RWS Annual Report 2022 web - Flipbook - Page 138
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 £13.6m (2021:£11m). 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.
Indirect tax
related
£m
Dilapidations
£m
Other
provisions
£m
Total
£m
At 1 October
2.5
1.5
5.2
9.2
Charged in the period
0.5
-
0.1
0.6
-
-
(2.0)
(2.0)
(0.5)
Reconciliation of movement in provisions
Utilised
Released
(0.1)
-
(0.4)
Effects of currency movements
0.4
-
0.1
0.5
At 30 September 2022
3.3
1.5
3.0
7.8
2.9
Due in less than one year
-
0.4
2.5
Due in greater than one year
3.3
1.1
0.5
4.9
At 30 September 2022
3.3
1.5
3.0
7.8
5.1
Due in less than one year
-
0.4
4.7
Due in greater than one year
2.5
1.1
0.5
4.1
At 30 September 2021
2.5
1.5
5.2
9.2
Indirect tax related provisions comprise £1.6m in respect of Service Tax declarations made by the Group's Brazilian subsidiary
during the period 2008–2012. Additionally, the Group has provided in full against any potential liability arising in later periods
which could still be subject to audit. A further £1.0m relates to potential penalties and interest from ongoing tax enquiries
primarily in the UK and Germany, together with interest on uncertain tax provisions. The timing of the payment is uncertain at the
reporting date.
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.
138
RWS — Annual Report 2022
NOTES TO THE CONSOLIDATED STATEMENTS
