A creditable, if unspectacular, half-year result from RWS Holdings prompted broker Numis to upgrade its recommendation from to buy, while a 10 per cent hike in the dividend provided yet more good news for shareholders. RWS - a provider of specialist patent translation services - continues to make solid progress in its key markets, but global economic trends - particularly the deteriorating situation within the eurozone - makes us more cautious.
Despite facing "ongoing uncertainty in the wider economy" RWS boosted first-half revenues a modest 4 per cent, citing a notable contribution from the company's medical translations business, although this was partially offset by the weak performance of its Berlin operations. However, higher administrative expenses fed through to a modest fall in profits. Comparative first-half earnings were also slightly skewed due to the net effects of financing and foreign exchange translations; a net charge of £51,000 was made in the current half-year against a £304,000 credit to earnings in 2011.
RWS anticipates that revenues will be weighted towards the second half of the year due to "recent client wins" and a "full half-year contribution from increased PatBase subscriptions". Nonetheless, Numis anticipates 2012 adjusted EPS of 31.1p (2011: 27.2p).
| RWS HOLDINGS (RWS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 500p | MARKET VALUE: | £212m | |
| TOUCH: | 485-500p | 12-MONTH HIGH: | 570p | LOW: 390p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 138p* | NET CASH: | £22.5m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 32.4 | 7.97 | 13.5 | 3.65 |
| 2012 | 33.7 | 7.83 | 13.9 | 4.02 |
| % change | +4 | -2 | +3 | +10 |
Ex-div:20 Jun Payment:20 Jul *Includes intangible assets of £16.1m, or 38p a share | ||||
