Statement of Compliance with the QCA Corporate Governance Code
The AIM Rules require that the Board of all companies listed on AIM disclose details of the recognised corporate governance code that they have chosen to apply, as well as how the company complies with that code. RWS has chosen to implement the QCA Corporate Governance Code (“QCA Code”). The QCA Code is based on 10 broad principles, with a corresponding set of disclosures, and details what are considered appropriate corporate governance arrangements for growing companies.
The Board considers that RWS does not depart from any of the principles of the QCA Code and our statement of compliance below sets out how we comply. Our compliance with the QCA Code is reviewed annually in line with its requirements.
Principle 1: Establish a strategy and business model which promote long-term value for shareholders
RWS Holdings plc (“RWS” or the “Group”) is a unique, world-leading provider of technology-enabled language, content and intellectual property services. Through content transformation and multilingual data analysis, our combination of AI-enabled technology and human expertise helps our clients to grow by ensuring they are understood anywhere, in any language. Our client base spans Europe, Asia Pacific, Africa and North and South America. Our 65+ global locations across five continents service clients in the automotive, chemical, financial, legal, medical, pharmaceutical, technology and telecommunications sectors.
RWS’s objective is to continue to increase shareholder value in the medium- to long-term by growing the Group’s revenue and profit before tax. The Group’s five-year plan is centred on growing organically through:
- Accelerating penetration into existing high growth segments;
- Pivoting into adjacent high growth segments;
- Growing share of wallet through expanding our service range;
- Winning more clients; and
- Re-affirming our technology product leadership.
This is supplemented by selective acquisitions, providing these are complementary to our existing business, enhance shareholder value and allow the Group to maintain conservative debt leverage.
The Group is organised around four operating divisions. Each division holds overall accountability and responsibility for revenue, profit, operations, research and development, together with sales, marketing and client delivery. Three of the divisions are supported by our Language eXperience Delivery ("LXD") platform. This unique production platform makes significant use of the technology products offered by the fourth division, Language and Content Technology, to support operational efficiency and excellence in the delivery of solutions to clients. While the Language and Content Technology division offers a suite of products to clients, it also serves as an enabler of the LXD platform.
Language Services focuses on localisation solutions for clients at any stage of their globalisation journey. Solutions are provided to a wide range of industries, including automotive, chemical, consumer, retail, technology, travel and telecommunications. Services cover translation, Artificial Intelligence (“AI”) data training, eLearning, video and interpreting services. The division has three client groups: Technology Enterprises (served by the Enterprise Internationalisation Group), Major Accounts and GoGlobal, servicing entry-level clients and businesses with less mature localisation models (the latter two are served by the Strategic Solutions Group). RWS’s language and content technologies are often provided in combination with its services.
IP Services is the world’s premier provider of patent translations, filing and renewal solutions, alongside Intellectual Property ("IP") search, retrieval and monitoring services. The division delivers highly specialised technical translations to patent applicants and their representatives and counts 18 of the world’s top 20 patent filers as its clients.
Regulated Industries provides a range of services to the life sciences, financial services and legal sectors. Service provision is centred around highly specialised, technical translations, with a strong emphasis on quality and security. Clients include 19 of the world's top 20 pharmaceutical companies, 18 of the top 20 medical device companies and 18 of the top 20 law firms. RWS’s work in the pharmaceutical and medical device verticals make a critical contribution to life safety – evidenced by our involvement in the development and testing of vaccines to combat Covid-19.
Language and Content Technology offers clients access to a range of translation technologies and content management platforms. Language Weaver, a pioneer in machine translation (MT), is a secure Neural MT platform for high translation volumes. Trados offers a suite of translation productivity and management solutions for enterprises, small and medium-sized organisations and individuals. Tridion and Contenta are the Group’s content management products – the former focused on both structured and web content solutions, the latter specialising in technical content solutions for the government and defence sectors. The structured content solutions offering was enhanced by the acquisition of Fonto in March 2022. These product lines are now led by four general managers who hold full ownership and accountability for the revenues and growth of their products.
Language eXperience Delivery provides an important and unique support function to our three services divisions by leveraging the Group’s scale and continuing investment in proprietary technologies in MT, AI and translation productivity to enable teams to deliver powerful solutions for clients. It offers access to the world’s largest linguistic network, including more than 1,750 in-house translators and in excess of 35,000 freelance specialists, whose cultural and technical expertise underpin 24/7 service provision to clients in more than 100 countries. Support functions have been established to provide effective and lean shared services that support our four divisions and facilitate the integration of acquisitions and continued margin development. These include Corporate Development, Finance, Group Technology, Human Resources, Legal and Professional Advisory.
Principle 2: Seek to understand and meet shareholders needs and expectations
RWS is committed to maintaining an open dialogue with existing and prospective shareholders, both retail and institutional, to ensure that our strategy, business model and financial performance is communicated effectively to both existing and prospective shareholders.
Investor relations is a priority for the Group and we strive to ensure that both the analyst and investor communities understand fully our strategy, business model and financial and operational performance through regular and open communication. The CEO and the CFO, with support from the Chairman and the help of our external financial PR firm, are responsible for ensuring that the Group’s investment thesis is communicated through a broad range of distribution channels in a manner designed to encourage further dialogue with the market. We achieve this principally through investor roadshows, attending investor conferences, RNS announcements and our half and full year financial results and accompanying presentations.
The Annual General Meeting is our main forum for dialogue with retail shareholders, where we invite all shareholders to engage with the Board, ask questions and present their views in person.
Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success
RWS understands that in order to achieve its medium to long-term objectives it is important to develop and maintain strong relationships with all of our stakeholders and in the communities in which we operate. The Board has recently published its gender pay gap report and modern slavery statement and further information on our corporate and social responsibilities can be found here.
The Group is in regular communication with both its clients and supplier networks, and where formal performance delivery feedback channels exist, the results are distributed to the Executive Team for review. Informal communications and an open dialogue with both clients and suppliers is encouraged to enable timely resolution of any issues.
Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Group considers a risk management framework as a vital tool to ensure existing and potential risks to the business are identified and mitigating actions are considered in full. The framework covers the extended business, including the Group’s supply chain, from key suppliers to end-customers. The Executive Team is charged with both identifying the range of potential risks to the Group and collating specific risks for further assessment.
Opportunities for the Group are assessed by the Executive Team in terms of potential financial benefit and return on investment, where appropriate.
The risk management framework categorises potential risks to the business, first by considering the risk area and the specific identified risk, before applying an impact analysis that ranks the significance of the risk with the probability of the risk occurring to produce a gross risk score. This is then filtered against any mitigating controls before identifying any further action that is required to minimise the potential risk to the Group. At the end of this process a net risk is assessed, and an Executive risk owner assigned, along with an expected timetable to complete any identified further action.
The Group believes that it has fostered an open and proactive culture to risk management throughout its divisional structure. This has led to the establishment of a group-wide official risk register which is reviewed and approved at least annually by the Board.
For further details of the Principal Risks and Uncertainties considered material to the Group please refer to page 44 of our Annual Report.
Principle 5: Maintain the Board as a well-functioning, balanced team led by the Chairman
The Chairman has overall responsibility for the effective management of the Board. The Board currently comprises the Chairman, CEO and CFO and seven Non-Executive Directors. The Board considers that all of the Non-Executive Directors are independent in character (save for Andrew Brode, who is not deemed independent due to his previous executive role at RWS, and Julie Southern, who was deemed independent on her appointment as Chairman) and that there are no relationships or circumstances which are likely to affect their independent judgement. The CEO and CFO have direct responsibility for business operations while the Chairman and Non-Executive Directors have a responsibility to bring independent, objective judgement to bear on Board decisions. During the last financial year, the Board met seven times to review financial performance and approve key business decisions so that it retained control over strategic, budgetary, financial and organisational issues and monitored executive management.
The Chairman and the Company Secretary have responsibility to ensure that all Directors receive relevant Board papers in a timely fashion in order to facilitate a full and more effective discussion of matters during Board meetings.
The Group believes it has effective procedures in place to monitor and deal with potential conflicts of interest. The Board is aware of the other commitments and interests of its Directors and changes to these commitments and interests are reported to and, where appropriate, agreed by the rest of the Board.
Principle 6: Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
The Board believes that as a collective, the Directors have the necessary blend of sector, financial and public market skills and experience, along with an effective balance of personal qualities and capabilities. Directors keep their skill sets up-to-date in a number of ways and their skills and expertise are reviewed on an annual basis. The Board is committed to providing specific training to Directors, be it internally sourced or via external advisers, to ensure their skill sets remain relevant for the Group’s requirements. A summary of the relevant experience of each of the Directors can be found here.
Principle 7: Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
An effective Board is critical to the success of RWS. In order to ensure that the Board continues to operate as efficiently as possible, this year the Board undertook an internal appraisal of its capabilities facilitated by the Company Secretary, to confirm that the Board is capable and effective in undertaking its responsibilities and duties. The Board commissioned an independent review in 2022 and has committed to continue to seek independent, externally-facilitated reviews periodically to ensure its ongoing effectiveness.
The Board continues to hold formal annual performance assessments for the CEO (led by the Chairman) and CFO (led by the CEO). Factors considered in the evaluation process include, but are not limited to, commitment to the long-term development of the Group; attendance at formal meetings; meaningful and varied contributions at Board meetings; personal interaction and relationship building with the Non-executive Directors, shareholders, other professional advisers to the Group, and the Executive Team
Principle 8: Promote a corporate culture that is based on ethical values and behaviours
The Board is committed to providing an environment and opportunities that encourage and reinforce the corporate culture of the Group. The Board is also committed to extending the values that it promotes to include all stakeholder groups. We are united by our purpose – unlocking global understanding – and we are guided by our four values, which shape how we think, act and behave with all our stakeholders: “we partner”, “we pioneer”, “we progress” and “we deliver”.
The Group’s activities are highly skilled and often labour intensive and therefore are reliant upon the skills, dedication and passion of all of our people and contractors, who are expected to meet our clients’ demand for excellent quality and timely delivery.
We look to employ people who reflect the diversity of the Group’s communities and reinforce our ethical values and behaviours. No discrimination is tolerated and we endeavour to give all colleagues an excellent working environment, the latest technology, appropriate training and development support, social opportunities and competitive benefits packages.
The regular dialogues we hold with colleagues are important to help us understand corporate culture, address concerns in a timely manner and explore further initiatives to make RWS an even better place to work. Dialogue is encouraged via one-to-one meetings with line managers, departmental team meetings and colleague briefings, both in-person and virtual. The Group conducts an annual colleague survey which allows us to understand the drivers of engagement, and plans are then formulated at organisation, divisional and functional levels to implement actions to improve engagement. Working closely with senior management, corporate culture is discussed regularly at Board meetings and provides an opportunity to explore concerns and assess colleague feedback and, where appropriate, put actions in place.
Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision making by the Board
THE BOARD AND COMMITTEES
The Board recognises the importance of, and is committed to, ensuring that effective corporate governance procedures are in place that are appropriate for a public company of RWS’s size and complexity.
The Board is responsible to shareholders for the effective direction and control of RWS and corporate governance and internal controls. The Board meets formally no less than six times a year, with additional meetings arranged, as required.
Each Board meeting is preceded by a clear agenda and relevant information is provided to Directors in advance of the meeting. The Company has established Audit, Nomination and Remuneration Committees of the Board with formally delegated duties and responsibilities.
The Board comprises the Chairman, Julie Southern; CEO, Ian El-Mokadem; CFO, Candida Davies and seven Non-Executive Directors: Paul Abbot, Lara Boro (until 22 February 2024), Andrew Brode, Graham Cooke, David Clayton, Frances Earl and Gordon Stuart, together with the Company Secretary, Jane Hyde In addition, various members of the Group’s senior management team are invited to Board meetings, as required, to report on their particular areas of responsibility.
The Audit Committee is responsible for the independent monitoring of the effectiveness of the system of internal control, compliance, accounting policies and published financial statements on behalf of the Board. It receives and reviews reports from the Group’s management and external auditors relating to the annual financial statements and the accounting and internal control systems in use throughout the Group. Any significant findings or identified risks are reviewed so that appropriate action may be taken. In addition, the committee has oversight of the external audit process and reviews its effectiveness on an annual basis.
The Audit Committee comprises Gordon Stuart (Committee Chair), David Clayton and Frances Earl. The members are Non-Executive Directors and the Board is satisfied that they have recent and relevant financial experience. The Audit Committee operates under written terms of reference and is scheduled to meet at least twice a year. The Group’s external auditor and CFO attend the meetings when invited by the Audit Committee.
The Nomination Committee leads the process for appointment to the Board and ensures plans are in place for orderly succession for the Board and other senior management positions.
The Nomination Committee comprises Julie Southern (Committee Chair), Paul Abbott, Lara Boro, Andrew Brode, Frances Earl, Graham Cooke, David Clayton and Gordon Stuart, all of whom are Non-Executive Directors.
The Remuneration Committee’s principal responsibility is to determine the policy for the remuneration of the Chairman, Executive Directors, Executive Team and Company Secretary.
The remuneration of Non-Executive Directors is a matter for the Board, excluding Non-Executive Directors. No Director takes part in any discussion concerning his or her own remuneration.
The Remuneration Committee comprises Frances Earl (Committee Chair), David Clayton, Gordon Stuart and Lara Boro. The members of the committee are all Non-Executive Directors.
The Group’s remuneration policy is disclosed each year in the Group’s Annual Report and Accounts.
Division of Roles and Responsibilities
The Chairman leads and chairs the Board and has overall responsibility for corporate governance and the effective management of the Board.
The Senior Independent Director acts as a sounding board for the Chairman and a trusted intermediary for other Board members, leads the Chairman's performance review and succession process, and acts as an additional point of contact for shareholders.
The CEO provides leadership and management to the Group and its senior management team. The CEO promotes the development of objectives, strategies and performance standards whilst also overseeing and managing key risks across all divisions of the Group. The CEO also plays a lead role in devising and implementing the Group’s corporate development strategy, including identifying and evaluating potential acquisition targets, and in investor relations to ensure that communications with the Group’s existing shareholders and financial institutions is maintained.
The CFO is responsible for shaping and executing upon the financial strategy and operational direction of the Group. In this role she also supports the Group’s investor relations programme and corporate development efforts.
The General Counsel and Company Secretary holds overall responsibility for the Group’s legal, governance and risk management functions. She attends all Board and Committee meetings, disseminates information and provides advice to the Board. She collates specific potential risks with the members of the Executive Team for further assessment via the established risk management framework.
Principle 10: Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
The Group encourages the involvement of both institutional and private investors through a programme of meetings which encourage an open and honest dialogue.
Following the Group’s preliminary and half year results, meetings are held with analysts, institutional shareholders and groups of private shareholders. These meetings allow the Chairman and Executive Directors to update shareholders on the Group’s strategy and performance.
Regular updates are provided to the Board on meetings with shareholders and analysts, and brokers’ opinions are made available to the Board. Executive and Non-Executive Directors are available to meet shareholders if required. All Directors attend the Company’s AGM where the chairs of the Audit, Nomination and Remuneration Committees are available to answer questions.