Vodafone 2003 Annual Report Download - page 38

Vodafone Group Plc Annual Report & Accounts and Form 20-F 2003
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OPERATING AND FINANCIAL REVIEW AND PROSPECTS Continued
of a different set of underlying assumptions and more frequent updates of asset
valuations. If the Group had adopted FRS 17 at 31 March 2003, net pension
liabilities, net of deferred tax, would be £257 million (2002: £228 million),
representing 0.2% of the Group’s net assets (2002: 0.2%).
Loss on ordinary activities before interest
During the year ended 31 March 2003, the Group reported a loss on ordinary
activities before interest of £5,456 million, compared with a loss for the year
ended 31 March 2002 of £12,694 million. The principal items that resulted in
the decreased loss are improved total Group operating profit, before goodwill
amortisation and exceptional items, which increased from £7,044 million for the
year ended 31 March 2002 to £9,181 million for the year ended 31 March 2003
and the decrease in exceptional operating items and exceptional non-operating
items, which decreased from £5,408 million for the year ended 31 March 2002
to £576 million for the year ended 31 March 2003 and £860 million for the year
ended 31 March 2002 to £5 million for the year ended 31 March 2003,
respectively, which were partially offset by the increased charge in respect of
goodwill amortisation from £13,470 million for the year ended 31 March 2002 to
£14,056 million for the year ended 31 March 2003.
Exceptional non-operating items
Net exceptional non-operating items amounted to £5 million for the year ended
31 March 2003. Exceptional non-operating items during the 2003 financial year
principally include impairment charges of £300 million in respect of the Group’s
interest in China Mobile and £25 million in respect of certain investments held by
Japan Telecom, offset by a profit on disposal of fixed asset investments of £255
million, principally relating to the disposal of the Group’s interest in Bergemann
GmbH, through which the Group’s 8.2% stake in Ruhrgas AG was held, and £55
million representing the Group’s share of the profit on disposal for cash of AOL
Europe shares by Cegetel.
The 2002 financial year exceptional non-operating costs of £860 million
principally comprise an impairment charge of £900 million in respect of the
Group’s investment in China Mobile, partly offset by an aggregate profit of £60
million on the disposal of fixed assets, businesses and fixed asset investments,
principally relating to the reduction in the Group’s interest in Vodafone Greece
from 55% to 51.9%, the disposal of the Group’s interest in the Korean mobile
operator, Shinsegi, offset by a net loss on disposal of certain other operations.
Net interest payable
Total Group net interest payable, including the Group’s share of the net interest
expense of joint ventures and associated undertakings, decreased from
£845 million for the year ended 31 March 2002 to £752 million for the year
ended 31 March 2003. Net interest costs in respect of the Group’s net
borrowings decreased from £503 million for the year to 31 March 2002 to
£457 million for the year ended 31 March 2003, reflecting the reduction in
average net debt levels. The Group’s share of the net interest expense of joint
ventures and associated undertakings decreased from £342 million for the year
ended 31 March 2002 to £295 million for the year ended 31 March 2003 partly
as a result of the consolidation of the Group’s former associated undertakings,
Japan Telecom and J-Phone Vodafone, from October 2001, and of Vizzavi from
29 August 2002, and reduced levels of indebtedness in SFR.
Taxation
The effective rate of taxation for the year ended 31 March 2003 is (47.6)%
(2002: (15.8)%). This rate includes the impact of goodwill amortisation and
exceptional items, which may not be deductible for tax purposes. The tax rate
has benefited from the reorganisation of the Group’s Italian operations and a
one-off benefit in Germany arising from the reorganisation of the German group
of companies following the acquisition of the remaining minorities in the year
ended 31 March 2003. In the prior year, the effective tax rate benefited from a
one-off tax credit received in Germany arising from the distribution of earnings
and also the Visco Law incentive scheme in Italy. The Visco Law has
subsequently been replaced by a less favourable tax regime.
Basic loss per share
Basic loss per share, after goodwill amortisation and exceptional items,
decreased from a loss of 23.77p for the year ended 31 March 2002 to a loss
per share of 14.41p for the year ended 31 March 2003. The loss per share of
14.41p includes an increase in the charge for the amortisation of goodwill from
19.82p per share for the year ended 31 March 2002, to a charge of 20.62p per
share for the year ended 31 March 2003, offset by a decrease in the charge for
exceptional items from 9.10p per share for the year ended 31 March 2002 to
0.60p per share for the year ended 31 March 2003.
2002 financial year compared to 2001 financial
year
Turnover
The Group’s turnover increased by £7,841 million from £15,004 million for the
year ended 31 March 2001 to £22,845 million for the year ended
31 March 2002, reflecting a combination of growth in turnover from existing
operations, which increased £1,610 million, and a further £6,231 million in
respect of businesses acquired during the 2002 financial year. Of the businesses
acquired during the 2002 financial year, J-Phone Vodafone, Japan Telecom and
Vodafone Ireland contributed £3,323 million, £1,105 million and £477 million,
respectively. Vodafone Spain, which was acquired in the second half of the 2001
financial year, contributed the remaining £1,326 million.
Mobile telecommunications
Year ended 31 March Increase/
2002 2001 (decrease)
£m £m %
Northern Europe 5,432 4,511 20
Central Europe 4,177 4,031 4
Southern Europe 6,743 4,479 51
Americas 12 9 33
Asia Pacific 4,072 713 471
Middle East and Africa 306 308 (1)
20,742 14,051 48