Vodafone in write-down summit

By NICK GOODWAY FOR MAILONLINE
Updated:

 

VODAFONE'S board was today expected to meet its auditors, Deloitte & Touche, to discuss the scale of write-downs it will make when it reveals its full-year figures next Tuesday. Some analysts believe the mobile phones giant could write-down up to £25bn, mainly on the value of Mannesmann, the German industrial combine it bought for £113bn in 2000.

Others believe Vodafone will make only relatively small write-offs on the value of some of its quoted minority holdings. It took some £4.5bn in such write-downs in its half-year results. Its recent prediction of slower growth in Europe makes it less rather than more likely that it will have to write-down asset values.

As with any company, Vodafone and its auditors have to assess its businesses on the basis of future cashflows and, if these are significantly lower than previously expected, apply an impairment charge on the value of the asset.

This is not a cash item but can affect the strength of the balance sheet and therefore Vodafone's ability to borrow. A final decision is expected to be taken at a full Vodafone board meeting which signs off the final results on Monday.

Vodafone shares, which hit a low of 95 1/4p early this month, fell 3/4p to 108p.

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