Carphone Warehouse 2014 Annual Report Download - page 91

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Carphone Warehouse Group plc
Annual Report 2014 89
FINANCIAL STATEMENTS
23 CPW EUROPE ACQUISITION
On  June  the Group completed the CPW Europe Acquisition for a gross consideration of £m, bringing the Group’s ownership interest
to%. CPW Europe is one of the largest independent telecommunications specialists in Europe, operating retail stores, principally under the
Carphone Warehouse and Phone House brands, together with well-developed online propositions. CPW Europe is also increasingly focused
onleveraging its assets and expertise to provide services to third parties through its Connected World Services business.
The primary reasons for the acquisition were to bring a simplified ownership structure, making day-to-day management easier and
thestrategic decision-making process more streamlined, and enabling the Group to better leverage CPW Europe’s asset base and
know-how.
The fair values of the identifiable assets and liabilities of CPW Europe as at the acquisition date were as follows:
Notes £m
Intangible assets 120
Property, plant and equipment 72
Deferred tax assets 44
Stock 343
Trade and other receivables a) i) 1,112
Net cash and cash equivalents 53
Current asset investments 5
Trade and other payables (836)
Corporation tax liabilities (48)
Provisions a) ii) (63)
Loans and other borrowings (271)
Finance lease obligations (3)
Identifiable net assets 528
Goodwill a) iii) 484
Total consideration 1,012
Satisfied by:
Fair value of existing joint venture investment b) i) 500
Cash b) ii) 370
Deferred consideration b) iii) 50
Equity b) iv) 113
Derivative asset b) iv) (21)
1,012
Net cash outflow arising on acquisition:
Cash consideration 370
Less net cash and cash equivalents acquired (53)
317
a) NET ASSETS ACQUIRED
i) The fair value of trade and other receivables represents gross contractual amounts receivable of £,m, less amounts not considered
collectable of £m.
ii) Provisions include the recognition of contingent liabilities of £m in relation to legal claims and other potential exposures. It is expected
thatany costs associated with these contingent liabilities will be incurred over the next four years.
iii) The goodwill of £m arising on the acquisition reflects the fact that CPW Europe’s value is based on its cash generating potential
rather than its existing assets, and the fact that many of its key strengths, such as its scale and expertise, do not represent intangible
assets as defined by IFRS. None of the goodwill is expected to be deductible for income tax purposes.