Carphone Warehouse 2006 Annual Report Download - page 46

Download and view the complete annual report

Please find page 46 of the 2006 Carphone Warehouse annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 82

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82

Notes to the Financial Statements continued
are continually reviewed and revised as necessary. While every effort is made
to ensure that such estimates and assumptions are reasonable, by their nature
they are uncertain, and as such changes in estimates and assumptions may
have a material impact on the financial statements.
The principal balances in the financial statements where changes in estimates
and assumptions may have a material impact are as follows:
Subscriber acquisition costs:
Estimates made in relation to future cash inflows and to rates of in-contract
churn are based on the best information available at the balance sheet date,
but such estimates may differ from actual results.
Recoverable amount of non-current assets:
All non-current assets, including goodwill and other intangible assets, are
reviewed for potential impairment using estimates of future economic benefits
attributable to them. Such estimates may differ from the benefits that ultimately
arise, and materially affect the recoverable value of the asset.
Trade and other receivables:
Provisions for irrecoverable receivables are based on extensive historic
evidence, and the best available information in relation to specific issues,
but are nevertheless inherently uncertain.
Current taxation:
The complex nature of tax legislation across the tax jurisdictions in which the
Group operates necessitates the use of many estimates and assumptions,
where the outcome may differ from that assumed.
Deferred taxation:
The extent to which tax losses can be utilised depends on the extent to
which taxable profits are generated in the relevant jurisdictions in the
foreseeable future, and on the tax legislation then in force, and as such
the value of associated deferred tax assets is uncertain.
Provisions:
The Group’s reorganisation provisions are based on the best information
available to management at the balance sheet date. However, the future
costs assumed are inevitably only estimates, which may differ from those
ultimately incurred.
Sales provisions are based on historic patterns: of redemption for promotions,
product return rates for returns and warranties, and penalty rates from
network operators. The Group has extensive data in all areas; however, if
the historic patterns on which the provisions are based change significantly
in the future, the financial statements may be materially impacted.
Provisions relating to the disposal of excess property necessitate assumptions
in respect of period to disposal and exit costs, which may differ from the
ultimate cost of disposal.
The Carphone Warehouse Group PLC Annual Report 2006
42