RWS AR 23 Final Single pages - Flipbook - Page 116
Notes to the Consolidated Financial Statements
1. ACCOUNTING POLICIES
Basis of accounting and preparation
of 昀椀nancial 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 昀椀nancial statements consolidate
those of the Company and its subsidiaries (“the Group”).
The Parent Company 昀椀nancial statements present
information about the Company as a separate entity and
not about its Group.
The consolidated 昀椀nancial statements have been
prepared in accordance with UK-adopted International
Financial Reporting Standards ('IFRS') as required by
the Companies Act 2006.
The consolidated 昀椀nancial statements have been
prepared under the historical cost convention as
modi昀椀ed, where applicable, by the revaluation of 昀椀nancial
assets and 昀椀nancial liabilities held at fair value through
pro昀椀t or loss or through other comprehensive income.
The principal accounting policies adopted in the
preparation of the consolidated 昀椀nancial statements are
set out below and within the Notes to which they relate
to provide context to users of the 昀椀nancial 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
identi昀椀ed by Management, are disclosed in the Group’s
Task Force on Climate-related Financial Disclosures
("TCFD") on pages 48 to 59. Management has assessed
the potential 昀椀nancial impacts relating to the identi昀椀ed
risks and exercised judgement in concluding that there
are no further material 昀椀nancial impacts of the Group’s
climate-related risks and opportunities on the 昀椀nancial
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
There are no new standards/amendments that have or
are expected to have a material impact.
Basis of consolidation
The consolidated 昀椀nancial statements comprise the
昀椀nancial statements of the Parent Company and
subsidiaries controlled by the Parent Company, drawn
up to 30 September 2023.
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
a昀昀ect those returns through its power over the entity.
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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
昀椀nancial statements based on their fair values at the
e昀昀ective date of control.
All intra-group transactions are eliminated as part of the
consolidation process.
Audit exemption for subsidiaries
Notwithstanding the disclosure in the Company’s
2022 Annual Report, regarding the application of an
audit exemption pursuant to s479A of the Companies
Act 2006 in respect of certain of its UK subsidiaries,
the Company has determined that those companies’
昀椀nancial statements be audited.
Going concern
In making their going concern assessment, the
Directors have considered the Group’s current 昀椀nancial
position and forecast earnings and cash昀氀ows for the
18-month period ending 31 March 2025. The business
plan used to support this going concern assessment
is derived from the Board-approved budget. The
Directors have undertaken a rigorous assessment
of going concern and liquidity taking into account
key uncertainties and sensitivities on the future
performance of the Group. In making this assessment
the Directors have considered the Group’s existing debt
levels, the committed funding and liquidity positions
under its debt covenants and its ability to continue
generating cash from trading activities.
As at 30 September 2023, the Group has net debt of
£9.9m comprising the Group’s US$220m revolving credit
facility (“RCF”) ( £52.6m drawn at year end) and lease
liabilities of £33.5m, less cash and cash equivalents
of £76.2m. The RCF matures in August 2026 but is
extendible for a further year subject to lender consent.
At year end the Group’s net leverage ratio (as de昀椀ned
by the RCF agreement) is -0.1x EBITDA, while its interest
coverage ratio (as de昀椀ned by the RCF agreement)
is 39.9x EBITDA and are well within the covenants
permitted by the Group’s RCF agreement.
In light of the Group’s principal risks and uncertainties
disclosed on pages 44 to 47 of the Strategic Report,
the Directors believe that the appropriate sensitivity in
assessing the Group and Company’s ability to continue
as a going concern are to model a range of reasonably
plausible downside scenarios, including a 20% reduction
to the Group’s revenues and corresponding cash 昀氀ows,
with mitigating actions from Management limited to
equivalent reductions in the Group’s controllable cost
base. No signi昀椀cant structural changes to the Group
have been assumed in any of the downside scenarios
modelled with all mitigating actions wholly within
Management’s control.
RWS Holdings plc — Annual Report 2023 NOTES TO THE CONSOLIDATED STATEMENTS
