Report on the audit of the financial statements continued Our audit approach continued How we tailored the audit scope continued
where management evaluated that climate risk has a potential impact are set out in note 1 to the financial statements. The directors have reached the overall conclusion that there has been no material impact on the financial statements for the current period from the potential impact of climate change. We used our knowledge of the group to challenge management’s assessment. We particularly considered how climate risk would impact the assumptions made in the forecasts prepared by management used in their goodwill impairment analysis, going concern and viability. We also considered the consistency of the disclosures in relation to climate change (including the disclosures in the Non-Financial and Sustainability Information Statement) within the Annual Report with the financial statements and our knowledge obtained from our audit. Our procedures did not identify any material impact in the context of our audit of the financial statements as a whole, or on our key audit matters for the year ended 30 September 2025. Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
We also performed audit procedures over the consolidation adjustments. The entities where we conducted audit work accounted for approximately 87% (2024: 91%) of the group’s revenue. For the remaining 44 management reporting units which were not subject to further audit procedures, we performed analytical procedures over 10 of these reporting units to respond to any potential risks of material misstatement in the group financial statements. The remaining 34 reporting units were considered to be inconsequential for the group’s financial statements. Included within above are the management reporting units relating to the group’s Escode business, which has been reclassified as held for sale and presented as a discontinued operation. Our audit scope included performing specific audit procedures relating to the presentation of the Escode business, including Escode specific consolidation adjustments. The parent company is comprised of one reporting unit which was subject to a full scope audit for the purposes of the company financial statements. The impact of climate risk on our audit We made enquiries of management to understand the process they have adopted to assess the extent of the potential impact of climate risk on the group’s financial statements. The key areas of the financial statements
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – group
Financial statements – company
Overall materiality
£3,000,000 (2024: 3,200,000).
£3,200,000 (2024: £3,400,000).
How we determined it
1% of total revenue (including discontinued operations)
1% of total assets
Rationale for benchmark applied
The company does not trade and therefore total assets is considered to be the most appropriate benchmark.
We considered materiality in a number of different ways and used our professional judgement having applied ‘rule of thumb’ percentages to a number of potential benchmarks. On the basis of this, we concluded that 1% of total revenue (including discontinued operations) is an appropriate level of materiality considering the overall scale of the business.
• We obtained directors’ latest going concern assessment, which included reasonably possible scenarios for a) the potential sale of the Escode business is completed within the going concern period; and b) the sale of the Escode business is not completed within the going concern period. • We tested the mathematical integrity of the directors’ going concern forecast models. • We evaluated and assessed the directors’ key assumptions, including assumptions relating to revenue and operating margins, in the going concern assessment over the period to the end of December 2026, which included consideration of the severe but plausible downside scenarios. • We evaluated and challenged management on the impact of the potential sale of the Escode business to the group’s going concern assessment, which included evaluating the impact of the sale to the group’s net debt position and committed financing facilities. • We evaluated the appropriateness of the severe but plausible downside scenarios which took into account the principal risks faced by the group, including the loss of key customers and further reductions in the group’s Technical Assurance Services (TAS) business. • We obtained the terms of the group’s revolving credit facility and the covenants in place in relation to this facility and determined that the directors’ forecasts in reasonably possible scenarios identified by management demonstrated compliance with all covenant conditions for at least 12 months from the date of the approval of the financial statements. • We agreed the opening net debt position within the forecast to bank statements and revolving credit facility statements. • We reviewed the disclosures made in respect of going concern included in the financial statements.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality allocated across components was between £879,000 and £2,325,000. Certain components were audited to a local statutory audit materiality that was also less than our overall group materiality. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2024: 75%) of overall materiality, amounting to £2,250,000 (2024: 2,400,000) for the group financial statements and 2,400,0000 (2024: 2,500,000) for the company financial statements. In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount in the middle of our normal range was appropriate. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £150,000 (group audit) (2024: £160,000) and £160,000 (company audit) (2024: £170,000) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons. Conclusions relating to going concern Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the going concern basis of accounting included:
NCC Group plc — Annual report and accounts for the year ended 30 September 2025 101
Made with FlippingBook Online newsletter maker