Carphone Warehouse 2001 Annual Report Download - page 32

1Accounting policies
The financial statements have been prepared in accordance with applicable accounting standards under the historical cost convention. The
following principal accounting policies have been applied consistently throughout the period and the preceding period.
a) Turnover
Turnover is stated net of VAT and other sales related taxes. The following accounting policies are applied in each business segment:
• Distribution – comprises turnover generated from the sale of mobile telephony products and services, commissions receivable on sales
and insurance premiums receivable.
• Telecoms Services – comprises revenue from network operators in respect of facilities management services, share of customer airtime
spend and loyalty income, and revenue from virtual mobile network services.
• Wireless Data Services – comprises turnover generated by the Group’s wireless internet portal business and data services.
b) Insurance premium income
Insurance premium income is credited to the profit and loss account over the period of the underlying policies.
c) Basis of consolidation
The consolidated financial statements incorporate the results of The Carphone Warehouse Group PLC and its subsidiary undertakings
drawn up to 31 March 2001. The results of subsidiaries acquired or sold during the period are included from or to the date on which control
passed. Acquisitions are accounted for under the acquisition method.
d) Intangible assets – goodwill
Goodwill arising on the acquisition of subsidiary undertakings and businesses, representing any excess of the fair value of the
consideration given over the fair value of the identifiable assets and liabilities acquired, is capitalised and written off on a straight line
basis over its useful economic life of 20 years. Provision is made for any impairment.
Negative goodwill is similarly included in the balance sheet and is credited to the profit and loss account in the periods in which the
acquired non-monetary assets are recovered through depreciation or disposal. Negative goodwill in excess of the fair values of the non-
monetary assets acquired is credited to the profit and loss account over the period that such goodwill is expected to apply.
Goodwill arising on acquisitions up to and including the period ended 28 March 1998 was written off to reserves in accordance with
the accounting standard then in force. As permitted by the current accounting standard the goodwill previously written off to reserves has
not been reinstated in the balance sheet. On disposal or closure of a previously acquired business, the attributable amount of goodwill
previously written off to reserves is included in determining the profit or loss on disposal.
e) Tangible fixed assets
Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment. Depreciation is provided on all tangible fixed
assets at rates calculated to write-off the cost, less estimated residual value, of each asset on a straight line basis over its expected useful
life from the date it is brought into use, as follows:
Computer and office equipment 20%-50% per annum
Fixtures and fittings 20% per annum
Motor vehicles 25% per annum
Short leasehold costs 10 years or the lease term if less
Freehold buildings 2%-4% per annum
f) Stock
Stock is stated at the lower of cost and net realisable value. Cost includes all direct costs incurred in bringing stock to its present location
and condition and represents finished goods and goods for resale.
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.
g) Investments
Fixed asset investments are shown at cost less provision for permanent diminution in value. Investments which are independently
managed within an external fund are evaluated on a portfolio basis at the end of the period.
Current asset investments are stated at the lower of cost and net realisable value.
30 The Carphone Warehouse Group PLC Annual Report 2001
Notes to the financial statements