Interim Results - Part 1

Vodafone Group Plc
16 November 2004


Vodafone Group Interim Results
For the six months ended 30 September 2004
PART 1





VODAFONE GROUP PLC                                          Embargo:
INTERIM RESULTS FOR THE                                     Not for publication
SIX MONTHS TO 30 SEPTEMBER 2004                             before 07:00 hours
                                                            16 November 2004

• Group turnover of £16.8 billion. Mobile turnover increased to £16.4
  billion, with organic growth at constant exchange rates of 6%

• Net organic proportionate customer additions in the half year of 7.4
  million, representing annualised organic growth of 11%. Closing proportionate
  customer base of 146.7 million

• Group operating profit, before goodwill amortisation and exceptional
  items, of £5.7 billion, with organic growth at constant exchange rates of 5%

• Earnings per share, before goodwill amortisation and exceptional items,
  increased by 10% to 5.28 pence. Basic loss per share was 4.77 pence. Loss for
  the period was £3.2 billion

• Interim dividend per share increased by 100% to 1.91 pence with the current
  expectation that the final dividend will also increase by 100%

• Share purchase programme increased from £3 billion to around £4 billion
  completing by March 2005, of which £1.8 billion has been expended to date


Arun Sarin, Chief Executive, commented:

I am very pleased to present a robust set of half year results demonstrating
a strong overall operational performance. Following the successful launch of
3G services, we are excited about our growth opportunities and ability to 
leverage global scale and scope advantages.

The strong underlying cash flows from the business and our future growth
prospects have enabled a rebasing of the dividend, which has been increased by
100%, and a further increase to our share purchase programme, from £3 billion
to around £4 billion, consistent with our goal of delivering superior
returns to our shareholders.

Chief Executive's Statement

Our first half results demonstrate a robust operational performance, which
reflects Vodafone's industry leading position and global footprint.

Organic revenue growth in the first half in our controlled mobile businesses was
6% and on a proportionate basis was 10%. A key driver has been the continued
strong growth in customers across many of our controlled businesses, principally
the UK, Spain and Germany, as well as in Verizon Wireless, our associate
business in the US, offset by weaker performance in Japan.

We continue to be excited about the future growth opportunities for our
business. We have recently launched a compelling set of new services on our 3G
platform in 13 markets with a wide range of industry leading new handsets. With
new and attractive pricing for both data and voice services, Vodafone is
delivering on its promise to delight the customer. Our 3G launch gives us a
market leading, differentiated customer proposition in Europe and significantly
improves our competitive position in Japan.

As we announced on 10 November, we expect 3G to deliver a material benefit to
our business over time and are targeting more than 10 million Vodafone live!
with 3G customers in our controlled operations by the end of March 2006.

Another core focus of the Group is to leverage our scale and scope advantage
through the One Vodafone programme. In September we announced financial targets
to quantify the benefits from One Vodafone. We are targeting to realise £2.5
billion of annual pre-tax operating free cash flow in the 2008 financial year
through both increased productivity and revenue enhancements. This annual 
benefit is made up of cost savings of £1.4 billion and revenue based 
enhancements of £1.1 billion and which we expect to have a significant impact on
our financial performance in the future.

In order to deliver on our 3G and One Vodafone objectives, we recently announced
changes in management responsibilities and a new organisational structure. These
changes will enable us to better respond to the high expectations of our
customers. In an increasingly competitive environment, faster execution will
enable us to continue to deliver benefits to our customers, our employees and
our shareholders.

Overall the business is performing well and on track with our expectations at
the beginning of the year. For the full year, we expect double digit organic
growth in average proportionate customers and high single digit organic growth
in proportionate mobile revenue. We still see broadly stable proportionate
mobile margins, excluding the impact of stake changes in the current year, and
free cash flow of around £7 billion.

Supported by strong underlying cash flow generation and strong growth prospects
for the business, we have announced today a rebasing of the interim dividend
to 1.91 pence per share and have increased the share purchase programme from
£3 billion to around £4 billion, completing by the end of March 2005. This is
consistent with our stated intention to increase returns to our shareholders
and our statement that we do not wish to delever the Group any further but wish
to retain financial flexibility to pursue selective, value enhancing 
opportunities that may arise.

These are exciting times for Vodafone as we lead the way in delivering an
enhanced customer experience that we believe will deliver superior returns for
our shareholders.


Arun Sarin

GROUP FINANCIAL HIGHLIGHTS


Statutory                    Six months to 30 September
---------                       2004            2003                % change
                                  £m              £m         £       Organic(1)
Turnover
- continuing operations       16,796          16,081         4             7

- discontinued operations          -             818
                              -------         -------
                              16,796          16,899        (1)            7

Group EBITDA, before
exceptional items              6,505           6,618        (2)            6

Total Group operating
profit, before       
goodwill amortisation
and exceptional items          5,685           5,722        (1)            5

Profit on ordinary
activities before
taxation, goodwill
amortisation and
exceptional items              5,394           5,366         1
Goodwill amortisation         (7,300)         (7,651)       (5)
Net exceptional items             22             293         -
                              -------         -------
Loss on ordinary
activities before
taxation                      (1,884)         (1,992)       (5)

Loss for the    
financial period              (3,195)         (4,254)      (25)

Effective tax rate
before goodwill
amortisation
and exceptional
items                           28.9%           30.9%


Proportionate                Six months to 30 September
-------------                   2004            2003                 % change
                                  £m              £m            £    Organic(1)
Turnover
- mobile 
  telecommunications          20,711          18,675           11         10   
- other operations               468           1,017          (54)
                              -------         -------
                              21,179          19,692            8         10

EBITDA before 
exceptional items
- mobile telecommunications    8,218           7,570            9         10
- other operations                77             222          (65)
                              -------         -------
                               8,295           7,792            6         10

Mobile EBITDA margin before
exceptional items               39.7%          40.5%

Proportionate information is calculated on the basis described on page 33.


Cash flow information        Six months to 30 September
---------------------           2004           2003      % change
                                  £m             £m
Net cash inflow from
operating activities           6,379           6,081            5

Free cash flow                 4,300           4,641           (7)

Net debt at 30 September      (8,721)        (10,906)         (20)


Per share information        Six months to 30 September
---------------------           2004           2003       % change
                               Pence          Pence

Earnings/(loss) per share
- before goodwill amortisation
  and exceptional items         5.28           4.78             10
- after goodwill amortisation 
  and exceptional items        (4.77)         (6.24)           (24)

Dividend per share               1.91         0.9535            100

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 36.

(1) Organic growth at constant exchange rates. See page 37 for definitions


GROUP OPERATING HIGHLIGHTS
                               Six months to / as at 30 September
                                                   2004      2003     % change

Organic net proportionate customer
additions (million)                                 7.4       5.7           30
Proportionate customer additions
arising from stake changes (million)                5.9      (0.1)
Closing proportionate customer
base (million)                                    146.7     125.3           17

Vodafone live! - closing customers
(million)(1)                                       11.5       2.9

Vodafone Mobile Connect datacard                323,000   127,000
- number of datacards sold to date(1)(2)

Partner Networks - countries                         13         9

Mobile voice usage (billion minutes)               83.7      76.7            9
Non-voice services as % of
service revenue                                    16.4%     15.5%

Mobile tangible fixed assets
- Additions (£ billion)                             2.1       2.0            5
- As a percentage of mobile turnover               12.8%     12.7%

(1) On a controlled venture basis
(2) Includes in excess of 100,000 sales of Vodafone Mobile Connect 3G/ GPRS
    datacards in the six months ended 30 September 2004 (2003: nil)

SIGNIFICANT TRANSACTIONS

The Group's effective shareholding in Vodafone Japan increased by 28.5% to 98.2%
for consideration of Yen475 billion (£2.4 billion). The subsequent merger of
certain legal entities on 1 October 2004 simplified the Group structure in Japan
and, as a result, the Group's shareholding in Vodafone Japan reduced to 97.7%.

OUTLOOK

Please see 'Forward-Looking Statements' on page 35.

For the year ending 31 March 2005

The Group expects to deliver organic growth of around 10% in average
proportionate mobile customers leading to high single digit growth in
proportionate mobile revenue, when compared to the prior year.

Taking into account the necessary investment and costs associated with opening
and operating 3G networks, as well as the effect of declines in interconnect
rates, the Group expects the proportionate mobile EBITDA margin to be broadly
stable compared to that achieved last year, excluding the impact of stake
changes in the current year. As a result of the above and including the impact
of stake changes, most notably in Japan, the proportionate mobile EBITDA margin
will be slightly lower.

Capitalised fixed asset additions are anticipated to be around £5 billion.
Depreciation and licence amortisation is expected to be around £0.7 billion
higher than last year, reflecting the timing of the commercial launch of 3G
services.

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

• The inclusion in the 2004 financial year of £0.8 billion of
  non-recurring receipts from hedging instruments and free cash flow generated
  by the fixed line business in Japan prior to its disposal; and

• Approximately £1 billion of additional cash expenditure on fixed assets, which
  is mainly due to movements in capital creditors together with higher tax
  payments of around £1.8 billion.

Share purchases are currently planned to be around £4 billion in the financial
year, subject to maintenance of credit ratings, of which £1.8 billion had been
expended at 30 September 2004.

For the year ending 31 March 2006

The Group expects to deliver high single digit organic growth in average
proportionate mobile customers leading to similar growth in proportionate mobile
revenue, when compared to the 2005 financial year. The Group also expects to
have over 10 million registered customers using Vodafone live! with 3G in its
controlled operations by the end of March 2006.

The proportionate mobile EBITDA margin is expected to be broadly stable to that
anticipated for the 2005 financial year.

Capitalised fixed asset additions are expected to be of the order of £5 billion.

These expectations for the 2006 financial year are on a UK GAAP basis. The Group
will provide guidance under IFRS on 20 January 2005. A description of the
expected significant differences between IFRS and the Group's UK GAAP accounting
policies is provided on page 22.

The section entitled 'Cash Flows and Funding', on page 21, provides information
in relation to potential future dividend payments by Vodafone Italy.

Other
The section of this Interim Results press release entitled 'One Vodafone' on
page 18 provides additional forward looking statements in relation to the
expected future benefits of One Vodafone initiatives on operating free cash
flow, revenue, capital expenditure and operating expenditure.

BUSINESS REVIEW

The Group has amended its segmental disclosure of turnover to a gross of
intercompany turnover basis, rather than a net of intercompany turnover basis as
previously disclosed, in order to facilitate analysis of the performance of the
Group and as part of the Group's preparations for the introduction of IFRS.
There is no impact on total Group turnover, which continues to be stated on a 
net of intercompany turnover basis. In addition, a more detailed analysis of the
results of the Group's mobile telecommunications business and certain key 
markets has been provided, on a basis consistent with internal measures, to
facilitate management's discussion of the results. 


                                      Six months to 30 September
                                              2004          2003        % change
                                                £m            £m     £   Organic
Turnover     Mobile telecommunications
             - Total service revenue        14,546        14,114     3         5
             - Other revenue(1)              1,817         1,592    14
                                            -------       -------
                                            16,363        15,706     4         6

             Other operations                  513         1,607   (68)
             Less: turnover   
             between mobile and
             other operations                  (80)         (414)  (81)
                                            -------       -------
                                            16,796        16,899    (1)        7
                                            -------       -------

Total Group 
operating
profit(2)(3) Mobile telecommunications       5,670         5,684     -
             Other operations                   15            38   (61)
                                            -------       -------
                                             5,685         5,722    (1)        5
Goodwill amortisation                       (7,300)       (7,651)   (5)
Exceptional operating items                      -           351     -
                                            -------       -------
Total Group operating loss                  (1,615)       (1,578)    2
                                            -------       -------

Mobile telecommunications
-------------------------

Trading
results      Voice services                 12,157        11,926     2
             Non-voice services              2,389         2,188     9
                                            -------       -------
             Total service revenue          14,546        14,114     3         5
             Other revenue(1)                  283           164    73
             Other direct costs               (964)         (921)    5
             Interconnect costs             (2,189)       (2,102)    4
             Net acquisition costs(1)         (983)         (866)   14
             Net retention costs (1)          (883)         (721)   22
             Payroll                        (1,044)       (1,006)    4
             Other operating expenses       (2,344)       (2,346)    -
                                            -------       -------
             EBITDA(2)                       6,422         6,316     2         5
             Depreciation and
             amortisation(3)                (2,314)       (1,995)   16
             Share of operating
             profit in associated
             undertakings(2)(3)              1,562         1,363    15
             Total Group           
             operating profit(2)(3)          5,670         5,684     -         4

(1) Turnover for the mobile telecommunications business includes revenue of 
    £1,534 million (2003: £1,428 million) which has been deducted from 
    acquisition and retention costs and excluded from other revenue in the 
    trading results
(2) Before exceptional items
(3) Before goodwill amortisation
See page 37 for definition of terms

GROUP RESULTS

Turnover decreased by 1% to £16,796 million in the six months ended 30 September
2004, comprising organic growth of 7%, offset by unfavourable movements in
exchange rates of 4% and the effect of acquisitions and disposals of 4%,
principally the disposal of Japan Telecom. The foreign exchange impact primarily
arose due to the relative strength of Sterling against the Euro and Yen compared
to the prior period.

After goodwill amortisation and exceptional items, the Group reported a total
operating loss of £1,615 million, compared with a loss of £1,578 million for the
prior period. The charges for goodwill amortisation, which do not affect the
cash flows of the Group or the ability of the Company to pay dividends, fell by
5% to £7,300 million, principally as a result of the impact of foreign exchange
movements. Total Group operating profit, before goodwill amortisation and
exceptional items, decreased by 1% to £5,685 million, with underlying organic
growth of 5%, as unfavourable exchange rate movements, particularly the
strengthening of Sterling against the Euro and the US Dollar, reduced this
growth by 5% and the effect of acquisitions and disposals led to a further
reduction of 1%.

MOBILE TELECOMMUNICATIONS RESULTS

Turnover

Turnover in the mobile telecommunications businesses increased by 4%, or 6% on
an organic basis at constant exchange rates. The increase in turnover was driven
principally by organic service revenue growth, at constant exchange rates, of
5%, which improved principally as a result of growth of 8% in the Group's
average controlled customer base compared to the prior period.

Voice revenue improved by 4% on an organic basis at constant exchange rates,
following an increase in total voice usage in controlled mobile businesses of 9%
to 83.7 billion minutes for the six months ended 30 September 2004, offset by
competitive pressures resulting in tariff reductions and lower termination rates
reducing incoming revenue.

Non-voice revenue increased to £2,389 million for the six months ended 30
September 2004, or 12% on an organic basis at constant exchange rates. Messaging
revenue continued to represent the largest component of non-voice revenue. Data
revenue as a percentage of non-voice revenue increased to 26.7% compared to
25.6% for the prior period as the Group continued to drive adoption of new
consumer services, such as Vodafone live!, and business offerings, including
Vodafone Mobile Connect datacard and BlackBerry from Vodafone.

Other revenue increased to £1,817 million, or 12% on an organic basis at
constant exchange rates. The increase has arisen from higher levels of gross
additions and upgrades in the period and revenue from non-Vodafone customers
acquired as a result of the acquisition of UK service providers in the prior
year. Other revenue related to acquisition and retention activities increased to
£1,534 million, or 10% on an organic basis at constant exchange rates.

Group operating profit before goodwill amortisation and exceptional items

Acquisition and retention costs, net of attributable revenue, increased by 18%
to £1,866 million. The increase was primarily driven by higher customer growth
in the UK and Spain and increased investment in retention activities in the UK
and Japan. Other operating expenses as a percentage of service revenue reduced
from 16.6% to 16.1% as the Group continued to realise cost efficiencies,
particularly in network and IT costs.

Depreciation and licence amortisation charges increased by 16% following the
commencement of 3G services in a number of the Group's controlled mobile
businesses. Licence amortisation amounted to £204 million in the period compared
to £22 million in the prior period.

The Group's share of operating profit, before goodwill amortisation and
exceptional items, in associated undertakings grew strongly, primarily due to
growth at Verizon Wireless in the US.

Total Group operating profit, before goodwill amortisation and exceptional
items, for the mobile businesses decreased by less than 1% to £5,670 million,
with organic growth of 4%, as unfavourable exchange rate movements, particularly
the strengthening of Sterling against the Euro and the US Dollar, reduced this
growth by 5%. The acquisition of service providers in the UK in the prior year
increased growth by 1%.

PROPORTIONATE RESULTS

Group proportionate turnover increased by 8% to £21,179 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 11% to £20,711 million,
representing organic growth of 10%.

The Group's proportionate EBITDA margin, before exceptional items, for the
mobile businesses decreased from 40.5% for the six months ended 30 September
2003 to 39.7% in the current period. The main reasons for this decrease were the
strengthening of Sterling, which has had a greater impact on the Group's higher
margin operations, the buy-out of the minority interests in Vodafone Japan in
the current period and the increase in acquisition and retention costs referred
to above.







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