Management at RWS (RWS) insists that last November's acquisition of Moravia is transforming the scale of the business, a point borne out by a £52.1m five-month contribution to the top line. Indeed, the provider of of localisation services instantly became the language services group’s largest division, but even without its influence constant currency revenue increased by 5 per cent.
Moravia's contribution to half-year profitability was also pronounced at £4.7m, although comparatives were skewed by pre-flagged negative currency translations amounting to £1.8m. Sales are growing at the patent translation business (hitherto the leading division), while a full six-month contribution from the higher-margin LUZ business (acquired in February 2017) helped drive a 251 basis point improvement in the gross margin at the life sciences segment.
The focus is now on delivering cross-selling opportunities. The group counts many of the world’s largest tech companies as clients, and of the 10 largest customers, all but two receive only one service from RWS, creating tantalising cross-selling opportunities to boost sales growth.
Analysts at Numis are forecasting adjusted pre-tax profit of £60.2m at September 2018, giving EPS of 17p (from £43.3m and 14.2p in 2017).
| RWS HOLDINGS (RWS) | ||||
| ORD PRICE: | 395p | MARKET VALUE: | £1.08bn | |
| TOUCH: | 392-395p | 12-MONTH HIGH: | 559p | LOW: 331p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 37 | |
| NET ASSET VALUE: | 119p* | NET DEBT: | 25% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 76.6 | 14.3 | 4.90 | 1.30 |
| 2018 | 140 | 18.3 | 4.70 | 1.50 |
| % change | +82 | +28 | -4 | +15 |
| Ex-div: | 28 Jun | |||
| Payment: | 20 Jul | |||
| Includes intangible assets of £362m, or 132p a share | ||||
