Interim Results - Part 3

Vodafone Group Plc
16 November 2004


Vodafone Group Interim Results
For the six months ended 30 September 2004
PART 3


ASIA PACIFIC

Financial highlights             Six months to 30 September
--------------------                     2004          2003         % change
                                           £m            £m         £       Yen

Turnover   Japan(1)                     3,689         3,974        (7)       (3)
           Other Asia Pacific             541           492        10
           Less:intra-segment
           turnover                        (3)           (2)
                                        ------        ------
                                        4,227         4,464        (5)
                                        ------        ------
Total
Group
operating  Japan                          454           672       (32)      (29)
profit(2)  Other Asia Pacific              80            64        25
                                        ------        ------
                                          534           736       (27)
                                        ------        ------
Japan
-----

Trading
results    Voice services               2,239         2,466        (9)       (5)
           Non-voice services             606           680       (11)       (7)
                                        ------        ------
           Total service revenue        2,845         3,146       (10)       (5)
           Other revenue (1)               11             9        22        29
           Other direct costs            (119)         (212)      (44)      (41)
           Net acquisition  costs(1)     (322)         (346)       (7)       (3)
           Net retention costs(1)        (320)         (223)       43        50
           Interconnect costs            (250)         (266)       (6)       (1)
           Payroll                       (111)          (89)       25        30
           Other operating
           expenses                      (710)         (766)       (7)       (3)
           Depreciation and
           amortisation(2)               (570)         (581)       (2)        3
                                        ------        ------
           Total Group operating
           profit(2)                      454           672       (32)      (29)
                                        ------        ------
           EBITDA margin                 27.8%         31.5%

KPIs       Closing Customers ('000)    15,123        14,540                   4
           Monthly average ARPU      Yen6,279      Yen6,968                 (10)
           
           

(1) Turnover for Japan includes revenue of £833 million (2003: £819 million) 
    which has been excluded from other revenue and deducted from acquisition
    and retention costs in the trading results
(2) Before goodwill amortisation
See page 37 for definition of terms

Japan

Vodafone continued to face challenging market conditions in Japan, primarily due
to the strength of competitor offerings that limited the Group's ability to
compete effectively in the 3G market in the period. Future improvements to the
handset range are expected to put Vodafone in a more competitive market
position.

Turnover for the six months ended 30 September 2004, compared to the prior
period, has declined marginally in local currency, with a decrease in service
revenue offset by an increase in equipment and other revenue. The loss of higher
value customers and the impact of price plans introduced in October 2003, which
were subsequently revised in July 2004, led to the reduction in monthly average
ARPU for the current period, which in turn contributed to the 5% decrease in
service revenue. Equipment and other revenue improved by 6% in local currency
due to a higher level of upgrade activity following a reduction in prices of
2.5G handsets, which outweighed lower acquisition revenue from lower gross
connections.

Vodafone Japan's customer base increased by 1% over the six months, but its
market share of 18.1% at 30 September 2004 was marginally lower than at 31 March
2004, the primary reason for which was the lack of a competitive 3G customer
proposition. This included the lack of suitable 3G handsets available for the
Vodafone W-CDMA network, compared with the range available through other
operators using different 3G technologies, which, amongst other factors, has
limited Vodafone Japan's ability to compete effectively in the 3G market.
Vodafone Japan held approximately 1% of the customers in the 3G market at 30
September 2004. Seven new 3G handsets are to be introduced for the winter sales
season this year, which are expected to improve Vodafone's market position.

As a result of the competitive pressures, there has been a strong focus on
customer retention, which has depressed the EBITDA margin, though this effect
was partially offset by a decrease in other direct costs, following reductions
in provisions for slow moving handset stocks, and operational efficiency.
Payroll costs were 30% higher than the comparative period, principally as a
result of charges associated with a voluntary redundancy programme, which is
part of the transformation plan discussed below. Operating profit before
goodwill amortisation also fell due to these factors.

An ongoing transformation plan is expected to improve Vodafone Japan's
performance and competitive position in the market. This is focusing on cost
reductions through leveraging the Group's global scale and scope, improving the
efficiency of the distribution structure, enhancing customer propositions,
including new product offerings, focusing on business customers and refining the
organisational structure to ensure Vodafone Japan is more agile and commercially
driven. In most areas of the plan, positive results are expected in the next
financial year, though good progress has been achieved in the consolidation of
the regional structure and cost reductions.

The Group has announced the appointment of Shiro Tsuda as the next President and
Chief Executive Officer of Vodafone Japan with effect from 1 December 2004.
Formerly Senior Executive Vice President at NTT DoCoMo, Inc., Shiro Tsuda brings
considerable experience of the mobile telecommunications industry, together with
an extensive knowledge of the Japanese business and consumer markets.

During the period, the Group increased its effective shareholding in Vodafone
K.K. to 98.2% and its stake in Vodafone Holdings K.K. to 96.1% for a total
consideration of £2.4 billion. On 1 October 2004 the merger of Vodafone K.K. and
Vodafone Holdings K.K. was completed. The Group has a 97.7% stake in the merged
company, Vodafone K.K.

Other Asia Pacific

Proportionate customers for the Group's other operations in the Asia Pacific
region, including the Group's share of China Mobile's customers, which is
accounted for as an investment, increased by 19% over the six month period.

Turnover increased by 10%, driven primarily by Vodafone New Zealand, resulting
from a larger customer base and higher service revenue, particularly non-voice
revenue. Vodafone Australia also experienced good turnover growth despite
intense competitor activity. The profitability of Vodafone Australia improved
significantly, due largely to changes in the handset subsidy model and business
structure. Vodafone New Zealand's margins also improved due to operational
efficiencies.

In August 2004, Vodafone Australia announced an agreement with another
telecommunications carrier to share 3G network equipment, which is expected to
culminate in the launch of 3G services in the next financial year. Vodafone New
Zealand is also expected to launch 3G services in the next financial year.

China Mobile, in which the Group has a 3.27% stake, became the first
overseas-listed telecommunications carrier to cover all Chinese provinces
following the purchase of further state-owned companies during the period. Its
customer base grew by 29% over the six month period to 194,382,000 at 30
September 2004, including 26,831,000 from acquisitions. ARPU continued to fall
with the increase in lower usage customers as penetration in China increased.

MIDDLE EAST AND AFRICA

Financial highlights             Six months to 30 September
--------------------                       2004        2003          % change
                                             £m          £m

Turnover                                    177         159                11
Less: intra-segment turnover                  -           -
                                          ------      ------
                                            177         159                11
                                          ------      ------
Total Group operating profit(1)             160         140                14
                                          ------      ------
(1) Before goodwill amortisation
See page 37 for definition of terms

In local currency, Vodafone Egypt's turnover increased by 28%, driven mainly by
strong customer growth, and increased non-voice and visitor revenue. The
reported results were, however, affected by the continued weakness of the
Egyptian Pound against Sterling. New prepaid tariffs were launched in Egypt in
June 2004 aimed at increasing penetration.

On 2 September 2004, an agreement was entered into with Telecom Egypt under
which it will acquire a 16.9% stake in Vodafone Egypt from the Group, reducing
the Group's stake to 50.1%. This transaction is subject to a number of
conditions precedent and is expected to be completed within the year.

The Group's associated undertakings in the Middle East and Africa Region
improved their performance compared to the prior period. Vodacom continued to
grow both in South Africa and internationally through its interests in the
Democratic Republic of the Congo, Lesotho, Mozambique and Tanzania. Its customer
base increased by 3,762,000 over the period, including 2,141,000 customers in
its international subsidiaries which were previously excluded from the Group's
reported customer base, bringing the total venture customers at 30 September
2004 to 13,487,000. ARPU declined as penetration continued to rise. Safaricom,
in Kenya, increased its customer base by 26% and improved its profitability.

Global Services

Vodafone live!

Vodafone live!, the Group's integrated messaging and multimedia content service,
is now available in 20 markets, comprising 14 markets in which the Group has a
controlling interest in its network operator, 3 markets of Group associates and
3 markets of Partner Networks. Total venture Vodafone live! customers on
controlled networks increased to 11.5 million at 30 September 2004, with an
additional 1.8 million customers connected in the Group's associated companies,
plus 13.0 million Vodafone live! customers in Japan following the rebranding of
its J-Sky service to Vodafone live! in October 2003. Vodafone live! was launched
during the first half of the financial year in the Group's Partner Networks in
Austria, Croatia and Slovenia. In November 2004, the Group reached an agreement
with Vodacom to introduce Vodafone live! to the South African market in early
2005.

The customer experience in the Vodafone live! mobile internet portal has also
been improved. Search functionality has been improved, and games, sport and
other information content services have all been enhanced in line with customer
feedback. By focusing its resources in supporting handset development, the Group
is delivering on its strategy to offer a wider range of Vodafone live! handsets
with enhanced functionality, with the range increasing from 21 in April 2004 to
55 with the launch of Vodafone live! with 3G.

Vodafone live! with 3G

Vodafone live! with 3G services were introduced in eight European markets,
including the Group's associated undertaking in France, during the first half of
the financial year, preparing the way for the full consumer 3G launch.
Commercial services are now available in 12 European markets, including the
Group's associated undertakings in France and Switzerland and the Group's
Partner Network operator in Austria, as well as Japan. Enhanced services are
available to Vodafone live! with 3G customers, including an improved new portal
with dynamic content continuously updated on the homepage. Vodafone live! with
3G customers also benefit from exciting new products and services, including
video telephony, video messaging, video and audio streaming, full track music
downloads, ringback tones and 3D games. The Group's 3G handset portfolio enables
existing Vodafone live! messaging and content services to be delivered faster.
Vodafone is offering a range of 10 new 3G handsets for the Christmas period, of
which seven will be available in Japan and nine available in Europe. The range
includes seven Vodafone exclusive handsets and the Sharp 902, Europe's first two
mega pixel camera phone.

Business services

The Vodafone Mobile Connect 3G/GPRS datacard, which provides access speeds up to
seven times faster than GPRS, was launched in February 2004 and has now been
rolled out across 13 markets, including the Group's associated undertakings in
France and Belgium and the Group's Partner Network operator in Austria. The
datacard range was extended in October 2004 with the launch of the 3G/GPRS/WLAN
datacard, which, along with the Group's other datacards, is being made available
in an increasing number of channels and with an increasing range of service
bundle alternatives.

The launch of BlackBerry from Vodafone in November 2003 allowed customers to
view and respond to email in real-time over the Group's network. A new device in
smart phone format, the Vodafone exclusive BlackBerry 7100v, was launched in
September 2004, extending the Group's overall offerings in a rapidly growing
segment. Further additions to the portfolio are expected in 2005.

Vodafone has also enhanced and extended the penetration of its Vodafone Wireless
Office service, which offers fixed line functionality and the freedom of
mobility in a single handset solution on either a group/team or a company-wide
basis. More handsets were introduced to the Vodafone Wireless Office range in
October 2004, as well as geographic numbering where regulatory conditions allow.

One Vodafone

The One Vodafone programme continues to make strong progress, with initiatives
underway in the areas of Service Platforms, Network and Network Supply Chain
Management, IT Delivery, Terminals Strategy, Customer Management and Roaming.
These initiatives focus on delivering the benefits of global scale and scope to
the Group over the next three to five years. The programme is also expected to
deliver revenue benefits, improve the Group's speed to market for new services,
as well as enhance the Group's strategic cost position.

In the area of Service Platforms, the Group is beginning to consolidate to a
single Global Shared Service organisation for development, hosting and
operations, while in Networks, the Group has begun a process to standardise
global network design and planning, supporting this with global supply chain
management.

The One Vodafone initiatives are expected to achieve £2.5 billion of annual
pre-tax operating free cash flow improvements in the Group's controlled mobile
businesses by the year ending 31 March 2008. Cost initiatives are anticipated to
generate improvements of £1.4 billion, with a further £1.1 billion from revenue
initiatives. Of the £1.4 billion of cost savings, £1.1 billion relate to the
total of operating expenses, being payroll and other operating expenses, and
tangible fixed asset additions. The remaining cost saving, of £0.3 billion,
relates to handset procurement activities. The Group expects that, in the year
ending 31 March 2008, the combined mobile operating expenses and tangible fixed
asset additions will be broadly similar to those for the year ended 31 March
2004, assuming no significant changes in exchange rates and after adjusting for
acquisitions and disposals.

Revenue enhancement initiatives are expected to deliver increased revenue of
£1.1 billion, the majority of which will be derived from enhanced handset
offerings in addition to improved customer management and roaming. The revenue
benefits are equivalent to at least 1% additional revenue market share for the
Group's controlled mobile businesses in the year ending 31 March 2008 compared
to the current financial year. The Group will measure the revenue benefits in
its five principal controlled markets compared to its established competitors.


OTHER OPERATIONS

Financial highlights                 Six months to 30 September
---------------------                            2004      2003     % change
                                                   £m        £m

Turnover                Northern Europe           513       481            7
                        Asia Pacific                -     1,126
                                                ------    ------
                                                  513     1,607          (68)
                                                ------    ------
Total Group operating   Northern Europe            15       (41)
profit/(loss)(1)        Asia Pacific                -        79
                                                ------    ------
                                                   15        38          (61)
                                                ------    ------

(1) Before goodwill amortisation

Northern Europe

The Group's other operations in Northern Europe comprise interests in fixed line
telecommunications businesses in Germany (Arcor) and France (Cegetel), and
Vodafone Information Systems, an IT and data services business based in Germany.

In local currency, Arcor's turnover increased by 14%, primarily due to customer
and usage growth, partially offset by tariff decreases caused by the competitive
market. The fixed line market leader continued to drive this intensive
competition, although Arcor strengthened its position as the main competitor
during the year, increasing its contract voice customers over the period. The
number of customers of Arcor's ISDN service, Direct Access, increased by 86,000
to 476,000 in the last six months, and the number of DSL customers increased by
32% to 223,000 at 30 September 2004. Due to revenue growth and further cost
efficiencies, the EBITDA margin improved.

Asia Pacific

The Group disposed of its interests in Japan Telecom during the previous
financial year and ceased consolidating the results of this business from 1
October 2003.

FINANCIAL UPDATE

PROFIT AND LOSS ACCOUNT

Exceptional items

There were no exceptional operating items in the six months ended 30 September
2004. Exceptional operating income for the six months ended 30 September 2003
comprised £351 million of expected recoveries and provision releases in relation
to a contribution tax levy on Vodafone Italy.

The exceptional non-operating credit for the six months ended 30 September 2004
was £22 million (2003: charge of £58 million). The current period credit is
primarily due to the profit on disposal of certain fixed asset investments in
Japan. The prior period charge principally related to a loss on disposal of the
Japan Telecom fixed line operations, which was partially offset by a profit on
disposal of Grupo Iusacell.

Interest

Total Group net interest payable, including the Group's share of the net
interest expense of associated undertakings, decreased from £356 million for the
six months ended 30 September 2003 to £291 million for the six months ended 30
September 2004.

The Group net interest cost, excluding the net interest expense of associated
undertakings, and including returns on investments for the current period of £18
million, decreased to £191 million, including £120 million (2003: £97 million)
relating to potential interest charges arising on settlement of tax balances,
from £251 million for the prior year and was covered 39 times by operating cash
flow plus dividends received from associated undertakings. The Group's share of
the net interest expense of associated undertakings decreased from £105 million
to £100 million.

Taxation

The effective tax rate on profit on ordinary activities before taxation,
goodwill amortisation and exceptional items for the period to 30 September 2004,
which is based on the expected effective tax rate for the year ending 31 March
2005, was 28.9% compared with 30.4% for the year ended 31 March 2004. The rate
has fallen due to finalisation of the reorganisation of the Group's German
operations in the current period, the benefits of which have outweighed the
impact of reduced tax incentives in Italy and the absence of last year's one-off
benefit from the restructuring of the Group's associated undertakings in France.
The Group's tax charge has also benefited from an exceptional deferred tax
credit of £572 million, which relates to tax losses in Vodafone Holdings K.K.
becoming eligible for offset against the profits of Vodafone K.K. following the
merger of the two entities on 1 October 2004. The deferred tax credit was
recognised following shareholder and regulatory approval of the transaction in
the six month period.

Earnings and loss per share

Earnings per share, before goodwill amortisation and exceptional items,
increased by 10% from 4.78 pence to 5.28 pence for the six months ended 30 
September 2004.

Basic loss per share, after goodwill amortisation and exceptional items,
improved from a loss per share of 6.24 pence to a loss per share of 4.77 pence
for the six months ended 30 September 2004. The loss per share includes a charge
of 10.91 pence per share (2003: 11.22 pence per share) in relation to the
amortisation of goodwill and a credit of 0.86 pence per share (2003: 0.20 pence
per share) in relation to exceptional items.

Total shareholder returns

The Company provides returns to shareholders through an appropriate combination
of dividends and share purchases.

Dividends

The Company has historically paid dividends semi-annually, with a regular
interim dividend in respect of the first six months of the financial year
payable in February and a final dividend payable in August. The directors expect
that the Company will continue to pay dividends semi-annually.

In considering the level of dividends, the Board takes account of the outlook
for earnings growth, operating cash flow generation, capital expenditure
requirements, acquisitions and divestments, together with the amount of debt and
share purchases. Accordingly, reflecting their confidence in the Group's growth
prospects, including those arising from the launch of 3G services, the directors
have declared an interim dividend of 1.91 pence per share, representing an
approximate 100% increase over last year's interim dividend, with the current
expectation that the final dividend will also be increased by 100%. Following
the rebasing of the dividend in the current financial year, the Board expects
future increases in dividends per share to reflect underlying growth in
earnings.

The ex-dividend date is 24 November 2004 for ordinary shareholders, the record
date for the interim dividend is 26 November 2004 and the dividend is payable on
4 February 2005.

Share purchases

When considering how increased returns to shareholders can be provided in the
form of share purchases, the Board reviews the free cash flow, anticipated cash
requirements, dividends, credit profile and gearing of the Group. The Board
intends to continue to consider share purchase programmes subject to the
maintenance of credit ratings.

On 25 May 2004, the directors allocated £3 billion to the share purchase
programme for the year to May 2005. For the period from 27 May 2004 to 30
September 2004, 1,396 million shares were purchased for a total consideration of
£1,751 million, including stamp duty and broker commissions. The average share
price paid, excluding transaction costs, was 124.77 pence, compared with the
average volume weighted price over the same period of 125.22 pence. Shares were
purchased on market on the London Stock Exchange under shareholder approvals
which expire in July 2005. The maximum share price payable for any share
purchase is no greater than 105% of the average of the middle market closing
price of the Company's share price on the London Stock Exchange for the five
business days immediately preceding the day on which any shares were contracted
to be purchased. Purchases are made only if accretive to earnings per share,
before goodwill amortisation and exceptional items.

In addition to ordinary market purchases, in the six months ended 30 September
2004, put options over 130 million shares were sold for a premium of £3 million
with exercise dates falling within the close period, being 1 October 2004 up to
and including 15 November 2004. As the Company's share price was higher than the
option exercise price on each exercise date, none of the put options were
exercised and no further shares were acquired by the Company. Currently, 2,196
million shares are held in treasury.

The Board has decided that the share purchase programme should be increased from
£3 billion to around £4 billion, completing by March 2005, subject to the
maintenance of credit ratings. Current plans are to continue to make purchases
in close periods, in accordance with approvals from shareholders.

CASH FLOWS AND FUNDING

During the six months ended 30 September 2004, the Group increased its net cash
inflow from operating activities by 5% to £6,379 million and generated
£4,300 million of free cash flow, as analysed in the following table. Free cash
flow in the prior period included £572 million received from the closure of
financial instruments and £198 million from the fixed line business in Japan
prior to its disposal.

                                         Six months to 30 September
                                                 2004          2003
                                                   £m            £m   % change

Net cash inflow from operating 
activities                                      6,379         6,081          5

Net capital expenditure on intangible and
tangible fixed assets                          (2,506)       (2,204)
Purchase of intangible fixed assets               (15)           (2)
Purchase of tangible fixed assets              (2,509)       (2,255)
Disposal of tangible fixed assets                  18            53
                                               -------       -------
Operating free cash flow                        3,873         3,877          -

Dividends received from associated
undertakings(1)                                 1,016           805
Taxation                                         (360)         (283)
Net cash (outflow)/inflow for returns on
investments and servicing of finance             (229)          242
Interest on group debt(2)                        (210)          257
Dividends from investments                         19            25
Dividends paid to minority interests              (38)          (40)
                                               -------       -------
Free cash flow                                  4,300         4,641         (7)
                                               =======       =======

(1) Six months ended 30 September 2004 includes £447 million (2003: £324
    million) from Verizon Wireless and £423 million (2003: £370 million) from
    the Group's interest in SFR.
(2) Six months ended 30 September 2004 includes £nil (2003: £572 million) of
    cash receipts from the closure of financial instruments related to interest
    rate management activities, including those in connection with bond 
    repurchases in subsidiaries.

The Group invested a net £2,171 million in acquisition and disposal activities
in the six month period and an analysis of the significant transactions is shown
below:
                                                                            £m
Acquisitions:
Vodafone Japan                                                           2,379
Other acquisitions, including investments                                   22
Disposals:
Japan Telecom withholding tax recovered                                   (226)
Other disposals, including investments                                      (4)
                                                                        -------
                                                                         2,171
                                                                        =======

The Group's consolidated net debt position at 30 September 2004 increased to
£8,721 million, from £8,488 million at 31 March 2004, principally as a result of
the cash flow items above, share purchases, equity dividend payments and
£83 million of foreign exchange movements. This represented approximately 10% of
the Group's market capitalisation at 30 September 2004 (31 March 2004: 10%).

The Group remains committed to maintaining a solid credit profile, 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 & 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.

In aggregate, the Group has committed facilities of approximately £7,116
million, of which £5,802 million was undrawn at 30 September 2004. The undrawn
facilities include a $4.9 billion Revolving Credit Facility that matures in June
2006 and a $5.5 billion Revolving Credit Facility that matures in June 2009.
Both facilities support US and Euro commercial paper programmes of $15 billion
and £5 billion respectively, neither of which had outstandings at 30 September
2004. Other undrawn facilities of £61 million are specific to the Group's
subsidiaries in Egypt and Albania. Facilities of €350 million (£240 million) in
Vodafone Hungary were repaid and cancelled during the period.

On 29 September 2004, the Group filed a Shelf Registration Statement in Japan
for a Yen600 billion shelf programme, which became effective from 7 October 
2004. No bonds have been issued under this programme.

Verizon Communications Inc. has an indirect 23.1% shareholding in Vodafone Italy
and, under the terms of the shareholders' agreement, can request dividends to be
paid, provided that such dividends would not impair the financial condition or
prospects of Vodafone Italy including, without limitation, its credit rating.
The Group currently expects that Vodafone Italy will pay a dividend in the 2006
financial year. At 30 September 2004, Vodafone Italy had cash on deposit with
Group companies of approximately £4.4 billion.

SIGNIFICANT TRANSACTIONS

Acquisitions

The Group increased its effective interest in two subsidiary companies in the
period. These were:

                                       % interest at             % interest at
                                       31 March 2004         30 September 2004

Vodafone Hungary(1)                             87.9                      92.8
Vodafone Japan                                  69.7                      98.2

(1) In the period, additional equity of HUF 89,301 million (£248 million) was
    subscribed for in Vodafone Hungary.

UPDATE ON US GAAP

On 29 September 2004, the Staff of the United States Securities and Exchange
Commission ('SEC') announced new guidance in the interpretation of US GAAP in
relation to accounting for intangible assets. Further details on the guidance
and its impact on the Group are provided on page 31.

UPDATE ON IFRS IMPLEMENTATION

The Group is preparing for the adoption of International Financial Reporting
Standards ('IFRS') as its primary accounting basis. IFRS will apply for the
first time in the Group's Annual Report for the year ending 31 March 2006. It is
currently envisaged that one year of comparative information will be presented
in the year of first adoption.

A provisional analysis of the major differences between IFRS and the Group's UK
GAAP accounting policies was included in the Annual Report for the year ended 31
March 2004. The major differences were scope of consolidation, business 
combinations and intangible assets, financial instruments, share based payments,
pensions and other retirement benefits and deferred taxes. These are still 
considered to be the major differences and, where relevant, an update to this
analysis is included below. The update below is consistent with the update 
provided to analysts and investors on 27 September 2004.

The Group has completed the review of the classification of its investments and
concluded that the Group's 76.8% interest in Vodafone Italy should be accounted
for as a joint venture. In addition, the Group's interests in South Africa,
Poland, Kenya, Romania and Fiji, which are currently classified as associated
undertakings under UK GAAP, will also be classified as joint ventures under
IFRS. The Group will adopt proportionate accounting as the basis of
consolidation for these entities.

In applying IFRS 1 'First Time Adoption of International Financial Reporting
Standards' in respect of goodwill, the Group expects to retain the existing UK
GAAP carrying value at the opening balance sheet date. Under IFRS, goodwill is
not amortised but is subject to an annual impairment test.

IAS 12 'Income Taxes' requires the Group to provide deferred tax on the
undistributed profits of its associates and joint ventures. All other factors
being equal, the adoption of IAS 12 is currently anticipated to increase the
Group's effective rate of tax.

On 1 October 2004, the European Union issued an amended version of IAS 39
'Financial Instruments: Recognition and Measurement' rather than the full
version as previously published by the International Accounting Standards Board
('IASB'). It is currently anticipated that the full version of IAS 39 issued by
the IASB will be adopted in the Group's first IFRS Annual Report for the year
ending 31 March 2006, in line with the UK Accounting Standard Board's
announcement in October 2004.

The Group expects to adopt the proposed amendments to IAS 19, 'Employee
Benefits' which would substantially align the accounting requirements for
defined benefit pension schemes to those of FRS 17 under UK GAAP, with actuarial
gains and losses being taken directly to reserves.

The Group intends to provide further guidance on the impact of IFRS and restated
financial information on 20 January 2005.

SUBSEQUENT EVENTS

In October 2004, the Company announced a new organisational structure which will
enable continued improvement in the delivery of the Group's strategic goals. The
new structure will become effective on 1 January 2005. The existing regional
structure will be simplified with major countries and business areas reporting
to the Chief Executive. All first line management functions in the operating
companies will have a dual reporting line to the respective functions at Group
level.

Sir Julian Horn-Smith will become Deputy Chief Executive with effect from 1
January 2005. Sir Julian will be responsible for the Group's affiliates and
expanding and consolidating the Group's footprint through the Partner Network
programme and Corporate Finance activity.

The Group separately announced the appointment of Andrew (Andy) Halford as
Financial Director Designate to succeed Ken Hydon when he retires following the
Annual General Meeting on 26 July 2005, having reached normal retirement age
during the year. Andy (aged 45) is presently Chief Financial Officer of Verizon
Wireless, based in the US, and will join both the Board of Vodafone Group Plc
and the Group Executive Committee in July 2005.

In October 2004, preference shares held by Vodafone K.K. (comprising the merged
entities of Vodafone K.K. and Vodafone Holdings K.K.) in Sora Holdings Japan,
Inc. were re-purchased by Sora Holdings Japan, Inc. for Yen33.9 billion (£170
million), further to the subsequent sale of Japan Telecom.









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