RWS pleased with first quarter as SDL integration continues

Language services and technology company RWS said on Wednesday that its main business had delivered “excellent” first quarter results, with revenue growing and adjusted profit before tax rising at a “significant” double-digit percentage.

The AIM-traded firm, which was holding its annual general meeting, said the first two months of SDL being a part of the group saw it produce results in line with its prior year, leaving its performance for 2020 in line with market expectations.

Chairman Andrew Brode said the integration of SDL was the company’s primary focus this year, with it thus far progressing to plan.

A new divisional structure and senior management team was now in place, with “significant” synergies already starting to be realised.

Brode said the company expected to report in more detail on the integration progress in its April trading update.

“We have agreed with the former owners of Iconic Translation Machines, which was acquired in June, to amend the earn-out agreement,” Brode said.

“The original agreement provided for further consideration of up to $10m in new RWS shares in October 2022, and this has been amended to provide for a single payment of $5m in new RWS shares to be made in October 2022.

“This new agreement will facilitate a quicker integration of Iconic with SDL, strengthen the group's market leading position in language technology, and simplify the group's go-to-market message on machine translation.”

Brode said RWS had the strongest balance sheet in the sector, with no net debt, making it “well-positioned” to take advantage of further acquisition opportunities in a “rapidly consolidating” market segment.

“We are delighted with the progress of the business in the first quarter and with the performance of our teams while they have been working remotely,” Andrew Brode said.

“However, it remains too early to predict the impact on RWS's 2021 financial results that ongoing Covid-19 lockdowns will have on the group's client base, and the strength of sterling against the dollar is creating an unwelcome foreign exchange headwind.

“Nonetheless, with our current momentum, we are confident of further progress in 2021.”

At 1024 GMT, shares in RWS Holdings were down 1.72% at 598.5p.