Carphone Warehouse 2011 Annual Report Download - page 72

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68 Carphone Warehouse Group plc Annual Report 2011
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
14 INTERESTS IN JOINT VENTURES CONTINUED
c) Analysis of assets and liabilities
The Group’s share of the assets and liabilities of its joint ventures is as follows:
Best Buy Europe 2011
£m
2010
£m
Non-current assets 661.7 677.4
Cash and overdrafts (net) 146.8 175.3
Other borrowings (15.1) (117.9)
Other assets and liabilities (net) 144.5 77.7
Net assets 937.9 812.5
Group share of net assets 468.9 406.3
Virgin Mobile France 2011
£m
2010
£m
Non-current assets 95.1 100.8
Cash and overdrafts (net) 10.7 17.4
Loans from the Group (35.7) (50.8)
Other borrowings (38.6) (54.8)
Other assets and liabilities (net) (64.0) (58.0)
Net liabilities (32.5) (45.4)
Group share of net liabilities (15.3) (21.6)
Total Group share 2011
£m
2010
£m
Total Group share of net assets of joint ventures 453.6 384.7
Best Buy Europe is in ongoing discussions with HMRC in relation to VAT on “free gift” promotions, which may result in new
assessments. Having undertaken internal investigations and obtained third party advice, the Board considers that further provision
for any such exposures would be inappropriate. There are no material contingent liabilities in relation to Virgin Mobile France.
Best Buy Europe had capital commitments at 2 April 2011 of £4.0m (2010: £11.0m).
Within the cash and overdrafts of Best Buy Europe, £45.0m (2010: £65.0m) is held by its insurance business to cover regulatory
reserve requirements; these funds are not available to offset other Best Buy Europe borrowings.
The Group’s principal CGUs are its joint venture investments and freehold properties, which are tested annually for impairment
or more frequently if there are indications that they might be impaired.
The recoverable amounts of the CGUs are determined from value in use calculations. The Group prepares cash flow forecasts
derived from the most recent financial budgets approved by management for the next four or five years and extrapolates cash flows
in perpetuity based on a growth rate of up to 1.5% (2010: 1.0%). The pre-tax rates used to discount the forecast cash flows range
between 6.5% and 10.3% (2010: 6.5% and 10.0%).
The key assumptions for the value in use calculations are those in relation to the discount rates, growth rates and expected changes
to selling prices and direct costs, all of which are based on historical patterns and expectations of future market developments.
Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and
the risks specific to the CGUs. The directors do not consider that there are any CGUs where a realistic change to one of the key
assumptions on which the value in use calculations are based would result in the CGU’s recoverable amount falling below its
carrying value.