RWS AR 23 Final Single pages - Flipbook - Page 107
Impairment of goodwill and acquired intangibles (2023: £608.6m goodwill and £296.7m acquired intangibles,
2022: £692.6m goodwill and £366.3m acquired intangibles)
Refer to the Audit Committee Report (page 82) and Notes 12 and 13 of the Consolidated Financial Statements (page 132 to 135)
Management applies judgement in assessing the valuation of acquired intangibles and goodwill, particularly in estimating
future cash 昀氀ows and deriving the appropriate discount rates. There is a risk that impairments are not identi昀椀ed, and the value
of goodwill or acquired intangibles is overstated
Our response to the risk
Key observations communicated
to the Audit Committee
Our audit procedures comprised the following:
We understood the annual goodwill and acquired intangible impairment
process and assessed the design e昀昀ectiveness of key controls. We con昀椀rmed
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 昀氀ow forecast to re昀氀ect these. We challenged
management in relation to the key assumptions included within the forecast
through inquiries of local management, commercial 昀椀nance 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 consider management’s
assessment appropriately re昀氀ects
the requirements of IAS 36 and
appropriately captures the risks to the
future cash 昀氀ows.
Management have recorded an
impairment of £62.4m of Goodwill
associated with the Language
and Content Technology CGU and
we concluded that this has been
calculated appropriately. We also
concluded that the remaining
goodwill and intangible asset balance
recognised in relation to the Language
and Content Technology CGU is
supported.
We concluded that the goodwill
recognised within the remaining
CGUs (being IP Services, Regulated
Industries and Language Services)
was supported by the Value in Use
calculated by management.
We concluded that that the
disclosures, including key assumptions
and sensitivities within Note 2, are
appropriate.
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
昀椀nancial statements, to con昀椀rm the adequacy of disclosure. Our procedures
covered 100% of the Goodwill and Acquired Intangibles risk amount.
FINANCIAL STATEMENTS RWS Holdings plc — Annual Report 2023
107
