FX is 97%. We don't tend to lose clients. We're very, very focused on that. Very high levels of client satisfaction.
I think the key component of our strategy all along has been to embrace AI and make sure that when our clients were ready to adopt AI-related solutions, we were ready with solutions that would meet their needs. I think with the launch of HAI now, in terms of those ambitions that we had, we've continued to invest in Language Weaver. We've continued to deploy AI through our language platform, the LXD. We've just launched HAI, and we've talked a lot today about Evolve. I think we now have a very comprehensive set of AI offerings. For clients who are increasingly ready to adopt new ways of working, we feel we are very well positioned.
And for the types of client that we work with, they value working with a well-established listed company with high standards of governance, a focus on security and ethical practice when it comes to deploying AI, because those are genuine risks in a fast-developing environment. So look, had we not made those investments, I think we would be much more exposed. I think the fact that we are on the front foot with these things positions us very well. And as we've seen with Evolve, in some cases, it's given us the ability to take share from our competitors who had less AI-enabled and less competitive offerings. So I hope that answers the question.
Thank you. A follow-up question from Jeff. How are your data services protected against cloning of the data?
Gosh. Okay. So look, I think the nature of the services that we offer is we go into distinct projects for particular areas of improvement for our clients' AI offerings. Each of those projects will have a defined set of objectives, a defined process for capturing and annotating or creating data in some cases, and we will agree that plan with the client. So that's very much the focus. We're either helping the client to validate data that they've captured or, in some cases, capture data, but in a very structured way. And each project will be slightly different.
Our next question is from Craig McDougall. Surely with a share price 25% below the average paid in the share buyback, it must be time to exercise a further buyback.
Well, I thank you for the question. As Candy has answered, we have a clear capital allocation policy, which hasn't changed.
I think we'll always prioritize, first of all, organic investment in the business, our progressive dividend, which today we've continued to commit to with the announcement of our interim dividend, and then M&A. And I think it's only after all of those things have been taken into consideration that we would consider a further share buyback. And right now, we are not anticipating a further share buyback. We do look at them from time to time. That isn't to say we won't do one at some point in the future, but it's not something we're currently considering.
Our next question from James Zaremba of Barclays. How much CapEx around transformation initiatives remain to be spent in full year 2025? Candy, do you want to pick that one up?
Yes. So we said we would spend GBP 100 million in total. We are tracking very slightly above that due to inflation and the delay of a couple of the projects. So it will be the remainder of the GBP 50 million that we originally outlined along with, I mean, being slightly coy because we've introduced new transformation projects, which will create some additional spend next year, but it's largely in line, James, with what we have. So trailing back down to the 5% of CapEx in total for next year.
Thank you. There are no more questions online. I'll hand back to the speakers for any closing remarks.
Any final thoughts in the room? No? Okay, well, thank you all for coming. Thank you for dialing in as well, those who've been online. We'll close the meeting there.