IFRS boosts Vodafone profits by £6.8bn
Switching to international financial reporting standards would provide a £6.8bn profits boost to UK mobile phone giant Vodafone, according to figures released by the company today.
Link: Vodafone commits to IAS39
Under the new rules, Vodafone is no longer required to amortise goodwill. This would have provided a £7.3bn increase in attributable profits had its accounts for the six months to 30 September 2004 been prepared under IFRS instead of UK GAAP. This figure would be slightly offset by a £0.3bn reduction in non-recurring tax income and a net charge of £0.2bn in relation to other adjustments.
In its outlook for the year ending 31 March 2005, Vodafone said that many of its key performance indicators would remain broadly similar. It did, however, expect a small drop in cashflow resulting from presentational changes surrounding the proportionate consolidation of joint ventures.
The group announced that it would be using the full version of the controversial financial instruments standard IAS39, in accordance with recommendations from the Accounting Standards Board, rather then the European Commission’s carved-out version.
It would also not be taking advantage of the exemptions granted in IFRS1 relating to IAS32 and 39, that allowed companies to avoid applying the standards in comparative accounts.
Vodafone did acknowledge that it would not be applying IFRS3 retrospectively to business combinations that took place before IFRS came into force.