RWS turns in strong full-year results

The AIM-traded firm said its gross margin expanded by 160 basis points in the 12 months ended 30 September, to 46.7%, as profit before tax surged 51% to £83.2m.

Its adjusted profit before tax was 17% firmer at £135.7m.

RWS said basic earnings per share jumped 48% year-on-year to 16.1p, while adjusted basic earnings were 12% firmer at 26.6p.

The board proposed a final dividend of 9.5p, up 12%, making for a total distribution of 11.75p per year for the period.

Cash conversion expanded by 1,350 basis points to 110.2%, with net cash at the end of the year standing £26.6m higher at £71.9m.

Looking ahead, RWS said its outlook was in line with market expectations, adding that the current economic environment was “challenging”, while also offering opportunities to strengthen leadership in its markets.

It said its “unique capabilities”, “diverse” end-market exposure and “strong” client retention was continuing to enable “resilience”.

Capital expenditure and investments were expected to be in line with guidance, with strong cash generation and a strong balance sheet positioning the firm to make the investments it announced in March, fund further selective acquisitions to enhance its capabilities and geographic reach, and to maintain its progressive dividend policy.

“Against a backdrop of wider global economic uncertainty, RWS has delivered robust, cash generative, profitable growth in line with market expectations, continued its unbroken record of dividend growth and made good progress on the actions and investments that we set out at our capital markets day in March,” said chief executive officer Ian El-Mokadem.

“The successful integration of SDL and the delivery of synergies ahead of original expectations has driven a strong margin improvement and provided the group with a unique combination of technology and expertise from which to further develop its technology-enabled platform."

“We are also very encouraged by the early signs of delivery against our organic growth initiatives, particularly e-learning and linguistic validation, our pricing programme and our transformation projects.”

El-Mokadem said the “simpler, more efficient and accountable organisational model” RWS had put in place to deliver its strategy was already making a difference.

“We believe that the current environment presents an opportunity for us to strengthen our leadership in our markets, as a well-funded business of unique scale, sector diversification, footprint and capabilities.

“In parallel, the group's strong cash generation and balance sheet means that we retain the ability and appetite to make strategically compelling acquisitions.

“Whilst remaining mindful of the global economic backdrop, as we enter the 2023 financial year we remain on track to deliver on our growth strategy and are confident in the long-term opportunities provided by a range of growth drivers across our markets."

At 1443 GMT, shares in RWS Holdings were up 2.93% at 351.4p.

Reporting by Josh White for Sharecast.com.