RWS AR 23 Final Single pages - Flipbook - Page 118
Notes to the Consolidated Financial Statements (continued)
The amount accumulated in the hedging reserve
is reclassi昀椀ed to pro昀椀t or loss in the statement of
comprehensive income in the same period the
hedged expected future cash 昀氀ows a昀昀ect the
Group’s pro昀椀t 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
昀氀ows are no longer expected to occur, then the amount
accumulated in the hedge reserve is reclassi昀椀ed to
pro昀椀t 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 e昀昀ective 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 e昀昀ective interest rate method.
2. CRITICAL JUDGEMENTS AND
ACCOUNTING ESTIMATES IN APPLYING
THE GROUP’S ACCOUNTING POLICIES
The preparation of the 昀椀nancial statements, in
conformity with generally accepted accounting
principles, requires Management to make estimates
and judgements that a昀昀ect the reported amounts
of assets and liabilities at the date of the 昀椀nancial
statements and the reported amounts of revenues and
expenses during the reported period. Actual results
could di昀昀er from these estimates.
These estimates and judgements are based on
historical experience and other factors, including
expectations of future events that are believed to
be reasonable under the circumstances. They are
reviewed on an ongoing basis. Revisions to estimates
are recognised prospectively.
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Judgements
In the process of applying the Group's accounting
policies, Management has made the following
judgements, which have the most signi昀椀cant e昀昀ect on
the amounts recognised in the consolidated 昀椀nancial
statements:
Revenue - multi-element arrangements
To determine the appropriate revenue recognition
for contracts containing multi-elements that include
both products and services, we evaluate whether the
contract should be accounted for as a single, or multiple
performance obligations. Management is required to
exercise a degree of judgement in setting the criteria
used for determining when revenue which involves
several elements should be recognised and the standalone selling price of each element. The Group generally
determines the stand-alone selling prices of elements
based on prices which are not observable and are
therefore based on stand-alone list prices which are
then subject to discount. These prices are reviewed
on an annual basis and amended where appropriate.
This is performed in conjunction with a fair value
assessment of the stand-alone selling prices to assess
the reasonableness of the transaction price allocation.
Further detail regarding the stand-alone selling prices
for the purpose of allocating the transaction price in
multi-element arrangements is provided in Note 3.
The judgement could materially a昀昀ect the timing and
quantum of revenue and pro昀椀t recognised in each
period. Licence revenue in the year amounted to £61.1m
(2022: £55.2m).
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. Signi昀椀cant
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 bene昀椀t and whether any previously capitalised
costs should be expensed. Development costs
capitalised during the year amounted to £19.3m (2022:
£22.6m) (see Note 13).
RWS Holdings plc — Annual Report 2023 NOTES TO THE CONSOLIDATED STATEMENTS
