TIDMRWS
RNS Number : 0212R
RWS Holdings PLC
06 December 2016
6 December 2016
RWS Holdings plc
Results for the year ended 30 September 2016
A milestone year in which we established a leading position in
life sciences language services
RWS Holdings plc ("RWS", the "Group"), the world's leading
provider of intellectual property support services (patent
translations, international patent filing solutions and searches),
commercial translations and linguistic validation, today announces
its final results for the year ended 30 September 2016.
Financial Highlights:
Delivered record revenues and profits ahead of market
expectations
-- Sales increased by 28% to GBP122.0m (2015: GBP95.2m)
-- Adjusted operating profit* was up 40% to GBP32.0m (2015: GBP22.9m)
-- Adjusted profit before tax* rose by 35% to GBP30.6m (2015: GBP22.7m)
- Reflects 10% underlying profit growth, 2% positive exchange
rate movements and 23% from CTi's contribution since acquisition
net of associated loan interest costs
-- Reported profit before tax was up 21% to GBP25.1m (2015: GBP20.7m)
-- Adjusted earnings per share* of 10.9p (2015: 8.1p), an increase of 35%
-- Final dividend of 4.45p (2015: 3.85p); total dividend
increased by 15% to 5.6p (2015: 4.88p), continuing an unbroken
series of dividend increases since flotation in 2003
-- Net debt at year end of GBP1.5m (2015: GBP30.6m net cash),
after GBP47.1m acquisition in October 2015
*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 stated before amortisation of intangibles,
share option costs and exceptional acquisition costs.
Operational Highlights:
Continued organic progress and investment in acquisition for
future growth
-- Acquisition of CTi, the world's leading translation company
focussing exclusively on life sciences translation and linguistic
validation:
o Excellent eleven-month contribution from CTi, with sales of
US$30.5m (11m 2015 US$27.0m, pre-acquisition)
o Integration of Group's life science activities complete
-- Good performance from core patent translation activities:
o Enhanced gross margins
o New client wins
o Excellent progress in China
-- PatBase revenues advanced by 7%
-- Currency tailwinds post EU referendum bringing useful gains
-- Intellectual property support services accounted for 70%, and
life sciences 20%, of Group revenues
-- Overall Group gross margin improved by 339bp
Current Trading and Outlook:
-- Group performance in the first two months of the new
financial year has been very strong, with underlying growth aided
by favourable currency movements
-- The Group remains focussed on developing sales opportunities
across the world from its expanded geographical presence, service
range and technology offerings
-- Net estimated Euro trading exposure hedged at an average rate
of 1 Euro = 83p to 30 September 2017
Andrew Brode, Chairman of RWS, commented:
"RWS has delivered exceptional results against a low-growth
world economic environment and the first year of our ownership of
CTi has fulfilled all of our expectations.
"The Board remains highly encouraged by the Group's
opportunities to continue to grow significantly and profitably
across its now broader portfolio of market leading businesses,
particularly as it looks to build on its position in life sciences
in the USA.
"The Group's strong cash generation and healthy balance sheet
leave us well positioned to pursue that growth through acquisitions
and organic investment, whilst also maintaining our progressive
dividend policy."
A meeting for analysts will be held today at 9.00am at the
offices of MHP, 6 Agar Street, London WC2N 4HN. Please contact MHP
by emailing rws@mhpc.com if you would like to attend.
For further information, contact:
RWS Holdings plc
Andrew Brode, Chairman 01753 480200
MHP rws@mhpc.com
Katie Hunt / Simon Hockridge 0203 128 8100
Numis
Stuart Skinner / Kevin Cruickshank (Nominated Adviser) 0207 260 1000
Michael Burke (Corporate Broker)
This announcement contains inside information which is disclosed
in accordance with the Market Abuse Regulation which came into
effect on 3 July 2016.
About RWS:
RWS is the world's leading provider of intellectual property
support services (patent translations, international patent filing
solutions and searches), 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, East Hartford 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
Results for the year ended 30 September 2016
Chairman's Statement
I am pleased to report that RWS has delivered its best year ever
despite a far from robust global economic backdrop. For the
thirteenth consecutive year since listing on AIM in November 2003,
we have achieved growth in sales, underlying profits and dividends,
testimony to the strength of our market positions in patent
translations, intellectual property services and life sciences
services. During the year, we have also continued to invest in
those resources which can deliver future expansion.
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 growth in
PatBase, China and Japan. In addition, the Group benefited from a
strong maiden contribution from CTi, the US life sciences
specialist it acquired in October 2015. A material improvement in
Group gross margins also contributed to our record results.
Group sales advanced by 28% to GBP122.0m (2015: GBP95.2m).
Adjusted operating profit before amortisation of intangibles, share
option costs and exceptional acquisition expenses was up 40% at
GBP32.0m (2015: GBP22.9m).
Adjusted profit before tax, amortisation of intangibles, share
option costs and exceptional acquisition expenses increased by 35%
to GBP30.6m (2015: GBP22.7m). This produced an increase of 35% in
adjusted earnings per share to 10.9p (2015: 8.1p).
Reported profit before tax was GBP25.1m (2015: GBP20.7m). This
result reflected significantly greater amortisation of intangibles
largely driven by the CTi acquisition and totalling GBP4.6m (2015:
GBP1.6m), offset by lower share based payment costs. Basic earnings
per share were 9.0p (2015: 7.3p), a rise of 23%. The Group's
effective tax rate was 22.9% (2015: 24.8%).
As at 30 September 2016, shareholders' funds had reached
GBP108.7m (2015: GBP85.7m). At 1 October 2015 the Group had net
cash of GBP30.6m. The Group ended the 2016 financial year with net
debt of only GBP1.5m, after the GBP47.1m cash consideration for CTi
which was acquired at the end of October 2015, demonstrating the
Group's continued strong underlying cash generation. Other
significant cash outlays included corporation tax of GBP5.2m and
dividends of GBP10.6m.
Currency Effects and Hedging
This year has been marked by considerable volatility in global
currency markets. This was compounded in the aftermath of the EU
referendum in late June and the Group has benefitted from the
resulting decline in sterling. RWS is a prolific exporter of its
services meaning that over 85% of its revenues are non-sterling,
its principal exposures being to the euro and the US dollar. The
Group's estimated net exposure to the Euro has been hedged at an
average rate of 1 Euro = 83p for the whole of the year to 30
September 2017. The average rate experienced over 2015-16 was
78.1p. Exposure to the US dollar is largely offset by the five year
US$45m dollar loan drawn to acquire CTi.
Acquisition of a market leader in Life Sciences translations and
linguistic validation
The Group announced on 2 November 2015 that it had acquired the
entire issued share capital of Corporate Translations Inc. ("CTi")
for a cash consideration of US$70m. This acquisition was in line
with our stated strategy of complementing organic growth with
selective acquisitions which have growth potential in attractive
sectors and/or geographies, offer excellent margins and enhance
shareholder value.
The acquisition of CTi established a significant Group presence
in the USA which the Board believes is the largest growth
opportunity for RWS. CTi is one of the world's leading life
sciences translation and linguistic validation providers. It enjoys
a preferred supplier relationship with many of its key clients,
with extraordinary penetration of the blue chip life sciences
community. CTi's greater scale, combined with the existing RWS
specialist divisions, provided a step change in the Group's
competitive standing amongst the major pharmaceutical groups and
contract research organisations, whilst RWS' strong foothold in
Europe is already supporting CTi's expansion into the European life
sciences sector.
Funding for the acquisition was via a combination of a US$45m
five-year bank loan and the Group's internal cash resources.
The acquisition of CTi has been immediately and significantly
earnings enhancing, with the US$70m consideration based upon CTi
reporting in excess of US$7m EBITDA for the year ended 31 December
2015. We have now completed the integration of CTi with our Medical
Translation Division, which included the linguistic validation
specialist PharmaQuest, and we now report on it as part of our
combined life sciences activities. We were also pleased to have
appointed Sheena Dempsey as Chief Executive Officer of CTi in early
September, following the anticipated departure of the CTi vendors
after a hand-over period. She brings a wealth of experience and
knowledge of the life sciences space and is a welcome addition to
our strong operational management team across the Group.
Dividend
I am pleased to announce that the Board has recommended a final
dividend of 4.45p per share. The interim dividend, paid in July,
was 1.15p per share, so the total payout in respect of the year
will amount to 5.6p per share, an increase of 15% over 2015,
reflecting the Group's earnings growth during 2016 and the Board's
confidence in the Group's continued progress. This proposed payout
marks a thirteen-year unbroken record of increases in the dividend
since flotation in November 2003.
The proposed total dividend is 1.6 times covered by basic
earnings per share. Subject to shareholder approval at the Annual
General Meeting, the final dividend will be paid on 24 February
2017 to all shareholders on the register at 27 January 2017. The
shares will trade ex-dividend on 26 January 2017.
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 with shareholders and to promote the retention of the
Group's senior executives.
Options over 4% of the Group's share capital have been issued to
ten participants, with a subscription price of 129.2p per share.
The earliest vesting date was 3 April 2015 and the latest exercise
date is 3 April 2021. A total of 4,184,810 options were exercised
during the year.
People
The very nature of the Group's activities dictate that it will
always be dependent upon the quality and dedication of its entire
staff to meet the demands for high quality and timely delivery
required by its worldwide clients. Group headcount reached 792 full
time equivalents at the year-end (2015: 621), which includes the
143 CTi employees who joined the Group upon acquisition. I wish to
place on record my thanks to all of our employees for their
contribution to the Group's excellent results.
Corporate Social Responsibility
RWS has always sought to be a socially responsible Group which
has a positive impact on the communities it operates in. We look to
employ colleagues who reflect 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' staff contribute generously on a monthly basis to a wide
selection of local and national charities chosen by the staff, and
their contributions are matched by the Group.
Current Trading and Outlook
The Group has made a very strong start to the new financial
year, benefiting from significant underlying growth in revenues,
better gross margins and currency tailwinds.
The Board remains highly encouraged by the Group's opportunities
to continue to grow significantly and profitably across its now
broader portfolio of market leading businesses, particularly as it
looks to build on its position in life sciences in the USA.
The Group's strong cash generation and healthy balance sheet
leave us well positioned to pursue that growth through acquisitions
and organic investment, whilst also maintaining our progressive
dividend policy.
Andrew Brode
Chairman
6 December 2016
Strategic Review
Business Model
RWS is the world's leading provider of intellectual property
(IP) support services (patent translations, international patent
filing solutions and searches), high level technical and commercial
translation services and, following the acquisition of Corporate
Translation Inc, a leading provider of translation and linguistic
validation services to the life sciences sector. It has a blue chip
multinational client base spanning Europe, North America and Asia,
particularly active in patent filing in the medical,
pharmaceutical, chemical, aerospace, defence, automotive and
telecoms industries. The Group's principal business activities
are:
-- Patent translations and filing, which currently accounts for
65% of Group revenue. RWS differentiates itself from the
competition through the quality of its translations, its high level
of IP expertise and customer service and the use of its
international web based patent filing platform, 'inovia'. Uniquely,
the business employs over 100 full time highly qualified
translators.
-- Following the acquisition in October 2015 of Corporate
Translations Inc, RWS has established a separate division, focussed
solely on the language service needs of the life sciences market,
providing technical translations and linguistic validation to large
pharmaceutical corporations and clinical research organisations in
North America and Europe.
-- 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.
-- Commercial translations, with a particular emphasis on 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 focussed upon organic growth
complemented by 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
-- the development of new drugs by the pharmaceutical industry
-- the outsourcing by corporates, clinical research
organisations, law firms and attorneys of all or part of their
foreign patent search, filing and translation and linguistic
validation processes
-- 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 and in new and/or growing geographies
-- increasing market share, particularly in the patent translation and life sciences markets
-- the retention of our client base, which includes a large
share 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 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, with
our primary focus currently on life sciences in the USA. 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 language services.
We are particularly pleased to be able to show our progress
against these stated objectives with 13 straight years of sales and
profit growth since flotation.
Year
ending
30
Sep 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
---------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------
Annual
Revenue
(GBPm) 27.3 31.0 35.9 40.8 46.2 54.1 55.7 60.6 65.4 68.8 77.4 93.6 95.2 122.0
---------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------
Annual
PBT
Adj
(GBPm) 5.6 6.0 7.4 9.0 11.0 13.9 14.5 14.6 16.2 17.2 21.0 22.1 22.7 30.6
---------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------
Operating Review
Patent Translations and Filing
The Group's core patent translation and filing business
(including inovia) represents 65% of Group sales and grew revenues
by 8% to GBP79.4m (2015: GBP73.3m). This performance reflects
earlier client wins, organic growth from the established client
base, and further strong growth in China. The macroeconomic
background delivered further grounds for confidence with record
numbers of new patent applications in 2015.
The Group has maintained its market leadership, having recently
successfully renewed master service agreements with many of its top
clients. It services 11 of the top 20 applicants at the World
Intellectual Property Office and 12 of the top 20 applicants at the
European Patent Office in 2015.
Selling IP services under the RWS inovia brand, the US and
European sales teams continue to develop opportunities with large
international patent filers which will support FY17 sales. In Asia
we continued successfully with our strategy to target Japanese and
Chinese international filers for our patent translation and filing
services. Sales from Japan are supporting our current growth, while
progress in China with a number of innovators is expected to
support additional growth in the medium term. 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 70 employees (2015: 63). We are operating from three
locations and have continued to develop production and training
centres with several Chinese universities. These centres enable the
Group to expand its Chinese offering but at a lower cost than in
Beijing. We have also continued to expand our long term
relationships with international patent bodies seeking to enlarge
their collections of translated Chinese patent prosecution
documents.
Life Sciences
The Group's life sciences division accounts for 20% of the
Group's sales (GBP24.4m compared to GBP4.2m in 2015) and focusses
on the language service requirements of Pharmaceutical corporations
and Clinical Research Organisations.
The results of this division include the sales of RWS businesses
which service the life sciences sector, namely PharmaQuest and
Medical Translation Division ("MTD") and were previously included
within the Commercial Translations division, in addition to an 11
month revenue (US$30.5m (2015: US$27.0m)) contribution from CTi
since its acquisition in October 2015.
During the year we successfully completed a thorough market
search for a new CEO ahead of the anticipated departure of the
vendors of CTi who wished to pursue philanthropic ventures. In
early September we announced the appointment of Sheena Dempsey. As
described in more detail below, RWS has successfully completed the
integration of PharmaQuest and MTD with CTi such that all 3
businesses now operate on the same operating system, using the same
process and report to Sheena.
Commercial Translations
The commercial translations business, which accounts for 10% of
Group sales and operates in the UK, Germany and Switzerland,
reported a 2% growth in revenues to GBP11.9m (2015: GBP11.7m)
(after restatement for the move of PharmaQuest and MTD revenues to
the new life sciences division). We have grouped all non-patent and
non-life science translations in this service line and it remains
the segment of our business most exposed to competition. 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 and to investigate ways of
improving margins through production process efficiencies.
The recently established German patent translation facility is
steadily growing and will both balance the cyclical effect evident
in the commercial translation activities and improve Germany's
contribution to Group 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 and life sciences businesses, which have already
made use of interpreting services provided by Group company
Eclipse.
Information
The information business accounts for 5% of Group sales and
reported revenues up 7% to GBP6.4m (2015: GBP6.0m) reflecting
several successful client wins and a good flow of regular work from
a number of clients. The high margin subscription service - PatBase
- grew by 7.2% during the year. We have continued to invest in
PatBase searchability, content, analytics and geographic coverage
as well as in a robust, state of the art infrastructure to secure
the resilience of the platform which provides 24/7 worldwide
access.
Market Update
Patent Filing Statistics
The World Intellectual Property Office (WIPO) has published
figures showing a 7.8% world-wide increase in patent applications
in 2015, a higher growth rate than the 4.5% seen in 2014. Overall
growth is driven by Chinese domestic applications, with the US
still being the most active in international filing. Filings are
under the two main international filing systems, the PCT (Patent
Cooperation Treaty) and the European Patent; PCT numbers increased
by 1.7% to 218,000 and European Patent application numbers by 1.6%
to 278,867 in 2015.
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, in the emergence of new translation
technologies, and 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 the first language services provider
and, independently, the first search company to adopt 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 profits and the uncertainty
around the timetable for its implementation. As one of the three
largest patent filers in Europe, the UK would play a key role in
the future administration of the Unitary Patent and has been
designated as one of the three countries to host a Unitary Patent
court. Given the UK's 'Brexit' vote, there was considerable
uncertainty as to whether the UK would ratify the Unitary Patent
prior to its exit from the European Union. However, on 28 November
2016 the UK government announced that it is proceeding with
preparations to ratify the Unified Patent Court Agreement, which
could see the UP introduced in the second half of 2017.
As previously reported, there is scepticism among applicants and
the IP profession both as regards the UP's jurisdiction and also
the actual financial benefits for those applicants which do not
require Europe-wide patent coverage. Because the proposed Unitary
Patent will run in parallel with the existing system, it will not
provide any financial advantage to many corporates who only seek
patent protection in selected key countries. In addition,
corporates using the Unitary Patent scheme for the first time will
also run the risk of a new and untried intellectual property
litigation system.
To date there has been insufficient guidance from the UK
Government as to the terms it will seek for UK's exit from the EU.
The uncertainty of whether the UP will still cover the UK when it
finally exits the EU could add further reluctance to using the new
system. We therefore anticipate a minimal loss of revenue in FY17
and we will be closely monitoring client reaction and legal
developments over the next six months to establish the
impact/position for FY 18 and beyond.
-- In October 2015, RWS acquired CTi with the intention of
building a single life sciences business with greater global reach.
The subsequent integration focussed on merging RWS' smaller
existing life sciences Businesses of PharmaQuest and MTD into CTi.
This integration work included retraining staff, the consolidation
of customers and suppliers, and establishing strong IT links
between the businesses. This work is now complete.
The supplier consolidations have reduced technical costs and
improved margins, whilst the consolidation of customers has
improved the focus of our service offering and enabled RWS to
provide its life science customers with a consistent, high level of
service across both their US and European operations. In addition,
cross-selling opportunities have already been identified and are
beginning to yield positive results as well as enhancing our sales
pipeline.
The framework for and experience gained from this successful CTi
and RWS integration will be utilised on future acquisitions.
-- The Group has always embraced new translation technologies
and used them to good effect in order to maintain and improve
margins, efficiency and competitiveness. Recognizing advances in
machine translation technology (MT), we have just completed an
internal programme to investigate and trial best MT use and have
started integrating MT engines into the translation workflow in
appropriate areas along with Translation Memory technology. Very
recently, substantial technological progress has been made with the
introduction of Neural Machine Translation (NMT) engines, which
will also be employed by the Group following further testing and
supplier selection. It is clear that the market for general
translations will be further eroded by NMT and that a successful
LSP (Language Services Provider) needs to focus on premium quality
translation work in critical areas, as RWS does in IP and life
sciences.
-- 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, as evidenced by the exceptionally low unemployment
statistics for the area.
RWS Holdings plc
Annual Report 2016
Consolidated Statement of Comprehensive Income
for the year ended 30 September
2016 2015
----------------------------- ----- ---------- ----------
Note GBP'000 GBP'000
----------------------------- ----- ---------- ----------
Revenue 3 121,986 95,215
Cost of sales (69,792) (57,706)
----------------------------- ----- ---------- ----------
Gross Profit 52,194 37,509
Administrative expenses (25,671) (16,677)
----------------------------- ----- ---------- ----------
Operating profit 26,523 20,832
----------------------------- ----- ---------- ----------
Analysed as:
Operating profit before
charging: 32,023 22,894
Amortization of acquired
intangibles (4,639) (1,607)
Acquisition costs (855) -
Share based payment
costs (6) (455)
----------------------------- ----- ---------- ----------
Operating profit 26,523 20,832
----------------------------- ----- ---------- ----------
Finance income 16 71
Finance costs (1,448) (251)
----------------------------- ----- ---------- ----------
Profit before tax 25,091 20,652
Taxation expense 4 (5,758) (5,124)
----------------------------- ----- ---------- ----------
Profit for the year 19,333 15,528
----------------------------- ----- ---------- ----------
Other comprehensive
income*
Gain on retranslation
of foreign operations 8,479 1,069
Total other comprehensive
income 8,479 1,069
----------------------------- ----- ---------- ----------
Total comprehensive
income attributable
to:
Owners of the parent 27,812 16,597
----------------------------- ----- ---------- ----------
Basic earnings per Ordinary
share (pence per share) 6 9.0 7.3
----------------------------- ----- ---------- ----------
Diluted earnings per
Ordinary share (pence
per share) 6 9.0 7.3
----------------------------- ----- ---------- ----------
*Other comprehensive income includes only items that will be
subsequently reclassified to Profit before tax when specific
conditions are met.
RWS Holdings plc
Annual Report 2016
Consolidated Statement of Financial Position
at 30 September
Registered Company 3002645
------------------------------------ ---- ---------- ----------
2016 2015
------------------------------------ ---- ---------- ----------
GBP'000 GBP'000
------------------------------------ ---- ---------- ----------
Assets
------------------------------------ ---- ---------- ----------
Non-current assets 61,518 31,445
Goodwill 28,421 6,836
Intangible assets 17,630 17,732
Property, plant and equipment 1,875 340
Deferred tax assets
------------------------------------------ ---------- ----------
109,444 56,353
----------------------------------------- ---------- ----------
Current assets 28,173 17,907
Trade and other receivables - 309
Foreign exchange derivatives 27,910 30,569
Cash and cash equivalents
------------------------------------------ ---------- ----------
56,083 48,785
----------------------------------------- ---------- ----------
Total assets 165,527 105,138
------------------------------------------ ---------- ----------
Liabilities 6,923 -
Current liabilities 20,207 14,797
Loan 681 -
Trade and other payables 4,702 2,417
Foreign exchange derivatives 79 77
Income tax payable
Provisions
------------------------------------------ ---------- ----------
32,592 17,291
----------------------------------------- ---------- ----------
Non-current liabilities 22,500 -
Loan 30 30
Other payables 379 301
Provisions 1,326 1,826
Deferred tax liabilities
------------------------------------------ ---------- ----------
24,235 2,157
----------------------------------------- ---------- ----------
Total liabilities 56,827 19,448
------------------------------------------ ---------- ----------
Total net assets 108,700 85,690
------------------------------------------ ---------- ----------
Equity 2,157 2,116
Capital and reserves attributable
to owners of the parent 8,947 3,583
Share capital 875 1,801
Share premium (8,483) (8,483)
Share based payment reserve 10,117 1,638
Reverse acquisition reserve 95,087 85,035
Foreign currency reserve
Retained earnings
------------------------------------------ ---------- ----------
Total equity 108,700 85,690
------------------------------------------ ---------- ----------
RWS Holdings plc
Annual Report 2016
Consolidated Statement of Changes in Equity
For the year ended 30 September
Total
Share Other equity
Share premium reserves Retained attributable
capital account (see earnings to
GBP'000 GBP'000 below) GBP'000 owners
GBP'000 of the
parent
GBP'000
-------------------------- ---------- ---------- ------------ ----------- --------------
At 1 October 2014 2,116 3,583 (6,568) 79,303 78,434
-------------------------- ---------- ---------- ------------ ----------- --------------
Profit for the
year - - - 15,528 15,528
Currency translation
differences - - 1,069 - 1,069
-------------------------- ---------- ---------- ------------ ----------- --------------
Total Comprehensive
income for - - 1,069 15,528 16,597
the year ended
30 September 2015
Dividends - - - (9,796) (9,796)
Credit arising
on share based
payments - - 455 - 455
-------------------------- ---------- ---------- ------------ ----------- --------------
At 30 September
2015 2,116 3,583 (5,044) 85,035 85,690
Profit for the
year - - - 19,333 19,333
Currency translation
differences - - 8,479 - 8,479
-------------------------- ---------- ---------- ------------ ----------- --------------
Total Comprehensive
income for - - 8,479 19,333 27,812
the year ended
30 September 2016
Issue of shares 41 5,364 - - 5,405
Deferred tax on
unexercised share
options - - - 414 414
Dividends - - - (10,627) (10,627)
Exercise of share
options - - (932) 932 -
Credit arising
on share based
payments - - 6 - 6
-------------------------- ---------- ---------- ------------ ----------- --------------
At 30 September
2016 2,157 8,947 2,509 95,087 108,700
-------------------------- ---------- ---------- ------------ ----------- --------------
Share Reverse Foreign Total
-------------------------- ---------- ---------- ------------ ----------- --------------
based acquisition currency other
payment
-------------------------- ---------- ---------- ------------ ----------- --------------
Other reserves reserve reserve reserve reserves
-------------------------- ---------- ---------- ------------ ----------- --------------
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---------- ---------- ------------ ----------- --------------
At 1 October 2014 1,346 (8,483) 569 (6,568)
-------------------------- ---------- ---------- ------------ ----------- --------------
Revaluation of net
assets of Overseas
subsidiaries - - (33) (33)
Revaluation of Goodwill
and intangibles - - 1,145 1,145
Revaluation of deferred
tax on intangibles - - (43) (43)
-------------------------- ---------- ---------- ------------ ----------- --------------
Other Comprehensive
gain for the year - - 1,069 1,069
-------------------------- ---------- ---------- ------------ ----------- --------------
Credit arising on
share based payments 455 - - 455
-------------------------- ---------- ---------- ------------ ----------- --------------
At 30 September 2015 1,801 (8,483) 1,638 (5,044)
-------------------------- ---------- ---------- ------------ ----------- --------------
Revaluation of net
assets of Overseas
subsidiaries - - 1,932 1,932
Revaluation of Goodwill
and intangibles - - 11,444 11,444
Revaluation of deferred
tax on intangibles - - (85) (85)
Revaluation of Loan - - (4,812) (4,812)
-------------------------- ---------- ---------- ------------ ----------- --------------
Other Comprehensive
gain for the year - - 8,479 8,479
-------------------------- ---------- ---------- ------------ ----------- --------------
- - - -
-------------------------- ---------- ---------- ------------ ----------- --------------
Exercise of share
options (932) - - (932)
Credit arising on
share based payments 6 - - 6
-------------------------- ---------- ---------- ------------ ----------- --------------
At 30 September 2016 875 (8,483) 10,117 2,509
-------------------------- ---------- ---------- ------------ ----------- --------------
The nature and purpose of each reserve within equity is as
follows:
- Share capital is the nominal value of the shares issued
- Share premium is the amount received for shares issued in
excess of their nominal value
- Share based payment reserve is the credit arising on the share
based payment charges in relation to the Company's share
option schemes
- Foreign currency reserve is the cumulative gain or loss
arising on retranslating the net assets of overseas operations
into
sterling except where the Group applies a net investment
hedge.
- Reverse acquisition reserve was created when RWS Holdings plc
became the legal parent of Bybrook Limited. The substance
of this combination was that Bybrook Limited acquired RWS
Holdings plc
- Retained earnings are the cumulative net gains and losses,
including the capital reserve from the Company balance sheet
RWS Holdings plc
Annual Report 2016
Consolidated Statement of Cash Flows
for the year ended 30 September
2016 2015
Note GBP'000 GBP'000
--------------------------------- ------- ----------- ----------
Cash flows from operating
activities
Profit before tax 25,091 20,652
Adjustments for:
Depreciation of property,
plant and equipment 941 824
Amortization of intangible
assets 4,719 1,663
Share based payment costs 6 455
Finance income (16) (71)
Finance expense 1,448 251
--------------------------------- ------- ----------- ----------
Operating cash flow before
movements
in working capital and
provisions 32,189 23,774
Increase in trade and
other receivables (4,249) (1,529)
increase in trade and
other payables and provisions 1,652 2,037
--------------------------------- ------- ----------- ----------
Cash generated from operations 29,592 24,282
Income tax paid (5,196) (5,091)
--------------------------------- ------- ----------- ----------
Net cash inflow from
operating activities 24,396 19,191
--------------------------------- ------- ----------- ----------
Cash flows from investing
activities
Interest paid (369) -
Interest received 16 76
Acquisition of subsidiary,
net of cash acquired (47,068) -
Purchases of property,
plant and equipment (731) (1,258)
Purchases of intangibles
(computer software) (169) (33)
--------------------------------- ------- ----------- ----------
Net cash outflow from
investing activities (48,321) (1,215)
--------------------------------- ------- ----------- ----------
Cash flows from financing
activities
Proceeds from borrowing 29,485 -
Repayment of borrowing (4,874) -
Proceeds from the issue
of share capital 5,405 -
Dividends paid 5 (10,627) (9,796)
--------------------------------- ------- ----------- ----------
Net cash inflow/(outflow)
from financing activities 19,389 (9,796)
--------------------------------- ------- ----------- ----------
Net (decrease)/increase
in cash and cash equivalents (4,536) 8,180
Cash and cash equivalents
at beginning of the year 30,569 22,479
Exchange gains/(losses)
on cash and cash equivalents 1,877 (90)
--------------------------------- ------- ----------- ----------
Cash and cash equivalents
at end of the year 27,910 30,569
--------------------------------- ------- ----------- ----------
Free cash flow
--------------------------------- ------- ----------- ----------
Analysis of free cash
flow
Net cash generated from
operations 29,592 24,282
Net interest (paid)/received (353) 76
Income tax paid (5,196) (5,091)
Purchases of property,
plant and equipment (731) (1,258)
Purchases of intangibles
(computer software) (169) (33)
--------------------------------- ------- ----------- ----------
Free cash flow 23,143 17,976
--------------------------------- ------- ----------- ----------
The Directors consider that the free cash flow analysis above
indicates the cash generated from normal activities excluding
acquisitions, dividends paid and the proceeds from the issue of
share capital.
RWS Holdings plc
Annual Report 2016
Notes to the Consolidated Financial Statements (continued)
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
2016, from which this financial information has been extracted, and
for the comparative year ended 30 September 2015, 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 2016 and the year ended 30 September 2015 set
out above does not constitute statutory accounts 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. The financial information contained in
this announcement does not constitute statutory accounts within the
meaning of Section 435 of the Companies Act 2006. Statutory
accounts for the year ended 30 September 2015 have been delivered
to the Registrar of Companies and those for the year ended 30
September 2016 will be delivered shortly, having been approved by
the Directors on 5 December 2016. The auditors have reported on the
accounts for the years ended 30 September 2015 and 30 September
2016, 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 account policies
Basis of accounting
The principle 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
2015.
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 17
January 2017.
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.
2016 2015
GBP'000 GBP'000
--------------------------------- --------- ---------
UK 15,510 17,637
Continental Europe 62,751 45,308
Asia, United States of America
and Australia 43,725 32,270
--------------------------------- --------- ---------
121,986 95,215
--------------------------------- --------- ---------
4. Taxation
2016 2015
GBP'000 GBP'000
--------------------------------------------- ---------- ----------
Taxation recognised in the income statement
is as follows:
Current tax expense
Tax on profit for the current year
- UK 4,171 3,957
- Overseas 3,325 1,039
Adjustment in respect of prior years (32) 288
--------------------------------------------- ---------- ----------
7,464 5,284
--------------------------------------------- ---------- ----------
Deferred tax
Current year movement (1624) (228)
Adjustment in respect of prior years (82) 68
--------------------------------------------- ---------- ----------
Total tax expense 5,758 5,124
--------------------------------------------- ---------- ----------
The table below reconciles the UK statutory
tax charge to the Group's total tax 2016 2015
charge. GBP'000 GBP'000
--------------------------------------------- ---------- ----------
Profit before taxation 25,091 20,652
--------------------------------------------- ---------- ----------
Notional tax charge at UK corporation
tax rate of 20.0% (2015: 20.5%) 5,018 4,234
Effects of:
Items not deductible or not chargeable
for tax purposes (512) 60
1,366
Differences in overseas tax rates (114) 474
Adjustments in respect of prior years 356
--------------------------------------------- ---------- ----------
Total tax expense for the year 5,758 5,124
--------------------------------------------- ---------- ----------
5. Dividends to shareholders
2016 2016 2015 2015
pence pence
per GBP'000 per GBP'000
share share
Final, paid 26 February 2016 3.85 8,146 3.60 7,617
(2015: paid 27 February 2015)
Interim, paid 22(nd) July 2016 1.15 2,481 1.03 2,179
(2015: paid 24 July 2015)
---------------------------------- -------- --------- -------- ---------
5.00 10,627 4.63 9,796
---------------------------------- -------- --------- -------- ---------
The Directors recommend a final dividend in respect of the
financial year ended 30 September 2016 of 4.45 pence per Ordinary
share to be paid on 24 February 2017 to shareholders who are on the
register at 27 January 2017. This dividend is not reflected in
these financial statements as it does not represent a liability at
30 September 2016. The final proposed dividend will reduce
shareholders' funds by an estimated GBP9.6 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:
2016 2015
Weighted average number of Ordinary 214,215,397 211,579,840
shares in issue for basic earnings
Dilutive impact of share options 1,564,458 1,086,738
-------------------------------------- ------------- -------------
Weighted average number of Ordinary
shares for diluted earnings 215,779,855 212,666,578
-------------------------------------- ------------- -------------
Adjusted earnings per Ordinary share is also presented to
eliminate the effects of acquired intangibles, share options and
exceptional acquisition costs. 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:
2016 2015 2016 2015
Basic Basic Diluted Diluted
earnings earnings earnings earnings
2016 2015 per per per per
share share share share
GBP'000 GBP'000 pence pence pence pence
Profit for the 19,333 15,528 9.0 7.3 9.0 7.3
year
Adjustments:
Amortization of 4,639 1,607 2.2 0.8 2.1 0.8
acquired intangibles
Exceptional acquisition 855 - 0.4 - 0.4 -
costs
Charges for share 6 455 - 0.2 - 0.2
based payments
Tax effect of (1,515) (412) (0.7) (0.2) (0.7) (0.2)
adjustments
--------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Adjusted earnings 23,318 17,178 10.9 8.1 10.8 8.1
--------------------------- ---------- ---------- ---------- ---------- ---------- ----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAPASELFKFFF
(END) Dow Jones Newswires
December 06, 2016 02:00 ET (07:00 GMT)