47153 AG Barr Annual Report 2025 AW4 SQ WEB - Flipbook - Page 135
Strategic Report
Corporate Governance
Accounts
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable
person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent company financial statements
Materiality
£2.93m (2024: £2.51m)
£2.64m (2024: £2.26m)
Basis for determining materiality
5% (2024: 5%) of adjusted profit before tax.
Parent company materiality equates to 0.8% (2024: 0.8%) of
revenue, capped at 90% (2024: 90%) of Group materiality.
Rationale for the benchmark applied We have used adjusted profit before tax as the benchmark for
our determination of materiality as we consider this to be the
critical performance measure for the Group on the basis that
it is a key metric to analysts and investors. The adjusted items
in the year are summarised on page 193.
We have used revenue as the benchmark for our determination of
materiality as we consider this to be the key driver of the business.
As statutory materiality would be higher than component
materiality, we have capped materiality to be 90% of group
materiality being £2.64m (2024: £2.26m). 90% is deemed to be
appropriate based on the company only contribution to the Group.
Group materiality
£2.9m
Component
materiality range
£0.7m to £1.8m
Adjusted profit
before tax £58.50m
Adjusted profit before tax
Group materiality
Audit and Risk
Committee
reporting threshold
£0.15m
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the
materiality for the financial statements as a whole.
Group financial statements
Parent company financial statements
Performance materiality
70% (2024: 70%) of group materiality
70% (2024: 70%) of parent company materiality
Basis and rationale for
determining performance
materiality
In determining performance materiality, we considered the following factors:
• Our risk assessment, including our assessment of the group’s overall control environment and whether we were able to rely on
controls over a number of business processes; and
• Our past experience of the audit, and our consideration of the number of corrected and uncorrected misstatements identified
in prior periods.
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