RWS AR 23 Final Single pages - Flipbook - Page 145
Interest rate risk
The majority of the Group’s cash balances are held with its principal bankers, earning interest at variable rates of interest. To the
extent the Pound Sterling overdraft is utilised, it attracts an interest rate of base rate plus a margin of 200 basis points.
The Group’s US$220 million Revolving Credit Facility (“RCF”) matures on 3 August 2026, with an option to extend until
2027 (subject to lender approval), and incurs interest at a rate based on Secured Overnight Financing Rate ("SORF") plus
a margin which 昀氀uctuates based on the Group’s net leverage, more details can be found in Note 1 and Note 16. The
Group elected not to hedge its interest rate risk.
Exposure to interest rate risk
Interest rate pro昀椀le of interest-bearing assets and liabilities - Variable rate instruments
2023
£m
2022
£m
Financial assets - Cash and cash equivalents
Sterling
US Dollars
Euros
Yen
Swiss Francs
Other
8.9
25.1
14.1
3.7
1.4
23.0
14.6
16.0
36.1
4.2
0.5
29.8
76.2
101.2
42.0
10.6
29.2
52.6
29.2
Financial liabilities – Loan
Sterling
US Dollars
If interest rates changed by 5% it is estimated that Group pro昀椀t before tax would change by £2.6m (2022: £1.5m).
On 3 August 2022, the Group entered into an Amendment and Restatement Agreement (“ARA”) with its banking
syndicate which amended its existing US$120m RCF maturing on 10 February 2024, to a US$220m RCF maturing on 3
August 2026 with an option to extend maturity to 3 August 2027.
Under the terms of the ARA, the Group’s interest margin over the SOFR reference interest rate ranges from 95bps to
195bps and is dependent on the Group’s net leverage. Commitment fees are payable on all committed, undrawn funds
at 35% of the applicable interest margin. The ARA also contains a US$100m uncommitted accordion facility.
Credit risk
Credit risk is the risk of a 昀椀nancial loss to the Group if a client or counterparty to a 昀椀nancial instrument fails to meet its
contractual obligations and arises from the Group’s cash and cash equivalents and trade and other receivables.
The Group’s cash and cash equivalents of £76.2m at 30 September 2023, are predominantly held in the UK and the US,
and placed with 昀椀nancial institutions who hold Standard & Poor’s long term credit ratings of between A+ and A-. The
Group considers that its cash and cash equivalents have a low credit risk based on the external credit ratings of the
counterparties.
Trade receivable exposures are mitigated by each division’s management team where they arise. The Group’s clients
are large international corporations or self-regulated bodies such as patent agents and legal 昀椀rms. In accordance with
IFRS 9, the Group has applied the simpli昀椀ed model speci昀椀ed for expected credit losses, based on historical default rates
experienced across the Group as well as forward looking information where material. Consideration has also been given to
the appropriateness of applying these historical default rates to the Group’s future trade and other receivables. Expected
credit losses are not material to the Group, no collateral is held in respect of trade receivables and the maximum potential
credit loss is equal to asset carrying value. See Note 15 for further details.
No client accounted for more than 10% of Group turnover in the current year (2022: nil).
NOTES TO THE CONSOLIDATED STATEMENTS
RWS Holdings plc — Annual Report 2023
145
