Sir Christopher Gent Chief Executive Vodafone Group Plc This - PowerPoint PPT Presentation

Sir Christopher Gent Chief Executive Vodafone Group Plc

This presentation is being made only to, and is directed at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 and (b) persons to whom it may otherwise lawfully be communicated (together "relevant persons") Any person who is not a relevant person should not act or rely on this presentation or any of its contents.

Agenda Overview of Results Sir Christopher Gent • Analysis of Results • Impairment Ken Hydon • Group Funding • KPIs and Business Drivers • Products and Services Julian Horn-Smith • Brand Development • Future Prospects and Q&A Sir Christopher Gent •

Statutory Highlights March 2002 Change Group Turnover £22.8bn +52% 1 Group Operating Profit £7.0bn +35% 1 Profit Before Taxation £6.2bn +54% 1 Adjusted EPS 5.15 pence +45% 1 Before goodwill and exceptional items EPS at higher level than before Mannesmann • transaction Ahead of expectations

Cash Flow Highlights Free cash flow £2.4bn, after licences • Group net debt of £12.0bn • Better than our expectations Good control on capex Excellent working capital performance

Proportionate Highlights March 2002 Change Turnover £29.8bn +34% EBITDA 1 £10.1bn +44% Registered customers 101.1m +22% 1 Before exceptional items

Margin Performance Highlights Mobile EBITDA margin of 36%; +3pp • Group EBITDA margin* of 33%; +3pp • Successful new commercial policies Better overhead management Lower exceptional costs * Includes fixed wire and exceptional costs

Operational Highlights ARPU Customer Growth i Stability in most markets i Satisfactory growth level i Despite reductions in incoming i Improved customer mix termination rates Rise in Data Revenues EBITDA i Data revenues increased 87% to i Improved margin performance >£2bn i From 30% to 33% i 11% at Y/E in controlled subsidiaries i 13% in Mar 02 vs 9% in Mar 01 Cash Flow Strong operating and free cash flow generation

Acquisition Highlights Japan Gained control in October 2001 • Achieved highest ever market share • 2nd position in Japan • EBITDA margin +3.6pp above level • prior to gain of control EBITDA margin +5.9pp on 2001 •

J-Phone Vodafone Data Success Sha-mail 4 million camera phone customers • – One third of customer base Fastest growing cellular application • Movie Sha-mail achieved 115,000 users in • first month – Better than DoCoMo’s Foma service in 6 months Revenue growth not dependent on 3G

Ken Hydon Group Financial Director Vodafone Group Plc

Statutory Results Year to 31 March Turnover & Group Operating Profit* (£ billions) 2002 2001 † Increase £m £m % 22.8 Turnover 22,845 15,004 52 Group operating profit* 7,044 5,204 35 Net interest payable (28) (845) (1,177) 15.0 Profit before tax* 6,199 4,027 54 Tax (2,140) (1,426) 50 7.9 7.0 Exceptional items (6,268) (240) 2,512 5.2 Goodwill amortisation (13,470) (11,873) 13 3.4 2.5 2.5 Adjusted earnings per share* 5.15p 3.54p 45 1.0 0.7 Dividends per share 1.4721p 1.4020p 5 1998 1999 2000 2001 2002 Restated following the adoption of FRS 19, “Deferred Tax” † * Before amortisation of goodwill and exceptional items

Earnings Per Share Adjusted EPS (Pence)* 5.15 4.90 Adjusted EPS*: 5.15 pence per share • 3.54 3.49 45% increase on 2000/1 • 2.57 5% higher than 1999/0 • 1997/8 1998/9 1999/0 2000/1 2001/2 * Before amortisation of goodwill and exceptional items and restated following the adoption of FRS 19, “Deferred Tax”

Impairment Review Methodology: • – In accordance with UK & US accounting standards – Discounted cash flow model – Forecasts to March 2011 – 2011 terminal growth at or below forecast nominal GDP – Long-term capital intensity below 10% – Pre-tax WACC in major mobile markets ranging from 8.8% in J-Phone to 11.5% in Western Europe Conclusion: • – No impairment on controlled mobile businesses – In H2, £1.25 billion further impairment for China Mobile, Japan Telecom & Cegetel

Proportionate Results* Mobile Turnover Year to 31 March Analysis of Turnover 2002 2001* Growth £m £m % Rest of Germany 4,101 4,102 - World Italy 2,838 2,323 22 5% Germany 15% United Kingdom 3,763 3,458 9 Japan 16% Other Europe 5,617 3,318 69 Italy 10% Total Europe 16,319 13,201 24 Americas 5,638 5,008 13 United Americas Japan 4,397 1,897 132 Kingdom 20% Other Asia Pacific 976 874 12 14% Middle East & Africa 488 448 9 Other Europe Total Mobile 27,818 21,428 30 20% * March 2001 stated on a pro forma basis for Mannesmann

Proportionate Results* Mobile EBITDA** Year to 31 March EBITDA** Margin Total Organic 2002 Growth* Growth Margin £m % % % 35.8% Germany 1,837 29 29 44.8 35.4% Italy 1,295 24 23 45.6 United Kingdom 1,294 21 21 34.4 Other Europe 2,037 91 31 36.3 33.4% Total Europe 6,463 40 27 39.6 Americas 1,907 17 13 33.8 32.3% Japan 991 175 27 22.5 Other Asia Pacific 330 45 35 33.8 Middle East & Africa 211 (7) 10 43.2 Total Mobile 9,902 41 24 35.6 H1/01 H2/01 H1/02 H2/02 * Calculated on a pro forma basis for Mannesmann ** Before exceptional items

Proportionate Results* Other Operations Year to 31 March 2002 2001* Growth £m £m % Other Operations : Turnover - Europe 821 767 7 Arcor • - Japan 1,160 35 N/A Japan Telecom Total Turnover 1,981 802 147 • Vizzavi • EBITDA** - Europe (8) (32) 75 Cegetel • - Japan 199 5 N/A Total EBITDA** 191 (27) N/A * March 2001 stated on a pro forma basis for Mannesmann ** Before exceptional items

Cash Flow Year to 31 March 2002 2001 Increase Operating Cash Flow Per Share £m £m % (Pence) 11.92 Operating cash flow 8,102 4,587 77 Capital expenditure (4,070) (3,740) 9 Tax paid (545) (1,574) (65) 9.26 Net interest paid (855) (969) (12) Dividends received & other 58 1,579 (96) 7.47 Free cash flow before licences 2,690 (117) N/A 6.74 Licences (325) (13,162) (98) 5.61 Free cash flow 2,365 (13,279) N/A Acquisitions (16,249) (17,652) (8) Disposals 5,390 32,156 (83) Share placement 3,510 - N/A Group dividends (978) (775) 26 Other 650 (529) N/A Net debt movement (5,312) (79) 6,624 1998 1999 2000 2001 2002

Tangible Capital Expenditure Analysis of Tangible Capital Expenditure March 2002: Other Operations • £4.1 billion 10% Germany Other 19% Mobile 8% • Includes: Japan Italy 16% – £0.6 billion in J-Phone 14% – £0.1 billion in JT United Kingdom Other 13% Europe • Under 10% on 3G 20%

Tangible Capital Expenditure March 2003: Tangible Capital Intensity 30.0% • £6.0 billion 25.0% • Includes: 20.0% 15.0% – £1.6 billion in J-Phone 10.0% – £0.4 billion in JT 5.0% • 30% on 3G 0.0% 1997/8 1998/9 1999/0 2000/1 2001/2 2002/3 Forecast 2G GPRS & 3G

Net Debt Net Debt vs Controlled EBITDA* • £12.0 bn at 31 March 2002 (£ billions) 1.5x 12.0 • 14% of market capitalisation • Single ‘A’ credit rating 8.0 2.7x 1.4x • 2002/3 transactions: 6.7 6.6 – Spain (2.2%) - £0.4 bn 4.9 – Spain (6.2%) - £1.3 bn 2.4 – China (1.1%) - £0.5 bn • Shareholder value 2000 2001 2002 Net debt Controlled EBITDA * Before exceptional items

Summary • Strong growth: – EBITDA – Operating cash flow per share – Free cash flow – Earnings per share • No impairment in controlled mobile businesses • Financial strength • Shareholder value

Julian Horn-Smith Group Chief Operating Officer Vodafone Group Plc

Introduction Review of operating performance • Value drivers • Progress on products and services • Implementation of single brand •

Progress to Date Excellent operational execution • – Refocus on customer value – Focus on revenue growth – Drive cost reductions – Focus on capital efficiency Strong cash flow result

The Transition High Customer Focus Customer Growth - Portfolio of voice - Voice centric and data services

Global Organisation Unified Culture • Vodafone Values • Passion for Our Our Our World customers people results around us

Operational Priority Launch new products and services • – Extend benefits to customers – Leverage global brand – Leverage new technology Developing a Vodafone brand experience

Proportionate Customer Growth 120,000 22% 100,000 Proportionate Customers 000's 80,000 60,000 40,000 20,000 0 Mar-01 Mar-02 Northern Europe, Middle East & Africa Central Europe Southern Europe Americas Asia Pacific

German Growth Prepaid connections & handset subsidies & 15 month disconnections 3,000 100 90 No. of connections / disconnections (000's) 2,500 80 Prepaid subsidy per handset (?) 70 2,000 60 1,500 50 40 1,000 30 20 500 10 0 0 Mar-00 Jun-00 Sep-00 Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Quarter ending Gross additions Disconnections (15 months later) Prepaid subsidy per handset

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