47153 AG Barr Annual Report 2025 AW4 SQ WEB - Flipbook - Page 85
Strategic Report
Other areas
Other matters independently assessed and
considered by the ARC in respect of the period
under review were:
• Impairment of intangible assets: the ARC
identified and reviewed the valuation of
intangible assets and considered whether any
intangible assets should be impaired. The
ARC considered a report from management
and the external auditors in relation to their
impairment reviews of the intangible asset
base and was satisfied with management’s
conclusion that, following impairment
assessments carried out as part of the interim
and full year reporting processes, no
impairment was required. The ARC concluded
that the carrying values of intangible assets on
the balance sheet remained supportable. The
external auditor concurred with management’s
assessment.
• Assumptions used in the Company’s defined
benefit pension scheme: the Company
operates the A.G. BARR p.l.c. (2008) Pension
and Life Assurance Scheme, which includes
a defined benefit section. The Company
engages a third party, Hymans Robertson,
to assist in the IAS 19 valuation of the defined
benefit pension scheme liability. There is a risk
related to judgements made by management
in valuing the defined benefit pension scheme
liability, including the appropriateness of the
discount rate and inflation rate assumptions.
These variables can have a material impact in
calculating the quantum of the defined benefit
liability. During the year the ARC were satisfied
that management had considered and were
comfortable with the assumptions used by
Hymans Robertson (the ‘Assumptions’), and
received and considered a report from the
external auditor which stated that it had
carried out a review and benchmarking
exercise of the Assumptions and concluded
that they were within an acceptable range.
After discussion and challenge the ARC was
satisfied that the Assumptions proposed
were reasonable and these were approved.
• Going concern: the ARC considered and
challenged reports from management
regarding the going concern assumption and
the key environmental and trading sensitivities
applied, and was satisfied that this assumption
was appropriate. The external auditor
supported the ARC’s conclusion.
• Viability: the ARC considered and challenged
reports from management regarding the
viability statement, including information on
the Group’s financing facilities, and approved
the viability statement. The external auditor
supported the ARC’s conclusion.
• The presentation and explanation of the
use of alternative performance measures
(‘APMs’): the ARC considered a report from
the external auditor on management’s
presentation of APMs in the Annual Report and
Accounts for the year ended 25 January 2025,
including a report on whether the use of
APMs and statutory figures was generally
well balanced and APMs were appropriately
labelled and defined, and was satisfied that
APMs were appropriately presented.
• Adjusting item(s): the ARC considered and
challenged a report from management in
relation to the classification and presentation
of certain items as adjusting items, and was
satisfied with the treatment and presentation of
the items, which arose during the period under
review as adjusting. The external auditor
concurred with the ARC’s assessment.
Throughout the year, ARC received regular
presentations from senior management,
providing valuable insights into key aspects
of the Group’s operations and strategy. These
presentations covered a range of topics, including
the Group’s pension strategy, tax strategy and risk
management policies, governance frameworks
around commercial pricing, commodity
procurement, intellectual property protection
and cyber risk management. These discussions
allowed the ARC to assess the effectiveness of the
Group’s approach in each of these critical areas
and to ensure alignment with overall business
objectives and risk management protocol.
Corporate Governance
External audit
The Group’s external auditor is Deloitte LLP
(‘Deloitte’). The current audit partner is David
Mitchell. The ARC reviews the external auditor’s
performance, independence and objectivity
annually. The ARC ensures that procedures are
in place to safeguard the external auditor’s
independence and objectivity. The external
auditor reports regularly to the ARC on the
actions that it has taken to comply with its
professional and regulatory requirements
and current best practice in order to maintain
its independence and objectivity.
The Group has a policy in place, which ensures
that the provision of non-audit services by the
external auditor does not impair the auditor’s
independence or objectivity. This policy reflects
the Financial Reporting Council’s Ethical Standard
2024, such that the external auditor may only
provide non-audit services, which are closely
linked to the audit itself or are required by law
or regulation. The policy was complied with
during the year.
Details of the amounts paid to the external
auditor during the year for audit and non-audit
services are set out in Note 3 to the financial
statements. The ratio of fees for non-audit
services to those for audit services for the year
was 10%, within the 70% cap in the Financial
Reporting Council’s guidance. The ARC
considered the nature and level of non-audit
services provided and was satisfied that the
objectivity and independence of the external
auditor were not affected by the non-audit work
undertaken. The non-audit fees during the year
related to the performance of the half year
review. The nature of and level of fees for the
non-audit services provided were considered by
Deloitte who concluded that they did not present
a threat to Deloitte’s independence.
Deloitte was appointed as the Group’s external
auditor in May 2017 following a competitive
tender process. There are no contractual
obligations, which restrict the ARC’s choice of
external auditor. The senior statutory auditor
rotates every five years to ensure independence.
Accounts
The ARC acknowledges the requirement to
tender the external audit contract at least every
ten years. The Company confirms that it has
complied with the provisions of the Competition
and Markets Authority’s Statutory Audit Services
Order in respect of the financial year. In line with
regulation, during the year ending January 2027,
the ARC will initiate a tender of the external
audit contract beginning with the 2027/28
financial year.
During the year, the ARC reviewed and
monitored the external auditor’s independence
and objectivity and the effectiveness of the
external audit process. The ARC reviewed
and approved the external auditor’s plan for
undertaking the half year review and the year
end audit, including the scope of its work and
its proposed approach to the key risk areas
identified. After discussion and challenge the
ARC approved this plan. The ARC reviewed
the detailed reports prepared by the external
auditor setting out its findings from the half year
review and the year end audit, with a particular
focus on the areas of audit risk identified.
The ARC also received comprehensive papers
from management in relation to the half year
review and the year end audit. The ARC held
meetings with the external auditor in the absence
of management to discuss the interim review
and the year end audit findings and processes.
The ARC was satisfied with the internal processes
run by management and its response to challenge
by the external auditor.
The ARC carried out a review of the effectiveness
of the external auditor and the external audit
process during the year, led by the Chair of the
ARC. This review included an internally facilitated
detailed and comprehensive evaluation of the
Group’s external auditor and the external audit
process using written survey questionnaires,
which were completed by the executive directors
and relevant members of senior management.
Members of the ARC carried out an internally
facilitated review of the Group’s external auditor
and the external audit process during the year
using written survey questionnaires. The results
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