Disappointing first-half figures from patent translator RWS (RWS) were well flagged by management in an April pre-close update. It cited the weak euro as well as increased competition for its core patent translation service. Even sales on a constant-currency basis were flat at £46.9m, while operating profit fell 6 per cent to £9m.
RWS's patent translation business, which now accounts for more than half of group sales, grew revenue by just £0.1m to £26.4m. Growth in China, where European and North American groups are increasingly seeking patent protection, prompted the group to grow its Chinese headcount to 57 employees. But this and some other bright spots were offset by corporate cost-cutting elsewhere. Management also reported that new client wins have been slow to translate into revenues, but it hopes momentum will pick up during the second half.
The group is still in the process of integrating patent filer Inovia after it acquired the remaining two-thirds of the business in September 2013. At £9.4m, revenue was slightly down on the same period in 2014. But Inovia has a strong US presence, which management hopes to leverage to expand into the key US patent market.
Broker Numis Securities expects adjusted EPS of 7.7p for the full year to September, down from 8.1p in full-year 2014.
RWS (RWS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 142p | MARKET VALUE: | £300m | |
| TOUCH: | 135-142p | 12-MONTH HIGH: | 185p | LOW: 130p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 38p* | NET CASH: | £21.5m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 46.9 | 9.59 | 3.3 | 0.98 |
| 2015 | 45.4 | 9.56 | 3.4 | 1.03 |
| % change | -3 | -0.3 | +3 | +5 |
Ex-div: 25 Jun Payment: 24 Jul *Includes intangible assets of £39.4m, or 19p a share NB: 2014 EPS & DPS adjusted to reflect subsequent five-for-one share split | ||||
