RWS AR 23 Final Single pages - Flipbook - Page 147
Hedging
The Group applies cash 昀氀ow hedge accounting on foreign exchange forward contracts taken out by Moravia IT s.r.o to
hedge its Czech Koruna expected future operating costs (Moravia is a US Dollar functional CGU). Any changes in the
fair value of these cash 昀氀ow hedges have been recognised in a separate hedge reserve in equity and recycled to the
statement of comprehensive income as these costs are settled.
The Group applies net investment hedge accounting in respect of borrowings associated with the acquisition of a single
acquisition which was US Dollar denominated. The hedging relationship was established with the intention of reducing
the e昀昀ect of currency 昀氀uctuations in the statement of comprehensive income, by recognising gains or losses through
other comprehensive income. The value of loans designated as net investment hedges are £54.7m and this is expected
to be settled over a period of 4 years.
During the year ended 30 September 2023, no ine昀昀ectiveness was recorded in the Group’s statement of comprehensive
income (2022: £Nil). All amounts recorded in the hedge reserve pertain to continuing hedging relationships as at 30
September 2023.
At the year end the Group had no cash 昀氀ow hedges, which take the form of forward foreign exchange contracts, in
place.
Forward foreign currency exchange contracts
Assets
2023
£m
Assets
2022
£m
Liabilities
2023
£m
Liabilities
2022
£m
-
-
-
0.6
Hedging reserve
2023
2022
At 1 October 2022
(5.5)
1.2
Cash昀氀ow hedges - fair value movement
Cash昀氀ow hedges - realised gains/ (losses) transferred to Statement of Comprehensive Income
Net investment hedge
At 30 September 2023
0.5
2.9
-
(2.5)
1.5
(7.1)
(3.5)
(5.5)
Capital risk
The Group considers its capital to comprise its ordinary share capital, share premium, other reserves and accumulated
retained earnings. In managing its capital, the Group’s primary objective is to ensure its continued ability to provide
a consistent return for its equity shareholders, through a combination of capital growth and distributions. The Group
has historically considered equity funding as the most appropriate form of capital for the Group, but debt 昀椀nancing has
been introduced where it was felt that the bene昀椀ts exceed the risks and costs to equity shareholders of further equity
昀椀nancings.
At 30 September 2023, there was £52.6m (2022: £29.3m) of external debt 昀椀nance on the balance sheet. The Group is not
subject to externally imposed capital requirements.
In addition, the Group held cash and cash equivalents at the year end of £76.2m (2022: £101.2m).
The Group funds dividend payments to shareholders through the underlying pro昀椀tability of its subsidiaries which are
contributed between the subsidiary and the ultimate parent company, RWS Holdings plc. The underlying pro昀椀tability
of the Group ensures that there is su昀케cient pro昀椀tability within these subsidiaries and contributions from these
subsidiaries to the Parent Company and that su昀케cient distributable reserves exist to maintain the Group's current
dividend policy.
Included within retained earnings are £184.6m relating to gain recognised on a cash-box structure utilised as part of
the Moravia acquisition. These amounts are not currently distributable.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS Holdings plc — Annual Report 2023
147
