Vodafone 2015 Annual Report Download - page 166

28. Acquisitions and disposals
We completed a number of acquisitions during the year including, most signicantly, the acquisition of Grupo
Corporativo Ono, S.A. (‘Ono’). The note below provides details of these transactions as well as those in the prior
year. For further details see “Critical accounting judgements and key sources of estimation uncertainty” in note 1
“Basis of preparation” to the consolidated nancial statements.
Accounting policies
Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values
at the date of exchange of assets given, liabilities incurred or assumed and equity instruments issued by the Group. Acquisition-related costs are
recognised in the income statement as incurred. The acquiree’s identiable assets and liabilities are recognised at their fair values at the acquisition
date. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree
and the fair value of the Group’s previously held equity interest in the acquiree, if any, over the net amounts of identiable assets acquired and
liabilities assumed at the acquisition date. The interest of the non-controlling shareholders in the acquiree may initially be measured either at fair
value or at the non-controlling shareholders’ proportion of the net fair value of the identiable assets acquired, liabilities and contingent liabilities
assumed. The choice of measurement basis is made on an acquisition-by-acquisition basis.
Acquisition of interests from non-controlling shareholders
In transactions with non-controlling parties that do not result in a change in control, the difference between the fair value of the consideration paid
or received and the amount by which the non-controlling interest is adjusted is recognised in equity.
Acquisitions
The aggregate cash consideration in respect of purchases of interests in subsidiaries, net of cash acquired, is as follows:
£m
Cash consideration paid:
Grupo Corporativo Ono, S.A. 2,945
Other acquisitions completed during the year 265
Fees paid in respect of acquisitions118
3,228
Net cash acquired (135)
3,093
Note:
1 Charged to other income and expense in the consolidated income statement.
Total goodwill on acquisitions was £1,634 million and included £1,423 million in relation to Ono and £211 million in relation to other acquisitions
completed during the year. No amount of goodwill is expected to be deductible for tax purposes.
Grupo Corporativo Ono, S.A. (‘Ono’)
On 23 July 2014, the Group acquired the entire share capital of Ono for cash consideration of £2,945 million. The primary reason for acquiring the
business was to create a leading integrated communications operator in Spain, offering customers unied communication services. The results
of the acquired entity have been consolidated in the Group’s income statement from 23 July 2014 and contributed £691 million of revenue and
a loss of £313 million to the prot attributable to owners of the parent during the year.
The acquisition date fair values of the assets and liabilities acquired are provisional. These may be further adjusted as we gain a further understanding
of the business. The provisional purchase price allocation is set out in the table below:
Fair value
£m
Net assets acquired:
Identiable intangible assets1777
Property, plant and equipment 3,272
Other investments 7
Trade and other receivables 156
Cash and cash equivalents 143
Current and deferred taxation 647
Short and long-term borrowings (3,001)
Trade and other payables (391)
Provisions (83)
Net identiable assets acquired 1,527
Non-controlling interests (5)
Goodwill21,423
Total consideration32,945
Notes:
1 Identiable intangible assets of £777 million consisted of customer contracts and relationships of £710 million, brand of £33 million and software of £34 million.
2 The goodwill arising on acquisition is principally related to the synergies expected to arise following the integration of the Ono business. These principally relate to synergies expected
to arise following integration of the respective networks, operating cost rationalisation and revenue synergies driven by the larger network footprint and incremental revenue streams from
integrated services.
3 Transaction costs of £11 million were charged in the Group’s consolidated income statement in the year ended 31 March 2015.
Vodafone Group Plc
Annual Report 2015
164
Notes to the consolidated nancial statements (continued)