FTE » Topics » 2.10 Goodwill

This excerpt taken from the FTE 20-F filed Apr 23, 2009.

2.10 Goodwill

Goodwill represents the excess of the purchase price of shares in consolidated companies, including transaction expenses, over the Group’s corresponding equity in the fair value of the underlying net assets at the date of acquisition. When full control is acquired, goodwill is deemed equal to fair value as established by reference to the market value of the underlying shares, or in the absence of an active market, by using generally accepted valuation methods such as those based on revenues or costs. Assets and liabilities acquired are not remeasured at fair value after an additional purchase when control has already been obtained.

This excerpt taken from the FTE 6-K filed Apr 14, 2009.

2.10  Goodwill

Goodwill represents the excess of the purchase price of shares in consolidated companies, including transaction expenses, over the Group’s corresponding equity in the fair value of the underlying net assets at the date of acquisition. When full control is acquired, goodwill is deemed equal to fair value as established by reference to the market value of the underlying shares, or in the absence of an active market, by using generally accepted valuation methods such as those based on revenues or costs. Assets and liabilities acquired are not remeasured at fair value after an additional purchase when control has already been obtained.



2008 REGISTRATION DOCUMENT / FRANCE TELECOM273



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This excerpt taken from the FTE 6-K filed Mar 5, 2009.

Note 11 - Goodwill


 

Year ended

 

December 31, 2008

December 31, 2007


(in millions of euros)

Cost

Accumulated impairment losses

Net

Net

PCS

26,504

(1,706)

24,798

24,931

HCS (1)

6,139

(547)

5,592

6,059

ECS

1,064

(643)

421

399

Total

33,707

(2,896)

30,811

31,389

(1)

Goodwill on TP Group is included in the HCS segment. It is tested for impairment at the level of the "Poland Group" of CGUs (see Note 6).


Movements in the net book value of goodwill are as follows:


 

Year ended

(in millions of euros)

December 31, 2008

December 31, 2007

Opening balance

31,389

31,517

Acquisitions (1)

366

436

Disposals (2)

(5)

(334)

Impairment (3)

(271)

(26)

Translation adjustment (4)

(674)

(79)

Reclassifications and other items (5)

6

(125)

Closing balance

30,811

31,389

(1)

See Note 3. Including, in 2008, Telkom Kenya for 216 million euros, Mobistar for 71 million euros and TP Group for 39 million euros. Including, in 2007, FT España ISP (Ya.com) for 125 million euros, Orange Moldova 85 million euros, VOXmobile 71 million euros and Groupe Silicomp for 70 million euros.

(2)

See Note 3. In 2007, (334) million euros relating to the sale of Orange's Dutch mobile and internet businesses.

(3)

See Note 6.

(4)

In 2008, this item mainly includes (409) million euros for TP Group, (354) million euros for Orange in the United Kingdom and 83 million euros for Orange Slovensko.

(5)

In 2007, (184) million euros of remeasurement relating to the merger of the Spanish entities in 2006.



58



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This excerpt taken from the FTE 20-F filed May 2, 2008.

2.3.8     Goodwill

Goodwill represents the excess of the purchase price of shares in consolidated companies, including transaction expenses, over the Group’s corresponding equity in the fair value of the underlying net assets at the date of acquisition. When full control is acquired, goodwill is deemed equal to fair value as established by reference to the market value of the underlying shares, or in the absence of an active market, by using generally accepted valuation methods such as those based on revenues or costs. Assets and liabilities acquired are not remeasured at fair value after an additional purchase when control has already been obtained.

This excerpt taken from the FTE 6-K filed Feb 6, 2008.

NOTE 12 - GOODWILL


 

Year ended

(in millions of euros)

December 31, 2007

December 31, 2006

 

Cost

Accumulated impairment losses

Net

Net

PCS

27,092

(2,161)

24,931

25,370

HCS (1)

6,401

(342)

6,059

5,839

ECS

1,041

(642)

399

308

Total

34,534

(3,145)

31,389

31,517

(1)

Goodwill on TP Group is included in the Home segment. It is tested for impairment at the level of the "Poland Group" of CGUs (see Note 7).


Movements in the net book value of goodwill are as follows:


 

Yearended

(in millions of euros)

December 31, 2007

December 31, 2006

Opening balance

31,517

33,726

Acquisitions (1)

436

565

Disposals (2)

(334)

(248)

Impairment (3)

(26)

(2,800)

Translation adjustment (4)

(79)

265

Reclassifications and other items (5)

(125)

9

Closing balance

31,389

31,517

(1)

See Note 4. Including, in 2007, FT España ISP (Ya.com) for 125 million euros, Orange Moldova for 85 million euros, VOXmobile for 71 million euros and Groupe Silicomp for 70 million euros. Including, in 2006, FT España for 386 million euros and JTC for 104 million euros.

(2)

See Note 4. In 2007, (334) million euros relating to the sale of Orange's Dutch mobile and internet businesses. Including, in 2006, (237) million euros relating to the sale of PagesJaunes Group.

(3)

See Note 7.

(4)

In 2006, this item mainly related to Orange in the United Kingdom for 272 million euros.

(5)

In 2007, (184) million euros of remeasurement relating to the merger of the Spanish entities in 2006.




55


Disclaimer

This English language translation of the consolidated financial statements prepared in French has been prepared solely for the convenience of English speaking readers. Despite all the efforts devoted to this translation, certain errors, omissions or approximations may subsist. France Telecom, its representatives and employees decline all responsibility in this regard.


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This excerpt taken from the FTE 20-F filed Jun 25, 2007.

NOTE 12 - GOODWILL

The principal goodwill items arising from fully or proportionally consolidated subsidiaries can be analyzed by business segment as follows:

 

      Year ended
     December 31, 2006    December 31, 2005    December 31, 2004
(in millions of euros)    Cost   

Accumulated
impairment

losses

   Net    Net    Net

Personal Communications Services

   27,907    (2,537)    25,370    27,276    21,587

Home Communications Services (1)

   6,162    (323)    5,839    5,958    5,740

Enterprise Communications Services

   963    (655)    308    255    32

Directories

   -    -    -    237    230

Total

   35,032    (3,515)    31,517    33,726    27,589

(1)

Goodwill on TP Group is included in the Home segment. It is tested for impairment at the level of the “Poland” group of CGUs (see Note 7).

Movements in the net book value of goodwill are as follows:

 

      Year ended
(in millions of euros)    December 31, 2006    December 31, 2005    December 31, 2004

Opening balance

   33,726    27,589    26,537

Acquisitions (1)

   565    5,471    1,555

Disposals (2)

   (248)    (19)    (329)

Impairment (3)

   (2,800)    (11)    (534)

Translation adjustment (4)

   265    730    397

Reclassifications and other items

   9    (34)    (37)

Closing balance

   31,517    33,726    27,589

(1)

Including, in 2006: FT España (386 million euros) and JTC (104 million euros) (see Note 4). Including, in 2005: Amena (4,454 million euros), Orange Slovensko (375 million euros), Orange Romania (272 million euros), and Equant (214 million euros) (see Note 4). Including, in 2004, 1,276 million euros in respect of the acquisition of minority interests in Wanadoo, and 249 million euros relating to the compulsory purchase procedure (offre de retrait obligatoire) and the Orange liquidity contract (see Note 4).

(2)

Including, in 2006, 237 million euros relating to the sale of PagesJaunes Group (see note 4). Including, in 2004, 237 million euros relating to the sale of Orange Denmark and 88 million euros relating to the flotation of 36.9% of PagesJaunes’ capital.

(3)

See Note 7.

(4)

At December 31, 2006, this item mainly related to Orange in the UK (272 million euros). At December 31, 2005, it mainly related to Orange in the UK (478 million euros) and TP Group (165 million euros). At December 31, 2004, it mainly related to TP Group (373 million euros - see Note 30).

This excerpt taken from the FTE 6-K filed Mar 7, 2007.

2.3.7 Goodwill

Goodwill represents the excess of the purchase cost of shares in consolidated companies, including transaction expenses, over the Group’s corresponding equity in the fair value of the underlying net assets at the date of acquisition. When full control is acquired, goodwill is deemed equal to fair value as established by reference to the market value of the underlying shares, or in the absence of an active market, by using generally accepted valuation methods such as those based on revenues or costs. Where full control is not acquired, the assets and liabilities acquired are not remeasured.

 

Impairment tests and Cash-Generating Units

In accordance with IFRS 3 “Business Combinations”, goodwill is not amortized but tested for impairment at least once a year or more frequently when there is an indication that it may be impaired. IAS 36 “Impairment of Assets” requires these tests to be performed either at the level of each Cash-Generating Unit (CGU) to which the goodwill has been allocated (a cash-generating unit is defined as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets), or at the level of a group of CGUs within a business or geographical segment. The allocation is reviewed if the Group changes the level at which it monitors return on investment for goodwill testing purposes. The allocation of goodwill is presented in Note 7.

Goodwill impairment losses are recorded in the income statement as a deduction from operating income.

 

Recoverable amount

To determine whether an impairment loss should be recognized, the carrying value of the assets and liabilities of the CGU (or group of CGUs) is compared to its recoverable amount. The recoverable amount of a CGU is the higher of its fair value less costs to sell and its value in use.

Fair value less costs to sell is the best estimate of the amount obtainable from the sale of a CGU in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal. This estimate is determined on the basis of available market information taking into account specific circumstances.

Value in use is the present value of the future cash flows expected to be derived from the CGU or group of CGUs. Cash flow projections are based on economic and regulatory assumptions, license renewal assumptions and forecast trading conditions drawn up by France Telecom management, as follows :

 

 

cash flow projections are based on three to five year business plans;

 

 

cash flow projections beyond that timeframe are extrapolated by applying a declining or flat growth rate over the next two years (for some CGUs), followed by a growth rate to perpetuity reflecting the expected long-term growth in the market;

 

 

the cash flows obtained are discounted using appropriate rates for the type of business and the countries concerned.

 

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This excerpt taken from the FTE 20-F filed May 22, 2006.

NOTE 12 - GOODWILL

 

The principal goodwill items arising from fully or proportionally consolidated subsidiaries can be analyzed by business segment as follows:

 

(in millions of euros)    At

   December 31, 2005

     December 31, 2004


  

Cost


     Accumulated
impairment losses


      

Net


    

Net


Personal    27,276             27,276      21,587
Enterprise    886      (631 )      255      32
Home(1)    5,998      (40 )      5,958      5,740
Directories    237             237      230

  
    

    
    
Total    34,397      (671 )      33,726      27,589
  (1) Goodwill relating to TP Group is included within the Home segment, and is tested for impairment as part of the “Poland” group of CGUs (see Note 7).

 

Movements in the net book value of goodwill are as follows:

 

(in millions of euros)    Year ended  

   December 31, 2005

       December 31, 2004

 
Opening balance    27,589        26,537  
Acquisitions(1)    5,471        1,555  
Disposals(2)    (19 )      (329 )
Impairment(3)    (11 )      (534 )
Translation adjustment(4)    730        397  
Reclassifications and other items    (34 )      (37 )

  

    

Closing balance    33,726        27,589  

 

F-46


  (1) Including, in 2005: Amena (4,454 million), Orange Slovensko (375 million), Orange Romania (272 million), and Equant (214 million) – see Note 4. Including, in 2004, 1,276 million in respect of the acquisition of minority interests in Wanadoo, and 249 million relating to the compulsory purchase procedure (offre de retrait obligatoire) and the Orange liquidity contract (see Note 4).
  (2) Including, in 2004, 237 million relating to the sale of Orange Denmark and 88 million relating to the flotation of 36.9% of PagesJaunes’ capital.
  (3) See Note 7.
  (4) At December 31, 2005, this item mainly concerns Orange in the UK in an amount of 478 million, and TP Group in an amount of 165 million. At December 31, 2004, the translation adjustment primarily related to TP Group in an amount of 373 million (see Note 30).

 

This excerpt taken from the FTE 6-K filed Apr 3, 2006.

NOTE 12 - GOODWILL

 

The principal goodwill items arising from fully or proportionally consolidated subsidiaries can be analyzed by business segment as follows:

 

(in millions of euros)    At

   December 31, 2005

     December 31, 2004


  

Cost


     Accumulated
impairment losses


      

Net


    

Net


Personal    27,276             27,276      21,587
Enterprise    886      (631 )      255      32
Home(1)    5,998      (40 )      5,958      5,740
Directories    237             237      230

  
    

    
    
Total    34,397      (671 )      33,726      27,589
  (1) Goodwill relating to TP Group is included within the Home segment, and is tested for impairment as part of the “Poland” group of CGUs (see Note 7).

 

Movements in the net book value of goodwill are as follows:

 

(in millions of euros)    Year ended  

   December 31, 2005

       December 31, 2004

 
Opening balance    27,589        26,537  
Acquisitions(1)    5,471        1,555  
Disposals(2)    (19 )      (329 )
Impairment(3)    (11 )      (534 )
Translation adjustment(4)    730        397  
Reclassifications and other items    (34 )      (37 )

  

    

Closing balance    33,726        27,589  
  (1) Including, in 2005: Amena (4,454 million), Orange Slovensko (375 million), Orange Romania (272 million), and Equant (214 million) – see Note 4. Including, in 2004, 1,276 million in respect of the acquisition of minority interests in Wanadoo, and 249 million relating to the compulsory purchase procedure (offre de retrait obligatoire) and the Orange liquidity contract (see Note 4).
  (2) Including, in 2004, 237 million relating to the sale of Orange Denmark and 88 million relating to the flotation of 36.9% of PagesJaunes’ capital.
  (3) See Note 7.
  (4) At December 31, 2005, this item mainly concerns Orange in the UK in an amount of 478 million, and TP Group in an amount of 165 million. At December 31, 2004, the translation adjustment primarily related to TP Group in an amount of 373 million (see Note 30).

 

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CONSOLIDATED FINANCIAL DOCUMENTS

 

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