Carphone Warehouse 2012 Annual Report Download - page 59

Carphone Warehouse Group plc Annual Report 2012 55
1 Accounting policies
a) Basis of preparation
The Company is incorporated in the United Kingdom. The financial statements of the Group have been prepared on a going concern basis
in accordance with IFRS as applied in accordance with the provisions of the Companies Act 2006 and Article 4 of the EU IAS Regulation.
The financial statements have been presented in UK Sterling on the historical cost basis except for the revaluation of certain financial
instruments. The principal accounting policies adopted are set out below.
Going concern
Note 17 to the financial statements includes the Group’s policies and processes for managing its exposure to liquidity risk. At 31 March 2012,
the Group had cash and cash equivalents of £102.7m (2011: £120.6m).
The directors have reviewed the future cash and profit forecasts of the Group’s joint venture investments and other businesses, which they
consider to be based on prudent assumptions. The directors are of the opinion that the forecasts, which reflect both the current uncertain
economic outlook and reasonably possible changes in trading performance, show that these businesses and the Group should be able to
operate within their facilities and comply with their banking covenants. In arriving at this conclusion the directors were mindful that the
Group has significant cash and cash equivalents.
Accordingly the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operation for
the foreseeable future and consequently the directors continue to adopt the going concern basis in the preparation of the financial statements.
Prior year comparatives
Prior year Headline results have been restated to exclude the results of businesses which have been discontinued by the Group's jointventures.
Joint ventures
Where necessary, adjustments are made to the financial statements of joint ventures to bring accounting policies used into line with those
used by the Group. The accounting policies below also relate to those applied to the Group's joint ventures.
b) Basis of consolidation
The financial statements reflect the Group’s results for the year from 1 April 2011 to 31 March 2012 and comparative information for the year
from 1 April 2010 to 31 March 2011. Best Buy Europe reports to a retail calendar, whereby its year‑end date is normally the Saturday closest
to 31 March. As such its results for the year ended 31 March 2012 cover the 52 weeks ended 31 March 2012 and its results for the year
ended 31 March 2011 cover the 52 weeks ended 2 April 2011.
The results of subsidiaries and joint ventures acquired or sold during the year are included from or to the date on which control or significant
influence passed. Intercompany transactions and balances between subsidiaries are eliminated on consolidation.
In accordance with UITF 38 ‘Accounting for ESOP Trusts’, shares in the Company held by the Group’s ESOT are shown as a reduction
inshareholders’ funds. Other assets and liabilities held by the Group’s ESOT are consolidated with the assets of the Group.
c) Foreign currency translation and transactions
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 IAS 39 ‘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.
Until May 2010 financial instruments were used for the purposes of net investment hedging. Hedges of net investments in foreign operations
are accounted for similarly to cash flow hedges in that the gain or loss on the effective portion of the hedges is recognised in equity, while gains
or losses on any ineffective portion are recognised in the income statement.
The results of overseas operations are translated at the average foreign exchange rates for the year, and their balance sheets are translated
atthe rates prevailing at the balance sheet date. Exchange differences arising on the translation of net assets, goodwill and results
ofoverseas operations are recognised in the translation reserve. All other exchange differences are included in the income statement.
NOTES TO THE FINANCIAL STATEMENTS
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