FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
Dated 27 May, 2003
VODAFONE GROUP
PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter)
VODAFONE HOUSE, THE CONNECTION, NEWBURY, BERKSHIRE, RG14 2FN, ENGLAND
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F..x... Form 40-F.....
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ..... No ..X...
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- ________
This Report on Form 6-K contains a press release issued by Vodafone Group Plc on
27 May 2003 entitled Preliminary Results for the year ended 31 March 2003.
Vodafone Group Plc
Preliminary Results for the year ended 31 March 2003
PART 1
Embargo:
VODAFONE GROUP PLC Not for
publication
PRELIMINARY ANNOUNCEMENT OF RESULTS before 07:00
YEAR ENDED 31 MARCH 2003 hours
27 May 2003
Continued excellent operating performance with strong
revenue, profit and free cash flow growth
* Turnover increased 33% to GBP30,375 million, including the effect of a first
full year's results from the Group's Japanese operations, with Group data
revenues increasing 73% to GBP3,622 million. Proportionate turnover increased
14% to GBP33,926 million
* Profit on ordinary activities before taxation, before goodwill amortisation of
GBP14,056 million and exceptional items of GBP581 million, increased 36% to
GBP8,429 million
* Earnings per ordinary share, before goodwill amortisation and exceptional
items, increased by 32% to 6.81 pence. Basic loss per share reduced from 23.77p
to 14.41p
* Loss for the financial year of GBP9,819 million, compared to GBP16,155 million
for the prior year
* Final dividend increased to 0.8983 pence per share. Total dividend per share
for year increased 15%
* Group proportionate EBITDA, before exceptional items, increased 26% to
GBP12,679 million. Mobile business proportionate EBITDA margin, before
exceptional items, improved to 38.4%. Group EBITDA, before exceptional items,
increased by 40% to GBP11,217 million
* Free cash flow more than doubled to GBP5,171 million after investing GBP5,180
million in tangible capital expenditure
* Organic customer growth of 11%. Proportionate registered customers at 31 March
2003 of 119.7 million
Lord MacLaurin, Chairman, commented:
Once again we have delivered excellent results and this is a great testament to
Sir Christopher Gent, our retiring Chief Executive. Sir Christopher has led our
Company with great distinction over these past six and a half years taking
Vodafone from a company of modest scale and international reach to the leading
mobile telecommunications company in the world, a great achievement.
Sir Christopher Gent, Chief Executive, commented:
These results show that Vodafone has again exceeded expectations. In particular,
we achieved strong year-on-year growth in operating profit, before goodwill
amortisation and exceptional items, adjusted earnings per share, EBITDA and free
cash flow. Today Vodafone has an unmatched global footprint and is now combining
this strength with a range of services for customers which gives Vodafone a real
competitive advantage. We are progressively building a brand ascendancy in
mobile which is gaining recognition both within our industry and in the world at
large. The continuing improvement in performance enables Vodafone to build new
services for the future for our customers while continuing to grow returns for
our shareholders.
Julian Horn-Smith, Group Chief Operating Officer, commented:
We have produced an excellent operating performance with good customer growth,
positive ARPU trends and continued focus on cost management, delivering a strong
improvement in both margins and cash flow generation. The successful launch of
Vodafone live! is the most visible manifestation of our strategy to drive
revenue through the take up of service offerings unique to Vodafone. We have
laid the foundation for further profitable growth and success in the years
ahead.
GROUP FINANCIAL HIGHLIGHTS
Statutory Year ended 31 March
2003 2002 Increase
GBPm GBPm %
Turnover 30,375 22,845 33
Group EBITDA, before
exceptional items 11,217 8,031 40
Total Group operating profit,
before goodwill amortisation
and exceptional items 9,181 7,044 30
Profit on ordinary activities
before taxation, before
goodwill amortisation and
exceptional items 8,429 6,199 36
Goodwill amortisation (14,056) (13,470) 4
Exceptional operating items (576) (5,408) -
Exceptional non-operating items (5) (860) -
-------- --------- --------
Loss on ordinary activities
before taxation (6,208) (13,539) -
Loss for the financial year (9,819) (16,155) -
Proportionate Year ended 31 March
2003 2002 Increase
GBPm GBPm %
Turnover
- Mobile telecommunications 31,853 27,818 15
- Other operations 2,073 1,981 5
-------- --------- --------
33,926 29,799 14
Organic growth at constant 9
exchange rates
EBITDA, before exceptional items
- Mobile telecommunications 12,235 9,902 24
- Other operations 444 191 132
-------- --------- --------
12,679 10,093 26
Organic growth at constant
exchange rates 22
Proportionate information is calculated on the basis described on page 34.
Cash flow information Year ended 31 March
2003 2002 Increase
GBPm GBPm %
Net cash inflow from
operating activities 11,142 8,102 38
Free cash flow 5,171 2,365 119
Net debt at 31 March 13,839 12,034 15
Per share information Year ended 31 March
2003 2002 Increase
%
Earnings/(loss) per share
- before goodwill amortisation
and exceptional items 6.81 p 5.15 p 32
- after goodwill amortisation
and exceptional items (14.41)p (23.77)p -
Dividends per share 1.6929p 1.4721p 15
This results announcement contains certain information on the Group's results
and cash flows that have been derived from amounts calculated in accordance with
UK Generally Accepted Accounting Principles, ("UK GAAP"), but are not themselves
UK GAAP measures. They should not be viewed in isolation as alternatives to the
equivalent UK GAAP measure and should be read in conjunction with the equivalent
UK GAAP measure. Further disclosures are also provided under "Use of Non-GAAP
Financial Information" on page 38.
GROUP OPERATING HIGHLIGHTS
* Sustained improvement in ARPU in many key markets in Europe, driven by
increased usage of both voice and data services, combined with better than
expected ARPU levels in Japan
* Continued strong progress in data, with revenues from data services increasing
by 73% to GBP3,622 million, representing 14.6% of service revenues for the year
ended 31 March 2003 and 15.6% of service revenues for the month of March 2003.
Data service revenues expected to exceed 20% of mobile service revenues in 2004
* Further improvement in the Group's mobile business proportionate EBITDA
margin, before exceptional items, which improved by 2.8 percentage points to
38.4%. Japanese mobile proportionate EBITDA margin, before exceptional items, of
31.3% from 22.5% in the prior year. Group proportionate EBITDA margin, before
exceptional items, improved 3.5 percentage points to 37.4%
* Worldwide customer base of 119.7 million proportionate registered customers,
representing growth of 18.6 million or 18.4% since 31 March 2002, including 10.7
million organic net additions. Venture registered customer base of 296.0 million
* Tangible fixed asset additions of approximately GBP4,800 million, lower than
expected due to rephasing and cost efficiencies
* Mannesmann synergies calculated on a proportionate after tax cash flow basis
achieved, exceeding target set for the year ended 31 March 2003
VODAFONE LIVE!
* European launch of Vodafone live!, Vodafone's easy to use consumer service,
bringing customers a world of colour, sound and pictures, with over one million
live! customers at 31 March 2003
* Now launched in thirteen countries
* Critically acclaimed by the industry, receiving awards from the GSM
Association for best consumer application, advertising and mobile handset
OTHER COMMERCIAL INITIATIVES
* Launch of the first global service from Vodafone's business proposition,
Mobile Office from Vodafone, called Mobile Connect Card, offering a
Vodafone-branded solution for secure remote connection of laptops to a corporate
network using a Vodafone-enabled GPRS data card and customised software
* Launch of new services: prepaid top-ups, allowing customers to top-up their
prepaid mobile phones when travelling abroad; Eurocall Platinum, aimed at
high-usage business travellers in Europe; and GPRS roaming, enabling seamless
access to Vodafone live! and Mobile Connect Card across Vodafone and Vodafone's
partner networks
* Continued development of the brand through high-profile sponsorship and
advertising campaigns, leading to increased brand recognition and awareness
* Partner network agreements in eight countries, including Iceland, which was
signed in April 2003
SIGNIFICANT TRANSACTIONS
* Acquisition of remaining minority stakes in Vodafone Germany and Vodafone
Spain for a total cash consideration of GBP2,050 million, and additional
minority stakes in the Group's subsidiaries in the Netherlands, Portugal and
Sweden for a total cash consideration of GBP1,062 million
* Acquisition of additional 15% stake in Cegetel for a cash consideration of
GBP1,402 million, taking the Group's economic interest in Cegetel and SFR to 30%
and approximately 43.9%, respectively
* Further investment of $750 million (GBP513 million) in China Mobile,
increasing interest to approximately 3.27%
* Cash proceeds of approximately Eur 1 billion (GBP0.7 billion) raised through
asset disposals
OUTLOOK
For the year ending 31 March 2004
In the coming year, the Group expects to achieve growth of over 10% in average
proportionate customers with a similar growth in proportionate revenues. In
addition, a forecast small improvement in EBITDA margins should generate better
proportionate EBITDA growth than revenue growth. The Group anticipates a good
performance for adjusted earnings per share growth.
This year should see a further improvement in capital efficiency. This year's
tangible fixed asset additions are expected to be approximately GBP5 billion,
slightly higher than the year just finished, mainly through deferred investment
from last year. The Group also expects to generate free cash flow somewhat
higher than the GBP5.2 billion in the year just ended.
BUSINESS REVIEW
2003 2002 Increase
GBPm GBPm %
Turnover
- Mobile telecommunications 27,542 20,742 33
- Other operations 2,833 2,103 35
------- ------- -------
30,375 22,845 33
Cost of sales (17,896) (13,446) 33
Sales and administration costs* (5,403) (4,328) 25
Share of operating profit in joint
ventures and associated
undertakings* 2,105 1,973 7
------- ------- -------
Total Group operating profit* 9,181 7,044 30
Goodwill amortisation (14,056) (13,470) 4
Exceptional operating items (576) (5,408) -
------- ------- -------
Total Group operating loss (5,451) (11,834) -
------- ------- -------
* Before goodwill amortisation and exceptional items
Turnover
Turnover increased 33% in the year. Growth from existing operations was
GBP2,440m, an increase of 11%, and growth in respect of acquired businesses was
GBP5,090m, mainly comprising J-Phone Vodafone and Japan Telecom which became
subsidiaries from October 2001. Changes in exchange rates beneficially impacted
the reported growth in total turnover as a result of a stronger Euro partially
offset by a weaker Yen. Translating the results of overseas companies at
exchange rates prevailing in the prior year would reduce reported growth by
GBP171m.
The GBP6,800m increase in turnover from mobile telecommunications comprises
GBP2,584m growth from existing operations, representing an increase of over 12%,
and GBP4,216m of growth from the full year inclusion of J-Phone Vodafone. Mobile
service revenue increased 32% to GBP24,824m, as a result of greater usage of
voice services, increased penetration of data products and services and the
benefit of a full year's service revenues from J-Phone Vodafone. Revenues from
voice services for the year ended 31 March 2003 were GBP21,201m, representing an
increase of 27% over the comparable period. The Group achieved a sustained
improvement in ARPU in many key markets in Europe, compared with the twelve
month period ended 31 March 2002, as benefits from the Group's continued focus
on high value customers led to increased penetration of the contract customer
segment and initiatives to stimulate usage, including the launch of new and
innovative products, were realised. In Japan, J-Phone Vodafone's ARPU fell 5.2%,
though this was better than expected and, at Yen 87,159, still represents the
highest ARPU of all the Group's controlled businesses.
Another key driver of the growth in turnover and improved ARPU position was the
continued success of the Group's data product and service offerings. Revenues
from data services increased 73% to GBP3,622m for the year ended 31 March 2003
from GBP2,093m for the year ended 31 March 2002, to represent 14.6% of service
revenues in the Group's controlled mobile subsidiaries, compared with 11.1% for
the 2002 financial year. Whilst SMS revenues continue to represent the largest
component of data revenues, an increased focus on providing value-added services
has contributed to the increase in data revenues and the increased penetration
of data services into the Group's customer base. In Japan, J-Phone Vodafone
continues to enjoy success from its data and content service offerings such that
data revenues have represented over 20% of service revenues every month since
August 2002.
During the period, Vodafone live! and Mobile Office from Vodafone were launched
in most of the Group's European markets, both of which are expected to generate
further growth in non-voice service revenues through games downloads, picture
messaging and other content and information services. Further details on these
two new service offerings can be found under "Strategic Developments - Global
Services" on pages 18 and 19.
Mobile service revenue growth was adversely affected both by reductions in
interconnect rates in a number of the Group's markets, mainly in Europe, and the
effect of increased competitive activity in certain key European markets by
existing competitors looking to attract market share and generate customer
loyalty.
Mobile equipment and other turnover increased 36% to GBP2,719m for the year
ended 31 March 2003, compared with GBP2,003m for the year ended 31 March 2002,
largely attributable to the volume of gross customer connections and upgrades in
the year, including a full year impact of J-Phone Vodafone and the effects of
the reduction in handset subsidies, in line with the Group's strategy.
Turnover from other operations increased by GBP730m in the year to GBP2,833m, an
increase of 35%. This change was primarily a result of the impact of Japan
Telecom, which was consolidated for a full year, and a turnover reduction from
other operations, principally in Arcor, following the disposal of the Telematiks
business.
Expenses
Consolidated cost of sales represented 58.9% of turnover in both the years ended
31 March 2003 and 31 March 2002. Excluding J-Phone Vodafone, the Group's
equipment costs and cost of providing financial incentives to service providers
and dealers for acquiring and retaining customers declined to 13.8% of turnover
from mobile telecommunications, compared with 14.7% for the prior year,
demonstrating the continued focus on gaining and retaining high-value customers
in the most cost-efficient manner. Inclusive of J-Phone Vodafone, equipment
costs and financial incentives amounted to 21.1% of turnover from mobile
telecommunications as costs to connect and retain customers, although reducing,
remain higher in Japan than in the Group's other key markets.
Sales and administration costs, excluding goodwill amortisation and exceptional
items, increased almost entirely as a result of the full year inclusion of
results from J-Phone Vodafone and Japan Telecom and represent 17.8% of turnover
in respect of the year ended 31 March 2003, compared with 18.9% for the prior
year. Excluding J-Phone Vodafone and Japan Telecom, sales and administration
costs represented 20.3% and 23.5% of turnover for the year ended 31 March 2003
and 2002, respectively, as these costs were reduced across the Group, reflecting
the realisation of benefits from the Group's continued focus on cost control and
the realisation of synergies on acquisitions.
Depreciation charges, which are charged within both cost of sales and sales and
administration costs, increased by 38% to GBP3,979m from GBP2,880m in the
comparable period. The increase was primarily as a result of the full year
inclusion of J-Phone Vodafone and Japan Telecom. However, a proportion of the
increase was also attributable to network infrastructure improvements and
additions made in the previous and current financial year. In Japan,
depreciation increased as a result of the increased charge in respect of its
UMTS network, which was opened for commercial service in December 2002 and in
Germany, depreciation increased as a result of the prior year expenditure on
network infrastructure improvements.
The charge for goodwill amortisation increased as a result of a full year's
charge for prior year acquisitions, charges in respect of current year
acquisitions and the impact of foreign exchange movements.
Exceptional operating costs comprise impairment charges of GBP405m and GBP80m in
respect of the tangible fixed assets of Japan Telecom and goodwill in respect of
the Group's interest in Grupo Iusacell, respectively, additional costs incurred
as a result of the integration of Vizzavi into the Group, following the
acquisition of the remaining 50% interest in August 2002, and related
restructuring of the Group's Global mobile platform business.
Total Group operating profit, before goodwill amortisation and exceptional items
Total Group operating profit, before goodwill amortisation and exceptional
items, increased by 30% as a result of growth in turnover, improved margins and
the benefit of changes in exchange rates, particularly the impact of a stronger
Euro offset by a weaker Yen and US dollar. Translating the results of overseas
companies at exchange rates prevailing in the prior year would reduce reported
growth by GBP25m.
Proportionate results
Proportionate turnover increased 14% to GBP33,926m as a result of both strong
organic growth together with the effect of increased stakes in a number of the
Group's existing businesses, principally Japan Telecom and J-Phone Vodafone. In
the mobile businesses, proportionate turnover grew by 15% to GBP31,853m,
including 10.4% organic growth in service revenues.
The Group's proportionate EBITDA margin, before exceptional items, in the mobile
businesses increased from 35.6% in the prior year to 38.4% in the year ended 31
March 2003, with most of the Group's main operations reporting increased EBITDA
margins. Greater control over customer acquisition and retention costs accounted
for 1.1 of the 2.8 percentage point increase in the Group's mobile EBITDA
margin, before exceptional items, during the year, with the remainder of the
margin improvement arising from cost control measures and the realisation of
Group synergies and efficiency gains, including the achievement of synergies
expected from the Mannesmann acquisition. In Japan, proportionate mobile EBITDA
margins, before exceptional items, have been raised from 22.5% to 31.3%, as a
result of lower customer acquisition and retention costs and the impact of an
extensive range of restructuring initiatives, including the merger of the
regional operating companies into a single structure. The EBITDA margin, before
exceptional items, has exceeded 30% over two years ahead of Company expectations
on taking control in October 2001.
Mobile Telecommunications
Northern Europe
Financial highlights Year ended 31
March
2003 2002 Increase
GBPm GBPm %
Statutory turnover - United Kingdom 4,026 3,763 7
- Other Northern
Europe 2,031 1,669 22
-------- --------
6,057 5,432 12
-------- --------
Statutory total Group - United Kingdom 1,120 941 19
operating profit * - Other Northern
Europe 1,102 744 48
-------- --------
2,222 1,685 32
-------- --------
Proportionate Turnover - United Kingdom 4,026 3,763 7
- Other Northern
Europe 3,396 2,753 23
-------- --------
7,422 6,516 14
-------- --------
Proportionate EBITDA - United Kingdom 1,541 1,294 19
(before exceptional - Other Northern
items) Europe 1,358 970 40
-------- --------
2,899 2,264 28
-------- --------
Proportionate EBITDA - United Kingdom 38.3% 34.4%
Margin - Other Northern 40.0% 35.2%
Europe
Key performance indicators (United Kingdom only)
ARPU GBP292** GBP276
Churn 30.0% 27.3%
Cost to connect GBP56** GBP67
* Before goodwill amortisation and exceptional items
** Amended basis of calculation. See page 41 for further details
United Kingdom
Vodafone UK has had a successful year, strengthening its contract customer base,
launching innovative new products and increasing ARPU which, coupled with the
continued focus on cost efficiencies, have driven growth in statutory turnover
and EBITDA, and led to growth in the proportionate EBITDA margin of almost 4
percentage points.
Statutory turnover increased 7% to GBP4,026m and within this, service revenue
increased by 6% to GBP3,748m, compared with GBP3,525m in the year ended 31 March
2002. ARPU grew by 6%, primarily due to a favourable combination of the improved
mix of the customer base, the focus on high value customers and through
stimulation of usage. Contract ARPU fell from GBP555 to GBP532 in the year.
However, this is demonstrating signs of stabilising having fallen only GBP4
since 30 September 2002. Prepaid ARPU increased to GBP125 at 31 March 2003 from
GBP118 at 31 March 2002.
In the latest figures reported by Oftel, published during April 2003, Vodafone
UK maintained its lead in revenue market share for outbound calls, with a lead
of 7 percentage points over its nearest competitor. Data as a percentage of
service revenue grew by 2.6 percentage points from 11.8% to 14.4%. Vodafone UK
anticipates continued improvement in the 2004 financial year as the full
benefits from propositions such as Vodafone live! are increasingly realised.
Attracting and retaining contract customers has continued to be a key objective
in the past year as part of the realignment of commercial policies to focus on
high value customers. At 31 March 2003, Vodafone UK had 13,300,000 registered
customers, an increase of 114,000 since 31 March 2002, of which contract
customers represented 41%, having grown by 9% in the year. In the same period
contract churn fell from 26.2% to 23.1%.
According to information contained in the latest Oftel report, at 31 December
2002, Vodafone UK's contract base exceeded that of its nearest competitor by
21%. The acquisition of Cellular Operations Limited also added a further 370,000
contract customers to the in-house managed base. Prepaid churn increased to
34.5%.
Vodafone UK participated in the Group's launch of Vodafone live! in October 2002
and, by the end of March 2003, 240,000 Vodafone live! handsets had been
activated, with 413,000 MMS capable handsets activated in total.
Customer activity levels were also improved in the year, with total active
customers increasing to 91%, compared with 89% at 31 March 2002. Contract
customer activity reduced to 95% and prepaid customer activity improved 4
percentage points to 88%.
Total operating expenses, excluding goodwill amortisation and exceptional items,
as a proportion of turnover continued to decline, falling from 19.9% for the
year ended 31 March 2002 to 19.6% for the year ended 31 March 2003. The average
cost to connect for contract customers was GBP117, slightly up compared with the
GBP116 as reported for the prior year. The average cost to connect for prepaid
customers fell from GBP26 to GBP10 for the year to 31 March 2003, reflecting
continued efforts to reduce subsidies.
Vodafone UK continues to be recognised in Oftel surveys as the leading UK
network, with a call success rate of 98.3% as a result of continued investment
to improve its network.
During the year, the Competition Commission concluded its investigation into the
cost of calling mobile phones. Despite its acknowledgement that the overall
profits within the industry were not excessive, it sought to re-balance margins
across the industry by requiring a reduction in the cost of calling mobile
phones across all UK networks. Vodafone UK believes the basis on which the
Competition Commission calculated these reductions is flawed and has requested a
judicial review of this decision, which will be heard in June. Vodafone UK has
also taken commercial actions to mitigate the effect of the required reduction.
Other Northern Europe
All operations in the region reported increases in customer numbers, most
notably in Sweden where customer numbers grew by 14% to 1,325,000, despite
market penetration of 89%, and in France where SFR increased its customer base
by 7% to 13,324,000 and its market share from an estimated 34.2% to 35.1%. The
increase in revenues is partially as a result of these improvements in customer
numbers but is mainly due to increased customer usage. In the Netherlands, ARPU
grew by over 13%, driven by the improved mix in the customer base and the
introduction of new services. In Ireland, outstanding data revenue growth
resulted in data revenues representing 19.1% of service revenues for the year
ended 31 March 2003 and exceeding 20% of service revenues since December 2002.
As a result of this growth in data usage, and the highest levels of voice usage
in the Group's European businesses, ARPU in Ireland continues to be amongst the
highest in the Group.
Vodafone live! was launched in all of the Group's subsidiary operating companies
in the region during the period.
Strong financial performance was achieved across the region, principally
attributable to increases in customer usage, particularly of data services, and
continued focus on cost effectiveness. In addition, the region benefited from
the first full year inclusion of Vodafone Ireland, which became a subsidiary of
the Group in May 2001, and the relative strength of the Euro and Swedish Kronor
against Sterling.
The Group successfully completed the rollout of its rebranding programme across
its other operations within Northern Europe as Europolitan Vodafone migrated to
the single Vodafone brand in April 2002. The Group has also increased its
interests in Vodafone Netherlands and Vodafone Sweden during the year to 97.2%
and 99.1%, respectively, at 31 March 2003. The Group has commenced in Sweden,
and intends to commence in the Netherlands, compulsory acquisition procedures to
acquire the remaining shares in these operations. In addition, the Group has
increased its effective holding in SFR from 32.0% to approximately 43.9% at 31
March 2003 through the acquisition of an additional 15% stake in Cegetel.
The Group announced further Partner Agreements with Radiolinja Eesti in Estonia
on 3 December 2002 and, on 16 April 2003, with Islandssimi hf in Iceland, adding
to the existing Partner Agreements with Oy Radiolinja (Finland) and TDC Mobil
(Denmark) within Northern Europe.
Central Europe
Financial highlights Year ended 31
March
2003 2002 Increase
GBPm GBPm %
Statutory turnover - Germany 4,646 4,112 13
- Other
Central
Europe 129 65 98
-------- --------
4,775 4,177 14
-------- --------
Statutory total Group - Germany 1,435 1,429 -
operating profit * - Other
Central
Europe 181 114 59
-------- --------
1,616 1,543 5
-------- --------
Proportionate turnover - Germany 4,642 4,101 13
- Other
Central
Europe 691 593 17
-------- --------
5,333 4,694 14
-------- --------
Proportionate EBITDA - Germany 2,016 1,837 10
(before exceptional - Other
items) Central
Europe 265 231 15
-------- --------
2,281 2,068 10
-------- --------
Proportionate EBITDA - Germany 43.4% 44.8%
margin - Other
Central
Europe 38.4% 39.0%
Key performance indicators (Germany only)
ARPU Eur 313 Eur 298
Churn 21.2% 23.5%
Cost to connect Eur 81 Eur 81
* Before goodwill amortisation and exceptional items
Vodafone Group Plc
Preliminary Results for the year ended 31 March 2003
PART 2
Germany
Vodafone Germany delivered a good set of operating results with increased
turnover and service revenue being driven by the improved mix in the customer
base and higher usage of both voice and data services. In particular, the
proportion of messaging and data revenue rose by 2 percentage points, benefiting
from the launch of Vodafone live!, and now represents 16.4% of service revenue
for the year ended 31 March 2003. The results for Germany also benefited from
the effect of a stronger Euro. When measured in local currency, statutory
turnover increased by 8%.
At 31 March 2003, Vodafone Germany had a customer base of 22,940,000,
representing an increase of 7% compared with 31 March 2002. The proportion of
contract customers rose by 4 percentage points, compared with the prior year, to
10,694,000 and contract customers now represent 47% of the total customer base.
Customer activity levels also increased to 92% at 31 March 2003, compared to 91%
at 31 March 2002. Customer churn decreased following a significantly reduced
contract churn rate, which decreased from 18.3% to 16.8%, and a reduction in
prepaid churn rate from 27.1% to 24.8%.
ARPU increased during the year, although contract ARPU decreased from Eur 559 to
Eur 519 as a result of higher contract penetration, including customer
migrations from prepaid to contract tariffs. Prepaid ARPU increased from Eur 110
to Eur 130, reflecting higher usage levels. Following further reductions in
equipment subsidies in the contract segment and reduced commissions per gross
addition in both segments, the cost to connect for contract customers decreased
from Eur 156 to Eur 145 and the cost to connect for prepaid customers further
declined from Eur 24 to Eur 19.
The reduction in the proportionate EBITDA margin was predominantly due to higher
retention costs. Operating profit was adversely affected by higher depreciation
over the prior year as a result of the prior year expenditure on network
infrastructure and IT system improvements.
Vodafone Germany participated in the Group's launch of Vodafone live! in October
2002 and, by the end of March 2003, 405,000 Vodafone live! handsets had been
activated, with 694,000 MMS capable handsets activated in total.
The Mobile Connect Card has been launched for business customers and Wireless
Local Area Network (W-LAN) will continue to be deployed by Vodafone Germany in
the coming months. Lufthansa lounges, airports, exhibitions, congress centres
and important hotel chains will also be equipped with W-LAN by Vodafone Germany.
In the 2004 financial year, Vodafone Germany expects to launch other innovative
services, including multimedia video clips, as it prepares for commercial launch
of 3G services.
Vodafone Germany's 3G network infrastructure rollout is proceeding according to
plan and in accordance with the licence obligation to provide at least 25%
population coverage by the end of the calendar year 2003.
Other Central Europe
The Group's other interests within Central Europe reported improved financial
performance, reflecting both continued penetration of their respective mobile
markets and improved operational efficiency. At 31 March 2003, the total
registered customer base within Other Central Europe stood at 9,428,000, an
increase of 24% in the year.
At 31 March 2003, Vodafone Hungary's registered venture customers amounted to
954,000, representing growth of over 71% in the year, partly through market
share gains which increased from 10.5% at the end of March 2002 to 13.4% at the
end of March 2003. Vodafone Hungary not only grew in terms of customers but also
in network coverage as it continued to invest in the expansion of its digital
network and service offerings with the launch of GPRS, MMS and Vodafone live!.
Revenue grew by 109% compared with the prior year, driven by the increase in
customer numbers and higher usage, which led to a 6% increase in ARPU.
Proportionate turnover also benefited from the acquisition of an additional
24.4% interest in the company.
Polkomtel increased its customer base by 34% to 4,839,000 at 31 March 2003. It
is anticipated that Polkomtel will return cash to its shareholders through a
combination of shareholder loan repayments and, for the first time, dividends.
The Swiss market continued to grow, ending the year with a penetration rate of
76%. Swisscom Mobile, already the market leader, acquired more new customers
than its competitors, increasing its customer base by 206,000 in the year. ARPU
remains strong at CHF1,081.
On 7 January 2003, a Partner Network agreement was announced with Mobilkom
Austria Group, Telekom Austria's mobile subsidiary. Vodafone's global services
in Austria, Croatia and Slovenia have since been launched and the Vodafone brand
has been introduced using dual brand logos, creating a source of revenue for
both Vodafone and Mobilkom Austria Group.
Southern Europe
Financial highlights Year ended 31
March
2003 2002 Increase
GBPm GBPm %
Statutory turnover - Italy 4,371 3,711 18
- Other
Southern
Europe 3,680 3,032 21
-------- --------
8,051 6,743 19
-------- --------
Statutory total Group - Italy 1,588 1,267 25
operating profit * - Other
Southern
Europe 907 805 13
-------- --------
2,495 2,072 20
-------- --------
Proportionate turnover - Italy 3,353 2,838 18
- Other
Southern
Europe 2,981 2,271 31
-------- --------
6,334 5,109 24
-------- --------
Proportionate EBITDA - Italy 1,654 1,295 28
(before exceptional items) - Other
Southern
Europe 1,062 836 27
-------- --------
2,716 2,131 27
-------- --------
Proportionate EBITDA - Italy 49.3% 45.6%
margin - Other
Southern
Europe 35.6% 36.8%
Key performance
indicators
(Italy only)
ARPU Eur 347 Eur 345
Churn 17.3% 18.9%
Cost to connect Eur 25 Eur 35
* Before goodwill amortisation and exceptional items
Italy
Vodafone Omnitel has had another excellent year, increasing its customer base
and revenues in a market where the penetration rate has reached 97%.
On a statutory basis, turnover increased 18% (13% when measured in local
currency), driven almost entirely by a 16% growth in service revenues (11% when
measured in local currency). Equipment sales also increased 36% (30% when
measured in local currency) as the benefits from increased handset prices more
than offset the lower gross customer additions. At 31 March 2003, Vodafone
Omnitel's customer base stood at 19,412,000, representing an increase of almost
10%, principally attributable to the continued focus on commercial offers and
incentives aimed at driving usage and sustaining customer loyalty, which
contributed to reduced churn rates. This level of customer growth was also
achieved despite the introduction of mobile number portability and the continued
efforts by competitors to develop and market their own offers and loyalty
incentives. Of the total customer base, 92% are connected to prepaid tariffs.
The 16% growth in service revenues has been generated by the continued growth in
the customer base, improved customer retention and increased ARPU. In
particular, voice revenues increased principally as a result of higher traffic
volumes and the associated prepaid top up cards, which more than offset the
voluntary reduction in termination rates. Data revenues increased 50%, due
largely to the continued growth in the popularity of SMS messaging, up 48%, and
significant growth in other data services, the revenues from which grew more
than 140%. Data revenues now represent 11.3% of service revenues.
The increase in blended ARPU can be largely attributed to contract ARPU, which
grew from Eur 769 in the year ended 31 March 2002 to Eur 818, demonstrating the
success of Vodafone Omnitel's targeted customer acquisition and retention
initiatives. Prepaid ARPU increased slightly to Eur 298, compared with Eur 297
for the year ended 31 March 2002. Voice ARPU decreased slightly while data ARPU
increased 30% compared with the year ended 31 March 2002. Cost to connect
continued to reduce as a result of Vodafone Omnitel's strict management of
commercial policies.
The increase in proportionate EBITDA, before exceptional items, was driven by a
combination of growth in turnover and an improved EBITDA margin as a result of
the continued focus on controlling acquisition and retention costs, operating
expenses and the positive effect of the appreciation of the Euro relative to
Sterling. When measured in local currency, proportionate EBITDA, before
exceptional items, increased by 22%.
Vodafone Omnitel was part of the Group's European-wide launch of Vodafone live!
and is also increasing its focus on providing value-added services, adding new
voice services and MMS services during the period. By the end of March 2003,
227,000 Vodafone live! handsets had been activated, with 367,000 MMS capable
handsets activated in total.
Vodafone Omnitel has completed the first stage of its 3G network rollout and
commenced user testing. In addition, Vodafone Omnitel plans to commence offering
experimental W-LAN services to the public.
During the year ended 31 March 2003, the Italian Government agreed to extend the
duration of Vodafone Omnitel's 2G and 3G licences from fifteen to twenty years
and, following the break up of Blu, the National Regulatory Authority has
approved a framework for the assignment of additional 2G spectrum amongst the
remaining network operators, including Vodafone Omnitel.
After Vodafone Omnitel voluntarily reduced its termination prices in August
2002, the National Regulatory Authority approved a decision to reduce the
maximum average termination price to Eur 0.1495 (minus 12%) for Vodafone Omnitel
and a competitor, applicable from June 2003.
Vodafone Omnitel migrated to the single Vodafone brand on 13 May 2003.
Other Southern Europe
The Group's other interests within the Southern Europe Region also performed
well in the period. The proportionate registered customer base increased by a
further 39%, or 4,248,000 customers, to 15,163,000, including 2,471,000
customers added as a result of the effect of stake increases in Vodafone Spain
(additional 8.4%), Vodafone Greece (additional 12.1%), Vodafone Portugal
(additional 43.5%) and Vodafone Albania (additional 5.5%).
Statutory turnover increased 21%, (16% when measured at constant exchange
rates), principally driven by excellent growth in Vodafone Spain and Vodafone
Greece, which saw turnover increase by 21% and 35%, respectively, (16% and 29%,
respectively, when measured in local currency) as a result of the increased
customer base and improved ARPU. In both Greece and Spain, turnover growth was
achieved against a backdrop of increased competition, which saw competitors
developing a range of incentives and commercial offers, including tariff
reductions, aimed at sustaining market share. Turnover was, however, adversely
affected by increased regulatory pressure, which triggered reductions in
interconnect rates for mobile terminated calls in Spain, Greece and Portugal.
In Portugal, Onyway (a new market entrant) had its UMTS licence withdrawn with
the spectrum reassigned to the other three operators, including Vodafone, which
maintained its position as the second largest operator and market leader in the
corporate segment.
The region also experienced higher roaming revenues and significant growth in
data revenues from increased SMS activity. During the period, MMS services were
introduced into all markets except Albania, with Greece, Spain and Portugal part
of the Group-wide launch of Vodafone live!.
Vodafone Albania continued to make market share gains, as penetration in the
Albanian market nearly doubled to 30.8%, with a 42.3% share.
Levels of brand awareness also continue to improve across the Region as a result
of local and Group-wide advertising and sponsorship.
AMERICAS
Financial highlights Year ended 31
March
Increase/
2003 2002 (decrease)
GBPm GBPm %
Statutory turnover - Verizon
Wireless - - -
- Other
Americas 5 12 (58)
-------- --------
5 12 (58)
-------- --------
Statutory total Group - Verizon
operating profit * Wireless 1,270 1,332 (5)
- Other
Americas (51) (15) -
-------- --------
1,219 1,317 (7)
-------- --------
Proportionate turnover - Verizon
Wireless ** 5,686 5,475 4
- Other
Americas 116 163 (29)
-------- --------
5,802 5,638 3
-------- --------
Proportionate EBITDA - Verizon
(before exceptional Wireless ** 2,001 1,889 6
items)
- Other
Americas (24) 18 -
-------- --------
1,977 1,907 4
-------- --------
Proportionate EBITDA - Verizon
margin Wireless 35.2% 34.5%
- Other
Americas (20.7%) 11.0%
Key performance indicators (Verizon Wireless only)
ARPU $584 $576
Churn 26.5% 29.4%
Cost to connect *** $139 $125
* Before goodwill amortisation and exceptional items
** When measured in local currency, proportionate turnover and proportionate
EBITDA, before exceptional items, increased by 12% and 14%, respectively
*** Comparative restated by Verizon Wireless to be on a basis consistent with
the current period
Verizon Wireless
Verizon Wireless operates in the US, which is a highly competitive market place
and which currently consists of six nationwide competitors and a number of
regional carriers. Within the US, Verizon Wireless is the leading wireless
telecommunications provider in terms of customers and revenues and also operates
the most extensive wireless network. The US continues to experience difficult
economic conditions and the competitive environment has intensified, with
carriers offering progressively larger bundle tariffs. Nonetheless, Verizon
Wireless has ranked first in the US market in terms of gross connections and
first or second in terms of customer net additions for each of the last four
quarters and has further increased its lead over the number two provider in the
year.
At 31 March 2003, Verizon Wireless' total customer base stood at 33,324,000, a
12.6% increase on the prior year. Annual ARPU increased slightly due to a focus
on selling plans with higher access price points, which resulted in slightly
higher average cost to connect. Churn decreased due to a reduction in contract
churn, which is thought to be attributable to a combination of the quality of
Verizon Wireless' network and the success of retention programmes, although this
was partially offset by disconnections through the wholesale channel, including
nearly 1 million reseller customers following MCI's withdrawal from the market.
The increase in proportionate turnover was primarily due to increased service
revenue from the larger customer base, as well as additional handset sales for
both upgrades and gross additions. The results for the year were also affected
by the relative strength of Sterling against the US dollar. When measured in
local currency, proportionate turnover and proportionate EBITDA, before
exceptional items, increased by 12% and 14%, respectively. Data revenues
increased to GBP136m for the twelve months to 31 March 2003, an increase of 106%
compared with the prior year. The proportionate EBITDA margin increased from
34.5% to 35.2% as a result of increased cost efficiencies.
Operating profit, before goodwill amortisation and exceptional items, decreased
to GBP1,270m for the twelve months to 31 March 2003 as a result of currency
effects and a 38% increase in the charge for depreciation. The increased charge
for depreciation arose as a consequence of capital expenditure required to
increase network capacity to the levels necessary to satisfy the demands placed
on it through increased usage and a larger customer base.
Verizon Wireless continues to upgrade its network to the next generation
technology (1xRTT) and has extended coverage to more than 85% of the company's
national network, with coverage expected to reach nearly 100% by the middle of
2003.
On 17 March 2003, Verizon Wireless announced plans to launch a high-speed
wireless data service (1xEV-DO) in Washington, D.C., and San Diego, California
before the end of the calendar year. This is expected to provide more secure and
faster mobile access to corporate intranets. The technology will potentially
allow operators to triple data user capacity, and to provide enhanced, next
generation wireless services such as video and audio streaming, interactive
gaming and other multimedia services. Verizon Wireless also announced its plans
to offer access between its own branded W-LAN service and its wireless area
networks in the third calendar quarter of 2003 and that it would offer W-LAN
services in locations such as hotels and airports.
In December 2002, the Federal Communications Commission ("FCC") refunded the
remaining $261m on deposit, which represented 15% of the payment made in
relation to the re-auction of licences for 1.9GHz spectrum, and relieved Verizon
Wireless of its remaining obligations with respect to the auction.
In addition, on 19 December 2002, Verizon Wireless signed an agreement with
Northcoast Communications, L.L.C., to purchase 50 Personal Communications
("PCS") licences and related network assets for approximately $750m in cash. The
PCS licences cover large portions of the East Coast and Midwest serving
approximately 47.2 million people.
On 15 August 2002, Verizon Wireless combined the business operations of Price
Communications Wireless, Inc. with certain Verizon Wireless assets in a
transaction valued at $1.7 billion, including $550m in net debt that was assumed
and redeemed. Price Communications Wireless provided 800 MHz wireless services
to approximately 411,000 customers in areas where Verizon Wireless did not
previously provide service.
Other Americas
In Mexico, Grupo Iusacell's ("Iusacell's") financial performance continued to
deteriorate in the year despite a modest increase in its customer base and
management's efforts to restructure the business through substantial headcount
reductions and tight cost and cash management.
In order to alleviate certain of the resulting financial pressures, Iusacell
began a debt restructuring effort in December 2002 and in May 2003, secured a
temporary waiver related to its $266 million secured bank credit facility.
Iusacell will continue to work with its financial advisor to restructure the
terms and payment schedules of its various debt agreements and instruments. It
is likely that Iusacell will require additional funding in order to grow its
operations. However, there is no assurance that such funding could be obtained
at all or, if obtainable, on terms which would be acceptable to Iusacell.
As a result of Iusacell's deteriorating financial performance, the Group has
written off its investment and is currently considering its options with respect
to its investment, including disposal.
In August 2002, the sale of two Globalstar service provider companies,
Globalstar US and Globalstar Caribbean, was finalised. In November 2002, the
sale of another Globalstar service provider company, Globalstar de Mexico, was
finalised. As a result, the Group no longer has an interest in any Globalstar
operations.
ASIA PACIFIC
Financial highlights Year ended 31
March
2003 2002 Increase
GBPm GBPm %
Statutory turnover - Japan 7,539 3,323 127
- Other
Asia
Pacific 825 749 10
-------- --------
8,364 4,072 105
-------- --------
Statutory total Group - Japan 1,310 523 150
operating profit * - Other
Asia
Pacific 111 66 68
-------- --------
1,421 589 141
-------- --------
Proportionate turnover - Japan 5,258 4,397 20
- Other
Asia
Pacific 1,178 976 21
-------- --------
6,436 5,373 20
-------- --------
Proportionate EBITDA - Japan 1,645 991 66
(before exceptional items) - Other
Asia
Pacific 474 330 44
-------- --------
2,119 1,321 60
-------- --------
Proportionate EBITDA - Japan 31.3% 22.5%
margin - Other
Asia
Pacific 40.2% 33.8%
Key performance indicators (Japan only)
ARPU Yen 87,159 Yen 91,903
Churn 23.3% 25.6%
Cost to connect Yen 32,519 Yen 34,145
* Before goodwill amortisation and exceptional items
Japan
In a market that continues to expand, J-Phone Vodafone has produced good results
due to a combination of increased service revenues, reduced acquisition and
retention expenses and higher operational efficiencies, including centralisation
of handset purchasing and improved control over capital expenditure. The
financial results have also benefited from the inclusion of a full year's
results for the first time and corporate efficiency initiatives.
At 31 March 2003, J-Phone Vodafone had 13,912,000 customers and a market share
of over 18%. J-Phone Vodafone continued to capture monthly market share above
its cumulative market share, with 1,727,000 net customer additions recorded in
the year ended 31 March 2003, capturing over 26% of the market. Market
penetration in Japan increased by 5 percentage points to 59% at 31 March 2003,
compared to 54% at 31 March 2002. One of the key drivers of this recent growth
has been the increase in J-Sky web usage and content revenue, together with the
continued success of J-Phone Vodafone's other data offerings, "Sha-mail", the
popular photo-messaging service for customers, and the video clip message
service "Movie Sha-mail". A combination of these innovative services and
attractive handsets continues to contribute to reducing customer churn, with 65%
of customers now owning camera-enabled handsets.
J-Phone Vodafone continues to produce the highest ARPU in the Group and although
voice ARPU declined as expected, data and content revenues continue to improve
and, in March 2003, represented 21.7% of total service revenues. Average cost to
connect decreased following a reduction in customer acquisition subsidies and
more cost efficient purchasing, which has been achieved in part by benefits on
handset purchases as a result of membership of the Group.
J-Phone Vodafone has substantially improved its EBITDA margin to 31.3% for the
year ended 31 March 2003, representing an increase of 8.8 percentage points over
the previous year. This was due to a combination of the synergies referred to
above and also the implementation of improved internal cost control measures.
Further cost savings are targeted as areas such as customer care and billing
system management are improved. J-Phone Vodafone has also leveraged its brand
position since becoming dual branded in December 2001 and plans to migrate to
the single Vodafone brand by October 2003.
J-Phone Vodafone was the first Group operating company to commence 3G services,
which began on 20 December 2002. Its 3G network is compatible with the global
W-CDMA standard, thus introducing international W-CDMA and GSM SIM enabled
roaming to Japan for the first time. J-Phone Vodafone has at present concluded
roaming agreements with 69 operators in 62 countries and regions. Use of micro
cell technology has allowed rapid and cost effective deployment of J-Phone
Vodafone's 3G network and the company currently has 3,644 operational 3G base
stations covering an estimated 71% of the population. By the second half of the
2004 financial year, J-Phone Vodafone aims to expand the network and have 13,275
operational 3G base stations covering over 95% of the population.
J-Phone Vodafone has invested in the development of its sales and distribution
channels. Convenience stores became a new distribution channel for prepaid
phones in February 2003 and J-Phone Vodafone's internet shop has been opened to
provide 24-hour direct access for customers. Pilot Vodafone-branded shops were
also launched in March 2003, exclusively selling J-Phone Vodafone products and
services.
In November 2002, the Japanese Telecommunications Ministry ("the Ministry")
initiated study groups and discussions regarding tariff setting rights for calls
from fixed lines to mobiles. Currently, mobile operators have the right to set
these tariffs and this has been challenged by certain fixed line operators. In
April 2003, the Ministry published a proposal based on selective transit whereby
the caller can select a mobile operators' rates or a fixed line operator's
rates. J-Phone Vodafone is considering the proposal and will submit its views in
due course. Should the proposal be implemented in its current form, J-Phone
Vodafone's future incoming call revenue may be reduced.
Other Asia Pacific
Considerable progress has been made to reshape the Australian business. Despite
an extremely competitive and maturing market, Vodafone Australia's registered
customer numbers have risen over 19% since 31 March 2002, following the launch
of an enhanced "no plans"TM offering and the introduction of new national
distribution channels. The prepaid sector, in particular, drove the increase in
customer numbers. The market share for the Australian business grew by an
estimated 1 percentage point to over 18% at 31 March 2003. Total blended ARPU
has declined over the period from $688 to $633 as a result of the change in base
from access-based plans with subsidies to non-subsidised plans with no access
fees. EBITDA increased 23% through continued focus on operational efficiency and
enhanced product marketing and distribution.
New Zealand performed strongly, with revenues and EBITDA increasing by 32% and
51%, respectively, (20% and 34%, respectively, when measured in local currency),
blended ARPU increasing by over 4% and EBITDA margin increasing by approximately
5 percentage points. By 31 March 2003, customer numbers reached 1,289,000,
resulting in a 51% market share. In Fiji, despite continuing poor economic
conditions, a 12% growth in customer numbers was achieved.
In Australia and New Zealand, MMS, GPRS roaming, Prepaid roaming and Mobile
Connect were launched during the year. In addition, Vodafone live! was launched
in both countries during April 2003.
China Mobile (Hong Kong) Limited ("China Mobile") increased its customer base by
49,376,000 in the year to 123,778,000 customers at 31 March 2003, including
25,143,000 customers acquired with the purchase of eight provincial cellular
operations from its parent on 1 July 2002. Monthly ARPU continued to fall after
showing signs of stabilising earlier in the year as a result of lower tariffs
aimed at retaining customers as competition increased, although SMS volume
growth accelerated, with almost 17.5 billion messages sent in the final quarter
of the current financial year, up from 13.3 billion in the prior quarter.
During the year the Group increased its stake in China Mobile to approximately
3.27% and, on 22 May 2003, received its first cash dividend from China Mobile.
MIDDLE EAST AND AFRICA
Financial highlights Year ended 31 March Increase/
2003 2002 (decrease)
GBPm GBPm %
Statutory turnover 290 306 (5)
Statutory total Group operating
profit * 197 161 22
Proportionate turnover 526 488 8
Proportionate EBITDA
(before exceptional items) 243 211 15
Proportionate EBITDA margin 46.2% 43.2%
* Before goodwill amortisation and exceptional items
Results for the Middle East and Africa region have been adversely affected by
the weakening of the Egyptian Pound and Kenyan Shilling over the period,
although this was partially offset by a strengthening of the South African Rand.
Vodafone Egypt continued to grow strongly throughout the financial year, with
customer numbers increasing by over 31% to 2,263,000. This resulted in a 17%
growth in turnover measured in local currency. A focus on cost effectiveness in
the operation lead to significant improvements in EBITDA margin, which increased
from 40% to 49%.
In South Africa, Vodacom reported significant improvements in its operating
results as its operations in Tanzania, Lesotho and the Democratic Republic of
Congo continued to grow. Turnover from the South African network increased by
over 22%, principally as a result of a 20% growth in customers to 7,874,000, and
Vodacom's EBITDA improved by 17% overall.
Safaricom, in Kenya, consolidated its position as the market leader with a 55%
market share as customer numbers increased 97% to 865,000 over the year.
The Group entered into a Partner Agreement with MTC in Kuwait in September 2002.
MTC recently obtained a licence to provide mobile telecommunications services in
Bahrain.
Vodafone Group Plc
Preliminary Results for the year ended 31 March 2003
PART 3
OTHER OPERATIONS
Financial highlights Year ended 31
March
Increase/
2003 2002 (decrease)
GBPm GBPm %
Statutory turnover - Europe 854 998 (14)
- Asia Pacific 1,979 1,105 79
-------- --------
2,833 2,103 35
-------- --------
Statutory total Group - Europe (138) (306) -
operating profit/(loss)* - Asia Pacific 149 (17) -
-------- --------
11 (323) -
-------- --------
Proportionate turnover - Europe 752 821 (8)
- Asia Pacific 1,321 1,160 14
-------- --------
2,073 1,981 5
-------- --------
Proportionate EBITDA - Europe 48 (8) -
(before exceptional
items) - Asia Pacific 396 199 99
-------- --------
444 191 132
-------- --------
* Before goodwill amortisation and exceptional items
The Group's other operations largely comprise interests in fixed line
telecommunications businesses in Germany (Arcor), Japan (Japan Telecom) and
France (Cegetel) and Vodafone Information Systems, an IT and data services
business based in Germany. Results for the Vizzavi joint venture are also
included until 29 August 2002.
Results for the Group's other operations have improved, primarily as a result of
the full year inclusion of Japan Telecom in the period, which was consolidated
from 12 October 2001. The proportionate results also benefited from the stake
increase in Cegetel, which took the Group's effective ownership to 30% with
effect from January 2003.
Arcor
Arcor provides fixed network services in Germany. The German fixed line market
remains intensely competitive although Arcor has retained its position as the
leading private operator and the strongest competitor to Deutsche Telekom, the
market leader. Turnover from voice, data and internet businesses increased by 9%
in the year, compensating for the significant reduction in carrier and other
business caused by the competitive market. During the period the contract voice
customer base increased by approximately 10% or 230,000 to 2,600,000 customers,
and total traffic volumes increased by 20% to 25.3 billion minutes.
In January 2002, a contract with Deutsche Bahn AG was signed to carve out
Arcor's railway specific telecommunication and service business into the company
Arcor DS-Telematik GmbH. Following completion of the sale in April 2002, the
remaining 50.1% share of Telematik was sold to Deutsche Bahn AG in July 2002.
Japan Telecom
Japan Telecom is the third largest fixed line telecommunications operator in
Japan, offering both voice and data services. Since Vodafone gained control in
October 2001, Japan Telecom's profitability has improved significantly, with
operating profit, before goodwill amortisation and exceptional items, of GBP149m
for the year ended 31 March 2003 as the benefits of management's transformation
plan start to be realised.
The fixed line market in Japan remains extremely competitive following the
lifting of market entry restrictions and the maintenance of market share
continues to be a challenge in the customer voice segment. The main focus of the
business in the period has been on high growth business opportunities and the
delivery of innovative data products and services. The corporate customer base
continues to expand due to the uptake of IP data related services, with the
next-generation IP network "PRISM", using optical fibres, being particularly
successful. Additional functionality such as new connectivity regarding IP-VPN
accessibility via the Internet and network expansion for Ethernet services has
been added to the network to enhance data services.
The Group is currently in discussions that may or may not lead to a disposal of
the Japan Telecom fixed line operations.
STRATEGIC DEVELOPMENTS
Global Services
The Group's vision is to be the world's mobile communications leader. A major
focus of the Group's strategy is to offer innovative services within
Vodafone-branded, end-to-end customer propositions which utilise the Group's
global footprint and global brand to offer customers a unique mobile experience
and seamless international services.
These programmes, such as Vodafone live!, are based on compelling customer
propositions and have been packaged together for a specific target market.
Vodafone live! is an easy-to-use consumer service, bringing customers a world of
colour, sound and pictures, enabling them to use picture messaging, download
polyphonic ringtones and colour games, and browse branded infotainment from
integrated camera phones through an easy to use icon driven menu.
Vodafone live! and Mobile Office from Vodafone
Vodafone live! was launched on 24 October 2002 and by 31 March 2003 the Group
had connected more than one million active live! customers in 10 countries. Of
the Vodafone live! customers, Germany had over 405,000, Italy 227,000 and the UK
240,000. Since 31 March 2003, Vodafone live! has also been launched in
Australia, Egypt and New Zealand. The service has also attracted critical
acclaim from the industry, including recent awards from the GSM Association for
best consumer application, advertising and mobile handset.
The acquisition of the remaining 50% stake in Vizzavi and its rapid integration
into the Group has supported the creation of Vodafone live!, which is expected
to continue to drive a significant part of the Group's growth in future years.
It is intended that the Vodafone live! experience will continue to be updated,
integrating the most up to date services and technologies as well as broadening
the range of handsets available to cover more market segments. The next release
of Vodafone live! will include access to picture messaging libraries and
improved download speeds.
Mobile Connect Card, the first of Vodafone's global business services to be
offered under Mobile Office from Vodafone, was launched in twelve countries
during the period. Mobile Connect Card, a high speed data card enabling
customers to access their normal business applications when out of the office,
is aimed at all business users, from large corporate customers to those in the
small and medium sized enterprise sector, and is marketed and sold through the
Group's direct sales, retail and e-channels as well as partner channels for
leading personal computer brands. Mobile Office from Vodafone will offer a range
of global and local mobile business services to customers, with more global
services to be introduced later this year.
Vodafone live! and Mobile Office from Vodafone are already demonstrating their
importance to the Group's strategy of deriving increased revenues from data
services, with games downloads, picture messaging and other content services
proving particularly popular and generating extra revenue.
3G
Together, Vodafone live! and Mobile Office from Vodafone lay the foundations for
the Group's next stage of growth, as it is planned that both will create the
demand for new data services against which the Group will deploy its 3G
networks. Both currently use 2.5G technology and will be upgraded to 3G,
enabling faster download speeds, which will enhance customer experience and
productivity.
In December 2002, J-Phone Vodafone became the first subsidiary in the Group to
commercially launch 3G services. Furthermore, J-Phone Vodafone customers with an
enabled handset can not only use 3G services within Japan, but can also roam
internationally on 2G networks with the convenience of being able to use the
same telephone number as they do at home.
In Europe, the Group's 3G programme continues, with networks being rolled out
according to plan and technical testing underway. The availability of suitable
handsets remains a key issue and supplies of these are expected to be limited
until 2004. 3G services are expected to be available to customers before the end
of the 2004 financial year, dependent on when networks and handsets are of
sufficient quality to offer such services to the Group's customers.
Brand
The strength of the Vodafone brand continues to improve. For example, in
countries where we have migrated to the Vodafone brand, brand awareness and
preference continues to grow. During the year, the Group continued with its high
profile sponsorship of the Manchester United Football Club and the Ferrari
Formula 1 team, backed up with individual sponsorship contracts which, when
combined with the continued brand rollout and other marketing communications
programmes, have significantly improved awareness and perception of the brand.
Migration to the single Vodafone brand is also underway in Japan and in Italy,
Vodafone Omnitel migrated to the single brand in May 2003. Having a consistently
implemented brand across our markets greatly assisted the execution of the
Vodafone live! campaign and Vodafone live! is already significantly contributing
to the brand in terms of brand equity and positioning. The brand is also being
rolled out in networks where Vodafone does not have equity stakes, through the
partner networks programme, which licenses the global brand and key global
services.
Partner Network Agreements
The Group's partner network strategy is becoming increasingly attractive to
operators in which it does not hold an equity stake. During the year ended 31
March 2003, the Group signed a further five Partner Network Agreements, with
Mobilkom Austria Group, si.mobil in Slovenia, VIPnet in Croatia, Radiolinja
Eesti in Estonia and MTC of Kuwait. The Group now has eight partner networks
following the latest agreement with Islandssimi hf in Iceland announced on 16
April 2003. By partnering with leading mobile operators the Group is able to
market its global services in new territories, extend its brand reach into new
markets and create additional revenue without the need for equity investment.
Synergies
Mannesmann synergies of approximately GBP644 million, calculated on a
proportionate after tax cash flow basis were achieved in the year ended 31 March
2003, exceeding the target set for the year ended 31 March 2003 mainly as a
result of higher savings on capital expenditure.
Corporate Social Responsibility
The Group recognises that key stakeholder groups have interests that extend
beyond short-term financial results to the broad context of social and
environmental issues and regards a strong corporate social responsibility
("CSR") programme as an important part of achieving sustainable business
success. Over the last twelve months, the Group has put in place a series of
programmes that address significant environmental issues. These include
addressing the concerns related to the perceived link between radio frequencies
(EMF) and health, the use of energy across the Group's operations, the reuse and
recycling of handsets and accessories, the management of waste and the use of
ozone depleting substances in our operations. Progress is being made across all
of these projects. Further details will be released in the Company's third
separate CSR report or on the CSR pages of the Group's website, www.vodafone.com
available in June 2003. The coming years will see a strong focus on further
delivery against commitments and increasing integration of CSR into core
business processes.
The Group has retained its position in both the FTSE4Good and Dow Jones
Sustainability Indices.
FINANCIAL UPDATE
Profit and loss account
Total Group operating profit/loss
Before goodwill amortisation and exceptional items, total Group operating profit
increased 30% to GBP9,181m in the year ended 31 March 2003 from GBP7,044m in the
year ended 31 March 2002.
After goodwill amortisation and exceptional items, the Group reported a total
operating loss of GBP5,451m, compared with a loss of GBP11,834m for the
comparable period. This net change of GBP6,383m arose as a result of a GBP4,832m
reduction in respect of exceptional items, and a GBP2,137m increase in operating
profit, before goodwill amortisation and exceptional items, partly offset by a
GBP586m increase in the goodwill amortisation charge, which increased primarily
as a result of the acquisition of J-Phone Vodafone and Japan Telecom in the
second half of the 2002 financial year. These charges for goodwill amortisation
do not affect the cash flows of the Group or the ability of the Group to pay
dividends.
Exceptional items
Exceptional operating items of GBP576m were charged in the year ended 31 March
2003, comprising GBP485m of impairment charges in relation to the Group's
interests in Japan Telecom and Grupo Iusacell, and GBP91m of reorganisation
costs relating to the integration of Vizzavi into the Group and related
restructuring.
During the comparable period to March 2002, exceptional operating items of
GBP5,408m consisted primarily of impairment charges of GBP5,100m in relation to
the carrying value of goodwill for Arcor, Cegetel, Grupo lusacell and Japan
Telecom and GBP222m representing the Group's share of exceptional items of its
associated undertakings and joint ventures. A further GBP86m of reorganisation
costs was also incurred, principally in respect of the Group's operations in
Australia and the UK.
Exceptional non-operating charges of GBP5m (2002: GBP860m) mainly represents a
profit on disposal of fixed asset investments of GBP255m, 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 GBP300m.
Interest
Total Group net interest payable, including the Group's share of the net
interest expense of joint ventures and associated undertakings, decreased from
GBP845m for the year ended 31 March 2002 to GBP752m for the year ended 31 March
2003. Net interest costs in respect of the Group's net borrowings decreased to
GBP457m from GBP503m for the comparable period, reflecting the decrease in
average net debt levels. Group interest is covered 26.0 times by operating cash
flow plus dividends received from associated undertakings, compared with 16.4
times for the year ended 31 March 2002. The Group's share of the net interest
expense of joint ventures and associated undertakings decreased from GBP342m to
GBP295m, partly as a result of the consolidation of the Group's former
associated undertakings, Japan Telecom and J-Phone Vodafone, from October 2001
and of Vizzavi from 29 August 2002 and reduced levels of indebtedness in SFR.
Taxation
The effective rate of taxation, before goodwill amortisation and exceptional
items, for the year to 31 March 2003 was 35.5%, 2.2% less than the rate
anticipated at the half year, mainly due to additional benefits arising from a
reorganisation of the Group's Italian operations and a one-off benefit in
Germany arising from the reorganisation of the German group of companies
following the purchase of the remaining minorities. In the prior year, the
effective tax rate was 35.7% after benefiting from a one-off tax credit received
in Germany arising from the distribution of earnings and the Visco Law incentive
scheme in Italy. The Visco Law has subsequently been replaced by a less
favourable tax regime.
Next year's effective rate of taxation, before goodwill amortisation and
exceptional items, is expected to be similar to this year's and the Group
anticipates tax payments to amount to approximately GBP2 billion.
Earnings per share
Earnings per share, before goodwill amortisation and exceptional items,
increased 32% from 5.15p to 6.81p for the period to 31 March 2003.
Basic loss per share, after goodwill amortisation and exceptional items,
improved from a loss per share of 23.77p to a loss per share of 14.41p for the
period to 31 March 2003. The loss per share of 14.41p includes a charge of
20.62p per share (2002: 19.82p per share) in relation to the amortisation of
goodwill and a charge of 0.60p per share (2002: 9.10p per share) in relation to
exceptional items.
Dividends
The Company has historically paid dividends semi-annually, with the regular
interim dividend in respect of the first six months of the financial year
payable in February and the final dividend in respect of the financial year
payable in August. The directors expect that the Company will continue to pay
dividends semi-annually.
In considering the level of dividend to declare and recommend, 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 buy backs. Accordingly, the
directors are recommending a final dividend of 0.8983 pence per share, bringing
the total dividend to 1.6929 pence per share, representing a 15% increase over
last year's total dividend. The Board expects progressively to increase the
payout ratio in the future.
The ex-dividend date is 4 June 2003, the record date for the final dividend is 6
June 2003 and the dividend is payable on 8 August 2003.
Cash flows and funding
The increase in operating profit, before goodwill amortisation and exceptional
items, in the year ended 31 March 2003 produced strong operating cash flows of
GBP11,142m, which are 38% higher than the comparable period, including over
GBP2,970m of operating cash flows from the Group's former associated
undertakings Japan Telecom and J-Phone Vodafone.
During the year ended 31 March 2003, the Group increased its operating free cash
flow by 58% to GBP5,863m and generated GBP5,171m of free cash flow, more than
double the previous financial year.
Year ended Year ended
31 March 31 March
2003 2002
GBPm GBPm
Net cash inflow from operating
activities (Note 7) 11,142 8,102
Purchase of intangible fixed assets (99) (325)
Purchase of tangible fixed assets (5,289) (4,145)
Disposal of tangible fixed assets 109 75
-------- --------
Net capital expenditure on intangible and
tangible fixed assets (5,279) (4,395)
-------- --------
Operating free cash flow 5,863 3,707
Dividends received from associated
undertakings * 742 139
Taxation (883) (545)
Interest on group debt (475) (854)
Dividends from investments 15 2
Dividends paid to minority interests (91) (84)
-------- --------
Net cash outflow for returns on investments
and servicing of finance (551) (936)
-------- --------
Free cash flow 5,171 2,365
======== ========
Notes:
* Year ended 31 March 2003 includes GBP564m (2002: GBPnil) from Verizon
Wireless.
The Group also invested a net GBP4.9 billion in merger and acquisition
activities, and an analysis of the significant transactions is shown below:
Impact on net
debt
GBP billion
Stake increases in subsidiary companies:
Vodafone Spain from 91.6% to 100% 1.8
Vodafone Netherlands from 70.0% to 97.2% 0.5
Vodafone Sweden from 71.1% to 99.1% 0.4
Vodafone Holding GmbH from 99.6% to 100% 0.3
Vodafone Greece from 51.9% to 64.0% 0.2
Vodafone Portugal from 50.9% to 94.4% 0.2
Others 0.1
Purchase of remaining 50% interest in Vizzavi operations 0.1
Acquisition of further stakes in associates:
Cegetel / SFR 1.4
Other associates 0.1
Stake increase in China Mobile from 2.18% to 3.27% 0.5
Disposal of Ruhrgas and Arcor's Telematik business (0.7)
--------
4.9
========
As a result of the significant levels of free cash flow generated and after
merger and acquisition activity, Group dividend payments of GBP1,052m and
GBP826m of adverse foreign exchange movements, the Group's consolidated net debt
position at 31 March 2003 increased to GBP13,839m, from GBP12,034m at 31 March
2002. This represented approximately 18% of the Group's market capitalisation at
31 March 2003 compared with 14% at 31 March 2002. A further analysis of net debt
can be found in Note 8 on page 32.
The Group remains committed to maintaining a strong financial position as
currently demonstrated by its stable credit ratings of P-1/F1/A-1 short-term and
A2/A/A long term from Moody's, Fitch Ratings and Standard and Poor's
respectively. Credit ratings are not a recommendation to purchase, hold or sell
securities, in as much as ratings do not comment on market price or suitability
for a particular investor, and are subject to revision or withdrawal at any time
by the assigning rating organisation. Each rating should be evaluated
independently.
The Group's credit ratings enable it to have access to a wide range of debt
finance including commercial paper, bonds and committed bank facilities. The
Group currently has US and euro commercial paper programmes of US$15 billion and
GBP5 billion, respectively, which are used to meet short-term liquidity
requirements. The commercial paper facilities are supported by a US$11.025
billion committed bank facility, which may be extended for one year from June
2003. This facility replaced the Group's previous US$13.7 billion committed bank
facility and as at 31 March 2003 no amounts had been drawn under it.
Additionally, the Group has a Eur 12 billion Medium Term Note programme and an
$8 billion US shelf programme, both of which are used to meet medium to long
term funding requirements.
The Group also has a Yen 225 billion committed bank facility which was fully
drawn down on 15 October 2002. At 31 March 2003, the Group had approximately
GBP11.7 billion (pounds sterling equivalent) of capital market debt in issue,
with maturities from April 2003 to November 2032, GBP2.5 billion (pounds
sterling equivalent) of term funding and GBP0.4 billion of short term funding.
Bond repurchases
On 9 January 2003 a cash tender offer was announced to purchase three bonds
issued by the Group's wholly owned subsidiary Vodafone Finance BV prior to its
acquisition by the Company and guaranteed by Vodafone Holding GmbH, also wholly
owned. The offer resulted in a total cash payment of Eur 3,782m to acquire
50.0%, 54.1% and 71.4% of the 2004, 2005 and 2009 issues, respectively.
Details of additional bond repurchases undertaken since 31 March 2003 can be
found under "Subsequent Events" on page 24.
Pension scheme funding
As at 31 March 2003, the net deficit in the Group's defined benefit pension
schemes, calculated under FRS 17, amounted to GBP257m, comprising a net
liability of GBP406m offset by a deferred tax asset of GBP149m. This amount
represents less than 0.5% of both the Group's market capitalisation and net
assets at that date.
Equity shareholders' funds
Total equity shareholders' funds at 31 March 2003 decreased from GBP130,573m at
31 March 2002 to GBP128,671m. The decrease comprises the loss for the period of
GBP9,819m (after goodwill amortisation of GBP14,056m) and dividends of
GBP1,154m. The decrease was partially offset by net currency translation gains
of GBP9,039m, the issue of new share capital of GBP31m and GBP1m of other
movements.
Group management
As previously announced, Arun Sarin will succeed Sir Christopher Gent as Chief
Executive after the Annual General Meeting ("AGM") on 30 July 2003. The Group's
Financial Director, Ken Hydon, is the next Director due to retire and it is
planned that he will retire at the AGM in July 2005.
Transactions
The Group undertook the following significant transactions in the year ended 31
March 2003:
Acquisitions
a) Acquisitions of minority stakes in subsidiary undertakings
Airtel Movil, S.A. ("Vodafone Spain") On 2 April 2002, the Company acquired a
further 2.2% interest in Vodafone Spain for the Euro equivalent of GBP0.4
billion, following the exercise of a put option held by Torreal, S.A, increasing
the Group's interest to 93.8%.
On 21 January 2003, the Company announced that it had acquired the remaining
6.2% interest in Vodafone Spain for Eur 2.0 billion (GBP1.4 billion) following
the exercise of a put option held by Acciona, S.A. and Tibest Cuatro, S.A. under
the terms of an agreement originally made in January 2000. The transaction
completed on 27 January 2003 at which time Vodafone Spain became a wholly owned
subsidiary of the Group.
Vodafone Telecel- Comunicacoes Pessoais, SA ("Vodafone Portugal") During the
year the Group increased its effective interest in Vodafone Portugal from 50.9%
to 94.4% through a combination of market purchases and a tender offer process.
The total aggregate cash consideration paid in the 2003 financial year amounted
to GBP184m, with a further GBP336 million paid in April 2003. The Company has
implemented compulsory acquisition procedures to acquire the remaining shares
and de-listing of Vodafone Portugal's shares occurred on 22 May 2003.
Europolitan Vodafone AB ("Vodafone Sweden") During the year the Group increased
its effective interest in Vodafone Sweden from 71.1% to 99.1% through a
combination of market purchases and a tender offer process for an aggregate cash
consideration of GBP391m. The Company has commenced compulsory acquisition
procedures to acquire the remaining shares and Vodafone Sweden's shares were
de-listed from the O-list, Attract 40, of the Stockholm Exchange on 28 March
2003.
Vodafone Libertel N.V. ("Vodafone Netherlands") On 27 November 2002, the Group
purchased for cash an additional 7.6% interest in Vodafone Netherlands,
increasing the Group's interest from 70% to 77.6%. The Company also undertook a
tender offer process to acquire the remaining shares held by minorities, which
was declared unconditional on 28 March 2003. As a result of the offer at that
time and market purchases, the Company increased its effective interest in
Vodafone Netherlands to 97.2%. The aggregate cash consideration paid was
GBP486m, with a further GBP110m paid in April 2003. Following a post-closing
acceptance period, the Company, as a result of the offer and further private
transactions, increased its effective interest in Vodafone Netherlands to 99.7%.
The Company intends to initiate squeeze-out procedures in order to acquire the
remaining shares in the company. Vodafone Netherlands shares have been de-listed
from the Euronext Amsterdam Stock Exchange.
Vodafone-Panafon Hellenic Telecommunications Company S.A. ("Vodafone Greece") On
3 December 2002 the Group acquired from France Telecom S.A ("FT") its 10.85%
interest in Vodafone Greece for cash, which increased the Group's effective
shareholding in Vodafone Greece from 51.9% to 62.7%. The Group also made further
market purchases amounting to 1.3% of the shares in Vodafone Greece, taking the
Group's effective interest to 64.0% at 31 March 2003. In addition, the Company
granted FT a cash settled call option to cover certain of FT's obligations under
its 4.125% Exchange Notes due 29 November 2004, which are convertible into
Vodafone Greece shares. Exercise of this option will not change the Company's
effective interest.
Vodafone Australia On 3 May 2002, the Group completed the purchase of the 4.5%
minority interest in Vodafone Australia, as a result of which Vodafone Australia
became a wholly owned subsidiary.
Vodafone Holding GmbH On 21 August 2002, the Group bought out the outstanding
minority shareholders in Vodafone Holding GmbH, formerly Mannesmann AG, for the
Euro equivalent of GBP281m.
Vodafone Hungary On 23 January 2003, the Group increased its stake in Vodafone
Hungary having acquired RWE Com GmbH&Co OHG's entire 15.565% interest in
Vodafone Hungary.
b) Other acquisitions
On 18 June 2002, the Group purchased a further stake of approximately 1.1% in
China Mobile for $750m, increasing the Group's interest in China Mobile to
approximately 3.27%.
On 29 August 2002, the Group acquired Vivendi Universal S.A.'s ("Vivendi's") 50%
stake in the Vizzavi joint venture companies that operate the mobile content
business, for Eur 143m. As a result of this transaction, the Group owns 100% of
Vizzavi, with the exception of Vizzavi France, which is now wholly owned by
Vivendi.
During December 2002, the Group completed the purchase of an additional 3.5%
equity stake in its South African associated undertaking, Vodacom, for the
sterling equivalent of GBP78 million. The transaction increases the Group's
effective interest in Vodacom to 35.0%.
On 10 January 2003, under an agreement with Mobitelea Ventures Limited, the
Group completed the purchase of an additional 5% equity stake in the Group's
Kenyan associated undertaking Safaricom for approximately $10 million,
increasing the Group's effective interest to 35%.
On 21 January 2003, the Company announced that its subsidiary, Vodafone Holding
GmbH, completed the acquisition of SBC's 15% interest in Cegetel for a cash
consideration of $2.27 billion (GBP1.4 billion), increasing the Group's
effective interest in SFR to approximately 43.9%.
Disposals
On 8 July 2002, the Group completed the sale to E.ON AG of its 23.6% stake in
Bergemann GmbH through which it held an effective 8.2% stake in Ruhrgas AG. The
total cash received amounted to Eur 0.9 billion.
SUBSEQUENT EVENTS
On 1 April 2003 the Group announced a cash tender offer to purchase $1.1 billion
of US Dollar bonds and DEM 400m bonds issued by its wholly owned subsidiary
Vodafone Americas, Inc. (previously AirTouch Communications, Inc.) On 17 April
2003, the Group announced that, pursuant to these offers, it had purchased bonds
in the principal amounts of $569,987,000 and DEM 308,360,000.
Vodafone Group Plc
Preliminary Results for the year ended 31 March 2003
PART 4
FINANCIAL STATEMENTS
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2003
Year ended Year ended
31 March 2003 31 March 2002
GBPm GBPm
Turnover:
Group and share of joint ventures
and associated undertakings 39,152 33,541
Less: Share of joint ventures
and associated undertakings (8,777) (10,696)
--------- ---------
30,375 22,845
========= =========
Turnover (Note 2) 30,375 22,845
========= =========
Operating loss (5,295) (10,377)
Share of operating loss in joint ventures
and associated undertakings (156) (1,457)
--------- ---------
Total Group operating loss (Note 2) (5,451) (11,834)
Exceptional non-operating items (Note 4) (5) (860)
--------- ---------
Loss on ordinary activities before interest
and similar items (5,456) (12,694)
Net interest payable and similar items (752) (845)
- Group (457) (503)
- Share of joint ventures
and associated undertakings (295) (342)
--------- ---------
Loss on ordinary activities before taxation (6,208) (13,539)
Tax on loss on ordinary activities (Note 5) (2,956) (2,140)
--------- ---------
Loss on ordinary activities after taxation (9,164) (15,679)
Minority interests (including non-equity
minority interests) (655) (476)
--------- ---------
Loss for the financial year (9,819) (16,155)
Equity dividends (1,154) (1,025)
--------- ---------
Retained loss for the Group and its share of
Joint ventures and associated undertakings (10,973) (17,180)
========= =========
Basic and diluted loss per share (Note 6) (14.41)p (23.77)p
Adjusted earnings per share (Note 6) 6.81p 5.15p
Dividends per share 1.6929p 1.4721p
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2003
31 March 2003 31 March 2002
GBPm GBPm
Fixed assets
Intangible assets 108,085 105,944
Tangible assets 19,574 18,541
Investments 27,030 28,977
Loans to joint ventures - 321
Investments in associated undertakings 25,825 27,249
Other investments 1,205 1,407
--------- ---------
154,689 153,462
--------- ---------
Current assets
Stocks 365 513
Debtors 7,460 7,053
Investments 291 1,792
Cash at bank and in hand 475 80
--------- ---------
8,591 9,438
Creditors: amounts falling due within
one year (14,293) (13,455)
--------- ---------
Net current liabilities (5,702) (4,017)
--------- ---------
Total assets less current liabilities 148,987 149,445
Creditors: amounts falling due after
more than one year (13,757) (13,118)
Provisions for liabilities and charges (3,696) (2,899)
Investments in joint ventures:
- Share of gross assets - 76
- Share of gross liabilities - (345)
--------- ---------
- (269)
Other provisions (3,696) (2,630)
--------- ---------
131,534 133,428
========= =========
Capital and reserves
Called up share capital 4,275 4,273
Share premium account 52,073 52,044
Merger reserve 98,927 98,927
Other reserve 843 935
Profit and loss account (27,447) (25,606)
--------- ---------
Total equity shareholders' funds 128,671 130,573
Equity minority interests 1,848 1,727
Non-equity minority interests 1,015 1,128
--------- ---------
131,534 133,428
========= =========
CONSOLIDATED CASH FLOW
FOR THE YEAR ENDED 31 MARCH 2003
Year ended Year ended
31 March 2003 31 March 2002
GBPm GBPm
Net cash inflow from operating
activities (Note 7) 11,142 8,102
Dividends received from joint ventures
and associated undertakings 742 139
Net cash outflow for returns on investments
and servicing of finance (551) (936)
Taxation (883) (545)
Net cash outflow for capital expenditure
and financial investment (5,373) (4,447)
Purchase of intangible fixed assets (99) (325)
Purchase of tangible fixed assets (5,289) (4,145)
Disposal of tangible fixed assets 109 75
Purchase of investments (560) (44)
Disposal of investments 575 319
Other (109) (327)
--------- ---------
Net cash outflow for acquisitions
and disposals (4,880) (7,691)
Purchase of interests in subsidiary
undertakings (3,519) (3,078)
Net cash/(overdrafts) acquired with
subsidiary undertakings 11 (2,514)
Purchase of interests in joint ventures
and associated undertakings (1,491) (7,159)
Disposal of interests in subsidiary
undertakings 125 -
Disposal of businesses - 5,071
Purchase of customer bases (6) (11)
--------- ---------
Equity dividends paid (1,052) (978)
--------- ---------
Cash outflow before management of liquid
resources and financing (855) (6,356)
Management of liquid resources 1,384 7,042
Net cash outflow from financing (136) (675)
Issue of ordinary share capital 28 3,581
Debt repayment (165) (4,268)
Issue of shares to minorities 1 12
--------- ---------
Increase in cash in the year 393 11
========= =========
Reconciliation of net cash flow to movement in net debt
Increase in cash in the year 393 11
Cash outflow from decrease in debt 165 4,268
Cash inflow from management of
liquid resources (1,384) (7,042)
--------- ---------
Increase in net debt resulting from cash flows (826) (2,763)
Premium on repayment of debt (157) -
Debt acquired on acquisition of subsidiaries - (3,116)
Translation difference (826) 517
Other movements 4 50
--------- ---------
Increase in net debt in the year (1,805) (5,312)
Opening net debt (12,034) (6,722)
--------- ---------
Closing net debt (Note 8) (13,839) (12,034)
========= =========
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 MARCH 2003
Year ended Year ended
31 March 2003 31 March 2002
GBPm GBPm
Loss for the financial year
- Group (9,049) (14,131)
- Share of joint ventures and
associated undertakings (770) (2,024)
--------- ---------
(9,819) (16,155)
--------- ---------
Currency translation
- Group 10,484 (1,980)
- Share of joint ventures and
associated undertakings (1,445) (283)
--------- ---------
9,039 (2,263)
--------- ---------
Total recognised losses for the year (780) (18,418)
========= =========
MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
FOR THE YEAR ENDED 31 MARCH 2003
Year ended Year ended
31 March 2003 31 March 2002
GBPm GBPm
Loss for the financial year (9,819) (16,155)
Equity dividends (1,154) (1,025)
--------- ---------
(10,973) (17,180)
Currency translation 9,039 (2,263)
New share capital subscribed 31 5,984
Shares to be issued - (978)
Other 1 3
--------- ---------
Net movement in equity shareholders' funds (1,902) (14,434)
Opening equity shareholders' funds 130,573 145,007
--------- ---------
Closing equity shareholders' funds 128,671 130,573
========= =========
NOTES TO THE PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 MARCH 2003
1 Basis of preparation
Statutory financial information
The preliminary results for the year ended 31 March 2003 are an abridged
statement of the full Annual Report & Accounts and Form 20-F, which was approved
by the Board of Directors on 26 May 2003. 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 2002 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 2003 will be delivered to the Registrar of Companies following
the Company's Annual General Meeting, to be held on 30 July 2003.
2 Segmental and other analysis
The Group's principal business is the supply of mobile telecommunications
services and products. Other operations primarily comprise fixed line
telecommunications businesses and, until 29 August 2002, the Vizzavi joint
venture. Analyses of turnover and total Group operating profit/(loss) by
geographical region and class of business are as follows:
Year ended Year ended
31 March 2003 31 March 2002
Turnover * GBPm GBPm
Mobile telecommunications:
Northern Europe 6,057 5,432
Central Europe 4,775 4,177
Southern Europe 8,051 6,743
--------- ---------
Europe 18,883 16,352
Americas 5 12
Asia Pacific 8,364 4,072
Middle East and Africa 290 306
--------- ---------
27,542 20,742
Other operations:
Europe 854 998
Asia Pacific 1,979 1,105
--------- ---------
30,375 22,845
========= =========
* The analysis of turnover represents turnover of the Company and its subsidiary
undertakings and is stated net of inter-company turnover.
Total Group operating profit/(loss) Year ended Year ended
(before goodwill and 31 March 31 March
exceptional items) 2003 2002
GBPm GBPm
Mobile telecommunications:
Northern Europe 2,222 1,685
Central Europe 1,616 1,543
Southern Europe 2,495 2,072
--------- ---------
Europe 6,333 5,300
Americas 1,219 1,317
Asia Pacific 1,421 589
Middle East and Africa 197 161
--------- ---------
9,170 7,367
Other operations:
Europe (138) (306)
Asia Pacific 149 (17)
--------- ---------
9,181 7,044
Subsidiary undertakings 7,076 5,071
Share of joint ventures and
associated undertakings 2,105 1,973
--------- ---------
Goodwill amortisation (14,056) (13,470)
Exceptional operating items (Note 3) (576) (5,408)
--------- ---------
Total Group operating loss (5,451) (11,834)
========= =========
3 Exceptional operating items
Year ended Year ended
31 March 2003 31 March 2002
GBPm GBPm
Impairment of intangible and
tangible fixed assets 485 5,100
Reorganisation costs 91 86
Share of exceptional operating items of
associated undertakings and joint ventures - 222
--------- ---------
576 5,408
========= =========
4 Exceptional non-operating items
Year ended Year ended
31 March 2003 31 March 2002
GBPm GBPm
Amounts written off fixed
asset investments 340 920
Profit on disposal of fixed
asset investments (255) (9)
Profit on disposal of fixed assets (3) (10)
Profit on disposal of businesses (22) (41)
Share of associate profit on
disposal of investment (55) -
--------- ---------
5 860
========= =========
5 Tax on loss on ordinary activities
Year ended Year ended
31 March 2003 31 March 2002
GBPm GBPm
United Kingdom corporation tax
charge at 30% 195 187
--------- ---------
Overseas corporation tax
Current tax:
Current year 1,971 857
Prior year 9 (322)
--------- ---------
1,980 535
--------- ---------
Total current tax 2,175 722
Deferred tax - origination of and
reversal of timing differences 818 1,489
--------- ---------
Tax on loss on ordinary activities,
before exceptional items 2,993 2,211
Tax on exceptional items (37) (71)
--------- ---------
Total tax charge 2,956 2,140
========= =========
Parent and subsidiary undertakings 2,624 1,925
Share of associated undertakings
and joint ventures 332 215
--------- ---------
2,956 2,140
========= =========
6 Earnings per share
Year ended Year ended
31 March 2003 31 March 2002
GBPm GBPm
Loss for basic loss per share (9,819) (16,155)
Goodwill amortisation 14,056 13,470
Exceptional operating items 576 5,408
Exceptional non-operating items 5 860
Tax on exceptional items (37) (71)
Share of exceptional items
attributable to minority interests (139) (14)
--------- ---------
Earnings for adjusted earnings per share 4,642 3,498
========= =========
Weighted average number of shares (millions):
Basic, diluted and adjusted 68,155 67,961
7 Reconciliation of operating loss to net cash inflow from
operating activities
Year ended Year ended
31 March 2003 31 March 2002
GBPm GBPm
Operating loss (5,295) (10,377)
Exceptional items 496 4,486
Depreciation 3,979 2,880
Goodwill amortisation 11,875 10,962
Amortisation of other intangible
fixed assets 53 34
Loss on disposal of tangible
fixed assets 109 46
--------- ---------
Group EBITDA, before
exceptional items * 11,217 8,031
Working capital movements (52) 98
Payments in respect of exceptional
items (23) (27)
--------- ---------
Net cash inflow from operating
activities 11,142 8,102
========= =========
* Group EBITDA, before exceptional items, is not a measure recognised under UK
GAAP but is presented in order to highlight operational performance of the
Group.
8 Analysis of net debt
Other
non-cash
changes
At 1 & At 31
April exchange March
2002 Cash flow movements 2003
GBPm GBPm GBPm GBPm
Liquid resources 1,789 (1,384) (114) 291
-------- -------- -------- --------
Cash at bank and in hand 80 393 2 475
-------- -------- -------- --------
Debt due within one year
(other than bank
overdrafts) (1,219) 1,366 (1,470) (1,323)
Debt due after one year (12,317) (1,298) 621 (12,994)
Finance leases (367) 97 (18) (288)
-------- -------- -------- --------
(13,903) 165 (867) (14,605)
-------- -------- -------- --------
(12,034) (826) (979) (13,839)
======== ======== ======== ========
A maturity analysis of net debt is shown below:
GBPm
One year or less 664
More than one year but not more than two years 2,169
More than two years but not more than five years 4,519
More than five years but not more than ten years 5,018
More than ten years but not more than twenty years 251
More than twenty years 1,218
--------
13,839
========
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 is
provided within Vodafone Group Plc's Annual Report & Accounts and Form 20-F for
the year ended 31 March 2003. The effects of these differing accounting
principles are as follows:
Year ended Year ended
31 March 31 March
2003 2002
GBPm GBPm
Revenues in accordance with UK GAAP 30,375 22,845
Items decreasing revenues:
Non-consolidated subsidiaries (4,371) (4,162)
Connection revenues (1,760) (1,044)
--------- ---------
Revenues in accordance with US GAAP 24,244 17,639
========= =========
Net loss in accordance with UK GAAP (9,819) (16,155)
Items (increasing)/decreasing net loss:
Goodwill and other intangibles
amortisation, including share of
equity accounted interests (8,659) (9,719)
Exceptional items 405 -
Connection income 16 (15)
Capitalised interest 549 387
Deferred taxes, including share of equity
accounted interests 8,242 7,627
Minority interests 269 1,308
Loss on disposal of businesses - (85)
Other (58) (36)
--------- ---------
Net loss in accordance with US GAAP (9,055) (16,688)
========= =========
US GAAP basic loss per ordinary share (13.29)p (24.56)p
========= =========
Shareholders' equity in accordance with
UK GAAP 128,671 130,573
Items increasing/(decreasing)
shareholders' equity:
Goodwill and other intangibles including
share of equity accounted interests -
net of amortisation 96,263 61,765
Exceptional items 405 -
Connection income (84) (100)
Capitalised interest 1,301 752
Cumulative deferred income taxes
including share of equity
accounted interests (82,189) (46,996)
Minority interests (4,068) (5,514)
Proposed dividends 612 511
Other (475) (104)
--------- ---------
Shareholders' equity in accordance
with US GAAP 140,436 140,887
========= =========
Vodafone Group Plc
Preliminary Results for the year ended 31 March 2003
PART 5
UNAUDITED PROPORTIONATE FINANCIAL INFORMATION
FOR THE YEAR ENDED 31 MARCH 2003
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 & Accounts and Form 20-F for the year ended 31 March 2003.
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 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.
Proportionate turnover is stated net of inter-company turnover. Proportionate
EBITDA is defined as operating profit before exceptional items 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.
Analysis of proportionate turnover
Year ended Year ended
31 March 2003 31 March 2002
GBPm GBPm
Proportionate turnover
Mobile telecommunications:
Northern Europe 7,422 6,516
Central Europe 5,333 4,694
Southern Europe 6,334 5,109
--------- ---------
Europe 19,089 16,319
Americas 5,802 5,638
Asia Pacific 6,436 5,373
Middle East and Africa 526 488
--------- ---------
31,853 27,818
Other operations:
Europe 752 821
Asia Pacific 1,321 1,160
--------- ---------
33,926 29,799
========= =========
Reconciliation of proportionate
turnover to statutory turnover
Proportionate turnover 33,926 29,799
Minority share of turnover in
subsidiary undertakings 5,437 3,822
Group share of turnover in
joint ventures, associated
undertakings and trade
investments (8,988) (10,776)
--------- ---------
30,375 22,845
========= =========
Analysis of proportionate EBITDA, before exceptional items
Year ended Year ended
31 March 2003 31 March 2002
GBPm GBPm
Proportionate EBITDA, before
exceptional items
Mobile telecommunications:
Northern Europe 2,899 2,264
Central Europe 2,281 2,068
Southern Europe 2,716 2,131
--------- ---------
Europe 7,896 6,463
Americas 1,977 1,907
Asia Pacific 2,119 1,321
Middle East and Africa 243 211
--------- ---------
12,235 9,902
Other operations:
Europe 48 (8)
Asia Pacific 396 199
--------- ---------
12,679 10,093
========= =========
Reconciliation of proportionate EBITDA, before exceptional items to total
Group operating loss
Proportionate EBITDA, before
exceptional items 12,679 10,093
Minority share of EBITDA in
subsidiary undertakings 1,889 1,333
Group's share of EBITDA in joint
ventures, associated undertakings
and trade investments (3,351) (3,395)
Charges for depreciation (3,979) (2,880)
Exceptional operating items (496) (4,486)
Goodwill amortisation (11,875) (10,962)
Amortisation of other intangibles (53) (34)
Loss on disposal of fixed assets (109) (46)
Share of losses in joint ventures
and associated undertakings (156) (1,457)
--------- ---------
(5,451) (11,834)
========= =========
OTHER INFORMATION
1) Copies of the Group's Annual Review and Summary Financial Statement will
be sent to all shareholders. Further copies, and copies of the Group's Annual
Report & Accounts and Form 20-F, will be available from the Company's registered
office:
Vodafone House
The Connection
Newbury
Berkshire
RG14 2FN
2) This Preliminary Results Announcement will also be available on the
Vodafone Group Plc website, www.vodafone.com, from 27 May 2003.
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
John West
Justin Griffiths
Tel: +44 (0) 20 7600 2288
High resolution photographs are available to the media free of charge at
www.newscast.co.uk
Tel: +44 (0)20 7608 1000
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 with respect to these items. In particular,
forward-looking statements include 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! and Mobile Office from
Vodafone; the ability to integrate our operations throughout the Group in the
same format and on the same technical platform; the development and impact of
new mobile technology, including the expected benefits of GPRS, 3G and other
services and demand for such services; the completion of Vodafone's brand
migration programme and the results of its brand awareness and brand preference
campaigns; growth in customers and usage, including improvements in customer
mix; future performance, including turnover, ARPU, cash flows, costs, capital
expenditures and improvements in margin, non-voice services and their revenue
contribution; the rate of dividend growth by the Group or its existing
investments; expected effective tax rates and expected tax payments; the ability
to realise synergies through cost savings, revenue generating services,
benchmarking and operational experience; future acquisitions, including
increases in ownership in existing investments and pending offers for
investments; future disposals; 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.
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, or slower customer growth or reduced customer retention;
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, the completion of the Group's brand migration programme and the
consolidation of IT systems; 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 Mobile Office from Vodafone 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! and Mobile Office from Vodafone 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 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; 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; 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 2002 and in our Annual Report & Accounts and Form 20-F to be published
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. 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.
Location in this
results
announcement of
Equivalent GAAP reconciliation and
Non-GAAP measure measure further information
---------------- --------------- ------------------
EBITDA, before exceptional Net cash inflow Note 7 on page 31
items from operating
activities
Total Group operating Total Group Note 2 on page 29
profit (before goodwill operating loss
amortisation and
exceptional items)
Sales and administration Sales and Other
costs, before goodwill Administration reconciliations,
amortisation and costs below
exceptional items
Profit on ordinary Loss on Group Financial
activities before ordinary Highlights on
taxation (before activities page 2
goodwill amortisation before
and exceptional items) taxation
Free cash flow Net cash inflow Cash flows and
from operating funding on
activities page 21
Adjusted earnings Earnings per Note 6 on
per share share page 31
Proportionate turnover Statutory Proportionate
turnover financial
information on
pages 34 and 35
Proportionate EBITDA, Total Group Proportionate
before exceptional operating loss Financial
items information on
pages 34 and 35
Other reconciliations
Reconciliation of sales and administrative costs, before goodwill amortisation
and exceptional items, to total sales and administrative expenses
Year ended Year ended
31 March 2003 31 March 2002
GBPm GBPm
Sales and administrative expenses,
before goodwill amortisation
and exceptional items 5,403 4,328
Goodwill amortisation 11,875 10,962
Exceptional operating items 496 4,486
--------- ---------
Sales and administrative expenses 17,774 19,776
========= =========
VODAFONE GROUP PLC - MOBILE TELECOMMUNICATIONS BUSINESSES
PROPORTIONATE NET CUSTOMERS - 1 APRIL 2002 TO 31 MARCH 2003
9 MONTHS TO 31 DECEMBER 2002
------------------------------------------
PERCENTAGE
COUNTRY OWNERSHIP AT 1 APRIL NET STAKE AT 31 DEC
(note 1) (note 2) 2002 ADDITIONS CHANGES 2002
(%) (000s) (000s) (000s) (000s)
NORTHERN EUROPE
UK 100.0 13,186 38 - 13,224
Ireland 100.0 1,704 25 - 1,729
Netherlands 97.2 2,289 10 248 2,547
(note 6)
Sweden 99.1 827 107 44 978
Others 5,000 273 6 5,279
TOTAL 23,006 453 298 23,757
CENTRAL EUROPE
Germany 100.0 21,434 1,243 55 22,732
Hungary 83.8 330 189 49 568
Others 1,567 226 - 1,793
TOTAL 23,331 1,658 104 25,093
SOUTHERN EUROPE
Greece 64.0 1,539 131 349 2,019
Italy 76.8 13,560 993 39 14,592
Malta 80.0 122 10 - 132
Portugal 94.4 1,445 109 310 1,864
(note 6)
Spain 100.0 7,241 708 172 8,121
Albania 82.4 130 136 19 285
Others 438 108 - 546
TOTAL 24,475 2,195 889 27,559
AMERICAS
United 44.4 13,081 1,120 185 14,386
States
(note 4)
Others 689 30 - 719
TOTAL 13,770 1,150 185 15,105
ASIA PACIFIC
Japan 69.7 8,496 758 - 9,254
Australia 100.0 2,050 307 97 2,454
New Zealand 100.0 1,095 125 - 1,220
Others 1,685 553 1,687 3,925
TOTAL 13,326 1,743 1,784 16,853
MIDDLE EAST AND AFRICA
Egypt 60.0 1,031 247 - 1,278
Others 2,197 380 262 2,839
TOTAL 3,228 627 262 4,117
GROUP TOTAL 101,136 7,826 3,522 112,484
VODAFONE GROUP PLC - MOBILE TELECOMMUNICATIONS BUSINESSES
PROPORTIONATE NET CUSTOMERS - 1 APRIL 2002 TO 31 MARCH 2003
(CONTINUED)
QUARTER TO 31 MARCH 2003
---------------------------------------
PERCENTAGE STAKE
COUNTRY OWNERSHIP AT 31 DEC NET CHANGES AT 31 MAR PREPAID
(note 1) (note 2) 2002 ADDITIONS (note 3) 2003 (note 5)
(%) (000s) (000s) (000s) (000s) (%)
NORTHERN EUROPE
UK 100.0 13,224 76 - 13,300 59
Ireland 100.0 1,729 11 - 1,740 71
Netherlands 97.2 2,547 (9) 645 3,183 59
(note 6)
Sweden 99.1 978 13 322 1,313 30
Others 5,279 62 1,568 6,909 52
TOTAL 23,757 153 2,535 26,445 55
CENTRAL EUROPE
Germany 100.0 22,732 208 - 22,940 53
Hungary 83.8 568 94 137 799 88
Others 1,793 65 - 1,858 45
TOTAL 25,093 367 137 25,597 52
SOUTHERN EUROPE
Greece 64.0 2,019 103 44 2,166 71
Italy 76.8 14,592 316 - 14,908 92
Malta 80.0 132 (2) - 130 92
Portugal 94.4 1,864 29 1,019 2,912 73
(note 6)
Spain 100.0 8,121 419 556 9,096 57
Albania 82.4 285 35 2 322 97
Others 546 (9) - 537 65
TOTAL 27,559 891 1,621 30,071 78
AMERICAS
United 44.4 14,386 403 3 14,792 7
States
(note 4)
Others 719 (16) - 703 83
TOTAL 15,105 387 3 15,495 11
ASIA
PACIFIC
Japan 69.7 9,254 448 - 9,702 6
Australia 100.0 2,454 110 - 2,564 50
New Zealand 100.0 1,220 69 - 1,289 78
Others 3,925 204 - 4,129 60
TOTAL 16,853 831 - 17,684 55
MIDDLE EAST AND AFRICA
Egypt 60.0 1,278 80 - 1,358 84
Others 2,839 181 39 3,059 86
TOTAL 4,117 261 39 4,417 86
GROUP TOTAL 112,484 2,890 4,335 119,709 53
note 1 All countries now operate under the Vodafone brand with the exception of
the United States (Verizon Wireless) and Japan (J-Phone Vodafone). Italy
migrated to the single Vodafone brand during May 2003.
note 2 All ownership percentages are stated as at 31 March 2003 and, subject to
note 6 below, exclude options, warrants or other rights or obligations of
Vodafone Group Plc to increase or decrease ownership in any venture. Ownership
interests have been rounded to the nearest tenth of one percent.
note 3 Represents stake increases in Vodafone Netherlands from 77.6% to 97.2%,
Vodafone Sweden from 74.6% to 99.1%, SFR from 32.0% to 43.9%, Vodafone Hungary
from 68.3% to 83.8%, Vodafone Greece from 62.7% to 64.0%, Vodafone Portugal from
61.4% to 94.4%, Vodafone Spain from 93.8% to 100.0%, Vodafone Albania from 81.7%
to 82.4% and Safaricom Limited in Kenya from 30.0% to 35.0%.
note 4 The Group's proportionate customer base has been adjusted for Verizon
Wireless's proportionate ownership of its customer base across all its network
interests of approximately 98.6% at 31 March 2003. In the absence of acquired
interests, this proportionate ownership will vary slightly from quarter to
quarter dependent on the underlying mix of net additions across each of these
networks.
note 5 Prepaid customer percentages are calculated on a venture basis.
note 6 Includes interests which the Company was irrevocably committed to
purchase.
VODAFONE GROUP PLC - MOBILE TELECOMMUNICATIONS BUSINESSES
CONTROLLED ACTIVE CUSTOMER INFORMATION AS AT 31 MARCH 2003
CONTROLLED ACTIVE CONTROLLED
(note 1)
-----------------------------
COUNTRY PREPAID CONTRACT TOTAL INACTIVE
(%) (%) (%) (%)
NORTHERN EUROPE
UK 88 95 91 9
Ireland 100 99 100 -
Netherlands 89 99 93 7
Sweden 95 95 95 5
TOTAL 90 96 92 8
CENTRAL EUROPE
Germany 90 94 92 8
Hungary* 89 97 90 10
TOTAL 90 94 92 8
SOUTHERN EUROPE
Greece 67 94 75 25
Italy 95 92 95 5
Malta 98 98 98 2
Portugal 83 99 88 12
Spain 94 99 96 4
Albania 94 95 94 6
TOTAL 92 97 93
ASIA PACIFIC
Japan (note 2) N/A N/A 98 2
Australia 93 92 93 7
New Zealand 98 100 98 2
TOTAL 95 93 98 2
MIDDLE EAST AND AFRICA
Egypt* 97 100 97 3
TOTAL 97 100 97 3
CONTROLLED GROUP TOTAL 91 95 93 7
CONTROLLED INACTIVE CUSTOMER INFORMATION - HISTORY
CONTROLLED INACTIVE CUSTOMERS AS AT
COUNTRY MARCH JUNE SEPTEMBER DECEMBER MARCH
2002 2002 2002 2002 2003
(%) (%) (%) (%) (%)
Germany 9 8 8 8 8
Italy 7 7 6 5 5
Japan 1 1 1 1 2
UK 11 9 7 8 9
Controlled
Total 8 7 6 6 7
note 1 Active customers are defined as customers who have made or received a
chargeable event in the last three months or, where information is not
available, defined as customers who have made a chargeable event in the last
three months (indicated by *).
note 2 Customer activity information for Japan is only available on a total
customer basis.
VODAFONE GROUP PLC - MOBILE TELECOMMUNICATIONS BUSINESSES
MONTHLY REGISTERED BLENDED ARPU FOR THE 15 MONTHS TO 31 MARCH 2003
Country Jan Feb Mar Apr May Jun Jul Aug
2002 2002 2002 2002 2002 2002 2002 2002
Germany EUR 25.1 22.7 25.4 25.2 26.5 26.5 27.9 27.7
Italy EUR 28.8 25.6 29.6 27.9 29.4 28.9 31.9 28.6
Japan JPY 7,470 7,200 7,630 7,310 7,400 7,160 7,670 7,410
UK (note 1) GBP 22.9 22.0 23.8 22.9 24.6 22.7 24.9 24.7
Country Sep Oct Nov Dec Jan Feb Mar
2002 2002 2002 2002 2003 2003 2003
Germany EUR 26.8 27.4 25.4 25.4 25.6 23.2 25.8
Italy EUR 29.0 29.3 28.0 29.5 29.3 26.5 29.1
Japan JPY 7,180 7,350 7,120 7,360 7,120 6,840 7,270
UK (note 1) GBP 24.9 25.5 24.3 23.5 24.7 23.4 25.6
ARPU INFORMATION FOR THE 12 MONTH PERIOD TO 31 MARCH 2003
ARPU (note 2)
COUNTRY CURRENCY REGISTERED REGISTERED REGISTERED
PREPAID CONTRACT TOTAL
NORTHERN EUROPE
UK (note 1) GBP 125 532 292
Ireland EUR 336 1,085 553
Netherlands EUR 174 863 437
Sweden SEK 908 6,258 4,713
CENTRAL EUROPE
Germany EUR 130 519 313
Hungary HUF 43,098 173,974 56,784
SOUTHERN EUROPE
Italy EUR 298 818 347
Malta MTL 87 895 151
Portugal EUR 178 711 330
Spain EUR 158 631 372
ASIA PACIFIC
Japan JPY N/A N/A 87,159
Australia AUD 312 873 633
New Zealand NZD 314 1,866 663
MIDDLE EAST AND AFRICA
Egypt EGP 682 2,824 1,002
ARPU - HISTORY
REGISTERED TOTAL ARPU FOR THE 12 MONTH PERIOD TO
COUNTRY CURRENCY MARCH JUNE SEPTEMBER DECEMBER MARCH
2002 2002 2002 2002 2003
Germany EUR 298 302 308 312 313
Italy EUR 345 345 345 347 347
Japan JPY 91,903 90,302 89,193 88,238 87,159
UK (note 1) GBP 276 278 282 287 292
note 1 During the period from 1 October 2002 to 31 March 2003, Vodafone UK
operated under interim commercial terms with one of its service providers. Final
terms were agreed in April 2003. Recognising revenues and costs on a consistent
basis during the interim period to the bases before and after this period would
result in additional service revenues and costs of GBP74 million. For
consistency and comparability purposes, these revenues have been included in the
calculation of UK ARPU but have been excluded from Group turnover in accordance
with UK GAAP.
The impact of the inclusion of these amounts has been to increase ARPU for the
12 months to 31 December 2002 and 31 March 2003 from GBP284 and GBP286 to GBP287
and GBP292, respectively.
note 2 ARPU is calculated as total revenues excluding handset revenues and
connection fees divided by the weighted average number of customers during the
period.
VODAFONE GROUP PLC - MOBILE TELECOMMUNICATIONS BUSINESSES
NON-VOICE SERVICES AS A PERCENTAGE OF SERVICE REVENUES
PROPORTIONATE BASIS
12 MONTHS TO 31 MARCH 2003
MARCH 2003 (MONTH ONLY)
COUNTRY MESSAGING DATA TOTAL MESSAGING DATA TOTAL
NORTHERN EUROPE
UK (note 1) 13.4% 1.0% 14.4% 14.0% 1.2% 15.2%
Others 9.4% 0.5% 9.9% 10.5% 0.7% 11.2%
TOTAL 11.6% 0.8% 12.4% 12.3% 0.9% 13.2%
CENTRAL EUROPE
Germany 15.6% 0.8% 16.4% 15.6% 1.0% 16.6%
Others 8.3% 1.2% 9.5% 9.5% 1.7% 11.2%
TOTAL 14.7% 0.9% 15.6% 14.8% 1.1% 15.9%
SOUTHERN EUROPE
Italy 10.8% 0.5% 11.3% 11.2% 0.6% 11.8%
Others 9.1% 0.3% 9.4% 10.0% 0.6% 10.6%
TOTAL 10.0% 0.4% 10.4% 10.7% 0.6% 11.3%
AMERICAS
United States 0.4% 0.7% 1.1% 0.7% 0.8% 1.5%
Others 0.1% - 0.1% 0.1% - 0.1%
TOTAL 0.4% 0.7% 1.1% 0.7% 0.8% 1.5%
ASIA PACIFIC
Japan 7.5% 12.8% 20.3% 7.7% 14.0% 21.7%
Others 8.8% 0.6% 9.4% 11.4% 1.0% 12.4%
TOTAL 7.8% 10.3% 18.1% 8.5% 11.1% 19.6%
MIDDLE EAST
AND AFRICA 3.7% - 3.7% 4.3% - 4.3%
PROPORTIONATE
GROUP TOTAL 8.9% 2.4% 11.3% 9.6% 2.7% 12.3%
STATUTORY BASIS
CONTROLLED
GROUP TOTAL 11.0% 3.6% 14.6% 11.6% 4.0% 15.6%
NON-VOICE SERVICES AS A PERCENTAGE OF SERVICE REVENUES - HISTORY
12 MONTHS TO
COUNTRY MAR 2002 JUN 2002 SEP 2002 DEC 2002 MAR 2003
Germany 14.4% 14.8% 15.4% 16.1% 16.4%
Italy 8.7% 9.4% 10.1% 10.7% 11.3%
Japan 15.1% 16.6% 18.1% 19.3% 20.3%
UK (note 1) 11.8% 12.6% 13.2% 13.9% 14.4%
Proportionate 8.7% 9.5% 10.1% 10.7% 11.3%
Total
Statutory Total 11.1% 12.1% 13.2% 13.9% 14.6%
MONTH ONLY
COUNTRY MAR 2002 JUN 2002 SEP 2002 DEC 2002 MAR 2003
Germany 15.2% 15.6% 16.2% 19.2% 16.6%
Italy 9.8% 10.4% 10.4% 12.9% 11.8%
Japan 19.8% 19.9% 20.2% 20.6% 21.7%
UK (note 1) 13.4% 14.3% 13.8% 16.0% 15.2%
Proportionate 10.3% 10.9% 10.9% 12.5% 12.3%
Total
Statutory Total 13.5% 14.0% 14.3% 16.0% 15.6%
note 1 During the period from 1 October 2002 to 31 March 2003, Vodafone UK
operated under interim commercial terms with one of its service providers. Final
terms were agreed in April 2003. Recognising revenues and costs on a consistent
basis during the interim period to the bases before and after this period would
result in additional service revenues and costs of GBP74 million. For
consistency and comparability purposes, these revenues have been included in the
calculation of non-voice services as a percentage of service revenues.
The impact of the inclusion of these amounts has been to decrease UK non-voice
services as a percentage of service revenues for the months of December 2002 and
March 2003 from 16.1% and 15.3% to 16.0% and 15.2%, respectively.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
VODAFONE GROUP
PUBLIC LIMITED COMPANY
(Registrant)
By:/s/ S R SCOTT
Name: Stephen R Scott
Title: Group General Counsel and Company Secretary
Date 27 May 2003