RWS Posts Record Revenues and Earnings

RWS Holdings plc reported results for the Financial Year ending September 30, 2017 today. The company headlined the report, “An outstanding year, strengthening our leading position in the Life Sciences.”

Revenues and profits hit a new record for RWS. Sales increased by 34.4% to GBP 164m (USD 219.7m), whereas profits before tax increased by a whopping 41.5% to GBP 43.3m (USD 58m).

Indeed, RWS shareholders should be pleased. Dividend payout for the full year will be 6.5p, an increase of 16.1% over FY 2016. Since RWS floated in 2003, the company has delivered an unbroken record of dividend increases year after year, in addition to consistent sales and profits growth.

The company highlighted that 18% of its profit growth was organic. RWS started as a patent translation company. For the full year 2017, they reported that patent translation activities in all geographies recorded “excellent growth”.

Besides translation, the company also offers patent search services which enjoyed their “best-ever results”. Subscription revenues for PatBase, their patent search service, grew by 20.5%.

Life Sciences Acquisitions Perform

The expansion of RWS via acquisitions into the highly competitive Life Sciences market seems to be paying off. 16% of its adjusted profits before tax came from LUZ and CTi. The report also said that the integration of LUZ with CTi to form the RWS Life Sciences division is now completed.

LUZ was acquired by RWS in February 2017 for USD 82.5m at a somewhat higher valuation compared to industry norms. CTi was acquired in November 2015 for USD 70m in cash; 3x revenue which again was a premium relative to industry precedents then. But the company’s confidence seems to have been vindicated so far.

Bullish on Moravia

The company’s latest acquisition is Moravia, a large, enterprise IT focused LSP headquartered in the Czech Republic. The transaction was completed on November 3, 2017 for USD 320m.

In this annual report, Chairman Andrew Brode called the acquisition as “transformational for RWS”. He said the acquisition will enable them to “build on our considerably broader global platform”, exploit cross selling opportunities and diversify business risk.

At USD 219.7m RWS is now catching up fast with the largest LSPs like SDL, Lionbridge, and TransPerfect. And with a market capitalization of over USD 1.5bn the company has the firepower for additional large acquisitions. The market’s reaction to the results was muted with shares trading flat as of press time.

Slator will provide more in-depth coverage of the results in the coming days.