Deloitte & Touche S.p.A.
Galleria San Federico, 54
10121 Torino
Italia
Tel: +39 011 55971
www.deloitte.it
INDEPENDENT AUDITOR'S REPORT
PURSUANT TO ARTICLE 14 OF LEGISLATIVE DECREE No. 39 OF JANUARY 27, 2010
AND ARTICLE 10 OF THE EU REGULATION 537/2014
To the Shareholders of
Juventus Football Club S.p.A.
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Qualified opinion
We have audited the financial statements of Juventus Football Club S.p.A. (the "Company" or the "Issuer"), which comprise the statement of financial position as of June 30, 2022, the income statement, the statement of comprehensive income, the statement of changes in shareholders' equity, the statement of cash flows for the year then ended and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, except for the effects of the matter described in the Basis for qualified opinion section of our report, the accompanying financial statements give a true and fair view of the financial position of the Company as of June 30, 2022, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of national regulations issued pursuant to art. 9 of Italian Legislative Decree
no. 38/05.
Basis for qualified opinion
The 2019/20 and 2020/21 football seasons were greatly affected by the effects of the Covid-19 pandemic which had a major impact on the normal organisation of football competitions and on the companies operating in the industry.
Against this backdrop, in previous reporting periods, the Company reached certain agreements for the reduction of remuneration payable to registered First Team personnel in the 2019/20 season and other agreements on additional remuneration for the subsequent 2020/21 and 2021/22 seasons (hereinafter, jointly, "measures regarding the remuneration of registered personnel for the 2019/20 season"). The Issuer recognised the accounting effects of the remuneration reduction agreements in its financial statements for the year ended June 30, 2020 as lower expenses for that reporting period. Meanwhile, the accounting effects of the additional remuneration for the subsequent reporting periods were reflected as additional expenses for the years ended June 30, 2021 and June 30, 2022.
Ancona Bari Bergamo Bologna Brescia Cagliari Firenze Genova Milano Napoli Padova Parma Roma Torino Treviso Udine Verona
Sede Legale: Via Tortona, 25 - 20144 Milano | Capitale Sociale: Euro 10.328.220,00 i.v.
Codice Fiscale/Registro delle Imprese di Milano Monza Brianza Lodi n. 03049560166 - R.E.A. n. MI-1720239 | Partita IVA: IT 03049560166
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Subsequently, the Company signed further agreements with some of its registered personnel to reduce remuneration for the 2020/21 season and other agreements whereby some of them would be paid loyalty bonuses if they remained with the team at a given date in the 2021/22 season and, in some cases, in the 2022/23 season; the amount of these bonuses was in line with the amounts of the further remuneration reduction agreements signed by the registered personnel in question (hereinafter, jointly, "measures regarding the remuneration of registered personnel for the 2020/21 season"). The Issuer recognised the accounting effects of the remuneration reduction agreements in its financial statements for the year ended June 30, 2021 as lower expenses for that reporting period. Meanwhile, the accounting effects of the portion of the loyalty bonuses relating to the 2021/22 season were reflected as additional expenses for the year ended June 30, 2022.
On 28 July 2022, CONSOB notified the Issuer that it was commencing a procedure with a view to the imposition of measures under Article 154-ter (7) of Legislative Decree no 58/1998 (the "Proceeding"). It informed the Company that it had identified certain issues with the accounting treatment of several transactions and operating events, including the aforementioned measures regarding the remuneration of registered personnel for the 2019/20 and 2020/21 football seasons.
Given the above and the material effects of the measures regarding the remuneration of registered personnel on the financial statements at June 30, 2022 and on the prior year information presented for comparative purposes, we performed detailed analysis and investigations on the matter in question - also with the involvement of our specialists and experts - which is extremely complex and difficult to interpret. Upon completion of these analyses and investigations, we have concluded that: i) with regard to the measures regarding the remuneration of registered personnel for the 2019/2020 season, the agreements for additional remuneration in the subsequent 2020/21 and 2021/22 seasons gave rise to a constructive obligation for the Company, as at June 30, 2022, with reference to the services already rendered at that date and, consequently, a liability should have been recorded in the financial statements at June 30, 2020; ii) with regard to the measures regarding the remuneration of registered personnel for the 2020/21 season, the agreements for remuneration to be paid in the subsequent 2021/22 and 2022/23 seasons in the form of loyalty bonuses gave rise to a constructive obligation for the Company, as at June 30, 2021, for services already rendered at that date and, consequently, a liability should have been recorded in the financial statements at June 30, 2021.
As a result of the above, in our opinion: i) the loss for the reporting period ended June 30, 2022 and shareholders' equity at June 30, 2022 are overstated by Euro 61 million and Euro 9 million, respectively;
- in contrast, with regard to the prior period information presented for comparative purposes, the loss for the reporting period ended June 30, 2021 is understated by Euro 38 million; iii) the Issuer should have corrected the prior period accounting errors highlighted by us in the manner required by IAS/IFRS.
The disclosures provided in the "Significant events after June 30, 2022" section of the Report on Operations describe the issue in question, the timeline of events relating to the CONSOB inspection and the reasons given by the Issuer in support of its approach.
The audit work performed by us included the following procedures:
- review of documentation made available to us in relation to the Proceeding;
- meetings and discussions with Management, with the Company's advisors and with the Board of Statutory Auditors on relevant elements;
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- review of the minutes of meetings of governance bodies;
- analysis of the accounting treatment of the transactions in question, also with support from our specialists on the application and interpretation of IAS/IFRS;
- analysis of contracts and additional supporting documentation made available to us on the transactions relating to the measures regarding the remuneration of registered personnel;
- review of the legal opinions prepared by the Company's advisors, also with the support of an independent expert engaged by us and performance of independent, legal analysis, also by obtaining and reviewing the legal opinion of our independent expert;
- analysis of the disclosures provided in the Report on Operations.
We conducted our audit in accordance with International Standards on Auditing (ISA Italia). 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 Company in accordance with the ethical requirements applicable under Italian law to the audit of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. 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.
In addition to the matter described in the Basis for qualified opinion section we have determined the matters described below to be the key audit matters to be communicated in our report.
Cross transactions in the financial statements at June 30, 2020 and June 30, 2021 Description of the key
audit matter
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In turn, the purchase transactions produced significant effects on the caption | |
"Players' registration rights, net" and on the subsequent amortisation of | |
those rights. | |
Given the complexity and interpretation issues involved in this matter, we | |
used our specialists and experts to perform detailed analysis and | |
investigations of these prior period transactions. | |
Given the above circumstances and the potential material effect on the | |
financial statements at June 30, 2022 and on the prior period information | |
reported for comparative purposes in respect of these "cross transactions", | |
we have considered this a key audit matter in relation to the financial | |
statements. | |
The disclosures provided in the "Significant events after June 30, 2022" | |
section of the Report on Operations describe the matter in questions and set | |
out the reasons provided by the Issuer in support of its approach. Note 5 | |
"Significant accounting principles" of the Notes describes the accounting | |
principles adopted by the Issuer in relation to Players' registration rights and | |
Revenues from players' registration rights. | |
Audit procedures | |
performed | The audit work performed by us included the following procedures: |
∙ review of documentation made available to us in relation to the | |
Proceeding; | |
∙ meetings and discussions with Management, with the Company's | |
advisors and with the Board of Statutory Auditors on relevant elements; | |
∙ review of the minutes of meetings of governance bodies; | |
∙ analysis of the accounting treatment of the transactions in question and | |
of the opinion prepared by the Issuer's accounting advisors, also with | |
support from our specialists on the application and interpretation of | |
IAS/IFRS; | |
∙ review of the "cross transactions" through analysis of relevant contracts, | |
documentation on federal (Italian FA) requirements and documentation | |
obtained in relation to the CONSOB inspection; | |
∙ acquisition of information on the amounts involved in the transactions, | |
also analysing third party sources; | |
∙ analysis of the appropriate reporting period for the gains on the | |
transactions carried out at the end of June 2020, also in order to assess | |
their effect on information for comparative reporting periods presented | |
in the financial statements at June 30, 2022; this involved analysis of the | |
relevant contracts and the documentation acquired in relation to the | |
CONSOB inspection; | |
∙ review of the legal opinions prepared by the Company's advisors, also | |
with the support of an independent expert engaged by us and | |
performance of independent, legal analysis, also by obtaining and | |
reviewing the legal opinion of our independent expert; |
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- analysis of the disclosures made in the Report on Operations and in the Notes and of the compliance of such disclosures and of recognition and measurement criteria with applicable accounting standards.
Recognition and measurement of players' registration rights
Description of the key
audit matter
Audit procedures performed
- gain an understanding of the main controls performed by Juventus Football Club S.p.A. when recording transactions involving the transfer of Rights;
- review the main transfer operations during the reporting period and the "cross transactions" carried out in the 2019/20 and 2020/21 periods, as per the previous key audit matter; this involved reviewing relevant contracts and documentation on requirements under Italian FA rules;
- test the accounting treatment of increases to Rights as a result of contract extensions and/or transfer price increases, by vouching supporting documentation;
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Juventus Football Club S.p.A. published this content on 08 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 November 2022 14:43:07 UTC.