RWS Annual Report 2022 web - Flipbook - Page 153
An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an
asset’s fair value less costs of disposal and its value in use,
where value in use is calculated as the present value of the
future cash flows expected to be derived from the asset.
For the purpose of assessing impairment, assets are
grouped at the lowest levels for which there are separately
identifiable income streams (CGUs).
Pension costs
The Company contributes to a Group personal pension
scheme for qualifying employees whereby it makes
defined contributions to independently administered
personal pension schemes. The Company does not control
any of the assets or have any ongoing liabilities with
regard to the performance of and payments from these
individual personal schemes. Obligations for contributions
to defined contribution pension plans are recognised as
an expense in the profit and loss account in the periods
during which services are rendered by employees.
Dividends
Interim dividends are recorded when they are paid,
and final dividends are recorded once they have been
approved by the Parent Company’s shareholders.
Taxation
Current tax, including UK corporation tax, is provided at
amounts expected to be paid (or recovered) using the tax
rates and laws that have been enacted or substantively
enacted by the balance sheet date.
For cash-settled share-based transactions, an expense
is recognised, with a corresponding increase in liabilities,
over the period during which employees become entitled
to payment. The liability is remeasured at each reporting
date and at settlement date based on the fair value of the
cash options. Any changes in the liability are recognised in
profit or loss in the statement of comprehensive income in
the period they occur.
Where the share options are awarded to employees of
subsidiaries, the amount of the charge is passed down to
the subsidiary as a capital contribution, which increases
the investment in that subsidiary.
3. CRITICAL JUDGEMENTS AND
ACCOUNTING ESTIMATES IN APPLYING
THE PARENT COMPANY’S ACCOUNTING
POLICIES
The preparation of the financial statements, in conformity
with generally accepted accounting principles, requires
management to make estimates and judgements that
affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported
amounts of revenues and expenses during the reported
period. Actual results could differ from these estimates.
These estimates and judgements are based on historical
experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. They are reviewed on an ongoing basis,
but the future actual experience may vary materially from
management’s expectation.
Management have not identified any key judgements but
have identified the following key estimates and assumptions.
Share-based payments
The Parent Company provides benefits to certain
employees (including certain Executive Directors), in the
form of share-based payment transactions, whereby
employees render services in exchange for rights over
shares in the form of share options (equity settled) or
rights to cash in the form of cash options (cash-settled).
The equity-settled share-based transactions are
measured at the fair value of the share option at the
grant date. The fair value excludes the effect of nonmarket-based vesting conditions. Details regarding the
determination of the fair value of these options can be
seen in note 22 of the Group financial statements.
The fair value determined at the grant date of the share
options is expensed on a straight-line basis over the
vesting period, based on the Parent Company’s estimate
of share options that will vest. At each balance sheet date,
the Parent Company revises its estimate of the number
of options expected to vest as a result of the effect of
non-market based vesting conditions. The impact of the
revision of the original estimates, if any, is recognised in
profit or loss in the statement of comprehensive income
with a corresponding adjustment to equity reserves.
Impairment
The determination of whether or not investment balances
have been impaired requires an estimate to be made of the
value in use of the investment. The value in use calculation
includes estimates about the future financial performance
of the investment, management’s estimates of discount
rates, long-term operating margins and long-term growth
rates. If the results of the investment in a future period are
materially adverse to the estimates used for the impairment
testing, an impairment charge may be triggered. Further
information on investments is included in note 7 in the
parent company notes. Further information with respect
to key assumptions in the assessment of impairment are
detailed in Note 13 of the consolidated financial statements.
4. DERIVATIVE FINANCIAL
INSTRUMENTS
The Parent Company enters into forward foreign
exchange contracts to mitigate its foreign exchange risk
from foreign currency dividend payments received from
its subsidiary undertakings. At 30 September 2022, there
were no derivative contracts outstanding (2021: £nil).
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
RWS — Annual Report 2022
153
