British translation and intellectual property firm RWS Holdings PLC (LON:RWS) expects to achieve an 85% jump in revenue for the year, boosted by the acquisition of Czech translation service provider Moravia.
RWS, which bought Moravia for £242.3mln last November, said revenue for the 2018 financial year would be at least £305mln, compared to £164mln last year. More favourable foreign exchange rates and a strong performance across the business in the second half also contributed to revenue growth.
READ: RWS Holdings shares slip on concerns over currency headwinds despite good start to 2018
Adjusted profit before tax is expected to have “grown strongly” and be slightly ahead of market forecasts, reflecting a higher margin in the IP support services business and a “markedly improved” second-half performance at Moravia.
Moravia had a weak start to the year with lower volumes from a small number of clients in the first half but RWS said the business delivered “excellent” second half results.
RWS addresses currency headwinds, cuts debt
RWS said there has been considerable volatility in global currency markets in recent years. But the group’s strategic shift to focus on the US and report in sterling has changed its currency exposure so that RWS is now broadly neutral in its currency pairs except for the pound versus the US dollar.
The company expects to hedge about 60% of its US dollar exposure for 2019 given that the US accounts for most of its revenues and debt.
RWS said it made good progress in reducing net debt to below £66mln at September 30 after the acquisition of Moravia, which was funded by existing cash resources, an increase in debt facilities and net proceeds of £181.9mln from an equity placing
The group believes its strong cash generation will continue to fund its acquisition strategy and its progressive dividend policy.
RWS eyes further acquisitions
"This has been a transformational year for RWS, underpinned by a strong financial performance,” said chairman Andrew Brode.
"With market-leading divisions in IP support services, life sciences and localisation, we believe that we are optimally positioned to drive further international expansion.
“We continue to review selective potential acquisitions which would extend our capabilities, technology platforms or geographical presence in the IP support services and specialist translation spaces.”
Shares rose 4% to 481p in morning trading.