Preliminary results
RWS GROUP
9 December 2014
RWS Holdings plc
Preliminary results for the year ended 30 September 2014
RWS Holdings plc ("RWS", "the Group"), the world's leading provider of intellectual property support services (patent translation, filing and search solutions) and commercial translations, today announced its preliminary results for the year ended 30 September 2014.
Financial Highlights:
Growth in sales, profits and dividends for the eleventh successive year since flotation
· Sales increased by 21% to £93.6m (2013: £77.4m)
- Sales up by 26% on a constant currency basis to £97.8m
(7% organic, 19% acquisition related)
· Adjusted operating profit* was up 9% to £22.0m (2013: £20.1m)
· Adjusted profit before tax* rose by 5% to £22.1m (2013: £21.0m)
- Adjusted profit before tax was up by 10% to £23.0m on a constant currency basis
· Adjusted basic earnings per share* increased by 5% to 40.5p (2013: 38.6p)
· Final dividend of 18.0p (2013: 15.75p); total dividend increased by 13% to 22.9p (2013: 20.25p), continuing an unbroken series of double digit dividend increases since flotation.
· Net cash at year end of £22.5m (2013: £18.3m), after £4.3m purchase of new building
* RWS uses adjusted results as key performance indicators as the directors believe that these provide a more consistent measure of operating performance. Adjusted operating profit and adjusted profit before tax are statedbefore amortization of intangibles, share option costs and, in 2013, gain on sale of associate.
Operational Highlights:
Continued organic progress and investment for future growth
· 7% increase in core patent translations sales (11% increase in constant currency) (2013: £48.8m, after elimination of £4.7m of intercompany sales to inovia) driven by:
- Prior period and 2014 client wins
- Further strong growth in China
· The Information division enjoyed an outstanding year, with growth of 17% in revenues to £6.2m (2013: £5.3m)
- Search revenues up 36% and PatBase subscriptions up by 5%
· inovia gross revenues grew by 15% to US$33.0m (2013: US$28.8m)
· Continued investment in the Group:
- Further expansion of Chinese production and training initiative with prestigious university
- PatBase searchability, content and geographical coverage
- Creation of patent translation facility within the German operation
- Purchase of new building adjoining Group headquarters for future expansion
· Intellectual property support services now account for over 80% of Group revenues
Current trading and outlook:
· Solid trading performance in the first two months of the new financial year
· 2014 client wins will underpin continued growth
· Useful appreciation in US$ exchange rate versus GBP
Andrew Brode, Chairman of RWS commented:
"Against a background of hesitant worldwide economic growth and volatile currency movements, the Group has continued to deliver strong cash generation, profit growth and a double digit increase in its dividend, for the eleventh successive year since flotation.
"We have made a reasonable start to the new financial year and expect to make further progress as we realise the full benefit of 2014 client wins and develop the targeted cross selling opportunities provided by the inovia acquisition. The strength of sterling has shown helpful signs of easing.
"The Board is optimistic about the Group's future prospects for the current year and looks forward to reporting further progress as it continues to consolidate its market leading position in the intellectual property space.
A meeting for analysts will be held today at 9.30 am at the offices of MHP, 60 Great Portland Street, London W1W 7RT. Please contact James Moncrieff at MHP if you would like to attend.
For further information contact:
RWS Holdings plc
Andrew Brode, Chairman 01753 480200
MHP
Katie Hunt / Simon Hockridge 020 3128 8100
Numis
Stuart Skinner/Kevin Cruickshank (Nominated Adviser) 020 7260 1000
James Serjeant (Corporate Broker)
RWS GROUP
RWS Holdings plc
Preliminary results for the year ended 30 September 2014
Chairman's Statement
It gives me great pleasure to be able to report another year of progress for RWS against a stuttering, slowly improving, economic backdrop and volatile currency markets. For the eleventh consecutive year as a public company we have delivered growth in sales, underlying profits and dividends, demonstrating the strength and resilience of the Group's core, market leading, patent translations business. inovia has grown quickly whilst a renewed focus on margins is delivering incremental benefits. Elsewhere, the search business prospered, as did PatBase and our operation in China.
Results and Financial Review
The Group has achieved further significant progress in underlying operational performance, reflecting continued growth in the core patent translations business, together with enhanced contributions from the Information division (including PatBase) and China in particular.
Group sales advanced by 21% to £93.6m (2013: £77.4m), assisted by a first full year contribution from inovia. In constant currency terms, sales were up by 26% to £97.8m. Adjusted operating profit before amortization of intangibles and share option costs was up 9% to £22.0m (2013: £20.1m).
Adjusted profit before tax, amortization of intangibles, share option costs, and in 2013 a gain on sale of associate increased by 5% to £22.1m (2013: £21.0m). This produced a 5% increase in adjusted earnings per share to 40.5p (2013: 38.6p), with no change in the number of shares in issue. As described below, RWS has been adversely affected by the strength of the £ sterling in 2014 compared to 2013, at constant currency, the adjusted profit before tax would have been £23.0m, a 10% increase over 2013. The principal causes of the adverse currency movement were exchange losses on Euro denominated assets coupled with unrealised losses on forward contracts.
Reported profit before tax was £19.6m (2013: £20.5m), a fall of 4%, due to higher amortisation charges and increased share based payment costs. The basic earnings per share were 35.9p (2013: 37.6p), a fall of 5%. The effective tax rate was 22.6% (2013: 22.4%).
At 30 September 2014, shareholders' funds had reached £78.4m (2013: £71.7m), of which net cash represented £22.5m (2013: £18.3m). The positive movement in net cash is despite significant outlays in respect of corporation tax of £5.2m, the final dividend for 2013 and the interim dividend for 2014, totalling £8.7m, and £4.3m for the purchase of a new building adjoining Group headquarters for future expansion.
Currency Effects and Hedging
Reported revenues were £4.2m lower than they would have been on a constant currency basis, resulting from the strong performance of sterling. The average rate used for conversion of Euro revenues was 81.5p to the € versus 84.2p in 2013. For the US dollar, the average rate was 1.66 dollars to the £ versus 1.56 dollars in 2013.
RWS's policy is to hedge its net trading exposure to the Euro, and since the inovia acquisition, to the US$. Looking forward, RWS has hedged its estimated Euro exposure from 1 January 2015 to 31 December 2015 at an average rate of 1 Euro = 81.0p. Similarly, the Group's estimated net exposure to the US$ has been hedged from 1 January 2015 to 30 September 2015 at an average rate of 1 sterling = US$1.60.
Dividend
I am pleased to announce that the Board has recommended a final dividend of 18.0p per share. The interim dividend, paid in July, was 4.9p per share, so that the total payout in respect of the year will amount to 22.9p per share, an increase of 13% over 2013, reflecting both the underlying growth in Group earnings during 2014 and the Board's confidence in the Group's continued progress. This proposed payout marks an eleven year unbroken record of double digit increases in the dividend since flotation in November 2003.
The proposed total dividend is 1.57 times covered by basic earnings per share. Subject to shareholder approval at the Annual General Meeting, the final dividend will be paid on 27 February 2015 to all shareholders on the register at 30 January 2015.
Share Option Plan
RWS announced on 4 April 2013 that the Board had approved a new share option plan for executive directors and senior managers, under which options would be granted over ordinary shares representing up to a maximum of 4% of the Group's share capital. The plan is designed to further align the interests of senior employees and shareholders and to promote the retention of the Group's senior executives.
Options have been issued to ten participants, with a subscription price of 646p per share. The earliest vesting date is 3 April 2015 and the latest exercise date is 3 April 2021.
Auditors
Earlier this year, in line with best practice, RWS carried out a competitive audit tender process. As a result of which, PricewaterhouseCoopers LLP "PwC" were appointed as the Group's auditors.
Shareholders will be invited to approve PwC's re-appointment as auditors at the Company's Annual General Meeting in February 2015.
I would like to take this opportunity to thank BDO for their help and support over many years as we have grown and developed the RWS business.
Proposed Share Split
The directors, having consulted with the Group's brokers, consider that an enlarged number of ordinary shares with a lower price per share will serve to improve the marketability and liquidity of the Group's shares.
A proposal will therefore be put to the forthcoming AGM that, subject to shareholder approval, a 5 for 1 share split will be effected.
People
RWS has always been dependent upon the quality and commitment of its entire staff to provide and maintain the high levels of service expected by the Group's clients. We were pleased that we were able to avoid net staff reductions in the recent recession and headcount has now reached 605 full time equivalents (2013: 591), with productivity continuing to improve. I wish to record my thanks to all of them for their contribution.
I am delighted to announce that David Shrimpton, the Group's senior Non Executive Director, has agreed to become Non Executive Deputy Chairman. David has worked with RWS since January 2010 and continues to bring a wealth of financial and business experience to the Board. His appointment is a significant step towards ensuring the future growth of the RWS business.
Corporate Social Responsibility
RWS seeks to be a socially responsible Group which has a positive impact on the communities it operates in. We look to employ a workforce which reflects the diversity of the Group's communities. No discrimination is tolerated, and we endeavour to give all employees the opportunity to develop their capabilities. We provide an excellent working environment, the latest technology and appropriate training.
RWS's staff contributes generously on a monthly basis to a wide selection of local and national charities and their contributions are matched by the Group.
Current Trading and Outlook
We have made a reasonable start to the new financial year, and expect to make further progress as we experience the full benefit of 2014 client wins and develop the targeted cross selling opportunities provided by the inovia acquisition.
The Board fully expects the Group to grow revenues and profits in 2015, consolidating its market leading position in the intellectual property support services space.
Andrew Brode
Chairman
9 December 2014
Strategic Report
Business Model
RWS is the world's largest provider of patent translations and one of the leading players in the provision of intellectual property support services and high level technical translation services. It has a blue chip multinational client base spanning Europe, North America and Asia, active in patent filing in the medical, pharmaceutical, chemical, aerospace, defence, automotive and telecoms industries The Group's principal business activities are:
· Patent translations, which currently accounts for over 55% of Group revenue. RWS differentiates itself from the competition through the quality of its translations and the high level of customer service and support it provides.
· Information, which includes 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 sold exclusively as an annual subscription service.
· International web based patent filing solutions via the recently acquired inovia business. This activity is expected to grow and continue to be a significant source of patent translation revenues for the RWS group.
· Commercial translations, with a particular emphasis on medical and technical translations.
Our Strategy
RWS's objective is to increase shareholder value by growing the Group's revenue and profit before tax.
Our strategy to achieve this is focused upon organic growth complemented by deploying the Group's substantial cash holdings for selective acquisitions, providing these can be demonstrated to enhance shareholder value.
Organic growth is driven by:
· increases in the worldwide patent filing activities of existing and potential multinational clients
· corporates, law firms and attorneys outsourcing all or part of the foreign patent search, filing and translation process
· the growing demand for language services and the Group's ability to increase its market share by winning new clients attracted by its leading position and reputation, in an otherwise fragmented sector
· the retention of our client base, which includes the majority of the top 20 patent filers both in Europe and globally, many of which will use the Group for substantially all of their patent translation requirements, and
· the addition of several key new clients each year with whom activity levels build up over time.
In terms of acquisitive growth, we continue to search for suitable potential acquisitions in the intellectual property support services and specialist commercial translation spaces. We seek niche businesses capable of delivering well above industry average levels of profitability or highly complementary businesses capable of reinforcing the Group's dominant position in intellectual property support and translation services.
We are particularly pleased to be able to show our progress against these stated objectives with 11 straight years of sales and profit growth.
|
Year ending 30th Sep |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
|
Annual Revenue £m |
27.3 |
31.0 |
35.9 |
40.8 |
46.2 |
54.1 |
55.7 |
60.6 |
65.4 |
68.8 |
77.4 |
93.6 |
|
Annual PBT Adj (£m) |
5.6 |
6.0 |
7.4 |
9.0 |
11.0 |
13.9 |
14.5 |
14.6 |
16.2 |
17.2 |
21.0 |
22.1 |
Operating Review
Patent Translations
The Group's core patent translations business represents approximately 55% of Group sales and grew underlying revenues by 7% to £52.0m (2013: £48.8m, after elimination of £4.7m of intercompany sales to inovia). The growth drivers were earlier client wins, and organic growth from the established client base. The macroeconomic background delivered further grounds for optimism with record numbers of new patent applications recorded in 2013.
The Group has enhanced its market leadership within its chosen niche of servicing a worldwide blue-chip client base, embracing many of the world's leading patent filers. As evidence of this leading role, the Group serviced 10 of the top 15 applicants at the World Intellectual Property Office and 11 of the top 15 applicants at the European Patent Office in 2013. Following the acquisition of inovia in September 2013, we have been able to combine the direct sales efforts of RWS and inovia in the US (the largest market for intellectual property support services) and have been successful in Europe in developing selective cross selling opportunities with major European corporates. China continues to attract North American and European patent filers seeking patent protection there, as a result of which our headcount in China has grown to 57 employees. As first outlined in last year's review, we have continued to develop the production and training centre with two universities in Rizhao, which has caught the attention of the university in Xi'an where a similar centre has been established. These centres enable the Group to expand its Chinese offering but at a lower cost than in Beijing. Our long term relationship with international patent bodies seeking to enlarge their collections of translated Chinese patent prosecution documents has prospered.
Commercial Translations
The commercial translations business, which accounts for 17% of Group sales, experienced currency headwinds and cyclical downturns. We group all non-patent translations in this division and it remains the sector of our business most exposed to competition. It operates in the UK, Germany and Switzerland. Given the intensity of the competition, we continue to focus upon specialist niches and larger projects where the Group's resources and expertise can provide a competitive edge. We experienced subdued trading in our German-speaking activities in the first half, followed by some improvement in the second half. We have now established an into-German patent translation facility in the Berlin office, which will balance the cyclical effect evident in the commercial translation activities and improve margins through better utilisation of existing resources. The commercial translation business does enable RWS to offer customers a complete solution to their translation needs whilst continuing to provide good cross selling opportunities for the patent translation business.
Information
The information business accounts for 7% of Group sales and enjoyed an outstanding year, with growth of 17% in revenues to £6.2m (2013: £5.3m). In particular, our patent search and watch services grew by 36%, whilst the high margin subscription service - PatBase - grew by a further 5%. We have continued to invest in PatBase searchability, content and geographic coverage, and will make further investments in 2015 to secure the resilience and robustness of the platform which provides 24/7 worldwide access.
inovia
The Group acquired the remaining two thirds of inovia's equity in September 2013. In its first full year contribution, inovia achieved a 15% increase in gross sales to US$33.0m (2013: US$28.8m, of which only US$1.8m was post acquisition revenue and consolidated into the 2013 financial statements). In sterling terms, gross sales reached £19.4m (after elimination of £0.5m of intercompany sales to Patent Translations), and as a continued underlying benefit of the acquisition, patent translation transfer revenues reached $7.1m (2013: $7.3m).
With new product developments and as a full member of the Group, inovia has been able to attract larger corporates. Its largest customer in 2014, a leading pharmaceutical group, developed from a small volume of sales in 2013. Further penetration of larger corporates is likely to put pressure on margins, but forms part of the strategy for inovia within the Group. It helps to achieve growth and increase market share, generates incremental higher margin translation revenue, and further improves client retention rates. We have started to see the benefits from the reorganisation of the senior sales management in the US in 2014 (inovia's key market) and we expect a further double digit sales growth in 2015.
In October this year inovia was recognised for the first time as the leading foreign filing provider by Managing Intellectual Property magazine's annual ranking of the top Patent Cooperation Treaty (PCT) firms, further consolidating the Group's position as a leading provider of intellectual property support services, which now account for over 80% of the Group's sales.
Market Update
Patent Filing Statistics
The USA and China drove record-level patent-filing activity via WIPO in 2013 as the number of annual international patent applications surpassed the 200,000 mark for the first time, showing a 5% increase in the 2013 PCT filings to 205,300 (2012: 195,400). The European Patent Office (EPO) also published record numbers, with the total number of European patent filings increasing by 3% to 265,690 (2012: 258,450). European filings from Chinese applicants grew by 16%. Patent applications in China increased by 26% to 825,136 (120,200 of which came from foreign applicants).
Risk Management
The Group maintains a risk register which is reviewed and assessed on an annual basis by the Board of Directors. The key risks to the business are errors in the provision of the Group's services, in a mismatch between currencies (especially as between the Euro and Sterling), in regulatory changes to patent translation requirements in Europe and in the failure to successfully integrate acquired businesses into RWS. Additionally, as with any people business delivering high quality services, the Group depends upon its ability to attract and retain well trained staff.
These risks are mitigated as follows:
· Failings in service provision are most likely to arise as a result of human error. RWS was one of the earliest adopters of ISO certification and invests in exhaustive and regularly updated procedures to minimise the risk of error. In addition, the Group carries substantial professional indemnity insurance.
· As previously reported, currency risk is partly mitigated via hedging operations.
· We have in the past drawn the market's attention to the proposed European Union Patent ("the Unitary Patent") and its potential impact upon the Group's sales and profits. Despite significant hurdles, the Unitary Patent has been making further progress. There appears to be consensus now that the earliest implementation would be in 2016 and that this is still very optimistic. It should be noted that a number of member states of the current European Patent system are not EU members, and that Spain and Italy remain implacably opposed to the Unitary Patent. Professional opinion remains highly sceptical both as regards jurisdiction and actual financial benefits, which cannot be quantified until fees have been set and published. Because the proposed Unitary Patent will run in parallel with the existing system, it will not provide any financial advantage to many corporates seeking patent protection in only selected key countries, and will have a new and untried litigation system. Our research indicates that there is currently little interest amongst large corporates and their professional advisers in full usage of the new system. That being the case, we anticipate minimal, incremental loss of revenues in the first few years after the introduction of the Unitary Patent.
· In September 2013 RWS acquired the inovia business. Integration is ongoing and focuses on several areas. Supplier and service consolidation continues to reduce technical costs and improve underlying margins. New technical developments ensure maintenance of our leading market position and help to increase the attractiveness of our technical solutions for new markets and existing RWS customers. Selected cross-selling opportunities have brought in new clients and continue to enhance our pipeline. Inovia Directors and other senior managers, regularly attend Board and other meetings in the UK, which improves communication and enhances the integration process.
· As a significant employer in the local area of South Buckinghamshire, we believe we offer stability of employment, competitive salaries and an excellent working environment. In the current economic climate we have been successful in recruiting high calibre staff as required, but competition for talented people to work on the periphery of the London conurbation is undoubtedly intensifying.
RWS Holdings plc
Annual Report 2014
Consolidated Statement of Comprehensive Income for the year ended 30 September
|
|
Note |
2014 £'000 |
2013 £'000 |
|
Revenue |
3 |
93,556 |
77,404 |
|
Cost of sales |
|
(56,783) |
(45,558) |
|
Gross profit |
|
36,773 |
31,846 |
|
Administrative expenses |
|
(17,187) |
(12,981) |
|
Operating profit |
|
19,586 |
18,865 |
|
Analysed as: |
|
|
|
|
Operating profit before charging: |
|
22,036 |
20,060 |
|
Amortization of customer relationships and trademarks |
|
(1,572) |
(727) |
|
Share based payment costs |
|
(878) |
(468) |
|
Operating profit |
|
19,586 |
18,865 |
|
Finance income |
|
57 |
456 |
|
Finance costs |
|
(14) |
- |
|
Share in results of associate |
|
- |
496 |
|
Gain on disposal of associate |
|
- |
693 |
|
Profit before tax |
|
19,629 |
20,510 |
|
Taxation expense |
4 |
(4,430) |
(4,592) |
|
Profit for the year |
|
15,199 |
15,918 |
|
Other comprehensive expense* |
|
|
|
|
Loss on retranslation of foreign operations |
|
(618) |
(294) |
|
Total other comprehensive expense |
|
(618) |
(294) |
|
Total comprehensive income attributable to: |
|
|
|
|
Owners of the parent |
|
14,581 |
15,624 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per Ordinary share (pence per share) |
6 |
35.9 |
37.6 |
|
Diluted earnings per Ordinary share (pence per share) |
6 |
35.6 |
37.6 |
*Other comprehensive expense includes only items that will be subsequently reclassified to Profit before tax when specific conditions are met.
RWS Holdings plc
Annual Report 2014
Consolidated Statement of Financial Position
at 30 September
|
Registered company 3002645
|
|
2014 £'000 |
2013 £'000 |
|
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Goodwill |
|
30,512 |
30,780 |
|
Intangible assets |
|
8,228 |
9,896 |
|
Property, plant and equipment |
|
17,310 |
13,002 |
|
Deferred tax assets |
|
353 |
270 |
|
|
|
56,403 |
53,948 |
|
Current assets |
|
|
|
|
Trade and other receivables |
|
16,385 |
16,574 |
|
Foreign exchange derivatives |
|
554 |
566 |
|
Cash and cash equivalents |
|
22,479 |
18,305 |
|
|
|
39,418 |
35,445 |
|
Total assets |
|
95,821 |
89,393 |
|
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
|
12,277 |
11,512 |
|
Income tax payable |
|
2,198 |
2,555 |
|
Provisions |
|
480 |
740 |
|
|
|
14,955 |
14,807 |
|
Non-current liabilities |
|
|
|
|
Other payables |
|
30 |
- |
|
Provisions |
|
378 |
530 |
|
Deferred tax liabilities |
|
2,024 |
2,343 |
|
|
|
2,432 |
2,873 |
|
Total liabilities |
|
17,387 |
17,680 |
|
Total net assets |
|
78,434 |
71,713 |
|
Equity |
|
|
|
|
Capital and reserves attributable to owners of the parent |
|
|
|
|
Share capital |
|
2,116 |
2,116 |
|
Share premium |
|
3,583 |
3,583 |
|
Share based payment reserve |
|
1,346 |
468 |
|
Reverse acquisition reserve |
|
(8,483) |
(8,483) |
|
Foreign currency reserve |
|
569 |
1,187 |
|
Retained earnings |
|
79,303 |
72,842 |
|
Total equity |
|
78,434 |
71,713 |
RWS Holdings plc
Annual Report 2014
Consolidated Statement of Changes in Equity
for the year ended 30 September
|
|
Share capital £'000 |
Share premium account £'000 |
Other reserves (see below) £'000 |
Retained earnings £'000 |
Total equity attributable to owners of the parent £'000 |
|
At 1 October 2012 |
2,116 |
3,583 |
(7,002) |
64,532 |
63,229 |
|
|
|
|
|
|
|
|
Profit for the year |
- |
- |
- |
15.918 |
15,918 |
|
Currency translation differences |
- |
- |
(294) |
- |
(294) |
|
|
|
|
|
|
|
|
Total Comprehensive income for |
- |
- |
(294) |
15,918 |
15,624 |
|
the year 30 September 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends |
- |
- |
- |
(7,608) |
(7,608) |
|
Credit arising on share based payments |
- |
- |
468 |
- |
468 |
|
|
|
|
|
|
|
|
At 30 September 2013 |
2,116 |
3,583 |
(6,828) |
72,842 |
71,713 |
|
|
|
|
|
|
|
|
Profit for the year |
- |
- |
- |
15,199 |
15199 |
|
Currency translation differences |
- |
- |
(618) |
- |
(618) |
|
|
|
|
|
|
|
|
Total Comprehensive income for |
- |
- |
(618) |
15,199 |
14,581 |
|
the year 30 September 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends |
- |
- |
- |
(8,738) |
(8,738) |
|
Credit arising on share based payments |
- |
- |
878 |
- |
878 |
|
|
|
|
|
|
|
|
At 30 September 2014 |
2,116 |
3,583 |
(6,568) |
79,303 |
78,434 |
|
Other reserves |
Share based payment reserve £'000 |
Reverse acquisition reserve £'000 |
Foreign currency reserve £'000 |
Total other reserves £'000 |
|
At 1 October 2012 |
- |
(8,483) |
1,481 |
(7,002) |
|
|
|
|
|
|
|
Currency translation differences |
- |
- |
(294) |
(294) |
|
|
|
|
|
|
|
Other Comprehensive income for the year |
- |
- |
(294) |
(294) |
|
Credit arising on share based payments |
468 |
- |
- |
468 |
|
|
|
|
|
|
|
At 30 September 2013 |
468 |
(8,483) |
1,187 |
(6,828) |
|
|
|
|
|
|
|
Currency translation differences |
- |
- |
(618) |
(618) |
|
|
|
|
|
|
|
Other Comprehensive income for the year |
- |
- |
(618) |
(618) |
|
Credit arising on share based payments |
878 |
- |
- |
878 |
|
|
|
|
|
|
|
At 30 September 2014 |
1,346 |
(8,483) |
569 |
(6,568) |
RWS Holdings plc
Annual Report 2014
Consolidated Statement of Cash Flows
for the year ended 30 September
|
|
|
2014 £'000 |
2013 £'000 |
|
Cash flows from operating activities |
|
|
|
|
Profit before tax |
|
19,629 |
20,510 |
|
Adjustments for: |
|
|
|
|
Depreciation of property, plant and equipment |
|
599 |
666 |
|
Amortization of intangible assets |
|
1,632 |
799 |
|
Share based payment costs |
|
878 |
468 |
|
Finance income |
|
(57) |
(456) |
|
Finance expense |
|
14 |
- |
|
Share in results of associate |
|
- |
(496) |
|
Gain on disposal of associate |
|
- |
(693) |
|
Operating cash flow before movements |
|
|
|
|
in working capital and provisions |
|
22,695 |
20,798 |
|
Decrease/(increase) in trade and other receivables |
|
64 |
(309) |
|
Increase/(decrease) in trade and other payables |
|
503 |
(36) |
|
Cash generated from operations |
|
23, 262 |
20,453 |
|
Income tax paid |
|
(5,239) |
(4,249) |
|
Net cash inflow from operating activities |
|
18,023 |
16,204 |
|
Cash flows from investing activities |
|
|
|
|
Interest received |
|
108 |
151 |
|
Acquisition of subsidiary, net of cash acquired |
|
- |
(14,892) |
|
Purchases of property, plant and equipment |
|
(4,919) |
(376) |
|
Purchases of intangibles (computer software) |
|
(78) |
(34) |
|
Net cash outflow from investing activities |
(4,889) |
(15,151) |
|
|
Cash flows from financing activities |
|
|
|
|
Dividends paid |
|
(8,738) |
(7,608) |
|
Net cash outflow from financing activities |
|
(8,738) |
(7,608) |
|
Net increase/(decrease) in cash and cash equivalents |
|
4,396 |
(6,555) |
|
Cash and cash equivalents at beginning of the year |
|
18,305 |
25,096 |
|
Exchange losses on cash and cash equivalents |
|
(222) |
(236) |
|
Cash and cash equivalents at end of the year |
|
22,479 |
18,305 |
|
|
|
|
|
|
Free cash flow |
|
|
|
|
Analysis of free cash flow |
|
|
|
|
Net cash generated from operations |
|
23,262 |
20,453 |
|
Net interest received |
|
108 |
151 |
|
Income tax paid |
|
(5,239) |
(4,249) |
|
Purchases of property, plant and equipment |
|
(4,919) |
(376) |
|
Purchases of intangibles (computer software) |
|
(78) |
(34) |
|
Free cash flow |
|
13,134 |
15,945 |
The Directors consider that the free cash flow analysis above indicates the cash generated from normal activities excluding acquisitions and dividends paid.
Notes to the Accounts
1. General information
RWS Holdings plc is a company incorporated in the United Kingdom. The address of the registered office is Europa House, Chiltern Park, Chiltern Hill, Chalfont St Peter, Buckinghamshire SL9 9FG.
The Group's financial statements for the year ended 30 September 2014, from which this financial information has been extracted, and for the comparative year ended 30 September 2013, are prepared in accordance with International Financial Reporting Standards ('IFRS') adopted for use in the EU.
The financial information shown in the announcement for the year ended 30 September 2014 and the year ended 30 September 2013, as set out above, do not constitute statutory accounts, within the meaning of Section 435 of the Companies Act 2006, but is derived from those accounts. The results have been prepared using accounting policies consistent with those used in the preparation of the statutory accounts. Statutory accounts for the year ended 30 September 2013 have been delivered to the Registrar of Companies and those for the year ended 30 September 2014 will be delivered shortly, having been approved by the Directors on 8 December 2014. The auditors have reported on the accounts for the years ended 30 September 2013 and 30 September 2014; their reports were unqualified, did not contain statements under Section 498 (2) or (3) of the Companies Act 2006 and did not contain any matters to which the auditors drew attention without qualifying their report.
Copies of this announcement are available at the registered office of the Company for a period of 14 days from the date hereof.
2. Significant accounting policies
Basis of accounting
The principal accounting policies adopted in the preparation of this preliminary announcement remain unchanged from those set out fully in the financial statements for the year ended 30 September 2013.
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), this announcement does not itself contain sufficient information to comply with IFRS. The Group expects to publish full financial statements that comply with IFRS on 16 January 2015.
3. Segment information
The Group's operations are based in UK, Continental Europe, Asia, United States of America and Australia. The table below shows turnover by the geographic market in which customers are located.
|
|
2014 £'000 |
2013 £'000 |
|
UK |
18,424 |
11,401 |
|
Continental Europe |
46,134 |
43,522 |
|
Asia, United States of America and Australia |
28,998 |
22,481 |
|
|
93,566 |
77,404 |
4. Taxation
|
|
|
2014 £'000 |
2013 £'000 |
|
Taxation recognised in the income statement is as follows: |
|
|
|
|
Current tax expense |
|
|
|
|
Tax on profit for the current year |
|
|
|
|
- UK |
|
4,077 |
4,097 |
|
- Overseas |
|
717 |
861 |
|
Adjustment to prior years |
|
89 |
(180) |
|
|
|
4,883 |
4,778 |
|
Deferred tax |
|
|
|
|
Current year movement |
|
(395) |
(196) |
|
Prior year movement |
|
(58) |
10 |
|
Total tax expense in the Statement of Comprehensive Income |
4,430 |
4,592 |
|
The table below reconciles the UK statutory tax charge to the Group's total tax charge.
|
|
|
2014 £'000 |
2013 £'000 |
|
Profit before tax |
|
19,629 |
20,510 |
|
Notional tax charge at UK corporation tax rate of 22.0 % (2013: 23.5%) |
4,318 |
4,820 |
|
|
Effects of: |
|
|
|
|
Items not deductible or not chargeable for tax purposes |
(116) |
(160) |
|
|
Gain on disposal of associate not chargeable for tax |
- |
(163) |
|
|
Differences in overseas tax rates |
|
139 |
275 |
|
Adjustments in respect of prior periods |
|
89 |
(180) |
|
Total tax expense for the year |
|
4,430 |
4,592 |
5. Dividends to shareholders
|
|
2014 pence per share |
2014
£'000 |
2013 pence per share |
2013
£'000 |
|
Final, paid 21 February 2014 (2013: paid 22 February 2013) |
15.75 |
6,665 |
13.48 |
5,704 |
|
Interim, paid 25 July 2014 (2013: paid 19 July 2013) |
4.90 |
2,073 |
4.50 |
1,904 |
|
|
20.65 |
8,738 |
17.98 |
7,608 |
The Directors recommend a final dividend in respect of the financial year ended 30 September 2014 of 18.00 pence per Ordinary share to be paid on 27 February 2015 to shareholders who are on the register at 30 January 2015. This dividend is not reflected in these financial statements as it does not represent a liability at 30 September 2014. The final proposed dividend will reduce shareholders' funds by an estimated £7.6 million.
6. Earnings per Ordinary share
Basic earnings per share are based on the post-tax group profit for the year and a weighted average number of Ordinary shares in issue during the year calculated as follows:
|
|
2014 |
2013 |
|
Weighted average number of Ordinary shares in issue for basic earnings |
42,315,968 |
42,315,968 |
|
Dilutive impact of share options |
410,758 |
23,190 |
|
Weighted average number of Ordinary shares for diluted earnings |
42,726,726 |
42,339,158 |
Adjusted earnings per Ordinary share is also presented to eliminate the effects of amortization of customer relationships, trademarks, share based payments and in 2013, a gain on sale of an associate. This presentation shows the trend in earnings per Ordinary share that is attributable to the underlying trading activities. The reconciliation between the basic and adjusted figures is as follows:
|
|
2014 £'000 |
2013 £'000 |
2014 Basic earnings per share pence |
2013 Basic earnings per share pence |
2014 Diluted earnings per share pence |
2013 Diluted earnings per share pence |
|
Profit for the year |
15,199 |
15,918 |
35.9 |
37.6 |
35.6 |
37.6 |
|
Post tax adjustments |
|
|
|
|
|
|
|
Amortization of customer relationships and trademarks |
1,242
- |
574 |
3.0 |
1.4 |
2.9 |
1.4 |
|
Gain on sale of Associate |
(547) |
- |
(1.3) |
- |
(1.3) |
|
|
Charges for share based payment |
694 |
370 |
1.6 |
0.9 |
1.6 |
0.9 |
|
Adjusted earnings |
17,135 |
16,315 |
40.5 |
38.6 |
40.1 |
38.6 |
7. Events since the reporting date
No significant events have occurred since 30 September 2014 at the date of authorisation of this announcement.
This information is provided by RNS
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