Vodafone Restates Results in Change to Accounting for Ventures
Vodafone Group Plc (VOD) is restating its results going back two fiscal years as new international accounting rules for joint ventures cut historical revenue and earnings.
Revenue for the year ended March 2012 was revised to 38.8 billion pounds ($58.4 billion) from 46.4 billion pounds, the Newbury, England-based company said today in a statement. Earnings before interest, taxes, depreciation and amortization were reduced to 11.6 billion pounds from 14.5 billion pounds.
Rather than taking a proportion of revenues and earnings for jointly owned businesses in Italy, Australia, India and Fiji, and telecommunications-tower builder and operator Indus Towers Ltd., and accounting for them in its income statement, Vodafone will only take its share of the net income and put it into the “associates” line, Chief Financial Officer Andy Halford said in November. That method is similar to the way the company accounts for its 45 percent stake in Verizon Wireless, Vodafone’s U.S. mobile venture with Verizon Communications Inc.
Free cash flow for the year ended March 2012 was reduced to 5.7 billion pounds from 6.1 billion pounds. Adjusted earnings per share and profit will remain the same under the new rules for joint ventures.
The company is also revising how it accounts for employee pension plans. Vodafone will replace the expected return on the plans’ assets and interest costs, which appear in the consolidated income statement for defined benefit pension plans, with a net interest cost. That will change the way the charge is calculated and impact the amounts recorded in the company’s income statement.
Vodafone will restate financial information for the 12 months ending March 2013 during its results announcement in May, the company said.
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