CRR Case Summaries and Entity-specific Press Notices
The FRC publishes, on a quarterly basis, summaries of its findings from recently closed reviews that resulted in a substantive question to a company (‘Case Summaries’). In addition, it publishes the names of companies whose reviews were closed in the previous quarter without the need for a substantive question. No Case Summary is prepared for such reviews.
Case Summaries, which are available for cases closed in the quarter ending March 2021 onwards, are included in the table below. As, currently, the FRC is subject to existing legal restrictions on disclosing confidential information received from a company, the Case Summaries can only be disclosed with the company's consent. Where consent has been withheld by the company, that fact is disclosed in the table.
From March 2018 until March 2021, the FRC published the names of companies whose reviews were closed in the previous quarter but did not prepare Case Summaries. However, on an exceptional basis, specific cases may be publicised through entity-specific Press Notices, which can also be found in the table below.
The FRC’s reviews are based solely on the company’s annual report and accounts (or interim reports) and do not benefit from detailed knowledge of the company’s business or an understanding of the underlying transactions entered into. They are, however, conducted by staff of the FRC who have an understanding of the relevant legal and accounting framework. The FRC’s correspondence with the company provides no assurance that the annual report and accounts (or interim reports) are correct in all material respects; the FRC’s role is not to verify the information provided but to consider compliance with reporting requirements. The FRC’s correspondence is written on the basis that the FRC (which includes the FRC’s officers, employees and agents) accepts no liability for reliance on its letters or Case Summaries by the company or any third party, including but not limited to investors and shareholders.
Key
- Only a certain number of CRR’s reviews result in substantive questioning of the Board. Matters raised may cover questions of recognition, measurement and/or disclosure.
- CRR’s routine reviews of companies’ annual reports and accounts generally cover all parts over which the FRC has statutory powers (that is, strategic reports, directors’ reports and financial statements). Similarly, CRR’s routine reviews of companies’ interim reports will generally cover all information in that document. Limited scope reviews arise for a number of reasons, including those conducted when a company’s annual report and accounts or interim report are selected for thematic review or reviews that have been prompted by a complaint. In accordance with the Supervision Committee’s Operating Procedures, CRR does not identify those companies whose reviews were prompted by a complaint.
- The FRC may ask a company to refer to its exchanges with CRR when the company makes a change to a significant aspect of its annual report and accounts or interim report in response to a review.
- Case closed after 1 January 2021 but performed under operating procedures that did not allow for the publication of Case Summaries.
- From the quarter ended June 2023, the FRC started identifying the auditor of the annual report and accounts, or the audit firm that issued a review report on the interim report, that was the subject of the CRR review. This information was also back-dated for closed cases publicised from the quarter ended September 2022. Cases marked N/A relate to those published prior to September 2022 or interim reviews that did not have a review opinion.’
Case Summaries
CRR Case Summaries and Entity-specific Press Notices (Excel version)
| Entity | JTC Plc |
|---|---|
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Valuation of shares issued as consideration We asked the company to clarify how the fair value of shares issued as consideration in an acquisition had been determined. We noted that the price per share used to determine the value of shares issued as consideration on acquisition of SALI Fund Management LLC and SALI GP Holdings LLC was inconsistent with the listed share price on the date of completion. The company confirmed that the value of shares issued as consideration had been incorrectly calculated. The company undertook to correct the error prospectively and to add further explanation in its 2022 annual report and accounts. |
| Entity | Just Eat Takeaway.com N.V. |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | Deloitte Accountants B.V. |
| Case Summary / Press Notice | N/A |
| Entity | Just Group plc (3) |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Loss attributable to ordinary equity holders used for earnings per share (‘EPS’) We asked the company to explain the basis on which it had concluded that the loss recognised on redemption of the company’s equity classified Tier 1 notes should not be deducted when calculating the loss attributable to ordinary equity holders used in the calculation of EPS, as they appeared to have similar characteristics to preference shares classified as equity. Following our correspondence, the company reconsidered its treatment of the Tier 1 notes and concluded that the requirements in IAS 33 regarding equity preference shares should have been applied to them. It agreed to restate the comparative amounts for EPS in the consolidated statement of comprehensive income in its 2022 annual report and accounts, and also proposed to disclose the judgement required in determining the treatment of the Tier 1 notes in the EPS calculation. As the restatement affected a primary statement, we asked the company to disclose the fact that the matter had come to its attention as a result of our enquiry. |
| Entity | Langley Holdings plc (3) |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | Saffery Champness LLP |
| Case Summary / Press Notice | Consent withheld |
| Entity | Learning Technologies Group plc |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice | N/A |
| Entity | London Stock Exchange Group Plc |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice | N/A |
| Entity | LXi REIT plc |
| Balance Sheet Date | 31 March 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice | N/A |
| Entity | Millbrook Healthcare Limited |
| Balance Sheet Date | 30 June 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Prior period adjustments presented in the annual report and accounts for the year ended 30 June 2020 We challenged the basis on which the company had recognised all prior year adjustments and asked the company to explain how each adjustment met the definition of a prior period error as set out in paragraph 10.19 of FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ and not changes in accounting estimates. The company provided a satisfactory response to our enquiries. Where the prior year adjustment was the result of a change in measurement basis, such as the reversal of put option and dilapidation provisions, or a reclassification of items such as salary and rental costs, the company provided a satisfactory explanation as to how the adjustments complied with the requirements of FRS 102. The company clarified that the prior year adjustment in respect of the write-off of the sales provision was because there was no evidence to support the existence of the balance at both 30 June 2019 and 30 June 2020. The company reversed the amount through revenue for the year ended 30 June 2019. Given there was no support for the existence of the balance in 2019, we would normally expect the prior year adjustment to be made against opening reserves at 1 July 2018 rather than through the income statement. However, this matter is of historical relevance only, and as there is no impact on any future annual reports and accounts, we will not be pursuing this matter further. The company provided details of the long-term remuneration plan, including the terms under which it was payable on sale of the company. The sale completed shortly after the 2019 year-end and, as a result, the company demonstrated that it was appropriate to recognise a liability as at 30 June 2019 for the present value of the obligation in accordance with sections 28 and 30 of FRS 102. The company explained that the defined benefit schemes were previously accounted for as defined contribution schemes as insufficient information was available to enable the use of defined benefit accounting. During 2020, sufficient information became available and the company applied defined benefit accounting. In restating the comparatives, the company did not comply with the requirements of paragraphs 28.11B and 28.11C of FRS 102. However, this matter is of historical relevance only, and as there is no impact on any future annual reports and accounts, we will not be pursuing this matter further. |
| Entity | Miller Homes Group Holdings Limited |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | N/A |
| Case Summary / Press Notice | N/A |
| Entity | Molten Ventures plc |
| Balance Sheet Date | 31 March 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | Motion JVco Limited |
| Balance Sheet Date | 25 December 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
Revised accounts We observed that the company had refiled accounts for the period ended 25 December 2021 with Companies House. However, we were unable to identify the reasons why amended accounts were produced and filed. The company explained that the annual report and accounts were refiled to include the name of a previously omitted UK registered subsidiary in the list of companies seeking to take advantage of exemption from audit under s479A of the Companies Act 2006. It acknowledged the requirements set out in The Companies (Revision of Defective Accounts and Reports) Regulations 2008 had not been met when refiling the accounts and that it would take steps to rectify that matter. We made some further observations and recommended that the company consider seeking additional clarification from its legal advisors regarding the lawfulness of the current and any subsequent refiled accounts including any consequences for the subsidiary placing reliance on them, for the purposes of the s479A audit exemption. Parent company accounts: investment in subsidiaries We noted that the carrying value of the company’s investment in its subsidiary significantly exceeded the net assets of the group and that headroom, which was disclosed for two of the three cash generating units in the group accounts, was relatively limited. We asked the company to provide further information about the impairment testing of its investment in subsidiaries, including a summary of the results of any impairment test conducted and a clarification of whether this matter included any significant judgements and estimates. The company provided satisfactory responses and agreed to include disclosure of the significant judgements and estimation uncertainty in the parent company accounts going forward. |
| Entity | National Grid plc |
| Balance Sheet Date | 30 March 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice | N/A |
| Entity | Norcros plc |
| Balance Sheet Date | 31 March 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice |
Impairment reviews It was unclear whether certain matters disclosed in the company’s report (namely, climate-related risks and changes in energy prices) were considered to be indicators of potential impairment. We asked the company to explain whether this was the case and, if so, whether it had performed additional impairment calculations, as required by IAS 36. The company clarified that it had identified trading performance and higher UK energy prices as indicators of potential impairment, and explained the impairment review it had performed in respect of the affected cash-generating unit. It also explained that the impairment review and related sensitivity analysis did not identify an impairment loss. We were satisfied with the company’s response and closed our enquiries. In closing the matter, we encouraged the company to consider whether, in such circumstances, users may benefit from additional disclosures (for example, disclosures highlighting that an impairment review was performed and that it did not identify a loss, together with information about key assumptions applied and related sensitivity analyses). TCFD compliance statement We noted that the company’s annual report did not include a clear statement (‘TCFD compliance statement’) setting out whether its disclosures are consistent with the TCFD recommendations and recommended disclosures, as required by paragraph 8(a) of Listing Rule 9.8.6R. We also questioned whether the report included all the disclosures required by paragraph (8)(b)(ii) of the Listing Rule in circumstances where a listed company’s report does not include disclosures consistent with all of the TCFD recommendations and recommended disclosures (for example, steps being taken by the company to be able to provide the missing disclosures and the relevant timeframes). We closed our enquiries after the company agreed to provide a clear TCFD compliance statement in its future reports, and to enhance its disclosures about any TCFD recommendations and recommended disclosures not included in such reports. |
| Entity | Oxford Instruments plc |
| Balance Sheet Date | 31 March 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice | N/A |
| Entity | PageGroup plc |
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice | N/A |