Vodafone 2005 Annual Report Download - page 47

Performance |45
Balance Sheet
Assets
Intangible fixed assets decreased from £93,622 million at 31 March 2004 to £83,464
million at 31 March 2005, as a result of £12,929 million of goodwill amortisation
charges and £412 million of other amortisation charges and an impairment charge of
£315 million to the profit and loss account in the 2005 financial year, partially offset by
£1,651 million of exchange movements and £1,757 million of goodwill arising on
acquisitions made in the 2005 financial year. See “Business Overview – History and
Development of the Company – Acquisitions of businesses”and note 25 to the
Consolidated Financial Statements.
Tangible fixed assets increased from £18,083 million at 31 March 2004 to
£18,398 million at 31 March 2005 as a result of £5,066 million of additions during the
year, offset by £4,528 million of depreciation charges in the 2005 financial year.
Network infrastructure assets of £14,620 million (2004: £14,823 million) represented
approximately 79% (2004: 82%) of the total tangible fixed asset base at 31 March
2005. Additions to network infrastructure in the year totalled £3,250 million. The
capital expenditure on 3G network infrastructure is discussed in “Business Overview –
Local operations – Licences and network infrastructure”.
The Group’s investments in associated undertakings reduced from £21,226 million at
31 March 2004 to £19,398 million at 31 March 2005, mainly as result of
£1,771 million of goodwill amortisation charges and £214 million of exchange
movements in the 2005 financial year.
Other fixed asset investments at 31 March 2005 totalled £852 million (2004: £1,049
million) and include the Group’s equity interest in China Mobile.
Current assets decreased to £11,794 million from £13,149 million, principally as a
result of a reduction in cash and liquid investments, partially offset by an increase in
tax assets.
Liabilities
The debt position of the Group is discussed in “Liquidity and Capital Resources”. Other
liabilities, including provisions for liabilities and charges, increased by 10% to
£19,761 million, mainly as a result of an increase in tax creditors and provisions, and
an increase in the proposed dividend.
Equity shareholders’ funds
Total equity shareholders’ funds decreased from £111,924 million at 31 March 2004
to £99,317 million at 31 March 2005. The decrease comprises the loss for the year of
£7,540 million (which includes goodwill amortisation of £14,700 million), equity
dividends of £2,658 million, purchases of the Company’s own shares (held in treasury)
of £3,997 million and £15 million of other movements, partially offset by net currency
translation gains of £1,467 million and the issue of new share capital of £136 million.
Equity Dividends
The table below sets out the amounts of interim, final and total cash dividends paid or,
in the case of the final dividend for the 2005 financial year, proposed in respect of
each financial year indicated both in pence per ordinary share and translated, solely for
convenience, into cents per ordinary share at the Noon Buying Rate on each of the
respective payment dates for such interim and final dividends.
Pence per ordinary share Cents per ordinary share
Year ended 31 March Interim Final Total Interim Final Total
2001 0.6880 0.7140 1.4020 0.9969 1.0191 2.0160
2002 0.7224 0.7497 1.4721 1.0241 1.1422 2.1663
2003 0.7946 0.8983 1.6929 1.2939 1.4445 2.7384
2004 0.9535 1.0780 2.0315 1.7601 1.9899 3.7500
2005 1.91 2.16(1) 4.07 3.60 4.08(1) 7.68
Notes:
(1) The final dividend for the year was proposed on 24 May 2005 and is payable on 5 August 2005 to holders of record as of
3 June 2005. This dividend has been translated at the Noon Buying Rate at 31 March 2005 for ADS holders, but will be
payable in US dollars under the terms of the terms of the deposit agreement.
The Company has historically paid dividends semi-annually, with a regular interim
dividend in respect of the first six months of the financial year payable in February and
a final dividend payable in August. The Board of directors expect that the Company will
continue to pay dividends semi-annually.
In considering the level of dividends, the Board of directors takes account of the outlook
for earnings growth, operating cash flow generation, capital expenditure requirements,
acquisitions and divestments, together with the amount of debt and share purchases.
In November 2004, the directors declared an interim dividend of 1.91 pence per share,
representing an approximate 100% increase over last year’s interim dividend, with the
expectation that the final dividend would also be increased by 100%. Consistent with
this, the directors have recommended a final dividend of 2.16 pence per share,
representing an approximate 100% increase over last year’s final dividend, and
bringing the total dividend per share to 4.07 pence, a doubling of last year’s total.
Following this rebasing of the dividend, the Board of directors expects future increases
in dividends per share to reflect underlying growth in earnings.
Cash dividends, if any, will be paid by the Company in respect of ordinary shares in
pounds sterling or, to holders of ordinary shares with a registered address in a country
which has adopted the euro as its national currency, in euro, unless shareholders wish
to elect to continue to receive dividends in sterling, are participating in the Company’s
Dividend Reinvestment Plan, or have mandated their dividend payment to be paid
directly into a bank or building society account in the United Kingdom. In accordance
with the Company’s Articles of Association, the sterling: euro exchange rate will be
determined by the Company shortly before the payment date.
The Company will pay the ADS Depositary, The Bank of New York, its dividend in US
dollars. The sterling: US dollar exchange rate for this purpose will be determined by the
Company shortly before the payment date. Cash dividends to ADS holders will be paid
by the ADS Depositary in US dollars.
US GAAP Reconciliation
The principal differences between US GAAP and UK GAAP, as they relate to the
Consolidated Financial Statements, are the use of equity accounting under US GAAP for
a subsidiary undertaking, Vodafone Italy, which is fully consolidated under UK GAAP,
methods of accounting for acquisitions completed before 31 March 1998, the
determination of the fair value of the share consideration as a component of the
purchase price of acquisitions, the accounting for goodwill and intangible assets, the
accounting for income taxes, the capitalisation of interest, the timing of recognition of
connection revenue and expenses, share options expense and the treatment of
dividends declared or proposed after the period end by the Board of directors.