Finance analysis of the performance of Vodafone Group Plc.
Introduction
Current Position
Chief Executive Comments
Ratio Analysis
Profitability
Liquidity and Control of Working Capital
Return on Capital
Investors’ Ratios
Sources of long-term finance
Gearing
Shareholders wealth
Dividend Policy
Mergers and Acquisitions
Efficient Market – are Vodafone’s share priced fairly
Future prospects
Introduction
This project sets out to give an overview of the current financial position of Vodafone Group plc and its prospects. ...
Background
Vodafone made the UK’s first mobile call at a few minutes past midnight on the 1st January 1985. Today Vodafone Group plc is the world’s largest mobile operator by revenues, and the only one with a claim to be global. ... Sir Christopher Gent has been CEO of Vodafone for over six years. ... Vodafone’s cellular footprint has also grown to more than 30 directly-owned, associate and partnership cellular networks. ... Vodafone had to raise their bid 2 or 3 times before their offer was accepted and in the end had to pay an astounding $12,400 in both New Shares and cash for each subscriber it gained. ... There have also been other acquisitions of mobile phone companies (see acquisitions section) and the overall result has been to make Vodafone the 2nd largest company on the FTSE 100 and the 11th largest in the world. ... Vodafone’s investment in these licences in the UK alone amounted to £[ bn], which has been a particularly heavy burden as, despite having to be purchased several years earlier, the licences will not generate any revenue for the company until the end of 2004. ...
Vodafone is the market leader in the UK. ...
Financial Performance
In his latest annual report the Chief Executive of Vodafone, Sir Christopher Gent commented:
"These figures demonstrate continued strong operational performance and are in line with or slightly better than our expectations when we provided our outlook for the financial year. ... We are also encouraged with the progress of Vodafone live! ... This report aims to test the company’s financial position against a wider range of metrics based on data obtained from Bloomberg, Vodafone and Bized. ... This reflects the rapid build-up of debt levels and may also take account of the recent sales of assets that Vodafone has undertaken following its major acquisitions. ... This has left Vodafone in a weak current financial position as its creditors are large but its cash and short-term assets balances are small by comparison. The potential weakness may be even greater since, unlike some of its competitors, Vodafone has not so far chosen to write down the value of its 3G licences. ... As the figures show Vodafone has fluctuated over and below 1 in the last three years and at present the value of its assets amount only to 60 % of its liabilities. ... However shareholder and supplier confidence in the potential of future cash flows plus Vodafone’s apparent ability to service its debt allows the company to continue to trade. ... 19
These figures reflect the extent to which Vodafone’s assets have grown [with the acquisition of the 3G licences? ... 20 times
These figures indicate that Vodafone has an improving ration of turnover to fixed assets which shows that it is using its fixed assets with improving efficiency. ... Vodafone Stock Turnover (Stock / (Cost of Sales/365))
2001 13. ... However, the value of the business is seen in its potential future cash flows, which should emerge from all the acquisitions Vodafone has made over the last several years. ... Money is being kept in the business to service debt and the acquisitions in keeping with the overall financial position of Vodafone. ...
Vodafone has borrowed heavily to finance its expansion and acquisitions.
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