RWS : 11 Dec 2018 - RWS Final Results 2018

For immediate release

11 December 2018

RWS Holdings plc

Results for the year ended 30 September 2018

An outstanding year, consolidating our leading position in global language services

RWS Holdings plc ("RWS", "the Group"), the world's leading provider of intellectual property support services (patent translations, international patent filing solutions and searches) and a leading provider of life sciences, localization and commercial language services, today announces its final results for the year ended 30 September 2018.

Financial highlights

2018	2017	Change
Revenue	£306.0m	£164.0m	+87%
Adjusted operating profit1	£66.3m	£43.4m	+53%
Adjusted profit before tax1	£61.8m	£43.3m	+43%
Reported profit before tax	£39.7m	£33.9m	+17%
Adjusted earnings per share	17.4p	14.3p	+22%
Basic earnings per share	10.4p	11.0p	-5%
Dividend
Proposed final	6.0p	5.2p	+15%
Total for year	7.5p	6.5p	+15%
Net debt2	£65.1m	£20.2m	+222%

1 RWS uses adjusted results as key performance indicators as the Directors believe that these provide a more consistent measure of operating performance by adjusting for acquisition related charges and significant one-off or non-cash items. Adjusted operating profit is stated before interest, amortization of intangibles, share option costs and acquisition costs. Adjusted profit before tax is stated before amortization of intangibles, share option costs and acquisition costs.

2 After the new loan facilities and the £185m gross proceeds from the share placing in October 2017, for the acquisition of Moravia.

Operational highlights

Successful acquisition and assimilation of leading localization provider

• • Completed acquisition of Moravia in November 2017, enhancing our global presence and helping to position RWS as a leading global language service provider with a dedicated localization division

• • The acquisition has significantly enhanced earnings, contributing to a 22% increase in adjusted earnings per share to 17.4p (2017: 14.3p)

• • Excellent second half at Moravia seeing adjusted operating profit up 162% to £12.3m, following slower first half1 (H1: £4.7m)

• • Successfully completed assimilation and rebranding to RWS Moravia on 1 October 2018

Growth in sales and profits across the Group

• • Growth in revenue and underlying2 adjusted operating profit across all divisions, notably:

  • o Patent Translation & Filing revenue up 5% to £102.3m (2017: £97.8m) and adjusted operating profit up 15% to £30.9m (2017: £26.9m)

  • o Life Sciences revenue up 15% to £52.3m (2017: £45.3m), including a full year contribution from LUZ, with the margin benefit of the integration of LUZ and CTi resulting in a 21% increase in adjusted operating profit to £14.5m (2017: £12.0m)

• • Good new business wins across the Group including from meaningful successes in cross-selling. Further enabling sales teams to pitch RWS's full suite of services remains a key focus for FY 2019

• • Strengthened the Board with the appointment of Tomas Kratochvíl, former CEO of Moravia, who brings extensive knowledge of the global localization market

• 1 Note: H2 includes one additional month of trading (H1 - five months, H2 - six months).

• 2 Calculated excluding the acquisitions and at constant currency.

Outlook

• • The Group has made a very good start to FY 2019 with a strong performance in the first two months, underscoring our expectations of delivering another record year

• • Our enhanced global presence and diversified service offering provides a strong platform for developing sales opportunities across our full suite of services and technology platforms to new and existing clients

Andrew Brode, Chairman of RWS, commented:

"This has been a remarkable year in which we celebrated our 60th year in business and delivered our 15th year of unbroken growth in revenues, profits and dividends since flotation in November 2003.

"We were delighted to complete the transformational acquisition of Moravia and receive

"Transaction of the Year" at the recent AIM Awards. The Moravia team delivered a very strong second half and we look forward to further growth from this business.

"The Group is now one of the world's leading providers of language services, with a strong platform

for taking advantage of the multiple opportunities afforded by our enhanced service offering, extended global presence and the growing markets for our intellectual property, life sciences and localization businesses. Backed by a strong balance sheet, we are also well positioned to take advantage of further acquisition opportunities as they arise.

"We have made a very good start to the new financial year and we look forward to 2019 with confidence."

For further information contact:

RWS Holdings plc

Andrew Brode, Chairman	01753 480200
Richard Thompson, Chief Executive Officer
MHP
Katie Hunt / Simon Hockridge	0203 128 8100
Numis
Stuart Skinner / Kevin Cruickshank (Nominated Adviser)	0207 260 1000
Michael Burke (Corporate Broker)

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 spanning Europe, North America and Asia.

RWS is based in the UK, with offices in Europe, the United States, China, Japan, Australia and Argentina, and is listed on AIM, the London Stock Exchange regulated market (RWS.L).

For further information, please visit:www.rws.com

Forward-looking statements

This announcement contains certain statements that are forward-looking. These 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.

Chairman's Statement

Introduction

RWS, which celebrated its 60th year in business in 2018, has grown to become one of the world's leading providers of language services. Following the transformational acquisition of Moravia in November 2017, which won "Transaction of the Year" at the recent AIM Awards, the Group now employs almost 2,500 people with operations across five continents.

We announced in June 2015 that our strategy for growth would focus on the United States to 2020, and that beyond 2020 we believed that China would become an important area for growth. Since that announcement, RWS has made four acquisitions with a US focus and built market-leading activities in intellectual property support services, in life sciences and in technology-enabled localization. China shows every sign of fulfilling the strategic growth potential we envisaged in 2015.

Performance

The Group delivered revenues of £306.0m, growing 87% over 2017 (£164.0m). The Moravia acquisition was by far the most significant contributor to this substantial increase, but all divisions delivered growth, contributing to 5% organic revenue growth across the Group (excluding acquisitions and currency movements).

Adjusted profit before tax grew by 43% to £61.8m (2017: £43.3m), reflecting an 11-month contribution from Moravia. Adjusted profit before tax increased by 6% on an organic (excluding acquisitions and related additional borrowing costs) and constant currency basis. Our balance sheet remains strong with net assets more than doubling to £355.3m (2017: £158.9m). Net debt was £65.1m (2017: £20.2m) despite the £66.8m cash outflow for the Moravia acquisition, in addition to the £185m gross placing proceeds raised to fund it, signifying continued strong underlying cash generation from which we have also repaid £17.8m of borrowings during the year. As a result, leverage (net debt: EBITDA1) at the year-end was a comfortable 1 times.

I am proud that RWS has delivered increases in revenues, profits and dividends in every year since flotation in November 2003.

1 EBITDA - profit before tax adjusted for interest, depreciation and amortization.

People and Board

The Group's advancement to being one of the top tier global language service providers is testament to the efforts of every single colleague who has helped to make it happen. RWS is a quintessential "people" business, dedicated to providing superior quality of service to a cross section of the world's largest and most demanding clients. The Board is determined to continue investing in the development of our staff and helping them to realize their full potential. I would like to thank the senior management team and all our hard-working employees.