Carphone Warehouse 2014 Annual Report Download - page 95

Carphone Warehouse Group plc
Annual Report 2014 93
FINANCIAL STATEMENTS
24 INTERESTS IN JOINT VENTURES AND ASSETS HELD FOR SALE continued
d) ANALYSIS OF ASSETS AND LIABILITIES continued
The Group’s share of the assets and liabilities of Virgin Mobile France is as follows:
2014 2013
£m £m
Non-current assets 98 100
Cash and overdrafts (net) 22
Loans from the Group (18) (20)
Other borrowings (34) (22)
Other assets and liabilities (net) (62) (75)
Net liabilities (14) (15)
Group share of net liabilities (7) (7)
There are no material contingent liabilities in relation to Virgin Mobile France, which had no capital commitments attheend of either year.
2014 2013
£m £m
Total Group share of net (liabilities) assets of joint ventures (7) 414
25 FINANCIAL RISK MANAGEMENT AND DERIVATIVE FINANCIAL INSTRUMENTS
Financial instruments that are measured at fair value in the financial statements require disclosure of fair value measurements bylevel
based on the following fair value measurement hierarchy:
— Level  – quoted prices (unadjusted) in active markets for identical assets and liabilities;
— Level  – inputs other than quoted prices included within Level  that are observable for the asset or liability either directly
(thatis,asprices) or indirectly (that is, derived from prices); and
— Level  – inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
The significant inputs required to fair value all of the Group’s financial instruments are observable. The Group only holds Level  financial
instruments. There have also been no transfers of assets or liabilities between levels of the fair value hierarchy.
Fair values have been arrived at by discounting future cash flows, assuming no early redemption, or by revaluing forward currency
contracts to year-end market rates as appropriate to the instrument.
The directors consider that the book value of financial assets and liabilities recorded at amortised cost and their fair value are
approximately equal.
The book value and fair value of the Group’s financial assets, liabilities and derivative financial instruments is as follows:
2014 2013
£m £m
Cash and cash equivalents 283 117
Trade and other receivables excluding derivative financial assets 1,010 3
Derivative financial assets 2—
Loans to Virgin Mobile France (see note 24) 18 20
Trade and other payables (869) (17)
Finance leases (1) —
Deferred consideration (50) —
Loans and other borrowings (290) —
a) FINANCIAL RISK MANAGEMENT POLICIES
The Group’s activities expose it to certain financial risks including market risk (such as foreign exchange risk and interest rate risk), credit
risk and liquidity risk. The Group’s treasury function, which operates under approved treasury policies, uses certain financial instruments
to mitigate potentially adverse effects on the Group’s financial performance from these risks. These financial instruments consist of bank
loans and deposits, spot and forward foreign exchange contracts, foreign exchange swaps and interest rate swaps.
b) FOREIGN EXCHANGE RISK
The Group undertakes certain transactions that are denominated in foreign currencies and as a consequence has exposure to exchange rate
fluctuations. These exposures primarily arise from stock purchases, with most of the Group’s exposure being to Euro fluctuations. The Group
uses spot and forward currency contracts to mitigate these exposures. The translation risk on converting overseas currency profits or losses
is not hedged and such profits or losses are converted into Sterling at average exchange rates throughout the year. Hedge accounting is not
applied to other outstanding currency contracts and gains and losses are therefore recognised directly in profit or loss.
No contracts with embedded derivatives have been identified and, accordingly, no such derivatives have been accounted for separately.