Annual Report2021Annual Report2021 Welcome to our
2021 Annual Report
Notwithstanding the ongoing global
pandemic, RWS ended the year with a
strong cash position and, following our
recent acquisitions, we remain confident
about our future growth prospects.
DAVE PARÉ | USA
For the first time, we invited all RWS employees to participate in a photography
competition with a selection of their images being used in this year’s Annual Report.
Receiving over 800 entries, the theme for the competition was ‘clouds’. As the key
regulator of the planet’s average temperature, clouds have an enormous influence on
the earth’s energy balance, climate and weather; increasingly, the cloud is the basis
on which our product solutions are delivered; and cloud communication is a way of
building, deploying and scaling enterprise communications systems, something which
we help our clients do every day.
2
RWS — Annual Report 2021
Contents
STRATEGIC REPORT
04
06
08
Group Overview
Financial and Performance Highlights
Chairman’s Statement
10 Market Overview
15
16
21
23
24
53
56
60
64
68
Our Business Model
Chief Executive Officer’s Review
Strategic Framework
Key Performance Indicators
Sustainability
SASB
Chief Financial Officer’s Review
Principal Risks and Uncertainties
Task Force on Climate-related Financial Disclosures
Section 172 Statement
GOVERNANCE REPORT
70
74
76
84
88
96
99
Corporate Governance Statement
Board of Directors
Corporate Governance Report
Audit Committee Report
Directors’ Remuneration Report
Directors’ Report
Statement of Directors’ Responsibilities
FINANCIAL STATEMENTS
100
Independent Auditors’ Report to the Members of RWS
Holdings plc
110 Consolidated Statement of Comprehensive Income
111 Consolidated Statement of Financial Position
112 Consolidated Statement of Changes in Equity
113 Consolidated Statement of Cash Flows
114 Notes to the Consolidated Financial Statements
154 Parent Company Financial Statements
156 Notes to the Parent Company Financial Statements
166 Glossary
166 Shareholder Information
RWS — Annual Report 2021
3
DIA
N A D A VIY A R | IN
A RJU
Group Overview
RWS is a world-leading provider of technology-enabled language,
content management and intellectual property services. We help
our clients to connect with and bring new ideas to people globally,
by communicating business critical content at scale and enabling
the protection and realisation of their innovations.
Our specialist teams combine the latest technology, proven processes and highly skilled
people 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 language services are delivered to, and are trusted by, world-leading companies
including 90 of the global top 100 brands, the top 20 pharmaceutical companies, 8 of
the top 10 Contract Research Organisations (CROs), 40 of the top 50 asset management
companies and 19 of the top 20 patent filers worldwide. Our key industries cover
technology, pharmaceutical, medical, legal, financial services, chemical, automotive,
government and telecommunications sectors, which we serve from offices across five
continents.
RWS operates an ISO-certified Quality Management System that fulfils regulatory and
industry requirements as applicable to services provided (and holds certifications ISO
9001, ISO 17100, ISO 13485, ISO 18587 and ISO 21500).
Our Information Security Management Systems contain the policies which govern
the implementation of information security and privacy throughout the Group; the
framework we use has enabled us to achieve ISO 27001 certification for many of our
products, services and supporting people, processes and technology.
We have ISO 14001 Environmental Management certification at our head office in
Chalfont St Peter, our Maidenhead office and our Chinese offices in Beijing, Rizhao and
Xi’an. Currently, our Environmental Management System certifications cover at least
10% of our business by headcount.
Over the last 63 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 over 80 offices worldwide and our shares are
traded on the Alternative Investment Market (AIM), the London Stock Exchange
regulated market (RWS.L).
4
RWS — Annual Report 2021
LANGUAGE SERVICES
The Language Services division is recognised as one of the world’s largest
language service providers and helps clients to create, translate, and
deliver content across 250+ languages. Our global team of linguists,
project managers, subject matter experts and localisation professionals
work closely with clients to ensure their communications and multilingual
content is compelling, accurate, consistent and tailored to the audience
they need to reach.
REGULATED INDUSTRIES
The Regulated Industries division provides a full suite of language
services exclusively for highly regulated industries such as life
sciences, managed healthcare, financial services and legal.
Language services include support for clinical trial management
and linguistic validation of Clinical Outcomes Assessments (COAs),
insurance, retail, commercial and investment banking, compliance,
mergers and acquisitions and litigation.
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.
The division enjoys a reputation for delivering solutions that support
strategic decision-making throughout the IP lifecycle.
LANGUAGE AND CONTENT TECHNOLOGY
The Language and Content Technology division offers the latest
innovations in language and content management technology to
help enterprises engage with global audiences across any device. Our
language technology and artificial intelligence (AI) solutions enable
enterprises to create, manage, translate and automate content in any
language globally. Our content management technology supports
the creation, translation and delivery of global content at scale in
ways that are efficient, secure and compliant. The combination of our
language and content technology – enhanced with state-of-the-art
award-winning machine learning (ML) and AI – offers the capability to
manage the ‘end-to-end’ translation supply chain.
RWS — Annual Report 2021
5
Financial and Performance
Highlights
£55.0m
Profit before tax (“PBT”)
2020: £58.7m
£6.2m
Net debt including lease liabilities
2020: £37.9m
10.9p
Basic earnings per ordinary share
2020: 16.9p
7,674
FTE employees at 30 September 2021
2020: 3,095 FTE at 30 September 2020
Note: Unless otherwise indicated, all figures relate to FY21 (1 October 2020 – 30 September 2021).
IP SERVICES
£113.6m
+1%
LANGUAGE
AND CONTENT
TECHNOLOGY
£100.4m
+25,000%
LANGUAGE
SERVICES
REGULATED
INDUSTRIES
£317.6m
+85%
£162.9m
+128%
OUR GEOGRAPHICAL REACH
Canada
United
States
Netherlands
Belgium
France
United
Kingdom
Ireland
Portugal
Switzerland
Germany
Czech Republic
Sweden
Finland
Poland
Ukraine
Romania
Republic of Korea
Lebanon
Spain
Luxembourg
Hungary
Croatia
Russian Federation
Japan
China
Taiwan
Brazil
Singapore
Thailand
Hong Kong S.A.R.
India
Vietnam
Chile
Argentina
6
RWS — Annual Report 2021
Australia
REVENUE
ANNUAL ADJUSTED PBT (£M)
£694.5m
+95%
+4% OCC2
2020: £355.8m
ADJUSTED PBT3
£116.4m
+66%
2020: £70.2m
ADJUSTED EPS3
23.8p
+20%
2020: 19.9p
CASH
£92.5m
+80%
2020: £51.4m
PROPOSED FINAL
DIVIDEND
8.5p
+ 17%
2020: 7.25p
NET CASH / (DEBT)1
£45.3m
4x growth
2020: (£15.1m)
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
ANNUAL REVENUE (£M)
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
5.6
6.0
7.4
9.0
11.0
13.9
14.5
14.6
16.2
17.2
21.0
22.1
22.7
30.6
43.3
61.8
74.2
70.2
116.4
27.3m
35.9m
46.2m
55.7m
65.4m
77.4m
95.2m
164.0m
355.7m
694.5m
1 Comprises loans less cash and cash equivalents excluding lease liabilities (refer to Note 16).
2 Excluding the impact of acquisitions and assumes constant currency.
3 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 page 164). Adjusted earnings per
share adjusts for amortisation of acquired intangibles, share based payment expense, acquisition costs and
exceptional items, net of associated tax effects.
RWS — Annual Report 2021
7
Chairman's Statement
INTRODUCTION
RWS celebrated its 63rd year in business in 2021, having
become the world’s leading provider of language services.
This year has been dominated by the significant task of
integrating the most substantial acquisition in our history,
SDL plc (“SDL”), into the Group; a task that is well advanced,
delivering excellent levels of synergies and opening up
additional opportunities. Upon completion of the integration,
we will have successfully optimised the world’s leading
language services and technology group. The acquisition has
been a real landmark for the Group and we were delighted to
be awarded “Best use of AIM”, at the 2021 AIM Awards, for the
SDL acquisition.
PERFORMANCE
The Group achieved revenues of £694.5m for the year, 95% ahead of 2020
(£355.8m). These revenues include an eleven-month contribution from former
SDL, alongside 4% organic growth, on a constant currency basis. Within the Group
numbers, there was a strong performance from the Regulated Industries division
and we were pleased to see the IP Services division revenues stabilised. All of this
was achieved, of course, against the background of Covid-19.
Adjusted profit before tax rose to £116.4m (2020: £70.2m), an increase of 66%
representing a stronger than expected margin performance.
As a result of the SDL acquisition, the Group’s balance sheet expanded
significantly to net assets of £1,010.9m (2020: £408.9m). At 30 September 2021 net
cash1 was £45.3m, compared with net debt1 of £15.1m in 2020. This strong position
was achieved despite the significant one-off outlays associated with the SDL
integration and an increased full-year dividend.
PEOPLE AND BOARD
The enlarged Group employed 7,674 people as at the financial year end, spread
across the Americas, Europe and Asia Pacific. For the majority of FY21 we continued
to work primarily from home with all of the constraints posed by the pandemic, as
did our clients. I am particularly proud of the manner in which our world-wide team
has continued to provide our products and services to the high-quality standards
expected by our broad range of world leading clients.
We have continued to invest in training and the provision of the latest
technological support to allow our colleagues to deliver a superior service.
Above all, our priority has been to embrace government guidelines and keep
our people safe.
As announced in June 2021, Ian El-Mokadem became the Group’s CEO,
and Richard Thompson stepped down from this role with effect
from 25 July 2021 following a short handover period. On behalf of
the Board, I would like to reiterate our thanks to Richard for his
strong leadership of the Group over the last nine years.
Andrew Brode | CHAIRMAN
1 Comprises loans less cash and cash equivalents
excluding lease liabilities (refer to Note 17).
8
RWS — Annual Report 2021
Ian was appointed following an extensive external
succession process seeking a candidate with the
necessary blend of skills and expertise to lead our
ambitious, international group. He has over 20 years
of experience in senior management roles in which
he grew substantial people and services businesses
globally, both organically and through acquisitions. The
CEO transition has gone well, with a unified Executive
Team having been established, supporting the Group’s
strong Board. As I highlighted in my statement last year,
regulatory and governance developments make the
role of a non-executive director ever more important
and we have enhanced our Board to reflect this. I
would like to extend a special welcome to the three
new non-executive directors who joined the Board in
November 2020. Frances Earl has been appointed as
Chair of the Remuneration Committee. She served for
many years as a Partner at Accenture, latterly in the
most senior HR roles. As a result of the SDL acquisition,
David Clayton, formerly the non-executive Chairman
of SDL, and Gordon Stuart, a recently appointed non-
executive director at SDL, joined the Board of RWS,
bringing extensive financial, technology and listed
company experience to the Board. Gordon has also
been appointed Chair of the Audit Committee.
David Shrimpton stepped down from the Board at the
AGM in February. David was RWS’s Senior Independent
Director and Deputy Chairman. He had served as a
director for 10 years, and I am particularly grateful for
his wise counsel. David has been appointed as Chairman
of the Trustees of the RWS Foundation.
ENVIRONMENTAL, SOCIAL AND
CORPORATE GOVERNANCE (ESG)
RWS is committed to achieving and maintaining high
standards of corporate sustainability in its business
activities and interactions with our people, our clients,
our suppliers, our investors, our community and the
environment around us.
In line with this commitment, we have made significant
progress recently. Having joined the United Nations
Global Compact Initiative in 2020, our commitment to
sustainability is channelled through specific goals which
underpin our actions, operations and reputation. These
goals are aligned with the United Nations’ Sustainable
Development Goals (SDGs), and we submitted our first
Communication on Progress report in June 2021.
RWS has also chosen to evolve its sustainability reporting
by disclosing sustainability topics and certain accounting
metrics in line with the SASB Standards and, in 2021, we
became a signatory to the Task Force on Climate-related
Financial Disclosures (TCFD) and have started working
towards aligning ourselves with and adopting TCFD.
We are also developing our carbon emissions reduction
plan and it is our intention to develop a science-based
target, aligned with the Science Based Target initiative (SBTi)
criteria and submit the plan to the SBTi for validation.
This progress sits alongside our commitment to high
standards of governance, having adopted the QCA
Corporate Governance Code in 2018, and our ongoing
support for our broader communities through our work
to improve access to careers in languages through
school and university partnership programmes
including the RWS Campus, the RWS Scholarship
Programme with the University of Manchester and
Urban Synergy; and through our commitment to
philanthropic initiatives through the RWS Foundation.
Later in this Annual Report we provide an extensive
update on the Group’s sustainability initiatives and all
aspects of our Corporate Governance.
We are pleased to have noted excellent improvement in
the ratings accorded to RWS by the bodies engaged in
governance and sustainability analytics and will look for
further improvement in the years to come.
DIVIDEND
RWS first listed its shares in November 2003 and has
raised its dividend in every year since the IPO. We
have a highly cash generative business model with
relatively low capex expenditure and have historically
distributed between 40% and 60% of earnings. As at
30 September 2021, we had net cash of £45.3m.
The Board is, therefore, pleased to recommend a final
dividend of 8.5p per share which, together with the
interim dividend of 2.0p per share, will result in a total
dividend for the year of 10.5p per share, an increase of
17% compared with 2020. Subject to final approval at
the AGM, the final dividend will be paid on 25 February
2022 to shareholders on the register at 28 January 2022.
SUMMARY
In summary, the Group has delivered a strong set of
results in spite of the challenges posed by Covid-19 and
the integration of SDL.
I am confident that the Group is in a stronger position
than ever, with an excellent team in place to drive the
business forward and build on its leadership of its
growing, fragmented markets. With a healthy balance
sheet to support the Group’s strategy, I am excited
about the plans we are developing to build on RWS’s
longstanding track record of delivery.
Andrew Brode | CHAIRMAN
20 December 2021
RWS — Annual Report 2021
9
Market Overview
A N IA
M
N C A B A D A R A U | R O
BI A
GLOBAL LANGUAGE SERVICES MARKET
Slator1 estimates the language industry’s
addressable market to be worth USD23.8bn in
2020. Despite significant disruption from Covid-19,
the overall market size remained stable in 2020,
shrinking slightly (by 1.57%) from 2019. In the first
half of 2021 the market has shown good signs
of recovery. Barring any major disruption, Slator
expected the language market to grow in 2021,
surpassing previous years.
Slator segments the language industry into 10 primary verticals
based on the areas in which buyers of language services operate.
The language services market by sector in 2020
Aerospace & Defence 5.1% USD1.21bn
Finance 5.9% USD1.41bn
Life Sciences 8.3% USD1.98bn
Engineering & Manufacturing
9.3% USD2.22bn
Media 9.5% USD2.27bn
TOTAL
USD23.8
BILLION
(2019: USD24.2
BILLION)
Gaming 2.7% USD0.65bn
Public Sector 23.4% USD5.59bn
Technology 15.07% USD3.59bn
Travel & Retail 9.6% USD2.29bn
Professional services 10.9% USD2.61bn
10
RWS — Annual Report 2021
STRATEGIC REPORT
1 Slator 2021 Language Industry Market Report
Growth across the verticals was mixed in 2020 as the tables below set out.
Technology, Finance, and Gaming markets grew fastest in percentage terms, while the
Technology, Finance, and the Public Sector markets grew most in US dollar terms. Life
Sciences was among the top growth verticals in both percentage and real terms.
FASTEST GROWING VERTICALS IN 2020
Percentage growth per end-customer vertical in 2020
Technology
Finance
Gaming
Life Sciences
Public Sector
12.19%
8.46%
8.33%
4.21%
1.64%
Professional Services
Media
Aerospace & Defence
-3.33%
-5.42%
-6.92%
Engineering & Manufacturing
-11.20%
Travel & Retail
-18.21%
(Source: Slator 2021 Language Industry Market Report)
The Travel and Retail market experienced the most severe contraction, and decreased by
18% (USD 0.051bn in real terms) in 2020, reflecting the collapse of global travel and the
sharp decline in retail sales linked to the Covid-19 pandemic. This vertical (as with others
that suffered in 2020) has already shown some signs of recovery in 2021.
TOP GROWING VERTICALS IN 2020 BY MARKET GROWTH
Top growth per end-customer vertical in 2020 (in USDm)
USD390m
USD110m
USD90m
USD80m
USD50m
Technology
Finance
Public Sector
Life Sciences
Gaming
Aerospace & Defence
Professional Services
Media
-USD90m
-USD90m
-USD130m
Engineering & Manufacturing -USD280m
Travel & Retail
-USD510m
(Source: Slator 2021 Language Industry Market Report)
One of the strengths of RWS's business model is that the Group serves a broad range
of these verticals, a number of which continued to grow through 2020 despite the
challenges posed by the global pandemic.
STRATEGIC REPORT
RWS — Annual Report 2021
11
Market Overview (continued)
LIFE SCIENCES
Slator2 estimates the Life Sciences market size accounts
for 8.3% (USD1.98bn) of the language services market
(USD 23.8bn) and is made up of sub-industries such as
medical devices, clinical life sciences and telehealth.
Life Sciences is among the top growth verticals in both
percentage (4.21%) and real terms (USD80m), and this
growth is expected to continue.
Navigating the pandemic was a huge challenge and life
sciences companies responded fast and are emerging
stronger.
The pandemic accelerated the adoption of practices,
new ways of living and working, and technologies
that were expected to take years to develop. Amid
the tragic consequences of Covid-19, life sciences and
medtech companies reacted swiftly and professionally
to unparalleled demand for diagnostic tests, personal
protective equipment, ventilators and other critical medical
supplies. The dedication of health care providers was met
by the fastest novel vaccine development in history, and
traditional competitors partnered to accelerate research
and manufacturing.3
In addition to the extraordinary measures underway
to rapidly ramp up manufacturing capacity and
capabilities, medtech leaders are also looking outside
their normal sector boundaries to explore creative
solutions to further supplement capacity, such as
partnerships with companies outside the sector, open-
source equipment design, and deployment of medically
trained employees to support public-health needs.4
The Covid-19 pandemic led to an unprecedented
number of postponed and cancelled elective surgical
procedures in 2020, substantially negatively impacting
the general surgery devices market, especially in its
worst hit months of April and May. While many of
the general surgery device markets returned to pre-
pandemic sales volumes and growth rates during H2
2020, the exacerbated backlog of elective procedures
due to the pandemic has continued to fuel demand well
into H1 2021. GlobalData’s analysis of the market trends
in 2021 has revealed that general surgery device sales
have continued to increase in both revenue and sales
unit volumes and are forecast to maintain this growth
pattern well into 2022.5
Deloitte reports that the rapid development of novel
vaccines for Covid-19 demonstrated that a new type of
streamlining and efficiency is possible. Deloitte also reports
that clinical trials for the vaccine development took less than
a year whereas previously the industry mean average for
new drug development and review was 8.2 years.6
Accelerated digital transformation during the pandemic
saw agile teams, release of the minimum viable product,
and senior management aligned with the process
changes required for increased speed to market.
Biopharma companies are adopting various strategies
for innovating clinical trials to shorten timelines,
including new trial designs and new technologies such
as artificial intelligence.7
New collaborations with academia, biotech, platform
companies and data providers were already happening
before Covid-19, but the pandemic accelerated time,
attention and capital to these types of collaborations
by the sector. Trial design and execution have also
undergone changes. Pandemic trials have proven that
big studies need not necessarily be multi-year affairs.
Regulators are becoming more flexible about clinical
trial design and the speed at which trials are conducted.
Virtual trials, and remote patient interviewing and
monitoring, enable greater patient involvement and
give patients an active voice in research. With support
from regulatory bodies, there is a trend toward more
decentralised, patient-centric trials in the long term, and
they offer many advantages. More trials will be hybrid
trials going forward, a combination of in-person and
virtual visits.8
As the pandemic progressed, the US Food & Drug
Administration (FDA) reviewed over 2,300 Emergency
Use Authorization (EUA) requests and provided EUAs
to more than 600 products, enabling therapies to be
available to patients faster. With the desire to shorten
new drug development and review timelines, regulators
have felt the added pressure throughout 2021. The
European Medicines Agency (EMA) uses the rolling
review for vaccines, one of their expedited regulatory
tools for emergencies that also includes rapid scientific
advice, accelerated marketing authorisations and
compassionate use programs. Developers were allowed
to use platforms approved in other areas, such as
mRNA, for new development, provided they had the
data to support it.9
Novel strategies and technologies, including real-world
evidence, platform trials, remote clinical trial monitoring
and advanced analytics can help organisations
succeed in the new regulatory environment, compress
timelines and accelerate insights. Also, run-on clinical
trials may be here to stay, but compliance with good
manufacturing processes (GMP), which had been
relaxed during the pandemic, may return.10
2 Slator 2021 Language Industry Market Report
3 Deloitte, 2021 Global Life Sciences Outlook
4 McKinsey & Company, Reimagining medtech for a Covid-19 world
5 Medical Device Network, General Surgery Devices Market Continuing its
Growth in H1 2021
6 Deloitte, 2021 Global Life Sciences Outlook
7 Deloitte, 2021 Global Life Sciences Outlook
8 Deloitte, 2021 Global Life Sciences Outlook
9 Deloitte, 2021 Global Life Sciences Outlook
10 Deloitte, 2021 Global Life Sciences Outlook
12
RWS — Annual Report 2021
STRATEGIC REPORT
FINANCIAL SERVICES
LEGAL SERVICES
Slator11 estimates the finance market accounts for
5.9% (USD1.41bn) of the language services market
(USD23.8bn) in 2020 and was one of the fastest growing
verticals in both percentage (8.46%) and real terms
(USD110m) and this growth is expected to continue.
Although RWS has clients across all sub-sectors in
finance, the most prevalent are asset management and
banking.
Despite volatile financial markets, the asset
management industry has fared relatively well. Key
themes such as sustainability and the use of technology
accelerated in response to end-client demands, but
pressure remains for improvement in efficiency,
diversity and tackling health and climate challenges.
In March 2021, the EU Sustainable Finance Disclosures
Regulation took effect, requiring for the first time
that asset managers provide information about their
investments' environmental, social and governance
risks as well as impact on society and the planet.
The USA and UK remain the first and second largest
asset management centres globally. For cross-
border distribution, over 56% of the domicile share
of authorisations is in Luxembourg and its top three
distribution markets are Germany, Switzerland and
France.12
Deloitte13 reports that, for the banking industry, the
economic consequences of the pandemic have not
been on the same scale as those during the Global
Financial Crisis of 2008–10, but they are still significant.
In addition to the financial fallout, Covid-19 is reshaping
the global banking industry on a number of levels,
ushering in a new competitive landscape, stifling growth
in some traditional product areas, prompting a new
wave of innovation, recasting the role of branches and
accelerating digitisation in almost every area of banking
and capital markets.
On that note, it is clear that Covid-19 has acted as a
catalyst for digitisation. In addition to hastening digital
adoption, the crisis has also served as a litmus test for
banks’ digital infrastructures. While institutions that
made strategic investments in technology came out
stronger, laggards may leapfrog competitors if they take
swift action to accelerate tech modernisation.
The Slator 2021 Language Industry Market Report further
identifies that legal translation is part of a USD2.61bn
Professional Services market. Moreover, such is
the breadth of legal translation needs that it spans
multiple themes across industries, most notably that
of “Complying with regulations” which is estimated at
USD4.43bn globally. The role of legal translation in this
field encompasses critical operational functions such as
contracts, licences and data regulations, meaning that it
has broad appeal across corporate departments as well
as heavily underpinning the legal operations of global
law firms.
Although the report identifies that Professional Services
localisation spending dipped in 2020 (by 3.33%), it has
rebounded strongly in key areas where growth has
been driven by a Covid-19 bounce. A key area where this
recovery is clear is in capital markets14, where legal is
aligned closely with financial services; specifically, there
has been strong demand for corporate finance and legal
advisory services in supporting M&A activity, IPOs and
SPACs (special purpose acquisition companies), all of
which often have a significant cross-border element.
Like financial services, Covid-19 has driven a surge in
innovation within the legal sector. Slator notes that, in
the localisation industry, this digital transformation is
being evidenced in areas like interpreting technology
and machine translation.
GOVERNMENT, AEROSPACE AND
DEFENCE
The Government sector accounts for the largest portion
of localisation spend at USD5.59bn (23.4%), while the
Aerospace and Defence industry represents USD1.21bn
(5.1%), according to the Slator 2021 Language Industry
Market Report.15
In terms of growth, the Government sector was one
of the top three highest growing verticals in 2020. The
need for organisations to comply with regulations was
a major driver in the large Public Sector vertical. For
example, laws that govern community access to legal
and health services drive demand for interpreting.
International institutions such as the EU stipulate
language requirements relating to the translation of
official documents and legislation, giving rise to major
public sector RFP opportunities for Language Service
Providers.
However, the Aerospace and Defence sector
experienced declines in both percentage and real terms,
declining by 6.92% (USD90m).
11 Slator 2021 Language Industry Market Report
12 Pwc, Global Fund Distribution Poster – 2021 edition
13 Deloitte, 2021 Banking and Capital Markets Outlook
14 Reuters, “Global M&A volumes hit new record in 2021, overtaking last year's
haul”
15 Slator 2021 Language Industry Market Report
STRATEGIC REPORT
RWS — Annual Report 2021
13
Market Overview (continued)
TECHNOLOGY
PATENT FILING STATISTICS
The technology industry represents the second largest
language services market at USD3.59bn (15.07%),
according to the Slator 2021 Language Industry Market
Report. It is also recognised as the fastest growing sector
in the report. Largely driven by a shift among businesses
towards digital, the technology sector has been buoyed
throughout the pandemic by an increased demand for
its products and services. Major market trends that
are driving a boom among technology companies,
particularly the “big tech firms,” include demand
for automation services, artificial intelligence, cloud
technology, content services, employee collaboration
technology and data training services.
In 2020 Patent Cooperation Treaty (PCT) application
activity slowed down soon after the pandemic began.
Throughout the four months prior to the World Health
Organization declaring the Covid-19 pandemic, monthly
growth rates [compared with the same month in 2019]
varied between 7.6% and 10.3% thereafter slowing from
9% in March to 2.1% in June. From July to September,
filing activity growth varied between 4% and 5%
per month, coinciding with the temporary lifting of
containment measures in many high-income economies.
In the last quarter of 2020, when stronger measures to
fight the virus returned, PCT filing activity fell, from a
0.4% growth in October to a 0.2% decline in December.
Companies are looking to reduce costs by introducing
automation and AI technology across their operations.
This trend is reflected in Gartner’s forecast that the
market for hyperautomation services, which includes
artificial intelligence, is up from USD481.6bn in 2020 and
projected to reach USD532.4bn in 2021.16
With the increased adoption of cloud technology, Gartner
also sees this as a significant growth area for technology
companies. Gartner first predicts that worldwide end-
user spending on public cloud services is forecast to grow
23.1% in 2021 to total USD332.3bn, up from USD270bn in
2020.17
Consumers today expect more personalised online
experiences, which is fuelling demand for content
services among technology companies. In its latest
market sizing report Gartner indicates that the content
services software market grew 6.7% (to USD12.6bn)
in 2020. Given the move towards home working,
companies are having to find new collaborative ways
to build a knowledge-based workforce. According to
Gartner, revenues in three software market segments
– collaborative work management, enterprise social
networks and employee communication software – are
set to reach almost USD4.5bn in 2021, a 17% increase
from USD3.8bn in 202018. The five-year revenue forecast
across these three segments predicts that revenues
will increase by double-digit percentages each year to
USD6.9bn in 2024.19
The total market size for data labelling services is
estimated to reach USD2.43bn in 2021 by Cognilytica
Research, almost doubling to USD4.1bn by 2024.20
The pandemic has made companies rethink their short
and long-term strategies, forcing many to accelerate their
digital initiatives. This has led to an increased demand for
technology companies’ products and services, and their
ability to support their digital transformation initiatives.
16 Gartner, Inc. report: Forecast Analysis: Hyperautomation Enablement
Software, Worldwide, 2021
17 Gartner, Inc. report: Forecast: Public Cloud Services, Worldwide, 2019-2025,
1Q21 Update, 2021
18 Gartner, Inc. report: Forecast Analysis: Social and Collaboration Software in the
The geographical distribution of PCT filings has changed
significantly since the last economic crisis in 2008.
This is due to China having undergone strong growth
in PCT filings since 2008 and by 2020 accounting for
approximately one quarter of all applications. A much
steeper decline in filing is seen when China is removed
from the total count, with filing activity dropping sharply
from March onward. Between May and December 2020,
the number of applications filed decreased month on
month compared with the previous year, with October
seeing the steepest fall (–4.3%). From November, the gap
between the overall filing trend and the trend excluding
China narrowed, reflecting a slower rate of growth in PCT
applications filed in China, though remaining at higher
volumes than in the rest of the world.
At the beginning of the pandemic, the number of PCT
applications filed slowed rapidly and dramatically in
Germany, the US and the Republic of Korea. Germany
had a short lag during the financial crisis before filings
declined but then saw filing activity fall particularly
steeply during both crises – in June 2020, filings dropped
by nearly 13%. In 2020, Japan’s filing activity fell sharply,
from a growth of 8% in February to a decline of 6.7%
in May. Filings from Japan decreased every month
between March and December, with the sharpest
fall coming in October (–11%). Of the top five origins,
Germany and Japan saw the steepest declines in PCT
filings following the onset of the pandemic. Although
China maintained high growth rates during the first
months of the pandemic, these slowed progressively
from August (+28.4%) to December (+7%). Countries
outside the top five, combined, saw filing activity slow
and fluctuate, but not plunge as steeply as it did during
the financial crisis.21
The EPO Annual Review 2020 shows that demand for
European patents remained nearly on a par with 2019.
The Office received a total of 180,250 European patent
applications, 0.7% fewer than in 2019.22 … Further, the
EPO published 133,715 European patents in 2020, -3%
compared with 2019, but well above its target of 120,000.
Workplace, Worldwide
19 Gartner, Inc. report: Market Share Analysis: Content Services, Worldwide, 2020
20 Cognilytica Research. Data Engineering, Preparation and Labelling report,
21 Source: Patent Cooperation Treaty Yearly Review 2021
22 European Patent Office, EPO Annual Review 2020 reflects organisation’s rapid
transformation, https://www.epo.org/news-events/news/2021/20210629.html
2020
14
RWS — Annual Report 2021
STRATEGIC REPORT
Our Business Model
QUALITY - we are committed to
delivering quality that delights our clients,
increases shareholder value and reflects
the training, dedication, experience and
expert knowledge of our employees. Our
management systems are compliant with
ISO-certification and fulfil regulatory and
industry requirements as applicable to the
services provided.
Creating
value for our
stakeholders
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
processes, 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.
MARKETS – we adopt a client-centric,
sector-based approach, maximising our
specialist knowledge to deliver industry-
focused solutions.
STRATEGIC REPORT
RWS — Annual Report 2021
15
D
A
N
N
Y
F
O
R
E
R
O
|
C
O
L
O
M
B
I
A
Chief Executive Officer's
Review
I am delighted to have joined RWS and would like to start by
thanking my predecessor, Richard Thompson, for his support
during our handover.
I have spent my first few months learning the business and
meeting with as many of our people, our clients and our
other stakeholders as possible. Overall, I have found the
Group to be in a very good place and have been most
impressed by the incredibly talented team of colleagues
that I have joined as well as the wonderful list of high
quality clients, many leaders in their fields, who trust us to
help them protect their ideas and to reach the global
markets that they serve.
Under my leadership, continuing to respond
to our clients' changing needs and impress
them with the integrated language
solutions we can offer them will remain
the Group's key priority.
Ian El-Mokadem | CHIEF EXECUTIVE OFFICER
16
RWS — Annual Report 2021
STRATEGIC REPORT
STRATEGY
The acquisition of SDL has strengthened the Group
considerably, enhancing our position in segments we
were already serving while also enabling us to offer a
wider range of technology products. The Group is now
highly technology-enabled which allows us to both
operate more efficiently and positions us better than
ever to offer a fuller and more tailored solution to each
client's needs.
Despite our considerably increased scale, the Group's
core focus remains largely unchanged. First, we
continue to seek organic growth through winning
new business and growing our levels of business with
existing clients. Second, our unique combination of
talented people, experience and technology enables us
to drive operational efficiency and margin improvement
whilst delivering high levels of client service and
remaining responsive to our clients' changing needs.
Third, we continue to seek to strengthen our market
position via targeted and well-integrated acquisitions
which either add capabilities or increase the Group's
geographic reach.
PRIORITIES AND PROGRESS
During FY21 we worked hard to ensure the successful
integration of SDL, starting to use its language
technology across the wider business, streamlining
back-office procedures and operations, and increasing
cross-selling opportunities across the Group. In
parallel, we maintained focus on our clients, continuing
to meet their evolving needs with the high-quality
service, responsiveness and technology solutions that
they trust us to deliver.
Whilst the process of evolving the Group's culture and
strengthening our systems infrastructure will continue,
the integration of SDL's clients, people and capabilities
is now largely complete and operating under a unified
leadership team. Our results reflect the delivery of over
£16m of cost synergies in FY21, a figure we expect to grow
as we realise the full year effect of the merger in FY22.
We are now working on plans to optimise the Group’s
structure, making the most of our expanded scale,
footprint and capabilities, to deliver for clients and
create further shareholder value through sustainable
organic growth allied to an efficient cost base. In a highly
fragmented market, where clients look for partners with
the scale and capacity to invest, RWS is now in an ideal
position to capitalise on this opportunity as a technology-
enabled services business leading in its markets.
With the benefit of a strong balance sheet, we will
continue to look for selective acquisition opportunities
in the intellectual property services, specialist language
services and language and content technology spaces.
We seek earnings enhancing acquisitions that are highly
complementary and can therefore reinforce the Group’s
leading positions in the markets that we serve.
1.7 billion
words translated by RWS translators
330+
language variants supported
40+ billion
words translated in cloud with MT
DIVISIONAL OVERVIEW
Following the acquisition of SDL on 4 November 2020,
the enlarged Group has been reorganised to operate
and report under four divisions, namely Language
Services, Regulated Industries, IP Services, and
Language & Content Technology.
The Language Services division was formed from
RWS’s Moravia and SDL’s Commercial Enterprise (CE)
businesses. It works with many of the world’s largest
companies to manage their complex localisation needs
and ensure brand consistency on a global scale. The
division provides a comprehensive set of technology-
enabled services and has an extensive global network of
specialised resources, drawing on freelancers alongside
its in-house capabilities to deliver the expertise,
consistency and scalability needed by enterprises
to ensure that their content connects with global
audiences. Its portfolio includes translation services,
linguistic quality services, AI data training services,
e-learning, video localisation and interpreting services.
The Regulated Industries division focuses on the
language service needs of the life science, financial,
legal and managed healthcare industries, providing
a range of linguistic services including high value
linguistic validation which supports clinical studies of
new medicines and vaccines. It was formed from the
integration of SDL’s Regulated Industries division with
the RWS Life Sciences division.
The IP Services division 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.
STRATEGIC REPORT
RWS — Annual Report 2021
17
Chief Executive Officer's Review (continued)
OPERATING REVIEW
Language Services’ operating margin
improved, with growth from major
technology and commercial clients
The Language Services division accounted for 46% of
Group sales, with revenue of £317.6m (2020: £171.3m),
an 85% increase over the prior period on a reported
basis, and up 4% on an organic constant currency
basis. The result includes full year revenues of the RWS
Moravia business, a full year contribution from the
former Webdunia business and eleven months of post-
acquisition performance of the SDL CE business.
Growth was driven by strong sales to several of the
division’s major global technology clients and good
growth in revenues from other large international
commercial clients. Much of the division’s focus was on
expanding new solutions and offerings such as creative
content, e-learning, testing, multimedia localisation
and data training. This helped to offset some Covid-19
impact on revenues from automotive and travel clients,
while sales to both the retail and manufacturing sectors
performed strongly year-on-year.
The growth from technology and retail clients was
underpinned by increased demand to communicate
with their partners and customers during the Covid-19
pandemic. Additionally, the growth in the retail sector
was also supported by a shift by some clients to online
(direct to consumer) sales channels. Lastly, our small-
medium market proposition (GoGlobal) continued to
grow, benefitting from increased sales and marketing
investment and an attractive proposition for the target
clients.
The division’s organic constant currency revenue
growth has been achieved despite a strong focus on the
integration of the RWS Moravia and SDL CE businesses,
which has involved a re-routing of production to our
optimal best-in-class delivery model for our clients and
bringing together our client delivery teams. Employee
well-being and client satisfaction remains a priority for
the division.
Overall adjusted operating profit for Language Services
increased 92% to £47.4m on a reported basis. The
improvement was driven by increased revenue and
overhead synergies realised after combining the
language services operations of RWS and SDL.
RWS differentiates itself from the competition
through the quality of its translations, its high level of
intellectual property expertise, its client service and
its use of technology, including a global web-based
patent filing platform, inovia; one of the world’s
largest searchable commercial patent databases,
PatBase; and the world’s leading IP research
platform, AOP Connect.
The Language & Content Technology division is
one of the world's leading technology providers
of language technology, linguistic AI and content
management. The combination of our language and
content technology – enhanced with state-of-the
art Machine Learning (ML) – offers the capability to
manage the ‘end-to-end’ translation supply chain for
our clients.
90out of the top100
global brands
16 clients on Fortune’s top 20
most admired companies list
20 out of the top 20
pharmaceutical companies
10 out of the top10 insurers
18 out of the top 20 law firms
19out of the top 20
patent filers
18
RWS — Annual Report 2021
STRATEGIC REPORT
Strong performance from
Regulated Industries, led by higher
value Linguistic Validation
IP Services improved operating
margins on increased H2 2021
revenues
The Group’s Regulated Industries division accounted
for 23% of the Group’s sales in the year. Revenue of
£162.9m represented an increase of 128% over the
prior period on a reported basis (2020: £71.3m), or a
8% increase on an organic constant currency basis.
The Life Sciences' vertical has performed well, driven
by our alignment around key verticals.
The Life Sciences vertical delivered a strong
performance across all segments, with revenues
up by 8% (in constant currency). Growth was led
by the division’s higher value Linguistic Validation
(“LV”) offering, which grew sales by 16% in constant
currency terms.
Sales to the division’s top 10 life sciences customers
also grew significantly in constant currency. Although
medical device sales continued to be impacted by the
Covid-driven slow-down on elective surgeries, we saw
overall positive growth in our top 10 medical device
clients, partly as a result of the EU Medical Device
Regulations (MDR).
Our financial and legal verticals also showed
improved performance and are positioned for growth
in 2022 through our increased focus on ESG and risk
and compliance offerings. Our managed healthcare
customers continue to grow through our sustained
leadership in annual enrolment in the United States.
The impact of Covid-19 on the division was marginally
positive overall. Growth driven by extra work
associated with clinical trials and translation work
for vaccines, anti-viral medications and antibody
testing equipment was largely offset by delays in
other clinical trial areas and the postponement of
elective surgeries. We are immensely proud to have
supported our clients as they launched vaccines and
treatments to combat the effects of the pandemic.
The division's operating profit increased 35% to
£28.4m (2020: £21.0m), on a reported basis. This was
driven by strong gross margins and effective cost
control, in line with prior years.
The Group’s IP Services division represented 16% of
Group sales in the year, with revenues broadly flat
year-on-year at £113.6m (2020: £112.8m). Divisional
performance was held back by the strengthening
of the GBP against USD in particular, with revenues
on an organic constant currency basis increasing by
2%. The reduction in patenting activity as a result of
Covid-19, which impacted H2 of 2020, has stabilised
but not yet recovered to pre-pandemic levels. In
addition, the European Patent Office has granted
fewer patents in 2021 compared with 2020. Tougher
trading in patent translation and filing revenues
was offset by a corresponding growth in IP search
services, where revenue rose by 27%, reflecting a
recovery from the levels in FY20 when search was the
first area to experience a significant drop during the
pandemic, and a 7% increase in PatBase revenues.
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 achieved strong
growth in sales to Chinese and Japanese corporates
and patent attorneys. Revenue from the Chinese and
Japanese IP Services businesses increased by 120%
and 44% respectively over the prior year. The East Asia
region was strengthened further by the acquisition of
Horn & Uchida Patent Translation, Ltd for £2.3m. This
acquisition gives the Group a team of in-house patent
translators, facilitating deployment of technology-led
workflows, and a strong roster of Japanese clients
with potential to upsell additional services.
The division’s adjusted operating profit increased 7%
to £32.3m (2020: £30.2m). As a result of streamlining
of operations in Q1 fiscal 2021 headcount was reduced
by 24 employees, which resulted in increased gross
margin, while overheads were held broadly in line
with the prior year.
STRATEGIC REPORT
RWS — Annual Report 2021
19
Chief Executive Officer's Review (continued)
Language & Content Technology’s
operating margin improved as
revenue reflects transition
The Language & Content Technology division accounted
for 15% of Group sales, with reported revenue of
£100.4m (2020: £0.4m) being a significant increase over
the prior year following the acquisition of SDL. On an
organic constant currency basis, revenue was 1% higher
than the prior year. The result includes eleven months
of post-acquisition performance of the SDL part of the
division and a full year of the Iconic business acquired in
June 2020.
Growth in revenues from our content technology
product suite during the year has been partly offset by
lower revenues within our language technology suite
of products due to a planned change in our software
license mix as the division continues to transition
towards recurring SaaS licenses.
We established Trados Live Team (a product built on
the Language Cloud platform and compatible with
RWS’s leading CAT tool, Trados Studio) as a viable cloud
solution for LSPs, corporations and enterprises with in-
house translation teams.
Language Weaver, the Group’s neural machine translation
product, saw a strong performance in the legal and
finance sectors in North America, and there was a
strong focus on product development supporting higher
scalability, an improved user experience, a new self-service
offering for smaller clients and new ways for the core AI
technology to adapt to diverse types of content in order to
enhance its appeal to a wider range of clients.
Tridion products generated several new wins and
upsells in the year, including new Electric Vehicle market
clients and we saw increased demand for regulatory and
compliance content.
Strong Net Promoter Scores (NPS) indicated that clients
continue to be highly satisfied with our technology
offering and Tridion has been recognised as a leader
by industry analyst IDC in its MarketScape: Worldwide
Content Management Systems for Authenticated Digital
Workspaces 2021 Vendor Assessment.
The division’s adjusted operating profit was £22.6m
(2020: £nil) for the year. This was the result of the
anticipated change in license mix, which has more than
offset the synergies realised during the year.
OUR PEOPLE
To compete effectively in our markets, it is critical that
RWS is well positioned to attract, recruit and retain the
best people. Our activities are highly reliant upon the
skills, dedication and passion of all of our colleagues and
freelancers around the world, who we rely upon to meet
our clients’ demands for excellent quality and timely
delivery. We aim to be a destination employer in every one
of our key operating territories and markets.
Throughout the pandemic and the additional challenges
posed through the integration of SDL, our people have
continued to perform brilliantly, remaining focused on our
clients whilst also supporting each other through a very
difficult period.
RWS’s main priority through the pandemic has remained
the safety and well-being of our colleagues. At the onset
of the pandemic we switched rapidly to a ‘working from
home’ operating model, with the nature of RWS’s business
allowing us to do this more readily than many other
organisations. We recognised that working from home
can create different stresses which impact upon mental
health, so we increased our efforts to ensure the well-
being of our teams through enhanced communication
and engagement alongside a number of activities for
colleagues, ranging from mental health sessions to
nutrition and exercise opportunities.
FY21 has also seen an important consolidation of our
key people platforms, processes and initiatives as the
Group comes together following the SDL acquisition and
the broader changes to our organisational structure that
followed. We have made good progress towards our goal
of establishing a new People function that is both highly
responsive at a divisional and local level, and efficiently
supported by a set of newly formed specialist HR teams at
group-level. At the start of 2022 Jim McHugh will join RWS
as Chief People Officer (and a member of the Executive
Team) to ensure that we fully realise the benefits of scale
in all our people processes, while shaping a more unified
culture across the expanded Group.
CURRENT TRADING AND OUTLOOK
RWS has delivered an encouraging performance against
the background of the Covid-19 pandemic. In particular,
we are pleased with the pace and effectiveness of our
integration of SDL.
We are now focused on capitalising on the Group’s
expanded scale, footprint and capabilities to drive
sustainable organic growth from an efficient cost base.
The current year has started in line with our full year
expectations.
The Group’s strong cash generation and balance sheet
supports our plans to invest for growth, both in our
software products and internal systems, and to make
selective, earnings enhancing acquisitions.
A further update on the Group’s medium term growth
strategy and investment plans will be given at a Capital
Markets Day in March 2022.
Ian El-Mokadem | CHIEF EXECUTIVE OFFICER
20 December 2021
20
RWS — Annual Report 2021
STRATEGIC REPORT
Strategic Framework
ORGANIC GROWTH
We are focused on providing an
increasing range of appropriate
products and services to existing and
new clients to drive organic growth.
We work with
> 7,600+ colleagues
> 29,000+ freelancers
> 20,000+ clients
INORGANIC GROWTH
> 90 of the world’s top 100 brands
This growth is supplemented by
selective acquisitions that complement
our existing business and which either
add additional capabilities, deepen our
presence in existing markets or enable
us to extend our reach into attractive
adjacent markets.
EFFICIENCY
We seek to leverage technology and
our global reach and scale to operate as
efficiently as possible, thereby enabling
our offerings to remain competitive and
to grow our margins over time.
SUCCESS
We are particularly pleased to be able to
show our progress against this strategy.
While we have been impacted by the
Covid-19 pandemic, since flotation we
have recorded 18 straight years of
sustained growth. The acquisition of SDL
plc in 2020 improved our competitive
positioning substantially and,
notwithstanding the ongoing global
pandemic, we remain optimistic about
our future growth prospects.
To help overcome their content
challenges of
> Volume
> Speed to market
> Quality
> Fragmentation
> Security and compliance
> Global understanding
With our unique combination of
> Language and localisation services
> Language technologies
> Machine Translation (MT) and Artificial
Intelligence (AI)
> Content technologies
> IP Research, patent translation and filing
Whilst we plan for the future
> Innovating in language services
> Providing next-generation technology
> Developing our IP support ecosystems
> And combining our services and technology into
compelling digital offerings
To create a sustainable positive impact
for all of our stakeholders
> Exceeding our clients’ expectations
> Enabling our colleagues to be their best
> Collaborating with our suppliers
> Making a positive contribution to local
communities
> Growing total shareholder returns
STRATEGIC REPORT
RWS — Annual Report 2021
21
Strategic Objectives
LEENA SHARMA | INDIA
Our business is focused on seven
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
> Solutions – be the leader in solutions in our target
segments
> Technology – be the leader in language and content
technologies
> People – be an employer of choice
> Clients – build strong and enduring relationships with
our clients
22
RWS — Annual Report 2021
STRATEGIC REPORT
Key Performance Indicators
GROUP REVENUE
ADJUSTED PROFIT BEFORE TAX
£694.5m
2021
2020
2019
2018
£694.5m
£355.8m
£355.7m
£306.0m
Description
Reflects the total value of work sold during the
financial year.
GROSS MARGIN
45.1%
2021
2020
2019
2018
45.1%
39.2%
40.1%
38.8%
Description
Reflects gross profits, being revenues less costs
directly incurred in generating revenues, expressed
as a percentage of revenues.
ADJUSTED BASIC EARNINGS
PER SHARE
23.8p
2021
2020
2019
2018
23.80p
19.90p
21.30p
17.40p
Description
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.
See note 11 for further details.
£116.4m
2021
2020
2019
2018
£116.4m
£70.2m
£74.2m
£61.8m
Description
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. See
page 164 for further details.
CASH CONVERSION
96.7%
2021
2020
2019
2018
96.7%
118.5%
105.4%
96.5%
Description
Cash conversion is calculated as underlying cash
flow from adjusted operating activities divided by
adjusted operating profit. This is viewed as a key
adjusted performance measure to understand how
much of the Group's profits have been converted to
cash. See page 165 for further details.
COLLEAGUE ATTRITION
19.2%
2021
2020
2019
19.2%1
16.8%2
25.9%
Description
Staff turnover is calculated as the number of FTE
leavers compared with the average number of FTE
during the financial year. This includes our managed
services employees where the fluctuation is much
higher as it varies according to client needs.
1 Figure based on strongest collation possible from multiple data sources,
arising from wide range of HR systems across the enlarged Group.
2 SDL plc's turnover figures have been included in 19/20 number however
Iconic Translation Machines and Webdunia's pre-acquisition figures have
not been included.
STRATEGIC REPORT
RWS — Annual Report 2021
23
Sustainability (ESG)
RWS’s corporate sustainability policy
encompasses the way we do business
and interact with our people, our
clients, our suppliers, our communities
and the environment around us.
Our commitment to corporate
sustainability, which is underpinned by
our values, aims to deliver continual
improvement in our economic, social
and environmental performance.
RWS is committed to achieving and maintaining
high standards of corporate sustainability in its
business activities and presents its corporate
sustainability strategy to the Board annually.
In 2020 RWS 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). We submitted our first
Communication on Progress report
in June 2021.
Following engagement with all our
stakeholders, RWS has mapped its
sustainability goals and actions to
four pillars.
RWS’S FOUR PILLARS OF SUSTAINABILITY
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 better
develop the four pillars of our sustainability strategy.
We recognise three distinct levels of RWS
stakeholders in our framework, with our clients,
employees and investors being the central
stakeholders for the Group.
Stakeholder
Framework
Clients
Employees
Investors
Society
Financial
Governments &
Regulatory Bodies
Suppliers
Partners
Competitors
OUR ENVIRONMENT
> Reduce energy
consumption and emissions
> Reduce waste, increasing
re-use and recycling
> Take actions to improve the
environment
OUR PEOPLE
> Attract, recruit and retain
the best people
> Education and career
opportunities
> Diversity and inclusion
> Health and well-being
RWS’s
Four pillars Info
four pillars of
graphic to be
created
sustainability
OUR COMMUNITIES
> Contribute positively to the
communities in which we
operate
> Partnerships to support
and empower young people
through education
OUR GOVERNANCE
> High ethical standards,
including our supply chain
> High standards of client
service
> Robust and secure
infrastructure
24
RWS — Annual Report 2021
STRATEGIC REPORT
MATERIALITY ANALYSIS
SUSTAINABILITY CONCERNS
RWS discussed and reviewed areas of concern for key
stakeholders before ranking and prioritising them in
terms of materiality to the RWS Group. Engagement
included an ESG Materiality survey which went to over
80% of our shareholders, over 20% of our key clients
and over 80% of our suppliers, as well as attending
meetings throughout the year. We also, for the first
time, ran a group-wide employee engagement survey
and we were very encouraged with the results. 80%
of respondents believe RWS is committed to its
responsibilities surrounding ESG.
Our ESG materiality survey and discussions identified
that client services, cyber security, human capital
and diversity and inclusion are particularly high
priorities. We have also included intellectual capital
management within our matrix as, following the
acquisition of SDL, the Group now has a significantly
enhanced product range.
We have developed our sustainability plan, taking
into consideration insight about our materiality, to
address the concerns, with targeted goals for each.
The matrix ranks the materiality of issues raised.
6
5
4
3
2
1
4
5
11
13
12
9
6
17
8
7
15
18
16
2
10
14
19
3
1
l
s
r
e
d
o
h
e
k
a
t
s
o
t
e
c
n
a
v
e
e
R
l
Relevance to RWS
1 2 3 4 5 6
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. Equality, diversity and inclusion - 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. Intellectual capital management - Strategy to
protect our intellectual capital.
11. Data privacy, cyber security and protection –
Strategy to protect our data and infrastructure.
12. Innovation - Innovation for developing our services.
13. Client satisfaction - Overall performance of our
services and client experience.
14. Economic performance - Strategic objectives linked
to growth and margin.
15. Financial transparency - Timely, meaningful and
reliable disclosures about RWS’s performance.
16. Reputation risk - Strategy regarding our image and
credibility.
17. Business ethics - Integrity and responsibility by
which we run our operations and make decisions.
18. Bribery and corruption - It is the policy of RWS to
conduct its business in accordance with the highest
professional and ethical standards.
19. Stakeholder engagement - Dialogue and
commitment with our stakeholders.
STRATEGIC REPORT
RWS — Annual Report 2021
25
Sustainability (ESG) (continued)
CORPORATE SUSTAINABILITY REPORT
In September 2015, all 193 Member States of the United Nations adopted a plan for
achieving a better future for all, laying out a path over the next 15 years to combat
poverty, inequality and injustice, and climate change. The Sustainable Development
Goals (SDGs) have been adopted as part of the 2030 Agenda for Sustainable
Development and comprise 17 goals, such as the elimination of poverty and hunger,
fighting climate change, supporting decent work conditions, and creating sustainable
cities and communities, and 169 targets.
Fulfilling these ambitions will take an unprecedented effort by all sectors in society and we all have an important
role in the process. As part of our commitment, we have started aligning our business strategies and vision with
the Sustainable Development Goals and Targets, driving change, developing partnerships and implementing
best reporting practices.
FOUR PILLARS OF SUSTAINABILITY
For the second year, we have undertaken a materiality assessment which has enabled us to report on issues
which are important to our stakeholders and outline future initiatives while taking into consideration our
business goals and risks. A limitation we have encountered is the amount of feedback we have received from
certain of our stakeholders regarding materiality – going forward this is something we will look to redress.
For each of the four pillars identified from the materiality index, we have identified primary goals aligned to the
SDGs and have established a set of policies and guidelines to underpin our activities, whilst looking to improve
our actions and reporting in each of the areas.
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.
> We are moving to renewable energy, where possible, and optimising LED and motion lighting in
offices to improve energy efficiency.
> We have a Green Agenda intranet and hold awareness days to increase understanding of climate
change, what we can and are doing to mitigate risks and reduce its impact on our colleagues and
operations.
> We have established employee-led environment teams to suggest and action local initiatives to
improve the environment.
> 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.
> We 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.
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RWS — Annual Report 2021
STRATEGIC REPORT
Responsibility to our people
> We foster working conditions which support effective health and safety programmes, non-
discrimination principles as well as human and labour rights.
> 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.
> During the Covid-19 pandemic, our staff have worked from home for various periods of time. The
Executive Team has been in regular communication with employees 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.
> We 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.
> We foster diversity among our teams based on the Group’s Equality, Diversity and
Inclusion Policy.
> We train our professionals to improve existing skills and develop new capacities.
We create a working environment for colleagues that nurtures innovation and
provides the resources to facilitate this.
Responsibility for our communities
> As a socially responsible company, we are an active and positive participant in local matters in the
communities in which we operate.
> 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. In this way we hope to be able
to help in the growth and development of tomorrow’s industry leading translators.
> 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.
> We have renamed the SDL Foundation the RWS Foundation and we are in the process of
consolidating all of our philanthropic initiatives and reviewing the Foundation's Deed and purpose.
> 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, supported by our network of suppliers.
> We enable a better, healthier, more connected society as language plays a critical
element in helping our clients find life-saving drugs and equipment as well as
communicate with their clients.
Responsibility for strong governance
> 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.
> 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.
> We ensure disclosure and promote observance of our Corporate Governance Code across all
divisions, suppliers and contractors.
> RWS has a zero tolerance against corruption policy, and therefore we require suppliers and partners
to observe professional and honest business practices. (Aligned to the UK’s Bribery Act 2010).
> We maintain our reputation as a trusted business partner through continual improvement of
our services and business management through ethics, innovation, safety and environmentally
sympathetic conduct, and the implementation of high-quality procedures across
all teams and geographies.
> We develop our own investor relations strategy that aims to ensure compliance
with legal and market practice responsibilities.
> We maintain clear communication channels with stakeholders and potential
stakeholders to provide quick and effective responses to their requirements.
STRATEGIC REPORT
RWS — Annual Report 2021
27
Environmental (ESG)
RWS SUSTAINABILITY ACTION PLAN
Each of the four sustainability pillars has a targeted action plan to ensure
the right steps are taken to both improve RWS’s business operations and
make progress towards the UN’s SDGs.
ENVIRONMENT
Climate change is posing a threat like never before.
RWS and its employees are concerned about the
environment and we are committed to helping the
world transition to net zero. In 2021, we became
a signatory to the Task Force on Climate-related
Financial Disclosures (TCFD) and have started working
towards aligning ourselves and adopting the TCFD
ahead of it becoming mandatory (see pages 64 to 67).
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, 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.
Due to the impact of the Covid-19 pandemic and
reduced travel and office occupation, it has been
difficult to set accurate targets, so we have continued to
use baseline data from FY19.
On 4 November 2020, RWS Holdings plc acquired SDL
plc, adding 60 offices and over 4,300 employees. As a
result of this, the carbon emissions for RWS for FY21 are
considerably higher than those of FY20.
To date we have been targeting reductions year-on-year
for the following:
> Natural resources and consumables
> Carbon footprint
> Electricity kWh/measured by employee and turnover
> Commercial waste
We are reviewing our climate change impact and going
forward it is our intention to develop a carbon emission
reduction plan using a science-based target aligned
with the Science Based Target initiative (SBTi) criteria
and submit the target to the SBTi for official validation.
Initially we are aiming to reduce carbon emissions by
55% by 2030, using FY22 as a baseline (see pages 30 and
31 for measures taken in FY21).
We have ISO 14001:2015 Environmental Management
certification at our head office in Chalfont St Peter, our
Maidenhead office and our Chinese offices in Beijing,
Rizhao and Xi’an. Our Environmental Management
System certifications collectively cover 11% of our
business by headcount and we have an objective to
increase this to a minimum of 30% compliance in FY22.
During FY21 we have achieved the following:
> Assessed, prioritised and started working on the
mitigation of environmental risks in alignment
with the Task Force on Climate-related Financial
Disclosures (TCFD) (see pages 64 to 67)
> Rolled out the RWS Green Agenda intranet across
the entire group, forming part of the new RWS Hub
> Held four group-wide environmental awareness
programmes to promote initiatives and actively
encourage employees to get involved globally.
These included National Recycling Week, Earth Day,
World Environment Day and World Cleanup Day
> Developed a network of environmental champions
across our offices
We are committed to:
> The continual improvement of our environmental
management systems globally
> Complying with the spirit as well as the letter of
all applicable environmental legislation, approved
codes of practice and any other requirements not
codified by law to which we subscribe
> Co-operating fully and maintaining open
relationships with all regulatory authorities
> Landfill waste/measured by employee and turnover
> Complying with the environmental requirements of
> Waste/measured by employee and turnover
the company’s clients
We also strive to have no environmental incidents.
28
RWS — Annual Report 2021
STRATEGIC REPORT
Energy and greenhouse gas report
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 Carbon Footprint Ltd used the
2021 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 group-wide GHG emissions for reporting year: 1 October 2020 to 30 September
2021. This is the third assessment that RWS has completed of its emissions and we have provided the baseline year
assessment results for comparison.
Scope
Scope 1
Scope 1 Sub Total
Scope 2
Scope 2 Sub Total
Scope 3
Activity
Site gas
Diesel
Company car travel
Electricity (generation and transmission
& distribution)
Heat and steam
Water
Flights
Employee-owned car travel (grey fleet)
Taxi travel
Waste
Rail travel
Bus travel
Hire cars
Scope 3 Sub Total
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)*
Baseline Year
2018/19
Tonnes CO2e
Previous Year
2019/20
Tonnes CO2e
Current Year
2020/21
Tonnes CO2e
169.00
0.85
9.06
178.91
1,881.13
78.90
1,960.03
29.04
1,326.16
24.99
16.88
230.36
21.73
0.16
-
1,649.32
2,138.94
3,788.26
1.50
-
-
99.08
8.32
4.96
112.36
1,567.20
47.76
1,614.96
22.37
537.65
11.77
8.54
68.65
12.67
0.02
-
661.67
1,727.32
2,388.99
0.76
4,493,297
1,296,067
87.72
1.10
0.65
89.47
4,706.71
131.50
4,838.21
95.57
51.97
22.62
5.28
2.90
1.79
0.05
0.04
180.22
4,927.68
5,107.90
0.67
16,347,849
1,724,594
*Total Energy Consumption includes Electricity, Natural Gas, Diesel, Heat and Steam and Company Car Fuel Consumption.
The UK energy consumption accounts for 7.7% of RWS’s
total Scope 1 and 2 carbon emissions and 10.5% of
RWS’s total global energy consumption (kWh). This has
been recorded since the previous year’s assessment and
will be captured going forward.
RWS carbon footprint 2020/21
Electricity generation
Heat & steam
Water
Natural gas
Other:
Flights
Employee car travel
Travel (bus/rail/taxi)
Waste
Diesel
Company car
STRATEGIC REPORT
RWS — Annual Report 2021
29
Traditionally, the Group’s second biggest cause of
emissions is air travel. Clearly the Covid-19 pandemic
has reduced the amount of travel in the year and carbon
emissions have therefore reduced accordingly.
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 naturally
low. However, we do consider waste to be an important
issue and, in managing waste, we strive to engage
employees to take ownership and create more efficient
operations and practices.
In FY21, the Group took several measures to reduce
waste. These included:
> Installing recycling facilities and increasing the
amount of waste which is recycled (targeting those
offices which reopened)
Below: Our colleagues in Brno (Czech Republic) and their families
collecting litter for World Cleanup Day
Environmental (ESG) (continued)
Energy use
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 5,107.90 tCO2e for
FY21. Of these emissions, 96.46% were from energy,
92.15% of which was electricity, 1.72% natural gas,
0.02% diesel and 2.57% from heat and steam; the
remaining 3.54% was from business travel, waste
and water.
Managing energy use
As energy accounts for 96.46% of our emissions,
we recognise the importance of investing in energy
efficient offices and renewable energy. In FY21, the
Group took several measures to reduce energy use
and emissions. These included:
> Moving to purchasing only renewable electricity
across all offices wherever possible (currently we
have green energy at 10 of our offices (Alnwick,
Beijing, Chalfont St Peter (Randall House), Leuven,
Nanjing, Rizhao, Stuttgart, Sydney, Xi’an and
Versailles). Our office in Chalfont St Peter (Europa
House) switched to green energy in November
2021 and our office in Brno is switching to green
energy in January 2022
> Replacing existing lighting with energy efficient
LED lighting. We have LED lighting in our head
office in Chalfont St Peter, as well as our offices in
Brno, Indore, Lausanne, London, Nanjing and San
Francisco
> Trialling solar panels in our office in Indore
> Ensuring energy efficient lighting and motion
sensors are installed in our larger sites or as we
open new offices. We have motion sensors in our
head office in Chalfont St Peter, as well as Brno,
London and San Francisco
> Installed a building management system (BMS)
monitoring tool in our Brno office to monitor the
consumption of electricity and water continuously
on each floor/meter. As a result of ongoing
monitoring, we have, for example, downsized the
need for a higher voltage circuit breaker in the
server room
> Setting timers relative to weather conditions and
office opening hours
> Implementing 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
> Launching a Green Agenda intranet to educate,
inform and engage employees around energy
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RWS — Annual Report 2021
STRATEGIC REPORT
> Working with landlords regarding waste
measurement and management
> Working with suppliers to get more accurate reports
detailing waste and recycling
> Championing recycling through our 'National
Recycling Week'
> The team in our Rosario office donated its old
hardware assets to a local charity; in other offices
we recycled all hardware assets on a global buyback
scheme with our asset supplier
> Undertaking an expansion project in our Rosario
office. Utilising an environmentally conscious
approach from concept, we optimised existing
resources through recycling and reuse of materials
> Launching a group-wide Green Agenda intranet to
educate, inform and engage employees around waste
Where our offices are in managed buildings, we will
work with landlords to derive better data on waste and
then implement programmes to reduce and recycle.
Water
Water accounted for 1.87% of our carbon emissions
in FY21. The majority of our offices use water from
municipal supply and are in developed countries with
a high capability for water adaptation and mitigation.
Our water usage increased in FY21 as a result of the SDL
acquisition but, as we have relied on estimations for
certain offices, the figures may not be 100% accurate.
Moving forward we are looking to get more detailed
data for our leased offices. Where possible we are also
introducing measures to reduce water usage including
low flow plumbing fixtures, identifying and fixing leaks,
and communicating with employees about responsible
water use measures.
Paper
RWS is not a manufacturing organisation, but because
of the nature of its services we use paper extensively in
certain divisions.
Recently we have seen a reduction in the amount of
paper we use, partly as a result of the pandemic and
increased remote working. In future, as RWS offices
reopen, we will continue to deliver our services online
where we can. We will also ensure that the paper
we purchase is sustainably sourced from known and
responsible sources and we print double-sided where
possible.
Above: Trees in Elizabeth Diamond Jubilee Wood in Leicestershire
Above: RWS's team from Brno planting trees in Šaratice
Carbon offsetting
As part of its commitment to helping reduce carbon
emissions, in 2019 RWS purchased 2,500 trees for the
National Forest; at that time this represented one for
each employee of the RWS Group. UK employees were
able to select what species of tree they preferred and a
number of colleagues travelled to the Queen Elizabeth
Diamond Jubilee Wood in Leicestershire, UK to help
plant some of the trees.
More recently (October 2021), a team of 26 from our
office in Brno, Czech Republic, planted 100 trees in a new
tree alley being developed as part of a walking/bike route
Šaratice (about 20km from our office). The fruit trees
were 1.5m high and included a mix of Apple, Plum and
Cherry trees.
STRATEGIC REPORT
RWS — Annual Report 2021
31
Social (ESG)
OUR PEOPLE
To compete effectively in our markets, it is critical that RWS is well positioned to attract,
recruit and retain the best people. Our activities are highly reliant upon the skills,
dedication and passion of all of our employees and freelancers around the world, who
we rely upon to meet our clients’ demands for excellent quality, timely delivery and
effective product solutions. We aim to be a destination employer in every one of our
key operating territories and markets.
The Covid-19 pandemic continued to present significant challenges in FY21, but also ongoing opportunities
to test and learn new ways of operating together, building on the positive new ways established the previous
year. Ensuring a safe work environment for our people, both physically and psychologically, remained a clear
priority for the Group, and we also found good opportunities to start a number of new people initiatives, often
leveraging the best divisional programmes to the advantage of RWS as a whole.
This year has been one of important consolidation of our key people platforms, processes and initiatives as the
Group comes together following the acquisition of SDL and the broader changes to our organisational structure
that followed. We have made good progress towards our goal of establishing a new people
organisation that is highly responsive at a divisional and local level, and efficiently supported
by newly formed specialist HR teams at group-level. Leveraging their expertise consistently
across the whole organisation will help us to offer improved career opportunities for our
people whilst shaping a more unified culture following the acquisition of SDL.
COMMUNICATION AND DIRECTION
SETTING
Communication and dialogue are 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 anywhere and it takes place
everywhere – at group, divisional and local level. It
includes all types of communication and consultation
between RWS colleagues on all manner of topics
including operational matters, business performance,
social issues, environmental concerns, well-being
issues and various other areas of common interest.
All divisions now have established, joined-up
frameworks for communicating and cascading yearly
objectives and progress against them.
Having virtualised many of our previously face-to-face
forums due to the Covid-19 pandemic, our approach
during FY21 has been to hone our utilisation of
these virtual channels whilst incrementally adding
back in more and more face-to-face communication
depending on regional and local restrictions. We have
found that virtual channels enhance communication
across the business significantly, particularly as
a means of enabling dialogue between teams
separated by geography, and keeping a widely
dispersed workforce connected. The interactivity
that applications such as MS Teams bring to set piece
communications events such as monthly/quarterly
business updates moved these events beyond purely
Above: Collage of some of our colleagues on International
Women's Day
32
RWS — Annual Report 2021
STRATEGIC REPORT
one-way broadcasts to fully interactive events. Our
leaders can now see and respond to questions and
feedback from our people in real-time during these
calls, so insight into employee ideas, opportunities and
concerns, and our ability to act upon them quickly, has
improved significantly.
At a more granular level, RWS’s enthusiastic adoption
of these remote communication and collaboration tools
is unlocking a dialogue between our many experts that
has not been possible previously, and we are optimistic
about the opportunities we see to accelerate insight
sharing, collaboration and innovation across teams and
divisions in future.
This year we rolled out the RWS intranet globally. Known
as the “RWS Hub”, it creates a single destination where
employees from across the Group can access essential
company information they need to perform their
roles most effectively, in addition to more division- or
location-specific information that remains available to
them on divisional intranet sites.
The RWS Hub has quickly gathered momentum as a source
of connecting information across the business with big
events such as our international awareness days, which
typically focus on important inclusion topics and regularly
attract wide readership - our PRIDE Month Hub page in
particular achieved more than 1,700 views.
We also enhanced group-wide communications by
launching a newsletter “Inside RWS”. This supports the
development of a single unified RWS culture by keeping
colleagues within all divisions informed about initiatives
taking place across the entire organisation and invites
them to get involved with our various group-wide
people programmes as they are launched.
Divisional newsletters also play a critical role in our
developing communications ‘ecosystem’.
All in all we are pleased with our ongoing efforts to
enhance communication within RWS, and results from
our recent employee engagement survey suggest we
are making good progress with most communication
related questions scoring 90%+ favourably. For
example:
"My manager fosters an open,
communicative environment where
diverse perspectives are sought."
– 91% favourable
"I understand how my role contributes
to achieving company goals."
– 93% favourable
Next year, in order to maintain the momentum gathered
in FY21, we intend to fine-tune our communications
framework to ensure our colleagues understand where
the company is headed (our vision, mission and business
objectives) and seek their engagement and feedback
regularly. By doing this we will get a clearer picture of
exactly what communication works most effectively for
people, and do more of it. Having established a new
rhythm of group-wide communication, we will also offer
more support to the newly integrated divisions as they
continue their efforts to do the same locally.
Below: Colleagues from Rosario (Argentina) collecting litter on the shore of the Paraná River
STRATEGIC REPORT
RWS — Annual Report 2021
33
Social (ESG) (continued)
Employee engagement
Employee engagement is critical to our sustained success
as an organisation. Research shows that more engaged
employees advocate products and services more and
better, stay longer and willingly provide their discretionary
effort in favour of the business and all its stakeholders.
We strongly encourage RWS colleagues around the world
to get involved with a broad range of socially beneficial
activities as this builds our brand in a positive and
responsible way and improves teamwork, communication
and camaraderie whilst helping our people develop
important organisational and management skills.
In June 2021 we ran a group-wide engagement survey for
the first time, and we were very encouraged by the results.
With 6,046 respondents, we had an excellent participation
rate of 81% which gives us confidence the feedback we
received through the survey is statistically valid and fully
representative.
Engagement survey
Above: Colleagues in Beijing (China) building a terrarium on
Earth Day
6,046
Respondents
81%
Response rate
Our survey, which was completely anonymous, used
off-the-shelf software and the results were analysed and
verified by an external agency. We examined our people's
opinions by asking 50 questions across nine areas to
provide a comprehensive picture of their experience.
These were:
> Collaboration
> Culture
> Clients
> Diversity
> Innovation
> Integration
> Leadership
> Operations
> Strategy
Overall, we averaged 80% favourable scores which we
were very pleased with, given the survey was conducted
at a time when the pandemic was still proving globally
disruptive and RWS was in the middle of a significant
business integration programme. Scores across the
divisions were similar to the Group average, with little
material variation.
Our highest scoring area was Diversity at 88% favourable,
with the Leadership, Strategy and Innovation areas all over
80%. On our critical ‘employment recommender’ question,
commonly regarded as a key indicator of engagement, we
also scored well at 80%.
Our lowest scoring areas were Operations (work tools
and joined-up processes) at 77% and Integration at 71%.
Clearly, there is more work to be done in the two areas and
we have programmes in place to address them.
Perhaps more fundamentally, our high scoring areas
are more complex, subtle and typically take longer for
organisations to improve, and for this reason it is likely
they can give us a more enduring competitive advantage
in the markets in which we operate.
The current global labour market remains highly
challenging with high hiring demand significantly
outstripping available talent in all skilled areas and
geographies, resulting in wage inflation, attrition and
increased time to onboard many colleagues.
To address these market and attrition challenges RWS has:
> Increased capacity within the Talent Acquisition
Centre of Excellence to meet demand while
implementing new attraction channels
> Developed an agile work policy to support new
colleague expectations
> Developed a more flexible geographical hiring
approach to where the talent is available rather than
simply replacing in the same location
> Reviewed and increased salary bandings in high
attrition geographies
> Focused on internal mobility to enable colleagues to
develop their careers within RWS
> Invested in scaling our online learning platform,
MyLX, across the company to enable colleagues to
develop themselves whenever and wherever
they want
> Continued to invest in tangible ways and actions to
build a culture of diversity, inclusion and belonging
34
RWS — Annual Report 2021
STRATEGIC REPORT
Diversity and inclusion
Being part of a vibrant, globally diverse community,
we know that tremendous value is gained from
people’s differences. An inviting culture that recognises
and celebrates diversity enables people to reach
their maximum potential and be their best, which is
fundamental to us and critical to our success.
Research has shown that when employees experience
a diverse, caring company it is a key driver of revenue
outperformance. When companies invite every
employee into the innovation process, they generate
more high-quality ideas, realise greater speed in
implementation, achieve greater agility, beat sales
targets and outperform their competition.
Given the unquestionable impact diversity and inclusion
has on people, the business, and society at large, we
have placed a renewed focus on diversity and inclusion
which is based on the Group's Equality, Diversity and
Inclusion Policy. It is simply the right thing to do.
Learning from our efforts in this regard, we take an
holistic approach to inclusion, choosing to develop a
fair, equal and inviting work environment for all people,
rather than purely targeting the most obvious groups
that are typically under-represented in organisations
with our profile.
In FY21 we established dedicated group-wide pillars in the
following areas, each of which emerged naturally as areas
of broad-based employee interest. Each has their own
Employee Resource Group to provide feedback into the
group diversity and inclusion plans, and support initiatives
that are bespoke to their pillar. Each pillar has an Executive
Team member and HR leader sponsoring it to ensure
appropriate organisational prioritisation and influence:
> Culture
> Ethnicity
> LGBT+
> Persons with Disabilities
> Well-being
> Women at RWS
Currently our voluntary attrition runs at 14.3% and
involuntary attrition at 4.9%. We are comfortable with
these levels but we monitor them closely to ensure they
stay within a desired range.
Staff attrition
RWS
20/21
19/20
19.2%*
16.8%*
*Estimation of staff turnover = number of FTE leavers during the
financial year/average number of FTEs during the year. Figure is based
on strongest collation possible from multiple data sources, arising
form wide range of HR systems across the enlarged Group.
SDL plc’s turnover figures have been included in 19/20 number
however Iconic Translation Machines and Webdunia‘s preacquisition
figures have not been included.
The encouraging engagement survey scores
reflect the wide range of programmes that we have
established across well-being, environment, remote
working and awareness days. With the impact of the
pandemic, colleagues were lacking in social interaction
and dealing with the pressures of daily life; all of which
had a significant impact on physical, emotional and
mental health.
As a result, we increased our focus on a range of well-
being events, in partnership with an external provider,
which encouraged colleagues to take time out of their
schedules and focus on themselves. Sessions included
Zumba, cooking, well-being for working parents,
musical sessions, sleeping tips and more. We also ran
stress awareness, mindfulness and personal training
and yoga programmes in-house. These were well
attended by over 3,300 people and received great
feedback.
We ran eight awareness days throughout FY21,
where we sought employee engagement around a
whole host of topics including Black History Month,
International Women’s Day, and World Cleanup Day
with employees sharing their stories on video, sending
in pictures and getting involved in events to mark
these occasions. These were then promoted via our
Group communication channels to show our pride
gratitude and to inspire others.
These activities provided an excellent foundation for
our “Life at RWS” programme, which is intended to
accelerate the development of a single unified RWS
culture as the integrated organisation fully takes
shape in FY22.
In FY22, we will develop a refined group-wide
engagement plan that takes the feedback from the
survey, examines it in the context of RWS’s strategic
priorities for FY22, and then sets out a series of key
actions that both amplify our current strengths and
address our most relevant lower scoring areas.
STRATEGIC REPORT
RWS — Annual Report 2021
35
Above: Colleague Danny Forero (Bogotá, Colombia) celebrating
PRIDE 2021.
Social (ESG) (continued)
The purpose of these groups is to identify strategies
for meeting the collective interests reported by each
group, thereby driving engagement and increasing
the representation, voice and contribution/influence
of that group over time. These cross-divisional
groups collect ideas from around the world and build
activity plans for the next period. Resources are then
allocated to the plan as appropriate. Streams typically
break into sub-streams to harness specific user
interests and experience, and to share workload.
We know there is more to be done to improve the
representation of minority groups across all areas,
and in FY21 for the first time we sought to establish
a demographic baseline across RWS along with a
comprehensive Group diversity and inclusion plan -
starting with a robust feedback collection exercise
through a sub-set of specific diversity and inclusion
questions in our first group-wide engagement
survey, as well as dedicated employee focus groups
and 1:1 meetings with each Executive Team member.
The information collected from the engagement
survey was invaluable and also encouraging. In
fact, diversity was the highest scoring area in this
all-employee survey with an 88% favourable score
(versus an 80% target) with very low unfavourable
scores at 5%. We were particularly pleased with our
scores as they suggest the various actions we have
been taking over the last two years have genuinely
moved us closer to our inclusion ambitions.
Whilst clearly the fact that we are a global
organisation means we already have a more
culturally and ethnically diverse work force than
many, we recognise that there are still gaps to be
addressed and, in FY22, we will fully leverage our
newly established resource groups to move things
further forward in each of their focus areas.
Whilst RWS is not legally required to report its
gender pay situation on a group-wide basis (we do
where required for specific in scope UK entities),
it is something we do measure. We have started
implementing spot-checks to examine relative pay
in various sample job families, and so far we are
comfortable that individuals in the same job families
are paid within a reasonable local range in offices
around the world, with no particular adverse trend by
gender. However, taking all roles into consideration
we know that we do have a general pay gap between
male and female employees.
We remain fully committed to addressing this general
gap over time, principally through recruitment and
training initiatives aimed at bringing more women
into technology-oriented roles and developing more
women into management and leadership roles. We
know that these initiatives do make a significant
difference - for example, recent recruitment
initiatives in technology where we have specifically
Diversity of our employees globally including office-based
and remote workers as at 30 September 2021
AGE
<30
<30-50>
>50
35% 56% 9%
GENDER
Female
Male
Undisclosed
54% 46% 0%
EMPLOYEE STATUS
Permanent Non-permanent
83% 17%
EMPLOYEE CATEGORY
MANAGER
Female
Male
Total
40% 60% 5%
NON-MANAGER
Male
Female
Total
55% 45% 95%
YEARS OF SERVICE
Number of employees with less
than a year's service
Number of employees between
1 and 5 years' service
Number of employees over
5 years' service
22%
47%
31%
36
RWS — Annual Report 2021
STRATEGIC REPORT
targeted women have increased the number of
female recruits into RWS technology roles, with 25%
of our hires over the course of 2021 being female.
While this is a higher proportion than the external
market typically achieves in this area, given the
relatively low number of women in the technology
profession globally (19% - source Women in Tech),
naturally 50% would be our ideal.
Talent acquisition
In early 2021 we created a single central recruitment
Centre of Excellence, with a direct recruitment
mandate for core internal non-linguistic hiring to
establish recruitment channels into new and more
diverse labour pools, as well as making recruitment
more effective and efficient in all key markets.
This new recruitment sourcing capability, along
with an improving recruitment branding and better
consolidated applicant tracking (generally through
the consolidation of our many applicant tracking
systems), will allow us to more accurately manage
and monitor our diverse talent attraction efforts.
We have quickly added new recruitment channels
that help us reach a number of underrepresented
groups. In particular we are now fully active
on Diversity Jobs (strong reach across multiple
underrepresented groups in the US) and myGworks
(strong reach into the LGBTQ+ community globally)
and active on a number of smaller channels targeting
individuals with a disability and veterans.
In FY22 we intend to build on this momentum
with a renewed focus on upskilling both recruiting
managers and recruitment team members on high
quality inclusive recruitment techniques, along
with executing our plan to consolidate all applicant
tracking systems onto a single platform.
Above: Colleagues in Xi'an (China) before their badminton match
Talent assessment and management
Maximising the potential of our employees is critical to
our growth. We have implemented initiatives globally
to help our employees maximise their contribution and
sense of achievement, as well as develop their careers.
All our divisions run systematic Performance and
Development review processes within their teams.
These reviews provide the opportunity for employees
to set their objectives for the year, discuss subsequent
performance including any particular achievements or
challenges, and consider future career opportunities
with their line manager. Feedback from our
engagement survey suggests these reviews serve as
an effective tool amongst others for aligning individual
goals with organisational goals and enabling a
supportive two-way dialogue between employees and
their manager.
In FY21 we set up a comprehensive group-wide talent
review process intended to develop a pipeline of
diverse talent ready to assume critical leadership roles
within the business as they materialise. The framework
considers leadership potential across three neutrally
biased dimensions: learning agility, change agility and
relationship agility. It is our intention to roll it out to
Senior Leadership Team in FY22.
STRATEGIC REPORT
RWS — Annual Report 2021
37
Social (ESG) (continued)
Above: Training session in Chalfont St Peter
Learning and development
Each of our divisions ran its own curriculum of learning
programmes covering technical skills, more generic
soft skills and management development. IP Services,
for example, started the final year of its “Talent
Development Programme” covering a third of the
workforce each year with a set of critical performance
skills: time management; client service; self-
development; stress management; and teamwork.
Many of these programmes, historically classroom
delivered, were paused in FY20 as the pandemic moved
people out of offices for a period and then re-oriented
towards virtual delivery. FY21 saw us adapt fully to a
virtual training environment and, anecdotally, this year
education and learning events have reached more
employees than ever as virtual meeting and training
tools like MS Teams have increased global training
capacity exponentially relative to the largely classroom-
oriented curriculum that was most prevalent previously.
During FY21 we have been piloting our new group-
wide learning platform “MyLX” for 250 sales roles in the
Group, and will begin extending its reach across the
Group in October 2021. This platform will, for the first
time, make available a much wider range of learning
content to all employees across the organisation. MyLX
includes a comprehensive range of training modules
from Skillsoft, and provides the capacity for us to add
almost infinite additional learning content into the RWS
curriculum, including our own proprietary training
developed by internal experts, which we intend to
leverage across all relevant roles.
This year we also made our “Foundations of Leadership”
programme available to all divisions and business units,
initially in a virtual format to maximise participation
in a multi-location environment. This high-quality
programme, originally developed within SDL, provides
a consistent set of foundational leadership skills across
RWS in support of our aspirations to develop common
standards of high-quality leadership across RWS. In FY21,
301 managers attended from multiple geographies and
the programme continues to build momentum based on
its reputation for providing excellent learning. We have
created capacity for more than 600 delegates in FY22.
Training
Year
Percentage of employees receiving training
Average number of training hours per
employee
Percentage of employees receiving business
ethics training*
Average training costs per employee
FY21
79%
11.7
32.5%
£164.69
*In FY22 our training portal MyLX will be extended to all colleagues
across the Group and our business ethics modules consolidated.
38
RWS — Annual Report 2021
STRATEGIC REPORT
Health, safety and well-being
RWS is committed to providing a safe environment for
its employees. Whilst we recognise that the nature of
our business is low risk relative to many in relation to
health and safety, we still focus very hard on it, driving
continuous improvement to ensure we meet or exceed
local legislative requirements in all units.
All our divisions and cross-divisional functions have
formal governance processes in place for health and
safety matters. Our group-wide policy uses UK health
and safety standards (recognised internationally as
being very high standards) as a guideline for all offices
around the world. In FY22 all offices will be required
to meet this UK standard irrespective of whether the
country or jurisdiction they are in operates to a lower
legal compliance threshold. If the jurisdiction has a
higher threshold than the UK, we comply with that
elevated standard.
We are proud of our health and safety practices and
in FY21 there were only a small number of work-based
accidents reported amongst our employees globally.
Naturally, our efforts continued a particular focus in
two areas during the course of this year in light of
Covid-19 disruption, safe home working and mental
well-being.
Absenteeism rate for illness and work accidents
Accident frequency rate
1.6%
0.339%
With the majority of our employees working primarily
from home for the whole of FY21, we continue to
provide training and guidance for our employees
on home workspace ergonomics including correct
display screen equipment set up, lighting, and posture.
We also provide or subsidise equipment, such as
chairs and peripherals, for home use where there
are certified medical needs. We know these efforts
will deliver ongoing value as we anticipate a move to
Below: A colleague in Rizhao (China) enjoys growing her own vegetables
hybrid working in most locations during the first half
of FY22, or otherwise when it is deemed safe to do so.
We continued to develop a very comprehensive
programme of communication and activities to
support mental health and well-being across our
entire employee base during FY21. This portfolio
includes a wide range of excellent resources on stress
management, meditation, virtual yoga, etc., as well
as ongoing guidance to managers on how to spot
the signs of mental ill-health within their teams, and
resources for them to support any employees finding
themselves in need.
In 2021 we launched our new well-being portal to
bring all of these resources together in one place. We
also made plans to provide external expert support by
introducing Employee Assistance Programme support
to all employees in all countries that do not already
have this in place, no matter how small. This plan is fully
set up and went live on 1 October 2021.
Human and labour rights compliance
Our divisions generally have their own Code of
Conduct or equivalent ensuring that managers and
employees are aware of their obligations in relation to
meeting local minimum wage standards and ensuring
compliance with human rights, child labour and anti-
slavery measures.
In 2021, following the integration of SDL, we have
been developing a comprehensive RWS Group
Code of Conduct, along with a series of other RWS
employment policies. As these policies are developed,
they are made available progressively to all employees
on the new RWS Hub intranet and complement our
divisional efforts by ensuring we address any new
global policy gaps as they emerge.
In 2022 we will launch the full new Code of Conduct,
and train in any new knowledge or skills required to
comply with the Code's requirements. Our intention
is to progressively replace the need for divisional
policies with this single set of Group policies as
they are published to ensure the highest degree of
consistency across the Group.
We also intend to bring in new measurement and
reporting frameworks to further validate our belief
there are no breaches of human or labour rights
within the Group, and we are currently evaluating
systems which would allow us the check the same,
right through our supply chains.
STRATEGIC REPORT
RWS — Annual Report 2021
39
Social (ESG) (continued)
COMMUNITY
We provide an active programme of charitable support to charities proposed by our
employees. We also promote foreign language learning actively through school and
university partnership programmes including the RWS Campus, the RWS
Scholarship Programme with the University of Manchester and Urban
Synergy. Other partnerships have included the Street Business School,
Food for the Hungry, Brighter Children and St Wilfrid's Centre.
RWS Campus
RWS Campus is our global university programme. We
aim to be recognised in our industry for inspiring and
developing localisation talent and markets worldwide.
We have a global presence with initiatives in more
than 35 countries. We collaborate with more than 220
university partners to focus on our two pillars: branding
of RWS as a work giver, and development of localisation
talent.
Through RWS Campus we have developed a wide array
of content ranging from presentations, trainings, and
guest lectures to extensive workshops, all of which
allow students to gain more insight and understanding
of the trends and realities of the industry. As part of the
programme, we also act as consultants to universities
on areas such as curricula development and tailored
guest lectures. All in all, we participate in or host more
than 100 events in a typical year.
Internships and scholarships are other key areas
within RWS Campus, with between 150 and 200 interns
globally each year, and 50 students taking part in our
scholarship programme in the UK.
Since early 2020, we have been working on virtualising
our content and approach. Not only has this enabled us to
continue to develop RWS Campus through all of 2020 and
2021, but it will allow us to continue to expand our global
presence through a digital footprint in the future.
As part of this digital transformation, we have been able
to adapt our approach so that, in 2020, 89% of internships
transitioned to a full or partial virtual set up. Initiatives
such as Support Guides and Best Practices for Managers
& “How to” Guides for Interns were developed to support
this methodology. With a successful implementation of
these initiatives, we have enabled the choice to conduct
physical internships in the offices, full remote internships
or any hybrid model to accommodate the different needs
and opportunities in each of our locations.
RWS Scholarship Programme with the
University of Manchester
As one of the world’s largest language services provider,
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.
In 2019 we launched a scholarship programme in
collaboration with the University of Manchester to
encourage students to complete a degree in modern
languages. Named after our Chairman, Andrew Brode,
the 'RWS-Brode Scholarship Programme' supports a total
of 50 undergraduate students who joined the university
between 2019 and 2021 from a state school.
As part of the scholarship programme, our colleagues,
many of whom are linguists, act as mentors to the
students, offering support with their studies and
guidance on future career opportunities. Covid-19
permitting, we offer 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 are delighted that Rozerin Demirci, a
second-year BA (Hons) Spanish and Portuguese student,
has started a four-month placement in our Porto office.
We share the experiences of some first and second year
RWS-Brode scholars. They are leading the way for future
cohorts of RWS-Brode Scholars, and we wish them all
well with their future studies.
Above: Students at the Chinese University of Hong Kong following
a presentation by RWS
40
RWS — Annual Report 2021
STRATEGIC REPORT
Above: University of Manchester where we sponsor 50 undergraduate students on the RWS-Brode Scholarship Programme
Fiona Mccudden-Hughes
BA (Hons) French and Spanish | Year 2
Rozerin Demirci
BA (Hons) Spanish and Portuguese | Year 2
"Looking back on the year, I think it has been a big
period of readjustment. I am very proud of the work
I managed to do this year, especially in the second
semester. I weighted my hours heavily on this term
which was incredibly challenging as my modules were
mostly literature-based.
"I am forever thankful for the support that this
scholarship has afforded me. It allowed me to get
involved in extracurricular activities (social secretary
for the woman’s hockey club and co-presenter for
fuse in focus, the university radio station’s flagship
news programme) which I believe helped secure my
internship with Java Films – a company in Paris that
distributes documentaries."
"The past year has been strange for everyone. I would
never have imagined my second year would take
place entirely online. It was a new and challenging
experience, at times lonely and frustrating, but as the
year progressed, I adapted to the new normal.
"The virtual RWS insight event that took place during
the second semester was a great way of gaining
knowledge about the different careers at RWS. I am
delighted I will be working as a Translation Intern at
the RWS offices in Porto and look forward to meeting
the team, learning from specialists and gaining insight
into a career in translation and translation technology.
"I am very grateful for the continued support you have
given me despite how challenging this year has been."
Michael Mccolgan
BA (Hons) French and Spanish | Year 2
"It would be disingenuous to suggest that this year has
been straightforward, and it has come with its own set
of challenges. I am pleased with the modules I selected
as they were diverse in their themes and ranged from
humanities-oriented units to Spanish linguistics.
"I am spending next year in Toulouse and Almería as a
student in their respective universities which will allow
me to become proficient in both French and Spanish.
"The RWS-Brode Scholarship has become even more
vital to me this year. The pandemic has meant I have not
been able to return home to Ireland and by alleviating
the financial burden, I have focused fully on my studies,
my personal development and been in a position to buy
any required course materials."
Sam Clarke
BA (Hons) Russian and Spanish | Year 2
"My second year at university has been very different to
the first. With all my classes now being delivered online,
I have had to adapt to a new style of learning that was
strange at first but has now become the norm.
"The highlight of this year has been being able to invest
more time in myself and improving my academic skills.
I have enjoyed developing my language skills in Spanish
and Russian; the language aspect of my course will
always be my favourite.
"My scholarship has helped me achieve what I have so
far during my time at university. It has eased the financial
pressure and allowed me to purchase materials that
have helped me with my academic studies. I cannot put
into words how grateful I am for this award."
STRATEGIC REPORT
RWS — Annual Report 2021
41
Social (ESG) (continued)
Aidan Findler
Emma Pivovarnikova
BA (Hons) French and Chinese | Year 1
BA (Hons) Russian and Spanish | Year 1
"My first year at university has been a bit of a peculiar
one, to say the least! With Covid-19 disrupting the lives
of everyone all over the world, the University was no
exception.
"In my joint honours course, I have had the opportunity
to study six different modules this year - the
Chinese side of my degree, both cultural studies and
language, has been the most enjoyable so far. It’s
been a challenging shift to such a drastically different
language and history, but it has been a fun challenge,
nonetheless.
"I am extremely thankful to you, my donors, for aiding
me financially this year. Though this year has been a
rough one for many, not having to worry massively
about my financial position has been a great help."
"This year has truly been challenging and difficult;
however, I feel I have dealt well with all the challenges.
The module I have enjoyed the most was my Russian
language class, and the highlight was how well I have
been doing in my Russian language classes. I am so
proud of how far I have come in my first year.
"I am looking forward to meeting my classmates in
person next year. This will have a positive impact on my
learning as we will be able to share our knowledge and
practise our language more.
"Thanks to this scholarship I have been able to buy
the books that I require. It has also given me the
opportunity to secure a house in Manchester for the
next academic year."
Eleanor Bramley
BA (Hons) Arabic and a Modern European
Language | Year 1
"It has been a great year for me, despite being difficult
and far from a normal first year at university.
"I have enjoyed all my courses and modules this year,
particularly learning the Arabic language. I have
surprised myself by how much Arabic I have picked up
in such a short space of time. I still hope to move abroad
and work for a while, either as a translator or language
teacher. My highest aspiration for the future would be
to work for the government as an Arabic translator or
language analyst.
"I would like to thank Andrew Brode and RWS for the
extra support I have received from this scholarship, and
for the extra events you held this year. I look forward to
continuing my degree."
Yassin Lopez Ruiz
BA (Hons) French and Spanish | Year 1
"This first year of university has been completely
different to what I thought it would have been.
Although I struggled a little at first, I have really
enjoyed my “Spanish Cultures” module in particular,
learning about my culture in a way that I never have
before.
"This year has come with many life lessons, I am super
excited to start another academic year with everything
that I know now. Thanks to this scholarship, I have
finally been able to buy a new, reliable laptop which
makes it so much easier to study. When I was living in
Spain, my dream was to study at a British university,
but I never thought it would be possible. Being
awarded this scholarship truly makes all the hard work
and struggles worth it."
42
RWS — Annual Report 2021
STRATEGIC REPORT
Urban Synergy
At RWS we understand the importance and benefit of
diversity, equity and inclusion and supporting education
which is why we have been actively supporting and
involved with Urban Synergy over the last year, taking
meaningful action that generates long-term impact.
Urban Synergy is a youth empowerment charity which
inspires, guides and ignites the ambitions of young
people in the UK. It has supported more than 15,000
students since 2007.
Due to the global pandemic, Urban Synergy has pivoted
its programmes online to support even more young
people from black, minority ethnic and disadvantaged
communities. The pandemic has further increased
uncertainties and this is adversely affecting young
people from black and ethnic minority communities
more. For example, black graduates are twice as likely
to be unemployed than their white counterparts.
Urban Synergy connects underrepresented
communities to mentors and corporate partners such
as RWS, implementing effective programmes, training
and recruitment opportunities that directly address
systemic barriers to success in the workplace.
Urban Synergy has
reached 4,611
young people through
40 e-Seminars
2021 impact so far
Urban Synergy has reached 4,611 young people through
40 e-Seminars, registered 172 new mentees on their
e-Mentoring Programme and provided 132 work
opportunities, in technology, finance, law, engineering,
business, trading and marketing.
Urban Synergy won a number of accolades for its work
during 2021: Leila Thomas, CEO and Founder, was
named on The Top 10 Black Role Model List, sponsored
by Google. She was also listed on The EMpower 100
Ethnic Minority Executives List and awarded a Profile
in Courage Award, from the National Black Crown
Prosecution Association.
Leila said: "Talent is everywhere,
but opportunities are not. Working with
RWS to raise the aspirations of young
people has been a joy. The language
specific seminars have really shown
our young people to be proud of their
additional languages, and that they can
gain employment and fulfilling careers
using them."
STRATEGIC REPORT
RWS — Annual Report 2021
43
Social (ESG) (continued)
Urban Synergy’s reach
Urban Synergy has 1,042 role models in its network
accruing 1,653 volunteer hours this year, though it is
seeking even more role models, as well as recruiting
mentors to join its three-month online e-Mentoring
programme. It works with students from 105 schools
across Greater London.
e-Seminars are inspirational panel discussions with
students from 10-18 years old, with the aim of providing
relatable role models and insight into the available roles
in the workplace, as well as the qualities required to
succeed. They are interactive sessions and provide time
for questions from the students.
RWS employees are able to work with Urban Synergy
by volunteering for both e-Mentor and e-Seminar
opportunities. The e-Mentor volunteers help the
students with presentation skills, creating their CVs,
mock interviews, goal setting and organisational skills.
This year Urban Synergy has also developed
inspirational interactive workshops to further support
students in their subject choices due to the slimmed
down curriculum that has been in place as a result of
pandemic restrictions.
RWS HIGHLIGHTS
Number of RWS volunteers:
17
Number of students impacted:
619
This is broken down into the following:
e-Mentoring - seven colleagues have been involved in
the e-Mentoring programme so far this year, though 16
colleagues in total have registered their interest in the
programme.
Colleagues have volunteered for a total of 27 hours, with
a further two volunteers awaiting training.
e-Seminars - eight colleagues have been active role
models on the e-Seminar programme supporting
612 students. They have attended 11 sessions and
completed 18.75 volunteer hours.
Student feedback
"My mentor was very helpful and
patient in helping me make my CV and also
I enjoyed presenting my final presentation
on the measurements of time."
Joe Lister, aged 17, e-Mentee (matched
with RWS mentor).
"My mentee and I built a good
rapport, and Dylan took several of the
discussion points from our meetings and
proactively applied them to his career
research. He was also willing to step out
of his comfort zone and try new things
that he initially felt nervous about and felt
good about having done them."
Andy, e-Mentor (RWS mentor).
"I think that Henry (from RWS)
was brilliant because of the simplicity
of his talk and how direct his message
was. He highlighted the importance of
keeping your options open at A-Level
and really studying what interests you in
tandem with what degree you study at
university."
Prince, aged 16, seminar attendee.
Together RWS and Urban Synergy are building an
equitable world where everyone, regardless of their
background, is empowered to write their own future.
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STRATEGIC REPORT
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.
Unfortunately, due to the Covid-19 pandemic,
schools across the UK were not allowed to run
residential programmes which had a hugely
detrimental impact on charities such as the
Outward Bound Trust which has had to cancel its
summer Adventures Programme in 2020 but, we
are delighted that the residential programmes
restarted in 2021.
RWS FOUNDATION
As part of the integration of SDL, we have
renamed its foundation and are consolidating all
our philanthropic initiatives under the new RWS
Foundation. As part of this, the trustees of the RWS
Foundation will be reviewing the Foundation’s Deed
and purpose and submitting it to the Board for
approval in FY22.
Initiatives supported by the SDL Foundation this
year include Street Business School, Food for the
Hungry, Brighter Children and St Wilfrid's Centre.
RWS encourages its employees to volunteer in the
community and five working days can be taken by
employees to get involved in charitable initiatives.
Above: Outward Bound Trust
Above: Street Business School
STRATEGIC REPORT
RWS — Annual Report 2021
45
Social (ESG) (continued)
Street Business School (Uganda)
St Wilfrid’s Centre (UK)
St Wilfrid’s Centre, based near our Sheffield office, is a
community where homeless, vulnerable and socially
excluded adults can find understanding, practical
assistance, a sense of belonging and the support to
regain self-esteem. Our Sheffield office has supported
it since 2013 with individual donations, team building
efforts and smaller fund-raising by employees. Recent
donations by the Foundation have been used to help
the Centre’s Rough Sleeper Programme. With the global
pandemic, the grant helped get many homeless people
off the streets and was used to fund a member of the
welfare team ensuring the charity could assist with
Sheffield’s HelpUsHelp partnership.
Below (top): Brighter Children
Below (bottom): Food for the Hungry
The Foundation has supported Street Business
School (SBS) since 2019 when it was provided with
an initial grant of USD50,000 in a three year pledge.
The partnership has enabled SBS to test a number of
solutions seeking an efficient way to create large scale
change for thousands of women in Uganda. Education
is a fundamental need for everyone and SBS aims to
educate and empower 1 million women by 2027, lifting
them out of poverty and educating the next generation.
Food for the Hungry (Kenya)
The Foundation has supported Food for the Hungry
since 2009. The partnership has developed into a
solid relationship over the past 10+ years and we have
witnessed the development of a community – Maisha
Bora, Kenya. Food for the Hungry’s development
interventions are based on two main principles:
> Education in terms of wisdom and understanding is
more valuable than material things
> The key to empowering indigenous leadership is
educating children as when they mature, the things
they have been taught remain with them.
"We know that a community is
transforming when we see the children
flourishing, all interventions can be seen
as preconditions needed to achieve quality
learning."
Paul Cornelius, President UK, Food for
the Hungry
Brighter Children (Worldwide)
Our partnership with Brighter Children started in
2019. Brighter Children works with schools’ partners
in impoverished communities across the world. It
provides an annual scholarship to children who are at
risk of dropping out of education. Brighter Children
also supports the communities by investing in farming
to help with food supply, healthcare including vaccines,
general care, hygiene, and home care.
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CLIENTS
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
Good client relations
Good client relations are of paramount importance to us
and we are proactive in building long-term relationships
with our clients and have a proven track record in
doing so. We work closely with them to understand
their requirements and always put in place a team and
process that meets their specific needs.
Most importantly, however, are the open channels of
communication we like to maintain with our clients.
We remain in regular contact to help us anticipate
their needs and pre-empt and/or immediately address
possible areas of concern and always remain alert to
identifying areas for streamlining our processes and
continuous business improvement.
Efficient and high-quality service
We are highly committed to delivering an efficient
and high-quality service to all our clients and take a
proactive approach to ensure this is achieved. Internally
we measure and report on the number of projects
delivered on time and client satisfaction through the
logging of positive and negative feedback received,
either through the response to questionnaires sent with
completed projects or gathered during account review
meetings or received directly from clients.
We seek client feedback in a number of ways, this
includes:
> At client onboarding we define service level
agreements (SLAs) and Key Performance Indicators
(KPIs) by which our performance will be evaluated.
We also define reporting requirements to ensure full
visibility within the programme
> Business Relationship Management (BRM) with key
accounts
> Map reporting to client specific needs - tracking
performance against specific metrics providing
feedback anecdotally and at quarterly business
reviews, etc.
> Net Promoter Score (NPS) tracking and interviews
> Project questionnaires and annual client service-
level questionnaires including our Voice of the Client
and Voice of the Vendor surveys
> Webinars and roadshows
> Annual conference (which attracted 6,000 users in
2021)
> Calls and contact via our help desks
> Live chats, user communities and user groups (for
Trados clients)
> Telemetry which is built into Trados Studio to report
errors in the software to a centralised database
> Technical support surveys on closing every incident
reported (for Trados clients)
> Product uptime KPIs (for Cloud Operations)
The RWS Account Management teams attend
regular account review meetings according to a
timescale agreed with the client where we discuss
our performance and provide updates and service
developments with the potential to further enhance the
added value delivered by RWS. During such meetings,
we present and discuss data relating to service delivery
and our performance against agreed KPIs.
Improving client outcomes
> Innovation, automation, efficiency, accessibility,
security making us more agile – RWS has always
adopted technology in its process and its innovative
use of technology in our translation process is one
of the Group’s unique selling points. The acquisition
of SDL allows the Group to combine the businesses’
language technology tools with the Group’s
industry-leading language business services to
further improve our client outcomes
> Responding to client needs – as described above
we do this through our in-depth knowledge of the
market and constant dialogue with our clients
> Continue to improve our products to further
empower clients – we operate in a fast-moving
market where technology plays an increasingly
important role. We constantly strive to deliver
new business services designed to streamline and
improve the efficiency of our clients’ services
STRATEGIC REPORT
RWS — Annual Report 2021
47
Social (ESG) (continued)
SUPPLIERS
RWS is committed to ethical and
responsible sourcing and working with
vendors who share common principles of
fair and honest trading, demonstrate a
commitment to maintaining satisfactory
working conditions, and comply fully with
all legal requirements and with the labour,
health and safety standards of those
regions in which operations take place.
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. Our Supplier Code of Conduct
outlines our core principles for supplier conduct,
including compliance with laws and regulations,
terms and conditions of employment, discrimination,
harassment and retaliation, wages and benefits, child
labour, health and safety, sustainable development
and environmental protection, data privacy and
anticorruption and bribery. 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. Our 2021 Modern Slavery and
Human Trafficking Statement sets out our commitment
to eradicating these abhorrent practices, and our
policies and governance.
RWS has a diverse supply chain with suppliers located in
169 countries across multiple categories. These include
technology (hardware, software, cloud, telecom, etc.),
indirect (consulting, marketing, vendors, travel, etc.),
and direct (production services, print, paper, stationery,
etc.) suppliers.
RWS’s supply chain can be categorised into two main
areas:
> Vendors – these include:
> Freelancers – individuals who provide us with
localisation services
> Single language vendors (SLV) and multi-
language vendors (MLV)
> Non-professionals – individuals who are part of
our crowdsourcing service
> Suppliers – these are both small and large companies
who provide us with products and services
We believe it is important to have two-way
communication with our suppliers to foster better
relationships and keep them updated on our
requirements, as well as assisting with efficiencies,
quality, insight, costs and reliability.
During FY21 we engaged with our suppliers in
numerous ways. These included newsletters, vendor
feedback and satisfaction surveys, holiday capacity
surveys, buddy meetings between language leads,
monthly welcome calls, on-boarding sessions,
specialised training sessions (such as programme-
specific post-editing training delivered on an individual
basis, workshops on creative translations and best
practices for our service providers, specialised training
on subtitling and challenges for APAC languages), as
well as surveys to get feedback on the training provided
and their feedback on ESG materiality.
We believe sustainable sourcing is essential as it
helps reduce risks in the supply chain and meets the
expectations of our stakeholders. It helps us make
informed and balanced decisions when purchasing
products and services. We will get the best value
for money while ensuring we take into account the
environmental, social and ethical aspects over the whole
product or service lifecycle.
We wish to do business with responsible suppliers
and subcontractors who understand the nature of the
products, materials and services they are supplying, and
with those who recognise their responsibility to protect
the environment and manage good relationships with
their employees and local communities.
We expect all suppliers and subcontractors to manage
the environmental and social impacts of their business
operations. Suppliers and subcontractors should, where
appropriate, adapt their business practices to ensure
that they meet with our Supplier Code of Conduct. Our
supply chain has our full support in working towards
compliance.
RWS prides itself on paying its suppliers promptly and
in FY20 signed up to the Prompt Payment Code. During
FY21 RWS's average payment terms to suppliers was 31
calendar days.
Going forward, it is our intention to roll out our
Supplier Code of Conduct to all suppliers, capturing
evidence of acceptance. We will develop a group-wide
Sustainable Procurement Policy which, demonstrates
our commitment to the United Nations Ten Principles.
Additionally, we will set formal group-wide KPIs which
are approved by, and reported to the Board, a cohesive
global onboarding processes for new suppliers and a
formal audit capability (focusing initially on geographic
regions and revenue. This will enable us to review
findings on a group-wide basis and co-ordinate the
necessary activities to enhance supply chain resilience
and reduce business risks.
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Corporate Governance (ESG) (continued)
GOVERNANCE
We are strongly committed to upholding the values of good corporate
governance as we believe it is important for the long-term success of the
business – our clients can depend on us, we can attract the top talent we
need to help us innovate, our suppliers can rely on us, and it helps us secure
the support of our investors. RWS is committed to promoting transparent,
fair and timely decision-making that considers the needs of all our
stakeholders.
Business ethics
We take a zero tolerance approach to bribery, corruption,
and other financial crime.
RWS operates in accordance with professional standards
and, following the acquisition of SDL plc, has integrated
its policies and is in the process of developing a new
group-wide Code of Conduct.
Although we recognise that, with our exacting policies
and procedures, controls and indeed the nature of our
business, the risk of the Group encountering financial
criminal or other criminal activity is very low, we must
always be vigilant and prepared to identify such activity
and know how to deal with it if encountered.
RWS has specific policies in place which ensure that
professional integrity is adhered to covering the
following subjects – Anti-Money Laundering, Anti-Bribery
and Corruption, Financial Sanctions, Modern Slavery and
Human Trafficking - and the protection of confidential
information. In 2021 RWS launched its new Supplier Code
of Conduct which requires everyone in its supply chain to
adhere to the same highest ethical standards as RWS.
RWS requires all employees, contractors and partners to
operate in a professional, ethical, diligent manner and be
transparent on all possible conflicts of interest. RWS is
setting up a formal process where all potential conflicts
of interest will be logged with the Company Secretary.
Under this process, all members of the Board, Executive
Team, office managers and anyone in a decision-making
role, will be required to sign a declaration each year
confirming that no conflicts of interest are known to
them. In the event a conflict of interest does arise, this
must be declared to the Company Secretary who will
advise on any necessary actions. Training on conflict
of interest matters has been set up in the RWS training
portal, MyLX.
RWS works with external law firms to keep up-to-date
globally on any changes to ethical standards to ensure
that any new legal requirements are reflected in its
policies, such as the EU Whistleblowing Directive, which
came into force December 2021.
RWS is setting up a formal process for filing the
declarations confirming no conflict of interest which
will fall within RWS’s internal audit process and will be
managed by the Audit Committee. A report will be tabled
to the Board annually. This process will be managed by
the Group Company Secretary and also reviewed by the
Head of Legal quarterly.
All confidential data is governed by terms of engagement
with clients and suppliers. Internal confidential data is
handled by select key personnel in a secure manner in
accordance with GDPR regulation. RWS also adheres
to the retention and destruction of data as required
through the process.
All billing and spend is managed locally at divisional
and regional levels and is overviewed by the finance
functions, ensuring all spend is pre-approved as per any
Delegation of Authority.
We encourage any form of corrupt or suspicious
behaviour to be reported either through an
independent third-party portal or via an internal
process specified in our Speaking Up / Whistleblowing
Policy, which is managed by the Regulatory and
Compliance representative and reported to the Head of
Legal. The Head of Legal is tasked with investigating the
matters with oversight from a member of the Board. In
all cases a report is created, recommending next steps
and/or possible disciplinary actions.
RWS has a zero tolerance for violations against
professional integrity. Disciplinary actions are reviewed
in conjunction with the Head of Legal and Chief People
Officer, together with local legal advice.
RWS manages sensitive data in accordance with GDPR
and relevant data privacy laws which is led by the Group
Privacy Officer (GPO). The GPO has regular meetings
with the security teams and divisional leads to ensure
compliance and reports back to the Chief Financial
Officer and the Head of Legal on a monthly basis.
Training for relevant regulations has been set up on the
RWS training portal, MyLX.
RWS strives to comply with best practice and
benchmarks itself against leaders in business ethics
and professional integrity, as well using knowledge
gleaned from attending conferences such as the annual
STRATEGIC REPORT
RWS — Annual Report 2021
49
Corporate Governance (ESG) (continued)
European Compliance and Ethics conference. RWS
adopts an open and transparent approach showcasing
its zero tolerance of violations against professional
integrity and business ethics.
The company is managed in accordance with The Quoted
Companies Alliance Corporate Governance Code (the
QCA code) and Rules of the AIM, the London Stock
Exchange regulated market (RWS.L), and any associated
legal disclosure requirements based on where the legal
proceedings may have originated.
There was no material litigation in FY21.
Governance and reporting
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 provide 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 our 2021 Annual Report includes
details of our compliance, which is reviewed annually in
line with the requirements of the QCA Code.
Governance structure
At RWS, the Chairman and CEO roles are separate. The
Chairman leads the Board and has overall responsibility
for corporate governance and promoting the values of
the Group, both internally to employees and externally
to the broader stakeholder group. The CEO manages
the day-to-day operations of the Group (see Corporate
Governance Report page 77).
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 judgement, and free from relationships
which may affect, or could appear to affect, their
judgement. The RWS Board consists of seven members,
the Chief Executive Officer and Chief Financial Officer as
Executive Directors, the Chairman and four Independent
Non-Executive Directors (see pages 74 to 75).
RWS has two specialised committees, the Audit
Committee and the Remuneration Committee.
The Audit Committee monitors the integrity of the financial
statements of the Company including but not limited to its
annual and half-yearly reports, preliminary announcement
of, and any other formal announcements relating to,
its financial performance, and reviews and reports to
the Board on significant financial reporting issues and
judgements which those statements contain having
regard to matters communicated to it by the auditor.
The Remuneration Committee is responsible for setting
the remuneration policy for all Executive Directors and
the Company’s Chair, including pension rights and any
compensation payments. The Remuneration Committee
also recommends and monitors the level and structure
of remuneration for the Executive Team. No Director or
Senior Executive is involved in any discussion or decision
about their own remuneration.
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 7,600 employees across 36
countries and over 80 offices globally, RWS also makes
significant tax payments in respect of payroll taxes,
value-added taxes and business/premises taxes.
Cyber security
Cyber security is the practice of defending computers,
services, mobile devices, electronic systems, networks
and data from malicious attacks. Cybercrime is not
new. Increased connectivity, remote working, reliance
on technology, and automation increases the risk of
attack. Furthermore changes in ways of working driven
by the pandemic have created more opportunities
for cybercriminals. RWS understands that our cyber
security preparedness must continue to evolve to
address the changing risk.
The strategic security posture for RWS is set by the
Information Security Steering Committee (ISSC),
chaired by the CTO who is the executive sponsor for
security. This group includes stakeholders from all
divisions and selected business units to collaborate on
the continual improvement of the Information Security
Management System (ISMS) which also helps drive our
integration program, increases awareness and supports
a consistent risk based approach to information
security. Furthermore, the ISSC provides oversight and
governance of information security risks.
RWS is adopting the NIST Cybersecurity framework
to provide a commonly understood structure to our
Information Security Management System (ISMS) and
focus our efforts. This helped us achieve the globally
recognised ISO27001:2013 certification for our hosted
product solutions, Regulated Industries division, IP
Services division and their supporting services, people,
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RWS — Annual Report 2021
STRATEGIC REPORT
responsibility of the asset/risk owner. If the owner of an
asset is unable to address the risk satisfactorily, it can
be escalated to the next level in the management chain.
Security risks are captured and managed through our
risk management process which is the responsibility of
our CFO, and shared with the Board annually.
RWS employs ‘defence in depth’ in its security posture
and understands that regular testing of its security
controls is important. As such we routinely conduct
vulnerability scanning of our internal and external
infrastructure and, at the request of some of our
clients, elements of our public facing infrastructure
are subject to periodic penetration testing. This allows
the identification of weaknesses which are analysed to
determine the most appropriate mitigation to
be applied.
The UK’s Cyber Security Breaches Survey identified that
83% of businesses reported phishing attacks in the last
12 months, making it the most prevalent type of attack.
RWS has also been regularly subjected to such attacks
and whilst our technical controls block most spam and
malicious messages, it is inevitable that some phishing
emails get through. Because we realise this is likely
to be the weakest link, we maintain and continually
improve our security awareness regime to provide
employees with the information necessary to identify
such threats thereby reducing the risks. In addition to
regular messaging and security awareness delivered
through our learning management system, MyLX, RWS
uses external providers to deliver security training,
knowledge assessments, and testing, allowing us to
identify where additional training may be needed, track
its delivery and participation and test its effectiveness.
We acknowledge that the implementation of cyber
defences can be expensive but we know that we must
continue to develop our resilience to support the
business. Our security roadmap takes a cost effective
and balanced approach to its continual improvement
to provide appropriate protection so that our defences
are sufficient to meet known threats, but not excessive.
As an example, RWS has almost completed the
implementation of multi-factor authentication (MFA)
to access our virtual private network. Furthermore we
understand that not all cyber-attacks can be prevented
and have engaged an external partner to provide a 24/7
detection and response capability to enable incidents
to be addressed as soon as possible to minimise any
business impact.
NIST Cyber security framework
R E C O V E R
R
E
S
P
O
N
D
I
D
E
N
T
IF
Y
T
C
E
T
O
R
P
DETECT
processes and technology. RWS also holds SOC2
certificates for its Cloud Operations and Language
Services functions. The ISMS provides a robust baseline
which gives RWS the agility to develop further the
controls necessary to meet a variety of sector specific
information security compliance requirements if
identified as being in the business interest. Our
ongoing work to improve and expand the scope of
our certified ISMS ensures the implementation and
external validation of internationally recognised
information security controls which benefit both RWS
and our clients.
Acknowledging that security risks will always exist, an
important part of our ongoing integration efforts is
the implementation of a suite of information security
policies which will provide high level security guidance
to all RWS functions in a number of areas including,
but not limited to: risk management; physical security;
privacy, and incident management. They set out
RWS’ approach to supporting business aims and
objectives whilst ensuring a consistent approach to the
management of risk.
The analysis of security risks in accordance with
approved policies and processes identifies threats,
considers the likelihood of the threat materialising and
assesses any potential impact on business objectives.
This structured approach informs decision makers
and allows them to identify whether mitigation is
appropriate and if so, what form it should take. This
could, for example, be to stop an activity, to implement
technical controls or update processes which reduce
the risk to an acceptable level. Selection of appropriate
mitigating measures or controls are informed by
advice and guidance from the security team but is the
STRATEGIC REPORT
RWS — Annual Report 2021
51
Corporate Governance (ESG) (continued)
Data protection
RWS ensures it complies with the relevant jurisdictional
data protection legislation. Headquartered in the UK,
RWS has adopted the EU GDPR and UK Data Protection
Act 2018 as its benchmark for data protection. We
have a comprehensive set of policies which reflect the
applicable privacy legislation and identify processes,
procedures and practices focused on the protection of
Confidential Business Information (CBI) and personally
identifiable information (PII).
RWS, being cognisant of the requirement for privacy
by design, provides functionality within RWS software
to enable clients to comply with their obligations under
data protection law.
RWS processes personal data on behalf of clients when
providing localisation services or when licensing our
software via SaaS. Our clients collect the data and
transfer it to RWS to process. Client data is translated,
transmitted and stored within the RWS environment
and on completion is deleted in accordance with
internal deletion policies or as specified by the client.
Similarly, when RWS licenses web content management
software, the client determines the parameters of data
collection and retention. RWS processes client data in
accordance with instructions agreed with clients in Non-
Disclosure Agreements, contracts and Data Processing
Agreements.
RWS does not undertake detailed profiling of consumer
clients on behalf of clients. Data provided by clients
is never sold or rented. As required to perform the
services, RWS will disclose data between affiliate
companies and approved third party sub-contractors;
Appropriate Data Processing Agreements are in place to
govern these transfers.
In FY21 there have been no disclosures or unauthorised
movement of sensitive information including PII and
CBI. As a result, no clients have been affected by any
such incidents.
FY21 INVESTOR AND OTHER RECOGNITION
During FY21 the Group had:
>
>
>
>
55 of 55 applicable sites* with BS EN ISO 9001:2015 for
Quality Management Systems in place
3 of 3 applicable sites* with BS EN ISO 13485:2016 for
Medical Devices in place
53 of 53 applicable sites* with BS EN ISO 17100:2015
for Translations Services in place
5 sites have BS EN ISO 14001:2015 for Environmental
Management Systems (EMS) in place
>
>
>
4 of 35 applicable sites* with BS EN ISO 18587:2017
for Translation Services - Post-editing of Machine
Translation Output in place (Awaiting certificates for
remaining applicable sites)
14 of 14 applicable sites* with BS EN ISO
21500:2012 for Project, Programme and Portfolio
Management in place
6 of 9 applicable sites* with BS EN ISO 27001:2013
for Information Security Management in place
* Applicable sites are sites providing services which are relevant to the
ISO certification within the reporting year.
>
14th percentile out of 14,000+ companies
> Climate programme score - B
The use of these logos, trademarks and index names does not constitute endorsement, sponsorship, recommendation or promotion of RWS Holdings plc by any of the associated companies.
The use by RWS Holdings plc of any MSCI ESG RESEARCH LLC or its affiliates (“MSCI”) data, and the use of msci logos, trademarks, service marks or index names herein, do not constitute a
sponsorship, endorsement, recommendation, or promotion of RWS Holdings plc by MSCI. MSCI SERVICES and data are the property of MSCI or its information providers, and are provided
‘as-is’ and without warranty. MSCI names and logos are trademarks or service marks of MSCI.
Copyright ©2021 Sustainalytics. All rights reserved. This section contains information developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of
Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an
investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/
legal-disclaimers.
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RWS — Annual Report 2021
STRATEGIC REPORT
SASB Disclosure
SERVICE SECTOR: PROFESSIONAL AND COMMERCIAL SERVICES
REPORTING YEAR: ALL DATA REPORTING FOR FY21 UNLESS SPECIFIED
RWS has chosen to evolve its sustainability reporting by disclosing sustainability topics and certain accounting
metrics in line with the SASB Standards. SASB Standards are maintained under the auspices of the Value Reporting
Foundation, a global nonprofit organisation that offers a comprehensive suite of resources designed to help
businesses and investors develop a shared understanding of enterprise value.
The Value Reporting Foundation Board of Directors oversees the strategy, finances, and operations of the
entire organisation, and appoints the members of the SASB Standards Board. The SASB Standards Board is an
independent board that is accountable for the due process, outcomes, and ratification of the SASB Standards.
RWS is supportive of the SASB framework as it allows companies to provide comparable and consistent ESG-related
data. We have modified some metrics to reflect our domicile in the UK. In addition, we have provided additional
metrics where we believe they will provide further information regarding a specific sustainability topic.
We have chosen to report in conformance with the SASB Standard for the Professional & Commercial Services
industry, which includes the following disclosure topics:
> Data security
> Workforce diversity and engagement
> Professional integrity
These ESG topics are reviewed along with specific metrics in the following sections of the Annual Report:
Topic
Summary approach
Data Security
We understand that information security is important to all our
stakeholders including clients, investors and employees. We take
a risk-based approach to the implementation and maintenance
of a robust baseline of security controls which are specified
in our information security management system, monitored
by senior management and subject to regular external and
internal validation. This allows RWS to ensure our safeguards
are appropriate and proportionate and facilitates the continual
improvement of our information security position.
For more information
SASB metrics: page 53
and 54
Discussion and Analysis:
pages 50 to 52
Workforce Diversity &
Engagement
RWS’s success is based on its delivery of high-quality solutions.
RWS recognises the importance of having an engaged, motivated
and diverse team of employees and has several initiatives in place
that seek to maintain an inclusive culture, recognising achievement
and support of all its employees.
SASB metrics: pages 54
and 55
Our people: pages 32 to
39
Professional Integrity
For RWS, acting and being seen to act with the highest level of
professional standards and integrity is fundamental to developing
and maintaining trusted partnerships with its various stakeholders.
RWS seeks to act with transparency, honesty and integrity at all
times.
SASB metrics: pages 54
and 55
Corporate Governance:
pages 49 to 52
SUSTAINABILITY DISCLOSURE TOPICS AND ACCOUNTING METRICS
Topic
Accounting metric
Category
Data Security
Description of approach
to identifying and
addressing data security
risks
Discussion
and Analysis
SASB
code
SV-PS-
230a.1
Response
See pages 50 to 52
Description of policies
and practices relating to
collection, usage, and
retention of customer
information
Discussion
and Analysis
SV-PS-
230a.2
See page 52
STRATEGIC REPORT
RWS — Annual Report 2021
53
Quantitative
SASB
code
SV-PS-
230a.3
Response
(1) (2) (3) In FY20/21 there have been no
disclosures or unauthorised movement of sensitive
information including PII and CBI. As a result, no
clients have been affected by any such incidents.
SASB Disclosure (continued)
Topic
Accounting metric
Category
(1) Number of data
breaches
(2) percentage involving
customers' confidential
business information (CBI)
or personally identifiable
information (PII)
(3) number of customers
affected
Percentage of gender
and racial/ethnic group
representation for (1)
executive management
and (2) all other
employees
Workforce
Diversity &
Engagement
Quantitative
SV-PS-
330a.1
(1) Voluntary and (2)
involuntary turnover rate
for employees
Quantitative
Employee engagement
as a percentage
Quantitative
SV-PS-
330a.2
SV-PS-
330a.3
As RWS is a global business, and in keeping with
local legislation which differs from region to
region, the decision was taken to reach out to all
employees globally but on a totally anonymous
and voluntary basis. This was done so that RWS
was deemed to be acting inclusively rather than
excluding certain regions.
The survey asked employees to share information on
their gender, age, ethnicity, sexuality and disability.
This was the first time that RWS has undertaken
such a survey and the response rate was 31.4%.
Due to the response rate being relatively low,
we are unable to substantiate that RWS is a truly
diverse company.
Going forward we hope that the voluntary response
rate will increase.
For the results of our survey, please see Tables 1, 2
and 3
See Table 4
See Table 5
Until FY21 all employee engagement surveys
had been undertaken on a divisional-basis.
We undertook our first group-wide employee
engagement survey in FY21 using off-the-
shelf software and the results were analysed
by an external agency. The response rate was
80.7%. The survey covered key areas including
diversity, leadership, strategy, innovation, clients,
collaboration, culture, business operation and
integration.
We used the percent favourable response for the
question concerning – "I would recommend RWS as
a place to work to my friends."
Diversity is viewed as a organisational strength with
a favourable score of 88%.
Professional
integrity
Description of approach
to ensuring professional
integrity
Discussion
and Analysis
SV-PS-
510a.1
See pages 49 to 52
Quantitative
SV-PS-
510a.2
Total amount of
monetary losses
as a result of legal
proceedings associated
with professional
integrity
There was no material litigation in FY21 and we
manage ourselves in accordance with the QCA Code
(see pages 80 to 82) and rules of the AIM, the London
Stock Exchange regulated market (RWS.L), and any
associated legal disclosure requirements based on
where the legal proceedings may have originated.
54
RWS — Annual Report 2021
STRATEGIC REPORT
ACTIVITY METRICS
Activity metric
Category
Code
Response
Number of employees by: (1) full-time and
part-time, (2) temporary, and (3) contract
Quantitative
SV-PS-
000.A
(1) 69% (5,295 FTE)
(2) 31% (2,378 FTE)
(3) We have around 29,000 vendors and
freelancers who are paid on invoice.
Employee hours worked, percentage
billable
Quantitative
SV-PS-
000.B
14,964,300
16%
Our primary business model is based on
words translated but billing per hour is typical
of some services adjacent to localisation such
as testing, DTP and multimedia services, etc.
Table 1. Role representation
of RWS employee responses (FY21)
Table 3. Racial/Ethnic group
representation* (%) (FY21)
Role
Senior Management
Junior Management or Team Leader
Employee
Prefer not to say
%
8.87%
19.32%
66.07%
5.73%
Table 2. Global gender
representation of RWS employees*
(FY21)
Gender
Female
Gender non-binary
Intersex
Male
Transgender
Transsexual
Prefer not say
Other
%
60.13%
0.93%
0.00%
35.97%
0.08%
0.04%
2.08%
0.76%
*For inclusivity, we included additional options under gender
representation.
Ethnicity
All employees
Arab
East or South-East Asian
South Asian
Black or African Caribbean
Hispanic or Latino
Mixed or Multiple ethnic groups
Native Hawaiian or Pacific Islander
Native American or Alaska Native
White
Prefer not to say
Other
0.90%
21.10%
5.52%
0.85%
8.04%
21.16%
0.00%
0.76%
55.81%
2.87%
2.65%
*As RWS is a UK-based company, and for inclusivity, we did not restrict
the racial/ethnic groups to US employees.
Table 4. Employee turnover
rates, % (FY21)
FY21
Turnover*
Voluntary
Involuntary
%
19.2%
14.3%
4.9%
*Challenges remain with data accuracy given the manual collation of
data required as a result of the current multiple HR information systems.
SDL plc’s turnover figures have been included in 19/20 number however
Iconic Translation Machines and Webdunia‘s preacquisition figures have
not been included.
Table 5. Employee engagement scores (FY21)
I would recommend RWS as a place to work to my friends.
I am proud to work at RWS.
Overall my workplace is respectful.
Favourable
Unfavourable
Don’t know
Skipped
80%
84%
96%
13%
9%
3%
7%
8%
2%
13%
13%
13%
STRATEGIC REPORT
RWS — Annual Report 2021
55
Chief Financial Officer's Review
INTRODUCTION
2021 has been a transformational year for the Group and we
enter the new fiscal year with an exciting platform from which
to continue to drive organic growth and a strong balance sheet
which will enable the Group to continue to deploy our capital
allocation strategy. Whilst the primary focus is on organic
growth, we are also focused on driving cost saving efficiencies
across the Group. We also continue to review selective
potential acquisitions that would further accelerate growth.
The year began in earnest with the announcement that effective 4 November
2020, following the previous 27 August 2020 statement that the Group had
reached agreement with SDL for an all share combination. RWS had acquired
the entire issued and to be issued share capital of SDL by means of a court-
sanctioned scheme of arrangement. Accordingly, 114,054,320 new ordinary
shares were issued by the parent company of RWS representing a consideration
of £625.5m to acquire 100% of the shares in SDL.
We are pleased to report significant progress on the subsequent integration
of SDL into the wider RWS Group. Following the implementation of a detailed
integration plan we have identified total cost synergies in excess of £33m, of
which over £16m were realised in the current fiscal period. The total expected
cost synergies are substantially greater than the original independently
identified synergy projection of £15m. The cost to achieve these synergies in the
current fiscal period was £10.5m which compares favourably with the original
independent projection of £17m. The Group will continue to assess additional
operational synergy opportunities as they arise.
The Group remains exposed to currency fluctuations and results this fiscal period
have been impacted by significant FX headwinds which have materially impacted
reported revenues. As a large proportion of RWS's revenue is denominated
in USD, a 7% swing in the GBP/USD currency pairing formed the principal FX
headwind in the period.
The Group continues to be highly cash generative, resulting in a movement
from net debt (excluding lease liabilities) of £15.1m as at 30 September 2020
to a position of net cash of £45.3m as at 30 September 2021, notwithstanding
significant acquisition costs, and costs associated with delivering synergies
following the acquisition of SDL. Net debt, including lease liabilities, is £6.2m,
significantly improved from an equivalent net debt measure of £37.9m as at 30
September 2020.
Desmond Glass | CHIEF FINANCIAL OFFICER
56
RWS — Annual Report 2021
STRATEGIC REPORT
REVENUE
ADMINISTRATIVE EXPENSES
Group revenue increased to £694.5m, an increase of
95% on the prior financial year. The results this year
are materially affected by the acquisition of SDL in
November 2020, as Group financials include an 11
month SDL contribution. When we adjust for the impact
of this, and that of the much smaller acquisition of
Horn & Uchida, on an organic basis Group revenue has
decreased by 1%. This reduction is due to the impact
of FX headwinds experienced this year, primarily due
to the strength of Sterling, and on an organic constant
currency ("OCC") basis, revenues have increased by
4%. The growth in OCC revenues was mainly due to
the strong performance of our Regulated Industries
division which increased by 8% and our Language
Services division, which grew by 4%.
Group revenue in the second half of the year increased
by 5% on an OCC basis compared with a 3% increase
in the first half of the fiscal year. This has led to a slight
increase in the revenue weighting towards the second
half of the year which now accounts for 51% of full year
revenues. The acquisition of SDL has not materially
impacted the organic cyclical revenue split between
fiscal half year periods.
In terms of divisional revenues, Language Services
recorded revenues of £317.6m, an increase of 85% on
the prior fiscal period and 4% on an OCC basis. RWS
Regulated industries recorded revenues of £162.9m,
an increase of 128% on the prior year and 8% on an
OCC basis. IP Services posted revenues of £113.6m,
an increase of 1% on the prior period comparative of
£112.8m and was up on an OCC basis by 2%. Finally,
RWS Language & Content Technology recorded
revenues of £100.4m, which represented an OCC
increase of 1% year on year.
Group revenue, categorised by geography, continues
to migrate towards the US market which now accounts
for 43% (2020: 41%) of Group revenue. Following the
acquisition of SDL, client concentration has reduced
and no one client accounts for more than 10% of
Group turnover while in the prior financial year a client
accounted for more than 10% of Group turnover.
Administrative expenses have increased to £257.0m
(2020: £88.4m). Administrative expenses as a
percentage of revenue have increased from 25% to 37%,
which reflects the impact of the significantly higher
structural cost base of SDL. Adjusted administrative
expenses (gross profit less adjusted operating profit)
increased by £128.0m to £194.7m, an increase of 192%.
Exceptional items of £14.1m (2020: £7.8m) include the
impact of the IP Services transformation (£4.8m) and the
impact of integration costs in relation to SDL (£10.5m).
This is offset by proceeds from a warranty claim relating
to Moravia of £1.2m
FINANCE COSTS
Net finance costs were £2.4m (2020: £1.5m). Net finance
costs have increased year on year due primarily to
increased lease interest costs under IFRS16 as a result of
the acquisition of SDL of £0.8m and the non-recurrence
of a debt modification gain of £1.4m recorded in the
prior year. This has been partially offset by reduced
bank interest payable, which has fallen by £0.9m as
a result of lower financing costs consequent to the
Group’s reduced level of debt and favourable FX rates.
ADJUSTED PROFIT BEFORE TAX
Adjusted profit before tax ("Adj PBT") is stated before
amortisation of acquired intangibles, share based
payment expense, acquisition costs, and exceptional
items (see reconciliation on page 164). 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 underlying
performance across financial periods. Adj PBT of £116.4m
(Adj PBT margin: 16.8%) recorded in the period has
increased from £70.2m (Adj PBT margin: 19.7%) in the
financial year ended 30 September 2020, an increase of
66%, following the acquisition of SDL.
GROSS PROFIT
Gross profit increased by 124% to £313.2m with an
associated gross margin of 45.1%. Group gross margin
has increased from 39.2% in the prior year mainly as a
result of the change in revenue mix as a result of the
relatively higher margin revenues recorded consequent
to the SDL acquisition while an OCC basis gross margin
has remained stable year on year.
TAX CHARGE
The Group’s tax charge for the year was £13.8m (2020:
£12.3m) representing an effective tax rate on profit
before tax of 25.1% compared with 21.0% 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.
STRATEGIC REPORT
RWS — Annual Report 2021
57
Chief Financial Officer's Review (continued)
EARNINGS PER SHARE AND DIVIDEND
CASH FLOW
Cash generated from operations was £102.0m, £7.4m
more than the prior financial year when cash generated
was £94.6m. This increase has been generated
notwithstanding significant cash costs including £11.2m
of acquisition fees and £10.0m of restructuring and
integration costs following the acquisition of SDL.
Operating cash flow before movements in working
capital and provisions increased from £87.5m to
£125.5m. A net investment in working capital of £23.5m
has been predominantly driven by the timing of deals
closing and the renewal cycles for our Language and
Content Technology division, coupled with a strong
finish to the fiscal year for the Group with record
revenues in September.
Significant cash flows from investing activities included
net cash acquired in connection with the acquisitions
of SDL and Horn and Uchida of £53.5m, partially offset
by an increase in purchases of intangible software of
£13.8m.
Cash flows from financing activities included £17.7m in
repaid debt and associated interest and dividends paid
within the financial year ended 30 September 2021 of
£36.0m.
Cash balances at the financial year end amounted to
£92.5m with external borrowings of £47.2m, excluding
lease liabilities, resulting in a net cash position of
£45.3m (2020: £51.4m cash and external borrowings
of £66.5m, resulting in net debt of £15.1m). Net debt
including lease liabilities was £6.2m (2020: £37.9m).
POST BALANCE SHEET EVENTS
No other significant events have occurred between the
balance sheet date and the date of authorising these
financial statements.
Desmond Glass | CHIEF FINANCIAL OFFICER
20 December 2021
Basic earnings per share for the financial year decreased
from 16.9p to 10.9p, a decrease of 36%, while adjusted
basic earnings per share increased from 19.9p to 23.8p,
representing an increase of 20% which reflects the after
tax impact of significant adjusting items this fiscal year
consequent to the acquisition of SDL. The weighted
average number of ordinary shares in issue for basic
and adjusted basic earnings increased from 275.0m to
378.5m, principally due to new ordinary shares issued in
connection with the SDL acquisition.
A final dividend for the financial year end 30 September
2021 of 8.5 pence per share has been proposed,
equivalent to £33.1m, while an interim dividend of 2.0
pence per share, equivalent to £7.8m, was paid during
the fiscal period. A comparative final dividend for the
year ended 30 September 2020 of 7.25 pence per share,
equivalent to £28.2m, was paid in this fiscal period.
The proposed total dividend for the year of 10.5 pence
per share represents a 17% increase on the total
dividend relating to the prior fiscal period of 9.0 pence
per share.
BALANCE SHEET AND WORKING CAPITAL
Net assets at 30 September 2021 increased by £602.0m
to £1,010.9m. The main driver of this increase was the
acquisition of SDL for total consideration of £625.5m
and comprised total identifiable net assets of £248.1m
and goodwill of £377.4m.
Current assets at 30 September 2021 of £287.8m
have increased by £153.7m on the prior financial year
including an increase in trade and other receivables of
£109.7m. Cash balances of £92.5m have increased by
£41.1m notwithstanding significant acquisition related
costs and restructuring costs necessary to realise cost
synergies. The increase in trade and other receivables is
primarily driven by the acquisition of SDL and includes
an increase in trade receivables of £72.9m and an
increase in accrued income of £20.8m. This increase
reflects stronger revenue in the second half of the
financial year and a strong year end performance across
the Group whilst the average days’ sales outstanding
(the calculation of which measures the number of days’
billings in trade receivables) has remained stable.
Current liabilities have also increased due to the
acquisition of SDL from £64.5m at 30 September
2020, to £190.9m at 30 September 2021 an increase of
£126.4m, primarily due to an increase in trade and other
payables balances of £94.4m. Non-current liabilities
have also increased by £26.3m, despite a reduction
in loan balances under our RCF facility of £19.3m, due
to an increase in deferred tax liabilities of £20.9m and
non-current lease liabilities of £20.9m following the
acquisition of SDL.
58
RWS — Annual Report 2021
STRATEGIC REPORT
PARTH PATEL | INDIA
STRATEGIC REPORT
RWS — Annual Report 2021
59
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
STRATEGIC RISKS
Loss of a key client
Being a global leader in localisation,
the Group has a number of key clients
who are supported by large teams
which are located globally. Any failure
with regard to service, or breakdown
in the relationship, would impact our
revenue.
Reputation
Failure to manage our reputation will
mean that clients will be less likely
to give us new business or renew
existing business. It will also impact
on our ability to attract new talent.
Good client relations are of paramount importance to us and
we are proactive in building long-term relationships with our
clients and have a proven track record in doing so. We work
closely with them to understand their requirements and always
put in place a team and process that meets their specific
needs. Most importantly, however, are the open channels of
communication we maintain with our clients which ensure
we anticipate their needs, pre-empt and/or immediately
address possible areas of concern and always remain alert
to identifying areas for streamlining our processes and
continuous business improvement (see page 47).
We have policies in place that apply to each and every
employee. The policies detail the standard of ethical
behaviour that all RWS employees, partners and suppliers
must adhere to. Policies, for example our Speaking Up/
Whistleblowing Policy, are also provided as a guideline
on the responsibilities of each employee on how to act,
to encourage employees to do the right thing, and as a
mechanism to report any violations (see pages 49 to 52).
PEOPLE
Failure to attract,
engage and retain
key talent
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 across the
Group.
Retention of key people is supported by a competitive
salary structure, annual bonuses, long-term incentive
programmes, a 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 teams focusing on their health and well-
being (see pages 32 to 39).
60
RWS — Annual Report 2021
STRATEGIC REPORT
Risk category
Description
Mitigation
OPERATIONAL
Cyber security
RWS may be adversely affected by
activities such as system intrusions,
denial of service attacks, virus
spreading and phishing.
Failure of a
business-critical
partner, supplier
or national
infrastructure
Failure of a business-critical partner
or supplier, or critical infrastructure,
resulting in RWS being unable to
deliver and/or perform to the required
standard.
Mergers and
acquisitions
Failure to integrate acquired
businesses successfully.
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 colleagues
on data security risks and holds cyber crime insurance (see
pages 50 and 51).
Where possible, the Group's reliance on a single partner
or supplier is avoided. Key partners and suppliers are
monitored carefully and we review the most significant risks
and the status of related mitigation projects at our Quarterly
Business Reviews. We are cognisant of our dependence
on the national infrastructure and associated resilience
in the regions where we have offices. As part of our risk
strategy we are mindful of which countries we operate in.
We monitor the situation globally, and where necessary, will
take steps to ensure the safety of our employees and the
continuity of our services to clients. During the Covid-19
pandemic, there has been no outright business-critical
partner or supplier failure.
The experience and knowledge gained, and integration
frameworks developed from acquisitions in recent
years, will continue to be utilised on future acquisitions.
Integration is considered as part of any acquisition process.
A broad understanding of how the acquisition target will
operate within the 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. As a result of a
number of acquisitions over the last
few years, we currently have a number
of different systems which we need to
consolidate and simplify to improve
synergies.
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. We are in the process of internal reviews to identify
best practice as we integrate the Group's systems and
procedures.
STRATEGIC REPORT
RWS — Annual Report 2021
61
Principal Risks and Uncertainties (continued)
Risk category
Description
Mitigation
TECHNOLOGY
New technology
FINANCIAL
Currency
RWS has always embraced new
translation technologies, such as
Machine Translation (MT), Neural
Machine Translation (NMT) and
Translation Memory (TM), however we
are mindful that new technology could
be developed which may reduce the
need for our services or disrupt the
way in which they are delivered.
There is continuous review of the technology available and
full consideration of its implications and potential benefits
for RWS. The quality of NMT will improve over time and, as
a leader in language services and language technology, we
will continue to differentiate ourselves by focusing on the
development of our Language Weaver product, and the
opportunities it provides.
A significant proportion of the Group’s
revenues and costs are generated
in foreign currencies which mean
these amounts, in GBP, will fluctuate
depending on prevailing exchange
rates.
The Group performs currency analyses on both its revenues
and costs regularly to ensure that adequate transactional
hedging measures are in place to minimise financial volatility
and to validate the overall currency exposures within the
Group.
LEGAL AND COMPLIANCE RISKS
Legislative /
regulatory changes
Legislative and regulatory changes
(e.g. unitary patent / medical device
regulations / the FDA approval
process that simplifies the linguistic
validation process) that reduce the
need for RWS's services or new, often
more rigorous legislation (e.g. climate-
related legislation) that creates an
elevated compliance and reputational
risk.
HAZARD RISKS
Climate change and
natural disasters
Risks to RWS resulting from long-term
climate change.
The Group considers new legislation requirements as part
of its risk management process. The Group will continue
to pursue an acquisition strategy that diversifies revenue
streams and further reduces the risk of individual regulatory
issues.
We are reviewing our global network of offices to identify
which offices and services could be affected by the
associated physical risks of climate change. All our offices
have business continuity plans, and where identified, we will
relocate offices and services which could be impacted. We
are also reviewing carbon emissions of the offices globally
and taking steps to reduce the carbon emissions, or where
necessary, moving to new locations. If extreme weather
events start to increase in severity and frequency, preventing
our employees from commuting to work, this would have a
negligible impact due to the availability of remote working
for employees. Extreme weather could also impact on our
supply chains and networks and we are reviewing our supply
chain vulnerabilities and addressing them. For further
details see the TCFD section (see pages 64 to 67).
62
RWS — Annual Report 2021
STRATEGIC REPORT
MAPPING OUR RISK
The Group categorises risks according to the likelihood
of occurrence and the potential impact on the Group.
The Directors consider the following to be principal risks
and uncertainties facing the Group.
The Directors have assessed the 11 principal risks and
uncertainties that the Group faces.
1
2
5
STRATEGIC RISKS
1. Loss of a key client
2. Reputation
PEOPLE
3. Failure to attract, engage and retain key talent
OPERATIONAL
4. Cyber security
5. Failure of a business-critical partner, supplier or
4
7
9
national infrastructure
6. Mergers and acquisitions
7. Systems
3
86
10
11
t
c
a
p
m
I
5
4
3
2
1
0
Likelihood
0 1 2 3 4 5
TECHNOLOGY
8. New technology
FINANCIAL
9. Currency
LEGAL AND COMPLIANCE RISKS
10. Legislative / regulatory changes
HAZARD RISKS
11. Climate change and natural disasters
STRATEGIC REPORT
RWS — Annual Report 2021
63
Task Force on Climate-related
Financial Disclosures (TCFD)
VIPIN PANDIT | INDIA
Climate change is one of the greatest challenges of our time
and threatens the lives and livelihoods of billions of people. We
all need to work together in helping the world transition to net
zero and RWS is committed to helping achieve this. In 2021
we became a signatory to the Task Force on Climate-related
Financial Disclosures and we have started working towards
aligning ourselves and adopting the TCFD ahead of it becoming
mandatory in 2022.
The disclosures included below outline the work we have done to date to align
our climate risk disclosure with the TCFD recommendations. Doing so will enable
our stakeholders to understand the ways in which climate change is affecting our
business now, and in the future.
These disclosures will evolve as the company moves towards full alignment, which we
will report on in our 2022 annual report.
In June 2017, the TCFD published recommendations to encourage businesses to
increase disclosure of climate-related information. These recommendations focus on
governance, strategy, risk management, and metrics and targets. We are aware that
new guidance has been published in 2021 and we are looking to include this in future
reporting periods.
64
RWS — Annual Report 2021
STRATEGIC REPORT
GOVERNANCE
The Board has direct oversight of climate-related
issues and it agrees our position and commitments on
climate change.
The CEO retains overall responsibility and
management of the Group's policies regarding
climate change. He is supported by the CFO who
communicates potential climate change issues and
manages appropriate mitigation measures. These
are presented to the Board bi-annually for support
and approval. This process ensures that the company
responds and reacts to climate change risks and
opportunities in a timely manner.
The CFO holds overall responsibility for risk
management. This is done by engaging leadership,
including the Divisional Presidents and the Chief
Technology Officer. Climate-related risks, as well
as Group risks, are assessed firstly to determine
their potential impact using hazard vs probability of
occurrence. These are then ranked, and appropriate
management strategies are developed ensuring that
the identified risk is mitigated as much as reasonably
possible.
The Board reviews performance against climate
targets and going forward will set carbon net zero
commitments.
STRATEGY
Internally we use business risk strategy scenarios to
help quantify and conceptualise the impact that risks,
including climate change, might have on our business
practices. Certain risks may need to be assessed and
reviewed at a business strategic level whilst others
focus on divisional or local practices. Dependant on
the risk being assessed, inputs include probability
of risk occurring, severity of the risk, assessment of
current methods in place to manage the risk and cost
of mitigation versus cost of inaction. These scenarios
look at the impact from risks over short-, medium-
and long-term i.e., 1 to 10 years.
The climate change risk examples we have identified
include:
> Enhanced reporting obligations – there is an
increasing number of emerging regulations
which require organisations to report on how
they are managing their climate change impact
and associated carbon emissions e.g., UK ESOS
and SECR legislation. Non-compliance with these
regulations could potentially result in negative
publicity and fines.
> Increased stakeholder concern or negative
stakeholder feedback – our stakeholders' needs
are at the heart of our business. Consequentially,
we have been experiencing an increased demand
to demonstrate our climate change management.
In response to our stakeholders’ needs we have
committed to reducing our climate change
impact continually. (See Environment section
pages 28 to 31).
> Changes in stakeholder demands of “wanting
companies to be greener” - we recognise that
the demand for “greener” practices will increase
in future years. This can be seen with the UK
Government's commitment to become carbon
net zero by 2050. As previously described in our
Environmental section, we too are responding
and demonstrating how we will reduce our carbon
emissions.
> Increases in severity and frequency of extreme
weather events such as cyclones and floods – our
business offerings rely on technology and we
recognise the need to future proof our operations
against any acute physical climate change risks,
so as to ensure our business services are not
disrupted. Our IT infrastructure continues to be
developed to enhance our ability to respond to
climate change disaster level scenarios.
The business risk strategy scenarios also identify
opportunities which could improve and enhance the
service we provide to our clients. Examples of climate
change opportunities are provided below:
> Moving to more efficient buildings – as mentioned
earlier, climate change has an adverse impact
on weather patterns and conditions and if we do
not respond to this risk our business operations
could be negatively affected. As such we regularly
review our site portfolio, which provides us the
opportunity to be able to move when needed to
more energy efficient sites.
> Improvements in energy and transport fuel
efficiencies - we recognise that improving our
climate change impacts generate financial gains,
for example, a reduction in energy and transport
consumption will reduce related costs.
> Increased demand for goods and services – as
mentioned previously, we take climate change
seriously and it is managed at Board level. We are
able to confidently demonstrate to our clients our
climate change management strategies to show
how we are reducing our impacts. As a natural
consequence, the demand for our products and
services may well increase.
RWS has considered and developed three qualitative
climate change scenarios based on details in the
Intergovernmental Panel on Climate Change’s (IPCC)
fifth assessment report. These scenarios include
RCP1.9 which limits global warming to below 1.5°C,
the aspirational goal of the Paris Agreement; RCP2.6
which represents a mitigation scenario aiming to
limit the increase of global mean temperature to
STRATEGIC REPORT
RWS — Annual Report 2021
65
Task Force on
Climate-related Financial Disclosures (TCFD) (continued)
ethical, responsible, and trustworthy organisation.
As such we review our operations regularly to ensure
that we operate as efficiently as possible. This risk is
considered over short-, medium-, and long-terms (1 to
10+ years).
RISK MANAGEMENT
As previously mentioned, climate change risks are
managed primarily through our risk management
process. Risks are identified by the CFO through
regular engagement with the Executive Team. Once
identified, they are assessed to determine their
potential impact (hazard vs probability of occurrence).
Risk profiles are produced at a business level with
Board-level oversight of climate-related risks being
maintained by the CFO. The Executive Team provides
additional horizon scanning and meets periodically
to discuss key risks and mitigation strategies. We also
continue to enhance our understanding of longer-term
risks relating to our scenario analysis and share it with
the Board for consideration and approval.
Our short- and long-term climate-related risks include:
> Transitional risks which mainly relate to potential
policy and regulatory changes that are considered
‘high’ in terms of significance and likelihood over
the longer term. For example, policy development
could trigger new green business taxes to fund the
initiatives. There is also the potential issue that if
legislation is rolled out in haste it could result in
long-term unintended consequences which will
need to be redressed.
> Physical risks are low in the short term and ‘low-
to-medium’ in the longer term for significance and
likelihood. Changes in temperature, for instance,
could impact energy demand for heating and
cooling, while extreme weather conditions could
cause flooding, rising sea levels and fires. Both risks
could adversely affect revenue.
Significant opportunities have been identified. These
are in sectors which are the most vulnerable as they
often have the biggest opportunity, such as the move
to renewables in oil and gas, move to electric cars in
the automotive industry, new technology, life sciences
contingency planning, increased litigation in the legal
market, and so on.
around 2°C above preindustrial levels for mid-range
climate sensitivity; and RCP8.5, a high-emissions
scenario frequently referred to as “business as usual”,
suggesting that is a likely outcome if society does
not make concerted efforts to cut greenhouse gas
emissions. The above scenarios take into consideration
the strategic and financial risks and opportunities that
are posed to our business.
This analysis is an important element in making
disclosures consistent with the guidance from the TCFD.
Based on current weather fluctuations, we have made
a number of assumptions associated with those states
and what could be experienced, for example, carbon tax
levels, extreme weather impacts on the business and
supply chains.
We have incorporated these scenarios into our climate
change risk assessment and based on our assessments
so far, no significant risks have been identified from
the scenario planning that we are unable to mitigate.
The risk assessment is reviewed bi-annually. Over time,
as global trends develop, any additional significant
risks and opportunities which are identified will be
incorporated into the scenario planning.
We believe we are well positioned to offset potential
adverse impacts by adapting our operations and
engaging with our clients and suppliers to maximise
opportunities as we transition to carbon net zero. We
are focused on reducing our global carbon emissions
as quickly as possible. As part of our goals (see page
28), we are driving emissions out of our business
through a range of initiatives including improving
energy efficiencies and adopting green tariffs across
our offices, reducing travel where possible, availability
of home working and developing a socially responsible
suppliers’ network.
Our research and development investment focuses on
enhancing our service offering. This includes improving
the efficiency of how we deliver our services in which
we utilise technology which in turn reduces the carbon
emissions generated from our services. Investment in
research and development is considered over short-,
medium- and long-terms (from 1 to 10+ years).
We are working with our suppliers to ensure that their
carbon management ethos matches our own. This will
expand our influential reach beyond that of just our
company and demonstrates a consistent and truthful
message is shared with our stakeholders regarding our
own environmental management practices. We are in
the process of rolling out our updated Supplier Code of
Conduct and our engagement will focus on the short to
medium term (1 to 5 years).
As mentioned previously, we have seen an increased
demand for companies to show effective management
of their climate change impact, for example, the
market, and existing and upcoming legislation. This
supports our efforts in demonstrating that we are an
66
RWS — Annual Report 2021
STRATEGIC REPORT
ANNA KILLER | GERMANY
METRICS AND TARGETS
Currently we assess our carbon emissions against
revenue and full-time equivalent employees and have
targeted year-on-year reductions for: natural resources
and consumables, carbon footprint, electricity, waste
and environmental incidents as well as reported our
results in the annual CDP disclosures.
We are in the process of developing our carbon net zero
metrics and aim to report these in the near future.
We monitor and report our global Scope 1, 2 and 3
emissions for all our offices (see page 29) and we are
looking to strengthen existing targets to help our
business be carbon net zero by 2045-50 (see page 28).
These goals are aligned to the Paris Accord which is a
global agreement to keep temperature rise well below
2°C above pre-industrial levels, and pursue efforts to
limit the increase to 1.5°C. Delivering our targets is
in part dependent on having a policy and regulatory
environment that supports our carbon net zero
objectives. We continue to adopt positive policies to
reduce carbon emissions and increase transparency and
flexibility (see pages 30 and 31 for more detail). RWS
is not utilising carbon management schemes such as
emissions trading schemes or green certificates.
We are aware of the new guidance issued in October
2021 regarding metrics, targets and transition plans.
We will incorporate it where practical and report on our
progress in our 2022 Annual Report.
STRATEGIC REPORT
RWS — Annual Report 2021
67
HYNEK HANZLIK | CZECH REPUBLIC
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 2021
report as follows:
> Our strategy on page 21
> Our business model on page 15
> Principal risks and uncertainties on pages 60 to 63
> Our stakeholder framework on page 24
> Our stakeholder engagement on pages 80 to 81
> Our people on pages 32 to 39
> Corporate governance section on pages 49 to 52 and 76 to 82
> Our environment on pages 28 to 31
> Directors’ emoluments and share interests on pages 88 to 94
68
RWS — Annual Report 2021
STRATEGIC REPORT
IDENTIFICATION OF STAKEHOLDERS
The Board of Directors has identified the following key
stakeholders and have explained within these financial
statements how they have engaged with each group of
stakeholders:
> Our shareholders
> Our people
> Our clients
> Our suppliers
> Our environment
BOARD ENGAGEMENT WITH
STAKEHOLDERS
The Board is committed to enhancing engagement with
all of our stakeholders. The Board met virtually on some
occasions during the year and a number of additional
meetings were held to discuss how the Company was
meeting the challenges it faced. The Board also received
regular briefings from management in the form of
written reports. Over the year, the Board met five times.
There have been regular communications with the wider
business during the period.
In addition to the methods of engagement described
above and over the following pages, the interests of our
stakeholder groups are considered by the Board through
a combination of:
> Regular reports and presentations at scheduled
Board and Committee meetings, including reports
presented by the CEO and updates from the CFO, and
other senior management on a range of issues.
> Unscheduled Board and Committee meetings if the
Board needs to be informed of matters or when a
decision is required before scheduled Board meetings
such as trading updates or M&A opportunities.
> Regular communication from the Executive Directors,
senior management and subject matter expects in a
number of areas.
> A rolling agenda of matters to be considered by the
Board and Committees throughout the year, including
a strategy review which considers the purpose of the
Company and strategy to be followed by the Group,
which is supported by a budget for the following year.
> Formal consideration of large bids, acquisitions,
dividends and other matters, including any factors
which are relevant to major decisions taken by the
Board through and Terms of Reference for each
Board Committee.
> The risk management process and other routine Audit
Committee and Remuneration Committee agenda
items, as described later in this report on pages 84 to
87 and 88 to 90.
As with other listed companies, the Directors fulfil their
duties partly through a governance framework which
delegates day-to-day decision-making to the Executive
Directors. Included in the Annual Report is a summary of
the governance structure, which covers the values and
behaviours expected of our employees; the standards
they must adhere to; how we engage with stakeholders;
and how the Board looks to ensure that we have a robust
system of control and assurance processes (see page 79).
Our corporate sustainability stakeholder framework is
structured around our key stakeholders and this year
we have focused even more on our approach to and
progress in delivering our ESG commitments.
We summarise our progress and performance in the
Sustainability section of this Annual Report on pages 24
to 52.
OUR SHAREHOLDERS
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.
Shareholders receive regular updates in addition to the
half and full year results reports and accompanying
presentations as well as attendance by the CEO and CFO
and other members of the Executive Team to discuss
relevant developments in the business at post-results
road shows and programme of investor conferences.
During 2020, this engagement was conducted mainly
through conference calls and online presentations. In
addition, we consult with institutions, proxy advisers
and ESG analysts as shareholders value their opinions.
The AGM provides the Board with an opportunity to
communicate with private and institutional investors.
The 2020 AGM took place as a closed meeting.
Although it was not possible for the Board to meet
with our shareholders in person at the 2021 AGM, all
shareholders were invited to submit questions to the
Board via email prior to the meeting.
OUR PEOPLE
Our approach to engagement with our people is
included on pages 32 to 39.
OUR CLIENTS AND SUPPLIERS
Details of our engagement with our clients and
suppliers are discussed further on pages 47 and 48.
OUR ENVIRONMENT
Details of our engagement with our environment are
discussed further on pages 28 to 31.
Ian El-Mokadem | CHIEF EXECUTIVE OFFICER
20 December 2021
STRATEGIC REPORT
RWS — Annual Report 2021
69
Corporate Governance
Statement
INTRODUCTION FROM OUR CHAIRMAN
We have all faced a unique set of circumstances over the last
two years and I am proud of the way that we have all risen to the
challenge.
The health, safety and well-being of our employees, clients and
communities have been paramount throughout this period.
Despite the challenges the pandemic has presented, the Board
and Executive Team has led the Group to deliver a sound trading
performance and maintain RWS’s balance sheet strength and
financial flexibility, equipping us well for future growth.
OUR STAKEHOLDERS
As a Board, we have been closely involved in assessing the impact of the Covid-19
pandemic on our stakeholders.
We took great care to balance the needs of all our stakeholders during the crisis.
The response and commitment of all our employees have been exceptional, with
almost all able to work effectively, either on-site or from home. Also, we did not
take any form of government support or reduce pay. We were able to continue
offering all our services and adapt our operating models to work from home and
meet our clients’ existing and new expectations.
We sustained our track record of paying regular dividends to shareholders and we
did not utilise government liquidity facilities.
We describe on pages 80 and 81 how the Board engaged with each of our key
stakeholders during FY21.
STRATEGY
The Board has continued to have oversight of the Group’s integration and
operational improvement programmes to support higher levels of quality and
client service.
As well as dealing with the effects of the Covid-19 pandemic, the Board is working
closely with the Executive Team in conducting a review of our corporate strategy.
More information about this work can be found in the CEO’s review.
ENGAGEMENT
The Board appreciates that effective stakeholder engagement
is essential to ensuring the long-term success of the Group.
Establishing and maintaining good relationships with all of
our stakeholders is important to us and we have focused on
increasing the amount of group-wide stakeholder engagement,
including undertaking our first ESG Materiality survey.
70
RWS — Annual Report 2021
Andrew Brode | CHAIRMAN
The Group also undertook its first group-wide
Employee Engagement Survey in June this year. We
had an excellent response rate of 81% which gives
us confidence the feedback we received through the
survey is statistically valid and fully representative.
The questions covered nine areas to provide a
comprehensive picture of their experience. These were:
diversity; leadership; strategy; innovation; clients;
collaboration; culture; operations and integration.
Overall, we averaged 80% favourable scores which we
were very pleased with given the survey was conducted
at a time when the Covid-19 pandemic was still proving
globally disruptive and RWS was still very much in the
middle of a huge business integration programme.
Scores across the divisions were similar to the Group
average, with little material variation. Our highest
scoring area was diversity at 88% favourable, with the
leadership, strategy and innovation areas all over 80%.
On our critical ‘employment recommender’ question,
commonly regarded as a key indicator of engagement,
we also scored well at 80%.
We have long-standing relationships with the majority
of our suppliers and subcontractors. Going forward our
plans are to ensure it is more robust and transparent.
LEADERSHIP
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 a 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 an 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.
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 that
may affect, or could appear to affect their judgment.
The last year has seen a number of leadership changes
at Board level. Following an extensive external
succession process, which identified a number of high
calibre candidates with the necessary blend of skills and
expertise to lead an ambitious, international group, the
Board appointed Ian El-Mokadem as the Group's CEO on
25 July 2021, after commencing employment on 19 July
2021. Ian joined the Board on 3 August 2021.
Ian brings over 20 years of experience in senior
management roles in large and international services
businesses, most recently as CEO of V.Group, the
world's leading ship management and marine support
services business, where he oversaw a significant
transformation programme, including the delivery of
new digitally-enabled approaches to crewing and vessel
management, international development, cultural
change and acquisitions.
Ian was previously CEO of Exova Group, the global
materials testing and calibration services provider,
which he steered through its IPO in 2014, grew revenues
and profitability substantially, both organically and
through 18 acquisitions, before executing its sale to
Element Materials Technology in 2017. Prior to Exova,
he was Managing Director, UK & Ireland, at Compass
Group, the FTSE 50 world-leading provider of catering,
hospitality and support services. In this role, he drove
the turnaround of a division with revenues of c.£1.8
billion which, as the Group's second-largest business
was critical to its success and oversaw c.65,000 people
across c.7,000 outlets. Earlier in his career, he started
out consulting with Accenture, before joining Centrica
and working his way up through a number of positions
culminating in the role of Managing Director of Onetel.
Ian is also currently a Non-Executive Director of Serco
Group plc and a Director of Roegate Consulting Ltd.
Richard Thompson left the Company on 25 July 2021,
having been with the business for nine years. We
thank Richard for his service to the Group; he made
an enormous contribution, initially as CFO from
2012, before becoming CEO in 2017. During that
period, the Group's revenues grew ten-fold through
organic growth, complemented by carefully selected
acquisitions. Richard also executed the merger with
SDL which positions the Group firmly as a world leading
provider of language services and technology.
Following the completion of the combination of RWS
and SDL plc on 4 November 2020, as announced on
27 August 2020, Elisabeth Lucas and Tomáš Kratochvíl
stood down from the RWS Board as Non-Executive
Directors and RWS appointed three new Independent
Non-Executive Directors, David Clayton, formerly Non-
Executive Chairman of SDL plc, Gordon Stuart, formerly
a Non-Executive Director of SDL plc, and Frances Earl.
We thank Elisabeth Lucas and Tomáš Kratochvíl for their
considerable contributions over the many years through
which they have held significant roles at RWS and
Moravia, and wish them well for the future.
David Clayton joined SDL plc as a Non-Executive Director
in December 2009 before becoming Non-Executive
Chairman in July 2013. He is currently Chairman of
Forensic and Compliance Systems and Chairman of the
Board of Trustees of the charity Changing Faces.
GOVERNANCE
RWS — Annual Report 2021
71
Corporate Governance Statement (continued)
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.
The Board believes that it complies with all the
principles of the QCA Corporate Governance Code.
BOARD EVALUATION
As there were a number of changes to the Board within
FY21, it was agreed that we would undertake a formal
internal evaluation of the performance of the Board
and its Committees this year, and a formal independent
review in FY22.
The evaluation included reviews of the Board, Audit
Committee, Remuneration Committee, the Chairman
and individual performance. Areas covered included
Board composition, stakeholder oversight, Board
dynamics, management of meetings, Board support,
focus of meetings, strategic oversight, risk management
and internal control, succession planning and human
resource management and priorities for change,
Following the evaluation, I am satisfied that all Directors
continue to perform well in their roles and contribute
effectively. We operate with a high level of trust, a track
record of improved effectiveness, and the ability to
adapt and change; strengths that served us well during
this challenging year.
SUSTAINABILITY
Sustainability is a key area of focus for the Group. During
FY21 we appointed a Head of Sustainability and ESG
and, following the appointment, are further developing
the Group’s sustainability approach after performing
a materiality assessment to identify issues material
to the Group’s stakeholders, taking account of the
Group’s operational strategy and business model (see
Sustainability report pages 24 to 55). Going forward we
are working towards ensuring the Group’s ‘sustainability
approach’, covering key environment, social and
governance issues, is embedded in day-to-day operations.
Gordon Stuart was appointed as a Non-Executive
Director of SDL plc in January 2020. Having started his
career as a management consultant with McKinsey
& Co, he brings approximately 20 years' experience
in senior management roles at global people and
technology businesses. Gordon currently serves as
the CFO of Unit4 NV, having previously been CFO of
TMF Group and Alexander Mann Solutions, and Group
Finance Director of Xansa plc and London Bridge
Software Holdings plc. He has also held non-executive
roles at Sepura plc and Intec Telecom Systems plc.
Gordon was appointed Audit Committee Chair when
David Shrimpton stepped down at the 2021 AGM.
Frances Earl brings deep experience in talent
strategies and management, including through
significant integration processes. Frances has spent
30 years driving global talent strategies at Accenture
and for its clients, with extensive experience advising
on the recruitment, management and development of
diverse talent, and played a key role in the integration
of senior executives and people as part of various
acquisitions for Accenture. While at Accenture she
was a member of the UK and Ireland Executive Board
in her role as UK and Ireland HR Director. Her time at
Accenture culminated in her role as Global Managing
Director for Executive Recruitment with responsibility
for all senior executive and partner recruitment
across twenty countries. Frances was appointed
Remuneration Committee Chair when Elizabeth Lucas
stood down.
Lara Boro has been appointed Senior Independent
Non-Executive Director following David Shrimpton
stepping down at the 2021 AGM in February 2021.
David made a significant contribution to the Board
over many years, and we thank him for his service.
We are strongly committed to upholding the values of
good corporate governance and accountability to all
the Group’s stakeholders including shareholders, staff,
clients and suppliers. We believe that good corporate
governance, which includes environmental and social
issues, is important for the long-term success of the
business.
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 (see Sustainability report pages
24 to 55). The Board understands that upholding good
72
RWS — Annual Report 2021
GOVERNANCE
DIVERSITY AND INCLUSION
ANNUAL GENERAL MEETING
Being part of a vibrant, globally diverse community,
we know that tremendous value is gained from
people’s differences. An inviting culture that
recognises and celebrates diversity enables people
to reach their maximum potential and be their best,
which is fundamental to us and critical to our success.
Due to the constraints of the Covid-19 pandemic,
the 2021 AGM was held remotely and was broadcast
to shareholders via a live webcast. Shareholders
were invited to ask questions before and during the
meeting, with the panel answering the questions
which we received.
Research has shown that when employees experience
a diverse, caring company it is a top driver of revenue
outperformance. When companies invite every
employee into the innovation process, they generate
more high-quality ideas, realise greater speed in
implementation, achieve greater agility, beat sales
targets and outperform their competition.
Given the unquestionable impact diversity and
inclusion has on people, the business, and society
at large, we are committed to further extending our
culture of diversity and inclusion. It is simply the right
thing to do (see Our People section pages 32 to 39).
The Board understands the importance of diversity
and is committed to increasing the diversity of the
Group’s workforce and the diversity of the Board
itself. The gender diversity split of the Board is 28.6%
female, 71.4% male and females make up 12.5% of
our Executive Team. We aim to increase the ethnic
diversity of the Board and Executive Team as soon as
reasonably practicable.
Since FY20 we have placed a sustained focus on
diversity and inclusion. Learning from our efforts in
this regard, we take a holistic approach to inclusion,
choosing to develop a fair, equal and inviting work
environment for all people, rather than purely
targeting the most obvious groups that are typically
under-represented in organisations with our profile
(see Our People section pages 35 to 39).
Due to ongoing concerns regarding people’s safety
and exposure to Covid-19, we have decided to hold
the 2022 AGM as a hybrid meeting. Shareholders
(and their proxies) shall only be permitted to attend
the AGM via a virtual meeting facility and will not be
permitted physically to attend the AGM.
Details of how shareholders may access the meeting
via the virtual meeting facility are set out in the
Notice of AGM. Shareholders will not be able to vote
at the AGM using the virtual meeting facility and
consequently the Board is asking shareholders to
exercise their votes by submitting their proxy in
advance of the AGM and to appoint the Chairman of
the AGM as their proxy with their voting instructions.
Although we will not have the opportunity to meet
with shareholders in person at our AGM, we are
very keen to engage with all shareholders and invite
them to submit questions prior to the event and at
the event. More details of our AGM are set out in the
Notice of Meeting. I would be delighted to answer
any questions that shareholders may have.
I do hope that in 2023 we will be able to meet face-to-
face once again.
Andrew Brode | CHAIRMAN
20 December 2021
GOVERNANCE
RWS — Annual Report 2021
73
Board of Directors
As at 30 September 2021 the Board comprised the Chairman, Andrew Brode, two Executive
Directors, Ian El-Mokadem and Desmond Glass, and four Non-Executive Directors, Lara
Boro, as Senior Independent Non-Executive Director, David Clayton, Frances Earl and
Gordon Stuart. 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. 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.
LARA BORO
Senior Independent
Non-Executive Director
Lara was appointed to the Board of Directors on 20
September 2017. She is a Member of the Remuneration
Committee. Lara was appointed the Senior
Independent Director after the 2021 AGM.
Lara is currently Chief Executive of The Economist
Group. Prior to that Lara was CEO of Informa Plc’s
Intelligence division.
IAN EL-MOKADEM
Chief Executive Officer
Ian was appointed as CEO on 25 July 2021 and to the
Board of Directors on 3 August 2021, having joined
RWS as CEO Designate on 19 July 2021. Previously
Ian was CEO of V.Group, the world’s leading ship
management and marine support services business,
where he oversaw a significant digital transformation
programme. Prior to that, he was CEO of Exova Group,
the global materials testing and calibration services
provider, which he steered through its IPO in 2014 and
where he grew revenues and profitability substantially,
both organically and through a large number of
acquisitions. Ian's earlier roles included the position
of Managing Director, UK and Ireland, at Compass
Group between 2006 and 2010, where he drove the
turnaround of a division with revenues of c£1.8 billion
and c65,000 people. Ian is also a Non-Executive
Director of Serco Group plc and a Director at Roegate
Consulting Limited.
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 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.
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.
74
RWS — Annual Report 2021
GOVERNANCE
Board of Directors
Andrew Brode
Chairman
Ian El-Mokadem
Desmond Glass
Lara Boro
David Clayton
Frances Earl
Gordon Stuart
Audit Committee
Gordon Stuart
Committee Chair
David Clayton
Frances Earl
Remuneration Committee
Frances Earl
Committee Chair
Lara Boro
David Clayton
Gordon Stuart
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.
Following the acquisition of
SDL plc on 4 November 2020,
Elisabeth Lucas and Tomáš Kratochvíl
resigned as directors of RWS and David
Clayton, Frances Earl and Gordon Stuart
joined the Board.
Elisabeth Lucas was appointed a Non-Executive
Director on 11 November 2003 and was Chair of the
Remuneration Committee and Member of the Audit
Committee. Elisabeth joined RWS Group in 1977 and
was Managing Director of the Translations division from
1992 and CEO from 1995 to 2011.
Tomáš Kratochvíl was appointed a Non-Executive
Director on 28 March 2018 and was a Member of the
Remuneration Committee and was the former CEO of
Moravia, acquired by RWS in November 2017.
David Shrimpton did not seek re-election at the Annual
General Meeting in February 2021 having completed
more than ten years on the Board. David was appointed
a Non-Executive Director on 1 January 2010 and was
Chair of the Audit Committee and Member of the
Remuneration Committee
Richard Thompson left RWS on 25 July 2021. Richard
Thompson was appointed CEO on 31 March 2017
having joined RWS on 28 November 2012 as CFO and
Company Secretary.
We thank them for their contributions to RWS.
GOVERNANCE
RWS — Annual Report 2021
75
Corporate Governance
Report
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
THE BOARD
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 7,600 employees across 36
countries and over 80 offices globally, RWS also makes
significant tax payments in respect of payroll taxes,
value-added taxes and business/premises taxes.
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 five Non-Executive Directors until the 2021 AGM
when David Shrimpton stepped down. The Executive
Directors have direct responsibility for business
ANTONINA GRIN | RUSSIAN FEDERATION
76
RWS — Annual Report 2021
GOVERNANCE
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 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 74 and 75.
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 70.
The CEO, Ian El-Mokadem, provides leadership and
management to the Group and its Executive 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 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 members of the Executive Team 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. It is our intention to appoint a separate
Group General Counsel and Company Secretary in FY22.
BOARD AND COMMITTEE
COMPOSITION
1 CHAIRMAN
1
2 EXECUTIVE DIRECTORS
2
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.
The Board and the Committees have written terms
of reference setting out the duties, authority and
reporting responsibilities.
The terms of reference are kept under review to
ensure they remain appropriate and reflect any
changes in legislation, regulation or best practice.
The terms of reference are available on our website.
AUDIT COMMITTEE
The Audit Committee monitors the integrity of the
financial statements of the Company including but
not limited to its annual and half-yearly reports,
preliminary announcement of, and any other
formal announcements relating to, its financial
performance, and reviews and reports to the
Board on significant financial reporting issues
and judgements which those statements contain
having regard to matters communicated to it by
the auditor.
REMUNERATION COMMITTEE
The Remuneration Committee is responsible for
setting the remuneration policy for all Executive
Directors and the Company’s Chair, including
pension rights and any compensation payments.
The Remuneration Committee also recommends
and monitors the level and structure of
remuneration for the Executive Team.
GOVERNANCE
RWS — Annual Report 2021
77
Corporate Governance Report (continued)
BOARD COMMITMENTS
KEY BOARD ACTIONS DURING THE YEAR
The Board held five 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 Executive
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 SDL Ltd and
Horn & Uchida Patent Translation, Ltd
> approved formal integration plans and related
synergy targets
> approved the appointment of the new Senior Non-
Executive Director
> reviewed and approved the proposed budget and
business plan for fiscal year 2022
> reviewed ESG initiatives across the Group
> published an updated gender pay gap report
> reviewed continued compliance with the QCA
Corporate Governance Code
> conducted bi-annual review and approval of Group
risk register by the Board
> in response to the Covid-19 pandemic, performed
financial and operational scenario planning analysis
to ensure the business’s continued resilience to
significant unplanned changes in demand
> interviewed and appointed a new CEO
> following the appointment of the new CEO, initiated
a refresh of the company's strategy and long-term
plans
> undertook an informal review of the Board
> following a formal retendering process, appointed
new company auditors
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.
GOVERNANCE FRAMEWORK
Clients
Suppliers
Shareholders
Employees
Community
Strategy
Performance
Governance
Controls
Risk Management
Accountable to
THE BOARD
Responsible for
78
RWS — Annual Report 2021
GOVERNANCE
MEMBERS AND ATTENDANCE
Board meetings
Eligible to attend
Attended
Andrew Brode
Ian El-Mokadem
Desmond Glass
Lara Boro
David Clayton
Frances Earl
Gordon Stuart
Richard Thompson
David Shrimpton
5
0
5
5
5
5
5
4
2
5
0
5
5
5
5
5
4
2
Committee meetings -
AUDIT
Eligible to attend
Attended
Gordon Stuart
David Clayton
Frances Earl
David Shrimpton
3
3
3
1
3
3
3
1
Committee meetings -
REMUNERATION
Eligible to attend
Attended
Frances Earl
Lara Boro
David Clayton
Gordon Stuart
Andrew Brode
David Shrimpton
Elisabeth Lucas
Tomáš Kratochvíl
6
6
6
6
5
5
0
0
6
6
6
6
5
3
0
0
As most of the members of the Board are relatively
new, a decision was taken to conduct the Board review
informally in FY21 and that a formal independent Board
review will be undertaken in FY22. The last review formal
independent 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 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 Executive Team.
APPOINTMENT AND RE-ELECTION OF
DIRECTORS
The Company’s Annual General Meeting (AGM) will be
held as a hybrid meeting on 23 February 2022.
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 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.
The Audit Committee is responsible for setting the
risk management framework and reviews this on an
annual basis.
GOVERNANCE
RWS — Annual Report 2021
79
Corporate Governance Report (continued)
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 the following pages include details of our compliance, which
is reviewed annually in line with the requirements of the QCA Code.
Deliver
Growth
PEOPLE
1
Principle
Compliance
Establish a strategy
and business
model which
promote long-
term value for
shareholders
>
>
The Group strategy is set out on pages 21 to 22 in the Strategic Report section of our
Annual Report.
The strategy for RWS is agreed by the Board, and progress towards delivering against
objectives is tracked and debated by the Board and the Executive Team.
> During FY21, the Board and Executive Team held several meetings specifically focussing on
the Group’s strategic plan.
2
Seek to understand
and meet
shareholders’
needs and
expectations
> Our objective is to continue to increase shareholder value in the medium- to long-term by
growing the Group’s revenue, profit before tax and earnings per share.
> 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 driving 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.
>
See Strategic Framework on page 21 and the Business Model on page 15.
Shareholders
>
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 primary forum to meet and communicate with our wider
shareholder base.
>
Shareholder feedback is received from our brokers and all shareholder feedback is
distributed to the Board.
> Decision-making at the Board takes into consideration how its decisions would
impact our shareholders.
>
See page 98 of the Directors’ Report.
3
Take into
account wider
stakeholder
and social
responsibilities
and their
implications
for long-term
success
>
The Board has identified the main stakeholders in the business as its
shareholders, employees, clients, suppliers 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 sustainability seriously and aim to incorporate best practice
in all our initiatives and actions.
>
See pages 24, 25, 68 and 69 of the Strategic Report and pages 70 to 73 of the
Corporate Governance Report.
80
RWS — Annual Report 2021
GOVERNANCE
Deliver
Growth
Principle
Compliance
Employees
> Regular online meetings take place to share strategy, keep employees updated and
seek feedback.
>
The Group conducts an annual employee engagement survey with the latest level of
engagement (FY21) at 80% (see pages 34 to 35).
Clients
> We are proactive in building long-term relationships with our clients and have a
proven track record in doing so. We work closely with them to understand their
requirements and put teams in place that meet their specific needs (see page 47).
Suppliers
> We believe it is important to have two-way communication with our suppliers.
Fostering better relationships, keeping our suppliers updated on our requirements
as well as assisting with efficiencies, quality, insight, costs and reliability (see page
48).
Community
>
The Group supports local organisations through its community initiatives and
donations this year amounted to £271,230 (see pages 40 to 46).
> We renamed the SDL Foundation to become the RWS Foundation and we are in the
process of consolidating all of our philanthropic initiatives, as well as reviewing the
Foundation's Deed and purpose (see pages 45 and 46).
4
Embed effective
risk management,
considering both
opportunities and
threats, throughout
the organisation
> RWS considers a risk management framework a vital tool to ensure existing and
potential risks (including climate-related 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 and Executive Team members are
also empowered to manage risk effectively.
>
In 2021, we became a signatory to the Task Force on Climate-related Financial
Disclosures (TCFD) and have started working towards aligning ourselves and
adopting the TCFD ahead of it becoming mandatory (see page 64).
>
See Principal Risks and Uncertainties on pages 60 to 63.
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
5
Maintain the
Board as a
well-functioning,
balanced team led
by the Chairman
>
The Board is led by our Chairman, Andrew Brode.
> During the reporting period, our Board consisted of our Chairman, CEO, CFO as well
as five Non-Executive Directors (Elisabeth Lucas and Tomáš Kratochvíl stood down
on 4 November 2020 and David Clayton, Frances Earl, and Gordon Stuart were
appointed on 4 November 2020) until our Senior Non-Executive Director (David
Shrimpton) stood down at our 2021 AGM, and Lara Boro was appointed our Senior
Non-Executive Director.
> 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 74 to 75, and 76 to 79 of the Corporate Governance
Report.
GOVERNANCE
RWS — Annual Report 2021
81
Corporate Governance Report (continued)
Deliver
Growth
Principle
Compliance
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
>
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 Board of Directors pages 74 and 75 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.
> An individual evaluation was undertaken which took the form of questionnaires and
a summary of the results and feedback will be presented at a Board meeting. The
results will be discussed and actions taken to improve in areas where required.
> A formal independent review will be undertaken in FY22.
>
The Remuneration Committee evaluates the Executive Directors' performance
alongside remuneration and reward.
> With regards to financial performance, the Audit Committee meets with the Auditors
to review the plan for the year-end audit, followed by a further meeting to review the
results of the audit.
Promote a
corporate culture
that is based on
ethical values and
behaviours
>
>
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 Sustainability Policy encompasses the way we
do business, our people, our clients, our community and the environment around us.
> Our commitment to corporate sustainability is underpinned by our core ethical values
and behaviours, and aims to deliver continual improvement in our economic, social
and environmental performance.
Maintain
governance
structures and
processes that
are fit for purpose
and support good
decision making by
the Board
>
>
>
>
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. The Group website
describes the terms of reference for the Committees.
In addition, various members of the Group’s Executive Team are invited to certain
Board meetings to report on their particular areas of responsibility.
>
See pages 76 to 79 of the Corporate Governance Report.
BUILD TRUST
10
Communicate
how the Company
is governed and
is performing
by maintaining
a dialogue with
shareholders and
other relevant
stakeholders
> We pride ourselves on having open communication with a range of stakeholders.
> Communications with shareholders are explained in Principle 2.
> Other communication includes investor roadshows and conferences, meetings with
our brokers, prospective investors, employee briefings and one-on-one meetings
with clients and suppliers, and the Annual Report.
>
>
The work of the subcommittees is described in the Governance section of the Annual
Report on pages 76 to 77.
The website includes historical announcements, copies of the Annual Report and
copies of presentations made at Interim and Full Year presentations.
82
RWS — Annual Report 2021
GOVERNANCE
CAMILLE METCALFE | UNITED KINGDOM
GOVERNANCE
RWS — Annual Report 2021
83
Audit Committee Report
Dear Shareholder
The Audit Committee continues to support the business in achieving its business
and strategic objectives, see pages 21 to 22 of this Annual Report. During 2021, the
Committee has supported the Board on a number of significant governance matters
relating to financial reporting, internal control and risk management, the tender and
appointment of a new external auditor and the continuing integration of SDL.
The Committee monitored the Group’s risk exposures in relation to changes in the
external regulatory and political environment, including the impact of Covid-19 on
the Group’s risk management activities. Further information on risk can be found on
pages 60 to 63.
Terms of reference
The Committee undertakes its duties in accordance with
its terms of reference which are regularly reviewed to
ensure that they remain fit for purpose and in line with
best practice guidelines. The terms of reference are
available on the Company’s website www.rws.com.
As part of the annual Board evaluation, a formal internal
review was undertaken of the Board and its commit-
tees in December 2021. The review confirmed that the
Audit Committee is working effectively. An independent
review will be undertaken in FY22.
KEY PURPOSE OF THE AUDIT
COMMITTEE: RESPONSIBILITIES AND
ACTIVITIES
The Committee’s responsibility is to ensure that
financial information published by the
Group properly presents its activities
to stakeholders in a way that is fair,
balanced and understandable, as
well as overseeing the effective
delivery of both external and
internal audit services.
MEMBERSHIP AND ATTENDANCE
Committee members are independent Non-Executive
Directors of the Company, with diverse skills and
experiences. The Committee as a whole has competence
relevant to the sector and David Clayton and I have recent
and relevant financial experience, as required by the
provisions of the QCA Code.
All Committee members have significant current and past
executive experience in various industries. This range and
depth of financial and commercial experience enables
them to deal effectively with the matters they are required
to address and to challenge management when necessary.
The Company Secretary is secretary to the Committee.
The Board evaluates the membership of the Committee on
an annual basis. Since the end of the year, the Committee
has met 3 times and all members attended.
Only the members of the Committee have the right to
attend Committee meetings, however the CFO, Chairman,
CEO, senior representatives of the external auditor, other
external advisors and other senior management attend
meetings by invitation. If the presence of any attendee is
inappropriate or might compromise discussion, then the
Committee would either not invite the attendee concerned
or request that they not attend that part of the meeting
Separate sessions with external auditors are held in the
absence of management.
GOVERNANCE AND COMPLIANCE
The Audit Committee Chair, together with the other
members of the Audit Committee regularly meet with
the key people involved in the Company’s governance,
including the Chairman, the CEO, the CFO, the external
auditor’s lead partner and other senior management.
84
RWS — Annual Report 2021
GOVERNANCE
Gordon Stuart | AUDIT COMMITTEE
The Committee also supports the Board in meeting its
responsibilities in respect of overseeing the Group’s
internal control systems, business risk management and
related compliance issues.
The Committee operates on the basis of open and
challenging dialogue with management and with the
external auditors. The Committee is responsible for
reporting on its responsibilities to the Board. The Group
does not have an internal audit function and the Audit
Committee reviews this decision on an annual basis.
Fair, balanced and understandable
The Committee assessed whether the Annual Report,
taken as a whole, is fair, balanced and understandable
and provides the information necessary for
shareholders to assess the Company’s position and
performance, business model and strategy. The
Committee ensures that all contributors and senior
management are fully aware of the requirements
and their responsibilities. This included the use and
disclosure of alternative performance measures
and the financial reporting responsibilities of the
Directors under s172 of the Companies Act 2006 to
promote the success of the Company for the benefit
of its members as well as considering the interests of
other stakeholders which will have an impact on the
Company’s long-term success.
During 2021, the Committee met three times (including
the audit tender presentation meeting) and full details
of matters discussed are covered later in this report.
This includes an annual calendar of standing items
such as:
> The review of the annual and half-yearly financial
statements to ensure these properly present the
Group’s activities in accordance with accounting
standards, law, regulations and market practice.
In addition to the above, particular areas on which the
Committee focused included:
> The external audit tender process and the
subsequent auditor transition plan.
> Principal risks and uncertainties and the
effectiveness of the risk management process.
> Accounting judgements and estimates and
developments in financial reporting.
Committee activity in 2021
7 June
2021
27 September
2021
7 December
2021
Statutory and financial
reporting
Full year results
Interim results
External audit
External audit plan
External audit reports
External audit effectiveness
and independence
Risk and control
Risk register
Other matters
Audit tender presentations
and external auditor
selection and transition
-
x
-
-
-
-
x
-
-
x
-
-
x
x
x
-
-
x
x
-
-
SIGNIFICANT JUDGEMENTS
Identification of the issues deemed to be significant
takes place following open, frank and challenging
discussion between the Audit Committee members,
with input from the CFO, the external auditor, the Group
Financial Controller and other relevant personnel.
The Audit Committee considered the following
significant matters during the course of the financial
year. In all cases, papers were presented to the Audit
Committee by management, setting out relevant facts,
material accounting estimates and the judgements
associated with them. The Committee satisfied
itself that the disclosures in relation to accounting
judgements and key sources of estimation were
appropriate and obtained, from the external auditor,
an independent view of the issues and risks. The
Committee is satisfied that the judgements made are
reasonable and appropriate disclosures have been
included in the accounts.
GOVERNANCE
RWS — Annual Report 2021
85
Audit Committee Report (continued)
Acquisition accounting for SDL acquisition
including the valuation of goodwill and
intangible assets
The Group acquired SDL plc in an all-share combination
on 4 November 2020. Acquired businesses give rise to
material assets and liabilities at the point of acquisition
that are based on estimates and judgements about
future performance. The provisional recognition of
goodwill, intangible assets, other assets and liabilities
and estimates of the fair value of consideration
transferred were based on a number of assumptions.
Significant judgement is involved in assessing the
relevant forecast, and selecting the appropriate
discount rates.
Management engaged with an external third party to
provide assistance in the determination of the valuation
of goodwill and intangible assets. The Committee has
reviewed the acquisition accounting calculations and
underlying estimates of this work, and understood the
key drivers and financial information used in their work.
The Committee considered the work management
performed on the opening balance sheet and
provisional purchase price allocations and concurred
with management’s recommendation.
Carrying value of goodwill
The Group considers the carrying value of goodwill on
at least an annual basis or when there is an indicator
of impairment. Management prepared a paper which
concluded that no indicators exist and that sufficient
headroom exists within the Group’s value in use models.
The Audit Committee reviewed this paper which included
challenging the key assumptions: revenue growth rates,
forecasting accuracy, cash flow projections and discount
rates. The Group has not recognised any goodwill
impairment in the current or prior year. See note 12 to the
financial statements for further information.
Revenue recognition
The Audit Committee has continued to receive and review
reports on the standard processes in place around
revenue recognition. In particular this includes, the
treatment of material licence contracts signed during
the year and recognition of revenue as performance
obligations are achieved. The Committee also received
reports from the external auditor on its findings where
accounting for sales arrangements is complex.
The Committee have reviewed management’s paper
and reviewed the Group’s policies for recognising
revenue on multiple element arrangements and the
determination of standalone selling prices.
The Committee discussed and challenged
management’s papers satisfying itself that a consistent
approach had been applied to determine revenue
recognised in 2021. The Audit Committee has reviewed
the disclosures provided in relation to revenue
recognition policy and to the significant estimates and
judgements policy on note 2.
We considered the exercise undertaken by management
to align and amend revenue recognition policies
across the group as well as the correction to related
prior period revenue disclosures. Further to this, we
reviewed management assessment of the quantification
of Work in Progress at the year end and concur with
the conclusions reached in respect of the limitations
in the underlying systems which has meant that an
adjustment to the prior period is impractical, noting
such amounts would not be material.
Uncertain tax provisions
The Group recognises a provision for uncertain tax
positions within the financial statements.
The Committee has reviewed management’s
consideration of uncertain tax provisions, and
understood the involvement of experts in the
preparation and determination of these provisions.
The Committee has reviewed movements in the
key uncertain tax position provisions that have
been recognised, and understood the basis for the
recognition of any new provisions made during the year.
The Committee discussed and challenged
management’s papers satisfying itself that a consistent
approach had been applied to the identification and
recognition of provisions in respect of uncertain tax
positions recognised in 2021.
The Committee have reviewed the disclosures provided
in relation to taxation in note 9 the significant estimates
and judgements policy disclosed in note 2.
Going concern
The Committee has reviewed management’s
assessment that the Group has adequate resources to
continue in operational existence for the foreseeable
future, including consideration of the impact of
Covid-19. This includes the Directors’ review of the
current liquidity of the Group, the impact of Covid-19 on
the budgets and forecasts which have been prepared
across a number of scenarios and the impact on the
Group’s banking covenants.
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.
After reviewing the Group’s performance in 2021, along
with budget and forecasts, the Committee endorses the
Directors' reasonable expectation that the Group has
adequate resources to continue in operational existence
for a period of at least 12 months from the date of this
86
RWS — Annual Report 2021
GOVERNANCE
report. Given this expectation they have continued to
adopt the going concern basis in preparing the financial
statements.
Internal control and risk management
The risk management process enables the identification,
assessment and prioritisation of risk through discussions
with executive management. Risks are reviewed by the
Executive Team and other delegated senior leadership
committees to ensure that they continue to remain
relevant. A risk that can seriously affect the performance
or reputation of the Group is termed a principal risk and
is aligned to the Group’s strategic objectives.
Whilst the Audit Committee has delegated authority
for internal control and risk, the Board is ultimately
responsible. The Board has established the level of risk
that is appropriate for the business and acceptable in the
pursuit of the strategic objectives and has therefore set
appropriate policies.
This process ensures that risks are not just the product of
a bottom-up approach but are also examined from a top-
down perspective via an integrated senior management
process, which is closely aligned with the Group’s
strategy, in order to enhance the Group’s approach to
risk generally.
Internal control and risk-related reviews carried out by
the Committee during the year included reviewing the
output from the Group’s risk review process to identify,
evaluate and mitigate risks and considered whether
changes in risk profile were complete and adequately
addressed.
External auditor and independence
The Committee is responsible for assessing the
effectiveness of the external audit process, for
monitoring the independence and objectivity of the
external auditor and for making recommendations to
the Board in relation to the appointment of the external
auditor. The Committee is also responsible for developing
and implementing the Group’s policy on the provision of
non-audit services by the external auditor.
EY was appointed as the Group’s auditor following a
competitive audit tender process. The Committee has
considered EY’s effectiveness, independence, objectivity
and scepticism throughout the audit tender process
and the period since appointment, through its own
observations and interactions with the external auditor.
The Committee meet the external auditor both formally
and informally throughout the year to discuss, amongst
other things, materiality, audit strategy and audit
findings. In accordance with International Standards
on Auditing (UK & Ireland) 260 and Ethical Standard 1
and as a matter of best practice, the external auditor
has confirmed its independence as auditor of the
Company. The Audit Committee assess external auditor
effectiveness through meetings with Management, the
external auditor and a review of the audit completed
subsequent to receipt of the signed audit opinion.
Audit tender
Following the acquisition of SDL and recognising that
PWC had been the Group’s auditor for 8 years, the
Board undertook a competitive external audit tendering
process for the external audit for the year ended 30
September 2021.
The Selection Committee was led by the Chair of the
Audit Committee, and comprised the other members of
the Audit Committee, the CFO and the Group Financial
Controller. The Selection Committee reviewed the FRC
‘Audit Tenders Note on Best Practice’ issued in February
2017 and approached a number of audit firms from
within and outside of the ‘Big 4’ to take part in the audit
tender process.
The Selection Committee reviewed and approved Request
For Proposal documentation and a data pack to be issued
to two participants, which provided detailed information
to support the submission of quality and accurate bids by
participants. Both participants then had the opportunity
to spend time with various management stakeholders to
obtain a more detailed understanding of the Group and
existing management processes and challenges to better
inform their tender submission. These meetings included
time with the CFO, Group Finance, Tax, Treasury, IT and
members of the Audit Committee. The bids submitted
were subject to review by the Selection Committee. Both
firms then met with the Selection Committee to present
their proposals with a question and answer session led
by the members of the Audit Committee present. The
Selection Committee reviewed the tender submissions
and scored them independently based upon the quality
and relevant sector experience of the proposed team,
depth of the team and the wider organisation relevant to
the Group, cultural fit, proposed approach to the transition
plan and wider audit and potential for audit efficiency and
effectiveness. The Selection Committee recommended EY
as the preferred external auditor for the Group.
The Board ratified the decision of the Selection
Committee and EY will be put forward for formal re-
appointment at the AGM on 23 February 2022.
Non-audit services
In order to safeguard the independence and objectivity
of the external auditor, the Committee reviews the nature
and extent of the non-audit services supplied, receiving
reports on the balance of audit to non-audit fees. Pre-
approval is required for any non-audit work from the
Audit Committee Chair. For 2021, the external auditor
has provided £15k of non-audit work for other assurance
related services. Fees paid to EY are set out in note 5 to
the financial statements.
Gordon Stuart | Audit Committee Chair
20 December 2021
GOVERNANCE
RWS — Annual Report 2021
87
Directors’ Remuneration
Report
ANNUAL STATEMENT
Dear Shareholder
I am pleased to introduce the Directors’ Remuneration Report for
FY21 (my first as the Chair of the Remuneration Committee). This
report is divided into three sections, being:
> This Annual Statement, which summarises the work of the
Committee (including details of a recent Policy review),
remuneration outcomes in FY21 and how the Remuneration
Policy will be operated for FY22;
> The Remuneration Policy Report, which summarises the
Company’s Remuneration Policy; and
> The Annual Report on Remuneration, which discloses how the
Remuneration Policy was implemented in the year ended 30
September 2021 and how the Policy will operate for the year
ending 30 September 2022.
Committee members & attendance
Director
Role
Attendance
Frances Earl
Chair from 4 November 2020
Elisabeth Lucas
Chair to 4 November 2020
Gordon Stuart
Member from 4 November 2020
David Clayton
Member from 4 November 2020
Lara Boro
Member
David Shrimpton
Member to 10 February 2021
Tomáš Kratochvíl
Member to 4 November 2020
Andrew Brode
Member to 10 February 2021
6 out of 6
0 out of 0
6 out of 6
6 out of 6
6 out of 6
3 out of 5
0 out of 0
5 out of 5
Additional attendees, as invited: Andrew Brode (following stepping down from
the Committee on 10 February 2021), FIT Remuneration Consultants LLP (the
Committee’s independent advisor).
Frances Earl
CHAIR OF THE REMUNERATION COMMITTEE
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RWS — Annual Report 2021
GOVERNANCE
Committee responsibilities
The Remuneration Committee is primarily responsible
for reviewing the performance of the Executive
Directors and determining their terms and conditions
of service and their remuneration. The Committee also
determines the remuneration of the Chairman and the
members of the Executive Team. The Committee meets
at least once a year. In FY21, it met six times.
Activities during the year
> Reviewed the FY20 Directors’ Remuneration Report
prior to its approval by the Board
> Reviewed the Remuneration Policy and its operation
for the Executive Directors and Executive Team
in light of FTSE 250 best and market practice. As
explained opposite and within the main body of this
report, this resulted in adjustments to Executive
Director salaries, a formalisation of the annual
bonus plan and the introduction of a new Long Term
Incentive Plan (LTIP)
> Reviewed performance against the FY20 annual
bonus plan targets and resulting awards and agreed
the metrics and targets for the FY21 bonus plan
> Agreed the termination arrangements for Richard
Thompson and joining arrangements for Ian El-
Mokadem
Advisors to the Committee
FIT Remuneration Consultants LLP ("FIT") was
appointed by the Remuneration Committee during
FY21 to provide it with independent advice as and
when required in respect of remuneration quantum
and structure and developments in governance and
best practice more generally. FIT is a member and
signatory of the Remuneration Consultants Group
and voluntarily operates under the Code of Conduct
in relation to executive remuneration consulting
in the UK, details of which can be found at www.
remunerationconsultantsgroup.com. FIT provides no
other services to the Company.
Remuneration Policy Review -
Remuneration Committee Conclusions
Following the completion of the SDL acquisition in
November 2020, and noting that a number of our
shareholders voted against the resolution to approve
the Directors’ Remuneration Report for the year ended
30 September 2020 at the February 2021 AGM, the
Remuneration Committee carried out a detailed review of
the Remuneration Policy during FY21. The Committee’s
conclusions from the Policy review were as follows:
> Base salary levels should be right sized for the size
and complexity of the business. As such, Richard
Thompson’s base salary was increased from
£450,000 to £600,000 and Des Glass’ base salary
was increased from £300,000 to £375,000. While
the Committee is aware of the sensitivities of above
workforce salary increases, and noting the CFO’s
salary was increased to £300,000 in 2019/2020
before the SDL acquisition, the Committee
concluded that the salary increases, which were
aimed at broadly aligning salaries to FTSE 250
median levels, were appropriate given the size and
nature of both the roles. Although the Committee
notes that best practice would have been to phase
the increases over two or three years, this was
not considered appropriate for RWS given the
Committee’s belief that:
> market level salaries should be paid to
the executives now for the roles they are
undertaking, particularly noting that before the
salaries were adjusted, they were lower than
those of SDL’s CEO and CFO; and
> rather than increasing fixed pay over time, the
performance targets attached to the annual
bonus and new LTIP should measure how
successful the SDL acquisition has been (given
that stretching annual and long-term targets
have been set for the combined businesses going
forward).
> Pension provision, at 5% of salary, should remain
unchanged given that it is aligned with the
workforce.
> Annual bonus provision for the year ending 30
September 2021 should be formalised and market
aligned and the ability to pay Executive Directors
discretionary bonuses should be removed. Bonus
potential is capped at 150% of salary for the CEO
role and 100% of salary for the CFO role (which
was increased to 125% of salary for FY22 in line
with market). For FY21, it was agreed that 40% of
the annual bonus would be based on sliding scale
profit targets, 30% would be based on sliding
scale revenue targets and 30% would be based
on personal and strategic targets. Any bonus
award greater than 100% of salary will normally be
deferred into shares for three years.
GOVERNANCE
RWS — Annual Report 2021
89
Directors' Remuneration Report (continued)
Implementing the Remuneration Policy
for FY22
In respect of the implementation of the Remuneration
Policy for FY22:
> The CFO's base salary was increased by 2.8% from 1
October 2021 in line with the general workforce. The
CEO did not receive a salary review given his recent
appointment;
> No changes will be made to benefits or pension
provision;
> Annual bonus will be capped at 150% of base salary
for the CEO and 125% of salary for the CFO with 40%
of the annual bonus based on sliding scale profit
targets, 35% based on sliding scale revenue targets
and 25% based on personal, strategic and ESG-
related targets. Any bonus award greater than 100%
of salary will normally be deferred into shares for
three years;
> LTIP awards are expected to be granted during FY22
to the CEO and CFO over shares equal to 200% and
175% of salary respectively. Performance targets
will continue to be based on sliding scale EPS growth
and Total Shareholder Return;
> Shareholding guidelines of 200% of salary for the
CEO and 175% of salary for the CFO will continue to
apply; and
> No changes will be made to fees for the Chairman
and Non-Executive Directors.
Frances Earl | Chair of the Remuneration Committee,
20 December 2021
> Long-term incentive provision should be updated
and aligned to best and market practice. As such,
RWS will no longer grant market value share options
with annual performance targets and has instead
adopted a more conventional LTIP whereby awards
will be granted annually, based on three-year
performance periods and vesting periods, with a
two-year post vesting holding period. Award levels
have been set at 200% of salary for the CEO role
and 175% of salary for the CFO role, with vesting
dependent on stretching Adjusted EPS growth
targets and relative Total Shareholder Return
performance measured against the constituents of
the FTSE 250 (excluding Investment Trusts). The first
such awards under the new Policy were granted in
January 2021 (instead of the normal grant of market
value options).
> Shareholding guidelines should be introduced at
200% of salary for the CEO role, 175% of salary
for the CFO role and 100% of salary for the tier of
management directly below the Board.
> This Directors’ Remuneration Report for the year
ended 30 September 2021 should be significantly
enhanced in respect of the level of disclosures
presented.
Performance and Reward for FY21
Following a review of performance in respect of the
FY21 annual bonus, the Committee determined that the
Group's profit for the year ended 30 September 2021
was between target and maximum while the Group's
revenue was just above target.
After assessing performance against the personal and
strategic targets, this resulted in a bonus of 76% of the
maximum for Richard Thompson (pro rata) and 67% of
the maximum for Des Glass. Ian El-Mokadem was not
eligible for an annual bonus in FY21.
No share awards vested during the year ended 30
September 2021 and no share awards were exercised
- i.e. no gains were made on the exercise of share
awards in the year ended 30 September 2021 (and no
gains were made on the exercise of share awards in
the year ended 30 September 2020). However, while
the 2019 and 2020 ESOP awards do not vest until the
third anniversary of the respective grant dates, the
Adjusted EPS performance target for the year ended
30 September 2021 for the final tranche of the 2019
ESOP awards and the second tranche of the 2020 ESOP
awards (23 pence for both tranches) was tested and as a
result, the relevant parts of each award will vest in full.
90
RWS — Annual Report 2021
GOVERNANCE
REMUNERATION POLICY REPORT
This section sets out the Directors’ Remuneration Policy (“Policy”).
In order to deliver the Group’s strategy, the primary objectives of our Policy are:
> to have a transparent, simple and effective 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; and
> 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.
Summary of Directors’ Remuneration Policy
Component
Base salary
Purpose and link to
strategy
To provide a competitive base
salary to attract, motivate
and retain directors with the
experience and capabilities to
achieve the strategic aims.
Benefits
To provide market-competitive
benefits package.
Pension
Annual
bonus
LTIP
To provide an appropriate level
of retirement benefit.
To reward performance
against annual targets which
support the strategic direction
of Group.
To drive and reward the
achievement of longer term
objectives, support retention
and promote share ownership
for Executive Directors.
Operation
Maximum
Performance
Reviewed annually after considering
pay levels at comparably sized listed
companies and sector peers; the
performance, role and responsibility of
each Director; the economic climate,
market conditions and the Company’s
performance; and the level of pay across
the Group as a whole.
Offered in line with market practice, and
may include a car allowance, private
medical, income protection & death in
service insurance.
n/a
n/a
n/a
n/a
Workforce aligned pension provision.
5% of base salary
Not applicable
150% of salary
200% of salary
Awards are based on annual
performance and are normally payable
in cash up to 100% of salary. Bonus in
excess of 100% of salary will be deferred
into shares for three years.
Conditional shares and/or nil cost or
nominal cost share options. Vesting is
normally subject to the achievement of
challenging performance conditions,
normally over a period of three years.
Dividend equivalents may be awarded to
the extent awards vest. Awards may be
subject to malus/clawback provisions at
the discretion of the Committee.
Sliding scale
financial and/or
personal/ESG/
strategic targets
Performance
metrics will
be linked to
financial and/
or share price
and/or strategic
and/or ESG
performance
Not applicable
Shareholding
guidelines
To promote share ownership
for Executive Directors.
Executive Directors are expected to build
a shareholding in the Group over time
by retaining the net of tax LTIP awards
which vest.
200% of salary for
the CEO, 175% of
salary for the CFO
Non-
Executive
Directors
The Committee determines
the Chairman’s fee and
fees for the Non-Executive
Directors are agreed by the
Chairman and Chief Executive.
Fees are reviewed annually taking into
account the level of responsibility,
relevant experience. Fees may include a
basic fee and additional fees for further
responsibilities. Fees are paid in cash.
n/a
n/a
GOVERNANCE
RWS — Annual Report 2021
91
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 CFO continue unless and until terminated by either party giving at
least six months’ notice while the service contract of the CEO continues unless and until terminated by either
the individual or the Company giving at least 12 months' notice. The date of the Chairman’s service contract is
30 October 2003, and the service contracts of Ian El-Mokadem and Desmond Glass are dated 28 June 2021 and 6
November 2017 respectively.
ANNUAL REPORT ON REMUNERATION
Implementation of the Policy for FY21
During the year, the Directors received the following remuneration and pension contributions:
Director
Andrew Brode
Richard Thompson1
Ian El-Mokadem2
Des Glass
Lara Boro
Frances Earl3
Gordon Stuart3
David Clayton3
Former Director
Elisabeth Lucas4
David Shrimpton5
Tomáš Kratochvíl4
Total
Salary
or fees
£000
Taxable
benefits
£000
Pension
contributions
£000
Annual
bonus
£000
263
489
129
375
50
45
45
45
10
17
4
1,472
2
-
-
2
-
-
-
-
-
-
-
4
-
27
-
19
-
-
-
-
-
-
-
-
567
-
250
-
-
-
-
-
-
-
FY21
Total
£000
265
1,083
129
646
50
45
45
45
10
17
4
FY20
Total
£000
265
573
-
373
50
-
-
-
55
50
50
46
817
2,339
1,416
1. To 25 July 2021 2. From 3 August 2021 3. From 4 November 2020 4. to 4 November 2020 5. to 10 February 2021
Annual Bonus for FY21
Details of the annual bonus awards to Executive Directors for the year ended 30 September 2021 are as follows:
Financial Targets (70% of bonus)
Below Target
On-Target
Maximum
Actual
% of max payable
% of max payable
PBT (40%)
<£111.0m
£111.0m
£122.1m
£116.4m
74.3%
Total Financial
Revenue (30%)
<£692.4m
£692.4m
£727.0m
£694.5m
53.0%
65%
92
RWS — Annual Report 2021
GOVERNANCE
Personal Objectives
(30% of bonus)
Richard Thompson
Des Glass
Objectives
Committee Assessment
% of max payable
Complete a detailed review of RWS/
SDL operations and agree the target
operating structure, progress RWS’s
ESG agenda, review the RWS and
SDL employee experience including
engagement levels, diversity and
retention, progress SDL integration
Integrate the SDL finance, tax and
treasury functions, review and integrate
transfer pricing and hedging policies,
improve year on year cash conversion,
manage new auditor appointment
process, progress SDL integration
Following a review of
Richard Thompson's
performance post year
end, and noting that
he served c10 months
out of the year, the
Committee determined
that all of the objectives
were met in full.
The Committee assessed
the personal objectives
for Des Glass as being
partially achieved.
100%
70%
Based on the above, the annual bonus awards earned for the year ended 30 September 2021 were as follows:
Richard Thompson
(150% of salary maximum)
Des Glass
(100% of salary maximum)
Financial
Personal
% of max
65%
100%
Total
76%
£
£342,301
£225,000
£567,301*
% of max
65%
70%
67%
£
£171,151
£78,750
£249,901
* Reduced to 10/12ths for time pro-rating given Richard Thompson stepped down from the Board on 25 July 2021.
Share awards granted in the year
The following LTIP awards were granted to the Executive Directors in January 2021:
Richard Thompson
Des Glass
Basis of award
Number of shares under award
200% of salary
175% of salary
222,469
121,662
The awards have an exercise price of one penny per share and become exercisable after three years from the date
of grant, subject to continued employment and the Company’s earnings per share and Total Shareholder Return
(TSR) as follows:
50% of awards
Absolute Adjusted EPS targets for the year ending 30 September 2023:
No vesting: 0% of this part of an award vests for 2023 Adjusted EPS of below 27.5 pence
Threshold vesting: 25% of this part of an award vests for 2023 Adjusted EPS of 27.5 pence,
increasing pro-rata to
Maximum vesting: 100% of this part of an award vests for 2023 Adjusted EPS of 32 pence
50% of awards
Relative TSR commencing on the Grant Date and ending on 30 September 2023 as measured against
the constituents of the FTSE 250 (excluding investment trusts):
No vesting: 0% of this part of an award vests for TSR below median
Threshold vesting: 25% of this part of an award vests for median TSR increasing pro-rata to
Maximum vesting: 100% of this part of an award vests for upper quartile TSR
GOVERNANCE
RWS — Annual Report 2021
93
Directors' Remuneration Report (continued)
Directors’ Interest in Shares
The interests of the Directors as at 30 September 2021 (including the interests of their families and related trusts),
all of which were beneficial, in the ordinary shares of the Company were:
Interests of Directors in
ordinary shares
Andrew Brode
Richard Thompson
Ian El-Mokadem
Elisabeth Lucas
Lara Boro
Gordon Stuart
David Clayton
Ordinary shares of
1 pence
90,174,060
282,467*
60,000
50,000*
2,600
5,085
164,035
*On leaving the business on 25/07/2021 and at cessation 04/11/2020 respectively
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 as follows:
Award
Type
1 October
2020
Granted
Lapsed
Exercised
30 Sept
2021
Exercise
Price
First date
exercisable
Last date
exercisable
Richard Thompson
Des Glass
ESOP
ESOP
LTIP
ESOP
ESOP
LTIP
320,798
574,441
-
-
(320,798)
(574,441)
-
222,469
(222,469)
115,640
246,189
-
-
-
121,662
-
-
-
-
-
-
-
-
-
-
-
-
601p
13.05.22
13.05.29
615p
22.01.23
22.01.30
1p
22.01.24
22.01.31
115,640
601p
13.05.22
13.05.29
246,189
615p
22.01.23
22.01.30
121,662
1p
22.01.24
22.01.31
ESOP = Employee Share Option Plan (2019 and 2020 ESOP awards) LTIP = Long Term Incentive Plan Awards
The market price of the Company’s shares at 30 September 2021 was 626.5 pence and the highest and lowest price
in the year ended 30 September 2021 was 523 and 696.5 pence respectively.
Share awards vesting/exercised in the year
No share awards vested during the year ended 30 September 2021 and no share awards were exercised - i.e. no
gains were made on the exercise of share awards in the year ended 30 September 2021 (and no gains were made on
the exercise of share awards in the year ended 30 September 2020).
However, while the 2019 and 2020 ESOP awards do not vest until the third anniversary of the respective grant dates,
the Adjusted EPS performance target for the year ended 30 September 2021 for the final tranche of the 2019 ESOP
awards and the second tranche of the 2020 ESOP awards (23 pence for both tranches) was tested and as a result,
the relevant parts of each award will vest in full.
94
RWS — Annual Report 2021
GOVERNANCE
Board Changes
As announced on 8 June 2021, Richard Thompson
stepped down from the Board on 25 July 2021. Richard
received salary, benefits and pension provision up to the
date of cessation and was eligible to receive a pro-rated
annual bonus for FY21 at the normal payment date
(£567,301). While his outstanding market value share
option awards lapsed at cessation, reflecting almost
nine years of service, Richard received a payment of
£200,000 in respect of his outstanding LTIP awards
(being the estimated value after time pro-rating and an
assessment of performance was applied as per good
leaver treatment). This amount was in addition to those
shown in the remuneration table on page 92. No other
payments in respect of Richard’s cessation were made
or are payable.
Ian El-Mokadem was appointed CEO designate on
19 July 2021 and became CEO on 25 July 2021. He
was appointed to the Board on 3 August 2021. His
remuneration, which is consistent with the Group’s
recently reviewed Directors’ Remuneration Policy as
detailed above, and is equivalent to Richard Thompson’s
package, is as follows:
> Base salary: £600,000 p.a.
> Pension: 5% of salary.
> Maximum annual bonus: 150% of salary, with 40%
of the annual bonus based on sliding scale profit
targets, 35% based on sliding scale revenue targets
and 25% based on personal and strategic targets.
Any bonus award greater than 100% of salary will
normally be deferred into shares for three years.
> LTIP award: 200% of salary p.a., with vesting
dependent on stretching Adjusted EPS growth
targets and relative Total Shareholder Return
performance measured against the constituents
of the FTSE 250 (excluding Investment Trusts). The
award will be granted annually, have a three year
performance period, and there will be a two-year
post vesting holding period.
> Share ownership guidelines: 200% of base salary.
> No relocation or buyout awards were payable.
Frances Earl | CHAIR OF THE REMUNERATION COMMITTEE
20 December 2021
GOVERNANCE
RWS — Annual Report 2021
95
Directors' Report
INTRODUCTION
The Directors present their Annual Report
together with the audited consolidated
financial statements for the year ended
30 September 2021.
Substantial shareholdings
At 30 September 2021, the following were substantial
shareholders:
Substantial shareholding
Andrew Brode
Liontrust Asset Management
Octopus Investments
Canaccord Genuity Wealth Management
%
holding
23.2
8.9
3.8
3.3
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 15 to 23.
BUSINESS PERFORMANCE AND RISKS
The review of the business, operations, principal risks
and outlook is dealt with in the Strategic Report on
pages 16 to 22 and 60 to 63. The key performance
indicators (page 23) 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 8.5p
pence per ordinary share (see note 10) to be paid on
25 February 2022 to shareholders on the register at 28
January 2022, which, together with the interim dividend
of 2.0 pence paid in July 2021, results in a total dividend
for the year of 10.5 pence (2020: 9.0 pence).
The final dividend will be reflected in the financial
statements for the year ending 30 September 2022.
The proposed total dividend per share is 1.0 times
(2020: 1.9 times) covered by basic earnings per share.
GOING CONCERN ACCOUNTING BASIS
In assessing the basis of preparation of the financial
statements for the year ended 30 September 2021, the
Directors have considered the principles of
the Financial Reporting Council’s ‘Guidance on
Risk Management, Internal Control and Related
Financial and Business Reporting, 2014’; particularly
in assessing the applicability of the going concern
basis, the review period and disclosures. The period of
assessment is the 18 months ending 31 March 2023.
As at 30 September 2021, the Group has net debt of
£6.2m comprising the Group’s US$120m revolving credit
facility (“RCF”) (US$66.1m or £49.2m drawn at year
end) and lease liabilities of £51.5m, less cash and cash
equivalents of £92.5m. The RCF matures in February
2024 but is extendable for a further year subject to
lender consent. At year end the Group’s net leverage
ratio (as defined by the RCF agreement) is
-0.31x of EBITDA, while its interest coverage ratio (as
defined by the RCF agreement) is 168.61x of EBITDA and
are well within the covenants permitted by the Group’s
RCF agreement.
During the year ended 30 September 2021, the Group
completed the all-share combination of SDL plc. Since
acquisition, both the RWS and SDL businesses have
continued to perform well, with synergies across
the Group identified and actioned. At the time of the
combination SDL had £55.0 million of cash reserves and
no drawn debt facilities, thereby further underpinning
the expanded group’s balance sheet and liquidity.
In making their going concern assessment, the
Directors have considered the Group’s current financial
position and forecast earnings and cashflows for the
18-month period ending 31 March 2023. The business
plan used to support this going concern assessment
is derived from the Board-approved budget. The
Directors have undertaken a rigorous assessment of
going concern and liquidity taking into account key
uncertainties and sensitivities, including the potential
impact of Covid-19 on the future performance of
the Group. In making this assessment the Directors
have considered the Group’s existing debt levels, the
committed funding and liquidity positions under its
debt covenants and its ability to continue generating
cash from trading activities.
In light of the Group’s principal risks and uncertainties
disclosed on page 60 of the Strategic Report and the
limited impact of Covid-19 on the Group’s profitability
and financial position, the Directors believe that the
appropriate sensitivity in assessing the Group and
Company’s ability to continue as a going concern are
to model a range of reasonably plausible downside
scenarios, including a 10% reduction to the Group’s
revenues and corresponding cash flows, with mitigating
actions from management limited to equivalent
reductions in the Group’s controllable cost base.
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RWS — Annual Report 2021
GOVERNANCE
No significant structural changes to the Group have
been assumed in any of the downside scenarios
modelled with all mitigating actions wholly within
management’s control.
In each of these modelled downside scenarios, the
Group continues to have significant covenant and
liquidity headroom over the period through to 31 March
2023. Consequently, the Directors are confident that the
Group and Company will have sufficient cash reserves
and committed debt facilities to withstand reasonably
plausible downside scenarios and therefore continue
to meet its liabilities as they fall due for the period
ending 31 March 2023 and therefore have prepared the
financial statements on a going concern basis.
SUBSEQUENT EVENTS
There are no material post balance sheet events that
require adjustment or disclosure in the Annual Report.
FINANCIAL INSTRUMENTS
Information about the use of financial instruments
by the Group is given in note 20 to the financial
statements.
DIRECTORS
Details of members of the Board at the date of signing
this report are set out on pages 74 and 75.
Further information on Board composition,
responsibilities, commitments and re-election/election
can be found on pages 76 to 79 of the Corporate
Governance Report.
The interests of the Directors in shares during the
year are set out on pages 88 and 95 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
84 to 95.
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.
GOVERNANCE
RWS — Annual Report 2021
97
Directors' Report (continued)
FOSTERING GOOD RELATIONSHIPS
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 23 February 2022 AGM
which renews, for the period ending on 26 May 2023 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 13 December 2021). 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.
EY has expressed its willingness to continue in office and
a resolution to reappoint them will be proposed at the
23 February 2022 AGM.
On behalf of the Board
Ian El-Mokadem | CHIEF EXECUTIVE OFFICER
20 December 2021
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.
POLITICAL DONATIONS
The Company made no political donations during the
year ended 30 September 2021.
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 23 February 2022
AGM which renews, for the period ending 26 May 2023,
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 13
December 2021.
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.
98
RWS — Annual Report 2021
GOVERNANCE
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
Ian El-Mokadem | CHIEF EXECUTIVE OFFICER
20 December 2021
GOVERNANCE
RWS — Annual Report 2021
99
Independent Auditors' Report
to the Members of
RWS Holdings plc
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 2021 and of the group’s profit for the year then ended;
> the group financial statements have been properly prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006;
> the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
> the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Group
Parent company
Consolidated statement of financial position as at 30
September 2021
Statement of financial position as at 30 September 2021
Consolidated statement of comprehensive income for the year
then ended
Statement of changes in equity for the year then ended
Consolidated statement of changes in equity for the year then
ended
Related notes 1 to 13 to the financial statements including a
summary of significant accounting policies
Consolidated statement of cash flows for the year then ended
Related notes 1 to 27 to the financial statements, including a
summary of significant accounting policies
The financial reporting framework that has been applied in the preparation of the group financial statements is
applicable law and international accounting standards in conformity with the requirements of the Companies Act
2006. The financial reporting framework that has been applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure
Framework” (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those
standards are further described in the Auditor’s
responsibilities for the audit of the financial statements
section of our report. We are independent of the group
in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to
listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
In auditing the financial statements, we have
concluded that the directors use of the going
concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation
of the directors’ assessment of the group and parent
company’s ability to continue to adopt the going
concern basis of accounting included:
> understanding management’s process and controls
related to the assessment of going concern;
> assessing the adequacy of the going concern
assessment period until 31 March 2023, considering
whether any events or conditions foreseeable after
the period indicated a longer review period would be
appropriate;
> obtaining management’s going concern models
which included a base case and downside scenarios
of the going concern assessment period. These
100
RWS — Annual Report 2021
INDEPENDENT AUDITORS’ REPORT
> comparing management’s forecasts to actual
results through the subsequent events period and
performing enquiries to the date of this report; and
> assessing if the going concern disclosures in
the financial statements are appropriate and in
accordance with the revised ISA UK 570 going
concern standard.
We observed that the adjusted operating profit for
the Group continues to grow (2021: £118.5 million,
2020: £72.9 million) and the Group generates positive
operating cashflows (2021: £84.9 million, 2020: £79.4
million). The Group has access to a committed revolving
credit facility of $120 million, which doesn’t expire until
2024. The covenant compliance necessary under both
covenant test ratios within the RCF have been modelled
as part of the going concern forecast.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Group and parent company’s
ability to continue as a going concern for the period to
31 March 2023.
Our responsibilities and the responsibilities of the
directors with respect to going concern are described in
the relevant sections of this report. However, because
not all future events or conditions can be predicted, this
statement is not a guarantee as to the group’s ability to
continue as a going concern.
forecasts include an assessment of available cash
balances including assessment of compliance with
the covenant requirements of the Group’s external
debt;
> checking the arithmetical accuracy of the cash
flow forecast models and assessed the Group’s
historical forecasting accuracy, comparing these
conclusions to the downside scenarios prepared by
management;
> confirming the continued availability of debt facilities
by examining executed documentation including
clauses relating to covenants;
> considering the downside scenarios identified by
management and independently assessing whether
there are any other scenarios which should be
considered, and recalculated the impact on the
available cash flows of the downside scenarios in the
going concern period;
> considering whether the Group’s forecasts in the
going concern assessment were consistent with
other forecasts used by the Group in its accounting
estimates, including goodwill impairment and
deferred tax asset recognition;
> evaluating, based on our own independent analysis,
what reverse stress testing scenarios could lead
either to a breach of the Group’s banking covenants
or liquidity shortfall, and considering whether these
scenarios were plausible;
> challenging management’s assumptions within
the cash flow forecasts in relation to the forecast
growth rates in the going concern period, including
comparison to internal and external economic
forecasts;
Overview of our audit approach
Audit scope
> We performed an audit of the complete financial information of 8 components and audit
procedures on specific balances for a further 6 components.
>
The components where we performed full or specific audit procedures accounted for 66%
of profit before tax adjusted for exceptional items, acquisition costs and amortisation of
acquired intangibles, 84% of Revenue and 87% of Total assets.
Key audit matters
> Revenue recognition
>
Impairment of goodwill and acquired intangibles
> Capitalisation and impairment of development costs
> Acquisition accounting for SDL Limited
Materiality
> Overall group materiality of £5.0m which represents 4.3% of profit before tax adjusted for
exceptional items, acquisition costs and amortisation of acquired intangibles.
INDEPENDENT AUDITORS’ REPORT
RWS — Annual Report 2021
101
Independent Auditors' Report
to the Members of RWS Holdings plc (continued)
An overview of the scope of the parent company and group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of
materiality and our allocation of performance
materiality determine our audit scope for each company
within the Group. Taken together, this enables us
to form an opinion on the consolidated financial
statements. We take into account size, risk profile, the
organisation of the group and effectiveness of group-
wide controls and changes in the business environment
when assessing the level of work to be performed at
each company.
In assessing the risk of material misstatement to the
Group financial statements, and to ensure we had
adequate quantitative coverage of significant accounts
in the financial statements, we selected 14 components
covering entities within the UK, US, Czech Republic and
EMEA, which represent the principal business units
within the Group.
Of the 14 components selected, we performed an audit
of the complete financial information of 8 components
(“full scope components”) which were selected based
on their size or risk characteristics. For the remaining
6 components (“specific scope components”), we
performed audit procedures on specific accounts within
that component that we considered had the potential
for the greatest impact on the significant accounts in
the financial statements either because of the size of
these accounts or their risk profile.
The reporting components where we performed audit
procedures accounted for 66% of the Group’s profit
before tax adjusted for exceptional items, acquisition
costs and amortisation of acquired intangibles, 84%
of the Group’s Revenue and 87% of the Group’s Total
assets. For the current year, the full scope components
contributed 53% of the Group’s profit before tax
adjusted for exceptional items, acquisition costs
and amortisation of acquired intangibles, 74% of the
Group’s Revenue and 82% of the Group’s Total assets.
The specific scope components contributed 13% of
the Group’s profit before tax adjusted for exceptional
items, acquisition costs and amortisation of acquired
intangibles, 10% of the Group’s Revenue and 5% of
the Group’s Total assets. The audit scope of these
components may not have included testing of all
significant accounts of the component but will have
contributed to the coverage of significant accounts
tested for the Group.
We also instructed 1 location to perform specified
procedures over certain aspects of capitalised
development costs, as described in the Risk section
above.
Of the remaining components that together represent
34% of the Group’s profit before tax adjusted for
exceptional items, acquisition costs and amortisation
of acquired intangibles, none are individually greater
than 4% of the Group’s profit before tax adjusted for
exceptional items, acquisition costs and amortisation
of acquired intangibles. For these components, we
performed other procedures, including analytical
review and/or ‘review scope’ procedures, testing of
consolidation journals and intercompany eliminations
and foreign currency translation recalculations to
respond to any potential risks of material misstatement
to the Group financial statements. The Group audit team
has also performed centralised testing over material
cash and cash equivalents balances for existence
purposes in these review scope components.
The charts below illustrate the coverage obtained from
the work performed by our audit teams.
Profit before tax adjusted for
exceptional items, acquisition
costs and amortisation of
acquired intangibles
53% Full scope components
13% Specific scope components
34% Other procedures
Revenue
74% Full scope components
10% Specific scope components
16% Other procedures
Total Assets
82% Full scope components
5% Specific scope components
13% Other procedures
102
RWS — Annual Report 2021
INDEPENDENT AUDITORS’ REPORT
Involvement with component teams
In establishing our overall approach to the Group
audit, we determined the type of work that needed to
be undertaken at each of the components by us, as
the primary audit engagement team, or by component
auditors from other EY global network firms operating
under our instruction. Of the 8 full scope components,
audit procedures were performed on seven of these
directly by the primary audit team. All specific scope
components were audited by the primary team.
Key audit matters
The primary team interacted regularly with the
component team where appropriate during various
stages of the audit, reviewed key working papers
and were responsible for the scope and direction of
the audit process. This, together with the additional
procedures performed at Group level, gave us
appropriate evidence for our opinion on the Group
financial statements.
Key audit matters are those matters that, in our professional judgment, were of most significance in our 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) that we identified. These matters included 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 were addressed in the context of our audit of the financial statements as a whole, and in our opinion
thereon, and we do not provide a separate opinion on these matters.
Revenue recognition (2021: £694.5m, 2020: £355.8m)
Refer to the Audit Committee Report (page 86) and Note 3 of the Consolidated Financial Statements (page 118)
There is a cut-off risk that revenue earned around the year-end date is inappropriately recognised in the period in order to
meet budgets and market expectations. This can apply to both point in time and over time revenue recognition, arising from
the sale of both technology and services to customers.
In addition, recognition of revenue may include an allocation of transaction price, specifically for bundled or bespoke
technology deals where there are multiple performance obligations. There is a risk that the transaction price is incorrectly
allocated to each performance obligation and/or recognised inappropriately (point in time or over time).
Our response to the risk
Our audit procedures comprised the following:
We understood the process for recognition of revenue transactions and
assessed the design effectiveness of key controls.
Cut-off:
For all revenue streams, we tested a sample of revenue transactions recognised
around the balance sheet date to validate the correct timing of revenue recognition.
Where applicable, we vouched to supporting documentation including proof of
completed works and acceptance documentation.
For services revenue, we understood the underlying process for identifying and
measuring accrued income and performed analytical procedures to identify
any specific risks. Further, we identified material or unusual accrued income
balances, for which we performed the following procedures, where applicable:
>
>
>
obtaining orders/contracts and supporting documentation to verify
amounts, for example purchase invoices for costs incurred to date;
for services revenue, meeting with project managers to challenge the
valuation of accrued income;
reviewing post year-end accrued income schedules to identify unusual
movements in accrued income balances; and
> Obtaining post-year end invoices raised and cash receipts
We considered each component’s application of IFRS 15 through review of
underlying contracts and terms and conditions, particularly in relation to the
timing and quantum of revenue recognition around the balance sheet date to
validate that the “over time” or “point in time” recognition policy was appropriate
and in line with the nature and characteristics of the services provided.
Key observations communicated to
the Audit Committee
We concluded that revenue recognised was
materially correct in accordance with IFRS 15.
We concluded based on our procedures
performed that the standalone selling price
of multi-element arrangements has been
calculated and recorded correctly in the
Technology division.
We reviewed management’s assessment
of revenue accounting policies across the
Group following the acquisition of SDL Plc,
noting that an amendment to the policy has
been made in relation to certain revenue
streams to recognise revenue as “over time”
in accordance with p. 35c of IFRS 15 within
the RWS legacy businesses, rather than
“point in time”. Management quantified the
impact of this correction and as a result
recorded an immaterial accrued income
balance in the legacy RWS business as at 30
September 2021.
We also reviewed management’s assessment
of the impact on the 30 September 2020
balance sheet and concurred with
management’s conclusion that it would be
impractical to quantify, and therefore no
restatement has been made to the prior year
INDEPENDENT AUDITORS’ REPORT
RWS — Annual Report 2021
103
Independent Auditors' Report
to the Members of RWS Holdings plc (continued)
comparatives in line with the requirements of
IAS 8. We also concluded on the reasonability
of the restatement to Note 3, which reflects
the correction of the accounting policy in the
prior period comparative disclosures.
Based on the procedures we performed we
concluded that the accounting policy and
associated disclosures are in line with IFRS 15.
Revenue recognition (2021: £694.5m, 2020: £355.8m) continued
We reviewed the Group’s disclosures in relation to revenue recognition made in
the financial statements to confirm the adequacy of disclosure of the Group’s
revenue recognition policy.
Multi-element arrangements:
We tested a sample of revenue contracts by performing the following:
>
>
>
>
agreeing revenues to contracts, purchase orders or software licence
agreements;
agreeing the revenue to subsequent payment as evidence of collectability;
checking evidence, such as licence keys or evidence of filing of patents to
support that performance obligation has been fulfilled prior to revenue
recognition;
reviewing terms and conditions to establish whether all performance
obligations have been identified and for any conditions that would
impact the timing of revenue recognition and in turn the completeness of
contract liabilities; and
>
ensuring appropriate allocation of the fair value and recognition of
revenue for other deliverables included within the contract;
> We obtained management’s assessment of the determination of
standalone selling price and validated this assessment to evidence
obtained through our test of details above.
We performed full and specific scope audit procedures over this risk area in 4
locations, which covered 84% of the risk amount.
Capitalisation and impairment of development costs (2021: £9.4m, 2020: £3.4m)
Refer to the Note 13 of the Consolidated Financial Statements (page 132)
The Group capitalises eligible costs in the development of its software products and internal systems. There is a risk of
inappropriate capitalisation of these development costs, which require significant judgement as to whether the costs meet the
capitalisation criteria per IAS 38.
Key observations communicated to
the Audit Committee
We concluded that development costs are
appropriately capitalised under IAS 38 and
that it is reasonable that no impairment
has been recorded on these assets as at 30
September 2021.
Our response to the risk
Our audit procedures comprised the following:
We performed walkthroughs of the capitalised development cost process and
assessed the design effectiveness of key controls.
We selected a sample of additions to understand the nature of the costs, and
to assess whether the items have been appropriately capitalised in accordance
with IAS 38.
We performed analytical procedures, including comparison of capitalization
and amortization to prior year, recalculation of maximum expected
capitalization cost and comparison of budgeted spend versus actuals
We vouched capitalised costs to supporting documentation including relevant
HR data, 3rd party invoices and cash payments made.
We reviewed the Group’s disclosures in relation to capitalised development
costs made in the financial statements to confirm the adequacy of disclosure
of the Group’s capitalisation policy
We assessed the impairment of assets in use and those still under
development in accordance with IAS 36 by considering whether there were any
indicators of impairment, including obsolescence of technology and changes
to underlying business and market trends
We performed full and specific scope audit procedures over this risk area in 3
locations, which covered 100% of the risk amount.
104
RWS — Annual Report 2021
INDEPENDENT AUDITORS’ REPORT
Accounting for acquisition of SDL
Refer to the Audit Committee Report (page 86); Accounting policies (page 115); and Note 24 of the Consolidated Financial Statements
(page 150)
Accounting for business combinations is complex and involves judgement including around the determination of the fair value
of consideration paid and assessment of the fair value of assets and liabilities acquired. The valuations of identified intangibles
can be a subjective process and there is a risk that the accounting treatment may be incorrect.
Key observations communicated to
the Audit Committee
We concluded that the transaction was
properly accounted for in accordance with
IFRS 3, and the fair value adjustments and
Purchase Price Allocation were appropriate.
The relevant tax considerations have been
recorded and disclosed appropriately in the
financial statements.
Our response to the risk
Our audit procedures comprised the following:
We read the scheme documents and other documents related to the
acquisition
We ensured the accounting is in accordance with IFRS 3 Business
combinations, in particularly that the acquisition meets the definition of a
business
We assessed management's consideration of merger vs acquisition accounting
We assessed the quantum of the consideration (being a share for share
transaction) by vouching the share price at the acquisition date
We performed audit procedures on the acquired opening balance sheet
of SDL, including rollback procedures from the audited 31 December 2020
consolidated accounts of SDL Limited and corroborating material fair value
adjustments to supporting documentation.
We assessed the valuation methodologies and key inputs used in determining
the purchase price allocation including the discount rate, cash flow forecast
and other prospective financial information and the useful lives assigned, with
the assistance of our valuation specialists.
The acquisition brings an increased level of complexity and judgement in
the assessment of deferred tax valuation on acquired intangible assets. We
assessed the split of the recorded deferred tax liability by jurisdiction and
reviewed the tax rates applied.
We reviewed the Group’s disclosures in relation to acquisition accounting
made in the financial statements to confirm the adequacy of disclosure of the
Group’s acquisitions.
INDEPENDENT AUDITORS’ REPORT
RWS — Annual Report 2021
105
Independent Auditors' Report
to the Members of RWS Holdings plc (continued)
Impairment of goodwill and acquired intangibles (2021: £615.8m goodwill and £351.6m acquired intangibles,
2020: £257.2m goodwill and £147.7m acquired intangibles)
Refer to the Audit Committee Report (page 86); and Notes 12 and 13 of the Consolidated Financial Statements (page 130)
Management applies judgement in assessing the valuation of acquired intangibles and goodwill, particularly in estimating
future cash flows and deriving the appropriate discount rates. There is a risk that impairments are not identified, and the value
of goodwill or acquired intangibles is overstated.
Key observations communicated to
the Audit Committee
Based on the final forecast cash flows
and assumptions used, there is sufficient
headroom across all CGUs. As a result of our
independent assessment and calculation,
we conclude that no impairments should be
recorded as at 30 September 2021.
We note that the assessments for the
Moravia, SDL Regulated Industries and SDL
Technology CGU’s demonstrated sensitivity
to changes in the discount rates applied. We
have reviewed the disclosures included in
the consolidated financial statements and
conclude this sensitivity to be appropriately
disclosed.
Our response to the risk
Our audit procedures comprised the following:
> We understood the annual goodwill and investment impairment process
and assessed the design effectiveness of key controls. We confirmed that
management’s process and methodology meet the requirements of IAS
36 ‘Impairment of Assets’
> We reviewed management’s paper identifying the cash generating units
(CGUs) to which impairment should be considered and assessed whether
the CGU allocation is appropriate
> We engaged EY specialists to determine if the discount rates applied for
each CGU are within an acceptable range
> We challenged management as to the robustness of the process
performed by discussing potential external and internal sources of
indicators of impairment, and updates made to the cash flow forecast to
reflect these
> We corroborated key assumptions included within the forecast through
inquiries of local management, commercial finance and product
development teams, as well as external market data. We ensured
consistency of key assumptions with forecasts used in other management
assessments, including going concern.
> We searched for any contradictory evidence, including whether any
indicators of impairment were omitted from management’s assessment
> We assessed adequacy of sensitivity analysis performed and performed
additional sensitivities.
> We assessed the historical accuracy of management’s forecasting process
through reviewing forecast versus actuals analyses for the current year.
> We reviewed the Group’s disclosures in relation to impairment made in
the financial statements to confirm the adequacy of disclosure of the
Group’s impairment policy.
106
RWS — Annual Report 2021
INDEPENDENT AUDITORS’ REPORT
Our application of materiality
Reporting threshold
An amount below which identified misstatements are
considered as being clearly trivial.
We agreed with the Audit Committee that we would
report to them all uncorrected audit differences
in excess of £0.25m, which is set at 5% of planning
materiality, as well as differences below that threshold
that, in our view, warranted reporting on qualitative
grounds.
We evaluate any uncorrected misstatements against
both the quantitative measures of materiality discussed
above and in light of other relevant qualitative
considerations in forming our opinion.
Other information
The other information comprises the information
included in the annual report set out on pages 1 to 166,
other than the financial statements and our auditor’s
report thereon. The directors are responsible for the
other information within the annual report.
Our opinion on the financial statements does not
cover the other information and, except to the extent
otherwise explicitly stated in this report, we do not
express any form of assurance conclusion thereon. 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 course of the audit
or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether there is a material misstatement in the financial
statements themselves. If, based on the work we
have performed, we conclude that there is a material
misstatement of the other information, we are required
to report that fact.
We have nothing to report in this regard.
We apply the concept of materiality in planning and
performing the audit, in evaluating the effect of
identified misstatements on the audit and in forming
our audit opinion.
Materiality
The magnitude of an omission or misstatement that,
individually or in the aggregate, could reasonably be
expected to influence the economic decisions of the users
of the financial statements. Materiality provides a basis for
determining the nature and extent of our audit procedures.
We determined materiality for the Group to be
£5.0m, which is 4.3% of profit before tax adjusted for
amortisation of acquired intangibles, acquisition costs
and exceptional items. We believe that profit before
tax adjusted for amortisation of acquired intangibles,
acquisition costs and exceptional items represents the
primary measure used by the shareholders in assessing
the performance of the Group, as it is a reflection of the
underlying performance of the Group.
We determined materiality for the Parent Company to
be £9.3m, which is 1.0% of total assets.
The previous auditor determined materiality for the
Group to be £3.5m for the external audit for the year
ended 30 September 2020. We note that this was prior
to the acquisition of SDL Limited.
Performance materiality
The application of materiality at the individual account
or balance level. It is set at an amount to reduce to an
appropriately low level the probability that the aggregate
of uncorrected and undetected misstatements exceeds
materiality.
On the basis of our risk assessments, together with our
assessment of the Group’s overall control environment,
our judgement was that performance materiality was
50% of our planning materiality, namely £2.5m. We
have set performance materiality at this percentage due
to a combination of risk factors, including this being a
first year audit for EY.
Audit work at component locations for the purpose
of obtaining audit coverage over significant financial
statement accounts is undertaken based on a
percentage of total performance materiality. The
performance materiality set for each component is
based on the relative scale and risk of the component
to the Group as a whole and our assessment of the risk
of misstatement at that component. In the current
year, the range of performance materiality allocated to
components was £0.5m to £1.1m.
INDEPENDENT AUDITORS’ REPORT
RWS — Annual Report 2021
107
Independent Auditors' Report
to the Members of RWS Holdings plc (continued)
Opinions on other matters prescribed
by the Companies Act 2006
Auditor’s responsibilities for the audit of
the financial statements
In our opinion, based on the work undertaken in the
course of the audit:
> the information given in the strategic report and
the directors’ report for the financial year for
which the financial statements are prepared is
consistent with the financial statements; and
> the strategic report and directors’ report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to
report by exception
In the light of the knowledge and understanding
of the group and the parent company and its
environment obtained in the course of the audit, we
have not identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
> adequate accounting records have not been kept
by the parent company, or returns adequate for
our audit have not been received from branches
not visited by us; or
> the parent company financial are not in
agreement with the accounting records and
returns; or
> certain disclosures of directors’ remuneration
specified by law are not made; or
> we have not received all the information and
explanations we require for our audit
Responsibilities of directors
As explained more fully in the directors’
responsibilities statement set out on page 99, the
directors are responsible for the preparation of the
financial statements and for being satisfied that they
give a true and fair view, and for such internal control
as the directors 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 and 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.
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 auditor’s 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.
Explanation as to what extent the audit was considered
capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect irregularities, including fraud. The
risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional
misrepresentations, or through collusion. The extent
to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention
and detection of fraud rests with both those charged
with governance of the company and management.
> We obtained an understanding of the legal and
regulatory frameworks that are applicable to the
company and determined that the most significant
are those related to the reporting framework
(international accounting standards in conformity
with the requirements of the Companies Act
2006, FRS 101, and the Companies Act 2006) and
the relevant tax compliance regulations in the
components.
> We understood how RWS Holdings plc is complying
with those frameworks by making enquiries of
management and those responsible for legal and
compliance procedures. We corroborated our
enquiries through our review of Board minutes,
discussions with the Audit Committee and any
correspondence received from regulatory bodies.
> We assessed the susceptibility of the group’s
financial statements to material misstatement,
including how fraud might occur by meeting
with management to understand where they
considered there was susceptibility to fraud. We
also considered performance targets and their
influence on efforts made by management to
manage earnings or influence the perceptions
of analysts. Where this risk was considered to be
108
RWS — Annual Report 2021
INDEPENDENT AUDITORS’ REPORT
higher, we performed audit procedures to address
each identified fraud risk. The key audit matters
section above addresses procedures performed
in areas where we have concluded the risks of
material misstatement are highest (including
where due to the risk of fraud). These procedures
included testing manual journal entries.
> Based on this understanding we designed our
audit procedures to identify non-compliance
with such laws and regulations. Our procedures
involved review of Board minutes to identify
non-compliance with such laws and regulations,
review of reporting to the Audit Committee on
compliance with regulations and enquiries of
management.
> All full and specific scope components were
instructed to perform procedures in the
identification of instances of non-compliance with
laws and regulations.
A further description of our responsibilities for the
audit of the financial statements is located on the
Financial Reporting Council’s website at https://www.
frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Use of our report
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company’s
members those matters we are required to state to
them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than
the company and the company’s members as a body,
for our audit work, for this report, or for the opinions
we have formed.
Joe Yglesia | SENIOR STATUTORY AUDITOR
for and on behalf of Ernst & Young LLP, Statutory
Auditor
Reading
20 December 2021
INDEPENDENT AUDITORS’ REPORT
RWS — Annual Report 2021
109
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2021
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
Amortisation of capitalised exceptional finance costs
Finance costs
Profit before tax
Taxation
Profit for the year
Other comprehensive (expense)/income
Items that may be reclassified to profit or loss:
Gain on retranslation of quasi equity loans (net of deferred tax)
(Loss) on retranslation of foreign operations
Gain on hedging (net of deferred tax)
Total other comprehensive expense
Total comprehensive income attributable to owners of the Parent
Basic earnings per ordinary share (pence per share)
Diluted earnings per ordinary share (pence per share)
The notes on pages 114 to 153 form part of these financial statements.
Note
3
6
5
13
6
22
6
8
6,8
6,8
8
9
11
11
2021
£m
694.5
(381.3)
313.2
1.2
(257.0)
57.4
118.5
(34.4)
(11.2)
(1.4)
(14.1)
57.4
-
-
(0.3)
(2.1)
55.0
(13.8)
41.2
(0.6)
(31.8)
1.6
(30.8)
10.4
10.9
10.9
2020
£m
355.8
(216.2)
139.6
9.0
(88.4)
60.2
72.9
(15.3)
(4.1)
(1.1)
7.8
60.2
0.1
1.4
(0.2)
(2.8)
58.7
(12.3)
46.4
-
(14.2)
1.9
(12.3)
34.1
16.9
16.9
110
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
Consolidated Statement of Financial Position
as at 30 September 2021
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Right-of-use assets
Non-current income tax receivable
Deferred tax assets
Current assets
Trade and other receivables
Income tax receivable
Foreign exchange derivatives
Cash and cash equivalents
Total assets
Current liabilities
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
Capital and reserves attributable to owners of the Parent
Share capital
Share premium
Share based payment reserve
Reverse acquisition reserve
Merger reserve
Foreign currency reserve
Hedge reserve
Retained earnings
Total equity
Note
12
13
14
18
9
15
20
23
17
18
20
19
16
18
17
19
9
21
2021
£m
615.8
366.6
32.1
42.4
1.0
1.5
1,059.4
191.8
3.5
-
92.5
287.8
1,347.2
152.0
11.0
0.7
22.1
5.1
190.9
47.2
40.5
2.4
4.1
51.2
145.4
336.3
1,010.9
3.9
54.2
2.8
(8.5)
624.4
(17.5)
1.2
350.4
1,010.9
Restated*
2020
£m
257.2
156.4
22.8
20.1
-
1.9
458.4
82.1
-
0.6
51.4
134.1
592.5
57.6
3.2
0.1
3.6
-
64.5
66.5
19.6
0.3
2.4
30.3
119.1
183.6
408.9
2.8
53.6
1.4
(8.5)
-
14.9
(0.4)
345.1
408.9
*Balances have been retrospectively restated following completion of the Webdunia purchase price allocation from the prior year (see note 24).
The notes on pages 114 to 153 form part of these financial statements. The financial statements on pages 110 to
153 were approved by the Board of Directors and authorised for issue on 20 December 2021 and were signed on its
behalf by:
Desmond Glass | CHIEF FINANCIAL OFFICER
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
111
Consolidated Statement of Changes in Equity
for the year ended 30 September 2021
At 1 October 2019
Adjusted for initial application of IFRS16 (net of tax)
Restated balance at 1 October 2019
Profit for the year
Gain on hedging
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 charge
At 30 September 2020
Profit for the year
Gain on hedging
Gain on retranslation of quasi equity loans
Loss on retranslation of foreign operations
Total comprehensive income for the year
Issue of shares
Issue of shares to acquire subsidiary undertaking
Deferred tax on unexercised share options
Dividends
Purchase of own shares
Exercise of share options
Equity-settled share based payments charge
At 30 September 2021
Other reserves
At 1 October 2019
Other comprehensive income for the year
Exercise of share options
Equity-settled share based payments
At 30 September 2020
Other comprehensive expense for the year
Issue of shares to acquire subsidiary undertaking
Exercise of share options
Equity-settled share based payments charge
At 30 September 2021
Share
capital
£m
Share
premium
account
£m
Other
reserves
(see below)
£m
Retained
earnings
£m
Notes
Total
attributable
to owners
of Parent
£m
2.7
-
2.7
-
-
-
-
51.8
-
51.8
-
-
-
-
0.1
1.8
-
-
-
-
-
-
-
-
2.8
53.6
-
-
-
-
-
-
1.1
-
-
-
-
-
-
-
-
-
-
0.6
-
-
-
-
-
-
19.0
-
19.0
-
1.9
(14.2)
(12.3)
-
-
-
(0.3)
1.0
7.4
-
1.6
(0.6)
(31.8)
(30.8)
-
624.4
-
-
-
-
1.4
324.0
(0.5)
323.5
46.4
-
-
46.4
-
(1.0)
(24.1)
0.3
-
345.1
41.2
-
-
-
41.2
-
-
0.4
(36.0)
(0.3)
-
-
397.5
(0.5)
397.0
46.4
1.9
(14.2)
34.1
1.9
(1.0)
(24.1)
-
1.0
408.9
41.2
1.6
(0.6)
(31.8)
10.4
0.6
625.5
0.4
(36.0)
(0.3)
-
1.4
9
10
24
9
10
22
3.9
54.2
602.4
350.4
1,010.9
Share based
payment
reserve
£m
Reverse
acquisition
reserve
£m
Merger
reserve
£m
Foreign
currency
reserve
£m
Hedge
reserve
£m
Total
other
reserves
£m
0.7
-
(0.3)
1.0
1.4
-
-
-
1.4
2.8
(8.5)
-
-
-
(8.5)
-
-
-
-
-
-
-
-
-
-
624.4
-
-
29.1
(14.2)
-
-
14.9
(32.4)
-
-
-
(2.3)
1.9
-
-
(0.4)
1.6
-
-
-
19.0
(12.3)
(0.3)
1.0
7.4
(30.8)
624.4
-
1.4
(8.5)
624.4
(17.5)
1.2
602.4
The acquisition of SDL plc ('SDL') in the year was eligible for merger relief and a merger reserve was therefore created to
reflect the value of the share premium that would otherwise have been generated on the issuing of the shares to acquire SDL
in the year (see note 24).
112
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
Consolidated Statement of Cash Flows
for the year ended 30 September 2021
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
Net gain on debt modification
Net finance costs/(income)
Operating cash flow before movements in working capital
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from operations
Income tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Interest received
Net cash acquired on acquisition of SDL plc
Settlement of share related liabilities on acquisition of SDL plc
Acquisition of subsidiary, net of cash acquired
Purchases of property, plant and equipment
Purchases of intangibles (software)
Net cash inflow / (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 (including interest charged of £1.5m (2020: £0.7m))
Proceeds from the issue of share capital
Purchase of own shares
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
Note
14
13
18
22
6
8
24
24
24
14
13
18
10
23
2021
£m
55.0
6.2
47.8
12.7
1.4
-
2.4
125.5
(23.8)
0.3
102.0
(17.1)
84.9
-
55.0
(6.4)
(1.5)
(4.1)
(19.1)
23.9
-
(17.1)
-
(0.6)
(12.6)
0.6
(0.3)
(36.0)
(66.0)
42.8
51.4
(1.7)
92.5
2020
£m
58.7
3.0
18.7
4.5
1.1
(1.2)
2.7
87.5
5.4
1.7
94.6
(15.2)
79.4
-
-
-
(23.0)
(2.9)
(5.1)
(31.0)
15.7
(29.4)
(0.6)
(3.2)
(4.1)
1.9
-
(24.1)
(43.8)
4.6
47.0
(0.2)
51.4
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
113
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 accounting
standards in conformity with the requirements of the
Companies Act 2006.
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 and within the notes to which they relate
to provide context to users of the financial statements.
The policies have been consistently applied to both
years presented, unless otherwise stated.
New accounting standards, amendment
and interpretations
The following amendments, which were effective for
the first time in the current year but had no impact on
the results or financial position of the Group:
> Amendments to References to the Conceptual
Framework in IFRS Standards
> Amendments to IFRS 3 Business Combinations:
Definition of a Business
> Amendments to IAS 1 and IAS 8 Definition of
Material
> Amendments to IFRS 9, IAS 37 and IFRS 7 Interest
Rate Benchmark Reform (phase 1, phase 2 to follow
in 2021)
> Amendments to IFRS 9, IAS 39 and IFRS 7 – Interest
Rate Benchmark Reform – Phase 2
> Annual Improvements to IFRS Standards 2018-2020
(Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41)
> Amendments to IAS 16 – Proceeds before Intended
Use
> Amendments to IAS 37 – Onerous Contracts – Cost
of Fulfilling a Contract
> Amendments to IAS 1 – Classification of Liabilities
as Current or Non-current
> Amendments to IFRS 17 – Insurance Contracts (and
related amendments)
> Amendments to IAS 8 'Definition of Accounting
Estimates'
> Amendments to IAS 1 'Disclosure of Accounting
Policies' and 'Practice Statement 2'
> Amendments to IAS 12 'Deferred tax related
to assets and liabilities arising from a single
transaction'
Basis of consolidation
The consolidated financial statements comprise the
financial statements of the Parent Company and
subsidiaries controlled by the Parent Company, drawn
up to 30 September 2021.
Subsidiary undertakings are entities that are directly or
indirectly controlled by the Group. The Group controls
an entity when it is exposed, or has rights to variable
returns from its involvement with the entity and has the
ability to affect those returns through its power over
the entity.
Results of subsidiaries are consolidated from the date
on which control is transferred to the Group and cease
to be consolidated from the date on which control
is transferred out of the Group. The separable net
assets, including intangible assets of newly acquired
subsidiaries, are incorporated into the consolidated
financial statements based on their fair values at the
effective date of control.
All intra-group transactions are eliminated as part of
the consolidation process.
> Amendments to IFRS 16 Covid-19 Related Rent
Going concern
Concessions
A number of new standards and amendments to
standards are effective for annual periods beginning
after 1 January 2021 and earlier application is
permitted. The Group has not early adopted any
of the following standards and does not currently
expect their adoption to have a material impact on
the financial statements but could impact future
transactions:
In making their going concern assessment, the
Directors have considered the Group’s current
financial position and forecast earnings and cashflows
for the 18-month period ending 31 March 2023. The
business plan used to support this going concern
assessment is derived from the Board-approved
budget. The Directors have undertaken a rigorous
assessment of going concern and liquidity taking into
account key uncertainties and sensitivities, including
the potential impact of Covid-19 on the future
performance of the Group. In making this assessment
the Directors have considered the Group’s existing
114
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
debt levels, the committed funding and liquidity
positions under its debt covenants and its ability to
continue generating cash from trading activities.
As at 30 September 2021, the Group has net debt of
£6.2m comprising the Group’s US$120m revolving
credit facility (“RCF”) (US$66.1m or £49.2m drawn at
year end) and lease liabilities of £51.5m, less cash
and cash equivalents of £92.5m. The RCF matures in
February 2024 but is extendable for a further year
subject to lender consent. At year end the Group’s net
leverage ratio (as defined by the RCF agreement) is
-0.31x of EBITDA, while its interest coverage ratio (as
defined by the RCF agreement) is 168.6x of EBITDA and
are well within the covenants permitted by the Group’s
RCF agreement.
During the year ended 30 September 2021, the Group
completed the all-share combination of SDL plc.
Since acquisition, both the RWS and SDL businesses
have continued to perform well, with synergies
across the Group identified and actioned. At the time
of the combination SDL had £55.0 million of cash
reserves and no drawn debt facilities, thereby further
underpinning the expanded group’s balance sheet and
liquidity.
In light of the Group’s principal risks and uncertainties
disclosed on page 60 of the Strategic Report and the
limited impact of Covid-19 on the Group’s profitability
and financial position, the Directors believe that the
appropriate sensitivity in assessing the Group and
Company’s ability to continue as a going concern are
to model a range of reasonably plausible downside
scenarios, including a 10% reduction to the Group’s
revenues and corresponding cash flows, with
mitigating actions from management limited to
equivalent reductions in the Group’s controllable cost
base. No significant structural changes to the Group
have been assumed in any of the downside scenarios
modelled with all mitigating actions wholly within
management’s control.
In each of these modelled downside scenarios, the
Group continues to have significant covenant and
liquidity headroom over the period through to 31
March 2023. Consequently, the Directors are confident
that the Group and Company will have sufficient cash
reserves and committed debt facilities to withstand
reasonably plausible downside scenarios and therefore
continue to meet its liabilities as they fall due for the
period ending 31 March 2023 and therefore prepared
the financial statements on a going concern basis.
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 up to 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.
Foreign currencies
The 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 profit or loss in the
statement of comprehensive income.
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 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.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
115
Notes to the Consolidated Financial Statements (continued)
Derivative financial instruments and hedging
The Group uses derivative financial instruments to
manage its exposure to foreign exchange volatility
arising from operational activities.
Derivative financial instruments are initially measured
at fair value (with direct transaction costs being
included in the statement of comprehensive income
as an expense) and are subsequently remeasured
to fair value at each reporting date. Changes in the
carrying value are also recognised in profit or loss in
the statement of comprehensive income unless part of
a designated hedging arrangement.
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.
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 profit or
loss in the statement of comprehensive income.
The amount accumulated in the hedging reserve
is reclassified to profit or loss in the statement of
comprehensive income in the same period 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
profit or loss in 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 as
part of the gain or loss on disposal in the consolidated
statement of comprehensive income on loss of control
of the foreign operation.
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.
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.
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.
Judgements
In the process of applying the Group's accounting
policies, management has made the following
judgements, which have the most significant effect on
the amounts recognised in the consolidated financial
statements:
Revenue - multi-element arrangements
To determine the appropriate revenue recognition
for contracts containing multi-elements that include
both products and services, we evaluate whether
the contract should be accounted for as a single, or
multiple performance obligations. Management is
required to exercise a degree of judgement in setting
the criteria used for determining when revenue which
involves several elements should be recognised and the
stand-alone selling price of each element. The Group
generally determines the stand-alone selling prices of
elements based on prices which are not observable and
are therefore based on stand-alone list prices which
are then subject to discount. Further detail involved in
116
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
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.
Other estimates and assumptions
Revenue - rendering of services
Management makes estimates of the total costs
that will be incurred on a contract by contract basis.
Management reviews the estimate of total costs on each
contract on an ongoing basis to ensure that the revenue
recognised accurately reflects the proportion of the
work done at the balance sheet date. All contracts are
of a short term nature. The majority of services work
is invoiced on completion and the amount of year end
work in progress was £34.9m (2020: £14.1m)
Taxation - uncertain tax positions
Uncertainties exist in respect of interpretation of
complex tax regulations, including transfer pricing, and
the amount and timing of future taxable income. Given
the nature of the Group’s operating model, the wide
range of international transactions and the long-term
nature and complexity of contractual agreements,
differences arising between the actual results and
assumptions made, or future changes to assumptions,
could necessitate future adjustments to taxation
already recorded. The Group considers all tax positions
on a separate basis, with any amounts determined by
the most appropriate of either the expected value or
most likely amount on a case by case basis.
Most deferred tax assets are recognised because they
can offset the future taxable income from existing
taxable differences (primarily on acquired intangibles)
relating to same jurisdiction or entity. Where there are
insufficient taxable differences, deferred tax assets are
recognised in respect of losses and other deductible
differences where current forecasts indicate profits
will arise in future periods against which they can be
deducted. The total value of UTPs was £6.4m (2020:
£Nil), see Note 9.
estimating stand-alone selling prices for the purpose
of allocating the transaction price in multi-element
arrangements is provided in Note 3.
The judgement could materially affect the timing and
quantum of revenue and profit recognised in each
period. Licence revenue in the year amounted to
£34.9m (2020: £Nil)
Capitalised development costs
The Group capitalises development costs relating
to product development in line with IAS 38
'Intangible Assets'. Management applies judgement
in determining if the costs meet the criteria and
are therefore eligible for capitalisation. Significant
judgements include the technical feasibility of the
development, recoverability of the costs incurred,
economic viability of the product and potential
market available considering its current and future
customers and when, in the development process,
these milestones have been met. Development costs
capitalised during the year amounted to £19.7m (2020:
£3.4m), the increase largely due to the acquisition of
SDL in the year (see Note 13).
Estimates and assumptions
The key assumptions and estimates concerning the
future and other key sources of estimation uncertainty
at the reporting date, that have significant risk of
causing a material adjustment to the carrying amount
of assets and liabilities within the next financial year
are discussed below:
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.
Acquisition accounting
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
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
117
Notes to the Consolidated Financial Statements (continued)
3. REVENUE FROM CONTRACTS WITH CUSTOMERS
Accounting Policy
IFRS 15 provides a single, principles based five step
model to be applied to all sales contracts as outlined
below. It is based on the transfer of control of goods and
services to customers and replaces the separate models
for goods and services. The specific application of the five
step principles of IFRS 15 as they apply to the Group’s
revenue contracts with customers are explained below at
an income stream level. In addition to this, the individual
performance obligations identified within the Group’s
contracts with customers are individually described as
part of this note to the financial statements.
For multi-element arrangements, revenue is allocated
to each performance obligation based on stand-alone
selling price, regardless of any separate prices stated
within the contract. This is most common within the
Group’s contract for technology licences, which may
include performance obligations in respect of the
licences, support and maintenance, hosting services and
professional services. The Group’s software licences are
either perpetual, term or software as a service (SaaS) in
nature. The Group’s revenue contracts do not include
any material future vendor commitments and thus no
allowances for future costs are made.
The allocation of transaction price to these obligations
is a significant judgement, more details of the nature
and impact of the judgement are included in Note 2.
The identification of the performance obligations within
some multi-element arrangements involves judgement,
however none of the Group’s contracts requires
significant judgement in this regard.
Language Services contracts are typically billed in
arrears on completion of the work with revenue
recognised as accrued income balances. Patent filing
contracts are typically billed in arrears on completion
of the work with revenue recognised as accrued income
balances. The Group’s technology contracts are typically
billed in advance and revenue recognition deferred
where the performance obligation is satisfied over time.
The Group’s contracts for term licenses are recognised
upfront when performance obligations are delivered
in the same manner as a perpetual license sale but,
typically, are billed annually and do not follow the same
billing pattern as the Group’s contracts for perpetual
licenses, instead billing follows more closely that of a
SaaS license contract.
Disaggregated information about the Group’s revenue
recognition policy and performance obligations are
summarised below:
Patent Filing Services (IP Services segment)
The Group’s Patent Filing revenue contracts with
customers include a sole performance obligation which
is satisfied at a point in time, which, is completion
of patent filing and delivery to the client. Revenue is
recognised when the sole performance obligation
is satisfied, which is when the benefits of control of
the services provided are delivered to the customer.
Language Services (IP Services, Language Services and
Regulated Industries segments)
The Group’s Language Services contracts with
customers provide for the Group to be reimbursed for
their performance under the contract as the work is
undertaken. Accordingly, as the Group has both the right
to payment and no alternative use for the translated
asset, the Group recognises revenue over time for this
performance obligation.
The Group measures the completeness of this
performance obligation using input methods. The
relevant input method is the cost incurred to date as a
proportion of total costs, in determining the progress
towards the completion of the performance obligation
for Language Services contracts.
Perpetual and term licences (Language and Content
Technology segment)
The Group’s perpetual and term licences are accounted
for at a point in time when the customer obtains control
of the licence, occurring either where the goods are
shipped or, more commonly, when electronic delivery
has taken place and there is no significant future vendor
obligation.
The software to which the licence relates has significant
standalone functionality and the Group has determined
that none of the criteria that would indicate the licence
is a right to access apply. In addition, the Group has
identified no other performance obligations under
their contracts for these licences which would require
the Group to undertake significant additional activities
which affects the software. The Group therefore believes
the obligation is right to use the licence as it presently
exists and therefore applies the point in time pattern of
transfer. Transaction price is allocated to licenses using
the residual method based upon other components
of the contract. The residual method is used because
the prices of licenses are highly variable and there
is no discernible standalone selling price from past
transactions.
‘SaaS’ licences (Language and Content Technology
segment)
Unlike the Group’s perpetual and term licences, the
Group has identified that there are material ongoing
performance obligations associated with the provision of
SaaS licences. The Group has identified that this creates
a right to access the intellectual property, instead of a
right to use. Accordingly, the associated licence revenue
is recognised over time, straight line for the duration of
the contract. As with other licences, the Group utilises
the residual method to allocate transaction price to these
performance obligations.
118
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
Support and maintenance (Language and Content
Technology segment)
Professional services (Language and Content
Technology segment)
The Group provides professional services to customers
including training, implementation and installation
services alongside certain contracts for software
licences. These services are sold in units of consultant
time and are therefore measured on an output method
basis. Revenue is therefore recognised on these
engagements based on the units of time delivered
to the end customer. Transaction price is allocated
based upon the standalone selling price, calculated by
reference to the internal list prices for consultant time
subject to any discounts. A small number of the Group’s
professional services contracts are on a fixed price
contract and the output method is used based on an
appraisal of applicable milestones.
Support and maintenance represents a stand ready
obligation to provide additional services to the Group’s
licence customers over the period of support included
in the contract. The Group measures the obligation by
reference to the standalone selling price, based upon
internal list prices subject to discount. The pattern of
transfer is deemed to be over time on the basis that this
is a continuing obligation over the period of support
undertaken and accordingly, recognised as revenue on a
straight line basis over the course of the contract.
Hosting services (Language and Content Technology
segment)
The Group provides managed services (hosting) as part of
certain contracts with customers. The pattern of transfer
for the service is such that the customer simultaneously
receives and consumes the benefits provided by the Group
and therefore, is recognised over time for the duration of the
agreement. Transaction price from the contract is allocated to
hosting services obligations based upon a cost plus method.
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 the provision of software. 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
Language and Content Technology
At a point in time
Over time
Language Services (formerly Moravia)
At a point in time
Over time
Regulated Industries (formerly Life Sciences)
Total revenue from contracts with customers
2021
£m
25.3
88.3
113.6
24.0
76.4
100.4
-
317.6
317.6
-
162.9
162.9
694.5
Restated
2020
£m
30.4
82.4
112.8
-
0.4
0.4
-
171.3
171.3
-
71.3
71.3
355.8
Following the acquisition of SDL plc during the period, the company has determined that an amendment to the
accounting policy within the IP Services, Life Sciences and Moravia businesses was required to reflect correctly the
nature of these revenue streams as being ‘over time’ rather than the previously disclosed ‘point in time’ recognition.
The company has quantified the impact of this change on the FY21 balance sheet and considered the impact on
the FY20 balance sheet but data needed to calculate the contract asset at FY20 with accuracy is not retrospectively
available and it would be impractical to recreate the information required. While no adjustment has been made to the
prior period revenue or contract assets (and hence prior period earnings per share), management is confident that
this would not have a material effect on revenue in either period. The Group has made a prospective adjustment in
the current year and reported a contract asset of £1.7m (FY20: £Nil) in relation to these revenue streams in accordance
with the requirements of IAS 8. The above note for FY20 have been restated to reflect ‘over time’ revenue recognition
for these revenue streams in line with the corrected accounting policy.
Revenue recognised during the period that was included within deferred revenue at 1 October 2020 was £5.2m
(1 October 2019: £3.1m).
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
119
Notes to the Consolidated Financial Statements (continued)
Capitalised contract costs
Capitalised contract costs primarily relate to sales commission costs capitalised under IFRS15 and are amortised
over the length of the contract. The group has taken advantage of the practical expedient to recognise, as an
expense, any costs which would be recognised in fewer than 12 months from being incurred. This primarily relates
to the Group's language services commissions and point in time technology revenue related commissions. The
value of capitalised contract costs at year end was £2.7m (2020: £Nil).
Receivables, contract assets and contract liabilities with customers
Receivables, contract assets and contract liabilities
Net trade receivables
Contract assets (accrued income)
Contract liabilities (deferred income)
Notes
15
15
17
2021
£m
133.7
34.9
(43.0)
2020
£m
60.8
14.1
(5.2)
2019
£m
69.2
9.6
(3.1)
Contract assets are recognised where performance obligations are satisfied over time until the point at which the
Group's right to consideration is unconditional when these are classified as trade receivables which, is generally the
point of final invoicing.
For performance obligations satisfied over time, judgement is required in determining whether a right to
consideration is unconditional. In such situations, a receivable is recognised for the transaction price of the non-
cancellable portion of the contract when the Group starts satisfying the performance obligation. The Group
recognises revenue for partially satisfied performance obligations as ‘Accrued Income’, which is presented in note
15 to these financial statements.
The total value of transaction price allocated to unsatisfied or partially unsatisfied performance obligations at the
year-end is £49.1m. Support and maintenance is a stand ready obligation discharged straight line over the duration
of the Group’s software contracts, the period over which this is recognised can be identified based on the value
of current and non-current deferred income. Unsatisfied performance obligations in respect of language and
professional services are all short-term and expected to be recognised in less than one year.
The Group offsets any contract liabilities with any contract assets that may arise within the same customer contract,
typically, this only applies to the Group’s licence and support and maintenance revenue contracts. In all material
respects there are no significant changes in the Group’s contract asset or liability balances other than business-as-
usual movements during the year following the acquisition of SDL.
120
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
4. SEGMENT INFORMATION
The chief operating decision maker for the Group is identified as the Group’s Board of Directors collectively. The Board
reviews the Group’s internal reporting in order to assess performance and allocates resources. The Board divides
the Group into four reportable segments and assess the performance of each segment based on the revenue and
adjusted profit before tax. These measures are reconciled to the financial statements on page 164.
The Board have assessed the Group’s structure following the acquisition of SDL plc during the year and have revised
the previously disclosed segments of IP Services, Life Sciences and Moravia. The former SDL plc Group operated
a model with three reporting segments, which were Language Services, Content Technologies and Language
Technologies. The fSDL Language Services segment was split by processes and customers into Commercial
Enterprises and Regulated Industries which have been combined with the fRWS segments, Moravia and Life
Sciences to form respectively the new reporting segments Language Services and Regulated Industries.
A new segment entirely was created for the former SDL Content Technologies and Language Technology segments
which are now reported as a single segment as Language and Content Technology. This includes the Iconic
acquisition as well which derives its revenues from technology products and services and therefore has a better
strategic fit with the new Language and Content Technology section. The Group’s IP Services division has been
entirely unaffected by the SDL acquisition but, includes the results of the newly acquired Horn & Uchida business.
The revised, four reporting segments, which match the operating segments, are explained in more detail below:
> Language Services: This is the Group’s former Moravia segment, which has been expanded to include the SDL
Group’s commercial enterprises with non-regulated customers and the Webdunia customers from the prior
year. The revenues are derived by providing localisation services which include translation and adaptation of
content across a variety of media and materials to ensure brand consistency.
> Regulated Industries: The Group’s Regulated Industries segment combines the former RWS Life Sciences
segment with the SDL regulated industries customers. Revenue is generated through the translation and
linguistic validation for customers who operate in regulated industries such as life sciences.
> IP Services: The Group’s IP Services segment provides high quality patent translations, filing services and a
broad range of intellectual property (‘IP’) search services, including the Horn & Uchida acquisition in the year.
> Language and Content Technology ('Technology'): The Group’s Language and Content Technology segment
represents the combined results of the former SDL Content Technologies and Language Technology segments,
as well as the results of the previously acquired Iconic Translation Machines results to create the Group’s new
Language and Content Technology segment.
The prior year segment information is restated for comparability, excluding the results of the newly acquired
businesses in FY21, being the SDL and Horn & Uchida acquisitions.
Unallocated costs reflect corporate overheads and other expenses not directly attributed to segments.
Segment results for the year ended 30
September 2021
Technology
£m
IP Services
£m
Regulated
Industries
£m
Language
Services
£m
Unallocated
Costs
£m
Revenue from contracts with customers
Operating profit/(loss) before charging:
Amortisation of acquired intangibles
Acquisition costs
Exceptional items (see note 6)
Share-based payment expense
Profit from operations
Net finance income/(expense)
Profit before taxation
Taxation
Profit for the year
100.4
22.6
(7.4)
-
-
(0.8)
14.4
113.6
32.3
(0.1)
-
(5.0)
(0.2)
27.0
162.9
28.4
(14.5)
-
(0.2)
(0.1)
13.6
317.6
47.4
(12.4)
-
(1.6)
(0.2)
33.2
-
(12.2)
-
(11.2)
(7.3)
(0.1)
(30.8)
Group
£m
694.5
118.5
(34.4)
(11.2)
(14.1)
(1.4)
57.4
(2.4)
55.0
(13.8)
41.2
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
121
Notes to the Consolidated Financial Statements (continued)
Segment results for the year ended 30
September 2020
Technology
£m
IP Services
£m
Regulated
Industries
£m
Language
Services
£m
Unallocated
Costs
£m
Revenue from contracts with customers
Operating profit/(loss) before charging:
Amortisation of acquired intangibles
Acquisition costs
Exceptional items (see note 6)
Share-based payment expense
Profit/(loss) from operations
Net finance income/(expense)
Profit before taxation
Taxation
Profit for the year
0.4
-
(0.1)
-
-
-
(0.1)
112.8
30.2
(0.7)
-
(0.8)
(0.1)
28.6
71.3
21.0
(5.9)
(0.3)
-
(0.1)
14.7
171.3
24.7
(8.6)
(0.5)
(0.4)
(0.2)
15.0
-
(3.0)
-
(3.3)
9.0
(0.7)
2.0
The table below shows revenue by the geographic market in which clients are located.
Revenue by client location
UK
Continental Europe
United States of America
Rest of the world
2021
£m
77.3
213.8
322.9
80.5
694.5
Group
£m
355.8
72.9
(15.3)
(4.1)
7.8
(1.1)
60.2
(1.5)
58.7
(12.3)
46.4
2020
£m
30.0
104.9
193.0
27.9
355.8
No client accounted for more than 10% of Group revenue in the current year (2020: one), the customer in the prior
year was in the language services segment. The following is an analysis of revenue the geographical area in which
the Group’s undertakings are located.
Geographical information
UK
Continental Europe
United States of America
Rest of the world
Segment assets and liabilities
2021
£m
175.1
174.1
297.3
48.0
694.5
2020
£m
108.3
88.4
147.1
12.0
355.8
The Board of Directors previously reviewed the assets and liabilities at a segmental level in the prior year, however,
following the acquisition of SDL plc in the year, this is no longer the case. The former SDL Plc, employs shared assets
and liabilities in the servicing of its Language Services and Regulated revenues a practice which means that it is
not beneficial to the Board to separate these assets when reviewing the results of the Group. Geographical split of
non current assets for the enlarged group is not provided as it is not available, provided to the Board, or feasible to
develop without incurring significant cost.
Following the change in internal reporting, the Chief Operating Decision Makers primarily review and assess
the assets and liabilities of the Group in aggregate and do not regularly review segmental information for the
Group’s assets and liabilities. Accordingly, under IFRS 8 Operating Segments, since this information is not reported
internally, the Group no longer include this information in the Annual Report.
122
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
5. OPERATING PROFIT
Operating profit has been arrived at after charging/(crediting):
Total staff costs (before the capitalisation of internal development costs) (note 7)
Research and development expenditure
Depreciation of property, plant and equipment (note 14)
Depreciation of right of use assets (note 18)
Amortisation of intangible assets (note 13)
Foreign exchange losses/(gains)
Share based payment expense (note 22)
Expected credit loss expense (note 15)
(Gain)/loss on changes in fair values on derivative contracts (see note 20)
Operating lease rentals:
- Property (note 18)
- Plant and equipment (note 18)
Auditors’ remuneration
Fees payable to the Company’s auditors for the audit of the Group’s annual financial statements
- The audit of subsidiaries of the Company
Total audit fees
- Financial due diligence
- Other non audit services
Total fees
2021
£m
311.1
30.7
6.2
12.7
47.8
(0.7)
1.4
0.4
(3.2)
1.7
0.5
1.2
0.1
1.3
-
-
1.3
2020
£m
109.1
4.3
3.0
4.5
18.7
3.5
1.1
0.1
(0.4)
0.1
0.1
0.1
0.2
0.3
0.9
0.1
1.3
Research and development costs
Management continually review development expenditure to assess whether any costs meet the criteria for
capitalisation. In addition to the amounts charged to the income statement, the Group has capitalised £19.7m
(2020: 3.4m) of development costs in the year, further details can be found in Note 13.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
123
Notes to the Consolidated Financial Statements (continued)
6. EXCEPTIONAL ITEMS
Accounting policy
Exceptional items are those items that in management's judgement should be disclosed separately by virtue of
their size, nature or incidence, in order to provide a better understanding of the underlying financial performance
of the Group. In determining whether an event or transaction is exceptional, management considers qualitative
factors such as frequency or predictability of occurrence. Examples of exceptional items include the costs of
integration, severance and restructuring costs which Management do not believe reflect the business's trading
performance and therefore are adjusted to present consistency between periods.
IP Services transformation programme
Restructuring & integration related costs
Proceeds from warranty claim
Total exceptional items - operating
Net gain on debt modification (Note 8)
Amortisation of exceptional finance (Note 8)
Total exceptional items - financing
Total exceptional items
2021
Pre-tax
£m
(4.8)
(10.5)
1.2
(14.1)
-
(0.3)
(0.3)
(14.4)
2021
Tax impact
£m
1.2
2.3
-
3.5
-
-
-
2021
Total
£m
(3.6)
(8.2)
1.2
(10.6)
-
(0.3)
(0.3)
3.5
(10.9)
2020
Pre-tax
£m
2020
Tax impact
£m
-
(1.2)
9.0
7.8
1.4
(0.2)
1.2
9.0
-
0.2
-
0.2
-
-
-
0.2
2020
Total
£m
-
(1.0)
9.0
8.0
1.4
(0.2)
1.2
9.2
Included within integration and restructuring costs are the severance agreements, termination payments and other
costs included within the business's defined integration plan for SDL plc to deliver synergies of £33.0m which have
been communicated to the market. The costs of delivering these synergies is classified as exceptional to highlight
those costs incurred in delivering the integration and represent costs which are considered by the Group to be
outside the normal course of business. The Group has realised synergies of £16.4m through operating profit during
the period.
Severance related to on-going business activities is recognised within operating profit and is not adjusted.
Severance related costs totalled £9.2m of which £9.0m was paid during the year. The remaining £1.3m relates to
professional fees incurred in delivering the integration of which £1.0m has been paid in cash.
In 2020, the Group announced a major transformation programme was underway to drive improved efficiency in
FY22 and beyond within the IP Services division. In 2021, £4.8 million of expense was incurred and £2.5million of
cash cost. The transformation programme is expected to incur further additional material costs FY22 and FY23, the
ongoing benefits of the integration are included in operating profit in the statement of comprehensive income.
In the prior year, 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. A final amount of £1.2m was
received during the year relating to the same settlement claim.
Adjusted Performance Measures are reconciled on page 164 to 165 of the accounts.
124
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
7. EMPLOYEE COSTS
Accounting policy
Pension cost
The Group operates a defined contribution pension scheme, for its employees. The assets of the scheme are held
separately from those of the Group in independently administered funds. Contributions to defined contribution pension
schemes are recognised in profit or loss in the Consolidated Statement of Profit or Loss in the period to which they
become payable.
Wages and salaries
Reorganisation costs
Social security costs
Pension costs
Share-based payment expense (note 22)
2021
£m
253.4
13.4
34.5
8.4
1.4
311.1
2020
£m
89.5
1.2
15.2
2.1
1.1
109.1
Details of Directors’ remuneration and pension contributions are disclosed in the Directors’ Remuneration Report
on pages 88 to 95. Key management remuneration disclosures are disclosed as part of Related Party Transactions
in note 25. Staff costs above are stated before the capitalisation of staff costs in respect of the Group's research and
development activities, the total value of staff costs capitalised were £19.7m (2020: £3.4m).
The Group operates a defined contribution pension scheme, making payments on behalf of employees to their
personal pension plans. Payments of £8.4m (2020: £2.1m) were made in the year and charged to profit and loss
in the statement of comprehensive income in the period in which they fell due. At the year end there were unpaid
amounts included in other payables totalling £1.8m (2020: £0.1m). The monthly average staff numbers were:
Production staff
Administrative staff
8. FINANCE INCOME AND COSTS
Finance income
- Return on short term deposits
- Net gain on debt modification - Exceptional (note 6)
Finance costs
- Bank interest payable
- Other interest payable
- Lease interest
- Amortisation of borrowing costs
- Amortisation of borrowing costs - Exceptional (note 6)
Net finance cost
2021
£m
5,671
1,989
7,660
2021
£m
-
-
-
(0.8)
0.5
(1.5)
(0.3)
(0.3)
(2.4)
(2.4)
2020
£m
2,219
537
2,756
2020
£m
0.1
1.4
1.5
(1.7)
-
(0.7)
(0.4)
(0.2)
(3.0)
(1.5)
On 10 February 2020 the Group completed a refinancing of its term loan (see note 16 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. A gain on the debt modification of £1.2m
was recognised in the prior year, less subsequent associated amortisation of £0.2m. In the current period the
amortisation expense on this gain amounted to £0.3m.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
125
Notes to the Consolidated Financial Statements (continued)
9. TAXATION
Taxation
The charge for current taxation is based on the results for the year as adjusted for items which are non-assessable
or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance
sheet date. Current tax assets and liabilities are offset when the relevant tax authority permits net settlement
and the group intends to settle on a net basis.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes where this differs.
Deferred tax is not recognised for temporary differences related to investments in subsidiaries and associates
where the Group is able to control the timing of the reversal of the temporary difference and it is probable that
this will not reverse in the foreseeable future; on the initial recognition of non-deductible goodwill; and on the
initial recognition of an asset or liability in a transaction that is not a business combination and that, at the time
of the transaction, does not affect the accounting or taxable profit.
Deferred tax is measured on an undiscounted basis, and at the tax rates that have been enacted or substantively
enacted by the reporting date that are expected to apply in the periods in which the asset or liability is settled
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available
against which they can be used and are reviewed at each reporting date.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation
authority, when the Group intends to settle its current tax assets and liabilities on a net basis and that authority
permits the Group to make a single net payment.
Current and deferred tax is recognised in the income statement except when it relates to items credited or
charged directly to other comprehensive income or equity, in which case the current or deferred tax is also
recognised within other comprehensive income or equity respectively (for example share-based payments).
Uncertain tax positions
The Group operates in numerous tax jurisdictions around the world. At any given time, the Group is involved in
disputes and tax audits and will have a number of tax returns potentially subject to audit, significant issues may
take several years to resolve. In estimating the probability and amount of any tax charge, management takes into
account the views of internal and external advisers and updates the amount of tax provision whenever necessary.
The ultimate tax liability may differ from the amount provided depending on interpretations of tax law, settlement
negotiations or changes in legislation. As referenced in note 2, the Group considers all tax positions separately
and uses either the most likely or expected value method of calculation on a case by case basis.
VAT
Revenues, expenses and assets are recognised net of the amount of VAT except:
> where the VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case
the VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
> trade receivables and payables are stated with the amount of VAT included.
The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of receivables
or payables in the balance sheet.
Taxation recognised in income and equity is as follows:
Current Tax Charge
- UK corporation tax at 19% (2020: 19%)
- Overseas current tax (credit) / charge
Adjustment in respect of previous years
Deferred Tax Charge
Origination and reversal of temporary differences
Rate change impact
Adjustment in respect of previous years
Total tax expense in profit or loss
Total tax charge in equity
Total tax in other comprehensive income
Total tax charge for the year
2021
£m
4.7
15.9
(3.0)
(4.4)
2.0
(1.4)
13.8
(0.4)
0.2
13.6
2020
£m
3.5
9.7
0.2
(1.2)
-
0.1
12.3
1.0
-
13.3
126
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
Reconciliation of the Group’s tax charge to the UK statutory rate:
Profit before taxation
Notional tax charge at UK corporation tax rate of 19.0% (2019: 19.0%)
Effects of:
Expenses not deductible for tax purposes
Adjustments in respect of previous years
Changes in tax rates
Higher/(lower) tax rates on overseas earnings
Tax charge as per the income statement
Effective tax rate
Factors that may affect future tax charges
2021
£m
55.0
10.4
2.4
(4.4)
2.0
3.4
13.8
2020
£m
58.7
11.2
(1.7)
0.4
-
2.4
12.3
25.1%
21.0%
The Group’s taxation strategy is aligned to its business strategy and operational needs. The Directors are
responsible for tax strategy supported by a global team of tax professionals and advisers. RWS strives for an open
and transparent relationship with all tax authorities and are vigilant in ensuring that the Group complies with
current tax legislation.
The Group’s effective tax rate for the year is higher than the UK’s statutory tax rate due to the impact of non-tax
deductibility of costs related to the acquisition of SDL, as well as a rate change impact to deferred tax balances
following the enactment of the increase in the main rate of UK corporation tax from 19.00% to 25.00% for the
year starting 1 April 2023. The Group’s tax rate is also sensitive to the geographic mix of profits and reflects a
combination of higher rates in certain jurisdictions, such as Germany and Japan, a lower rate in the UK and Czech
Republic with other rates that lie in between.
The Group made corrections of errors totalling £3.5m within its assessment of current and deferred tax which dates
back prior to the earliest period presented within these financial statements. Of the corrections, £2.6m have been
adjusted for in the current period income statement and £0.9m through an adjustment to Goodwill.
The majority of the income statement credit (£2.2m in current tax and £1.0m in deferred tax) relates to the US and
arose from an exercise to reconcile the US tax numbers to US tax returns. The adjustment to goodwill (see note 12)
represents a £0.9m decrease made to the deferred tax liability recognised on intangibles acquired on the Moravia
acquisition in 2018 to reflect the correct blended state tax rate.
Transfer Pricing
Tax liabilities are recognised when it is considered probable that there will be a future outflow of funds to a tax
authority. The methodology used to estimate liabilities is set out in Note 2. In common with other multinational
companies and given the Group has operations in 39 countries, transfer pricing arrangements are in place covering
transactions that occur between Group entities.
A number of pre-existing tax risks were provided for within the SDL business including a net provision of £2.3m
relating to historic transfer pricing arrangements between the UK, Ireland and the US for the 4 years ended 31
December 2017. During the period, the discussions with UK tax authorities regarding the period 1 January 2014 to
31 December 2016 were concluded with no additional tax UK liabilities being assessed. As a consequence the Group
has reduced the net provision by £1.9m to £0.4m by the year end date. The reduction has been recorded through
the income statement as an adjustment in respect of prior periods.
The Group undertook a review of historic transfer pricing uncertain tax positions ('UTPs') within the acquired SDL
business, and whilst it is not possible to predict the outcome of any pending tax authority investigations, adequate
provisions are considered to be included in the Group accounts to cover any expected estimated future settlement.
In carrying out this review, and subsequent quantification, management has made judgements, taking into
account: the status of any unresolved matters; strength of technical argument and clarity of legislation; external
advice, statute of limitations and any expected recoverable amounts under the Mutual Agreement Procedure
('MAP'). As a result of the review the Group concluded that at the date of acquisition UTPs for transfer pricing
existed and a provision was required. This provision increased during the year to reflect current period trading.
The current tax liability of £22.1m on the balance sheet comprises £18.5m of uncertain tax provisions, although it
is not expected that these will be cash settled within 12 months of the year end date. The deferred tax liability of
£51.2m on the balance sheet is net of £11.1m of deferred tax assets relating to uncertain tax positions.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
127
Notes to the Consolidated Financial Statements (continued)
Share based
payments
£m
Accelerated
capital
allowances
£m
Other
temporary
differences
£m
Acquired
intangibles
£m
Tax losses
£m
At 1 October 2019
1.3
(0.7)
Adjustments in respect of prior years
Acquisitions (restated**)
Credited to income
Credited to equity / OCI
Foreign exchange differences
At 30 September 2020
Adjustments in respect of prior years
Acquisitions*
Credited to income
Credited to equity / OCI
Foreign exchange differences
At 30 September 2021
-
-
-
(1.1)
-
0.2
(0.3)
0.1
0.2
0.4
-
0.6
-
-
(0.4)
-
-
(1.1)
(0.5)
0.1
(0.2)
-
-
(1.7)
1.4
(0.1)
-
-
(0.3)
-
1.0
1.6
2.6
1.8
-
(0.2)
6.8
(29.2)
-
(2.1)
1.5
-
1.3
(28.5)
(0.3)
(44.4)
0.5
-
1.1
(71.6)
-
-
-
-
-
-
-
0.9
15.3
0.1
-
(0.1)
16.2
*The acquisitions line includes £0.9m of deferred tax in respect of the Moravia error correction referenced in this note
Total
£m
(27.2)
(0.1)
(2.1)
1.1
(1.4)
1.3
(28.4)
1.4
(26.3)
2.4
0.4
0.8
(49.7)
Deferred tax assets and liabilities are presented on the balance sheet after jurisdictional netting as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred tax liability
2021
£m
1.5
(51.2)
(49.7)
Restated**
2020
£m
1.9
(30.3)
(28.4)
**Following the finalisation of the Webdunia Purchase Price Allocation in the year certain balances have been restated (see note 24)
Deferred tax assets and liabilities
Deferred tax is calculated using tax rates that are expected to apply in the period when the liability has been settled
or the asset realised based on tax rates that have been enacted or substantively enacted at the reporting date.
Most deferred tax assets are recognised because they can offset the future taxable income from existing taxable
differences (primarily on acquired intangibles) relating to same jurisdiction or entity. Where there are insufficient
taxable differences, deferred tax assets are recognised in respect of losses and other deductible differences where
current forecasts indicate profits will arise in future periods against which they can be deducted.
Losses
At the balance sheet date the Group has unused tax losses of £127.6m (2020: £12.8m) available for offset against
future profits. A deferred tax asset of £16.7m (2020: £Nil) has been recognised in respect of £72.6m (2020: £Nil) of
such losses. These losses include corresponding adjustments that could be claimed on settlement of uncertain tax
positions with overseas tax authorities as accounted for under IFRIC 23.
No deferred tax asset has been recognised in respect of the remaining £55.0m (2020: £12.8m) as these can only
be used to offset limited types of profits and as it is not considered probable that there will be the required type of
future trading or non-trading profits available in the correct entities necessary to permit offset and recognition.
The unrecognised deferred tax asset on losses is £13.8m (2020: £2.4m).
Recognised deferred tax assets principally relate to UK and US activities of the acquired SDL business.
The Group has recognised deferred tax assets on losses in the US which have a 20 year expiry date and expects to
use these losses in this period, the earliest date these losses expire is 31 December 2033 and at the year-end losses
amounted to £10.0m (2020: £Nil).
128
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
10. DIVIDENDS TO SHAREHOLDERS
Accounting policy
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.
Final ordinary dividend for the year ended 30 September 2021 was 7.25p (2020: 7.25p)
Interim dividend, paid 16 July 2021 was 2.00p (2020: paid 17 July 2020)
2021
£m
28.2
7.8
36.0
2020
£m
19.3
4.8
24.1
The Directors recommend a final dividend in respect of the financial year ended 30 September 2021 of 8.5 pence
per ordinary share, to be paid on 25 February 2022 to shareholders who are on the register at 28 January 2022. This
dividend is not reflected in these financial statements as it does not represent a liability at 30 September 2021. The
final proposed dividend will reduce shareholders’ funds by an estimated £33.1 million.
11. EARNINGS PER SHARE
Accounting policy
Basic earnings per share
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.
Diluted earnings per share
Diluted earnings per share is calculated by adjusting the basic earnings per share for the effects of share options
and awards granted to employees. These are included in the calculation when their effects are dilutive.
Adjusted earnings per share
Adjusted earnings per share is a trend measure, which presents the long-term profitability of the Group, excluding
the impact of specific transactions that management considers affects the Group's short-term profitability. The Group
presents this measure to assist investors in their understanding of trends. Adjusted earnings is the numerator used for
this measure. 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.
The reconciliation between the basic and adjusted earnings per share is as follows:
Profit for the year
Adjustments:
Amortisation of acquired intangibles
Acquisition costs
Share based payments expense
Net gain of debt modification
Exceptional items
Tax effect of adjustments
Tax adjustments in respect of prior years
Adjusted earnings
2021
£m
41.2
34.4
11.2
1.4
0.3
14.1
(7.3)
(4.5)
90.8
2020
£m
46.4
15.3
4.1
1.1
(1.2)
(7.8)
(3.4)
-
54.5
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
2021
Basic earnings
per share
pence
2020
Basic earnings
per share
pence
2021
Diluted earnings
per share
pence
2020
Diluted earnings
per share
pence
10.9
16.9
10.9
16.9
23.8
19.9
23.8
19.9
2021
Number
2020
Number
378,460,314
648,504
274,995,438
119,359
379,108,818
275,114,797
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
129
Notes to the Consolidated Financial Statements (continued)
12. GOODWILL
Cost and net book value
At 1 October
Additions (note 24)
Adjustments in respect of prior periods (note 9)
Exchange adjustments
At 30 September
2021
£m
257.2
378.6
(1.0)
(19.0)
615.8
Restated*
2020
£m
249.4
17.8
-
(10.0)
257.2
*The amount of goodwill is restated and does not correspond to the values in the 2020 financial statements since adjustments were made to the
final valuation of Webdunia, more details are included in note 24.
Accounting policy
Goodwill arising on business combinations (representing the excess of fair value of the consideration given over
the fair value of the separable net assets acquired) is capitalised, and its subsequent measurement is based on
annual impairment reviews, with any impairment losses recognised immediately in profit or loss in the statement
of comprehensive income. Direct costs of acquisition are recognised immediately in profit or loss in the statement
of comprehensive income as an expense.
At least annually, or when otherwise required, Directors review the carrying amounts of the Group’s property,
plant and equipment and intangible assets to determine whether there is any indication of an impairment loss.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent
of any impairment loss. A full impairment review is performed annually for goodwill regardless of whether an
indicator of impairment exists.
The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money as well as risks specific to the asset (or cash generating
unit ('CGU')) for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying
amount of the asset or CGU is reduced to its recoverable amount. An impairment loss is recognised as an expense
immediately in profit or loss in the consolidated statement of comprehensive income.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised
estimate of its recoverable amount, but not beyond the carrying amount that would have been determined had
no impairment loss been recognised for the asset in prior-years. A reversal of an impairment loss is recognised
immediately as income in the Consolidated Statement of Profit or Loss, although impairment losses relating to
goodwill may not be reversed.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried
out on the smallest group of assets to which it belongs for which there are separately identifiable cash flows; its
CGU. Goodwill is allocated on initial recognition to each of the Group’s CGUs that are expected to benefit from the
synergies of the combination giving rise to the goodwill. Goodwill is allocated at the lowest level monitored by
management, and no higher than an operating segment.
130
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
Key assumptions for the value in use - 30 September 2021
Long-term
growth rate
Discount
rate
Average revenue
growth
IP Services
Life Sciences
Moravia
SDL - Technology
SDL - Language Services
SDL - Regulated industries
Key assumptions for the value in use - 30 September 2020
IP Services
Life Sciences
Moravia
Iconic (as formerly classified, in 2021 included as part of 'SDL - Technology')
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
3.0%
10.4%
10.9%
11.0%
11.4%
11.1%
12.3%
9.0%
10.6%
10.5%
11.0%
4.0%
5.5%
5.5%
8.0%
5.5%
5.5%
2.8%
5.2%
5.0%
32.1%
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.
Determination of key assumptions
The long-term growth rate is the rate applied to determine the terminal value on year five cash flows. This rate
is determined by the long term compound annual growth rate in adjusted operating profit as estimated by
Management with reference to external benchmarks.
The discount rate is the pre-tax discount rate calculated by Management based on a series of inputs starting with a
risk free rate based on the return on long term, zero coupon government bonds. The risk free rate is adjusted with a
beta to reflect sensitivities to market changes, before consideration of other factors such as a company risk premium.
Revenue growth is the average annual increase in revenue over the five-year projection period. The revenue growth
rate is determined by Management based on the most recently prepared budget for the future period and adjusted
for longer term developments within operating segments where such developments are known and possible to
reliably forecast.
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 the assessment of the carrying value of Goodwill, the Directors believe there are three cash-
generating units where reasonably possible changes to the underlying assumptions exist that would give rise to an
impairment. These CGUs are Moravia, SDL - Techology and SDL - Regulated Industries.
For Moravia, sensitivity analyses have been performed for this cash generating unit. The recoverable amount
exceeds the carrying value by £46.1 million (2020: £87.4m). An increase in the pre-tax discount rate of 190 basis
point from 11.0% to 12.9% would lead to the recoverable amount of Moravia equalling its carrying amount (2020:
260 basis points, from 10.5% to 13.1%).
For SDL - Technology, sensitivity analyses have been performed for this cash generating unit. The recoverable
amount exceeds the carrying value by £38.1 million. An increase in the pre-tax discount rate of 100 basis point from
11.4% to 12.4% would lead to the recoverable amount equalling its carrying amount.
For SDL - Regulated Industries, sensitivity analyses have been performed for this cash generating unit. The
recoverable amount exceeds the carrying value by £32.8 million. An increase in the pre-tax discount rate of 260
basis point from 12.3% to 14.9% would lead to the recoverable amount equalling 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.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
131
Notes to the Consolidated Financial Statements (continued)
The allocation of goodwill to each CGU is as follows:
IP Services
Life Sciences
Moravia
Iconic (as formerly classified, in 2021 included as part of 'SDL - Technology')
SDL - Technology*
SDL - Language Services
SDL - Regulated Industries
At 30 September
2021
£m
31.3
67.3
133.6
-
242.8
74.5
66.3
615.8
Restated*
2020
£m
31.2
69.9
147.8
8.5
-
-
-
257.2
*The formerly disclosed Iconic segment in the prior year is now included as part of the SDL - Technology CGU.
At 30 September 2021, a customer relationship was transferred from the Moravia CGU to SDL Language Services CGU, due
to the transfer of the contract between the CGUs as a result of commercial decisions made in respect of this one customer.
13. INTANGIBLE ASSETS
Accounting Policy
Intangible assets are carried at cost less accumulated amortisation and impairment losses. Intangible assets
acquired from a business combination are initially recognised at fair value. An intangible asset acquired as part of
a business combination is recognised outside goodwill if the asset is separable or arises from contractual or other
legal rights.
Where computer software is not an integral part of a related item of computer hardware, the software is classified
as an intangible asset. The capitalised costs of software for internal use include external direct costs of materials
and services consumed in developing or obtaining the software, and directly attributable payroll and payroll-
related costs arising from the assignment of employees to implementation projects. Capitalisation of these costs
ceases when the software is substantially complete and ready for its intended internal use.
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
5 to 8 years
10 years
13 years
5 years
5 years
5 years
Client relationships
7 to 20 years
Research and development
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, these
costs are recognised in administrative expenses within
the consolidated statement of comprehensive income.
Research costs are expensed as incurred. Development expenditure is capitalised when management is satisfied
that the expenditure being incurred meets the recognition criteria from IAS 38. Specifically, this is at the point
which management believe they can demonstrate:
> The technical feasibility of completing the asset,
> The intention to complete the asset for use or sale,
> The ability to use or sell the asset,
> The future benefits expected to be realised from the sale or use of the asset,
> The availability of sufficient resources to enable completion of the asset,
> Reliable measurement for the costs incurred during the course of development.
132
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
Where these criteria are not met the expenditure is expensed to the income statement. Following the initial
capitalisation of the development expenditure the cost model is applied, requiring the asset to be carried at cost less
any accumulated amortisation and impairment losses. Any expenditure capitalised is amortised over the period of
expected future economic benefit from the related project. For capitalised development costs this period is 3 to 5 years.
The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use or
more frequently when an indicator of impairment arises during the reporting period indicating that the carrying
value may not be recoverable.
Development costs that are subject to amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
Clinician
& supplier
databases
£m
Technology
£m
Non-compete
& Trademarks
£m
Client
relationships
& order books
£m
Internally
generated
software
£m
Software
£m
Cost
At 1 October 2019
Additions
Acquisitions (restated*)
Disposals
Currency translation
At 30 September 2020
Additions
Acquisitions (note 24)
Disposals
Currency translation
At 30 September 2021
Trade
names
£m
10.0
-
-
-
(0.5)
9.5
-
-
(9.1)
(0.4)
-
Accumulated amortisation and impairment
At 1 October 2019
Amortisation charge
Disposals
Currency translation
At 30 September 2020
Amortisation charge
Disposals
Currency translation
At 30 September 2021
Net book value
At 30 September 2019
At 30 September 2020
At 30 September 2021
4.0
1.8
-
(0.2)
5.6
3.7
(9.1)
(0.2)
-
6.0
3.9
-
6.6
-
0.7
-
(0.7)
6.6
-
-
-
(0.2)
6.4
2.2
0.6
-
(0.1)
2.7
0.6
-
(0.1)
3.2
4.4
3.9
3.2
5.7
-
0.8
-
(0.2)
6.3
10.3
107.1
-
(0.3)
123.4
4.2
0.6
-
(0.1)
4.7
15.5
-
(0.2)
20.0
1.5
1.6
103.4
2.3
188.7
-
-
-
(0.1)
2.2
-
-
-
(0.1)
2.1
1.3
0.4
-
(0.1)
1.6
0.4
-
(0.1)
1.9
1.0
0.6
0.2
-
6.5
-
(7.5)
187.7
-
139.4
(3.1)
(11.0)
313.0
39.5
11.9
-
(1.4)
50.0
23.0
(3.1)
(1.7)
68.2
149.2
137.7
244.8
12.4
1.7
0.2
(1.5)
(0.3)
12.5
1.8
-
(1.6)
-
12.7
9.1
1.1
(1.5)
(0.2)
8.5
1.6
(1.3)
-
8.8
3.3
4.0
3.9
6.5
3.4
-
-
(0.1)
9.8
9.4
-
(3.7)
-
15.5
2.9
2.3
-
(0.1)
5.1
3.0
(3.7)
-
4.4
3.6
4.7
11.1
Total
£m
232.2
5.1
8.2
(1.5)
(9.4)
234.6
21.5
246.5
(17.5)
(12.0)
473.1
63.2
18.7
(1.5)
(2.2)
78.2
47.8
(17.2)
(2.3)
106.5
169.0
156.4
366.6
*The amount of intangibles is restated and does not correspond to the values in the 2020 financial statements since adjustments were made to the final
valuation of Webdunia, more details are included in note 24.
Amortisation of acquired intangibles was £34.4m (2020: £15.3m) and amortisation of other intangibles was £13.4m
(2020: £3.4m). The £13.4m amortisation of other intangibles comprises £1.6m on amortisation of software (2020:
£1.1m), £3.0m on internally developed intangibles (2020: £2.3m) and an additional £9.0m of technology which
relates to the SDL business (2020: £Nil). The residual £34.4m of amortisation was wholly incurred on acquired
intangible assets.
The Group has identified intangible assets which are individually material. Within Technology, these comprise the
balance in respect of SDL technology products acquired in the year of £74.2m (2020: £Nil) and SDL's Helix platform
of £18.9m (2020: £Nil). Material customer relationships from past acquisitions include Moravia of £81.1m (2020:
£98.2m), Life Sciences of £11.8m (2020: £14.6m) and newly acquired SDL relationships of £124.4m (2020:£Nil).
No other classes of intangible asset hold individually material items, the remaining average useful life is 12 years.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
133
Notes to the Consolidated Financial Statements (continued)
14. PROPERTY, PLANT AND EQUIPMENT
Accounting policy
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
Nil
50 years
Leasehold land, buildings
and improvements
Shorter of useful economic
life and lease term
Furniture and equipment
3 to 10 years
Motor vehicles
6 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 profit or loss 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
profit or loss in the statement of comprehensive income.
Included within freehold land and buildings at 30 September 2020 was freehold land of £5.6m (2020: £5.6m).
There were no gains or losses on disposal in the year, no assets included in property plant and equipment were
subject to any specific security or contractual commitments (2020: None).
Cost
At 1 October 2019
Currency translation
Additions
Acquisitions
Disposals
At 30 September 2020
Currency translation
Additions
Acquisitions
Disposals
At 30 September 2021
Accumulated depreciation
At 1 October 2019
Currency translation
Depreciation charge
Disposals
At 30 September 2020
Currency translation
Depreciation charge
Disposals
At 30 September 2021
Net book value
At 30 September 2019
At 30 September 2020
At 30 September 2021
Freehold land
and buildings
£m
Leasehold land,
buildings and
improvements
£m
Furniture and
equipment
£m
Motor
vehicles
£m
17.0
-
-
-
-
17.0
-
-
-
-
17.0
1.9
-
0.2
-
2.1
-
0.2
-
2.3
15.1
14.9
14.7
3.5
(0.1)
0.1
-
(0.2)
3.3
(0.1)
0.6
4.6
-
8.4
1.9
(0.2)
0.4
(0.2)
1.9
0.1
1.1
-
3.1
1.6
1.4
5.3
18.0
(0.5)
2.8
0.3
(1.0)
19.6
(0.3)
3.5
7.4
(0.6)
29.6
11.9
(0.1)
2.4
(1.0)
13.2
0.1
4.9
(0.6)
17.6
6.1
6.4
12.0
0.2
-
-
-
-
0.2
-
-
-
-
0.2
0.1
-
-
-
0.1
-
-
-
0.1
0.1
0.1
0.1
Total
£m
38.7
(0.6)
2.9
0.3
(1.2)
40.1
(0.4)
4.1
12.0
(0.6)
55.2
15.8
(0.3)
3.0
(1.2)
17.3
0.2
6.2
(0.6)
23.1
22.9
22.8
32.1
134
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
15. TRADE AND OTHER RECEIVABLES
Accounting policy
Trade and other receivables are carried at amortised cost less expected credit losses. They are included in current
assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non
current assets. 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.
The Group has no significant concentration of credit risk, with exposure spread over a large number of customers
and geographies.
Accrued income relates to the Group’s rights to consideration for work performed but not billed at the reporting
date for language and professional services. Accrued income balances are transferred to trade receivables when
there is an unconditional right to consideration, generally, when an invoice is issued to the customer.
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.
Trade receivables
Other receivables
Prepayments
Accrued income
At 30 September
2021
Gross
136.3
9.4
13.8
35.6
195.1
2021
Provisions
2021
Net
(2.6)
133.7
-
-
(0.7)
(3.3)
9.4
13.8
34.9
191.8
2020
Gross
61.3
3.0
4.2
14.1
82.6
2020
Provisions
(0.5)
-
-
-
(0.5)
Trade receivables net of allowances are held in the following currencies at the
reporting date:
Sterling
Euros
Japanese Yen
US Dollars
Swiss Francs
Other
2021
£m
9.8
30.3
2.9
81.6
0.9
8.2
133.7
2020
Net
60.8
3.0
4.2
14.1
82.1
2020
£m
2.9
10.9
0.9
44.1
0.7
1.3
60.8
The following table provides information about the exposure to
credit risk for trade receivables at 30 September 2021:
Not past due
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
Past due > 90 days
Gross
amount
£m
107.4
14.7
6.6
3.4
4.2
136.3
Loss
allowance
£m
Net amount
£m
-
-
-
(0.1)
(2.5)
(2.6)
107.4
14.7
6.6
3.3
1.7
133.7
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
135
Notes to the Consolidated Financial Statements (continued)
The following table provides information about the exposure to
credit risk for trade receivables at 30 September 2020:
Gross
amount
£m
Loss
allowance
£m
Net amount
£m
Not past due
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
Past due > 90 days
Movement in expected credit loss provisions:
At 1 October
Utilised
Acquired
Released
Charge for the year
At 30 September
16. LOANS
Accounting policy
46.4
7.9
3.4
1.0
2.6
61.3
-
-
-
-
(0.5)
(0.5)
46.4
7.9
3.4
1.0
2.1
60.8
Trade
Debtors
2021
Accrued
Income
2021
Trade
Debtors
2020
Accrued
Income
2020
0.5
(0.2)
1.9
-
0.4
2.6
-
-
0.9
(0.2)
-
0.7
0.5
(0.2)
0.1
-
0.1
0.5
-
-
-
-
-
-
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.
When an existing loan facility is replaced by another from the same lender on substantially different terms,
or the terms of an existing loan are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying
amounts is recognised in the profit or loss in the statement of comprehensive income.
Due in more than one year
Loan
Issue costs
At 30 September
2021
£m
49.2
(2.0)
47.2
2020
£m
69.1
(2.6)
66.5
Analysis of net debt - 30 September 2021
At 1 October
£m
Acquired
£m
Cash flows
£m
Non-cash
charges
£m
At 30 September
£m
Cash and cash equivalents
Issue costs
Loans (current and non-current)
Net debt - Excluding lease liabilities - ("Net debt”)
Lease liabilities
Net debt - Including lease liabilities
51.4
2.6
(69.1)
(15.1)
(22.8)
(37.9)
55.8
(13.1)
-
-
55.8
(37.7)
18.1
-
17.7
4.6
12.6
17.2
(1.6)
(0.6)
2.2
-
(3.6)
(3.6)
92.5
2.0
(49.2)
45.3
(51.5)
(6.2)
136
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
Analysis of net debt - 30 September 2020
At 1 October
£m
Cash and cash equivalents
Issue costs
Loans (current and non-current)
Net debt - Excluding lease liabilities - ("Net debt”)
Lease liabilities
Net debt - Including lease liabilities
47.0
1.1
(84.8)
(36.7)
(25.0)
(61.7)
Acquired
£m
(23.0)
-
-
(23.0)
(1.9)
(24.9)
Cash flows
£m
Non-cash
charges
£m
At 30 September
£m
27.6
0.6
13.7
41.9
4.1
46.0
(0.2)
0.9
2.0
2.7
-
2.7
51.4
2.6
(69.1)
(15.1)
(22.8)
(37.9)
Non-cash charges against the loan balance represent the effects of foreign exchange on the financial liability.
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 same terms, which is accessible subject to lender consent. Details of the Group's full available facilities are
included in note 1, the non-cash movements in issue costs above of £0.9m in the prior year include the modification gain.
Under the terms of the ARA, the Group’s interest margin over US LIBOR, is determined by the Group’s net leverage.
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 which is due to expire in parallel with the RCF.
Further information on the impact of LIBOR reform on the Group can be found in note 20.
17. TRADE AND OTHER PAYABLES
Due in less than one year
Trade payables
Other taxes and social security costs
Other payables
Accruals
Deferred consideration (see note 19)
Deferred income
At 30 September
2021
£m
28.1
5.3
14.7
61.6
1.5
40.8
152.0
2020
£m
21.7
1.9
2.5
26.3
-
5.2
57.6
The deferred consideration of £1.5m above is in respect of the Iconic acquisition from the prior year which, was
subject to a deed of amendment to the Share Purchase Agreement in the year (see note 24). Previous contingent
consideration recognised in provisions was extinguished and replaced with deferred consideration, a gain of £0.2m
on the modification was recognised within exceptional items, in administrative expenses.
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 income
Other payables
At 30 September
2021
£m
2.2
0.2
2.4
2020
£m
-
0.3
0.3
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
137
Notes to the Consolidated Financial Statements (continued)
18. LEASES
Accounting policy
The Group applies a single recognition and measurement approach for all leases, except for short-term leases
and leases of low-value assets. The Group recognises lease liabilities and right-of-use assets representing the
right to use the underlying assets. In the prior year, on transitioning to IFRS16, the Group adopted the modified
retrospective approach and utilised all available practical expedients in approaching the transition.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or
before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a
straight-line basis over the lease term.
If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise
of a purchase option, depreciation is calculated using the estimated useful life of the asset.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance
fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and
amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease,
if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on
an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which
the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the
lease commencement date because the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the
lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a
change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in
an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the
underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of certain leasehold property
and motor vehicles (i.e., those leases that have a lease term of 12 months or less from the commencement date and do
not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office
equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets
are recognised as expense on a straight-line basis over the lease term.
Lease modifications
Where factors arise which give rise to a modification of a lease and to re-measure a lease liability, the Group
calculates the required re-measurement based on the revised discounted lease payments under the modified
lease agreement with the lessor. Any re-measurement adjustments identified are recognised with a corresponding
entry against the carrying value of the right of use asset unless the lease is being fully terminated where any gain
or loss is recognised in profit or loss.
138
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
Group as a lessee
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the year:
Right-of-use assets
At 1 October
Acquisitions
Additions
Depreciation expense
Re-measurement adjustments
Currency adjustment
At 30 September 2020
Additions
Leases acquired on acquisition of subsidiary
Depreciation expense
Re-measurement adjustments
Currency adjustment
At 30 September 2021
Property
£m
Office Equipment
£m
22.6
1.9
0.2
(4.3)
(0.6)
(0.6)
19.2
2.0
34.1
(11.8)
-
(1.1)
42.4
1.1
-
-
(0.2)
-
-
0.9
-
-
(0.9)
-
-
-
Set out below are the carrying amounts of lease liabilities and the movements during the year:
Lease liabilities
At 1 October
Additions
Leases acquired on acquisition of subsidiary
Accretion of interest
Re-measurement adjustments
Repayments
Currency adjustment
At 30 September
Current
Non-current
The maturity analysis of lease liabilities is disclosed in Note 20.
Depreciation expense on right of use assets
Interest expense on lease liabilities
Expense relating to short term leases*
Expense relating to leases of low value assets*
Total amount recognised in profit or loss
2021
£m
22.8
4.3
37.7
1.5
-
(12.6)
(2.2)
51.5
11.0
40.5
2021
£m
12.7
1.5
1.7
0.5
16.4
Total
£m
23.7
1.9
0.2
(4.5)
(0.6)
(0.6)
20.1
2.0
34.1
(12.7)
-
(1.1)
42.4
2020
£m
25.0
0.2
1.9
0.7
0.2
(4.1)
(1.1)
22.8
3.2
19.6
2020
£m
4.5
0.7
0.1
0.1
5.4
*The expenses in respect of short term and low value leases are recognised in administrative expenses
The Group had total cash outflows for leases of £14.8m (2020: £4.3m). The Group had no non-cash additions to
right-of-use assets and lease liabilities in the year (2020: £0.1m). 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 also 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.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
139
Notes to the Consolidated Financial Statements (continued)
During the year, following the acquisition of SDL plc (‘SDL’), the Group’s lease portfolio increased significantly, both in
value with material additions through the acquisition as well as in terms of Geographies of the leases included. The
property leases acquired are mainly in support of SDL’s language offices across the globe. Following the increase to
the lease portfolio, there is no pattern for extending or terminating leases and lease terms are considered on a lease
by lease basis with regards the reasonable certainty of extending or terminating leases.
The Group considers factors like leasehold improvements, when assessing the degree of certainty for exercising any
options included in the contract. The Group’s leasehold improvements are most heavily concentrated in its highest
value leases, each of which has a lease term significantly above the Group’s average lease term.
The Group has concluded that on this basis, there is no reasonable certainty regarding the exercising of extension
options and there is reasonable certainty of not exercising early termination options within these leases. The Group’s
default position is that the lease term at inception of the lease, excluding any options, is the most probable duration
over which that lease will be held. This is then overridden where facts and circumstances make it clear this is no longer
reasonably certain, such as for key leases in certain locations where longer term investment may be required.
The Group has concluded that this is not a significant judgement by virtue of the low number and value of leases due
to expire shortly and by extension, the low impact of inaccuracy within these judgements on the financial statements.
19. PROVISIONS
Accounting policy
A provision is recognised when the Group has a legal or constructive obligation as a result of a past event and it
is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate
can be made of the amount of the obligation. If the effect is material, expected future cash flows are discounted
using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. The expense relating
to any provision is presented in profit or loss in the consolidated statement of comprehensive income net of
any reimbursement. Where discounting is used, the increase in the provision due to unwinding the discount is
recognised as a finance expense.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a
contract are lower than the unavoidable cost of meeting its obligations under the contract. Before a provision is
established, the Group recognises any impairment loss on the assets associated with that contract.
Reconciliation of movement in provisions
Indirect tax
related
£m
Contingent
consideration
£m
Dilapidations
£m
Other
provisions
£m
At 1 October
Acquired
Charged in the period
Utilised
Released
Effects of currency movements
At 30 September 2021
Due in less than one year
Due in greater than one year
At 30 September 2021
Due in less than one year
Due in greater than one year
At 30 September 2020
-
6.5
0.1
(1.7)
(2.4)
-
2.5
-
2.5
2.5
-
-
-
1.7
-
-
-
(1.7)
-
-
-
-
-
-
1.7
1.7
0.2
1.3
-
-
-
-
1.5
0.4
1.1
1.5
-
0.2
0.2
0.5
2.3
7.7
(4.8)
(0.4)
(0.1)
5.2
4.7
0.5
5.2
-
0.5
0.5
Total
£m
2.4
10.1
7.8
(6.5)
(4.5)
(0.1)
9.2
5.1
4.1
9.2
-
2.4
2.4
Other provisions principally relate to employment related provisions in respect of future severance as part of the
transformation programmes under way across the Group following the acquisition of SDL plc in the year. Provisions are
recognised for employee severance as the criteria defined in IAS37 have been met for the severance payments provided for.
Other provisions also include an element for long term employment benefits in certain geographies the Group
operates in. These relate to future post employment payments of £1.7m (2020: £0.6m). The contingent consideration
of £nil (2020: £1.7m) is in respect of the acquisition of Iconic Translation Machines Ltd. In the year, the balance was
extinguished and replaced with a deferred consideration amount payable (see Notes 17 and 24).
140
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
20. 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. Contingent consideration of £Nil (2020: £1.7m) is classified as fair value through
profit and loss, during the year this was extinguished (see note 24) and a deferred consideration balance recognised
which is recognised at amortised cost.
Financial Assets
Trade and other receivables
Cash and cash equivalents
Foreign exchange derivatives
Financial Liabilities
Loans
Trade and other payables
Provisions
Lease liabilities
Foreign exchange derivatives
FVOCI
2021
£m
-
-
-
-
-
-
-
-
0.7
0.7
2020
£m
-
-
0.2
0.2
-
-
-
-
0.1
0.1
FVTPL
2021
£m
-
-
-
-
-
-
-
-
-
-
2020
£m
-
-
0.4
0.4
-
-
1.7
-
-
1.7
AC
2021
£m
178.0
92.5
-
270.5
47.2
105.9
9.2
51.5
-
213.8
2020
£m
77.9
51.4
-
129.3
66.5
50.8
0.8
22.8
-
140.9
The Group’s foreign exchange derivatives are fair valued using readily available market information so therefore are
Level 2 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 2021 is £49.2m (2020: £69.2m), this is as per Level 2 of the fair value hierarchy.
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 2021 amounted to £92.5m (2020: £51.4m), the
Group has an overdraft facility of £1.5m (2020: £1.5m) 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.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
141
Notes to the Consolidated Financial Statements (continued)
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.
Carrying
amount
£m
47.2
104.7
-
51.5
203.4
0.7
0.7
Carrying
amount
£m
66.5
50.8
1.7
22.8
Contractual cash flows at
30 September 2021
Non-derivative financial liabilities
Revolving Credit Facility
Trade and other payables
Provisions
Lease liabilities
Derivative financial liabilities
Foreign exchange derivatives
- Outflow
Contractual cash flows at
30 September 2020
Non-derivative financial liabilities
Revolving credit facility
Trade and other payables
Provisions
Lease liabilities
Derivative financial liabilities
Foreign exchange derivatives
- Outflow
Interest rate risk
Total
£m
Less than 12
months
£m
1-2 years
£m
2-5 years
£m
More than
5 years
£m
51.4
104.7
-
58.2
214.3
0.7
0.7
Total
£m
72.3
50.8
1.7
25.1
0.9
104.5
-
11.0
116.4
0.7
0.7
0.9
0.2
-
11.0
12.1
-
-
49.6
-
-
22.1
71.7
-
-
-
-
-
14.1
14.1
-
-
Less than 12
months
£m
1-2 years
£m
2-5 years
£m
More than
5 years
£m
0.9
50.4
-
5.1
56.4
0.1
0.1
0.9
0.4
-
4.8
6.1
-
-
70.5
-
1.7
9.2
81.4
-
-
-
-
-
6.0
6.0
-
-
141.8
149.9
0.1
0.1
0.1
0.1
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 (subject to lender approval), and incurs interest at a rate based on USD LIBOR plus a margin which
fluctuates based on the Group’s net leverage, more details can be found in note 1 and note 16. The Group elected
not to hedge its interest rate risk.
142
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
Exposure to interest rate risk
Interest rate profile of interest-bearing assets and liabilities - Variable rate instruments
Financial assets - Cash and cash equivalents
Sterling
US Dollars
Euros
Yen
Swiss Francs
Other
Financial liabilities – Loan
US Dollars
2021
£m
18.4
36.7
11.0
5.5
1.4
19.5
92.5
47.2
2020
£m
7.8
30.0
5.1
2.7
1.6
4.2
51.4
66.5
If interest rates changed by 1% is it estimated that Group profit before tax would change by £0.2m (2020: £0.2m).
As part of the cessation of LIBOR, the Group’s RCF will be amended in line with Loan Market Association ('LMA')
recommended terms to transition from LIBOR to a new risk free rate being the Sterling Overnight Index Average
('SONIA') for all GBP denominated borrowings effective 1 January 2022. This is structured to be economically neutral
and no material impact is expected on the Group’s financial statements. Currently, all Group borrowings under the
RCF are denominated in USD which continue to use US LIBOR until its planned cessation in June 2023.
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 £92.5 million at 30 September 2021, 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. Expected credit losses are not material to the Group, no collateral is held in respect of trade
receivables and the maximum potential credit loss is equal to asset carrying value. See note 15 for further details.
No client accounted for more than 10% of Group turnover in the current year (2020: one). This client was part of the
Language Services reporting segment. There were no other significant concentrations of credit risk at the balance
sheet date.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
143
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 61% (2020: 72%) of Group external sales in the reporting period were denominated in USD, while a
further 24% were denominated in Euros (2020: 20%). Similarly, the Group’s cost base was 31% in USD (2020: 43%)
and 24% in Euros (2020: 30%).
Since the acquisition of SDL the Group has obtained a number of intercompany loans designated as quasi
equity at inception. This designation is made where loan transactions between Group companies represent, in
substance, long term investments in that subsidiary rather than intercompany loan transactions. These loans
are often denominated in a currency other than the functional currency of at least one of the counterparties.
Foreign currency translation on these loans is recognised in other comprehensive income in the statement of
comprehensive income until the underlying investment is disposed of at which point they are recognised in profit or
loss in the statement of 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
Assets
2021
£m
45.4
138.9
184.3
Assets
2020
£m
13.6
21.4
35.0
Liabilities
2021
£m
15.7
64.0
79.7
Liabilities
2020
£m
8.0
45.8
53.8
Foreign currency sensitivity analysis
The following table details the Group’s sensitivity to a 10% (2020: 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 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
Profit and loss
impact
2021
£m
Profit and loss
impact
2020
£m
2.7
6.9
9.6
0.5
1.8
2.3
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.
144
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
Hedging
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 (Moravia is a USD functional CGU). 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.
The Group applies net investment hedge accounting in respect of borrowings associated with the acquisition of
a single acquisition which was USD denominated. The hedging relationship was established with the intention of
reducing the effect of currency fluctuations in the statement of comprehensive income, by recognising gains or
losses through other comprehensive income. The value of loans designated as net investment hedges are £37.2m
and this is expected to be settled over a period of 5 years.
During the year ended 30 September 2021, no ineffectiveness was recorded in the Group’s statement of
comprehensive income (2020: £Nil). All amounts recorded in the hedge reserve pertain to continuing hedging
relationships as at 30 September 2021.
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
Assets
2021
£m
-
Assets
2020
£m
0.2
Liabilities
2021
£m
Liabilities
2020
£m
0.7
0.1
As at 30 September 2021, 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 2021, there was £47.2m (2020: £66.7m) 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 £92.5m (2020: £51.4m).
The Group funds dividend payments to shareholders through the underlying profitability of its subsidiaries which
are contributed between the subsidiary and the ultimate parent company, RWS Holdings plc. The underlying
profitability of the Group ensures that there is sufficient profitability within these subsidiaries and contributions
from these subsidiaries to the Parent Company and that sufficient distributable reserves exist to maintain the
Group's current dividend policy.
Included within retained earnings are £184.6m relating to gain recognised on a cash-box structure utilised as part
of the Moravia acquisition. These amounts are not currently distributable.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
145
Notes to the Consolidated Financial Statements (continued)
21. SHARE CAPITAL AND RESERVES
Authorised
Ordinary shares of 1 pence each
500,000,000
5.0
500,000,000
2021
Number
2021
£m
2020
Number
Allotted, called up and fully paid
At beginning of year
Issue of shares
At end of year
275,188,492
114,207,681
389,396,173
2.8
1.1
3.9
273,695,907
1,492,585
275,188,492
2020
£m
5.0
2.8
-
2.8
The following movements in the ordinary share capital of the Company occurred during the year:
> 114,054,320 new ordinary shares were issued as full consideration to acquire 100% control of SDL plc (note
24), the total value of this consideration was £625.5m, with the premium on this transaction recognised in the
merger reserve (see below). The number above includes 715,809 ordinary shares of 1p each in respect of SDL
options vested but not exercised at completion.
> 153,361 ordinary shares of 1p each were allotted under the RWS 2013 share option plan and RWS Save As You
Earn schemes.
The nature and purpose of each reserve within equity is as follows:
> Share premium account represents the premium arising on the issue of equity shares.
> 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 for the effective portion of the cash flow
hedge.
> Merger reserve represents the amounts of share premium that would have been recognised on a share for
share exchange eligible for merger relief under the Companies Act 2006, this was created on the acquisition of
SDL plc (see note 24), there was no comparative reserve as at 30 September 2020.
> 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.
146
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
22. SHARE-BASED PAYMENTS
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 at the fair value of the share option at the grant date.
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 profit or loss in the consolidated statement of comprehensive income, such that the cumulative
expense reflects the revised estimate 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 profit or loss.
The Group incurred a charge of £1.4m relating to share-based payments in the year ended 30 September, as follows;
Scheme
Save As You Earn (SAYE) scheme
LTIPs
Executive Share Option Plan ('ESOP')
Deferred consideration
2021
Equity-settled
£m
Cash-settled
£m
0.1
0.5
0.5
0.5
1.4
-
-
-
-
-
Total
£m
0.1
0.5
0.5
0.5
1.4
2020
Equity-settled
£m
Cash-settled
£m
0.1
-
1.0
-
1.1
-
-
-
-
-
Total
£m
0.1
-
1.0
-
1.1
Summary of movements in awards
2013 Share
option plan
Number
Save As You
Earn scheme
Number
Executive share
option plan
Number
LTIPs
Weighted average
exercise price (£)
Balance at 1 October 2019
Granted during the year
Lapsed during the year
Exercised during the year
Balance at 30 September 2020
Exercisable at 30 September 2020
Granted during the year
Lapsed during the year
Exercised during the year
-
-
-
-
-
-
1,645,220
175,067
1,230,946
-
-
93,538
3,008,976
(13,736)
(1,562,893)
(1,492,585)
-
-
152.635
254,869
2,677,029
152,635
-
-
1,850,118
(418,662)
-
-
253,707
34,192
(31,968)
(1,587,701)
-
(152,635)
-
-
Balance at 30 September 2021
Exercisable at 30 September 2021
1,431,456
-
-
-
476,608
1,123,520
-
-
1.292
6.133
6.094
1.292
5.750
1.292
0.667
4.827
1.292
3.124
The weighted average share price at the date of exercise of shares exercised during the year was 636.0 pence per
share (2020: 585.2 pence). The weighted average remaining contractual life of outstanding options at the end of the
year was 10.0 years (2020: 8.2 years). The aggregate fair value of options granted in the year was £5.1m (2020: £5.4m).
Deferred consideration of £0.8m relates wholly to shares payable to certain vendors of Iconic (see Note 24) with a
post combination service period. The only associated conditions for payment of these shares as consideration for
the acquisition is the service period which expires in September 2022 at which point the shares are payable.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
147
Notes to the Consolidated Financial Statements (continued)
2021 LTIP scheme
On 22 January 2021, the Company adopted a long term incentive scheme for senior employees. Under the scheme,
options to purchase ordinary shares are granted by the Board of Directors. The options vest after a period of three
years. 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 ten years from the date of grant. These option grants are settled
on exercise via the issue of new ordinary shares.
Date of grant
22 January 2021
1 July 2021
Total
1 October
2020
Number
Granted
during
the year
Number
Exercised
during
the year
Number
Lapsed
during
the year
Number
30 September
2021
Number
Exercise
price
pence
Exercise
period
-
-
-
1,730,173
119,945
1,850,118
-
-
-
(418,662)
1,311,511
-
119,945
1
1
22 Jan 2026 to 22 Jan 2036
1 July 2026 to 1 July 2036
(418,662)
1,431,456
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
22 February 2021
1 October
2020
Number
163,915
90,954
-
-
-
253,707
Total
254,869
253,707
Executive share option plan (“ESOP”)
Granted
during
the year
Number
Exercised
during
the year
Number
Lapsed
during
the year
Number
30 September
2021
Number
Exercise
price
pence
Exercise
period
-
-
-
-
(13,897)
150,018
(5,508)
85,446
(12,563)
241,144
413.0
557.0
472.0
1 April - 30 Sept 2022
1 April - 30 Sept 2023
1 April - 30 September 2024
(31,968)
476,608
On 13 May 2019, the Group announced a new Share Option Plan for executives and selected senior management.
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
10 May 2019
1 October
2020
Number
773,624
Granted
during
the year
Number
-
22 January 2020
1,903,405
34,192
Total
2,677,029
34,192
Exercised
during
the year
Number
Lapsed
during
the year
Number
30 September
2021
Number
Exercise
price
pence
Exercise
period
-
-
-
(547,088)
226,536
601.0
10 May 2022 - 10 May 2029
(1,040,613)
896,984
615.0
22 Jan 2023 - 22 Jan 2030
(1,587,701)
1,123,520
148
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
The fair value of 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 assumptions
applied to the options granted. Equity settled option grants are settled on exercise via new shares. The expected volatility
reflects the assumption historical volatility over a period similar to the life of the options is indicative of future trends,
which may not necessarily be the actual outcome. Below are the key inputs to the model used in the year of grant.
LTIPs (non-
market)
LTIPs (market)
SAYE
scheme
ESOP
(equity settled)
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 (pence)
572.0
1.0
4.3
35.97
1.5
(0.08)
342.0
572.0
1.0
4.3
35.97
1.50
(0.08)
133.0
23. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
630.0
472.0
3.0
39.00
1.50
0.05
237.7
2021
£m
89.6
2.9
92.5
610.0
613.0
5.0
39.00
1.50
0.14
177.3
2020
£m
50.1
1.3
51.4
The fair value of cash and cash equivalents is £92.5m (2020: £51.4m). Restricted cash at 30 September 2021 was £Nil (2020: £Nil).
Short-term deposits have an original maturity of three months or less depending on the immediate cash
requirements of the Group, and earn interest at the respective short-term deposit rates.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
149
Notes to the Consolidated Financial Statements (continued)
24. ACQUISITIONS
Acquisition of SDL plc
As disclosed in the Group’s financial statements for the year ended 30 September 2020 as a post balance sheet
event, 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, 114,054,320 new ordinary shares were issued by the Parent Company as full consideration
to acquire 100% control of SDL. Included within the consideration were shares issued in relation to SDL open
share options which were subject to accelerated vesting on acquisition. These shares were issues net of relevant
employee taxes of £6.4m and as a result an additional liability of £6.4m was recognised in respect of other taxes
payable in the opening balance sheet.
The transaction, being a share for share exchange to acquire greater than 90% of the share capital in SDL plc, was
eligible for merger relief under the Companies Act. Accordingly, the £624.4m of share premium that would have
been created on the acquisition has been recognised within a merger reserve.
The fair value of identifiable assets and liabilities acquired,
purchase consideration and goodwill were as follows:
Technology
Customer relationships
Property, plant and equipment
Right-of-use assets
Trade and other receivables
Deferred tax assets
Cash and cash equivalents
Trade and other payables
Corporation tax liabilities
Other taxes payable
Lease liabilities
Deferred tax liabilities
Provisions
Total identifiable net assets
Goodwill
Total consideration
Satisfied by:
Shares
Fair values
£m
107.1
139.4
12.0
34.1
87.1
17.5
55.0
(91.0)
(13.9)
(6.4)
(37.7)
(45.0)
(10.1)
248.1
377.4
625.5
625.5
SDL contributed £340.0m to the Group’s revenue and £23.3m to profit after tax for the period between the date of
acquisition and the balance sheet date, receivables acquired are believed by Management to already be at fair value
due to provisions already in place, acquisitions costs to acquire SDL were £10.4m and are not included above.
If the acquisition had been completed on the first day of the financial year, SDL would have contributed additional
revenues of £30.4m and reduced profit after tax for the year by £5.4m for the Group due to transaction costs
accrued before the acquisition. The values disclosed above in respect of SDL plc are considered final following the
completion of the PPA exercise prior to the year end, none of the goodwill is expected to be deductible for tax.
The goodwill of £377.4m on acquisition comprises the value of expected synergies arising from the acquisition and
expected to be realised across future periods.
The acquisition of SDL, including the strategic reasons for the acquisition, are discussed in more detail in the
Strategic report pages 17 to 20.
150
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
Acquisition Horn & Uchida
The Group acquired Horn & Uchida Patent Translation, Ltd ('H&U'), a specialist in patent translation based in Osaka,
Japan for cash consideration of Y349m (£2.3m) on 7 July 2021 for 100% of ordinary share capital.
The provisional fair value of identifiable assets and liabilities acquired,
purchase consideration and goodwill were as follows:
Net assets acquired:
Investment securities
Trade and other receivables
Deferred tax assets
Cash and cash equivalents
Trade and other payables
Total identifiable net assets
Goodwill
Total consideration
Satisfied by:
Cash
Fair values
£m
0.2
1.0
0.1
0.8
(1.0)
1.1
1.2
2.3
2.3
Provisional values above are stated before the finalisation of the purchase price allocation ('PPA'). The Directors
expect that the PPA work will identify intangible assets and that their allocation from the goodwill value disclosed
above will lead the goodwill to be different to that as disclosed above. The Directors expect that there will be
associated deferred tax amounts recognisable on the intangible assets, with an increase to goodwill expected to be
reported in the Group’s financial statements for the year ending 30 September 2022, once the PPA procedures are
finalised, these adjustments are not expected to be material and will be included in the financial statements for the
year ending 30 September 2022. If the acquisition had been completed on the first day of the financial year, H&U
would have contributed additional revenues of £1.4m and increased profit after tax for the year by £0.4m.
Iconic Translation Machines Ltd (prior period acquisition)
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. During the current year, this was modified with a deed of amendment and
became deferred consideration of US$5m (see below). 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 fair value of identifiable assets and liabilities acquired,
purchase consideration and goodwill were as follows:
Net assets acquired:
Property, plant and equipment
Client relationships
Technology
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
£m
-
0.7
0.8
(0.2)
0.4
0.1
0.3
(1.2)
0.9
8.2
9.1
7.4
1.7
7.4
(0.3)
7.1
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
151
Notes to the Consolidated Financial Statements (continued)
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.
In the current year, as a consequence of the acquisition of SDL, a deed of amendment was issued in respect of the
original Iconic Share Purchase Agreement ('SPA'). This was because the newly restructured RWS Language and
Content Technology segment would change the strategy for Iconic and its future results which, was likely to affect
conditions associated with the contingent consideration. This deed was negotiated with the former vendors and
signed in February 2021. Management have identified this as a modification of the SPA that is not considered a
remeasurement adjustment on the basis the underlying agreement has been fundamentally changed for new facts
and circumstances. Accordingly, no adjustments have been made against Goodwill but rather, are recognised in the
income statement.
The terms of the modification of the SPA included replacing contingent consideration of US$10m with deferred
consideration of US$5m payable in RWS shares at the maturity date of September 2022. The only remaining
condition for this consideration was a post combination service period for some of the vendors.
In respect of vendors without post combination service conditions, the £1.7m contingent consideration payable
noted above has been extinguished and replaced with deferred consideration of £1.5m. This was a substantial
modification as defined under IFRS9 and accordingly, has led to a gain on modification of £0.2m. This has been
recognised within exceptional items as this is a one-off income item relating to an acquisition and mirrors the
treatment of similar gains realised in respect of debt modifications in the prior year (see note 6).
For the vendors whose consideration is conditional on post combination services, the deferred consideration
payable in shares in September 2022 is considered to be within the scope of IFRS2 Share Based Payments.
Accordingly, the estimated deferred consideration of £2.2m for these vendors is being charged evenly to the income
statement over the period from modification date to the payment date. The charge in the current year is £0.8m (see
note 22), no amount had previously been charged in respect of these vendors in the prior year.
Webdunia (prior period acquisition)
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 fair value of identifiable assets and liabilities acquired,
purchase consideration and goodwill were as follows:
Net assets acquired:
Customer relationships
Databases
Property, plant and equipment
Right-of-use asset
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Deferred tax liabilities
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
Fair value
£m
5.8
0.7
0.3
1.9
2.4
0.9
(0.8)
(1.9)
(1.9)
(0.2)
7.2
9.6
16.8
16.8
16.8
(0.9)
15.9
152
RWS — Annual Report 2021
NOTES TO THE CONSOLIDATED STATEMENTS
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.
The net assets recognised in the 30 September 2020 accounts were included at their provisional fair values with
the purchase price allocation exercise concluded in May 2021. The outcome of this exercise was an adjustment to
allocate transaction price of £0.7m to databases, a reduction of £2.0m to customer relationships (see Note 13) and
an increase to goodwill of £1.4m. Additional deferred tax liabilities on the identified intangibles were recognised of
£1.9m with a corresponding increase to goodwill. No provisional fair value changes were made to any other class of
asset, the total impact was a remeasurement adjustment to goodwill of £3.3m in the year (see Note 12).
25. RELATED PARTY TRANSACTION
On 23 February 2021 Ocorian Limited, acting as trustee of the RWS Holdings plc Employee Benefit Trust (EBT)
purchased in the market a total of 55,896 Ordinary Shares of 1p each at an average price of 637.43p pence per
share. The shares will be held in the EBT, a discretionary trust, and are intended to be used to satisfy the exercise
of share options by employees. Following this transaction the EBT holds a total of 55,896 shares, representing
approximately 0.01% of the RWS's issued share capital. Costs of £0.4m relating to this purchase have been deducted
from retained earnings.
During the year, in the normal course of business, the Group provided translation services worth £0.4m (2020:
£0.2m) 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 £0.1m (2020: £0.1m) was due from LTG at the reporting date.
Key management compensation
Short-term employee benefits
Post-employment benefits
Share based payments
2021
£m
4.6
0.1
0.3
5.0
2020
£m
3.0
0.1
0.9
4.0
In addition, £0.2m was paid to the highest paid director during the year. Details of this are included on p95.
The key management compensation includes the seven (2020: seven) Directors of RWS Holdings plc and the six
(2020: six) members of the Executive Team who are not Directors of RWS Holdings plc.
During the year key management were issued with a total of 725,849 shares with an approximate fair value of
£1.9m. Details of the Group's share based payments and associated share option schemes can be found in Note 22.
26. COMMITMENTS AND CONTINGENT LIABILITIES
The Group had no material capital commitments contracted for, but not provided for, in the financial statements (2020: £Nil).
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 (2020: £Nil).
The Group’s US$120 million RCF is subject to guarantees provided by material Group companies, as well as from
other Group companies as necessary to ensure that all guarantors together account for more than 75% of the
Group’s consolidated EBITDA, turnover and gross assets.
27. POST BALANCE SHEET EVENTS
There have been no significant events that have occurred between the balance sheet date and the date of
authorising these financial statements which require disclosure or adjustment within these financial statements.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2021
153
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 2021
Registered Company 03002645
Note
Fixed assets
Investments
Current assets
Debtors
Cash at bank and in hand
Total current assets
Total assets
Creditors: amounts falling due within one year
Trade creditors
Other creditors
Total current liabilities
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Loans
Provisions for liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Share based payment reserve
Merger reserve
Capital reserve
Profit and loss account
Total shareholders’ funds
Statement of Comprehensive Income: Profit after taxation
7
8
10
10
9
11
2021
£m
725.5
725.5
212.9
4.2
217.1
942.6
0.1
12.3
12.4
204.7
930.2
35.2
-
35.2
895.0
3.9
54.2
2.8
624.4
2.0
207.7
895.0
60.3
2020
£m
93.0
93.0
191.1
9.9
201.0
294.0
1.3
3.4
4.7
196.3
289.3
44.0
1.7
45.7
243.6
2.8
53.6
1.4
-
2.0
183.8
243.6
26.0
The financial statements on pages 154 to 166 were approved by the Board of Directors and authorised for issue on
20 December 2021 and were signed on its behalf by:
Desmond Glass | CHIEF FINANCIAL OFFICER
154
RWS — Annual Report 2021
PARENT COMPANY FINANCIAL STATEMENTS
Parent Company Statement of Changes
in Equity for the year ended 30
September 2021
Called
up share
capital
£m
Share
premium
account
£m
Share
based
payment
reserve
£m
Merger
reserve
£m
Capital
reserve
£m
Profit
and loss
account
£m
Shareholders’
funds
£m
At 1 October 2019
2.7
51.8
0.7
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
-
-
-
0.1
-
-
-
-
-
1.8
-
-
Balance at 30 September 2020
2.8
53.6
Profit for the financial year
Total comprehensive income for the year
Dividends paid
Issue of shares
Issue of shares to acquire subsidiary
Purchase of own shares
Exercise of share options
Equity-settled share based payments
-
-
-
-
1.1
-
-
-
-
-
-
0.6
-
-
-
-
Balance at 30 September 2021
3.9
54.2
-
-
-
-
(0.3)
1.0
1.4
-
-
-
-
-
-
-
1.4
2.8
-
-
-
-
-
-
-
-
-
-
-
-
624.4
-
-
-
2.0
181.6
238.8
-
-
-
-
-
-
26.0
26.0
26.0
26.0
(24.1)
(24.1)
-
0.3
-
1.9
-
1.0
2.0
183.8
243.6
-
-
-
-
-
-
-
-
60.3
60.3
(36.0)
-
-
(0.4)
-
-
60.3
60.3
(36.0)
0.6
625.5
(0.4)
-
1.4
624.4
2.0
207.7
895.0
PARENT COMPANY FINANCIAL STATEMENTS
RWS — Annual Report 2021
155
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 (where required
these disclosures are included in the Group accounts):
> 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”
> 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 the Group
(providing any subsidiary party to the transaction is
wholly owned by a member of the 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
The Directors have prepared cash flow forecasts for a
period of at least 12 months from the date of approval
of the financial statements, which indicate that, taking
account of reasonably possible downsides, the Group
will have sufficient funds to meet its liabilities as they fall
due in the period.
Consequently, the Directors are confident that the
Company will have sufficient funds to continue to meet its
liabilities as they fall due for at least 12 months from the
date of approval of the financial statements and therefore
have prepared the financial statements on a going
concern basis. Note 2 to the Group Financial statements
includes more details on the Directors' assessment of
going concern for the entity and for the Group.
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 marked-to-market
at each reporting date with any changes in fair values
recognised in the Parent Company’s statement of
comprehensive income.
Investments in subsidiaries
Investments denominated in foreign currency are
recorded using the rate of exchange at the date of
acquisition. Investments in subsidiaries are stated
at cost less any provision for impairment in value.
Investments are reviewed annually for evidence of
impairment.
156
RWS — Annual Report 2021
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an
asset’s fair value less costs of disposal and its value in
use, where value in use is calculated as the present value
of the future cash flows expected to be derived from the
asset. For the purpose of assessing impairment, assets are
grouped at the lowest levels for which there are separately
identifiable income streams (CGUs).
Pension costs
The Company contributes to a Group personal pension
scheme for qualifying employees whereby it makes
defined contributions to independently administered
personal pension schemes. The Company does not
control any of the assets or have any ongoing liabilities
with regard to the performance of and payments from
these individual personal schemes. Obligations for
contributions to defined contribution pension plans are
recognised as an expense in the profit and loss account
in the periods during which services are rendered by
employees.
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 at 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 22 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 profit or loss 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 profit or loss in the statement
of comprehensive income in the period 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.
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.
Management have not identified any key judgements
but have identified the following key estimates and
assumptions.
Impairment
The determination of whether or not investment
balances have been impaired requires an estimate to be
made of the value in use of the investment. The value
in use calculation includes estimates about the future
financial performance of the investment, management’s
estimates of discount rates, long-term operating
margins and long-term growth rates. If the results of
the investment in a future period are materially adverse
to the estimates used for the impairment testing, an
impairment charge may be triggered. More information
on investments is included in note 7.
Intercompany impairment
An impairment analysis is performed at each reporting
date using to measure expected credit losses in relation
to intercompany receivables. The calculation reflects the
probability-weighted outcome, the time value of money
and reasonable and supportable information that is
available at the reporting date about past events, current
conditions and forecasts of future economic conditions.
More information on debtors is included in note 8.
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
RWS — Annual Report 2021
157
Notes to the Parent Company Financial Statements (continued)
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 2021, there were
no derivative contracts outstanding (2020: £0.4m).
5. PARENT COMPANY PROFIT AND LOSS
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 2021 was £60.3m (2020: £26.0m).
Audit fees payable in relation to the audit of the financial statements of the Parent Company are £15,000 (2020:
£15,000). Fees paid to the Groups auditor 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
2021
£m
4.3
0.4
0.1
0.8
5.6
2020
£m
2.3
0.2
0.1
0.6
3.2
During the year, the Parent had seven (2020: seven) Directors, including 5 Non-Executive Directors and 7 other
employees (2020: seven), providing services to the Group.
Two Directors (2020: two) received contributions to their personal pension schemes as did seven (2020: seven) of
the additional employees.
Details of the Directors’ remuneration and pension contributions are disclosed in the Directors’ Remuneration
Report on pages 88 to 95. The values above are lower than the key management remuneration disclosure in note 25
of the Group's accounts as not all key management are remunerated through the Parent Company.
158
RWS — Annual Report 2021
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
2021
£m
93.0
632.5
725.5
2020
£m
83.5
9.5
93.0
The increase in investments in the year comprises £625.5m for the acquisition of SDL plc, as well as £6.4m in
respect of the liability to tax authorities on behalf of employees on net settlement of share options (see note 24).
The remaining £0.6m related to capital contributions relating to share-based payments made by the Parent Company
to employees of its subsidiary undertakings.
The prior year increase in investments of £9.5m included the acquisition of Iconic Translation Machines Limited
of £9.1m and £0.4m 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
LUZ, Inc.
RWS Life Sciences Inc.
555 Montgomery Street Suite 720
San Francisco CA 94111 USA
Patent translations
Technical and legal translations
Holding company
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
LLC SDL Ukraine
Business center SP Hall, Office 604, 28 A
(letter G), Stepana Bandery avenue
Kiev, Ukraine
Localisation services
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
RWS — Annual Report 2021
159
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.
Moravia US Intermediate Holding Company,
LLC
Moravia IT, LLC
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
Holding company
Localisation services
Localisation services
Moravia IT s.r.o.*
Vlněna 526/1, Trnita, 602 00 Brno,
Czech Republic
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
LLC SDL Rus
195112, St. Petersburg, Zanevsky prospect
71, building 2, letter A, office 1301, Russia
Localisation services
SDL Multi-Lingual Solutions (Singapore) PTE Ltd 600 North Bridge Road, #23-01 Parkview
Localisation services
Square, Singapore 188778
SDL d.o.o Ljubljana
Dunajska cesta 167, 1000 Ljubljana, Slovenia
Localisation services
Software Development Language Solutions
Hispania, SL
Claudio Coello, 37, 28001 Madrid, Spain
Localisation services
SDL Vietnam Limited
REE Tower, No. 9 Doan Van Bo Street, ward 12
district 4, Ho Chi Minh city, Vietnam
Localisation services
SDL Sweden AB
SDL Tridion AB
Fatbursgatan 1, Stockholm, S-118 28, Sweden Localisation services
Technology services
160
RWS — Annual Report 2021
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
Subsidiary undertaking
Registered address
Nature of business
SDL Limited
SDL Sheffield Limited
SDL Global Holdings Limited
SDL Tridion Limited
XyEnterprise Limited
Bemoko Consulting Limited
SDL Nominees Limited
Automated Language Processing Services
Limited
Interlingua Group Limited
Alpnet UK Limited
Computype Limited
Alterian Holdings Limited
Alterian Technology Limited
SDL (Newbury) Limited
Intrepid Consultants Limited
New Globe House, Vanwall Business Park,
Vanwall Road, Maidenhead, SL6 4UB, UK
Localisation and technology
services
Localisation services
Holding company
Technology services
Technology services
Dormant
Holding company
Dormant
Holding company
Dormant
Dormant
Holding company
Technology services
Holding company
Dormant
SDL Inc
SDL XyEnterprise LLC
SDL Government Inc
Alterian Holdings Inc
201 Edgewater Drive, Suite 225, Wakefield,
MA 01880-1296 USA
Localisation and technology
services
Technology services
Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801 USA
Technology services
Holding company
SDL Technologies (Australia) Pty Ltd
Level 16, 1 Market Street, Sydney NSW 2000,
Australia
Localisation services
SDL Belgium NV
Vital Decosterstraat 44, 3000 Leuven, Belgium Localisation services
SDL do Brazil Global Solutions Ltda
Rua Barão do Triunfo 73, Brooklin Paulista,
Saõ Paolo
Localisation services
SDL International (Canada) Inc
1550 Metcalfe St., Suite 800, Montreal, QC,
H3A 1X6, Canada
Localisation and technology
services
SDL Chile SA
Avenida Holanda 100 Oficina 1002
Providencia, Región Metropolitana, Santiago
7510021 Chile
Localisation services
SDL Software Technology (Shenzhen) Co. Ltd
Room 309, Floor 3, Resources-Tech-Building,
Songping ShanRoad, Nanshan District,
Shenzhen City, Guandong, China
Localisation and technology
services
SDL Hong Kong Limited
Suites 1101-1103, 11th Floor, Three Exchange
Square, 8 Connaught Place, Central, Hong
Kong
Localisation services
SDL Zagreb d.o.o.
Bednjanska 14/II, 10 000 Zagreb, Croatia
Localisation services
SDL CZ s.r.o.
Nerudova 198, Hradec Králové, 50002 Czechia
Localisation services
SDL France SARL
44-46 Rue Alphonse Penaud, Paris, 75020,
France
Localisation services
SDL Tridion GmbH
Balanstrasse 49, 81669 Munich, Germany
Technology services
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
RWS — Annual Report 2021
161
Notes to the Consolidated Financial Statements (continued)
Subsidiary undertaking
Registered address
Nature of business
Trados GmbH
Waldburgstraße 21, 70563 Stuttgart,
Germany
Technology services
SDL Hellas Efarmoges Pliroforikis Limited
396 Mesogeion Avenue, 153 41 Agia
Paraskevi, Attica, Athens, Greece
Localisation services
SDL Magyarorszag Szolgaltato Kft
Arboc u 6 III, Budapest, Hungary
Localisation services
SDL Multilingual Solutions Private Ltd
1319, 13th Floor, Bldg A1, Rupa Solitaire,
Sector 1, Millenium Business Park, Mumbai,
400 710, India
Localisation services
SDL Technologies India Private Limited
Building 4, Block A, 7th Floor, 77 Town Centre,
Yemalur Main Road, Off Old Airport Road,
Bangalore - 560 037, India
Localisation services
SDL Global Solutions (Ireland) Limited
2 Shelbourne Buildings, Crampton Avenue,
Shelbourne Road, Dublin 4, Ireland
Localisation services
SDL Italia Srl Unipersonale
Legale Tributario, Via 20 Settembre n 5
00187 Roma, Italy
Localisation services
SDL Japan KK
SDL Tridion KK
Nakameguro GT Tower 4F, 2-1-1, Kamimeguro
Meguro, Tokyo 153-0051, Japan
Localisation services
Technology services
Horn & Uchida Patent Translations Ltd
6-11, Kitihama 2-Chome, Chuo-ku, Osaka-shi,
Japan
Patent translation and filing
SDL Luxembourg SARL
SDL Holdings BV
SDL Media Manager BV
SDL Netherlands BV
SDL Xopus BV
26 Boulevard Royal, Office no. 125, 1st Floor,
L2449 Luxembourg
Localisation services
Jupiter Plaza Arena, Herikerbergweg 78-80,
1101 CM Amsterdam, Netherlands
Holding company
Technology
Localisation and technology
Technology
SDL Poland Sp. z o.o.
ul.Fordonska 246, 85 766 Bydgoszcz, Poland Localisation services
SDL Portugal Unipessoal LDA
Rua Santo António Contumil, nº 130, Porto,
Portugal
Localisation services
SDL Language Weaver srl
Scala Office Building, 34 Someșului Street,
Cluj-Napoca, Cluj County, Romania.
Localisation services
SDL Turkey Translation Services and Commerce
Limited Company
Barbaros Mah. Kardelen Sk. Palladium Tower
Blok No: 2 İç Kapı No: 41 Ataşehir, Istanbul,
Turkey
Localisation services
*Moravia IT s.r.o. also has branches operating in Argentina, Ireland, Japan, Poland and the United Kingdom. SDL
Limited also has branches operating in Lebanon, Germany and Taiwan. SDL Inc also has branches in Korea and
Thailand. SDL Singapore also has a branch operating in Malaysia. SDL Sweden AB also has branches operating in
Denmark, Finland and Norway.
All subsidiary undertakings, except SDL Limited, RWS Group Limited and Iconic Translation Machines Ltd, are held
indirectly.
All subsidiary undertakings are 100% owned.
162
RWS — Annual Report 2021
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
8. DEBTORS
Amounts owed by Group undertakings
Other debtors
Derivative financial assets
Prepayments
Amounts due within one year
2021
£m
212.5
-
-
0.4
212.9
2020
£m
190.1
0.3
0.4
0.3
191.1
Included withing amounts owed by Group undertakings is an amount of £5.0m (2020: £21.8m) 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. LOANS
Loans due in more than one year
2021
£m
35.2
2020
£m
44.0
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 was 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 £1.2m in the
prior year. Refer to Note 6 for of the Group’s financial statements for further details.
As part of the cessation of LIBOR, the Group’s RCF will be amended in line with Loan Market Association ('LMA')
recommended terms to transition from LIBOR to a new risk free rate being the Sterling Overnight Index Average
('SONIA') for all GBP denominated borrowings effective 1 January 2022. This is structured to be economically neutral
and no material impact is expected on the Group’s financial statements. Currently, all Group borrowings under the
RCF are denominated in USD which continue to use US LIBOR until its planned cessation in June 2023.
10. TRADE AND OTHER PAYABLES
Trade creditors
Amounts owed to Group undertakings
Accruals
Deferred consideration
Amounts due within one year
2021
£m
0.1
7.6
3.2
1.5
12.4
2020
£m
1.3
-
3.4
-
4.7
Amounts owed to Group undertakings are unsecured, interest free, have no fixed date of repayment and are
repayable on demand.
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
RWS — Annual Report 2021
163
Notes to the Parent Company Financial Statements (continued)
11. SHARE CAPITAL, RESERVES AND SHARE-BASED PAYMENTS
Details of the share capital of the Parent Company can be found in note 21 of the Group’s financial statements.
Details of the dividend payments within the year can be found in note 10 of the Group’s financial statements.
During 2021, the total share-based payment charge amounted to £1.4m (2020: £1.0m). The Company has taken the
exemption available under FRS101 available in respect of disclosures relating to IFRS 2 Share-based payments in
respect of Group settled payments. For details of the Group's share-based payment transactions, see Note 22 of the
Group Financial Statements. Most share-based payments are equity settled by the Parent Company.
Included within retained earnings are £189.0m relating to gain recognised on a cash-box structure utilised as part
of the Moravia acquisition. These amounts are not currently distributable.
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 (2020: £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
There have been no significant events that have occurred between the balance sheet date and the date of
authorising these financial statements which require disclosure or adjustment within these financial statements.
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)
Exceptional finance costs (note 8)
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
2021
£m
55.0
34.4
11.2
1.4
14.1
0.3
116.4
2021
£m
118.5
(34.4)
(11.2)
(1.4)
(14.1)
57.4
2020
£m
58.7
15.3
4.1
1.1
(7.8)
(1.2)
70.2
2020
£m
72.9
(15.3)
(4.1)
(1.1)
7.8
60.2
164
RWS — Annual Report 2021
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
Organic Revenue
Organic revenue is calculated by adjusting the prior year revenues by adding pre-acquisition revenues for the
corresponding period of ownership.
IP Services
Regulated Industries
Language Services
Language & Content Technology
Total
2020
Revenue
112.8
71.3
171.3
0.4
355.8
2020
Pre Acq
Revenue1
2020
Organic Revenue
2021
Organic Revenue
Growth/(Loss)
2021 Organic
Revenue2
Organic
Revenue Growth
-
85.9
157.5
105.4
348.8
112.8
157.2
328.8
105.8
704.6
(0.6)
5.0
(11.1)
(3.8)
(10.5)
112.2
162.2
317.7
102.0
694.1
0%
3%
(3%)
(4%)
(1%)
Organic revenue at constant exchange rates
Organic revenue at constant exchange rates is calculated by adjusting the prior year revenues by adding pre-acquisition
revenues for the corresponding period of ownership, and applying the 2021 foreign exchange rates to both years.
2020
Revenue at
FY 21 Rates
2020
Pre Acq Revenue
at FY 21 Rates1
2020 Organic
revenue at
constant
exchange rates
2021
Revenue Growth
2021 Organic
Revenue2
Organic
Constant
Currency
Revenue Growth
IP Services
Regulated Industries
Language Services
Language & Content Technology
Total
109.6
66.5
160.0
0.4
336.5
-
83.9
146.8
101.1
331.8
109.6
150.4
306.8
101.5
668.3
2.6
11.8
10.9
0.5
25.8
112.2
162.2
317.7
102.0
694.1
2%
8%
4%
1%
4%
1 Includes Iconic, Webdunia & SDL pre-acquisition operating results 2 Excludes Horn & Uchida FY21 operating results
Adjusted Operating Profit
Adjusted operating profit is calculated by adjusting operating profit for the impact of exceptional items, amortization
of acquired intangibles, acquisition costs and share based payments. This is further analysed in note 4 and labelled as
‘Operating profit/(loss) before charging.
Cash flow conversion calculations
Adjusted operating profit
Depreciation (excluding right of use asset depreciation)
Amortisation from non-acquired intangibles
Net changes in working capital
Underlying cash flow from adjusted operating activities
2017
£m
43.4
1.2
0.1
(3.8)
40.9
2018
£m
66.3
2.8
2.0
(7.1)
64.0
2019
£m
78.4
3.0
3.0
(1.8)
82.6
2020
£m
72.9
3.0
3.4
7.1
86.4
2021
£m
118.5
6.2
13.4
(23.5)
114.6
Cash conversion
94.2%
96.5%
105.4%
118.5%
96.7%
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
RWS — Annual Report 2021
165
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 cash flow – is operating cash
flow excluding the impact of acquisition costs and
exceptional items.
Adjusted operating profit (reconciled above) – 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
(reconciled above) – is stated before amortisation of
acquired intangibles, acquisition costs, share-based
payment expense and exceptional items.
Amortisation of acquired intangibles – is the value
of amortisation recognised on intangibles that were
acquired as part of business combinations, net
of the amortisation on those intangibles charged
by the underlying business. This amount is added
back in arriving at adjusted profit and adjusted EPS
measures. This is reconciled to total amortisation as
part of note 13 in the financial statements.
Cash conversion – is the adjusted operating
cash flow expressed as a percentage of adjusted
operating profit.
Constant currency – constant currency measures
apply consistent rates for foreign exchange to
remove the impact of currency movements in
financial performance.
EBITDA – is defined as the Group’s profit before
interest, tax, depreciation and amortisation.
Net debt – net debt is the net value of cash or
debt held by the business, calculated by taking the
Group's cash balance less any amounts under loans,
borrowings and lease liabilities. The Group presents
net debt both including and excluding the impact of
lease liabilities as part of note 16.
Organic – organic measures exclude the impact of
acquisitions without assuming constant currency
and are prepared on a common basis with the prior
year.
Underlying – underlying measures exclude the
impact of acquisitions and assumes constant
currencies.
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, 60 Great Portland Street,
London W1W 7RT
Tel: +44 (0) 20 3128 8000
NOMINATED ADVISER AND JOINT BROKER
Numis Securities Ltd, 45 Gresham Street,
London EC2V 7BF
Tel: +44 (0) 20 7260 1000
JOINT BROKER
Berenberg, 60 Threadneedle Street, London EC2R 8HP
Tel: +44 (0) 20 3207 7800
REGISTRARS
Link Group, 10th Floor, Central Square,
29 Wellington Street, Leeds LS1 4DL
Tel: 087 1664 0300
from outside the UK: +44 (0) 371 664 0300
Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable
international rate. We are open between 09:00 - 17:30, Monday to Friday
excluding public holidays in England and Wales
Email: shareholderenquiries@linkgroup.co.uk
INDEPENDENT AUDITORS
Ernst & Young LLP, 1 More London Place, London SE1 2AF
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
166
RWS — Annual Report 2021
GLOSSARY AND COMPANY INFORMATION
Shareholder Information
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
RWS — Annual Report 2021
167
RWS Holdings plc
ANNUAL REPORT 2021
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
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