RWS builds organic growth

Moravia helps adapt companies’ content so it is consistent across different geographies. Accounting for over two-fifths of the overall total, revenue increased here by almost a fifth to £150m. The business posted organic growth of 7 per cent despite the continued reduction in volumes from Microsoft (US:MSFT) – one of its top five clients – for its Office suite. While the decline is expected to persist into 2020, it is being partly offset by growth from the software giant’s cloud and artificial intelligence products.

The IP services division, which provides patent translation and filing services, enjoyed new business wins and increased activity from existing clients, resulting in a 12 per cent rise in revenue to £125m. Although adjusted operating profit increased by 5 per cent to £36m, the margin contracted by almost two percentage points, reflecting increased investment to retain staff in the first half. The segment is leading the group’s push into the Asia Pacific region, capitalising on international companies seeking patent protection as well as domestic demand. Revenue from China and Japan increased by 21 per cent and 19 per cent, respectively.

The strongest growth came from life sciences, where revenue jumped by a quarter on the back of 10 per cent organic growth. The segment, which offers technical translations and higher-margin ‘linguistic validation’ to pharmaceutical and clinical research companies, is benefiting from increasing global spending on healthcare. Management changes boosted performance, renewing focus on keeping existing customers happy as well as chasing new business – sales to the largest client grew by 9 per cent at constant currencies.

House broker Numis anticipates adjusted pre-tax profit of £77.3m and EPS of 22.2p in 2020, rising to £82.9m and 23.8p in 2021.