Investor's Champion Blog
Provides refreshingly forthright, independent comment on predominantly small cap companies and specialist investment funds. Informed opinion, based on first-hand research, but pulls no punches in exposing management weaknesses.

RWS gets a material tax boost and the shares…… fall

RWS the AIM quoted provider of intellectual property support services came out with highly pleasing news that HMRC has agreed the Group's 2004 tax return. The outcome of this is the release of a £4.4 million tax provision and an increase in both pre and post tax profits of £4.4 million in the six months ending 31 March 2009.

With five years of uncertainty being resolved and shareholder funds materially enhanced one might have expected to see a positive reaction from the share price – wishful thinking, the shares actually dropped approximately 2%!

Never mind, the, shares have had a good run of late and clearly the £4.4m boost to 2009 profits is of little relevance, despite the fact this is equivalent to approx 30% of estimated 2009 pre-tax profit. (Consensus 2009 estimates £14.3m).

I acknowledge that this represents a non-cash gain but it is still a 12% boost to net assets and removes a potential restriction on the group's cash balances.


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