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UK Tax Strategy
Introduction
This UK Tax Strategy sets out the approach of the Williams Lea Group (the “WL Group”) to risk management and governance arrangements in relation to UK taxation. It applies to all UK entities in the WL Group within the charge to UK Corporation Tax and covers the attitude towards tax compliance, tax governance, tax planning and tax risk management as well as the approach to dealing with the UK tax authorities (HMRC).
The publication of this UK Tax Strategy complies with the requirements of the Finance Act 2016 Schedule 19 paragraphs 19(2) and 19(4) for the financial year ending 31 December 2024 and remains in force from the date of publication until it is superseded.
Approach to Tax Risk Management and Tax Governance
As a multinational organisation, the WL Group is exposed to a variety of tax risks. The WL Group looks to manage tax risks in a similar way to other risks in the WL Group.
The Finance function is responsible for monitoring tax risks within the business and internal controls are put in place to identify, quantify and manage those risks. Day to day management of the WL Group’s tax affairs is delegated to the Group Head of Tax, a senior member of the Finance function who reports directly into the Group Chief Financial Officer (“GCFO”). The GCFO is the executive member with responsibility for tax matters. Ultimate responsibility for tax risk management and tax governance rests with the WL Group Board.
The WL Group is committed to full compliance with all statutory tax requirements and full disclosure to relevant tax authorities. The WL Group’s tax affairs are managed in a way which takes into account the group’s wider corporate reputation in line with the group’s overall high standards of governance.
Attitude Towards Tax Planning
The WL Group understands its responsibilities in complying with all relevant tax legislation and regulations in every country in which it operates. The WL Group reserves the right to structure its affairs in a tax efficient manner and to utilise tax reliefs and incentives in accordance with intended government policy objectives. The WL Group does not enter into wholly artificial structures or transactions which serve no commercial purpose other than to avoid tax.
All WL Group employees are subject to the Code of Conduct provided to them when joining the business and this is available on the employee intranet.
External advice may be sought in relation to any area of taxation, including tax compliance processes, tax structuring and tax planning.
Level of Acceptable Tax Risk
There are no formal levels of acceptable tax risk. Tax risks are managed on the same basis as other risks within the business. The WL Group is fully committed to complying with all tax laws and regulations in each of the countries in which it operates.
Approach towards Dealings with HMRC
The WL Group seeks to establish and maintain an open and constructive relationship with HMRC. The WL Group is committed to compliance with all statutory obligations and undertakes to provide full disclosure of all relevant matters. Where appropriate, the WL Group will engage with HMRC at an early stage to address any areas of uncertainty and seek to resolve disputed matters in a timely manner.
The Walker Guidelines
The private equity industry faced significant reputational challenges in the UK in 2007 and 2008, and as a result, the British Private Equity and Venture Capital Association commissioned Sir David Walker to conduct a review into disclosure and transparency within the industry. This review led to the development of the Walker Guidelines, which apply to the largest private equity-backed companies in the UK and operate on a ‘comply or explain’ basis. The Walker Guidelines are the cornerstone of activities to demonstrate the UK private equity industry’s commitment to transparency of its activities. Williams Lea Group intends to comply with these guidelines, with the exception of the non-financial KPIs as explained later in this report.
Ownership
The AI Wertheimer Holdings Group (WL Group) is owned by funds containing institutional owners. It is controlled by funds advised by Advent International Corporation, a private equity investment company.
About Advent International
Founded in 1984, Advent International Corporation (“Advent”) is one of the largest and most experienced global private equity firms. With offices on four continents, Advent has established a globally integrated team of more than 470 investment professionals, focused on buyouts and growth equity investments in five core sectors. Since beginning its private equity strategy in 1989, Advent has invested $61 billion in over 390 private equity investments across 42 countries, and as of 31 December 2021, manages $88 billion in assets. For more than 30 years Advent International has sought to invest in well-positioned companies and partner with management teams to create value through sustained revenue and earnings growth.
The board that directs and controls the group operates at the level of a subsidiary company, Wertheimer UK Limited.
Directors of Wertheimer UK Limited
The directors who hold office were as follows:
Appointed
| James Brocklebank | 29 January 2018 |
|---|---|
| Chris Benson | 22 March 2018 |
Messrs Brocklebank and Benson are representatives of Advent International and the investment funds managed by Advent.
Short biographies for the current Board members (including Advent directors) are shown below:
Ralph Kugler (Chairman Williams Lea Group)
Ralph has over 26 years of experience in senior executive positions within international and FTSE-100 businesses. He previously served on the Board of Unilever PLC, spending 29 years in a variety of roles and has also held Non-Executive positions at Intercontinental Hotels Group PLC and Mars, and is a former Senior Advisor to 3i Group.
Richard Hanks (Chief Financial Officer Williams Lea Group)
Richard has a multi decade experience as CFO in both Public and Private Equity backed companies. He has driven material M&A and value creation programs as well as experience leading an IPO and associated capital markets experience. Richard is a Chartered Accountant and has a BA (with Honors) in Industrial Economics, University of Nottingham.
James Brocklebank (Managing Partner at Advent International Ltd – London)
Experience: James Brocklebank joined Advent in 1997. Based in London, he co-chairs Advent’s global Executive Committee and is co-head of the firm’s European business. He is a member of the Europe and North America Investment Committees. His sector focus is Business and Financial Services. James sits on the Advisory Council of Level20, is chairman of the Private Equity Taskforce of the Sustainable Markets Initiative (SMI) and is a member of the CFR’s Global Board of Advisors. Prior to Advent, James worked on international mergers and acquisitions in the London office of investment bank Baring Brothers and its affiliate Dillon, Read & Co. in New York. James has an MA from Cambridge University.
Investments: James has worked on 17 Advent investments, including Concardis GmbH, Equiniti, GFKL, Nets, Nexi, V. Group, Williams Lea Tag and Worldpay
Directorships: Current: V.Group Limited, Williams Lea
Previous: Equiniti, MACH, Tertio Telecoms, Worldpay, Nexi, Nets Holding
Chris Benson (Director at Advent International Ltd – London)
Experience: Chris Benson joined Advent in 2012. Previously, he worked for Actis, an emerging market private equity fund, making investments across Africa, Asia and Latin America. Prior to Actis, he was a consultant with OC&C Strategy Consultants in London.
Chris has an MA in Philosophy, Politics and Economics from Oxford University and an MBA from Harvard Business School, where he was a Fulbright Scholar.
Investments: Chris has worked on Advent’s investments in Nexi, Evri, Towergate, V.Group, Williams Lea Tag and Worldpay
Directorships: Current: Williams Lea
Financial position
Borrowings
The Group’s borrowings at 31 December 2021 were put in place at the time of the acquisition by Advent International on 30 November 2017. On 6 May 2022 the Group completed a refinancing of its existing borrowings whereby a new funding structure was put in place comprising a financing facility of €310m and a further acquisition facility of €50m both repayable in 2027 and a revolving credit facility of €40m maturing in 2025. On 10 May 2022, the existing senior bank and payment in kind loans were repaid in full. In June 2023 the Group amended its existing borrowing facilities, reducing the size of the financing and acquisition facilities from €310m and €50m to €185m and €13.7m respectively with both still repayable in 2027. The size of the revolving credit facility of €40m repayable in 2025 was reduced to €30m and extended to 2026.
Senior facilities
The senior facilities agreement included one financial covenant, a leverage ratio, which was tested on a quarterly basis. The covenant required that the Group’s net debt as at 31 December 2023 did not exceed 5.75 times its adjusted consolidated EBITDA. At all testing periods during the year, the covenant tests were met. At year ended the Group’s leverage ratio was 3.81.
Hedging instruments
The Group has entered into forward foreign currency contracts to mitigate the exchange rate risk for certain foreign currency payables incorporating an interest rate swap to hedge the Group’s exposure to interest rate movements on the Senior bank loans.
Financial risk management
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s activities expose it to a variety of financial risks including inflation risk, credit risk, contract risk, market risk and liquidity risk.
Inflation risk
Inflation arises when goods and services sold by the Group are purchased from external suppliers. These costs are subject to regular review and competitive procurement processes. The Group is partially exposed to commodity price risk as a result of key raw materials historically showing volatility in price. These relate principally to the procurement service line and are also subject to regular review and competitive procurement processes. Where possible the Group passes the effects of such volatility on to its customers. Where not possible, this is communicated and the risk assessed by senior management.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations. Credit risk management follows normal best practice and includes varying levels of credit assessment according to customer size and active credit performance management through key performance indicators such as days’ sales outstanding. As the customer base is predominantly blue chip multinational clients, the risk of a major client defaulting is considered low.
Contract risk
Contract risk is the risk of financial loss to the Group arising from contract breach. Contract risk is managed by a formal contract approval processes, active operational management and, in some cases, certain risks are insured.
Market risk
Market risk is the risk that changes in foreign exchange rates and interest rates will affect the Group’s income or costs.
- Foreign currency risk is attributable to investments, financing measures and operating activities. Cross-currency swaps are used to limit foreign currency risk where appropriate. These transactions relate to the exchange rate hedging of material payments covering general
business activities that are not made in the functional currency of the respective Group companies. The principle of matching currencies applies to the Group’s financing activities. - Hedging transactions performed in 2023 as part of foreign currency risk management related primarily to Sterling, the US dollar and the Euro.
- Interest rate risk results from changes in market interest rates, primarily for medium- and long-term debt. Interest rate swaps, cross-currency swaps and other types of interest rate contracts are entered into to hedge against this risk primarily under fair value or cash flow hedges and depending on market conditions.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities. The Group aims to mitigate liquidity risk by managing cash generation by its operations and maintains funds on demand to meet all operational expense including the servicing of financial obligations.
Principal activities
The Williams Lea Group is a leading global provider in skilled, business-critical support services to law firms, investment banks, and professional service firms.
As a leading partner to legal and financial services firms worldwide, the Group enables customers to focus on their core activities and optimise people and resources to drive success. Using global expertise and local knowledge, the Group helps customers navigate complexity by building solutions focused on process optimisation, deploying advanced technology, operational excellence driven by the best people in the outsourcing industry.
As a leading independent communications optimisation partner to legal and financial services firms worldwide, the Group enables customers to focus on their core activities and optimise people and resources to drive success. Using global expertise and local knowledge, the Group helps customers navigate complexity and constant change by building solutions focused on process optimisation, advanced technology and expert activation via the best people in the industry.
Principal risks and uncertainties
The Group assesses risk at board level and through other operational boards which meet on a regular basis. The principal risks and uncertainties facing the Group are set out below:
General business environment
The business of the Group substantially depends on the financial health of our customers which in turn depends on the global macro-economic environment.
Competition
The Group operates in a competitive environment and all contracts and processes are subject to regular analysis with the aim of retaining existing customers, growing the customer base and optimising the economic performance under customer contracts.
Employees
The hard work, expertise and commitment of its employees are essential to the commercial success of the Group and a high priority is placed on the effectiveness of employment practices and human resource development initiatives. Actions and programmes in relation to employee engagement and involvement are described in the Directors’ report.
Information technology and cyber risks
Information technology is an integral part of the Group’s service capability and its business performance depends heavily on the functioning and performance of its applications and infrastructure. Active risk management processes are in place to maximise the efficiency of the Group’s technology. The directors continuously monitor data security compliance and risk.
Key performance indicators
A number of measures are reported internally. A range of Group financial and non-financial KPIs are prepared.
Business model
The Group’s purpose is to create value for its clients by working smarter, leveraging technology, enhancing efficiencies, improving their customers’ experience and strengthening their business workflows. The Group’s clients and their customers are at the heart of everything the business does. Long-term partnerships, strong relationships, exceptional employees and leading technology have been the driving force behind the Group’s success.
Williams Lea is a global provider of skilled business-critical support services to financial, legal and professional services firms, connecting people, processes and technology to streamline key business and administrative functions and helping companies adapt to a more virtual and digital workplace.
Built on a strong heritage, great client relationships and a talented team. Williams Lea is the trusted global outsourcing provider to clients in highly regulated environments.
Business situation and strategy
The key future strategies to deliver growth in the Group’s business critical support services are as follows:
- Investment in broader digital capabilities to drive efficiencies improve the client offering.
- Customer excellence programme to drive commercial effectiveness including investment in next generation technology platforms to enhance client experience and value.
- Building the mergers and acquisition pipeline to bolster Group capabilities and to bring in additional service lines as well as continued geographical expansion.
Outlook
Market dynamics are providing Williams Lea with significant growth opportunities. COVID-19 accelerated the tendency to outsource across many industries. The cost inflationary environment being experienced globally is driving businesses to focus on optimisation and cost saving through outsourcing. Seismic shifts in employment market dynamics driven by COVID-19, whereby working from home has become a more acceptable norm, has made remote service delivery options accepted by clients, which has accelerated the shift to outsourcing. These markets shifts, particularly in the legal and investment banking industries where Williams Lea has a strong presence, provides significant growth opportunities. Furthermore, digitalisation and automation are opening up new opportunities to Williams Lea, both in terms of upgrading existing support services, as well as introducing new solutions. Significant investments in technologies have provided Williams Lea a strong foothold in the fast growing segment of digital support services to professional firms.
Employees
The Group believes that the wellbeing of its employees and their active participation in two-way communication forums is fundamental to the success of the business. Regular meetings, conference calls and webcasts are held where Company strategy and operational matters are discussed. Training is provided according to structured training and development plans for employees at all levels.
Employee engagement surveys are conducted annually and the most recent one had a higher participation rate than in recent years. The results of the survey are built into communication and consultation plans for each employee or, where more relevant, groups of employees.
Full consideration is given to all applications for employment and to treat all staff fairly, regardless of gender, religion, race, age or disability. Where existing employees become disabled, it is the Company’s policy, where practicable, to provide continuing employment under normal terms and conditions and to provide training and career development and promotion opportunities to disabled employees.
Senior employees participate directly in the success of the business through the Group’s bonus schemes. The organisation publishes information on the Career and Development Plan (CDP) portal.
Our Learning
Learning and development (L&D) is a constant focus, where we react to industry developments and client demands by continually learning new disciplines. Our investment in our people is vital to professional and personal development and assures both our people and clients we are committed to their growth.
We promise to provide all employees with ample opportunity to build on existing skills but encourage growth into new disciplines across industry practices. We want to cultivate a place of work where employees feel they are performing at their best, growing in confidence, exploring internal prospects and ultimately, reaching their full potential.
Gender diversity information
The Group is committed to providing equal opportunities in employment and eliminating unlawful and unfair discrimination in employment and against clients.
The Group values the differences that a diverse workforce brings to the organisation and will not discriminate because of age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race (which includes colour, nationality and ethnic or national origins), religion or belief, sex or sexual orientation (each of these being a “protected characteristic” in discrimination law). It will not discriminate because of any other irrelevant factor and will build a culture that values openness, fairness and transparency.
The gender split of the Group’s work force at the end of December 2023 is set out below:
| Male | Female | Non-binary | Not declared | Total | |
|---|---|---|---|---|---|
| Board | 2 | – | – | – | 2 |
| Senior management | 9 | 5 | – | – | 14 |
| Total workforce | 3,541 | 3,209 | 15 | 43 | 6,808 |
In accordance with the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, the Company published our Gender Pay Gap Analysis which can be viewed on the Company Website.
Williams Lea is committed to providing equal opportunities in employment and eliminating unlawful and unfair discrimination in employment.
Williams Lea values the differences that a diverse workforce brings to the organisation and will not discriminate because of age, disability, marriage and civil partnerships, pregnancy and maternity, race (includes colour nationality, and ethnic or national origins), religion or belief, sex or sexual orientation. It will not discriminate because of any other irrelevant factor and will build a culture that values openness, fairness and transparency.
View Williams Lea’s 2023 Gender Pay Gap Report.
Environmental matters
Please refer to page 13 of the 2023 Annual Report.
Social community and human rights issues
The Group is developing its Corporate Social Responsibility (CSR) strategy to widen its reach and measure its impact across the many communities we engage with.
Pursuant to Section 54(1) of the Modern Slavery Act 2015 the Group has taken and is continuing to take adequate practices to ensure that modern slavery or human trafficking is not taking place within our business or supply chain.
Our People
In 2021, the formation of dedicated global DE&I (Diversity, equity and inclusion) teams drove initiatives that would make a difference to our people. We aim to break down barriers, encourage conversation and ignite ideas.
We want all employees to have a voice, to openly express who they are and to feel safe, respected and valued. DE&I at the Group is an all-inclusive request for equality that encompasses gender, gender identity, age, race, religion, ethnicity, disability and more.
Collecting global baseline data was key to identifying opportunities where we can improve diversity across genders, and race/ethnicities; this helped us establish measurable DE&I objectives and programmes for the forthcoming years.
We are proud to have:
- A diverse team spanning the globe
- Completed training to aim to eliminate bias
- 50% of women in leadership positions (directors and above) bolstered by Internal Women in Leadership
- programmes (EMEA)
- 16% mean pay gap of basic salary of FTE based on gender and further plans to reduce this (EMEA)
- Collected baseline data globally to identify opportunities to improve diversity
- Over 12 DE&I initiatives to get employees involved across 2021 around Family, Gender Equality, LGBT+, Mental Health and more (Global)
- New talent acquisition tactics to establish more diverse talent pools and inclusive recruiting methods.
Modern slavery encompasses slavery, servitude, human trafficking and forced labour. The Group has a zero-tolerance approach to any form of modern slavery. We are strongly committed to playing our part in eradicating modern slavery by ensuring we act ethically and with integrity and transparency in all business dealings and to putting effective systems and controls in place to safeguard against any form of modern slavery taking place within the business or our supply chain.
Our Policies
Our internal policies ensure that we are conducting business in an ethical and transparent manner, such as:
- Recruitment policy– This includes vetting, eligibility to work, safeguards our employees against human trafficking or individuals being forced to work against their will.
- Code of Conduct– Our code defines the objectives and rules that reflect our commitment to responsible, ethically irreproachable and legally compliant behaviour from all employees and contractors.
- Whistleblowing policy– where there are concerns regarding any unethical conduct within our business, including any forms of modern slavery, we strongly encourage our employees to report the concern so we may properly and quickly resolve the situation. An external and independent whistleblowing hotline service operates 24 hours a days 365 days a year, across approximately 40 countries enabling our employees to report matters anonymously, without fear of reprisal and includes a translation service.
Our Suppliers
The Group works with a wide and varied network of suppliers to execute and support solutions that we design for our clients. Supplier due diligence is a critical part of what we provide for our clients and essential for the security and performance of our own business.
All suppliers to the Group must go through our due diligence process at the on-boarding stage and are then subject to regular audits and reviews. These audits are based on perceived risk (i.e. country of supplier, strategic importance of supplier, and handling of confidential data) with a tiered approach taken to ensure each supplier’s corporate social responsibilities are aligned with that of the Group and, most importantly, United Nations Global Compact, the UN Universal Declaration of Human Rights as well as the 1998 International Labour Organization Declaration on Fundamental Principles and Rights at Work in addition to full compliance with the UK legislation, including the Modern Slavery Act.
Our Supplier Code of Conduct sets the minimum standards for doing business with the Group, and we request is signed by each supplier as part of the onboarding process, with follow up to ensure our policies are adhered to. We also review supply chain contracts to ensure they contain the appropriate legislative requirements.
Breaches of our code and/or the Modern Slavery Act within our supply chain are treated seriously and investigated in detail. Whilst we shall, of course look to support companies in their efforts to comply with the legislation, in the event of a serious breach, a termination of the supplier relationship could occur.
Key Performance Indicators
We will know and understand the effectiveness of the steps that we are taking to ensure that slavery and/or human trafficking is not taking place within our business or supply chain if:
- No reports are received from employees, the public, or law enforcement agencies to indicate that modern slavery practices have been identified; and by
- Completing annual due diligence, where necessary, on our supplier’s code of conduct.
Looking Forward
We will periodically review the effectiveness of our processes and systems and any changes will be reflected in future annual statements.
Globally, the Group’s employees have participated and volunteered across a wide range of charitable initiatives including 22,000 hours for employee paid volunteer day incentive globally, Ukraine crisis fundraising, sponsoring POPAI’s Retail Recycling Research, Alexandra Murphy HHT Foundation, Pencils for Kids, World Vision India sponsoring a child, fundraising for Epilepsy Society and Alzheimer’s Society and many other charities, all aiding the underprivileged in the community.