Notes to the consolidated financial statements 1 Basis of - PDF document

Notes to the consolidated financial statements 1 Basis of presentation and principal accounting policies Colt Group S.A. (‘Colt S.A.’ or ‘the Company’), together with its subsidiaries are referred to as ‘the Group’. The Group financial statements consolidate the financial statements of the Company and its subsidiaries as at and for the year ended 31 December 2014 as approved by the Group’s Board of Directors on 25 February 2015. Colt Group S.A. is a company domiciled in Luxembourg. Basis of preparation The consolidated financial statements have been prepared under the historical cost convention modified for fair value where required (refer below for details on specific fair value policies applied). The accounting policies set out below have been consistently applied across Group companies to all periods presented in these consolidated financial statements except in relation to the new and amended IFRS standards adopted by the Group in 2014. Going concern The Directors believe that they have a reasonable basis for concluding that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the financial statements have been prepared on a going concern basis. Basis of accounting The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (‘IFRS’) and IFRIC interpretations as endorsed by the EU and in accordance with Luxembourg laws and regulations. The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amounts, events or transactions, the actual results ultimately may differ from those estimates. Basis of consolidation The consolidated financial statements include those of the Company and all of its subsidiary undertakings. Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The Group recognises any non- controlling interest acquired on acquisition of a subsidiary at the proportionate share of the acquired net assets excluding goodwill. Subsequent to acquisition, the carrying amount of the non-controlling interest is the amount of those interests at initial recognition plus the non-controlling share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interest even if this results in the non-controlling interest having a deficit balance. Foreign currency translation Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Euros as the Group has a European- domiciled holding company and the Euro is the Group’s most significant trading currency. Transactions denominated in foreign currencies are translated at the exchange rate prevailing at the time of the transaction. Monetary assets and liabilities are translated at the period end rate and any exchange differences are taken to the consolidated income statement. Exchange differences arising from the re-translation of the opening net assets of subsidiaries which are denominated in foreign currencies, and any related long-term loans, together with the differences between income statements translated at average rates and rates ruling at the period end, are taken directly to the translation reserve. 92 Colt Group S.A. Annual Report for the year ended 31 December 2014

FINANCIALS Change in accounting policy and disclosures New and amended standards adopted by the Group The following new and amended IFRS standards and IFRIC interpretations have been adopted by the Group but have not had a significant impact on the amounts reported in the financial statements: • IAS 27 (amended) Separate Financial Statements • IAS 32 (amended) Financial instruments: Presentation • IFRS 10 Consolidated Financial Statements • IFRS 11 Joint Arrangements • IFRS 12 Disclosures of interests in other entities Standards, amendments and interpretations to existing standards that are not yet effective and have not been early-adopted by the Group The following standards and amendments to existing standards have been published and are mandatory for the Group’s accounting periods beginning on or after 1 January 2015 or later periods, but the Group has not early-adopted them: • IAS 19 (amended) Employee benefits • IFRS 10 (amended) Consolidated Financial Statements • IFRS 11 (amended) Joint Arrangements • IFRS 15 Revenue from contracts with customers It is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed. The Group does not at this stage expect the adoption of any other standards and amendments to significantly impact the Group’s financial statements. A summary of the more important Group accounting policies is set out below. Exceptional items The Group separately identifies and discloses one-off or unusual items (termed ‘exceptional items’) as disclosed in note 7. The Board believes this provides meaningful analysis of the trading results of the Group and aids readers’ understanding of the impact of such items. Therefore, in the discussion of the Group’s results of operations, reference is made to measurements before and after exceptional items. Exceptional items may not be comparable to similarly titled measures used by other companies. Revenue Revenue represents amounts earned for services and equipment sales provided to customers (net of value added tax and intra-group revenue). Contracted income invoiced in advance for fixed periods is recognised as revenue in the period of actual service provision. Where the Group acts as an agent in a transaction, it recognises revenue net of directly attributable costs. Network, Data Centre and IT Services revenues are generally billed in advance, with revenue allocated over the life of the customer contract according to the pattern in which the customer derives the benefits of the service. Installation fees are deferred and recognised in the consolidated income statement over the expected length of the customer relationship period (typically three to five years) or the contractual period, if longer. Voice Services revenue is recognised when Voice traffic is carried over the network based on the fair value of this traffic. Where a contractual arrangement consists of two or more separate elements that have value to a customer on a standalone basis, revenue is recognised for each element as if it were an individual contract. The total contract consideration is allocated between the separate elements on the basis of relative fair value and the appropriate revenue recognition criteria are applied to each element as described above. Revenue from the sale of equipment is recognised when all the significant risks and rewards of ownership are transferred to the buyer, which is normally the date the equipment is delivered and accepted by the customer. www.colt.net Stock code: COLT.L 93