Carphone Warehouse 2013 Annual Report Download - page 56

Download and view the complete annual report

Please find page 56 of the 2013 Carphone Warehouse annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 88

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88

CARPHONE WAREHOUSE GROUP PLC ANNUAL REPORT 201354
NOTES TO THE FINANCIAL STATEMENTS
1 ACCOUNTING POLICIES
a) BASIS OF PREPARATION
The Company is incorporated in England and Wales. 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, the functional currency of the Company, 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 2013,
the Group had cash and cash equivalents of £116.9m (2012: £102.7m).
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. This review considered the implications of the CPW Europe Acquisition after the year end
(see note 21), including the effect on forecast cash flows and changes to the Group’s financing facilities. 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.
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 2012 to 31 March 2013 and comparative information
fortheyear from 1 April 2011 to 31 March 2012. 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 2013 cover the 52 weeks ended 30 March 2013 and
itsresults for the year ended 31 March 2012 cover the 52 weeks ended 31 March 2012.
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.
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.