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 May 18, 2021
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.
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.
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 Stock Exchange Announcement
dated 18 May 2021 entitled ‘VODAFONE GROUP PLC – FY21 PRELIMINARY RESULTS’.
Vodafone Group Plc
⫶ FY21 Preliminary results
18 May 2021
Resilient performance in FY21 and announcing
next phase in our strategy to drive returns through growth
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Stable service revenue in FY21, returning to growth
in the second half
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Strong delivery of strategic priorities over the
last three years to reshape Vodafone
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Next strategic phase to become a new generation
connectivity & digital services provider in Europe and Africa
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Medium-term financial ambition to drive returns
through growth acceleration
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FY21
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FY20
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Change1
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Financial results (unaudited)
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Page
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€m
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€m
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%
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Group revenue
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14
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43,809
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44,974
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(2.6
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)
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Group service revenue
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14
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37,141
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37,871
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(0.1
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)*
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Operating profit
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14
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5,097
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4,099
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+24.3
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Adjusted EBITDA2
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14
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14,386
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14,881
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(1.2
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)*
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Profit / (loss) for the financial year
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14
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536
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(455
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)
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Basic earnings/(loss) per share
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26
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0.38
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c
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(3.13
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)c
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Adjusted basic earnings per share2
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26
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8.08
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c
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5.60
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c
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Total dividends per share
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36
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9.00
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c
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9.00
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c
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Cash inflow from operating activities
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26
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17,215
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17,379
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(0.9
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)
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Free cash flow (pre spectrum, restructuring and integration costs)2
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27
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5,019
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5,700
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(11.9
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)
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Free cash flow2
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27
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3,110
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4,949
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Net debt2,3
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28
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(40,543
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(42,047
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+3.6
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1.
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Amounts marked with an "*" represent organic growth. See page 2
for more information. ǀ 2. Non-GAAP measure. See page 40 for more information.
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3.
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FY20 Net debt has been aligned to the FY21 presentation. See
page 28 for more information.
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·
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Group revenue declined by 2.6% to €43.8 billion,
as good underlying momentum and the benefit from the acquisition of Liberty Global’s assets was offset by the effects of COVID-19
on roaming and visitor revenue, as well as foreign exchange movements
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·
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Adjusted EBITDA declined by 1.2%* to €14.4
billion as our leading digital and efficiency programmes resulted in a further €0.5 billion net reduction in European operating expenditure,
largely mitigating COVID impacts
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Free cash flow (pre spectrum, restructuring and
integration costs) of €5.0 billion, in line with expectations
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Total dividends per share are 9.0 eurocents, including
a final dividend per share of 4.5 eurocents
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Nick Read,
Group Chief Executive, commented:
“I
am pleased that we achieved full year results in line with our guidance and we exited the year with accelerating service revenue growth
across the business, with a particularly good performance in our largest market, Germany.
We
have delivered on the first phase of our strategy to reshape Vodafone as a stronger connectivity provider – including the
simplification of the group to Europe and Africa, the successful IPO of Vantage Towers (€13.2 billion market capitalisation), the
fast roll out of our next generation mobile and fixed networks, share gain in broadband subscriptions and continued reduction in customer
churn. Our digital transformation initiatives have generated savings of €0.5 billion over the year and the integration of the assets
acquired from Liberty Global is well ahead of plan.
The
world has changed. The pandemic has shown how critical connectivity and digital services are to society. Vodafone is strongly positioned
and through increased investment, we are taking action now to ensure we play a leadership role and capture the opportunities that these
changes create. The increased demand for our services supports our ambition to grow revenues and cash flow over the medium-term. We remain
fully focused on driving shareholder returns through deleveraging, improving our return on capital, and a firm commitment to our dividend.”
For more information, please contact:
Investor Relations Media Relations
Investors.vodafone.com Vodafone.com/media/contact
ir@vodafone.co.uk GroupMedia@vodafone.com
Registered Office: Vodafone House, The Connection,
Newbury, Berkshire RG14 2FN, England. Registered in England No. 1833679
A webcast Q&A session will be held at 10am on 18 May 2021.
The webcast and supporting information can be accessed at investors.vodafone.com
Summary ⫶ Resilient financial
performance
All amounts marked with
an “*” represent organic growth, which presents performance on a comparable basis, including merger and acquisition activity
and foreign exchange rates. Organic growth is a non-GAAP measure that is presented to provide readers with additional financial information
and should not be viewed in isolation or as an alternative to the equivalent GAAP measure. See “Non-GAAP measures” on page 40
for more information.
Financial performance
Total revenue declined by 2.6% to €43.8 billion
(FY20: €45.0 billion), as our good underlying momentum and the benefit from the acquisition of Liberty Global’s assets in Germany
and Central and Eastern Europe was offset by lower revenue from roaming, visitors and handset sales, adverse foreign exchange movements
and the disposal of Vodafone New Zealand.
Operating profit increased by 24.3% to €5.1
billion (FY20: €4.1 billion). Compared to the prior year period, we recognised lower gains on disposals, no impairment losses, and
we no longer recognised Vodafone’s share of losses related to Vodafone Idea following the write down of the asset to nil in FY20.
On an underlying basis, performance was broadly stable as lower adjusted EBITDA was partially offset by lower restructuring costs, depreciation
and amortisation, and a higher share of profits from associates and joint ventures.
The Group made a profit for the financial year
of €0.5 billion (FY20: loss of €0.5 billion). The profit increase was partly driven by higher operating profit and the recognition
of mark-to-market gains (FY21: €1.1 billion, FY20: losses of €1.1 billion). These factors were partially offset by higher income
tax expense in the current year, primarily due to a non-cash charge of €2.8 billion following a decrease in the carrying value of
deferred tax assets.
Basic earnings per share was 0.38 eurocents, compared
to a loss per share of 3.13 eurocents in the prior year.
Adjusted EBITDA decreased
by 1.2%* to €14.4 billion (FY20: €14.9 billion) as the decline in revenue was partially offset by strong cost control, with
a net reduction in our Europe and Common Functions operating expenditure of €0.5 billion.
Cash flow, funding &
capital allocation
Cash inflow from operating activities decreased
by 0.9% to €17.2 billion (FY20: €17.4 billion).
Free cash flow (pre spectrum, restructuring and
integration costs) decreased by 11.9% to €5.0 billion (FY20: €5.7 billion) due to lower adjusted EBITDA and increased investment
in network performance during the pandemic, partially offset by working capital movements including lower cash commissions.
Net debt at 31 March 2021 was €40.5 billion,
compared to €42.0 billion as at 31 March 2020. Net debt decreased by €1.5 billion, supported by free cash flow of €3.1
billion and net proceeds1 from the Vantage Towers public offering of €2.0 billion, partially offset by equity dividends
of €2.4 billion and payments to purchase KDG shares from minority shareholders of €1.5 billion.
Total dividends per share are 9.0 eurocents (FY20:
9.0 eurocents), including a final dividend per share of 4.5 eurocents. The ex-dividend date for the final dividend is 24 June 2021
for ordinary shareholders, the record date is 25 June 2021 and the dividend is payable on 6 August 2021.
1 Net proceeds as at 31 March 2021,
excluding proceeds from greenshoe.
Strategic review ⫶
A new generation connectivity & digital services provider
In November 2018,
we set out our ambition to reshape Vodafone and establish a foundation from which the Group can grow in the converged connectivity markets
in Europe, and mobile data and payments in Africa. During the first phase of our transformation we have executed at pace to deliver
on our priorities, and in this strategic review we highlight that:
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A.
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we have delivered the first phase of our strategy to reshape Vodafone;
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B.
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structural trends are accelerating, creating new growth opportunities;
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C.
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the next phase of our strategy is to become a new generation connectivity and digital services provider
for Europe and Africa; and
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D.
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we are committed to improving returns.
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A
⫶ We have delivered the first phase of our strategy to reshape Vodafone
We have now substantially delivered the first phase
of our strategic ambition to reshape Vodafone into a stronger connectivity provider. This has been delivered through four key strategic
priorities: (i) deepening customer engagement; (ii) accelerating our transformation to a digital first organisation; (iii) improving
the utilisation of our assets; and (iv) optimising our portfolio.
During FY21, we have continued to execute at pace
across all four priorities. Highlights of activity during the period include:
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mobile contract customer loyalty improved by 0.9
percentage points year-on-year;
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we have added 1.4 million NGN broadband customers
and 44 million homes are now passed with our 1 gigabit capable fixed-line network in Europe;
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we have launched 5G in 240 cities across 10 of
our European markets;
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in response to the trading conditions related
to the COVID-19 pandemic, we accelerated a series of cost saving activities, resulting in a €0.5 billion net reduction in operating
expenditure in Europe and Common Functions;
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we have secured mobile wholesale agreements with
PostePay in Italy and Asda Mobile in the UK; and
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we completed the IPO of Vantage Towers March 2021,
with a market capitalisation of €13.2 billion as at 17 May 2021.
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The table below summarises the progress against
our strategic priorities in FY21.
Strategic progress summary
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Units
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FY21
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FY20
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Deepening customer engagement
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Europe mobile contract customers1
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million
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65.4
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64.4
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Europe broadband customers1
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million
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25.6
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25.0
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Europe on-net gigabit capable connections1
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million
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43.7
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31.9
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Europe Consumer converged customers1
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million
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7.9
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7.2
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Europe mobile contract customer churn
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%
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13.7
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14.62
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Africa data users3
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million
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84.9
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82.6
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M-Pesa transaction volume3
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billion
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15.2
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12.2
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Business fixed-line service revenue growth4
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%
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3.0
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3.3
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IoT SIM connections
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million
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123.3
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102.9
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Accelerating digital transformation
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Europe net opex savings5
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EUR billion
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0.5
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0.4
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Europe digital channel sales mix6
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%
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26
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21
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Europe frequency of customer contacts p.a.
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#
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1.4
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1.4
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Europe MyVodafone app penetration
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%
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63
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65
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Improving asset utilisation
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Average mobile data usage per customer in Europe
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GB/month
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7.2
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5.7
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Europe on-net NGN broadband penetration1
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%
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30
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30
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Pre-tax return on capital employed (controlled)7
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%
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5.5
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6.3
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Post-tax return on capital employed (controlled and associates/joint ventures)7
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%
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3.9
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3.9
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Notes:
1. Including VodafoneZiggo | 2. Excluding the impact
of inactive data-only SIM losses in Italy during Q3 and Q4 FY20 | 3. Africa including Ghana, Egypt and Safaricom | 4. Organic growth |
5. Europe & Common Function operating costs | 6. Based on Germany, Italy, UK and Spain | 7. These line items are non-GAAP
measures. See page 40 for more information.
Deepening customer engagement
Our actions have delivered a more consistent commercial
performance, and our service revenue trends have remained resilient, despite the direct impacts of the COVID-19 pandemic on revenue from
roaming and visitors.
In mobile, we have launched speed-tiered, unlimited
data plans in 10 markets. This has enabled us to stabilise and grow our higher value customer base and increase average revenue per user
(‘ARPU’). We have also launched and embedded ‘second’ brands across our markets and now have over 5 million active
users across our second brands in Germany, Italy, the UK and Spain.
We have maintained strong commercial momentum in
our fixed business and over the past three years we have added 4.3 million NGN broadband customers in Europe. We also have converged customer
plans available in all major markets. By deepening the relationship we have with our customers we have been able to drive a significant
improvement in customer loyalty, with mobile contract churn in Europe reducing by 2.3 percentage points over the last three years.
In Africa, demand for mobile data remains significant
given the lack of fixed line infrastructure. There is also a substantial opportunity to grow M-Pesa (our mobile payments platform) and
expand it into new financial and digital services. During the last three years, we have continued to see significant demand for mobile
data and monthly average data usage in our markets outside Europe has increased to 4.6 GB (FY18: 2.2 GB). The total number of data users
in Africa has grown from 72.4 million to 84.9 million. The number of M-Pesa and other mobile money customers has continued to grow strongly,
with a total of 48.3 million active users now registered.
Accelerating digital transformation
We have now exceeded our original three-year target
of at least €1.2 billion of net savings from operating expenses in Europe and Common Functions, with cumulative savings of €1.3
billion, equivalent to a c.15% net reduction. This focus on efficiency, delivered through standardisation, integration and digitalisation
of our operations, has enabled our adjusted EBITDA margin to be resilient during the pandemic and remain broadly stable at 32.8%. In the
last three years, we have introduced 5,500 role efficiencies in our shared service centres (‘_VOIS’) and approximately 30%
of Group employees now work in our shared operations. We are continuing to transform the business and evolve the Group digital toolset
– including our AI assistant, TOBi, and Robotic Process Automation (‘RPA’) – in order to further our productivity
leadership. We have also increased our digital sales, now 26% of total sales across Germany, Italy, the UK and Spain, and optimised
our retail footprint.
Improving asset utilisation
Three years ago, we began a series of activities
to improve our asset utilisation to support a recovery in return on capital employed (‘ROCE’). We have reached network sharing
agreements with leading mobile network operators in most of our European markets, established Vantage Towers as a separate business to
consolidate the ownership and operations of our passive mobile network infrastructure, and signed significant wholesale agreements in
both our fixed and mobile networks.
Despite the strong delivery of our strategic priorities
at pace, our post-tax return ROCE of 3.9% remains below our cost of capital. In a subsequent section, we have set out our growth model
and capital allocation framework and explained how we will drive shareholder returns through efficiency and growth.
Optimising the portfolio
In order to achieve our strategic objectives to
focus on converged connectivity markets in Europe, and mobile data and payments in Africa, we began a large programme to rationalise our
portfolio in 2019. Our portfolio optimisation programme has had three overriding objectives as summarised below:
Objective
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Transactions
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1. Focus on Europe & Africa
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5 disposals including New Zealand and Malta
4 acquisitions, including purchase of KDG shares from minority shareholders
3 mergers in Australia and India (Vodafone Idea & Indus Towers)
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2. Achieve convergence with local scale
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3 acquisitions in Germany, Greece and Eastern Europe
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3. Enable structural shift in asset utilisation
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2 tower mergers
in Italy and Greece, as well as subsequent sale of INWIT stake
IPO of Vantage Towers
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B ⫶
Accelerating structural trends creating new growth opportunities
Whilst the events of the last year have underscored
the importance society places on fast, reliable, secure and affordable connectivity, we see this as an acceleration of existing longer-term
trends. There are five key mega trends that we see shaping our industry over the medium-term.
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2.
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greater adoption of cloud technology;
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4.
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digital payments & financial services; and
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1
⫶ Remote working
The trend towards remote working for employees
and businesses was strong before the impact of the pandemic, driven by the changing lifestyle priorities of different demographics. COVID-19
has driven a step-change in demand, driving multiple benefits including a more flexible organisational culture and greater productivity.
This trend is driving demand for fast and reliable fixed and mobile connectivity for individual workers, but also emerging cloud architecture,
digital security and unified communications solutions for employers.
2
⫶ Greater adoption of cloud technology
Over the last decade, large technology companies
have invested heavily in advanced centralised data storage and processing capabilities that organisations and consumers can access remotely
through data connectivity (commonly termed “cloud” technology). As result, organisations and consumers are increasingly moving
away from using their own expensive hardware and device-specific software to streaming more efficient shared hardware capacity or services
over the cloud. This is popular as it allows upfront capital investment savings, the ability to efficiently scale resources to meet demand,
easily update systems and increase resiliency. This is driving demand for fast, reliable and secure connectivity with lower latency.
3
⫶ Connected devices
A wide array of devices across all sectors and
use cases are increasingly becoming connected to the internet. These connected devices, known as the Internet of Things (‘IoT’),
are expected to double by 2025, driven by continued reductions in the cost of computing components, advances in cross-device operability
and software, and the near-ubiquity of mobile networks. There is a wide range of consumer applications such as smartwatches, security
systems and tracking devices, as well as business applications such as supply chain management, autonomous vehicles and remote surgery.
This trend is driving significant growth in connectivity, but also end-to-end integrated IoT solutions.
4
⫶ Digital payments & financial services
In Africa, digital payments are primarily conducted
via mobile phones through payment networks owned and operated by network operators. In Consumer, increasing smartphone penetration drives
higher peer-to-peer transaction volumes and revenue, whilst also driving the adoption of next-generation mobile payment applications.
Network operators are leveraging this relationship to offer additional financial services products, ranging from advances on mobile airtime
and device insurance to more complex offerings such as life insurance. Businesses are also increasingly reliant on operator-owned payment
infrastructure for both consumer-to-business payments, but also for large business-to-business transfers.
5
⫶ EU recovery funding
The European Commission has launched a series of
funding programmes with €750 billion available under the banner “NextGenerationEU”. These include the Recovery &
Resilience facility, which combines €360 billion of loans and €312.5 billion of grants available to European Union Member States.
Of these grants, approximately 70% will be allocated to European Union Member States in which Vodafone has an operating presence. These
grants are planned to be 70% distributed by the end of 2022. The range of funding presents a direct and indirect opportunity given that
at least 20% of the total funding is planned to support the European Commission’s digital transformation agenda.
C
⫶ The next phase in our strategy - a new generation connectivity and digital services provider
Following the significant actions we have taken
to reshape the Group, we are focused on growing our converged connectivity markets in Europe, and mobile data and payments in Africa.
The next phase of our strategy focuses on three customer commitments and three enabling strategies, all of which work together towards
realising our vision to become a new generation connectivity and digital services provider for Europe and Africa, enabling an inclusive
and sustainable digital society. In order to achieve our vision, we will:
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1.
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provide the best connectivity products and services;
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2.
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provide leading & innovative digital service platforms;
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3.
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provide an outstanding digital customer experience;
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4.
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further simplify our operating model to be the most efficient operator in our sector;
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5.
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leverage our social contract to build partnerships with governments and regulators to shape a healthier
industry structure and improve returns for all stakeholders; and
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6.
|
invest in and operate leading connectivity infrastructure.
|
1
⫶ Best connectivity products & services
Consumer ⫶
Europe
In Europe, we are a leading converged connectivity
provider with 7.9 million converged customers, 113 million mobile connections, 142 million marketable NGN broadband homes, we cover 98%
of the population in the markets we operate in with 4G, and we have launched 5G in 240 cities in 10 markets in Europe. We have achieved
this leading position by focusing on our core fixed and mobile connectivity. We are enhancing our products through capacity and speed
upgrades, unlimited mobile plans, a distinct tiered branding hierarchy and convergent product bundles.
Consumer ⫶
Africa
In Africa, we are the leading provider of mobile
data and mobile payment services. We have 178 million mobile customers in 8 markets which represent 40% of Africa’s total Gross
Domestic Product. We are the leading mobile connectivity provider by revenue market share in 7 markets. Excluding Kenya, we cover 62%
of the population in the markets in which we operate with 4G services. Our M-Pesa financial services platform processed over 15 billion
transactions during the year.
Further information
on our operations in Africa can be accessed here: vodacom.com.
Vodafone Business
In March 2021,
we held a virtual briefing on Vodafone Business for investors and analysts (investors.vodafone.com/vbbriefing). This briefing
outlined the following four key messages.
|
1.
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We operate in attractive markets ⫶ We serve over 6 million
private and public sector customers of all sizes, across Europe and Africa, in addressable markets totalling over €100 billion. With
more employees seeking flexible working, gigabit connectivity with low latency and both public and private organisations driving digitalisation,
we have a compelling structural opportunity, with expected addressable market growth of c.8% per annum.
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2.
|
We
have unique scale & capabilities ⫶ We have the scale, expertise and technology
to successfully compete in these attractive markets. We are expanding our portfolio of products
and services to enhance our provision of core connectivity services, with in-house innovation
in IoT and partnerships with leading technology companies to offer cloud, security and unified
communications services.
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3.
|
We
have strong operating momentum ⫶ Over the last three years, we have delivered
a step-change in our commercial performance, leading to service revenue growth (excluding
roaming and visitor revenue) of 1.8% in FY21, with total service revenue now over €10
billion. This has been driven by ongoing improvements in our commercial momentum, strong
support to our customers throughout the pandemic, clear understanding of our economic model
and disciplined prioritisation of high marginal return on capital opportunities.
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|
4.
|
We
are on a clear growth pathway ⫶ Our strategy is grounded in our purpose to connect
for a better future and is focused on three core elements. Firstly, to be the trusted partner
for small and medium-sized enterprises. Secondly, to be the gigabit connectivity provider
of choice to large enterprises. Thirdly, to be the leading end-to-end provider of IoT solutions
for every organisation.
|
2 ⫶
Leading innovation in digital services
Alongside optimising our core connectivity services,
we are building platforms that will allow ‘best on Vodafone’ experiences. Our primary areas of focus are premium TV in Europe;
financial services in Africa; Vodafone Business specific digital platforms across the Group; and the IoT for both consumers and businesses.
Premium TV
Our consumer TV proposition now has over 22 million
subscribers in 11 markets, making Vodafone the 2nd largest TV provider in Europe. We partner with 18 leading global content
producers and distributors such as Disney, ViacomCBS, WarnerMedia, Netflix, Amazon and Comcast. Our premium TV offering is delivered
through a seamlessly integrated, multi-device platform. This enables consumers to watch whatever they want, whenever they want on any
connected device.
Financial services
We remain focused on embedding Vodacom as a leading
pan-African technology company and M-Pesa offers a unique opportunity to extend our reach further into financial services through our
investments in financial, digital and lifestyle services. This provides us with opportunities to enhance our relationship with the 178
million mobile customers we serve across our African footprint. In particular, we note our partnership with Alipay and the imminent launch
of our single lifestyle app for customers and merchants in South Africa that promotes greater financial inclusion. We see this super-app
as a precursor to M-Pesa’s evolution, supporting accelerated growth across our financial services’ businesses and assisting
us in connecting hundreds of millions more in Africa so that no one is left behind.
Vodafone Business digital platforms
We are extending the breadth of our propositions
to private and public sector organisations beyond connectivity. We estimate the addressable market for unified communications, cloud
applications and digital security is over €50 billion and growing at over 10% per annum. We are partnering with leading technology
firms such as Microsoft, Accenture, IBM, Google, Cisco and Amazon to provide our customers with best-in-class products and services.
We provided further information on this growth opportunity as part of the Vodafone Business virtual investor briefing.
IoT
Our end-to-end IoT
proposition is the largest of its kind globally. Our Business IoT offering for private and public sector clients was discussed at our
recent virtual investor briefing. Our addressable market has already reached €10 billion and is expected to grow at 16% per
annum over the medium term. At the end of March 2021, we had over 120 million devices connected to our network, including 33 million
connected cars. We have also developed over 100 tailored end-to-end solutions for a range of sectors including healthcare, distribution,
manufacturing and automotive.
Our consumer IoT offering has now connected over
1.4 million devices such as the watches through our OneNumber service and our ‘Curve’ mobile tracking device. In addition,
we recently launched a new smart kids watch, developed with The Walt Disney Company. We will be expanding on the opportunity for consumer
IoT and other consumer growth opportunities at a virtual investor briefing in December 2021.
3 ⫶
Outstanding digital experiences
Over the last thirty years, Vodafone’s approach
to retail, distribution and customer care has evolved in line with broader social and technological development. During the 1990s, we
operated primarily through a traditional retail ‘high street’ store mode, whereby the vast majority of customer interaction
was face-to-face and involved a high degree of manual process. In the 2000s, we introduced a multi-channel model, in which customers
could also choose to interact with us through dedicated websites or contact centres, in addition to the retail stores. In the 2010s,
we began to combine the models into an omni-channel experience, through which our customers could move between different channels for
different missions.
In the new decade, our ambition is for customers
to primarily interact with us in a ‘Digital First’ manner. Our investments in this area have already resulted in our artificial
intelligence-enabled assistant (‘TOBi’) resolving 63% of customer support interactions with no human interaction and an approximate
5% reduction in the frequency of customer contacts per year to 1.4. As we look ahead, we expect the majority of new customers will join
Vodafone through digital channels and the overwhelming majority of customer interaction and queries will be fulfilled through either
the MyVodafone app or support provided through ‘TOBi’. We will then support the ongoing customer relationship through data-driven
and automated targeting of upselling, cross-selling and contract extension. This Digital First customer experience will improve customer
loyalty and reduce the service cost per customer.
We will be expanding on our plans for outstanding
digital experiences at a virtual investor briefing in December 2021.
4 ⫶
Simplified, most efficient operations
The connectivity value chain involves a high degree
of repeatable processes across all of our markets, such as procurement, network deployment, network operations, sales activities, customer
support operations, and billing and transaction processing. This has provided us with a significant opportunity to standardise processes
across markets, relocate operations to lower cost centres of excellence and apply automation at scale, delivering best in class efficiency
levels.
In the next phase of our strategy, we are pursuing
these opportunities through two significant evolutions in our operating model. Firstly, integrating our network and digital teams in
Europe and, secondly, streamlining our approach to product development and customer care within our European commercial teams. These
programmes will be key components in delivering the next phase of our ongoing efficiency programme, which targets a total net reduction
of Europe and Common Function operating expenses of 20% by FY23 (versus a FY18 baseline).
Integrating network & digital teams
We are integrating our European network and digital
teams. This new structure will drive effectiveness, increase our speed of execution, standardise key processes, and support the codification
of what is the best solution for Group implementation. We will increase our IT and digital capabilities, standardise key development
environments and enhance coding collaboration, while internalising software engineering capabilities, further leveraging our _VOIS shared
services environment.
This new operating model for our technology teams
will enable our multi-year journey to redefine our technology architecture following a ‘Telco as a Service’ (‘TaaS’)
model. Our TaaS model is based on two existing layers of inter-connected digital technology. We have created a standardised suite of
customer and user-facing interfaces for an entire omni-channel journey and called it OnePlatform. The OnePlatform suite is powered by
our Digital eXperience Layer (‘DXL’). DXL refers to the abstraction layer in our IT architecture which separates customer-facing
micro-services requiring frequent and rapid adjustment from back-end systems such as billing and CRM.
We have already moved more than half our core
network functions to the cloud in Europe, supporting voice core, data core and service platforms on over 1,300 virtual network functions.
In Europe, we now operate a single digital network architecture across all markets, enabling the design, build, test and deployment of
next generation core network functions more securely, 40% faster and at 50% lower cost. Similarly, more than half of our IP applications
are now virtualised and running in the cloud.
Product development consistency &
common customer care
To meet the needs of our customers, both individuals
and businesses, we need to bring innovative and differentiated products to market and scale them across our footprint much faster than
we do today. We also need to further leverage the scale of our footprint and avoid duplication and fragmentation of our resources. We
are simplifying and unifying our approach to product development, reducing time and resources for new products from the idea creation
phase to launch, with a new process to allocate and sustain funding across our markets.
We are also accelerating the deployment and adoption
of digital tools through common digital platforms with the ambition to move to one ‘My Vodafone’ app and, over time, one
TOBi chatbot platform. This will also help us deliver a more consistent customer experience regardless of geography, with further automation
and simplification.
5 ⫶
Social contract shaping industry structure to improve returns
Over the last decade, the performance of the European
telecommunications industry has been weaker than other regions, which market commentators largely attribute to its regulatory environment.
European regulation differs in both its fragmented approach to spectrum licensing and market structure, compared with North America or
Asia.
In 2019, we introduced our ‘social contract’,
which represents the partnerships we want to develop with governments, policy makers and civil society. We believe the industry needs
a pro-investment, pro-innovation partnership approach to ensure Europe can compete in the global digital economy and be at the forefront
of technology ecosystems. This requires healthy market structures, an end to extractive spectrum auctions, support for equipment vendor
diversity, a defined framework for network sharing, and regulation that enables the physical deployment of network infrastructure, as
well as rewards quality – such as security, resilience and coverage – with fair prices.
Following our efforts and society’s increasing
reliance on our connectivity infrastructure and services, notably during the COVID-19 pandemic, we are beginning to see positive signs
of a healthier industry structure emerge. Recent spectrum auctions in the UK, Greece and Hungary were conducted in a positive manner
and completed with spectrum being assigned at sustainable prices, in line or below European benchmark levels. Authorities are recognising
that operators need to be able to focus available private funds for fast deployment of new infrastructure and services.
We have also seen national governments increase
support, such as state-subsidies for rural networks in the UK and Germany. A key area will be shaping Member State recovery funds and
how at least 20% of the €750 billion NextGenerationEU funding targeted for digital initiatives is distributed.
We will play our part by investing in our high-quality
network infrastructure and will continue to work closely with regulators and policy makers in order to create a more healthy and sustainable
industry structure that is truly pro-investment, pro-innovation and supportive of returns.
6 ⫶
Leading gigabit networks
In order to provide our customers with the best
connectivity products and ‘best on Vodafone’ connectivity platforms, we need to have leading gigabit network infrastructure
in each of our markets. Importantly, we must also ensure that our customers recognise and value the quality of our gigabit network infrastructure.
We will be hosting a dedicated virtual investor briefing on technology and our approach on 17 June 2021.
In mobile, we are currently deploying mobile network
infrastructure to deliver 5G connectivity. So far, we have launched 5G services in 240 cities, in 10 markets in Europe. 5G services provide
‘real world’ speeds well in excess of 100 Mbps, compared with 4G which provides ‘real world’ speeds of 20-35
Mbps. In addition to the speed advantage, 5G networks that are ‘built right’ and with longer-term competitive advantage in
mind, provide more uses cases, and significant capacity and efficiency advantages, ultimately lowering the cost per gigabyte of mobile
data provision. However, the European mobile sector is also utilising dynamic spectrum sharing (‘DSS’) technology to share
existing 4G spectrum to provide a more limited 5G experience.
Underpinning our
5G network infrastructure is our majority shareholding in Vantage Towers AG. Further information on Vantage Towers can be accessed here:
https://www.vantagetowers.com/.
Alongside our 5G mobile network infrastructure
is our NGN fixed-line network infrastructure. We can now reach 142 million homes across 12 markets in Europe (including VodafoneZiggo).
This marketable base is connected through a mix of owned NGN network (56 million homes, of which 44 million are gigabit-capable), strategic
partnerships (24 million homes) and wholesale arrangements (62 million homes). This network provides us with the largest marketable footprint
of any fixed-line provider in Europe. In Germany, our owned network covering 24 million households is being progressively upgraded to
the latest DOCSIS 3.1 standard, which provides us with a structural speed advantage over the incumbent. Over the medium-term we will
continue to increase the proportion of our Europe customers that can receive gigabit-capable connections through our owned network and
continue to work with strategic partners to provide cable and fibre access.
D ⫶ Committed to improving returns
Disciplined capital allocation
to drive shareholder returns
The objectives of our portfolio activities over
the last three years have been to focus on our two scaled geographic platforms in Europe and Africa; achieve converged scale in our chosen
markets; and deliver a structural shift in asset utilisation. We are now a matrix of country operations, products and platforms and will
continue to be disciplined in managing our portfolio, following three principles:
|
·
|
we
aim to continue to focus on the converged connectivity markets in Europe, and mobile data
and payments in Africa;
|
|
·
|
we
aim to achieve returns above the local cost of capital in all of our markets; and
|
|
·
|
we
consider whether we are the best owner (i.e. whether the asset adds value to the Group and
the Group adds value to the asset) and whether there are any pragmatic and value-creating
alternatives.
|
Our capital allocation priorities are to support
investment in connectivity infrastructure; maintain a robust balance sheet; and support improved shareholder distribution.
Our growth strategy requires a greater level of
investment, in four major areas.
|
·
|
We
will continue to invest in leading gigabit networks by upgrading our fixed networks and rolling
out 5G ‘built right’. To help fund this, our new Technology operating model will
drive a higher level of efficiency in unitary spend, while greater standardisation will eliminate
duplication.
|
|
·
|
We
will have a stronger, more comprehensive product offering in every market, particularly in
Vodafone Business, to accelerate our revenue and profit growth.
|
|
·
|
We
will accelerate our digital capabilities, which will ultimately help us sustain margin expansion,
strengthen our direct channels and build further differentiation in our customer offer.
|
|
·
|
We
are retaining the flexibility to support Vantage Towers in realising its own growth ambitions,
particularly in the high incremental returns opportunities of new build-to-suit sites and
ground-lease buyouts.
|
Medium-term financial ambition
During this next phase of our ongoing transformation
to be a new generation connectivity and digital services provider, we are committed to improving returns. The table below sets our model
for value creation, alongside our medium-term financial ambition. Alongside this medium-term financial ambition, we have set out financial
guidance for FY22 on page 13.
Value
model
|
Medium-term
ambition
|
Consistent
revenue growth
|
Growth
in both Europe & Africa
|
+
Ongoing margin expansion
|
Mid-single
digit adjusted EBITDAaL1 growth
|
+
Good cash conversion
|
Mid-single
digit adjusted FCF2 growth
|
+
Disciplined capital allocation
|
Net
debt to adjusted EBITDA: 2.5-3.0x
|
=
Sustainable value creation
|
ROCE3
greater than WACC
|
A
minimum dividend of 9.00 eurocents per share per annum
|
1 Adjusted EBITDAal is equivalent
to FY21 definition and calculation of adjusted EBITDA
2Adjusted free cash flow is free
cash flow before spectrum, restructuring, integration costs and Vantage Towers growth capital additions. Growth capital additions is
on a cash basis and includes expenditure on new sites, ground lease optimisation and other adjacency opportunities as defined by Vantage
Towers
3Pre-tax return on capital employed
(controlled)
Our purpose ⫶ We connect for a better
future
We believe that Vodafone has a significant role
to play in contributing to the societies in which we operate and we want to enable an inclusive and sustainable digital society. Our
sustainable business strategy helps the delivery of our targets across three purpose pillars: Inclusion for All, Planet and Digital Society.
We have continued to make progress against our purpose strategy and will provide a full update on our progress in our FY21 Annual Report.
Our significant role has become even more evident
during the COVID-19 pandemic, as our essential network infrastructure has been critical in enabling people to work, allowing businesses
to remain operational, supporting emergency services and giving access to education. Through our essential network infrastructure, our
services and our targeted initiatives, we have kept people and societies connected. In response to the unprecedented situation, we continued
to execute on our social contract five-point plan across all markets to help citizens, businesses and governments manage through the
health crisis and cushion its economic impacts. We have also donated over €150 million to support those affected by the crisis through
direct contributions and services in-kind, supporting millions of our customers, frontline workers and citizens. The Vodafone Foundation
has donated an additional €10 million to local charities in our markets in the form of cash grants, gifts in-kind and from employee
donations via the community fund.
In November 2020, we announced a further
update with respect to our long-term ambition to minimise our environmental impact. We have committed to reducing our total global carbon
emissions to ‘net zero’ by 2040 and confirmed that our 2030 carbon reduction targets have been approved by the Science Based
Targets initiative. Our targets are in line with reductions required to keep warming to below 1.5°C, the most ambitious goal of the
Paris Agreement.
This builds on a commitment we made in July 2020
to power 100% of our European network with renewable electricity by July 2021, creating a ‘Green Gigabit Net’ for customers
across 11 markets that will grow sustainably using only power from wind, solar or hydro sources. Our accelerated shift to 100% renewable
electricity on our European network, as well as our connectivity products and services, will help our customers reduce their carbon emissions,
particularly our Business customers, while helping to create a healthier planet for everyone. This year, 80% of our purchased electricity
in Europe was from renewable sources (FY20: 33%) and we are confident that we will meet our July 2021 target.
In December 2020, we were recognised by global
environmental non-profit organisation CDP for our actions and transparency with respect to our environmental impact and secured a place
on CDP’s prestigious climate change ‘A List’. This places us in the top 5% of companies that responded to CDP’s
2020 climate change questionnaire.
Reporting
Vodafone reports against a number of voluntary
reporting frameworks to help stakeholders understand our sustainable business performance. We will shortly be publishing a separate report
that summarises our progress towards meeting the recommendations of the Task Force on Climate-related Financial Disclosures (‘TCFD’),
as well as a comprehensive spreadsheet that includes data on environmental, social and governance (‘ESG’) topics. We will
also be reporting against a number of voluntary reporting frameworks to help our stakeholders understand our sustainable business performance,
including guidance provided by the Global Reporting Initiative (‘GRI’) and Sustainability Accounting Standards Board (‘SASB’).
Governance
On 11 May 2021, the Board of Vodafone approved
the creation of an ESG Committee as a principal committee of the Board. The ESG Committee will provide oversight of the Company’s
Environment, Social and Governance programme. This covers activities under Vodafone’s Purpose – to connect for a better future
enabling an inclusive and sustainable digital society, sustainability and responsible business practices, as well as Vodafone’s
contribution to the societies in which it operates in through its social contract.
Outlook ⫶ Resilient operating model supporting our growth
investment plan
Performance against FY21 guidance
In May 2020, we set out our guidance for
FY21 with respect to free cash flow (pre spectrum, restructuring and integration costs). Following a resilient performance in the first
half of the year, we reaffirmed our free cash flow (pre spectrum, restructuring and integration costs) guidance and provided our expectation
for adjusted EBITDA in November 2020. The table below compares the guidance given and our actual performance.
|
|
Original guidance
|
|
Updated guidance
|
|
FY21 outcome
|
Adjusted EBITDA
|
|
–
|
|
€14.4-14.6 billion
|
|
€14.4 billion
|
Free cash flow (pre spectrum, restructuring and integration costs)
|
|
At least €5.0 billion
|
|
At least €5.0 billion
|
|
€5.0 billion
|
Outlook for FY22
Our performance during FY21 has been in line with
our expectations and demonstrates the relative resilience of our operating model. We remain focused on the delivery of the next phase
of our strategy.
Adjusted EBITDA will be referred to as ‘adjusted
EBITDAaL’ from FY22 onwards, with no change to the underlying definition. Free cash flow (pre spectrum, restructuring and integration
costs) will be referred to as ‘adjusted free cash flow’1, and excludes Vantage Towers growth capital additions.
FY22 Guidance
Based on the current prevailing assessments of
the global macroeconomic outlook:
|
·
|
Adjusted
EBITDAaL is expected to be between €15.0 – €15.4 billion in FY22; and
|
|
·
|
Adjusted
free cash flow1 is expected to be at least €5.2 billion in FY22.
|
Financial modelling considerations &
assumptions
The guidance above reflects the following:
|
·
|
Foreign
exchange rates used when setting guidance were as follows:
|
|
·
|
Guidance
and medium-term ambition (see page 11) assume no material change to the structure of
the Group.
|
1 Adjusted free cash flow is free cash
flow before spectrum, restructuring, integration costs and Vantage Towers growth capital additions. Growth capital additions is on a
cash basis and includes expenditure on new sites, ground lease optimisation and other adjacency opportunities as defined by Vantage Towers
Financial performance ⫶ Resilient performance, in line with
our expectations
Group financial performance
|
|
FY211
|
|
|
FY20
|
|
|
Reported
|
|
|
|
€m
|
|
|
€m
|
|
|
change %
|
|
Revenue
|
|
|
43,809
|
|
|
|
44,974
|
|
|
|
(2.6
|
)
|
- Service revenue
|
|
|
37,141
|
|
|
|
37,871
|
|
|
|
(1.9
|
)
|
- Other revenue
|
|
|
6,668
|
|
|
|
7,103
|
|
|
|
|
|
Adjusted EBITDA2,3
|
|
|
14,386
|
|
|
|
14,881
|
|
|
|
(3.3
|
)
|
Restructuring costs
|
|
|
(356
|
)
|
|
|
(695
|
)
|
|
|
|
|
Interest on lease liabilities4
|
|
|
374
|
|
|
|
330
|
|
|
|
|
|
Loss on disposal of property, plant & equipment and intangible assets
|
|
|
(30
|
)
|
|
|
(54
|
)
|
|
|
|
|
Depreciation and amortisation on owned assets
|
|
|
(10,187
|
)
|
|
|
(10,454
|
)
|
|
|
|
|
Share of results of equity accounted associates and joint ventures
|
|
|
342
|
|
|
|
(2,505
|
)
|
|
|
|
|
Impairment losses
|
|
|
–
|
|
|
|
(1,685
|
)
|
|
|
|
|
Other income and expense
|
|
|
568
|
|
|
|
4,281
|
|
|
|
|
|
Operating profit
|
|
|
5,097
|
|
|
|
4,099
|
|
|
|
24.3
|
|
Non-operating expense
|
|
|
–
|
|
|
|
(3
|
)
|
|
|
|
|
Investment income
|
|
|
330
|
|
|
|
248
|
|
|
|
|
|
Financing costs
|
|
|
(1,027
|
)
|
|
|
(3,549
|
)
|
|
|
|
|
Profit before taxation
|
|
|
4,400
|
|
|
|
795
|
|
|
|
|
|
Income tax expense
|
|
|
(3,864
|
)
|
|
|
(1,250
|
)
|
|
|
|
|
Profit/(loss) for the financial year
|
|
|
536
|
|
|
|
(455
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
- Owners of the parent
|
|
|
112
|
|
|
|
(920
|
)
|
|
|
|
|
- Non-controlled interests
|
|
|
424
|
|
|
|
465
|
|
|
|
|
|
Profit/(loss) for the financial year
|
|
|
536
|
|
|
|
(455
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings/(loss) per share
|
|
|
0.38
|
c
|
|
|
(3.13
|
)c
|
|
|
|
|
Adjusted basic earnings per share2
|
|
|
8.08
|
c
|
|
|
5.60
|
c
|
|
|
|
|
Further information is available in a spreadsheet
at https://investors.vodafone.com/reports-information/results-reports-presentations
Notes:
|
1.
|
The FY21 results reflect average foreign exchange
rates of €1:£0.89, €1:INR 86.60, €1:ZAR 19.04, €1:TRY 8.58 and
€1: EGP 18.44.
|
|
2.
|
Adjusted EBITDA and adjusted basic earnings
per share are Non-GAAP measures. See page 40 for more information.
|
|
3.
|
Includes depreciation on Right-of-use assets
of €3,914 million (FY20: €3,720 million).
|
|
4.
|
Reversal of interest on lease liabilities
included within adjusted EBITDA under the Group’s definition of that metric, for re-presentation
in financing costs.
|
Total revenue declined by 2.6% to €43.8 billion
(FY20: €45.0 billion), as our good underlying momentum and the benefit from the acquisition of Liberty Global’s assets in
Germany and Central and Eastern Europe was offset by lower revenue from roaming, visitors and handset sales, adverse foreign exchange
movements and the disposal of Vodafone New Zealand.
Operating profit increased by 24.3% to €5.1
billion (FY20: €4.1 billion). Compared to the prior year period, we recognised lower gains on disposals, no impairment losses, and
we no longer recognised Vodafone’s share of losses related to Vodafone Idea following the write down of the asset to nil in FY20.
On an underlying basis, performance was broadly stable as lower adjusted EBITDA was partially offset by lower restructuring costs, depreciation
and amortisation, and a higher share of profits from associates and joint ventures.
Adjusted EBITDA decreased by 1.2%* to €14.4
billion (FY20: €14.9 billion) as the decline in revenue was partially offset by strong cost control, with a net reduction in our
Europe and Common Functions operating expenditure of €0.5 billion.
Cash inflow from operating activities decreased
by 0.9% to €17.2 billion (FY20: €17.4 billion).
Free cash flow (pre spectrum, restructuring and
integration costs) decreased by 11.9% to €5.0 billion (FY20: €5.7 billion) due to lower adjusted EBITDA and increased investment
in network performance during the pandemic, partially offset by working capital movements including lower cash commissions.
Income tax expense increased by €2.6 billion,
primarily due to a non-cash charge of €2.8 billion following a decrease in the carrying value of deferred tax assets.
Total dividends per share are 9.0 eurocents (FY20:
9.0 eurocents), including a final dividend per share of 4.5 eurocents. The ex-dividend date for the final dividend is 24 June 2021
for ordinary shareholders, the record date is 25 June 2021 and the dividend is payable on 6 August 2021.
Geographic
performance summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
Other
|
|
|
Common
|
|
|
Elimi-
|
|
|
|
|
FY21
|
|
Germany
|
|
|
Italy
|
|
|
UK
|
|
|
Spain
|
|
|
Europe
|
|
|
Vodacom
|
|
|
Markets
|
|
|
Functions
|
|
|
nations
|
|
|
Group
|
|
Total revenue (€m)
|
|
|
12,984
|
|
|
|
5,014
|
|
|
|
6,151
|
|
|
|
4,166
|
|
|
|
5,549
|
|
|
|
5,181
|
|
|
|
3,765
|
|
|
|
1,368
|
|
|
|
(369
|
)
|
|
|
43,809
|
|
Service revenue (€m)
|
|
|
11,520
|
|
|
|
4,458
|
|
|
|
4,848
|
|
|
|
3,788
|
|
|
|
4,859
|
|
|
|
4,083
|
|
|
|
3,312
|
|
|
|
470
|
|
|
|
(197
|
)
|
|
|
37,141
|
|
Adjusted EBITDA (€m)
|
|
|
5,634
|
|
|
|
1,597
|
|
|
|
1,367
|
|
|
|
1,044
|
|
|
|
1,760
|
|
|
|
1,873
|
|
|
|
1,228
|
|
|
|
(117
|
)
|
|
|
|
|
|
|
14,386
|
|
Adjusted EBITDA margin (%)
|
|
|
43.4
|
%
|
|
|
31.9
|
%
|
|
|
22.2
|
%
|
|
|
25.1
|
%
|
|
|
31.7
|
%
|
|
|
36.2
|
%
|
|
|
32.6
|
%
|
|
|
(8.6
|
%)
|
|
|
|
|
|
|
32.8
|
%
|
Further geographic performance information is available in a downloadable spreadsheet format at https://investors.vodafone.com/reports-information/results-reports-presentations
FY21
Service revenue growth %
|
|
Q1
|
|
|
Q2
|
|
|
H1
|
|
|
Q3
|
|
|
Q4
|
|
|
H2
|
|
|
Total
|
|
Germany
|
|
|
25.4
|
|
|
|
6.9
|
|
|
|
15.4
|
|
|
|
1.0
|
|
|
|
1.2
|
|
|
|
1.1
|
|
|
|
7.7
|
|
Italy
|
|
|
(6.5
|
)
|
|
|
(7.9
|
)
|
|
|
(7.2
|
)
|
|
|
(7.8
|
)
|
|
|
(8.8
|
)
|
|
|
(8.3
|
)
|
|
|
(7.8
|
)
|
UK
|
|
|
(3.2
|
)
|
|
|
(0.8
|
)
|
|
|
(2.0
|
)
|
|
|
(5.1
|
)
|
|
|
(4.4
|
)
|
|
|
(4.7
|
)
|
|
|
(3.4
|
)
|
Spain
|
|
|
(6.9
|
)
|
|
|
(1.8
|
)
|
|
|
(4.4
|
)
|
|
|
(0.9
|
)
|
|
|
(2.2
|
)
|
|
|
(1.5
|
)
|
|
|
(3.0
|
)
|
Other
Europe
|
|
|
3.8
|
|
|
|
(1.9
|
)
|
|
|
0.8
|
|
|
|
(4.0
|
)
|
|
|
–
|
|
|
|
(2.0
|
)
|
|
|
(0.6
|
)
|
Vodacom
|
|
|
(11.9
|
)
|
|
|
(12.3
|
)
|
|
|
(12.1
|
)
|
|
|
(9.1
|
)
|
|
|
(1.2
|
)
|
|
|
(5.3
|
)
|
|
|
(8.7
|
)
|
Other
Markets
|
|
|
(18.9
|
)
|
|
|
(15.1
|
)
|
|
|
(17.0
|
)
|
|
|
(9.5
|
)
|
|
|
(6.1
|
)
|
|
|
(7.8
|
)
|
|
|
(12.8
|
)
|
Group
|
|
|
1.3
|
|
|
|
(2.5
|
)
|
|
|
(0.7
|
)
|
|
|
(3.9
|
)
|
|
|
(2.4
|
)
|
|
|
(3.1
|
)
|
|
|
(1.9
|
)
|
FY21
Organic service revenue growth %*
|
|
Q1
|
|
|
Q2
|
|
|
H1
|
|
|
Q3
|
|
|
Q4
|
|
|
H2
|
|
|
Total
|
|
Germany
|
|
|
–
|
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
1.0
|
|
|
|
1.2
|
|
|
|
1.1
|
|
|
|
0.5
|
|
Italy
|
|
|
(6.5
|
)
|
|
|
(8.0
|
)
|
|
|
(7.2
|
)
|
|
|
(7.8
|
)
|
|
|
(7.8
|
)
|
|
|
(7.8
|
)
|
|
|
(7.5
|
)
|
UK
|
|
|
(1.9
|
)
|
|
|
(0.5
|
)
|
|
|
(1.2
|
)
|
|
|
(0.4
|
)
|
|
|
(0.6
|
)
|
|
|
(0.5
|
)
|
|
|
(0.8
|
)
|
Spain
|
|
|
(6.9
|
)
|
|
|
(1.8
|
)
|
|
|
(4.4
|
)
|
|
|
(1.1
|
)
|
|
|
(1.3
|
)
|
|
|
(1.2
|
)
|
|
|
(2.8
|
)
|
Other
Europe
|
|
|
(3.1
|
)
|
|
|
(1.8
|
)
|
|
|
(2.4
|
)
|
|
|
(0.7
|
)
|
|
|
(0.2
|
)
|
|
|
(0.4
|
)
|
|
|
(1.4
|
)
|
Vodacom
|
|
|
1.5
|
|
|
|
3.2
|
|
|
|
2.3
|
|
|
|
3.3
|
|
|
|
7.3
|
|
|
|
5.3
|
|
|
|
3.9
|
|
Other
Markets
|
|
|
9.1
|
|
|
|
9.0
|
|
|
|
9.0
|
|
|
|
12.3
|
|
|
|
13.1
|
|
|
|
12.7
|
|
|
|
10.8
|
|
Group
|
|
|
(1.3
|
)
|
|
|
(0.4
|
)
|
|
|
(0.8
|
)
|
|
|
0.4
|
|
|
|
0.8
|
|
|
|
0.6
|
|
|
|
(0.1
|
)
|
Germany ⫶
31% of Group service revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY21
|
|
|
FY20
|
|
|
Reported
|
|
|
Organic
|
|
|
|
€m
|
|
|
€m
|
|
|
change
%
|
|
|
change
%*
|
|
Total
revenue
|
|
|
12,984
|
|
|
|
12,076
|
|
|
|
7.5
|
|
|
|
|
|
-
Service revenue
|
|
|
11,520
|
|
|
|
10,696
|
|
|
|
7.7
|
|
|
|
0.5
|
|
-
Other revenue
|
|
|
1,464
|
|
|
|
1,380
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA1
|
|
|
5,634
|
|
|
|
5,077
|
|
|
|
11.0
|
|
|
|
1.8
|
|
Adjusted
EBITDA margin1
|
|
|
43.4
|
%
|
|
|
42.0
|
%
|
|
|
|
|
|
|
|
|
Note:
|
1.
|
Adjusted EBITDA and Adjusted EBITDA margin
are Non-GAAP measures. See page 40 for more information.
|
Reported total revenue increased by 7.5% to €13.0
billion, primarily reflecting the consolidation of the acquired Liberty Global assets for the full year.
On an organic basis, service revenue grew by 0.5%*
(Q3: 1.0%*, Q4: 1.2%*), with growth across all customer segments in the second half of the year. Growth was supported by good customer
and ARPU growth, a strong performance in Business fixed and higher variable usage revenue during the COVID-19 lockdown, offset by lower
roaming, visitor and wholesale revenue. The year-on-year impact from the decline in roaming and visitor revenue was -1.0 percentage points
(Q3: -1.0 percentage points, Q4: -0.5 percentage points). Retail service revenue grew by 1.1%* (Q3: 1.5%*, Q4: 1.8%*).
Fixed service revenue grew by 1.4%* (Q3: 1.4%*,
Q4: 1.4%*). This was driven by customer base and ARPU growth, higher variable usage during the pandemic and growing demand for new services,
such as cloud & security. Business fixed service revenue grew strongly by 9.8%* in FY21. We added 301,000 cable customers in
the year, including 140,000 migrations from legacy broadband DSL. Almost half of our cable broadband customer base now subscribes to
speeds of at least 250Mbps, and gigabit speeds are now available to 22.4 million households across our network. Our total broadband customer
base increased by 161,000 to 10.9 million despite the majority of our retail stores being closed for four months during the year due
to the COVID-19 pandemic, including during most of Q4.
Our TV customer base declined by 236,000 reflecting
lower retail activity during the COVID-19 pandemic. During the year, we launched a harmonised portfolio across all homes in Germany,
aligning our sales activities and brought Vodafone TV to the Unitymedia footprint. We also launched the ‘DAZN’ Pay-TV channel
and our new Apple set-top box product during the year. The full benefit from these actions was not visible in our commercial results
due to lockdown restrictions affecting retail activity. Our converged propositions, led by ‘GigaKombi’, allow customers to
combine their mobile, landline, broadband and TV subscriptions for one monthly fee. Our converged customer base continued to grow, with
130,000 Consumer additions during the year. We now have over 1.6 million Consumer converged accounts.
Mobile service revenue declined by 0.7%* (Q3:
0.5%*, Q4: 0.9%*) mainly due to the reduction in roaming, visitor and wholesale revenue. Service revenue grew in the second half of the
year, supported by higher variable usage and increased demand from business customers, particularly in the public and health sectors.
We added 317,000 contract customers during the year, supported by the migration of 187,000 Unitymedia mobile customers onto our network.
Contract churn improved by 0.8 percentage points year-on-year to 11.8%. We also added 437,000 prepaid customers, supported by our online-only
proposition, ‘CallYa Digital’. We added a further 5.9 million IoT connections during the year, supported by a strong demand
from SMEs.
In April 2021, we became the first operator
in Europe to launch a standalone 5G network. This enables higher speeds, enhanced reliability and ultra-low latency, in addition to using
20% less energy on customers’ devices.
Adjusted EBITDA grew by 1.8%* as the benefit synergy
delivery and ongoing cost efficiencies were partially offset by a -1.5 percentage point year-on-year impact from lower roaming and visitors,
and lower wholesale revenue. The adjusted EBITDA margin was 0.4* percentage points higher year-on-year and was 43.4%.
We have continued to make good progress on integrating
Unitymedia, with the rebranding, harmonisation of our internet & TV portfolio, and the organisational integration completed
during the year. We are eight months ahead of plan with respect to our cost and capital expenditure synergy targets and remain on track
to deliver the remaining synergies.
Italy
⫶ 12% of Group service revenue
|
|
FY21
|
|
|
FY20
|
|
|
Reported
|
|
|
Organic
|
|
|
|
€m
|
|
|
€m
|
|
|
change %
|
|
|
change %*
|
|
Total revenue
|
|
|
5,014
|
|
|
|
5,529
|
|
|
|
(9.3
|
)
|
|
|
|
|
- Service revenue
|
|
|
4,458
|
|
|
|
4,833
|
|
|
|
(7.8
|
)
|
|
|
(7.5
|
)
|
- Other revenue
|
|
|
556
|
|
|
|
696
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA1
|
|
|
1,597
|
|
|
|
2,068
|
|
|
|
(22.8
|
)
|
|
|
(12.7
|
)
|
Adjusted EBITDA margin1
|
|
|
31.9
|
%
|
|
|
37.4
|
%
|
|
|
|
|
|
|
|
|
Note:
|
1.
|
Adjusted EBITDA and Adjusted EBITDA margin
are Non-GAAP measures. See page 40 for more information.
|
Reported total revenue decreased by 9.3% to €5.0
billion, driven by continued price competition in the mobile market, as well as lower roaming, visitor and equipment revenue.
On an organic basis, service revenue declined
by 7.5%* (Q3: -7.8%*, Q4: -7.8%*). The year-on-year impact from the decline in roaming and visitor revenue was -2.1 percentage points
(Q3: -1.9 percentage points, Q4: -1.2 percentage points).
Mobile service revenue
declined 10.5%* (Q3: -10.7%*, Q4: -9.3%*) reflecting lower roaming and visitor revenue, a reduction in the active prepaid customer base
year-on-year, which began to stabilise in Q4, and price competition in the value segment. Market mobile number portability (‘MNP’)
volumes were approximately 20% lower year-on-year, reflecting retail lockdowns. Our second brand ‘ho.’ continued to grow,
with 662,000 net additions during the year and now has 2.5 million customers. Quarterly net additions slowed in Q4, although returned
to growth towards the end of the quarter. During the year, we signed mobile wholesale agreements with PostePay and Digi. We will start
to migrate PostePay customers onto our network in the first quarter of FY22.
Fixed service revenue
grew by 1.4%* (Q3: 1.1%*, Q4:-3.8%*) driven by 90,000 broadband customer additions. In total, we now have almost 3.0 million broadband
customers. The quarter-on-quarter slowdown in Q4 service revenue trends reflected higher Business project revenue in the prior year.
However, Business demand was strong overall, supported by our NPS leadership and now represents approximately 40% of fixed revenue. Our
total Consumer converged customer base is now 1.2 million (39% of our broadband base), an increase of 105,000 during the year. Through
our own next generation network and partnership with Open Fiber, our broadband services are now available to 8.4 million households.
We also cover 3.4 million households with fixed-wireless access, offering speeds of up to 100Mbps.
Adjusted EBITDA declined by 12.7%* reflecting
a -4.0 percentage point year-on-year impact from lower roaming and visitors, and lower service revenue, partially offset by continued
good cost control. The adjusted EBITDA margin was 1.3* percentage points lower year-on-year and was 31.9%.
UK ⫶ 13% of Group service revenue
|
|
FY21
|
|
|
FY20
|
|
|
Reported
|
|
|
Organic
|
|
|
|
€m
|
|
|
€m
|
|
|
change %
|
|
|
change %*
|
|
Total revenue
|
|
|
6,151
|
|
|
|
6,484
|
|
|
|
(5.1
|
)
|
|
|
|
|
- Service revenue
|
|
|
4,848
|
|
|
|
5,020
|
|
|
|
(3.4
|
)
|
|
|
(0.8
|
)
|
- Other revenue
|
|
|
1,303
|
|
|
|
1,464
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA1
|
|
|
1,367
|
|
|
|
1,500
|
|
|
|
(8.9
|
)
|
|
|
(7.3
|
)
|
Adjusted EBITDA margin1
|
|
|
22.2
|
%
|
|
|
23.1
|
%
|
|
|
|
|
|
|
|
|
Note:
|
1.
|
Adjusted EBITDA and Adjusted EBITDA margin
are Non-GAAP measures. See page 40 for more information.
|
Reported total revenue decreased by 5.1% to €6.2
billion, primarily due to the depreciation of the local currency versus the euro, and lower roaming, visitor and equipment revenue.
On an organic basis, service revenue decreased
by 0.8%* (Q3: -0.4%*, Q4: -0.6%*) as good customer base growth and strong Business demand, was offset by lower roaming, visitor and incoming
revenue. The year-on-year impact from the decline in roaming and visitor revenue was -2.4 percentage points (Q3: -2.3 percentage points,
Q4: -1.5 percentage points).
Mobile service revenue declined 3.3%* (Q3: -3.6%*,
Q4: -1.8%*), as lower roaming, visitor and incoming revenue offset good customer base growth. During the year, we maintained our good
commercial momentum, supported by a significant shift in sales mix, with digital sales growing significantly to 39%. We also benefited
from Business demand, strong iPhone sales, and improved customer loyalty. Contract churn improved 1.1 percentage point year-on-year to
13.0%. In total, we added 219,000 customers to our mobile contract base in FY21. Our digital sub-brand ‘VOXI’ also continued
to grow strongly, with 176,000 customers added during the year, supported by the launch of new propositions.
Fixed service revenue
grew by 5.6%* (Q3: 7.9%*, Q4: 2.2%*) and our commercial momentum remained strong with 192,000 net customer additions during the
year. The quarter-on-quarter slowdown in Q4 was driven by the lapping of strong Business fixed performance in the prior year and lower
wholesale revenue. In March, we launched Vodafone ‘Pro Broadband’ which combines fixed and mobile connectivity to provide
‘unbreakable’ connectivity. Pro Broadband customers also benefit from super Wi-Fi and dedicated customer support. We now
have 911,000 broadband customers, of which 459,000 are converged. Business demand for our SME and corporate products remained strong,
including productivity and security solutions.
Adjusted EBITDA decreased by 7.3%* reflecting
the year-on-year impacts from lower roaming and visitors of -4.8 percentage points and a prior year one-off licence fee settlement of
-4.6 percentage points. On an underlying basis, we continued to grow adjusted EBITDA, supported by strong cost control, with operating
expenses 7.5% lower year-on-year. Our adjusted EBITDA margin was 1.1* percentage points lower year-on-year at 22.2%.
To support our continued investment in our networks,
products and services, we announced that an annual price increase of Consumer Price Index plus 3.9% will be applied to all broadband
and mobile contracts signed from 9 December 2020, taking effect from April 2021.
In March 2021, we acquired 40MHz of spectrum
in the 3.6GHz band for next-generation 5G mobile services at a cost of €206 million. The new spectrum acquired will enable us to
significantly expand 5G network capacity to meet the growing demand for fast, reliable, high-quality data services.
Spain ⫶ 10% of Group service revenue
|
|
FY21
|
|
|
FY20
|
|
|
Reported
|
|
|
Organic
|
|
|
|
€m
|
|
|
€m
|
|
|
change %
|
|
|
change %*
|
|
Total revenue
|
|
|
4,166
|
|
|
|
4,296
|
|
|
|
(3.0
|
)
|
|
|
|
|
- Service revenue
|
|
|
3,788
|
|
|
|
3,904
|
|
|
|
(3.0
|
)
|
|
|
(2.8
|
)
|
- Other revenue
|
|
|
378
|
|
|
|
392
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA1
|
|
|
1,044
|
|
|
|
1,009
|
|
|
|
3.5
|
|
|
|
3.4
|
|
Adjusted EBITDA margin1
|
|
|
25.1
|
%
|
|
|
23.5
|
%
|
|
|
|
|
|
|
|
|
Note:
|
1.
|
Adjusted EBITDA and Adjusted EBITDA margin
are Non-GAAP measures. See page 40 for more information.
|
Reported total revenue decreased by 3.0% to €4.2
billion, primarily due to lower roaming and visitor revenue and other COVID-19 related impacts.
On an organic basis, service revenue declined
by 2.8%* (Q3: -1.1%*, Q4: -1.3%*) reflecting price competition in the market and lower roaming and visitor revenue. The year-on-year
impact from the decline in roaming and visitor revenue was -2.0 percentage points (Q3: -1.7 percentage points, Q4: -1.1 percentage points).
The service revenue slowdown quarter-on-quarter mainly reflected a change in premium calling regulation.
In mobile, we are competing effectively across
all segments, and grew our contract customer base by 70,000, despite the market remaining highly competitive following the easing of
restrictions in the second half of the year and an increase in mobile number portability. Mobile contract churn decreased 1.0 percentage
points year-on-year to 20.2% reflecting our continued focus on improving customer loyalty. Our second brand ‘Lowi’ added
236,000 customers during the year and now has a total base of 1.2 million.
Our broadband customer base increased by 21,000
despite our more-for-more pricing actions, and higher competitive intensity during the second half of the year. We added 109,000 customers
to our NGN network as customers continued to transition to higher-speed plans. Our extensive library of movies and TV series, as well
as our new ‘boxless’ TV app proposition, supported continued good customer growth in TV with 156,000 customers added during
the year.
Adjusted EBITDA grew by 3.4%* and the adjusted
EBITDA margin was 1.5* percentage points higher year-on-year at 25.1%. The growth in EBITDA reflects lower commercial and football content
costs, and a 5.8% reduction in operating expenses, partially offset by a -5.7 percentage point year-on-year impact from lower roaming
and visitors.
Other Europe ⫶ 13% of Group service revenue
|
|
FY21
|
|
|
FY20
|
|
|
Reported
|
|
|
Organic
|
|
|
|
€m
|
|
|
€m
|
|
|
change %
|
|
|
change %*
|
|
Total revenue
|
|
|
5,549
|
|
|
|
5,541
|
|
|
|
0.1
|
|
|
|
|
|
- Service revenue
|
|
|
4,859
|
|
|
|
4,890
|
|
|
|
(0.6
|
)
|
|
|
(1.4
|
)
|
- Other revenue
|
|
|
690
|
|
|
|
651
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA1
|
|
|
1,760
|
|
|
|
1,738
|
|
|
|
1.3
|
|
|
|
(0.5
|
)
|
Adjusted EBITDA margin1
|
|
|
31.7
|
%
|
|
|
31.4
|
%
|
|
|
|
|
|
|
|
|
Note:
|
1.
|
Adjusted EBITDA and Adjusted EBITDA margin
are Non-GAAP measures. See page 40 for more information.
|
Total revenue increased by 0.1% to €5.5 billion,
primarily reflecting the consolidation of the acquired Liberty Global assets in Central Eastern Europe for a full year, offset by lower
roaming and visitor revenue and the disposal of Vodafone Malta in the prior year.
On an organic basis, service revenue declined
by 1.4%* (Q3: -0.7%*, Q4: -0.2%*), as growth in Portugal, Czech Republic, and Hungary was offset by declines in Ireland, Greece and Romania.
The decline in service revenue was driven by lower roaming and visitor revenue, lower prepaid top-ups (notably in Greece), and increased
competition in some markets. The year-on-year impact from the decline in roaming and visitor revenue was -2.0 percentage points (Q3:
-1.8 percentage points, Q4: -1.3 percentage points).
In Portugal, service
revenue grew as mobile contract and fixed base growth was partially offset by lower roaming and visitor revenue. During the year,
we added 62,000 mobile contract customers and 71,000 fixed broadband customers. Almost a third of our broadband customer base is converged.
In Ireland, service
revenue declined reflecting lower roaming and visitor revenue and higher competitive intensity, partially offset by the successful
launch of unlimited Consumer mobile data tariffs. During the year, our mobile contract customer base increased by 68,000 and mobile contract
churn improved 0.6 percentage point year-on-year to 9.9%.
Service revenue
in Greece declined, reflecting lower roaming, visitor and prepaid revenue and higher promotional intensity during the COVID-19
pandemic, partially offset by strong fixed demand, notably from business customers. Mobile contract churn improved 1.8 percentage point
year-on-year to 9.3%.
Adjusted EBITDA
declined by 0.5%*, including a -4.4 percentage point year-on-year impact from lower roaming and visitors. The adjusted EBITDA
margin increased by 0.2* percentage points and was 31.7%.
We have continued to make good progress on integrating
the assets acquired from Liberty Global in Central Eastern Europe and we remain on track to deliver our targeted synergies.
Vodacom ⫶ 11% of Group service revenue
|
|
FY21
|
|
|
FY20
|
|
|
Reported
|
|
|
Organic
|
|
|
|
€m
|
|
|
€m
|
|
|
change %
|
|
|
change %*
|
|
Total revenue
|
|
|
5,181
|
|
|
|
5,531
|
|
|
|
(6.3
|
)
|
|
|
|
|
- Service revenue
|
|
|
4,083
|
|
|
|
4,470
|
|
|
|
(8.7
|
)
|
|
|
3.9
|
|
- Other revenue
|
|
|
1,098
|
|
|
|
1,061
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA1
|
|
|
1,873
|
|
|
|
2,088
|
|
|
|
(10.3
|
)
|
|
|
2.9
|
|
Adjusted EBITDA margin1
|
|
|
36.2
|
%
|
|
|
37.8
|
%
|
|
|
|
|
|
|
|
|
Note:
|
1.
|
Adjusted EBITDA and Adjusted EBITDA margin
are non-GAAP measures. See page 40 for more information.
|
Reported total revenue decreased by 6.3% to €5.2
billion and reported adjusted EBITDA decreased by 10.3%, primarily due to the depreciation of the local currencies versus the euro.
On an organic basis, Vodacom’s total service
revenue grew 3.9%* (Q3: 3.3%*, Q4: 7.3%*) as good growth in South Africa was partially offset by revenue pressure in Vodacom’s
international operations due to macroeconomic pressure and the zero-rating of person-to-person M-Pesa transfers for most of the year.
The quarter-on-quarter improvement in growth in Q4 reflected stronger growth in South Africa and an acceleration in Vodacom’s international
markets as M-Pesa service fees normalised across all markets from January 2021.
In South Africa, service revenue growth achieved
a 10-year high, as the business benefited from higher demand for voice, data and financial services, and an increase in consumer discretionary
spend as a result of government measures and social grants during the COVID-19 pandemic. We added 133,000 contract customers, supported
by strong growth in Business connectivity as remote working and mobile broadband demand increased. We also added 2.5 million prepaid
customers supported by our successful ‘Shake-off’ summer campaign and new behavioural loyalty programme launched during the
second half of the year. Data traffic increased by c.60% year-on-year, and 45% of our customer base is now using data services. Our ‘ConnectU’
platform continues to promote digital inclusion via zero-rated access to a wide range of websites, including job portals and online learning
platforms, with total unique users reaching 15.5 million at year end. Financial Services customers in South Africa increased by 15.4%
to 13.3 million, reflecting our strong execution and the ongoing expansion of our service offerings. In January 2021, we announced
an expanded wholesale agreement with Cell-C for its mobile contract and mobile broadband customers to roam on our network.
In Vodacom’s international markets, service
revenue slightly declined, reflecting economic pressure, the disruption to our commercial activities during the COVID-19 pandemic, the
zero-rating of person-to-person M-Pesa transfers in DRC, Mozambique, and Lesotho, and the impact of service barring in Tanzania due to
biometric registration compliance. There was a significant improvement in trends in the second half of the year, driven by the reinstatement
of person-to-person M-Pesa transfer fees across all markets and improved commercial momentum. Digital adoption across Vodacom’s
international markets accelerated. M-Pesa transaction value increased by 28.4%, while M-Pesa revenue as a share of total service revenue
increased by 1.6 percentage points to 20.9%, and 52% of our customer base is now using data services.
Vodacom’s adjusted EBITDA increased by 2.9%*
as growth in South Africa was partially offset by revenue pressure in Vodacom’s international operations, notably in the first
half of the year. The adjusted EBITDA margin was 1.3* percentage points lower year-on-year, partly driven by 5G roaming investment in
South Africa. The adjusted EBITDA margin was 36.2%.
Other Markets ⫶ 9% of Group service revenue
|
|
FY21
|
|
|
FY20
|
|
|
Reported
|
|
|
Organic
|
|
|
|
€m
|
|
|
€m
|
|
|
change %
|
|
|
change %*
|
|
Total revenue
|
|
|
3,765
|
|
|
|
4,386
|
|
|
|
(14.2
|
)
|
|
|
|
|
- Service revenue
|
|
|
3,312
|
|
|
|
3,796
|
|
|
|
(12.8
|
)
|
|
|
10.8
|
|
- Other revenue
|
|
|
453
|
|
|
|
590
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA1
|
|
|
1,228
|
|
|
|
1,400
|
|
|
|
(12.3
|
)
|
|
|
8.5
|
|
Adjusted EBITDA margin1
|
|
|
32.6
|
%
|
|
|
31.9
|
%
|
|
|
|
|
|
|
|
|
Note:
|
1.
|
Adjusted EBITDA and Adjusted EBITDA margin
are Non-GAAP measures. See page 40 for more information.
|
Reported total revenue decreased by 14.2% to €3.8
billion, primarily due to the depreciation of the local currencies versus the euro and the disposal of Vodafone New Zealand in the prior
year.
On an organic basis, service revenue increased
by 10.8%* (Q3: 12.3%*, Q4: 13.1%*), driven by customer base growth and increased demand for data across our markets. The year-on-year
impact from the decline in roaming and visitor revenue was -1.5 percentage points (Q3: -1.0 percentage points, Q4: -0.5 percentage points).
Service revenue in Turkey grew ahead of inflation,
reflecting strong customer contract ARPU growth and increased demand for mobile data and fixed broadband. Mobile contract customer additions
were 1.1 million during the year – the highest amongst any of our markets – supported by migrations from prepaid customers.
Contract churn improved by 3.3 percentage points year-on-year to 19.3%.
Service revenue in Egypt also grew ahead of inflation,
supported by customer base growth and increased data usage, partially offset by lower roaming and visitor revenue. During the year, we
added 402,000 mobile contract customers and 1.1 million prepaid mobile customers. Mobile contract churn in Egypt was the lowest in the
entire Group at 6.5%.
Adjusted EBITDA increased by 8.5%* and the adjusted
EBITDA margin decreased by 0.7* percentage points. This reflected strong revenue growth and operating efficiencies in Turkey, offset
by the lapping of a prior year settlement and the impact of the temporary zero-rating of e-money transaction fees in Egypt. The adjusted
EBITDA margin was 32.6%.
In November 2020, we announced that Vodafone
Egypt had acquired 40MHz of 2.6Ghz spectrum, with a 10-year licence through to 2030. The spectrum will enable us to significantly expand
network capacity to meet growing demand for reliable, high quality voice and data services.
In December 2020, we announced that discussions
with Saudi Telecom Company in relation to the sale of Vodafone’s 55% shareholding in Vodafone Egypt had been terminated. Vodafone
Egypt has a strong market position in an attractive market and generates a strong return on capital employed, in excess of its local
cost of capital. We are committed to retaining our presence in Egypt.
Associates and joint ventures
|
|
|
|
|
|
|
|
|
FY21
|
|
|
FY20
|
|
|
|
€m
|
|
|
€m
|
|
VodafoneZiggo Group Holding B.V.
|
|
|
(232
|
)
|
|
|
(64
|
)
|
Indus Towers Limited
|
|
|
274
|
|
|
|
19
|
|
Safaricom Limited
|
|
|
217
|
|
|
|
247
|
|
Vodafone Idea Limited
|
|
|
–
|
|
|
|
(2,546
|
)
|
Other
|
|
|
83
|
|
|
|
(161
|
)
|
Share of results of equity accounted associates and joint ventures
|
|
|
342
|
|
|
|
(2,505
|
)
|
VodafoneZiggo Joint Venture
(Netherlands)
The results of VodafoneZiggo (in which Vodafone
owns a 50% stake) are reported here under US GAAP, which is broadly consistent with Vodafone’s IFRS basis of reporting.
Total revenue grew 1.6% (Q3: 0.5%, Q4: 1.8%) to
€4.0 billion. This reflected mobile contract customer base growth and strong Business fixed demand, partly offset by lower roaming,
visitor and handset revenue.
During the year, VodafoneZiggo added 262,000 mobile
contract customers, supported by the successful ‘Runners’ campaign and higher demand from businesses. Strong Business fixed
performance was supported by an increase in the customer base, as well as higher demand for unified communications and remote-working
solutions. The number of converged households increased by 81,000, with 44% of broadband customers and 71% of all B2C mobile customers
now converged, delivering significant NPS and churn benefits. VodafoneZiggo was the first operator to launch a nationwide 5G network in
the Netherlands and also completed its analogue TV switch-off during April 2021. VodafoneZiggo now offers 1 gigabit speeds to more
than 3.1 million homes and is on track to provide nationwide coverage in 2022.
Adjusted EBITDA grew by 5.2%, supported by top
line growth and cost synergies realisation, more than offsetting a year-on-year impact from lower roaming and visitor mobile revenue.
VodafoneZiggo has now successfully delivered the €210 million cost and capital expenditure synergies targeted, one year ahead of
the original plan.
During the year, Vodafone received €209 million
in dividends from the joint venture, as well as €43 million in interest payments. The joint venture also drew down an additional
€104 million shareholder loan from Vodafone to fund spectrum licences acquired in July 2020.
Indus Towers Associate (India)
In November 2020, we announced that that the
merger of Indus Towers Limited (‘Indus Towers’) and Bharti Infratel Limited (‘Bharti Infratel’) had completed.
The merged company is listed on the National Stock Exchange of India and the Bombay Stock Exchange and was renamed Indus Towers Limited
following the merger. Vodafone was issued with 757.8 million shares in the merged company in exchange for its 42% shareholding in Indus
Towers and this is equivalent to a 28.1% shareholding in the combined company.
Indus Towers is classified as held for sale at
31 March 2021 in the consolidated statement of financial position. The Group’s interest in Indus Towers has been provided as
security against certain bank borrowings secured against Indian assets and partly to the pledges provided to the new Indus Towers entity
under the terms of the merger between erstwhile Indus Towers and Bharti Infratel.
Safaricom Associate (Kenya)
Safaricom service
revenue declined by 0.3%* (Q3: 1.6%*, Q4: 6.4%*) due to depressed economic activity and the zero-rating of some M-Pesa services
in the first half of the year. The quarter-on-quarter improvement in Q4 was driven by an increase in M-Pesa revenue as service fees normalised
and higher demand for fixed broadband. Adjusted EBITDA decreased by 3.3% primarily driven by a decline in revenue.
Vodafone Idea Limited Joint
Venture (India)
In October 2019, the Indian Supreme Court
gave its judgement in the Union of India v Association of Unified Telecom Service Providers of India case regarding the interpretation
of adjusted gross revenue (‘AGR’), a concept used in the calculation of certain regulatory fees. Vodafone Idea was liable
for very substantial demands made by the Department of Telecommunications (‘DoT’) in relation to these fees. Based on submissions
of the DoT in the Supreme Court proceedings (which the Group is unable to confirm as to their accuracy), Vodafone Idea reported a total
estimated liability of INR 654 billion (€7.6 billion) excluding repayments and including interest, penalty and interest on penalty
up to 30 June 2020. On 17 February, 20 February, 16 March and 16 July 2020, Vodafone Idea made payments totalling INR 78.5
billion (€0.9 billion) to the DoT. In September 2020, the Supreme Court of India directed that telecom operators make payment
of 10% of the total dues by 31 March 2021 and thereafter repay the balance, along with 8% interest, in 10 annual instalments.
Vodafone Idea Limited (‘Vodafone Idea’)
recorded losses for each of the six month periods ended 30 September 2019, 31 March 2020 and 30 September 2020, respectively.
For the six months ended 30 September 2019, the Group recognised its share of estimated Vodafone Idea losses arising from both its
operating activities and those in relation to the AGR judgement. The Group has no obligation to fund Vodafone Idea, consequently the Group’s
recognised share of losses in the six months ended 30 September 2019 was limited to the remaining carrying value of Vodafone Idea
which was therefore reduced to €nil at 30 September 2019; no further losses have been recognised by the Group.
As part of the agreement to merge Vodafone India
and Idea Cellular in 2017, the parties agreed a mechanism for payments between the Group and Vodafone Idea pursuant to the crystallisation
of certain identified contingent liabilities in relation to legal, regulatory, tax and other matters, and refunds relating to Vodafone
India and Idea Cellular. Cash payments or cash receipts relating to these matters must have been made or received by Vodafone Idea before
any amount becomes due from or owed to the Group. Any future payments by the Group to Vodafone Idea as a result of this agreement would
only be made after satisfaction of this and other contractual conditions. The Group’s potential exposure under this mechanism is
now capped at INR 64 billion (€747 million). See Note 3 ‘Commitments, contingent liabilities and legal proceedings’ in
the unaudited condensed consolidated financial statements for further information.
Vodafone Hutchison Australia
/ TPG Telecom Limited Joint Venture (Australia)
In July 2020, Vodafone Hutchison Australia
Pty Limited (‘VHA’) and TPG Telecom Limited (‘TPG’) completed their merger to establish a fully integrated telecommunications
operator in Australia. The merged entity was admitted to the Australian Securities Exchange (‘ASX’) on 30 June 2020
and is known as TPG Telecom Limited. Vodafone and Hutchison Telecommunications (Australia) Limited each own an economic interest of 25.05%
in the merged unit.
Net financing costs
|
|
|
|
|
|
|
|
|
|
|
|
FY21
|
|
|
FY20
|
|
|
Reported
|
|
|
|
€m
|
|
|
€m
|
|
|
change %
|
|
Investment income
|
|
|
330
|
|
|
|
248
|
|
|
|
|
|
Financing costs
|
|
|
(1,027
|
)
|
|
|
(3,549
|
)
|
|
|
|
|
Net financing costs
|
|
|
(697
|
)
|
|
|
(3,301
|
)
|
|
|
78.9
|
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark-to-market (gains)/losses
|
|
|
(1,091
|
)
|
|
|
1,128
|
|
|
|
|
|
Foreign exchange losses
|
|
|
23
|
|
|
|
205
|
|
|
|
|
|
Adjusted net financing costs1
|
|
|
(1,765
|
)
|
|
|
(1,968
|
)
|
|
|
10.3
|
|
Note:
|
1.
|
Adjusted net financing costs is a Non-GAAP measure. See page 40 for more information. The FY20 adjusted
net financing costs has been aligned to the FY21 presentation which no longer excludes lease interest. This increased adjusted net financing
costs for FY20 by €330 million.
|
Net financing costs decreased by €2.6 billion,
primarily due to mark-to-market gains of €1.1 billion (compared to losses of €1.1 billion in FY20). This was driven by a higher
share price, causing a gain on options held relating to €3.8 billion of mandatory convertible bonds. Adjusted net financing costs
decreased reflecting net favourable interest movements on borrowings in relation to foreign operations.
Taxation
|
|
|
|
|
|
|
|
|
|
|
|
FY21
|
|
|
FY20
|
|
|
Change
|
|
|
|
%
|
|
|
%
|
|
|
pps
|
|
Effective tax rate
|
|
|
87.8
|
%
|
|
|
157.2
|
%
|
|
|
(69.4
|
)
|
Adjusted effective tax rate1
|
|
|
26.9
|
%
|
|
|
25.3
|
%
|
|
|
1.6
|
|
Note:
|
1.
|
Adjusted effective tax rate is a Non-GAAP measure. See page 40 for more information.
|
The Group’s effective tax rate for the year ended 31 March 2021
was 87.8%.
The Group’s effective tax rate for both years
includes the following items: a €2,827 million charge (2020: €346 million credit) for the utilisation of losses in Luxembourg
which arises from an increase (2020: decrease) in the valuation of investments based upon local GAAP financial statements and tax returns.
The increase in the current year was principally driven by increases in the value of our operating businesses, listed associates and joint
ventures. These items change the total losses we have available for future use against our profits in Luxembourg and neither item affects
the amount of tax we pay in other countries.
The Group’s effective tax rate for the year
ended 31 March 2020 included a reduction in our deferred tax assets in Luxembourg of €881 million following a reduction in the
Luxembourg corporate tax rate.
The Group’s adjusted effective tax rate for the year ended 31
March 2021 was 26.9%. The rate increased as a result of the mix of profits in the Group and a lower use of our Luxembourg losses
in the year.
The Group’s adjusted effective tax rate for
both years does not include the following items: €320 million relating to Luxembourg losses (2020: €348 million) and €2,827
million charge (2020: €346 million credit) arising from an increase (2020: decrease) in the valuation of investments based upon the
local GAAP financial statements and tax returns as stated above.
We expect the adjusted effective tax rate to rise
to the high 20’s over the medium term reflecting the forecast profit mix, a reducing annual use of our Luxembourg deferred tax asset
as market conditions drive margins lower on existing financing activities, the impact of an anticipated reduction in levels of intercompany
debt over the medium term and the impact of government responses to the COVID pandemic resulting in increased tax liabilities.
The Group’s adjusted effective tax rate
for the year ended 31 March 2020 does not include the reduction in our deferred tax assets in Luxembourg referred to above.
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
|
FY21
|
|
|
FY20
|
|
|
change
|
|
|
|
eurocents
|
|
|
eurocents
|
|
|
eurocents
|
|
Basic earnings/(loss) per share
|
|
|
0.38
|
c
|
|
|
(3.13
|
)c
|
|
|
3.51
|
c
|
Adjusted basic earnings per share1
|
|
|
8.08
|
c
|
|
|
5.60
|
c
|
|
|
2.48
|
c
|
Note:
|
1.
|
Adjusted basic earnings per share is a non-GAAP measure. See page 40 for more information.
|
Basic earnings per share was 0.38 eurocents, compared
to a loss per share of 3.13 eurocents for the year ended 31 March 2020.
Adjusted basic earnings per share was 8.08 eurocents
compared to 5.60 eurocents for the year ended 31 March 2020.
Cash flow, capital allocation and funding
Analysis of cash flow
|
|
|
|
|
|
|
|
|
FY21
|
|
|
FY20
|
|
|
Reported
|
|
|
|
€m
|
|
|
€m
|
|
|
change %
|
|
Inflow from operating activities
|
|
|
17,215
|
|
|
|
17,379
|
|
|
|
(0.9
|
)
|
Outflow from investing activities
|
|
|
(9,262
|
)
|
|
|
(8,088
|
)
|
|
|
(14.5
|
)
|
Outflow from financing activities
|
|
|
(15,196
|
)
|
|
|
(9,352
|
)
|
|
|
(62.5
|
)
|
Cash inflow from operating activities decreased
by 0.9% to €17.2 billion (FY20: €17.4 billion) due to an increase in the net working capital outflow compared to the prior year.
Working capital movements in FY21 include a €0.3 billion inflow from handset purchases and the associated sale of customer receivables.
Outflow from investing activities primarily increased
by 14.5% to €9.3 billion (FY20: €8.1 billion) due to lower inflows from disposals of subsidiaries and disposals of short term
investments, increased investment in network performance during the pandemic, partially offset by reduced outflows on purchases of subsidiaries
and associates.
Outflows from financing activities increased by
62.5% to €15.2 billion (FY20: €9.4 billion) principally due to higher net outflows on borrowings. Inflows from transactions
with non-controlling shareholders, mostly from the Vantage Towers public offering, were partially offset by payments to purchase shares
from KDG minorities.
Analysis of cash flow (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY21
|
|
|
FY20
|
|
|
Reported
|
|
|
|
€m
|
|
|
€m
|
|
|
change %
|
|
Adjusted EBITDA1
|
|
|
14,386
|
|
|
|
14,881
|
|
|
|
(3.3
|
)
|
Capital additions2
|
|
|
(7,854
|
)
|
|
|
(7,411
|
)
|
|
|
|
|
Working capital
|
|
|
564
|
|
|
|
(127
|
)
|
|
|
|
|
Disposal of property, plant and equipment
|
|
|
42
|
|
|
|
41
|
|
|
|
|
|
Interest received and paid3
|
|
|
(1,553
|
)
|
|
|
(1,160
|
)
|
|
|
|
|
Taxation
|
|
|
(1,020
|
)
|
|
|
(930
|
)
|
|
|
|
|
Dividends received from associates and joint ventures
|
|
|
628
|
|
|
|
417
|
|
|
|
|
|
Dividends paid to non-controlling shareholders in subsidiaries
|
|
|
(391
|
)
|
|
|
(348
|
)
|
|
|
|
|
Other
|
|
|
217
|
|
|
|
337
|
|
|
|
|
|
Free cash flow (pre spectrum, restructuring and integration costs)1
|
|
|
5,019
|
|
|
|
5,700
|
|
|
|
(11.9
|
)
|
Licence and spectrum payments
|
|
|
(1,221
|
)
|
|
|
(181
|
)
|
|
|
|
|
Restructuring and integration payments
|
|
|
(421
|
)
|
|
|
(570
|
)
|
|
|
|
|
Integration capital expenditure4
|
|
|
(267
|
)
|
|
|
–
|
|
|
|
|
|
Free cash flow1
|
|
|
3,110
|
|
|
|
4,949
|
|
|
|
(37.2
|
)
|
Acquisitions and disposals
|
|
|
447
|
|
|
|
(14,454
|
)
|
|
|
|
|
Equity dividends paid
|
|
|
(2,427
|
)
|
|
|
(2,296
|
)
|
|
|
|
|
Share buybacks3
|
|
|
(53
|
)
|
|
|
(1,094
|
)
|
|
|
|
|
Foreign exchange (loss)/gain
|
|
|
(219
|
)
|
|
|
309
|
|
|
|
|
|
Other movements on net debt5
|
|
|
646
|
|
|
|
(2,428
|
)
|
|
|
|
|
Net debt decrease/(increase)1,6
|
|
|
1,504
|
|
|
|
(15,014
|
)
|
|
|
|
|
Opening net debt16
|
|
|
(42,047
|
)
|
|
|
(27,033
|
)
|
|
|
|
|
Closing net debt1,6
|
|
|
(40,543
|
)
|
|
|
(42,047
|
)
|
|
|
3.6
|
|
Notes:
|
1.
|
Adjusted EBITDA, free cash flow (pre spectrum, restructuring and integration costs), free cash flow and
net debt are Non-GAAP measures. See page 40 for more information.
|
|
2.
|
See page 49 for an analysis of tangible and intangible additions in the year.
|
|
3.
|
Interest received and paid excluded interest on lease liabilities of €307 million (FY20: 305 million
outflow); €nil (FY20: €175 million) of interest costs related to Liberty acquisition financing, included within Other; and €9
million of cash inflow (FY20: €273 million outflow) from the option structures relating to the issue of the mandatory convertible
bonds, included within Share buybacks. The option structures were intended to ensure that the total cash outflow to execute the programme
were broadly equivalent to the amounts raised on issuing each tranche.
|
|
4.
|
Integration capital expenditure comprises amounts for the integration of acquired Liberty Global assets
and network integration.
|
|
5.
|
“Other movements on net debt” for the year ended 31 March 2021 includes mark-to-market
gains recognised in the income statement of €1,091 million, offset by payments in respect of bank borrowings secured against Indian
assets (€83m) and payments to Vodafone Idea Limited of €235m in respect of the contingent liability mechanism. The comparative
figure primarily included €1,510 million of debt in relation to licences and spectrum in Germany and mark-to-market losses recognised
in the income statement of €1,128 million.
|
|
6.
|
Net debt as at 31 March 2020 has been aligned to the FY21 presentation, increasing by €3,799
million to exclude derivative movements in cash flow hedging reserves and decreasing by €121 million to reflect that Vodafone Egypt
is no longer held for sale.
|
Free cash flow (pre spectrum, restructuring and
integration costs) decreased by 11.9% to €5.0 billion (FY20: €5.7 billion) due to lower adjusted EBITDA and increased investment
in network performance during the pandemic, partially offset by working capital movements including lower cash commissions.
Acquisitions and disposals in the current year
included proceeds from the Vantage Towers public offering of €2.0 billion, partially offset by payments to purchase shares from KDG
minorities of €1.5 billion. The prior year included €2.0 billion received on completion of the sale of Vodafone New Zealand
on 31 July 2019, together with €2.1 billion received on completion of the sale of Italian tower assets on 31 March 2020.
It also included €10.3 billion paid on completion of the acquisition of the Liberty Global assets on 31 July 2019 and acquired
net debt of €8.2 billion
Net debt at 31 March 2021 was €40.5
billion, compared to €42.0 billion as at 31 March 2020.
Borrowings and cash position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY21
|
|
|
FY20
|
|
|
Reported
|
|
|
|
€m
|
|
|
€m
|
|
|
change %
|
|
Non-current borrowings
|
|
|
(59,272
|
)
|
|
|
(62,949
|
)
|
|
|
|
|
Current borrowings
|
|
|
(8,488
|
)
|
|
|
(11,976
|
)
|
|
|
|
|
Borrowings
|
|
|
(67,760
|
)
|
|
|
(74,925
|
)
|
|
|
|
|
Cash and cash equivalents
|
|
|
5,821
|
|
|
|
13,557
|
|
|
|
|
|
Borrowings less cash and cash equivalents
|
|
|
(61,939
|
)
|
|
|
(61,368
|
)
|
|
|
0.9
|
|
Borrowings principally includes bonds of €46,885
million (FY20: €49,412 million) and lease liabilities of €13,032 million (FY20: €12,118 million).
Reductions in borrowings are offset by movements
in cash and cash equivalents and are principally driven by the early repayment of €3.4 billion of bonds due to mature up to 2024
and lower derivative collateral positions which impact both cash and short term borrowings.
Funding position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY21
|
|
|
FY20
|
|
|
Reported
|
|
|
|
€m
|
|
|
€m
|
|
|
change %
|
|
Bonds
|
|
|
(46,885
|
)
|
|
|
(49,412
|
)
|
|
|
|
|
Bank loans
|
|
|
(1,419
|
)
|
|
|
(2,880
|
)
|
|
|
|
|
Other borrowings including spectrum
|
|
|
(4,215
|
)
|
|
|
(3,877
|
)
|
|
|
|
|
Gross debt1
|
|
|
(52,519
|
)
|
|
|
(56,169
|
)
|
|
|
(6.5
|
)
|
Cash and cash equivalents
|
|
|
5,821
|
|
|
|
13,557
|
|
|
|
|
|
Short term investments2
|
|
|
4,007
|
|
|
|
4,132
|
|
|
|
|
|
Derivative financial instruments
|
|
|
3
|
|
|
|
610
|
|
|
|
|
|
Net collateral liabilities3
|
|
|
2,145
|
|
|
|
(4,177
|
)
|
|
|
|
|
Net debt1
|
|
|
(40,543
|
)
|
|
|
(42,047
|
)
|
|
|
(3.6
|
)
|
Notes:
|
1.
|
Gross debt and net debt are Non-GAAP measures. See page 40 for more information. Net debt as at 31
March 2020 has been aligned to the FY21 presentation, increasing by €3,799 million to exclude derivative movements in cash flow
hedging reserves and decreasing by €121 million to reflect that Vodafone Egypt is no longer held for sale.
|
|
2.
|
Short term investments includes €1,053 million (FY20: €1,681 million) of highly liquid government
and government-backed securities and managed investment funds of €2,954 million (FY20: €2,451 million) that are in highly rated
and liquid money market investments with liquidity of up to 90 days.
|
|
3.
|
Collateral arrangements on derivative financial instruments result in cash being paid/(held) as security.
This is repayable when derivatives are settled and is therefore deducted from liquidity.
|
Net debt decreased by €1.5 billion primarily as a result of free
cash flow of €3.1 billion and €2.0 billion of proceeds from the Vantage Towers public offering, partially offset by €2.4
billion of equity dividends and €1.5 billion of payment to purchase KDG shares from minority shareholders.
Other funding obligations to be considered alongside
net debt include:
|
-
|
Lease liabilities of €13,032 million (31 March 2020: €12,118 million)
|
|
-
|
Mandatory convertible bonds recognised in equity of €1,904 million (31 March 2020: €3,848
million)
|
|
-
|
KDG put option liabilities of €492 million (31 March 2020: €1,850 million)
|
|
-
|
Guarantees over Australia joint venture loans of €1,489 million (31 March 2020: €2,062
million)
|
|
-
|
Pension liabilities of €513 million (31 March 2020: €438 million)
|
The Group’s
gross and net debt does not consider the 50% equity characteristic of the long term “Hybrid bonds” being €3,971
million (31 March 2020: €2,971 million).
The Group’s gross and net debt includes
certain bonds which have been designated in hedge relationships, which are carried at €1.4 billion higher value (31 March 2020:
€1.5 billion higher) than their euro equivalent redemption value. In addition, where bonds are issued in currencies other than euros,
the Group has entered into foreign currency swaps to fix the euro cash outflows on redemption. The impact of these swaps are not reflected
in gross debt and would decrease the euro equivalent redemption value of the bonds by €0.1 billion (31 March 2020: €1.3
billion).
Return on capital employed
Return on Capital Employed (‘ROCE’)
reflects how efficiently we are generating profit with the capital we deploy.
|
|
FY21
|
|
|
FY201
|
|
|
Change
|
|
|
|
€m
|
|
|
€m
|
|
|
pps
|
|
ROCE2
|
|
|
4.4
|
%
|
|
|
3.9
|
%
|
|
|
0.5
|
|
Pre-tax ROCE (controlled)3
|
|
|
5.5
|
%
|
|
|
6.3
|
%
|
|
|
(0.8
|
)
|
Post-tax ROCE (controlled and associates/joint ventures)3
|
|
|
3.9
|
%
|
|
|
3.9
|
%
|
|
|
-
|
|
Notes:
|
1.
|
The presentation of FY20 ROCE has been aligned to the FY21 presentation. See page 47.
|
|
2.
|
ROCE is calculated by dividing operating profit by the average of capital employed as reported in the
consolidated statement of financial position. See page 40 for the detail of the calculation.
|
|
3.
|
Pre-tax ROCE (controlled) and Post-tax ROCE (controlled and associates/joint ventures) are Non-GAAP measures.
See page 40 for more information.
|
ROCE increased to 4.4% (FY20: 3.9%). The increase
reflects the increase in operating profit in the year coupled with broadly stable average capital employed.
We calculate two further ROCE measures: i) Pre-tax
ROCE for controlled operations only and ii) Post-tax ROCE (including associates & joint ventures). See “Non-GAAP measures”
on pages 46 and 47 for an explanation how ROCE is calculated and a reconciliation to the GAAP basis discussed above.
ROCE decreased to 5.5% on a pre-tax basis (FY20:
6.3%). The decrease reflects stable adjusted operating profit, offset by higher average capital employed. ROCE remained stable at 3.9%
on a post-tax basis (FY20: 3.9%).
Funding facilities
The Group has undrawn committed facilities of €7.4
billion comprising euro and US dollar
revolving credit facilities of €4.0 billion and US$4.0 billion (€3.4 billion) which mature in 2025 and 2026 respectively. Both
committed revolving credit facilities support US and euro commercial paper programmes of up to US$15 billion and €8 billion respectively.
Post employment benefits
The €152
million net surplus of scheme assets over scheme liabilities at 31 March 2020 decreased by €605 million to a €453 million
net deficit at 31 March 2021 arising from the Group’s obligations in respect of its defined benefit schemes. The next triennial
actuarial valuation of the Vodafone Section and CWW Section of the Vodafone UK Group Pension Scheme will be as at 31 March 2022.
Dividends
Dividends will continue to be declared in euros
and paid in euros, pounds sterling and US dollars, aligning the Group’s shareholder returns with the primary currency in which we
generate free cash flow. The foreign exchange rate at which future dividends declared in euros will be converted into pounds sterling
and US dollars will be calculated based on the average World Markets Company benchmark rates over the five business days during the week
prior to the payment of the dividend.
The Board is recommending total dividends per share
of 9.0 eurocents for the year. This includes a final dividend of 4.5 eurocents compared to 4.5 eurocents in the prior year.
The ex-dividend date for the final dividend is
24 June 2021 for ordinary shareholders, the record date is 25 June 2021 and the dividend is payable on 6 August 2021.
Dividend payments on ordinary shares will be paid directly into a nominated bank or building society account.
Other significant developments
Board changes
On 17 May 2021, Renee James notified Vodafone
that she will not seek re-election as a Non-Executive Director at Vodafone's Annual General Meeting on 27 July 2021 having served
on the Board for ten years. Renee was appointed as a Non-Executive Director on 1 January 2011 and is a member of Vodafone's Nominations
and Governance and Remuneration Committees.
Acquisitions and disposals
IPO of Vantage Towers
Vantage Towers completed an initial public offering
and the first day of trading on the Regulated Market of the Frankfurt Stock Exchange was 18 March 2021. The offer consisted solely
of a secondary sell-down of existing shares held by Vodafone GmbH.
Indus Towers
On 26 November 2020, the Group announced that
the merger of Indus Towers Limited and Bharti Infratel Limited had completed (together the ‘combined company’). The combined
company is listed on the National Stock Exchange of India and the Bombay Stock Exchange and was renamed Indus Towers Limited following
the merger.
Vodafone was issued with 757.8 million shares in
the combined company in exchange for its 42% shareholding in Indus Towers which is equivalent to a 28.1% shareholding in the combined
company.
Tower assets of Vodafone Greece
On 21 December 2020, the Group announced that
it had completed the combination of the tower infrastructure assets of Vodafone Greece with those of Wind Hellas Telecommunications SA
(‘Wind Hellas’). The combined entity (‘Vantage Towers Greece’) is the largest tower infrastructure company in
Greece.
The agreement included a call option for Vantage
Towers A.G. to acquire the remaining 38% of Vantage Towers Greece from Crystal Almond for €288 million in cash which was exercised
and the transaction is complete.
Cornerstone Telecommunications Limited (‘CTIL’)
On 11 January 2021, the Group’s UK subsidiary,
Vodafone Limited (‘Vodafone UK’) and Telefonica UK Limited (‘TEF UK’) announced the commercialisation of CTIL,
the 50:50 owned joint venture company that owns and manages their passive tower infrastructure in the United Kingdom.
Vodafone UK and TEF UK have each entered into long-term
Master Services Agreements with CTIL, which have initial terms of 8 years from 1 January 2021, with three 8-year renewal periods
and which establishes Cornerstone as a preferred supplier of new sites for both operators.
Vodafone transferred its 50% shareholding in CTIL
to Vantage Towers A.G.
Vodafone Egypt
The Group signed a Memorandum of Understanding
(‘MoU’) with Saudi Telecom Company (‘stc’) in January 2020 to pursue the sale of the Group’s 55% equity
holding in Vodafone Egypt Telecommunications S.A.E. (‘Vodafone Egypt’) for cash consideration of US$2.4 billion (€2.2
billion).
On 21 December 2020, the Group announced that
its discussions with stc had been terminated.
Unaudited condensed consolidated financial statements
Consolidated income statement
|
|
|
|
|
|
|
|
|
Year ended 31 March
|
|
|
|
2021
|
|
|
2020
|
|
|
|
€m
|
|
|
€m
|
|
Revenue
|
|
|
43,809
|
|
|
|
44,974
|
|
Cost of sales
|
|
|
(30,086
|
)
|
|
|
(30,682
|
)
|
Gross profit
|
|
|
13,723
|
|
|
|
14,292
|
|
Selling and distribution expenses
|
|
|
(3,522
|
)
|
|
|
(3,814
|
)
|
Administrative expenses
|
|
|
(5,350
|
)
|
|
|
(5,810
|
)
|
Net credit losses on financial assets
|
|
|
(664
|
)
|
|
|
(660
|
)
|
Share of results of equity accounted associates and joint ventures
|
|
|
342
|
|
|
|
(2,505
|
)
|
Impairment loss
|
|
|
–
|
|
|
|
(1,685
|
)
|
Other income
|
|
|
568
|
|
|
|
4,281
|
|
Operating profit
|
|
|
5,097
|
|
|
|
4,099
|
|
Non-operating expense
|
|
|
–
|
|
|
|
(3
|
)
|
Investment income
|
|
|
330
|
|
|
|
248
|
|
Financing costs
|
|
|
(1,027
|
)
|
|
|
(3,549
|
)
|
Profit before taxation
|
|
|
4,400
|
|
|
|
795
|
|
Income tax expense
|
|
|
(3,864
|
)
|
|
|
(1,250
|
)
|
Profit/(loss) for the financial year
|
|
|
536
|
|
|
|
(455
|
)
|
|
|
|
–
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
– Owners of the parent
|
|
|
112
|
|
|
|
(920
|
)
|
– Non-controlling interests
|
|
|
424
|
|
|
|
465
|
|
Profit/(loss) for the financial year
|
|
|
536
|
|
|
|
(455
|
)
|
|
|
|
|
|
|
|
|
|
Profit/(loss) per share
|
|
|
|
|
|
|
|
|
Total Group:
|
|
|
|
|
|
|
|
|
– Basic
|
|
|
0.38
|
c
|
|
|
(3.13
|
)c
|
– Diluted
|
|
|
0.38
|
c
|
|
|
(3.13
|
)c
|
Consolidated statement of comprehensive income/expense
|
|
|
|
|
|
|
|
|
|
|
|
Year ended 31 March
|
|
|
|
|
2021
|
|
|
|
2020
|
|
|
|
|
€m
|
|
|
|
€m
|
|
Profit/(loss) for the financial year
|
|
|
536
|
|
|
|
(455
|
)
|
Other comprehensive income/(expense):
|
|
|
|
|
|
|
|
|
Items that may be reclassified to the income statement in subsequent years:
|
|
|
|
|
|
|
|
|
Foreign exchange translation differences, net of tax
|
|
|
133
|
|
|
|
(982
|
)
|
Foreign exchange translation differences transferred to the income statement
|
|
|
(17
|
)
|
|
|
(36
|
)
|
Other, net of tax1
|
|
|
(3,743
|
)
|
|
|
3,066
|
|
Total items that may be reclassified to the income statement in subsequent years
|
|
|
(3,627
|
)
|
|
|
2,048
|
|
Items that will not be reclassified to the income statement in subsequent periods:
|
|
|
|
|
|
|
|
|
Net actuarial (losses)/gains on defined benefit pension schemes, net of tax
|
|
|
(555
|
)
|
|
|
526
|
|
Total items that will not be reclassified to the income statement in subsequent years
|
|
|
(555
|
)
|
|
|
526
|
|
Other comprehensive (expense)/income
|
|
|
(4,182
|
)
|
|
|
2,574
|
|
Total comprehensive (expense)/income for the financial year
|
|
|
(3,646
|
)
|
|
|
2,119
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
– Owners of the parent
|
|
|
(4,069
|
)
|
|
|
1,696
|
|
– Non-controlling interests
|
|
|
423
|
|
|
|
423
|
|
|
|
|
(3,646
|
)
|
|
|
2,119
|
|
Note:
1. Principally includes the impact of the Group’s cash flow hedges deferred to other comprehensive income during the year.
Consolidated statement of financial position
|
|
|
|
|
|
|
|
|
31 March
|
|
|
31 March
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
Re-presented1
|
|
|
|
€m
|
|
|
€m
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
31,731
|
|
|
|
31,378
|
|
Other intangible assets
|
|
|
21,818
|
|
|
|
22,631
|
|
Property, plant and equipment
|
|
|
41,243
|
|
|
|
40,113
|
|
Investments in associates and joint ventures
|
|
|
4,670
|
|
|
|
5,831
|
|
Other investments
|
|
|
925
|
|
|
|
792
|
|
Deferred tax assets
|
|
|
21,569
|
|
|
|
23,606
|
|
Post employment benefits
|
|
|
60
|
|
|
|
590
|
|
Trade and other receivables
|
|
|
4,777
|
|
|
|
10,393
|
|
|
|
|
126,793
|
|
|
|
135,334
|
|
Current assets
|
|
|
|
|
|
|
|
|
Inventory
|
|
|
676
|
|
|
|
598
|
|
Taxation recoverable
|
|
|
434
|
|
|
|
278
|
|
Trade and other receivables
|
|
|
10,923
|
|
|
|
11,724
|
|
Other investments
|
|
|
9,159
|
|
|
|
7,089
|
|
Cash and cash equivalents
|
|
|
5,821
|
|
|
|
13,557
|
|
|
|
|
27,013
|
|
|
|
33,246
|
|
Assets held for sale
|
|
|
1,257
|
|
|
|
(412
|
)
|
Total assets
|
|
|
155,063
|
|
|
|
168,168
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Called up share capital
|
|
|
4,797
|
|
|
|
4,797
|
|
Additional paid-in capital
|
|
|
150,812
|
|
|
|
152,629
|
|
Treasury shares
|
|
|
(6,172
|
)
|
|
|
(7,802
|
)
|
Accumulated losses
|
|
|
(121,587
|
)
|
|
|
(120,349
|
)
|
Accumulated other comprehensive income
|
|
|
27,954
|
|
|
|
32,135
|
|
Total attributable to owners of the parent
|
|
|
55,804
|
|
|
|
61,410
|
|
Non-controlling interests
|
|
|
2,012
|
|
|
|
1,215
|
|
Total equity
|
|
|
57,816
|
|
|
|
62,625
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
59,272
|
|
|
|
62,949
|
|
Deferred tax liabilities
|
|
|
2,095
|
|
|
|
2,103
|
|
Post employment benefits
|
|
|
513
|
|
|
|
438
|
|
Provisions
|
|
|
1,747
|
|
|
|
1,479
|
|
Trade and other payables
|
|
|
4,909
|
|
|
|
5,189
|
|
|
|
|
68,536
|
|
|
|
72,158
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
8,488
|
|
|
|
11,976
|
|
Financial liabilities under put option arrangements
|
|
|
492
|
|
|
|
1,850
|
|
Taxation liabilities
|
|
|
769
|
|
|
|
787
|
|
Provisions
|
|
|
892
|
|
|
|
1,053
|
|
Trade and other payables
|
|
|
18,070
|
|
|
|
17,719
|
|
|
|
|
28,711
|
|
|
|
33,385
|
|
Total equity and liabilities
|
|
|
155,063
|
|
|
|
168,168
|
|
Note:
|
1.
|
In the Annual Report for the year ended 31 March 2020, the Group’s 55% interest in Vodafone
Egypt was presented within assets and liabilities held for sale, following the announcement on 29 January 2020 that the Group had
signed a memorandum of understanding to sell its interest to Saudi Telecom. On 21 December 2020, the Group announced that its discussions
with Saudi Telecom had ended and the memorandum of understanding had been terminated. Consequently, the balances as at 31 March 2020
have been re-presented to reflect that Vodafone Egypt is no longer held for sale. There is no impact on Total assets and Total equity
and liabilities although certain classifications within these totals have changed.
|
Consolidated statement of changes in equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
Additional
paid-in
capital1
|
|
|
Treasury
shares
|
|
|
Accumulated
comprehensive
losses2
|
|
|
Equity attributable to the owners
|
|
|
Non-
controlling
interests
|
|
|
Total equity
|
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
1 April 2019 brought forward
|
|
|
4,796
|
|
|
|
152,503
|
|
|
|
(7,875
|
)
|
|
|
(87,467
|
)
|
|
|
61,957
|
|
|
|
1,231
|
|
|
|
63,188
|
|
Issue or reissue of shares
|
|
|
1
|
|
|
|
1
|
|
|
|
73
|
|
|
|
(68
|
)
|
|
|
7
|
|
|
|
–
|
|
|
|
7
|
|
Share-based payments
|
|
|
–
|
|
|
|
125
|
|
|
|
–
|
|
|
|
–
|
|
|
|
125
|
|
|
|
11
|
|
|
|
136
|
|
Transactions with non-controlling interests in subsidiaries
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(58
|
)
|
|
|
(58
|
)
|
|
|
(102
|
)
|
|
|
(160
|
)
|
Comprehensive income
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
1,696
|
|
|
|
1,696
|
|
|
|
423
|
|
|
|
2,119
|
|
Dividends
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(2,317
|
)
|
|
|
(2,317
|
)
|
|
|
(348
|
)
|
|
|
(2,665
|
)
|
31 March 2020
|
|
|
4,797
|
|
|
|
152,629
|
|
|
|
(7,802
|
)
|
|
|
(88,214
|
)
|
|
|
61,410
|
|
|
|
1,215
|
|
|
|
62,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 April 2020 brought forward
|
|
|
4,797
|
|
|
|
152,629
|
|
|
|
(7,802
|
)
|
|
|
(88,214
|
)
|
|
|
61,410
|
|
|
|
1,215
|
|
|
|
62,625
|
|
Issue or reissue of shares
|
|
|
–
|
|
|
|
(1,943
|
)
|
|
|
2,033
|
|
|
|
(87
|
)
|
|
|
3
|
|
|
|
–
|
|
|
|
3
|
|
Share-based payments
|
|
|
–
|
|
|
|
126
|
|
|
|
–
|
|
|
|
–
|
|
|
|
126
|
|
|
|
10
|
|
|
|
136
|
|
Transactions with non-controlling interests in subsidiaries
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
1,149
|
|
|
|
1,149
|
|
|
|
748
|
|
|
|
1,897
|
|
Comprehensive (expense)/income
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(4,069
|
)
|
|
|
(4,069
|
)
|
|
|
423
|
|
|
|
(3,646
|
)
|
Dividends
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(2,412
|
)
|
|
|
(2,412
|
)
|
|
|
(384
|
)
|
|
|
(2,796
|
)
|
Purchase of treasury shares
|
|
|
–
|
|
|
|
–
|
|
|
|
(403
|
)
|
|
|
–
|
|
|
|
(403
|
)
|
|
|
–
|
|
|
|
(403
|
)
|
31 March 2021
|
|
|
4,797
|
|
|
|
150,812
|
|
|
|
(6,172
|
)
|
|
|
(93,633
|
)
|
|
|
55,804
|
|
|
|
2,012
|
|
|
|
57,816
|
|
Notes:
|
1.
|
Includes share premium, capital reserve, capital redemption reserve, merger reserve and share-based payment
reserve. The merger reserve was derived from acquisitions made prior to 31 March 2004 and subsequently allocated to additional paid-in
capital on adoption of IFRS.
|
|
2.
|
Includes accumulated losses and accumulated other comprehensive income.
|
Consolidated statement of cash flows
|
|
|
|
|
|
|
|
|
Year ended 31 March
|
|
|
|
2021
|
|
|
2020
|
|
|
|
€m
|
|
|
€m
|
|
Inflow from operating activities
|
|
|
17,215
|
|
|
|
17,379
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
Purchase of interests in subsidiaries, net of cash acquired
|
|
|
(136
|
)
|
|
|
(10,295
|
)
|
Purchase of interests in associates and joint ventures
|
|
|
(13
|
)
|
|
|
(1,424
|
)
|
Purchase of intangible assets
|
|
|
(3,227
|
)
|
|
|
(2,423
|
)
|
Purchase of property, plant and equipment
|
|
|
(5,413
|
)
|
|
|
(5,182
|
)
|
Purchase of investments
|
|
|
(3,726
|
)
|
|
|
(1,832
|
)
|
Disposal of interests in subsidiaries, net of cash disposed
|
|
|
157
|
|
|
|
4,427
|
|
Disposal of interests in associates and joint ventures
|
|
|
420
|
|
|
|
–
|
|
Disposal of property, plant and equipment and intangible assets
|
|
|
43
|
|
|
|
61
|
|
Disposal of investments
|
|
|
1,704
|
|
|
|
7,792
|
|
Dividends received from associates and joint ventures
|
|
|
628
|
|
|
|
417
|
|
Interest received
|
|
|
301
|
|
|
|
371
|
|
Outflow from investing activities
|
|
|
(9,262
|
)
|
|
|
(8,088
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Proceeds from issue of long term borrowings
|
|
|
4,359
|
|
|
|
9,933
|
|
Repayment of borrowings
|
|
|
(12,237
|
)
|
|
|
(16,028
|
)
|
Net movement in short term borrowings
|
|
|
(2,791
|
)
|
|
|
2,488
|
|
Net movement in derivatives
|
|
|
279
|
|
|
|
98
|
|
Interest paid1
|
|
|
(2,152
|
)
|
|
|
(2,284
|
)
|
Payments for settlement of written put options
|
|
|
(1,482
|
)
|
|
|
–
|
|
Purchase of treasury shares
|
|
|
(62
|
)
|
|
|
(821
|
)
|
Issue of ordinary share capital and reissue of treasury shares
|
|
|
5
|
|
|
|
7
|
|
Equity dividends paid
|
|
|
(2,427
|
)
|
|
|
(2,296
|
)
|
Dividends paid to non-controlling shareholders in subsidiaries
|
|
|
(391
|
)
|
|
|
(348
|
)
|
Other transactions with non-controlling shareholders in subsidiaries
|
|
|
1,663
|
|
|
|
(160
|
)
|
Other movements with associates and joint ventures
|
|
|
40
|
|
|
|
59
|
|
Outflow from financing activities
|
|
|
(15,196
|
)
|
|
|
(9,352
|
)
|
|
|
|
|
|
|
|
|
|
Net cash outflow
|
|
|
(7,243
|
)
|
|
|
(61
|
)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of the financial year2
|
|
|
13,288
|
|
|
|
13,605
|
|
Exchange loss on cash and cash equivalents
|
|
|
(255
|
)
|
|
|
(256
|
)
|
Cash and cash equivalents at end of the financial year2
|
|
|
5,790
|
|
|
|
13,288
|
|
Notes:
|
1.
|
Interest paid includes €9 million of cash inflow (2020: €273 million outflow) on derivative
financial instruments for the share buyback related to maturing tranches of mandatory convertible bonds.
|
|
2.
|
Includes cash and cash equivalents as presented in the consolidated statement of financial position of
€5,821 million (2020: €13,557 million), together with overdrafts of €31 million (2020: €269 million).
|
Notes to the unaudited condensed consolidated financial statements
These unaudited Condensed Consolidated Financial
Statements of Vodafone Group Plc and its subsidiaries 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 2020, which were prepared
in accordance with International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards
Board and were also prepared in accordance with IFRS adopted by the European Union (‘EU’), the Companies Act 2006 and Article 4
of the EU IAS Regulations.
Ernst & Young LLP has consented to the
release of this Preliminary Announcement. The financial information presented in the unaudited Condensed Consolidated Financial Statements
does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006 (‘the Act’). Statutory
accounts for the year ended 31 March 2020 were published in Vodafone’s Annual Report and a copy was delivered to the Registrar
of Companies for England and Wales. The auditor’s report on those accounts was unqualified, did not include a reference to any matters
to which the auditor drew attention by way of emphasis without qualifying the report and did not contain a statement under sections 498(2) or
498(3) of the Act. A separate announcement will be made in accordance with Disclosure and Transparency Rules (DTR) 6.3 when
the annual report and audited financial statements for the year ended 31 March 2021 are made available on the Company’s website,
which is expected to be in May 2021.
The preparation of the preliminary results requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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.
Considerations in respect of COVID-19
Going concern
As outlined on pages 1 and 2, trading during
the year demonstrated the relative resilience of the Group’s operating model. The Group has a strong liquidity position with €5.8
billion of cash and cash equivalents available at 31 March 2021, which together with access to committed facilities, cover all of
the Group’s reasonably expected cash requirements over the going concern period. The Directors have reviewed trading and liquidity
forecasts for the Group, which were based on current trading conditions, and considered a variety of scenarios including not being able
to access the capital markets during the assessment period. In addition to the liquidity forecasts prepared, the Directors considered
the availability of the Group’s revolving credit facilities which were undrawn as at 31 March 2021. As a result of the assessment
performed, the Directors have concluded that the Group is able to continue in operation for a period of at least 12 months from the date
of approving the consolidated financial statements and that it is appropriate to continue to adopt a going concern basis in preparing
the consolidated financial statements.
Critical accounting judgements and estimates
The Group’s critical accounting judgements
and estimates were disclosed in the Group’s annual report for the year ended 31 March 2020. The ongoing impact of COVID-19
has been factored into our latest forecasts. These judgements and estimates were assessed during the year ended 31 March 2021 and
considered in our impairment review.
New accounting pronouncements adopted
On 1 April 2020, the Group adopted certain
new accounting policies where necessary to comply with amendments to IFRS, none of which had a material impact on the consolidated results,
financial position or cash flows of the Group. Further details are provided in the Group’s annual report for the year ended 31 March 2020.
|
|
2021
|
|
|
2020
|
|
|
|
€m
|
|
|
€m
|
|
Declared and paid during the financial year:
|
|
|
|
|
|
|
|
|
Final dividend for the year ended 31 March 2020: 4.50 eurocents per share (2019: 4.16 eurocents per share)
|
|
|
1,205
|
|
|
|
1,112
|
|
Interim dividend for
the year ended 31 March 2021: 4.50 eurocents per share (2020: 4.50 eurocents per share)
|
|
|
1,207
|
|
|
|
1,205
|
|
|
|
|
2,412
|
|
|
|
2,317
|
|
Proposed after the end of the year and not recognised as a liability:
|
|
|
|
|
|
|
|
|
Final dividend for the year ended 31 March 2021: 4.50 eurocents per share (2020: 4.50 eurocents per share)
|
|
|
1,260
|
|
|
|
1,205
|
|
|
3
|
Commitments, contingent liabilities and legal proceedings
|
Vodafone Idea
As part of the agreement
to merge Vodafone India and Idea Cellular in 2017, the parties agreed a mechanism for payments between the Group and Vodafone Idea Limited
(‘VIL’) pursuant to the difference between the crystallisation of certain identified contingent liabilities in relation
to legal, regulatory, tax and other matters, and refunds relating to Vodafone India and Idea Cellular. Cash payments or cash receipts
relating to these matters must have been made or received by VIL before any amount becomes due from or owed to the Group. Any future payments
by the Group to VIL as a result of this agreement would only be made after satisfaction of this and other contractual conditions.
The Group’s
potential exposure under this mechanism is now capped at INR 64 billion (€747 million) following payments made under this mechanism
from Vodafone to VIL totalling INR 19 billion (€235 million). The matters covered by the mechanism include the Adjusted Group
Revenue (‘AGR’) judgement debt levied on VIL for an amount materially in excess of the cap. There are significant uncertainties
in relation to VIL’s ability to settle all liabilities relating to the AGR judgement and no further cash payments are considered
probable at 31 March 2021.
The carrying value of the Group’s investment
in VIL is €nil and the Group is recording no further share of losses in respect of VIL. The Group’s potential exposure to liabilities
within VIL is capped by the mechanism described above. As a consequence, contingent liabilities arising from litigation in India concerning
operations of Vodafone India are no longer reported below.
Indus Towers merger
The merger of Indus and Bharti Infratel completed
on 19 November 2020 and the combined entity was renamed Indus Towers Ltd (‘Indus Towers’). Under the terms of the merger
a security package was agreed for the benefit of Indus Towers which can be invoked in the event that VIL is unable to satisfy certain
payment obligations under its Master Services Agreements with Indus Towers (the ‘MSAs’). The security package includes:
|
-
|
A prepayment in cash of INR 24 billion (€279 million) by VIL to Indus Towers in respect of its payment
obligations that are undisputed, due and payable under the MSAs after the merger closing;
|
|
-
|
A primary pledge over 190.7 million shares owned by Vodafone Group in Indus Towers having a value of INR
47 billion (€544 million) as at 31 March 2021; and
|
|
-
|
A secondary pledge over shares owned by Vodafone Group in Indus Towers (ranking
behind Vodafone’s existing lenders for the remaining €1.2 billion bank borrowings secured against Indian assets utilised to
fund Vodafone’s contribution to the VIL rights issue in 2019) (‘the Bank Borrowings’) with a maximum liability
cap of INR 42.5 billion (€495 million).
|
In the event of non-payment
of relevant MSA obligations by VIL, Indus Towers will have recourse to the primary pledge shares and, after repayment of the Bank
Borrowings in full, any secondary pledged shares, up to the value of the liability cap. VIL’s ability to make MSA payments to Indus
Towers is uncertain and depends on a number of factors including its ability to raise additional funding.
Legal
Proceedings
The Group is currently involved in a number of
legal proceedings, including inquiries from, or discussions with, government authorities that are incidental to their operations.
Legal proceedings
where the Group considers that the likelihood of material future outflows of cash or other resources is more than remote are disclosed
below. Where the Group assesses that it is probable that the outcome of legal proceedings will result in a financial outflow, and
a reliable estimate can be made of the amount of that obligation, a provision is recognised for these amounts.
In all cases, determining the probability of successfully
defending a claim against the Group involves the application of judgement as the outcome is inherently uncertain. The determination of
the value of any future outflows of cash or other resources, and the timing of such outflows, involves the use of estimates. The costs
incurred in complex legal proceedings, regardless of outcome, can be significant.
The Group is not involved in any material proceedings
in which any of the Group’s Directors, members of senior management or affiliates are either a party adverse to the Group or have
a material interest adverse to the Group.
Indian tax cases
In January 2012, the Supreme
Court of India found against the Indian tax authority and in favour of Vodafone International Holdings BV (‘VIHBV’) in proceedings
brought after the Indian tax authority alleged potential liability under the Income Tax Act 1961 for the failure by VIHBV to deduct withholding
tax from consideration paid to the Hutchison Telecommunications International Limited group (‘HTIL’) in connection with its
2007 disposal to VIHBV of its interests in a wholly-owned Cayman Island incorporated subsidiary that indirectly held interests in Vodafone
India Limited (‘Vodafone India’).
The Finance Act 2012 of India, which amended various
provisions of the Income Tax Act 1961 with retrospective effect, contained provisions intended to tax any gain on transfer of shares in
a non-Indian company, which derives substantial value from underlying Indian assets, such as VIHBV’s transaction with HTIL in 2007.
Further, it sought to subject a purchaser, such as VIHBV, to a retrospective obligation to withhold tax. On 3 January 2013, VIHBV
received a letter from the Indian tax authority reminding it of the tax demand raised prior to the Supreme Court of India’s judgement
and updating the interest element of that demand to a total amount of INR142 billion, which included principal and interest as calculated
by the Indian tax authority but did not include penalties. On 12 February 2016, VIHBV received a notice dated 4 February 2016
of an outstanding tax demand of INR221 billion (plus interest) along with a statement that enforcement action, including against VIHBV’s
indirectly held assets in India, would be taken if the demand was not satisfied. On 29 September 2017, VIHBV received an electronically
generated demand in respect of alleged principal, interest and penalties in the amount of INR190.7 billion. This demand does not appear
to have included any element for alleged accrued interest liability.
In response to the 2013 letter, VIHBV initiated
arbitration proceedings under the Netherlands-India Bilateral Investment Treaty (‘Dutch BIT’). The arbitration hearing took
place in February 2019. In September 2020, the arbitration tribunal issued its award unanimously ruling in VIHBV’s favour.
The Indian Government applied in Singapore to set aside the award primarily on jurisdictional grounds. The proceedings have been transferred
to a senior court, with a hearing date set for September 2021.
Separately, on 24 January 2017,
Vodafone Group Plc and Vodafone Consolidated Holdings Limited formally commenced arbitration with the Indian Government under the United
Kingdom-India Bilateral Investment Treaty (‘UK BIT’) in respect of retrospective tax claims under the Income Tax Act 1961
(as amended by the Finance Act 2012). Although relating to the same underlying facts as the claim under the Dutch BIT, the claim brought
by Vodafone Group Plc and Vodafone Consolidated Holdings Limited is a separate and distinct claim under a different treaty. After the
Delhi High Court first upheld, and subsequently dismissed, the Indian Government’s application for an injunction preventing Vodafone
from progressing the UK BIT arbitration as an abuse of process, the Indian Government appealed the dismissal. Hearings took place from
2018 to 2020 with frequent adjournments. Following the award in the Dutch BIT, the Delhi High Court dismissed the injunction appeal proceedings.
Vodafone has undertaken to take no steps advancing the UK BIT arbitration proceedings pending the outcome of the Indian Government’s
application to set aside the Dutch BIT award in Singapore. The Delhi High Court also permitted the formation of the UK BIT tribunal.
VIHBV and Vodafone
Group Plc will continue to defend vigorously any allegation that VIHBV or Vodafone India is liable to pay tax in connection with the transaction
with HTIL and will continue to exercise all rights to seek redress including pursuant to the Dutch BIT and the UK BIT. Based on
the facts and circumstances of this matter, including the outcome of legal proceedings to date, the Group considers that it is more likely
than not that no present obligation exists at 31 March 2021.
VISPL tax claims
Vodafone India Services Private Limited (‘VISPL’)
is involved in a number of tax cases. The total value of the claims is approximately €500 million plus interest, and penalties of
up to 300% of the principal.
Of the individual tax claims, the most significant
is in the amount of approximately €249 million (plus interest of €554 million), which VISPL has been assessed as owing in respect
of (i) a transfer pricing margin charged for the international call centre of HTIL prior to the 2007 transaction with Vodafone for
HTIL assets in India; (ii) the sale of the international call centre by VISPL to HTIL; and (iii) the acquisition of and/or the
alleged transfer of options held by VISPL in Vodafone India. The first two of the three heads of tax are subject to an indemnity by HTIL.
The larger part of the potential claim is not subject to an indemnity. A stay of the tax demand on a deposit of £20 million and
a corporate guarantee by VIHBV for the balance of tax assessed are in place. On 8 October 2015, the Bombay High Court ruled in favour
of Vodafone in relation to the options and the call centre sale. The Indian Tax Authority has appealed to the Supreme Court of India.
The appeal hearing has been adjourned indefinitely.
While there is some uncertainty as to the outcome
of the tax cases involving VISPL, the Group believes it has valid defences and does not consider it probable that a financial outflow
will be required to settle these cases.
Other cases in the Group
UK : IPCom v Vodafone Group Plc and Vodafone
UK
On 22 February 2019, IPCom
sued Vodafone Group Plc and Vodafone Limited for alleged infringement of two patents claimed to be essential to UMTS and LTE network standards.
If IPCom could have established that one or more of its patents was valid and infringed, it could have sought an injunction against the
UK network if a global licence for the patents was not agreed. The Court ordered expedited trials on the infringement and validity issues.
The trial on the first patent was in November 2019 and removed the risk of an injunction so IPCom withdrew the second patent trial
listed for May 2020. Both IPCom and Vodafone appealed certain aspects of the judgement from the first trial at a hearing in January 2021.
The Court of Appeal found in favour of both IPCom and Vodafone on different issues. Vodafone is seeking permission to appeal a discrete
issue from the Supreme Court of the United Kingdom. The validity of the first patent will be considered by the Board of Appeal of the
European Patent Office at a hearing in July 2021. Although the outcome of this hearing is unknown, we believe that there is a high
probability that the first patent will be found to be invalid and as a result Vodafone has no liability for patent infringement
which would mean that the Group has no present obligation . IPCom has indicated that it wishes to pursue a damages assessment for the
limited infringement found by the trial court. However, IPCom has suggested that these proceedings be deferred until the outcome
of the Board of Appeal of the European Patent Office. In any event, were the patent found to be valid the Group believes that the resulting
damages would be minimal.
Spain and UK: TOT v Vodafone Group Plc, VGSL,
and Vodafone UK
Vodafone Group Plc has been sued in Spain by TOT
Power Control (‘TOT’), an affiliate of Top Optimized Technologies. The claim makes a number of allegations including patent
infringement, with TOT initially seeking over €500 million in damages from Vodafone Group Plc as well as an injunction against using
the technology in question. Huawei has also been sued by TOT in the same action.
In a decision dated
30 October 2017, the Commercial Court of Madrid ruled that while it did have jurisdiction to hear the infringement case relating
to the Spanish patent, it was not competent to hear TOT’s contractual and competition law claims against Vodafone. The trial took
place in September 2018 and in January 2020 judgement was handed down in Vodafone and Huawei’s favour. TOT appealed but
limited its claims against Vodafone to seek approximately €4 million in damages and injunctive relief. The appeal judgement was issued
on 23 April 2021 and TOT’s claims for damages and injunctive relief against both Vodafone and Huawei were rejected,
therefore the Group does not believe that any present obligation exists.
In December 2019
TOT brought a similar claim in the English High Court against Vodafone Group and Vodafone UK alleging breach of confidentiality and patent
infringement. The value of the claim is not pleaded. Proceedings have been stayed until 30 September 2021 pending the outcome of
the appeal in Spain. Vodafone has issued an application seeking to strike out certain aspects of TOT’s case which will be heard
once the stay has been lifted. It remains unclear how much of the claim will remain after the strike out application. Vodafone has not
yet filed its defence. At this stage of proceedings, we are not able reliably to evaluate the likelihood of, or amount of, any
financial outflow.
Germany: Kabel Deutschland takeover - class
actions
The German courts
have been determining the adequacy of the mandatory cash offer made to minority shareholders in Vodafone’s takeover of Kabel Deutschland.
Hearings took place in May 2019 and a decision was delivered in November 2019 in Vodafone’s favour, rejecting all claims
by minority shareholders. A number of shareholders appealed. The appeal process is ongoing. While the outcome is uncertain, the Group
believes it has valid defences and that the outcome of the appeal will be favourable to Vodafone.
Italy: Iliad v Vodafone Italy
In July 2019, Iliad filed a claim for
€500 million against Vodafone Italy in the Civil Court of Milan. The claim alleges anti-competitive behaviour in relation to portability
and certain advertising campaigns by Vodafone Italy. Preliminary hearings have taken place, including one at which the Court rejected
Iliad’s application for a cease and desist order against alleged misleading advertising by Vodafone. The main hearing on the merits
of the claim is scheduled for 8 June 2021.
The Group is currently
unable to estimate any possible loss in this claim in the event of an adverse judgement but while the outcome is uncertain, the
Group believes it has valid defences and that it is probable that no present obligation exists.
Greece: Papistas Holdings SA, Mobile Trade
Stores (formerly Papistas SA) and Athanasios and Loukia Papistas v Vodafone Greece
In October 2019, Mr. and
Mrs. Papistas, and companies owned or controlled by them, filed several new claims against Vodafone Greece with a total value of
approximately €330 million for purported damage caused by the alleged abuse of dominance and wrongful termination of a franchise
arrangement with a Papistas company. Lawsuits which the Papistas claimants had previously brought against Vodafone Group Plc and certain
Directors and officers of Vodafone were withdrawn. Vodafone Greece filed a counter claim and all claims were heard in February 2020.
All of the Papistas claims were rejected by the Greek Court because the stamp duty payments required to have the merits of the case considered
had not been made. Vodafone Greece’s counter claim was also rejected. The Papistas claimants and Vodafone Greece have each filed
appeals and, subject to the Papistas claimants paying the requisite stamp duty, the hearing on the merits of these appeals will take place
in late 2021 and early 2022.
The
amount claimed in these lawsuits is substantial and, if the claimants are successful, the total potential liability could be material.
However, we are continuing vigorously to defend the claims and based on the progress of the litigation so far the Group believes that
it is highly unlikely that there will be an adverse ruling for the Group. On this basis, the Group does not expect the outcome
of these claims to have a material financial impact.
UK: Phones 4U in Administration v Vodafone
Limited and Vodafone Group Plc and Others
In December 2018,
the administrators of former UK indirect seller, Phones 4U, sued the three main UK mobile network operators (‘MNOs’), including
Vodafone, and their parent companies. The administrators allege a conspiracy between the MNOs to pull their business from Phones 4U thereby
causing its collapse. Vodafone and the other defendants filed their defences in April 2019 and the Administrators filed their replies
in October 2019. Disclosure has taken place and witness statements are due to be filed by the end of July 2021. The judge
has also ordered that there should be a split trial between liability and damages. The first trial will start in May 2022.
Taking into account
all available evidence, the Group assesses it to be more likely than not that a present obligation does not exist and that the allegations
of collusion are completely without merit; the Group is vigorously defending the claim. The value of the claim is not pleaded but
we understand it to be the total value of the business, possibly equivalent to approximately £1 billion. Vodafone’s alleged
share of the liability is also not pleaded. The Group is not able to estimate any possible loss in the event of an adverse judgement.
Non-GAAP measures
In the discussion of the Group’s reported
operating results, non-GAAP measures are 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 a measure defined under GAAP. Such
measures should not be viewed in isolation or as an alternative to the equivalent GAAP measure.
The non-GAAP measures discussed in this document
are listed below, together with the location of the definition and the reconciliation between the non-GAAP measure and the closest equivalent
GAAP measure.
Non-GAAP measure
|
|
Defined on
page
|
|
Closest equivalent GAAP measure
|
|
Reconciled on page
|
Performance metrics
|
|
|
|
|
|
|
Adjusted EBITDA
Referred to as Adjusted EBITDAaL in the FY22 Outlook section of the document The metrics have the same definition.
|
|
Page 41
|
|
Operating profit
|
|
Page 14
|
Organic adjusted EBITDA growth
|
|
Page 41
|
|
Not applicable
|
|
Not applicable
|
Organic percentage point change in adjusted EBITDA margin
|
|
Page 41
|
|
Not applicable
|
|
Not applicable
|
Organic revenue growth
|
|
Page 41
|
|
Reported revenue growth
|
|
Page 42
|
Organic service revenue growth
|
|
Page 41
|
|
Reported service revenue growth
|
|
Pages 42 to 43
|
Organic mobile service revenue growth
|
|
Page 41
|
|
Reported mobile service revenue growth
|
|
Pages 42 to 43
|
Organic fixed service revenue growth
|
|
Page 41
|
|
Reported fixed service revenue growth
|
|
Pages 42 to 43
|
Organic retail revenue growth
|
|
Page 41
|
|
Reported retail revenue growth
|
|
Pages 42 to 43
|
Other metrics
|
|
|
|
|
|
|
Adjusted profit attributable to owners of the parent
|
|
Page 44
|
|
Profit attributable to owners of the parent
|
|
Page 44
|
Adjusted basic earnings per share
|
|
Page 44
|
|
Basic earnings per share
|
|
Page 44
|
Cash flow, funding and capital allocation metrics
|
|
|
|
|
|
|
Free cash flow (pre spectrum, restructuring and integration costs)
|
|
Page 45
|
|
Inflow from operating activities
|
|
Page 45
|
Free cash flow
|
|
Page 45
|
|
Inflow from operating activities
|
|
Pages 27 and 45
|
Gross debt
|
|
Page 45
|
|
Borrowings
|
|
Page 45
|
Net debt
|
|
Page 45
|
|
Borrowings less cash and cash equivalents
|
|
Page 45
|
Return on Capital Employed (‘ROCE’)
|
|
Page 46
|
|
ROCE calculated on a GAAP basis
|
|
Pages 46 to 47
|
Financing and Taxation metrics
|
|
|
|
|
|
|
Adjusted net financing costs
|
|
Page 48
|
|
Net financing costs
|
|
Page 25
|
Adjusted profit before taxation
|
|
Page 48
|
|
Profit before taxation
|
|
Page 48
|
Adjusted income tax expense
|
|
Page 48
|
|
Income tax expense
|
|
Page 48
|
Adjusted effective tax rate
|
|
Page 48
|
|
Effective tax rate
|
|
Page 48
|
Share of adjusted results in equity accounted associates and joint ventures
|
|
Page 48
|
|
Share of results in equity accounted associates and joint ventures
|
|
Page 49
|
Performance metrics
Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA is our segment performance measure.
Adjusted EBITDA margin is adjusted EBITDA divided by Revenue.
To simplify our reporting, the Group no longer
discloses adjusted operating profit and EBIT. These metrics were non-GAAP measures disclosed in the year ended 31 March 2020.
Non-GAAP measure
|
Purpose
|
Definition
|
Adjusted EBITDA
|
It is used for internal performance reporting.
It is used in conjunction with financial measures such as operating
profit to assess our operating performance and profitability.
It is a key external metric used by the investor community to assess
performance of our operations.
|
Adjusted EBITDA is operating profit after depreciation on lease-related right of use assets and interest on leases but excluding depreciation, amortisation and gains/losses on disposal of owned fixed assets and excluding share of results in associates and joint ventures, impairment losses, restructuring costs arising from discrete restructuring plans, other income and expense and significant items that are not considered by management to be reflective of the underlying performance of the Group.
|
Organic growth
All amounts in this document marked with an “*”
represent organic growth. This measure presents performance on a comparable basis, including merger and acquisition activity and movements
in foreign exchange rates.
Organic growth is calculated for revenue and profitability
metrics, as follows:
|
-
|
Mobile service revenue;
|
|
-
|
Percentage point change in adjusted EBITDA margin.
|
Whilst organic growth is not intended to be a substitute
for reported growth, nor is it superior to reported growth, we believe that the measure provides useful and necessary information to investors
and other interested parties for the following reasons:
|
-
|
It provides additional information on underlying growth of the business without the effect of certain
factors unrelated to its operating performance;
|
|
-
|
It is used for internal performance analysis; and
|
|
-
|
It facilitates comparability of underlying growth with other companies (although the term “organic”
is not a defined term under GAAP and may not, therefore, be comparable with similarly titled measures reported by other companies).
|
We have not provided a comparative in respect of
organic growth rates as the current rates describe the change between the beginning and end of the current period, with such changes being
explained by the commentary in this document. If comparatives were provided, significant sections of the commentary for prior periods
would also need to be included, reducing the usefulness and transparency of this document.
Year ended 31 March 2021
|
|
FY21
|
|
|
FY20
|
|
|
Reported
growth
|
|
|
Other
activity
(incl. M&A)
|
|
|
Foreign
exchange
|
|
|
Organic
growth*
|
|
|
|
€m
|
|
|
€m
|
|
|
%
|
|
|
pps
|
|
|
pps
|
|
|
%
|
|
Service revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
11,520
|
|
|
|
10,696
|
|
|
|
7.7
|
|
|
|
(7.2
|
)
|
|
|
–
|
|
|
|
0.5
|
|
Mobile service revenue
|
|
|
5,056
|
|
|
|
5,084
|
|
|
|
(0.6
|
)
|
|
|
(0.1
|
)
|
|
|
–
|
|
|
|
(0.7
|
)
|
Fixed service revenue
|
|
|
6,464
|
|
|
|
5,612
|
|
|
|
15.2
|
|
|
|
(13.8
|
)
|
|
|
–
|
|
|
|
1.4
|
|
Italy
|
|
|
4,458
|
|
|
|
4,833
|
|
|
|
(7.8
|
)
|
|
|
0.3
|
|
|
|
–
|
|
|
|
(7.5
|
)
|
Mobile service revenue
|
|
|
3,244
|
|
|
|
3,625
|
|
|
|
(10.5
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(10.5
|
)
|
Fixed service revenue
|
|
|
1,214
|
|
|
|
1,208
|
|
|
|
0.5
|
|
|
|
0.9
|
|
|
|
–
|
|
|
|
1.4
|
|
UK
|
|
|
4,848
|
|
|
|
5,020
|
|
|
|
(3.4
|
)
|
|
|
0.7
|
|
|
|
1.9
|
|
|
|
(0.8
|
)
|
Mobile service revenue
|
|
|
3,428
|
|
|
|
3,618
|
|
|
|
(5.3
|
)
|
|
|
–
|
|
|
|
2.0
|
|
|
|
(3.3
|
)
|
Fixed service revenue
|
|
|
1,420
|
|
|
|
1,402
|
|
|
|
1.3
|
|
|
|
2.3
|
|
|
|
2.0
|
|
|
|
5.6
|
|
Spain
|
|
|
3,788
|
|
|
|
3,904
|
|
|
|
(3.0
|
)
|
|
|
0.2
|
|
|
|
–
|
|
|
|
(2.8
|
)
|
Other Europe
|
|
|
4,859
|
|
|
|
4,890
|
|
|
|
(0.6
|
)
|
|
|
(2.1
|
)
|
|
|
1.3
|
|
|
|
(1.4
|
)
|
Vodacom
|
|
|
4,083
|
|
|
|
4,470
|
|
|
|
(8.7
|
)
|
|
|
0.1
|
|
|
|
12.5
|
|
|
|
3.9
|
|
Other Markets
|
|
|
3,312
|
|
|
|
3,796
|
|
|
|
(12.8
|
)
|
|
|
10.2
|
|
|
|
13.4
|
|
|
|
10.8
|
|
Common Functions
|
|
|
470
|
|
|
|
494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminations
|
|
|
(197
|
)
|
|
|
(232
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total service revenue
|
|
|
37,141
|
|
|
|
37,871
|
|
|
|
(1.9
|
)
|
|
|
(1.4
|
)
|
|
|
3.2
|
|
|
|
(0.1
|
)
|
Other revenue
|
|
|
6,668
|
|
|
|
7,103
|
|
|
|
(6.1
|
)
|
|
|
–
|
|
|
|
4.1
|
|
|
|
(2.0
|
)
|
Revenue
|
|
|
43,809
|
|
|
|
44,974
|
|
|
|
(2.6
|
)
|
|
|
(1.2
|
)
|
|
|
3.4
|
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other growth metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany - Business fixed service revenue
|
|
|
893
|
|
|
|
813
|
|
|
|
9.8
|
|
|
|
–
|
|
|
|
–
|
|
|
|
9.8
|
|
Italy - Business fixed service revenue
|
|
|
490
|
|
|
|
453
|
|
|
|
8.2
|
|
|
|
(0.2
|
)
|
|
|
–
|
|
|
|
8.0
|
|
Germany - Retail revenue
|
|
|
11,201
|
|
|
|
10,315
|
|
|
|
8.6
|
|
|
|
(7.5
|
)
|
|
|
–
|
|
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
5,634
|
|
|
|
5,077
|
|
|
|
11.0
|
|
|
|
(9.2
|
)
|
|
|
–
|
|
|
|
1.8
|
|
Italy
|
|
|
1,597
|
|
|
|
2,068
|
|
|
|
(22.8
|
)
|
|
|
10.1
|
|
|
|
–
|
|
|
|
(12.7
|
)
|
UK
|
|
|
1,367
|
|
|
|
1,500
|
|
|
|
(8.9
|
)
|
|
|
–
|
|
|
|
1.6
|
|
|
|
(7.3
|
)
|
Spain
|
|
|
1,044
|
|
|
|
1,009
|
|
|
|
3.5
|
|
|
|
(0.1
|
)
|
|
|
–
|
|
|
|
3.4
|
|
Other Europe
|
|
|
1,760
|
|
|
|
1,738
|
|
|
|
1.3
|
|
|
|
(3.3
|
)
|
|
|
1.5
|
|
|
|
(0.5
|
)
|
Vodacom
|
|
|
1,873
|
|
|
|
2,088
|
|
|
|
(10.3
|
)
|
|
|
–
|
|
|
|
13.2
|
|
|
|
2.9
|
|
Other Markets
|
|
|
1,228
|
|
|
|
1,400
|
|
|
|
(12.3
|
)
|
|
|
9.0
|
|
|
|
11.8
|
|
|
|
8.5
|
|
Common Functions
|
|
|
(117
|
)
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
|
|
|
14,386
|
|
|
|
14,881
|
|
|
|
(3.3
|
)
|
|
|
(1.1
|
)
|
|
|
3.2
|
|
|
|
(1.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage point change in adjusted EBITDA margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
43.4
|
%
|
|
|
42.0
|
%
|
|
|
1.4
|
|
|
|
(1.0
|
)
|
|
|
–
|
|
|
|
0.4
|
|
Italy
|
|
|
31.9
|
%
|
|
|
37.4
|
%
|
|
|
(5.5
|
)
|
|
|
4.2
|
|
|
|
–
|
|
|
|
(1.3
|
)
|
UK
|
|
|
22.2
|
%
|
|
|
23.1
|
%
|
|
|
(0.9
|
)
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
(1.1
|
)
|
Spain
|
|
|
25.1
|
%
|
|
|
23.5
|
%
|
|
|
1.6
|
|
|
|
(0.1
|
)
|
|
|
–
|
|
|
|
1.5
|
|
Other Europe
|
|
|
31.7
|
%
|
|
|
31.4
|
%
|
|
|
0.3
|
|
|
|
(0.2
|
)
|
|
|
0.1
|
|
|
|
0.2
|
|
Vodacom
|
|
|
36.2
|
%
|
|
|
37.8
|
%
|
|
|
(1.6
|
)
|
|
|
–
|
|
|
|
0.3
|
|
|
|
(1.3
|
)
|
Other Markets
|
|
|
32.6
|
%
|
|
|
31.9
|
%
|
|
|
0.7
|
|
|
|
(0.6
|
)
|
|
|
(0.8
|
)
|
|
|
(0.7
|
)
|
Group
|
|
|
32.8
|
%
|
|
|
33.1
|
%
|
|
|
(0.3
|
)
|
|
|
0.1
|
|
|
|
–
|
|
|
|
(0.2
|
)
|
Quarter ended 31 March 2021
|
|
Q4 FY21
|
|
|
Q4 FY20
|
|
|
Reported
growth
|
|
|
Other
activity
(incl. M&A)
|
|
|
Foreign
exchange
|
|
|
Organic
growth*
|
|
|
|
€m
|
|
|
€m
|
|
|
%
|
|
|
pps
|
|
|
pps
|
|
|
%
|
|
Service revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
2,885
|
|
|
|
2,852
|
|
|
|
1.2
|
|
|
|
–
|
|
|
|
–
|
|
|
|
1.2
|
|
Mobile service revenue
|
|
|
1,274
|
|
|
|
1,262
|
|
|
|
1.0
|
|
|
|
(0.1
|
)
|
|
|
–
|
|
|
|
0.9
|
|
Fixed service revenue
|
|
|
1,611
|
|
|
|
1,590
|
|
|
|
1.3
|
|
|
|
0.1
|
|
|
|
–
|
|
|
|
1.4
|
|
Italy
|
|
|
1,084
|
|
|
|
1,189
|
|
|
|
(8.8
|
)
|
|
|
1.0
|
|
|
|
–
|
|
|
|
(7.8
|
)
|
Mobile service revenue
|
|
|
788
|
|
|
|
870
|
|
|
|
(9.4
|
)
|
|
|
0.1
|
|
|
|
–
|
|
|
|
(9.3
|
)
|
Fixed service revenue
|
|
|
296
|
|
|
|
319
|
|
|
|
(7.2
|
)
|
|
|
3.4
|
|
|
|
–
|
|
|
|
(3.8
|
)
|
UK
|
|
|
1,231
|
|
|
|
1,287
|
|
|
|
(4.4
|
)
|
|
|
2.4
|
|
|
|
1.4
|
|
|
|
(0.6
|
)
|
Mobile service revenue
|
|
|
880
|
|
|
|
909
|
|
|
|
(3.2
|
)
|
|
|
–
|
|
|
|
1.4
|
|
|
|
(1.8
|
)
|
Fixed service revenue
|
|
|
351
|
|
|
|
378
|
|
|
|
(7.1
|
)
|
|
|
8.3
|
|
|
|
1.0
|
|
|
|
2.2
|
|
Spain
|
|
|
951
|
|
|
|
972
|
|
|
|
(2.2
|
)
|
|
|
0.9
|
|
|
|
–
|
|
|
|
(1.3
|
)
|
Other Europe
|
|
|
1,233
|
|
|
|
1,233
|
|
|
|
–
|
|
|
|
(1.1
|
)
|
|
|
0.9
|
|
|
|
(0.2
|
)
|
Vodacom
|
|
|
1,078
|
|
|
|
1,091
|
|
|
|
(1.2
|
)
|
|
|
0.1
|
|
|
|
8.4
|
|
|
|
7.3
|
|
Other Markets
|
|
|
827
|
|
|
|
881
|
|
|
|
(6.1
|
)
|
|
|
0.2
|
|
|
|
19.0
|
|
|
|
13.1
|
|
Common Functions
|
|
|
136
|
|
|
|
137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminations
|
|
|
(59
|
)
|
|
|
(48
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total service revenue
|
|
|
9,366
|
|
|
|
9,594
|
|
|
|
(2.4
|
)
|
|
|
0.4
|
|
|
|
2.8
|
|
|
|
0.8
|
|
Other revenue
|
|
|
1,815
|
|
|
|
1,691
|
|
|
|
7.3
|
|
|
|
(0.8
|
)
|
|
|
3.6
|
|
|
|
10.1
|
|
Revenue
|
|
|
11,181
|
|
|
|
11,285
|
|
|
|
(0.9
|
)
|
|
|
0.2
|
|
|
|
2.9
|
|
|
|
2.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other growth metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany - Retail revenue
|
|
|
2,812
|
|
|
|
2,762
|
|
|
|
1.8
|
|
|
|
–
|
|
|
|
–
|
|
|
|
1.8
|
|
Quarter ended 31 December 2020
|
|
Q3 FY21
|
|
|
Q3 FY20
|
|
|
Reported
growth
|
|
|
Other
activity
(incl. M&A)
|
|
|
Foreign
exchange
|
|
|
Organic
growth*
|
|
|
|
€m
|
|
|
€m
|
|
|
%
|
|
|
pps
|
|
|
pps
|
|
|
%
|
|
Service revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
2,912
|
|
|
|
2,883
|
|
|
|
1.0
|
|
|
|
–
|
|
|
|
–
|
|
|
|
1.0
|
|
Mobile service revenue
|
|
|
1,279
|
|
|
|
1,273
|
|
|
|
0.5
|
|
|
|
–
|
|
|
|
–
|
|
|
|
0.5
|
|
Fixed service revenue
|
|
|
1,633
|
|
|
|
1,610
|
|
|
|
1.4
|
|
|
|
–
|
|
|
|
–
|
|
|
|
1.4
|
|
Italy
|
|
|
1,125
|
|
|
|
1,220
|
|
|
|
(7.8
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(7.8
|
)
|
Mobile service revenue
|
|
|
818
|
|
|
|
916
|
|
|
|
(10.7
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(10.7
|
)
|
Fixed service revenue
|
|
|
307
|
|
|
|
304
|
|
|
|
1.0
|
|
|
|
0.1
|
|
|
|
–
|
|
|
|
1.1
|
|
UK
|
|
|
1,216
|
|
|
|
1,282
|
|
|
|
(5.1
|
)
|
|
|
–
|
|
|
|
4.7
|
|
|
|
(0.4
|
)
|
Mobile service revenue
|
|
|
848
|
|
|
|
924
|
|
|
|
(8.2
|
)
|
|
|
–
|
|
|
|
4.6
|
|
|
|
(3.6
|
)
|
Fixed service revenue
|
|
|
368
|
|
|
|
358
|
|
|
|
2.8
|
|
|
|
–
|
|
|
|
5.1
|
|
|
|
7.9
|
|
Spain
|
|
|
957
|
|
|
|
966
|
|
|
|
(0.9
|
)
|
|
|
(0.2
|
)
|
|
|
–
|
|
|
|
(1.1
|
)
|
Other Europe
|
|
|
1,215
|
|
|
|
1,265
|
|
|
|
(4.0
|
)
|
|
|
1.5
|
|
|
|
1.8
|
|
|
|
(0.7
|
)
|
Vodacom
|
|
|
1,056
|
|
|
|
1,162
|
|
|
|
(9.1
|
)
|
|
|
–
|
|
|
|
12.4
|
|
|
|
3.3
|
|
Other Markets
|
|
|
806
|
|
|
|
891
|
|
|
|
(9.5
|
)
|
|
|
–
|
|
|
|
21.8
|
|
|
|
12.3
|
|
Common Functions
|
|
|
115
|
|
|
|
117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminations
|
|
|
(45
|
)
|
|
|
(53
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total service revenue
|
|
|
9,357
|
|
|
|
9,733
|
|
|
|
(3.9
|
)
|
|
|
0.2
|
|
|
|
4.1
|
|
|
|
0.4
|
|
Other revenue
|
|
|
1,844
|
|
|
|
2,017
|
|
|
|
(8.6
|
)
|
|
|
–
|
|
|
|
4.8
|
|
|
|
(3.8
|
)
|
Revenue
|
|
|
11,201
|
|
|
|
11,750
|
|
|
|
(4.7
|
)
|
|
|
0.2
|
|
|
|
4.2
|
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other growth metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany - Retail revenue
|
|
|
2,832
|
|
|
|
2,791
|
|
|
|
1.5
|
|
|
|
–
|
|
|
|
–
|
|
|
|
1.5
|
|
Other metrics
Non-GAAP measure
|
Purpose
|
Definition
|
Adjusted profit attributable to owners of the parent
|
This metric is used in the calculation of adjusted basic earnings per share.
|
Adjusted profit attributable to owners of the parent excludes restructuring costs arising from discrete restructuring plans, amortisation of customer bases and brand intangible assets, impairment losses, other income and expense and mark-to-market and foreign exchange movements, together with related tax effects.
|
Adjusted basic earnings per share
|
This performance measure is used in discussions with the investor community.
|
Adjusted basic earnings per share is Adjusted profit attributable to owners of the parent divided by the weighted average number of shares outstanding. This is the same denominator used when calculating basic earnings / (loss) per share.
|
Adjusted profit attributable to owners of the
parent
The reconciliation of adjusted profit attributable
to owners of the parent to the closest equivalent GAAP measure, profit attributable to owners of the parent, is provided below.
|
|
FY21
|
|
|
FY20
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Adjusted
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Adjusted
|
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
Adjusted EBITDA
|
|
|
14,386
|
|
|
|
-
|
|
|
|
14,386
|
|
|
|
14,881
|
|
|
|
-
|
|
|
|
14,881
|
|
Restructuring costs
|
|
|
(356
|
)
|
|
|
356
|
|
|
|
-
|
|
|
|
(695
|
)
|
|
|
695
|
|
|
|
-
|
|
Interest on lease liabilities
|
|
|
374
|
|
|
|
-
|
|
|
|
374
|
|
|
|
330
|
|
|
|
-
|
|
|
|
330
|
|
Depreciation and amortisation1
|
|
|
(10,217
|
)
|
|
|
488
|
|
|
|
(9,729
|
)
|
|
|
(10,508
|
)
|
|
|
423
|
|
|
|
(10,085
|
)
|
Share of results of equity accounted associates and joint ventures2
|
|
|
342
|
|
|
|
90
|
|
|
|
432
|
|
|
|
(2,505
|
)
|
|
|
2,264
|
|
|
|
(241
|
)
|
Impairment losses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,685
|
)
|
|
|
1,685
|
|
|
|
-
|
|
Other income and expense
|
|
|
568
|
|
|
|
(568
|
)
|
|
|
-
|
|
|
|
4,281
|
|
|
|
(4,281
|
)
|
|
|
-
|
|
Operating profit
|
|
|
5,097
|
|
|
|
366
|
|
|
|
5,463
|
|
|
|
4,099
|
|
|
|
786
|
|
|
|
4,885
|
|
Non-operating expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
3
|
|
|
|
-
|
|
Investment income
|
|
|
330
|
|
|
|
-
|
|
|
|
330
|
|
|
|
248
|
|
|
|
-
|
|
|
|
248
|
|
Financing costs
|
|
|
(1,027
|
)
|
|
|
(1,068
|
)
|
|
|
(2,095
|
)
|
|
|
(3,549
|
)
|
|
|
1,333
|
|
|
|
(2,216
|
)
|
Profit/(loss) before taxation
|
|
|
4,400
|
|
|
|
(702
|
)
|
|
|
3,698
|
|
|
|
795
|
|
|
|
2,122
|
|
|
|
2,917
|
|
Income tax expense
|
|
|
(3,864
|
)
|
|
|
2,985
|
|
|
|
(879
|
)
|
|
|
(1,250
|
)
|
|
|
451
|
|
|
|
(799
|
)
|
Profit/(loss) for the financial year
|
|
|
536
|
|
|
|
2,283
|
|
|
|
2,819
|
|
|
|
(455
|
)
|
|
|
2,573
|
|
|
|
2,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– Owners of the parent
|
|
|
112
|
|
|
|
2,278
|
|
|
|
2,390
|
|
|
|
(920
|
)
|
|
|
2,567
|
|
|
|
1,647
|
|
– Non-controlled interests
|
|
|
424
|
|
|
|
5
|
|
|
|
429
|
|
|
|
465
|
|
|
|
6
|
|
|
|
471
|
|
Profit/(loss) for the financial year
|
|
|
536
|
|
|
|
2,283
|
|
|
|
2,819
|
|
|
|
(455
|
)
|
|
|
2,573
|
|
|
|
2,118
|
|
Note:
|
1.
|
Reported depreciation and amortisation excludes depreciation on leased assets and loss on disposal of Right-of-use assets. Refer to
Additional Information on page 49 for an analysis of depreciation and amortisation. The adjustments of €488 million (FY20: €423
million) relate to amortisation of customer bases and brand intangible assets.
|
|
2.
|
Refer to page 49 for an analysis of the adjustments to share of results of equity accounted associates and joint ventures.
|
Adjusted basic earnings per share
The reconciliation of adjusted basic earnings per
share to the closest equivalent GAAP measure, basic loss per share, is provided below.
|
|
FY21
|
|
|
FY20
|
|
|
|
€m
|
|
|
€m
|
|
Profit attributable to owners of the parent
|
|
|
112
|
|
|
|
(920
|
)
|
Adjusted profit attributable to owners of the parent
|
|
|
2,390
|
|
|
|
1,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Million
|
|
|
|
Million
|
|
Weighted average number of shares outstanding - Basic
|
|
|
29,592
|
|
|
|
29,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
eurocents
|
|
|
|
eurocents
|
|
Basic earnings/(loss) per share
|
|
|
0.38
|
c
|
|
|
(3.13
|
)c
|
Adjusted basic earnings per share
|
|
|
8.08
|
c
|
|
|
5.60
|
c
|
Cash flow, funding and capital allocation metrics
Cash flow and funding
Non-GAAP measure
|
Purpose
|
Definition
|
Free cash flow (pre spectrum, restructuring and integration costs)
|
Internal performance reporting.
External metric used by investor community.
Setting director and management remuneration
Key external metric used to evaluate liquidity and the cash generated
by our operations.
|
Free cash flow (pre spectrum, restructuring and integration costs) is Adjusted EBITDA after cash flows in relation to cash capital additions, working capital, disposal of property, plant and equipment, interest received and paid, dividends received from associates and investments, dividends paid to non-controlling shareholders in subsidiaries and payments in respect of lease liabilities but before restructuring costs arising from discrete restructuring plans, licence and spectrum payments and integration costs.
|
Free cash flow
|
Internal performance reporting.
External metric used by investor community.
Assists comparability with other companies, although our metric may
not be directly comparable to similarly titled measures used by other companies.
|
Free cash flow is Free cash flow (pre spectrum, restructuring and integration costs) adjusted for licence and spectrum payments, restructuring and integration payments and integration capital expenditure.
|
Gross debt
|
Prominent metric used by debt rating agencies and the investor community.
|
Non-current borrowings and current borrowings, excluding lease liabilities, collateral liabilities and borrowings specifically secured against Indian assets.
|
Net debt
|
Prominent metric used by debt rating agencies and the investor community.
|
Gross debt less short term investments, collateral assets, mark-to-market adjustments and cash and cash equivalents.
|
The tables below present: (i) the reconciliation
between Inflow from operating activities and Free cash flow (pre spectrum, restructuring and integration costs) and (ii) the reconciliation
between Borrowings, Gross debt and Net debt.
|
FY21
|
|
FY20
|
|
€m
|
|
€m
|
Inflow from operating activities
|
|
17,215
|
|
|
17,379
|
|
Net tax paid
|
|
1,020
|
|
|
930
|
|
Cash generated by operations
|
|
18,235
|
|
|
18,309
|
|
Capital additions
|
|
(7,854
|
)
|
|
(7,411
|
)
|
Working capital movement in respect of capital additions
|
|
410
|
|
|
(11
|
)
|
Disposal of property, plant and equipment
|
|
42
|
|
|
41
|
|
Interest received and paid
|
|
(1,860
|
)
|
|
(1,465
|
)
|
Taxation
|
|
(1,020
|
)
|
|
(930
|
)
|
Dividends received from associates and investments
|
|
628
|
|
|
417
|
|
Dividends paid to non-controlling shareholders in subsidiaries
|
|
(391
|
)
|
|
(348
|
)
|
Payments in respect of lease liabilities
|
|
(3,897
|
)
|
|
(3,552
|
)
|
Restructuring and integration payments
|
|
421
|
|
|
570
|
|
Other
|
|
305
|
|
|
80
|
|
Free cash flow (pre spectrum, restructuring and integration costs)
|
|
5,019
|
|
|
5,700
|
|
|
|
|
|
|
|
|
Borrowings
|
|
(67,760
|
)
|
|
(74,925
|
)
|
Adjustments:
|
|
|
|
|
|
|
Lease liabilities
|
|
13,032
|
|
|
12,118
|
|
Bank borrowings secured against Indian assets
|
|
1,247
|
|
|
1,346
|
|
Collateral liabilities
|
|
962
|
|
|
5,292
|
|
Gross debt
|
|
(52,519
|
)
|
|
(56,169
|
)
|
Collateral liabilities
|
|
(962
|
)
|
|
(5,292
|
)
|
Cash and cash equivalents
|
|
5,821
|
|
|
13,557
|
|
Short term investments
|
|
4,007
|
|
|
4,132
|
|
Collateral assets
|
|
3,107
|
|
|
1,115
|
|
Derivative financial instruments
|
|
(859
|
)
|
|
4,409
|
|
Mark-to-market gains deferred in hedge reserves
|
|
862
|
|
|
(3,799
|
)
|
Net debt1
|
|
(40,543
|
)
|
|
(42,047
|
)
|
|
1.
|
Net debt as at 31 March 2020 has been aligned to the FY21 presentation, increasing by €3,799
million to exclude derivative movements in cash flow hedging reserves and decreasing by €121 million to reflect that Vodafone Egypt
is no longer held for sale.
|
Return on Capital Employed
Non-GAAP measure
|
Purpose
|
Definition
|
Return on Capital Employed (‘ROCE’)
|
ROCE is a metric used by the investor community and reflects how efficiently we are generating profit with the capital we deploy.
|
We calculate ROCE by dividing Operating profit by the average of capital employed as reported in the consolidated statement of financial position. Capital employed includes total borrowings, cash and cash equivalents, derivative financial instruments included in trade and other receivables/payables, short term investments, collateral assets, financial liabilities under put option arrangements and equity.
|
Pre-tax ROCE for controlled operations
Post-tax ROCE (including Associates and Joint Ventures)
|
As above
|
We calculate pre-tax ROCE (controlled operations) by dividing Operating profit excluding impairment losses, amortisation of customer bases and brand intangible assets, restructuring costs arising from discrete restructuring plans, lease-related interest and other income and expense and excluding the share of results in associates and joint ventures. On a post-tax basis, the measure includes our share of results from associates and joint ventures and a notional tax charge. Capital is equivalent to net operating assets and is calculated as the average of opening and closing balances of: property, plant and equipment (including Right-of-Use assets and liabilities), intangible assets (including goodwill), operating working capital (including held for sale assets and excluding derivative balances) and provisions. Other assets that do not directly contribute to returns are excluded from this measure and include other investments, current and deferred tax balances and post employment benefits. On a post-tax basis, ROCE also includes our investments in associates and joint ventures.
|
Return on Capital Employed (‘ROCE’)
The table below presents the calculation of ROCE
using GAAP measures as reported in the consolidated income statement and consolidated statement of financial position.
|
|
FY21
|
|
|
FY20
|
|
|
|
€m
|
|
|
€m
|
|
Operating profit
|
|
|
5,097
|
|
|
|
4,099
|
|
|
|
|
|
|
|
|
|
|
Total borrowings
|
|
|
67,760
|
|
|
|
74,925
|
|
Cash and cash equivalents
|
|
|
(5,821
|
)
|
|
|
(13,557
|
)
|
Derivative financial instruments included in trade and other receivables
|
|
|
(3,151
|
)
|
|
|
(9,176
|
)
|
Derivative financial instruments included in trade and other payables
|
|
|
4,010
|
|
|
|
4,767
|
|
Short term investments
|
|
|
(4,007
|
)
|
|
|
(4,132
|
)
|
Collateral assets
|
|
|
(3,107
|
)
|
|
|
(1,115
|
)
|
Financial liabilities under put option arrangements
|
|
|
492
|
|
|
|
1,850
|
|
Equity
|
|
|
57,816
|
|
|
|
62,625
|
|
Capital employed at end of the year
|
|
|
113,992
|
|
|
|
116,187
|
|
|
|
|
|
|
|
|
|
|
Average capital employed for the year1
|
|
|
115,090
|
|
|
|
104,255
|
|
|
|
|
|
|
|
|
|
|
ROCE
|
|
|
4.4
|
%
|
|
|
3.9
|
%
|
Note:
|
1.
|
Average capital employed for FY20 is calculated with reference to the Group’s published results
for FY19, which were prepared in accordance with IAS 17.
|
Return on Capital Employed (‘ROCE’)
: Non-GAAP basis
The table below presents the calculation of ROCE
using non-GAAP measures and reconciling to the closest equivalent GAAP measure.
|
|
|
|
|
FY20
|
|
|
|
FY21
|
|
|
Re-presented1
|
|
|
|
€m
|
|
|
€m
|
|
Operating profit
|
|
|
5,097
|
|
|
|
4,099
|
|
Interest on lease liabilities
|
|
|
(374
|
)
|
|
|
(330
|
)
|
Restructuring costs
|
|
|
356
|
|
|
|
695
|
|
Impairment loss
|
|
|
-
|
|
|
|
1,685
|
|
Other income
|
|
|
(568
|
)
|
|
|
(4,281
|
)
|
Share of results in equity accounted associates and joint ventures
|
|
|
(342
|
)
|
|
|
2,505
|
|
Adjusted operating profit for calculating pre-tax ROCE (controlled)
|
|
|
4,169
|
|
|
|
4,373
|
|
Share of adjusted results in equity accounted associates and joint ventures (excluding amortisation of acquired customer base and brand intangible assets)2
|
|
|
203
|
|
|
|
(456
|
)
|
Notional tax at adjusted effective tax rate
|
|
|
(1,176
|
)
|
|
|
(991
|
)
|
Adjusted operating profit for calculating post-tax ROCE (controlled and associates/joint ventures)
|
|
|
3,196
|
|
|
|
2,926
|
|
|
|
|
|
|
|
|
|
|
Capital employed for calculating ROCE on a GAAP basis
|
|
|
113,992
|
|
|
|
116,187
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
- Leases
|
|
|
(13,032
|
)
|
|
|
(12,118
|
)
|
- Deferred tax assets
|
|
|
(21,569
|
)
|
|
|
(23,606
|
)
|
- Deferred tax liabilities
|
|
|
2,095
|
|
|
|
2,103
|
|
- Taxation recoverable
|
|
|
(434
|
)
|
|
|
(278
|
)
|
- Taxation payable
|
|
|
769
|
|
|
|
787
|
|
- Other investments
|
|
|
(1,514
|
)
|
|
|
(1,397
|
)
|
- Excluding associates and joint ventures
|
|
|
(5,927
|
)
|
|
|
(5,419
|
)
|
- Pension assets and liabilities
|
|
|
453
|
|
|
|
(152
|
)
|
Adjusted capital employed for calculating pre-tax ROCE (controlled)
|
|
|
74,833
|
|
|
|
76,107
|
|
Associates and joint ventures
|
|
|
5,927
|
|
|
|
5,419
|
|
Adjusted capital employed for calculating post-tax ROCE (controlled and associates/joint ventures)
|
|
|
80,760
|
|
|
|
81,526
|
|
|
|
|
|
|
|
|
|
|
Average capital employed for calculating pre-tax ROCE (controlled)
|
|
|
75,470
|
|
|
|
69,743
|
|
Average capital employed for calculating post-tax ROCE (controlled and associates/joint ventures)
|
|
|
81,143
|
|
|
|
74,308
|
|
|
|
|
|
|
|
|
|
|
Pre-tax ROCE (controlled)
|
|
|
5.5
|
%
|
|
|
6.3
|
%
|
Post-tax ROCE (controlled and associates/joint ventures)
|
|
|
3.9
|
%
|
|
|
3.9
|
%
|
Notes:
|
1.
|
The presentation of FY20 ROCE has been aligned to the FY21 presentation. As a result, the FY20 ROCE has
been amended to exclude the amortisation of acquired customer base and brand intangible assets of €215 million from Adjusted operating
profit for calculating pre-tax ROCE (controlled) and from the Share of adjusted results in equity accounted associates and joint ventures.
Furthermore, Other investments now excludes amounts owed to M-Pesa account holders of €1,237 million for FY20 and €1,048 million
for FY19.
|
|
2.
|
Share of adjusted results in equity accounted associates and joint ventures is a Non-GAAP measure. See
page 49 for more information.
|
Financing and Taxation metrics
Non-GAAP measure
|
Purpose
|
Definition
|
Adjusted net financing costs
|
This metric is used by both management and the investor community.
This metric is used in the calculation of adjusted basic earnings per
share.
|
Adjusted net financing costs exclude mark-to-market and foreign exchange gains/losses.
|
Adjusted profit before taxation
|
This metric is used in the calculation of the adjusted effective tax rate (see below).
|
Adjusted profit before taxation excludes the tax effects of items excluded from adjusted basic earnings per share, including: impairment losses, amortisation of customer bases and brand intangible assets, restructuring costs arising from discrete restructuring plans, other income and expense and mark to market and foreign exchange movements.
|
Adjusted income tax expense
|
This metric is used in the calculation of the adjusted effective tax rate (see below).
|
Adjusted income tax expense excludes the tax effects of items excluded from adjusted basic earnings per share, including: impairment losses, amortisation of customer bases and brand intangible assets, restructuring costs arising from discrete restructuring plans, other income and expense and mark to market and foreign exchange movements. It also excludes deferred tax movements relating to tax losses in Luxembourg as well as other significant one-off items.
|
Adjusted effective tax rate
|
This metric is used by both management and the investor community.
|
Adjusted income tax expense (see above) divided by Adjusted profit before taxation (see above).
|
Share of adjusted results in equity accounted associates and joint ventures
|
This metric is used in the calculation of adjusted effective tax rate and ROCE.
|
Share of results in equity accounted associates and joint ventures excluding restructuring costs, amortisation of acquired customer base and brand intangible assets and other income and expense.
|
Adjusted tax metrics
The table below reconciles profit before taxation
and income tax expense to adjusted profit before taxation, adjusted income tax expense and adjusted effective tax rate.
|
|
FY21
|
|
|
FY20
|
|
|
|
€m
|
|
|
€m
|
|
Profit before taxation
|
|
|
4,400
|
|
|
|
795
|
|
Adjustments to derive adjusted profit before tax
|
|
|
(702
|
)
|
|
|
2,122
|
|
Adjusted profit before taxation
|
|
|
3,698
|
|
|
|
2,917
|
|
Share of adjusted results in associates and joint ventures
|
|
|
(432
|
)
|
|
|
241
|
|
Adjusted profit before tax for calculating adjusted effective tax rate
|
|
|
3,266
|
|
|
|
3,158
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(3,864
|
)
|
|
|
(1,250
|
)
|
Tax on adjustments to derive adjusted profit before tax
|
|
|
(162
|
)
|
|
|
(432
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
- Deferred tax following revaluation of investments in Luxembourg
|
|
|
2,827
|
|
|
|
(346
|
)
|
- Reduction in deferred tax following rate change in Luxembourg
|
|
|
–
|
|
|
|
881
|
|
- Deferred tax on use of Luxembourg losses in the year
|
|
|
320
|
|
|
|
348
|
|
Adjusted income tax expense for calculating adjusted tax rate
|
|
|
(879
|
)
|
|
|
(799
|
)
|
|
|
|
|
|
|
|
|
|
Adjusted effective tax rate
|
|
|
26.9
|
%
|
|
|
25.3
|
%
|
Share of adjusted results in equity accounted associates and joint
ventures
The table below reconciles share of adjusted results
in equity accounted associates and joint ventures to the closest GAAP equivalent, share of results in equity accounted associates and
joint ventures.
|
|
FY21
|
|
|
FY20
|
|
|
|
€m
|
|
|
€m
|
|
Share of results in equity accounted associates and joint ventures
|
|
|
342
|
|
|
|
(2,505
|
)
|
Restructuring costs
|
|
|
3
|
|
|
|
25
|
|
Amortisation of acquired customer base and brand intangible assets
|
|
|
229
|
|
|
|
215
|
|
Other income and expense
|
|
|
(142
|
)
|
|
|
2,024
|
|
Share of adjusted results in equity accounted associates and joint ventures
|
|
|
432
|
|
|
|
(241
|
)
|
Additional information
Analysis of depreciation and amortisation
The table below presents an analysis of the different
components of depreciation and amortisation discussed in the document, reconciled to the GAAP amounts in the consolidated income statement.
|
|
FY21
|
|
|
FY20
|
|
|
|
€m
|
|
|
€m
|
|
Depreciation on leased assets
|
|
|
3,914
|
|
|
|
3,720
|
|
Depreciation on owned assets
|
|
|
5,766
|
|
|
|
5,995
|
|
Amortisation of intangible assets
|
|
|
4,421
|
|
|
|
4,459
|
|
Total depreciation and amortisation
|
|
|
14,101
|
|
|
|
14,174
|
|
Loss on disposal of owned fixed assets
|
|
|
30
|
|
|
|
54
|
|
Loss on disposal of Right-of-Use assets
|
|
|
(13
|
)
|
|
|
(3
|
)
|
Total depreciation, amortisation and loss on disposal of fixed assets - as recognised in the consolidated income statement
|
|
|
14,118
|
|
|
|
14,225
|
|
Analysis of tangible and intangible additions
The table below presents an analysis of the different
components of tangible and intangible additions discussed in the document.
|
|
FY21
|
|
|
FY20
|
|
|
|
€m
|
|
|
€m
|
|
Capital additions
|
|
|
7,854
|
|
|
|
7,411
|
|
Integration related capital additions
|
|
|
329
|
|
|
|
111
|
|
Licence additions
|
|
|
896
|
|
|
|
1,776
|
|
Additions to customer bases
|
|
|
1
|
|
|
|
–
|
|
Additions
|
|
|
9,080
|
|
|
|
9,298
|
|
|
|
|
|
|
|
|
|
|
Intangible assets - additions
|
|
|
3,367
|
|
|
|
4,061
|
|
Property, plant and equipment (owned) - additions
|
|
|
5,713
|
|
|
|
5,237
|
|
Total additions
|
|
|
9,080
|
|
|
|
9,298
|
|
Definitions
Key terms are defined below. See page 40 for
the location of definitions for non-GAAP measures.
Term
|
|
Definition
|
ARPU
|
|
Average revenue per user, defined as customer revenue and incoming revenue divided by average customers.
|
B2C
|
|
Business-to-Consumer refers to the process of selling products and services directly between a business and consumers who are the end-users.
|
Capital additions
|
|
Comprises the purchase of property, plant and equipment and intangible assets, other than licence and spectrum payments and integration capital expenditure.
|
Churn
|
|
Total gross customer disconnections in the period divided by the average total customers in the period.
|
Common Functions
|
|
Comprises central teams and business functions.
|
Converged customer
|
|
A customer who receives fixed and mobile services (also known as unified communications) on a single bill or who receives a discount across both bills.
|
Customer costs
|
|
Includes acquisition costs, retention costs and other direct costs of providing services.
|
Depreciation and amortisation
|
|
The accounting charge that allocates the cost of a tangible or intangible asset to the income statement over its useful life. This measure includes the profit or loss on disposal of property, plant and equipment and computer software. Includes Right-of-use assets.
|
Direct costs
|
|
Direct costs include interconnect costs and other direct costs of providing services.
|
Europe
|
|
Comprises the Group’s operations in Europe.
|
Fixed service revenue
|
|
Service revenue (see below) relating to the provision of fixed line and carrier services.
|
GAAP
|
|
Generally Accepted Accounting Principles.
|
IFRS
|
|
International Financial Reporting Standard.
|
Integration capital expenditure
|
|
Capital expenditure incurred in relation to significant changes in the operating model, such as the integration of recently acquired subsidiaries.
|
Internet of Things (‘IoT’)
|
|
The network of physical objects embedded with electronics, software, sensors, and network connectivity, including built-in mobile SIM cards, that enables these objects to collect data and exchange communications with one another or a database.
|
Mobile service revenue
|
|
Service revenue (see below) relating to the provision of mobile services.
|
Next generation networks (‘NGN’)
|
|
Fibre or cable networks typically providing high-speed broadband over 30Mbps.
|
Operating expenses
|
|
Comprise primarily sales and distribution costs, network and IT related expenditure and business support costs.
|
Other Europe
|
|
Other Europe markets include Portugal, Ireland, Greece, Romania, Czech Republic, Hungary and Albania.
|
Other Markets
|
|
Other Markets comprise Turkey, Egypt and Ghana.
|
Other revenue
|
|
Other revenue includes connection fees, equipment revenue, interest income and lease revenue.
|
Regulation
|
|
Impact of industry law and regulations covering telecommunication services. The impact of regulation on service revenue in European markets comprises the effect of changes in European mobile termination rates and changes in out-of-bundle roaming revenue less the increase in visitor revenue.
|
Reported growth
|
|
Reported growth is based on amounts reported in euros and determined under IFRS.
|
Restructuring costs
|
|
Costs incurred by the Group following the implementation of discrete restructuring plans to improve overall efficiency.
|
Retail revenue
|
|
Retail revenue comprises service revenue (see below) excluding Mobile Virtual Network Operator (‘MVNO’) and Fixed Virtual Network Operator (‘FVNO’) wholesale revenue
|
Roaming
|
|
Allows customers to make calls, send and receive texts and data on other operators’ mobile networks, usually while travelling abroad.
|
Service revenue
|
|
Service revenue is all revenue related to the provision of or ongoing services including but not limited to, monthly access changes, airtime usage, roaming, incoming and outgoing network usage by non-Vodafone customers and interconnect charges for incoming calls.
|
SME
|
|
Small and medium sized enterprises.
|
Vodafone Business
|
|
Vodafone Business is part of the Group and partners with businesses of every size to provide a range of business-related services.
|
Notes
|
1.
|
This announcement contains inside information for the purposes of Article 7 of EU regulation 596/2014.
The person responsible for arranging the release of this announcement on behalf of Vodafone Group Plc is Rosemary Martin, Group General
Counsel and Company Secretary. Tel: +44 (0) 1635 33251.
|
|
2.
|
References to Vodafone are to Vodafone Group Plc and references to Vodafone Group are to Vodafone Group
Plc and its subsidiaries unless otherwise stated. Vodafone, the Vodafone Speech Mark Devices, Vodacom and Together we can are trade marks
owned by Vodafone. Vantage Towers is a trade mark owned by Vantage Towers AG. Other product and company names mentioned herein may be
the trade marks of their respective owners.
|
|
3.
|
All growth rates reflect a comparison to the year ended 31 March 2020 unless otherwise stated.
|
|
4.
|
References to “Q3” and “Q4” are to the three months ended 31 December 2020
and 31 March 2021, respectively, unless otherwise stated. References to the “second half of the year” or “H2”
are to the six months ended 31 March 2021 unless otherwise stated. References to “FY21”, the “year” or “2021
financial year” are to the financial year ending 31 March 2021 and references to “FY20”, the “last year”
or “last financial year” are to the financial year ended 31 March 2020 unless otherwise stated.
|
|
5.
|
Vodacom refers to the Group’s interest in Vodacom Group Limited (‘Vodacom’) in South
Africa as well as its subsidiaries, including its operations in the DRC, Lesotho, Mozambique and Tanzania.
|
|
6.
|
Quarterly historical information, including
information for service revenue, mobile customers, mobile churn, mobile data usage, mobile
ARPU and certain fixed line and convergence metrics, is provided in a spreadsheet available
at https://investors.vodafone.com/reports-information/results-reports-presentations
|
|
7.
|
This document contains references to our website. Information on our website is not incorporated into
this document and should not be considered part of it. We have included any website as an inactive textual reference only.
|
This report 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 and the guidance for Adjusted EBITDA and free cash flow (pre spectrum, restructuring and integration costs) for the financial
year ending 31 March 2022; the Group’s sustainable business strategy and 2025 targets; expectations for the Group’s future
performance generally; expectations regarding the operating environment and market conditions and trends, including customer usage, competitive
position and macroeconomic pressures, price trends and opportunities in specific geographic markets; intentions and expectations regarding
the development, launch and expansion of products, services and technologies, either introduced by Vodafone or by Vodafone in conjunction
with third parties or by third parties independently including 5G networks, sharing infrastructure and its benefits and sharing mobile
networks in Europe; expectations regarding the integration or performance of current and future investments, associates, joint ventures,
non-controlled interests and newly acquired businesses, including in respect of Vodafone Business’ partnership with Accenture.
Forward-looking statements are sometimes, but not
always, identified by their use of a date in the future or such words as “will”, “anticipates”, “could”,
“may”, “should”, “expects”, “believes”, “intends”, “plans” or
“targets” (including in their negative form or other variations). 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 may or may not
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: external cyber-attacks,
insider threats or supplier breaches; general economic and political conditions including as a consequence of the COVID-19 pandemic, of
the jurisdictions in which the Group operates, including as a result of Brexit, and changes to the associated legal, regulatory and tax
environments; increased competition; increased disintermediation; levels of investment in network capacity and the Group’s ability
to deploy new technologies, products and services; rapid changes to existing products and services and the inability of new products and
services to perform in accordance with expectations; the ability of the Group to integrate new technologies, products and services with
existing networks, technologies, products and services; the Group’s ability to generate and grow revenue; a lower than expected
impact of new or existing products, services or technologies on the Group’s future revenue, cost structure and capital expenditure
outlays; slower than expected customer growth, reduced customer retention, reductions or changes in customer spending and increased pricing
pressure; the Group’s ability to extend and expand its spectrum position to support ongoing growth in customer demand for mobile
data services; the Group’s ability to secure the timely delivery of high-quality products from suppliers; loss of suppliers, disruption
of supply chains and greater than anticipated prices of new mobile handsets; changes in the costs to the Group of, or the rates the Group
my charge for, terminations and roaming minutes; the impact of a failure or significant interruption to the Group’s telecommunications,
networks, IT systems or data protection systems; the Group’s ability to realise expected benefits from acquisitions, partnerships,
joint ventures, franchises, brand licences, platform sharing or other arrangements with third parties; acquisitions and divestments of
Group businesses and assets and the pursuit of new, unexpected strategic opportunities; the Group’s ability to integrate acquired
business or assets; the extent of any future write-downs or impairment charges on the Group’s assets, or restructuring charges incurred
as a result of an acquisition or disposition; a developments in the Group’s financial condition, earnings and distributable funds
and other factors that the Board takes into account in determining the level of dividends; the Group’s ability to satisfy working
capital requirements; changes in foreign exchange rates; changes in the regulatory framework in which the Group operates; the impact of
legal or other proceedings against the Group or other companies in the communications industry and changes in statutory tax rates and
profit mix.
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 financial year ended 31 March 2020 and the half year results for the six months ended 30 September 2020. The
annual report can be found on the Group’s website (https://investors.vodafone.com/reports-information/latest-annual-results). 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. Any forward-looking statements are made of the date of this presentation. 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.
Copyright © Vodafone
Group 2021 -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: May 18,
2021
|
By:
|
/s/ R E S MARTIN
|
|
Name:
|
Rosemary E S Martin
|
|
Title:
|
Group General Counsel and Company Secretary
|
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