Dave Forsey Chief Executive 19 July 2012 - Sports Direct International

Employee Benefit Trust
The cost of shares acquired by the Sports Direct Employee Benefit
Trust is recognised within ‘Own share reserve’ in equity.
Share based payments
The Group issues equity-settled share-based payments to certain
directors and employees. These are measured at fair value at
the date of grant, which is expensed to the consolidated income
statement on a straight-line basis over the vesting period, with the
corresponding credit going to equity.
Non-market vesting conditions are not taken into account in
determining grant date fair value. Instead, they are taken into
account by adjusting the number of equity instruments to vest.
Fair value is based on the market share price on the grant date, the
likelihood of meeting the vesting targets and the expected number
of staff who will leave the Company prior to the vesting date. The
expected staff numbers used in the model has been adjusted,
based on management’s best estimate, for the effects of nontransferability,
exercise restrictions, and behavioural considerations.
A share-based payment charge of £20,643,000 was recognised
in selling, distribution and administrative expenses for the 53
weeks ended 29 April 2012. The key details in respect of the share
scheme charges are set out in Note 21.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its liabilities.
Equity instruments issued by the Group are recorded at the
proceeds received, net of any direct issue costs.
Dividends
Dividends are recognised as a liability in the Group’s financial
statements and as a deduction from equity in the period in which
the dividends are declared. Where such dividends are proposed
subject to the approval of shareholders, the dividends are regarded
as declared once shareholder approval has been obtained.
2. Critical accounting estimates and judgements
The critical accounting estimates and judgements
made by the Group regarding the future or other key
sources of estimation, uncertainty and judgement that
may have a significant risk of giving rise to a material
adjustment to the carrying values of assets and
liabilities within the next financial year are:
Impairment of goodwill
The calculation for considering the impairment of the carrying
amount of goodwill requires a comparison of the present value of
the cash-generating units to which the goodwill has been allocated,
to the value of goodwill and associated assets in the balance sheet.
The calculation of present values requires an estimation of the future
cash flows expected to arise from the cash-generating units and
the selection of a suitable discount rate.
The key assumptions made in relation to the impairment review of
goodwill are set out in Note 15.
International Financial Reporting Standards (“Standards”) in
issue but not yet effective
At the date of authorisation of these consolidated financial
statements, the International Accounting Standards Board (“IASB”)
and International Financial Reporting Standards Committee
(“IFRSC”) have issued the following standards and interpretations
which are effective for annual accounting periods beginning on or
after the stated effective date.
These standards and interpretations are not effective for and have
not been applied in the preparation of the consolidated financial
statements:
• IFRS 9 Financial Instruments (effective 1 January 2015)
• IFRS 10 Consolidated Financial Statements
(effective 1 January 2013)
• IFRS 11 Joint arrangements (effective 1 January 2013)
• IFRS 12 Disclosures Of Interest in Other Entities
(effective 1 January 2013)
• IFRS 13 Fair Value Measurement (effective 1 January 2013)
• IAS 27 (Revised), Separate Financial Statements
(effective 1 January 2013)
• IAS 28 (Revised), Investments in Associates and Joint Ventures
(effective 1 January 2013)
• Deferred Tax: Recovery of Underlying Assets - Amendments to
IAS 12 Income Taxes (effective 1 January 2012)
• Annual Improvements 2009-2011 Cycle
(effective 1 January 2013)
The directors anticipate that the adoption of these standards and
interpretations in future periods will have no material impact on the
financial statements of the Group except for the treatment of the
acquisition of subsidiaries in future accounting periods.
Impairment of tangible assets
The directors review the carrying amounts of the Group’s tangible
assets to determine whether there is any indication that those
assets have suffered an impairment loss. The key assumptions
made in relation to the impairment review of tangible assets are set
out in Note 16.
Impairment of other intangible assets
The calculation for considering the impairment of the carrying
amount of other intangible assets with an indefinite life, specifically
brands, trade marks and licences, requires a comparison of the
present value of the related cash flows to the value of the other
intangible assets in the balance sheet. The calculation of present
value requires an estimation of the future cash flows expected
to arise from the other intangible assets and the selection of a
suitable discount rate. The key assumptions made in relation to the
impairment review of other intangible assets are set out in Note 15.
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