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NOTES TO THE INTERIM RESULTS
FOR THE SIX MONTHS TO 30 SEPTEMBER 2004
9 Summary of differences between UK and US GAAP
The interim results have been prepared in accordance with UK Generally Accepted Accounting Principles (“UK GAAP”),
which differ in certain significant respects from US Generally Accepted Accounting Principles (“US GAAP”). A description
of the relevant accounting principles which differ materially has been provided within Vodafone Group Plc’s Annual Report
for the year ended 31 March 2004. The effects of these differing accounting principles are as follows:
31
Six months to
30 September
2004
£m
Six months to
30 September
2003
£m
Year ended
31 March
2004
£m
Revenue from continuing operations in accordance with UK GAAP
Items (decreasing)/increasing revenue:
16,796 16,081 32,741
Non-consolidated entity (2,678) (2,612) (5,276)
Connection revenue 617 (536) 188
Revenue from continuing operations in accordance with US GAAP 14,735 12,933 27,653
Net loss in accordance with UK GAAP
Items decreasing/(increasing) net loss:
(3,195) (4,254) (9,015)
Investments accounted for under the equity method 662 789 1,354
Connection revenue and costs 9 12 29
Goodwill and other intangible assets (3,116) (3,116) (6,520)
Licence fee amortisation (193) (3) (76)
Exceptional items – (253) (351)
Capitalised interest (32) 223 406
Income taxes 2,612 3,426 6,183
Other (47) 15 (137)
Net loss in accordance with US GAAP (3,300) (3,161) (8,127)
US GAAP basic and diluted loss per share (4.93)p (4.64)p (11.93)p
As at
30 September
2004
£m
As at
30 September
2003
as restated
£m
As at
31 March
2004
£m
Shareholders’ equity in accordance with UK GAAP
Items increasing/(decreasing) shareholders’ equity:
107,744 124,583 111,924
Investments accounted for under the equity method 6,336 5,581 5,566
Connection revenue and costs (24) (72) (55)
Goodwill and other intangible assets 44,162 49,156 45,320
Licence fee amortisation (306) (43) (109)
Capitalised interest 1,584 1,296 1,615
Income taxes (39,250) (42,988) (40,074)
Proposed dividends 1,263 650 728
Other 137 120 114
Shareholders’ equity in accordance with US GAAP 121,646 138,283 125,029
On 29 September 2004, the Staff of the United States Securities and Exchange Commission (“SEC”) announced new
guidance in the interpretation of US GAAP in relation to accounting for intangible assets.
Historically, under US GAAP, Vodafone has assigned to mobile licences the residual purchase price in business
combinations in excess of the fair values of all assets and liabilities other than mobile licences and goodwill. This
approach has been on the basis that mobile licences were indistinguishable from goodwill. The adoption of the new SEC
guidance will now require Vodafone to distinguish between mobile licences and goodwill. However, the new guidance
does not permit the amount historically recorded as mobile licences to be subsequently reallocated between mobile
licences and goodwill.
The adoption of this new guidance is likely to result in a reduction in the carrying value of Vodafone’s equity accounted
investment in Verizon Wireless under US GAAP. Vodafone is currently assessing the impact of this change in
interpretation. Any resulting reduction in the carrying value of Vodafone’s investment in Verizon Wireless under US GAAP
would not be as a result of a change in Vodafone’s view of the financial prospects of Verizon Wireless.