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 | Bellis Finco PLC |
|---|---|
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | June 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
This company was selected as part of our thematic review of the UK's largest private companies and, as such, only disclosures included in the scope of the thematic were reviewed. Acquisition of Arthur Foodstores Limited We asked the company for further information about its judgement that it did not control Arthur Foodstores Limited which was acquired during the year. The company provided a satisfactory explanation of the restrictions which prevented it from being able to direct the relevant activities of the company at the year end and the point, post year end, at which these restrictions were lifted and it obtained control. Wholesale revenue We asked for clarification of the wholesale revenue accounting policy, including the goods or services to which this applied and whether the company was acting as an agent or principal in each arrangement. The company explained its wholesale revenue streams for both fuel and groceries and the basis for these being recognised as agent and principal respectively. The company confirmed that it plans to update the accounting policy in its 2023 annual report and accounts. Incremental borrowing rate We asked the company for information about the determination of the incremental borrowing rates applied for new or modified leases, including the use of observable data from other geographical regions. The company provided a satisfactory explanation for the judgements it had made. |
| Entity | BlackRock Throgmorton Trust plc |
| Balance Sheet Date | 30 November 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | Bluefield Solar Income Fund Limited |
| Balance Sheet Date | 30 June 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | KPMG Channel Islands |
| Case Summary / Press Notice | N/A |
| Entity | BMW (UK) Manufacturing Limited |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | June 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
This company was selected as part of our thematic review of the UK's largest private companies and, as such, only disclosures included in the scope of the thematic were reviewed. Functional currency We asked the company to explain the key factors that were considered when determining the functional currency and whether this involved significant judgement under IAS 1 ‘Presentation of Financial Statements’. The company provided a satisfactory response and agreed to disclose details of the judgement in its 2023 annual report and accounts. |
| Entity | Cake Box Holdings Plc (3) |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | MHA |
| Case Summary / Press Notice |
Other comprehensive income We identified a difference between the amounts of other comprehensive income reported in the Statement of Comprehensive Income (SOCI) and the Statement of Changes in Equity (SOCIE). We asked the company to explain the apparent difference, and where a deferred tax charge in respect of the revaluation of property, plant and equipment, had been recognised. The company agreed to restate the other comprehensive income comparatives in the SOCI in their next annual report and accounts to include the relevant deferred tax charge. The company also agreed to restate the comparative figures in the SOCIE to reclassify this deferred tax charge from retained earnings to revaluation reserves. As the changes affected two primary statements, we asked the company to disclose the fact that the matter had come to its attention as a result of our enquiry. Financial asset impairment We questioned why the financial asset impairment charge had not been disclosed separately on the face of the SOCI, as the amount was greater than audit materiality. The company agreed to restate the 2023 SOCI in the next annual report and accounts to show the financial asset impairment charge separately. It also agreed to disclose the fact that the matter had come to its attention as a result of our enquiry. Change in useful economic lives We questioned why a change in the useful economic lives of certain assets had been accounted for as a prior year adjustment. The company provided a satisfactory response. Franchisee deposits We asked the company to explain the accounting treatment applied to franchisee deposits. The company provided a satisfactory response and agreed to include an accounting policy in future sets of accounts. Franchise package revenue We sought to understand the way in which revenue from franchise packages was recognised. The company provided a satisfactory response. |
| Entity | Chrysalis Investments Limited |
| Balance Sheet Date | 30 September 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | KPMG Channel Islands |
| Case Summary / Press Notice | N/A |
| Entity | CMO Group plc (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Saffery Champness LLP |
| Case Summary / Press Notice |
Presentation and measurement of amounts owed from group undertakings We asked the company why amounts owed from group undertakings were classified as current assets in the parent company balance sheet. The company acknowledged that a large part of the overall balance was not expected to be realised within 12 months of the balance sheet date and so should be presented as non-current assets. The company agreed to revise the presentation and restate comparative figures in its 2023 annual report and accounts. As the change 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. We also asked the company to provide further details of how it had complied with the requirements of IFRS 9 ‘Financial Instruments’ in determining expected credit losses on amounts owed from group undertakings in the balance sheet of the parent company. The company provided the requested information and agreed to include further detail in their next annual report and accounts regarding how the requirements had been applied to this balance. Calculation of cashflows from business combinations We queried the calculation of the cash outflow disclosed in the cashflow statement for acquisitions of businesses, based on the amounts disclosed elsewhere the financial statements. The company satisfactorily explained the basis of calculation. |
| Entity | CQS New City Yield Fund Limited |
| Balance Sheet Date | 30 June 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | PricewaterhouseCoopers CI LLP |
| Case Summary / Press Notice | N/A |
| Entity | Custodian Property Income REIT plc |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice |
Estimation uncertainty in relation to investment property valuations We asked the company how it met the requirements of IAS 1 'Presentation of Financial Statements' in relation to estimation uncertainty of investment property valuations as we were unable to identify all the relevant disclosures. The company responded that it had already identified this matter and resolved to disclose the sensitivity of the valuations to changes in the key assumptions in its 2024 financial statements. |
| Entity | DP Poland plc (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Mazars LLP |
| Case Summary / Press Notice |
Acquisition of All About Pizza d.o.o. (‘AAP’) We asked the company why the cash flow statement showed cash flows from acquiring a subsidiary, All About Pizza d.o.o. (‘AAP’), when other disclosures indicated that the acquisition was conducted via a share-for-share exchange. The company agreed to restate the 2022 cash flow statement and associated notes in the 2023 annual report and accounts to show both the acquisition and the associated issue of share capital as non-cash transactions. We also requested further details of the purchase price allocation for the acquisition of AAP, including why no deferred tax arose on the recognition of the Master Franchise Agreement (‘MFA’). The company provided the explanations requested, but acknowledged that deferred tax should have been recognised on the fair value adjustment uplift on the MFA. It proposed to correct this by way of a restatement of the comparative information in the 2023 annual report and accounts. It also agreed to provide more transparent disclosure of the judgements made by management regarding the purchase price allocation. As both of these changes affected the primary statements, we asked the company to disclose that the matters had come to its attention as a result of our enquiry. Finally, we asked for further explanation of the company’s judgement that an indefinite useful life is appropriate for the MFA acquired with AAP. The company provided a satisfactory explanation, and agreed to provide more transparent disclosure regarding the factors considered by management in making the assessment of the MFA’s useful life in future annual reports and accounts. |
| Entity | E D & F Man Holdings Limited (3) |
| Balance Sheet Date | 30 September 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | June 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
This company was selected as part of our thematic review of the UK's largest private companies and, as such, only disclosures included in the scope of the thematic were reviewed. Statement of cash flows We asked the company to clarify the composition of those net cash inflows from discontinued operations classified as investing activities in the statement of cash flows, which did not appear consistent with other information in the accounts. The company explained that cash proceeds from the sale of investments relating to the discontinued operations had been incorrectly classified within operating activities. In addition, we asked the company to explain why restricted cash did not meet the criteria to be classified as cash and cash equivalents. We also queried the rationale for deducting the restricted cash balance from the reconciliation of movements in cash and cash equivalents in the statement of cash flows when the balance already appeared to have been excluded from the opening and closing figures. The company confirmed that restricted cash met the definition of cash and cash equivalents and that it had been incorrectly deducted from the reconciliation of cash and cash equivalents in the statement of cash flows. We closed our enquiries after the company agreed to restate the comparative figures included in its next annual report and accounts. As the restatements affected a primary statement, we asked the company to disclose that the matter had come to its attention as a result of our enquiries. Parent company investments We sought clarification of the facts and circumstances that led to the impairment of an investment in the subsidiary E D & F Man Junior Finco Limited following a group re-organisation. The company explained that the restructuring was sanctioned by the courts, with the process requiring detailed external valuations, which gave rise to the impairment in the investment. The company agreed to enhance the explanation of the facts and circumstances causing the impairment in future annual reports and accounts. We did not consider further why the impairment was not recognised in an earlier period, given that any restatement would not have a significant effect on the company’s future reporting. |
| Entity | Eneraqua Technologies plc |
| Balance Sheet Date | 31 January 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | PKF (UK) LLP |
| Case Summary / Press Notice |
Distributable profits and dividends paid We observed that the company had paid a dividend in the year ended 31 January 2023. However, the parent company’s 2022 accounts showed a retained loss and no interim accounts had been filed at Companies House to support the distribution, as required by section 836(2)(a) of the Companies Act 2006 (the Act). The company confirmed that the directors were satisfied that there were sufficient distributable reserves prior to payment of the dividend but had omitted to file the relevant accounts at the required time. The company confirmed that the accounts had subsequently been filed and provided an undertaking to disclose the matter, including any steps required to rectify the position, in its next annual report and accounts. Share premium reserve In order to support our understanding of the matter above, we asked the company for an explanation for the difference between the values of share premium reserves reported by the group and parent company. The company explained that the difference related to costs incurred by a subsidiary in respect of the issue of shares in the parent company and noted that further explanation will be provided in the company’s next financial statements. We observed that the basis for the additional deduction in the group accounts remained unclear and asked the company to consider its treatment, having regard to the relevant requirements of the Act. However, having concluded our enquiries in respect of the company’s distributable reserves, we did not consider it proportionate to pursue this matter further. Impairment testing We asked the company to provide certain information about its impairment testing, as its disclosures did not appear to meet all of the requirements of IAS 36, ‘Impairment of Assets’. The company provided an undertaking to disclose or clarify the following information in future accounts: (i) the carrying amount of goodwill allocated to each cash generating unit (CGU), or group of CGUs; (ii) the key assumptions on which cash flows within the budget period are based; and (iii) the growth rate used to extrapolate cash flows beyond the budget period. |
| Entity | Facilities by ADF plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Crowe U.K. LLP |
| Case Summary / Press Notice |
Acquisition-related payments and contingent consideration We asked the company to explain whether payments made and contingent consideration payable in relation to the acquisition of Location 1 Group Limited (‘Location One’) depended on the recipients remaining in its employment after the acquisition date and, if so, how it had concluded that the amounts should be classified as acquisition consideration. We closed our enquiry after it explained that the amounts did not depend on the recipients remaining in employment. We also asked the company to explain the difference between the maximum contingent consideration disclosed in the accounts and the amount disclosed in the related RNS announcement. We were satisfied with the company’s response and closed our enquiry. We noted that part of the contingent consideration agreed with the vendors had been omitted from the RNS announcement; however, we did not pursue the matter further as RNS announcements are not in the scope of our reviews. Intangible assets acquired on the acquisition of Location One We noted that the accounting policy disclosed for intangible assets acquired in a business combination was not consistent with IAS 38 ‘Intangible Assets’ and we queried the matter with the company. We closed our query after it explained that the disclosed policy had not affected amounts recognised in its accounts and confirmed that it would correct the accounting policy in its next annual report and accounts. We also asked the company to clarify why it had not recognised any customer relationship intangibles on the acquisition of Location One. We closed the matter after it explained its view that a market participant would not have attributed a material value to such customer relationships due to their nature. The company also acknowledged that it would have been beneficial if it had included the judgement in its disclosure of critical accounting judgements, and we accepted its commitment to consider this in the future. |
| Entity | FirstGroup plc |
| Balance Sheet Date | 30 September 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice | N/A |
| Entity | Foresight Group Holdings Limited |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice |
Fair value of intangible assets – customer contracts We asked the company to explain why the fair value of customer contract intangible assets recognised on the acquisition of Infrastructure Capital Holdings Pty Ltd had decreased from the amount reported in the Half-year Report for the six months ended 30 September 2022, as we were unable to locate an explanation for the significant reduction in fair value. The company explained that there was an error in the initial valuation of the intangible asset in its Half-year Report for the six months ended 30 September 2022, which was subsequently corrected in the Annual Report and Financial Statements FY23. However, the company acknowledged that it would also have been appropriate to provide further disclosure to explain the adjustments in the Annual Report and Financial Statements FY23, and agreed to provide such disclosure in future to the extent that it is relevant. Earnings per share We asked the company for further information about the calculation of the weighted average number of shares in issue during the period, as this appeared to include shares held in escrow, however, the notes stated that shares held in escrow were removed from the calculation. The company provided an explanation of the calculation and agreed to correct the accounting policy wording. |