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BUSINESS NEWS: Impairment reviews knock Vodafone for biggest ever loss. By John Stokdyk

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30th May 2006
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Mobile phone operator Vodafone this week announced a £14.9 billion loss on revenues of £29.4 billion for the year to 31 March 2006.

The company was at pains to point out in its results statement that the loss - the biggest ever in UK corporate history - was primarily due to £23.5 billion in goodwill write-downs on companies it had acquired in recent years.

Vodafone has been preparing its accounts under International Financial Reporting Standards (IFRS) since April 2004.

IAS 36 'Impairment of Assets' requires entities to assess at each reporting date whether there are any indications that its assets might be impaired by measuring the asset's recoverable value - the higher estimate of either the value that can be derived from its use or what it might be worth if sold.

The goodwill impairments were expected, and flagged up by the company in an impairment statement issued to the Stock Exchange in February. The biggest dent in the company's balance sheet came from Germany, where it wrote off £19.4 billion in goodwill for Mannesman, which it bought for £100 billion at the peak of the market in 2000. Another £3.6 billion was written off the value of its Italian subsidiary. In both case, Vodafone said competitive pressures affected the long term prospects of these businesses. It also registered a £515 million write-down for its Swedish subsidiary, which netted £653 million when it was sold in January 2006.

Around 400 job losses are likely to take place at Vodafone's HQ in Newbury as it embarks on a new strategy, but in spite of the scale of the loss announced, chief executive Arun Sarin said the company had exceeded expectations in an increasingly competitive market. The company experienced 9% organic growth for its revenues from mobile calls and announced a 49% dividend increase to 6.07p per share.

Vodafone also said it would return another £3 billion to shareholders via buy-backs, bringin the total announced in the year to £19 billion.

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By lodemygi
29th May 2020 20:03

When it comes to the field of electronics and telecommunication then there are many famous companies. Vodafone is one of them and mostly it is famous in the India. The uk writers service discusses about them in a good way and explains that its services are very good and impressive.

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