TOPpick: AIM blue-chip RWS Holdings may be the UK’s most successful listed company Buckinghamshire-based RWS Holdings is a supplier of translation services to patent filers worldwide. The company boasts a remarkable ten year record of uninterrupted sales, profit and dividend increases. More than two thirds of RWS’ business is the translation of patent applications. Here, RWS translates the patent filings of an innovator such as AstraZeneca into the languages of the territories where it wants protection. This requires a double-whammy of know-how: both linguistics and the application area i.e. pharmaceuticals or engineering. This level of expertise is rare, meaning that RWS can demand a high price.
level of expertise is rare, meaning that RWS can demand a high price. Around one fifth of sales comes from commercial translation services. 9% of sales comes from information services and a recent acquisition. If you were thinking that RWS’ ten year record was achieved with small advances you are wrong. In 2003, the company made £27m of sales and £5.6m of pre-tax profit. A dividend of 5p per share was declared. For 2013, RWS reported total sales of £77m, www.aimprospector.co.uk
RWS headquarters, Chalfont St. Peter
pre-tax profit of £21m and dividends per share of 20.25p. In the last five years, EPS has been increasing at an average rate of 9.8% a year. Dividends have been raised by 14.3% a year on average. Sales have been increasing at an average rate of 7.4%. According to Stockopedia, only nine UK-listed companies have a better record over the last five years. It is a job to find another company with a London listing that can match RWS’ record over the decade. RWS has thrived thanks to operating at the confluence of three major trends: outsourcing, the increase in patent applications and globalisation. As firms have become more willing to procure services from outside providers, organisations that previously translated their work inhouse have been turning to RWS. A recent presentation made by RWS to investors revealed the huge growth in patent applications. In the ten years from 2002 to 2012, a key measure of
patent applications showed an 80% rise. In only one year did applications fall – a decline of 5%. The average annual increase in annual applications in the ten year period was 5.6%. The third leg, globalisation, has increased pressures on inventors to file in multiple territories. The result has been a bonanza of work and profits for RWS.
Dividends have been raised by 14.3% a year on average. As the company has become known as a market leader, it has grown market share further. This has been managed while still maintaining a diverse customer base. RWS’ ten largest clients are drawn from across a number of different sectors and together account for just 27% of all sales. No single customer brings in more than 6% of revenues. The company’s most recent trading statement reported good growth from the core patent translation services.
Published on Mar 31, 2014