Annual Report and Accounts 2008
Critical accounting policies
Key accounting judgements
Taking into account this analysis of risks and uncertainties, the key accounting judgements which could impact future financial performance include the following:
Going concern
This is a fundamental accounting concept that underlies the preparation of accounts in the UK. In adopting the going concern approach, the Directors have considered the uncertainties that could impact the Group including the impact of the challenging trading environment on profitability, the limited availability of new debt funding in current market conditions and its objective to reduce net debt in order to maximise the likelihood of maintaining debt covenant compliance. Given the Group's plans and potential mitigations, its opportunities and core funding relationships, in the opinion of the Directors, there are currently no material uncertainties that lead to significant doubt upon the Group's ability to continue as a going concern;
Pensions
Movement in asset markets, interest rates and life expectancy could materially affect the funding of the Group's pension schemes. The key assumptions used to value pension liabilities are set out in the notes to the financial statements;
Tax
The Group carries out tax management consistent with a business of its size and makes appropriate provision, based on best estimates, until tax computations are agreed with the tax authorities;
Provisions
Using information available at the balance sheet date, the Group makes judgements, based on experience, on the level of provision required. Information subsequent to the balance sheet date may impact the level of provision required;
Impairment
The Group has reviewed the carrying value of tangible and intangible assets and, from time to time, may impair certain asset values on a value in use basis. Future changes in performance or disposals could impact these values.
In addition to these key accounting judgements, the Group has significant accounting policies in respect of revenue recognition, foreign currencies, property, plant and equipment, intangible assets and derivative financial instruments and hedge accounting, which are set out in the notes to the financial statements.
Basis of preparation
This financial information has been prepared in accordance with IFRS. The comparative information for 2007 has been amended to reflect the final fair value adjustments relating to the acquisition of Continental Auto and Kings Ferry, together with reclassification of Dot2Dot as a discontinued operation. Details are contained in the notes to the Financial Statements.
Cautionary statement
This Operating and Financial Review is intended to focus on matters which are relevant to the interests of shareholders of the Company. The purpose of the OFR is to assist shareholders in assessing the strategies adopted and performance delivered by the Company and the potential for those strategies to succeed. It should not be relied on by any other party or for any other purpose.
Forward looking statements are made in good faith, based on a number of assumptions concerning future events and information available to Directors at the time of their approval of this report. These forward looking statements should be treated with caution due to the inherent uncertainties underlying any such forward looking information. The user of these accounts should not rely unduly on these forward looking statements, which are not a guarantee of performance and which are subject to a number of uncertainties and other facts, many of which are outside the Company's control and could cause actual events to differ materially from those in these statements. No guarantee can be given of future results, levels of activity, performance or achievements.