Notes to the Consolidated Financial Statements
Notes 26-30
- 26. Provisions
- 27. Trade and other payables
- 28. Acquisitions
- 29. Disposals and discontinued operations
- 30. Reconciliations of net cash flows from operating activities
29. Disposals and discontinued operations
India – Bharti Airtel Limited
On 9 May 2007 and in conjunction with the acquisition of Vodafone Essar, the Group entered into a share sale and purchase agreement in which a Bharti group company irrevocably agreed to purchase the Group’s 5.60% direct shareholding in Bharti Airtel Limited. During the year ended 31 March 2008, the Group received £654 million in cash consideration for 4.99% of such shareholding and recognised a net gain on disposal of £250 million, reported in non-operating income and expense. The Group’s remaining 0.61% direct shareholding was transferred in April 2008 for cash consideration of £87 million.
Japan – Vodafone K.K.
On 17 March 2006, the Group announced an agreement to sell its 97.7% holding in Vodafone K.K. to SoftBank. The transaction completed on 27 April 2006, with the Group receiving cash of approximately ¥1.42 trillion (£6.9 billion), including the repayment of intercompany debt of ¥0.16 trillion (£0.8 billion). In addition, the Group received non-cash consideration with a fair value of approximately ¥0.23 trillion (£1.1 billion), comprised of preferred equity and a subordinated loan. SoftBank also assumed debt of approximately ¥0.13 trillion (£0.6 billion). Vodafone K.K. represented a separate geographical area of operation and, on this basis, Vodafone K.K. was treated as a discontinued operation in Vodafone Group Plc’s annual report for the year ended 31 March 2006.
Income statement and segment analysis of discontinued operations
| 2007 £m |
2006 £m |
|
|---|---|---|
| Segment revenue | 520 | 7,268 |
| Inter-segment revenue | – | (2) |
| Net revenue | 520 | 7,266 |
| Operating expenses | (402) | (5,667) |
| Depreciation and amortisation(1) | – | (1,144) |
| Impairment loss | – | (4,900) |
| Operating profit/(loss) | 118 | (4,445) |
| Net financing costs | 8 | (3) |
| Profit/(loss) before taxation | 126 | (4,448) |
| Taxation relating to performance of discontinued operations | (15) | 7 |
| Loss on disposal(2) | (747) | – |
| Taxation relating to the classification of the discontinued operations | 145 | (147) |
| Loss for the financial year from discontinued operations (3) | (491) | (4,588) |
| Notes: | |
|---|---|
| (1) | Including gains and losses on disposal of fixed assets. |
| (2) | Includes £794 million of foreign exchange differences transferred to the income statement on disposal. |
| (3) | Amount attributable to equity shareholders for the year to 31 March 2008 was nil (2007: £(494) million; 2006: £(4,598) million). |
Loss per share from discontinued operations
| 2007 Pence per share |
2006 Pence per share |
|
|---|---|---|
| Basic loss per share | (0.90) | (7.35) |
| Diluted loss per share | (0.90) | (7.35) |
Cash flows from discontinued operations
| 2007 £m |
2006 £m |
|
|---|---|---|
| Net cash flows from operating activities | 135 | 1,651 |
| Net cash flows from investing activities | (266) | (939) |
| Net cash flows from financing activities | (29) | (536) |
| Net cash flows | (160) | 176 |
| Cash and cash equivalents at the beginning of the financial year | 161 | 4 |
| Exchange loss on cash and cash equivalents | (1) | (19) |
| Cash and cash equivalents at the end of the financial year | – | 161 |
Assets and liabilities of discontinued operations
| 27 April 2006 £m |
|
|---|---|
| Intangible assets | 3,943 |
| Property, plant and equipment | 4,562 |
| Other investments | 29 |
| Cash and cash equivalents | 124 |
| Inventory | 148 |
| Trade and other receivables | 1,147 |
| Deferred tax asset | 636 |
| Total assets | 10,589 |
| Short and long term borrowings | (674) |
| Trade and other payables(1) | (2,342) |
| Deferred tax liabilities | (245) |
| Other liabilities | (40) |
| Total liabilities | (3,301) |
| Net assets | 7,288 |
| Minority interest | (87) |
| Net assets disposed | 7,201 |
| Total consideration | 7,245 |
| Other effects: foreign exchange recycled to the income statement on disposal | (794) |
| Other | 3 |
| Net loss on disposal | (747) |
| £ | |
|---|---|
| Net cash inflow arising on disposal: | |
| Cash consideration | 6,141 |
| Cash to settle intercompany debt | 793 |
| Cash and cash equivalents disposed | (124) |
| 6,810 | |
| Other | (12) |
| 6,798 |
| Note: | |
|---|---|
| (1) | Includes £793 million of intercompany debt. |
Belgium and Switzerland – Belgacom Mobile S.A. and Swisscom Mobile A.G.
During the year ended 31 March 2007, the Group disposed of its 25% interest in Belgacom Mobile S.A. to Belgacom S.A. and its 25% interest in Swisscom Mobile A.G. to Swisscom A.G. These transactions completed on 3 November 2006 and 20 December 2006, respectively. The carrying value of these investments at disposal and the cash effects of the transactions are summarised in the table below:
| Belgacom Mobile £m |
Swisscom Mobile £m |
|
|---|---|---|
| Net assets disposed | 901 | 1,664 |
| Total cash consideration | 1,343 | 1,776 |
| Other effects(1) | (1) | (44) |
| Net gain on disposal(2) | 441 | 68 |
| Notes: | |
|---|---|
| (1) | Other effects include foreign exchange gains and losses transferred to the income statement and professional fees related to the disposal. |
| (2) | Reported in other income and expense in the Consolidated Income Statement. |