Carphone Warehouse 2014 Annual Report Download - page 97

Carphone Warehouse Group plc
Annual Report 2014 95
FINANCIAL STATEMENTS
25 FINANCIAL RISK MANAGEMENT AND DERIVATIVE FINANCIAL INSTRUMENTS continued
d) LIQUIDITY RISK continued
<1 year 1–2 years 2–3 years >3 years Total
2013 £m £m £m £m £m
Trade and other payables (17) — — — (17)
e) CREDIT RISK
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers. The Group’s exposure to credit risk is regularly monitored
and the Group’s policy is updated as appropriate.
The large majority of the Group’s trade receivables are balances due from MNOs, which are generally major multi-national enterprises
with whom the Group has well-established relationships andare consequently not considered to add significantly to the Group’s credit risk
exposure. The Group's trade receivables also include balances due from equipment manufacturers, dealer customers and Connected
World Services customers. Where it is considered appropriate, the Group obtains credit insurance on accounts receivable. Provision is
made for any receivables that are considered to be irrecoverable. Details of trade receivables which are past due but not impaired are
provided in note .
The credit risks on cash and cash equivalents and derivative financial instruments are closely monitored and credit ratings are used
indetermining maximum counterparty credit risk.
The Group’s funding is reliant on its £m bank facilities, which are provided by nine banks; these institutions are considered to be
adequately capitalised to continue to meet their obligations under the facility.
The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the Group's
maximum exposure to credit risk.
f) CAPITAL RISK
The Group manages its capital to ensure that entities within the Group will be able to continue as going concerns, whilst maximising the
return to shareholders through a suitable mix of debt and equity. Thecapital structure of the Group consists of cash and cash equivalents,
loans and other borrowings and equity attributable to equity holders of the Company, comprising issued capital, reserves and accumulated
profits. Except in relation to minimum capital requirements in its insurance business, the Group is not subject to any externally imposed
capital requirements. The Group monitors its capital structure on an ongoing basis, including assessing the risks associated with each
class of capital.
26 RELATED PARTY TRANSACTIONS
During the year, the Group had the following transactions and balances requiring disclosure with its joint ventures (see also note ):
Virgin Virgin
CPW Mobile CPW Mobile
Europe France Europe France
2014 2014 2013 2013
£m £m £m £m
Revenue for services provided — 1 4 —
Net interest and other finance income — 1 — 1
Loans owed to the Group —18 —20
Other amounts owed to the Group — — 1 —
Other amounts owed by the Group — — (6) —
Revenue for services provided in the prior year relates to investment property rental income.
Revenue for services provided to Virgin Mobile France in the current year relates to commissions on sales of Virgin Mobile France
connections by the Group’s wholly owned operations in France.
All transactions entered into with related parties were completed on an arm’s length basis.
27 CAPITAL COMMITMENTS
2014 2013
£m £m
Expenditure contracted, but not provided for in the financial statements ——