Final Results - Part Five
Vodafone Group Plc
24 May 2005
PART 5
VODAFONE GROUP PLC
PRELIMINARY RESULTS
NOTES TO THE PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31 MARCH 2005
1 Basis of preparation
Statutory financial information
The preliminary results for the year ended 31 March 2005 are an abridged
statement of the full Annual Report, which was approved by the Board of
Directors on 24 May 2005. The Auditors' Report on these accounts was
unqualified. The preliminary results do not comprise statutory accounts within
the meaning of section 240 of the Companies Act 1985. The information relating
to the year ended 31 March 2004 is an extract from the published accounts for
that year, which have been delivered to the Registrar of Companies, and on which
the Auditors' Report was unqualified. The accounts for the year ended 31 March
2005 will be delivered to the Registrar of Companies following the Company's
Annual General Meeting, to be held on 26 July 2005.
2 Segmental and other analyses
The Group's principal business is the supply of mobile telecommunications
services and products. Other operations primarily comprise fixed line
telecommunications businesses. In October 2004, the Company announced a new
organisational structure effective from 1 January 2005. Results are shown under
the new reporting structure. The results of the Japan Telecom fixed line
business, which has been disposed of, are analysed as discontinued operations.
Analyses of turnover and total Group operating profit/(loss) by geographical
region and class of business are as follows:
Turnover
Year ended Year ended
31 March 2005 31 March 2004
----------------------------------- ----------------------------------
Segment Inter-segment Net Segment Inter-segment Net
turnover turnover turnover turnover turnover turnover
£m £m £m £m £m £m
Mobile
telecommunications:
Germany 5,684 (51) 5,633 5,536 (42) 5,494
Italy 5,565 (44) 5,521 5,312 (36) 5,276
UK 5,065 (47) 5,018 4,782 (38) 4,744
Other EMEA 8,614 (129) 8,485 7,627 (116) 7,511
Asia Pacific 8,531 (4) 8,527 8,896 (6) 8,890
----------------------------------- ----------------------------------
33,459 (275) 33,184 32,153 (238) 31,915
----------------------------------- ----------------------------------
Other operations:
Germany 1,108 - 1,108 1,002 - 1,002
Asia Pacific(1) - - - 1,126 - 1,126
----------------------------------- ----------------------------------
1,108 - 1,108 2,128 - 2,128
----------------------------------- ----------------------------------
Turnover between mobile
and other operations(2) (159) (484)
----------------------------------- ----------------------------------
Group turnover 34,133 33,559
=================================== ==================================
(1) Includes turnover of discontinued operations of £nil for the year ended
31 March 2005 (2004: £924 million).
(2) Includes turnover of discontinued operations of £nil for the year ended
31 March 2005 (2004: £106 million).
Total Group operating profit/(loss) before goodwill amortisation
and exceptional items
Year ended Year ended
31 March 31 March
2005 2004
£m £m
Mobile telecommunications:
Germany 1,663 1,741
Italy 2,257 2,143
UK 975 1,098
Other EMEA 3,383 3,142
Asia Pacific 950 1,212
Americas 1,647 1,393
-------- --------
10,875 10,729
-------- --------
Other operations:
Germany 66 (58)
Other EMEA (37) (1)
Asia Pacific(1) - 79
-------- --------
29 20
-------- --------
Group 10,904 10,749
-------------------------------------------------------------------------------
Subsidiary undertakings 7,940 8,091
Share of associated undertakings 2,964 2,658
-------------------------------------------------------------------------------
Goodwill amortisation (14,700) (15,207)
Exceptional operating items (Note 3) (315) 228
-------- --------
Total Group operating loss (4,111) (4,230)
======== ========
(1) Includes the following amounts in relation to discontinued operations:
year ended 31 March 2005: £nil; 2004: £66 million.
3 Exceptional operating items
Year ended Year ended
31 March 31 March
2005 2004
£m £m
Impairment of intangible fixed assets (315) -
Contribution tax - 351
Reorganisation costs - (123)
-------- --------
(315) 228
======== ========
The exceptional operating cost of £315 million in the year ended 31 March 2005
is due to an impairment of the carrying value of goodwill relating to Vodafone
Sweden. The exceptional operating income for the year ended 31 March 2004 of
£351 million relates to expected recoveries and provision releases in relation
to a contribution tax levy on Vodafone Italy.
4 Exceptional non-operating items
Year ended Year ended
31 March 31 March
2005 2004
£m £m
Profit on disposal of fixed asset investments 19 12
Share of associate profit/(loss) on disposal of
investment 5 (1)
Amounts written off fixed asset investments (2) (6)
Loss on disposal of businesses (9) (127)
Profit on disposal of tangible fixed assets - 19
-------- --------
13 (103)
======== ========
5 Tax on loss on ordinary activities
Year ended Year ended
31 March 31 March
2005 2004
£m £m
United Kingdom corporation tax
charge at 30% (2004: 30%) 271 209
-------- --------
Overseas corporation tax
Current tax:
Current year(1) 2,430 2,264
Prior year (221) (159)
-------- --------
2,209 2,105
-------- --------
Total current tax 2,480 2,314
Deferred tax - origination of and
reversal of timing differences:
United Kingdom 292 426
Overseas(1) (539) 310
-------- --------
(247) 736
-------- --------
Tax on exceptional items 3 104
-------- --------
Total tax charge 2,236 3,154
======== ========
-------------------------------------------------------------------------------
Tax on loss on ordinary
activities before exceptional items 2,832 3,050
Tax on exceptional items 3 104
Exceptional tax credit(1) (599) -
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Parent and subsidiary undertakings 1,698 2,866
Share of associated undertakings 538 288
-------- --------
2,236 3,154
======== ========
-------------------------------------------------------------------------------
(1) Total tax charge for the year ended 31 March 2005 includes exceptional
current tax and deferred tax credits, totalling £599 million, relating
to tax losses in Vodafone Holdings K.K., which became eligible for offset
against the profits of Vodafone K.K. following the merger of the two
entities on 1 October 2004. The tax credit was recognised following
shareholder and regulatory approval of the transaction in the year.
6 (Loss)/earnings per share
Year ended Year ended
31 March 31 March
2005 2004
£m £m
Loss for basic and diluted loss per share (7,540) (9,015)
Add back:
- Goodwill amortisation 14,700 15,207
- Exceptional operating items 315 (228)
- Exceptional non-operating items (13) 103
- Exceptional tax credit (599) -
- Tax on exceptional items 3 104
- Share of exceptional items attributable to
minority interests 26 27
-------- --------
Earnings for adjusted earnings per share 6,892 6,198
======== ========
Weighted average number of shares (millions) 66,196 68,096
Basic and diluted loss per share (11.39)p (13.24)p
Adjusted basic earnings per share 10.41p 9.10p
Diluted loss per share is the same as basic loss per share as it is considered
that there are no dilutive potential ordinary shares.
7 Reconciliation of operating loss to net cash inflow from operating activities
Year ended Year ended
31 March 31 March
2005 2004
£m £m
Operating loss (5,304) (4,776)
Exceptional operating items 315 (228)
Depreciation 4,528 4,362
Goodwill amortisation 12,929 13,095
Amortisation of other intangible fixed assets 412 98
Loss on disposal of tangible fixed assets 161 89
-------- --------
Group EBITDA(1) 13,041 12,640
Working capital movements (281) (238)
Payments in respect of exceptional items (47) (85)
-------- --------
Net cash inflow from operating activities 12,713 12,317
======== ========
(1) Group EBITDA is not a measure recognised under UK GAAP but is presented in
order to highlight operational performance of the Group. It is stated
before exceptional items.
8 Analysis of net debt
Other
non-cash
changes and At 31
At 1 April exchange March
2004 Cash flow movements 2005
£m £m £m £m
Liquid resources 4,381 (3,563) (2) 816
-------- -------- -------- --------
Cash at bank and in hand 1,409 1,408 33 2,850
Bank overdrafts (42) (3) (2) (47)
-------- -------- -------- --------
1,367 1,405 31 2,803
-------- -------- -------- --------
Debt due within one year
(other than bank overdrafts) (2,000) 1,997 (329) (332)
Debt due after one year (12,100) 161 439 (11,500)
Finance leases (136) 12 (2) (126)
-------- -------- -------- --------
(14,236) 2,170 108 (11,958)
-------- -------- -------- --------
Net debt (8,488) 12 137 (8,339)
======== ======== ======== ========
Included within net debt at 31 March 2005 are bond issues maturing as
follows:
£m
One year or less 283
More than one year but not more than two years 1,561
More than two years but not more than five years 4,863
More than five years but not more than ten years 1,388
More than ten years but not more than twenty years 1,118
More than twenty years 1,339
-------
10,552
=======
9 Summary of differences between UK and US GAAP
The preliminary results have been prepared in accordance with UK Generally
Accepted Accounting Principles ('UK GAAP'), which differ in certain significant
respects from US Generally Accepted Accounting Principles ('US GAAP'). A
description of the relevant accounting principles which differ materially will
be provided within Vodafone Group Plc's Annual Report for the year ended 31
March 2005. The effects of these differing accounting principles are as follows:
Year ended Year ended
31 March 31 March
2005 2004
£m £m
Revenue from continuing operations in accordance
with UK GAAP 34,133 32,741
Items (decreasing)/increasing revenue:
Non-consolidated entity (5,483) (5,276)
Connection revenue 1,223 188
-------- --------
Revenue from continuing operations in accordance
with US GAAP 29,873 27,653
======== ========
Net loss in accordance with UK GAAP (7,540) (9,015)
Items (increasing)/decreasing net loss:
Investments accounted for under the equity method (18) 1,306
Connection revenue and costs 16 29
Goodwill and other intangible assets (6,482) (6,520)
Capitalised interest (86) 406
Licence fee amortisation (435) (76)
Exceptional items 246 (351)
Income taxes 7,007 6,231
Other (118) (137)
Cumulative effect of change in accounting principle:
EITF Topic D-108 (6,177) -
Cumulative effect of change in accounting principle:
pensions (195) -
-------- --------
Net loss in accordance with US GAAP (13,782) (8,127)
======== ========
Loss from continuing operations (7,410) (7,734)
Loss from operations and disposal of discontinued
operations - (393)
Cumulative effect of changes in accounting
principles (6,372) -
-------- --------
Net loss (US GAAP) (13,782) (8,127)
======== ========
Basic and diluted loss per share (US GAAP):
- Loss from continuing operations (11.19)p (11.36)p
- Loss from operations and disposal of discontinued
operations - (0.57)p
- Cumulative effect of changes in accounting
principles (9.63)p -
- Net loss (US GAAP) (20.82)p (11.93)p
======== ========
31 March 31 March
2005 2004
£m £m
Shareholders' equity in accordance with UK GAAP 99,317 111,924
Items increasing/(decreasing) shareholders' equity:
Investments accounted for under the equity method 5,043 15,669
Connection revenue and costs (14) (55)
Goodwill and other intangible assets 40,723 45,320
Capitalised interest 1,529 1,615
Licence fee amortisation (552) (109)
Exceptional items 315 -
Income taxes (40,535) (50,177)
Proposed dividends 1,395 728
Other 24 114
-------- --------
Shareholders' equity in accordance with US GAAP 107,245 125,029
======== ========
UNAUDITED PROPORTIONATE FINANCIAL INFORMATION
FOR THE YEAR ENDED 31 MARCH 2005
Proportionate results
Group proportionate turnover increased by 11% to £43,602 million for the
financial year as a result of both organic growth and the effect of increased
stakes in a number of the Group's existing business, partially offset by the
disposal of Japan Telecom. In the mobile business, proportionate turnover grew
by 12% to £42,762 million, with organic growth of 9%.
The Group's proportionate EBITDA margin, before exceptional items, for the
mobile business decreased by 0.4 percentage points to 38.5%. The main reason for
this decrease was the increase of the Group's effective shareholding in Vodafone
Japan.
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.
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.
Group proportionate turnover is stated net of intercompany turnover. The Group
has amended its analysis of proportionate turnover between the mobile business
and other operations to a gross of intercompany turnover basis, rather than a
net of intercompany turnover presentation previously disclosed.
Proportionate EBITDA is defined as operating profit before exceptional items and
depreciation and amortisation of subsidiary undertakings, 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.
Reconciliation of proportionate turnover to statutory turnover
Year ended Year ended
31 March 31 March
2005 2004
£m £m
Proportionate turnover 43,602 39,446
Minority share of turnover in subsidiary
undertakings 2,370 4,521
Group share of turnover in associated
undertakings and trade investments (11,839) (10,408)
-------- --------
Statutory turnover 34,133 33,559
======== ========
UNAUDITED PROPORTIONATE FINANCIAL INFORMATION
FOR THE YEAR ENDED 31 MARCH 2005
Reconciliation of proportionate EBITDA, before exceptional items, to loss for
the financial year
Year ended Year ended
31 March 31 March
2005 2004
£m £m
Proportionate EBITDA, before exceptional items 16,641 15,114
Minority share of EBITDA in subsidiary
undertakings 997 1,602
Group's share of EBITDA in associated
undertakings and trade investments (4,597) (4,076)
-------- --------
Group EBITDA 13,041 12,640
Charges for depreciation (4,528) (4,362)
Exceptional operating items (315) 228
Goodwill amortisation (12,929) (13,095)
Amortisation of other intangibles (412) (98)
Loss on disposal of tangible fixed assets (161) (89)
-------- --------
Operating loss (5,304) (4,776)
Share of operating profit in associated
undertakings 1,193 546
Exceptional non-operating items 13 (103)
Net interest payable and similar items (604) (714)
Tax on loss on ordinary activities before
exceptional tax (2,835) (3,154)
Exceptional tax credit 599 -
Minority interests (including non-equity
minority interests) (602) (814)
-------- --------
Loss for the financial year (7,540) (9,015)
======== ========
Proportionate mobile EBITDA margin, before exceptional items, excluding the
impact of the Japan stake change
Proportionate mobile EBITDA margin, before exceptional items, excluding the
impact of the Japan stake increases in the first half of the financial year, was
39.0% compared to the Group proportionate EBITDA margin, before exceptional
items, of 38.2%. The Group's increased effective shareholding in Japan
represents the most significant stake change of the current and prior financial
years. A reconciliation of these margins is as follows:
EBITDA
Turnover EBITDA(1) margin(1)
£m £m %
Proportionate result for mobile business
excluding the impact of the Japan stake
change 41,222 16,064 39.0
Impact of the Group's additional stake in
Japan 1,540 419
-------- --------
Proportionate result for mobile business 42,762 16,483 38.5
Proportionate result for other operations 1,178 158
Turnover between mobile and other operations (338) -
-------- --------
Group proportionate result 43,602 16,641 38.2
======== ========
(1) Before exceptional items
OTHER INFORMATION
1) Copies of this document are available from the Company's registered office:
Vodafone House
The Connection
Newbury
Berkshire
RG14 2FN
2) This Preliminary Announcement will be available on the Vodafone Group Plc
website, www.vodafone.com, from 24 May 2005.
For further information:
Vodafone Group
Simon Lewis, Group Corporate Affairs Director
Tel: +44 (0) 1635 673310
Investor Relations
Charles Butterworth
Darren Jones
Sarah Moriarty
Tel: +44 (0) 1635 673310
Media Relations
Bobby Leach
Ben Padovan
Tel: +44 (0) 1635 673310
High resolution photographs are available to the media free of charge at
www.newscast.co.uk.
Vodafone, Vodafone live!, Vodafone Mobile Connect, Vodafone Wireless Office,
Vodafone Simply and Vodafone Passport are trademarks of
the Vodafone Group. Other product and company names mentioned herein may be the
trademarks of their respective owners.
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 'Chief Executive's Statement' regarding returns to
shareholders, free cash flow and anticipated benefits from the One Vodafone
programme, expectations regarding the Group's competitive position and
implementation of a business improvement plan, share purchases, dividends and
dividend growth rates and business acquisitions; the statements under 'Outlook'
regarding Vodafone's expectations for the year ending 31 March 2006 as to
organic growth in proportionate mobile revenue, proportionate mobile EBITDA
margins, capitalised fixed asset additions, free cash flow, dividend receipts
from Verizon Wireless, cash expenditure on fixed assets, tax payments and
expected adjusted effective tax rates, share purchases by the Group and share
repurchases by Vodafone Italy and One Vodafone targets; the statements under
'Japan' with respect to expected outcome of the plans and services announced to
improve Vodafone Japan's performance and competitive position; the statements
under 'Dividends' with respect to dividend payments and increases in the level
of dividends; the statements under 'Share purchases' with respect to the level
of share purchase programme; and the statements under 'One Vodafone' regarding
anticipated benefits in 2007 and 2008 to the Group of the One Vodafone
programme, including statements related to time to market for new services and
terminals, mobile capital expenditure, free cash flow, cost savings, migration
of service delivery platforms, maintenance costs and purchasing options,
consolidation of billing and customer relationship management systems, churn,
retention and customer satisfaction, inter-operator roaming tariffs, revenue
enhancements delivering pre-tax cash flow and revenue market share and the
aggregate of mobile operating expenses and tangible fixed asset additions. 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 and interconnect rates, customer acquisition and retention
costs, network opening and 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 Simply and
Vodafone Passport and Vodafone's business services; intentions regarding the
development of products and services; acquisitions and disposals; share
purchases; the Group's adoption and implementation of IFRS; share repurchases by
Vodafone Italy; maintenance of credit ratings and overall market trends.
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 'Chief Executive's Statement', 'Outlook', 'One Vodafone'
and 'Dividends' 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 and the integration of our
operations and those of 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! and other new or existing products, services or
technologies on the Group's future revenue, 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! and other new or existing
products, services or technologies 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 and may affect the level of dividends; 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 Group's cost position; changes in exchange rates, including
particularly the exchange rate of pounds sterling 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 any 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 with respect to the financial year ended 31 March 2004 and in our
Annual Report with respect to the financial year ended 31 March 2005 which will
be available on www.vodafone.com from 8 June 2005. 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 Group 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 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
measure this results
announcement of
reconciliation
and further
information
--------------------------------------------------------------------------------
Group EBITDA, before exceptional items Operating loss Note 7 on page
31
Mobile EBITDA before exceptional items Total Group Business review
operating loss on page 6
Total Group operating profit (before Total Group Note 2 on page
goodwill amortisation and exceptional operating loss 29
items)
Profit on ordinary activities before Loss on Group Financial
taxation (before goodwill amortisation ordinary Highlights on
and exceptional items) activities page 3
before taxation
Operating free cash flow Net cash inflow Cash flows and
from operating funding on page
activities 22
Free cash flow Net cash inflow Cash flows and
from operating funding on page
activities 22
Adjusted earnings per share Earnings per Note 6 on page
share 30
Proportionate turnover Statutory Proportionate
turnover financial
information on
page 33
Proportionate EBITDA, before Loss for the Proportionate
exceptional items financial year financial
information on
page 34
Proportionate EBITDA, before Loss for the Proportionate
exceptional items, excluding the financial year financial
impact of Japan stake changes information on
page 34
Effective rate of taxation before Tax on loss on Profit on
goodwill amortisation and exceptional ordinary ordinary
items activities as a activities
percentage of before taxation
loss on (before
ordinary goodwill
activities amortisation
before taxation and exceptional
items) is shown
in Group
Financial
Highlights on
page 3
Tax on loss on ordinary activities Tax on loss on Note 5 on page
before exceptional items ordinary 30
activities
In addition, the trading results of the Group and key markets present certain
GAAP financial information, being revenue and cost of sales related to
acquisition and retention activity, on a net basis. The Group believes that this
basis of presentation provides useful information for investors regarding trends
in net subsidies with respect to the acquisition and retention of customers and
facilitates comparability of results with other companies operating in the
mobile telecommunications business. 'Other revenue', 'Net acquisition costs' and
'Net retention costs', as used in the trading results, are defined on page 38.
Definition of terms
Term Definition
------------- ------------------------------------------------------------------
Organic The percentage movements in organic growth are presented to
growth reflect operating performance on a comparable basis. Where a
subsidiary or associated undertaking was newly acquired or
disposed of in the current or prior period, the Group adjusts,
under organic growth calculations, the results for the current and
prior period to remove the amount the Group earned in both periods
as a result of the acquisition or disposal of subsidiary or
associated undertakings. Where the Group increases, or decreases,
its ownership interest in an associated undertaking in the current
or prior period, the Group's share of results for the prior period
is restated at the current period's ownership level. A further
adjustment in organic calculations excludes the effect of exchange
rate movements by restating the current period's results as if
they had been generated at the prior period's exchange rates.
Organic growth for proportionate results is adjusted to reflect
current year and prior year results at constant exchange rates,
using like-for-like ownership levels in both years.
Customer A customer is defined as a SIM, or in territories where SIMs do
not exist, a unique mobile telephone number, which has access to
the network for any purpose (including data only usage) except
telemetric applications. Telemetric applications include, but are
not limited to, asset and equipment tracking, mobile payment/
billing functionality (for example, vending machines and meter
readings) and includes voice enabled customers whose usage is
limited to a central service operation (for example, emergency
response applications in vehicles).
Active A customer who has made or received a chargeable event in the last
customer three months.
Vodafone A handset or device equipped with the Vodafone live! portal which
live! active has made or received a chargeable event in the last month.
device
3G device A handset or device capable of accessing 3G data services.
ARPU Total revenue excluding handset revenue and connection fees
divided by the weighted average number of customers during the
period.
Average Total ARPU in an accounting period divided by the number of months
monthly ARPU in the period.
Depreciation This measure includes the profit or loss on disposal of fixed
and assets but excludes goodwill amortisation.
amortisation
Intra-segment Turnover between operating companies of the same business (mobile
turnover or non-mobile) within the same reporting segment.
Inter-segment Turnover between operating companies of the same business (mobile
turnover or non-mobile) in different reporting segments.
Non-voice Comprises all service revenue that is not related to voice
service services including, but not limited to, messaging, downloads,
revenue Internet browsing and other data services.
Messaging Messaging revenue includes all SMS and MMS revenue including
revenue wholesale messaging revenue, revenue from the use of messaging
services by Vodafone customers roaming away from their home
network and customers visiting the local network.
Data revenue Data revenue includes all non-voice service revenue excluding
messaging.
Other revenue Comprises all non-service revenue. In the trading results,
presented for the mobile telecommunications business and the
Group's key markets, net other revenue excludes revenue relating
to acquisition and retention activities as such revenue is
deducted from acquisition and retention costs. The Group believes
that this basis of presentation provides useful information for
investors regarding trends in net subsidies with respect to the
acquisition and retention of customers and facilitates
comparability of results with other companies operating in the
mobile telecommunications business.
Net The total of connection fees, trade commissions and equipment
acquisition costs, net of related revenue, relating to new customer
costs connections.
Net retention The total of trade commissions, loyalty scheme and equipment
costs costs, net of related revenue, relating to customer retention and
upgrade.
Churn Total gross customer disconnections in the period divided by the
average total customers in the period.
EBITDA margin Operating profit before depreciation, amortisation, profit or loss
on disposal of fixed assets and exceptional items as a percentage
of total turnover.
This information is provided by RNS
The company news service from the London Stock Exchange
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