RWS AR 23 Final Single pages - Flipbook - Page 142
Notes to the Consolidated Financial Statements (continued)
in the period. The Group also has several lease contracts that include extension and termination options. These
options are negotiated by management to provide 昀氀exibility in managing the leased-asset portfolio and align with the
Group’s business needs.
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 signi昀椀cantly 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
cash昀氀ows associated with leases expiring within the next 12 months are £10.4m (2022:£13.6m). Further information
on the maturity pro昀椀le of the Group's leases is shown in Note 20. The Group has concluded that this is not a signi昀椀cant
judgement by virtue of the low number and value of leases due to expire near-term and the future cash out昀氀ows
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 out昀氀ow of economic bene昀椀ts will be required to settle the obligation and a reliable estimate
can be made of the amount of the obligation. If the e昀昀ect is material, expected future cash 昀氀ows are discounted
using a current pre-tax rate that re昀氀ects, where appropriate, the risks speci昀椀c to the liability. The expense relating
to any provision is presented in pro昀椀t 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 昀椀nance expense.
A provision for onerous contracts is recognised when the expected bene昀椀ts 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.
Severance
£m
Other
provisions
£m
1.5
-
3.0
7.8
-
13.5
4.3
18.1
(0.1)
(6.7)
(1.5)
(8.3)
Indirect tax
related
£m
Dilapidations
£m
At 1 October
3.3
Charged in the period
0.3
-
Reconciliation of movement in provisions
Utilised
Total
£m
Released
(0.1)
-
-
-
(0.1)
E昀昀ects of currency movements
(0.1)
-
-
(0.1)
(0.2)
3.4
1.4
6.8
5.7
17.3
At 30 September 2023
Due in less than one year
-
0.4
6.8
0.4
7.6
Due in greater than one year
3.4
1.0
-
5.3
9.7
At 30 September 2023
3.4
1.4
6.8
5.7
17.3
-
0.4
-
2.5
2.9
Due in less than one year
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
Indirect tax related provisions comprise £2.2m in respect of Service Tax declarations made by the Group's Brazilian subsidiary
during the period 2008–2012. This amount includes all potential liabilities arising in later periods which could still be subject to
audit. A further £1.2m relates to potential penalties and interest from ongoing tax enquiries 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 speci昀椀c 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.
142
RWS Holdings plc — Annual Report 2023 NOTES TO THE CONSOLIDATED STATEMENTS
