15th Nov 2005 07:03
Vodafone Group Plc15 November 2005 VODAFONE GROUP PLCINTERIM RESULTS FOR THE SIX MONTHS ENDED30 SEPTEMBER 2005 *******PART II******* CONSOLIDATED INCOME STATEMENT Six months to Six months to Year ended 30 September 30 September 31 March 2005 2004 2005 £m £m £m Revenue 18,251 16,742 34,073 Cost of sales (11,408) (10,410) (21,464) ---------- ---------- ----------Gross profit 6,843 6,332 12,609 Selling and distribution expenses (1,167) (1,013) (2,046)Administrative expenses (1,871) (1,638) (3,526)Share of result in associated undertakings 1,187 1,078 1,980Other income and expense (515) - (475) ---------- ---------- ----------Operating profit 4,477 4,759 8,542 Non-operating income and expense 1 16 6Investment income 259 321 581Financing costs (630) (556) (1,178) ---------- ---------- ----------Profit before taxation 4,107 4,540 7,951 Tax on profit (1,289) (857) (1,433) ---------- ---------- ----------Profit for the period 2,818 3,683 6,518 ========== ========== ========== Attributable to: - Equity shareholders 2,775 3,615 6,410- Minority interests 43 68 108 Earnings per share: - Basic 4.36p 5.40p 9.68p- Diluted 4.35p 5.39p 9.65p CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Six months to Six months to Year ended 30 September 30 September 31 March 2005 2004 2005 £m £m £m Gains on revaluation of available-for-sale investments 572 28 106Exchange differences on translation of foreign operations 448 2,067 1,488Actuarial losses on defined benefit pension schemes - (38) (79) ---------- ---------- ----------Net income recognised directly in equity 1,020 2,057 1,515 Profit for the period 2,818 3,683 6,518 ---------- ---------- ----------Total recognised income and expense relating to the period 3,838 5,740 8,033 ========== ========== ========== Attributable to: - Equity shareholders 3,784 5,706 7,958- Minority interests 54 34 75 CONSOLIDATED BALANCE SHEET 30 September 30 September 31 March 2005 2004 2005 £m £m £mNon-current assets Intangible assets 97,792 97,958 97,139Property, plant and equipment 17,844 17,230 17,451Investments in associated undertakings 22,063 20,921 20,234Other investments 1,859 1,157 1,181Deferred tax assets 973 1,195 1,184Trade and other receivables 236 267 221 ---------- ---------- ---------- 140,767 138,728 137,410 ---------- ---------- ----------Current assets Inventory 536 424 440Taxation recoverable 68 - 38Trade and other receivables 6,068 5,680 5,449Cash and cash equivalents 1,400 4,704 3,769 ---------- ---------- ---------- 8,072 10,808 9,696 ---------- ---------- ---------- Total assets 148,839 149,536 147,106 ========== ========== ========== Equity Called up share capital 4,292 4,283 4,286Share premium account 52,401 52,202 52,284Own shares held (7,608) (2,873) (5,121)Additional paid in capital 100,100 100,020 100,081Accumulated other recognised income and expense 2,790 2,324 1,781Retained losses (38,204) (41,043) (39,511) ---------- ---------- ----------Total equity shareholders' funds 113,771 114,913 113,800 Minority interests (115) 185 (152) ---------- ---------- ----------Total equity 113,656 115,098 113,648 ---------- ---------- ---------- Non-current liabilities Long-term borrowings 13,945 13,519 13,190Deferred tax liabilities 5,241 5,336 4,849Post employment benefits 128 210 124Provisions for other liabilities and charges 340 358 319Other payables 469 281 390 ---------- ---------- ---------- 20,123 19,704 18,872 ---------- ---------- ----------Current liabilities Short-term borrowings 2,026 2,670 2,003Current taxation liabilities 4,639 4,522 4,353Trade payables and other payables 8,212 7,387 8,002Provisions for other liabilities and charges 183 155 228 ---------- ---------- ---------- 15,060 14,734 14,586 ---------- ---------- ----------Total equity and liabilities 148,839 149,536 147,106 ========== ========== ========== CONSOLIDATED CASH FLOW STATEMENT Six months Six months Year to to ended 30 September 30 September 31 March 2005 2004 2005 £m £m £m Net cash flows from operating activities 6,084 5,827 10,979 ---------- ---------- ----------Cash flows from investing activities Purchase of interests in subsidiary undertakings and jointly controlled entities, net of cash acquired (1,887) (2,391) (2,461) Disposal of interests in subsidiary undertakings, net of cash disposed - 226 444 Purchase of intangible fixed assets (252) (329) (699) Purchase of property, plant and equipment (2,328) (2,204) (4,279) Purchase of investments (1) (10) (19) Disposal of property, plant and equipment 10 18 68 Disposal of investments 1 4 22 Loans to businesses sold or acquired businesses held for sale - - 110 Dividends received from associated undertakings 375 947 1,896 Dividends received from investments 41 18 19 Interest received 135 194 339 ---------- ---------- ----------Net cash flows from investing activities (3,906) (3,527) (4,560) ---------- ---------- ---------- Cash flows from financing activities Issue of ordinary share capital and re-issue of treasury shares 274 40 115 Proceeds from issue of borrowings 765 - - Repayment of borrowings (1,121) (683) (1,824) Loans repaid to associated undertakings (47) (2) (2) Purchase of treasury shares (2,750) (1,757) (4,053) Equity dividends paid (1,382) (728) (1,991) Dividends paid to minority shareholders in subsidiary undertakings (21) (18) (32) Interest paid (345) (430) (736) Interest element of finance leases (4) (4) (8) ---------- ---------- ----------Net cash flows from financing activities (4,631) (3,582) (8,531) ---------- ---------- ---------- Net decrease in cash and cash equivalents (2,453) (1,282) (2,112) Cash and cash equivalents at beginning of the period 3,726 5,809 5,809Exchange gain on cash and cash equivalents 90 55 29 ---------- ---------- ----------Cash and cash equivalents at end of the period 1,363 4,582 3,726 ========== ========== ========== NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSFOR THE SIX MONTHS TO 30 SEPTEMBER 2005 1 Basis of preparation The unaudited Interim Consolidated Financial Statements for the six months ended30 September 2005, which were approved by the Board of Directors on 15 November2005, do not constitute statutory accounts within the meaning of section 240 ofthe Companies Act 1985. Financial information for the year ended 31 March 2005 and for the six monthsended 30 September 2004, presented as comparative figures in this report, hasbeen restated from UK GAAP in accordance with the Group's best knowledge ofexpected International Financial Reporting Standards ("IFRS") (includingInternational Accounting Standards ("IAS") and interpretations issued by theInternational Accounting Standards Board ("IASB") and its committees, and asinterpreted by any regulatory bodies applicable to the Group) and on the basisset out in the accounting policies below. This restated IFRS information wasfirst published in press releases issued on 20 January 2005, 18 March 2005 and12 July 2005. The IFRS information for the year ended 31 March 2005 was derived by restatementof information extracted from the statutory financial statements prepared underUK GAAP on the historical cost basis. Those statutory financial statements werefiled with the Registrar of Companies. The auditors' report on those accountswas unqualified and did not contain statements under section 237(2) or 237(3) ofthe UK Companies Act 1985. The restated IFRS financial information provided forthe year ended 31 March 2005 does not constitute statutory accounts within themeaning of section 240 of the Companies Act 1985. However, they are anticipatedto form the comparative period for the statutory accounts for the year ending 31March 2006, the Group's first Annual Report to be prepared in accordance withIFRS. The unaudited interim results for the six months ended 30 September 2005, andfor the six months ended 30 September 2004, have been prepared by the Group inaccordance with IAS 34 "Interim Financial Reporting", using its best knowledgeof the expected International Financial Reporting Standards and accountingpolicies that will be applied when the Group prepares its first set of IFRSfinancial statements as at and for the year ending 31 March 2006. There is,however, a possibility that some changes to these policies will be necessarywhen preparing the full annual financial statements as the Interim ConsolidatedFinancial Statements have been prepared using expected IFRS that is anticipatedto be applicable and adopted for use in the EU at 31 March 2006, which is notknown with certainty at the time of preparing these Interim ConsolidatedFinancial Statements. Therefore, until such time, the possibility that theopening balance sheet and the interim IFRS financial information presented mayrequire amendment cannot be excluded. The significant accounting policies used in preparing this information are setout in note 2. The Interim Consolidated Financial Statements have been prepared in accordancewith IFRS, which differs in certain material respects from US GAAP (see note15), and on a historical cost basis except for certain financial and equityinstruments that have been measured at fair value. The preparation of the Interim Consolidated Financial Statements requiresmanagement to make estimates and assumptions that affect the reported amounts ofassets and liabilities, and disclosure of contingent assets and liabilities atthe balance sheet date, and the reported amounts of revenue and expenses duringthe reporting period. Actual results could vary from these estimates. Theestimates and underlying assumptions are reviewed on an ongoing basis. Revisionsto accounting estimates are recognised in the period in which the estimate isrevised if the revision affects only that period, or in the period of therevision and future periods if the revision affects both current and futureperiods. Amounts in the Interim Consolidated Financial Statements are stated in poundssterling (£), unless otherwise stated. 2 Significant accounting policies Basis of consolidation The interim results incorporate the financial statements of the Company andentities controlled, both unilaterally and jointly, by the Company. Accounting for subsidiaries A subsidiary is an entity controlled by the Company. Control is achieved wherethe Company has the power to govern the financial and operating policies of anentity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are includedin the income statement from the effective date of acquisition or up to theeffective date of disposal, as appropriate. Where necessary, adjustments aremade to the financial statements of subsidiaries to bring their accountingpolicies into line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated onconsolidation. Minority interests in the net assets of consolidated subsidiaries are identifiedseparately from the Group's equity therein. Minority interests consist of theamount of those interests at the date of the original business combination andthe minority's share of changes in equity since the date of the combination.Losses applicable to the minority in excess of the minority's share of changesin equity are allocated against the interests of the Group except to the extentthat the minority has a binding obligation and is able to make an additionalinvestment to cover the losses. Business combinations The acquisition of subsidiaries is accounted for using the purchase method. Thecost of the acquisition is measured at the aggregate of the fair values, at thedate of exchange, of assets given, liabilities incurred or assumed, and equityinstruments issued by the Group in exchange for control of the acquiree, plusany costs directly attributable to the business combination. The acquiree'sidentifiable assets and liabilities are recognised at their fair values at theacquisition date. Goodwill arising on acquisition is recognised as an asset and initially measuredat cost, being the excess of the cost of the business combination over theGroup's interest in the net fair value of the identifiable assets, liabilitiesand contingent liabilities recognised. The interest of minority shareholders in the acquiree is initially measured atthe minority's proportion of the net fair value of the assets, liabilities andcontingent liabilities recognised. Interests in joint ventures A joint venture is a contractual arrangement whereby the Group and other partiesundertake an economic activity that is subject to joint control, that is whenthe strategic financial and operating policy decisions relating to theactivities require the unanimous consent of the parties sharing control. The Group reports its interests in jointly controlled entities usingproportionate consolidation. The Group's share of the assets, liabilities,income, expenses and cash flows of jointly controlled entities are combined withthe equivalent items in the interim results on a line-by-line basis. Any goodwill arising on the acquisition of the Group's interest in a jointlycontrolled entity is accounted for in accordance with the Group's accountingpolicy for goodwill arising on the acquisition of a subsidiary. Investments in associates An associate is an entity over which the Group has significant influence andthat is neither a subsidiary nor an interest in a joint venture. Significantinfluence is the power to participate in the financial and operating policydecisions of the investee, but is not control or joint control over thosepolicies. The results and assets and liabilities of associates are incorporated in theinterim results using the equity method of accounting. Under the equity method,investments in associates are carried in the consolidated balance sheet at costas adjusted for post-acquisition changes in the Group's share of the net assetsof the associate, less any impairment in the value of the investment. Losses ofan associate in excess of the Group's interest in that associate are notrecognised. Additional losses are provided for, and a liability is recognised,only to the extent that the Group has incurred legal or constructive obligationsor made payments on behalf of the associate. Any excess of the cost of acquisition over the Group's share of the net fairvalue of the identifiable assets, liabilities and contingent liabilities of theassociate recognised at the date of acquisition is recognised as goodwill. Thegoodwill is included within the carrying amount of the investment. Intangible assets Goodwill Goodwill arising on the acquisition of an entity represents the excess of thecost of acquisition over the Group's interest in the net fair value of theidentifiable assets, liabilities and contingent liabilities of the entityrecognised at the date of acquisition. Goodwill is initially recognised as anasset at cost and is subsequently measured at cost less any accumulatedimpairment losses. Goodwill is not subject to amortisation but is tested annually for impairment. Negative goodwill arising on an acquisition is recognised directly in the incomestatement. On disposal of a subsidiary or a jointly controlled entity, the attributableamount of goodwill is included in the determination of the profit or lossrecognised in the income statement on disposal. Goodwill arising before the date of transition to IFRS, on 1 April 2004, hasbeen retained at the previous UK GAAP amounts subject to being tested forimpairment at that date. Licence and spectrum fees Licence and spectrum fees are stated at cost less accumulated amortisation. Theamortisation periods range from 3 to 25 years and are determined primarily byreference to the unexpired licence period, the conditions for licence renewaland whether licences are dependent on specific technologies. Amortisation ischarged to the income statement on a straight-line basis over the estimateduseful lives from the commencement of service of the network. The licences of the Group's associated undertaking, Verizon Wireless, areindefinite lived assets as they are subject to perfunctory renewal. Accordinglythey are not subject to amortisation but are tested annually for impairment, orwhen indicators exist that the carrying value is not recoverable. Computer software Computer software licences are capitalised on the basis of the costs incurred toacquire and bring into use the specific software. These costs are amortised overtheir estimated useful lives, being 3 to 5 years. Costs that are directly associated with the production of identifiable andunique software products controlled by the Group, and that are expected togenerate economic benefits exceeding costs beyond one year, are recognised asintangible assets. Direct costs include software development employee costs anddirectly attributable overheads. Software integral to a related item of hardware equipment is accounted for asproperty, plant and equipment. Costs associated with maintaining computer software programmes are recognised asan expense as incurred. Research and development expenditure Expenditure on research activities is recognised as an expense in the period inwhich it is incurred. An internally-generated intangible asset arising from the Group's developmentactivity is recognised only if all of the following conditions are met: - an asset is created that can be separately identified; - it is probable that the asset created will generate future economic benefits; and - the development cost of the asset can be measured reliably. Internally-generated intangible assets are amortised on a straight-line basisover their estimated useful lives. Where no internally-generated intangibleasset can be recognised, development expenditure is charged to the incomestatement in the period in which it is incurred. Other intangible assets Other intangible assets with finite lives are stated at cost less accumulatedamortisation and impairment losses. Amortisation is charged to the incomestatement on a straight-line basis over the estimated useful lives of intangibleassets from the date they are available for use. The estimated useful lives areas follows: Brands 1 - 10 years Customer bases 3 - 8 years Property, plant and equipment Land and buildings held for use are stated in the balance sheet at their cost,less any subsequent accumulated depreciation and subsequent accumulatedimpairment losses. Assets in the course of construction are carried at cost, less any recognisedimpairment loss. Depreciation of these assets commences when the assets areready for their intended use. Fixtures and equipment are stated at cost less accumulated depreciation and anyaccumulated impairment losses. Depreciation is charged so as to write off the cost or valuation of assets,other than land and properties under construction using the straight-linemethod, over their estimated useful lives as follows: Freehold buildings 25 - 50 years Leasehold premises the term of the lease Equipment, fixtures and fittings 3 - 10 years Depreciation is not provided on freehold land. Assets held under finance leases are depreciated over their expected usefullives on the same basis as owned assets or, where shorter the term of therelevant lease. The gain or loss arising on the disposal or retirement of an item property,plant and equipment is determined as the difference between the sales proceedsand the carrying amount of the asset and is recognised in the income statement. Impairment of assets Indefinite lived assets Goodwill and other assets that have an indefinite useful life are not subject toamortisation but are tested for impairment annually or whenever there is anindication that the asset may be impaired. For the purpose of impairment testing, assets are grouped at the lowest levelsfor which there are separately identifiable cash flows, known as cash-generatingunits. If the recoverable amount of the cash-generating unit is less than thecarrying amount of the unit, the impairment loss is allocated first to reducethe carrying amount of any goodwill allocated to the unit and then to the otherassets of the unit pro-rata on the basis of the carrying amount of each asset inthe unit. An impairment loss recognised for goodwill is not reversed in asubsequent period. Recoverable amount is the higher of fair value less costs to sell and value inuse. In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risks specific to theasset for which the estimates of future cash flows have not been adjusted. Property, plant and equipment and finite lived intangible assets At each balance sheet date, the Group reviews the carrying amounts of itsproperty, plant and equipment and finite lived intangible assets to determinewhether there is any indication that those assets have suffered an impairmentloss. If any such indication exists, the recoverable amount of the asset isestimated in order to determine the extent of the impairment loss (if any).Where it is not possible to estimate the recoverable amount of an individualasset, the Group estimates the recoverable amount of the cash-generating unit towhich the asset belongs. If the recoverable amount of an asset (or cash-generating unit) is estimated tobe less than its carrying amount, the carrying amount of the asset (orcash-generating unit) is reduced to its recoverable amount. An impairment lossis recognised immediately in the income statement. Where an impairment loss subsequently reverses, the carrying amount of the asset(or cash-generating unit) is increased to the revised estimate of itsrecoverable amount, not to exceed the carrying amount that would have beendetermined had no impairment loss been recognised for the asset (orcash-generating unit) in prior years. A reversal of an impairment loss isrecognised immediately in the income statement. Inventory Inventory is stated at the lower of cost and net realisable value. Costcomprises direct materials and, where applicable, direct labour costs and thoseoverheads that have been incurred in bringing the inventories to their presentlocation and condition. Revenue Group revenue comprises revenue of the Company and its subsidiary undertakingsplus the Group's share of the revenue of its joint ventures and excludes salestaxes and discounts. Revenue from mobile telecommunications comprises amounts charged to customers inrespect of monthly access charges, airtime usage, messaging, the provision ofother mobile telecommunications services, including data services andinformation provision, fees for connecting users of other fixed line and mobilenetworks to the Group's network, revenue from the sale of equipment, includinghandsets and revenue arising from agreements entered into with partner networks. Access charges and airtime used by contract customers are invoiced and recordedas part of a periodic billing cycle and recognised as revenue over the relatedaccess period, with unbilled revenue resulting from services already providedfrom the billing cycle date to the end of each period accrued and unearnedrevenue from services provided in periods after each accounting period deferred.Revenue from the sale of prepaid credit is deferred until such time as thecustomer uses the airtime, or the credit expires. Other revenue from mobile telecommunications primarily comprises equipmentsales, which are recognised upon delivery to customers, and customer connectionrevenue. Customer connection revenue is recognised together with the relatedequipment revenue to the extent that the aggregate equipment and connectionrevenue does not exceed the fair value of the equipment delivered to thecustomer. Any customer connection revenue not recognised together with relatedequipment revenue is deferred and recognised over the period in which servicesare expected to be provided to the customer. Revenue from data services and information provision is recognised when theGroup has performed the related service and, depending on the nature of theservice, is recognised either at the gross amount billed to the customer or theamount receivable by the Group as commission for facilitating the service. Revenue from other businesses primarily comprises amounts charged to customersof the Group's fixed line businesses, mainly in respect of access charges andline usage, invoiced and recorded as part of a periodic billing cycle. Leasing Leases are classified as finance leases whenever the terms of the lease transfersubstantially all the risks and rewards of ownership of the asset to the lessee.All other leases are classified as operating leases. Assets held under finance leases are recognised as assets of the Group at theirfair value at the inception of the lease or, if lower, at the present value ofthe minimum lease payments as determined at the inception of the lease. Thecorresponding liability to the lessor is included in the balance sheet as afinance lease obligation. Lease payments are apportioned between finance chargesand reduction of the lease obligation so as to achieve a constant rate ofinterest on the remaining balance of the liability. Finance charges arerecognised in the income statement. Rentals payable under operating leases are charged to the income statement on astraight line basis over the term of the relevant lease. Benefits received andreceivable as an incentive to enter into an operating lease are also spread on astraight line basis over the lease term. Foreign currencies In preparing the financial statements of the individual entities, transactionsin currencies other than the entity's functional currency are recorded at therates of exchange prevailing on the dates of the transactions. At each balancesheet date, monetary items denominated in foreign currencies are retranslated atthe rates prevailing on the balance sheet date. Non-monetary items carried atfair value that are denominated in foreign currencies are retranslated at therate prevailing on the date when fair value was determined. Non-monetary itemsthat are measured in terms of historical cost in a foreign currency are notretranslated. Exchange differences arising on the settlement of monetary items, and on theretranslation of monetary items, are included in the income statement for theperiod. Exchange differences arising on the retranslation of non-monetary itemscarried at fair value are included in the income statement for the period exceptfor differences arising on the retranslation of non-monetary items in respect ofwhich gains and losses are recognised directly in equity. For such non-monetaryitems, any exchange component of that gain or loss is also recognised directlyin equity. For the purpose of presenting Consolidated Financial Statements, the assets andliabilities of entities with a functional currency other than sterling areexpressed in sterling using exchange rates prevailing on the balance sheet date.Income and expense items and cash flows are translated at the average exchangerates for the period and exchange differences arising are recognised directly inequity. Such translation differences are recognised in the income statement inthe period in which a foreign operation is disposed of. Goodwill and fair value adjustments arising on the acquisition of a foreignoperation are treated as assets and liabilities of the foreign operation andtranslated accordingly. In respect of all foreign operations, any exchange differences that have arisenbefore 1 April 2004, the date of transition to IFRS, are deemed to be nil andwill be excluded from the determination of any subsequent profit or loss ondisposal. Borrowing costs All borrowing costs are recognised in the income statement in the period inwhich they are incurred. Retirement benefits For defined benefit retirement plans, the difference between the fair value ofthe plan assets and the present value of the plan liabilities is recognised asan asset or liability on the balance sheet. Actuarial gains and losses arisingin the year are taken to the Statement of Recognised Income and Expense. Forthis purpose, actuarial gains and losses comprise both the effects of changes inactuarial assumptions and experience adjustments arising because of differencesbetween the previous actuarial assumptions and what has actually occurred. Other movements in the net surplus or deficit are recognised in the incomestatement, including the current service cost, any past service cost and theeffect of any curtailment or settlements. The interest cost less the expectedreturn on assets is also charged to the income statement. The amount charged tothe income statement in respect of these plans is included within operatingcosts or in the Group's share of the results of equity accounted operations asappropriate. The values attributed to plan liabilities are assessed in accordance with theadvice of independent qualified actuaries. The Group's contributions to defined contribution pension plans are charged tothe income statement as they fall due. Cumulative actuarial gains and losses as at 1 April 2004, the date of transitionto IFRS, have been recognised in the balance sheet. Taxation Income tax expense represents the sum of the current tax payable and deferredtax. The current tax payable or recoverable is based on taxable profit for the year.Taxable profit differs from profit as reported in the income statement becausesome items of income or expense are taxable or deductible in different years ormay never be taxable or deductible. The Group's liability for current tax iscalculated using UK and foreign tax rates that have been enacted orsubstantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable in the futurearising from temporary differences between the carrying amounts of assets andliabilities in the financial statements and the corresponding tax bases used inthe computation of taxable profit. It is accounted for using the balance sheetliability method. Deferred tax liabilities are generally recognised for alltaxable temporary differences and deferred tax assets are recognised to theextent that it is probable that taxable profits will be available against whichdeductible temporary differences can be utilised. Such assets and liabilitiesare not recognised if the temporary difference arises from goodwill or from theinitial recognition (other than in a business combination) of other assets andliabilities in a transaction that affects neither the taxable profit nor theaccounting profit. Deferred tax liabilities are recognised for taxable temporary differencesarising on investments in subsidiaries and associates, and interests in jointventures, except where the Group is able to control the reversal of thetemporary difference and it is probable that the temporary difference will notreverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset realised, based on tax ratesthat have been enacted or substantively enacted by the balance sheet date. Deferred tax assets and liabilities are offset when there is a legallyenforceable right to set off current tax assets against current tax liabilitiesand when they either relate to income taxes levied by the same taxationauthority on either the same taxable entity or on different taxable entitieswhich intend to settle the current tax assets and liabilities on a net basis. Tax is charged or credited to the income statement, except when it relates toitems charged or credited directly to equity, in which case the tax is alsorecognised directly in equity. Financial instruments Financial assets and financial liabilities, in respect of financial instruments,are recognised on the Group's balance sheet when the Group becomes a party tothe contractual provisions of the instrument. The Group has applied the requirements of IFRS to financial instruments for allperiods presented and has not taken advantage of any exemptions available tofirst time adopters of IFRS in this respect. Trade receivables Trade receivables do not carry any interest and are stated at their nominalvalue as reduced by appropriate allowances for estimated irrecoverable amounts. Investments Investments are recognised and derecognised on a trade date where a purchase orsale of an investment is under a contract whose terms require delivery of theinvestment within the timeframe established by the market concerned, and areinitially measured at cost, including transaction costs. Investments are classified as either held for trading or available for-sale, andare measured at subsequent reporting dates at fair value. Where securities areheld for trading purposes, gains and losses arising from changes in fair valueare included in net profit or loss for the period. For available for-saleinvestments, gains and losses arising from changes in fair value are recogniseddirectly in equity, until the security is disposed of or is determined to beimpaired, at which time the cumulative gain or loss previously recognised inequity is included in the net profit or loss for the period. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and call deposits, and othershort-term highly liquid investments that are readily convertible to a knownamount of cash and are subject to an insignificant risk of changes in value. Trade payables Trade payables are not interest bearing and are stated at their nominal value. Financial liabilities and equity instruments Financial liabilities and equity instruments issued by the Group are classifiedaccording to the substance of the contractual arrangements entered into and thedefinitions of a financial liability and an equity instrument. An equityinstrument is any contract that evidences a residual interest in the assets ofthe Group after deducting all of its liabilities. The accounting policiesadopted for specific financial liabilities and equity instruments are set outbelow. Capital market and bank borrowings Interest-bearing loans and overdrafts are initially measured at fair value, andare subsequently measured at amortised cost, using the effective interest ratemethod. Any difference between the proceeds net of transaction costs and thesettlement or redemption of borrowings is recognised over the term of theborrowing. Equity instruments Equity instruments issued by the Group are recorded at the proceeds received,net of direct issue costs. Derivative financial instruments and hedge accounting The Group's activities expose it to the financial risks of changes in foreignexchange rates and interest rates. The use of financial derivatives is governed by the Group's policies approved bythe board of directors, which provide written principles on the use of financialderivatives consistent with the Group's risk management strategy. The Group doesnot use derivative financial instruments for speculative purposes. Derivative financial instruments are initially measured at fair value on thecontract date, and are subsequently re-measured to fair value at each reportingdate. The Group designates certain derivatives as either: i. hedges of the change of fair value of recognised assets and liabilities ("fair value hedges"); or ii. hedges of highly probable forecast transactions ("cash flow hedges"); or iii. hedges of net investments in foreign operations. Hedge accounting is discontinued when the hedging instrument expires or is sold,terminated, or exercised, or no longer qualifies for hedge accounting. Fair value hedges The Group's policy is to use derivative instruments (primarily interest rateswaps) to convert a proportion of its fixed rate debt to floating rates in orderto hedge the interest rate risk arising, principally, from capital marketborrowings. The Group designates these as fair value hedges of interest raterisk with changes in fair value of the hedging instrument recognised in theincome statement for the period together with the changes in the fair value ofthe hedged item due to the hedged risk, to the extent the hedge is effective.The ineffective portion is recognised immediately in the income statement. Cash flow hedges Changes in the fair value of derivative financial instruments that aredesignated and effective as hedges of future cash flows are recognised directlyin equity and the ineffective portion is recognised immediately in the incomestatement. The Group's policy with respect to hedging the foreign currency riskof a firm commitment is to designate it as a cash flow hedge. If the cash flowhedge of a firm commitment or forecasted transaction results in the recognitionof an asset or a liability, then at the time the asset or liability isrecognised, the associated gains or losses on the derivative that had previouslybeen recognised in equity are included in the initial measurement of the assetor liability. For hedges that do not result in the recognition of an asset or aliability, amounts deferred in equity are recognised in the income statement inthe same period in which the hedged item affects the income statement. Net investment hedges Exchange differences arising from the translation of the net investment inforeign operations are recognised directly in equity. Gains and losses on thosehedging instruments designated as hedges of the net investments in foreignoperations are recognised in equity to the extent that the hedging relationshipis effective. Any ineffectiveness is recognised immediately in the incomestatement for the period. Gains and losses accumulated in the translationreserve are included in the income statement when the foreign operation isdisposed of. Provisions Provisions are recognised when the Group has a present obligation as a result ofa past event, and it is probable that the Group will be required to settle thatobligation. Provisions are measured at the directors' best estimate of theexpenditure required to settle the obligation at the balance sheet date, and arediscounted to present value where the effect is material. Share-based payments The Group issues equity-settled share-based payments to certain employees.Equity-settled share-based payments are measured at fair value (excluding theeffect of non market-based vesting conditions) at the date of grant. The fairvalue determined at the grant date of the equity-settled share-based payments isexpensed on a straight-line basis over the vesting period, based on the Group'sestimate of the shares that will eventually vest and adjusted for the effect ofnon market-based vesting conditions. Fair value is measured using a binomial pricing model which is calibrated usinga Black-Scholes framework. The expected life used in the model has beenadjusted, based on management's best estimate, for the effects ofnon-transferability, exercise restrictions and behavioural considerations. The Group has applied the provisions of IFRS 2: Share-based Payments to allequity instruments granted but not fully vested at 1 April 2004, the date oftransition to IFRS. Advertising costs Expenditure on advertising is written off in the year in which it is incurred. 3 Segmental and other analyses The Group's principal business is the supply of mobile telecommunicationsservices and products. Other operations primarily comprise fixed linetelecommunications businesses. Analyses of revenue and operating profit bygeographical region and class of business are as follows: Six months ended 30 September 2005 Revenue Less: between Intra- (2) Inter- mobile Segment Joint segment Common segment Net re- and other Group revenue Subsidiaries ventures revenue functions revenue venue operations revenue £m £m £m £m £m £m £m £m £mMobile telecommunications: Germany(1) 2,913 2,913 - - (29) 2,884 (52) 2,832Italy(1) 2,240 - 2,240 - (25) 2,215 - 2,215Japan(1) 3,704 3,704 - - (1) 3,703 - 3,703Spain(1) 1,968 1,968 - - (59) 1,909 - 1,909UK(1) 2,568 2,568 - - (29) 2,539 - 2,539Americas(1) - - - - - - - -Other mobile (1) 4,441 3,826 632 (17) (53) 4,388 - 4,388Common functions 70 (8) 62 - 62 ------- ------- ------- ------- ------- ------- ------- ------- --------Total 17,834 14,979 2,872 (17) 70 (204) 17,700 (52) 17,648 Other operations: Germany(1) 622 622 - - - 622 (19) 603Other(1) - - - - - - - - ------- ------- ------- ------- ------- ------- ------- ------- --------Total 622 622 - - - 622 (19) 603 ------- ------- ------- ------- ------- ------- ------- ------- -------- 18,456 15,601 2,872 (17) 70 (204) 18,322 (71) 18,251 ======= ======= ======= ======= ======= ======= ======= ======= ======== (3) Items not reflecting (2) underlying Adjusted Segment Joint Common Operating business operating result Subsidiaries ventures functions Associates profit performance profit £m £m £m £m £m £m £m £m Mobile telecommunications: Germany(1) 775 775 - - 775 - 775 Italy(1) 923 - 923 - 923 - 923 Japan(1) 191 191 - - 191 - 191 Spain(1) 529 529 - - 529 - 529 UK(1) 320 320 - - 320 - 320 Americas(1) - - - 772 772 - 772 Other mobile (1) 361 191 170 432 793 496 1,289 Common functions 153 153 - 153 ------ ------ ------ ------ ------ ------ ------ ------Total 3,099 2,006 1,093 153 1,204 4,456 496 4,952 Other operations: Germany(1) 38 38 - - 38 - 38 Other(1) - - - (17) (17) - (17) ------ ------ ------ ------ ------ ------ ------ ------Total 38 38 - (17) 21 - 21 ------ ------ ------ ------ ------ ------ ------ ------ 3,137 2,044 1,093 153 1,187 4,477 496 4,973 ====== ====== ====== ====== ====== ====== ====== ====== (1) Reportable segments(2) Common functions represents revenue from Partner Markets and unallocated central Group income and expenses(3) Comprises £515 million in respect of the impairment to the carrying value of goodwill relating to Vodafone Sweden offset by £19 million of non-operating income in relation to the Group's associated undertakings Six months ended 30 September 2004 Revenue Less: between Intra- (2) Inter- mobile Segment Joint segment Common segment Net re- and other Group revenue Subsidiaries ventures revenue functions revenue venue operations revenue £m £m £m £m £m £m £m £m £mMobile telecommunications: Germany(1) 2,808 2,808 - - (25) 2,783 (51) 2,732Italy(1) 2,091 - 2,091 - (19) 2,072 - 2,072Japan(1) 3,689 3,689 - - - 3,689 - 3,689Spain(1) 1,554 1,554 - - (47) 1,507 - 1,507UK(1) 2,563 2,563 - - (24) 2,539 - 2,539Americas(1) - - - - - - - -Other mobile (1) 3,712 3,176 548 (12) (45) 3,667 - 3,667Common functions 58 58 58 ------- ------- ------- ------- ------- ------- ------- ------- --------Total 16,417 13,790 2,639 (12) 58 (160) 16,315 (51) 16,264 Other operations: Germany(1) 505 505 - - - 505 (27) 478Other(1) - - - - - - - - ------- ------- ------- ------- ------- ------- ------- ------- --------Total 505 505 - - - 505 (27) 478 ------- ------- ------- ------- ------- ------- ------- ------- -------- 16,922 14,295 2,639 (12) 58 (160) 16,820 (78) 16,742 ======= ======= ======= ======= ======= ======= ======= ======= ======== Items not reflecting (2) underlying Adjusted Segment Joint Common Operating business operating result Subsidiaries ventures functions Associates profit performance profit £m £m £m £m £m £m £m £m Mobile telecommunications: Germany(1) 779 779 - - 779 - 779 Italy(1) 844 - 844 - 844 - 844 Japan(1) 423 423 - - 423 - 423 Spain(1) 397 397 - - 397 - 397 UK(1) 396 396 - - 396 - 396 Americas(1) - - - 738 738 - 738 Other mobile (1) 850 717 133 346 1,196 - 1,196 Common functions (25) (25) - (25) ------ ------ ------ ------ ------ ------ ------ ------Total 3,689 2,712 977 (25) 1,084 4,748 - 4,748 Other operations: Germany(1) 17 17 - - 17 - 17 Other(1) - - - (6) (6) - (6) ------ ------ ------ ------ ------ ------ ------ ------Total 17 17 - (6) 11 - 11 ------ ------ ------ ------ ------ ------ ------ ------ 3,706 2,729 977 (25) 1,078 4,759 - 4,759 ====== ====== ====== ====== ====== ====== ====== ====== (1) Reportable segments(2) Common functions represents revenue from Partner Markets and unallocated central Group income and expenses Year ended 31 March 2005 Revenue Less: between Intra- (2) Inter- mobile Segment Joint segment Common segment Net re- and other Group revenue Subsidiaries ventures revenue functions revenue venue operations revenue £m £m £m £m £m £m £m £m £mMobile telecommunications: Germany(1) 5,684 5,684 - - (51) 5,633 (110) 5,523Italy(1) 4,273 - 4,273 - (36) 4,237 - 4,237Japan(1) 7,396 7,396 - - (1) 7,395 - 7,395Spain(1) 3,261 3,261 - - (80) 3,181 - 3,181UK(1) 5,065 5,065 - - (47) 5,018 - 5,018Americas(1) - - - - - - - -Other mobile (1) 7,637 6,474 1,184 (21) (84) 7,553 - 7,553Common functions 123 (5) 118 (1) 117 ------- ------- ------- ------- ------- ------- ------- ------- --------Total 33,316 27,880 5,457 (21) 123 (304) 33,135 (111) 33,024 Other operations: Germany(1) 1,095 1,095 - - - 1,095 (46) 1,049Other(1) - - - - - - - - ------- ------- ------- ------- ------- ------- ------- ------- --------Total 1,095 1,095 - - - 1,095 (46) 1,049 ------- ------- ------- ------- ------- ------- ------- ------- -------- 34,411 28,975 5,457 (21) 123 (304) 34,230 (157) 34,073 ======= ======= ======= ======= ======= ======= ======= ======= ======== (3) Items not reflecting (2) underlying Adjusted Segment Joint Common Operating business operating result Subsidiaries ventures functions Associates profit performance profit £m £m £m £m £m £m £m £m Mobile telecommunications: Germany(1) 1,473 1,473 - - 1,473 - 1,473 Italy(1) 1,694 - 1,694 - 1,694 - 1,694 Japan(1) 664 664 - - 664 - 664 Spain(1) 775 775 - - 775 - 775 UK(1) 779 779 - - 779 - 779 Americas(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 6,583 4,584 1,999 (85) 2,025 8,523 475 8,998 Other operations: Germany(1) 64 64 - - 64 - 64 Other(1) - - - (45) (45) - (45) ------ ------ ------ ------ ------ ------ ------ ------Total 64 64 - (45) 19 - 19 ------ ------ ------ ------ ------ ------ ------ ------ 6,647 4,648 1,999 (85) 1,980 8,542 475 9,017 ====== ====== ====== ====== ====== ====== ====== ====== (1) Reportable segments(2) Common functions represents revenue from Partner Markets and unallocated central Group income and expenses(3) Impairment to the carrying value of goodwill relating to Vodafone Sweden 4 Other income and expense Six months Six months Year to to ended 30 September 30 September 31 March 2005 2004 2005 £m £m £m Impairment of carrying value of goodwill of Vodafone Sweden 515 - 475 ======= ======= ======= The impairment of the carrying value of goodwill of Vodafone Sweden in the sixmonths to 30 September 2005 results from the recent fierce competition in theSwedish market combined with onerous 3G licence obligations. Vodafone Swedenrepresents the Group's entire business operation in Sweden and forms part of theGroup's Other Mobile Operations, which is a reportable segment. The recoverable amount of Vodafone Sweden is the fair value less costs to sell,reflecting the announcement on 31 October 2005 that the Group's 100% interest inVodafone Sweden is to be sold for €1,035 million (£704 million). The sale isexpected to be completed by 31 December 2005, subject to EU regulatory approval. 5 Taxation Six months Six months Year to to ended 30 September 30 September 31 March 2005 2004 2005 £m £m £m United Kingdom corporation tax charge at 30% (2004: 30%) Current year 41 67 339 Adjustments in respect of prior years - (26) (79) Overseas corporation tax Current year 1,019 1,086 1,949 Adjustments in respect of prior years (182) - (196) ------- ------- -------Total current tax charge 878 1,127 2,013 ------- ------- ------- Deferred tax: United Kingdom deferred tax 41 165 168 Overseas deferred tax (1) 370 (435) (748) ------- ------- -------Deferred tax charge/(credit) 411 (270) (580) ------- ------- ------- Total tax charge 1,289 857 1,433 ======= ======= ======= (1) Deferred tax for the year ended 31 March 2005 includes a £599 million credit (£303 million for the 6 months ended 30 September 2004) in respect of 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. 6 Earnings per share Six months Six months Year to to ended 30 September 30 September 31 March 2005 2004 2005 Weighted average number of shares for basic EPS (millions) 63,694 66,915 66,196 Weighted average number of shares for diluted EPS (millions) 63,842 67,102 66,427 Basic earnings per share 4.36p 5.40p 9.68pDiluted basic earnings per share 4.35p 5.39p 9.65p Adjusted basic earnings per share 5.37p 4.95p 9.62pAdjusted diluted basic earnings per share 5.36p 4.93p 9.59p Six months Six months Year to to ended 30 September 30 September 31 March 2005 2004 2005 £m £m £m Earnings for basic and diluted earnings per share 2,775 3,615 6,410 Items not related to underlying business performance: - Other income and expense(1) 515 - 475 - Share of associated undertakings' non-operating income (19) - - - Non-operating income and expense (1) (16) (6) - Net financing costs in relation to the put option held by Telecom Egypt(2) 151 - 67 - Deferred tax asset recognised on shareholder and regulatory approval of the merger of Vodafone K.K. and Vodafone Holdings K.K.(3) - (303) (599) - Tax on items not related to underlying business performance - - 3 - Items not related to underlying business performance attributable to minority interests - 13 21 ------- ------- -------Earnings for adjusted earnings per share 3,421 3,309 6,371 ======= ======= ======= The following are the principal items not related to underlying businessperformance: (1) Other income and expense comprises an impairment to the carrying value of goodwill relating to Vodafone Sweden of £515 million (year ended 31 March 2005: £475 million). (2) During the 2005 financial year, the Group sold 16.9% of Vodafone Egypt to Telecom Egypt, reducing the Group's effective interest to 50.1%. It was also agreed that the Group and Telecom Egypt would each contribute a 25.5% interest in Vodafone Egypt shares to a newly formed 50:50 joint venture. As part of the transaction, Telecom Egypt was granted an option over its 25.5% indirect interest in Vodafone Egypt, giving Telecom Egypt the right to put its shares back to the Group at fair market value. This right remains for as long as the Group owns in excess of 20% of Vodafone Egypt. Under IAS 32, 'Financial Instruments: Disclosure and Presentation' and IAS 39, 'Financial Instruments: Recognition and Measurement' the put option held by Telecom Egypt is classified as a financial liability, held at deemed fair value on the Group's consolidated balance sheet, with movements recognised in the consolidated income statement. Fair value movements are determined by the reference to the quoted share price of Vodafone Egypt. The right to receive the indirect interest in Vodafone Egypt in the event of exercise of the put option is accounted for separately from the financial liability. For the year ended 31 March 2005, a liability of £356m was established at the inception of the option which has been classified as forming part of net debt and a further charge of £67m was recognised in the income statement. For the six months ended 30 September 2005, a further charge of £151m was recognised. The valuation of this option is inherently unpredictable and changes in the fair value of this financial liability could have a material impact on the future results and financial position of Vodafone. (3) In the year ended 31 March 2005, tax losses in Vodafone Holdings K.K. became eligible for offset against the profits of Vodafone K.K. following the merger of the two entities on 1 October 2004. The tax credit was recognised following shareholder and regulatory approval of the transaction. 7 Dividends Six months Six months Year to to ended 30 September 30 September 31 March 2005 2004 2005 £m £m £m Equity dividends on ordinary shares: Declared and paid during the period: Final dividend for the year ended 31 March 2005: 2.16 pence per share (2004: 1.0780 pence per share) 1,395 728 728Interim dividend for the year ended 31 March 2005: 1.91 pence per share - - 1,263 ------- ------- ------- 1,395 728 1,991 ======= ======= ======= Proposed or declared but not recognised as a liability: Final dividend for the year ended 31 March 2005: 2.16 pence per share - - 1,395Interim dividend for the year ending 31 March 2006: 2.20 pence per share (2005: 1.91 pence per share) 1,376 1,263 - ------- ------- ------- 1,376 1,263 1,395 ======= ======= ======= 8 Reconciliation of net cash flows to operating activities Six months Six months Year to to ended 30 September 30 September 31 March 2005 2004 2005 £m £m £m Profit for the period 2,818 3,683 6,518 Adjustments for Tax on profit 1,289 857 1,433 Depreciation and amortisation 2,871 2,607 5,517 Loss on disposal of property, plant and equipment 35 32 162 Non operating income and expense (1) (16) (6) Investment income (259) (321) (581) Financing costs 630 556 1,178 Other income and expense 515 - 475 Share of result in associated undertakings (1,187) (1,078) (1,980) ------- ------- -------Operating cash flows before movements in working capital 6,711 6,320 12,716 (Increase)/decrease in inventory (85) 39 17 Increase in trade and other receivables (207) (205) (321) Increase in payables 332 90 145 ------- ------- -------Cash generated by operations 6,751 6,244 12,557 Tax paid (667) (417) (1,578) ------- ------- -------Net cash flows from operating activities 6,084 5,827 10,979 ======= ======= ======= 9 Acquisition of subsidiary On 31 May 2005, the Group acquired 99.99% of the issued share capital ofClearWave N.V. for cash consideration of £1,905 million. ClearWave N.V. is theparent company of a group of companies involved in the provision of mobiletelecommunications in the Czech Republic and Romania. This transaction has beenaccounted for by the purchase method of accounting. Fair value Fair value Book value adjustments £m £m £mNet assets acquired: Intangible assets 87 619 706 Property, plant and equipment 562 - 562 Inventory 7 - 7 Trade and other receivables 106 (12) 94 Cash and cash equivalents 65 - 65 Deferred tax liabilities - (108) (108) Short and long term borrowings (550) (64) (614) Current tax liabilities (11) - (11) Trade and other payables (153) - (153) --------- --------- -------- 113 435 548 ========= ========= Minority Interests (2) Goodwill 1,359 --------Total cash consideration (including £9 million of directly attributable costs) 1,905 ======== Net cash outflow arising on acquisition: Cash consideration 1,905 Cash and cash equivalents acquired (65) -------- 1,840 ======== The goodwill is attributable to the profitability of the acquired business andthe synergies expected to arise after the Group's acquisition of ClearWave. The acquired entities and percentage of voting rights acquired was as follows % MobiFon S.A. 78.99 Oskar Mobil a.s. 99.87 ClearWave N.V. 99.99 MobiFon Holdings B.V. 99.99 Oskar Holdings N.V. (renamed Vodafone Oskar Holdings N.V.) 99.99 Oskar Finance B.V. (renamed Vodafone Oskar Finance B.V.) 99.99 ClearWave Services (Mauritius) Ltd. 99.99 Results of the acquired entities have been consolidated in the income statementfrom the date of acquisition, 31 May 2005. If the acquisition had been completed on 1 April 2005, the Group's revenue forthe six months ended 30 September 2005 would have increased by an additional£129 million and profit for the period would have increased by an additional £22million. Subsequent to the completion of the acquisition on 31 May 2005, a further 0.9%of MobiFon S.A. was acquired for consideration of £16 million. 10 Transactions with equity shareholders Share Additional Called up premium Own shares paid in share capital account held capital £m £m £m £m At 1 April 2004 4,280 52,154 (1,136) 99,950 Issue of new shares 3 48 - (13) Purchase of treasury shares - - (1,748) -Own shares released on vesting of share awards - - 11 -Share-based payment charge, inclusive of tax credit of £12 million - - - 80 Other movements - - - 3 ------- ------- ------- -------At 30 September 2004 4,283 52,202 (2,873) 100,020 Issue of new shares 3 82 - (15) Purchase of treasury shares - - (2,249) -Own shares released on vesting of share awards - - 1 -Share-based payment charge, inclusive of tax credit of £10 million - - - 79 Other movements - - - (3) ------- ------- ------- -------At 31 March 2005 4,286 52,284 (5,121) 100,081 Issue of new shares 6 110 - (37) Purchase of treasury shares - - (2,802) -Own shares released on vesting of share awards - 7 315 (7) Share-based payment charge, inclusive of tax credit of £4 million - - - 63 ------- ------- ------- -------At 30 September 2005 4,292 52,401 (7,608) 100,100 ======= ======= ======= ======= In the six months ended 30 September 2005, the Company issued 96 millionordinary shares of $0.10 each and re-issued 235 million ordinary shares fromtreasury. 11 Movements in accumulated other recognised income and expense Available- for-sale Translation Pensions investments reserve reserve reserve Total £m £m £m £m At 1 April 2004 - - 233 233 Gains/(losses) arising in the period 2,101 (54) 28 2,075 Tax effect - 16 - 16 ------- ------- ------- -------At 30 September 2004 2,101 (38) 261 2,324 (Losses)/gains arising in the period (580) (48) 78 (550) Tax effect - 7 - 7 ------- ------- ------- -------At 31 March 2005 1,521 (79) 339 1,781 Gains arising in the period 437 - 574 1,011 Tax effect - - (2) (2) ------- ------- ------- -------At 30 September 2005 1,958 (79) 911 2,790 ======= ======= ======= ======= 12 Movements in retained losses Six months Six months Year to to ended 30 September 30 September 31 March 2005 2004 2005 £m £m £m At 1 April (39,511) (43,930) (43,930) Profit for the period 2,775 3,615 6,410 Dividends (1,395) (728) (1,991) Loss on reissue of treasury shares (73) - - ------- ------- -------At 30 September / 31 March (38,204) (41,043) (39,511) ======= ======= ======= 13 Related party transactions Transactions between the Company and its subsidiaries, which are relatedparties, have been eliminated on consolidation and are not disclosed in thisnote. Transactions between the Company and its joint ventures have beendisclosed to the extent that they have not been eliminated through proportionateconsolidation. Six months Six months Year to to ended 30 September 30 September 31 March 2005 2004 2005 £m £m £m Transactions with associated undertakings: - Sales of goods and services 153 139 194 ======= ======= ======= - Purchase of goods and services 186 155 243 ======= ======= =======Transactions with joint ventures: - Sales of goods and services(1) 15 11 22 ======= ======= ======= - Purchase of goods and services 17 14 28 ======= ======= ======= (1) In addition, Vodafone Italy was recharged certain expenses by Group entities in the period of which £16 million (six months ended September 2004: £11 million; year ended 31 March 2005: £19 million) is included in the consolidated income statement. As at As at As at 30 September 30 September 31 March 2005 2004 2005 £m £m £m Amounts owed by associated undertakings 33 24 22 ======= ======= =======Amounts owed to associated undertakings 28 16 12 ======= ======= =======Amounts owed by joint ventures included within receivables 31 19 17 ======= ======= =======Amounts owed to joint ventures included within payables 3 1 3 ======= ======= =======Amounts owed to joint ventures included withinshort-term borrowings 770 1,024 1,136 ======= ======= ======= In the six months ended 30 September 2005, the Group made contributions todefined benefit pension schemes of £24 million (six months ended 30 September2004: £59 million, year ended 31 March 2005: £209 million). Compensation paid to the Company's Board of directors and members of theExecutive Committee will be disclosed in the Group's Annual Report for the yearending 31 March 2006. 14 Other matters Contingent liabilities There have been no material changes to the Group's contingent liabilitiesrelating to performance bonds and credit guarantees in the six months ended 30September 2005. There have been no changes to any legal or arbitration proceedings involving theGroup in the six months ended 30 September 2005 which are expected to have, orhave had, a material effect on the financial position or profitability of theGroup. Seasonality or cyclicality of interim operations The Group's financial results and cash flows have, historically, been subject toseasonal trends between the first and second half of the financial year. Traditionally, the Christmas period sees a higher volume of customerconnections, contributing to higher equipment and connection revenue in thesecond half of the financial year and increased acquisition costs. Ongoingairtime revenue also demonstrate signs of seasonality, with revenue generallylower during February, which is a shorter than average month, and revenue fromroaming charges higher during the summer months as a result of increased travelby customers. There is no assurance that these trends will continue in the future. Events after the balance sheet date On 28 October 2005, it was announced that Vodafone had agreed to acquire,through wholly owned subsidiaries, a 5.61% direct interest in BhartiTele-Ventures Limited ("BTVL"), a national mobile operator in India which alsoprovides fixed-line services, and a 4.39% indirect interest in BTVL throughBharti Enterprises Private Limited for total cash consideration of Rs.66.56billion (£820 million). As such, Vodafone has agreed to acquire, through whollyowned subsidiaries, an economic interest of 10% in BTVL. The acquisition ofshares in BTVL is expected to be completed by 18 November 2005, whilst theacquisition of shares in Bharti Enterprises Private Limited is conditional onreceipt of all necessary unconditional regulatory approvals and certaincustomary conditions and is expected to be completed by the end of the currentfinancial year. These acquisitions will deliver the Group material rights inBTVL, including the right to appoint two directors to the BTVL Board and,consequently, the Group expects to proportionately consolidate BTVL. On 31 October 2005, it was announced that the Group's 100% interest in VodafoneSweden is to be sold for €1,035 million (£704 million) to Telenor, a pan-Nordictelecommunications operator. Net cash proceeds, after assumption of net debt bythe purchaser, will be approximately €970 million (£660 million). The sale isexpected to be completed by 31 December 2005, subject to EU regulatory approval.Vodafone and Telenor have agreed the terms of a Partner Network Agreement inSweden, allowing Vodafone Sweden and Vodafone customers to continue to benefitfrom Vodafone's global brand, products and services in Sweden. On 4 November, Vodafone announced its intention to increase its effectiveshareholding in Vodacom, its joint venture in South Africa, to 50% through theacquisition of shares in VenFin Limited ("VenFin"), a South African companywhich currently holds 15% of the shares of Vodacom. Vodafone has since that dateentered into an agreement for the acquisition of the "B" shares in VenFin, whichis currently conditional upon, inter alia, regulatory approvals and thesuccessful acquisition of a specified proportion of the ordinary shares ofVenFin. Between 1 October 2005 and 14 November 2005, the Company repurchased 439,500,000of its own shares, to be held in treasury, under irrevocable purchase ordersplaced prior to 30 September 2005 for total consideration of £648 million. Changes in estimates There has been no material changes in estimates of amounts reported in the sixmonths ended 30 September 2005 or in the prior financial year. Issuances and repayment of debt See "Cash Flows and Funding" on pages 23 to 24 for details of issuances andrepayment of debt. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Vodafone