Arun Sarin Chief Executive Vodafone Group Plc This presentation is - PowerPoint PPT Presentation

Arun Sarin Chief Executive Vodafone Group Plc

This presentation is being made only to, and is directed at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 and (b) persons to whom it may otherwise lawfully be communicated (together "relevant persons") Any person who is not a relevant person should not act or rely on this presentation or any of its contents. This presentation contains forward looking statements which are subject to risks and uncertainties because they relate to future events. Some of the facts which may cause actual results to differ from these forward looking statements are discussed in the final slide to this presentation and others can be found by referring to our Interim Results release for the six month period ended 30 September 2003 and the “Risk Factors” in our Annual Report & Accounts and Form 20-F for the year ended 31 March 2003.

Agenda • Overview and Highlights Arun Sarin • Results and Financial Position Ken Hydon • Operational Performance Julian Horn-Smith • Outlook and Q&A Arun Sarin

Industry Leading Results • Solid performance in challenging competitive and regulatory environment – Over 125m customers – Strong double digit turnover & EBITDA growth – Significant cash flow growth – Continued improvement in capital efficiency • Increasing returns to shareholders – 20% increase in interim dividend – Introduction of share buy-back programme – £2.5bn allocation

Statutory Highlights Turnover Operating Profit* £16.9bn 13% £14.9bn £5.7bn 23% £4.6bn H1 02/03 H1 03/04 H1 02/03 H1 03/04 Earnings per Share* 4.78p 46% 3.28p H1 02/03 H1 03/04 * Before goodwill, amortisation and exceptional items

Proportionate Highlights Turnover EBITDA* £19.7bn £7.8bn 19% 26% £16.5bn £6.2bn H1 02/03 H1 03/04 H1 02/03 H1 03/04 Group EBITDA Margin* Customers 125.3 16% 2pp 39.6% 37.6% 107.5 H1 02/03 H1 03/04 Sep-02 Sep-03 * Before exceptional items

Outstanding Cash Flow Growth Free Cash Flow £4.6bn • Capital expenditure of £2.2bn 61% • Improved mobile capital efficiency to 12.7% £2.9bn • Reduction in net debt to £10.9bn H1 02/03 H1 03/04

Strong Growth in Mobile Revenues £15.6bn 16% £13.4bn 10% Organic Mobile Growth H1 02/03 H1 03/04 H1 02/03 Total Mobile Revenue Organic Mobile Growth Exchange Rate Effect

Better Churn Leads to Strong Net Additions 6 Month Annualised Customer Churn* Customer Growth* 120 11% 27% 100 Mobile Customers (Millions) 25% 80 23% 60 21% 40 19% 20 17% 0 15% Sept-02 Sept-03 H1 02/03 H2 02/03 H1 03/04 UK & Ireland Northern Europe Total Contract Prepaid Southern Europe & MEA Asia Pacific * All subsidiaries

Underlying ARPU ARPU on a Constant Currency Basis* £274 £273 H1 02/03 H1 03/04 • MOU increased to 126 min / customer • Termination rate cuts in UK, Italy, Ireland and Portugal * Annualised 6 months rolling ARPU. All subsidiaries

Strong Data Growth Total Data Revenue* 12 Month Rolling Data % of Service Revenue* £2.2bn 29% £1.7bn 15.5% 14.6% 13.2% Sep-02 Mar-03 Sep-03 H1 02/03 H1 03/04 * All subsidiaries

Vodafone live! Gaining Momentum Over 3 million customers Incremental ARPU* 7+% Pre Vodafone live! Post Vodafone live! Germany UK Italy Spain Others *Based on a European sample

Increasing Controlled Mobile EBITDA and Margin 40.7% 39.0% £6.3bn £5.2bn 1H 02/03 1H 03/04 UK Germany Italy Japan Other • Small improvement in acquisition and retention costs • Efficiency in network operating costs

Committed Investment in 3G • Over £800m in first half Cumulative 3G Spend- Approx £4bn • Major 3G push planned for middle of next fiscal year Germany UK Italy Japan Other

Power of 3G Drive more mobile minutes

Power of 3G Improved high quality content

Power of 3G Greater productivity and mobilising applications

Great Opportunity

The Journey has Begun… • Disposal of non core fixed business • Acquisition of service providers • Extended Partner Network reach to 10 countries

Ken Hydon Group Financial Director Vodafone Group Plc

Statutory Results Turnover Analysis of Turnover Growth 2.5 • £16.9bn 0.8 ( 0.1 ) • Up 13% (£2.0bn) 2.0 • Mobile organic growth Change (£bn) 1.5 0.1 0.4 – Total: +10% 1.0 0.8 – Data: +23% – Voice: +8% 0.5 - Mobile Mobile Other Foreign Disposals voice data growth currency growth growth (organic) (organic) (organic)

Statutory Results Group Operating Profit* Analysis of Operating Profit* Growth • £5.7bn 1% • 23% increase 6% • Depreciation M&A FX Organic growth – £2.2bn – £0.2bn in Japan Telecom 16% *Before amortisation of goodwill and exceptional items as detailed in notes 3 & 4 of the Interim Announcement dated 18 November 2003

Statutory Results 6 months to 30 September Adjusted EPS* (pence) 2003 2002 Increase 4.78 £m £m % Turnover 16,899 14,898 13 Group operating profit* 5,722 4,640 23 3.53 Net interest payable (356) (390) (9) 3.28 Profit before tax* 5,366 4,250 26 2.64 Tax (1,792) (1,602) 2.51 Goodwill amortisation (7,651) (6,837) Exceptional items 293 267 Minority interests (470) (414) Loss for the period (4,254) (4,336) Basic loss per share (6.24p) (6.36p) Adjusted earnings per share* 4.78p 3.28p H1/02 H2/02 H1/03 H2/03 H1/04 *Before amortisation of goodwill and exceptional items as detailed in notes 3 & 4 of the Interim Announcement dated 18 November 2003

Shareholder Returns Dividend Growth and Yield (2000-4) • Interim dividend Dividend Yield (based on 30/9/03 closing share price of £1.20 1.8% – Up 20% on 2002/3 1.6% – 0.9535p per share 20% 1.4% – £650m 1.2% 15% • Share buyback programme 1.0% – Allocation of £2.5bn 0.8% 0.6% 5% 5% 5% 0.4% 0.2% 0.0% 2000 2001 2002 2003 2004 Interim

Cash Flow 6 months to 30 September Analysis of Operating Cash Flow 2003 2002 Increase £m £m % Other Other Operating cash flow 6,081 5,676 7 5% Mobile Germany Capital expenditure (2,202) (2,670) (18) 3% 20% Licences (2) (59) (97) Other Europe 20% Operating free cash flow 3,877 2,947 32 Tax paid (283) (154) 84 Net interest received/(paid) 256 (211) N/A Dividends received & other 791 296 167 Free cash flow 4,641 2,878 61 Acquisitions (1,075) (1,600) Italy Disposals 105 686 23% Group dividends (612) (511) Japan Other (126) (116) 18% United Net debt decrease 2,933 1,337 Kingdom Opening net debt (13,839) (12,034) 11% Closing net debt (10,906) (10,697)

Tangible Fixed Assets September 2003 March 2004 • £2.1bn additions • Around £5bn Other Other Operations Operations Germany Germany 5% 3% 17% 17% Other Other Mobile Mobile 27% 26% Italy Italy 11% 14% United United Kingdom Kingdom 11% Japan Japan 11% 28% 30% • 40% on 3G • 40% on 3G • Mobile capital efficiency March 2005 • Around £5bn – 9/03: 12.7% (9/02: 13.4%)

Net Debt Debt Maturity at 30 September 2003 (£bn) • September 2003 Total = £15.5bn 4 £bn – Gross debt (15.5) 3 – Cash & investments 4.6 – Net debt (10.9) 2 • Solid credit profile 1 0 <1 1-2 2-3 3-4 4-5 5-6 6-7 >7 Years

Summary • Growth – Turnover – Operating profit* – Adjusted earnings per share* – Free cash flow • Increasing returns to shareholders • Healthy financial position *Before amortisation of goodwill and exceptional items as detailed in notes 3 & 4 of the Interim Announcement dated 18 November 2003

Julian Horn-Smith Group Chief Operating Officer Vodafone Group Plc

Delivering on our objectives Vodafone live! • Today in 15 markets • Over 3m customers • Attracting new customers • Increasing usage • Higher customer satisfaction • Higher ARPU Better investment in customers

Vodafone Japan • The Group’s largest business by revenue • Rebranded to Vodafone Japan (1st October) • Seamless services - GSM roaming

Vodafone Japan Net Additions 17.9% 18.0% 18.1% 18.5% 18.7% 18.6% 14,540 14,389 13,912 Customers Market Share 13,269 12,949 12,618 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2002/03 2003/04 2002/03 2003/04 • Competitive market • Stable market share over 18%

Vodafone Japan Customer Base Costs EBITDA 1,000 180 32.4% 32.0% 30.6% 28.0% 160 800 23.7% 24.3% 140 Customer Base Cost (¥ billions) 20.0% 18.1% 120 EBITDA (£ millions) 600 100 80 400 60 40 200 20 0 0 H2 01/02 H1 02/03 H2 02/03 H1 03/04 H2 01/02 H1 02/03 H2 02/03 H1 03/04 EBITDA EBITDA Margin SRC SAC % Service Revenue • Acquisition and retention costs reducing • Increase in operating expenses due to as a % service revenue additional network maintenance costs for 3G resulting in flat margins