Slide 1: Vodafone
O vodafone
Slide 2: Sir Christopher Gent, Chief Executive
Sir Christopher Gent Chief Executive Vodafone Group Plc
Slide 3: Financial promotion notice
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 b
Slide 4: Agenda
Agenda • Summary of Results Sir Christopher Gent • Analysis of Results Ken Hydon • Group Funding • Progress on KPI’s Julian Horn-Smith • Major Achievements Sir Christopher Gent • Outlook and Q&A Arun Sarin • Vodafone & the Future
Slide 5: Results Overview
Results Overview • Exceeded expectations • Strong growth in: – Customers – Operating Profit* – Adjusted Earnings Per Share* – EBITDA – Free Cash Flow *Before goodwill and exceptional items
Slide 6: Statutory Highlights
Statutory Highlights Mar 03 Change 2 Group Turnover £30.4bn +33% Group Operating Profit 1 £9.2bn +30% Profit Before Taxation1 £8.4bn +36% Adjusted EPS 1 6.81 pence +32% More than 30% growth 1 Before goodwill and exceptional items 2 Change on same period last year
Slide 7: Cash Flow Highlights
Cash Flow Highlights Free Cash Flow £5.2bn 5000 • More than double last 4000 year 3000 £2.4bn • Capital additions £4.8bn 2000 • Improved mobile capital 1000 efficiency - 16.3% • Group net debt of 0 £13.8bn Mar-02 Mar-03
Slide 8: Proportionate Highlights
Proportionate Highlights Mar 03 Change 1 Turnover £33.9bn +14% EBITDA 2 £12.7bn +26% Registered customers 119.7m +18% 1 Change on same period last year 2 Before exceptional items
Slide 9: Margin Improvement
Margin Improvement Proportionate Mobile EBITDA Margin 1 Proportionate Total EBITDA Margin 2 40% 38.4% +2.8 pp 40% 37.1% +4.0 pp 30% 30% 20% 20% 10% 10% 0% Mar-02 Mar-03 0% Mar-02 Mar-03 1 Before exceptional items 2 After exceptional items
Slide 10: Second Half Performance
Second Half Performance • Better than anticipated – Enhanced operating performance – Interconnect delays in Japan and Italy – Re-phased and lower cost capital additions – Lower than expected tax rate
Slide 11: Operational Highlights
Operational Highlights Customer Growth ARPU i Better organic customer growth i Sustained improvement in some i More stake increases key markets i Better levels in Japan and US Rise in Data Revenues Services i Up 73% to £3.6bn i Launch of Vodafone live! i 14.6% for year to March i Over 1m customers i
Slide 12: Transactions
Transactions Cegetel 15.0% 30.0% SFR 32.0% 43.9% CMHK 2.2% 3.3% Vodacom 31.5% 35.0% Germany 99.7% 100% Spain 91.6% 100% Sweden 71.1% 99.1% Portugal 50.9% 94.4% Greece 51.9% 64.0% Netherlands 70.0% 97.2% Hungary 59.0% 83.8%
Slide 13: Dividend Growth
Dividend Growth 1.80 1.60 15% 5% 1.40 5% Dividend per Share 1.20 1.00 0.80 0.60 0.40 0.20 0.00 Mar-00 Mar-01 Mar-02 Mar-03
Slide 14: Ken Hydon, Group Financial Director
Ken Hydon Group Financial Director Vodafone Group Plc
Slide 15: Statutory Results
Statutory Results Year ended 31 March 2003 2002 Increase Sources of Revenue £m £m % (£ billions) Turnover 30,375 22,845 33 2.8 Group operating profit* 9,181 7,044 30 2.7 Net interest payable (752) (845) (11) 2.1 3.6 2.0 Profit before tax* 8,429 6,199 36 2.1 Tax (2,956) (2,140) Goodwill amortisation
Slide 16: Shareholder Returns
Shareholder Returns 1.8 Dividend per share history (1989 - 2003) Final Dividend: 1.6 1.4 • 0.8983p per share 1.2 Pence per Share 1.0 Total Dividend: 0.8 0.6 • 1.6929p per share 0.4 0.2 • Up 15% on 2001/2 - 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Ye ar e nde d 31 M
Slide 17: Statutory Turnover
Statutory Turnover Turnover - Year Ended 31 March Organic Service Revenue & 2003 Growth Organic Average Customer Growth £m % 17% Germany 4,646 13 Italy 4,371 18 United Kingdom 4,026 7 Other Europe 5,840 23 11% 11% 10% 10% Total Europe 18,883 15 9% Americas 5 (58) Japan 7,539 127 6% 6% Other Asia Pac
Slide 18: Proportionate Results
Proportionate Results Year Ended 31 March 2003 Mobile EBITDA* Organic Growth Turnover EBITDA* Margin* £m £m % Germany 4% Germany 4,642 2,016 43.4 Italy 3,353 1,654 49.3 United Kingdom 4,026 1,541 38.3 Italy 22% Other Europe 7,068 2,685 38.0 United Total Europe 19,089 7,896 41.4 Kingdom 19% Americas
Slide 19: Cash Flow
Cash Flow Year ended 31 March 2003 2002 Increase £m £m % Operating cash flow 11,142 8,102 38 Analysis of Capital expenditure (5,180) (4,070) 27 Operating Cash Flow Licences (99) (325) (70) Other Other Mobile 4% Operating free cash flow 5,863 3,707 58 3% Germany 19% Tax paid (883) (545) 62 Other Net
Slide 20: Tangible Fixed Assets
Tangible Fixed Assets Analysis of Tangible Fixed Asset Additions March 2003: Other Operations 7% Germany • £4.8 billion additions 17% (£5.2 billion cash spend) Other Mobile 23% • 35% on 3G Italy 15% • Mobile capital intensity: United 2002/3 2001/2 Kingdom Japan 11% Including 3G 16.3% 20.4% 27% Exclu
Slide 21: Tangible Fixed Assets
Tangible Fixed Assets Analysis of March 2004: Tangible Fixed Asset Additions Other • >£5.0 billion Operations 8% Germany 17% • Savings: Other Mobile 25% Italy – Rephasings 13% – Efficiencies United Kingdom • 40% on 3G 11% Japan 26%
Slide 22: Net Debt
Net Debt Net Debt vs Operating Cash Flow* (£ Billions) 1.2x 13.8 1.5x • £13.8 bn at 31 March 2003 12.0 11.9 • 18% of market capitalisation 1.4x 8.2 6.7 4.9 • Single ‘A’ credit profile 2000/1 2001/2 2002/3 Net debt Group Operating Cash Flow * * Before exceptional items. Includes dividends received fr
Slide 23: Summary
Summary • Strong growth: – Service revenues – Adjusted earnings per share – Free cash flow • Healthy financial position • Increase returns to shareholders
Slide 24: Julian Horn-Smith, Group Chief Operating Officer
Julian Horn-Smith Group Chief Operating Officer Vodafone Group Plc
Slide 25: Broader Vision
Broader Vision • Grow global revenues – increased marketing focus • Extend operational leadership – leverage of scale & scope • Extend service differentiation – investing in delivering a Vodafone branded, easy to use customer proposition
Slide 26: Impressive Performance
Impressive Performance • Good customer growth • Sustained ARPU levels • Continued focus on cost management 38.4 % Mobile EBITDA Margin* Free Cash Flow Doubled * Proportionate before exceptionals
Slide 27: Milestones Achieved
Milestones Achieved Customer orientated service proposition • GPRS Roaming • Launch of Vodafone live! across multiple countries • Rollout of Mobile Office from Vodafone
Slide 28: Organic Proportionate Customer Growth
Organic Proportionate Customer Growth 11% 120,000 Regional Growth Organic Proportionate Customers (000s) 100,000 24% 80,000 12% 12% 60,000 9% 40,000 6% 11% 20,000 0 2002 2003 Northern Europe, Middle East & Africa Central Europe Southern Europe Americas Asia Pacific
Slide 29: Germany Net Additions
Germany Net Additions 1,000 800 600 400 Net Additions (000s) 200 0 (200) (400) (600) (800) (1,000) H1 01/02 H2 01/02 H1 02/03 H2 02/03 Contract Prepaid
Slide 30: UK Contract Market Share
UK Contract Market Share 8,000 36% Vodafone Contract Customers (000s) 7,000 30% 6,000 Contract Market Share 24% 5,000 4,000 18% 3,000 12% 2,000 6% 1,000 0 0% H1 01/02 H2 01/02 H1 02/03 H2 02/03 Vodafone contract customers Vodafone O2 Orange T-Mobile
Slide 31: Spain Net Additions
Spain Net Additions 900 800 700 91% Net Additions (000s) 600 500 7% 400 300 200 100 0 H1 01/02 H1 02/03 H2 01/02 H2 02/03 Market share leader of net additions in H2 02/03
Slide 32: US Year End Closing Customer Base
US Year End 02/03 Closing Customer Base 35 30 Closing Customers (Million) 25 20 15 10 5 0 Verizon Wireless Cingular AT&T Sprint Nextel T-Mobil
Slide 33: Churn
Churn Annualised Half Year Churn* 29% 27% Annualised Half Year Churn % 25% 23% 21% 19% 17% 15% H1 01/02 H2 01/02 H1 02/03 H2 02/03 Total Contract Prepaid * All subsidiaries. For comparability purposes Japan is included for periods prior to its consolidation.
Slide 34: Annualised Quarterly Churn and Upgrade
Annualised Quarterly Churn and Upgrade %* 28% 14% 26% 13% Annualised Quarterly Upgrade % Annualised Quarterly Churn % 24% 12% 22% 11% 20% 10% 18% 9% 16% 8% 14% 7% 12% 6% 10% 5% Q3 01/02 Q4 01/02 Q1 02/03 Q2 02/03 Q3 02/03 Q4 02/03 Total Churn Total upgrade % * All subsidiaries. For comparability pur
Slide 35: Vodafone Italy Loyalty Programme
Vodafone Italy Loyalty Programme 9,000,000 28% No. of Loyalty Scheme Prepaid Customers 8,000,000 Annualised Quarterly Prepaid Churn % 26% 7,000,000 6,000,000 24% 5,000,000 22% 4,000,000 3,000,000 20% 2,000,000 18% 1,000,000 0 16% Q1 01/02 Q2 01/02 Q3 01/02 Q4 01/02 Q1 02/03 Q2 02/03 Q3 02/03 Q4 02/0
Slide 36: Twelve Months Rolling ARPU
Twelve Months Rolling ARPU* 500 140 135 450 130 Annual Prepaid ARPU (£) 400 Annual ARPU (£) 125 350 120 115 300 110 250 105 200 100 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Quarter ending Total Contract Prepaid * All subsidiaries. For comparability purposes Japan is included for periods prior to its conso
Slide 37: Total Voice Minutes & Usage
Total Voice Minutes & Usage* 80,000 760 70,000 740 Half Year Total Voice Minutes per Customer Half Year Total Voice Minutes (millions) 720 60,000 700 50,000 680 40,000 660 30,000 640 20,000 620 10,000 600 H1 2001/2 H2 2001/2 H1 2002/3 H2 2002/3 Total minutes Minutes per customer * All subsidiaries.
Slide 38: Prepaid Voice Minutes & Usage
Prepaid Voice Minutes & Usage* 24,000 440 Half Year Prepaid Voice Minutes per Customer Half Year Prepaid Voice Minutes (millions) 23,000 430 22,000 420 21,000 410 20,000 400 19,000 390 18,000 380 H1 2001/2 H2 2001/2 H1 2002/3 H2 2002/3 Total prepaid minutes Minutes per prepaid customer * All subsidi
Slide 39: SMS Revenue per Active User
SMS Revenue per Active User* 700 60 Total Quarterly SMS Revenue (£ millions) 600 55 Annualised Quarterly SMS Revenue 500 50 per Active User (£) 400 45 300 40 200 35 100 30 0 25 Q1 01/02 Q2 01/02 Q3 01/02 Q4 01/02 Q1 02/03 Q2 02/03 Q3 02/03 Q4 02/03 SMS Revenue SMS Revenue per user *All subsidiaries
Slide 40: Non Voice Revenue % for year to March 2003
Non Voice Revenue % for year to March 2003* Increase March 2002 to March 2003 Japan 5% Germany 2% UK 3% Italy 3% Spain 2% Group 4% 0% 5% 10% 15% 20% 25% Mar-02 Mar-03 * All subsidiaries. For comparability purposes Japan is included for periods prior to its consolidation and the UK is on a consistent
Slide 41: Customer Base Costs
Customer Base Costs* £3,233 million £3,085 million 1,000,000 15% 900,000 14% Acquisition and Retention Net Costs (£000s) 800,000 13% 700,000 % Turnover (Mobile) 12% 600,000 11% 500,000 10% 400,000 9% 300,000 8% 200,000 100,000 7% 0 6% Q1 01/02 Q2 01/02 Q3 01/02 Q4 01/02 Q1 02/03 Q2 02/03 Q3 02/03 Q4
Slide 42: Acquisition Cost per Gross Addition
Acquisition Cost per Gross Additions* 160 Total acquisition Cost per Gross Acquisition Cost per Gross Additions (£) Addition* 140 90 120 Acquisition Cost per Gross Addition (£) 80 100 70 80 60 60 50 40 40 30 20 20 0 10 Jun-01 Jun-02 Mar-03 Mar-02 Sep-01 Dec-02 Dec-01 Sep-02 0 Quarter ending Q1 Q2 Q3
Slide 43: Cost per Upgrade
Cost per Upgrade* 140 2,500 120 2,000 Upgrade Cost per Upgrade (£) Volume of Upgrades (000s) 100 1,500 80 60 1,000 40 500 20 0 0 Q1 01/02 Q2 01/02 Q3 01/02 Q4 01/02 Q1 02/03 Q2 02/03 Q3 02/03 Q4 02/03 Cost per upgrade Upgrades *All subsidiaries excluding Japan, where comparable data in not available
Slide 44: Germany Customer Base Costs
Germany Customer Base Costs Germany Acquisition Costs and Gross Germany Retention Costs and Additions Upgrades 23% 63% Number of Upgrades (Thousands) Total Gross Additions (Thousands) Retention Costs (£000) Acquisition Costs (£000) H1 01/02 H2 01/02 H1 02/03 H2 02/03 H1 01/02 H2 01/02 H1 02/03 H2 02
Slide 45: Japan EBITDA Margin improvement
Japan EBITDA Margin improvement 35% 30% 25% • Lower handset EBITDA margin 20% subsidies 15% • Change in loyalty 10% program offering 5% 0% 2001/02 2002/03 Other margin improvement SAC/SRC margin improvement 2001/2 EBITDA margin
Slide 46: Acquisition and Retention Costs
Acquisition and Retention Costs • Focus on CRM • Segmented customer approach • Cost effective investment No expected adverse impact on margin for FY 04
Slide 47: Net Operating Expenses as % Turnover
Net Operating Expenses as % Turnover* 3,000 24% 23% 2,900 Net Operating Expenses (£ millions) 22% % Turnover (Mobile) 2,800 21% 2,700 20% 2,600 19% 2,500 18% H1 01/02 H2 01/02 H1 02/03 H2 02/03 Net Operating Expenses % of Statutory Turnover * All mobile subsidiaries. Turnover represents statutory tu
Slide 48: Enhanced Services – Powered by 3G
Enhanced Services – Powered by 3G Deliver enhanced customer experience Greater speeds Better quality of service Improved range of services • Ready to offer services powered by 3G later this financial year
Slide 49: Not a got: Apa t oN
Not a got: Apa t oN foran 1s igo.
Slide 50: Vodafone live! launch dates by country
Country Date of launch Country Date of launch Germany 24 October 2002 Sweden 2 December 2002 Netherlands 25 October 2002 Greece 13 January 2003 UK 25 October 2002 Hungary 3 February 2003 Spain 29 October 2002 Egypt 28 March 2003 Italy 1 November 2002 New Zealand 11 April 2003 Ireland 7 November 2002
Slide 51: Over 1 million customers in 5 months
Best Wireless Handset Best Consumer Application Best Television • Over 1 million customers in 5 months • The most successful launch in the history of Vodafone – Award winning • Differentiation in the marketplace
Slide 52: Impact on competitive position
• 60% of all MMS handsets • Building customer loyalty and usage – Half of Vodafone live! handsets were upgrades • Significant impact on competitive position • Fuelled strong customer growth
Slide 53: Driving higher usage and ARPU
• Driving higher than average usage and ARPU • Popular features: – Downloading ringtones and games • Messaging: increasing ARPU contributor – More MMS enabled handsets – Further interoperability agreements
Slide 54: Improving service
• Improving service – Video streaming, download, messaging – Multi-media library pictures – More than 11,000 ringtones • Continue to distinguish offering – More features
Slide 55: Handset Range
Handset Range Sharp GX10 • Stimulate further penetration and usage • Wider range of handset pricing • More handsets to be added to the range Panasonic Panasonic Sharp GD87 GD87i GX10i Nokia Nokia Sony Ericsson Sagem Sharp 7650 3650 T610 MY-X6 GX20 Oct 02 April 03 May 03 June 03 July 03
Slide 56: Vodafone Mobile Office
Vodafone Mobile Office • Compelling, seamless service • Initial offering: Mobile Connect Card – Vodafone brand on laptop for first time – 12 markets today: +50,000 customers • New sales channels • High customer satisfaction • Drive market share of corporate segment
Slide 57: Vodafone Mobile Office
Vodafone Mobile Office • Combine local and global voice and data services to produce best business offering – Wireless LAN in Germany • Continued development of proposition – Delivering faster data speeds • Enrich customer experience • Unique to Vodafone
Slide 58: Vodafone Now in 8 Partner Networks
Vodafone Now in 8 Partner Networks *
Slide 59: Excellent Operational Performance
Excellent Operational Performance • Customer Orientated – Strong customer growth – Reduced churn – Improved voice and data usage • Focus on cost management Continue to lead – Continue to succeed
Slide 60: Sir Christopher Gent, Chief Executive
Sir Christopher Gent Chief Executive Vodafone Group Plc
Slide 61: Expected Outlook FY 2004
Expected Outlook FY 2004 • Average customer* growth > 10% • Similar growth in revenues* • Small EBITDA margin* improvement • Better EBITDA* growth than revenue* growth • Good adjusted EPS growth • Capital additions little up on last year • Improved capital efficiency • Free cash flow > £5.2bn * Prop
Slide 62: Vodafone Today
Vodafone Today • Serve over 295m customers • 28 national networks • 16 controlled networks – 15 single branded – Japan by October • 8 Partner Networks UNMATCHED GLOBAL FOOTPRINT
Slide 63: Differentiated Services
Differentiated Services VOICE DATA • One rate roaming • Consumers: plans – Vodafone live! • International short • Business: code dialing – Mobile Office from • Prepaid roaming Vodafone – In country top ups
Slide 64: Global Capability
Global Capability • Successful acquisitions • Fully integrated operations • Vodafone is more than sum of its parts Global service offerings Exceeded synergy targets
Slide 65: Financial Performance
Financial Performance • EPS performance better than anticipated • Compound EBITDA growth > 30% - 3 yrs • Very sound balance sheet • Strong credit profile: 3 stable single A ratings • Flexibility For Further Opportunities – Invest appropriately in capex – Build new services for future – Improve share
Slide 66: Executed Strategy of World Leadership
Executed Strategy of World Leadership
Slide 67: Strong Executive Management Team
Strong Executive Management Team Sir Christopher Gent Arun Sarin Julian Horn-Smith Ken Hydon Chief Executive Chief Executive Designate Group Chief Operating Officer Financial Director Vittorio Colao, Chief Executive Peter Bamford, Chief Executive Thomas Geitner, Chief Executive Southern Europe Regio
Slide 68: Brand Ascendancy
Brand Ascendancy
Slide 69: Internal Commitments
Internal Commitments Vision Values “The world’s mobile Passion for customers communications leader – enriching customers’ lives, Passion for our people helping individuals, Passion for results businesses and communities be more Passion for the world connected in a mobile around us world”
Slide 70: Vodafone's Potential
Vodafone’s Potential • Expect the future to be more exciting • Opportunity to gain market share through superior capability • Range of services to expand – Bigger opportunity to increase share of wallet • Potential of mobile substitution
Slide 71: Vodafone
O vodafone
Slide 72: Quote on belief in Vodafone
“Will forever be a believer in Vodafone, and what it can do to make the world a better place for our customers, our shareholders and the society we serve”
Slide 73: Forward-Looking Statement
Forward-Looking Statement This presentation 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 r
Slide 74: Vodafone
O vodafone
Slide 75: Arun Sarin, Chief Executive Designate
Arun Sarin Chief Executive Designate Vodafone Group Plc
Slide 76: Great Opportunities
Great Opportunities Telecommunications Mobile Information Technology Infotainment (IT)
Slide 77: Great Opportunities
Great Opportunities Telecommunications Mobile Information Technology Infotainment (IT)
Slide 78: Our Focus
Our Focus – Delight our customers – Leverage global scale and scope – Expand our core business – Best workforce – Creating shareholder value
Slide 79: Vodafone
O vodafone