Final Results - Part 3
Vodafone Group Plc
30 May 2006
Vodafone Group Plc
Preliminary Results for the year ended 31 March 2006
PART 3
CONSOLIDATED INCOME STATEMENT
2006 2005
Notes £m £m
Revenue 2 29,350 26,678
Cost of sales (17,070) (15,800)
---------- ----------
Gross profit 12,280 10,878
Selling and distribution expenses (1,876) (1,649)
Administrative expenses (3,416) (2,856)
Share of result in associated undertakings 2,428 1,980
Impairment losses 3 (23,515) (475)
Other income and expense 15 -
---------- ----------
Operating (loss)/profit 2 (14,084) 7,878
Non-operating income and expense (2) (7)
Investment income 353 294
Financing costs (1,120) (880)
---------- ----------
(Loss)/profit before taxation (14,853) 7,285
Tax on (loss)/profit 4 (2,380) (1,869)
---------- ----------
(Loss)/profit for the financial year from
continuing operations (17,233) 5,416
(Loss)/profit from discontinued operations (4,588) 1,102
---------- ----------
(Loss)/profit for the financial year (21,821) 6,518
========== ==========
Attributable to:
- Equity shareholders (21,916) 6,410
- Minority interests 95 108
Basic (loss)/earnings per share from continuing
operations (27.66)p 8.12p
Diluted basic (loss)/earnings per share from
continuing operations (27.66)p 8.09p
Basic (loss)/earnings per share on (loss)/profit
for the financial year (35.01)p 9.68p
Diluted basic (loss)/earnings per share on (loss)
/profit for the financial year (35.01)p 9.65p
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
2006 2005
£m £m
Gains on revaluation of available-for-sale investments 705 106
Exchange differences on translation of foreign
operations 1,494 1,488
Actuarial losses on defined benefit pension schemes (30) (79)
Revaluation gain 112 -
---------- ----------
Transfer to the income statement on disposal of foreign
operations 36 -
---------- ----------
Net income recognised directly in equity 2,317 1,515
(Loss)/profit for the financial year (21,821) 6,518
---------- ----------
Total recognised income and expense relating to the
financial year (19,504) 8,033
========== ==========
Attributable to:
- Equity shareholders (19,607) 7,958
- Minority interests 103 75
CONSOLIDATED BALANCE SHEET
2006 2005
£m £m
Non-current assets
Intangible assets 69,118 97,148
Property, plant and equipment 13,660 17,442
Investments in associated undertakings 23,197 20,234
Other investments 2,119 1,181
Deferred tax assets 140 1,184
Post employment benefits 19 12
Trade and other receivables 361 585
---------- ----------
108,614 137,786
---------- ----------
Current assets
Inventory 297 440
Taxation recoverable 8 38
Trade and other receivables 4,438 5,164
Cash and cash equivalents 2,789 3,769
---------- ----------
7,532 9,411
---------- ----------
Assets included in disposal group held for resale 10,592 -
---------- ----------
Total assets 126,738 147,197
========== ==========
Equity
Called up share capital 4,165 4,286
Share premium account 52,444 52,284
Own shares held (8,198) (5,121)
Additional paid in capital 100,152 100,081
Capital redemption reserve 128 -
Accumulated other recognised income and expense 4,090 1,781
Retained losses (67,356) (39,511)
---------- ----------
Total equity shareholders' funds 85,425 113,800
Minority interests (113) (152)
---------- ----------
Total equity 85,312 113,648
---------- ----------
Non-current liabilities
Long-term borrowings 16,750 13,190
Deferred tax liabilities 5,670 4,849
Post employment benefits 120 136
Provisions for other liabilities and charges 265 319
Other payables 566 438
---------- ----------
23,371 18,932
---------- ----------
Current liabilities
Short-term borrowings 3,448 2,003
Current taxation liabilities 4,448 4,353
Trade payables and other payables 7,477 8,033
Provisions for other liabilities and charges 139 228
---------- ----------
15,512 14,617
---------- ----------
Liabilities included in disposal group held for resale 2,543 -
---------- ----------
Total equity and liabilities 126,738 147,197
========== ==========
CONSOLIDATED CASH FLOW STATEMENT
2006 2005
Note £m £m
Net cash flows from operating activities 7 11,841 10,979
--------- ---------
Cash flows from investing activities
Purchase of interests in subsidiary
undertakings and jointly controlled
entities, net of cash acquired (4,186) (2,461)
Disposal of interests in subsidiary
undertakings, net of cash disposed 599 444
Purchase of intangible fixed assets (690) (699)
Purchase of property, plant and equipment (4,481) (4,279)
Purchase of investments (57) (19)
Disposal of property, plant and equipment 26 68
Disposal of investments 1 22
Loans to businesses sold or acquired businesses
held for sale - 110
Dividends received from associated undertakings 835 1,896
Dividends received from investments 41 19
Interest received 319 339
--------- ---------
Net cash flows from investing activities (7,593) (4,560)
--------- ---------
Cash flows from financing activities
Issue of ordinary share capital and re-issue of
treasury shares 356 115
Net movement in short-term borrowings 708 -
Proceeds from issue of long term borrowings 5,256 -
Repayment of borrowings (1,371) (1,824)
Loans repaid to associated undertakings (47) (2)
Purchase of treasury shares (6,457) (4,053)
Equity dividends paid (2,749) (1,991)
Dividends paid to minority shareholders in
subsidiary undertakings (51) (32)
Interest paid (721) (744)
--------- ---------
Net cash flows from financing activities (5,076) (8,531)
--------- ---------
Net decrease in cash and cash equivalents (828) (2,112)
Cash and cash equivalents at the beginning of
the financial year 3,726 5,809
Exchange gain on cash and cash equivalents 34 29
--------- ---------
Cash and cash equivalents at the end of the
financial year 2,932 3,726
========= =========
NOTES TO THE PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31 MARCH 2006
1 Basis of preparation
The preliminary results for the year ended 31 March 2006 are an abridged
statement of the full Annual Report, which was approved by the Board of
Directors on 30 May 2006. The Auditors' Report on these accounts was unqualified
and did not contain statements under section 237(2) or 237(3) of the Companies
Act 1985. The preliminary results do not comprise statutory accounts within the
meaning of section 240 of the UK Companies Act 1985. The Annual Report for the
year ended 31 March 2006 will be delivered to the Registrar of Companies
following the Company's Annual General Meeting, to be held on 25 July 2006.
The preliminary results are prepared in accordance with International Financial
Reporting Standards ('IFRS') (including International Accounting Standards
('IAS') and interpretations issued by the International Accounting Standards
Board ('IASB') and its committees, and as interpreted by any regulatory bodies
applicable to the Group) as adopted for use in the European Union ('EU'), the
Companies Act 1985 and Article 4 of the IAS Regulations. Financial information
for the year ended 31 March 2005, presented as comparative figures in this
report, has been restated from UK GAAP in accordance with IFRS as adopted for
use in the EU. The Group has adopted the Amendments to IAS 21, 'The Effect of
Changes in Foreign Exchange Rates', with effect from 1 April 2004, being the
date of transition to IFRS for the Group.
The preparation of the preliminary results requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the balance sheet date, and
the reported amounts of revenue and expenses during the reporting period. Actual
results could vary from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision
affects only that period or in the period of the revision and future periods if
the revision affects both current and future periods.
2 Segmental and other analyses
The Group's principal business is the supply of mobile telecommunications
services and products. Other operations primarily comprise fixed line
telecommunications businesses. Analyses of revenue and operating profit by
geographical region and class of business are as follows:
Year ended 31 March 2006
-------------------------------------------------------------------------------------------------------------------
Revenue
Less: between
Intra- Inter- mobile
Segment Joint segment Common(2) Segment Net and other Group
revenue Subsidiaries ventures revenue functions revenue revenue operations revenue
£m £m £m £m £m £m £m £m £m
-------------------------------------------------------------------------------------------------------------------
Continuing operations
Mobile
telecommunications:
Germany(1) 5,754 5,754 - - (64) 5,690 (91) 5,599
Italy(1) 4,363 - 4,363 - (44) 4,319 - 4,319
Spain(1) 3,995 3,995 - - (105) 3,890 - 3,890
UK(1) 5,048 5,048 - - (65) 4,983 - 4,983
US(1) - - - - - - - -
Other mobile(1) 9,250 7,812 1,470 (32) (121) 9,129 (1) 9,128
Common functions 145 (19) 126 - 126
-------------------------------------------------------------------------------------------------------------------
Total 28,410 22,609 5,833 (32) 145 (418) 28,137 (92) 28,045
Other operations:
Germany(1) 1,320 1,320 - - - 1,320 (34) 1,286
Other(1) 19 - 19 - - 19 - 19
-------------------------------------------------------------------------------------------------------------------
Total 1,339 1,320 19 - - 1,339 (34) 1,305
-------------------------------------------------------------------------------------------------------------------
29,749 23,929 5,852 (32) 145 (418) 29,476 (126) 29,350
===================================================================================================================
Discontinued
operations
Japan(1)(4) 7,268 7,268 - - - (2) 7,266 - 7,266
===================================================================================================================
----------------------------------------------------------------------------------------------------------------------
Adjusted
Segment Joint Common(2) Operating Other(3) operating
result Subsidiaries ventures functions Associates profit Adjustments profit
£m £m £m £m £m £m £m £m
----------------------------------------------------------------------------------------------------------------------
Continuing operations
Mobile
telecommunications:
Germany(1) (17,904) (17,904) - - (17,904) 19,400 1,496
Italy(1) (1,928) - (1,928) - (1,928) 3,600 1,672
Spain(1) 968 968 - - 968 - 968
UK(1) 698 698 - - 698 - 698
US(1) - - - 1,732 1,732 - 1,732
Other mobile(1) 1,296 933 363 712 2,008 495 2,503
Common
functions 215 8 223 (12) 211
----------------------------------------------------------------------------------------------------------------------
Total (16,870) (15,305) (1,565) 215 2,452 (14,203) 23,483 9,280
Other operations:
Germany(1) 139 139 - 139 - 139
Other(1) 4 - 4 (24) (20) - (20)
----------------------------------------------------------------------------------------------------------------------
Total 143 139 4 (24) 119 - 119
----------------------------------------------------------------------------------------------------------------------
(16,727) (15,166) (1,561) 215 2,428 (14,084) 23,483 9,399
======================================================================================================================
Discontinued
operations
Japan(1)(4) (4,445) (4,445) - - - (4,445) 4,900 455
======================================================================================================================
(1) Reportable segments
(2) Common functions represents results from Partner Markets and unallocated
central Group income and expenses
(3) Comprises impairments to the carrying value of goodwill relating to
the mobile operations in Germany, Italy and Sweden amounting to £23,515
million offset by £17 million of non-operating income in relation to the
Group's associated undertakings and £15 million of other items. The
adjustment to discontinued operations represents an impairment loss
following the announcement of the sale of Vodafone Japan
(4) Operations relate entirely to the supply of mobile telecommunications
services and products
Year ended 31 March 2005
-------------------------------------------------------------------------------------------------------------------
Revenue
Less: between
Intra- Inter- mobile
Segment Joint segment Common(2) Segment Net and other Group
revenue Subsidiaries ventures revenue functions revenue revenue operations revenue
£m £m £m £m £m £m £m £m £m
-------------------------------------------------------------------------------------------------------------------
Continuing operations
Mobile
telecommunications:
Germany(1) 5,684 5,684 - - (51) 5,633 (110) 5,523
Italy(1) 4,273 - 4,273 - (36) 4,237 - 4,237
Spain(1) 3,261 3,261 - - (80) 3,181 - 3,181
UK(1) 5,065 5,065 - - (47) 5,018 - 5,018
US(1) - - - - - - - -
Other mobile(1) 7,637 6,474 1,184 (21) (84) 7,553 - 7,553
Common
functions 123 (5) 118 (1) 117
-------------------------------------------------------------------------------------------------------------------
Total 25,920 20,484 5,457 (21) 123 (303) 25,740 (111) 25,629
Other operations:
Germany(1) 1,095 1,095 - - - 1,095 (46) 1,049
Other(1) - - - - - - - -
-------------------------------------------------------------------------------------------------------------------
Total 1,095 1,095 - - - 1,095 (46) 1,049
-------------------------------------------------------------------------------------------------------------------
27,015 21,579 5,457 (21) 123 (303) 26,835 (157) 26,678
======================================================================================================================
Discontinued
operations
Japan(1) (4) 7,396 7,396 - - (1) 7,395 - 7,395
======================================================================================================================
----------------------------------------------------------------------------------------------------------------------
Adjusted
Segment Joint Common(2) Operating Other operating
result Subsidiaries ventures functions Associates profit Adjustments profit
£m £m £m £m £m £m £m £m
----------------------------------------------------------------------------------------------------------------------
Continuing operations
Mobile
telecommunications:
Germany(1) 1,473 1,473 - - 1,473 - 1,473
Italy(1) 1,694 - 1,694 - 1,694 - 1,694
Spain(1) 775 775 - - 775 - 775
UK(1) 779 779 - - 779 - 779
US(1) - - - 1,354 1,354 - 1,354
Other mobile(1) 1,198 893 305 671 1,869 475 2,344
Common
functions (85) (85) - (85)
----------------------------------------------------------------------------------------------------------------------
Total 5,919 3,920 1,999 (85) 2,025 7,859 475 8,334
Other operations:
Germany(1) 64 64 - - 64 - 64
Other(1) - - - (45) (45) - (45)
----------------------------------------------------------------------------------------------------------------------
Total 64 64 - (45) 19 - 19
----------------------------------------------------------------------------------------------------------------------
5,983 3,984 1,999 (85) 1,980 7,878 475 8,353
======================================================================================================================
Discontinued
operations
Japan(1)(4) 664 664 - - 664 - 664
======================================================================================================================
(1) Reportable segments
(2) Common functions represents results from Partner Markets and
unallocated central Group income and expenses
(3) Impairment to the carrying value of goodwill relating to Vodafone
Sweden
(4) Operations relate entirely to the supply of mobile telecommunications
services and products
3 Impairment losses
2006 2005
£m £m
Germany 19,400 -
Italy 3,600 -
Sweden 515 475
--------- -------
23,515 475
========= =======
Germany and Italy
The carrying value of goodwill of the Group's mobile operations in Germany and
Italy, with each representing a reportable segment, has been impaired due to
Vodafone having revised its view of medium to longer term prospects for these
businesses given certain developments in the current market environment.
The German market has seen recent intensification in price competition,
principally from new market entrants, together with high levels of penetration
and continued regulated reductions in incoming call rates.
In Italy, competitive pressures are increasing with the mobile network operators
competing aggressively on subsidies and, increasingly, on price.
Sweden
The impairment of the carrying value of goodwill in relation to Vodafone Sweden
in the year to 31 March 2006 resulted from fierce competition in the Swedish
market combined with onerous 3G licence obligations. Vodafone Sweden represents
the Group's entire business operation in Sweden and forms part of the Group's
Other Mobile Operations, which is a reportable segment. The recoverable amount
of Vodafone Sweden was based on the fair value less costs to sell, reflecting
the announcement on 31 October 2005 that the Group's 100% interest in Vodafone
Sweden was to be sold. The sale completed on 5 January 2006 with net cash
proceeds, after assumption of net debt by the purchaser, of €953 million (£653
million).
4 Taxation
2006 2005
£m £m
United Kingdom corporation tax charge at 30% (2005: 30%)
Current year 169 339
Adjustments in respect of prior years (15) (79)
Overseas corporation tax
Current year 2,077 1,774
Adjustments in respect of prior years (418) (154)
--------- -------
Total current tax charge 1,813 1,880
--------- -------
Deferred tax:
United Kingdom deferred tax 444 234
Overseas deferred tax 123 (245)
--------- -------
Deferred tax charge/(credit) 567 (11)
--------- -------
Total tax charge 2,380 1,869
========= =======
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