Dave Forsey Chief Executive 19 July 2012 - Sports Direct International

notes to the Financial Statements
For the 53 weeks ended 29 April 2012
1. Accounting policies
The consolidated financial statements of Sports Direct International
plc (the “Company”) and its subsidiaries (together the “Group”) have
been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union (“IFRS”).
Basis of preparation
The consolidated financial statements have been prepared
in accordance with IFRS as adopted for use in the European
Union (including International Accounting Standards (“IAS”) and
International Financial Reporting Standards Committee (“IFRSC”)
interpretations) and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS as adopted for use
in the European Union. The consolidated financial statements have
been prepared under the historical cost convention, as modified
to include fair valuation of certain financial assets and derivative
financial instruments.
Consolidation
The consolidated financial statements consolidate the revenues,
costs, assets, liabilities and cash flows of the Company and its
subsidiaries, being those entities in relation to which the Company
has the power to govern the financial and operating policies,
generally achieved by a share of more than 50% of the voting rights.
On acquisition, the assets and liabilities and contingent liabilities
of a subsidiary are measured at their fair values at the date of
acquisition. Any excess of fair value of the consideration transferred
over the fair values of the identifiable net assets acquired is
recognised as goodwill. Any deficiency of fair value of consideration
transferred below the fair values of the identifiable net assets
acquired is credited to the consolidated income statement in the
period of acquisition. The non-controlling interest is stated at the
non-controlling interest’s proportion of the fair values of the assets,
liabilities and contingent liabilities recognised.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of disposal,
as appropriate.
Inter-company transactions, balances and unrealised gains and
losses on transactions between Group companies are eliminated.
Associates and joint ventures
Associates are entities over which the Group has significant
influence but not control, generally accompanied by a share of
between 20% and 50% of the voting rights.
A joint venture is an entity in which the Group holds an interest on
a long-term basis and which is jointly controlled by the Group and
one or more other venturers under a contractual agreement.
The Group’s share of the results of associates and joint ventures is
included in the Group’s consolidated income statement using the
equity method of accounting. Investments in associates and joint
ventures are carried in the Group’s consolidated balance sheet at
cost plus post acquisition changes in the Group’s share of the net
assets of the associates and joint ventures, less any impairment in
value. The carrying values of investments in associates and joint
ventures include acquired goodwill.
If the Group’s share of losses in an associate or joint venture equals
or exceeds its investment in the associate or joint venture, the
Group does not recognise further losses, unless it has incurred
obligations to do so or made payments on behalf of the associate
or joint venture.
Unrealised gains arising from transactions with associates and
joint ventures are eliminated to the extent of the Group’s interest
in the entity.
Investments
Available-for-sale investments are initially recognised at fair value.
Where fair value is different to cost, this is recognised in the
income statement on initial recognition. Subsequent gains and
losses arising from changes in fair value are recognised in other
comprehensive income through the statement of comprehensive
income, until the security is disposed or de-recognised at which
time the cumulative gain or loss previously recognised in other
comprehensive income is reclassified from equity to the income
statement as a reclassification adjustment in the consolidated
income statement for the period. If an available-for-sale investment
is determined to be impaired, the cumulative loss that had been
recognised in other comprehensive income is reclassified from
equity to profit or loss.
Acquisitions
For business combinations achieved in stages, the Group
remeasures its previously held equity interest in the acquiree at
its acquisition date fair value and recognises the resulting gain
or loss, if any, in profit or loss or other comprehensive income,
as appropriate.
Goodwill
Goodwill arising on consolidation is recognised as an asset and
reviewed for impairment at least annually or when a change in
circumstances or situation indicates that the goodwill has suffered
an impairment loss. Any impairment is recognised immediately
in the income statement. Gains and losses on the disposal of a
business include the amount of goodwill relating to that business.
When the non-controlling interest of an existing subsidiary is
acquired the carrying value of the non-controlling interests in the
balance sheet is eliminated. Any difference between the amount by
which the non-controlling interest is adjusted and the fair value of
the consideration paid is recognised directly in equity.
Other intangible assets
Brands, trade marks and licences that are internally generated are
not recorded on the balance sheet. Acquired brands, trade marks
and licences are initially carried on the balance sheet at cost. The
fair value of brands, trade marks and licences that are acquired
by virtue of a business combination is determined at the date of
acquisition and is subsequently assessed as being the deemed
cost to the Group.
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No amortisation is charged on brands, trade marks or perpetual /
renewable licences with an indefinite life as the Group believes
that the value of these brands and trade marks can be maintained
indefinitely. The Group carries out an impairment review of indefinite
life intangibles, at least annually, or when a change in circumstances
or situation indicates that those intangibles have suffered an
impairment loss.