RWS Annual Report 2022 web - Flipbook - Page 127
12. GOODWILL
2022
£m
Cost and net book value
At 1 October
Additions (note 24)
2021
£m
615.8
257.2
7.8
378.6
Adjustments in respect of prior periods (note 9)
(0.4)
(1.0)
Exchange adjustments
69.4
(19.0)
692.6
615.8
At 30 September
Accounting policy
Goodwill arising on business combinations (representing the excess of fair value of the consideration given over
the fair value of the separable net assets acquired) is capitalised, and its subsequent measurement is based on
annual impairment reviews, with any impairment losses recognised immediately in profit or loss in the statement of
comprehensive income. Direct costs of acquisition are recognised immediately in profit or loss in the statement of
comprehensive income as an expense.
At least annually, or when otherwise required, Directors review the carrying amounts of the Group’s property, plant and
equipment and intangible assets to determine whether there is any indication of an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment loss. A full
impairment review is performed annually for goodwill regardless of whether an indicator of impairment exists.
The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money as well as risks specific to the asset (or cash generating unit ('CGU')) for
which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of
the asset or CGU is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately in
profit or loss in the consolidated statement of comprehensive income.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate
of its recoverable amount, but not beyond the carrying amount that would have been determined had no impairment
loss been recognised for the asset in prior-years. A reversal of an impairment loss is recognised immediately as income
in the Consolidated Statement of Profit or Loss, although impairment losses relating to goodwill may not be reversed.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on
the smallest group of assets to which it belongs for which there are separately identifiable cash flows; its CGU. Goodwill
is allocated on initial recognition to each of the Group’s CGUs that are expected to benefit from the synergies of the
combination giving rise to the goodwill. Goodwill is allocated at the lowest level monitored by management, and no
higher than an operating segment.
Key assumptions for the value in use - 30 September 2022
Long-term
growth rate
Discount
rate
Average revenue
growth
IP Services
2.0%
12.5%
3.2%
Regulated Industries
2.0%
13.2%
6.7%
Language Services
2.0%
12.7%
5.1%
Language and Content Technology
2.0%
13.5%
10.9%
Key assumptions for the value in use - 30 September 2021
IP Services
2.0%
10.4%
4.0%
Life Sciences
2.0%
10.9%
5.5%
Moravia
2.0%
11.0%
5.5%
SDL - Technology
2.0%
11.4%
8.0%
SDL - Language Services
2.0%
11.1%
5.5%
SDL - Regulated industries
2.0%
12.3%
5.5%
During the year, management has reviewed its identified CGUs in light of the further integration work that has been
performed by the Group since the acquisition of SDL plc in November 2020, and based on the result of this review,
management believes the Group now has four CGUs. Key factors of the integration in the year that were considered
NOTES TO THE CONSOLIDATED STATEMENTS
RWS — Annual Report 2022
127
