Become a Member
  • Track your favourite stocks
  • Create & monitor portfolios
  • Daily portfolio value
Sign Up
Quickpicks
Add shares to your
quickpicks to
display them here!

Interim Results

31st May 2007 07:01

RWS Holdings PLC31 May 2007 31 May 2007 RWS Holdings plc ("RWS" or "the Group") Interim results for the six months ending 31 March 2007 RWS Holdings plc, Europe's leading provider of intellectual property supportservices (patent translations and technical searches) and technicaltranslations, today announced its interim results for the six months ended 31March 2007. Financial Highlights: • Record interim results: - sales for the period increased by 17% to £22.6m - profit before tax for the period rose by 21% to £5.4m (before goodwill amortization) • Normalised earnings per share for the period were 10.2p up 26% (2006: 8.1p), on an increased number of shares in issue and a consequently lower tax rate this year• Proposed interim dividend of 2.15p (2006: 1.85p) an increase of 16%• Strong cash generation from operations resulted in net cash at period end of £18m Operational Highlights: • A strong performance from the core patent translations business• Significant new client wins in Europe and USA• Excellent performances from all other areas of the business• Beijing office now open for business Outlook: Executive Chairman Andrew Brode commented: "Growth has continued apace during the first half of the financial year, drivenby the Group's market leading position in its core patent translation activity.With multinational corporate profitability buoyant and expenditure on researchand development continually rising, the Group expects to benefit further fromexpansion of its comprehensive intellectual property protection services. "Our financial position is strong; our customer base continues to broaden andthe Board has every reason to be confident about the outturn for 2007 andbeyond." For further information contact: RWS Holdings plcAndrew Brode, Executive Chairman 01753 480200 SmithfieldReg Hoare/Miranda Good 020 7360 4900 Numis Securities 020 7260 1000James Serjeant 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, electronics and telecoms industries.RWS also provides specialist technical, legal and financial translation servicesfor areas of industry outside the patent arena. RWS is based in the UK, withoffices in Europe, New York, Tokyo and Beijing, and is listed on AIM, the LondonStock Exchange regulated market (RWS.L). Approximately 1,000,000 patent documents are published per annum, 200,000 ofwhich are published in Europe (Source: European Patent Office) and theintellectual property market has shown significant growth in recent years, withpatent applications in Europe having doubled over the last ten years. For further information visit www.rws.com Executive Chairman's Statement Business Overview I have pleasure in presenting yet another record set of results for the Groupfor the six months ended 31 March 2007. RWS is Europe's leading provider of intellectual property support services andhigh level technical, legal and financial translation services. The corebusiness - patent translations - is the largest operation of its kind in Europe,translating over 50,000 patents and intellectual property related documents eachyear. It services a blue chip multinational client base from Europe, NorthAmerica and Japan, active in patent filing in the medical, pharmaceutical,chemical, aerospace, defence, automotive and telecoms industries, as well aspatent agents acting on behalf of such clients. The Group comprises twoprincipal business units - Translations and Information. The Translations'activities account for over 90% of sales. The Information unit offers acomprehensive range of patent search, retrieval and monitoring services and hasrecently developed PatBase, the largest searchable commercial patent database,available as a subscription service. Strategy Our strategy continues to focus upon organic growth driven by the rising numbersof patent applications worldwide, and the increasing demand for languageservices. We expect to build market share through the exploitation of ourleading position and reputation in what is otherwise a fragmented sector. Wewill deploy our substantial cash holdings for selective acquisitions providingthey can be demonstrated to enhance shareholder value. In line with this growth strategy, the search for suitable potentialacquisitions in the high level technical translation and intellectual propertysupport spaces has continued and RWS has very recently entered into exclusivenegotiations to acquire a small but highly profitable company in its chosenacquisition field. Further details will be released in due course. Results Growth has continued apace during the first half of the financial year, drivenby the Group's market leading position in its core patent translation activity. Sales and profit for the period once again achieved record levels: sales grew by17% to £22.6m; profit before tax and goodwill amortization rose by 21% to £5.4m(2006: £4.5m), as the Group benefited from margin improvement and increasedproductivity, although this was to some extent offset by unfavourable currencymovements. Earnings and Dividend Normalised earnings per share were up 26% at 10.2 pence (2006: 8.1 pence) on anincreased number of shares in issue following the exercise of employee optionsand a consequently lower tax rate. The lower tax rate is likely to be chargedfor the year as a whole, but is expected to return to the standard rate in RWS'next financial year. The Directors have approved an interim dividend of 2.15 pence per share, anincrease of 16 % over the 2006 interim dividend of 1.85 pence per share. Operating Review Translations Patent translations, which account for 80% of Group business, showed continuedprogress from a combination of increased patent grants and new corporateclients, with significant wins in Europe and the USA. The RWS "translate andfile" service commends itself to multinational corporates seeking comprehensivegeographical patent protection, and is both competitive and of high quality. Wehave successfully replicated the European model in Japan and have begun tocapitalise upon strong client interest in our embryonic operation in China. Commercial translations (medical, legal, financial etc.) have all performed wellin a competitive marketplace. Information The Information business unit accounts for around 10% of sales. The core patentsearch and watch services resumed modest growth. Costs are under firm controland margins, already very healthy, have improved further. The PatBase subscription database service continues to attract worldwidesubscriber interest and has already become a useful contributor to Groupprofits. We have now completed a comprehensive upgrade to the functionality ofthe service and are marketing simplified access to broaden the appeal tocorporate research departments. PatBase revenues grew by 81% in the period. Financial Review RWS' financial strength has improved further, with shareholders' funds standingat £23.8m at the half year end, of which net cash represented £18m. Free cashflow advanced to £3.2m with overall net cash inflow of £2.1m. Capitalexpenditure was again extremely modest for a business of RWS' size, amounting to£115,000 for the six months' period. Additional working capital of £1.2m wasrequired to fund the growth in revenues. Currencies have moved against the Group in the period, particularly the USdollar and Japanese yen. The Group has entered into hedge arrangements for Euro/Sterling at rates in excess of 69 pence to the euro, but is otherwise unhedged. People RWS is a quintessential 'people' business and owes its strong customer loyaltyto the quality of its staff and the services they deliver. As at 31 March 2007the Group employed 366 people, up from 344 a year ago, clearly demonstratingthat productivity has continued to advance. We believe that we offer marketleading remuneration to key skilled staff, but recruitment of the right calibreto match client requirements remains the key challenge. Outlook With multinational corporate profitability buoyant and expenditure on researchand development continually rising, the Group expects to benefit further fromexpansion of its comprehensive intellectual property protection services. Ourfinancial position is strong; our customer base continues to broaden and theBoard has every reason to be confident about the outturn for 2007 and beyond. Andrew BrodeExecutive Chairman30 May 2007 RWS Holdings plcInterim ReportGroup Profit and Loss Account_____________________________________________________________________________________________ 6 months ended Year ended 6 months ended 31 March 2007 30 September 2006 31 March 2006 Note £'000 £'000 £'000_____________________________________________________________________________________________ Turnover 1 22,627 40,779 19,400Cost of sales (13,150) (24,141) (11,488)_____________________________________________________________________________________________Gross profit 9,477 16,638 7,912_____________________________________________________________________________________________Administrative expensesAmortization of goodwill (309) (631) (323)Other (4,371) (8,082) (3,607) ____________________________________________ (4,680) (8,713) (3,930)_____________________________________________________________________________________________ Group operating profit before goodwillamortization 5,106 8,556 4,305_____________________________________________________________________________________________Group operating profit and profit on ordinaryactivities before interest 4,797 7,925 3,982 Net interest 342 483 210_____________________________________________________________________________________________Profit on ordinary activities beforetaxation 5,139 8,408 4,192 Taxation 2 (1,412) (2,509) (1,372)_____________________________________________________________________________________________Profit for the financial period 3,727 5,899 2,820(Profit attributable to shareholders)_____________________________________________________________________________________________All amounts relate to continuingactivities Earnings per share 4 Pence Pence PenceBasic 9.4 15.2 7.3Diluted 8.9 14.2 6.8 RWS Holdings plcInterim ReportGroup Statement of Total Recognised Gains and Losses_____________________________________________________________________________________________ 6 months ended Year ended 6 months ended 31 March 2007 30 September 2006 31 March 2006 £'000 £'000 £'000_____________________________________________________________________________________________ Profit for the financial period 3,727 5,899 2,820 Exchange adjustments on retranslation of net assets of subsidiaryundertakings (26) (67) (24)_____________________________________________________________________________________________Total recognised gains and losses for the financial period 3,701 5,832 2,796_____________________________________________________________________________________________ RWS Holdings plcInterim ReportGroup Balance Sheet_____________________________________________________________________________________________ 31 March 2007 30 September 2006 31 March 2006 Note £'000 £'000 £'000_____________________________________________________________________________________________Fixed assetsIntangible assets 6,109 6,418 6,726Tangible assets 798 836 896_____________________________________________________________________________________________ 6,907 7,254 7,622_____________________________________________________________________________________________Current assetsWork in progress 1,880 1,240 1,011Debtors: due within one year 8,355 7,599 7,284Cash at bank 18,406 16,139 13,494 _____________________________________________ 28,641 24,978 21,789 Creditors: amounts due within one year 5 (11,701) (10,993) (10,759)_____________________________________________________________________________________________Net current assets 16,940 13,985 11,030_____________________________________________________________________________________________Net assets 23,847 21,239 18,652_____________________________________________________________________________________________Capital and reservesCalled up share capital 2,006 1,954 1,942Share premium account 2,955 1,977 1,719Capital reserve 292 157 157Share option reserve 1,738 1,873 1,873Reverse acquisition reserve (8,483) (8,483) (8,483)Profit and loss account 25,329 23,751 21,434_____________________________________________________________________________________________Shareholders' funds 6 23,837 21,229 18,642Minority interest 10 10 10_____________________________________________________________________________________________ 23,847 21,239 18,652_____________________________________________________________________________________________ RWS Holdings plcInterim ReportStatement of Group Cash Flow_____________________________________________________________________________________________ 6 months ended Year ended 6 months ended 31 March 2007 30 September 2006 31 March 2006 £'000 £'000 £'000_____________________________________________________________________________________________Net cash inflow from operating activities 4,087 7,967 3,650 Returns on investments and servicing offinanceInterest received 347 474 204Interest paid (5) (1) (1)_____________________________________________________________________________________________ 342 473 203_____________________________________________________________________________________________Tax paid (1,153) (2,485) (1,077) Capital expenditure and financial investmentPurchase of tangible fixed assets (115) (208) (113) Free cash flow 3,161 5,747 2,663Dividends paid to shareholders (2,123) (2,395) (1,676)_____________________________________________________________________________________________Cash inflow before financing 1,038 3,352 987 FinancingIssue of ordinary shares 1,030 631 361_____________________________________________________________________________________________Increase in cash 2,068 3,983 1,348_____________________________________________________________________________________________ RWS Holdings plcInterim ReportNotes to the Statement of Group Cash Flow 6 months ended Year ended 6 months ended 31 March 2007 30 September 2006 31 March 2006 £'000 £'000 £'000_____________________________________________________________________________________________Reconciliation of operating profit to net cashflow from operating activities Group operating profit 4,797 7,925 3,982Depreciation and amortization 462 938 474Work in progress increase (640) (467) (238)Debtors increase (757) (1,017) (705)Creditors increase 253 653 161Other non-cash movements (28) (65) (24)_____________________________________________________________________________________________Net cash inflow from operating activities 4,087 7,967 3,650_____________________________________________________________________________________________Reconciliation of net cash flow to movement in net funds Increase in cash in the period 2,068 3,983 1,348Net funds at beginning of the period 15,912 11,929 11,929_____________________________________________________________________________________________Net funds at end of the period 17,980 15,912 13,277_____________________________________________________________________________________________Analysis of net funds At 1 October Cash At 31 March 2006 Flow 2007 £'000 £'000 £'000 _______________________________________________ Cash 16,139 2,267 18,406Overdrafts (227) (199) (426) _______________________________________________ 15,912 2,068 17,980 _______________________________________________ RWS Holdings plcInterim ReportNotes 6 months Year 6 months ended ended ended 31 March 30 September 31 March 2007 2006 2006 £'000 £'000 £'000_______________________________________________________________________________ 1 Segment information Turnover by class of business Translation and localization services 21,154 38,032 18,143 Information services 1,473 2,747 1,257 _________________________________ 22,627 40,779 19,400 _________________________________ Turnover by geographic location of Group undertakings United Kingdom 20,590 36,673 17,454 Continental Europe 351 616 308 Japan 1,581 3,304 1,548 United States of America 105 186 90 _________________________________ 22,627 40,779 19,400 _________________________________ Turnover by geographic market in which customers are located United Kingdom 3,349 5,676 2,481 Continental Europe Germany 7,622 14,296 7,328 France 2,349 4,812 2,432 Other 4,816 8,228 3,855 _________________________________ 14,787 27,336 13,615 Japan 1,261 2,470 1,172 United States of America 3,120 5,061 2,052 Other 110 236 80 _________________________________ 22,627 40,779 19,400 _________________________________ Profit before taxation by business sector and location of Group undertakings In the opinion of the Directors, disclosure would be seriously prejudicial tothe interests of the Group. 2. Taxation - the charge for the 6 months ended 31 March 2007 is at the likelyeffective tax rate that will be applicable for the whole year. The UK standardrate of 30% is diluted by the effect of the deductible for employee shareoptions exercised. The Group has estimated capital losses of £20 million available for offsetagainst 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 beenagreed the offset of the capital losses has not been recognised in the currenttax charge. 3 Dividends 6 months Year 6 months ended ended ended 31 March 30 September 31 March 2007 2006 2006 £'000 £'000 £'000 ____________________________________ Ordinary shares Interim paid of 1.85 pence - 723 - Final dividends for the prior year of: 5.35 pence paid 15 February 2007 (4.35 pence, paid 16 February 2006) per share 2,123 1,672 1,676 ____________________________________ 2,123 2,395 1,676 ____________________________________ An interim dividend of 2.15 pence (interim 2006 - 1.85 pence, paid 14 July 2006)per Ordinary share will be paid on 13 July 2007 to Shareholders on the Registerat 15 June 2007. This dividend, which was approved by the Directors after thebalance sheet date, has not been recognised as a liability at 31 March 2007. 4 Earnings per 6 months ended Year ended 30 6 months ended Ordinary share 31 March 2007 September 2006 31 March 2006 ________________________________________________________________ Earnings EPS Earnings EPS Earnings EPS £'000 Pence £'000 Pence £'000 Pence ________________________________________________________________ Basic earnings 3,727 9.4 5,899 15.2 2,820 7.3 Goodwill amortization 309 0.8 631 1.6 323 0.8 ________________________________________________________________ Normalised earnings 4,036 10.2 6,530 16.8 3,143 8.1 ________________________________________________________________ Diluted normalised earnings per share 9.7 15.8 7.6 ________________________________________________________________ Number of Number of Number of shares shares shares 6 months Year 6 months ended ended ended 31 March 30 September 31 March 2007 2006 2006 __________________________________________Diluted earnings per share are basedon the group profit for the period anda weighted average of Ordinary sharesin issue during the period calculatedas follows:In issue 39,514,905 38,763,414 38,566,268Dilutive potentialOrdinary shares arising fromunexercised share options 2,310,152 2,863,444 2,887,388 __________________________________________ 41,825,057 41,626,858 41,453,656 __________________________________________ The weighted average number of Ordinary shares in issue reflects the 1,034,553Ordinary shares issued under options exercised during the period. At 31 March2007 there were unexercised options over a total of 2,199,919 (2006 - 3,474,472)Ordinary shares. 5. Creditors: amounts due within one year include corporation tax of £5,792,000(31 March 2006 - £5,804,000). The taxation amount includes £4,434,000 being theliability on the gain arising on the redemption of loan notes in the year ended30 September 2004. 6 Reconciliation of movements in 6 months Year 6 months shareholders' funds ended ended ended 31 March 30 September 31 March 2007 2006 2006 £'000 £'000 £'000 ___________________________________ Opening shareholders' funds 21,229 17,161 17,161 Profit for the financial period 3,727 5,899 2,820 Dividends (note 3) (2,123) (2,395) (1,676) Other net recognised gains and losses (26) (67) (24) relating to the financial period Shares issued under options exercised 1,030 631 361 ___________________________________ Shareholders' funds at the end of the period 23,837 21,229 18,642 ___________________________________ 7. Basis of preparation The interim financial statements were approved by the Board of Directors on 30May 2007 and the interim results for the half years ended 31 March 2007 and 31March 2006 are neither audited nor reviewed by our auditors. The accounts inthis interim report do not constitute statutory accounts in accordance withSection 240 of the Companies Act 1985. The financial information contained inthis document has been prepared on the basis of accounting policies consistentwith those set out in the Group's statutory accounts for the year ended 30September 2006, which received an unqualified report and have been lodged withthe Registrar of Companies. The figures for the year ended 30 September 2006have been extracted from those statutory accounts. This information is provided by RNS The company news service from the London Stock Exchange

Related Shares:

RWS Holdings
FTSE 100 Latest
Value8,941.12
Change-34.54