Vodafone 2001 Annual Report Download - page 49

Vodafone Group Plc
Annual Report & Accounts
for the year ended
31 March 2001
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
20 Reserves
Share Profit
premium Merger Other and loss
account reserve reserve account
£m £m £m £m
1 April 2000 39,577 96,914 1,120 (575)
Shares issued in respect of the acquisition of
Airtel Móvil S.A. 7,699–––
Shares issued in respect of the acquisition of an interest
in Swisscom Mobile SA 811 – – –
Other allotments of shares 202 – – –
Loss for the financial year – – – (10,650)
Goodwill transferred to the profit and loss
account in respect of business disposals – – – 1
Currency translation – – – 5,197
Transfer in respect of issue of shares
to employee trusts (note 19) 5 – – (5)
Transfer to profit and loss account – – (96) 96
Scrip dividends (2) – – 67
–––––––– –––––––– –––––––– ––––––––
31 March 2001 48,292 96,914 1,024 (5,869)
–––––––– –––––––– –––––––– ––––––––
The currency translation movement includes a loss of £518m (2000 – gain of £316m) in respect of foreign currency net borrowings.
For acquisitions prior to 1 April 1998, the cumulative goodwill written off to reserves, net of the goodwill attributed to business disposals,
was £1,193m at 31 March 2001 (2000 – £1,194m). See notes 8 and 10 for details of the movement.
21 Non -equity m in ority in terests
Non-equity minority interests of £1,129m (2000 – £1,004m) comprise £1,125m (2000 – £1,000m) of Class D & E Preferred Shares
issued by Vodafone Americas Asia Inc. and £4m (2000 – £4m) non-cumulative redeemable preference shares issued by Vodafone
Pacific Limited.
The aggregate redemption value of the Class D & E Preferred Shares, on which annual dividends of $51.43 per share are payable
quarterly in arrears, is $1.65 billion. The holders of the Preferred Shares are not entitled to vote unless their dividends are in arrears
and unpaid for six quarterly dividend periods, in which case holders can vote for the election of two directors. The maturity date of the
825,000 Class D Preferred Shares is 6 April 2020, although they may be redeemed at the option of the company, in whole or in part,
after 7 April 2018. The 825,000 Class E Preferred Shares have a maturity date of 7 April 2018 with no early redemption. The Preferred
Shares have a redemption price of $1,000 per share plus all accrued and unpaid dividends.
The holders of the shares issued by Vodafone Pacific Limited have the right to vote and receive such dividend as the directors declare,
subject to a pre-defined limit on the amount of that dividend. These shares are redeemable by either the company or the holder of the
share under certain circumstances and are generally not entitled to any participation in the profits or assets of the company other than
as prescribed. These securities rank in priority to all other classes of share issued by the company as regards return of capital.
22 Acqu isitions an d disposals
The Group has undertaken a number of transactions during the year including completion of the acquisition of Mannesmann AG,
contribution of the Group’s US cellular operations to Verizon Wireless, the acquisition of a controlling interest in Airtel Móvil S.A. and
the acquisition of a 25% interest in Swisscom Mobile SA.
The total goodwill capitalised in respect of transactions completed during the year has been provisionally assessed to be £112,721m
of which £87,171m, £25,536m and £14m is in respect of subsidiary undertakings, associated undertakings and customer bases
respectively.
Further details of these transactions are given below.
Acquisition of Man nesman n AG
On 12 April 2000, the Group received approval from the European Commission for the acquisition of Mannesman AG. Among the
interests held by Mannesmann AG were majority stakes in the German mobile operator, Mannesmann Mobilfunk GmbH (“D2 Vodafone”)
and the Italian mobile operator, Omnitel Pronto Italia S.p.A. (“Omnitel Vodafone”). Prior to the acquisition of Mannesmann AG, the Group
held interests in D2 Vodafone and Omnitel Vodafone of approximately 34.8% and 21.6%, respectively, and these were accounted for as
associated undertakings. In accordance with Financial Reporting Standard 2, “Accounting for Subsidiary Undertakings”, and in order
to give a true and fair view, purchased goodwill has been calculated as the sum of the goodwill arising on each stake increase in
D2 Vodafone and Omnitel Vodafone, being the difference at the date of each purchase between the fair value of the consideration given
and the fair value of the identifiable assets and liabilities attributable to the interest purchased. This represents a departure from the
statutory method, under which goodwill is calculated as the difference between cost and fair value on the date that D2 Vodafone and
Omnitel Vodafone became subsidiary undertakings. The statutory method would not give a true and fair view because it would result in
the Group’s share of D2 Vodafone’s and Omnitel Vodafone’s retained reserves, during the period that they were associated undertakings,
being recharacterised as goodwill. The effect of this departure is to increase retained profits, and purchased goodwill, by £49m.