24th Apr 2018 09:14
LONDON (Alliance News) - RWS Holdings PLC said Tuesday interim profit and revenue is set to rise after "strong" performances from its key businesses as its net debt fell more than expected and it outlined the impact of US tax reform on its future tax costs.
For the six months ended March, revenue rose 82% to GBP139.6 million from GBP76.6 million the year prior. This was "broadly" in line with its expectations, RWS said.
Revenue performance was helped by a "steady" performance from its Patent Translation & Filing unit after a record 2017. Both its Patent Information and Language Solutions units saw 11% like-for-like growth. Its Life Sciences unit also had an "excellent" six months with revenue 9% higher on a like-for-like basis.
Adjusted pretax profit is anticipated to be "at least" GBP30.0 million on a constant-currency basis, GBP28.3 million on a reported basis. This is after the strengthening of sterling acted as a drag on profit performance. The year prior, adjusted pretax profit stood at GBP19.4 million.
RWS said it would monitor currency price movements but that if current exchnages rates prevail - USD1.37 for every pound - it expects profit to be "slightly" below market expectations for the full year.
"Notwithstanding the foreign exchange headwinds, we have seen strong performances from several of our divisions", RWS Chairman Andrew Brode said. "We are also already realising the benefits of synergies and cross-selling across our successfully integrated Life Sciences activities, which are now able to provide a full-service offering to their clients. The further integration work of Moravia's Life Science business into RWS is well underway and will be completed by 30 September 2018."
RWS acquired localisation services firm Moravia in November for USD320 million in cash. RWS remains "encouraged" by the performance of the business despite currency headwinds and lower than expected volume activity from a "few clients".
"Following the recent acquisition of Moravia," Brode added, "the group now operates from five clear divisions and we are seeing good momentum and a strong sales pipeline going into the second half. While FX may continue to have an impact, we expect to make continued underlying progress in both revenues and profits over the second half of the year."
RWS also expected its effective tax rate for the current financial year to be 23% after US tax reforms came into operation at the start of 2018. The company expects its effective tax rate to settle at 21% after the changes.
In December 2017, the US government passed the Tax Cuts & Jobs Act which, amongst other things, reduced corporate tax rates to 21% from 35%. The changes came into effect from the start of 2018.
Net debt was lower than expected at GBP84 million. This benefited from a weaker US dollar as well as strong cash generation.
Shares in RWS were 15% lower at 391.00 pence on Tuesday.
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