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RWS Holdings (RWS)
473.38p
- Change Today: 2.88p
- 52 Week High: 481.63
- 52 Week Low: 328.00
- Currency: UK Pounds
- Shares Issued: 42.32m
- Volume: 6,607
- Market Cap: £200.31m
- RiskGrade: 120
- Beta: 0.08
Interim Results
RWS Holdings PLC
31 May 2006
31 May 2006
RWS Holdings plc
Interim for the year ended 31 March 2006
RWS Holdings plc (RWS), Europe's leading provider of intellectual property
support services (patent translations and technical searches) and technical
translations, is pleased to announce its unaudited interim results for the six
months ended 31 March 2006.
Highlights:
• Sales increased by 13% to £19.4M
• Profit before tax and goodwill increased by 29.2% to £4.5M (new record)
• Normalised earnings per share were 8.1p (2005 - 6.4p), on an increased
number of shares in issue
• Interim dividend increased by 12% to 1.85p per share
• Excellent cash flow from operations; net cash of £13.3M at 31 March
• Eclipse (2005 acquisition) fully integrated and performing ahead of
expectations
• High margin database service - PatBase - has secured subscriptions well in
excess of targets
• Solid growth in the core business underpinned by client wins and rising
numbers of patent applications
• Foreign exchange exposure in Euros and US dollars largely hedged to
30 September at favourable rates
Executive Chairman, Andrew Brode commented:
"RWS is pleased to be reporting further substantial growth and record financial
achievements.
Our strategy of building upon our market leading positions in patent
translations and information search and supply, where quality is at a premium,
has been demonstrably successful.
Our finances and order book are strong. Intellectual property protection is
gaining in importance worldwide and provides the fundamental driver for our
business. These factors underpin our confidence in further progress in the
second half of the year."
For further information, please contact:
RWS Holdings plc
Andrew Brode Tel: 01753 480200
Weber Shandwick Square Mile
Nick Oborne Tel: 020 7067 0700
About RWS
RWS is Europe's leading provider of intellectual property support services
(patent translations and technical searches to the medical, pharmaceutical,
chemical, aerospace, defence, automotive and telecoms industries). RWS also
provides specialist technical, legal and financial services for areas outside
the patent arena. RWS is based in the UK with offices in Europe, North America,
Japan and China.
For further information visit www.rws.com
RWS Holdings plc
Interim Results 2006
Chairman's Statement
_______________________________________________________________________________________________
I have pleasure in presenting a further record set of results for your Company
for the six months ended 31 March 2006.
Business Overview
RWS is Europe's leading provider of intellectual property support services and
high level technical, legal and financial translation services. The core
business - patent translations - is the largest operation of its kind in Europe,
translating over 30,000 patents and intellectual property related documents each
year. It services a blue chip multinational client base from Europe, North
America and Japan, active in patent filing in the medical, pharmaceutical,
chemical, aerospace, defence, automotive and telecoms industries, as well as
patent agents acting on behalf of similar clients. The Group comprises two
principal business units - Translations and Information. The Translations'
activities account for over 90% of sales. The Information unit offers a
comprehensive range of patent search, retrieval and monitoring services and has
recently developed PatBase, the largest collection of patent families, available
as a subscription service.
Strategy
Our strategy is to focus upon organic growth driven by the rising numbers of
patent applications worldwide. We expect to build market share through the
exploitation of our leading position and reputation in what is otherwise a
fragmented sector. We will deploy our substantial cash holdings for selective
acquisitions providing they can be demonstrated to enhance shareholder value.
Results
RWS has continued to grow, driven by its market leading position in its core
patent translation activity.
Sales and profit for the six months ended 31 March 2006 again achieved record
levels. Sales grew by 13% to £19.4M; profit before tax and goodwill amortization
rose by 29% to £4.5M (2005: £3.5M). The Group benefited from margin improvement,
a full contribution from Eclipse and favourable currency movements.
Earnings and Dividend
Normalised earnings per share were 8.1p (2005: 6.4p) on an increased number of
shares in issue.
The Directors have approved an interim dividend of 1.85p per share, an increase
of 12% over the 2005 interim dividend of 1.65p per share.
Operating Review
Translations Patent translations account for 80% of our business and showed
continued progress from a combination of increased patent grants and new
corporate clients. The RWS "translate and file" service commends itself to
multinational corporates seeking comprehensive geographical patent protection,
and is both competitive and of high quality. We have successfully replicated the
European model in Japan and will now seek to capitalise upon strong client
interest in our embryonic operation in China.
Commercial translations (medical, legal, financial etc.) have performed well in
a competitive marketplace. In particular, Eclipse Translations which was
acquired in February 2005, has more than exceeded our expectations and
maintained its margins.
Information The Information business unit now accounts for somewhat less than
10% of sales. The core patent search and watch services remain flat as corporate
budgets are constrained. However, costs are under good control and margins,
already superior, have improved further.
The PatBase subscription database service continues to attract worldwide
subscriber interest and has already become a useful contributor to Group
profits. We are about to complete a comprehensive upgrade to the functionality
of the service and to market simplified access to broaden the appeal to
corporate research departments.
Financial Review
RWS' financial position has strengthened considerably with net assets of £18.6M,
to include net cash of £13.3M. Free cash inflow was £2.7M, and overall net cash
inflow was £1.4M. As a people-intensive business, capital expenditure has
historically been modest and was £113,000 in the six month period. Additional
working capital of £800,000 funded the growth in sales.
As at 31 March 2006 the Group had hedged much of its Euro/Sterling exposure at
rates averaging 69.75, to the end of the financial year. US Dollar exposure is
similarly hedged at 1.74 per £ sterling.
People
RWS relies entirely upon the quality of its staff to deliver the services
demanded by our worldwide clientele. As at 31 March 2006 the Group employed 344
people and their productivity showed further improvement over 2005. As ever, we
have vacancies for good technical translators and linguists. Recruitment of the
right calibre of staff to match client requirements remains the key challenge.
Outlook
With economic recovery beginning in the Eurozone, especially in Germany, our
core overseas market, and the continuing focus of our clients upon comprehensive
intellectual property protection, RWS has every reason to expect further
progress. Our financial position is strong; our major client base continues to
expand and your Board is therefore justifiably confident about the outturn for
2006.
Andrew Brode
Executive Chairman
30 May 2006
RWS Holdings plc
Interim Report
Group Profit and Loss Account
________________________________________________________________________________________________
6 months ended Year ended 6 months ended
31 March 2006 30 September 2005 31 March 2005
Note £'000 £'000 £'000
________________________________________________________________________________________________
Turnover 1 19,400 35,875 17,185
Cost of sales (11,488) (21,198) (10,170)
________________________________________________________________________________________________
Gross profit 7,912 14,677 7,015
Administrative expenses (3,607) (7,648) (3,739)
Amortization of goodwill (323) (616) (289)
________________________________________
Total administrative expenses (3,930) (8,264) (4,028)
________________________________________
________________________________________________________________________________________________
Group operating profit before goodwill
amortization 4,305 7,029 3,276
________________________________________________________________________________________________
Group operating profit and profit on
ordinary activities before interest 3,982 6,413 2,987
Net interest 210 412 219
________________________________________________________________________________________________
Profit on ordinary activities before 4,192 6,825 3,206
taxation
Taxation 2 (1,372) (2,265) (1,076)
________________________________________________________________________________________________
Profit for the financial period
(Profit attributable to shareholders) 2,820 4,560 2,130
________________________________________________________________________________________________
All amounts relate to continuing
activities
Earnings per share 4 Pence Pence Pence
Basic 7.3 11.9 5.6
Diluted 6.8 11.1 5.2
RWS Holdings plc
Interim Report
Group Statement of Total Recognised Gains and Losses
_______________________________________________________________________________________________
6 months ended Year ended 6 months ended
31 March 2006 30 September 2005 31 March 2005
£'000 £'000 £'000
_______________________________________________________________________________________________
Profit for the financial period 2,820 4,560 2,130
Exchange adjustments on retranslation
of net assets of subsidiary
undertakings (24) (25) 12
_______________________________________________________________________________________________
Total recognised gains and losses for
the financial period 2,796 4,535 2,142
_______________________________________________________________________________________________
RWS Holdings plc
Interim Report
Group Balance Sheet
_______________________________________________________________________________________________
31 March 30 September 31 March
2006 2005 2005
Note £'000 £'000 £'000
_______________________________________________________________________________________________
Fixed assets
Intangible assets 6,726 7,049 7,376
Tangible assets 896 935 974
_______________________________________________________________________________________________
7,622 7,984 8,350
_______________________________________________________________________________________________
Current assets
Work in progress 1,011 773 742
Debtors: due within one year 7,284 6,571 6,423
Cash at bank 13,494 12,280 9,958
_________________________________________
21,789 19,624 17,123
Creditors: amounts due within one year 5 (10,759) (10,437) (10,223)
_______________________________________________________________________________________________
Net current assets 11,030 9,187 6,900
_______________________________________________________________________________________________
Total assets less current liabilities 18,652 17,171 15,250
Creditors: amounts due after one year - - (27)
_______________________________________________________________________________________________
Net assets 18,652 17,171 15,223
_______________________________________________________________________________________________
Capital and reserves
Called up share capital 1,942 1,922 1,914
Share premium account 1,719 1,378 1,199
Capital reserve 157 68 68
Share option reserve 1,873 1,962 1,962
Reverse acquisition reserve (8,483) (8,483) (8,483)
Profit and loss account 6 21,434 20,314 18,553
_______________________________________________________________________________________________
Shareholders' funds - equity interests 7 18,642 17,161 15,213
Minority interests in equity 10 10 10
_______________________________________________________________________________________________
18,652 17,171 15,223
_______________________________________________________________________________________________
RWS Holdings plc
Interim Report
Group Cash Flow Statement
_______________________________________________________________________________________________
6 months ended Year ended 6 months ended
31 March 2006 30 September 2005 31 March 2005
Note £'000 £'000 £'000
_______________________________________________________________________________________________
Net cash inflow from operating
activities 3,650 7,142 3,342
Returns on investments and servicing of
finance
Interest received 204 401 212
Interest paid (1) (1) (3)
_______________________________________________________________________________________________
203 400 209
_______________________________________________________________________________________________
Tax paid (1,077) (2,143) (975)
Capital expenditure and financial investment
Purchase of tangible fixed assets (113) (233) (91)
________________________________________
Free cash flow 2,663 5,166 2,485
Acquisitions and disposals
Acquisition of subsidiary undertakings - (2,430) (2,430)
Net overdraft in subsidiary
undertakings acquired - (249) (249)
_______________________________________________________________________________________________
- (2,679) (2,679)
_______________________________________________________________________________________________
Equity dividends paid to shareholders (1,676) (1,970) (1,338)
_______________________________________________________________________________________________
Cash inflow/(outflow) before financing 987 517 (1,532)
Financing
Issue of ordinary shares 361 674 487
_______________________________________________________________________________________________
Increase/(decrease) in cash 1,348 1,191 (1,045)
_______________________________________________________________________________________________
RWS Holdings plc
Interim Report
Notes to the Group Cash Flow Statement
_______________________________________________________________________________________________
6 months ended Year ended 6 months ended
31 March 2006 30 September 2005 31 March 2005
£'000 £'000 £'000
_______________________________________________________________________________________________
Reconciliation of operating profit to
net cash flow from operating activities
Group operating profit 3,982 6,413 2,987
Depreciation and amortization 474 958 449
Work in progress increase (238) (91) (60)
Debtors increase (705) (1,341) (683)
Creditors increase 161 1,218 649
Other non-cash movements (24) (15) -
_______________________________________________________________________________________________
Net cash inflow from operating
activities 3,650 7,142 3,342
_______________________________________________________________________________________________
Reconciliation of net cash flow to
movement in net funds
Increase/(decrease) in cash in the
period 1,348 1,191 (1,045)
Net funds at beginning of the period 11,929 10,738 10,738
_______________________________________________________________________________________________
Net funds at end of the period 13,277 11,929 9,693
_______________________________________________________________________________________________
Analysis of net funds At 1 October Cash At 31 March
2005 Flow 2006
£'000 £'000 £'000
_________________________________________
Cash 12,280 1,214 13,494
Overdrafts (351) 134 (217)
_______________________________________________________________________________________________
11,929 1,348 13,277
_______________________________________________________________________________________________
RWS Holdings plc
Interim Report
Notes
_______________________________________________________________________________________________
6 months ended Year ended 6 months ended
31 March 2006 30 September 2005 31 March 2005
£'000 £'000 £'000
_______________________________________________________________________________________________
1 Turnover and segmental information
Turnover and operating profit derive
from continuing operations
Turnover by class of business
Translation and localization services 18,143 33,327 15,886
Information services 1,257 2,548 1,299
_________________________________________
19,400 35,875 17,185
_________________________________________
Turnover by geographic location of
Group undertakings
United Kingdom 17,454 31,748 15,050
Continental Europe 308 611 301
Japan 1,548 3,339 1,701
United States of America 90 177 133
_________________________________________
19,400 35,875 17,185
_________________________________________
Turnover by geographic market in
which customers are located
United Kingdom 2,481 4,882 2,212
Continental Europe
Germany 7,328 13,284 5,908
France 2,432 3,698 1,956
Other 3,855 6,695 3,308
_________________________________________
13,615 23,677 11,172
Japan 1,172 2,446 1,287
United States of America 2,052 4,747 2,456
Other 80 123 58
_________________________________________
19,400 35,875 17,185
_________________________________________
_______________________________________________________________________________________________
RWS Holdings plc
Interim Report
Notes (continued)
_______________________________________________________________________________________________
2 Taxation - the charge for the 6 months ended 31 March 2006 is at the rate
that is anticipated will be applicable for the whole year.
The Group has estimated capital losses of £20 million available for offset
against the capital gain arising on the redemption of loan notes in the
year ended 30 September 2004. As the quantum of the capital losses has not
been agreed the offset of the capital losses has not been recognised in the
current tax charge.
_______________________________________________________________________________________________
3 Dividends
6 months ended Year ended 6 months ended
31 March 2006 30 September 2005 31 March 2005
_______________________________________________
Ordinary shares
Interim paid of 1.65p - 632 -
Final dividends proposed for the prior year
of:
4.35p paid 16 February 2006 (3.5p, paid 7
March 2005) per share 1,676 1,338 1,338
_______________________________________________
1,676 1,970 1,338
_______________________________________________
An interim dividend of 1.85p (interim 2005 - 1.65p, paid 30 June 2005) per
Ordinary share will be paid on 14 July 2006 to Shareholders on the Register
at 16 June 2006. This dividend, which was approved by the Directors after the
balance sheet date, has not been recognised as a liability at 31 March 2006.
_______________________________________________________________________________________________
4 Earnings per Ordinary share
6 months ended 6 months ended
31 March 2006 31 March 2005
Earnings EPS Earnings EPS
£'000 Pence £'000 Pence
_____________________________________________
Basic earnings 2,820 7.3 2,130 5.6
Goodwill amortization 323 0.8 289 0.8
_____________________________________________
Normalised earnings 3,143 8.1 2,419 6.4
_____________________________________________
Number of shares Number of shares Number of shares
6 months ended Year ended 6 months ended
31 March 2006 30 September 2005 31 March 2005
____________________________________________________
Diluted earnings per share are based on the
group profit for the period and a weighted
average of Ordinary shares in issue during
the period calculated as follows:
In issue 38,566,268 38,204,648 38,093,574
Dilutive potential Ordinary shares arising
from unexercised share options 2,887,388 2,735,932 2,697,289
____________________________________________________
41,453,656 40,940,580 40,790,863
____________________________________________________
The weighted average number of Ordinary shares in issue reflects the 400,000
Ordinary shares issued under options exercised during the period. At
31 March 2006 there were unexercised options over a total of 3,474,472
(2005 - 4,040,472) Ordinary shares
_______________________________________________________________________________________________
RWS Holdings plc
Interim Report
Notes (continued)
_______________________________________________________________________________________________
5 Creditors: amounts due within one year include corporation tax of £5,804,000
(31 March 2005 - £5,474,000). The taxation amount includes £4,434,000 being
the liability on the gain arising on the redemption of loan notes in the year
ended 30 September 2004.
_______________________________________________________________________________________________
6 Reserves Share Share Other Profit and Shareholders'
capital premium reserves loss account funds
£000 £,000 £'000 £'000 £'000
_______________________________________________________
At 31 March 2005 as previously stated 1,914 1,199 (6,453) 17,921 14,581
Prior year adjustment:
Restatement on adoption of FRS 21
(note 8) - - - 632 632
_______________________________________________________
At 31 March 2005 as restated 1,914 1,199 (6,453) 1 8,553 15,213
_______________________________________________________
At 30 September 2005 as previously
stated 1,922 1,378 (6,453) 18,642 15,489
Prior year adjustment:
Restatement on adoption of FRS 21
(note 8) - - - 1,672 1,672
_______________________________________________________
At 30 September 2005 as restated 1,922 1,378 (6,453) 20,314 17,161
_______________________________________________________
_______________________________________________________________________________________________
7 Reconciliation of movements in shareholders' funds
6 months ended Year ended 6 months ended
31 March 2006 30 September 2005 31 March 2005
£'000 £'000 £'000
__________________________________________
Profit for the financial period 2,820 4,560 2,130
Dividends (note 3) (1,676) (1,970) (1,338)
__________________________________________
1,144 2,590 792
Other net recognised gains and losses relating
to the financial period (24) (25) 12
Shares issued under options exercised 361 674 487
__________________________________________
Net additions to shareholders' funds 1,481 3,239 1,291
__________________________________________
Opening shareholders' funds as previously stated 15,489 12,599 12,599
Prior year adjustment:
Restatement on adoption of FRS 21 (note 8) 1,672 1,323 1,323
__________________________________________
Opening shareholders' funds as restated 17,161 13,922 13,922
__________________________________________
Shareholders' funds at end of the period 18,642 17,161 15,213
__________________________________________
_______________________________________________________________________________________________
8 Basis of preparation
The interim financial statements were approved by the Board of Directors on
30 May 2006 and the interim results for the half years ended 31 March 2006
and 31 March 2005 are neither audited nor reviewed by our auditors. The
accounts in this interim report do not constitute statutory accounts in
accordance with Section 240 of the Companies Act 1985. Save as set out below,
the financial information contained in this document has been prepared on the
basis of accounting policies consistent with those set out in the Group's
statutory accounts for the year ended 30 September 2005, which received an
unqualified report and have been lodged with the Registrar of Companies. The
figures for the year ended 30 September 2005 have been extracted from those
statutory accounts.
Change in accounting policies
The Group has adopted FRS 21 "Events after the balance sheet date".
Previously, equity dividends declared after the balance sheet date were
recognised as liabilities at the period end, as required by company law and
SSAP 17 "Accounting for post balance sheet events". In accordance with FRS 21
and recent changes to the law, if an equity dividend is declared after the
balance sheet date but before the financial statements are authorised for
issue, the dividend is not recognised as a liability at the balance sheet
date.
The adoption of FRS 21 has resulted in an increase in shareholders' funds of
£1,672,000 at 1 October 2005 ( 1 October 2004 - £1,323,000) due to the write
back of the dividend proposed at the balance sheet date.
_______________________________________________________________________________________________
This information is provided by RNS
The company news service from the London Stock Exchange
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