Final Results

RNS Number : 9053T

RWS Holdings PLC

14 December 2011

 



RWS GROUP

                                                                                                                               14 December 2011

RWS Holdings plc

Preliminary results for the year ended 30 September 2011

RWS Holdings plc, Europe's leading provider of intellectual property support services (patent translations and technical searches) and technical translations, today announced its preliminary results for the year ended 30 September 2011.

Financial Highlights:

 Growth in sales, underlying profits and dividends for the eighth successive year since flotation

·         Sales increased by 8% to £65.4m (2010: £60.6m).

·         Underlying operating profit* was up 12.6% to £16.1m (2010: £14.3m).

·         Profit before tax* rose by 11% to £16.2m (2010: £14.6m) despite:

·      a £0.14m reduction in interest income, and a mark to market loss of £0.1m on foreign currency contracts.

·         Diluted adjusted earnings per share of 27.2p* (2010: 24.9p).

·         Final dividend of 11.75p (2010: 10.25p); total dividend increased by 15% to 15.4p (2010: 13.4p), continuing an unbroken series of double digit dividend increases since flotation.

·         Net cash at year end of £24.8m (2010: £17.9m), after repayment of development loan.

*  before amortization of intangibles, and in 2010 net cost of relocation

Operational Highlights:

  Good progress in core patent translations business, PatBase and China, recovery in Germany

·         Further consolidation of our market leading position in patent translations.

·         Challenging market conditions successfully overcome.

·         Chinese business delivered a 52% increase in profits.

·         German and Swiss technical translations achieved a significant recovery in profits.

·         PatBase subscription revenues grew by 12% whilst margins advanced by 400bps.

·         Successful move into new freehold offices amalgamating four separate locations into one and reducing costs.

·         Appointment of Reinhard Ottway as Group Chief Executive designate.

Post Year End Acquisition:

·         Acquisition of an initial one third interest in inovia Holdings Pty Limited and agreement to acquire the remaining two thirds in September 2013 announced on 11 October 2011.

·         For the three months to 30 September 2011, inovia's gross revenues were 72% ahead of Q1 2010.

Executive Chairman Andrew Brode commented on current trading and outlook:

"The Group has delivered strong cash generative, profit growth and a double digit increase in dividends, whilst we have continued to invest in the future of the business, despite a challenging economic environment.

"Trading in the first two months of the new financial year has been in line with management's expectations. Whilst the macroeconomic environment, particularly in the Eurozone, remains uncertain, we have fully hedged our Euro and US Dollar trading exposure for the current financial year and our strong financial position leaves us well placed to deliver continued progress during 2012.

"Furthermore, our recent investment in inovia's excellent proprietary technology platform adds a highly complementary and scaleable service to our existing patent search and translation offerings. We expect its considerable growth prospects, as well as cross selling opportunities, to materially enhance the Group's leading position in intellectual property protection over the medium term."

A meeting for analysts will be held today at 9.30am at the offices of Numis Securities, The London Stock Exchange Building, 10 Paternoster Square, London, EC4M 7LT. Please contact Sarah Ireland on 020 3128 8753 if you would like to attend.

For further information contact:

RWS Holdings plc

Andrew Brode, Executive Chairman                                                                                         01753 480200

MHP

Katie Hunt / Simon Hockridge                                                                                                020 3128 8794

Numis

Stuart Skinner (Nominated Adviser)                                                                                        020 7260 1000

James Serjeant (Corporate Broker)

About RWS:

RWS is the world's leading provider of intellectual property support services (patent translations and technical searches) to the medical, pharmaceutical, chemical, aerospace, defence, automotive, electronics and telecoms industries.  RWS also provides specialist technical, legal and financial translation services for areas of industry outside the patent arena.  RWS is based in the UK, with offices in Europe, New York, Tokyo and Beijing, and is listed on AIM, the London Stock Exchange regulated market (RWS.L).

Approximately 2,000,000 patent applications are filed per annum worldwide, with particular growth in China and a good recovery in Europe post recession, where 235,000 EP applications were filed in 2010 (Source: World Intellectual Property Office and European Patent Office).

For further information please visit: www.rws.com

RWS GROUP

RWS Holdings plc

Preliminary results for the year ended 30 September 2011

Executive Chairman's Statement

It gives me great pleasure to be able to report another year of progress for RWS against a challenging and volatile economic backdrop. For its eighth consecutive year as a public company it has delivered growth in sales, underlying profits and dividends, demonstrating the strength and resilience of the Group's core, market leading patent translations business. Beyond patent translation, technical translations benefitted from a recovery in Germany and Switzerland, whilst PatBase was the primary driver of growth within our information services business.

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, legal and financial translation services.  Its main business - patent translation - translates well over 65,000 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 medical, pharmaceutical, chemical, aerospace, defence, automotive and telecoms industries, as well as patent agents acting on behalf of such clients.  The Group has two principal business activities; Translations, which accounts for over 90% of sales and incorporates patent, commercial and technical translation services, and 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 a subscription service.

Strategy

Our strategy is focused upon organic growth complemented by deploying our substantial cash holdings for selective acquisitions, providing they can be demonstrated to enhance shareholder value.  Organic growth is  driven by increases in the worldwide patent filing activities of our existing and potential multinational clients, 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, in an otherwise fragmented sector.  Whilst the global number of applications fell modestly during the recession of 2008/2009, it recovered in 2010 and we have successfully grown market share amongst our target blue-chip customers who have historically remained committed to protecting their intellectual property through the cycle.

In terms of acquisitive growth, having been pleased with the return on acquisitions made to date, we continue to search for suitable potential acquisitions in the high level technical translation and intellectual property support services spaces.  We seek niche businesses capable of delivering well above industry average levels of profitability or highly complementary businesses capable of reinforcing our dominant position in intellectual property support services.

Results and Financial Review

The Group has achieved a strong underlying operational performance, reflecting continued growth in the core patent translations business, together with encouraging growth in medical translations, a full recovery in Germany, excellent profits in China and further growth in our database subscription service - PatBase.

Sales advanced by 8% to £65.4m (2010: £60.6m), a creditable achievement in competitive market conditions.  Underlying operating profit before amortization of intangibles and, in 2010, the net cost of relocation was up 12.6% to £16.1m (2010: £14.3m). Profit before tax, intangibles amortization (and in 2010 relocation costs) was £16.2m (2010: £14.6m), a rise of 11% and achieved despite a further reduction in interest income of £0.14m and a mark to market loss of £0.1m on foreign exchange contracts. Reported profit before tax was £15.6m (2010: £13.7m), a rise of 14%, and basic earnings per share 26.2p (2010: 23.2p). The effective tax rate was 29.1% (2010: 28.6%); the increase was due to the level of non-qualifying depreciation.

Diluted adjusted earnings per share rose by 9% to 27.2p (2010: 24.9p). There was no change during 2011 in the number of shares in issue.

At 30 September 2011 shareholders' funds had reached £58.1m (2010: £52.7m), of which net cash represented £24.8m (2010: £17.9m).  The movement in net cash reflects an underlying increase of £3.8m and is after the £1.6m rebate, received in November 2010, of the VAT cash outlay in relation to the purchase of the new premises in July 2010 and the repayment, in July 2011, of the £1.5m building development loan by the developer. The significant other cash outlays included corporation tax of £3.8m, the final dividend for 2010 and the interim dividend for 2011, totalling £5.9m.

Following the decision to adopt rolling twelve month currency hedging, volatility was much reduced. The average rate used for conversion of the Euro was 86.9p against 87.0p in 2010. Looking forward, RWS has hedged its estimated net trading exposure at 1 Euro = 86.9p until 30 November 2012. Currently US$ exposure is hedged at $1.59 = £1 until 30 September 2012.

Interest income on the Group's substantial cash balances reduced further following the purchase of the new premises, the repayment of the development loan, and with the Bank of England maintaining a base rate of 0.5% throughout the financial year.

Dividend

The Board recommend a final dividend of 11.75p per share.  The interim dividend, paid in July, was 3.65p per share, so that the total payout in respect of the year will amount to 15.4p per share, an increase of 15% over 2010, reflecting the growth in Group earnings during 2011 and our confidence in the continued progress of the Group.

The proposed total dividend per share is 1.7 times covered by basic earnings per share.  Subject to shareholder approval at the Annual General Meeting, the final dividend will be paid on 17 February 2012 to all shareholders on the register at 20 January 2012.

Operating Review

Translations

The Group's core business (accounting for 70% of sales) remains patent translations. In a period of considerable economic upheaval, the resilience of our patent translation services has been a key element in the Group's further progress. The Group's market leadership is reflected in an impressive list of blue-chip multinational clients with good penetration amongst those corporates who are most active in patent filing. We provide a high quality and competitive "translate and file" service which began in Europe and has now been successfully extended on a global scale. US multinationals wishing to file via the national and PCT routes recognise the benefits of our WorldFile service and RWS is benefitting from its increased direct sales effort in the US, which remains the market with the largest potential for intellectual property protection services.

It was also pleasing to note that demand for our Beijing patent translation service was encouraging. Revenues grew by 38% and profits by 52%. We are investing in staff, training and systems as our activities focus upon servicing European and North American corporates' patent applications for filing in China. This work is principally sourced from our other offices.

Technical translation services account for 23% of Group revenues. These comprise commercial and technical non-patent translations requiring high standards of quality and accuracy. This sector experiences the highest levels of competition and we seek to delineate ourselves through our ability to manage larger projects, deliver high quality client service and through our focus on technical, specialist niches to achieve acceptable margins. This market segment is more exposed to the economic cycle and, predictably, government work in particular has become extremely competitive. In Germany, the recovery noted in the last quarter of 2009/10 followed through into 2010/11.

Information

The information services business accounts for 7% of sales, and a significantly higher proportion of profit.  The underlying activity levels of our core patent search and watch services, which declined in the recession, have now stabilised, but remain well below pre-recession levels.

The PatBase database subscription service has enjoyed further worldwide subscriber interest.  We continue to invest in improving its coverage and searchability.  This investment has paid dividends in the form of a further 12% growth in subscription revenues in the period.  The scalability and operational gearing of PatBase has allowed it to increase margins by 400bps and grow to contribute over 12% of Group profits.

Post Balance Sheet Acquisition

In line with our stated strategy, RWS announced on 11 October 2011 the acquisition of an initial one third interest in inovia Holdings Pty Limited ("inovia"), a leading provider of web-based international patent filing solutions, and an agreement to acquire the remaining share capital, for a maximum aggregate price of US$31.2m.

The total cash consideration comprises an initial payment of US$5.8 million and deferred consideration for the remaining two thirds of the issued share capital, which will be calculated according to an agreed earnout formula and payable in September 2013. The deferred consideration is capped at a maximum of US$25.4 million, which will become due if revenues of not less than US$29 million and EBITDA of not less than US$5.4 million are delivered by the business for the year ended 30 June 2013.

Headquartered in New York, inovia is the largest non-law firm provider of international patent filing solutions globally. Its patented, web-based technology provides over 1000 law firm and corporate clients with cost effective processing of international patent applications, typically producing cost savings in excess of 30%. From its locations in the US, Australia, Europe and Japan, its patent filing service covers 62 jurisdictions in 84 countries.

inovia's sales for the year ended 30 June 2011 were US$15.1m, an increase of 33.5% over 2010. Its EBITDA remained marginally negative for the financial year but the business is expected to become profitable in the new financial year. As at 30 June 2011, the business had net assets of US$1.5 million. inovia has continued to trade in line with the management team's expectations since the beginning of the current financial year and for the quarter ended 30 September 2011 revenues were 72% ahead of the corresponding quarter in 2010.

Market Update

Statistics recently issued by the European Patent Office and the World Intellectual Property Organisation point to an upturn in the number of patent applications in 2010 following two years of recession induced decline; an encouraging sign that research and development and the protection of intellectual property rights has remained a priority during and after the global downturn.

In April 2011, the European Patent Office published figures showing 235,000 European patent applications were filed in 2010, a record in its 34 year history and an 11% increase over 2009.

In May 2011, the World Intellectual Property Organisation reported that 164,300 international patent applications were filed under its Patent Cooperation Treaty (PCT) in 2010, an increase of 5.7% over 2009.

Principal Risks

The Directors, having further reviewed the Group's risk profile, remain convinced that the principal 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), and in regulatory changes to patent translation requirements in Europe.  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.

·       Currency risk is normally addressed via hedging operations.  Currently, Sterling/Dollar exposure for the whole of 2011/12 has been hedged at $1.59 = £1, and Sterling/Euro exposure is similarly hedged at 1 Euro = 86.9p.

·       The London Agreement was implemented in May 2008 and the three financial years thereafter have borne the full effect, which was broadly in line with our expectations.  RWS would also be impacted if a further initiative - the European Union Patent - were to become effective.  This latter initiative was declared illegal by the European Court of Justice in March 2011, but the majority of European governments continue to seek ways to circumvent this ruling.  The thrust of our acquisition strategy since 2005 has been to target technical translation businesses which have zero exposure to any regulatory developments in the patent field.

·       As a major 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.

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 our clients. We were pleased that we were able to avoid staff reductions in the recent recession; headcount has now reached 493 full time equivalents (2010: 466) and productivity continues to improve.

Directorate Change

RWS announced on 12 October 2011 that Liz Lucas, who has been with the Group for 34 years and Chief Executive of its Translation activities for 19 years, would retire with effect from 31 December 2011. We also announced the appointment of Reinhard Ottway as Group Chief Executive with effect from 1 January 2012. Reinhard joined RWS in 1993, and since 2001 has been a key member of the executive team as Business Development Director with a pivotal role in the Group's international expansion.

The Board, employees and shareholders owe Liz an enormous debt for her inspirational leadership and extreme professionalism. The management team she leaves behind her is testament to the skills she has demonstrated in positioning RWS as the widely respected market leader. Liz has accepted the Board's invitation to become a Non Executive Director and will represent RWS in a similar capacity on the Board of inovia.

Corporate Social Responsibility

RWS seeks to be a socially responsible company which has a positive impact on the communities it operates in. We look to employ a workforce which reflects the diversity of our communities. No discrimination is tolerated, and we endeavour to give all our employees the opportunity to develop their capabilities. We provide an excellent working environment, the latest technology and appropriate training.

Our staff contribute generously and regularly to a wide selection of local and national charities and their contributions are matched by the Group.

Premises

There has been extensive reorganisation of our UK operations' premises since the beginning of the calendar year. We acquired a new freehold headquarters building in Chalfont St Peter, South Buckinghamshire in July 2010; following extensive fit-out, we moved four separate offices into the new building in January 2011. Not only has the Group benefitted from a reduction in its rental costs since that time, but we are also already identifying operational efficiencies as well as enjoying an enhanced, modern environment. The purchase price equated to a yield of 7.5% at the expense of limited interest income.

Current Trading and Outlook

Trading in the first two months of the new financial year has been in line with management's expectations.  Whilst the macroeconomic environment, particularly in the Eurozone, remains uncertain, we have fully hedged our Euro and US Dollar trading exposure for the current financial year and our strong financial position leave us well placed to deliver continued progress during 2012.

Furthermore, our recent investment in inovia's excellent proprietary technology platform adds a highly complementary and scaleable service to our existing patent search and translation offering.  We expect its considerable growth prospects, as well as cross selling opportunities, to materially enhance the Group's leading position in intellectual property protection over the medium term.

Andrew Brode

Executive Chairman

13 December 2011

Consolidated Statement of Comprehensive Income

for the year ended 30 September

	Note	2011 £'000	2010 £'000
Revenue	3	65,394	60,625
Cost of sales		(36,914)	(33,434)
Gross profit		28,480	27,191
Other operating income		-	253
Administrative expenses		(12,953)	(14,118)
Profit from operations		15,527	13,326
Analysed as:
Operating profit before charging:		16,097	14,270
Amortization of customer relationships and trademarks		(570)	(566)
Relocation costs and related other operating income		-	(378)
Profit from operations		15,527	13,326
Finance income		210	346
Finance expense		(98)	(15)
Profit before tax		15,639	13,657
Taxation expense	4	(4,545)	(3,908)
Profit for the year		11,094	9,749
Other comprehensive income
Exchange gain/(loss) on retranslation of foreign operations		201	(318)
Total other comprehensive income/(expense)		201	(318)
Total comprehensive income		11,295	9,431
Total comprehensive income attributable to:
Owners of the parent		11,295	9,431
Basic earnings per Ordinary share (pence per share)	6	26.2	23.2
Diluted earnings per Ordinary share (pence per share)	6	26.2	23.0

Consolidated Statement of Financial Position

at 30 September

Registered company 3002645	Note	2011 £'000	2010 £'000
Assets
Non-current assets
Goodwill		13,057	13,070
Intangible assets		3,589	4,182
Property, plant and equipment		13,530	12,426
Deferred tax assets		246	205
Other receivables		-	1,500
		30,422	31,383
Current assets
Trade and other receivables		14,485	14,056
Foreign exchange derivatives		7	105
Cash and cash equivalents		24,845	17,908
		39,337	32,069
Total assets		69,759	63,452
Liabilities
Current liabilities
Trade and other payables		7,434	7,086
Income tax payable		2,141	1,378
Provisions		486	642
		10,061	9,106
Non-current liabilities
Provisions		547	567
Deferred tax liabilities		1,093	1,134
		1,640	1,701
Total liabilities		11,701	10,807
Total net assets		58,058	52,645
Equity
Capital and reserves attributable to owners of the parent
Share capital		2,116	2,116
Share premium		3,583	3,583
Reverse acquisition reserve		(8,483)	(8,483)
Foreign currency reserve		2,310	2,109
Retained earnings		58,532	53,320
Total equity		58,058	52,645

Consolidated Statement of Changes in Equity

for the year ended 30 September

	Share capital £'000	Share premium account £'000	Other reserves £'000	Retained earnings £'000	Attributable to owners of the parent £'000	Non- controlling interest £'000	Total equity £'000
At 1 October 2009	2,065	3,401	(6,056)	48,649	48,059	10	48,069
Issue of shares	51	182	-	-	233	-	233
Preference share redemption	-	-	-	-	-	(10)	(10)
Dividends	-	-	-	(5,078)	(5,078)	-	(5,078)
Profit for the year	-	-	-	9,749	9,749	-	9,749
Currency translation differences	-	-	(318)	-	(318)	-	(318)
At 30 September 2010	2,116	3,583	(6,374)	53,320	52,645	-	52,645
Dividends	-	-	-	(5,882)	(5,882)	-	(5,882)
Profit for the year	-	-	-	11,094	11,094	-	11,094
Currency translation differences	-	-	201	-	201	-	201
At 30 September 2011	2,116	3,583	(6,173)	58,532	58,058	-	58,058

Other reserves

	Foreign currency reserve £'000	Reverse acquisition reserve £'000	Total other reserves £'000
At 1 October 2009	2,427	(8,483)	(6,056)
Currency translation differences	(318)	-	(318)
At 30 September 2010	2,109	(8,483)	(6,374)
Currency translation differences	201	-	201
At 30 September 2011	2,310	(8,483)	(6,173)

Consolidated Statement of Cash Flows

for the year ended 30 September

		2011 £'000	2010 £'000
Cash flows from operating activities
Profit before tax		15,639	13,657
Adjustments for:
Depreciation of property, plant and equipment		485	260
Amortization of intangible assets		641	661
Finance income		(210)	(346)
Finance expense		98	15
Operating cash flow before movements
in working capital and provisions		16,653	14,247
Increase in trade and other receivables		(420)	(2,302)
Increase in trade and other payables		173	1,018
Cash generated from operations		16,406	12,963
Interest paid		-	(15)
Income tax paid		(3,864)	(3,885)
Net cash inflow from operating activities		12,542	9,063
Cash flows from investing activities
Interest received		203	346
Development loan repaid		1,500	1,072
Purchases of property, plant and equipment		(1,589)	(11,929)
Purchases of intangibles (computer software)		(34)	(84)
Net cash inflow/(outflow) from investing activities		80	(10,595)
Cash flows from financing activities
Proceeds from the issue of share capital		-	233
Preference shares redeemed		-	(10)
Dividends paid		(5,882)	(5,078)
Net cash outflow from financing activities		(5,882)	(4,855)
Net increase/(decrease) in cash and cash equivalents		6,740	(6,387)
Cash and cash equivalents at beginning of the year		17,908	24,269
Exchange gains on cash and cash equivalents		197	26
Cash and cash equivalents at end of the year		24,845	17,908
Free cash flow
Analysis of free cash flow
Net cash generated from operations		16,406	12,963
Net interest received		203	331
Income tax paid		(3,864)	(3,885)
Purchases of property, plant and equipment		(1,589)	(11,929)
Purchase of intangibles (computer software)		(34)	(84)
Free cash flow		11,122	(2,604)

The Directors consider that the free cash flow analysis above indicates the cash generated from (2010: utilised in) 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 2011, from which this financial information has been extracted, and for the comparative year ended 30 September 2010, 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 2011 and the year ended 30 September 2010 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 2010 have been delivered to the Registrar of Companies and those for the year ended 30 September 2011 will be delivered shortly.  The auditors have reported on the accounts for the year ended 30 September 2011; their report was 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 2010.

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 (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs.  The Group expects to publish full financial statements that comply with IFRSs on 15 January 2012.

3.  Segment information

The Group's operations are based in UK, Europe, Asia and the United States of America. The table below shows turnover by the geographic market in which customers are located.

	2011 £'000	2010 £'000
UK	7,729	7,529
Continental Europe	44,177	41,231
Asia and United States of America	13,488	11,865
	65,394	60,625

4.  Taxation

		2011 £'000	2010 £'000
Taxation recognised in the income statement is as follows:
Current tax expense
Tax on profit for the current year
- UK		3,905	2,763
- Overseas		596	493
Adjustment to prior years		120	(127)
		4,621	3,129
Deferred  tax (credit)/expense
Origination and reversal of temporary differences		(76)	779
Total tax expense in the statement of comprehensive income		4,545	3,908

The table below reconciles the UK statutory tax charge to the Group's total tax charge.

		2011 £'000	2010 £'000
Profit before tax		15,639	13,657
Notional tax charge at UK corporation tax rate of 27% (2010: 28%)		4,222	3,824
Effects of:
Items not deductible or not chargeable for tax purposes		131	163
Differences in overseas tax rates		131	87
UK tax rate change		(59)	-
Utilisation of losses brought forward		-	(39)
Adjustments in respect of prior years		120	(127)
Total tax expense for the year		4,545	3,908

5.  Dividends to shareholders

	2011 pence per share	2011 £'000	2010 pence per share	2010 £'000
Final, paid 18 February 2011 (2010: paid 19 February 2010)	10.25	4,337	8.85	3,745
Interim, paid 15 July 2011 (2010: paid 16 July 2010)	3.65	1,545	3.15	1,333
	13.90	5,882	12.00	5,078

    The Directors recommend a final dividend in respect of the financial year ended 30 September 2011 of 11.75 pence per Ordinary share to be paid on 17 February 2012 to shareholders who are on the register at 20 January 2012.  This dividend is not reflected in these financial statements as it does not represent a liability at 30 September 2011.  The final proposed dividend will reduce shareholders' funds by an estimated £5.0 million.

6. Earnings per Ordinary share

    Basic and diluted 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:

	2011	2010
Weighted average number of Ordinary shares in issue for basic earnings	42,315,968	42,096,937
Dilutive impact of share options	-	200,403
Weighted average number of Ordinary shares for diluted earnings	42,315,968	42,297,340

    Adjusted earnings per Ordinary share is also presented to eliminate the effects of amortization of customer relationships and trademarks and net costs of relocation in 2010. 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:

	2011 £'000	2010 £'000	2011 Basic earnings per share pence	2010 Basic earnings per share pence	2011 Diluted earnings per share pence	2010 Diluted earnings per share pence
Profit for the year	11,094	9,749	26.2	23.2	26.2	23.0
Amortization of customer relationships and trademarks (after tax)	422	408	1.0	1.0	1.0	1.0
Net cost of relocation	-	378	-	0.9	-	0.9
Adjusted earnings	11,516	10,535	27.2	25.1	27.2	24.9

7.  Events since the reporting date

RWS announced on 11 October 2011 the acquisition of an initial one third interest in inovia Holdings Pty Limited, a leading provider of web-based international patent filing solutions, and an agreement to acquire the remaining share capital, for a maximum aggregate price of US$ 31.2 million.

The total cash consideration comprises an initial payment of US$ 5.8 million and deferred consideration for the remaining two thirds of the issued share capital, which will be calculated according to an agreed earnout formula and payable in September 2013. The deferred consideration is capped at a maximum of US$ 25.4 million, which will become due if revenues of not less than US$ 29 million and EBITDA of not less than US$ 5.4 million are delivered by the business for the year ended 30 June 2013.

 

END

 

 

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