Telecommunication is a word derived from Greek and means conversation through an object to a distance. This industry is composed of all telephone companies and the providers of internet services. The history of telecommunication industry can be traced to have begun by the use of drums and smoke signals in Africa, Asia, and America (Hardeman, 2008). Cyrus the great who was a renowned Persian emperor developed the first postal system so as to communicate with his vast kingdom. Robert Hook created the first acoustic telephone in 1672.He discovered the proactivity of sound traveling through a string to the earpiece or mouthpiece. Samuel B Moore learned that sound a connection of two model together with a running electricity in a wire could send messages by holding and releasing the button in a regular manner (Vodafone Annual Report, 2016). The greatest and remarkable invention in this industry was the development of the telephone by Alexander Graham Bell in March 1876 which marked the turning point of telecommunication industry. Telecom industry is a very competitive (Baker, Christensen, & Cottrell, 2012) industry with the United States being the world most competitive and innovative market. Fundamentally, this has led to the merging of various telecommunication industries and also the dissolution of others due to market competition.
Telecom industry comprises several companies around the world. Various components can be used to rank this company. According to the market value occupied by the enterprises at the beginning of 2016, the top five in groups in descending that includes China Mobile Ltd, which has a market value of 280 billion dollars. The Verizon Communications Inc. found in the United States of America is the second-largest company with the market value of 202.5 billion dollars. In the same way, AT&T Inc. of the United States has a market share of 173 billion dollars, Vodafone Group plc as 88 billion dollars market value and Nippon Telegraph and Telephone Corporation has a market value of 71.5 billion dollars. This industries are global since they operate in different countries.
Telecommunication sector is among the competitive industries in the world with nearly all countries using its services. Entry of several companies into the market has led to the increased completion and also innovation of various products and services. Vodafone Group is among the oldest and one of the top industries into this market. It offers services such as mobile telephony, fixed line, and digital television. Vodafone has a broad financial base with a total equity of 65.88 billion euros (Vodafone Annual Report, 2016) and owning assets worth 133.7 billion euros. In the year 2016, Vodafone made a revenue of 40.97 billion euros but went a loss of 4.02 billion euros. All this financial information makes Vodafone the best company to be used in the analysis of financial entities. The report, therefore, deals with the profile information of Vodafone Company evaluates the financial statement of the company and annual reports and finally concludes the matters outlined in the report.
Vodafone Group was founded in 1991 in Berkshire, United Kingdom. It is currently the fourth largest telecommunication company in the world with 446 million mobile subscribers and a market value of 88 billion dollars (Vodafone Annual Report, 2016).Vodafone, formally known as Racal Telecoms Division was able to make their first cellular call in the year 1985 and the call was made from St Katharine Docks all the way to Newbury, and later on it launched the first UK mobile satellite. The Racal Telecom was dismantled from the larger Racal Electronics to form the Vodafone Group in 1991.The company later started the Vodata in the year 1994 which had a purpose of providing the digital data, fax and also text messaging services. Vodafone operates its networks in 26 countries and also has partner networks in more than 50 countries globally and has a division called Vodafone Global Enterprise. The board of governors is as follows;
The executive leadership of the Vodafone Company comprises of the following
1. Gerard Kleisterlee who is a non-executive Chairman of the Board
2. Vittorio Colao is the Chief Executive Officer.
3. Nicholas Read is the Chief Financial Officer,
4. Vivek Badrinath is the Chief Executive, Africa, Middle East and Asian-Pacific
5. Paolo Bertoluzzo who is the Chief Executive Officer, Southern Europe.
This company is audited by Price Water Coopers which replaced Deloitte auditing company in 2014.
Letter to Shareholders
In his message to shareholders dated 24th July 2016, the non-executive chairman invites all the stakeholders to an annual general meeting to be held on Friday 29th July 2016 at the Hilton London Metropole Hotel. He encourages the stakeholders to attend the Annual General Meeting so that they can have a chance to interact with the Directors. The chairman congratulates the shareholders for the recognizable work done, he says that the company earnings have risen above those of the previous year and promises for better and more convenient services for the year 2016. He further notifies the shareholders on the new method of convening the information by use of the Vodafone Website (Vodafone Annual Report, 2016).
The Chairman encourages them to visit the website and get informed of up to date information concerning the company. He appreciates the stakeholders on their continued support and invites them to come and vote for the resolutions set up the second and fourth page of the notice as he termed them beneficial for the stakeholders. He also tells those who were not able to attend the meeting to vote to vote for the resolutions as outlined on page 10 and 11 of the notice and encourages everyone to vote regardless of the number of shares owned by the company. He further points out that the results of the voting on the company Resolutions will be announced through the Regulatory News Service and will be made available to the companys website as soon as the General Annual Meeting ends.
Financial Statements of Vodafone Company as at 17th May 2016
The main items in the total assets of the Vodafone Company Limited as at 17th may 2016 are the tangible assets of 28,082.0 million euros, while the intangible assets and the right will amounting to 46,768.0 million euros. Investment and other Non-Current assets totaled to 30,719.0 million euros and inventory of 565.0, trade and receivables amounted to 9,141.0 million euros, cash and receivables amounting to 10,218.0 million euros. Observably, other current assets and other property held for resale totaling to 8,220.0 million euros. The total assets amount to 133,713 million euros (Vodafone Annual Report, 2016). The main items of the liabilities include the short-term liabilities of 33,395.0 million euros, the long-term liabilities of 33,001.0 million euros and other commitments amounting to 0.0 million dollars. The total amount of liabilities sums up to 66,396.0 million euros.
The shareholder's equity contains the share capital of 3,792.0 million euros, the minority interest of 1,432.0 million euros, the retained earnings of 56808.0 million euros, the share premium account and other equity of 118,901.0 which totals up the equity to 67,317.00 million euros. The Vodafone inventories amount to 565.0 million euros against 482.0 million euros that were recorded in the year 2015 (Vodafone Annual Report, 2016).This increase in inventory is due to the improved technology which leads to the efficiency of operations hence lowering the cost of exploitation and in return increasing the stock.
The cash flow from operating activities amounts to 10481.0 million euros while the cash flow before financing amounts to 330.0 million euros. It totals the money to 10811 million euros which are an increase in pay by 3290.0 from that of 2015.The total cash dividends as at 3rd August 2016 are 11.45 which is an increase from 11.22 recorded on 5th August 2015.The change of dividends shows the amount of investment into the business, Increase in the number of dividends implies that the amount of investment into the Vodafone company has increased as compared to the previous year (Vodafone Annual Report, 2016). The retained earnings for the year 2016 are 56,808.0 while that of the year 2015 were 49,471.0.The amount of retained earnings has increased from 56808 million euros from 49471 million euros. The sum of money which was paid but was not collected from the company increased. It can be due to increased capacity of the enterprise.
A cash flow statement and an income statement differs in various ways which include
1. The cash flow statement shows the source of the money to the company or organization and also the use of such cash over a specific duration of time. The income statement, on the other hand, is sometimes referred to as the financial performance and shows the financial results of the company such as the expenses, the revenues, the profits and the losses over a given period (Ramachandran, 2010).
2. A cash flow statement is a document that outlines exactly the amount of money that a company has used in a period of one month and captures information like the current operating expenses and deviations on the balance sheet. A cash flow is crucial in the determination the viability and liquidity of an organization or company in a short period especially its ability to service the bills and vendors.
3. An income statement is a statement of finance that is most common and illustrates the revenue of the company, the aggregate expenditure; it includes the non-cash accounting system, for example, the depreciation and also the profit and loss over a duration of one month. This statement is crucial in the determination of the performance of the company financially.
4. The cash flow statement has a direct relationship with the income declaration of the net profit. The net profit is useful in the derivation of the cash flow from the company operations. This scenario is referred to as the indirect method and entails the deduction of the amount of money received directly from the money that has been used to arrive at the net cash flow.
The profit and loss account in the cash flow statement is a negative of 3,818.0 million euros while the closing cash flow statement in the cash flow statement is a positive of 3290.0 million euros.
Key financial elements over the first 12 months
Managements report on internal control over financial reporting
The management is required to establish and maintain the enough required control for the reporting of financial reports in the group. The monetary impact of the management report includes;
1. Proper management of reports leads to the accurate and fair transactions and also asset deposition.
2. It leads to reasonable assurance which leads to the timely finding of acquisition which is not authorized and the use and also the statement of the assets which could have the tangible effect on the financial statements.
Directors responsibility statement
It illustrates the responsibility of the companys directors which has the following impacts;
1. It gives the clear indication of the liabilities, the position of the firm, the assets and also the profit of the company.
2. It outlines the development and a fair review of the performance of the business and also the position of the business at a particular period.
The company had a risk to uncertainties, and these uncertainties were discussed on how they can be mitigated. The process of mitigation was outlined to be of two types;
1. The planning process of the business and also the performance management.
2. Complete risk aversion.
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