Vodafone 2009 Annual Report Download - page 28

Download and view the complete annual report

Please find page 28 of the 2009 Vodafone annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 148

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148

26 Vodafone Group Plc Annual Report 2009
Operating results continued
Net financing costs
2009 2008
£m £m
Investment income 795 714
Financing costs (2,419) (2,014)
Net financing costs (1,624) (1,300)
Analysed as:
Net financing costs before dividends
from investments (1,480) (823)
Potential interest charges arising on settlement
of outstanding tax issues(1) 81 (399)
Dividends from investments 110 72
Foreign exchange(2) 235 (7)
Changes in fair value of equity put rights and
similar arrangements(3) (570) (143)
(1,624) (1,300)
Notes:
(1) Includes release of a £317 million interest accrual relating to a favourable settlement of long
standing tax issues. See taxation below.
(2) Comprises foreign exchange differences reflected in the income statement in relation to certain
intercompany balances and the foreign exchange differences on financial instruments received
as consideration in the disposal of Vodafone Japan to SoftBank in April 2006.
(3) Includes the fair value movement in relation to put rights and similar arrangements held by
minority interest holders in certain of the Group’s subsidiaries. The valuation of these financial
liabilities is inherently unpredictable and changes in the fair value could have a material impact
on the future results and financial position of Vodafone. The amount for the year ended 31 March
2008 also includes a charge of £333 million representing the initial fair value of the put options
granted over the Essar Group’s interest in Vodafone Essar, which was recorded as an expense.
Further details of these options are provided on page 44.
Net financing costs before dividends from investments increased by 79.8% to
£1,480 million, primarily due to mark-to-market losses in the current year compared
with gains in the prior year and unfavourable exchange rate movements impacting
the translation into sterling. The interest charge resulting from the 28.2% increase
in average net debt was minimised due to changes in the currency mix of debt
and significantly lower interest rates for US dollar and euro denominated debt.
At 31 March 2009, the provision for potential interest charges arising on settlement
of outstanding tax issues was £1,635 million (31 March 2008: £1,577 million).
Taxation
The effective tax rate was 26.5% (2008: 24.9%). This rate was lower than the Group’s
weighted average statutory tax rate due to the structural benefit from the ongoing
enhancement to the Group’s internal capital structure and a benefit of £767 million
following the resolution of long standing tax issues related to the Group’s acquisition
and subsequent restructuring of the Mannesmann Group. This was offset by an
increase in the rate due to the impact of impairment losses for which no tax benefit
is recorded.
Earnings per share
Adjusted earnings per share increased by 37.4% to 17.17 pence for the year ended
31 March 2009, resulting primarily from movements in exchange rates and the
benefit from a favourable tax settlement, as discussed to the left. Excluding these
factors, adjusted earnings per share rose by around 3%. Basic earnings per share
decreased by 53.5% to 5.84 pence, including the impairment losses of £5.9 billion.
2009 2008
£m £m
Profit from continuing operations
attributable to equity shareholders 3,078 6,660
Adjustments:
Impairment losses 5,900 –
Other income and expense(1) – 28
Non-operating income and expense(2) 44 (254)
Investment income and financing costs(3) 335 150
6,279 (76)
Foreign exchange on tax balances (155) –
Tax on the above items (145) 44
Adjusted profit attributable to equity shareholders 9,057 6,628
Weighted average number of shares outstanding Million Million
Basic 52,737 53,019
Diluted 52,969 53,287
Notes:
(1) The amount for the 2008 financial year represents a pre-tax charge offsetting the tax benefit
arising on recognition of a pre-acquisition deferred tax asset.
(2) The amount for the 2009 financial year includes a £39 million adjustment in relation to the broad
based black economic empowerment transaction undertaken by Vodacom. The amount for the
2008 financial year includes £250 million representing the profit on disposal of the Group’s
5.60% direct investment in Bharti Airtel Limited (‘Bharti Airtel’).
(3) See notes 2 and 3 in net financing costs.