Carphone Warehouse 2008 Annual Report Download - page 57

www.cpwplc.com 45
1 Accounting policies
a) Basis of preparation
The Carphone Warehouse Group PLC (“the Company”) is incorporated
in the United Kingdom.
The consolidated financial statements of the Company and all of its
subsidiaries (“the Group”) have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) as adopted for use
in the European Union and as applied in accordance with the provisions
of the Companies Act 1985 and the effective provisions of the Companies
Act 2006. These financial statements therefore comply with Article 4 of
the European Union International Accounting Standard regulation. The
Company continues to apply United Kingdom GAAP in the preparation of
its individual financial statements, which are contained on pages 76 to 80.
The following standards and interpretations have become effective during
the period ended 29 March 2008:
• IFRS7 ‘Financial Instruments: Disclosures’, and the related amendment
to IAS1 ‘Presentation of Financial Statements’ on capital disclosures.
This introduces new disclosures relating to financial instruments but
does not have any impact on their classification or valuation.
• IFRIC8 ‘Scope of IFRS2’, provides guidance where the consideration
received for equity instruments issued is less than their fair value
so as to assess whether they fall within the scope of IFRS2. This
standard has not impacted the Group’s financial statements.
• IFRIC9 ‘Reassessment of Embedded Derivatives’ provides further
guidance on the assessment of embedded derivatives and is not
relevant to the Group’s operations.
• IFRIC10 ‘Interim Financial Reporting and Impairment’ prohibits certain
impairment losses recognised in an interim period to be reversed at a
subsequent balance sheet date. This has not had any impact on the
Group’s financial statements.
At the date of authorisation of these financial statements, the following
standards and interpretations had been adopted by the European Union
but have not been applied by the Group:
• IFRS8 ‘Operating Segments’, which the Group will adopt for the
period ending 4 April 2009. This standard updates segmental reporting
requirements but is expected to have little impact on the Group’s future
disclosures, results or financial position.
• IFRIC11 ‘Group and Treasury Share Transactions’ states that when
an entity buys its own instruments to settle a share-based payment
obligation it should be accounted for as an equity-settled award.
The Group will adopt IFRIC11 for the period ending 4 April 2009.
At the date of the authorisation of these financial statements the following
standards and interpretations are still subject to endorsement by the
European Union and as such cannot be adopted early by the Group.
• IFRIC12 ‘Service Concession Arrangements’ prescribes how to
account for service concession arrangements. This is not relevant
to the Group’s operations.
• IFRIC13 ‘Customer Loyalty Programmes’ requires that where goods
or services are sold with a customer loyalty incentive, the consideration
receivable from the customer is allocated between the components
of the arrangement using fair values, resulting in a portion of revenue
being deferred on the balance sheet until the loyalty incentive has been
satisfied or has expired.
Notes to the Financial Statements
• IFRIC14 ‘IAS19 – The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction’ provides further guidance
on accounting for defined benefit funds. This standard does not have
any impact on the Group’s financial statements.
• IAS1 (Amendment) ‘Presentation of Financial Statements’ impacts
certain disclosures within the financial statements especially in relation
to the income statement and statement of changes in equity but will
have no effect on the financial results of the Group. This will be adopted
for the period ending 3 April 2010.
• IAS23 (Amendment) ‘Borrowing Costs’ requires the Group to capitalise
borrowing costs directly attributable to a qualifying asset as part of the
cost of that asset. The Group will adopt this standard for the period
ending 4 April 2009.
• IFRS2 (Amendment) ‘Share-based Payment’ clarifies the treatment
of certain conditions when accounting for share-based payments.
The Group will adopt the amendments for the period ending
3 April 2010.
• IFRS3 (Revised) ‘Business Combinations’ changes certain aspects of
accounting for business combinations including requiring all transaction
costs to be expensed. The Group will adopt these revisions for the
period ending 3 April 2010.
The financial statements have been prepared on the historical cost basis,
except for the revaluation of certain financial instruments and investments.
The Group’s principal accounting policies are set out below.
b) Basis of consolidation
The consolidated financial statements incorporate the results of the Group
to 29 March 2008. The results of subsidiaries acquired or sold during
the period are included from or to the date on which control passed.
Intercompany transactions and balances are eliminated on consolidation.
Where necessary, adjustments are made to the financial statements of
subsidiaries, joint ventures and associates to bring accounting policies
used into line with those used by the Group.
c) Foreign currency translation and financial instruments
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. Material monetary assets and liabilities denominated in foreign
currencies are hedged, mainly using forward foreign exchange contracts
to create matching liabilities and assets, and are retranslated at each
balance sheet date. Hedge accounting as defined by IAS39 ‘Financial
Instruments: Recognition and Measurement’ has been applied by marking
to market the relevant financial instruments at the balance sheet date and
recognising the gain or loss in reserves in respect of cash flow hedges,
and through the income statement in respect of fair value hedges.
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. Goodwill is held in the
currency of the operations to which it relates. Exchange differences arising
on the translation of opening net assets, goodwill and results of overseas
operations are dealt with through the translation reserve. All other
exchange differences are included in the income statement.
Financial Statements