A NNUA L REPORT 2 0 1 3 R W S H O L D I N G S P L C UKUSAFRANCEGERMANYSWITZERLANDCHINAJAPANAUSTRALIA www.rws.com RWS GROUP RWS Holdings plc Contents 1 2 6 8 9 12 15 16 19 20 21 22 23 50 56 Executive Chairman’s Statement Strategic Review Board of Directors Directors’ Report Directors’ Remuneration Report Statement of Directors’ Responsibilities Independent Auditor’s Report to the Shareholders of RWS Holdings PLC Financial Statements Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Parent Company Financial Statements Shareholder Information RWS Holdings plc 2 It gives me great pleasure to be able to report another year of progress for RWS against a sluggish, slowly improving economic backdrop. For the tenth consecutive year as a public company we have delivered growth in sales, underlying profits and dividends, demonstrating the strength and resilience of the Group’s core, market leading patent translations business. RWS’ businesses in China and Germany grew significantly, as did our medical division, whilst PatBase remained the primary driver of growth within the Group’s information services business. inovia achieved an outstanding performance in the year prior to becoming a wholly- owned subsidiary. ■ RESULTS AND FINANCIAL REVIEW The Group has achieved a further significant improvement in underlying operational performance, reflecting continued growth in the core patent translations business, together with excellent progress in China, Germany, and the medical division, and further growth in its database subscription service – PatBase. Sales advanced by 12.5% to £77.4 million (2012: £68.8 million), an encouraging achievement given that market conditions have only improved gradually during the period. Adjusted operating profit before amortization of intangibles, share option costs and profit on sale of associate, was up 20% to £20.1 million (2012: £16.8 million). Adjusted profit before tax, intangibles amortization, share option costs and profit on sale of associate, rose by 22.1% to £21.0 million (2012: £17.2 million), giving rise to a 24.5% increase in adjusted earnings per share to 38.6p (2012: 31.0p). There was no change during 2013 in the number of shares in issue. Reported profit before tax was £20.5 million (2012: £16.6 million), a rise of 23.5%, and basic earnings per share 37.6p (2012: 29.9p), a rise of 25.7%. The effective tax rate was 22.4% (2012: 23.6%); the reduction was due to the fall in corporation tax rates and prior year over provisions. At 30 September 2013, shareholders’ funds had reached £71.7 million (2012: £63.2 million), of which net cash represented £18.2 million (2012: £25.1 million). The movement in net cash reflects an underlying increase of £8.2 million before an outlay of £15.1 million in respect of acquisitions. The significant other cash outlays included corporation tax of £4.2 million, the final dividend for 2012 and the interim dividend for 2013, totalling £7.6 million. RWS’ policy was to hedge its net trading exposure to the Euro at an average rate of 85p per Euro during 2012/13. Looking forward, RWS has hedged that exposure at 1 Euro = 87p until 30 September 2014, and will seek further suitable hedges. As regards the US$ exposure, the Group intends to enter into rolling 12 month forward hedges in the near term. Interest income on the Group’s substantial cash balances remained at comparably subdued levels with the Bank of England maintaining a base rate of 0.5% throughout the financial year. ■ DIVIDEND The Board recommend a final dividend of 15.75p per share. The interim dividend, paid in July, was 4.50p per share, so that the total payout in respect of the year will amount to 20.25p per share, an increase of 15.7% over 2012, reflecting the growth in Group earnings during 2013 and the Board’s confidence in the continued progress of the Group. The proposed total dividend per share is 1.86 times covered by basic earnings per share. Subject to shareholder approval at the Annual General Meeting, the final dividend will be paid on 21 February 2014 to all shareholders on the register at 24 January 2014. ■ OPERATING REVIEW Translations The Group’s core patent translations business, which accounts for approximately 69% of Group sales, grew its revenue by 10.5% to £53.5 million (2012: £48.4 million) despite the subdued economic conditions during the period. The Group has further consolidated its market leadership, with its European and International blue-chip client base representing many of the world’s most active patent filers; its clients include 12 of the top 20 applicants at the World Intellectual Property Office in 2012 and 14 of the top 20 applicants at the European Patent Office in 2012. We are particularly pleased with our recent progress in strengthening our new business pipeline with wins including significant Executive Chairman’s StatementRWS Holdings plc 3 household names in the USA, a prominent European pharmaceutical group and a new three year contract with a world leading agri-business. Importantly, the patent translations business also derived significant benefit from a full year’s transfer of work generated by the inovia international patent filing business, amounting to £4.2 million (2012: £1.4 million) in the UK alone 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 the Group’s WorldFile service and RWS is benefiting from its increased direct sales effort in the US, still the largest potential market for intellectual property protection services. Work from US clients has driven the growth in the Group’s Beijing patent translation service. It has also increased its share of a contract with an international patent body through its ability to provide high quality work. These factors have led to a 62% increase in revenue. Given this demand, we have continued to invest in staff, training and systems to develop our services, which are primarily focused on European and North American corporates’ patent applications for filing in China and are typically sourced from our other offices. A new Chinese production and training centre has been established in the city of Rizhao. The site has also been designated a centre of excellence for translation technology, leveraging the latest developments in translation memory and machine translation to maximise productivity and profitability. A cooperation agreement has been signed with local universities in Qufu and Rizhao, with RWS offering translation training to students and providing investment in the university technology infrastructure, in return for which the students undertake translation and terminology work on behalf of the company. Our commercial translations business, which accounts for approximately 22% of Group sales, delivered increased revenue of £17.4 million (2012: £15.5 million), within which we experienced considerable variability across regions and market segments. Our commercial translations business includes all non-patent translations and is typically more exposed to competition and the economic cycle than our patent translations business, though it remains differentiated by its ability to manage larger projects and deliver high quality client service, whilst its focus on technical, specialist niches enables it to achieve excellent margins. During the year we saw an encouraging performance in medical translations, enhanced by the PharmaQuest acquisition in May 2013, and large projects for existing clients at major EU institutions. We also experienced good growth in our German/Swiss business, influenced by a cyclical upturn in the work performed for one major international client. Information Our information business, which accounts for 7% of Group sales and a significantly higher proportion of operating profit, grew its revenue by 6% to £5.3 million (2012: £5.0 million). This performance was primarily driven by the 11% growth in subscription revenue from PatBase, our subscription patent database service, offset by the continued low demand for our search services, which now represents less than 3% of Group revenue and has greater sensitivity to the economic environment. Our ongoing investment in improving PatBase’s searchability and coverage enabled us to secure a strong level of new subscriptions during the year as well as an increase in the number of users within existing client accounts. ■ ACQUISITIONS inovia In line with the Board’s stated strategy, RWS announced on 17 September 2013 the completion of the acquisition of inovia Holdings Pty Limited (“inovia”), a leading provider of web-based international patent filing solutions. IFRS accounting required this transaction to be reflected as a disposal of the one third interest acquired in October 2011, and the acquisition of 100% of the issued share capital of inovia. The total cash consideration for 100% of the issued share capital amounted to US$29.1 million before related costs, calculated by reference to an agreed earnout formula based upon the financial performance of inovia for its financial year ended 30 June 2013. For this reference year, inovia’s gross revenue increased by 37% to US$26.5 million compared to 2012 and it achieved EBITDA of US$2.7 million. In RWS Holdings plc Executive Chairman’s Statement (continued) 4 addition, as noted elsewhere, the inovia business generated sufficient patent translation revenue for it to be RWS’ largest customer prior to the full acquisition. the new system. That being the case, we anticipate minimal loss of revenue in the first few years after the introduction of the Unitary Patent. ■ SHARE OPTION PLAN RWS announced on 3 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 and shareholders and to promote the retention of the Group’s senior executives. Options have been issued to eleven participants, with a subscription price of 646p per share. The earliest vesting date is 3 April 2015 and the latest exercise date is 3 April 2021. ■ 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 the Group’s clients. We were pleased that we were able to avoid net staff reductions in the recent recession and headcount has now reached 591 full time equivalents (2012: 497), including the inovia staff, with productivity continuing to improve. ■ CORPORATE SOCIAL RESPONSIBILIT Y RWS seeks to be a socially responsible Group which has a positive impact on the communities it operates in. We look to employ a workforce which reflects 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 and their contributions are matched by the Group. PharmaQuest Again in line with the Board’s strategy, RWS announced on 1 May 2013 the acquisition of the entire issued share capital of PharmaQuest Limited for an all cash consideration of £2.2 million. The company specialises in providing high quality translation and linguistic validation of patient reported outcome measures resulting from clinical trials conducted globally. In the year ended 31 March 2013 PharmaQuest had revenue of £1.4 million and adjusted profit before tax of £0.6 million. ■ MARKET AND REGULATORY UPDATE Patent Filing Statistics In March, the World Intellectual Property Office (WIPO) published figures showing a 6.6% increase in the 2012 PCT filings to 194,400 (2011: 182,379). The European Patent Office (EPO) also published figures in January 2013 showing the total number of European patent filings increased by 5.2% to 257,744 (2011: 244,934). Both the WIPO and EPO figures established new records for numbers of filings. Current expectations are that 2013 will see further record patent filings with growth of not less than 4%. European Union Patent 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 sales and profits. Despite significant legal hurdles it now appears possible that the Unitary Patent will come into effect in late 2015, and that the first patents could be granted in early 2016. It should be noted that a number of member states of the current European Patent system are not EU members, and that Spain and Italy remain opposed to the Unitary Patent. Professional opinion remains highly sceptical both as regards jurisdiction and the fee structure. Because the proposed Unitary Patent will run in parallel with the existing system and will have a new and untried litigation system, our research indicates that there is currently little interest amongst large corporates and their professional advisers in using RWS Holdings plc ■ CURRENT TRADING AND OUTLOOK We have made a solid start to the new financial year, in line with management’s expectations and comfortably ahead of the comparable period. Notwithstanding any changes to global macroeconomic conditions, we expect to continue to make good progress in the current year as we realise the full year benefit of 2013 client wins, the ongoing positive trends in worldwide patent applications, and the full benefit of the PharmaQuest and inovia acquisitions The Board is confident that we will materially enhance the Group’s leading position in the intellectual property arena over the near to medium term. Andrew Brode Executive Chairman 6 December 2013 5 RWS Holdings plc Strategic Review 6 ■ THE BUSINESS 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, medical, 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 spanning 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 representing such clients. The Group’s principal business activities include ■ Translations, which currently accounts for over 90% of sales and incorporates both patent translation and commercial translation services; ■ 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; and: ■ Following the recent acquisition of inovia, RWS is now a provider of international web based patent filing solutions; an activity which is expected to continue to be a significant source of Group patent translation revenue. RWS provides these services through offices in 6 countries. The table below shows their location and the principal services they deliver for RWS. Translation – Translation – Commercial Patent Information Services inovia web based patent filing Strategy and Business Model RWS’ objective is to increase shareholder value by increasing the Group’s sales revenue and profit before tax. Our strategy to achieve this is focused upon organic growth complemented by deploying the Group’s substantial cash holdings for 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 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. Our business model focuses on the retention of our client base, which includes the majority of the top 20 patent filers in Europe and Globally, (many of which will use the Group for substantially all of their patent translation requirements), and the addition of several key new clients each year with whom activity levels build up over time. The global number of patent applications reached new record levels in both 2011 and 2012 and RWS has successfully grown market share amongst its target blue-chip customers who have historically remained committed to protecting their intellectual property through the economic 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 commercial 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 the Group’s dominant position in intellectual property support services. Progress against our stated objectives is shown below. x Annual Revenue (£m) x x x x x x UK Germany Japan China Australia USA x x In addition to the above locations, services are also offered through sales liaison offices in France and Switzerland. RWS Holdings plc 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 . 3 7 2 3 0 0 2 . 0 1 3 4 0 0 2 . 9 5 3 5 0 0 2 8 . 0 4 6 0 0 2 2 . 6 4 7 0 0 2 . 1 4 5 8 0 0 2 7 . 5 5 9 0 0 2 . 6 0 6 0 1 0 2 . 4 5 6 1 1 0 2 8 . 8 6 2 1 0 2 . 4 7 7 3 1 0 2 Annual PBT Adj (£m) 25 20 15 10 5 0 . . 3 6 7 5 2 3 3 0 0 0 0 2 2 . . 0 0 1 6 3 4 4 0 0 0 0 2 2 . . 9 4 5 7 3 5 5 0 0 0 0 2 2 . . 8 0 0 9 4 6 6 0 0 0 0 2 2 . . 2 0 6 1 4 1 7 7 0 0 0 0 2 2 . . 1 9 4 3 5 1 8 8 0 0 0 0 2 2 . . 7 5 5 4 5 1 9 9 0 0 0 0 2 2 . . 6 6 0 4 6 1 0 0 1 1 0 0 2 2 . . 4 2 5 6 6 1 1 1 1 1 0 0 2 2 . . 8 2 8 7 6 1 2 2 1 1 0 0 2 2 . . 4 0 7 1 7 2 3 3 1 1 0 0 2 2 The remuneration of the Executive Directors and Senior Executives is largely dependent upon growth in sales and adjusted profit before tax. ■ PRINCIPAL RISKS The Directors, having conducted a further annual review of the Group’s risk profile, are 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), in regulatory changes to patent translation requirements in Europe and following the acquisition of inovia, the integration of that business 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 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/Euro net trading exposure is hedged to 30 September 2014 at 1 Euro = 87p. ■ The London Agreement was implemented in May 2008 and the five financial years thereafter have borne the full effect, which was broadly in line with management expectations. RWS could also be impacted if a further initiative – the European Union Patent – were to become effective, and be adopted by its clients. Whilst the inovia acquisition would also be impacted by the proposed European Union Patent, its key business territories are outside of Europe. The Group sales strategy 7 focuses on expanding its share in international non-European patent translations, especially of patents filed in BRIC countries, and with a strong focus on China. The thrust of the Board’s acquisition strategy since 2005 has been to target technical translation businesses which have zero exposure to any regulatory developments in the patent field. Management is currently of the opinion that the EU Patent will not be introduced before late 2015 / early 2016, and is highly unlikely to be adopted by RWS’ major clients for a number of years thereafter. ■ In October 2011 RWS acquired the first one third of the inovia business. From then through to the final acquisition in September 2013, RWS and inovia had the opportunity to work together to understand each others’ business model, culture and ethos. This enabled the preparation of a detailed integration plan which identified areas and a timetable for integration. In line with that plan, since acquisition, meetings and detailed discussions have taken place between both teams which have so far resulted in a smooth integration process and substantial cross selling opportunities. ■ 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. On behalf of the Board Richard Thompson 6 December 2013 RWS Holdings plc Board of Directors at 30 September 2013 8 Andrew S Brode (73) Executive Chairman Peter Mountford (56) Non-Executive Director Member of the Audit Committee and Remuneration Committee Chairman of the Audit Committee and member of the Remuneration Committee Appointed as a Director 11 April 2000 Appointed as a Director 11 April 2000 Founder of Bybrook and led the management buy in of the RWS Group. A substantial shareholder in the Company Chairman of Mountford Capital Limited, Chairman of Heropreneurs, Deputy Chairman of Learning Technologies Group plc and a director of a number of other private companies Non-Executive Director of Vitesse Media plc, Non-Executive Chairman of Electric Word plc and Learning Technologies Group plc. Director of other private equity financed media companies Reinhard Ottway (54) Chief Executive Officer Appointed as a Director 1 January 2012 Joined RWS Group in 1994 and was Business Development Director from 2001 Richard Thompson (51) Finance Director and Company Secretary Appointed as a Director and Company Secretary 28 November 2012 Elisabeth A Lucas (57) Non-Executive Director Member of the Audit Committee and member of the Remuneration Committee Joined RWS Group in 1977, Managing Director of Translations Division from 1992 and Chief Executive Officer from 1995 to 2011 Appointed as a Director on 11 November 2003 Registered office Europa House Chiltern Park Chiltern Hill Chalfont St Peter Buckinghamshire SL9 9FG Previously worked for Actix International Limited, a global supplier of software and services to the telecommunications market Company registration number 3002645 David E Shrimpton (70) Senior independent Non-Executive Director Chairman of the Remuneration Committee and member of the Audit Committee Appointed as a Director 1 January 2010 Non-Executive Director of a number of private companies RWS Holdings plc Directors’ Report The Directors present their annual report together with the audited financial statements for the year ended 30 September 2013. ■ BUSINESS PERFORMANCE AND RISKS The review of the business, operations, principal risks and outlook are dealt with in the Strategic review on pages 6 and 7. The key performance indicators of the Group are revenue and pre-tax profit before amortization of customer relationships and trademarks, share option costs and any profits or losses on disposal of subsidiaries or associates. flow in 2013 of £16.1 million (2012: £13.2 million), results of operations and overall financial condition, the Directors have a reasonable expectation that the Group has adequate resources to continue in operation for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the financial statements. 9 ■ FINANCIAL INSTRUMENTS Information about the use of financial instruments by the Group is given in note 18 to the financial statements. ■ FINANCIAL RESULTS ■ EVENTS AFTER THE REPORTING DATE The financial statements set out the results of the Group for the year ended 30 September 2013 which are shown on page 19. No significant events have occurred between 30 September 2013 and the date of authorisation of these financial statements. Group revenue advanced by 12.5% to £77.4 million (2012: £68.8 million) and pre-tax profit before amortization of intangibles, share option costs and profit on disposal of associate was £21.0 million (2012: £17.2 million), a rise of 22.1%. Profit before tax was £20.5 million (2012: £16.6 million). The current year total tax expense was £4.6 million (2012: £3.9 million) an effective tax rate of 22.4% (2012: 23.6%). Basic earnings per share was 37.6 pence (2012: 29.9 pence). ■ DIVIDENDS The Directors recommend a final dividend of 15.75 pence per Ordinary share to be paid on the 21 February 2014 to shareholders on the register at 24 January 2014, which, together with the dividend of 4.50 pence paid in July 2013, makes a total dividend for the year of 20.25 pence (2012: 17.50 pence). The final dividend will be reflected in the financial statements for the year ending 30 September 2014. The proposed total dividend per share is 1.86 times covered by basic earnings per share. ■ GOING CONCERN ACCOUNTING BASIS In view of the Group’s resources, cash at 30 September 2013 of £18.2 million, free cash ■ DIRECTORS Details of members of the Board at 30 September 2013 are set out on page 8. The interests of the Directors in shares during the year are set out on page 13 in the Directors’ Remuneration Report. Michael McCarthy retired as a Director on 31 December 2012. Peter Mountford retires by rotation at the Annual General Meeting and being eligible offers himself for reappointment. The Company’s Annual General Meeting will be held in London on 11 February 2014. ■ CORPORATE GOVERNANCE The Board The Board comprised three Executive and three Non-Executive Directors. The Board considers that all of the Non-Executive Directors are independent in character and judgement and that there are no relationships or circumstances which are likely to affect their independent judgement. RWS Holdings plc 10 Directors’ Report (continued) The Executive Directors have direct responsibility for business operations whilst the Non-Executive Directors have a responsibility to bring independent, objective judgement to bear on Board decisions. The Board met seven times during the year to review financial performance and approve key business decisions, so that it retained control over strategic, budgetary, financial and organisational issues and monitored executive management. In addition to the Executive Directors, the members of the Senior Executive Team are: Charles Sitch, Managing Director UK Translations Division; Neil Simpkin, Deputy Managing Director UK Translations Division; Jo Hindley, Commercial Director UK Translations Division; Yvette Edwards, Managing Director Information Division and Roberto Aletto, IT Director. They are invited to attend various board meetings and report on the areas of responsibility delegated to them. Audit Committee The members of the Audit Committee are Peter Mountford (committee Chairman), David Shrimpton, Elisabeth Lucas and Andrew Brode. The members, with the exception of Andrew Brode, are Non- Executive Directors and the Board is satisfied that they have recent and relevant financial experience. Andrew Brode is the Group’s Executive Chairman and a substantial shareholder in the Ordinary shares of the Company. The Finance Director and representatives from the external auditors attend meetings at the request of the Committee. During the year the Committee met twice. The Committee reviews and makes recommendations to the Board on: any change in accounting policies; decisions requiring a major element of judgement and risk; compliance with accounting standards and legal and regulatory requirements; disclosures in the interim and annual report and accounts; dividend policy and payment; any significant concerns of the external auditor about the conduct, results or overall outcome of the annual audit of the Group; and, any matters that may significantly affect the independence of the external auditor. In addition the Committee has oversight of the external audit process and reviews its effectiveness and approves any non-audit services provided. RWS Holdings plc Remuneration Committee Further information about the Committee and the Company’s remuneration policy is set out on page 12 in the Directors’ Remuneration Report. Internal controls and risk management The Board has overall responsibility for the Group’s system of internal controls. The system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Directors believe that the Group has internal control systems in place appropriate to the size and nature of the business. The key elements are: bimonthly Group board meetings with reports from and discussions with senior executives on performance and key risk areas in the business; monthly financial reporting, for the Group and for each subsidiary, of actual performance compared to budget and previous year; annual budget setting; and, a defined organisational structure with appropriate delegation of authority. The Board also receives a report from the external auditor on matters identified in the course of the statutory audit work. ■ EMPLOYMENT OF DISABLED PERSONS It is Company policy that people with disabilities should have the same consideration as others with respect to recruitment, retention and personal development. People with disabilities, depending on their skills and abilities, enjoy the same career prospects as other employees and the same scope for realising potential. ■ EMPLOYEE INVOLVEMENT The Company’s policy is to consult and discuss with employees at staff meetings matters likely to affect employee interests. The Company is committed to a policy of recruitment and promotion on the basis of aptitude and ability irrespective of sex, race or religion. Group subsidiaries endeavour to provide equal opportunities in recruiting, training, promoting and developing the careers of all employees. ■ SUBSTANTIAL SHAREHOLDINGS At 30 September 2013, excluding the Directors, the following were substantial shareholders: Liontrust Asset Management Blackrock Investment Management Invesco Perpetual Investec Wealth Octopus Investments % holding 11.0 8.1 4.1 3.9 3.9 ■ AUTHORIT Y TO ALLOT Under section 549 Companies Act 2006, the Directors are prevented, subject to certain exceptions, from allotting shares in the Company or from granting rights to subscribe for or to convert any security into shares in the Company without the authority of the shareholders in General meeting. An ordinary resolution will be proposed at the forthcoming Annual General Meeting which renews, for the period ending on 10 May 2015, or if earlier the date of the 2015 Annual General Meeting, the authority previously granted to the Directors to allot shares, and to grant rights to subscribe for or convert any security into shares in the Company, up to an aggregate nominal value of £705,266, representing approximately one third of the share capital of the Company in issue at 6 December 2013 (being the last practicable date prior to the publication of this Annual Report). This authority complies with guidelines issued by institutional investors. The Directors have no immediate plans to make use of this authority, although the Company approved on 2 April a share option plan pursuant to which all available options were granted to employees on that date. As at the date of this report the Company does not hold any Ordinary shares in the capital of the Company in treasury. ■ STATUTORY PRE-EMPTION RIGHTS Under section 561 of the Companies Act 2006, when new shares are allotted, they must first be offered to existing shareholders pro rata to their holdings. A special resolution will be proposed at the forthcoming Annual General Meeting which renews, for the period ending on 10 May 2015 or, if earlier, the date of the 2015 Annual General Meeting, the authorities previously granted to the Directors to: 11 (a) allot shares of the Company in connection with a rights issue or other pre-emptive offer; and (b) otherwise allot shares of the Company, or sell treasury shares for cash, up to an aggregate nominal value of £211,579 representing in accordance with institutional investor guidelines, approximately 10% of the share capital in issue as at 6 December 2013 (being the last practicable date prior to the publication of this Annual Report) as if the pre-emption rights of section 561 did not apply. The Directors have no immediate plans to make use of these authorities. In addition, and in line with best practice, the Company has not issued more than 7.5% of its issued share capital on a non-pro rata basis over the last three years. ■ AUDITORS All of the Directors have taken all the steps that they ought to have taken to make themselves aware of any information relevant to the audit and established that the auditors are aware of that information. As far as each of the Directors is aware, the auditors have been provided with all relevant information. BDO LLP have expressed their willingness to continue in office and a resolution to reappoint them will be proposed at the Annual General Meeting. On behalf of the Board Richard Thompson 6 December 2013 RWS Holdings plc Directors’ Remuneration Report 12 ■ REMUNERATION COMMIT TEE ■ SHARE BASED PAYMENTS On 2 April 2013 the Board approved a new share option scheme. The scheme was designed to incentivise Executive Directors and Senior Executives and further align the interests of senior employees and shareholders. The Committee has responsibility for supervising the scheme and the grant of options under its terms. ■ SERVICE CONTRACTS The Non-Executive Directors do not have service contracts. Their appointments will continue unless and until terminated by either party giving not less than 30 days’ notice. The service contracts of Executive Directors continue unless and until terminated by either party giving at least six months’ notice. The date of the Executive Chairman’s service contract is 30 October 2003 and the service contracts of Reinhard Ottway and Richard Thompson are dated 20 December 2011 and 1 November 2012 respectively. In the event of early termination, the Executive Director’s service contract provides for compensation up to a maximum of the total benefits which he or she would have received during the notice period. ■ DIRECTORS’ EMOLUMENTS AND PENSION CONTRIBUTIONS The aggregate remuneration, excluding pension contributions, paid or accrued for the Directors of the Company for service in all capacities during the year ended 30 September 2013 was £965,000 (2012: £925,000). The remuneration of individual directors and the pension contributions paid by the Group to their personal pension schemes during the year were as follows: The members of the Remuneration Committee are David Shrimpton (committee Chairman), Peter Mountford, Elisabeth Lucas and Andrew Brode. With the exception of Andrew Brode the members are Non-Executive Directors. The remit of the Committee is primarily to determine and agree with the Board the framework or broad policy for the remuneration of the Company’s Executive Directors and, if required by the Board, the Senior Executives of the Group. The remuneration of Non-Executive Directors is a matter for the Board, excluding the Non-Executive Directors. No Director or Senior Executive is involved in any discussion or decision about his or her own remuneration. The Remuneration committee met twice during the year. The Board has confirmed that the Group’s overall remuneration policy is designed to attract and retain the right people and provide appropriate incentives to encourage enhanced performance so as to create growth in shareholder value. ■ INDIVIDUAL ELEMENTS OF REMUNERATION For Executive Directors and Senior Executives the components contained in their total remuneration package are: base salary, performance related annual bonus, share options and other customary benefits such as holidays and health benefits, sickness benefit and pension contributions. Neither the performance related annual bonus nor the share options apply to the Executive Chairman. Performance related bonuses are based on a combination of sales and/or adjusted profit before tax targets depending on an individual’s area of responsibility. For Non-Executive Directors there is only one component, a base fee. RWS Holdings plc Salary or fees £’000 Bonus £’000 Taxable benefits £’000 2013 Total 2013 Pension contributions 2012 Total 2012 Pension contributions £’000 £’000 £’000 £’000 13 Andrew Brode Michael McCarthy (to 31 December 2012) Reinhard Ottway Richard Thompson (from 28 November 2012) Elisabeth Lucas Peter Mountford David Shrimpton 236 80 275 169 45 35 35 875 – 3 46 37 – – – 86 3 – 1 – – – – 4 239 83 322 206 45 35 35 965 26 2 8 3 – – – 39 239 282 223 – 111 35 35 925 26 8 6 – 2 – – 42 ■ DIRECTORS’ INTERESTS IN SHARES The interests of the Directors as at 30 September 2013 (including the interests of their families and related trusts), all of which were beneficial, in the Ordinary shares were: Andrew Brode Elisabeth Lucas Peter Mountford Richard Thompson Ordinary shares of 5 pence 18,034,812 10,000 13,755 1,380 18,059,947 The interests of Directors at the year end in options to subscribe for Ordinary shares of the Company, together with details of options granted during the year are included in the following table. All options were granted at market value at the date of grant. Approved Share Option scheme Number of shares under option At 1 October 2012 Issued in the year Exercised in the year At 30 September 2013 Exercise price Pence First date exercisable Last date exercisable Reinhard Ottway Richard Thompson – – 4,643 4,643 – – 4,643 4,643 646.00 646.00 02 ⁄04⁄ 16 02 ⁄04⁄ 16 02 ⁄04⁄21 02 ⁄04⁄21 Unapproved Share Option scheme Number of shares under option At 1 October 2012 Issued in the year Exercised in the year At 30 September 2013 Exercise price Pence First date exercisable Last date exercisable Reinhard Ottway Richard Thompson – – 503,149 249,253 – – 503,149 249,253 646.00 646.00 02 ⁄04⁄ 15 02 ⁄04⁄ 15 02 ⁄04⁄21 02 ⁄04⁄21 RWS Holdings plc Directors’ Remuneration Report (continued) 14 The options granted under both schemes will be exercisable at the mid market price of 646p. The market price of the Company’s share as at 30 September 2013 and the highest and lowest market prices during the year are as follows: 30 September 2013 Highest Market Price Lowest Market Price 765p 800p 530p All participants in the share option scheme have indemnified the Company against any tax liability arising from the exercising of any of the above options, including any employer’s national insurance contribution. ■ TRANSACTIONS WITH DIRECTORS During the year there were no material transactions between the Company and the Directors, other than their emoluments. On behalf of the Board Richard Thompson 6 December 2013 RWS Holdings plc The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market. In preparing these financial statements, the Directors are required to: ■ select suitable accounting policies and then apply them consistently; ■ make judgements and accounting estimates that are reasonable and prudent; ■ state whether the Group financial statements have been prepared in accordance with IFRSs as adopted by the European Union and the Company financial statements have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice, subject to any material departures disclosed and explained in the financial statements; ■ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are Statement of Directors’ Responsibilities also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 15 ■ WEBSITE PUBLICATION The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein. RWS Holdings plc Independent Auditor’s Report to the Shareholders of RWS Holdings plc 16 We have audited the financial statements of RWS Holdings plc for the year ended 30 September 2013 which comprise the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows, the Company balance sheet and the related notes. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standard (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the Company’s members, as a body, in accordance with chapter 3 of part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. ■ RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council’s (FRC’s) Ethical Standards for Auditors. ■ SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS A description of the scope of an audit of financial statements is provided on the FRC’s website at www.frc.org.uk/auditscopeukprivate. ■ OPINION ON FINANCIAL STATEMENTS In our opinion: ■ the financial statements give a true and fair view of the state of the Group’s and the parent company’s affairs as at 30 September 2013 and of the Group’s profit for the year then ended; ■ the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; ■ the parent company’s financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and ■ the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. RWS Holdings plc ■ OPINION ON OTHER MAT TERS PRESCRIBED BY THE COMPANIES ACT 2006 In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements. ■ MAT TERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: ■ adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or ■ the parent company financial statements are not in agreement with the accounting records and returns; or ■ certain disclosures of directors’ remuneration specified by law are not made; or ■ we have not received all the information and explanations we require for our audit. Julian Frost, senior statutory auditor For and on behalf of BDO LLP, statutory auditor London United Kingdom 6 December 2013 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). 17 RWS Holdings plc F IN A NCI A L S TAT E MEN T S 2 0 1 3 RWS Holdings plc Consolidated Statement of Comprehensive Income for the year ended 30 September Revenue Cost of sales Gross profit Administrative expenses Profit from operations Analysed as: Operating profit before charging: Amortization of customer relationships and trademarks Share based payment costs Profit from operations Finance income Finance expense Share in results of associate Gain on disposal of associate Profit before tax Taxation expense Profit for the year Other comprehensive expense* Loss on retranslation of foreign operations Share in other comprehensive income of associate Total other comprehensive expense Total comprehensive income attributable to: Owners of the parent Basic earnings per Ordinary share (pence per share) Diluted earnings per Ordinary share (pence per share) 19 Note 3 4 11 20 6 6 13 7 9 9 2013 £’000 77,404 (45,558) 31,846 (12,981) 18,865 20,060 (727) (468) 18,865 456 – 496 693 20,510 (4,592) 15,918 (294) – (294) 15,624 37.6 37.6 2012 £’000 68,825 (39,614) 29,211 (13,035) 16,176 16,773 (597) – 16,176 405 (1) 18 – 16,598 (3,925) 12,673 (694) (135) (829) 11,844 29.9 29.9 *Other Comprehensive expense includes only items that will be subsequently reclassified to Profit before tax when specific conditions are met. The notes on pages 23 to 48 form part of these financial statements. RWS Holdings plc Consolidated Statement of Financial Position at 30 September 20 Registered Company 3002645 Assets Non-current assets Goodwill Intangible assets Property, plant and equipment Investment in associate Deferred tax assets Current assets Trade and other receivables Foreign exchange derivatives Cash and cash equivalents Total assets Liabilities Current liabilities Trade and other payables Income tax payable Put and call option liability Provisions Non-current liabilities Other creditors Provisions Deferred tax liabilities Total liabilities Total net assets Equity Capital and reserves attributable to owners of the parent Share capital Share premium Share based payment reserve Reverse acquisition reserve Foreign currency reserve Retained earnings Total equity The notes on pages 23 to 48 form part of these financial statements. Note 10 11 12 13 14 15 18 21 16 18 17 16 17 14 19 2013 £’000 30,325 9,896 13,002 – 270 53,493 16,670 566 18,211 35,447 88,940 11,463 2,555 – 336 14,354 – 530 2,343 2,873 17,227 71,713 2,116 3,583 468 (8,483) 1,187 72,842 71,713 2012 £’000 14,053 4,274 13,285 4,345 228 36,185 14,612 260 25,096 39,968 76,153 8,015 2,007 769 336 11,127 100 530 1,167 1,797 12,924 63,229 2,116 3,583 – (8,483) 1,481 64,532 63,229 The financial statements were approved by the Board of Directors and authorised for issue on 6 December 2013 and were signed on its behalf by: Andrew Brode Director RWS Holdings plc Consolidated Statement of Changes in Equity for the year ended 30 September Share capital £’000 2,116 – – – – 2,116 – – – – – Share premium account £’000 Other reserves (see below) £’000 Retained earnings £’000 3,583 (6,173) 58,532 – – – – 3,583 – – – – – Share based payment reserve £’000 – – – – – – 468 468 – (829) (829) – (7,002) – (294) (294) – 468 (6,828) Reverse acquisition reserve £’000 (8,483) – – (8,483) – – – (8,483) 12,673 – 12,673 (6,673) 64,532 15,918 – 15,918 (7,608) – 72,842 Foreign currency reserve £’000 2,310 (829) (829) 1,481 (294) (294) – 1,187 2,116 3,583 21 Total equity attributable to owners of the parent £’000 58,058 12,673 (829) 11,844 (6,673) 63,229 15,918 (294) 15,624 (7,608) 468 71,713 Total other reserves £’000 (6,173) (829) (829) (7,002) (294) (294) 468 (6,828) At 1 October 2011 Profit for the year Currency translation differences Other Comprehensive income for the year 30 September 2012 Dividends At 30 September 2012 Profit for the year Currency translation differences Other Comprehensive income for the year 30 September 2013 Dividends Credit arising on share based payment charges At 30 September 2013 Other reserves At 1 October 2011 Currency translation differences Other Comprehensive income for the year 30 September 2012 At 30 September 2012 Currency translation differences Other Comprehensive income for the year 30 September 2013 Credit arising on share based payment charges At 30 September 2013 The nature and purpose of each reserve within equity is as follows: – Share capital is 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. – 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. The notes on pages 23 to 48 form part of these financial statements. RWS Holdings plc Consolidated Statement of Cash Flows for the year ended 30 September 22 Note 22 13 12 11 8 21 Cash flows from operating activities Profit before tax Adjustments for: Depreciation of property, plant and equipment Amortization of intangible assets Share based payment costs Finance income Finance expense Share in results of associate Gain on disposal of associate Operating cash flow before movements in working capital and provisions (Increase)/decrease in trade and other receivables Increase in trade and other payables Cash generated from operations Income tax paid Net cash inflow from operating activities Cash flows from investing activities Interest received Acquisition of subsidiary, net of cash acquired Acquisition of share in associate Purchases of property, plant and equipment Purchases of intangibles (computer software) Net cash outflow from investing activities Cash flows from financing activities Dividends paid Net cash outflow from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Exchange losses on cash and cash equivalents Cash and cash equivalents at end of the year Free cash flow Analysis of free cash flow Net cash generated from operations Net interest received Income tax paid Purchases of property, plant and equipment Purchases of intangibles (computer software) Free cash flow 2013 £’000 20,510 666 799 468 (456) – (496) (693) 20,798 (318) 119 20,599 (4,249) 16,350 151 (15,132) – (376) (34) (15,391) (7,608) (7,608) (6,649) 25,096 (236) 18,211 20,599 151 (4,249) (376) (34) 16,091 2012 £’000 16,598 593 656 – (405) 1 – – 17,443 63 391 17,897 (4,297) 13,600 98 (2,480) (3,693) (363) (92) (6,530) (6,673) (6,673) 397 24,845 (146) 25,096 17,897 98 (4,297) (363) (92) 13,243 The Directors consider that the free cash flow analysis above indicates the cash generated from normal activities excluding acquisitions and dividends paid. The notes on pages 23 to 48 form part of these financial statements. RWS Holdings plc Notes to the Consolidated Financial Statements 23 1 ACCOUNTING POLICIES Basis of accounting and preparation of financial statements RWS Holdings plc is a company incorporated in the UK. The Group financial statements consolidate those of the Parent Company and its subsidiaries. The Parent Company financial statements present information about the Company as a separate entity and not about its Group. The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and judgements that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from these estimates. Judgements include classification of transactions between the income statement and the balance sheet, whilst estimations focus on areas such as carrying values and estimated lives. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU. The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. Consolidation A subsidiary is an entity controlled, directly or indirectly. Control is regarded as the power to govern the financial and operating policies of the entity so as to benefit from its activities. The financial results of subsidiaries are consolidated from the date control is obtained until the date that control ceases. All intra-group transactions are eliminated as part of the consolidation process. The Company has elected to prepare the Company financial statements in accordance with UK Accounting Standards. These are presented on pages 50 to 55 and the accounting policies in respect of Company information are set out on page 51. Changes in accounting policies There were no new standards, interpretations and amendments, applied for the first time from 1 October 2012, that have had a material effect on the financial statements apart from IAS1, ‘Financial statement presentation’ regarding other comprehensive income. The main change resulting from this amendment is a requirement for entities to group items presented in ‘other comprehensive income’ on the basis of whether they are potentially reclassifiable to profit or loss in future accounting periods. Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for later accounting periods and which have not been adopted early. There were no new standards, amendments or interpretations that are expected to have a material impact on the Group. On 11 November 2003, RWS Holdings plc became the legal parent company of Bybrook Limited and its subsidiary undertakings. The substance of the combination was that Bybrook Limited acquired RWS Holdings plc in a reverse acquisition. Goodwill arose on the difference between the fair value of the legal parent’s share capital and the fair value of its net liabilities at the reverse acquisition date. This goodwill was written-off in the year ended 30 September 2004, because the goodwill had no intrinsic value. Business combinations Under the requirements of IFRS 3 (revised), all business combinations are accounted for using the acquisition method (‘acquisition accounting’). The cost of a business acquisition is the aggregate of fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the acquirer. Following IFRS 3 (revised) becoming effective, costs directly attributable to business combinations are expensed as part of the cost of the acquisition. The cost of a business combination is allocated at the acquisition date by recognising the acquiree’s identifiable assets, liabilities and contingent liabilities that satisfy the recognition criteria, at their fair values at that date. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. An intangible asset, such as customer relationships RWS Holdings plc Notes to the Consolidated Financial Statements (continued) 24 or trademarks, is recognised if it meets the definition of an intangible asset under IAS 38 ‘Intangible assets’. The excess of the cost of the acquisition over the fair value of the Group’s share of the net assets acquired is recorded as goodwill. Intangible assets (i) Goodwill arising on acquisitions is capitalised and subject to an impairment review, both annually and when there is an indication that the carrying value may not be recoverable. (ii) Intangible assets separately identified from goodwill acquired as part of a business combination are initially stated at fair value. The fair value attributable is determined by discounting the expected future cash flows to be generated from that asset at the risk adjusted weighted average cost of capital appropriate to that intangible asset. The assets are amortized over their estimated useful lives which range from five to ten years. (iii) Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These assets are amortized using the straight line method over their estimated useful lives (not exceeding three years). Revenue recognition Group revenue represents the fair value of the consideration received or receivable for the rendering of services, net of value added tax and other similar sales based taxes, rebates and discounts and after eliminating inter-company sales. Revenue, other than subscription and commission income, is recognised as a translation, filing or search is fulfilled in accordance with agreed client instructions and includes, where contracts are partially completed, the revenue on the element of the work performed to date. Subscription revenue is recognised on a straight line basis over the term during which the service is provided. Commission income is credited to revenue upon securing the related sale. Accrued income represents the full receivable value of work performed to date. RWS Holdings plc Foreign currencies The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements. In preparing the individual financial statements of the individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items that are measured in terms of historical cost in foreign currency are not retranslated. Exchange differences on all transactions are taken to operating profit. In the consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates, which approximate to actual rates, for the relevant accounting period. Exchange differences arising, if any, are classified as other comprehensive income and recognised in the Group’s foreign currency reserve. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. The Group has elected to treat goodwill and fair value adjustments arising on acquisitions before the date of transition to IFRSs as sterling-denominated assets and liabilities. Segment information Segment information reflects how management controls the business. This is primarily by the type of service supplied and then by the geographic location of the business units delivering those services. The assets and liabilities of the segments reflect the assets and liabilities of the underlying companies involved. Property, plant and equipment The Group’s policy is to write off the difference between the cost of each item of property, plant and equipment and its estimated residual value systematically over its estimated useful life using the straight-line method on the following bases: Freehold Land – Nil Freehold buildings – 2% Long leasehold and leasehold improvements – the length of the lease Furniture and equipment – 10% to 33% Motor vehicles – Over six years All items of property, plant and equipment are tested for impairment when there are indications that the carrying value may not be recoverable. Any impairment losses are recognised immediately in the Statement of Comprehensive Income. The gain or loss on disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of Comprehensive Income. Associates Where the Group has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate. Associates are initially recognised in the Consolidated Statement of Financial Position at cost. The Group’s share of post-acquisition profits and losses is recognised in the Consolidated Statement of Comprehensive Income, except that losses in excess of the Group’s investment in the associate are not recognised unless there is an obligation to make good those losses. impaired the carrying amount of the investment is tested for impairment in the same way as other non- financial assets. 25 Derivative financial instruments The Group uses derivative financial instruments to manage its exposure to foreign exchange arising from operational activities. Derivative financial instruments are initially measured at fair value (with direct transaction costs being included in the Statement of Comprehensive Income as an expense) and are subsequently remeasured to fair value at each reporting date. Changes in carrying value are recognised in the Statement of Comprehensive Income. Trade and other receivables Trade and other receivables represent amounts due from customers in the normal course of business. All amounts are initially stated at fair value and carried at amortized cost where there is objective evidence of any impairment. Cash and cash equivalents Cash and cash equivalents comprise cash in hand, deposits held at call with banks and highly liquid investments with original maturities of three months or less and are subject to an insignificant risk of changes in value. Taxation The tax expense represents the sum of the tax currently payable and deferred tax. Tax is recognised in the Statement of Comprehensive Income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Profits and losses arising on transactions between the Group and its associates are recognised only to the extent of unrelated investors’ interests in the associate. The investors’ share in the associate’s profits and losses resulting from these transactions is eliminated against the carrying value of the associate. Any premium paid for an associate above the fair value of the Group’s share of the identifiable assets, liabilities and contingent liabilities acquired is capitalised and included in the carrying amount of the associate. Where there is objective evidence that the investment in an associate has been The current tax payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the Statement of Comprehensive Income because it excludes items that are not taxable or deductible. The Group’s current tax assets and liabilities are calculated using tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is RWS Holdings plc estimates, if any, is recognised in the Consolidated Statement of Comprehensive Income such that the cumulative expense reflects the revised estimate with a corresponding adjustment to equity reserves. Trade and other payables Trade and other payables are initially measured at fair value, and are subsequently measured at amortized cost, using the effective interest rate method. Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event from which it is probable that it will result in an outflow of economic benefits that can reasonably be estimated. Leases Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease rental payments are recognised as an expense in the Statement of Comprehensive Income on a straight-line basis over the lease term. The benefit of lease incentives is spread over the term of the lease. Capital The Group considers its capital to comprise its ordinary share capital, share premium, other reserves and accumulated retained earnings. In managing its capital, the Group’s primary objective is to ensure its continued ability to provide a consistent return for its equity shareholders through a combination of capital growth and distributions. The Group has historically considered equity funding as the most appropriate form of capital for the Group but keeps this under review bearing in mind the risks, costs and benefits to equity shareholders of introducing debt finance. Equity issued by the Company is recorded as the proceeds received net of direct issue costs. 26 Notes to the Consolidated Financial Statements (continued) accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is calculated using tax rates that are expected to apply in the period when the liability is settled or the asset realised based on tax rates that have been enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Employee benefits The Group operates a defined contribution pension plan and has no further obligations once the contributions have been paid. Payments to the plan are recognised in the Statement of Comprehensive Income as they fall due. Paid holidays are regarded as an employee benefit and as such are charged to the Statement of Comprehensive Income as the benefits are earned. An accrual is made at the balance sheet date to reflect the fair value of holidays earned but not yet taken. Share based payments The Group and Company provide benefits to certain employees (including certain Executive Directors), in the form of share based payment transactions whereby employees render services in exchange for rights over shares in the form of share options. These equity settled share based transactions are measured as the fair value of the share option at the grant date. The fair value excludes the effect of non market based vesting conditions. Details regarding the determination of the fair value of these options can be seen in note 20. The fair value determined at the grant date of the share options is expensed on a straight line basis over the vesting period, based on the Group’s estimate of share options that will vest. At each balance sheet date the Group revises its estimate of the number of options expected to vest as a result of the effect on non market based vesting conditions. The impact of the revision of the original RWS Holdings plc 2 CRITICAL JUDGEMENTS AND ACCOUNTING ESTIMATES IN APPLYING THE GROUP’S ACCOUNTING POLICIES The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions are reviewed on an ongoing basis. In the future, actual experience may vary materially from management expectation. Key sources of estimation uncertainty The following estimates and assumptions are considered to have a risk of causing a material adjustment to the carrying amounts of assets and liabilities in the financial statements. Impairment of goodwill Determining whether goodwill is impaired requires an estimation of the value in use of the cash- generating units to which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating units and then discount these cashflows to their present value using a pre-tax discount rate that reflects both current market assessments of the time value of money and the risks specific to the cash-generating unit. More details on the carrying value of goodwill is included in note 10. Fair value of identifiable net assets acquired Upon acquisition of a business the fair value of identifiable assets and liabilities are calculated. These values are either based on reports obtained from independent 3rd party professional valuation experts or internally generated discounted cash flow forecasts. Share based payments The Group operates a share option scheme. The charge for share based payments is based on the fair value of awards at the date of grant which is partly calculated by use of the Black-Scholes pricing model which requires judgement to be made regarding volatility, dividend yield risk free rates of return and expected option lives. The inputs used in these pricing models to calculate the fair values are set out in note 20. 27 An element of the share based profit charge also relies on certain assumptions over the future performance of the share price which may not be met or may be exceeded by the time the relevant awards vest. Useful economic lives of intangible and tangible assets The useful economic lives and residual values of assets have been established using historic experience and an assessment of the nature of the assets involved. Fair value of associate on disposal The fair value of associate on disposal is based on future cashflows of the business discounted at an appropriate rate to reflect both the time value of money and the deemed risk specific to the associate. Fair value of put and call option The fair value of the put and call option is valued based upon reports obtained from independent 3rd party valuation experts. RWS Holdings plc Notes to the Consolidated Financial Statements (continued) 28 3 SEGMENT INFORMATION The Group comprises two principal divisions, the Translations division (for management reporting analysed between UK and Overseas operations) providing patent and technical document translation, filing and localisation services in the UK, USA, Europe, Japan and China, and the Information division, which offers a full range of patent search, retrieval and monitoring services as well as an extremely comprehensive patent database service accessible by subscribers, known as PatBase. Following the acquisition of inovia Holdings pty Limited on 17 September 2013 (see note 22) the Group has treated their results as a separate segment and has shown them separately. inovia is a leading provider of web based international filing solutions. The unallocated segment relates to corporate overheads, assets and liabilities. The segment results for the year ended 30 September 2013 are as follows: Revenue Patent translation Commercial translation inovia Information Total Revenue Operating profit/(loss) before charging: Amortization of customer relationships and trademarks Share based payment costs Profit/(loss) from operations Finance income Share in results of associate Gain on disposal of associate Profit before taxation Taxation Profit for the year Translations UK Translations Overseas inovia Information Unallocated £’000 £’000 £’000 £’000 £’000 49,035 11,010 – – 60,045 15,973 (584) (160) 15,229 4,505 6,366 – – 10,871 2,322 – (59) 2,263 – – 1,186 – 1,186 129 – – 129 – – – 5,302 5,302 2,390 (143) (19) 2,228 – – – – – (754) – (230) (984) Group £’000 53,540 17,376 1,186 5,302 77,404 20,060 (727) (468) 18,865 456 496 693 20,510 (4,592) 15,918 Overseas intercompany revenue to the UK amounting to £4.2 million has been eliminated on consolidation. RWS Holdings plc The segment results for the year ended 30 September 2012 are as follows: 29 Revenue Patent translation Commercial translation inovia Information Total Revenue Operating profit/(loss) before charging: Amortization of customer relationships and trademarks Profit/(loss) from operations Finance income Finance expense Share in results of associate Profit before taxation Taxation Profit for the year Translations UK Translations Overseas inovia Information Unallocated £’000 £’000 £’000 £’000 £’000 43,593 9,657 – – 53,250 13,322 (549) 12,773 4,761 5,835 – – 10,596 1,974 – 1,974 – – – – – – – – – – – 4,979 4,979 2,135 (48) 2,087 – – – – – (658) – (658) Group £’000 48,354 15,492 – 4,979 68,825 16,773 (597) 16,176 405 (1) 18 16,598 (3,925) 12,673 Overseas intercompany revenue to the UK amounting to £3.6 million has been eliminated on consolidation. The segment assets and liabilities at 30 September 2013 are as follows: Total assets Total liabilities Capital expenditure Depreciation Amortization Translations UK Translations Overseas inovia Information Unallocated £’000 £’000 £’000 £’000 £’000 62,289 6,451 6,416 367 583 5,250 1,849 159 98 65 4,510 3,628 8 – – 5,286 1,950 88 142 143 11,605 3,349 126 59 8 Group £’000 88,940 17,227 6,797 666 799 Capital expenditure comprises additions to property, plant and equipment and intangible assets, including additions from acquisitions through business combinations. The segment assets and liabilities at 30 September 2012 are as follows: Total assets Total liabilities Capital expenditure Depreciation Amortization Translations UK Translations Overseas inovia Information Unallocated £’000 £’000 £’000 £’000 £’000 49,081 7,237 108 366 549 9,655 1,728 176 77 50 – – – – – 4,527 1,970 1,580 100 48 12,890 1,989 23 50 9 Group £’000 76,153 12,924 1,887 593 656 Capital expenditure comprises additions to property, plant and equipment and intangible assets, including additions from acquisitions through business combinations. The majority of unallocated assets relates to cash held by the Parent Company. RWS Holdings plc Notes to the Consolidated Financial Statements (continued) 30 3 SEGMENT INFORMATION (CONTINUED) Segment assets and liabilities are reconciled to the Group’s assets and liabilities as follows: Segment assets and liabilities Unallocated: Deferred tax Property, plant and equipment Non-financial assets Other financial assets and liabilities Total unallocated Assets 2013 £’000 Liabilities 2013 £’000 Assets 2012 £’000 Liabilities 2012 £’000 77,335 13,878 63,263 10,935 189 130 271 11,015 11,605 88,940 2,048 – 771 530 3,349 17,227 201 62 244 12,383 12,890 76,153 955 – 504 530 1,989 12,924 Assets allocated to a segment consist primarily of operating assets such as property, plant and equipment, intangible assets, goodwill, receivables and cash. Liabilities allocated to a segment comprise primarily trade payables and other operating liabilities. The Group’s operations are based in the UK, Continental Europe, Asia, United States of America and Australia. The table below shows turnover by the geographic market in which customers are located. UK Continental Europe Asia, United States of America and Australia 2013 £’000 11,401 43,522 22,481 77,404 2012 £’000 8,584 43,461 16,780 68,825 No customer accounted for more than 6% of Group turnover in either the current or prior year. The following is an analysis of revenue, carrying amount of assets, and additions to property, plant and equipment and intangible assets, analysed by the geographical area in which the Group’s undertakings are located. Revenue Segment assets 2013 £’000 65,347 6,335 5,722 77,404 2012 £’000 58,229 5,779 4,817 68,825 2013 £’000 79,181 2,440 7,319 88,940 2012 £’000 66,498 2,530 7,125 76,153 Capital expenditure 2013 2012 £’000 £’000 6,664 43 90 6,797 1,711 142 34 1,887 UK Continental Europe Asia, United States of America and Australia RWS Holdings plc 4 PROFIT FROM OPERATIONS 31 This has been arrived at after charging/(crediting): Staff costs (note 5) Depreciation of property, plant and equipment and motor vehicles (note 12) Amortization of intangible assets (note 11) Foreign exchange (gains)/losses Operating lease rentals: – Property – Plant and equipment Auditors’ remuneration Fees payable to the Company’s auditor for the audit of the Group’s annual accounts Fees payable to the Company’s auditor and its associates for other services: – the audit of the subsidiaries pursuant to legislation – taxation – all other services Total fees 5 STAFF COSTS Staff costs (including directors) comprise: Wages and salaries Social security costs Pension costs Share based payment costs (note 20) 2013 £’000 2012 £’000 22,091 666 799 (316) 20,804 593 656 147 621 175 53 87 58 18 216 601 181 49 82 57 8 196 2013 £’000 2012 £’000 18,910 2,345 368 468 22,091 18,197 2,255 352 – 20,804 The Group operates a defined contribution pension scheme making payments on behalf of employees to their personal pension plans. Payments of £368,000 (2012: £352,000) were made in the year and charged to the income statement in the period they fell due. At the year end there were unpaid amounts included within Other Creditors totalling £44,000 (2012: £42,000). Details of directors’ remuneration and pension contributions are disclosed in the Directors’ Remuneration Report on pages 12 to 14. Key management compensation Salaries, bonuses, short-term employee benefits Share based payment costs 2013 £’000 2,434 468 2,902 2012 £’000 2,243 – 2,243 The key management compensation includes the seven (2012: six) directors of RWS Holdings plc, the five (2012: five) members of the Senior Executive Team who are not directors of RWS Holdings plc and the three (2012: three) managing directors of the operating subsidiary undertakings based overseas. RWS Holdings plc Notes to the Consolidated Financial Statements (continued) 32 5 STAFF COSTS (CONTINUED) The average number of people employed by the Group, including directors and part-time employees, during the year was: Production staff Administrative staff 6 FINANCE INCOME AND EXPENSE Finance income – Returns on short-term deposits – Fair value of forward foreign currency contracts outstanding at the year end Finance expense – Interest on deferred consideration relating to an acquisition Net finance income 7 TAXATION Taxation recognised in the income statement is as follows: Current tax expense Tax on profit for the current year – UK – Overseas Adjustment to prior years Deferred tax Current year movement Prior year movement Total tax expense in the Statement of Comprehensive Income The table below reconciles the UK statutory tax charge to the Group’s total tax charge. Profit before taxation Notional tax charge at UK corporation tax rate of 23.5% (2012: 25%) Effects of: Items not deductible or not chargeable for tax purposes Gain on disposal of associate not chargeable for tax Differences in overseas tax rates UK tax rate change Adjustments in respect of prior periods Total tax expense for the year RWS Holdings plc 2013 Number 2012 Number 434 98 532 394 94 488 2013 £’000 2012 £’000 149 307 – 456 152 253 (1) 404 2013 £’000 2012 £’000 4,097 861 (180) 4,778 (196) 10 4,592 2013 £’000 20,510 4,820 (160) (163) 275 – (180) 4,592 3,714 644 (250) 4,108 (238) 55 3,925 2012 £’000 16,598 4,150 (67) – 163 (71) (250) 3,925 8 DIVIDENDS TO SHAREHOLDERS 33 Final, paid 22 February 2013 (2012: paid 17 February 2012) Interim, paid 19 July 2013 (2012: paid 20 July 2012) 2013 2013 pence per share 13.48 4.50 17.98 £’000 5,704 1,904 7,608 2012 pence per share 11.75 4.02 15.77 2012 £’000 4,972 1,701 6,673 The Directors recommend a final dividend in respect of the financial year ended 30 September 2013 of 15.75 pence per Ordinary share to be paid on 21 February 2014 to shareholders who are on the register at 24 January 2014. This dividend is not reflected in these financial statements as it does not represent a liability at 30 September 2013. The final proposed dividend will reduce shareholders’ funds by an estimated £6.7 million. 9 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: Weighted average number of Ordinary shares in issue for basic earnings Dilutive impact of share options Weighted average number of Ordinary shares for diluted earnings 2013 2012 42,315,968 42,315,968 – 42,339,158 42,315,968 23,190 Adjusted earnings per Ordinary share is also presented to eliminate the effects of amortization of customer relationships and trademarks, and gain on sale of associate and charges for share based payments. 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: 2013 2012 2013 2012 Basic earnings per share Basic earnings per share Diluted earnings per share Diluted earnings per share pence pence pence pence 2013 £’000 2012 £’000 15,918 12,673 37.6 574 (547) 370 16,315 460 – – 13,133 1.4 (1.3) 0.9 38.6 29.9 1.1 – – 31.0 37.6 1.4 (1.3) 0.9 38.6 29.9 1.1 – – 31.0 Profit for the year Post tax adjustments Amortization of customer relationships and trademarks Gain on sale of Associate Charges for share based payments Adjusted earnings RWS Holdings plc Notes to the Consolidated Financial Statements (continued) 34 10 GOODWILL Cost and net book value At 1 October Additions Exchange adjustments At 30 September 2013 £’000 2012 £’000 14,053 16,345 (73) 30,325 13,057 1,347 (351) 14,053 During the year, goodwill was tested for impairment. The recoverable amount for each cash-generating unit (“CGU”) has been determined from value in use calculations. The key assumptions for the value in use calculations are those regarding discount rates, growth rates and expected changes to selling prices and direct costs during the period. All of these assumptions have been reviewed during the year. Management estimates discount rates using pre tax rates that reflect current market assessments of the time value of money and the risk specific to each CGU. This has resulted in a range of discount rates 12% – 19% (FY 2012: 15%) being used within the calculations. The FY 2013 acquisitions of PharmaQuest Limited (see note 22) and inovia Holdings Pty Limited being at the high end of the range. The growth rates used in the calculations are based on a review of both recently achieved growth rates and a prudent estimate of likely future growth rates for each specific market sector. As part of the value in use calculation management prepare cash flow forecasts derived from the most recent financial budgets, approved by the Board of Directors for the next 12 months, and extrapolate the cash flows for the following 5 years based on an estimated growth rate. This rate does not exceed the expected growth rate for the relevant markets of each CGU. The allocation of goodwill to cash generating units is as follows: Translations UK Continental Europe inovia Information At 30 September 2013 £’000 2012 £’000 17,501 4,411 21,912 6,632 1,781 30,325 8,065 4,207 12,272 – 1,781 14,053 Subsidiaries A list of the subsidiaries whose results or financial position principally affect the figures shown in the Group financial statements is shown in note 4 to the Company’s separate financial statements. RWS Holdings plc 11 INTANGIBLE ASSETS 35 Cost At 1 October 2011 Additions Disposals Currency translation At 30 September 2012 Additions Disposals Currency translation At 30 September 2013 Amortization and impairment At 1 October 2011 Amortization charge Disposals Currency translation At 30 September 2012 Amortization charge Disposals Currency translation At 30th September 2013 Net book value At 1 October 2011 At 30 September 2012 At 30 September 2013 Technology Trademarks Customer relationships Software £’000 £’000 £’000 £’000 – – – – – 2,011 – (37) 1,974 – – – – – – – – – – – 1,974 256 – – (20) 236 – – 12 248 187 48 – (15) 220 17 – 11 248 69 16 – 5,173 1,432 – (281) 6,324 4,368 – 109 10,801 1,748 549 – (110) 2,187 710 – 70 2,967 3,425 4,137 7,834 291 92 (23) (21) 339 34 (61) 13 325 196 59 (23) (14) 218 72 (61) 8 237 95 121 88 Total £’000 5,720 1,524 (23) (322) 6,899 6,413 (61) 97 13,348 2,131 656 (23) (139) 2,625 799 (61) 89 3,452 3,589 4,274 9,896 Trademarks, Technology and Customer Relationships are amortized over 5 to 10 years and Software over 3 years on a straight line basis. RWS Holdings plc Freehold land and buildings £’000 Leasehold land, buildings and improvements £’000 Furniture and equipment £’000 Motor vehicles £’000 12,350 – 25 – – 12,375 – – – – 12,375 133 – – 178 – 311 – – 178 – 489 12,217 12,064 11,886 519 – – – – 519 – – – – 519 234 – – 28 – 262 – – 64 – 326 285 257 193 1,922 (35) 274 12 (151) 2,022 9 376 13 (78) 2,342 901 (20) 11 368 (151) 1,109 6 4 420 (73) 1,466 1,021 913 876 26 (2) 64 – (9) 79 – – – – 79 19 (1) – 19 (9) 28 – – 4 – 32 7 51 47 Total £’000 14,817 (37) 363 12 (160) 14,995 9 376 13 (78) 15,315 1,287 (21) 11 593 (160) 1,710 6 4 666 (73) 2,313 13,530 13,285 13,002 Notes to the Consolidated Financial Statements (continued) 36 12 PROPERT Y, PLANT AND EQUIPMENT Cost At 1 October 2011 Currency translation Additions Acquisitions Disposals At 30 September 2012 Currency translation Additions Acquisitions Disposals At 30 September 2013 Depreciation At 1 October 2011 Currency translation Acquisitions Depreciation charge Disposals At 30 September 2012 Currency translation Acquisitions Depreciation charge Disposals At 30 September 2013 Net book value At 1 October 2011 At 30 September 2012 At 30 September 2013 RWS Holdings plc 13 INVESTMENT IN ASSOCIATE 37 Following the exercise of the Group’s put and call option on 17 September the Group completed the acquisition of inovia by acquiring the remaining 66% (see note 22) for a cash consideration of $23,349,828. Under IFRS 3 this transaction is accounted for as a sale of an associate and the purchase of a subsidiary. The gain on sale of associate is calculated by comparing the fair value of the associate with its carrying value. The fair value of the put and call option at the date it was exercised was deemed negligible and the change in fair value of this financial derivative of £769,000 has also been shown as a gain in the sale. Aggregated amounts relating to inovia are as follows: Cost and net book value at beginning of year Cash cost of investment acquired during the year Change in fair value of put and call option (financial derivative) Share in results of associate Share in other comprehensive income of associate Disposal of Associate Cost and net book value at the end of year Gain on disposal of Associate Fair Value of Associate Book Value of Associate Loss on remeasurement of Associate to fair value Change in fair value of put and call option Gain on Disposal of Associate Aggregated amounts relating to the full results of the associate are as follows: Total assets Total liabilities Revenue Net profit (after amortization of intangibles) 2013 £’000 4,345 – – 496 – (4,841) – 4,765 (4,841) (76) 769 693 2013 £’000 – – – – 2012 £’000 – 3,693 769 18 (135) – 4,345 2012 £’000 3,387 2,467 12,218 165 RWS Holdings plc Notes to the Consolidated Financial Statements (continued) 38 14 DEFERRED TAX The deferred tax assets and liabilities and the movements during the year, before offset of balances within the same tax jurisdiction, are as follows: Accelerated tax Other temporary depreciation differences £’000 £’000 65 2 67 (5) 62 181 (20) 161 (11) 150 Accelerated tax depreciation £’000 Intangibles £’000 187 – 24 – 211 – 83 – 294 906 329 (225) (54) 956 1,340 (227) (20) 2,049 2013 £’000 270 (2,343) (2,073) Total £’000 246 (18) 228 42 270 Total £’000 1,093 329 (201) (54) 1,167 1,340 (144) (20) 2,343 2012 £’000 228 (1,167) (939) Share Options £’000 – – – 58 58 Deferred tax assets At 1 October 2011 Credited/(charged) to income At 30 September 2012 Credited/(charged) to income At 30 September 2013 Deferred tax liabilities At 1 October 2011 Acquisition of subsidiary Charged/(credited) to income Credited to equity At 30 September 2012 Acquisition of subsidiary Charged/(credited) to income Credited to equity At 30 September 2013 Deferred tax assets Deferred tax liabilities Net deferred tax balance at 30 September The deferred tax rate is lower than that applied in the prior year. RWS Holdings plc 15 TRADE AND OTHER RECEIVABLES 39 Trade receivables Less: allowance for doubtful debts Other receivables Prepayments and accrued income 2013 £’000 13,523 (69) 13,454 231 2,985 16,670 2012 £’000 11,772 (74) 11,698 174 2,740 14,612 Trade receivables are non-interest bearing and generally have a 30 day term. Due to their short maturities, the carrying amount of trade and other receivables approximate to their fair value. Trade receivables net of allowances are held in the following currencies: Sterling Euros Japanese Yen US Dollars Swiss Francs Other The ageing of trade receivables at the reporting date was: Not past due Past due 1-30 days Past due 31-60 days Past due 61-90 days Past due > 90 days Movement in allowance for doubtful debts: At 1 October Utilised Charged At 30 September 2013 £’000 2,423 5,994 562 4,110 351 14 13,454 2013 £’000 8,477 3,657 935 311 74 13,454 2012 £’000 2,123 6,094 660 2,224 527 70 11,698 2012 £’000 7,670 2,698 895 341 94 11,698 2013 £’000 2012 £’000 74 (14) 9 69 60 – 14 74 Given the profile of the Group’s customers no further credit risk has been identified with trade receivables other than those balances for which an allowance has been made. RWS Holdings plc Notes to the Consolidated Financial Statements (continued) 40 16 TRADE AND OTHER PAYABLES Due in less than one year Trade payables Other tax and social security payable Other creditors Accruals and deferred income 2013 £’000 2012 £’000 4,944 969 1,007 4,543 11,463 2,588 921 1,711 2,795 8,015 The carrying amount of trade and other payables approximates to their fair value. Trade payables normally fall due within 30 to 60 days. Due in more than one year Other creditors – contingent consideration: re Davda & Associates Limited 17 PROVISIONS Due in less than one year At 1 October Utilised At 30 September 2013 £’000 2012 £’000 – 100 2013 £’000 2012 £’000 336 – 336 486 (150) 336 The provisions relate to the cost of dilapidations arising on the move to the new Group Head Office at Chiltern Park. Due in more than one year At 1 October Paid in year Unwinding of discount rate At 30 September This long term provision relates to monthly ongoing future pension payments to a third party. 2013 £’000 2012 £’000 530 (75) 75 530 547 (72) 55 530 RWS Holdings plc 18 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT 41 Categories of financial instruments All financial assets other than derivative assets are classified as loans and receivables, and all financial liabilities are held at amortized cost, apart from the put and call option shown in 2012, which is treated as being at fair value through the income statement. The principal financial assets and liabilities on which financial risks arise are as follows: Financial assets Trade and other receivables – current Foreign exchange derivatives Cash and cash equivalents Financial liabilities Trade and other payables – current Put and call option liability – inovia Holdings Pty Limited (see note 13) Carrying value Carrying value 2012 £’000 2013 £’000 15,390 566 18,211 34,167 7,655 – 7,655 13,546 260 25,096 38,902 5,357 769 6,126 Trade and other receivables – current includes accrued revenue of £1,936,000 (30 September 2012: £1,848,000). Trade and other payables – current includes Trade payables, Other tax and social security balances plus certain other selected accruals. Financial risk management objectives and policies The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group’s Finance Director. The principal financial risks to which the Group is exposed are those of liquidity, interest rate, credit, foreign currency and capital. Each of these is managed as set out below. Liquidity risk In addition to its cash balances the Group has an overdraft facility of £1.5 million which was undrawn as at the year end. Most available funds, after meeting working capital requirements, are invested in sterling, euro and US dollar deposits with maturities not exceeding three months. Accordingly, liquidity risk is considered to be low. Interest rate risk The majority of the Group’s cash balances are held with its principal bankers earning interest at variable rates of interest. The target yield on deposits is UK base rate plus a margin. To the extent the sterling overdraft is utilised it attracts a rate of base plus 2%. RWS Holdings plc Notes to the Consolidated Financial Statements (continued) 42 18 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED) The currency profiles of the Group’s cash and cash equivalents at 30 September 2013 are set out below. Assets – Cash and cash equivalents Sterling US Dollar Euros Yen Swiss Francs/Australian Dollar Floating rate Floating rate 2012 £’000 2013 £’000 11,645 3,223 2,144 597 602 18,211 13,428 7,602 2,313 1,133 620 25,096 If interest rates changed by 1%, the profit and loss impact would not be material to the Group’s results in either the current or prior year. Credit risk The Group is exposed to credit risk on cash and cash equivalents, derivative instruments and trade and other receivables. Cash balances, predominantly held in the UK, are placed with the Group’s principal bankers who are rated A by Standard & Poor’s. During the year funds have been mainly spread between three institutions. Trade receivable exposures are managed locally in the operating units where they arise. The client base tends to be major blue chip organisations or self regulated bodies such as patent agents and legal firms. As a result the Group rarely considers a credit check is appropriate but, and where management have doubt, they will use their judgement and may impose a credit limit or require payment in advance. No client accounts for more than 6% (2012 – 5%) of group revenue and there were no significant concentrations of credit risk at the balance sheet date. Provisions for doubtful debts are established in respect of specific trade and other receivables where it is deemed they may be irrecoverable. Foreign currency risk Approximately 50% (2012 – 54%) of Group external sales in the reporting period were denominated in Euros while the cost base of the Group is predominantly denominated in sterling. The Group has established spot and forward foreign exchange facilities with its principal bankers and other financial institutions that enables it to manage most of its currency exposures on expected future sales over the next twelve months. The Group’s policy is, where possible, to allow Group entities to settle liabilities denominated in the functional currency with cash generated in that currency from their own operations. Transaction exposures arise from non-local currency sales and purchases by subsidiaries with gains and losses on transactions arising from fluctuations in exchange rates being recognised in the income statement. In entities which have a material exposure the policy is to seek to manage the risk using forward foreign exchange contracts. Assets and liabilities of Group entities located in Germany, Switzerland, the United States, Japan, China and Australia are principally denominated in their respective currencies and are therefore not materially exposed to currency risk. On translation to sterling gains or losses arising are recognised directly in equity. RWS Holdings plc The carrying amounts of the Group’s material foreign currency denominated monetary assets and liabilities at the reporting date are as follows: 43 Euros US Dollars Swiss Francs Yen Other Liabilities 2013 £’000 Liabilities 2012 £’000 942 186 – – 59 1,187 1,028 71 2 17 98 1,216 Assets 2013 £’000 6,516 2,997 577 457 121 10,668 Assets 2012 £’000 6,668 9,394 770 380 90 17,302 Foreign currency sensitivity analysis The following table details the Group’s sensitivity to a 10% increase and decrease in sterling against the major currencies listed in the table above. The sensitivity analysis includes only the outstanding denominated monetary items and adjusts their translation at the end of the period for a 10% change in the sterling exchange rate. A positive number below indicates an increase in profit and other equity where sterling weakens against the relevant currency. For a 10% strengthening of sterling against the relevant currency, there would be an equal and opposite impact on profit and other equity, and the balances would be negative. The sensitivities below are based on the exchange rates at the reporting date used to convert the assets or liabilities to sterling. Euros US Dollars Swiss Francs Yen Profit and loss impact 2012 £’000 2013 £’000 507 256 52 42 857 513 848 70 33 1464 If the exchange rate on uncovered exposures were to move significantly between the year end and date of payment or receipt there could be an impact on the Group’s profit. As all financial assets and liabilities are short-term in nature this risk is not considered to be material. Whilst the table above indicates the Group’s gross exposure, in practice this would be reduced as a result of the forward foreign currency contracts in place. The fair value of the forward foreign currency contracts at 30 September 2013 was £566,000 which was confirmed to valuations provided by Barclays Bank plc and other financial institutions. RWS Holdings plc Notes to the Consolidated Financial Statements (continued) 44 18 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED) The Group’s derivative financial instruments in place at the year end are as follows: Forward foreign currency exchange contracts An analysis of the group’s forward contracts’ maturity is as follows: Up to 3 months 3 to 6 months 6 to 12 months 2013 £’000 2012 £’000 566 260 2013 £’000 2012 £000 139 137 290 566 216 44 – 260 Capital risk The Group considers its capital to comprise its ordinary share capital, share premium, other reserves and accumulated retained earnings. In managing its capital, the Group’s primary objective is to ensure its continued ability to provide a consistent return for its equity shareholders through a combination of capital growth and distributions. The Group has historically considered equity funding as the most appropriate form of capital for the Group but keeps this under review bearing in mind the risks, costs and benefits to equity shareholders of introducing debt finance. The Group is not subject to externally imposed capital requirements. 2013 Number 2013 £’000 2012 Number 2012 £’000 100,000,000 5,000 100,000,000 5,000 42,315,968 2,116 42,315,968 2,116 19 SHARE CAPITAL Authorised Ordinary shares of 5 pence each Allotted, called up and fully paid At beginning and end of year RWS Holdings plc 20 SHARE BASED PAYMENT 45 On 2 April 2013 the Company adopted a new share option scheme for employees. Under the scheme, options to purchase ordinary shares are granted by the Board of Directors, subject to the exercise price of the option being not less than the market value at the grant date. The options typically vest after a period of 2 years and the vesting schedule is subject to predetermined overall company selection criteria. In the event that the option holder’s employment is terminated, the option may not be exercised unless the Board of Directors so permits. The options expire 8 years from the date of grant. Number of approved options Number of unapproved options Vesting date Exercise Price Grant Date approved options unapproved options Lapse Date 32,501 1,660,141 6.46 2 April 2013 2 April 2016 2 April 2015 2 April 2021 A charge of £468,000 (2012: nil) has been made in the accounts relating to share options all of which related to equity settled share based payment transactions. No options were exercised during the year. The fair values of the share option is estimated as at the date of grant using the Black-Scholes option pricing model. The following table lists the range of assumptions applied to the options granted in the respective period shown. Weighted average share price at grant Weighted average exercise price Expected life of option (years) Volatility (%) Dividend yield (%) Risk free interest rate (%) Approved Option Scheme Unnapproved Option Scheme 6.46 6.46 3 33.5 2.69 2 6.46 6.46 2 33.5 2.69 2 Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous 3 years. 21 CASH AND CASH EQUIVALENTS Cash at bank and in hand Short-term deposits 2013 £’000 14,161 4,050 18,211 2012 £’000 14,241 10,855 25,096 Short-term deposits have original maturity of three months or less. The fair value of these assets supports their carrying value. There are no restrictions regarding the utilisation of the Group’s cash resources. RWS Holdings plc Notes to the Consolidated Financial Statements (continued) 46 22 ACQUISITIONS Acquisitions during the period PharmaQuest Limited On 30 April 2013 the Group acquired the entire issued share capital of PharmaQuest Limited, whose principal activity is the provision of technical translations for the medical and pharmaceutical industries, for a cash consideration of £2,853,000. The fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows: Net assets acquired: Property, plant and equipment Intangible asset – customer relationships Trade and other receivables Cash and cash equivalents Trade and other payables Deferred tax liabilities Goodwill Total consideration Satisfied by: Cash Cash flow: Total consideration Cash included in undertaking acquired Net cash consideration Book value Fair value adjustments Fair value £’000 £’000 £’000 1 – 89 621 (196) – 515 – 1,391 – – – (292) 1,099 1 1,391 89 621 (196) (292) 1,614 1,239 2,853 2,853 2,853 (621) 2,232 The intangible assets acquired are to be amortized over their estimated useful lives of 10 years. The main factors leading to a recognition of goodwill on the acquisition of PharmaQuest Limited are, the presence of certain intangible assets in the acquired entity which do not qualify for separate recognition such as the assembled workforce and cost synergies within the Group’s operations in the United Kingdom, and, an unidentified proportion representing the balance contributing to profit generation. PharmaQuest Limited contributed £0.4 million revenue and £0.1 million to the Group’s profit after tax for the year between the date of acquisition and the balance sheet date. If the acquisition had been completed on the first day of the financial year, group revenue for the year would have been £78.2 million and group profit £16.1 million. Acquisition costs of £41,000 have been charged through the Comprehensive Income Statement. RWS Holdings plc inovia Holdings Pty Limited On 17 September 2013 the Group acquired the remaining two thirds share of inovia for a cash consideration of £14,871,000 ($23,350,000). 47 The fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows: Net assets acquired: Property, plant and equipment Intellectual property Intangible asset – customer relationships Intangible asset – technology based Trade and other receivables Cash and cash equivalents Trade and other payables Deferred tax liabilities Goodwill on acquisition Total consideration Satisfied by: Cash Deferred consideration Fair value of 33% associate Cash flow: Cash consideration Cash included in undertaking acquired Net cash consideration Book value Fair value adjustments Fair value £’000 £’000 £’000 7 1,025 – – 1,594 1,971 (2,849) – 1,748 – (1,025) 2,975 2,011 49 – – (1,047) 2,963 7 –- 2,975 2,011 1,643 1,971 (2,849) (1,047) 4,711 15,106 19,817 14,871 180 4,766 19,817 14,871 (1,971) 12,900 The fair value of the put and call option was deemed negligible at the transaction date. The intangible assets acquired are to be amortized over their estimated useful lives of 10 years. The main factors leading to a recognition of goodwill on the acquisition of inovia Holdings Pty Limited are, the presence of certain intangible assets in the acquired entity which do not qualify for separate recognition such as the assembled workforce and cost synergies within the Group’s operations in the United Kingdom, and, an unidentified proportion representing the balance contributing to profit generation. inovia Holdings Pty Limited contributed £1.2 million revenue and £0.1 million to the Group’s profit after tax for the year between the date of acquisition and the balance sheet date. If the acquisition had been completed on the first day of the financial year, group revenue for the year would have been £90.5 million and group profit £17.2 million. Acquisition costs of £133,000 have been charged through the Comprehensive Income Statement. RWS Holdings plc Notes to the Consolidated Financial Statements (continued) 48 23 RELATED PART Y TRANSACTIONS Prior to the completion of the full acquisition of inovia, sales for the period up to 17 September 2013 (the date of acquisition of the remaining two thirds of the business) made by RWS Group to inovia were £4.2 million (2012: £1.4 million) and £1,000,000 was owing to RWS at 30 September 2013 (2012: £513,000). This was fully discharged in November 2013. Purchases from inovia over the same period amounted to £235,000 (2012: £10,000) of which £109,000 was outstanding at 30 September 2013 (2012: £10,000). Terms of trade are 30 days following invoice date for both sales and purchases. During the year in the normal course of business, RWS provided translation services worth £81,000 (2012: £75,000) to Learning Technologies Group plc (“LTG”) and Andrew Brode and Peter Mountford have an interest in this Company. An amount of £9,000 due from LTG at 30 September 2013 was discharged in October 2013 (2012: £55,000). 24 COMMITMENTS AND CONTINGENT LIABILITIES The Group had no material capital commitments contracted for but not provided for in the financial statements. (2012: £nil) 25 LEASES Operating lease payments represent rentals payable by the Group for its office properties and certain equipment. Property leases have various terms, escalation clauses and renewal rights. At the reporting date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows: Within one year In the second to fifth years inclusive After five years 2013 £’000 2012 £’000 806 1,117 29 1,952 683 647 222 1,552 26 EVENTS SINCE THE REPORTING DATE No significant events have occurred since 30 September 2013 at the date of authorisation of these financial statements. RWS Holdings plc 49 PARENT COMPANY FINANCIAL STATEMENTS RWS Holdings plc Parent Company Financial Statements 50 The following parent entity financial statements are prepared under UK GAAP and relate to the Company and not to the Group. The statement of accounting policies which have been applied to these accounts can be found on page 51. Company Balance Sheet at 30 September Registered Company 3002645 Fixed assets Investments Current assets Debtors Cash at bank Creditors: amounts due within one year Net current assets Net assets Capital and reserves Called up share capital Share premium account Share based payment reserve Capital reserve Retained earnings Shareholders’ funds 2013 £’000 13,993 13,993 4,013 10,040 14,053 246 13,807 27,800 2,116 3,583 468 2,030 19,603 27,800 Note 4 5 6 7 8 8 8 8 8 2012 £’000 13,525 13,525 3,624 11,017 14,641 290 14,351 27,876 2,116 3,583 – 2,030 20,147 27,876 The financial statements were approved by the Board of Directors and authorised for issue on 6 December 2013 and were signed on its behalf by: Andrew Brode Director RWS Holdings plc 1 ACCOUNTING POLICIES 51 Basis of preparation These financial statements present financial information for RWS Holdings plc as a separate entity, and have been prepared in accordance with the historical cost convention, the Companies Act 2006 and United Kingdom Accounting Standards (UK Generally Accepted Accounting Practice). The Company’s Consolidated Financial Statements, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, are separately presented. The principal accounting policies adopted in these company financial statements are set out below and, unless otherwise indicated, have been consistently applied for all periods presented. In accordance with FRS 18, Accounting policies, the Directors have reviewed the accounting policies of the Company as set out below and consider them to be appropriate. Related party transactions The Company is exempt under the terms of FRS 8, Related party disclosures, from disclosing related party transactions with entities that are part of the Group. The principal accounting policies are: Investments Investments are stated at cost less provision for impairment. Pensions Contributions to personal pension plans are charged to the profit and loss account in the period in which they fall due. Dividend distribution Interim dividends are recorded when they are paid and the final dividends are recorded when they become legally payable. Taxation Current tax, including UK corporation tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Share based payments The Group and Company provide benefits to certain employees (including certain Executive Directors), in the form of share based payment transactions whereby employees render services in exchange for rights over shares in the form of share options. These equity settled share based transactions are measured as the fair value of the share option at the grant date. The fair value excludes the effect of non market based vesting conditions. Details regarding the determination of the fair value of these options can be seen in note 20 of the consolidated financial statements. The fair value determined at the grant date of the share options is expensed on a straight line basis over the vesting period, based on the Group’s estimate of share options that will vest. At each balance sheet date the Group revises its estimate of the number of options expected to vest as a result of the effect on non market based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the Consolidated Statement of Comprehensive Income such that the cumulative expense reflects the revised estimate with a corresponding adjustment to equity reserves. RWS Holdings plc Parent Company Financial Statements (continued) 52 2 PROFIT FOR THE YEAR The Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own Profit and Loss Account in these financial statements. The Company profit after tax for the year ended 30 September 2013 under UK GAAP was £7,064,000 (2012: £6,677,000). Fees paid to BDO LLP and its associates for non-audit services to the Company itself are not disclosed in the individual accounts of RWS Holdings plc because the Company’s consolidated accounts are required to disclose such fees on a consolidated basis. 3 DIRECTORS AND EMPLOYEES There were no employees (2012: nil) of the Company other than the Directors. The remuneration of the Directors of RWS Holdings plc for services in all capacities is set out below: Directors’ emoluments Pension costs – paid to the Director’s personal pension scheme 2013 £’000 965 39 1,004 2012 £’000 925 42 967 During the year the Company had 7 (2012: 6) directors, including three Non-Executive Directors, providing services to the Group. During the year 4 directors (2012: 4) received contributions to their personal pension schemes. Emoluments of the highest paid director: Emoluments Pension costs – paid to the Director’s personal pension scheme 2013 £’000 2012 £’000 322 8 330 282 8 290 Details of directors’ remuneration and pension contributions are disclosed in the Directors’ Remuneration Report on pages 12 to 14. RWS Holdings plc 4 INVESTMENTS 53 Cost and net book value at beginning of year Additions Cost and net book value at beginning and end of year 2013 £’000 13,525 468 13,993 2012 £’000 13,525 – 13,525 The following were the principal wholly owned subsidiary undertakings and have been consolidated in the financial statements: Country of incorporation Nature of business Beijing RWS Science & Technology Information Consultancy Co. Limited RWS Group Deutschland GmbH (formerly Document Service Center GmbH) Eclipse Translations Limited RWS Group Schweiz GmbH (formerly Ifama GmbH) KK RWS Group Lawyers’ and Merchants’ Translation Bureau Inc RWS Group GmbH RWS Group Limited RWS Information Limited RWS (Overseas) Limited RWS Translations Limited PharmaQuest Limited inovia Pty Holdings Limited China Germany England Switzerland Japan USA Germany England England England England England Australia Patent, technical and legal translations Technical and legal translations Technical and legal translations Technical and legal translations Patent, technical and legal translations Technical and legal translations Technical and legal translations Holding company Patent and technical information searches Holding company Patent, technical and legal translations Technical and medical translations Patent filing All principal subsidiary undertakings, except RWS Group Limited, are held indirectly. 5 DEBTORS Amounts owed by Group undertakings Deferred tax Other debtors Prepayments Amounts due within one year 2013 £’000 3,542 396 18 57 4,013 2012 £’000 3,542 – – 82 3,624 The amounts owed by Group undertakings are repayable on demand and classified as due within one year. RWS Holdings plc Parent Company Financial Statements (continued) 54 6 CREDITORS: AMOUNTS DUE WITHIN ONE YEAR Trade Creditors Amounts owed to group undertakings Accruals 7 SHARE CAPITAL Authorised Ordinary shares of 5 pence each Allotted, called up and fully paid Ordinary shares of 5 pence each At beginning and end of the year 2013 £’000 2012 £’000 9 75 162 246 – 124 166 290 2013 Number 2013 £’000 2012 Number 2012 £’000 100,000,000 5,000 100,000,000 5,000 42,315,968 2,116 42,315,968 2,116 8 SHAREHOLDERS’ FUNDS AND MOVEMENTS ON RESERVES Share premium account £’000 3,583 – – – 3,583 Share capital £’000 2,116 – – – 2,116 Share based payment reserve £’000 Capital reserve £’000 Retained Shareholders’ funds earnings £’000 £’000 – 468 – – 468 2,030 – – – 2,030 20,147 – (7,608) 7,064 19,603 27,876 468 (7,608) 7,064 27,800 At beginning of year Credit arising on share based payment charges Dividends Profit for the year At end of year The balance on the capital reserve is an amount not distributable to shareholders and not transferred to the profit and loss account. RWS Holdings plc 9 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS 55 Profit for the year Credit arising on share based payment charges Dividends paid Net (decrease)/increase in shareholders’ funds Opening shareholders’ funds Net (decrease)/increase in shareholders’ funds Shareholders’ funds at end of year 2013 £’000 7,064 468 (7,608) (76) 27,876 (76) 27,800 2012 £’000 6,677 – (6,673) 4 27,872 4 27,876 10 GUARANTEES AND OTHER FINANCIAL COMMITMENTS In respect of overdraft facilities, the Company, together with certain subsidiary undertakings, has given to the Group’s principal bankers cross-guarantees secured by fixed and floating charges over the assets of the Group. At the end of the year liabilities covered by these guarantees totalled £nil (2012: £nil). 11 RELATED PART Y TRANSACTIONS The Company has taken advantage of the exemption allowed under Financial Reporting Standard No 8 “Related Party Transactions” not to disclose any transactions or balances with entities which are part of the Group as consolidated financial statements of the ultimate parent company are available from Companies House. 12 POST BALANCE SHEET EVENTS There have been no events since 30 September 2013 that require disclosure. RWS Holdings plc 56 Shareholder information Corporate headquarters and Registered office No. 3002645 Europa House Chiltern Park Chiltern Hill Chalfont St Peter Buckinghamshire SL9 9FG United Kingdom Tel: +44 (0)1753 480200 Fax: +44 (0)1753 480280 Public relations advisers MHP Communications 60 Great Portland Street London W1W 7RT Tel: +44 (0)20 3128 8100 Nominated adviser and broker Numis Securities Limited London Stock Exchange Building 10 Paternoster Square London EC4M 7LT Tel: +44 (0)20 7260 1000 Registrars Capita Asset Services The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Tel: 087 1664 0300 (calls cost 10p per minute plus network extras, lines are open 8.30 am – 5.30pm Mon – Fri) from outside the UK: +44 (0)20 8639 3399 Email: ssd@capita.co.uk Auditors BDO LLP 55 Baker Street London W1U 7EU Solicitors Olswang 90 High Holborn London WC1V 6XX Principal bankers Barclays Bank plc Level 28 1 Churchill Place Canary Wharf London E14 5HP RWS Holdings plc 57 RWS Holdings plc 2013 Annual Report RWS Holdings plc