Annual report and accounts 2023 - Flipbook - Page 89
Strategic Report
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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 Company’s investment in Boost Drinks Holdings
Limited (“Boost”): the Company acquired a 100%
equity stake in Boost in December 2022.
Management concluded that the Company
obtained control over Boost and has therefore
consolidated Boost as a fully owned subsidiary in the
Company’s accounts for the year ended 29 January
2023. The identification and valuation of intangibles
as well as the valuation of other assets acquired
and related assumptions, including any impairment
considerations, were a key area of focus. The ARC
received and considered reports from management
and the external auditor on these matters. The ARC
was satisfied with these reports and with the
accounting for the investment in Boost.
The Company’s acquisition of the remaining 38.2%
equity stake in MOMA Foods Limited (“MOMA”):
the Company obtained control of MOMA in the
prior year following its acquisition of an initial c.62%
equity stake in MOMA in December 2021. MOMA
was consolidated as a fully owned subsidiary in
the Company’s prior year accounts and a noncontrolling interest was recognised. Following the
Company’s acquisition of the remaining 38.2%
equity stake in MOMA in December 2022, the
Company holds a 100% equity stake in MOMA.
Management concluded that the non-controlling
interest should be derecognised as a result of this
transaction, with the difference between the put
option liability and the consideration paid released
to the income statement for the year under review.
The external auditor reviewed management’s
treatment of this transaction, including the
recalculation of the amounts released. The ARC
received and considered reports from management
and the external auditor on these matters. The
ARC was satisfied with these reports and with the
accounting for the investment in MOMA.
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The presentation and explanation of the use of
alternative performance measures (“APMs”): the ARC
considered a report from management regarding
the move from reporting exceptional items in the
financial statements to a singular tabular reporting
structure for the income statement and the use of
adjusting items as APMs for the year ended
29 January 2023; this move was made in line with
market and best practice. The ARC also considered
a report from the external auditor on management’s
presentation of APMs in the Annual Report and
Accounts for the year ended 29 January 2023,
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 items: 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 these items which arose during
the period under review as adjusting. Please see
above regarding the change from reporting
exceptional items to reporting adjusting items for
the year ended 29 January 2023.
Valuation of inventory: inventory was an area of
focus due to the price volatility related to raw
materials. The ARC received a report from
management confirming that the annual average
actual cost per case would be used as the method
of calculation for the purposes of valuing inventory
at the year end; this was supported by the external
auditor and the ARC. The ARC also received and
considered a report from the external auditor
following their review of management’s controls
and processes in relation to the valuation of inventory,
and their assessment of the risk identified. The ARC
was satisfied that the estimates and judgements
made by management were appropriate.
Corporate Governance
Accounts
The ARC receives regular presentations from members
of the senior management team. During the year, the
ARC considered presentations from representatives of
the management team on treasury and commodities
management, intellectual property risk, emerging
risks related to technology, brand support accruals,
procedures to prevent bribery and corruption, tax
strategy and the project to transition the Company’s
defined contribution pension schemes to an
outsourced master trust arrangement.
External audit
The Group’s external auditor is Deloitte LLP (“Deloitte”).
The current audit partner is David Mitchell, who
replaced David Sweeney with effect from July 2022
following David Sweeney’s completion of five years as
the Group’s audit partner. 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
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 2019, 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 18%, 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
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