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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Rws Holdings Plc | LSE:RWS | London | Ordinary Share | GB00BVFCZV34 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 4.20 | 2.52% | 170.80 | 171.40 | 172.00 | 173.60 | 166.20 | 168.00 | 1,893,185 | 16:35:01 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Business Services, Nec | 733.8M | -27.7M | -0.0738 | -23.22 | 643.04M |
From Apr 2019 to Apr 2024
TIDMRWS
RNS Number : 5753Q
RWS Holdings PLC
07 June 2018
For immediate release 7 June 2018
RWS Holdings plc
Half year report for the six months to 31 March 2018
RWS Holdings plc ("RWS", "the Group"), one of the world's leading language, intellectual property support services and localization providers, today announces its half year results for the six months ended 31 March 2018.
Financial Highlights:
A transformational period for the Group
-- Revenue increased by 82% to GBP139.6m (H1 2017: GBP76.6m). Includes a GBP52.1m five-month contribution from Moravia
o 5% underlying growth* on a constant currency basis
-- Adjusted operating profit** up by 61% to GBP30.5m (H1 2017: GBP19.0m)
-- Adjusted profit before tax*** up by 47% to GBP28.6m (H1 2017: GBP19.4m) including a GBP4.7m five-month contribution from Moravia
o underlying growth* of 12% on a constant currency basis
o GBP1.8m impact from adverse exchange rate movements
-- Adjusted earnings per share was up by 19% to 8.2p (H1 2017: 6.9p) -- Interim dividend increased by 15% to 1.50p (H1 2017: 1.30p)
-- Net debt at period end of GBP82.8m (H1 2017: GBP31.8m), after GBP242.3m net cash outflow for the acquisition of Moravia and GBP46.2m outflow for repayment of borrowings, reflecting continued strong underlying cash generation
o acquisition of Moravia funded by a GBP182m share placing and a US$160m refinanced loan facility
* excluding impact of Moravia and Article One Partners acquisitions but LUZ acquisition included on the basis of a full contribution in both periods
** before finance income and expense, amortization of intangibles and exceptional acquisition costs
*** before amortization of intangibles and exceptional acquisition costs
Operating Highlights:
A good underlying performance bolstered by acquisition of leading localization provider
-- Acquisition of Moravia in November 2017, a leading provider of technology-enabled localization services to the largest technology companies in the world:
o enhanced RWS's global presence with operations in the Czech Republic, USA, Japan, China, Argentina and Ireland
o added a profitable, cash generative business of scale in an attractive, adjacent market
o now anticipating achieving GBP5m annualized cost savings
-- Excellent performance from our Life Sciences activities with underlying revenue up by 9%. The successful integration of our two US acquisitions, CTi and LUZ, delivering very positive results and meaningful additional revenues from key customers
-- Patent Translation & Filing delivered a solid performance, following record revenues in 2017. China continued to expand and future growth prospects remain encouraging
-- Patent Information enjoyed a further 11% growth in revenues building upon record revenues in 2017
-- Language Solutions delivered good growth following prior year reorganization which has supported greater collaboration, cross selling and efficiency
Current Trading and Outlook:
-- Trading performance since the period end has continued in line with our expectations -- Growth expected to accelerate in the second half, driven by:
o good organic momentum and a strong sales pipeline
o accelerating revenue performance at Moravia over the last two months and better than anticipated synergies
o an improving run rate at Article One Partners
-- The important GBP/US$ exchange rate has recently moved in the Group's favour and will have a favourable impact on revenues and profits if current rates are maintained
-- Net estimated Euro trading exposure hedged at a rate of 1 Euro = 90p to 30 September 2018. US dollar exposure partially hedged via dollar denominated debt
Andrew Brode, Chairman of RWS, commented on outlook:
"RWS has delivered a solid performance over the first half, despite the challenges presented by currency headwinds and we are pleased with the progress we are making with managing the assimilation of Moravia.
"The Group's trading performance since the period end has been in line with our expectations, and we are pleased to see currency headwinds abating. Moravia, in particular, has enjoyed an excellent start to the second half with new client wins since its acquisition, and we are encouraged by good momentum across the Group.
"As the premier global supplier of intellectual property support services, a major force in life sciences and a global player in localization, we are exceptionally well positioned to drive further international expansion.
"The Board is, therefore, confident of further progress in the second half and beyond."
For further information contact:
RWS Holdings plc Andrew Brode, Chairman Richard Thompson, Chief Executive Officer MHP 01753 480200 Katie Hunt / Simon Hockridge Numis 0203 128 8100 Stuart Skinner / Kevin Cruickshank (Nominated Adviser) Michael Burke (Corporate Broker) 0207 260 1000
About RWS:
RWS is the world's leading provider of intellectual property support services (patent translations international patent filing solutions and searches), a market leader in life sciences translations and linguistic validation, a leading localization provider, and a high level specialist language service provider in other technical areas, providing for the diverse needs of a blue-chip multinational client base from Europe, North America and Asia. RWS is based in the UK, with offices in Europe, the USA, China, Japan, Latin America and Australia, and is listed on AIM, the London Stock Exchange regulated market (RWS.L).
For further information, please visit: www.rws.com
This announcement contains inside information, which is disclosed in accordance with the Market Abuse Regulation, which came into effect on 3 July 2016.
Forward-Looking Statements
This announcement contains certain statements that are forward-looking statements. They appear in a number of places through this announcement and include statements regarding our intentions, beliefs or current expectations and those of our officers, directors and employees concerning, amongst other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the business we operate. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this document and, unless otherwise required by applicable law, the Company undertakes no obligation to update or review these forward-looking statements. Nothing in this announcement should be construed as a profit forecast. The Company and its directors accept no liability to third parties in respect of this document save as would arise under English law.
RWS Holdings plc
Results for the six months to 31 March 2018
Chairman's Statement
I am pleased to report that RWS has delivered a solid performance across the Group and grown sales, profits and dividends despite significant currency headwinds. We have added a market-leading player in localization services, Moravia, to our premier positions in intellectual property support and life sciences services.
Business Overview
RWS is one of the world's leading language solutions providers, focusing on key market segments where the quality of its services is of critical importance to its customers. The Group has a blue chip multinational client base spanning Europe, North America and Asia that is particularly active in the medical, pharmaceutical, chemical, automotive, technology and telecoms industries.
Following the acquisition of Moravia, the Group now operates five divisions, as follows:
-- RWS Patent Translation & Filing is the world's premier supplier of patent translations and filing solutions. RWS differentiates itself from the competition through the quality of its translations, its high level of Intellectual Property (IP) expertise and customer service and the use of its international web based patent filing platform, 'inovia'. Uniquely the business employs over 100 full time, highly qualified translators.
-- RWS Life Sciences focuses solely on the language service needs of the life sciences market, providing technical translations and linguistic validation to large pharmaceuticals and clinical research organizations in North America and Europe. This division includes both the CTi and LUZ businesses, which were fully integrated as one business with effect from 1 October 2017.
-- Moravia is a leading provider of technology-enabled localization services with long term relationships with some of the largest publicly traded technology companies in the world. It addresses its clients' large, complex and time-critical localization requirements, including adapting content, software, websites and applications across more than 160 languages and multiple platforms.
-- RWS Patent Information includes a comprehensive range of patent search, retrieval and monitoring services as well as PatBase, one of the world's largest searchable commercial patent databases, access to which is sold as an annual subscription service, and AOP, an innovative IP information business with access to 42,000 researchers globally.
-- RWS Language Solutions (formerly "Commercial Translations") manages the Group's non-patent and non-life science translations and it remains the division most exposed to competition, with a particular emphasis on technical translations.
Our Strategy
Our strategy is to grow the Group's revenue and net profit by focusing on providing an increasing range of complementary specialist translation and language services to existing and new customers, driving organic growth. This is supplemented by selective acquisitions, providing these are complementary to our existing business and enhance shareholder value.
Organic growth is driven by:
-- increases in the worldwide patent filing activities of existing and potential multinational clients
-- the development of new drugs by the pharmaceutical industry -- the growing demand for language services through globalization
-- the outsourcing by corporates, clinical research organizations, law firms and attorneys of all or part of their foreign patent search, filing, translation, localization and linguistic validation processes
-- the Group's ability to attract new clients by virtue of its leading position and reputation, in an otherwise fragmented sector, with whom activity levels typically build up over time
-- the Group's ability to expand in new or existing but growing geographies
-- leveraging the Group's excellent relationships with clients to promote and expand the sale of other Group services
-- the retention of our client base.
Whilst the primary near term focus is on assimilating Moravia and driving synergies across the enlarged Group, we will continue to review selective potential acquisitions in the IP support services and specialist translation spaces that would further accelerate growth. We seek businesses capable of delivering above industry average levels of profitability or highly complementary businesses capable of reinforcing the Group's dominant position in intellectual property support and language services.
We are pleased that our strategy has delivered 14 years of sales, profit and dividend growth since flotation.
Results and Financial Review
The Group has achieved further progress in its underlying operational performance, building upon the record growth experienced in 2017 in the core patent translations business, the information business including PatBase, and in China. Following the acquisition of LUZ in February 2017, our life sciences activities have been integrated and performed exceptionally well. Our most recent acquisition - Moravia - contributed significantly to Group revenues.
Group sales advanced by 82% to GBP139.6m (H1 2017: GBP76.6m). Adjusted operating profit before finance income and expenditure, amortization of intangibles and exceptional acquisition costs increased by 60.5% to GBP30.5m (H1 2017: GBP19.0m).
Adjusted profit before tax, amortization of intangibles and exceptional acquisition costs increased by 47.4% to GBP28.6m (H1 2017: GBP19.4m). This profit included a five-month contribution from Moravia of GBP4.7m.
Adjusted earnings per share increased by 18.8% to 8.2p (H1 2017: 6.9p).
As at 31 March 2018, shareholders' funds had reached GBP324.6m (2017: GBP152.3m), augmented by the GBP181.9m placing of new shares, net of issue costs, in connection with the acquisition of Moravia. The five year term loan originally drawn down to fund the two life sciences acquisitions (CTi and LUZ) was rolled up into a new five year loan of US$160m to part fund the Moravia acquisition.
As at 31 March 2018, net debt amounted to GBP82.8m (H1 2017: GBP31.8m) comprising the term loan of GBP107.1m less cash of GBP24.3m. During the six months ended 31 March 2018, the major cash outlays were the final dividend of GBP14.2m, income tax of GBP4.9m and the total Moravia acquisition costs of GBP242.3m. The Group continued its long record of strong underlying cash generation.
Currency Effects and Hedging
The principal currency markets have continued to display considerable volatility and RWS has experienced significant headwinds as a result. Having previously been highly exposed to the Euro exchange rate, almost two thirds of our revenues are now in US Dollars as a result of our three acquisitions in Life Sciences and Moravia. The negative effect of currency movements on operating profit between the first halves of 2017 and 2018 amounted to GBP1.8m, on an underlying constant currency basis. For the financial year ending 30 September 2018, the Group's net exposure to the Euro was hedged at the favourable rate of 1 Euro = 90p, but the benefit was marked to market at 30 September 2017. Exposure to the US Dollar is currently partially hedged through the natural hedge provided by the dollar denominated term loan and local entity hedges.
Following the Moravia acquisition, net Euro transactional exposure will be broadly neutral. However, we are reviewing our options in terms of hedging our very significant US Dollar revenues.
Acquisition of Moravia
The Group announced on 3 November 2017 that it had completed the acquisition of Moravia, a Czech based provider of technology-enabled localization services for many of the world's leading technology companies. The cash consideration was US$320m, which was funded by a GBP182m share placing, and a US$160m refinanced loan facility.
The acquisition was in line with our stated strategy of complementing organic growth with selective acquisitions offering growth potential in attractive and complementary sectors and/or geographies.
This key acquisition enhances RWS's global presence, adding operations in the Czech Republic, USA, Japan, China, Argentina and Ireland, whilst adding a further profitable, cash generative business of real scale and confirming the Group's position as a leading global provider of language management services.
Taxation
Following the recent US Tax Reform legislation, we anticipate that the reduction in the Federal tax rate from 35% to 21% will lower our overall tax rate to circa 23% in the current financial year and to 21% in 2019. As previously announced, the change will, therefore, have a material positive impact on earnings per share and cash generation.
Dividend
The Directors have approved an interim dividend of 1.50p per share, representing an increase of 15% over the 2017 interim dividend of 1.30p. This increase reflects both the Group's strong financial position and the Board's belief in further progress. This dividend will be paid on 20 July 2018 to those shareholders on the register on 29 June 2018, and the ex-dividend date is 28 June 2018. The Group remains committed to a progressive dividend policy, which has been adhered to since flotation in November 2003.
Board and Management Changes
Tomas Kratochvil, formerly Chief Executive Officer of Moravia, was appointed as an Independent Non-Executive Director with effect from 28 March 2018, bringing over two decades of experience with Moravia and his deep knowledge of the global localization market to the Board. Tomas has also become a member of RWS's Remuneration Committee.
In January 2018, Paul Danter, formerly EVP, Business Development & Client Services, was appointed as CEO of Moravia. Paul joined Moravia in 2016 with over 17 years of experience in software sales, marketing and product management including in executive level positions at MobileIQ and Argogroup.
In April 2018, Joe Lugo was promoted to become RWS's Chief Operating Officer ("COO"). Prior to this change Joe had been COO of LUZ and more recently COO of RWS Life Sciences, where he has played a pivotal role in the successful integration of CTi and LUZ into the RWS Life Sciences division, continued to drive the growth of the LUZ business and managed last year's acquisition of AOP.
Joe's new role is initially focused on the identification and implementation of best operational practice across the Group. This will include working alongside Paul Danter (Moravia's CEO) to ensure that this business is successfully assimilated into the wider Group, without damaging the unique Moravia ethos that has made the business such a success. As part of the Group's senior management team, Joe will report directly to Richard Thompson.
Operating Review
RWS Patent Translation & Filing
Patent Translation & Filing represented 35% of Group revenues during the period and reported revenues of GBP49.5m (H1 2017: GBP49.6m) or 1% growth on an underlying constant currency basis. It delivered adjusted operating profit of GBP15.5m (H1 2017: GBP13.5m).
The division delivered a solid performance given its strong comparatives in the prior financial year 2017, when it performed exceptionally well, particularly in its European translation and filing service. In 2018, European sales reverted back to more usual levels offset by 7% growth in the division's other key service, Worldfile.
Growth in Worldfile sales has largely been driven by sales of additional services to existing customers, revenue growth from customers won in prior periods and new customer wins, including a number resulting from cross selling from other divisions.
China has seen further growth in H1 FY 2018 as demand for into--Chinese patent applications from European and North American corporates continues to expand. It is encouraging to note that the acquisition of Moravia has enhanced the Group's reputation in this strategically important market, particularly amongst the larger Chinese corporates.
Tight control over costs and overheads enabled the division to deliver a very strong profit performance on stable revenues.
RWS Life Sciences
Life Sciences represented 19% of Group revenues during the period and grew revenues by 54% to GBP26.2m (H1 2017: GBP17.0m) or 9% on an underlying basis (constant currency and adjusting for LUZ). It delivered adjusted operating profit of GBP8.0m (H1 2017: GBP3.7m).
The division performed strongly in the first half benefitting from good revenue growth in its key markets and the full period impact of LUZ, acquired in February 2017, partly offset by adverse exchange rates as the US$ weakened against the GBP.
As previously reported, the integration of CTi and LUZ was completed in September 2017 and the division is now beginning to see the benefits of this action, with better utilization of operational resources, which combined with a full six months of the higher margin LUZ business helped to drive a 251bp gross margin improvement.
The division is continuing to expand and has increased its investment in China and Japan initially to support existing clients but with a view to developing the local market.
Moravia: An RWS Company
The Moravia business was acquired in November 2017 and the results reported for this business cover the five months of trading since then. However, to help understand the results of Moravia, pro forma comparative revenue for the first half of 2017 has been provided below.
Moravia's five-month contribution represented 37% of Group revenues during the period and it grew revenues by 9% to $71.5m (pro forma for the same five months in 2017: $65.9m). It contributed adjusted operating profit of GBP4.7m.
The good sales growth of 9% was despite the largely anticipated reduction in volumes at one of its top five customers, excluding which sales across the division were up 17% reflecting an average of 20% growth across its other four top customers.
Despite this good start to RWS's ownership, the division's performance was not as strong as we had anticipated due principally to a negative impact from foreign exchange movements as a result of over 95% of its revenue being in US$, whilst the majority of the cost base is in Euro and CZK, a slower increase in activity than expected from a small number of clients and a higher cost base than we had originally expected. However, we are encouraged by Moravia's first half client wins, improving levels of activity with existing clients and its pipeline of new opportunities, which have led to an excellent revenue performance in the last two months. We are also pleased to see that Moravia is already benefitting from the cross pollination of sales opportunities from the rest of the Group.
In addition, the integration process is proceeding well and we have identified a higher level of synergies than previously expected, which we now anticipate will achieve annualized cost savings of c.GBP5m delivered incrementally over the second half and beyond.
As previously reported, Moravia is being managed as a separate division within RWS; Paul Danter has been appointed as CEO, the management team has been restructured and operational responsibilities realigned, resulting in a leaner, faster reacting division. We are already seeing the benefits of the changes as intra division communication improves and cost savings are identified and realized.
The division's Life Sciences business is currently being integrated into RWS Life Sciences. This work is well advanced, is in line with our timetable and will be completed by September 2018. Similarly, the assimilation of the wider Moravia division into RWS is successfully moving forward and will again be complete by the end of the year.
RWS Patent Information
The Group's intellectual property information business (including PatBase) continued to deliver excellent growth with sales of GBP4.8m in the period (H1 2017: GBP3.8m) and now represents 4% of Group revenues. Revenues from our search activities were 9.9% ahead of the comparative period in 2017 and revenues at PatBase, our high margin subscription-only database service, advanced 7.4% over the same period. The Article One Partners ("AOP") business purchased in September 2017 generated revenue of GBP0.8m in the period.
The integration of AOP into the RWS Patent Information division is on schedule and will be completed by September 2018. This acquisition provides the Group with additional crowd sourced service offerings, enabling the Group to provide IP searches from within the US for the first time, and has a unique operating platform which is being rolled out across the division.
The cost structure of the AOP business has been realigned during the period, which is expected to result in the business becoming profitable in the fourth quarter of our current financial year.
In the first half, the division recorded an adjusted operating profit of GBP1.7m (including a loss at AOP of GBP0.6m) compared with a GBP2.0m profit in the first half of 2017.
RWS Language Solutions
Language Solutions represented 5% of Group revenues during the period and grew revenues by 11% to GBP7.0m (H1 2017: GBP6.3m). It delivered adjusted operating profit of GBP0.6m (H1 2017: GBP0.3m).
In September 2017, this division was reorganized and the three businesses that had previously been classified as 'Commercial Translations' were rebranded as 'RWS Language Solutions' and brought under one divisional management structure. The positive results of this change are already becoming apparent with an encouraging growth in sales and profit.
Language Solutions' performance was driven by a combination of new customer wins, sales expansion with existing clients, and the realization of the benefits of sharing operational resource across the division, which has improved utilization and delivered improved margins.
The division has also benefited from sales referrals from other RWS Divisions, particularly Moravia, which have helped boost the Group's small interpreting business.
Market and Regulatory Update
Patent Filing Statistics
The World Intellectual Property Organisation (WIPO) recently published figures showing a 4.5% increase in the 2017 PCT Filings to 243,500. Applicants from the USA remain the largest filers under the PCT system, but the strongest growth came from China and Japan, with WIPO forecasting that China will overtake the USA in 2020. The European Patent Office (EPO) has also issued its 2017 Annual Report which shows that the total number of European Patent Filings increased by 4.4% to 310,784. The WIPO and EPO statistics are both at new record levels.
European Union Patent
We now anticipate that the proposed European Union Patent ("the Unitary Patent") will come into effect in the first quarter of calendar 2019 at the earliest. Whilst the UK has now ratified the new Unified Patent Court (UPC) Agreement and the Unitary Patent, the Brexit negotiations may influence implementation.
Implementation requires ratification by the three most important (for patenting activities) countries i.e. Germany, France and the UK. We understand that ratification by Germany is currently delayed by a challenge before the German Constitutional Court
The proposed Unitary Patent will run in parallel with the current system, thus affording applicants a clear choice. We expect our clients to tailor their patenting strategies as they observe the Unitary Patent in action and to decide which of the two systems they prefer.
People
The Group's activities remain labour intensive but with increasing support from technological advances. We are, therefore, highly reliant upon the skills, dedication and commitment of all of our staff, who are driven by the demands for excellent quality and timely delivery required by our clients. The Group's Full time Equivalents ("FTEs") reached 2,374 (2017: 908) at 31 March 2018, which includes Moravia's FTEs of 1,409.
Current Trading and Outlook
The Group has delivered a solid performance over the first half, despite the challenges presented by currency headwinds and we are pleased with the progress we are making with managing the assimilation of Moravia.
The Group's trading performance since the period end has been in line with our expectations, and we are pleased to see currency headwinds abating. Moravia, in particular, has enjoyed an excellent start to the second half with new client wins since its acquisition, and we are encouraged by good momentum across the Group. The Board believes that our premier positions in intellectual property support services, life sciences and, most recently, localization, provide an excellent platform for further global expansion.
Whilst our primary near term focus is on the continuing assimilation of Moravia and driving synergies across the enlarged Group, the Group's robust financial position and strong cash generation provide the support for both organic and acquisitive growth.
The Board is, therefore, confident of further progress in the second half and beyond.
Andrew Brode
Chairman
7 June 2018
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RWS Holdings plc
Condensed Consolidated Statement of Comprehensive
Income
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30
31 March 31 March September
2018 2017 2017
Note GBP'000 GBP'000 GBP'000
Revenue 2 139,561 76,615 164,040
Cost of sales (84,658) (43,114) (92,269)
Gross profit 54,903 33,501 71,771
Administrative expenses (34,717) (19,537) (37,790)
Operating profit 20,186 13,964 33,981
Analysed as:
Operating profit before
charging: 30,525 19,012 43,405
Amortization of acquired
intangibles (3,668) (2,682) (6,574)
Acquisition costs (6,671) (2,366) (2,850)
--------------
Operating profit 20,186 13,964 33,981
------- -------------- --------------
Finance income 3 36 720 973
Finance expense 3 (1,938) (358) (1,088)
-------------------------------------------- ------- -------------- -------------- -----------
Profit before tax 18,284 14,326 33,866
Taxation expense (5,699) (3,669) (9,306)
Profit for the period 2 12,585 10,657 24,560
Other comprehensive
income *
Exchange (loss)/gain on retranslation
of foreign operations (13,822) 2,524 (4,702)
Total other comprehensive
income (13,822) 2,524 (4,702)
---------------------------------------------- ------- -------------- -------------- -----------
Total comprehensive income
attributable to:
Owners of the parent (1,237) 13,181 19,858
-------------------------------------------- ------- -------------- -------------- -----------
Basic earnings per Ordinary
share (pence per share) 5 4.7 4.9 11.0
---------------------------------------------- ------- ---------- ------------------ ---------------
Diluted earnings per Ordinary
share (pence per share) 5 4.7 4.8 10.9
---------------------------------------------- ------- ---------- ------------------ ---------------
*Other comprehensive income includes only items that will
be subsequently reclassified to Profit before tax when specific
conditions are met.
RWS Holdings plc
Condensed Consolidated Statement of
Financial Position
Unaudited Unaudited Audited
at at at
31 March 31 March 30 September
2018 2017 2017
Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 313,067 99,060 101,108
Intangible assets 48,810 57,720 48,787
Property, plant and equipment 22,662 17,907 18,147
Deferred tax assets 1,456 1,858 1,475
385,995 176,545 169,517
-------------------------------- ----- ---------- -------------- -------------
Current assets
Trade and other receivables 67,679 38,013 41,682
Foreign exchange derivatives 4,091 34 281
Cash and cash equivalents 6 24,312 16,193 20,064
96,082 54,240 62,027
-------------------------------- ----- ---------- -------------- -------------
Total assets 482,077 230,785 231,544
--------------------------------- ----- ---------- -------------- -------------
Liabilities
Current liabilities
Loans 22,534 9,600 8,955
Trade and other payables 42,597 24,990 27,689
Income tax payable 5,324 3,721 2,748
Provisions 82 80 82
70,537 38,391 39,474
-------------------------------- ----- ---------- -------------- -------------
Non-current liabilities
Loans 84,558 38,400 31,343
Other payables 30 30 30
Provisions 346 340 297
Deferred tax liabilities 1,342 1,343 1,515
-------------- -------------
86,276 40,113 33,185
-------------------------------- ----- ----------
Total liabilities 156,813 78,504 72,659
--------------------------------- ----- ---------- -------------- -------------
Total net assets 325,264 152,281 158,885
--------------------------------- ----- ---------- -------------- -------------
Equity
Capital and reserves attributable
to owners of the parent
Share capital 2,732 2,279 2,293
Share premium 232,104 48,827 50,718
Share based payment reserve 526 875 526
Reverse acquisition reserve (8,483) (8,483) (8,483)
Foreign currency reserve (8,407) 12,641 5,415
Retained earnings 106,792 96,142 108,416
Total equity 325,264 152,281 158,885
--------------------------------- ----- ---------- -------------- -------------
RWS Holdings
plc
Condensed Consolidated Statement of
Changes in Equity
Total
equity
Other attributable
Share Share reserves Retained to owners
of the
capital premium (see below) earnings parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ---------------------- ------------------------ ---------------------- ------------------------
At 30 September
2016 (audited) 2,157 8,947 2,509 95,087 108,700
Profit for the
period - - - 10,657 10,657
Currency
translation
differences - - 2,524 - 2,524
Total
Comprehensive
income for
the period at 31
March 2017 - - 2,524 10,657 13,181
Issue of shares 122 39,880 - - 40,002
Dividends - - - (9,602) (9,602)
------------------------ ---------------------- ------------------------ ---------------------- ------------------------
At 31 March
2017
(unaudited) 2,279 48,827 5,033 96,142 152,281
Profit for the
period - - - 13,903 13,903
Currency
translation
differences - - (7,226) - (7,226)
Total
Comprehensive
income for
the period at 30
September 2017 - - (7,226) 13,903 6,677
Issue of shares 14 1,891 - - 1,905
Deferred tax on
unexercised
share options - - - 394 394
Income tax on
unexercised
share options - - - 598 598
Dividends - - - (2,970) (2,970)
Exercise of
share
options - - (349) 349 -
---------------- ------------------------ ---------------------- ------------------------ ---------------------- ------------------------
At 30 September
2017 (audited) 2,293 50,718 (2,542) 108,416 158,885
Profit for the
period - - - 12,585 12,585
Currency
translation
differences - - (13,822) - (13,822)
Total
Comprehensive
income for
the period at 31
March 2018 - - (13,822) 12,585 (1,237)
Issue of shares 439 181,386 - - 181,825
Dividends - - - (14,209) (14,209)
------------------ ------------------------ ---------------------- ------------------------ ---------------------- ------------------------
At 31 March 2018
(unaudited) 2,732 232,104 (16,364) 106,792 325,264
----------------- ------------------------ ---------------------- ------------------------ ---------------------- ------------------------
Share
based Reverse Foreign Total
payment acquisition currency other
Other reserves reserve reserve reserve reserves
GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------------------------ ---------------------- ------------------------ ---------------------- ------------------------
At 30 September
2016 (audited) 875 (8,483) 10,117 2,509
Currency
translation
differences - - 2,524 2,524
----------------- ------------------------ ---------------------- ------------------------ ---------------------- ------------------------
Other
Comprehensive
income for
the period at 31
March 2017 - - 2,524 2,524
------------------ ------------------------ ---------------------- ------------------------ ---------------------- ------------------------
At 31 March
2017
(unaudited) 875 (8,483) 12,641 5,033
Currency
translation
differences - - (7,226) (7,226)
----------------- ------------------------ ---------------------- ------------------------ ---------------------- ------------------------
Other
Comprehensive
income for
the period at 30
September 2017 - - (7,226) (7,226)
Exercise of
share
options (349) - - (349)
---------------- ------------------------ ---------------------- ------------------------ ---------------------- ------------------------
At 30 September
2017 (audited) 526 (8,483) 5,415 (2,542)
Currency
translation
differences - - (13,822) (13,822)
----------------- ------------------------ ---------------------- ------------------------ ---------------------- ------------------------
Other
Comprehensive
income for
the period at 31
March 2018 - - (13,822) (13,822)
------------------ ------------------------ ---------------------- ------------------------ ---------------------- ------------------------
At 31 March 2018
(unaudited) 526 (8,483) (8,407) (16,364)
----------------- ------------------------ ---------------------- ------------------------ ---------------------- ------------------------
RWS Holdings plc
Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited Audited
6 months 6 months
ended ended Year ended
31 March 31 March 30 September
2018 2017 2017
Note GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit before
tax 18,284 14,326 33,866
Adjustments for:
Depreciation of property,
plant and equipment 1,297 583 1,171
Amortization of intangible
assets 4,497 2,704 6,709
Finance income (36) (720) (973)
Finance expense 1,938 358 1,088
Operating cash flow before movements
in working capital and
provisions 25,980 17,251 41,861
Increase in trade and
other receivables (4,733) (5,023) (8,019)
(Decrease)/increase in trade
and other payables (5,891) 2,452 4,244
Cash generated from operating
activities 15,356 14,680 38,086
------------------------------------------ ---------- ---------- -------------
Income tax paid (4,928) (4,821) (9,687)
Net cash inflow from operating
activities 10,428 9,859 28,399
------------------------------------------ ---------- ---------- -------------
Cash flows from investing
activities
Interest paid (1,285) (274) (1,009)
Interest received 36 5 11
Acquisition of subsidiary,
net of cash acquired 7 (242,312) (68,961) (74,834)
Purchases of property,
plant and equipment (1,090) (615) (1,495)
Purchases of intangibles (2,775) (680) (728)
Net cash outflow from investing
activities (247,426) (70,525) (78,055)
------------------------------------------ ---------- ---------- -------------
Cash flows from financing
activities
Proceeds from
borrowings 120,301 21,000 21,000
Transaction costs related
to loans and borrowings (1,614) - -
Repayment of borrowings (46,236) (3,560) (8,159)
Proceeds from the issue of share
capital, net of share issue costs 181,825 40,002 41,907
Dividends paid (14,209) (9,602) (12,572)
Net cash inflow from financing
activities 240,067 47,840 42,176
----------------------------------- ----- ---------- ---------- -------------
Net increase/(decrease) in cash
and cash equivalents 3,069 (12,826) (7,480)
Cash and cash equivalents at
the beginning of the period 20,064 27,910 27,910
Exchange gains/(losses) on cash
and cash equivalents 1,179 1,109 (366)
Cash and cash equivalents
at the end of the period 6 24,312 16,193 20,064
----------------------------------- ----- ---------- ---------- -------------
Free cash flow
-------------
Analysis of free
cash flow
Net cash generated from
operating activities 15,356 14,680 38,086
Net interest paid (1,249) (269) (998)
Income tax paid (4,928) (4,821) (9,687)
Purchases of property,
plant and equipment (1,090) (615) (1,495)
Purchases of intangibles (2,775) (680) (728)
Free cash flow 5,314 8,295 25,178
----- ---------- ----------
RWS Holdings plc
Notes to the Condensed Consolidated Financial
Statements
1 Accounting policies
Basis of preparation
The interim financial statements were approved by the Board
of Directors on 6 June 2018. The interim results for the half
years ended 31 March 2018 and 31 March 2017 are neither audited
nor reviewed by our auditors and the accounts in this interim
report do not therefore constitute statutory accounts in accordance
with Section 434 of the Companies Act 2006. They do not include
all of the information required for full annual financial
statements, and should be read in conjunction with the consolidated
financial statements of the Group for the year ended 30 September
2017.
The Group's statutory accounts for the year ended 30 September
2017 have been filed with the Registrar of Companies. The
report of the auditors on those accounts was unqualified,
did not contain any statements under s498 (2) or (3) of the
Companies Act 2006 and did not contain any matters to which
the auditors drew attention without qualifying their report.
The same accounting policies and disclosure principles are
followed in these condensed consolidated financial statements
as were applied in the Group's latest annual audited financial
statements unless otherwise stated.
2 Segmental reporting
Following the acquisition of Moravia the Board monitors and
manages the Group in five reportable segments and assesses
these segments based on revenue and profit/(loss) from operations.
The five segments are:
* RWS Patent Translation & Filing division providing patent
and technical document translation and filing services in
the UK, USA, Continental Europe, Japan, China and Australia
* Patent Information division which offers a full range of
patent search, retrieval and monitoring services as well as
a comprehensive patent database service accessible by subscribers,
known as PatBase.
* Life Sciences division providing technical translations
and linguistic validation to the Medical and Pharmaceutical
sector.
* RWS Language Solutions division which provides non-patent
or non-life science technical translations.
* Localization
division
(Moravia)
The unallocated segment relates to
corporate overheads, assets and liabilities.
The segment results for the six months
ended 31 March 2018 are as follows:
Patent Patent Life Language Moravia Unallocated Group
Translation Information Sciences Solutions
& Filing
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ------------- --------- ------------- ---------------- ------------------------ ------------
Revenue 49,468 4,813 26,158 6,979 52,143 - 139,561
------------------------ ------------ ------------- --------- ------------- ---------------- ------------------------ ------------
Operating profit
before
charging: 15,489 1,724 8,018 601 4,674 19 30,525
Amortization of
acquired
intangibles (479) (72) (2,985) (132) - - (3,668)
Acquisition costs - - - - - (6,671) (6,671)
----------------------- --- ------------ ------------- --------- ------------- ---------------- ------------------------ ------------
Operating
profit/(loss) 15,010 1,652 5,033 469 4,674 (6,652) 20,186
Finance income 36
Finance expense (1,938)
----------------------- --- ------------ ------------- --------- ------------- ---------------- ------------------------ ------------
Profit before tax 18,284
Taxation (5,699)
------------
Profit for the period 12,585
----------------------- --- ------------ ------------- --------- ------------- ---------------- ------------------------ ------------
Segment assets 67,730 14,458 124,798 13,137 258,400 3,554 482,077
Segment liabilities 13,636 4,586 44,257 2,041 88,700 3,593 156,813
Net
assets/(liabilities) 54,094 9,872 80,541 11,096 169,700 (39) 325,264
----------------------- --- ------------ ------------- --------- ------------- ---------------- ------------------------ ------------
RWS Holdings plc
Notes to the Condensed Consolidated Financial Statements
(continued)
The segment results for the six months ended
31 March 2017 (restated) were as follows:
Patent Patent Life Language Moravia Unallocated Group
Translation Information Sciences Solutions
& Filing
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ----------------- ------------------ ------------- ---------------- ---------------------- ---------------------- --------
Revenue 49,611 3,750 16,998 6,256 - - 76,615
Operating
profit/(loss)
before charging: 13,543 1,980 3,667 326 - (504) 19,012
Amortization of
acquired
intangibles (554) (72) (1,872) (184) - - (2,682)
Acquisition costs - - - - - (2,366) (2,366)
Operating
profit/(loss) 12,989 1,908 1,795 142 - (2,870) 13,964
Finance income 720
Finance expense (358)
----------------------- ----------------- ------------------ ------------- ---------------- ---------------------- ---------------------- --------
Profit before tax 14,326
Taxation (3,669)
---------------- --------
Profit for the period 10,657
----------------------- ----------------- ------------------ ------------- ---------------- ---------------------- ---------------------- --------
Segment assets 71,096 6,964 138,169 11,848 - 2,708 230,785
Segment liabilities 13,625 4,203 58,053 1,655 - 968 78,504
Net
assets/(liabilities) 57,471 2,761 80,116 10,193 - 1,740 152,281
----------------------- ----------------- ------------------ ------------- ---------------- ---------------------- ---------------------- --------
The segment results for the year ended 30 September
2017 (restated) were as follows:
Patent Patent Life Language Moravia Unallocated Group
Translation Information Sciences Solutions
& Filing
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ------------------ ------------- ---------------- ---------------------- ---------------------- --------
Revenue 97,766 7,700 45,347 13,227 - - 164,040
Operating
profit/(loss)
before charging: 27,270 4,100 11,986 959 - (910) 43,405
Amortization of
acquired
intangibles (1,066) (143) (4,994) (371) - - (6,574)
Acquisition costs - - - - - (2,850) (2,850)
Operating
profit/(loss) 26,204 3,957 6,992 588 - (3,760) 33,981
Finance income 973
Finance expense (1,088)
----------------- ------------------ ------------- ---------------- ---------------------- ---------------------- --------
Profit before tax 33,866
Taxation (9,306)
---------------- --------
Profit for the year 24,560
----------------------- ----------------- ------------------ ------------- ---------------------- ---------------------- --------
Segment assets 67,926 12,557 131,274 14,132 - 5,655 231,544
Segment liabilities 14,229 4,350 50,344 3,003 - 733 72,659
Net assets 53,697 8,207 80,930 11,129 - 4,922 158,885
----------------------- ----------------- ------------------ ------------- ---------------- ---------------------- --------
Finance income and
3 expense
6 months
6 months ended ended Year ended
31 March 31 March 30 September
2018 2017 2017
GBP'000 GBP'000 GBP'000
--------------------------------- ---------------------- --------
Finance income
- Returns on
short-term
deposits 36 5 11
- Movement in the fair value of
foreign currency contracts - 715 962
Finance expense
- Bank interest
payable (1,867) (358) (1,088)
- Movement in the fair value of
foreign currency contracts (71) - -
Net finance
(expense)/income (1,902) 362 (115)
----------------------- ----------------- ------------------ ------------- ---------------- ---------------------- ---------------------- --------
RWS Holdings plc
Notes to the Condensed Consolidated Financial Statements
(continued)
4 Dividends
6 months
6 months ended ended Year ended
31 March 30 September
31 March 2018 2017 2017
pence pence pence
per per per
share GBP'000 share GBP'000 share GBP'000
Interim paid
July - - - - 1.30 2,970
Final paid
February 5.20 14,209 4.45 9,602 4.45 9,602
----------------------- ------------------- ------------------------- ---------------------- ------------- -------------
Dividends paid
to
shareholders 5.20 14,209 4.45 9,602 5.75 12,572
----------------------- ------------------- ------------------------- ---------------------- ------------- -------------
An interim dividend of 1.50 pence per Ordinary share will
be paid on 20 July 2018 to Shareholders on the register at
29 June 2018. This dividend, declared by the Directors after
the balance sheet date, has not been recognized in these
financial statements as a liability at 31 March 2018. The
interim dividend will reduce shareholders' funds by an estimated
GBP4.1 million.
Earnings per
Ordinary
5 share
In addition to disclosing basic and diluted earnings per
share the Group shows an adjusted earnings per share figure
as the Directors believe that this information will be of
interest to the users of the accounts in measuring the Group's
performance and underlying trends.
6 months
ended Year ended
6 months
ended
31 March 31 March 30 September
2018 2017 2017
Earnings EPS Earnings EPS Earnings EPS
GBP'000 Pence GBP'000 Pence GBP'000 Pence
Profit for the
period 12,585 4.7 10,657 4.9 24,560 11.0
Adjustments:
Amortization
of acquired
intangibles 3,668 1.3 2,682 1.2 6,574 2.9
Acquisition
costs 6,671 2.5 2,366 1.1 2,850 1.3
Tax effect of
adjustments (828) (0.3) (714) (0.3) (1,972) (0.9)
Adjusted
earnings 22,096 8.2 14,991 6.9 32,012 14.3
----------------------- ------------------- ------------------------- ---------------------- ------------- -------------
Diluted
earnings 12,585 4.7 10,657 4.8 24,560 10.9
----------------------- ------------------- ------------------------- ---------------------- ------------- -------------
Adjusted
diluted
earnings 22,096 8.2 14,991 6.8 32,012 14.2
----------------------- ------------------- ------------------------- ---------------------- ------------- -------------
Basic earnings per share of 4.7p are based on the post-tax profit
for the period and a weighted average number of Ordinary shares
in issue during the period.
Number Number Number
of shares of shares of shares
6 months 6 months
ended ended Year ended
31 March 31 March 30 September
2018 2017 2017
----------------------- ------------------- ------------------------- ---------------------- ----------------------------
Weighted average number of Ordinary
shares in issue
for basic
earnings 269,032,021 218,620,204 223,735,513
------------------- ------------------------- ---------------------- ------------- -------------
Dilutive
impact of
share options 1,489,455 2,297,486 1,539,927
-------------------
Weighted average number of
Ordinary shares for diluted
earnings 270,521,476 220,917,690 225,275,440
------------------- ------------------------- ---------------------- ------------------------
Cash and cash
6 equivalents at at at
31 March 31 March 30 September
2018 2017 2017
GBP'000 GBP'000 GBP'000
------------------- --------------------------------------------- ------------- -------------
Cash at bank
and in
hand 20,902 15,232 19,227
Short-term
deposits 3,410 961 837
------------------- ------------------------- ---------------------- ------------- -------------
Cash and cash equivalents in
the cash flow statement 24,312 16,193 20,064
------------------- ------------------------- ---------------------- ----------------------------
Short-term deposits includes deposits with a maturity of
three months or less, or deposits that can be readily converted
into cash. The fair value of these assets supports their
carrying value.
RWS Holdings plc
Notes to the Condensed Consolidated Financial Statements
(continued)
7 Acquisition of Moravia
On 3 November 2017, the Group acquired the entire issued share
capital of Moravia US Holding Co, Inc and Moravia LUX Holding
Company Sarl (together "Moravia"), a leading provider of technology-enabled
localization services for a cash consideration of US$320 million
plus certain other adjustments and transaction costs. These
were funded by a GBP182 million cash placing of new ordinary
shares and a new US$160 million loan which refinanced the
Group's existing facility.
The provisional fair value of identifiable assets and
liabilities acquired, purchase consideration and goodwill
are as follows:
Book and
Provisional
fair values
GBP'000
Net assets acquired:
Property, plant and equipment 8,409
Trade and other receivables 25,075
Cash and cash equivalents 8,326
Trade and other payables (21,981)
----------------
19,829
Goodwill 230,809
----------------
Total consideration 250,638
----------------
Satisfied by:
Cash 128,351
Loan 122,287
----------------
250,638
Cash flow:
Total consideration 250,638
Cash included in undertaking acquired (8,326)
Net cash consideration in cash flow statement 242,312
----------------
The identification of intangible assets within the Goodwill
balance had not been ascertained at the publication date of
this report hence there has been no amortization of such assets
as at 31 March 2018.
Moravia contributed GBP52.1 million revenue and GBP3.8 million
to the Group's profit after tax for the year between the date
of acquisition and the balance sheet date.
Acquisition costs of GBP6.7 million have been
charged through the Statement of Comprehensive
Income.
Events since the reporting
8 date
No significant events have occurred since 31 March
2018 as at the date of authorizing these financial
statements.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR FKADPKBKBAAK
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