RWS AR 23 Final Single pages - Flipbook - Page 120
Notes to the Consolidated Financial Statements (continued)
3. REVENUE FROM CONTRACTS WITH CUSTOMERS
Accounting policy
IFRS 15 provides a single, principles based 昀椀ve step model
to be applied to all sales contracts as outlined below. It
is based on the transfer of control of goods and services
to customers and replaces the separate models for
goods and services. The speci昀椀c application of the 昀椀ve
step principles of IFRS 15 as they apply to the Group’s
revenue contracts with customers are explained below at
an income stream level. In addition to this, the individual
performance obligations identi昀椀ed within the Group’s
contracts with customers are individually described as
part of this Note to the 昀椀nancial statements.
For multi-element arrangements, revenue is allocated to
each performance obligation based on stand-alone selling
price, regardless of any separate prices stated within the
contract. This is most common within the Group’s contract
for technology licences, which may include performance
obligations in respect of the licences, support and
maintenance, hosting services and professional services.
The Group’s software licences are either perpetual, term
or software as a service (SaaS) in nature. The Group’s
revenue contracts do not include any material future
vendor commitments and thus no allowances for future
costs are made.
The allocation of transaction price to these obligations
is a signi昀椀cant judgement, more details of the nature
and impact of the judgement are included in Note 2.
The identi昀椀cation of the performance obligations within
some multi-element arrangements involves judgement,
however none of the Group’s contracts requires
signi昀椀cant judgement in this regard.
Language Services and patent 昀椀ling contracts are typically
billed in arrears on completion of the work with revenue
recognised as accrued income balances. The Group’s
technology contracts are typically billed in advance and
revenue recognition deferred where the performance
obligation is satis昀椀ed over time. 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.
Disaggregated information about the Group’s revenue
recognition policy and performance obligations are
summarised below:
Patent Filing Services (IP Services segment)
The Group’s Patent Filing revenue contracts with
customers include a sole performance obligation which is
satis昀椀ed at a point in time, being the completion of patent
昀椀ling and delivery to the client. Revenue is recognised
when the sole performance obligation is satis昀椀ed, which is
when the bene昀椀ts of control of the services provided are
delivered to the customer.
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Language Services (IP Services, Language Services
and Regulated Industries segments)
The Group’s Language Services contracts with
customers provide for the Group to be reimbursed for
their performance under the contract as the work is
undertaken. Accordingly, as the Group has both the right
to payment and no alternative use for the translated
asset, the Group recognises revenue over time for this
performance obligation.
The Group measures the completeness of this
performance obligation using input methods. The relevant
input method is the cost incurred to date as a proportion
of total costs, in determining the progress towards the
completion of the performance obligation for Language
Services contracts.
Perpetual and term licences (Language and Content
Technology segment)
The Group’s perpetual and term licences are accounted
for at a point in time when the customer obtains control of
the licence, occurring either where the goods are shipped
or, more commonly, when electronic delivery has taken
place and there is no signi昀椀cant future vendor obligation.
The software to which the licence relates has signi昀椀cant
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
identi昀椀ed no other performance obligations under their
contracts for these licences which would require the
Group to undertake signi昀椀cant additional activities which
a昀昀ects 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.
‘SaaS’ licences (Language and Content Technology
segment)
Unlike the Group’s perpetual and term licences, the
Group has identi昀椀ed that there are material ongoing
performance obligations associated with the provision of
SaaS licences. The Group has identi昀椀ed 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.
RWS Holdings plc — Annual Report 2023 NOTES TO THE CONSOLIDATED STATEMENTS
