Final Results - Part 6

Vodafone Group Plc 25 May 2004 Vodafone Group Plc Preliminary Results for the year ended 31 March 2004 PART 6 UNAUDITED PROPORTIONATE FINANCIAL INFORMATION FOR THE YEAR ENDED 31 MARCH 2004 Basis of preparation The tables of financial information below are presented on a proportionate basis. Proportionate presentation is not a measure recognised under UK GAAP and is not intended to replace the consolidated financial statements prepared in accordance with UK GAAP. However, since significant entities in which the Group has an interest are not consolidated, proportionate information is provided as supplemental data to facilitate a more detailed understanding and assessment of the consolidated financial statements prepared in accordance with UK GAAP. Proportionate financial information is not presented in the Group's Annual Report for the year ended 31 March 2004. UK GAAP requires consolidation of entities controlled by the Group and the equity method of accounting for entities in which the Group has significant influence but not a controlling interest. Proportionate presentation is a pro rata consolidation, which reflects the Group's share of turnover and expenses in both its consolidated and unconsolidated entities. Proportionate results are calculated by multiplying the Group's ownership interest in each entity by each entity's results. Proportionate information includes results from the Group's equity accounted investments and investments held at cost. The Group does not have control over the turnover, expenses or cash flows of these investments and is only entitled to cash from dividends received from these entities. The Group does not own the underlying assets of these investments. Proportionate turnover is stated net of intercompany turnover. Proportionate EBITDA is defined as operating profit before exceptional items and depreciation and amortisation of subsidiary undertakings, joint ventures, associated undertakings and investments, proportionate to equity stakes. Proportionate EBITDA represents the Group's ownership interests in the respective entities' EBITDA. As such, proportionate EBITDA does not represent EBITDA available to the Group. Proportionate EBITDA margin before exceptional items is proportionate EBITDA before exceptional items, as a percentage of proportionate turnover. Analysis of proportionate turnover Year ended Year ended 31 March 31 March 2004 2003 £m £m Mobile telecommunications: United Kingdom 4,744 4,026 Ireland 760 629 Germany 5,404 4,642 Other Northern Europe 4,997 3,458 Italy 4,052 3,353 Other Southern Europe 4,299 2,981 Verizon Wireless 6,111 5,686 Other Americas 31 116 Japan 5,399 5,258 Other Asia Pacific 1,449 1,178 Middle East and Africa 723 526 ------- ------- 37,969 31,853 Other operations: Europe 879 752 Asia Pacific 598 1,321 ------- ------- 39,446 33,926 ======= ======= Reconciliation of proportionate turnover to statutory turnover Year ended Year ended 31 March 31 March 2004 2003 £m £m Proportionate turnover 39,446 33,926 Minority share of turnover in subsidiary undertakings 4,521 5,437 Group share of turnover in joint ventures, associated undertakings and trade investments (10,408) (8,988) ------- ------- 33,559 30,375 ======= ======= Analysis of proportionate EBITDA, before exceptional items Year ended Year ended 31 March 31 March 2004 2003 £m £m Mobile telecommunications: United Kingdom 1,608 1,541 Ireland 347 274 Germany 2,492 2,016 Other Northern Europe 1,950 1,349 Italy 2,148 1,654 Other Southern Europe 1,594 1,062 Verizon Wireless 2,193 2,001 Other Americas (3) (24) Japan 1,559 1,645 Other Asia Pacific 589 474 Middle East and Africa 349 243 ------- ------- 14,826 12,235 Other operations: Europe 112 48 Asia Pacific 176 396 ------- ------- Proportionate EBITDA, before exceptional items 15,114 12,679 ======= ======= Reconciliation of proportionate EBITDA, before exceptional items to loss for financial year Year ended Year ended 31 March 31 March 2004 2003 £m £m Proportionate EBITDA, before exceptional items 15,114 12,679 Minority share of EBITDA in subsidiary undertakings 1,602 1,889 Group's share of EBITDA in joint ventures, associated undertakings and trade investments (4,076) (3,351) ------- ------- Group EBITDA 12,640 11,217 Charges for depreciation (4,362) (3,979) Exceptional operating items 228 (496) Goodwill amortisation (13,095) (11,875) Amortisation of other intangibles (98) (53) Loss on disposal of tangible fixed assets (89) (109) ------- ------- Operating loss (4,776) (5,295) Share of profit/(losses) in joint ventures and associated undertakings 546 (156) Exceptional non-operating items (103) (5) Net interest payable and similar items (714) (752) Tax on loss on ordinary activities (3,154) (2,956) Minority interests (including non-equity minority interests) (814) (655) ------- ------- Loss for the financial year (9,015) (9,819) ======= ======= OTHER INFORMATION 1) Copies of the Group's Annual Review and Summary Financial Statements will be sent to all shareholders. Further copies, and copies of the Group's Annual Report, will be available from the Company's registered office: Vodafone House The Connection Newbury Berkshire RG14 2FN 2) This Preliminary Results Announcement will be available on the Vodafone Group Plc website, www.vodafone.com, from 25 May 2004. For further information: Vodafone Group Tim Brown, Group Corporate Affairs Director Tel: +44 (0) 1635 673310 Investor Relations Melissa Stimpson Darren Jones Tel: +44 (0) 1635 673310 Media Relations Bobby Leach Ben Padovan Tel: +44 (0) 1635 673310 Tavistock Communications Lulu Bridges Justin Griffiths Tel: +44 (0) 20 7920 3150 High resolution photographs are available to the media free of charge at www.newscast.co.uk. Forward-Looking Statements This document contains 'forward-looking statements' within the meaning of the US Private Securities Litigation Reform Act of 1995 with respect to the Group's financial condition, results of operations and businesses and certain of the Group's plans and objectives. In particular, such forward-looking statements include the statements under 'Outlook' with respect to Vodafone's expectations for the year ending 31 March 2005 as to average proportionate mobile customer growth, full year proportionate organic mobile revenue and mobile EBITDA growth, proportionate mobile EBITDA margins, costs associated with opening and operating 3G networks including depreciation and amortisation, effective tax rate, capitalised fixed asset additions, mobile capital efficiency, free cash flow and tax payments; the statements under 'United Kingdom' regarding Vodafone UK's restructuring programme and its impact on operating costs and margins; the statements under 'Japan' with the respect to expected availability of 3G handsets, the expected impact on margins until the handsets are available and the expected outcome of the plans announced to improve Vodafone Japan's performance and competitive position; the statements under 'Taxation' with respect to the expected effective tax rates; and the statements under 'Other Commercial Initiatives' regarding the prospects for a mobile top level domain. These forward-looking statements are made on the basis of certain assumptions which Vodafone believes to be reasonable in light of Vodafone's operating experience in recent years. The principal assumptions on which these statements are based relate to exchange rates, customer numbers, usage and pricing, take-up of new services, termination rates, customer acquisition and retention costs, network operating costs and the availability of handsets. The document also contains other forward-looking statements including statements with respect to Vodafone's expectations as to launch and roll-out dates for products and services, including, for example, 3G services, Vodafone live!TM and Vodafone's business offerings; intentions regarding the development of products and services; the ability to integrate our operations throughout the Group in the same format and on the same technical platform and the ability to be operationally efficient; the anticipated share repurchase programme; the rate of dividend growth by the Group or its existing investments; expected effective tax rates and expected tax payments; mobile penetration and coverage rates; expectations with respect to long-term shareholder value growth; our ability to be the mobile market leader, overall market trends and other trend projections. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as 'anticipates', 'aims', 'could', 'may', 'should', 'expects', 'believes', 'intends', 'plans' or 'targets'. By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements particularly the statements under 'Outlook', 'Expenses' and 'Taxation' referred to above. These factors include, but are not limited to, the following: changes in economic or political conditions in markets served by operations of the Group that would adversely affect the level of demand for mobile services; greater than anticipated competitive activity requiring changes in pricing models and/or new product offerings or resulting in higher costs of acquiring new customers or providing new services; the impact on capital spending from investment in network capacity and the deployment of new technologies, or the rapid obsolescence of existing technology; slower customer growth or reduced customer retention; the possibility that technologies, including mobile internet platforms, and services, including 3G services, will not perform according to expectations or that vendors' performance will not meet the Group's requirements; changes in the projected growth rates of the mobile telecommunications industry; the Group's ability to realise expected synergies and benefits associated with 3G technologies, the integration of our operations and those of recently acquired companies; future revenue contributions of both voice and non-voice services offered by the Group; lower than expected impact of GPRS, 3G and Vodafone live!TM and the Group's business offerings on the Group's future revenues, cost structure and capital expenditure outlays; the ability of the Group to harmonise mobile platforms and any delays, impediments or other problems associated with the roll-out and scope of 3G technology and services and Vodafone live!TM and the Group's business or service offerings in new markets; the ability of the Group to offer new services and secure the timely delivery of high-quality, reliable GPRS and 3G handsets, network equipment and other key products from suppliers; greater than anticipated prices of new mobile handsets; the ability to realise benefits from entering into partnerships for developing data and internet services and entering into service franchising and brand licensing; the possibility that the pursuit of new, unexpected strategic opportunities may have a negative impact on one or more of the measurements of our financial performance; any unfavourable conditions, regulatory or otherwise, imposed in connection with pending or future acquisitions or dispositions; changes in the regulatory framework in which the Group operates, including possible action by regulators in markets in which the Group operates or by the European Commission regulating rates the Group is permitted to charge; the Group's ability to develop competitive data content and services which will attract new customers and increase average usage; the impact of legal or other proceedings against the Group or other companies in the mobile telecommunications industry; the possibility that new marketing campaigns or efforts are not an effective expenditure; the possibility that the Group's integration efforts do not increase the speed-to-market of new products or improve the cost position; changes in exchange rates, including particularly the exchange rate of the pound to the euro, US dollar and the Japanese yen; the risk that, upon obtaining control of certain investments, the Group discovers additional information relating to the businesses of that investment leading to restructuring charges or write-offs or with other negative implications; changes in statutory tax rates and profit mix which would impact the weighted average tax rate; changes in tax legislation in the jurisdictions in which the Group operates; final resolution of open issues which might impact the effective tax rate; timing of tax payments relating to the resolution of open issues and loss of suppliers or disruption of supply chains. Furthermore, a review of the reasons why actual results and developments may differ materially from the expectations disclosed or implied within forward-looking statements can be found under 'Risk Factors' contained in our Annual Report & Accounts and Form 20-F with respect to the financial year ended 31 March 2003. All subsequent written or oral forward-looking statements attributable to the Company or any member of the Group or any persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. No assurance can be given that the forward-looking statements in this document will be realised. Neither Vodafone nor any of its affiliates intends to update these forward-looking statements. Use of Non-GAAP Financial Information In presenting and discussing the Group's reported financial position, operating results and cash flows, certain information is derived from amounts calculated in accordance with UK GAAP, but this information is not itself an expressly permitted GAAP measure. Such non-GAAP measures should not be viewed in isolation as alternatives to the equivalent GAAP measure. A summary of certain of the non-GAAP measures included in this results announcement, together with details where additional information and reconciliation to the nearest equivalent GAAP measure can be found, is shown below. Non-GAAP measure Equivalent GAAP Location in this results measure announcement of reconciliation and further information Group EBITDA, before Operating loss Note 7 on page 29 exceptional items Total Group operating Total Group operating Note 2 on page 27 profit (before goodwill loss amortisation and exceptional items) Profit on ordinary Loss on ordinary Group Financial Highlights activities before activities before on page 2 taxation (before taxation goodwill amortisation and exceptional items) Operating free cash Net cash inflow from Cash flows and funding on flow operating activities page 19 Free cash flow Net cash inflow from Cash flows and funding on operating activities page 19 Adjusted earnings per Earnings per share Note 6 on page 28 share Proportionate turnover Statutory turnover Proportionate financial information on page 31 Proportionate EBITDA, Loss for the financial Proportionate financial before exceptional year information on page 32 items Effective rate of Tax on loss on ordinary Profit on ordinary taxation before goodwill activities as a activities before taxation amortisation and percentage of loss on (before goodwill exceptional items ordinary activities amortisation and before taxation exceptional items) is shown in Group Financial Highlights on page 2 This information is provided by RNS The company news service from the London Stock Exchange

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