Dixons Carphone

Dixons Carphone plc Monitor

Company Name Annual Report Year
CR Monitor Issue: 
2018/0101
Company covered: 
Dixons Carphone plc
Period End: 
28 April, 2018
Report issued on 8 January 2019 covered the following practice issues:
Pronouncements
Extended disclosure in respect of the impact of new accounting standards including IFRS 15 "Revenue from contracts with customers" and IFRS 16 "Leases".
Change
Changes made to segmental reporting.
Change
Disclosure made in respect of discontinued operations and assets held for sale.
Change
Restatement made in respect of headline tax charge.

Disclosure of judgements and estimates

At the end of 2017, the FRC published a thematic review which focused on the disclosure of critical judgements and sources of estimation uncertainty, a requirement of IAS 1 Presentation of Financial Statements. This review was carried out in part because, in its 2016-17 corporate reporting review, the FRC found that companies were not making sufficiently clear disclosures in this area.

Unfortunately, despite this, judgements and estimates still represent an area of difficulty for companies, remaining the area most commonly raised by the Corporate Reporting Review Panel in reviewing company accounts during 2017–18. Common issues include poor explanations, a failure to separate judgements and estimates clearly and discussion of judgements and estimates that were not considered by the company to be significant or material. In some cases the FRC noted that disclosures elsewhere in the accounts suggested that significant judgements were made but these were not included in or referred to in the IAS 1 disclosures.

As a result of this, the FRC can be expected to continue its scrutiny of these disclosures and to challenge companies that do not provide clear, specific disclosures that meet the requirements of IAS 1.

This report analyses the disclosures about judgements and estimates which have been included in the consolidated annual reports of 20 UK listed companies selected at random from the FTSE 350.

IFRS 15 impact disclosures - focus on telecommunications

In our last report on IFRS 15, we looked at the disclosure of the expected impact of the standard in a randomly selected group of 20 UK listed company accounts for periods ending 31 December 2017. None of the sample of companies had early adopted IFRS 15 and only 25% of the sample anticipated the adoption to have a material impact on their next set of financial statements. 

When selecting the sample of ten for this report, we included some 31 March 2018 year-end accounts and we have only included companies in the software and mobile telecommunications industry for which the adoption of IFRS 15 is expected to have a greater impact.  The new standard sets out five core principles that preparers should following when judging how to recognise revenue from longer-term contracts. In these two industries, companies often offer customers multi-year service contracts with equipment offered for no or a low fee. Under previous rules, there were a greater number of options available to companies, whereas IFRS 15 is considerably more prescriptive, and requires companies to split the revenue from these contracts based on the performance of the contract.

This report also includes some discussion of Capita Plc, which has early adopted the standard.