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 | Rathbones Group Plc (3) |
|---|---|
| Balance Sheet Date | 31 December 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | March 2023 |
| Auditor (5) | Deloitte LLP |
| Case Summary / Press Notice |
Statement of cash flows We asked the company for further information about how the repayment of debt following the acquisition of Saunderson House was treated in the consolidated statement of cash flows. The company clarified that the repayment was made to a third party and explained that following further discussions, it had concluded that it would be more appropriate to classify the third-party debt repayment as a financing outflow in the consolidated statement of cash flows. The company agreed to restate the comparative period of the consolidated statement of cash flows in its 2022 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 asked the company for further information about amounts reported in the consolidated statement of cash flows for the repurchase and issue of ordinary shares, and the purchase and sale of investment securities. The company provided a satisfactory answer to our questions and gave an undertaking to provide enhanced note disclosures in its 2022 Annual Report and Accounts. Share-based payments We asked the company for further information about the amounts presented in the primary financial statements for share-based payments. The company provided a satisfactory answer to our questions and gave an undertaking to provide enhanced disclosures in its 2022 Annual Report and Accounts by providing further disaggregation of amounts presented in the consolidated statement of changes in equity relating to share-based payments. |
| Entity | Tyman Plc (3) |
| 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 |
Offsetting of deferred tax balances We asked for further information about the company’s application of paragraph 74 of IAS 12 ‘Income Taxes’ to its deferred tax asset and liability balances, which were presented on a gross basis in the accounts. The company concluded that certain asset and liability balances arose in the same tax jurisdiction and met the criteria for offsetting under IAS 12. The company agreed to restate the 31 December 2021 comparatives in its 2022 accounts, offsetting these balances. Offsetting of bank overdraft The company presented its cash at bank and bank overdraft balances on a net basis in the accounts on the basis of its cash pooling arrangements giving a legal right of offset. We asked for further information about the application of paragraph 42(b) of IAS 32 ‘Financial Instruments: Presentation’, in conjunction with the IFRS Interpretation Committee’s March 2016 decision regarding cash-pooling arrangements. Following a review of their cash pooling arrangements, the company concluded that, although there is a legal right of offset, as they did not settle the entire period-end balance subsequent to the year-end and had further transactions before the next net settlement date, the second criterion of IAS 32 paragraph 42 was not met. The company agreed to restate the 31 December 2021 comparatives in its 2022 accounts, presenting the balances on a gross basis. As both of the above restatements related to a primary statement, we asked the company to disclose that the matters had come to its attention as a result of our enquiry. Research and development expenditure We asked for further information about the company’s development costs and the associated accounting policy. The company provided further context for its development activities and explained its policy in more detail. It agreed to make some clarifications to its policy in its 2022 accounts, and to disclose the total R&D costs expensed to the income statement in accordance with IAS 38 ‘Intangible Assets’. |
| Entity | ScS Group plc (3) |
| Balance Sheet Date | 31 July 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | December 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Product warranty sales We questioned the basis for recognising revenue from the sale of product warranties as principal. As a result of our enquiry, the company reconsidered the principal versus agent requirements in IFRS 15 ‘Revenue from Contracts with Customers’ and reviewed the accounting treatment adopted by its peers. The company concluded that it did not control product warranties before transferring them to the customer and that revenue related to the sale of these warranties should have been recognised as agent rather than as principal. Consequently, the company agreed to restate the comparative amounts in the following year’s income statement. As the change affected a primary statement, we asked the company to disclose the fact that the matter had come to its attention as result of our enquiry. The company also agreed to make certain improvements to its accounting policy for product warranty sales and enhance certain other revenue-related disclosures. Product guarantees We asked the company to explain the accounting treatment of its 12-month and 20-year product guarantees. The company satisfactorily responded to our query. |
| Entity | YouGov plc (3) |
| Balance Sheet Date | 31 July 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | December 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Capitalisation of panel acquisition costs The company recognises intangible assets relating to its consumer panels, which comprise some of the costs of recruiting new members to the panel. We requested further information from the company to help us understand the basis for the conclusion that these costs meet the criteria for capitalisation, which it disclosed as a critical judgement. We enquired specifically about the unit of account applied to panel assets and how this links to the way in which the panel assets are utilised and managed. We also asked the company to explain how the requirements of IAS 38, ‘Intangible Assets’, had been considered when developing its accounting policy. The company explained that each monthly cohort of panellists in an individual country is recognised as a separate asset. The company explained the basis for capitalising panel acquisition costs and the rationale for using the unit of account chosen. The company agreed to enhance the critical judgement disclosure in its 2022 annual report and accounts. Statement of cash flows We asked the company to confirm whether the cash flow for ‘settlement of deferred consideration’ related to consideration which was contingent upon the future employment of the former owners of acquired businesses. The company confirmed it was and acknowledged that the resulting cash flow should have been classified as an operating rather than investing cash flow. We requested an explanation of the calculation of cash flow amounts for both ‘purchase of intangible assets’ and ‘acquisition of subsidiaries’ as it appeared some cash flows were included within both. The company confirmed that it had double-counted some amounts by including them in both cash flows and also identified several other offsetting errors made in the presentation of the cash flow statement. The company agreed to restate the comparatives in its next annual report and accounts for each of the above changes. As all of these affected a primary statement, we asked the company to disclose the fact that the matters had come to its attention as a result of our enquiry. We also asked the company to explain the rationale for classifying some intercompany cash flows in the parent company cash flow statement. The company acknowledged that it would have been more appropriate to reclassify some of the amounts but noted that it intended to adopt FRS 101, ‘Reduced Disclosure Framework’, and take the exemption from presenting a parent company statement of cash flows in its future reporting. We closed our enquiries on this basis. Deferred tax assets for share options We requested more information on how the tax impact of share options, both current and deferred, has been accounted for and whether the reductions in deferred tax assets related to the exercise of share options. IAS 12, ‘Income Taxes’, requires tax deductions in excess of the cumulative remuneration expense for share-based payments to be recognised directly in equity. The company confirmed that it had correctly accounted for the split in deferred tax between the income statement and equity. However, on the exercise of the share options all current tax, and the reversal of previously accumulated deferred tax, had been included incorrectly within the income statement, despite the total tax deductions being in excess of the cumulative remuneration expense for the associated share-based payments. Following our enquiry, the company also identified additional adjustments to the presentation of deferred tax assets and liabilities. The company agreed to restate the comparatives in its next annual report and accounts for each of the above changes. As all of these affected a primary statement, we asked the company to disclose the fact that the matters had come to its attention as a result of our enquiry. Other deferred tax assets We also asked the company to explain the extent to which the change in the future UK corporation tax rate had been recognised in the carrying amount of deferred tax assets and the reasons for a reclassification of deferred tax assets. The company explained how it had considered the impact of the rate change. It also confirmed that several of the items included within the reclassification should not have been described as such. The company agreed to correct this in future annual reports and accounts, noting that it did not consider the amounts to be material. |
| Entity | Carnival plc (3) |
| Balance Sheet Date | 30 November 2020 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Our enquiries related to the Strategic Report and IFRS financial statements of Carnival plc for the year ended 30 November 2020. The combined US GAAP financial statements of Carnival Corporation and plc for that year, mentioned below, were not within the scope of our inquiries. The disclosure of the possible effects of climate change on the Company’s business
The company explained that it had subsequently enhanced its disclosures in the above respects in its Strategic Report and IFRS financial statements for the year ended 30 November 2021. The company undertook to include in its future Strategic Reports a summary of the impact of the business on the environment and disclosure of appropriately balanced information regarding the usage of LNG, reflecting the different views as to the impact of LNG on the environment relative to other fossil fuels. The company also agreed to continue to monitor environmental developments and to update its disclosure of the potential effect of climate change on significant judgements and estimates, including in relation to impairment and useful lives of ships, as the company’s understanding of the actual and potential impacts develops and changes in the related assumptions are made. We also asked the company to consider clearer signposting in the various documents that form its annual report to the individual disclosures required under subsections 414CB(2)(a) to (e) and subsections 172(1)(a) to (f) of the Act (as required under section 414CZA). The company included clearer signposting to these disclosures in its 2021 Strategic Report. Alternative performance measures (‘APMs’) We asked the company to consider how it might improve the presentation of financial information in the Strategic Report (which is based on the US GAAP results of Carnival Corporation and plc rather than the IFRS results of Carnival plc) to align with the European Securities and Markets Authority (‘ESMA’) ‘Guidelines on Alternative Performance Measures’ as regards prominence compared with, and reconciliations to, the IFRS financial statement figures. We also asked the company to reconsider the granularity of the related reconciliation provided in the segment reporting note in line with paragraph 28 of IFRS 8, ‘Operating Segments’. The company committed to present key IFRS measures for Carnival plc in its 2022 and future Strategic Reports. It also provided a more granular reconciliation between the combined group US GAAP and plc IFRS results in the segment reporting note for the year ended 30 November 2021. We encouraged the company to include a cross-reference to this reconciliation from the Strategic Report. Cash flow statements We asked for more information on the gross cash payments to, and receipts from, other group entities reported as net amounts in the group cash flow statement. The company satisfactorily explained the presentation of cash flows on a net basis in relation to amounts owed to other group entities. We also questioned the classification of cash flows in relation to loans to other group entities as financing activities in the parent company cash flow statement, rather than investing activities under paragraphs 6 and 16(e) of IAS 7 ‘Statement of Cash Flows’. The company identified that certain cash flows in relation to loans to other group entities had been incorrectly presented as financing activities in the years ended 30 November 2020 and 2021 and stated that it would restate the comparative parent company statement of cash flows for the year ended 30 November 2021 included in the 2022 financial statements to present these cash flows within investing activities. As the matter 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. Accounting for foreign exchange We requested further information on the foreign exchange accounting policy applied by the parent company in its individual financial statements. The company explained its foreign exchange accounting policy in relation to the parent company’s individual financial statements and undertook to expand its policy wording in its 2022 financial statements. As a result of our enquiries the company revised its net investment hedging accounting treatment and the translation of investments in subsidiaries, and recognised immaterial adjustments in its 2021 parent company financial statements to amend its previous accounting treatment in these respects. Accounting for dry-docking costs We asked the company to clarify its accounting policy in relation to dry-docking costs in the light of the requirements of paragraph 14 of IAS 16, ‘Property, Plant and Equipment’. The company satisfactorily responded to our enquiry and revised the accounting policy wording for dry-docking costs in its IFRS financial statements for the year ended 30 November 2021. |
| Entity | Chill Brands Group plc (3) |
| Balance Sheet Date | 31 March 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2022 |
| Auditor (5) | PKF Littlejohn LLP |
| Case Summary / Press Notice |
Payment for the purchase of a domain name The company’s condensed consolidated statement of cash flows, in its interim results for the six months ended 30 September 2021, includes a cash outflow described as ‘Purchase of intangible assets’ of £1,195,898. We asked the company to confirm the cost of the domain name at 30 September 2021 and explain how this was determined. It explained that the cost of the domain name was £1,195,898 and that this amount is specified in the purchase agreement. We also asked how the cash outflow for the purchase of the domain name, presented in the 2021 interim results, relates to the statement in the company’s RNS of 26 April 2022, about its £3.5 million fundraising. This noted that one of the uses of the funds will be settlement of the outstanding balance owed in respect of purchasing the domain name. The company acknowledged that the cash flow statement should only have included the amount actually paid during the period to 30 September 2021. The company confirmed that it will:
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| Entity | FirstGroup plc (3) |
| Balance Sheet Date | 31 March 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Transfers between property, plant, and equipment and right of use assets We asked the company for additional information about transfers between property, plant, and equipment (PPE) and right of use assets including factors considered in concluding that transfers met the criteria to be considered sales, any judgements involved, and the treatment of related cash flows. The company explained that they had reassessed the accounting treatment adopted for certain transactions accounted for as sale and leasebacks, and had concluded these should have been treated as financing transactions. The company told us that the proceeds from these transactions had been incorrectly netted off purchases of PPE in the cash flow statement, and that these cash flows should have been classified as financing activities. The company also explained that cash flows relating to certain lease buy outs had been incorrectly reported within purchases of PPE rather than as repayments of lease liabilities. The company agreed to restate the comparative amounts in the consolidated cash flow statement to correct these items in its 2022 annual report and accounts, in addition to making certain reclassifications in the notes to the accounts. As the restatement affects a primary statement, the company also agreed to disclose in its 2022 report and accounts that the matter came to its attention as a result of the Financial Reporting Council’s enquiry. |
| Entity | FRP Advisory Group plc (3) |
| Balance Sheet Date | 30 April 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Deemed remuneration In relation to acquisitions, we requested further information about the company’s accounting for deemed remuneration. The company satisfactorily explained the basis for concluding that equity consideration represented post combination remuneration (deemed remuneration) and provided its rationale for recording the deemed remuneration debit to the share-based payment reserve on initial recognition. Spectrum acquisition We observed that the description of the acquisition of Spectrum Corporate Finance Limited (‘Spectrum’) in the accounts and an announcement of the transaction did not appear consistent. Accordingly, we requested further information to enable us to better understand the accounting for the transaction. The company provided the information requested which included details of the terms and structure of the deal. In closing the matter, we encouraged the company to ensure that, in future, information provided in the accounts and other public sources of information can be easily reconciled. Revenue from non-refundable retainer fees We asked the company to explain its rationale for recognising non-refundable retainer fees up-front. The company clarified that these fees were recognised ‘over time’ rather than upfront at a ‘point in time’ and undertook to amend its policy wording going forward. Unbilled revenue We requested further information about the credit risk associated with unbilled revenue which the company provided together with a commitment to expand its unbilled revenue credit risk disclosures, in view of the significance of this balance. Trade and other payables Within current and non-current liabilities, the company disclosed balances described as “liabilities to partners go forward”. We asked the company how these arose and were accounted for as this was not clear from the accounts. The company provided the information requested and undertook to include an accounting policy for partner liabilities in its next accounts. We also requested an explanation for the movement in current other payables and accruals which the company provided. Provisions We sought further information about the company’s provisions and the accounting for claims covered by insurance. The company confirmed that there were no claims which required provisioning or disclosure and also committed to review its policy for provisions in its next accounts. Dividend liability We asked the company to explain the basis for recognising a liability for interim dividends declared but not paid. The company acknowledged that no legal or constructive obligation existed at year end to support recognition of the liability. The company undertook to change its policy for interim dividends, so that they are recognised when paid rather than declared, and to derecognise retrospectively the interim dividend accrued in 2021 of £1.8m, in its2022 consolidated and parent company 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. |
| Entity | Mode Global Holdings Plc (3) |
| Balance Sheet Date | 31 December 2020 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Convertible loan notes We asked the company for further information about why the initial $USD consideration for the convertible loan notes had been allocated to both liability and equity components, as we would not expect a convertible bond denominated in a foreign currency to have an equity component. We also questioned why a gain was recognised on the settlement of the convertible loan notes. The company provided an explanation of the terms of the convertible loan notes and stated that following further review of the matter the company had determined that the convertible loan notes should have been recognised as a liability in full, with no gain recognised on settlement. The company agreed to restate the comparative period in its 2021 Annual Report and Accounts for this error. 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. |
| Entity | On the Beach Group plc (3) |
| Balance Sheet Date | 30 September 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | September 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Disclosure of engagement with regulators We questioned the disclosure in the Audit Committee Report that referred to an FRC Corporate Reporting Review (CRR) team review of the 2020 Annual Report. The company confirmed that its correspondence with the FRC in the year ended 30 September 2021 in fact related to a review of the company’s 2020 audit by the FRC’s Audit Quality Review (AQR) team. We also drew the company’s attention to the FRC Guidance on Audit Committees, which states that when disclosing the fact that a company’s audit has been reviewed by the AQR team, companies should not disclose the audit quality category. The company undertook to publish a correction its 2022 Annual Report to clarify the nature of its correspondence with the FRC in the year ended 30 September 2021 and to confirm that the CRR team did not make any assessment as to the quality of the disclosures given in the 2020 Annual Report and Accounts. Deferred tax asset classification and disclosure We challenged the classification of a material net deferred tax asset as a current asset in the balance sheet. The company undertook to restate the comparative balance sheet in its 2022 Annual Report and Accounts, to present deferred tax as non-current, as required by paragraph 56 of IAS 1, ‘Presentation of Financial Statements’. The company agreed to disclose the fact that the matter had come to its attention as a result of our enquiry. We asked the company to provide more information on the nature of the evidence supporting the recognition of a net deferred tax asset, given that the company suffered a loss in both the current and preceding financial years. The company satisfactorily responded to our enquiries and, should the balance remain material, we encouraged the inclusion of more company-specific disclosure in future reporting, in accordance with the 2019 ESMA public statement ‘Considerations on recognition of deferred tax assets arising from the carry-forward of unused tax losses’. We also enquired whether the company considered the measurement of the deferred tax asset to be a major source of estimation uncertainty that has a significant risk of resulting in a material adjustment within the next financial year, as set out in paragraph 125 of IAS 1. The company clarified that it did not consider there to be a significant risk of a material adjustment within the next financial year, and undertook to enhance its future disclosures under paragraph 122 of IAS 1 in relation to the critical judgements made in relation to the expected timing of recovery of the deferred tax asset. |
| Entity | Energean plc (3) |
| Balance Sheet Date | 31 December 2020 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Income taxes We requested further information about deferred tax assets arising from losses. The company satisfactorily explained the evidence supporting the recognition of these deferred tax assets, and other factors associated with the losses, including the locations in which these losses arose and, where relevant, their expiry date. The company agreed to provide additional disclosures associated with these deferred tax assets in the future. Leases We asked the company to explain their accounting policy for certain leases referred to in the annual report. The company explained their accounting policy for these leases, which related to oil and gas concessions, and agreed to include disclosure of the accounting policy for leases outside the scope of IFRS 16 in its next annual reports and accounts. Trade and other payables We requested an explanation for certain balances presented within trade and other payables. We questioned the nature of a liability described as a long term prepayment. The company explained this arose from amounts paid by Israel Natural Gas Lines for the transfer of the near shore and onshore segment of the Karish and Tanin infrastructure, which was expected to complete in Q4 2021/Q1 2022. We asked the company further questions about the classification of the associated asset as property, plant, and equipment, the timing of the expected derecognition, and the classification of cash flows in the cash flow statement. As a result of our enquiries, the company reconsidered the classification of the cash flows, and agreed that they should be classified as investing activities, rather than financing activities. The company agreed to reclassify the comparative amounts to reflect this change in its 2021 annual report and accounts. As the reclassification affects a primary statement, the company also agreed to disclose in its 2021 report and accounts that the matter came to its attention as a result of the Financial Reporting Council’s enquiry. Borrowing facilities We asked the company for an explanation of the difference between the carrying value of its borrowings, and the disclosures of the amounts drawn down under those facilities. The company explained these differences to our satisfaction. |
| Entity | Epwin Group Plc (3) |
| Balance Sheet Date | 31 December 2020 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Offset of bank overdrafts and cash and cash equivalents We questioned why the parent company accounts included an overdraft balance which was not included within the consolidated accounts. The company acknowledged that, in its consolidated accounts, it had offset positive cash balances and overdrafts that did not meet the offsetting criteria in paragraph 42 of IAS 32, ‘Financial Instruments: Presentation’. The company agreed to restate the comparative balance sheet in its next annual report and accounts by presenting the positive cash balances and overdrafts separately. 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. Share options We asked the company for more information about the terms of the share options exercised during the year and to explain the consequential reduction in equity. The company provided a satisfactory explanation of the terms of the options including a net settlement feature which supported the reduction. The company undertook to disclose details of the terms and conditions of the options, including the net settlement feature, in its next annual report and accounts. Movement in lease assets We asked for clarification of the reasons for the reduction in lease assets, held by the company as a lessor, and where this was disclosed in the annual report and accounts. The company explained that the asset had been reclassified to right-of-use assets as it is no longer sublet and is instead now expected to be used by the group. The company agreed to expand the disclosure in its next annual report and accounts to explain the recognition of the right-of-use asset. Gain on sale and leaseback We asked the company to explain where the gain on sale and leaseback of a property was presented in the income statement. The company provided this information noting that it was not separately presented in the income statement as, in the year under review, total gross gains were considered immaterial. |
| Entity | Helical plc (3) |
| Balance Sheet Date | 31 March 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Amounts owed by subsidiary undertakings We asked the company to explain the rationale for classifying amounts due from subsidiary undertakings as current assets in the parent company balance sheet. The company acknowledged that it did not expect the amounts to be settled within 12 months and that the amounts should be classified as non-current assets. The company agreed to restate the comparatives in its next 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. |
| Entity | HSS Hire Group plc (3) |
| Balance Sheet Date | 26 December 2020 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Identification of cash-generating units We requested more information on the identification of cash-generating units for the purpose of assessing impairment of property, plant and equipment and right of use assets. The company provided satisfactory responses to our enquiries. Onerous property cost and dilapidations provisions We asked the company to explain the reasons for a material change in the level of property-related provisions between the 2020 year-end and the 2021 interim reporting date, and hence the basis on which it was satisfied that the provisions were measured at the best estimate of the expenditure required to settle the present obligation under paragraph 36 of IAS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’. The company explained that this was due to the successful negotiation of the early surrender of property leases in the first half of 2021 that had not been anticipated at the time the 2020 year-end accounts were prepared. We questioned the extent of the sensitivity disclosures provided under paragraph 129 of IAS 1 ‘Presentation of Financial Statements’, in relation to property-related provisions, and the company undertook to include additional disclosure to the extent it is relevant and material in the future. We also encouraged the company to improve the clarity of the disclosure of material components of exceptional onerous property costs and credits in future financial statements. Impairment of financial assets We asked the company to explain its rationale for not presenting material impairment losses in relation to financial assets on the face of the consolidated income statement as required by paragraph 82(ba) of IAS 1. The company agreed to disclose this information in future financial statements to the extent material, and agreed to restate the 2020 comparatives to the 2021 income statement accordingly. 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 | Murray Income Trust PLC (3) |
| Balance Sheet Date | 30 June 2021 |
| Exchange of Substantive Letters (1) | Yes |
| Scope of Review (2) | Full |
| Quarter Published | June 2022 |
| Auditor (5) | N/A |
| Case Summary / Press Notice |
Classification of cash inflow in relation to asset purchase We questioned the company’s classification of a cash inflow of £40,248,000 associated with the acquisition of a pool of investment assets, satisfied by the issue of shares and assumption of debt, as an investing cash flow in the Statement of Cash Flows. As the transaction was not accounted for as a business combination, this cash inflow did not meet the definition of investing activities set out in paragraph 7.5(c) of FRS 102, ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’. The company undertook to restate the comparatives to the Statement of Cash Flows for the period ending 30 June 2022 to reclassify the cash inflow associated with the transaction as a financing inflow, in accordance with paragraph 7.6 of FRS 102. 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. |