Sports Direct implements FRC corrections in annual reporting

Sports Direct implements FRC corrections in annual reporting

Corrective action has been taken by Sports Direct into its international stores reporting, following a review by accounting's watchdog

CORRECTIVE ACTION has been taken by Sports Direct into its international stores reporting, following a review by accounting’s watchdog.

After a discussion with the Financial Reporting Council (FRC), Sports Direct’s directors will include specific commentary about Sports Direct’s international stores in its narrative reporting.

Extra detail will be included within its strategic report, and for it to present separate, segmental, information about those stores in the accounts. This has resulted in additional information in the 2016 interim results, announced today.

In respect of the accounts ended 26 April 2015, the FRC reviewed whether the strategic report, within the annual report, complied with the Companies Act 2006. The act requires the reporting to be balanced and comprehensive – but the FRC found there was no discussion of the development and performance of international stores, which is an important asset to the total revenue, number of stores, or a gross profit figure.

Additionally, one of Sports Direct’s key performance indicators, gross contribution, excludes stores that have not been owned by the company for the full 12 months in both periods. Therefore, the stores acquired in Austria and the Baltics in 2014 were excluded and this gross contribution measure had decreased from 7.4% to 0.8%. Also, there was no discussion of the performance of these stores, or their effect on the company’s results.

The FRC also considered whether the aggregation of the UK and international Sports Retail stores were in accordance with IFRS 8 ‘Operating Segments’, based on the information provided.

Since the corrective actions of Sports Direct, the FRC consider the enquiries, initiated on 26 February 2016, as concluded.

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