RWS AR 23 Final Single pages - Flipbook - Page 103
CONCLUSIONS RELATING TO GOING
CONCERN
In auditing the 昀椀nancial statements, we have concluded
that the directors’ use of the going concern basis of
accounting in the preparation of the 昀椀nancial statements
is appropriate. Our evaluation of the directors’ assessment
of the group and parent company’s ability to continue to
adopt the going concern basis of accounting included:
•
understanding management’s process and controls
related to the assessment of going concern;
•
assessing the adequacy of the going concern
assessment period until 31 March 2025, considering
whether any events or conditions foreseeable after
the period indicated a longer review period would be
appropriate;
•
obtaining management’s going concern models which
included a base case and downside scenarios of the
going concern assessment period. These forecasts
include an assessment of liquidity including assessment
of compliance with the covenant requirements of the
Group’s external debt;
•
checking the arithmetical accuracy of the cash 昀氀ow
forecast models and assessing the Group’s historical
forecasting accuracy, comparing these conclusions to
the downside scenarios prepared by management;
•
con昀椀rming the continued availability of debt facilities by
examining executed documentation including clauses
relating to covenants;
•
considering the downside scenarios identi昀椀ed by
management and independently assessing whether
there are any other scenarios which should be
considered, and recalculated the impact on the available
cash 昀氀ows of the downside scenarios in the going
concern period;
•
considering whether the Group’s forecasts in the going
concern assessment were consistent with other forecasts
used by the Group in its accounting estimates, including
goodwill impairment and deferred tax asset recognition;
•
evaluating what reverse stress testing scenarios
could lead either to a breach of the Group’s banking
covenants or liquidity shortfall, and considering
whether these scenarios were plausible;
•
challenging management’s assumptions within
the cash 昀氀ow forecasts in relation to the forecast
growth rates in the going concern period, including
comparison to internal and external economic
forecasts;
•
comparing management’s forecasts to actual results
through the subsequent events period and performing
enquiries to the date of this report; and
•
assessing if the going concern disclosures in the
昀椀nancial statements are appropriate and in accordance
with the revised ISA UK 570 going concern standard.
We observed that the Group continues to remain
pro昀椀table (2023: £123.8 million adjusted operating pro昀椀t,
2022: £138.5 million) and the Group generates positive
operating cash昀氀ows (2023: £107.5 million, 2022: £127.5
million). The Group has access to a committed revolving
credit facility of $220 million, which expires in 2026. The
covenant compliance necessary under both covenant
test ratios within the RCF have been modelled as part of
the going concern forecast.
Based on the work we have performed, we have not
identi昀椀ed any material uncertainties relating to events
or conditions that, individually or collectively, may cast
signi昀椀cant doubt on the group and parent company’s
ability to continue as a going concern for the period to 31
March 2025.
Our responsibilities and the responsibilities of the
directors with respect to going concern are described in
the relevant sections of this report. However, because
not all future events or conditions can be predicted, this
statement is not a guarantee as to the group’s ability to
continue as a going concern.
OVERVIEW OF OUR AUDIT APPROACH
Audit scope
Key audit matters
Materiality
•
We performed an audit of the complete 昀椀nancial information of 8 components and
audit procedures on speci昀椀c balances for a further 5 components.
•
The components where we performed full or speci昀椀c audit procedures accounted for
74% of loss before tax adjusted for exceptional items, impairment losses, acquisition
costs and amortisation of acquired intangibles, 87% of Revenue and 92% of Total assets.
•
•
•
Revenue recognition
•
Overall group materiality of £5.9m which represents 5.0% of Loss before tax adjusted for
exceptional items, impairment losses, acquisition costs and amortisation of acquired intangibles.
Impairment of goodwill and acquired intangibles
Capitalisation and impairment of development costs
FINANCIAL STATEMENTS RWS Holdings plc — Annual Report 2023
103
