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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Rws Holdings Plc | LSE:RWS | London | Ordinary Share | GB00BVFCZV34 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 3.00 | 1.71% | 178.80 | 178.60 | 179.20 | 182.60 | 174.80 | 177.00 | 438,388 | 16:29:52 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Business Services, Nec | 733.8M | -27.7M | -0.0738 | -24.31 | 673.06M |
From May 2019 to May 2024
TIDMRWS
RNS Number : 5307I
RWS Holdings PLC
20 June 2017
For immediate release 20 June 2017
RWS Holdings plc
Half year report for the six months to 31 March 2017
An outstanding six months, strengthening our leading position in Life Sciences
RWS Holdings plc ("RWS", "the Group"), the world's leading provider of intellectual property support services (patent translations, international patent filing solutions and searches) and a leading provider of life sciences and commercial language services, today announces its half year results for the six months ended 31 March 2017.
Financial Highlights:
Hot Features
Premium
-- Sales for the period of GBP76.6m (H1 2016: GBP56.9m), an increase of 35%
o Includes GBP3.5m contribution from LUZ, Inc. ("LUZ") from six weeks of trading
-- Adjusted operating profit* was up by 28.4% to GBP19.0m (H1 2016: GBP14.8m)
-- Adjusted profit before tax* was up by 39.6% to GBP19.4m (H1 2016: GBP13.9m) including:
o GBP1.1m from six weeks of trading at LUZ
o GBP1.3m benefit from favourable foreign exchange movements compared to same period in 2016
-- Adjusted earnings per share* were up by 40.8% to 6.9p (H1 2016: 4.9p) -- Interim dividend increased by 13% to 1.30p (2016: 1.15p)
-- Net debt at period end of GBP31.8m (H1 2016: GBP13.1m), after GBP29m net cash outflow for the acquisition of LUZ, reflects strong underlying cash generation
o GBP69m LUZ acquisition funded by existing cash resources, a GBP21.0m increase in our term loan and a GBP40m share placing
* before amortisation of intangibles, exceptional acquisition costs and in 2016 only, share based payment costs.
Operational Highlights:
-- Acquisition of LUZ in February 2017, a leading US-based translation company focusing exclusively on life sciences translation:
o Provides Group with full service offering in life sciences, enhanced market share and West Coast presence
o Excellent six weeks' contribution
o Integration with existing life science activities proceeding to plan
-- Excellent performance from patent translation activities:
o New client wins and encouraging pipeline in the US and Europe
o Further progress in China
-- PatBase revenues advanced by 21% -- Improved revenues in commercial translations
-- Overall Group gross margin improved by a further 200 bps after advancing significantly in 2016
-- Richard Thompson appointed as Chief Executive Officer
Current Trading and Outlook:
-- Trading performance in the first two months of the second half has continued in line with our enhanced first half performance, further assisted by favourable currency movements and the LUZ acquisition
-- The Group remains focused on developing sales opportunities across the world from its expanded service range and technology offerings
-- Net estimated Euro trading exposure hedged at an average rate of 1 Euro = 86p to 30 September 2017. US dollar exposure naturally hedged
Andrew Brode, Chairman of RWS, commented on outlook:
"This has been a period of extremely strong performance across all of the Group's service offerings. Having completed the integration of CTi, we were delighted to have acquired LUZ, which complements our existing life sciences offering both operationally and geographically.
"As the premier global supplier of intellectual property support services and now a major force in life sciences, we believe we are exceptionally well positioned to drive further international expansion.
"Both our financial and market positions remain strong and we continue to see an interesting pipeline of niche acquisition opportunities to complement our organic growth.
"Overall, we anticipate further progress in the second half of the financial year, with the full benefit of the LUZ acquisition which is already contributing strongly."
For further information contact:
RWS Holdings plc Andrew Brode, Chairman Richard Thompson, Chief Executive Officer 01753 480200 MHP Katie Hunt / Simon Hockridge 0203 128 8100 Numis Stuart Skinner / Kevin Cruickshank (Nominated Adviser) 0207 260 Michael Burke (Corporate Broker) 1000
About RWS:
RWS is the world's leading provider of patent translations and one of the leading players in the provision of intellectual property support services and a market leader in life sciences translations and linguistic validation as well as a high level specialist language service provider in other technical areas, providing for the diverse needs of a blue-chip multinational client base from Europe, North America and Asia. RWS is based in the UK, with offices in Europe, the USA (New York, Hartford, Colorado, San Francisco, Boston and Chicago), China, Japan and Australia, and is listed on AIM, the London Stock Exchange regulated market (RWS.L).
For further information, please visit: www.rws.com
RWS Holdings plc
Half year report for the six months to 31 March 2017
Chairman's Statement
RWS has delivered an outstanding performance in the first half of the current financial year, with a full contribution from CTi, excellent growth in patent translation services, a material improvement in gross margins, and an encouraging early contribution from LUZ, which we acquired in February 2017.
Business Overview
RWS is the world's leading provider of patent translations and one of Europe's leading players in the provision of intellectual property support services and high level technical, medical, commercial, legal and financial translation services and linguistic validation. Its main business - patent translation and filing - translates well over 80,000 patents and intellectual property related documents each year. It has a blue chip multinational client base from Europe, North America and Asia, active in patent filing in the chemical, aerospace, defence, life sciences and pharmaceutical, automotive and telecoms industries, as well as an excellent global network of third party patent agents acting on behalf of clients. With its commercial translation division, the Group also provides translation and interpreting services in the above specialist areas outside the patent sphere. As a result of the October 2015 acquisition of Corporate Translations Inc ("CTi"), and the February 2017 acquisition of LUZ, Inc ("LUZ"), the Group is now a major global player in life sciences translation and linguistic validation with a strong presence across the US.
The Group's Information division provides a comprehensive range of patent search, retrieval and monitoring services, as well as PatBase, one of the world's largest searchable commercial patent databases, access to which is exclusively by subscription.
Following the recent acquisitions, over 90% of Group revenues are derived from its highly specialised intellectual property and life sciences services.
Strategy
Our strategy is focused upon organic growth complemented by selective acquisitions which can strengthen our market leading position and enhance shareholder value. Organic growth is driven by increases in the worldwide patent filing activities of our existing and potential multinational clients, enhanced service offerings, the growing demand for language services and our ability to increase our market share by winning new clients attracted by our leading position and reputation for outstanding quality. Our substantive portfolio of intellectual property support services offers cross-selling opportunities and strengthens our position in the IP market. CTi and LUZ position the Group as a major force in life sciences and offer a substantial growth opportunity driven by a combination of the growing markets for pharmaceutical, medical and other health products and services worldwide and the greater regulatory scrutiny and information requirements in these markets. They also provide us with a significant base from which to expand our sales in the substantial US market for all Group services.
In terms of acquisitive growth, we continue to search for and selectively review suitable potential acquisitions in the high level commercial translation and intellectual property support services sector, and in life sciences. We seek niche businesses capable of delivering well above industry average levels of profitability or highly complementary businesses reinforcing our dominant positions.
Results and Financial Review
Sales for the six months ended 31 March 2017 were GBP76.6m (2016: GBP56.9m), an increase of 35%. Like for like sales increased by 10%, calculated on a constant currency basis and by excluding LUZ and adjusting for the one extra month's sales at CTi in H1 2017.
Profit before tax, amortization of intangibles, share option costs and exceptional acquisition costs, was GBP19.4m (2016: GBP13.9m), an increase of 39.6%. This includes a GBP1.1m contribution from six weeks of trading from LUZ. Adjusted earnings per share were up by 40.8% to 6.9p (2016: 4.9p).
At 31 March 2017, shareholder funds amounted to GBP152.3m (2016: GBP93.7m), augmented by the GBP40m placing of new shares in connection with the acquisition of LUZ. The five year term loan drawn down to acquire CTi in October 2015 was rolled up into a new term loan facility to part fund the LUZ acquisition.
As at 31 March 2017, net debt amounted to GBP31.8m (H1 2016: GBP13.1m), consisting of the term loan of GBP48.0m, less cash of GBP16.2m, which reflects the Group's strong underlying cash generation when taking account of the GBP29m net cash outflow for the consideration for the LUZ acquisition during the period. During the six months ended 31 March 2017, the major cash outlays were the 2016 final dividend of GBP9.6m, corporation tax of GBP4.8m, and the total LUZ acquisition costs of GBP69.0m which was part funded by a placing to raise GBP40m. Term loan repayments were GBP3.6m.
Currency Effects and Hedging
The Group's principal exposure is to the Euro and more recently, following the US acquisitions, to the US Dollar. The average conversion rate for the Euro was 85.8p = 1 Euro versus 74.6p in the first half of 2016 Financial year. For the US Dollar, the average rate was 1.24 dollars = 1 GBP versus 1.46 dollars in the six months ended 31 March 2016.
Looking forward, the Group has hedged its estimated net trading exposure to the Euro at 1 Euro = 86.0p to 30 September 2017. US Dollar exposure is naturally hedged as the Group's term loan is denominated in US Dollars. The estimated net effect on the Group's trading results from exchange rate movements and mark to market on forward contracts was a positive GBP1.3m as compared to the results for the first half of 2016.
Dividend
The Directors have approved an interim dividend of 1.30p per share, an increase of 13% over the 2016 interim dividend of 1.15p. This increase reflects both the Group's strong financial position and the Board's belief that further progress can be achieved. This dividend will be paid on 21 July 2017 to those shareholders on the register on 30 June 2017. The Group remains committed to a progressive dividend policy, as announced at flotation in November 2003 and delivered every year since then.
Operating Review
Patent Translations and Filing
The Group's core patent translations and filing activities, which now account for approximately 65% of total sales, grew revenues by 34.8% to GBP49.6m (2016: GBP36.8m). This was driven by increased levels of business from a number of our established clients, some meaningful new client wins and particularly some strong growth in China. We continue to enhance our market leadership, especially amongst the world's most active international patent filers. Our inovia-branded patent filing business and technology platform, now fully integrated into the Group, continues to drive patent translation revenues in Europe, the USA and Australia and is also being marketed in Asia. Demand from European and North American corporates applying for patents in China continues to expand, whilst we are now also seeing increasing demand from Chinese firms applying for patents in other markets. We now have three offices in China and have expanded our sales team in the region. The current pipeline of new client opportunities is encouraging.
Information
The Group's information business (patent search, watch and litigation support, as well as PatBase) delivers excellent margins despite accounting for just 5% of Group revenues. Search activities were 27.8% ahead of 2016. PatBase, our subscription-only database service, has experienced exceptional growth, with recognised revenues advancing 20.7% versus 2016. We continue to invest in IT infrastructure, searchability features and geographic coverage.
Life Sciences
In less than eighteen months the Group has achieved a leading position in all aspects of life sciences translation and linguistic validation, through its acquisitions of CTi and LUZ, such that life sciences accounts for 22% of Group revenues in the first half. These acquisitions also provide the strategic presence in the US market which we stated in June 2015 we would seek, and the Group's existing infrastructure will form a platform from which Life Sciences can address the Far Eastern markets.
CTi was fully integrated into the Group during 2016. In February 2017 RWS acquired LUZ, which is based in San Francisco and specialises in translation services for both medical device and regulatory sectors of the life sciences market. Its integration has proceeded smoothly and to plan and it is performing in line with our expectations. In FY2018, as we benefit from a full year contribution from LUZ, we expect that our combined life sciences activities will deliver approximately 30% of total Group revenues, as well as providing cross selling opportunities for patent translations in the USA.
Commercial Translations
Our commercial translations business accounts for approximately 8% of Group sales and delivered satisfactory results in a highly competitive market place, albeit aided by currency tailwinds. The business includes all non-patent activities, excluding life sciences, and is the Group activity most exposed to economic cycles. Given the continuing modest growth rates in this division's core markets, we increased revenues to GBP6.3m (2016: GBP6.0m) which is a robust outcome. New wins at existing clients, and an expanding interpreting offering, have served to replace cyclical sales from several large clients, whilst we also continue to optimise the use of our resources by growing the patent translation facility we have recently established in Germany.
Market and Regulatory Update
Patent Filing Statistics
The World Intellectual Property Organisation (WIPO) recently published figures showing a 7.3% increase in the 2016 PCT filings to 233,000. Applicants from the USA remain the largest filers under this system with the largest growth coming from China, up 44.7% on prior year, with a total share of 18.5%. Cumulative PCT applications reached 3 million in February 2017. The European Patent Office (EPO) has also issued statistics showing that the total number of European patent filings increased by 6.2% to 296,000 in 2016, again a new record. In addition, European filings from Chinese applicants increased by 25.0%.
Life Sciences Market
Life sciences was a GBP1,078.7bn market in 2015 and is expected to have a CAGR of 5.5% between 2015-2019 (Source: Deloitte, 2016 Global Life Sciences Outlook). The growing markets for pharmaceutical, medical and other health products and services worldwide, combined with greater regulatory scrutiny and information requirements underpin a substantial growth opportunity for language services.
European Union Patent
We now expect the proposed European Union Patent ("the Unitary Patent") to come into effect in the first quarter of calendar 2018 at the earliest. The Brexit negotiations may influence implementation.
The proposed Unitary Patent, when implemented, will not have the same territorial coverage as the current, long-established patent application procedures, and will run in parallel. It will also have a different litigation process and fee structure. As such, we believe our major clients will be cautious in their take up of the new system and will decide upon their patenting strategies as they observe the Unitary Patent in action and assess which of the two systems they prefer for the majority of their filings. We continue to anticipate minimal financial impact for the foreseeable future and closely monitor client reaction and regulatory developments.
Board and People
Richard Thompson was appointed as Chief Executive Officer with effect from 1 April 2017, succeeding Reinhard Ottway who had decided to retire following more than 23 years with the Group.
Richard joined RWS in 2012 as Chief Financial Officer and, following a successful three years in that position, took on the broader role of Deputy Chief Executive Officer from December 2015. In that position, Richard had successfully spearheaded the acquisition and integration of CTi and LUZ into the Group, following which he continued to oversee the Group's Life Sciences activities, giving him an excellent track record in successfully driving the Company's growth.
The Board is making good progress with the search for a new Chief Financial Officer and will provide an update in due course.
RWS is a quintessential 'people' business. Our excellent and leading reputation depends upon the skills and commitment of our staff. The headcount (including 97 LUZ employees) had reached 887 at 31 March 2017 (2016: 787), and I am grateful for their contribution to delivering this exceptionally strong set of results.
Current Trading and Outlook
This has been a period of strong progress in which RWS has performed particularly well, despite a low--growth world economic environment. The business has consolidated its world leading position in intellectual property and established a market leading position in life sciences support services through the acquisitions of CTi and LUZ.
Trading in the first two months of the second half has continued in line with our enhanced first half performance, further assisted by favourable currency movements and the LUZ contribution. Our technology platforms, extended expertise, geographical presence and market position form a strong base from which we intend to expand aggressively and profitably and we are encouraged by the opportunities we are seeing across the business. Furthermore, the Group's robust financial position and strong cash generation leaves us well placed to continue to selectively review a healthy pipeline of potential acquisitions.
The Board is, therefore, confident of further progress in the second half of the financial year and beyond.
Andrew Brode
Chairman
RWS Holdings plc
Condensed Consolidated Statement of Comprehensive Income
Unaudited Audited Unaudited
6 months Year ended 6 months
ended 30 September ended
Note 31 March 2016 31 March
2017 GBP'000 2016
GBP'000 GBP'000
--------------------------------- ---------- -------------- ----------
Revenue 2 76,615 121,986 56,853
Cost of sales (43,114) (69,792) (33,170)
---------------------------- --- ---------- -------------- ----------
Gross Profit 33,501 52,194 23,683
Administrative
expenses (19,537) (25,671) (11,932)
---------------------------- --- ---------- -------------- ----------
Operating profit 13,964 26,523 11,751
---------------------------- --- ---------- -------------- ----------
Analysed as:
Operating profit
before charging: 19,012 32,023 14,773
Amortization of
customer relationships,
trademarks and
technology
Acquisition costs (2,682) (4,639) (2,117)
Share based payment
costs (2,366) (855) (899)
- (6) (6)
---------------------------- --- ---------- -------------- ----------
Operating profit 13,964 26,523 11,751
---------------------------- --- ---------- -------------- ----------
Finance income 3 720 16 12
Finance expense 3 (358) (1,448) (893)
---------------------------- --- ---------- -------------- ----------
Profit before tax 14,326 25,091 10,870
Taxation expense (3,669) (5,758) (2,715)
---------------------------- --- ---------- -------------- ----------
Profit for the
period 2 10,657 19,333 8,155
---------------------------- --- ---------- -------------- ----------
Other comprehensive
income*
Exchange gain on
retranslation of
foreign operations 2,524 8,479 2,639
Total other comprehensive
income 2,524 8,479 2,639
---------------------------- --- ---------- -------------- ----------
Total comprehensive
income attributable
to:
Owners of the parent 13,181 27,812 10,794
---------------------------- --- ---------- -------------- ----------
Basic earnings
per Ordinary share
(pence per share) 5 4.9 9.0 3.8
---------------------------- --- ---------- -------------- ----------
Diluted earnings
per Ordinary share
(pence per share) 5 4.8 9.0 3.8
---------------------------- --- ---------- -------------- ----------
*Other comprehensive income includes only items that will be subsequently reclassified to Profit before tax when specific conditions are met.
RWS Holdings plc
Condensed Consolidated Statement of Financial Position
Unaudited Audited Unaudited
at at at
Note 31 March 2017 30 September 31 March
GBP'000 2016 2016
GBP'000 GBP'000
------------------------------------ ----------------- --------------- ------------
Assets
------------------------------------- ---------------- --------------- ------------
Non-current assets
Goodwill 99,060 61,518 56,669
Intangible assets 57,720 28,421 28,334
Property, plant and equipment 17,907 17,630 17,627
Deferred tax assets 1,858 1,875 487
------------------------------------- ---------------- --------------- ------------
176,545 109,444 103,117
------------------------------------- ---------------- --------------- ------------
Current assets
Trade and other receivables 38,013 28,173 26,389
Foreign exchange derivatives 34 - -
Cash and cash equivalents
6 16,193 27,910 16,561
------------------------------------- ---------------- --------------- ------------
54,240 56,083 42,950
------------------------------------- ---------------- --------------- ------------
Total assets 230,785 165,527 146,067
------------------------------------- ---------------- --------------- ------------
Liabilities
Current liabilities
Loans 9,600 6,923 6,250
Trade and other payables 24,990 20,207 17,729
Foreign exchange derivatives - 681 379
Income tax payable 3,721 4,702 2,309
Provisions 80 79 78
------------------------------------- ---------------- --------------- ------------
38,391 32,592 26,745
------------------------------------- ---------------- --------------- ------------
Non-current liabilities
Loans 38,400 22,500 23,438
Other payables 30 30 30
Provisions 340 379 258
Deferred tax liabilities 1,343 1,326 1,906
------------------------------------- ---------------- --------------- ------------
40,113 24,235 25,632
------------------------------------- ---------------- --------------- ------------
Total liabilities 78,504 56,827 52,377
------------------------------------- ---------------- --------------- ------------
Total net assets 152,281 108,700 93,690
------------------------------------- ---------------- --------------- ------------
Equity
Capital and reserves attributable
to owners of the parent
Share capital 2,279 2,157 2,157
Share premium 48,827 8,947 8,888
Share based payment reserve 875 875 887
Reverse acquisition reserve (8,483) (8,483) (8,483)
Foreign currency reserve 12,641 10,117 4,277
Retained earnings 96,142 95,087 85,964
------------------------------------- ---------------- --------------- ------------
Total equity 152,281 108,700 93,690
------------------------------------- ---------------- --------------- ------------
RWS Holdings plc
Condensed Consolidated Statement of Changes in Equity
Total
Other equity
Share Share reserves Retained attributable
capital premium (see earnings to owners
GBP'000 GBP'000 below) GBP'000 of the
GBP'000 parent
GBP'000
------------------------------ ---------- ---------- ------------ ----------- ---------------
At 30 September 2015
(audited) 2,116 3,583 (5,044) 85,035 85,690
------------------------------ ---------- ---------- ------------ ----------- ---------------
Profit for the period - - - 8,155 8,155
Currency translation
differences - - 2,639 - 2,639
------------------------------ ---------- ---------- ------------ ----------- ---------------
Other Comprehensive
income for the period
at 31 March 2016 - - 2,639 8,155 10,794
Issues of shares 41 5,305 - - 5,346
Dividends - - - (8,146) (8,146)
Exercise of share options - - (920) 920 -
Credit arising on share
based payment charges - - 6 - 6
------------------------------ ---------- ---------- ------------ ----------- ---------------
At 31 March 2016 (unaudited) 2,157 8,888 (3,319) 85,964 93,690
Profit for the period - - - 11,178 11,178
Currency translation
differences - - 5,840 - 5,840
------------------------------ ---------- ---------- ------------ ----------- ---------------
Other Comprehensive
income for the period
30 September 2016 - - 5,840 11,178 17,018
Issue of shares - 59 - - 59
Deferred tax on unexercised
share options - - - 414 414
Dividends - - - (2,481) (2,481)
Exercise of share options - - (12) 12 -
Credit arising on share
based payment charges - - - - -
------------------------------ ---------- ---------- ------------ ----------- ---------------
At 30 September 2016
(audited) 2,157 8,947 2,509 95,087 108,700
Profit for the period - - - 10,657 10,657
Currency translation
differences - - 2,524 - 2,524
------------------------------ ---------- ---------- ------------ ----------- ---------------
Other Comprehensive
income for the period
at 31 March 2017 - - 2,524 10,657 13,181
Issue of shares 122 39,880 - - 40,002
Dividends - - - (9,602) (9,602)
------------------------------ ---------- ---------- ------------ ----------- ---------------
At 31 March 2017 (unaudited) 2,279 48,827 5,033 96,142 152,281
------------------------------ ---------- ---------- ------------ ----------- ---------------
Share Reverse Foreign Total
------------------------------ ---------- ---------- ------------ ----------- ---------------
based acquisition currency other
payment
------------------------------ ---------- ---------- ------------ ----------- ---------------
Other reserves reserve reserve reserve reserves
------------------------------ ---------- ---------- ------------ ----------- ---------------
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------- ---------- ------------ ----------- ---------------
At 30 September 2015
(audited) 1,801 (8,483) 1,638 (5,044)
------------------------------ ---------- ---------- ------------ ----------- ---------------
Currency translation
differences - - 2,639 2,639
------------------------------ ---------- ---------- ------------ ----------- ---------------
Other Comprehensive
income for the period
at 31 March 2016 - - 2,639 2,639
------------------------------ ---------- ---------- ------------ ----------- ---------------
Exercise of share options (920) - - (920)
------------------------------ ---------- ---------- ------------ ----------- ---------------
Credit arising on share
based payment charges 6 - - 6
------------------------------ ---------- ---------- ------------ ----------- ---------------
At 31 March 2016 (unaudited) 887 (8,483) 4,277 (3,319)
Currency translation
differences - - 5,840 5,840
------------------------------ ---------- ---------- ------------ ----------- ---------------
Other Comprehensive
income for the period
at 30 September 2016 - - 5,840 5,840
------------------------------ ---------- ---------- ------------ ----------- ---------------
Exercise of share options (12) - - (12)
------------------------------ ---------- ---------- ------------ ----------- ---------------
At 30 September 2016
(audited) 875 (8,483) 10,117 2,509
Currency translation
differences - - 2,524 2,524
------------------------------ ---------- ---------- ------------ ----------- ---------------
Other Comprehensive
income for the period
at 31 March 2017 - - 2,524 2,524
------------------------------ ---------- ---------- ------------ ----------- ---------------
At 31 March 2017 (unaudited) 875 (8,483) 12,641 5,033
------------------------------ ---------- ---------- ------------ ----------- ---------------
RWS Holdings plc
Condensed Consolidated Statement of Cash Flows
Unaudited Audited Unaudited
6 months Year ended 6 months
ended 30 September ended
Note 31 March 2016 31 March
2017 GBP'000 2016
GBP'000 GBP'000
----------------------------- ------- ------------ --------------- ------------
Cash flows from
operating activities
Profit before tax 14,326 25,091 10,870
Adjustments for:
Depreciation of
property, plant
and equipment 583 941 470
Amortization of
intangible assets 2,704 4,719 2,130
Share based payment
costs - 6 6
Finance income (720) (16) (12)
Finance expense 358 1,448 893
----------------------------- ------- ------------ --------------- ------------
Operating cash flow
before movements
in working capital
and provisions 17,251 32,189 14,357
Increase in trade
and other receivables (5,023) (4,249) (2,467)
Increase/(decrease)
in trade and other
payables 2,452 1,652 (868)
----------------------------- ------- ------------ --------------- ------------
Cash generated from
operating activities 14,680 29,592 11,022
----------------------------- ------- ------------ --------------- ------------
Income tax paid (4,821) (5,196) (2,993)
----------------------------- ------- ------------ --------------- ------------
Net cash inflow
from operating activities 9,859 24,396 8,029
----------------------------- ------- ------------ --------------- ------------
Cash flows from
investing activities
Interest paid (274) (369) (204)
Interest received 5 16 12
Acquisition of subsidiary,
net of cash acquired 7 (68,961) (47,068) (47,068)
Purchases of property,
plant and equipment (615) (731) (314)
Purchases of intangibles
(computer software) (680) (169) (152)
----------------------------- ------- ------------ --------------- ------------
Net cash outflow
from investing activities (70,525) (48,321) (47,726)
----------------------------- ------- ------------ --------------- ------------
Cash flows from
financing activities
Proceeds from borrowing 21,000 29,485 29,485
Repayment of borrowing (3,560) (4,874) (1,619)
Proceeds from the
issue of share capital 40,002 5,405 5,346
Dividends paid (9,602) (10,627) (8,146)
----------------------------- ------- ------------ --------------- ------------
Net cash inflow
from financing activities 47,840 19,389 25,066
----------------------------- ------- ------------ --------------- ------------
Net decrease in
cash and cash equivalents (12,826) (4,536) (14,631)
Cash and cash equivalents
at beginning of
the period 27,910 30,569 30,569 Exchange gains on cash and cash equivalents 1,109 1,877 623 ----------------------------- ------- ------------ --------------- ------------ Cash and cash equivalents at the end of the period 6 16,193 27,910 16,561 ----------------------------- ------- ------------ --------------- ------------ Free cash flow ----------------------------- ------- ------------ --------------- ------------ Analysis of free cash flow Net cash generated from operating activities 14,680 29,592 11,022 Net interest paid (269) (353) (192) Income tax paid (4,821) (5,196) (2,993) Purchases of property, plant and equipment (615) (731) (314) Purchases of intangibles (computer software) (680) (169) (152) ----------------------------- ------- ------------ --------------- ------------ Free cash flow 8,295 23,143 7,371 ----------------------------- ------- ------------ --------------- ------------
RWS Holdings plc
Notes to the Condensed Consolidated Financial Statements
1. Accounting policies
Basis of preparation
The interim financial statements were approved by the Board of Directors on 19 June 2017. The interim results for the half years ended 31 March 2017 and 31 March 2016 are neither audited nor reviewed by our auditors and the accounts in this interim report do not therefore constitute statutory accounts in accordance with Section 434 of the Companies Act 2006. They do not include all of the information required for the full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 September 2016.
The Group's statutory accounts for the year ended 30 September 2016 have been filed with the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain any statements under s498 (2) or (3) of the Companies Act 2006 and did not contain any matters to which the auditors drew attention without qualifying their report.
The same accounting policies, presentation and methods of computation are followed in these condensed consolidated financial statements as were applied in the Group's latest annual audited financial statements.
2. Segmental reporting
The Board monitors and manages the Group in four reportable segments and assesses these segments based on revenue and profit/(loss) from operations.
The four segments are:
-- Translation division providing patent and technical document translation and filing services in the UK, USA, Europe, Japan and China.
-- Life Sciences division providing technical translations and linguistic validation to the Medical and Pharmaceutical sector. The division includes the recently acquired LUZ, Inc.
-- Commercial division providing specialist technical translation, localisation and interpreting services.
-- Information division which offers a full range of patent search, retrieval and monitoring services as well as an extremely comprehensive patent database service accessible by subscribers, known as PatBase.
The unallocated segment relates to corporate overheads, assets and liabilities.
The segment results for the six months ended 31 March 2017 are as follows:
Patent Patent
and and Life
Commercial Commercial Sciences Information Unallocated Group
UK Overseas GBP'000 GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Revenue
Patent translation 46,794 2,817 - - - 49,611
Commercial translation 3,471 2,785 - - - 6,256
Life Sciences - - 16,998 - - 16,998
Information - - - 3,750 - 3,750
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Total Revenue 50,265 5,602 16,998 3,750 - 76,615
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Operating profit/(loss)
before charging: 12,799 1,070 3,667 1,980 (504) 19,012
Amortization of customer
relationships, trademarks
and technology (554) (184) (1,872) (72) - (2,682)
Acquisition costs - - - - (2,366) (2,366)
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Operating profit/(loss) 12,245 886 1,795 1,908 (2,870) 13,964
Finance income 720
Finance expense (358)
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Profit before tax 14,326
Taxation (3,669)
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Profit for the period 10,657
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Overseas intercompany sales to the UK amounting to GBP3.1 million are eliminated on consolidation.
Segment assets 71,760 11,184 138,169 6,964 2,708 230,785 Segment liabilities 12,703 2,577 58,053 4,203 968 78,504 ---------------------- -------- ------- -------- ------- ------ -------- Net assets 59,057 8,607 80,116 2,761 1,740 152,281 ---------------------- -------- ------- -------- ------- ------ --------
RWS Holdings plc
Notes to the Condensed Consolidated Financial Statements (continued)
The segment results for the year ended 30 September 2016 were as follows:
Patent Patent
and and Life
Commercial Commercial Sciences Information Unallocated Group
UK Overseas GBP'000 GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Revenue
Patent translation 74,704 4,655 - - - 79,359
Commercial translation 6,277 5,578 - - - 11,855
Life Sciences - - 24,416 - - 24,416
Information - - - 6,356 - 6,356
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Total Revenue 80,981 10,233 24,416 6,356 - 121,986
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Operating profit/(loss)
before charging: 20,325 2,604 6,170 3,598 (674) 32,023
Amortization of customer
relationships, trademarks
and technology (981) (334) (3,181) (143) - (4,639)
Acquisition costs - - - - (855) (855)
Share based payment
costs (3) - - - (3) (6)
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Operating profit/(loss) 19,341 2,270 2,989 3,455 (1,532) 26,523
Finance Income 16
Finance expense (1,448)
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Profit before tax 25,091
Taxation (5,758)
----------------------------- ------------ ------------ ----------- -------------- -------------- ---------- Profit for the year 19,333 ----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Overseas intercompany sales to the UK amounting to GBP6.1 million were eliminated on consolidation.
Segment assets 73,083 12,790 69,622 6,116 3,916 165,527 Segment liabilities 12,584 2,831 37,135 2,432 1,845 56,827 ---------------------- -------- ------- -------- ------- ------- -------- Net assets 60,499 9,959 32,487 3,684 2,071 108,700 ---------------------- -------- ------- -------- ------- ------- --------
The segment results for the six months ended 31 March 2016 were as follows:
Patent Patent
and and Life
Commercial Commercial Sciences Information Unallocated Group
UK Overseas GBP'000 GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Revenue
Patent translation 34,583 2,186 - - - 36,769
Commercial translation 3,367 2,595 - - - 5,962
Life Sciences - - 11,077 - - 11,077
Information - - - 3,045 - 3,045
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Total Revenue 37,950 4,781 11,077 3,045 - 56,853
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Operating profit/(loss)
before charging: 9,139 1,256 3,038 1,692 (352) 14,773
Amortization of customer
relationships, trademarks
and technology (475) (159) (1,411) (72) - (2,117)
Acquisition costs - - - - (899) (899)
Share based payment
costs (3) - - - (3) (6)
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Operating profit/(loss) 8,661 1,097 1,627 1,620 (1,254) 11,751
Finance income 12
Finance expense (893)
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Profit before tax 10,870
Taxation (2,715)
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Profit for the period 8,155
----------------------------- ------------ ------------ ----------- -------------- -------------- ----------
Overseas intercompany sales to the UK amounting to GBP2.9 million were eliminated on consolidation.
Segment assets 63,003 12,488 61,987 6,200 2,389 146,067 Segment liabilities 10,818 2,338 34,665 3,392 1,164 52,377 -------------------------- -------- ------- -------- ------- ------- -------- Net assets/(liabilities) 52,185 10,150 27,322 2,808 1,225 93,690 -------------------------- -------- ------- -------- ------- ------- --------
3 Finance income and expense
6 months Year ended 6 months
ended 30 September ended
31 March 2016 31 March
2017 GBP'000 2016
GBP'000 GBP'000
------------------------------ ---------- -------------- ----------
Finance income
- Returns on short-term
deposits 5 16 12
- Movement in the
fair value of foreign
currency contracts 715 - -
Finance expense
- Bank interest payable (358) (458) (205)
- Movement in the
fair value of foreign
currency contracts - (990) (688)
------------------------------ ---------- -------------- ----------
Net finance income/(expense) 362 (1,432) (881)
------------------------------ ---------- -------------- ----------
RWS Holdings plc
Notes to the Condensed Consolidated Financial Statements (continued)
4 Dividends
6 months Year ended 6 months
ended 30 September ended
31 March 2016 31 March
2017 2016
----------------------- ------------------- ------------------- -------------------
pence pence pence
per per per
share GBP'000 share GBP'000 share GBP'000
Interim paid - - 1.15 2,481 - -
July
Final paid 4.45 9,602 3.85 8,146 3.85 8,146
February
----------------------- -------- --------- -------- --------- -------- ---------
Dividends
paid to shareholders 4.45 9,602 5.00 10,627 3.85 8,146
----------------------- -------- --------- -------- --------- -------- ---------
An interim dividend of 1.30 pence per Ordinary share will be paid on 21 July 2017 to Shareholders on the register at 30 June 2017. This dividend, declared by the Directors after the balance sheet date, has not been recognised in these financial statements as a liability at 31 March 2017. The interim dividend will reduce shareholders' funds by an estimated GBP3.0 million.
5 Earnings per Ordinary share
The Group shows both a basic and adjusted earnings per share figure as the Directors believe that this information will be of interest to the users of the accounts in measuring the Group's performance and underlying trends.
6 months ended Year ended 6 months
31 March 2017 30 September ended
2016 31 March
2016
------------------- ------------------ ------------------ ------------------
Earnings EPS Earnings EPS Earnings EPS
GBP'000 Pence GBP'000 Pence GBP'000 Pence
------------------- --------- ------- --------- ------- --------- -------
Profit for
the period 10,657 4.9 19,333 9.0 8,155 3.8
Adjustments:
Amortization
of customer
relationships,
trademarks
and technology 2,682 1.2 4,639 2.2 2,117 1.0
Acquisition
costs 2,366 1.1 855 0.4 899 0.4
Charges for
share based
payments - - 6 - 6 -
Tax effect
of adjustments (714) (0.3) (1,515) (0.7) (604) (0.3)
------------------- --------- ------- --------- ------- --------- -------
Adjusted earnings 14,991 6.9 23,318 10.9 10,573 4.9
------------------- --------- ------- --------- ------- --------- -------
Basic diluted
earnings 10,657 4.8 19,333 9.0 8,155 3.8
------------------- --------- ------- --------- ------- --------- -------
Adjusted diluted
earnings 14,991 6.8 23,318 10.8 10,573 4.9
------------------- --------- ------- --------- ------- --------- -------
Basic earnings per share are based on the post-tax profit for the period and a weighted average number of Ordinary shares in issue during the period.
Number Number Number
of shares of shares of shares
6 months Year ended 6 months
ended 30 September ended
31 March 2016 31 March
2017 2016
--------------------------- ------------ -------------- ------------
Weighted average number
of ordinary shares in
issue for basic earnings 218,620,204 214,215,397 212,694,548
--------------------------- ------------ -------------- ------------
Dilutive impact of share
options 2,297,486 1,564,458 2,305,214
--------------------------- ------------ -------------- ------------
Weighted average number
of Ordinary shares for
diluted earnings 220,917,690 215,779,855 214,999,762
--------------------------- ------------ -------------- ------------
6 Cash and cash equivalents
at at at
31 March 30 September 31 March
2017 2016 2016
GBP'000 GBP'000 GBP'000
----------------------------- ---------- -------------- ----------
Cash at bank and in hand 15,232 18,477 9,616
Short-term deposits 961 9,433 6,945
----------------------------- ---------- -------------- ----------
Cash and cash equivalents
in the cash flow statement 16,193 27,910 16,561
----------------------------- ---------- -------------- ----------
Short-term deposits includes deposits with a maturity of three months or less, or deposits that can be readily converted into cash. The fair value of these assets supports their carrying value.
RWS Holdings plc
Notes to the Condensed Consolidated Financial Statements (continued)
7 Acquisition
On 17 February 2017, the Group acquired the entire issued share capital of LUZ, Inc for a cash consideration of US$82.5 million plus US$4.9 million for working capital. The acquisition was funded by a GBP40 million share placing, a US$26.25 million five year loan and internal cash resources.
The provisional fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
Book and
provisional
fair values GBP'000
-------------------------------- ---------------------
Net assets acquired:
Property, plant and equipment 256
Non-compete agreements
with former owners of
LUZ, Inc 3,181
Orderbook 329
Customer relationships 23,677
Technology 3,093
Trade and other receivables 4,820
Cash and cash equivalents 965
Trade and other payables (2,212)
-------------------------------- ---------------------
34,109
--------------------------------
Goodwill 35,817
--------------------------------
Total consideration 69,926
-------------------------------- ---------------------
Satisfied by:
Cash 48,926
Loan 21,000
-------------------------------- ---------------------
69,926
Cash flow:
Total consideration 69,926
Cash included in undertaking
acquired (965)
-------------------------------- ---------------------
Net cash consideration
in cash flow statement 68,961
-------------------------------- ---------------------
LUZ, Inc contributed GBP3.5 million revenue and GBP0.7 million to the Group's profit after tax for the year between the date of acquisition and the balance sheet date.
Acquisition costs of GBP2.37 million have been charged through the Comprehensive Income Statement.
8 Events since the reporting date
No significant events have occurred since 31 March 2017 at the date of authorisation of these financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKCDDOBKDFAD
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