Vodafone 2014 Annual Report Download - page 203

In the discussion of our reported nancial position, operating results and cash ows, information is presented to provide readers with additional
nancial information that is regularly reviewed by management. However, this additional information presented is not uniformly dened by all
companies including those in the Group’s industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other
companies. Additionally, certain information presented is derived from amounts calculated in accordance with IFRS but is not itself an expressly
permitted GAAP measure. Such non-GAAP measures should not be viewed in isolation or as an alternative to the equivalent GAAP measure.
Management basis
The discussion of our operating results and cash ows in the strategic report is shown on a management basis, consistent with how the business
is managed, operated and reviewed by management, and includes the results of the Group’s joint ventures, Vodafone Italy, Vodafone Hutchison
Australia, Vodafone Fiji and Indus Towers, on a proportionate basis. This differs to the “Consolidated nancial statements” on pages 96 to 170 which
are presented on a statutory basis, and includes the results of the Group’s joint ventures using the equity accounting basis.
We believe that the management basis metrics, which are not intended to be a substitute for, or superior to, our reported metrics, provide useful
and necessary information to investors and other interested parties as they are used internally for performance analysis and resource allocation
purposes of the operations where we have control or joint control. A reconciliation of the key operating metrics on a management basis to the
statutory results are summarised below and provided in detail in note 2 “Segmental analysis” to the consolidated nancial statements.
2014 Restated 2013
Management
basis
Presentation
adjustments
Discontinued
operations
Statutory
basis
Management
basis
Presentation
adjustments
Discontinued
operations
Statutory
basis
£m £m £m £m £m £m £m £m
Revenue 43,616 (5,270) –38,346 44,445 (6,404) –38,041
EBITDA 12,831 (1,747) –11,084 13,566 (2,100) –11,466
Depreciation and amortisation (8,181) 1,083 –(7,098) (7,543) 1,041 –(6,502)
Share of results in associates and joint ventures 3,224 269 (3,169) 324 6,554 572 (6,500) 626
Adjusted operating prot 7,874 (395) (3,169) 4,310 12,577 (487) (6,500) 5,590
Impairment loss (6,600) (7,700)
Restructuring costs (355) (311)
Amortisation of acquired customer base and
brand intangible assets (551) (249)
Other income and expense (717) 468
Operating loss (3,913) (2,202)
Non-operating income and expense (149) 10
Investment income and nancing costs (1,208) (1,291)
Income tax credit/(expense) 16,582 (476)
Prot for the nancial year from discontinued
activities 48,108 4,616
Prot for the nancial year 59,420 657
EBITDA
EBITDA is operating prot excluding share in results of associates, depreciation and amortisation, gains/losses on the disposal of xed assets,
impairment losses, restructuring costs, other operating income and expense and signicant items that are not considered by management
to be reective of the underlying performance of the Group. We use EBITDA, in conjunction with other GAAP and non-GAAP nancial measures
such as adjusted operating prot, operating prot and net prot, to assess our operating performance. We believe that EBITDA is an operating
performance measure, not a liquidity measure, as it includes non-cash changes in working capital and is reviewed by the Chief Executive to assess
internal performance in conjunction with EBITDA margin, which is an alternative sales margin gure. We believe it is both useful and necessary
to report EBITDA as a performance measure as it enhances the comparability of prot across segments.
Because EBITDA does not take into account certain items that affect operations and performance, EBITDA has inherent limitations as a performance
measure. To compensate for these limitations, we analyse EBITDA in conjunction with other GAAP and non-GAAP operating performance measures.
EBITDA should not be considered in isolation or as a substitute for a GAAP measure of operating performance. A reconciliation of EBITDA to the
closest equivalent GAAP measure, operating prot, is provided in above and in note 2 “Segmental analysis” to the consolidated nancial statements.
Group adjusted operating prot and adjusted earnings per share
Group adjusted operating prot excludes non-operating income of associates, impairment losses, restructuring costs, amortisation of customer
bases and brand intangible assets, other operating income and expense and other signicant one-off items. Adjusted earnings per share also
excludes certain foreign exchange rate differences, together with related tax effects. We believe that it is both useful and necessary to report these
measures for the following reasons:
a these measures are used for internal performance reporting;
a these measures are used in setting director and management remuneration; and
a they are useful in connection with discussion with the investment analyst community and debt rating agencies.
A reconciliation of adjusted operating prot to the respective closest equivalent GAAP measure, operating prot, is provided above and in note 2
“Segmental analysis” to the consolidated nancial statements. A reconciliation of adjusted earnings per share to basic earnings per share, is provided
in the “Operating Review” on page 45.
201Overview Strategy review Performance Governance Financials Additional information
Non-GAAP information