Translating legal and technical documentation translated into record half year results for RWS, Europe's leading provider of 'intellectual property support services.'
As expected, last year's introduction of the voluntary London Agreement on patent translation put a dent in sales. Some 70 per cent of RWS's revenues come from patent translation, so the decision that only the executive summary of patent applications needs to be translated into the home language, rather than the entire document, meant an estimated £3-4m fall in translation fees.
But the core translation business was resilient overall, helped by sterling weakness and recent acquisitions, while earnings were also boosted by the release of a tax provision. Having seen strong interest from coporates in North America and Europe, RWS is now looking to build its patent translation business in the US, Japan and China.
However, the effects of recession were felt more acutely elsewhere in the business, notably in commercial translation. Recent acquisition DSC has been held back by its exposure to German exporters, while its patent 'search and watch' services also saw demand dip.
RWS is looking for further acquisitions to boost growth, and broker WH Ireland has increased its full-year pre-tax profit forecast from £15.0m to £15.4m, with EPS increased from 26.1p to 26.5p (2008: £13.9m/24p).
RWS HOLDINGS (RWS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 308p | MARKET VALUE: | £ 127m | |
| TOUCH: | 300-315p | 12-MONTH HIGH: | 403p | LOW: 163p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 108p* | NET CASH: | £24.5m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 27.0 | 6.77 | 11.4 | 2.50 |
| 2009 | 26.8 | 7.80 | 24.2** | 2.80 |
| % change | -1 | +15 | +112 | +12 |
Ex-div:17 Jun Payment:17 Jul *Includes intangible assets of £17.6m or 43p per share **Includes one-off tax credit £4.4m or 10.7p a share | ||||
