Interim Results - Part 4

Vodafone Group Plc 16 November 2004 Vodafone Group Interim Results For the six months ended 30 September 2004 PART 4 FINANCIAL STATEMENTS CONSOLIDATED PROFIT AND LOSS ACCOUNT Six months to Six months to Year ended 30 September 30 September 31 March 2004 2003 2004 Â£m Â£m Â£m Turnover: Group and share of associated undertakings - Continuing operations 22,513 21,198 42,920 - Discontinued operations - 818 818 ------- ------- ------- 22,513 22,016 43,738 Less: Share of associated undertakings (5,717) (5,117) (10,179) ------- ------- ------- 16,796 16,899 33,559 ======= ======= ======= Turnover (Note 2) - Continuing operations 16,796 16,081 32,741 - Discontinued operations - 818 818 ------- ------- ------- 16,796 16,899 33,559 ======= ======= ======= Operating (loss)/profit - Continuing operations (2,245) (1,907) (4,842) - Discontinued operations - 66 66 ------- ------- ------- (2,245) (1,841) (4,776) Share of operating profit in associated undertakings - Continuing operations 630 263 546 ------- ------- ------- Total Group operating loss (Note 2) (1,615) (1,578) (4,230) Exceptional non-operating items (Note 4) 22 (58) (103) ------- ------- ------- Loss on ordinary activities before interest (1,593) (1,636) (4,333) Net interest payable and similar items (291) (356) (714) - Group (191) (251) (499) - Share of associated undertakings (100) (105) (215) ------- ------- ------- Loss on ordinary activities before taxation (1,884) (1,992) (5,047) Tax on loss on ordinary activities (Note 5) (987) (1,792) (3,154) - Tax on loss on ordinary activities before exceptional tax (1,559) (1,792) (3,154) - Exceptional deferred tax credit 572 - - ------- ------- ------- Loss on ordinary activities after taxation (2,871) (3,784) (8,201) Minority interests (including non-equity minority interests) (324) (470) (814) ------- ------- ------- Loss for the period (3,195) (4,254) (9,015) Equity dividends (1,263) (650) (1,378) ------- ------- ------- Retained loss for the Group and its share of associated undertakings (4,458) (4,904) (10,393) ======= ======= ======= Basic and diluted loss per share (Note 6) (4.77)p (6.24)p (13.24)p Adjusted basic earnings per share (Note 6) 5.28p 4.78p 9.10p Dividend per share 1.91p 0.9535p 2.0315p CONSOLIDATED BALANCE SHEET 30 September 30 September 31 March 2004 2003 2004 as restated Â£m Â£m Â£m Fixed assets Intangible assets 90,399 103,815 93,622 Tangible assets 18,070 19,622 18,083 Investments 21,725 25,231 22,275 - Investments in associated undertakings 20,831 24,204 21,226 - Other investments 894 1,027 1,049 -------- -------- -------- 130,194 148,668 133,980 -------- -------- -------- Current assets Stocks 416 437 458 Debtors 6,957 7,186 6,901 Investments 1,998 1,417 4,381 Cash at bank and in hand 2,652 3,228 1,409 -------- -------- -------- 12,023 12,268 13,149 Creditors: amounts falling due within one year (15,304) (14,776) (15,026) -------- -------- -------- Net current liabilities (3,281) (2,508) (1,877) -------- -------- -------- Total assets less current liabilities 126,913 146,160 132,103 Creditors: amounts falling due after more than one year (12,494) (14,653) (12,975) Provisions for liabilities and charges (4,038) (3,763) (4,197) -------- -------- -------- 110,381 127,744 114,931 ======== ======== ======== Capital and reserves Called up share capital 4,283 4,277 4,280 Share premium account 52,202 52,094 52,154 Merger reserve 98,927 98,927 98,927 Own shares held (2,873) (58) (1,136) Other reserve 678 793 713 Profit and loss account (45,473) (31,450) (43,014) -------- -------- -------- Total equity shareholders' funds 107,744 124,583 111,924 Equity minority interests 1,749 2,194 2,132 Non-equity minority interests 888 967 875 -------- -------- -------- 110,381 127,744 114,931 ======== ======== ======== CONSOLIDATED CASH FLOW Six months to Six months to Year ended 30 September 30 September 31 March 2004 2003 2004 as restated Â£m Â£m Â£m Net cash inflow from operating activities (Note 7) 6,379 6,081 12,317 Dividends received from associated undertakings 1,016 805 1,801 Net cash (outflow)/inflow for returns on investments and servicing of finance (229) 242 (44) Taxation (360) (283) (1,182) Net cash outflow for capital expenditure and financial investment (2,514) (2,099) (4,267) - Purchase of intangible fixed assets (15) (2) (21) - Purchase of tangible fixed assets (2,509) (2,255) (4,508) - Purchase of investments (10) (9) (43) - Disposal of tangible fixed assets 18 53 158 - Disposal of investments 4 87 123 - Other (2) 27 24 Net cash outflow for acquisitions and disposals (2,165) (1,059) (1,312) - Purchase of interests in subsidiary undertakings (2,391) (1,074) (2,064) - Net cash acquired with subsidiary undertakings - (1) 10 - Purchase of interests in associated undertakings - (2) - - Disposal of interests in subsidiary undertakings 226 9 995 - Net cash disposed of with subsidiary undertakings - - (258) - Other - 9 5 Equity dividends paid (728) (612) (1,258) ------- ------- ------- Cash inflow before management of liquid resources and financing 1,399 3,075 6,055 Management of liquid resources 2,411 (1,126) (4,286) Net cash (outflow)/inflow from financing (2,674) 952 (700) - Issue of ordinary share capital 40 22 69 - (Decrease)/increase in debt (957) 947 280 - Purchase of treasury shares (1,757) - (1,032) - Purchase of own shares in relation to employee share schemes - (17) (17) ------- ------- ------- Increase in cash in the period 1,136 2,901 1,069 ======= ======= ======= Reconciliation of net cash flow to movement in net debt Increase in cash in the period 1,136 2,901 1,069 Cash outflow/(inflow) from decrease/(increase) in debt 957 (947) (280) Cash (inflow)/outflow from (decrease)/increase in liquid resources (2,411) 1,126 4,286 ------- ------- ------- (Increase)/decrease in net debt resulting from cash flows (318) 3,080 5,075 Translation difference 83 (95) 144 Premium on repayment of debt - (56) (56) Net debt acquired on acquisition of subsidiary undertakings - - (7) Net debt disposed on disposal of subsidiary undertakings - - 194 Other movements 2 4 1 ------- ------- ------- (Increase)/decrease in net debt in the period (233) 2,933 5,351 Opening net debt (8,488) (13,839) (13,839) ------- ------- ------- Closing net debt (Note 8) (8,721) (10,906) (8,488) ======= ======= ======= CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Six months to Six months to Year ended 30 September 30 September 31 March 2004 2003 2004 Â£m Â£m Â£m Loss for the financial period - Group (3,436) (4,143) (8,996) - Share of associated undertakings 241 (111) (19) ------- ------- ------- (3,195) (4,254) (9,015) ------- ------- ------- Currency translation - Group 1,597 1,697 (2,462) - Share of associated undertakings 379 (845) (2,830) ------- ------- ------- 1,976 852 (5,292) ------- ------- ------- Total recognised gains and losses for the period (1,219) (3,402) (14,307) ======= ======= ======= MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS Six months to Six months to Year ended 30 September 30 September 31 March 2004 2003 2004 as restated Â£m Â£m Â£m Loss for the period (3,195) (4,254) (9,015) Equity dividends (1,263) (650) (1,378) -------- -------- -------- (4,458) (4,904) (10,393) Currency translation 1,976 852 (5,292) New share capital subscribed 51 18 86 Purchase of treasury shares (1,748) - (1,088) Purchase of own shares in relation to employee share schemes - (17) (17) Own shares released on vesting of share awards 11 - 10 Other (12) 4 (12) -------- -------- -------- Net movement in equity shareholders' funds (4,180) (4,047) (16,706) Opening equity shareholders' funds 111,924 128,630 128,630 -------- -------- -------- Closing equity shareholders' funds 107,744 124,583 111,924 ======== ======== ======== NOTES TO THE INTERIM RESULTS FOR THE SIX MONTHS TO 30 SEPTEMBER 2004 1 Basis of preparation The unaudited interim results for the six months ended 30 September 2004 have been prepared on a basis consistent with the accounting policies set out in Vodafone Group Plc's Annual Report for the year ended 31 March 2004. The interim results should therefore be read in conjunction with the 2004 Annual Report. The interim results for the six months ended 30 September 2004, which were approved by the Board of Directors on 16 November 2004, do not comprise statutory accounts within the meaning of section 240 of the Companies Act 1985. The information relating to the year ended 31 March 2004 is an extract from the published Annual Report for that year, which has been delivered to the Registrar of Companies, and on which the Auditors' Report was unqualified. In the 2004 Annual Report, the Group early adopted UITF 38 'Accounting for ESOP Trusts' which requires presentation of an entity's own shares held in an ESOP trust to be deducted in arriving at shareholders' funds. As a consequence, the comparative Consolidated Balance Sheet as at and Consolidated Cash Flows for the six months ended 30 September 2003 have been restated. The impact of adopting UITF 38 was to reduce equity shareholders' funds by Â£58 million at 30 September 2003. Loss on ordinary activities before taxation for the six months ended 30 September 2003 has not been impacted by the adoption of UITF 38. 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. The results of the Japan Telecom fixed line business, which has been disposed of, are analysed as discontinued operations. Analyses of turnover and total Group operating profit/(loss) by geographical region and class of business are as follows: Turnover Six months ended Six months ended Year ended 30 September 2004 30 September 2003 31 March 2004 ------------------------------- ----------------------------- ------------------------------- Inter- Inter- Inter- Segment segment Net Segment segment Net Segment segment Net turnover turnover turnover turnover turnover turnover turnover turnover turnover Â£m Â£m Â£m Â£m Â£m Â£m Â£m Â£m Â£m Mobile telecommunications: UK & Ireland 2,960 (18) 2,942 2,543 (15) 2,528 5,538 (34) 5,504 Northern Europe 3,778 (23) 3,755 3,743 (19) 3,724 7,488 (40) 7,448 Southern Europe 5,343 (73) 5,270 4,903 (68) 4,835 9,886 (110) 9,776 Asia Pacific 4,227 (2) 4,225 4,464 (2) 4,462 8,896 (6) 8,890 Middle East & Africa 177 (6) 171 159 (2) 157 305 (8) 297 ------- ------- ------- ------- ------- ------- ------- ------- ------- 16,485 (122) 16,363 15,812 (106) 15,706 32,113 (198) 31,915 ------- ------- ------- ------- ------- ------- ------- ------- ------- Other operations: Northern Europe 513 - 513 481 - 481 1,002 - 1,002 Asia Pacific(1) - - - 1,126 - 1,126 1,126 - 1,126 ------- ------- ------- ------- ------- ------- ------- ------- ------- 513 - 513 1,607 - 1,607 2,128 - 2,128 ------- ------- ------- ------- ------- ------- ------- ------- ------- Turnover between mobile and other operations(2) (80) (414) (484) ------- ------- ------- ------- ------- ------- ------- ------- ------- Group turnover 16,796 16,899 33,559 ======= ======= ======= ======= ======= ======= ======= ======= ======= (1) Includes turnover of discontinued operations of Â£nil for the six months ended 30 September 2004 (six months ended 30 September 2003: Â£924 million; year ended 31 March 2004: Â£924 million). (2) Includes turnover of discontinued operations of Â£nil for the six months ended 30 September 2004 (six months ended 30 September 2003: Â£106 million; year ended 31 March 2004: Â£106 million). Total Group operating profit / (loss) before goodwill amortisation and exceptional items Six months to Six months to Year ended 30 September 30 September 31 March 2004 2003 2004 Â£m Â£m Â£m Mobile telecommunications: UK & Ireland 637 685 1,360 Northern Europe 1,647 1,689 3,192 Southern Europe 1,807 1,729 3,299 Americas 885 705 1,393 Asia Pacific 534 736 1,212 Middle East & Africa 160 140 273 ------- ------- ------- 5,670 5,684 10,729 ------- ------- ------- Other operations: Northern Europe 15 (41) (59) Asia Pacific(1) - 79 79 ------- ------- ------- 15 38 20 ------- ------- ------- Group 5,685 5,722 10,749 - Subsidiary undertakings 4,128 4,355 8,091 - Share of associated undertakings 1,557 1,367 2,658 Goodwill amortisation (7,300) (7,651) (15,207) Exceptional operating items (Note 3) - 351 228 ------- ------- ------- Total Group operating loss (1,615) (1,578) (4,230) ======= ======= ======= (1) Includes the following amounts in relation to discontinued operations: six months to 30 September 2004: Â£nil; six months to 30 September 2003: Â£66 million; year ended 31 March 2004: Â£66 million. 3 Exceptional operating items Six months to Six months to Year ended 30 September 30 September 31 March 2004 2003 2004 Â£m Â£m Â£m Contribution tax - 351 351 Reorganisation costs - - (123) ------- ------- ------- - 351 228 ======= ======= ======= The exceptional operating income for the six months ended 30 September 2003 of Â£351 million relates to expected recoveries and provision releases in relation to a contribution tax levy on Vodafone Italy. 4 Exceptional non-operating items Six months to Six months to Year ended 30 September 30 September 31 March 2004 2003 2004 Â£m Â£m Â£m Profit on disposal of fixed asset investments 18 - 12 Share of associate profit/(loss) on disposal of investment 6 (1) (1) Amounts written off fixed asset investments (2) (4) (6) Loss on disposal of businesses - (69) (127) Profit on disposal of tangible fixed assets - 16 19 ------- ------- ------- 22 (58) (103) ======= ======= ======= 5 Tax on loss on ordinary activities Six months to Six months to Year ended 30 September 30 September 31 March 2004 2003 2004 Â£m Â£m Â£m United Kingdom corporation tax charge at 30% (2003: 30%) 45 152 209 ------- ------- ------- Overseas corporation tax Current tax: Current year 1,329 1,265 2,264 Prior year (21) (144) (159) ------- ------- ------- 1,308 1,121 2,105 ------- ------- ------- Total current tax 1,353 1,273 2,314 Deferred tax - origination of and reversal of timing differences(1) (366) 385 736 ------- ------- ------- Tax on loss on ordinary activities 987 1,658 3,050 Tax on loss on ordinary activities before exceptional items 1,559 1,658 3,050 Exceptional deferred tax credit(1) (572) - - Tax on exceptional items - 134 104 ------- ------- ------- Total tax charge 987 1,792 3,154 ======= ======= ======= Parent and subsidiary undertakings 718 1,559 2,866 Share of associated undertakings 269 233 288 ------- ------- ------- 987 1,792 3,154 ======= ======= ======= (1) Deferred tax for the six months to 30 September 2004 includes an exceptional deferred tax credit of Â£572 million relating to tax losses in Vodafone Holdings K.K., which became eligible for offset against the profits of Vodafone K.K. following the merger of the two entities on 1 October 2004. The deferred tax credit was recognised following shareholder and regulatory approval of the transaction in the six month period. 6 (Loss)/earnings per share Six months to Six months to Year ended 30 September 30 September 31 March 2004 2003 2004 Â£m Â£m Â£m Loss for basic and diluted loss per share (3,195) (4,254) (9,015) Add back: - Goodwill amortisation 7,300 7,651 15,207 - Exceptional operating items - (351) (228) - Exceptional non-operating items (22) 58 103 - Exceptional tax credit (572) - - - Tax on exceptional items - 134 104 - Share of exceptional items attributable to minority interests 24 23 27 ------- ------- ------- Earnings for adjusted earnings per share 3,535 3,261 6,198 ======= ======= ======= Weighted average number of shares (millions) 66,915 68,191 68,096 Basic and diluted loss per share (4.77)p (6.24)p (13.24)p Adjusted basic earnings per share 5.28p 4.78p 9.10p Diluted loss per share is the same as basic loss per share as it is considered that there are no dilutive potential ordinary shares. 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