Carphone Warehouse 2009 Annual Report Download - page 93

www.cpwplc.com 89
Financial Statements
Notes to the Company Financial Statements
1 Accounting policies
Basis of preparation
The nancial statements have been prepared in accordance
with applicable United Kingdom accounting standards under
the historical cost convention, as modied by FRS 26 ‘Financial
Instruments: Measurement’. The following principal accounting
policies have been applied consistently throughout the current
and preceding year.
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 Carphone Warehouse Group PLC consolidated nancial
statements for the year ended 31 March 2009 contain a
consolidated statement of cash ows. Consequently, the
Company has applied the exemption in FRS 1 ‘Cash Flow
Statements’ not to present its own cash ow statement.
Investments
Investments in subsidiaries and joint ventures are recognised
at cost, being the fair value of consideration, acquisition
charges associated with the investment and capital
contributions by way of share-based payments, less any
provision for permanent diminution in value.
Investments held in non-Group companies are treated as
available-for-sale and recorded at fair value. Changes in fair
value, together with any related deferred taxation, are taken
directly to reserves, and recycled to the prot and loss account
when the investment is sold or is determined to be impaired.
Share-based payments
The Company issues equity settled share-based payments to
certain employees. Equity settled share-based payments are
measured at fair value at the date of grant, and expensed over
the vesting period, based on the Company’s estimate of the
number of shares that will eventually vest.
Fair value is measured by use of a Binomial model for
share-based payments with internal performance criteria
(such as Earnings Per Share targets) and a Monte Carlo
model for those with external performance criteria (such
as Total Shareholder Return targets).
For schemes with internal performance criteria, the number of
options expected to vest is recalculated at each balance sheet
date, based on expectations of performance against target and
of leavers prior to vesting. The movement in cumulative
expense since the previous balance sheet is recognised in the
prot and loss account, with a corresponding entry in reserves.
For schemes with external performance criteria, the number of
options expected to vest is adjusted only for expectations of
leavers prior to vesting. The movement in cumulative expense
since the previous balance sheet is recognised in the prot and
loss account, with a corresponding entry in reserves.
Share-based payments issued by the Company to its
subsidiary undertakings are treated as additions to
investments based on the fair value of the grant, spread over
the relevant vesting period, with a corresponding credit to
reserves. Where the Company recharges the cost of share-
based payments to its subsidiary undertakings the investment
is reduced accordingly.
Dividends
Dividends receivable from the Company’s subsidiaries and
joint venture investments are recognised only when they
are approved by shareholders.
Final dividend distributions to the Company’s shareholders are
recognised as a liability in the nancial statements in the period
in which they are approved by the Company’s shareholders.
Interim dividends are recognised in the period in which they
are paid.
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 FRS 26 has been applied in the year.
Loans and other borrowings
Loans and other borrowings represent committed and
uncommitted bank loans, and bank overdrafts.
Bank fees and legal costs associated with the securing of
external nancing are capitalised and amortised 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.
Provisions
Provisions are recognised when the Company has a legal
or constructive obligation as a result of past events and it
is probable that an outow of resources will be required
to settle the obligation and a reliable estimate can be made
of the amount of the obligation. Provisions are discounted
where the time value of money is considered to be material.
2 Profit and loss account
In accordance with the exemption permitted by section 230
of the Companies Act 1985, the prot and loss account of the
Company is not presented separately. The prot recognised
for the year was £1,607m (2008: £15m).
Audit fees for the audit of the Company nancial statements
are £10,000 (2008: £10,000).