ANNUAL REPORT
2020
Welcome to our 2020 annual report.
Notwithstanding the ongoing global pandemic,
RWS ended the year with a strong cash position and
together with our recent acquisitions, we remain
confident about our future growth prospects.
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Contents
STRATEGIC REPORT
05
06
08
10
16
Group Overview
Financial and Performance Highlights
Chairman’s Statement
Chief Executive Officer’s Review
Our Business Model
17 Market Overview
18
22
24
26
Chief Financial Officer’s Review
Key Performance Indicators
Section 172 Statement
Principal Risks and Uncertainties
GOVERNANCE REPORT
29
30
32
50
52
56
59
Corporate Governance Statement
Board of Directors
Corporate Governance Report
Audit Committee Report
Directors’ Remuneration Report
Directors’ Report
Statement of Directors’ Responsibilities
FINANCIAL STATEMENTS
62
68
69
70
71
72
Independent Auditors’ Report to the Members of RWS
Holdings plc
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
108 Parent Company Financial Statements
110 Notes to the Parent Company Financial Statements
117 Glossary
118 Shareholder Information
RWS — Annual Report 2020
3
RWS is a world-leading provider of intellectual
property support solutions, localisation, language
technology and translation services.
4
RWS — Annual Report 2020
STRATEGIC REPORT
Group Overview
RWS is a world-leading provider
of translation and localisation,
intellectual property (IP) support
solutions and life sciences
language services.
Our specialist teams combine
the latest technology, proven
processes and highly skilled staff
to deliver complex services at
each stage of the product life
cycle to meet the diverse needs
of a global, blue-chip client base.
Our services are delivered in accordance with ISO
9001, ISO 14001, ISO 17100, ISO 13485 and ISO
27001 and are trusted by world-leading companies
across a range of sectors including technology,
pharmaceutical, medical, chemical, automotive and
telecommunications.
Over the last 62 years, we have built a reputation for
quality, reliability and flexibility with our global team
of linguists, searchers and technical experts.
With headquarters in the UK, we have 36 offices
worldwide and are publicly listed on the Alternative
Investment Market (AIM), a London Stock Exchange
regulated market.
IP SERVICES
The IP Services division delivers high
quality patent translations, seamless
patent filing and unmatched IP research
capability.
Our clients benefit from expert and experienced
translators supported by innovative language
technology which lowers costs and increases
consistency. We offer the most robust intellectual
property research services and tools available, from
traditional to crowd based search.
IP Services enjoys a reputation for delivering
solutions that support strategic decision-making
throughout the IP lifecycle.
LIFE SCIENCES
The Life Sciences division provides a full
suite of language services and solutions for
the world’s leading pharmaceutical, medical
device and clinical research organisations.
This includes language solutions throughout the
entire product life cycle, including translation of
clinical content, the linguistic validation of Clinical
Outcomes Assessments (COAs), regulatory affairs
and labelling, product marketing, manufacturing,
product safety and training programmes.
MORAVIA
The Moravia division works primarily with
global technology companies to help them
provide high-quality, localised products and
content to their clients worldwide. The ability to
maintain quality at scale is a key differentiator for
RWS in the market place.
Our “Go Global Model” offers a holistic approach
to localisation that ensures even the most complex
products and content succeed in all locations,
at scale. Its five-phase system is designed to
offer flexibility while powering our customers’
international expansion.
5
RWS — Annual Report 2020s
Financial and Performance
Highlights
£58.7m
+0.02%
-1.17% underlying1
2019: £355.7m
REVENUE
£355.8m
Profit before tax (“PBT”)
16.9p
Basic earnings per
ordinary share
£37.9m
Net debt including lease
liabilities
3,095
FTE employees
Note: Unless otherwise indicated, all figures relate
to FY 2020 (1 October 2019 – 30 September 2020).
ADJUSTED PBT2
£70.2m
ADJUSTED EPS2
19.9p
CASH
£51.4m
- 5.5%
- 2.7% underlying1
2019: £74.2m
- 6.6%
2019: 21.3p
+ 9.4%
2019: £47.0m
PROPOSED FINAL DIVIDEND
+ 3.6%
7.25p
2019: 7.0p
NET DEBT3
£15.1m
0.22x 2020 Adjusted PBT
2019: £36.8m
1 Excluding the impact of acquisitions and assumes constant currency.
2 Adjusted profit before tax or Adjusted PBT – is stated before
amortisation of acquired intangibles, acquisition costs, share-based
payment expense and exceptional items (Refer to Note 4).
3 Net debt comprises loans less cash and cash equivalents excluding
lease liabilities (refer to Note 17).
OUR GEOGRAPHICAL REACH
Canada
USA
France
England
Ireland
Switzerland
Germany
Czech
Republic
China
Thailand
India
Colombia
Argentina
6
RWS — Annual Report 2020
Japan
Australia
STRATEGIC REPORT
US$10 trillion
Global health care spending is projected
to reach US$10 trillion by 2022, worldwide
prescription drug sales to increase at an average
of 7.25% year on year from 2021 - 2024 and the
global medical device market to reach US$425.5
billion by 2025.
(Source: Deloitte, 2020 Global Life Sciences Outlook)
US$57 billion
Global language services market estimated to
reach US$57 billion in 2020 (6.2% CAGR)
(Source: The Nimdzi 100, 2020)
5.2% increase
in worldwide patent applications filed under the
Patent Cooperation Treaty (PCT) in 2019 (Source:
Patent Cooperations Treaty Yearly Review 2020)
REVENUE
IP Services
112.8m
-10.0%
Life sciences
69.5m
+6.1%
Moravia
173.6m
+5.2%
ANNUAL ADJUSTED PBT (£M)
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ANNUAL REVENUE (£M)
35.9m
2005
55.7m
2009
77.4m
2013
164.0m
2017
355.8m
2020
27.3m
2003
46.2m
2007
>
>
>
65.4m
2011
>
>
95.2m
2015
>
>
355.7m
2019
>
>
7
RWS — Annual Report 2020s Chairman’s Statement
INTRODUCTION
RWS celebrated its 62nd year in business in 2020 and has grown to
become the world’s leading provider of language services. Later in this
statement, I provide details of a most significant post balance sheet
event, the acquisition by RWS of SDL plc (“SDL”), which creates the
world’s leading language services and technology group.
We announced two acquisitions in June 2020, namely Iconic Translation
Machines Ltd (“Iconic”), based in Dublin, a specialist in the development
of best in class neural machine translation and AI solutions, and Webdunia.
com (India) Private Limited (“Webdunia”), a leader in translation,
localisation and technology services, based in India. Iconic and Webdunia
have settled in well as valuable additions to the RWS Group.
PERFORMANCE
PEOPLE AND BOARD
The Group achieved revenues of £355.8m for the year,
in line with 2019 (£355.7m). Life Sciences and Moravia
delivered good revenue growth and resilience in the face
of Covid-19. IP Services experienced some disruption as
it adapted to the working from home environment and
suffered additional headwinds.
Adjusted profit before tax fell to £70.2m (2019: £74.2m).
On an organic, constant currency basis, adjusted profit
before tax was down £2.0m.
The Group’s balance sheet expanded with net assets of
£408.8m (2019: £397.5m). Net debt1 reduced to £15.1m
(2019: £36.8m) and would have been eliminated had we
not purchased Iconic and Webdunia. Our cash balance
also benefited from the receipt of £9.0m relating to a
warranty claim in connection with the 2017 acquisition
of Moravia. Despite Covid-19 and foreign exchange
headwinds, the Group has continued to demonstrate
high levels of cash generation. Cash conversion2 at
100.1% improved on the 94.6% recorded in 2019.
In what has been a very challenging year, particularly so
in the second half, I am proud to salute the contribution
of our colleagues, most of whom have adapted extremely
well to the requirements of working from home.
RWS is very much a “people” business,
providing a superior quality of service to
a large number of the world’s leading
and most demanding clients. We
continue to invest in the training
and development of our people
and providing them with the
relevant technology support to
allow them to realise their full
potential. In 2020, it has also
been a priority to keep them safe.
I also wish to thank my fellow
directors for their advice
and support.
1 Net debt comprises loans less cash and cash equivalents,
excluding lease liabilities (refer to Note 17)
2 Cash conversion - please see glossary
Andrew Brode
C H A I R M A N
8
RWS — Annual Report 2020
STRATEGIC REPORT As the level of external scrutiny and regulation rises
inexorably, the role of a non-executive director
becomes more onerous.
I would like to extend special thanks to Elisabeth
Lucas and Tomáš Kratochvíl, who stepped down
from the RWS Board on 4 November, when the
merger with SDL plc became effective. Elisabeth has
devoted 43 years to the Group with her full-time
involvement culminating as CEO from 1999 – 2011.
She was appointed as a Non-Executive Director upon
her retirement as CEO, and I have relied upon her
dedication and professionalism for over 25 years.
Tomáš joined the board in March 2018, following the
acquisition of Moravia, which he helped build to a
market-leading localisation provider. The Group is
grateful for his independence of thought and wide
industry knowledge.
ENVIRONMENTAL, SOCIAL AND
CORPORATE GOVERNANCE (ESG)
RWS adopted the QCA Corporate Governance Code in
2018. In 2020 the Group also committed to the United
Nations Global Compact Initiative.
We have continued to devote significant resources
towards improving our environmental impact and
reducing our carbon emissions globally. Electricity
consumption accounts for the highest proportion
of RWS’s total GHG emissions. Where possible, we
will move to purchasing renewable energy; replacing
existing lighting with energy efficient LED lighting;
ensuring energy efficient lighting and motion sensors
are installed in our larger sites; and updating air-
conditioning to ensure effectiveness and efficiency.
We also gained ISO 14001:2015 certification at our
head office, which we are now seeking to roll out to
our other offices. We have also planted 2,500 trees
to offset our carbon emissions and launched a Green
Agenda intranet to educate, inform and engage with
our employees.
Our CEO has been extremely active, particularly
during the extensive Covid-19 lock-down, in engaging
and communicating with the Group’s worldwide
staff via virtual meetings. Our relationship with the
University of Manchester to provide scholarships
for modern language students from underprivileged
backgrounds has been successful, albeit restricted
by the Covid-19 impact. Similarly, we have been
encouraged by our sponsorship of students
participating in Outward Bound Trust events, as well
as the related mentoring by RWS staff. We are actively
engaging with potential partners who can assist us
in promoting diversity both within the Group and
externally.
DIVIDEND
Since flotation in November 2003, RWS has pursued a
progressive dividend policy. Our highly cash generative
business model and modest capital expenditure
requirements have underpinned rapid debt repayment,
acquisitions, continued organic investment in the
business and an increasing dividend.
We announced in August that the monies received from
the UK government in respect of furloughed employees
had been repaid and that we had not taken any other
form of government support.
The Board is, therefore, pleased to recommend a final
dividend of 7.25 per share which, together with the
interim dividend of 1.75p per share, will result in a total
dividend for the year ended 30 September 2020 of 9.00p
per share, an increase of 2.9% compared to 2019. Subject
to shareholder approval at the next AGM, the final
dividend will be paid on 19 February 2021, to shareholders
on the register as at 22 January 2021.
POST BALANCE SHEET EVENT
Prior to our year-end, on 27 August, we announced an
agreed all-share offer for SDL plc, a UK listed competitor
focused on language technology, through a scheme of
arrangement, which became effective on 4 November
2020. The enlarged RWS Group combines RWS’s specialist
technical language services with SDL’s leading language
technology expertise and created the world’s leading
language services and technology group, with over
7,000 employees and global coverage. The successful
integration of SDL’s operations into the RWS Group will be
management’s key focus in the year ahead.
SUMMARY AND OUTLOOK
RWS has delivered a resilient performance against the unique
background of the Covid-19 pandemic. We have adjusted well
to the new requirements of working from home.
The acquisition of SDL offers an unrivalled opportunity to
consolidate the Group’s world-leading language services
offering and provide our extensive blue-chip client base with
best in class solutions for all of their language requirements.
The new financial year has begun positively, slightly ahead
of our expectation. We have no net debt and a strong
balance sheet, placing us in pole position to compete for
the most attractive acquisition opportunities.
Despite global economic and political uncertainty, I am
proud to chair a fast-expanding Group competing in a
growing business environment.
Andrew Brode
CHAIRMAN
9 December 2020
9
RWS — Annual Report 2020s STRATEGIC REPORT
Chief Executive Officer's
Review
Following the acquisition of SDL,
RWS is now the world’s leading
provider of language services and
language technology, focusing
on key market segments where
the quality and scale of its
services combined with its market
leading technology is of critical
importance to its clients.
The Group has a blue-chip
multinational client base spanning
Europe, North and South America
and Asia Pacific.
SDL was acquired on 4 November 2020 and its results
are not therefore consolidated within this Annual
Report; however it has been included within this
strategic report to provide a full analysis of the RWS
Group’s strategy.
The results of Webdunia, which was acquired in June
2020, are consolidated with the results for the Moravia
division. The results from Iconic Translation Machines,
also acquired in June 2020, whilst immaterial to the
consolidated 2020 results, are consolidated within the
Life Sciences division.
It should also be noted that with effect from 1 October
2019, RWS Language Solutions was merged into
RWS Moravia. As a result, the Group operated as
three divisions throughout the 12 months ended 30
September 2020:
> RWS IP Services is a leading supplier of patent
translations and filing solutions, offering a seamless
global patent filing experience and a wide range
of cutting-edge intellectual property (IP) search
services. RWS differentiates itself from the
competition through the quality of its translations,
its high level of intellectual property expertise,
its customer service and its use of technology,
including:
> inovia, its international web-based patent filing
platform;
> PatBase, one of the world’s largest searchable
commercial patent databases, designed by
professional searchers for professional searchers;
and
> AOP Connect™ our global connection to our
Crowd of +39,000 researchers, allowing customers
to store, review, search full-text, rank, highlight
and organise intellectual property all in one
central location.
Richard Thompson
CHIEF EXECUTIVE
OFFICER
10
RWS — Annual Report 2020
s
> RWS Life Sciences focuses solely on the language
service needs of the life sciences market,
providing technical translations and linguistic
validation to large pharmaceutical companies,
clinical research organisations and medical
device manufacturers in North America, Europe
and Asia. This division was formed on 1 October
2017 following the integration of two acquired
businesses, CTi and LUZ.
> RWS Moravia (including RWS Language Solutions)
works with many of the world’s largest publicly
traded technology companies to manage their
complex localisation needs and ensure brand
consistency on a global scale. This includes
the adaptation of content, software, websites,
applications, marketing materials and audio/
video for hundreds of languages and geographies.
Moravia was acquired in November 2017. The
division includes the Webdunia business, which
provides the Group with additional translation
and IT capabilities in India and the Asia Pacific
region.
SDL was acquired after the RWS year end and is
clearly an important part of the RWS business and
strategy going forward. SDL is the world’s leading
language technology business and one of the world’s
largest language services businesses.
2 billion
words translated by RWS translators
260
languages supported
78 billion
words processed with machine
translation
OUR STRATEGY
We are focused on providing an increasing range of
services to existing and new clients to drive organic
growth. This growth is supplemented by selective
acquisitions that are complementary to our existing
business and either add additional services or increase
RWS’s geographical coverage to support our clients and
enhance shareholder value.
The acquisition of SDL enables the enlarged RWS business
to drive improved operational synergies through better
utilisation of SDL’s language technology, streamlining of
back office procedures and operations, and increased
cross selling opportunities for IP Services and Language
Technology.
The Group is already making progress integrating the
SDL business and achieving the significant synergies and
operational improvements that have been identified. The
detailed three-month review referred to in the Group’s
Circular, published in connection with the acquisition
of SDL, is underway. This will provide the basis for a
detailed integration programme designed to optimise the
Group’s structure, making the most of its expanded scale,
footprint and capabilities, and to deliver the expected
opportunities and benefits of the acquisition for the
Group’s stakeholders, whilst minimising disruption to
customers and employees.
In addition to the integration work, the Group will
continue to drive the growth of the business.
Organic growth will be driven by:
> the expected demand for language services and
language technology, driven by globalisation and
international trade
> the historic trend in worldwide patent filing activities
of existing multinational clients
> the development of new drugs by the pharmaceutical
industry
> the growth in digital content generated internationally
and requiring quality localisation
> the Group’s use of technology that enables it to
provide customers with a world-leading augmented
translation service, incorporating the latest IT
developments for the language service sector
> the increasing market concerns for data security
where RWS's and SDL's quality services and language
technology can provide a totally secure localisation
environment
> the Group’s ability to grow market share and attract
new clients due to its leading position, reputation,
scale and range of capabilities in a fragmented sector
> the Group’s ability to expand into new or existing but
growing geographies
> an increase in cross divisional selling of the Group’s
suite of services
RWS — Annual Report 2020
11
Strategic Report (continued)
In a highly fragmented market, where technology is
playing an increasingly important role, customers
look for suppliers with the scale and capacity to
invest. RWS is in an ideal position to capitalise on this
opportunity.
Whilst we are highly focused on the integration of
SDL, we will continue to look for selective acquisition
opportunities in the intellectual property services,
specialist language services and language technology
spaces, and we have the benefit of a strong balance
sheet. We seek businesses capable of delivering
above average industry levels of profitability, or
that are highly complementary, and can therefore
reinforce the Group’s leading position in language
services and technology.
We are pleased to have been able to demonstrate
our progress against this strategy with strong growth
in revenues and profits since flotation.
PEOPLE
Due to the impact of Covid-19, 2020 has been a truly
challenging year for many people around the globe.
RWS’s number one priority has always been the
safety and well-being of its staff. This has been
particularly important in 2020 as the entire
organisation rapidly and efficiently pivoted to a ‘work
from home’ operational environment. I would like
to congratulate and thank all the RWS staff for the
brilliant manner in which they achieved this.
Of course, working from home is not for everyone
as it can create different stresses which impact
upon mental health. As a result, we have increased
our efforts to ensure the well-being of our teams,
through:
> Enhanced communications via virtual coffee
mornings, emails, and virtual Town Hall
meetings
> An enlarged and enhanced Group intranet with
special sections dedicated to supporting staff
working from home
> Special events, such as “Well-being week” that
provide a range of activities for staff ranging
from mental health to nutrition and exercise
RWS aims to continually make improvements to
create a better environment for all our teams; we
are expanding our staff environmental initiatives,
will increase other employee initiatives including the
‘Well-being’ weeks, and will increase and expand our
‘Inclusivity’ programme; our partnerships with the
Outward Bound Trust and Urban Synergy charity are
just part of this commitment.
12
RWS — Annual Report 2020
STRATEGIC REPORT OPERATING REVIEW
RWS IP SERVICES
RWS LIFE SCIENCES
The Group’s IP Services division represented
32% of Group sales in the year and revenues
declined by 10% to £112.8m (2019: £125.2m).
This performance reflects several factors.
Firstly, there was a strong comparative result in
2019 during which the European Patent Office
changed its procedures leading to a one-off
surge in European patent work in the prior
period. Secondly, the 2020 results were adversely
affected by the full year impact of a major client
lost in the second half of 2019, and another large
client selling a large part of its business. Finally,
the adverse effect of Covid-19, where lockdowns
of markets, businesses and many patent offices
around the world led to reduced filing activity.
The Covid-19 impact was particularly pronounced
within the Group’s automotive, aerospace and oil
and gas customers, which sought to save costs
by reducing the number of patents filed or the
number of territories in which they protect their
intellectual property and certain clients in other
industries that also looked to reduce their
IP spend.
Despite the problems caused by the pandemic,
the division achieved several new client wins,
including a large telecoms business based in the
Asia Pacific region and our sales team continues
to work hard to drive and convert opportunities.
However, it is clear that Covid-19 is continuing to
have an adverse impact through lengthening
sales cycles and in the time taken to on-board
new clients.
The Asia Pacific (“APAC”) market continues to be
a key strategic focus for the division’s longer-
term revenue growth ambitions, with the region
continuing to attract North American and
European enterprises seeking patent protection
in APAC territories. In addition, the IP Services
division is seeing strong growth in the local Asian
market as we successfully develop new business
with both local companies and patent attorneys
and it was pleasing to see revenue from the
Chinese and Japanese IP Services businesses
increasing by 7% and 13% respectively over the
prior year.
Revenue at the start of the new financial year
has been ahead of expectations but does reflect
the ongoing impact of cautious customer spend
arising from the impact of Covid-19.
The division’s lower revenue resulted in a lower
adjusted operating profit1 of £30.2m (2019:
£36.1m). Overheads were lower in 2020 but
the move to ‘working from home’ affected the
operational efficiency of the division, as several
processes were initially more labour intensive in
the home environment, as the division correctly
maintained IP translation and filing quality levels.
The Group’s Life Sciences division accounted
for 19% of the Group’s sales in the year.
Revenue of £69.5m represented an increase
of 6% over the prior period (2019: £65.5m).
Following the change in divisional leadership
in the second half of the prior financial year,
the business has grown strongly in all key
areas, led by sales of the division’s higher
margin Linguistic Validation (“LV”) offering,
which grew by 8% in constant currency
terms. This increase is particularly pleasing,
as it demonstrates the benefits of previous
investment in extra resources for this part of
the business.
Sales to the division’s largest customer also
grew significantly in constant currency,
helped by the global rollout of a project to
increase its usage of machine translation.
Sales of other Life Science services increased
by 3% in constant currency, reflecting several
factors including the actions taken by the new
management team to improve the focus on
sales and marketing activities.
The impact of Covid-19 on this division was
mixed, but overall slightly positive. There
was growth driven by extra work associated
with clinical trials and translation work for
vaccines, anti-viral medications and antibody
testing equipment, but this was largely offset
by delays in other clinical trial areas and the
postponement of elective surgeries.
The division increased adjusted operating profit
by 3% over the prior year to £20.9m (2019:
£20.3m). This result was driven by increased
revenue, along with strong gross margins,
in line with prior years, despite previous
investment in staffing to support LV's growth,
offset by higher overheads largely arising
from a full year of senior management costs
and further investment in sales resource and
management to support future growth in the
LV business.
We have seen positive trading in the initial
months of the new financial year. The outlook
for the division is encouraging, with continued
good opportunities in LV, good progress
with Machine Translation opportunities and
ongoing growth in the Medical Device sector,
where we are continuing to see a positive
impact on work volumes arising from the
European Union Medical Device requirements.
1 Adjusted operating profit is stated before interest,
amortisation of acquired intangibles, share based payment
expense, acquisition costs and exceptional items.
13
RWS — Annual Report 2020s
Strategic Report (continued)
RWS MORAVIA
(INCLUDING RWS LANGUAGE
SOLUTIONS)
The RWS Moravia division accounted for 49%
of Group sales, with revenue of £173.6m
(2019: £164.9m), a 5% increase over the prior
period. The growth was driven by strong sales
to several of the division’s major technology
customers, particularly during the initial
Covid-19 lockdown period, when accurate
messaging across social media platforms was
extremely important. Sales to the Group’s
largest client were higher than anticipated,
reflecting the new service development work
that was delivered during the last year, albeit
total revenue with the client was lower than
the prior year.
Growth outside the ‘top six’ major clients
(excluding the former RWS Language
Solutions business) was even stronger, up
by 6% in constant currency, with increasing
revenue from a range of sectors and
companies, including financial services, online
sales platforms and web services providers.
The division’s 5% revenue growth was
achieved despite a significant reduction in
sales volumes within the smaller, former
RWS Language Solutions business, which
was integrated into RWS Moravia during the
year. This business provides more general
translation services to a range of businesses
but with a real focus on the automotive and
renewable energy sectors, both of which
substantially reduced their translation
volumes during the lockdown period.
Moravia’s adjusted operating profit increased
by 8% excluding an adverse exchange rate
movement of £3.4m, largely caused by the
impact of the weaker USD on RWS Moravia’s
balance sheet. Including this movement, the
division recorded an adjusted operating profit
of £24.8m a decrease of 5% over the prior
period (2019: £26.2m).
Trading in the first couple of months of the
new financial year has been slightly ahead
of our expectations, reflecting ongoing
growth with the division’s major customers
who continue to value Moravia’s technical
expertise and global reach.
14
RWS — Annual Report 2020
SDL INTEGRATION
Despite having completed the transaction
to acquire SDL only a few weeks ago, the
integration process has started well with the
new RWS Senior Leadership team and revised
operational structure having been announced.
The enlarged RWS Group will operate as four
divisions, which will be rebranded in 2021,
and which comprise:
> RWS IP Services
> RWS Life Sciences and SDL Regulated
Industries
> RWS Moravia and SDL Commercial
Enterprise
> SDL Language Technology and SDL
Content Technologies
Each division will be led by a Managing
Director ("MD") who will be responsible and
accountable for the results of their respective
businesses.
In addition, each MD will play a pivotal role
in the integration process for their division’s
workstream as we simplify and optimise our
operational structure.
Azad Ootam (former Chief Technology Officer
at SDL) will take control of IT and R&D across
the enlarged Group, to build upon SDL’s vision
for language technology. In addition, Azad will
also work with the rest of the management
team to streamline the Group’s product
offerings, allowing the business to focus on key
areas of market growth going forward.
The detailed planning for the integration
is well underway and significant synergy
opportunities, in excess of the previously
announced £15m, have already been identified.
The new leadership team will be working to
finalise the integration plan over the coming
weeks, with a view to rolling it out early in
2021. Given our track record in integrating
acquisitions, our proven integration formula,
and our experienced management team, we
expect to deliver a significantly improved
operational performance over the coming
12-18 months.
STRATEGIC REPORT
SUMMARY
ANNUAL REVENUE (£355.8M)
The Group has delivered a highly resilient
performance in a year of unprecedented turmoil,
whilst continuing to broaden the Group’s capabilities
and reach with the acquisition of SDL creating the
world’s leading language services and technology
group.
We are confident that the Group’s enhanced client
proposition, strong balance sheet and experienced
management team leaves it well placed to build
on its track record of profitable, cash generative
growth.
Richard Thompson
CHIEF EXECUTIVE OFFICER
9 December 2020
£58.7m
Profit before tax
(“PBT”)
2,951clients
874 new clients
2003 - £27.3m
2005 - £35.9m
2007 - £46.2m
2009 - £55.7m
2011 - £65.4m
2013 - £77.4m
2015 - £95.2m
2017 - £164.0m
2019 - £355.7m
2020 - £355.8m
ANNUAL ADJUSTED PBT (£70.2M)
2003 - £5.6m
2005 - £7.4m
2007 - £11.0m
2009 - £14.5m
2011 - £16.2m
2013 - £21.0m
2015 - £22.7m
2017 - £43.3m
2019 - £74.2m
2020 - £70.2m
15
RWS — Annual Report 2020s Our Business Model
Creating value for our
stakeholders
Quality - we were the first
company in the translation
industry to receive ISO 9001
accreditation and follow
stringent checking, monitoring
and feedback procedures for all
of our work
Solutions - we offer a full range
of translation, interpreting,
localisation and language support
services to help businesses
communicate globally
Technology - we place great
importance on leveraging
cutting-edge technology to
streamline process, create
efficiencies and ensure high-
quality services
People - we combine a large
in-house team of translators
with highly-qualified freelance
linguists to provide extensive
subject and language coverage,
greater capacity and faster
delivery
16
RWS — Annual Report 2020
STRATEGIC REPORT
Market Overview
GLOBAL LANGUAGE SERVICES MARKET
In mid-March 2020, Nimdzi published its 2020
Language Services Industry Market Report. This year
it is estimated the Language Services market will
reach US$57 billion. Clearly the Covid-19 pandemic
has created uncertainty when it comes to forecasting
future market growth but using a CAGR of 6.2%,
Nimdzi’s five-year projection is that the market will
reach US$77 billion in 2025.
Data showed that the five most dominant services
provided by Language Service Providers ("LSPs") are
translation (36.2%), localisation (20.8%), interpreting
(20.1%), transcreation (2.6%), and subtitling (2.1%).
(Source: The Nimdzi 100, 2020).
GLOBAL LIFE SCIENCES MARKET
Global health care spending is projected to reach
US$10 trillion by 2022. Worldwide prescription drug
sales are expected to increase at an average of 7.25%
year-on-year from 2021–2024, a considerable rise
from 2.9% in 2013–2017. This increase partly reflects
the accelerated and rising number of drug approvals,
and a growing portion of sales from oncology
therapies. The global medical device market was
valued at US$425.5 billion in 2018 and is expected to
reach US$612.7 billion by 2025, growing at a CAGR of
5.4% over the period. (Source: Deloitte, 2020 Global
Life Sciences Outlook).
Health care spending in 2021 will likely be driven by:
ageing and growing populations, developing market
expansion and clinical and technology advances. In
addition, the trend towards universal health care is
expected to continue, with more countries expanding
or deepening their public health care systems.
For pharmaceutical/biotechnology, medical device
companies and contract research organisations, this
will mean more content that needs to be translated.
A major challenge for the biopharma segment is
recruiting trial participants from important demographic
groups, including racial and ethnic minorities, women,
and the elderly. This means it will become more
important to provide patient-centric study resources
in the patient’s native language. Linguistic validation
services will thus become even more important for
ensuring study rigor regardless of language. (Source:
Deloitte, 2020 Global Life Sciences Outlook).
PATENT FILING STATISTICS
The World Intellectual Property Organisation (WIPO)
has published figures showing a 5.2% worldwide
increase in patent applications filed under the Patent
Cooperation Treaty (PCT) in 2019. This is the tenth
consecutive year of growth, with an estimated 265,800
applications being filed. Since the PCT system became
operational in 1978, almost 4 million PCT applications
have been filed.
The largest number of patent filers in 2019 were
located in China where 58,990 PCT applications were
filed (10.6% growth), just nudging ahead of the United
States for the first time (57,840 PCT applications filed).
The number of applications from other countries in
Asia has continued to grow, most notably from the
Republic of Korea (12.8%) and Japan (5.9%).
The European Patent Office (EPO) reports European
patent applications remained at record levels with
181,406 received in 2019 - an increase of 4%. Nearly
half of all European patent applications (45%) came
from 38 EPO member states. The top country of origin
remained the United States followed by Germany,
Japan, China and France. (Source: Patent Cooperation
Treaty Yearly Review 2020).
Global health care spending is
projected to reach
Global language services market is
estimated to reach
US$10 trillion
by 2022
US$57 billion
in 2020
17
RWS — Annual Report 2020s STRATEGIC REPORT
Chief Financial Officer’s
Review
INTRODUCTION
2020 has been an unprecedented year but we enter the new fiscal
period with renewed confidence. Having navigated the initial phases
of the ongoing global pandemic we have seen resilience in demand
for our services across all three divisions, particularly in our key life
sciences and technology markets.
consideration of US$21m. Prior to these acquisitions,
the Group was on course to complete the financial
year in a net cash position. Net debt at 30 September
2020 was £15.1m, a significant reduction, despite
the Group’s acquisitions, from the net debt position
at the end of the previous financial year of £36.8m.
Following the transition to IFRS 16, the Group’s
net debt including lease liabilities is £37.9m.
The acquisition of SDL, post balance sheet, has
strengthened our balance sheet and further reduced
our leverage position.
The adoption of IFRS 16 from 1 October 2019 has had
a small impact on our financial results for the period.
The impact on the statement of comprehensive
income is an increase in operating profit of
approximately £0.5m and an increase in finance
costs of £0.7m resulting
in a decrease in
adjusted profit
before tax of
£0.2m.
We have also been reassured, particularly given the
challenging economic backdrop, by the strength and
stability of our balance sheet that supports our low
capex, high growth business model and has enabled
us to complete multiple acquisitions during the
period as well as the transformational acquisition of
SDL plc in November 2020, shortly after the end of
our financial year. We are confident that in financial
year 2021 we will continue to build our business
organically and successfully progress the integration
of SDL into our operations to enable further growth
throughout our divisional portfolio, while at the same
time remaining focused on margins.
We have remained focused on retaining our strong
balance sheet and improving the flexibility of our
financing options. On 10 February 2020, the Group
completed a refinancing of its term loan and entered
into a revised agreement with its banking syndicate,
on improved terms, which amended our existing
US$160m term loan maturing on 18 October 2022
into a US$120m revolving credit facility maturing on
10 February 2024, with an option to extend maturity
until 10 February 2025, subject to lender approvals.
The revised agreement also provides for a US$80m
uncommitted accordion facility.
The Group’s enhanced financial position helped
to facilitate the acquisitions of both Iconic and
Webdunia in June 2020. Iconic was purchased for
an initial consideration of US$10m with additional
contingent consideration of up to US$10m in RWS
shares, subject to future performance conditions,
while Webdunia was purchased for a total cash
GROUP CHIEF FINANCIAL OFFICER
Des Glass
18
RWS — Annual Report 2020
REVENUE
Group revenue increased to £355.8m in line with the
prior financial year. On an underlying1 basis, Group
revenue is 1% down. The growth in revenue was partly
due to the contribution of post-acquisition revenues
from both Iconic and Webdunia. Revenue in the
second half of the financial year increased to £186.1m
compared to first half revenues of £169.7m, an increase
of £16.4m or 9.7%, and represent a 1.5% increase on
the comparative revenues in the second half of FY 2019.
Overall, this led to a slight increase in revenue weighting
towards the second half of the year and now makes
up 52.3% of full year revenues, up from 51.5% in the
comparative financial year.
In terms of divisional revenues, RWS Moravia recorded
revenues of £173.6m, an increase of 5.1% on the
prior financial year, and benefitted from both the
incremental contribution of post-acquisition revenues
from Webdunia, and also increased activity from
certain technology customers. RWS Life Sciences also
experienced increased demand for their services and
posted revenues of £69.5m, an increase of 6% year on
year, partially as a result of additional work related to
Covid-19. Increased revenue in these two divisions was
offset by RWS IP Services which recorded revenues of
£112.8m, a reduction of 10%. This division faced strong
comparatives and was more exposed to changes in
demand consequent to the ongoing global pandemic.
Group revenue, categorised by client location, continues
to migrate towards the US market which now accounts
for 54% of group revenue, an increase of £2.3m over
the year ended 30 September 2019. Similar to the prior
financial year, only one client accounted for more than
10% of Group turnover. This client was part of the RWS
Moravia reporting segment.
GROSS PROFIT
Gross profit decreased by 2% to £139.6m resulting in a
gross margin of 39.2%. Group gross margin has fallen
from 40.1% in the prior year primarily as a result of both
the change in revenue mix as a result of the relatively
lower margin RWS Moravia revenues accounting for 49%
of group revenue this year compared to 46% in the prior
financial year and a slightly lower achieved gross margin
at RWS Moravia in the year.
ADMINISTRATIVE EXPENSES
Administrative expenses, excluding amortisation of
acquired intangibles, acquisition costs, share based
payment expense, and restructuring costs, increased
by £2.6m to £66.7m, an increase of 4.1%. As a result of
revenue remaining in line with prior year, in combination
1Underlying - please see glossary
with inflationary increases to overheads and foreign
exchange losses due to a strengthening of the Czech
Koruna against the US dollar, adjusted administrative
expenses as a percentage of revenue have increased
from 18.0% in the financial year ended 30 September
2019 to 18.7% for the financial year ended 30
September 2020.
NET FINANCE COSTS
Net finance costs were £1.5m (2019: £4.2m). Net finance
costs have decreased year on year due primarily to
reduced bank interest payable which has fallen by
£2.2m as a result of lower financing costs consequent
to the Group’s term loan refinancing and reduced
level of debt. In addition, there was a net gain of £1.2m
recognised as an exceptional item as a result of the
Group refinancing its term loan into a revolving credit
facility. The introduction of IFRS 16 has resulted in
recording £0.7m of finance costs on lease liabilities with
no prior period comparative.
ADJUSTED PROFIT BEFORE TAX
Adjusted profit before tax is stated before amortisation
of acquired intangibles, share based payment expense,
acquisition costs and exceptional items. The Group
uses adjusted results as a key performance indicator,
as the Directors believe that these provide a more
consistent and meaningful measure of the Group’s
performance across financial periods. Adjusted
profit before tax of £70.2m recorded in the period
has fallen from £74.2m in the financial year ended 30
September 2019, a reduction of 5.5%. This reduction
reflects the slightly lower gross margin achieved along
with increased adjusted administrative expenses
while Group revenue has remained in line with the
comparative period. On an organic, constant currency
basis, adjusted profit before tax was down £2.0m.
Adjusted profit before tax margin has decreased from
20.9% in the prior period to 19.7% (19.8% on a like for
like basis pre IFRS 16) for the financial year ended 30
September 2020.
TAX CHARGE
The Group’s tax charge for the year was £12.2m (2019:
£12.6m) representing an effective tax rate on Profit
before tax of 20.9% compared to 21.8% in the prior
financial year. The corporate income tax rates in
the overseas countries in which the Group operates
continue to be higher than the UK corporate income tax
rate of 19% which results in a higher effective rate than
the headline UK rate.
19
RWS — Annual Report 2020s
STRATEGIC REPORT
Chief Financial Officer’s review (continued)
Significant cash flows from investing activities
included outflows of £23m, net of cash acquired,
in connection with the acquisitions of Iconic and
Webdunia in June 2020.
Cash flows from financing activities included £29.4m
in repaid debt and dividends paid within the financial
year ended 30 September 2020 of £24m, representing
the final dividend related to the financial year ended
30 September 2019 of £19.2m or 7.00 pence per share,
along with the interim dividend paid for the current
period of £4.8m equivalent to 1.75 pence per share.
Cash balances at the financial year end amounted to
£51.4m with external borrowings of £66.5m, excluding
lease liabilities, resulting in a net debt position of
£15.1m (2019: £47m cash and external borrowings of
£83.7m, resulting in net debt of £36.7m).
POST BALANCE SHEET EVENTS
On 27 August 2020, the Group announced that it
had reached agreement with SDL for an all share
combination, pursuant to which RWS acquired the
entire issued and to be issued share capital of SDL by
means of a court-sanctioned scheme of arrangement
which became effective on 4 November 2020.
Accordingly, 113,338,511 new ordinary shares were
issued by the parent company of RWS as consideration
to acquire 100% of the shares in SDL.
Given the size, complexity and close proximity of this
transformative acquisition to the date of approval of
the financial statements it has not yet been possible
to complete a purchase price allocation to determine
provisional fair values. Therefore, fair values of
identifiable assets and liabilities and the amount
attributable to goodwill has not been disclosed.
No other significant events have occurred between
the balance sheet date and the date of authorising
these financial statements.
Des Glass
GROUP CHIEF FINANCIAL OFFICER
9 December 2020
EARNINGS PER SHARE
Basic earnings per share for the financial year increased
from 16.5p to 16.9p, an increase of 2.4%, while adjusted
basic earnings per share decreased from 21.3p to 19.9p.
The weighted average number of ordinary shares in
issue for basic and adjusted basic earnings increased
from 273.6m to 275.0m principally due to new ordinary
shares issued in connection with share options
exercised.
BALANCE SHEET AND WORKING CAPITAL
Net assets at 30 September 2020 increased by £11.4m
to £408.8m. Non-current assets at 30 September
2020 increased by £11.7m to £456.5m primarily due to
additions to net assets as a result of the acquisitions of
Webdunia and Iconic and the establishment of Right-of-
use assets under IFRS 16 of £20.1m.
Current assets at 30 September 2020 of £134.1m have
increased by £1.6m on the prior financial year. Cash
balances of £51.4m have increased by £4.4m while there
has been a significant reduction in trade receivables
of £8.5m. This reduction has been due in part to an
increase in accrued income balances but mainly due to
an improvement in our days’ sales outstanding measure,
(the calculation of which measures the number of days’
billings in trade receivables) from 51 days outstanding in
the prior financial year to just over 44 days outstanding
for the year ended 30 September 2020 as a result of
a greater focus on credit and collections procedures
across the Group. Current liabilities have reduced by
£25.4m from £89.9m at 30 September 2019 to £64.5m at
30 September 2020. This reduction reflects the fact that,
following the refinancing transaction, loan balances of
£25.7m previously classified as current liabilities are now
reclassified as non-current liabilities. Trade payables
have reduced by £0.7m as the Group has maintained
payment terms to our supplier base during the global
pandemic, while deferred income has increased by
£2.1m to £5.2m at 30 September 2020.
CASH FLOW
Cash generated from operations was £94.5m, an
improvement from the prior financial year of £12.7m or
15.5%. Free cash flow has also increased, from £58.3m to
£59.1m for the year ended 30 September 2020. Free cash
flow is calculated as cash generated from operations,
less the proceeds from a warranty claim, capital
expenditure, debt servicing cost, and income taxes paid
and represents the surplus cash generated by the Group
available for debt repayments, mergers and acquisitions
or dividend payments. This increase in free cash flow
has been achieved primarily as the Group was able to
improve cash collections, despite the impact of Covid-19,
reflecting the Group’s blue-chip client base. The strength
of the Group’s continued ability to generate significant
free cash flow is demonstrated by an increase in cash
conversion from the 94.6% recorded in the last financial
year up to a level of 100.1% in the current financial year.
20
RWS — Annual Report 2020
“We have seen resilience in demand for our
services across all three divisions, particularly in
our key life sciences and technology markets.”
21
RWS — Annual Report 2020s Key Performance Indicators
Our business is focused on six
objectives and these are used to
focus management conversations
on future outcomes and
performance improvements.
STRATEGIC OBJECTIVES
> Profit – achieve target operating budget
> Revenue – focus on growing revenue, both from
new and existing clients as well as incremental
growth from acquisitions
> Quality – be the world’s best Language Service
Provider
GROUP REVENUE
£355.8m
2020
2019
2018
Description
£355.8m
£355.7m
£306.0m
Reflects the total value of work sold during the
financial year.
> Solutions – be the leader in solutions in our target
segments
GROSS MARGIN
> Technology – be the leader in Language and
Content Technologies
> People – be an employer of choice
> Clients – build strong relationships with our clients
39.2%
2020
2019
2018
Description
39.2%
40.1%
38.8%
Reflects gross profits, being revenues less costs
directly incurred in generating revenues, expressed
as a percentage of revenues.
22
RWS — Annual Report 2020
STRATEGIC REPORT
ADJUSTED BASIC EARNINGS PER SHARE
CASH CONVERSION
19.90p
100.1%
2020
2019
2018
Description
19.90p
21.30p
17.40p
2020
2019
2018
Description
100.1%
94.6%
68.9%
Adjusted basic earnings per share is calculated as
adjusted earnings (calculated as profit for the year
less amortisation of acquired intangible assets,
acquisition costs, share based payment expense and
exceptional items, net of any associated tax effects)
divided by the weighted average number of ordinary
shares in issue during the financial year.
Cash conversion is calculated as free cash flow divided
by adjusted net income. This is viewed by the Group
as a key alternative performance measure to
understand the how much of the Group’s profits have
been converted into cash flow available for dividends,
debt repayment and acquisitions.
ADJUSTED PROFIT BEFORE TAX
£70.2m
2020
2019
2018
Description
£70.2m
£74.2m
£61.8m
Adjusted profit before tax is profit before tax
before amortisation of acquired intangible assets,
acquisition costs, share based payment expense and
exceptional items. The Directors believe this
alternative performance measure provides a more
consistent measure of the Group’s performance.
STAFF TURNOVER
18.90%
2020
2019
Description
18.90%
25.90%
Staff turnover is calculated by the number of leavers
during the financial year and the average number of
FTE’s during the year. The turnover includes Moravia’s
Managed Services’ employees where the fluctuation is
much higher as it is driven by client needs. If Managed
Services’ turnover is excluded, the Group figure falls
to 13.1% for 2020.
23
RWS — Annual Report 2020s
Section 172 Statement
The Board of Directors
understands how crucial strong
stakeholder engagement is to
the sustained long-term success
of the Group and therefore
ensures that stakeholders are
a central part of the Board’s
discussions and decision-making
process.
Sections of the Corporate Governance,
Remuneration and Directors’ Report explain how
we have taken account of stakeholder views and
met the requirements of s172 of the Companies Act.
Commentary can be found on our duty to promote
the long-term success of RWS throughout this 2020
report as follows:
> Our strategy on page 11
> Our business model on page 16
> Principal risks and uncertainties on pages 26 to 27
> Our stakeholder engagement on pages 32 to 33
> Our people on pages 38 to 39
> Corporate governance section on pages 29 to 59
> Our environment on pages 36 to 38
> Directors’ emoluments and share interests on
pages 54 and 55
24
RWS — Annual Report 2020
STRATEGIC REPORT
25
RWS — Annual Report 2020s Principal Risks and
Uncertainties
The risks outlined below are those that the Board considers material to the Group. They are not presented in any
order of priority. There may be other risks that are either currently unknown, or considered by the Board to be
immaterial, which could adversely affect the Group’s business, results of operation or financial condition.
The Board routinely monitors risks that could materially and adversely affect the Group’s ability to achieve strategic
goals, its financial condition and the results of its operations. The Board is supported by senior management
personnel who collectively play a key role in risk management and regularly report to the Board.
Risk category Description
Mitigation
OPERATIONAL
Pandemics and
natural
disasters
Risks to RWS resulting from specific
events such as the Covid-19 pandemic
or natural disasters which may impact
our operations.
Climate change Risks to RWS resulting from long-term
climate change.
Mergers and
acquisitions
Failure to integrate acquired
businesses successfully.
Staff welfare and well-being are the Group’s #1 priority and our HR teams are
in contact with our employees and communicating advice regularly. The Group
has followed local Government guidance consistently and systems have been
put in place to enable everyone to work from home. All office locations have
been assessed and adapted to provide a safe and clean working environment
for any staff wishing to return to the office. RWS’s business model utilises
freelancers which provides cost scalability in line with changes in demand. The
Group is well diversified geographically, by markets, services and clients. RWS
performs financial modelling to stress test our financial resources to ensure
our continued ability to absorb changes in demand as a result of Covid-19.
We have a role to play in limiting global warming by improving our energy
management and reducing our carbon emissions. Growing awareness of climate
change and internal sustainability targets will provide impetus for operational
improvements within RWS and we will work with our clients and suppliers to
increase efficiencies, and reduce energy use and carbon emissions. In our view
climate change does not represent a material uncertainty for RWS, however we
consider it is an issue where we need and want to take action. For further details
see the Sustainability section of the Corporate Governance Report.
The experience and knowledge gained, and integration frameworks
developed from acquisitions in recent years, will continue to be utilised on
future acquisitions such as that of SDL. Integration is considered as part of
any acquisition process. A broad understanding of how the acquisition target
will operate within the RWS Group is established at the time an indicative
offer is submitted. This view is validated during due diligence and detailed
integration plans and related timetables are established following completion
of the acquisition. The Group’s integration plan/process is under continuous
review.
Systems
Systems need to be reviewed
continually and, where necessary,
updated to manage the increasingly
complex business and data analysis
needs of our clients.
Ongoing reviews of internal systems are undertaken, fully utilising existing internal
IT resources and third party experts when necessary. RWS is working on an update
of existing workflow practices which will enable the Group to strengthen and further
automate the production environment which will allow for more efficient enterprise
resource planning investment, streamlining the workflow process.
Quality
Failings in service provision arising as a
result of human error.
FINANCIAL
Brexit
The impact of Brexit on the business
remains under review.
Currency
A significant proportion of the Group’s
revenues and profits are generated
in foreign currencies which mean
these amounts, in GBP, will fluctuate
depending on prevailing exchange rates.
26
RWS — Annual Report 2020
RWS was the first language services provider and the first search company to
adopt ISO certification. The Group also has extensive ISO certified processes
in its divisions and invests in exhaustive and regularly updated procedures to
minimise the risk of error, leading to consistently high levels of accuracy. The
Group continues to invest in the automation process to reduce human error.
In addition, the Group carries substantial professional indemnity insurance.
RWS continuously reviews the macro situation to ensure that the company
follows all relevant UK Government advice. The Group has established good
lines of communication with staff to regularly reinforce our support for them
and our strong desire to ensure continued employment within the Group
for EU Nationals. The Group continues to liaise with clients throughout the
sales process to ensure they are fully aware of RWS’s ability to deliver their
requirements from other locations within the EU. The acquisition of SDL has
enhanced the Group’s European footprint.
The Group regularly performs currency analyses on both its revenues and
expenses to ensure that adequate transactional hedging measures are
in place to minimise financial volatility and to validate the overall currency
exposures within the Group.
STRATEGIC REPORT Risk category Description
Mitigation
Taxation
Incorrect or inefficient funding
arrangements/tax treatment of
overseas companies results in a
higher than necessary tax charge and
potential penalties.
TECHNOLOGY
Data security
RWS may be adversely affected by
activities such as system intrusions,
denial of service attacks, virus
spreading and phishing.
New technology RWS has always embraced new
translation technologies, such as
translation memory. The emergence of
NMT and other technologies presents
familiar risks and opportunities.
The Group seeks external professional advice on its group structuring,
including in particular in relation to its acquisitions and transfer pricing
framework but does not participate in aggressive tax planning strategies.
The Group has in place data recovery and systems recovery procedures,
security measures and business continuity plans in the event of failure or
disruption or damage to the Group’s technology or systems. In addition the
Group carries out third party penetration testing, trains staff on data security
risks and holds significant cyber crime insurance.
There is continuous review of the technology available and full
consideration of its implications and potential benefits for RWS. The
acquisition of SDL and Iconic Translation Machines significantly
strengthens the Group’s NMT offering and provides additional sales
opportunities for the RWS Group. The quality of NMT will improve over time
and, as the leader in language services and language technology, we will
continue to differentiate ourselves by focusing on the opportunities this
creates.
PEOPLE
Reliance on key
personnel
Services and
talent
The Group’s future success depends
on the continued service of senior
management and key technical
personnel, the retention of whom
cannot be guaranteed.
The Group has a performance evaluation system to identify key talent and
ensure that key personnel are appropriately rewarded and incentivised. This is
through a mixture of annual bonuses and long-term incentive programmes.
The quality of services provided by
RWS is fundamentally derived from the
quality of our people. Our performance
could therefore be adversely affected
if we are unable to recruit, train
and retain key talent in the Group’s
businesses and at the Group level.
Retention of key people is supported by a competitive salary structure, good
working environment, clear communication of role requirements, career
planning opportunities and RWS’s role in promoting ESG activities. With regard
to Covid-19, the Group implemented work from home policies to protect
our people and ensure continuity of service for our clients. We have regular
communication forums with all staff focusing on the health and well-being of
our people.
LEGAL AND REGULATORY RISKS
Legislative
changes
Legislative changes (e.g. unitary patent
/ medical device regulations / the
FDA approval process that simplifies
the linguistic validation process) that
reduce the need for RWS services.
GDPR
compliance
Breach of EU GDPR regulations and
risk of large financial penalties for non
compliance.
The Group has pursued an acquisition strategy that has diversified revenue
streams and reduced the risk of individual regulatory issues.
The Group has developed guidelines for compliance with data privacy laws
in the territories in which it operates and has structured its service offerings
around a core of compliance with data protection and privacy laws. The Group
ensures that its people are properly trained on the implications of applicable
data privacy legislation.
MAPPING OUR RISKS
The Group categorises risks according to the likelihood
of occurrence and the potential impact on the Group.
The Directors consider the following to be the principal
risks and uncertainties facing the Group.
OPERATIONAL
1 Pandemics and natural
disasters
2 Climate change
3 Mergers and acquisitions
4 Systems
5 Quality
FINANCIAL
6 Brexit
7 Currency
8 Taxation
TECHNOLOGY
9 Data security
10 New technology
PEOPLE
11 Reliance on key personnel
12 Services and talent
LEGAL AND
REGULATORY RISKS
13 Legislative changes
14 GDPR compliance
H
G
H
I
T
C
A
P
M
I
W
O
L
6
5
4
3
2
1
1
5
4
8
13
14
9
3
10
7
11
12
2
6
1
2
3
4
5
6
LOW
LIKELIHOOD
HIGH
27
RWS — Annual Report 2020s GOVERNANCE
28
RWS — Annual Report 2020
Corporate Governance
Statement
As part of our commitment to high standards of
governance, the Board recognises the importance of
having Non-Executive Directors who are independent
in character and judgment, and free from relationships
which may affect, or could appear to affect their
judgment. Following the SDL acquisition, I took the
opportunity to appoint three new Non-Executive
Directors to the RWS Board - Frances Earl, Gordon Stuart
and David Clayton, who are all independent and add a
wide range of experience.
The Board believes that it complies with all the principles
of the QCA Corporate Governance Code.
Andrew Brode
CHAIRMAN
9 December 2020
INTRODUCTION FROM OUR CHAIRMAN
We are strongly committed to upholding the values
of good corporate governance and accountability to
all the Group’s stakeholders including shareholders,
staff, clients, suppliers and our local communities.
We believe that good corporate governance,
which includes environmental and social issues, is
important for the long-term success of the business.
Our company values of integrity, innovation, agility
and cooperation lie at the heart of everything we do.
We have a long tradition of respecting and reinforcing
the core values instilled by our founders in the 1950s
and these continue to guide the way we work and
underpin our success in the industry.
We believe that success should be pursued without
detriment to others or our environment. We
are committed to generating prosperity for our
shareholders and employees, the clients we serve,
the suppliers we engage and the communities in
which we operate.
Our values, which are championed by the Group’s
Executive Directors and monitored by the Board, are
aligned with good corporate governance to allow for
the continued international expansion and growth
of the business, while enhancing the interests of all
of the Group’s stakeholders. The Board understands
that upholding good corporate governance is a
significant factor in achieving this growth, while at
the same time mitigating risks for the long-term
benefit of the business.
At RWS, the Chairman and CEO roles are separate.
As Chairman, I lead the Board and have overall
responsibility for corporate governance and
promoting the values of the Group, both internally
to employees and externally to the broader
stakeholder group. I am involved in developing
strategy for the Group and overseeing investor
relations and communication between the Group
and its shareholders. A key part of the Board’s
commitment to high standards of governance
is active dialogue with its shareholders. I am
also involved in the evaluation of potential
acquisition targets that fit within prescribed
selective criteria, to further grow the Group.
All of the day-to-day operations of the Group are
managed by the CEO and his leadership team.
27
RWS — Annual Report 2020g GOVERNANCE
Board of Directors
As at 30 September 2020
the Board comprised of the
Chairman, Andrew Brode, two
Executive Directors, Richard
Thompson and Desmond Glass,
and four Non-Executive Directors,
David Shrimpton, as Senior
Independent Non-Executive
Director, Elisabeth Lucas, Lara
Boro and Tomáš Kratochvíl. The
Directors are listed here, as well
as their biographies.
ANDREW BRODE
CHAIRMAN
Andrew was appointed to the Board of Directors on
10 April 2000 and is a Member of the Remuneration
Committee. Andrew led the management buy-in
of RWS Group and is a substantial shareholder in
the Company. He is the Non-Executive Chairman of
Learning Technologies Group plc and GRC plc, both
AIM listed companies. Andrew is also a Non-Executive
Director of a number of other private companies.
RICHARD THOMPSON
CHIEF EXECUTIVE OFFICER
Richard was appointed as CEO on 31 March 2017
having joined RWS on 28 November 2012 as CFO and
Company Secretary. During his time as CFO and CEO,
Richard has played a pivotal role in RWS’s move into life
sciences translations, spearheading the acquisitions
of CTi and LUZ, and latterly localisation services with
the acquisitions of SDL, Iconic Translation Machines,
Webdunia and Moravia.
DESMOND GLASS
CHIEF FINANCIAL OFFICER AND
COMPANY SECRETARY
Desmond was appointed as CFO and Company
Secretary on 6 November 2017. He previously worked
for GAN plc, the AIM listed internet gaming software
company, where he held the role of CFO for nine years.
Desmond was instrumental in preparing GAN plc for
its successful AIM public listing in November 2013, and
subsequently expanding the company’s operations
and delivery capability across the United States
and Europe. Desmond is a Fellow of the Institute of
Chartered Accountants in Ireland.
DAVID SHRIMPTON
SENIOR INDEPENDENT NON-EXECUTIVE
DIRECTOR AND DEPUTY CHAIRMAN
David was appointed to the Board of Directors on 1
January 2010. He is Chair of the Audit Committee and
a Member of the Remuneration Committee. David is
also a Non-Executive Director of a number of private
companies. During his time with BDO LLP, David
played a significant role in establishing BDO as a
top-ranking firm through his involvement in both the
Management Committee and Partnership Council.
David will not seek re-election at the Annual General
Meeting in February 2021 having completed more than
ten years on the Board.
30
RWS — Annual Report 2020
ELISABETH LUCAS
NON-EXECUTIVE DIRECTOR
Appointed to the Board of Directors on 11 November
2003, Elisabeth was Chair of the Remuneration
Committee and a Member of the Audit Committee
until her resignation on 4 November 2020. Elisabeth
joined RWS Group in 1977, was Managing Director of
the Translations Division from 1992 and CEO from
1999 to 2011. In her role as CEO, Elisabeth led the
business through its successful initial public offering
(IPO) on AIM and successfully managed the business
post-IPO through eight consecutive years of growth in
sales and profits.
LARA BORO
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Lara was appointed to the Board of Directors
on 20 September 2017. She is a Member of the
Remuneration Committee. After the 2021 AGM,
Lara will become Senior Independent Director.
Lara is currently Chief Executive of The Economist
Group. Prior to that Lara was CEO of Informa Plc’s
Intelligence division.
TOMÁŠ KRATOCHVÍL
NON-EXECUTIVE DIRECTOR
Tomáš was appointed to the Board of Directors on 28
March 2018. He was a Member of the Remuneration
Committee until his resignation on 4 November 2020.
Tomáš is the former CEO of Moravia, acquired by
RWS in November 2017, having held this position for
eight years during which time he led the company
to become a premier provider of localisation
services. Tomáš is a long-term member of the CEO
Collaborative Forum.
g
Following the combination of RWS Holdings plc and SDL
plc on 4 November 2020, Elisabeth Lucas and Tomáš
Kratochvíl have resigned as directors of RWS. Joining the
Board of Directors are the following new directors:
GORDON STUART
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Gordon was appointed to the Board of Directors on 4
November 2020. Gordon currently serves as the CFO
of Unit4, a global provider of people-centric enterprise
cloud applications for ERP and HCM to midmarket service
sector organisations. Previous roles include CFO of TMF
Group and CFO at Alexander Mann Solutions. He has held
senior positions with a number of UK listed businesses
including Group Finance Director of Xansa plc and Group
Finance Director of London Bridge Software Holdings plc.
He has also held Non-Executive roles at SDL plc, Sepura
plc and Intec Telecom Systems plc.
FRANCES EARL
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Frances was appointed to the Board of Directors on 4
November 2020. Frances was a Managing Director at
Accenture and held a number of senior HR Director
positions in the UK and Ireland, and globally. She served
on the Accenture UK and Ireland Executive Board, the
Products Operating Group Executive Board and the
Financial Services Operating Group Executive Board as HR
Director. Frances was Global Recruitment Director for all
Executive and Partner Recruitment across 50 countries.
DAVID CLAYTON
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Appointed to the Board of Directors on 4 November
2020, David is a former Non-Executive Chairman of SDL
plc. He is currently Chairman of Forensic and Compliance
Systems and Chairman of the Board of Trustees of the
charity Changing Faces. David is also on the boards of
FCS (UK) Limited, Solar Archive Ltd, Albora Technologies
Ltd and a trustee of Changing Faces and Dixons
Academies Charitable Trust Ltd.
Gordon Stuart, Frances Earl and David Clayton are deemed
by the Board to be independent and are free from any
associations or relationships with the Group, with the
exception of the fees that they receive as Directors.
RWS — Annual Report 2020
31
Corporate Governance
Report
RWS’s corporate responsibility policy encompasses the way we do
business and interact with our people, our clients, our community
and the environment around us. Our commitment to corporate
responsibility is underpinned by our core values of integrity, innovation,
agility and cooperation and aims to deliver continual improvement in
our economic, social and environmental performance.
RWS is committed to achieving and maintaining high
standards of corporate responsibility in its business
activities and presents its corporate responsibility
strategy to the Board annually.
During the last year RWS has joined the United Nations
Global Compact Initiative, a voluntary leadership
platform for the development, implementation and
disclosure of responsible business practices.
Our commitment to sustainability is channelled through
specific goals which underpin our actions, operations
and reputation and are aligned with the United Nations’
Sustainable Development Goals (SDGs).
To identify RWS’s sustainability goals
and actions we first identified our
key stakeholders via a Stakeholder
Framework. This was followed by
discussions with these stakeholders
to identify their concerns in relation
to RWS’s sustainability, after which
we assessed the materiality of these
concerns.
Once completed, a sustainability plan was developed,
based on materiality, to address the concerns with
targeted goals for each. The activities were separated
into four groups or pillars. This process is described in
more detail below.
OUR ENVIRONMENT
> Reduce energy consumption
and emissions
> Reduce waste, increasing
re-use and recycling
> Take actions to improve
the environment
OUR COMMUNITY
> Positively contribute to the
communities in which we
operate
> Partnerships to support
and empower young people
through education
RWS’s FOUR
PILLARS TO
SUSTAINABILITY
OUR PEOPLE
> Education and career
opportunities
> Diversity and inclusion
> Health and well-being
OUR GOVERNANCE
> High ethical standards
> High standard of client
service
32
RWS — Annual Report 2020
GOVERNANCE
STAKEHOLDER FRAMEWORK
Initiating and maintaining dialogue with our
stakeholders enables the Group to align our
sustainability initiatives and business model to their
concerns. This feedback is important during our
decision-making processes and enables us to develop
the four pillars of our sustainability strategy.
We recognise three different levels of RWS
stakeholders in our framework, with our clients,
employees and investors being the central
stakeholders for the Group.
Clients
Investors
Employees
Society
Financial
Governments &
Regulatory Bodies
Suppliers
Partners
Competitors
MATERIALITY ANALYSIS
RWS discussed and reviewed areas of concern of key
stakeholders before ranking and prioritising them in
terms of materiality to the RWS Group.
The matrix shows the materiality of issues raised.
4
10
12
3
6
15
11
17
14
16
5
13
9
2
8
7
1
3
H
G
H
I
S
R
E
D
L
O
H
E
K
A
T
S
O
T
E
C
N
A
V
E
L
E
R
2.5
2
1.5
1
0.5
W
O
L
0
10
20
30
40
50
LOW
MATERIALITY TO RWS
60
HIGH
FULL LIST OF SUSTAINABILITY CONCERNS
ENVIRONMENT
1. Biodiversity impacts
Practices to preserve
species and ecosystems.
2. Climate change and
natural resource
management
Commitment and practices
for the reduction of energy
consumption and GHG
emissions.
PEOPLE
3. Health and Safety
Practices to guarantee our
employees’ health and
safety.
4. Human capital practices
Practices to attract,
support and retain skilled
employees.
5. Diversity, inclusion and
equality
Fair opportunities,
recognition, treatment
and remuneration for all
employees.
COMMUNITY
6. Human rights
Practices to promote and
protect human rights in
our operations, including
suppliers.
7. Community impacts
Impacts on and relations
with local communities in
which we operate.
GOVERNANCE
8. Risk management
Risk assessment and
management procedures.
9. Corporate governance
Rules, practices and
processes by which our
company is run.
10. Innovation
Innovation for developing
our services.
11. Client satisfaction
Overall performance of
our services and client
experience.
12. Economic performance
Strategic objectives linked
to growth and margin.
13. Financial transparency
Timely, meaningful and
reliable disclosures about
RWS’s performance.
14. Reputation risk
Strategy regarding our
image and credibility.
15. Business ethics
Integrity and responsibility
by which we run our
operations and make
decisions.
16. Bribery and corruption
It is the policy of RWS to
conduct its business in
accordance with the highest
professional and ethical
standards.
17. Stakeholder engagement
Dialogue and commitment
with our stakeholders.
33
RWS — Annual Report 2020g
Corporate Governance Report (continued)
FOUR PILLARS OF SUSTAINABILITY
For each of the four pillars identified from the materiality
index, a set of policies and guidelines were established to
structure RWS’s activities in each area.
RESPONSIBILITY FOR THE
ENVIRONMENT
> By providing policies and management
systems based on environmental best
practices, we ensure active prevention
and limitation of potential impacts on
climate change and the environment
caused by our operations. (SDG 13)
> RWS is an office-based business
services operation and has little
exposure to harmful and hazardous
materials. Nevertheless, we have
defined strict controls to manage,
handle, store and dispose of harmful
and hazardous substances to
minimise the environmental release-
risks according to local guidelines and
regulations. (SDG 13)
> Conform to a series of environmental
rules, implemented at Group level
covering all RWS operations globally,
focused on waste minimisation,
emission reduction and use
optimisation of natural and clean
energy resources. (SDG 12)
> Provide innovative services which
are delivered in a manner which does
not compromise the environmental
impact of our clients’ operations in the
communities where they operate.
(SDG 11)
> Established employee-led environment
teams to suggest and action local
initiatives to improve the environment.
Such initiatives include wild flower
meadow planting, tree planting (the
Group purchased 2,500 trees, one
for each employee) as part of the UK
National Forest planting scheme, local
litter picking, succulent planting and
an eco-bottle initiative where plastic
bottles filled with non-recyclable
plastic waste, were donated for use as
bricks in construction. (SDG 11)
> Encouraged the Group to move to
green energy sources where available
and commenced roll out of LED
lighting in offices. (SDG 7)
RESPONSIBILITY TO OUR
PEOPLE
> Foster working conditions which
support effective health and safety
programmes, non-discrimination
principles as well as human and
labour rights. (SDG 3, SDG 5,
SDG 10)
> Health and Safety for our
employees is extremely important
and our operations are therefore
reviewed and monitored regularly;
RWS is committed at the highest
level to a robust health and safety
policy. (SDG 3)
> During the Covid-19 pandemic,
all staff have worked from home
for various periods of time. The
senior management team has been
in regular communication with
staff globally, both through virtual
meetings and through an enhanced
group intranet which has provided
information and advice on how to
cope with working from home to
ensure the mental and physical
well-being of our teams. (SDG 3)
> Provide an environment that allows
good career and professional-
development opportunities and
enables all RWS employees to fulfil
their potential, therefore allowing
the Group to retain and attract
highly talented professionals.
(SDG 4, SDG 8)
> Foster diversity among our teams
based on the Group’s Equality,
Diversity and Inclusion Policy.
(SDG 5, SDG 10)
> Train our professionals to improve
existing skills and develop new
capacities. (SDG 4)
34
RWS — Annual Report 2020
GOVERNANCE
RESPONSIBILITY FOR OUR
COMMUNITY
> RWS has established a set of
corporate rules, policies and
processes that define our current
corporate governance model and
ensure our long-term vision is
seen through the lens of excellent
governance. (SDG 16)
> We are sensitive to changes in laws
and trends in this area, and we are
committed to transparency in all
areas of activity. (SDG 10, SDG 16)
> Our commitment to business ethics
is managed by the Board through the
CEO and the CFO to ensure ethical
behaviour is integrated across all
our teams and geographies through
our Corporate Governance Code
and associated policies, which are all
visible on the Group’s intranet.
(SDG 16)
> We ensure disclosure and promote
observance of our Corporate
Governance Code across all divisions,
suppliers and contractors. (SDG 16)
> RWS has a zero tolerance against
corruption, and therefore we require
suppliers and partners to observe
professional and honest business
practices. (Aligned to the UK’s Bribery
Act 2010). (SDG 8, SDG 16)
> As a socially responsible company, we
are an active and positive participant
in local matters in the communities in
which we operate. (SDG 4)
> A risk to RWS is the future availability
of linguists. We have taken steps to
encourage young people to study
languages and consider a career in
the language profession. We have
done this through the sponsorship of
language students at the University of
Manchester and activities at schools
that have evidenced a passion for
teaching languages. In this way we
hope to be able to help in the growth
and development of tomorrow’s
industry leading translators. (SDG 4)
> All of RWS’s corporate sponsorship
is in line with the Group’s Charitable
Giving, Sponsorship and Collections
policy and is aimed towards
promoting the learning of languages
by young people from non-privileged
backgrounds. (SDG 4)
RESPONSIBILITY FOR
STRONG GOVERNANCE
> We focus our business through
a client-oriented strategy based
on close communication enabling
us to understand and foresee
our clients’ needs and fulfil their
expectations. The acquisition
of SDL plc in November 2020 is
an example of this with clients
enquiring increasingly about
machine translation services.
(SDG 9)
> We ensure the implementation
of procedures to maintain the
quality of our services across all
geographies and teams while
keeping high service standards and
high-quality procedures across all
of the Group’s divisions. Similarly,
SDL’s leading language technology
will enhance RWS’s procedures
which, combined with ongoing
staff training both on the job and
via third parties, will ensure that
RWS maintains its position as the
world’s premier translation and
localisation business. (SDG 9)
> We continuously improve our
services and business management
(through ethics, innovation, safety
and environmentally sympathetic
conduct) to maintain our
reputation as a trusted business
partner. (SDG 9)
> We develop our own investor
relations strategy that aims to
ensure compliance with legal and
market practice responsibilities.
(SDG 8)
> We maintain clear communication
channels with stakeholders and
potential stakeholders to provide
quick and effective responses to
their requirements. (SDG 9)
> We create a working environment
for staff that nurtures innovation
and provide the resources to
facilitate this. (SDG 8)
35
RWS — Annual Report 2020g Corporate Governance Report (continued)
RWS SUSTAINABILITY ACTION PLAN
ENERGY AND GREENHOUSE GAS REPORT
As described below, each of the four sustainability pillars
has a targeted action plan to ensure steps are taken
to both improve RWS’s business operations and make
progress towards the UN’s SDGs.
ENVIRONMENT
RWS employees have indicated that they are concerned
about the environment and any possible impact of RWS’s
operations. RWS is committed to reviewing and improving
the environmental aspects and impacts of our operations
by preventing pollution, protecting the environment
and enhancing positive impacts wherever reasonably
practicable. These actions improve the environment as
well as RWS’s attractiveness as a place to work, reducing
staff turnover, and they are a mitigation factor offsetting
one of the Group’s key risks, namely attracting and
retaining good quality staff.
The CEO has overall responsibility for all climate-related
issues and the CFO is responsible for managing climate-
related risks across the Group. Both the CEO and CFO sit
on RWS’s Board and climate-related issues are presented
and considered by the Board bi-annually.
We measure and monitor our principal environmental
impacts and have set objectives and targets for their
reduction.
Our targets have been set as a reduction of 2% year-on-
year, for the following:
> Natural resources and consumables
> Carbon footprint
> Electricity KwHr/measured by employee and turnover
> Commercial waste
> Landfill waste/measured by employee and turnover
> Waste/measured by employee and turnover
We also strive to have no environmental incidents.
Environmental performance is reviewed six-monthly in
line with our environmental policy and reviewed against
our objectives and targets.
We have implemented ISO 14001:2015 Environmental
Management Standard at our head office in Chalfont St
Peter and have committed to:
> The continual improvement of our environmental
management systems globally
> Comply with the spirit as well as the letter of all
As part of the Streamlined Energy and Carbon Reporting
(SECR) requirement, RWS is required to report its energy and
Greenhouse Gas (GHG) Emissions within its Directors’ Report.
RWS appointed Carbon Footprint Ltd to independently
assess the Group’s GHG emissions in accordance with the
UK Government’s SECR guidance.
The GHG emissions have been assessed following the
ISO 14064-1:2018 standard and has used the 2020
emission conversion factors published by Department
for Environment, Food and Rural Affairs (Defra) and the
Department for Business, Energy & Industrial Strategy
(BEIS). The operational control approach has been used.
The table below summarises the GHG emissions for
reporting year: 1 October 2019 to 30 September 2020.
Activity
Scope 1
Site gas
Company car travel
Diesel
Total Scope 1
Scope 2
Electricity (generation and transmission &
distribution)
Heat and steam
Total Scope 2
Scope 3
Employee owned car travel (grey fleet)
Flights
Rail travel
Water
Waste
Taxi travel
Bus travel
Total Scope 3
Scope 1 & 2 tonnes of CO2e
Total tonnes of CO2e
Tonnes of CO2e per FTE
Total Global Energy Consumption (kWh)*
Total UK Energy Consumption (kWh)*
Tonnes CO2e
99.08
4.96
8.32
112.36
1,567.20
47.76
1,614.96
11.77
537.65
12.67
22.37
68.65
8.54
0.02
661.67
1,727.32
2,388.99
0.76
4,493.297
1,296,067
*Total Energy consumption includes Electricity, Natural Gas, Diesel
Hear and Steam and Company Car Fuel Consumption.
applicable environmental legislation, approved codes
of practice and any other requirements not codified
by law to which we subscribe
The UK energy consumption accounts for 19% of RWS’s
total Scope 1 and 2 carbon emissions and 29% of RWS’s
total global energy consumption (kWh).
> Co-operate fully and maintain open relationships
with all regulatory authorities
> Comply with the environmental requirements of the
This is the second assessment that RWS has completed
of its emissions and we have provided the base year
assessment results for comparison.
company’s clients
Activity
Total tonnes of CO2e
Baseline Year
2018/19
3,770.58
Current Year
2019/20
2,388.99
36
RWS — Annual Report 2020
GOVERNANCE
RWS CARBON FOOTPRINT 2019/20
Water 0.9%
Waste 2.9%
Car travel 1.4%
Air travel 22.5%
Electricity 65.6%
Company owned
vehicles 0.2%
Heat and steam 2.0%
Diesel 0.3%
Gas 4.2%
ENERGY USE
As can be seen in the above charts, energy is a key
driver of carbon emissions across the Group and we are
committed to reducing our energy consumption across
our operations.
RWS’s total carbon footprint was 2,388.99 tCO2e for FY20.
Of these emissions, 72.1% were from energy, 65.6% of
which was electricity, 4.2% natural gas, 0.3% diesel and
2.0% from heat and steam; the remaining 27.9% was from
business travel, waste and water.
MANAGING ENERGY USE
The Group has taken the opportunity to utilise software
to hold virtual meetings and these will continue to be
promoted as a way to curtail the number of flights in
the future.
With many of our initiatives, we recognise that what
is good for the environment is also good for business.
Energy savings, for example, reduce our emissions
output while cutting costs.
Each division within RWS tracks and monitors energy
use, in line with our Group-wide commitment to reduce
emissions and to reach RWS’s annual target to reduce
energy use across its operations.
MINIMISING WASTE
Waste management is not a significant issue for RWS
as being a service-based company our waste is low.
However, we do consider waste to be an important
issue and have set company targets to reduce general
waste and increase recycling across the Group.
In managing waste, we strive to engage employees to
take ownership and create more efficient operations
and practices.
In 2020, the Group took several measures to reduce
waste. These included:
> Liaising with landlords regarding waste
measurement and management
> Liaising with suppliers to get more accurate reports
detailing waste and recycling
As energy accounts for 72.1% of our emissions, we
recognise the importance of investing in energy efficient
offices and renewable energy.
> Launching a Green Agenda intranet to educate,
inform and engage employees around waste and
recycling
At present, due to some of our offices being in managed
buildings, we are unable to measure all our waste
effectively and this is something we are working to
improve moving forward.
RWS Moravia staff plogging (a combination
of jogging with picking up litter) in Argentina
In 2020, the Group took several measures to reduce
energy use and emissions. These included:
> A move to purchasing only renewable electricity
across all offices wherever possible
> Replacing existing lighting with energy efficient LED
lighting
> Ensuring energy efficient lighting and motion sensors
are installed in our larger sites or as we open new
offices such as Moravia’s head office in Brno
> Implemented various energy efficiency actions such
as: a “closed-door” policy to avoid unnecessary
energy consumption for heating/cooling; and a
“switch off at night” policy
> Updated the Group’s head office air-conditioning to
ensure effectiveness and energy efficiency
> Launched a Green Agenda intranet to educate,
inform, engage and advise employees on energy
consumption
Traditionally, the Group’s second biggest cause of
emissions is air travel. Clearly the Covid-19 pandemic has
reduced the amount of travel in this financial year and
carbon emissions have therefore reduced accordingly.
37
RWS — Annual Report 2020g Corporate Governance Report (continued)
PEOPLE
As previously mentioned, one of the key risks to RWS
is our ability to attract, recruit and retain good quality
staff as our activities are highly reliant upon the skills,
dedication and passion of all of our employees and
contractors, who are expected to meet our clients’
demand for excellent quality and timely delivery.
In order to mitigate this risk RWS aims to be the
‘Employer of choice’.
GOALS
We aim to be the employer of choice through providing:
> a workplace where our employees feel valued,
supported and safe
> work that is engaging, stimulating and challenging
> a competitive remuneration and benefits package
> an opportunity for good career development through
training, mentoring and career path planning
> equal opportunities and inclusivity
> open communications at all levels, so that staff have
a voice
> opportunities and encouragement for staff to be
involved with or lead RWS environmental, social and
external community initiatives
HEALTH AND WELL-BEING
RWS is fully committed to supporting the physical and
mental health of our employees to enable them to thrive
in their professional and personal lives.
During this period we have established a range of
activities across our global offices to encourage well-
being including mindfulness sessions, pilates and yoga
classes, lunch time jogging clubs, and walking clubs.
In addition, we enlarged the Group intranet with a site
dedicated to the physical and mental challenges of
working remotely.
RWS IP Services staff tree planting in Leicestershire
CARBON OFFSET
As part of its commitment to helping reduce carbon
emissions, RWS purchased 2,500 trees for the National
Forest; one for each employee of the RWS Group. The
UK employees were able to select what species of tree
they preferred and then many employees travelled to the
Queen Elizabeth Diamond Jubilee Wood, in Leicestershire,
England to help plant some of the trees.
New research estimates that a worldwide planting program
could remove two-thirds of all the emissions from human
activities that remain in the atmosphere today.
If you wish to see the area where our trees were planted,
you can do so by going to www.what3words.com and
typing in value.august.fruit
38
RWS — Annual Report 2020
GOVERNANCE DIVERSITY AND INCLUSION
RWS aims to build a workforce made up of people who
reflect the diversity of the Group’s communities in
which we operate and reinforce our ethical values and
behaviours. No discrimination is tolerated. We have
policies and practices to keep out discrimination. We have
provided staff with links to learn more about diversity and
racial prejudice. We recognise that we have more to do in
this area, particularly in terms of the racial diversity within
our main offices and we are introducing steps to address
this across the Group. In addition, we are delighted to be
working with Urban Synergy as described on page 43.
PERSONAL DEVELOPMENT
Maximising the potential of our employees is central to
our growth. We have implemented initiatives globally to
help our employees develop their careers. These include
personal skills, business management and leadership
training. Appraisals are held for employees to discuss
performance, challenges and future career opportunities.
EMPLOYEE ENGAGEMENT
Communication and dialogue is vital within RWS. At
heart, we are a people business and therefore we
have to talk; it improves business, is good for morale
and is good for well-being. Communication within
RWS is encouraged at all levels and it takes place at
Group, divisional and local level. It includes all types
of communication and consultation between RWS
employees on all manner of topics including, operational
matters, business performance, social issues,
environmental concerns, well-being issues and various
other areas of common interest.
Dialogue is encouraged and is promoted through
internal surveys and ‘pulse checks’, regular town hall
meetings, group ‘virtual coffee calls’ with the CEO
and divisional briefings, together with management
team updates and newsletters. Our aim is to keep our
colleagues informed about the business operations and
our activities.
We also encourage RWS staff to get involved with all
activities and, as you will see in this report, we provide
opportunities for staff to be involved in tree planting,
wild flower planting, recycling programs, litter picking,
student mentoring, keep fit activities, etc. This not only
improves teamwork, communication and camaraderie
but can also help staff develop their organisational and
management skills.
HEALTH AND SAFETY
RWS is committed to providing a safe environment for
its employees. Whilst we recognise that the nature of
our business is low risk in relation to health and safety,
we strive to expand our approach, driving continuing
improvements to ensure we meet, or exceed, legislative
requirements. All our divisions and cross-divisional
functions have formal governance processes in place for
health and safety matters in the business operations for
which they are responsible.
STAFF TURNOVER
We are pleased to see the positive impact of the actions
we have taken in our reduced staff turnover rates,
although we need to continue to improve our actions in
this area.
Staff turnover1
IP Services
Life Sciences
Moravia2
Group
19/20
18/19
12.90%
12.40%
22.30%
18.90%
20.70%
21.80%
29.30%
25.90%
1 staff turnover = number of FTE leavers during the financial year/
average number of FTEs during the year.
2 includes Managed Services’ employees where the fluctuation is much
higher as driven by client needs. If Managed Services’ 2020 turnover
is excluded, the Moravia divisional staff turnover figure falls to 13.4%
and the Group figure falls to 13.1%.
Diversity of our employees globally (including office-based and remote workers) as at 30 September 2020:
Age
<30
35%
Gender
Male
48%
Employee status
Permanent
88%
30-50
57%
>50
8%
Female
52%
Undisclosed
0%
Non-permanent
12%
Employee category
Manager
Non-manager
Male
Female
Total
57% 43% 6%
47% 53% 94%
Years of service
Number of
employees
with less than a
years’ service
Number of
employees
between 1 and
5 years’ service
16%
55%
Number of
employees over
5 years’ service
29%
39
RWS — Annual Report 2020g
Corporate Governance Report (continued)
COMMUNITY
We provide an active programme of matched funding charitable
support to charities proposed by our employees. We also promote
foreign language learning actively through school and university
partnership programmes. Three of our initiatives this year have been
the RWS Scholarship Programme with The University of Manchester,
working with the Outward Bound Trust and a new initiative with
Urban Synergy.
RWS SCHOLARSHIP PROGRAMME WITH THE
UNIVERSITY OF MANCHESTER
As one of the world’s largest language services
providers, we see the growing demand for translation
services required to support our clients’ global business
goals whilst witnessing a decline in the number of
students studying languages at university. As a large
employer of language graduates, we believe we have
a role to play in encouraging the next generation to
consider a degree in languages and support those who
may not have the financial means to complete their
studies.
Last year we launched a scholarship programme in
collaboration with The University of Manchester to
encourage students from lower income families to
complete a degree in modern languages. Named
after RWS’s Chairman, Andrew Brode, the ‘RWS
Brode Scholarship Programme’ supports a total of
50 undergraduate students who join the university
between 2019 and 2021 from a state school.
As part of the scholarship programme, our staff, many
of whom are linguists, act as mentors to the students,
offering support with their studies and guidance on
future career opportunities. When Covid-19 permits,
we will be offering students first-hand experience of
working in the language services industry through
summer internships and work placements, with the
potential for full-time graduate roles on completion of
their studies.
We share the first-year experiences of four RWS Brode
scholars and we are delighted to be able to help them.
They are leading the way for future cohorts of RWS
Brode Scholars and we wish them all well with their
future studies.
40
RWS — Annual Report 2020
GOVERNANCE Rozerin Demirci
Jonathan Millward
BA (Hons) Spanish and Portuguese
BA (Hons) Italian and Spanish
I have experienced so many new things in my
first year. Starting to learn Portuguese from
scratch, alongside learning Spanish, has at
times been challenging but it has also been very
enjoyable.
I am eternally grateful for the
support RWS has given me this
year, which has enabled me to
gain new experiences that
would otherwise have been
out of my reach.
This has been a milestone year for me: moving
to a different city, starting at a world-class
university and beginning a new course - it makes
all the hours of study prior to university worth it.
I have also enjoyed the social aspect of university
life - I tried rock climbing this year, something
I had never attempted before.
Thank you again for providing
the funds that have enabled
this scholarship and helped
make my first year so
enjoyable. I intend to
continue pushing beyond
‘normal’ in my academic life.
Akasha Perera
Oscar Seecharan
BA (Hons) French and Spanish
BA (Hons) Russian and Chinese
This year has been a very positive experience
for me. I found this year’s course units and
modules fascinating and inspiring from the very
beginning. I particularly enjoyed ’Themes in
Spanish and Latin American Studies’.
I would like to thank you for
providing me with the RWS
Brode Scholarship, you
have improved my student
experience and lightened
my financial burden, which
has allowed me to focus
more on my studies.
It has been a very engaging and challenging step
up from sixth form to higher education - the
academic work is more intense, and the students
and teachers are highly engaged. Excitingly,
I have been asked to become a PASS teacher
for Russian language, i.e. teach course-specific
content to first-year students.
With the financial support you
have given me, I was intending
to travel to Russia for a work
placement but unfortunately,
due to Covid-19, this was
cancelled. However, I am now
even more determined to go
next year.
41
RWS — Annual Report 2020g Corporate Governance
Report (continued)
RWS AND THE OUTWARD BOUND TRUST
The Outward Bound Trust was established in 1941, and is
a leading educational charity that uses the great outdoors
to help young people from all walks of life develop. They
provide adventurous learning courses for young people to
learn the social and emotional skills that will play a pivotal
role in how they navigate the challenges of adolescence
and beyond. The aim is for young people to return home
with a stronger sense of self-belief, and empowered with
the attitudes, skills and behaviours they need to make
positive change in their lives.
RWS’s financial support enables a number of young
people from less privileged backgrounds to go on a five-
day residential course, helping them to develop through
outdoor activities. RWS’s involvement also includes our
employees who act as ambassadors and participate in the
activities, acting as mentors to the students.
Earlier this year, several of our employees volunteered
to be Employee Ambassadors. Between them, they
visited three of the Outward Bound residential centres
in Snowdonia, Aberdovey and Ullswater, and supported
pupils from three inner London schools (some of whom
had never been outside London before) to participate in
activities such as mountain hiking, canoeing, camping and
“jetty jumping”.
The overwhelming consensus from the Employee
Ambassadors upon return from the centres was that
it had been “such a rewarding experience”. Before
attending the residential courses Employee Ambassadors
also visited their selected schools and presented an
“Introduction to Languages in Business” session.
The schools RWS selects to work with are in lower
economic areas and were chosen only if they evidenced
a firm commitment towards teaching languages.
Unfortunately, due to the Covid-19 pandemic, schools
across the UK are not currently allowed to run residential
programmes. This is having a hugely detrimental impact
on charities such as the Outward Bound Trust which has
had to cancel its summer Adventures Programme this
year.
The Outward Bound Trust hopes to increase its
operations in 2021.
42
RWS — Annual Report 2020
GOVERNANCE URBAN SYNERGY
As part of our endeavours to support education and
diversity, RWS is now actively supporting and involved
with Urban Synergy.
Founded in 2007 by Leila Thomas, Urban Synergy aims
to improve the talents of young people. Working closely
with students, schools, local councils and corporate
sponsors, Urban Synergy provides a tailored mentoring
scheme to raise the confidence and achievement of
young people.
This initiative is based in Lewisham (London) where
young people face many challenges including high levels
of deprivation, a lack of accessible positive role models
and restricted employment opportunities.
RWS employees are able to work with Urban Synergy
by volunteering for both e-mentor and e-seminar
opportunities. The e-mentor volunteers will help
the students with presentation skills, updating and
completing their CVs, mock interviews, etc. The
e-seminars are presentations to young students with the
aim of providing professional role models and insight
into the qualities required to succeed.
GOVERNANCE
RWS strives to satisfy its clients’ needs by providing
services that meet and/or exceed their expectations.
Our clients rely on our expertise, integrity and creativity
to help them overcome their translation challenges
and keep their businesses moving forward in a global
environment. Our employees are aware of the role they
play in achieving this which is reflected in improving and
optimising existing processes and controls, striving for:
> On-time delivery
> Right first time
> Client satisfaction
The maintenance of a well-managed supply chain is a
priority to RWS. Our suppliers are selected on quality,
service and cost criteria as part of our responsible
procurement practices. We are mindful of our
obligations under the Modern Slavery Act, 2015 and our
commitment to eliminate slavery and human trafficking
in our supply chain.
RWS is a supporter of the Prompt Payment Code.
43
RWS — Annual Report 2020g Corporate Governance Report (continued)
Good governance and business
standards are essential to the
success and prosperity of RWS.
RWS is committed to promoting
transparent, fair and timely
decision-making that considers
the needs of all our stakeholders
– employees, shareholders,
clients, suppliers and our
community.
BUSINESS ETHICS
We take a zero-tolerance approach to bribery,
corruption, and other financial crime.
TAX TRANSPARENCY
RWS is committed to being a responsible corporate
citizen within each jurisdiction in which it operates,
and does not use “tax haven” countries or other tax
avoidance arrangements as part of its tax planning.
RWS is straightforward, transparent and cooperative
in all its dealings with tax authorities, ensuring that it
is in compliance with all local taxation legislation and
meets all applicable filing and payment deadlines.
As an employer of more than 3,000 employees across
15 countries and 36 offices globally, RWS also makes
significant tax payments in respect of payroll taxes,
value-added taxes and business/premises taxes.
THE BOARD
The Board is committed to providing an environment
and opportunities that encourage and reinforce
the corporate culture of the Group. It is committed
to extending the values that it promotes to include
all stakeholder groups. The Board recognises the
importance of, and is committed to, ensuring that
effective corporate governance procedures are in
place that are appropriate for a public company of
RWS’s size and complexity.
The Board is committed to providing specific training
to Directors, be it internally sourced or via external
advisers, to ensure their skillset remains relevant for
the Group’s requirements.
During the reporting period, the Board comprised the
CEO and CFO as Executive Directors, the Chairman
and four Non-Executive Directors. The Executive
Directors have direct responsibility for business
operations, whilst the independent Non-Executive
Directors have a responsibility to bring independent,
objective judgement to bear on Board decisions.
The Board considers that all of the Non-Executive
Directors are independent in character and that there
are no relationships or circumstances which are likely
to affect their independent judgement.
The Board believes that, as a collective, the Directors
have the necessary blend of sector, financial and
public market skills and experience, along with
an effective balance of personal qualities and
capabilities. Directors keep their skillset up-to-date
in a number of ways: through active membership of
professional organisations and institutes through
fulfilment of associated continuing professional
development (CPD) requirements; through specific
44
RWS — Annual Report 2020
GOVERNANCE training; by participating in business network groups;
through holding Non-Executive positions with other
public and private companies; and by maintaining
active and highly relevant full-time employment.
A summary of the relevant experience of each of the
Directors can be found on pages 30 to 31.
EXECUTIVE ROLES AND
RESPONSIBILITIES
The Chairman, Andrew Brode, leads and chairs the
Board. Further details of the Chairman’s role can
be found in the Chairman’s corporate governance
introduction on page 29.
The CEO, Richard Thompson, provides leadership and
management to the Group and its Senior Management
team. The CEO drives the development of objectives,
strategies and performance standards whilst also
overseeing key risks across all divisions of the
Group. The CEO also plays a lead role in devising and
implementing the Group’s corporate development
strategy and in investor relations to ensure that
communications with the Group’s shareholders and
financial institutions are maintained.
The CFO, Desmond Glass, is responsible for shaping
and executing the financial strategy of the Group.
In this role he also supports the Group’s investor
relations programme and corporate development
efforts. The CFO also has responsibility for identifying
the broad market-related risks and collating specific
potential risks from the divisional Managing Directors
for further assessment via the established risk
management framework. Due to his prior relevant
experience, the CFO also serves as the Company
Secretary and is charged with ensuring the delivery
of clear and accurate management information to the
Board to allow for timely deliberation and subsequent
communication of agreed actions.
BOARD AND COMMITTEE COMPOSITION
1 Chairman
2 Executive Directors
4 Independent Non-Executive
Directors
The Board
The operation of the Board is documented in a
formal schedule of matters reserved for its
approval, which is reviewed annually.
Committees
The Board has delegated specific responsibilities to
the Audit and Remuneration Committees.
Each Committee has written terms of reference
setting out its duties, authority and reporting
responsibilities.
The Committee terms of reference are kept under
review to ensure they remain appropriate and
reflect any changes in legislation, regulation or
best practice.
Audit
Committee
The Audit Committee
has responsibility for
monitoring the quality
of internal controls
and ensuring that the
financial performance
of the Group is
measured and
reported accurately.
Remuneration
Committee
The Remuneration
Committee reviews
the performance
of the Executive
Directors and makes
recommendations
to the Board on
matters relating to
their remuneration
and terms of
employment.
45
RWS — Annual Report 2020g
Corporate Governance Report (continued)
BOARD COMMITMENTS
KEY BOARD ACTIONS DURING THE YEAR
The Board held seven scheduled board meetings
in the year. The Board is tasked with developing
the overall structure and direction of the business,
ensuring that appropriate delegations of authority
are communicated throughout the Group, monitoring
Executive Director performance, reviewing the
monthly operational and financial performance of
the Group and formally approving the annual budget
and audited financial statements of the Group. The
Board also reviews and approves the formal risk
register presented by the CFO bi-annually. Various
members of the Group’s Senior Management team
are invited to certain Board meetings to report on
their particular areas of responsibility.
Each Board meeting is preceded by a clear agenda
and relevant information is provided to Directors
in advance of the meeting. The Chairman and the
Company Secretary have responsibility to ensure that
all Directors receive relevant Board papers in a timely
fashion, to facilitate a full and effective discussion of
matters during Board meetings.
The Non-Executive Directors are expected to dedicate
not less than one day per month to fulfil their duties.
This includes, but is not limited to, preparation and
attendance of Board meetings of the Company and,
where agreed, other Group companies and the
general meeting of the shareholders of the Company.
The Group believes it has effective procedures in
place to monitor and deal with potential conflicts
of interest. The Board is aware of the other
commitments and interests of its Directors, and
changes to these commitments and interests are
reported to and, where appropriate, agreed by the
rest of the Board.
> reviewed and approved acquisitions of Iconic
Translation Machines Ltd and Webdunia.com (India)
Private Limited
> negotiation of terms for the acquisition of SDL, which
was completed November 2020, post-financial year
end
> reviewed and approved proposed budget and
business plan for fiscal year 2021
> reviewed and prioritised ESG initiatives across the
Group
> published updated gender pay gap report
> developed, reviewed and approved new community
initiatives focused on language education
partnership programmes at secondary schools
> reviewed continued compliance with the QCA
Corporate Governance Code
> conducted bi-annual review and approval of Group
risk register
> approved the re-financing of the Group debt facility
> in response to the Covid-19 epidemic, performed
financial and operational scenario planning analysis
to ensure the business’s continued resilience to
significant unplanned changes in demand
An effective Board is critical to the success of RWS. In
order to ensure that the Board continues to operate
as efficiently as possible, the Board will commission,
as appropriate, a full independent appraisal of the
Board’s capabilities, to confirm that the Board is capable
and effective in undertaking its responsibilities and
duties. The Board has committed to continue to seek
independent reviews to ensure its ongoing effectiveness.
The last review was performed in 2019.
The Board continues to hold formal annual performance
assessments for the CEO (led by the Chairman) and CFO
(led by the CEO). Factors considered in the evaluation
process include, but are not limited to, commitment
GOVERNANCE FRAMEWORK
Clients
Suppliers
Shareholders
Employees
Community
O
T
E
L
B
A
T
N
U
O
C
C
A
46
RWS — Annual Report 2020
The Board
Strategy
Performance
Governance
Controls
R
O
F
E
L
B
I
S
N
O
P
S
E
R
Risk Management
GOVERNANCE
MEMBERS AND ATTENDANCE
Board meetings
Eligible to attend
Attended
Andrew Brode
Richard Thompson
Desmond Glass
David Shrimpton
Elisabeth Lucas
Lara Boro
Tomáš Kratochvíl
7
7
7
7
7
7
7
7
7
7
7
7
7
7
Committee meetings AUDIT
Eligible to attend
Attended
David Shrimpton
Elisabeth Lucas
Lara Boro
2
2
2
2
1
2
Committee meetings REMUNERATION
Eligible to attend
Attended
Andrew Brode
David Shrimpton
Elisabeth Lucas
Lara Boro
Tomáš Kratochvíl
2
2
2
2
2
2
2
2
2
2
to the long-term development of the Group;
attendance at formal meetings; meaningful and varied
contributions at Board meetings; personal interaction
and relationship building with the Executive Directors,
shareholders, other professional advisers to the
Group and the Senior Management team.
APPOINTMENT AND RE-ELECTION OF
DIRECTORS
The Company’s Annual General Meeting (AGM) will be
held in London (or virtually) on 10 February 2021.
Notwithstanding that neither the Company’s Articles
of Association nor the QCA Guidelines (the corporate
governance code to which the Company adheres)
require them to do so, all of the Directors, except
for David Shrimpton who has served for over nine
years, are standing for re-election as has increasingly
become the market practice and standard of good
corporate governance.
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 each
division, of actual performance compared to budget
and previous year; annual budget setting; and a
defined organisational structure with appropriate
delegation of authority.
In addition, bi-annually, the Board assesses the risks
facing the business and approves the steps and
timetable Senior Management has established to
mitigate those risks.
OUR GOVERNANCE MODEL
As an AIM listed company, RWS has chosen to
implement The Quoted Companies Alliance
Corporate Governance Code (the QCA Code). The
principles and disclosures laid out by the QCA
Code provides a framework to ensure we have the
appropriate corporate governance arrangements in
place. The Board considers that RWS does not depart
from any of the principles of the QCA Code and pages
48 to 49 include details of our compliance, which is
reviewed annually in line with the requirements of
the QCA Code.
47
RWS — Annual Report 2020g
Corporate Governance Report (continued)
Governance principles Compliant Explanation
Further reading
DELIVER GROWTH
1
2
3
4
Establish a strategy and
business model which
promote long-term value
for shareholders
Seek to understand and
meet shareholders’ needs
and expectations
Take into account wider
stakeholder and social
responsibilities and their
implications for long-
term success
Embed effective
risk management,
considering both
opportunities and
threats, throughout the
organisation
See pages 11 and
12 of the Chief
Executive’s Report
and the Business
Model on page 16
The strategy for RWS is decided by the Board and progress
towards delivering against objectives is tracked and debated
by the Board and the Senior Management team.
Our objective is to continue to increase shareholder value in
the medium- to long-term by growing the Group’s revenue
and profit before tax. Our strategy to achieve this is focused
on providing an increasing range of complementary specialist
translation, localisation, language technology and broader
language services to existing and new clients, and hence
drive organic growth. This is supplemented by selective
acquisitions, providing these are complementary to our
existing business, enhance shareholder value and allow the
Group to maintain conservative debt leverage within existing
covenant requirements.
Investor relations is a priority for RWS and we strive to ensure
that both the investor and analyst communities understand
our strategy, business model and financial and operational
performance. Regular meetings are held with investors and
analysts, mainly at investor roadshows and conferences. Our
AGM is our main forum to meet and communicate with our
wider shareholder base. Decision-making at the Board takes into
consideration how its decisions would impact our shareholders.
See page 58 of the
Directors’ Report
The Board has identified the main stakeholders in the
business as its shareholders, employees, clients and the
community in which it operates. Decision-making takes
account of how our various stakeholders may be affected
by our decisions and developments. We pride ourselves
on transparency and open communication. We take our
corporate responsibilities seriously and aim to incorporate
best practice in all our initiatives and actions.
RWS considers a risk management framework a vital tool
to ensure existing and potential risks to the business are
identified and mitigating actions are considered in full. The
CFO is responsible for reviewing the risks and reports to
the Board bi-annually on these as well as new risks, and the
processes to mitigate and contain them. Whilst the CFO is
responsible for risk, all Board members and Divisional MDs
are also empowered to manage risk effectively.
See Section 172
Statement on page
24 and pages 29,
and 32 to 33 of
the Corporate
Governance Report
See Principal Risks
and Uncertainties
on pages 26 and 27
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
5
Maintain the Board
as a well-functioning,
balanced team led by the
Chairman
During the reporting period, our Board consisted of our
Chairman, CEO, CFO as well as four Non-Executive Directors.
Our Board works well bringing together its wealth of
experience on strategy, operations and financial matters.
Open communication, debate and thought leadership are
encouraged and new proposals are challenged rigorously.
See Board of
Directors pages 30
and 31, and 44 to
47 of the Corporate
Governance Report
48
RWS — Annual Report 2020
GOVERNANCE Governance principles Compliant Explanation
Further reading
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
6
7
8
9
Ensure that between
them the Directors have
the necessary up-to-date
experience, skills and
capabilities
Evaluate Board
performance based
on clear and relevant
objectives, seeking
continuous improvement
Promote a corporate
culture that is based on
ethical values and
behaviours
Maintain governance
structures and processes
that are fit for purpose
and support good
decision making by the
Board
BUILD TRUST
10 Communicate how the
Company is governed
and is performing by
maintaining a dialogue
with shareholders
and other relevant
stakeholders
The Board believes that as a collective, the Directors have the
necessary blend of sector, financial and public market skills
and experience, along with an effective balance of personal
qualities and capabilities.
All members of the Board keep their skillsets current in a
variety of ways. Their skills and expertise are reviewed on an
annual basis.
See pages 44 and
45 of the Corporate
Governance Report
Performance is reviewed regularly. During the review,
initiatives and improvements are measured against that of the
previous review. New and updated actions are agreed.
See page 46 of
the Corporate
Governance Report
See pages 29
and 44 to 47 of
the Corporate
Governance Report
See pages 44 to 47
of the Corporate
Governance Report
The Board is committed to providing an environment and
opportunities that encourage and reinforce the corporate
culture of the Group. The Board is also committed to
extending the values that it promotes, to include all
stakeholder groups. RWS’s corporate responsibility policy
encompasses the way we do business, our people, our
clients, our community and the environment around us. Our
commitment to corporate responsibility is underpinned by
our core values of integrity, innovation, agility and cooperation
and aims to deliver continual improvement in our economic,
social and environmental performance.
The Board recognises the importance of, and is committed
to, ensuring that effective corporate governance procedures
are in place that are appropriate for a public company of
RWS’s size and complexity. Each Board meeting is preceded
by a clear agenda and relevant information is provided to
Directors in advance of the meeting. The Group has properly
constituted Remuneration and Audit Committees of the
Board with formally delegated duties and responsibilities.
In addition, various members of the Group’s Senior
Management team are invited to certain Board meetings to
report on their particular areas of responsibility.
We pride ourselves on having open communication with a
range of stakeholders. This includes investor roadshows and
conferences, employee briefings and one-on-one meetings
with clients and suppliers, and the annual report.
See pages 29 to 47
of the Corporate
Governance Report
49
RWS — Annual Report 2020g Audit Committee Report
DAVID SHRIMPTON - COMMITTEE CHAIR
The members of the audit committee are all independent Non-
Executive Directors. The Board is satisfied that the Committee Chair,
David Shrimpton, has recent and relevant financial experience. He is
a Chartered Accountant and was a member of both the Management
Committee and Partnership Council at BDO LLP. The Committee’s
other members have both played an active role at
Committee meetings held throughout the year.
The membership of the committee throughout
the period comprised the Committee Chair David
Shrimpton, Lara Boro and Elisabeth Lucas, and
from 4 November 2020, Gordon Stuart,
David Clayton and Frances Earl. On 4 November
2020, Lara Boro stepped down from the
Committee and Elisabeth Lucas
resigned as a director.
MEMBERS OF THE AUDIT COMMITTEE
David Shrimpton (Committee Chair)
Lara Boro (stood down 4 November 2020)
Elisabeth Lucas (resigned 4 November 2020)
Gordon Stuart (appointed 4 November 2020)
David Clayton (appointed 4 November 2020)
Frances Earl (appointed 4 November 2020)
MEMBERS AND ATTENDANCE
Members
David Shrimpton
Elisabeth Lucas
Lara Boro
Attendance
2 / 2
1 / 2
2 / 2
Although not a member of the Audit Committee, the
CFO is invited to attend meetings. The Committee has
engaged PricewaterhouseCoopers LLP (‘PwC’) to act as
external auditors and they are also invited to attend
Committee meetings. During the year, the Committee
met twice and the members’ attendance record at
Committee meetings during the financial year is set out
on this page.
RESPONSIBILITIES
The Committee reviews and makes recommendations
to the Board on:
> any change in accounting policies
> decisions requiring a major element of financial
judgement and risk
> compliance with accounting standards and legal and
regulatory requirements
> disclosures in the annual report and financial
statements
> reviewing the effectiveness of the Group’s financial
and internal controls
> any significant concerns of the external auditor
about the conduct, results or overall outcome of the
annual audit of the Group
> any matters that may affect the independence of
the external auditor
50
RWS — Annual Report 2020GOVERNANCE > Leases – From 1 October 2019, the Group adopted
IFRS 16 Leases which requires the Group to recognise
a right of use asset and a related lease liability in
respect of leases that were previously accounted for
as operating leases.
> Foreign exchange – The Group is exposed to
volatility in foreign exchange markets with significant
exposure to the US dollar. This has increased the
complexity of the accounting for foreign exchange
transactions in terms of the application of hedge
accounting.
On behalf of the Board
David Shrimpton
9 December 2020
In addition, the Committee has oversight of the
external audit process and reviews its effectiveness
and approves any non-audit services provided.
EXTERNAL AUDIT
The external auditors, PwC, were first appointed
in the financial year to 30 September 2014. The fee
to PwC for the financial year to 30 September 2020
is £350,000. The Audit Committee undertakes a
comprehensive review of the quality, effectiveness,
value and independence of the audit provided
by PwC each year, seeking the views of the wider
Board, together with relevant members of the Senior
Management team.
SIGNIFICANT FINANCIAL JUDGEMENTS
The Audit Committee considered the following
significant issues regarding the financial statements,
and having done so, were satisfied that they are
appropriately stated:
> Covid-19 and going concern – Covid-19 has not led
to a heightened going concern risk for the Group
on the basis of interim financial performance,
undrawn financial facilities and cash flows
generated from operations. We continue to
monitor the risks of impairment of goodwill and
trade receivables as well as any other assets
or liabilities potentially adversely impacted by
Covid-19.
> The acquisition accounting for Iconic Translation
Machines, Ltd and Webdunia.com (India) Private
Limited, including the valuation of goodwill
and intangible assets. Fair value adjustments
associated with the acquisition accounting is a
judgmental area and inherently complex.
> Impairment of goodwill and intangible assets –
There is a significant Group goodwill balance which
is required to be assessed annually for impairment
through a value in use calculation, while the Group
intangible assets are also assessed for impairment
when an indicator of impairment is determined.
Performing value-in-use calculations requires
judgement; operating cash flows for each cash
generating unit (CGU) are to be estimated and
discounted at an appropriate discount rate that
reflects both market assessments of the time value
of money and the risks specific to the CGU.
51
RWS — Annual Report 2020g Directors’ Remuneration
Report
With the exception of Andrew Brode, the members of the
Remuneration Committee are Non-Executive Directors. The Board
believes that Andrew Brode’s interests, as the Group’s largest
shareholder, are closely aligned with those of all shareholders and are
therefore of the opinion that he plays an important role as a member
of the Remuneration Committee.
The Remuneration Committee meets at least once a year and was
chaired by Elisabeth Lucas, until her resignation on 4 November 2020.
The membership of the committee, in addition to the Chairman,
comprises David Shrimpton, Lara Boro, and from 4 November 2020,
Frances Earl (Committee Chair), Gordon Stuart and David Clayton.
Tomáš Kratochvíl was a member of the Committee until his resignation
on 4 November 2020.
MEMBERS OF THE REMUNERATION
COMMITTEE
Frances Earl (Committee Chair, appointed 4 November
2020)
Elisabeth Lucas (resigned 4 November 2020)
David Shrimpton
Lara Boro
Tomáš Kratochvíl (resigned 4 November 2020)
Andrew Brode
Gordon Stuart (appointed 4 November 2020)
Our remuneration policy applies to the Chairman,
Executive Directors and our Senior Management team.
We aim to offer competitive remuneration packages
which are designed with a significant weighting towards
performance-based components. Our policy is to
provide a structure which attracts and, as importantly,
retains key talent in a highly competitive international
marketplace.
REMUNERATION POLICY OBJECTIVES
In order to deliver the Group’s strategy, the primary
objectives of our remuneration policy are:
David Clayton (appointed 4 November 2020)
> to have a transparent, simple and effective
MEMBERS AND ATTENDANCE
Members
Andrew Brode
David Shrimpton
Elisabeth Lucas
Lara Boro
Tomáš Kratochvíl
Attendance
2 / 2
2 / 2
2 / 2
2 / 2
2 / 2
52
remuneration structure which encourages the
delivery of Group targets in accordance with our
business plan
> to motivate and retain the best people of the highest
calibre by providing appropriate short- and long-term
variable pay which is dependent upon challenging
performance conditions
> to promote the long-term success of the Group and
ensure that our policy is aligned with the interests of,
and feedback from, our shareholders
> to have a competitive remuneration structure which
will attract new appropriately skilled executives to
complement our teams worldwide
The Remuneration Committee follows the principles of
good corporate governance in relation to the structure
of its remuneration policy and, accordingly, takes
account of the QCA Corporate Governance Code as
adopted by the Board.
RWS — Annual Report 2020GOVERNANCE 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 the Senior Managers 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. During
the year, the Committee met twice, and the members’
attendance is set out on page 52.
The Board has confirmed that the Group’s overall
remuneration policy is designed to attract and retain
the best people and provide appropriate incentives to
encourage enhanced performance and 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, long term incentive plan and other customary
benefits such as holidays, health and sickness benefits
and pension contributions. The performance-related
annual bonus and share option schemes do not apply
to the Chairman. For Non-Executive Directors there is
only one component, a base fee.
For the CEO, performance bonus is based solely
on an adjusted profit before tax target. The CFO’s
performance bonus is based on an adjusted profit
before tax target and personal targets.
2020 ANNUAL BONUS
The maximum bonus opportunity during the year
ended 30 September 2020 was capped at 100% of base
salary for the CEO and 50% for the CFO. No profit-
related bonus is payable if adjusted profit before tax
was below a profit threshold.
As the profit target was not met in the period, the
bonus payout was nil. The bonus payments detailed
on page 54 represents a discretionary bonus for
the CEO and a combination of discretionary bonus
and achievement of personal objectives for the
CFO. The discretionary bonuses reflects additional
work performed by the Executive Directors on the
acquisitions of Iconic, Webdunia and SDL.
EXECUTIVE SHARE OPTION PLAN
(“ESOP”) AND SAVE AS YOU EARN
(“SAYE”) SCHEME
On 22 January 2020, the RWS Board approved a grant of
options over 2,956,776 ordinary shares at an exercise price
of 615 pence (being the closing mid-market price on the
21 January 2020, the business day preceding the date of
grant) to executives and selected senior management. This
represents approximately 1.08 per cent of the Company’s
issued share capital.
On 13 May 2019 the Board also approved the grant of
options over 1,230,946 ordinary shares at an exercise price
of 601 pence (being the closing mid-market price on 9 May
2019).
These options will normally vest on the third
anniversary of the grant date, subject to the rules of
the plan, continued employment and achievement of
performance conditions. The performance conditions
applicable to the options are based on the Group
achieving stretched EPS targets, each option being split
into three equal tranches, each subject to an EPS target
for a specific reporting year of the vesting period, set
annually in advance by RWS’s Remuneration Committee.
Vested options are exercisable however, if exercised
before the fifth anniversary of the grant date, recipients
are not permitted to sell ordinary shares until the fifth
anniversary of the grant date. All share options will
lapse on the tenth anniversary of the grant date and are
subject to defined malus and claw-back provisions.
On 19 February 2019 the Company adopted an HMRC-
approved SAYE scheme (“SAYE scheme”) for all UK based
employees. Under the terms of the SAYE scheme, the
Board grants options to purchase ordinary shares in the
Company to eligible employees who enter into the SAYE
scheme for a term of three years. Options are granted
at up to a 10% discount to the market price of the shares
on the day preceding the date of offer and are normally
exercisable for a period of six months after completion
of the three-year term. These option grants are settled
on exercise via the issue of new shares.
The Remuneration Committee has responsibility for
supervising the scheme and the grant of options under
its terms.
SHARE OPTION PLAN IN 2020
As the stretched EPS target set by the Remuneration
Committee was not achieved by the Group in 2020, the
Executive Directors’ earnings in the period from the
ESOP were nil.
The financial statements show a charge for share based
payments in this period as they require the ESOP to be
measured under IFRS2.
53
RWS — Annual Report 2020g Directors’ Remuneration Report (continued)
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 Richard Thompson and
Desmond Glass are dated 1 November 2012 and 6 November 2017 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 they would have received during the notice period.
DIRECTORS’ EMOLUMENTS AND PENSION CONTRIBUTIONS
The aggregate remuneration, including pension contributions - paid or accrued - for the Directors of the Company
for service in all capacities during the year ended 30 September 2020 was £1,416,000 (2019: £1,797,000). The
remuneration of individual Directors and the pension contributions paid by the Group to their personal pension
schemes during the year were as follows:
Remuneration and pension contributions of
individual Directors
Andrew Brode
Richard Thompson
Desmond Glass
Elisabeth Lucas
David Shrimpton
Lara Boro
Tomáš Kratochvíl
Salary
or fees
£’000
263
450
300
55
50
50
50
Bonus
£’000
-
100
58
-
-
-
-
1,218
158
Taxable
benefits
£’000
2020
Pension
contributions
2
-
-
-
-
-
-
2
-
23
15
-
-
-
-
2020
Total
£’000
265
573
373
55
50
50
50
2019
Total
£’000
266
922
409
54
48
48
50
38
1,416
1,797
DIRECTORS’ INTEREST IN SHARES
The interests of the Directors as at 30 September 2020
(including the interests of their families and related
trusts), all of which were beneficial, in the ordinary
shares of the Company were:
The interests of the Directors in
the ordinary shares
Andrew Brode
Elisabeth Lucas
Richard Thompson
Lara Boro
Ordinary shares
of 1 pence
90,174,060
50,000
282,480
2,600
90,509,140
54
RWS — Annual Report 2020GOVERNANCE 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.
Share option
schemes
At 1 October
2019
Issued in
the year
Lapsed
during
the year
Exercised
in the year
At 30
September
2020
Exercise price
pence
First date
exercisable
Last date
exercisable
-
-
(1,246,265)
(23,215)
-
-
129.20
03.04.15
03.04.21
129.20
03.04.16
03.04.21
Richard Thompson
1,246,265
23,215
478,701
-
-
-
(157,903)
-
861,661
(287,220)
Desmond Glass
170,965
-
(55,325)
-
369,283
(123,094)
During the year, Richard Thompson exercised his options
granted under the original 3 April 2013 scheme and as
per the rules of this scheme paid the Class 1 employers
national insurance contribution that arose from the
exercise.
The options granted under the 2019 scheme on 13 May 2019
will be exercisable at the mid-market price of 601.0p. The
options granted on 22 January 2020 will be exercisable at the
mid-market price of 615.0p.
The market price of the Company’s shares as at 30 September
2020 and the highest and lowest market prices during the
year were as follows:
30 September 2020
Highest Market Price
Lowest Market Price
565.0 pence
747.0 pence
413.0 pence
As the stretched EPS target was not achieved in the year, the
share options associated with the second tranche of the 2019
award and the first tranche of the 2020 award lapsed.
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
Andrew Brode
CHAIRMAN
9 December 2020
-
-
-
-
320,798
574,441
115,640
246,189
601.00
615.00
13.05.22
13.05.29
22.01.23
22.01.30
601.00
13.05.22
13.05.29
615.00
22.01.23
22.01.30
55
RWS — Annual Report 2020g Directors’ Report
INTRODUCTION
The Directors present their
annual report together with the
audited consolidated financial
statements for the year ended
30 September 2020.
Substantial shareholdings
At 6 November 2020, the following were substantial
shareholders:
Substantial shareholders
Andrew Brode (Director)
Liontrust Asset Management
Aberdeen Standard Investments
Canaccord Genuity
Octopus Investments
% holding
23.2
8.0
5.1
4.1
3.5
GENERAL INFORMATION
RWS Holdings plc is the ultimate parent company
of the RWS Group which operates internationally.
RWS Holdings plc is registered in England and Wales
(company number 03002645). The principal activities
of the Group and its subsidiaries are described in the
Strategic Report on pages 10 to 15.
BUSINESS PERFORMANCE AND RISKS
The review of the business, operations, principal risks
and outlook is dealt with in the Strategic Report on
pages 10 to 27. The key performance indicators of the
Group are revenues and adjusted pre-tax profit before
amortisation of acquired intangibles, share-based
payment expenses, acquisition costs and exceptional
items.
DIVIDENDS
The Directors recommend a final dividend of 7.25
pence per ordinary share (see note 10) to be paid on
19 February 2021 to shareholders on the register at 22
January 2021, which, together with the interim dividend
of 1.75 pence paid in July 2020, makes a total dividend
for the year of 9.00 pence (2019: 8.75 pence).
The final dividend will be reflected in the financial
statements for the year ending 30 September 2021. The
proposed total dividend per share is 1.9 times (2019: 1.9
times) covered by basic earnings per share.
GOING CONCERN ACCOUNTING BASIS
As part of the Directors’ consideration of the
appropriateness of adopting the going concern basis
in preparing these financial statements, a range of
scenarios have been prepared. The assumptions
modelled include reasonable downside scenarios, as
well as taking into consideration the potential impact of
Covid-19 across the Group over the period until March
2022.
The range of scenarios consider the impact of reductions
to the Group’s revenues and corresponding cash flows,
with mitigating actions by management limited to
equivalent reductions in the Group’s controllable cost
base. No significant structural changes to the business
have been assumed in any of the scenarios modelled
with all mitigating actions wholly within management’s
control.
Subsequent to 30 September 2020, the Group’s all-
share acquisition of SDL plc completed and at the date
of acquisition SDL had significant cash reserves and no
outstanding debt, thereby further strengthening the
Group’s balance sheet and liquidity.
56
RWS — Annual Report 2020GOVERNANCE For the year ended 30 September 2020, the Group’s
revenue has been in line with the prior year. The Group’s
Life Sciences and Moravia divisions have seen revenue
growth compared to the prior year, with revenues
growing at a faster rate during the second half of the
financial year, when Covid-19 restrictions were tighter
than as at the date of authorising these financial
statements. Revenues in the IP Services division have
fallen 10% compared with the prior year, as set out on
page 13 of the Strategic Report.
As at 30 September 2020, the Group’s balance sheet
reflects a net asset position of £408.8 million and the
liquidity of the Group remains strong with £51.4m of
cash reserves. During the year we refinanced our debt
into a US$120 million revolving credit facility (RCF) with
a maturity date of February 2024, which is extendable
for a further year subject to lender consent. At year end
US$31.1 million is undrawn, while the RCF also offers
an accordion facility of US$80 million, subject to lender
consent, however in all scenarios modelled the Group’s
liquidity requirements are within the US$120 million RCF.
At 30 September 2020, our net debt position excluding
lease liabilities is £15.1m (see note 17), and the Group’s
two debt covenants under its RCF being the ratio of Net
Debt to trailing 12-month Adjusted EBITDA (as defined
in the RCF agreement) and trailing 12-month EBITDA to
Finance Charges (as defined in the RCF agreement) are
0.23:1 and 44.97:1, respectively. Both are well within
the covenant limits permitted by the Group’s RCF. The
Group has assessed its forecast compliance with these
covenants at 31 March 2021, 30 September 2021 and 31
March 2022 and concluded that even in the most severe
but plausible scenario modelled, the Group will continue
to comply with its covenants.
On the basis set out above, the Directors consider it
appropriate to conclude that the Group has adequate
resources to continue as a going concern for the
foreseeable future and for a period of at least 12 months
from the date of authorising these financial statements.
Therefore, the Group continues to adopt the going
concern basis for preparing its financial statements.
SUBSEQUENT EVENTS
On 27 August 2020, the Parent Company announced it
had reached agreement with SDL plc (“SDL”) for an all-
share combination, pursuant to which RWS would acquire
the entire issued and to be issued share capital of SDL by
means of a court-sanctioned scheme of arrangement.
Subsequent to 30 September 2020, following the
shareholders of both SDL and the Parent Company voting
in favour of the proposed all-share combination, a court-
sanctioned scheme of arrangement became effective
on 4 November 2020. Accordingly, 113,338,511 new
ordinary shares were issued by the Parent Company as
consideration to acquire 100% control of SDL.
FINANCIAL INSTRUMENTS
Information about the use of financial instruments by
the Group is given in note 21 to the financial statements.
DIRECTORS
Details of members of the Board at the date of signing
this report are set out on pages 30 to 31.
Further information on Board composition, responsibilities,
commitments and re-election/election can be found on
pages 44 to 47 of the Corporate Governance Report.
The interests of the Directors in shares during the
year are set out on pages 54 and 55 in the Directors’
Remuneration Report.
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
Further information about the Audit and Remuneration
Committees and details of the Company’s remuneration
policy are set out on pages 50 to 55.
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 their potential.
EMPLOYEE INVOLVEMENT
The Company’s policy is to consult and discuss with
employees 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 age, sex, race or religion. All group
companies endeavour to provide equal opportunities
in recruiting, training, promoting and developing the
careers of all employees.
57
RWS — Annual Report 2020g Directors’ Report (continued)
FOSTERING GOOD RELATIONSHIPS
Understanding what matters to our stakeholders is
achieved by building strong, constructive relationships
and engaging regularly. We value the diverse
perspectives that our broad range of stakeholders
bring to our decision making. We recognise that
engagement with stakeholders is a vital part in the
execution of our long-term strategy. Our shareholders,
staff, clients, suppliers and our local communities are
our key stakeholder groups.
We rely on our shareholders to finance our activities
and the continuing expansion of our business. As such,
engagement with them, creating value for them and
shaping our future decisions based on the results of
our engagement with them is critical to the long-term
success of the Group.
Our clients are at the core of our strategic thinking. It
is in response to their needs that we seek to provide
quality, efficient solutions. We are acutely focused on
how their needs continue to develop in the 24/7 digital
world we all now inhabit.
It is the talent, passion and hard work of our people
that enable us to deliver the most effective and
innovative solutions for our clients.
The relationships we build with stakeholders are
subject to sound governance to ensure insights
are taken into consideration in decision-making
at management and Board level. This has been
demonstrated by how we responded to the Covid-19
pandemic: our teams migrated to working from home
successfully and efficiently, helping with clinical trials
for new Covid-19 vaccines, translated training material
for Covid-19 related antibody testing devices and
providing additional services to the Group’s technology
customers.
AUTHORITY TO ALLOT
Under section 549 of the 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 10 February 2021
AGM which renews, for the period ending 13 May
2022, or, if earlier, the date of the 2022 AGM, 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 £1,295,090, representing
approximately one third of the share capital of the
Company in issue at 9 December 2020.
58
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 10 February 2021 AGM
which renews, for the period ending on 13 May 2022 or,
if earlier, the date of the 2022 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
£194,264 (representing in accordance with institutional
investor guidelines, approximately 5% of the share capital
in issue as at 9 December 2020). The second resolution
will request a further authority for the Directors to allot
shares up to an aggregate nominal value of £194,264,
in respect of an acquisition or capital investment. Both
resolutions will ask for approval, as if the pre-emption
rights of section 561 of the Act did not apply.
STATEMENT OF DISCLOSURE OF
INFORMATION TO 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.
PwC has expressed its willingness to continue in office
and a resolution to reappoint them will be proposed at
the 10 February 2021 AGM.
On behalf of the Board
Richard Thompson
CHIEF EXECUTIVE OFFICER
9 December 2020
RWS — Annual Report 2020GOVERNANCE Statement of Directors’
Responsibilities
The Directors are responsible
for preparing the annual report
and the financial statements in
accordance with applicable law
and regulation.
Company law requires the Directors to prepare
financial statements for each financial year. Under
that law, the Directors have prepared the Group
financial statements in accordance with International
Financial Reporting Standards (IFRSs), as adopted
by the European Union, and the Parent Company
financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising
FRS 101 “Reduced Disclosure Framework”, and
applicable law). Under company law, the Directors
must not approve the financial statements unless they
are satisfied that they give a true and fair view of the
state of affairs of the Group and the Parent Company,
and of the profit or loss of the Group and the Parent
Company for that period.
In preparing these financial statements, the Directors
are required to:
> select suitable accounting policies and then apply
them consistently;
> state whether applicable IFRSs, as adopted by
the European Union, have been followed for the
Group financial statements and United Kingdom
Accounting Standards, comprising FRS 101, have
been followed for the Parent Company financial
statements, subject to any material departures
disclosed and explained in the financial statements;
> make judgements and accounting estimates that
are reasonable and prudent; and
> prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group and the Parent Company will
continue in business.
The Directors are also responsible for safeguarding
the assets of the Group and the Parent Company, and
hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show
and explain the Group and the Parent Company’s
transactions and disclose, with reasonable accuracy at
any time, the financial position of the Group and the
Parent Company, and enable them to ensure that the
financial statements comply with the Companies
Act 2006.
The Directors are responsible for the maintenance
and integrity of the Company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
DIRECTORS’ CONFIRMATION
The Directors consider that the Annual Report
and accounts, taken as a whole, is fair, balanced
and understandable and provides the information
necessary for shareholders to assess the Group and
Parent Company’s position and performance, business
model and strategy.
On behalf of the Board
Richard Thompson
CHIEF EXECUTIVE OFFICER
9 December 2020
59
RWS — Annual Report 2020g 60
RWS — Annual Report 2020FINANCIAL STATEMENTS Financial Statements
61
RWS — Annual Report 2020f
Independent Auditors’
Report to the Members
of RWS Holdings plc
Report on the audit of the financial statements
OPINION
In our opinion:
> RWS Holdings plc’s Group financial statements and
Parent Company financial statements (the “financial
statements”) give a true and fair view of the state of
the Group’s and of the Parent Company’s affairs as at
30 September 2020 and of the Group’s profit and cash
flows for the year then ended;
> the Group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the
European Union;
> the Parent Company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 101 “Reduced
Disclosure Framework”, and applicable law); and
> the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
We have audited the financial statements, included within
the Annual Report, which comprise: the Consolidated
and Parent Company Statements of Financial Position
as at 30 September 2020; the Consolidated Statement of
Comprehensive Income, the Consolidated Statement of
Cash Flows, and the Consolidated and Parent Company
Statements of Changes in Equity for the year then ended;
and the notes to the financial statements, which include a
description of the significant accounting policies.
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described
in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the Group in accordance
with the ethical requirements that are relevant to our
audit of the financial statements in the UK, which includes
the FRC’s Ethical Standard, as applicable to listed entities,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
OUR AUDIT APPROACH
Overview
> Overall Group materiality: £3.5 million (2019: £3.7 million), based on 5% of profit
before tax adjusted for amortisation of acquired intangibles, acquisition costs,
share-based payment expense and exceptional items.
> Overall Parent Company materiality: £2.9 million (2019: £3.0 million), based on
Materiality
1% of total assets.
> We performed full scope audits over the complete financial information for the
Life Sciences and Moravia divisions and for the Translations business within the IP
Services division (each being a “component”). In addition, we conducted specific
audit procedures on certain balances and transactions in respect of centralised
functions; this included work on Group-wide estimates and judgments and the
consolidation. Analytical review procedures were performed on a further three
components.
> This accounted for approximately 90% (2019: 93%) of the Group’s revenue and 86%
(2019: 90%) of the Group’s adjusted profit before taxation.
> Impairment of goodwill and intangible assets – Group
> Acquisition accounting for Iconic Translation Machines Ltd and Webdunia.com
(India) Private Limited – Group
> Consideration of the impact of COVID-19 – Group and Company
Audit scope
Key audit
matters
62
RWS — Annual Report 2020FINANCIAL STATEMENTS The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the directors made subjective judgements, for example in
respect of significant accounting estimates that involved making assumptions and considering future events that
are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal
controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material
misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the
audit of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters, and any comments we make on the results of our procedures thereon, were addressed in
the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Impairment of goodwill and intangible assets
- Group
Refer to Note 1 (Accounting policies), Note 2
(Critical judgements and accounting estimates in
applying the Group’s accounting policies), Note 12
(Goodwill) and Note 13 (Intangible assets).
The Group has goodwill amounting to £253.9
million (2019: £249.4m) and intangible assets with
a net book value of £157.8 million (2019: £169.1
million) as at 30 September 2020.
IAS 36 ‘Impairment of Assets’ requires that
goodwill is subject to an impairment assessment
at least annually, or more frequently when
there is evidence of a trigger event. Impairment
assessments are required to be performed at the
cash generating unit (‘CGU’) level and therefore
include an assessment of the carrying value of
the Group’s intangible assets and other non
financial assets. Specific disclosures in respect of
the impairment assessment are also required in
the financial statements.
Impairment assessments require significant
estimation and there is the risk that the carrying
value of the assets may not be supported by their
recoverable amount, determined by management
through a value in use calculation. As such, this
was a key area of focus for our audit due to the
material nature of the respective balances and
the significant degree of estimation involved in
the discounted cash flow used to determine value
in use.
The Directors’ impairment assessment concluded
that there was headroom over the carrying
amounts of each of the CGUs and that there were
no impairments to goodwill or intangible assets.
The key assumptions in this assessment included
the forecast revenue growth, the discount rate
and the perpetuity growth rate.
Our audit procedures comprised the following:
> Evaluating the Directors’ designation of the CGUs as
being in compliance with IAS 36;
> Obtaining the impairment assessments performed by
management and comparing the carrying value of each
CGU (as defined in Note 12) with the recoverable amount
determined by management;
> Assessing the appropriateness of the methodology built
into the model and the mathematical accuracy of the
calculations built into the model;
> Agreeing forecast financial information to budgets and
forecasts approved by senior management and the
Board; and
> Challenging management over the reasonableness of
the key assumptions inherent in the model.
In order to assess each of the key assumptions in the
impairment assessment, we performed the following:
> Compared the reasonableness of forecast revenue
growth rates, margins and the corresponding cash flows
against management’s strategic plans and third party
analyst reports;
> Evaluated the reliability of management’s forecasting by
comparing actual results with previous years’ forecasts;
> Assessed the appropriateness of the discount rate
assumption by using experts to derive an independent
view on the rate. We agreed the inputs into
management’s calculation to third party data;
> Assessed the appropriateness of the long term growth
rate by using experts to derive an independent view
on the rate. We also compared management’s rates to
independent external publications; and
> Performed sensitivity analyses on the key assumptions
in the model.
Having ascertained the extent of change in those
assumptions that either individually or collectively would
be required for the goodwill to be impaired for the CGU, we
considered the likelihood of such a movement in those key
assumptions arising.
We also considered the appropriateness of the related
disclosures in note 12 to the financial statements. We
challenged management on the sensitivity to reasonable
changes in the key assumptions. We found the sensitivity
disclosures in relation to the discount rate for the Moravia
CGU to be appropriate and in compliance with the
requirements of IAS 36.
63
RWS — Annual Report 2020f Independent Auditors’ Report to the Members of
RWS Holdings plc (continued)
Key audit matter
How our audit addressed the key audit matter
Acquisition accounting for Iconic Translation
Machines Ltd and Webdunia.com (India) Private
Limited - Group
Refer to Note 1 (Accounting policies) , Note 2 (Critical
judgements and accounting estimates in applying the
Group’s accounting policies) and Note 25 (Acquisitions).
The Group completed two acquisitions in June 2020:
> Iconic Translation Machines Ltd (“Iconic”) for cash
consideration of $10m with a further contingent
consideration of up to $10m; and
> Webdunia.com (India) Private Limited for cash
consideration of $21m.
Both transactions are considered to be business
combinations under IFRS 3. Accounting for business
combinations is complex and involves judgement
including around the determination of the fair value of
consideration paid and payable, and assessment of the
fair value of assets and liabilities acquired. The valuation
of identified intangibles can be a subjective process and
there is a risk that the accounting treatment may be
incorrect and as such this was an area of focus for us.
Iconic
Management conducted its initial provisional purchase
price allocation for Iconic within which it identified
intangible assets of £1.5m in respect of Iconic’s client
relationships and supplier database, resulting in
Goodwill of £8.2m.
Determining the fair value of the identified intangible
assets includes the application of valuation techniques
that require estimation of client attrition rates, growth
rates for existing client revenues, forecast profitability
levels and an appropriate discount rate. Management
utilised an external valuation expert to assist in the
identification and valuation of intangible assets.
The valuation of the contingent consideration is also
subjective and requires judgements as to whether
financial targets are expected to be met.
Webdunia
The provisional fair value of assets and liabilities has
been recorded as equal to their book value with the
surplus to the purchase price recorded as goodwill.
Management will finalise the purchase price allocation
for Webdunia within 12 months of the acquisition date in
accordance with IFRS 3.
Our audit procedures in respect of both acquisitions
comprised the following:
> Reading the SPA agreement and other documents
including due diligence reports;
> Ensuring the accounting is in accordance with IFRS
3 Business Combinations, in particular that the
acquisition meets the definition of a business;
> Agreeing cash consideration to bank statements;
and
> Examining the related disclosures in note 25 of the
financial statements including the disclosure of fair
values as provisional and consider these disclosures
to be reasonable.
Iconic
Specifically in respect of the Iconic acquisition, our
audit procedures also comprised:
> Performing audit procedures on the acquired
opening balance sheet, which included vouching
material assets and liabilities back to supporting
documentation;
> Assessing the calculation of and the accounting
for the contingent consideration, which included
understanding the ongoing involvement of certain
Iconic shareholders; and
> Assessing the reasonableness of the contingent
consideration recognised at the date of acquisition
by understanding the financial metrics for the earn-
out and the range of possible outcomes together
with vouching to internal and external forecasts.
In relation to the intangible assets identified in respect
of Iconic’s client relationships and software, we utilised
our valuations experts and performed the following:
> Assessed the results of the purchase price
allocation exercise conducted by management’s
own experts. This included an assessment of
the valuation methodology and confirming its
mathematical accuracy;
> Assessed the appropriateness of the assumptions
in the underlying model, including client attrition
rates, growth rates for existing client revenues and
forecast profitability levels;
> Performed a benchmarking exercise to assess the
appropriateness of the software asset recognised;
and
> Considered the appropriateness of the discount
rate used.
Based on our audit procedures performed, we
consider management’s accounting for the acquisitions
for Iconic and Webdunia, the provisional purchase
price allocations and the related disclosures to be
reasonable.
64
RWS — Annual Report 2020FINANCIAL STATEMENTS
Key audit matter
How our audit addressed the key audit matter
Consideration of the impact of COVID-19 –
Group and Company
Refer to the Directors’ Report and note 1 of the financial
statements which contain disclosure of the risk to the
Group of Covid-19 and management’s conclusions on
going concern.
As with all businesses, the Group and Company have
felt the impact of the pandemic with certain areas of the
business being more impacted than others. Given the
significance of the impact of the pandemic on the global
economy, we considered this an important area of focus,
particularly with respect to future cash flow projections
in the context of impairment assessments (see above)
and the appropriateness of the going concern basis of
preparation as well as consideration of the recoverability
of accounts receivable and contract assets.
Management has performed its going concern
assessment which has included modelling multiple
scenarios including a severe but plausible downside,
having given consideration to its trading since March
2020. Management’s assessment has also considered
the liquidity position and forecasts of SDL following
completion of the acquisition in November 2020.
The result of management’s assessment is that the
Group expects to be solvent and to continue to meet all
banking covenant requirements for a period no less than
12 months from the date of this report. The Directors
have therefore prepared the financial statements on
a going concern basis with no material uncertainty
identified.
With respect to the appropriateness of the going concern
basis of preparation, our audit procedures comprised
the following:
> Obtaining management’s going concern paper and
supporting model and testing the accuracy of key
sources of information by agreeing them to the
underlying books and records subject to our other audit
procedures;
> Testing the mathematical accuracy of the model;
> Agreeing the forecasts to the Board approved budget
for the financial year ended 30 September 2021 and
management’s forecasts for the six month period
beyond that;
> Comparing the forecasts used in the going concern
model to other sources, in particular those used for
management’s impairment assessment; and
> Assessing the appropriateness of the cash flow forecasts
and evaluating the Directors’ downside sensitivities
against these forecasts.
Our conclusions relating to going concern are set out in
the ‘Conclusions relating to going concern’ section below.
Regarding impairment, our procedures performed are
as detailed in the above key audit matter.
We considered other potential areas of the statement of
Financial Position which could be impacted, specifically
in respect of recoverability of accounts receivable and
contract assets and the appropriateness of the expected
credit loss ratio applied. We concluded that there were
no indicators of material misstatement in relation to
accounts receivables or contract assets.
We reviewed management’s disclosures in relation to
the potential impact of COVID-19 and concluded they are
appropriate given our audit work and knowledge.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we
performed enough work to be able to give an opinion on
the financial statements as a whole, taking into account
the structure of the Group and the Parent Company, the
accounting processes and controls, and the industry in
which they operate.
In establishing the overall approach to the Group audit,
we determined the type of work that needed to be
performed at a divisional level by us, as the Group audit
team, or through involvement of component auditors.
The Group audit team performed the work over the Life
Sciences division and the Translations business within the
IP Services division. We instructed our component audit
team in the Czech Republic to perform an audit of the
complete financial information of the Moravia division.
Where work was performed by our component auditors
in the Czech Republic, we determined the level of
involvement we needed to have in the audit work to be
able to conclude whether sufficient appropriate audit
evidence had been obtained as a basis for our opinion on
the Group financial statements as a whole. As Covid-19
prevented travel to the Czech Republic, we were unable
to make a site visit during our FY20 audit. We conducted
site visits and met with local management and with our
component audit team during the prior year audit. For
the FY20 audit, we instead conducted our oversight of
our component team through conference calls, video
conferencing and other forms of communication as
considered necessary as well as remote working paper
reviews to satisfy ourselves as to the appropriateness of
audit work performed by our component team. We also
attended key meetings with local management with our
component team.
In addition, the Group audit team conducted specific audit
procedures on certain balances and transactions in respect
of centralised functions; this included work on Group-wide
estimates and judgments and the consolidation. Analytical
review procedures were performed on a further three
components by the Group audit team.
Our scope gave us coverage of approximately 90% (2019:
93%) of the Group’s revenue and 86% (2019: 90%) of the
Group’s adjusted profit before taxation and as a whole,
gave us the evidence we needed for our opinion on the
Group financial statements.
65
RWS — Annual Report 2020f
Independent Auditors’ Report to the Members of
RWS Holdings plc (continued)
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in
evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
£3.5 million (2019: £3.7 million).
£2.9 million (2019: £3.0 million).
Group financial statements
Parent Company financial statements
How we determined it
Rationale for benchmark
applied
5% of profit before tax adjusted for
amortisation of acquired intangibles,
acquisition costs, share-based payment
expense and exceptional items.
Based on the benchmarks used in
the Annual Report, we believe that
adjusted profit before tax is the primary
measure used by the shareholders
in assessing the performance of the
Group, as a reflection of the underlying
performance of the Group. It is the key
performance indicator utilised by the
users of the financial statements.
1% of total assets.
We believe that Total Assets is the primary
measure used by the shareholders in
assessing the performance of the entity
and is a generally accepted auditing
benchmark.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group
materiality. The range of materiality allocated across components was £2.3 million to £3.2 million. Certain components
were audited to a local statutory audit materiality that was also less than our overall Group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
£175,000 (Group audit) (2019: £185,000) and £145,000 (Parent Company audit) (2019: £150,000) as well as misstatements
below those amounts that, in our view, warranted reporting for qualitative reasons.
CONCLUSIONS RELATING TO GOING
CONCERN
We have nothing to report in respect of the following
matters in relation to which ISAs (UK) require us to report
to you where:
> the directors’ use of the going concern basis of
accounting in the preparation of the financial
statements is not appropriate; or
> the directors have not disclosed in the financial
statements any identified material uncertainties
that may cast significant doubt about the Group’s
and Parent Company’s ability to continue to adopt
the going concern basis of accounting for a period
of at least twelve months from the date when the
financial statements are authorised for issue.
However, because not all future events or conditions can
be predicted, this statement is not a guarantee as to the
Group’s and Parent Company’s ability to continue as a
going concern.
REPORTING ON OTHER INFORMATION
The other information comprises all of the information in
the Annual Report other than the financial statements and
our auditors’ report thereon. The directors are responsible
for the other information. Our opinion on the financial
statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except
to the extent otherwise explicitly stated in this report, any
form of assurance thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to
be materially misstated. If we identify an apparent material
inconsistency or material misstatement, we are required
to perform procedures to conclude whether there is a
material misstatement of the financial statements or a
material misstatement of the other information. If, based
on the work we have performed, we conclude that there
is a material misstatement of this other information, we
are required to report that fact. We have nothing to report
based on these responsibilities.
With respect to the Strategic Report and Directors’ Report,
we also considered whether the disclosures required by
the UK Companies Act 2006 have been included.
66
RWS — Annual Report 2020FINANCIAL STATEMENTS Based on the responsibilities described and our work
undertaken in the course of the audit, ISAs (UK) require us
also to report certain opinions and matters as described
below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in
the course of the audit, the information given in the
Strategic Report and Directors’ Report for the year
ended 30 September 2020 is consistent with the financial
statements and has been prepared in accordance with
applicable legal requirements.
Use of this report
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.
In light of the knowledge and understanding of the Group
and Parent Company and their environment obtained in
the course of the audit, we did not identify any material
misstatements in the Strategic Report and Directors’
Report.
Other required reporting
COMPANIES ACT 2006 EXCEPTION
REPORTING
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
> certain disclosures of directors’ remuneration
specified by law are not made; or
> the Parent Company financial statements are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Timothy McAllister
(SENIOR STATUTORY AUDITOR)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
10 December 2020
RESPONSIBILITIES FOR THE FINANCIAL
STATEMENTS AND THE AUDIT
Responsibilities of the directors for the financial
statements
As explained more fully in the Statement of Directors’
Responsibilities, the directors are responsible for the
preparation of the financial statements in accordance
with the applicable framework and for being satisfied
that they give a true and fair view. The directors are also
responsible for such internal control as they determine
is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless
the directors either intend to liquidate the Group or
the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the
audit of the financial statements is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditors’ report.
67
RWS — Annual Report 2020f Consolidated Statement of Comprehensive Income
for the year ended 30 September 2020
Revenue
Cost of sales
Gross profit
Proceeds from warranty claim
Administrative expenses
Operating profit
Analysed as:
Adjusted operating profit:
Amortisation of acquired intangibles
Acquisition costs
Share based payment expense
Exceptional items
Operating profit
Finance income
Net gain on debt modification
Finance costs
Profit before tax
Taxation
Profit for the year
Other comprehensive (expense)/income*
(Loss)/gain on retranslation of foreign operations
Gain/(loss) on cash flow hedges
Total other comprehensive (expense)/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
6
5
4
13
23
6
8
6
8
9
2020
£’000
2019
£’000
355,783
(216,180)
355,696
(213,210)
139,603
142,486
9,017
(88,419)
60,201
72,881
(15,317)
(4,112)
(1,057)
7,806
60,201
50
1,193
(2,770)
58,674
-
(80,606)
61,880
78,396
(15,414)
(791)
(311)
-
61,880
105
-
(4,268)
57,717
(12,243)
46,431
(12,577)
45,140
(14,214)
1,864
(12,350)
20,141
(2,661)
17,480
34,081
62,620
11
11
16.9
16.9
16.5
16.4
*Other comprehensive (expense)/income includes only items that will be subsequently reclassified to profit before
tax when specific conditions are met.
The notes on pages 72 to 107 form part of these financial statements.
68
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS
Consolidated Statement of Financial Position
as at 30 September 2020
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Right-of-use assets
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
Lease liabilities
Foreign exchange derivatives
Income tax payable
Provisions
Non-current liabilities
Loans
Lease liabilities
Trade and 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
Hedge reserve
Retained earnings
Total equity
Note
2020
£’000
2019
£’000
12
13
14
19
15
16
21
24
3
17
18
19
21
20
17
19
18
20
15
3
22
253,908
157,813
22,791
20,084
1,939
456,535
82,086
601
51,380
134,067
590,602
-
57,576
3,207
103
3,561
87
64,534
66,515
19,571
357
2,368
28,409
117,220
181,754
408,848
2,752
53,634
1,389
(8,483)
14,868
(389)
345,077
408,848
249,421
169,109
22,888
-
3,371
444,789
85,543
-
46,974
132,517
577,306
25,681
57,343
-
824
5,969
87
89,904
58,045
-
318
843
30,700
89,906
179,810
397,496
2,737
51,757
662
(8,483)
29,082
(2,253)
323,994
397,496
The notes on pages 72 to 107 form part of these financial statements.
The financial statements on pages 68 to 107 were approved by the Board of Directors and authorised for issue on
9 December 2020 and were signed on its behalf by:
Andrew Brode
DIRECTOR
69
RWS — Annual Report 2020f
Consolidated Statement of Changes in Equity
for the year ended 30 September 2020
At 1 October 2018
Profit for the year
Loss on cash flow hedges
Gain on retranslation of foreign operations
Total comprehensive income for the year
Issue of shares
Deferred tax on unexercised share options
Income tax on unexercised share options
Dividends
Exercise of share options
Equity settled share based payments
At 30 September 2019
Share
capital
£’000
Share
premium
account
£’000
Other
reserves
(see below)
£’000
Retained
earnings
£’000
Notes
Total
attributable
to owners
of Parent
£’000
2,735
51,549
1,250
299,745
355,279
-
-
-
-
2
-
-
-
-
-
-
-
-
-
208
-
-
-
-
-
-
45,140
(2,661)
20,141
-
-
45,140
(2,661)
20,141
17,480
45,140
62,620
-
-
-
-
(33)
311
-
145
131
210
145
131
(21,200)
(21,200)
33
-
-
311
2,737
51,757
19,008
323,994
397,496
15
10
Adjusted on initial application of IFRS 16 (net of tax)
-
-
-
(504)
(504)
Restated balance at 1 October 2019
2,737
51,757
19,008
323,490
396,992
Profit for the year
Gain on cash flow hedges
Loss on retranslation of foreign operations
Total comprehensive income for the year
Issue of shares
Deferred tax on unexercised share options
Dividends
Exercise of share options
Equity-settled share based payments
-
-
-
-
-
-
-
-
-
46,431
1,864
(14,214)
-
-
46,431
1,864
(14,214)
(12,350)
46,431
34,081
15
10
23
15
1,877
-
-
-
-
-
-
-
-
-
-
-
-
(1,100)
1,892
(1,100)
(24,063)
(24,063)
(319)
1,046
319
-
-
1,046
At 30 September 2020
2,752
53,634
7,385
345,077
408,848
Other reserves
At 1 October 2018
Other comprehensive income for the year
Exercise of share options
Equity-settled share based payments
Share based
payment
reserve
£’000
Reverse
acquisition
reserve
£’000
Hedge
reserve
£’000
Foreign
currency
reserve
£’000
Total
other
reserves
£’000
384
(8,483)
408
8,941
1,250
-
(33)
311
-
-
-
(2,661)
20,141
17,480
-
-
-
-
(33)
311
At 30 September 2019
662
(8,483)
(2,253)
29,082
19,008
Other comprehensive expense for the year
Exercise of share options
Equity-settled share based payments
-
(319)
1,046
-
-
-
1,864
(14,214)
(12,350)
-
-
-
-
(319)
1,046
At 30 September 2020
1,389
(8,483)
(389)
14,868
7,385
70
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS Consolidated Statement of Cash Flows
for the year ended 30 September 2020
Cash flows from operating activities
Profit before tax
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Depreciation of right-of-use assets
Share-based payment expense
Finance income
Net gain on debt modification
Finance costs
Operating cash flow before movements in working capital and provisions
Decrease/(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 received
Acquisition of subsidiary, net of cash acquired
Purchases of property, plant and equipment
Purchases of intangibles (software)
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Transaction costs relating to debt refinancing
Interest paid
Lease liability payments
Proceeds from the issue of share capital
Dividends paid
Net cash outflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Exchange (losses)/gains on cash and cash equivalents
Cash and cash equivalents at end of the year
Free cash flow - Non-GAAP measure
Analysis of free cash flow
Cash generated from operations
Proceeds from warranty claim
Net interest paid
Income tax paid
Purchases of property, plant and equipment
Purchases of intangibles (software)
Free cash flow
Note
2020
£’000
2019
£’000
58,674
57,717
14
13
19
23
8
6
8
25
14
13
10
24
4
2,951
18,731
4,492
1,057
(50)
(1,193)
2,770
87,432
5,374
1,723
94,529
(15,164)
79,365
50
(22,973)
(2,942)
(5,119)
3,025
18,364
-
311
(105)
-
4,268
83,580
(11,523)
9,770
81,827
(11,464)
70,363
105
(4,536)
(3,844)
(4,170)
(30,984)
(12,445)
15,711
(29,417)
(615)
(3,189)
(4,094)
1,892
(24,063)
(43,775)
4,606
46,974
(200)
51,380
94,529
(9,017)
(3,139)
(15,164)
(2,942)
(5,119)
59,148
-
(25,057)
-
(4,125)
-
210
(21,200)
(50,172)
7,746
38,155
1,073
46,974
81,827
-
(4,020)
(11,464)
(3,844)
(4,170)
58,329
Free cash flow excludes proceeds from warranty claim of £9.0 million (2019: £nil).
71
RWS — Annual Report 2020f
Notes to the Consolidated Financial Statements
1. ACCOUNTING POLICIES
Basis of accounting and preparation
of financial statements
RWS Holdings plc (“the Parent Company”) is a public
company, limited by shares, incorporated and domiciled
in England and Wales whose shares are publicly traded
on AIM, the London Stock Exchange regulated market.
The consolidated financial statements consolidate
those of the Company and its subsidiaries (“the Group”).
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, IFRS IC
interpretations and the 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 held at fair value
through profit or loss or through other comprehensive
income.
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.
New accounting standards, amendment
and interpretations
IFRS 16 “Leases” – (Effective from 1 October 2019)
The Group has adopted IFRS 16 from 1 October 2019
and applied the modified retrospective approach.
IFRS 16 provides a single on-balance sheet accounting
model for lessees which recognises a right-of-use asset,
representing its right to use the underlying asset, and
lease liability, representing the Group’s obligation to
make payments for the use of the underlying asset. The
distinction between finance and operating leases has
been removed for lessees. Comparatives for the prior
period have not been restated and the adjustments
arising from the new leasing standard are therefore
recognised in the opening balance sheet on 1 October
2019 as follows:
Non-Current assets
Right-of-use assets
Deferred tax asset
Trade and other receivables
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Non-Current liabilities
Lease liabilities
Total liabilities
Total movement in retained earnings as at
1 October 2019
1 October 2019
£’000
23,650
140
(14)
23,776
(682)
5,261
19,701
24,280
(504)
The Group has predominantly office leases, which were
all previously accounted for under IAS 17 as operating
leases. These leases have a variety of lease terms and
some include scheduled rent reviews, break options,
extension options or rent increases based on future
indices (e.g. CPI).
At transition, the Group recognised lease liabilities for
leases which had previously been classified as operating
leases by measuring the present value of the remaining
lease payments, discounted by an incremental borrowing
rate. The Group’s weighted average incremental
borrowing rate at 1 October 2019 was 2.9%.
In regard to right-of-use assets, these were measured at
either:
> Their carrying amount as if IFRS 16 had applied since
the lease commencement date (or where subsidiaries
holding these leases were acquired by the Group),
discounted by the relevant incremental borrowing
rate as at 1 October 2019. The Group has applied this
transition methodology where sufficient historical
information has been available; or
> An amount equal to the lease liability. This approach
has been applied to a small number of property
and non-property leases where either historical
information was unavailable or where these leases
were not considered to be material.
Reconciliation of lease commitments to
opening lease liability balance
Operating lease commitments as disclosed at
30 September 2019
Effect of discounting using the Group’s incremental
borrowing rate
Short term leases with less than 12 months to
expiry not recognised as a liability
Low value leases not recognised as a liability
Recognition differences relating to lease extension
options and lease term assumptions
£’000
24,687
(2,292)
(188)
(58)
2,813
Lease liability recognised as at 1 October 2019
24,962
72
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS
Practical expedients applied
On adoption of IFRS 16, the Group has used the following
practical expedients permitted by the standard:
> Used a single incremental borrowing rate for similar
leases exposed to similar risks
> Excluded initial direct costs for the measurement
of right-of-use assets at the date of the initial
application
lease liability is remeasured, a corresponding adjustment
is made to the right-of-use asset.
Payments associated with short term leases or low-
value assets are recognised on a straight-line basis as an
expense in the income statement. Short term leases are
leases with a term of 12 months or less.
The Group’s activities as a lessor are currently not
material.
> Used hindsight in determining the lease term where
the contract contains options to extend or terminate
the lease
There were no other new IFRSs or IFRS IC interpretations
that are not yet effective that are expected to have a
material impact on the Group.
> Excluded long-term leases with less than 12 months
remaining until expiry.
Basis of consolidation
Additionally, on transition the Group elected not to
reassess whether a contract is, or contains, a lease,
instead relying on the assessment already made applying
IAS 17 ‘Leases’ and IFRIC 4 ‘Determining whether an
arrangement contains a lease’.
Impact on the statement of comprehensive income
The impact on the statement of comprehensive income
for the year ended 30 September 2020 is an increase in
operating profit of approximately £0.5m and an increase
in finance costs of £0.7m resulting in a decrease in profit
before tax of £0.2m.
Impact on the statement of cash flows
There has been a change to the classification of cash
flows in the statement of cash flows with operating lease
payments previously categorised as cash flows from
operating activities now being disclosed within financing
activities. In the 12 months to 30 September 2020 there
are £4.1 million of lease payments within financing
activities comprising £3.4 million of the repayment of
lease liabilities and £0.7 million of interest paid. There
were no changes to the net cash flows related to leases.
Accounting policy
The Group recognises a right-of-use asset and a lease
liability at the lease commencement date.
The right-of-use asset is initially measured at cost,
comprising the initial amount of the lease liability plus
any initial direct costs incurred and an estimate of
costs to restore the underlying asset, less any lease
incentives received. The right-of-use asset is subsequently
depreciated using the straight-line method from the
commencement date to the earlier of the end of the
useful life of the asset or the end of the lease term.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the incremental
borrowing rate. The lease liability is measured at
amortised cost using the effective interest method. It
is remeasured when there is a change in future lease
payments arising from a change in an index or a rate or
a change in the Group’s assessment of whether it will
exercise an extension or termination option. When the
The consolidated financial statements comprise the
financial statements of the Parent Company and
subsidiaries controlled by the Parent Company, drawn up
to 30 September 2020. 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.
Going concern
As part of the Director’s consideration of the
appropriateness of adopting the going concern basis
in preparing these financial statements, a range of
scenarios have been prepared. The assumptions
modelled include reasonable downside scenarios, as
well as taking into consideration the potential impact of
Covid-19 across the Group over the period until March
2022.
The range of scenarios consider the impact of reductions
to the Group’s revenues and corresponding cash flows,
with mitigating actions by management limited to
equivalent reductions in the Group’s controllable cost
base. No significant structural changes to the business
have been assumed in any of the scenarios modelled
with all mitigating actions wholly within management’s
control.
Subsequent to 30 September 2020, the Group’s all-
share acquisition of SDL plc completed and at the date
of acquisition SDL had significant cash reserves and no
outstanding debt, thereby further strengthening the
Group’s balance sheet and liquidity.
For the year ended 30 September 2020, the Group’s
revenue has been in line with the prior year. The Group’s
Life Sciences and Moravia divisions have seen revenue
growth compared to the prior year, with revenues
growing at a faster rate during the second half of the
financial year, when Covid-19 restrictions were tighter
than as at the date of authorising these financial
statements. Revenues in the IP Services division have
fallen 10% compared with the prior year, as set out on
page 13 of the Strategic Report.
73
RWS — Annual Report 2020f Notes to the Consolidated Financial Statements (continued)
As at 30 September 2020, the Group’s balance sheet
reflects a net asset position of £408.8 million and the
liquidity of the Group remains strong with £51.4m of cash
reserves. During the year the Group refinanced debt
into a US$120 million revolving credit facility (RCF) with
a maturity date of February 2024, which is extendable
for a further year subject to lender consent. At year end
US$31.1 million is undrawn, while the RCF also offers
an accordion facility of US$80 million, subject to lender
consent, however in all scenarios modelled the Group’s
liquidity requirements are within the US$120 million RCF.
At 30 September 2020, net debt excluding lease liabilities
is £15.1m (see note 17), and the Group’s two debt
covenants under its RCF being the ratio of Net Debt to
trailing 12-month Adjusted EBITDA (as defined in the RCF
agreement) and trailing 12-month EBITDA to Finance
Charges (as defined in the RCF agreement) are 0.23:1 and
44.97:1, respectively. Both are well within the covenant
limits permitted by the Group’s RCF. The Group has
assessed its forecast compliance with these covenants
at 31 March 2021, 30 September 2021 and 31 March
2022 and concluded that even in the most severe but
plausible scenario modelled, the Group will continue to
comply with its covenants.
On the basis set out above, the Directors consider it
appropriate to conclude that the Group has adequate
resources to continue as a going concern for the
foreseeable future and for a period of at least 12 months
from the date of authorising these financial statements.
Therefore, the Group continues to adopt the going
concern basis for preparing its financial statements.
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.
Costs directly attributable to business combinations
are expensed. 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. 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.
Provisional fair values are provided when there has been
insufficient time to finalise a purchase price allocation
process. IFRS 3 allows a period of 12 months from the
date of acquisition for provisional fair values to be revised.
Any contingent consideration, which is classified as
a provision, is measured at fair value at the date of
acquisition and subsequently remeasured to fair value at
each reporting date, until the contingency is settled. Any
changes in the fair value of contingent consideration are
recognised in profit or loss.
Goodwill and other intangible assets
Goodwill and other intangible assets are stated at cost
less accumulated amortisation and any accumulated
impairment losses. All intangible assets are subject
to an impairment review when there is an indication
that the carrying value may not be recoverable, while
goodwill is subject to an annual impairment review.
Intangible assets, excluding goodwill, that have suffered
an impairment previously, are reviewed for possible
reversal of this impairment at each reporting date or if
an indicator of reversal exists.
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, goodwill
is allocated at the lowest levels for which there are
separately identifiable cash inflows, for the purpose of
impairment testing.
Other intangible assets, separately identified from
goodwill and acquired as part of a business combination,
are initially stated at fair value, subject to meeting the
definition under IAS 38 “Intangible assets”. 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.
Other intangible assets are amortised using the straight
-line method over their estimated useful lives as follows:
Trade names
Clinician database
Supplier database
Technology
Non-compete clauses
Trademarks
Client relationships
Five to eight years
10 years
13 years
Five years
Five years
Five years
Seven to 20 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 amortised
using the straight-line method over their estimated
useful lives which range from one to five years.
The Group has chosen to capitalise some internally
generated software projects. These capitalised
development costs which also include staff costs are
being recorded as intangible assets, subject to the
conditions of IAS 38 being met, and amortised from the
point at which they are available for use. These assets
are being amortised using the straight-line method over
their estimated useful lives of up to three years.
Revenue recognition
Group revenue represents the fair value of the
consideration expected to be received or receivable for
the rendering of services, net of value added tax and other
similar sales-based taxes, rebates, discounts and third-
party licences, and after eliminating inter-company sales.
74
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS For contractual arrangements containing one
performance obligation, revenue is recognised at a
point in time, once the sole performance obligation is
satisfied, when the benefits of control of the services
performed are delivered to the client, typically when a
translation, filing, search or localisation deliverable has
been completed and delivered to the client.
Where contracts are partially completed, the revenue
recognised is based on work performed and delivered to
the client. Accrued income represents the full expected
receivable value of work performed and delivered to
date, less any amounts already invoiced.
For contractual arrangements within IP Services where
more than one performance obligation exists, such as a
translation and filing deliverable, revenue is allocated to
each performance obligation, at a point in time, based
on either the contracted stand-alone selling price, if any,
or the fair value of that performance obligation.
A proportion of the Group’s contractual arrangements
within Life Sciences, Moravia and IP Services contain
performance obligations that are recognised over
time. In Life Sciences, income is recognised over time
on a stage of completion basis, calculated on the
basis of costs incurred. In Moravia, revenues from
managed services are recognised over time based on
an hourly rate, will in IP Services subscription revenue
is recognised on a straight-line basis over the relevant
contractual subscription period.
Foreign currencies
The functional and presentation currency of the Group is
British Pounds Sterling.
Transactions in foreign currencies are translated into
the respective functional currencies of the Group at the
exchange rate on the dates of the transactions.
Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency
at the exchange rate at the reporting date. Non-
monetary assets and liabilities that are measured at
fair value in a foreign currency are translated into the
functional currency at the exchange rate when the fair
value was determined. Non-monetary items that are
measured based on historical cost in a foreign currency
are translated at the exchange rate at the date of the
transaction. Foreign currency differences are normally
recognised in the statement of comprehensive income.
rates prevailing on the reporting date. The Group has
elected to treat goodwill and fair value adjustments
arising on acquisitions before the date of transition to
IFRS as sterling-denominated assets and liabilities.
Segment information
Segment information reflects how the Group’s Board of
Directors (the Group’s chief operating decision maker)
controls the business, which is primarily on a divisional
basis. The assets and liabilities of the segments reflect
the assets and liabilities of the underlying companies
within each segment.
Property, plant and equipment
Property, plant and equipment are stated at 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 depreciates the cost of
each item of property, plant and equipment (less its
estimated residual value) using the straight-line method
over their estimated useful lives as follows:
Freehold land
Buildings
Leasehold land, buildings and
improvements
Furniture and equipment
Motor vehicles
Nil
50 years
Shorter of useful economic
life and lease term
Three to 10 years
Six years
All items of property, plant and equipment are tested
for impairment when there are indications that the
carrying value may not be recoverable. Any impairment
losses are recognised immediately in the statement of
comprehensive income. 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
value 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 volatility
arising from operational activities.
The assets and liabilities of the Group’s foreign
operations are translated at exchange rates prevailing
on the reporting date. Income and expense items
are translated using 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
foreign currency reserve in the consolidated statement
of financial position.
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 exchange
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 the carrying value are also
recognised in the statement of comprehensive income.
The Group designates certain derivatives as hedging
instruments to hedge the variability in cash flows
associated with highly probable forecast transactions
arising from changes in foreign exchange rates and
certain non-derivative liabilities as hedges of foreign
exchange risk on a net investment in a foreign operation.
75
RWS — Annual Report 2020f Notes to the Consolidated Financial Statements (continued)
At inception of designated hedging relationships, the
Group documents the risk management objective and
strategy for undertaking the hedge. The Group also
documents the economic relationship between the
hedged item and hedging instrument, including whether
the changes in cash flows of the hedged item and hedging
instrument are expected to offset each other.
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in fair value
of the derivative is recognised in other comprehensive
income and accumulated in the hedge reserve. The
effective portion of changes in the fair value of the
derivative that is recognised in other comprehensive
income is limited to the cumulative change in fair value
of the hedged item, determined on a present value basis,
from inception of the hedge. Any ineffective portion of
changes in the fair value of the derivative is recognised
immediately in the statement of comprehensive income.
The amount accumulated in the hedging reserve is
reclassified to the statement of comprehensive income
in the same period or periods during which the hedged
expected future cash flows affect the Group’s profit or loss.
If the hedge no longer meets the criteria for hedge
accounting or the hedging instrument expires or is
sold, terminated or exercised, then hedge accounting is
discontinued prospectively. If the hedged future cash
flows are no longer expected to occur, then the amount
accumulated in the hedge reserve is reclassified to the
statement of comprehensive income immediately.
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. 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 and accrued income
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
Tax expense comprises current 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.
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 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.
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.
Trade receivables represent amounts due from clients in
the normal course of business.
Employee benefits
Accrued income represents the expected receivable
value of work performed and delivered to date, less any
amounts already invoiced.
Both trade receivables and accrued income amounts
are initially stated at fair value and subsequently at
amortised cost using the effective interest method less
an estimate made for expected credit losses. The Group
applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected
loss allowance for all trade receivables and contract
assets. In order to estimate the expected credit losses,
the Group reviews outstanding amounts at year end
based on historical rates of default adjusted for forward
looking information where material.
Other receivables represent security deposits held in
respect of office leases and recoverable taxes.
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 amortised cost
using the effective interest rate method.
76
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS 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.
For cash-settled share-based transactions, an expense
is recognised, with a corresponding increase in liabilities,
over the period during which employees become entitled
to payment. The liability is remeasured at each reporting
date and at settlement date based on the fair value of the
cash options. Any changes in the liability are recognised
in profit or loss.
Share capital
Equity issued by the Parent Company is recorded as the
proceeds received net of direct share issue costs.
Loans
Loans are recognised initially at fair value, less directly
attributable transaction costs. Subsequent to initial
recognition, loans are stated at amortised cost using
the effective interest method. Loans are classified as
current, unless the Group has the discretion to roll over
an obligation for a period of at least 12 months under
an existing loan facility.
Directly attributable transaction costs are capitalised
into the loans to which they relate and are amortised
using the effective interest rate method.
Leases
Leases are now accounted for under IFRS 16. In
prior years under IAS 17, where the lessor retained
substantially all the risks and benefits of ownership
of the asset they were classified as operating leases.
Operating lease rental payments were recognised as
an expense in the statement of comprehensive income
on a straight-line basis over the lease term. The benefit
of lease incentives was spread over the term of the
lease.
Share based payments
The Group and Parent 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 either share options (equity-settled) or
cash options (cash-settled).
The 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 share options can be seen in note
23. 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
Dividends payable to the Parent Company’s shareholders
are recognised as a liability in the Group’s financial
statements in the period in which dividends are approved
by the Parent Company’s shareholders.
Exceptional items
When items of income or expense are material or
they are one-off or non-recurring in nature, they are
disclosed separately within the financial statements.
Such exceptional items include reorganisation costs,
proceeds from warranty claims, and net gains from debt
modifications.
Proceeds from warranty claims have been classified as
operating activities in the Group’s statement of cash flows.
2. CRITICAL JUDGEMENTS AND
ACCOUNTING ESTIMATES IN APPLYING
THE GROUP’S ACCOUNTING POLICIES
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.
These estimates and judgements are based on historical
experience and other factors, including expectations
of future events that are believed to be reasonable
under the circumstances. They are reviewed on an
ongoing basis. Revisions to estimates are recognised
prospectively.
Impairment of goodwill and intangible assets
An impairment test of goodwill (performed annually) and
other intangible assets (when an indicator of impairment
exists), requires estimation of the value in use of the CGUs
to which goodwill and other intangible assets have been
allocated. The value in use calculation requires the Group
to estimate the future cash flows expected to arise from
the CGUs, for which the Group considers revenue growth
rates to be a significant estimate. The estimated future
cash flows derived are discounted to their present value
using a pre-tax discount rate that reflects estimates of
market risk premium, asset betas, the time value of money
and the risks specific to the CGU. See Note 12 and 13 for
further details.
77
RWS — Annual Report 2020f Notes to the Consolidated Financial Statements (continued)
Acquisition accounting
Accounting for leases
Judgement is often required in determining the
identifiable intangible assets acquired as part of a
business combination that must be recognised as an
asset in the Group’s consolidated financial statements.
Estimation is required in determining both the fair value
of all identified assets, liabilities acquired, any contingent
consideration and in particular intangible assets. In
determining these fair values a range of assumptions
are used, including forecast revenue, discount rates,
and attrition rates that are specifically related to the
intangible asset being valued. The useful economic
lives of these assets is estimated using management’s
best estimates and reassessed annually. If the useful
economic lives of the Group intangible assets were one
year shorter, the impact on the income statement would
be a reduction of £1.8 million to profit before tax.
The Group has applied significant judgement to the
determination of the expected lease term over which to
recognise a lease liability. The Group’s sole lease with
a break clause expires in May 2030 with a one-time
break clause exercisable in May 2025. Whether this
break clause will be triggered is not reasonably certain
at either transition or 30 September 2020, but will be
reassessed at each reporting date. Such reassessment
will take into account time to expiry of the option,
current and future trading, the Group’s office space
needs, and the economic benefits of triggering the
break clause. If this break clause were assumed at 30
September 2020 the impact on the Group’s financial
statements would be a reduction of £3.6 million in right
of use assets and £3.6 million in lease liabilities.
3. REVENUE FROM CONTRACTS WITH CUSTOMERS & SEGMENT INFORMATION
Revenue from contracts with customers
The Group generates all revenue from contracts with its customers for the provision of translation and localisation,
intellectual property support solutions and life sciences language services. Revenue from providing these services
during the year is recognised both at a point in time and over time as shown in the table below:
Timing of revenue recognition for contracts with customers
At a point in time
Over time
IP Services
At a point in time
Over time
Moravia
At a point in time
Over time
Life Sciences
2020
£’000
106,928
5,850
112,778
140,705
32,846
173,551
47,629
21,825
69,454
2019
£’000
119,625
5,615
125,240
135,014
29,976
164,990
45,173
20,293
65,466
Total revenue from contracts with customers
355,783
355,696
The following table provides information about receivables, accrued income and deferred income from contracts
with customers.
Receivables, accrued and deferred income
Net trade receivables
Accrued income
Deferred income
Notes
16
16
18
2020
£’000
60,762
14,107
(5,210)
2019
£’000
69,244
9,642
(3,079)
Accrued income relates to the Group’s right to consideration for work completed and delivered but not invoiced as at
year end and is transferred to trade receivables when an invoice is issued to the client. Clients are typically invoiced
on a monthly basis and consideration is payable when invoiced. During the year £9.6 million of accrued income
recognised at the beginning of the year was invoiced.
Deferred income relates to advance consideration received from clients for PatBase subscriptions and linguistic
validation projects, where revenue is recognised over time as the services are provided/delivered to clients. During
the year, £3.1 million of deferred revenue at the beginning of the period has been recognised as revenue.
78
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS As at 1 October 2019, net trade receivables were £61.1 million, accrued income was £6.7 million and deferred income
was £2.9 million.
Segment information
The chief operating decision maker has been identified as the Group’s Board of Directors. The Board reviews the
Group’s internal reporting in order to assess performance and allocate resources. The Board divides the Group into
three reportable segments and assesses the performance of each segment based on revenue and profit/(loss) from
operations. These are measured on a basis consistent with the statement of comprehensive income.
The three segments are:
> RWS IP Services: provides the quality patent translations, a seamless global patent filing experience and a wide
range of intellectual property (IP) search services.
> RWS Life Sciences: provides a full suite of language services, including technical translations and linguistic
validation, exclusively for the life sciences industry.
> RWS Moravia: provides localisation services including the adaptation of content, software, websites, applications,
marketing material and audio/video to ensure brand consistency.
In the year ended 30 September 2019, there were four reportable segments; RWS Language Solutions, which was
previously shown separately, is now included within RWS Moravia.
The prior year segment information has been restated for comparability purposes.
The unallocated segment relates to corporate overheads, assets and liabilities.
Segment results for the year ended 30 September 2020
IP Services
£’000
Life Sciences
£’000
Moravia
£’000
Unallocated
£’000
Group
£’000
Revenue from contracts with customers
112,778
69,454 173,551
-
355,783
Operating profit/(loss) before charging:
Amortisation of acquired intangibles
Acquisition costs
Exceptional items (see note 6)
Share-based payment expense
Profit from operations
Finance income
Finance expense
Profit before taxation
Taxation
Profit for the year
30,191
(671)
-
(815)
(45)
20,934
(6,004)
(259)
-
(116)
24,805
(8,642)
(504)
(396)
(192)
28,660
14,555
15,071
(3,049)
72,881
-
(15,317)
(3,349)
9,017
(704)
1,915
(4,112)
7,806
(1,057)
60,201
1,243
(2,770)
58,674
(12,243)
46,431
Segment results for the year ended 30 September 2019
IP Services
£’000
Life Sciences
£’000
Moravia
£’000
Unallocated
£’000
Group
£’000
Revenue from contracts with customers
125,240
65,466 164,990
-
355,696
Operating profit/(loss) before charging:
Amortisation of acquired intangibles
Acquisition costs
Share-based payment expense
Profit/(loss) from operations
Finance income
Finance expense
Profit before taxation
Taxation
Profit for the year
36,119
20,327
26,181
(4,231)
78,396
(674)
(6,036)
(8,704)
-
(15,414)
-
(74)
-
-
(195)
(58)
(596)
(179)
(791)
(311)
35,371
14,291
17,224
(5,006)
61,880
105
(4,268)
57,717
(12,577)
45,140
79
RWS — Annual Report 2020f Notes to the Consolidated Financial Statements (continued)
Segment assets and liabilities at 30 September 2020
Total assets
Total liabilities
Capital expenditure
Depreciation
Amortisation
Segment assets and liabilities at 30 September 2019
Total assets
Total liabilities
Capital expenditure
Depreciation
Amortisation
IP Services
£’000
Life Sciences
£’000
Moravia
£’000
Unallocated
£’000
Group
£’000
97,946
143,990 335,885
12,781
23,904
31,568 116,854
9,428
894
619
241
302
17,037
1,845
2,070
7,208
13,945
398
185
-
590,602
181,754
18,570
2,951
23,223
IP Services
£’000
Life Sciences
£’000
Moravia
£’000
Unallocated
£’000
Group
£’000
105,453
138,676 329,511
23,009
44,636 108,249
3,666
3,916
577,306
179,810
758
582
747
349
259
6,778
2,006
6,095
11,512
159
178
10
8,044
3,025
18,364
Capital expenditure comprises additions to property, plant and equipment and intangible assets, including additions
from acquisitions through business combinations.
Assets and liabilities are reconciled to the
Group’s assets and liabilities as follows:
Assets
2020
£’000
Liabilities
2020
£’000
Assets
2019
£’000
Liabilities
2019
£’000
Total segment assets and liabilities
577,821
172,326
573,640
175,894
Unallocated:
Deferred tax
Property, plant and equipment
Non-financial assets
Other financial assets and liabilities
Cash and cash equivalents
Total unallocated assets and liabilities
218
515
788
377
10,883
12,781
1,960
-
5,696
1,772
-
9,428
1,063
302
999
-
1,302
3,666
1,509
-
2,198
209
-
3,916
Total Group assets and liabilities
590,602
181,754
577,306
179,810
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 and other payables.
The Group’s operations are based in the UK, Continental Europe, the United States of America, China, Japan, India,
Thailand, Argentina, Australia, Columbia and Canada. The table below shows turnover by the geographic market in
which clients are located.
Turnover by client location
UK
Continental Europe
United States of America
Rest of the world
80
RWS — Annual Report 2020
2020
£’000
29,906
104,883
193,088
27,906
2019
£’000
29,791
108,770
190,807
26,328
355,783
355,696
NOTES TO THE CONSOLIDATED STATEMENTS One client accounted for more than 10% of Group turnover in the current year (2019: one). This client was part of the
Moravia reporting segment.
The following is an analysis of revenue and non-current assets analysed by the geographical area in which the
Group’s undertakings are located.
Geographical information
UK
Continental Europe
United States of America
Rest of the world
Revenue
Non-Current assets
2020
£’000
108,359
88,446
147,012
11,966
2019
£’000
123,770
84,134
138,730
9,062
2020
£’000
29,611
275,877
124,706
26,341
2019
£’000
28,397
276,058
134,238
6,096
355,783
355,696
456,535
444,789
4. ALTERNATIVE PERFORMANCE MEASURES
RWS uses adjusted results as a key performance indicator, as the Directors believe that these provide a more
consistent measure of the Group’s operating performance. Adjusted profit is therefore stated before amortisation of
acquired intangibles, acquisition costs, share-based payment expense and exceptional items.
The table below reconciles the statutory profit before tax to the adjusted profit before tax.
Reconciliation of statutory profit before tax to adjusted profit before tax:
Statutory profit before tax
Amortisation of acquired intangibles
Acquisition costs
Share-based payment expense
Exceptional items (note 6)
Adjusted profit before tax
Reconciliation of adjusted operating profit to statutory operating profit:
Adjusted operating profit
Amortisation of acquired intangibles
Acquisition costs
Share-based payment expense
Exceptional items (note 6)
Statutory operating profit
2020
£’000
58,674
15,317
4,112
1,057
(8,999)
70,161
2020
£’000
72,881
(15,317)
(4,112)
(1,057)
7,806
60,201
2019
£’000
57,717
15,414
791
311
-
74,233
2019
£’000
78,396
(15,414)
(791)
(311)
-
61,880
A further alternative profit measure that is used by the Group is free cash flow which the Directors believe
provides a more meaningful measure of the Group’s cash that is available for use after the cost of servicing
debt and tax. Free cash flow excludes proceeds from warranty claim of £9.0 million (2019: £nil).
81
RWS — Annual Report 2020f
Notes to the Consolidated Financial Statements (continued)
5. OPERATING PROFIT
Operating profit has been arrived at after charging/(crediting):
Staff costs (note 7)
Depreciation of property, plant and equipment (note 14)
Depreciation of right of use asset
Amortisation of intangible assets (note 13)
Foreign exchange losses/(gains)
Expected credit losses
(Gain)/loss on changes in fair values on derivative contracts
Operating lease rentals:
- Property
- Plant and equipment
Auditors’ remuneration
Fees payable to the Company’s auditors for the audit of the Group’s annual financial statements
2020
£’000
105,693
2,951
4,492
18,731
3,463
36
(376)
62
87
137
- The audit of subsidiaries of the Company
213
Total audit fees
- Other assurance services
- Financial due diligence
- Tax compliance
- Tax advisory services
Total tax services
- Other non-audit services
Total fees
6. EXCEPTIONAL ITEMS
Proceeds from warranty claim
Reorganisation costs
Total exceptional items - operating
Net gain on debt modification (Note 8)
Total exceptional items - financing
Total exceptional items
350
5
917
28
-
28
11
1,311
2020
£’000
9,017
(1,211)
7,806
1,193
1,193
8,999
2019
£’000
104,580
3,025
-
18,364
(29)
257
572
4,444
269
105
221
326
4
309
28
15
43
90
772
2019
£’000
-
-
-
-
-
-
Reorganisation costs of £1.2 million relate to the restructuring of the sales team within the IP Services division and
redundancy programmes completed in both IP Services and Moravia during the year. On 22 September 2020, a
settlement was agreed for a claim made by the Group under warranty insurance taken out as part of the Moravia
acquisition in November 2017, an amount of £9.0 million was agreed and received during the year. This has been
treated as an operating activity in the statement of cash flows. The Directors are of the view that each of these items
are non-recurring and by their nature do not form part of the Group’s ongoing operating activities.
7. STAFF COSTS
Staff costs (including Directors) comprise:
Wages and salaries
Reorganisation costs (note 6)
Social security costs
Other pension costs
Share-based payment expense (note 23)
82
RWS — Annual Report 2020
2020
£’000
2019
£’000
89,507
1,211
15,166
2,135
1,057
90,197
-
14,700
2,055
311
109,076
107,263
NOTES TO THE CONSOLIDATED STATEMENTS The Group operates a defined contribution pension scheme, making payments on behalf of employees to their
personal pension plans. Payments of £2.1 million (2019: £2.1 million) were made in the year and charged to the
statement of comprehensive income in the period they fell due. At the year end, there were unpaid amounts
included within other payables totaling £0.1 million (2019: £0.1 million).
During the year, staff costs amounting to £3.4 million (2019: £2.7 million) were capitalised in respect of internally
generated software projects.
Details of Directors’ remuneration and pension contributions are disclosed in the Directors’ Remuneration Report
on pages 52 to 55.
Key management compensation
Short-term employee benefits
Post-employment benefits
Share based payments
2020
£’000
3,024
77
886
3,987
The key management compensation includes the seven (2019: seven) Directors of RWS Holdings plc and the six
(2019: six) members of the Senior Executive team who are not Directors of RWS Holdings plc.
The monthly average number of people employed by the Group,
including Directors and part-time employees, during the year was:
Production staff
Administrative staff
8. FINANCE INCOME AND COSTS
Finance income
- Returns on short-term deposits
- Net gain on debt modification - Exceptional (note 6)
Finance costs
- Bank interest payable
- Lease interest
- Amortisation of borrowing costs
Net finance cost
2020
2,219
537
2,756
2020
£’000
50
1,193
1,243
(1,739)
(671)
(360)
(2,770)
(1,527)
2019
£’000
3,289
74
260
3,623
2019
2,033
490
2,523
2019
£’000
105
-
105
(3,921)
-
(347)
(4,268)
(4,163)
On 10 February 2020 the Group completed a refinancing of its term loan (see note 17 for further details), which is
treated as a non-substantial modification under IFRS 9 Financial Instruments, as the refinancing did not result in
an extinguishment of debt. The difference between the amortised cost carrying amount of the old facility and the
present value of the new facility, discounted using the original effective interest rate, resulted in a modification gain,
which is amortised over the life of the new revolving credit facility. The net gain recognised comprises a gain on debt
modification of £1.4 million less subsequent associated amortisation of £0.2 million (2019: £nil).
83
RWS — Annual Report 2020f Notes to the Consolidated Financial Statements (continued)
9. TAXATION
Taxation recognised in the statement of comprehensive income is as follows:
Current tax expense
Tax on profit for the current year
- UK
- Overseas
Adjustments in respect of prior years
Deferred tax expense
Current year movement
Adjustments in respect of prior years
Total tax expense for the year
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 19.0% (2019: 19.0%)
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
There was no tax recognised in other comprehensive income (2019: £Nil).
2020
£’000
2019
£’000
3,490
9,673
208
13,371
(1,254)
126
12,243
2020
£’000
58,674
11,148
(1,676)
2,449
322
12,243
6,228
8,815
(824)
14,219
(1,715)
73
12,577
2019
£’000
57,717
10,966
448
1,914
(751)
12,577
Factors that may affect future tax charges
The standard rate of corporation tax in the UK changed from 20% to 19% with effect from 1 April 2017 and will
remain at this level following the UK Government March 2020 budget.
The aggregate income and deferred tax arising in the reporting period and not recognised in net profit or loss or
other comprehensive income but directly (debited) or credited to equity was as follows:
Amounts recognised directly in equity
Current tax:
Share options
Deferred tax:
Share options
Other temporary differences
Acquired intangibles
Total amount recognised in equity
84
RWS — Annual Report 2020
2020
£’000
-
(1,100)
(10)
(1,274)
(2,384)
2019
£’000
131
145
528
1,550
2,354
NOTES TO THE CONSOLIDATED STATEMENTS 10. DIVIDENDS TO SHAREHOLDERS
Final, paid 21 February 2020 (2019: paid 22 February 2019)
Interim, paid 17 July 2020 (2019: paid 19 July 2019)
2020
pence
per share
7.00
1.75
8.75
2020
£’000
19,247
4,816
24,063
2019
pence
per share
6.00
1.75
7.75
2019
£’000
16,413
4,787
21,200
The Directors recommend a final dividend in respect of the financial year ended 30 September 2020 of 7.25 pence
per ordinary share, to be paid on 19 February 2021 to shareholders who are on the register at 22 January 2021. This
dividend is not reflected in these financial statements as it does not represent a liability at 30 September 2020. The
final proposed dividend will reduce shareholders’ funds by an estimated £28.2 million.
11. EARNINGS PER ORDINARY SHARES
Basic earnings per share is calculated using the Group’s profit after tax and the weighted average number of
ordinary shares in issue during the year, as follows:
Weighted average number of ordinary shares in issue for basic earnings
Dilutive impact of share options
Weighted average number of ordinary share for diluted earnings
The reconciliation between the basic and adjusted earnings per share is as follows:
2020
Number
2019
Number
274,995,438
273,556,236
119,359
1,250,343
275,114,797
274,806,579
Profit for the year
Adjustments:
2020
£’000
2019
£’000
2020
Basic
earnings
per share
pence
2019
Basic
earnings
per share
pence
2020
Diluted
earnings
per share
pence
2019
Diluted
earnings
per share
pence
46,431
45,140
16.9
16.5
16.9
16.4
Amortisation of acquired intangibles
15,317
15,414
Acquisition costs
Share based payments expense
Net gain of debt modification
Exceptional items
Tax effect of adjustments
Adjusted earnings
4,112
1,057
(1,193)
(7,806)
(3,375)
54,543
791
311
-
-
(3,176)
58,480
5.6
1.5
0.4
(0.4)
(2.9)
(1.2)
19.9
5.6
0.3
0.1
-
-
(1.2)
21.3
5.6
1.5
0.4
(0.4)
(2.9)
(1.2)
19.9
5.6
0.3
0.1
-
-
(1.2)
21.2
RWS uses adjusted earnings per share as a key performance indicator, as the Directors believe that this provides a
more consistent measure of the Group’s operating performance. Adjusted earnings and adjusted earnings per share
are therefore stated before amortisation of acquired intangibles, acquisition costs, share based payment expenses
and exceptional items, net of any associated tax effects.
85
RWS — Annual Report 2020f
Notes to the Consolidated Financial Statements (continued)
12. GOODWILL
Cost and net book value
At 1 October
Additions (note 25)
Exchange adjustments
At 30 September
2020
£’000
2019
£’000
249,421
14,513
(10,026)
253,908
233,236
3,430
12,755
249,421
During the year, goodwill was tested for impairment. The recoverable amount for each CGU has been determined
from value in use calculations. Also in the current year, the CGUs have been revised with the inclusion of the
Language Solutions business into the Moravia CGU following an operational reorganisation. This has resulted in an
increase in the carrying value of the Moravia CGU of £10.7m. The key assumptions for the value in use calculations
are those regarding discount rates and revenue growth rates. 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 value in use calculations.
Key assumptions for the value in use calculations are as follows:
IP Services
Life Sciences
Moravia
Iconic
Long-term
growth rate
Discount
rate
Average revenue
growth
2.0%
2.0%
2.0%
3.0%
9.0%
10.6%
10.5%
11.0%
2.8%
5.2%
5.0%
32.1%
The growth rates used in the calculations are based on a review of both recently achieved growth rates and a
prudent estimate of expected future growth rates for each specific market sector.
The long-term growth rate is the rate applied to determine the terminal value on year five cash flows. The discount
rate is the pre-tax discount rate. Revenue growth is the average annual increase in revenue over the five-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 four years based on an estimated growth rate which is either based on management’s best estimate or the
expected growth rate of the market in which the CGU operates.
The Group has conducted sensitivity analyses on the value in use/recoverable amount of each of the CGUs. Based on
the result of the value in use calculations undertaken, the Directors conclude that the recoverable amount of each
CGU exceeds its carrying value.
In performing its assessment of the carrying value of Goodwill, the Directors believe there is only one cash-
generating unit where reasonably possible changes to the underlying assumptions exist that would give rise to an
impairment, being Moravia. As a result, sensitivity analyses have been performed for this cash generating unit. The
recoverable amount exceeds the carrying value by £87.4 million. An increase in the pre-tax discount rate of 260 basis
point from 10.5% to 13.1% would lead to the recoverable amount of Moravia equalling its carrying amount.
The Directors believe there are no other cash-generating units where reasonably possible changes to the underlying
assumptions exist that would give rise to impairment.
The allocation of goodwill to each CGU is as follows:
IP Services
Life Sciences
Moravia
Iconic
At 30 September
86
RWS — Annual Report 2020
2020
£’000
31,168
66,573
147,731
8,436
253,908
2019
£’000
32,360
69,511
147,550
-
249,421
NOTES TO THE CONSOLIDATED STATEMENTS 13. INTANGIBLE ASSETS
Trade
names
£’000
Clinician
& supplier
databases
£’000
Technology
£’000
Non-compete
& Trademarks
£’000
Client
relationships
& order books
£’000
Internally
generated
software
£’000
Software
£’000
9,431
5,243
5,413
2,136
178,131
11,041
Cost
At 1 October 2018
Additions
Acquisitions (note 25)
Disposals
Currency translation
At 30 September 2019
Additions
Acquisitions (note 25)
Disposals
Currency translation
At 30 September 2020
-
-
-
545
9,976
-
-
-
(442)
9,534
Accumulated amortisation and impairment
At 1 October 2018
Amortisation charge
1,933
1,842
Disposals
Currency translation
At 30 September 2019
Amortisation charge
Disposals
Currency translation
At 30 September 2020
Net book value
At 30 September 2018
At 30 September 2019
At 30 September 2020
-
176
3,951
1,829
-
(182)
5,598
7,498
6,025
3,936
-
649
-
741
6,633
-
-
-
(684)
5,949
1,529
572
-
109
2,210
582
-
(100)
2,692
3,714
4,423
3,257
-
-
-
313
5,726
-
812
-
(235)
6,303
3,395
604
-
217
4,216
640
-
(189)
4,667
2,018
1,510
1,636
Total
£’000
216,440
4,170
1,700
(1,231)
11,103
232,182
5,119
9,516
(1,494)
(9,351)
-
1,420
-
-
-
1,051
-
-
(3)
(62)
107
9,493
2,243
188,675
12,396
-
-
-
-
8,527
1,702
177
-
(1,494)
5,045
2,750
-
(1,228)
(34)
6,533
3,417
-
-
(81)
(7,489)
(262)
(158)
2,162
189,713
12,519
9,792
235,972
858
383
-
48
1,289
380
-
(40)
1,629
1,278
954
533
25,903
12,013
-
1,522
39,438
11,886
8,109
1,047
(1)
(44)
9,111
1,068
-
(1,494)
(1,373)
49,951
152,228
149,237
139,762
(195)
8,490
2,932
3,285
4,029
2,196
1,903
(1,228)
(13)
2,858
2,346
-
(72)
43,923
18,364
(1,229)
2,015
63,073
18,731
(1,494)
(2,151)
5,132
78,159
2,849
3,675
172,517
169,109
4,660
157,813
Technology, trademarks, trade names, non-compete, supplier and clinician databases and client relationships arise
through business combinations and are amortised over periods ranging from five to 20 years.
Software and internally generated software is amortised over three to five years.
87
RWS — Annual Report 2020f Notes to the Consolidated Financial Statements (continued)
14. PROPERTY, PLANT AND EQUIPMENT
Freehold land
and buildings
£’000
Leasehold land,
buildings and
improvements
£’000
Furniture and
equipment
£’000
Motor
vehicles
£’000
Cost
At 1 October 2018
Currency translation
Additions
Acquisitions
Disposals
At 30 September 2019
Currency translation
Additions
Acquisitions
Disposals
17,034
-
-
-
-
17,034
-
-
-
-
At 30 September 2020
17,034
2,661
15
1,299
15
(432)
3,558
(139)
143
-
(241)
3,321
16,636
166
2,524
113
(1,486)
17,953
(495)
2,769
337
(997)
19,567
Accumulated depreciation
At 1 October 2018
Currency translation
Acquisitions
Depreciation charge
Disposals
At 30 September 2019
Currency translation
Depreciation charge
Disposals
At 30 September 2020
Net book value
At 30 September 2018
At 30 September 2019
At 30 September 2020
1,619
1,795
11,045
-
-
229
-
1,848
-
229
-
2,077
15,415
15,186
14,957
2
15
557
(432)
1,937
(35)
332
(241)
1,993
866
1,621
1,328
51
83
2,227
(1,470)
11,936
(174)
2,381
(997)
13,146
5,591
6,017
6,421
205
(2)
21
-
(38)
186
4
30
-
-
220
116
(2)
-
12
(4)
122
4
9
-
135
89
64
85
Total
£’000
36,536
179
3,844
128
(1,956)
38,731
(630)
2,942
337
(1,238)
40,142
14,575
51
98
3,025
(1,906)
15,843
(205)
2,951
(1,238)
17,351
21,961
22,888
22,791
Included within freehold land and buildings at 30 September 2020 was freehold land of £5.6m (2019: £5.6m).
There were no gains or losses on disposal in the year.
88
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS 15. 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 2018
Adjustment in respect of prior years
Credited to income
Credited to equity
At 30 September 2019
Adjustment in respect of prior years
Acquisitions
Credited/(charged) to income
Charged to equity
At 30 September 2020
Deferred tax liabilities
At 1 October 2018
Acquisitions
Credited to income
Charged to equity
At 30 September 2019
Acquisitions
(Credited)/charged to income
(Credited)/charged to equity
At 30 September 2020
Share
options
£’000
1,118
-
-
145
1,263
-
-
-
(1,100)
163
Depreciation
in excess
of capital
allowances
£’000
Other
temporary
differences
£’000
85
(4)
25
-
106
(19)
-
23
-
110
878
(69)
519
674
2,002
(107)
40
(115)
(154)
1,666
Accelerated
capital
allowances
£’000
Acquired
Intangibles
£’000
Other
temporary
differences
£’000
556
-
293
-
849
-
311
-
1,160
28,676
450
(1,459)
1,550
29,217
185
(1,519)
(1,274)
26,609
785
-
(5)
(146)
634
-
(138)
144
640
Total
£’000
2,081
(73)
544
819
3,371
(126)
40
(92)
(1,254)
1,939
Total
£’000
30,017
450
(1,171)
1,404
30,700
185
(1,346)
(1,130)
28,409
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.
The deferred tax asset on share-based payments is created by the temporary difference between the carrying value
of outstanding share-based payment options in the statement of financial position and the tax base of these options,
being the estimated future tax deduction expected to crystallise on exercise of the option. The tax base is calculated
by reference to the Company’s share price at the reporting date and the number of share options outstanding which
for those options attracting a deferred tax asset decreased during the year to 30 September 2020.
No deferred tax liabilities have been recognised relating to investments in subsidiaries (2019: £Nil).
There are no tax losses (2019: £Nil) available for offset against future taxable profits.
The Group has capital losses carried forward of £12,812,000 none of which has been recognised (2019: £12,812,000-
not recognised).
89
RWS — Annual Report 2020f
Notes to the Consolidated Financial Statements (continued)
16. TRADE AND OTHER RECEIVABLES
Trade receivables
Less: loss allowance
Other receivables
Prepayments
Accrued income
At 30 September
2020
£’000
61,285
(523)
60,762
3,014
4,203
14,107
82,086
2019
£’000
69,731
(487)
69,244
2,792
3,865
9,642
85,543
Trade receivables are non-interest bearing and generally on terms ranging from 30 to 120 days. 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 following table provides information about the exposure to
credit risk for trade receivables at 30 September 2020:
Not past due
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
Past due > 90 days
The following table provides information about the exposure to
credit risk for trade receivables at 30 September 2019:
Not past due
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
Past due > 90 days
Gross
amount
£’000
46,384
7,854
3,404
1,027
2,616
61,285
Gross
amount
£’000
49,441
9,945
7,048
1,623
1,674
69,731
2020
£’000
2,896
10,926
912
44,114
654
1,260
60,762
Loss
allowance
£’000
-
-
-
-
(523)
(523)
Loss
allowance
£’000
-
-
-
-
(487)
(487)
2019
£’000
3,604
15,909
630
47,731
905
465
69,244
Net amount
£’000
46,384
7,854
3,404
1,027
2,093
60,762
Net amount
£’000
49,441
9,945
7,048
1,623
1,187
69,244
90
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS Movement in allowance for doubtful debts:
At 1 October
Utilised
Acquired
Provided
At 30 September
2020
£’000
487
(168)
151
53
523
2019
£’000
230
(19)
-
276
487
The Group applies the simplified approach, as permitted by IFRS 9, in measuring lifetime expected credit losses for
trade receivables.
17. LOANS
Due in less than one year
Loan
Issue costs
At 30 September 2020
Due in more than one year
Loan
Issue costs
At 30 September 2020
Analysis of net debt
Cash and cash equivalents
Issue costs
Loans due in less than one year
Loans due in more than one year
Net debt - Excluding lease liabilities -
(“Net debt”)
Lease liabilities
Net debt - Including lease liabilities
At 1 October
2019
£’000
46,974
1,098
(26,037)
(58,787)
(36,752)
(24,962)
(61,714)
Transferred
£’000
-
-
(3,380)
3,380
-
-
-
Cash flows
£’000
4,608
615
29,417
(15,711)
18,929
2,183
21,112
2020
£’000
2019
£’000
-
-
-
69,153
(2,638)
66,515
26,037
(356)
25,681
58,787
(742)
58,045
Non-cash
charges
£’000
At 30 September
2020
£’000
(202)
925
-
1,965
2,688
1
2,689
51,380
2,638
-
(69,153)
(15,135)
(22,778)
(37,913)
On 10 February 2020, the Group entered into an Amendment and Restatement Agreement (“ARA”) with its banking
syndicate which amended its existing US$160 million term loan maturing on 18 October 2022 into a US$120 million
Revolving Credit Facility (“RCF”) maturing on 10 February 2024, with an option to extend maturity until 10 February
2025.
Under the terms of the ARA, the Group’s interest margin over US LIBOR, is determined by the Group’s net leverage.
At signing, the Group’s existing term loan debt was transferred across to the RCF. Commitment fees are payable
on all committed, undrawn funds at 35% of the applicable interest margin. The ARA also contains a US$80 million
uncommitted accordion facility.
This debt refinancing has been accounted for as a debt modification without extinguishment under IFRS 9 Financial
Instruments as the terms of the debt remain substantially the same. A debt modification gain has been recognised
within Finance income in the statement of comprehensive income. Refer to Note 8 for further details.
91
RWS — Annual Report 2020f Notes to the Consolidated Financial Statements (continued)
18. TRADE AND OTHER PAYABLES
Due in less than one year
Trade payables
Other tax and social security payable
Other payables
Accruals
Deferred income
At 30 September
2020
£’000
2019
£’000
21,709
1,925
2,474
26,258
5,210
57,576
22,376
2,526
2,761
26,601
3,079
57,343
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
Deferred rent
Other payables
At 30 September
19. LEASES
2020
£’000
-
357
357
2019
£’000
318
-
318
The Group has lease contracts for various items of property and furniture and equipment. Leases have varying
durations and can range from 1 year to 11 years. The Group’s obligations under its leases are secured by the lessor’s
title to the leased assets. Generally, the Group is restricted from assigning and subleasing the leased assets. These
leases have a variety of lease terms and some include scheduled rent reviews, break options, extension options or
rent increases, which are further discussed below.
The Group also has certain leases of property as well as leases of office equipment with low value or lease lengths
of 12 months or less. The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions
for these leases.
92
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
Cost
At October 2019
Acquisitions
Additions
Disposals
Currency adjustment
At 30 September 2020
Accumulated depreciation
At 1 October 2019
Depreciation expense
Disposals
Currency adjustment
At 30 September 2020
Net book value
At 1 October 2019
At 30 September 2020
Property
£’000
22,588
1,887
222
(745)
(482)
Furniture and
equipment
£’000
1,062
-
-
-
(2)
Total
£’000
23,650
1,887
222
(745)
(484)
23,470
1,060
24,530
-
4,294
(133)
87
4,248
-
198
-
-
198
-
4,492
(133)
87
4,446
22,588
19,222
1,062
862
23,650
20,084
Set out below are the carrying amounts of lease liabilities and the movements during the period:
At 1 October 2019
Additions
Accretion of interest
Re-measurement adjustments
Repayments
Currency adjustment
At 30 September 2020
Current
Non-current
Total
£’000
24,962
2,056
671
172
(4,094)
(989)
22,778
3,207
19,571
The maturity analysis of lease liabilities is disclosed in Note 21.
The amounts recognised in the statement of comprehensive income with respect to leases are disclosed in Note 5
and Note 8.
The Group had total cash outflows for leases of £4.1 million in 2020. The Group had non-cash additions to right-of-
use assets and lease liabilities of £0.2 million in 2020. There are no future cash outflows relating to leases not yet
commenced to disclose separately.
The Group has several lease contracts that include scheduled rent reviews or rent increases based on future
indices. Index linked payment increases are typically in respect of changes in the Consumer Price Index for leases
in the United Kingdom, or similar indexes outside of the United Kingdom. These agreements represent standard
commercial terms for several locations in which leases are held. The impact of index linked rent increases was not
material for the Group in the period.
The Group has several lease contracts that include extension and termination options. These options are negotiated
by management to provide flexibility in managing the leased-asset portfolio and align with the Group’s business
needs. Management exercises significant judgement in determining whether these extension and termination
options are reasonably certain to be exercised, refer to Note 2.
93
RWS — Annual Report 2020f Notes to the Consolidated Financial Statements (continued)
20. PROVISIONS
Due in less than one year
At 1 October
Utilised
Transferred from provisions due in more than one year
At 30 September 2020
Due in more than one year
At 1 October
Acquired
Arising on acquisition
Charged/(Credited) to the statement of comprehensive income
Transferred to provisions due in less than one year
At 30 September 2020
Contingent
consideration
£’000
Dilapidations
£’000
Long term
employment
benefits
£’000
-
-
-
-
-
-
1,651
-
-
1,651
-
-
-
-
717
-
-
(475)
-
242
87
(87)
87
87
126
246
-
190
(87)
475
Total
£’000
87
(87)
87
87
843
246
1,651
(285)
(87)
2,368
Long term employment benefits relate to future pension payments to a third-party of £562,000. The contingent
consideration of £1,651,000 is in respect of the acquisition of Iconic Translation Machines Ltd during the year. Refer to
Note 25 for further details.
21. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Categories of financial instruments
All financial assets and liabilities, other than derivatives and contingent consideration, are held at amortised cost
(“AC”). All derivatives are classified as fair value through profit and loss (“FVTPL”), other than derivatives designated
in a cash flow hedging relationship which are classified as fair value through other comprehensive income (“FVOCI”).
Contingent consideration of £1,651,000 is classified as fair value through profit and loss.
FVOCI
FVTPL
AC
2020
£’000
-
-
225
225
-
-
-
-
103
103
2019
£’000
-
-
-
-
-
-
-
-
824
824
2020
£’000
-
-
376
376
-
-
1,651
-
-
1,651
2019
£’000
2020
£’000
2019
£’000
-
-
-
-
-
-
-
-
-
-
77,883
51,380
-
77,813
46,974
-
129,263
124,787
66,515
50,798
804
22,778
-
84,824
52,056
930
-
-
140,895
137,810
Financial Assets
Trade and other receivables
Cash and cash equivalents
Foreign exchange derivatives
Financial Liabilities
Loan
Trade and other payables
Provisions
Lease liabilities
Foreign exchange derivatives
94
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS The Group’s foreign exchange derivatives are fair valued using readily available market information so therefore are
Level 1 of the fair value hierarchy. The fair value of contingent consideration is determined through discounting the
expected future cashflows based on management’s assessment of expected performance against specific terms
of the sale and purchase agreement; these are Level 3 of the fair value hierarchy. There have been no transfers
between levels of the fair value hierarchy.
The carrying amount of the Group’s trade and other receivables and accrued income, trade and other payables and
cash and cash equivalents are considered to be a reasonable approximation of their fair value. The fair value of the
Group’s loan at 30 September 2020 is £69.2 million (2019: £84.6 million).
Financial risk management objectives and policies
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 CFO.
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 borrowings have a number of financial covenants which
are tested bi-annually.
The principal financial risks to which the Group is exposed are those of liquidity, interest rate, credit, foreign currency
and capital. Each of these is managed as set out below.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is
to ensure, as far as possible, that it will have sufficient cash resources to meet its liabilities as and when they fall due
and payable.
In addition to the Group’s cash balances which at 30 September 2020 amounted to £51.4 million (2019: £47.0 million),
the Group has an overdraft facility of £1.5 million (2019: £2.0 million) which is unsecured, with interest payable at the
rate of GBP LIBOR plus a margin of 200 basis points. This overdraft was undrawn as at year end.
Any surplus funds are invested in British pound or US dollar deposits, with maturities not exceeding three months.
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are
gross, undiscounted, and include contractual interest payments.
95
RWS — Annual Report 2020f Notes to the Consolidated Financial Statements (continued)
Contractual cash flows at
30 September 2020
Non-derivative financial liabilities
Revolving Credit Facility
Trade and other payables
Provisions
Lease liabilities
Carrying
amount
£’000
66,515
50,798
2,455
22,778
Total
£’000
Less than 12
months
£’000
1-2 years
£’000
2-5 years
£’000
72,343
50,798
4,747
25,062
934
50,441
87
5,133
56,595
934
357
55
4,764
6,110
70,475
-
3,888
9,165
83,528
142,546
152,950
More than
5 years
£’000
-
-
717
6,000
6,717
Derivative financial liabilities
Foreign exchange derivatives
- Outflow
103
103
103
103
103
103
-
-
-
-
-
-
Contractual cash flows at
30 September 2019
Non-derivative financial liabilities
Secured bank loans
Trade and other payables
Provisions
Carrying
amount
£’000
83,726
52,056
930
Total
£’000
Less than 12
months
£’000
1-2 years
£’000
2-5 years
£’000
More than
5 years
£’000
89,366
52,056
930
28,436
52,056
930
81,422
54,369
6,561
-
-
-
-
54,369
6,561
-
-
-
-
136,712
142,352
Interest rate risk
The majority of the Group’s cash balances are held with its principal bankers, earning interest at variable rates of
interest. To the extent the British pound overdraft is utilised, it attracts an interest rate of base rate plus a margin of
200 basis points.
The Group’s US$120 million Revolving Credit Facility (“RCF”) matures on 10 February 2024, with an option to extend
until 2025, and incurs interest at a rate based on USD LIBOR plus a margin which fluctuates based on the Group’s net
leverage.
The Group elected not to hedge its interest rate risk.
96
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS Exposure to interest rate risk
The interest rate profile of the Group’s interest-bearing financial assets and liabilities is as follows:
Variable-rate instruments
Financial assets - Cash and cash equivalents
Sterling
US Dollars
Euros
Yen
Swiss Francs
Other
Financial liabilities – Loan
US Dollars
2020
£’000
2019
£’000
7,796
29,962
5,124
2,695
1,555
4,248
12,596
21,278
6,226
2,065
1,726
3,083
51,380
46,974
66,515
83,726
If interest rates changed by 1%, it is estimated Group profit before tax would change by £0.2 million.
Credit risk
Credit risk is the risk of a financial loss to the Group if a client or counterparty to a financial instrument fails to meet
its contractual obligations and arises from the Group’s cash and cash equivalents and trade and other receivables.
The Group’s cash and cash equivalents of £51.4 million at 30 September 2020, are predominantly held in the UK and
the US, and placed with financial institutions who hold Standard & Poor’s long term credit ratings of between A+ and
A-. The Group considers that its cash and cash equivalents have a low credit risk based on the external credit ratings
of the counterparties.
Trade receivable exposures are mitigated by each division’s management team where they arise. The Group’s clients
are large international corporations or self-regulated bodies such as patent agents and legal firms. In accordance
with IFRS 9, the Group has applied the simplified model specified for expected credit losses, based on historical
default rates experienced across the Group as well as forward looking information where material. Consideration
has also been given to the appropriateness of applying these historical default rates to the Group’s future trade and
other receivables. Refer to Note 16 for further details.
One client accounted for more than 10% of Group turnover in the current year (2019: one). This client was part of the
Moravia reporting segment. There were no other significant concentrations of credit risk at the balance sheet date.
97
RWS — Annual Report 2020f Notes to the Consolidated Financial Statements (continued)
Foreign currency risk
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 with gains and losses on transactions arising from fluctuations in exchange rates
being recognised in the statement of comprehensive income. Where we have a material or recurring exposure, the
policy is to seek to mitigate the risk using forward foreign exchange contracts.
Approximately 72% (2019: 69%) of Group external sales in the reporting period were denominated in USD, while a
further 20% were denominated in Euros (2019: 22%). Similarly, the Group’s cost base was 43% in USD (2019: 42%) and
30% in Euros (2019: 27%).
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 statement of comprehensive income, by
recognising gains or losses through other comprehensive income.
Assets and liabilities of Group entities located in Germany, Switzerland, the United States, Japan, China, India,
Argentina and Australia, are principally denominated in their respective currencies and are therefore not materially
exposed to currency risk. On translation to British pounds, gains or losses arising are recognised directly in equity.
Our Czech entity as discussed above applies cash flow hedge accounting to hedge its Czech Koruna operating costs.
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
Other
Assets
2020
£’000
13,627
21,356
1,950
1,620
38,553
Assets
2019
£’000
20,468
10,675
2,378
964
34,485
Liabilities
2020
£’000
7,945
45,766
61
1,398
55,170
Liabilities
2019
£’000
9,057
50,901
75
1,274
61,307
Foreign currency sensitivity analysis
The following table details the Group’s sensitivity to a 10% (2019: 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 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
Profit and loss
impact
2020
£’000
Profit and loss
impact
2019
£’000
517
1,783
172
2,472
1,037
847
209
2,093
If the exchange rate on uncovered exposures were to move significantly between the year end and the 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.
98
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS
Cash flow hedges
The Group applies cash flow hedge accounting on foreign exchange forward contracts taken out by Moravia (since
acquisition) to hedge its Czech Koruna expected future operating costs. Any changes in the fair value of these
cash flow hedges have been recognised in a separate hedge reserve in equity and recycled to the statement of
comprehensive income as these costs are settled.
During the year ended 30 September 2020, no ineffectiveness was recorded in the Group’s statement of
comprehensive income (2019: £Nil). All amounts recorded in the hedge reserve pertain to continuing hedging
relationships as at 30 September 2020.
The Group’s cash flow hedges, which take the form of forward foreign exchange contracts, in place at the year end
are as follows:
Forward foreign currency exchange contracts
Analysis of the Group’s forward contracts’ maturity
Up to three months
Three to six months
Six to 12 months
Assets
2020
£’000
225
Assets
2020
£’000
53
56
116
225
Assets
2019
£’000
-
Assets
2019
£’000
-
-
-
-
Liabilities
2020
£’000
103
Liabilities
2020
£’000
31
26
46
103
Liabilities
2019
£’000
824
Assets
2019
£’000
215
204
405
824
As at 30 September 2020, forward contracts are in place for the purchase of 699.5 million Czech Koruna, at an
average contracted price of 23.32 Czech Koruna.
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 further equity financings.
At 30 September 2020, there was £66,515,000 (2019: £83,726,000) of external debt finance on the balance sheet. The
Group is not subject to externally imposed capital requirements.
In addition, the Group held cash and cash equivalents at the year end of £51,380,000 (2019: £46,974,000).
99
RWS — Annual Report 2020f Notes to the Consolidated Financial Statements (continued)
22. SHARE CAPITAL AND RESERVES
Authorised
Ordinary shares of 1 pence each (2019: 1 pence)
500,000,000
5,000
500,000,000
5,000
2020
Number
2020
£’0000
2019
Number
2019
£’000
Allotted, called up and fully paid
At beginning of year
Issue of shares
At end of year
273,695,907
1,492,585
2,737
273,543,272
15
152,635
275,188,492
2,752
273,695,907
2,735
2
2,737
The increase in share capital was as a result of the exercise of 1,492,585 share options by a Group Director and a
senior manager of the Group.
The nature and purpose of each reserve within equity is as follows:
> Share-based payment reserve is the credit arising on the share-based payment charges in relation to the
Group’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.
> Hedge reserve is the fair value movement on the derivative contracts.
> 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 Parent
Company balance sheet.
23. SHARE-BASED PAYMENTS
The Group recognised a charge of £1.1 million relating to share-based payments during the year to 30 September, as
follows;
Date of grant
Save As You Earn (SAYE) scheme
Executive share option plan
2020
2019
Equity-settled
£’000
Cash-settled
£’000
78
968
1,046
-
11
11
Total
£’000
78
979
1,057
Equity-settled
£’000
Cash-settled
£’000
51
260
311
-
-
-
Total
£’000
51
260
311
100
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS
Summary of movements in awards
Balance at 1 October 2018
Granted during the year
Lapsed during the year
Exercised during the year
Balance at 30 September 2019
Exercisable at 30 September 2019
Granted during the year
Lapsed during the year
Exercised during the year
Balance at 30 September 2020
Exercisable at 30 September 2020
Save As You
Earn scheme
Number
Executive share
option plan
Number
Weighted average
exercise price (£)
2013 Share
option plan
Number
1,797,855
-
-
(152,635)
1,645,220
1,645,220
-
176,720
(1,653)
-
-
1,230,946
-
-
175,067
1,230,946
-
-
-
-
93,538
3,008,976
(13,736)
(1,562,893)
(1,492,585)
152,635
152,635
-
-
254,869
2,677,029
-
-
1.292
5.774
4.130
1.292
3.358
1.292
6.133
6.094
1.292
5.750
1.292
The weighted average share price at the date of exercise of shares exercised during the year was 585.2 pence per
share (2019: 604.0 pence).
The weighted average remaining contractual life of outstanding options at the end of the year was 8.2 years (2019:
4.8 years). The aggregate fair value of options granted in the year was £5.4 million (2019: £1.4 million).
2013 Share option plan
On 2 April 2013, the Company adopted a 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 three years for the approved scheme
and two 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 eight years from the date of grant. These option grants
are settled on exercise via the issue of new ordinary shares.
Date of grant
1 October
2020
Number
Granted
during
the year
Number
Exercised
during
the year
Number
Lapsed
during
the year
Number
30 September
2020
Number
Exercise
price
pence
Exercise
period
3 April 2013 (approved)
23,215
-
(23,215)
3 April 2013 (unapproved)
1,622,005
- (1,469,370)
Total
1,645,220
- (1,492,585)
-
-
-
-
129.2
3 April 2016 to 3 April 2021
152,635
129.2
3 April 2015 to 3 April 2021
152,635
101
RWS — Annual Report 2020f Notes to the Consolidated Financial Statements (continued)
Save As You Earn (“SAYE”) scheme
On 19 February 2019, the Company announced a HMRC-approved SAYE scheme (“SAYE scheme”) for all UK based
employees. Under the terms of the SAYE scheme, the Board grants options to purchase ordinary shares in the
Company to eligible employees who enter into the SAYE scheme for a term of three years. Options are granted
at up to a 10% discount to the market price of the shares on the day preceding the date of offer and are normally
exercisable for a period of six months after completion of the three-year term. These option grants are settled on
exercise via the issue of new shares.
Date of grant
18 February 2019
12 February 2020
1 October
2019
Number
175,067
Granted
during
the year
Number
-
-
93,538
Total
175,067
93,538
Exercised
during
the year
Number
Lapsed
during
the year
Number
30 September
2020
Number
Exercise
price
pence
Exercise
period
-
-
-
(11,152)
163,915
413.0
1 April - 30 Sept 2022
(2,584)
90,954
557.0
1 April - 30 Sept 2023
(13,736)
254,869
Executive share option plan (“ESOP”)
On 13 May 2019, the Group announced a new Share Option Plan for executives and selected senior management.
During the year the Board has approved the grant of options over 2,956,776 ordinary shares at an exercise price of
615 pence (being the closing mid-market price on 21 January 2020), representing approximately 1.08 per cent of the
Company’s issued share capital.
These options will normally vest on the third anniversary of the grant date subject to the rules of the plan, continued
employment and achievement of performance conditions. The performance conditions applicable to the options are
based on the Group achieving EPS targets, each option grant being split into three tranches, each subject to an EPS
target for a reporting year, set annually in advance by RWS’ Remuneration Committee.
Vested options are exercisable, however if exercised before the fifth anniversary of the grant date, participants are
not permitted to sell the ordinary shares until the fifth anniversary of grant date. All options will lapse on the tenth
anniversary of the grant date and are subject to defined malus and claw-back provisions.
These option grants are normally settled on exercise via the issue of new shares but some are cash settled. Equity
and cash settled shares follow the same vesting conditions.
Date of grant
1 October
2019
Number
10 May 2019
1,230,946
Granted
during
the year
Number
-
22 January 2020
-
3,008,976
Total
1,230,946 3,008,976
Exercised
during
the year
Number
Lapsed
during
the year
Number
30 September
2020
Number
Exercise
price
pence
Exercise
period
-
-
-
(457,322)
773,624
601.0
10 May 2022 - 10 May 2029
(1,105,571)
1,903,405
615.0
22 Jan 2023 - 22 Jan 2030
(1,562,893)
2,677,029
102
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS The fair value of the share options granted under the SAYE scheme and ESOP during the year were estimated using
the Black-Scholes option pricing model. Cash settled options issued under the ESOP were valued at the reporting
date while equity settled options under the SAYE scheme and ESOP were valued at grant date. The following table
lists the range of assumptions applied to the options granted during the year. Equity settled option grants are settled
on exercise via the issue of new shares.
Weighted average share price at grant (pence)
Weighted average exercise price (pence)
Expected life of option (years)
Volatility (%)
Dividend yield (%)
Risk free interest rate (%)
Option value (£)
24. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
SAYE
scheme
605.0
557.0
3.0
34.00
1.50
0.48
163.4
ESOP
(equity settled)
ESOP
(cash settled)
611.2
615.0
5.0
38.10
1.50
0.42
175.7
2020
£’000
50,055
1,325
51,380
611.2
615.0
4.3
39.38
1.50
(0.05)
141.5
2019
£’000
26,628
20,346
46,974
Short-term deposits have an 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.
103
RWS — Annual Report 2020f Notes to the Consolidated Financial Statements (continued)
25. ACQUISITIONS
Iconic Translation Machines Ltd
On 9 June 2020, the Group acquired the entire issued share capital of Iconic Translation Machines Ltd (Iconic), for
an initial consideration of US$10.0 million, with additional contingent consideration of up to US$10.0 million in RWS
shares, subject to future performance, refer to Note 20. Based in Dublin, Ireland, Iconic specialises in developing
best-in-class neural machine translation (NMT) solutions adapted for specific industries and blue-chip clients. The
acquisition will provide RWS with the competitive advantage of leveraging language technology to improve on our
already high-quality standards and service delivery, as well as strengthen our capabilities in service-offerings in the
NMT sector.
The provisional fair value of identifiable assets and liabilities acquired,
purchase consideration and goodwill were as follows:
Net assets acquired:
Property, plant and equipment
Client relationships
Software
Deferred tax liability
Trade and other receivables
Deferred tax asset
Cash and cash equivalents
Trade and other payables
Total identifiable net assets
Goodwill
Total consideration
Satisfied by:
Cash
Contingent consideration
Cash flow:
Cash consideration
Cash included in undertaking acquired
Net cash consideration in statement of cash flows
Provisional
Fair values
£’000
39
668
812
(185)
358
40
328
(1,182)
878
8,204
9,082
7,431
1,651
7,431
(328)
7,103
During the measurement period of 12 months post acquisition, the Group shall obtain all the information necessary
to identify and measure the identifiable intangible assets and retrospectively adjust the provisional amounts
recognised at the acquisition date.
Iconic contributed £0.4 million to the Group’s revenue and £0.0 million to the Group’s profit after tax for the period
between the date of acquisition and the balance sheet date, excluding the impact of amortisation on acquired
intangibles. If the acquisition had been completed on the first day of the financial year, Iconic would have contributed
additional revenues of £0.9 million and profit after tax for the year of £0.3 million to the Group.
Acquisition costs of £0.3 million have been charged through the consolidated statement of comprehensive income.
Trade and other receivables acquired of £0.4 million included no gross contractual amounts receivable. None of the
goodwill recognised on the acquisition of Iconic is expected to be deductible for tax purposes.
Contingent consideration of up to US$10.0 million in RWS shares is payable after 28 months, subject to the
achievement of pre-agreed revenue and EBITDA targets. All contingent consideration relating to the former owners,
who are continuing as employees, has been recognised in the income statement.
104
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS Webdunia
On 9 June 2020, the Group acquired the localisation and software services business units of Webdunia.com (India)
Private Limited (“Webdunia”) as well as the technology solutions component of its affiliated Company, Diaspark Inc.
The total cash consideration was US$21.0m. Webdunia is a leader in translation, localisation and technology services
to technology and digital companies in the Indian and North American markets. The acquisition will be highly
complementary to RWS’s existing Moravia business, will strengthen our Indian-based translation and localisation
market share, support our customers’ growth aspirations in India, as well as complement our digital technology
services.
The provisional fair value of identifiable assets and liabilities acquired,
purchase consideration and goodwill were as follows:
Net assets acquired:
Customer relationships
Software
Property, plant and equipment
Right-of-use asset
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Lease liabilities
Provisions
Total identifiable net assets
Goodwill
Total consideration
Satisfied by:
Cash
Cash flow:
Total consideration
Cash included in undertaking acquired
Net cash consideration in statement of cash flows
Provisional
fair values
£’000
7,859
177
298
1,887
2,264
965
(767)
(1,911)
(246)
10,526
6,309
16,835
16,835
16,835
(965)
15,870
During the measurement period of 12 months post acquisition, the Group shall obtain all the information necessary
to identify and measure the identifiable intangible assets and retrospectively adjust the provisional amounts
recognised at the acquisition date.
Webdunia contributed £2.8 million to the Group’s revenue and £0.8 million to the Group’s profit after tax for the
period between the date of acquisition and the balance sheet date, excluding the impact of amortisation on acquired
intangibles. If the acquisition had been completed on the first day of the financial year, Webdunia would have
contributed additional revenues of £5.2 million and profit after tax for the year of £1.3 million to the Group.
Acquisition costs of £0.5 million have been charged through the consolidated statement of comprehensive income.
Trade and other receivables acquired of £2.3 million included no gross contractual amounts receivable. None of the
goodwill recognised on the acquisition of Webdunia is expected to be deductible for tax purposes.
105
RWS — Annual Report 2020f Notes to the Consolidated Financial Statements (continued)
Acquisition of the prior year (20 January 2019)
Alpha Translations
On 17 January 2019, the Group acquired the entire issued share capital of Alpha Translations Canada Inc. (“Alpha”)
a leader in expert legal and financial translations, for a cash consideration of US$6.0 million. Based in Alberta,
Canada, Alpha provides rapid delivery of high-quality legal and financial translations to multinational law firms and
corporations, with a client base principally located in Germany. Clients include many of the world’s top 100 law firms
and Fortune 500 companies. The acquisition is highly complementary to RWS’s existing Language Solutions business
and strengthens its specialist legal and financial translation offering.
The fair value of identifiable assets and liabilities acquired,
purchase consideration and goodwill were as follows:
Net assets acquired:
Property, plant and equipment
Client relationships
Supplier database
Deferred tax liability
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Total identifiable net assets
Goodwill
Total consideration
Satisfied by:
Cash
Cash flow:
Total consideration
Cash included in undertaking acquired
Net cash consideration in statement of cash flows
There were no changes to provisional fair values during the measurement period.
Fair values
£’000
29
1,051
649
(450)
346
65
(519)
1,171
3,430
4,601
4,601
4,601
(65)
4,536
106
RWS — Annual Report 2020
NOTES TO THE CONSOLIDATED STATEMENTS 26. RELATED PARTY TRANSACTION
During the year, in the normal course of business, the Group provided translation services worth £207,000 (2019:
£454,000) to subsidiaries of Learning Technologies Group plc (LTG), a company in which Andrew Brode, the Group’s
Chairman, has a significant interest. An amount of £58,000 (2019: £29,000) was due from LTG at the reporting date.
27. COMMITMENTS AND CONTINGENT LIABILITIES
The Group had no material capital commitments contracted for, but not provided for, in the financial statements
(2019: £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 amounted to £Nil (2019: £Nil).
The Group’s US$120 million RCF, originally taken out with a syndicate of banks to part fund the acquisition of
Moravia, is secured by guarantees provided by the Group’s material subsidiary undertakings.
28. POST BALANCE SHEET EVENTS
On 27 August 2020, the Parent Company announced it had reached agreement with SDL plc (“SDL”) for an all-
share combination, pursuant to which RWS would acquire the entire issued and to be issued share capital of
SDL by means of a court-sanctioned scheme of arrangement.
Subsequent to 30 September 2020, following the shareholders of both SDL and the Parent Company voting
in favour of the proposed all-share combination, a court-sanctioned scheme of arrangement was effective on
4 November 2020. Accordingly, 113,338,511 new ordinary shares were issued by the Parent Company as full
consideration to acquire 100% control of SDL.
Given the size, complexity and close proximity of this transformative acquisition to the date of approval of
the financial statements it has not yet been possible to complete a purchase price allocation to determine
provisional fair values. Therefore no fair values have been included in these financial statements and nor has
the amount of applicable goodwill been determined.
No other significant events have occurred between the balance sheet date and the date of authorising these
financial statements.
107
RWS — Annual Report 2020f Parent Company Financial Statements
The following Parent Company financial statements are prepared under FRS 101 and relate to the Parent
Company and not to the Group.
Parent Company Statement of Financial Position at 30 September 2020
Registered Company 03002645
Note
2020
£’000
2019
£’000
Fixed assets
Investments
Current assets
Debtors
Cash and cash equivalents
Derivative financial instruments
Total assets
Creditors: amounts falling due within one year
Loans
Trade and other payables
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Loans
Deferred tax liabilities
Contingent consideration
Net assets
Capital and reserves
Called up share capital
Share premium account
Share based payment reserve
Capital reserve
Profit and loss account
Total shareholders’ funds
7
8
4
9
10
9
7
11
92,982
92,982
190,666
9,903
376
200,945
293,927
-
4,665
4,665
196,280
289,262
44,018
18
1,651
45,687
83,451
83,451
213,960
1,111
-
215,071
298,522
15,219
10,171
25,390
189,681
273,132
34,327
32
-
34,359
243,575
238,773
2,752
53,634
1,389
2,030
183,770
243,575
2,737
51,757
662
2,030
181,587
238,773
Statement of Comprehensive Income: Profit/(loss) after taxation
25,927
(1,659)
The financial statements on pages 108 to 116 were approved by the Board of Directors and authorised for issue on
9 December 2020 and were signed on its behalf by:
Andrew Brode
DIRECTOR
108
RWS — Annual Report 2020
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS Parent Company Statement of Changes in
Equity for the year ended 30 September
2020
Called
up share
capital
£’000
Share
premium
account
£’000
Share
based
payment
reserve
£’000
Capital
reserve
£’000
Profit
and loss
account
£’000
Shareholders’
funds
£’000
At 1 October 2018
2,735
51,549
384
2,030
204,413
261,111
Loss for the financial year
Total comprehensive loss for the year
Dividends paid
Issue of shares
Exercise of share options
Equity-settled share based payments
-
-
-
2
-
-
-
-
-
208
-
-
Balance at 30 September 2019
2,737
51,757
Profit for the financial year
Total comprehensive income for the year
Dividends paid
Issue of shares
Exercise of share options
Equity-settled share based payments
-
-
-
15
-
-
-
-
-
1,877
-
-
Balance at 30 September 2020
2,752
53,634
-
-
-
-
(33)
311
662
-
-
-
-
(319)
1,046
1,389
-
-
-
-
-
-
(1,659)
(1,659)
(1,659)
(1,659)
(21,200)
(21,200)
-
33
-
210
-
311
2,030
181,587
238,773
-
-
-
-
-
-
25,927
25,927
25,927
25,927
(24,063)
(24,063)
-
319
-
1,892
-
1,046
2,030
183,770
243,575
109
RWS — Annual Report 2020f Notes to the Parent 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, localisation 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 and in accordance
with the Companies Act 2006.
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:
> Paragraph 79(a) (iv) of IAS 1;
> Paragraph 73(e) of IAS 16 “Property, plant and
equipment”; and
> 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”
> paragraphs 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.
New accounting standards, amendment and
interpretations
There were no new standards effective during the year
that have a material impact to the preparation of these
Parent Company financial statements.
Going concern
As part of the Directors’ consideration of the
appropriateness of adopting the going concern basis in
preparing these financial statements, a range of scenarios
have been prepared. The assumptions modelled include
reasonable downside scenarios, as well as taking into
consideration the potential impact of Covid-19 across the
Parent Company and its subsidiaries (the “Group”) over
the period until March 2022.
The range of scenarios consider the impact of reductions
to the Group’s revenues and corresponding cash flows,
with mitigating actions by management limited to
equivalent reductions in the Group’s controllable cost
base. No significant structural changes to the business
have been assumed in any of the scenarios modelled with
all mitigating actions are wholly within management’s
control.
Subsequent to 30 September 2020, the Group’s all-
share acquisition of SDL plc completed and at the date
of acquisition SDL had significant cash reserves and no
outstanding debt, thereby further strengthening the
Group’s balance sheet and liquidity.
For the year ended 30 September 2020, the Group’s
revenue has been in line with the prior year. The Group’s
Life Sciences and Moravia divisions have seen revenue
growth compared to the prior year, with revenues
growing at a faster rate during the second half of the
financial year, when Covid-19 restrictions were tighter
than as at the date of authorising these financial
statements. Revenues in the IP Services division have
fallen 10% compared with the prior year, as set out on
page 13 of the Strategic Report.
110
RWS — Annual Report 2020
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS As at 30 September 2020, the Group’s balance sheet
reflects a net asset position of £408.8 million and the
liquidity of the Group remains strong with £51.4m of
cash reserves. During the year we refinanced our debt
into a US$120 million revolving credit facility (RCF) with
a maturity date of February 2024, which is extendable
for a further year subject to lender consent. At year end
US$31.1 million is undrawn, while the RCF also offers
an accordion facility of US$80 million, subject to lender
consent, however in all scenarios modelled the Group’s
liquidity requirements are within the US$120 million RCF.
At 30 September 2020, our net debt position excluding
lease liabilities is £15.1m (see note 17 of the Group
financial statements), and the Group’s two debt
covenants under its RCF being the ratio of Net Debt to
trailing 12-month Adjusted EBITDA (as defined in the RCF
agreement) and trailing 12-month EBITDA to Finance
Charges (as defined in the RCF agreement) are 0.23:1 and
44.97:1, respectively. Both are well within the covenant
limits permitted by the Group’s RCF. The Group has
assessed its forecast compliance with these covenants
at 31 March 2021, 30 September 2021 and 31 March
2022 and concluded that even in the most severe but
plausible scenario modelled, the Group will continue to
comply with its covenants.
On the basis set out above, the Directors consider it
appropriate to conclude that the Group has adequate
resources to continue as a going concern for the
foreseeable future and for a period of at least 12 months
from the date of authorising these financial statements.
Therefore, the Group continues to adopt the going
concern basis for preparing its financial statements.
Derivative financial instruments and hedging activities
The Parent Company enters into foreign exchange
forward contracts to hedge its GBP cash outflows. The
Parent Company does not apply hedge accounting for
these forward contracts which are mark-to-market at
each reporting date with any changes in fair values
recognised in the Parent Company’s statement of
comprehensive income.
Investments
Investments are stated at cost less any provision for
impairment. Cost includes capital contributions arising
from share options granted by the Parent Company to
employees of its subsidiaries.
Pensions
Contributions to personal pension plans are charged to
the statement of comprehensive income in the period in
which they fall due and payable.
Dividends
Interim dividends are recorded when they are paid,
and final dividends are recorded once they have been
approved by the Parent Company’s shareholders.
Taxation
Current tax, including UK corporation tax, is provided
at amounts expected to be paid (or recovered) using
the tax rates and laws that have been enacted or
substantively enacted by the balance sheet date.
Share-based payments
The Parent Company provides 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 (equity settled) or
rights to cash in the form of cash options (cash-settled).
The 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 23 of the Group 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 Parent Company’s estimate
of share options that will vest. At each balance sheet
date, the Parent Company revises its estimate of the
number of options expected to vest as a result of the
effect of non-market based vesting conditions. The
impact of the revision of the original estimates, if any, is
recognised in the statement of comprehensive income
with a corresponding adjustment to equity reserves.
For cash-settled share-based transactions, an expense
is recognised, with a corresponding increase in liabilities,
over the period during which employees become
entitled to payment. The liability is remeasured at each
reporting date and at settlement date based on the fair
value of the cash options. Any changes in the liability are
recognised in the statement of comprehensive income in
the period which they occur.
Where the share options are awarded to employees of
subsidiaries, the amount of the charge is passed down to
the subsidiary as a capital contribution, which increases
the investment in that subsidiary.
3. CRITICAL JUDGEMENTS AND
ACCOUNTING ESTIMATES IN APPLYING
THE PARENT COMPANY’S ACCOUNTING
POLICIES
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.
111
RWS — Annual Report 2020f Notes to the Parent Company Financial Statements (continued)
These estimates and judgements are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances. They are reviewed on an ongoing basis,
but the future actual experience may vary materially from management’s expectation.
No critical judgements were required to be made by the Directors in these financial statements.
Key sources of estimation uncertainty
No estimates and assumptions are considered to have a risk of causing a material adjustment to the carrying
amounts of assets and liabilities in the Parent Company financial statements.
4. DERIVATIVE FINANCIAL INSTRUMENTS
The Parent Company enters into forward foreign exchange contracts to mitigate its foreign exchange risk from
foreign currency dividend payments received from its subsidiary undertakings. At 30 September 2020, there was a
derivative asset of £0.4 million relating to outstanding forward foreign exchange contracts (2019: none).
5. OPERATING PROFIT
The Parent Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own
statement of comprehensive income in these financial statements. The Parent Company profit after tax for the year
ended 30 September 2020 under FRS 101 was £25.9 million (2019: £1.7 million loss).
Audit fees payable in relation to the audit of the financial statements of the Parent Company are £15,000 (2019:
£15,000). Fees paid to PricewaterhouseCoopers LLP and its associates for non-audit services to the Parent Company
itself are not disclosed in the individual financial statements of RWS Holdings plc. These are disclosed on a
consolidated basis in note 5 of the Group’s financial statements.
6. DIRECTORS AND EMPLOYEES
Wages and salaries
Social security costs
Other pension costs
Share-based payment expense
2020
£’000
2,344
234
60
600
2019
£’000
2,193
230
50
175
3,238
2,648
During the year, the Parent had seven (2019: seven) Directors, including four Non-Executive Directors and seven
other employees (2019: five), providing services to the Group.
Two Directors (2019: two) received contributions to their personal pension schemes as did all seven (2019: five) of the
additional employees. The 2019 figures have been adjusted to include all employees of the Parent Company.
Emoluments of the highest paid Director:
Aggregate emoluments
Pension costs - paid to the Director’s personal pension scheme
Share-based payment expense
2020
£’000
550
23
339
912
2019
£’000
604
17
301
922
Details of the Directors’ remuneration and pension contributions are disclosed in the Directors’ Remuneration
Report on pages 52 to 55.
112
RWS — Annual Report 2020
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS 7. INVESTMENTS
Cost and net book value at beginning of year
Increase in investments
Cost and net book value at end of year
2020
£’000
83,451
9,531
92,982
2019
£’000
83,315
136
83,451
The increase of £9.5 million in the year comprises the acquisition of Iconic Translation Machines Ltd. (£9.1 million),
including estimated contingent consideration of £1.7m, and capital contributions of £0.4 million relating to share-
based payments made by the Parent Company to employees of its subsidiary undertakings.
The prior year increase in investments of £0.1 million were capital contributions relating to share-based payments
made by the Parent Company to employees of its subsidiary undertakings.
The Directors consider that the value of the Parent Company’s fixed asset investments, which are listed below, is
supported by their underlying profitability.
Subsidiary undertaking
Registered address
Nature of business
Alpha Translations Canada Inc.
Suite 216 636 King Street Spruce
Grove Alberta Canada
Technical and legal translations
RWS Information US LLC (formerly Article One
Partners LLC)
426 Industrial Avenue Suite 150,
Williston VT 5495 USA
IP information searches
Corporate Translations Inc.
101 East River Drive East Hartford,
Connecticut CT 06108 USA
Translation and linguistic validation
inovia LLC
Lawyers’ and Merchants’ Translation Bureau Inc.
RWS US Holding Co. Inc.
90 Broad Street Suite 402
New York NY 10004 USA
Patent translations
Technical and legal translations
Holding company
LUZ, Inc.
RWS Life Sciences Inc.
555 Montgomery Street Suite 720
San Francisco CA 94111 USA
Translation and linguistic validation
Translation and linguistic validation
RWS Group Deutschland GmbH
Joachimsthaler Str. 15
10719 Berlin Germany
Technical and legal translations
KK RWS Group
Jimbocho Kita Tokyu Building, 4F 3-1-16 Kanda-
Misakicho, Chiyoda-ku, Tokyo, Japan, 101-0061
Patent, technical and legal
translations
RWS Life Sciences International SA
Avenue Mon-Repos 14
1005 Lausanne Switzerland
Translation and linguistic validation
inovia Pty Holdings Limited
Suite 4 Level 12 45 Clarence Street
Sydney NSW 2000 Australia
Patent filing
Beijing RWS Science & Technology
Information Consultancy Co. Ltd
A601, Floor 6th, Building B-2, Northern
Territory, Zhongguancun, Dongsheng
Technology Park, No. 66 Xixiaokou Road,
Haidian District, Beijing, China 100192
Patent, technical and legal
translations
113
RWS — Annual Report 2020f Notes to the Parent Company Financial Statements (continued)
Subsidiary undertaking
Registered address
Nature of business
Communicare Limited
Corporate Translations UK Limited
RWS Language Solutions Limited
Japanese Language Services Limited
Pharmaquest Limited
RWS Group Limited
RWS Information Limited
RWS (Overseas) Limited
RWS Translations Limited
RWS UK Holding Co. Limited
Moravia US Holding Company, Inc.
Europa House, Chiltern Park
Chiltern Hill, Chalfont St Peter
Buckinghamshire SL9 9FG England
Technical and legal translations
Translation and linguistic validation
Technical and legal translations
Technical and legal translations
Technical and linguistic validation
Holding company
IP searches
Holding company
Patent translation and filing
Holding company
223 E Thousand Oaks Blvd, Suite 202,
Thousand Oaks CA 91360 USA
Holding company
Moravia US Intermediate Holding Company, LLC
223 E Thousand Oaks Blvd, Suite 202,
Thousand Oaks CA 91360 USA
Holding company
Moravia IT, LLC
Moravia IT s.r.o.*
223 E Thousand Oaks Blvd, Suite 202,
Thousand Oaks CA 91360 USA
Localisation services
Vinena 526/1, Trnita, 602 00 Brno,
Czech Republic
Localisation services
Moravia IT (Nanjing) Co., Ltd
3F Hongxin Mansion, 98 Jianye Road Qinhuai
District, Nanjing, 210004 Jiangsu, China
Localisation services
Moravia IT Hungary Kft.
Horvát utca 14-24, 1027 Budapest, Hungary
Localisation services
RWS Moravia Colombia S.A.S.
Carrera 43 A 1 50 Torre 2 of 864, Antioquia,
Medellin, Colombia
Localisation services
Iconic Translation Machines Ltd
Invent Building, DCU Campus, Glasnevin,
Dublin 9, Ireland
Machine translation
RWS Moravia India Private Limited, f.k.a.
Webdunia.com (India) Private Limited
B-810, 8th Floor, BSEL Tech park, 39-5 & 39-5A,
Sector - 30A, Vashi, Navi Mumbai - Thane
400 703, Maharashtra, India
Localisation and technology services
RWS Moravia (Thailand) Company Limited f.k.a
Webdunia Thailand Co. Ltd
187/2/6 Chang Klan Road, Chang Klan, Muang
Chiang Mai, 50100 Thailand
Localisation and technology services
Webdunia.com Technologies Inc.
515 Plainfield Avenue Suite 102, Edison,
NJ - 08817, USA
Localisation and technology services
*Moravia IT s.r.o. also has branches operating in Argentina, Ireland, Japan and the United Kingdom.
All subsidiary undertakings, except RWS Group Limited and Iconic Translation Machines Ltd, are held indirectly.
All subsidiary undertakings are 100% owned.
114
RWS — Annual Report 2020
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS 8. DEBTORS
Amounts owed by Group undertakings
Other debtors
Prepayments
Amounts due within one year
2020
£’000
2019
£’000
190,116
213,728
275
275
78
154
190,666
213,960
Included withing amounts owed by Group undertakings is an amount of £21.8 million (2019: £20.2 million) that is
due after more than one year. The debtor incurs interest at a rate equivalent to the Parent Company’s external debt
facility and is repayable on 18 October 2027. All other amounts owed by Group undertakings are unsecured, interest
free and repayable on demand.
9. LOAN
Due in less than one year
Loan
Due in more than one year
Loan
2020
£’000
2019
£’000
-
15,219
44,018
34,327
On 10 February 2020, the Group entered into an Amendment and Restatement Agreement (“ARA”) with its banking
syndicate which amended its existing US$160 million term loan maturing on 18 October 2022 into a US$120 million
Revolving Credit Facility (“RCF”) maturing on 10 February 2024, with an option to extend maturity to 10 February
2025.
Under the terms of the ARA, the Group’s interest margin over US LIBOR, is determined by the Group’s net leverage.
At signing, the Group’s existing term loan debt was transferred across to the RCF. Commitment fees are payable
on all committed, undrawn funds at 35% of the applicable interest margin. The ARA also contains a US$80 million
uncommitted accordion facility.
This debt refinancing has been accounted for as a debt modification without extinguishment resulting in a debt
modification gain being recognised in the Parent Company’s statement of comprehensive income of £1.2 million.
Refer to Note 6 for of the Group’s financial statements for further details.
10. TRADE AND OTHER PAYABLES
Trade creditors
Amounts owed to Group undertakings
Accruals
Amounts due within one year
2020
£’000
1,294
41
3,330
4,665
2019
£’000
311
8,831
1,029
10,171
Amounts owed to Group undertakings are unsecured, interest free, have no fixed date of repayment and are
repayable on demand.
115
RWS — Annual Report 2020f Notes to the Parent Company Financial Statements (continued)
11. SHARE CAPITAL AND RESERVES
Authorised
Ordinary shares of 1 pence each (2019: 1 pence)
500,000,000
5,000
500,000,000
5,000
2020
Number
2020
£’000
2019
Number
2019
£’000
Allotted, called up and fully paid
At beginning of year
Issue of shares
At end of year
273,695,907
2,737
273,543,272
1,492,585
15
152,635
275,188,492
2,752
273,695,907
2,735
2
2,737
The increase in share capital was as a result of the exercise of 1,492,585 share options by a Director of the Parent
Company and a senior manager of a subsidiary undertaking.
Reserves
The nature and purpose of each reserve within equity is as follows:
> The balance on the capital reserve is an amount not distributable to shareholders and not transferred to the
income statement.
> The share-based payment reserve is the credit arising from share-based payment charges in relation to the
Group’s share option schemes.
> The profit and loss account is the cumulative net gains and losses, arising from the Parent Company’s profit or
loss.
12. GUARANTEES AND OTHER FINANCIAL COMMITMENTS
In respect of overdraft facilities, the Parent 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 amounted to £Nil (2019: £Nil).
The Group’s RCF, to which the Parent Company is a borrower is secured by guarantees provided by the material
subsidiaries of the Parent Company’s subsidiary undertakings.
13. POST BALANCE SHEET EVENTS
On 27 August 2020, the Parent Company announced it had reached agreement with SDL plc (“SDL”) for an all-share
combination, pursuant to which RWS agreed to acquire the entire issued and to be issued share capital of SDL by
means of a court-sanctioned scheme of arrangement.
Subsequent to 30 September 2020, following the shareholders of both SDL and the Parent Company voting in favour
of the proposed all-share combination, a court-sanctioned scheme of arrangement was effective on 4 November
2020. Accordingly, 113,338,511 new ordinary shares were issued by the Parent Company as full consideration to
acquire 100% control of SDL.
Given the size, complexity and close proximity of this transformative acquisition to the date of approval of the
financial statements it has not yet been possible to complete a purchase price allocation to determine provisional
fair values. Therefore no fair values have been included in these financial statements and nor has the amount of
applicable goodwill been determined.
No other significant events have occurred between the balance sheet date and the date of authorising these financial
statements.
116
RWS — Annual Report 2020
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
GLOSSARY AND SHAREHOLDER INFORMATION
Glossary
Adjusted earnings per share or Adjusted EPS - is stated
before amortisation of acquired intangibles, acquisition
costs, share-based payment expense and exceptional
items, net of associated tax effects.
Adjusted net income – Adjusted net income is calculated
as statutory profit for the year adjusted for the Group’s
amortisation on acquired intangibles, acquisition costs,
share based payment expense and exceptional items.
Adjusted operating profit – is operating profit
before charging amortisation of acquired intangibles,
acquisition costs, share-based payment expense and
exceptional items.
Adjusted profit before tax or Adjusted PBT – is stated
before amortisation of acquired intangibles, acquisition
costs, share-based payment expense and exceptional
items.
CAGR – compound annual growth rate (CAGR) is the rate
of return that would be required for an investment to
grow from its beginning balance to its ending balance,
assuming the profits were reinvested at the end of each
year of the investment’s lifespan.
Cash conversion - is free cash flow expressed as a
percentage of adjusted net income. This is viewed by
the Group as a key measure to understand how much
of the Group’s profits have been converted into cash
flow available for dividends, debt repayments and
acquisitions.
Clinical Outcomes Assessment (COA) - questionnaires
used in Health Economic Outcome Research studies
including Patient Reported Outcome Instruments (PRO),
Clinician Reported Outcome Instruments (ClinRO), and
Observer Reported Outcome Instruments (ObsRO).
EBITDA – is defined as the Group’s profit before interest,
tax, depreciation and amortisation.
Free cash flow – free cash flow is calculated as cash
generated from operations, less proceeds from warranty
claim, capital expenditure, debt service costs, and
income taxes.
Linguistic validation (LV) – the process of investigating
the reliability, conceptual equivalence, and content
validity of translations of Clinical Outcomes Assessment
measures.
Localisation – process of adapting a product or content
to a specific locale or market. The aim of localisation is to
give a product the look and feel of having been created
specifically for a target market, no matter their language,
culture, or location.
Underlying – excludes the impact of acquisitions and
assumes constant currencies.
117
RWS — Annual Report 2020f INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
SOLICITORS
CMS Cameron Mckenna Nabarro Olswang LLP
Cannon Place
78 Cannon Street
London EC4N 6AF
PRINCIPAL BANKERS
Barclays Bank plc
1 Churchill Place
Canary Wharf
London E14 5HP
Shareholder Information
CORPORATE HEADQUARTERS AND
REGISTERED OFFICE
Company 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 JOINT BROKER
Numis Securities Ltd
London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT
Tel: +44 (0) 20 7260 1000
JOINT BROKER
Berenberg
60 Threadneedle Street
London EC2R 8HP
Tel: +44 (0) 20 3207 7800
REGISTRARS
Link Market Services Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Tel: 087 1664 0300
from outside the UK: +44 (0) 371 664 0300
Email: enquiries@linkgroup.co.uk
118
RWS — Annual Report 2020
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS 119
RWS — Annual Report 2020f RWS Holdings plc
ANNUAL REPORT 2020
Europa House
Chiltern Park
Chiltern Hill
Chalfont St Peter
Bucks
SL9 9FG
United Kingdom
Tel: +44 (0) 1753 480 200
Fax: +44 (0) 1753 480 280
Email: rws@rws.com
rws.com