14th Nov 2006 07:04
Vodafone Group Plc14 November 2006 VODAFONE GROUP PLCINTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 PART II CONSOLIDATED INCOME STATEMENT Six months Six months Year ended to 30 to 30 31 September September March 2006 2005 2006 Notes £m £m £m Revenue 2 15,594 14,548 29,350Cost of sales (9,022) (8,399) (17,070) ----------- ----------- -----------Gross profit 6,572 6,149 12,280 Selling and distribution expenses (1,038) (940) (1,876)Administrative expenses (1,800) (1,595) (3,416)Share of result in associated undertakings 1,413 1,187 2,428Impairment losses (8,100) (515) (23,515)Other income and expense 1 - 15 ----------- ----------- -----------Operating (loss)/profit 2 (2,952) 4,286 (14,084) Non-operating income and expense 10 - (2)Investment income 425 165 353Financing costs (813) (540) (1,120) ----------- ----------- -----------(Loss)/profit before taxation (3,330) 3,911 (14,853) Tax on (loss)/profit 4 (1,218) (1,282) (2,380) ----------- ----------- -----------(Loss)/profit for the period from continuing operations (4,548) 2,629 (17,233) (Loss)/profit from discontinued operations (491) 189 (4,588) ----------- ----------- -----------(Loss)/profit for the period (5,039) 2,818 (21,821) =========== =========== ===========Attributable to:- Equity shareholders (5,105) 2,775 (21,916)- Minority interests 66 43 95 Basic (loss)/earnings per share from continuing operations 5 (8.02)p 4.07p (27.66)p Diluted (loss)/earnings per share from continuing operations 5 (8.02)p 4.06p (27.66)p Basic (loss)/earnings per share on (loss)/profit for the period 5 (8.88)p 4.36p (35.01)p Diluted (loss)/earnings per share on (loss)/profit for the period 5 (8.88)p 4.35p (35.01)p CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 £m £m £m Gains on revaluation of available-for-sale investments 641 572 705Exchange differences on translation of foreign operations (3,293) 448 1,494Actuarial gains/(losses) on defined benefit pension schemes 18 - (30)Asset revaluation surplus - - 112Transfer to the income statement on disposal of foreign operations 794 - 36 ----------- ----------- -----------Net (loss)/gain recognised directly in equity (1,840) 1,020 2,317(Loss)/profit for the period (5,039) 2,818 (21,821) ----------- ----------- -----------Total recognised income and expense relating to the period (6,879) 3,838 (19,504) =========== =========== ===========Attributable to:- Equity shareholders (6,931) 3,784 (19,607)- Minority interests 52 54 103 CONSOLIDATED BALANCE SHEET 30 September 30 September 31 March 2006 2005 2006 Notes £m £m £m Non-current assetsGoodwill 44,330 81,919 52,606Other intangible assets 16,203 15,873 16,512Property, plant and equipment 13,248 17,844 13,660Investments in associated undertakings 21,879 22,063 23,197 Other investments 3,762 1,859 2,119Deferred tax assets 450 973 140Post employment benefits 33 19 19Trade and other receivables 466 217 361 ----------- ----------- ----------- 100,371 140,767 108,614 ----------- ----------- -----------Current assetsInventory 356 536 297Taxation recoverable 2 68 8Trade and other receivables 4,963 6,068 4,438Cash and cash equivalents 789 1,400 2,789 ----------- ----------- ----------- 6,110 8,072 7,532 ----------- ----------- -----------Assets included in disposal group held for resale 914 - 10,592 ----------- ----------- -----------Total assets 107,395 148,839 126,738 =========== =========== ===========EquityCalled up share capital 10 4,166 4,292 4,165Share premium account 10 43,443 52,401 52,444Own shares held 10 (8,153) (7,608) (8,198)Additional paid in capital 10 100,191 100,100 100,152Capital redemption reserve 10 9,121 - 128Accumulated other recognised income and expense 11 2,264 2,790 4,090 Retained losses 12 (83,656) (38,204) (67,356) ----------- ----------- -----------Total equity shareholders' funds 67,376 113,771 85,425 Minority interests 197 (115) (113) ----------- ----------- -----------Total equity 67,573 113,656 85,312 ----------- ----------- -----------Non-current liabilitiesLong-term borrowings 17,014 13,945 16,750Deferred tax liabilities 4,901 5,241 5,670Post employment benefits 107 128 120Trade and other payables 567 469 566Provisions for other liabilities and charges 273 340 265 ----------- ----------- ----------- 22,862 20,123 23,371 ----------- ----------- -----------Current liabilitiesShort-term borrowings:Third parties 3,539 1,256 3,070Related parties 575 770 378Current taxation liabilities 4,911 4,639 4,448Trade and other payables 7,768 8,212 7,477Provisions for other liabilities and charges 167 183 139 ----------- ----------- ----------- 16,960 15,060 15,512 ----------- ----------- -----------Liabilities included in disposal group held for resale - - 2,543 ----------- ----------- -----------Total equity and liabilities 107,395 148,839 126,738 =========== =========== =========== CONSOLIDATED CASH FLOW STATEMENT Six months Six months to 30 to 30 Year ended September September 31 March 2006 2005 2006 Note £m £m £m Net cash flows from operating activities 7 4,975 6,084 11,841 ----------- ----------- -----------Cash flows from investing activitiesPurchase of interests in subsidiary undertakings and joint ventures, net of cash acquired (2,585) (1,887) (4,186)Disposal of interests in subsidiary undertakings, net of cash disposed 6,799 - 599Purchase of intangible fixed assets (298) (252) (690)Purchase of property, plant and equipment (1,892) (2,328) (4,481)Purchase of investments (154) (1) (57)Disposal of property, plant and equipment 11 10 26Disposal of investments - 1 1Dividends received from associated undertakings 371 375 835Dividends received from investments 57 41 41Interest received 256 135 319 ----------- ----------- -----------Net cash flows from investing activities 2,565 (3,906) (7,593) ----------- ----------- -----------Cash flows from financing activitiesIssue of ordinary share capital and re-issue of treasury shares 39 274 356Net movement in short-term borrowings 426 - 708Proceeds from issue of long-term borrowings 2,451 765 5,256Repayment of borrowings (453) (1,121) (1,371)Loans repaid to associated undertakings - (47) (47)Purchase of treasury shares (43) (2,750) (6,457)'B' share capital redemption (5,707) - -'B' share preference dividends paid (3,286) - -Equity dividends paid (2,315) (1,382) (2,749)Dividends paid to minority shareholders in subsidiary undertakings (34) (21) (51)Interest paid (499) (349) (721) ----------- ----------- -----------Net cash flows from financing activities (9,421) (4,631) (5,076) ----------- ----------- -----------Net decrease in cash and cash equivalents (1,881) (2,453) (828) Cash and cash equivalents at beginning of the period 2,932 3,726 3,726 Exchange (losses)/gains on cash and cash equivalents (275) 90 34 ----------- ----------- -----------Cash and cash equivalents at end of the period 776 1,363 2,932 =========== =========== =========== NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 1 Basis of preparation The unaudited Interim Consolidated Financial Statements ("Interim ConsolidatedFinancial Statements") for the six months ended 30 September 2006 have beenprepared on a basis consistent with the accounting policies set out in VodafoneGroup Plc's Annual Report for the year ended 31 March 2006. The InterimConsolidated Financial Statements should therefore be read in conjunction withthe 2006 Annual Report. The Interim Consolidated Financial Statements for the six months ended 30September 2006, which were approved by the Board of directors on 14 November2006, do not constitute statutory accounts within the meaning of section 240 ofthe Companies Act 1985. The information relating to the year ended 31 March 2006 is an extract from thepublished Annual Report for that year, which has been delivered to the Registrarof Companies, and on which the Auditors' Report was unqualified and did notcontain statements under section 237(2) or 237(3) of the UK Companies Act 1985. The Interim Consolidated Financial Statements are prepared in accordance withInternational Financial Reporting Standards ("IFRS") (including InternationalAccounting Standards ("IAS") and interpretations issued by the InternationalAccounting Standards Board ("IASB") and its committees, and as interpreted byany regulatory bodies applicable to the Group as adopted for use in the EuropeanUnion ("EU"), the Companies Act 1985 and Article 4 of the IAS Regulations, andon a historical cost basis except for certain financial and equity instrumentsthat have been measured at fair value. The Interim Consolidated Financial Statements for the six months ended 30September 2006, and for the six months ended 30 September 2005, have beenprepared by the Group in accordance with IAS 34 "Interim Financial Reporting".IFRS differs in certain material respects from US GAAP (see note 15). The preparation of the Interim Consolidated Financial Statements requiresmanagement to make estimates and assumptions that affect the reported amounts ofassets and liabilities, and disclosure of contingent assets and liabilities atthe balance sheet date, and the reported amounts of revenue and expenses duringthe reporting period. Actual results could vary from these estimates. Theestimates and underlying assumptions are reviewed on an ongoing basis. Revisionsto accounting estimates are recognised in the period in which the estimate isrevised if the revision affects only that period or in the period of therevision and future periods if the revision affects both current and futureperiods. In May 2006, the Group announced changes to the organisational structure of itsoperations, effective from 1 May 2006. The segmental analysis in note 2 ispresented in accordance with the new organisation structure. Amounts in the Interim Consolidated Financial Statements are stated in poundssterling (£), unless otherwise stated. 2 Segmental and other analyses The Group's principal business is the supply of telecommunications services andproducts. The Group's analyses of revenue and operating profit for discontinuedoperations are shown in note 9. Analyses of revenue and operating profit bygeographical region for the Group's continuing operations are as follows: Six months ended 30 September 2006 (1) Intra- Inter- Segment Joint Common region Regional region Net revenue Subsidiaries ventures Eliminations functions revenue revenue revenue revenue £m £m £m £m £m £m £m £m £mRevenue Germany 2,827 (29) 2,798 (42) 2,756Italy 2,174 (27) 2,147 (3) 2,144Spain 2,268 (65) 2,203 (2) 2,201UK 2,549 (29) 2,520 (5) 2,515Other Europe 2,216 (54) 2,162 (2) 2,160 --------------------------------------------------------------------------------------Europe 12,034 9,865 2,174 (5) (204) 11,830 (54) 11,776 --------------------------------------------------------------------------------------Eastern Europe 1,162 - 1,162 (16) 1,146Middle East, Africa and Asia 1,247 - 1,247 (5) 1,242Pacific 666 - 666 (4) 662 --------------------------------------------------------------------------------------EMAPA 3,075 2,051 1,030 (6) - 3,075 (25) 3,050 --------------------------------------------------------------------------------------Other 706 706 - - 86 - 792 (24) 768 -------------------------------------------------------------------------------------- 15,815 12,622 3,204 (11) 86 (204) 15,697 (103) 15,594 ====================================================================================== (1) (2) Adjusted Segment Joint Common Operating Other operating result Subsidiaries ventures Associates functions (loss) adjustments profit /profit £m £m £m £m £m £m £m £mAdjusted operating profit Germany (5,976) (5,976) 6,700 724Italy (561) (561) 1,400 839Spain 585 585 - 585UK 318 318 - 318Other Europe 528 528 - 528 ----------------------------------------------------------------------------------------Europe (5,106) (4,547) (561) 2 (5,106) 8,100 2,994 ----------------------------------------------------------------------------------------Eastern Europe 118 118 - 118Middle East, Africa and Asia 339 339 - 339Pacific 66 66 - 66Associates - US 1,021 1,021 (6) 1,015 Associates - Other 390 390 - 390 ----------------------------------------------------------------------------------------EMAPA 1,934 308 215 1,411 1,934 (6) 1,928 ----------------------------------------------------------------------------------------Other 83 83 - - 137 220 (1) 219 ---------------------------------------------------------------------------------------- (3,089) (4,156) (346) 1,413 137 (2,952) 8,093 5,141 ======================================================================================== Notes: (1) Common functions represents results from Partner Markets and unallocated central Group income and expenses (2) Comprises impairments to the carrying value of goodwill relating to the mobile operations in Germany and Italy amounting to £8,100 million offset by £6 million of non-operating income in relation to the Group's associated undertakings and £1 million of other items Six months ended 30 September 2005 (1) Intra- Inter- Segment Joint Common region Regional region Net revenue Subsidiaries ventures Eliminations functions revenue revenue revenue revenue £m £m £m £m £m £m £m £m £mRevenue Germany 2,913 (25) 2,888 (56) 2,832Italy 2,240 (22) 2,218 (3) 2,215Spain 1,968 (58) 1,910 (1) 1,909UK 2,568 (25) 2,543 (4) 2,539Other Europe 2,437 (47) 2,390 (1) 2,389 -----------------------------------------------------------------------------------------Europe 12,126 9,892 2,240 (6) (177) 11,949 (65) 11,884 -----------------------------------------------------------------------------------------Eastern Europe 618 - 618 (4) 614Middle East, Africa and Asia 755 - 755 (5) 750Pacific 636 - 636 (5) 631 -----------------------------------------------------------------------------------------EMAPA 2,009 1,383 632 (6) - 2,009 (14) 1,995 -----------------------------------------------------------------------------------------Other 622 622 - - 70 - 692 (23) 669 ----------------------------------------------------------------------------------------- 14,757 11,897 2,872 (12) 70 (177) 14,650 (102) 14,548 ========================================================================================= (1) (2) Adjusted Segment Joint Common Operating Other operating result Subsidiaries ventures Associates functions profit adjustments profit /(loss) £m £m £m £m £m £m £m £mAdjusted operating profit Germany 775 775 - 775Italy 923 923 - 923Spain 529 529 - 529UK 320 320 - 320Other Europe (23) (23) 515 492 ----------------------------------------------------------------------------------------Europe 2,524 1,598 923 3 2,524 515 3,039 ----------------------------------------------------------------------------------------Eastern Europe 90 90 - 90Middle East, Africa and Asia 236 236 - 236Pacific 58 58 - 58Associates - US 772 772 - 772Associates - Other 415 415 (19) 396 ----------------------------------------------------------------------------------------EMAPA 1,571 214 170 1,187 1,571 (19) 1,552 ----------------------------------------------------------------------------------------Other 38 38 - - 153 191 - 191 ---------------------------------------------------------------------------------------- 4,133 1,850 1,093 1,190 153 4,286 496 4,782 ======================================================================================== Notes: (1) Common functions represents results from Partner Markets and unallocated central Group income and expenses (2) Comprises impairment to the carrying value of goodwill relating to the mobile operations in Sweden amounting to £515 million offset by £19 million of non-operating income in relation to the Group's associated undertakings Year ended 31 March 2006 (1) Intra- Inter- Segment Joint Common region Regional region Net revenue Subsidiaries ventures Eliminations functions revenue revenue revenue revenue £m £m £m £m £m £m £m £m £mRevenue Germany 5,754 (52) 5,702 (100) 5,602Italy 4,363 (39) 4,324 (4) 4,320Spain 3,995 (100) 3,895 (2) 3,893UK 5,048 (50) 4,998 (10) 4,988Other Europe 4,697 (78) 4,619 (3) 4,616 -----------------------------------------------------------------------------------------Europe 23,857 19,503 4,363 (9) (319) 23,538 (119) 23,419 -----------------------------------------------------------------------------------------Eastern Europe 1,435 - 1,435 (14) 1,421 Middle East, Africa and Asia 1,784 - 1,784 (15) 1,769Pacific 1,335 - 1,335 (14) 1,321 -----------------------------------------------------------------------------------------EMAPA 4,554 3,077 1,489 (12) - 4,554 (43) 4,511 -----------------------------------------------------------------------------------------Other 1,320 1,320 - - 145 1,465 (45) 1,420 ----------------------------------------------------------------------------------------- 29,731 23,900 5,852 (21) 145 (319) 29,557 (207) 29,350 ========================================================================================= (1) (2) Adjusted Segment Joint Common Operating Other operating result Subsidiaries ventures Associates functions (loss) adjustments profit /profit £m £m £m £m £m £m £m £mAdjusted operating profit Germany (17,904) (17,904) 19,400 1,496Italy (1,928) (1,928) 3,600 1,672Spain 968 968 - 968UK 698 698 - 698Other Europe 466 466 512 978 -----------------------------------------------------------------------------------------Europe (17,700) (15,777) (1,928) 5 (17,700) 23,512 5,812 -----------------------------------------------------------------------------------------Eastern Europe 176 176 - 176Middle East, Africa and Asia 523 523 - 523Pacific 140 140 - 140Associates - US 1,732 1,732 - 1,732Associates - Other 683 683 (17) 666 -----------------------------------------------------------------------------------------EMAPA 3,254 472 367 2,415 3,254 (17) 3,237 -----------------------------------------------------------------------------------------Other 147 139 - 8 215 362 (12) 350 ----------------------------------------------------------------------------------------- (14,299) (15,166) (1,561) 2,428 215 (14,084) 23,483 9,399 ========================================================================================= Notes: (1) Common functions represents results from Partner Markets and unallocated central Group income and expenses (2) Comprises impairments to the carrying value of goodwill relating to the mobile operations in Germany, Italy and Sweden amounting to £23,515 million offset by £17 million of non-operating income in relation to the Group's associated undertakings and £15 million of other items 3 Impairment losses Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 £m £m £mGermany 6,700 - 19,400Italy 1,400 - 3,600Sweden - 515 515 --------- --------- --------- 8,100 515 23,515 ========== ========= ========= The carrying value of goodwill of the Group's operations in Germany and Italy,with each representing a reportable segment, has been impaired following a testfor impairment triggered by an increase in long term interest rates andincreased price competition in the German market along with continued regulatorypressures. The increase in long term interest rates, which led to higherdiscount rates, resulted in a reduction in value of £3.7 billion. The impairment losses were based on value in use calculations using pre-tax risk adjusted discount rates and are recognised in the income statement, as a separate line item within operating profit. The carrying values of the Group's operations inGermany and Italy equal their respective ammounts at 30 September 2006 and consequently, any adverse change in a key assumption may cause a furtherimpairment loss to be recognised. Key assumptions The following assumptions have been used in determining the value in use: Germany Italy ------------------------------ ---------------------------- 30 September 31 March 30 September 31 March 2006 2006 2006 2006 % % % %Pre-tax risk adjusted discount rate 10.4 10.1 10.9 10.1 Budgeted EBITDA(1) (5.1) 0.3 (0.7) (1.8)Budgeted capital expenditure(2) 7.7 - 7.4 9.3 - 9.0 9.8 - 8.5 13.4 - 8.5Long term growth rate 1.1 1.1 1.5 1.5 ============= ============ ============= ============= Notes: (1) Compound annual growth in the initial five years of the Group's approved financial plans (2) Range of capital expenditure as a percentage of revenue in the initial five years of the Group's approved financial plans 4 Taxation Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 £m £m £mUnited Kingdom corporation tax (credit)/charge at 30% (2005: 30%): Current year - 41 169 Adjustments in respect of prior years (39) - (15) Overseas corporation tax: Current year 2,084 1,018 2,077 Adjustments in respect of prior years (162) (134) (418) -------- -------- --------Total current tax charge 1,883 925 1,813 -------- -------- --------Deferred tax: United Kingdom deferred tax (50) 218 444 Overseas deferred tax (615) 139 123 -------- -------- --------Deferred tax (credit)/charge (665) 357 567 -------- -------- --------Total tax charge 1,218 1,282 2,380 ======== ======== ======== 5 (Loss)/earnings per share Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006Weighted average number of shares for basic (loss)/earnings per share (millions) 57,515 63,694 62,607 Weighted average number of shares for diluted (loss)/earnings per share (millions)(1) 57,515 63,842 62,607 Basic (loss)/earnings per share from continuing operations (8.02)p 4.07p (27.66)p Diluted (loss)/earnings per share from continuing operations (8.02)p 4.06p (27.66)p Basic (loss)/earnings per share on (loss)/ profit for the period (8.88)p 4.36p (35.01)p Diluted (loss)/earnings per share on (loss) /profit for the period (8.88)p 4.35p (35.01)p Adjusted basic earnings per share 5.98p 5.08p 10.11pAdjusted diluted earnings per share(1) 5.97p 5.07p 10.08p Six months to Six months to Year ended 31 30 September 30 September March 2006 2005 2006 £m £m £m Amounts attributable to equity shareholders:(Loss)/profit for the period (5,105) 2,775 (21,916)Loss/(profit) from discontinued operations 494 (185) 4,598 -------- --------- ---------(Loss)/profit for (loss)/earnings per share from continuing operations (4,611) 2,590 (17,318)Adjustments:- Share of associated undertakings' non-operating income (6) (19) (17)- Impairment losses 8,100 515 23,515- Other income and expense (1) - (15)- Non-operating income and expense (10) - 2- Changes in the fair value of equity put rights and similar arrangements(2)(3) (21) 151 161- Foreign exchange(3)(4) (8) - -- Tax on items not related to underlying business performance (2) - - -------- --------- ---------Profit for adjusted earnings per share 3,441 3,237 6,328 ======== ========= ========= Notes: (1) In the six months ended 30 September 2006, 140 million (year ended 31 March 2006: 183 million) shares have been excluded from the calculation of the weighted average number of shares as they are anti dilutive. The weighted average number of shares for adjusted diluted earnings per share from continuing operations was 57,655 million (31 March 2006: 62,790 million), including the 140 million (31 March 2006: 183 million) shares. (2) Comprises the fair value movement in relation to the potential put rights held by Telecom Egypt over its 25.5% interest in Vodafone Egypt and the fair value of a financial liability in relation to the minority partners of Arcor, the Group's non-mobile operation in Germany. Following the sale of 16.9% of Vodafone Egypt to Telecom Egypt in preceding periods, the Group signed a shareholder agreement with Telecom Egypt setting out the basis under which the Group and Telecom Egypt would each contribute a 25.5% interest in Vodafone Egypt to a newly formed company to be 50% owned by each party. Within this shareholder agreement, Telecom Egypt was granted a put option over its entire interest in Vodafone Egypt giving Telecom Egypt the right to put its shares back to the Group at deemed fair value. In the 2006 financial year, the shareholder agreement between Telecom Egypt and Vodafone expired and the associated rights and obligations contained in the shareholder agreement terminated, including the aforementioned put option. However, the original shareholders agreement contained an obligation on both parties to use reasonable efforts to renegotiate a revised shareholder agreement for their direct shareholding in Vodafone Egypt on substantially the same terms as the original agreement. During the period, the parties agreed to abandon such efforts and as such the financial liability relating to the initial shareholder agreement was released from the Group's balance sheet. Fair value movements are determined by the reference to the quoted share price of Vodafone Egypt. For the period ended 30 September 2006, a credit of £34 million was recognised. The capital structure of Arcor provides all partners, including Vodafone, the right to withdraw capital from 31 December 2026 onwards and this right in relation to the minority partner has been recognised as a financial liability. Fair value movements are determined by reference to a calculation of enterprise value of the partnership. For the period ended 30 September 2006, a charge of £13 million was recognised. The valuation of this financial liability is inherently unpredictable and changes in the fair value could have a material impact on the future results and financial position of the Group. (3) Changes in the fair value of equity put rights and similar arrangements and foreign exchange are included in investment income and financing costs. (4) Comprises the foreign exchange reflected in the income statement in relation to certain intercompany balances, and the foreign exchange on financial instruments received as consideration in the disposal of Vodafone Japan to SoftBank, which completed in April 2006. 6 Dividends Six months Six months Year to to ended 30 September 30 September 31 March 2006 2005 2006 £m £m £mEquity dividends on ordinary shares: Declared and paid during the period: Final dividend for the year ended 31 March 2006:3.87 pence per share (2005: 2.16 pence per share) 2,328 1,395 1,386 Interim dividend for the year ended 31 March 2006:2.20 pence per share - - 1,367 --------- --------- --------- 2,328 1,395 2,753 ========= ========= =========Proposed or declared but not recognised as aliability: Final dividend for the year ended 31 March 2006:3.87 pence per share - - 2,327 ========= ========= =========Interim dividend for the year ended 31 March 2007:2.35 pence per share (2006: 2.20 pence per share) 1,238 1,376 - ========= ========= ========= 7 Cash flow information Reconciliation of net cash flows from operating activities: Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 £m £m £m (Loss)/profit for the period from continuing operations (4,548) 2,629 (17,233) (Loss)/profit for the period from discontinued operations (491) 189 (4,588) Adjustments(1): Tax on (loss)/profit 1,088 1,289 2,520 Depreciation and amortisation 2,488 2,871 5,834 Loss on disposal of property, plant and equipment 19 35 88 Share of result in associated undertakings (1,413) (1,187) (2,428) Impairment losses 8,100 515 28,415 Other income and expense (1) - (15) Non operating income and expense (10) (1) 2 Investment income (425) (169) (353) Financing costs 805 540 1,123 Loss on disposal of discontinued operations 747 - - -------- -------- --------Operating cash flows before movements in working capital 6,359 6,711 13,365 (Increase)/decrease in inventory (92) (85) 23 (Increase)/decrease in trade and other receivables (868) (207) 54 Increase in payables 793 332 81 -------- -------- --------Cash generated by operations 6,192 6,751 13,523Tax paid (1,217) (667) (1,682) -------- -------- --------Net cash flows from operating activities 4,975 6,084 11,841 ======== ======== ======== Note: (1) Adjustments includes amounts relating to continuing and discontinued operations Cash flows from discontinued operations: Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 £m £m £m Net cash flows from operating activities 135 857 1,651Net cash flows from investing activities (266) (405) (939)Net cash flows from financing activities (29) (452) (536) -------- -------- --------Net (decrease)/increase in cash and cash equivalents (160) - 176Cash and cash equivalents at the beginning of the period 161 4 4Exchange loss on cash and cash equivalents (1) - (19) -------- -------- --------Cash and cash equivalents at the end of the period - 4 161 ======== ======== ======== 8 Acquisitions On 24 May 2006, the Group acquired substantially all the assets and business ofTelsim Mobil Telekomunikasyon Hizmetleri ("Telsim") from the Turkish Savings andDeposit Insurance Fund for consideration of approximately US$4.7 billion. Inaddition to the consideration price, the Group is due to pay US$0.4 billion ofVAT, which is recoverable against Telsim's future VAT liabilities. The Group didnot acquire Telsim's liabilities, other than certain minor employee-relatedliabilities and outstanding service credits to be fulfilled. The initialpurchase price allocation has been determined to be provisional pending thecompletion of the final valuation of the fair value of assets acquired. Thetransaction has been accounted for by the purchase method of accounting. Fair value Book value adjustments Fair value £m £m £mNet assets acquired: Identifiable intangible assets 13 846 859Property, plant and equipment 168 - 168Inventory 2 - 2Trade and other receivables 178 - 178Trade and other payables (252) - (252) ----------- ---------- --------- 109 846 955 =========== ==========Goodwill 1,606 ---------Total consideration (including £30 million of directly attributable costs) 2,561 ========= Of the £2,561 million total consideration, the Group had paid £2,547 million at30 September 2006. The goodwill is attributable to the profitability of the acquired business andthe synergies expected to arise after the Group's acquisition of Telsim. Results of the acquired business and assets have been consolidated in the incomestatement from the date of acquisition, 24 May 2006. The following unaudited pro forma summary presents the Group as if Telsim hadbeen acquired on 1 April 2006 or 1 April 2005, respectively. The pro formaamounts include the results of Telsim, amortisation of the acquired intangiblesassets recognised on acquisition and the interest expenses on debt issued as aresult of the acquisition. The pro forma amounts do not include any possiblesynergies from mergers and acquisitions. The pro forma information is providedfor comparative purposes only and does not necessarily reflect the actualresults that would have occurred, nor is it necessarily indicative of futureresults of operations of the combined companies. Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 £m £m £m Revenue 15,736 14,777 29,822 (Loss)/profit for the period (5,097) 2,628 (22,281) (Loss)/profit attributable to equity shareholders (5,163) 2,585 (22,376) Basic (loss)/earnings per share (8.98)p 4.06p (35.74)p Diluted (loss)/earnings per share (8.98)p 4.05p (35.74)p 9 Disposals Japan - Vodafone K.K. On 17 March 2006, the Group announced an agreement to sell its 97.7% holding inVodafone K.K. to SoftBank. The transaction completed on 27 April 2006 with theGroup receiving cash of approximately Y1.42 trillion (£6.9 billion) includingthe repayment of intercompany debt of Y0.16 trillion (£0.8 billion). Inaddition, the Group received non-cash consideration with a fair value ofapproximately Y0.23 trillion (£1.1 billion), comprised of preferred equity and asubordinated loan. SoftBank also assumed debt of approximately Y0.13 trillion(£0.6 billion). Vodafone K.K. represented a separate geographical area ofoperation and, on this basis, Vodafone K.K. was treated as a discontinuedoperation in Vodafone Group Plc's Annual Report for the year ended 31 March2006. A loss of £0.7 billion arose on the disposal, being the proceeds less thecarrying amount of Vodafone K.K.'s net assets and attributable goodwill togetherwith cumulative exchange difference transferred to the income statement ondisposal. £mNet assets disposed: Intangible assets 3,972Property, plant and equipment 4,562Inventory 148Trade and other receivables 1,147Deferred tax assets 391Cash and cash equivalents 124Short and long term borrowings (674)Trade and other payables(1) (2,382) --------- 7,288Minority interests (87) --------- Net assets disposed 7,201 Total consideration 7,245 Other effects: transfer of foreign exchange differences to the income statement on disposal (794)Other effects: other 3 --------- Loss on disposal (747) =========Net cash inflow arising on disposal:Cash consideration 6,141Cash to repay intercompany debt 793Cash and cash equivalents disposed (124) --------- 6,810 =========Note:(1) Includes £793 million of intercompany debt Analysis of loss from discontinued operations Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 £m £m £m Service revenue 376 2,704 5,264Equipment revenue 144 1,000 2,004 ------- ------- -------Segment revenue 520 3,704 7,268Eliminations - (1) (2) ------- ------- -------Net revenue 520 3,703 7,266Operating expenses (402) (2,899) (5,667)Depreciation and amortisation(1) - (613) (1,144)Impairment loss - - (4,900) ------- ------- -------Operating profit/(loss) 118 191 (4,445)Non-operating income and expense - 1 -Net financing income/(costs) 8 4 (3) ------- ------- -------Profit/(loss) before taxation from discontinued operations 126 196 (4,448)Taxation related to performance of discontinued operations (15) (7) 7Loss on disposal(2) (747) - -Taxation relating to classification of the discontinued operations 145 - (147) ------- ------- -------(Loss)/profit from discontinued operations(3) (491) 189 (4,588) ======= ======= =======Basic (loss)/earnings per share from discontinued operations (0.86)p 0.29p (7.35)p Diluted (loss)/earnings per share from discontinued operations (0.86)p 0.29p (7.35)p Notes: (1) Including gains and losses on disposal of fixed assets (2) Includes £794 million of foreign exchange differences transferred to the income statement on disposal (3) Amount attributable to equity shareholders for the six months ended 30 September 2006 was £(494) million (30 September 2005: £185 million; 31 March 2006: £(4,598) million) 10 Transactions with equity shareholders Called up Share Additional Capital share premium Own shares paid in redemption capital account held capital reserve £m £m £m £m £m 1 April 2005 4,286 52,284 (5,121) 100,081 - Issue of new shares 6 110 - (37) -Purchase of treasury shares - - (2,802) - -Own shares released on vesting of share awards - 7 315 (7) - Share-based payment charge, inclusive of tax credit of £4 million - - - 63 - -------- -------- -------- ------- -------30 September 2005 4,292 52,401 (7,608) 100,100 - Issue of new shares 1 42 - (7) -Purchase of treasury shares - - (3,698) - -Own shares released on vesting of share awards - 1 55 (1) - Cancellation of treasury shares (128) - 3,053 - 128Share-based payment charge, inclusive of tax credit of £5 million - - - 60 - -------- -------- -------- ------- -------31 March 2006 4,165 52,444 (8,198) 100,152 128 Issue of new shares 1 25 - (7) -Own shares released on vesting of share awards - - 45 - -Share consolidation - (9,026) - - -'B' share capital redemption - - - - 5,707'B' share preference dividend - - - - 3,286Share-based payment charge, inclusive of tax charge of £3 million - - - 46 - -------- -------- -------- ------- -------30 September 2006 4,166 43,443 (8,153) 100,191 9,121 ======== ======== ======== ======= ======= 11 Movements in accumulated other recognised income and expense Available-for -sale Asset Translation Pensions investments revaluation reserve Reserve reserve surplus Total £m £m £m £m £m 1 April 2005 1,521 (79) 339 - 1,781 Gains arising in the period 437 - 574 - 1,011Tax effect - - (2) - (2) -------- -------- -------- ------- -------30 September 2005 1,958 (79) 911 - 2,790 Gains/(losses) arising in the period 1,049 (43) 136 112 1,254Transfer to the income statement ondisposal of foreign operations 36 - - - 36Tax effect - 13 (3) - 10 -------- -------- -------- ------- -------31 March 2006 3,043 (109) 1,044 112 4,090 (Losses)/gains arising in the period (3,279) 26 641 - (2,612)Transfer to the income statement ondisposal of foreign operations 794 - - - 794Tax effect - (8) - - (8) -------- -------- -------- ------- -------30 September 2006 558 (91) 1,685 112 2,264 ======== ======== ======== ======= ======= 12 Movement in retained losses 30 September 30 September 31 March 2006 2005 2006 £m £m £m 1 April (67,356) (39,511) (39,511)(Loss)/profit for the period (5,105) 2,775 (21,916)Dividends (2,328) (1,395) (2,753)Gain on expiration of equity put right 142 - -Loss on reissue of treasury shares (16) (73) (123)Cancellation of shares - - (3,053)'B' share capital redemption (5,707) - -'B' share preference dividend (3,286) - - --------- --------- --------- 30 September / 31 March (83,656) (38,204) (67,356) ========= ========= ========= 13 Related party transactions Transactions between the Company and its subsidiaries, joint ventures andassociates represent related party transactions. Transactions with subsidiarieshave been eliminated on consolidation. Transactions between the Company and itsjoint ventures are not material to the extent that they have not been eliminatedthrough proportionate consolidation. Except as disclosed below, no materialrelated party transactions have been entered into, during the period, whichmight reasonably affect any decisions made by users of these InterimConsolidated Financial Statements. Six months to Six months to Year ended 30 September 30 September 31 March 2006 2005 2006 £m £m £mTransactions with associated undertakings: - Sales of goods and services 160 153 288 ========= ========= =========- Purchase of goods and services 163 186 268 ========= ========= ========= Amounts owed to joint ventures included within short-term borrowings 575 770 378 ========= ========= ========= In the six months ended 30 September 2006, the Group made contributions todefined benefit pension schemes of £30 million (six months ended 30 September2005: £24 million, year ended 31 March 2006: £85 million). Compensation paid to the Company's Board of directors and members of theExecutive Committee will be disclosed in the Group's Annual Report for the yearending 31 March 2007. 14 Other matters Contingent liabilities There have been no material changes to the Group's contingent liabilitiesrelating to performance bonds and credit guarantees in the six months ended 30September 2006. There have been no changes to any legal or arbitrationproceedings involving the Group in the six months ended 30 September 2006 whichare expected to have, or have had, a material effect on the financial positionor profitability of the Group. Seasonality or cyclicality of interim operations The Group's financial results and cash flows have, historically, been subject toseasonal trends between the first and second half of the financial year.Traditionally, the Christmas period sees a higher volume of customerconnections, contributing to higher equipment and connection revenue in thesecond half of the financial year and increased acquisition costs. Ongoingairtime revenue also demonstrates signs of seasonality, with revenue generallylower during February, which is a shorter than average month, and revenue fromroaming charges higher during the summer months as a result of increased travelby customers. There is no assurance that these trends will continue in thefuture. Events after the balance sheet date On 25 August 2006, the Group announced the sale of its 25% interest in Proximus,the Group's associated undertaking in Belgium, for consideration of €2.0billion. The sale completed on 3 November 2006. On 8 November 2006, the Group announced its intention to launch a tender offerfor an additional 4.9% of the shares in Vodafone Egypt for a maximum possibleconsideration of approximately £108 million. Telecom Egypt has given anirrevocable undertaking to accept the tender in respect of at least 3.97% and upto 4.69% of the shares in Vodafone Egypt. If fully accepted, this tender offerwill take Vodafone's shareholding in its Egyptian subsidiary to 55%, with afurther 45% held by Telecom Egypt. Subject to regulatory approvals, the tenderoffer is expected to be launched later in November 2006. Changes in estimates There has been no material changes in estimates of amounts reported in the sixmonths ended 30 September 2006 or in the prior financial year. Issuances and repayment of debt See "Cash Flows and Funding" on pages 19 to 20 for details of issuances andrepayment of debt. 15 Summary of differences between IFRS and US GAAP The unaudited Interim Consolidated Financial Statements have been prepared inaccordance with IFRS, which differ in certain significant respects from USGenerally Accepted Accounting Principles ("US GAAP"). The following is a summaryof the effects of the adjustments from IFRS to US GAAP. Financial information asat 30 September 2005 and for the six months then ended has been adjusted for theadoption of SFAS No 123 (Revised 2004). 30 September 30 September 31 March 2006 2005 2006 (Adjusted) £m £m £mRevenue (IFRS) 15,594 14,548 29,350 Items (decreasing)/increasing revenue: Discontinued operations (31) (536) (944) Basis of consolidation (3,139) (2,821) (5,756) Connection revenue 170 598 1,106 --------- --------- --------- Revenue (US GAAP) 12,594 11,789 23,756 ========= ========= ========= (Loss)/profit for the period (IFRS) (5,039) 2,818 (21,821) Items (increasing)/decreasing net loss: Investments accounted for under the equity method (733) (2,426) (1,230) Connection revenue and costs 2 6 10 Goodwill and other intangible assets (6,681) (7,191) (14,299) Impairment losses 6,700 (368) 15,377 Amortisation of capitalised interest (54) (54) (108) Interest capitalised during the period 23 15 36 Other 670 47 (42) Income taxes 2,650 2,600 8,902 Minority interests (66) (43) (95) --------- --------- --------- Net loss (US GAAP) (2,528) (4,596) (13,270) ========= ========= ========= Total equity (IFRS) 67,573 113,656 85,312 Items increasing/(decreasing) shareholders'equity: Investments accounted for under the equity method (2,883) (3,340) (2,287) Connection revenue and costs (3) (9) (5) Goodwill and other intangible assets 32,232 23,824 32,552 Capitalised interest 1,382 1,490 1,443 Other 60 207 210 Income taxes (25,382) (36,229) (30,354) Minority interests (197) 115 113 --------- --------- --------- Shareholders' equity (US GAAP) 72,782 99,714 86,984 ========= ========= ========= INDEPENDENT REVIEW REPORT BY DELOITTE & TOUCHE LLP TO VODAFONE GROUP PLC Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 September 2006 which comprise the consolidated incomestatement, the consolidated balance sheet, the consolidated statement ofrecognised income and expense, the consolidated cash flow statement and relatednotes 1 to 15. We have read the other information contained in the InterimConsolidated Financial Statements and considered whether it contains anyapparent misstatements or material inconsistencies with the financialinformation. This report is made solely to the Company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the Company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe Company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The Interim Consolidated Financial Statements, including the financialinformation contained therein, is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the InterimConsolidated Financial Statements in accordance with the Listing Rules of theFinancial Services Authority and the requirements of IAS 34 which require thatthe accounting policies and presentation applied to the interim figures areconsistent with those applied in preparing the preceding annual accounts exceptwhere any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2006. Deloitte & Touche LLPChartered AccountantsLondon14 November 2006 Basis of preparation The tables of financial information below are presented on a proportionate basisfrom continuing operations. Proportionate presentation is not a measurerecognised under IFRS and is not intended to replace the full year resultsprepared in accordance with IFRS. However, since significant entities in whichthe Group has an interest are not consolidated, proportionate information isprovided as supplemental data to facilitate a more detailed understanding andassessment of the full year results prepared in accordance with IFRS. IFRS requires consolidation of entities which the Group has the power to controland allows either proportionate consolidation or equity accounting for jointventures. IFRS also requires equity accounting for interests in which the Grouphas significant influence but not a controlling interest. The proportionate presentation, below, is a pro rata consolidation, whichreflects the Group's share of revenue and expenses in entities, bothconsolidated and unconsolidated, in which the Group has an ownership interest.Proportionate results are calculated by multiplying the Group's ownershipinterest in each entity by each entity's results. Proportionate presentation of financial information differs in material respectsto the proportionate consolidation adopted by the Group under IFRS for its jointventures. Proportionate information includes results from the Group's equity accountedinvestments and other investments. The Group may not have control over therevenue, expenses or cash flows of these investments and may only be entitled tocash from dividends received from these entities. Group proportionate revenue is stated net of intercompany revenue. ProportionateEBITDA represents the Group's ownership interests in the respective entities'EBITDA. As such, proportionate EBITDA does not represent EBITDA available to theGroup. Reconciliation of proportionate revenue to statutory revenue 30 30 31 September September March 2006 2005 2006 £m £m £m Proportionate revenue 21,897 20,315 41,355Minority share of revenue in subsidiary undertakings 420 322 666Group share of revenue in associated undertakings and other investments (6,723) (6,089) (12,671) -------- -------- -------- Statutory revenue 15,594 14,548 29,350 ======== ======== ======== Reconciliation of proportionate EBITDA to operating (loss)/profit for the period 30 30 31 September September March 2006 2005 2006 £m £m £m Proportionate EBITDA 8,786 8,155 16,380Minority share of EBITDA in subsidiary undertakings 145 101 224Group's share of EBITDA in associated undertakings and other investments (2,689) (2,349) (4,838) -------- -------- -------- Group EBITDA 6,242 5,907 11,766Charges for depreciation and amortisation (2,491) (2,261) (4,709)Loss on disposal of property, plant and equipment (17) (35) (69)Share of results in associated undertakings 1,413 1,190 2,428Impairment losses (8,100) (515) (23,515)Other income and expense 1 - 15 -------- -------- -------- Operating (loss)/profit (2,952) 4,286 (14,084) ======== ======== ======== 1) Copies of this document are available from the Company's registered office: Vodafone HouseThe ConnectionNewburyBerkshireRG14 2FN 2) This interim results announcement will be available on the Vodafone Group Plc website, www.vodafone.com, from 14 November 2006. For further information: Vodafone Group Investor Relations Media RelationsTelephone: +44 (0) 1635 664447 Telephone: +44 (0) 1635 664444 High resolution photographs are available to the media free of charge atwww.newscast.co.uk. Video interviews with Arun Sarin, Chief Executive, and Andy Halford, ChiefFinancial Officer, are available from midday on www.vodafone.com andwww.cantos.com and are also available in audio and transcript from theCompany's registered office. Vodafone, Vodafone live!, Vodafone Mobile Connect, Vodafone Office, Vodafone AtHome, Vodafone Zuhause, Vodafone Casa, Oficina Vodafone, Vodafone Simply,Vodafone Passport, Stop the Clock and Vodafone Radio DJ are trademarks of theVodafone 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 statements include statements with respectto Vodafone's expectations as to launch and roll-out dates for products,services or technologies offered by Vodafone; intentions regarding thedevelopment of products and services introduced by Vodafone or by Vodafone inconjunction with initiatives with third parties; the ability to integrate alloperations throughout the Group; the development and impact of new mobiletechnology; anticipated benefits to the Group of the One Vodafone programme;anticipated benefits to the Group from core cost reduction programmes,outsourcing, supply chain management and IT operations initiatives; anticipatedbenefits to the Group of the Mobile Plus strategy; growth in customers andusage, including improvements in customer mix; future performance, includingrevenue, average revenue per user ("ARPU"), cash flows, costs, capitalexpenditure, capitalised fixed asset additions and margins; the rate of dividendgrowth by the Group or its existing investments; expectations regarding theGroup's access to adequate funding for its working capital requirements;expected effective tax rates and expected tax payments; the ability to realisesynergies through cost savings, revenue generating services, benchmarking andoperational experience; future acquisitions, including increases in ownership inexisting investments and pending offers for investments; future disposals; themanagement of the Group's portfolio; contractual obligations; mobile penetrationand coverage rates; the impact of regulatory and legal proceedings involvingVodafone; expectations with respect to long-term shareholder value growth;Vodafone's ability to be the mobile market leader, overall market trends andother trend projections. 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". Bytheir nature, forward-looking statements are inherently predictive, speculativeand involve risk and uncertainty because they relate to events and depend oncircumstances that will occur in the future. There are a number of factors thatcould cause actual results and developments to differ materially from thoseexpressed or implied by these forward-looking statements. These factors include,but are not limited to, the following: changes in economic or politicalconditions in markets served by operations of the Group that would adverselyaffect the level of demand for mobile services; greater than anticipatedcompetitive activity, from both existing competitors and new market entrants,including Mobile Virtual Network Operators ("MVNOs"), which could requirechanges to the Group's pricing models, lead to customer churn and make it moredifficult to acquire new customers, and reduce profitability; the impact ofinvestment in network capacity and the deployment of new technologies, or therapid obsolescence of existing technology; slower than expected customer growthand reduced customer retention; changes in the spending patterns of new andexisting customers; the possibility that new products and services, includingmobile internet platforms, 3G, Vodafone live!, Vodafone Radio DJ and otherproducts and services, will not be commercially accepted or perform according toexpectations or that vendors' performance in marketing these technologies willnot meet the Group's requirements; the Group's ability to win 3G licenceallocations; the Group's ability to realise expected synergies and benefitsassociated with 3G technologies; a lower than expected impact of GPRS, 3G,Vodafone live!, Vodafone Radio DJ and other new or existing products, servicesor technologies on the Group's future revenue, cost structure and capitalexpenditure outlays; the ability of the Group to harmonise mobile platforms anddelays, impediments or other problems associated with the roll-out and scope of3G technology, Vodafone live!, Vodafone Radio DJ 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; theGroup's ability to develop competitive data content and services that willattract new customers and increase average usage; future revenue contributionsof both voice and non-voice services; greater than anticipated prices of newmobile handsets; changes in the costs to the Group of or the rates the Group maycharge for terminations and roaming minutes; the Group's ability to achievemeaningful cost savings and revenue improvements as a result of its One Vodafoneand outsourcing initiatives; the ability to realise benefits from entering intopartnerships for developing data and internet services and entering into servicefranchising and brand licensing; the possibility that the pursuit of new,unexpected strategic opportunities may have a negative impact on the Group'sfinancial performance; developments in the Group's financial condition, earningsand distributable funds and other factors that the Board of Directors takes intoaccount in determining the level of dividends; any unfavourable conditions,regulatory or otherwise, imposed in connection with pending or futureacquisitions or dispositions and the integration of acquired companies in theGroup's existing operations; the risk that, upon obtaining control of certaininvestments, the Group discovers additional information relating to thebusinesses of that investment leading to restructuring charges or write-offs orwith other negative implications; changes in the regulatory framework in whichthe Group operates, including possible action by regulators in markets in whichthe Group operates or by the EU regulating rates the Group is permitted tocharge; the impact of legal or other proceedings against the Group or othercompanies in the mobile telecommunications industry; the possibility that newmarketing or usage stimulation campaigns or efforts and customer retentionschemes are not an effective expenditure; the possibility that the Group'sintegration efforts do not reduce the time to market for new products or improvethe Group's cost position; loss of suppliers or disruption of supply chains; theGroup's ability to satisfy working capital requirements through borrowing incapital markets, bank facilities and operations; changes in exchange rates,including particularly the exchange rate of pounds sterling to the euro and theUS dollar; changes in statutory tax rates and profit mix which would impact theweighted average tax rate; changes in tax legislation in the jurisdictions inwhich the Group operates; and final resolution of open issues which might impactthe effective tax rate; timing of tax payments relating to the resolution ofopen issues. 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, Trends and Outlook - Risk Factors" in Vodafone Group Plc's Annual Report for the year ended 31 March 2006. All subsequent written or oral forward-looking statements attributable to the Company or any member of the Group or any persons acting ontheir behalf are expressly qualified in their entirety by the factors referred to above. No assurances can be given that the forward-looking statements in thisdocument will be realised. Neither Vodafone nor any of its affiliates intends to update these forward-looking statements. In presenting and discussing the Group's reported financial position, operatingresults and cash flows, certain information is derived from amounts calculatedin accordance with IFRS 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. Location in this results announcement of reconciliationNon-GAAP measure Equivalent GAAP measure and further information Group EBITDA Operating profit/(loss) Proportionate financial information on page 37 Adjusted operating profit Operating profit/(loss) Business review on page 7 Adjusted profit before tax Profit/(loss) before tax Financial update on page 17 Adjusted profit for the period Profit/(loss) for the Note 5 on page 29attributable to equity period attributable toshareholders equity shareholders Adjusted earnings per share Earnings/(loss) per share Note 5 on page 29 Operating free cash flow Net cash flows from Cash flows and funding on page operating activities 19 Free cash flow Net cash flows from Cash flows and funding on page operating activities 19 Net debt Borrowings Cash flows and funding on page 19 Proportionate revenue Statutory revenue Proportionate financial information on page 37 Proportionate EBITDA Operating profit/(loss) Proportionate financial information on page 37 Adjusted effective tax rate Tax on profit/(loss) as a Financial update on page 17 percentage of profit/(loss) before taxation Term Definition3G broadband 3G services enabled with High Speed Downlink Packet Access ("HSDPA") technology which enables data transmission speeds of up to 2 megabits per second. 3G device A handset or device capable of accessing 3G data services. Acquired intangibles Amortisation relating to intangible assets identified and recognisedamortisation separately in respect of a business combination in excess of the intangible assets recognised by the acquiree prior to acquisition. Active customer A customer who pays a monthly fee or has made or received a chargeable event in the last three months. ARPU Total revenue excluding handset revenue and connection fees divided by the weighted average number of customers during the period. Average monthly ARPU Total ARPU in an accounting period divided by the number of months in the period. Capitalised fixed asset This measure includes the aggregate of capitalised property, plant andadditions equipment additions and capitalised software costs. Change at constant Changes relating to one country are calculated based on local currencyexchange rates amounts in both periods. For changes relating to multiple countries, calculations exclude the effect of exchange rate movements by restating the prior period's results as if they had been generated at the current period's exchange rates. Churn Total gross customer disconnections in the period divided by the average total customers in the period. Controlled and jointly The networks include the Group's mobile operating subsidiaries andcontrolled networks joint ventures. Measures for controlled and jointly controlled networks include 100% for subsidiaries and the Group's proportionate share for joint ventures. 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). Data revenue Data revenue includes all non-voice service revenue excluding messaging, fixed line and DSL. Depreciation and other This measure includes the profit or loss on disposal of property,amortisation plant and equipment and computer software. DSL A Digital Subscriber Line which is a fixed line enabling data to be transmitted at high speeds. HSDPA High Speed Downlink Packet Access is a wireless technology enabling data transmission speeds of up to 2 megabits per second. ISDN An Integrated Service Digital Network which can be used for sending voice, video and data over digital telephone lines or normal telephone wires and supports data transfer rates of 64 kilobits per second. Messaging revenue Messaging revenue includes all SMS and MMS revenue including 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. Net debt Long-term borrowings, short-term borrowings and mark to market adjustments on financing instruments less cash and cash equivalents. Organic growth The percentage movements in organic growth are presented to reflect operating performance on a comparable basis. Where an entity, being a subsidiary, joint venture 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 a joint venture or associated undertaking in the current or prior period, the Group's results for the prior period are restated at the current period's ownership level. Further adjustments in organic calculations exclude the effect of exchange rate movements by restating the prior period's results as if they had been generated at the current period's exchange rates and excludes the amortisation of acquired intangible assets. 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. Partner Markets Markets in which the Group has entered into a Partner Agreement with a local mobile operator enabling a range of Vodafone's global products and services to be marketed in that operator's territory and extending Vodafone's brand reach into such new markets. Purchased licence Amortisation relating to capitalised licence and spectrum feesamortisation purchased directly by the Group or existing on recognition through business combination accounting, and such fees recognised by an acquiree prior to acquisition. Vodafone live! active A handset or device equipped with the Vodafone live! portal which hasdevice made or received a chargeable event in the last month. REGIONAL ANALYSISFOR THE SIX MONTHS ENDED 30 SEPTEMBER Adjusted Capitalised fixed Free Revenue EBITDA operating profit asset additions cash flow(1) ----------------- --------------- ---------------- --------------- ---------------- 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 £m £m £m £m £m £m £m £m £m £mEUROPEGermany 2,827 2,913 1,263 1,353 724 775 198 296 990 1,090Italy(2) 2,174 2,240 1,128 1,207 839 923 184 191 878 1,024Spain 2,268 1,968 813 721 585 529 213 183 432 438UK 2,549 2,568 785 781 318 320 305 265 393 396Greece 636 625 250 241 167 164 74 59 160 152Netherlands 600 604 176 185 102 106 50 52 136 117Portugal 466 452 168 146 107 84 44 53 101 48Other 519 762 225 277 152 138 55 102 146 142Intra-region revenue (209) (183) - - - - - - - - ----------------- --------------- ---------------- --------------- ----------------Total Europe 11,830 11,949 4,808 4,911 2,994 3,039 1,123 1,201 3,236 3,407 EMAPARomania(3) 355 213 175 105 68 40 82 50 121 74Turkey(4) 283 - 65 - (18) - 36 - 134 -Egypt 355 255 198 141 155 98 66 56 137 101South Africa(2) 727 454 261 164 152 122 92 81 139 64Pacific 666 636 165 167 66 58 104 137 61 28Other subsidiaries 397 298 120 88 41 25 77 68 72 41Other joint ventures(2) 294 153 116 66 59 41 101 40 27 33United States - - - - 1,015 772 - - - -Other Associates - - - - 390 396 - - - -Intra-region revenue (2) - - - - - - - - - ----------------- --------------- ---------------- --------------- ----------------Total EMAPA 3,075 2,009 1,100 731 1,928 1,552 558 432 691 341 Common functions 86 70 208 182 136 153 67 53 110 37Other operations 706 622 126 83 83 38 76 64 (16) (24)Inter-region revenue (103) (102) - - - - - - - - ----------------- --------------- ---------------- --------------- ----------------Total Group 15,594 14,548 6,242 5,907 5,141 4,782 1,824 1,750 4,021 3,761 ================= =============== ================ =============== Net interest paid (186) (165)Tax paid (1,217) (698)Dividends received and other 337 354 ----------------Free cash flow- Continuing Operations 2,955 3,252- Discontinued operations(5) (8) 443 ---------------- 2,947 3,695 ================ Notes: (1) For the Group's operating companies, common functions and other operations, the cash flows presented reflect operating free cash flow (2) The results of joint ventures have been included using proportionate consolidation (3) Includes periods in the 2006 financial year where accounted for as a joint venture (4) Presents the results from 24 May 2006, being the date of acquisition (5) Discontinued operations represent Vodafone Japan See page 40 for use of non-GAAP financial information and page 41 for definitionof terms This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Vodafone