Final Results - Part 3

Vodafone Group Plc
25 May 2004

Vodafone Group Plc
Preliminary Results for the year ended 31 March 2004
PART 3


Other Asia Pacific

Proportionate customers for the Group's other operations in the Asia Pacific
region increased by 14% during the year, including the Group's share of China
Mobile's customers, which is accounted for as an investment.

The increase in turnover was driven primarily by Vodafone New Zealand, resulting
from a larger customer base and higher equipment revenues. Vodafone Australia
also experienced turnover growth despite intense competitor activity. The EBITDA
margins of both Vodafone New Zealand and Vodafone Australia improved, due
largely to the cost savings from operational efficiencies.

Vodafone Fiji increased its customer base by 25% and the EBITDA margin improved.

China Mobile, in which the Group has a 3.27% stake, increased its customer base
by 21% to 150,256,000 in the year ended 31 March 2004. ARPU continued to fall
with the increase in low usage customers. Dividends totalling £25 million were
received from China Mobile during the year.

The Group disposed of its interest in its Indian associate, RPG Cellular
Services Ltd, during the year.

In November 2003, a Partner Network Agreement was announced with M1 in
Singapore, the first Vodafone partner in this region.

MIDDLE EAST AND AFRICA

Financial highlights                        Year ended 31 March
                                             2004          2003     % change
                                               £m            £m

Turnover                                      297           290            2

Total Group operating profit(1)               273           197           39

Proportionate EBITDA margin(2)               48.3%         46.2%

(1) before goodwill amortisation and exceptional items
(2) see pages 31 and 32 for details of proportionate turnover and EBITDA

The Group's operations in the Middle East and Africa region comprise Vodafone
Egypt and the Group's associated companies in South Africa (Vodacom) and Kenya
(Safaricom). In addition, the Group has two Partner Network Agreements with MTC,
covering Kuwait and Bahrain.

Vodafone Egypt experienced turnover growth of 41% when measured in local
currency, driven mainly by strong customer growth, improved contract ARPU and
increased roaming revenue. The EBITDA margin improved principally as a result of
increased roaming and operational efficiencies. The reported results were,
however, affected by the continued weakness of the Egyptian Pound against
Sterling.

The Group has reached a preliminary understanding with Telecom Egypt for the
proposed disposal of a 16.9% stake in Vodafone Egypt, which would reduce its
stake to 50.1%. In December 2003, Vodafone Egypt was listed on the Cairo and
Alexandria Stock Exchange.

The Group's associated undertakings in the region reported improved operating
performance in the year, primarily as a result of strong customer growth of 24%
in Vodacom and 77% in Safaricom.

Other Operations

Financial highlights                           Year ended 31 March
                                                2004         2003      % change
                                                  £m           £m

Turnover                 Europe                  947          854           11
                         Asia Pacific            897        1,979          (55)
                                              -------      -------
                                               1,844        2,833          (35)
                                              -------      -------
Total Group operating    Europe                  (59)        (138)         (57)
profit/(loss)(1)         Asia Pacific             79          149          (47)
                                              -------      -------
                                                  20           11           82
                                              -------      -------

Proportionate EBITDA     Europe                 12.7%       6.4%
margin(2)                Asia Pacific           29.4%      30.0%

(1) before goodwill amortisation
(2) see pages 31 and 32 for details of proportionate turnover and EBITDA

Europe

The Group's other operations in Europe comprise interests in fixed line
telecommunications businesses in Germany (Arcor) and France (Cegetel), and
Vodafone Information Systems, an IT and data services business based in Germany.

In local currency, Arcor's turnover increased by 5%. Excluding the results of
the Telematiks business which was disposed of in June 2002, turnover increased
by 16%, primarily due to customer and usage growth, partially offset by tariff
decreases caused by the competitive market. The fixed line market leader
continues to drive this intensive competition, although Arcor strengthened its
position as the main competitor during the year, increasing its contract voice
customers by 11%. The number of customers of Arcor's ISDN service, Direct
Access, increased by 98% to 389,000 at 31 March 2004. This revenue growth and
further cost control measures resulted in a significantly improved EBITDA margin
and positive cash flow.

Cegetel has the second largest residential customer base in France. The Group
increased its stake in Cegetel from 15% to 30% in the second half of the
previous financial year. Following the reorganisation of the Cegetel-SFR group
structure in December 2003, the Group's effective interest in the Cegetel
fixed-line business, whose business was enlarged through the merger with Telecom
Developpement, became 28.5%.

Asia Pacific

The Group's 66.7% controlled entity Vodafone Holdings K.K. (formerly Japan
Telecom Holdings Co., Ltd.) completed the disposal of its 100% interest in Japan
Telecom in November 2003. Receipts resulting from this transaction are Y257.9
billion (£1.4 billion), comprising Y178.9 billion (£1.0 billion) of cash
received, Y32.5 billion (£0.2 billion) of transferable redeemable preferred
equity and Y46.5 billion (£0.2 billion) of withholding tax recoverable, which is
expected to be received in the 2005 financial year. The Group ceased
consolidating the results of Japan Telecom from 1 October 2003.

Global Services

A major focus of the Group's strategy is to delight its customers, delivering a
superior customer experience and developing customer loyalty at all touch
points, introducing end-to-end voice and data propositions to target customer
segments, and achieving customer preference for the Vodafone brand.

To achieve this objective requires a focused, integrated and operationally
efficient business providing high quality products and services across the
greatest number of markets. To assist in this process, the Group established two
new central functions in July 2003, Group Marketing and Group Technology &
Business Integration.

Group Marketing provides leadership and co-ordination across the Group on a
range of marketing and commercial activities. These activities include the
design and rollout of segmented service propositions to consumer and business
customers such as Vodafone live!TM and the Group's business offerings.

Group Technology & Business Integration leads in the selection, development and
implementation of global technology solutions to support the terminals, service
platforms, network and IT requirements of the Group. It drives the benefits of
scale and scope to deliver enhanced customer experience, increased speed to
market and an improved strategic cost position by applying the principle of
'design once, deploy many times' and by working closely with suppliers.

A major Business Integration project was initiated in October 2003 and is
intended to lead the Group through a business transformation process spanning up
to five years. 'Working as One Vodafone' will continue to be a key theme for the
Group in delivering the benefits of global scale and scope. The Service Delivery
Platform, which in part delivers Vodafone live!TM, is one early example of the
Group's 'develop once, deploy many times' concept. This concept allows the
architecture, design and development of core enabling technologies to be
undertaken only once, and rolled out to many countries, saving on costs of
design and development in each country.

The launch of the 3G data service in February 2004 was also an example of
Vodafone leveraging its scale and scope. 3G commercial services in Europe, in
the form of the Vodafone Mobile Connect 3G/GPRS datacard, were able to be
launched in a much reduced period in seven countries in early 2004 through
working with common suppliers and network technology. This commercial launch of
the 3G service was the result of a three year global programme of technology
selection, development and testing across the Group companies.

In Japan, the 3G network has been rolled out with the goal of national coverage
and the eventual replacement of the current Personal Digital Cellular network.
In Europe, the deployment of 3G has been centred on major metropolitan centres,
thereby providing a complementary service to the current 2G and 2.5G networks.
The introduction of Wideband Code Division Multiple Access ('W-CDMA') as the
third generation standard will provide roaming capabilities between Japan and
other territories that use the W-CDMA standard.

The Group continues to build its capability to manage suppliers on a global
basis and has delivered synergies through negotiating global contracts,
particularly in the areas of terminals, network infrastructure and IT. There has
been continued progress in eCommerce activities, with the Group taking an
industry leading position in the effective use of e-auctions. The Group
continues to leverage scale in the handset area, consolidating country
requirements and volumes for supplier negotiation. This has provided savings,
along with supporting Vodafone's ability to shape an enhanced customer
experience through the specification of handset features and functions.

Brand Development

The three year brand migration programme was completed during the year, with
Italy and Japan migrating to the Vodafone brand in May and October 2003,
respectively. Local and global advertising campaigns, together with Vodafone's
high profile sponsorships, particularly Ferrari and Manchester United, have
contributed to the recognition of the Vodafone brand. Having established the
Vodafone brand in the Group's controlled markets, the focus is now shifting, and
more emphasis and resources are aimed at increasing customer satisfaction and
brand preference. In order to do this, Vodafone has put in place a framework for
measuring and improving its performance on every element of customer experience.

In addition, the Group has put in place a segmentation framework that has been
arrived at on a basis of extensive research. All marketing plans and activities,
both global and local, are now built around seven customer segments identified
through the research.

Partner Networks

The Group's Partner Network strategy has become a more broadly established
business concept for the delivery of the Group's mobile services in the year. By
partnering with leading mobile operators around the world, the Group is able to
market its portfolio of global services in new territories, extend its brand
reach into new markets and derive additional revenue from fees and visitor
roaming without buying equity stakes.

The Group has signed a further six Partner Network Agreements during the year
with Og Fjarskipti in Iceland, Bite in Lithuania, M1 in Singapore, MTC in
Bahrain, LuxGSM in Luxembourg and Cytamobile in Cyprus, bringing the total
number of partners to 13. With two partners in the Middle East and one in Asia
Pacific, the Partner Network strategy is becoming increasingly relevant for
mobile operators outside Europe.

Mobilkom-Group, which operates in Austria, Croatia and Slovenia, will become the
first Partner Network to introduce Vodafone live!TM and is expected to launch
services in June 2004. The Mobile Connect 3G/GPRS datacard has been launched in
Austria and the Mobile Connect Card has been introduced in Bahrain, Croatia,
Denmark, Slovenia, Estonia and Finland.

Products and services

Vodafone live!TM

Vodafone live!TM, the Group's integrated messaging and multimedia content
service, was launched in six countries during the 2004 financial year, including
the Group's associated networks in France (SFR) and Switzerland (Swisscom
Mobile), bringing the total number of markets in which the service is available
to 16 at 25 May 2004. At 31 March 2004, there were over 6.8 million controlled
Vodafone live!TM customers, with a further 0.7 million customers connected to
associated company networks. In addition, Vodafone Japan had 13.0 million
Vodafone live!TM customers following the rebranding of its J-Sky service to
Vodafone live!TM on 1 October 2003.

The range of services available on Vodafone live!TM has continued to be improved
throughout the year, with the integration of services such as real music tones,
as well as broadening the range of handsets available. New capabilities have
also been introduced such as video messaging, video streaming and Search, a new
facility enabling customers to use their mobile handsets to search across an
extensive portfolio of content. The scale of the customer base together with the
broader reach of Vodafone live!TM has meant that the Group has increasingly been
able to attract stronger content partners and recent agreements have involved
such established brands as Warner Bros. Online, Disney, Cartoon Network, Sony
Pictures Mobile, Sony Music Entertainment, UEFA Champions League Football, Tomb
Raider and The Simpsons

During the year, the range of Vodafone live!TM handsets has increased from three
to fifteen. By focusing its handset development resources, the Group aims to
offer a wider range of handsets with enhanced functionality. The first
GSM-enabled megapixel camera phone launched in the European market, the Sharp
GX30, had been introduced into 10 controlled markets by 25 May 2004.

Vodafone live!TM with 3G

Vodafone is the first mobile operator to bring 3G technology to business and
consumer markets across a number of European countries. Vodafone's 3G consumer
service was launched in Europe on 4 May 2004 when Vodafone live!TM with 3G was
introduced in Germany and Portugal. In the first phase of Vodafone live!TM with
3G, Vodafone live!TM has been enhanced with video telephony and video downloads
as well as improved ringtones and new content. Vodafone live!TM with 3G will be
enhanced later in the year, when a wider range of handsets will become
available, together with an even more extensive range of content and services.
The Group is prioritising efforts to ensure timely availability of handsets and
plans for handset deliveries later in 2004 and 2005 are at an advanced stage.

Mobile Connect Card

The Vodafone Mobile Connect Card, first launched in November 2002 and which
enables customers to connect to e-mail and business applications from a range of
access devices, has been enhanced to operate across both GPRS and 3G
technologies with the introduction in certain markets of the Vodafone Mobile
Connect 3G/GPRS datacard in February 2004. By 31 March 2004, Germany, Italy, the
Netherlands, Portugal, Spain, Sweden and the UK had all opened their networks
for commercial service. The Group's associated network in Belgium launched the
Mobile Connect 3G/GPRS datacard on 13 May 2004. The Mobile Connect 3G/GPRS
datacard provides customers with data speeds up to seven times faster than GPRS
when used on the Group's 3G networks.

Other business services
During the year the Group continued to enhance its business propositions. In
November 2003, the Group commenced roll out of Vodafone Wireless Office, a
mobile handset solution reducing the need for fixed line phones, and Blackberry
from Vodafone, which delivers voice, email, SMS, browser and organiser functions
in a single mobile device.

On 22 October 2003, the Group announced a joint initiative with Oracle to offer
enterprise customers integrated mobility solutions enabling mobile access to
business systems.

Roaming services

The Group has introduced new pricing structures in its networks for its roaming
services, with a view to encouraging the use of services when travelling abroad.

In November 2003, Vodafone UK launched Vodafone World, a new branded roaming
tariff that delivers simple, transparent pricing for roaming all over the world,
with preferential rates available for roaming onto all the Group's networks. Now
available in 13 markets, Vodafone World builds on the success of Eurocall, a
European roaming service, and replaces it with a concept that is relevant to the
Group's markets and partners worldwide. By making roaming prices worldwide
easier to understand, Vodafone World represents an important step in the Group's
strategy to meet the needs of its roaming customers at an affordable price and
encourage change in the roaming market.

Vodafone's Data Roaming Tariff was launched across 10 networks in October 2003
and provides a new simple price plan for roaming data services including
Vodafone live!TM and the Group's business services.

On 22 December 2003, the Group and Verizon Wireless announced the introduction
of transatlantic text messaging between their respective customers. By 31 March
2004, this service had been launched in 11 of the Group's networks.

The Group and Verizon Wireless have continued to cooperate in the development of
inter-standard roaming products. An agreement for the Group to licence its
Mobile Connect dashboard know-how to Verizon Wireless has recently been
completed, setting the stage for the launch of inter-standard data card products
in Europe and the United States, in due course.

Commercial initiatives

On 13 October 2003, the Group announced with Microsoft an intention to use
mobile SIM based authentication and billing to help create open Web services
standards that will enable new business opportunities for application developers
and mobile network operators and deliver new integrated services for customers
across fixed and mobile networks.

On 10 March 2004, the Group announced that it had signed a memorandum of
understanding with other leading companies from the mobile industry to apply for
a mobile Top Level Domain ('TLD') from the Internet Corp. for Assigned Names and
Numbers. A mobile TLD would be a key step in bridging the world of mobility and
the Internet.

Content Standards

In October 2002, a dedicated Content Standards team was established to provide
leadership in mobile content standards in order to protect customers from
inappropriate content, contact and commercialism. Specific emphasis is placed on
protecting young mobile phone users. The Group recognises that, although
acceptable to an older audience, not all content and services are suitable for
all ages and has committed to exercise responsibility in ways that are
consistent with its customer and public values.

The Content Standards team has actively supported a number of initiatives such
as the UK mobile operators Code of Practice and the Group's age verification
mechanism currently being piloted in Germany. Looking ahead the Content
Standards team will work with the operating companies to implement policies and
develop an independent auditing process to ensure they are maintained.

Corporate Social Responsibility

The Group reports in detail on its approach to Corporate Social Responsibility
('CSR') through annual CSR reports, which are available alongside other CSR
information on the Group's web-site (www.vodafone.com). In addition to the Group
CSR Report, Vodafone Greece, Ireland, The Netherlands and Italy all published a
CSR report during the financial year and several other businesses are planning
to report in the coming period.

Since 1 April 2003, the Group's focus has been on continuing to integrate CSR
into the business as well as rolling out practical initiatives relating to
reducing environmental impact and addressing relevant social issues. The Group
is making progress against the commitments set out in previous CSR Reports.

Specific achievements include the launch of additional handset recycling
programmes, the development of group guidelines on responsible marketing, the
launch of standards on mobile internet content, improvements in waste and energy
management and significant progress on working with key suppliers on human
rights and other matters. The Group has established new foundations in Ireland
and Hungary, ending the year with 19 local foundations.

The Group has retained its position in both the FTSE4Good and Dow Jones
Sustainability indices.

FINANCIAL UPDATE

PROFIT AND LOSS ACCOUNT

Exceptional items

Net exceptional operating income for the year ended 31 March 2004 of £228
million comprises £351 million of recoveries and provision releases in relation
to a contribution tax levy on Vodafone Italy that is no longer expected to be
levied, net of £123 million of restructuring costs principally in Vodafone UK.
Exceptional operating costs of £576 million were charged in the year ended 31
March 2003, comprising £485 million of impairment charges in relation to the
Group's interests in Japan Telecom and Grupo Iusacell and £91 million of
reorganisation costs relating to the integration of Vizzavi into the Group and
related restructuring.

Net exceptional non-operating charges for the year of £103 million principally
relate to a loss on disposal of the Japan Telecom fixed line operations. In the
prior year, net exceptional non-operating charges of £5 million mainly
represented a profit on disposal of fixed asset investments of £255 million,
principally relating to the disposal of the Group's interest in Bergemann GmbH,
through which the Group's 8.2% stake in Ruhrgas AG was held, offset by an
impairment charge in respect of the Group's investment in China Mobile of £300
million.

Interest

Total Group net interest payable, including the Group's share of the net
interest expense of joint ventures and associated undertakings, decreased from
£752 million for the year ended 31 March 2003 to £714 million for the year ended
31 March 2004.

The Group net interest cost for the current year increased to £499 million,
including £215 million (2003: £55 million) relating to potential interest
charges arising on settlement of a number of outstanding tax issues, from £457
million for the prior year and was covered 28 times by operating cash flow plus
dividends received from associated undertakings. The Group's share of the net
interest expense of associated undertakings and joint ventures decreased from
£295 million to £215 million, principally as a result of the sale of the Group's
stake in Grupo Iusacell.

Taxation

The effective rate of taxation, before goodwill amortisation and exceptional
items, for the year ended 31 March 2004 was 30.4% compared with 35.5% for the
year ended 31 March 2003. The rate has fallen principally due to further
benefits arising out of the restructuring of the Group's Italian operations in
the prior year, from the current year restructuring of the French operations, a
fall in the Group's weighted average tax rate and benefits from other tax
incentives. These benefits have outweighed the absence of the one-off benefit
arising from the restructuring of the German group in the previous year. The
effective tax rate for the 2005 financial year is expected to be higher than the
current year due to lower recurring tax benefits, particularly in Italy and the
absence of the one-off benefit from restructuring in France, but is subject to
the resolution of open issues, planning opportunities, corporate acquisitions
and disposals and changes in tax legislation. Please see 'Forward-Looking
Statements' on page 34.

Earnings per share

Earnings per share, before goodwill amortisation and exceptional items,
increased by 34% from 6.81p to 9.10p for the year ended 31 March 2004.

Basic loss per share, after goodwill amortisation and exceptional items,
improved from a loss per share of 14.41p to a loss per share of 13.24p for the
year ended 31 March 2004. The loss per share includes a charge of 22.33p per
share (2003: 20.62p per share) in relation to the amortisation of goodwill and a
charge of 0.01p per share (2003: 0.60p per share) in relation to exceptional
items.

Dividends

Vodafone Group Plc ('the Company') has historically paid dividends
semi-annually, with a regular interim dividend in respect of the first six
months of the financial year payable in February and a final dividend payable in
August. The directors expect that the Company will continue to pay dividends
semi-annually.

In considering the level of dividends, the Board takes account of the outlook
for earnings growth, operating cash flow generation, capital expenditure
requirements, acquisitions and divestments, together with the possibilities for
debt reductions and share repurchases. Accordingly, the directors have
recommended a final dividend of 1.0780 pence per share, representing a 20% 
increase over last year's final dividend, bringing the total dividend for the 
year to 2.0315 pence per share. The Board expects progressively to increase the
payout ratio in the future.

The ex-dividend date is 2 June 2004, the record date for the final dividend is 4
June 2004 and the dividend is payable on 6 August 2004.

Share purchases

When considering how increased returns to shareholders can be provided in the
form of dividends and share purchases, the Board reviews the free cash flow,
anticipated cash requirements and gearing of the Group.

On 18 November 2003, the directors decided to introduce a share purchase
programme and allocated £2.5 billion to this programme. Shares have been
purchased on market on the London Stock Exchange in accordance with shareholder
approval obtained at the Annual General Meeting ('AGM') in July 2003 which
expires at the conclusion of the Company's AGM on 27 July 2004. The maximum
share price payable for any share purchase is no greater than 105% of the
average of the middle market closing price of the Company's share price on the
London Stock Exchange for the five business days immediately preceding the day
on which any shares were contracted to be purchased. Purchases are made only if
accretive to earnings per share, before goodwill amortisation and exceptional
items. In accordance with the Companies (Acquisition of Own Shares) (Treasury
Shares) Regulations 2003 on 1 December 2003, shares purchased are held in
treasury.

For the period from 1 December 2003 to 31 March 2004, 800 million shares for a
total consideration of £1.1 billion, including stamp duty and broker
commissions, were purchased. The average share price paid, excluding transaction
costs, was 135.3 pence compared with the average volume weighted price over the
same period of 137.5 pence.

The Board intends to decide the amount to allocate to the share purchase
programme on an annual basis at the end of each financial year. In addition to
the £1.1 billion already expended, £3 billion of shares are planned to be
purchased over the next year, starting in early June 2004, subject to
maintenance of credit ratings, superseding the £2.5 billion announced in
November 2003. Because shareholder approval to purchase shares expires on 27
July 2004, this amount is subject to receiving renewed shareholder approval on
27 July 2004 at the AGM. In addition to ordinary market purchases, the Company
currently plans to purchase shares during its close periods.






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