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RWS Holdings plc 2016 Annual Report
RWS Holdings plc 2016 Annual Report
Europa House
Chiltern Park
Chiltern Hill
Chalfont St Peter
Bucks
SL9 9FG
United Kingdom
Telephone +44 (0) 1753 480 200
Facsimile +44 (0) 1753 480 280
Email rws@rws.com
www.rws.com
Contents
2 RWS Holdings plc 2016 Annual Report
Contents
Contents
Company Overview
Financial Highlights
Chairman‘s Statement
Strategic Report
Board of Directors
Directors‘ Report
Statement of Directors‘ Responsibilities
Directors‘ Remuneration Report
Independent Auditor‘s Report
to the Members 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
Company Statement
of Changes in Equity
Notes to the Company
Financial Statements
Shareholder information
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2 RWS Holdings plc 2016 Annual Report
RWS Holdings plc 2016 Annual Report 1
Company overview
RWS provides language and intellectual
property services that support its clients in
taking products from concept to market
Research and
development
Patenting
Information
A comprehensive range of patent search
and monitoring services which enable
clients to check if their intellectual property
is novel, valid for an application or risks
infringing upon existing patents. RWS has
also established Patbase as one of the
world’s largest searchable commercial
patent databases covering over 57 million
patent families, designed by professional
searchers and sold on a subscription basis.
Patent Translation & Filing
The translation of patent and supporting
intellectual property documents in over
200 language pairs and the management
of multi-jurisdictional patent filing supported
by our international web-based filing
platform, inovia.com.
Technically and linguistically accurate
translations delivered to deadline
Efficient processes supported by
sophisticated and proprietary technology
Over 99% on time*
Over 500 million words
translated last year*
2 RWS Holdings plc 2016 Annual Report
Our in-depth understanding of clients’ differing requirements as their product
moves from research and development, to protection and commercialisation
enables us to deliver consistently high-quality services at each stage of the product
lifecycle, whilst giving RWS visibility of activity across the value chain
Clinical Trials,
Patient Outcomes
Commercialisation
and Litigation
Life Sciences
A full suite of language solutions designed
to support the entire life science industry.
The translation and linguistic validation
of vital content for pharmaceutical,
biotech and medical device companies
including their clinical research
organisations, advertising agencies
and other subcontractors.
Technical & Commercial Translation
The translation of other specialist
documents, from technical specifications
and manuals to sensitive legal and
financial documents. Our work includes
the localisation of materials to ensure they
are linguistically and culturally appropriate
and in line with local regulations in multiple
target markets.
Excellent quality control
and customer service
Over 99% of customers happy
with the quality of our services*
*Source: RWS records
RWS Holdings plc 2016 Annual Report 3
Financial Highlights
)
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Over 80,000
patent and IP
documents and
65,000 life
science projects
per year
A strong financial track record
Market leader in intellectual property and
life science language and support services
c.800 employees
including subject specialist
translators & checkers
and project managers
Strong reputation for quality and
delivery with specialist staff supported
by sophisticated technology
7.8% increase
in world-wide patent
applications in 2015*
14% CAGR in US clinical
trials 2011-2016**
Growing markets
13%
sales growth at CTi
since acquisition
RWS has a strong track record of
executing earnings accretive acquisitions
*Source: World Intellectual Property Office, **Source: Number of clinical trials as recorded by ClinicalTrials.gov, a U.S. National Institutes of Health service
4 RWS Holdings plc 2016 Annual Report
10%
Commercial
Translation
20%
Life Sciences
5%
Information
90% of revenues in
highly specialised fields –
intellectual property
and life sciences
65%
Patent translation
& filing
Medical &
Pharma
Aerospace
& Defence
Chemical
Automotive
Energy
Manufacturing
Technology
& Telecoms
A diversified international, blue chip client base
Strong cash generation
supports progressive
dividend policy
13 years
of dividend
increases
Operations located to service
customer needs globally
RWS Holdings plc 2016 Annual Report 5
Chairman’s Statement
I am pleased to report that RWS has delivered its
best year ever despite a far from robust global
economic backdrop. For the thirteenth consecutive
year since listing on AIM in November 2003, we have
achieved growth in sales, underlying profits and
dividends, testimony to the strength of our market
positions in patent translations, intellectual property
services and life sciences services. During the year,
we have also continued to invest in those resources
which can deliver future expansion.
Results and Financial Review
The Group has achieved further significant progress
in underlying operational performance, reflecting
continued growth in the core patent translations
business, together with growth in PatBase, China
and Japan. In addition, the Group benefited from
a strong maiden contribution from CTi, the US life
sciences specialist it acquired in October 2015.
A material improvement in Group gross margins also
contributed to our record results.
Group sales advanced by 28% to £122.0 million
(2015: £95.2 million). Adjusted operating profit
before amortization of intangibles, share option
costs and acquisition expenses was up 40% at
£32.0 million (2015: £22.9 million).
Adjusted profit before tax, amortization of
intangibles, share option costs and exceptional
acquisition expenses increased by 35% to
£30.6 million (2015: £22.7 million). This produced an
increase of 35% in adjusted earnings per share to
10.9p (2015: 8.1p).
Reported profit before tax was £25.1 million (2015:
£20.7 million). This result reflected significantly
greater amortization of intangibles largely driven by
the CTi acquisition and totalling £4.6 million (2015:
£1.6 million), offset by lower share based payment
costs. Basic earnings per share were 9.0p (2015:
7.3p), a rise of 23%. The Group’s effective tax rate
was 22.9% (2015: 24.8%).
As of 30 September 2016, shareholders’ funds
had reached £108.7 million (2015: £85.7 million).
At 1 October 2015 the Group had net cash of
£30.6 million. The Group ended the 2016 financial
year with net debt of only £1.5 million, after the
£47.1 million cash consideration for CTi which was
acquired at the end of October 2015, demonstrating
the Group’s continued strong underlying cash
6 RWS Holdings plc 2016 Annual Report
generation. Other significant cash outlays included
corporation tax of £5.2 million and dividends of
£10.6 million.
Currency Effects and Hedging
This year has been marked by considerable volatility
in global currency markets. This was compounded
in the aftermath of the EU referendum in late June
and the Group has benefitted from the resulting
decline in sterling. RWS is a prolific exporter of its
services meaning that over 85% of its revenues
are non-sterling, its principal exposures being to
the euro and the US dollar. The Group’s estimated
net exposure to the Euro has been hedged at an
average rate of 1 Euro = 83p for the whole of the
year to 30 September 2017. The average rate
experienced over 2015-16 was 78.1p. Exposure
to the US dollar is largely offset by the five year
US$45 million dollar loan drawn to acquire CTi.
Acquisition of a market leader in Life Sciences
translations and linguistic validation
The Group announced on 2 November 2015 that
it had acquired the entire issued share capital
of Corporate Translations Inc. (“CTi”) for a cash
consideration of US$70 million. This acquisition was
in line with our stated strategy of complementing
organic growth with selective acquisitions which
have growth potential in attractive sectors and/or
geographies, offer excellent margins and enhance
shareholder value.
The acquisition of CTi established a significant Group
presence in the USA which the Board believes is
the largest growth opportunity for RWS. CTi is one
of the world’s leading life sciences translation and
linguistic validation providers. It enjoys a preferred
supplier relationship with many of its key clients,
with extraordinary penetration of the blue chip life
sciences community. CTi’s greater scale, combined
with the existing RWS specialist divisions, provided
a step change in the Group’s competitive standing
amongst the major pharmaceutical groups and
contract research organisations, whilst RWS’ strong
foothold in Europe is already supporting CTi’s
expansion into the European life sciences sector.
Funding for the acquisition was via a combination of
a US$45 million five-year bank loan and the Group’s
internal cash resources.
Chairman’s Statement (continued)
The acquisition of CTi has been immediately
and significantly earnings enhancing, with the
US$70 million consideration based upon CTi reporting
in excess of US$7 million EBITDA for the year ended
31 December 2015. We have now completed the
integration of CTi with our Medical Translation
Division, which included the linguistic validation
specialist PharmaQuest, and we now report on it as
part of our combined life sciences activities. We were
also pleased to have appointed Sheena Dempsey
as Chief Executive Officer of CTi in early September,
following the anticipated departure of the CTi vendors
after a hand-over period. She brings a wealth of
experience and knowledge of the life sciences space
and is a welcome addition to our strong operational
management team across the Group.
Dividend
I am pleased to announce that the Board has
recommended a final dividend of 4.45p per share.
The interim dividend, paid in July, was 1.15p per
share, so the total payout in respect of the year will
amount to 5.6p per share, an increase of 15% over
2015 reflecting the Group’s earnings growth during
2016 and the Board’s confidence in the Group’s
continued progress. This proposed payout marks a
thirteen-year unbroken record of increases in the
dividend since flotation in November 2003.
The proposed total dividend is 1.6 times covered
by basic earnings per share. Subject to shareholder
approval at the Annual General Meeting, the final
dividend will be paid on 24 February 2017 to all
shareholders on the register at 27 January 2017. The
shares will trade ex-dividend on 26 January 2017.
Share Option Plan
RWS announced on 4 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 with shareholders and to promote
the retention of the Group’s senior executives.
Options over 4% of the Group’s share capital have
been issued to ten participants, with a subscription
price of 129.2p per share. The earliest vesting date
is 3 April 2015 and the latest exercise date is 3 April
2021. A total of 4,184,810 options were exercised
during the year.
People
The very nature of the Group’s activities dictate that
it will always be dependent upon the quality and
dedication of its entire staff to meet the demands
for high quality and timely delivery required by its
worldwide clients. Group headcount reached 792 full
time equivalents at the year-end (2015: 621), which
includes the 143 CTi employees who joined the
Group upon acquisition. I wish to place on record my
thanks to all of our employees for their contribution
to the Group’s excellent results.
Corporate Social Responsibility
RWS has always sought to be a socially responsible
Group which has a positive impact on the
communities it operates in. We look to employ
colleagues who reflect 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
chosen by the staff, and their contributions are
matched by the Group.
Current Trading and Outlook
The Group has made a very strong start to the new
financial year, benefiting from significant underlying
growth in revenues, better gross margins and
currency tailwinds.
The Board remains highly encouraged by the Group’s
opportunities to continue to grow significantly and
profitably across its now broader portfolio of market
leading businesses, particularly as it looks to build on
its position in life sciences in the USA.
The Group’s strong cash generation and healthy
balance sheet leave us well positioned to pursue that
growth through acquisitions and organic investment,
whilst also maintaining our progressive dividend
policy.
Andrew Brode
Chairman
6 December 2016
RWS Holdings plc 2016 Annual Report 7
Organic growth is driven by:
– increases in the worldwide patent filing activities of
existing and potential multinational clients
– the development of new drugs by the
pharmaceutical industry
– the outsourcing by corporates, clinical research
organisations, law firms and attorneys of all or part
of their foreign patent search, filing and translation
and linguistic validation processes.
– 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
and in new and/or growing geographies
– increasing market share, particularly in the patent
translation and life sciences markets
– the retention of our client base, which includes
a large share of the top 20 patent filers both
in Europe and globally, many of which will use
the Group for substantially all of their patent
translation requirements, and
– the addition of new clients each year with whom
activity levels build up over time.
In terms of acquisitive growth, we continue to
search for suitable potential acquisitions in the
intellectual property support services and specialist
commercial translation spaces, with our primary
focus currently on life sciences in the USA. 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 and language services.
We are particularly pleased to be able to show
our progress against these stated objectives with
13 straight years of sales and profit growth since
flotation.
Strategic Review
Business Model
RWS is the world’s leading provider of intellectual
property (IP) support services (patent translations,
international patent filing solutions and searches),
high level technical and commercial translation
services and, following the acquisition of Corporate
Translation Inc, a leading provider of translation
and linguistic validation services to the life sciences
sector. RWS has a blue chip multinational client
base spanning Europe, North America and Asia,
particularly active in patent filing in the medical,
pharmaceutical, chemical, aerospace, defence,
automotive and telecoms industries. The Group’s
principal business activities are:
– Patent translations and filing, which currently
accounts for over 65% of Group revenue. RWS
differentiates itself from the competition through
the quality of its translations, its high level of IP
expertise and customer service and the use of
its international web based patent filing platform,
‘inovia’. Uniquely, the business employs over
100 full time highly qualified translators.
– Following the acquisition in October 2015 of
Corporate Translations Inc, RWS has established a
separate division, focussed solely on the language
service needs of the life sciences market, providing
technical translations and linguistic validation to
large pharmaceutical corporations and clinical
research organisations in North America and
Europe.
– 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.
– Commercial translations, with a particular
emphasis on technical translations.
Our Strategy
RWS’ objective is to increase shareholder value by
growing the Group’s revenue and profit before tax.
Our strategy to achieve this is focused upon organic
growth complemented by selective acquisitions,
providing these can be demonstrated to enhance
shareholder value.
8 RWS Holdings plc 2016 Annual Report
Strategic Review (continued)
Annual Revenue £m
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Annual Adjusted PBT £m
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Operating Review
Patent Translations and Filing
The Group’s core patent translation and filing
business (including inovia) represents 65% of
Group sales and grew revenues by 8% to £79.4
million (2015: £73.3 million). This performance
reflects earlier client wins, organic growth from the
established client base, and further strong growth
in China. The macroeconomic background delivered
further grounds for confidence with record numbers
of new patent applications in 2015.
The Group has maintained its market leadership,
having recently successfully renewed master service
agreements with many of its top clients. It services
11 of the top 20 applicants at the World Intellectual
Property Office and 12 of the top 20 applicants at
the European Patent Office in 2015.
Selling IP services under the RWS inovia brand, the
US and European sales teams continue to develop
opportunities with large international patent filers
which will support FY17 sales. In Asia we continued
successfully with our strategy to target Japanese and
Chinese international filers for our patent translation
and filing services. Sales from Japan are supporting
our current growth, while progress in China with
a number of innovators is expected to support
additional growth in the medium term. China
continues to attract North American and European
patent filers seeking patent protection there, as a
result of which our headcount in China has grown
to 70 employees (2015: 63). We are operating from
three locations and have continued to develop
production and training centres with several Chinese
universities. These centres enable the Group to
expand its Chinese offering but at a lower cost than
in Beijing. We have also continued to expand our
long term relationships with international patent
bodies seeking to enlarge their collections of
translated Chinese patent prosecution documents.
Life Sciences
The Group’s life science division accounts for 20%
of the Group’s sales (£24.4 million compared to
£4.2 million in 2015) and focuses on the language
service requirements of Pharmaceutical corporations
and Clinical Research Organisations.
The results of this division include the sales of RWS
businesses which service the life sciences sector,
namely PharmaQuest and Medical Translation
Division (“MTD”) and were previously included within
the Commercial Translations division, in addition
to an 11 month revenue (US$30.5 million (2015:
US$27.0 million), contribution from CTi since its
acquisition in October 2015.
During the year we successfully completed a
thorough market search for a new CEO ahead of
the anticipated departure of the vendors of CTi
who wished to pursue philanthropic ventures. In
early September we announced the appointment of
Sheena Dempsey. As described in more detail below,
RWS has successfully completed the integration of
PharmaQuest and MTD with CTi such that all 3
businesses now operate on the same operating
system, using the same process and report to
Sheena.
RWS Holdings plc 2016 Annual Report 9
Strategic Review (continued)
Commercial Translations
The commercial translations business, which
accounts for 10% of Group sales and operates in the
UK, Germany and Switzerland, reported a 2% growth
in revenues to £11.9 million (2015: £11.7 million)
(after restatement for the move of PharmaQuest and
MTD revenues to the new life sciences division). We
have grouped all non-patent and non-life science
translations in this service line and it remains
the segment of our business most exposed to
competition. Given the intensity of the competition,
we continue to focus upon specialist niches and
larger projects where the Group’s resources and
expertise can provide a competitive edge and to
investigate ways of improving margins through
production process efficiencies.
The recently established German patent translation
facility is steadily growing and will both balance the
cyclical effect evident in the commercial translation
activities and improve Germany’s contribution to
Group margins through better utilisation of existing
resources.
The commercial translation business does enable
RWS to offer customers a complete solution to their
translation needs whilst continuing to provide good
cross selling opportunities for the patent translation
and life sciences businesses, which have already
made use of interpreting services provided by Group
company Eclipse.
Information
The information business accounts for 5% of Group
sales and reported revenues up 7% to £6.4 million
(2015: £6.0 million) reflecting several successful
client wins and a good flow of regular work from
a number of clients. The high margin subscription
service – PatBase – grew by 7.2% during the year.
We have continued to invest in PatBase searchability,
content, analytics and geographic coverage as well as
in a robust, state of the art infrastructure to secure
the resilience of the platform which provides 24/7
worldwide access.
10 RWS Holdings plc 2016 Annual Report
Market Update
Patent Filing Statistics
The World Intellectual Property Office (WIPO) has
published figures showing a 7.8% world-wide
increase in patent applications in 2015; a higher
growth rate than the 4.5% seen in 2014. Overall
growth is driven by Chinese domestic applications,
with the US still being the most active in international
filing. Filings are under the two main international
filing systems, the PCT (Patent Cooperation Treaty)
and the European Patent; PCT numbers increased
by 1.7% to 218,000 and European Patent application
numbers by 1.6% to 278,867 in 2015.
Risk Management
The Group maintains a risk register which is
reviewed and assessed on an annual basis by the
Board of Directors. The key 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, in the
emergence of new translation technologies, and the
failure to successfully integrate acquired businesses
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 the first
language services provider and, independently,
the first search company to adopt 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.
– As previously reported, currency risk is partly
mitigated via hedging operations.
– 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 profits and the uncertainty around the
timetable for its implementation. As one of the
three largest patent filers in Europe, the UK would
play a key role in the future administration of the
Unitary Patent and has been designated as one of
the three countries to host a Unitary Patent court.
Given the UK’s ‘Brexit’ vote, there was considerable
uncertainty as to whether the UK would ratify the
Unitary Patent prior to its exit from the European
Strategic Review (continued)
Union. However, on 28 November 2016 the UK
government announced that it is proceeding with
preparations to ratify the Unified Patent Court
Agreement, which could see the UP introduced in
the second half of 2017.
As previously reported, there is scepticism among
applicants and the IP profession both as regards
the UP’s jurisdiction and also the actual financial
benefits for those applicants which do not
require Europe-wide patent coverage. Because
the proposed Unitary Patent will run in parallel
with the existing system, it will not provide any
financial advantage to many corporates who only
seek patent protection in selected key countries.
In addition, corporates using the Unitary Patent
scheme for the first time will also run the risk of
a new and untried intellectual property litigation
system.
To date there has been insufficient guidance from
the UK Government as to the terms it will seek for
UK’s exit from the EU. The uncertainty of whether
the UP will still cover the UK when it finally exits the
EU could add further reluctance to using the new
system. We therefore anticipate a minimal loss of
revenue in FY17 and we will be closely monitoring
client reaction and legal developments over the
next six months to establish the impact/position
for FY18 and beyond.
– In October 2015, RWS acquired CTi with the
intention of building a single life sciences business
with greater global reach. The subsequent
integration focussed on merging RWS’ smaller
existing life science businesses of PharmaQuest
and MTD into CTi. This integration work included
retraining staff, the consolidation of customers and
suppliers, and establishing strong IT links between
the businesses. This work is now complete.
The supplier consolidations have reduced
technical costs and improved margins, whilst the
consolidation of customers has improved the focus
of our service offering and enables RWS to provide
its life science customers with a consistent, high
level of service across both their US and European
operations. In addition, cross-selling opportunities
have already been identified and are beginning to
yield positive results as well as enhancing our sales
pipeline.
The framework for and experience gained from this
successful CTi and RWS integration will be utilised
on future acquisitions.
– The Group has always embraced new translation
technologies and used them to good effect in
order to maintain and improve margins, efficiency
and competitiveness. Recognizing advances in
machine translation technology (MT), we have just
completed an internal programme to investigate
and trial best MT use and have started integrating
MT engines into the translation workflow in
appropriate areas along with Translation Memory
technology. Very recently, substantial technological
progress has been made with the introduction of
Neural Machine Translation (NMT) engines, which
will also be employed by the Group following
further testing and supplier selection. It is clear
that the market for general translations will be
further eroded by NMT and that a successful LSP
(Language Services Provider) needs to focus on
premium quality translation work in critical areas,
such as IP and life sciences
– 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, as
evidenced by the exceptionally low unemployment
statistics for the area.
On behalf of the Board
Richard Thompson
6 December 2016
RWS Holdings plc 2016 Annual Report 11
Board of Directors at 30 September 2016
Andrew S Brode (76)
Chairman
Peter Mountford (59)
Non-Executive Director
Member of the Audit Committee and the
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 and a Non-Executive Director
of a number of other private companies
Non-Executive Chairman of Learning Technologies
Group plc and Electric Word plc and Non-Executive
Director of a number of private companies
Elisabeth A Lucas (60)
Non-Executive Director
Reinhard Ottway (57)
Chief Executive Officer
Appointed as a Director 1 January 2012
Joined RWS Group in 1994 and was Business
Development Director from 2001
Member of the Audit Committee and 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
Company registration number
03002645
Richard Thompson (54)
Deputy Chief Executive Officer
Finance Director and Company Secretary
Appointed as a Director and Company Secretary
28 November 2012
Previously worked for Actix International Limited,
a global supplier of software and services to the
telecommunications market
David E Shrimpton (73)
Senior independent Non-Executive Director
and Deputy Chairman
Member of the Audit Committee and Chairman
of the Remuneration Committee
Appointed as a Director 1 January 2010
Non-Executive Director of a number of private
companies
12 RWS Holdings plc 2016 Annual Report
Directors’ Report
The Directors present their annual report together
with the audited consolidated financial statements
for the year ended 30 September 2016.
Business performance and risks
The review of the business, operations, principal risks
and outlook are dealt with in the Strategic Review
on pages 8 to 11. The key performance indicators of
the Group are revenues and adjusted pre-tax profit
before amortization of acquired intangibles, share
option costs and acquisition costs.
the next 12 months from the date these financial
statements were approved.
Financial instruments
Information about the use of financial instruments
by the Group is given in note 18 to the financial
statements.
Directors
Details of members of the Board at 30 September
2016 are set out on page 12.
Financial results
The financial statements set out the results of the
Group for the year ended 30 September 2016 which
are shown on page 23.
The interests of the Directors in shares during
the year are set out on page 18 in the Directors‘
Remuneration Report.
Group revenues advanced by 28.2% to
£122.0 million (2015: £95.2 million) and pre-tax
profit before amortization of intangibles, share
option costs and exceptional costs was £30.6 million
(2015: £22.7 million), a rise of 34.8%. Profit before
tax is £25.1 million (2015: £20.7 million). The total
tax expense was £5.8 million (2015: £5.1 million) an
effective tax rate of 22.9% (2015: 24.8%).
Basic earnings per share was 9.0 pence (2015:
7.3 pence).
Dividends
The Directors recommend a final dividend of
4.45 pence per Ordinary share (see note 8) to be
paid on the 24 February 2017 to shareholders on the
register at 27 January 2017, which, together with the
dividend of 1.15 pence paid in July 2016 makes a total
dividend for the year of 5.60 pence (2015: 4.88 pence).
The final dividend will be reflected in the financial
statements for the year ending 30 September 2017.
The proposed total dividend per share is 1.6 times
covered by basic earnings per share.
Going concern accounting basis
The Group had cash resources of £27.9 million
at 30 September 2016 and an overall net debt
of £1.5 million following the funding of the CTi
acquisition. The Group was able to generate free
cash flow of £23.1 million in the year. The Directors
have considered the recent operating results, the
acquisition of CTi and the associated debt along
with the financial position and have a reasonable
expectation that the Group has adequate resources
to continue in operation as a going concern for
Peter Mountford and Richard Thompson retire by
rotation at the Annual General Meeting and being
eligible offers themselves for re-election.
The Company‘s Annual General Meeting will be held
in London on 14 February 2017.
Directors‘ indemnities
As permitted in its articles of association, the
Directors have the benefit of an indemnity which is a
third party indemnity provision as defined in section
234 of the Companies Act 2006. The indemnity was
in force throughout the last financial year and is
currently in force. (The Company also purchased and
maintained throughout the financial year, Directors
and Officers liability insurance in respect of itself and
its Directors).
Corporate governance
The Board
Throughout the year the Board comprised the
Chairman, two 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. The Board notes that
Elisabeth Lucas was previously the Chief Executive
of the Company, however they believe that her in
depth knowledge and experience of working with
RWS, in the language services industry, gives her
a unique insight into the Company‘s operations and
markets, making her a very valued member of the
RWS Board.
RWS Holdings plc 2016 Annual Report 13
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 six 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; Caroline Chenique,
European Sales Director 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 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 financial statements; 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.
Remuneration Committee
Further information about the Committee and the
Company‘s remuneration policy is set out on pages
17 to 19 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:
bi-monthly 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.
In addition, a further Board Meeting is held during
the year to consider and assess the risks facing the
business and approve the steps and timetable senior
management has established to mitigate those risks.
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.
14 RWS Holdings plc 2016 Annual Report
Directors’ Report (continued)
Substantial shareholdings
At 30 September 2016, excluding the Directors, the
following were substantial shareholders:
Liontrust Asset Management
Octopus Investments
Investec Wealth and Investment
Hargreave Hale
% holding
13.0
7.1
4.6
4.0
Authority 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
14 February 2017 Annual General Meeting which
renews, for the period ending 14 May 2018, or if
earlier the date of the 2018 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 £719,216,
representing approximately one third of the share
capital of the Company in issue at 6 December 2016.
The Directors have no immediate plans to make use
of this authority except in respect of the issue of
shares under the employee share option scheme. 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 14 February 2017 Annual General Meeting which
renews, for the period ending on 14 May 2018 or, if
earlier, the date of the 2018 Annual General Meeting,
the authorities previously granted to the Directors to:
(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 £215,765 (representing in accordance with
institutional investor guidelines, approximately 10% of
the share capital in issue as at 6 December 2016) as
if the pre-emption rights of section 561 of the Act 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 four years.
Rule 9 of the city code
Under rule 9 of the city code, where any person
acquires an interest in shares which carry 30 per
cent or more of the voting rights, that person is
normally required to make a general offer to all
the remaining shareholders of the Company to
acquire their shares. Subject to approval by the
Panel on Takeovers and Mergers, an ordinary
resolution will be proposed at the 14 February
2017 Annual General Meeting which renews, for the
period ending 14 May 2020, or if earlier the date
of the 2020 Annual General Meeting the waiver of
any requirement under rule 9 for Andrew Brode
(Chairman) and any related parties to make a
general offer to the shareholders of the Company as
a result of any market purchase by the Company of
its own shares.
Independent 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.
PricewaterhouseCoopers LLP (PwC) has expressed
its willingness to continue in office and a resolution
to reappoint them will be proposed at the
14 February 2017 Annual General Meeting.
RWS Holdings plc 2016 Annual Report 15
Statement of Directors’ Responsibilities
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 FRS 101.
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;
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 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.
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.
– make judgements and accounting estimates that
On behalf of the Board
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 FRS 101 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.
Richard Thompson
Finance Director and Company Secretary
6 December 2016
16 RWS Holdings plc 2016 Annual Report
Directors’ Remuneration Report
Remuneration Committee
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 Board believes
that Andrew Brode‘s interests are closely aligned
with those of all shareholders and therefore believe
that he plays an important role as member of the
Remuneration Committee.
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.
The remuneration of the Chairman is a matter for
the Remuneration Committee, excluding Andrew
Brode. No Director or Senior Executive is involved
in any discussion or decision about his or her own
remuneration. The Remuneration Committee met
once 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 the 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 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.
Share Options
On 3 April 2013 the Board approved a share option
scheme. The scheme was designed to incentivise
Executive Directors and 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 the Chairman and the
Executive Directors continue unless and until
terminated by either party giving at least six months‘
notice.
The date of the 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
Chairman‘s and the Executive Directors‘ service
contracts provide 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 2016 was £1,166,000
(2015: £998,000). The remuneration of individual
Directors and the pension contributions paid by the
Group to their personal pension schemes during the
year were as follows:
RWS Holdings plc 2016 Annual Report 17
Directors’ Remuneration Report (continued)
Salary
or
fees
£'000
263
332
285
45
35
35
995
Bonus
£'000
Taxable
benefits
£'000
-
70
100
-
-
-
170
-
1
-
-
-
-
1
2016
Total
£'000
263
403
385
45
35
35
1,166
2016
Pension
contribu-
tions
£'000
-
10
9
-
-
-
19
2015
Total
£'000
263
350
270
45
35
35
998
2015
Pension
contribu-
tions
£'000
-
10
7
-
-
-
17
Andrew Brode
Reinhard Ottway
Richard Thompson
Elisabeth Lucas
Peter Mountford
David Shrimpton
Directors‘ interests in shares
The interests of the Directors as at 30 September 2016 (including the interests of their families and related
trusts), all of which were beneficial, in the Ordinary shares were:
Andrew Brode
Elisabeth Lucas
Reinhard Ottway
Peter Mountford
Richard Thompson
Ordinary shares of 1 pence
90,174,060
50,000
224,053
68,775
13,000
90,529,888
The interests of Directors at the year end in options to subscribe for Ordinary shares of the Company, together
with details of any options granted during the year are included in the following table. All options were granted
at market value at the date of grant.
18 RWS Holdings plc 2016 Annual Report
Directors’ Remuneration Report (continued)
Approved Share Option scheme
Number of shares under option
Reinhard Ottway
Richard Thompson
Unapproved
Share Option scheme
At 1
October
2015
23,215
23,215
Issued in
the year
Exercised
in the year
At 30
September
2016
Exercise
price
Pence
First date
exercis-
able
Last date
exercis-
able
-
-
-
-
23,215
23,215
129.20 03/04/16 03/04/21
129.20 03/04/16 03/04/21
Number of shares under option
At 1
October
2015
Issued in
the year
Exercised
in the year
At 30
September
2016
Exercise
price
Pence
First date
exercis-
able
Last date
exercis-
able
Reinhard Ottway
Richard Thompson
2,515,745
1,246,265
- 2,515,745
-
-
- 1,246,265
129.20 03/04/15 03/04/21
129.20 03/04/15 03/04/21
During the year the following Directors exercised options:
Date
exercised
Number
Market
price
at date of
exercise
Pence
Gain
£'000
Reinhard Ottway
9 February 2016 2,515,745
180.00
1,278
The options granted under both schemes will be exercisable at the mid market price of 129.2p.
The market price of the Company‘s share as at 30th September 2016 and the highest and lowest market
prices during the year are as follows:
30 September 2016
Highest Market Price
Lowest Market Price
250p
270p
135p
All participants in the share option scheme have indemnified the Company against any tax liability relating to
the option including class 1 employers 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
David Shrimpton
6 December 2016
RWS Holdings plc 2016 Annual Report 19
Independent auditors’ report to the members of RWS Holdings plc
REPORT ON THE GROUP FINANCIAL
STATEMENTS
Our opinion
In our opinion, RWS Holdings plc’s Group financial
statements (the “financial statements”):
– give a true and fair view of the state of the Group’s
affairs as at 30 September 2016 and of its profit and
cash flows for the year then ended;
– have been properly prepared in accordance with
International Financial Reporting Standards (“IFRSs”)
as adopted by the European Union; and
– have been prepared in accordance with the
requirements of the Companies Act 2006.
What we have audited
The financial statements, included within the Annual
Report (the “Annual Report”), comprise:
– the Consolidated Statement of Financial Position as
at 30 September 2016;
– the Consolidated Statement of Comprehensive
Income for the year then ended;
– the Consolidated Statement of Cash Flows for the
year then ended;
– the Consolidated Statement of Changes in Equity for
the year then ended; and
– the notes to the financial statements, which include
a summary of significant accounting policies and
other explanatory information.
Certain required disclosures have been presented
elsewhere in the Annual Report, rather than in the
notes to the financial statements. These are cross-
referenced from the financial statements and are
identified as audited.
The financial reporting framework that has been
applied in the preparation of the financial statements
is IFRSs as adopted by the European Union, and
applicable law.
In applying the financial reporting framework,
the Directors have made a number of subjective
judgements, for example in respect of significant
accounting estimates. In making such estimates,
they have made assumptions and considered future
events.
Opinion on other matter 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.
Other matters on which we are required
to report by exception
Adequacy of information and explanations
received
Under the Companies Act 2006 we are required to
report to you if, in our opinion, we have not received
all the information and explanations we require for
our audit. We have no exceptions to report arising
from this responsibility.
Directors’ remuneration
Under the Companies Act 2006 we are required to
report to you if, in our opinion, certain disclosures
of Directors’ remuneration specified by law are not
made. We have no exceptions to report arising from
this responsibility.
Responsibilities for the financial statements
and the audit
Our responsibilities and those of the Directors
As explained more fully in the Statement of Directors’
Responsibilities set out on page 16, 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) (“ISAs (UK & Ireland)”). Those
standards require us to comply with the Auditing
Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared
for and only for the Parent Company’s members as a
body in accordance with Chapter 3 of Part 16 of the
Companies Act 2006 and for no other purpose. We
do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other
person to whom this report is shown or into whose
hands it may come save where expressly agreed by
our prior consent in writing.
20 RWS Holdings plc 2016 Annual Report
Independent auditors’ report to the members of RWS Holdings plc (continued)
What an audit of financial statements involves
We conducted our audit in accordance with ISAs
(UK & Ireland). An audit involves obtaining evidence
about the amounts and disclosures in the financial
statements sufficient to give reasonable assurance
that the financial statements are free from material
misstatement, whether caused by fraud or error. This
includes an assessment of:
– whether the accounting policies are appropriate
to the Group’s circumstances and have been
consistently applied and adequately disclosed;
– the reasonableness of significant accounting
estimates made by the Directors; and
– the overall presentation of the financial statements.
We primarily focus our work in these areas by
assessing the Directors’ judgements against available
evidence, forming our own judgements, and
evaluating the disclosures in the financial statements.
We test and examine information, using sampling and
other auditing techniques, to the extent we consider
necessary to provide a reasonable basis for us to
draw conclusions. We obtain audit evidence through
testing the effectiveness of controls, substantive
procedures or a combination of both.
In addition, we read all the financial and non-
financial information in the Annual Report to identify
material inconsistencies with the audited financial
statements and to identify any information that is
apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in
the course of performing the audit. If we become
aware of any apparent material misstatements or
inconsistencies we consider the implications for our
report.
Other matter
We have reported separately on the Parent Company
financial statements of RWS Holdings plc for the year
ended 30 September 2016.
Nigel Reynolds (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
6 December 2016
RWS Holdings plc 2016 Annual Report 21
Financial Statements
Financial Statements
Consolidated Statement of Comprehensive Income for the year ended 30 September
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Analysed as:
Operating profit before charging:
Amortization of acquired intangibles
Acquisition costs
Share based payment costs
Operating profit
Finance income
Finance costs
Profit before tax
Taxation expense
Profit for the year
Other comprehensive income*
Gain on retranslation of foreign operations
Total other comprehensive income
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)
Note
3
4
11
20
6
6
7
9
9
2016
£’000
121,986
(69,792)
52,194
(25,671)
26,523
32,023
(4.639)
(855)
(6)
26,523
16
(1,448)
25,091
(5,758)
19,333
8,479
8,479
2015
£’000
95,215
(57,706)
37,509
(16,677)
20,832
22,894
(1,607)
-
(455)
20,832
71
(251)
20,652
(5,124)
15,528
1,069
1,069
27,812
16,597
9.0
9.0
7.3
7.3
* Other comprehensive income includes only items that will be subsequently reclassified to Profit before tax
when specific conditions are met.
The notes on pages 28 to 53 form part of these financial statements.
RWS Holdings plc 2016 Annual Report 23
Consolidated Statement of Financial Position at 30 September
Registered Company 3002645
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Deferred tax assets
Current assets
Trade and other receivables
Foreign exchange derivatives
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Loans
Trade and other payables
Foreign exchange derivatives
Income tax payable
Provisions
Non-current liabilities
Loans
Other payables
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 28 to 53 form part of these financial statements.
Note
2016
£’000
2015
£’000
10
11
12
13
14
18
21
3
15
16
18
17
15
16
17
13
3
19
61,518
28,421
17,630
1,875
109,444
28,173
-
27,910
56,083
165,527
6,923
20,207
681
4,702
79
32,592
22,500
30
379
1,326
24,235
56,827
108,700
2,157
8,947
875
(8,483)
10,117
95,087
108,700
31,445
6,836
17,732
340
56,353
17,907
309
30,569
48,785
105,138
-
14,797
-
2,417
77
17,291
-
30
301
1,826
2,157
19,448
85,690
2,116
3,583
1,801
(8,483)
1,638
85,035
85,690
The financial statements on pages 23 to 53 were approved by the Board of Directors and authorised for issue
on 6 December 2016 and were signed on its behalf by:
Andrew Brode
Director
24 RWS Holdings plc 2016 Annual Report
Consolidated Statement of Changes in Equity for the year ended 30 September
Share
capital
£’000
Share
premium
account
£’000
Other
reserves
(see below)
£’000
Retained
earnings
£’000
Total
equity
attribut-
able
to owners
of the
parent
£’000
At 1 October 2014
2,116
3,583
(6,568)
79,303
78,434
Profit for the year
Currency translation differences
Total Comprehensive income for
the year ended 30 September 2015
Dividends
Credit arising on share based payments
At 30 September 2015
Profit for the year
Currency translation differences
Total Comprehensive income for
the year ended 30 September 2016
Issue of shares
Deferred tax on unexercised share options
Dividends
Exercise of share options
Credit arising on share based payments
At 30 September 2016
Other reserves
-
-
-
-
-
-
-
1,069
15,528
-
15,528
1,069
1,069
15,528
16,597
-
-
2,116
-
-
3,583
-
455
(5,044)
(9,796)
-
85,035
(9,796)
455
85,690
-
-
-
41
-
-
-
-
2,157
-
-
-
5,364
-
-
-
-
8,947
Share
based
payment
reserve
£’000
-
8,479
19,333
-
19,333
8,479
8,479
19,333
27,812
-
-
-
(932)
6
2,509
-
414
(10,627)
932
-
95,087
5,405
414
(10,627)
-
6
108,700
Reverse
acquisition
reserve
£’000
Foreign
currency
reserve
£’000
Total
other
reserves
£’000
At 1 October 2014
1,346
(8,483)
569
(6,568)
Other Comprehensive gain for the year
-
-
1,069
1,069
Credit arising on share based payments
At 30 September 2015
455
1,801
-
(8,483)
-
1,638
455
(5,044)
Other Comprehensive gain for the year
-
-
8,479
8,479
Exercise of share options
Credit arising on share based payments
At 30 September 2016
(932)
6
875
-
-
(8,483)
-
-
10,117
(932)
6
2,509
RWS Holdings plc 2016 Annual Report 25
Consolidated Statement of Changes in Equity for the year ended 30 September (continued)
The nature and purpose of each reserve within equity is as follows:
– Share capital is the nominal value of the shares issued.
– Share premium is the fair value of the 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 except where the Group applies a net investment hedge.
– 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 28 to 53 form part of these financial statements.
26 RWS Holdings plc 2016 Annual Report
Consolidated Statement of Cash Flows for the year ended 30 September
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
Operating cash flow before movements
in working capital and provisions
Increase in trade and other receivables
Increase in trade and other payables and provisions
Cash generated from operations
Income tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Interest paid
Interest received
Acquisition of subsidiary, net of cash acquired
Purchases of property, plant and equipment
Purchases of intangibles (computer software)
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from borrowing
Repayment of borrowing
Proceeds from the issue of share capital
Dividends paid
Net cash inflow/(outflow) from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Exchange gains/(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 (paid)/received
Income tax paid
Purchases of property, plant and equipment
Purchases of intangibles (computer software)
Free cash flow
Note
2016
£’000
2015
£’000
25,091
20,652
12
11
6
6
22
12
11
8
21
941
4,719
6
(16)
1,448
32,189
(4,249)
1,652
29,592
(5,196)
24,396
(369)
16
(47,068)
(731)
(169)
(48,321)
29,485
(4,874)
5,405
(10,627)
19,389
(4,536)
30,569
1,877
27,910
29,592
(353)
(5,196)
(731)
(169)
23,143
824
1,663
455
(71)
251
23,774
(1,529)
2,037
24,282
(5,091)
19,191
-
76
-
(1,258)
(33)
(1,215)
-
-
-
(9,796)
(9,796)
8,180
22,479
(90)
30,569
24,282
76
(5,091)
(1,258)
(33)
17,976
The Directors consider that the free cash flow analysis above indicates the cash generated from normal
activities excluding acquisitions, dividends paid and the proceeds from the issue of share capital.
The notes on pages 28 to 53 form part of these financial statements.
RWS Holdings plc 2016 Annual Report 27
Notes to the Consolidated Financial Statements
1 Accounting policies
Basis of accounting and preparation
of financial statements
RWS Holdings plc is a public limited company
incorporated and domiciled in England and Wales
whose shares are publicly traded on the Alternative
Investment Market of the London Stock Exchange.
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 consolidated financial statements have been
prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU,
IFRIC interpretations and Companies Act 2006
applicable to Companies reporting under IFRS.
The consolidated financial statements have been
prepared under the historical cost convention as
modified, where applicable, by the revaluation of
financial assets and financial liabilities at fair value
through the income statement.
The principal accounting policies adopted in
the preparation of the consolidated financial
statements are set out below. The policies have been
consistently applied to both years presented, unless
otherwise stated.
The Company has elected to prepare the Company
financial statements in accordance with FRS 101.
These are presented on pages 56 to 64 and
the accounting policies in respect of Company
information are set out on page 58.
Changes in accounting policies
The impact on the Group’s financial statements of
the future adoption of new standard interpretations
and amendments is still under review.The only
relevant amendments to the Group are IFRS 15
‘Revenue from contracts with customers’ and IFRS 16
‘Leases’, neither of which is likely to have a material
effect on the results or net assets of the Group.
There were no other new IFRSs or IFRIC
interpretations that are not yet effective that would
be expected to have a material impact on the Group.
28 RWS Holdings plc 2016 Annual Report
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 revenues
and expenses during the reported period. Actual
results could differ from these estimates.
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.
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,
where previously they were treated 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 or a trademark, 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.
Goodwill and other intangible assets
Intangible assets are stated at historical purchase
cost less accumulated amortization.
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. At the date of acquisition,
Notes to the Consolidated Financial Statements (continued)
goodwill is allocated at the lowest levels for which
there are separate identifiable cash flows for the
purpose of impairment testing. Assets, excluding
goodwill, which have suffered an impairment are
reviewed for possible reversal of the impairment at
each reporting date.
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 one to ten years.
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, discounts
and 3rd party licences and after eliminating inter-
company sales. Revenue, other than subscription,
commission and linguistic validation project 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. Revenue
from linguistic validation projects is recognised partly
on completion of the translation work (50%) with
the remainder recognised upon completion of the
project.
Accrued income represents the full receivable value
of work performed to date.
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 Statement of
Comprehensive Income.
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, except when deferred in Other
Comprehensive Income as qualifying as a net
investment hedge. 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.
RWS Holdings plc 2016 Annual Report 29
Notes to the Consolidated Financial Statements (continued)
Property, plant and equipment
Property, plant and equipment are stated at
historical purchase cost less accumulated
depreciation where cost includes the original
purchase price of the asset and the costs
attributable to bring the asset to its working
condition for intended use. 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 and buildings – Nil to 2%
Long leasehold and leasehold improvements –
the length of the lease
Furniture and equipment – 10% to 33%
Motor vehicles – 16.67%
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. Any
assets which have suffered an impairment are
reviewed for possible reversal of the impairment at
each reporting date. 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.
Derivative financial instruments and hedging
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.
The Group hedges the net investment in certain
foreign operations by borrowing in the currency of
the operations’ net assets. Any gain or loss on the
hedging instrument relating to the effective portion
of the hedge is recognised in Other Comprehensive
Income.
30 RWS Holdings plc 2016 Annual Report
Gains and losses accumulated in equity are included
in the Consolidated Statement of Comprehensive
Income when the foreign operation is partially
disposed of or sold.
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 are
subsequently measured at amortized cost, using the
effective interest rate method.
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.
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.
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 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.
Notes to the Consolidated Financial Statements (continued)
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.
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 debt financing has been introduced where it
was felt that the benefits exceed the risks and costs
to equity shareholders of introducing this type of
finance.
Equity issued by the Company is recorded as the
proceeds received net of direct issue costs.
Loans
Borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial
recognition, interest bearing borrowings are stated
at amortised cost with any difference between
cost and redemption value being recognised in the
Consolidated Statement of Comprehensive Income
over the period of the borrowings on an effective
interest basis.
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. 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 the number 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.
Dividends
Dividend distribution to the Company’s shareholders
is recognised as a liability in the Group’s financial
statements in the period in which dividends are
approved by the Company’s shareholders, or in the
case of interim dividends, when they are paid.
RWS Holdings plc 2016 Annual Report 31
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.
Accruals
Costs which have not been invoiced to the Group are
estimated and recorded as accruals. Judgement is
required where the amount of the cost is not known
and this may differ from the actual cost.
Provisions
Provisions are assessed annually in accordance
with the Group’s accounting policy. Provisions are
recognised when it is probable that an outflow of
economic benefits will occur as a result of a past
event or transaction and a reliable estimate of the
outflow can be made. In the event that estimates are
wrong, this may impact the financial statements in
future periods.
Allowance for doubtful debts
Provision is made for receivables where amounts
may be considered to be irrecoverable. In the event
that this estimate is wrong , this may impact the
financial statements in future periods.
Notes to the Consolidated Financial Statements (continued)
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 and intangible assets
Determining whether goodwill and intangible assets
are impaired requires an estimation of the value in
use of the cash-generating units to which goodwill
and intangible assets have 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 the estimated future
cash flows are discounted to their present value
using a pre-tax discount rate that reflects 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 and
intangible assets is included in notes 10 and 11.
Acquisition accounting
The Group acquired Corporate Translations Inc
on 30 October 2015 for £47.1m consideration.
Accounting for the acquisition required a fair value
exercise to assess the assets and liabilities acquired,
including any separately identifiable intangible
assets, both of which can be a particularly subjective
process.
Share based payments
The Group operates a share based payment 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.
32 RWS Holdings plc 2016 Annual Report
Notes to the Consolidated Financial Statements (continued)
3 Segment information
The chief operating decision maker has been identified as the Board. The Board reviews the Group’s internal
reporting in order to assess performance and allocate resources, and has divided the Group into reportable
segments. The Board assesses the performance of the segments based on revenue and profit/(loss) from
operations. These are measured on a basis consistent with the income statement.
Reporting segments have been reclassified from prior years, and the comparatives have been restated in
order to be more representative of the Group’s current internal reporting. Following the successful integration
of the inovia web-based filing business into the patent translation business and the acquisition of Corporate
Translations Inc the Board monitors and manages the Group in four reportable segments and assesses these
segments based on revenue and profit/(loss) from operations. The four segments are:
– Patent translation division providing patent and technical document translation and filing services with offices
in the UK, USA, Europe, Japan and China.
– Life science division providing technical translations and linguistic validation to the medical and
pharmaceutical sector. This division includes the newly acquired Corporate Translations Inc plus the medical
translation and Pharmaquest linguistic validation businesses both previously included within the Commercial
segment.
– Commercial division providing non patent technical translation and localisation services.
– 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.
The unallocated segment relates to corporate overheads, assets and liabilities.
The segment results for the year ended 30 September 2016 are as follows:
Patent and
Commer-
cial
UK
£’000
Patent and
Commer-
cial
Overseas
£’000
Life
Sciences
£’000
Informa-
tion
£’000
Unallo-
cated
£’000
Group
£’000
Revenue
Patent translation
Commercial translation
Life sciences
Information
Revenue
Operating profit/(loss) before charging:
Amortization of acquired intangibles
Acquisition costs
Share based payment charges
Profit/(loss) from operations
Finance income
Finance expense
Profit before taxation
Taxation
Profit for the year
74,704
6,277
-
-
80,981
20,325
(981)
-
(3)
19,341
4,655
5,578
-
-
10,233
2,604
(334)
-
-
2,270
-
-
24,416
-
24,416
6,170
(3,181)
-
-
2,989
-
-
-
6,356
6,356
3,598
(143)
-
-
3,455
-
-
-
-
-
(674)
-
(855)
(3)
(1,532)
79,359
11,855
24,416
6,356
121,986
32,023
(4,639)
(855)
(6)
26,523
16
(1,448)
25,091
(5,758)
19,333
Overseas intercompany revenues to the UK amounting to £6.1 million have been eliminated on consolidation.
The segment results for the year ended 30 September 2015 are as follows:
RWS Holdings plc 2016 Annual Report 33
Notes to the Consolidated Financial Statements (continued)
Patent and
Commer-
cial
UK
£’000
Patent and
Commer-
cial
Overseas
£’000
Life
Sciences
£’000
Informa-
tion
£’000
Unallo-
cated
£’000
Group
£’000
Revenue
Patent translation
Commercial translation
Life sciences
Information
Revenue
Operating profit/(loss) before charging:
Amortization of acquired intangibles
Share based payment charges
Profit/(loss) from operations
Finance income
Finance expense
Profit before taxation
Taxation
Profit for the year
69,334
6,079
-
-
75,413
17,490
(903)
(140)
16,447
4,013
5,578
-
-
9,591
2,099
(316)
(59)
1,724
-
-
4,204
-
4,204
893
(245)
(23)
625
-
-
-
6,007
6,007
3,114
(143)
-
2,971
-
-
-
-
-
(702)
-
(233)
(935)
73,347
11,657
4,204
6,007
95,215
22,894
(1,607)
(455)
20,832
71
(251)
20,652
(5,124)
15,528
Overseas intercompany revenues to the UK amounting to £5.2 million have been eliminated on consolidation.
The segment assets and liabilities at 30 September 2016 are as follows:
Patent and
Commer-
cial
UK
£’000
Patent and
Commer-
cial
Overseas
£’000
Life
Sciences
£’000
Informa-
tion
£’000
Unallo-
cated
£’000
Group
£’000
73,083
12,584
12,790
2,831
69,622
37,135
6,116
2,432
3,916
1,845
165,527
56,827
248
389
981
200
108
376
132
34
3,184
132
236
143
238
174
35
950
941
4,719
Total assets
Total liabilities
Capital expenditure
Depreciation
Amortization
34 RWS Holdings plc 2016 Annual Report
Notes to the Consolidated Financial Statements (continued)
The segment assets and liabilities at 30 September 2015 are as follows:
Patent and
Commer-
cial
UK
£’000
Patent and
Commer-
cial
Overseas
£’000
Life
Sciences
£’000
Informa-
tion
£’000
Unallo-
cated
£’000
Group
£’000
72,943
11,415
11,039
2,427
7,369
756
6,024
2,585
7,763
2,265
105,138
19,448
230
338
903
118
105
372
13
18
245
507
193
143
390
170
-
1,258
824
1,663
Total assets
Total liabilities
Capital expenditure
Depreciation
Amortization
Capital expenditure comprises additions to property, plant and equipment and intangible assets, including
additions from acquisitions through business combinations.
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
2016
£’000
Liabilities
2016
£’000
Assets
2015
£’000
Liabilities
2015
£’000
161,611
54,982
97,375
17,183
644
250
376
2,646
3,916
-
-
1,386
459
1,845
196
322
244
7,001
7,763
1,368
-
522
375
2,265
165,527
56,827
105,138
19,448
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 bank loans, 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
2016
£’000
2015
£’000
15,510
62,751
43,725
121,986
17,637
45,308
32,270
95,215
No customer accounted for more than 5% of Group turnover in the current year (prior year 7%).
RWS Holdings plc 2016 Annual Report 35
Notes to the Consolidated Financial Statements (continued)
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
Capital expenditure
2016
£’000
2015
£’000
*restated
2016
£’000
2015
£’000
*restated
2016
£’000
2015
£’000
*restated
UK
Continental Europe
Asia, United States of America
and Australia
90,541
5,579
80,993
5,578
87,559
7,999
98,862
3,100
25,866
121,986
8,644
95,215
69,969
165,527
3,176
105,138
618
44
288
950
1,140
74
44
1,258
* The 2015 figures have been restated to include the inovia figures within the UK segment. These had
previously been considered part of the Asia, United States of America and Australia segment.
4 Profit from operations
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
Operating lease rentals:
– Property
– Plant and equipment
Auditors’ remuneration
Fees payable to the Company’s auditors for the audit
of the Group’s annual accounts
– The audit of subsidiaries of the Company
– Taxation Compliance services
– Taxation Advisory services
– Audit related assurance services
Total fees
2016
£’000
2015
£’000
33,654
941
4,719
(1,756)
1,086
77
54
136
115
182
208
695
25,870
824
1,663
(1,305)
623
121
54
95
78
-
-
227
36 RWS Holdings plc 2016 Annual Report
Notes to the Consolidated Financial Statements (continued)
5 Staff costs
Staff costs (including Directors) comprise:
Wages and salaries
Social security costs
Other pension costs
Share based payment expense (note 20)
2016
£’000
2015
£’000
28,980
3,576
1,092
6
33,654
22,192
2,731
492
455
25,870
The Group operates a defined contribution pension scheme making payments on behalf of employees to
their personal pension plans. Payments of £1,092,000 (2015: £492,000) 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 payables totalling £53,000 (2015: £54,000).
Details of Directors’ remuneration and pension contributions are disclosed in the Directors’ Remuneration
Report on pages 17 to 19.
Key management compensation
Short term employee benefits
Post employment benefits
Share based payments
2016
£’000
3,077
104
6
3,187
2015
£’000
2,645
45
455
3,145
The key management compensation includes the six (2015: six) Directors of RWS Holdings plc, the five (2015:
five) members of the Senior Executive Team who are not Directors of RWS Holdings plc the four (2015: four)
Managing Directors of the operating subsidiary undertakings based overseas and the two (2015: nil) former
owners of CTi who were employed by the Group during the year.
The monthly average number of people employed by the Group, including Directors and part-time employees,
during the year was:
Production staff
Administrative staff
2016
Number
2015
Number
629
159
788
477
135
612
RWS Holdings plc 2016 Annual Report 37
Notes to the Consolidated Financial Statements (continued)
6 Finance income and expense
Finance income
– Returns on short-term deposits
Finance expense
– Bank interest payable
– Movement in the fair value of foreign currency contracts
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
Adjustments in respect of prior years
Deferred tax
Current year movement
Adjustments in respect of prior years
Total tax expense
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 20.0% (2015: 20.5%)
Effects of:
Items not deductible or not chargeable for tax purposes
Differences in overseas tax rates
Adjustments in respect of prior years
Total tax expense for the year
2016
£’000
2015
£’000
16
71
(458)
(990)
(1,448)
(1,432)
(6)
(245)
(251)
(180)
2016
£’000
2015
£’000
4,171
3,325
(32)
7,464
(1,624)
(82)
5,758
2016
£’000
25,091
5,018
(512)
1,366
(114)
5,758
3,957
1,039
288
5,284
(228)
68
5,124
2015
£’000
20,652
4,234
60
474
356
5,124
Factors that may affect future tax charges
The standard rate of corporation tax in the UK changed from 21.0% to 20.0% with effect from 1 April 2015.
Legislation was enacted to reduce the main rate of corporation tax from 20% to 19% with effect from 1 April
2017 and 17% from 1 April 2020.
The reductions in tax rate to 20% were substantively enacted for the purposes of IAS 12, ‘income taxes’, on
2 July 2013. As these rate changes have been substantively enacted at the balance sheet date, their effects
have been included in these financial statements.
38 RWS Holdings plc 2016 Annual Report
Notes to the Consolidated Financial Statements (continued)
8 Dividends to shareholders
Final, paid 26 February 2016 (2015: paid 27 February 2015)
Interim, paid 22 July 2016 (2015: paid 24 July 2015)
2016
pence
per share
2016
£’000
2015
pence
per share
3.85
1.15
5.00
8,146
2,481
10,627
3.60
1.03
4.63
2015
£’000
7,617
2,179
9,796
The Directors recommend a final dividend in respect of the financial year ended 30 September 2016 of
4.45 pence per Ordinary share to be paid on 24 February 2017 to shareholders who are on the register at
27 January 2017. This dividend is not reflected in these financial statements as it does not represent a liability at
30 September 2016. The final proposed dividend will reduce shareholders’ funds by an estimated £9.6 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:
2016
2015
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
214,215,397
1,564,458
215,779,855
211,579,840
1,086,738
212,666,578
Adjusted earnings per Ordinary share is also presented to eliminate the effects of acquired intangibles, share
options and exceptional acquisition costs. 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:
2016
2015
£’000
£’000
2016
Basic
earnings
per share
pence
2015
Basic
earnings
per share
pence
2016
Diluted
earnings
per share
pence
2015
Diluted
earnings
per share
pence
Profit for the year
Adjustments:
Amortization of acquired intangibles
Acquisition costs
Charges for share based payments
Tax effect of adjustments
Adjusted earnings
19,333
15,528
9.0
7.3
9.0
7.3
4,639
855
6
(1,515)
23,318
1,607
-
455
(412)
17,178
2.2
0.4
0.0
(0.7)
10.9
0.8
-
0.2
(0.2)
8.1
2.1
0.4
0.0
(0.7)
10.8
0.8
-
0.2
(0.2)
8.1
RWS Holdings plc 2016 Annual Report 39
Notes to the Consolidated Financial Statements (continued)
10 Goodwill
Cost and net book value
Opening
Additions
Exchange adjustments
At 30 September
2016
£’000
2015
£’000
31,445
22,788
7,285
61,518
30,512
-
933
31,445
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 being used within the calculations.
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.
Key assumptions for the value in use calculations are as follows:
Patent and Commercial UK
Patent and Commercial Overseas
Life Sciences
Information
Long Term
Growth Rate
Discount
Rates
Revenue
Growth
2%
2%
2%
2%
9%
8%
12%
9%
5%
6%
7%
6%
Long term growth rate is the rate applied to determine the terminal value at 5 years. The discount rate is the
pre-tax discount rate. Revenue growth is the average annual increase in revenue over the 5 year projection
period.
As part of the value in use calculation, management prepares cash flow forecasts derived from the most recent
financial budgets, approved by the Board of Directors for the next 12 months, and extrapolates the cash flows
for a period of 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 Group has conducted a sensitivity analysis on the carrying value of each of the CGUs. There are no
reasonably possible changes in the key assumptions that could cause the carrying value of the CGUs to exceed
their recoverable amounts.
Based on the result of the value in use calculations undertaken, the Directors conclude that the recoverable
amount in the CGUs exceeds its carrying value.
40 RWS Holdings plc 2016 Annual Report
Notes to the Consolidated Financial Statements (continued)
The allocation of goodwill to each CGU is as follows:
Patent and Commercial UK
Patent and Commercial Overseas
Life Sciences
Information
At 30 September
11 Intangible assets
Trade
name
£’000
Clinician
database
£’000
Technology
£’000
Trade-
marks
£’000
Cost
At 1 October 2014
Additions
Disposals
Currency translation
At 30 September 2015
Additions
Acquisitions
Disposals
Currency translation
At 30 September 2016
Accumulated amortization
and impairment
At 1 October 2014
Amortization charge
Disposals
Currency translation
At 30 September 2015
Amortization charge
Disposals
Currency translation
At 30th September 2016
Net book value
At 1 October 2014
At 30 September 2015
At 30 September 2016
-
-
-
-
-
-
957
-
167
1,124
-
-
-
-
-
119
-
10
129
-
-
995
-
-
-
-
-
-
4,467
-
777
5,244
-
-
-
-
-
443
-
38
481
1,974
-
-
143
2,117
-
-
-
342
2,459
395
415
-
37
847
453
-
176
1,476
232
-
-
(12)
220
-
-
-
38
258
232
-
-
(12)
220
-
-
38
258
2016
£’000
25,120
4,632
29,985
1,781
61,518
2015
£’000
22,472
3,961
3,231
1,781
31,445
Customer
relation-
ships
& order
book
£’000
10,583
-
-
89
10,672
-
16,548
-
3,933
31,153
4,031
1,192
-
(47)
5,176
3,624
-
836
9,636
Software
£’000
Total
£’000
371
33
(2)
(17)
385
169
-
(11)
68
611
274
56
(2)
(13)
315
80
(11)
64
448
13,160
33
(2)
203
13,394
169
21,972
(11)
5,325
40,849
4,932
1,663
(2)
(35)
6,558
4,719
(11)
1,162
12,428
-
-
4,763
1,579
1,270
983
-
-
-
6,552
5,496
21,517
97
70
163
8,228
6,836
28,421
Technology, Trademarks, Trade name, Clinician database and Customer relationships are amortized over
5 to 10 years and Software over not more than 3 years. The Order book intangible identified in valuing CTi
acquisition is amortised over one year and has been included within Customer relationships.
RWS Holdings plc 2016 Annual Report 41
Notes to the Consolidated Financial Statements (continued)
12 Property, plant and equipment
Leasehold
land,
buildings and
improve-
ments
£’000
Freehold land
and buildings
£’000
Furniture
and
equipment
£’000
Motor
vehicles
£’000
16,913
-
97
-
17,010
-
-
-
-
17,010
704
-
228
-
932
-
-
229
-
1,161
16,209
16,078
15,849
581
-
2
-
583
-
-
-
-
583
330
-
49
-
379
-
-
28
-
407
251
204
176
2,613
(28)
1,159
(912)
2,832
182
731
240
(62)
3,923
1,808
(16)
537
(912)
1,417
126
190
674
(62)
2,345
805
1,415
1,578
79
-
-
-
79
14
-
-
-
93
34
-
10
-
44
12
-
10
-
66
45
35
27
Total
£’000
20,186
(28)
1,258
(912)
20,504
196
731
240
(62)
21,609
2,876
(16)
824
(912)
2,772
138
190
941
(62)
3,979
17,310
17,732
17,630
Cost
At 1 October 2014
Currency translation
Additions
Disposals
At 30 September 2015
Currency translation
Additions
Acquisitions
Disposals
At 30 September 2016
Accumulated depreciation
At 1 October 2014
Currency translation
Depreciation charge
Disposals
At 30 September 2015
Currency translation
Acquisitions
Depreciation charge
Disposals
At 30 September 2016
Net book value
At 1 October 2014
At 30 September 2015
At 30 September 2016
42 RWS Holdings plc 2016 Annual Report
Notes to the Consolidated Financial Statements (continued)
13 Deferred tax
The deferred tax assets and liabilities and the movements during the year, before offset of balances within the
same jurisdiction, are as follows:
Deferred tax assets
At 1 October 2014
(Charged)/credited to income
At 30 September 2015
Credited to income
Credited to equity
At 30 September 2016
Deferred tax liabilities
At 1 October 2014
Charged/(credited) to income
Charged to equity
At 30 September 2015
Credited to income
Charged to equity
At 30 September 2016
Deferred tax assets
Deferred tax liabilities
Net deferred tax balance at 30 September
Deprecia-
tion in
excess of
capital
allowances
£’000
Other
temporary
differences
£’000
58
(24)
34
20
-
54
126
28
154
623
-
777
Share
Options
£’000
169
(17)
152
478
414
1,044
Total
£’000
353
(13)
340
1,121
414
1,875
Accelerated
capital
allowances
£’000
Intangibles
£’000
Total
£’000
312
145
-
457
(92)
-
365
1,712
(386)
43
1,369
(493)
85
961
2016
£’000
2,024
(241)
43
1,826
(585)
85
1,326
2015
£’000
1,875
(1,326)
549
340
(1,826)
(1,486)
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.
RWS Holdings plc 2016 Annual Report 43
Notes to the Consolidated Financial Statements (continued)
14 Trade and other receivables
Trade receivables
Less: allowance for doubtful debts
Other receivables
Prepayments and accrued income
At 30 September
2016
£’000
24,429
(101)
24,328
365
3,480
28,173
2015
£’000
15,718
(507)
15,211
272
2,424
17,907
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 approximates to their fair value.
Trade receivables net of allowances are held in the following currencies at the reporting date:
Sterling
Euros
Japanese Yen
US Dollars
Swiss Francs
Other
The ageing of trade receivables net of allowances 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
(Released)/Charged
At 30 September
2016
£’000
2,524
9,918
680
10,614
526
66
24,328
2016
£’000
15,346
5,040
2,752
779
411
24,328
2016
£’000
507
(217)
(189)
101
2015
£’000
2,495
7,088
437
4,337
684
170
15,211
2015
£’000
9,163
3,855
1,343
505
345
15,211
2015
£’000
144
(26)
389
507
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.
44 RWS Holdings plc 2016 Annual Report
Notes to the Consolidated Financial Statements (continued)
15 Loan
Due in less than one year
Loan
Due in more than one year
Loan
2016
£’000
6,923
22,500
2015
£’000
-
-
On 30 October 2015 the Group acquired the entire issued share capital of Corporate Translations Inc (see
note 22) The acquisition was funded from internal resources and a US$45m loan from Barclays.This loan is
repayable over 5 years on a straight line basis. Interest is charged quarterly at LIBOR plus 1% and the debt is
secured on the assets of CTi and other subsidiaries in the Group.
16 Trade and other payables
Due in less than one year
Trade payables
Other tax and social security payable
Other payables
Accruals and deferred income
At 30 September
2016
£’000
2015
£’000
7,260
1,252
1,363
10,332
20,207
6,960
1,024
599
6,214
14,797
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
Rental deposits
2016
£’000
2015
£’000
30
30
This long term creditor relates to rental deposits received in relation to the leasing of a portion of Randall House.
RWS Holdings plc 2016 Annual Report 45
Notes to the Consolidated Financial Statements (continued)
17 Provisions
Due in less than one year
At 1 October
Utilised
Charged/(released) to the Statement of Comprehensive Income
Transferred (to)/from provisions due in more than one year
At 30 September
Due in more than one year
At 1 October
Transferred from/(to) provisions due in less than one year
At 30 September
2016
£’000
77
(77)
157
(78)
79
2016
£’000
301
78
379
2015
£’000
480
(76)
(404)
77
77
2015
£’000
378
(77)
301
This long term provision relates solely to monthly ongoing future pension payments to a third party and will
continue for the remainder of the recipients life.
46 RWS Holdings plc 2016 Annual Report
Notes to the Consolidated Financial Statements (continued)
18 Financial instruments and financial risk management
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.
The principal financial assets and liabilities on which financial risks arise are as follows:
Financial assets
Trade receivables and accrued revenue - current
Foreign exchange derivatives
Cash and cash equivalents
At 30 September
Financial liabilities
Trade and other payables - current
Loan
Foreign exchange derivatives
At 30 September
Carrying value
2016
£’000
Carrying value
2015
£’000
26,547
-
27,910
54,457
12,331
29,423
681
42,435
16,746
309
30,569
47,624
10,611
-
-
10,611
Trade receivables and accrued revenue – current includes accrued revenue of £2,219,000 (30 September
2015: £1,535,000). 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 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.
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 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. Group’s borrowings have a number of financial covenants
which are tested bi-annually. The Board manages compliance by reviewing forecasts on a regular basis.
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%. The loan of USD$45 milion is for a period of 5 years with interest
payable at 1% over LIBOR on a straight line basis.
RWS Holdings plc 2016 Annual Report 47
Notes to the Consolidated Financial Statements (continued)
The currency profiles of the Group’s cash and cash equivalents at 30 September 2016 are set out below.
Assets – Cash and cash equivalents
Sterling
US Dollars
Euros
Yen
Swiss Francs
Other
Financial liabilities – Loan
US Dollars
Floating rate
2016
£’000
Floating rate
2015
£’000
9,460
9,733
4,870
1,749
1,655
443
27,910
18,415
4,639
4,983
1,171
1,034
327
30,569
£’000
£’000
29,423
-
If interest rates changed by 1%, the impact would not be material to the Group’s results in either the current
or prior year.
The Directors believe that a change of 1% represents a reasonable sensitivity of the Group’s interest rate risk.
The analysis assumes that all other variables remain constant.
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, and with a further institution carrying an A rating.
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 5% (2015 – 7%) of Group revenues 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 44% (2015: 51%) of Group external sales in the reporting period were denominated in Euros
and 31% in US dollars (2015: 20%) while the cost base of the Group is predominantly denominated in sterling.
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.
48 RWS Holdings plc 2016 Annual Report
Notes to the Consolidated Financial Statements (continued)
The Group applies net investment hedge accounting in respect of borrowings associated with the acquisition
of foreign operations, reducing the effect of currency fluctuations in the income statement by recognising
gains or losses directly in equity.
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.
The carrying amounts of the Group’s material foreign currency denominated monetary assets and liabilities at
the reporting date are as follows:
Euros
US Dollars
Swiss Francs
Yen
Other
Liabilities
2016
£’000
Liabilities
2015
£’000
3,092
30,592
8
111
77
33,880
2,204
201
1
55
141
2,602
Assets
2016
£’000
12,388
6,720
1,487
20
124
20,739
Assets
2015
£’000
10,287
6,057
1,189
91
237
17,861
Foreign currency sensitivity analysis
The following table details the Group’s sensitivity to a 10% (2015:10%) 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
2015
£’000
735
532
108
3
1,378
2016
£’000
845
505
134
(8)
1,476
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.
RWS Holdings plc 2016 Annual Report 49
Notes to the Consolidated Financial Statements (continued)
The Group’s derivative financial instruments, which take the form of forward foreign exchange contracts in
place at the year end are as follows:
2016
£’000
2015
£’000
Forward foreign currency exchange contracts
(681)
309
An analysis of the Group’s forward contracts’ maturity is as follows:
Up to 3 months
3 to 6 months
6 to 12 months
2016
£’000
(288)
(297)
(96)
(681)
2015
£000
309
-
-
309
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 debt financing has been introduced where it was felt that the benefits exceed the
risks and costs to equity shareholders of introducing this type of finance.
Following dividend payments of £10,627,000, closing reserves are £108,700,000. At 30 September 2016 there
was £29,423,000 of external debt finance on the balance sheet being the balance of the $45 million loan taken
out to part fund the acquisition of Corporate Translations Inc. (note 22). The Group is not subject to externally
imposed capital requirements.
In addition the Group held its own Cash and cash equivalents at the year end of £27,910,000.
19 Share capital
Authorised
Ordinary shares of 1 pence each
(2015: 1 pence)
Allotted, called up and fully paid
At beginning of year
Subdivision of shares
Issue of shares
2016
Number
2016
£’000
2015
Number
2015
£’000
500,000,000
5,000
500,000,000
5,000
211,579,840
-
4,184,810
2,116
-
41
42,315,968
169,263,872
-
2,116
-
-
2,116
At end of year
215,764,650
2,157
211,579,840
At the RWS Holdings plc AGM on 10 February 2015, shareholders approved a resolution to subdivide the
Company’s existing shares so that each 5p Ordinary share was subdivided into 5 Ordinary shares of 1p each.
These new 1p shares were admitted for trading on the London Stock Exchange on 11 February 2015.
The increase in share capital was as a result of the exercise of share options by a Director and several Senior
Executives.
50 RWS Holdings plc 2016 Annual Report
Notes to the Consolidated Financial Statements (continued)
20 Share based payment
On 6 April 2013 the Company adopted a new share option scheme for senior 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 vest after a period of 3 years
for the approved scheme and 2 years for the unapproved scheme 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
unap-
proved
options
Vesting Date
Exercise
Price (£)
Grant
Date
approved
options
unap-
proved
options
Lapse
Date
Balance at 1 Oct 2015
Exercised
Balance at 30 Sep 2016
139,290 7,971,285
46,430 4,138,380
92,860 3,832,905
1.292
3 April
2013
3 April
2016
3 April
2015
3 April
2021
A charge of £6,000 (2015: £455,000) has been made in the accounts relating to share options all of which
related to equity settled share based payment transactions.
4,184,810 options were exercised during the year (2015: Nil).
The fair value of the share options 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 (%)
Option value (£)
Approved
Option Scheme
Unnapproved
Option Scheme
1.292
1.292
3
33.5
2.69
2
1.31
1.292
1.292
2
33.5
2.69
2
1.11
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the
previous 3 years at the date of grant.
RWS Holdings plc 2016 Annual Report 51
Notes to the Consolidated Financial Statements (continued)
21 Cash and cash equivalents
Cash at bank and in hand
Short-term deposits
2016
£’000
18,477
9,433
27,910
2015
£’000
15,935
14,634
30,569
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.
22 Acquisition
On 30 October 2016, the Group acquired the entire issued share capital of Corporate Translations Inc for a
cash consideration of US$70 million plus US$2 million for working capital. The acquisition was funded by a
US$45 million five year loan and internal cash resources.
The fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
Book value
£’000
Provisional
fair value
adjustments
£’000
Provisional
fair values
£’000
Net assets acquired:
Property, plant and equipment
Trade name
Orderbook
Customer relationships
Clinician Database
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Goodwill
Total consideration
Satisfied by:
Cash
Cash flow:
Total consideration
Cash included in undertaking acquired
Net cash consideration in cash flow statement
168
-
-
-
-
6,020
208
(3,762)
2,634
(118)
957
824
15,724
4,467
-
-
-
21,854
50
957
824
15,724
4,467
6,020
208
(3,762)
24,488
22,788
47,276
47,276
47,276
(208)
47,068
Corporate Translations Inc contributed £21.2 million revenue and £3.4 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 revenues for the year would have been £123.9 million and Profit for the
year £19.6 million.
Acquisition costs of £855,000 have been charged through the Consolidated Statement of Comprehensive Income.
52 RWS Holdings plc 2016 Annual Report
Notes to the Consolidated Financial Statements (continued)
23 Related party transactions
During the year in the normal course of business, RWS provided translation services worth £357,000 (2015:
£295,000) to Learning Technologies Group plc (“LTG”) a company in which Andrew Brode has a notifiable
interest. An amount of £38,000 due from LTG at 30 September 2016 was paid in October and November 2016
(2015: £30,000).
24 Commitments and contingent liabilities
The Group had no material capital commitments contracted for but not provided for in the financial
statements. (2015: £nil)
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 (2015: £nil).
The loan of $45 million taken out with Barclays Bank plc to part fund the acquisition of Corporate Translations
Inc has been guaranteed against the assets of CTi and other fellow subsidiary undertakings.
25 Operating lease commitments
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
2016
£’000
2015
£’000
1,476
2,297
1,133
4,906
780
801
365
1,946
26 Events since the reporting date
No significant events have occurred between the balance sheet date and the date of authorisation of these
financial statements.
RWS Holdings plc 2016 Annual Report 53
Independent auditors’ report to the members of RWS Holdings plc
REPORT ON THE PARENT COMPANY
FINANCIAL STATEMENTS
Our opinion
In our opinion, RWS Holdings plc’s Parent Company
financial statements (the “financial statements”):
– give a true and fair view of the state of the Parent
Company’s affairs as at 30 September 2016;
– have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting
Practice; and
– have been prepared in accordance with the
requirements of the Companies Act 2006.
What we have audited
The financial statements, included within the Annual
Report (the “Annual Report”), comprise:
– the Parent Company Statement of Financial Position
as at 30 September 2016;
Opinion on other matter 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.
Other matters on which we are required
to report by exception
Adequacy of accounting records and
information and explanations received
Under the Companies Act 2006 we are required to
report to you if, in our opinion:
– we have not received all the information and
explanations we require for our audit; or
– 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 Statement of Changes in Equity
– the financial statements are not in agreement with
for the year then ended; and
the accounting records and returns.
– the notes to the financial statements, which include
a summary of significant accounting policies and
other explanatory information.
We have no exceptions to report arising from this
responsibility.
Certain required disclosures have been presented
elsewhere in the Annual Report, rather than in the
notes to the financial statements. These are cross-
referenced from the financial statements and are
identified as audited.
The financial reporting framework that has been
applied in the preparation of the financial statements
is United Kingdom Accounting Standards, comprising
FRS 101 “Reduced Disclosure Framework”, and
applicable law (United Kingdom Generally Accepted
Accounting Practice).
In applying the financial reporting framework,
the Directors have made a number of subjective
judgements, for example in respect of significant
accounting estimates. In making such estimates,
they have made assumptions and considered future
events.
Directors’ remuneration
Under the Companies Act 2006 we are required to
report to you if, in our opinion, certain disclosures
of Directors’ remuneration specified by law are not
made. We have no exceptions to report arising from
this responsibility.
Responsibilities for the financial statements
and the audit
Our responsibilities and those of the Directors
As explained more fully in the Statement of Directors’
Responsibilities set out on page 16, 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) (“ISAs (UK & Ireland)”).
Those standards require us to comply with the
Auditing Practices Board’s Ethical Standards for
Auditors.
This report, including the opinions, has been
prepared for and only for the Parent Company’s
members as a body in accordance with Chapter 3 of
54 RWS Holdings plc 2016 Annual Report
Independent auditors’ report to the members of RWS Holdings plc (continued)
Other matter
We have reported separately on the Group financial
statements of RWS Holdings plc for the year ended
30 September 2016.
Nigel Reynolds (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
6 December 2016
Part 16 of the Companies Act 2006 and for no other
purpose. We do not, in giving these opinions, accept
or assume responsibility for any other purpose or to
any other person to whom this report is shown or
into whose hands it may come save where expressly
agreed by our prior consent in writing.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs
(UK & Ireland). An audit involves obtaining evidence
about the amounts and disclosures in the financial
statements sufficient to give reasonable assurance
that the financial statements are free from material
misstatement, whether caused by fraud or error. This
includes an assessment of:
– whether the accounting policies are appropriate to
the Parent Company’s circumstances and have been
consistently applied and adequately disclosed;
– the reasonableness of significant accounting
estimates made by the Directors; and
– the overall presentation of the financial statements.
We primarily focus our work in these areas by
assessing the Directors’ judgements against available
evidence, forming our own judgements, and
evaluating the disclosures in the financial statements.
We test and examine information, using sampling and
other auditing techniques, to the extent we consider
necessary to provide a reasonable basis for us to
draw conclusions. We obtain audit evidence through
testing the effectiveness of controls, substantive
procedures or a combination of both.
In addition, we read all the financial and non-financial
information in the Annual Report to identify material
inconsistencies with the audited financial statements
and to identify any information that is apparently
materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in
the course of performing the audit. If we become
aware of any apparent material misstatements or
inconsistencies we consider the implications for our
report.
RWS Holdings plc 2016 Annual Report 55
Parent Company Financial Statements
The following parent entity financial statements are prepared under FRS 101 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 58 to 59.
Statement of Financial Position at 30 September 2016
Registered Company 3002645
Fixed assets
Investments
Current assets
Debtors
Foreign exchange derivatives
Cash at bank and in hand
Total assets
Current liabilities
Loan
Trade and other payables
Foreign exchange derivatives
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Loan
Net assets
Capital and reserves
Share capital
Share premium account
Share based payment reserve
Capital reserve
Profit and loss account
Total shareholders’ funds
Note
2016
£’000
2015
£’000
6
7
10
8
9
10
8
11
44,817
44,817
913
-
6,991
7,904
15,326
15,326
5,982
309
7,735
14,026
52,721
29,352
6,923
263
681
7,867
-
230
-
230
44,854
29,122
44,854
29,122
22,500
22,354
2,157
8,947
1,807
2,030
7,413
22,354
-
29,122
2,116
3,583
1,801
2,030
19,592
29,122
The financial statements on pages 56 to 64 were approved by the Board of Directors and authorised for issue
on 5 December 2016 and were signed on its behalf by:
Andrew Brode
Director
56 RWS Holdings plc 2016 Annual Report
Parent Company Financial Statements (continued)
Statement of changes in Equity
Share
capital
£’000
Share
premium
account
£’000
Share
based
payment
Reserve
£’000
Capital
Reserve
£’000
Retained
earnings
£’000
Total
£’000
At 1 October 2014
2,116
3,583
1,346
2,030
18,724
27,799
Profit for the financial year
Total Comprehensive Income for the year
Dividends
Credit arising on share based payments
-
-
-
-
-
-
-
-
-
-
-
455
-
-
-
-
10,664
10,664
10,664
10,664
(9,796)
-
(9,796)
455
Balance at 30 September 2015
2,116
3,583
1,801
2,030
19,592
29,122
Loss for the financial year
Total Comprehensive loss for the year
Dividends
-
-
-
-
-
-
Credit arising on share based payments
Issue of shares
-
41
-
5,364
-
-
-
6
-
-
-
(1,552)
(1,552)
(1,552)
(1,552)
-
(10,627)
(10,627)
-
-
-
-
6
5,405
Balance at 30 September 2016
2,157
8,947
1,807
2,030
7,413
22,354
The nature and purpose of each reserve within equity is as follows:
– Share capital is the nominal value of the shares issued.
– Share premium is the fair value of the shares issued in excess of their nominal value.
– The balance on the capital reserve is an amount not distributable to shareholders and not transferred to the
Income Statement.
– Share based payment reserve is the credit arising on the share based payment charges in relation to the
Company’s share option schemes.
– Retained earnings are the cumulative net gains and losses, including the capital reserve from the Company
balance sheet.
RWS Holdings plc 2016 Annual Report 57
Notes to the Company Financial Statements
1 General information
RWS Holdings plc is the holding company of a number of subsidiaries which provide patent translations,
intellectual property support services, high level technical and commercial translations and linguistic validation
services.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
The financial statements of RWS Holdings plc have been prepared in accordance with Financial Reporting
Standard 101, ‘Reduced Disclosure Framework’ (FRS 101). The financial statements have been prepared under
the historical cost convention as modified by the revaluation of land and buildings and derivative financial
assets and financial liabilities measured at fair value through the income statement and in accordance with
the Companies Act 2006. This is the first year the Company has prepared accounts under FRS101 and the
transitional adjustments are set out in note 14.
The preparation of financial statements in conformity with FRS 101 requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying the
Company’s accounting policies.
The following exemptions from the requirements of IFRS have been applied in the preparation of these
financial statements, in accordance with FRS 101:
– Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based payment’ (details of the number and weighted-average
exercise prices of share options and how the fair value of goods or services received was determined).
– IFRS 7, ‘Financial Instruments: Disclosures’.
– Paragraphs 91 to 99 of IFRS 13, ‘Fair value measurement’ (disclosure of valuation techniques and inputs used
for fair value measurement of assets and liabilities).
– Paragraph 38 of IAS 1, ‘Presentation of financial statements’ comparative information requirements in
respect of
(i) paragraph 79(a) (iv) of IAS 1
(ii) paragraph 73(e) of IAS 16 ‘Property, plant and equipment’
(iii) paragraph 118(e) of IAS 38 ‘Intangible assets’ (reconciliations between the carrying amount at the
beginning and end of the period).
– The following paragraphs of IAS 1, ‘Presentation of financial statements’:
10(d), (statement of cash flows),
16 (statement of compliance with all IFRS),
38A (requirement for minimum of two primary statements, including cash flow statements),
38B-D (additional comparative information)
111 (cash flow statement information), and
134-136 (capital management disclosures).
– IAS 7, ‘Statement of cash flows’
– Paragraph 30 and 31 of IAS 8 ‘Accounting policies, changes in accounting estimates and errors’ (requirement
for the disclosure of information when an entity has not applied a new IFRS that has been issued but is not
yet effective).
– Paragraph 17 of IAS 24, ‘Related party disclosures’ (key management compensation).
The requirements in IAS 24, ‘Related party disclosures’ to disclose related party transactions entered into
between two or more members of a Group.
58 RWS Holdings plc 2016 Annual Report
Notes to the Company Financial Statements (continued)
Going concern
The Company meets its day-to-day working capital requirements through its cash reserves and borrowings.
After making enquiries, the Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the next 12 months. The Company therefore continues to
adopt the going concern basis in preparing its financial statements.
Derivative financial instruments and hedging activities
The Company has not applied hedge accounting and all derivatives are measured at fair value through profit
and loss.
Investments
Investments are stated at cost less provision for impairment. Cost includes capital contributions arising from
share options.
Pensions
Contributions to personal pension plans are charged to the income statement 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 payment
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 Company 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.
Where the share options are awarded to employees of subsidiaries, the amount of the charge is passed down
to the subsidiary in the form of a capital contribution which is recognised as an increase in the investment in
that subsidiary.
3 Derivative Financial Instruments
The Company enters into forward foreign currency contracts to mitigate the exchange rate risk for certain
foreign currency receivables. At 30 September 2016 the outstanding contracts all mature within 12 months
(2015: 3 months) of the year end. The Company is committed to sell €19,200,000 and receive a fixed sterling
amount.
RWS Holdings plc 2016 Annual Report 59
Notes to the Company Financial Statements (continued)
The forward currency contracts are measured at fair value, which is determined using valuation techniques
that utilise observable inputs. The key assumptions used in valuing the derivatives are the exchange rates for
the Euro which are sold for sterling.
4 Operating profit
The Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own
Income statement in these financial statements. The Company loss after tax for the year ended 30 September
2016 under FRS 101 was £1,552,000 (2015 profit: £10,664,000).
Audit fees payable in relation to the audit of the financial statements of the Company are £54,000 (2015: £54,000).
Fees paid to PwC 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.
5 Directors and employees
There were no employees (2015: 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
2016
£’000
1,166
19
1,185
2015
£’000
998
17
1,015
During the year the Company had six (2015: 6) Directors, including three Non-Executive Directors, providing
services to the Group.
During the year two Directors (2015: 2) received contributions to their personal pension schemes.
Emoluments of the highest paid Director:
Emoluments
Pension costs – paid to the Director’s personal pension scheme
2016
£’000
403
10
413
2015
£’000
350
10
360
Details of Directors’ remuneration and pension contributions are disclosed in the Directors’ Remuneration
Report on pages 17 to 19.
60 RWS Holdings plc 2016 Annual Report
Notes to the Company Financial Statements (continued)
6 Investments
Cost and net book value at beginning of year
Purchase of shares in a subsidiary undertaking
Additions – capital contributions
Cost and net book value at end of year
2016
£’000
15,326
29,485
6
44,817
2015
£’000
14,871
-
455
15,326
The Directors consider that the value of the Company’s fixed asset investments, which are listed below, is
supported by their underlying profitability.
The following were the wholly owned subsidiary undertakings and have been consolidated in the financial
statements:
Country of
incorporation
Nature of business
Beijing RWS Science & Technology Information
China
Patent, technical and legal translations
Consultancy Co. Ltd
Communicare Limited
Corporate Translations Inc.
Corporate Translations UK Limited
Eclipse Translations Limited
England
Technical and legal translations
USA
England
England
Translation and linguistic validation
Translation and linguistic validation
Technical and legal translations
RWS Schweiz GmbH (formerly Ifama GmbH)
Switzerland
Technical and legal translations
Japanese Language Services Limited
England
Technical and legal translations
KK RWS Group
Lawyers’ and Merchants’ Translation Bureau Inc
Japan
USA
Patent, technical and legal translations
Technical and legal translations
RWS Group Deutschland GmbH
Germany
Technical and legal translations
RWS Group Limited
RWS Information Limited
RWS (Overseas) Limited
RWS Translations Limited
RWS UK Holding Co. Limited
RWS US Holding Co. Inc
Pharmaquest Limited
inovia Pty Holdings Limited
inovia LLC
inovia Europe GmbH
England
England
England
England
England
USA
England
Australia
USA
Holding company
Patent and technical information searches
Holding company
Patent, technical and legal translations
Holding company
Holding company
Technical and medical translations
Patent translations
Patent translations
Germany
Patent translations
All subsidiary undertakings, except RWS Group Limited are held indirectly.
RWS Holdings plc 2016 Annual Report 61
Notes to the Company Financial Statements (continued)
7 Debtors
Amounts owed by Group undertakings
Other debtors
Prepayments
Amounts due within one year
8 Loan
Due in less than one year
Loan
Due in more than one year
Loan
2016
£’000
876
8
29
913
2016
£’000
6,923
22,500
2015
£’000
5,942
13
27
5,982
2015
£’000
-
-
On 30 October 2015 the Group acquired the entire issued share capital of Corporate Translations Inc
(see note 22 of the consolidated accounts). The acquisition was funded from internal resources and a
US$45 million loan from Barclays. This loan is repayable over 5 years on a straight line basis. Interest is charged
quarterly at 1% over LIBOR and the debt is secured by the assets of CTi and other subsidiaries in the Group.
9 Creditors: amounts falling due within one year
Trade creditors
Amounts owed to Group undertakings
Accruals
2016
£’000
8
36
219
263
2015
£’000
9
103
118
230
The amounts owed both by and to Group undertakings are repayable on demand and classified as due within
one year.
62 RWS Holdings plc 2016 Annual Report
Notes to the Company Financial Statements (continued)
10 Financial instruments
The Company’s derivative financial instruments, which take the form of forward foreign exchange contracts,
in place at the year end are as follows:
2016
£’000
2015
£’000
Foreign exchange derivatives
An analysis of the Group’s forward contracts’ maturity is as follows:
(681)
2016
£’000
(288)
(297)
(96)
(681)
309
2015
£000
309
-
-
309
Up to 3 months
3 to 6 months
6 to 12 months
11 Share capital
Authorised
Ordinary shares of 1 pence each
(2015: 1 pence)
Allotted, called up and fully paid
At beginning of year
Subdivision of shares
Issue of shares
2016
Number
2016
£’000
2015
Number
2015
£’000
500,000,000
5,000
500,000,000
5,000
211,579,840
-
4,184,810
2,116
-
41
42,315,968
169,263,872
-
2,116
-
-
2,116
At end of year
215,764,650
2,157
211,579,840
The increase in share capital was as a result of the exercise of share options by a Director and several Senior
Executives.
12 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 (2014: £nil). The loan of
US$45 million taken to fund the acquisition of Corporate Translations Inc is secured against the assets of CTi
and other subsidiaries of the Group.
13 Post balance sheet events
There have been no events since 30 September 2016 that require disclosure.
RWS Holdings plc 2016 Annual Report 63
Notes to the Company Financial Statements (continued)
14 Appendix to the Financial Statements – First time adoption of FRS 101
Background
This is the first year in respect of which the Company has prepared its financial statements under FRS 101.
The previous financial statements for the year ended 30 September 2015 were prepared under ‘UK GAAP’.
The date of transition to FRS 101 for the Company is 1 October 2014. Set out below are descriptions of the
various implementation options applied by the Company in preparing the financial statements for the year
ended 30 September 2016, as well as reconciliations from ‘UK GAAP’ to FRS 101 for both total equity as at
1 October 2014 and 30 September 2015 and comprehensive income for the year ended 30 September 2015.
Reconciliation of Total Equity as at 1 October 2014 and 30 September 2015
UK GAAP – As previously reported
Forward foreign exchange contracts
FRS 101
1 October
2014
£’000
30 September
2015
£’000
27,245
28,814
554
308
27,799
29,122
Reconciliation of Total Comprehensive Income for the period ended 30 September 2015
Profit for the financial year
UK GAAP – As previously reported
Forward foreign exchange contracts
FRS 101
£
10,910
(246)
10,664
64 RWS Holdings plc 2016 Annual Report
Independent Auditors
PricewaterhouseCoopers LLP
Embankment Place
London WC2N 6RH
Solicitors
Olswang
90 High Holborn
London WC1V 6XX
Principal bankers
Barclays Bank plc
Level 28
1 Churchill Place
Canary Wharf
London E14 5HP
Shareholder information
Corporate headquarters and Registered office
No. 03002645
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
6 Agar Street
London WC2N 4HN
Tel: +44 (0)20 3128 8100
Nominated adviser and broker
Numis Securities Ltd
London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT
Tel: +44 (0)20 7260 1000
Registrars
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Tel: 087 1664 0300
From overseas: +44 371 664 0300
calls outside the United Kingdom
Email: shareholderenquiries@capita.co.uk
RWS Holdings plc 2016 Annual Report 65
Contents
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New horizons
RWS Holdings plc 2016 Annual Report
RWS Holdings plc 2016 Annual Report
Europa House
Chiltern Park
Chiltern Hill
Chalfont St Peter
Bucks
SL9 9FG
United Kingdom
Telephone +44 (0) 1753 480 200
Facsimile +44 (0) 1753 480 280
Email rws@rws.com
www.rws.com