Edgar Filing: VODAFONE GROUP PUBLIC LTD CO

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Private Issuer

Pursuant to Rules 13a-16 or 15d-16 under

the Securities Exchange Act of 1934

Dated November 9, 2011

Commission File Number: 001-10086

VODAFONE GROUP

PUBLIC LIMITED COMPANY

(Translation of registrant’s name into English)

VODAFONE HOUSE, THE CONNECTION, NEWBURY, BERKSHIRE, RG14 2FN, ENGLAND

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ü

Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes

No ü

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- .

This Report on Form 6-K contains a news release issued by Vodafone Group Plc on November 8, 2011 entitled “Half-year financial report for the six months ended 30 September 2011”.

Half-year financial report for the six months ended 30 September 2011

8 November 2011

Consistent results: growth, investment, cash generation, shareholder returns

·	Q2 Group organic service revenue growth +1.3%(); Europe -1.2%(), AMAP +8.2%(*)

·	H1 EBITDA up 2.3% to £7.5 billion; EBITDA margin 32.0%, down 0.6 percentage points, as expected

·	Adjusted operating profit £6.0 billion; full year guidance now improved to £11.4 – £11.8 billion

·	Free cash flow £2.6 billion; full year guidance of £6.0 – £6.5 billion confirmed(1)

·	Interim dividend 3.05 pence, up 7.0%; special dividend of 4.0 pence to be paid at the same time

Financial highlights


	Six months ended	Change year-on-year
	30 September 2011	Reported	Organic
	£m	%	%
Group revenue	23,520	+4.1	+2.2
Group service revenue	21,894	+3.1	+1.4
Europe	15,337	+1.6	(1.3	)
Africa, Middle East and Asia Pacific	6,376	+6.8	+8.4
Adjusted operating profit	6,035	(0.6)	+4.4
Free cash flow	2,616	(25.0)
EPS	13.06p	(8.7)
Adjusted EPS	7.75p	(11.5)
Interim dividend per share	3.05p	+7.0

Continued progress on strategic delivery

·	Data revenue +23.8%(*), with smartphone penetration in Europe rising to 21.7% in Q2; 24% of consumer contract customers in Europe(2) are on integrated voice, SMS and data tariffs

·	Enterprise revenue +2.6%(*), driven by new account wins, growth in demand for converged services and increasing penetration of existing clients

·	Continued strong momentum in emerging markets: India service revenue +18.4%(), Turkey +27.9%(), Vodacom +7.3%(*)

·	Increased focus on new services: M-Pesa now in 7 markets with 27 million registered users; charge-to-bill launched in Europe; machine-to-machine revenue up 33%(*) with 6.2 million SIMs

·	£2.8 billion dividend from Verizon Wireless due January 2012, with £2.0 billion special dividend to be paid to Vodafone shareholders; SFR stake sold, with £4.0 billion committed to a share buyback

Notes:

(*)	All amounts in this document marked with an “(*)” represent organic growth which presents performance on a comparable basis, both in terms of merger and acquisition activity and foreign exchange rates.
(1)	Excludes the dividend due from Verizon Wireless in January 2012.
(2)	Five European markets: Germany, Italy, Spain, UK, Netherlands.

Vittorio Colao, Group Chief Executive, commented:

“A year on from announcing our updated strategy, we are making clear progress. We are gaining share in most of our major markets, through our focus on superior network quality and an improved customer experience. In addition, we are achieving sustained growth in the key areas of data, emerging markets and enterprise.

“At the same time, we have delivered on our commitment to crystallise value from our non-controlled assets through a successful programme of disposals and the announcement of a dividend from Verizon Wireless, with the majority of proceeds pledged to shareholder returns.

“Although we remain mindful of the uncertain economic outlook, we are confident that we have the right strategy and capabilities to continue to perform consistently through top line growth, cost efficiency, investment and cash generation.”

CHIEF EXECUTIVE’S STATEMENT

Financial review

Group

Group revenue was up 4.1% to £23.5 billion, or 2.2%(*) on an organic basis. Organic service revenue growth was 1.4%(*) for the first half of the financial year, and 1.3%(*) in Q2. Excluding the impact of mobile termination rate (‘MTR’) cuts, service revenue growth was 3.8%(*). Our overall performance reflects continued strong demand for data services and further voice penetration growth in emerging markets, offset by regulatory changes and voice price deflation driven by ongoing competitive pressures.

Group EBITDA was up 2.3% to £7.5 billion. The EBITDA margin was down 0.6 percentage points year-on-year, as expected. The fall in the margin was primarily driven by our re-pricing in Spain and our performance in Australia, partially offset by good cost control.

Adjusted operating profit was £6.0 billion (H1 2010: £6.1 billion). On an organic basis, including adjusting for the disposal of SFR, adjusted operating profit was up 4.4%(*) year-on-year, driven by the growth in EBITDA and the continued strong performance from Verizon Wireless.

Reported earnings per share was 13.06 pence, boosted by the profit on disposal of our 44% stake in SFR. Adjusted earnings per share was 7.75 pence, a decline of 11.5% year-on-year, reflecting the loss of our share of SFR’s profits, the loss of interest income from investment disposals and mark-to-market items charged through finance costs.

Free cash flow for the first half of the financial year was £2.6 billion (H1 2010: £3.5 billion). The year-on-year decline is the result of timing differences on working capital and capex compared to the equivalent period last year. Capex for the period was £2.6 billion (H1 2010: £2.4 billion). Net debt at 30 September 2011 was £26.2 billion. The reduction in net debt since 31 March 2011 has been driven by underlying cash generation and the £6.8 billion consideration from the SFR disposal, offset by £1.8 billion of share buybacks as well as equity dividend payments.

The Board has agreed an interim dividend of 3.05 pence per share, an increase of 7.0% year-on-year, in line with our dividend per share growth target of at least 7% per annum until March 2013. In addition, in July the Group announced its intention to pay a special dividend of 4.0 pence per share, with the same timetable as the interim dividend, to reflect the receipt of a dividend from Verizon Wireless.

Europe

In Europe, service revenue was down 1.3%(*) in H1, with a marginally better performance in Q2 than in Q1.

In northern Europe, service revenue growth in Q2 improved in the UK (+2.5%(*)) and the Netherlands (+4.2%(*)), and remained steady in Germany (+0.1%(*)).

In southern Europe, Spain showed a sequential improvement in its service revenue trend to -9.3%(*) (Q1 - 9.9% (*)), as our price reductions led to early signs of improvement in our commercial performance. Growth in Italy deteriorated from -1.5%(*) in Q1 to -3.0%(*) in Q2, reflecting a decline in consumer confidence and an incremental impact of 0.4 percentage points from MTR cuts. Turkey continued to grow strongly in Q2 (+ 24.0% (*)).

Europe EBITDA was flat year-on-year at £5.6 billion, with the EBITDA margin down 1.0 percentage point. This decline was almost entirely driven by a 6.1 percentage point margin decline in Spain as a result of price reductions and the macroeconomic environment.

Africa, Middle East and Asia Pacific (‘AMAP’)

AMAP service revenue was up 8.4%(*) in H1, with a slight slowdown in Q2 compared to Q1. In India, service revenue growth was 20.1%(*) in Q2, reflecting improving underlying growth boosted by new SMS termination charges in the Indian market. Growth at Vodacom slowed slightly to +6.7%(*) in Q2. In Australia,

CHIEF EXECUTIVE’S STATEMENT

service revenue fell by 8.1%(*) in Q2 (Q1 -3.6%(*)), as the network and customer service issues experienced in the Group’s prior financial year had a negative impact on customer perception.

AMAP EBITDA was up 3.6%, with the EBITDA margin falling 1.0 percentage point. The biggest impact came in Australia (down 5.1 percentage points). The margin in India fell slightly despite strong top line growth as a result of rising commercial costs and the dilutive impact of SMS termination.

Verizon Wireless

Verizon Wireless, our US associate, achieved organic service revenue growth of 7.1%(*) in H1 and 6.4%(*) in Q2. Our share of profits from Verizon Wireless totalled £2.5 billion, up 11.1%(*) year-on-year. Verizon Wireless’ net debt fell from US$9.6 billion at 31 March 2011 to US$3.1 billion at 30 September 2011. In July, Verizon Wireless announced its intention to pay a dividend of US$10.0 billion to its shareholders in January 2012. Vodafone’s share of this dividend is US$4.5 billion (£2.8 billion).

Strategy progress

There are four main elements to the strategy to build a more valuable Vodafone announced in November 2010:

1. Focus on key areas of growth potential;

2. Deliver value and efficiency from scale;

3. Generate liquidity or free cash flow from non-controlled interests; and

4. Apply rigorous capital discipline to investment decisions.

We have made further progress on each of these over the course of the first half of the financial year.

1) Focus on key areas of growth potential

Mobile data: data revenue was up 23.8%(*) year-on-year to £3.1 billion, and now represents 14% of Group service revenue. Data represents the single biggest opportunity to Vodafone and the industry over the next few years, and we intend to continue to be at the forefront of stimulating data adoption among our customers.

We have increased smartphone penetration in our European customer base to 21.7%, by broadening our range of handsets and marketing attractive commercial propositions. 58.7% of these customers now have a data allowance included within their tariff plan. Pricing is becoming increasingly important in preventing the substitution of voice and SMS usage with data usage and ensuring that increased data traffic is properly reflected in our revenue. To this end, we have focused on migrating customers to integrated voice, SMS and data bundles that insulate our revenue from changing customer behaviour and capture future growth in data usage. At the end of H1, 24% of consumer contract customers in our five largest European markets were on integrated tariffs.

We have also continued to make significant network investments to improve data coverage, speed and reliability. Our launch of LTE services in Germany has been an early success, with over 50,000 customers using the service and giving very positive feedback. During the period we acquired spectrum in Spain and were awarded spectrum in Italy to ensure we have the best possible portfolio of spectrum across a range of frequencies to deliver the ongoing enhancement in performance that customers will expect.

Enterprise: enterprise revenue across the Group was up 2.6%(*) year-on-year in H1. In Europe, enterprise represents 30% of service revenue. We are seeing a number of trends in the enterprise business – such as the increasing focus on mobility, the move towards converged services, the growth in the tablet market and companies’ desire to consolidate their supplier bases – that play to our strengths. We are successfully addressing the full breadth of the market: within Vodafone Global Enterprise, which manages the largest multi-national accounts, revenue was up 7%(*); and at the SME and SoHo level, Vodafone One Net

CHIEF EXECUTIVE’S STATEMENT

continues to be rolled out across our footprint offering customers a cost effective and simple converged mobile and fixed service.

Emerging markets: the Group has an attractive level of exposure to emerging markets, where mobile voice penetration is lower and GDP growth is higher than in the more mature markets of western Europe. In addition, the lack of fixed line infrastructure in many emerging markets means that mobile operators are likely to be the primary providers of internet connectivity. Our key emerging markets operations all continued to achieve strong service revenue growth, with India +18.4%(*), Vodacom +7.3%(*) and Turkey +27.9%(*).

In addition, we see the potential for data adoption to accelerate. The number of customers using Opera Mini, a web browser that significantly improves the experience for customers using data over 2G networks, has reached 13.7 million, up 98% year-on-year. This demonstrates the strong underlying demand for data services, which we expect to translate into strong service revenue growth as customers migrate to faster 3G platforms.

Total communications: fixed revenue across the Group was up 6.1%(*) year-on-year in the first half of the financial year. We continue to develop our fixed line capabilities to meet our customers’ total communications needs beyond mobile connectivity, in both the consumer and enterprise markets.

In the enterprise market we have made significant progress in the development of converged services, giving us an attractive opportunity to grow our share of companies’ total telecoms spend: Fixed revenue within enterprise was up 19.2%(*). In the consumer market, we have shown continued good growth in Italy, while in Germany we are developing new services, such as Vodafone TV, to make our overall domestic connectivity package more competitive.

New services: we see significant potential for profitable growth from new services, driven by two key factors – the increasing level of intelligence in our own network and the introduction of connectivity between appliances as well as people, allowed by very high levels of mobile coverage.

During the period we launched “charge to bill” services across a number of European markets and on a range of mobile operating systems. Using this platform, customers can charge purchases from online applications stores to their Vodafone mobile phone accounts, making it much easier for users to make purchases. The initial results have been very encouraging and we will continue to roll out the service over the coming months.

Machine-to-machine (‘M2M’) revenue grew strongly, with regulation in the utilities sector and the increasing use of tracking and telemetry in the automotive sector being key drivers.

2) Deliver value and efficiency from scale

The scale and composition of the Group has enabled us to increase efficiency and achieve favourable relative cost positions in many markets. We aim to continue to generate savings from technology standardisation, off-shoring, outsourcing, platform sharing and Group purchasing. During the first half of the financial year we commenced working with Verizon Communications to identify procurement savings opportunities across a wide range of common suppliers.

3) Generate liquidity or free cash flow from non-controlled interests

During the first half of the financial year, we completed the sale of our 44% interest in SFR, the number two mobile operator in France, to Vivendi, the majority shareholder, for £6.8 billion. We have committed £4.0 billion of the proceeds to a share buyback programme. We also announced the sale of our 24.4% stake in Polkomtel, the Polish operator, for £0.8 billion.

CHIEF EXECUTIVE’S STATEMENT

In July, Verizon Wireless announced its intention to pay a dividend of US$10.0 billion in January 2012. Vodafone’s share of this dividend is US$4.5 billion (£2.8 billion), out of which we intend to pay a special dividend of 4.0 pence per share to Vodafone shareholders at the same time as the interim dividend in February 2012.

4) Apply rigorous capital discipline to investment decisions

We continue to adhere to strict capital discipline in our investment decisions. We apply rigorous commercial analysis and demanding hurdle rates to ensure that any investment or corporate activity will enhance shareholder returns. Maintaining our target credit rating of a low single A provides the Group with a low cost of debt and good access to liquidity. We will continue to undertake regular reviews of Vodafone’s entire portfolio to make sure we are maximising the return on the capital employed across the Group.

Outlook and guidance(1)

Progress against our strategic and financial objectives in the first half of the financial year has been good. Although the macroeconomic outlook is uncertain, we are confident that we can continue to execute successfully in the second half of the financial year.

We now expect adjusted operating profit for the full year to be in the range of £11.4 – £11.8 billion, the upper half of the range indicated in May 2011. We continue to expect free cash flow to be in the range of £6.0 – £6.5 billion, excluding the £2.8 billion dividend due from Verizon Wireless in January 2012.

(1) See ‘Guidance’ on page 8.

GROUP FINANCIAL HIGHLIGHTS

		Six months ended
		30 September
		2011	2010	% change
	Page	£m	£m	Reported		Organic
Financial information(1)
Revenue	24	23,520	22,603	4.1		2.2
Operating profit	24	8,999	5,213	72.6
Profit before taxation	24	8,011	8,240	(2.8	)
Profit for the financial period	24	6,644	7,504	(11.5	)
Basic earnings per share (pence)	24	13.06p	14.31p	(8.7	)
Capital expenditure	37	2,618	2,435	7.5
Cash generated by operations	19	7,069	7,331	(3.6	)



Performance reporting(1)(2)
Group EBITDA	9	7,532	7,363	2.3		–
Group EBITDA margin		32.0%	32.6%	(0.6pp	)	(0.7pp	)
Adjusted operating profit	9, 39	6,035	6,069	(0.6	)	4.4
Adjusted profit before tax	11, 39	5,142	5,629	(8.7	)
Adjusted effective tax rate	11	25.2%	22.9%
Adjusted profit attributable to equity shareholders	11, 39	3,962	4,616	(14.2	)
Adjusted earnings per share (pence)	11, 39	7.75p	8.76p	(11.5	)
Free cash flow(3)	19	2,616	3,489	(25.0	)
Net debt	19, 20	26,247	30,457	(13.8	)

Notes:

(1) Amounts presented at 30 September or for the six month period then ended.

(2) See page 36 for “Use of non-GAAP financial information” and page 41 for “Definitions of terms”.

(3) All references to free cash flow are to amounts before licence and spectrum payments.

GUIDANCE

Please see page 36 for “Use of non-GAAP financial information”, page 41 for “Definition of terms” and page 42 for “Forward-looking statements”.

2012 financial year guidance

	Original guidance	Updated guidance
	2012 financial year	2012 financial year
	£bn	£bn

Adjusted operating profit	11.0 – 11.8	11.4 – 11.8
Free cash flow	6.0 – 6.5	6.0 – 6.5

Assumptions

Guidance for the 2012 financial year is based on our current assessment of the global economic outlook and assumes foreign exchange rates of £1:€1.15 and £1:US$1.60. It excludes the impact of licence and spectrum purchases, the £2.8 billion dividend due from Verizon Wireless, material one-off tax related payments and restructuring costs, and assumes no material change to the current structure of the Group.

Actual foreign exchange rates may vary from the foreign exchange rate assumptions used. A 1% change in the euro to sterling exchange rate would impact adjusted operating profit and free cash flow by approximately £50 million and a 1% change in the dollar to sterling exchange rate would impact adjusted operating profit by approximately £50 million.

CONTENTS


	Page
Financial results	9
Liquidity and capital resources	19
Other significant developments	22
Risk factors	23
Responsibility statement	23
Unaudited condensed consolidated financial statements	24
Use of non-GAAP financial information	36
Additional information	37
Other information (including forward-looking statements)	41

FINANCIAL RESULTS

Group(1)

					Non-
			Africa,		Controlled
			Middle East		Interests and				Six months ended 30
			and Asia		Common				September
	Europe		Pacific		Functions(2)		Eliminations		2011		2010		% change

	£m		£m		£m		£m		£m		£m		£		Organic
Voice revenue	8,652		4,561		147		–		13,360		13,788
Messaging revenue	2,168		474		30		–		2,672		2,482
Data revenue	2,286		757		19		–		3,062		2,411
Fixed line revenue	1,589		213		–		–		1,802		1,646
Other service revenue	642		371		11		(26	)	998		902
Service revenue	15,337		6,376		207		(26	)	21,894		21,229		3.1		1.4
Other revenue	999		532		99		(4	)	1,626		1,374
Revenue	16,336		6,908		306		(30	)	23,520		22,603		4.1		2.2
Direct costs	(3,889	)	(1,799	)	(38	)	26		(5,700	)	(5,681	)
Customer costs	(4,985	)	(1,709	)	(207	)	–		(6,901	)	(6,260	)
Operating expenses	(1,907	)	(1,399	)	(85	)	4		(3,387	)	(3,299	)
EBITDA	5,555		2,001		(24	)	–		7,532		7,363		2.3		–
Depreciation and amortisation:
Acquired intangibles	(56	)	(406	)	(2	)	–		(464	)	(577	)
Purchased licences	(573	)	(101	)	–		–		(674	)	(563	)
Other	(1,969	)	(887	)	(24	)	–		(2,880	)	(2,808	)
Share of result in associates	2		11		2,508		–		2,521		2,654
Adjusted operating profit	2,959		618		2,458		–		6,035		6,069		(0.6	)	4.4
Impairment loss									(450	)	(800	)
Other income and (expense)(3)									3,414		(56	)
Operating profit									8,999		5,213
Non-operating (expense)/income(4)									(161	)	2,389
Net (financing costs)/investment income									(827	)	638
Income tax expense									(1,367	)	(736	)
Profit for the financial period									6,644		7,504

Notes:

(1) Current period results reflect average foreign exchange rates of £1:€1.14 and £1:US$1.62.

(2) Common Functions primarily represent the results of the partner markets and the net result of unallocated central Group costs.

(3) Other income and expense for the six months ended 30 September 2011 included a £3,419 million gain on disposal of the Group’s 44% interest in SFR. Other income and expense for the six months ended 30 September 2010 included £56 million representing the net loss on disposal of certain Alltel investments by Verizon Wireless. This is included within the line item “Share of results in associates” in the consolidated income statement.

(4) Non-operating (expense)/income for the six months ended 30 September 2010 includes £2,388 million profit arising on the sale of the Group’s 3.2% interest in China Mobile Limited.

FINANCIAL RESULTS

Revenue

Group revenue was up 4.1% to £23.5 billion, with service revenue of £21.9 billion, an increase of 1.4%(*) on an organic basis. Our overall performance reflects continued strong demand for data services and further voice penetration growth in emerging markets, offset by regulatory changes and voice price deflation driven by ongoing competitive pressures.

AMAP service revenue was up by 8.4%(*), with a strong performance in India and continued growth in Vodacom, Ghana and Qatar.

In Europe, service revenue was down by 1.3%(*) reflecting reductions in most markets offset by growth in the UK, the Netherlands and Turkey.

EBITDA and profit

Group EBITDA was up by 2.3% to £7.5 billion, driven by strong revenue growth partially offset by higher customer investment due to increased smartphone penetration.

Adjusted operating profit was stable at £6.0 billion.

Operating profit increased by 72.6% to £9.0 billion, primarily due to the gain on disposal of the Group’s 44% interest in SFR and lower impairment losses compared to the six months ended 30 September 2010.

An impairment loss of £450 million was recorded in relation to Vodafone Greece, primarily resulting from lower projected cash flows within business plans and an increase in discount rates.

Net (financing costs)/investment income

	Six months ended 30 September
	2011		2010
	£m		£m
Investment income	226		1,402
Financing costs	(1,053	)	(764	)
Net (financing costs)/investment income	(827	)	638
Analysed as:
Net financing costs before income from investments	(867	)	(594	)
Potential interest charges arising on settlement of outstanding tax issues(1)	(36	)	(47	)
Income from investments	10		201
	(893	)	(440	)
Foreign exchange(2)	66		228
Equity put rights and similar arrangements(3)	–		(22	)
Interest related to the settlement of tax cases	–		872
	(827	)	638

Notes:

(1) Excluding interest credits related to a tax case settlement.

(2) Comprises foreign exchange rate differences reflected in the income statement in relation to certain intercompany balances and the foreign exchange rate differences on financial instruments received as consideration on the disposal of Vodafone Japan to SoftBank in April 2006.

(3) Includes foreign exchange rate movements, accretion expense and fair value charges. Further details of these options are provided on page 22.

Net financing costs before income from investments increased from £594 million to £867 million, primarily due to mark-to-market movements on interest rate swaps and futures. Income from investments decreased by £191 million as a result of the disposal of the Group’s 3.2% interest in China Mobile Limited and the Group’s interests in SoftBank during the 2011 financial year.

FINANCIAL RESULTS

Taxation

	Six months ended 30 September
		2011		2010
		£m		£m
Income tax expense		1,367		736
Tax on adjustments to derive adjusted profit before tax		(170	)	(235	)
Tax benefit related to settlement of tax cases		–		550
Adjusted income tax expense		1,197		1,051
Share of associates’ tax		145		322
Adjusted income tax expense for purposes of calculating adjusted tax rate		1,342		1,373
Profit before tax		8,011		8,240
Adjustments to derive adjusted profit before tax(1)		(2,869	)	(2,611	)
Adjusted profit before tax		5,142		5,629
Add: Share of associates’ tax and non-controlling interest		185		366
Adjusted profit before tax for the purpose of calculating adjusted effective tax rate		5,327		5,995
Adjusted effective tax rate		25.2%		22.9%

Note:

(1) See “Earnings per share” below.

The adjusted effective tax rate for the year ending 31 March 2012 is expected to be in the mid 20’s. This is in line with the adjusted effective tax rate for the year ended 31 March 2011.

Income tax expense has increased in the six months ended 30 September 2011 largely due to the impact of a tax settlement in the six months ended 30 September 2010.

Earnings per share

Adjusted earnings per share was 7.75 pence, a decline of 11.5% year-on-year, reflecting the loss of our share of SFR’s profits, the loss of interest income from investment disposals and mark-to-market items charged through finance costs, partially offset by a reduction in shares arising from the Group’s share buyback programme. Basic earnings per share was 13.06 pence (H1 2010: 14.31 pence), reflecting the profit on disposal of our 44% interest in SFR and the impairment in relation to Vodafone Greece, which are excluded from adjusted earnings per share.

	Six months ended 30 September
		2011		2010
		£m		£m
Profit attributable to equity shareholders		6,679		7,542
Pre-tax adjustments:
Impairment loss		450		800
Other income and expense(1)		(3,414	)	56
Non-operating income and expense(2)		161		(2,389	)
Investment income and financing costs(3)		(66	)	(1,078	)
		(2,869	)	(2,611	)
Taxation		170		(315	)
Non-controlling interests		(18	)	–
Adjusted profit attributable to equity shareholders		3,962		4,616
		Million		Million
Weighted average number of shares outstanding – basic		51,132		52,701
Weighted average number of shares outstanding – diluted		51,427		52,984

Notes:

(1) Other income and expense for the six months ended 30 September 2011 includes a £3,419 million gain on disposal of the Group’s 44% interest in SFR. The six months ended 30 September 2010 includes £56 million representing the net loss on disposal of certain Alltel investments by Verizon Wireless. This is included within the line item “Share of results in associates” in the consolidated income statement.

(2) Non-operating income and expense for the six months ended 30 September 2010 includes £2,388 million profit arising on the sale of the Group’s 3.2% interest in China Mobile Limited.

(3) See notes 2 and 3 in “Net (financing costs)/investment income” on page 10.

FINANCIAL RESULTS

Europe

	Germany		Italy		Spain		UK		Other		Eliminations		Europe		% change
	£m		£m		£m		£m		£m		£m		£m		£		Organic
30 September 2011
Voice revenue	1,633		1,595		1,560		1,201		2,663		–		8,652
Messaging revenue	440		443		156		609		520		–		2,168
Data revenue	748		354		310		432		442		–		2,286
Fixed line revenue	932		317		165		22		153		–		1,589
Other service revenue	126		74		112		212		267		(149	)	642
Service revenue	3,879		2,783		2,303		2,476		4,045		(149	)	15,337		1.6		(1.3	)
Other revenue	223		122		208		188		259		(1	)	999
Revenue	4,102		2,905		2,511		2,664		4,304		(150	)	16,336		2.8		(0.2	)
Direct costs	(894	)	(664	)	(527	)	(753	)	(1,200	)	149		(3,889	)
Customer costs	(1,199	)	(590	)	(1,043	)	(993	)	(1,161	)	1		(4,985	)
Operating expenses	(457	)	(289	)	(260	)	(285	)	(616	)	–		(1,907	)
EBITDA	1,552		1,362		681		633		1,327		–		5,555		–		(3.5	)
Depreciation and amortisation:
Acquired intangibles	–		–		–		–		(56	)	–		(56	)
Purchased licences	(274	)	(54	)	(4	)	(166	)	(75	)	–		(573	)
Other	(447	)	(332	)	(316	)	(282	)	(592	)	–		(1,969	)
Share of result in associates	–		–		–		–		2		–		2
Adjusted operating profit	831		976		361		185		606		–		2,959		(3.3	)	(7.3	)
EBITDA margin	37.8%		46.9%		27.1%		23.8%		30.8%				34.0%
30 September 2010
Voice revenue	1,784		1,685		1,738		1,279		2,716		–		9,202
Messaging revenue	382		414		177		555		468		–		1,996
Data revenue	584		286		265		359		349		–		1,843
Fixed line revenue	892		271		157		16		120		–		1,456
Other service revenue	68		71		103		216		283		(148	)	593
Service revenue	3,710		2,727		2,440		2,425		3,936		(148	)	15,090
Other revenue	149		125		174		168		186		(2	)	800
Revenue	3,859		2,852		2,614		2,593		4,122		(150	)	15,890
Direct costs	(931	)	(656	)	(549	)	(780	)	(1,189	)	148		(3,957	)
Customer costs	(1,052	)	(533	)	(930	)	(949	)	(1,069	)	2		(4,531	)
Operating expenses	(405	)	(307	)	(267	)	(265	)	(603	)	–		(1,847	)
EBITDA	1,471		1,356		868		599		1,261		–		5,555
Depreciation and amortisation:
Acquired intangibles	–		–		–		–		(70	)	–		(70	)
Purchased licences	(216	)	(50	)	(3	)	(166	)	(67	)	–		(502	)
Other	(437	)	(302	)	(310	)	(295	)	(578	)	–		(1,922	)
Share of result in associates	–		–		–		(1	)	–		–		(1	)
Adjusted operating profit	818		1,004		555		137		546		–		3,060
EBITDA margin	38.1%		47.5%		33.2%		23.1%		30.6%				35.0%
Change at constant exchange rates	%		%		%		%		%
Voice revenue	(12.3	)	(9.4	)	(14.1	)	(6.1	)	(3.0	)
Messaging revenue	10.2		2.5		(15.4	)	9.7		9.3
Data revenue	22.7		18.8		12.1		20.4		23.1
Fixed line revenue	0.1		12.2		0.7		37.5		25.0
Other service revenue	78.8		(1.0	)	4.5		(1.9	)	(7.8	)
Service revenue	0.2		(2.3	)	(9.6	)	2.1		1.3
Other revenue	43.1		(5.2	)	14.6		11.9		33.3
Revenue	1.8		(2.4	)	(8.0	)	2.7		2.8
Direct costs	(8.2	)	(3.1	)	(8.0	)	(3.5	)	0.8
Customer costs	9.2		6.2		7.5		4.6		7.1
Operating expenses	8.3		(9.7	)	(6.8	)	7.5		1.5
EBITDA	1.1		(3.7	)	(24.9	)	5.6		1.7
Depreciation and amortisation:
Acquired intangibles	–		–		–		–		(18.8	)
Purchased licences	21.2		1.9		–		–		10.3
Other	(2.0	)	6.1		(2.2	)	(4.4	)	0.2
Share of result in associates	–		–		–		(100.0	)	–
Adjusted operating profit	(2.8	)	(6.9	)	(37.7	)	35.0		5.2
EBITDA margin movement (pps)	(0.3	)	(0.6	)	(6.1	)	0.7		(0.4	)

FINANCIAL RESULTS

Revenue increased by 2.8% including a 2.9 percentage point impact from favourable foreign exchange rate movements. On an organic basis service revenue declined by 1.3%(*) reflecting reductions in most markets offset by growth in the UK, the Netherlands and Turkey. The decline was primarily driven by the impact of MTR reductions, competitive pricing pressures and continued economic weakness leading to lower voice revenue, partially offset by growth in data revenue.

EBITDA was stable, benefiting from a 3.6 percentage point impact from favourable foreign exchange rate movements. On an organic basis EBITDA decreased by 3.5%(*), resulting from higher customer investment, driven by the increased penetration of smartphones, and a reduction in service revenue in most markets, partially offset by operating cost efficiencies.

	Organic		M&A		Foreign	Reported
	change		activity		exchange	change
	%		pps		pps	%
Revenue - Europe	(0.2	)	0.1		2.9	2.8
Service revenue
Germany	0.2		–		4.4	4.6
Italy	(2.3	)	–		4.4	2.1
Spain	(9.6	)	–		4.0	(5.6	)
UK	2.1		–		–	2.1
Other Europe	1.3		–		1.5	2.8
Europe	(1.3	)	–		2.9	1.6
EBITDA
Germany	1.1		–		4.4	5.5
Italy	(3.7	)	–		4.1	0.4
Spain	(24.9	)	–		3.4	(21.5	)
UK	5.6		–		–	5.6
Other Europe	1.9		(0.2	)	3.5	5.2
Europe	(3.5	)	(0.1	)	3.6	–
Adjusted operating profit
Germany	(2.8	)	–		4.4	1.6
Italy	(6.9	)	–		4.1	(2.8	)
Spain	(37.7	)	–		2.7	(35.0	)
UK	35.0		–		–	35.0
Other Europe	5.9		(0.7	)	5.8	11.0
Europe	(7.3	)	(0.1	)	4.1	(3.3	)

Germany

Service revenue was stable on an organic basis as strong data and enterprise revenue growth was offset by the impact of an MTR cut effective from 1 December 2010. Data revenue increased by 22.7%(*) driven by the increased penetration of smartphones and Superflat Internet tariffs. Enterprise revenue grew by 4.7%(*) driven by significant customer wins and the success of converged service offerings.

EBITDA increased by 1.1%(*) driven by the revenue trends mentioned above. The EBITDA margin reduced by 0.3 percentage points reflecting investment in customer acquisition and retention.

The roll out of LTE has continued, following the launch of services in the 2011 financial year, with 52,000 LTE customers at 30 September 2011.

Italy

Service revenue declined by 2.3%(*) as a result of weak macro economic conditions, intense competition and the impact of an MTR cut effective from 1 July 2011. In September 2011 prepaid tariffs were refreshed with the launch of new integrated tariffs. Fixed line revenue grew by 12.2%(*) as a result of strong customer additions. Data revenue increased by 18.8%(*) resulting from a higher penetration of smartphones and strong mobile internet. Enterprise revenue grew by 6.4%(*) driven by growth in the customer base and the success of Vodafone One Net, which enables customers to combine their fixed and mobile communications into a single service with one number.

FINANCIAL RESULTS

EBITDA decreased by 3.7%(*). The EBITDA margin fell by 0.6 percentage points, with the impact of the decline in mobile voice revenue and the growth in lower margin fixed line business partially offset by operating cost efficiencies including site sharing agreements and the ongoing move to a single radio access network (‘RAN’).

Spain

Service revenue declined by 9.6%(*), impacted by continued intense competition, general economic weakness and high unemployment, which have driven customers to reduce or optimise their spend on tariffs. The decline in Q2 improved by 0.6 percentage points compared to Q1. Data revenue increased by 12.1%(*), benefiting from the penetration of integrated voice and data tariffs launched in April 2011 and strong growth in mobile internet. Improvements were seen in fixed line revenue which increased by 4.2%(*) in Q2, resulting from a competitive proposition leading to good customer additions. Mobile customer net additions were strong, arising from mobile number portability net gains, as a result of our more competitive tariffs introduced in Q1, and a focus on improving the retention of higher-value customers.

EBITDA declined by 24.9%(*), with a 6.1 percentage point fall in the EBITDA margin, due to the lower revenue and higher acquisition and retention costs resulting from the increased penetration of smartphones, partially offset by operating cost efficiencies.

Service revenue grew by 2.1%(*) driven by an increase in enterprise and data revenue as well as good net customer additions and some price increases in consumer contract and prepaid. Growth was impacted by an MTR cut effective from 1 April 2011. The increase in enterprise revenue was driven by the success of integrated offerings and strong data roaming. Data revenue grew by 20.4%(*) resulting from the higher penetration of smartphones with a high percentage being sold with data bundles.

EBITDA increased by 5.6%(*), with a 0.7 percentage point improvement in the EBITDA margin, as a result of higher revenue partially offset by investment in customer acquisition and retention.

Other Europe

Service revenue increased by 1.3%(*) as growth in Albania, the Netherlands and Turkey more than offset a decline in the rest of the region, particularly in Greece, Portugal and Ireland which continued to be impacted by the challenging economic environment and competitive factors. Service revenue in Turkey grew by 27.9%(*), driven by strong growth in voice and data revenue resulting from a larger contract customer base and data campaigns. In the Netherlands service revenue increased by 2.3%(*), driven by an increase in the customer base and stronger roaming revenue, partially offset by a slow-down in messaging revenue growth rates and price competition.

EBITDA grew by 1.9%(*), with strong growth in Turkey, driven by operating cost savings and improved management of customer acquisition costs, partially offset by declines in the majority of the other markets.

FINANCIAL RESULTS

Africa, Middle East and Asia Pacific

					Other Africa, Middle East and		Africa, Middle East and
	India		Vodacom		Asia Pacific		Asia Pacific		% change
	£m		£m		£m		£m		£	Organic
30 September 2011
Voice revenue	1,621		1,740		1,200		4,561
Messaging revenue	107		147		220		474
Data revenue	176		348		233		757
Fixed line revenue	6		108		99		213
Other service revenue	185		117		69		371
Service revenue	2,095		2,460		1,821		6,376		6.8	8.4
Other revenue	22		354		156		532
Revenue	2,117		2,814		1,977		6,908		7.2	8.6
Direct costs	(629	)	(569	)	(601	)	(1,799	)
Customer costs	(292	)	(873	)	(544	)	(1,709	)
Operating expenses	(661	)	(438	)	(300	)	(1,399	)
EBITDA	535		934		532		2,001		3.6	5.3
Depreciation and amortisation:
Acquired intangibles	(172	)	(209	)	(25	)	(406	)
Purchased licences	(44	)	(1	)	(56	)	(101	)
Other	(328	)	(254	)	(305	)	(887	)
Share of result in associates	–		–		11		11
Adjusted operating (loss)/profit	(9	)	470		157		618		10.0	12.4
EBITDA margin	25.3	%	33.2	%	26.9	%	29.0	%
30 September 2010
Voice revenue	1,499		1,706		1,236		4,441
Messaging revenue	79		150		220		449
Data revenue	111		254		187		552
Fixed line revenue	3		101		86		190
Other service revenue	161		99		77		337
Service revenue	1,853		2,310		1,806		5,969
Other revenue	21		302		150		473
Revenue	1,874		2,612		1,956		6,442
Direct costs	(531	)	(567	)	(578	)	(1,676	)
Customer costs	(251	)	(773	)	(513	)	(1,537	)
Operating expenses	(604	)	(406	)	(287	)	(1,297	)
EBITDA	488		866		578		1,932
Depreciation and amortisation:
Acquired intangibles	(180	)	(291	)	(29	)	(500	)
Purchased licences	–		–		(59	)	(59	)
Other	(302	)	(231	)	(306	)	(839	)
Share of result in associates	–		(1	)	29		28
Adjusted operating profit	6		343		213		562
EBITDA margin	26.0	%	33.2	%	29.6%		30.0%

Change at constant exchange rates
	%		%		%
Voice revenue	13.3		2.5		(2.0	)
Messaging revenue	41.1		(2.1	)	(6.1	)
Data revenue	66.1		37.6		18.7
Fixed line revenue	114.4		14.2		17.4
Other service revenue	20.3		20.0		(13.6	)
Service revenue	18.4		7.3		0.1
Other revenue	6.5		17.0		1.7
Revenue	18.3		8.4		0.2
Direct costs	24.4		2.0		3.5
Customer costs	21.4		13.5		1.3
Operating expenses	14.5		8.1		5.0
EBITDA	14.8		8.1		(6.6	)
Depreciation and amortisation:
Acquired intangibles	–		(28.2	)	(21.9	)
Purchased licences	100.0		100.0		–
Other	13.5		10.9		(0.3	)
Share of result in associates	–		–		(56.9	)
Adjusted operating profit	nm		37.3		(22.4	)
EBITDA margin movement (pps)	(0.7	)	(0.1	)	(2.0	)

FINANCIAL RESULTS

Revenue grew by 7.2% including a 1.4 percentage point adverse impact from foreign exchange rate movements. On an organic basis service revenue grew by 8.4%(*) driven by customer and data growth, partially offset by the impact of MTR reductions. Growth was driven by a strong performance in India, Qatar and Ghana, continued growth from Vodacom and a return to growth in Egypt in Q2.

EBITDA grew by 3.6% after a 1.7 percentage point adverse impact from foreign exchange rate movements. On an organic basis EBITDA grew by 5.3%(*) driven primarily by strong growth in India and Vodacom, as well as improved contributions from Qatar, Ghana and New Zealand offset in part by declining EBITDA margins in Egypt and the impact of network and customer service issues in Australia.

	Organic	M&A	Foreign	Reported
	change	activity	exchange	change
	%	pps	pps	%
Revenue – Africa, Middle East and Asia Pacific	8.6	–	(1.4)	7.2
Service revenue
India	18.4	–	(5.3)	13.1
Vodacom	7.3	–	(0.8)	6.5
Other Africa, Middle East and Asia Pacific	0.1	–	0.7	0.8
Africa, Middle East and Asia Pacific	8.4	–	(1.6)	6.8
EBITDA
India	14.8	–	(5.2)	9.6
Vodacom	8.1	–	(0.2)	7.9
Other Africa, Middle East and Asia Pacific	(6.6)	–	(1.4)	(8.0)
Africa, Middle East and Asia Pacific	5.3	–	(1.7)	3.6
Adjusted operating profit
India	nm	–	nm	nm
Vodacom	37.3	–	(0.3)	37.0
Other Africa, Middle East and Asia Pacific	(22.4)	–	(3.9)	(26.3)
Africa, Middle East and Asia Pacific	12.4	–	(2.4)	10.0

Note:

nm – Not meaningful.

India

Service revenue grew by 18.4%(*), driven by a 25.5% increase in the customer base, strong growth in incoming and outgoing voice minutes and 66.1%(*) growth in data revenue. Growth also benefited from operators starting to charge for SMS termination in Q2. At 30 September 2011 data customers totalled 27.5 million, a year-on-year increase of 142%. This was driven by an increase in data enabled handsets and the impact of successful marketing campaigns. Whilst the market remains highly competitive, the effective rate per minute is stabilising as operators increase headline voice tariffs and focus on promotional offers.

Following the launch of commercial 3G services in February 2011, 3G was available to Vodafone customers in 534 towns and cities across 20 circles at 30 September 2011.

EBITDA grew by 14.8%(*) driven by the increase in revenue and economies of scale, partially offset by higher customer acquisition costs and increased interconnection costs.

Vodacom

Service revenue grew by 7.3%(*), primarily driven by South Africa where growth in data revenue was partially offset by the impact of an MTR cut effective from 1 March 2011. Despite intense competitive pricing pressure, data revenue increased by 37.6%(*), driven by the higher penetration of smartphones and data bundles.

Vodacom’s operations outside South Africa continued to improve, with strong service revenue growth of 19.5%(*), driven by customer net additions. M-Pesa continues to perform well in Tanzania with over 10 million users now registered. Trading conditions remain challenging in the Gateway operations.

EBITDA increased by 8.1%(*), driven by service revenue growth.

FINANCIAL RESULTS

Other Africa, Middle East and Asia Pacific

Organic service revenue, which now includes Australia, was flat year-on-year. New Zealand’s service revenue growth was heavily impacted by MTR cuts effective from 6 May 2011. In Australia network and customer service issues experienced in the Group’s prior financial year adversely impacted on service revenue growth. In Egypt the economic environment remains challenging. Whilst Egypt service revenue was flat year-on-year in H1, growth in Q2 was 1.2%(*), driven by an increase in the customer base and improved data usage offsetting a decline in messaging and visitor revenue. In Qatar a 35.4% increase in customers resulted in service revenue growth of 48.1%(*) despite significant price competition in the market. Service revenue in Ghana grew by 32.5%(*), driven primarily by an increase in the customer base. Ghana launched its 3G network on 29 June 2011.

EBITDA was down 6.6%(*), driven by the service revenue decline in Australia and the challenging economic and competitive environment in Egypt, partially offset by growth in Qatar, Ghana and New Zealand. Integration in Australia continues to progress, with synergies exceeding original expectations to date.

FINANCIAL RESULTS

Non-Controlled Interests and Common Functions

Verizon Wireless(1)(2)

	Six months ended 30 September
		2011	2010	% change
		£m	£m	£	Organic(3)
Service revenue		8,741	8,692	0.6	7.1
Revenue		9,728	9,372	3.8	10.5
EBITDA		3,848	3,753	2.5	9.1
Interest		(108)	(134)	(19.4)
Tax(2)		(141)	(146)	(3.4)
Group’s share of result in Verizon Wireless		2,451	2,344	4.6	11.1
KPIs (100% basis)
Customers (‘000)(4)		90,708	86,734
Average monthly ARPU (US$)(4)		58.5	57.0
Churn(4)		14.8%	16.5%
Messaging and data as a percentage of service revenue		36.4%	31.5%

Notes:

(1) All amounts represent the Group’s share, based on its equity interest, unless otherwise stated.

(2) The Group’s share of the tax attributable to Verizon Wireless relates only to the corporate entities held by the Verizon Wireless partnership and certain state taxes which are levied on the partnership. The tax attributable to the Group’s share of the partnership’s pre-tax profit is included within the Group tax charge.

(3) Organic growth rates include the impact of a non-cash revenue adjustment in the prior period which was recorded to defer previously recognised data revenue that will be earned and recognised in future periods. Excluding this the equivalent organic growth rates for service revenue, revenue, EBITDA and the Group’s share of result in Verizon Wireless would have been 6.1%, 9.6%, 6.9% and 7.7% respectively.

(4) In order to align with the customer numbers reported externally by Verizon Wireless, customers have been restated to reflect retail customers only. Comparatives are presented on the revised basis.

In the United States Verizon Wireless reported 2.3 million net mobile retail customer additions during the six months ended 30 September 2011, bringing its closing mobile retail customer base to 90.7 million, up 4.6%.

Service revenue growth of 7.1%(*) was driven by the expanding customer base and robust growth in data ARPU driven by increased penetration of smartphones.

The EBITDA margin remained strong despite the competitive challenges and economic environment. Efficiencies in operating expenses and lower direct costs were partly offset by a higher level of customer acquisition and retention costs reflecting the increased demand for smartphones.

Verizon Wireless’ net debt at 30 September 2011 totalled US$3.1 billion (31 March 2011: US$9.6 billion).

LIQUIDITY AND CAPITAL RESOURCES

Cash flows and funding

	Six months ended 30 September
		2011		2011		2010		2010
		£m		£m		£m		£m		%
EBITDA				7,532				7,363		2.3
Working capital				(533	)			(110	)
Other				70				78
Cash generated by operations				7,069				7,331		(3.6	)
Cash capital expenditure(1)				(3,349	)			(2,677	)
Capital expenditure		(2,618	)			(2,435	)
Working capital movement in respect of capital expenditure		(731	)			(242	)
Disposal of property, plant and equipment				42				15
Operating free cash flow				3,762				4,669		(19.4	)
Taxation				(1,043	)			(1,091	)
Dividends received from associates and investments(2)				735				784
Dividends paid to non-controlling shareholders in
subsidiaries				(199	)			(234	)
Interest received and paid				(639	)			(639	)
Free cash flow				2,616				3,489		(25.0	)
Tax settlement				(100	)			–
Licence and spectrum payments				(264	)			(2,937	)
Acquisitions and disposals(3)				6,674				(22	)
Equity dividends paid				(3,102	)			(2,976	)
Purchase of treasury shares				(1,813	)			(146	)
Foreign exchange				135				825
Other(4)				(535	)			4,626
Net debt decrease				3,611				2,859
Opening net debt				(29,858	)			(33,316	)
Closing net debt				(26,247	)			(30,457	)	(13.8	)

Notes:

(1)	Cash capital expenditure comprises the purchase of property, plant and equipment and intangible assets, other than licence and spectrum payments, during the period.
(2)	Dividends received from associates and investments for the six months ended 30 September 2011 includes £554 million (2010: £700 million) from the Group’s interest in Verizon Wireless and £178 million (2010: £nil) from the Group’s interest in SFR.
(3)	Acquisitions and disposals for the six months ended 30 September 2011 primarily includes £6,805 million proceeds from the sale of SFR and excludes the £2,588 million payment in relation to the purchase of non-controlling interests in Vodafone India.
(4)	Other for the six months ended 30 September 2011 primarily includes £2,301 million movement in the written put option in relation to India offset by the £2,588 million payment in relation to the purchase of non-controlling interests in Vodafone India. The six months ended 30 September 2010 includes £4,269 million in relation to the disposal of the Group’s 3.2% interest in China Mobile Limited.

Cash generated by operations decreased by 3.6% to £7.1 billion primarily driven by working capital movements.

Free cash flow decreased by 25.0% to £2.6 billion primarily due to timing differences on both working capital movements and capital expenditure. Cash capital expenditure increased by £0.7 billion, driven by a reduction in capital creditors and increased investment, particularly in India and Vodacom.

Payments for taxation decreased by 4.4% to £1.0 billion primarily due to the timing of tax payments in Italy and lower tax payments in the US.

Dividends received from associates and investments were stable at £0.7 billion, as were net interest payments at £0.6 billion.

LIQUIDITY AND CAPITAL RESOURCES

Analysis of net debt:

	30 September			31 March
		2011		2011
		£m		£m
Cash and cash equivalents(1)		6,975		6,252
Short-term borrowings
Bonds		(1,801	)	(2,470	)
Commercial paper(2)		(1,598	)	(1,660	)
Put options over non-controlling interests		(758	)	(3,113	)
Bank loans		(1,837	)	(2,070	)
Other short-term borrowings(1)		(836	)	(593	)
		(6,830	)	(9,906	)
Long-term borrowings
Put options over non-controlling interests		(69	)	(78	)
Bonds, loans and other long-term borrowings		(29,210	)	(28,297	)
		(29,279	)	(28,375	)
Other financial instruments(3)		2,945		2,171
Net debt associated with held for sale assets		(58	)	–
Net debt		(26,247	)	(29,858	)

Notes:

(1) At 30 September 2011 the amount includes £821 million (31 March 2011: £531 million) in relation to cash received under collateral support agreements.

(2) At 30 September 2011 US$817 million was drawn under the US commercial paper programme; €1,023 million and US$306 million were drawn under the euro commercial paper programme.

(3) Comprises i) mark-to-market adjustments on derivative financial instruments which are included as a component of trade and other receivables (30 September 2011: £2,624 million; 31 March 2011: £2,045 million) and trade and other payables (30 September 2011: £423 million; 31 March 2011: £548 million); and ii) short-term investments primarily in index linked government bonds included as a component of other investments (30 September 2011: £744 million; 31 March 2011: £674 million).

Net debt decreased by £3.6 billion to £26.2 billion primarily due to cash generated in the first half of the financial year and the proceeds from the sale of the Group’s 44% interest in SFR, partially offset by share buybacks and equity dividend payments.

The following table sets out the Group’s undrawn committed bank facilities:

		30 September
		2011
	Maturity	£m
US$4.2 billion committed revolving credit facility provided by 30 banks(1)	March 2016	2,665
€4.2 billion committed revolving credit facility provided by 31 banks(1)	July 2015	3,567
Other committed credit facilities	Various	765
Undrawn committed facilities		6,997

Note:

(1) Both facilities support US and euro commercial paper programmes of up to US$15 billion and £5 billion respectively.

The Group’s £1,598 million of commercial paper maturing within one year is covered 4.4 times by the £6,997 million of undrawn credit facilities. In addition, the Group has historically generated significant amounts of free cash flow which can be allocated to pay dividends, repay maturing borrowings and pay for discretionary spending. The Group currently expects to continue generating significant amounts of free cash flow.

The Group has a €30 billion euro medium-term note (“EMTN”) programme and a US shelf registration programme which are used to meet medium to long-term funding requirements. At 30 September 2011 the total amounts in issue under these programmes split by currency were US$13.3 billion, £2.5 billion, €10.2 billion and £0.2 billion sterling equivalent of other currencies.

LIQUIDITY AND CAPITAL RESOURCES

At 30 September 2011 the Group had bonds outstanding with a nominal value of £19.8 billion (31 March 2011: £21.0 billion). In the six months ended 30 September 2011 one bond was issued on 19 August 2011 for US$100 million (£64 million) under the Group’s EMTN programme, maturing on 22 August 2012. On 11 July 2011 the Group also raised US$850 million (£543 million) through a US private placement with a maturity of 11 July 2016.

Dividends

In May 2010 the directors issued a dividend per share growth target of at least 7% per annum for each of the financial years in the period ending 31 March 2013.

Accordingly, the directors have announced an interim dividend of 3.05 pence per share representing a 7.0% increase over last year’s interim dividend.

On 28 July 2011 Vodafone announced that the Board of Verizon Wireless approved the payment of a US$10.0 billion (£6.1 billion) dividend. As a 45% shareholder in Verizon Wireless, Vodafone’s share of the dividend is US$4.5 billion (£2.8 billion). The Board of Vodafone therefore intends to pay a special, second interim, dividend of £2.0 billion, equivalent to 4.0 pence per share, to Vodafone shareholders in February 2012.

The ex-dividend date for the interim and special dividend is 16 November 2011 for ordinary shareholders, the record date is 18 November 2011 and the dividends are payable on 3 February 2012. Dividend payments on ordinary shares will be paid by direct credit into a nominated bank or building society account or, alternatively, into the Company’s dividend reinvestment plan. The Company no longer pays dividends by cheque. Ordinary shareholders who have not already done so should provide appropriate bank account details to the Company’s Registrars: Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY.

Share buyback programmes

Following the disposal of the Group’s 3.2% interest in China Mobile Limited on 10 September 2010, the Group initiated a £2.8 billion share buyback programme under the authority granted by the shareholders at the 2010 AGM which was completed in June 2011. Under this programme the Group purchased a total of 1,631,662,645 shares at an average price per share, including transaction costs, of 171.60 pence.

Following the disposal of the Group’s entire 44% shareholding in SFR to Vivendi on 16 June 2011, the Group initiated a £4.0 billion share buyback programme. The Group placed irrevocable purchase instructions with a number of banks to enable the banks to buy back shares on our behalf when we may otherwise have been prohibited from buying in the market. Details of the shares purchased to date, including those purchased under irrevocable instructions, are shown below:

Date of share purchase	Number of shares purchased(1) ‘000	Average price paid per share inclusive of transaction costs Pence	Total number of shares purchased under publicly announced share buyback programme(2) ‘000	Maximum value of shares that may yet be purchased under the programme(3) £m
June 2011	95,908	164.15	95,908	3,843
July 2011	178,643	163.77	274,551	3,550
August 2011	196,798	165.14	471,349	3,225
September 2011	199,672	162.77	671,021	2,900
October 2011	173,100	172.69	844,121	2,601
November 2011 (to date)	52,900	173.34	897,021	2,509
Total	897,021(4)	166.17	897,021	2,509

Notes:

(1) The nominal value of shares purchased is 113/7 US cents each.

(2) No shares were purchased outside the publicly announced share buyback programme.

(3) In accordance with shareholder authority granted at the 2011 AGM.

(4) The total number of shares purchased represents 1.78% of our issued share capital, excluding treasury shares, at 7 November 2011.

LIQUIDITY AND CAPITAL RESOURCES

Option agreements and similar arrangements

The Group is party to a number of option agreements which could result in it being required to pay cash to maintain or increase its equity interests in its operations in India and the United States.

Information regarding the Group’s interest in Vodafone India Limited (formerly Vodafone Essar Limited) can be found on pages 32 and 33.

Details of other call and put option agreements, including those in relation to the United States, are available on page 51 of the Group’s annual report for the year ended 31 March 2011.

OTHER SIGNIFICANT DEVELOPMENTS

Indian tax case

Vodafone International Holdings B.V. (‘VIHBV’) believes that neither it nor any other member of the Group is liable for Indian withholding taxes on the Hutchison transaction in 2007 and continued to take actions to defend itself vigorously both during and after the six months ended 30 September 2011. The Group did not carry a provision for this litigation at 30 September 2011 or 31 March 2011. Further details are set out on page 33.

RISK FACTORS

There are a number of risk factors and uncertainties that could have a significant effect on the Group’s financial performance including the following:

·	adverse macro economic conditions in the markets in which the Group operates;
·	the continued volatility of worldwide financial markets may make it more difficult for the Group to raise capital externally;
·	decisions and changes in the fiscal and regulatory environment in the geographical areas in which the Group operates;
·	inability to obtain or retain spectrum could impair our ability to operate;
·	increased competition may affect the Group’s revenue and market share;
·	delays in the development of handsets may hinder the deployment of new technologies;
·	the Group may experience a decline in revenue or profitability notwithstanding its efforts to increase the proportion of non-voice service revenue as a percentage of total service revenue from the introduction of new services;
·	the Group may experience a decline in revenue or profitability due to the introduction of alternative converged offerings from competitors;
·	the failure to achieve expected benefits from cost reduction initiatives;
·	the Group’s emerging market footprint may present exposure to unpredictable economic, political, regulatory, tax and legal risks;
·	the Group’s strategic objectives may be impeded by the fact that it does not have a controlling interest in some of its ventures;
·	expected benefits from investment in networks, licences and new technology may not be realised;
·	the Group’s business and its ability to retain customers and attract new customers may be impaired by actual or perceived health risks associated with the transmission of radio waves from mobile telephones, transmitters and associated equipment;
·	the Group’s business may be adversely affected by the failure of a major supplier to supply equipment and support services;
·	the Group’s business could be adversely affected by disruptions to its telecommunications network;
·	the Group could suffer a loss of consumer confidence and/or legal action due to a failure to protect our proprietary and employee information; and
·	the Group’s failure to manage effectively one or more of the risks set out above may result in significant reputational damage and, consequently, reduce the Group’s market share and profitability.

In addition to the above the Group is exposed to financial risks arising from external factors including unfavourable movements in foreign exchange rates, interest rates and other factors such as long-term economic growth rates, all of which may impact the Group’s financial performance. Other risks that could have a significant effect on the Group’s financial performance for the six months ending 31 March 2012 and which are outside the Group’s control include the willingness and ability of third parties, including regulators, tax authorities and commercial partners, to engage and reach agreement on open matters.

Any of the above and/or changes in assumptions underlying the carrying value of certain Group assets could result in asset impairments.

Further information in relation to these risk factors and uncertainties can be found on pages 45 to 46 of the Group’s annual report for the year ended 31 March 2011 which can be found at www.vodafone.com/investor.

RESPONSIBILITY STATEMENT

We confirm that to the best of our knowledge:

·	the unaudited condensed consolidated financial statements have been prepared in accordance with IAS 34, “Interim Financial Reporting”; and
·	the interim management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7R and Disclosure and Transparency Rule 4.2.8R.

Neither the Company nor the directors accept any liability to any person in relation to the half-year financial report except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A of the Financial Services and Markets Act 2000.

By Order of the Board

Rosemary Martin

Group General Counsel and Company Secretary

8 November 2011

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Consolidated income statement

		Six months ended 30 September
		2011		2010
	Note	£m		£m
Revenue	2	23,520		22,603
Cost of sales		(15,794	)	(15,062	)
Gross profit		7,726		7,541
Selling and distribution expenses		(1,658	)	(1,526	)
Administrative expenses		(2,554	)	(2,600	)
Share of result in associates		2,521		2,598
Impairment loss	3	(450	)	(800	)
Other income and expense	2	3,414		–
Operating profit	2	8,999		5,213
Non-operating (expense)/income		(161	)	2,389
Investment income		226		1,402
Financing costs		(1,053	)	(764	)
Profit before taxation		8,011		8,240
Income tax expense	4	(1,367	)	(736	)
Profit for the financial period		6,644		7,504
Attributable to:
– Equity shareholders		6,679		7,542
– Non-controlling interests		(35	)	(38	)
		6,644		7,504
Earnings per share
– Basic	5	13.06p		14.31p
– Diluted	5	12.99p		14.23p

Consolidated statement of comprehensive income

	Six months ended 30 September
	2011		2010
	£m		£m
Gains on revaluation of available-for-sale investments, net of tax	54		328
Foreign exchange translation differences, net of tax	(2,029	)	(2,444	)
Net actuarial losses on defined benefit pension schemes, net of tax	(207	)	(116	)
Foreign exchange gains transferred to the income statement	(585	)	–
Fair value gains transferred to the income statement	–		(2,196	)
Other, net of tax	(26	)	3
Other comprehensive loss	(2,793	)	(4,425	)
Profit for the financial period	6,644		7,504
Total comprehensive income for the financial period	3,851		3,079

Attributable to:
– Equity shareholders	3,996		3,114
– Non-controlling interests	(145	)	(35	)
	3,851		3,079

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of financial position

		30 September		31 March
		2011		2011
	Note	£m		£m
Non-current assets
Goodwill		43,131		45,236
Other intangible assets		21,197		23,322
Property, plant and equipment		18,620		20,181
Investments in associates		33,816		38,105
Other investments		1,216		1,381
Deferred tax assets		2,155		2,018
Post employment benefits		60		97
Trade and other receivables		3,062		3,877
		123,257		134,217
Current assets
Inventory		580		537
Taxation recoverable		316		281
Trade and other receivables		14,132		9,259
Other investments		744		674
Cash and cash equivalents		6,975		6,252
Assets held for sale	7	749		–
		23,496		17,003
Total assets		146,753		151,220
Equity
Called up share capital		3,976		4,082
Additional paid-in capital		153,947		153,760
Treasury shares		(8,264	)	(8,171	)
Retained losses		(78,613	)	(77,661	)
Accumulated other comprehensive income		12,862		15,545
Total equity shareholders’ funds		83,908		87,555
Non-controlling interests		2,157		2,880
Put options over non-controlling interests		(793	)	(2,874	)
Total non-controlling interests		1,364		6
Total equity		85,272		87,561
Non-current liabilities
Long-term borrowings		29,279		28,375
Taxation liabilities		250		350
Deferred tax liabilities		6,767		6,486
Post employment benefits		312		87
Provisions		509		482
Trade and other payables		670		804
		37,787		36,584
Current liabilities
Short-term borrowings		6,830		9,906
Taxation liabilities		1,931		1,912
Provisions		488		559
Trade and other payables		14,264		14,698
Total liabilities associated with assets classified as held for sale	7	181		–
		23,694		27,075
Total equity and liabilities		146,753		151,220

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of changes in equity

	Share capital £m		Additional paid-in capital £m	Treasury shares £m		Accumulated comprehensive income £m		Equity shareholders’ funds £m		Non- controlling interests £m		Total equity £m

1 April 2010	4,153		153,509	(7,810	)	(59,471	)	90,381		429		90,810
Issue or reissue of shares	–		–	134		(108	)	26		–		26
Repurchase of own shares	–		–	(187	)	–		(187	)	–		(187	)
Share-based payment	–		88	–		–		88		–		88
Transactions with non-
controlling shareholders in
subsidiaries	–		–	–		(107	)	(107	)	22		(85	)
Comprehensive income	–		–	–		3,114		3,114		(35	)	3,079
Dividends	–		–	–		(2,976	)	(2,976	)	(240	)	(3,216	)
Other	–		–	–		28		28		–		28
30 September 2010	4,153		153,597	(7,863	)	(59,520	)	90,367		176		90,543

1 April 2011	4,082		153,760	(8,171	)	(62,116	)	87,555		6		87,561
Issue or reissue of shares	–		3	237		(189	)	51		–		51
Redemption or cancellation
of shares	(106	)	106	2,343		(2,343	)	–		–		–
Repurchase of own shares	–		–	(2,673	)	–		(2,673	)	–		(2,673	)
Share-based payment	–		78	–		–		78		–		78
Transactions with non-
controlling shareholders in
subsidiaries	–		–	–		(2,006	)	(2,006	)	1,703		(303	)
Comprehensive income	–		–	–		3,996		3,996		(145	)	3,851
Dividends	–		–	–		(3,102	)	(3,102	)	(200	)	(3,302	)
Other	–		–	–		9		9		–		9
30 September 2011	3,976		153,947	(8,264	)	(65,751	)	83,908		1,364		85,272

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of cash flows

		Six months ended 30 September
		2011		2010
	Note	£m		£m

Net cash flow from operating activities	8	5,926		6,240

Cash flows from investing activities
Purchase of interests in subsidiaries and joint ventures, net of cash acquired		(118	)	(22	)
Purchase of intangible assets		(983	)	(3,455	)
Purchase of property, plant and equipment		(2,630	)	(2,159	)
Purchase of investments		(85	)	(28	)
Disposal of interests in associates		6,805		–
Disposal of property, plant and equipment		42		15
Disposal of investments		68		4,270
Dividends received from associates		733		700
Dividends received from investments		2		84
Interest received		158		120
Taxation on investing activities		(104	)	–
Net cash flow from investing activities		3,888		(475	)

Cash flows from financing activities
Issue of ordinary share capital and reissue of treasury shares		51		26
Net movement in short-term borrowings		643		885
Proceeds from issue of long-term borrowings		1,062		3,871
Repayment of borrowings		(1,984	)	(1,703	)
Purchase of treasury shares		(1,813	)	(146	)
Equity dividends paid		(3,102	)	(2,976	)
Dividends paid to non-controlling shareholders in subsidiaries		(199	)	(234	)
Other transactions with non-controlling shareholders in subsidiaries		(2,601	)	(137	)
Interest paid		(797	)	(759	)
Net cash flow from financing activities		(8,740	)	(1,173	)

Net cash flow		1,074		4,592
Cash and cash equivalents at beginning of the financial period		6,205		4,363
Exchange loss on cash and cash equivalents		(325	)	(134	)
Cash and cash equivalents at end of the financial period		6,954		8,821

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Notes to the unaudited condensed consolidated financial statements

For the six months ended 30 September 2011

1 Basis of preparation

The unaudited condensed consolidated financial statements for the six months ended 30 September 2011:

· were prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” (‘IAS 34’);

· are presented on a condensed basis as permitted by IAS 34 and therefore do not include all disclosures that would otherwise be required in a full set of financial statements and should be read in conjunction with the Group’s annual report for the year ended 31 March 2011;

· apply the same accounting policies, presentation and methods of calculation as those followed in the preparation of the Group’s consolidated financial statements for the year ended 31 March 2011 which were prepared in accordance with International Financial Reporting Standards (‘IFRS’) adopted by the European Union (‘EU’), the Companies Act 2006 and Article 4 of the EU IAS Regulations;

· include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the periods presented; and

· do not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006 and were approved by the Board of directors on 8 November 2011.

The information relating to the year ended 31 March 2011 is an extract from the Group’s published annual report for that year, which has been delivered to the Registrar of Companies, and on which the auditors’ report was unqualified and did not contain statements under section 498(2) or 498(3) of the UK Companies Act 2006.

The directors are satisfied that, at the time of approving the interim financial statements, it is appropriate to continue to adopt a going concern basis of accounting.

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the end of the reporting period, and the reported amounts of revenue and expenses during the reporting period. Actual results could vary from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Notes to the unaudited condensed consolidated financial statements

For the six months ended 30 September 2011

2 Segment analysis

The Group has a single group of related services and products being the supply of communications services and products. The Group announced a new organisational structure on 9 September 2010, effective 1 October 2010. The table below presents segmental information on the revised basis, with the six months ended 30 September 2010 amended to conform to the current presentation.

		Intra-			Inter-
	Segment	region		Regional	region		Group
	revenue	revenue		revenue	revenue		revenue	EBITDA
	£m	£m		£m	£m		£m	£m
Six months ended 30 September 2011
Germany	4,102	(25	)	4,077	(1	)	4,076	1,552
Italy	2,905	(19	)	2,886	(1	)	2,885	1,362
Spain	2,511	(38	)	2,473	(2	)	2,471	681
UK	2,664	(25	)	2,639	(3	)	2,636	633
Other Europe	4,304	(43	)	4,261	(2	)	4,259	1,327
Europe	16,486	(150	)	16,336	(9	)	16,327	5,555
India	2,117	–		2,117	(3	)	2,114	535
Vodacom	2,814	–		2,814	(3	)	2,811	934
Other Africa, Middle East and Asia Pacific	1,977	–		1,977	(11	)	1,966	532
Africa, Middle East and Asia Pacific	6,908	–		6,908	(17	)	6,891	2,001
Non-Controlled Interests and Common Functions	306	–		306	(4	)	302	(24	)
Group	23,700	(150	)	23,550	(30	)	23,520	7,532
Verizon Wireless(1)	9,728							3,848


Six months ended 30 September 2010
Germany	3,859	(24	)	3,835	(2	)	3,833	1,471
Italy	2,852	(24	)	2,828	(1	)	2,827	1,356
Spain	2,614	(38	)	2,576	(1	)	2,575	868
UK	2,593	(26	)	2,567	(4	)	2,563	599
Other Europe	4,122	(38	)	4,084	(2	)	4,082	1,261
Europe	16,040	(150	)	15,890	(10	)	15,880	5,555
India	1,874	–		1,874	(7	)	1,867	488
Vodacom	2,612	–		2,612	(4	)	2,608	866
Other Africa, Middle East and Asia Pacific	1,956	–		1,956	(13	)	1,943	578
Africa, Middle East and Asia Pacific	6,442	–		6,442	(24	)	6,418	1,932
Non-Controlled Interests and Common Functions	320	–		320	(15	)	305	(124	)
Group	22,802	(150	)	22,652	(49	)	22,603	7,363
Verizon Wireless(1)	9,372							3,753

Note:

(1) Values shown represent the Group’s share, based on its equity interest. They are not included in the calculation of Group revenue or EBITDA as Verizon Wireless is an associate.

A reconciliation of EBITDA to operating profit is shown below. For a reconciliation of operating profit to profit before taxation see the consolidated income statement on page 24.

	Six months ended 30 September
	2011		2010
	£m		£m
EBITDA	7,532		7,363
Depreciation and amortisation including loss on disposal of fixed assets	(4,018	)	(3,948	)
Share of results in associates	2,521		2,598
Impairment loss	(450	)	(800	)
Other income and expense	3,414		–
Operating profit	8,999		5,213

The Group’s 44% interest in SFR was sold on 16 June 2011 for £6,805 million generating a £3,419 million income statement gain.

Notes to the unaudited condensed consolidated financial statements

For the six months ended 30 September 2011

3 Impairment loss

The carrying value of goodwill, intangible assets and property, plant and equipment of the Group’s operations in Greece (reported within the Other Europe segment) was impaired by £450 million in the six months ended 30 September 2011 following a test for impairment triggered by adverse movements in the discount rate and adverse performance against previous plans.

The majority of the impairment loss in the six months ended 30 September 2011 was driven by lower projected cash flows within business plans as a result of challenging economic conditions. There was also an adverse movement in the discount rate. The carrying value was based on a value in use calculation using a pre-tax risk adjusted discount rate of 15.9%. The pre-tax adjusted discount rate used in the previous value in use calculation at 31 March 2011 was 14.0%. The charge has been recognised in the consolidated income statement as a separate line item within operating profit. The recoverable amount of the Group’s operations in Greece equals its reported carrying value at 30 September 2011 and consequently, any adverse change in a key assumption underpinning the value in use calculation may cause a further impairment loss to be recognised.

The carrying value of goodwill of the Group’s operations in Greece was impaired by £800 million in the six months ended 30 September 2010.

4 Taxation

	Six months ended 30 September
		2011		2010
		£m		£m
United Kingdom corporation tax expense/(income):
Current year		8		38
Adjustments in respect of prior years		(4	)	5
Overseas current tax expense/(income):
Current year		1,165		1,624
Adjustments in respect of prior years		1		(229	)
Total current tax expense		1,170		1,438
Deferred tax on origination and reversal of temporary differences:
United Kingdom deferred tax		(43	)	(210	)
Overseas deferred tax		240		(492	)
Total deferred tax expense/(income)		197		(702	)
Total income tax expense		1,367		736

5 Earnings per share

	Six months ended 30 September
		2011	2010
		Millions	Millions
Weighted average number of shares for basic earnings per share		51,132	52,701
Effect of dilutive potential shares: restricted shares and share options		295	283
Weighted average number of shares for diluted earnings per share		51,427	52,984

		£m	£m
Earnings for basic and diluted earnings per share		6,679	7,542

Notes to the unaudited condensed consolidated financial statements

For the six months ended 30 September 2011

6 Equity dividends on ordinary shares

	Six months ended 30 September
	2011	2010
	£m	£m
Declared during the period:

Final dividends for the year ended 31 March 2011: 6.05 pence per share
(2010: 5.65 pence per share)	3,102	2,976

Proposed after the end of the reporting period and not recognised as a liability:

Interim dividend for the year ending 31 March 2012: 3.05 pence per share
(2011: 2.85 pence per share)	1,538	1,494
Second interim dividend for the year ending 31 March 2012: 4.0 pence per
share (2011: nil)	2,017	–
	3,555	1,494

7 Held for sale assets

On 30 June 2011 the Group announced an agreement to sell its entire 24.4% holding in Polkomtel to Spartan Capital Holdings SP. z o.o. This transaction is part of an agreement between all of the shareholders of Polkomtel to sell their stakes to Spartan Capital Holdings SP. z o.o. The transaction is due to complete in the fourth calendar quarter of 2011. The Group is expected to receive a cash consideration of approximately €920 million (£815 million) before tax and transaction costs.

The major classes of assets and liabilities comprising the operations classified as held for sale are as follows:

		As at 30
		September
		2011

		£m
Goodwill		358
Other intangible assets		137
Property, plant and equipment		201
Other current assets		53
Total assets classified as held for sale		749
Long-term borrowings		49
Deferred tax liabilities		12
Trade and other payables		109
Other current liabilities		11
Total liabilities associated with assets classified as held for sale		181

Net assets of disposal group		568

Notes to the unaudited condensed consolidated financial statements

For the six months ended 30 September 2011

8 Reconciliation of net cash flow from operating activities

	Six months ended 30 September
	2011		2010
	£m		£m
Profit for the financial period	6,644		7,504
Adjustments for:
Share-based payments	70		78
Depreciation and amortisation	4,000		3,930
Loss on disposal of property, plant and equipment	18		18
Share of result in associates	(2,521	)	(2,598	)
Impairment loss	450		800
Other income and expense	(3,414	)	—
Non-operating income and expense	161		(2,389	)
Investment income	(226	)	(1,402	)
Financing costs	1,053		764
Income tax expense	1,367		736
Increase in inventory	(54	)	(149	)
Increase in trade and other receivables	(587	)	(481	)
Increase in trade and other payables	108		520
Cash generated by operations	7,069		7,331
Tax paid	(1,143	)	(1,091	)
Net cash flow from operating activities	5,926		6,240

9 Related party transactions

The Group’s related parties are its joint ventures, associates, pension schemes, directors and Executive Committee members.

Related party transactions with the Group’s joint ventures and associates primarily comprise fees for the use of products and services including network airtime and access charges, and cash pooling arrangements.

No related party transactions have been entered into during the period which might reasonably affect any decisions made by the users of these condensed consolidated financial statements, except as disclosed below. Transactions between the Company and its joint ventures are not material to the extent that they have not been eliminated through proportionate consolidation or disclosed on the following page.

	Six months ended 30 September
	2011	2010
	£m	£m
Sales of goods and services to associates	110	152
Purchases of goods and services from associates	59	93
Purchases of goods and services from joint ventures	108	107
Net interest income receivable from joint ventures	3	12

	30 September	31 March
	2011	2011
	£m	£m
Trade balances owed:
by associates	28	52
to associates	3	23
by joint ventures	58	67
to joint ventures	28	27
Other balances owed by joint ventures(1)	327	176

Note:

(1) Amounts arise primarily through Vodafone Italy and Indus Towers and represent amounts not eliminated on consolidation. Interest is paid in line with market rates.

Notes to the unaudited condensed consolidated financial statements

For the six months ended 30 September 2011

In the six months ended 30 September 2011 the Group made contributions to defined benefit pension schemes of £14 million (six months ended 30 September 2010: £15 million). Dividends received from associates are disclosed in the consolidated statement of cash flows.

10 Commitments and contingent liabilities

There have been no material changes to the Group’s commitments or contingent liabilities during the period, except as disclosed in note 11.

11 Other matters

Seasonality or cyclicality of interim operations

The Group’s financial results have not, historically, been subject to significant seasonal trends.

SFR

Following clearance of the transaction by the relevant competition and regulatory authorities, the Group completed the disposal of its entire 44% shareholding in SFR to Vivendi on 16 June 2011.

The Group received cash consideration of €7.75 billion (£6.8 billion) from Vivendi and a final dividend from SFR of €200 million (£178 million). Vodafone and SFR have also entered into a partner market agreement which will maintain their commercial cooperation.

Vodafone India Limited (formerly Vodafone Essar Limited)

On 1 July 2011 Vodafone Group, Essar Communications (Mauritius) Limited (‘ECML’) and ETHL Communications Holdings Limited (‘ECHL’) agreed the terms under which ECML and ECHL would sell their direct and indirect shareholdings in Vodafone India Limited (‘VIL’).

Under the terms of the agreements, ECML’s wholly owned subsidiaries, Essar Communications Limited (‘ECL’) and Essar Com Limited (‘ECom’), sold their entire 22% shareholdings in VIL, and ECHL agreed terms to dispose of its 11% shareholding in VIL. Further, the parties agreed that all outstanding claims between them are terminated, and that all future claims have been renounced. The parties also agreed to cooperate fully in seeking all regulatory approvals necessary for the completion of these transactions. ECML and ECHL’s contractual rights in respect of VIL under their prior agreements with Vodafone have terminated, and both ECML and ECHL relinquished all of their board seats in VIL.

The total cash outflow from Vodafone, including cash already paid for the first tranche of ECL’s shareholding in VIL, was expected to be approximately US$5.5 billion (£3.4 billion). This comprised:

· a net payment of US$3.3 billion (£2.0 billion) for the 22% stake in VIL held by ECL and ECom after withholding tax of US$0.9 billion (£0.6 billion). The transfer of these shares from ECL and ECom to Vodafone was completed in two tranches on 1 June 2011 and 1 July 2011. Euro Pacific Securities Ltd., an indirect wholly owned subsidiary of Vodafone International Holdings B.V., had sought confirmation from the Authority for Advanced Rulings (‘AAR’) in India on whether withholding tax was due in respect of consideration payable on the acquisition of Essar Group’s offshore holding in VIL. A ruling from the AAR was expected by the end of May 2011 but was adjourned until 1 July 2011, when the case was withdrawn. Whilst Vodafone and Essar continue to believe that no tax is due on this transfer, it was viewed as prudent to pay withholding tax on a “without prejudice” basis. The payment was made on 5 July 2011.

· a payment of US$1.3 billion (£0.8 billion or INR 56.7 billion) relating to the remaining 11% stake in VIL held by ECHL and the settlement of all shareholder claims. On 10 August 2011 Vodafone announced that Piramal Healthcare (‘Piramal’) had agreed to purchase approximately 5.5% of the issued equity share capital of VIL from ECHL for cash consideration of approximately US$0.6 billion (£0.4 billion). The transaction contemplates various exit mechanisms for Piramal, including both participation in a potential initial public offering of VIL and a sale of its stake to Vodafone. Approval for the sale of the remaining 5.5% interest in VIL currently held by ECHL is pending.

Notes to the unaudited condensed consolidated financial statements

For the six months ended 30 September 2011

Licence acquisition in Spain

On 29 July 2011 Vodafone acquired a total of 20 MHz (2x10 MHz) spectrum in the 800 MHz band and 40 MHz (2x20 MHz) spectrum in the 2.6 GHz band for a total cost of €0.5 billion (£0.5 billion). The 800 MHz ‘digital dividend’ spectrum is expected to become available in 2014 and the 2.6 GHz spectrum is immediately available for use.

Events after the end of the reporting period

Developments in the India tax case

The Group continues to believe that neither VIHBV nor any other member of the Group is liable for Indian withholding taxes on the Hutchison transaction in 2007, and continues to take actions to defend itself vigorously both during and after the six months ended 30 September 2011.

On 22 October 2010 the Indian Tax Authority quantified the alleged tax liability and issued a demand of INR 112.2 billion (£1.5 billion) in respect of tax (INR 79 billion) and interest (INR 33.2 billion). On 15 November 2010 VIHBV was asked to make a deposit with the Supreme Court of INR 25 billion (£0.3 billion) and provided a guarantee for INR 85 billion (£1.1 billion) pending final adjudication of the case. It is normal for the Supreme Court in India to request a monetary deposit and/or security by way of a bank guarantee as an interim measure pending the final outcome of a case. In line with this practice, VIHBV duly complied with the request in order to enable it to continue with the Supreme Court appeal process.

Following the payment of the deposit, interest remains accruing at 1% per month on the balance of the alleged tax liability of INR 54 billion (£0.7 billion) should this be found due. In addition to the tax and interest, penalties of up to 100% could be imposed on any tax found due.

The hearing before the Supreme Court, which is considering the appeal on the issue of jurisdiction as well as on the challenge to quantification, finished on 19 October 2011 and the decision of the Supreme Court is expected in due course. The outcome of the proceedings may or may not conclude on the matter in its entirety and there can be no assurance that any outcome will be favourable to VIHBV or the Group.

The Group did not carry a provision for this litigation at 30 September 2011 or 31 March 2011 as it continues to believe that it had no obligation to withhold tax on the acquisition under applicable Indian law at the time of the transaction.

Additional details on this matter are available under “Legal proceedings” on page 122 of the Group’s annual report for the year ended 31 March 2011.

Licence acquisition in Italy

On 3 October 2011 Vodafone acquired a total of 20 MHz (2x10 MHz) spectrum in the 800 MHz band, 10 MHz (2x5 MHz) spectrum in the 1.8 GHz band and 30 MHz (2x15MHz) spectrum in the 2.6 GHz band for a total cost of €1.3 billion (£1.1 billion). The 1.8 GHz band is expected to become available by the end of 2011, the 2.6 GHz spectrum band is expected to become available by the end of 2012 and the 800 MHz ‘digital dividend’ spectrum is expected to become available in January 2013.

INDEPENDENT REVIEW REPORT BY DELOITTE LLP TO VODAFONE GROUP PLC

We have been engaged by Vodafone Group Plc (the “Company”) to review the Condensed Consolidated Financial Statements in the half-year financial report for the six months ended 30 September 2011 which comprise the consolidated income statement, the consolidated statement of financial position, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows and related notes 1 to 11. We have read the other information contained in the half-year financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors’ responsibilities

The half-year financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-year financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom’s Financial Services Authority.

The annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union and as issued by the International Accounting Standards Board. As disclosed in note 1, the Condensed Consolidated Financial Statements included in this half-year financial report have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting,” (‘IAS 34’) as adopted by the European Union and as issued by the International Accounting Standards Board.

Our responsibility

Our responsibility is to express to the Company a conclusion on the Condensed Consolidated Financial Statements in the half-year financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusions

Based on our review, nothing has come to our attention that causes us to believe that the accompanying Condensed Consolidated Financial Statements are not prepared, in all material respects, in accordance with IAS 34 as adopted by the European Union and as issued by the International Accounting Standards Board, and the Disclosure and Transparency Rules of the United Kingdom’s Financial Services Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

8 November 2011

USE OF NON-GAAP FINANCIAL INFORMATION

In the discussion of the Group’s reported financial position, operating results and cash flows, information is presented to provide readers with additional financial information that is regularly reviewed by management. However, this additional information presented is not uniformly defined by all companies including those in the Group’s industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, certain information presented is derived from amounts calculated in accordance with IFRS but is not itself an expressly permitted GAAP measure. Such non-GAAP measures should not be viewed in isolation or as an alternative to the equivalent GAAP measure.

A summary of certain non-GAAP measures included in this results announcement, together with details of where additional information and reconciliation to the nearest equivalent GAAP measure can be found, is shown below.

		Location in this results
		announcement of reconciliation and
Non-GAAP measure	Equivalent GAAP measure	further information
EBITDA	Operating profit	Group results on page 9

Adjusted operating profit	Operating profit	Group results on page 9

Adjusted profit before tax	Profit before taxation	Taxation on page 11

Adjusted effective tax rate	Income tax expense as a percentage of profit before taxation	Taxation on page 11

Adjusted income tax expense	Income tax expense	Taxation on page 11

Adjusted profit attributable to equity shareholders	Profit attributable to equity shareholders	Earnings per share on page 11

Adjusted earnings per share	Basic earnings per share	Earnings per share on page 11 and 30

Operating free cash flow	Cash generated by operations	Cash flows and funding beginning on page 19

Free cash flow	Cash generated by operations	Cash flows and funding beginning on page 19

Net debt	Short-term borrowings, Long-term borrowings, cash and cash equivalents and other financial instruments	Analysis on net debt on page 20

ADDITIONAL INFORMATION

Regional results - six months ended 30 September

									Adjusted operating						Operating free
	Revenue				EBITDA				profit/(loss)				Capital expenditure		cash flow
	2011		2010		2011		2010		2011		2010		2011	2010	2011		2010
	£m		£m		£m		£m		£m		£m		£m	£m	£m		£m
Germany	4,102		3,859		1,552		1,471		831		818		410	342	869		1,111
Italy	2,905		2,852		1,362		1,356		976		1,004		269	260	893		983
Spain	2,511		2,614		681		868		361		555		147	220	343		402
UK	2,664		2,593		633		599		185		137		219	178	252		266
Other Europe
Greece	456		486		132		124		42		26		50	67	110		36
Netherlands	903		823		308		286		181		177		93	99	202		217
Portugal	560		565		250		232		162		145		62	63	169		162
Romania	361		359		141		149		46		53		38	32	64		84
Turkey	870		760		132		93		2		(33	)	134	146	(127	)	3
Other(1)	1,154		1,129		364		377		173		178		120	114	164		182
	4,304		4,122		1,327		1,261		606		546		497	521	582		684
Intra-region eliminations	(150	)	(150	)	–		–		–		–		–	–	–		–
Europe	16,336		15,890		5,555		5,555		2,959		3,060		1,542	1,521	2,939		3,446

India	2,117		1,874		535		488		(9	)	6		329	286	332		340
Vodacom	2,814		2,612		934		866		470		343		303	183	590		565
Other Africa, Middle East and Asia Pacific
Egypt	623		691		271		323		158		199		59	101	153		213
Other	1,354		1,265		261		255		(1	)	14		223	205	21		155
	1,977		1,956		532		578		157		213		282	306	174		368

Intra-region eliminations	–		–		–		–		–		–		–	–	–		–
Africa, Middle East and Asia Pacific	6,908		6,442		2,001		1,932		618		562		914	775	1,096		1,273

Non-Controlled Interests and Common
Functions	306		320		(24	)	(124	)	2,458		2,447		162	139	(273	)	(50	)
Inter-region eliminations	(30	)	(49	)	–		–		–		–		–	–	–		–
Group	23,520		22,603		7,532		7,363		6,035		6,069		2,618	2,435	3,762		4,669

Note:

(1) Includes elimination of £21 million (2010: £12 million) and £1 million (2010: £2 million) of intercompany revenue between operating companies within the Other Europe and Other Africa, Middle East and Asia Pacific segments respectively.

See page 36 for “Use of non-GAAP financial information” and page 41 for “Definitions of terms”.

ADDITIONAL INFORMATION

Service revenue – quarter ended 30 September

									Africa, Middle East
			Group(1)				Europe		and Asia Pacific
	2011		2010		2011		2010		2011		2010
	£m		£m		£m		£m		£m		£m
Voice revenue	6,668		6,851		4,306		4,578		2,290		2,208
Messaging revenue	1,359		1,260		1,096		1,014		249		227
Data revenue	1,579		1,243		1,188		944		380		286
Fixed line revenue	903		819		795		720		108		99
Other service revenue	527		469		345		315		190		164
Service revenue	11,036		10,642		7,730		7,571		3,217		2,984
	% change
									Africa, Middle East
			Group				Europe		and Asia Pacific
	Reported		Organic		Reported		Organic		Reported		Organic
Voice revenue	(2.7	)	(4.5	)	(5.9	)	(8.9	)	3.7		4.6
Messaging revenue	7.9		4.8		8.1		5.1		9.7		5.9
Data revenue	27.0		23.1		25.8		21.3		32.9		31.8
Fixed line revenue	10.3		5.9		10.4		5.2		9.1		11.0
Other service revenue	12.4		11.2		9.5		7.0		15.9		16.2
Service revenue	3.7		1.3		2.1		(1.2	)	7.8		8.2

			Germany				Italy				Spain			UK		India		Vodacom
	2011		2010		2011		2010		2011		2010		2011	2010	2011	2010	2011	2010
	£m		£m		£m		£m		£m		£m		£m	£m	£m	£m	£m	£m
Voice revenue	815		896		780		824		781		866		611	642	808	724	877	865
Messaging revenue	226		192		222		213		77		88		308	282	63	40	75	76
Data revenue	385		295		186		150		164		136		219	184	89	56	172	134
Fixed line revenue	468		443		157		132		84		76		12	8	3	1	53	54
Other service revenue	68		35		40		37		60		55		111	114	93	78	60	48
Service revenue	1,962		1,861		1,385		1,356		1,166		1,221		1,261	1,230	1,056	899	1,237	1,177

	% change
			Germany				Italy				Spain			UK		India		Vodacom
	Reported		Organic		Reported		Organic		Reported		Organic		Reported	Organic	Reported	Organic	Reported	Organic
Service revenue	5.4		0.1		2.1		(3.0	)	(4.5	)	(9.3	)	2.5	2.5	17.5	20.1	5.1	6.7

Note:

(1) The sum of the regional amounts may not be equal to Group totals due to Non-Controlled Interests and Common Functions and intercompany eliminations.

ADDITIONAL INFORMATION

Reconciliation of adjusted earnings

	Note	Reported		Adjustments		Adjusted
Six months ended 30 September 2011		£m		£m		£m

Operating profit	1	8,999		(2,964	)	6,035
Non-operating income and expense	2	(161	)	161		–
Net financing costs	3	(827	)	(66	)	(893	)
Profit before taxation		8,011		(2,869	)	5,142
Income tax expense	4	(1,367	)	170		(1,197	)
Profit for the financial period		6,644		(2,699	)	3,945

Attributable to:
– Equity shareholders		6,679		(2,717	)	3,962
– Non-controlling interests		(35	)	18		(17	)

Basic earnings per share		13.06p				7.75p

Notes:

(1)	Adjustment primarily relates to the £3,419 million gain arising from the disposal of the Group’s 44% interest in SFR.
(2)	Adjustment primarily consists of losses in relation to equity investments.
(3)	Comprises a £66 million adjustment in relation to foreign exchange rate movements on certain intercompany balances.
(4)	Adjustment primarily consists of tax related to the anticipated sale of an investment.

	Note	Reported		Adjustments		Adjusted
Six months ended 30 September 2010		£m		£m		£m

Operating profit	1	5,213		856		6,069
Non-operating income and expense	2	2,389		(2,389	)	–
Net investment income/(financing costs)	3	638		(1,078	)	(440	)
Profit before taxation		8,240		(2,611	)	5,629
Income tax expense	4	(736	)	(315	)	(1,051	)
Profit for the financial period		7,504		(2,926	)	4,578

Attributable to:
– Equity shareholders		7,542		(2,926	)	4,616
– Non-controlling interests		(38	)	–		(38	)

Basic earnings per share		14.31p				8.76p

Notes:

(1)	Adjustment relates to the £800 million impairment loss for Vodafone Greece and the £56 million net loss arising on the disposal by Verizon Wireless of certain markets related to the Alltel acquisition.
(2)	Adjustment primarily consists of the gain on disposal arising from the disposal of the Group’s 3.2% interest in China Mobile Limited.
(3)	Includes a £228 million adjustment in relation to foreign exchange rate movements on certain intercompany balances and on financial instruments received as consideration in the disposal of Vodafone Japan to SoftBank which completed in April 2006 and an £872 million release of interest accrual on the settlement of a tax case.
(4)	Represents £235 million relating to tax on the adjustments used to derive adjusted profit before tax offset by £550 million arising on the settlement of a tax case.

ADDITIONAL INFORMATION

Mobile customers(1)

(in thousands)
	1 July	Net		Other	30 September
Country	2011	additions		movements	2011	Prepaid(2)
Europe
Germany	36,024	804		–	36,828	58.7	%
Italy	23,223	(148	)	–	23,075	83.6	%
Spain	17,350	170		–	17,520	38.1	%
UK(3)	19,006	81		244	19,331	48.0	%
	95,603	907		244	96,754	60.4	%

Other Europe
Albania	1,663	85		–	1,748	93.9	%
Czech Republic	3,230	69		–	3,299	45.6	%
Greece	3,995	90		–	4,085	60.7	%
Hungary	2,642	12		–	2,654	51.5	%
Ireland	2,209	11		–	2,220	67.3	%
Malta	257	17		–	274	83.6	%
Netherlands	5,145	119		–	5,264	37.4	%
Portugal	6,052	128		–	6,180	81.4	%
Romania	8,930	(334	)	–	8,596	60.5	%
Turkey	17,505	323		–	17,828	70.3	%
	51,628	520		–	52,148	64.1	%
Europe	147,231	1,427		244	148,902	61.7	%

Africa, Middle East and Asia Pacific
India	141,519	3,473		–	144,992	95.3	%
Vodacom(4)	45,418	2,479		–	47,897	88.9	%
	186,937	5,952		–	192,889	93.7	%

Other Africa, Middle East and Asia Pacific
Australia	3,419	(27	)	–	3,392	39.7	%
Egypt	33,745	1,576		–	35,321	96.0	%
Fiji	305	(2	)	–	303	95.4	%
Ghana	3,494	472		–	3,966	99.6	%
New Zealand	2,458	(24	)	–	2,434	67.2	%
Qatar	761	53		–	814	96.3	%
	44,182	2,048		–	46,230	87.2	%
Africa, Middle East and Asia Pacific	231,119	8,000		–	239,119	92.4	%

Non-Controlled Interests and Common
Functions
Poland	3,365	(21	)	–	3,344	47.5	%

Group	381,715	9,406		244	391,365	79.3	%

Memorandum:

Group’s share of Verizon Wireless(5)	40,381	438		–	40,819	5.0	%
Vodafone Group plus the Group’s
share of Verizon Wireless	422,096	9,844		244	432,184	65.9	%

Notes:

(1)	Group customers represent subsidiaries on a 100% basis and joint ventures (being Italy, Australia, Fiji and Poland) based on the Group’s equity interests.
(2)	Prepaid customer percentages are calculated on a venture basis. At 30 September 2011 there were 521.0 million venture customers.
(3)	Other movements relate to a customer base acquisition.
(4)	Vodacom refers to the Group’s interests in Vodacom Group Limited and its subsidiaries, including those located outside of South Africa.
(5)	Includes Verizon Wireless’ retail customers only, based on the Group’s equity interest.

ADDITIONAL INFORMATION

Annualised mobile customer churn – quarter ended 30 September 2011

Country	Contract	Prepaid	Total

Germany	15.4%	32.4%	25.4%

Italy	19.2%	31.4%	29.5%

Spain	20.9%	56.4%	34.4%

UK	17.0%	55.4%	35.4%

India	22.4%	65.2%	63.2%

Vodacom(1)	9.2%	53.9%	48.8%

Note:

(1) Vodacom refers to the Group’s interests in Vodacom Group Limited and its subsidiaries, including those located outside of South Africa.

OTHER INFORMATION

1)	Copies of this document are available from the Company’s registered office at Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN.

2)	The half-year financial report will be available on the Vodafone Group Plc website, www.vodafone.com/investor, from 8 November 2011.

For further information:
Vodafone Group Plc
Investor Relations	Media Relations
Telephone: +44 7919 990230	Telephone: +44 1635 664 444

Notes:

1.	Vodafone and the Vodafone logo, Vodacom, M-Pesa, Vodafone TV and Vodafone One Net are trademarks of the Vodafone Group. Other product and company names mentioned herein may be the trademarks of their respective owners.
2.	All growth rates reflect a comparison to the half-year ended 30 September 2010 unless otherwise stated.
3.	References to the “Q1” are to the quarter ended 30 June 2011 unless otherwise stated.
4.	References to the “Q2” are to the quarter ended 30 September 2011 unless otherwise stated.
5.	References to “first half of the financial year” or “H1” are to the six months ended 30 September 2011 unless otherwise stated.
6.	All amounts marked with an “(*)” represent organic growth which presents performance on a comparable basis, both in terms of merger and acquisition activity and foreign exchange rates.
7.	Reported growth is based on amounts in pounds sterling as determined under IFRS.
8.	Quarterly historical information including service revenue, customers, churn, voice usage and ARPU is provided in a spreadsheet available at www.vodafone.com/investor.

Definitions of terms

Term

Definition

Proportionate mobile customers

The proportionate mobile customer number represents the number of mobile customers in the Group’s subsidiaries, joint ventures and associates, based on the Group’s ownership in such ventures.

SME

Small to medium-sized enterprises.

SoHo

Small-office-home-office.

For definitions of other terms please refer to pages 149 to 150 of the Group’s annual report for the year ended 31 March 2011.

Forward-looking statements

This document contains “forward-looking statements” within the meaning of the US Private Securities Litigation Reform Act of 1995 with respect to the Group’s financial condition, results of operations and businesses and certain of the Group’s plans and objectives.

In particular, such forward-looking statements include, but are not limited to, statements with respect to: expectations regarding the Group’s financial condition or results of operations contained within the Chief Executive’s statement on pages 3 to 6 of this document and within the guidance for adjusted operating profit and free cash flow for the 2012 financial year; expectations for the Group’s future performance generally including EBITDA growth; expectations regarding the Group’s 7% per annum dividend per share growth target, the Verizon Wireless dividend anticipated to be paid in January 2012 and the special dividend expected to be paid in February 2012; expectations regarding the operating environment and market conditions and trends, including customer usage, competitive pressures and price trends; intentions and expectations regarding the development and launch of products, services and technologies either introduced by Vodafone or by Vodafone in conjunction with third parties or by third parties independently, including the growth of tablet device usage; growth in customers and usage; growth in data, enterprise and broadband; expectations regarding spectrum licence acquisitions, including anticipated new availability in Spain and Italy; expectations regarding adjusted operating profit, revenue, service revenue, capitalised fixed asset additions, EBITDA margins, depreciation and amortisation charges, capital expenditure, free cash flow, foreign exchange rate movements and tax rates, including the Group’s anticipated adjusted effective tax rate for the financial year ending 31 March 2012; expectations regarding capital expenditures; expectations regarding the integration or performance of current and future investments, associates, joint ventures, non-controlled interests and newly acquired businesses, including Australia; expectations regarding disposals, including the anticipated disposal of Polkomtel; expectations regarding the Group’s share buyback programmes and the outcome and impact of regulatory and legal proceedings involving Vodafone and of scheduled or potential regulatory changes.

Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as “will”, “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 and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, the following: changes in economic or political conditions in markets served by operations of the Group that would adversely affect the level of demand for mobile services; greater than anticipated competitive activity, from both existing competitors and new market entrants, which could require changes to the Group’s pricing models, lead to customer churn or make it more difficult to acquire new customers; the impact of investment in network capacity and the deployment of new technologies, or the rapid obsolescence of existing technology; higher than expected costs or capital expenditures; slower than expected customer growth and reduced customer retention; changes in the spending patterns of new and existing customers and the possibility that new products and services will not be commercially accepted or perform according to expectations; the Group’s ability to renew or obtain necessary licences; the Group’s ability to achieve cost savings; the Group’s ability to execute its strategy in mobile data, enterprise and broadband and in emerging markets; changes in foreign exchange rates or interest rates; the ability to realise benefits from entering into partnerships for developing data and internet services and entering into service franchising and brand licensing; unfavourable consequences of acquisitions or disposals; changes in the regulatory framework in which the Group operates, including possible action by regulators in markets in which the Group operates or by the EU to regulate rates the Group is permitted to charge; the impact of legal or other proceedings against the Group or other companies in the mobile telecommunications industry; loss of suppliers or disruption of supply chains; the Group’s ability to satisfy working capital and other requirements through access to bank facilities, funding in the capital markets and operations; changes in statutory tax rates or profit mix which might impact the weighted average tax rate; changes in tax legislation or final resolution of open tax issues which might impact the Group’s tax payments or effective tax rate; and changes in exchange rates, including, particularly, the exchange rate of sterling to the euro and the US dollar.

Furthermore, a review of the reasons why actual results and developments may differ materially from the expectations disclosed or implied within forward-looking statements can be found under “Forward-looking statements” and “Principal risk factors and uncertainties” in the Group’s annual report for the year ended 31 March 2011. The annual report can be found on the Group’s website, www.vodafone.com/investor. All subsequent written or oral forward-looking statements attributable to the Company or any member of the Group or any persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. No assurances can be given that the forward-looking statements in this document will be realised. Subject to compliance with applicable law and regulations, Vodafone does not intend to update these forward-looking statements and does not undertake any obligation to do so.

-ends-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.

	VODAFONE GROUP
	PUBLIC LIMITED COMPANY
	(Registrant)



Dated: 9 November 2011	By:	/s/ R E S MARTIN
	Name:	Rosemary E S Martin
	Title:	Group General Counsel and Company Secretary