Carphone Warehouse 2009 Annual Report Download - page 50

46 The Carphone Warehouse Group PLC Annual Report 2009
Notes to the Financial Statements
through amortisation expense in the income statement over
the minimum subscription period. The Group has changed its
policy to expense these costs in operating expenses as the
costs are incurred. Having undertaken a comprehensive review
of the accounting policies of other businesses operating in
the telecommunications sector, the Directors believe that the
change in policy will provide greater comparability with such
businesses and will therefore provide reliable and more
relevant information to shareholders and other users of the
nancial statements.
In accordance with IAS 8 ‘Accounting Policies, Changes in
Accounting Estimates and Errors’ comparative information
has been restated to reect this change in policy, as detailed
in note 33.
d) Foreign currency translation
Material transactions in foreign currencies are hedged using
forward purchases or sales of the relevant currencies and are
recognised in the nancial 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 dened by IAS 39 ‘Financial Instruments: Recognition and
Measurement’ has been applied in the current period by
marking to market the relevant nancial instruments at the
balance sheet date and recognising the gain or loss in reserves
in respect of cash ow hedges, and through the income
statement in respect of fair value hedges.
Financial instruments are also used for the purposes of net
investment hedging. Hedges of net investments in foreign
operations are accounted for similarly to cash ow hedges
in that the gain or loss on the effective portion of the
hedges is recognised in equity, while any gains or losses
on any ineffective portion is recognised immediately in the
income statement.
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 recognised in the translation
reserve. All other exchange differences are included in the
income statement.
The principal exchange rates against Sterling used in these
nancial statements are as follows:
Average Closing
2009 2008 2009 2008
Euro 1.21 1.41 1.08 1.26
South African Rand 14.89 14.35 13.63 16.08
Swedish Krona 12.08 13.19 11.85 11.85
Swiss Franc 1.89 2.32 1.63 1.99
United States Dollar 1.73 2.01 1.43 1.99
Where a foreign operation is sold, the gain or loss on disposal
recognised in the income statement is determined after taking
into account the cumulative currency translation differences
that are attributable to the operation.
1 Accounting policies
a) Basis of preparation
The Carphone Warehouse Group PLC (“the Company”) is
incorporated in the United Kingdom.
The consolidated nancial statements of the Company and 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
nancial 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 nancial statements, which are
contained on pages 88 to 92.
The nancial statements have been prepared on the going
concern basis. Details of the considerations undertaken
by the Directors in reaching this conclusion are set out on
page 22 within the Business Review.
The nancial statements have been prepared on the historical
cost basis, except for the revaluation of certain nancial
instruments and investments. The nancial statements are
presented in Sterling, rounded to the nearest million.
The Group’s principal accounting policies are set out below.
b) Basis of consolidation
The nancial statements reect the Group’s results for the
period from 30 March 2008 to 31 March 2009 (“the year”).
Comparative information is provided for the 52 week period
ended 29 March 2008. In prior periods, the Group reported
using a weekly nancial (“retail”) calendar under which the
nancial statements were drawn up to the closest Saturday to
31 March. Following the part-disposal of the Group’s retail and
distribution business on 30 June 2008 the Group elected to
move to a xed period end of 31 March, which is better suited
to the operating cycles of the Group’s telecoms business,
TalkTalk Group. From 30 June 2008 the retail and distribution
business is reported as a joint venture. This business continues
to report to a retail calendar and its results are drawn up to
4 April 2009.
The results of subsidiaries and joint ventures and associates
acquired or sold during the year are included from or to the
date on which control or signicant inuence passed.
Intercompany transactions and balances between subsidiaries
are eliminated on consolidation.
Where necessary, adjustments are made to the nancial
statements of subsidiaries, joint ventures and associates to
bring accounting policies used into line with those used by
the Group.
c) Change in accounting policy – subscriber
acquisition costs
Subscriber acquisition costs comprise the direct third-party
costs of recruiting and retaining customers, net of incentives
from network operators and provision for in-contract churn.
In prior years these costs were capitalised as an intangible
asset, to the extent that they were supported by expected
future cash inows, and amortised on a straight-line basis