RWS Annual Report 2022 web - Flipbook - Page 115
Licence revenue in the year amounted to £55.2m (2021:
£34.9m).
Capitalised development costs
The Group capitalises development costs relating to
product development and internally generated software
in line with IAS 38 'Intangible Assets'. Management
applies judgement in determining if the costs meet
the criteria and are therefore eligible for capitalisation.
Significant judgements include the technical feasibility
of the development, recoverability of the costs incurred,
economic viability of the product, and potential market
available considering its current and future customers
and when, in the development process, these milestones
have been met. Where software products are already
in use, management applies judgement in determining
whether further development spend increases the
economic benefit and whether any previously capitalised
costs should be expensed. Development costs
capitalised during the year amounted to £22.6m (2021:
£19.7m) (see Note 13).
Estimates and assumptions
The Group has considered whether there are key
assumptions and estimates concerning the future
and other key sources of estimation uncertainty at the
reporting date, that have significant risk of causing a
material adjustment to the carrying amount of assets
and liabilities within the next financial year and there are
none for this financial year.
Other estimates and assumptions
The consolidated financial statements include other
estimates and assumption. Whilst management do not
consider these to be significant accounting estimates,
the recognition and measurement of certain material
assets and liabilities are based on assumptions which,
if changed, could result in adjustments to the carrying
amounts of and liabilities.
Impairment of goodwill and intangible assets
An impairment test of goodwill (performed annually) and
other intangible assets (when an indicator of impairment
exists), requires estimation of the value in use of the
CGUs to which goodwill and other intangible assets have
been allocated. The value in use calculation requires
the Group to estimate the future cash flows expected
to arise from the CGUs, for which the Group considers
revenue growth rates to be a significant estimate. The
estimated future cash flows derived are discounted to
their present value using a pre-tax discount rate that
reflects estimates of market risk premium, asset betas,
the time value of money and the risks specific to the CGU.
See Note 12 and 13 for further details.
Taxation - uncertain tax positions
Uncertainties exist in respect of interpretation of
complex tax regulations, including transfer pricing,
and the amount and timing of future taxable income.
Given the nature of the Group’s operating model, the
wide range of international transactions and the longterm nature and complexity of contractual agreements,
differences arising between the actual results and
assumptions made, or future changes to assumptions,
could necessitate future adjustments to taxation already
recorded. The Group considers all tax positions on a
separate basis, with any amounts determined by the
most appropriate of either the expected value or most
likely amount on a case by case basis.
Most deferred tax assets are recognised because they
can offset the future taxable income from existing
taxable differences (primarily on acquired intangibles)
relating to same jurisdiction or entity. Where there are
insufficient taxable differences, deferred tax assets are
recognised in respect of losses and other deductible
differences where current forecasts indicate profits
will arise in future periods against which they can be
deducted. The total value of UTPs was £6.8m (2021:
£6.5m), see Note 9.
Revenue - rendering of services
Management makes estimates of the total costs that will
be incurred on a contract by contract basis. Management
reviews the estimate of total costs on each contract on
an ongoing basis to ensure that the revenue recognised
accurately reflects the proportion of the work done at
the balance sheet date. All contracts are of a short term
nature. The majority of services work is invoiced on
completion and the amount of year end work in progress
was £51.2m (2021: £34.9m). The effect of changing the
estimated total cost of each contract could, in aggregate,
have an effect on the carrying amount of accrued
income at the balance sheet date.
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2022
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