Key Insights About The Support Services' Group – RWS Holdings Plc (AIM)

  • May 21, 2019 BST
  • Team Kalkine
Key Insights About The Support Services' Group – RWS Holdings Plc (AIM)

RWS Holdings Plc (RWS) is a UK based leading provider of support services related to intellectual property. The company is a market leader in linguistic validation and life sciences translations. The company specialises in the areas of providing localization and specialist language service to different technical areas. The company provides customized services as per its customers located in Europe, Asia and North America. The company is having an employee base of 2,459 people including 577 specialist translators, QA staff, testers and revisers.

Trading Update – H1 Financial Year 2019 ending 31st March

In the first half of the financial year 2019 ending 31st March 2019, the company’s revenue surged by 23 per cent to £172.3 million against £139.6 million in H1 FY2018. There was an increase of 10 per cent on an underlying like-for-like basis. The adjusted PBT (profit before tax) is expected to be £35.5 million for the period and increased by 24 per cent from £28.6 million in H1 FY2018. The company had strong sales performance in H1 FY2019 from its IP Services business with 13 per cent upside, driven by the company’s European patent filing. The operations from China and Japan was up by 27 per cent and 20 per cent respectively. The company’s RWS Life Sciences and PCT translation business had a good first half. The company remained cash generative with reduced net debt for the period to £63.9 million. The company had acquired Alpha Translations Canada Inc for US$6 million on 17th January 2019. The company paid a final dividend of £16.4 million in February.

Financial Highlights – Financial Year 2018 (£, thousand)

(Source: Annual Report, Company Website)

 

In the financial year ending 30 September 2018, the company’s reported revenue was £306,044 thousand against £164,040 thousand in FY2017. There was a significant increase of 87 per cent driven by Moravia acquisition and growth delivered by all divisions. The gross profit for the period was up by £47,062 thousand to £ 118,833 thousand. The operating profit for FY2018 was £44,131 thousand versus £33,981 thousand in FY2017. The profit before tax was up by 17.10 per cent to £39,659 thousand in FY2018 against £33,866 thousand in FY2017. The profit after tax for the FY2018 stood at £28,257 thousand against £24,560 thousand in FY2017. The basic earnings per share was 10.4 pence in FY2018 against 11 pence in FY2017. The diluted earnings per share was 10.4 pence in FY2018 against 10.9 pence in FY2017.

Share Price Performance

Daily Chart as at May-21-19, before the market closed (Source: Thomson Reuters)  

On 21st May 2019, at the time of writing (before the market closed, at GMT 11:54 am), RWS Holdings Plc shares were trading at GBX 613.00, up by 1.66 per cent against the previous day closing price. Stock's 52 weeks High and Low is GBX 620.00/GBX 335.50The outstanding market capitalisation was around £1.65 billion with a dividend yield of 1.24 per cent.

Conclusion

The company had shown decent financial performance. There had been a surge in revenue from all the divisions of the company. The company had recently acquired Alpha Translations Canada Inc to expand its global reach. The company is looking to expand its operations in the US till 2020 and after that, it will focus on China to further expand its operations. The company is well balanced and is having diversified service offerings.

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