2024 ANNUAL REPORT
RWS Holdings plc
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
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Welcome to our
2024 Annual Report
We have continued to make good progress in the delivery of our
medium-term strategy, having returned to growth in the second half
of the year on an organic constant currency basis. It is clear that our
investments in growth and AI and the efficiency actions that we have
taken in line with our strategy are allowing us to successfully pivot
towards both AI-led and more specialist solutions, as well as facilitating
a more resilient performance.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
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Contents
STRATEGIC REPORT
4
Group Overview
6
Performance and Financial Highlights
8
Chairman’s Statement
10
Market Overview
12
Strategy and Growth Model
16
Chief Executive Officer’s Review
23
Key Performance Indicators
24
Environmental, Social and Governance
34
Sustainability Accounting Standards Board Disclosure
37
Non-Financial and Sustainability Information Statement
38
Chief Financial Officer’s Review
42
Principal Risks and Uncertainties
46
Task Force on Climate-related Financial Disclosures
58
Our Stakeholders
60
Section 172 Statement
GOVERNANCE REPORT
62
Chairman’s Letter to Shareholders
64
Board of Directors
66
Corporate Governance Report
74
Audit Committee Report
78
Nomination Committee Report
80
Directors’ Remuneration Report
88
Directors’ Report
92
Statement of Directors’ Responsibilities
FINANCIAL STATEMENTS
94
Independent Auditor's Report to the Members of RWS Holdings plc
104
Consolidated Statement of Comprehensive Income
105
Consolidated Statement of Financial Position
106
Consolidated Statement of Changes in Equity
107
Consolidated Statement of Cash Flows
108
Notes to the Consolidated Financial Statements
146
Parent Company Financial Statements
148
Notes to the Parent Company Financial Statements
156
Alternative Performance Measures
158
Glossary
158
Shareholder Information
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Group Overview
The RWS Group comprises four operating divisions. Each division carries overall
accountability and responsibility for revenue, profit, operations, research and
development, as well as sales, marketing and client delivery.
RWS’S FOUR DIVISIONS
LANGUAGE SERVICES
+2.5%
Organic constant currency
revenue increase in FY24
The Language Services division provides localisation and
related solutions across a wide range of end markets
including automotive, chemical, consumer goods, retail,
technology, travel and telecommunications.
The range of services includes AI-centred localisation
and data services, eLearning, interpreting services and
multimedia localisation. The division has three client
segments – global technology enterprises (served by
the Enterprise Services business unit), major accounts
and small and medium enterprises (both served by
the Strategic Content Solutions business unit). RWS’s
technology products, such as Language Weaver® and
Trados®, either underpin the division’s services solutions
(such as Evolve and HAI) or are sold in combination with
them. The division provides solutions to support clients
at any stage of their globalisation journey.
REGULATED INDUSTRIES
-6.8%
Organic constant currency
revenue decline in FY24
The Regulated Industries division provides a range of
localisation services for three verticals – life sciences,
financial services and the legal sector. Service
provision is centred around highly specialised technical
translations with a strong emphasis on quality and
security, and an increasing adoption of technology.
The division’s clients include 19 of the world’s top 20
pharmaceutical companies, all of the top 10 asset
management companies and 18 of the top 20 law firms.
In the pharmaceutical and medical device verticals,
we work in both the clinical and regulatory phases of
therapy development and our services often make a
critical contribution to life safety.
LANGUAGE & CONTENT
TECHNOLOGY
-0.7%
Organic constant currency
revenue decline in FY24
The Language and Content Technology (“L&CT”)
division offers a range of technology products
which deliver translation and content management
solutions. A pioneer in machine translation (“MT”),
Language Weaver® is a neural MT product, using
linguistic AI. With Trados®, RWS offers a suite of
translation productivity and management solutions
for enterprises, small and medium-sized organisations
and professionals. Tridion®, Contenta® and Propylon®
are the Group’s portfolio of content management
products, which offer specialised solutions for multiple
end markets, including aerospace and defence, high-
tech, law-makers and law-takers, life sciences and
manufacturing, alongside a leading XML editor (Fonto).
All these products offer clients enterprise grade
privacy, security and quality.
IP SERVICES
+3.3%
FY23 to FY24 organic constant
currency revenue increase
The IP Services division is one of the world’s leading
providers of patent translations, filing solutions and
Intellectual Property (“IP”) search, renewal, recordals
and monitoring services. The division delivers highly
specialised technical translations to patent applicants
and their representatives and counts 19 of the world’s
top 20 patent filers as its clients.
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OPERATING
DIVISIONS
LANGUAGE
SERVICES
• AI-enabled
localisation
solutions for
multiple verticals
• Includes
data training,
multimedia
localisation,
eLearning and
interpreting
services
REGULATED
INDUSTRIES
• Highly specialised
technical
translations,
increasingly
influenced by
technology, for
specific verticals:
• Life Sciences
• Financial Services
• Legal Services
LANGUAGE &
CONTENT
TECHNOLOGY
• Linguistic AI –
neural machine
translation
• Language
technology
– translation
management and
productivity
• Content
management
technology
IP SERVICES
• Technical
translations for
clients in multiple
end markets
• IP lifecycle services
including:
• Search
• Translation
• Filing
• Monitoring
• Recordals
• Renewals
GROUP
REVENUE
SHARE
FY23:
45%
FY24:
46%
FY23:
22%
FY24:
20%
FY23:
19%
FY24:
20%
FY23:
14%
FY24:
14%
PRODUCTION
PLATFORM
SUPPORT
FUNCTIONS
Corporate Development • Finance • Human Resources • Information Technology
• Legal & Professional Advisory
Language eXperience Delivery
SUPPORT FUNCTIONS
Our support functions provide a range of shared
services, playing a pivotal role in supporting our four
divisions and facilitating the integration of acquisitions
while furthering margin development. These functions
include Corporate Development, Finance, Human
Resources, Information Technology and Legal and
Professional Services.
LANGUAGE EXPERIENCE DELIVERY
Language eXperience Delivery (“LXD”), RWS’s unique
production platform, supports all four divisions. The LXD
translates the majority of client content from the Language
Services and Regulated Industries divisions: 83% (FY23:
63%) and, as part of its transformation programme, began
handling volumes from the IP Services division in the first
quarter of FY24. The LXD uses RWS’s AI-enabled technology
products to support operational efficiency and excellence
in the delivery of solutions to clients - the Trados Enterprise
product is deployed to aid translation productivity and
management and Language Weaver AI is routinely used
both to analyse client content to enable it to be better
assigned to linguists and to pre-translate content before
it is post-edited by linguists. Approximately 55% of client
content is machine-translated first by Language Weaver,
making the LXD an extensive and experienced user of AI.
The LXD also gives clients access to the world’s largest
linguistic network, which includes over 1,800 in-house
translators and in excess of 40,000 freelance specialists.
The LXD’s linguistic and technical expertise serves as the
bedrock for offering uninterrupted services 24/7/365 to
clients in over 106 countries. The LXD is now running a
common supply chain for the whole Group and, as a result,
all three services divisions benefit from volume discounts
with our freelance network of language specialists. LXD
supply chain team expertise is used to support the sourcing
and management of the communities that underpin the
delivery of TrainAI and other data services.
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Performance and Financial Highlights
OUR GEOGRAPHICAL REACH
62 offices
across 34
countries
Client NPS Score
Countries our clients
are located across
Number of clients
AI-related patents
FTE employees at
30 September 2024
In-house translators
Freelance linguists
Countries our in-house and network
of translators are located across
25%
Proportion of
revenue by AI
650
Language pairs
9,059
1,816
40,000+
193
47
+48
8,000
106
3.27bn
Words processed in
FY24 by our Language
eXperience
Delivery platform
Argentina
Colombia
Canada
Chile
Brazil
United States
Lebanon
South Africa
China
Hong Kong SAR
India
Japan
Republic of Korea
Russia
Singapore
Taiwan
Thailand
Vietnam
= 1 office
UK
Belgium
Croatia
Czechia
Finland
France
Germany
Ireland
Luxembourg
Netherlands
Poland
Portugal
Romania
Spain
Switzerland
Norway
26
14
20
1
1
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PROFIT BEFORE TAX
£60.0m
2023: £(10.9)m
CASH
£61.5m
-£14.7m
2023: £76.2m
REVENUE
£718.2m
-2% (0% OCC1)
2023: £733.8m
1 Excluding the impact of acquisitions and assumes constant currency.
2 Adjusted profit before tax or Adjusted PBT – is stated before amortisation of acquired intangibles, acquisition costs, share-based payment expense
and exceptional items (refer to page 157). 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 156.
3 Comprises loans less cash and cash equivalents excluding lease liabilities (refer to Note 16).
ANNUAL REVENUE (£M)
2004
2008
2012
2016
2017
2018
2019
2020
2021
2022
2023
2024
800
700
600
500
400
300
200
100
2004
2008
2012
2016
2017
2018
2019
2020
2021
2022
2023
2024
140
120
100
80
60
40
20
ANNUAL ADJUSTED PBT (£M)
BASIC EPS
12.8p
ADJUSTED EPS2
21.6p
ADJUSTED PBT2
£106.7m
PROPOSED FINAL DIVIDEND
10.00p
NET (DEBT)/CASH3
£(12.9)m
NET DEBT
INCLUDING LEASE LIABILITIES
£(40.1)m
+19.9p
2023: (7.1)p
-11%
2023: £120.1m
-7%
2023: 23.3p
+2%
2023: 9.80p
-£36.5m
2023: £23.6m
2023: £(9.9)m
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
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Chairman’s Statement
In FY24 we continued to invest in line with our strategy and the changing nature
of our industry, particularly the growing role that AI is playing. That response was
demonstrated by the launch of Evolve, our pioneering linguistic AI solution, the further
adoption of AI features and functionality into our software products and the increasing
deployment of AI across our operations. In our Language eXperience Delivery (“LXD”)
platform approximately 55% of words are machine-translated first and AI-related
products and services now account for a quarter of Group revenues.
The Group continues to operate in attractive markets with a combined global size
estimated at £49bn, where our specialist knowledge, in-house technology, proprietary
linguistic data, security, reputation and scale are critical enablers for our clients
embarking on an AI-influenced strategy. Our results reflect encouraging progress in
a number of areas and demonstrate that we are well positioned for clients’ increased
appetite to harness AI to meet their language and content needs.
PERFORMANCE
In FY24 the Group delivered £718.2m of revenues, a
decline of approximately 2% compared with the previous
year (FY23: £733.8m). This reflected a combination of
good progress with our growth initiatives, particularly
TrainAI and Linguistic Validation and recovery in some end
markets, offset by continuing reduced activity in others.
We were pleased to see a return to underlying growth
during the year – on an organic constant currency (“OCC”)
basis, RWS grew 2% in the second half, bringing FY24 in
line with the prior year. Both Language Services and IP
Services delivered encouraging growth for the full year
along with significant improvements in both Regulated
Industries and Language & Content Technology in the
second half. In parallel, we have continued to focus on
making the business more efficient and delivering our
planned investments in transformation.
Reported profit before tax for the year was £60.0m (FY23:
£(10.9)m). Adjusted profit before tax declined to £106.7m
(FY23: £120.1m), reflecting our ongoing investments in
growth and transformation, foreign exchange headwinds
and unfavourable client and business mix in some parts
of the Group, offset by the benefits of continued focus
on cost efficiency and an increasing proportion of work
delivered by the LXD.
The Group continues to have a strong balance sheet, with
net assets of £899.6m (FY23: £987.3m) at 30 September
2024. This included net debt (excluding lease liabilities) of
£(12.9)m (FY23: net cash of £23.6m).
Julie Southern
PEOPLE AND BOARD
At 30 September 2024, RWS employed 9,059 full-time
equivalents (FY23: 7,910) across 62 locations in 34
countries. This increase is driven by the resources
recruited to support the increase in TrainAI business
during the year. Our agile working policy has
successfully balanced regular face-to-face interactions
for effective collaboration with the benefits of
technology, leading to significant time and energy
savings by reducing commuting. Amid cost-of-living
challenges in many regions, our commitment to flexible
working has been well-received globally. Additionally,
we continued to assess the effectiveness and operating
costs of our locations and reduced the number of
offices by approximately 7%, resulting in further savings
in property and related costs.
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Despite challenging global macroeconomic and
political conditions, our Group has navigated the
year with resilience and dedication. On behalf of
the Board, I extend our gratitude to all our teams
worldwide for their unwavering commitment to
delivering high-quality services and products to
our clients. Additionally, the Group has continued
to provide support to colleagues affected by the
ongoing conflicts in Ukraine and the Middle East.
Paul Abbott and Graham Cooke joined RWS as
Independent Non-executive Directors with effect from
1 January 2024. Their combined breadth of experience
in technology platforms and solutions, implementing
organisational change and driving business growth in
customer-focused, international organisations further
strengthens the Group’s highly experienced Board.
Paul Abbott is currently Chief Executive Officer of
American Express Global Business Travel, the global
software and services company for travel and expense
for more than 20,000 businesses. Since 2019 Paul
has led Amex Global Business Travel through several
strategic acquisitions, transforming the company’s
product and technology solutions and driving
significant growth.
Graham Cooke was the founder and Chief Executive
Officer of Qubit, a leading SaaS company in the
e-commerce space, providing AI-personalised shopping
recommendations to more than a billion shoppers per
month. He oversaw the sale of Qubit to Coveo Solutions
in 2021. Prior to Qubit, Graham was one of the first
European employees at Google, working on its Ad
Platform and Google Analytics products.
On 12 January 2024 Lara Boro, Senior Independent
Director, informed the Board of her intention to step
down as a Non-executive Director at the Annual
General Meeting on 22 February after six years on the
Board. We would like to extend a warm thank you to
Lara for all her support over the years. David Clayton
succeeded Lara Boro as Senior Independent Director.
On 23 May Ian El-Mokadem informed the Board of his
intention to step down as Chief Executive Officer and
Director of the Company to pursue the next stage of
his career. On 26 November the Group announced
the appointment of Benjamin Faes as Chief Executive
Officer, succeeding Ian El-Mokadem, with effect from
6 January 2025.
We are grateful for his leadership of RWS during a
pivotal time for the business and the industry. He, and
our broader leadership team, have made considerable
progress in line with the Group’s strategy. We wish Ian
all the very best in his future.
SUSTAINABILITY AND ESG
Our commitment to uphold the highest standards
in environmental, social and corporate governance
is the foundation for all our business activities and
stakeholder engagements. We are proud to have
achieved significant milestones in the past year.
On 18 June 2024, RWS announced that the Science Based
Targets initiative (“SBTi”) had validated our commitment
to reduce Scope 1 and 2 GHG emissions by 54.6% by the
end of the year ending 30 September 2033, and Scope 3
carbon emissions by 61.1% per million GBP value added
within the same time frame. We also announced on 11
December 2023 that RWS had been awarded a silver
medal by EcoVadis for its sustainability achievements.
We are proud of these significant achievements which
underscore our commitment and journey towards being a
sustainable business.
The RWS Foundation made more than £200,000 in
donations over the year, supporting three programmes
– the RWS-Brode Scholarship Programme with the
University of Manchester, together with our ongoing
work with CLEAR Global, and the development work
to make Trados an accessible tool for those with visual
impairments.
DIVIDEND
The Group continues to deliver in against its progressive
dividend policy and this marks the 21st year in succession
that we have increased the dividend. The Group remains
cash generative and, while our investment programme
has meant a higher level of capital expenditure in FY24, we
continue to focus on cash conversion and managing our
net cash/net debt position effectively.
The Board therefore recommends a final dividend of 10p
per share. Together with the interim dividend of 2.45p per
share, this will result in a total dividend of 12.45p for the
year, an increase of 2% compared with FY23. Subject to
final approval at the AGM, the final dividend will be paid
on 14 February 2025 to shareholders on the register at 17
January 2025.
SUMMARY
Whilst our market has been more challenging than
anticipated when we set out our medium-term strategy
in 2022, it is clear that ongoing investments in our growth
initiatives and the efficiency actions we have made in
line with that strategy have enabled a more resilient
performance.
We are uniquely positioned to capitalise on advancements
in AI and technology. The demand drivers for our products
and services are well-established and, combined with the
ongoing success of our growth initiatives, we see clear
opportunities ahead to emerge from the current market
transition in a position of strength. The Group maintains a
robust balance sheet, ensuring our capacity to be able to
invest to ensure our long-term competitiveness.
Our global presence, diverse market portfolio and excellent
client retention rates further strengthen our confidence
in the Group’s long-term potential. Our innovation in AI
is a key pillar of our strategy, ensuring we stay ahead in a
rapidly evolving landscape.
Julie Southern | Chairman
11 December 2024
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
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Market Overview
RWS, leveraging its AI-first solutions, addresses a market valued at approximately
£49bn. Below is a breakdown of the key end markets in which we operate, along with
estimated market sizes, demonstrating significant opportunities for expansion.
CORE LOCALISATION SERVICES
As organisations seek to establish communication
channels with internal and external audiences across
diverse geographies and languages, they require the
linguistic and cultural expertise offered by language
service providers. The core localisation services market
(excluding Life Sciences, Finance, and Legal) was
estimated at approximately £28 billion in 2024.
This market, though highly fragmented, experienced a
decline from 2023 to 2024 and, while we believe there
increasingly are AI-driven opportunities, technology
continues to have an impact on price. RWS is well-
positioned to capitalise on this dynamic, not only through
growing revenues in sales of our technology products
such as Language Weaver, but also as a leader in applying
AI to enhance localisation efficiency through combining
machine intelligence and human intelligence for
scalability, agility and accuracy – further reinforcing RWS’s
competitive edge in a rapidly evolving space.
SPECIALIST LOCALISATION SERVICES
LIFE SCIENCES, FINANCE AND LEGAL,
IP SERVICES
The Life Sciences sector includes a diverse range of
businesses, such as pharmaceutical companies, clinical
research organisations and medical device firms. Each of
these sectors has unique and specific requirements for
translation and linguistic expertise, heavily influenced
by regulatory demands. Additionally, these industries
are increasingly adopting digital strategies and AI
capabilities to enhance their operations.
Financial institutions and legal firms require advanced
and secure technology and services to create, manage
and transform their business-critical content for their
local and global audiences. The rising emphasis on
sustainability is creating the demand for content
that supports environmental, social and governance
initiatives.
IP Services clients also require specialised localisation
support to manage the complexities of patent
translation. Together with the Life Sciences and Finance
& Legal end markets, we estimate the market for these
services at £9 billion.
MARKET SIZE SERVICES AND TECHNOLOGY BREAKDOWN
£49bn MARKET SIZE
28
Core localisation services
9
Specialist localisation services (Life Sciences, Finance & Legal, IP)
6
Specialist non-localisation services (Intellectual Property, AI Data Services)
3
Language AI (Neural Machine Translation)
0.7
Language Technology
2.8
Content Technology
Source: Analysis by RWS based on research from Slator, CSA and Cognilytica.
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SPECIALIST NON-LOCALISATION
SERVICES
AI DATA SERVICES
The emergence of generative AI is driving organisations
to rapidly scale their AI initiatives and enhance their
adoption strategies. A crucial factor in the success of
these efforts is access to high-quality, curated data for
training AI and machine learning (“ML”) models. This
high-quality data is achieved through the collection,
annotation and labelling of datasets at scale and in
various languages and formats by human experts, which
is essential for developing multimodal AI systems.
The market for AI data training, annotation and labelling
services was estimated at approximately £2 billion in
2024. With the rise of generative AI, this sector is set for
substantial growth in the short to medium-term.
IP SERVICES
Enterprises looking to protect and monetise their
innovations must collaborate with a partner who fully
understands every aspect of the patent process. This
involves not only patent translation and filing but also
managing renewals, recordals and conducting thorough
IP research. Our IP Lifecycle Management strategy has
opened up IP product adjacencies that were previously
not considered as our core market and we therefore
estimate the addressable IP Services market size
(excluding the translation component) as approximately
£4 billion in 2024.
LANGUAGE TECHNOLOGY
Enterprises and translators, both freelance and in-
house, rely heavily on advanced language technology
tools, including translation management systems,
collaboration platforms and computer-assisted
translation software. These technologies are essential for
localisation teams, streamlining workflows, enhancing
collaboration with multiple stakeholders and ensuring
the seamless creation, management and delivery of
content optimised for global markets. The integration
of AI capabilities further amplifies efficiency, enabling
smarter automation, improved translation accuracy
and scalability across diverse languages and regions.
The market for Language technology was estimated at
approximately £0.7 billion in 2024.
LANGUAGE AI (NEURAL MACHINE
TRANSLATION)
Advancements in Language AI neural machine
translation (“NMT”) have not only continued to improve
translation accuracy but also expand support for a
broader range of language combinations, positioning
the technology for widespread adoption across global
markets. As NMT models are typically trained on
controlled datasets focused on specific language pairs,
this reduces the risk of exposure to sensitive information
and supports the maintenance of accuracy. NMT remains
the preferred option for high-accuracy translations
in specific domains, while LLMs offer versatility and
potential for handling more nuanced language tasks. As
these technologies develop, we see convergence that
combines the strengths of both approaches. The market
for Language AI (NMT), was estimated at approximately
£3 billion in 2024.
CONTENT TECHNOLOGY
Enterprises are increasingly adopting strategies to
streamline their fragmented content management
systems and establish a unified source of truth
across their content ecosystem. Leveraging AI-driven
capabilities, organisations can automatically structure
and tag content, enabling centralised management and
seamless re-use across multiple devices and channels,
including web, intranet, technical documentation
and immersive platforms such as virtual reality. AI
also enhances content discovery, personalisation and
scalability, driving greater operational efficiency and
business value. The market for Content Technology was
estimated at approximately £2.8 billion in 2024.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
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Strategy and Growth Model
The Group has continued to make solid progress with the delivery of its medium-term
strategy, navigating a series of market headwinds over the last 18 months and remaining
committed to its investments in growth and transformation. RWS remains dedicated to
building a long-term sustainable business, delivering both financial and social value.
The Group’s five-year plan is centred on growing
organically through:
• Accelerating penetration into existing high growth
segments (e.g. Linguistic Validation)
• Pivoting into adjacent high growth segments (e.g. TrainAI)
• Growing share of wallet through expanding our
service range (e.g. IP life cycle services and Evolve, our
linguistic AI Solution)
• Winning more clients, through targeted sales
approaches in key end markets (e.g. content
management solutions for life sciences clients)
• Re-affirming our technology leadership, sunsetting
some of our legacy translation management solutions
The Language eXperience Delivery (“LXD”) platform
uses RWS’s AI-enabled technology products to support
operational efficiency and excellence in the delivery of
solutions to clients – the Trados Enterprise product is
deployed to aid translation productivity and management
and Language Weaver is routinely used both to analyse
client content to enable it to be better assigned to
language specialists and to pre-translate content before it
is post-edited by linguists.
The LXD is now running a common supply chain for the
whole Group and, as a result, all three services divisions
benefit from volume discounts with our extensive
freelance network of language specialists. LXD supply
chain team expertise is also used to support the sourcing
and management of the communities that underpin the
delivery of TrainAI and other data services.
We continued to invest in the transformation of the
Group in line with our medium-term strategy and remain
committed to our planned investments in sales and
marketing, R&D and the consolidation of our operating
platforms including HR and Finance systems. We believe
that these investments will underpin future growth,
efficiency and margin development.
The focus on new sources of organic growth is
complemented by a disciplined M&A programme to
selectively acquire businesses which enhance our organic
growth profile, deliver above industry margins and align
with our strategic priorities to add:
• Assets that broaden our natural language processing,
content creation and linguistic testing capabilities
• New capabilities in AI technology and technology-
enabled language services in both text and multimedia
formats
• AI data services
• Localisation assets with attractive end-market exposure
RWS PURPOSE AND VALUES
Our purpose is Unlocking Global Understanding.
Everything we create and deliver, whether it is
technology-enabled services, AI-centred solutions or
software products, is about transforming content to
enable universal understanding, allowing our clients
to connect with their audiences. Our purpose is
supported by our values. These values capture RWS
at our best and reflect what our clients and other
stakeholders consistently tell us they appreciate about
RWS. These values are a daily reminder of what is
important to us, helping to guide and strengthen our
culture as we work together with purpose. Our focus
on partnership, the pioneering spirit of our people
and our growth mindset all contribute to our ability to
deliver consistently for clients.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
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RWS VALUES
EXPLOSION
OF DATA /
CONTENT
90% of the
world's data was
generated in the
last two years
alone¹
>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
$15tn (14%) of
global GDP by
2030⁴
Value of global
trade expected
to grow 70%
from 2020 to
$29.7tn in 2030⁵
INCREASING ESG
/ REGULATORY
REQUIREMENTS
CONTINUED
INNOVATION
GROWTH IN AI /
AUTOMATION
CHANGING
GLOBALISATION
MARKET
We play as one team –
with colleagues, clients
and partners
WE PARTNER
We shape the future –
combining the best of
people and technology
WE PIONEER
We choose to be
positive – using every
experience to grow
WE PROGRESS
We keep our promises
– to clients, colleagues
and communities
WE DELIVER
RWS DEMAND DRIVERS
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.
Sources: ¹ Statista; ² Office of the Federal Register; ³ SP Global Intelligence; ⁴ PWC; ⁵ Standard Chartered
To address these demand drivers, we provide a unique combination of technology and human expertise. We support
our clients to create, collect, transform and analyse, launch and manage content. This helps our clients grow ensuring
they are understood anywhere, in any language and in any medium.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
14
Building long-
term client
relationships
• We offer a broad range of technology and AI-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 both by sector and by geography, spanning Europe,
APAC, North and South America and Africa.
• We support clients through dedicated sector account management teams and enjoy
high average levels of tenure – more than 17 years for our top 30 clients.
Deepening
our cultural
expertise
• We offer true global coverage, with a presence in more than 30 countries.
• We have the largest linguist network in the sector, with more than 1,800 in-house
language specialists, complemented by access to more than 40,000 freelance
experts in 193 countries.
• We support more than 650 language pairs.
• We are rich in data – with our translation memories and term bases across multiple
markets becoming increasingly valuable.
Strategy and Growth Model (continued)
CONTENT VALUE CHAIN
MULTIPLE MEDIUMS
RWS’S RIGHT TO WIN
TEXT
IMAGE
AUDIO
VIDEO
CREATE
COLLECT
TRANSFORM
ANALYSE &
ENGAGE
LAUNCH &
MANAGE
2
1
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
15
Deploying
our unique
technology
and AI
• We are award-wining machine translation (“MT”) pioneers via our AI-based Language
Weaver product and Evolve solution. Our neural MT research team is accredited with
47 patents.
• Through Trados we offer a range of market-leading, cloud-oriented translation
management and productivity tools, with functionality that allows clients to make use
of LLMs in a secure way within the tool.
• Our content management technologies – Tridion, Fonto, Propylon 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 software product suite is sold both separately and alongside our service
solutions, as well as supporting our internal efficiency and effectiveness.
• We continue to shift towards a higher proportion of SaaS revenues in our technology
products to enhance recurring revenues and quality of earnings.
Developing
our portfolio
• Our 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 multiple end markets, with greater emphasis on higher growth
segments such as data services (via our TrainAI solution) and linguistic validation
(in Life Sciences).
• Continued growth in data and content that is driving increased outsourcing of
localisation, language and intellectual property services by multinationals to well-
reputed partners of scale.
• Continued innovation as our clients actively 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, with clients looking to RWS to help them access the benefits of AI
and navigate its potential risks.
• We continue to seek opportunities to enhance our offering to clients, gain market
share and consolidate fragmented service provision through adding to our strong
track record of value-accretive acquisitions.
Leveraging our
global scale
and reach
• 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.
• The LXD platform delivers operational leverage, with potential for sustained efficiency
and margin improvement.
• We are continuing to invest to establish effective and lean shared services which
will support our four operating divisions and facilitate further organic growth, the
integration of acquisitions and continued margin development.
3
4
5
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
16
Chief Executive Officer’s Review
We have continued to make solid progress in relation to the strategy we launched
in early 2022. Navigating a series of market headwinds over the last 18 months, we
have returned the business to growth on an organic constant currency (“OCC”) basis
in the second half of FY24, with significant improvements in performance across
the Group during this period. We have continued to invest in sales effectiveness,
transformation and improved efficiency to help ensure that we are well placed to
emerge from the current market transition in a position of strength.
Client satisfaction remained high, with our 12-month rolling client Net Promoter
Score at +48, continuing an encouraging trend as our Voice of the Customer
programme further matures (FY23: +42). We have continued to win new logos
across multiple end markets including e-commerce, food & beverages, government,
legal services, medical devices, pharmaceutical and technology.
AI-based solutions and functionality are central to our future success and, as an
AI-native organisation, we have long-established capabilities across the content
value chain. With AI-related products and services now accounting for a quarter of
the Group’s revenues, RWS is both an established industry leader and one of the
principal AI innovators.
83
out of the top 100
global brands
Ian El-Mokadem
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
17
PROGRESS IN RELATION TO OUR
MEDIUM-TERM STRATEGY
AI AND TECHNOLOGY
In March 2022, when we launched our medium-term
strategy, we highlighted the critical role that technology
and AI would play in the future of our business and that
of our clients. As anticipated in our strategy, within a year
generative AI had become mainstream with the launch of
several free-to-use solutions. With our long history in AI
innovation, we continue to capitalise on the opportunities
presented by AI and believe strongly that we are well
positioned to support clients on their AI journey.
We achieved high levels of repeat revenue with existing
clients, supported by some significant new wins and
further incremental revenue contributions from our growth
initiatives, particularly TrainAI and Linguistic Validation, as
well as a very strong year for Language Weaver. The launch
of Evolve in early 2024 experienced positive traction with
clients. Evolve, our patent-pending and award-winning
linguistic AI solution, utilises a private large language model
in combination with Language Weaver to significantly reduce
the time it takes to achieve near human-like translation
quality. We have secured a number of substantial client
wins and have started to see some efficiency benefits from
deploying the solution internally.
In June we launched HAI, a digital self-service platform
designed to streamline the translation experience by
combining human expertise and AI, simplifying project
management, offering real-time cost visibility and security
and ensuring high-quality translations, all in one place.
We made significant progress with one of our growth
initiatives, TrainAI. We invested in people, marketing and
sales, and further developed the scope of our TrainAI
community, balancing our established network of 100,000+
freelance members with some in-house recruitment to
effectively meet increased demand for the service. We
also transformed our approach to managing the freelance
community, using the Language eXperience Delivery’s
capabilities and expertise to successfully recruit, onboard,
train, manage and pay community members.
In September we announced a strategic collaboration
agreement with Amazon Web Services (“AWS”) to bring to
market new solutions powered by generative AI. Under the
agreement RWS and AWS will develop generative AI solutions,
enabling clients to increase efficiencies when creating,
translating and delivering content. RWS is working with AWS on
25 new product features and multiple new proofs of concept.
People are always at the heart of our technology
developments and partnerships. This approach is reflected
in our Genuine Intelligence™ philosophy, bringing together
human and artificial intelligence in way that delivers real
value for our clients. Genuine Intelligence enables us – and
our clients – to work confidently with AI, to mitigate the risks
of naïve AI implementation and to unlock the true potential
of AI for business and society.
19
out of the
globe’s top 20
pharmaceutical
companies
9
out of the
globe’s top 10
contract research
organisations
9
out of the globe’s
top 10 medical
device companies
10
out of the globe’s
top 10 asset
management
companies
8
out of the globe’s
top 10 investment
banks
19
out of the top 20
patent filers
18
out of the globe’s
top 20 law firms
16
clients on
Fortune’s top 20
‘Most Admired
Companies’ list
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
18
Chief Executive Officer’s Review (continued)
TRANSFORMATION
We continued to invest in our transformation in line
with our medium-term strategy and remain committed
to our planned investments in sales and marketing,
R&D and consolidation of our operating platforms
that will underpin future growth, efficiency and margin
development. We successfully completed our HR
transformation by the end of 2024, with Dynamics 365
for Human Resources being adopted across the Group.
We were also pleased to launch iCIMS, our new Applicant
Tracking System, which delivers a One RWS recruitment
process, enabling effective hiring and a better candidate
and colleague experience through automation, self-
service and simplified processes.
In finance the first phase of the shared service centre
implementation has been completed. We also have
made good progress on moving a greater proportion
of translation volumes into the Language eXperience
Delivery platform (including some IP Services content)
and we have rationalised the supply chain for our
freelance network of language specialists, with the
resulting efficiency benefits already supporting margin.
Looking forward, we will continue the transformation
programmes in finance and IP Services and look to access
new opportunities in the further development and scaling
of our AI propositions, end-to-end optimisation and legal
entity rationalisation.
ACQUISITIONS AND DIVESTMENTS
Through the acquisition of Cape Town-based STComms
Language Specialists Proprietary Limited (“ST
Communications”) early in the year, we were delighted to
establish a local presence and operations in Africa, further
strengthening RWS’s ability to support clients with rarer
languages. The integration of ST Communications marks
a significant milestone for RWS and will enable clients to
further their reach into the African market with locally-
based talent and linguistic expertise across an additional
40+ African languages.
In May the Group further strengthened its balance sheet
with the disposal of its interest in a revenue and cost
sharing arrangement, together with certain associated
assets, relating to a patent information resource business
known as ‘PatBase,’ receiving £25m in cash in May, with
the remaining £5m paid in November 2024.
The Group continues to seek acquisitions which can
accelerate delivery of our medium-term plans. Our
disciplined M&A programme is focused on selectively
acquiring complementary businesses which enhance our
organic growth profile, including new capabilities in AI
technology and technology-enabled language services
in text and multimedia formats, assets that broaden our
natural language processing capabilities, data annotation
solutions and localisation assets with attractive end
market exposure.
EXPLORING AI
BUILDING AI
USING AI
CLIENT
PRODUCTS &
SOLUTIONS
Tech
Services
Choose the right AI
strategies and tools
Train AI
Train AI with
dependable,
responsible data
Language
Weaver
Understand content
in any language,
instantly
Trados
Deliver
translation projects
smarter and faster
Evolve
AI-based
quality estimation &
automatic
post-editing
HAI
Digital
self-service platform,
for small & medium
sized businesses
Language
Weaver
Build a secure linguistic
AI platform, tailored for
businesses
Structured Content
Management
Author, manage, collaborate, publish
INTERNAL
DEVELOPMENT
Language eXperience Delivery
• Improving productivity & automation
• Training our proprietary AI solutions
EVOLVE AND HAI JOIN ESTABLISHED SET OF AI-RELATED SOLUTIONS
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
19
OPERATING REVIEW
LANGUAGE SERVICES
First half OCC growth momentum
maintained, underpinned by delivery of
several TrainAI programmes and further
Evolve wins
The Language Services division represented 46% of
Group revenues in the year (FY23: 45%). Revenues of
£327.1m were 0.8% lower on a reported basis (FY23:
£329.8m) and increased by 2.5% on an OCC basis.
We were pleased to see the return to growth on an
OCC basis, driven by a good performance in Enterprise
Services, particularly in TrainAI, where our global
technology clients are increasingly benefiting from our
data services expertise. Clients are attracted to the
enterprise-grade security and privacy that RWS offers,
as well as its strong ethical practices in the sourcing and
quality checking of data for training their AI models.
We also won our first TrainAI contracts from clients
in other parts of the Group and, with an encouraging
pipeline, we anticipate TrainAI will make a further
positive contribution to revenue growth in FY25.
We are also encouraged by the impact of Evolve on
clients. Evolve, our pioneering linguistic AI solution,
combines RWS’s language services expertise with our
translation management system (Trados Enterprise)
and neural machine translation technology (Language
Weaver), alongside language specialist-trained quality
estimation and a fine-tuned private large language model.
After a successful beta program in the second quarter
of FY24 in which a number of clients participated, we
are now receiving revenues from Evolve contracts with
major clients. We anticipate Evolve continuing to play an
important part in our AI-enabled services portfolio.
We made good progress in respect of growth initiatives
in the division during the period. In the third quarter we
successfully launched HAI, a digital self-service platform
which streamlines the translation experience for small
and medium businesses and combines the best of our
human expertise and AI capability. We anticipate HAI
making an important contribution to FY25 performance.
In eLearning we increased the number of pilots and
opportunities across all verticals.
Once again, we saw high levels of client retention and
satisfaction in the division, a number of new client wins
in the technology and e-commerce sectors and a strong
organic performance in the Asia-Pacific region.
Operating profit was £25.4m (FY23: £18.8m). Adjusted
operating profit was £39.6m (FY23: £39.4m), reflecting
changes in service and language mix offset by strong
cost control.
REGULATED INDUSTRIES
Impact of corrective actions
delivered strong second half recovery,
accompanied by continued progress
with Linguistic Validation
The Regulated Industries division accounted for 20% of
Group revenues in the year (FY23: 22%). Revenues of
£146.5m decreased by 9.8% on a reported basis (FY23:
£162.5m) and by 6.8% on an OCC basis.
In Regulated Industries the early signs of recovery
highlighted in the Group’s mid-year results were
maintained, with OCC revenues meaningfully improved
in the second half compared with the prior year. While
a number of our larger life science clients implemented
cost-cutting exercises and there was no repeat of the
boost in FY23 from compliance work to meet PRIIPS
regulatory changes in the financial services segment,
the corrective actions that we have taken are having
a positive impact. By contrast, Linguistic Validation,
one of our growth initiatives and a service used by
clients at the clinical phase of therapy development,
again performed strongly over the course of the year
– pointing to improved demand in the regulatory and
launch phases of life sciences in due course.
In FY24 we were pleased to have secured our first
Evolve contract with a large life sciences client. We
finished the year with an important technology
win in the Life Sciences division, demonstrating
both our improving cross-selling effectiveness and
the willingness of life sciences clients to embrace
technology solutions.
Operating profit was £5.9m (FY23: £9.1m). Adjusted
operating profit decreased to £19.8m (FY23: £22.9m),
reflecting the reduction in topline revenue and adverse
foreign exchange impact, partially mitigated by increased
use of LXD and cost actions taken through the year.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
20
Chief Executive Officer’s Review (continued)
LANGUAGE & CONTENT TECHNOLOGY
Second half recovery driven by improving performance in content technology,
alongside strong year in Linguistic AI, particularly Language Weaver
The Language and Content Technology (“L&CT”) division
accounted for 20% of Group revenues in the year
(FY23: 19%). Revenues of £142.3m were 4.1% higher
on a reported basis (FY23: £136.7m) and decreased by
0.7% on an OCC basis, reversing the first half decline to
deliver modest OCC growth in H2.
Divisional performance was underpinned by continued
strong revenues in Language Weaver (our long-
established AI-centred machine translation solution),
Propylon performing ahead of plan and improved second
half performance elsewhere in the content technology
segment. We saw new logo wins across a range of end
markets, including financial services, government, media
and retail. In the final quarter we secured our largest ever
three-year Language Weaver contract.
We achieved an 18% growth in SaaS licence revenues
in the period compared with FY23 and SaaS revenues
as a percentage of total licence revenues in the division
increased to 39% (FY23: 34%), demonstrating the
continued shift in our licence models to SaaS, linked
to the increased R&D investments in our technology
products. This transition to SaaS builds long-term value
for FY25 and beyond by supporting greater stability and
predictability of future revenue streams.
The division’s in-house R&D team led the development
of the Evolve solution and continues to roll out the
range of language pairs available through Evolve,
with 22 language pairs expected to be available by
the end of 2024. In parallel, having announced end of
life timelines for the majority of our legacy translation
management products in March 2024, we have
IP SERVICES
Return to OCC growth driven by strong Eurofile revenues and good
growth in renewals
The IP Services division represented 14% of Group
revenues in the year (FY23: 14%). Revenues of £102.3m
were 2.4% lower on a reported basis (FY23: £104.8m)
and 3.3% higher on an OCC basis.
OCC revenue growth in IP Services division was driven
by a strong performance in the Eurofile segment
with many patent filers remaining committed to the
existing arrangements over the Unitary Patent. The IP
Services division secured several new client wins and
we saw growth in patent renewals work, particularly
continued to work on the transition programme to
Trados Enterprise for clients of these products, with
29% of transitions completed so far.
We also launched Trados Studio 2024 in June, the latest
version of our computer-assisted translation tool for
individual users. Delivering access to cutting-edge
AI, multiple usability improvements and enhanced
accessibility features, and with Language Weaver as a
standard feature, Trados Studio 2024 continues to address
the diverse, evolving needs of users and reinforces the
position of Trados as the backbone of the industry.
The release of Tridion Docs 15.1 included a host of
new AI features, including Tridion Docs Genius, a new
AI-driven knowledge portal that helps employees,
customers and partners find the information they need
more quickly across vast amounts of information. In
addition, a new Draft Companion feature, based on
generative AI, acts as a second pair of eyes for the
author by spotting and fixing grammar and spelling
issues, rephrasing sentences and phrases and
summarising text.
The launch of Contenta Cloud S1000D in September
benefits our clients in aerospace and defence, allowing
them to more effectively create, manage and publish
technical documentation.
Operating profit was £18.5m (FY23: £(40.9)m). Adjusted
operating profit was at £34.2m (FY23: £37.0m),
reflecting the higher proportion of SaaS revenues,
ongoing planned investments, adverse foreign
exchange impact and the Propylon acquisition.
in China and Japan. With an expanded product offering
in IP recordals and docketing, we further demonstrated
our ability to serve clients across the entire IP lifecycle,
reflecting an improved sales structure and effectiveness.
Operating profit was £33.3m (FY23: £21.6m). Adjusted
operating profit was £26.9m (FY23: £27.7m), reflecting
changes in mix, partially offset by some transition of
volumes to the LXD and the disposal of PatBase.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
21
PEOPLE & CULTURE
We are committed to making RWS a great place to work
and we are proud to have built an inclusive environment
where everyone has the opportunity, and support
around them, to be their best.
We aim to ensure that everyone understands the
Group’s overriding priorities – growth, efficient delivery
and engagement – through a regular cadence of
communications. This includes CEO-led messages,
our monthly newsletter, updates on transformation
programmes and regular town hall events across
divisions and functions, as well as on a Group-wide basis.
Now in its fourth year, our annual RWS Engagement
Survey explores colleagues’ attitudes and experiences
towards RWS – what’s working well and what can be
improved with regards to collaboration, engagement,
inclusion, growth and development, leadership and
living the Group’s values. This year’s survey achieved
another strong response rate of 81% (FY23: 84%) and a
61% (FY23: 61%) favourable engagement score. We were
pleased to note that there is strong flexibility, trust and
respect between colleagues and that managers are seen
as effective in removing barriers and engendering caring
and trusting relationships with their teams. In addition,
we saw an improvement in the belief amongst colleagues
that their voice matters and that there will be positive
change as a result of the insights that the survey offers.
Over the year we have continued to address the feedback
from our 2023 colleague engagement survey, with
action plans in place across four global workstreams
and at divisional and functional levels to focus and
drive improvements. In support of one of the global
workstreams we held 67 ‘One RWS’ events in 43 locations
in the last week of April, supplemented by a number of
virtual events for those colleagues who are fully remote.
It was an opportunity for colleagues to be recognised for
their contribution, to better connect them to strategy,
group priorities and one another, to learn more about
our portfolio of products and solutions, particularly how
critical AI is to our future, and to focus on our community
and culture. These events were well received and we
anticipate them becoming annual events in our calendar.
I am also pleased to report an improvement to our
voluntary colleague attrition levels which have fallen to
10.6% (FY23: 11.9%). Combined with an improvement
in the ‘intent-to-stay’ measurement in the 2024
engagement survey to 67% (FY23: 64%), we believe
that we are building the kind of organisation where
colleagues feel that they can develop their careers.
We were also pleased to continue our Ambassador
Awards – a recognition programme that encourages all
colleagues to nominate a fellow colleague or team. Now
in its second year, all colleagues (across each division, the
LXD and our Group functions) nominate one colleague
or team that exemplifies each of our four values. These
24 semi-annual winners are given a financial reward
and their stories are shared and promoted internally
to acknowledge their outstanding contributions. This
programme has been highly popular, attracting over 800
entries throughout the year.
Our eLearning platform, MyLX, continues to be the
bedrock of our learning and development. Colleagues
have access to more than 360,000 training courses
from Skillsoft. A majority of our colleagues use MyLX
on an ongoing basis and have completed over 150,000
various learning assets during FY24. The platform,
which we have contractually renewed this year, has also
enabled us to roll out important business-wide learning
initiatives, including our compliance and quality training,
professional and technical skill development, and DEI
and wellbeing sessions.
Three significant appointments were made during the
year to further strengthen our Executive Team and focus
on delivering against our medium-term strategy.
In December 2023, Amanda Newton was appointed
President of Global Content Services, bringing together
RWS’s linguistic, intellectual property and cultural
expertise – alongside our AI-enabled technologies –
to support clients on their globalisation journey. We
also appointed Vasagi Kothandapani in January 2024
as President of Enterprise Services, taking a leading
position in how RWS partners with its clients to ensure
that AI becomes the driving force behind their future
success. In September 2024 Mark Lawyer, previously
General Manager of Linguistic AI, was appointed
President of Regulated Industries & Linguistic AI. Mark’s
appointment reinforces RWS’s focus on delivering AI
technology to financial, legal and life sciences clients.
Thomas Labarthe continues to lead RWS’s content
technology portfolio.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
22
Chief Executive Officer’s Review (continued)
SUSTAINABILITY AND ESG
Environmental, social and governance (“ESG”) matters
continue to be core to the way RWS operates. Clients,
partners and colleagues are keen to understand the steps
we are taking to become a more sustainable business.
On environmental matters, the Group formally submitted
its greenhouse gas (“GHG”) emissions reduction targets
to the Science Based Targets initiative (“SBTi”) for
validation in December 2023. We were delighted to receive
confirmation from the SBTi that the targets had been
validated. We have committed to reduce absolute Scope 1
and 2 GHG emissions by 54.6% by the end of the financial
year ending 30 September 2033 (FY33) from a FY22 base
year. The Group has also committed to reduce Scope 3
GHG emissions from purchased goods and services and
colleague commuting by 61.1% per million GBP value
added within the same time frame.
In recognition of our ESG progress, in December 2023 we
were awarded a Silver Medal by EcoVadis for the second
year running. Once again we ranked in the top quartile of
participating companies and in the top 10% of companies
in our industry category, improving our score to 66%
(FY22: 63%).
The RWS Campus, a global programme nurturing
localisation talent, continues to partner with around 600
universities worldwide, fostering strong relationships to
develop the next generation of professionals who will
positively impact our industry. One of these relationships
is with the University of Manchester, where The RWS
Foundation provides funding via the RWS-Brode
scholarship and, during the last year, several professional
development workshops were delivered to students.
Earlier in the year our Trados team – funded by The RWS
Foundation – embarked on a profound learning journey,
exploring ways in which to make Trados more accessible
for the visually impaired. Working with a blind language
specialist, a dedicated team has worked to improve the
tool – ensuring that it is accessible to those with visual
impairments. The latest improvements include enhanced
screen reader compatibility, improved keyboard navigation
and accessible project list and workflow navigation.
In February 2024 RWS joined Meta’s Open Loop to help
bridge the gap between rapid advances in AI innovation
and policy-making. Open Loop is a global programme
involving a consortium of technology businesses,
academics and civil society representatives that connects
policymakers and technology companies to help develop
effective and evidence-based policies around AI and
specifically generative AI systems. As an extensive
developer and user of AI, RWS believes that it is critical
that proposed AI regulations strike the right balance
between fostering innovation and ensuring that AI is
developed safely and securely for the benefit of customers
and broader society.
CURRENT TRADING AND OUTLOOK
The Group’s FY24 results reflect good progress in a
number of key areas and demonstrate that we are well
positioned for clients’ increased appetite to harness AI to
meet their language and content needs. Our successes
with TrainAI, Language Weaver and Evolve demonstrate
that our AI-enabled solutions are resonating with clients
at this transitional moment for our industry.
Given our rich history and deep experience in developing
AI and technology, we are confident that we are well
positioned to support clients throughout their AI journey,
developing the tools and solutions required to help them
engage with their customers and users on a global scale.
It is clear that our investments in growth, AI and
transformation are allowing us to successfully pivot away
from an overreliance on traditional localisation revenues
and underpin future revenue and margin development,
alongside ongoing effective cost management.
In May 2024 I announced my intention to step down as
Chief Executive Officer and Director of the Company.
Since the start of December I have been handing over
my responsibilities to my successor, Benjamin Faes, and I
will remain available to him until the end of January 2025,
when I will leave the Company. It has been my privilege
to lead our talented and diverse global team and to serve
our wonderful clients over the past three and half years.
Ian El-Mokadem | Chief Executive Officer
11 December 2024
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
23
Key Performance Indicators
ADJUSTED PROFIT BEFORE TAX
£106.7m
2024
£106.7m
2023
£120.1m
2022
£135.7m
2021
£116.4m
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 156 for
further details.
CASH CONVERSION
51%
2024
49%
2023
74%
2022
93%
2021
66%
Description Cash conversion is calculated as free cash
flow expressed as a percentage of adjusted net income.
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 157 for further
details.
COLLEAGUE ATTRITION (VOLUNTARY)
10.6%
2024
10.6%
2023
11.9% 1
2022
15.9% 1
2021
19.2% 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.
GROUP REVENUE
£718.2m
2024
£718.2m
2023
£733.8m
2022
£749.2m
2021
£694.5m
Description Reflects the total value of work sold during
the financial year.
GROSS MARGIN
46.9%
2024
46.9%
2023
46.3%
2022
46.7%
2021
45.1%
Description Reflects gross profits, being revenues
less costs directly incurred in generating revenues,
expressed as a percentage of revenues.
ADJUSTED BASIC EARNINGS PER SHARE
21.6p
2024
21.6p
2023
23.3p
2022
26.6p
2021
23.8p
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.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
24
Environmental, Social and Governance
INTRODUCTION
Sustainability is central to our business and operational strategy, shaping how we
create value and drive sustainable growth over the long term.
Our approach is built on four key sustainability pillars – environment, people,
community and governance. We are proud of our progress across these pillars,
including the recent validation of our near- and long-term carbon targets by the
Science Based Targets initiative.
Our achievements reflect the dedication and support of our global team, whose
commitment has been essential to reaching these milestones and advancing our
sustainability goals.
OUR APPROACH TO CORPORATE
SUSTAINABILITY
We are committed to transparent, comprehensive and
timely reporting, continually enhancing the clarity and
credibility of our environmental, social and governance
(“ESG”) disclosures.
By aligning and benchmarking our progress against
globally recognised sustainability reporting frameworks,
we strengthen our accountability and commitment to
achieving the highest sustainability standards.
We currently collaborate with leading organisations,
including:
• SASB Standards
• Science Based Targets initiative
• Task Force on Climate-related Financial Disclosures
• United Nations Global Compact
STAKEHOLDER FRAMEWORK
Engaging in ongoing dialogue with our stakeholders
allows us to align our sustainability strategy and
models with their key concerns and priorities. While
our framework recognises several stakeholder
communities, our core focus remains on client,
colleague and investor groups.
Clients
Colleagues
Investors
Society
Financial
Governments &
Regulatory bodies
Suppliers
Partners
Competitors
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
25
ENVIRONMENTAL
We hold ourselves to high accountability standards. As a result, in 2024 we set
near-term science-based carbon emissions reduction targets that were approved
by the Science Based Targets initiative (“SBTi”). We also improved the accuracy
of our footprint by improving our data collection and greenhouse gas (“GHG”)
emissions accounting.
In 2021, we became a signatory to the Task Force on
Climate-related Financial Disclosures (“TCFD”) and
have adopted its framework. As part of our strategy in
FY24 we re-assessed three different climate scenarios
using Representative Concentration Pathways (“RCP”)
- RCP 2.6, RCP 6.0 and RCP 8.5. RCPs are used by the
Intergovernmental Panel on Climate Change (“IPCC”) to
illustrate future concentrations of greenhouse gases in
the atmosphere.
We are committed to reviewing and improving the
environmental aspects and impacts of our operations
by preventing pollution, protecting the environment and
enhancing positive impacts wherever we can.
To demonstrate how important climate change and
the environment is to RWS, the CEO retains overall
responsibility for all relevant climate-related and
environmental matters whilst the General Counsel and
Company Secretary has overall responsibility for the
Group’s risk management programme. For climate-
related risks they are assisted by the Executive Team and
additional top management.
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 Board has
direct oversight of climate-related issues as part of
the risk review process, and it agrees our position and
commitments on climate change.
We are proud to hold ISO 14001:2015 Environmental
Management certification. This certification covers
a number of our offices, and we aim to increase this
compliance to over 90% by the end of FY30.
During FY24 we made several strides toward improving
our environmental impact, including:
• Enhanced climate risk and opportunity disclosure in
line with TCFD guidelines.
• Office relocations with a focus on sustainable practices.
• Engaged colleagues in various environmental
awareness campaigns such as Earth Day, World Bee
Day, Forests and Wildlife protection, Clean Air Day and
many others.
• Organised local events promoting sustainable
practices, including ‘bike to work’ initiatives, tree
planting, and cleaning up days.
• Published environmental articles in our Group-
wide newsletter. Including highlighting urgent
environmental challenges and sustainability efforts
from our office locations around the world.
• Increased internal engagement of colleagues and
´Green Champions´ through our Green Agenda intranet
and Viva Engage channel.
• Hosted sustainability-focused interviews and
presentations, including webinars with Everyday Plastic,
Home energy saving tips with Irish Energy Agency and
a presentation from ‘Sailors for Sustainability.’
• Promoting green office policy and biodiversity projects.
• Selected sustainable corporate merchandise.
We remain committed to:
• Reducing our Group-wide carbon emissions.
• Continuously improving our environmental
management systems globally.
• Meeting and exceeding all applicable environmental
regulations.
• Collaborating positively with regulatory authorities.
• Supporting our clients’ environmental goals.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
26
Environmental, Social and Governance (continued)
Our carbon emissions for FY24 are as follows:
Overall FY24 carbon emissions (tCO2e)
Scope 1
610
Scope 2 (location-based)
4,610
Scope 2 (market-based)
3,960
Scope 3 (location-based)
29,139
Scope 3 (market-based)
29,230
Total (market-based)
33,799
Total (location-based)
34,412
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.
ENERGY AND GREENHOUSE GAS REPORT
As part of the Streamlined Energy and Carbon Reporting
(“SECR”) requirement, RWS is required to report its energy
and GHG emissions within its Directors’ Report.
During FY23 we improved the accuracy of our footprint
by improving our data collection and GHG emissions
to include both our operations and supply chain and
committed to setting carbon reduction targets which
are aligned with SBTi. In FY24 we delivered on this
commitment, achieving SBTi approval for RWS’s science-
based targets, using FY22 as the base year.
METHODOLOGY
Emissions were calculated following the GHG Reporting
Protocol (Corporate Standard) using the Watershed
platform. Energy usage data was collected or estimated
based on building square-footage for all facilities,
and was combined with emission factors from the US
Environmental Protection Agency (“EPA”), Ecoinvent,
Technical Compliance Rate (“TCR”) and other data sources
to calculate GHG emissions. Electricity emissions factors
are chosen based on geography to reflect the emissions
intensities of the facilities’ local grid.
GHG Scope tCO2e (FY22 Base Year)
Scope 1
549
Scope 2
3,663
Scope 3
33,876
Total
38,088
All numbers are market-based.
On 15 May, 2024, the SBTi approved RWS’s near-term
science-based targets with the following wording:
APPROVED
NEAR-TERM SCIENCE-BASED TARGETS
The Science Based Targets initiative has validated that
the science-based greenhouse gas emissions reductions
target(s) submitted by RWS Holdings plc conform with the
SBTi Criteria and Recommendations (Criteria version 5.1).
SBTi has classified your company’s Scope 1 and 2 target
ambition as in line with a 1.5°C trajectory.
The official near-term science-based target language:
RWS commits to reduce absolute Scope 1 and 2 GHG
emissions 54.6% by FY33 from a FY22 base year. RWS
also commits to reduce Scope 3 GHG emissions from
purchased goods and services and employee commuting
61.10% per million GBP value added within the same
timeframe.
SCOPE 1 - 2%
SCOPE 2 - 12%
SCOPE 3 - 86%
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
27
ANNUAL ENERGY USE AND EMISSIONS
Our annual global energy use (in kWh) and associated greenhouse gas emissions (tCO2e) have been summarised
in the table.
FY22
FY23
FY24
UK and
offshore
Global
(excluding
UK and
offshore)
Total
UK and
offshore
Global
(excluding
UK and
offshore)
Total
UK and
offshore
Global
(excluding
UK and
offshore)
Total
MWh
Energy consumption used
to calculate emissions (see
Scope 1 & 2 categories below)
1,269
11,935
13,204
1,438
13,733
15,171
1,524
14,443
15,967
tCO2e
Emissions from sources
which are owned or
controlled by the company
including combustion of fuel
for transport & operation of
facilities (Scope 1)
44
505
549
44
444
488
80
530
610
Emissions from purchased
electricity, heat, steam, and
cooling (Scope 2, market-based)
202
3,461
3,663
207
4,427
4,634
186
3,774
3,960
Total gross tCO2e
246
3,966
4,212
251
4,871
5,122
266
4,304
4,570
These numbers are market-based and include: electricity, natural gas, diesel, heat and steam, refrigerants and company car
fuel consumption from Scope 1 + 2.
INTENSITY RATIOS
RWS uses the intensity ratios of full-time equivalent (“FTE”). The FTE in FY24 was 9,059. This provides another way of
assessing our carbon performance taking into consideration key variables that affect our overall carbon footprint.
Our Scope 1, 2 and 3 FTE intensity performance shows a collective improvement of 7.5% when compared with the
previous year. Our Scope 1,2 and 3 revenue intensity performance shows a circa 3.7% improvement per £1m.
Annual GHG emissions
(tCO2e, market-based unless otherwise indicated)
2022
2023
2024
Scope 1
549
488
610
Scope 2 (location-based)
4,167
5,147
4,610
Scope 2
3,665
4,634
3,960
Scope 3
33,874
30,824
29,230
Scope 3.1 Purchased Goods and Services
22,295
18,274
16,453
Scope 3.2 Capital Goods
241
341
382
Scope 3.3 Fuel and Energy Related Activities
1,705
2,003
1,870
Scope 3.5 Waste Generated in Operations
136
282
432
Scope 3.6 Business Travel
989
3,234
3,526
Scope 3.7 Employee Commuting
8,508
6,689
6,566
Total tCO2e (location-based)
35,764
34,112
34,412
Total tCO2e
38,088
35,946
33,799
Total tCO2e / £1M Revenue
50.84
48.99
47.17
Total tCO2e / FTE
4.91
4.54
3.73
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
28
Environmental, Social and Governance (continued)
MANAGING ENERGY USE
We recognise the importance of energy efficiency and
renewable energy. In FY24, we took steps to reduce
energy use and emissions by:
• Increasing awareness and enabling the use of
renewable energy in our offices where possible.
• Implementing energy-saving measures such as
setting timers, using energy-efficient lighting,
establishing ‘closed-door’ and ‘switch off at night/
weekend’ policies.
• Engaging in discussions with the IT team to raise the
temperature in our data centres, reducing the need
for cooling where feasible.
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.
MINIMISING WASTE
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 FY24, the Group took several measures to reduce
waste. These included:
• Ensuring the Group-wide Waste Policy and Green
Office Procedure are followed.
• Improving waste collection and recycling processes in
various offices.
• Collaborating with suppliers and landlords for better
waste management.
• Promoting recycling and waste reduction through
events like World Cleanup Day, Recycling week,
Compost Week, No Mow May and many others.
Where our offices are in managed buildings, we are
working with landlords to derive better data on waste
and then implement programmes to reduce, reuse
and recycle.
WATER
Most of our offices use water from the local municipal
supply and are in developed countries with a high
capability for water adaptation and mitigation.
We are taking steps to reduce water usage across our
offices, such as installing low-flow fixtures, fixing leaks,
and ensuring offices follow the Green Office Procedure.
In FY24, we shared awareness campaigns like World
Wetlands Day, World Oceans Day and Healthy Soil Day to
promote responsible water use.
PAPER
Our shift to agile working has reduced paper
consumption. We continue to prioritise sustainable
paper sourcing and encourage double-sided printing
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.
BUSINESS TRAVEL
As conditions return to normal post the Covid-19
pandemic, business travel and commuting have
increased. The Group continues to use software to hold
virtual meetings and these are promoted as a way to
reduce unnecessary business travel.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
29
SOCIAL
OUR PEOPLE
We are proud to continue our ESG progress and be recognised by our people.
Our 2024 engagement survey shows 79% of colleagues believe RWS fosters
environmentally friendly practices; 80% believe RWS shows a commitment to ethical
business decisions and conduct; 79% believe RWS is taking action to be socially
responsible; 72% say RWS supports their efforts to balance work and personal
life; and 81% believe RWS promotes a diverse culture where individuals from all
backgrounds feel a sense of belonging.
DIVERSITY, EQUITY AND INCLUSION
RWS is part of a vibrant, globally diverse community and
recognises the tremendous value gained from people’s
differences. We know that an inclusive and inviting culture
that recognises and celebrates diversity enables people
to be their best. This is fundamental to RWS and critical to
our success.
We continue to demonstrate our commitment to diversity,
equity and inclusion (“DEI”) with a specific focus on
key pillars in line with the Group’s Diversity, Equity and
Inclusion Policy. Each pillar has its own Employee Resource
Group (“ERG”) to provide feedback on the Group DEI
plans, and guide initiatives that are bespoke to their pillar.
Each ERG has an Executive Team member as a sponsor
to ensure appropriate organisational prioritisation and
influence. We have evolved our ERGs to best represent the
needs and interests of our organisation and people. To
that end, in 2024 we added a new ERG on Neurodiversity.
We have also included Wellbeing as a separate ERG with a
wide range of initiatives to support all colleagues.
Our ERGs are:
• Culture & Ethnicity
• LGBTQ+
• Persons with disabilities
• Women at RWS
• Neurodiversity
• Wellbeing
6,279
Respondents
81%
Response rate
Engagement
Survey
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30
Environmental, Social and Governance (continued)
Our ERGs identify strategies for meeting the collective
interests identified by each group, thereby driving
engagement and increasing the representation, voice,
contribution and influence of that group over time. The
RWS Diversity Council’s purpose is to guide and support
RWS in creating a diverse and inclusive organisation. The
council plays an important role in connecting the work
of all the ERGs into a broader business-driven results-
oriented strategy. To bring all DEI activities together more
effectively, we host an annual RWS Diversity Festival.
The success of our Language Pal programme inspired
us to expand our ‘Pal’ programme, which now includes
Language Pals, Career Pals and Support Pals. All of our
Pal programmes endeavour to connect colleagues around
shared interests and provide support and insight.
<30
22%
Female
50%
<1 yr
23%
Female
48%
50%
>50
8%
Undisclosed
10%
>5 yrs
34%
Undisclosed
2%
Undisclosed
11%
<30-50>
59%
Male
40%
1-5 yrs
43%
Male
50%
39%
11%
MENTAL HEALTH, PHYSICAL HEALTH AND
WELLBEING
Throughout 2024, we have grown our programmes to
support mental health and wellbeing. We offer ongoing
programmes on a range of topics such as stress
management, meditation and yoga, mental health
and nutrition. Additionally, we promote our Employee
Assistance Program which provides support to managers
and colleagues in areas such as stress management,
mental and physical wellbeing, dependent care and
financial health. RWS supports colleagues sharing their
interests and hobbies through our colleague-led clubs,
which include areas like music, photography, running,
sewing, knitting, books, nutrition, chess and mindfulness
& meditation.
AGE
GENDER
YEARS OF SERVICE
EMPLOYEE CATEGORY
MANAGER
NON-MANAGER
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
31
OUR COMMUNITIES
We provide an active programme of charitable support and promote foreign
language learning actively through school and university partnership
programmes including RWS Campus and the RWS-Brode Scholarship Programme.
Our philanthropic initiatives fall under The RWS Foundation. RWS committed to
another £200,000 of funding in FY24 that The RWS Foundation can call upon at
any time. The RWS Foundation donations in the year amounted to £206k. RWS
encourages its colleagues to volunteer in the community and five working days
can be taken annually to get involved in charitable initiatives.
CLEAR GLOBAL
CLEAR Global (formerly Translators without Borders) was
selected as the Foundation’s beneficiary in 2023. CLEAR
Global is a non-profit global community of linguists who
help people in need to get vital information and be heard,
whatever language they speak. RWS is supporting the
initiative by sharing resources and providing support
with our own network of in-house language specialists.
Ongoing support includes translating, localising and
reviewing critical content, managing large-scale projects,
providing training to translators and members and
analysing data to ensure the highest translation standards
are maintained.
RWS CAMPUS
RWS Campus is our pioneering global programme, with a
clear mission: to inspire great futures in localisation and to
be recognised in our industry for developing localisation
talent and markets worldwide. Since its inception, we have
been working to bring as many benefits as possible to the
academic world. Over the years we have progressed in
our ambition to be a future talent incubator and to bring
the benefits of translation technology to universities and
students, to help bridge the gap between the academic
world and industry.
RWS SCHOLARSHIP PROGRAMME
WITH UNIVERSITY OF MANCHESTER
In 2019 we launched the RWS-Brode Scholarship
Programme – named after our former Chairman,
Andrew Brode – in collaboration with the University
of Manchester, to encourage students to complete a
degree in modern languages. Since its launch, we have
supported more than 60 students. This year saw 20
students in their final year of study and graduating.
Currently, there are 32 scholarship recipients studying
at the university receiving financial support from
Andrew Brode and The RWS Foundation.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
32
Environmental, Social and Governance (continued)
GOVERNANCE
We are strongly committed to upholding the values of good
governance as we believe it is important for the long-term success of
the business – our clients can depend on us, we can attract the top
talent we need to help us innovate, our suppliers can rely on us and it helps us secure
the support of our investors. RWS is committed to promoting transparent, fair and
timely decision-making that considers the needs of all our stakeholders.
For more detail on our approach to governance, see the Corporate Governance Report section of this annual report.
BUSINESS ETHICS
RWS is committed to acting professionally, fairly and
with integrity in all our business dealings and does so
in compliance with RWS’s Code of Conduct. The Code of
Conduct is reviewed annually to remain consistent with
ever-changing regulatory standards and guidance.
RWS requires all colleagues, contractors and partners to
operate in a professional, ethical and diligent manner and
be transparent on all possible conflicts of interest. RWS
works with external law firms and consultants to keep
up-to-date globally on any changes to legal and regulatory
standards to ensure that any new legal requirements are
reflected in its policies.
GOVERNANCE AND REPORTING
As an AIM listed company, RWS has chosen to implement
The Quoted Companies Alliance Corporate Governance
Code (“QCA Code”). The principles and disclosures laid
out by the QCA Code provide a framework to ensure we
have the appropriate governance arrangements in place.
The Board believes that it complies with all the principles
of the QCA Code; see pages 69 to 73 for details of our
compliance, which is reviewed annually in line with the
requirements of the QCA Code.
CORPORATE GOVERNANCE STRUCTURE
The Chairman leads the Board and has overall
responsibility for corporate governance and the
effective management of the Board. The CEO provides
leadership and management to the Group and its senior
management team.
To learn more about RWS’s Corporate Governance
Structure, see pages 66 to 73.
MANAGING RISKS
Identifying and managing risks is fundamental to
protecting the business, our people and our communities
as well as delivering long-term shareholder value. 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 who collectively play a key role in risk
management and regularly report to the Board.
Six of our 11 principal business risks are relevant to
ESG and these are set out in the Principal Risks and
Uncertainties section of this annual report.
KEY POLICIES AND CODES OF CONDUCT
PUBLISHED ON THE GROUP’S WEBSITE
INCLUDE:
•
Anti-Bribery and Corruption Policy
•
Business Continuity Policy
•
Client Entertainment and Gifts Policy and
Procedure
•
Code of Conduct
•
Conflicts of Interest Policy
•
Corporate Sustainability Policy Statement
•
Diversity, Equity and Inclusion Policy
•
Environmental Policy
•
Harassment, Bullying and Victimisation Policy
•
Health and Safety Policy
•
ISMS Policy
•
Labour and Human Rights Policy
•
Modern Slavery and Human Trafficking Policy
•
Speak-up Policy
•
Supplier Code of Conduct
•
Sustainable Procurement Policy
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33
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. Visit the
Directors’ Report on page 91 for more information.
CYBER SECURITY
RWS understands that its cyber security preparedness
must continue to evolve to address the changing nature
of risk. The strategic security posture for RWS is set
by the Security and Privacy Committee, chaired by the
CTIO. This group includes stakeholders from all relevant
business units to collaborate on continual improvement
of increasing awareness and supporting a consistent risk-
based approach to information security. The Information
Security Management System (“ISMS”) 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.
FY24 RECOGNITION
DURING FY24 THE GROUP HAD:
•
ISO 9001: applicable in 41 offices, 36 offices
certified and 5 offices compliant
•
ISO 17100: applicable in 38 offices, 33 offices
certified and 5 offices compliant
•
ISO 18587: applicable in 35 offices, 30 offices
certified and 5 offices compliant
•
ISO 27001: applicable in 9 offices and 9 offices
certified
•
ISO 13485: applicable in 7 offices, 2 offices certified
and 5 offices compliant
•
ISO 21500: applicable in 13 offices and 13 offices
compliant
•
ISO 14001: applicable in 31 offices, 5 offices
certified and 26 offices compliant
All applicable sites are sites providing services which are
in scope of the ISO certification within the reporting year.
DATA PROTECTION
RWS has adopted a global data protection programme
anchored to the EU GDPR and UK Data Protection Act
2018, ensuring adherence to the highest data protection
standards while incorporating local regulations’
requirements as needed. The programme includes a
comprehensive set of policies and processes focused on
the protection of personally identifiable information. RWS
does not undertake profiling of consumers independently
or on behalf of clients. Data provided by clients is never
sold or rented. As required to perform and deliver its
products and services, RWS will share and transfer
personal data between affiliate companies and approved
third-party contractors; appropriate privacy agreements
are in place to govern such data sharing and transfers.
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34
Sustainability Accounting Standards
Board Disclosure (“SASB”)
SERVICE SECTOR: PROFESSIONAL AND COMMERCIAL SERVICES
REPORTING YEAR: ALL DATA REPORTING FOR FY23 UNLESS SPECIFIED
RWS has chosen to report by disclosing sustainability topics and certain accounting
metrics in line with the SASB Standards. In August 2023, the International
Sustainability Standards Board ("ISSB") of the IFRS Foundation assumed
responsibility for the SASB Standards. The ISSB has committed to maintain, enhance
and evolve the SASB Standards and encourages preparers and investors to continue
to use the SASB Standards.
The Standards:
• Surface information about sustainability-related risks and
opportunities that is likely to be decision-useful for investors
• Are industry-based because those risks and
opportunities vary by industry
• Are designed to be cost-effective for companies to use
• Are developed using an evidence-based and market-
informed process similar to that which is used to
develop financial accounting standards
• Put preparers on the path toward ISSB implementation
Global investors recognise SASB Standards as essential
requirements for companies seeking to make consistent
and comparable sustainability disclosures.
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 ESG Report:
Topic
Summary approach
For more information
Data Security
We understand that information security is important to all our
stakeholders including clients, investors and colleagues. 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.
SASB metrics: page 35
Discussion and Analysis:
page 33
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 colleagues and has several initiatives in place that
seek to maintain an inclusive culture, recognising achievement and
support of all its colleagues.
SASB metrics: pages 35 & 36
Our people: pages 29 & 30
Professional Integrity
For RWS, acting and being seen to act with the highest level
of professional standards and integrity is fundamental to
developing and maintaining trusted partnerships with its various
stakeholders. RWS seeks to act with transparency, honesty and
integrity at all times.
SASB metrics: page 35
Governance: pages 32 & 33
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
35
Sustainability disclosure topics and accounting metrics
Topic
Summary approach
Category
SASB
code
For more information
Data Security
Description of approach
to identifying and
addressing data security
risks
Discussion and
Analysis
SV-PS-
230a.1
See page 33
Description of policies
and practices relating to
collection, usage, and
retention of customer
information
Discussion and
Analysis
SV-PS-
230a.2
See page 33
(1) Number of data
breaches
(2) percentage involving
customers' confidential
business information
(CBI) or personally
identifiable information
(PII)
(3) number of customers
affected
Quantitative
SV-PS-
230a.3
As per the SASB requirements a data breach is defined
as 'the unauthorised movement or disclosure of sensitive
information to a party, usually outside the organisation,
that is not authorised to have or see the information.'
There have been no known data breaches of this nature.
Workforce
Diversity &
Engagement
Percentage of gender
and racial/ethnic group
representation for (1)
executive management
and (2) all other
employees
Quantitative
SV-PS-
330a.1
As RWS is a global business, and in keeping with
local legislation which differs from region to region,
once again the decision was taken to reach out to all
colleagues globally 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 fourth year RWS has undertaken this
survey and the response rate was 15.9%. 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
Employee engagement
as a percentage
Quantitative
SV-PS-
330a.3
See Table 5
FY24 was the fourth year RWS undertook a Group-wide
employee engagement survey. Using a world-class
external engagement survey and platform, which
provides precise colleague engagement data, enables
us to benchmark our results externally. The survey was
completed again in September FY24 and we achieved a
global response rate of 81%, slightly down on last year's
score of 84%.
This year we achieved a 61% favourable employee
engagement score (see Table 5).
We remain encouraged by the results regarding diversity
and inclusion with a 81% 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 32 & 33
Total amount of monetary
losses as a result of legal
proceedings associated
with professional integrity
Quantitative
SV-PS-
510a.2
There have been no monetary losses in FY24 as a result of
legal proceedings associated with professional integrity.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
36
SASB Disclosure (continued)
Table 3. RACIAL/ETHNIC GROUP
REPRESENTATION* (%) (FY24)
Ethnicity All employees
Arab
1.33%
Black or African or Caribbean (For example:
African / Caribbean / Any other Black, African or
Caribbean background)
0.55%
East or South-East Asian (For example: Chinese
/ Korean / Japanese / Vietnamese / Filipino / Any
other East or South-East Asian background)
23.94%
Hispanic or Latino (For example: Brazilian /
Argentine / Colombian / Chilean)
4.92%
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)
1.67%
Native Hawaiian or Pacific Islander
0.08%
Native American or Alaskan
0.17%
South Asian (For example: Indian / Pakistani /
Bangladeshi / Any other South Asian background)
5.84%
White
55.21%
Prefer not to say
4.42%
Other
1.92%
*As RWS is a UK-based company, and for inclusivity, we did not restrict the
racial/ethnic groups
Table 4. EMPLOYEE TURNOVER RATES,
% (FY24)
FY24
%
Turnover*
21.3%
Voluntary
10.6%
Involuntary
10.7%
*Challenges remain with data collection given the migration of some data from
multiple legacy sources onto a unified HR system.
Activity metrics
Activity metric
Category
SASB
code
Response
Number of employees by: (1) full-time
and part-time, (2) temporary, and (3)
contract
Quantitative
SV-PS-
000.A
(1) 86% (7,752 FTE)
(2) 13% (1,170 FTE)
(3) We have around 40,000 vendors and freelancers who
are paid on invoice.
Employee hours worked, percentage
billable
Quantitative
SV-PS-
000.B
3,299,809
19%
Our primary business model is based on words translated
but billing per hour is typical of some services adjacent to
localisation such as testing, DTP and multimedia services, etc.
Table 5. EMPLOYEE ENGAGEMENT SCORES (FY24)
Favourable
Neutral Unfavourable
My work gives me a feeling of personal accomplishment
64%
21%
15%
I would recommend RWS to people I know as a great place to work
62%
25%
13%
RWS as a company motivates me to excel in my work
56%
26%
17%
Table 1. ROLE REPRESENTATION OF RWS
EMPLOYEE RESPONSES (FY24)
Role
%
Senior Manager or Executive
9.50%
Manager or Team Leader
27.40%
Non-Manager
57.32%
Prefer not to say
5.78%
Table 2. GLOBAL GENDER REPRESENTATION
OF RWS EMPLOYEES* (FY24)
Gender
%
Female (Female or Cis woman)
66.19%
Genderqueer
0.63%
Genderfluid
0.32%
Intersex
0.16%
Male (Male or Cis man)
28.42%
Non-binary
0.87%
Trans woman/Trans female
0.08%
Trans man/Trans male
0.00%
Prefer not to say
2.69%
Other
0.63%
*For inclusivity, we included additional options under gender representation.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
37
Non-Financial and Sustainability
Information Statement
The following aligns to the non-financial reporting
requirements contained in sections 414CA and 414CB of the
Companies Act 2006.
Description of business model
Strategy and Growth model
Social and community
Our People
Our Communities
Employees
People, culture
Development
Employee engagement
Wellbeing
Diversity, Equity and Inclusion
Board diversity
Human rights
Labour and Human rights
Modern Slavery
Anti-bribery and corruption
Ethics and Code of Conduct
Whistleblowing and reporting concerns
Environmental matters
Environment
Climate-related financial disclosures
Policy, due diligence and outcomes
Risk management
Audit Committee report
Principal risks and uncertainties
Non-financial key performance indicators
2024 performance and key performance indicators
Policies
All public policies, codes and standards are available on our
website rws.com
Page 12
Page 29
Page 31
Page 21
Page 21
Page 29
Page 30
Page 29
Page 79
Page 32
Page 32
Page 31
Page 32
Page 24
Page 46
Page 42
Page 74
Page 42
Page 23
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
38
Chief Financial Officer’s Review
"The Group maintains a robust balance sheet,
ensuring our capacity to invest in long-term
competitiveness and deliver sustained value to
our shareholders. Our continued investment in
growth initiatives and ongoing efficiency efforts
have resulted in a more resilient performance
in FY24, with a return to growth in the second
half. We further strengthened our balance sheet
by disposing of our interest in PatBase, have
successfully integrated our recent acquisitions
(Propylon and ST Comms), and have completed
our first share repurchase programme. We
continue to make good progress on the Group’s
transformation programme.“
During 2024 total revenue declined by 2%, adjusted operating profit
by 9%, and adjusted profit before tax by 11%. Whilst the Group
experienced continued pressure from reduced client budgets and
longer decision-making cycles in some parts of the business this
year, we were pleased that the Group returned to growth in the
second half. Gross margin expansion of 60bps to 46.9% for FY24 was
driven by efficiencies from LXD, group restructuring and broader
cost control efforts. Cost of inflation in overheads was also offset by
restructuring and broader cost control efforts, whilst incremental
levels of investment were made to support the growth initiatives
and ongoing transformation. Gains from hedging were £5m in FY24
compared to £13m in FY23. The Group continued to enhance its
portfolio with the successful integration of Propylon, the acquisition
and integration of ST Communications and the disposal of its interest
in PatBase.
The Group continues to be highly cash generative, with cash
generated from operations of £94.5m, notwithstanding acquisitions
and costs associated with restructuring and integration. Net cash
(excluding lease liabilities) declined in the period from £23.6m to net
debt (excluding lease liabilities) of £12.9m reflecting £25m proceeds
from the disposal of PatBase, capital expenditure of £43.1m, dividend
payments of £45.5m and a further £30.4m paid for the share
repurchase programme.
Candida Davies
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
39
REVENUE
Overall, in FY24 the Group generated revenues of
£718.2m, which is 2% lower than FY23. The second
half reported revenue was in line with prior year due
to an improved performance across all divisions which
is reflected in a second half OCC revenue growth of
+2%. For the full year OCC revenue growth was flat
compared to FY23.
In divisional terms, Language Services recorded
£327.1m in revenue, a 1% decrease in total revenue and
a 3% improvement on an OCC basis. Client retention
and satisfaction remain high, albeit we continue to
see reduced volume from certain clients in some
end markets as they adjust to continued challenging
conditions. The TrainAI growth initiative performed
well and provides good momentum going forwards.
Regulated Industries recorded £146.5m in revenue, a
decrease of 10%, although a decline of 7% on an OCC
basis year-on-year. Positive progress continues to be
made with Linguistic Validation and while some Life
Sciences clients continued to deliver reduced levels
of activity, we anticipate volumes to recover as more
products move through regulatory and launch phases
in due course. Language and Content Technology had
total revenue of £142.3m, an increase of 4% year on
year and a decline of 1% on an OCC basis. Language
Weaver and Propylon performed well supporting
a more challenged performance elsewhere in the
division. IP Services recorded £102.3m in revenue, a
decrease of 2% on prior year and an increase of 3%
on an OCC basis. The growth was driven by a strong
performance in the Eurofile segment with many patent
filers remaining committed to the existing arrangement
over the Unitary Patent.
The majority of the Group revenue, categorised by
geography, is in the US market, which accounts for
53% of the total. No one client accounts for more than
10% of Group revenue.
GROSS PROFIT
Gross profit decreased by 1% to £336.5m, delivering a
gross margin of 46.9%, up 60bps from 46.3% in the prior
year. Cost of inflation and foreign exchange headwinds
were more than offset by efficiencies from LXD, group
restructuring and broader cost control efforts. We
continue to identify further opportunities for efficiency
gains through our transformation programmes and LXD
platform and the use of AI internally.
ADMINISTRATIVE EXPENSES
Administrative expenses have decreased to £270.7m
(FY23: £346.4m). Administrative expenses as a
percentage of revenue have decreased from 47% to
38%, which reflects the lower exceptional items and
impairment charges within adjusting items. Adjusted
administrative expenses (gross profit less adjusted
operating profit) increased by £8.5m to £224.2m, with
cost control measures not quite offsetting cost of
inflation, the additional overheads costs associated with
Propylon, incremental investments in growth initiatives
and reduced foreign exchange gains.
Amortisation of acquired intangibles was £40.8m
(FY23: £38.8m). This included additional amortisation
for Propylon intangible assets, partially offset by the
impact of exchange rate movements during the period.
Amortisation of non-acquired intangibles was £14.0m
(FY23: £18.1m).
The Group recorded a £10.5m impairment charge on
its revalued freehold building at 1-3 Chalfont St Peter
after a recent revaluation lowered its value from £14.0m
to £3.5m. The revaluation took place as part of a Group
property portfolio review. Furthermore, an impairment
charge of £11.7m was recognised on IT investments
after a change in strategy resulted in the impairment of
a previous solution that was in development.
Exceptional costs of £3.4m were incurred during the
year, relating to Group restructuring, integration and
the disposal of PatBase.
Acquisition costs of £7.2m were primarily related to
the contingent consideration and purchase of ST
Communications during the period and contingent
consideration for the purchase of Propylon Holdings
Limited in the prior period.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
40
FINANCE COSTS
Net finance costs were £5.8m (FY23: £4.0m), with the
year on year increase due primarily to an increase of
£2.2m in interest payable on external debt, reflecting
higher interest rates and increased borrowings. The
Group has a US$220m Revolving Credit Facility ("RCF")
maturing on 6 August 2027, after triggering the option
to extend maturity by one year. With only $100m drawn
as at 30 September 2024, we have further flexibility as
we continue to grow the business and seek selective
acquisitions to enhance the Group's capabilities and
geographic reach.
PROFIT BEFORE TAX
The Group reported a profit before tax of £60.0m (FY23:
loss of £10.9m), the increase being driven by lower
impairment charges and lower exceptional charges
primarily related to group restructuring as well as the
profit on sale of Patbase of £30.0m.
ADJUSTED PROFIT BEFORE TAX
Adjusted profit before tax ("Adjusted PBT") is stated
before amortisation and impairment of acquired
intangibles, share-based payment expense, acquisition
costs and exceptional items (see reconciliation on
page 156). 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 Adjusted PBT of £106.7m
(Adjusted PBT margin: 14.9%) recorded in the period
has decreased from £120.1m (Adjusted PBT margin:
16.4%) in the prior year. Strong cost control measures
and restructuring efforts were implemented to
counteract inflation and ongoing investments in
growth and transformation. However, weaker business
performance and foreign exchange headwinds led
to the release of management bonuses and a slightly
lower adjusted PBT compared to the previous year.
Excluding the impact of foreign exchange, both the
adjusted PBT and margin are in line with the prior year.
TAX CHARGE
The Group’s tax charge for the year was £12.5m (FY23:
£16.8m). The adjusted tax charge for the period was
£26.6m (FY23: £29.6m) representing an effective
adjusted tax rate of 24.9% compared with 24.6% in the
prior financial year. The rise in the effective rate largely
reflects the full year impact of the increase in the UK
rate change to 25%, from the blended rate of 22% in the
prior year.
EARNINGS PER SHARE AND DIVIDEND
Basic earnings per share for the financial year increased
from (7.1)p to 12.8p, while adjusted basic earnings per
share decreased from 23.3p to 21.6p, representing a
decrease of 7%, which reflects the drop in adjusted
profit before tax. The weighted average number of
ordinary shares in issue for basic and adjusted basic
earnings decreased from 388.2m to 371.3m, principally
due to the proportionate impact of the ordinary shares
repurchased through the share repurchase programme.
A final dividend for the financial year ended 30
September 2024 of 10.0 pence per share has been
proposed, equivalent to £36.9m, while an interim
dividend of 2.45 pence per share, equivalent to £9.1m,
was paid during the financial period. A final dividend for
the year ended 30 September 2023 of 9.8p pence per
share, equivalent to £45.5m, was paid in this financial
period.
The proposed total dividend for the year of 12.45 pence
per share represents a 2% increase on the total dividend
relative to the prior financial period of 12.2 pence per
share.
BALANCE SHEET
Net assets at 30 September 2024 decreased by £87.7m
to £899.6m. The main drivers of this decrease was the
decreasing foreign currency denominated net assets,
mainly due to the weakening US Dollar.
Current assets at 30 September 2024 of £278.3m have
decreased by £11.9m on the prior year. This includes a
decrease in trade and other receivables of £1.1m and
cash and cash equivalents balances of £14.7m to £61.5m.
Current liabilities have also decreased to £158.4m at 30
September 2024, a decrease of £24.2m, primarily due
to a decrease in trade and other payables balances of
£22.1m. Non-current liabilities have increased by £2.6m,
reflecting a net increase in loan balances under our RCF
of £21.8m, partly offset by a decrease in lease liabilities
of £4.9m, trade and other payables of £1.9m and
deferred tax of £4.2m.
Chief Financial Officer’s Review (continued)
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
41
CASH FLOW AND WORKING CAPITAL
Cash generated from operations was £95.5m, £33.7m
less than the prior year, when cash generated was
£129.2m. Operating cash flow before movements in
working capital and provisions was £128.6m decreased
from £130.9m in the prior year. The key items within
the net working capital outflow of £32.2m relate to the
restructuring of the Group, revenue related phasing,
supply chain management and other procurement
activities.
Significant cash outflows from investing activities
included purchases of intangible software of £40.5m and
property plant and equipment of £2.6m partially offset
by the £25.0m receipt for the disposal of Patbase.
The Group completed its share repurchase programme
during the period with £19.4m of shares repurchased in
FY23 and the remaining £30.4m repurchased in FY24.
Cash flows from other financing activities included
dividends paid within the financial year ended 30
September 2024 of £45.5m.
Cash balances at the financial year end amounted to
£61.5m, with external borrowings of £74.4m, excluding
lease liabilities, resulting in a net debt position of £12.9m
(FY23: £76.2m cash and external borrowings of £52.6m,
resulting in net cash of £23.6m). Net debt including lease
liabilities was £40.1m (FY23: net debt of £9.9m).
POST BALANCE SHEET EVENTS
No significant events have occurred between the
balance sheet date and the date of authorising these
financial statements.
Candida Davies | Chief Financial Officer
11 December 2024
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
42
Principal Risks and Uncertainties
The 11 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 the Executive Team and other senior leaders who
collectively play a key role in the identification, assessment and mitigation of risk
and periodically report to the Board on progress.
Risk category
Description
Mitigation
PEOPLE
Failure to attract,
engage, retain,
incentivise and
develop key talent
The quality of service provided by RWS is
fundamentally derived from the quality of our
people. Our performance could therefore be
adversely affected if we are unable to recruit,
train, incentivise and retain the key talent
required for the future needs of the Group.
We are also exposed to wage inflation and
talent shortages in certain countries and
markets, which is fueling the 'war for talent'.
RWS has an attractive proposition for current
and future employees, operating in a fast-
moving sector; we are at an inflection point
within the industry and have the competitive
and technological capability and capacity
to remain at the forefront of the industry.
We continue to offer internal development/
career options, a positive culture and values;
and strong communications. We have
introduced structured job architecture; job
grading; and benchmarking; and embedded
onboarding and engagement programmes.
The Group also plans for succession at senior
levels.
OPERATIONAL
Failure to deliver
transformation
programme
The Group’s transformation programme
is addressing its core systems, processes
and operating models to enable faster
response to market, efficiency and growth
opportunities. The Group would be exposed
to commercial, operational and reputational
risk if the execution of the implementation
programme does not deliver the planned
benefits to time, plan and cost.
The Group has established an overarching
Business Transformation Office ("BTO") with
the required structure, processes, experience
and capabilities to support the executive
sponsors responsible for each prioritised
transformation. The BTO is responsible
for assisting the Executive Team in driving
a successful integrated plan and playing
an independent role in oversight and
governance ensuring risks are appropriately
monitored and mitigated. Risks are reduced
by ensuring appropriate focus, and quality
and quantity of resource is provided to each
activity. This ensures that where resource
constraints emerge, timely impact analysis
and prioritisation occurs. The Executive Team
meet monthly in the Steering Committee and
the Board receives periodic status updates.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
43
Risk category
Description
Mitigation
Complexity risk
The Group’s current structure and operating
model are complex due to past organic and
inorganic growth. This risk manifests itself in
the breadth of service offering, a multitude
of different operational systems and the
associated workload involved in maintaining,
securing and using them.
The Group is currently investing in a
transformation programme to significantly
simplify its operating model. Protocols are
also in place to ensure that acquisitions are
better integrated in order to avoid adding to
complexity wherever practical. The Board and
Executive Team reviews the Group’s operating
model and transformation programme
regularly to ensure progress is being made.
TECHNOLOGY
Technology and AI
RWS’s leading position in AI-enabled linguistic
processes requires agile development,
deployment and commercialisation of AI
technology such as Evolve. We could, however,
be disrupted if we are unable to respond
rapidly to changing technological or market
developments. This could challenge our
competitive standing, customer proposition
and put customer relationships, demand for
our services, new growth opportunities and
revenues at risk.
There is continuous review of AI technology,
possible disruptions and the risks and
commercial opportunities for RWS. We invest
in our linguistic AI portfolio to leverage our
unique technology, product and sector
expertise and differentiate our offering.
We actively pursue opportunities to secure
patent protection for our innovations. We
also constantly monitor AI developments in
the market to identify and manage potential
threats and opportunities and incorporate
leading edge innovation in our solutions.
STRATEGIC AND FINANCIAL
Data Services Business
Model risk
AI data services such as TrainAI are a key
growth initiative for RWS. We could be at risk
if we are unable to scale our business model
and processes in line with growth expectations
to support data services. The business
model requires agile resourcing and active
management of large numbers of individuals
which result in a range of compliance
obligations in areas such as onboarding, supply
chain management, data privacy and fraud
prevention. We also need to actively manage
the client portfolio to focus on higher margin
projects and to avoid concentration risk.
RWS is leveraging Group policies and
procedures as well as introducing additional
AI / Data services specific amendments
in key control areas such as onboarding,
workforce management, data privacy, audit
& compliance and operations. RWS is also
monitoring the future portfolio to manage
margins and avoid portfolio concentrations.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
44
Principal Risks and Uncertainties (continued)
Risk category
Description
Mitigation
Failure to deliver
profitable growth
The Group is seeking organic growth in
competitive markets with rapidly evolving
client expectations. Whilst our client
retention remains strong, we need to
remain commercially attractive and respond
effectively to client demands, to avoid losing
clients or having our share of spend reduced.
We might also be unable to fully pass on
inflationary pressures in our pricing which
could compress margins unless we find
efficiency gains to offset any reduction in
margins. There is also a risk that our ability
to forecast client spend may be unreliable
leading to our business planning and
associated market guidance being inaccurate.
In terms of retention, we measure client
satisfaction regularly and, where appropriate,
have account managers and client service teams
focused on our key accounts. We have been
investing in our sales and marketing capabilities
and in a series of new growth initiatives. We have
appointed an SVP of sales operations to facilitate
best practice sharing and drive consistent
performance management. We have also
been training our sales and account managers
through our 'Leading for Growth' programme
and have been making improvements to our
Key Account Plans and our approach to pricing.
We continue to manage long-term relationships
closely to reduce revenue risk. Forecasts are
also reviewed regularly at Board and Executive
Team level to inform business planning and
shareholder communications.
LEGAL AND COMPLIANCE
Legislative
and regulatory
compliance risk
The pace and demands of legislative
and regulatory change as well as the
increase in stakeholder expectations,
can adversely impact on RWS's revenues
and increase potential compliance and
reputational risks (e.g. AI, privacy and cyber,
corporate governance, climate, sanctions,
environmental, health and safety).
The Group has established a unified Legal &
Professional Advisory team under the Group
General Counsel and Company Secretary to
support the business and ensure a consistent,
global approach to legal, governance and
privacy risk management and to monitor and
manage the impact of regulatory change. The
RWS Code of Conduct is underpinned by an all-
colleague training programme. Our ethics and
compliance policy framework is reviewed and
enhanced periodically and as necessary.
Failure to manage
data-privacy
requirements and
expectations
The Group is facing increasing regulation across
its multi-national operations as the global
landscape of data protection, privacy, AI and
cyber regulation develops. The current pace of
innovation and regulation also leads to additional
expectations from our clients in relation to the
protection of personal data and the deployment
of AI. The broader scope of data processing
anticipated by the Group’s AI and data services
strategic initiatives increases our risk exposure.
The Group has established and expanded its
Data Privacy Office under the General Counsel
and Company Secretary to oversee data
privacy matters globally. The legal team also
plays an active role in reviewing data privacy
requirements and obligations in client and
vendor contracts. Data privacy and AI policies
and procedures are being further developed
and rolled-out.
EXTERNAL ENVIRONMENT
Competitive risk
We face competitive risks across products
and services from existing and new entrants,
market consolidation and other market
dynamics as well as development of new
offerings and technology solutions. We
could also be at risk of disintermediation if
customers become competitors. There is
continuous review of the competitive risks
facing RWS across its products and services.
We have a Group-level monitoring and
business intelligence for monitoring existing
and potential competitors. We also scan the
technology / AI developments in conjunction
with the linguistic AI team to identify and
manage potential threats and to counter these
by incorporating leading edge technology
in our solutions. There is a structured client
engagement programme to help identify and
mitigate competitive threats.
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
45
REVIEWING AND MAPPING OUR RISKS
During FY24 the Board reconsidered the relevance of
climate change as a Group principal risk. This risk is
defined as a combination of increasing disclosure and
reporting obligations and exposure to natural disasters.
The Board’s review recognised the importance of climate
risk for the Group and its stakeholders but concluded
that both elements of the risk are well-managed through
the oversight and activities of the Group’s ESG Steering
Committee. In addition, the Group has made good
progress in setting its carbon reduction pathway, with
its targets formally approved by the SBTi in May 2024
(see pages 25 to 28 for more detail). Noting also that
climate risk has a relatively lower impact for the Group in
comparison with other industries, the Board concluded
that climate risk should be retired as a principal risk.
The Group categorises risks according to the likelihood
of occurrence and the potential impact on the Group.
Impact is assessed on financial grounds. Financial impact
in the period could be increased costs, reduced revenue,
fines or increased management time required to deliver a
given activity. 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). During FY24, the
Board conducted a risk appetite and exposure exercise
to help better inform the focus of its mitigation efforts.
Risk category
Description
Mitigation
Cyber security
RWS may be adversely affected by activities
such as systems intrusions, denial of service
attacks, ransomware, virus spreading and
phishing. AI is increasing the volume and
sophistication of such activities and further
heightens the people risk associated with
cyber attacks. The cyber threat level is
increasing and successful attacks on legacy
and new IT estate could also lead to data
loss and adverse financial and reputational
impact.
The Group operates a network of systems to
act as barriers to outside attacks. It has third
party threat detection and response services,
fully supported firewall protection, data and
systems recovery procedures, BCP, MFA, and
uses targeted third-party penetration testing.
The Group also conducts employee cyber /
information security training and holds an
appropriate level of cyber insurance.
Geopolitical
The Group is exposed to the heightened
global geopolitical uncertainty. The risk could
lead to changes to demand, growth rates and
attractiveness of clients and markets, and
have an impact on the geographical focus of
the Group and the cost of doing business.
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
Group reflects changes to the geopolitical risk
in its budgeting, investments, planning and
decision-making.
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46
Task Force on Climate-related
Financial Disclosures ("TCFD")
Recognition of climate-change impacts and the need
to act proactively is increasing. The hottest recorded
June, July and August was experienced in 2024 for the
eleventh consecutive year and, if action is not taken
by all, these changes will become long lasting. RWS
has the desire to lead by example. This is evidenced
by it becoming a signatory of the TCFD before it
became mandatory and achieving SBTi approval
of its science-based targets in FY24, ensuring that
RWS can support the achievement of keeping global
temperature rises to 1.5°C or less.
Following our decision in 2021 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 to 11.
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47
TCFD pillar
TCFD recommended
disclosures
Cross-reference or
reason for non-
compliance
Comments and next steps
Governance
1. Board oversight of
climate-related risks and
opportunities
Page 48
Compliant
The Board will continue to review the climate-related risks
and opportunities routinely.
2. Management’s role in
assessing and managing
climate-related risks and
opportunities
Page 48
Compliant
We will continue to develop the roles and responsibilities
of management in assessing and managing climate-
related risks and opportunities across the Group.
Strategy
3. Climate-related risks and
opportunities in the short,
medium-, and long-term
Pages 48 to 52
Compliant
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 & 54
Compliant
We have completed a scenario analysis in respect of
climate-related risks and opportunities and these are
being incorporated into financial planning. In FY24 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 54 & 55
Compliant
Based on current weather fluctuations, we have made a
number of assumptions associated with those states and
what could be experienced.
Through our climate scenario analysis we believe our
business is resilient in the short-, medium-, and long-
term. In FY24 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 55
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.
7. Our processes for
managing climate-related
risks
Page 55
Compliant
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.
8. Describe how processes
for identifying, assessing,
and managing climate-
related risks are integrated
into the organisation’s overall
risk management
Page 55
Compliant
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 56
Compliant
RWS worked with the industry-leading carbon accounting
platform and consultancy team, Watershed, to report
against our emissions-related performance metrics for
Scopes 1, 2 and 3.
10. Disclose Scope 1, Scope
2 and, if appropriate, Scope
3 greenhouse gas ("GHG")
emissions and the related
risks
Page 56
Compliant
We have disclosed our Scope 1, 2 and 3 emissions the
past several years.
11. Describe the targets
used by the organisation
to manage climate-related
risks and opportunities and
performance against targets
Page 57
Compliant
In FY24 we received SBTi approval for our near-term
science-based emissions reduction targets.
We will continue to report regularly on our progress to
reduce our carbon emissions.
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48
Task Force on Climate-related Financial Disclosures (continued)
GOVERNANCE
a. Board oversight of climate-related risks
and opportunities
The Board is responsible for overseeing and directing
the overall RWS strategy, including agreeing the Group’s
position and commitments on key sustainability and
climate-related matters. Climate-related issues are
discussed during Board meetings, in addition they receive
regular reports on sustainability and ESG issues.
The climate-related issues raised to the Board inform and
influence business strategy decisions, including annual
budgets, major plans of action and associated capital
expenditures, remuneration, transition plans and targets.
The Board and Executive Team oversee progress against
climate-related goals and targets including the annual
reporting of the Group’s science-based targets to the
Science Based Targets initiative (“SBTi”).
b. Management’s role in assessing and
managing climate-related risks and
opportunities
The CEO oversees the sustainability and climate agenda
with the Executive Team, in order to identify climate-
related risks and opportunities, and to manage the
implementation of any key actions approved by the Board.
The Executive Team oversees the implementation of the
Group’s policies and programmes in order to mitigate risk,
including risks that relate to sustainability and climate.
The Executive Team considers climate-related issues
as part of the overall ESG strategy, led by the General
Counsel and Company Secretary, who is responsible
for coordinating the Group’s overall risk management
program. The Board formally reviews ESG and climate-
change topics at least once annually, and more frequently
where required.
RWS’s remuneration philosophy reflects the importance
of sustainability and aims to incentivise senior leaders
to contribute to the Group’s ESG strategy individually,
by including ESG targets in each senior leader’s annual
objectives.
STRATEGY
a. Climate-related risks and opportunities in
the short-, medium- and long-term
RWS considers a range from one to three years as ‘short-
term’, from three to five years as ‘medium-term’, and
anything over five years as ‘long-term’ which is aligned
with the Group’s business planning.
Working with a third-party external consultant and their
expert handling of climate impact analytics tools, key
risks and opportunities were identified for our operations
locations. Risks and opportunities were then assessed for
likelihood of materialisation, risk level, and time period
in which risk could arise and impact business. Risks and
opportunities were considered across separate RCP
scenario analyses.
As part of its overall risk-management strategy, RWS
has identified a number of climate-related risks and
opportunities that potentially could have a material
financial impact on the organisation. These have been
categorised into physical risks and transition risks and
opportunities.
An overview of the identified short-, medium-, and long-
term risks and opportunities have been summarised on
the next page.
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49
Risk
Business disruption
Increased energy costs
Heat stress and reduced
labour productivity
PHYSICAL RISKS
Risk Level
Medium
Medium
Low
Description
Physical risks such as flooding
can impact RWS Holdings plc
business by causing disruptions
and outages within offices and
data centres. Employees may
be prevented from accessing
necessary data. In extreme
cases, IT infrastructure may be
compromised and locally hosted
data could be lost.
Additionally physical climate risks
could impact employees abilities
to be able to perform their day
to day roles due to acute climate
events, for example severe storms
or hurricanes.
Warmer average temperatures will
require additional cooling capacity.
Energy usage and costs will likely
increase due to higher demand for
heating and air conditioning within
offices and data centres, as well
as for employees and freelancers
working from home.
Heightened heat stress may
cause lower labour productivity.
Reduced productivity of the labour
force in impacted areas would
directly impact RWS’s revenue if no
measures were implemented.
Labour productivity could be
reduced both in RWS offices and at
the homes of remote workers due
to insufficient air conditioning.
Likelihood
Unlikely
Likely
Likely
Scenario
analysis
RWS has mapped its operations,
and conducted scenario analysis
to determine sites with the highest
exposure to flood risk. Under RCP
6.0, exposure to flood risk was
highly or very highly increased
at one site out of the 62 sites
assessed in the medium-term and
nine sites in the long-term.
Average temperature rises are
expected to be highly or very
highly impactful at one site in
the long-term under the RCP
6.0 scenario. Under the RCP 8.5
scenario, this increases to thirteen
sites out of our 63 total sites.
Under RCP 6.0, heat stress is likely
to cause at least a 10% reduction
in productivity at 4 sites by 2100
and at least 5% at 4 additional
sites by 2100.
RWS expects that heat stress
in these geographical locations
will also pose similar risks to
homeworkers, primarily in India,
Thailand, and China.
Impacts
Reduced revenue, increased
operational costs
Increased operational costs
Reduced revenue, increased
operational costs (energy)
Timeframe
Short, Medium, Long
Medium, Long
Medium, Long
Management
response and
mitigation
Apart from our head office
(Chalfont St Peter), RWS lease all
offices and data centres. We are
therefore able to have flexibility
to move our locations as required
in the event of climate impacts or
insurance premiums becoming
uneconomical.
We have an agile working policy
for employees who are able to
utilise the office or home working
as suited. This is in addition to our
business continuity policies.
This risk will be mitigated through
actively monitoring our energy
consumption using a carbon
emissions tracking platform.
Identifying, assessing and investing
in energy saving opportunities
in the short-term will help keep
costs down in the long-term. An
example is RWS Holdings plc’s
recent transformation plan which
is dedicated to upgrading complex
and outdated systems, harmonising
ways of working and using a single,
cloud-based system to improve
accessibility around the globe.
Increased costs are expected and
will be budgeted for, to allow for
higher demand for air conditioning
within offices and data centres.
Emerging legislation that may
increase energy prices, such as the
introduction of carbon pricing, will
be continually monitored.
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50
Task Force on Climate-related Financial Disclosures (continued)
Risk type
Current and emerging
legislation
Market and reputation
Policy
Technology
TRANSITION RISKS
Risk
Non-compliance with
regulation
Clients’ demands for
effective sustainability
management
Increased energy costs
Substitution of existing
products and services with
lower emissions options
Risk Level
Low-Medium
Medium
Medium
Low
Description
RWS Holdings plc’s
global reach means
that it must be aware
of and comply with
current climate-related
regulation. Emerging
climate regulations,
such as UK Sustainability
Disclosure Standards
(“SDS”), Corporate
Sustainability Reporting
Directive (“CSRD”),
Corporate Sustainability
Due Diligence Directive
(“CSDDD”), and pending
SEC and California state
legislations must also
be considered given our
global footprint.
These regulations are
anticipated to focus
on enhancing climate
change management
practices, improving
transparency
surrounding reporting
carbon emissions
and climate change
management strategies.
Non-compliance with
regulation may result in
fines and reputational
damage. Compliance
with emerging carbon
pricing legislation,
may also contribute to
increased costs.
Our clients are
demanding
increasingly effective
environmental and
sustainability practices,
as well as improved
transparency in
the reporting on
sustainability topics.
Failure to meet these
high standards may
risk losing some of
our higher value
customers, which
would cause a
decrease in revenue.
The energy transition
may bring a period
of high energy
prices in the short to
medium-term. Higher
carbon prices may be
introduced to support
the shift to investments
in, and adoption of,
renewable energy,
driving increased fossil
fuel prices. Wholesale
fossil fuel prices may
also increase as a result
of lower supply and
higher relative demand,
due to the potential for
reduced investment
in new oil and gas
supplies.
Technology, including
data centres and network
infrastructure, is central
to RWS Holdings plc’s
offerings. It constitutes
an important aspect of
its energy consumption
and associated carbon
emissions. Innovation
focused on low/no
carbon technology forms
a central part of RWS
Holdings plc sustainability
agenda and climate
change goals. Failure to
respond sufficiently to
trends in technological
advancement could lead
to increased energy costs,
as well as decreased asset
value or useful economic
life, leading to write-offs,
asset impairment or early
retirement of existing
assets.
Likelihood
Unlikely
Likely
Likely
Unlikely
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51
Risk type
Current and emerging
legislation
Market and reputation
Policy
Technology
TRANSITION RISKS
Risk
Non-compliance with
regulation
Clients’ demands for
effective sustainability
management
Increased energy costs
Substitution of existing
products and services with
lower emissions options
Scenario
analysis
Enhanced regulatory
requirements
are expected as
organisations
transition to a lower
carbon economy, and
particularly under RCP
2.6, where a strong
regulatory response will
be necessary to limit
warming to below 2
degrees.
Under the ‘very
stringent’ RCP 2.6
pathway, greater
emphasis will be
placed on companies
to improve the
transparency of their
supply chains, and
to demonstrate the
environmental and
sustainability credentials
of their suppliers.
Under the RCP 2.6
pathway, increased
energy costs are highly
likely due to a more
rapid decarbonisation of
global energy supply. A
rapid transition will likely
necessitate high levels
of global investment in
renewable energy and
grid infrastructure, as well
as regulatory interventions
such as high carbon prices
to disincentivise fossil
fuel consumption. These
would contribute to higher
global energy prices in
the short-term as carbon
prices increase. Energy
prices would decrease
over the medium-to long-
term as renewable energy
increases in the global
energy mix.
There is an expectation
that, under RCP 2.6, rapid
technological advancement
across sectors will be
required to limit warming
to below 2 degrees. This
will primarily increase
costs to organisations who
operate high-emission
data centres and use
outdated technology as
energy costs will increase
in the short-term and
inefficient equipment will
become obsolete and /
or prohibitively expensive
to operate, regardless of
remaining asset life value.
Impacts
Increased operational
costs
Reduced revenue
Increased operational
costs
Reduced revenue,
increased operational
costs, increased capital
expenditure
Timeframe
Medium, Long
Short, Medium, Long
Medium, Long
Long
Management
response and
mitigation
RWS continues to
monitor the evolving
regulatory landscape
in order to ensure it
is complying with all
relevant legislation
and is prepared for
emerging legislation
as it becomes
applicable. RWS
ensures preparedness
by seeking external
support where
required in order
to ensure full
compliance. RWS
has demonstrated
its commitment to
this through the
engagement of
external consultants
to quantify its Scope
1, 2 and 3 carbon
footprint.
RWS ensures
alignment with market
expectations through
seeking external
consultancy support
to ensure compliance
with legislation, and
the accreditation of its
carbon emissions. It
has recently received
approval of its near-term
science based targets
by the Science Based
Targets initiative ("SBTi").
Increased costs are
expected and will be
budgeted for, to allow
for higher demand for
air conditioning within
offices and data centres.
Emerging legislation
that may increase
energy prices, such
as the introduction of
carbon pricing, will be
continually monitored.
RWS has migrated servers
to the cloud through
large, reputable suppliers.
Additionally, RWS is actively
pursuing optimisations to
systems that serve large
language models and
artificial intelligence to
reduce processing power
requirements, and therefore
energy use and costs.
RWS will continue to assess
the energy transition plans
of our technology third-party
suppliers to evaluate their
resilience to technological
changes as a result of
transition climate-related risks.
Additionally, RWS will continue
to monitor alternative
technological solutions to
ensure it is keeping up with
market trends. RWS has
a transformation plan in
place that is dedicated to
upgrading outdated systems,
harmonising ways of working,
and implementing a single,
cloud-based system to
improve accessibility across
the globe.
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52
Task Force on Climate-related Financial Disclosures (continued)
Opportunity
type
Energy efficiency
Market and reputation
Technology
OPPORTUNITIES
Opportunity
Participation in renewable energy
programmes and adoption of
energy efficiency measures
Aligning to customer priorities and
market expectations
Use of more efficient production
and distribution processes /
Development of low emissions
goods/services.
Opportunity
Level
Medium
High
Low
Description
RWS continues to identify
energy and carbon savings
opportunities through
compliance with regulations.
Energy savings have been
made to date, and efficiency
improvement opportunities
are continually monitored and
explored. RWS has a focused
effort on increasing the source
of renewable energy procured
further leading to additional
carbon savings and emission
reductions in line with our SBTi
goal.
Many of RWS’s clients and other
stakeholders have an increasing
focus on sustainability issues
within their own operations
and in their supply chain.
RWS’s continuing alignment
with current and emerging
regulations, such as TCFD
and CDP, demonstrate its
commitment to transparency and
to contributing to the transition
to a lower carbon economy.
This, therefore, represents
opportunities as existing and
potential customers focus on
managing and reducing their
supply chain emissions.
Technology is a key focus of RWS,
and it continually monitors and
realises opportunities relating to
emerging technologies. Increased
efficiencies due to an increasing
adoption of, and improvements to,
artificial intelligence (AI) services
for example, poses opportunities
for reducing emissions associated
with translation services.
RWS is actively pursuing
reductions to energy use and
resultant energy costs for large
language models and AI through
the quantising of models -
enabling the use of efficient
central processing units (“CPUs”) in
place of higher energy demanding
graphics processing units (“GPUs”).
Likelihood
Likely
Likely
Likely
Scenario
analysis
Under RCP 2.6, an accelerated
transition may mandate
further measures to improve
energy efficiency or increased
transparency.
Under RCP 2.6, existing and
potential customers are more
likely to place increased emphasis
on visibility over their supply
chain emissions, increasing
the potential for opportunities
related to aligning to market
expectations.
Under RCP 2.6, technological
advancement is likely to occur
at a more rapid pace, potentially
bringing down the cost of
adoption of lower emission
technologies.
Impacts
Decreased operational costs
Increased revenue
Decreased operational costs
Timeframe
Short, Medium
Short, Medium, Long
Short, Medium
Management
response and
mitigation
Transition
risks
RWS continues to work to realise
the opportunity for energy
savings, through allocating
personnel resources to manage
its climate change strategies, and
to support in the identification of
opportunities.
RWS allocated internal and
external resources to managing
climate impact strategies and
increasing transparency through
verification of emissions and other
sustainability metrics. New sources
of revenue are also monitored to
identify realised opportunities.
RWS will continue to invest in R&D
that will enable the production
of energy-efficient AI-based
technology and products.
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53
b. Impact of climate-related risks and
opportunities on business, strategy, and
financial planning
RWS conducts three different scenario analyses using
Representative Concentration Pathways ("RCPs") to assess
the identified climate-related risks and opportunities in the
short-, medium-, and long-term. They are then prioritised
using the risk matrix method as described above.
RWS business, strategy, and financial planning are affected
by climate-related issues in the following seven ways:
PRODUCTS AND SERVICES
For the last few years there has been a noticeable
increase in the demand for sustainable products and
services.
There has been a shift in market preferences,
with clients preferring to engage with sustainable
businesses. RWS continues to investigate ways to
optimise its products and services, focusing on
reducing carbon emissions while also ensuring client
satisfaction and improving efficiencies wherever
possible.
Strong demand has also continued from our corporate
and financial services clients in relation to the reporting
of their own ESG initiatives and progress. We are
working with numerous multinationals, asset managers
and investment banks in translating their stakeholder
communications for global audiences, particularly
as they relate to decarbonising the global economy
through investment in renewable energy and the
transition away from fossil fuels.
RWS has also begun to identify projects undertaken
for clients which are directly linked to climate change,
e.g. localising patents for blades for windmills or
insulation material; localising information related to
electric vehicles and solar panels; localising ESG-related
information resulting from regulatory disclosures such
as the Corporate Sustainability Reporting Directive
("CSRD") and the Sustainable Finance Disclosure
Regulation ("SFDR"); and thought leadership content
produced by clients to market and sell financial
products.
SUPPLY CHAIN/VALUE CHAIN
In FY24, the majority of the RWS global carbon footprint
was related to Scope 3 categories. A significant portion
was attributable to its value chain. To reduce upstream
carbon emissions, RWS rolled out a programme of
engagement with its suppliers on their climate-change
management strategies through supplier questionnaires
and/or engagement through a risk screening,
performance mapping and rating software platform for
supply chain sustainability issues. Suppliers who are seen
as managing their climate-change strategy actively are
preferred, and suppliers who are not will be encouraged
to improve. The Group’s expectations are listed in its
Supplier Code of Conduct and Corporate Sustainability
Policy Statement.
To promote the ethos of sustainable management of
climate-change, clients and investors are informed of
RWS climate-related risk management strategies through
published reports, including Annual Reports , CDP
disclosures, and TCFD statements.
ADAPTATION AND MITIGATION
ACTIVITIES
RWS has considered its impact on the environment and
on overall climate-change carefully. The Group’s risk
management programme is headed by the General Counsel
and Company Secretary, and is supported by the Executive
Team and relevant top management.
To demonstrate its commitment to being a sustainable
business, in 2024 RWS received approval for its near-term
greenhouse gas emissions reductions targets from the SBTi.
Additional sustainable and climate-change mitigation
activities are encouraged throughout the RWS global offices.
INVESTMENT IN R&D
Technological advancements have been identified as a
primary risk in the Group’s risk management programme.
RWS scans for and reviews innovations in technology
that can improve efficiencies while reducing energy
consumption. As virtual workplaces become more
common and its clients span across the globe, important
consideration is given to new, innovative ways to deliver
products and services as efficiently as possible. RWS
is committed to investing in growth areas, technology
products and infrastructure with a view to accelerate
organic growth.
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54
Task Force on Climate-related Financial Disclosures (continued)
OPERATIONS
RWS has noted a significant increase in the number of
clients requesting robust climate-change management
from their suppliers. To ensure RWS meets or exceeds
these expectations, it complies with all relevant climate-
change regulations and actively improves its climate
change management wherever possible.
ACQUISITIONS AND DIVESTMENTS
In FY24 RWS acquired a Cape Town-based STComms
Language Specialists Proprietary Limited (“ST
Communications”), one of Africa’s leading language
services providers.
ST Communications offers a wide range of professional
language and linguistic solutions to African and
international businesses such as localisation services
including translation, interpreting, software testing,
subtitling and transcreation. ST Communications’ services
covers industries, from life sciences and financial services
to government, technology and gaming.
Establishing a local presence and operations in Africa
marks a significant milestone for RWS and enables clients
to further their reach into the African market with locally-
based talent and linguistic expertise across 40+ African
languages.
In May 2024, RWS agreed the terms for the disposal of
its interest in a revenue and cost sharing arrangement,
together with some associated assets, relating to a patent
information resource business known as 'PatBase' for
£30,000,000 in cash, of which £5,000,000 was deferred
and will be payable during first quarter of FY25.
ACCESS TO CAPITAL
Many of the measures detailed throughout this section
contribute to ensuring RWS has access to capital.
Strengthening its climate-change management strategy
through commitments to carbon emissions reduction
targets, transparent engagement with its value chain,
and investments in technological advancements can
generate additional revenue from drawing in new clients
with similar values. The initiatives themselves may have
several benefits. For example, improving the accuracy of
our data collection and carbon footprinting not only aids
in achieving our carbon emissions reduction targets, but
also can lead to improved business decisions.
A commitment to carbon emissions reduction targets
allows RWS to access new sources of investment, while
also more traditional lenders are favouring businesses
with a clear strategy.
c. Resilience of the strategy, taking into
consideration different climate-related
scenarios, including a 2°C or lower scenario
RWS analyses identified risks and opportunities across
three different RCPs scenarios to assess climate-related
risks and opportunities in the short-, medium-, and long-
term. RCPs are a method for capturing and modelling
future climate change impacts, as adopted by the
Intergovernmental Panel on Climate Change ("IPCC"),
and are characterised by their range of increase in global
mean temperature by 2100. The three climate scenarios
used include:
• Low emission scenario (RCP 2.6) – this pathway
predicts keeping global temperature increases below
2°C.
• Medium emission scenario (RCP 6.0) – under this
pathway, global temperatures are predicted to
increase an average of 3-4°C.
• High emission scenario (RCP 8.5) – here, global
temperatures are predicted to increase an average of
over 4°C.
Assumptions used for the scenario analysis include
relevant weather fluctuations, carbon tax levels, extreme
weather impacts on businesses and supply chains. The
assessments span the identified climate-related physical
risks, transition risks, and opportunities.
A qualitative scenario analysis was also undertaken
to analyse the impacts of climate change on revenue;
assumptions for the qualitative scenarios include various
increases in energy costs due to climate change.
RWS incorporates each of the scenario analyses in
its climate change risk assessments, which is used to
drive the overall business strategy. These risks are
assessed annually, and any additional significant risks
and opportunities identified will be incorporated into the
scenario planning to influence the overall strategy and
planning.
Similar to FY23, it was not possible to estimate a single
figure for the full financial impact of all identified climate
change risks and opportunities. However, ranges, where
used, have been calculated based on conservative
estimates. The costs associated with mitigation activities
are also factored into strategic planning. RWS is
confident that the costs of meeting its sustainability and
climate change goals will be at least partly mitigated by
its climate-related initiatives and associated benefits.
Some of the initiatives undertaken in FY24 include:
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55
1. Submitting science-based targets to the SBTi and
obtaining approval in FY24.
2. To reduce operating costs and minimise energy
consumption, RWS identified several locations
as larger than necessary, given its agile working
approach. Some offices like in Berlin (Germany),
Sheffield (UK), and Mumbai (India) were downsized to
limit excess energy usage and carbon emissions.
3. Investment in R&D to improve the RWS IT system –
RWS continues to review technological advancements
and use the most energy efficient and latest
technology available, which supports the attainment
of its sustainability and climate change goals.
4. Enhanced engagement with its value chain. RWS
utilises the Watershed platform, which pulls data
from CDP, and EcoVadis to engage with suppliers and
track details on their climate-change management.
This approach is tailored to each supplier based
on size, where more climate change information is
being requested from larger suppliers. This enables
RWS to target the larger carbon emitting suppliers
and encourage them to reduce their climate change
impact.
RISK MANAGEMENT
THE PROCESSES FOR IDENTIFYING AND
ASSESSING CLIMATE-RELATED RISKS
The Executive Team assists the General Counsel and
Company Secretary with the identification of risks
through horizon-scanning activities. Potential risks
related to existing and future regulation, reputation and
markets, potential financial impacts, and physical climate
change are all considered carefully.
Once identified, risks are prioritised using a risk
matrix approach which assesses the potential impact,
both financial and reputational, on the Group and
the likelihood of occurrence. Risks are assessed over
the short-, medium-, and long-term on both a gross
basis and net basis, i.e. without considering existing
mitigations and then with existing mitigations,
respectively. As detailed under ‘Governance’, climate
strategy scenarios are also used to quantify the impact
that risks may have on the business.
THE PROCESSES FOR MANAGING CLIMATE-
RELATED RISKS
A formal risk assessment review is undertaken annually
to prioritise principal risks using the above defined risk
matrix (impact equals level of hazard vs likely probability).
Potential appropriate actions are also identified. These
risks and actions are presented to the CEO and Board,
influencing business strategy.
The Group routinely monitors for emerging regulatory
developments, complies with reporting requirements,
annually benchmarks its performance against climate and
sustainability targets, and develops specific action plans
for carbon reduction.
A good example of this is the Group’s approval of its
near-term carbon emissions reduction targets by the SBTi
in 2024. This significant action addresses several risks at
once; e.g. the reputational and market risks associated
with a noticeable shift in consumer preferences towards
companies with robust climate-change mitigation
strategies.
a. How processes for identifying, assessing,
and managing climate-related risks are
integrated into overall risk management
As mentioned above in the ‘Governance’ and ‘Strategy’
sections, the General Counsel and Company Secretary has
overall responsibility for co-ordinating the Group’s risk
management programme including in relation to climate-
related risks. She is assisted by the Executive Team, the
ESG Steering Committee, and additional top management.
RWS promotes transparency on its climate-change
management strategy through engagement with
stakeholders throughout its value chain. Details on how
RWS has responded to risks are provided through news
releases, stock exchange announcements, and published
reports such as its CDP submission and TCFD report.
Board of directors
EXECUTIVE TEAM
ESG STEERING COMMITTEE
EXECUTIVE SPONSORS
Chief Language Officer | Chief People Officer |
General Counsel and Company Secretary
SUBJECT-MATTER EXPERTS
RWS Holdings plc — Annual Report 2024 | STRATEGIC REPORT
56
Task Force on Climate-related Financial Disclosures (continued)
METRICS AND TARGETS
a. The metrics used to assess climate-
related risks and opportunities are in
line with the strategy behind RWS’s
SBTi-approved science-based targets
RWS uses two metrics to compare its carbon emissions
and measure its climate change impact: absolute Scope
1 and 2 emissions, and Scope 3 economic intensity
showing emissions as a function of gross profit.
An example of strategy alignment is the initiative to
move all leased cars to electric or hybrid models as
soon as possible. RWS has also implemented an energy
performance site selection programme, where the
energy efficiency of new buildings is considered before
leases are secured.
b. Scope 1, Scope 2, and Scope 3 greenhouse
gas ("GHG") emissions and the related risks
RWS Scope 1, 2 and 3 greenhouse gas ("GHG") emissions
are included in detail on pages 26 and 27 of this report.
These have been calculated using the GHG Protocol
methodology. RWS emissions are as follows:
Overall FY24 carbon emissions (tCO2e)
Scope 1
610
Scope 2 (location-based)
4,610
Scope 2 (market-based)
3,960
Scope 3 (location-based)
29,139
Scope 3 (market-based)
29,230
Total (market-based)
33,799
Total (location-based)
34,412
Note: The above Scope 3 emissions include the following
categories:
•
Category 1 (Purchased Goods and Services)
•
Category 2 (Capital Goods)
•
Category 3 (Fuel- and Energy-Related Activities Not
Included in Scope 1 or Scope 2)
•
Category 5 (Waste Generated in Operations)
•
Category 6 (Business Travel)
•
Category 7 (Employee Commuting)
RWS recognises that the risks associated with ignoring
climate change include physical climate disruption,
resource depletion, and various knock-on transitional
effects, as well as the business specific risks already
identified and discussed in detail within the TCFD strategy
section. As a business with a complex and vast value
chain, RWS also recognises that it must play its part to
mitigate the effects of climate change through a robust
climate change management strategy.
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57
c. Targets to manage climate-related risks and opportunities, and performance
against SBTi-approved near-term science-based targets
Target reference number
1
2
Type of target
Absolute
Intensity
Coverage
Scope 1 and 2
Scope 3: Purchased Goods and Services
(100%) & Employee Commuting (20%)
Metric (if applicable)
N/A
Gross profit (£1M)
Target
54.6% Reduction by FY33
61.1% Reduction by FY33
FY 2022 Result (Base Year)
4,214
66.9
FY 2023 Result (Previous Year)
5,122
55.7
FY 2024 Result (Current Year)
5,122
55.7
FY 2024 Progress vs. Base Year
8% Increase
24% Reduction
FY 2024 Progress vs. Previous Year
11% Reduction
9% Reduction
Absolute reduction target 1
54.6% reduction in Scope 1 and 2 carbon emissions by
FY33
PROJECTED TARGET ACTUAL
Intensity reduction target 2
61.1% reduction in all Scope 3.1 Purchased Goods &
Services and 20% of Scope 3.7 Employee Commuting
carbon emissions vs £M gross profit by FY33
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY29
FY30
FY31
FY32
6000
5000
4000
3000
2000
1000
0
tCO2e
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY29
FY30
FY31
FY32
80
70
60
50
40
30
20
10
0
Scope 3.1 and 3.7 (20%), tCO2e by Gross Profit
Although the Scope 1 and 2 carbon emissions in
FY24 continue to be above target, they have dropped
considerably when compared to FY23. After experiencing
a dramatic increase in Scope 1 and 2 emissions in FY23
versus the base year of FY22 due to the large-scale return
of employees to the office workplace, the energy saving and
efficiency initiatives that were put in place are beginning to
take effect. The expectation is for this trend to continue into
FY25. It is important to point out that emissions from Scope
1 and 2 combined make up less than 15% of RWS’s total
overall emissions.
The Scope 3 intensity performance in FY24 shows a positive
improvement, indicating that RWS is 13% ahead of the
annual target. This is the result of working with the supply
chain, increasing the emphasis on carbon performance,
and enhancing carbon measurement methodologies.
In addition, RWS is committed to transitioning to 100%
renewable electricity across its estate portfolio wherever
possible. In FY24 14.5% was achieved.
In summary, the overall trend for RWS in financial year
2024 is a very positive one, with three additional key
indicators marking a reduction in GHG output year on
year since the base year of 2022. Since financial year 2022,
total carbon emissions per one million pounds of revenue
are down 7.2%, per employee by 24%, and company-wide
emissions have dropped 11.3%.
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58
Our Stakeholders
Our stakeholders are key to the delivery of our strategy. Below we set out the many
ways we engage with stakeholders and why their engagement matters. The Board
seeks regular feedback from investors, clients and suppliers, colleagues and the
communities we operate in through various mechanisms, to identify what matters to
our stakeholders. The Board is committed to enhancing engagement and seeks to
build honest, respectful and transparent relationships, taking into consideration what
matters to each group.
Why we engage
What matters to this group
How we engage
SHAREHOLDERS
We provide regular
updates to investors,
who provide capital for
our business, so that
they can be assured that
the Company is being
managed responsibly.
This includes ESG updates
alongside financial and
performance information
to enable investors to
take a broader view of
value and risk.
Our shareholders are concerned with a broad
range of issues, including how the Company
has responded to and is affected by:
• Profitability and business growth
• Impact of economy-wide forces such as
price inflation
• Other operational and financial
performance issues
• Developments in our markets
• Regulatory developments and the
execution and delivery of our strategy
• Sustainability of our business
• Capital return through share price
appreciation and dividends
We held roadshow events at the full and half
year as part of a proactive investor relations
programme covering 120 engagements
during FY24. Our Annual General Meeting
(AGM) took place in February and we engaged
directly with investors ahead of the AGM as
well as at the meeting.
For further details see pages 69 to 73.
CLIENTS AND SUPPLIERS
Our clients expect us
to provide reliable,
innovative products and
services that meet their
needs.
We actively seek feedback
on what clients think
about us so we can make
our services better and
address the issues that
matter.
Developing strong
relationships with
our suppliers is key
to success, ensuring
mutual respect and
understanding of how we
should work together.
Clients:
• Reliable and consistent service
• Quality products and services that are
value for money
• Product and process innovation
• Ability to solve complex problems
• Innovation
• Environmental impact of the products
and services we provide
Suppliers:
• Fair treatment and timely payment
• Growing their business
• Quality management
• Cost-efficiency
• Developing long-term relationships
• Environmental and climate impact
The RWS ‘Voice of the Customer’ and ‘Voice
of the Vendor’ programmes aim to generate
better understanding of clients and suppliers,
to build better experiences and positive
business outcomes. The programmes turn
client and supplier feedback into actionable
insight, to easily understand the core drivers
of client behaviours and improve our business
KPIs and support organic growth.
Customers complete satisfaction surveys on
our products and services enabling us to
monitor our Net Promoter Score. The Board
receives regular updates on the outcomes of
these surveys.
Supplier onboarding process and regular
dialogue throughout supplier relationship
to build good partnerships and ensure best
possible service to RWS.
For further details see page 32.
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59
Why we engage
What matters to this group
How we engage
COLLEAGUES
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.
It is essential to
proactively engage with
colleagues to establish a
positive culture based on
trust.
• Career progression and fulfilment
• Flexible working
• Reward and recognition
• Belonging to an organisation with
purpose and strong values
• Wellbeing
• Safe inclusive ethical working
environment
• 'One RWS' events held in 2024
• CEO and Executive Team site visits
• Global/divisional/functional town halls
• Board member filmed interviews
shared across internal communications
platforms
• RWS’s annual Group-wide engagement
survey
• Employee Resource Groups
• Training and development
• Colleague volunteering days
For further details see Our People section on
page 29.
Employee engagement metrics can be found
on page 36.
COMMUNITY & ENVIRONMENT
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.
RWS strives to
understand the needs
of our communities,
recognising our
responsibility to
contribute to the
sustainability and well-
being of society and the
economy wherever we
operate.
Our Communities:
• Our commitment to the local
communities and environment
• Our conduct as a socially responsible
organisation
• The positive impact we can have on the
community living and working around us
• Employment and training opportunities
Employee volunteering through local sites,
providing wide-ranging variety of fundraising
opportunities, engaging directly with local
communities.
Charitable donations, long-term charitable
partnerships and initiatives via The RWS
Foundation.
RWS continues to promote Campus, a global
programme nurturing localisation talent,
partnering with universities worldwide to
foster strong relationships and future talent
in industry.
The internal 'Green Agenda' team/local
environmental initiatives at site level that
can help RWS to meet carbon reduction
commitments.
By setting science-based targets, we can track
and measure carbon emissions.
For details see pages 25 to 28.
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60
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:
• the likely consequences of any decision in the long term;
• the interests of the Group’s employees;
• the need to foster the Group’s business relationships with suppliers,
customers and others;
• the impact of the Group’s operations on the community and the
environment;
• the desirability of the Group maintaining a reputation for high
standards of business conduct; and
• the need to act fairly as between members of the Company.
KEY DECISIONS IN THE YEAR
Considering stakeholders in key decisions is fundamental to RWS’s
long-term growth and success, and engagement with our stakeholders
enables the Board to clearly understand what matters to them. It is not
always possible to provide positive outcomes for all stakeholders and
the Board may have to make decisions based on balancing competing
priorities of stakeholders. Differing interests are considered by the Board,
who assess the likely long-term consequences of decisions, including the
impact on stakeholders.
Details of our key stakeholders, how we have engaged with them during
the year and the outcomes of that engagement are set out on pages 58
to 59 and are incorporated by reference into this Section 172 statement.
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 set out on the opposite page.
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61
Principal decision
How the Board made the
decision
Stakeholder consideration
Outcome and impact of
decision
Approval of dividend
policy
When considering the proposals
to pay interim and final dividends
during 2024, the Board considered
cash generation, the performance
of the underlying business and
the long-term impact of paying
the dividends on the liquidity and
solvency positions. The Board
also considered the impact of the
dividend decisions on expectations
relating to the dividend policy.
Shareholders’ expectations
in relation to the payment of
dividends, both from a capital
return perspective and as a
signal of future performance.
The impact of paying dividends
on whether the business
remained within the financial
covenants agreed with lenders.
The Board recommended a
full-year dividend of 12.45p per
share, with the payment of a final
dividend of 10p to shareholders
in February 2025 and an interim
dividend of 2.45p in July 2024.
The Board concluded that it was
in the long-term interest of the
Company to proceed with the
payment of the dividends.
Implementing the
Leading for Growth
sales initiative to
embed best in class
sales practices and
performance, driving
the enablement
of cross-selling of
technology enabled
services.
Recognising the evolving
marketplace for the Group’s
services, the Board considered
the detailed scope of the initiative,
aimed at enabling stronger, data-
driven sales performance and
consistent marketing of RWS’s
services and technology across its
portfolio.
Shareholders’ expectations in
relation to business growth.
Sales teams given clear and
consistent performance targets
and training to drive growth in
revenue streams and across
services and technology.
Customers are consistently
presented with RWS’s offering
and capabilities.
Leading for Growth has been fully
deployed, with sales practices,
performance measurement and
sales training now embedded
across RWS's sales teams.
The Board receives regular
progress updates on a quarterly
basis.
Investment in new
revenue streams
(Evolve/TrainAI)
In conjunction with insights from
the Group’s Executive Team
and Marketing team, the Board
considered investment in new
revenue streams in response to
a rapidly changing marketplace
and client needs.
Impact on colleagues, clients,
investors, environment of rapid
growth and development, whilst
managing risks and opportunities
of technology and product
propositions different to RWS's
historical mix of propositions.
Ongoing review of business
growth and risk management,
with regular presentations by
management to the Board.
Developing roadmaps
for growing revenue
streams (HAI/Evolve/
TrainAI) and for
standardising our
services portfolio.
Overseeing and considering
the realignment of the Group’s
business development and
operational functions to fit with
evolving changes in portfolio
mix, to enable and drive
cross selling and increasing
operational efficiencies.
Impact on colleagues and
organisation of building our
capability to grow, mitigate
associated risks and effectively
manage implementation.
Ongoing review of road map
implementation over a period
of time, with regular progress
updates presented to the Board.
Talent and succession
planning
Following significant changes to
senior leadership team during
year, due to organisational
changes, the Board has
worked actively with the ET on
monitoring talent and succession
planning.
Impact on colleagues, clients,
investors – consider impact on
people of volume of change and
transformation,
Increased oversight by Board
on ongoing succession planning
and review of RWS’s future skills
needs. The Board will continue to
regularly engage with Executive
Team to monitor progress.
PatBase disposal
Review of Group assets, capital
structure, opportunities
for simplification, return on
investment in PatBase,a revenue
and cost sharing arrangement,
together with some associated
assets, relating to a patent
information resource business.
Stakeholders jointly benefitting
from a strengthening of RWS’s
balance sheet from sales
proceeds, and the disposal of
PatBase offered simplification to
the Group’s operations.
As part of the Board’s regular
review of the Group’s assets and
capital structure, opportunities
for simplification and return on
investment, the Board resolved
to sell the Group’s interests in
PatBase, a patent information
resource business.
Ian El-Mokadem | Chief Executive Officer
11 December 2024
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62
Chairman’s Letter to Shareholders
On behalf of the Board, I am pleased to introduce our Governance Report for the year
ended 30 September 2024, my first year as Chairman.
BOARD ACTIVITIES IN 2024
During the year, the Board has overseen the execution
of the Group’s strategy, which is focused on accelerating
penetration into existing and adjacent higher growth
segments, leveraging our AI technology and capabilities to
develop innovative solutions and re-affirming our technology
product leadership. The Board has monitored progress
of significant transformation programmes designed to
strengthen organisational capability and efficiencies, and
increased its focus on risk review and oversight in the context
of an ever changing global environment. A summary of
activities during the year is set out on page 67.
BOARD CHANGES
As reported in last year’s Annual Report, two new Non-
Executive Directors joined our Board in January 2024,
strengthening and supplementing the Board’s skillset.
Paul Abbott and Graham Cooke joined as Non-executive
Directors in January 2024. Lara Boro stepped down as
Senior Independent Director in February 2024, and was
succeeded in that role by David Clayton in April 2024.
In May this year, the Company announced that Ian
El-Mokadem had informed the Board of his intention
to step down as CEO to pursue the next stage in his
career. A significant priority for the Board, supported
by the Nomination Committee, during the second half
of FY24 has been to identify a candidate to succeed Ian.
As announced on 26 November 2024, Benjamin (‘Ben’) Faes will
succeed Ian as CEO. Ben became CEO Designate on 2 December
2024, and will be appointed CEO and Executive Direcor on 6
January 2025. Ian will remain with RWS to the end January 2025,
to facilitate a smooth transition and handover to Ben.
The Board and I are delighted to welcome Ben to RWS.
His extensive, international track record in developing
new revenue streams and implementing go-to-market
strategies will be a significant asset to us. I am confident
that Ben’s longstanding experience across sales, business
development and marketing, combined with his strong
technology background, will enable him to build on the
strong foundations Ian has established.
We are grateful for Ian’s leadership of RWS over the last
three and half years, and I would like to thank him for
his continued commitment to the Group over the last six
months while we have recruited his successor
The Board will also continue to oversee the execution of
RWS’s strategy and in particular sustainable growth, the
exploitation of our expertise in AI to develop new services,
transformation programmes, efficiencies, executive talent
and succession, while continuing to deliver for our clients,
and continuing positive engagement with our clients,
colleagues, suppliers and communities.
BOARD PERFORMANCE EVALUATION
This year we undertook an internal review of the
performance of the Board and its Committees, facilitated by
the Company Secretary. The Board discussed the findings
and agreed on a number of areas for improvement.
Following the evaluation, I am satisfied that all Directors
continue to perform well in their roles and contribute
effectively, and that the Board and its Committees operated
effectively and discharged their respective responsibilities
during 2024. My own performance as Chairman was
also reviewed through a process facilitated by the Senior
Independent Director and found to be satisfactory. The
results of the performance review are set out on page 68.
ESG
Environmental, social and governance (“ESG”) matters
continue to be core to the way RWS operates. Clients,
partners and colleagues are keen to understand the steps
we are taking to become a more sustainable business.
On environmental matters, the Group formally submitted
its greenhouse gas (“GHG”) emissions reduction
targets to the Science Based Targets initiative (“SBTi”)
for validation in December 2023. We were delighted to
receive confirmation from the SBTi in May 2024 that the
targets had been validated. We have committed to reduce
absolute Scope 1 and 2 GHG emissions by 54.6% by FY33
from a FY22 base year. The Group has also committed to
reduce Scope 3 GHG emissions from purchased goods
and services, and colleague commuting by 61.1% per
million GBP value added within the same timeframe.
In recognition of our ESG progress, in December 2023 we
were awarded a Silver Medal by EcoVadis for the second
year running. Once again we ranked in the top quartile of
participating companies and in the top 10% of companies
in our industry category, improving our score to 66%
(FY22: 63%).
RWS continues to promote the RWS Campus, a global
programme nurturing localisation talent. By partnering
with over 600 universities worldwide, we foster strong
relationships to develop the next generation of
professionals who will positively impact our industry.
One of these is the University of Manchester, where The
RWS Foundation provides funding via the RWS-Brode
Scholarship and, during the last six months, professional
development workshops were delivered to students. The
RWS Foundation also provided funding for our project to
make Trados Studio more accessible to visually impaired
and blind language specialists, as well as financial support
to match the funds raised by colleagues across a range of
local community initiatives.
RWS Holdings plc — Annual Report 2024 | GOVERNANCE REPORT
63
In February 2024 RWS joined Meta’s Open Loop to
help bridge the gap between rapid advances in AI
innovation and policy-making. Open Loop is a global
programme involving a consortium of technology
businesses, academics and civil society representatives
that connects policymakers and technology companies
to help develop effective and evidence-based policies
around AI and specifically generative AI systems. As an
extensive developer and user of AI, RWS believes that
it is critical that proposed AI regulations strike the right
balance between fostering innovation and ensuring that
AI is developed safely and securely for the benefit of
customers and broader society.
BOARD ENGAGEMENT WITH
STAKEHOLDERS
The Board appreciates that effective stakeholder
engagement is essential to ensuring the long-term
success of the Group and establishing and maintaining
good relationships with all stakeholders is important to
us. 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 governance,
which includes taking account of 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.
The Board is informed of stakeholder views and interests
in the following ways:
•
Reports and presentations at Board and Committee
meetings by the CEO, CFO and other members of the
Executive Team and senior leaders on topics such as:
•
Strategy delivery
•
Markets and business performance
•
Financial performance
•
Capital allocation and shareholder returns
•
Investor relations
•
Voice of Customer insights and marketing strategy
•
Transformation programmes
•
Colleague engagement and wellbeing
•
Talent and succession planning
•
RWS Code of Conduct
•
Supplier partnerships
•
Community engagement
•
Environment and sustainability
•
Annual Board and Executive Team strategy reviews
•
Feedback from colleagues via the annual RWS
engagement survey results
•
Focused face-to-face client engagement by senior
leaders with significant enterprise clients, with
outcomes reported to the Board
•
Engagement and communications via regulatory news
announcements, RWS’s website, social media, investor
roadshows, investor meetings and at the Annual
General Meeting
Details of the Group’s stakeholders, and of stakeholder
engagement during the year, are set out on pages 58 and
59 of the Strategic Report.
ANNUAL GENERAL MEETING
The 2025 AGM will be held on 11 February 2025, at
Slaughter and May, One Bunhill Row, London EC1Y 8YY.
Details of how shareholders can attend the meeting are
set out in the Notice of AGM.
We value engagement with shareholders and the Board
and I look forward to answering questions at the AGM.
Julie Southern | Chairman
11 December 2024
Julie Southern
R
N
A
C
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64
JULIE SOUTHERN
Non-executive Chairman
Julie joined RWS as a Non-executive Director in July 2022
and became Non-executive Chairman in October 2023.
Her executive career includes 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,
and at Virgin Atlantic, as CFO from 2000 until becoming
Chief Commercial Officer in 2010. In addition, Julie has
significant Board experience having previously held non-
executive director positions at Rentokil Initial, easyJet,
DFS Furniture Company, Cineworld Cinemas, Stagecoach
and Gategroup.
Julie is the Non-executive Chairman
of NXP Semiconductor NV, and a
Non-executive Director and Chairman
of the Remuneration Committee at
Ocado Group plc.
IAN EL-MOKADEM
Chief Executive Officer
Ian was appointed Chief Executive Officer in July 2021
and an Executive Director in August 2021.
Ian was previously 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. Ian’s earlier career included divisional
leadership roles at Compass Group plc and Centrica plc
as well as strategy consulting with
Accenture.
Ian is a Non-executive Director of
Serco Group plc and a Director at
Roegate Consulting Limited.
C
Board of Directors
AUDIT COMMITTEE
REMUNERATION COMMITTEE
NOMINATION COMMITTEE
CHAIR
CANDIDA DAVIES
Chief Financial Officer
Candida was appointed Chief Financial Officer and
Executive Director in October 2022.
Candida has considerable experience in financial,
commercial and operational leadership in global
multinational companies in the pharmaceutical,
consumer and health technology sectors with a focus on
driving successful business and finance transformation.
Previously Candida was Head of Finance for the Personal
Health division of Royal Philips where she also supported
the Group Innovation and Strategy function. Prior to
this she held Group Controller and
Divisional Finance Director roles as
Reckitt Benckiser. Earlier in her career
she held several roles with Eli Lilly &
Co, having qualified as a chartered
accountant with KPMG.
DAVID CLAYTON
Senior Independent Director
David was appointed a Non-executive Director in
November 2020, following the acquisition of SDL plc, of
which he was Non-executive Chairman. David became
Senior Independent Director in April 2024.
He was Managing Director and Head of European
Technology Research at CSFB from 1997 until 2004.
David was Non-executive Director of The Sage Group
plc in 2004 before taking up an executive role as
Director of Strategy and Corporate Development from
2007 to 2012.
David is Chairman of Forensic
and Compliance Systems, and
a member of the boards of FCS
(UK) Limited, Solar Archive Ltd
and Albora Technologies Ltd.
N
A
N
Benjamin Faes was appointed CEO Designate on
2 December 2024 and will succeed Ian El-Mokadem
as CEO and Executive Director on 6 January 2025.
RWS Holdings plc — Annual Report 2024 | GOVERNANCE REPORT
65
PAUL ABBOTT
Independent Non-executive Director
Paul was appointed to the RWS Board in January 2024.
He is Chief Executive Officer of American Express Global
Business Travel (Amex GBT), the leading global software
and services company for travel and expense for more
than 20,000 businesses globally. Since joining in 2019,
Paul has led Amex GBT through several strategic
acquisitions, transforming the company’s product and
technology solutions and driving significant growth with
SME customers. After initially leading the business as a
private equity-backed joint venture, Paul took Amex GBT
public in May 2022. Before Amex
GBT. Paul as Chief Commercial
Officer at American Express,
where he has spent twenty-four
years in a variety of senior roles
across the business.
ANDREW BRODE
Non-executive Director
Andrew led the management buy-in of RWS in 1995
and the Group’s flotation on AIM in 2003. He acted as
Executive Chairman between 1995 and 2023. He is the
Group’s largest shareholder. He is the
Non-executive Chairman of Learning
Technologies Group plc, an AIM
listed company, and a Non-Executive
Director of several private
companies.
GRAHAM COOKE
Independent Non-executive Director
Graham joined RWS as a Non-executive Director in
January 2024.
He is the founder and former CEO of Qubit, a leading
SaaS company in the e-commerce space, providing AI-
personalised shopping recommendations to more than
1 billion shoppers per month. He oversaw the sale of
Qubit to Coveo So-lutions in 2021 followed by a listing on
the Toronto Stock Exchange, and he remained an advisor
to the company until 2023. Prior to Qubit, Graham was
one of the first European employees
at Google, working on its Ad
Platform and Google Analytics
products.
Graham is a Non-executive
Director of ITV plc.
C
C
FRANCES EARL
Independent Non-executive Director
Frances was appointed as a Non-executive Director in
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.
GORDON STUART
Independent Non-executive Director
Gordon joined RWS as a Non-executive Director in
November 2020, following the acquisition of SDL plc, of
which he was Non-executive Director.
He is Interim CEO of AMS, the global total workforce
solutions provider of talent acquisition and contingent
workforce management, internal mobility and skills
development, and talent and technology advisory services.
Prior to his current role, Gordon re-joined AMS as CFO in
May 2022, having previously held that position between
2008 and 2012. He has over 25 years of experience leading
financial organisations at global companies including Dell,
London Bridge Software, Xansa,
TMF Group and Unit4. He has
also held Non-executive roles at
Sepura plc, Intec Telecom Systems
plc. In each instance he served as
Chairman of the Audit Committee.
JANE HYDE
General Counsel and Company Secretary
Jane joined the RWS Board and Executive Team in
October 2022 and holds responsibility for the Group’s
legal, governance and privacy functions. She also
oversees the company’s risk management capabilities.
Jane was previously General Counsel and Company
Secretary of De La Rue plc and prior to that,
Head of Corporate and European Legal at Hikma
Pharmaceuticals plc. Before then,
Jane led the Investment Banking
Compliance function at Nomura
International and spent six years
as a corporate broker at JP Morgan
Cazenove. She qualified as a solicitor
with Freshfields.
N
A
R N
N
R
N
A
R N
A
RWS Holdings plc — Annual Report 2024 | GOVERNANCE REPORT
66
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.
THE BOARD
The Board considers that all the Non-executive Directors
are independent (save for Andrew Brode who is not deemed
independent due to his previous executive role at RWS) 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. A summary of the
relevant experience of each of the Directors can be found
on pages 64 and 65.
DIVISION OF ROLES AND
RESPONSIBILITIES
The Chairman, Julie Southern, leads the Board and has
overall responsibility for corporate governance and
the effective management of the Board. She supports
communication between the Board and shareholders: a
key part of the Board’s commitment to high standards of
governance is an active dialogue with its shareholders.
The CEO, Ian El-Mokadem, provides leadership and
management to the Group and the Executive Team, who
manage the day-to-day operations of the Group. The
CEO promotes the development of objectives, strategies
and performance standards whilst also overseeing key
risks across all divisions of the Group. The CEO also plays
a lead role in devising and implementing the Group’s
corporate development strategy, including identifying
and evaluating potential acquisition targets, and in
investor relations to ensure that communications with the
Group’s existing shareholders and prospective investors
are maintained.
Candida Davies, our CFO, is responsible for shaping and
executing the financial strategy and operational direction
of the Group. In this role Candida also supports the
Group’s investor relations programme and corporate
development efforts.
Our Senior Independent Director, David Clayton,
acts as a sounding board for the Chairman and a
trusted intermediary for other Board members, leads
the Chairman’s performance review and succession
process, and acts as an additional point of contact for
shareholders.
Jane Hyde, our General Counsel and Company Secretary,
holds overall responsibility for the Group’s legal,
governance and privacy functions. Jane attends all Board
and Committee meetings, ensures timely dissemination
of information to the Board, supports the Board with
inductions, training and evaluations, advises on all
corporate governance matters, and acts as a point of
contact for shareholders. Jane also oversees the Group’s
risk management capabilities.
BOARD IN ACTION
The Board held six scheduled board meetings in the
year, with additional meetings as required. 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
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67
and audited financial statements of the Group. The Board
routinely reviews and 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 assumes overall accountability
for the management of risk whilst the Audit Committee
monitors and review the effectiveness of the Group’s
risk management and internal control systems. 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 are
responsible for ensuring that all Directors receive relevant
Board papers in a timely fashion to facilitate a full and
effective discussion of matters during Board meetings.
The Non-executive Directors are expected to dedicate not
less than one day per month to fulfilling 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.
BOARD ACTIVITIES DURING THE YEAR
• Review and approval of the proposed budget and
business plan for FY25
• Oversight of Group transformation programmes in
HR, Finance, Technology and LXD
• Approval of the dividend policy for the final
payment for FY23 and interim payment for FY24
• Review of ESG strategy and reporting
• Review of all investor communications
• Review of potential M&A opportunities and the
disposal of the Group’s interests in the PatBase
business
• Review of Group-wide ‘Voice of the Customer’
marketing programme
• Review of obligations with the updated QCA
Corporate Governance Code and overall corporate
governance framework
• Review and approval of Group’s principal risks and
risk appetite
• Review of bank counterparty risk and mitigation of
credit exposure
• Review of succession planning and talent retention
• Monitoring of culture and colleague engagement
For further details on principal decisions made by the
Board during the year, see page 61.
DIRECTOR ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
Director
Board
Audit Committee
Nomination
Committee
Remuneration
Committee
Julie Southern
6/6
4/4*
3/3
7/7*
Ian El-Mokadem
5/6
4/4*
2/3*
6/7*
Candida Davies
6/6
4/4*
-
-
David Clayton
6/6
4/4
3/3
7/7
Paul Abbott1
4/4
-
3/3
7/7
Andrew Brode
6/6
-
3/3
-
Graham Cooke1
4/4
3/3
3/3
-
Frances Earl
6/6
4/4
3/3
6/7
Gordon Stuart
6/6
4/4
3/3
6/7
Lara Boro2
3/3
-
-
2/2
1 Joined the Board on 1 January 2024
2 Stepped down from the Board on 22 February 2024
Ian El-Mokadem, Frances Earl and Gordon Stuart each missed one meeting during the year, due to personal reasons.
* Attended by invitation
RWS Holdings plc — Annual Report 2024 | GOVERNANCE REPORT
68
Corporate Governance Report (continued)
OUR STRATEGY
Through our defined growth initiatives, we are
accelerating penetration into existing higher growth
segments, leveraging our capabilities into adjacent
higher growth segments such as AI data services
(TrainAI), Linguistic Validation and eLearning and
reaffirming our technology product leadership. In respect
of our language technology portfolio, we are underway
with our Trados transition programme.
AI is at the heart of these developments and we are
already well-established as developers, providers
and users of AI technology through products such as
Language Weaver and Trados and AI data services such
as TrainAI. Large language models (“LLMs”) represent an
exciting development as far as content generation and
transformation is concerned and we have deployed a
private LLM as a core part of our Evolve solution.
In parallel, the Group is investing to create an efficient,
scalable platform that can underpin both organic
and inorganic growth, with the completion of the HR
transformation and the implementation of the first phase
of our finance shared service centre in FY24. We have
made good progress on moving a greater proportion of
volume into the Language eXperience Delivery (“LXD”)
platform (including some IP Services content) and we
have fully rationalised the supply chain for our freelance
network, with the resulting efficiency benefits helping to
support margin.
RWS’s cash position means that the Group continues to
seek acquisitions which can accelerate delivery of our
medium-term plans. Our disciplined M&A programme
is focused on selectively acquiring complementary
businesses which enhance our organic growth profile and
fit with our strategic priorities to add:
• Assets that broaden our natural language processing,
content creation and linguistic testing capabilities
• New capabilities in AI technology and technology-
enabled language services in both text and multimedia
formats
• AI data services; and localisation assets with attractive
end market exposure
In overseeing the Group’s strategy, the Board
participated in the annual Board strategy sessions to
discuss longer-term strategy, direction of travel and our
strategic priorities. The Board received and reviewed
regular reports and presentations from the Executive
Team on progress against strategic objectives and
reviewed risk management and operational matters.
The Board reviewed the Group’s principal risks and
uncertainties, reviewed risk appetite and considered
whether such key risks might impact on medium- and
long-term strategy.
BOARD EVALUATION
In order to ensure that the Board continues to operate
as efficiently as possible, this year the Board undertook
an internal appraisal of its capabilities facilitated by the
Company Secretary, to confirm that the Board is capable
and effective in undertaking its responsibilities and duties.
The Board commissioned an independent review in 2022
and has committed to independent, externally facilitated
reviews periodically to ensure its ongoing effectiveness.
The Board discussed the findings of the 2024 review and
agreed on a number of areas for improvement, including
striking the right balance between review and discussion
at Board meetings, refinements to Board reporting,
approach to the Board strategy sessions and formalising a
colleague engagement programme for the Board. .
Following the review, it was concluded that the Board and
its Committees contained the appropriate combination of
skills, experience and knowledge, and that they continue
to effectively discharge their duties and responsibilities.
The Chairman was satisfied that all the directors
continued to perform well in their roles and contribute
effectively. The Chairman’s performance was also deemed
satisfactory and effective, following an assessment
facilitated by the Senior Independent Director.
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.
ELECTION AND RE-ELECTION OF
DIRECTORS
All Directors will stand for re-election at the 2025 AGM,
with the exception of Ian El-Mokadem, who will step
down as CEO and Executive Director on 6 January 2025.
Ben Faes will stand for election at the 2025 AGM, having
been appointed to the Board after the last AGM.
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69
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, 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 monitoring
and reviewing the effectiveness of the Group’s risk
management and internal control systems.
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 provide a framework to ensure we have the
appropriate corporate governance arrangements in place.
The Board believes that it complies with all the principles
of the QCA Corporate Governance Code and the following
pages include details of our compliance, which is reviewed
annually in line with the requirements of the QCA Code.
Principle
How we comply
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 FY24, the Board and Executive Team held several meetings specifically
focusing on the Group’s strategic plan for creating value for the Group. Any
significant business decision is taken with reference to this 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 a range of complementary
specialist localisation, language and content technology, intellectual property
(IP) translation, filing and broader language services, increasingly AI-centrered,
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.
1
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70
Principle
How we comply
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 61 for further details.
•
The Group maintains a disciplined approach to investment, returns and capital
efficiency.
Take into account
wider stakeholder
and social
responsibilities and
their implications for
long-term success
•
The Board has identified the main stakeholders in the business as our
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 58 to 61 of the Strategic Report and pages 62 to 63 of the Corporate
Governance Report.
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 61% in the FY24 survey (FY23: 61%).
•
Together with our employees, we have established 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 values give
guidance to everyone at RWS as to the behaviours that underpin our success.
•
We consider the health, safety and wellbeing of our colleagues in general and
specifically in countries experiencing war.
•
The Board works with active Employee Resource Groups to discuss how we
can foster culture, diversity and inclusion and environmental impacts in the
workplace.
Corporate Governance Report (continued)
2
3
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71
Principle
How we comply
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’ Net Promoter Score (“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
with 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.
• We have implemented a Supplier Code of Conduct which sets out the standards
and responsibilities that RWS expects its suppliers to adhere to when working
with RWS.
Community
• The Group supports local organisations through colleague-led community
initiatives and donations. The RWS Foundation boosts funds raised by
colleagues in support of charitable organisations and causes.
• We also promote foreign language learning actively through university
partnership programmes, including RWS Campus (our global university
programme) and the RWS Scholarship Programme with the University of
Manchester.
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 to the business are identified and mitigating actions are
considered in full.
• The General Counsel and Company Secretary is responsible for assessing risks
and mitigations with the Executive Team, for review by the Board.
• Whilst the General Counsel and Company Secretary is responsible for risk
management, Executive Team members are also empowered to manage risk
effectively. The Audit Committee keeps under review the Group’s internal
controls and risk management systems that identify, assess, manage and
monitor risks.
• See Principal Risks and Uncertainties on pages 42 to 45.
4
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72
Corporate Governance Report (continued)
5
Principle
How we comply
Maintain the
Board as a well-
functioning,
balanced team led
by the Chairman
• Our Board brings together significant experience in executive leadership,
strategic planning, the sector, operations and financial matters.
• The majority of the Board comprises independent, non-executive directors.
• Open communication, debate and thought leadership are encouraged and
new proposals are challenged rigorously.
• The Board regularly assesses its effectiveness (see further detail on Board
evaluation on page 68).
• The Nomination Committee reviews the size, composition, tenure and skills
of the Board. It also leads the process for new appointments, monitors Board
and senior management succession planning, considers independence,
diversity, inclusion and Group governance matters. See pages 78 to 79 for
further detail.
• See Board of Directors pages 64 and 65, and 66 to 69 of the Corporate
Governance Report.
Ensure that
between them the
Directors have the
necessary up-to-date
experience, skills and
capabilities
• 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.
• The Nomination Committee reviews the current Board and Committee
composition, the existing diversity of skills, knowledge and experience on
the Board, the diversity of gender and ethnicity, together with the skills,
experience and time commitments required in the delivery of the role.
Appointments are based on merit and relevant experience, while taking
into account the broadest definition of diversity. The Committee challenges
external search consultants where necessary, to ensure that diversity is always
considered when drawing up candidate shortlists.
• 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.
• The Board has access to external advice, and receives periodic training, and
business insights and updates as required.
• See Board of Directors pages 64 to 65 and 68 of the Corporate Governance
Report.
Evaluate Board
performance
based on clear and
relevant objectives,
seeking
continuous
improvement
• Performance is reviewed annually and objectives set for the CEO and CFO.
• An internal Board and Committee evaluation, facilitated by the Company
Secretary, was undertaken during the year. Individual questionnaires were
completed by each Director, and a summary of the results together with
feedback was presented to the Board, who then discussed and agreed follow-
up actions.
Promote a corporate
culture that is based
on ethical values and
behaviours
• The Board is committed to setting the tone and high standards for the
corporate culture of the Group to ensure the delivery of long-term value to
shareholders whilst engaging effectively with all stakeholders.
• The RWS Code of Conduct 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.
8
7
6
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73
Principle
How we comply
Maintain governance
structures and
processes that
are fit for purpose
and support good
decision making by
the Board
• The Board is responsible for ensuring that effective corporate governance
procedures are in place that are appropriate for a public company of RWS’s size
and complexity.
• For details of how the Board operates, see pages 66 to 69.
• The Board has a properly constituted governance framework with clearly
defined responsibilities, through its formal schedule of matters reserved
for the Board, and matters delegated to its Committees. The Committees’
respective terms of reference are available on the Group’s website. The work of
the Board’s Committees is described on pages 74 to 87.
• Members of the Group’s Executive Team are invited to certain Board meetings
to report on their particular areas of responsibility.
• See the Corporate Governance Report on page 66 for further information on
Board members’ roles and responsibilities.
Communicate
how the Company
is governed and
is performing
by maintaining
a dialogue with
shareholders and
other relevant
stakeholders
• We pride ourselves on having open communication with a range of
stakeholders.
• Communications with shareholders are explained in Principle 2 above.
• Other communication includes investor roadshows and conferences, meetings
with our brokers, prospective investors, colleague engagement events,
quarterly employee town halls and one-on-one meetings with clients and
suppliers, and engaging with stakeholders on social media. .
• Company news and presentations, regulatory announcements, financial
reports and results are available on the Group’s website www.rws.com.
9
10
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74
Gordon Stuart
Audit Committee Report
Dear Shareholder
During FY24, the Committee has supported the Board on a number of significant
governance matters relating to financial reporting and internal control.
The Committee has looked at upcoming regulatory changes and regulatory risk and
considered how to exercise effective oversight of risk management processes.
MEMBERSHIP AND ATTENDANCE
Committee members are independent Non-executive
Directors of the Company, with diverse skills and
experience. The Committee has competence relevant
to the sector and both David Clayton and I have recent
and relevant financial experience, as required by the
provisions of the QCA Code.
All Committee members have significant executive
experience in various industries. This range and depth
of financial and commercial experience enables them
to deal effectively with the matters they are required to
address and to challenge management when necessary.
The Company Secretary is secretary to the Committee.
The Board evaluates the membership of the Committee
on an annual basis. During the year, the Committee has
met four times and details of attendance can be found
on page 67. Following his appointment to the Board on
1 January 2024, Graham Cooke became a member of
the Committee in April 2024.
Only the members of the Committee have the right
to attend Committee meetings, however the CFO,
CEO, Group Financial Controller, Group Head of Tax,
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 with the Committee without management present.
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. These are regularly reviewed
to ensure that they remain fit for purpose and in line
with best practice guidelines and were last updated in
June 2024. The terms of reference are available on the
Company’s website (www.rws.com).
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75
KEY PURPOSE OF THE AUDIT COMMITTEE:
RESPONSIBILITIES AND ACTIVITIES
The Audit Committee is responsible for the independent
monitoring of the effectiveness of the systems of
internal control and risk management, accounting
policies and published financial statements on behalf
of the Board. It receives and reviews reports from the
Group’s management and external auditors relating to
the annual financial statements and the accounting and
internal control systems in use throughout the Group. Any
significant findings or identified risks are reviewed so that
appropriate action may be taken.
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 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
has engaged a third party to conduct internal audit
reviews where it is thought such investment is required
and in the best interests of the Company. 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 the year, the Committee met four 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: the approach to internal
control and internal audit, accounting judgements and
estimates, treasury effectiveness, finance transformation,
tax strategy and tax policies, developments in financial
reporting and dividend planning.
COMMITTEE ACTIVITY IN THE YEAR ENDED 30 SEPTEMBER 2024
Financial
statements
and reports
Reviewed the Annual Report and Accounts, together with the full year results announcement and the half
year results announcement and received reports from the external auditor on the above.
Reviewed the effectiveness of the Group’s internal controls and disclosures made in the Annual Report and
Accounts.
Reviewed executive management’s representation letter to the auditor, going concern reviews, fair,
balanced and understandable criteria and significant areas of accounting estimates and judgement.
Reviewed the Group’s cash flow forecasts, the Group’s bank facilities and the Viability Statement.
Received updates from the Group’s Head of Tax on compliance with global tax regulations.
Internal
control and risk
management
Assessed the Committee’s role in monitoring and reviewing the effectiveness of risk management and
internal control processes, identifying specific areas for oversight including Group Finance function
resourcing and allocation of responsibilities.
Internal audit
Reviewed proposals for internal audits to be conducted during FY24 and FY25.
External auditor
and non-audit
work
Recommended to the Board the re-appointment of EY as external auditor at the 2024 Annual General
Meeting.
Reviewed, considered and agreed the scope of the audit work to be undertaken by the external auditor,
and agreed the terms of engagement and fees to be paid to the external auditor.
Reviewed external auditor reporting and assessed independence and effectiveness of external auditor.
Reviewed and approved non-audit services and reviewed and non-audit fees.
Governance
Monitored progress of the Group’s Finance Transformation programme.
Considered the impact of certain regulatory developments, including the enactment of the Economic
Crime and Corporate Transparency Act 2023, the implementation of the OECD’s Pillar Two rules, and
amendments to the UK Corporate Governance Code, and reviewed management’s proposed response.
Reviewed Committee’s annual work plan and terms of reference, and evaluated Committee
performance. Monitored Speak-up reporting and mandatory training statistics.
RWS Holdings plc — Annual Report 2024 | GOVERNANCE REPORT
76
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.
CAPITAL ALLOCATION
The Group has a strategy to optimise utilisation of cash
resources and return capital to shareholders where
appropriate. The Group’s capital and dividend policy
includes both dividends and share repurchases as tools
for capital distribution to shareholders.
Papers submitted to the committee have detailed the
Group’s progressive approach to dividend policy and the
Committee has challenged key assumptions including
the sufficiency of the Groups distributable reserves to
support the policy.
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 IAS 38
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 at
a minimum on a yearly basis, and also when there is
an indicator of impairment. Management prepared a
paper at the half-year that suggested that weak first-half
performance in the RI division constituted an indicator
of impairment. Subsequent analysis indicated sufficient
headroom to conclude no impairment existed.
Management also prepared a paper for the annual
assessment which concluded that no indicators
of impairment 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 year (FY23: £62.4m). See
Notes 2 and 12 to the financial statements for further
information, including reasonable possible changes to
the assumptions which would cause an impairment.
CARRYING VALUE OF INTANGIBLE ASSETS
The Group considers the carrying value of intangible
assets at a minimum on an annual basis, and also when
there is an indicator of impairment. Following a review of
transformation activities, it was concluded that due to IP
Services embarking on an alternative solution to satisfy
their need to streamline and modernise its customer
engagement processes, intangible assets which related
to a previous solution were now impaired. The Group has
recognised £11.7m impairment in the current year. See
Notes 2 and 13 to the financial statements for further
information.
CARRYING VALUE OF TANGIBLE ASSETS
During the year, the Group performed a property portfolio
review, where different options, including the disposal of
certain freehold interests, were considered. As part of the
review an initial valuation report on the freehold building
at Chiltern Park, Chalfont St Peter, UK, indicated that the
carrying value was higher than the recoverable amount.
An impairment was therefore recorded of £10.5m which
lowered the carrying value from £14.0m to £3.5m.
REVENUE RECOGNITION
The Audit Committee has continued to receive and review
reports on the standard processes in place around
revenue recognition. 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 2024.
The Audit Committee has reviewed the disclosures
provided in the FY24 financial statements in relation to
revenue recognition policy and to the significant estimates
and judgements policy on Note 2.
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77
UNCERTAIN TAX PROVISIONS
The Group recognises a provision for uncertain tax
positions within the financial statements.
The Committee has reviewed management’s
consideration of uncertain tax provisions and understood
the involvement of experts in the preparation and
determination of these provisions.
The Committee has reviewed movements in the key
uncertain tax position provisions that have been
recognised and understood the basis for the recognition
of any new provisions made during the year.
The Committee discussed and challenged management’s
papers satisfying itself that a consistent approach had been
applied to the identification and recognition of provisions in
respect of uncertain tax positions recognised in 2024.
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 FY25 and beyond and the impact on the
Group’s banking covenants.
After reviewing the Group’s performance in 2024, along
with budget and forecasts, the Committee endorses the
Directors’ reasonable expectation that the Group has
adequate resources to continue in operational existence for
a period of at least 12 months from the date of this 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. The Executive Team and
other delegated senior leadership committees review risks
to ensure that they continue to remain relevant. A risk that
can seriously affect the performance or reputation of the
Group or the delivery of the Group’s strategic objectives is
termed a principal risk.
Whilst the Audit Committee has delegated authority
for assessing the Group’s internal control and risk
management systems, the Board is ultimately responsible
for reviewing and determining the Group’s principal risks
and setting the Group’s risk appetite. The Board has
established a level of risk which it believes is appropriate
for the business and acceptable in the pursuit of
the strategic objectives. During the year, following a
governance review, the Board and the Audit Committee
agreed to update the Committee’s terms of reference to
include regular review of the effectiveness of the Group’s
internal control and risk management systems, including
its procedures for identifying and assessing emerging
and principal risks to the Group’s business, and the
management and mitigation of those risks.
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.
During the year the Committee reviewed the Group’s
approach to internal control and internal audit. The Board
reviewed the output from the Executive Team’s risk review
process to identify, evaluate and mitigate the Group’s principal
risks and considered whether changes in risk profile were
adequately addressed. The Board also reviewed and set the
Group’s risk appetite in respect of its principal risks.
Further information on risk can be found on pages 42 to 45.
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 2021, 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
meets 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 assesses 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
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 2024,
the external auditor has provided £17k 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.
The Committee is satisfied that the external auditors
remain fully independent, objective and effective and
has recommended to the Board that a resolution for the
re-appointment of Ernst & Young LLP should be put to
shareholders at the 2025 AGM.
Gordon Stuart | Audit Committee Chair
11 December 2024
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78
Nomination Committee Report
Dear Shareholder
On behalf of the Nomination Committee
(“Committee”), I am pleased to present our report
for 2024. During the year, the Committee focused
on Board and senior executive succession planning,
including undertaking the search for our new CEO.
MEMBERSHIP AND ATTENDANCE
The Committee’s members comprise the Chairman of the Board, who is
the Committee chair, and all Non-executive Directors of the Company.
Other individuals, such as other Board members and external advisers,
may be invited to attend for all or part of any meeting. The Company
Secretary is secretary to the Committee.
The Nomination Committee met three times during the year to 30
September 2024 with all members present.
KEY RESPONSIBILITIES
The Nomination Committee supports the Board in ensuring that the
Board and its Committees are appropriately constituted and operate
effectively. The Committee identifies qualified individuals to join
the Board, recommends any changes to the Board and Committee
composition and monitors the annual process to assess Board
effectiveness.
The Committee’s principal duties are to:
• Monitor the structure, size and composition of the Board and make
recommendations to the Board regarding any changes.
• Give full consideration to succession planning for Directors and other
senior executives in the course of its work, considering challenges and
opportunities facing the Group, its leadership needs and the skills and
expertise needed on the Board in the future.
• Assess the effectiveness of the Board and its Committees.
In fulfilling these responsibilities, the Committee’s work includes:
• Overseeing and facilitating annual reviews of the Chairman, the Board,
its Committees and individual Directors, including periodic externally
facilitated reviews.
• Evaluating the balance of skills, knowledge and experience on the
Board and its Committees and any potential gaps.
• Monitoring the independence and time commitments of the Directors.
• Overseeing Board and senior executive succession plans and leading
the process to identify suitable candidates to fill Board vacancies,
nominating candidates for approval by the Board and ensuring that
appointments are made on merit and against objective criteria.
• Overseeing the induction of new Directors and assessing the training
needs of existing Directors.
Julie Southern
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79
TERMS OF REFERENCE
The Committee undertakes its duties in accordance with
its terms of reference which will be 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).
KEY ACTIVITIES IN 2024
There were several Board changes during the year.
Paul Abbott and Graham Cooke joined the Board on 1
January 2024 as Non-executive Directors, following a
search process supported by Spencer Stuart. Paul and
Graham’s combined breadth of experience in technology
platforms and solutions, implementing organisational
change and driving business growth in customer-focused,
international organisations has further strengthened
the Board. On joining the Board, our new Non-executive
Directors received a structured induction, comprising
comprehensive management information and details of
RWS’s governance framework, and meetings with Board
colleagues, the Executive Team and external advisers.
Lara Boro stepped down from the Board as Senior
Independent Director on 22 February 2024. The Board
approved the appointment of David Clayton as Lara’s
successor, effective 23 April 2024, following a selection
process overseen by the Committee.
On 23 May 2024, the Company announced that Ian
El-Mokadem had informed the Board of his intention
to step down as CEO to pursue the next stage of his
career. As a result, much of the Committee’s focus
has been on identifying Ian’s successor. To ensure we
identified candidates from the widest pool, the Committee
instructed the consultant firm, Spencer Stuart to advise on
the search.
On 26 November 2024, the Company announced
Benjamin (‘Ben’) Faes as Ian’s successor. Ben became CEO
Designate on 2 December 2024, and will become CEO and
a Board Director on 6 Janaury 2025. Ian will remain with
RWS until the end of January 2025 to ensure an orderly
transition and handover to Ben.
Other principal matters considered during the year were:
• Reviewing the annual workplan
• Reviewing the composition of the Board, including the
directors’ tenure, skills and experience and diversity
• Overseeing the appointment of Paul Abbott and
Graham Cooke to the Board’s Committees
• Executive Team succession planning
• Considering the independence of the Directors and
diversity of the Board
• Overseeing the Board performance review
• Reviewing Director induction process and training
requirements
BOARD EVALUATION
During the year, an internal evaluation of the performance
and effectiveness of the Board and its Committees was
carried out, facilitated by the Company Secretary. Further
details are set out on page 68.
DIVERSITY AND INCLUSION
The Committee believes it is important to promote a
culture that values diversity in all areas, including an
inclusive and diverse culture in terms of ideas, skills,
knowledge, experience, education, age, gender, social
and ethnic backgrounds, cognitive and person strengths
and other factors. As a result of Board changes during
2024, the % of female Directors on the Board declined,
from 50% in FY23, to 33% currently. Nevertheless, some of
the most senior leadership roles in RWS are occupied by
women, at Board level, in our Executive Team and in our
senior leadership population. The Committee will continue
to seek progress in all facets of diversity.
INDEPENDENCE OF NON-EXECUTIVE
DIRECTORS
I was appointed Non-executive Chairman on 2 October
2023, and was considered independent on appointment.
With the exception of Andrew Brode, who is not deemed
to be independent due to his previous executive role
with the Group, the Committee considers that all Non-
executive Directors are independent and that there are
no relationships or circumstances which are likely to affect
their independent judgement.
ELECTION AND RE-ELECTION OF
DIRECTORS
All Directors will stand for re-election at the 2025 AGM,
with the exception of Ian El-Mokadem, who will step down
as CEO and Executive Director on 6 January 2025.
Ben Faes will stand for election at the 2025 AGM, having
been appointed to the Board after the last AGM
The Board has carried out a performance evaluation
and considers each of the Directors to be effective in
their respective roles. It judges that they demonstrate
commitment and is of the opinion that all Directors
continue to provide valuable contributions to the long-
term success of the Company. The Board strongly
supports their re-election to the Board and recommends
that shareholders vote in favour of the re-election
resolutions at the AGM.
Julie Southern | Nomination Committee Chair
11 December 2024
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80
Directors’ Remuneration Report
Dear Shareholder
I am pleased to introduce the Directors’ Remuneration Report for FY24. The report
comprises three sections, being:
• This Annual Statement, which summarises the work of the Committee, remuneration
outcomes in FY24 and how the Remuneration Committee intends to implement the
Remuneration Policy in FY25
• The Remuneration Policy Report, which summarises the Company’s Remuneration Policy
• The Annual Report on Remuneration, which discloses how the Remuneration Policy was
implemented in FY24
Consistent with best practice, the Directors’ Remuneration Report will be taken to the
2025 AGM for shareholder approval by way of an advisory vote.
ANNUAL STATEMENT
COMMITTEE RESPONSIBILITIES
The Remuneration Committee is primarily responsible for
determining the Directors’ Remuneration Policy and the
terms and conditions of service and remuneration for the
Executive Directors. The Committee also determines the
remuneration of the Chairman and the members of the
Executive Team.
Frances Earl
COMMITTEE ACTIVITIES DURING THE YEAR
In FY24, the Committee met seven times and details of
Committee member attendance can be found on page 67.
The Committee’s key activities during F24 were as follows:
• Reviewed the FY23 Directors’ Remuneration Report prior
to its approval by the Board
• Reviewed performance against the FY23 annual bonus
plan targets and agreed the metrics and targets for the
FY24 bonus plan
• Reviewed and set targets for the FY24 LTIP awards
• Reviewed and approved updated terms of reference for
the Remuneration Committee
• Considered the new QCA Code
• Agreed the outgoing CEO’s remuneration arrangements
and considered incoming CEO remuneration
• Agreed the CFO’s retention award terms following
consultation with, and supportive feedback from, major
shareholders
• Reviewed the annual fees for the Chairman
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 FY24. 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.
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81
IMPLEMENTING THE REMUNERATION
POLICY FOR FY24
In respect of the implementation of the Remuneration
Policy for FY24:
• No changes were made to the CEO and CFO’s base
salaries which remained at £621,000 and £410,000
respectively;
• As was noted in the FY23 Directors’ Remuneration
Report, reflecting a desire to refocus the FY24 annual
bonus performance metrics, annual bonus potential
was reduced by 25% with two thirds of the reduced
potential based on sliding scale revenue, profit,
personal and ESG targets and one third of the bonus
based on key strategic targets. Following a review of
performance in respect of the FY24 annual bonus,
no bonus was awarded in respect of the two thirds of
bonus potential based on revenue, profit, personal and
ESG targets. In respect of the one third of the reduced
bonus potential measured against strategic targets,
these targets were considered to have been met in full;
• The Long Term Incentive Plan (“LTIP”) awards granted in
January 2022 will lapse in full in January 2025 as a result
of threshold Earnings Per Share (“EPS”) and relative
Total Shareholder Return (“TSR”) targets not being met.
Details of the outstanding share awards held by Ian El-
Mokadem and Candida Davies as at 30 September 2024
are set out in the Annual Report on Remuneration;
• The Committee granted an LTIP award in January 2024
to the CEO and CFO in line with the Remuneration
Policy. Reflecting a desire to set a more balanced set
of performance targets at that time, a cash conversion
target was introduced to complement the existing EPS
and relative TSR targets, with each metric weighted
equally at a third each. Details of the award levels and
the performance targets are set out on page 86; and
• Following the announcement of Ian El-Mokadem’s
intention to step down as CEO in early 2025, the
Board believed that it was in the best interests of the
Company to ensure the retention of Candida Davies.
As such, RWS’s major shareholders were consulted on
a proposal to grant Candida a retention share award
with a value on grant equal to 75% of her base salary.
Following confirmation that the major shareholders
were supportive of the proposal, an award was granted
under the RWS Holdings plc Long Term Incentive Plan
over 189,908 ordinary shares in the Company on 23
September 2024 with 40% of the award vesting on the
first anniversary of the grant date and the remaining
60% vesting on the second anniversary of the grant
date. Given the primary objective of this award is
retention, vesting will be conditional on Candida’s
continued service, with the award ordinarily lapsing
if she ceases employment ahead of the respective
vesting dates. All of the net of tax shares which vest
are expected to be retained against the 175% of salary
shareholding guidelines.
IMPLEMENTING THE REMUNERATION
POLICY FOR FY25
In respect of the implementation of the Remuneration
Policy for FY25:
• The Committee agreed to move the Executive Director
salary review date from 1 October to 1 January to
align it with the rest of the workforce. In this regard,
the CFO’s salary will be increased by 3.6% to £424,760
from 1 January 2025 in line with the UK workforce.
The incoming CEO’s salary (set at £550,000 from
appointment) will not be reviewed until 1 January 2026;
• No changes have been made to benefits or pension
provision (5% of salary in line with the workforce);
• The annual bonus scheme for FY25 will be capped at
150% of salary for the incoming CEO (pro-rated) and
125% of salary for the CFO, based on sliding scale
financial targets and strategic 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 in January
2025. As part of his recruitment arrangements and
considered necessary by the Committee to secure the
appointment, the incoming CEO’s LTIP award will be set
at 400% of salary. The CFO’s LTIP award will continue to
be set at 175% of salary. Reflecting the Board’s desire to
focus on share price recovery, stretching performance
targets will be set based on TSR. The target range will
be disclosed in the RNS issued immediately following
grant; and
• Shareholding guidelines will continue to operate (200% of
salary for the incoming CEO and 175% of salary for the CFO).
The Chairman’s fee of £275,000 will be increased by 3.6%
in line with UK workforce increases to £285,000 from
1 January 2025. Similarly, Non-executive Director fees
(currently £55,000 base fee with an additional £10,000
fee for the Senior Independent Director, Audit Committee
Chair and Remuneration Committee Chair) will be
increased by 3.6% from 1 January 2025, to £57,000 and
£10,500 (rounded up to the nearest £500), respectively.
As a Committee, we recognise the need to foster strong
relations with our shareholders and encourage open
dialogue. As such, the Chairman 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 | Chairman of the Remuneration Committee
11 December 2024
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82
Directors’ Remuneration Report (continued)
REMUNERATION POLICY REPORT
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 Code as adopted by the Board.
No changes have been made to the Directors’ Remuneration Policy for
FY25 other than to reflect the CEO’s recruitment LTIP award (400% of
salary) which the Committee intends to grant in January 2025 following
consultation with major shareholders.
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83
SUMMARY OF DIRECTORS’ REMUNERATION POLICY
Component
Purpose and link to strategy
Operation
Maximum
Performance
Base salary
To provide a competitive
base salary to attract,
motivate and retain
directors with the
experience and
capabilities to achieve the
strategic aims.
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.
n/a
n/a
Benefits
To provide market-
competitive benefits
package.
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
Pension
To provide an appropriate
level of retirement
benefit.
Workforce aligned pension
provision.
5% of base
salary
Not
applicable
Annual bonus
To reward performance
against annual targets
which support the
strategic direction of
Group.
Awards are based on annual
performance and are normally
payable in cash up to 100% of salary.
Bonus in excess of 100% of salary
will be deferred into shares for three
years.
150% of
salary for the
CEO
125% of
salary for the
CFO
Sliding scale
financial
and/or
personal/
ESG/
strategic
targets
LTIP
To drive and reward the
achievement of longer
term objectives, support
retention and promote
share ownership for
Executive Directors.
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.
200% of
salary for the
CEO (400%
of salary
for FY25 in
respect of
the CEO’s
recruitment)
175% of
salary for the
CFO
Performance
metrics will
be linked
to financial
and/or share
price and/
or strategic
and/or ESG
performance
Shareholding
Guidelines
To promote share
ownership for Executive
Directors.
Executive Directors are expected to
build a shareholding in the Group
over time by retaining 50% of the
net of tax LTIP awards which vest.
200% of
salary for the
CEO, 175% of
salary for the
CFO
Not
applicable
Non-
executive
Directors
The Committee
determines the
Chairman’s fee and fees
for the Non-executive
Directors are agreed
by the Chairman and
Executive Directors.
Fees are reviewed annually
taking into account the level of
responsibility, relevant experience.
Fees may include a basic fee
and additional fees for further
responsibilities. Fees are paid in cash.
n/a
n/a
RWS Holdings plc — Annual Report 2024 | GOVERNANCE REPORT
84
IMPLEMENTATION OF THE POLICY FOR FY24
During the year, the Directors received the following remuneration and pension contributions:
Directors
Salary
£000
Taxable
benefits
£000
Pension
contributions
£000
Annual
bonus
£000
FY24
total
£000
FY23
total
£000
Executive Directors
Ian El-Mokadem
621
-
31
233
885
652
Candida Davies
410
-
21
128
559
431
Non-executive Directors
Julie Southern
275
-
-
-
275
150
Frances Earl
65
-
-
-
65
65
Gordon Stuart
65
-
-
-
65
65
David Clayton 1
65
-
-
-
65
55
Andrew Brode 2
55
2
-
-
57
265
Paul Abbott 3
41
-
-
-
41
-
Graham Cooke 3
41
-
-
-
41
-
Former Directors
Lara Boro 4
26
-
-
-
26
65
Rod Day
-
-
-
-
-
149
Total
1,664
2
52
361
2,079
1,897
1 Appointed Senior Independent Director 22 April 2024
2 Stepped down as Chairman, remaining on the Board as a Non-Executive Director, on 2 October 2023
3 Appointed 1 January 2024
4 Stepped down from the Board effective 22 February 2024
Directors’ Remuneration Report (continued)
SERVICE CONTRACTS
The Chairman and Non-executive Directors have letters
of appointment, under which their appointments will
continue unless and until terminated by either party
giving not less than 30 days’ notice and 6 months’ notice
in respect of the Chairman. 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. The dates of the service contracts of Ian
El-Mokadem and Candida Davies are 28 June 2021 and
4 July 2022 respectively. The service contract for Ben
Faes, who joined the Company on 2 December 2024 as
CEO Designate and will step up to the Board as CEO on 6
January 2025, is dated 25 November 2024.
ANNUAL REPORT ON REMUNERATION
RWS Holdings plc — Annual Report 2024 | GOVERNANCE REPORT
85
ANNUAL BONUS FOR FY24
Annual bonus potential was capped at 112.5% and 93.75%
of salary for the CEO and CFO respectively for the year
ended 30 September 2024. Details of the annual bonus
awards are as follows:
Financial targets
(75% of bonus potential)
PBT
(40%)
Revenue
(35%)
Threshold (start to earn)
£114.4m
£729.2m
On-target
£120.5m
£767.6m
Maximum
£132.5m
£805.9m
Actual (for bonus
purposes)
Below
Threshold
Below
Threshold
% of max payable
75% of salary (CEO),
62.5% of salary (CFO)
0%
0%
Strategic targets (25% of bonus potential)
Committee Assessment
Strategy:
Take forward the themes from the FY23 Strategy
Day, follow-up and implement.
Target considered to have been met in full:
• Evolve (RWS’s linguistic AI solution, offering significant efficiency
gains for global enterprises with substantial translation demands)
successfully launched.
• HAI (RWS’s new digital self-service platform, integrating RWS’s AI-
powered technology and linguistic expertise) successfully launched.
• Segmentation model presented to April Board meeting.
• Three year financial plan presented to April Board.
• Regular updates provided to the Board in May, July (strategy session)
and October.
Efficiency:
Support the development of proposals to
deliver further step change in the efficiency of
the group in respect of process, system, role
and location with associated business case
Target considered to have been met in full:
An updated approach to delivering approved end-to-end efficiency which
aligns to the anticipated target operating model was presented to the
Board and the FY25 elements were approved as part of the FY25 budget
and are in the implementation phase.
% of max payable
37.5% of salary (CEO),
31.25% of salary (CFO)
37.5% of salary for the CEO
31.25% of salary for the CFO
TOTAL BONUS AWARD FOR FY24
Reflecting the progress made against the strategic
objectives, and noting the reduced bonus potential
set for FY24 (the CEO and CFO’s bonus potentials
were reduced by 25% to 112.5% and 93.75% of salary
respectively), the total FY24 bonus award for the CEO and
CFO equated to £233,000 (37.5% of salary) and £128,000
(31.25% of salary) respectively. All of the CFO’s bonus
will be delivered in shares which will vest immediately,
with at least 50% of the net of tax number expected to
be retained against her 175% of salary shareholding
guidelines. Reflecting the CEO’s January 2025 departure
date, the CEO’s FY24 bonus will be payable in cash.
RWS Holdings plc — Annual Report 2024 | GOVERNANCE REPORT
86
Directors’ Remuneration Report (continued)
SHARE AWARDS GRANTED IN THE YEAR
The following LTIP awards were granted to the Executive
Directors on 25 January 2024:
Basis of award
Number of shares
under award
Ian El-Mokadem
200% of salary
524,050
Candida Davies
175% of salary
302,742
The awards are nil cost awards and vest three years from the grant (with a two year post vesting holding period) subject
to continued employment and the following Earnings Per Share (EPS), Cash Conversion and Total Shareholder Return
(“TSR”) targets:
One third of awards
One third of awards
One third of awards
Adjusted EPS targets for the year
ending 30 September 2026:
Cash Conversion targets for the year
ending 30 September 2026:
Relative TSR measured over the three years
ending 30 September 2026:
0% of this part of an award
vests for Adjusted EPS of 23.3p
increasing pro-rata to 100% of this
part of an award vests for Adjusted
EPS of 29p or more.
0% of this part of an award vests for
Average Cash Conversion of below 70%
increasing pro-rata to 100% of this part
of an award vests for Average Cash
Conversion of 90% or more.
0% of this part of an award vests for TSR
below median, 25% of this part of an award
vests for median TSR increasing pro-rata
to 100% of this part of an award vests for
upper quartile TSR measured against the
constituents of the FTSE 250 (excluding
investment trusts).
In addition to the performance conditions detailed above,
the Remuneration Committee retains the discretion to
adjust the level of vesting that would apply (including
to nil vesting) if it considers this to be appropriate (for
example to counter windfall gains or to have regard to
underlying financial performance and/or the shareholder
experience over the measurement period).
As detailed in the Annual Statement, in addition to the
LTIP awards detailed above, the following retention
award was granted to the CFO under the LTIP on 23
September 2024:
Basis of
award
Number of
shares under
award
Candida Davies
75% of salary
189,908
40% of the award will vest on the first anniversary of the
grant date and the remaining 60% will vest on the second
anniversary of the grant date with vesting conditional
on continued service, with the award ordinarily lapsing if
she ceases employment ahead of the respective vesting
dates. All of the net of tax shares which vest are expected
to be retained against the 175% of salary shareholding
guidelines.
CEO CHANGE
As per the RNS dated 1 October 2024, Ian El-Mokadem
will step down from the Board and will leave the Company
in January 2025. In respect of Ian’s leaving arrangements,
he will:
• Receive salary, pension and benefits up to cessation of
employment and a payment in lieu of notice in respect
of the remainder of the unexpired notice period.
• Not be eligible to participate in the annual bonus plan
for the year ending 30 September 2025.
• Retain his unvested LTIP awards which will continue
to vest at the normal vesting dates subject to
performance and time pro-rating; and
• Continue to comply with the shareholding guidelines
up to cessation.
As announced on 26 November 2024, Ben Faes joined
the Company on 2 December 2024 as CEO Designate
and will step up to the Board as CEO and Executive
Director on 6 January 2025. Details of Ben’s remuneration
from appointment are set out in the ‘Implementing the
Remuneration Policy for FY25’ section above.
RWS Holdings plc — Annual Report 2024 | GOVERNANCE REPORT
87
DIRECTORS’ INTERESTS IN SHARES
The interests of the Directors as at 30 September 2024
(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
Ordinary shares of 1 pence
Ian El-Mokadem
195,000
Candida Davies
20,000
Julie Southern
9,076
Frances Earl
3,000
Gordon Stuart
5,085
David Clayton
164,035
Andrew Brode
90,174,060
Paul Abbott
-
Graham Cooke
-
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 2023
Granted
Lapsed
30 Sep
2024
Exercise
Price
First date
normally
exercisable
Last date
normally
exercisable
Ian El-Mokadem
LTIP
24.01.22
220,791
-
-
220,791
1p
Lapsed
Lapsed
LTIP
24.01.23
314,207
-
-
314,207
1p
24.01.28
24.01.33
LTIP
24.01.24
-
524,050
-
524,050
nil
24.01.29
24.01.34
Candida Davies
LTIP
24.01.23
181,516
-
181,516
1p
24.01.28
24.01.33
SAYE
16.02.23
4,986
(4,986)
-
361p
Lapsed
Lapsed
LTIP
24.01.24
-
302,742
-
302,742
nil
24.01.29
24.01.34
SAYE
12.02.24
-
8,918
8,918
208p
01.04.27
30.09.27
LTIP
23.09.24
-
189,908
-
189,908
nil
23.09.25
23.09.34
The market price of the company’s shares at 30 september 2024 was 160 pence per share and the highest and lowest price in the year ended 30
september 2024 was 160 pence and 257.8 Pence per share respectively.
SHARE AWARDS VESTING/
EXERCISED IN THE YEAR
No share awards vested during the year ended 30
September 2024 and no share awards were exercised
which meant that no gains were made on the exercise of
share awards in the year ended 30 September 2024.
Frances Earl | Remuneration Committee Chair
11 December 2024
RWS Holdings plc — Annual Report 2024 | GOVERNANCE REPORT
88
Directors’ Report
The Directors present their Annual Report together with the audited consolidated
financial statements for the year ended 30 September 2024.
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 23. The Company’s shares are admitted
to trading on the Alternative Investment Market of the
London Stock Exchange.
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 42 to 45. The key performance
indicators (page 23) of the Group are revenues and
adjusted pre-tax profit before amortisation of acquired
intangibles, share-based payment expenses, acquisition
costs and exceptional items.
DIVIDENDS
The Directors recommend a final dividend of 10 pence
per ordinary share to be paid on 14 February 2025 to
shareholders on the register at 17 January 2025, which,
together with the interim dividend of 2.45 pence paid in
July 2024, results in a total dividend for the year of 12.45
pence (2023: 12.20 pence). Please refer also to Note 10 to
the Consolidated Financial Statements.
The final dividend will be reflected in the financial
statements for the year ending 30 September 2025, as it
does not represent a liability at 30 September 2024.
GOING CONCERN
In assessing the basis of preparation of the financial
statements for the year ended 30 September 2024,
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 2026.
As at 30 September 2024, the Group has net debt
including lease liabilities of £40.1m, comprising the
Group’s US$220m revolving credit facility (“RCF”) (£76.5m
drawn at year end) and lease liabilities of £27.2m, less
cash and cash equivalents of £61.5m. The RCF is for
US$220m and the term expires on 6 August 2027 after
the one-year extension option was triggered in 2024.
The facility is provided by a consortium of banks. At year
end the Group’s net leverage ratio (as defined by the RCF
agreement) is 0.3 of EBITDA, while its interest coverage
ratio (as defined by the RCF agreement) is 23.7 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 2026. 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 pages 42 to 45 of the Strategic Report on the
Group’s profitability and financial position, the Directors
believe that the appropriate sensitivity in assessing the
Group and Company’s ability to continue as a going
concern are to model a range of downside scenarios,
including a 20% 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
2026. 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 2025 and therefore have prepared the financial
statements on a going concern basis.
RWS Holdings plc — Annual Report 2024 | GOVERNANCE REPORT
89
DIRECTORS
The names and biographical details of the Directors of
the Company at the date of signing this report are set
out on pages 64 to 65.
Further information on Board composition,
responsibilities, commitments and re-election/election
of Directors can be found on pages 66 to 73 of the
Corporate Governance Report.
The interests of the Directors in shares during the year
are set out on page 87 in the Directors’ Remuneration
Report.
DIRECTORS’ INDEMNITIES
To the extent permitted in is 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 Company also
purchased and maintained throughout the financial year,
Directors’ and Officers’ liability insurance cover for the
directors and officers of the Company and of all Group
subsidiary companies.
CORPORATE GOVERNANCE
Further information about the Audit, Nomination and
Remuneration Committees and details of the Company’s
Remuneration Policy are set out on pages 74 to 87.
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 ENGAGEMENT
The Company’s policy is to consult and discuss with
employees matters likely to affect employee interests.
This includes building common awareness of the financial
and economic factors affecting the Group’s performance
through newsletters, all-colleague emails, quarterly
all-colleague calls with the CEO and CFO and local ‘town
hall’ meetings with senior leadership. 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 WITH
STAKEHOLDERS
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.
Please refer to pages 58 to 61, and 63 for further
information on engagement with stakeholders.
DIRECTORS’ AUTHORITIES IN RELATION
TO SHARE CAPITAL
At the 22 February 2024 Annual General Meeting, the
Directors were generally and unconditionally authorised
to allot shares in the Company up to an aggregate nominal
value of £1,240,922 (being approximately one third of
the Company’s then issued share capital) or up to an
aggregate nominal value of £2,481,844 (representing
approximately two thirds of the Company’s then issued
share capital) in respect of a strictly pro-rata issue.
At the 2024 AGM, the Directors were also granted
additional powers to allot ordinary shares for cash (i) up
to a nominal value of £372,276 (being approximately 10%
of the Company’s then issued share capital) and (ii) up to
a further nominal value of £372,276, in each case without
regard to the pre-emption provisions of the Companies
Act 2006, provided that the authority under (ii) can only be
used in connection with an acquisition or specified capital
investment.
These authorities are valid until the conclusion of the next
following AGM.
The Directors propose to seek equivalent authorities at
the 2025 AGM. The Directors have no immediate plans to
make use of these authorities, if granted, other than to
satisfy the exercise of options or vesting of awards under
the Company’s employee share schemes.
As at the date of this report, the Company does not hold
any ordinary shares in the capital of the Company in
treasury.
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90
EMPLOYEE SHARE AND SHARE OPTION
SCHEMES
The Company operates a number of employee and share
option schemes. Details of outstanding share awards and
share options are given in Note 22 to the consolidated
financial statements on pages 141 to 143.
Directors’ Report (continued)
AUTHORITY TO PURCHASE OWN SHARES
At the 2024 AGM, shareholders gave the Company
authority to make market purchases of up to 37,227,600
of its own ordinary shares (representing 10% of the
Company’s then issued share capital). This authority
expires at the conclusion of the next following AGM.
ACQUISITION OF OWN SHARES
On 14 June 2023 the Company announced a share
repurchase programme of up to £50m to be executed
by the Company’s 2024 AGM. During the year, the Group
completed the share repurchase programme. During
1 October 2023 to 22 February 2024 the Company
purchased 12.9 million shares at an average price of
233.52p. The overall number of shares purchased under
the programme was 20.8 million.
POLITICAL DONATIONS
The Company made no political donations during the year
ended 30 September 2024.
BRANCHES
RWS is a global business and our activities and interests
are operated through subsidiaries and associated
branches which are subject to the laws and regulations of
many different jurisdictions. Our subsidiary undertakings
and associated branches are listed in Note 7 to the Parent
Company financial statements on pages 151 to 154.
MAJOR SHAREHOLDINGS
As at 30 September 2024, insofar as it is known to the Company by virtue of notifications made in accordance with DTR
5, the table below sets out holders of notifiable interests representing 3% or more of the issued Ordinary share capital
of the Company (such holdings may have changed since notification to the Company):
Substantial shareholder
% of Issued Share Capital
Number of Ordinary Shares
Andrew Brode
24.5
90,174,060
Liontrust Asset Management
13.05
48,134,918
Octopus Investments
5.04
19,039,802
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.
GREENHOUSE GAS EMISSIONS, ENERGY
CONSUMPTION AND ENERGY EFFICIENCY
Details of the Group’s annual greenhouse gas emissions,
energy consumption and energy efficiency are shown in
the ‘Task Force on Climate-related Financial Disclosures’
section of the Strategic Report on pages 46 to 57.
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91
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.
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 9,000 colleagues across
33 countries and 62 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.
ANNUAL GENERAL MEETING
The 2025 AGM will be held on 11 February 2025, at
the offices of Slaughter and May, One Bunhill Row,
London EC1Y 8YY. 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.
AUDITORS
Ernst & Young LLP have expressed their willingness to
continue in office and a resolution to reappoint them will
be proposed at the 2025 AGM.
STATEMENT OF DISCLOSURE OF
INFORMATION TO AUDITORS
Each of the persons who is a Director at the date of
approval of this report confirms that:
• So far as the Director is aware, there is no relevant
audit information of which the Company’s auditor is
unaware.
• The Director has taken all the steps that they ought to
have taken as a Director to make themselves aware of
any information relevant to the audit and to establish
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.
This confirmation is given, and should be interpreted,
in accordance with the provisions of section 418 of the
Companies Act 2006.
This Directors’ Report was approved by the Board on
11 December 2024.
On behalf of the Board
Ian El-Mokadem | Chief Executive Officer
11 December 2024
RWS Holdings plc — Annual Report 2024 | GOVERNANCE REPORT
92
Statement of Directors’ responsibilities
in respect of the financial statements
The Directors are responsible for preparing the annual report and the Group and
Parent Company 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, including Financial Reporting
Standard 101 Reduced Disclosure Framework (“FRS 101”))
and applicable law. Under company law the Directors
must not approve the financial statements unless they
are satisfied that they give a true and fair view of the
state of affairs of the Group and the Parent Company
and of the profit or loss of the Group and the Parent
Company for that period.
In preparing these financial statements the Directors are
required to:
• Select suitable accounting policies 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 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
Each of the Directors confirm, to the best of their
knowledge:
• That the Group 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.
• 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. For the details of the process that was
followed to enable the Board to make this statement, please
refer to the Audit Committee Report on pages 74 to 77.
For and on behalf of the Board of Directors
Ian El-Mokadem | Chief Executive Officer
11 December 2024
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93
2024 FINANCIAL
STATEMENTS
RWS Holdings plc
RWS Holdings plc — Annual Report 2024 | FINANCIAL STATEMENTS
94
Independent Auditors’ Report to the
Members of RWS Holdings plc
OPINION
In our opinion:
• RWS Holdings plc’s group financial statements and parent company financial statements (the “financial statements”)
give a true and fair view of the state of the group’s and of the parent company’s affairs as at 30 September 2024 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 2024 which comprise:
Group
Parent company
Consolidated statement of comprehensive income for the year
then ended 30 September 2024
Balance sheet as at 30 September 2024
Consolidated statement of financial position as at 30
September 2024
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 of the financial statements, including
material accounting policy information
Consolidated statement of cash flows for the year then ended
Related notes 1 to 27 to the financial statements, including
material accounting policy information
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.
RWS Holdings plc — Annual Report 2024 | FINANCIAL STATEMENTS
95
CONCLUSIONS RELATING TO GOING CONCERN
• evaluating 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 Group continues to remain
profitable (2024: £112.3 million adjusted operating profit,
2023: £123.8 million) and the Group generates positive
operating cashflows (2024: £75.3 million, 2023: £107.5
million) which are the key measures for covenant and
liquidity compliance respectively. The Group has access
to a committed revolving credit facility of $220 million,
which expires in 2027. 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 2026.
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 7 components and
audit procedures on specific balances for a further 5 components.
• The components where we performed full or specific audit procedures accounted for
71% of profit before tax adjusted for exceptional items, impairment losses, acquisition
costs and amortisation of acquired intangibles, 86% of Revenue and 90% 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 £5.4m which represents 5% of profit before tax adjusted for
exceptional items, impairment losses, acquisition costs and amortisation of acquired intangibles.
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 2026, 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;
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96
AN OVERVIEW OF THE SCOPE OF THE PARENT COMPANY AND GROUP AUDITS
Independent Auditors’ Report to the Members of
RWS Holdings plc (continued)
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 12 components covering entities within the
UK, US, Czech Republic and EMEA, which represent the
principal business units within the Group.
Of the 12 components selected, we performed an audit
of the complete financial information of 7 components
(“full scope components”) which were selected based
on their size or risk characteristics. For the remaining 5
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 71% (2023: 74%) of the Group’s
profit before tax adjusted for exceptional items, impairment
losses, acquisition costs and amortisation of acquired
intangibles, 86% (2023: 87%) of the Group’s Revenue
and 90% (2023: 92%) of the Group’s Total assets. For the
current year, the full scope components contributed 62%
(2023: 71%) of the Group’s profit before tax adjusted for
exceptional items, impairment losses, acquisition costs and
amortisation of acquired intangibles, 73% (2023: 77%) of
the Group’s Revenue and 88% (2023: 91%) of the Group’s
Total assets. The specific scope components contributed
9% (2023: 3%) of the Group’s profit before tax adjusted for
exceptional items, impairment losses, acquisition costs
and amortisation of acquired intangibles, 13% (2023: 10%)
of the Group’s Revenue and 2% (2023: 1%) 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 (Czech Republic) 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
29% of the Group’s profit before tax adjusted for
exceptional items, impairment losses, acquisition costs and
amortisation of acquired intangibles, none are individually
greater than 6% of the Group’s profit before tax adjusted
for exceptional items, impairment losses, acquisition
costs and amortisation of acquired intangibles. For these
components, we performed other procedures, including
analytical review and/or ‘review scope’ procedures, testing
of consolidation journals and intercompany eliminations
and foreign currency translation recalculations to respond
to any potential risks of material misstatement to the Group
financial statements.
The charts below illustrate the coverage obtained from the
work performed by our audit teams.
PROFIT BEFORE TAX (OR ADJUSTED
PBT MEASURE USED)
62%
Full scope
components
9%
Specific scope
components
29%
Other procedures
TOTAL ASSETS
88% Full scope
components
2%
Specific scope
components
10% Other procedures
REVENUE
73%
Full scope
components
13%
Specific scope
components
14%
Other procedures
RWS Holdings plc — Annual Report 2024 | FINANCIAL STATEMENTS
97
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 7 full scope components,
audit procedures were performed on 6 of these directly
by the primary audit team. All specific scope components
were audited by the primary audit engagement team.
During the current year’s audit cycle, visits were
undertaken by the primary audit team to the component
team in the Czech Republic. These visits involved review
of the component’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.
CLIMATE CHANGE
Stakeholders are increasingly interested in 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 pages 46 to 57 in the Task Force On
Climate Related Financial Disclosures and on pages
42 to 45 in the principal risks and uncertainties. All of
these disclosures form part of the “Other information,”
rather than the audited financial statements. Our
procedures on these unaudited 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, in line with
our responsibilities on “Other information”.
In planning and performing our audit we assessed the
potential impacts of climate change on the Group’s
business and any consequential material impact on its
financial statements.
As explained in note 1, the basis of preparation,
consideration of climate change impact on the
judgements in the accounts 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
determining asset and liability valuations and the timing
of future cash flows under the requirements of UK
adopted International Accounting Standards.
Our audit effort in considering the impact of climate
change on the financial statements was focused on
evaluating management’s assessment of the impact
of climate risk, physical and transition, their climate
commitments and confirming the effects of material
climate risks disclosed do not have a material impact on
the financial statements. As part of this evaluation, we
performed our own risk assessment to determine the
risks of material misstatement in the financial statements
from climate change which needed to be considered in
our audit.
We also challenged the Directors’ considerations of
climate change risks in their assessment of going concern
and associated disclosures. Where considerations of
climate change were relevant to our assessment of going
concern, these are described above.
Based on our work we have not identified the impact of
climate change on the financial statements to be a key
audit matter or to impact a key audit matter.
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.
RWS Holdings plc — Annual Report 2024 | FINANCIAL STATEMENTS
98
Revenue recognition (2024: £718.2m, 2023: £733.8m)
Refer to the Audit Committee Report (page 76) and Note 3 of the Consolidated Financial Statements (page 112)
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).
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 10
locations, which covered 86% of the risk amount.
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 materially 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.
Independent Auditors’ Report to the Members of
RWS Holdings plc (continued)
RWS Holdings plc — Annual Report 2024 | FINANCIAL STATEMENTS
99
Impairment of goodwill and acquired intangibles (2024: £570.8m goodwill and £239.8m acquired intangibles,
2023: £608.6m goodwill and £296.7m acquired intangibles)
Refer to the Audit Committee Report (page 76) and Notes 12 and 13 of the Consolidated Financial Statements (page 124 to 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.
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.
We performed the following procedures:
We validated the mathematical accuracy of management’s impairment models.
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 challenged
management in relation to the 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 accordance with the requirements of
IAS 36 and IAS 1, including in relation to the impairment recognised in the
financial statements, to confirm the adequacy of disclosure. Our procedures
covered 100% of the Goodwill and Acquired Intangibles risk amount.
Key observations communicated
to the Audit Committee
We consider management’s
assessment appropriately reflects
the requirements of IAS 36 and
appropriately captures the risks to the
future cash flows.
We concluded that the goodwill
recognised within all CGUs was
supported by the Value in Use
calculated by management, and as
such concluded that no impairment of
goodwill should be recognised.
We concluded that that the
disclosures, including key assumptions
and sensitivities within Note 2, are
appropriate.
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100
Independent Auditors’ Report to the Members of
RWS Holdings plc (continued)
Capitalisation and impairment of development costs (2024: £40.5m additions, 2023: £36.5m additions)
Refer to the Audit Committee Report (page 76) and refer to the Note 13 of the Consolidated Financial Statements (page 126).
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.
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 development cost business cases, supporting
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 incremental economic
benefit.
We performed analytical procedures, including comparison of capitalization
and amortization to prior year.
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. We also performed specific HR testing to validate salary
information to supporting documentation.
We reviewed the Group’s disclosures in relation to capitalised development
costs made in the financial statements to confirm the adequacy of disclosure
of the Group’s capitalisation policy.
We assessed the impairment of assets in use and those still under
development in accordance with IAS 36 by considering whether there were
any indicators of impairment, including obsolescence of technology and
changes to underlying business and market trends.
We performed full and specific scope audit procedures over this risk area in
3 locations, which covered 100% of the risk amount.
Key observations communicated
to the Audit Committee
Management impaired previously
capitalised amounts of £11.7m
following a strategic review of
solutions.
We concluded that remaining
development costs capitalised under
IAS 38 are materially correct and that
it is reasonable that no impairment
has been recorded on these assets
as at 30 September 2024.
RWS Holdings plc — Annual Report 2024 | FINANCIAL STATEMENTS
101
Materiality
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 £5.4
million (2023: £5.9 million), which is 5% (2023: 5%)
of profit before tax adjusted for exceptional items,
impairment losses, acquisition costs and amortisation
of acquired intangibles. We believe that profit before
tax adjusted for exceptional items, impairment
losses, 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 £11.1 million (2023: £10.5 million), which is 1% (2023:
1%) of total assets.
• Profit before tax - £60.0m
• Exceptional items - (£26.6m)
• Impairment losses - £22.2m
• Acquisition costs - £7.2m
• Amortisation of acquired
intangibles - £40.8m
• Profit before tax adjusted for exceptional
items, impairment losses, acquisition costs
and amortisation of acquired intangibles -
£103.6m
• Materiality - £5.4m
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% (2023: 50%) of our planning
materiality, namely £2.7m (2023: £3.0m). 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 £0.5m to £1.3m (2023:
£0.6m to £1.5m).
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 (2023: £0.3m), 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.
Adjustments
Starting
basis
RWS Holdings plc — Annual Report 2024 | FINANCIAL STATEMENTS
102
OTHER INFORMATION
The other information comprises the information included
in the annual report set out on pages 1 to 92, 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 92, 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.
Independent Auditors’ Report to the Members of
RWS Holdings plc (continued)
RWS Holdings plc — Annual Report 2024 | FINANCIAL STATEMENTS
103
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
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.
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
11 December 2024
RWS Holdings plc — Annual Report 2024 | CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
104
Note
2024
£m
2023
£m
Revenue
3
718.2
733.8
Cost of sales
(381.7)
(394.3)
Gross profit
336.5
339.5
Administrative expenses
(270.7)
(346.4)
Operating profit/(loss)
5
65.8
(6.9)
Analysed as:
Adjusted operating profit:
112.3
123.8
Amortisation of acquired intangibles
13
(40.8)
(38.8)
Impairment of intangible assets
12,13
(11.7)
(62.4)
Impairment of property, plant and equipment
14
(10.5)
-
Acquisition costs
6
(7.2)
(5.1)
Share-based payment expense
22
(2.9)
(1.8)
Profit on disposal of business
6
30.0
-
Exceptional items
6
(3.4)
(22.6)
Operating profit/(loss)
65.8
(6.9)
Finance income
8
0.9
0.6
Amortisation of capitalised exceptional finance costs
8
(0.2)
(0.3)
Finance costs
8
(6.5)
(4.3)
Profit /(loss) before tax
60.0
(10.9)
Taxation
9
(12.5)
(16.8)
Profit/(loss) for the year attributable to the owners of the Parent
47.5
(27.7)
Other comprehensive (expense)/ income
Items that may be reclassified to profit or loss:
Gain /(loss) on retranslation of quasi equity loans (net of deferred tax)
1.7
(1.9)
Loss on retranslation of foreign operations
(64.1)
(60.3)
Gain on hedging (net of deferred tax)
0.4
2.0
Total other comprehensive expense
(62.0)
(60.2)
Total comprehensive expense attributable to owners of the Parent
(14.5)
(87.9)
Basic earnings per ordinary share (pence per share)
11
12.8
(7.1)
Diluted earnings per ordinary share (pence per share)
11
12.8
(7.1)
The Notes on pages 108 to 145 form part of these financial statements.
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2024
RWS Holdings plc — Annual Report 2024 | CONSOLIDATED STATEMENT OF FINANCIAL POSITION
105
Note
2024
£m
2023
£m
Non-current assets
Goodwill
12
570.8
608.6
Intangible assets
13
317.0
359.4
Property, plant and equipment
14
13.5
27.5
Right-of-use assets
18
22.7
27.5
Non-current income tax receivable
2.2
1.4
Deferred tax assets
9
2.0
1.2
928.2
1,025.6
Current assets
Trade and other receivables
15
211.2
212.3
Income tax receivable
5.6
1.7
Cash and cash equivalents
23
61.5
76.2
278.3
290.2
Total assets
1,206.5
1,315.8
Current liabilities
Trade and other payables
17
127.7
149.8
Lease liabilities
18
8.5
9.9
Income tax payable
14.3
15.3
Provisions
19
7.9
7.6
158.4
182.6
Non-current liabilities
Loans
16
74.4
52.6
Lease liabilities
18
18.7
23.6
Trade and other payables
17
0.4
2.3
Provisions
19
1.5
9.7
Deferred tax liabilities
9
53.5
57.7
148.5
145.9
Total liabilities
306.9
328.5
Total net assets
899.6
987.3
Capital and reserves attributable to owners of the Parent
Share capital
21
3.7
3.8
Share premium
54.5
54.5
Share based payment reserve
8.1
5.3
Reverse acquisition reserve
(8.5)
(8.5)
Other reserve
0.1
-
Merger reserve
624.4
624.4
Foreign currency reserve
(31.8)
33.7
Hedge reserve
-
(3.5)
Retained earnings
249.1
277.6
Total equity
899.6
987.3
Consolidated Statement of Financial Position
as at 30 September 2024
The Notes on pages 108 to 145 form part of these financial statements. The financial statements on pages 104 to 145
were approved by the Board of Directors and authorised for issue on 11 December 2024 and were signed on its
behalf by:
Candida Davies | Chief Financial Officer
RWS Holdings plc — Annual Report 2024 | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
106
Consolidated Statement of Changes in Equity
for the year ended 30 September 2024
Note
Share
capital
£m
Share
premium
account
£m
Other
reserves
(see below)
£m
Retained
earnings
£m
Total
attributable
to owners
of Parent
£m
At 30 September 2022
3.9
54.4
712.3
371.1
1,141.7
Loss for the year
-
-
-
(27.7)
(27.7)
Gain on hedging
-
-
2.0
-
2.0
Loss on retranslation of quasi equity loans
-
-
(1.9)
-
(1.9)
Loss on retranslation of foreign operations
-
-
(60.3)
-
(60.3)
Total comprehensive (expense)/ income for the year
-
-
(60.2)
(27.7)
(87.9)
Issue of shares
-
0.1
-
-
0.1
Deferred tax on unexercised share options
9
-
-
-
(0.2)
(0.2)
Deferred consideration settlement
-
-
(2.5)
-
(2.5)
Dividends
10
-
-
-
(46.3)
(46.3)
Purchase of own shares
(0.1)
-
-
(19.3)
(19.4)
Equity-settled share based payments charge
22
-
-
1.8
-
1.8
At 30 September 2023
3.8
54.5
651.4
277.6
987.3
Profit for the year
-
-
-
47.5
47.5
Gain on hedging
-
-
0.4
-
0.4
Gain on retranslation of quasi equity loans
-
-
1.7
-
1.7
Loss on retranslation of foreign operations
-
-
(64.1)
-
(64.1)
Total comprehensive (expense)/ income for the year
-
-
(62.0)
47.5
(14.5)
Deferred tax on unexercised share options
9
-
-
-
(0.1)
(0.1)
Dividends
10
-
-
-
(45.5)
(45.5)
Purchase of own shares
(0.1)
-
0.1
(30.4)
(30.4)
Equity-settled share-based payments charge
22
-
-
2.9
-
2.9
Deferred tax on share-based payments
-
-
(0.1)
-
(0.1)
At 30 September 2024
3.7
54.5
592.3
249.1
899.6
Other reserves
Share-based
payment
reserve
£m
Other
reserve
£m
Reverse
acquisition
reserve
£m
Merger
reserve
£m
Foreign
currency
reserve
£m
Hedge
reserve
£m
Total
other
reserves
£m
At 30 September 2023
6.0
-
(8.5)
624.4
95.9
(5.5)
712.3
Other comprehensive (expense)/income for the year
-
-
-
-
(62.2)
2.0
(60.2)
Equity-settled share-based payments charge
1.8
-
-
-
-
-
1.8
Deferred consideration settlement
(2.5)
-
-
-
-
-
(2.5)
At 30 September 2023
5.3
-
(8.5)
624.4
33.7
(3.5)
651.4
Other comprehensive (expense)/income for the year
-
-
-
-
(62.4)
0.4
(62.0)
Fair value losses on net investment hedge taken to
currency reserve
-
-
-
-
(3.1)
3.1
-
Equity-settled share-based payments charge
2.9
-
-
-
-
-
2.9
Purchase of own shares
-
0.1
-
-
-
-
0.1
Deferred tax on share-based payments
(0.1)
-
-
-
-
(0.1)
At 30 September 2024
8.1
0.1
(8.5)
624.4
(31.8)
-
592.3
RWS Holdings plc — Annual Report 2024 | CONSOLIDATED STATEMENT OF CASH FLOWS
107
Consolidated Statement of Cash Flows
for the year ended 30 September 2024
Note
2024
£m
2023
£m
Cash flows from operating activities
Profit / (loss) before tax
60.0
(10.9)
Adjustments for:
Depreciation of property, plant and equipment
14
6.3
7.3
Amortisation of intangible assets
13
54.8
56.9
Impairment of Intangible assets
12,13
11.7
62.4
Impairment of property, plant and equipment
14
10.5
-
Depreciation of right-of-use assets
18
8.2
9.4
Share-based payment expense
22
2.9
1.8
Profit on disposal of business
6
(30.0)
-
Lease modification
18
(1.6)
-
Net finance costs
8
5.8
4.0
Operating cash flow before movements in working capital
128.6
130.9
Increase in trade and other receivables
(6.8)
(2.3)
(Decrease) / Increase in trade and other payables and provisions
(26.3)
0.6
Cash generated from operations
95.5
129.2
Income tax paid
(20.2)
(21.7)
Net cash inflow from operating activities
75.3
107.5
Cash flows from investing activities
Interest received
0.9
0.6
Disposal proceeds
6
25.0
-
Acquisition of subsidiary, net of cash acquired
24
(0.5)
(31.5)
Purchases of property, plant and equipment
14
(2.6)
(3.8)
Purchases of intangibles (software)
13
(40.5)
(36.5)
Net cash outflows from investing activities
(17.7)
(71.2)
Cash flows from financing activities
Proceeds from borrowings
87.0
49.0
Repayment of borrowings
(64.1)
(25.0)
Interest paid
(4.6)
(2.6)
Lease liability payments (including interest charged of £1.1m (2023: £1.1m))
18
(9.5)
(11.9)
Proceeds from the issue of share capital
-
0.1
Purchase of own shares
(30.4)
(19.4)
Dividends paid
10
(45.5)
(46.3)
Net cash outflow from financing activities
(67.1)
(56.1)
Net decrease in cash and cash equivalents
(9.5)
(19.8)
Cash and cash equivalents at beginning of the year
76.2
101.2
Exchange losses on cash and cash equivalents
(5.2)
(5.2)
Cash and cash equivalents at end of the year
23
61.5
76.2
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
108
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 UK-adopted International
Financial Reporting Standards ('IFRS') as required by 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 Task Force
on Climate-related Financial Disclosures ("TCFD") on pages
46 to 56. 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
The International Accounting Standards Board (IASB)
issued the following amendments, which have been
endorsed by the UK Board, for annual periods beginning
on or after 1 January 2023.
• Amendments to IFRS 17, Insurance Contracts;
• Amendments to IAS 1 and IFRS Practice Statement 2;
• Amendment to IAS 8, Accounting Policies, Changes in
Accounting Estimates and Errors; and
• Amendments to IAS 12, Deferred Tax related to Assets
and Liabilities arising from a Single Transaction.
These changes have not had a material impact on
the Group.
On the 19th July 2023, the UK endorsed the amendments
to IAS 12 Income Taxes, issued by the International
Accounting Standards Board on 23rd May 2023, which
grants companies a temporary exemption from applying
IAS 12 to the International Tax Reform: Pillar Two Model
Rules. The Group has adopted the amendments to IAS 12
and applied the exception to recognising and disclosing
information about deferred tax assets and liabilities
related to Pillar Two income taxes.
The following are accounting standards to be adopted by
the Group in future reporting periods; they have not yet
been endorsed by the UK Endorsement Board.
• IFRS 18, Presentation and Disclosure in Financial
Statements, published by the IASB on 9th April 2024
and effective for accounting periods commencing 1st
January 2027; and
• IFRS 19, Subsidiaries without Public Accountability,
published by the IASB on 9th May 2024 and effective
for accounting periods commencing 1st January 2027.
The Group will assess the impact of these new accounting
standards in due course following endorsement by the UK
Endorsement Board.
The Group has not early adopted any standard,
interpretation or amendment that was issued but is
not yet effective. The Group does not expect these
amendments to have a material impact on the Group's
consolidated financial statements.
The list of amendments considered in relation to the
above are as follows:
• Amendments to IAS 1, Classification of liabilities as
current and non-current liabilities with covenants;
• Amendments to IFRS 16, Lease liability in a sale and
leaseback;
• Amendments to IAS 7 and IFRS 7, Supplier finance
arrangements; and
• Amendments to IAS 21, The Effects of Changes in
Foreign Exchange Rates.
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 2024.
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.
Notes to the Consolidated Financial Statements
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
109
Audit exemption for subsidiaries
The Company has, in line with prior year, opted not
to apply the audit exemption under s479A of the
Companies Act 2006 for certain of its UK subsidiaries.
Going concern
The financial statements have been prepared on a
going concern basis, as outlined in the Directors'
report. The Directors have conducted an assessment
of the Group's ability to continue as a going concern
for a period of at least twelve months from the date of
approval of the accounts.
In making this assessment, the Directors considered the
Group's current financial position, as well as forecasted
earnings and cash flows for the 18-month period ending
31 March 2026. The business plan supporting this
evaluation is based on the Board-approved budget.
The Directors’ assessment also considered the Group's
existing debt levels, committed funding, liquidity
position under its debt covenants, and its ongoing
ability to generate cash through trading activities. As of
30 September 2024, the Group had net debt of £40.0m
(2023: £9.9m), which includes the Group's US$220m
revolving credit facility ("RCF") of which £74.4m was
drawn at year end (2023: £52.6m), lease liabilities
of £27.2m (2023: £33.5m), offset by cash and cash
equivalents of £61.5m (2023: £76.2m). The RCF matures
in August 2027, after the one-year extension option
was triggered and approved by lenders in the period.
At year-end, the Group's net leverage ratio, as defined
by the RCF agreement, was 0.3 EBITDA (2023: -0.1),
while the interest coverage ratio was 23.7 EBITDA (2023:
39.9), both of which are well within the limits set by the
Group's RCF agreement.
In view of the Group's principal risks and uncertainties,
detailed on pages 42 to 45 of the Strategic Report, the
Directors have applied appropriate sensitivities in their
going concern assessment. They modelled a range of
downside scenarios, including a 20% reduction in the
Group's revenues and corresponding cash flows, with
management mitigating these impacts by only reducing
the Group's directly attributable controllable costs of
sale. No significant structural changes to the Group
were assumed in these scenarios, and all mitigating
actions were within management’s control.
In each downside scenario, the Group maintained
headroom with respect to both covenants and
liquidity through to 31 March 2026. As a result, 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 continue to meet their liabilities as
they fall due during the period ending 31 March 2026
and therefore prepared the financial statements on a
going concern basis.
Business combinations
The acquisition method of accounting is applied to
business acquisitions, with the acquisition cost measured
as the aggregate fair value of the consideration paid. The
identifiable assets, liabilities, and contingent liabilities of
the acquiree that meet the recognition criteria under IFRS
3 "Business Combinations" are recognised at their fair
values on the date the Group gains control of the acquiree.
Where applicable, the acquisition consideration includes
assets or liabilities arising from contingent consideration,
which is initially measured at fair value at the date control
is obtained. Subsequent changes in fair value are adjusted
against the acquisition cost if they qualify as measurement
period adjustments. All other subsequent changes in the fair
value of contingent consideration, classified as either an asset
or liability, are recognised in profit or loss and accounted for
in accordance with relevant IFRS standards. The excess of the
acquisition cost over the fair value of the Group’s share of the
net assets acquired is recorded as goodwill.
Acquisition-related costs are expensed as incurred
and reported under administrative expenses in the
Consolidated Income Statement.
Contingent payments dependent on continued
employment are accounted for as post-combination
remuneration expenses in accordance with IAS 19
employment benefits.
Foreign currencies
Pounds Sterling is the ultimate Parent Company's functional
and presentation currency, hence its adoption as the
Group's functional and presentation currency.
Transactions in foreign currencies are translated to the
functional currency of the Group at the exchange rate on
the dates of the transactions.
Monetary assets and liabilities denominated in foreign
currencies are translated into functional currency at the
rates of exchange quoted at the balance sheet date. Non-
monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange
rates as at the dates of the initial transactions. Translation
differences on monetary items are taken to the consolidated
income statement.
Transactions in foreign currencies are recorded in the
functional currency at an average rate for the period in
which those transactions take place, which is used as a
reasonable approximation to the exchange rates prevailing
at the dates of the transactions.
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.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
110
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.
Exchange differences arising on the translation of the
net investment in overseas subsidiaries are recorded
through other comprehensive income. On disposal of
the net investment, the cumulative exchange difference
is reclassified from equity to operating profit. All other
currency gains and losses are dealt with in the income
statement.
Derivative financial instruments and hedging
The Group uses derivative financial instruments to
manage its exposure to foreign exchange volatility
arising from operational activities.
Derivative financial instruments are initially measured at
fair value (with direct transaction costs being included
in the statement of comprehensive income as an
expense) and are subsequently remeasured to fair value
at each reporting date. Changes in the carrying value
are also recognised in profit or loss in the statement
of comprehensive income unless part of a designated
hedging arrangement.
The Group designates certain derivatives as hedging
instruments to hedge the variability in cash flows
associated with highly probable forecast transactions
arising from changes in foreign exchange rates and
certain non-derivative liabilities as hedges of foreign
exchange risk on a net investment in a foreign operation.
At inception of designated hedging relationships, the
Group documents the risk management objective and
strategy for undertaking the hedge. The Group also
documents the economic relationship between the
hedged item and hedging instrument, including whether
the changes in cash flows of the hedged item and
hedging instrument are expected to offset each other.
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in fair value
of the derivative is recognised in other comprehensive
income and accumulated in the hedge reserve. The
effective portion of changes in the fair value of the
derivative that is recognised in other comprehensive
income is limited to the cumulative change in fair value
of the hedged item, determined on a present value
basis, from inception of the hedge. Any ineffective
portion of changes in the fair value of the derivative is
recognised immediately in profit or loss in the Statement
of Comprehensive Income.
The amount accumulated in the hedging reserve
is reclassified to profit or loss in the statement of
comprehensive income in the same period the hedged
expected future cash flows affect the Group’s profit or loss.
If the hedge no longer meets the criteria for hedge
accounting or the hedging instrument expires or is
sold, terminated or exercised, then hedge accounting
is discontinued prospectively. If the hedged future cash
flows are no longer expected to occur, then the amount
accumulated in the hedge reserve is reclassified to
profit or loss in the statement of comprehensive income
immediately.
The Group hedges the net investment in certain foreign
operations by borrowing in the currency of the operations’
net assets. Any gain or loss on the hedging instrument
relating to the effective portion of the hedge is recognised in
other comprehensive income. Gains and losses accumulated
in equity are included as part of the gain or loss on disposal
in the consolidated statement of comprehensive income on
loss of control of the foreign operation.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits
held at call with banks and highly liquid investments with
original maturities of three months or less.
Trade and other payables
Trade and other payables are initially measured at fair
value and are subsequently measured at amortised cost
using the effective interest rate method.
2. CRITICAL JUDGEMENTS AND
ACCOUNTING ESTIMATES IN APPLYING
THE GROUP’S ACCOUNTING POLICIES
The preparation of financial statements in accordance
with generally accepted accounting principles requires
management to make certain judgments, estimates,
and assumptions that affect the reported amounts of
assets, liabilities, income, and expenses. These judgments
and estimates are evaluated on a regular basis and
reflect management’s best estimates, drawing from
historical experience and other relevant factors, including
reasonable expectations of future events. Revisions to
estimates are recognized prospectively. However, actual
results may differ from these estimates due to unforeseen
events or actions, and such differences could be material.
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
Due to the complexity of multi-element contracts which
often include the provision of products and services,
management judgment is required to determine the
appropriate revenue recognition. Management assesses
whether the contract should be accounted for as a single
performance obligation or as multiple performance
obligations.
Notes to the Consolidated Financial Statements (continued)
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
111
Judgment is applied in establishing the criteria for
determining when revenue related to multiple elements
should be recognized and in determining the stand-
alone selling price of each element. The Group typically
determines the stand-alone selling prices of elements
based on prices that are not directly observable, relying
on stand-alone list prices which are then subject to
discounts. These prices are reviewed annually and
adjusted as necessary. This process is undertaken
alongside a fair value assessment of the stand-alone
selling prices to ensure the reasonableness of the
transaction price allocation. Further details regarding
the determination of stand-alone selling prices for the
purpose of allocating the transaction price in multi-
element arrangements can be found in Note 3.
The judgement could materially affect the timing and
quantum of revenue and profit recognised in each period.
Licence revenue in the year amounted to £60.0m (2023:
£61.1m).
Capitalised development costs
The Group capitalises development costs relating to
product development and internally generated software
in line with International Accounting Standard ('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 £14.0m (2023: £19.3m) (see Note 13).
Estimates and assumptions
The key assumptions and estimates concerning the
future and other key sources of estimation uncertainty
at the reporting date, that have significant risk of
causing a material adjustment to the carrying amount
of the assets and liabilities within the next financial year
are discussed below:
Acquisition accounting
Judgement is often required in determining the
identifiable intangible assets acquired as part of a
business combination that must be recognised in the
Group's consolidated financial statements. Estimation is
required in determining both the fair value of all identified
assets, liabilities acquired, any contingent consideration
and in particular intangible assets. In determining these
fair values, a range of assumptions are used, including
forecast revenue, discount rates, and attrition rates
that are specifically related to the intangible asset being
valued. The useful economic lives of these assets is being
estimated using Management's best estimates and
reassessed annually.
Other estimates and assumptions
The consolidated financial statements include other
estimates and assumptions. 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 estimates the total costs to be incurred
on a contract-by-contract basis, and these estimates are
reviewed on an ongoing basis to ensure that the revenue
recognised accurately reflects the proportion of work
completed as of the balance sheet date. All contracts are
of a short-term nature, with the majority of services being
invoiced upon completion. As at the year end, the value
of work in progress amounted to £56.0m (2023: £52.7m).
Changes in the estimated total costs of contracts could, in
aggregate, have a material impact on the carrying amount
of accrued income at the balance sheet date.
Impairment of goodwill and intangible assets
An impairment test of goodwill and other intangible
assets, requires estimation of the value in use (‘VIU’) of
the cash generating units ('CGUs') to which goodwill and
other intangible assets have been allocated. The VIU
calculation requires the Group to estimate the future
cash flows expected to arise from the CGUs, for which
the Group considers revenue growth rates and EBITDA
margin to be a significant estimates. 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.
Key assumptions used by management in estimating
VIU are
Discount rates – Pre tax discount rates which are based
on the Weighted Average Cost of Capital (WACC) of a
typical market participant and reflect market volatility
in risk free rate and equity risk premium inputs . The
discount rates have increased reflecting market volatility
in risk free rate and equity risk premium inputs. See Note
12 for details
Forecast cash flows - based on assumptions from the
approved budget and 3-year plan which incorporate
Management’s best estimates of future cash flows and take
into account future growth and price increases, have proved
to be reliable guides in the past and the Directors believe the
estimates are appropriate. See Note 12 for details of long
term growth rates used outside of the plan period
Terminal growth rates - of 2.0% (2023: 2.0%) was used
for cash flows outside the plan projections. This rate is
conservative and is considered to be lower than the long-
term historic growth rates in the underlying territories in
which the CGUs operate and the long-term growth rate
prospects of the sectors in which the CGUs operate.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
112
1) Language and Content Technology Division
Identification of performance obligations
The Group’s Language and Content Technology contracts
typically include multi-elements performance obligations
in respect of licences, support and maintenance, hosting
services and professional services. Identification of the
performance obligations in such arrangements involves
judgement, more details of the nature and impact of the
judgement are included in Note 2.
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.
Determining transaction prices
At the inception of a contract, a transaction price is agreed,
being the amount, the Group expects to be entitled over the
expected duration of the contract. Such expected amounts
are only included to the extent that it is highly probable no
revenue reversal will occur.
Allocation of transaction prices to performance
obligations
The service contracts typically consist of multiple
components and typically have more than one obligation,
each with its own contract duration as adjudged by
management. Management applies judgement to allocate
the consideration specified in the contract with the customer
to each performance obligation based on the stand-alone
selling price. See below for details.
Revenue recognition
The Group’s contracts for term licences are recognised
upfront when performance obligations are delivered in the
same manner as a perpetual licence sale but, typically, are
billed annually and do not follow the same billing pattern as
the Group’s contracts for perpetual licences, instead billing
follows more closely that of a SaaS licence contract.
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.
Perpetual and term licences software licences have
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 licences using the residual method based upon
other components of the contract. The residual method is
used because the prices of licences are highly variable and
there is no discernible standalone selling price from past
transactions.
Notes to the Consolidated Financial Statements (continued)
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 the 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 uncertain tax positions
('UTPs') was £6.4m (2023: £6.7m), see Note 9.
3. REVENUE FROM CONTRACTS WITH
CUSTOMERS
Accounting policy
Revenue represents transaction prices to which the Group
expects to be entitled in return for delivering goods or
services to its customers. The Group applies the five-step
model in IFRS 15 Revenue from Contracts with Customers
(“IFRS 15”). Prescriptive guidance in IFRS 15 is followed
to deal with specific scenarios requiring management
judgement. The approach taken to evaluate revenue
recognition is consistent across all divisions, although each
contract is considered on a case-by-case basis.
Group contracts have single or multi-elements performance
obligations. 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. Some contracts include performance
obligations in respect of the licences, support and
maintenance, hosting services and professional services.
Software licences are either perpetual, term or software as a
service (SaaS) in nature.
Contract revenue is billed in advance and revenue is deferred
where the performance obligation is satisfied over time. The
Group’s revenue contracts do not include any material future
vendor commitments and thus no allowances for future
costs are made.
The following provides information about the nature and
timing of the satisfaction of performance obligations in
contracts and the related revenue recognition policies,
categorised by reporting segments:
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
113
3) Language Services
Identification of performance obligations
The contracts provide for the Group to be reimbursed for
translation services.
Determining transaction prices
The transaction price is the consideration specified in the
contract.
Allocation of transaction prices to performance
obligations
Each contract has a single performance obligation and
so the whole contract price is assigned to that single
obligation.
Revenue recognition
The Group recognises revenue over time and measures the
completeness of this performance obligation using input
method (cost incurred to date as a proportion of total costs).
4) Regulated Industries
Identification of performance obligations
Regulated Industries services contracts provide for the
Group to be reimbursed for specialist translation services
provided.
Determining transaction prices
The transaction price is as stipulated in the contract.
Allocation of transaction prices to performance
obligations
Contract price is allocated to the sole performance
obligation in the contract.
Revenue recognition
The Group recognises revenue over time and 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.
‘SaaS’ licences have material ongoing performance
obligations associated with them. 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.
A support and maintenance contracts have 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 contract revenue 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.
Professional 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.
2) IP Services
Identification of performance obligations
The Group’s Patent Filing Contracts have one performance
obligation, which is to deliver patent filing or translation
services.
Determining transaction prices
The transaction price is based on the value of services
rendered.
Allocation of transaction prices to performance
obligations
Transaction price is assigned to a single performance
obligation.
Revenue recognition
Revenue is recognised at a point in time for patent filing
services and over time for language translation services.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
114
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
2024
£m
2023
£m
At a point in time
22.4
25.8
Over time
119.9
110.9
Language and Content Technology
142.3
136.7
At a point in time
30.7
22.4
Over time
71.6
82.4
IP Services
102.3
104.8
Over time
327.1
329.8
Language Services
327.1
329.8
Over time
146.5
162.5
Regulated Industries
146.5
162.5
Total revenue from contracts with customers
718.2
733.8
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 IFRS 15 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 £1.5m (2023: £1.7m). Capitalised contract costs are recognised within other debtors on
the statement of financial position.
Receivables, contract assets and contract liabilities with customers
Notes
2024
£m
2023
£m
Net trade receivables
15
125.9
138.6
Net contract assets (accrued income)
15
56.0
52.7
Contract liabilities (deferred income)
17
(41.6)
(49.9)
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 £56.0m (2023: £52.7m). 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 2023 was £47.6m (2023: £49.5m).
Notes to the Consolidated Financial Statements (continued)
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
115
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 assesses the performance of each segment based on the revenue and
adjusted profit before tax. These measures are reconciled to the financial statements on page 157.
The four reporting segments, which match the operating segments, are explained in more detail below:
• 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 Propylon Holdings Ltd in July
2023.
• 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 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.
Unallocated costs reflect corporate overheads and other expenses not directly attributed to segments.
Segment results for the year ended
30 September 2024
L&CT
£m
IP Services
£m
Language
Services
£m
Regulated
Industries
£m
Unallocated
Costs
£m
Group
£m
Revenue from contracts with customers
142.3
102.3
327.1
146.5
-
718.2
Operating profit/(loss) before charging:
34.2
26.9
39.6
19.8
(8.2)
112.3
Amortisation of acquired intangibles
(14.9)
-
(14.0)
(11.9)
-
(40.8)
Impairment losses (see Note 13,14)
-
(22.2)
-
-
-
(22.2)
Acquisition costs
-
-
-
-
(7.2)
(7.2)
Profit on disposal of business
-
30.0
-
-
-
30.0
Exceptional items (see Note 6)
(0.3)
(0.9)
1.0
(1.6)
(1.6)
(3.4)
Share based payment expense
(0.5)
(0.5)
(1.2)
(0.4)
(0.3)
(2.9)
Profit from operations
18.5
33.3
25.4
5.9
(17.3)
65.8
Net finance expense
(5.8)
Profit before taxation
60.0
Taxation
(12.5)
Profit for the year
47.5
Segment results for the year ended
30 September 2023
L&CT
£m
IP Services
£m
Language
Services
£m
Regulated
Industries
£m
Unallocated
Costs
£m
Group
£m
Revenue from contracts with customers
136.7
104.8
329.8
162.5
-
733.8
Operating profit/(loss) before charging:
37.0
27.7
39.4
22.9
(3.2)
123.8
Amortisation of acquired intangibles
(12.0)
(0.1)
(14.4)
(12.3)
-
(38.8)
Impairment Losses (see Note 12)
(62.4)
-
-
-
-
(62.4)
Acquisition costs
-
-
-
-
(5.1)
(5.1)
Exceptional items (see Note 6)
(3.3)
(6.0)
(5.7)
(1.3)
(6.3)
(22.6)
Share based payment expense
(0.2)
-
(0.5)
(0.2)
(0.9)
(1.8)
(Loss)/ profit from operations
(40.9)
21.6
18.8
9.1
(15.5)
(6.9)
Net finance expense
(4.0)
Loss before taxation
(10.9)
Taxation
(16.8)
Loss for the year
(27.7)
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
116
The table below shows revenue by the geographic market in which clients are located.
Revenue by client location
2024
£m
2023
£m
UK
75.4
81.7
Continental Europe
171.0
167.8
United States of America
382.8
393.2
Rest of the World
89.0
91.1
Total
718.2
733.8
The Group does not place reliance on any specific customer and had no individual customers that generated more than
10% or more of its total Group revenue.
The following is an analysis of revenue by the geographical area in which the Group’s undertakings are located.
Revenue by subsidiary location
2024
£m
2023
£m
UK
184.8
191.8
Continental Europe
146.7
156.6
United States of America
315.3
334.6
Rest of the World
71.4
50.8
Total
718.2
733.8
The table below presents the Group's operating assets by geographical location. Goodwill and acquired intangible
assets are excluded, as they support all four divisions across all countries where the Group operates (see Note 12 and 13
for further details on goodwill and intangible assets).
Operating assets by geography
2024
£m
2023
£m
UK
209.8
190.2
Continental Europe
64.3
80.8
United States of America
115.3
128.1
Rest of the World
47.9
59.1
Total
437.3
458.2
Goodwill
570.8
608.6
Acquired intangible assets
198.4
249.0
Current liabilities
(158.4)
(182.6)
Non-current liabilities
(148.5)
(145.9)
Net assets
899.6
987.3
Notes to the Consolidated Financial Statements (continued)
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
117
5. OPERATING PROFIT
Operating (loss)/ profit has been arrived at after charging/(crediting):
2024
£m
2023
£m
Total staff costs (before the capitalisation of internal development costs) (Note 7)
353.9
351.6
Research and development expenditure
38.0
37.0
Depreciation of property, plant and equipment (Note 14)
6.3
7.3
Depreciation of right of use assets (Note 18)
8.2
9.4
Amortisation of intangible assets (Note 13)
54.8
56.9
Impairment of intangible assets (Note 12,13)
11.7
62.4
Impairment of property, plant and equipment (Note 14)
10.5
-
Foreign exchange losses
(5.2)
0.6
Expected credit loss expense (Note 15)
1.6
0.2
(Gain)/ loss on changes in fair values on derivative contracts
(0.4)
(13.6)
Operating lease rentals:
- Property (Note 18)
1.4
1.9
- Plant and equipment (Note 18)
0.5
0.5
Auditor's remuneration
Fees payable to the Company’s auditor for the audit of the Group’s annual financial statements
1.4
1.4
- The audit of subsidiaries of the Company
0.7
0.8
Total audit fees
2.1
2.2
The audit of subsidiary Companies amount includes £0.2m (2023 £0.3m) of fees relating to subsidiary audits for prior
financial years. Non audit fees of £17k (2023: £16k) were incurred in the period in respect of assurance related services.
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 £14.0m (2023:
£19.3m) of development costs in the year, further details can be found in Note 13.
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 results* 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.
2024
Pre-tax
£m
2024
Tax impact
£m
2024
Total
£m
2023
Pre-tax
£m
2023
Tax impact
£m
2023
Total
£m
Group transformation programme
(1.4)
0.3
(1.1)
(5.5)
1.1
(4.4)
Restructuring & integration related costs
(2.2)
0.6
(1.6)
(12.3)
2.9
(9.4)
Legacy payment arrangements
1.7
-
1.7
(4.8)
-
(4.8)
Total exceptional items - operating
(1.9)
0.9
(1.0)
(22.6)
4.0
(18.6)
Amortisation of exceptional finance (Note 8)
(0.2)
-
(0.2)
(0.3)
-
(0.3)
Disposal costs
(1.3)
-
(1.3)
-
-
-
Total exceptional items - excluding profit on disposal of business
(3.4)
0.9
(2.5)
(22.9)
4.0
(18.9)
Profit on disposal of business
30.0
-
30.0
-
-
-
Total exceptional items
26.6
0.9
27.5
(22.9)
4.0
(18.9)
Total exceptional items - financing and profit on disposal
28.5
-
28.5
(0.3)
-
(0.3)
*Underlying results are performance measures that exclude one-off charges or non-recurring events, offering a clearer reflection of the core financial
performance without the influence of unusual or extraordinary items.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
118
A description of the principal items included is provided below:
Profit on disposal of business: During the year the Group disposed of its interest in PatBase a revenue and cost sharing
arrangement venture for £30m. £25m was paid on completion and £5m was received in November 2024.
Transformation costs – £1.4m was incurred during the period in respect of transformation programmes for Finance and
Human Resources initiated as part of a strategic review of the business to drive improved efficiencies in future periods. In
total £2.6m has been paid in the period. The severance costs are expected to be paid during the first half of FY25 and the
ongoing benefits from the integration will be recognised in the operating profit in the Statement of Comprehensive Income.
Restructuring Costs - £1.4m was incurred in respect of severance and termination payments related to the Group’s cost
reduction plans. A total of £5.1m of these costs were paid during the period.
Integration costs - A £0.8m was incurred related to delivering synergies from business
Legacy payments - a £1.7m credit was recognised in the period in respect of ongoing liabilities related to historic agreements
with former owners of the business and their respective families. This credit related to a reduction in the liability after a final
settlement was agreed. A further £0.6m was paid during the period in respect of current year obligations.
Finance costs - £0.2m was incurred related to amortisation expense associated with a gain on debt modification
recognised in previous accounting periods.
In the prior period, exceptional costs included £5.5m of Group transformation costs, £12.3m of restructuring and integration
related costs and £4.8m for legacy payment arrangements. In total £22.6m was charged during the prior period.
Acquisition-related costs
Acquisition-related costs totalled £7.2m (2023: £5.1m) and include a £0.3m contingent payment linked to continued
employment as part of the ST Communications acquisition, contingent consideration of £5.6m (223: £1.2m) in relation to
the acquisition of Propylon and £1.2m (2023: £2.1m) in relation to the acquisition of Fonto, both of which were acquired
in prior years.
These amounts are accounted for in compliance with IFRS 3 Business Combinations and IAS 19 Employee Benefits.
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 Comprehensive Income in the period to which
they become payable.
2024
£m
2023
£m
Wages and salaries
291.5
288.6
Reorganisation costs
1.2
7.6
Social security costs
42.1
43.2
Pension costs
10.5
10.4
Share-based payment expense (Note 22)
2.9
1.8
Total employee costs
348.2
351.6
Details of Directors’ remuneration and pension contributions are disclosed in the Directors’ Remuneration Report
on pages 80 to 87. Key Management's 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 £17.1m (2023: £19.1m).
The Group operates a defined contribution pension scheme, making payments on behalf of employees to their personal
pension plans. Payments of £10.1m (2023: £10.6m) were made in the year. The amount charged to profit and loss in the
Consolidated Statement of Comprehensive Income in the year was £10.5m (2023: £10.4m). At the year end there were
unpaid amounts included in other payables totalling £2.7m (2023: £2.3m).
The monthly average staff numbers were:
2024
No
2023
No
Production staff
6,094
6,248
Administrative staff
1,846
1,860
7,940
8,108
Notes to the Consolidated Financial Statements (continued)
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
119
8. FINANCE INCOME AND COSTS
2024
£m
2023
£m
Finance income
Return on short term deposits
0.9
0.6
0.9
0.6
Finance costs
Bank interest payable
(4.7)
(2.6)
Lease interest
(1.1)
(1.1)
Amortisation of borrowing costs
(0.7)
(0.6)
Finance costs excluding exceptional amortisation
(6.5)
(4.3)
Amortisation of borrowing costs - Exceptional (Note 6)
(0.2)
(0.3)
(6.7)
(4.6)
Net finance cost
(5.8)
(4.0)
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 also have a number of tax returns potentially subject to audit. These tax audits may
give rise to significant tax issues that 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.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
120
Notes to the Consolidated Financial Statements (continued)
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:
2024
£m
2023
£m
Current Tax Charge
UK corporation tax at 25% (2023: 22%)
1.9
4.8
Overseas current tax charge
17.4
17.7
Adjustment in respect of previous years
(4.0)
(2.4)
Deferred Tax Charge
Origination and reversal of temporary differences
(7.5)
(5.9)
Rate change impact
1.3
0.2
Adjustment in respect of previous years
3.4
2.4
Total tax expense in profit or loss
12.5
16.8
Total tax charge in equity
0.1
0.2
Total tax in other comprehensive income
(0.2)
(0.3)
Total tax charge for the year
12.4
16.7
Reconciliation of the Group’s tax charge to the UK statutory rate:
2024
£m
2023
£m
Profit / (loss) before taxation
60.0
(10.9)
Tax charge at UK corporation tax rate of 25% (2023 notional rate: 22%)
15.0
(2.4)
Effects of:
Expenses not deductible for tax purposes
2.7
3.1
Income treated as non taxable
(7.5)
-
Impact of impairment losses
1.9
13.7
Adjustments in respect of previous years
(0.6)
-
Rate change
1.3
0.2
Impact of overseas tax rates
(0.3)
2.2
Tax charge as per the income statement
12.5
16.8
Effective tax rate
20.8%
(154.1)%
Factors that may affect future tax charges
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 lower than the UK’s statutory tax rate due to the impact of the non-taxable
gain on the disposal of the PatBase business, which was treated as tax exempt under the UK’s substantial shareholding
exemption. The impact of this is offset, in part, by non deductibility of acquisition costs, as well as non recoverable
withholding tax suffered of intragroup dividends. 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, and a lower rate in the
Czechia with other rates that lie in between.
The adjustments in respect of prior periods includes a release of a release of historic uncertain tax positions, offset
by new risks identified and provided for during the period. There has also been a recharacterisation of current and
deferred tax assets and liabilities following true ups of filed tax returns.
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 33 countries, transfer pricing arrangements are in place covering
transactions that occur between Group entities.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
121
The Group periodically reviews its historic 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.
The current tax liability of £14.3m on the balance sheet comprises £7.7m of UTPs, although it is not expected that these
will be cash settled within 12 months of the year end date. Of the current tax assets of £5.6m, £1.3m relates to uncertain
tax provisions. The deferred tax liability of £53.5m is net of deferred tax assets and liabilities arising on uncertain tax
provisions of £0.1m.
Pillar Two
On 20 June 2023 the UK enacted Pillar Two legislation which will seek to impose a global minimum tax rate of 15%. The
Group will be within the Pillar Two rules for the period ended 30 September 2025.
The Group has adopted the amendments to IAS 12 which was amended in response to the OECD’s BEPS Pillar Two
rules, which includes a mandatory temporary exception to the recognition and disclosure of deferred taxes arising from
the jurisdictional implementation of the Pillar Two model rules. RWS has applied the mandatory exception and is not
recognising any deferred tax impact
The Group has sought to assess whether they would expect any Pillar Two top up taxes to apply in future periods based
on its current jurisdictional profile, which concluded that the Republic of Ireland is the only jurisdiction that is likely to
be affected. The Republic of Ireland has enacted a minimum corporate tax rate of 15% with effect from 1 January 2024,
increasing the rate from its current 12.5%. The future impact on the Group’s effective tax rate for this impact is expected to
be negligible.
Deferred tax
Share based
payments
£m
Accelerated
capital
allowances
£m
Other
temporary
differences
£m
Acquired
intangibles
£m
Tax losses
£m
Total
£m
At 30 September 2022
0.5
(1.8)
9.8
(75.7)
9.9
(57.3)
Adjustments in respect of prior years
-
(0.1)
(0.1)
0.1
(2.3)
(2.4)
Acquisitions
-
-
-
(1.3)
-
(1.3)
Credited to income
0.2
-
1.7
4.4
(0.6)
5.7
Transfers to current taxes
-
-
-
-
(2.8)
(2.8)
Charged to equity / OCI
(0.2)
-
-
-
-
(0.2)
Foreign exchange differences
-
-
(1.4)
3.4
(0.2)
1.8
At 30 September 2023
0.5
(1.9)
10.0
(69.1)
4.0
(56.5)
Adjustments in respect of prior years
-
(0.6)
(0.5)
0.6
(2.9)
(3.4)
Acquisitions
-
-
-
(0.2)
-
(0.2)
Credited to income
0.5
0.7
(0.9)
7.3
(0.1)
7.5
Rate change
-
-
(0.1)
(1.2)
-
(1.3)
Charged to equity / OCI
(0.1)
-
-
-
-
(0.1)
Foreign exchange differences
-
-
(0.5)
3.1
(0.1)
2.5
At 30 September 2024
0.9
(1.8)
8.0
(59.5)
0.9
(51.5)
Deferred tax assets and liabilities are presented on the balance sheet after jurisdictional netting as follows:
2024
£m
2023
£m
Deferred tax assets
2.0
1.2
Deferred tax liabilities
(53.5)
(57.7)
Net deferred tax liability
(51.5)
(56.5)
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
122
Deferred tax assets and liabilities
Deferred tax is calculated using tax rates that are expected to apply in the period when the liability has been settled
or the asset realised based on tax rates that have been enacted or substantively enacted at the reporting date. Most
deferred tax assets are recognised because they can offset the future taxable income from existing taxable differences
(primarily on acquired intangibles) relating to same jurisdiction or entity. Where there are insufficient taxable
differences, deferred tax assets are recognised in respect of losses and other deductible differences where current
forecasts indicate profits will arise in future periods against which they can be deducted.
Losses
At the balance sheet date the Group has unused tax losses of £95.7m (2023: £113.0m) available for offset against
future profits. A deferred tax asset of £0.9m (2023: £3.9m) has been recognised in respect of £4.5m (2023: £17.7m) of
such losses. The reduction in recognised losses is mainly due to the unwind of deductions arising on corresponding
adjustments that could be claimed on settlement of uncertain tax positions, as well as a classification of available
deductions as a reduction to the current tax liability, as accounted for under International Financial Reporting
Interpretations Committee 23 ('IFRIC 23').
No deferred tax asset has been recognised in respect of the remaining £91.2m (2023: £95.3m) 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 £21.2m (2023: £21.9m).
Recognised deferred tax assets principally relate 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 £2.7m (2023: £4.2m).
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 £84.4m. Since the Group is able to control the timing of reversal of these
temporary differences, a deferred tax liability of £0.9m has been recognised on the unremitted earnings which the
Group anticipate might give rise to a tax charge when distributed. The Group has an estimated unrecognised deferred
tax liability of £3.8m of unremitted earnings where no distributions are expected to be paid in the foreseeable future
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.
2024
£m
2023
£m
Final ordinary dividend for the year ended 30 September 2023 was 9.8p (2022: 9.5p)
36.4
37.0
Interim ordinary dividend, paid 12 June 2024 was 2.45p (2023: 2.4p paid 21 July 2023)
9.1
9.3
45.5
46.3
The Directors recommend a final dividend in respect of the financial year ended 30 September 2024 of 10.0 pence
per ordinary share, to be paid on 14 February 2025 to shareholders who are on the register at 17 January 2025. This
dividend is not reflected in these financial statements as it does not represent a liability at 30 September 2024. The final
proposed dividend will reduce shareholders’ funds by an estimated £36.9m.
Notes to the Consolidated Financial Statements (continued)
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
123
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:
2024
£m
2023
£m
2024
Basic earnings
per share
pence
2023
Basic earnings
per share
pence
2024
Diluted earnings
per share
pence
2023
Diluted
earnings
per share
pence
Profit /(loss) for the year
47.5
(27.7)
12.8
(7.1)
12.8
(7.1)
Adjustments:
Amortisation of acquired intangibles
40.8
38.8
Impairment losses
22.2
62.4
Acquisition costs
7.2
5.1
Share based payments expense
2.9
1.8
Net gain of debt modification
0.2
0.3
Exceptional items
(26.6)
22.6
Tax effect of adjustments
(14.1)
(12.8)
Tax adjustments in respect of prior years
-
-
Adjusted earnings
80.1
90.5
21.6
23.3
21.6
23.3
2024
Number
2023
Number
Weighted average number of ordinary shares in issue for basic earnings
371,315,586
388,231,290
Dilutive impact of share options
490,640
30,688
Weighted average number of ordinary shares for diluted earnings
371,806,226
388,261,978
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
124
12. GOODWILL
Cost and net book value
2024
£m
2023
£m
At 1 October
608.6
692.6
Additions (Note 24)
0.3
12.9
Impairment
-
(62.4)
Exchange adjustments
(38.1)
(34.5)
At 30 September
570.8
608.6
Accounting policy
Goodwill arising on business combinations (representing the excess of fair value of the consideration given over
the fair value of the separable net assets acquired) is capitalised, and its subsequent measurement is based on
annual impairment reviews, with any impairment losses recognised immediately in profit or loss in the statement of
comprehensive income. Direct costs of acquisition are recognised immediately in profit or loss in the statement of
comprehensive income as an expense.
At least annually, or when otherwise required, the 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 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 Comprehensive Income, 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 2024
Long-term
growth rate
Discount rate
Average
revenue growth
Average
EBITDA margin
IP Services
2.0%
13.0%
4.6%
23.2%
Regulated Industries
2.0%
13.3%
2.0%
19.0%
Language Services
2.0%
13.3%
3.4%
17.5%
Language and Content Technology
2.0%
14.5%
6.7%
31.4%
Key assumptions for the value in use
- 30 September 2023
IP Services
2.0%
14.3%
4.0%
29.7%
Regulated Industries
2.0%
15.2%
2.7%
21.9%
Language Services
2.0%
15.1%
2.9%
17.2%
Language and Content Technology
2.0%
17.4%
8.7%
36.3%
Notes to the Consolidated Financial Statements (continued)
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
125
The Group has four CGUs and in accordance with IAS 36, Management performed a value in use impairment test at 30
September 2024. 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.
The trading projections for the five-year period underpinning the value-in-use reflect assumptions for EBITDA margins.
The EBITDA margin is based on a number of elements of the operating model over the longer-term, including pricing
trends, volume growth and the mix of complexity of translation activity and assumptions regarding cost inflation.
As part of the value-in-use calculation, Management prepares cash flow forecasts derived from the most recent financial
budgets as approved by the Board of Directors and extrapolates the cash flows for future years based on estimated
growth rates which are based on Management’s best estimate of 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 allocation of goodwill to each of
the CGUs is as shown in the table below:
The allocation of goodwill to each CGU is as follows:
2024
£m
2023
£m
IP Services
30.8
33.2
Regulated Industries
133.1
141.8
Language Services
208.1
223.9
Language and Content Technology
198.8
209.7
At 30 September
570.8
608.6
Goodwill assessment
The value-in-use calculations performed confirm that the recoverable goodwill amount for all CGUs exceed their asset
carrying value.
Additionally, the Group has considered other reasonable possible changes to the assumptions underpinning the
Language and Content Technology CGU valuations that would need to occur and which would cause an impairment as
follows:
EBITDA margin: By assuming the actual FY24 EBITDA margin (29.8%) across the projection period while keeping all other
factors consistent with the base model, we have noted an impairment of £20m at the mid range of the WACC which is a
reasonable possible change.
Revenue growth: adjusting revenue growth by 1% impacts the value in use by approximately £14m which is a reasonable
possible change.
Discount factor (WACC): There is evidence of reasonable possible change at the higher end of WACC sensitivity (+100bps)
which causes the headroom to be £0m.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
126
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
5 to 8 years
Clinician database
10 years
Supplier database
13 years
Technology
3 to 7 years
Non-compete clauses
5 years
Trademarks
5 years
Client relationships
7 to 20 years
Notes to the Consolidated Financial Statements (continued)
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 and development
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.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
127
Trade
names
£m
Clinician
& supplier
databases
£m
Technology
£m
Non-
compete
&
trademarks
£m
Client
relationships
& order
books
£m
Software
£m
Internally
generated
software
£m
Total
£m
Cost
At 30 September 2022
0.4
7.6
142.2
2.5
367.5
13.5
20.3
554.0
Additions
-
-
15.4
-
-
2.5
18.6
36.5
Transfers
-
-
(1.0)
-
-
-
1.0
-
Acquisitions (Note 24)
0.7
-
3.1
-
8.0
-
-
11.8
Disposals
-
-
-
-
-
(0.6)
(3.7)
(4.3)
Currency translation
-
(0.6)
(1.2)
(0.2)
(23.9)
(0.2)
(0.1)
(26.2)
At 30 September 2023
1.1
7.0
158.5
2.3
351.6
15.2
36.1
571.8
Additions
-
-
11.2
-
-
0.1
29.2
40.5
Transfers
-
-
-
-
-
(11.2)
11.2
-
Acquisitions (Note 24)
-
-
-
-
-
-
-
-
Disposals
-
-
-
-
-
-
(4.0)
(4.0)
Currency translation
(0.1)
(0.6)
(1.3)
(0.2)
(25.0)
(0.7)
1.4
(26.5)
At 30 September 2024
1.0
6.4
168.4
2.1
326.6
3.4
73.9
581.8
Accumulated amortisation and impairment
At 30 September 2022
-
4.6
39.5
2.5
107.3
9.3
5.4
168.6
Amortisation charge
0.1
0.7
23.8
-
26.4
2.0
3.9
56.9
Disposals
-
-
-
-
-
(0.6)
(3.7)
(4.3)
Currency translation
-
(0.4)
(0.5)
(0.2)
(7.5)
(0.1)
(0.1)
(8.8)
At 30 September 2023
0.1
4.9
62.8
2.3
126.2
10.6
5.5
212.4
Amortisation charge
0.2
0.6
22.6
-
25.8
0.3
5.3
54.8
Impairment
-
-
-
-
-
-
11.7
11.7
Disposals
-
-
-
-
-
-
(4.0)
(4.0)
Transfers
-
-
-
-
-
(7.4)
7.4
-
Currency translation
-
(0.4)
(0.6)
(0.2)
(10.3)
(0.5)
1.9
(10.1)
At 30 September 2024
0.3
5.1
84.8
2.1
141.7
3.0
27.8
264.8
Net book value
At 30 September 2022
0.4
3.0
102.7
-
260.2
4.2
14.9
385.4
At 30 September 2023
1.0
2.1
95.7
-
225.4
4.6
30.6
359.4
At 30 September 2024
0.7
1.3
83.6
-
184.9
0.4
46.1
317.0
Amortisation of acquired intangibles was £40.8m (2023: £38.8m) and amortisation of other intangibles was £14.0m
(2023: £18.1m). The £14.0m amortisation of other intangibles includes £5.3m on internally developed intangibles (2023:
£3.9m) and £8.4m (2023: £12.2m) of technology which related to the SDL business. The Group has identified intangible
assets which are individually material as follows:
• SDL technology products acquired of £38.0.m (2023: £49.8m) with a remaining useful life of 3 years
• SDL's Helix platform of £7.9m (2023: £12.6m) with a remaining useful life of 3 years
• SDL's customer relationships of £86.8m (2023:£104.3m) with a remaining useful life of 7 years
• Moravia's customer relationships of £72.3m (2023: £85.4m) with a remaining useful life of 13 years and
• Life Science’s customer relationships of £5.3m (2023: £8.2m) with a remaining useful life of 3 years.
No other classes of intangible asset hold individually material items. The remaining average useful life is 9 years.
Following a review of historical transformation activities during the year, it was concluded that due to IP Services
embarking on an alternative solution to satisfy their need to streamline and modernise its customer engagement
processes, historical intangible assets which related to a previous solution were now impaired. The Group has
recognised £11.7m impairment in the current year.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
128
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
Nil
Buildings
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
Notes to the Consolidated Financial Statements (continued)
Included within freehold land and buildings at 30 September 2024 was freehold land of £5.1m (2023: £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 (2023: None).
Freehold land
and buildings
£m
Leasehold land,
buildings and
improvements
£m
Furniture and
equipment
£m
Motor
vehicles
£m
Total
£m
Cost
At 30 September 2022
17.0
9.3
34.6
0.2
61.1
Currency translation
-
(0.2)
-
-
(0.2)
Additions
-
0.1
3.7
-
3.8
Acquisitions
-
-
0.1
-
0.1
Disposals
-
(1.2)
(2.7)
(0.1)
(4.0)
At 30 September 2023
17.0
8.0
35.7
0.1
60.8
Currency translation
-
(0.4)
(1.9)
-
(2.3)
Additions
-
0.2
2.4
-
2.6
Acquisitions (Note 24)
-
-
-
-
-
Disposals
-
(0.6)
(2.2)
-
(2.8)
At 30 September 2024
17.0
7.2
34.0
0.1
58.3
Accumulated depreciation
At 30 September 2022
2.5
4.2
22.9
0.2
29.8
Currency translation
-
0.1
(0.2)
-
(0.1)
Depreciation charge
0.2
1.3
5.8
-
7.3
Disposals
-
(0.9)
(2.7)
(0.1)
(3.7)
At 30 September 2023
2.7
4.7
25.8
0.1
33.3
Currency translation
-
(0.2)
(2.3)
-
(2.5)
Depreciation charge
0.2
1.2
4.9
-
6.3
Impairment
10.5
-
-
-
10.5
Disposals
-
(0.6)
(2.2)
-
(2.8)
At 30 September 2024
13.4
5.1
26.2
0.1
44.8
Net book value
At 30 September 2022
14.5
5.1
11.7
-
31.3
At 30 September 2023
14.3
3.3
9.9
-
27.5
At 30 September 2024
3.6
2.1
7.8
-
13.5
The Group recorded a £10.5m impairment on its revalued freehold building at 1-3 Chalfont St Peter after a recent
revaluation lowered its value from £14.0m to £3.5m. The revaluation took place as part of a Group property portfolio
review, where different options, including the disposal of certain freehold interests, were considered. No impairment
losses related to tangible assets were recognised in the Group income statement in FY23. The valuation was carried out
by a third party valuer and was a level 3 valuation as it was based on spot market value on the valuation date.
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.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
129
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.
Upon reviewing the outstanding balance of other receivables, management determined that these receivables do not
present a credit risk due to their short life expectancy and the nature of their contractual terms.
Other receivables represent security deposits held in respect of office leases, recoverable taxes and capitalised
contract costs.
2024
Gross
2024
Provisions
2024
Net
2023
Gross
2023
Provisions
2023
Net
Trade receivables
129.3
(3.4)
125.9
140.4
(1.8)
138.6
Other receivables
10.7
-
10.7
6.0
-
6.0
Prepayments
18.6
-
18.6
15.0
-
15.0
Accrued income
56.1
(0.1)
56.0
53.2
(0.5)
52.7
At 30 September
214.7
(3.5)
211.2
214.6
(2.3)
212.3
Trade receivables net of allowances are held in the following currencies at the
reporting date:
2024
£m
2023
£m
Sterling
4.3
5.6
Euros
30.3
29.9
Japanese Yen
2.3
2.5
US Dollars
81.5
93.4
Swiss Francs
1.8
1.2
Other
5.7
6.0
125.9
138.6
The following table provides information about the exposure to
credit risk for trade receivables at 30 September 2024:
Gross
amount
£m
Loss
allowance
£m
Net amount
£m
Not past due
93.2
-
93.2
Past due 1-30 days
14.3
-
14.3
Past due 31-60 days
5.5
-
5.5
Past due 61-90 days
4.6
-
4.6
Past due > 90 days
11.7
(3.4)
8.3
129.3
(3.4)
125.9
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
130
The following table provides information about the exposure to
credit risk for trade receivables at 30 September 2023:
Gross
amount
£m
Loss
allowance
£m
Net amount
£m
Not past due
105.0
-
105.0
Past due 1-30 days
15.7
-
15.7
Past due 31-60 days
7.1
-
7.1
Past due 61-90 days
3.9
(0.2)
3.7
Past due > 90 days
8.7
(1.6)
7.1
140.4
(1.8)
138.6
Movement in expected credit loss provisions:
Trade
debtors
2024
Accrued
income
2024
Trade
debtors
2023
Accrued
income
2023
At 1 October
1.8
0.5
2.3
0.5
Utilised
-
-
(0.6)
-
Released
-
(0.4)
-
-
Charge for the year
1.6
0.1
0.2
-
Exchange adjustment
(0.1)
-
(0.1)
-
At 30 September
3.3
0.2
1.8
0.5
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.
Borrowings are derecognised from the Consolidated Financial Statements when the contractual obligation is
discharged, canceled, or expires. Any difference between the carrying amount of the financial liability extinguished
or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities
assumed, is recognized in the Consolidated Income Statement as either Other Income or Finance Expense.
If an existing financial liability is replaced with a new one from the same lender under substantially different terms,
or if the terms of an existing liability are significantly modified, the transaction is treated as the derecognition of the
original liability and the recognition of a new liability. The resulting difference in carrying amounts is recorded in the
Consolidated Income Statement.
2024
£m
2023
£m
Due in more than one year
Loan
76.0
54.7
Issue costs
(1.6)
(2.1)
At 30 September
74.4
52.6
Analysis of net debt 30 September 2024
At 1 October
£m
Acquired
£m
Cash flows
£m
Non-cash
charges
£m
At 30 September
£m
Cash and cash equivalents
76.2
-
(9.5)
(5.2)
61.5
Issue costs
2.1
-
-
(0.5)
1.6
Loans (current and non-current)
(54.7)
-
(22.9)
1.6
(76.0)
Net debt excluding lease liabilities ("Net debt”)
23.6
-
(32.4)
(4.1)
(12.9)
Lease liabilities
(33.5)
-
9.5
(3.2)
(27.2)
Net debt including lease liabilities
(9.9)
-
(22.9)
(7.3)
(40.1)
Notes to the Consolidated Financial Statements (continued)
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
131
Analysis of net debt 30 September 2023
At 1 October
£m
Acquired
£m
Cash flows
£m
Non-cash
charges
£m
At 30 September
£m
Cash and cash equivalents
101.2
3.3
(23.1)
(5.2)
76.2
Issue costs
2.9
-
-
(0.8)
2.1
Loans (current and non-current)
(32.2)
-
(24.0)
1.5
(54.7)
Net debt excluding lease liabilities ("Net debt”)
71.9
3.3
(47.1)
(4.5)
23.6
Lease liabilities
(46.7)
(0.3)
11.9
1.6
(33.5)
Net debt including lease liabilities
25.2
3.0
(35.2)
(2.9)
(9.9)
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$100m
uncommitted accordion facility.
On 3 August 2024, the Group exercised its option to extend the maturity of its US$220m Revolving Credit Facility by
one year, moving the loan's maturity date from August 3, 2026, to August 6, 2027. The terms of the facility, including the
interest rate, remained unchanged. This extension did not qualify as a significant loan modification under IFRS 9.
All transaction costs incurred in amending and re-stating the RCF were capitalised and are being amortised over the
extended maturity period of the facility on a straight-line basis. Currently all Group borrowings under the RCF are
denominated in US Dollars or Sterling.
17. TRADE AND OTHER PAYABLES
2024
£m
2023
£m
Due in less than one year
Trade payables
25.1
25.7
Other taxes and social security costs
1.8
4.5
Other payables
11.2
11.5
Accruals
46.6
58.1
Contingent consideration
1.8
2.4
Deferred income
41.2
47.6
At 30 September
127.7
149.8
The contingent consideration of £1.8m comprises £1.5m for the acquisition of Propylon in the prior period and £0.3m
for the acquisition of ST Comms. These amounts are being accrued on a straight-line basis and are payable on the
anniversary of the respective transactions. The prior period amount included £1.2m of contingent consideration for
Liones Holdings B.V. and £1.2m of contingent consideration for Propylon. Both amounts were settled during the period.
The carrying amount of trade and other payables approximates to their fair value. Trade payables normally fall due
within 30 to 60 days.
2024
£m
2023
£m
Due in more than one year
Deferred income
0.4
2.3
At 30 September
0.4
2.3
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
132
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 specified assets.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the designated 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 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.
Notes to the Consolidated Financial Statements (continued)
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
133
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, these are all property related.
Right-of-use assets
Total
£m
At 1 October
39.0
Leased assets acquired on acquisition
0.3
Additions
1.0
Depreciation expense
(9.4)
Re-measurement adjustments
(2.4)
Currency adjustment
(1.0)
At 30 September 2023
27.5
Additions
2.9
Depreciation expense
(8.2)
Re-measurement adjustments
1.6
Currency adjustment
(1.1)
At 30 September 2024
22.7
Set out below are the carrying amounts of lease liabilities and the movements during the year:
Lease liabilities
2024
£m
2023
£m
At 1 October
33.5
46.7
Additions
2.9
1.0
Leases acquired on acquisition (see Note 24)
-
0.3
Accretion of interest
1.1
1.1
Re-measurement adjustments
0.4
(2.4)
Repayments
(9.5)
(11.9)
Currency adjustment
(1.2)
(1.3)
At 30 September
27.2
33.5
Current
8.5
9.9
Non-current
18.7
23.6
The maturity analysis of lease liabilities is disclosed in Note 20.
2024
£m
2023
£m
Depreciation expense on right of use assets
8.2
9.4
Interest expense on lease liabilities
1.2
1.1
Expense relating to short term leases*
1.4
1.9
Expense relating to leases of low value assets*
0.5
0.5
Total amount recognised in profit or loss
11.3
12.9
*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 £9.5m (2023: £11.9m). The Group had no non-cash additions to right-
of-use assets and lease liabilities in the year (2023: £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.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
134
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 £8.9m (2023:£10.4m). 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
Indirect tax
related
£m
Dilapidations
£m
Severance
£m
Other
provisions
£m
Total
£m
At 1 October
3.4
1.4
6.8
5.7
17.3
Charged in the period
1.3
0.1
0.5
0.2
2.1
Utilised
(0.6)
(0.2)
(5.5)
(0.7)
(7.0)
Released
(1.3)
-
-
(1.7)
(3.0)
At 30 September 2024
2.8
1.3
1.8
3.5
9.4
Due in less than one year
2.8
0.3
1.8
3.0
7.9
Due in greater than one year
-
1.0
-
0.5
1.5
At 30 September 2024
2.8
1.3
1.8
3.5
9.4
Due in less than one year
-
0.4
6.8
0.4
7.6
Due in greater than one year
3.4
1.0
-
5.3
9.7
At 30 September 2023
3.4
1.4
6.8
5.7
17.3
Indirect tax related provisions comprise £0.4m in respect of Service Tax Declarations made by the Group’s Brazilian subsidiary for
periods that are still open to audit. Of the brought forward indirect tax provision, £0.6m was used to participate in a Brazilian tax
amnesty to cover the Service Tax Declarations for the period between 2008 – 2012 which was being investigated by the Brazilian
Tax Authorities, with the remaining provision of £1.3m being released.
A further £1.9m of the Indirect tax related provisions relates to potential penalties and interest that would be payable in respect
of the Groups uncertain tax provisions as well estimated interest and penalties that would be due in relation to ongoing tax
enquiries. The timing of the payment is uncertain at the reporting date. Additional indirect tax provisions of £0.3m were raised
in the year for VAT liabilities that could arise in respects of the Group’s European subsidiaries, as well as a £0.2m provision for
employment taxes that could be payable in respect of the Group’s operations in Argentina.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
135
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.Included within Other Provisions are the following:
Provisions for future severance liabilities, totalling £1.9m remain in relation to redundancies to be incurred as part of the
Group's continuing transformation and cost reduction programmes. These amounts have been recorded in accordance
with the criteria defined in IAS37 and are expected to be settled within the next 12 months
£2.0m relates to ongoing historic agreements with the former owners of the business and their respective families. One
of these agreements will now be settled in FY25 for £1.7m, resulting in a £1.7m provision release.
£1.2m relates to TFR severance liabilities required under article 2120 of the Italian Civil Code. This provision has been
valued in accordance with the requirements of IAS 19 as it represents long term benefits payable to employees of the
Group’s Italian subsidiary. The timing of the payment is uncertain at the reporting date.
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”).
2024
£m
2023
£m
Financial Assets
Trade and other receivables
193.3
197.3
Cash and cash equivalents
61.5
76.2
254.8
273.5
Financial Liabilities
Loans
74.4
52.6
Trade and other payables
86.1
97.7
Lease liabilities
27.2
33.5
187.7
183.8
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 2024 is £76.0m (2023: £54.7m), 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.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
136
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 and cash equivalents, which at 30 September 2024 amounted to £61.5m (2023: £76.2m),
the Group has an overdraft facility of £1.5m (2023: £1.5m) which is unsecured. The reference interest rate on this facility
is SONIA with the margin being 200 basis points. This overdraft was undrawn as at year end.
Any surplus funds are invested in Pound Sterling 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 2024
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
74.4
90.3
5.0
5.1
80.2
-
Trade and other payables
86.1
86.1
86.1
-
-
-
Lease liabilities
27.2
29.8
8.9
5.9
11.6
3.4
187.7
206.2
100.0
11.0
91.8
3.4
Contractual cash flows at
30 September 2023
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
52.6
70.7
4.2
4.2
62.3
-
Trade and other payables
97.7
97.7
97.7
-
-
-
Lease liabilities
33.5
35.1
10.4
7.0
11.5
6.2
183.8
203.5
112.3
11.2
73.8
6.2
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 Pound Sterling overdraft is utilised, it attracts an interest rate of base rate plus a margin of 200 basis points.
The Group’s US$220m Revolving Credit Facility (“RCF”) matures on 6 August 2027 and incurs interest at a rate based
on Secured Overnight Financing Rate ("SOFR") 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.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
137
Exposure to interest rate risk
Interest rate profile of interest-bearing assets and liabilities - Variable rate instruments
2024
£m
2023
£m
Financial assets - Cash and cash equivalents
Sterling
3.9
8.9
US Dollars
14.3
25.1
Euros
9.9
14.1
Yen
6.1
3.7
Swiss Francs
1.5
1.4
Other
25.8
23.0
61.5
76.2
Financial liabilities – Loan
Sterling
74.4
42.0
US Dollars
-
10.6
74.4
52.6
If interest rates changed by 500 bps it is estimated that Group profit before tax would change by £3.7m (2023: £2.6m).
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. During the year ended 30 September 2024, the Group
exercised this option to extend maturity and a final extended maturity date of 6 August 2027 was agreed.
Under the terms of the ARA, the Group’s interest margin over the 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$100m 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 £61.5m at 30 September 2024, are predominantly held 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 (2023: nil).
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
138
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 66% (2023: 65%) of Group external sales in the reporting period were denominated in US Dollars, while a
further 20% were denominated in Euros (2023: 21%). Similarly, the Group’s cost base was 33% in US Dollars (2023: 39%)
and 21% in Euros (2023: 22%).
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 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 overseas 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 designates its forward foreign exchange contracts as cash flow hedges in
accordance with IFRS 9 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:
Assets
2024
£m
Assets
2023
£m
Liabilities
2024
£m
Liabilities
2023
£m
Euros
43.6
47.3
13.9
21.4
US Dollars
137.8
154.8
15.0
67.0
181.4
202.1
28.9
88.4
Foreign currency sensitivity analysis
The following table details the Group’s sensitivity to a 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.
Profit and loss impact 2024
£m
Profit and loss impact 2023
£m
Euros
4.9
4.3
US Dollars
20.5
14.6
25.4
18.9
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.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
139
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 US Dollar functional CGU). Any changes in the fair
value of cash flow hedges outstanding at the reporting date, would be recognised in a separate hedge reserve in equity
and recycled to the statement of comprehensive income as these costs are settled.
To safeguard the Group's strong balance sheet and mitigate cash flow risks, the Group hedged its US Dollar-
denominated loan. During the year, the loan (FY23 £54.7m) was repaid, and the hedge was terminated. Consequently,
a balance of £3.1m from the hedge reserves was transferred to the translation reserve. During the year ended 30
September 2024, no ineffectiveness was recorded in the Group’s statement of comprehensive income (2023: £Nil). All
amounts recorded in the hedge reserve pertain to continuing hedging relationships as at 30 September 2023.
At the year end the Group had no cash flow hedges, which take the form of forward foreign exchange contracts, in
place.
Assets
2024
£m
Assets
2023
£m
Liabilities
2024
£m
Liabilities
2023
£m
Forward foreign currency exchange contracts
-
-
-
-
Hedging reserve
2024
2023
At 1 October 2023
(3.5)
(5.5)
Cashflow hedges - fair value movement
-
0.5
Transfer to currency reserve
3.1
-
Net investment hedge
0.4
1.5
At 30 September 2024
-
(3.5)
Capital risk
The Group considers its capital to comprise its ordinary share capital, share premium, other reserves and accumulated
retained earnings. In managing its capital, the Group’s primary objective is to ensure its continued ability to provide
a consistent return for its equity shareholders, through a combination of capital growth and distributions. The Group
has historically considered equity funding as the most appropriate form of capital for the Group, but debt financing has
been introduced where it was felt that the benefits exceed the risks and costs to equity shareholders of further equity
financings.
At 30 September 2024, there was £74.4m (2023: £52.6m) 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 £61.5m (2023: £76.2m).
The Group funds dividend payments to shareholders through the profitability of its subsidiaries which are contributed
between the subsidiary and the ultimate parent company, RWS Holdings plc. The 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.
Fair value measurement of financial assets and liabilities
The Group uses the following hierarchy for determining and disclosing the fair value of its financial instruments:
• Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly (level 2); and
• Inputs for the assets or liabilities that are not based on observable market data (level 3).
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
140
Notes to the Consolidated Financial Statements (continued)
21. SHARE CAPITAL AND RESERVES
2024
Number
2024
£m
2023
Number
2023
£m
Authorised
Ordinary shares of 1 pence each
500,000,000
5.0
500,000,000
5.0
Allotted, called up and fully paid
At beginning of year
381,603,326
3.8
389,463,810
3.9
Issue of shares
-
-
16,709
-
Purchase of own shares
(12,885,346)
(0.1)
(7,877,193)
(0.1)
At end of year
368,717,980
3.7
381,603,326
3.8
During the year, nil ordinary shares of 1p each (2023: 16,709) were allotted under the former SDL Save as You Earn
schemes.
In line with the share repurchase programme that the Company announced on 8 June 2023, in FY24 12,885,346
(FY23 7,877,193) shares were acquired on the open market and cancelled. The cost of the shares was £30.4m (FY23:
£19.4m).
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.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
141
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 £2.9m relating to share-based payments in the year ended 30 September 2024, as follows;
2024
2023
Scheme
Equity-settled
£m
Cash-settled
£m
Total
£m
Equity-settled
£m
Cash-settled
£m
Total
£m
Save As You Earn ("SAYE") scheme
-
-
-
-
-
-
LTIPs
1.3
0.1
1.4
1.8
-
1.8
RSA
1.5
-
1.5
-
-
-
Executive Share Option Plan ("ESOP')
-
-
-
-
-
-
Deferred consideration
-
-
-
-
-
-
2.8
0.1
2.9
1.8
-
1.8
Summary of movements in awards
RSA
LTIPs
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 2022
-
2,381,371
554,172
844,151
44,867
2.088
Granted during the year
-
2,723,622
287,292
-
-
0.354
Lapsed during the year
-
(1,376,547)
(391,064)
(66,140)
(28,158)
1.177
Exercised during the year
-
-
-
-
(16,709)
3.348
Balance at 30 September 2023
-
3,728,446
450,400
778,011
-
1.348
Exercisable at 30 September 2023
-
-
-
-
-
Granted during the year
1,039,043
4,325,498
499,627
-
-
0.192
Lapsed during the year
(117,093)
(1,370,943)
(333,017)
(219,738)
-
1.246
Exercised during the year
-
-
-
-
-
-
Balance at 30 September 2024
921,950
6,683,001
617,010
558,273
-
0.609
Exercisable at 30 September 2024
-
-
-
-
-
-
The weighted average share price at the date of exercise of shares exercised during the year was nil pence per share (2023:
388.9 pence). The weighted average remaining contractual life of outstanding options at the end of the year was 11.0 years
(2023: 11.0 years). The aggregate fair value of options granted in the year was £11.2m (2023: £9.0m).
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
142
Notes to the Consolidated Financial Statements (continued)
Long term incentive plan ("LTIP")
On 22 January 2021, the Company adopted a long term incentive plan ("LTIP") 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. In
2024, the Company revised the vesting conditions for newly granted awards. The updated performance measures
include earnings per share (EPS), a non-market performance condition; Total Shareholder Return (TSR), a market-based
performance condition; and Cash Conversion, another non-market performance condition. The new awards are evenly
allocated across EPS performance, TSR performance, and Cash Conversion performance. LTIP 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
2023
Number
Granted
during
the year
Number
Exercised
during
the year
Number
Lapsed
during
the year
Number
30 September
2024
Number
Exercise
price
pence
Exercise
period
24 January 2022
1,145,392
-
-
(256,736)
888,656
1
24 Jan 2025 - 24 Jan 2032
24 January 2023
2,408,042
-
-
(585,805)
1,822,237
1
24 Jan 2026 - 24 Jan 2033
30 June 2023
175,012
-
-
(19,429)
155,583
1
1 Jul 2026 - 1 Jul 2033
24 January 2024
-
4,013,228
-
(508,973)
3,504,255
nil
24 Jan 2027 - 24 Jan 2034
01 July 2024
-
122,362
-
-
122,362
nil
24 Jan 2027 - 24 Jan 2034
23 September 2024*
-
189,908
-
-
189,908
nil
23 Sep 2026 - 24 Sep 2028
Total
3,728,446
4,325,498
-
(1,370,943)
6,683,001
* Retention award granted to CFO without performance conditions, subject only to continued service. See pages 86 and 87.
Restricted Stock Awards ("RSA")
On 24 January 2024, the Company granted nil-cost options under the LTIP, referred to as Restricted Stock Awards ("RSA")
to participants. The RSA Options vest on 24 January 2025 and are subject to the achievement of non-market performance
conditions as well as continued employment at vesting date. 100% of the RSA options will vest if personal performance is
satisfactory or better and 0% if personal performance is less than satisfactory. These option grants are settled on exercise
via the issue of new ordinary shares.
Date of grant
1 October
2023
Number
Granted
during
the year
Number
Exercised
during
the year
Number
Lapsed
during
the year
Number
30 September
2024
Number
Exercise
price
pence
Exercise
period
24 January 2024
-
1,039,043
-
(117,093)
921,950
nil
25 Jan 2025 - 24 Jan 2034
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
1 October
2023
Number
Granted
during
the year
Number
Exercised
during
the year
Number
Lapsed
during
the year
Number
30 September
2024
Number
Exercise
price
pence
Exercise
period
22 February 2021
120,220
-
-
(44,751)
75,469
472
1 Apr - 30 Sep 2024
17 February 2022
91,544
-
-
(40,845)
50,699
504
1 Apr - 30 Sep 2025
10 February 2023
238,636
-
-
(159,582)
79,054
361
1 Apr - 30 Sep 2026
10 February 2024
-
499,627
-
(87,839)
411,788
208
1 Apr - 30 Sep 2027
Total
450,400
499,627
-
(333,017)
617,010
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
143
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
1 October
2023
Number
Granted
during
the year
Number
Exercised
during
the year
Number
Lapsed
during
the year
Number
30 September
2024
Number
Exercise
price
pence
Exercise
period
10 May 2019
216,556
-
-
-
216,556
601.0
10 May 2024 - 10 May 2029
22 January 2020
538,660
-
-
(210,117)
328,543
615.0
22 Jan 2025 - 22 Jan 2030
9 June 2021
22,795
-
-
(9,621)
13,174
613.0
9 Jun 2026 - 9 Jun 2031
Total
778,011
-
-
(219,738)
558,273
The fair value of share options granted during the year under the SAYE scheme and LTIP award relating to the Non Market
related performance condition were estimated using the Black-Scholes option pricing model. The share options granted
under the LTIP award relating to the market performance condition (TSR performance condition) were valued using the
Monte Carlo model. Equity settled options under the SAYE scheme and the LTIP scheme 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
RSA
LTIP -Market
No Holding
condition
LTIP - Non Market
No Holding
condition
LTIP - Market
Holding
Condition
LTIP - Non
Market
Holding
Condition
Weighted average share price at grant (pence)
222.2
248
248
248
248
248
Weighted average exercise price (pence)
802
nil
nil
nil
nil
nil
Expected life of option (years)
3
1
3
3
3
3
Volatility (%)
51.0%
46.4
41.7%
41.7%
41.7%
41.7%
Dividend yield (%)
nil
nil
nil
nil
nil
nil
Risk free interest rate (%)
4.18%
4.55%
4.02%
4.02%
4.02%
4.02%
Fair value (pence)
90
248
149
248
123
205
23. CASH AND CASH EQUIVALENTS
2024
£m
2023
£m
Cash at bank and in hand
52.4
68.5
Short-term deposits
9.1
7.7
61.5
76.2
The fair value of cash and cash equivalents is £61.5m (2023: £76.2m). Restricted cash at 30 September 2024 was £Nil
(2023: £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.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
144
Notes to the Consolidated Financial Statements (continued)
24. ACQUISITIONS
ST Comms Language Specialist Proprietary Limited (“ST Communications”)
On 3 October 2023, the Group acquired ST Comms Language Specialists Proprietary Limited (“ST Communications”),
a Cape Town based language services provider for an initial consideration of £0.6m (US$0.675m) on a cash and debt
free basis with additional contingent consideration, deemed as remuneration of £0.5m (US$0.675m) due in two equal
instalments on the first and second anniversary of the transaction.
The fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill were as follows:
The provisional fair value of identifiable assets and liabilities
acquired, purchase consideration and goodwill were as follows:
Fair values
£m
Net assets acquired:
Trade and other receivables
0.3
Cash and cash equivalents
0.1
Trade and other payables
(0.1)
Total identifiable net assets
0.3
Goodwill
0.3
Total consideration
0.6
The fair value of the total amounts paid and payable
are as follows:
Non-contingent
consideration £m
Deemed Remuneration
payable £m
Total consideration
£m
Cash consideration payments made in the current period
0.6
-
0.6
Contingent consideration recorded in the current period and
payable in cash
-
0.3
0.3
Future contingent consideration payable in cash
-
0.2
0.2
Total consideration
0.6
0.5
1.1
The difference between the total consideration and the carrying value of the acquired assets and liabilities was allocated
to goodwill. The fair values of Trade and other receivables and other classes of assets and their gross contractual
amount are the same.
ST Communications contributed £0.3m to the Group revenue and £0.1m to profit after tax in FY24. The goodwill of
£0.3m on acquisition comprises the value of expected synergies to be realised across future periods. Including the
integration of services work with the RWS language service teams, future growth of a new and diverse customer
portfolio and ability to provide clients with solutions and technologies for rare languages. Integration of ST
Communications into the RWS Group has continued successfully during FY24.
Contingent payments dependent on continued employment are accounted for as post-combination remuneration
expenses in accordance with IAS 19 employment benefits.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE CONSOLIDATED STATEMENTS
145
25. RELATED PARTY TRANSACTIONS
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 637.43 pence per share. The
shares were held in the EBT, a discretionary trust, and are intended to be used to satisfy the exercise of share options by
employees.
On 3 October 2022, 25,208 shares were sold at 313.22 pence per share and 1 February 2024, 30,688 shares were sold at
242.05 pence per share.
During the year, in the normal course of business, the Group provided translation services worth £0.6m (2023: £0.7m) to
subsidiaries of Learning Technologies Group plc (LTG), a company in which Andrew Brode, the Group’s former Chairman,
has a significant interest. An amount of £0.1m (2023: £0.2m) was due from LTG at the reporting date.
Key management compensation
2024
£m
2023
£m
Short-term employee benefits
5.4
5.9
Post-employment benefits
0.2
0.2
Share based payments
1.9
0.9
7.5
7.0
The key management compensation includes the 10 (2023: 9) Directors of RWS Holdings plc and the 10 (2023: 10)
members of the Executive Team who are not Directors of RWS Holdings plc.
During the year key management were granted 2,095,982 share options with an approximate fair value of £4.2m.
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 (2023: £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 (2023: £Nil).
The Group’s US$220m 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 are no significant post balance sheet events.
RWS Holdings plc — Annual Report 2024 | PARENT COMPANY FINANCIAL STATEMENTS
146
The following Parent Company financial statements are prepared under FRS 101 and relate to the Parent
Company and not to the Group.
Parent Company Balance Sheet Position at 30 September 2024
Registered Company 03002645
Note
2024
£m
2023
£m
Non-current assets
Investments
7
732.4
729.8
Deferred tax assets
0.2
-
732.6
729.8
Current assets
-
Debtors
8
373.9
309.5
Cash at bank and in hand
0.5
6.9
374.4
316.4
Total assets
1,107.0
1,046.2
Creditors: amounts falling due within one year
Trade creditors
10
0.8
0.1
Other creditors
10
14.2
7.1
15.0
7.2
Net current assets
359.4
309.2
Creditors: amounts falling due after more than one year
Loans
9
74.4
52.6
74.4
52.6
Total liabilities
89.4
59.8
Net assets
1,017.6
986.4
Capital and reserves
Share capital
11
3.7
3.8
Share premium
54.5
54.5
Share based payment reserve
8.1
5.3
Merger reserve
624.4
624.4
Capital reserve
2.1
2.0
Retained earnings
324.8
296.4
Total shareholders’ funds
1,017.6
986.4
Statement of Comprehensive Income: Profit after taxation
104.3
122.6
The financial statements on pages 146 to 156 were approved by the Board of Directors and authorised for issue on
11 December 2024 and were signed on its behalf by:
Candida Davies | Chief Financial Officer
RWS Holdings plc Parent Company Financial Statements
RWS Holdings plc — Annual Report 2024 | PARENT COMPANY FINANCIAL STATEMENTS
147
Parent Company Statement of
Changes in Equity for the year ended
30 September 2024
Share
capital
£m
Share
premium
£m
Share-
based
payment
reserve
£m
Merger
reserve
£m
Capital
reserve
£m
Retained
earnings
£m
Shareholders’
funds
£m
Balance at 1 October 2022
3.9
54.4
6.0
624.4
2.0
239.4
930.1
Profit for the year
-
-
-
-
-
122.6
122.6
Total comprehensive income for the year
-
-
-
-
-
122.6
122.6
Dividends
-
-
-
-
-
(46.3)
(46.3)
Issue of shares
-
0.1
-
-
-
-
0.1
Purchase of own shares
(0.1)
-
-
-
-
(19.3)
(19.4)
Deferred consideration settlement
-
-
(2.5)
-
-
-
(2.5)
Equity-settled share-based payments charge
-
-
1.8
-
-
-
1.8
Balance at 30 September 2023
3.8
54.5
5.3
624.4
2.0
296.4
986.4
Profit for the year
-
-
-
-
-
104.3
104.3
Total comprehensive income for the year
-
-
-
-
-
104.3
104.3
Dividends
-
-
-
-
-
(45.5)
(45.5)
Issue of shares
-
-
-
-
-
-
-
Purchase of own shares
(0.1)
-
-
-
0.1
(30.4)
(30.4)
Deferred tax on share-based payment charge
-
-
(0.1)
-
-
-
(0.1)
Equity-settled share-based payment charge
-
-
2.9
-
-
-
2.9
Balance at 30 September 2024
3.7
54.5
8.1
624.4
2.1
324.8
1,017.6
RWS Holdings plc — Annual Report 2024 | NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
148
Notes to the Parent Company Financial Statements
1. GENERAL INFORMATION
RWS Holdings plc is the holding company of a number
of subsidiaries which provide patent translations,
intellectual property support services, high-level technical
and commercial translations, localisation and linguistic
validation services.
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies applied in the
preparation of these financial statements are set out
below. These policies have been consistently applied to all
the years presented, unless otherwise stated.
Basis of preparation
The financial statements of RWS Holdings plc have
been prepared in accordance with Financial Reporting
Standard 101, 'Reduced Disclosure Framework' (FRS 101).
The financial statements have been prepared under the
historical cost convention and in accordance with the
Companies Act 2006.
The preparation of financial statements in conformity with
FRS 101 requires the use of certain critical accounting
estimates. It also requires management to exercise its
judgement in the process of applying the Company’s
accounting policies.
The following exemptions from the requirements of IFRS
have been applied in the preparation of these financial
statements, in accordance with FRS 101 (where required
these disclosures are included in the Group accounts):
• Paragraphs 45(b) and 46 to 52 of IFRS 2, “Share-based
payment” (details of the number and weighted-average
exercise prices of share options and how the fair value of
goods or services received was determined).
• IFRS 7, 'Financial Instruments: Disclosures.'
• Paragraphs 91 to 99 of IFRS 13, 'Fair value measurement'
(disclosure of valuation techniques and inputs used for
fair value measurement of assets and liabilities).
• Paragraph 38 of IAS 1, 'Presentation of financial
statements' comparative information requirements in
respect of:
-
Paragraph 79(a) (iv) of IAS 1
-
Paragraph 73(e) of IAS 16 “Property, plant and
equipment”
• The following paragraphs of IAS 1, 'Presentation of
financial statements':
-
10(d), (statement of cash flows)
-
16 (statement of compliance with all IFRS)
-
38A (requirement for minimum of two primary
statements, including cash flow statements)
-
38B-D (additional comparative information)
-
111 (cash flow statement information); and,
-
134-136 (capital management disclosures)
• IAS 7, 'Statement of cash flows.'
• Paragraphs 30 and 31 of IAS 8 'Accounting policies,
changes in accounting estimates and errors.'
(requirement for the disclosure of information when an
entity has not applied a new IFRS that has been issued
but is not yet effective).
• Paragraph 17 of IAS 24, 'Related party disclosures' (key
management compensation).
• The requirements in IAS 24, 'Related party disclosures' to
disclose related party transactions entered into between
two or more members of the Group (providing any
subsidiary party to the transaction is wholly owned by a
member of the Group).
New accounting standards, amendment and
interpretations
There were no new standards effective during the year that
have a material impact to the preparation of these Parent
Company financial statements.
Going concern
The Directors have prepared cash flow forecasts for the
18 month period ending 31 March 2026, 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 over the period to 31 March 2026 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.
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).
RWS Holdings plc — Annual Report 2024 | NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
149
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 12 of the consolidated financial statements.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
150
Notes to the Parent Company Financial Statements (continued)
4. DERIVATIVE FINANCIAL INSTRUMENTS
The Parent Company enters into forward foreign exchange contracts to mitigate its foreign exchange risk from foreign
currency dividend payments received from its subsidiary undertakings. At 30 September 2024, there were no derivative
contracts outstanding (2023: £Nil).
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's profit after tax for the year
ended 30 September 2024 was £104.3m (2023: £122.6m).
Audit fees payable in relation to the audit of the financial statements of the Parent Company are £20,000 (2023:
£18,000). Fees paid to the Group's 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
2024
£m
2023
£m
Wages and salaries
3.6
3.6
Social security costs
0.5
0.4
Share-based payment expense
0.3
0.6
Total employee costs
4.4
4.6
During the year, the Parent had ten (2023: nine) Directors, including seven Non-executive Directors and fourteen other
employees (2023: eleven), providing services to the Group.
Two Directors (2023: two) received pension allowances payments. Ten employees received employer contributions to
their personal pension schemes (2023: seven).
Details of the Directors’ remuneration and pension contributions are disclosed in the Directors’ Remuneration Report
on pages 80 to 87. 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.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
151
7. INVESTMENTS
2024
£m
2023
£m
Cost and net book value at beginning of year
729.8
728.6
Increase in investments
2.6
1.2
Cost and net book value at end of year
732.4
729.8
The Company charges subsidiaries the amounts recognised as share-based payments relating to awards to their
employees. These are recognised as an increase in the investment in relevant subsidiaries in accordance with IFRS 2
“Share-based Payment”. For details of the share-based payments that have increased the Company’s investments, see
note 22 to the consolidated financial statements.
The Directors consider that the value of the Parent Company’s fixed asset investments, which are listed below, is
supported by the subsidiary undertakings profitability. Key assumptions for value in use calculations are detailed in
Note 12.
Jurisdiction
Subsidiary
undertakings
Registered address
Nature of business
Australia
Inovia Holdings Pty
Limited
Suite 4 Level 12 45 Clarence Street Sydney NSW 2000
Australia
Patent filing
Belgium
SDL Belgium NV
Sluisstraat 79, Leuven, 3000, Belgium
Localisation services
Brazil
SDL do Brasil Global
Solutions Ltda
Rua Barão do Triunfo 73, Brooklin Paulista, Saõ Paolo,
Brazil
Localisation services
Canada
Alpha Translations
Canada Inc.
421–7th Avenue SW Calgary Alberta T2P 4K9 Canada
Technical and legal translations
Canada
SDL International
(Canada) Inc
1550 Metcalfe Street, Suite 800, Montreal, QC, H3A 1X6,
Canada
Localisation and technology
services
Chile
SDL Chile SA
Avenida Holanda 100 Oficina 1002 Providencia, Región
Metropolitana, Santiago, 7510021 Chile
Localisation services
China
Beijing RWS Science
& Technology
Information
Consultancy Co. Ltd
A601, Floor 6th, Building B-2, Northern Territory,
Zhongguancun, Dongsheng Technology Park, No. 66
Xixiaokou Road, Haidian District, Beijing, China 100192
Patent, technical and legal
translations
China
Moravia IT (Nanjing)
Co., Ltd
4F Zhongnan International Mansion, no 129 Zhongshan
Road, Nanjing, 210005 Jiangsu, China
Localisation services
China
SDL Software
Technology
(Shenzhen) Co. Ltd
Room 309, Floor 3, Resources-Tech-Building, Songping
ShanRoad, Nanshan District, Shenzhen City, Guandong,
China
Localisation and technology
services
Colombia
RWS Moravia
Colombia S.A.S.
Carrera 43 A 1 50 Torre 2 of 864, Medellin, Antioquia,
Colombia
Localisation services
Croatia
SDL Zagreb d.o.o.
Bednjanska 14/II, 10 000 Zagreb, Croatia
Localisation services
Czechia
Moravia IT s.r.o.*
Vlněna 526/1, Trnita, 602 00 Brno, Czechia
Localisation services
Czechia
SDL CZ s.r.o.
Nerudova 198, Hradec Králové, 50002 Czechia
Localisation services
France
SDL France SARL
44-46 Rue Alphonse Penaud, Paris, 75020, France
Localisation services
Germany
Trados GmbH
Waldburgstraße 21, 70563 Stuttgart, Germany
Technology services
Greece
SDL Hellas Efarmoges
Pliroforikis Limited
396 Mesogeion Avenue, 153 41 Agia Paraskevi, Attica,
Athens, Greece
Localisation services
Hong Kong
SDL Hong Kong
Limited
Suite 1017, 10th Floor Three Exchange Square, 8
Connaught Place, Central, Hong Kong
Localisation and technology
services
Hungary
Moravia IT Hungary
Kft.
Horvát utca 14-24, 1027 Budapest, Hungary
Localisation services
Hungary
SDL Magyarorszag
Szolgaltato Kft
Arboc u 6 III, Budapest, Hungary
Localisation services
India
RWS Moravia India
Private Limited
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
India
SDL Multilingual
Solutions Private Ltd
312, Vardaan House, 7/28 Ansari Road Darya Ganj, New
Delhi, Central Delhi, India
Localisation and Translation
services
RWS Holdings plc — Annual Report 2024 | NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
152
Notes to the Parent Company Financial Statements (continued)
Jurisdiction
Subsidiary
undertakings
Registered address
Nature of business
India
SDL Technologies
India Private Limited
Building 4, Block A, 7th Floor, 77 Town Centre, Yemalur
Main Road, Off Old Airport Road, Bangalore - 560 037,
India
Information and Technology
Services
Ireland
Iconic Translation
Machines Ltd (in
liquidation)
Invent Building, DCU Campus, Glasnevin, Dublin 9,
Ireland
Machine translation
Ireland
SDL Global Solutions
(Ireland) Limited
2 Shelbourne Buildings, Crampton Avenue, Shelbourne
Road, Dublin 4, Ireland
Localisation services
Ireland
Propylon Holdings
Limited
36 Blackburne Square, Rathfarnham Gate, Dublin 14,
Rathfarnham, Dublin, Ireland
Holding company
Ireland
Propylon Limited
36 Blackburne Square, Rathfarnham Gate, Dublin 14,
Rathfarnham, Dublin, Ireland
Content authoring
Italy
SDL Italia Srl
Unipersonale
Legale Tributario, Via 20 Settembre n 5 00187 Roma,
Italy
Localisation services
Japan
KK RWS Group
Jimbocho Kita Tokyu Building, 4F 3-1-16 Kanda-
Misakicho, Chiyoda-ku, Tokyo, Japan, 101-0061
Patent, technical and legal
translations
Japan
SDL Japan KK
Jimbocho Kita Tokyu Building, 1-16 Kanda-Misakicho
3-chome, Chiyoda-ku, Tokyo, 101-0054, Japan
Localisation and technology
services
Japan
SDL Tridion KK
Jimbocho Kita Tokyu Building, 1-16 Kanda-Misakicho
3-chome, Chiyoda-ku, Tokyo, 101-0054, Japan
Technology services
Japan
Horn & Uchida Patent
Translations Ltd
6-11, Kitihama 2-Chome, Chuo-ku, Osaka-shi, Japan
Patent translation and filing
Luxembourg
SDL Luxembourg SARL
40, Boulevard Joseph II, L-1840, Grand Duchy of
Luxembourg, Luxembourg
Localisation services
Netherlands
SDL Holdings BV
Herikerbergweg 292-342 1101CT Amsterdam
Netherlands
Holding company
Netherlands
SDL Media Manager
B.V.
Herikerbergweg 292-342 1101CT Amsterdam
Netherlands
Technology
Netherlands
SDL Netherlands B.V.
Herikerbergweg 292-342 1101CT Amsterdam
Netherlands
Localisation and technology
Netherlands
SDL Xopus B.V.
Herikerbergweg 292-342 1101CT Amsterdam
Netherlands
Technology
Netherlands
Liones Holding B.V.
Polakweg 7, 2288 GG Rijswijk, Netherlands
Holding company
Netherlands
Liones Group B.V.
Polakweg 7, 2288 GG Rijswijk, Netherlands
Content authoring
Netherlands
Liones B.V.
Polakweg 7, 2288 GG Rijswijk, Netherlands
Content authoring
Netherlands
Fonto Group B.V.
Polakweg 7, 2288 GG Rijswijk, Netherlands
Content authoring
Poland
SDL Poland Sp. z o.o.
ul.Fordonska 246, 85 766 Bydgoszcz, Poland
Localisation services
Portugal
SDL Portugal
Unipessoal LDA
Rua Santo António Contumil, nº 130, Porto, Portugal
Localisation services
Romania
SDL Language Weaver
srl
Scala Office Building, 34 Someșului Street, Cluj-Napoca,
Cluj County, Romania
Localisation services
Russia
LLC SDL Rus
Zanevsky prospect 71, building 2, letter A, office 1301,
195112, St. Petersburg, Russia
Localisation services
Singapore
SDL Multi-Lingual
Solutions (Singapore)
PTE Ltd *
600 North Bridge Road, #23-01 Parkview Square,
Singapore 188778
Localisation and technology
services
Slovenia
SDL d.o.o Ljubljana
Dunajska cesta 167, 1000 Ljubljana, Slovenia
Localisation services
South Africa
STComms Language
Specialists Proprietary
Limited *1
Unit E8 Westlake Business Square, 1 Westlake Drive,
Westlake, Western Cape, 7985, South Africa
Localisation services
Spain
Software Development
Language Solutions
Hispania, SL
Claudio Coello, 37, 28001 Madrid, Spain
Localisation services
Sweden
SDL Sweden AB *
C/O BDO Mälardalen AB, Skatt, Box 6343, 102 35
Stockholm, Sweden
Localisation services
RWS Holdings plc — Annual Report 2024 | NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
153
Jurisdiction
Subsidiary
undertakings
Registered address
Nature of business
Sweden
SDL Tridion AB
C/O BDO Mälardalen AB, Skatt, Box 6343, 102 35
Stockholm, Sweden
Technology services
Switzerland
RWS Life Sciences
International SA
Avenue Mon-Repos 14 1005 Lausanne Switzerland
Translation and linguistic
validation
Türkiye
SDL ÇEVİRİ
HİZMETLERİ LİMİTED
ŞİRKET
Barbaros Mah. Kardelen Sk. Palladium Tower Blok No: 2
İç Kapı No: 41 Ataşehir, Istanbul, Türkiye
Localisation services
UK
Corporate Translations
Inc (UK) Limited
Europa House, Chiltern Park Chiltern Hill, Chalfont St
Peter SL9 9FG England
Translation and linguistic
validation
UK
RWS Language
Solutions Limited
Europa House, Chiltern Park Chiltern Hill, Chalfont St
Peter SL9 9FG England
Technical and legal translations
UK
RWS Group Limited
Europa House, Chiltern Park Chiltern Hill, Chalfont St
Peter SL9 9FG England
Holding company
UK
RWS Information
Limited
Europa House, Chiltern Park Chiltern Hill, Chalfont St
Peter SL9 9FG England
IP searches
UK
RWS (Overseas)
Limited
Europa House, Chiltern Park Chiltern Hill, Chalfont St
Peter SL9 9FG England
Holding company
UK
RWS Translations
Limited
Europa House, Chiltern Park Chiltern Hill, Chalfont St
Peter SL9 9FG England
Patent translation and filing
UK
RWS UK Holding Co.
Limited
Europa House, Chiltern Park Chiltern Hill, Chalfont St
Peter SL9 9FG England
Holding company
UK
SDL Limited *
New Globe House, Vanwall Business Park, Vanwall Road,
Maidenhead, SL6 4UB, UK
Localisation & technology
services
UK
SDL Sheffield Limited
New Globe House, Vanwall Business Park, Vanwall Road,
Maidenhead, SL6 4UB, UK
Localisation & technology
services
UK
SDL Global Holdings
Limited
New Globe House, Vanwall Business Park, Vanwall Road,
Maidenhead, SL6 4UB, UK
Holding company
UK
SDL Tridion Limited
New Globe House, Vanwall Business Park, Vanwall Road,
Maidenhead, SL6 4UB, UK
Localisation services
UK
XyEnterprise Limited
New Globe House, Vanwall Business Park, Vanwall Road,
Maidenhead, SL6 4UB, UK
Technology services
UK
SDL Nominees Limited
New Globe House, Vanwall Business Park, Vanwall Road,
Maidenhead, SL6 4UB, UK
Dormant
UK
Automated Language
Processing Services
Ltd
New Globe House, Vanwall Business Park, Vanwall Road,
Maidenhead, SL6 4UB, UK
Holding company
UK
Interlingua Group
Limited
New Globe House, Vanwall Business Park, Vanwall Road,
Maidenhead, SL6 4UB, UK
Dormant
UK
Alterian Holdings
Limited
New Globe House, Vanwall Business Park, Vanwall Road,
Maidenhead, SL6 4UB, UK
Dormant
UK
Alterian Technology
Limited
New Globe House, Vanwall Business Park, Vanwall Road,
Maidenhead, SL6 4UB, UK
Holding company
UK
SDL (Newbury) Limited
New Globe House, Vanwall Business Park, Vanwall Road,
Maidenhead, SL6 4UB, UK
Technology services
UK
Intrepid Consultants
Limited
New Globe House, Vanwall Business Park, Vanwall Road,
Maidenhead, SL6 4UB, UK
Holding company
UK
RWS Global Holdings
Limited
Europa House, Chiltern Park Chiltern Hill, Chalfont St
Peter SL9 9FG England
Holding company
Ukraine
LLC SDL Ukraine
Business center SP Hall, Office 604, 28 A (letter G),
Stepana Bandery avenue Kiev, Ukraine
Localisation services
USA
RWS Information US
LLC
426 Industrial Avenue Suite 150, Williston VT 5495 USA
IP information searches
USA
Corporate Translations
Inc
101 East River Drive East Hartford,Connecticut CT 06108
USA
Translation and linguistic
validation
USA
Inovia LLC
251 Little Falls Drive, City of Wilmington, County of
Newcastle , Delaware, USA 19808
Patent translations
RWS Holdings plc — Annual Report 2024 | NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
154
Notes to the Parent Company Financial Statements (continued)
Jurisdiction
Subsidiary
undertakings
Registered address
Nature of business
USA
RWS US Holding Co.
Inc.
251 Little Falls Drive, City of Wilmington, County of
Newcastle , Delaware, USA 19808
Holding company
USA
Lawyers’ and
Merchants’ Translation
Bureau Inc.
11 Broadway Ste 466 New York NY 10004 USA
Technical and legal translations
USA
LUZ, Inc.
555 Montgomery Street Suite 720 San Francisco CA
94111 USA
Translation and linguistic
validation
USA
Moravia US Holding
Company, Inc.
Corporation Service Company, 2711 Centerville Road,
Suite 400, City of Wilmington, County of New Castle,
Delaware 19808 USA
Holding company
USA
Moravia US
Intermediate Holding
Company, LLC
Corporation Service Company, 2711 Centerville Road,
Suite 400, City of Wilmington, County of New Castle,
Delaware 19808 USA
Holding company
USA
Moravia IT, LLC
223 E Thousand Oaks Blvd, Suite 202, Thousand Oaks
CA 91360 USA
Localisation services
USA
Webdunia
Technologies Inc.
515 Plainfield Avenue Suite 102, Edison, NJ - 08817, USA
Localisation and technology
services
USA
SDL Inc *
201 Edgewater Drive, Suite 225, Wakefield, MA 01880-
1296 USA
Localisation and technology
services
USA
SDL XyEnterprise LLC
201 Edgewater Drive, Suite 225, Wakefield, MA 01880-
1296 USA
Technology services
USA
SDL Government Inc
Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801 USA
Technology services
USA
Alterian Holdings Inc
Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801 USA
Holding company
USA
RWS Life Sciences Inc
Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801 USA
Translation and linguistic
validation
USA
Propylon Inc.
Registered Agent Solutions, Inc, 9 E. LOOCKERMAN
STREET SUITE 311, DOVER, Kent, DE, 19901, United
States of America
Content authoring
Vietnam
SDL Vietnam Limited
REE Tower, No. 9 Doan Van Bo Street, ward 12 district 4,
Ho Chi Minh city, Vietnam
Localisation services
* Moravia IT s.r.o. also has branches operating in Argentina, Ireland, Japan, Poland and the United Kingdom. SDL Limited also has branches operating
in Lebanon, Germany and Taiwan. SDL Inc also has branches in Korea and Thailand. SDL Multi-Lingual Solutions (Singapore) PTE Ltd also has a branch
operating in Malaysia. SDL Sweden AB also has branches operating in Denmark, Finland and Norway.
*1 Entities acquired in FY24.
On 30 January 2024 RWS Holdings plc entered into a share purchase agreement, relating to the sale of the entire
issued share capital of RWS Group Limited and SDL Limited to RWS Global Holdings Limited, for group reorganisation
purposes. This has resulted in a change in immediate parent undertaking of RWS Group Limited and SDL Limited from
RWS Holdings plc to RWS Global Holdings Limited. RWS Holdings plc is now the immediate parent undertaking of RWS
Global Holdings Limited.
All subsidiary undertakings, except RWS Global Holdings Limited, are held indirectly.
All subsidiary undertakings are 100% owned.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
155
8. DEBTORS
2024
£m
2023
£m
Amounts owed by Group undertakings
373.7
308.7
Other debtors
-
0.3
Prepayments
0.2
0.5
Amounts due within one year
373.9
309.5
Included within amounts owed by Group undertakings is an amount of £nil (2023 £13.2m) that is due after more
than one year. Included in Amounts owed by Group undertakings is £273.1m (2023 233.4m), representing loans with
subsidiary undertakings which are unsecured, interest bearing and repayable on demand. The interest on these loans
is charged at a rate of 1.55% above the Bank of England Base rate. 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
2024
£m
2023
£m
Loans due in more than one year
74.4
52.6
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. During the year ended 30 September 2024, the
Group exercised this option to extend maturity and a final extended maturity date of 6 August 2027 was agreed.
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$100m
uncommitted accordion facility.
On 3 August 2024, the Group exercised its option to extend the maturity of its US$220m Revolving Credit Facility by
one year, moving the loan's maturity date from August 6, 2026, to August 6, 2027. The terms of the facility, including the
interest rate, remained unchanged. This extension did not qualify as a significant loan modification under IFRS 9.
All transaction costs incurred in amending and re-stating the RCF have been capitalised and are being amortised over
the extended maturity period of the facility on a straight-line basis. Currently all Group borrowings under the RCF are
denominated in Sterling.
10. TRADE AND OTHER PAYABLES
2024
£m
2023
£m
Amounts owed to Group undertakings
11.9
5.4
Other taxes and social security costs
0.1
0.1
Other payables
(0.3)
0.1
Accruals
0.9
1.5
Corporation Tax Payable
1.6
-
Total other creditors
14.2
7.1
Trade creditors
0.8
0.1
Amounts due within one year
15.0
7.2
Included in amounts owed to Group undertakings is a £7.3m loan drawndown, from an available $50.0m facility
agreement. Interest is charged at a rate of 1.55% per annum above the Federal Reserve System. The loan is repayable
on demand.
Remaining amounts owed to Group undertakings are unsecured, interest free, have no fixed date of repayment and are
repayable on demand.
RWS Holdings plc — Annual Report 2024 | NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
156
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 2024, the total share-based payment charge amounted to £2.9m (2023: £1.8m). 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 (2023: £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 are no significant post balance sheet events.
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 charging amortisation of
acquired intangibles, impairments of other assets considered material and one off in nature, 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:
2024
£m
2023
£m
Statutory (loss)/profit before tax
60.0
(10.9)
Amortisation of acquired intangibles
40.8
38.8
Impairment losses (Note 12,13,14)
22.2
62.4
Acquisition costs
7.2
5.1
Share-based payment expense
2.9
1.8
Profit on sale of PatBase
(30.0)
-
Exceptional items (Note 6)
3.4
22.6
Exceptional finance costs (Note 8)
0.2
0.3
Adjusted profit before tax
106.7
120.1
Reconciliation of adjusted operating profit to statutory operating profit:
2024
£m
2023
£m
Adjusted operating profit
112.3
123.8
Amortisation of acquired intangibles
(40.8)
(38.8)
Impairment losses (Note 12)
(22.2)
(62.4)
Acquisition costs
(7.2)
(5.1)
Share-based payment expense
(2.9)
(1.8)
Exceptional items (Note 6)
26.6
(22.6)
Statutory operating (loss)/ profit
65.8
(6.9)
RWS Holdings plc — Annual Report 2024 | NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
157
Cash conversion:
2024
£m
2023
£m
Adjusted profit before tax
106.7
120.1
Adjusted tax charge
(26.6)
(29.6)
Adjusted net income
80.1
90.5
Net cash inflow from operating activities
75.3
107.5
Exceptional cash flows
21.6
13.7
Purchase of PPE
(2.6)
(3.8)
Purchase of intangibles
(40.5)
(36.5)
Net interest
(3.7)
(2.0)
Lease liability payments
(9.5)
(11.9)
Free cash flow
40.6
67.0
Cash conversion
51%
74%
Organic Revenue
Organic revenue is calculated by adjusting the prior year's revenues. This involves adding the revenues from
acquisitions during the corresponding ownership period and subtracting the revenues from disposal during the same
period such that prior year results are prepared on a common basis with the current year.
2022
Organic revenue1
2023
Organic revenue
growth/(loss)
2023
Organic revenue
2024
Organic revenue
growth/(loss)
2024 Organic
revenue
2024
Organic
revenue
growth/(loss) %
IP Services
104.8
(2.6)
102.2
0.1
102.3
0%
Regulated Industries
173.0
(10.5)
162.5
(16.0)
146.5
(10%)
Language Services
342.1
(12.3)
329.8
(2.7)
327.1
(1%)
Language & Content Technology
139.2
7.8
147.0
(4.7)
142.3
(3%)
Total
759.1
(17.5)
741.5
(23.3)
718.2
(3%)
1 Includes Liones Holdings B.V. and Propylon Holdings Ltd's pre-acquisition operating results and PatBase pre-divestment operating results
Organic revenue at constant exchange rates
Organic revenue at constant exchange rates is calculated by adjusting the prior year's revenues. This involves adding
the revenues from acquisitions during the corresponding ownership period and subtracting the revenues from
disposal during the same period such that prior year results are prepared on a common basis with the current year,
and applying the 2024 foreign exchange rates to both years.
2023
Revenue at
FY24 rates
2023
Pre-acq revenue
at FY23 rates1
2023 Organic
revenue at
constant
exchange rates
2024
Revenue growth
2024 Organic
revenue
Organic
constant
currency
revenue
growth
IP Services
101.6
(2.6)
99.0
3.3
102.3
3%
Regulated Industries
157.2
-
157.2
(10.7)
146.5
(7%)
Language Services
319.0
-
319.0
8.1
327.1
3%
Language & Content Technology
132.9
10.4
143.3
(1.0)
142.3
(1%)
Total
710.8
7.7
718.5
(0.3)
718.2
0%
1 Includes Liones Holdings B.V. and Propylon Holdings Ltd's pre-acquisition operating results and PatBase pre-divestment operating results
Adjusted operating Profit
Adjusted operating profit is calculated by adjusting operating profit for the impact of exceptional items, amortisation
acquired intangibles, impairments of other assets considered material and one off in nature, and share based payments.
This is further analysed in Note 4 and labelled as ‘Operating profit/(loss) before charging:'.
RWS Holdings plc — Annual Report 2024 | GLOSSARY AND SHAREHOLDER INFORMATION
158
Shareholder Information
CORPORATE HEADQUARTERS AND REGISTERED OFFICE
Company No. 03002645
Europa House, Chiltern Park, Chiltern Hill, Chalfont
St Peter, Buckinghamshire, SL9 9FG United Kingdom
Tel: +44 (0) 1753 480200
PUBLIC RELATIONS ADVISERS
MHP Communications, 60 Great Portland Street,
London W1W 7RT
Tel: +44 (0) 20 3128 8100
NOMINATED ADVISER AND JOINT BROKER
Deutsche 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
Slaughter and May, One Bunhill Row, London EC1Y 8YY
PRINCIPAL BANKERS
Barclays Bank plc, 1 Churchill Place, Canary Wharf,
London E14 5HP
Glossary
Adjusted earnings per share or Adjusted EPS – is
stated before charging amortisation of acquired
intangibles, impairments of other assets considered
material and one off in nature, acquisition costs, share-
based payment expense and exceptional items, net of
associated tax effects.
Adjusted net income – is calculated as profit for the
year adjusted for amortisation of acquired intangibles,
impairments of other assets considered material
and one off in nature, 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 – is operating profit
before charging amortisation of acquired intangibles,
impairments of other assets considered material
and one off in nature, 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 – is
stated before amortisation of acquired intangibles,
impairments of other assets considered material
and one off in nature, 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 is reconciled to
total amortisation as part of Note 13 in the financial
statements.
Free cash flow – is the net cash inflow from operating
activities before exceptional cash flows, less purchases
of fixed assets, net interest paid and lease liabilities.
Cash conversion – is the free cash flow before
exceptional cash flows, divided by adjusted net income.
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 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 include pre-acquisition
results of acquired businesses and exclude revenues
from disposals during the same period such that prior
year results are prepared on a common basis with the
current year.
rws.com
RWS Holdings plc
ANNUAL REPORT 2024
Europa House
Chiltern Park
Chiltern Hill
Chalfont St Peter
Bucks
SL9 9FG
United Kingdom
Tel: +44 (0) 1753 480 200
Email: rws@rws.com
© 2024 RWS Holdings plc.
All rights reserved