Independent Auditor
’s Report to the members of
The Lindsell Train Investment Trust plc
continued
In relation to the Company’s reporting on how it has 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.
O
verview
Key audit matters
Valuation and ownership of investments
Materiality
Company Financial Statements as a whole
£2.1m based on 1% of Net Assets as at 31/03/2023
An overview of the scope of our audit
O
ur audit was scoped by obtaining an understanding of the Company and its environment, including the
Company’s system of internal control, and assessing the risks of material misstatement in the Financial
Statements. We also addressed the risk of management override of internal controls, including assessing
whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.
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.
How the scope of our audit addressed the key audit matter
We responded to this matter by testing the valuation and ownership of
the full portfolio of investments.
In respect of listed and fund investments, we performed the following
procedures:
– confirmed the year-end bid price was used by agreeing to
independently quoted prices;
– obtained direct confirmation of the number of shares / units held in
each investment from the custodian at the balance sheet date; and
– tested the computational accuracy by multiplying the number of
shares/units held per the statement obtained from the custodian by
the valuation per share.
In respect of unlisted, private company, investment, we performed the
following procedures with support from our internal valuation experts:
– considered whether the valuation methodology is the most
appropriate in the circumstances under the International Private Equity
and Venture Capital Valuation (“IPEV”) Guidelines and applicable
accounting standards;
– independently confirmed the number of shares held to companies
house at the balance sheet date;
– assessed the appropriateness of assumptions used in applying the
valuation methodology. This included validating the Funds Under
Management (‘FUM’) to the published factsheets of LTL managed funds
and investment management revenue to historical records as well as
comparing cost assumptions and earnings / price to FUM ratios to
comparable companies; and
– performing sensitivity analysis over key inputs.
Key audit matter
Valuation and ownership of investments
(Note 1 and Note 10 to the Financial
Statements)
The investment portfolio at the year-end
comprised of listed equity investments
(£100,547,000), an unquoted fund
(£17,361,000) and one unlisted, private
company, investment (£85,220,000) held at
fair value through profit or loss.
We considered the valuation and ownership
of investments to be the most significant
audit area as the investments also represent
the most significant balance in the Financial
Statements and underpin a significant
portion of the principal activity of the entity.
Whilst we do not consider their valuation to
be subject to a significant degree of
estimation or judgement, there is a risk that
the prices used for the listed equity
investments and unquoted fund held by the
Company are not reflective of fair value of
those investments as at the year end.
Determining the fair value of the unlisted
investment involves judgement with respect
to determining the most appropriate
valuation methodology to adopt and
estimates in relation to the inputs used in
applying that methodology. Changes in
these can result in material changes in the
valuation of the unlisted investment.