Final Results - Part 1

Vodafone Group Plc
25 May 2004

Vodafone Group Plc
Preliminary Results for the year ended 31 March 2004
PART 1


VODAFONE GROUP PLC                                     Embargo:
PRELIMINARY ANNOUNCEMENT OF RESULTS                    Not for publication
YEAR ENDED 31 MARCH 2004                               before 07:00 hours
                                                       25 May 2004

• Group turnover increased by 10% to £33.6 billion. Mobile
  telecommunications turnover increased by 15% to £31.7 billion

• Profit on ordinary activities before tax, goodwill amortisation and
  exceptional items, increased by 19% to £10.0 billion

• Earnings per share, before goodwill amortisation and exceptional items,
  increased by 34% to 9.10 pence

• After goodwill amortisation of £15.2 billion, the loss for the financial
  year was £9.0 billion. Basic loss per share was 13.24 pence

• Free cash flow increased by 65% to £8.5 billion, after £4.3 billion of
  net cash expenditure on tangible fixed assets

• 13.7 million net new proportionate mobile customers in the year,
  bringing the total to 133.4 million

• Final dividend per share increased by 20% to 1.0780 pence, and for the
  year, total dividends per share increased to 2.0315 pence, giving a total
  dividend payout of £1.4 billion

• £1.1 billion expended to date on the share purchase programme. A further
  £3.0 billion of purchases are planned over the next year


Arun Sarin, Chief Executive, commented:

These results reflect a strong operational performance with an excellent level
of free cash flow generation.

Our financially disciplined team continues to look for ways to strengthen our
core business, delight our customers and increase returns to shareholders. With
the advent of our Mobile Connect 3G/GPRS datacard and Vodafone live!TM with 3G,
we are well positioned for a future of transition as we take the lead in
expanding market boundaries through new technologies and industry partnerships.

We remain committed to delivering increasing returns to our shareholders,
demonstrated by a 20% increase in dividends and a further £3 billion of share
purchases, in addition to the £1.1 billion already expended.

Julian Horn-Smith, Group Chief Operating Officer, commented:

Strong customer growth and escalating take up of data services have driven
double digit growth in revenues once again. Our ongoing efforts to drive cost
efficiencies have offset increased competitive and regulatory pressures to
further increase margins. Overall, these results demonstrate the underlying
operational strength of the Group.

As we transition to 3G, we will continue to enhance the customer experience,
driving up brand preference and customer loyalty and building on Vodafone's
success as a market leader.

GROUP FINANCIAL HIGHLIGHTS

Statutory                                               Year ended 31 March
                                                   2004        2003   % change
                                                     £m          £m
Turnover                                         33,559      30,375         10

Group EBITDA, before exceptional items           12,640      11,217         13

Total Group operating profit, before goodwill
amortisation and exceptional items               10,749       9,181         17

Profit on ordinary activities before
taxation, goodwill amortisation and
exceptional items                                10,035       8,429         19
Goodwill amortisation                           (15,207)    (14,056)         8
Exceptional operating items                         228        (576)         -
Exceptional non-operating items                    (103)         (5)         -
                                                --------    --------          
Loss on ordinary activities before taxation      (5,047)     (6,208)       (19)

Loss for the financial year                      (9,015)     (9,819)        (8)


Proportionate                                         Year ended 31 March
                                                   2004        2003   % change
                                                     £m          £m
Turnover
- mobile telecommunications                      37,969      31,853        19
- other operations                                1,477       2,073       (29)
                                                 --------   --------          
                                                 39,446      33,926        16

Organic growth at constant exchange rates                                  11

EBITDA before exceptional items
- mobile telecommunications                      14,826      12,235        21
- other operations                                  288         444       (35)
                                                 --------   --------          
                                                 15,114      12,679        19

Organic growth at constant exchange rates                                  14

Proportionate information is calculated on the basis described on page 31.


Cash flow information                                 Year ended 31 March
                                                   2004        2003   % change
                                                     £m          £m
Net cash inflow from operating activities        12,317      11,142         11
Free cash flow                                    8,521       5,171         65
Net debt at 31 March                             (8,488)    (13,839)       (39)


Per share information                                  Year ended 31 March
                                                   2004        2003   % change
Earnings/(loss) per share
- before goodwill amortisation 
  and exceptional items                            9.10p       6.81p        34
- after goodwill amortisation 
  and exceptional items                          (13.24)p    (14.41)p       (8)

Dividends per share                              2.0315p     1.6929p        20

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 35.

GROUP OPERATING HIGHLIGHTS

• 13.7 million net new proportionate mobile customers in the year, bringing the
  total to 133.4 million at 31 March 2004. Venture mobile customer base 
  increased to 340.1 million. Net proportionate organic additions of 2.5 million
  in the fourth quarter

• ARPU up 4% and 6% in Italy and the UK respectively, and down 7% and 1% in
  Japan and Germany respectively, compared with the year ended 31 March 2003

• Voice usage increased by 11% to 154.8 billion minutes in the Group's
  controlled mobile businesses, from 138.9 billion minutes for the year ended 31
  March 2003

• Usage of data services continued to increase in the Group's controlled mobile
  businesses, with revenues from data services increasing by 25% over the year 
  to £4,540 million. Data revenues represented 16.1% of service revenues for the
  year ended 31 March 2004 compared with 14.6% for the year ended 31 March 2003

• Mobile proportionate EBITDA margin, before exceptional items, up by 0.6
  percentage points to 39.0% for the year ended 31 March 2004

• Tangible fixed asset additions of £4.8 billion in the year, the same amount as
  for the year ended 31 March 2003. Tangible fixed asset additions in the
  controlled mobile businesses represented 14.5% of turnover for the current 
  year, compared with 16.3% for the prior year

• Mannesmann synergies, calculated on a proportionate after tax cash flow basis,
  exceeded the target of £600 million set for the year ended 31 March 2004

PRODUCTS AND SERVICES

• Vodafone live!TM with 3G introduced for consumers in Europe from 4 May 2004.
  The Samsung Z105 handset initially available in Germany and Portugal, and from
  25 May 2004 in Italy and Spain, with  other countries and handsets to follow 
  in coming months

• European introduction of commercial 3G services in 7 countries, through the
  launch of the Vodafone Mobile Connect 3G/GPRS datacard in February 2004 

• First megapixel camera phone launched in European market, the Sharp GX30,
  introduced into 10 controlled countries by 25 May 2004

• Over 6.8 million Vodafone live!TM customers in controlled mobile
  businesses and over 0.7 million in associates as at 31 March 2004, plus an
  additional 13.0 million Vodafone live!TM customers in Japan following the
  rebranding of its J-Sky service to Vodafone live!TM on 1 October 2003

• Enhanced Vodafone live!TM content offering to customers, involving established
  brands such as Warner Bros. Online, Disney, Cartoon Network, Sony Pictures
  Mobile, Sony Music Entertainment, UEFA Champions League Football, Tomb Raider
  and The Simpsons

• Launch of Vodafone live!TM by two of the Group's associated undertakings, SFR
  on 29 October 2003 and Swisscom Mobile on 13 November 2003

OTHER COMMERCIAL INITIATIVES

• Mobile top level domain applied for, with other leading companies from the
  mobile industry, a key step in bridging the world of mobility and the Internet

• Partner Networks extended by 6 countries since 31 March 2003 to cover 13
  countries as at 25 May 2004

• Bid submitted, in partnership with Celtel, to operate the second licence in
  the Sultanate of Oman. Prequalifed as one of 11 bidders to operate the second
  licence in the Kingdom of Saudi Arabia

SIGNIFICANT TRANSACTIONS

• Purchased 800 million own shares at a cost of £1,088 million as part of the
  share purchase programme

• Disposed of the Group's interest in Japan Telecom. Receipts resulting from
  this transaction are Y257.9 billion (£1.4 billion), comprising Y178.9 billion
  (£1.0 billion) of cash received, Y32.5 billion (£0.2 billion) of transferable
  redeemable preferred equity and Y46.5 billion (£0.2 billion) of withholding 
  tax recoverable

• Shareholding in Vodafone Greece increased to 99.4% from 64.0% at 31 March 2003
  following market purchases and a public offer for shares announced on 1 
  December 2003

• Simplification of the Cegetel-SFR Group structure and agreement on the receipt
  of quarterly dividends

OUTLOOK

Please see 'Forward-Looking Statements' on page 34.

For the year ending 31 March 2005

In the coming year, on an organic basis, the Group anticipates high single-digit
average proportionate mobile customer growth, leading to broadly similar growth
in proportionate mobile revenues.

Taking into account the necessary investment and costs associated with opening
and operating 3G networks, as well as the effects of declines in interconnect
rates, the Group expects the proportionate mobile EBITDA margin to be broadly
stable.

As already stated in November 2003, the ongoing impact of the commercial launch
of 3G services is expected to increase depreciation and amortisation by around
£0.6 billion in the 2005 financial year.

The effective tax rate is expected to be a little higher than the 30.4% for the
2004 financial year due to lower recurring tax benefits, particularly in Italy
and the absence of the one-off benefit from restructuring in France, but is
subject to the resolution of open issues, planning opportunities, corporate
acquisitions and disposals and changes in tax legislation.

For the 2005 financial year, total capitalised fixed asset additions are
expected to be around £5 billion, slightly higher than the £4.8 billion for the
2004 financial year, mainly due to deferred investment from that year.

Free cash flow is expected to be around £7 billion, lower than in the 2004
financial year, due to:

- the inclusion in that year of:

• £0.6 billion of one-off receipts from hedging instruments; and
• £0.2 billion of free cash flow from the fixed line business in Japan which
  has been sold

- together with higher cash expenditure expected in the 2005 financial year on:

• approximately £1 billion of additional capital expenditure, mainly due to
  the unwinding of capital creditors; and
• tax payments, which are expected to be under £2 billion.

BUSINESS REVIEW

                                                        Year ended 31 March
                                              2004             2003   % change
                                                £m               £m
Turnover
Mobile telecommunications:
- Voice services                            23,618           21,201         11
- Data services                              4,540            3,622         25
                                            --------        --------
- Total service revenue                     28,158           24,823         13
- Equipment and other                        3,557            2,719         31
                                            --------        --------
                                            31,715           27,542         15
Other operations                             1,844            2,833        (35)
                                            --------        --------
                                            33,559           30,375         10

Direct costs(1)                            (13,378)         (11,825)        13
Operating expenses(1)                       (7,541)          (7,333)         3
Depreciation and amortisation(1)(2)         (4,549)          (4,141)        10
Share of operating profit in joint
ventures and associated 
undertakings(1)                              2,658            2,105         26
                                            --------        --------

Total Group operating profit(1)             10,749            9,181         17
Goodwill amortisation                      (15,207)         (14,056)         8
Exceptional operating items                    228             (576)         -
                                            --------        --------
Total Group operating loss                  (4,230)          (5,451)       (22)
                                            --------        --------
(1) Before goodwill amortisation and exceptional items
(2) Includes loss on disposal of tangible fixed assets


Turnover

Turnover increased by 10% to £33,559 million in the year ended 31 March 2004,
resulting from organic growth (10%) and changes in exchange rates (4%),
partially offset by the impact of acquisitions and disposals (4%). The foreign
exchange impact primarily arose due to a stronger Euro.

The principal component of the increase in turnover from mobile
telecommunications arose from service revenue growth of 13%, driven primarily by
growth in the Group's controlled customer base, which increased by 9% over the
prior year.

ARPU was up 4% and 6% in Italy and the UK respectively, and down 7% and 1% in
Japan and Germany respectively, compared with the year ended 31 March 2003.
Total voice usage in controlled mobile businesses increased by 11% over the year
to 154.8 billion minutes for the year ended 31 March 2004, although the effect
on ARPU was partially offset by tariff reductions and regulatory intervention.
Lower termination rates, resulting from regulatory changes, have reduced service
revenue by an estimated £0.3 billion in the year.

Another key driver of the growth in service revenue was the continued success of
the Group's data product and service offerings. Revenues from data services
increased 25% to £4,540 million for the year ended 31 March 2004 and represented
16.1% of service revenues in the Group's controlled mobile subsidiaries for the
twelve months ended 31 March 2004, compared with 14.6% for the 2003 financial
year. SMS revenues continue to represent the largest component of both the level
of and growth in data revenues. Non-messaging data revenues increased to 4.2% of
service revenues from 3.6% in the prior financial year as a result of the
increased focus on providing value-added services, particularly through Vodafone
live!TM, the Group's business offerings and the increased penetration of data
services into the Group's customer base.

Mobile equipment and other turnover increased 31% to £3,557 million, due to
revenues from non-Vodafone customers acquired as a result of the acquisition of
service providers in the UK and increased acquisition and retention activity.

Turnover from other operations decreased by 35% to £1,844 million in the year,
principally as a result of the deconsolidation of Japan Telecom from 1 October
2003 and the disposal of the Telematiks business by Arcor in the previous year.

Expenses

Direct costs, before exceptional items, increased by 13% to £13,378 million and
represented 39.9% of turnover in the year ended 31 March 2004, compared with
38.9% for the year ended 31 March 2003. The increase in direct costs as a
percentage of turnover is principally due to an increase in the proportion of
acquisition and retention costs, primarily following the acquisition of a number
of service providers in the UK. Acquisition and retention costs, net of
equipment revenues, as a percentage of service revenues, for the Group's
controlled mobile businesses, increased to 12.6%, compared with 12.3% for the
comparable period. This was partially offset by the benefit from the disposal of
Japan Telecom.

Operating expenses, before exceptional items, increased by 3% to £7,541 million,
and represented 22.5% of turnover in respect of the year ended 31 March 2004,
compared with 24.1% for last year. The principal reason for the improvement in
expenses as a percentage of turnover was the maintenance of network operating
costs at a similar level to the previous financial year, despite the growth in
customer numbers and usage. Operating expenses as a proportion of turnover also
benefited from the disposal of Japan Telecom.

Depreciation and amortisation charges, excluding goodwill amortisation,
increased by 10% to £4,549 million from £4,141 million in the comparable period.
The launch of 3G services in a number of countries resulted in approximately
£0.3 billion of additional depreciation and amortisation in the current year as
3G infrastructure and licences have been brought into use.

Total Group operating profit before goodwill amortisation and exceptional items

Total Group operating profit, before goodwill amortisation and exceptional
items, increased by 17% to £10,749 million, with underlying organic growth of 14
% and beneficial changes in exchange rates of 4% due to a stronger Euro offset
by a weaker US dollar. Acquisitions and disposals reduced reported growth by 1%,
resulting principally from the impact of the deconsolidation of Japan Telecom on
1 October 2003, partially offset by the stake increase in Societe Francaise du
Radiotelephone ('SFR') in the second half of the previous financial year.

Total Group operating loss

After goodwill amortisation and exceptional items, the Group reported a total
operating loss of £4,230 million, compared with a loss of £5,451 million for the
previous year. The £1,221 million reduction in the total operating loss arose as
a result of a £228 million credit in respect of exceptional operating items in
the year ended 31 March 2004, compared with an expense of £576 million in the
prior year, and a £1,568 million increase in operating profit before goodwill
amortisation and exceptional items, partially offset by a £1,151 million
increase in the goodwill amortisation charge. The charges for goodwill
amortisation, which do not affect the cash flows of the Group or the ability of
the Company to pay dividends, increased by 8% to £15,207 million, principally as
a result of the impact of foreign exchange movements.

Proportionate results

Proportionate turnover increased 16% to £39,446 million as a result of both
organic growth and the effect of increased stakes in a number of the Group's
existing businesses, partially offset by the disposal of Japan Telecom. In the
mobile businesses, proportionate turnover grew by 19% to £37,969 million,
including organic growth in service revenue of 11%.

The Group's proportionate EBITDA margin, before exceptional items, in the mobile
businesses increased from 38.4% in the prior year to 39.0% in the year ended 31
March 2004. The main driver behind this growth has been savings in ongoing
network costs as a percentage of turnover. On a proportionate basis, acquisition
and retention costs, net of equipment revenues, as a percentage of service
revenues rose in line with the increase seen in the Group's controlled
businesses.

Mobile Telecommunications

In June 2003, the Group announced changes in the regional structure of its
operations. The former Northern Europe and Central Europe regions were combined
into a new Northern Europe region, with the exception of the United Kingdom and
Ireland which now form their own region. The following results are presented in
accordance with the new regional structure.

UNITED KINGDOM AND IRELAND

Financial highlights                                    Year ended 31 March
                                                     2004      2003   % change
                                                       £m        £m
Turnover               United Kingdom:
                       - Voice services             3,487     3,207          9
                       - Data services                671       541         24
                                                   -------   -------
                       - Total service revenue      4,158     3,748         11
                       - Equipment and other          586       278        111
                                                   -------   -------
                                                    4,744     4,026         18
                       Ireland                        760       629         21
                                                   -------   -------
                                                    5,504     4,655         18
                                                   -------   -------
Total Group operating profit(1)
                       United Kingdom               1,098     1,120         (2)
                       Ireland                        262       206         27
                                                   -------   -------
                                                    1,360     1,326          3
                                                   -------   -------
Proportionate EBITDA margin(2)
                      United Kingdom                33.9%     38.3%

Key performance indicators (United Kingdom only)

Customers ('000)(3)                                14,095    13,300
ARPU(3)                                              £309      £292
Churn                                                29.6%     30.0%

Acquisition and retention costs net of equipment
revenues, as a percentage of service revenues(3)     15.6%     11.9%

(1) before goodwill amortisation and exceptional items
(2) see pages 31 and 32 for details of proportionate turnover and EBITDA
(3) refer to definitions on pages 36, 38 and 40






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