22nd Feb 2005 15:00
Vodafone Group Plc22 February 2005 22 February 2005 CHANGE IN US GAAP ACCOUNTING FOR INTANGIBLE ASSETS - NO IMPACT ON VODAFONE'S RESULTS UNDER UK GAAP OR IFRS As previously announced, on 29 September 2004 the Staff of the United StatesSecurities and Exchange Commission ("SEC") announced new guidance on theinterpretation of accounting principles generally accepted in the United States("US GAAP") in relation to accounting for intangible assets. The new SEC guidance does not affect Vodafone Group Plc's ("Vodafone") results,cash flows, or the carrying values of any of its assets under UK GAAP or, in thefuture, under IFRS. Furthermore, the Group's dividend distribution policy andshare purchase programme are unaffected by the new SEC guidance. Historically, under US GAAP, Vodafone has assigned to mobile licences theresidual purchase price in business combinations in excess of the fair values ofall assets and liabilities other than mobile licences and goodwill. Thisapproach has been on the basis that mobile licences were indistinguishable fromgoodwill. For US GAAP purposes only, the adoption of the new SEC guidance requiresVodafone to distinguish between mobile licences and goodwill. However, the newguidance does not permit the amount historically recorded as mobile licences tobe subsequently reallocated between mobile licences and goodwill. This hasresulted in a reduction of the carrying value of Vodafone's indirect interest inthe Verizon Wireless licences under US GAAP of £6.2 billion, net of £5.2 billionrelated tax. Consequently, the reduction in the carrying value of Vodafone's investment inVerizon Wireless under US GAAP was not as a result of a change in Vodafone'sview of the financial prospects of Verizon Wireless. - ends -For further information: Vodafone GroupSimon Lewis, Group Corporate Affairs DirectorTel: +44 (0) 1635 673310 Investor Relations Media RelationsCharles Butterworth Bobby LeachDarren Jones Ben PadovanSarah MoriartyTel: +44 (0) 1635 673310 Tel: +44 (0) 1635 673310 Tavistock CommunicationsLulu BridgesJohn WestTel: +44 (0) 20 7920 3150 Notes to editors:For US GAAP reporting, Vodafone and certain other telecom and media companieshave historically used the residual method to assign values to licences inbusiness combinations and, since the adoption of FASB Statement No. 142 Goodwilland Other Intangibles Assets (Statement 142), in impairment testing ofindefinite lived intangible assets. Under the residual method, Vodafone hasassigned to mobile licences the residual purchase price in business combinationsin excess of the fair values of all assets and liabilities other than mobilelicences and goodwill. In their announcement, the SEC Staff stated that the residual method ofaccounting for intangible assets should no longer be used. The new guidancerequires a direct method of valuation where assets are valued separately andwithout reference to other assets or liabilities. On transition to the newrules, the guidance requires Vodafone to carry its indirect interest in theVerizon Wireless licences at the lower of the current carrying value and thefair value of the licences determined using a direct valuation method. Vodafone performed its transitional impairment test as of 1 January 2005 andrecorded a transitional reduction of its indirect interest in the VerizonWireless licences of £6.2 billion, net of £5.2 billion tax, which will be shownas a cumulative effect of change in accounting principle in its Annual Report onForm 20-F for the year ending 31 March 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Vodafone