Full-year - Chime Communications PLC

Notes to the consolidated financial statementsFinance costsFinance costs which include interest, bank charges and the unwinding of the discount on deferred consideration, are recognised in the incomestatement in the year in which they are incurred.Segmental reportingAs required by IAS 14 (Segment Reporting) the prior year comparatives have been restated to reflect the change in management reporting of TTAPublic Relations within the group. TTA Public Relations was previously reported within Advertising and Marketing Services; it is now included withinPublic Relations. The effect of this change is as follows for 2007: revenue £3,274,000, operating income £2,965,000; operating profit £358,000;capital additions £46,000, depreciation £20,000; segment assets £1,107,000; segment liabilities £454,000.Operating profitOperating profit is stated before the share of results of associate, investment income and finance costs.Retirement benefit costsThe pension cost is the amount of contributions payable by the Group to the defined contribution pension scheme and to personal pensionschemes of certain employees during the accounting period. These are charged as an expense as they fall due.TaxationThe tax expense represents the sum of the tax currently payable and deferred tax.The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because itexcludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liabilitymethod. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extentthat it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities arenot recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assetsand liabilities in a transaction that affects neither the tax profit nor the accounting profit.Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in jointventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will notreverse in the foreseeable future.The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable thatsufficient taxable profits will be available to allow all or part of the asset to be recovered.Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax isalso dealt with in equity.Property, plant and equipmentProperty, plant and equipment are stated at cost net of depreciation and any provision for impairment. Depreciation is provided in equal instalmentsover the estimated useful economic lives of assets, using the following rates:Short-term leasehold improvements 20%Motor vehicles 16.67%Fixtures, fittings and equipment 25%Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term ofthe relevant lease.The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of theasset and is recognised in the income statement.Other intangible assetsOther intangible assets comprise acquired customer relationships and computer software. Customer relationships acquired as part of acquisitionsof business are capitalised separately from goodwill as an intangible if their value can be measured reliably on initial recognition and it is probablethat the expected future economic benefit that are attributable to the asset will flow to the Group. Computer software is capitalised based on thecost incurred to acquire and bring to use the specific software. Intangible assets are stated at cost net of amortisation and any provision forimpairment. The costs are amortised over their estimated useful lives; for customer relationships this is five years and computer software this isfour years.56Chime Communications plc