Vodafone 2003 Annual Report Download - page 42

Vodafone Group Plc Annual Report & Accounts and Form 20-F 2003
40
OPERATING AND FINANCIAL REVIEW AND PROSPECTS Continued
impairment charges totalling £1,250 million were necessary in respect of non-
controlled mobile and non-mobile businesses. This brought the total charge for
the 2002 financial year to £6,000 million, as detailed below.
Total charge for year ended
31 March 2002
Company £m
Arcor 4,000
Japan Telecom 400
Cegetel 250
Iusacell 450
China Mobile 900
6,000
The charge in respect of China Mobile was included within non-operating
exceptional items.
Loss on ordinary activities before interest
During the year ended 31 March 2002, the Group reported a loss on ordinary
activities before interest of £12,694 million, compared with a loss for the year
ended 31 March 2001 of £6,909 million. The principal items that resulted in the
increased loss are: the increase in exceptional operating items and exceptional
non-operating items, which increased from £320 million for the year ended
31 March 2001 to £5,408 million for the year ended 31 March 2002, and a
credit of £80 million for the year ended 31 March 2001 to a charge of £860
million for the year ended 31 March 2002, respectively; the increased charge in
respect of goodwill amortisation from £11,873 million for the year ended
31 March 2001 to £13,470 million for the year ended 31 March 2002; partly
offset by improved operating profit, before goodwill amortisation and exceptional
items, which increased from £5,204 million for the year ended 31 March 2001
to £7,044 million for the year ended 31 March 2002.
Exceptional non-operating items
Exceptional non-operating items of £860 million for the year ended 31 March
2002 comprised 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.
The exceptional non-operating items for the 2001 financial year of £80 million
profit comprised of predominantly a profit on termination of a hedging instrument
of £261 million offset by an impairment charge of £193 million in relation to the
Group’s interests in Globalstar and Shinsegi.
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
£1,177 million for the year ended 31 March 2001 to £845 million for the year
ended 31 March 2002. Net interest costs in respect of the Group’s net
borrowings decreased from £850 million in the year to 31 March 2001 to
£503 million in the year ended 31 March 2002, reflecting the reduction in
average net debt levels, primarily due to proceeds received from the disposal of
assets held for resale during the second half of the 2001 financial year. The
Group’s share of the net interest expense of joint ventures and associated
undertakings increased from £327 million for the year ended 31 March 2001 to
£342 million for the year ended 31 March 2002 due primarily to the inclusion of
interest costs from the Group’s then newly acquired interest in Iusacell.
Taxation
The effective rate of taxation for the year ended 31 March 2002 was (15.8)%
(2002: (17.6)%) and benefited from a one-off German tax refund arising from
the distribution of retained earnings.
Basic loss per share
Basic loss per share, after goodwill amortisation and exceptional items, increased
from a loss of 16.09p for the year ended 31 March 2001 to a loss per share of
23.77p for the year ended 31 March 2002. The loss per share of 23.77p
includes an increase in the charge for the amortisation of goodwill from 19.32p
per share for the year ended 31 March 2001, to a charge of 19.82p per share
for the year ended 31 March 2002, and an increase in the charge for
exceptional items from 0.31p per share for the year ended 31 March 2001 to
9.10p per share for the year ended 31 March 2002.
Balance sheet
Total fixed assets increased from £153,462 million as at 31 March 2002 to
£154,689 million at 31 March 2003.
Other fixed asset investments at 31 March 2003 totalled £1,205 million
(2002: £1,407 million), and include the Group’s equity interest in China Mobile.
Tangible fixed assets increased from £18,541 million at 31 March 2002 to
£19,574 million at 31 March 2003, of which network infrastructure assets of
£16,243 million (2002: £14,744 million) represented approximately 83%
(2002: 80%) of the total. Additions to network infrastructure in the year totalled
£3,363 million. The fair value of tangible fixed assets acquired as part of
acquisitions of businesses, primarily Vizzavi, amounted to £79 million.
Current asset investments with an aggregate value of £291 million (2002:
£1,792 million) include liquid investments with a value of £291 million (2002:
£1,789 million).
Equity shareholders’ funds
Total equity shareholders’ funds decreased from £130,573 million at 31 March
2002 to £128,671 million at 31 March 2003. The decrease comprises the loss
for the year of £9,819 million (which includes goodwill amortisation of £14,056
million and exceptional items, net of tax and minority interests, of £404 million),
dividends of £1,154 million, offset by net currency translation gains of £9,039
million, the issue of new share capital of £31 million and £1 million of other
movements.
Dividends
The table on the following page sets out the amounts of interim, final and total
cash dividends paid and proposed in respect of each financial year indicated
both in pounds sterling per ordinary share and translated, solely for convenience,
into US dollars per ordinary share at the Noon Buying Rate on each of the
respective payment dates for such interim and final dividends, in both cases,
where relevant, net of the associated advance corporation tax.