RWS reports jump in first half earnings as revenues rise on CTi acquisition

RWS Holdings, a provider of intellectual property support services, reported a 28.7% increase in first half pre-tax profit to £13.9m as revenues grew on the back of its acquisition of Corporate Translations Inc.

Adjusted profit before tax rose to £13.9m in the six months ended 31 March 2016 from £10.8m the same period a year earlier. Revenue jumped 25% to £56.9m, driven by a £9.4m contribution from a strong performance in CTi in the first five months of trading. A 277 basis point increase in gross margins also gave revenues a boost.

RWS Holdings acquired CTi, a life sciences translation and linguistic validation company, in November 2015 to expand its service range and technology offerings.

Adjusted earnings per share increased by 25.6% from 3.9p to 4.9p.

However, RWS said profit was adversely impacted by about £1m because of foreign exchange movements.

Nevertheless, chairman Andrew Brode said the first half had been a period of strong progress despite a "low-growth world economic environment".

"Our technology platforms, extended expertise and market position form a strong base from which we intend to expand aggressively and profitably and we are encouraged by the opportunities we are seeing across the business.

"Furthermore, our robust financial position leaves us well placed to continue to selectively review a healthy pipeline of potential acquisitions."

He said the board was confident about further progress in the second half with robust trading in the first two months of the period, supported by favourable currency movements.

The group raised its interim dividend by 12% to 1.15p.

Numis said the interims were "very modestly" ahead of the guidance provided in the company's trading update in April.

"We expect the group to continue to generate strong cash flow over time, and think the business has excellent market
positions, helping to drive organic growth." The broker reiterated an 'add' rating and target price of 255p for the stock, saying RWS has demonstrated strong value creation with recent acquisitions.

Shares rose 1.74% to 234.50p at 1202 BST.