Financial Statements Annual General Meeting 2021: Resolutions Independent Auditor’S Report to the Members of Daily Mail and General Trust Plc
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Daily Mail and General Trust plc Annual Report 2020 Governance Financial Statements Annual General Meeting 2021: Resolutions Independent Auditor’s Report to the members of Daily Mail and General Trust plc Report on the audit of the Independence The scope of our audit ReportStrategic financial statements We remained independent of the Group in As part of designing our audit, we determined accordance with the ethical requirements materiality and assessed the risks of material Opinion that are relevant to our audit of the financial misstatement in the financial statements. In In our opinion: statements in the UK, which includes the particular, we looked at where the directors • Daily Mail and General Trust plc’s Group FRC’s Ethical Standard, as applicable to made subjective judgements, for example in financial statements and Company listed public interest entities, and we have respect of significant accounting estimates financial statements (the ‘financial fulfilled our other ethical responsibilities that involved making assumptions and statements’) give a true and fair view in accordance with these requirements. considering future events that are inherently uncertain. of the state of the Group’s and of the To the best of our knowledge and belief, we Company’s affairs as at 30 September declare that non-audit services prohibited by Capability of the audit in detecting 2020 and of the Group’s profit and the FRC’s Ethical Standard were not provided irregularities, including fraud cash flows for the year then ended; to the Group or the Company. Based on our understanding of the Group • the Group financial statements have and industry, we identified that the principal Other than those disclosed in Note 5 to the been properly prepared in accordance risks of non-compliance with laws and with International Financial Reporting financial statements, we have provided no regulations related to data protection, Governance non-audit services to the Group or the Standards (IFRSs) as adopted by the competition and anti-trust legislation, EU Company in the period from 1 October 2019 European Union; Market Abuse Regulation, libel legislation, to 30 September 2020. • the Company financial statements have and tax compliance, and we considered the been properly prepared in accordance Our audit approach extent to which non-compliance might have with United Kingdom Generally Accepted Overview a material effect on the financial statements. Accounting Practice (United Kingdom Materiality We also considered those laws and Accounting Standards, comprising • Overall Group materiality: £4.3 million regulations that have a direct impact on the FRS 101 ‘Reduced Disclosure Framework’, (2019: £7.25 million), based on preparation of the financial statements, and applicable law); and approximately 5% of a rolling three-year including but not limited to, the Companies • the financial statements have been average of underlying adjusted profit Act 2006. We evaluated management’s prepared in accordance with the before tax and non-controlling interests incentives and opportunities for fraudulent requirements of the Companies Act 2006 using FY20, FY19 and FY18 actuals. manipulation of the financial statements and, as regards the Group financial • Overall Company materiality: £33 million (including the risk of override of controls), statements, Article 4 of the IAS Regulation. (2019: £32 million), based on and determined that the principal risks We have audited the financial statements, were related to posting inappropriate approximately 1% of total assets. StatementsFinancial included within the Annual Report, which journal entries to increase revenue, and Audit scope comprise: the Consolidated and Company management bias in accounting estimates. • Of the Group’s five operating divisions, we Statements of Financial Position as at The Group engagement team shared this risk obtained full scope audits for Consumer 30 September 2020, the Consolidated assessment with the component auditors so Media and Insurance Risk. For Events and Income Statement and Consolidated that they could include appropriate audit Exhibitions, Property Information and Statement of Comprehensive Income, the procedures in response to such risks in their EdTech, we scoped our audit at a business Consolidated and Company Statements of work. Audit procedures performed by the level, and identified six businesses over Changes in Equity, and the Consolidated Group engagement team and/or component which we performed either a full scope Cash Flow Statement for the year then auditors included: audit or specified audit procedures ended; and the Notes to the financial on certain balances or transactions. • review of the financial statement statements, which include a description • Taken together, the components where disclosures to underlying supporting of the significant accounting policies. we performed audit work accounted documentation; Our opinion is consistent with our reporting for 83% of Group revenue and 75% of • enquiry with senior management and to the Audit & Risk Committee. absolute adjusted profit before taxation internal counsel; • review of material component auditors’ and non-controlling interests. Shareholder Information Basis for opinion work; We conducted our audit in accordance with Key audit matters • review of internal audit reports in so far as International Standards on Auditing (UK) • Impairment of intangible assets and they related to the financial statements; (‘ISAs (UK)’) and applicable law. Our goodwill (Group) • review of the Directors’ Litigation report responsibilities under ISAs (UK) are further • Accounting for deferred taxation and and bribery, fraud, whistleblowing and described in the Auditors’ responsibilities for uncertain tax positions (Group) internal controls review report; and the audit of the financial statements section • Accounting for acquisitions and disposals • testing journal entries, in particular those of our report. We believe that the audit (Group) with unusual financial statement line item evidence we have obtained is sufficient and • Presentation of adjusted profit (Group) combinations. appropriate to provide a basis for our opinion. • Impact of Covid-19 (Group and Company) • Carrying value of shares in Group undertakings (Company) 97 Financial Statements Daily Mail and General Trust plc Annual Report 2020 Financial Statements Independent Auditor’s Report to the members of Daily Mail and General Trust plc There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations ReportStrategic is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. Key audit matter How our audit addressed the key audit matter Impairment of intangible assets and goodwill (Group) Refer to the Audit & Risk Committee report on pages 60 to 66 As part of our audit of the Directors’ impairment assessments (for both and to Notes 21 and 22 in the Group financial statements. goodwill and intangible assets) we evaluated future cash flow forecasts Governance and the process by which they were drawn up. This included comparing The Group had £255.4 million of goodwill and a further them to the latest Board approved five-year plan, and testing the £94.9 million of intangible assets on the balance sheet at mathematical accuracy of the assessments. 30 September 2020. There has been an impairment charge recorded of £11.8 million against goodwill and £3.8 million For the impairment assessment of goodwill and intangible assets against other intangible assets for businesses which remain allocated to the material individual lowest level CGUs within the Events & in the statement of financial position at 30 September 2020. Exhibitions and Consumer Media segments and the EU Property Group