Annual Report 2022

Independent Auditor’s Report

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to the Members of C&C Group Plc

Report on the audit of the financial statements

Opinion

We have audited the financial statements of C&C Group plc (‘the Company’) and its subsidiaries (‘the Group’) for the year ended 28 February 2022, which comprise:

  • the Consolidated Income Statement and the Consolidated Statement of Comprehensive Income for the year then ended;
  • the Consolidated Balance Sheet and the Company Balance Sheet as at 28 February 2022;
  • the Consolidated Cash Flow Statement for the year then ended;
  • the Consolidated Statement of Changes in Equity and the Company Statement of Changes in Equity for the year then ended; and
  • the notes forming part of the financial statements, including the Statement of Accounting Policies set out on pages 154 to 170.

The financial reporting framework that has been applied in their preparation is Irish Law and International Financial Reporting Standards (IFRS) as adopted by the European Union and, as regards the Company financial statements, Accounting Standards including FRS 101 Reduced Disclosure Framework issued in the United Kingdom by the Financial Reporting Council.

In our opinion:

  • the Group financial statements give a true and fair view of the assets, liabilities and financial position of the Group as at 28 February 2022 and of the Group’s profit for the year then ended;
  • the Company financial statements give a true and fair view of the assets, liabilities and financial position of the Company as at 28 February 2022;
  • the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union;
  • the Company financial statements have been properly prepared in accordance with FRS 101 Reduced Disclosure Framework; and as applied in accordance with the provisions of the Companies Act 2014;
  • the Group financial statements and Company financial statements have been properly prepared in accordance with the requirements of the Companies Act 2014 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group and Company in accordance with ethical requirements that are relevant to our audit of financial statements in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA) as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and Company’s ability to continue to adopt the going concern basis of accounting included:

Risk assessment procedures

  • Obtained an understanding of management’s process for the use of the going concern basis of accounting;
  • Considering whether events or conditions existed that may cast doubt on the entity’s ability to continue as a going concern for a period not less than 12 months from the approval of the financial statements.

Management’s process for assessing going concern

  • In conjunction with our walkthrough of the Group’s financial statement close process, we engaged with management early to ensure key factors were considered in their assessment including controls;
  • Obtained management’s board-approved forecasted cash flows and covenant calculations for the going concern period which covers a period of at least 12 months from the date the financial statements are authorised for issue along with the Group’s assessment models for specific stressed scenarios;
  • Using our understanding of the business and through inspection and testing, evaluated and determined, whether the forecasting model and methods adopted by management in assessing going concern were appropriately sophisticated to be able to make an assessment for the Group; and
  • Considered the consistency of information obtained from other areas of the audit such as the forecasts used for impairment assessments.

Assumptions

  • Considered past historical accuracy of management’s forecasting;
  • Tested the assumptions included in the model and stressed scenarios, noting that the model was prepared on a top-down basis, driven by volumes sold within each business unit and channel with different assumptions around reduction in revenue and cost inflation, we reviewed and challenged the key assumptions, corroborating to underlying available data;
  • Tested the forecast models for each scenario to ensure that they were mathematically accurate; and
  • Considered industry reports and market data for indicators of contradictory evidence, including a review of profit warnings within the sector.

Debt facilities / liquidity

  • Performed a detailed review of all borrowing facilities to assess their continued availability to the Group through the going concern assessment period and to ensure completeness of covenants identified by management; and
  • Verified the covenant waivers in place covering the August 2022 and February 2023 measurement dates. As a result of the Equity Raise, the Group’s banking covenants were renegotiated to increase the threshold of the Group’s Net Debt/Adjusted EBITDA covenant to not exceed 4.5x and to reduce the Interest cover covenant to be not less than 2.5x for the August 2022 assessment date after which the Group returns to its original debt covenants of Net Debt/Adjusted EBITDA covenant to not exceed 3.5x and the Interest cover covenant to be not less than 3.5x.

Stress testing and Management’s plans for future actions

  • Performed sensitivity analysis assuming inflationary increases to operating costs in line with analyst forecasts and general economic sentiment, a change in revenue mix and reduction in revenue given the potential for changes in consumer behaviour as a result of the COVID-19 pandemic, which indicated that there was still liquidity headroom under these scenarios;
  • Assessed the plausibility of management’s stressed scenarios by evaluating the Group’s actual performance in early FY23 and considering industry outlook analysis; and
  • Evaluated management’s ability to undertake mitigating actions to reduce cash outflows during the going concern assessment period to determine whether such actions are feasible.

Disclosures

Reviewed the Group’s going concern disclosures in the financial statements to ensure they are in accordance with International Financial Reporting Standards.

Our key observations

We have observed that the Group has quickly recovered from the pandemic, returning to profitability in the latter part of the current year and generating operating cash flows of €33.0 million in the year ended 28 February 2022. The Group is not expected to be significantly impacted by Covid-19 in the going concern assessment period. Further, the Group has access to significant liquidity. The majority of the Group’s long-term funding commitments mature after July 2024. At 28 February 2022, the Group has unrestricted cash and cash equivalents of €64.7 million and unused committed debt facilities of up to €374 million from a revolving bank credit facility expiring in July 2024.

Conclusion

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

In relation to the Group and Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s or the Company’s ability to continue as a going concern.

Overview of our audit approach

Audit scope

  • We performed an audit of the complete financial information of 12 components and performed audit procedures on specific balances for a further 3 components
  • We performed specified procedures at a further 7 components that were determined by the Group audit team in response to specific risk factors
  • The components where we performed either full or specific audit procedures accounted for 94.3% of the Group’s Profit before Tax from continuing operations, 99.6% of the Group’s Net Revenue and 95.8% of the Group’s Total Assets
  • Components represent business units across the Group considered for audit scoping purposes

Key audit matters

  • Going concern – presented in the ‘Conclusions relating to going concern’ section above
  • Recoverability of on-trade receivable balances and advances to customers
  • Impairment assessment of goodwill and intangible brand assets
  • Assessment of the valuation of property, plant and equipment (PP&E)
  • Revenue recognition

Materiality

  • Overall Group materiality was assessed to be €3.85 million which represents approximately 5% of the Group’s Normalised Earnings based on the average profit before tax and pre-exceptional items for the years ended 28 February 2019 to 28 February 2022 excluding 28 February 2021. We refer to this materiality basis as ‘Normalised Earnings’ throughout. In our prior year audit, we adopted a materiality of €3.7 million based on 0.5% of the Group’s Net Revenue.

What has changed?

  • In the current year, our auditor’s report includes an amendment to the key audit matter Assessment of the valuation of property, plant and equipment (PP&E), where this key audit matter has been narrowed to exclude impairment assessment of equity accounted investments as the significant equity accounted investment is ‘Held For Sale’ at the year end.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our 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) that we identified, 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 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.

Risk

Our response to the risk

Key observations communicated to the Audit Committee

Recoverability of on-trade receivable balances and advances to customers (Trade receivables 2022: €147.5m, 2021: €75.9m, advances to customers 2022: €43.0m, 2021: €42.1m)

The Group has a risk through exposure to on-trade receivable balances and advances to customers who may experience financial difficulty given the ongoing COVID-19 pandemic and the withdrawal of government wage subsidies during the year.

Refer to the Audit Committee Report (page 102); and Statement of Accounting Policies (pages 167 and 170); and Note 15 of the Consolidated Financial Statements (pages 203 to 204).

We have evaluated the process and key controls, designed and implemented by management, related to assessing recoverability of on-trade receivable balances and advances to customers.

We have reviewed the model used by management in calculating the expected credit losses to ensure that it is compliant with IFRS 9 and adequately captures the additional risks in the current environment. We are satisfied that a consistent methodology tailored for local nuances has been applied in calculating expected credit losses.

We have considered management’s assumptions around the impact of the current environment on the debtor portfolios. Additionally, we have benchmarked the expected credit losses using information such as credit default swaps for comparable groups operating in the same sector and found these to be reasonable.

Given the inherent level of uncertainty and the sensitivity of judgements and estimates, we reviewed all related disclosures of the key assumptions used and judgements made in estimating the Expected Credit Loss (ECL).

We completed our planned audit procedures with no exceptions noted.

Our observations included our assessment of management’s methodology for calculating expected credit losses in accordance with IFRS 9. We focused on the significant judgements made by management, benchmarked key assumptions and the appropriate disclosure of these in the financial statements.

Impairment assessment of goodwill & intangible brand assets (2022: €656.5m, 2021: €646.0m)

The Group holds significant amounts of goodwill & intangible brand assets on the balance sheet. In line with the requirements of IAS 36: ‘Impairment of Assets’ (‘IAS 36’), management tests goodwill balances annually for impairment, and also tests intangible assets where there are indicators of impairment.

The annual impairment testing was significant to our audit because of the financial quantum of the assets it supports as well as the fact that the testing relies on a number of critical judgements, estimates and assumptions by management. Judgemental aspects include cash-generating unit (‘CGU’) determination for goodwill purposes, assumptions of future profitability, revenue growth, margins and forecast cash flows, and the selection of appropriate discount rates, all of which may be subject to management override.

Refer to the Audit Committee Report (page 102); Statement of Accounting Policies (pages 161 to 162 and 169 to 170); and Note 12 of the Consolidated Financial Statements (pages 194 to 199).

We have evaluated the process and key controls, designed and implemented by management, related to the impairment assessment of goodwill & intangible brand assets.

Valuations specialists within our team performed an independent assessment against external market data of key inputs used by management in calculating appropriate discount rates, principally risk-free rates, country risk premia and inflation rates.

We carefully considered the determination of the Group’s 6 CGUs, and flexed our audit approach relative to our risk assessment and the level of excess of value-in-use over carrying amount in each CGU for goodwill purposes and in each model for the impairment assessment for intangible brand assets. For all models, we assessed the historical accuracy of management’s estimates, corroborated key assumptions and benchmarked growth assumptions to external economic forecasts.

We evaluated management’s sensitivity analyses and performed our own sensitivity calculations to assess the level of excess of value-in-use over the goodwill and intangible brand carrying amount and whether a reasonably possible change in assumptions could cause the carrying amount to exceed its recoverable amount.

We considered the adequacy of management’s disclosures in respect of impairment testing and whether the disclosures appropriately communicate the underlying sensitivities, in particular the requirement to disclose further sensitivities for CGUs and intangible brands where a reasonably possible change in a key assumption would cause an impairment.

The above procedures were performed by the Group audit team.

We completed our planned audit procedures with no exceptions noted.

Our observations included our assessment of management’s impairment model methodology and then for each CGU and intangible brand model:

  • whether the discount rates lay within an acceptable range;
  • the level of headroom of the present value of cash flows over the CGU and asset carrying amounts;
  • analysis of the 5-year forecast EBIT growth rate when viewed against the prior year and current year actual growth;
  • the results of our sensitivity analyses on the outcome of the value-in-use models which indicated management’s conclusions were appropriate; and
  • all disclosures are appropriate to the requirements of IAS 36.

Assessment of the valuation of property, plant and equipment (PP&E) (2022: €146.0m, 2021: €139.3m)

The Group carries its land and buildings at estimated fair value, its plant and machinery using a depreciated replacement cost approach and motor vehicles and other equipment at cost less accumulated depreciation and impairment losses.

During the year, all land and buildings and plant and machinery were subject to independent expert valuations.

We considered the valuation of these assets to be a risk area due to the size of the balances and the lack of comparable market data and observable inputs such as market based assumptions, plant replacement costs and plant utilisation levels due to the specialised nature of the Group’s assets. The valuation of PP&E involves significant judgement and therefore is susceptible to management override.

Refer to the Audit Committee Report (page 102); Statement of Accounting Policies (pages 158 to 159 and 169); and note 11 of the Consolidated Financial Statements (pages 189 to 193).

We have evaluated the process and key controls, designed and implemented by management, related to assessing the valuation of property, plant and equipment.

For PP&E, we inspected the independent expert valuation reports to assess the integrity of the data and key assumptions underpinning the valuations.

Our specialist valuation team performed an independent assessment on the reasonableness of the key assumptions and judgements underlying the valuations.

We corroborated the key assumptions and considered consistency to market data and observable inputs.

We ensured the related valuation adjustments were correctly reflected and we re-calculated depreciation considering the useful lives of the assets.

We considered the adequacy of management’s disclosures in respect of the valuation and whether the disclosures appropriately communicate the underlying sensitivities.

All of the above procedures were performed predominantly by the Group audit team.

We completed our planned audit procedures with no exceptions noted.

Our observations included:

  • an overview of the risk;
  • an outline of the procedures performed;
  • the judgements we focused on including the appropriateness of the depreciated replacement cost methodology; and
  • the results of our testing on the outcome of the valuations and in respect of the related disclosures.

Revenue recognition (2022: €1,438.1m, 2021: €736.9m)

The Group generates revenue from a variety of geographies and across a large number of separate legal entities spread across the Group’s two business segments.

The Group’s revenue particularly on supply, complex and non-standard customer contract agreements may not have been accounted for correctly. In this regard we focused our risk on revenue generated in connection with certain of the Group’s arrangements with third parties entered into in order to utilise excess capacity and other material complex arrangements with customers.

Revenue is an important element of how the Group measures its performance, and revenue recognition is therefore inherently susceptible to the risk of management override.

Refer to the Audit Committee Report (page 102); Statement of Accounting Policies (page 164 ); and note 1 of the Consolidated Financial Statements (pages 171 to 174).

We considered the appropriateness of the Group’s revenue recognition accounting policies; in particular, those related to supply, complex and non-standard customer contracts.

For the purpose of our audit, the procedures we carried out included the following:

  • We have evaluated the systems and key controls, designed and implemented by management, related to revenue recognition.
  • We considered the appropriateness of the Group’s revenue recognition policy.
  • We discussed with management the key assumptions, estimates and judgements related to recognition, measurement, classification of revenue and related disclosures in accordance with IFRS 15: Revenue.
  • In addition, we have discussed significant and complex customer contracts, discounts and the treatment of marketing contributions to ensure that accounting policies are applied correctly.
  • We performed journal entry testing and verification of proper cut-off at year-end.

We completed our planned audit procedures with no exceptions noted.

Our observations included:

  • an overview of the risk;
  • an outline of the procedures performed; and
  • the judgements we focused on and the results of our testing.

Our application of materiality

We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion.

Materiality

The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.

We determined materiality for the Group and Company to be €3.85 million, which is approximately 5% of the Group’s Normalised Earnings based on the average Profit before Tax and pre-exceptional items for the years ending 28 February 2019 to 28 February 2022 excluding 28 February 2021, (2021: €3.7 million based on 0.5% of the Group’s Net Revenue). We believe that Normalised Earnings provides us with the most appropriate performance metric on which to base our materiality calculation as we consider it to be the most relevant performance measure to the Group’s equity and debt stakeholders in the context of the Group which has not yet returned to a normalised level of profits.

During the course of our audit, we reassessed initial materiality and considered that no further changes to materiality were necessary.

Performance materiality

The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that performance materiality was 50% (2021: 50%) of our planning materiality, namely €1.93 million (2021: €1.85 million). We have set performance materiality at this percentage based on our assessment of the risk of misstatements, both corrected and uncorrected, consistent with the prior year.

Reporting threshold

An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of €0.193 million (2021: €0.18 million), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.

An overview of the scope of our audit report

Tailoring the scope

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each entity within the Group. Taken together, this enables us to form an opinion on the Consolidated Financial Statements.

In determining those components in the Group to which we perform audit procedures, we utilised size and risk criteria when assessing the level of work to be performed at each entity.

In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative coverage of significant accounts in the financial statements, we selected 15 (2021: 18) components covering entities across Ireland, UK and the US, which represent the principal business units within the Group.

Of the 15 (2021: 18) components selected, we performed an audit of the complete financial information of 12 (2021: 10) components (“full scope components”) which were selected based on their size or risk characteristics. For the remaining 3 (2021: 8) components (“specific scope components”), we performed audit procedures on specific accounts within that component that we considered had the potential for the greatest impact on the significant accounts in the financial statements either because of the size of these accounts or their risk profile.

In addition to the 15 (2021: 18) components discussed above, we selected a further 7 (2021: 6) components where we performed procedures at the component level that were specified by the Group audit team in response to specific risk factors.

The reporting components where we performed audit procedures accounted for 99.6% (2021: 98.9%) of the Group’s Profit/loss before Tax, 99.6% (2021: 99.6%) of the Group’s Net Revenue and 95.9% (2021: 99.5%) of the Group’s Total Assets.

For the current year, the full scope components contributed 91.8% (2021: 85.0%) of the Group’s Profit /loss before Tax, 99.6% (2021: 97.0%) of the Group’s Net Revenue and 95.8% (2021: 97.3%) of the Group’s Total Assets. The specific scope component contributed 2.5% (2021: 13.7%) of the Group’s Profit/loss before Tax, 0.0% (2021: 0.0%) of the Group’s Net Revenue and 0.0% (2021: 0.5%) of the Group’s Total Assets. The components where we performed specified procedures that were determined by the Group audit team in response to specific risk factors contributed 5.3% (2021: 0.2%) of the Group’s Profit/loss before Tax, 0.0% (2021: 2.6%) of the Group’s Net Revenue and 0.1% (2021: 1.7%) of the Group’s Total Assets. The audit scope of these components may not have included testing of all significant accounts of the component but will have contributed to the coverage of significant accounts tested for the Group.

Of the remaining components that together represent 0.4% (2021: 1.1%) of the Group’s Profit/loss before Tax, none are individually greater than 5% (2021: 5%) of the Group’s Profit/loss before Tax. For these components, we performed other procedures, including analytical review, testing of consolidation journals and intercompany eliminations and foreign currency translation recalculations to respond to any potential risks of material misstatement to the Group financial statements.

The charts below illustrate the coverage obtained from the work performed by our audit teams.

Loss before tax

Revenue

Total Assets

Involvement with component teams

In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the components by us, as the primary audit engagement team, or by component auditors from other EY global network firms operating under our instruction. Where the work was performed by component auditors, we determined the appropriate level of involvement to enable us to determine that sufficient audit evidence had been obtained as a basis for our opinion on the Group as a whole.

We issued detailed instructions to each component auditor in scope for the Group audit, with specific audit requirements and requests across key areas. During the current year’s audit cycle, the Group audit team performed remote file reviews at Belfast, Glasgow and MCB. These visits involved discussing the audit approach and any issues arising with the component teams and holding discussions with local management and attending closing meetings.

The Group audit team interacted regularly with the component teams, where appropriate, during various stages of the audit, reviewed and evaluated the work performed by these teams, including review of key reporting documents, in accordance with the ISAs (Ireland) and were responsible for the overall planning, scoping and direction of the Group audit process. Senior members of the Group audit team also participated in component and divisional planning, interim and closing meeting calls during which the planning and results of the audits were discussed with the component auditors, local management and Group management. This, together with the additional procedures performed at Group level, gave us appropriate evidence for our opinion on the Group financial statements.

Other conclusions relating to principal risks, going concern and viability statement

We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (Ireland) require us to report to you whether we have anything material to add or draw attention to:

  • the disclosures in the annual report (set out on pages 34 to 43) that describe the principal risks and explain how they are being managed or mitigated;
  • the directors’ confirmation (set out on page 35) in the annual report that they have carried out a robust assessment of the principal risks facing the Group and the Company, including those that would threaten its business model, future performance, solvency or liquidity.
  • the directors’ statement (set out on pages 43 to 44) in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements and the directors’ identification of any material uncertainties to the Group’s and the Company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;
  • whether the directors’ statement relating to going concern required under the Listing Rules in accordance with Listing Rule 6.8.3(3) is materially inconsistent with our knowledge obtained in the audit; or
  • the directors’ explanation (set out on pages 44 to 45) in the annual report as to how they have assessed the prospects of the Group and the parent company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Group and the parent company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

Other information

The Directors are responsible for the other information. The other information comprises the information included in the Annual Report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other information and to report any uncorrected material misstatements of the other information where we conclude that those items meet the following conditions:

  • Fair, balanced and understandable (set out on page 96) – the statement given by the Directors that they consider the Annual Report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s and the Company’s performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or
  • Audit Committee reporting (set out on pages 100 to 105) – the section describing the work of the Audit Committee does not appropriately address matters communicated by us to the Audit Committee or is materially inconsistent with our knowledge obtained in the audit; or
  • Directors’ statement of compliance with the UK Corporate Governance Code (set out on page 91) – the parts of the Directors’ statement required under the Listing Rules relating to the Company’s compliance with the UK Corporate Governance Code containing provisions specified for review by the auditor in accordance with Listing Rule 6.8.6 do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code.

Opinions on other matters prescribed by the Companies Act 2014

In our opinion, based solely on the work undertaken in the course of the audit, we report that:

  • the information given in the Directors’ Report, other than those parts dealing with the non-financial statement pursuant to the requirements of S.I. No. 360/2017 on which we are not required to report in the current year, is consistent with the financial statements; and
  • the Directors’ Report, other than those parts dealing with the non-financial statement pursuant to the requirements of S.I. No. 360/2017 on which we are not required to report in the current year, has been prepared in accordance with the Companies Act 2014.

We have obtained all the information and explanations which, to the best of our knowledge and belief, are necessary for the purposes of our audit.

In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited and the Company Balance Sheet is in agreement with the accounting records.

Matters on which we are required to report by exception

Based on the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors’ report.

The Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of directors’ remuneration and transactions required by sections 305 to 312 of the Act, which relate to disclosures of directors’ remuneration and transactions, are not complied with by the Company. We have nothing to report in this regard.

We have nothing to report in respect of section 13 of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017, which require us to report to you if, in our opinion, the Company has not provided in the non-financial statement the information required by Section 5(2) to (7) of those Regulations, in respect of 28 February 2021.

Respective responsibilities

Responsibilities of directors for the financial statements

As explained more fully in the directors’ responsibilities statement set out on page 136, the directors are responsible for the preparation of the financial statements in accordance with the applicable financial reporting framework that give a true and fair view, and for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group and the parent Company’s ability to continue as going concerns, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or the parent Company or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The objectives of our audit, in respect to fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.

Our approach was as follows:

  • We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group across the various jurisdictions globally in which the Group operates. We determined that the most significant are those that relate to the form and content of external financial and corporate governance reporting including company law, tax legislation, employment law and regulatory compliance.
  • We understood how C&C Group plc is complying with those frameworks by making enquiries of management, internal audit, those responsible for legal and compliance procedures and the Company Secretary. We corroborated our enquiries through our review of the Group’s Compliance Policies, board minutes, papers provided to the Audit Committee and correspondence received from regulatory bodies.
  • We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur, by meeting with management, including within various parts of the business, to understand where they considered there was susceptibility to fraud. We also considered performance targets and the potential for management to influence earnings or the perceptions of analysts. Where this risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included testing manual journals and were designed to provide reasonable assurance that the financial statements were free from fraud or error.
  • Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures included a review of board minutes to identify any non-compliance with laws and regulations, a review of the reporting to the Audit Committee on compliance with regulations, enquiries of internal and external legal counsel and management.

A further description of our responsibilities for the audit of the financial statements is located on the IAASA’s website at: http://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Description_of_auditors_responsibilities_for_audit.pdf.

This description forms part of our auditor’s report.

Other matters which we are required to address

We were appointed by the Audit Committee following an AGM held on 6 July 2017 to audit the financial statements for the year ending 28 February 2018 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 5 years.

The non-audit services prohibited by IAASA’s Ethical Standard were not provided to the Group and we remain independent of the Group in conducting our audit.

Our audit opinion is consistent with the additional report to the audit committee.

The purpose of our audit work and to whom we owe our responsibilities

Our report is made solely to the Company’s members, as a body, in accordance with section 391 of the Companies Act 2014. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

Pat O’Neill

for and on behalf of Ernst & Young

Chartered Accountants and Statutory Audit Firm

Dublin

17 May 2022

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