Notes to the consolidated
financial statements
26. Acquisitions
The aggregate cash consideration in respect of purchases of interests in subsidiaries and joint ventures, net of cash acquired, is as follows:
| £m | |
|---|---|
| Cash consideration paid: | |
| Vodacom Group Limited | 1,577 |
| Other acquisitions completed during the year | 26 |
| Acquisitions of non-controlling interests | 150 |
| Acquisitions completed in previous years | (20) |
| 1,733 | |
| Net overdrafts acquired | 44 |
| 1,777 |
Total goodwill acquired was £1,185 million and included £1,193 million in relation to Vodacom, £27 million in relation to other acquisitions completed during the year and a reduction of £35 million resulting from amendments to provisional purchase price allocations on acquisitions completed in previous periods. In addition, there was a reduction of £102 million in relation to the merger of Vodafone Hutchison Australia.
Vodacom Group Limited (‘Vodacom’)
On 20 April 2009 the Group acquired an additional 15% stake in Vodacom for cash consideration of ZAR 20.6 billion (£1.6 billion). On 18 May 2009 Vodacom became a subsidiary following the listing of its shares on the Johannesburg Stock Exchange and concurrent termination of the shareholder agreement with Telkom SA Limited, the seller and previous joint venture partner. During the period from 20 April 2009 to 18 May 2009 the Group continued to account for Vodacom as a joint venture, proportionately consolidating 65% of the results of Vodacom.
The results of the acquired entity have been consolidated in the income statement from 18 May 2009. From 18 May 2009 the acquired entity contributed £90 million to the profit attributable to equity shareholders of the Group.
The purchase price allocation is set out in the table below:
| Book value £m | Fair value adjustments £m | Fair value £m |
|
|---|---|---|---|
| Net assets acquired: | |||
| Identifiable intangible assets(1) | 271 | 2,931 | 3,202 |
| Property, plant and equipment | 1,603 | – | 1,603 |
| Other investments | 25 | – | 25 |
| Inventory | 56 | – | 56 |
| Trade and other receivables | 870 | – | 870 |
| Cash and cash equivalents | 58 | – | 58 |
| Current and deferred taxation liabilities | (140) | (834) | (974) |
| Short and long-term borrowings | (1,312) | – | (1,312) |
| Trade and other payables | (897) | 8 | (889) |
| Net identifiable assets acquired | 534 | 2,105 | 2,639 |
| Goodwill(2) | 1,193 | ||
| Total asset acquired | 3,832 | ||
| Non-controlling interests | (973) | ||
| Revaluation gain | (860) | ||
| Value of investment held prior to acquisition | (422) | ||
| Total consideration(3) | 1,577 |
- Notes:
- (1)
- Identifiable intangible assets of £3,202 million consist of licences and spectrum fees of £1,454 million and other intangible assets of £1,748 million.
- (2)
- The goodwill is attributable to the expected profitability of the acquired business and the synergies expected to arise after the Group’s acquisition of Vodacom.
- (3)
- Includes £5 million of directly attributable costs.
Pro-forma full year information
The following unaudited pro-forma summary presents the Group as if the additional stake in Vodacom had been acquired on 1 April 2009. The pro-forma amounts include the results of Vodacom, amortisation of the acquired intangible assets recognised on acquisition and interest expense on the increase in net debt as a result of the acquisition. The pro-forma amounts do not include any possible synergies from the acquisition of an additional stake in Vodacom. The pro-forma information is provided for comparative purposes only and does not necessarily reflect the actual results that would have occurred, nor is it necessarily indicative of future results of operations of the combined companies.
| 2010 £m |
|
|---|---|
| Revenue | 44,677 |
| Profit for the financial year | 8,556 |
| Profit attributable to equity shareholders | 8,603 |
| Pence | |
| Basic earnings per share | 16.36 |
| Diluted earnings per share | 16.28 |
Australia
On 9 June 2009 Vodafone Australia completed its merger with Hutchison 3G Australia to form a 50:50 joint venture. Vodafone Hutchison Australia (Pty) Limited, which, in due course, will market its products and services solely under the Vodafone brand. The results of the combined business have been proportionately consolidated in the Group’s results as a joint venture from the date of the merger.
Other
During the 2010 financial year the Group completed a number of smaller acquisitions for net cash consideration of £26 million paid during the year. The aggregate goodwill and fair values of identifiable assets and liabilities of the acquired operations were £27 million, £23 million and £24 million respectively.
© Copyright Vodafone 2010
