Carphone Warehouse 2003 Annual Report Download - page 34

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Notes to the Financial Statements continued
14 Fixed asset investments continued
Acquisitions
a. Opal Telecom plc
On 6 November 2002, the Group acquired 100% of the issued share capital of Opal Telecom plc, a fixed line telecommunications provider registered
in England, for an initial gross consideration of £67.6m, with a further deferred consideration of up to £18.0m payable over two years. The following
table sets out the book values of the identifiable assets and liabilities acquired and their fair value to the Group:
Accounting Other fair
policy value Fair value
Book value alignments adjustments to Group
£’000 £’000 £’000 £’000
Fixed assets
Tangible 12,912 – (2,133) 10,779
Investments 360 – (360) –
Current assets
Debtors 28,365 1,477 – 29,842
Total assets 41,637 1,477 (2,493) 40,621
Creditors
Overdrafts (5,335) – – (5,335)
Loans (24,136) – – (24,136)
Trade creditors (8,704) – – (8,704)
Other taxes (855) – – (855)
Accruals and deferred income (14,046) – – (14,046)
Total liabilities (53,076) – – (53,076)
Net liabilities (11,439) 1,477 (2,493) (12,455)
Goodwill 98,100
85,645
Satisfied by
Cash 32,557
New shares issued 32,500
Loan notes 2,588
Deferred consideration 18,000
85,645
Net cash outflows in respect of the acquisition comprised:
Gross cash consideration 32,557
Overdrafts acquired 5,335
37,892
Accounting policy alignments relate to the recognition of deferred tax assets. Other fair value adjustments relate to the revaluation of tangible fixed
assets and investments.
Deferred consideration is based on performance in the two financial periods ending 27 March 2004.
Opal Telecom plc earned a profit after taxation of £4.8m in the 15 month period ended 29 March 2003 (year ended 31 December 2001 – £4.5m
loss), of which £1.2m arose in the period from 1 January 2002 to 6 November 2002. The summarised profit and loss account and the statement of
total recognised gains and losses for the period from 1 January 2002 to 6 November 2002, shown on the basis of the accounting policies of Opal
prior to the acquisition, are as follows:
Profit and loss account £’000
Tur nover 113,755
Cost of sales (82,267)
Gross profit 31,488
Operating expenses (26,811)
Operating profit 4,677
Net interest payable (3,450)
Profit on ordinary activities before taxation 1,227
Tax on profit on ordinary activities –
Profit on ordinary activities after taxation 1,227
All recognised gains and losses for the period are included in the profit and loss account.
b. Other acquisitions
During the period the Group acquired the remaining 15% of the issued share capital of MViva Limited, a company in which it already had an 85%
stake, from AOL Europe S.A., in exchange for 3.3 million shares in the Company, giving rise to goodwill of £2.0m. No fair value adjustments arose
from this acquisition.
In addition, further goodwill of £2.0m arose during the period, principally resulting from fair value adjustments in respect of previous acquisitions.
Net cash outflows in respect of all acquisitions in the period were as follows:
£’000
Gross cash consideration 32,557
Overdrafts acquired 5,335
37,892
32
The Carphone Warehouse Group PLC Annual Report 2003