Interim Results - Part 5
Vodafone Group Plc
12 November 2002
Vodafone Group Plc
Interim Results
For the six months ended 30 September 2002
PART 5
NOTES TO THE INTERIM RESULTS (Continued)
3. Exceptional operating items
Six months Six months
to to Year ended
30 Sept 30 Sept 31 March
2002 2001 2002
#m #m #m
Impairment of intangible
and tangible fixed assets - (4,450) (5,100)
Reorganisation costs - - (86)
Share of exceptional
operating items of
associated undertakings
and joint ventures - (65) (222)
-------- -------- --------
- (4,515) (5,408)
======== ======== ========
4. Exceptional non-operating items
Six months Six months
to to Year ended
30 Sept 30 Sept 31 March
2002 2001 2002
#m #m #m
Amounts written off
fixed asset investments (4) (300) (920)
Profit on disposal of
fixed asset investments 268 45 9
Profit on disposal of
fixed assets - 7 10
Profit on disposal of
Businesses 3 - 41
-------- -------- --------
267 (248) (860)
======== ======== ========
5. Tax on loss on ordinary activities
Six months Six months
to to Year ended
30 Sept 30 Sept 31 March
2002 2001 2002
#m #m #m
United Kingdom
Corporation tax charge at 30% 120 144 187
-------- -------- --------
Overseas corporation tax
Current tax:
Current year 996 772 857
Prior year - (173) (322)
-------- -------- --------
996 599 535
-------- -------- --------
Total current tax 1,116 743 722
Deferred tax - origination
of and reversal of
timing differences 486 354 1,489
-------- -------- --------
Tax on loss on ordinary
activities 1,602 1,097 2,211
Tax on exceptional items - (11) (71)
-------- -------- --------
Total tax charge 1,602 1,086 2,140
======== ======== ========
Parent and subsidiary
undertakings 1,428 940 1,925
Share of associated
undertakings and joint
ventures 174 146 215
-------- -------- --------
1,602 1,086 2,140
======== ======== ========
6. Earnings per share
Six months Six months
to to Year ended
30 Sept 30 Sept 31 March
2002 2001 2002
#m #m #m
Loss for basic loss per share (4,336) (9,735) (16,155)
Amortisation of goodwill 6,837 6,697 13,470
Exceptional operating
items - 4,515 5,408
Exceptional non-operating
items (267) 248 860
Tax on exceptional items - (11) (71)
Share of exceptional items
attributable to
minority interests - (12) (14)
-------- -------- --------
Earnings for adjusted
earnings per share 2,234 1,702 3,498
======== ======== ========
Weighted average number
of shares (millions):
Basic and adjusted 68,152 67,776 67,961
Diluted 67,690 67,543 67,715
7. Reconciliation of operating loss to net cash inflow from
operating activities
Six months Six months
to to Year ended
30 Sept 30 Sept 31 March
2002 2001 2002
#m #m #m
Operating loss (2,163) (7,089) (10,377)
Exceptional items - 4,000 4,486
Depreciation 1,892 1,053 2,880
Amortisation of goodwill 5,335 10,962
5,767
Amortisation of other
intangible fixed assets 23 19 34
Loss on disposal of tangible
fixed assets 47 - 46
-------- -------- --------
Group EBITDA (note 1) 5,566 3,318 8,031
Working capital movements 116 322 98
Payments in respect of
exceptional items (6) - (27)
-------- -------- --------
Net cash inflow from
operating activities 5,676 3,640 8,102
======== ======== ========
(1)Group EBITDA 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
At 1 changes & At 30
April exchange September
2002 Cash flow movements 2002
#m #m #m #m
Liquid resources 1,789 1,108 (202) 2,695
-------- -------- -------- --------
Cash at bank and
in hand 80 35 2 117
-------- -------- -------- --------
80 35 2 117
-------- -------- -------- --------
Debt due within
one year
(other than bank
overdrafts) (1,219) 231 (747) (1,735)
Debt due after
one year (12,317) 58 799 (11,460)
Finance leases (367) 55 (2) (314)
-------- -------- -------- --------
(13,903) 344 50 (13,509)
-------- -------- -------- --------
Net debt (12,034) 1,487 (150) (10,697)
======== ======== ======== ========
Included within net debt are bond issues maturing as follows:
#m
One year or less 132
More than one year but not more than two years 1,970
More than two years but not more than five years 3,277
More than five years 5,164
--------
10,543
========
9. Summary of differences between UK and US GAAP
The interim 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 2002. The effects of these differing accounting
principles are as follows:
Six months Six months
to to Year ended
30 Sept 30 Sept 31 March
2002 2001 2002
#m #m #m
Revenues in accordance
with UK GAAP 14,898 8,906 22,845
Items decreasing revenues:
Non-consolidated subsidiaries (2,101) (2,182) (4,162)
Deferral of connection
revenues (831) (155) (1,044)
-------- -------- --------
Revenues in accordance
with US GAAP 11,966 6,569 17,639
======== ======== ========
Net loss in accordance
with UK GAAP (4,336) (9,735) (16,155)
Items (increasing)/decreasing
net loss:
Goodwill and other
intangibles amortisation (2,985) (6,280) (9,719)
Deferral of connection
income 9 (20) (15)
Capitalised interest 237 203 387
Income taxes 2,748 4,750 7,627
Minority interests 190 1,020 1,308
Loss on disposal of business - - (85)
Other (37) (43) (36)
-------- -------- --------
Net loss in accordance
with US GAAP (4,174) (10,105) (16,688)
======== ======== ========
US GAAP basic loss per
ordinary share (6.12)p (14.91)p (24.56)p
======== ======== ========
Shareholders' equity in
accordance with UK GAAP 125,912 138,445 130,573
Items increasing /
(decreasing) shareholders'
equity:
Goodwill and other
intangibles - net of
amortisation 63,317 62,067 61,765
Deferral of connection
income (91) (105) (100)
Capitalised interest 989 568 752
Cumulative deferred
income taxes (48,250) (48,469) (46,996)
Minority interests (5,738) (3,887) (5,514)
Proposed dividends 542 492 511
Other (532) (103) (104)
-------- -------- --------
Shareholders' equity
in accordance with
US GAAP 136,149 149,008 140,887
======== ======== ========
10.Proportionate financial information
Six months Six months
to to Year ended
30 Sept 30 Sept 31 March
2002 2001 2002
#m #m #m
Proportionate turnover
Mobile telecommunications:
Northern Europe 3,565 3,133 6,516
Central Europe 2,585 2,343 4,694
Southern Europe 3,009 2,408 5,109
-------- -------- --------
Europe 9,159 7,884 16,319
Americas 2,907 2,839 5,638
Asia Pacific 3,155 2,517 5,373
Middle East and Africa 238 252 488
-------- -------- --------
15,459 13,492 27,818
Other operations:
Europe 380 381 821
Asia Pacific 678 453 1,160
-------- -------- --------
16,517 14,326 29,799
======== ======== ========
Reconciliation of proportionate turnover to statutory turnover
Proportionate turnover 16,517 14,326 29,799
Add back: minority share of
turnover in subsidiary
undertakings 2,758 1,243 3,822
Deduct: turnover of joint
ventures, associated
undertakings and trade
investments (4,377) (6,663) (10,776)
-------- -------- --------
14,898 8,906 22,845
======== ======== ========
Proportionate EBITDA
Mobile telecommunications:
Northern Europe 1,379 1,028 2,264
Central Europe 1,174 1,026 2,068
Southern Europe 1,313 1,049 2,131
-------- -------- --------
Europe 3,866 3,103 6,463
Americas 1,010 1,000 1,907
Asia Pacific 1,042 567 1,321
Middle East and Africa 109 108 211
-------- -------- --------
6,027 4,778 9,902
Other operations:
Europe (2) (32) (8)
Asia Pacific 178 31 199
-------- -------- --------
Proportionate EBITDA 6,203 4,777 10,093
Less: depreciation and
amortisation,
excluding goodwill (2,096) (1,648) (3,693)
-------- -------- --------
Proportionate total Group
operating profit before
goodwill amortisation
and exceptional items 4,107 3,129 6,400
======== ======== ========
- Mobile telecommunications 4,151 3,321 6,688
- Other operations (44) (192) (288)
Reconciliation of proportionate EBITDA to statutory EBITDA
Proportionate EBITDA 6,203 4,777 10,093
Add back: minority share
of EBITDA from
subsidiary undertakings 1,028 507 1,333
Deduct: EBITDA of joint
ventures, associated
undertakings and trade
investments (1,665) (1,966) (3,395)
-------- -------- --------
5,566 3,318 8,031
======== ======== ========
Other information
1) Copies of the Group's Interim Report will be sent to all
shareholders. Further copies will be available from the
Company's registered office:
The Courtyard
2-4 London Road
Newbury
Berkshire RG14 1JX
England.
2) This report will also be available on the Vodafone Group
Plc website: www.vodafone.com from 12 November 2002.
For further information contact:
Tim Brown, Group Corporate Affairs Director
Melissa Stimpson, Director of Group Investor Relations
Bobby Leach, Head of Group Financial Media Relations
Darren Jones, Senior Investor Relations Manager
Tel: +44 (0) 1635 673310
Tavistock Communications
Lulu Bridges/John West
Tel: +44 (0) 207 600 2288
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 Vodafone Mobile
Office; 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; growth in customers
and usage, including improvements in customer mix; future
performance, including turnover, ARPU, EBITDA, cash flows,
costs, capital expenditures and improvements in margin, non-
voice services and their revenue contribution; 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; mobile penetration 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 Vodafone Mobile
Office 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 Vodafone
Mobile Office 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 new, unexpected strategic opportunities may arise in
the next two to three years, the pursuit of which could be
in the best interests of Vodafone's shareholders and that
future acquisitions that we believe to be in the best
interests of Vodafone's shareholders may have a negative
short or medium-term 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 possibility that,
in connection with the agreement to purchase BT and SBC's
interests in Cegetel, Vivendi will pre-empt our offer on one
or both stakes or will not comply with the Cegetel
shareholders' agreement or delay its compliance or interpose
obstacles thereby delaying significantly our ability to gain
control of the management of Cegetel or influence its
strategic or value generative decisions or otherwise limit
the Group's ability to realise benefits of increased
ownership, and that, in connection with the Group's offer to
Vivendi for its stakes in Cegetel, Vivendi may decline the
Group's offer; and 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. 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' on
pages 29 and 30 of Vodafone's Annual Report & Accounts and
Form 20-F for the year ended 31 March 2002. 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.
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