Carphone Warehouse 2016 Annual Report Download - page 99

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l) Property, plant & equipment
Property, plant & equipment are stated at cost less
accumulated depreciation and any accumulated impairment
losses.
With the exception of land, depreciation is provided to write off
the cost of the assets over their expected useful lives from the
date the asset was brought into use or capable of being used.
Rates applied to different classes of property, plant &
equipment are as follows:
Land and buildings 1Ҁ% – 4% per annum
Fixtures, fittings and equipment 10 – 33ѿ% per annum
Assets capitalised as finance leases are depreciated over the
term of the lease.
Property, plant & equipment are assessed on an ongoing
basis to determine whether circumstances exist that could lead
to the conclusion that the net book value is not supportable.
Where assets are to be taken out of use, an impairment
charge is levied. Where the property, plant & equipment form
part of a separate CGU, such as a store or group of stores, and
business indicators exist which could lead to the conclusions
that the net book value is not supportable, the recoverable
amount of the CGU is determined by calculating its value in
use. The value in use is calculated by applying discounted
cash flow modelling to management’s projection of future
profitability and any impairment is determined by comparing
the net book value with the value in use.
m) Financial assets and investments
The Group’s financial assets comprise cash and cash
equivalents, and those receivables which involve a contractual
right to receive cash from external parties. Financial assets
comprise all items shown in notes 14 and 15 with the
exception of prepayments. Under the classifications stipulated
by IAS 39, cash and cash equivalents and derivative financial
instruments, which are further described in notes 1p) and 26,
are classified as ‘loans and receivables’ and ‘held for trading
unless designated in a hedge relationship’, respectively. Trade
and other receivables (excluding derivative financial assets) are
classified as ‘loans and receivables’.
n) Interests in joint ventures
Joint ventures are joint arrangements whereby the parties that
have joint control of the arrangement have rights to the net
assets of the arrangement. These consolidated financial
statements include the Group’s share of the total recognised
gains and losses of joint ventures using the equity method less
any impairment losses. When the Group’s interest in a joint
venture has been reduced to nil because the Group’s share of
losses exceeds its interest in the joint venture, the Group only
provides for additional losses to the extent that it has incurred
legal or constructive obligations to fund such losses, or where
the Group has made payments on behalf of the joint venture.
Any associated goodwill is included within the carrying value
of the investment and is assessed for impairment as part of
that investment.
o) Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost comprises direct purchase cost and those
overheads that have been incurred in bringing the inventories
to their present location and condition less any attributable
discounts and bonuses received from suppliers in respect of
that inventory. Net realisable value is based on estimated
selling price, less further costs expected to be incurred to
disposal. Provision is made for obsolete, slow moving or
defective items where appropriate.
p) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in
hand, bank overdrafts and short term highly liquid deposits
which are subject to an insignificant risk of changes in value.
Bank overdrafts, which form part of cash and cash equivalents
for the purpose of the cash flow statement, are shown under
current liabilities.
q) Borrowings and other financial liabilities
The Group’s financial liabilities are those which involve a
contractual obligation to deliver cash to external parties at a
future date. Financial liabilities comprise all items shown in
notes 16 to 19 with the exception of deferred income and other
non-financial creditors.
Borrowings
Borrowings in the Group's balance sheet represent committed
and uncommitted bank loans. Borrowings are initially recorded
at the consideration received less directly attributable
transaction costs. Transaction fees such as bank fees and
legal costs associated with the securing of financing are
capitalised and amortised through the income statement over
the term of the relevant facility. All other borrowing costs are
recognised in the income statement in the period in which they
are incurred.
Under the classifications stipulated by IAS 39, borrowings,
finance lease obligations and trade and other payables
(excluding derivative financial liabilities) are classified as
‘financial liabilities measured at amortised cost’. Derivative
financial instruments, which are described further in note 26,
are classified as ‘held for trading unless designated in a
hedge relationship’.
Trade and other payables
Trade and other payables (excluding derivative financial
liabilities) are recorded at cost. Derivative financial instruments,
are initially recorded at fair value and then subsequently
remeasured to fair value at each balance sheet date and
are held within assets or liabilities as appropriate. Gains and
losses arising from revaluation at the balance sheet date are
recognised in the income statement unless the derivatives
are designated as hedges and such hedges are proved to
be effective.
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