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 FRC's Operating Procedures, for Corporate Reporting Review, 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 | Ibstock plc |
|---|---|
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice |
Reversal of impairment We asked the company for information about the reversal of impairment recognised during the period in relation to the Atlas and Nostell sites. The impairment of these sites had been recognised in the 2020 annual report and accounts. We asked the company to explain the nature of the redevelopment of the building which had previously been impaired, and the basis for including expenditure to enhance the asset in the calculation of the value in use of the cash generating unit. We also asked the company for further information about that calculation, and the timing of the impairment test. The company explained that the impairment reversal was recognised at the point the company became committed to a restructuring, based on paragraphs 46-47 of IAS 36. While recognising this was an area of judgement, we and the company had different views on whether it was appropriate, under IAS 36, to view this as a restructuring or instead as an asset enhancement. However, as the company also demonstrated that significant cash outflows on the redevelopment of the related sites had been incurred by 31 December 2021, we concluded it would not be proportionate to pursue this matter further, as paragraph 42 of IAS 36 supports the inclusion of cashflows to complete development projects which are in progress. The company addressed the related questions that we asked to our satisfaction. The company agreed to enhance their disclosures to include information required by paragraph 130 of IAS 36 in the event of future impairment or reversal of impairment. |
| Entity | International Distributions Services plc (formerly Royal Mail plc) |
| Balance Sheet Date | 27 March 2022 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Limited |
| Quarter Published | March 2023 |
| Auditor (5) | KPMG LLP |
| Case Summary / Press Notice | N/A |
| Entity | ITM Power Plc |
| Balance Sheet Date | 30 April 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | Grant Thornton UK LLP |
| Case Summary / Press Notice |
Impairment of investment in subsidiaries We asked the company to explain why the reversal of previously recognised impairment losses in respect of the parent investment in subsidiaries had been treated as a prior year adjustment, rather than recognising the reversal in the income statement. The reversal of impairment losses arose following an impairment assessment where recoverable amount was based on fair value less costs to sell. Previous assessments had been performed on a value in use basis. We also asked the company to explain how the fair value of subsidiaries had been determined and to explain the apparent inconsistency with the accounting policy for investments, which stated that recoverable amount was based on value in use. The company explained that the fair value less costs to sell of the investment in subsidiaries was based on the market capitalisation of the Group, adjusted to reflect the fact that the subsidiaries were private companies. In previous years, value in use was used to determine the recoverable amount despite information being readily available which could be used to calculate a higher recoverable amount on a fair value less costs to sell basis. The company demonstrated that, had the impairment assessment considered fair value less costs to sell, as required by IAS 36 ‘Impairment of Assets’, no impairment loss would have been recognised for the years ended 30 April 2020 and 30 April 2021. As a result, the reversal of impairment losses to correct this error was treated as a prior period adjustment. The company agreed to amend the accounting policy for investments in future accounting periods to explain how recoverable amount is determined for impairment testing purposes. |
| Entity | ITV 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 |
Revenue recognition We questioned the nature of, and the accounting policy applied to, ‘partnerships and other revenue’. The company satisfactorily explained the nature of these revenues, and the accounting polices applied. They also agreed to update the revenue recognition accounting policy to clarify this information. We asked the company to describe the way in which variable consideration is recognised and measured. The company explained that variable consideration is only recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty is resolved and agreed to clarify this within their accounting policy. Cash flow We asked the company to clarify where in the cash flow statement certain cash outflows in respect of contingent consideration were recorded. The company satisfactorily explained that these cash flows were included within cash flows from operating items. |
| Entity | James Halstead plc |
| Balance Sheet Date | 30 June 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 | 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 |