Final Results - Year Ended 31 March 2000, Part 2

Vodafone AirTouch PLC 30 May 2000 PART 2 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2000 Year ended Year ended 31 March 31 March 2000 1999 £m £m Turnover - Continuing operations 4,498 3,360 - Acquisitions 3,375 - ------ ------ 7,873 3,360 ====== ====== Operating profit - Continuing operations 980 847 - Acquisitions 1 - ------ ------ 981 847 Share of operating profit/(loss) in joint ventures and associated undertakings - Continuing operations 104 116 - Acquisitions (289) - ------ ------ Total Group operating profit 796 963 Disposal of fixed asset investments 954 66 ------ ------ Profit on ordinary activities before interest 1,750 1,029 Net interest payable - Group (350) (76) - Joint ventures and associated (51) (18) undertakings ------ ------ Profit on ordinary activities before taxation 1,349 935 Tax on profit on ordinary activities (685) (252) ------ ------ Profit on ordinary activities after taxation 664 683 Equity minority interests (137) (46) Non-equity minority interests (40) - ------ ------ Profit for the financial year 487 637 Equity dividends (620) (197) ------ ------ Retained (loss)/profit for Group and its share of joint ventures and associated undertakings (133) 440 ====== ====== Basic earnings per share 1.80p 4.12p Diluted earnings per share 1.78p 4.11p Adjusted basic earnings per share 4.71p 3.77p UNAUDITED PRO FORMA* CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 MARCH 2000 Year ended Year ended 31 March 31 March 2000 1999 £m £m Turnover 8,887 7,018 ===== ===== Operating profit 1,013 762 Share of operating loss in joint ventures and associated undertakings (376) (760) ------- ------- Total Group operating profit 637 2 Total Group operating profit before goodwill and exceptional items: - Subsidiary undertakings 1,886 1,624 - Joint ventures and associated undertakings 1,056 636 ------- ------- 2,942 2,260 Amortisation of goodwill (2,275) (2,258) Exceptional reorganisation costs (30) - ------- ------- Total Group operating profit 637 2 ------- ------- Disposal of fixed asset investments 975 116 ------- ------- Profit on ordinary activities before interest 1,612 118 Net interest payable (485) (460) ------- ------- Profit/(loss) on ordinary activities before taxation 1,127 (342) Tax on profit/(loss) on ordinary activities (810) (584) ------- ------- Profit/(loss) on ordinary activities after taxation 317 (926) Equity minority interests (162) (129) Non-equity minority interests (51) (51) ------- ------- Profit/(loss) for the financial year 104 (1,106) ===== ===== Basic earnings/(loss) per share 0.34p (3.64)p Adjusted basic earnings per share 4.64p 3.47p * See basis of pro forma financial information described in Note 2 CONSOLIDATED BALANCE SHEET 31 MARCH 2000 31 March 31 March 2000 1999 £m £m Fixed assets Intangible assets 22,206 329 Tangible assets 6,307 2,150 Investments 122,338 372 Investments in joint ventures: - Share of gross assets 2,912 - - Share of gross liabilities (241) - ------- ------- 2,671 - Investments in associated undertakings 17,979 275 Other investments 101,688 97 ------- ------- 150,851 2,851 ------- ------- Current assets Stocks 190 45 Debtors 2,138 741 Liquid investments 30 - Cash at bank and in hand 159 6 ------- ------- 2,517 792 Creditors: amounts falling due within one year 4,441 1,530 ------- ------- Net current liabilities (1,924) (738) ------- ------- Total assets less current liabilities 148,927 2,113 Creditors: amounts falling due after more than one year 6,374 1,179 Provisions for liabilities and charges 193 10 ------- ------- 142,360 924 ===== ===== Capital and reserves Called up share capital 3,797 155 Share premium account 39,577 96 Merger reserve 96,914 - Other reserve 1,120 - Profit and loss account (575) 564 ------- ------- Total equity shareholders' funds 140,833 815 Equity minority interests 523 105 Non-equity minority interests 1,004 4 ------- ------- 142,360 924 ===== ===== CONSOLIDATED CASH FLOW FOR THE YEAR ENDED 31 MARCH 2000 Year ended Year ended 31 March 31 March 2000 1999 £m £m Net cash inflow from operating activities 2,510 1,045 Dividends received from associated undertakings 236 3 Net cash outflow for returns on investments and servicing of finance (406) (90) Taxation (325) (195) Net cash outflow for capital expenditure and financial investment (756) (688) Net cash outflow for acquisitions and disposals (4,756) (317) Equity dividends paid (221) (118) ------- ------- Cash outflow before management of liquid resources and financing (3,718) (360) Management of liquid resources (33) - Net cash inflow from financing 3,867 353 ------- ------- Increase/(decrease) in cash in the year 116 (7) ===== ===== Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash in the 116 (7) year Cash inflow from increase in debt (3,468) (360) Cash outflow from increase in liquid resources 33 - ------- ------- Increase in net debt resulting from cash flows (3,319) (367) Debt acquired on acquisition of subsidiaries (2,133) - Other movements 1 (5) Translation difference 316 (19) ------- ------- Increase in net debt in the year (5,135) (391) Opening net debt (1,508) (1,117) ------- ------- Closing net debt (6,643) (1,508) ===== ===== CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 MARCH 2000 Year ended Year ended 31 March 31 March 2000 1999 £m £m Profit for the financial year 487 637 Currency translation (1,130) 6 ------- ------- Total recognised gains and losses for the year (643) 643 ===== ===== MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS FOR THE YEAR ENDED 31 MARCH 2000 Profit for the financial year 487 637 Equity dividends (620) (197) ------- ------- (133) 440 Currency translation (1,130) 6 New share capital subscribed 140,037 19 Unvested option consideration 1,165 - Goodwill transferred to the profit and loss account in respect of business disposals 18 11 Scrip dividends 81 64 Other (20) (8) ------- ------- Net movement in equity shareholders' funds 140,018 532 Opening equity shareholders' funds 815 283 ------- ------- Closing equity shareholders' funds 140,833 815 ===== ===== NOTES TO THE PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2000 1 Basis of preparation The preliminary results for the year ended 31 March 2000 are an abridged statement of the full Group accounts which were approved by the Board of Directors on 29 May 2000. 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 non-pro forma information relating to the year ended 31 March 1999, except where restated for the capitalisation (bonus) issue in the year, 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. On 29 June 1999, Vodafone Group Plc ('Vodafone Group') was renamed Vodafone AirTouch Plc ('Vodafone AirTouch'). On 30 June 1999, the merger of Vodafone AirTouch and AirTouch Communications, Inc. ('AirTouch') was completed. Vodafone AirTouch has accounted for the merger as an acquisition under UK GAAP in accordance with Financial Reporting Standard ('FRS') 6, 'Acquisitions and Mergers'. The unaudited pro forma consolidated financial information is also prepared on this basis. Vodafone AirTouch's offer for Mannesmann closed on 27 March 2000, with valid acceptances for approximately 98.62% of the ordinary shares of Mannesmann AG having been received by that date. European Commission approval of the acquisition was received on 12 April 2000. Accordingly, the Group's consolidated profit and loss account prepared for the year ended 31 March 2000, and the unaudited pro forma consolidated profit and loss account, do not include the impact of the acquisition of Mannesmann AG. Additionally, the Group's consolidated profit and loss account for the year ended 31 March 2000 and the pro forma consolidated profit and loss accounts do not include any adjustments arising from the creation, on 3 April 2000, of Verizon Wireless under a joint venture arrangement with Bell Atlantic. The Group has adopted FRS 15 - 'Tangible Fixed Assets' and FRS 16 - 'Current Tax' in the year. Compliance with these standards has not required any changes to prior year comparatives. 2 Basis of pro forma financial information The unaudited pro forma consolidated profit and loss account and accompanying notes of Vodafone AirTouch for the year ended 31 March 2000 have been derived from its consolidated financial results for that period, and the unaudited financial results of AirTouch for the three month period ended 30 June 1999. The unaudited pro forma consolidated profit and loss account and accompanying notes of Vodafone AirTouch for the year ended 31 March 1999 are derived from the audited consolidated financial statements of Vodafone Group, and the unaudited consolidated financial statements of AirTouch, prepared for the corresponding period. The financial statements of AirTouch, which were previously prepared under US GAAP, have been adjusted to conform materially to Vodafone AirTouch's accounting policies under UK GAAP following the merger. The pro forma results for the year ended 31 March 2000 and the year ended 31 March 1999 have been determined as if the merger took place on 1 April 1999 and 1 April 1998, respectively, the first day of the financial accounting period presented in the unaudited pro forma consolidated profit and loss accounts for those periods. The pro forma merger adjustments reflected in the unaudited pro forma consolidated profit and loss accounts include assumptions made by Vodafone AirTouch's management that it believes to be reasonable. The unaudited pro forma consolidated profit and loss accounts do not take into account any synergies, including cost savings, or any severance and restructuring costs, which may or are expected to occur as a result of the merger, except in so far as such costs and savings have been included in the financial statements of Vodafone AirTouch for the year ended 31 March 2000. 3 Segmental analysis The Group operates substantially in one class of business, the supply of mobile telecommunications services and products. Analysis of total Group operating profit, net assets, pro forma turnover and pro forma total Group operating profit by geographical region is set out below. Total Group operating profit is stated after the inclusion of the Group's share of operating profit in joint ventures and associated undertakings. Statutory basis Year ended Year ended 31 March 31 March 2000 1999 £m £m Total Group operating profit (before goodwill and exceptional items) Europe, Middle East & Africa 1,103 314 United Kingdom 706 644 United States & Asia Pacific 729 14 2,538 972 ------- ------- Amortisation of goodwill (1,712) (9) Exceptional reorganisation costs (30) - ------- ------- 796 963 ===== ===== At At 31 March 31 March 2000 1999 £m £m Net assets Europe, Middle East & Africa 119,511 900 United Kingdom 729 779 United States & Asia Pacific 28,763 753 Net borrowings (6,643) (1,508) ------- ------- 142,360 924 ===== ===== Pro forma basis* Year ended Year ended 31 March 31 March 2000 1999 £m £m Turnover Europe, Middle East & Africa 2,030 1,617 United Kingdom 2,901 2,088 United States & Asia Pacific 3,956 3,313 ------- ------- 8,887 7,018 ====== ====== Total Group operating profit (before goodwill and exceptional items) Europe, Middle East & Africa 1,321 983 United Kingdom 706 644 United States & Asia Pacific 915 633 ------- ------- 2,942 2,260 Amortisation of goodwill (2,275) (2,258) Exceptional reorganisation costs (30) - ------- ------- 637 2 ====== ====== Profit on ordinary activities before taxation, goodwill and exceptional items Total Group operating profit (before goodwill and exceptional reorganisation costs) 2,942 2,260 Net interest payable (before exceptional finance costs) (468) (460) ------- ------- 2,474 1,800 ====== ====== * See basis of pro forma financial information described in Note 2. Exceptional reorganisation costs are in respect of the merger with AirTouch and have been incurred in the United States. Exceptional finance costs of £17m have been incurred in restructuring the Group's borrowing facilities as a result of the acquisition of Mannesmann. 4 Taxation Year ended Year ended 31 March 31 March 2000 1999 £m £m United Kingdom taxation 128 169 International taxation: Subsidiary undertakings 366 73 Joint ventures and associated undertakings 191 10 ------- ------- 557 83 ------- ------- 685 252 ====== ====== 5 Equity dividends The directors propose a final dividend of 0.680p per share for the year ended 31 March 2000, making a total of 1.335p (1999 - 1.272p) for the year. The record date for the final dividend is 9 June 2000 and the dividend is payable on 11 August 2000. Shareholders may take a scrip dividend alternative to the cash dividend in accordance with the rules of Vodafone AirTouch Plc's Scrip Dividend Scheme. The ex-dividend date is 5 June 2000 and the last date for elections or variations to mandates under the Scrip Dividend Scheme is 12 July 2000. 6 Earnings per share Year ended Year ended 31 March 31 March 2000 1999 £m £m Statutory basis Earnings for basic and diluted earnings per share 487 637 Amortisation of goodwill 1,712 9 Exceptional reorganisation costs, net of attributable taxation 19 - Disposals of fixed asset investments, net of attributable taxation (954) (64) Exceptional finance costs, net of attributable taxation 12 - ------- ------- Earnings for adjusted earnings per share 1,276 582 ====== ====== Weighted average number of shares (millions): Basic and adjusted 27,100 15,445 Earnings per share have been restated for prior periods to give effect to the capitalisation issue on 30 September 1999. Year ended Year ended 31 March 31 March 2000 1999 £m £m Pro forma basis* Earnings/(loss) for the financial year for basic earnings/(loss) per share 104 (1,106) Amortisation of goodwill 2,275 2,258 Exceptional reorganisation costs, net of attributable taxation 19 - Disposals of fixed asset investments, net of attributable taxation (975) (98) Exceptional finance costs, net of attributable taxation 12 - ------- ------ Earnings for adjusted earnings per share 1,435 1,054 ====== ====== Weighted average number of shares (millions): Basic and adjusted 30,908 30,381 * See basis of pro forma financial information described in Note 2. 7 Reconciliation of operating profit to net cash inflow from operating activities Year ended Year ended 31 March 31 March 2000 1999 £m £m Operating profit 981 847 Depreciation and amortisation 1,432 297 Increase in stocks (65) (15) Increase in debtors (271) (213) Increase in creditors 433 129 ------- ------- 2,510 1,045 ====== ====== 8 Net cash outflow for capital expenditure and financial investment Year ended Year ended 31 March 31 March 2000 1999 £m £m Purchase of intangible fixed assets (185) (18) Purchase of tangible fixed assets (1,848) (737) Purchase of trade investments (17) (4) Disposal of interests in tangible fixed assets 294 54 Disposal of trade investments 991 14 Loans repaid by associated undertakings 9 3 ------- ------- (756) (688) ====== ====== 9 Net cash outflow for acquisitions and disposals Year ended Year ended 31 March 31 March 2000 1999 £m £m Purchase of subsidiary undertakings (4,062) (255) Net cash acquired with subsidiary undertakings 4 - Disposal of interest in subsidiary undertaking - 19 Purchase of interests in associated undertakings (717) (75) Purchase of customer bases (9) (10) Disposal of interests in associated undertakings 28 4 ------- ------- (4,756) (317) ====== ====== 10 Analysis of net debt Other non-cash Acquisitions changes & At 1 (excluding exchange At 31 April Cash cash & movements March 1999 flow overdrafts) 2000 £m £m £m £m £m Liquid investments - 33 - (3) 30 ------ ------ ------ ------- ------- Cash at bank and in hand 6 153 - - 159 Bank overdrafts (6) (37) - - (43) ------ ------ ------ ------- ------- - 116 - - 116 ------ ------ ------ ------- ------- Debt due within one year (other than bank overdrafts) (371) (149) (449) 218 (751) Debt due after one year (1,137) (3,319) (1,684) 102 (6,038) ------ ----- ------- ------ ------- (1,508) (3,468) (2,133) 320 (6,789) ------ ----- ------- ------ ------ (1,508) (3,319) (2,133) 317 (6,643) ===== ===== ===== ===== ===== 11 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 GAAP. A description of the relevant accounting principles which differ materially is provided within Vodafone AirTouch Plc's Annual Report & Accounts for the year ended 31 March 2000. The effects of these differing accounting principles are as follows: Statutory basis Year ended Year ended 31 March 31 March 2000 1999 £m £m UK GAAP net income 487 637 Items (decreasing)/increasing net income: Goodwill amortisation (425) (99) Reorganisation costs 25 - Profit on disposal of fixed asset investments 1 4 Income taxes 439 (28) Minority interests 35 - Other (9) (4) ----- ----- Net income in accordance with US GAAP 553 510 ===== ===== US GAAP basic earnings per ordinary share 2.04p 3.30p Pro forma basis * Year ended Year ended 31 March 31 March 2000 1999 £m £m UK GAAP pro forma net 104 (1,106) income/(loss) Items (decreasing)/increasing net income/(loss): Goodwill amortisation (534) (535) Reorganisation costs 25 - Profit on disposal of fixed asset investments 1 4 Income taxes 625 637 Minority interests 46 45 Other (9) 4 ------- ------- Pro forma net income/(loss) in accordance with US GAAP 258 (951) ===== ===== US GAAP pro forma basic earnings/(loss) per ordinary share 0.83p (3.13)p * See basis of pro forma financial information described in Note 2. 12 Unaudited pro forma proportionate information The following tables of pro forma customer and financial information are presented on a proportionate basis. Proportionate presentation is not required by 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. Joint ventures are consolidated using the gross equity method. 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 flow 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. As a condition to the European Commission's approval of the merger with AirTouch Communications, Inc. the Group entered into an undertaking to dispose of its interest in E-Plus Mobilfunk GmbH following merger completion. As a result, pro forma proportionate customer and financial information excludes E-Plus for the years presented. Pro forma basis At At 31 March 31 March 2000 1999 Proportionate customer information (thousands) Europe, Middle East & Africa 15,662 9,170 United Kingdom 8,791 5,575 United States & Asia Pacific 14,686 10,676 ------- ------- Proportionate number of customers 39,139 25,421 ===== ===== Pro forma basis* Year ended Year ended 31 March 31 March 2000 1999 £m £m Proportionate financial information Europe, Middle East & Africa 4,437 3,208 United Kingdom 2,945 2,170 United States & Asia Pacific 5,187 3,807 ------- ------- Proportionate turnover 12,569 9,185 ===== ===== Europe, Middle East & Africa 1,492 1,127 United Kingdom 934 816 United States & Asia Pacific 1,522 1,103 ------- ------- Proportionate EBITDA ** 3,948 3,046 Less: Depreciation and amortisation, excluding goodwill (1,240) (991) ------- ------- Proportionate total Group operating profit before goodwill and exceptional costs 2,708 2,055 ===== ===== * See basis of pro forma financial information described in Note 2. ** Proportionate EBITDA (earnings before interest, tax, depreciation and amortisation) is defined as operating profit before exceptional reorganisation costs plus 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. 13 Rates of dividends 2000 1999 Final proposed (1999 - second interim) 10.8% 10.2% (% of nominal value) Amount absorbed (to shareholders on the Register at close of business on 9 June 2000) £417m £100m Interim already paid (% of nominal value) 10.8% 9.9% Amount absorbed £203m £97m TOTAL (% of nominal value) 21.6% 20.1% TOTAL AMOUNT ABSORBED £620m £197m The rates of dividends for the year ended 31 March 1999 have been restated. Statements in this document relating to future status or circumstances, including statements regarding future performance, costs, revenues, cash flows, earnings, divestments, growth, market share and other trend projections and the synergistic benefits of transactions, are forward-looking statements. These statements may generally, but not always, be identified by the use of words such as 'anticipates', 'should', 'expects', 'estimates', 'believes' or similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward-looking statements due to many factors, many of which are outside Vodafone AirTouch's control, including the ability to obtain regulatory approvals (including new licences) without onerous conditions, the risk of negative impacts on Vodafone AirTouch's credit ratings, the potential costs, including tax costs, of divesting Orange and Mannesmann's industrial businesses, general economic conditions, competition, technical difficulties and the need for increased capital expenditure (such as that resulting from increased demand for usage, new business opportunities, new licences and deployment of new technologies) and the ability to release benefits from entering into partnerships for developing data and internet services. For further information contact:- Terry Barwick, Director of Corporate Affairs Tim Brown, Director of Investor Relations Melissa Stimpson, Senior Investor Relations Manager Tel: +44 (0) 1635 33251 Lulu Bridges / Peter Willetts Tavistock Communications Tel: +44 (0) 20 7600 2288 MORE TO FOLLOW FRCEAFSEDAEEEEE

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