47153 AG Barr Annual Report 2025 AW4 SQ WEB - Flipbook - Page 133
Strategic Report
Corporate Governance
Accounts
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of accounting included:
• Challenging underlying data and considering the impact of economic uncertainty on the assumptions, with reference to historical performance and other external data;
• Assessing the integrity of the model used to prepare the forecasts, testing the clerical accuracy of those forecasts, and considering the historical accuracy of the forecasts
prepared by management;
• Assessing the headroom in the forecasts (liquidity and covenants) by evaluating the financing facilities that are in place during the forecast period including the repayment
terms and covenants, and assessing whether these have been appropriately reflected in the model;
• Assessing the reasonableness of the downside scenarios and sensitivities performed by management; and
• Assessing the appropriateness of the going concern disclosures in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt
on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the group has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the
directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include
the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
5.1. Completeness and valuation of brand support discounts and cost accruals
Key audit matter description
Brand support discounts and cost accruals within trade and other payables of £16.7m (2024: £12.5m).
The Group incurs significant costs in agreeing sales discounts to support and develop its brands, with commercial teams agreeing joint
business plans with customers. Estimation is required in determining the level of variable consideration recognised, as there are timing
delays in receiving information on volume sold; therefore when computing the amounts to be recognised in the financial statement,
management are required to estimate total sales volumes. As such, in cases where sales discounts, promotions and brand support
campaigns span the year-end and where settlement has not been fully agreed at year-end, or where prior year claims arise, the
year-end accrual can depend on information not yet made available by the customer. Total amounts earned by the customer are
deducted from revenue.
Further details are included within “Key Sources of Estimation Uncertainty” as disclosed in the accounting policies within note 1 to the
financial statements.
Due to the high level of estimation involved, we have determined there is a potential for fraud through possible manipulation of this balance.
Brand support discounts and cost accruals are included within note 22 to the financial statements.
The Audit and Risk Committee’s consideration in respect of the risk is included on page 82.
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