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The Guardian: Macho cash

The Guardian: Macho cash

25 May 2005

The “headline” profits of £10.3bn trumpeted by Vodafone yesterday might have qualified as the Biggest Profit Turned By A British Company – except that would have been misleading.

Followers of the bulge bracket corporate scene this year will have first seen Shell declared as the leader in February with £9.4bn, only to be eclipsed a month later by HSBC with £9.6bn. But comparing the heavyweights of corporate Britain has an air of comparing apples, pears – and oranges, too.

Shell, like other oil majors, declares its headline profit as “net income”, that is, net of tax. HSBC goes for old-fashioned “pre-tax profit” while Vodafone’s £10.3bn was before nasty bits like £14.7bn of goodwill amortisation. The pre-tax loss was actually £4.7bn.

This is not to say Vodafone is doing badly. In fact, it is a cash machine, producing £12.7bn of the hard stuff over the past 12 months. All that’s holding it back on paper are the accounting costs of its rapid expansion. But until those (non-cash) costs are absorbed, it would be wrong to hand Vodafone the corporate crown, and those media brickbats that tend to go with the title.,,1491505,00.html and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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