Slide 1: Vodafone
O vodafone
Slide 2: Sir Christopher Gent, Chief Executive
Sir Christopher Gent Chief Executive Vodafone Group Plc
Slide 3: Agenda
Agenda • Summary of Results Sir Christopher Gent • Analysis of Results Ken Hydon • Group Funding • Progress on KPIs Julian Horn-Smith • Products and Services • Outlook and Q&A Sir Christopher Gent
Slide 4: Results Overview
Results Overview • Exceeded market expectations • Good turnover growth • Excellent EBITDA margin improvement • Strong operating profit*, PBT* and EPS* • Very good proportionate EBITDA growth • Outstanding free cash flow generation *Before goodwill and exceptional items
Slide 5: Statutory Highlights
Statutory Highlights 2 Sep 02 Change Group Turnover £14.9bn +67% Group Operating Profit1 £4.6bn +37% Profit Before Taxation1 £4.2bn +41% 1 Adjusted EPS 3.28 pence +31% 1 Before goodwill and exceptional items 2 Change on same period last year
Slide 6: Proportionate Highlights
Proportionate Highlights Sep 02 Change 1 Turnover £16.5bn +15% 2 EBITDA £6.2bn +30% Registered customers 107.5m +12% 1 Change on same period last year 2 Before exceptional items
Slide 7: Margin Improvement
Margin Improvement Proportionate Mobile EBITDA Margin* Proportionate Group EBITDA Margin* 40% 39.0% 40% 37.6% 3.6 pp 4.7 pp 30% 30% 20% 20% 10% 10% 0% 0% Sep-01 Sep-02 Sep-01 Sep-02 * before exceptional items * after exceptional items
Slide 8: Cash Flow Highlights
Cash Flow Highlights Strong turnover Improved margins Lower capex • Free cash flow of £2.9bn • Capex £2.7bn; Capital efficiency 17.9% • Lower group net debt of £10.7bn
Slide 9: Operational Highlights
Operational Highlights Customer Growth ARPU i Ahead of our expectations: i Up in some key markets i Better organic growth i In line with our expectations i Stake increases Rise in Data Revenues EBITDA Margin Performance i 13.2% for year to September i Better overhead management i 14.3% in month of S
Slide 10: Acquisition Highlights
Acquisition Highlights • Agreement to acquire BT’s and SBC’s stakes in Cegetel for €6.3bn – Management Control – Pro-rata offer to Vivendi renewed at same price; offer expires end of pre-emption period: 10 Dec • Stake increases: – Portugal: 50.9% - 61.4% – Sweden: 71.1% - 74.7% – Buy out of minority
Slide 11: Dividend Growth
Dividend Growth 0.90 0.80 10% 5% 0.70 5% Dividend per Share 0.60 0.50 0.40 0.30 0.20 0.10 0.00 Sep-99 Sep-00 Sep-01 Sep-02
Slide 12: Ken Hydon, Group Financial Director
Ken Hydon Group Financial Director Vodafone Group Plc
Slide 13: Statutory Results
Statutory Results 6 months to 30 September 2002 2001 Increase Adjusted EPS* (Pence) £m £m % 3.28 Turnover 14,898 8,906 67 Group operating profit* 4,640 3,392 37 2.64 2.51 Net interest payable (390) (381) 2 2.00 Profit before tax* 4,250 3,011 41 Tax (1,602) (1,086) 1.54 Goodwill amortisation (6,837)
Slide 14: Dividends
Dividends Dividend per share history (1989 - 2003) 1.6 • Growth based on: 1.4 – Revenue 1.2 – Earnings 1.0 Free Cash Flow Pence per Share – 0.8 0.6 • Interim dividend 0.4 – 10% increase 0.2 – Dividend of 0.79464p - 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 – Total >
Slide 15: Proportionate Results: Mobile Turnover
Proportionate Results Mobile Turnover 6 Months to 30 September Organic Service Revenue and Total Organic Average Customer Growth 2002 Growth 20% £m % Germany 2,246 9 Italy 1,598 20 13% United Kingdom 2,000 11 11% 11% 10% 10% Other Europe 3,315 23 8% 8% 9% Total Europe 9,159 16 5% 4% Americas 2,907 2
Slide 16: Proportionate Results: Mobile EBITDA
Proportionate Results Mobile EBITDA* 6 Months to 30 September Total Organic Mobile EBITDA* Margin 2002 Growth Growth Margin 41% £m % % % 39.0% Germany 1,038 11 8 46.2 39% Italy 789 20 17 49.4 37% 35.8% 35.4% United Kingdom 739 31 31 37.0 35% Other Europe 1,300 37 25 39.2 33.4% 33% 32.3% Total Europe
Slide 17: Proportionate Results: Other Operations
Proportionate Results Other Operations 6 Months to 30 September 2002 2001 Growth £m £m % Turnover Other Operations: - Europe 380 381 - - Asia 678 453 50 • Arcor Total Turnover 1,058 834 27 • Japan Telecom EBITDA* • Vizzavi - Europe (2) (32) N/A - Asia 178 31 474 • Cegetel Total EBITDA* 176 (1) N/A *
Slide 18: Cash Flow
Cash Flow 6 months to 30 September 2002 2001 Increase Analysis of £m £m % Operating Cash Flow Operating cash flow 5,676 3,640 56 Capital expenditure (2,670) (1,781) 50 Other Other Licences (59) (223) (74) Mobile 2% 3% Germany Operating free cash flow 2,947 1,636 80 Other 19% Tax paid (154) (545) (72
Slide 19: Tangible Capital Expenditure
Tangible Capital Expenditure Analysis of Tangible Capital Expenditure September 2002: • £2.7 billion Other Operations Germany 16% 19% • Excludes licences Other Mobile 3% • Capitalised internal costs < 5% Other Italy Europe 11% 15% • 20% on 3G United Kingdom 9% Japan 27%
Slide 20: Tangible Capital Expenditure
Tangible Capital Expenditure Analysis of Tangible Capital Expenditure March 2003: 100% • > £5.5 billion 90% 80% • Savings: 70% 60% – Rephasing 50% 40% – Efficiencies 30% 20% • 35% on 3G 10% 0% Germany Italy United Japan Total Kingdom Group 3G Other
Slide 21: Net Debt
Net Debt Net Debt vs Group EBITDA* • £10.7 bn at 30 September 2002 3.3x (£ Billions) 13.2 1.5x 1.0x • 19% of market capitalisation 12.0 1.5x 10.710.7 • 2002/3 transactions: 1.3x 9.2 8.2 – France (41.0%) - £4.0 bn 6.7 6.3 (subject to pre-emption) 5.3 4.0 – Spain (6.2%) - £1.3 bn • Committed to single
Slide 22: Summary
Summary • Strong growth: – Service revenue – Adjusted earnings per share – Operating free cash flow • Financial strength • Returns to shareholders
Slide 23: Julian Horn-Smith, Group Chief Operating Officer
Julian Horn-Smith Group Chief Operating Officer Vodafone Group Plc
Slide 24: Excellent Operating Performance
Excellent Operating Performance • Proportionate revenue up 15% • Good customer growth • Higher usage levels • New services • Improved customer mix • Improved EBITDA margins • Strong cash flow
Slide 25: Organic Proportionate Customer Growth
Organic Proportionate Customer Growth 120,000 10% 100,000 Organic Proportionate Customers (000s) Regional Growth 80,000 8% 60,000 29% 11% 40,000 12% 2% 20,000 7% 10% 0 Sep-01 Sep-02 Northern Europe, Middle East & Africa Central Europe Southern Europe Americas Asia Pacific
Slide 26: Improved Customer Mix
Improved Customer Mix* 100% 29% 80% 40% 61% 60% 40% 71% 60% 20% 39% 0% H1 01/02 H2 01/02 H1 02/03 Contract Prepaid * All subsidiaries. For comparability purposes Japan is included for periods prior to its consolidation
Slide 27: Germany Net Additions
Germany Net Additions 400 300 200 100 Net additions (000s) 0 (100) 49% (200) (300) (400) (500) (600) Q3 01/02 Q4 01/02 Q1 02/03 Q2 02/03 Contract Prepaid
Slide 28: Japan Gross Additions
Japan Gross Additions 25% 23% 26% 27% 48% 51% J-Phone Vodafone NTT KDDI J-Phone Vodafone NTT KDDI Q1 02/03 Q2 02/03
Slide 29: US Net Customer Additions
US Net Customer Additions 900 800 700 600 Net Additions (000s) 500 400 300 200 100 0 (100) Q1 02/03 Q2 02/03 Verizon Wireless Cingular Sprint AT&T
Slide 30: Annualised Quarterly ARPU
Annualised Quarterly ARPU* 500 400 Annualised Quarterly ARPU (£) 300 200 100 0 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Quarter ending Contract Prepaid Total * All subsidiaries. For comparability purposes Japan is included for periods prior to its consolidation
Slide 31: Outgoing ARPU
Outgoing ARPU* 95 Annualised Quarterly Outgoing ARPU (£) 90 85 80 75 70 65 60 Q1 01/02 Q1 02/03 Q2 01/02 Q2 02/03 * Subsidiaries over 65% penetration
Slide 32: Contract Minutes and Usage
Contract Minutes and Usage* 24,000 200 Monthly contract voice minutes per customer 198 22,000 196 Contract minutes (millions) 20,000 194 192 18,000 190 16,000 188 14,000 186 184 12,000 182 10,000 180 Q1 01/02 Q2 01/02 Q3 01/02 Q4 01/02 Q1 02/03 Q2 02/03 Total contract minutes Minutes per contract cu
Slide 33: Germany Prepaid ARPU & Usage
Germany Prepaid ARPU & Usage 90 39 Prepaid monthly minutes of use per customer 85 38 Prepaid Annualised Quarterly ARPU (£) 37 80 36 75 35 70 34 65 33 60 32 55 31 50 30 Q1 01/02 Q2 01/02 Q3 01/02 Q4 01/02 Q1 02/03 Q2 02/03 Prepaid ARPU Prepaid Usage
Slide 34: Germany Year on Year movements
Germany Year on Year movements 12% 10% 8% 12% 6% 9% 4% 2% 4% 0% 0% Q1 02/03 Q2 02/03 (2%) (4%) (8%) (6%) (9%) (8%) (10%) Customers Minutes Service Revenue
Slide 35: Germany Half Year Annualised ARPU
Germany Half Year Annualised ARPU 200 9% 3% 6% Half Year Annualised ARPU (£) 180 160 140 120 100 H1 01/02 H1 02/03 2001/02 ARPU Mix Uplift
Slide 36: ARPU and Service Revenue: UK and Italy
Annualised Quarterly ARPU (£) 250 255 260 265 270 275 280 285 290 295 300 Q1 01/02 ARPU Q2 01/02 Q3 01/02 UK Q4 01/02 Q1 02/03 Q2 02/03 Quarterly Service Revenue 750 800 850 900 950 1,000 Quarterly Service Revenue (£millions) Annualised Quarterly ARPU (£) 170 180 190 200 210 220 230 Q1 01/02 Other M
Slide 37: Usage Campaigns
Usage Campaigns 20% FREE Credit We' calling Earn up to £50 worth of free calls just by using your phone. We're saving how much?
Slide 38: ARPU Trend
ARPU Trend* 105% Japan Sept-02 100% Germany Dec-01 UK Aug-01 95% Italy Mar-01 ARPU relative to month 1 90% 85% 80% 75% 70% 65% 60% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Months since 50% penetration level reached Germany Japan UK Italy *Slide represents comparative performanc
Slide 39: J-Phone Vodafone: Relative ARPU
J-Phone Vodafone Relative ARPU of voice and data users* 160% 150% 140% 152% 130% 120% 110% 116% 100% 90% 80% 100% 70% 78% 60% Voice only users Average of all Web and Mail Packet users users users * J-Phone billing data for September 2002, Tokyo area. Analysis based on customer revenue (i.e. excludes
Slide 40: SMS Penetration and Customer Usage
SMS Penetration and Customer Usage* 52% 78 76 SMS Usage per Customer per Month 50% 74 48% 72 SMS Penetration 70 46% 68 44% 66 64 42% 62 40% 60 Q1 01/02 Q2 01/02 Q3 01/02 Q4 01/02 Q1 02/03 Q2 02/03 Penetration Usage per active customer * All subsidiaries excluding Japan due to different services offe
Slide 41: Japan Handset Penetration
Japan Handset Penetration 100% 90% 80% Penetration of customer base 70% 60% 50% 40% 30% 20% 10% 0% Apr-02 May-02 Jun-02 Jul-02 Aug-02 Sep-02 Sha-mail and Movie Sha-mail capable handsets Non camera capable handsets
Slide 42: % Non Voice Revenue September 2002
% Non Voice Revenue September 2002* Increase Sept 2001 to Sept 2002 20% Japan 5.7% 16% Germany 2.1% 14% UK 2.5% 10% Italy 1.8% 14% Group* 3.9% 0% 5% 10% 15% 20% 25% September 2001 September 2002 * All subsidiaries. For comparability purposes Japan is included for periods prior to its consolidation
Slide 43: Annualised Quarterly Churn
Churn Annualised Quarterly Churn* 30% Annualised Quarterly Churn % 25% 20% 15% Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Quarter ending Contract Prepaid Total * All subsidiaries. For comparability purposes Japan is included for periods prior to its consolidation
Slide 44: Acquisition and Retention Costs
Acquisition and Retention Costs Acquisition Cost per Gross Addition* Annualised Retention Cost per Customer* 150 40 Annualised Retention Cost per Average Customer (£) 35 Acquisition cost per gross addition (£) 125 30 100 25 75 20 15 50 10 25 5 0 0 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Jun-01 Sep
Slide 45: Acquisition and Retention Net Costs
Subsidiary Customer Base Costs* 900 16% 800 14% Acquisition and Retention Net Costs (£m) % Statutory Turnover (Mobile) 700 12% 600 10% 500 8% 400 6% 300 4% 200 100 2% 0 0% Q1 01/02 Q2 01/02 Q3 01/02 Q4 01/02 Q1 0203 Q2 0203 SRC SAC % Statutory Turnover (Mobile) *All mobile subsidiaries. For comparab
Slide 46: Cost per Upgrade
Cost per Upgrade* 140 1,750 120 Upgrade costs per upgrade (£) 1,500 Volume of upgrades ('000) 100 1,250 80 60 1,000 40 750 20 0 500 Q1 01/02 Q2 01/02 Q3 01/02 Q4 01/02 Q1 01/03 Q2 01/03 Cost per Upgrade Upgrades * All subsidiaries excluding Japan, where the loyalty programme is currently being revam
Slide 47: Operating Expenses as % Statutory Turnover
Operating Expenses as % Statutory Turnover* 25.0% 24.5% 5% decrease % Statutory Turnover (Mobile) 24.0% 23.5% 23.0% 22.5% 22.0% H1 01/02 H1 02/03 *All mobile subsidiaries. For comparability purposes Japan is included for periods prior to its consolidation. Operating expenses comprise sales and admin
Slide 48: Customers per FTE
1,900 Customers per FTE* 50% 1,850 40% 1,800 Payroll as % overheads Customers per FTE 30% 1,750 1,700 20% 1,650 10% 1,600 1,550 0% Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 2003 Customers per FTE Payroll as % overheads * All subsidiaries. For comparability purposes Japan is included for periods pri
Slide 49: Synergy Benefits
Synergy Benefits • Purchasing – Infrastructure – Handsets • Product development & advertising • Benchmarking & best practice Ahead of FY 2003 Mannesmann synergy target year to date
Slide 50: New Service Propositions
New Service Propositions CONSUMER BUSINESS USER Vodafone Mobile Office
Slide 51: Games Ringtones
Games Ringtones
Slide 52: Vodafone Mobile Office
Vodafone Mobile Office Vodafone Network ready GPRS Data Card Kit
Slide 53: Prepaid Roaming
Prepaid Roaming Connect to Vodafone to WIN a decade Vodafone works in places of dream holidays Forget your phone charger you didn’t even know existed. and you can forget telling Meee er. a people how you're recharging your batteries. or 1 of 200 European escapes
Slide 54: Largest Global Mobile Brand
Largest Global Mobile Brand : Malta Hungary : UK Australia New Zealand Albania Fiji : UK Australia New Zealand Malta Hungary Albania Fiji : Portugal Spain Netherlands Ireland Greece Sweden Germany Egypt Portugal Spain Netherlands Ireland Greece Sweden Germany Egypt : : Italy Italy :: Japan Japan : :
Slide 55: Conclusion
Conclusion • Key operating measures performed ahead of expectations • Strong brand and service offering give unique market differentiation • Compelling platform for the future
Slide 56: Sir Christopher Gent, Chief Executive
Sir Christopher Gent Chief Executive Vodafone Group Plc
Slide 57: Impact of France
Impact of France • Increase customer numbers • Increase turnover • Increase EBITDA • Increase free cash flow EPS pre goodwill accretive
Slide 58: Revenue Outlook
Revenue Outlook 2H 2003 • Sustain organic growth from 1H • Incremental stake increase in Spain Net customer growth > 10% on last year • Improvement in customer mix • Improvement in activity • Increase voice and data usage ARPU continuing to rise in some key markets Double digit proportionate revenue
Slide 59: Effect of New Data Services
Effect of New Data Services • Vodafone live! and Vodafone Mobile Office • Impact in 2H 2004 • Reach a critical mass of customers • Networking effect of mobile to mobile
Slide 60: EBITDA Margin Outlook
EBITDA Margin Outlook 2H 2003 • Full year up on last year’s 35.6% margin • 2H 03 should be > 2H 02’s 35.8% margin • 2H 03 < 1H 03 – Impact of launch of new services – Don’t expect increased acquisition or retention costs – Incoming rate reductions in some markets – Appreciation of Pound
Slide 61: Business Outlook
Business Outlook 2H 2003 • Increase in depreciation – Opening 3G network in Japan – Incremental capex • Operating profit down on 1H 03 but significantly up on 2H 02 • European 3G networks to open in 2003 • Capex > £5.5bn • Strong free cash flow
Slide 62: Transactions Outlook
Transactions Outlook • No significant transactions envisaged • Continue to increase stakes in quoted subsidiaries • Final stage of Spanish put expected • Possible transaction in France
Slide 63: Expected Outlook FY 2004
Expected Outlook FY 2004 • Average customer growth > 10% • Continued rise in ARPU in some key markets • Double digit proportionate revenue growth • Modest margin improvement • Proportionate EBITDA growth > 15% • Good progress on increasing EPS • Similar capex level to FY 2003, improving efficiency •
Slide 64: Conclusion
Conclusion • Transition to new growth environment – Financial performance better than expectations • Convinced of long-term revenue growth opportunities • Good year-on-year growth • Very confident in future prospects
Slide 65: Forward-Looking Statements
Forward-Looking Statements This presentation, including the speeches being made today, 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
Slide 66: Vodafone
O vodafone