Accounting standards require that directors satisfy themselves that it is reasonable for them to conclude whether it is appropriate to prepare financial statements on a going concern basis. There has been no material uncertainty identified which would cast significant doubt upon the Group's ability to continue using the going concern basis of accounting for the 12 months following the approval of this Annual Report.
In assessing going concern, the Directors take into account the Group's cash flows, solvency and liquidity positions and borrowing facilities. At period end, the Group had cash and cash equivalents of £45.8 million, external gross debt (excluding finance leases payable to MHE JVCo) of £53.3 million and net current liabilities of £(59.5) million. The Group has a mix of short and medium term finance arrangements and has an unutilised £210 million revolving credit facility which contains typical financial covenants and runs until July 2019. The Group forecasts its liquidity requirements, working capital position and the maintenance of sufficient headroom against the financial covenants in its borrowing facilities (see below). The financial position of the Group, including information on cash flow, can be found in Our Financials. In determining whether there are material uncertainties, the Directors consider the Group's business activities, together with factors that are likely to affect its future development and position (see Our Strategy) and the Group's principal risks and the likely effectiveness of any mitigating actions and controls available to the Directors (see How We Manage Our Risks).
Further details of the Group's considerations are provided in the Group's Viability and Going Concern Statement in How We Manage Our Risks.
Impairment of Assets Based on the Separation of the Business into Cash Generating Units
The Group is required to undergo an assessment of the future viability of assets grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Given the Group's current operating structure, the lowest level at which cash flows can reasonably be assessed is for the Group as a whole. The Board does not consider that any further impairment of assets is required. There are a large number of assumptions and estimates involved in calculating these future cash flow projections, including management's expectations of:
- Increase in Revenue;
- Growth in EBITDA;
- Timing and quantum of future capital expenditure; and
- Estimation and cost of future funding.