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 | musicMagpie Plc (3) |
|---|---|
| Balance Sheet Date | 30 November 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2025 |
| Auditor (5) | RSM UK Audit LLP |
| Case Summary / Press Notice |
Property, plant and equipment (PPE) and related cash flows We queried why cashflows arising from the acquisition of rental assets were classified as investing activities, rather than within operating activities as required by IAS 7, ‘Statement of Cash Flows’. The company acknowledged that the amounts should be included within operating activities and agreed to revise the presentation and restate comparative figures in its 2024 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 explain how balances included in the PPE note reconciled to amounts in the cash flow statement and in the calculation of an adjusted performance measure. The company provided us with reconciliations of the relevant amounts and agreed to amend its disclosure in future accounts to provide greater clarity on the presentation adopted. Impairment testing We asked the company to clarify which cash generating units (CGUs) goodwill had been allocated to for the purposes of impairment testing, and how these CGUs related to its operating segments. The company provided the requested information and agreed to update future disclosures to provide additional clarity. We asked the company for further details of the assumptions used in its calculations of value in use and the basis on which management had determined these assumptions. The company provided this information and agreed to expand the disclosures to quantify the values assigned to all key assumptions and to provide additional sensitivity disclosures in its next annual report. We requested further details of the company’s approach to valuing its investments in subsidiaries and amounts due from group companies in the parent company financial statements. The company provided a satisfactory response in respect of these matters. |
| Entity | Alpha Growth Plc (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | December 2024 |
| Auditor (5) | PKF Littlejohn LLP |
| Case Summary / Press Notice |
Consolidation of insurance subsidiaries We asked the company for further information about how the assets and liabilities of insurance subsidiaries had been presented in the consolidated financial statements, and the basis for presenting all assets and liabilities of insurance subsidiaries within a single asset and single liability line item in the consolidated statement of financial position, as this appeared to aggregate items which were not similar in nature. We also questioned why the cash and cash equivalents balances held by insurance subsidiaries were not reflected in the consolidated statement of cash flows. The company explained that the financial assets held by the insurance subsidiaries are held solely to back the associated liabilities and that the presentation was adopted to clearly identify this. However, after further consideration the company agreed to restate the consolidated statement of financial position by providing appropriate disaggregation of the assets and liabilities of the insurance subsidiaries. The company also agreed to restate the consolidated statement of cash flows to include cash and cash equivalents held by insurance subsidiaries. Revenue of Alpha International Life Assurance Company (AILAC) We asked the company for further information about the terms of the acquisition of Alpha International Life Assurance Company (AILAC), and in particular the point at which income in relation to AILAC was recognised. The company explained that control of AILAC was achieved upon receiving regulatory approval in November 2022, but also noted that a fee was charged for management and advisory services performed from August 2022. Segmental reporting We asked the company for an explanation of the basis on which they concluded that the company has a single operating segment. The company provided a satisfactory explanation; however, we noted that this matter should be kept under review as the company grows. Future impact of IFRS 17, ‘Insurance Contracts’ We questioned the company’s assertion that IFRS 17 would not have a material impact on the group, given the nature of the company’s business, and asked for further information about the nature of the contracts issued by the insurance subsidiaries. The company explained that the majority of the contracts issued by the insurance subsidiaries do not contain significant insurance risk but that it was assessing the impact of IFRS 17 on those contracts that do contain significant insurance risk. Recoverability of Interval Fund Expenses We asked the company for further information about the recoverability of the interval fund expenses recognised as a receivable by the company. The company provided a satisfactory explanation. TCFD disclosures We noted the limited TCFD reporting and asked the company to explain what additional or improved disclosures it expected to make in its next annual report and accounts. The company agreed to consider our thematic reviews and expand the TCFD disclosures in the next annual report and accounts. Earnings per share We questioned the calculation of diluted earnings per share, as options and warrants were shown to be dilutive, despite having a weighted average exercise price which appeared to be above the average market price of ordinary shares in the period. The company agreed to restate the calculation of diluted earnings per share in the next annual report and accounts. Other disclosures We asked the company to enhance its disclosures in relation to (i) key performance indicators (KPIs) in the strategic report, (ii) the management of capital, (iii) fair value of financial instruments, and (iv) liquidity risk. The company agreed to make a number of disclosure enhancements in its next annual report and accounts in these areas. |
| Entity | Kier Group plc (3) |
| Balance Sheet Date | 30 June 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | December 2024 |
| Auditor (5) | PricewaterhouseCoopers LLP |
| Case Summary / Press Notice |
Impairment testing of intangible assets Offsetting of bank overdraft The company clarified that it considered all bank accounts within its cash pooling arrangement, where the legal right of set-off existed, to be a single unit of account. Therefore, although it could not demonstrate an intention to settle period end amounts on a net basis, it did not consider this requirement to be relevant. We were not persuaded, on the basis of the information and explanations provided, that it was appropriate in the company’s circumstances to treat these balances as a single unit of account. The company accepted that separate presentation of subsidiary company overdrafts and cash balances within the consolidated balance sheet would be more appropriate and agreed to change its accounting policy with the prior year comparative balances re-presented accordingly. As this related to a primary statement, we asked the company to disclose that the matter had come to its attention as a result of our enquiry. |
| Entity | Mattioli Woods plc (3) |
| Balance Sheet Date | 31 May 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | December 2024 |
| Auditor (5) | Moore Kingston Smith LLP |
| Case Summary / Press Notice |
Acquisition-related cash flows We asked the company to explain the basis on which contingent remuneration paid on acquisition of subsidiaries had been presented within investing activities rather than operating activities in the cash flow statement. The company recognised that the presentation of contingent remuneration in the cashflow statement was not in accordance with the requirements of IAS 7, ‘Statement of Cash Flows’, and agreed to restate the prior year cashflow statement to reflect this presentational change in its next annual report and accounts. As this affected a primary statement, the company also agreed to disclose that this matter had come to its attention as a result of our enquiry. We also requested a reconciliation of the outflow from acquisition of subsidiaries, shown in the cash flow statement, to the amounts disclosed in the notes regarding individual acquisitions during the year. The company explained that the difference related to an amount relating to working capital adjustments that was included within accruals at the year end. Adjusted cash generated from operations In response to our questioning, the company agreed to amend some inconsistencies in the reconciliation of adjusted cash generated from operations to statutory cash generated from operations in its future reporting. Goodwill impairment review We asked the company to explain the change in approach to goodwill impairment reviews to include software and right-of-use assets in, and deduct deferred tax liabilities and lease liabilities from, cash generating units (CGUs). The company agreed to explain these matters more clearly in the 2024 financial statements, as well as clarifying that, where the lease liabilities have been incorporated in the carrying amounts of CGUs, the carrying amounts of the liabilities have also been deducted from the calculated value in use as required by IAS 36, ‘Impairment of Assets’. Revenue recognition We requested further details of the process used to allocate revenue between performance obligations both for investment and asset management and for pension consultancy and administration. Satisfactory explanations were provided. Provisions for client claims We asked the company to explain the reason for taking expected insurance recoveries into account in determining the value of provisions for client claims. The company explained that insurance recoveries were not material. |
| Entity | Ricardo plc (3) |
| Balance Sheet Date | 30 June 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | December 2024 |
| Auditor (5) | KPMG LLP |
| Case Summary / Press Notice |
Derivatives We asked the company to clarify whether hedging accounting was applied. The company explained that hedge accounting was not applied in the current period and agreed to review the accounting policies to make this clear. We also asked for further information about a cash outflow of £4.2m in respect of settlement of derivatives shown as financing in the cash flow statement, as we were unable to reconcile the movement in derivatives in the year, and the basis for presenting this amount within financing activities was not clear. The company provided a reconciliation of the carrying value of derivatives and explained that the amount presented in the cash flow statement was actually a non-cash movement which had been incorrectly included as a financing cash outflow. The company agreed to restate the comparative figures included in its next annual report and accounts by removing the item from financing cash flows, with an offsetting adjustment to operating cash flows. 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. Impairment of non-financial assets We asked the company for further information about an impairment of non-financial assets recognised in respect of buildings. The company provided a satisfactory answer to our question. |
| Entity | Smart Metering Systems plc (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | December 2024 |
| Auditor (5) | Ernst & Young LLP |
| Case Summary / Press Notice |
Uninstalled meter assets We asked the company for further information in relation to the balance sheet classification of uninstalled meter assets and the presentation of related cash flows. After further enquiries, the company agreed to account for these assets and other significant meter components as property, plant and equipment rather than as inventories, and to classify the related cash flows as investing activities. The company agreed to restate the comparative amounts in its 2023 annual report and accounts, including consequential changes to the consolidated income statement. As the change affected the primary statements, we asked the company to disclose that the matter had come to its attention as a result of our enquiry. Other cash flow presentation matters We asked the company to explain certain differences between amounts shown in the consolidated statement of cash flows and amounts reported elsewhere in the accounts. The company provided satisfactory explanations. |
| Entity | Burford Capital PLC (3) |
| Balance Sheet Date | 31 December 2022 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2024 |
| Auditor (5) | Ernst & Young LLP, Guernsey |
| Case Summary / Press Notice | Consent withheld |
| Entity | Marks Electrical Group plc (3) |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2024 |
| Auditor (5) | BDO LLP |
| Case Summary / Press Notice |
Revenue recognition We sought clarification of the accounting policies applied to revenue arising from installation services, credit arrangements, and extended warranties. The company satisfactorily responded to our enquiries and agreed to expand the policy disclosures in its next annual report to provide further detail on these transactions. Equity investment We requested details of the basis of the fair value measurement of an equity investment. The company explained that this represented an investment in a buying group and, having reconsidered the most appropriate accounting treatment, concluded that the amount due under the arrangement should be accounted for as a rebate receivable, with a corresponding reclassification from fair value gains to cost of sales in the consolidated statement of comprehensive income for the year ended 31 March 2023. 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. Impairment of parent company investment in subsidiary We asked for more information about the estimated recoverable amount of the parent company’s investment in its subsidiary. As a result of our enquiry, the company identified that a post-tax discount rate had been applied to pre-tax cash flows, resulting in an overstatement of the value in use. The company agreed to restate the carrying amount of its investment in its subsidiary as at 31 March 2022 to recognise a consequential impairment charge. As the restatement affected a primary statement, we asked the company to disclose the fact that this matter had also come to its attention as a result of our enquiry. |
| Entity | Places for People Group Limited (3) |
| Balance Sheet Date | 31 March 2023 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2024 |
| Auditor (5) | MHA |
| Case Summary / Press Notice |
Consolidated statement of financial position We identified that the format of the consolidated statement of financial position was inconsistent with the requirements of FRS 102, section 4, ‘Statement of Financial Position’ and Part 1 General Rules and Formats to the ‘Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008’ (‘the Regulations’). The company agreed to restate the consolidated statement of financial position to be consistent with the requirements of the Regulations. The company also agreed to disclose the fact that this matter had come to its attention as a result of our enquiry. Gain on debt breakage We sought to understand the accounting treatment applied to debt breakage costs, and the associated financial liability. The company explained the accounting policy applied and confirmed that there was no remaining debt breakage liability as of 31 March 2024. The company also committed to describe the accounting treatment applied in the 2024 annual report and accounts. Consolidated statement of cash flows We asked the company to reconcile certain items presented in the consolidated statement of cash flows to corresponding amounts reported elsewhere in the annual report and accounts. The company provided satisfactory reconciliations. Cladding remediations We sought to understand the accounting treatment applied to cladding remediation costs. The company provided a satisfactory response. Parent company statement of changes in equity We asked the company to explain why a parent company statement of changes in equity had not been presented. The company confirmed there were no entries to record in the parent company statement of changes in equity and that future sets of accounts will include an explanatory statement to this effect. Other group interests In response to our question about the accounting treatment applied to the investment in Ansaar Management Company (Private) Limited, the company explained that the investment was accounted for as an associate. |
| Entity | Arnold Clark Automobiles Ltd (3) |
| 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. Sale of leased vehicles We asked the company to provide details of the accounting policy that it applies to the sale of vehicles which have previously been held for rental. The company provided the requested information and agreed to disclose the policy and enhance the related disclosures in its 2023 annual report and accounts. We also asked for clarification of the treatment of both rental and non-rental vehicles in the cash flow statement. The company explained how the cash flows for rental vehicles were in line with the requirements in IAS 7, ‘Statement of Cash Flows’, but acknowledged that the cash flows for non-rental vehicles should have been classified as investing, rather than operating, activities. The company agreed to restate the comparative amounts 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. Cash equivalents We asked the company to explain how some balances recognised within cash equivalents were used to meet short- term commitments rather than being held for investment purposes. The company provided a satisfactory response and agreed to enhance the disclosure about these balances 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 | 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 | 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 | GB Group 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) | Ernst & Young LLP |
| Case Summary / Press Notice |
Impairment testing of goodwill We sought further information about the company’s projection of growth from 2028 to 2032. For the 2023 impairment test, this assumed annual growth rates in excess of the long-run average growth rate for the geographic markets in which the company operates. The company elaborated on its disclosure of the third-party sources used and explained other factors taken into account in determining the estimated rate of growth. It acknowledged that clearer disclosure of the change in approach from prior periods, and the basis on which the estimate was considered more relevant and reliable, would have been helpful to users. In closing this matter, we recommended that the company enhance its explanation of the methodology applied and of significant changes in estimates. We also queried the sensitivity of the recoverable amounts of groups of cash-generating units to changes in the cash conversion ratio and operating margin, which appeared to be key assumptions in the value in use calculation. The company explained why it did not consider the values assigned to these assumptions to be subject to significant variability. The company agreed to clarify its future disclosure of key assumptions and to provide sensitivity analysis should the circumstances change. We also encouraged the company to disclose reasonably possible positive changes in estimated operating margins, to enhance users’ understanding of management’s view of the uncertainty involved. Impairment of parent company investment in subsidiaries We questioned the basis on which the company estimated the recoverable amount of its investment in GBG (US) Holdings LLC. The company explained its approach and acknowledged that the recoverable amount as at 31 March 2023 did not take full account of loan liabilities of the subsidiary. The company agreed to restate the comparative figures in its 2024 annual report and accounts. As this change affected the parent company’s primary statements, we asked the company to disclose that the matter had come to its attention as a result of the FRC’s enquiries. Deferred revenue We asked the company to explain apparent inconsistencies in disclosure between deferred revenue balances and the revenue recognised in the year. The company agreed to correct an error it had identified in the revenue note disclosure and enhance its presentation of movements in deferred revenue to reflect more clearly the effect of movements in exchange rates. Deferred tax on losses carried forward We sought to clarify the apparently low effective tax rate applied in the disclosure of losses carried forward. The company acknowledged and agreed to correct a disclosure error, which accounted for part of the effect. We also encouraged the company to enhance its disclosure relating to losses eligible for more than one type of tax relief, which would address much of the rest. Intercompany debt owed to and by the parent company We asked the company to explain movements in intercompany balances relating to group restructuring transactions. We received a satisfactory response. |