RWS Holdings plc
ANNUAL REPORT 2022
Europa House
Chiltern Park
Chiltern Hill
Chalfont St Peter
Bucks
SL9 9FG
United Kingdom
Tel: +44 (0) 1753 480 200
Email: rws@rws.com
rws.com
© 2022 RWS Holdings plc.
All rights reserved
Annual Report
2022
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Welcome to our
2022 Annual Report
RWS has delivered another robust set of results
against a backdrop of increasing economic
uncertainty and conflict in Eastern Europe.
The global nature of our business and the diverse
range of end markets that we operate in allows us
to better navigate these impacts while delivering
consistently strong returns to shareholders.
2
2
RWS — Annual Report 2022
RWS — Annual Report 2022
Contents
STRATEGIC REPORT
Performance and Financial Highlights
Strategy and Growth Model
Chief Executive Officer’s Review
Key Performance Indicators
Chairman’s Statement
Group Overview
04
06
08
10 Market Overview
12
16
24
25
36
40
44
48
60
Sustainability (ESG)
Section 172 Statement
Chief Financial Officer’s Review
Principal Risks and Uncertainties
Sustainability Accounting Standards Board Disclosure
Task Force on Climate-related Financial Disclosures
GOVERNANCE REPORT
66
70
74
80
84
92
95
Corporate Governance Statement
Board of Directors
Corporate Governance Report
Audit Committee Report
Directors’ Remuneration Report
Directors’ Report
Statement of Directors’ Responsibilities
FINANCIAL STATEMENTS
Independent Auditor's Report to the Members of RWS Holdings plc
96
108 Consolidated Statement of Comprehensive Income
109 Consolidated Statement of Financial Position
110 Consolidated Statement of Changes in Equity
111 Consolidated Statement of Cash Flows
112 Notes to the Consolidated Financial Statements
150 Parent Company Financial Statements
152 Notes to the Parent Company Financial Statements
160 Alternative Performance Measures
162 Glossary
162 Shareholder Information
RWS — Annual Report 2022
3
Group Overview
The RWS Group is organised around four
operating divisions. Each division holds overall
accountability and responsibility for revenue,
profit, operations, research and development,
together with sales, marketing and client
delivery.
Three of the divisions are supported by our recently launched
Language eXperience Delivery ("LXD") platform. This unique
production platform makes significant use of the technology products
offered by the fourth division, Language and Content Technology,
to support operational efficiency and excellence in the delivery of
solutions to clients. While the Language and Content Technology
division offers a suite of products to clients, it also serves as an
enabler of the LXD platform.
REGULATED
INDUSTRIES
• Life Sciences
• Financial Services
• Legal Services
• Highly specialised
technical
translations
LANGUAGE &
CONTENT
TECHNOLOGY
• Linguistic AI –
neural MT
• Language technology
– translation
management and
productivity
• Content technology
IP SERVICES
• Patent translation,
filing and renewals
• Search, retrieval
and monitoring
services
• Highly specialised
technical
translations
OPERATING
DIVISIONS
LANGUAGE
SERVICES
• Localisation
solutions to
multiple verticals
• Includes data
training, eLearning,
video localisation
and interpreting
services
GROUP
REVENUE
SHARE
PRODUCTION
PLATFORM
SUPPORT
FUNCTIONS
4
FY21:
46%
FY22:
46%
FY21:
23%
FY22:
23%
FY21:
15%
FY22:
17%
FY21:
16%
FY22:
14%
Language eXperience Delivery
Corporate Development • Finance • Human Resources • Information Technology
• Legal & Company Secretarial
RWS — Annual Report 2022 STRATEGIC REPORT RWS’S FOUR DIVISIONS
+10%1
FY21 to FY22 revenue growth
Language Services focuses on localisation
solutions for clients at any stage of their globalisation
journey. Solutions are provided to a wide range of
industries, including automotive, chemical, consumer,
retail, technology, travel and telecommunications.
Services cover translation, Artificial Intelligence (AI) data
training, eLearning, video and interpreting services. The
division has three client groups: Technology Enterprises
(served by the Enterprise Internationalisation Group),
Major Accounts and GoGlobal, servicing entry-level
clients and businesses with less mature localisation
models (both are served by the Strategic Solutions
Group). RWS’s language and content technologies are
often provided in combination with its services.
+6%1
FY21 to FY22 revenue growth
Regulated Industries provides a range of
services to the life sciences, financial services and
legal sectors. Service provision is centred around
highly specialised, technical translations, with a strong
emphasis on quality and security. Clients include 19
of the world's top 20 pharmaceutical companies, 18
of the top 20 medical device companies and 18 of the
top 20 law firms. RWS’s work in the pharmaceutical and
medical device verticals make a critical contribution
to life safety – evidenced by our recent involvement
in the development and testing of vaccines to combat
Covid-19.
1 Amounts stated included 1 month of additional revenue in FY22 from
the SDL acquisition and the impact of foreign exchange movements. See
p20-21, Operating Review, for year-on-year organic constant currency
growth for each division.
+17%1
FY21 to FY22 revenue growth
Language and Content Technology ("L&CT")
offers clients access to a range of translation technologies
and content management platforms. Language Weaver, a
pioneer in machine translation (MT), is a secure Neural MT
platform for high translation volumes. Trados offers a suite
of translation productivity and management solutions for
enterprises, small and medium-sized organisations, and
individuals. Tridion and Contenta are the Group’s content
management products – the former focused on both
structured and web content solutions, the latter specialising
in technical content solutions for the government and
defence sectors. The structured content solutions offering
was enhanced by the acquisition of Fonto in March 2022.
These product lines are now led by four general managers
who hold full ownership and accountability for the revenues
and growth of their products.
-6%1
FY21 to FY22 revenue growth
IP Services is the world’s premier provider of patent
translations, filing and renewal solutions, alongside
Intellectual Property ("IP") search, retrieval and monitoring
services. The division delivers highly specialised technical
translations to patent applicants and their representatives
and counts 18 of the world’s top 20 patent filers as its clients.
RWS’S SUPPORT FUNCTIONS
Language eXperience Delivery provides an important and
unique support function to our three services divisions
by leveraging the Group’s scale, continuing investment
in proprietary technologies in MT, AI and translation
productivity, and cultural expertise to enable teams to
deliver powerful solutions for clients. It offers access to
the world’s largest linguistic network, including more than
2,000 in-house translators and in excess of 30,000 freelance
specialists, whose cultural and technical expertise underpin
24/7 service provision to clients in more than 111 countries.
Support functions have been established to provide
effective and lean shared services that support our four
divisions and facilitate the integration of acquisitions and
continued margin development. These include Corporate
Development, Finance, Human Resources, Information
Technology, Legal and Company Secretarial.
5
STRATEGIC REPORT RWS — Annual Report 2022
Performance and
Financial Highlights
+41
Client NPS Score
8,000+
Number of clients
111+
Countries our clients
are located across
429
Language pairs
and variants
7,761
FTE employees at 30 September 2022
2,000+
In-house translators
30,000+
Number of freelancers
159
Countries our in-house and network
of translators are located across
1.9bn
Words processed in FY22 by our Language
eXperience Delivery platform
OUR GEOGRAPHICAL REACH
72 offices across 33 countries
Canada
United
States
United
Kingdom
Portugal
Finland
Poland
Russian Federation
Ukraine
Romania
Croatia
Spain
Greece
Lebanon
China
Republic
of Korea
Japan
Taiwan
Hong Kong S.A.R.
Thailand
Singapore
Vietnam
India
Netherlands
Germany
Belgium
Luxembourg
Czech
Republic
France
Switzerland
Single office
2+
5+
2-5 offices
5+ offices
Colombia
Brazil
Chile
Argentina
6
RWS — Annual Report 2022 STRATEGIC REPORT
REVENUE
PBT
CASH
£749.2m
+8% (-1% OCC1)
2021: £694.5m
£83.2m
+51%
2021: £55.0m
£101.2m
+9%
2021: £92.5m
ANNUAL ADJUSTED PBT (£M)
BASIC EPS
16.1p
ADJUSTED EPS 2
26.6p
ADJUSTED PBT2
+48%
2021: 10.9p
+12%
2021: 23.8p
£135.7m +17%
2021: £116.4m
PROPOSED FINAL
DIVIDEND
9.5p
+12%
2021: 8.5p
NET CASH3
£71.9m
+59%
2021: £45.3m
NET CASH/(DEBT) INCLUDING
LEASE LIABILITIES
£25.2m
+506%
2021: (£6.2M)
4
0
0
2
6
0
0
2
8
0
0
2
0
1
0
2
2
1
0
2
4
1
0
2
6
1
0
2
8
1
0
2
0
2
0
2
2
2
0
2
ANNUAL REVENUE (£M)
140
120
100
80
60
40
20
0
800
700
600
500
400
300
200
100
0
4
0
0
2
6
0
0
2
8
0
0
2
0
1
0
2
2
1
0
2
4
1
0
2
6
1
0
2
8
1
0
2
0
2
0
2
2
2
0
2
1 Excluding the impact of acquisitions and assumes constant currency.
2 Adjusted profit before tax or Adjusted PBT – is stated before
amortisation of acquired intangibles, acquisition costs, share-based
payment expense and exceptional items (refer to page 160). Adjusted
earnings per share adjusts for amortisation of acquired intangibles,
share-based payment expense, acquisition costs and exceptional items,
net of associated tax effects. See Alternative Performance Measures on
page 160.
3 Comprises loans less cash and cash equivalents excluding lease liabilities
(refer to Note 16).
STRATEGIC REPORT RWS — Annual Report 2022
7
Chairman's Statement
RWS continued to evolve rapidly during FY22, with the formulation and launch of
its medium-term growth strategy, the introduction of new values and purpose,
further development of its Board and Executive Team, and completion of the SDL
integration. The Group is now a unique world-leading provider of technology-
enabled language, content and intellectual property services, which operates
in attractive growing markets with a combined global size estimated at more
than £47bn1. The Group’s specialist knowledge, reputation and scale help it to
enjoy leading positions in a range of highly fragmented markets, serving a highly
diversified client base.
PERFORMANCE
PEOPLE AND BOARD
The Group delivered £749.2m of revenues for the year,
approximately 8% ahead of the prior year (FY21: £694.5m).
This reflects an additional month’s trading from SDL plc
("SDL"), accelerated growth in Language and Content
Technology, modest growth in Language Services, and
favourable FX movements. These were offset by a reduced
volume of activity from some of our largest global
technology clients, a decision to gradually cease work
with a significant client in Regulated Industries and, in IP
Services, some weaker demand arising from the impact
of the forthcoming Unitary Patent. Overall, the Group
demonstrated strong resilience against a worsening
global economic backdrop – illustrating the defensive
qualities of a well-diversified business, operating across a
number of key territories.
At 30 September 2022 RWS employed 7,761 full-time
equivalents across 72 locations in 33 countries (FY21:
7,796). As the world emerged from the constraints of
the global pandemic, we undertook a gradual return
to office working and we introduced an agile working
policy that supports a mix of office and home working
for all our colleagues. We recognise the value of regular
face-to-face contact in fostering high-performing teams
and effective collaboration, as well as the benefits of
technology in delivering time and energy savings from
a reduction in commuting. In planning the return to
our offices, we also took the opportunity to consider
the viability of some of our locations and were able to
reduce the number of offices by c.13%, with associated
savings in property and related costs.
Profit before tax for the year increased to £83.2m (FY21:
£55.0m). Adjusted profit before tax increased to £135.7m
(FY21: £116.4m), reflecting effective cost control, the full
year effect of synergies from the integration of SDL, and
operational leverage from higher translation volumes
through Language eXperience Delivery, our production
platform.
The Group continues to enjoy a strong balance sheet,
with net assets of £1,141.7m (FY21: £1,010.9m) as at
30 September 2022. This included net cash of £71.9m
(FY21: £45.3m), underlining the Group’s continuing cash
generation characteristics.
As in FY21, our teams responded admirably to the
challenges caused by the lockdowns and travel
restrictions in various jurisdictions during the first half of
the year, continuing to focus on delivering high-quality
services and products to our clients, who often faced
similar restrictions on their operations. In February
we responded rapidly to the situation in Ukraine and
we continue to provide support for those colleagues
impacted by the conflict. On behalf of the Board I would
like to thank all our teams across the world for their
continuing commitment, focus and efforts to support
our clients and further develop the Group.
1 Sources: OC&C, Slator, CSA,
WIPO, EPO, Companies House
Andrew Brode
CHAIRMAN
8
RWS — Annual Report 2022
On 29 December 2021 we announced that Des Glass,
Chief Financial Officer and Company Secretary, was leaving
to pursue other opportunities. On 10 January 2022 we
confirmed that Rod Day had joined the Group as Interim
Deputy Chief Financial Officer. Rod has more than thirty
years of senior finance and strategy experience, primarily
in the business services, online and retail sectors. After an
effective handover period, Des Glass left on 8 April 2022, at
which point Rod Day was appointed to the Board. In parallel
Christopher Lewey, Group Corporate Development Director
and a member of the Executive Team, was appointed acting
Company Secretary.
After a rigorous search and selection process, we
announced the appointment of Candida (Candy) Davies
as Chief Financial Officer on 5 July 2022. Candy was
most recently Head of Finance for the Personal Health
division of Royal Philips, the Dutch-headquartered health
technology conglomerate, where she also supported the
Group Innovation and Strategy function. Candy joined the
Group on 3 October 2022 and was appointed to the Board
the same day. She also joined the Executive Team and
has been conducting a thorough handover with Rod Day,
who will leave the Group on 31 December 2022. Jane Hyde
was also appointed as General Counsel and Company
Secretary and joined the Executive Team on 3 October
2022. As a result of this appointment, Christopher Lewey
stepped down from his role as acting Company Secretary.
On 27 July 2022 we also announced the appointment of
Julie Southern as Non-Executive Director. The appointment
further strengthens the Group’s highly experienced Board
and forms part of the Group’s succession planning, with
the intention that Julie takes up the role of Non-Executive
Chairman in October 2023, at which time I will become
a Non-Executive Director. Julie, who has also become
a member of the Group’s Audit Committee, brings a
wealth of business and governance experience from her
executive career and her current Non-Executive Director
roles at Rentokil Initial, Ocado, NXP Semiconductors and
easyJet, and we are delighted to have attracted someone
of her calibre to chair the Group.
On behalf of the Board I would like to thank Des and Rod
for their significant contributions to the development of
the Group.
SUSTAINABILITY AND ESG
RWS remains fully committed to sustainability and
achieving the highest standards in Environmental, Social
and Governance (ESG) in its business activities and
interactions with stakeholders. Sustainability was therefore
a core consideration in the development of the Group’s
medium-term growth strategy and purpose.
As a signal of our ambition we have published a separate
ESG report for the first time. This comprehensive review
sets out our progress in detail and is available to download
from the Group’s website (www.rws.com/about/
corporate-sustainability/). We provide a summary of our
sustainability activities and our SASB disclosure on p.25-39
and an update on our progress in adopting the Taskforce
on Climate-related Financial Disclosures (TCFD) on p.48-59.
DIVIDEND
RWS continues to deliver against its progressive dividend
policy and this marks the 19th year in succession that we
have increased the dividend. The Group remains highly
cash generative, and while our previously announced
investment programme will mean a higher level of capital
expenditure for the next couple of years, we will continue
to deliver high levels of cash conversion and we have a
strong net cash position.
The Board therefore recommends a final dividend of 9.5p
per share. Together with the interim dividend of 2.25p per
share, this will result in a total dividend of 11.75p for the
year – an increase of 12% compared with FY21. Subject to
final approval at the AGM, the final dividend will be paid
on 24 February 2023 to shareholders on the register at 27
January 2023.
SUMMARY
The Group has delivered another robust set of results
against a backdrop of increasing economic uncertainty
and conflict in Eastern Europe. The global nature of our
business and the diverse range of end markets that we
operate in allows us to better navigate these impacts while
delivering consistently strong returns to shareholders.
With an even stronger Board and Executive Team in place,
I remain confident in the Group’s position and long-
term prospects. We continue to lead the markets which
we serve and we are excited about the opportunities
for organic growth and M&A in the sector, which will
support enhanced profitability and cash conversion in the
medium- to long-term. I am looking forward to my last
year as Chairman as the Group continues to deliver on its
five-year accelerated growth plan.
Andrew Brode
CHAIRMAN
14 December 2022
9
STRATEGIC REPORT RWS — Annual Report 2022 Market Overview
RWS’s services and products form part of a market estimated at £47.1bn in
2021. Below is a breakdown of the large end markets we serve, alongside the
estimated market size for each.
Market size and sector breakdown
£30bn Language Services –
core localisation
£2bn Language Services –
data annotation
£3bn Life Sciences –
localisation
£4bn Finance & Legal –
localisation
£3bn Linguistic AI
£0.3bn Language Technology
£2.8bn Content Technology
£2bn IP Services
£47.1bn
MARKET SIZE
Source: OC&C analysis based on research from Slator, CSA, EPO, Companies House
LANGUAGE SERVICES – CORE
LOCALISATION
LANGUAGE SERVICES – DATA
ANNOTATION
Organisations that are looking to engage and
communicate with internal and external audiences,
across multiple geographies and languages, require the
linguistic and cultural expertise of a language services
provider.
The core localisation services market (excluding Life
Sciences, Finance and Legal) is currently estimated at
£30bn, growing at 3-5% Compound Annual Growth Rate
(CAGR) (according to OC&C research). This growth is
driven by volume increases and companies looking to
expand internationally. The market is highly fragmented,
though we believe that RWS is the second largest player
by revenue.
Data annotation typically involves humans labelling data in
various formats (videos, images or text) so that machines
and Artificial Intelligence ("AI") applications can understand
and process the information. Companies looking to build
AI applications require a large network of people, across
multiple languages and geographies, in order to ensure
data is labelled correctly, accurately and consistently.
The approximate market size for AI data training and
annotation services in 2021 was £2bn and is growing at
an attractive CAGR of approximately 20-25% between
2021-26, according to OC&C estimates. As AI capabilities
become more widely understood, demand for data
training is expected to increase across a wider variety of
industries (e.g. healthcare, financial, automotive and the
public sector).
10
RWS — Annual Report 2022 STRATEGIC REPORT
LIFE SCIENCES – LOCALISATION
The Life Sciences industry broadly comprises
pharmaceutical companies, clinical research organisations
and medical device firms. Each has its own unique
requirements for translation and linguistic expertise,
largely driven by regulatory requirements. These
industries are also exploring more innovative digital
approaches to their business.
The Life Sciences localisation market is forecast to grow at
an approximate CAGR of 8% between FY22-26, according to
OC&C research, which estimates the market size at £3bn.
FINANCIAL AND LEGAL – LOCALISATION
Financial institutions and legal services organisations
have a broad range of requirements for language
services and content technology – ranging from secure
communications and digital marketing through to
regulatory filings, eDiscovery (the process of identifying
and delivering electronic information that can be used as
evidence in legal cases) and content intelligence.
The market for localisation services within the financial
and legal sectors is estimated at £4bn, according to
OC&C research. This market has an expected CAGR
of 5% between FY22-26, driven by demand for cross-
border M&A and international expansion of customers.
These established growth drivers have been joined
in recent years by a rapidly expanding demand for
content supporting sustainability initiatives; both
corporates and financial institutions are instrumental
in the decarbonisation of the global economy and
this is contributing to increased demand for external
communications and regulatory reporting content.
LINGUISTIC AI
Linguistic AI and machine translation ("MT") technology
enables organisations of all sizes to translate and
understand large volumes of content securely, efficiently
and cost effectively. Recent advances in MT technology
have driven significant improvements in the quality of
translations, alongside the availability of more language
combinations.
The addressable market for MT, estimated at £3bn, is
projected to grow c.20-25% CAGR, according to OC&C
estimates – with favourable tailwinds from increasing
client comfort with MT solutions given the improving
accuracy of engines.
LANGUAGE TECHNOLOGY
Enterprises and translators (both freelance and
in-house) typically work with translation management
systems, collaboration platforms and computer-assisted
translation tools. These enable localisation teams – who
often work with multiple stakeholders – to efficiently
create, manage and deliver high-quality translations for
global audiences. Historically these three technologies
have grown at 5-10% pa, according to OC&C. The
market size for translation management systems is
estimated to be £140-180m, while the market size for
computer assisted translation tools is £50-60m. The total
addressable market for Language Technology is estimated
at £300m, according to OC&C.
CONTENT TECHNOLOGY
Enterprises need to ensure that they provide customers,
partners and employees with an engaging, intuitive
experience across any digital device. They also need
to differentiate themselves from the competition, cost
effectively and efficiently, while managing huge volumes
of content and information.
OC&C estimates the total addressable market size at £2.8bn.
IP SERVICES
Organisations looking to monetise and protect their ideas
and intellectual property require the expertise of a partner
that understands all aspects of the patent process. This
typically covers patent translation, patent filing, renewals
and IP research.
According to OC&C, the total addressable market for RWS’s
IP Services is c.£2bn (including £0.8-1bn from renewals)
and has grown c.3% pa on average in 2016-21, with forecast
growth projected at c.2% CAGR between 2022-26.
11
STRATEGIC REPORT RWS — Annual Report 2022 Strategy and Growth Model
RWS launched its medium-term strategy, values
and purpose at a Capital Markets Day on
23 March 2022, outlining its continued
commitment to building a long-term sustainable
business, delivering both financial and social value.
The Group’s five-year accelerated growth plan is centred on growing
organically through:
• Accelerating penetration into existing high-growth segments
• Pivoting into adjacent high-growth segments
• Growing share of wallet through expanding our service range
• Winning more clients
• Re-affirming our technology product leadership
In parallel we are investing to deliver the sector’s most efficient
production platform, Language eXperience Delivery ("LXD"), which
will allow us to offer the most appropriate blend of people and
technology to meet client needs – irrespective of content type, quality
requirement or urgency. Fully optimised, the LXD offers significant
operational leverage potential.
This renewed focus on organic growth is accompanied by a disciplined
M&A programme to selectively acquire complementary businesses
which enhance our organic growth profile, deliver above-industry
average margins, and align with our strategic priorities to add:
• Localisation assets with attractive end-market exposure
• New capabilities in technology-enabled language services
• Assets that broaden our natural language processing capabilities
• Data annotation solutions
In delivering this strategy, we are united by our purpose – unlocking
global understanding – and we are guided by our values, which
shape how we think, act and behave with all our stakeholders:
we partner, we pioneer, we progress, and we deliver.
12
RWS — Annual Report 2022 STRATEGIC REPORT
RWS VALUES
X
X
=
We play as one team –
with colleagues, clients
and partners
We shape the future –
combining the best of
people and technology
We choose to be
positive – using every
experience to grow
We keep our promises
– to clients, colleagues
and communities
Our strategy is underpinned by five fundamental drivers of demand for our products and services. These drivers vary in
emphasis across the markets in which we operate, but each one contributes to one or more of the four core client needs
that we meet.
RWS DEMAND DRIVERS
EXPLOSION
OF DATA /
CONTENT
INCREASING ESG
/ REGULATORY
REQUIREMENTS
CONTINUED
INNOVATION
GROWTH IN AI /
AUTOMATION
CHANGING
GLOBALISATION
MARKET
Annual volume of
data to reach 2,140
zettabytes by 2035
– 33x increase
from 2020¹
>3k rules/
regulations added
annually to US
Federal Register
since 1993²
Capex investment
surged 13%
in 2021 and
is forecast to
continue growing
to 2030³
AI to contribute
$15tr (14%) of
global GDP by
2030⁴
Value of global
trade expected
to grow 70%
from 2020 to
$29.7tn in 2030⁵
Sources: 1Statista; 2 Office of the Federal Register; 3SP Global Intelligence; 4PWC; 5Standard Chartered
RWS has a deep, wide and flexible range of solutions which meet these needs, using our unique combination of people
and proprietary technology. We partner with our clients to help them to acquire and retain customers, to deliver
compelling user experiences, to maintain compliance, and to give them access to insights. From localised marketing
and eLearning solutions, to linguistic validation and content intelligence, RWS helps clients to grow by ensuring they are
understood anywhere, in any language.
13
STRATEGIC REPORT RWS — Annual Report 2022 Strategy and Growth Model (continued)
FOUR CORE USE CASES
RWS
BRINGS
CLIENT
OUTCOMES
RWS
SOLUTIONS
CLIENT, CULTURAL AND TECHNICAL UNDERSTANDING
EMOTION
BEHAVIOUR
REGULATION
DATA
Acquiring and
Retaining
Customers
Localised
Marketing
Localised
Branding
Delivering User
Experiences
Maintaining
Compliance
Access to
Insights
Localised UI /
Guides
eLearning
Colleague Portals
Localised
Regulatory Filings
Patent Filing and
Translation
Linguistic Validation
Content Intelligence
Data Annotation
Content
Management
ENABLED BY
Unique combination of proprietary technologies and human expertise
THE RWS GROWTH MODEL
Our growth model is focused on five key areas.
Firstly, as a trusted partner, our clients rely on us to keep
our promises and deliver tailored support that meets a
broad range of needs. This allows us to build long-term
client relationships.
Deepening our cultural and technical expertise
is an important enabler of our growth. The value
of our linguistic expertise is enhanced by our deep
understanding of client industries and local cultures, and
complemented by our expertise in content, our rich data
networks and talented people.
We know that deploying our unique technology and
AI will increasingly be essential for our clients, and for
RWS, in successfully managing the explosion of content
that a more digitised world is causing. Our capabilities
are underpinned by our pioneering Language Weaver
AI machine translation proposition, market-leading
translation management and productivity tools like
Trados, and our content technologies.
A persistent focus on developing our portfolio of
services has created the resilient and diverse company
that RWS is today. As a well-run business with a strong
balance sheet, we will continue to develop our own
technologies, products and services, and enhance
our capabilities through strategic acquisitions and
partnerships.
We are able to leverage our global reach and scale
through nuanced cultural insight at a local level. We
deliver work smartly for our clients – offering 24/7 delivery
through a blend of human expertise and technology – and
build economies of scale to work more cost-effectively
and profitably.
The RWS Growth Model differentiates us in the
marketplace and underpins our compelling investment
proposition.
14
RWS — Annual Report 2022 STRATEGIC REPORT RWS GROWTH
MODEL
BUILDING
LONG-TERM
CLIENT
RELATIONSHIPS
WHY WE ARE UNIQUE
• We offer a broad range of technology-enabled services and software products to many of
the world’s largest organisations.
• We have deep specialist sector expertise in multiple verticals including automotive,
chemical, consumer, retail, financial, government, legal, medical, pharmaceutical,
technology and telecommunications.
• Our client base is well-diversified by geography and sector, spanning Europe, Asia Pacific
and North and South America.
• We support clients through dedicated sector account management teams and enjoy high
average levels of tenure – 15 years for our top 30 clients.
DEEPENING
OUR CULTURAL
AND TECHNICAL
EXPERTISE
• We offer true global coverage, with a presence in more than 33 countries.
• We have the largest linguist network in the sector, with more than 2,000 internal linguists,
complemented by access to more than 30,000 freelance experts in 159 countries.
• We support 429 language pairs and variants.
• We are rich in data – our translation memories and termbases across multiple markets are
increasingly valuable.
• We invest in future linguistic and technical talent.
DEPLOYING
OUR UNIQUE
TECHNOLOGY
AND AI
• We are machine translation (MT) pioneers via our Language Weaver product, and our
neural MT research team is accredited with more than 45 patents.
• Through Trados we offer a range of market-leading, cloud-oriented translation
management and productivity tools.
• Our content management technologies – Tridion, Fonto and Contenta – are used by some
of the world’s largest companies to better reach their audiences and make optimal use of
their content.
• Our technology product suite is sold both separately and alongside our service solutions,
as well as supporting our internal efficiency and effectiveness.
• We are shifting towards a higher proportion of SaaS revenues in our technology products
to enhance recurring revenues and quality of earnings.
DEVELOPING
OUR
PORTFOLIO
• Our strong cash generation enables us to invest in service and technical development.
• We are well-diversified, and strongly positioned to take advantage of:
• Ongoing growth in the technology, life sciences, and other end markets, with greater
emphasis on higher growth segments such as data annotation and linguistic validation.
• The explosion in data and content is driving increased outsourcing of localisation,
language and intellectual property services by multinationals to well-reputed partners
of scale.
• Continued innovation as our clients seek our support in launching and supporting new
products and services.
• The trend towards globalisation, which brings greater demand for digital content and
language services.
• Growth in AI and automation.
• We continue to take advantage of opportunities to gain market share and consolidate
fragmented service provision by adding to our strong track record of value accretive
acquisitions.
• Our unique production platform, LXD, provides 24/7 coverage via a blend of human
expertise and technology.
• Our solutions can meet any mix of quality, speed and value required by our clients.
• This platform delivers operational leverage – with the potential for sustained efficiency and
margin improvement.
• We are investing to establish effective and lean shared services which will support our
four operating divisions, and will facilitate further organic growth, the integration of
acquisitions and continued margin development.
LEVERAGING
OUR GLOBAL
SCALE AND
REACH
15
STRATEGIC REPORT RWS — Annual Report 2022 Chief Executive Officer's Review
I am delighted to report another solid year of progress in
the development of RWS as a unique world-leading provider
of technology-enabled language, content and intellectual
property services.
With the impact of the pandemic fundamentally behind us,
we have been focused on developing, launching and starting
to implement the Group’s medium-term strategy and
accelerated growth plan.
It has been an exciting and busy year for the business as
we have also defined our purpose and values; embarked
on a significant transformation programme; strengthened
our Executive Team; completed our second colleague
engagement survey; and made further progress on our ESG
journey – all while continuing to grow our client base.
As always, serving our clients comes first and I take great
pride in knowing that our global teams have continued
to deliver day-in-day-out for the many thousands of
organisations who rely on our unique blend of service and
technology solutions.
88
out of the top 100
global brands
Ian El-Mokadem
CHIEF EXECUTIVE OFFICER
16
RWS — Annual Report 2022
MEDIUM-TERM STRATEGY AND ACCELERATED GROWTH PLAN
In the first half of the year we conducted a comprehensive
review of our strategy. With the integration of SDL
completed, it was an opportunity to develop a refreshed
plan for the next phase of development for the Group.
Consulting widely, using independent expertise and
detailed growth forecasts, we created a focused,
ambitious and grounded five-year accelerated growth
plan, a fresh set of values, and a new purpose for the
Group – unlocking global understanding.
The strategy is centred on organic growth – to drive cash
generative enhanced profitability. It will be enabled by a
series of transformation investments that will deliver an
efficient and sustainable platform business and will have
the sector’s strongest production engine, which we have
named Language eXperience Delivery ("LXD"), at its heart.
We have identified a range of growth initiatives, in both
existing markets and in adjacencies, that will allow us to
capitalise on our strengths and deliver value to our clients,
as well as pivoting towards a greater proportion of our
revenues being derived from higher growth segments.
The opportunity for RWS is significant, operating in
markets with an estimated combined size of £47bn1, and
we have scope to take advantage of M&A opportunities
due to the often fragmented nature of these markets.
Conscious of the evolving nature of client needs in the
end markets that we serve, and with an exciting suite
of language and content technology products, we
believe that we have the right blend of human expertise
and software solutions to successfully meet any client
requirement. Our solutions range from localising
content for life-saving applications and global eLearning
platforms, to data labelling and text analytics that offer
clients valuable insight in a single language. Through
content transformation and multilingual data analysis, we
help our clients to grow by ensuring they are understood
anywhere, in any language. We continue to partner with
many of the world’s leaders in their respective markets.
16
clients on Fortune’s top 20
'Most Admired Companies' list
9
out of the globe's top 10
investment banks
19
out of the globe's top 20
pharmaceutical companies
18
out of the globe's top 20
medical device companies
10
out of the globe's top 10
contract research organisations
19
out of the globe's top 20
asset management companies
18
out of the globe's top 20 law firms
18
out of the top 20 patent filers
We regard technological change as an enabler for
our sector and for our business. Technology expands
the range of content that can be localised and brings
added sophistication to the solutions that we provide
– regardless of content type, quality and urgency. With
the continued explosion in the volume of content being
created and requiring localisation (see p.13), we are
confident that technology is an opportunity for RWS.
1Sources: OC&C, Slator, CSA, WIPO, EPO, Companies House
17
STRATEGIC REPORT RWS — Annual Report 2022 Chief Executive Officer's Review (continued)
Solutions right across the
people / technology spectrum
MEDICAL
AND PHARMA
CONTENT
PATENT
TRANSLATION
eLEARNING
KNOWLEDGE
BASES
USER
FORUMS
WEBSITES
EMAIL
SUPPORT
TEXT
ANALYTICS
HUMAN EXPERTISE
TECHNOLOGY
The extent of our human expertise is centred on more
than 2,000 in-house linguists and access to a network
of in excess of 30,000 freelance translators. They are
complemented by some of the sector’s foremost experts
in neural machine translation, translation productivity
and management, and structured content management,
who are focused on the continuous development of our
software products. These experts work with our highly
integrated delivery teams and dedicated account teams
for our large and enterprise clients. Together, they bring a
deep level of understanding – client, cultural and technical
– which, in combination, differentiates us in the market.
CLIENT
UNDERSTANDING
RWS
COMPETITIVE
ADVANTAGE
CULTURAL
TECHNICAL
UNDERSTANDING
UNDERSTANDING
Deep understanding
differentiates us
OUR PURPOSE
Understanding is at the core of what we deliver for
clients and informs our purpose – unlocking global
understanding. Across our four core use cases (acquiring
and retaining customers; delivering user experiences;
maintaining compliance; and access to insights), we work
towards a common outcome – breaking down barriers
to communication and understanding so that our clients
can connect with their audiences, solve problems, and
grow their businesses anywhere in the world. Our global
scale and reach allow us to support those clients whose
ambition is to go global. It also means that we can fully
support any client on a genuine 24/7 basis, with experts
available across multiple time zones. We are not only
helping clients succeed, we are helping the world to
connect.
18
RWS — Annual Report 2022 STRATEGIC REPORT
OUR VALUES
ORGANISATION AND CULTURE
In parallel with defining our medium-term strategy, we
have spent time defining how we think, act and behave
as an organisation and developed a new set of values,
grounded in the business we are today, and the one that
we will become. We consulted widely with colleagues,
through an initial set of workshops, core working group
input, and then an all-company survey where everyone
was given the opportunity to give us their views. I am
delighted that 56% of colleagues did so.
We made a number of organisational changes to support
delivery of our strategy. We reaffirmed RWS’s long-held
view on the primacy of the operating divisions and
business units within them, giving clear accountability
to the general managers of our technology product
portfolios and putting each R&D team under the general
manager’s leadership. We have already seen a positive
effect in the Language and Content Technology division,
with a strong return to growth during the year.
Our new values – we partner; we pioneer; we progress;
and we deliver – give everyone at RWS clear guidance as
to the behaviours that will underpin our success. They will
also help align colleagues in our journey towards a more
unified company culture (see p.13 for more detail on RWS’s
values).
We enhanced sales leadership in several areas and have
begun to inculcate a stronger growth mindset across
the business, backed by more readily available and
comparable data on sales and marketing performance,
which is reviewed during our internal quarterly business
review process. We have also moved the product support
function closer to the client and have taken some
important steps in relation to our 'voice of the customer'
programme, where we harmonised historically disparate
schemes, partnered with one of the world’s leading
Net Promoter Score (NPS) experts, and centralised the
programme and expanded its scale – developing a
product-specific survey to go alongside the existing client-
focused one.
We announced our accelerated growth plan, values
and purpose to investors on 23 March 2022, and to
our colleagues and clients in the ensuing two months
via a series of events, engagements and targeted
communications. We were encouraged by the positive
response from all our stakeholders and we continue to
reinforce our new Group story, both inside and outside
the organisation. Internally, we are now embedding the
purpose and values in everything that we do, so that they
become part of our organisational DNA – from talent
attraction and performance management to colleague
development and recognition.
Strategy summary
PURPOSE
WHY WE EXIST
UNLOCKING GLOBAL UNDERSTANDING
OUR BUSINESS
WHO WE ARE
A unique, world-leading technology-enabled language, content and IP
services business
PROPOSITION
WHAT WE DO
Through content transformation and multilingual data analysis, our
unique combination of technology and cultural expertise helps our
clients to grow, by ensuring they are understood anywhere, in any
language
GROWTH MODEL
HOW WE WIN
• Long-term relationships
• Developing our portfolio
• Cultural and technical expertise
• Leveraging our scale and reach
• Unique technology and AI
VALUES
HOW WE THINK,
ACT AND BEHAVE
• We partner
• We pioneer
• We progress
• We deliver
19
STRATEGIC REPORT RWS — Annual Report 2022 Chief Executive Officer's Review (continued)
OPERATING REVIEW
Language Services
Solid growth in Strategic Solutions
Group; some Enterprise Internationalisation
Group clients reduced activity, but confidence in
these established, long-term relationships points
to recovery
The Language Services division represented 46% of
Group revenues in the year (FY21: 46%). Revenues of
£342.1m were 10% higher year on year on a reported
basis (FY21: £309.9m) and saw a 1% increase on an
organic constant currency basis.
In the Strategic Solutions Group there were a number
of new client wins in the Major Account and GoGlobal
segments across a variety of verticals. The particular
success that we had in the first half with new business
won in the Americas region continued through the second
half. In our GoGlobal proposition, where we use our
expertise, technology and reach to support high-growth
businesses that are expanding rapidly into new territories,
we welcomed several electric vehicle manufacturers to
our client base, demonstrating our ability to serve new
entrants alongside many of the more established global
manufacturers. The GoGlobal solution was successfully
introduced into the Japanese and South Korean markets,
with some initial client wins and a healthy pipeline.
One of our key growth initiatives is eLearning, where we
had a strong year. We won several new clients based on
our new proposition and expanded into India and Japan.
Cross-selling eLearning into existing accounts accelerated
in the second half of the year and we had our first major
wins in providing a full end-to-end eLearning content
lifecycle solution, which included development and
concurrent authoring.
In our Enterprise Internationalisation Group, which serves
global technology enterprises, we had some successful
programme wins with one large technology company and
strong revenue development with a global digital retailer
in the first half. We saw a reduced volume of activity
from several of the largest technology clients but we
remain confident in the strong, long-term nature of these
relationships. These clients continue to be very satisfied
with the services and solutions we are providing, so we
expect to see volumes recover in due course.
We identified data services, including data annotation and
labelling, as an important growth lever and we have made
progress on the investments required to strengthen our
existing offering.
The division’s adjusted operating profit2 was £53.3m
(FY21: £44.1m), on a reported basis, reflecting the growth
in top-line revenues in the Strategic Solutions Group,
improved gross margin and effective cost control.
2 Adjusted operating profit is stated before amortisation of acquired
intangibles, acquisition costs, share- based payments expense and
exceptional items. See Note 4
Regulated Industries
Strong performance in Linguistic
Validation offset by some second half softness
The Regulated Industries division accounted for 23%
of Group revenues in the year (FY21: 23%). Revenues of
£173.0m increased by 6% year on year on a reported basis
(FY21: £162.9m) and decreased by 2% on an organic constant
currency basis.
In the Life Sciences vertical, our Linguistic Validation ("LV")
proposition again performed strongly with a number of
additional programmes with existing clients, as well as
some significant new orders in Q4 – with multiple study
programmes covering LV, eCOA migration and proofreading,
and consulting services.
In August we joined Critical Path Institute’s Electronic
Clinical Outcome Assessment (eCOA) Consortium to help
drive the science, best practice and adoption of eCOA within
clinical trials. An eCOA replaces the traditional paper-based
approach to collecting patient results, feedback, and results
in clinical trials and studies. RWS has delivered LV for more
than 20,000 clinical outcome assessments, into 429 language
pairs, in over 200 different specific therapeutic and disease
areas. As a result, we are pleased to be one of 19 member
organisations who collaborate across multiple disciplines for
the electronic collection of clinical outcome data. The Group
also started an important collaboration with a US-based
clinical trial platform provider during the year.
We saw solid performance with our largest life sciences
client, with continued growth in clinical and regulatory work
reflecting increased account management focus. Across our
top 20 clients, we saw good period-on-period growth with 13
of them (on a constant currency basis), including significant
new programmes with an existing medical device client
and an existing pharmaceutical client. We also secured a
major new client in the managed care segment – once again
reflecting our continued leadership in annual enrolment in
the US – and we won our first piece of Contract Research
Organisation ("CRO") business in Japan.
As previously announced, in the second half of the year we
decided to gradually reduce work with a large CRO which
lowered its volumes and moved into offering competing
services.
In the financial and legal services vertical we saw solid
revenues, with several new client wins with financial services
organisations in the last quarter. In the first half we exited
several low-margin contracts which impacted revenues,
but improved profit performance. Our ESG and risk and
compliance offerings have shown encouraging signs of
progress.
The division’s adjusted operating profit2 increased 11% to
£31.6m (FY21: £28.4m), on a reported basis. This was driven by
increasing use of LXD, the exit from low-margin contracts and
effective cost control.
20
RWS — Annual Report 2022 STRATEGIC REPORT Language and Content
Technology
Full ownership and accountability for product
groups drove accelerated growth, despite
faster-than-anticipated transition towards SaaS
revenues
The Language and Content Technology ("L&CT") division
accounted for 17% of Group revenues in the year (FY21:
15%). Revenues of £126.9m were 17% higher year on
year on a reported basis (FY21: £108.1m) and saw a 5%
increase on an organic constant currency basis, despite
the higher than anticipated increase in the proportion
of SaaS revenues, which holds back revenue during the
transition phase from perpetual to SaaS licences.
After an encouraging first half we moved to full
ownership and accountability for the leaders of the four
principal product areas – Language Weaver, Trados,
Tridion and Contenta – which drove a more focused and
successful approach in the second half. The division’s
accelerated growth plan resulted in a refined go-to-
market model for each product, aided by the stronger
link between product development and sales and
marketing. Leveraging the wider RWS client portfolio,
we have seen an increasing number of sales of language
and content technology solutions to services clients
across the Group.
Renewals and extensions were strong and we secured
a major new Tridion client – a provider of robotic
automation software. A major new release of our Trados
Studio product (a key productivity tool for individual
translators), incorporating hundreds of new features,
drove a positive outcome in the second half and
demonstrated our commitment to innovation across our
technology platform.
SaaS revenue growth for the year was 26% (FY21:
18%), ahead of our plan and reflecting the success of
a more targeted sales approach. The proportion of
SaaS revenues for the division is now 29% (FY21: 24%),
offering increased recurring revenue and improved
visibility.
In March 2022 we announced the acquisition of Fonto, a
structured content management business with a strong
roster of clients, complementing our Tridion proposition
and widening our proposition in this segment.
Integration of Fonto into the Group is on track.
The division’s adjusted operating profit2 was £37.6m
(FY21: £25.9m), on a reported basis, reflecting the
growth in top-line revenues, supported by lower cloud
costs and some direct people cost savings, and despite
the greater proportion of SaaS revenues in the year.
2Adjusted operating profit is stated before amortisation of acquired
intangibles, acquisition costs, share- based payments expense and
exceptional items. See Note 4
IP Services
Lower revenue due to impact of
forthcoming introduction of Unitary
Patent, partially offset by solid growth in Worldfile
and other patent services
The IP Services division represented 14% of Group revenues in
the year (FY21: 16%). Revenues of £107.2m were 6% lower year
on year on a reported basis (FY21: £113.6m) and 10% lower on
an organic constant currency basis.
In line with guidance, the division continued to experience
weak demand as a result of the impending introduction of
the Unitary Patent (UP). As we noted in our HY22 results, the
European Patent Office (EPO) announced in January that it
would allow clients to delay the granting of patent applications
in order to benefit from protection under the UP. The latest
guidance from the EPO indicates that the UP will become
effective in the first half of 2023. We continue to engage with
clients and other stakeholders to understand their proposed
approach to the UP and its likely impact on the division.
Other segments, which account for approximately two-thirds
of the division's revenues, delivered modest growth, including
patent translation and filing outside Europe, IP Research and
our operations in Japan. The integration of Horn & Uchida
Patent Translation Ltd was successfully completed and will
support continued growth in East Asia. Revenues in China had
another very strong year, growing by 47%.
In line with lower revenues in our European patent translation
and filing business, we took actions in the first half to lower
our cost base. The division’s transformation programme
remains key to its longer-term prospects and we saw good
progress during the year on the design of the future state
operating model. The transformation will enhance many
aspects of our proposition and is expected to deliver
significant operating efficiencies.
We also restructured the division’s leadership team. In the first
half, we strengthened its sales capability and focus to help
drive penetration in renewals and better access to the patent
attorney segment, with encouraging results. We subsequently
secured new logos with clients from a diverse range of
verticals, including chemical manufacturing and agricultural
sciences; energy storage and battery manufacturing;
pharmaceutical and medical device; petroleum and natural
gas; and the world's largest producer of home appliances.
In November 2022 we announced the appointment of Daniel
Bennett as President, IP Services. Daniel, who is a proven
industry leader with more than 25 years’ international
experience in brand protection, covering a breadth of IP
and corporate security issues, will drive the next phase
of the division’s development, including delivery of the
transformation programme.
The division’s adjusted operating profit2 was £30.1m (FY21:
£32.3m) on a reported basis, reflecting the reduction in
top-line revenues, offset by good cost control and the positive
impact of the actions taken in the first half, which protected
profitability.
21
STRATEGIC REPORT RWS — Annual Report 2022 Chief Executive Officer's Review (continued)
OUR PEOPLE
RWS is a truly people-centred organisation. Deep client
understanding, specialist sector expertise across multiple
verticals, and a rich understanding of culture and nuance
enable more than 7,700 colleagues to put the best
solutions in front of clients across the world every day,
aided by some of the sector’s smartest technologies.
Through our 'voice of the customer' programme and
the high levels of client retention that we enjoy, we can
see the positive impact that our people bring to our
clients’ success and the level of trust that we engender.
Once again, I would like to thank all of our incredibly
talented teams around the world for their hard work
and dedication which enables us to deliver best-in-class
solutions 24/7.
During the year we continued to focus our efforts on
RWS being a great place to work. As well as defining and
launching a new purpose and fresh values (with 56% of
colleagues taking the opportunity to have a say in their
development via a survey), we launched MyLX, a Group-
wide learning portal, demonstrating our commitment to
building a culture of continuous learning. With hundreds
of courses available across multiple languages, take-up
has been very encouraging and we continue to add our
own bespoke training to the platform, where required, as
well as best-in-class external learning assets provided by
the platform provider Skillsoft.
In September 2022 we conducted our second colleague
engagement survey, with 85% of colleagues participating
(FY21: 81%). We evolved our approach, moving to an
Employee Promoter Score framework, which gave us an
overall employee engagement score for the first time,
as well as making the survey available in 12 languages.
The overall engagement score was 69%, with some
clearly articulated strengths, as well as a number of
opportunities for us to address. Partnering with our 'voice
of the customer' programme provider also gave us access
to valuable benchmarking data, allowing us to understand
the steps we need to take to match the global benchmark
for businesses of our type.
The nature of labour markets has clearly changed over the
course of the last 12 months and the importance of having
a compelling employee proposition to attract the right
talent is more pertinent than ever, particularly against a
backdrop of increasing wage inflation. We believe that the
progress made on our people agenda during FY22 moved
us closer to being the employer of choice in our sector
and I am encouraged by our voluntary colleague attrition
rate3 of 15.9% for the year (FY21: 19.2%).
We remain shocked and saddened by the situation in
Ukraine and we continue to focus on supporting our
colleagues in Kyiv and the wider humanitarian efforts. In
February we immediately implemented our crisis response
plan and continue to monitor the situation closely.
In addition to the Board and Company Secretariat
changes outlined in the Chairman's Statement, we also
took a number of steps during the year to strengthen
our Executive Team. At the start of 2022 Jim McHugh
joined as Chief People Officer, with a remit to fully realise
the benefits of scale across all aspects of the colleague
experience, alongside shaping a more unified culture,
to ensure we have committed, energised and engaged
people at all levels of the organisation.
In the spring Maria Schnell was promoted to the position
of Chief Language Officer, leading the development
of the LXD – our unique production platform – with
responsibility for our 2,000+ strong team of in-house
linguists. At the same time Emer Dolan was promoted
to the role of President, Enterprise Internationalisation
Group (part of our Language Services Division), which
works closely with our largest technology enterprise
clients, building highly integrated solutions that enable
them to continually innovate, anticipate trends and scale
their global operations.
In September 2022 we appointed Terry Doyle as Chief
Information Officer, with responsibility for the Group’s
information technology infrastructure, data, security
and compliance, as well as ensuring the delivery of the
transformation programmes that we launched as part of
our medium-term strategy.
SUSTAINABILITY AND ESG
We have made encouraging progress on our sustainability
agenda during the year. As a participant in their
Early Adopter Programme, we submitted our 2022
Communication on Progress report to the UN Global
Compact in June 2022, and our Global Reporting Initiative
framework report was submitted in July 2022, following
approval by a third-party assessor.
On the environment we moved to a new web-based
platform to better facilitate measuring and tracking our
carbon emissions and have spent the year gathering the
baseline data that will allow us to submit science-based
targets to SBTi for validation in FY23. We also launched
our Sustainable Procurement Policy and rolled out the
supporting action plan across the Group.
RWS Campus, our global university partnership
programme, which inspires and develops localisation
talent worldwide, had an extremely strong year. We
merged the RWS Trados Academic Partner Programme
with RWS Campus, meaning that we now have more than
700 university partnerships globally across 76 countries.
3 Calculated as number of FTE leavers during the financial year, divided by
average number of FTEs during the year, noting the constraints imposed by
having multiple HR systems
22
RWS — Annual Report 2022 STRATEGIC REPORT We have continued to make progress on the actions
and investments that we set out at our Capital Markets
Day and we are very encouraged by the early signs
of delivery against our organic growth initiatives,
particularly eLearning and Linguistic Validation. We are
also encouraged by the impact of our pricing programme
and the Group's focus on its transformation projects. The
simpler, more efficient and accountable organisational
model we have put in place to deliver our strategy is
already making a difference.
We also believe that the current environment presents
an opportunity for us to strengthen our leadership in our
markets, as a well-funded business of unique scale, sector
diversification, footprint and capabilities. In parallel, the
Group’s strong cash generation means that we retain
the ability and appetite to make strategically-compelling
acquisitions.
As we enter FY23, our outlook is in line with market
expectations and our capex and investments in line with
plans presented at our Capital Markets Day.
Ian El-Mokadem
CHIEF EXECUTIVE OFFICER
14 December 2022
Following the lifting of restrictions in the majority of
geographies, we have been able to return to onsite
engagement with universities, and hosted 90 workshops,
talks and events during the year. We also expanded the
RWS Campus programme in Africa, with 12 universities
joining the programme for the first time, as we focused
on eight languages, including Amharic, Hausa, Swahili
and Zulu. Trados Studio is now provided free for teaching
purposes to universities (moving from a discounted
approach previously). A third of interns who spend time at
RWS through the RWS Campus programme are offered a
full-time career after completing of their degrees.
We also relaunched the RWS Foundation during the year,
with a key aspect being its response to those impacted by
the conflict in Ukraine. The Foundation’s Ukraine Appeal
raised £34,436 from colleague donations and donated an
additional £15,000 to the International Committee of the
Red Cross. The Foundation also made further donations
of £10,000 each to the UNHCR, the UN’s Refugee Agency,
and to UNICEF, the UN’s Children’s Fund.
On governance, we completed the harmonisation
of policies across the Group and shared these with
colleagues in the first quarter of the year. In the second
half of the year, we launched a Group-wide Code of
Conduct, with associated training, giving all our people
a simple guide to what is expected of them at work, as
well as easy access to the resources that will help support
effective action and decision making. With our ambition to
be the best-run business in our sector, it is vital that our
teams are given the framework and the tools to act with
integrity at all times.
Shortly after the end of the year, we were delighted
to be awarded a silver medal by EcoVadis, the world’s
most trusted provider of business sustainability ratings.
EcoVadis gives silver medals only to the top quartile of
companies participating in its programme worldwide.
RWS was also placed in the top 10% of companies in
the industry category ‘Other professional, scientific and
technical activities’.
CURRENT TRADING AND OUTLOOK
Against a backdrop of wider global economic uncertainty,
RWS has delivered in line with market expectations. The
Group is in a robust position, with resilience afforded
by its diversified capabilities and end markets. We also
remain confident in the long-term opportunities provided
by a range of growth drivers across our markets.
23
STRATEGIC REPORT RWS — Annual Report 2022 Key Performance Indicators
GROUP REVENUE
ADJUSTED PROFIT BEFORE TAX
£749.2m
2022
2021
2020
2019
£749.2m
£694.5m
£355.8m
£355.7m
Description Reflects the total value of work sold
during the financial year.
GROSS MARGIN
46.7%
2022
2021
2020
2019
46.7%
45.1%
39.2%
40.1%
Description Reflects gross profits, being revenues
less costs directly incurred in generating revenues,
expressed as a percentage of revenues.
ADJUSTED BASIC EARNINGS
PER SHARE
26.6p
2022
2021
2020
2019
26.6p
23.8p
19.9p
21.3p
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.
£135.7m
2022
2021
2020
2019
£135.7m
£116.4m
£70.2m
£74.2m
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 160 for further details.
CASH CONVERSION
110.2%
2022
2021
2020
2019
110.2%
96.7%
118.5%
105.4%
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 161 for further details.
COLLEAGUE ATTRITION
15.9%
2022
2021
2020
15.9%1
19.2%1
16.8%2
Description Colleague 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.
24
RWS — Annual Report 2022 STRATEGIC REPORT
Sustainability
INTRODUCTION
We are committed to achieving
and maintaining high standards of
corporate sustainability across all
business activities and present our
corporate sustainability strategy
and progress to the Board annually.
Our 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 is in line with our purpose
of unlocking global understanding and
our values (we partner, we pioneer, we
progress, and we deliver), and aims to
deliver continual improvement in our
economic, social and environmental
performance.
This year we have published a separate Environmental,
Social and Governance ("ESG") report in which we share
progress on our sustainability targets and initiatives.
We have summarised our approach to corporate
sustainability, reporting and our key environmental, social
and governance highlights in this section. We encourage
you to read the 2022 ESG Report for full details (www.
rws.com/about/corporate-sustainability/).
THE RWS FOUR PILLARS OF
SUSTAINABILITY
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, equity and inclusion
• Health and well-being
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
25
STRATEGIC REPORT RWS — Annual Report 2022 Sustainability (continued)
OUR APPROACH TO CORPORATE SUSTAINABILITY
Our corporate sustainability pillars – our people,
our community, our environment and our corporate
governance – are at the centre of our purpose to
unlock global understanding. Engagement with all our
stakeholders has continued to develop, and in particular,
important strides have been achieved in diversity, equity
and inclusion, health and safety, and well-being, via our
Group-wide pillars. We have partnered with a number of
community organisations, have undertaken fundraising
aid for Ukraine, and progressed our focus on education,
partnering with over 700 universities and sponsoring
50 language students via the RWS-Brode Scholarship
programme. We have also contributed to important
life safety work in our Regulated Industries division,
undertaking segment analysis for a major technology
company to help protect its reputation and brand, as
well as working to remove structural bias from Language
Weaver, our machine translation solution. The RWS
Language Lab, led by our Chief Language Officer, also
works closely with the linguistic community to foster
future talent and incubate rare languages.
MATERIALITY ANALYSIS
As a result of the limitation we encountered last year
regarding the amount of feedback we received from
certain stakeholders regarding materiality, we now
identify and prioritise material issues using Datamaran
software that enables a data-driven and dynamic
process for ESG risk identification and monitoring.
The software enabled us to gain a continuous, evidence-
based review of ESG-related risks within our regulatory,
competitive, and operating contexts.
This approach ensures that we can continue to build an
ESG focus that responds to external events, evolving
business priorities, stakeholder expectations, and our
own performance results.
The review enforced our corporate sustainability
strategy and identified emerging issues, such as
geopolitical risks and human rights. These insights have
shaped conversations across RWS as well as the Group’s
principal risks and uncertainties.
Engagement included a materiality survey which went
to over 80% of our shareholders, over 25% of our key
clients and over 85% of our suppliers, and meetings
with stakeholders, i.e. investors, clients, colleagues
and suppliers. We also ran a Group-wide colleague
engagement survey and we were delighted to achieve an
85% global response rate. 82% of respondents believe
RWS is committed to its responsibilities surrounding
ESG.
The results received from ongoing stakeholder
feedback, and the insights from the analysis, showed
us that client privacy and data security; public health
risks; climate change and GHG emissions; employee
diversity and inclusion; employee health and safety; and
ethical corporate behaviour have become increasingly
important to our stakeholders. The matrix ranks the
materiality of issues raised.
2
3
4
5
6
9
1
7
6
5
8
l
s
r
e
d
o
h
e
k
a
t
s
o
t
e
c
n
a
v
e
l
e
R
4
3
2
19
21
23
25
27
10
12
11
13
14
17
18
20
15
16
22
26
24
2 3 4 5 6
Relevance to RWS
ENVIRONMENT PEOPLE COMMUNITY GOVERNANCE
1 Public health risks
2 Client privacy and data security
3 Climate change and GHG
emissions
4 Employee diversity and
inclusion
5 Employee health and safety
6 Ethical corporate behaviour
7 Human rights
8 Physical and sociopolitical risks
9 Workforce management
10 Natural capital
11 Energy management
12 Transition to renewables and
alternative energies
13 Client practices
14 Access and affordability
15 Labour practices
16 Transparency
17 Governance structures
and mechanisms
18 Innovation and technology
19 Business model resilience
20 Waste and hazardous
materials management
21 Management of the legal
and regulatory environment
22 Community relations
23 Ecological impacts
24 Sourcing efficiency
and management
25 Competitive behaviour
26 Responsible consumption
and production
27 Selling practices and
product labelling
26
RWS — Annual Report 2022 STRATEGIC REPORT
REPORTING
We believe in timely, transparent and comprehensive
reporting and continue to improve the transparency and
credibility of our environmental, social and governance
disclosures through the adoption of globally recognised
sustainability reporting standards. These include:
UNGC
In 2020 RWS joined the United Nations Global Compact
(UNGC) 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 UNGC’s Sustainable Development Goals.
In 2022 we participated in the Early Adopter Programme,
disclosed our progress on the new Communication on
Progress digital platform and had the opportunity to
provide targeted feedback to shape the platform before its
full release in 2023.
TCFD
We became a signatory of the Task Force on Climate-
related Financial Disclosures ("TCFD") in FY21, as part of our
commitment to transparency and ongoing improvement
of ESG reporting and included disclosures on our climate-
related performance and strategies in our 2021 annual
report for the first time. Many of the disclosures are
included in CDP Climate responses due to alignment
between the frameworks. Read more about TCFD and how
we manage our climate-related risks on pages 48 to 59).
GRI
Last year, also for the first time, we reported using the
Global Reporting Initiative ("GRI") standards and we will
report again, separately, for FY22 in accordance with the
GRI Standards.
SASB
Last year, for the first time, our annual report included
disclosures from the Sustainability Accounting Standards
Board ("SASB"). In our SASB Index, we report on the
sector-specific disclosure topics contained in the
Professional & Commercial Services industry, which
includes the following disclosure topics:
• Data security
• Workforce diversity and engagement
• Professional integrity
By including SASB’s industry-specific standards,
we aim to provide decision-useful sustainability
information to investors (see pages 36 to 39).
27
STRATEGIC REPORT RWS — Annual Report 2022 Sustainability (continued)
ENVIRONMENTAL
We are committed to helping prevent the impact of global
climate change by transitioning to carbon net zero.
In 2022, we signed up to the United Nation’s Race to Zero
and officially committed to set science-based targets to
be carbon net zero through the Science Based Targets
initiative ("SBTi"). Initially we are aiming to reduce carbon
emissions by 55% by 2030 using FY22 as a baseline. To
achieve these challenging goals, we began developing a
carbon emission reduction plan in 2021. This included the
very important step of expanding our Scope 3 indirect
carbon scope. FY22 provided an opportune moment
to re-establish our baseline year as operations were
returning to normal following the Covid-19 pandemic.
We actively measure and monitor our principal
environmental impacts and have set objectives and
targets for their reduction. To date we have been
targeting reductions year-on-year for the following:
• Carbon footprint
• Commercial waste
• Electricity kWh/measured by employee and turnover
• Landfill waste/measured by employee and turnover
• Natural resources and consumables
• Waste/measured by employee and turnover
We have ISO 14001:2015 Environmental Management
certification at our head office in Chalfont St Peter, our
Maidenhead office (both UK) and our Chinese offices in
Beijing, Rizhao and Xi’an. Our Environmental Management
System certifications collectively cover 31% of our offices
by headcount and we will continue to increase this
compliance aiming to achieve 100% compliance by 2030.
ENERGY AND GREENHOUSE GAS REPORT
ANNUAL ENERGY USE AND EMISSIONS
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. The Group’s GHG emissions were
prepared in accordance with the UK Government’s SECR
guidance. The analysis conforms with the GHG Protocol
Corporate Standard (2004) and relates to the emissions of
all locations within the Group.
The overall data quality was "considered good and
comprehensive, with common and statistically
insignificant data quality issues."
The results of the analysis will be used to provide us with
transparency on our emissions, enable us to setup and
implement specific carbon reduction measures and the
foundation to track our progress in reducing carbon
emissions, as well as to evaluate the effectiveness of our
reduction measures. In FY22, RWS offset all non-avoidable
emissions with high-quality carbon offsetting projects.
Our annual global energy use (in MWh) and associated
greenhouse gas emissions (tCO2e) have been summarised
in the table. As mentioned previously, we have expanded
and enhanced our carbon emissions data collection
methodology which has resulted in a significant increase
in our reported Scope 3 emissions when compared with
the previous year. These now account for circa 90% of our
overall carbon footprint and will be used to develop our
carbon reduction strategy going forward.
Global
FY21
FY22
Total Energy
Consumption (MWh)*
UK Energy Consumption
(MWh)*
Scope 1 emissions (from
aircon, heating, fleet)**
Scope 2 emissions (from
purchased electricity,
heating, fleet)**
16,347.85
12,691.49
1,724.59
1,592.87
89.47
473.41
4,838.21
4,415.63
473.41 tCO2e
52,625.06 tCO2e
4,415.63 tCO2e
Total Scope 1 + 2
4,927.68
4,889.04
47,736.02 tCO2e
Scope 3
180.22
47,736.02***
* includes: electricity, natural gas, diesel, heat and steam and company car
fuel consumption from Scope 1 + 2
** location-based
*** Our Scope 3 emissions methodology was enhanced in FY22 and we were
able to report on more Scope 3 categories than in previous years. This fully
supports our commitment to set science-based targets. Scope 3 emissions
previously covered two categories including waste and business travel.
This has now been expanded to seven categories which includes purchased
goods and services, capital goods, fuel and energy related activities, waste
generated in operations, business travel, employee commuting and home
office, and upstream leased assets.
Overall results* (FY22)
Scope 1
Scope 2
Scope 3
Total
* location-based: although we have reported on location-based carbon
emissions, these were also calculated from a market-based perspective. Scope
1 and Scope 3 remained the same however, Scope 2 reduced to 4,232.18 tCO2e
from a market-based perspective
Explanation: A location-based method reflects the average emissions
intensity of grids on which energy consumption occurs (using mostly grid-
averaged emission factor data). A market-based method reflects emissions
from electricity that companies have purposely chosen.
28
RWS — Annual Report 2022 STRATEGIC REPORT
UK data covers office locations in Alnwick, Bloxham,
Chalfont St Peter, London (Great Tower Street and
Tavistock Square), Maidenhead, Nottingham and
Sheffield. The UK share makes up 9% of the total energy
consumption.
Notes:
• The methodology used to calculate our carbon
emissions was the GHG Protocol Corporate Standard
• The scope and boundary used was operational control
• Scope 1 emission sources include fuel for company
vehicles and heating fuel used for offices
• Scope 2 emission sources include electricity and district
heating
• Scope 3 emission source include purchased goods
and services, capital goods, fuel and energy related
activities, waste generated in operations, business travel,
employee commuting and home office, and upstream
leased assets
• Use of sold products – online interaction: we plan to
enhance our Scope 3 carbon emission methodology
capture further to include online interaction from our
clients and other internet users on their own devices,
for example, whilst using our software, browsing or
using our website
INTENSITY RATIOS
RWS uses the intensity ratios of full-time equivalent
("FTE"). The FTE in FY22 was 7,761 (FY21: 7,674).
This provides another way of assessing our carbon
performance taking into consideration key variables that
affect our overall carbon footprint.
Global
Scope 1
Scope 2
Scope 3
FY21
FY22
0.01
0.63
0.02
0.06
0.57
6.15***
*** Our Scope 3 emissions methodology was enhanced in FY22 and we were
able to report on more Scope 3 categories than in previous years. This fully
supports our commitment to set science-based targets. Scope 3 emissions
previously covered two categories including waste and business travel.
This has now been expanded to seven categories which includes purchased
goods and services, capital goods, fuel and energy related activities, waste
generated in operations, business travel, employee commuting and home
office, and upstream leased assets.
Our Scope 1 and 2 intensity performance shows a
collective improvement of circa 2% when compared
with the previous year. Scope 3 carbon emissions have
increased significantly due to the improved data collection
methodology we developed and implemented in FY22.
EMISSIONS BY ACTIVITY GROUP
We have enhanced our carbon footprint analysis by
grouping our carbon emissions into three core activity
groups. This improves our ability to target significant
carbon emission sources.
PROCUREMENT 76%
EMPLOYEE 15%
BUILDINGS 9%
PROCUREMENT-RELATED CARBON
EMISSIONS
Like many companies, a substantial part of the RWS
carbon emissions is attributable to procurement which
makes up 76% of its overall carbon footprint.
Going forward we aim to work more closely with our
suppliers to drive sustainability through the procurement
processes. This includes: building Greenhouse Gas
Protocol ("GHG") awareness; enhancing our procurement
process and increase the sustainability requirements into
the registration process; add dimension into evaluation
and awarding decisions; include sustainability clauses and
track progress.
EMPLOYEE-RELATED CARBON EMISSIONS
Our employee-related carbon emissions make up 15% of
our overall carbon footprint with 88% of this attributable
to commuting and homeworking and 12% to business
travel and accommodation.
Going forward we will continue to engage with our
colleagues and increase awareness of environmental
issues and encourage everyone to get involved and take
steps to reduce our carbon emissions globally. To reduce
carbon emissions associated with commuting we will look
to ensure our offices are easily accessible using public
transport, where possible.
29
STRATEGIC REPORT RWS — Annual Report 2022 Sustainability (continued)
BUILDING-RELATED CARBON EMISSIONS
MINIMISING WASTE
Waste has been reviewed and is currently not considered
a significant issue for RWS. Being a service-based
company, our waste generation is naturally low and non-
hazardous. However, we continue to engage colleagues,
suppliers and other stakeholders to take ownership and
create more efficient operations and practices.
In FY22, the Group took several measures to reduce
waste. These included:
• Developed and implemented a new Group-wide Waste
Policy.
•
Installed recycling facilities and increased the amount
of waste which is recycled (targeting those offices which
reopened).
• Working with landlords regarding waste measurement
and management.
• Working with suppliers to get more accurate reports
detailing waste and recycling.
• Sending our electronic equipment back to the supplier
to recycle as part of a global buy-back scheme.
• Storing and reusing bubble wrap and cardboard boxes.
• Championing recycling through our 'Recycling Week.'
• Hosted an awareness day for World Cleanup Day to
educate, inform and engage colleagues 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, reuse and recycle.
Our office carbon emissions make up 9% of our overall
carbon footprint. Of these emissions, 97% were from
energy, 80% of which was electricity and 17% from heating
and cooling; the remaining 3% was from waste and water.
MANAGING ENERGY USE
We recognise the importance of investing in energy
efficient offices and renewable energy. In FY22, the
Group took several measures to reduce energy use and
emissions. These included:
• Switching to 100% renewable energy at Chalfont St
Peter’s Europa House in November 2021 and Brno,
Czech Republic (the Group’s largest office) in January
2022. Currently we have 100% renewable energy at six
of our offices (Alnwick, Brno, Chalfont St Peter, Leuven,
Munich, Stuttgart). Global contribution of market-based
renewable electricity is currently 17%.
• Replacing existing lighting with energy efficient LED
lighting in our office in Chennai (40%) and Nanjing,
China. We have LED lighting in our head office in
Chalfont St Peter, as well as our offices in Brno, Indore,
Lausanne, London and San Francisco.
• Trialling solar panels installed by our landlord at our
Indore office in India which provides lighting to common
areas.
•
Installed a SMART meter in our Alnwick office to monitor
the consumption of electricity.
• 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.
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 our annual target to reduce
energy use across its operations.
30
RWS — Annual Report 2022 STRATEGIC REPORT WATER
BUSINESS TRAVEL
Most of our offices use water from municipal supply and
are in developed countries with a high capability for water
adaptation and mitigation.
The Covid-19 pandemic 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.
CARBON OFFSETTING
Project
Compensation Volume (tCO2e)
Solar Water Heater
Program, India
Coastal Rainforest
Protection REDD+,
Colombia
Wind Energy Project
Satara, India
Total
28
196
155
379
Moving forward we continue to reach out to the landlords
of our leased offices and request detailed information.
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.
In FY22 we hosted an awareness day for World Oceans
Day to educate, inform and engage colleagues.
PAPER
RWS is not a manufacturing organisation, but because
of the nature of our services we use paper extensively in
certain divisions.
As a result of the Covid-19 pandemic and remote working,
we changed the way we operate which has resulted in a
reduction in the amount of paper we use. As RWS offices
reopen, we 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.
ELECTRONIC WASTE
RWS seeks to purchase the most energy efficient IT
hardware and work with global suppliers who are
committed to reducing their global footprint.
We purchase our end use computers from a supply base
which utilise carbon fibre and tree-based bio plastics.
Our supply base has been an Energy Star partner for
over a decade, demonstrating its ongoing commitment
to energy efficiency in its products. Energy star certified
laptops use 25-40% less energy than conventional
monitors by using the most efficient components and
better managing energy use when idle. We also operate a
buy-back scheme with our supply base to further enhance
reuse and certified Waste Electrical and Electronic
Equipment ("WEEE") recycling as part of our disposal
policy.
We encourage our colleagues globally to switch off laptops
and monitors when not in use and have configurations
in place for inactivity to reduce energy consumption. Our
strategy incorporates consolidation to reduce overall
footprint of hardware and software across our IT estate.
31
STRATEGIC REPORT RWS — Annual Report 2022 Sustainability (continued)
SOCIAL
OUR PEOPLE
This year we partnered with external employee
engagement experts to undertake our annual Group-
wide engagement survey, and through them deployed a
world-class external survey tool from Qualtrics. Qualtrics
is a leading ‘experience management’ platform which we
already use in RWS to measure client engagement. As well
as providing more precise employee engagement data
through the survey, we will also be able to benchmark our
results externally allowing us to establish our competitive
position in the labour market. Using Qualtrics will also
enable us to examine links between employee satisfaction
and client satisfaction in the future.
We achieved a 69% favourable employee engagement
score (the external average benchmark is 72%).
DIVERSITY, EQUITY AND INCLUSION
Being part of a vibrant, globally diverse community, we
know that tremendous value is gained from people’s
differences. An inclusive and 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.
Two years ago we established dedicated Group-wide
inclusion pillars and we have built on the successes of
these groups in FY22. Each pillar emerged naturally
as areas of broad-based employee interest. Each has
their own Employee Resource Group ("ERG") to provide
feedback into the Group diversity, equity and inclusion
plans, and support initiatives that are bespoke to their
pillar. Each ERG has an Executive Team member as a
sponsor and an HR leader, and a dedicated learning
and development team member supporting it to ensure
appropriate organisational prioritisation and influence.
Engagement survey
6,639
respondents
85%
response rate
Our ERGs are:
• Culture
• Ethnicity
• LGBT+
• Persons with disabilities
• Well-being
• Women at RWS
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.
In FY22 we extended our efforts, fully launching our
Persons with disabilities ERG and promoting a number
of significant globally recognised awareness events
including World Day of Down’s Syndrome (March), Autism
Awareness Day (April), Accessibility Awareness Day (May),
etc. This ERG is the last of the six to become operational so
now all six groups are fully active.
On 8 March, our Women’s Network celebrated
International Women’s Day and promoted the theme
of ‘Break the Bias’ globally to all colleagues. A series of
training courses and online resources were offered,
encouraging everyone to create a gender equal world
which is free of bias, stereotypes, discrimination and
which supports diversity and inclusion.
Overall, we are happy with the progress we are making
around diversity, equity and inclusion, and increasingly
see it as a genuine source of potential advantage in our
markets.
32
RWS — Annual Report 2022 STRATEGIC REPORT
Age
<30
<30-50>
>5050>>50
30% l 61% l 9%
Gender
Male
Female
Undisclosed
45% l 55% l 0%
Employee status
Permanent Non-Permanent
90% l 10%
Employee category
Manager
Female
Male
Total
51% l 49% l 15%
Non-manager
Female
Male
Total
56% l 44% l 85%
Years of service
Number of employees with
less than a year's service
23%
Number of employees
between 1 and 5 years' service 47%
Number of employees with
more than 5 years' service
30%
Diversity of our employees globally including office-
based and remote workers as at 30 September 2022
RWS FOUNDATION AND COMMUNITY
ACTION
All philanthropic initiatives at RWS have been consolidated
under the new RWS Foundation. Donations by RWS and
the RWS Foundation this year amounted to £300,553.
Upon outbreak of the Russia-Ukraine conflict our
Regulated Industries division partnered with long-term
customer St Jude Children’s Research Hospital to help
support the evacuation efforts of more than 600 children
with cancer from Ukraine. The US-headquartered hospital
needed translations between English, Ukrainian and Polish
within a timeframe of just a few hours to provide patients
with important documents prior to travel into Poland.
Our colleagues, through the RWS Foundation Ukraine
Appeal, showed overwhelming support and raised over
£34,000. Donations went to the International Red Cross,
which is supporting the people of Ukraine to ensure they
have essential supplies, food, water, as well as providing
aid to hospitals and families. The RWS Foundation also
made further donations to the UNHCR, the UN’s refugee
agency, and to UNICEF, the UN’s children’s fund.
During FY22 we also assisted Clear Global (formerly
Translators without Borders) with localising Polish and
Slovak into Ukrainian. We are in regular communication
with them on several topics, including our availability
to provide training around translation processes and
machine translation and have colleagues ready and
waiting to volunteer their time and expertise.
Two areas of community outreach in the UK include
TutorMate and Urban Synergy. Colleagues from across
the UK were involved in TutorMate, assisting Year 1 or
Year 2 (aged 5 to 7) pupils attending a school that serves a
disadvantaged community in England. Teachers selected
readers who were struggling and needed extra help.
The reading programme involved 30 minute one-to-one
weekly online sessions. RWS supported 26 children with
189 hours of reading support, resulting in the average
child progress of 3.2 reading levels.
Over the past year we have continued to support Urban
Synergy. The organisation is a youth empowerment
charity that inspires, guides and ignites the ambitions
of young people in the UK. It has supported more than
20,000 students since 2007. In FY22 we mentored 125
students through our e-mentoring and delivered 84 work
experience placements (totalling 3,259 hours of work
experience for young people).
33
STRATEGIC REPORT RWS — Annual Report 2022 Sustainability (continued)
RWS CAMPUS
We have built and developed a programme to partner
with the academic world in order to grow and nurture
future localisation talent. RWS Campus launched in 2018,
harmonising and consolidating several existing initiatives,
to develop one global programme. In 2021, the existing
Trados technology university programme joined forces
with RWS Campus, to enhance the programme further
with free-of-charge Trados Studio technology for partner
universities. Over the years, we have progressed our
ambition to be a future talent incubator, to help bridge
the gap between the academic world and industry, as
well as to bring the benefits of translation technology to
universities and students. We have built a global footprint
in the academic world across markets. We are delighted to
offer our professional expertise to universities, lecturers
and students in line with their local requirements and
expectations.
700+
university partners
worldwide, across
76 countries
190+
interns across
26 countries
GOVERNANCE
RWS is committed to acting professionally, fairly and
with integrity in all our business dealings and does so in
compliance with the RWS Group Code of Conduct. We
take a zero-tolerance approach to bribery and corruption,
financial crimes and other violations against professional
integrity.
Key policies published on our website include:
• Code of Conduct
• Anti-Bribery and Corruption Policy
• Corporate Sustainability Statement
• Environmental Policy
• Diversity, Equity and Inclusion Policy
• Harassment, Bullying and Victimisation Policy
• Health and Safety Policy
•
• Labour and Human Rights Policy
• Modern Slavery and Human Trafficking Policy
• Supplier Code of Conduct
• Whistleblowing Policy
ISMS Policy
Board and committee composition
1
2
4
CHAIRMAN
EXECUTIVE DIRECTORS
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
RWS has two specialised committees, the Audit
Committee and the Remuneration Committee.
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.
No Director or Senior Executive is involved in any
discussion or decision about their own remuneration.
CORPORATE 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. As part of our
commitment to high standards of corporate 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.
34
RWS — Annual Report 2022 STRATEGIC REPORT
MANAGING RISKS
CYBER SECURITY AND DATA PROTECTION
The strategic security posture for RWS is set by the
Information Security Steering Committee ("ISSC"), chaired
by the CIO 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
programme, increases awareness and supports a
consistent risk-based approach to information security.
RWS continues to expand its Information Security
Management System (ISMS) which is the framework
that underpins the globally recognised ISO 27001:2013
certification. We hold this for our hosted product
solutions, Regulated Industries division, IP Services
division and their supporting services, people, 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.
FY22 investor and other recognition
During FY22
the Group had:
•
•
•
•
•
ISO 9001: applicable in 49 offices, 40 offices certified and
9 offices compliant
ISO 17100: applicable in 45 offices, 36 offices certified
and 9 offices compliant
ISO 18587: applicable in 43 offices, 34 offices certified
and 9 offices compliant
ISO 27001: applicable in 17 offices, 8 offices certified and
9 offices compliant
ISO 13485: applicable in 10 offices, 1 office certified and
9 offices compliant
ISO 21500: applicable in 13 offices, 13 offices compliant
ISO 14001: 5 offices certified and 5 offices compliant
•
•
*Applicable sites are sites providing services which are in scope of the ISO
certification within the reporting year.
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. Eight of our 12 principal business risks
are relevant to ESG, and these are set out in the table on
the below. In addition to these known principal risks, we
continue to identify and analyse emerging ones including
those related to ESG, such as climate risks.
Principal risk
Loss of a key client
Geopolitical
Failure to attract,
engage, retain and
develop key talent
Cyber security
Failure of a business-
critical partner, JV
relationship, supplier or
national infrastructure
New technology
Legislative/regulatory
risk
Climate change and
natural disasters
Related ESG topic/sustainable
business priority
Community – on-time delivery, right
first time, innovating and inspiring
our clients
Our people and communities –
potential to impact all – health,
safety and well-being of our people
and communities
Our people – inspiring, rewarding
and supporting our people
Governance – treating data with
care and due diligence
Community – potential to impact all
Governance – harness innovation
and efficiencies
Governance – potential to impact all
Environment – potential to impact
all – well-being of our people and
communities
TAX TRANSPARENCY
RWS manages its tax affairs responsibility and seeks to build
constructive relationships with all tax authorities. During
the year, the Board reviewed and approved the Group’s
Tax Strategy, with the CFO providing regular updates to
the Board on tax matters. The approach RWS has taken in
relation to the management of tax issues is to ensure that:
• We comply with all applicable laws, disclosure
requirements and regulations in the territories in which we
do business
• We have an open and transparent working relationship
with the relevant tax authorities around the world
• Where considered appropriate, the Group takes advice
from professional firms
• Tax risks are appropriately managed in accordance with
the tax strategy
• Our tax planning is aligned with the Group’s commercial
and business activities and does not use 'tax haven'
countries or other tax avoidance arrangements as part of
its tax planning
35
STRATEGIC REPORT RWS — Annual Report 2022 Sustainability Accounting
Standards Board Disclosure
("SASB")
SERVICE SECTOR: PROFESSIONAL AND COMMERCIAL SERVICES
REPORTING YEAR: ALL DATA REPORTING FOR FY22 UNLESS SPECIFIED
RWS has chosen to evolve its sustainability reporting by disclosing sustainability topics and certain accounting metrics
in line with the SASB Standards. In August 2022, the IFRS Foundation assumed responsibility for SASB Standards when it
merged with the Value Reporting Foundation, which previously maintained these Standards.
The Standards were developed using a rigorous and transparent standard-setting process that included:
• Evidence-based research
• Broad and balanced participation from companies, investors and subject-matter experts
• Oversight and approval from the independent SASB Standards Board
Global investors recognise SASB Standards as essential requirements for companies seeking to make consistent and
comparable sustainability disclosures.
The IFRS Foundation’s International Sustainability Standards Board (ISSB) has committed to building on the industry-
based SASB Standards and adopting SASB’s industry-based approach to standards development.
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 37
Discussion and Analysis:
page 35
Workforce Diversity &
Engagement
RWS 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 37
and 39
Our people: pages 32 to
33
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 various stakeholders.
RWS seeks to act with transparency, honesty and integrity at all
times.
SASB metrics: pages 38
Corporate Governance:
pages 34 to 35
36
RWS — Annual Report 2022 STRATEGIC REPORT
Sustainability disclosure topics and accounting metrics
Topic
Accounting metric
Category
SASB
code
SV-PS-
230a.1
Response
See page 35
Discussion
and Analysis
Data Security
Workforce
Diversity &
Engagement
Description of
approach to
identifying and
addressing data
security risks
Description of policies
and practices relating
to collection, usage,
and retention of
customer information
(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
Discussion
and Analysis
SV-PS-
230a.2
See page 35
Quantitative
SV-PS-
230a.3
(1) (2) (3) In FY22 there have been no disclosures
or unauthorised movement of sensitive
information including CBI and PII. As a result, no
clients have been affected by any such incidents.
Quantitative
SV-PS-
330a.1
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
colleagues 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 colleagues to share information
on their gender, age, ethnicity, sexuality and
disability.
This was the second time RWS has undertaken
this survey and the response rate was 36.2%, up
4.8% from last year. Due to the still relatively low
response rate, 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
(1) Voluntary and (2)
involuntary turnover
rate for employees
Quantitative
SV-PS-
330a.2
See Table 4
37
STRATEGIC REPORT RWS — Annual Report 2022 SASB Disclosure (continued)
Topic
Accounting metric
Category
Workforce
Diversity &
Engagement
cont...
Employee engagement
as a percentage
Quantitative
SASB
code
SV-PS-
330a.3
Response
See Table 5
In June FY21 we undertook our first Group-wide
employee engagement survey using off-the-shelf
software and we achieved a response rate of
80.7%. In FY22 we deployed a world-class external
engagement survey and platform. As well as
providing more precise employee engagement
data through the survey, we will also be able to
benchmark our results externally allowing us to
establish our competitive position in the labour
market. The survey was completed in September
FY22 and we were delighted to achieve a global
response rate of 85.4%.
This year we achieved a 69% favourable employee
engagement score (see table 5).
We remain encouraged by the results regarding
diversity and inclusion with an 83% favourable
response to the critical question “RWS promotes
a diverse culture where individuals from all
backgrounds feel a sense of belonging.”
Professional
integrity
Description of
approach to ensuring
professional integrity
Discussion
and Analysis
SV-PS-
510a.1
See pages 34 to 35
Total amount of
monetary losses
as a result of
legal proceedings
associated with
professional integrity
Quantitative
SV-PS-
510a.2
There was no material litigation in FY22 and we
manage ourselves in accordance with 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.
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) 90% (6,985 FTE)
(2) 10% (776 FTE)
(3) We have around 30,000 vendors and
freelancers who are paid on invoice.
Employee hours worked, percentage
billable
Quantitative
SV-PS-
000.B
15,133,950
15.06%
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.
38
RWS — Annual Report 2022 STRATEGIC REPORT
Table 1. Role representation
of RWS employee responses (FY22)
Role
Table 3. Racial/Ethnic group
representation* (%) (FY22)
%
Ethnicity
Senior Manager or Executive
Manager or Team Leader
Non-Manager
Prefer not to say
5.60%
25.12%
62.28%
7.00%
Table 2. Global gender
representation of RWS employees*
(FY22)
Gender
Female (cis female)
Genderqueer
Genderfluid
Intersex
Male (cis male)
Non-binary
Trans woman/Trans female
Trans man/Trans male
Prefer not say
Other
*For inclusivity, we included additional options under gender
representation.
%
59.74%
0.59%
0.52%
0.03%
0.95%
0.17%
0.10%
3.65%
0.78%
33.47%
Native Hawaiian or Pacific Islander
Arab
East or South-East Asian (For example:
Chinese / Korean / Japanese /
Vietnamese / Filipino / Any other East
or South-East Asian background)
South Asian (For example: Indian /
Pakistani / Bangladeshi / Any other
South Asian background)
Black or African or Caribbean (For
example: African / Caribbean / Any other
Black, African or Caribbean background)
Hispanic or Latino (For example: Brazilian
/ Argentine / Colombian / Chilean)
Mixed or Multiple ethnic groups (For
example: White and Black Caribbean
/ White and Black African / White and
Asian / Any other Mixed or Multiple
ethnic background)
Native American or Alaskan
White
Prefer not to say
Other
All
employees
0.66%
20.13%
6.19%
1.00%
10.10%
2.03%
0.03%
0.11%
54.33%
2.80%
2.62%
*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, % (FY22)
FY22
Turnover*
Voluntary
Involuntary
%
21.3%
15.9%
5.4%
*Challenges remain with data accuracy given the manual collation of data
required as a result of the current multiple HR information systems.
Table 5. Employee engagement scores (FY22)
My work gives me a feeling of personal accomplishment
I would recommend RWS to people I know as a great place to work
RWS as a company motivates me to excel in my work
Favourable
Neutral Unfavourable
71%
72%
65%
18%
20%
23%
11%
8%
12%
39
STRATEGIC REPORT RWS — Annual Report 2022 Chief Financial Officer's Review
INTRODUCTION
The Group has made significant progress during
2022. The Group successfully integrated the
acquisition of SDL and laid out an ambitious
Accelerated Growth Strategy. During 2022
revenue growth, coupled with improved margins,
has supported strong cash generation. A strong
platform has been built for further progress in
2023 and beyond.
During 2022 total revenue grew by 8%, operating profit by 50%, and
adjusted profit before tax by 17%. Results were supported by an
extra month of SDL in 2022 when compared to 2021, the successful
execution of the synergy and integration programme, as well as
favourable foreign exchange movements. Strong performance in
the Language and Content Technology division helped to offset the
regulatory impact of the introduction of the Unitary Patent in the IP
Services division. The Group has identified a number of key growth
levers, such as eLearning and Data Annotation, and is investing behind
these levers to drive future growth. We are also investing to transform
our back office efficiency to enable this growth. We are encouraged by
the early impact of our pricing programme, which aims to mitigate the
impact of cost inflation. The Group continued to enhance its portfolio
with the acquisition of Liones Holdings B.V, whose flagship product
Fonto, is a leading authoring solution for mission-critical documents.
The Group continues to be highly cash generative, resulting in an
increase in net cash (excluding lease liabilities) from £45.3m as at 30
September 2021 to £71.9m as at 30 September 2022, notwithstanding
significant acquisition costs, and costs associated with delivering
synergies following the acquisition of SDL. Net cash including lease
liabilities is £25.2m – significantly improved from an equivalent net
debt measure of £6.2m as at 30 September 2021.
Rod Day
INTERIM DEPUTY CHIEF
FINANCIAL OFFICER
40
RWS — Annual Report 2022
GROSS PROFIT
Gross profit increased by 12% to £350.2m, delivering a
gross margin of 46.7%. This represents an increase from
45.1% in the prior year, primarily as a result of the change
in revenue mix towards the higher gross margin division
of Language and Content Technology, increased use of
the Language eXperience Delivery, benefits from SDL
integration synergies, and favourable foreign exchange
movements with the strengthening of the US dollar
relative to a number of currencies.
ADMINISTRATIVE EXPENSES
Administrative expenses have increased to £263.9m
(2021: £257.0m). Administrative expenses as a
percentage of revenue have decreased from 37% to 35%,
which reflects the impact of the integration activities
during the period. Adjusted administrative expenses
(gross profit less adjusted operating profit) increased by
£17.0m to £211.7m, a rise of 9% year on year. The extra
month of costs from SDL, combined with unfavourable
FX, more than offset the benefit of integration synergies.
Exceptional items of £12.5m were incurred during the
year, which includes £7.4m for IT integration and £3.2m
for severance, termination and other costs in relation
to the SDL integration. Acquisition costs of £2.1m, were
primarily related to the purchase of Liones Holding B.V.
during the period.
FINANCE COSTS
Net finance costs were £3.1m (2021: £2.4m). Net finance
costs have increased year on year due primarily to an
increase in interest payable on external debt of £0.6m,
driven by a rise in interest rates. On 3 August 2022, the
Group entered into an Amendment and Restatement
Agreement with its banking syndicate, which amended
its existing US$120m RCF maturing on 10 February 2024,
to a US$220m RCF maturing on 3 August 2026, with an
option to extend maturity to 3 August 2027. This gives
us further flexibility as we continue to grow our business
and seek selective acquisitions to enhance the Group's
capabilities and geographic reach. The debt refinancing
was accounted for as a debt modification without
extinguishment, resulting in a nominal debt modification
gain being recognised in the parent company's
statement of comprehensive income.
Gross profit increased by
12% to
£350.2m
41
STRATEGIC REPORT RWS — Annual Report 2022REVENUE Overall in FY22 the Group generated revenues of £749.2m, which is 8% higher than FY21. Revenue in FY22 benefited from an additional month of trading from SDL, which was acquired in November 2020. Excluding this impact, revenue growth was 3%. The strengthening of the US Dollar when compared to prior year also supported revenue in local sterling currency. On an organic constant currency (OCC) basis revenues are 1% lower than those achieved in FY21. In divisional terms, Language Services recorded £342.1m in revenue, a 10% increase in total revenue and 1% on an OCC basis. Reduced volume from certain of the largest technology clients was more than offset by growth from the Strategic Solutions Group. Regulated Industries recorded £173.0m, an increase of 6%, although a decline of 2% on an OCC basis. Reducing work for a significant client and also stopping work for a number of unprofitable clients impacted revenue. Language and Content Technology had total revenue of £126.9m, an increase of 17% year on year and 5% OCC. Good growth was recorded across the portfolio, despite the increase in SaaS revenues which in the short term defers current year revenues to future years. IP Services recorded £107.2m, a decrease of 6% on prior year and 10% on an OCC basis. The proposed introduction of the Unitary Patent in the European Union, which we forecast for H1 FY23, has impacted volumes in the short term as clients look to defer filings. The majority of the Group revenue, categorised by geography, is in the US market, which accounts for 52% of the total. Client concentration is such that no one client accounts for more than 10% of Group turnover.
Chief Financial Officer's Review (continued)
ADJUSTED PROFIT BEFORE TAX
BALANCE SHEET AND WORKING CAPITAL
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 160). 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. The Adj PBT of
£135.7m (Adj PBT margin: 18.1%) recorded in the period
has increased from £116.4m (Adj PBT margin: 16.8%) in
the prior year.
TAX CHARGE
The Group’s tax charge for the year was £20.5m
(2021: £13.8m), representing an effective tax rate on
profit before tax of 24.6% compared with 25.1% 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 existing UK corporate
income tax rate of 19%, which results in a higher
effective rate than the headline UK rate.
EARNINGS PER SHARE AND DIVIDEND
Basic earnings per share for the financial year increased
from 10.9p to 16.1p, an increase of 48%, while adjusted
basic earnings per share increased from 23.8p to 26.6p,
representing an increase of 12%, which reflects the after
tax impact of significant adjusting items this financial
year consequent to the acquisition of SDL. The weighted
average number of ordinary shares in issue for basic
and adjusted basic earnings increased from 378.5m to
389.4m, principally due to the proportionate impact of
the ordinary shares issued in connection with the SDL
acquisition in the prior period.
A final dividend for the financial year end 30 September
2022 of 9.5 pence per share has been proposed,
equivalent to £37.0m, while an interim dividend of 2.25
pence per share, equivalent to £8.7m, was paid during
the financial period. A comparative final dividend for the
year ended 30 September 2021 of 8.5 pence per share,
equivalent to £33.1m, was paid in this financial period.
The proposed total dividend for the year of 11.75
pence per share represents a 12% increase on the total
dividend relative to the prior financial period of 10.5
pence per share.
Net assets at 30 September 2022 increased by £130.8m
to £1,141.7m. The main driver of this increase was the
strengthening USD, increasing dollar-denominated net
assets by £119m.
Current assets at 30 September 2022 of £325.9m have
increased by £38.1m on the prior financial year, including
an increase in trade and other receivables of £28.7m. Cash
and cash equivalents balances of £101.2m have increased
by £8.7m.
The increase in trade and other receivables is primarily
driven by the growth of the business in the period and
includes an increase in trade receivables of £15.2m and
an increase in accrued income of £16.3m. This increase
reflects stronger revenues during the financial year, 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 to £203.6m at 30
September 2022, an increase of £12.7m, primarily due
to an increase in trade and other payables balances of
£13.6m. Non-current liabilities have decreased by £14.4m,
reflecting a net reduction in loan balances under our
RCF of £17.9m, a reduction in other non-current liabilities
of £3.7m, partly offset by an increase in deferred tax
liabilities of £7.2m.
110.2%
Cash Conversion Ratio
26.6p
Adjusted EPS
9.5p
Final dividend
42
RWS — Annual Report 2022 STRATEGIC REPORT
CASH FLOW
Cash generated from operations was £148.8m, £46.8m
more than the prior financial year, when cash generated
was £102.0m. Operating cash flow before movements in
working capital and provisions increased from £125.5m
to £157.5m. The net working capital outflow of £8.7m has
reduced by £14.8m from the prior financial year's outflow
of £23.5m. This has been driven by improvement in
payment cycles during the period, with outflows in trade
receivables from growth of the business offset by inflows
across trade payables.
Significant cash outflows from investing activities included
net cash consideration for the acquisitions of Liones
Holdings B.V of £14.1m and purchases of intangible
software of £24.3m.
Cash flows from financing activities included £25.5m in
repaid debt and associated interest, and dividends paid
within the financial year ended 30 September 2022 of
£41.9m.
Cash balances at the financial year end amounted to
£101.2m, with external borrowings of £29.3m, excluding
lease liabilities, resulting in a net cash position of £71.9m
(2021: £92.5m cash and external borrowings of £47.2m,
resulting in net cash of £45.3m). Net cash including lease
liabilities was £25.2m (2021: net debt of £6.2m).
POST BALANCE SHEET EVENTS
No other significant events have occurred between the
balance sheet date and the date of authorising these
financial statements.
Rod Day
INTERIM DEPUTY CHIEF FINANCIAL OFFICER
14 December 2022
43
STRATEGIC REPORT RWS — Annual Report 2022 Principal Risks and
Uncertainties
The 12 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, the
results of its operations 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
colleagues who collectively play a key role in risk
management and regularly report to the Board on
progress.
44
RWS — Annual Report 2022 STRATEGIC REPORT Risk Category
Description
Mitigation
COLLEAGUES
Loss of a key
client
Geopolitical
PEOPLE
Failure to
attract, engage
and retain key
talent
OPERATIONAL
Cyber security
Being a global leader in localisation, the Group has
a number of key clients who are themselves global
leaders. These clients are typically supported by
dedicated teams, which are located globally. Any
failure with regard to service, or breakdown in
relationship, could impact our revenue with these
clients. We are also at risk from disintermediation and
the performance of the sectors our clients operate in.
The Group is exposed to heightened global
geopolitical uncertainty, for example in East Asia and
the war in Ukraine, as well as political uncertainty in
the UK. The risk could lead to changes in demand,
growth rates and attractiveness of clients and
markets, and have an impact on the geographical
focus of the Group.
The Group maintains close relationships at senior level;
runs a key account programme; undertakes monthly
tracking of performance; uses formal independent
measuring of client satisfaction (e.g. Net Promoter Score);
and maintains open channels of communication to
anticipate client needs.
The Group monitors the changing global situation and
is alert to any relevant changes. It can then take action
by reallocating work where relevant across its global
infrastructure and ensuring the safety of its people.
The quality of service provided by RWS is
fundamentally derived from the quality of our people
and the freelance network that we have access to. Our
performance could therefore be adversely affected
if we, or our vendors, are unable to recruit, train and
retain key talent within and outside the Group. We are
also exposed to wage inflation and talent shortage in
key areas which is fuelling the 'war for talent'.
RWS has a compelling proposition for future employees:
a fast-moving growing sector; strong processes around
salary structure, bonuses, LTIP and career planning;
a positive culture, clear purpose and values; strong
communications; and focus on ESG. The Group also
plans for succession at senior levels.
RWS may be adversely affected by activities such as
systems intrusions, denial of service attacks, virus
spreading and phishing. The cyber threat level is
increasing and successful attacks could also lead to
data loss and adverse reputational impacts.
Failure of a
business-critical
partner, supplier
or national
infrastructure
Failure of a business-critical partner or supplier,
or critical infrastructure could result in RWS being
unable to deliver to clients and/or perform to the
required standard.
Failure to deliver
transformation
programme
The Group is executing an ambitious transformation
programme, which affects large parts of its core
systems and processes. The Group would be exposed
if the implementation does not deliver the planned
benefits to time, plan and cost.
The Group operates a network of systems to act as
barriers to outside attacks. It has data and systems
recovery procedures, business continuity planning,
uses third-party penetration testing, conducts cyber
training for colleagues, and holds an appropriate level of
cybercrime insurance.
RWS avoids reliance on a single supplier / critical partner
where possible. It leverages Quarterly Business Reviews
to evaluate relationships and manage risk, has business
continuity plans in place, and maintains appropriate back-
up in relation to national infrastructure threats where
possible. Active monitoring of hot spots ensures the
safety of employees and the management of continuity
of service.
The Group has a structured programme to update and
report on progress of each of its key initiatives. Risks are
reduced by ensuring the appropriate quality and quantity
of resource is provided to each activity. To the extent that
issues arise, these are identified early and appropriate
remedial action taken.
45
STRATEGIC REPORT RWS — Annual Report 2022 Principal Risks and Uncertainties (continued)
Risk Category
Description
Mitigation
TECHNOLOGY
New technology
FINANCIAL
Currency
Inflation and
pricing pass
through
Demand risks
RWS has a leading position in new translation
technologies, such as Machine Translation (“MT”),
Neural Machine Translation (“NMT”) and Translation
Memory (“TM”), however we could be disrupted
if competitors launch or commercialise new
technologies more effectively than RWS. This could
challenge our client proposition and put client
relationships, demand for our services, revenue and
our market-leading position at risk.
There is continuous review of available technology,
possible disruptions, and the implications and benefits
of technology commercialisation for RWS. We undertake
an ongoing programme of investment in our technology
products and, through our unique combination of
technology, cultural, product and sector expertise, we are
able to differentiate our client proposition.
A significant proportion of the Group's revenues
and costs are generated in foreign currencies, which
mean these amounts, when translated into GBP, will
fluctuate depending on prevailing exchange rates.
Revenues and costs are also not always matched in
the same currency.
The Group performs currency analyses to support
hedging activities. Transactional hedges are in place to
partially manage in-year volatility. Longer-term options
may improve matching revenue to costs through flexible
supply arrangements and pricing.
The Group is facing a sharp increase in inflation in its
cost base and, unless these increases are successfully
passed on in whole or in part to clients, we could face
the risk of margin compression. We are also exposed
to differentials in terms of different sectors’ abilities to
absorb price increases.
The Group is actively entering discussions with clients to
ensure that the value offered is properly reflected in our
pricing and, to the extent that costs increase, that we are
appropriately compensated. This programme has been
supported through enhanced training and information
support.
RWS is facing increased uncertainty in predicting the
future demand for translation services in light of the
overall economic outlook, de-globalisation trends and
content volume, combined with possible changes to
the mix of service delivery.
The global business model, combined with a wide
portfolio of technology products, helps to mitigate
some specific country or industry risks. The Group also
operates an agile policy with respect to cost and cash
control and monitoring, such that, should circumstances
deteriorate, action can be taken to mitigate the impact
on earnings.
LEGAL AND COMPLIANCE RISKS
Legislative /
regulatory risk
The pace and demand of legislative and regulatory
changes – such as the Unitary Patent – can adversely
impact on RWS's revenues or increase potential
compliance and reputational risks (e.g. climate
change, anti-money laundering, sanctions). In
contrast, increased regulatory burdens for clients
can lead to higher demand for our services, through
increased requirements to localise content.
The Group considers new legislation requirements as
part of its risk management process and constantly
monitors for potential changes to the legislative and the
regulatory environment which could impact the business
and, where possible, develops plans to mitigate them.
HAZARD RISKS
Climate change
and natural
disasters
RWS is facing an increased focus on climate change
transparency and reporting, as well as increasing
requirements from our clients and people to
demonstrate carbon reduction. The Group is also
exposed to the natural disasters arising from, for
instance, climate change in a small number of
locations. Failure to address this could have significant
financial and reputational impact.
The Group is monitoring regulatory developments,
complying with reporting requirements, benchmarking
its climate and sustainability performance, and
developing specific action plans for carbon reduction, as
well as the possible impact on climate change on specific
locations. For further details, see the TCFD section (see
pages 48-59).
46
RWS — Annual Report 2022 STRATEGIC REPORT
MAPPING OUR RISK
The Group categorises risks according to the likelihood
of occurrence and the potential impact on the Group.
Impact is assessed on both financial and reputational
grounds. Financial impact in the period could be
increased costs, reduced revenue, fines or increased
management time required to deliver a given activity.
The adverse impact on share price will initially be
used as a proxy at Group level to capture longer-
term reputational impacts. The Directors have also
assessed the risks on a gross basis (i.e. without
existing mitigations) and a net basis (i.e. with existing
mitigations).
47
STRATEGIC REPORT RWS — Annual Report 2022
Task Force on Climate-related
Financial Disclosures (TCFD)
Greenhouse gas concentrations are at their
highest in two million years and emissions are
continuing to rise. 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 for the first
time disclosed against the framework, although
voluntary, and have continued to work towards
aligning ourselves and adopting the TCFD ahead
of it becoming mandatory in April 2022.
Following our decision last year to start reporting in line with TCFD
early, these disclosures include our actions taken to date to align our
climate risk disclosures 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, as well as the
steps that we are taking.
In meeting the requirements of Financial Conduct Authority (FCA) listing
rule 9.8.6R in respect of TCFD we have concluded that:
• We comply fully with recommended disclosures 1, 2, 3, 6, 7, 8 and 10
• We comply partially with recommended disclosures 4, 5, 9 and 11
We expect to be fully compliant by next year when reporting becomes
mandatory for RWS.
48
RWS — Annual Report 2022 STRATEGIC REPORT TCFD recommended
disclosures
Cross-reference or reason
for non-compliance
Comments and next steps
TCFD pillar
Governance
1. Board oversight of climate-
related risks and opportunities
Page 50
Compliant
2. Management’s role in
assessing and managing climate-
related risks and opportunities
Pages 50 to 51
Compliant
Strategy
3. Climate-related risks and
opportunities in the short,
medium, and long term
Pages 51 to 52
Compliant
The Board will continue to review the climate-
related risks and opportunities and review
performance against targets.
We will continue to develop the roles and
responsibilities of management in assessing and
managing climate-related risks and opportunities
across the Group.
We have completed a scenario analysis in respect
of climate-related risks and opportunities across
the short, medium, and long term, and will
continue to review and update the respective
scenarios.
4. Impact of climate-related
risks and opportunities on our
business, strategy, and financial
planning
Pages 53 to 54
Partially compliant – we have
completed a scenario analysis
in respect of climate-related
risks and opportunities.
In FY23 we will further integrate our climate-
related risk mitigation into our strategic planning
and forecasting, and continue to review how
climate change may impact our medium term
strategy.
5. Resilience of the organisation’s
strategy, taking into
consideration different climate-
related scenarios, including a
2°C or lower scenario
Pages 55 to 56
Partially compliant – through
our climate scenario analysis
we believe our business is
resilient in the short, medium,
and long term.
Based on current weather fluctuations, we have
made a number of assumptions associated with
those states and what could be experienced.
In FY23 we will continue to review how climate
change may impact our strategy.
Risk
management
6. Our processes for identifying
and assessing climate-related
risks
Page 56
Compliant
7. Our processes for managing
climate-related risks
Pages 56 to 57
Compliant
8. Describe how processes
for identifying, assessing, and
managing climate-related
risks are integrated into the
organisation’s overall risk
management
Page 57
Compliant
The Executive Team will continue to be
responsible for identifying potential climate-
related risks which will be assessed as part of the
Group's risk process.
Climate change risks are managed through our
risk management process and after they are
assessed, risk profiles are produced at a business
level with Board-level oversight.
We will continue to monitor and manage our
climate-related risks and ensure that each risk is
monitored and managed appropriately.
Metrics and
targets
9. Disclose the metrics used
by the organisation to assess
climate-related risks and
opportunities in line with its
strategy and risk management
process
Page 58
Partially compliant – due to
expanding the tracking and
reporting of Scope 3 indirect
emissions, in FY22 we created a
new baseline year.
Although we were able to report against our
carbon-related performance metrics for Scope 1
and 2 in FY22, due to our changing and improving
our methodology for capturing and measuring
Scope 3, as such the Scope 3 carbon emissions
changed significantly from FY21.
10. Disclose Scope 1, Scope
2 and, if appropriate, Scope 3
greenhouse gas (GHG) emissions
and the related risks
Page 58
Compliant
11. Describe the targets used
by the organisation to manage
climate-related risks and
opportunities and performance
against targets
Page 59
Partially compliant – in FY23 we
propose to prepare and submit
science-based targets to the
SBTi for validation in FY23.
This is our fourth year we have disclosed our
Scope 1, 2 and 3 emissions.
In FY22, we expanded the tracking and reporting
of our Scope 3 indirect emissions to enable us to
set science-based targets.
In FY23 we propose to prepare and submit
science-based targets to the SBTi for validation
and will continue the process of developing and
reporting on our climate-related performance
metrics.
We will continue to monitor regularly our progress
to reduce our carbon emissions.
49
STRATEGIC REPORT RWS — Annual Report 2022 Task Force on Climate-related Financial Disclosures (continued)
GOVERNANCE
a. Board oversight of climate-related risks
and opportunities
The Board is provided with monthly reports on
Sustainability and ESG issues, has direct oversight of
climate-related issues and risks, and it agrees our position
and commitments on climate change.
The CEO, who is part of the Board as well as a core
member of the Executive Team, retains overall
responsibility for climate change management for RWS.
The CEO works with the CFO to identify applicable risks
and opportunities in order to direct business strategy.
Climate-related issues are taken into consideration when
reviewing and guiding strategy, major plans of action, risk
management policies, annual budgets and business plans,
as well as setting performance objectives, monitoring
implementation and performance, and overseeing major
capital expenditures and acquisitions.
A good example of how strategy has been influenced by
climate change is the business decision to implement
science-based carbon reduction targets, and RWS is in the
process of preparing them for submission to the Science
Based Target initiative (SBTi).
The CEO is supported by the CFO who communicates
potential climate change issues and risks and manages
appropriate mitigation measures. These are presented to
the Board for support and approval. This process ensures
that the company responds and reacts to climate change
risks and opportunities in a timely manner.
Climate-related risks are assessed as part of the Group’s
risk process to determine the principal risks facing the
Group. These are then prioritised, 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 is working towards setting a carbon net
zero commitment. Initially, the aim is to reduce carbon
emissions by 55% by 2030.
b. Management’s role in assessing and
managing climate-related risks and
opportunities
The CFO leads climate change risk management and is
supported by the Head of Sustainability and ESG. This is
accomplished successfully by involving and engaging the
Executive Team on strengths, weaknesses, opportunities
and threats to RWS regarding external and internal
influences. Once the risks are identified, they are assessed
to determine their potential impact (scale of 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 heads of all
functions, such as procurements and facilities, report to
members of the Executive Team who, in turn, report to the
CEO and Board.
The CFO is also responsible for environmental compliance
and reporting, including CDP, Streamlined Energy and
Carbon Reporting (SECR), Energy Savings Opportunity
Scheme (ESOS), and Task Force on Climate-related
Financial Disclosures (TCFD).
As well as having seats on the Board, the CEO and CFO
sit on the RWS Executive Team which consists of the CEO;
CFO; Chief Information Officer (CIO); Chief Language
Officer, Chief People Officer (CPO), President, Enterprise
Internalisation Group; President, IP Services; President,
Regulated Industries; President, Language Services and
Technology; Group Corporate Development Director and,
with effect from 3 October 2022 the General Counsel and
Company Secretary.
The Executive Team provides additional horizon scanning
and meets periodically to discuss key risks and mitigation
strategies. Collectively, they continue to enhance the
Group’s understanding of longer-term risks relating
to scenario analysis and share it with the Board for
consideration and approval.
The Executive Team lead in each operational area is
responsible for ensuring the continuity of the Group’s
operations, including resilience to events caused by
extreme weather whilst the Business Continuity team is
responsible for identifying risks, assessing continuity and
incident response plans.
50
RWS — Annual Report 2022 STRATEGIC REPORT
The Board and Executive Team are kept informed and
updated on climate-change issues by the Head of
Sustainability and ESG using a variety of forms including
reports, presentations and discussions, including
monitoring and verification of global carbon emissions,
Environmental Management Systems (EMS) compliance
initiatives, carbon reduction plans as well as the latest
changes in regulation and the International Sustainability
Standards Board (ISSB).
The Head of Sustainability and ESG is responsible for
setting the strategy and targets for measuring and
reducing the Group’s environmental impact. These
are then approved by the CEO and CFO. The Group’s
performance is measured throughout the year, tracking
emissions across all scopes.
RWS is reviewing its climate change impact and
developing a carbon emission reduction plan using a
science-based target aligned with the SBTi criteria. These
targets and subsequent reduction plan will be submitted
to the SBTi for official validation following Board approval.
Initially, RWS is aiming to reduce carbon emissions by 55%
by 2030, using FY22 as a baseline. RWS is in the process
of establishing a system to monitor implementation and
performance of climate-related objectives.
The early adoption and alignment to the TCFD
recommendations, demonstrated by RWS becoming
a signatory to the TCFD in 2021 ahead of it becoming
mandatory in 2022, demonstrated the proactive approach
RWS has taken to risk management.
STRATEGY
a. Climate-related risks and opportunities
in the short, medium, and long term
Internally we use climate 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. Dependent 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. Our short term is one to three
years; medium term is three to five years; and long term
is five to 10 years. We have defined our terms to coincide
with business strategies and the planned objectives for
climate-change risk mitigation.
Although we operate in a low carbon intensive market
sector, 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 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, with carbon
tax levels, extreme weather impacts on the business and
supply chains.
As a company, we define a risk having a material financial
or strategic impact on the company if it meets the
following criteria:
• A financial impact of £500,000 or more
• A probability of very likely (medium) or higher
51
STRATEGIC REPORT RWS — Annual Report 2022 Task Force on Climate-related Financial Disclosures (continued)
Examples of our findings relating to risks include:
SHORT TERM
(one to three years)
• Regulatory: enhanced reporting obligations
• Reputational: increased requests from investors and clients for information and
pressure to reduce carbon emissions
MEDIUM TERM
(three to five years)
LONG TERM
(five to 10 years)
• Physical: extreme weather conditions requiring mitigation and adaptation
strategies and business continuity planning
• Financial: cost escalation and security of supply
• Regulatory: enhanced and emerging reporting obligations particularly relating to
entire value chain
• Reputational: increased requests from investors and clients for information and
pressure to reduce carbon emissions
• Physical: increasing sea level rises and extreme weather conditions will increase risk
of business interruption and damage to property
• Financial: increased pricing of GHG emissions
• Regulatory: enhanced reporting obligations being introduced in short timeframes
• Reputational: resulting from interruption in business services or not mitigating
climate-risk timeously
• Physical: extreme weather events increasing in severity and frequency which could
cause localised disruption to our supply chains and networks
• Financial: ambitious carbon pricing and operational costs e.g. energy, insurance, etc.
Examples of our findings relating to opportunities include:
SHORT TERM
(one to three years)
• Regulatory: being an early adopter
• Reputational: improvement in reputation due to environmental initiatives
• Physical: increased resilience due to investment in IT infrastructure
• Financial: resilience as we increase participation in renewable energy programmes
and adoption of energy-efficient measures such as savings achieved from energy/
carbon reduction measures put in place (lighting sensors, LEDs, less air travel, etc.)
MEDIUM TERM
(three to five years)
• Regulatory: transparency and clarity in reporting
• Reputational: increased reputation due to the approach taken by RWS in relation to
global warming
LONG TERM
(five to 10 years)
• Physical: reducing number of offices and improve resilience of current portfolio,
software testing labs and recording studios; diversification of technology connectivity
• Financial: rationalisation of software applications across RWS, reducing carbon
emissions (energy/use of paper), increasing efficiencies
• Regulatory: clarity and completeness in reporting
• Reputational: corporate sustainability initiatives become a key differentiator for RWS
• Physical: business continuity built into office network and supply chain
• Financial: increased revenues due to new products and services and access to new
and emerging markets (i.e. electric vehicles, carbon capture technologies, etc.);
use of new technologies with increased energy efficiencies; resource efficiencies
achieved via supply chain
52
RWS — Annual Report 2022 STRATEGIC REPORT Investment in research and development
The Covid-19 pandemic provided us the opportunity
to invest in new and innovative ways of working. As
we emerge from the pandemic restrictions, we are
committed to continue investment into how we can deliver
our products and services more efficiently. Currently,
our research and development investment focuses on
enhancing our service offering. This in turn reduces
the carbon emissions generated from our business
operations.
Our commitment to reducing carbon emissions through
R&D can be seen by our efforts to use the most energy
efficient and latest technology e.g., our datacentres. We
review technological advancements continually to see
if they can be used to support the attainment of our
sustainability and climate change goals.
Operations
As the demand for sustainable products and services
has increased exponentially, so has the demand
for organisations to show effective climate change
management. We are committed to being an ethical,
responsible, and trustworthy company by complying with
all relevant climate related regulations, as well as publicly
reporting on our climate change management through
Annual Reports and our disclosures to CDP. We continue
to review our operations globally against climate risk and
take steps to mitigate it where necessary. We are focused
on reducing our global carbon footprint through a range
of initiatives including improving energy efficiencies of
our offices and adopting green leases which include
securing 100% renewable energy contracts across our
estate portfolio where possible; LED lighting with motion
sensors; measured recycling; energy efficient heating
and cooling; and detailed reporting of resource use. We
are also reducing travel where possible, increasing the
availability of homeworking, and developing a socially
responsible suppliers’ network.
b. Impact of climate-related risks and
opportunities on our business, strategy,
and financial planning
The impact is as follows:
Products and services
Following COP26 in Glasgow, and throughout the
pandemic, we have seen the demand for sustainable
products and services increase exponentially. RWS
continues to take this market shift very seriously and
has investigated ways to optimise services to reduce
carbon emissions and improve satisfaction. We continue
to improve our value chain engagement strategies and
are focusing on reducing our Scope 3 emissions through
improving operational efficiency.
The successes of our investigations can be seen through
the increased demand of specific products and services.
For example, in FY21 we saw an increase in demand
of our Tridion products amongst new electric vehicle
(EV) market clients. These clients’ business offering is
focused on reducing demand of finite fossil fuels and
therefore their suppliers will need to demonstrate green
credentials. Other examples of services we have provided
include providing patents related to climate change (e.g.
a windmill generator and insulation material), localisation
relating to sustainable products, content or regulation
(e.g. EVs, rapid-charging stations, home batteries, and
solar panels, Sustainable Finance Disclosure Reporting,
website content, white papers, and reports for many of
our clients to market and sell financial products with a
sustainable objective).
As a natural consequence, the demand for our products
and services may well increase.
Supply chain/value chain
We recognise that the majority of an organisation's carbon
footprint is the result of their value chain i.e., suppliers and
clients. Therefore, organisations who truly want to have a
substantive impact on climate change must engage these
core stakeholder groups. We promote a sustainable and
carbon management ethos through our business and
have started to engage our suppliers and clients to ensure
our sustainability goals are understood throughout our
value chain.
To help achieve this goal, we are rolling out our updated
Supplier Code of Conduct which is supported by a new
Sustainable Development Policy. This shows that we
expect all suppliers and subcontractors to demonstrate
effective management of their environmental and
social impacts and we favour suppliers who are able to
demonstrate they are aligned with the UN Ten Principles
and reducing their environmental footprint actively.
53
STRATEGIC REPORT RWS — Annual Report 2022 Task Force on Climate-related Financial Disclosures (continued)
We also recognise that improving our climate change
impacts generate financial gains, for example, a reduction
in energy and transport consumption will reduce related
costs.
Climate-related risks are assessed as part of the Group’s
risk process to determine the principal risks facing the
Group. These are then prioritised, and appropriate
management strategies are developed ensuring that the
identified risk is mitigated as much as reasonably possible.
Investment is considered on the basis of the priority of
the issue as well as the return on investment. An example
of this is the installation of LED lights at our offices in
Chalfont St Peter, Brno, Indore, Lausanne, London,
Nanjing, Rosario and San Francisco, reflecting a long-term
return on investment whilst reducing carbon emissions in
the short term.
Due to the Covid-19 pandemic, we accelerated our IT
Infrastructure improvements to ensure that our clients
were supported and could receive the same level of care
despite not being able to operate from central locations.
This developed our remote working practices which also
improved our resilience to the impact of climate change.
We look for ways to enhance our remote working system
continually to further reduce our carbon emissions and
improve our clients’ experience.
As a further focus on driving change, each member of
the Executive Team has objectives related to mitigating the
effects of climate-change on/by the business. Additional
remuneration is linked to achieving pre-established targets
and goals. Personal objectives for FY22 and FY23 are
aligned with establishing policies, systems and processes.
Moving forward the proposal is they will be aligned with
achieving carbon emission targets.
Adaptation and mitigation activities
As mentioned above under ‘Governance’, the Board
reviews performance against climate targets and is
working towards setting a carbon net zero commitment.
Initially, the aim is to reduce carbon emissions by 55% by
2030.
Applicable risks and opportunities are identified by the
CEO, CFO and Head of Sustainability and ESG in order to
direct business strategy. The CFO is also responsible for
environmental compliance and reporting which also helps
focus the company’s attention on climate-related risks,
opportunities and mitigation.
Acquisitions or divestments
RWS acquired Liones Holding B.V. ('Liones') for €17.7
million (on a cash-and-debt free basis) with additional
payments of €2.5 million due on each of the first and
second anniversaries of completion. The flagship product
of Liones is Fonto, the leading cloud native, data driven
authoring solution for mission critical documents. The
Fonto suite of products allows non-technical subject
matter experts to create, edit and collaborate on
structured documents by hiding the complexity of the
underlying mark-up languages. The acquisition was
funded from existing RWS cash resources.
Access to capital
To continue to ensure access to capital we have
strengthened our corporate climate governance and
associated disclosures.
Steps we have taken include:
• Appointing a Head of Sustainability and ESG in 2020
• Reporting using TCFD ahead of it becoming mandatory
• Committing to SBTs and having our targets validated by
SBTi
• Setting ESG targets and delivering against them
• Setting ESG personal objectives related to mitigating the
effects of climate-change on/by the business for each
member of the Executive Team
As mentioned, our senior executives monitor climate-
related risks and invest where necessary to mitigate these
scenarios.
The decision by the company to switch to 100% renewable
energy wherever possible is an example of this. Although
initially it will cost the company more, we have taken this
decision as we believe it is more ethical and responsible,
it is aligned with the company’s values, and we hope
that it will become common practice as more and more
companies adopt this approach.
54
RWS — Annual Report 2022 STRATEGIC REPORT 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.
As a provider of services, 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,
renewable energy, reducing waste, reducing travel where
possible, availability of homeworking 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 one to 10+ years).
We manage the risks of climate change as mentioned
previously, with oversight by the Board and Audit
Committee as part of our risk management process. We are
tracking and reporting on our carbon emissions globally.
We are pursuing best practice by engagement with the
United Nations Global Compact initiative, Race to Zero,
seeking to set science-based targets and disclosing against
the TCFD framework.
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 that a consistent and truthful
message is shared with our stakeholders regarding our
own environmental management practices. We are rolling
out our Supplier Code of Conduct to all suppliers and
have developed a Sustainable Procurement Policy – our
engagement will focus on the short to medium term (one to
five years).
c. Resilience of the organisation’s strategy,
taking into consideration different climate-
related scenarios, including a 2°C or lower
scenario
In FY22 we strengthened our approach and actions to
climate-related risks and opportunities to align RWS with
the TCFD recommendations.
As mentioned above, when considering our climate-related
risks and opportunities in the short, medium, and long
term, we reviewed our climate scenario analysis to assess
potential impacts and opportunities for RWS against
possible climate futures. We assessed three different
climate scenarios, set by the latest science and known as
Representative Concentration Pathways (‘RCPs’). RCPs are
used by the Intergovernmental Panel on Climate Change to
illustrate future concentrations of greenhouse gases in the
atmosphere. The climate scenarios we used were:
Low
emission
scenario
(RCP 1.9)
Medium
emission
scenario
(RCP 2.6)
A predicted global temperature increase which
limits global warming to below 1.5, the global
aspiration goal of the Paris Agreement
A predicted global temperature increase
between 1.5°C and 1.7°C by 2100, compared to
preindustrial levels. This would bring the world
in line with the Paris Agreement of 1.5°C. This
is commonly referred to as the best-case and
most ambitious scenario
High
emission
scenario
(RCP 8.5)
A global temperature increase between 3.2°C
and 5.4°C, where carbon emissions continue
growing unmitigated. With no mitigation, this
is deemed the worst-case scenario
The locations of all our offices and supply chain were
considered due to our dependence on our people to
deliver our services. We conducted the analysis across
three time horizons: short term (one to three years),
medium term (three to five years) and long term (five to 10
years). Consistent with TCFD, our assessment covered the
following:
• Physical risks: resulting from climate change events and
changes in weather. These can be acute (event-driven)
or chronic (long-term shifts)
• Transition risks: associated with the implications from
the measures taken to reach a low carbon economy.
These can be policy and legal, technology, market and
reputation
• Opportunities: realised capitalisation of benefits upon
the low carbon market and technological drivers. These
can be from resource efficiencies, energy sources, new
products or services, markets and resilience
55
STRATEGIC REPORT RWS — Annual Report 2022 Task Force on Climate-related Financial Disclosures (continued)
As noted earlier, we have seen an increased demand for
companies to show effective management of their climate
change impact, for example, requests from the market, and
existing and upcoming legislation. This supports our efforts
in demonstrating that we are an ethical, responsible, and
trustworthy company. 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 (one to 10+ years).
Over this next 10 year period, significant investment will
continue to be made by the company in a number of areas
The Group has previously set out plans to reduce its global
office footprint which will significantly reduce of Scope
1, 2 and most importantly Scope 3 emissions that are
associated with operating and travel to/from an office. The
financial impact of this will see the Group achieve savings
on its leased offices, the majority of which are on tenures of
less than three years.
As well, savings from reduced leasing costs, the Group
shall also reduce energy and heating costs. However, with
energy cost and heating costs expected to increase (from
either increased demand for renewable energy sources
or from carbon taxes on traditional energy sources),
any saving here may well be offset. Similarly, the Group
insurance premiums may reduce as the number of offices in
the Group reduces, however insurance premiums may well
rise as a result of increasingly extreme weather events and
rising sea levels.
For those locations where an office is required to continue
effectively serving our clients, the Group will prioritise
offices that possess the highest environmental ratings
possible in that jurisdiction. Any savings made arising
from reducing the Group’s office footprint shall be used to
cover the cost of moving and setting up these new office
locations or indeed making further improvements to our
existing office locations that we are retaining.
At this stage, its is not possible to estimate the full financial
impact of the above, other than to confirm that the costs of
transitioning toward our 55% reduction in carbon by 2030
will be mitigated partly by other initiatives that the Group is
actively implementing.
RISK MANAGEMENT
a. Our processes for identifying and
assessing climate-related risks
The principal and emerging risks facing the business,
which have been assessed by the Audit Committee and
Board, are described on pages 44 to 47. The Board and
Executive Team has considered the risk of climate change
to the business.
As mentioned, the Executive Team is responsible for
identifying potential climate-related risks and, together
with the CFO and Head of Sustainability and ESG, assesses
them to determine their potential impact following
which they are prioritised and risk-mitigation strategies
developed.
The climate risk assessment also includes the assessment
of existing and emerging regulatory requirements related
to climate change. These include additional reporting.
As mentioned above under ‘Governance’ we use climate
risk strategy scenarios to help quantify and conceptualise
the impact that risks might have on business practices.
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 over
short, medium, and long term.
Thereafter these are tied back to our climate-related
risk register and where we rank the risks in terms of
significance, priority, probability and gross risk as well as
tracking the strength of the risk management and actions
required.
b. Our processes for managing climate-
related risks
As noted above, climate change risks are managed
primarily through our risk management process. Risks
are identified by the CFO and Head of Sustainability
and ESG, and 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 meetings take place
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.
The RWS business continuity programme oversees
mitigations of the physical risks of climate change on
our operations through business continuity plans which
include remote working. Supplier management by the
procurement teams mitigate the potential impact of
climate-related risks on our supply chain.
56
RWS — Annual Report 2022 STRATEGIC REPORT 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 at the end of FY23.
We monitor and report our global Scope 1, 2 and 3
emissions for all our offices (see pages 28 to 29) and we are
looking to strengthen existing targets to help our business
be carbon net zero by 2050 using FY22 as a baseline year
(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 preindustrial 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 28 to 29
for more detail). RWS is not utilising carbon management
schemes such as emissions trading schemes however RWS
has invested a number of small carbon offsetting projects
which are linked to our SDGs.
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. With a global footprint of over 70 offices
in 33 countries there is a varying degree of risk in
different geographic locations which are monitored in
conjunction with our business continuity programmes.
RWS has identified significant opportunities in sectors
which are the most vulnerable as they often have the
biggest opportunity, such as the move to renewables in
oil and gas, the move to electric cars in the automotive
industry, new technology, life sciences contingency
planning, increased litigation in the legal market, and so on.
c. Describe how processes for identifying,
assessing, and managing climate-related
risks are integrated into the organisation’s
overall risk management
The CEO has overall responsibility for climate change
management. The CFO and Head of Sustainability and
ESG supports the CEO by managing the risk potential
impact register and by engaging the Executive Team
on climate change related issues. The Executive Team
meets periodically to discuss climate change issues
and determine appropriate mitigation strategies. Risks
for direct operations, upstream and downstream, are
determined through consultation with each of the
Divisional Presidents and the Chief Information Officer
(CIO), and the Head of Sustainability and ESG. Risks are
categorised according to the likelihood of occurrence
versus the severity of the potential impact on the group.
For example, the hazard risk of climate change and
natural disasters ranks ‘medium’ for both criteria, and
so this is considered to be a principal risk. The Board
monitors principal risks routinely.
57
STRATEGIC REPORT RWS — Annual Report 2022 Task Force on Climate-related Financial Disclosures (continued)
a. Disclose the metrics used by the organisation to assess climate-related risks and
opportunities in line with its strategy and risk management process
RWS Intensity Figures
Intensity
Metric
Year
Intensity Metric 1
Metric tons CO2e per unit revenue (£)
Intensity Metric 2
Metric tons CO2e per unit FTE
FY19
(Baseline)
FY20
% Change
to baseline
year
FY21
% Change
to baseline
year
FY22
(Location
based)
% Change
to baseline
year
FY19
(Baseline)
FY20
% Change
to baseline
year
FY21
% Change
to baseline
year
FY22
(Location
based)
% Change
to baseline
year
Scope 1
1.47
0.95
-36%
0.13
-91% 0.63
-57%
0.15
0.09
-41%
0.01
-92% 0.06
-60%
Scope 2
6.64
5.86
-12%
6.97
5% 5.89
-11%
0.69
0.56
-20%
0.63
-9% 0.57
-18%
Scope 3
8.24
2.43
-71%
0.26
-97% 63.72 N/A*
0.86
0.23
-73%
0.02
-97%
6.15
N/A*
Notes:
* RWS has changed and improved its methodology for capturing and measuring Scope 3 carbon emissions in readiness
for setting and submitting science-based targets. As such, the overall Scope 3 carbon emissions have changed
significantly for FY22. Comparisons against the baseline year (FY19) is therefore not representative. Going forward, FY22
will be used as the baseline year for Scope 3 intensity metrics and targets.
b. Disclose Scope 1, Scope 2 and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions and the
related risks
Our Scope 1, 2 and 3 greenhouse gas (GHG) emissions are included in
detail on pages 28 to 29 of this report. Our emissions are as follows:
Scope 1
473.41 tCO2e
Scope 2 4,415.63 tCO2e
Scope 3 47,736.02 tCO2e
52,625.06 tCO2e
Total
58
RWS — Annual Report 2022 STRATEGIC REPORT c. Describe the targets used by the organisation to
manage climate-related risks and opportunities and
performance against targets
RWS Targets
Target ref. number
Type of target
Intensity metric
Target
1
Intensity
Scope 1 and 2, metric tons CO2e per
unit revenue (£m)
10% reduction in intensity metric
from FY19 to FY24
Base year (FY19) result
8.1180231302
Expected target year (FY22) result
7.3062208171
% of target achieved in FY22,
relative to base year
100%
Target ref. number
Type of target
Intensity metric
Target
2
Intensity
Scope 1 and 2, metric tons CO2e per
unit FTE
10% reduction in intensity metric
from FY19 to FY24
Base year (FY20) result
0.84544
Expected target year (FY25) result
0.76090
% of target achieved in FY22
100%
Intensity targets 1 (Scope 1 & 2)
)
m
£
(
e
u
n
e
v
e
r
t
i
n
u
r
e
p
e
2
O
C
s
n
o
t
c
i
r
t
e
M
8.50
8.00
7.50
7.00
6.50
6.00
9
1
Y
F
0
2
Y
F
1
2
Y
F
2
2
Y
F
3
2
Y
F
4
2
Y
F
Intensity targets 2 (Scope 1 & 2)
E
T
F
t
i
n
u
r
e
p
e
2
O
C
s
n
o
t
c
i
r
t
e
M
0.90
0.85
0.80
0.75
0.70
0.65
0.60
9
1
Y
F
0
2
Y
F
1
2
Y
F
2
2
Y
F
3
2
Y
F
4
2
Y
F
PROJECTED TARGET ACTUAL
59
STRATEGIC REPORT RWS — Annual Report 2022
Section 172 Statement
The Directors of the Company are bound by their
duties under the Companies Act 2006 and, in
particular, must act in the way they consider, in
good faith, would most likely promote the success
of the Company for the benefit of its members as
a whole, taking into account the factors listed in
section 172(1)(a) to (f) of the Companies Act 2006.
The following disclosure describes how the Board
has had regard to those matters and forms the
Directors’ statement required under section
414CZA of the Companies Act 2006.
IDENTIFICATION OF STAKEHOLDERS
The Board of Directors has identified the following stakeholders
and have explained how they have engaged with each group of
stakeholders:
• Our shareholders
• Our colleagues
• Our clients
• Our suppliers
• Our community
• Our environment
60
RWS — Annual Report 2022 STRATEGIC REPORT BOARD ENGAGEMENT WITH STAKEHOLDERS
The Board is committed to enhancing engagement
and seeks to build honest, respectful and transparent
relationships with all of the Company’s stakeholders. As
with other large and complex companies, the Directors
fulfil their duties partly through a governance framework,
which delegates day-to-day decision making to the
Executive Directors and, within defined levels of costs and
impact, divisional leadership teams. The Board recognises
that such delegation needs to be much more than simple
financial authorities and it covers areas such as risk, ethics
and new sector or country approaches.
The governance structure, which covers the values and
behaviours expected of our colleagues, the standards
to which they must adhere, how we engage with
stakeholders, and how the Board looks to ensure that we
have a robust system of control and assurance processes,
is designed to drive high standards of business conduct
across the Group.
Our Environmental, Social and Governance ("ESG")
framework is structured around our key stakeholders, and
the Board has continued to focus on our approach to and
progress in delivering our ESG commitments.
In addition to the methods of engagement described
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 operational reports
presented by the Chief Executive Officer, and updates
from the Chief Financial Officer and other senior
management on a range of matters including:
- Strategy
- Financial
- Treasury and tax matters
- Approach to ESG
- Health, safety and well-being
- Assurance and controls
- Risk, ethics and compliance
- Cyber security
- Colleague matters (including colleague
engagement, workforce and management diversity,
gender pay gap, workforce remuneration and
related policies)
- Markets
- Operational performance
- Suppliers
- Community
- Environment
- Client and investor feedback
• 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 Covid-19 developments, trading updates, bids or
M&A opportunities.
• Regular briefings from Executive Directors, senior
management and subject matter experts, which
include details of engagement with stakeholders,
strategy, performance, local market and competitor
positions, operational and colleague matters, and client
satisfaction and business development.
• A rolling agenda of matters which are considered by the
Board and Committees throughout the year, including
a strategy review which considers the purpose of the
Company and the strategy to be followed by the Group,
supported by a budget for the following year and a
medium-term financial plan.
• Formal consideration of large bids, acquisitions,
refinancing, share buybacks, dividends and
other matters, including any factors which are relevant
to major decisions taken by the Board through the year,
in line with the Delegation of Authority 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 80 to 83 and
84 to 91 respectively.
• Feedback from colleagues through responses to the
annual RWS engagement survey. More details are
provided on this below.
• A focused approach to client engagement through
both face-to-face visits with our significant enterprise
clients, and the addition of ‘voice of the customer’
programme insights, tabled at Board meetings.
The Board also engages with stakeholders through news
releases and stock exchange announcements on a wide
range of matters, including regular trading updates,
half-year and full-year results reports and accompanying
presentations, changes to the Board, key leadership
appointments, material shareholdings, refinancing and
corporate transactions, acquisitions, contract awards and
losses, and operational updates from across the Group.
These news releases and stock exchange announcements
drive ad hoc engagement with stakeholders and are
available on the Company’s website.
Details of the Group’s key stakeholders, their key
concerns, and how the Board engages with them are set
out on the next pages.
61
STRATEGIC REPORT RWS — Annual Report 2022 Section 172 Statement (continued)
OUR SHAREHOLDERS
OUR COLLEAGUES
Engagement with and receiving the support of our
shareholders is a key factor in achieving our ambitions.
We seek long-term relationships based on transparency,
honesty and clarity – all of which are critical for building trust.
Our shareholders are concerned with a broad range of
issues, including how the Company has responded to and
is affected by:
Our colleagues are at the heart of our business. Our
activities are highly reliant upon the skills, dedication and
passion of all our colleagues and freelancers around the
world. We are the sum of the efforts, energy and values
of our colleagues, who are critical to meeting our clients’
demands for excellent quality, timely delivery and effective
product solutions.
Through our annual Group-wide engagement survey, we
know that our colleagues are happy working with RWS and
would recommend RWS as a great place to work.
Each year our colleagues provide their views on a wide
range of topics in the awareness days that we run. This year
these included International Women’s Day, International
Men’s Day, Happy World Wellbeing Week, Earth Day 2022
and International Translation Day. These were promoted
via our Group communications channels. We continue with
our dedicated Group-wide pillars in the following areas
of broad-based colleague 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. An Executive Team member
and HR leader co-sponsor each pillar to ensure appropriate
organisational prioritisation and influence:
Culture
Ethnicity
LGBT+
Persons with
disabilities
Well-being
Women at RWS
RWS has rolled out ‘My Learning Experience’ ("MyLX")
across the Group, demonstrating our commitment to
building a culture of continuous learning. This is a learning
management system, powered by Skillsoft, which will
enhance everyone’s development so that they can flourish
and help the Company to realise its full potential. MyLX
offers thousands of tailor-made online courses.
Further relevant details are referred to elsewhere in
this report:
ESG Social Our People section on page 32.
Employee engagement metrics on page 32.
Impact of economy-wide forces such as price inflation
• Conflicts and pandemics
•
• Other operational and financial performance issues
• Developments in our markets
• Regulatory developments and the execution and
delivery of our strategy
• Sustainability of our business
•
Impact RWS has on the communities we serve and the
environment in which we operate
Shareholders receive regular updates in addition to the
half-year and full-year results reports and accompanying
presentations. The Chief Executive Officer and Chief
Financial Officer meet with shareholders to discuss
relevant developments in the business at our post-results
roadshows, via attendance at investor conferences, and
on an ad hoc basis.
In March 2022, we held a Capital Markets Day (CMD) event.
It was attended by the Chairman, the Chief Executive
Officer, the Chief Financial Officer, and other members of
the Executive Team. This included a series of presentations
and Q&A sessions to provide an update and greater insight
into the Group’s strategy, business operations, and financial
performance, as well as demonstrations of some of the
Group’s technology products.
The feedback received from the meetings with
shareholders is provided to the Board as part of the rolling
agenda of matters to be considered by the Board and
Committees throughout the year.
The AGM provides the Board with an opportunity to
communicate with private and institutional investors. Due
to the Covid-19 restrictions in place in the UK at the time
of the 2022 AGM, the AGM again took place as a closed
meeting. Although it was not possible for the Board to
meet with our shareholders in person at the 2022 AGM,
all shareholders were invited to submit questions to the
Board via email prior to the meeting.
Further relevant details are referred to elsewhere
in this report:
Key Performance Indicators on page 24.
Further ESG items and details on our ESG performance
and data are set out in the ESG section on pages 25 to 35.
Details of substantial interests in the shares of the
Company are provided on page 92 of the Directors’
Report.
62
RWS — Annual Report 2022 STRATEGIC REPORT
OUR CLIENTS AND SUPPLIERS
OUR COMMUNITIES
RWS runs a central experience management
programme for clients and suppliers. The RWS ‘voice of
the customer’ and ‘voice of the vendor’ programmes aim
to generate an accurate and consistent understanding
of our clients and suppliers to build better experiences
and positive business outcomes across the Group.
The RWS ‘voice of the customer’ and ‘voice of the vendor’
programmes ensure a continuous and neutral approach
to listening and learning – turning client and supplier
feedback into actionable insight. The Group-wide
experience management programme allows us to easily
understand the core drivers of client behaviours to act
upon and improve our business KPIs, such as renewals
and referrals, and support organic growth.
Further relevant details are referred to elsewhere in
this report:
Voice of the customer programme on page 19.
Principal Risks and Uncertainties on pages 44 to 47, in
particular the significant failure of a business-critical
partner or supplier.
Our communities comprise those living and working
in close proximity to our operations, and those who
represent the needs of the communities we operate in,
including charities, schools and universities. Operating
amongst and on behalf of our communities, we strive
to maintain a deep understanding of the complex social
challenges that impact them, whilst recognising our
responsibility to contribute to the sustainability and
well-being of society and the economy wherever we
operate.
The RWS Foundation’s Ukraine Appeal raised £34,436
from colleague donations and donated an additional
£15,000 to the International Committee of the Red Cross.
The RWS Foundation also made further donations of
£10,000 each to the UNHCR, the UN’s Refugee Agency,
and to UNICEF, the UN’s Children’s Fund.
Further relevant details are referred to elsewhere in
this report:
ESG Social Community section on pages 33 to 34.
63
STRATEGIC REPORT RWS — Annual Report 2022 Section 172 Statement (continued)
OUR ENVIRONMENT
We are committed to the continual reduction of our
global carbon footprint. To enable us to set science-
based targets, we moved to a new web-based platform
to better facilitate the tracking and measurement of
carbon emissions, and will use the data gathered in
FY22 as the baseline for future improvement. We also
launched our Sustainable Procurement Policy and rolled
out the supporting action plan across the Group during
the year.
The CEO has overall responsibility for all climate-related
issues and the CFO is responsible for managing climate-
related risks across the Group.
Bi-annually, climate-related issues are presented and
considered by the Board.
Further relevant details are referred to elsewhere in
this report:
ESG Environment section on pages 28 to 31.
DECISION MAKING IN PRACTICE
A summary of how the Board applied the factors listed in
section 172(1)(a) to (f) of the Companies Act 2006 when
making principal decisions during the year is provided
below.
In Spring 2022 we launched a Group-wide company Code
of Conduct, along with associated training, and have
implemented an annual compliance declaration. A copy of
the Code of Conduct is available on the Company website.
Cyber
Protecting RWS’s clients, our colleagues, and RWS’s own
data and operations is extremely important. Security
of data is understandably a concern to all our clients,
who frequently require RWS to demonstrate strong and
effective security controls, including technical prevention
and detection measures. Accordingly, RWS is certified to
ISO27001– the industry standard for information security
management.
Information security is an enterprise risk that is monitored
by our Board of Directors. The company continues
to invest in new security technologies and services
to counter the constantly changing threat landscape.
RWS engages with leading third-party security service
companies, utilising the latest technology to provide 24x7
detection and response capabilities across all systems. All
our colleagues undertake regular security training and
receive frequent security awareness communications to
ensure security is embedded in everyday activity.
Acquisitions
The acquisition of Netherlands-based Fonto in March 2022
was undertaken after the Board considered the strategic
rationale, the impact on future growth, the impact on
earnings accretion, as well as how the acquisition would
be received by the Company’s shareholders.
ESG
The CEO receives information on corporate sustainability
performance, assesses future risks and opportunities,
develops our strategy in this area, and is responsible for
disseminating this to all colleagues. The Head of ESG and
Sustainability reports directly to the CEO.
Sustainability was a core consideration in the
development of the Group’s medium-term growth
strategy and purpose. RWS was part of the United Nations
Global Compact Initiative’s Early Adopter programme
and our Communications on Progress ("CoP") report was
published in June this year using this new framework.
RWS’s Agile Work Practices policy is currently being
implemented and will provide colleagues with options
for balancing their work and personal life, and in support
of improved productivity. These options include the
ability to job-share, start and finish at different times,
and even work from varying locations depending on
personal circumstances. We are investing appropriately in
technology to support more flexible working options.
64
RWS — Annual Report 2022 STRATEGIC REPORT Strategy
Shareholders, clients, colleagues, suppliers, community
and the environment are both critical and central to any
meaningful discussion on strategy. Our stakeholders
were fully considered in the development of the Group’s
accelerated growth plan, which was launched at the CMD.
The Company’s senior leadership team were involved
in its development. ESG is increasingly centred in our
operational decisions and a regular component of internal
operational reviews.
During the year the Board initiated a project to identify
Group values. All colleagues were invited to participate
in an online survey to help shape what the RWS values
should be. Our new RWS values were launched in April
2022 and are "We partner, we pioneer, we progress, we
deliver". These values encompass how we should think,
act and behave to fulfil our purpose – unlocking global
understanding. The values will be embedded across all
areas of our organisation to enable us to live and breathe
them, and will provide the foundations on which to build
our One RWS culture.
Our strategy requires that our commercial functions
are clearly aligned to client segments with differing
needs. Our sales and our account management teams
have clarity on our clients’ needs. There is a strong link
between the commercial organisations and the CEO,
with the leaders of our four divisions reporting directly
to the CEO.
Our colleagues are key to our growth, and we seek to
build an inclusive culture where everyone is welcomed
and inspired to fulfil their potential. To execute on our
strategy with speed and precision, we are creating a
culture where we can adapt and react quickly to evolving
circumstances. It is our continued investment in our
colleagues, who are inspired to perform at their very
best, that will enable our success.
Ian El-Mokadem
CHIEF EXECUTIVE OFFICER
14 December 2022
65
STRATEGIC REPORT RWS — Annual Report 2022 Corporate Governance
Statement
RWS continued to evolve rapidly during FY22,
with the development and launch of its medium-
term accelerated growth strategy, new values and
purpose, further development of its Board and
Executive Team, and completion of the integration
of SDL.
A flexible working policy was introduced for our
colleagues, with the dynamic workplace enabling
the Group to meet client expectations and deliver
a good trading performance, while maintaining
RWS’s strong balance sheet.
OUR STAKEHOLDERS
The Board is committed to enhancing engagement with all of our
stakeholders. In FY22, we continued to provide an excellent service to
our clients. Our corporate sustainability policy encompasses the way
that we do business and interact with our colleagues, our clients, our
suppliers, our communities and the environment around us,
In spring 2022, we launched a Group-wide company Code of Conduct,
along with associated training, and have implemented an annual
compliance declaration.
We sustained our track record of paying regular dividends to
shareholders. This is the 19th year in succession that we have
increased the dividend.
We describe on pages 77 to 79 how the Board engaged with each
of our key stakeholders during FY22.
Andrew Brode
CHAIRMAN
66
RWS — Annual Report 2022
STRATEGY
We have developed our Accelerated Growth Plan for the
next five years. It recognises our strong portfolio and
excellent market leadership. We are proud of our long-
term partnerships with our impressive client list and our
deep, global linguistic and subject matter expertise. With
our talented, experienced and passionate colleagues, we
will strive to improve organic growth and so continue to be
a unique, world–leading provider of technology-enabled
language, content and IP services.
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.
The Group also undertook its second Group-wide
colleague engagement survey in September this year. We
had an excellent response rate of 85% (6,639 participants)
(2021: 81%), which gives us confidence that the feedback
we received through the survey is statistically valid and
fully representative. The questions covered 14 areas
to provide a comprehensive picture of our colleagues’
experience across areas such as strategy and values;
growth and development; performance and reward; trust
and respect; ESG; innovation and process; teamwork and
collaboration; health and well-being; communications
and change management; inclusion; engagement;
and intention to stay. The survey was translated into
12 languages by our in-house Language eXperience
Delivery teams. We also utilised our machine translation
technology, Language Weaver, to back translate
comments from two free-text questions into English.
The Group engagement score was 69%. This is 3% lower
than the global benchmark¹ for businesses of our type
and provides a helpful baseline from which to improve
(there was no overall engagement score for the 2021
survey, so we are not able to compare year-on-year
change). The survey data has given us helpful insights
into demographic differences across geography, tenure,
seniority and area of the business that colleagues work in.
This will enable us to ensure that actions are appropriately
targeted to drive meaningful improvements.
We were particularly encouraged by colleagues’ feedback
in respect of the positive team climate promoted by
strong team management. Our people trust their
managers, believe they care about their well-being,
and help to remove barriers to working effectively.
Collaboration within immediate teams is strong. These
elements scored above high-performing benchmark
levels and are key factors that colleagues value most at
1 Qualtrics Global Benchmark
RWS. People are clear about what is expected of them
and have opportunities to use their skills and abilities.
RWS’s diverse culture is appreciated and people feel
respected. It is also clear that colleagues feel safe while
working in RWS offices and are able to work productively
through agile and remote practices.
We have long-standing relationships with the majority
of our suppliers and subcontractors. Our ‘voice of the
customer’ and ‘voice of the vendor’ programmes ensure
a continuous and neutral approach to listening and
learning – turning client and supplier feedback into
actionable insight.
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 colleagues
and externally to the broader stakeholder group. I
am involved in developing a strategy for the Group
and supporting 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 judgement, and free from relationships
that may affect, or could appear to affect their
judgement.
As at 30 September 2022, the Board comprised myself
as Chairman, alongside two Executive Directors, Ian
El-Mokadem and Rod Day, and five Non-Executive
Directors, who are Lara Boro, David Clayton, Frances
Earl, Julie Southern and Gordon Stuart.
This past year has seen several leadership changes at
Board level.
In April 2022, Desmond Glass stood down from the
position of Chief Financial Officer to take up a position as
CFO of a privately held business in a different industry.
We thank Desmond for his strong contribution to the
business during his more than four years in the role of
CFO. Most recently, Desmond played a significant role
in the successful execution of the SDL acquisition and
integration, which is now complete and firmly positions
the Group for further growth and value creation. We
wish him well in his new role.
67
GOVERNANCE REPORT RWS — Annual Report 2022 Corporate Governance Statement (continued)
Rod Day joined RWS in January 2022 and was appointed
as Interim Chief Financial Officer in April 2022. Rod has
over thirty years of senior finance, leadership and strategy
experience, primarily in the business services, online and
retail sectors, including serving as Group CFO of Iron
Mountain Inc., AOL Europe and Group Strategy Manager
at Kingfisher Plc. More recently, Rod served as Interim
Chief Financial Officer at Cobham Group and V.Group,
where he oversaw global finance operations and M&A
activity.
It was announced on 27 July 2022 that I intend to step
down from my role as Chairman in October 2023, at which
time I will become a Non-Executive Director. I remain
fully committed to supporting the Board in driving the
business forward and intend to remain a significant
shareholder in the Group.
Julie Southern joined RWS as a Non-Executive Director
in July 2022 and will be my successor as Non-Executive
Chairman in October 2023. She brings a wealth of
business and governance experience from her current
Non-Executive Director roles. Julie is currently a Non-
executive Director and Chair of the Audit committees at
Rentokil Initial, Ocado, NXP Semiconductors and easyJet,
where she is also Senior Independent Director.
Candida (Candy) Davies was appointed as Chief Financial
Officer with effect from 3 October 2022. She will join
the Board and the Group Executive Team. Candy was
most recently Head of Finance for the Personal Health
division of Royal Philips, the Dutch-headquartered health
technology conglomerate, where she also supported
the Group Innovation and Strategy function. She has
considerable experience in commercial and operational
leadership and played a key role in driving market
innovation, new business models and solutions to support
enhancing patient and consumer experience, improving
health outcomes, and driving sustainable performance.
Prior to this she spent eight years at Reckitt Benckiser,
latterly as European Finance Director for the Hygiene and
Home Business Unit, having previously been Senior Vice
President and Corporate Controller for the Group. Earlier
in her career, she spent twelve years with Eli Lilly & Co,
having gained chartered accountant status at KPMG.
Following Candy Davies’ appointment, Rod Day became
Interim Deputy CFO and is completing a thorough
handover before leaving RWS at the end of 2022.
Jane Hyde became our General Counsel and Company
Secretary with effect from 3 October 2022. Jane, who will
attend the Group’s Board and Committee meetings, will
focus on strengthening the Group’s legal, governance,
and compliance approach, and will develop RWS’s
company secretarial and risk management capabilities
to support the achievement of our growth strategy
ambitions. Jane was previously the General Counsel and
Company Secretary of De La Rue plc, overseeing all legal
and corporate governance matters, business ethics and
risk management.
We are strongly committed to upholding the values of
good corporate governance and accountability to all the
Group’s stakeholders, including shareholders, colleagues,
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 colleagues, 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 Environment, Social &
Governance section on pages 25 to 35). The Board
understands that upholding good corporate governance
is a significant factor in achieving this growth, while at the
same time mitigating risks for the long-term benefit of the
business.
The Board believes that it complies with all the principles
of the QCA Corporate Governance Code.
BOARD EVALUATION
We completed a formal independent review of the Board
in FY22, with questionnaires to all Board members
reviewed by our consultants and recommendations given
on areas for improvement. 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, have a track record of improved
effectiveness, and the ability to adapt and change. These
are strengths that served us well during this year.
CORPORATE SUSTAINABILITY
Sustainability is a key area of focus for the Group. We
aim to ensure it is woven into our divisional and group
plans, along with environmental issues in the discussions
carried out by our Employee Resource Groups. As a
mark of our maturing approach to Environmental, Social
and Governance, we have for the first time published a
separate sustainability report for FY22.
68
RWS — Annual Report 2022 GOVERNANCE REPORT DIVERSITY AND INCLUSION
ANNUAL GENERAL MEETING
Due to the constraints of the Covid-19 pandemic, the 2022
AGM was held as a hybrid meeting. Shareholders (and
their proxies) were only permitted to attend the AGM via
a virtual meeting facility and not permitted to physically
attend.
The 2023 AGM will be held on 22 February 2023, at CMS
Cameron McKenna Nabarro Olswang LLP, Cannon Place,
78 Cannon Street, London EC4N 6AF. Details of how
shareholders can attend the meeting are set out in the
Notice of AGM. Shareholders will be able to vote at the
AGM in person or by submitting their proxy in advance of
the AGM and to appoint the Chairman of the AGM as their
proxy with their voting instructions.
We are very keen to engage with all shareholders and
look forward to meeting with some of them at the AGM.
I would be delighted to answer any questions that
shareholders may have.
Andrew Brode
CHAIRMAN
14 December 2022
Being part of a vibrant, globally diverse community, we
know that tremendous value is gained from colleagues'
differences. An inviting culture that recognises and
celebrates diversity enables colleagues to reach their
maximum potential and achieve their best, which is
fundamental to us and critical to our success.
Research has shown that when colleagues experience
a diverse, caring company it is a key driver of revenue
outperformance. When companies invite every colleague
into the innovation process, they generate more high
quality ideas, realise greater speed in implementation,
achieve greater agility, deliver sales targets and
outperform their competition.
Given the unquestionable impact diversity and inclusion
has on colleagues, 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 the Diversity,
Equality and Inclusion section of the ESG on pages 32 to
33). In our Executive Team workshops we work to include
ideas from our Employee Resource Groups on how to
further improve the work place.
The Board understands the importance of diversity and
is committed to increasing the diversity of the Group’s
workforce and of the Board itself. The gender diversity
split of the Board was 37.5% female, 62.5% male at the
beginning of the year, but at year end (and as 1 October
2022) the split is 44.4% female and 55.6% male. Females
made up 20% of our Executive Team at the beginning of
the year but at the year end (and as of 1 October 2022),
females comprise 33% of the Executive Team. We aim to
increase the ethnic diversity of the Board and Executive
Team as soon as reasonably practicable.
We place a sustained focus on diversity and inclusion.
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 colleagues,
rather than purely targeting the most obvious groups that
are typically under-represented in organisations with our
profile (see Our People section page 32).
69
GOVERNANCE REPORT RWS — Annual Report 2022 Board of Directors
As of 30 September 2022 the Board comprises the
Chairman, Andrew Brode, alongside two Executive
Directors, Ian El-Mokadem and Rod Day, and five
Non-Executive Directors, including Lara Boro,
David Clayton, Frances Earl, Julie Southern and
Gordon Stuart.
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.
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 career included divisional leadership
roles at Compass Group plc and Centrica plc as well as strategy
consulting with Accenture. Ian is also a Non-Executive Director of Serco
Group plc and a Director at Roegate Consulting Limited.
70
RWS — Annual Report 2022 GOVERNANCE REPORT ROD DAY
Interim Chief Financial Officer
Rod joined RWS in January 2022 and was appointed as Chief Financial
Officer in April 2022 on an interim basis.
Rod has over thirty years of senior finance, leadership and strategy
experience primarily in the business services, online and retail sectors,
including serving as Group Chief Financial Officer of Iron Mountain Inc.,
AOL Europe and Group Strategy Manager at Kingfisher Plc. More recently,
Rod served as Interim Chief Financial Officer at Cobham Group and
V.Group, where he oversaw global finance operations and M&A activity.
LARA BORO
Senior Independent Non-Executive Director
Lara was appointed to the Board of Directors on 20 September 2017 and
is a Member of the Remuneration Committee. She was appointed the
Senior Independent Director after the 2021 AGM.
Currently the Group Chief Executive for the Economist Group, Lara
is focused on driving continued growth in both the core Economist
business, as well as the business-to-business offerings of the Economist
Intelligence Unit. She was previously CEO International for Ascential plc
(formerly EMAP plc) and CEO of Informa Plc's Intelligence division. Prior to
Informa, Lara held strategy, M&A and commercial development roles for
CPA Global, Pearson, MasterCard and Lloyd’s of London.
DAVID CLAYTON
Non-Executive Director
David was appointed to the Board of Directors on 4 November 2020, and
is a former Non-Executive Chairman of SDL plc.
He was Managing Director and Head of European Technology Research
at CSFB from 1997 until 2004. He then joined The Sage Group plc Board
as a Non-Executive Director in 2004 before taking up an executive role as
Director of Strategy and Corporate Development from October 2007 to
February 2012.
David 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.
71
GOVERNANCE REPORT RWS — Annual Report 2022
Board of Directors (continued)
FRANCES EARL
Non-Executive Director
Frances has been a Non-Executive Director of RWS since November 2020.
Previously Frances was a Managing Director at Accenture, where she
held senior HR positions both locally (in UK and Ireland) and globally.
She served as HR Director on Accenture’s UK and Ireland Executive
Board, Products Operating Group Executive Board and Financial Services
Operating Group Executive Board, and was Global Recruitment Director
for all Executive and Partner Recruitment across 20 countries.
JULIE SOUTHERN
Non-Executive Director
Julie joined RWS as a Non-Executive Director in July 2022, and will succeed
Andrew Brode as Non-Executive Chairman in October 2023.
She has significant Board experience and is currently a Non-Executive
Director and Chair of the Audit committees at Rentokil Initial, Ocado,
NXP Semiconductors and easyJet, where she is also Senior Independent
Director. Julie will retire from the Board of easyJet at its next AGM in
February 2023. She has also previously held non-executive director
positions at DFS Furniture Company, Cineworld Cinemas, Stagecoach and
Gategroup.
Julie’s executive career included a number of senior finance, operations
and marketing roles, where she has driven significant growth and
revenues, including at Porsche Cars, as Group Finance Director from
1996, before she joined Virgin Atlantic in 2000 as CFO – a role she held for
10 years before becoming Chief Commercial Officer in 2010.
GORDON STUART
Non-Executive Director
Gordon joined RWS as a Non-Executive Director in November 2020. He
currently serves as the CFO of AMS, a global total workforce solutions
provider of talent acquisition and contingent workforce management,
internal mobility and skills development, and talent and technology
advisory services. He has led Finance, Corporate Services and Operational
functions as an Executive Director for over 20 years.
Previous roles include CFO of Unit4 and TMF Group. He has held senior
positions with several 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 Sepura plc,
Intec Telecom Systems plc and, prior to its acquisition by RWS, SDL plc. In
each instance he served as Chair of the Audit Committee.
72
RWS — Annual Report 2022 GOVERNANCE REPORT Candida (Candy) Davies was
appointed to the role of Chief
Financial Officer and joined the Board
of RWS on 3 October 2022. On the
same day Rod Day was appointed
Interim Deputy Chief Financial Officer,
and will continue as a member of the
Board until 31 December when, as
planned, he will leave the Group.
Chairman
Board of Directors
Andrew Brode
Ian El-Mokadem
Rod Day
Lara Boro
David Clayton
Frances Earl
Julie Southern
Gordon Stuart
Audit Committee
Gordon Stuart
Committee Chair
Julie Southern
David Clayton
Frances Earl
Remuneration Committee
Committee Chair
Frances Earl
Lara Boro
David Clayton
Gordon Stuart
73
GOVERNANCE REPORT RWS — Annual Report 2022 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 – colleagues,
shareholders, clients, suppliers and our community.
BUSINESS ETHICS
We take a zero tolerance approach to bribery, corruption, and other
financial crime.
TAX TRANSPARENCY
RWS is committed to being a responsible corporate citizen within each
jurisdiction in which it operates and does not use 'tax haven' countries or
other tax avoidance arrangements as part of its tax planning.
RWS is straightforward, transparent and co-operative 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 7,500 colleagues across 33 countries and
72 offices globally, RWS also makes significant tax payments in respect of
payroll taxes, value-added taxes and business/premises taxes.
The RWS tax strategy is available to read on our website www.rws.com.
THE BOARD
The Board is committed to providing an environment and opportunities
that encourage and reinforce the corporate culture of the Group. It
is committed to extending the values that it promotes to include all
stakeholder groups. The Board recognises the importance of, and is
committed to, ensuring that effective corporate governance procedures
are in place that are appropriate for a public company of RWS’s size and
complexity.
The Board is committed to providing specific training to Directors, be it
internally-sourced or via external advisers, to ensure their skillset remains
relevant for the Group’s requirements.
74
RWS — Annual Report 2022 GOVERNANCE REPORT members of the Executive Team for further assessment
via the established risk management framework. Due to
his prior relevant experience, Desmond Glass also served
as Company Secretary and was 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. In April 2022, Desmond
stepped down and Rod Day took on the role of CFO on
an interim basis and Christopher Lewey was appointed as
Acting Company Secretary. On 3 October 2022, Candida
(Candy) Davies was appointed as Chief Financial Officer
and Jane Hyde became our General Counsel and Company
Secretary.
BOARD COMMITMENTS
The Board held ten 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 in order 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.
During the reporting period, the Board comprised the
CEO and CFO as Executive Directors, the Chairman and
four Non-Executive Directors until 27 July 2022 when
Julie Southern was appointed, bringing the number of
Non-Executive Directors to five. The Executive Directors
have direct responsibility for business operations,
whilst the independent Non-Executive Directors have a
responsibility to bring independent, objective judgement
to bear on Board decisions. The CFO, Desmond Glass,
stepped down in April 2022 and was replaced on an
interim basis by Rod Day. Candida (Candy) Davies was
appointed as Chief Financial Officer with effect from 3
October 2022.
The Board considers that all 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 70 to 72.
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 66.
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.
During FY22 Desmond Glass was CFO until April 2022,
when he stepped down and was replaced on an interim
basis by Rod Day. The CFO 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
75
GOVERNANCE REPORT RWS — Annual Report 2022 Corporate Governance Report (continued)
KEY BOARD ACTIONS DURING
THE YEAR
APPOINTMENT AND RE-ELECTION OF
DIRECTORS
• Review and approval of the acquisition of Liones
Holdings B.V., whose flagship product, Fonto, is the
leading cloud native, data-driven authoring solution
for mission-critical documents.
• Approval of the appointment of the new Non-
Executive Director, Julie Southern
• Review and approval of the proposed budget and
business plan for FY23
• Ensuring that ESG initiatives are woven into divisional
and group management policies
• Driving synergies from SDL acquisition, including real
estate rationalisation
• Review and approval of the RWS Growth Model as
announced on our Capital Markets Day in March
2022 and associated RWS values
• Review of Group-wide 'voice of the customer'
marketing programme
• Review of continued compliance with the QCA
Corporate Governance Code
• Conduct bi-annual review and approval of Group risk
register by the Board
• Undertook a number of divisional and functional
reviews
• Review of succession planning
•
•
Interview and appointment of an interim CFO
Interview and appointment of a new CFO, Candida
Davies and a new General Counsel and Company
Secretary, Jane Hyde.
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 commissioned
an independent appraisal of the Board’s capabilities,
to confirm that the Board is capable and effective in
undertaking its responsibilities and duties. The Board
has committed to continue to seek independent
reviews to ensure its ongoing effectiveness.
The 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 Non-Executive Directors,
shareholders, other professional advisers to the Group,
and the Executive Team.
76
The Company’s Annual General Meeting (AGM) will be held
on 22 February 2023.
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: regular 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.
Board Meetings
Eligible to attend
Attended
Andrew Brode
Ian El-Mokadem
Desmond Glass
Rod Day
David Clayton
Frances Earl
Gordon Stuart
Julie Southern
Lara Boro
10
10
5
7
10
10
10
2
10
10
10
5
7
10
10
10
2
10
RWS — Annual Report 2022 GOVERNANCE REPORT 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
Principle
Compliance
COLLEAGUES
1
Establish a strategy
and business model
which promote
long-term value for
shareholders
>
>
>
The Group strategy is set out on pages 12 to 15 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 FY22, the Board and Executive Team held several meetings specifically focusing on the Group’s
strategic plan and five-year plan for creating value for the Group. Any significant business decision is
taken with reference to the five-year plan.
> 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 and content technology, intellectual property translation and filing
(IP services) 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 Strategy and Growth on pages 12 to 15.
2 Seek to understand
and meet
shareholders’ needs
and expectations
>
>
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 93 of the Directors’ Report for our statement on Fostering good
relationships with our shareholders and other stakeholders.
In March 2022, we held a Capital Markets Day for the major investors to enable them to learn
more about our strategy and plans for accelerating growth.
The Board has identified the main stakeholders in the business as its shareholders,
colleagues, clients, suppliers and the communities 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 25-26 and 60-65 of the Strategic Report and pages 66 to 69 of the Corporate
Governance Report.
3
Take into account
wider stakeholder
and social
responsibilities
and their
implications
for long-term
success
77
GOVERNANCE REPORT RWS — Annual Report 2022 Corporate Governance Report (continued)
Deliver
Growth
Principle
Compliance
Colleagues
>
>
Regular online meetings take place to share strategy, keep colleagues updated and seek
feedback.
The Group conducts an annual engagement survey with an overall engagement score of 69% in
the FY22 survey (the basis of this year's survey was changed from the FY21 survey, so no direct
comparison is possible) (see page 22).
> We have held consultations with thousands of our colleagues to find those common traits that
are most closely associated with doing a great job for our clients. The result is a set of values
that will bring us together to achieve our shared goals in a way we can be proud of. These
values are “We partner, we pioneer, we progress and we deliver.” Our new values give guidance
to everyone at RWS as to the behaviours that underpin our success.
> We consider the health, safety and well-being of our colleagues in the global pandemics and in
countries experiencing war.
>
The Board has established active Employee Resource Groups to discuss how we can foster
culture, diversity and inclusion and environmental impacts in the work place.
Clients
>
Building long-term client relationships and a client-centric culture starts with an accurate and
consistent understanding of our clients. A Group-wide 'voice of the customer' NPS programme
ensures we effectively turn client feedback into key driver analysis, aligned to our values to
improve client experience and accelerate growth through the client lifecycle and buyer journey.
We deliver this through:
>
>
Reliable metrics – consistent approach to getting feedback, both relational (NPS) and
transactional (CSAT).
Insight – client journey performance, topics driving NPS and key actions to close the loop
on client issues.
> Operational infrastructure – Best-in-class experience management suite (Qualtrics) used to
run surveys and provide real-time trends and insight.
>
>
Drive business growth - Trigger actions based on negative feedback. A formal process of
closed loop actions in addition to acknowledging promoters.
Executive oversight workgroup. Quarterly review meeting on issue resolutions, action
planning for wider macro topics.
Suppliers
> We believe it is important to have two-way communication with our suppliers. We strive to
foster better relationships with our suppliers, keeping them updated on our requirements, as
well as assisting with efficiencies, quality, insight, costs and reliability.
Community
>
The Group supports local organisations through its community initiatives and donations.
Our RWS Foundation’s Ukraine Appeal raised £34,436 from colleague donations and donated
an additional £15,000 to the International Committee of the Red Cross. The RWS Foundation
also made further donations of £10,000 each to the UNHCR, the UN’s Refugee Agency, and to
UNICEF, the UN’s Children’s Fund. The RWS Foundation seeks to involve the colleagues in the
various countries in which RWS operates in charitable organisations and causes.
> We also promote foreign language learning actively through school and university partnership
programmes, including RWS Campus (our global university programme) and the RWS
Scholarship Programme with the University of Manchester.
4
Embed effective
risk management,
considering both
opportunities and
threats, throughout
the organisation
>
>
RWS considers a risk management framework to be 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.
>
See Principal Risks and Uncertainties on pages 44 to 47.
78
RWS — Annual Report 2022 GOVERNANCE REPORT Deliver
Growth
Principle
Compliance
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
5 Maintain the
Board as a
well-functioning,
balanced team led
by the Chairman
>
As at 30 September 2022, the Board comprises the Chairman, Andrew Brode, alongside two
Executive Directors, Ian El-Mokadem and Rod Day, and five Non-Executive Directors, who are
Lara Boro, David Clayton, Frances Earl, Julie Southern and Gordon Stuart. 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 70 to 73, and 74 to 76 of the Corporate Governance Report.
6
7
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 skill sets current in a variety of ways. Their skills and
expertise are reviewed on an annual basis.
See Board of Directors pages 70 to 73 and 74 to 76 of the Corporate Governance Report.
Performance is reviewed annually and objectives set for the CEO and CFO.
During the review, initiatives and improvements are measured against those of the previous
review. New and updated actions are agreed.
An individual evaluation was undertaken which took the form of a questionnaire 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 of Board effectiveness was undertaken during 2022. Input was
received from all Directors and performance benchmarked against various criteria. The findings
were subsequently discussed collectively. The review found that the Board is well run and that
a great deal had been achieved during the previous 12 months. The review also provided an
opportunity for the Board to consider how to continue to evolve to ensure it remains effective as
the business progresses.
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.
8 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
colleagues, 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.
>
>
>
>
>
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 74 to 76 of the Corporate Governance Report.
9 Maintain
governance
structures and
processes that
are fit for purpose
and support good
decision making by
the Board
BUILD TRUST
10
Communicate
how the Company
is governed and
is performing
by maintaining
a dialogue with
shareholders and
other relevant
stakeholders
> We pride ourselves on having open communication with a range of stakeholders.
>
> Other communication includes investor roadshows and conferences, meetings with our brokers,
Communications with shareholders are explained in Principle 2 above.
prospective investors, colleague briefings and one-on-one meetings with clients and suppliers
and the Annual Report.
The work of the sub-committees is described in the Governance section of the Annual Report on
pages 80 to 91.
The website includes historical announcements, copies of the Annual Report and copies of
presentations made at half-year and full-year presentations.
>
>
79
GOVERNANCE REPORT RWS — Annual Report 2022 Audit Committee Report
Dear Shareholder
The Audit Committee continues to support the business in achieving its business
and strategic objectives, see pages 12 to 15 of this Annual Report and Accounts.
During FY22, the Committee has supported the Board on a number of significant
governance matters relating to financial reporting, internal control and risk
management.
The Committee monitors the Group’s risk exposures including those in relation to
changes in the external regulatory, economic and political environment. Further
information on risk can be found on pages 44 to 47.
MEMBERSHIP AND ATTENDANCE
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.
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).
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, Julie Southern
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. Julia Southern joined the Committee upon
becoming a Non-Executive Director in July 2022, further
strengthening the Committee.
The Company Secretary is secretary to the Committee.
The Board evaluates the membership of the Committee
on an annual basis. During the year, the Committee has
met five times and members attended all meetings that
they were eligible to attend. This is an increase from three
meetings held in 2021.
Only the members of the Committee have the right to
attend Committee meetings, however the CFO, 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.
Gordon Stuart
AUDIT COMMITTEE CHAIR
80
RWS — Annual Report 2022
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.
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 but does carry
our internal audits through a third party. 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 2022, the Committee met five times and full details
of matters discussed are covered later in this report.
This includes an annual calendar of standing items,
including 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:
• Principal risks and uncertainties and the effectiveness of
the risk management process.
• Accounting judgements and estimates and
developments in financial reporting.
• Dividend planning.
Committee activity in the year ended 30 September 2022
7 December
2021
29 March
2022
27 May
2022
2 August
2022
29 September
2022
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
Internal audit proposals
Other matters
Affordability of proposed dividends
x
-
-
x
x
-
-
-
-
x
-
x
-
x
-
-
-
x
-
-
-
-
x
x
-
-
x
-
-
-
-
-
-
-
-
-
-
x
-
x
GOVERNANCE REPORT RWS — Annual Report 2022
81
Audit Committee Report (continued)
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.
Acquisition accounting for Liones
Holdings B.V. acquisition, including the
valuation of goodwill and intangible assets
The Group acquired the entire share capital of Liones
Holdings B.V. and its subsidiaries on 22 March 2022 for an
initial consideration of €17.7m with an additional deferred
consideration of €5m payable in two equal instalments on
the first and second anniversaries of the transaction.
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 purchase
price allocations and concurred with management’s
recommendation.
Capitalised software development
The Audit Committee has reviewed reports on the
capitalisation policies and procedures for internally
developed software. The papers submitted considered
detail of individual products, features and enhancements
to products, together with the incremental economic
value-add to support the addition to intangible assets.
Specifically, the Committee has considered whether the
capitalisation policy enables the Group to meet the criteria
set out under IAS38 and is sufficient to enable identification
of costs to be capitalised and costs to be expensed, such as
support and maintenance expenditure.
Carrying value of goodwill
The Group considers the carrying value of goodwill as a
minimum on a half yearly basis, and also 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 management’s paper covered
whether service revenue is recognised at a point in time
or over time. It was concluded that point in time revenue
recognition be reserved for the completion of filings
revenues in IP Services and the recognition of perpetual/
term licence revenue in Technology and for other services
provided, the revenue is recognised over time.
The Committee discussed and challenged management’s
papers, satisfying itself that a consistent approach had
been applied to determine revenue recognised in 2022.
The Audit Committee has reviewed the disclosures
provided in the FY22 financial statements in relation to
revenue recognition policy and to the significant estimates
and judgements policy on note 2.
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
82
RWS — Annual Report 2022 GOVERNANCE REPORT been applied to the identification and recognition of
provisions in respect of uncertain tax positions recognised
in 2022.
The Committee has reviewed the disclosures provided in
relation to taxation in note 9 and the significant estimates
and judgements policy 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. This
includes the Directors’ review of the current liquidity of
the Group, the profitability and liquidity in the Group
budget for FY23 and the five-year plan and the impact on
the Group’s banking covenants.
After reviewing the Group’s performance in 2022, 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 18 months from the date of this 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.
In the prior year, Ernst & Young LLP was appointed as
the Group’s auditor following a competitive audit tender
process.
The Committee has considered Ernst & Young LLP'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.
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 the financial year ended 30
September 2022, the external auditor has provided £27k
of non-audit work for other assurance related services.
Fees paid to Ernst & Young LLP are set out in note 5 to the
financial statements.
Gordon Stuart
AUDIT COMMITTEE CHAIR
14 December 2022
83
GOVERNANCE REPORT RWS — Annual Report 2022 Directors’ Remuneration
Report
ANNUAL STATEMENT
Dear Shareholder
I am pleased to introduce the Directors’ Remuneration
Report for FY22. This report is divided into three sections:
• This Annual Statement, which summarises the work of
the Committee, remuneration outcomes in FY22, and
how the Remuneration Policy will be operated for FY23.
• The Remuneration Policy Report, which summarises
the Company’s Remuneration Policy, which remains
unchanged.
• The Annual Report on Remuneration, which discloses
how the Remuneration Policy was implemented in the
year ended 30 September 2022, and how the Policy will
operate for the year ending 30 September 2023.
Committee Members & Attendance
Director
Frances Earl
Lara Boro
David Clayton
Gordon Stuart
Role
Chair
Member
Member
Member
Attendance
3 out of 3
3 out of 3
3 out of 3
3 out of 3
In addition, the Chairman, Chairman Designate, Chief Executive Officer, Chief Financial
Officer, Chief People Officer and FIT Remuneration Consultants LLP (the Committee’s
independent advisor) may attend Committee meetings by invitation.
84
Frances Earl
REMUNERATION COMMITTEE CHAIR
RWS — Annual Report 2022 GOVERNANCE REPORT COMMITTEE RESPONSIBILITIES
PERFORMANCE AND REWARD FOR FY22
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 FY22, it met three times.
ACTIVITIES DURING THE YEAR:
• Reviewed the FY21 Directors’ Remuneration Report
prior to its approval by the Board.
• Reviewed performance against the FY21 annual bonus
plan targets and resulting awards and agreed the
metrics and targets for the FY22 bonus plan.
• Reviewed and set targets for the FY22 LTIP awards and
for legacy ESOP awards.
• Reviewed and approved updated terms of reference for
the Remuneration Committee.
• Agreed the remuneration arrangements in respect of:
(i) Des Glass stepping down from the Board as CFO
in April 2022; (ii) Rod Day’s appointment as Deputy
Interim CFO from 10 January 2022 and subsequently
Interim CFO effective 8 April 2022; and (iii) Candy
Davies, who joined as CFO from 3 October 2022.
Further details are set out in the Annual Report
Remuneration section of this report.
Following a review of performance in respect of the
FY22 annual bonus, the Committee determined that
the Group’s profit and revenue for the year ended 30
September 2022 were below threshold targets. After
assessing performance against the personal and strategic
targets, this resulted in a bonus of 23% of the maximum
for Ian El-Mokadem and a bonus of 17% of the maximum
for Des Glass (albeit pro-rated to his April leaving date) in
line with his legacy contractual commitments. Rod Day
was not eligible for an annual bonus as he is employed on
an interim fixed-term contract.
In respect of the vesting of outstanding share awards,
two thirds of the ESOP awards granted in May 2019 vested
in May 2022, and two thirds of the ESOP awards granted
in January 2020 will vest in January 2023. Details of the
ESOP awards held by Des Glass (Ian El-Mokadem does not
hold any ESOP awards) are set out in the Annual Report
on Remuneration. No share awards were exercised by
Executive Directors and therefore no gains were made
on the exercise of share awards in the year ended 30
September 2022.
IMPLEMENTING THE REMUNERATION
POLICY FOR FY23
In respect of the implementation of the Remuneration
Policy for FY23:
• Reviewed the annual fees for the Chairman.
• The CEO’s base salary was increased by 3.5% from 1
ADVISORS TO THE COMMITTEE
FIT Remuneration Consultants LLP (“FIT”) was appointed
by the Remuneration Committee during FY21 and
continued to provide the Remuneration Committee
with independent advice as and when required in
respect of remuneration quantum and structure
and developments in governance and best practice
more generally during FY22. 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.
October 2022 to £621,000. This was lower than the 3.7%
increase awarded to the general UK workforce. The
new CFO was appointed on a salary of £410,000 from 1
October 2022 which is broadly aligned to the salary of
the previous CFO had he remained in post and received
an increase from 1 October 2022. No changes were
made to the Interim CFO’s remuneration arrangements;
• No changes were made to benefits or the workforce
aligned pension provision;
• Annual bonus will continue to be capped at 150% of base
salary for the CEO and 125% of salary for the CFO with
the majority based on sliding scale financial targets and
a minority 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 FY23
to the CEO and CFO over shares up to 200% and
175% of salary respectively. Performance targets will
continue to be based on financial metrics (e.g. EPS
growth and relative Total Shareholder Return). Details
of the performance targets set by the Committee will
be published in the RNS immediately after grant. While
the Board has made significant progress on RWS’s ESG
proposition, the Committee will keep the introduction
of ESG targets under review in respect of future LTIP
awards.
85
GOVERNANCE REPORT RWS — Annual Report 2022
Directors’ Remuneration Report (continued)
• Shareholding guidelines will continue to operate at 200%
of salary for the CEO and 175% of salary for the CFO.
• The structure and quantum of non-executive director
fees were reviewed by the Board excluding the non-
executive directors in light of time commitments and
best and market practice. Going forward, the non-
executive director base fee will increase to £55,000
with an additional £10,000 payable for the SID role
and an additional £10,000 payable for chairing a
committee. No change was made to Andrew Brode’s
Chairman fee (£263,000), and Julie Southern’s fee
as Non-Executive Director was set at £150,000 from
appointment, reflecting her experience and expected
time commitment in the role.
As a Committee, we recognise the need to foster strong
relations with our shareholders and encourage open
dialogue. As such, the Chair of the Remuneration
Committee is available for discourse with institutional
investors concerning the Company’s approach to
remuneration. We look forward to receiving your support
at our forthcoming AGM.
Frances Earl
REMUNERATION COMMITTEE CHAIR
14 December 2022
REMUNERATION POLICY REPORT
This section sets out the Directors’
Remuneration Policy (“Policy”) which
remains unchanged from last year.
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.
• 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.
86
RWS — Annual Report 2022 GOVERNANCE REPORT 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 a 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 and 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. Bonuses 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 proceeds of
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 and
relevant experience. Fees may include a
basic fee and additional fees for further
responsibilities. Fees are paid in cash.
n/a
n/a
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 contract of the chairman continues unless and until terminated by either party giving at least six months’
notice while the service contract of the CEO and CFO continues unless and until terminated by either the individual
or the Company giving at least 12 months' notice. Whilst legacy RWS service contracts entitled leavers to a pro-rated
annual bonus award, the CEO and CFO’s service contracts contain best practice, market aligned, good leaver provisions
in respect of annual bonus and LTIP awards. The date of the Chairman’s service contract is 30 October 2003, and the
service contract of Ian El-Mokadem and Candy Davies are dated 28 June 2021 and 4 July 2022 respectively.
87
GOVERNANCE REPORT RWS — Annual Report 2022 Directors’ Remuneration Report (continued)
ANNUAL REPORT ON REMUNERATION
IMPLEMENTATION OF THE POLICY FOR FY22
During the year, the Directors received the following remuneration and pension contributions:
Director
Andrew Brode
Ian El-Mokadem
Rod Day1
Non-Executive Directors
Lara Boro
Frances Earl
Gordon Stuart
David Clayton
Julie Southern2
Former Director
Des Glass3
Total
Salary
or Fees
£000
263
600
320
50
50
50
50
27
202
1,612
Taxable
Benefits
£000
Pension
Contributions
£000
2
-
-
-
-
-
-
-
-
2
-
30
-
-
-
-
-
-
11
41
Annual
Bonus
£000
-
206
-
-
-
-
-
-
FY22
Total
£000
265
836
320
50
50
50
50
27
FY21
Total
£000
265
129
-
50
45
45
45
-
42
248
255
1,903
646
1,225
1 From 10 January 2022 (see Board Changes section) 2 From 27 July 2022 (see Board Changes section) 3 To 8 April 2022 (see Board Changes section)
ANNUAL BONUS FOR FY22
Details of the annual bonus awards to Executive Directors for the year ended 30 September 2022 are as follows:
Financial Targets (75% of bonus)
Adjusted profit before tax (40%)
Revenue (35%)*
Threshold (start to earn)
On-Target
Maximum
Actual (for bonus purposes)
% of max payable
% of max payable
£133.29m
£140.30m
£154.33m
£729.22m
£767.60m
£805.98m
Below Threshold
Below Threshold
0%
Total Financial
0%
0%
*Adjusted profit before tax and revenue targets for bonus payments are stated at budgeted exchange rates. Although reported Adjusted profit before tax and
revenues are above the bonus threshold level, when restated at budgeted exchange rates, they are below the threshold and accordingly no bonus is payable in
respect of this element of the remuneration
88
RWS — Annual Report 2022 GOVERNANCE REPORT Personal
Objectives
(25% of bonus) Objectives
Committee
Assessment
Committee
Review
Ian led the development of the new
Group strategy, purpose and values and a
successful Capital Market’s Day ("CMD") in
March 2022
He led the strengthening of the Group
Executive Team and aligned the
organisation structure to the new strategy
He strengthened the systems and
processes to drive the organic growth
strategy for the Group moving forward
The Group’s M&A priorities and screening
criteria were clarified as part of CMD and
Fonto acquisition
A Group-wide succession plan was
completed
A new Code of Conduct was implemented,
and a Carbon Reduction Plan and
Sustainable Procurement Policy defined
Ian
El-Mokadem
Lead the development and
implementation of the new Group
strategy, purpose and values.
Achieved
Align organisation structure to strategy
Achieved
Drive increased focus on organic growth
Achieved
Partially
Achieved
Achieved
Achieved
Lead the Group’s M&A strategy
Complete a Group-wide succession
planning exercise
Lead the effective development and
implementation of the Group’s ESG
strategy
Performance of all of our leaders is
assessed in terms of both the actual
results delivered and how the outcomes
are delivered in line with our values and
leadership behaviours
Make an active contribution to the
development and implementation of the
new Group strategy, purpose and values
Des Glass
Achieved
Des actively contributed to and supported
the delivery of the CMD
Improve the quality and timeliness of
performance reporting
Partially
Achieved
He made progress on improvements to the
quality and timeliness of Board reporting,
further work to be undertaken post
strategy launch
Drive the Group’s ERP initiative
Partially
Achieved
He supported the definition and planning
of the business case for the new ERP
project
Strengthening the Group’s finance, risk
and assurance capabilities
Partially
Achieved
Partially
Achieved
Achieved
Recommend a new Delegations of
Authority policy
Contribute to the effective development
and implementation of the Group’s ESG
strategy
Performance of all of our leaders is
assessed in terms of both the actual
results delivered and how the outcomes
are delivered in line with our values and
leadership behaviours
He made progress on the Group’s
finance, risk and assurance capabilities in
agreement with the Audit Committee
The Board agreed a revised DOA policy
A new Code of Conduct was implemented,
and a Carbon Reduction plan and
Sustainable Procurement policy defined.
% of Max
Payable
92% on the
basis that
five out of six
objectives
were fully
achieved and
one objective
was partially
achieved
67% on the
basis that
two out of
six objectives
were fully
achieved and
four objectives
were partially
achieved,
based on
leaving date
preventing
completion
of the full
objective
Based on the above, the annual bonus awards earned for the year ended 30 September 2022 were as follows:
Ian El-Mokadem
(150% of salary maximum)
Des Glass
(125% of salary maximum)
Financial
Personal
Total
0% of max
(0% of salary)
0% of max
(0% of salary)
92% of max
(34.5% of salary)
67% of max
(20.9% of salary)
£206,325 out of a max of £900,000
£42,225 out of a max of £252,058*
* Reduced for time pro-rating given Des Glass stepped down from the Board on 8 April 2022.
89
GOVERNANCE REPORT RWS — Annual Report 2022 Directors’ Remuneration Report (continued)
SHARE AWARDS GRANTED IN THE YEAR
The following LTIP awards were granted to the Executive Directors in January 2022:
Ian El-Mokadem
200% of salary
220,791
Basis of award
Number of shares under award
Des Glass did not receive a 2022 LTIP award given that he was serving notice at the time of grant. 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
50%
of awards
Adjusted EPS targets for the year ending 30 September 2024:
No vesting: 0% of this part of an award vests for 2024 Adjusted EPS of below 26.5 pence
Threshold vesting: 25% of this part of an award vests for 2024 Adjusted EPS of 26.5 pence, increasing pro-rata to
Maximum vesting: 100% of this part of an award vests for 2024 Adjusted EPS of 31 pence
Relative TSR commencing on the Grant Date and ending on 30 September 2024 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
BOARD CHANGES
Departure of Des Glass
As per the announcements on 29 December 2021 and
8 April 2022, Des Glass stepped down from the Board
as CFO in April 2022 following an orderly handover of
responsibilities. In respect of his departure, he:
• Received his normal salary, pension and benefits up
to the date of cessation. No payments were made in
respect of the remainder of his notice period.
• Received a pro-rated bonus of £42,225 for the year
ended 30 September 2022, in line with his legacy
contractual entitlements, which was payable at the
normal payment date.
• Retained 113,977 market value options under the 2019
ESOP award which vested in May 2022 given that the
normal vesting date was within his six-month notice
period. These awards are subject to a two year post
vesting holding period and will then be exercisable
during a 6 month exercise window (with an exercise
price of £6.01) after which point they will lapse. His 2020
ESOP, 2021 LTIP and SAYE awards lapsed at cessation.
• No other payments for loss of office were paid or are
payable.
Appointment of Candy Davies
As per the announcement on 5 July 2022, Candy Davies
was appointed CFO and joined the Board on 3 October
2022. Her remuneration package, which is consistent with
the Group’s recently reviewed Directors’ Remuneration
Policy, is as follows:
• Base salary: £410,000 p.a. This is c.3% higher than the
salary of the previous CFO (assuming they would have
received the 3.5% salary increased awarded to the CEO
from 1 October 2022).
• Pension: 5% of salary (workforce aligned).
• Maximum annual bonus: 125% of salary, with any bonus
award greater than 100% of salary normally deferred
into shares for three years.
• LTIP award: Up to 175% of salary p.a.
• Share ownership guidelines: 175% of salary.
No relocation or buyout awards were payable.
90
RWS — Annual Report 2022 GOVERNANCE REPORT Appointment of Rod Day
Appointment of Julie Southern
Rod Day was initially appointed as Deputy Interim CFO
on 10 January 2022, and Interim CFO on 8 April 2022, and
also became an interim member of the Board on this date.
He became Interim Deputy CFO on 3 October 2022, when
Candy Davies was appointed CFO. He was appointed on a
fixed-term contract for a maximum period of 12 months
to allow for the recruitment and integration of a new
permanent CFO and his compensation was based on a
market competitive day rate of £2,000 per day with no
eligibility for an annual bonus or LTIP award.
As per the announcement on 27 July 2022, Julie Southern
was appointed as a Non-Executive Director from this date.
The appointment forms part of the Group's succession
planning, with the intention that Julie takes up the role of
Non-Executive Chairman in October 2023, at which time
Andrew Brode will become a Non-Executive Director.
Her annual fee on commencement, which reflects her
experience and expected time commitment, was set at
£150,000. It is envisaged that her fee from appointment
as Chairman will be commensurate with the fee paid to
Andrew Brode.
DIRECTORS’ INTEREST IN SHARES
The interests of the Directors as at 30 September 2022
(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
Julie Southern
Ian El-Mokadem
Lara Boro
Gordon Stuart
David Clayton
Frances Earl
Rod Day
Ordinary shares of
1 penny
90,174,060
-
75,000
5,050
5,085
164,035
-
-
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
Date of
grant
1 Oct
2021
Granted
Lapsed
Exercised
30 Sept
2022
Exercise
Price
First date
normally
exercisable
Last date
normally
exercisable
Ian El-
Mokadem
LTIP 24.01.22
-
220,791
Des Glass
ESOP 13.05.19
113,977
ESOP 22.01.20
246,188
LTIP 22.01.21
121,662
-
-
-
-
-
246,188*
121,662*
-
-
-
-
220,791
1p
24.01.27
24.01.32
113,977
-
-
601p
615p
13.05.24
13.11.24
22.01.25
22.01.30
1p
22.01.26
22.01.31
* Awards lapsed on cessation in April 2022 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 2022 was 320 pence and the highest and lowest price in the
year ended 30 September 2022 was 654 and 320 pence respectively.
SHARE AWARDS VESTING/EXERCISED IN THE YEAR
No share awards vested during the year ended 30 September 2022 and no share awards were exercised - i.e., no gains
were made on the exercise of share awards in the year ended 30 September 2022.
Frances Earl
REMUNERATION COMMITTEE CHAIR
14 December 2022
91
GOVERNANCE REPORT RWS — Annual Report 2022 Directors' Report
INTRODUCTION
The Directors present their Annual Report together with the audited consolidated
financial statements for the year ended 30 September 2022.
Substantial shareholdings
As at 30 September 2022, the following were
substantial shareholders:
Substantial shareholding
% holding
RESEARCH AND DEVELOPMENT
RWS is constantly engaged in research and development
activities to improve the quality of the services offered to
customers and to optimise the operation of the Group.
See notes 5 and 13 for further details.
Andrew Brode
Liontrust Asset Management
Octopus Investments
RGM Capital
23.2
11.7
4.5
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 Company and
its subsidiaries are described in the Strategic Report on
pages 12 to 24.
BUSINESS PERFORMANCE AND RISKS
The review of the business, operations, principal risks and
outlook is dealt with in the Strategic Report on pages 12
to 23 and 44 to 47. The key performance indicators (page
24) 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 9.5 pence
per ordinary share (see note 10) to be paid on 24 February
2023 to shareholders on the register at 27 January 2023,
which, together with the interim dividend of 2.25 pence
paid in July 2022, results in a total dividend for the year of
11.75 pence (2021: 10.5 pence).
The final dividend will be reflected in the financial
statements for the year ending 30 September 2023.
The proposed total dividend per share is 1.4 times (2021:
1.0 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 2022, 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 2024.
As at 30 September 2022, the Group has net cash of
£25.2m comprising the Group’s US$220m revolving
credit facility (“RCF”) (£29.3m drawn at year end) and
lease liabilities of £46.7m, less cash and cash equivalents
of £101.2m. On 3 August 2022, the Group refinanced the
RCF in order to both increase the facility’s term and size.
The refinancing increased the RCF from US$120.0 million
to US$220 million and the term expiry from February
2024 to August 2026 with a one-year extension option.
The facility is provided by a consortium of banks, all of
whom participated in the modified facility, together with
2 new lenders. At year end the Group’s net leverage ratio
(as defined by the RCF agreement) is -0.11x of EBITDA,
while its interest coverage ratio (as defined by the RCF
agreement) is 64.2 of EBITDA, and are well within the
covenants permitted by the Group’s RCF agreement.
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 2024. 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 considering key uncertainties and sensitivities,
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 44 of the Strategic Report on the
Group’s profitability and financial position, the Directors
believe that the appropriate sensitivity in assessing the
92
RWS — Annual Report 2022 GOVERNANCE REPORT 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 2024.
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 2024 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 70 to 72.
Further information on Board composition, responsibilities,
commitments and re-election/election can be found on
pages 74 to 76 of the Corporate Governance Report.
The interests of the Directors in shares during the year are
set out on page 91 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 80 to 91.
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.
FOSTERING GOOD RELATIONSHIPS
Understanding what matters to our stakeholders is
achieved by building strong, constructive relationships
and engaging regularly. We value the diverse perspectives
that our broad range of stakeholders bring to our decision
making. We recognise that engagement with stakeholders
is a vital part in the execution of our long-term strategy.
Our shareholders, colleagues, 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.
93
GOVERNANCE REPORT RWS — Annual Report 2022 (b) up to an aggregate nominal amount of £194,683
(which represents approximately 5 per cent of the issued
ordinary share capital of the Company as at the Latest
Practicable Date; and
(c) in addition to the authority referred to in (b) above,
up to an aggregate nominal amount of £194,683
(which represents approximately 5 per cent of the
issued ordinary share capital of the Company as at the
Latest Practicable Date) for use only for the purposes
of financing or refinancing an acquisition or capital
investment of the kind contemplated by the Statement of
Principles on Disapplying Pre-Emption Rights published by
the Pre-Emption Group.
The Directors' authority will expire on the conclusion of
the 2023 Annual General Meeting of the Company, at
which a resolution will be proposed for its renewal, or, if
earlier, 22 May 2023 and permits the Board to allot and
issue shares (or sell shares from treasury) after expiry of
the disapplication if it has agreed to do so beforehand.
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.
Ernst & Young LLP has expressed its willingness to
continue in office and a resolution to reappoint them will
be proposed at the 22 February 2023 AGM.
On behalf of the Board
Ian El-Mokadem
CHIEF EXECUTIVE OFFICER
14 December 2022
Directors’ Report (continued)
POLITICAL DONATIONS
The Company made no political donations during the year
ended 30 September 2022.
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. At the 22 February
2022 Annual General Meeting, shareholders approved
the issue of shares and grant rights up to an aggregate
nominal value of £1,297,886 (representing, in accordance
with the guidelines published by the Investment
Association, approximately one third of the nominal value
of the ordinary share capital of the Company in issue).
The Directors’ authority expires on the earlier of the
conclusion of the 2023 Annual General Meeting of the
Company, at which a resolution will be proposed for its
renewal, or, if earlier, 22 May 2023.
The Directors have no immediate plans to make use of this
authority, except in respect of the issue of shares under
the employee share option scheme. As at the date of this
report, the Company does not hold any ordinary shares in
the capital of the Company in treasury.
STATUTORY PRE-EMPTION RIGHTS
Under section 561 of the Companies Act 2006, when new
shares are allotted, they must first be offered to existing
shareholders pro rata to their holdings. The Board
considers it desirable to have flexibility, as permitted by
corporate governance guidelines, to respond to market
developments and to enable allotments to take place to
finance business opportunities without making a pre-
emptive offer to existing Shareholders.
At the 22 February 2022 Annual General Meeting,
shareholders approved the disapplication of these pre-
emption rights by special resolution. These resolutions
enabled the Directors to allot equity securities for cash
without having to comply with statutory pre-emption
rights, with the power being limited to allotments:
(a) allot shares of the Company in connection with a rights
issue, or other pre-emptive offer to ordinary shareholders
and to holders of other equity securities (if required by the
rights of those securities or the Directors otherwise consider
necessary), but (in accordance with normal practice) subject
to such exclusions or other arrangements; and
94
RWS — Annual Report 2022 GOVERNANCE REPORT
Statement of Directors’
responsibilities in respect of
the financial statements
The Directors are responsible for preparing
the annual report and the financial
statements in accordance with applicable
United Kingdom law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have elected to prepare the Group financial
statements in accordance with UK-adopted international
accounting standards (“IFRSs”), and the Parent Company
financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law), including Financial
Reporting Standard 101 Reduced Disclosure Framework
(“FRS 101”). Under company law the Directors must not
approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Group and the 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 in accordance with
IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors and then apply them consistently.
• Make judgements and accounting estimates that are
reasonable and prudent.
• Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information.
• Provide additional disclosures when compliance with
the specific requirements in IFRSs and in respect of
the Parent Company financial statements, FRS 101 is
insufficient to enable users to understand the impact of
particular transactions, other events and conditions on
the Group and Parent Company financial position and
financial performance.
•
•
In respect of the Group financial statements, state
whether UK-adopted international accounting standards
have been followed, subject to any material departures
disclosed and explained in the financial statements.
In respect of the Parent Company financial statements,
state whether applicable UK Accounting Standards,
including FRS 101, have been followed, subject to any
material departures disclosed and explained in the
financial statements.
• Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Parent
Company and/ or the Group will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Parent Company’s and Group’s transactions and
disclose with reasonable accuracy at any time the financial
position of the Parent Company and the Group and enable
them to ensure that the Parent Company and the Group
financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets
of the Group and Parent Company and hence for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.
Under applicable law and regulations, the Directors
are also responsible for preparing a strategic report,
Directors’ report, Directors’ remuneration report and
corporate governance statement that each comply with
the relevant law and regulations.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm, to the best of their knowledge:
• That the consolidated financial statements, prepared
in accordance with UK-adopted international
accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit of the
Parent Company and undertakings included in the
consolidation taken as a whole;
• That the annual report, including the strategic
report, includes a fair review of the development
and performance of the business and the position of
the Parent Company and undertakings included in
the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that
they face; and
• That they consider the annual report, taken as a whole,
is fair, balanced and understandable and provides the
information necessary for shareholders to assess the
Parent Company’s position, performance, business
model and strategy.
On behalf of the Board
Ian El-Mokadem
CHIEF EXECUTIVE OFFICER
14 December 2022
GOVERNANCE REPORT RWS — Annual Report 2022
95
Independent Auditor's 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 2022 and of the
Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted international accounting
standards;
• 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.
We have audited the financial statements of RWS Holdings plc (the ‘parent company’) and its subsidiaries (the ‘Group’)
for the year ended 30 September 2022 which comprise:
Group
Parent company
Consolidated statement of financial position as at 30
September 2022
Balance sheet as at 30 September 2022
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 UK adopted international accounting standards. 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 and parent company
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.
96
RWS — Annual Report 2022 INDEPENDENT AUDITOR’S REPORT 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 2024, 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 forecasts
include an assessment of liquidity 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 assessing 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;
• 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 (2022: £138.5 million,
2021: £118.5 million) and the Group generates positive
operating cashflows (2022: £127.5 million, 2021: £84.9
million). The Group has access to a committed revolving
credit facility of $220 million, which doesn’t expire until
2026. 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 2024.
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.
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 74% of profit before tax adjusted for exceptional items, acquisition costs and
amortisation of acquired intangibles, 87% of Revenue and 96% of Total assets.
Key audit matters
• Revenue recognition
•
Impairment of goodwill and acquired intangibles
• Capitalisation and impairment of development costs
Materiality
• Overall Group materiality of £6.0m which represents 4.5% of Profit before tax adjusted for
exceptional items, acquisition costs and amortisation of acquired intangibles.
97
INDEPENDENT AUDITOR’S REPORT RWS — Annual Report 2022 Independent Auditor's Report to the Members of
RWS Holdings plc (continued)
AN OVERVIEW OF THE SCOPE OF THE PARENT COMPANY AND GROUP
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, of the reporting components of
the Group, 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 72% (2021: 66%) of the
Group’s profit before tax adjusted for exceptional items,
acquisition costs and amortisation of acquired intangibles,
87% (2021: 84%) of the Group’s Revenue and 96% (2021:
87%) of the Group’s Total assets. For the current year,
the full scope components contributed 65% (2021: 53%)
of the Group’s profit before tax adjusted for exceptional
items, acquisition costs and amortisation of acquired
intangibles, 76% (2021: 74%) of the Group’s Revenue
and 94% (2021: 82%) of the Group’s Total assets. The
specific scope components contributed 7% (2021: 13%)
of the Group’s Profit before tax adjusted for exceptional
items, acquisition costs and amortisation of acquired
intangibles, 11% (2021: 10%) of the Group’s Revenue and
2% (2021: 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
28% of the Group’s Profit before tax adjusted for
exceptional items, acquisition costs and amortisation
of acquired intangibles, none are individually greater
than 5% of the Group’s Profit before tax adjusted for
98
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 to respond to any potential risks of
material misstatement to the Group financial statements.
The Group audit team has also performed centralised
testing over cash and cash equivalent 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
65% Full scope components
9% Specific scope
components
26% Other procedures
Revenue
74% Full scope components
12% Specific scope
components
14% Other procedures
Total assets
80% Full scope components
5% Specific scope
components
15% Other procedures
RWS — Annual Report 2022 INDEPENDENT AUDITOR’S REPORT26% 65% 9% 14% 74% 12% 15% 80% 5%
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 7 of these directly
by the primary audit team. All specific scope components
were audited by the primary team.
During the current year’s audit cycle, a visit was
undertaken by the primary audit team to the component
CLIMATE CHANGE
There has been increasing interest from stakeholders
as to how climate change will impact RWS Holdings plc.
The Group has determined that the most significant
future impacts from climate change on their operations
will be from business interruption driven by extreme
climate. These are explained on page 46 in the
principal risks and uncertainties, which form part of the
“Other information,” rather than the audited financial
statements. Our procedures on these disclosures
therefore consisted solely of considering whether they
are materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit or
otherwise appear to be materially misstated.
As explained in Note 1, the impact of climate change is
not considered to have a material impact at this time.
Governmental and societal responses to climate change
risks are still developing, and are interdependent upon
each other, and consequently financial statements cannot
capture all possible future outcomes as these are not yet
known. The degree of certainty of these changes may
also mean that they cannot be taken into account when
team in the Czech Republic. This involved a combination of
site visit, review of the component team’s audit work and
meeting with business unit management. The primary
team interacted regularly with the component teams
where appropriate during various stages of the audit,
reviewed relevant 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.
determining asset and liability valuations and the timing of
future cash flows under the requirements of UK adopted
International Accounting Standards (‘IFRS’).
Our audit effort in considering climate change was
focused on evaluating management’s assessment of
the impact of climate risk, physical and transition, and
ensuring that the effects of climate risks disclosed
on page 52 do not have a material impact on the
financial statements. We also challenged the Directors’
considerations of climate change in their assessment of
going concern and viability and associated disclosures.
Whilst the Group have stated their commitment to
the aspirations of the Paris Agreement to achieve net
zero emissions by 2050, the Group is currently unable
to determine the full future economic impact on their
business model, operational plans and customers to
achieve this and therefore as set out above the potential
impacts are not fully incorporated in these financial
statements.
KEY AUDIT MATTERS
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.
99
INDEPENDENT AUDITOR’S REPORT RWS — Annual Report 2022
Independent Auditor's Report to the Members of
RWS Holdings plc (continued)
Revenue recognition (2022: £749.2m, 2021: £694.5m)
Refer to the Audit Committee Report (page 82) and Note 3 of the Consolidated Financial Statements (page 116)
In “Our response to the risk” and “Key Observations” sections below, we have disaggregated revenue into two streams, being
Technology revenue (relating to revenue recognised within the Language and Content Technology segment) and Services
revenue (being revenue recognised within all other segments). Refer to Note 3 for further details.
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 multi-element arrangements. 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).
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.
Based on the procedures we
performed we concluded that the
accounting policy and associated
disclosures are in line with IFRS 15.
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 and completion
documentation where applicable;
•
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
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.
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 technology 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;
• ensuring appropriate allocation of the fair value and recognition of revenue for
other deliverables included within the contract based on relative standalone selling
price.
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.
100
RWS — Annual Report 2022 INDEPENDENT AUDITOR’S REPORT Impairment of goodwill and acquired intangibles (2022: £692.6m goodwill and £366.3m acquired intangibles,
2021: £615.8m goodwill and £351.6m acquired intangibles)
Refer to the Audit Committee Report (page 82); and Notes 12 and 13 of the Consolidated Financial Statements (page 127)
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 2022.
Our response to the risk
Our audit procedures comprised the following:
We understood the annual goodwill and acquired intangible 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. This included reviewing management assessment of the integration
of CGU’s resulting in the reduction in the number of CGU’s identified against which
goodwill is allocated and monitored, from 6 to 4.
We performed the following procedures for both the current and previous CGU
allocation:
We engaged EY specialists to determine if the discount rates and long-term
growth 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 (including
revenue growth rates) 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.
Our procedures covered 100% of the Goodwill and Acquired Intangibles risk
amount.
101
INDEPENDENT AUDITOR’S REPORT RWS — Annual Report 2022 Independent Auditor's Report to the Members of
RWS Holdings plc (continued)
Capitalisation and impairment of development costs (2022: £22.6m, 2021: £19.7m)
Refer to the Note 13 of the Consolidated Financial Statements (page 129).
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 2022.
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 specifically challenged this with respect to capitalisation of
costs incurred on products already in use, in order to validate managements
judgements around whether the costs were likely to give rise to additional future
economic benefit.
We performed analytical procedures, including comparison of capitalization and
amortization to prior year and comparison of budgeted spend versus actuals.
Further to this, we challenged management on the useful economic life of assets
capitalised, including validating that additions are amortised over the remaining
useful life of the underlying asset to which they relate.
.We audited capitalised costs to supporting documentation including 3rd party
invoices and cash payments made where relevant. We also performed specific HR
testing to validate salary information to supporting documnetation..
We audited the Group’s disclosures in relation to capitalised development costs
made, where 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.
In the prior year, our auditor’s report included a key audit matter in relation to accounting for acquisition of SDL. In the
current year, we did not identify this as a key audit matter due to the smaller quantum of acquisitions in the current year.
102
RWS — Annual Report 2022 INDEPENDENT AUDITOR’S REPORT OUR APPLICATION OF MATERIALITY
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 £6.0 million
(2021: £5.0 million), which is 4.5% (2021: 4.3%) of Profit
before tax adjusted for exceptional items, acquisition costs
and amortisation of acquired intangibles. We believe that
Profit before tax adjusted for exceptional items, acquisition
costs and amortisation of acquired intangibles provides us
with an appropriate basis for materiality as it represents
the primary measure used by 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
£9.3 million (2021: £9.3 million), which is 1.0% (2021: 1.0%)
of total assets.
Starting
basis
• Profit before tax - £83.2m
Adjustments
• Exceptional items - £12.5m
• Acquisition costs - £2.1m
• Amortisation of acquired intangibles - £34.4m
Materiality
• Totals £132.2m
• Materiality of £6.0m (4.5% of materiality basis)
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%
(2021: 50%) of our planning materiality, namely £3.0m
(2021: £2.5m). We have set performance materiality at this
percentage due to a combination of risk factors.
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 £0.6m to £1.3m
(2021: £0.5m to £1.1m).
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 £0.3m (2021: £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.
103
INDEPENDENT AUDITOR’S REPORT RWS — Annual Report 2022 Independent Auditor's Report to the Members of
RWS Holdings plc (continued)
Other information
The other information comprises the information included
in the annual report set out on pages 1 to 162, 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 this gives rise
to 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.
Opinions on other matters prescribed by
the Companies Act 2006
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 statements are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and
explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities
statement set out on page 95 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.
AUDITOR’S RESPONSIBILITIES FOR THE
AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an 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
104
RWS — Annual Report 2022 INDEPENDENT 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.
Jose Yglesia
(SENIOR STATUTORY AUDITOR)
for and on behalf of Ernst & Young LLP, Statutory
Auditor Reading
14 December 2022
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 Group
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 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.
105
INDEPENDENT AUDITOR’S REPORT RWS — Annual Report 2022 Financial Statements
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2022
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
Amortisation of capitalised exceptional finance costs
Finance costs
Profit before tax
Taxation
Profit for the year attributable to the owners of the Parent
Other comprehensive income/ (expense)
Items that may be reclassified to profit or loss:
Gain/ (loss) on retranslation of quasi equity loans (net of deferred tax)
Gain/ (loss) on retranslation of foreign operations
(Loss)/ gain on hedging (net of deferred tax)
Total other comprehensive income/ (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 112 to 149 form part of these financial statements.
Note
3
6
5
13
22
6
8
6,8
8
9
11
11
2022
£m
749.2
(399.0)
350.2
-
(263.9)
86.3
138.5
(34.4)
(2.1)
(3.2)
(12.5)
86.3
0.2
(0.3)
(3.0)
83.2
(20.5)
62.7
6.1
107.3
(6.7)
106.7
169.4
16.1
16.0
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
108
RWS — Annual Report 2022 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Consolidated Statement of Financial Position
as at 30 September 2022
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
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
23
17
18
20
19
16
18
17
19
9
21
2022
£m
692.6
385.4
31.3
39.0
1.0
1.1
2021
£m
615.8
366.6
32.1
42.4
1.0
1.5
1,150.4
1,059.4
220.5
4.2
101.2
325.9
1,476.3
165.6
11.8
0.6
22.7
2.9
203.6
29.3
34.9
3.5
4.9
58.4
131.0
334.6
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
1,141.7
1,010.9
3.9
54.4
6.0
(8.5)
624.4
95.9
(5.5)
371.1
3.9
54.2
2.8
(8.5)
624.4
(17.5)
1.2
350.4
1,141.7
1,010.9
The notes on pages 112 to 149 form part of these financial statements. The financial statements on pages 108 to 149
were approved by the Board of Directors and authorised for issue on 14 December 2022 and were signed on its
behalf by:
Rod Day | INTERIM DEPUTY CHIEF FINANCIAL OFFICER
CONSOLIDATED STATEMENT OF FINANCIAL POSITION RWS — Annual Report 2022
109
Consolidated Statement of Changes in Equity
for the year ended 30 September 2022
Share
capital
£m
Share
premium
account
£m
Other
reserves
(see below)
£m
Notes
At 30 September 2020
Profit for the year
Gain on hedging
Loss 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
Equity-settled share based payments charge
At 30 September 2021
Profit for the year
Loss on hedging
Gain on retranslation of quasi equity loans
Gain on retranslation of foreign operations
Total comprehensive income for the year
Issue of shares
Deferred tax on unexercised share options
Dividends
Equity-settled share based payments charge
At 30 September 2022
Other reserves
At 30 September 2020
Other comprehensive (expense)/ income for the year
Issue of shares to acquire subsidiary undertaking
Equity-settled share based payments charge
At 30 September 2021
Other comprehensive income/ (expense) for the year
Equity-settled share based payments charge
At 30 September 2022
Total
attributable
to owners
of Parent
£m
408.9
41.2
1.6
(0.6)
(31.8)
10.4
0.6
625.5
0.4
(36.0)
(0.3)
1.4
Retained
earnings
£m
345.1
41.2
-
-
-
41.2
-
-
0.4
(36.0)
(0.3)
-
2.8
53.6
-
-
-
-
-
-
1.1
-
-
-
-
-
-
-
-
0.6
-
-
-
-
7.4
-
1.6
(0.6)
(31.8)
(30.8)
-
624.4
-
-
1.4
3.9
54.2
602.4
350.4
1,010.9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.2
-
-
-
-
(6.7)
6.1
107.3
106.7
-
-
-
3.2
62.7
-
-
-
62.7
-
(0.1)
(41.9)
-
62.7
(6.7)
6.1
107.3
169.4
0.2
(0.1)
(41.9)
3.2
3.9
54.4
712.3
371.1
1,141.7
24
9
10
22
9
10
22
Share based
payment
reserve
£m
Reverse
acquisition
reserve
£m
1.4
(8.5)
Merger
reserve
£m
-
-
624.4
-
-
-
-
(8.5)
624.4
-
-
-
-
(8.5)
624.4
Foreign
currency
reserve
£m
14.9
(32.4)
-
-
(17.5)
113.4
-
95.9
Hedge
reserve
£m
(0.4)
1.6
-
-
1.2
(6.7)
-
(5.5)
Total
other
reserves
£m
7.4
(30.8)
624.4
1.4
602.4
106.7
3.2
712.3
-
-
1.4
2.8
-
3.2
6.0
110
RWS — Annual Report 2022 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated Statement of Cash Flows
for the year ended 30 September 2022
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 finance costs
Operating cash flow before movements in working capital
(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
Net cash acquired on acquisition of SDL plc
Settlement of share related liabilities on acquisition of SDL plc
Interest received
Acquisition of subsidiary, net of cash acquired
Purchases of property, plant and equipment
Purchases of intangibles (software)
Net cash (outflows)/ inflow from investing activities
Cash flows from financing activities
Repayment of borrowings
Transaction costs relating to debt refinancing
Interest paid
Lease liability payments (including interest charged of £1.3m (2021: £1.5m))
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 gains/(losses) on cash and cash equivalents
Cash and cash equivalents at end of the year
Note
14
13
18
22
8
24
14
13
18
10
23
2022
£m
83.2
7.1
50.1
10.8
3.2
3.1
157.5
(5.6)
(3.1)
148.8
(21.3)
127.5
-
-
0.1
(14.1)
(5.3)
(24.3)
(43.6)
(25.5)
(1.5)
(1.4)
(13.1)
0.2
-
(41.9)
(83.2)
0.7
92.5
8.0
101.2
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
CONSOLIDATED STATEMENT OF CASH FLOWS RWS — Annual Report 2022
111
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 accordance with UK-adopted international
accounting standards (IFRS) in accordance 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.
The potential climate change-related risks and
opportunities to which the Group is exposed, as
identified by management, are disclosed in the Group’s
TCFD disclosures on pages 48 to 59. Management has
assessed the potential financial impacts relating to the
identified risks and exercised judgement in concluding
that there are no further material financial impacts of
the Group’s climate-related risks and opportunities on
the financial statements. These judgements will be kept
under review by management as the future impacts of
climate change depend on environmental, regulatory
and other factors outside of the Group’s control which
are not all currently known.
New accounting standards, amendment
and interpretations
No new standards/amendments that have or are
expected to have a material impact.
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 2022.
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.
Audit exemption for subsidiaries
The parent company, RWS Holdings plc, has given
guarantees to some of its subsidiaries incorporated in
the United Kingdom, to allow them to take exemption
from requiring an audit by virtue of s479A of the
Companies Act 2006.
The following companies incorporated in the United
Kingdom are exempt from the requirements of the
Companies Act 2006 relating to the audit of individual
financial statements by virtue of s479A of the Companies
Act 2006:
Subsidiary undertaking
Company
Registered number
Alterian Technology Limited
Corporate Translations Inc UK Limited
RWS Information Limited
RWS Language Solutions Limited
SDL Tridion Limited
XyEnterprise Limited
RWS Overseas Limited
RWS UK Holding Co Limited
SDL Global Holdings Limited
RWS Group Limited
RWS Translations Limited
SDL Sheffield Limited
SDL Limited
03351717
08072632
01032254
03290358
03875520
01750338
01014383
09809972
04007930
01575193
01080416
02034398
02675207
112
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS Going concern
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 2024. 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 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.
As at 30 September 2022, the Group has net cash of
£25.2m comprising the Group’s US$220m revolving
credit facility (“RCF”) ( £29.3m drawn at year end) and
lease liabilities of £46.7m, less cash and cash equivalents
of £101.2m. The RCF matures in August 2026 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 -0.11x EBITDA, while its interest
coverage ratio (as defined by the RCF agreement) is 64.2x
EBITDA and are well within the covenants permitted by
the Group’s RCF agreement.
In light of the Group’s principal risks and uncertainties
disclosed on page 44 of the Strategic Report, 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
2024. 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 2024 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.
113
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022 Notes to the Consolidated Financial Statements (continued)
Derivative financial instruments and hedging
Cash and cash equivalents
The Group uses derivative financial instruments to
manage its exposure to foreign exchange volatility
arising from operational activities.
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.
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.
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. These prices are reviewed on
an annual basis and amended where appropriate. This is
performed in conjunction with a fair value assessment of
the stand-alone selling prices to assess reasonableness of
the transaction price allocation. Further detail regarding
the 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.
114
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS 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.
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 £6.8m (2021:
£6.5m), see Note 9.
Licence revenue in the year amounted to £55.2m (2021:
£34.9m).
Capitalised development costs
The Group capitalises development costs relating to
product development and internally generated software
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. Where software products are already
in use, management applies judgement in determining
whether further development spend increases the
economic benefit and whether any previously capitalised
costs should be expensed. Development costs
capitalised during the year amounted to £22.6m (2021:
£19.7m) (see Note 13).
Estimates and assumptions
The Group has considered whether there are 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 and there are
none for this financial year.
Other estimates and assumptions
The consolidated financial statements include other
estimates and assumption. Whilst management do not
consider these to be significant accounting estimates,
the recognition and measurement of certain material
assets and liabilities are based on assumptions which,
if changed, could result in adjustments to the carrying
amounts of and liabilities.
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 £51.2m (2021: £34.9m). The effect of changing the
estimated total cost of each contract could, in aggregate,
have an effect on the carrying amount of accrued
income at the balance sheet date.
115
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022 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, being the 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.
116
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS
Support and maintenance (Language and Content
Technology segment)
Professional services (Language and Content
Technology segment)
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.
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.
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
Over time
Language Services
Over time
Regulated Industries
Total revenue from contracts with customers
2022
£m
21.2
86.0
107.2
26.0
100.9
126.9
342.1
342.1
173.0
173.0
749.2
2021
£m
25.3
88.3
113.6
24.0
84.1
108.1
309.7
309.7
163.1
163.1
694.5
See note 4 for information on revenue disaggregation by geographical location.
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 £1.9m (2021: £2.7m). Capitalised contract costs are recognised within other debtors on
the statement of financial position.
117
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
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
2022
£m
148.9
51.2
(53.0)
2021
£m
133.7
34.9
(43.0)
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 the transaction price allocated to unsatisfied or partially unsatisfied performance obligations at the
year-end is £54.1m (2021: £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.
Revenue recognised in the year that was included in deferred revenue at 1 October 2021 was £40.8m (2021: £1.7m).
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 160.
The four reporting segments, which match the operating segments, are explained in more detail below:
• Language Services: 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: 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.
• Language and Content Technology ('L&CT'): Revenue is generated through the provision of a range of translation
technologies and content platforms to clients. This was enhanced by the acquisition of Liones Holding B.V. in March
2022.
Unallocated costs reflect corporate overheads and other expenses not directly attributed to segments.
118
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS Segment results for the year ended 30
September 2022
L&CT
£m
IP Services
£m
Regulated
Industries
£m
Language
Services
£m
Unallocated
Costs
£m
Revenue from contracts with customers
126.9
107.2
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 expense
Profit before taxation
Taxation
Profit for the year
Segment results for the year ended 30
September 2021
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 expense
Profit before taxation
Taxation
Profit for the year
37.6
(8.0)
-
(3.0)
(1.8)
24.8
L&CT1
£m
108.1
25.9
(7.4)
0.0
0.0
(0.8)
17.7
173.0
31.6
(12.4)
-
(2.3)
(0.3)
16.6
342.1
53.3
(13.8)
-
(3.9)
(0.4)
35.2
-
(14.1)
-
(2.1)
(2.8)
(0.5)
(19.5)
30.1
(0.2)
-
(0.5)
(0.2)
29.2
IP Services
£m
Regulated
Industries
£m
Language
Services1
£m
Unallocated
Costs
£m
113.6
32.3
(0.1)
0.0
(5.0)
(0.2)
27.0
163.1
28.4
(14.5)
0.0
(0.2)
(0.1)
13.6
309.7
44.1
(12.4)
0.0
(1.6)
(0.2)
29.9
-
(12.2)
-
(11.2)
(7.3)
(0.1)
(30.8)
1Webdunia was previously included in Language Services and is now part of L&CT. This comparative table has been restated to reflect this change.
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
Total
2022
£m
85.9
178.2
390.2
94.9
749.2
Group
£m
749.2
138.5
(34.4)
(2.1)
(12.5)
(3.2)
86.3
(3.1)
83.2
(20.5)
62.7
Group
£m
694.5
118.5
(34.4)
(11.2)
(14.1)
(1.4)
57.4
(2.4)
55.0
(13.8)
41.2
2021
£m
77.3
213.8
322.9
80.5
694.5
The Group does not place reliance on any specific customer and has no individual customers that generate more than
10% or more of its total Group revenue.
119
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022 Notes to the Consolidated Financial Statements (continued)
The following is an analysis of revenue by the geographical area in which the Group’s undertakings are located.
Revenue by subsidiary location
UK
Continental Europe
United States of America
Rest of the world
Total
2022
£m
189.5
166.6
339.0
54.1
749.2
2021
£m
175.1
174.1
297.3
48.0
694.5
The table below shows operating assets by geographical location of the Group's undertakings. These assets exclude
goodwill and acquired intangibles.
Operating assets by geography
UK
Continental Europe
United States of America
Rest of the World
Total
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)
Expected credit loss expense (note 15)
Loss/ (gain) on changes in fair values on derivative contracts (see note 20)
Operating lease rentals:
- Property (note 18)
- Plant and equipment (note 18)
Auditor's remuneration
Fees payable to the Company’s auditor for the audit of the Group’s annual financial statements
- The audit of subsidiaries of the Company
Total audit fees
FY22
£m
162.7
79.0
147.2
67.5
456.4
2022
£m
328.4
34.2
7.1
10.8
50.1
3.7
0.8
1.1
1.8
0.5
1.8
0.1
1.9
FY21
£m
148.0
76.3
118.6
61.5
404.4
2021
£m
311.1
30.7
6.2
12.7
47.8
(0.7)
0.4
(3.2)
1.7
0.5
1.2
0.1
1.3
Non audit fees of £27k (2021: £15k) were incurred in the period in respect of assurance related services. The current
year fees payable to the Company's auditor includes £0.2m paid in respect of statutory audit services for the year ended
30 September 2021.
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 £22.6m
(2021: £19.7m) of development costs in the year, further details can be found in Note 13.
120
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS
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.
Group transformation programme
Restructuring & integration related costs
Proceeds from warranty claim
Total exceptional items - operating
Amortisation of exceptional finance (Note 8)
Total exceptional items - financing
Total exceptional items
2022
Pre-tax
£m
(0.3)
(12.2)
-
(12.5)
(0.3)
(0.3)
(12.8)
2022
Tax impact
£m
0.1
2.4
-
2.5
-
-
2.5
2022
Total
£m
(0.2)
(9.8)
-
(10.0)
(0.3)
(0.3)
(10.3)
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)
As part of a strategic review of the business, the Group has initiated a transformation programme for Finance and
Human Resources to drive improved efficiencies in future periods. In 2022, £0.3m of cost was incurred and paid
during the period. The Group expects to incur and pay further material costs over the next 2 years related to the
transformation totalling £15.9m and the ongoing benefits from the integration will be recognised in operating profit in
the statement of comprehensive income.
Included with restructuring and integration costs are £3.2m of severance agreements and termination payments
included within the businesses defined integration plan for SDL plc. A further £7.4m was incurred in respect of IT
integration projects, all of which was paid during the period. An additional £1.6m was incurred and paid in respect of
contract termination costs to rehouse the Group's data warehousing capability for the integrated business. The cost
of delivering synergies is classified as exceptional to highlight the expense of delivering the integration and represent
costs which are considered by the Group to be outside the normal course of business.
In FY20, a settlement was agreed for a claim made by the Group under warranty insurance taken out as part of the
Moravia acquisition in 2017. In FY21, a final amount of £1.2m was received relating to this settlement claim.
Exceptional finance costs of £0.3m (2021: £0.3m) relate to the amortisation expense associated with a gain on debt
modification recognised in previous accounting periods.
Adjusted Performance Measures are reconciled on page 160 to 161 of the accounts.
121
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022 Notes to the Consolidated Financial Statements (continued)
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)
Total employee costs
2022
£m
276.6
1.6
37.0
10.0
3.2
328.4
2021
£m
253.4
13.4
34.5
8.4
1.4
311.1
Details of Directors’ remuneration and pension contributions are disclosed in the Directors’ Remuneration Report
on pages 84 to 91. 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 £22.6m (2021: £19.7m).
The Group operates a defined contribution pension scheme, making payments on behalf of employees to their
personal pension plans. Payments of £8.8m (2021: £6.7m) were made in the year. The amount charged to profit and
loss in the statement of comprehensive income in the period was £9.5m (2021: £8.4m). At the year end there were
unpaid amounts included in other payables totalling £2.5m (2021: £1.8m). The monthly average staff numbers were:
Production staff
Administrative staff
8. FINANCE INCOME AND COSTS
Finance income
- Return on short term deposits
Finance costs
- Bank interest payable
- Other interest payable
- Lease interest
- Amortisation of borrowing costs
Finance costs excluding exceptional amortisation
Amortisation of borrowing costs - Exceptional (note 6)
Net finance cost
2022
£m
6,193
1,787
7,980
2022
£m
0.2
0.2
(1.4)
-
(1.3)
(0.3)
(3.0)
(0.3)
(3.3)
(3.1)
2021
£m
5,671
1,989
7,660
2021
£m
-
-
(0.8)
0.5
(1.5)
(0.3)
(2.1)
(0.3)
(2.4)
(2.4)
On 3 August 2022, the Group completed a refinancing of its term loan (see note 16 for further details). The debt refinancing was
accounted for as a debt modification without extinguishment resulting in a nominal debt modification gain being recognised in
the parent company's statement of comprehensive income of £5k.
122
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS
9. TAXATION
Accounting policy
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% (2021: 19%)
- Overseas current tax 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
2022
£m
5.7
18.7
(4.2)
(2.4)
0.1
2.6
20.5
0.1
0.7
21.3
2021
£m
4.7
15.9
(3.0)
(4.4)
2.0
(1.4)
13.8
(0.4)
0.2
13.6
123
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022 Notes to the Consolidated Financial Statements (continued)
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% (2021: 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
2022
£m
83.2
15.8
2.2
(1.6)
0.1
4.0
20.5
2021
£m
55.0
10.4
2.4
(4.4)
2.0
3.4
13.8
24.6%
25.1%
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 acquisition costs, offset by the impact of recognizing historic US Research and Development tax credits related to the period
FY16-FY21. 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 majority of the adjustments in respect of prior periods relates to historic Research and Developments tax credits
recognised in the US of a £1.6m credit to deferred taxes. In addition , a £4.5m credit to current tax and £3.9m debit to
deferred tax has been recognised as an adjustment to prior periods representing the impact of the reduction of historic
uncertain tax positions recognised for transfer pricing that are outside the relevant jurisdictional statute of limitations.
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.
The Group periodically reviews its historic uncertain tax positions ('UTPs') for transfer pricing 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'). During the period the Group reduced
the provision for liabilities that are expected to no longer be sought by tax authorities on the basis that the relevant
statute of limitations has expired. In addition, UTPs related to transfer pricing were increased during the year to reflect
current period trading as well as new historic risks identified during the period.
The current tax liability of £22.7m on the balance sheet comprises £15.2m 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 £58.4m on
the balance sheet is net of £6.5m of deferred tax assets relating to uncertain tax positions.
Pillar Two
On 20 December 2021, the OECD published their proposals in relation to Global Anti-Base Erosion Rules, which provide for an
internationally co-ordinated system of taxation to ensure that large multinational groups pay a minimum level of corporate
income tax in countries where they operate. In January 2022 the UK government reconfirmed its intention to introduce
legislation to give effect to the OECD proposals. The new rules are expected to take effect from 2023 onwards, however the
impact on the Group will depend on the precise rules adopted in individual countries which are not known at this time.
124
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS Deferred tax
At 1 October 2020
Adjustments in respect of prior years
Acquisitions*
Credited to income
Credited to equity / OCI
Foreign exchange differences
At 30 September 2021
Adjustments in respect of prior years
Acquisitions
Credited to income
Charged to equity / OCI
Foreign exchange differences
At 30 September 2022
Share based
payments
£m
Accelerated
capital
allowances
£m
Other
temporary
differences
£m
Acquired
intangibles
£m
Tax losses
£m
0.2
(0.3)
0.1
0.2
0.4
-
0.6
-
-
-
(0.1)
-
0.5
(1.1)
(0.5)
0.1
(0.2)
-
-
(1.7)
(0.1)
-
-
-
-
(1.8)
1.0
1.6
2.6
1.8
-
(0.2)
6.8
1.7
-
0.4
-
0.9
9.8
(28.5)
(0.3)
(44.4)
0.5
-
1.1
(71.6)
-
(2.5)
4.4
-
(6.0)
(75.7)
-
0.9
15.3
0.1
-
(0.1)
16.2
(4.2)
-
(2.5)
-
0.4
9.9
The acquisitions line includes £0.9m of deferred tax in respect of the Moravia error correction referenced in this note
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
Deferred tax assets and liabilities
2022
£m
1.1
(58.4)
(57.3)
Total
£m
(28.4)
1.4
(26.3)
2.4
0.4
0.8
(49.7)
(2.6)
(2.5)
2.3
(0.1)
(4.7)
(57.3)
2021
£m
1.5
(51.2)
(49.7)
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 £143.9m (2021: £143.0m) available for offset against future
profits. A deferred tax asset of £9.9m (2021: £16.7m) has been recognised in respect of £44.0m (2021: £72.6m) 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 £99.9m (2021: £70.4m) 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 £23.5m (2021: £17.7m).
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 £6.0m (2021: £10.0m).
Unremitted earnings
Dividends received from subsidiaries are largely exempt from UK tax but may be subject to dividend withholding taxes
levied by the overseas tax jurisdictions in which the subsidiaries operate. The gross temporary differences of those
subsidiaries affected by such potential taxes is £82.3m. Since the Group is able to control the timing of reversal of these
temporary differences, a current tax liability of £0.2m has been recognised on the unremitted earnings it is anticipating
to be distributed that would give rise to a tax charge. The Group has an estimated unrecognised deferred tax liability of
£4.7m of unremitted earnings where no distributions are expected to be paid in the foreseeable future.
125
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
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 8.5p (2020: 7.5p)
Interim dividend, paid 22 July 2022 was 2.25p (2021: 2.00p paid 16 July 2021)
2022
£m
33.1
8.8
41.9
2021
£m
28.2
7.8
36.0
The Directors recommend a final dividend in respect of the financial year ended 30 September 2022 of 9.5 pence
per ordinary share, to be paid on 24 February 2023 to shareholders who are on the register at 27 January 2023. This
dividend is not reflected in these financial statements as it does not represent a liability at 30 September 2022. The final
proposed dividend will reduce shareholders’ funds by an estimated £37.0m.
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
2022
£m
62.7
34.4
2.1
3.2
0.3
12.5
(10.0)
(1.6)
103.6
2021
£m
41.2
34.4
11.2
1.4
0.3
14.1
(7.3)
(4.5)
90.8
Weighted average number of ordinary shares in issue for basic earnings
Dilutive impact of share options
Weighted average number of ordinary shares for diluted earnings
126
2022
Basic earnings
per share
pence
2021
Basic earnings
per share
pence
2022
Diluted earnings
per share
pence
2021
Diluted
earnings
per share
pence
16.1
10.9
16.0
10.9
26.6
23.8
26.5
23.8
2022
Number
389,374,854
1,469,514
390,844,368
2021
Number
378,460,314
648,504
379,108,818
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS
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
Accounting policy
2022
£m
615.8
7.8
(0.4)
69.4
692.6
2021
£m
257.2
378.6
(1.0)
(19.0)
615.8
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.
Key assumptions for the value in use - 30 September 2022
Long-term
growth rate
Discount
rate
Average revenue
growth
IP Services
Regulated Industries
Language Services
Language and Content Technology
Key assumptions for the value in use - 30 September 2021
IP Services
Life Sciences
Moravia
SDL - Technology
SDL - Language Services
SDL - Regulated industries
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
12.5%
13.2%
12.7%
13.5%
10.4%
10.9%
11.0%
11.4%
11.1%
12.3%
3.2%
6.7%
5.1%
10.9%
4.0%
5.5%
5.5%
8.0%
5.5%
5.5%
During the year, management has reviewed its identified CGUs in light of the further integration work that has been
performed by the Group since the acquisition of SDL plc in November 2020, and based on the result of this review,
management believes the Group now has four CGUs. Key factors of the integration in the year that were considered
127
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022 Notes to the Consolidated Financial Statements (continued)
in management’s conclusion included the integration of delivery of services to customers across fRWS and fSDL
businesses and commencing to internally report and plan resources on the combined businesses
In accordance with IAS 36, management performed a value in use impairment test on the pre-existing six CGUs and
determined there to be no impairment of goodwill within any CGU. Following this impairment test the Life Sciences
and SDL – Regulated Industries CGUs were merged to form the Regulated Industries CGU. Additionally, the Moravia
and SDL – Language Services CGUs are also merged to form a Language Services CGU.
At year end management has performed an additional value in use impairment test on the Group four CGUs as
detailed further below.
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 size 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 and 5 year plan, both approved by the Board of Directors and extrapolates the cash flows for a
further year 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.
The Directors believe there are no cash-generating units where reasonably possible changes to the underlying
assumptions exist that would give rise to impairment.
The allocation of goodwill to each CGU is as follows:
IP Services
Regulated Industries 1
Language Services 2
Language and Content Technology
At 30 September
1 Previously Life Sciences and SDL - Regulated Industries 2 Previously Moravia and SDL - Language Services
2022
£m
35.8
150.4
239.9
266.5
692.6
2021
£m
31.3
133.6
208.1
242.8
615.8
128
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS 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
3 to 7 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.
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 7 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.
129
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022 Notes to the Consolidated Financial Statements (continued)
Trade
names
£m
Clinician
& supplier
databases
£m
Technology
£m
Non-
compete
&
Trademarks
£m
Client
relationships
& order
books
£m
Internally
generated
software
£m
Software
£m
Cost
At 30 September 2020
Additions
Acquisitions (note 24)
Disposals
Currency translation
At 30 September 2021
Additions
Acquisitions (note 24)
Adjustments in respect of prior periods
Disposals
Currency translation
At 30 September 2022
9.5
-
-
(9.1)
(0.4)
-
-
0.4
-
-
-
0.4
Accumulated amortisation and impairment
At 30 September 2020
Amortisation charge
Disposals
Currency translation
At 30 September 2021
Amortisation charge
Disposals
Currency translation
At 30 September 2022
Net book value
At 30 September 2020
At 30 September 2021
At 30 September 2022
5.6
3.7
(9.1)
(0.2)
-
-
-
-
-
3.9
-
0.4
6.6
-
-
-
(0.2)
6.4
-
-
-
-
1.2
7.6
2.7
0.6
-
(0.1)
3.2
0.7
-
0.7
4.6
3.9
3.2
3.0
6.3
10.3
107.1
-
(0.3)
123.4
15.5
2.1
-
-
1.2
142.2
4.7
15.5
-
(0.2)
20.0
18.4
-
1.1
39.5
1.6
103.4
102.7
2.2
187.7
-
-
-
(0.1)
2.1
-
-
-
-
0.4
2.5
1.6
0.4
-
(0.1)
1.9
0.2
-
0.4
2.5
0.6
0.2
-
-
139.4
(3.1)
(11.0)
313.0
0.2
6.4
0.4
-
47.5
367.5
50.0
23.0
(3.1)
(1.7)
68.2
25.5
-
13.6
107.3
137.7
244.8
260.2
12.5
1.8
-
(1.6)
-
12.7
1.9
-
-
(1.9)
0.8
13.5
8.5
1.6
(1.3)
-
8.8
1.9
(1.9)
0.5
9.3
4.0
3.9
4.2
9.8
9.4
-
(3.7)
-
15.5
6.9
-
-
(2.7)
0.6
20.3
5.1
3.0
(3.7)
-
4.4
3.4
(2.7)
0.3
5.4
4.7
11.1
14.9
Total
£m
234.6
21.5
246.5
(17.5)
(12.0)
473.1
24.5
8.9
0.4
(4.6)
51.7
554.0
78.2
47.8
(17.2)
(2.3)
106.5
50.1
(4.6)
16.6
168.6
156.4
366.6
385.4
Amortisation of acquired intangibles was £34.4m (2021: £34.4m) and amortisation of other intangibles was £15.7m
(2021: £13.4m). The £15.7m amortisation of other intangibles comprises £1.9m on amortisation of software (2021:
£1.6m), £3.4m on internally developed intangibles (2021: £3.0m).and £10.4m (2021: £9.0m) of technology which related
to the SDL business. The residual £34.4m of amortisation was wholly incurred on acquired intangible assets (2021:
£34.4m). The Group has identified intangible assets which are individually material as follows:
• SDL technology products acquired of £61.9m (2021: £74.2m) with a remaining useful life of 5 years
• SDL's Helix platform of £15.8m (2021: £18.9m) with a remaining useful life of 5 years
• SDL's customer relationships of £122.9m (2021:£124.4m) with a remaining useful life of 9 years
• Moravia's customer relationships of £99.9m (2021: £81.1m) with a remaining useful life of 15 years and
• Life Science’s customer relationships of £11.6m (2021: £11.8m) with a remaining useful life of 5 years.
No other classes of intangible asset hold individually material items. The remaining average useful life is 11 years.
130
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS
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 2022 was freehold land of £5.6m (2021: £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 (2021: None).
Cost
At 30 September 2020
Currency translation
Additions
Acquisitions
Disposals
At 30 September 2021
Currency translation
Transfers
Additions
Acquisitions
Disposals
At 30 September 2022
Accumulated depreciation
At 30 September 2020
Currency translation
Depreciation charge
Disposals
At 30 September 2021
Currency translation
Depreciation charge
Disposals
At 30 September 2022
Net book value
At 30 September 2020
At 30 September 2021
At 30 September 2022
Freehold land
and buildings
£m
Leasehold land,
buildings and
improvements
£m
Furniture and
equipment
£m
Motor
vehicles
£m
17.0
-
-
-
-
17.0
-
-
-
-
-
17.0
2.1
-
0.2
-
2.3
-
0.2
-
2.5
14.9
14.7
14.5
3.3
(0.1)
0.6
4.6
-
8.4
0.9
0.1
0.4
-
(0.5)
9.3
1.9
0.1
1.1
-
3.1
0.2
1.4
(0.5)
4.2
1.4
5.3
5.1
19.6
(0.3)
3.5
7.4
(0.6)
29.6
1.2
(0.1)
4.9
0.1
(1.1)
34.6
13.2
0.1
4.9
(0.6)
17.6
0.9
5.5
(1.1)
22.9
6.4
12.0
11.7
0.2
-
-
-
-
0.2
-
-
-
-
-
0.2
0.1
-
-
-
0.1
0.1
-
-
0.2
0.1
0.1
-
Total
£m
40.1
(0.4)
4.1
12.0
(0.6)
55.2
2.1
-
5.3
0.1
(1.6)
61.1
17.3
0.2
6.2
(0.6)
23.1
1.2
7.1
(1.6)
29.8
22.8
32.1
31.3
131
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022 Notes to the Consolidated Financial Statements (continued)
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
2022
Gross
151.2
7.3
13.1
51.7
223.3
2022
Provisions
2022
Net
2021
Gross
2021
Provisions
2021
Net
(2.3)
148.9
136.3
(2.6)
133.7
-
-
(0.5)
(2.8)
7.3
13.1
51.2
9.4
13.8
35.6
220.5
195.1
-
-
(0.7)
(3.3)
Trade receivables net of allowances are held in the following currencies at the
reporting date:
Sterling
Euros
Japanese Yen
US Dollars
Swiss Francs
Other
2022
£m
18.9
24.0
3.0
88.7
1.3
13.0
The following table provides information about the exposure to
credit risk for trade receivables at 30 September 2022:
Not past due
Past due 1-30 days
Past due 31-60 days
Past due 61-90 days
Past due > 90 days
148.9
133.7
Loss
allowance
£m
Net amount
£m
-
-
-
-
(2.3)
(2.3)
114.8
19.3
7.8
3.6
3.4
148.9
Gross
amount
£m
114.8
19.3
7.8
3.6
5.7
151.2
132
9.4
13.8
34.9
191.8
2021
£m
9.8
30.3
2.9
81.6
0.9
8.2
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS 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
Movement in expected credit loss provisions:
At 1 October
Utilised
Acquired
Released
Charge for the year
Exchange adjustment
At 30 September
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
Trade
Debtors
2022
Accrued
Income
2022
Trade
Debtors
2021
Accrued
Income
2021
2.6
(1.3)
-
-
0.8
0.2
2.3
0.7
-
-
-
-
(0.2)
0.5
0.5
(0.2)
1.9
-
0.4
-
2.6
-
-
0.9
(0.2)
-
-
0.7
133
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022 Notes to the Consolidated Financial Statements (continued)
16. LOANS
Accounting policy
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
2022
£m
32.2
(2.9)
29.3
2021
£m
49.2
(2.0)
47.2
Analysis of net debt - 30 September 2022
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
92.5
2.0
(49.2)
45.3
(51.5)
(6.2)
0.6
-
-
0.6
(0.2)
0.4
0.1
1.5
25.5
27.1
13.1
40.2
8.0
(0.6)
(8.5)
(1.1)
(8.1)
(9.2)
101.2
2.9
(32.2)
71.9
(46.7)
25.2
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)
Non-cash charges against the loan balance represent the effects of foreign exchange on the financial liability.
On 3 August 2022, the Group entered into an Amendment and Restatement Agreement (“ARA”) with its banking
syndicate which amended its existing US$120m RCF maturing on 10 February 2024, to a US$220m RCF Facility
maturing on 3 August 2026 with an option to extend maturity to 3 August 2027.
Under the terms of the ARA, the Group’s interest margin over the Secured Overnight Financing Rate (“SOFR”)
reference interest rate ranges from 95bps to 195bps and is dependent on 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$100 million uncommitted accordion facility.
The debt refinancing was accounted for as a debt modification without extinguishment resulting in a nominal debt
modification gain being recognised in the parent company’s statement of comprehensive income of £5k.
All transaction costs incurred in amending and re-stating the RCF have been capitalised and are being amortised over the
4-year term of the facility on a straight-line basis. Currently all Group borrowings under the RCF are denominated in USD.
134
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS
17. TRADE AND OTHER PAYABLES
Due in less than one year
Trade payables
Other taxes and social security costs
Other payables
Accruals
Deferred and contingent consideration
Deferred income
At 30 September
2022
£m
30.2
4.0
10.1
68.9
2.9
49.5
2021
£m
28.1
5.3
14.7
61.6
1.5
40.8
165.6
152.0
The deferred and contingent consideration of £2.9m (2021: £1.5m) comprises £1.1m of contingent consideration in
respect of the acquisition of Liones Holding B.V. during the period and £1.8m of deferred consideration in respect of
the Iconic acquisition from the prior year. The amount payable to Liones Holding B.V. is denominated in Euros and the
amount payable to Iconic is denominated in US dollars. A foreign exchange impact of £0.3m was recognised in the
period in respect of these amounts.
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
2022
£m
3.5
-
3.5
2021
£m
2.2
0.2
2.4
135
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022 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.
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.
Nature of the leased assets
The property assets under lease are offices where our employees work. Office equipment includes photocopiers, water
coolers and software.
136
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS Group as a lessee
The Group has entered into leases across the business, principally relating to property. 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
Leases acquired on acquisition
Additions
Depreciation expense
Currency adjustment
At 30 September 2021
Acquisitions
Additions
Disposals
Depreciation expense
Re-measurement adjustments
Currency adjustment
At 30 September 2022
Property
£m
Office Equipment
£m
19.2
34.1
2.0
(11.8)
(1.1)
42.4
0.2
6.8
(0.1)
(10.8)
(1.0)
1.5
39.0
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
2022
£m
51.5
6.8
0.2
1.3
(1.0)
(13.1)
1.0
46.7
11.8
34.9
2022
£m
10.8
1.3
1.8
0.5
14.4
Total
£m
20.1
34.1
2.0
(12.7)
(1.1)
42.4
0.2
6.8
(0.1)
(10.8)
(1.0)
1.5
39.0
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
*The expenses in respect of short term and low value leases are recognised in administrative expenses. The cash outflows in respect of short term and low
value leases are presented within cash flows from operating activities in the Statement of Cash Flows.
The Group had total cash outflows for leases of £13.1m (2021: £12.6m). The Group had no non-cash additions to right-
of-use assets and lease liabilities in the year (2021: £nil). 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.
137
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022 Notes to the Consolidated Financial Statements (continued)
The property leases held by the Group have varying terms and renewal rights. Management applies judgement in
determining whether it is reasonably certain that a renewal or termination option will be exercised by considering factors
such as leasehold improvements. 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
cashflows associated with leases expiring within the next 12 months are £13.6m (2021:£11m). Further information on the
maturity profile of the Group's leases is shown in Note 20.
The Group has concluded that this is not a significant judgement by virtue of the low number and value of leases due to
expire near-term and the future cash outflows associated with such leases are not material for the Group.
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
At 1 October
Charged in the period
Utilised
Released
Effects of currency movements
At 30 September 2022
Due in less than one year
Due in greater than one year
At 30 September 2022
Due in less than one year
Due in greater than one year
At 30 September 2021
Indirect tax
related
£m
Dilapidations
£m
Other
provisions
£m
2.5
0.5
-
(0.1)
0.4
3.3
-
3.3
3.3
-
2.5
2.5
1.5
-
-
-
-
1.5
0.4
1.1
1.5
0.4
1.1
1.5
5.2
0.1
(2.0)
(0.4)
0.1
3.0
2.5
0.5
3.0
4.7
0.5
5.2
Total
£m
9.2
0.6
(2.0)
(0.5)
0.5
7.8
2.9
4.9
7.8
5.1
4.1
9.2
Indirect tax related provisions comprise £1.6m in respect of Service Tax declarations made by the Group's Brazilian subsidiary
during the period 2008–2012. Additionally, the Group has provided in full against any potential liability arising in later periods
which could still be subject to audit. A further £1.0m relates to potential penalties and interest from ongoing tax enquiries
primarily in the UK and Germany, together with interest on uncertain tax provisions. The timing of the payment is uncertain at the
reporting date.
The majority of the dilapidation provisions relate to leased properties and are associated with the requirement to return
properties to either their original condition, or to enact specific improvement activities in advance of exiting the lease.
Dilapidations associated with leased properties are held as a provision until such time as they fall due, with the longest running
lease ending in January 2032.
138
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS Included within Other Provisions are the following:
£1.6m related to related to long term employment benefits in certain countries the Group operates in. This amount includes £1.1m
for TFR severance amounts required under article 2120 of the Italian Civil Code. This provision has been valued in accordance with
the requirements of IAS19 as it represents long term benefits payable to employees of the Group’s Italian subsidiary. The timing of
the payment us uncertain at the reporting date.
£0.7m related to future severance as part of the transformation programmes currently being undertaken by the Group to integrate
acquired businesses in accordance with the criteria defined in IAS37. This is expected to be settled in the next 12 months.
£0.5m related to legal and other cost that the Group expects to incur over an extended period, in respect of past events for which a
provision has been recorded, none of which are individually material.
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.
Financial Assets
Trade and other receivables
Cash and cash equivalents
Financial Liabilities
Loans
Trade and other payables
Lease liabilities
Foreign exchange derivatives
FVOCI
2022
£m
-
-
-
-
-
-
0.6
0.6
2021
£m
-
-
-
-
-
-
0.7
0.7
FVTPL
2022
£m
2021
£m
AC
2022
£m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
207.4
101.2
308.6
29.3
112.1
46.7
-
188.1
2021
£m
178.0
92.5
270.5
47.2
105.9
51.5
-
204.6
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 2022 is £32.2m (2021: £49.2m), 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.
139
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
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 2022 amounted to £101.2m (2021: £92.5m), the
Group has an overdraft facility of £1.5m (2021: £1.5m) which is unsecured. The reference interest rate on this facility
transitioned from GBP LIBOR to SONIA during the period with the margin remaining unchanged at 200 basis points.
This overdraft was undrawn as at year end.
Any surplus funds are invested in British pound or US dollar deposits, with maturities not exceeding three months.
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are
gross, undiscounted, and include contractual interest payments.
Contractual cash flows at
30 September 2022
Non-derivative financial liabilities
Revolving Credit Facility
Trade and other payables
Lease liabilities
Derivative financial liabilities
Foreign exchange derivatives
- Outflow
Carrying
amount
£m
29.3
112.1
46.7
188.1
0.6
0.6
Total
£m
Less than 12
months
£m
1-2 years
£m
2-5 years
£m
More than
5 years
£m
39.0
112.1
50.2
201.3
0.6
0.6
1.8
112.1
13.6
127.5
0.6
0.6
1.8
-
11.2
13.0
-
-
35.4
-
17.6
53.0
-
-
-
-
7.7
7.7
-
-
Contractual cash flows at
30 September 2021
Carrying
amount
£m
Total
£m
Less than 12
months
£m
1-2 years
£m
2-5 years
£m
More than
5 years
£m
Non-derivative financial liabilities
Revolving credit facility
Trade and other payables
Lease liabilities
Derivative financial liabilities
Foreign exchange derivatives
- Outflow
47.2
104.7
51.5
203.4
0.7
0.7
51.4
104.7
58.2
214.3
0.7
0.7
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
-
-
140
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS
Interest rate risk
The majority of the Group’s cash balances are held with its principal bankers, earning interest at variable rates of interest. To the
extent the British pound overdraft is utilised, it attracts an interest rate of base rate plus a margin of 200 basis points.
The Group’s US$220 million Revolving Credit Facility (“RCF”) matures on 3 August 2026, with an option to extend until
2027 (subject to lender approval), and incurs interest at a rate based on SOFR ('Secured Overnight Financing Rate') 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.
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
2022
£m
14.6
16.0
36.1
4.2
0.5
29.8
101.2
29.2
2021
£m
18.4
36.7
11.0
5.5
1.4
19.5
92.5
47.2
If interest rates changed by 5% is it estimated that Group profit before tax would change by £1.5m (2021: £1.0m).
On 3 August 2022, the Group entered into an Amendment and Restatement Agreement (“ARA”) with its banking
syndicate which amended its existing US$120m RCF maturing on 10 February 2024, to a US$220m RCF maturing on 3
August 2026 with an option to extend maturity to 3 August 2027.
Under the terms of the ARA, the Group’s interest margin over the Secured Overnight Financing Rate (“SOFR”) reference
interest rate ranges from 95bps to 195bps and is dependent on 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$100 million
uncommitted accordion facility.
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 £101.2m at 30 September 2022, 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 (2021: nil).
141
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022 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 65% (2021: 61%) of Group external sales in the reporting period were denominated in USD, while a
further 21% were denominated in Euros (2021: 24%). Similarly, the Group’s cost base was 39% in USD (2021: 31%) and
21% in Euros (2021: 24%).
The Group has 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 Sterling gains or losses arising are recognised directly in equity.
Moravia IT s.r.o. as discussed below applies cash flow hedge accounting to hedge its 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
2022
£m
46.7
156.1
202.8
Assets
2021
£m
45.4
138.9
184.3
Liabilities
2022
£m
Liabilities
2021
£m
19.4
54.0
73.4
15.7
64.0
79.7
Foreign currency sensitivity analysis
The following table details the Group’s sensitivity to a 20% (2021: 120%) 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 20% change in the Sterling exchange rate. A
positive number below indicates an increase in profit where Sterling weakens against the relevant currency. For a 20%
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
2022
£m
Profit and loss
impact
2021
£m
4.5
17.0
21.5
5.0
12.4
17.4
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.
142
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS
Hedging
The Group applies cash flow hedge accounting on foreign exchange forward contracts taken out by Moravia IT s.r.o
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 £32.2m and this is expected to be
settled over a period of 5 years.
During the year ended 30 September 2022, no ineffectiveness was recorded in the Group’s statement of comprehensive
income (2021: £Nil). All amounts recorded in the hedge reserve pertain to continuing hedging relationships as at 30
September 2022.
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
2022
£m
-
Assets
2021
£m
-
Liabilities
2022
£m
Liabilities
2021
£m
0.6
0.7
As at 30 September 2022, forward contracts are in place to sell US dollars and purchase 511.2 million Czech Koruna, at
an average contracted price of 25.06 and 18 million Euro’s at an average contracted price of 0.993.
Hedging Reserve
At 1 October 2021
Cashflow hedges - fair value movement
Cashflow hedges - realised gains/ losses transferred to statement of comprehensive income
Net investment hedge
At 30 September 2022
Capital risk
2022
1.2
2.9
(2.5)
(7.1)
(5.5)
2021
(0.4)
(1.8)
1.7
1.7
1.2
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 2022, there was £29.2m (2021: £47.2m) 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 £101.2m (2021: £92.5m).
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.
143
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022
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
2022
Number
2022
£m
2021
Number
Allotted, called up and fully paid
At beginning of year
Issue of shares
At end of year
389,396,173
67,637
389,463,810
3.9
-
3.9
275,188,492
114,207,681
389,396,173
2021
£m
5.0
2.8
1.1
3.9
During the year, 67,637 ordinary shares of 1p each were allotted under the RWS 2013 share option plan and RWS Save
As You Earn schemes and former SDL 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
and the gains and losses relating to the net investment 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 in
2021.
• 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.
144
RWS — Annual Report 2022 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 £3.2m relating to share-based payments in the year ended 30 September 2022, as follows;
Scheme
Save As You Earn (SAYE) scheme
LTIPs
Executive Share Option Plan ('ESOP')
Deferred consideration
2022
Equity-settled
£m
Cash-settled
£m
0.1
1.2
0.2
1.7
3.2
-
-
-
-
-
Total
£m
0.1
1.2
0.2
1.7
3.2
2021
Equity-settled
£m
Cash-settled
£m
0.1
0.3
0.5
0.5
1.4
-
-
-
-
-
Total
£m
0.1
0.3
0.5
0.5
1.4
Summary of movements in awards
LTIPs
2013 Share
option plan
Number
RWS Save As You
Earn scheme
Number
Executive share
option plan
Number
SDL Save
as You Earn
scheme
Number
Weighted
average
exercise price
(£)
Balance at 1 October 2020
-
152,635
Granted during the year
On acquisition of SDL
Lapsed during the year
Exercised during the year
1,850,118
-
(418,662)
-
-
-
254,869
253,707
-
2,677,049
34,192
-
-
-
276,258
(31,968)
(1,587,701)
(5,643)
-
(152,635)
-
-
(154,315)
Balance at 30 September 2021
1,431,456
Exercisable at 30 September 2021
Granted during the year
Lapsed during the year
Exercised during the year
-
1,378,864
(428,949)
-
Balance at 30 September 2022
2,381,371
Exercisable at 30 September 2022
-
-
-
-
-
-
-
-
476,608
1,123,540
116,300
-
211,288
-
-
35,218
-
(128,067)
(279,389)
(9,453)
(5,657)
554,172
123,650
-
(61,980)
844,151
-
44,867
44,867
5.750
0.667
2.821
4.823
1.940
3.123
0.678
2.810
3.014
2.088
The weighted average share price at the date of exercise of shares exercised during the year was 519.6 pence per share
(2021: 631.6 pence). The weighted average remaining contractual life of outstanding options at the end of the year was
10.5 years (2021: 9.7 years). The aggregate fair value of options granted in the year was £3.3m (2021: £5.1m).
145
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022 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. These conditional
awards vest after the performance period of three years and are subject to the achievement of certain performance
conditions as well as continued employment on vesting for two years. The performance measures are earnings per
share (EPS) which is a non-market performance condition and Total Shareholder Return (TSR) which is a market-based
performance condition. The awards are split with 50% on EPS performance and 50% on TSR performance. The awards
are valued using Black-Scholes. 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
1 October
2021
Number
Granted
during
the year
Number
Exercised
during
the year
Number
Lapsed
during
the year
Number
30 September
2022
Number
Exercise
price
pence
Exercise
period
22 January 2021
1,311,511
1 July 2021
119,945
-
-
24 January 2022
-
1,378,864
Total
1,431,456
1,378,864
-
-
-
-
(287,862)
1,023,649
1 22 Jan 2026 to 22 Jan 2036
(16,309)
103,636
1
1 July 2026 to 1 July 2036
(124,778)
1,254,086
1 25 Jan 2027 to 22 Jan 2037
(428,949)
2,381,371
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
17 February 2022
1 October
2021
Number
150,018
85,446
241,144
Granted
during
the year
Number
Exercised
during
the year
Number
Lapsed
during
the year
Number
30 September
2022
Number
Exercise
price
pence
Exercise
period
-
-
-
(5,594)
(20,774)
123,650
413.0
1 April - 30 Sept 2022
-
(24,169)
61,277
557.0
1 April - 30 Sept 2023
(63)
(51,872)
189,209
472.0
1 April - 30 Sept 2024
-
211,288
-
(31,252)
180,036
504.0
1 April – 30 Sept 2025
Total
476,608
211,288
(5,657)
(128,067)
554,172
The former SDL plc SAYE scheme no longer grants options to employees. The movements on this scheme are in the
table below.
Date of grant
18 February 2019
12 February 2020
Total
1 October
2021
Number
35,218
81,082
116,300
Granted
during
the year
Number
Exercised
during
the year
Number
-
-
-
(35,218)
(26,762)
(61,980)
Lapsed
during
the year
Number
-
(9,453)
(9,453)
30 September
2022
Number
Exercise
price
pence
Exercise
period
-
258.0
1 Aug 2021- 31 Jan 2022
44,867
334.8
1 Aug 2022 - 31 Jan 2023
44,867
146
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS
Executive share option plan (“ESOP”)
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
22 January 2020
9 June 2021
Total
1 October
2021
Number
216,556
872,792
34,192
1,123,540
Granted
during
the year
Number
Exercised
during
the year
Number
Lapsed
during
the year
Number
30 September
2022
Number
Exercise
price
pence
Exercise
period
-
-
-
-
-
-
-
-
-
216,556
601.0
10 May 2024 - 10 May 2029
(279,389)
593,403
615.0
22 Jan 2025 - 22 Jan 2030
-
34,192
613.0
9 June 2026 – 9 June 2036
(279,389)
844,151
The fair value of share options granted under the SAYE and LTIP schemes during the year were estimated using the
Black-Scholes option pricing model. 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.
SAYE Scheme
LTIP -Market LTIP - Non Market
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)
23. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
470.0
504.0
3.0
37.00
1.50
0.05
113.10
500.0
500.0
1.0
4.3
32.14
1.50
0.87
129.0
2022
£m
94.8
6.4
101.2
1.0
4.3
32.14
1.50
0.87
308.0
2021
£m
89.6
2.9
92.5
The fair value of cash and cash equivalents is £101.2m (2021: £92.5m). Restricted cash at 30 September 2022 was £Nil
(2021: £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. Management consider short term deposits to
be 'subject to an insignificant risk of changes in value.
147
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
24. ACQUISITIONS
Liones Holding BV (“Fonto”)
On 22 March 2022, the Group acquired the entire issued share capital of Liones Holding BV (‘Fonto’) and its subsidiaries
for an initial consideration of Euro 17.7m (£14.7m) on a cash and debt free basis, with additional contingent consideration
of Euro 5m payable in two equal installments on the first and second anniversary of the transaction. Fonto is a
structured content management business which complements our Tridion proposition and further builds our Content
Technology portfolio.
The fair value of identifiable assets and liabilities acquired, purchase
consideration and goodwill were as follows:
Fair values
£m
Net assets acquired:
Intangible assets
Property, plant and equipment
Right-of-use assets
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Corporation tax
Deferred tax
Lease liabilities
Total identifiable net assets
Goodwill
Total consideration
Satisfied by:
Cash
8.9
0.1
0.2
0.9
0.6
(1.1)
(0.3)
(2.2)
(0.2)
6.9
7.8
14.7
14.7
The provisional fair values of assets and liabilities were recognised effective 22 March 2022 with the purchase price
allocation work concluded in August 2022. This resulted in an allocation of £6.4m to customer relationships, £2.1m to
Technology assets and £0.4m to Brands, with a corresponding reduction in goodwill. Additional deferred tax liabilities
of £2.2m were recognized on the identified intangible assets. The fair values of Trade and other receivables and other
classes of assets and their gross contractual amount are the same.
Fonto contributed revenue of £1.1m to Group revenue and £0.1m to profit after tax for the period between date of
acquisition and the balance sheet date. If the acquisition had been completed on the first day of the financial year, Fonto
would have contributed additional revenues of £3.4m and increased profit after tax for the year by £1.1m
The goodwill of £7.8m on acquisition comprises the value of expected synergies to be realized across future periods.
These derive primarily from cross sales of RWS products integration of services work with the RWS professional service
teams and up-sell of Tridion as a content management service. Integration of Fonto into the RWS Group has progressed
during the second half of the financial year and will continue during FY23.
Horn & Uchida (prior year acquisition)
The Group acquired Horn & Uchida Patent Translation Ltd, a specialist based on Osaka, Japan for cash consideration of
Y349m (£2.2m) on 7 July 2021 for 100% of its ordinary share capital.
The fair value of identifiable assets and liabilities acquired, purchase
consideration and goodwill were as follows:
Net assets acquired:
Customer relationships
Investment securities
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Deferred tax assets
Total identifiable net assets
148
Fair values
£m
0.7
0.2
1.0
0.8
(1.0)
0.1
1.8
RWS — Annual Report 2022 NOTES TO THE CONSOLIDATED STATEMENTS
The fair value of identifiable assets and liabilities acquired, purchase
consideration and goodwill were as follows:
Goodwill
Total consideration
Satisfied by:
Cash
Fair values
£m
0.5
2.3
2.3
The provisional fair values of assets and liabilities were recognised effective 7 July 2021 with the purchase price allocation
work concluded in January 2022. This resulted in an allocation of £0.7m to customer relationships and a corresponding
reduction in goodwill. Additional deferred tax liabilities on the identified intangibles were recognised of £0.2m, with a
corresponding increase in intangible assets. No provisional fair value changes were made to any other class of asset.
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. There were no movements in the EBT holding during the year.
During the year, in the normal course of business, the Group provided translation services worth £0.5m (2021: £0.4m) 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 (2021: £0.1m) was due from LTG at the reporting date.
Key management compensation
Short-term employee benefits
Post-employment benefits
Share based payments
2022
£m
5.3
0.2
0.5
6.0
2021
£m
4.6
0.1
0.3
5.0
The key management compensation includes the nine (2021: seven) Directors of RWS Holdings plc and the ten (2021: six)
members of the Executive Team who are not Directors of RWS Holdings plc.
During the year key management were granted 610,736 share options with an approximate fair value of £1.3m.
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 (2021: £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 (2021: £Nil).
The Group’s US$220 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 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.
149
NOTES TO THE CONSOLIDATED STATEMENTS RWS — Annual Report 2022
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 2022
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
Total non-current liabilities
Total 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
2022
£m
728.6
728.6
232.3
4.4
236.7
965.3
0.6
5.3
5.9
230.8
959.4
29.3
29.3
35.2
930.1
3.9
54.4
6.0
624.4
2.0
239.4
930.1
73.6
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
47.6
895.0
3.9
54.2
2.8
624.4
2.0
207.7
895.0
60.3
The financial statements on pages 150 to 160 were approved by the Board of Directors and authorised for issue on
14 December 2022 and were signed on its behalf by:
Rod Day | INTERIM DEPUTY CHIEF FINANCIAL OFFICER
150
RWS — Annual Report 2022 PARENT COMPANY FINANCIAL STATEMENTS
Parent Company Statement of Changes
in Equity for the year ended 30
September 2022
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 2020
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
2.8
53.6
1.4
-
-
-
-
1.1
-
-
-
-
-
-
0.6
-
-
-
-
Balance at 30 September 2021
3.9
54.2
Profit for the financial year
Total comprehensive income for the year
Dividends paid
Issue of shares
Equity-settled share based payments
Balance at 30 September 2022
-
-
-
-
-
3.9
-
-
-
0.2
-
54.4
-
-
-
-
-
624.4
-
-
-
2.0
183.8
-
-
-
-
-
-
-
-
60.3
60.3
(36.0)
-
-
(0.4)
-
-
624.4
2.0
207.7
-
-
-
-
-
-
-
-
-
-
73.6
73.6
(41.9)
-
-
243.6
60.3
60.3
(36.0)
0.6
625.5
(0.4)
-
1.4
895.0
73.6
73.6
(41.9)
0.2
3.2
624.4
2.0
239.4
930.1
-
-
-
-
-
-
-
1.4
2.8
-
-
-
-
3.2
6.0
PARENT COMPANY FINANCIAL STATEMENTS RWS — Annual Report 2022
151
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)
• RWS Holdings plc, has given guarantees to some of its
subsidiaries incorporated in the United Kingdom, to
allow them to take exemption from requiring an audit by
virtue of s479A of the Companies Act 2006. See note 7 for
further details.
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.
152
RWS — Annual Report 2022 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. Further
information on investments is included in note 7 in the
parent company notes. Further information with respect
to key assumptions in the assessment of impairment are
detailed in Note 13 of the consolidated financial statements.
4. DERIVATIVE FINANCIAL
INSTRUMENTS
The Parent Company enters into forward foreign
exchange contracts to mitigate its foreign exchange risk
from foreign currency dividend payments received from
its subsidiary undertakings. At 30 September 2022, there
were no derivative contracts outstanding (2021: £nil).
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS RWS — Annual Report 2022
153
Notes to the Parent Company Financial Statements (continued)
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 2022 was £73.6m (2021: £60.3m).
Audit fees payable in relation to the audit of the financial statements of the Parent Company are £16,500 (2021: £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 COSTS
Wages and salaries
Social security costs
Other pension costs
Share-based payment expense
Total employee costs
2022
£m
3.6
0.5
0.1
-
4.2
2021
£m
4.3
0.4
0.1
0.8
5.6
During the year, the Parent had nine (2021: seven) Directors, including five Non-Executive Directors and nine other
employees (2021: seven), providing services to the Group.
Two Directors (2021: 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 84 to 91. 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.
154
RWS — Annual Report 2022 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
2022
£m
725.5
3.1
728.6
2021
£m
93.0
632.5
725.5
The increase in investments in the year for capital contributions relating to share-based payments made by the Parent
Company to employees of its subsidiary undertakings. The prior year 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 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.
421 - 7th Avenue SW Calgary Alberta T2P
4K9 Canada
Technical and legal translations
RWS Information US LLC
Corporate Translations Inc
426 Industrial Avenue Suite 150,
Williston VT 5495 USA
101 East River Drive East Hartford,
Connecticut CT 06108 USA
IP information searches
Translation and linguistic validation
Inovia LLC
RWS US Holding Co. Inc.
251 Little Falls Drive, City of Wilmington,
County of Newcastle , Delaware, USA 19808
Patent translations
Holding company
Lawyers’ and Merchants’ Translation Bureau
Inc.
11 Broadway Ste 466 New York NY 10004
USA
Technical and legal translations
LUZ, Inc.
RWS Group Deutschland GmbH
KK RWS Group
555 Montgomery Street Suite 720
San Francisco CA 94111 USA
Joachimsthaler Str. 15, 10719 Berlin
Germany
Translation and linguistic validation
Technical and legal translations
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 Holdings Pty Limited
Beijing RWS Science & Technology
Information Consultancy Co. Ltd
LLC SDL Ukraine
Moravia US Holding Company, Inc.
Moravia US Intermediate Holding Company,
LLC
Suite 4 Level 12 45 Clarence Street
Sydney NSW 2000 Australia
Patent filing
A601, Floor 6th, Building B-2, Northern
Territory, Zhongguancun, Dongsheng
Technology Park, No. 66 Xixiaokou Road,
Haidian District, Beijing, China 100192
Business center SP Hall, Office 604, 28 A
(letter G), Stepana Bandery avenue
Kiev, Ukraine
Corporation Service Company, 2711
Centerville Road, Suite 400, City of
Wilmington, County of New Castle,
Delaware 19808 USA
Patent, technical and legal
translations
Localisation services
Holding company
Holding company
Moravia IT, LLC
223 E Thousand Oaks Blvd, Suite 202,
Thousand Oaks CA 91360 USA
Localisation services
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS RWS — Annual Report 2022
155
Notes to the Parent Company Financial Statements (continued)
Subsidiary undertaking
Registered address
Nature of business
Communicare Limited*1
Corporate Translations Inc (UK) Limited
RWS Language Solutions Limited
Japanese Language Services Limited *1
Pharmaquest Limited *1
RWS Group Limited
RWS Information Limited
RWS (Overseas) Limited
RWS Translations Limited
RWS UK Holding Co. Limited
Moravia IT s.r.o.*
Moravia IT (Nanjing) Co., Ltd
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
Vlněna 526/1, Trnita, 602 00 Brno,
Czech Republic
4F Zhongnan International Mansion, no 129
Zhongshan Road, Nanjing, 210004 Jiangsu,
China
Localisation services
Localisation services
Moravia IT Hungary Kft.
Horvát utca 14-24, 1027 Budapest, Hungary Localisation services
RWS Moravia Colombia S.A.S.
Iconic Translation Machines Ltd
RWS Moravia India Private Limited
Carrera 43 A 1 50 Torre 2 of 864, Medellin,
Antioquia, Colombia
Localisation services
Invent Building, DCU Campus, Glasnevin,
Dublin 9, Ireland
Machine translation
Unit 1319, 13 Floor, Building A1, Rupa
Solitaire Sector 1, Millenium Business Park,
Navi, Mumbai, Mumbai City, MH 400710,
Maharashtra, India
Localisation and technology
services
RWS Moravia (Thailand) Company Limited
187/2/6 Chang Klan Road, Chang Klan,
Muang Chiang Mai, 50100 Thailand
Localisation and technology
services
Webdunia Technologies Inc.
LLC SDL Rus
515 Plainfield Avenue Suite 102, Edison,
NJ - 08817, USA
Localisation and technology
services
Zanevsky prospect 71, building 2, letter A,
office 1301, 195112, St. Petersburg, Russia
Localisation services
SDL Multi-Lingual Solutions (Singapore) PTE Ltd 600 North Bridge Road, #23-01 Parkview
Localisation services
SDL d.o.o Ljubljana
Software Development Language Solutions
Hispania, SL
SDL Vietnam Limited
SDL Sweden AB
SDL Tridion AB
SDL Inc
SDL XyEnterprise LLC
SDL Government Inc
Alterian Holdings Inc
RWS Life Sciences Inc
SDL Software Technology (Shenzhen) Co. Ltd
SDL Hong Kong Limited
SDL Belgium NV
Square, Singapore 188778
Dunajska cesta 167, 1000 Ljubljana,
Slovenia
Localisation services
Claudio Coello, 37, 28001 Madrid, Spain
Localisation services
REE Tower, No. 9 Doan Van Bo Street, ward 12
district 4, Ho Chi Minh city, Vietnam
Localisation services
Fatbursgatan 1, Stockholm, S-118 28,
Sweden
Localisation services
Technology services
201 Edgewater Drive, Suite 225, Wakefield,
MA 01880-1296 USA
Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801 USA
Room 309, Floor 3, Resources-Tech-
Building, Songping ShanRoad, Nanshan
District, Shenzhen City, Guandong, China
Suites 1101-1103, 11th Floor, Three
Exchange Square, 8 Connaught Place,
Central, Hong Kong
Vital Decosterstraat 44, 3000 Leuven,
Belgium
Localisation and technology
services
Technology services
Technology services
Holding company
Translation and linguistic validation
Localisation and technology
services
Localisation services
Localisation services
156
RWS — Annual Report 2022 NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
Subsidiary undertaking
Registered address
Nature of business
New Globe House, Vanwall Business Park,
Vanwall Road, Maidenhead, SL6 4UB, UK
SDL Limited
SDL Sheffield Limited
SDL Global Holdings Limited
SDL Tridion Limited
XyEnterprise Limited
Bemoko Consulting Limited *1
SDL Nominees Limited
Automated Language Processing Services Ltd
Interlingua Group Limited
Alpnet UK Limited *1
Computype Limited *1
Alterian Holdings Limited
Alterian Technology Limited
SDL (Newbury) Limited
Intrepid Consultants Limited
SDL Technologies (Australia) Pty Ltd
Level 16, 1 Market Street, Sydney NSW
2000, Australia
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
Localisation services
SDL do Brazil Global Solutions Ltda
Rua Barão do Triunfo 73, Brooklin Paulista,
Saõ Paolo, Brazil
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 Zagreb d.o.o.
Bednjanska 14/II, 10 000 Zagreb, Croatia
Localisation services
SDL CZ s.r.o.
SDL France SARL
Nerudova 198, Hradec Králové, 50002 Czech
Republic
Localisation services
44-46 Rue Alphonse Penaud, Paris, 75020,
France
Localisation services
SDL Tridion GmbH *1
Balanstrasse 49, 81669 Munich, Germany
Technology services
Trados GmbH
SDL Hellas Efarmoges Pliroforikis Limited
Waldburgstraße 21, 70563 Stuttgart,
Germany
396 Mesogeion Avenue, 153 41 Agia
Paraskevi, Attica, Athens, Greece
Technology services
Localisation services
SDL Magyarorszag Szolgaltato Kft
Arboc u 6 III, Budapest, Hungary
Localisation services
SDL Multilingual Solutions Private Ltd
SDL Technologies India Private Limited
SDL Global Solutions (Ireland) Limited
SDL Italia Srl Unipersonale
SDL Japan KK
SDL Tridion KK
1319, 13th Floor, Bldg A1, Rupa Solitaire,
Sector 1, Millenium Business Park, Mumbai,
400 710, India
Building 4, Block A, 7th Floor, 77 Town
Centre, Yemalur Main Road, Off Old Airport
Road, Bangalore - 560 037, India
Localisation services
Localisation services
2 Shelbourne Buildings, Crampton Avenue,
Shelbourne Road, Dublin 4, Ireland
Localisation services
Legale Tributario, Via 20 Settembre n 5
00187 Roma, Italy
Localisation services
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
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS RWS — Annual Report 2022
157
Notes to the Parent Company Financial Statements (continued)
Subsidiary undertaking
Registered address
SDL Luxembourg SARL
SDL Holdings BV
SDL Media Manager BV
SDL Netherlands BV
SDL Xopus BV
SDL Poland Sp. z o.o.
SDL Portugal Unipessoal LDA
SDL Language Weaver srl
SDL Turkey Translation Services and Commerce
Limited Company
Liones Holding B.V. *2
Liones Group B.V. *2
Liones B.V. *2
Fonto Group B.V. *2
26 Boulevard Royal, Office no. 125, 1st
Floor, L2449 Luxembourg
Jupiter Plaza Arena, Herikerbergweg 78-80,
1101 CM Amsterdam, Netherlands
ul.Fordonska 246, 85 766 Bydgoszcz,
Poland
Nature of business
Localisation services
Holding company
Technology
Localisation and technology
Technology
Localisation services
Rua Santo António Contumil, nº 130, Porto,
Portugal
Localisation services
Scala Office Building, 34 Someșului Street,
Cluj-Napoca, Cluj County, Romania.
Localisation services
Barbaros Mah. Kardelen Sk. Palladium
Tower Blok No: 2 İç Kapı No: 41 Ataşehir,
Istanbul, Turkey
Polakweg 7, 2288 GG Rijswijk, The
Netherlands
Localisation services
Holding company
Content authoring
Content authoring
Content authoring
* 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.
*1 Entites dissolved in FY2022.
*2 Liones Holding B.V., Liones Group B.V., Liones B.V. and Fonto Group were acquired on 22 March 2022.
All subsidiary undertakings, except SDL Limited, RWS Group Limited and Iconic Translation Machines Ltd, are held
indirectly.
All subsidiary undertakings are 100% owned.
158
RWS — Annual Report 2022 NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
8. DEBTORS
Amounts owed by Group undertakings
Prepayments
Amounts due within one year
2022
£m
232.0
0.3
232.3
2021
£m
212.5
0.4
212.9
Included within amounts owed by Group undertakings is an amount of £5.0m (2021: £5.0m) 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. An Expected Credit Loss (ECL) is recognised against amounts owed, only when it is considered to be material
and there is evidence that the credit worthiness of a counterparty may render the balances irrecoverable. Management
have considered the balances owed by Group undertakings and concluded any ECL to be immaterial.
9. LOANS
Loans due in more than one year
2022
£m
29.3
2021
£m
35.2
On 3 August 2022, the Group entered into an Amendment and Restatement Agreement (“ARA”) with its banking
syndicate which amended its existing US$120m RCF maturing on 10 February 2024, to a US$220m RCF Facility maturing
on 3 August 2026 with an option to extend maturity to 3 August 2027.
Under the terms of the ARA, the Group’s interest margin over the Secured Overnight Financing Rate (“SOFR”) reference
interest rate ranges from 95bps to 195bps and is dependent on 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$100 million
uncommitted accordion facility.
The debt refinancing was accounted for as a debt modification without extinguishment resulting in a nominal debt
modification gain being recognised in the parent company’s statement of comprehensive income of £5k.
All transaction costs incurred in amending and re-stating the RCF have been capitalised and are being amortised over
the 4-year term of the facility on a straight-line basis. Currently all Group borrowings under the RCF are denominated in
USD.
10. TRADE AND OTHER PAYABLES
Amounts owed to Group undertakings
Other taxes and social security costs
Other payables
Accruals
Deferred consideration
Total Other creditors
Trade Creditors
Amounts due within one year
2022
£m
-
0.1
1.0
2.7
1.5
5.3
0.6
5.9
2021
£m
7.6
-
0.8
2.4
1.5
12.3
0.1
12.4
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 2022
159
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 2022, the total share-based payment charge amounted to £3.2m (2021: £1.4m). 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 £184.6m 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 (2021: £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
2022
£m
83.2
34.4
2.1
3.2
12.5
0.3
2021
£m
55.0
34.4
11.2
1.4
14.1
0.3
135.7
116.4
2022
£m
138.5
(34.4)
(2.1)
(3.2)
(12.5)
86.3
2021
£m
118.5
(34.4)
(11.2)
(1.4)
(14.1)
57.4
160
RWS — Annual Report 2022 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.
2020
Organic Revenue
2021
Organic Revenue
Growth/(Loss)
2021
Organic Revenue
2022
Organic Revenue
Growth/(Loss)
2022 Organic
Revenue2
Organic
Revenue
Growth
IP Services
Regulated Industries
Language Services
Language & Content Technology
Total
112.8
157.2
320.9
113.7
704.6
0.8
14.0
2.7
2.8
20.3
113.6
171.2
323.6
116.5
724.9
(6.4)
1.8
18.5
9.1
23.0
107.2
173.0
342.1
125.6
747.9
(6%)
1%
6%
8%
3%
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 2022 foreign exchange rates to both years.
2021
Revenue at
FY 22 Rates
2021
Pre Acq Revenue
at FY 22 Rates1
2021 Organic
revenue at
constant
exchange rates
2022
Revenue Growth
2022 Organic
Revenue2
IP Services
Regulated Industries
Language Services
Language & Content Technology
Total
117.5
168.6
324.4
110.9
721.4
1.4
8.1
13.9
8.4
31.8
118.9
176.7
338.3
119.3
753.2
(11.7)
(3.7)
3.8
6.3
(5.3)
107.2
173.0
342.1
125.6
747.9
1 Includes SDL and Horn & Uchida pre-acquisition operating results 2 Excludes Liones Holding B.V. FY22 operating results
Organic
Constant
Currency
Revenue
Growth
(10%)
(2%)
1%
5%
(1%)
Adjusted Operating Profit
Adjusted operating profit is calculated by adjusting operating profit for the impact of exceptional items, amortisation
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
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
2022
£m
138.5
7.1
15.7
(8.7)
152.6
Cash conversion
96.5%
105.4%
118.5%
96.7%
110.2%
ALTERNATIVE PERFORMANCE MEASURES RWS — Annual Report 2022
161
Glossary
Shareholder Information
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. The Group
uses share-based payments as part of remuneration
to align the interests of senior management and
employees with shareholders. These are non-cash
charges and the charge is based on the Group’s share
price which can change. These costs are therefore
added back to assist with the understanding of the
underlying trading performance.
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.
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 8100
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: +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
162
RWS — Annual Report 2022
Shareholder Information
RWS Holdings plc
ANNUAL REPORT 2022
Europa House
Chiltern Park
Chiltern Hill
Chalfont St Peter
Bucks
SL9 9FG
United Kingdom
Tel: +44 (0) 1753 480 200
Email: rws@rws.com
rws.com
© 2022 RWS Holdings plc.
All rights reserved
Annual Report
2022
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