Companies: RWS   

The patent translation and search business RWS Holdings is once again set to beat market expectations. Last week’s trading update talked of strong performances right across the business. New acquisition Japanese Language Services is already making a ‘useful’ contribution to profits. The cash pile is now £21 million (equivalent to 52p per share) and the company will be lifting the dividend in line with profits.

The one fly in the ointment is the imminent ratification of the London Agreement – aimed at reducing the number of languages into which patents lodged with the European Patent Office have to be translated – by the French senate. This will bring the agreement into effect in March next year. The issue has been hanging over RWS for the past seven years. Now that it is about to become reality, it is set to reduce next year’s profits by about £1 million – and twice that amount in 2008/09. But RWS’s Andrew Brode clearly expects to be able to make good the gap with further acquisitions, plus his move into Japan and China.

The shares have already tailed back 15 per cent from their highs. At the current 315p (which compares with a recommendation level here in June 2005 of 180p), the shares remain good long-term value at less than 15 times earnings.

RWS Holdings	AIM	£85.71m	207.50p	-5.00p
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Other company articles:
RWS Holdings			21/07/2008
Fund Manager Focus by Jenny Lowe			02/06/2008
Recession beaters			28/04/2008
RWS quantifies London Agreement impact			05/10/2007
Mears and more at the GCI Show			11/06/2007