Vodafone 2000 Annual Report Download - page 12

Vodafone AirTouch Plc Annual Report & Accounts for the year ended 31 March 2000
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Profit and loss account
The statutory consolidated profit and loss account presented on
page 28, and the accompanying notes, have been prepared on the
basis required by accounting standards and include the results of
AirTouch Communications, Inc. from 30 June 1999, the date the
merger completed.
The consolidated profit and loss account does not include any
adjustments arising from the creation, on 3 April 2000, of Verizon
Wireless under a joint venture arrangement with Bell Atlantic, or the
acquisition of Mannesmann AG, for which European Commission
approval was received on 12 April 2000.
Group turnover
Group turnover, including turnover from acquisitions completed in the
year, increased from £3,360m last year to £7,873m.
Turnover from acquisitions, relating primarily to the consolidation of the
former AirTouch businesses for the nine month period since merger
completion, represented £3,375m of this increase. Turnover from
continuing operations increased by 34% from £3,360m to £4,498m,
reflecting strong turnover growth in the Group’s operations in the EMEA
and UK regions.
Total Group operating profit
Total Group operating profit, before goodwill and exceptional
reorganisation costs, and including the Group’s share of the operating
profit of joint ventures and associated undertakings, was £2,538m.
This represented an increase of £1,566m compared with total Group
operating profit of £972m last year.
After goodwill amortisation charges of £1,712m, and exceptional
reorganisation costs of £30m incurred in the US following the merger
with AirTouch, total Group operating profit fell from £963m to £796m.
Profit on ordinary activities before taxation increased to £1,349m from
£935m, primarily due to the profit on the sale of E-Plus Mobilfunk
GmbH, organic growth from continuing operations and contributions
arising from the acquired AirTouch businesses, offset by goodwill
amortisation.
A more detailed commentary on the results for the year is included in
the discussion of the pro forma profit and loss accounts.
Profit on disposal of fixed asset investments
The profit on disposal of fixed asset investments of £954m primarily
comprises a profit of £939m on the disposal of the Group’s 17.24%
shareholding in E-Plus. This disposal was a condition to the European
Commission’s approval of the merger with AirTouch. The remaining
profit on disposal includes the sale of the Group’s 20% interest in a
UK service provider business, Martin Dawes Telecommunications
Limited, and the disposal of the Group’s 50% shareholding in Comfone
AG in Switzerland.
Interest
Net interest costs in respect of the Group’s net borrowings increased by
£257m to £333m during the year, before charging £17m of exceptional
finance costs incurred in restructuring the Group’s borrowing facilities
as a result of the Mannesmann acquisition. This increase reflects a
£5,135m increase in net borrowings during the year, mainly due to the
additional debt arising from the merger with AirTouch.
Taxation
The effective rate of taxation for the year, before goodwill and disposals,
increased to 32.5% from 28.7% in the year ended 31 March 1999.
The 3.8% increase in the effective tax rate is primarily the result of
the higher tax rates attributable to the former AirTouch operations,
whose results have been included for the nine month period following
merger completion.
Employees
The Group employed approximately 40,700 people at 31 March 2000,
compared with 13,300 at last year end. This increase includes
approximately 20,700 employees who joined the Group following the
merger with AirTouch and the completion of other acquisitions in the
year. 69% of the Group’s employees work outside the United Kingdom.
Pro forma profit and loss account
Due to the significance of the merger with AirTouch on the results,
unaudited pro forma consolidated profit and loss accounts have been
presented for the years ended 31 March 2000 and 31 March 1999.
Pro forma information has been calculated on the basis that the
merger took place on 1 April in each year, as this provides a direct
comparison of operating performance.
The pro forma information is presented on pages 60 to 62.
Further explanation regarding the basis of preparation of the
unaudited pro forma profit and loss accounts is included on
page 60.
Pro forma Group turnover
Pro forma Group turnover for the financial year increased by
£1,869m to £8,887m, representing pro forma growth of 27%.
Pro forma turnover in EMEA increased by 26% to £2,030m, with
strong turnover growth across the region as pro forma customers in
controlled businesses increased by 52% during the year. The growth in
prepaid services has been an important feature of this result, with over
54% of the region’s proportionate customers now being connected to
prepaid products.
Turnover in the UK increased by 39% to £2,901m, reflecting strong
PAYT customer growth, the success of data services and increased
minutes’ usage, offset by the impact of tariff reductions.
Customer numbers in the Group’s subsidiaries in the US, Australia and
New Zealand increased by 26% to almost 12,000,000 customers at
31 March 2000, resulting in a £643m increase in pro forma turnover
for the United States & Asia Pacific region to £3,956m.
Total pro forma proportionate turnover, which reflects the Group’s
ownership interests in its worldwide operations, increased during the
year by 37% to £12,569m. The Group’s total proportionate customers
increased to 39,139,000 at 31 March 2000, representing pro forma
growth of 54%. The basis of preparation of proportionate customer and
financial information is set out on page 62.
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