Carphone Warehouse 2002 Annual Report Download - page 33

g) Leases
Rental payments under operating leases are charged to the profit and loss account on a straight line basis over the period of the lease.
h) Taxation
Current tax, including UK corporation tax and overseas tax, is provided at amounts expected to be paid or recovered using the tax rates and
laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where
transactions or events that result in an obligation to pay more, or a right to pay less, tax in the future have occurred at the balance
sheet date, with the following exceptions:
• Provision is made for the tax that would arise on remittance of the retained earnings of overseas subsidiaries only to the extent that, at
the balance sheet date, dividends have been accrued as receivable.
• Deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be
suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences
reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
i) Software and website development costs
The Group capitalises both internal and external infrastructure and design costs incurred in the development of software for internal use
and in the development of the functionality of its website. These costs are depreciated in accordance with the policy defined in note 1d.
j) Pensions
Contributions to defined contribution schemes are charged to the profit and loss account as they become payable in accordance with the
rules of the scheme.
k) Foreign exchange
Material transactions in foreign currencies are hedged using forward purchases or sales of the relevant currencies and are recognised in
the financial statements at the exchange rates thus obtained. Unhedged transactions are recorded at the exchange rate on the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are hedged, mainly using forward foreign exchange
contracts to create matching liabilities and assets. At the balance sheet date, both the monetary assets and liabilities and the foreign
currency hedges are retranslated at rates prevailing at the balance sheet date and any differences are taken to the profit and loss account.
The results of overseas operations are translated at the average foreign exchange rates for the period, and their balance sheets
are translated at the rates prevailing at the balance sheet date. Exchange differences arising on translation of opening net assets and
results of overseas operations are dealt with through reserves. All other exchange differences are included in the profit and loss account.
l) Employee incentive schemes
The Company operates a Save As You Earn scheme that allows for the grant of share options at a discount to the market price at the
date of the grant. The Company has made use of the exemption under UITF Abstract 17 not to recognise any compensation charge in
respect of these options.
The Carphone Warehouse Group PLC Annual Report 2002 31