Asset write-down scuppers Vodafone's profits
Downward revision of assets contributes to Vodafone posting a £3.3bn loss, despite £4.8bn underlying profits
Mobile phone giant Vodafone has
reported a multibillion-pound write-down of its assets.
The group published the news in its interim report released today, which
showed that a £4.8bn pre-tax profit had been decimated by an £8.1bn impairment
charge due to a number of factors including the asset value reduction.
Vodafone said: ‘The carrying value of goodwill of the Group’s operations in
Germany and Italy, with each representing a reportable segment, has been
impaired following a test for impairment triggered by an increase in long term
interest rates and
increased price competition in the German market along with continued regulatory
pressures.’
Despite the downward revision and increased pitch competition in Germany and
Italy, overall revenues increased by 4% to £15.6bn, compared with the same
period last year.
Vodafone would not rule out further write downs in the future: ‘The carrying
values of the Group’s operations in Germany and Italy equal their respective
ammounts at 30 September 2006 and consequently, any adverse change in a key
assumption may cause a further impairment loss to be recognised,’ it warned.
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