24th May 2005 07:02
Vodafone Group Plc24 May 2005 PART 5 VODAFONE GROUP PLCPRELIMINARY RESULTS NOTES TO THE PRELIMINARY ANNOUNCEMENT OF RESULTSFOR THE YEAR ENDED 31 MARCH 2005 1 Basis of preparation Statutory financial information The preliminary results for the year ended 31 March 2005 are an abridgedstatement of the full Annual Report, which was approved by the Board ofDirectors on 24 May 2005. The Auditors' Report on these accounts wasunqualified. The preliminary results do not comprise statutory accounts withinthe meaning of section 240 of the Companies Act 1985. The information relatingto the year ended 31 March 2004 is an extract from the published accounts forthat year, which have been delivered to the Registrar of Companies, and on whichthe Auditors' Report was unqualified. The accounts for the year ended 31 March2005 will be delivered to the Registrar of Companies following the Company'sAnnual General Meeting, to be held on 26 July 2005. 2 Segmental and other analyses The Group's principal business is the supply of mobile telecommunicationsservices and products. Other operations primarily comprise fixed linetelecommunications businesses. In October 2004, the Company announced a neworganisational structure effective from 1 January 2005. Results are shown underthe new reporting structure. The results of the Japan Telecom fixed linebusiness, which has been disposed of, are analysed as discontinued operations. Analyses of turnover and total Group operating profit/(loss) by geographicalregion and class of business are as follows: Turnover Year ended Year ended 31 March 2005 31 March 2004 ----------------------------------- ---------------------------------- Segment Inter-segment Net Segment Inter-segment Net turnover turnover turnover turnover turnover turnover £m £m £m £m £m £m Mobile telecommunications:Germany 5,684 (51) 5,633 5,536 (42) 5,494Italy 5,565 (44) 5,521 5,312 (36) 5,276UK 5,065 (47) 5,018 4,782 (38) 4,744Other EMEA 8,614 (129) 8,485 7,627 (116) 7,511Asia Pacific 8,531 (4) 8,527 8,896 (6) 8,890 ----------------------------------- ---------------------------------- 33,459 (275) 33,184 32,153 (238) 31,915 ----------------------------------- ---------------------------------- Other operations:Germany 1,108 - 1,108 1,002 - 1,002Asia Pacific(1) - - - 1,126 - 1,126 ----------------------------------- ---------------------------------- 1,108 - 1,108 2,128 - 2,128 ----------------------------------- ---------------------------------- Turnover between mobileand other operations(2) (159) (484) ----------------------------------- ----------------------------------Group turnover 34,133 33,559 =================================== ================================== (1) Includes turnover of discontinued operations of £nil for the year ended 31 March 2005 (2004: £924 million). (2) Includes turnover of discontinued operations of £nil for the year ended 31 March 2005 (2004: £106 million). Total Group operating profit/(loss) before goodwill amortisation and exceptional items Year ended Year ended 31 March 31 March 2005 2004 £m £m Mobile telecommunications:Germany 1,663 1,741Italy 2,257 2,143UK 975 1,098Other EMEA 3,383 3,142Asia Pacific 950 1,212Americas 1,647 1,393 -------- -------- 10,875 10,729 -------- -------- Other operations:Germany 66 (58)Other EMEA (37) (1)Asia Pacific(1) - 79 -------- -------- 29 20 -------- -------- Group 10,904 10,749-------------------------------------------------------------------------------Subsidiary undertakings 7,940 8,091Share of associated undertakings 2,964 2,658------------------------------------------------------------------------------- Goodwill amortisation (14,700) (15,207)Exceptional operating items (Note 3) (315) 228 -------- --------Total Group operating loss (4,111) (4,230) ======== ======== (1) Includes the following amounts in relation to discontinued operations: year ended 31 March 2005: £nil; 2004: £66 million. 3 Exceptional operating items Year ended Year ended 31 March 31 March 2005 2004 £m £m Impairment of intangible fixed assets (315) -Contribution tax - 351Reorganisation costs - (123) -------- -------- (315) 228 ======== ======== The exceptional operating cost of £315 million in the year ended 31 March 2005is due to an impairment of the carrying value of goodwill relating to VodafoneSweden. The exceptional operating income for the year ended 31 March 2004 of£351 million relates to expected recoveries and provision releases in relationto a contribution tax levy on Vodafone Italy. 4 Exceptional non-operating items Year ended Year ended 31 March 31 March 2005 2004 £m £m Profit on disposal of fixed asset investments 19 12Share of associate profit/(loss) on disposal ofinvestment 5 (1)Amounts written off fixed asset investments (2) (6)Loss on disposal of businesses (9) (127)Profit on disposal of tangible fixed assets - 19 -------- -------- 13 (103) ======== ======== 5 Tax on loss on ordinary activities Year ended Year ended 31 March 31 March 2005 2004 £m £m United Kingdom corporation taxcharge at 30% (2004: 30%) 271 209 -------- -------- Overseas corporation taxCurrent tax: Current year(1) 2,430 2,264 Prior year (221) (159) -------- -------- 2,209 2,105 -------- -------- Total current tax 2,480 2,314Deferred tax - origination of andreversal of timing differences: United Kingdom 292 426 Overseas(1) (539) 310 -------- -------- (247) 736 -------- -------- Tax on exceptional items 3 104 -------- --------Total tax charge 2,236 3,154 ======== ========-------------------------------------------------------------------------------Tax on loss on ordinaryactivities before exceptional items 2,832 3,050Tax on exceptional items 3 104Exceptional tax credit(1) (599) -------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Parent and subsidiary undertakings 1,698 2,866Share of associated undertakings 538 288 -------- -------- 2,236 3,154 ======== ========------------------------------------------------------------------------------- (1) Total tax charge for the year ended 31 March 2005 includes exceptional current tax and deferred tax credits, totalling £599 million, relating to tax losses in Vodafone Holdings K.K., which became eligible for offset against the profits of Vodafone K.K. following the merger of the two entities on 1 October 2004. The tax credit was recognised following shareholder and regulatory approval of the transaction in the year. 6 (Loss)/earnings per share Year ended Year ended 31 March 31 March 2005 2004 £m £m Loss for basic and diluted loss per share (7,540) (9,015)Add back: - Goodwill amortisation 14,700 15,207 - Exceptional operating items 315 (228) - Exceptional non-operating items (13) 103 - Exceptional tax credit (599) - - Tax on exceptional items 3 104 - Share of exceptional items attributable to minority interests 26 27 -------- --------Earnings for adjusted earnings per share 6,892 6,198 ======== ======== Weighted average number of shares (millions) 66,196 68,096 Basic and diluted loss per share (11.39)p (13.24)pAdjusted basic earnings per share 10.41p 9.10p Diluted loss per share is the same as basic loss per share as it is consideredthat there are no dilutive potential ordinary shares. 7 Reconciliation of operating loss to net cash inflow from operating activities Year ended Year ended 31 March 31 March 2005 2004 £m £m Operating loss (5,304) (4,776)Exceptional operating items 315 (228)Depreciation 4,528 4,362Goodwill amortisation 12,929 13,095Amortisation of other intangible fixed assets 412 98Loss on disposal of tangible fixed assets 161 89 -------- --------Group EBITDA(1) 13,041 12,640 Working capital movements (281) (238)Payments in respect of exceptional items (47) (85) -------- --------Net cash inflow from operating activities 12,713 12,317 ======== ======== (1) Group EBITDA is not a measure recognised under UK GAAP but is presented in order to highlight operational performance of the Group. It is stated before exceptional items. 8 Analysis of net debt Other non-cash changes and At 31 At 1 April exchange March 2004 Cash flow movements 2005 £m £m £m £m Liquid resources 4,381 (3,563) (2) 816 -------- -------- -------- -------- Cash at bank and in hand 1,409 1,408 33 2,850Bank overdrafts (42) (3) (2) (47) -------- -------- -------- -------- 1,367 1,405 31 2,803 -------- -------- -------- --------Debt due within one year(other than bank overdrafts) (2,000) 1,997 (329) (332)Debt due after one year (12,100) 161 439 (11,500)Finance leases (136) 12 (2) (126) -------- -------- -------- -------- (14,236) 2,170 108 (11,958) -------- -------- -------- -------- Net debt (8,488) 12 137 (8,339) ======== ======== ======== ======== Included within net debt at 31 March 2005 are bond issues maturing asfollows: £m One year or less 283More than one year but not more than two years 1,561More than two years but not more than five years 4,863More than five years but not more than ten years 1,388More than ten years but not more than twenty years 1,118More than twenty years 1,339 ------- 10,552 ======= 9 Summary of differences between UK and US GAAP The preliminary results have been prepared in accordance with UK GenerallyAccepted Accounting Principles ("UK GAAP"), which differ in certain significantrespects from US Generally Accepted Accounting Principles ("US GAAP"). Adescription of the relevant accounting principles which differ materially willbe provided within Vodafone Group Plc's Annual Report for the year ended 31March 2005. The effects of these differing accounting principles are as follows: Year ended Year ended 31 March 31 March 2005 2004 £m £m Revenue from continuing operations in accordancewith UK GAAP 34,133 32,741 Items (decreasing)/increasing revenue:Non-consolidated entity (5,483) (5,276)Connection revenue 1,223 188 -------- --------Revenue from continuing operations in accordancewith US GAAP 29,873 27,653 ======== ======== Net loss in accordance with UK GAAP (7,540) (9,015) Items (increasing)/decreasing net loss:Investments accounted for under the equity method (18) 1,306Connection revenue and costs 16 29Goodwill and other intangible assets (6,482) (6,520)Capitalised interest (86) 406Licence fee amortisation (435) (76)Exceptional items 246 (351)Income taxes 7,007 6,231Other (118) (137)Cumulative effect of change in accounting principle:EITF Topic D-108 (6,177) -Cumulative effect of change in accounting principle:pensions (195) - -------- --------Net loss in accordance with US GAAP (13,782) (8,127) ======== ======== Loss from continuing operations (7,410) (7,734)Loss from operations and disposal of discontinuedoperations - (393)Cumulative effect of changes in accountingprinciples (6,372) - -------- --------Net loss (US GAAP) (13,782) (8,127) ======== ======== Basic and diluted loss per share (US GAAP): - Loss from continuing operations (11.19)p (11.36)p - Loss from operations and disposal of discontinued operations - (0.57)p - Cumulative effect of changes in accounting principles (9.63)p - - Net loss (US GAAP) (20.82)p (11.93)p ======== ======== 31 March 31 March 2005 2004 £m £m Shareholders' equity in accordance with UK GAAP 99,317 111,924 Items increasing/(decreasing) shareholders' equity:Investments accounted for under the equity method 5,043 15,669Connection revenue and costs (14) (55)Goodwill and other intangible assets 40,723 45,320Capitalised interest 1,529 1,615Licence fee amortisation (552) (109)Exceptional items 315 -Income taxes (40,535) (50,177)Proposed dividends 1,395 728Other 24 114 -------- --------Shareholders' equity in accordance with US GAAP 107,245 125,029 ======== ======== UNAUDITED PROPORTIONATE FINANCIAL INFORMATIONFOR THE YEAR ENDED 31 MARCH 2005 Proportionate results Group proportionate turnover increased by 11% to £43,602 million for thefinancial year as a result of both organic growth and the effect of increasedstakes in a number of the Group's existing business, partially offset by thedisposal of Japan Telecom. In the mobile business, proportionate turnover grewby 12% to £42,762 million, with organic growth of 9%. The Group's proportionate EBITDA margin, before exceptional items, for themobile business decreased by 0.4 percentage points to 38.5%. The main reason forthis decrease was the increase of the Group's effective shareholding in VodafoneJapan. Basis of preparation The tables of financial information below are presented on a proportionatebasis. Proportionate presentation is not a measure recognised under UK GAAP andis not intended to replace the consolidated financial statements prepared inaccordance with UK GAAP. However, since significant entities in which the Grouphas an interest are not consolidated, proportionate information is provided assupplemental data to facilitate a more detailed understanding and assessment ofthe consolidated financial statements prepared in accordance with UK GAAP. UK GAAP requires consolidation of entities controlled by the Group and theequity method of accounting for entities in which the Group has significantinfluence but not a controlling interest. Proportionate presentation is a prorata consolidation, which reflects the Group's share of turnover and expenses inboth its consolidated and unconsolidated entities. Proportionate results arecalculated by multiplying the Group's ownership interest in each entity by eachentity's results. Proportionate information includes results from the Group's equity accountedinvestments and investments held at cost. The Group does not have control overthe turnover, expenses or cash flows of these investments and is only entitledto cash from dividends received from these entities. The Group does not own theunderlying assets of these investments. Group proportionate turnover is stated net of intercompany turnover. The Grouphas amended its analysis of proportionate turnover between the mobile businessand other operations to a gross of intercompany turnover basis, rather than anet of intercompany turnover presentation previously disclosed. Proportionate EBITDA is defined as operating profit before exceptional items anddepreciation and amortisation of subsidiary undertakings, associatedundertakings and investments, proportionate to equity stakes. ProportionateEBITDA represents the Group's ownership interests in the respective entities'EBITDA. As such, proportionate EBITDA does not represent EBITDA available to theGroup. Proportionate EBITDA margin before exceptional items is proportionate EBITDAbefore exceptional items, as a percentage of proportionate turnover. Reconciliation of proportionate turnover to statutory turnover Year ended Year ended 31 March 31 March 2005 2004 £m £m Proportionate turnover 43,602 39,446Minority share of turnover in subsidiaryundertakings 2,370 4,521 Group share of turnover in associatedundertakings and trade investments (11,839) (10,408) -------- --------Statutory turnover 34,133 33,559 ======== ======== UNAUDITED PROPORTIONATE FINANCIAL INFORMATION FOR THE YEAR ENDED 31 MARCH 2005 Reconciliation of proportionate EBITDA, before exceptional items, to loss forthe financial year Year ended Year ended 31 March 31 March 2005 2004 £m £m Proportionate EBITDA, before exceptional items 16,641 15,114Minority share of EBITDA in subsidiaryundertakings 997 1,602Group's share of EBITDA in associatedundertakings and trade investments (4,597) (4,076) -------- --------Group EBITDA 13,041 12,640Charges for depreciation (4,528) (4,362)Exceptional operating items (315) 228Goodwill amortisation (12,929) (13,095)Amortisation of other intangibles (412) (98)Loss on disposal of tangible fixed assets (161) (89) -------- --------Operating loss (5,304) (4,776)Share of operating profit in associatedundertakings 1,193 546Exceptional non-operating items 13 (103)Net interest payable and similar items (604) (714)Tax on loss on ordinary activities beforeexceptional tax (2,835) (3,154)Exceptional tax credit 599 -Minority interests (including non-equityminority interests) (602) (814) -------- --------Loss for the financial year (7,540) (9,015) ======== ======== Proportionate mobile EBITDA margin, before exceptional items, excluding theimpact of the Japan stake change Proportionate mobile EBITDA margin, before exceptional items, excluding theimpact of the Japan stake increases in the first half of the financial year, was39.0% compared to the Group proportionate EBITDA margin, before exceptionalitems, of 38.2%. The Group's increased effective shareholding in Japanrepresents the most significant stake change of the current and prior financialyears. A reconciliation of these margins is as follows: EBITDA Turnover EBITDA(1) margin(1) £m £m % Proportionate result for mobile businessexcluding the impact of the Japan stakechange 41,222 16,064 39.0Impact of the Group's additional stake inJapan 1,540 419 -------- --------Proportionate result for mobile business 42,762 16,483 38.5Proportionate result for other operations 1,178 158Turnover between mobile and other operations (338) - -------- --------Group proportionate result 43,602 16,641 38.2 ======== ========(1) Before exceptional items OTHER INFORMATION 1) Copies of this document are available from the Company's registered office: Vodafone HouseThe ConnectionNewburyBerkshireRG14 2FN 2) This Preliminary Announcement will be available on the Vodafone Group Plcwebsite, www.vodafone.com, from 24 May 2005. For further information: Vodafone Group Simon Lewis, Group Corporate Affairs DirectorTel: +44 (0) 1635 673310 Investor RelationsCharles ButterworthDarren JonesSarah MoriartyTel: +44 (0) 1635 673310 Media RelationsBobby LeachBen PadovanTel: +44 (0) 1635 673310 High resolution photographs are available to the media free of charge atwww.newscast.co.uk. Vodafone, Vodafone live!, Vodafone Mobile Connect, Vodafone Wireless Office,Vodafone Simply and Vodafone Passport are trademarks ofthe Vodafone Group. Other product and company names mentioned herein may be thetrademarks of their respective owners. Forward-Looking Statements This document contains "forward-looking statements" within the meaning of the USPrivate Securities Litigation Reform Act of 1995 with respect to the Group'sfinancial condition, results of operations and businesses and certain of theGroup's plans and objectives. In particular, such forward-looking statementsinclude the statements under "Chief Executive's Statement" regarding returns toshareholders, free cash flow and anticipated benefits from the One Vodafoneprogramme, expectations regarding the Group's competitive position andimplementation of a business improvement plan, share purchases, dividends anddividend growth rates and business acquisitions; the statements under "Outlook"regarding Vodafone's expectations for the year ending 31 March 2006 as toorganic growth in proportionate mobile revenue, proportionate mobile EBITDAmargins, capitalised fixed asset additions, free cash flow, dividend receiptsfrom Verizon Wireless, cash expenditure on fixed assets, tax payments andexpected adjusted effective tax rates, share purchases by the Group and sharerepurchases by Vodafone Italy and One Vodafone targets; the statements under"Japan" with respect to expected outcome of the plans and services announced toimprove Vodafone Japan's performance and competitive position; the statementsunder "Dividends" with respect to dividend payments and increases in the levelof dividends; the statements under "Share purchases" with respect to the levelof share purchase programme; and the statements under "One Vodafone" regardinganticipated benefits in 2007 and 2008 to the Group of the One Vodafoneprogramme, including statements related to time to market for new services andterminals, mobile capital expenditure, free cash flow, cost savings, migrationof service delivery platforms, maintenance costs and purchasing options,consolidation of billing and customer relationship management systems, churn,retention and customer satisfaction, inter-operator roaming tariffs, revenueenhancements delivering pre-tax cash flow and revenue market share and theaggregate of mobile operating expenses and tangible fixed asset additions. Theseforward-looking statements are made on the basis of certain assumptions whichVodafone believes to be reasonable in light of Vodafone's operating experiencein recent years. The principal assumptions on which these statements are basedrelate to exchange rates, customer numbers, usage and pricing, take-up of newservices, termination and interconnect rates, customer acquisition and retentioncosts, network opening and operating costs and the availability of handsets. The document also contains other forward-looking statements including statementswith respect to Vodafone's expectations as to launch and roll-out dates forproducts and services, including, for example, 3G services, Vodafone Simply andVodafone Passport and Vodafone's business services; intentions regarding thedevelopment of products and services; acquisitions and disposals; sharepurchases; the Group's adoption and implementation of IFRS; share repurchases byVodafone Italy; maintenance of credit ratings and overall market trends.Forward-looking statements are sometimes, but not always, identified by theiruse of a date in the future or such words as "anticipates", "aims", "could","may", "should", "expects", "believes", "intends", "plans" or "targets". By their nature, forward-looking statements are inherently predictive,speculative and involve risk and uncertainty because they relate to events anddepend on circumstances that will occur in the future. There are a number offactors that could cause actual results and developments to differ materiallyfrom those expressed or implied by these forward-looking statements particularlythe statements under "Chief Executive's Statement", "Outlook", "One Vodafone"and "Dividends" referred to above. These factors include, but are not limitedto, the following: changes in economic or political conditions in markets servedby operations of the Group that would adversely affect the level of demand formobile services; greater than anticipated competitive activity requiring changesin pricing models and/or new product offerings or resulting in higher costs ofacquiring new customers or providing new services; the impact on capitalspending from investment in network capacity and the deployment of newtechnologies, or the rapid obsolescence of existing technology; slower customergrowth or reduced customer retention; the possibility that technologies,including mobile internet platforms, and services, including 3G services, willnot perform according to expectations or that vendors' performance will not meetthe Group's requirements; changes in the projected growth rates of the mobiletelecommunications industry; the Group's ability to realise expected synergiesand benefits associated with 3G technologies and the integration of ouroperations and those of acquired companies; future revenue contributions of bothvoice and non-voice services offered by the Group; lower than expected impact ofGPRS, 3G and Vodafone live! and other new or existing products, services ortechnologies on the Group's future revenue, cost structure and capitalexpenditure outlays; the ability of the Group to harmonise mobile platforms andany delays, impediments or other problems associated with the roll-out and scopeof 3G technology and services and Vodafone live! and other new or existingproducts, services or technologies in new markets; the ability of the Group tooffer new services and secure the timely delivery of high-quality, reliable GPRSand 3G handsets, network equipment and other key products from suppliers;greater than anticipated prices of new mobile handsets; the ability to realisebenefits from entering into partnerships for developing data and internetservices and entering into service franchising and brand licensing; thepossibility that the pursuit of new, unexpected strategic opportunities may havea negative impact on one or more of the measurements of our financialperformance and may affect the level of dividends; any unfavourable conditions,regulatory or otherwise, imposed in connection with pending or futureacquisitions or dispositions; changes in the regulatory framework in which theGroup operates, including possible action by regulators in markets in which theGroup operates or by the European Commission regulating rates the Group ispermitted to charge; the Group's ability to develop competitive data content andservices which will attract new customers and increase average usage; the impactof legal or other proceedings against the Group or other companies in the mobiletelecommunications industry; the possibility that new marketing campaigns orefforts are not an effective expenditure; the possibility that the Group'sintegration efforts do not increase the speed-to-market of new products orimprove the Group's cost position; changes in exchange rates, includingparticularly the exchange rate of pounds sterling to the euro, US dollar and theJapanese yen; the risk that, upon obtaining control of certain investments, theGroup discovers additional information relating to the businesses of thatinvestment leading to restructuring charges or write-offs or with other negativeimplications; changes in statutory tax rates and profit mix which would impactthe weighted average tax rate; changes in tax legislation in the jurisdictionsin which the Group operates; final resolution of open issues which might impactthe effective tax rate; timing of any tax payments relating to the resolution ofopen issues; and loss of suppliers or disruption of supply chains. Furthermore, a review of the reasons why actual results and developments maydiffer materially from the expectations disclosed or implied withinforward-looking statements can be found under "Risk Factors" contained in ourAnnual Report with respect to the financial year ended 31 March 2004 and in ourAnnual Report with respect to the financial year ended 31 March 2005 which willbe available on www.vodafone.com from 8 June 2005. All subsequent written ororal forward-looking statements attributable to the Company or any member of theGroup or any persons acting on their behalf are expressly qualified in theirentirety by the factors referred to above. No assurance can be given that the forward-looking statements in this documentwill be realised. Neither Vodafone Group nor any of its affiliates intends toupdate these forward-looking statements. Use of Non-GAAP Financial Information In presenting and discussing the Group's reported financial position, operatingresults and cash flows, certain information is derived from amounts calculatedin accordance with UK GAAP, but this information is not itself an expresslypermitted GAAP measure. Such non-GAAP measures should not be viewed in isolationas alternatives to the equivalent GAAP measure. A summary of certain non-GAAP measures included in this results announcement,together with details where additional information and reconciliation to thenearest equivalent GAAP measure can be found, is shown below. Non-GAAP measure Equivalent GAAP Location in measure this results announcement of reconciliation and further information--------------------------------------------------------------------------------Group EBITDA, before exceptional items Operating loss Note 7 on page 31 Mobile EBITDA before exceptional items Total Group Business review operating loss on page 6 Total Group operating profit (before Total Group Note 2 on pagegoodwill amortisation and exceptional operating loss 29items) Profit on ordinary activities before Loss on Group Financialtaxation (before goodwill amortisation ordinary Highlights onand exceptional items) activities page 3 before taxation Operating free cash flow Net cash inflow Cash flows and from operating funding on page activities 22 Free cash flow Net cash inflow Cash flows and from operating funding on page activities 22 Adjusted earnings per share Earnings per Note 6 on page share 30 Proportionate turnover Statutory Proportionate turnover financial information on page 33 Proportionate EBITDA, before Loss for the Proportionateexceptional items financial year financial information on page 34 Proportionate EBITDA, before Loss for the Proportionateexceptional items, excluding the financial year financialimpact of Japan stake changes information on page 34 Effective rate of taxation before Tax on loss on Profit ongoodwill amortisation and exceptional ordinary ordinaryitems activities as a activities percentage of before taxation loss on (before ordinary goodwill activities amortisation before taxation and exceptional items) is shown in Group Financial Highlights on page 3 Tax on loss on ordinary activities Tax on loss on Note 5 on pagebefore exceptional items ordinary 30 activities In addition, the trading results of the Group and key markets present certainGAAP financial information, being revenue and cost of sales related toacquisition and retention activity, on a net basis. The Group believes that thisbasis of presentation provides useful information for investors regarding trendsin net subsidies with respect to the acquisition and retention of customers andfacilitates comparability of results with other companies operating in themobile telecommunications business. "Other revenue", "Net acquisition costs" and"Net retention costs", as used in the trading results, are defined on page 38. Definition of terms Term Definition------------- ------------------------------------------------------------------Organic The percentage movements in organic growth are presented togrowth reflect operating performance on a comparable basis. Where a subsidiary or associated undertaking was newly acquired or disposed of in the current or prior period, the Group adjusts, under organic growth calculations, the results for the current and prior period to remove the amount the Group earned in both periods as a result of the acquisition or disposal of subsidiary or associated undertakings. Where the Group increases, or decreases, its ownership interest in an associated undertaking in the current or prior period, the Group's share of results for the prior period is restated at the current period's ownership level. A further adjustment in organic calculations excludes the effect of exchange rate movements by restating the current period's results as if they had been generated at the prior period's exchange rates. Organic growth for proportionate results is adjusted to reflect current year and prior year results at constant exchange rates, using like-for-like ownership levels in both years. Customer A customer is defined as a SIM, or in territories where SIMs do not exist, a unique mobile telephone number, which has access to the network for any purpose (including data only usage) except telemetric applications. Telemetric applications include, but are not limited to, asset and equipment tracking, mobile payment/ billing functionality (for example, vending machines and meter readings) and includes voice enabled customers whose usage is limited to a central service operation (for example, emergency response applications in vehicles). Active A customer who has made or received a chargeable event in the lastcustomer three months. Vodafone A handset or device equipped with the Vodafone live! portal whichlive! active has made or received a chargeable event in the last month.device 3G device A handset or device capable of accessing 3G data services. ARPU Total revenue excluding handset revenue and connection fees divided by the weighted average number of customers during the period. Average Total ARPU in an accounting period divided by the number of monthsmonthly ARPU in the period. Depreciation This measure includes the profit or loss on disposal of fixedand assets but excludes goodwill amortisation.amortisation Intra-segment Turnover between operating companies of the same business (mobileturnover or non-mobile) within the same reporting segment. Inter-segment Turnover between operating companies of the same business (mobileturnover or non-mobile) in different reporting segments. Non-voice Comprises all service revenue that is not related to voiceservice services including, but not limited to, messaging, downloads,revenue Internet browsing and other data services. Messaging Messaging revenue includes all SMS and MMS revenue includingrevenue wholesale messaging revenue, revenue from the use of messaging services by Vodafone customers roaming away from their home network and customers visiting the local network. Data revenue Data revenue includes all non-voice service revenue excluding messaging. Other revenue Comprises all non-service revenue. In the trading results, presented for the mobile telecommunications business and the Group's key markets, net other revenue excludes revenue relating to acquisition and retention activities as such revenue is deducted from acquisition and retention costs. The Group believes that this basis of presentation provides useful information for investors regarding trends in net subsidies with respect to the acquisition and retention of customers and facilitates comparability of results with other companies operating in the mobile telecommunications business. Net The total of connection fees, trade commissions and equipmentacquisition costs, net of related revenue, relating to new customercosts connections. Net retention The total of trade commissions, loyalty scheme and equipmentcosts costs, net of related revenue, relating to customer retention and upgrade. Churn Total gross customer disconnections in the period divided by the average total customers in the period. EBITDA margin Operating profit before depreciation, amortisation, profit or loss on disposal of fixed assets and exceptional items as a percentage of total turnover. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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