Vodafone 2007 Annual Report Download - page 45

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Vodafone Group Plc Annual Report 2007 43
The Group’s share of the tax attributable to Verizon Wireless for the year
ended 31 March 2007 relates only to the corporate entities held by the
Verizon Wireless partnership. The tax attributable to the Group’s share of the
partnership’s pre-tax profit is included within the Group tax charge.
The Group’s other associated undertakings in EMAPA have been impacted
by intense competition and reduction in termination rates, similar to the
experiences of the Group’s controlled businesses in the Europe region,
which have had a negative impact on revenue. The Group disposed of its
associated undertakings in Belgium and Switzerland on 3 November 2006
and 20 December 2006, respectively, for a total cash consideration of
£3.1 billion. Results are included until the respective dates of the
announcement of disposal.
SFR, the Group’s associated undertaking in France, achieved an increase of
3.5% in its customer base, higher voice usage and strong growth in data
services. However, service revenue was stable in local currency as the
impact of these items was offset by a 5.7% decline in ARPU due to the
increase in competition and significant termination rate cuts imposed by
the regulator. The voice termination rate was cut by 24% to 9.5 eurocents
per minute with effect from 1 January 2006 and by a further 21% to
7.5 eurocents per minute with effect from 1 January 2007. France is the first
European Union country to impose regulation on SMS termination rates,
which were cut by 19% with effect from 1 January 2006 and a further 30%
with effect from mid September 2006 to 3 eurocents per SMS.
With effect from July 2007, SFR will be governed by the Europe regional
management team. Accordingly, for the 2008 financial year onwards SFR
will be reported as part of the Europe region.
Investments
China Mobile, in which the Group has a 3.27% stake and is accounted for as
an investment, increased its customer base by 21.3% in the period to
316.1 million. Dividends of £57 million were received by the Group in the
2007 financial year.
Common functions
2007 2006 Change
£m £m %
Revenue 168 145 15.9
Other direct costs (66) ––
Operating expenses 206 130 58.5
Depreciation and amortisation (181) (72) 151.4
Share of result in associated undertakings 18 (87.5)
Adjusted operating profit 128 211 (39.3)
Common functions represent the results of Partner Markets and the net
result of central Group costs less charges to the Group’s operations.
Adjusted operating profit has been impacted in the 2007 financial year by
restructuring costs incurred in the central functions, principally marketing
and technology, which amounted to £36 million.
PerformancePerformance