Going concern, viability and s172(1) statements GOING CONCERN AND VIABILITY STATEMENT Key judgements and mitigating actions At the time of approving the financial statements, the Board The key judgement that the Directors have considered in of Directors is required to formally assess that the business forming their conclusion is the potential impact on future has adequate resources to continue in operational existence revenue, profits and cashflows of a downturn in the homewares for the foreseeable future and as such can continue to adopt market as the hospitality and travel industries re-open and the the ‘Going Concern’ basis of accounting. The Board is also impact of further lockdowns asa result of the ongoing Covid-19 required to state that it ‘has a reasonable expectation that pandemic. In terms of future lockdowns, the Directors have the Group will continue in operation and meet its longer- considered both a ‘circuit break’ style lockdown in December term liabilities as they fall due’(the ‘Viability Statement’). 2021 and a more prolonged period of lockdown, as seen in To support this statement, the Board is required to consider early 2021,both of which could result in future store closures. the Group’s current financial position, its strategy, the In forming their conclusions, the Directors reviewed the trading market outlook and its principal risks. In FY20, a three-year performance during the three national lockdowns in the past period was chosen due to the uncertainty arising from 18 months and the trading performance when restrictions the pandemic. However, in FY21, the Group has chosen have been lifted. In forming their conclusions, the Directors to review viability over a five-year period reflecting the also considered the potential mitigating actions that the Group confidence the Board has in the future growth of the could take to preserve liquidity and ensure compliance with business. This is aligned to the ‘central case’ five-year plan the Group’s financial covenants. In doing so, judgement has approved by the Directors in May 2021, with two ‘severe but been applied in determining whether such actions would be plausible downside’ scenarios and two reverse stress tests reasonably possible to execute as well as the financial impact of as described on page 90. taking such actions. In terms of mitigating actions, the Directors are confident that they would be able to take similar actions Following this review, the Directors have a reasonable to those taken during the first lockdown in March 2020, which expectation that the Group has adequate resources to rapidly secured the financial stability of the business. continue in operational existence for the foreseeable future and they continue to adopt the going concern basis of accounting in preparing the annual financial statements. The Directors have reached this conclusion based on the following considerations. DUNELM GROUP PLCANNUAL REPORT & ACCOUNTS 2021 89 STRATEGIC REPORT GOVERNANCEFINANCIAL STATEMENTSOTHER INFORMATION