29th May 2007 07:03
Vodafone Group Plc29 May 2007 Vodafone Group PlcPreliminary Results for the year ended 31 March 2007PART 2 CONSOLIDATED INCOME STATEMENT 2007 2006 £m £m Revenue 31,104 29,350Cost of sales (18,725) (17,070) ---------- ----------Gross profit 12,379 12,280 Selling and distribution expenses (2,136) (1,876)Administrative expenses (3,437) (3,416)Share of result in associated undertakings 2,728 2,428Impairment losses (11,600) (23,515)Other income and expense 502 15 ---------- ----------Operating loss (1,564) (14,084) Non-operating income and expense 4 (2)Investment income 789 353Financing costs (1,612) (1,120) ---------- ----------Loss before taxation (2,383) (14,853) Income tax expense (2,423) (2,380) ---------- ----------Loss for the financial year from continuing operations (4,806) (17,233) Loss from discontinued operations (491) (4,588) ---------- ----------Loss for the financial year (5,297) (21,821) ========== ==========Attributable to: - Equity shareholders (5,426) (21,916)- Minority interests 129 95 ========== ========== Basic and diluted loss per share Loss from continuing operations (8.94)p (27.66)pLoss from discontinued operations (0.90)p (7.35)p ---------- ----------Loss for the financial year (9.84)p (35.01)p ========== ==========Weighted average number of shares for basic and diluted earnings per share (millions) 55,144 62,607 ========== ========== CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE 2007 2006 £m £mGains on revaluation of available-for-sale investments 2,108 705Exchange differences on translation of foreign operations (3,804) 1,494Actuarial gains / (losses) on defined benefit pension schemes 50 (30)Revaluation gain - 112Transfer to the income statement on disposal of foreign operations 838 36 ---------- ----------Net (expense)/income recognised directly in equity (808) 2,317 Loss for the financial year (5,297) (21,821) ---------- ----------Total recognised income and expense relating to the financial year (6,105) (19,504) ========== ==========Attributable to: - Equity shareholders (6,210) (19,607)- Minority interests 105 103 ========== ========== CONSOLIDATED BALANCE SHEET 2007 2006 £m £mNon-current assets Goodwill 40,567 52,606Other intangible assets 15,705 16,512Property, plant and equipment 13,444 13,660Investments in associated undertakings 20,227 23,197Other investments 5,875 2,119Deferred tax assets 410 140Post employment benefits 82 19Trade and other receivables 494 361 --------- --------- 96,804 108,614 --------- ---------Current assets Inventory 288 297Taxation recoverable 21 8Trade and other receivables 5,023 4,438Cash and cash equivalents 7,481 2,789 --------- --------- 12,813 7,532 --------- ---------Assets included in disposal group held for resale - 10,592 --------- ---------Total assets 109,617 126,738 ========= =========Equity Called up share capital 4,172 4,165Share premium account 43,572 52,444Own shares held (8,047) (8,198)Additional paid-in capital 100,185 100,152Capital redemption reserve 9,132 128Accumulated other recognised income and expense 3,306 4,090Retained losses (85,253) (67,356) --------- ---------Total equity shareholders' funds 67,067 85,425Minority interests 226 (113) --------- ---------Total equity 67,293 85,312 --------- ---------Non-current liabilities Long-term borrowings 17,798 16,750Deferred tax liabilities 4,626 5,670Post employment benefits 123 120Provisions 296 265Other payables 535 566 --------- --------- 23,378 23,371 --------- ---------Current liabilities Short-term borrowings 4,817 3,448Current taxation liabilities 5,088 4,448Trade payables and other payables 8,774 7,477Provisions 267 139 --------- --------- 18,946 15,512 --------- ---------Liabilities included in disposal group held for resale - 2,543 --------- ---------Total equity and liabilities 109,617 126,738 ========= ========= CONSOLIDATED CASH FLOW STATEMENT 2007 2006 £m £m Net cash flows from operating activities 10,328 11,841 Cash flows from investing activities Purchase of interests in subsidiary undertakings and joint ventures, net of cash acquired (2,805) (4,186)Disposal of interests in subsidiary undertakings, net of cash disposed 6,767 599Disposals of interests in associated undertakings 3,119 -Purchase of intangible fixed assets (899) (690)Purchase of property, plant and equipment (3,633) (4,481)Disposal of property, plant and equipment 34 26Purchase of investments (172) (57)Disposal of investments 80 1Dividends received from associated undertakings 791 835Dividends received from investments 57 41Interest received 526 319 --------- ----------Net cash flows from investing activities 3,865 (7,593) --------- ----------Cash flows from financing activities Issue of ordinary share capital and reissue of treasury shares 193 356Net movement in short-term borrowings 953 708Proceeds from issue of long-term borrowings 5,150 5,256Repayment of borrowings (1,961) (1,371)Loans repaid to associated undertakings - (47)Purchase of treasury shares (43) (6,457)'B' share capital redemption (5,713) -'B' share preference dividends paid (3,291) -Equity dividends paid (3,555) (2,749)Dividends paid to minority shareholders in subsidiary undertakings (34) (51)Interest paid (1,051) (721) --------- ----------Net cash flows from financing activities (9,352) (5,076) --------- ---------- Net cash flows 4,841 (828)Cash and cash equivalents at the beginning of the financial year 2,932 3,726Exchange (loss)/gain on cash and cash equivalents (315) 34 --------- ----------Cash and cash equivalents at the end of the financial year 7,458 2,932 ========= ========== NOTES TO THE PRELIMINARY RESULTSFOR THE YEAR ENDED 31 MARCH 2007 1 Basis of preparation The preliminary results for the year ended 31 March 2007 are an abridgedstatement of the full Annual Report, which was approved by the Board ofDirectors on 29 May 2007. The Auditors' Report on these accounts was unqualifiedand did not contain statements under section 237(2) or 237(3) of the CompaniesAct 1985. The preliminary results do not comprise statutory accounts within themeaning of section 240 of the Companies Act 1985. The Annual Report for the yearended 31 March 2007 will be delivered to the Registrar of Companies followingthe Company's Annual General Meeting, to be held on 24 July 2007. The preliminary results are prepared in accordance with International FinancialReporting Standards ("IFRS") as issued by the International Accounting StandardsBoard ("IASB"). The preliminary results are also prepared in accordance withIFRS adopted by the European Union ("EU"), the Companies Act 1985 and Article 4of the EU IAS Regulations, and on a historical basis, except for certainfinancial and equity instruments that have been measured at fair value. However,the financial information included in this preliminary announcement does notitself contain sufficient information to comply with IFRS. The company willpublish full financial statements that comply with IFRS in June 2007. The preparation of the preliminary results requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities, anddisclosure of contingent assets and liabilities at the balance sheet date, andthe reported amounts of revenue and expenses during the reporting period. Actualresults could vary from these estimates. The estimates and underlyingassumptions are reviewed on an ongoing basis. Revisions to accounting estimatesare recognised in the period in which the estimate is revised if the revisionaffects only that period or in the period of the revision and future periods ifthe revision affects both current and future periods. 2 Dividends 2007 2006 £m £mEquity dividends on ordinary shares:Declared during the financial year:Final dividend for the year ended 31 March2006: 3.87 pence per share (2005: 2.16 pence per share) 2,328 1,386Interim dividend for the year ended 31 March2007: 2.35 pence per share (2006: 2.20 pence per share) 1,238 1,367 ------ ------ 3,566 2,753 ====== ======Proposed but not recognised as a liability:Final dividend for the year ended 31 March2007: 4.41 pence per share (2006: 3.87 pence per share) 2,331 2,328 ====== ====== UNAUDITED PROPORTIONATE FINANCIAL INFORMATIONFOR THE YEAR ENDED 31 MARCH 2007 Basis of preparation The tables of financial information below are presented on a proportionate basisfrom continuing operations. Proportionate presentation is not a measurerecognised under IFRS and is not intended to replace the full year resultsprepared in accordance with IFRS. However, since significant entities in whichthe Group has an interest are not consolidated, proportionate information isprovided as supplemental data to facilitate a more detailed understanding andassessment of the full year results prepared in accordance with IFRS. IFRS requires consolidation of entities which the Group has the power to controland allows either proportionate consolidation or equity accounting for jointventures. IFRS also requires equity accounting for interests in which the Grouphas significant influence but not a controlling interest. The proportionate presentation, below, is a pro rata consolidation, whichreflects the Group's share of revenue and expenses in entities, bothconsolidated and unconsolidated, in which the Group has an ownership interest.Proportionate results are calculated by multiplying the Group's percentageequity ownership interest in each entity by each entity's results. Proportionate presentation of financial information differs in material respectsto the proportionate consolidation adopted by the Group under IFRS for its jointventures. Proportionate information includes results from the Group's equity accountedinvestments and other investments. The Group may not have control over therevenue, expenses or cash flows of these investments and may only be entitled tocash from dividends received from these entities. Group proportionate revenue is stated net of intercompany revenue. ProportionateEBITDA represents the Group's ownership interests in the respective entities'EBITDA. As such, proportionate EBITDA does not represent EBITDA available to theGroup. In order to simplify its financial reporting and improve understanding of itsresults, the Group will be moving to a single basis of statutory reporting andwill no longer provide proportionate financial information with effect from the2008 financial year. Reconciliation of proportionate revenue to statutory revenue 2007 2006 £m £m Proportionate revenue 43,613 41,355Minority share of revenue in subsidiary undertakings 829 666Group share of revenue in associated undertakings and trade investments (13,338) (12,671) --------- ---------Revenue 31,104 29,350 ========= ========= Reconciliation of proportionate EBITDA to operating loss for the financial year 2007 2006 £m £m Proportionate EBITDA 16,882 16,380Minority share of EBITDA in subsidiary undertakings 279 224Group's share of EBITDA in associated undertakings and other investments (5,201) (4,838) --------- ---------Group EBITDA 11,960 11,766Charges for depreciation and amortisation (5,111) (4,709)Loss on disposal of property, plant and equipment (43) (69)Share of results in associated undertakings 2,728 2,428Impairment losses (11,600) (23,515)Other income and expense 502 15 --------- ---------Operating loss (1,564) (14,084) ========= ========= OTHER INFORMATION 1) Copies of this document are available from the Company's registered office: Vodafone HouseThe ConnectionNewburyBerkshireRG14 2FN 2) These preliminary results will be available on the Vodafone Group Plc website, www.vodafone.com, from 29 May 2007. For further information: Vodafone Group Investor Relations Media RelationsTelephone: +44 (0) 1635 664447 Telephone: +44 (0) 1635 664444 High resolution photographs are available to the media free of charge atwww.newscast.co.uk. Video interviews with Arun Sarin, Chief Executive, and Andy Halford, ChiefFinancial Officer, are available from midday on www.vodafone.com andwww.cantos.com. Also available in audio and transcript. Vodafone, Vodafone At Home, Vodafone Office, Vodafone live!, Vodafone MobileConnect, Vodafone Passport and the Vodafone logos are trademarks ofthe Vodafone Group. Other product and company names mentioned herein may be thetrademarks of their respective owners. FORWARD-LOOKING STATEMENTS This document contains "forward-looking statements" within the meaning of the USPrivate Securities Litigation Reform Act of 1995 with respect to the Group'sfinancial condition, results of operations and businesses and certain of theGroup's plans and objectives. In particular, such forward-looking statements include statements with respectto Vodafone's expectations as to launch and roll-out dates for products,services or technologies offered by Vodafone; intentions regarding thedevelopment of products and services introduced by Vodafone or by Vodafone inconjunction with initiatives with third parties, including Yahoo! and Microsoft;the ability to integrate all operations throughout the Group; the developmentand impact of new mobile technology; expected savings resulting from costreduction initiatives, including the IT AD&M programme, supply chain centralisation, data centre consolidation, network sharing and enterprise resource planning initiatives; growth in customers and usage, includinggrowth in emerging markets; the Group's expectations for revenue, adjusted operating profit, capitalised fixed asset additions and free cash flow for the 2008 financial year contained within the outlook statement on page 6 of this document, and expectations for the Group's future performance generally, including, average revenue per user ("ARPU"), costs, capital expenditure, operating expenditure and margins; the rate of dividend growth by the Group or its existing investments;expectations regarding the Group's access to adequate funding for its working capital requirements; expected effective tax rates and expected tax payments; stimulation initiatives in Europe; future acquisitions and future disposals; the benefits of acquisitions, including the Hutch Essar acquisition; contractual obligations; mobile penetration and coverage rates; the impact of regulatory and legal proceedings involving Vodafone; expectations with respect to long-term shareholder value growth; Vodafone's ability to be a market leader in providing voice and data communications; overall market trends and other trend projections. Forward-looking statements are sometimes, but not always, identified by theiruse of a date in the future or such words as "anticipates", "aims", "could","may", "should", "expects", "believes", "intends", "plans" or "targets". Bytheir nature, forward-looking statements are inherently predictive, speculativeand involve risk and uncertainty because they relate to events and depend oncircumstances that will occur in the future. There are a number of factors thatcould cause actual results and developments to differ materially from thoseexpressed or implied by these forward-looking statements. These factors include,but are not limited to, the following: changes in economic or politicalconditions in markets served by operations of the Group that would adverselyaffect the level of demand for mobile services; greater than anticipatedcompetitive activity, from both existing competitors and new market entrants,including Mobile Virtual Network Operators ("MVNOs"), which could requirechanges to the Group's pricing models, lead to customer churn and make it moredifficult to acquire new customers, and reduce profitability; the impact ofinvestment in network capacity and the deployment of new technologies, or therapid obsolescence of existing technology; slower than expected customer growthand reduced customer retention; changes in the spending patterns of new andexisting customers; the possibility that new products and services will not becommercially accepted or perform according to expectations or that vendors'performance in marketing these technologies will not meet the Group'srequirements; a lower than expected impact of new or existing products, servicesor technologies on the Group's future revenue, cost structure and capitalexpenditure outlays; the ability of the Group to harmonise mobile platforms andother new or existing products, services or technologies in new markets; theability of the Group to offer new services and secure the timely delivery ofhigh-quality, reliable network equipment and other key products from suppliers;the Group's ability to develop competitive data content and services that willattract new customers and increase average usage; future revenue contributionsof both voice and non-voice services; greater than anticipated prices of newmobile handsets; changes in the costs to the Group of or the rates the Group maycharge for terminations and roaming minutes; the Group's ability to achievemeaningful cost savings and revenue improvements as a result of its cost savinginitiatives and revenue stimulation activities in Europe; the ability to realisebenefits from entering into partnerships for developing data and internetservices and entering into service franchising and brand licensing; thepossibility that the pursuit of new, unexpected strategic opportunities may havea negative impact on the Group's financial performance; developments in theGroup's financial condition, earnings and distributable funds and other factorsthat the Board of Directors takes into account in determining the level ofdividends; any unfavourable conditions, regulatory or otherwise, imposed inconnection with pending or future acquisitions or dispositions and theintegration of acquired companies in the Group's existing operations; the riskthat, upon obtaining control of certain investments, the Group discoversadditional information relating to the businesses of that investment leading torestructuring charges or write-offs or with other negative implications; changesin the regulatory framework in which the Group operates, including possibleaction by regulators in markets in which the Group operates or by the EUregulating rates the Group is permitted to charge; the impact of legal or otherproceedings against the Group or other companies in the mobiletelecommunications industry; the possibility that new marketing or usagestimulation campaigns or efforts and customer retention schemes are not aneffective expenditure; the possibility that the Group's integration efforts donot reduce the time to market for new products or improve the Group's costposition; loss of suppliers or disruption of supply chains; the Group's abilityto satisfy working capital requirements through borrowing in capital markets,bank facilities and operations; changes in exchange rates, includingparticularly the exchange rate of pounds sterling to the euro and the US dollar;changes in statutory tax rates and profit mix which would impact the weightedaverage tax rate; changes in tax legislation in the jurisdictions in which theGroup operates; and final resolution of open issues which might impact theeffective tax rate; timing of tax payments relating to the resolution of openissues. Furthermore, a review of the reasons why actual results and developments maydiffer materially from the expectations disclosed or implied withinforward-looking statements can be found under "Risk Factors, Trends and Outlook- Risk Factors" in Vodafone Group Plc's Annual Report for the year ended 31March 2006. All subsequent written or oral forward-looking statementsattributable to the Company or any member of the Group or any persons acting ontheir behalf are expressly qualified in their entirety by the factors referredto above. No assurances can be given that the forward-looking statements in thisdocument will be realised. Neither Vodafone nor any of its affiliates intends toupdate these forward-looking statements. USE OF NON-GAAP FINANCIAL INFORMATION In presenting and discussing the Group's reported financial position, operatingresults and cash flows, certain information is derived from amounts calculatedin accordance with IFRS but this information is not itself an expresslypermitted GAAP measure. Such non-GAAP measures should not be viewed in isolationas alternatives to the equivalent GAAP measure. A summary of certain non-GAAP measures included in this results announcement,together with details where additional information and reconciliation to thenearest equivalent GAAP measure can be found, is shown below. Non-GAAP measure Equivalent GAAP measure Location in this results announcement of reconciliation and further information Group EBITDA Operating loss Unaudited proportionate financial information on page 27 Adjusted operating profit Operating loss Group results on page 7 Adjusted profit before tax Loss before tax Group results on page 9 Adjusted profit from Loss for the financial year Group results on page 9 continuing operations Adjusted earnings per share Loss per share Group results on page 9 Operating free cash flow Net cash flows from Cash flows and funding on operating activities page 20 Free cash flow Net cash flows from Cash flows and funding on operating activities page 20 Net debt Borrowings Cash flows and funding on page 20 Proportionate revenue Revenue Unaudited proportionate financial information on page 27 Proportionate EBITDA Operating loss Unaudited proportionate financial information on page 27 Adjusted effective tax rate Tax on profit as a Group results on page 9 percentage of profit before taxation DEFINITION OF TERMS For definition of terms please refer to page 41 of the Interim Resultsannouncement for the six months ended 30 September 2006. REGIONAL ANALYSIS FOR THE YEAR ENDED 31 MARCH Capitalised Adjusted operating fixed asset Free Revenue EBITDA profit additions cash flow(1) ----------------- ------------------ -------------------- ---------------- ------------------- 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 £m £m £m £m £m £m £m £m £m £mEUROPE Germany 5,443 5,754 2,429 2,703 1,354 1,496 425 592 1,971 2,167Italy(2) 4,245 4,363 2,149 2,270 1,575 1,672 421 541 1,823 1,808Spain 4,500 3,995 1,567 1,373 1,100 968 547 502 1,091 958UK 5,124 5,048 1,459 1,623 511 698 661 665 794 942Arcor 1,441 1,320 267 228 171 139 189 129 71 56Greece 1,202 1,233 416 470 243 317 110 108 269 336Netherlands 1,137 1,174 357 369 208 219 163 124 254 224Portugal 926 899 323 286 195 163 120 115 225 153Other 1,020 1,400 434 510 290 279 96 164 329 310Intra-region revenue (446) (453) - - - - - - - - ----------------- ------------------ -------------------- ---------------- -------------------Total Europe 24,592 24,733 9,401 9,832 5,647 5,951 2,732 2,940 6,827 6,954 EMAPA Romania(3) 722 533 340 254 129 88 134 104 250 159Turkey(4) 698 - 151 - (68) - 143 - 102 -Egypt 741 555 391 307 295 212 192 167 (2) 190South Africa(2) 1,478 1,070 532 388 327 271 221 202 324 178Pacific 1,399 1,335 361 362 159 140 251 247 167 112Other subsidiaries 802 675 242 195 72 42 120 132 116 61Other joint ventures(2) 601 387 234 153 123 86 199 101 66 60 United States - - - - 2,077 1,732 - - - -Other Associates - - - - 642 666 - - - -Intra-region revenue - (1) - - - - - - - - ----------------- ------------------ -------------------- ---------------- -------------------Total EMAPA 6,441 4,554 2,251 1,659 3,756 3,237 1,260 953 1,023 760Common functions 168 145 308 275 128 211 216 112 231 (19)Inter-regionrevenue (97) (82) - - - - - - - - ----------------- ------------------ -------------------- ---------------- -------------------Total Group 31,104 29,350 11,960 11,766 9,531 9,399 4,208 4,005 8,081 7,695 =================== ================== ==================== ================ Net interest paid (468) (349)Tax paid (2,243) (1,712)Dividends received and other 757 784 ------- -------Free cash flow- Continuing operations 6,127 6,418- Discontinued operations(5) (8) 701 ------- ------- 6,119 7,119 ======= =======Notes:(1) For the Group's operating companies and common functions, the cash flows presented reflect operating free cash flow. (2) The results of joint ventures have been included using proportionate consolidation. (3) Includes periods in the 2006 financial year where accounted for as a joint venture. (4) Presents the results from 24 May 2006, being the date of acquisition. (5) Discontinued operations represent Vodafone Japan. See page 30 for use of non-GAAP financial information and for definition ofterms. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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