Carphone Warehouse 2015 Annual Report Download - page 93

Dixons Carphone plc Annual Report and Accounts 2014/15
Financial statements
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n) Property, plant & equipment
Property, plant & equipment are stated at cost less
accumulated depreciation and any accumulated impairment
losses.
With the exception of land, depreciation is provided to write off
the cost of the assets over their expected useful lives from the
date the asset was brought into use or capable of being used.
Rates applied to different classes of property, plant &
equipment are as follows:
Land and buildings 1Ҁ% – 4% per annum
Fixtures, fittings and equipment 10 – 33ѿ% per annum
Assets capitalised as finance leases are depreciated over the
term of the lease.
Property, plant & equipment are assessed on an ongoing basis
to determine whether circumstances exist that could lead to
the conclusion that the net book value is not supportable.
Where assets are to be taken out of use, an impairment charge
is levied. Where the property, plant & equipment form part of a
separate CGU, such as a store or group of stores, and
business indicators exist which could lead to the conclusions
that the net book value is not supportable, the recoverable
amount of the CGU is determined by calculating its value in
use. The value in use is calculated by applying discounted
cash flow modelling to management’s projection of future
profitability and any impairment is determined by comparing
the net book value with the value in use.
o) Financial assets and investments
The Group’s financial assets comprise cash and cash
equivalents, and those receivables which involve a contractual
right to receive cash from external parties. Financial assets
comprise all items shown in notes 13 and 14 with the
exception of prepayments. Under the classifications stipulated
by IAS 39, cash and cash equivalents and derivative financial
instruments, which are further described in notes 1r) and 25,
are classified as ‘loans and receivables’ and ‘held for trading
unless designated in a hedge relationship’, respectively. Trade
and other receivables (excluding derivative financial assets) are
classified as ‘loans and receivables’.
Investments, other than subsidiaries and joint ventures, are
initially recognised at cost, being the fair value of the
consideration given plus any transaction costs associated with
the acquisition. Investments are categorised as available-for-
sale and are then recorded at fair value. Changes in fair value,
together with any related taxation, are taken directly to
reserves, and recycled to the income statement when the
investment is sold or determined to be impaired.
p) Interests in joint ventures
Interests in joint ventures are accounted for using the equity
method. The consolidated income statement includes the
Group’s share of the post-tax profits or losses of the joint
ventures based on their financial statements for the year. In the
consolidated balance sheet, the Group’s interests in joint
ventures are shown as a non-current asset in the balance
sheet, representing the Group’s investment in the share capital
of the joint ventures, as adjusted by post-acquisition changes
in the Group’s share of the net assets or liabilities less
provision for any impairment. Any associated goodwill is
included within the carrying value of the investment and is
assessed for impairment as part of that investment.
Where a joint venture has net liabilities, any loans advanced to
it are included in the Group’s equity accounted investment in it.
Where a joint venture has net assets, any loans advanced to it
are shown separately in the balance sheet, as a receivable to
the Group.
q) Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost incorporates any attributable discounts and
bonuses received from suppliers in respect of that inventory.
Cost comprises direct purchase cost and those overheads that
have been incurred in bringing the inventories to their present
location and condition. Net realisable value is based on
estimated selling price, less further costs expected to be
incurred to disposal. Provision is made for obsolete, slow
moving or defective items where appropriate.
r) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in
hand, bank overdrafts and short term highly liquid deposits
with a maturity of three months or less and which are subject
to an insignificant risk of changes in value. Bank overdrafts,
which form part of cash and cash equivalents for the purpose
of the cash flow statement, are shown under current liabilities.
s) Borrowings and other financial liabilities
The Group’s financial liabilities are those which involve a
contractual obligation to deliver cash to external parties at a
future date. Financial liabilities comprise all items shown in
notes 15 to 18 with the exception of other taxation and social
security, deferred income and other non-financial creditors.
Borrowings
Borrowings in the Group's balance sheet represent committed
and uncommitted bank loans. Borrowings are initially recorded
at the consideration received less directly attributable
transaction costs. Transaction fees such as bank fees and
legal costs associated with the securing of financing are
capitalised and amortised through the income statement 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.