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 | J Sainsbury plc |
|---|---|
| Balance Sheet Date | 4 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
Consolidated cash flow statement We asked the company to explain the basis on which cash outflows associated with the settlement of bond liabilities related to an asset purchase were classified as investing, rather than financing, cashflows in its interim report for the 28 week period ended 16 September 2023. The company satisfactorily explained that the payment was made as a condition of the purchase agreement, in advance of the ultimate settlement of the bond liabilities, and agreed to enhance the related disclosures in its next annual report and financial statements. |
| Entity | Kainos Group Plc |
| Balance Sheet Date | 30 September 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | KPMG LLP |
| Case Summary / Press Notice | N/A |
| Entity | Keller Group plc |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
Impairment of financial assets An apparently material movement in the expected credit loss (‘ECL’) provision was disclosed in the notes to the accounts but not presented separately on the face of the consolidated income statement, as required by IAS 1 ‘Presentation of Financial Statements’. We asked the company to explain why it had not applied this IAS 1 requirement. After further enquiries, it emerged that the ECL movement disclosed in the notes to the accounts was incorrect and that the actual ECL movement was not material. The company agreed to restate the related comparative amounts in the notes to its 2023 accounts and explained that it would present the ECL movement for 2023 on the face of the income statement as the amount was material. We also asked the company to explain the movement in ECL rates related to the ECL provision for trade and other receivables. The company responded satisfactorily and agreed to include an explanation of the movement in these rates in next year’s annual report and accounts and in any future accounts that have material movements. |
| Entity | Keystone Law Group plc (3) |
| Balance Sheet Date | 31 January 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | RSM UK Audit LLP |
| Case Summary / Press Notice |
Accrued income We requested further information about the measurement of accrued income and clarification of whether a provision against this balance was recorded. The company satisfactorily provided details of the method used to value accrued income and confirmed the amount of provision held was not material. As the method to calculate accrued income had historically proved to be accurate, we encouraged the company to reconsider whether there was a significant risk of material adjustment to the carrying amount in the next financial year that was required to be disclosed as a key source of estimation uncertainty. Alternatively, if the estimate of accrued income carried lower risk, having a smaller impact or crystallising over a longer timeframe, any disclosures provided should be clearly distinguished from those with a significant short-term effect. Expected credit losses We asked the company to explain its rationale for not presenting apparently material impairment losses on trade receivables on the face of the consolidated income statement, as required by IAS 1 ‘Presentation of Financial Statements’. Upon review, the company agreed to restate the 2023 comparative consolidated income statement in its 2024 accounts, to separately present the impairment charge, and agreed to disclose the fact that the matter had come to its attention as a result of our enquiry. Provisions We sought further information about the company’s provisions and the accounting for claims covered by insurance, which the company provided. In view of the amount of claims-related provisions, we encouraged the company to reconsider whether an accounting policy was necessary or, alternatively, if there were no material claims in the current or preceding year, to make a statement to that effect. |
| Entity | Manchester Airport 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) | Ernst & Young LLP |
| Case Summary / Press Notice |
Revenue recognition We asked the company to clarify the basis on which it concluded it was acting as principal in respect of utilities recharges to tenants, and whether this determination involved significant judgement. The company satisfactorily explained the factors that management took into account in reaching their conclusion, and why they did not believe this analysis involved significant judgement. |
| Entity | Marlowe plc |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | RSM UK Audit LLP |
| Case Summary / Press Notice | N/A |
| Entity | Martin-Brower UK Ltd |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Limited |
| Quarter Published | June 2024 |
| Auditor (5) | Deloitte 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. Impairment testing We asked the company to explain the nature of capital investments included in future cash flows in the value in use calculation prepared for the impairment testing of goodwill and investments. The company explained its impairment methodology and identified that, in some instances, this had included capital investment which was not allowed under the requirements of FRS 102. The company confirmed that there remained no impairment after reperforming the impairment testing excluding this capital investment and associated benefits and agreed to update its impairment methodology and disclosures in future annual reports and accounts. |
| Entity | M&C Saatchi 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) | BDO LLP |
| Case Summary / Press Notice |
Cash flows on settlement of put options We asked the company to explain why cash paid on the settlement of put options, included as a staff cost in the income statement, was classified within financing activities, rather than operating activities, in the cash flow statement. We noted that these cash flows did not appear to fall within the IAS 7 ‘Statement of Cash Flows’ definition of financing activities. The company acknowledged that classification of these cash flows within operating activities would be more appropriate. Consequently, the company agreed to classify all cash payments relating to such put options within operating activities in the 2023 annual report and accounts and to restate the 2022 comparative amounts. 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. Headline results We asked for an explanation of why the company’s measure of headline results excludes from staff costs amounts relating to dividends paid to put holders and put option accounting. The company provided an explanation of its rationale for excluding these items and agreed to explain this in its future reporting. |
| Entity | Naked Wines plc |
| Balance Sheet Date | 3 April 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice |
Allocation of goodwill to operating segments We asked for information about the amounts disclosed in respect of the US segment and cash generating unit. The company provided this information and agreed to clarify in its future annual reports the reason for the difference between non-current assets allocated to the operating segments for the purposes of impairment analysis and those disclosed in the segmental analysis note. Impairment review of the parent company’s investment in intercompany loans We sought clarification of the terms of intercompany loans, and of the accounting policy for impairment applied to them, which did not appear clearly to comply with the requirements of IFRS 9, ‘Financial Instruments’. The company provided a satisfactory response, agreeing to revise its accounting policy disclosure. |
| Entity | Ninety One 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 | OVO Group Ltd |
| 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. Climate-related disclosures in the strategic report The company’s strategic report appeared to give more prominence to less material revenue streams from energy efficient services, with relatively little discussion on the core revenue producing activities that generated the majority of the company’s scope 3 emissions. The company accepted that its strategic report could have provided better clarity and context for its decarbonisation initiatives and its progress towards achieving net zero targets. We closed our enquiry after the company agreed to enhance its disclosures in its future annual report and accounts when it applies the new Companies Act climate-related financial disclosure requirements. |
| Entity | Pacific Horizon Investment Trust PLC |
| Balance Sheet Date | 31 July 2023 |
| Exchange of Substantive Letters (1) | No |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice | N/A |
| Entity | Pan African Resources PLC |
| Balance Sheet Date | 30 June 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Distributable profits We observed that the company had made a number of dividend payments when the amount of the company’s net assets was less than the aggregate of its called-up share capital and undistributable reserves, in contravention of the net assets test set out in section 831 of the Companies Act 2006 (the Act). The company explained the steps that it intends to take to rectify its non-compliance with the requirements of the Act. |
| Entity | PricewaterhouseCoopers LLP |
| Balance Sheet Date | 30 June 2023 |
| 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 |
Retirement benefit asset We sought an explanation for the basis on which the recognised retirement benefit asset was considered recoverable. The LLP provided a satisfactory response and agreed to disclose this basis in its next annual report and accounts. |
| Entity | ProCook Group plc |
| Balance Sheet Date | 2 April 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2024 |
| Auditor (5) | Mazars LLP |
| Case Summary / Press Notice |
Lawfulness of dividends paid during the year to 3 April 2022 We noted that a dividend had been proposed during the company’s first accounting reference period. We asked the company whether its auditor had made a report stating whether, in their opinion, the initial accounts had been properly prepared, and whether a copy of the auditor’s report had been delivered to the registrar. The company confirmed that a copy of the unqualified auditor’s report had been delivered to the registrar. Deferred tax asset We requested details of the evidence supporting the recognition of a deferred tax asset relating to carried forward losses. The company provided this information and agreed to provide more clarity about the evidence supporting such deferred tax assets in its future annual reports and accounts. Impairment testing of non-financial assets We asked the company whether there is any interdependence between the cash inflows generated by the ecommerce platforms and those generated by the individual stores, as well as details of any allocation of ecommerce revenue, costs, or assets to the stores for the purposes of impairment testing. We were satisfied with the company’s response and encouraged the company to provide further details of the treatment of ecommerce platforms and related cash flows in future annual reports and accounts. |