The way ahead? - Vodafone

Overview
Business
review Performance Governance Financials
11. Acquisitions and disposals
Additional
information
109
We made a number of business acquisitions during the year, the two largest being Cable & Wireless Worldwide
plc and TelstraClear Limited. See below for further details of the net assets acquired and the goodwill arising.
The note also provides details of our disposals of our interests in SFR and Polkomtel in the prior year.
The aggregate cash consideration in respect of purchases of interests in subsidiaries and joint ventures, net of cash acquired, is as follows:
Cash consideration paid:
Cable & Wireless Worldwide plc 1,050
TelstraClear Limited 440
Other acquisitions completed during the year 25
1,515
Net overdrafts acquired (83)
1,432
Total goodwill acquired was £59 million and included £44 million in relation to TelstraClear and £15 million in relation to other acquisitions
completed during the year.
Cable & Wireless Worldwide plc (‘CWW’)
On 27 July 2012 the Group acquired the entire share capital of CWW for cash consideration of approximately £1,050 million before tax and
transaction costs. CWW de‑listed from the London Stock Exchange on 30 July 2012. CWW provides a wide range of managed voice, data, hosting
and IP‑based services and applications. The primary reasons for acquiring the business were to strengthen the enterprise business of Vodafone
Group in the UK and internationally, and the attractive network and other cost saving opportunities for the Vodafone Group.
The results of the acquired entity have been consolidated in the Group’s income statement from 27 July 2012 and contributed £1,234 million
of revenue and a loss of £151 million to the profit attributable to equity shareholders of the Group during the year.
The purchase price allocation is set out in the table below:
Net assets acquired:
Identifiable intangible assets 1 325
Property, plant and equipment 1,207
Inventory 34
Trade and other receivables 452
Cash and cash equivalents 78
Current and deferred taxation 788
Short and long-term borrowings (306)
Trade and other payables (754)
Provisions (249)
Post employment benefits (47)
Net identifiable assets acquired 1,528
Non-controlling interests (5)
Negative goodwill 2 (473)
Total consideration 1,050
Notes:
1 Identifiable intangible assets of £325 million consisted of customer relationships of £225 million, CWW brand of £54 million and software of £46 million and are amortised in line with Group accounting policies.
2 Transaction costs of £11 million were charged in the Group’s consolidated income statement in the year ended 31 March 2013.
Vodafone Group Plc
Annual Report 2013
The negative goodwill primarily arose from an upward fair value adjustment in relation to acquired property, plant and equipment, the recognition
of acquired identifiable intangible assets not previously recognised by CWW together with the recognition of a deferred tax asset resulting from
previously unclaimed UK capital allowances. The change in the purchase price allocation from that previously disclosed relates to further deferred
tax asset recognition following the completion of new long‑term business plans. No deferred tax assets have been recognised in respect of the
losses of CWW (see “Factors affecting the tax charge in future years” on page 106). The income statement credit in respect of the negative goodwill
is reported within “Other income and expense” on the face of the consolidated income statement.
On 27 July 2012 the Group acquired convertible bonds issued by CWW amounting to £245 million which resulted in £6 million of interest being
charged to the Group’s consolidated income statement in the year ended 31 March 2013.
£m
Fair value
£m