TIDMVOD
RNS Number : 6953L
Vodafone Group Plc
17 May 2022
Vodafone Group Plc FY22 Preliminary results
17 May 2022
Good financial performance with growth in revenues, profits and
cash flows
-- Good service revenue growth in FY22 with continued growth in
both Europe and Africa throughout the year
-- Good financial performance in Germany with 1.1%* service
revenue growth and 6.5%* Adjusted EBITDAaL growth
-- Strong step up in pre-tax ROCE of 1.7 percentage points to
7.2%, supported by operating profit growth of 11.1%
Financial results FY22 FY21 Change (1)
---------------------------------------
Page EURm EURm %
-------------------------------------- ---- -------- -------- ----------
Group revenue 6 45,580 43,809 4.0
Group service revenue 6 38,203 37,141 2.6*
Operating profit 6 5,664 5,097 11.1
Adjusted EBITDAaL(2) 6 15,208 14,386 5.0*
Profit for the financial year 6 2,624 536
Basic earnings per share 17 7.20c 0.38c
Adjusted basic earnings per share(2) 17 11.03c 8.08c
Total dividends per share 27 9.00c 9.00c
Cash inflow from operating activities 17 18,081 17,215 5.0
Adjusted free cash flow(2) 18 5,437 5,019
Net debt(2) 19 (41,578) (40,543) (2.6)
======================================= ==== ======== ======== ==========
1. '*' represents organic growth. See page 2. 2. Non-GAAP measure.
See page 31.
-- Group revenue increased by 4.0% to EUR45.6 billion driven by
service revenue growth in Europe and Africa
-- Adjusted EBITDAaL growth of 5.0%* to EUR15.2 billion driven
by good revenue growth and continued cost transformation programme
savings
-- Adjusted free cash flow of EUR5.4 billion, with growth
enabled by an increase in Adjusted EBITDAaL
-- Total dividends per share are 9.0 eurocents, including a
final dividend per share of 4.5 eurocents
Nick Read, Group Chief Executive, commented:
"We delivered a good financial performance in the year with
growth in revenues, profits and cash flows, in line with our
medium-term financial ambitions. Our organic growth underpinned a
step-change in our return on capital, which improved by 170bps to
7.2%. Whilst we are not immune to the macroeconomic challenges in
Europe and Africa, we are positioned well to manage them and we
expect to deliver a resilient financial performance in the year
ahead.
Our near-term operational and portfolio priorities remain
unchanged from those communicated 6 months ago. We are focused on
improving the commercial performance in Germany, actively pursuing
opportunities with Vantage Towers and strengthening our market
positions in Europe. These actions, together with the
simplification of our portfolio and the ongoing delivery of our
organic growth strategy, will create further value for our
shareholders."
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 10:00 BST on 17 May
2022. The webcast and supporting information can be accessed at
investors.vodafone.com
Summary Good financial performance
Organic growth
All amounts marked with an '*' in the commentary represent
organic growth which presents performance on a comparable basis,
excluding the impact of foreign exchange rates, mergers and
acquisitions and other adjustments to improve the comparability of
results between periods. When calculating organic growth, the FY21
results for Vantage Towers and relevant operating entities have
been adjusted to reflect a full year of operation on a pro forma
basis in order to be comparable to FY22. Organic growth figures are
non-GAAP measures. See non-GAAP measures on page 31 for more
information.
Financial performance
Total revenue increased by 4.0% to EUR45.6 billion (FY21:
EUR43.8 billion), driven by service revenue growth in Europe and
Africa, and higher equipment revenue, as well as favourable foreign
exchange movements.
Adjusted EBITDAaL increased by 5.0%* to EUR15.2 billion (FY21:
EUR14.4 billion) due to revenue growth, and strong cost control,
supported by a legal settlement in Italy. The Adjusted EBITDAaL
margin was 0.5* percentage points higher year-on-year at 33.4%.
Operating profit increased by 11.1% to EUR5.7 billion (FY21:
EUR5.1 billion), reflecting higher Adjusted EBITDAaL, and lower
depreciation and amortisation on owned assets, partly offset by
lower other income.
The Group made a profit for the financial year of EUR2.6 billion
(FY21: EUR0.5 billion). The profit increase was primarily driven by
higher Adjusted EBITDAaL, and lower income tax expense.
Basic earnings per share was 7.20 eurocents, compared to basic
earnings per share of 0.38 eurocents in the prior year.
Cash flow, funding & capital allocation
Cash inflow from operating activities increased by 5.0% to
EUR18.1 billion (FY21: EUR17.2 billion).
Free cash flow was an inflow of EUR3.3 billion (FY21: inflow of
EUR3.1 billion). Higher Adjusted EBITDAaL, and lower licence and
spectrum payments were partially offset by lower working capital,
lower interest received and paid, and higher restructuring and
integration cash expenditure during the year. Adjusted free cash
flow was an inflow of EUR5.4 billion (FY21: inflow of EUR5.0
billion).
Net debt at 31 March 2022 was EUR41.6 billion, compared to
EUR40.5 billion as at 31 March 2021. Net debt increased by EUR1.1
billion due to share buybacks of EUR2.0 billion (1,441 million
shares) used to offset dilution linked to mandatory convertible
bonds, partially offset by Free cash flow of EUR3.3 billion less
equity dividends paid of EUR2.5 billion.
Total dividends per share are 9.0 eurocents (FY21: 9.0
eurocents), including a final dividend per share of 4.5 eurocents.
The ex-dividend date for the final dividend is 1 June 2022 for
ordinary shareholders, the record date is 6 June 2022 and the
dividend is payable on 5 August 2022.
Strategy Committed to improving returns through growth
Our strategy focuses on driving shareholder returns through
growth, and is delivered through three customer commitments and
three enabling strategies. These work together towards our vision
to become a new generation connectivity and digital services
provider for Europe and Africa, enabling an inclusive and
sustainable digital society.
We have made good progress with our strategy during FY22 and
highlights include: further deepening our customer relationships
with lower customer churn; good results from our increased capital
investment with improvements in network quality; increasing
penetration of financial services in Africa; and another successful
year of digital enabled efficiencies, driving the highest Adjusted
EBITDAaL margin over the last decade. Our strategic progress has
enabled us to deliver well against our medium-term financial
ambitions with growth in pre-tax ROCE to 7.2%. The table below
includes a selection of KPIs that illustrates progress in our key
areas of focus.
Units FY22 FY21
=============================================== ======= ===== =================
Customer commitments
Best connectivity products & services
Europe mobile contract customers(1) million 66.4 65.4
Europe broadband customers(1) million 25.6 25.6
Europe Consumer converged customers(1) million 9.0 7.9
Europe mobile contract customer churn % 13.6 13.7
Africa mobile customers(2) million 184.5 178.0
Africa data users(2) million 89.9 84.9
Business service revenue growth* % 0.8 (0.6)
Leading innovation in digital services
Europe TV subscribers(1) million 21.9 22.2
IoT SIM connections million 150.1 123.3
Africa M-Pesa customers(2) million 52.4 48.3
Africa M-Pesa transaction volume(2) billion 19.9 15.2
Outstanding digital experiences
Digital channel sales mix(3) % 25 26
End-to-end TOBi completion rate(4 5) % 42.9 34.6
Enabling strategies
Leading gigabit networks
5G available in European cities(1) # 294 240
Europe on-net gigabit capable connections(1) million 48.5 43.7
Europe on-net NGN broadband penetration(1) % 30 30
Simplified & most efficient operator
Pre-tax return on capital employed(6
7) % 7.2 5.5
Post-tax return on capital employed(6
8) % 5.0 3.9
Europe markets where 3G switched off(1) # 4 3
================================================ ======= ===== =================
1. Including VodafoneZiggo | 2. Africa including Safaricom | 3.
Based on Germany, Italy, UK, Spain only | 4. Group excluding Egypt
| 5. Defined as percentage of total customer contacts resolved
without human interaction through TOBi | 6. These line items are
non-GAAP measures. See page 31 for more information. | 7.
Controlled operations | 8. Controlled operations and
associates/joint ventures
A more detailed review of our strategic progress is contained
within an accompanying video presentation available here:
investors.vodafone.com/reports-information/results-reports-presentations
. In this presentation we outline: we are systematically executing
our organic growth strategy and have clear operational priorities;
we are well-placed and have actions underway to manage current
macro-economic challenges; and we are committed to improving
shareholder returns through growth and clear portfolio priorities.
Further information on our strategy is also available through the
following links.
Resource Link
============================== =======================================
Second phase of strategy vodafone.com/ar2021
Digital services & outstanding investors.vodafone.com/digital-services
experience
Leading gigabit networks investors.vodafone.com/vtbriefing
Vodafone Business investors.vodafone.com/vbbriefing
Vantage Towers vantagetowers.com
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. We continue to
make progress against our purpose strategy and will provide a full
update in our FY22 Annual Report and supplementary materials
(available on investors.vodafone.com ). Highlights and achievements
from FY22 are summarised below.
Europe's largest network, powered by 100% renewable
electricity
From July 2021, our entire European operations - including
mobile and fixed networks, data centres, retail and offices - are
100% powered by electricity from renewable sources. This marks a
key step towards our goal of reducing our own carbon emissions to
'net zero' by 2030 and across our entire value chain by 2040.
Eco Rating
In May 2021, we launched a new Eco Rating labelling scheme
jointly with other major European operators. This is a pan-industry
initiative to help consumers identify and compare the most
sustainable mobile phones on the market, whilst also encouraging
suppliers to reduce the environmental impact of devices. Eco rating
evaluates the environmental impact of the entire production
process, transportation, use and disposal of a handset, resulting
in an overall score. The Eco Rating scheme was initially launched
in 24 European countries and has since been rolled out in several
countries in Latin America and by Vodacom in South Africa. More
than 150 mobile phones from 15 manufacturers are now assessed by
the Eco Rating initiative, nearly doubling the range of devices
rated at launch.
M-Pesa
As of March 2022, over 52 million customers were using our
mobile money platform, M-Pesa, to manage business transactions and
to pay salaries, pensions, agricultural subsidies and government
grants. M-Pesa provides financial services to millions of people
who have a mobile phone but limited access to a bank account and
also helps reduce the associated risks of robbery and corruption in
a cash-based society. As we have now reached a milestone 52 million
customers, we have exceeded our goal to connect 50 million people
and their families to mobile financial services three years ahead
of our original target date.
Ethnicity targets
In December 2021, we announced new ethnic diversity targets for
our global leadership team, as well as our senior leadership and
management teams in the UK and South Africa. These new targets
reflect our ambition to be a company with a global workforce that
reflects the customers, communities and businesses we serve, as
well as the wider societies in which we operate. The data
supporting our new targets has been informed by an internal
campaign called '#CountMeIn', which encourages employees to
voluntarily self-declare their diversity demographics in line with
local privacy and legal requirements.
Reporting
We report against a number of voluntary reporting frameworks to
help stakeholders understand our sustainable business performance.
We will shortly be publishing our second standalone 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 also report
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').
Outlook FY22 guidance delivered
Performance against FY22 guidance
In May 2021, we set out guidance for FY22 with respect to
Adjusted EBITDAaL and Adjusted free cash flow. As a result of our
good performance in H1 FY22 and based on the prevailing assessments
of the global macroeconomic outlook, we updated our guidance range
in November 2021. The table below compares the guidance given and
our actual performance.
Original guidance Updated guidance FY22 outcome FY22 outcome
on guidance as reported
basis(1)
=================== =================== =================== ================ ================
Adjusted EBITDAaL EUR15.0 - EUR15.4 EUR15.2 - EUR15.4
(2) billion billion EUR15.3 billion EUR15.2 billion
Adjusted free
cash flow (2 At least EUR5.2 At least EUR5.3
3) billion billion EUR5.5 billion EUR5.4 billion
=================== =================== =================== ================ ================
(1) The FY22 outcome on guidance basis is derived by applying
FY22 guidance foreign exchange rates. The FY22 guidance foreign
exchange rates were EUR1: GBP 0.86; EUR1: ZAR 17.15; EUR1: TRY
9.74; EUR1: EGP 18.89.
FY23 Guidance
The current macroeconomic climate presents specific challenges,
particularly inflation, and is likely to impact our financial
performance in the year ahead. Based on the current prevailing
assessments of the of the global macroeconomic outlook:
-- Adjusted EBITDAaL (2) is expected to be between EUR15.0 - EUR15.5 billion in FY23; and
-- Adjusted free cash flow (2 3) is expected to be c.EUR5.3 billion in FY23.
The guidance above reflects the following:
-- Foreign exchange rates used when setting guidance were as follows:
- EUR 1 : GBP 0.84;
- EUR 1 : ZAR 17.32;
- EUR 1 : TRY 16.75; and
- EUR 1 : EGP 19.28.
-- We expect Turkey to be designated as a hyper-inflationary
economy under IFRS during the first quarter of FY23, in which case
Vodafone Turkey's results will be presented on a revised basis. See
note 1 of the condensed consolidated financial statements for
further information. Our guidance as presented above excludes any
impact from this change in accounting.
-- Guidance and our medium-term financial ambition assume no
material change to the structure of the Group.
(2) Adjusted EBITDAaL and Adjusted free cash flow are non-GAAP
measures. See page 31 for more information.
(3) Adjusted free cash flow is Free cash flow before licences
and spectrum, restructuring costs arising from discrete
restructuring plans, integration capital additions and working
capital related items, M&A, and Vantage Towers growth capital
expenditure. Growth capital expenditure is total capital
expenditure excluding maintenance-type expenditure.
Financial performance Continued growth in both Europe and
Africa
-- Group revenue increased by 4.0% to EUR45.6 billion mainly
driven by service revenue growth in Europe and Africa
-- Adjusted EBITDAaL growth of 5.0%* to EUR15.2 billion and
margin expansion of 0.5* percentage points year-on-year to
33.4%
-- Ongoing delivery of our efficiency programme leading to a net
EUR1.5 billion of savings during FY19-22
-- Operating profit increased by 11.1% to EUR5.7 billion,
reflecting the growth in Adjusted EBITDAaL and reduction in
depreciation and amortisation on owned assets
-- Significant increase in profit for the financial year and
basic earnings per share, due to higher Adjusted EBITDAaL, and
lower income tax expense
-- Returns continued to improve and pre-tax ROCE increased by 1.7 percentage points to 7.2%
Group financial performance
FY22 (1) FY21 Reported
EURm EURm change %
========================================= ======== ======== ========
Revenue 45,580 43,809 4.0
- Service revenue 38,203 37,141 2.9
- Other revenue 7,377 6,668
Adjusted EBITDAaL (2,3) 15,208 14,386 5.7
Restructuring costs (346) (356)
Interest on lease liabilities(4) 398 374
Loss on disposal of property, plant and
equipment and intangible assets (28) (30)
Depreciation and amortisation of owned
assets (9,858) (10,187)
Share of results of equity accounted
associates and joint ventures 211 342
Other income 79 568
-------- -------- --------
Operating profit 5,664 5,097 11.1
Investment income 254 330
Financing costs (1,964) (1,027)
-------- -------- --------
Profit before taxation 3,954 4,400
Income tax expense (1,330) (3,864)
-------- -------- --------
Profit for the financial year 2,624 536
Attributable to:
- Owners of the parent 2,088 112
- Non-controlled interests 536 424
-------- -------- --------
Profit for the financial year 2,624 536
Basic earnings per share 7.20c 0.38c
Adjusted basic earnings per share(2) 11.03c 8.08c
========================================= ======== ======== ========
Further information is available in a spreadsheet at
https://investors.vodafone.com/reports-information/results-reports-presentations
Notes:
1. The FY22 results reflect average foreign exchange rates of
EUR1:GBP0.85, EUR1:INR 86.59, EUR1:ZAR 17.25, EUR1:TRY 12.16 and
EUR1: EGP 18.35.
2. Adjusted EBITDAaL and Adjusted basic earnings per share are
non-GAAP measures. See page 31 for more information.
3. Includes depreciation on leased assets of EUR3,908 million (FY21: EUR3,914 million).
4. Reversal of interest on lease liabilities included within
Adjusted EBITDAaL under the Group's definition of that metric, for
re-presentation in financing costs.
Organic growth
All amounts marked with an '*' in the commentary represent
organic growth which presents performance on a comparable basis,
excluding the impact of foreign exchange rates, mergers and
acquisitions, and other adjustments to improve the comparability of
results between periods. When calculating organic growth, the FY21
results for Vantage Towers and relevant operating entities have
been adjusted to reflect a full year of operation on a pro forma
basis in order to be comparable to FY22. Organic growth figures are
non-GAAP measures. See non-GAAP measures on page 31 for more
information.
Segmental reporting
Following the IPO of Vantage Towers A.G. in March 2021, the
business is a new reporting segment for the year ended 31 March
2022 ('FY22'). Comparative information for the year ended 31 March
2021 has not been re-presented. Total revenue is unaffected because
charges from Vantage Towers A.G. to operating companies are
eliminated on consolidation. Adjusted EBITDAaL and Adjusted
EBITDAaL margin are both impacted by this change which does affect
year-on-year comparisons. The segmental results of Vantage Towers
A.G. include the contribution from Cornerstone Technologies
Infrastructure Limited as a joint operation with Telefonica in the
UK.
The Group issued a press release in July 2021 which provided a
pro forma view of our FY20 and FY21 financial results under this
new segmentation. This press release can be accessed at:
change-in-segmental-reporting_VT_RNS.pdf (vodafone.com)
Geographic performance summary
Other Other Vantage Common Elimi-
Functions
FY22 Germany Italy UK Spain Europe Vodacom Markets Towers (1) nations Group
============== ======= ===== ===== ===== ====== ======= =========== ======= ========= ======= ======
Total revenue
(EURm) 13,128 5,022 6,589 4,180 5,653 5,993 3,830 1,252 1,414 (1,481) 45,580
Service
revenue
(EURm) 11,616 4,379 5,154 3,714 5,001 4,635 3,420 - 522 (238) 38,203
Adjusted
EBITDAaL
(EURm)(2) 5,669 1,699 1,395 957 1,606 2,125 1,335 619 (197) - 15,208
Adjusted
EBITDAaL
margin (%)(2) 43.2% 33.8% 21.2% 22.9% 28.4% 35.5% 34.9% 49.4% 33.4%
============== ======= ===== ===== ===== ====== ======= =========== ======= ========= ======= ======
Downloadable performance information is available at:
https://investors.vodafone.com/reports-information/results-reports-presentations
FY22
----------------------------------------------------------------------------------------
Organic service
revenue growth %
*(2) Q1 Q2 H1 Q3 Q4 H2 Total
======================= ===== ============ ====== ==================== ======= ========= =================
Germany 1.4 1.0 1.2 1.1 0.8 1.0 1.1
Italy (3.6) (1.4) (2.5) (1.3) (0.8) (1.0) (1.8)
UK 2.5 0.6 1.2 0.9 2.0 1.4 1.3
Spain 0.8 (1.9) (0.6) (1.6) (5.1) (3.4) (2.0)
Other Europe 4.2 2.4 3.3 2.9 2.7 2.8 3.0
Vodacom 7.9 3.1 5.4 4.4 3.1 3.7 4.6
Other Markets 18.4 19.7 19.1 19.8 19.8 19.8 19.4
Vantage Towers - - - - - - -
Group 3.3 2.4 2.8 2.7 2.0 2.3 2.6
======================= ===== ============ ====== ==================== ======= ========= =================
Notes:
1. Common Functions Adjusted EBITDAaL includes a non-recurring
charge in relation to the impairment of prior year receivables.
2. Adjusted EBITDAaL, Adjusted EBITDAaL margin and organic
service revenue growth are non-GAAP measures. See page 31 for more
information.
Germany 30% of Group service
revenue
FY22 FY21 Reported Organic
EURm EURm change % change %*
============================== ====== ====== ======== =========
Total revenue 13,128 12,984 1.1
- Service revenue 11,616 11,520 0.8 1.1
- Other revenue 1,512 1,464
Adjusted EBITDAaL(1) 5,669 5,634 0.6 6.5
Adjusted EBITDAaL margin 43.2% 43.4%
============================== ====== ====== ======== =========
Note:
1. When calculating organic growth for Adjusted EBITDAaL, the
FY21 results are adjusted for Vantage Towers A.G. on a pro forma
basis to be comparable to FY22.
Total revenue increased by 1.1% to EUR13.1 billion, driven by
service revenue and equipment revenue growth.
On an organic basis, service revenue grew by 1.1%* (Q3: 1.1%*,
Q4: 0.8%*), driven by broadband ARPU growth, good growth in
Business, and higher roaming and visitor revenue. This was
partially offset by a reduction in mobile termination rates, and
lower variable call usage revenue. Retail service revenue grew by
1.6%* (Q3: 1.7%*, Q4: 1.2%*).
Fixed service revenue grew by 0.5%* (Q3: 0.7%*, Q4: -0.4%*), as
continued broadband ARPU growth was partially offset by lower
variable call usage revenue compared to the prior year, as usage
began to normalise post-pandemic, and a lower TV customer base. The
decline in fixed service revenue in Q4 FY22 was primarily driven by
a lower customer base, partly impacted by specific operational
challenges related to the implementation of policies to comply with
a new telecommunications law, which came into effect in December
2021. We added 20,000 cable customers during the year, including
66,000 migrations from legacy DSL broadband. Half of our cable
broadband customers now subscribe to speeds of at least 250Mbps,
and gigabit speeds are available to 23.8 million households across
our hybrid fibre cable network.
Our TV customer base declined by 309,000, as reduced retail
activity during the COVID-19 pandemic led to fewer gross customer
additions, and was also impacted by broadband customer losses due
to challenges related to compliance with the new telecommunications
law. During the year, we accelerated convergence penetration as a
result of successful campaigns and our converged customer base
increased by 718,000 to 2.4 million Consumer converged accounts.
Our converged propositions, led by the 'GigaKombi' products, allow
customers to combine their mobile, landline, broadband and TV
subscriptions for one monthly fee.
Mobile service revenue increased by 1.8%* (Q3: 1.7%*, Q4:
2.4%*), reflecting a higher customer base in both the Consumer and
Business segments, as well as higher roaming and visitor revenue,
which more than offset the impact of a reduction in mobile
termination rates. The increased rate of service revenue growth in
Q4 FY22 also benefited from some small non-recurring year-end
adjustments. We added 19,000 contract customers during the year and
contract churn remained broadly stable year-on-year at 12.3%,
despite the impact of operational challenges related to compliance
with the new telecommunications law. In June, we successfully
launched our digital-only second brand, SIMon mobile. We added a
further 6.4 million IoT connections during the year, supported by
strong demand from the automotive sector.
Adjusted EBITDAaL grew by 6.5%*, supported by higher service
revenue, cost synergy delivery, and some one-off settlements. The
Adjusted EBITDAaL margin was 2.1* percentage points higher
year-on-year at 43.2%.
We have now achieved our EUR425 million cost and capital
expenditure synergy target for the integration of the Unitymedia
assets acquisition, over two years ahead of plan. We see further
opportunities for cost reduction including through the planned
termination of our Transitional Service Agreements (TSAs) with
Liberty Global.
We switched off our 3G network on 1 July 2021, with spectrum
re-assigned to increase the capacity, speed and coverage of our 4G
networks. Our 5G network is now available to more than 45 million
people. We launched Europe's first 5G standalone network in April
2021. Standalone 5G enables higher speeds, enhanced reliability and
ultra-low latency, in addition to using 20% less energy on
customers' devices.
Italy 11% of Group service
revenue
FY22 FY21 Reported Organic
EURm EURm change % change %*
============================ ===== ===== ======== =========
Total revenue 5,022 5,014 0.2
- Service revenue 4,379 4,458 (1.8) (1.8)
- Other revenue 643 556
Adjusted EBITDAaL 1,699 1,597 6.4 6.4
Adjusted EBITDAaL margin 33.8% 31.9%
============================ ===== ===== ======== =========
Total revenue was stable at EUR5.0 billion as lower service
revenue was offset by higher equipment revenue.
On an organic basis, service revenue declined by 1.8%* (Q3:
-1.3%*, Q4: -0.8 %*) as good growth in Business digital services
revenue, higher MVNO revenues, and higher roaming and visitor
revenue was offset by continued price pressure, and a reduction in
mobile termination rates.
Mobile service revenue declined by 3.2%* (Q3: -2.9%*, Q4:
-3.1%*) reflecting greater competition in the value segment and a
lower active prepaid customer base. This was partly offset by
targeted pricing actions and the positive contribution from
PostePay MVNO customer migrations onto our network, which completed
in early August. The decline in mobile service revenue in Q4 FY22
was impacted by a reduction in mobile termination rates. Market
mobile number portability volumes continued to improve versus prior
year levels. Our second brand 'ho.' continued to grow, with 342,000
net additions, supported by our best-in-class net promoter score,
and now has 2.8 million customers.
Fixed service revenue increased by 2.0%* (Q3: 3.1%*, Q4: 5.3%*)
driven by broadband customer base growth in Consumer, as well as
good demand for our Business digital services, such as cloud &
security. The acceleration in fixed service revenue growth in Q4
FY22 was driven by new Business customer additions, supported by a
strong share of EU recovery funding voucher customers, as well as
our pricing actions. We added 73,000 fixed-wireless access
customers during the period, which are included in our mobile
customer base. We now have 3.1 million broadband customers, and
52.6% of our broadband base is converged. Our total Consumer
converged customer base is 1.3 million, an increase of 163,000
during the period. Through our own next generation network and
partnership with Open Fiber, our broadband services are now
available to 9.0 million households. We also cover 3 million
households with fixed-wireless access, offering speeds of up to
100Mbps.
Adjusted EBITDAaL increased by 6.4 %*, reflecting a 6.6
percentage point benefit from a EUR105 million legal settlement,
partially offset by lower service revenue. Excluding the impact of
the one-off legal settlement, Adjusted EBITDAaL was stable*
year-on-year. The Adjusted EBITDAaL margin was 1.9* percentage
points higher year-on-year at 33.8%.
UK 13% of Group service revenue
FY22 FY21 Reported Organic
EURm EURm change % change %*
================================= ===== ===== ======== =========
Total revenue 6,589 6,151 7.1
- Service revenue 5,154 4,848 6.3 1.3
- Other revenue 1,435 1,303
Adjusted EBITDAaL(1) 1,395 1,367 2.0 3.3
Adjusted EBITDAaL margin 21.2% 22.2%
================================= ===== ===== ======== =========
Note:
1. When calculating organic growth for Adjusted EBITDAaL, the
FY21 results are adjusted for Vantage Towers A.G. on a pro forma
basis to be comparable to FY22.
Total revenue increased by 7.1% to EUR6.6 billion, due to higher
service revenue and equipment revenue, and an appreciation of the
pound sterling versus the euro.
On an organic basis, service revenue grew by 1.3%* (Q3: 0.9%*,
Q4: 2.0%*), driven by strong Consumer segment growth, and supported
by higher MVNO, roaming and visitor revenue. This was partially
offset by a slowdown in Business, and a reduction in mobile
termination rates.
Mobile service revenue grew by 2.8%* (Q3: 2.6 %*, Q4: 5.9%*)
driven by strong commercial momentum in Consumer, partially offset
by the post-pandemic normalisation of Business connections. The
increase in mobile service revenue growth rate in Q4 FY22 was
partially due to higher wholesale MVNO revenue . During the year,
we added 338,000 mobile contract customers, supported by our
'Vodafone EVO' proposition, which offers customers a combination of
flexible contracts, trade-in options, and early upgrades. We also
benefited from good iPhone demand and improved customer loyalty.
Contract churn improved by 0.5 percentage points year-on-year to
12.5%. Our digital sub-brand 'VOXI' also continued to grow, with
104,000 customers added in the year. Our digital sales remained
strong during the year, and now account for 33% of total sales. We
also announced an exclusive retail partnership with the Dixons
Carphone Group, covering 300 stores and digital channels, with
improved terms compared to our previous arrangement.
Fixed service revenue declined by 2.3%* (Q3: -3.3 %*, Q4:
-7.0%*), impacted by lower Business revenue, with a further
slowdown in the segment in Q4 FY22. Our performance was also driven
by the decision to end a large but unprofitable multinational
contract, and a reseller entering into administration in the first
half of the year. Our commercial momentum in Consumer remained
strong, with good demand for our Vodafone 'Pro Broadband' product.
With 139,000 broadband net additions during the year, we now have
over one million customers, of which 527,000 are converged. In
November 2021, we announced the expansion of our long-term
strategic partnership agreement with CityFibre. In conjunction with
our existing partnership with Openreach, our NGN broadband services
are now available to 29.3 million households.
Adjusted EBITDAaL increased by 3.3 %*, driven by growth in
service revenue, and continued strong cost control. Our Adjusted
EBITDAaL margin was 0.3 * higher year-on-year at 21.2%.
Spain 10% of Group service
revenue
FY22 FY21 Reported Organic
EURm EURm change % change %*
============================ ===== ===== ======== =========
Total revenue 4,180 4,166 0.3
- Service revenue 3,714 3,788 (2.0) (2.0)
- Other revenue 466 378
Adjusted EBITDAaL(1) 957 1,044 (8.3) (1.1)
Adjusted EBITDAaL margin 22.9% 25.1%
============================ ===== ===== ======== =========
Note:
1. When calculating organic growth for Adjusted EBITDAaL, the
FY21 results are adjusted for Vantage Towers A.G. on a pro forma
basis to be comparable to FY22.
Total revenue was stable at EUR 4.2 billion, as higher equipment
revenue was offset by lower service revenue.
On an organic basis, service revenue declined by 2.0 %* (Q3:
-1.6 %*, Q4 -5.1%*) as the impact of continued price competition in
the value segment, and a reduction in mobile termination rates,
were partially offset by higher roaming and visitor revenue. The
quarterly slowdown in service revenue in Q4 was largely driven by a
tougher prior year comparative, due to the full quarter impact of
our more-for-more pricing actions in the prior year, and a
reduction in mobile termination rates in FY22 .
The market remained highly competitive in the Consumer value
segment. In mobile, our contract customer base remained stable in
the year, supported by strong public sector demand, and a gradual
improvement in our commercial performance towards the end of the
year, reflecting our continued focus on improving customer loyalty.
Mobile contract churn increased by 0.5 percentage points
year-on-year to 20.7% due to an exceptionally low churn in the
prior year as a result of portability restrictions. Our second
brand 'Lowi' added 310,000 customers during the period and now has
a total customer base of 1.5 million.
Our broadband customer base declined by 164,000 as a result of
higher competitive intensity in the Consumer value segment, and the
temporary impact of our retail channel optimisation. Our TV
customer base decreased by 88,000, impacted by continued
competitive intensity. We have renewed our exclusive agreement with
HBO Max, and through our partnerships with other content providers
such as Disney, we have the most extensive library of movies and TV
series in the market.
During the year, a digital toolkit platform for small and medium
sized enterprises was launched by the Spanish government as part of
the EU recovery funding initiatives. This scheme enables businesses
to access fully subsidised digital services on a single platform.
We have already received a significant number of registration
requests from customers and will achieve an attractive Adjusted
EBITDAaL margin on this incremental revenue. A second phase of this
scheme is expected to launch in June 2022.
Adjusted EBITDAaL declined by 1.1%* and the Adjusted EBITDAaL
margin was 0.3* percentage points lower year-on-year at 22.9%. The
marginal decrease in Adjusted EBITDAaL reflects lower service
revenue, largely offset by further efficiency savings.
During the year we announced a restructuring plan, mainly
affecting owned retail stores, as part of our operational
transformation. In November, we completed the optimisation of our
retail footprint, with all branded stores now operating under a
franchise model.
Other Europe 13% of Group service revenue
FY22 FY21 Reported Organic
EURm EURm change % change %*
==================================== ======= ===== ======== =========
Total revenue 5,653 5,549 1.9
- Service revenue 5,001 4,859 2.9 3.0
- Other revenue 652 690
Adjusted EBITDAaL(1) 1,606 1,760 (8.8) 1.4
Adjusted EBITDAaL margin 28.4% 31.7%
==================================== ======= ===== ======== =========
Note:
1. When calculating organic growth for Adjusted EBITDAaL, the
FY21 results are adjusted for Vantage Towers A.G. on a pro forma
basis to be comparable to FY22.
Total revenue increased by 1.9% to EUR 5.7 billion, primarily
reflecting service revenue growth, also supported by the
appreciation of local currencies versus the euro.
On an organic basis, service revenue increased by 3.0%* (Q3:
2.9%*, Q4: 2.7 %*), with all markets other than Romania growing
during the year. The growth in service revenue was supported by
customer base growth, higher roaming and visitor revenue, partially
offset by a reduction in mobile termination rates.
In Portugal, service revenue grew due to strong fixed line
revenue growth, higher mobile ARPU, and roaming and visitor revenue
growth. During the period, we added 161,000 mobile contract
customers and 64,000 fixed broadband customers. In October, we
announced that Vodafone Portugal had acquired 90MHz of 3,600MHz and
2x10MHz of 700MHz spectrum, with a 20-year licence through to 2041.
The spectrum will enable us to significantly expand network
capacity to meet growing demand for reliable, high-quality voice
and data services.
In Ireland, service revenue increased, reflecting good mobile
contract customer growth, and higher roaming and visitor revenue,
partially offset by a reduction in mobile termination rates. During
the period, our mobile contract customer base increased by 77,000
and mobile contract customer loyalty rates improved, with churn
reducing 1.5 percentage points year-on-year to 8.4 %.
Service revenue in Greece increased, reflecting higher roaming
and visitor revenue as international tourism grew year-on-year,
partially offset by a reduction in mobile termination rates. During
the year, we added 38,000 mobile contract customers and 145,000
prepaid customers.
Adjusted EBITDAaL increased by 1.4 %*, supported by good revenue
growth and further efficiency savings, partially offset by a
one-off provision in Greece, and higher direct cost. The Adjusted
EBITDAaL margin decreased by 0.2* percentage points and was
28.4%.
We continued to make good progress on integrating the assets
acquired from Liberty Global in Central and Eastern Europe and we
have now delivered 60% of our cost and capital expenditure synergy
target.
Vodacom 12% of Group service
revenue
FY22 FY21 Reported Organic
EURm EURm change % change %*
============================== ===== ===== ======== =========
Total revenue 5,993 5,181 15.7
- Service revenue 4,635 4,083 13.5 4.6
- Other revenue 1,358 1,098
Adjusted EBITDAaL 2,125 1,873 13.5 3.4
Adjusted EBITDAaL margin 35.5% 36.2%
============================== ===== ===== ======== =========
Total revenue increased by 15.7% to EUR 6.0 billion and Adjusted
EBITDAaL increased by 13.5%, primarily due to the strengthening of
the local currencies versus the euro.
On an organic basis, Vodacom's total service revenue grew by
4.6%* (Q3: 4.4%*, Q4 3.1%*) with growth in both South Africa and
Vodacom's international markets.
In South Africa, service revenue grew year-on-year, supported by
sustained demand, incremental wholesale services, good Business
demand and financial services growth. We added 1.8 million mobile
prepaid customers and 272,000 mobile contract customers, with the
latter supported by our new more-for-more 'Vodafone Red'
proposition introduced in June. Financial services revenue in South
Africa increased by 12.4%* to EUR155 million, reflecting the
expansion of our service offerings, and 69.4% of our mobile
customer base now uses data services.
In October 2021, we launched our new 'VodaPay' super-app in
South Africa, bringing consumer and business capabilities under one
platform. The application enables customers to access financial,
insurance and eCommerce services and supports businesses with
additional resource planning and 'business-to-business'
functionalities. We now have 1.6 million registered users on the
platform, and over 2.2 million downloads of the application. For
more detail about Vodacom Financial Services, please watch our
Digital Ecosystem briefing at vodacom.com/presentations.php
In March, we announced that Vodacom South Africa had acquired
2x10MHz of 700MHz, 1x80MHz of 2600MHz and 1x10MHz of 3500MHz
spectrum, with a 20-year licence through to 2042. The spectrum will
enable us to significantly expand network capacity and coverage,
and help accelerate post-pandemic economic recovery and digital
inclusion.
In Vodacom's international markets, service revenue increased
during the year. Growth was supported by an increase in M-Pesa
transaction volumes and data revenue. This benefit was partially
offset by the introduction of mobile money levies in Tanzania, and
a stronger prior year comparative in Mozambique and the DRC,
reflecting the reinstatement of fees on person-to-person M-Pesa
transfers in the prior year. M-Pesa transaction value increased by
10.9%, while M-Pesa revenue as a share of total service revenue
increased by 2.0 percentage points to 22.7%, and 65.1% of our
customer base is now using data services.
Vodacom's Adjusted EBITDAaL increased by 3.4%* supported by good
revenue growth, and positive operational leverage in Vodacom's
international operations. This was partially offset by an increase
in technology operating expenses in South Africa, as we invested in
further improving the resilience of our network. The Adjusted
EBITDAaL margin decreased by 1.0* percentage point and was
35.5%.
On 10 November 2021, Vodacom Group announced it had entered into
an agreement to acquire Vodafone Egypt from Vodafone for a total
consideration of EUR2.4 billion. The proposed acquisition presents
a unique opportunity to advance Vodacom Group's strategic
connectivity and financial services ambitions in one of Africa's
premier telecom operators. Vodafone Egypt is a clear market leader
that will diversify and accelerate Vodacom Group's growth profile.
The transaction is expected to receive Egyptian regulatory approval
in the near term.
Vodacom also announced that it had agreed to acquire a
co-controlling 30% interest in the fibre assets currently owned by
Community Investment Ventures Holdings (Pty) Limited ('CIVH'). CIVH
owns Vumatel and Dark Fibre Africa, which are South Africa's
largest open access fibre operators. Vodacom's investment and
strategic support will further accelerate the growth trajectory of
fibre roll-out in South Africa helping close the digital divide.
The transaction is subject to regulatory approvals in South
Africa.
Further information on our operations in Africa can be accessed
here: vodacom.com .
Other Markets 9% of Group service revenue
FY22 FY21 Reported Organic
EURm EURm change % change %*
==================================== ======= ===== ======== =========
Total revenue 3,830 3,765 1.7
- Service revenue 3,420 3,312 3.3 19.4
- Other revenue 410 453
Adjusted EBITDAaL 1,335 1,228 8.7 23.0
Adjusted EBITDAaL margin 34.9% 32.6%
==================================== ======= ===== ======== =========
Total revenue increased by 1.7% to EUR 3.8 billion, as higher
service revenue was partially offset by the depreciation of local
currencies versus the euro.
On an organic basis, service revenue increased by 19.4%* (Q3:
19.8%*, Q4: 19.8%*) as a result of higher customer base and ARPU
growth across our markets.
Service revenue in Turkey accelerated as a result of strong
mobile customer base and ARPU growth, with ongoing repricing
actions to reflect increasing inflation in a difficult
macroeconomic environment. Mobile contract customer additions were
1.3 million including migrations from prepaid customers. We also
added 120,000 broadband customers during the year. Mobile contract
churn improved by 3.9 percentage points year-on-year to 15.4 %.
We expect Turkey to be designated as a hyper-inflationary
economy under IFRS during the first quarter of FY23, in which case
Vodafone Turkey's results will be presented on a revised basis. See
note 1 of the condensed consolidated financial statements for
further information.
Service revenue in Egypt grew ahead of inflation, supported by
customer base growth and increased data usage. During the year, we
added 237,000 mobile contract customers and 877,000 prepaid mobile
customers.
Adjusted EBITDAaL increased by 23.0%* and the Adjusted EBITDAaL
margin increased by 1.1* percentage points, despite the
inflationary pressure on our cost base due to worsening
macroeconomic conditions. The Adjusted EBITDAaL margin was
34.9%.
Vantage Towers Delivering on our plan
FY22 FY21 (1) Reported Organic
EURm EURm change % change %*
================================= ====== ======== ======== =========
Total revenue 1,252 - -
- Service revenue - - - -
- Other revenue 1,252 -
Adjusted EBITDAaL 619 - - -
Adjusted EBITDAaL margin 49.4% -
================================= ====== ======== ======== =========
Note:
1. Vantage Towers is a new reporting segment for the year ended
31 March 2022 and hence no comparative information is presented.
See page 7 for more information.
Total revenue increased to EUR1.3 billion, with 1,700 new
tenancies added during the year, bringing the tenancy ratio to
1.44x. Vantage Towers concluded a number of new partnership
agreements during the year, including an agreement with 1&1 in
December 2021 for the provision of passive tower infrastructure
access to at least 3,800 sites throughout Germany by the end of
2025, and potentially up to 5,000 sites, for the next 20 years,
with an option to extend until 2060.
Vantage Towers reported its results on 16 May 2022. Further
information on Vantage Towers can be accessed at: vantagetowers.com
.
Associates and joint ventures
FY22 FY21
EURm EURm
================================================= ==== =====
VodafoneZiggo Group Holding B.V. (19) (232)
Safaricom Limited 217 217
Indus Towers Limited - 274
Other 13 83
---- -----
Share of results of equity accounted associates
and joint ventures 211 342
================================================= ==== =====
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 by 1.4% to EUR4.1 billion, primarily driven
by mobile contract customer base and ARPU growth, supported by
higher roaming and visitor revenue. This was partially offset by a
slowdown in Consumer fixed revenue growth in the second half of
FY22.
During the year, VodafoneZiggo added 196,000 mobile contract
customers, supported by our best-in-class net promoter score,
mainly driven by higher Consumer demand. Strong Business fixed
performance was due to an increase in the customer base, as well as
higher demand for unified communications. The number of converged
households increased by 25,000, with 45% of broadband customers now
converged, delivering significant NPS and customer loyalty
benefits. VodafoneZiggo now offers 1 gigabit speeds to 5.8 million
homes and is on track to provide nationwide coverage in 2022.
During the year, Vodafone received EUR350 million in dividends
from the joint venture, as well as EUR49 million in interest
payments. The joint venture also drew down an additional loan from
shareholders to fund an instalment arising from spectrum licences
acquired in July 2020, with Vodafone's share being EUR104
million.
Safaricom Associate (Kenya)
Safaricom service revenue grew to EUR2.2 billion due to strong
Business fixed demand, and a recovery in M-Pesa revenue as
transaction volumes increased and peer-to-peer transaction fees
normalised.
Indus Towers Associate (India)
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 ('Indus') under the terms of the merger between erstwhile
Indus Towers and Bharti Infratel. Indus has been classified as held
for sale in the condensed consolidated statement of financial
position since 31 March 2021 and the Group's share of Indus'
results is not reflected in the Group's consolidated income
statement for the year ended 31 March 2022.
Vodafone Idea Limited Joint Venture (India)
See note 3 'Contingent liabilities and legal proceedings' in the
condensed consolidated financial statements on page 27 for further
information.
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
FY22 FY21 Reported
EURm EURm change %
================================= ======= ======= ========
Investment income 254 330
Financing costs (1,964) (1,027)
------- ------- --------
Net financing costs (1,710) (697) (145.3)
Adjustments for:
Mark-to-market gains (256) (1,091)
Foreign exchange losses 284 23
------- ------- --------
Adjusted net financing costs (1) (1,682) (1,765) 4.7
================================== ======= ======= ========
Note:
1. Adjusted net financing costs is a non-GAAP measure. See page
31 for more information.
Net financing costs increased by EUR1,013 million, primarily due
to lower mark-to-market gains on options held relating to the
Group's mandatory convertible bonds and increased foreign exchange
losses on intercompany funding arrangements. Adjusted net financing
costs remained broadly stable year-on-year, reflecting consistent
average net debt balances and weighted average borrowing costs for
both periods.
Taxation
FY22 FY21 Change
% % pps
================================= ===== ===== ======
Effective tax rate 33.6% 87.8% (54.2)
Adjusted effective tax rate (1) 27.9% 26.9% 1.0
================================= ===== ===== ======
Note:
1. Adjusted effective tax rate is a non-GAAP measure. See page
31 for more information.
The Group's effective tax rate for the year ended 31 March 2022
was 33.6%. The effective tax rate includes a EUR1,468 million
charge (2021: EUR2,128 million * ) for the utilisation of losses in
Luxembourg which arises from an increase in the valuation of
investments based upon local GAAP financial statements and tax
returns. The current year charge was principally driven by
increases in the value of our listed investments. The effective tax
rate also includes EUR327 million (2021: EUR320 million) relating
to the use of losses in Luxembourg and a credit of EUR699 million
relating to the recognition of a deferred tax asset in Luxembourg
because of higher interest rates increasing our forecasts of future
profits. The year ended 31 March 2021 included a charge of EUR699
million(*) relating to the de-recognition of a deferred tax asset
in Luxembourg. 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 effective tax rate also includes an increase in our deferred
tax assets in the UK of EUR593 million (2021: EURnil) following the
increase in the corporate tax rate to 25% and EUR273 million (2021:
EURnil) following the revaluation of assets for tax purposes in
Italy.
The Group's Adjusted effective tax rate for the year ended 31
March 2022 was 27.9% (2021: 26.9%). This is in line with our
expectations for the year.
The adjusted effective tax rate excludes the amounts relating to
Luxembourg, the impact of the UK tax rate change and revaluation of
assets in Italy which are set out above.
* During the year ended 31 March 2022, we revised the
calculation of certain impairment reversals recognised by our
Luxembourg holding companies for the year ended 31 March 2021; this
had no impact on the amount of deferred tax assets recognised at
that date but has changed the amount of our unrecognised deferred
tax assets by EUR0.7 billion (unrecognised losses of EUR2.8
billion).
Earnings per share
Reported
FY22 FY21 change
eurocents eurocents eurocents
====================================== ========= ========= =========
Basic earnings per share 7.20c 0.38c 6.82c
Adjusted basic earnings per share (1) 11.03c 8.08c 2.95c
======================================= ========= ========= =========
Note:
1. Adjusted basic earnings per share is a non-GAAP measure. See
page 31 for more information.
Basic earnings per share was 7.20 eurocents, compared to 0.38
eurocents for the year ended 31 March 2021.
Adjusted basic earnings per share was 11.03 eurocents compared
to 8.08 eurocents for the year ended 31 March 2021.
Cash flow, capital allocation and funding
Analysis of cash flow
FY22 FY21 Reported
EURm EURm change %
======================================= ======= ======== ========
Inflow from operating activities 18,081 17,215 5.0
Outflow from investing activities (6,868) (9,262) 25.8
Outflow from financing activities (9,706) (15,196) 36.1
Net cash inflow/(outflow) 1,507 (7,243) 120.8
Cash and cash equivalents at beginning
of the financial year 5,790 13,288
Exchange gain/(loss) on cash and cash
equivalents 74 (255)
Cash and cash equivalents at end of
the financial year 7,371 5,790
======================================= ======= ======== ========
Cash inflow from operating activities increased by 5.0% to
EUR18,081 million, primarily due to higher operating profit.
Outflow from investing activities decreased by 25.8% to EUR6,868
million, primarily due to a decrease of EUR2,409 million (2021:
EUR1,993 million increase) in collateral assets held against
derivative liabilities, partially offset by purchases of other
short-term investments and property, plant and equipment.
Outflows from financing activities decreased by 36.1% to
EUR9,706 million, driven by an increase of EUR1,952 million (2021:
EUR4,330 million decrease) in collateral liabilities held against
derivative assets and lower borrowing repayments compared to the
previous year, partially offset by the purchase of treasury shares
of EUR2,087 million in the current year.
Analysis of cash flow (continued)
FY22 FY21 Reported
EURm EURm change %
=============================================== ======== ======== ========
Adjusted EBITDAaL (1) 15,208 14,386 5.7
Capital additions(2) (8,306) (7,854)
Working capital (31) 564
Disposal of property, plant and equipment
and intangible assets 27 42
Restructuring costs (267) (356)
Integration capital additions(3) (314) (329)
Restructuring and integration working
capital (213) (3)
Licences and spectrum (896) (1,221)
Interest received and paid(4) (1,254) (1,553)
Taxation (925) (1,020)
Dividends received from associates and
joint ventures 638 628
Dividends paid to non-controlling shareholders
in subsidiaries (539) (391)
Other 181 217
-------- -------- --------
Free cash flow (1) 3,309 3,110 6.4
Acquisitions and disposals 138 447
Equity dividends paid (2,474) (2,427)
Share buybacks(4) (2,029) (53)
Foreign exchange loss (378) (219)
Other movements on net debt(5) 399 646
-------- -------- --------
Net debt (increase)/decrease (1) (1,035) 1,504
Opening net debt(1) (40,543) (42,047)
-------- -------- --------
Closing net debt (1) (41,578) (40,543) (2.6)
=============================================== ======== ======== ========
Free cash flow (1) 3,309 3,110
Adjustments:
- Licences and spectrum 896 1,221
- Restructuring costs 267 356
- Integration capital additions(3) 314 329
- Restructuring and integration working
capital 213 3
- Vantage Towers growth capital expenditure 244 -
- Special dividend in Egypt 194 -
-------- -------- --------
Adjusted free cash flow (1) 5,437 5,019
=============================================== ======== ======== ========
Notes:
1. Adjusted EBITDAaL, Free cash flow, Adjusted free cash flow
and Net debt are non-GAAP measures. See page 31 for more
information.
2. See page 41 for an analysis of tangible and intangible
additions in the year.
3. Integration capital additions comprises amounts for the
integration of acquired Liberty Global assets and network
integration.
4. Interest received and paid excludes interest on lease
liabilities of EUR361 million outflow (FY21: EUR307 million)
included within Adjusted EBITDAaL and EUR58 million of cash inflow
(FY21: EUR9 million) from the option structures relating to the
issue of the mandatory convertible bonds which is 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.
5. 'Other movements on net debt' for the year ended 31 March
2022 includes mark-to-market gains recognised in the income
statement of EUR256 million (FY21: EUR1,091 million gain). The year
ended 31 March 2021 also included payments in respect of bank
borrowings secured against Indian assets of EUR83 million and
payments to Vodafone Idea Limited of EUR235 million in respect of
the contingent liability mechanism.
Adjusted free cash flow increased by EUR418 million to an inflow
of EUR5,437 million, resulting from an increase in Adjusted
EBITDAaL and lower interest received and paid, partially offset by
an increase in capital additions and neutral working capital
movements for the year.
Borrowings and cash position
FY22 FY21 Reported
EURm EURm change %
========================================== ======== ======== ========
Non-current borrowings (58,131) (59,272)
Current borrowings (11,961) (8,488)
-------- -------- --------
Borrowings (70,092) (67,760)
Cash and cash equivalents 7,496 5,821
-------- -------- --------
Borrowings less cash and cash equivalents (62,596) (61,939) (1.1)
=========================================== ======== ======== ========
Borrowings principally includes bonds of EUR48,031 million
(FY21: EUR46,885 million) and lease liabilities of EUR12,539
million (FY21: EUR13,032 million).
The increase in borrowings of EUR2,332 million is principally
driven by an increase of EUR1,952 million on derivative collateral
positions, which impacts both cash and short-term borrowings.
Funding position
FY22 FY21 Reported
EURm EURm change %
======================================= ======== ======== ========
Bonds (48,031) (46,885)
Bank loans (1,317) (1,419)
Other borrowings including spectrum (3,909) (4,215)
-------- -------- --------
Gross debt (1) (53,257) (52,519) (1.4)
Cash and cash equivalents 7,496 5,821
Short-term investments(2) 4,795 4,007
Derivative financial instruments(3) 1,604 3
Net collateral (liabilities)/assets(4) (2,216) 2,145
-------- -------- --------
Net debt (1) (41,578) (40,543) (2.6)
======================================== ======== ======== ========
Notes:
1. Gross debt and Net debt are non-GAAP measures. See page 31
for more information.
2. Short-term investments includes EUR1,446 million (FY21:
EUR1,053 million) of highly liquid government and government-backed
securities and managed investment funds of EUR3,349 million (FY21:
EUR2,954 million) that are in highly rated and liquid money market
investments with liquidity of up to 90 days.
3. Derivative financial instruments excludes derivative
movements in cash flow hedging reserves of EUR1,350 million gain
(FY21: EUR862 million loss).
4. Net collateral (liabilities)/assets on derivative financial
instruments result in cash being (held)/paid as security. This is
repayable or receivable when derivatives are settled and is
therefore deducted from liquidity.
Net debt increased by EUR1,035 million primarily as a result of
Free cash flow of EUR3,309 million, offset by equity dividends paid
of EUR2,474 million and share buybacks of EUR2,029 million (1,441
million shares) used to offset dilution linked to mandatory
convertible bonds.
Other funding obligations to be considered alongside net debt
include:
- Lease liabilities of EUR12,539 million (FY21: EUR13,032 million)
- Mandatory convertible bonds recognised in equity of EURnil (FY21: EUR1,904 million)
- KDG put option liabilities of EUR494 million (FY21: EUR492 million)
- Guarantees over Australia joint venture loans of EUR1,573 million (FY21: EUR1,489 million)
- Pension liabilities of EUR281 million (FY21: EUR513 million)
The Group's gross and net debt includes EUR9,942 million (FY21:
EUR7,942 million) of long-term borrowings ('Hybrid bonds') for
which a 50% equity characteristic of EUR4,971 million (FY21:
EUR3,971 million) is attributed by credit rating agencies.
The Group's gross and net debt includes certain bonds which have
been designated in hedge relationships, which are carried at
EUR1,316 million higher value (FY21: EUR1,390 million 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 is not reflected in gross
debt and if it was included would decrease the euro equivalent
value of the bonds by EUR1,456 million (FY21: EUR127 million).
Return on capital employed
Return on capital employed ('ROCE') reflects how efficiently we
are generating profit with the capital we deploy.
FY22 FY21 Change
% % pps
=============================================== ==== ==== ======
Pre-tax ROCE (controlled) (1) 7.2% 5.5% 1.7
Post-tax ROCE (controlled and associates/joint
ventures) (1) 5.0% 3.9% 1.1
ROCE calculated using GAAP measures
(2) 5.0% 4.4% 0.6
=============================================== ==== ==== ======
Notes:
1. Pre-tax ROCE (controlled) and Post-tax ROCE (controlled and
associates/joint ventures) are non-GAAP measures. See page 31 for
more information.
2. ROCE is calculated by dividing Operating profit by the
average of capital employed as reported in the consolidated
statement of financial position. See pages 38 and 39 for the detail
of the calculation.
We calculate two ROCE measures: i) Pre-tax ROCE for controlled
operations only and ii) Post-tax ROCE including associates and
joint ventures.
Pre-tax ROCE increased to 7.2% % (FY21: 5.5%). The increase
reflects a strong increase in adjusted operating profit, lower
amortisation on licences and spectrum fees and a small decrease in
average capital employed. Similarly, post-tax ROCE increased to
5.0% (FY21: 3.9%).
ROCE using GAAP measures increased to 5.0% (FY21: 4.4%). The
increase reflects a higher operating profit during the year-ended
31 March 2022 coupled with a slight decrease in average capital
employed.
Funding facilities
The Group has undrawn revolving credit facilities of EUR7.6
billion comprising euro and US dollar revolving credit facilities
of EUR4.0 billion and US$4.0 billion (EUR3.6 billion) which mature
in 2025 and 2027 respectively. Both committed revolving credit
facilities support US and euro commercial paper programmes of up to
US$15 billion and EUR10 billion respectively.
Post employment benefits
At 31 March 2022, the Group's net surplus of scheme assets over
scheme liabilities was EUR274 million (2021: EUR453 million net
deficit). 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, aligning the
Group's shareholder returns with the primary currency in which we
generate free cash flow, and paid in euros, pounds sterling and US
dollars. 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 1 June 2022 for
ordinary shareholders, the record date is 6 June 2022 and the
dividend is payable on 5 August 2022. Dividend payments on ordinary
shares will be paid directly into a nominated bank or building
society account.
Other significant developments
Board changes
Deborah Kerr was appointed as a non-executive director on 1
March 2022.
On 6 May 2022, Vodafone announced that Delphine Ernotte Cunci
and Simon Segars will be appointed as non-executive directors
following the Annual General Meeting on 26 July 2022, subject to
shareholder approval.
On 12 May, Vodafone announced that Stephen A. Carter will be
appointed as non-executive director following the Annual General
Meeting on 26 July 2022, subject to shareholder approval.
Executive Committee changes
On 19 April 2022, Vodafone announced that Hannes Ametsreiter
will step down from his role as CEO of Vodafone Germany, and as a
member of the Group Executive Committee, effective 30 June 2022.
Philippe Rogge will become CEO of Vodafone Germany and a member of
the Group Executive Committee on 1 July 2022.
Indus Towers
On 24 February 2022, Vodafone confirmed the sale of 63.6 million
shares in Indus Towers Limited ("Indus") through an accelerated
book build offering (the "Placing"), generating net proceeds of
approximately INR 14.2 billion (EUR169 million). The Group sold a
further 127.1 million shares in Indus Bharti Airtel Limited
("Bharti") on 29 March 2022, generating additional net proceeds of
approximately INR 29.9 billion (EUR283 million). The Indus shares
related to the Placings and the agreement with Bharti were all
subject to the security arrangements entered into between Vodafone
and Indus.
Following completion of the sale of shares to Bharti, Vodafone
retains 567.1 million shares in Indus, equivalent to a 21.0%
shareholding (the "Residual Shareholding"). Vodafone continues to
be in discussions with several interested parties in relation to a
proposed sale of the Residual Shareholding.
Major shareholder announcement
On 14 May 2022, Vodafone was informed by Emirates
Telecommunications Group Company ('Etisalat') that they have become
the Group's largest shareholder with a 9.8% stake.
Condensed consolidated financial statements
Consolidated income statement
Year ended 31 March
---------------------
2022 2021
EURm EURm
------------------------------------------------------- ---------- ---------
Revenue 45,580 43,809
Cost of sales (30,574) (30,086)
--------------------------------------------------------- ---------- ---------
Gross profit 15,006 13,723
Selling and distribution expenses (3,358) (3,522)
Administrative expenses (5,713) (5,350)
Net credit losses on financial assets (561) (664)
Share of results of equity accounted associates
and joint ventures 211 342
Other income 79 568
--------------------------------------------------------- ---------- ---------
Operating profit 5,664 5,097
Investment income 254 330
Financing costs (1,964) (1,027)
--------------------------------------------------------- ---------- ---------
Profit before taxation 3,954 4,400
Income tax expense (1,330) (3,864)
--------------------------------------------------------- ---------- ---------
Profit for the financial year 2,624 536
--------------------------------------------------------- ---------- ---------
Attributable to:
- Owners of the parent 2,088 112
- Non-controlling interests 536 424
--------------------------------------------------------- ---------- ---------
Profit for the financial year 2,624 536
--------------------------------------------------------- ---------- ---------
Profit per share
Total Group:
- Basic 7.20c 0.38c
- Diluted 7.17c 0.38c
--------------------------------------------------------- ---------- ---------
Consolidated statement of comprehensive income/expense
Year ended 31 March
---------------------
2022 2021
EURm EURm
------------------------------------------------------- ---------- ---------
Profit for the financial year 2,624 536
Other comprehensive income/(expense):
Items that may be reclassified to the income
statement in subsequent periods:
Foreign exchange translation differences, net
of tax (25) 133
Foreign exchange translation differences transferred
to the income statement 19 (17)
Other, net of tax(1) 1,863 (3,743)
--------------------------------------------------------- ---------- ---------
Total items that may be reclassified to the
income statement in subsequent years 1,857 (3,627)
Items that will not be reclassified to the
income statement in subsequent years:
Net actuarial gains/(losses) on defined benefit
pension schemes, net of tax 483 (555)
--------------------------------------------------------- ---------- ---------
Total items that will not be reclassified to
the income statement in subsequent years 483 (555)
Other comprehensive income/(expense) 2,340 (4,182)
--------------------------------------------------------- ---------- ---------
Total comprehensive income/(expense) for the
financial year 4,964 (3,646)
--------------------------------------------------------- ---------- ---------
Attributable to:
- Owners of the parent 4,402 (4,069)
- Non-controlling interests 562 423
--------------------------------------------------------- ---------- ---------
4,964 (3,646)
------------------------------------------------------- ---------- ---------
Note:
1. Principally includes the impact of the Group's cash flow
hedges deferred to other comprehensive income during the year.
The accompanying notes are an integral part of the condensed
consolidated financial statements.
Condensed consolidated financial statements
Consolidated statement of financial position
31 March 31 March
2022 2021
EURm EURm
---------------------------------------------------- --------- ---------
Non-current assets
Goodwill 31,884 31,731
Other intangible assets 21,360 21,818
Property, plant and equipment 40,804 41,243
Investments in associates and joint ventures 4,268 4,670
Other investments 1,073 925
Deferred tax assets 19,089 21,569
Post employment benefits 555 60
Trade and other receivables 6,383 4,777
------------------------------------------------------ --------- ---------
125,416 126,793
---------------------------------------------------- --------- ---------
Current assets
Inventory 836 676
Taxation recoverable 296 434
Trade and other receivables 11,019 10,923
Other investments 7,931 9,159
Cash and cash equivalents 7,496 5,821
------------------------------------------------------ --------- ---------
27,578 27,013
---------------------------------------------------- --------- ---------
Assets held for sale 959 1,257
------------------------------------------------------ --------- ---------
Total assets 153,953 155,063
------------------------------------------------------ --------- ---------
Equity
Called up share capital 4,797 4,797
Additional paid-in capital 149,018 150,812
Treasury shares (7,278) (6,172)
Accumulated losses (122,118) (121,587)
Accumulated other comprehensive income 30,268 27,954
------------------------------------------------------ --------- ---------
Total attributable to owners of the parent 54,687 55,804
------------------------------------------------------ --------- ---------
Non-controlling interests 2,290 2,012
------------------------------------------------------ --------- ---------
Total equity 56,977 57,816
------------------------------------------------------ --------- ---------
Non-current liabilities
Borrowings 58,131 59,272
Deferred tax liabilities 520 2,095
Post employment benefits 281 513
Provisions 1,881 1,747
Trade and other payables 2,516 4,909
------------------------------------------------------ --------- ---------
63,329 68,536
---------------------------------------------------- --------- ---------
Current liabilities
Borrowings 11,961 8,488
Financial liabilities under put option arrangements 494 492
Taxation liabilities 864 769
Provisions 667 892
Trade and other payables 19,661 18,070
------------------------------------------------------ --------- ---------
33,647 28,711
---------------------------------------------------- --------- ---------
Total equity and liabilities 153,953 155,063
------------------------------------------------------ --------- ---------
The accompanying notes are an integral part of the condensed
consolidated financial statements.
Condensed consolidated financial statements
Consolidated statement of changes
in equity
Equity
Additional Accumulated attributable Non-
Share paid-in Treasury comprehensive to the controlling Total
capital capital(1) shares losses(2) owners interests equity
EURm EURm EURm EURm EURm EURm EURm
------------------------------- -------- ----------- -------- -------------- ------------- ------------ -------
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
shareholders 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
------------------------------- -------- ----------- -------- -------------- ------------- ------------ -------
1 April 2021 brought
forward 4,797 150,812 (6,172) (93,633) 55,804 2,012 57,816
Issue or reissue
of shares - (1,902) 2,000 (98) - - -
Share-based payments - 108 - - 108 11 119
Transactions with
non-controlling
shareholders in
subsidiaries - - - (38) (38) 237 199
Comprehensive (expense)/income - - - 4,402 4,402 562 4,964
Dividends - - - (2,483) (2,483) (532) (3,015)
Purchase of treasury
shares - - (3,106) - (3,106) - (3,106)
------------------------------- -------- ----------- -------- -------------- ------------- ------------ -------
31 March 2022 4,797 149,018 (7,278) (91,850) 54,687 2,290 56,977
------------------------------- -------- ----------- -------- -------------- ------------- ------------ -------
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.
The accompanying notes are an integral part of the condensed
consolidated financial statements.
Condensed consolidated financial statements
Consolidated statement of cash flows
Year ended 31 March
---------------------
2022 2021
EURm EURm
----------------------------------------------------- --------- ----------
Inflow from operating activities 18,081 17,215
------------------------------------------------------- --------- ----------
Cash flows from investing activities
Purchase of interests in subsidiaries, net
of cash acquired - (136)
Purchase of interests in associates and joint
ventures (445) (13)
Purchase of intangible assets (3,262) (3,227)
Purchase of property, plant and equipment (5,798) (5,413)
Purchase of investments (2,009) (3,726)
Disposal of interests in subsidiaries, net
of cash disposed - 157
Disposal of interests in associates and joint
ventures 446 420
Disposal of property, plant and equipment
and intangible assets 33 43
Disposal of investments 3,282 1,704
Dividends received from associates and joint
ventures 638 628
Interest received 247 301
------------------------------------------------------- --------- ----------
Outflow from investing activities (6,868) (9,262)
------------------------------------------------------- --------- ----------
Cash flows from financing activities
Proceeds from issue of long-term borrowings 2,548 4,359
Repayment of borrowings (8,248) (12,237)
Net movement in short-term borrowings 3,002 (2,791)
Net movement in derivatives (293) 279
Interest paid(1) (1,804) (2,152)
Payments for settlement of written put options - (1,482)
Purchase of treasury shares (2,087) (62)
Issue of ordinary share capital and reissue
of treasury shares - 5
Equity dividends paid (2,474) (2,427)
Dividends paid to non-controlling shareholders
in subsidiaries (539) (391)
Other transactions with non-controlling shareholders
in subsidiaries 189 1,663
Other movements with associates and joint
ventures - 40
------------------------------------------------------- --------- ----------
Outflow from financing activities (9,706) (15,196)
------------------------------------------------------- --------- ----------
Net cash inflow/(outflow) 1,507 (7,243)
Cash and cash equivalents at beginning of
the financial year(2) 5,790 13,288
Exchange gain/(loss) on cash and cash equivalents 74 (255)
------------------------------------------------------- --------- ----------
Cash and cash equivalents at end of the
financial year (2) 7,371 5,790
------------------------------------------------------- --------- ----------
Notes:
1. Interest paid includes EUR58 million of cash inflow (FY21:
EUR9 million inflow) on derivative financial instruments for the
share buyback related to maturing tranches of mandatory convertible
bonds.
2. Comprises cash and cash equivalents as presented in the
consolidated statement of financial position of EUR7,496 million
(FY21: EUR5,821 million), together with overdrafts of EUR125
million (FY21: EUR31 million).
The accompanying notes are an integral part of the condensed
consolidated financial statements.
Notes to condensed consolidated financial statements
1 Basis of preparation
The preliminary results for the year ended 31 March 2022 are an
abridged statement of the full Annual Report which was approved by
the Board of Directors on 17 May 2022. The consolidated financial
statements in the full Annual Report are prepared in accordance
with UK-adopted International Financial Reporting Standards
('IFRS'), with IFRS as issued by the International Accounting
Standards Board ('IASB') and with the requirements of the Companies
Act 2006.
The auditor's report on those consolidated financial statements
was unqualified, did not draw attention to any matters by way of
emphasis without qualifying their report and did not contain
statements under section 498(2) or 498(3) of the Companies Act
2006. The preliminary results do not comprise statutory accounts
within the meaning of section 434(3) of the Companies Act 2006. The
Annual Report for the year ended 31 March 2022 will be delivered to
the Registrar of Companies following the Company's Annual General
Meeting on 26 July 2022.
The financial information included in this preliminary
announcement does not itself contain sufficient information to
comply with IFRS. 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 2022 are made available on the Company's website in
June 2022.
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.
Going concern
The Group has a strong liquidity position with EUR7.4 billion of
cash and cash equivalents available at 31 March 2022 which,
together with undrawn revolving credit facilities of EUR7.6
billion, 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 2022. 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 the going concern basis in preparing the
consolidated financial statements.
Critical accounting judgements and estimates
The Group's critical accounting judgements and estimates are
disclosed in the Group's Annual Report for the year ended 31 March
2022. The impact of recent energy price inflation, exacerbated by
the war in Ukraine, has been factored into our latest forecasts and
considered in our impairment review.
New accounting pronouncements adopted
On 1 April 2021, 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 2021.
Basis of preparation changes to be adopted on or after 1 April
2022
It is expected that Turkey will meet the requirements to be
designated as a hyper-inflationary economy under IAS 29 'Financial
Reporting in Hyper-Inflationary Economies' in the quarter ended 30
June 2022 and that the Group's financial reporting relating to
Turkey during the year ending 31 March 2023 will be in accordance
with IAS 29. Under IAS 29, Turkish Lira results and non-monetary
asset and liability balances are revalued to present value
equivalent local currency amounts (adjusted based on an inflation
index) before translation to euros at reporting-date exchange
rates.
Notes to the condensed consolidated financial statements
2 Equity dividends
2022 2021
EURm EURm
------------------------------------------------------ ----- -----
Declared and paid during the financial year:
Final dividend for the year ended 31 March 2021: 4.5
eurocents per share
(2020: 4.5 eurocents per share) 1,254 1,205
Interim dividend for the year ended 31 March 2022:
4.5 eurocents per share
(2021: 4.5 eurocents per share) 1,229 1,207
------------------------------------------------------ ----- -----
2,483 2,412
Proposed after the end of the year and not recognised
as a liability:
Final dividend for the year ended 31 March 2022: 4.5
eurocents per share
(2021: 4.5 eurocents per share) 1,265 1,260
------------------------------------------------------ ----- -----
3 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 capped at
INR 64 billion (EUR743 million) following payments made under this
mechanism from Vodafone to VIL, in the year ended 31 March 2021,
totalling INR 19 billion (EUR235 million). On 15 September 2021,
the Government of India announced a relief package and a series of
reforms designed to improve the liquidity and financial health of
the telecom sector. The reforms include a four-year moratorium on
spectrum and AGR payments and the option to convert payments due on
spectrum and AGR payments to equity at the end of the moratorium
period, with interest on due amounts being convertible during the
moratorium period; VIL elected to accept the options in October and
November 2021, respectively.
VIL raised INR 45 billion (EUR524 million) via the issue of new
equity in March 2022, most of which was used to settle amounts due
to Indus. VIL remains in need of additional liquidity support from
its lenders and intends to raise additional equity capital. There
are significant uncertainties in relation to VIL's ability to make
payments in relation to any remaining liabilities covered by the
mechanism and no further cash payments are considered probable from
the Group as at 31 March 2022. The carrying value of the Group's
investment in VIL is EURnil 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; consequently, contingent liabilities arising from litigation
in India concerning operations of Vodafone India are not
reported.
Notes to the condensed consolidated financial statements
Indus Towers
VIL's ability to satisfy certain payment obligations under its
Master Services Agreements with Indus Towers (the 'MSAs') is
uncertain and depends on a number of factors including its ability
to raise additional funding. Under the terms of the Indus and
Bharti Infratel merger in November 2020, a security package was
agreed for the benefit of the newly created merged entity, Indus
Towers, which could be invoked in the event that VIL was unable to
make MSA payments. The security package included the following
elements:
- A prepayment in cash of INR 24 billion (EUR279 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. The prepayment was fully utilised during the year to 31
March 2022;
- A primary pledge over 190.7 million shares owned by Vodafone
Group in Indus Towers having a value of INR 47 billion (EUR544
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
outstanding bank borrowings of EUR1.4 billion as at 31 March 2022
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
(EUR504 million).
In the event of non-payment of relevant MSA obligations by VIL,
Indus Towers would 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.
During February and March 2022, the Group announced the disposal
of the 190.7 million shares that were subject to the primary pledge
in two transactions for a combined INR 38.1 billion (EUR452
million). The Group invested INR 33.7 billion (EUR393 million) of
the proceeds by subscribing to newly issued VIL equity, which VIL
immediately used to partially settle outstanding MSA obligations to
Indus Towers. This transaction resulted in an equivalent partial
release of the primary pledge, with the remaining INR 4.4 billion
(EUR52 million) proceeds of the share disposal remaining secured
for further utilisation by Indus Towers.
Indus Towers has recourse against the secondary pledge to the
maximum liability cap, from any proceeds remaining after the
settlement of the Bank Borrowings.
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 its 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').
Notes to the condensed consolidated financial statements
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). 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.
VIHBV initiated arbitration proceedings under the
Netherlands-India Bilateral Investment Treaty ('Dutch BIT') on 17
April 2014. In September 2020, the arbitration tribunal issued its
award unanimously ruling in Vodafone's favour. The Indian
Government applied to set aside the award primarily on
jurisdictional grounds. The proceedings have been transferred to
the Singapore International Commercial Court ('SICC').
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'). Although relating to the same
underlying facts as the claim under the Dutch BIT, the UK BIT claim
is a separate and distinct claim under a different treaty and
includes independent claims relating to disputes between the Indian
tax authority and Vodafone India Services Private Limited ('VISPL')
(see below). In 2020, following attempts by the Indian Government
to obtain a court injunction preventing Vodafone from progressing
the UK BIT arbitration, the Delhi High Court ordered that Vodafone
shall proceed with the UK BIT arbitration only if the award already
published under the Dutch BIT is set aside.
In August 2021 the Indian Parliament passed new legislation
which affects the retrospective effect of the Finance Act 2012. The
impact of this legislation on the Dutch and UK BIT proceedings, in
particular whether the Indian Government will withdraw its
challenge to the arbitration award in the Dutch BIT, is unknown as
of the date of this report. The SICC granted a stay in the Dutch
BIT proceedings to 15 June 2022.
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. 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
that not that no present obligation exists at 31 March 2022.
VISPL tax claims
VISPL is involved in a number of tax cases. The total value of
the claims is approximately EUR500 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 EUR254 million (plus interest of EUR614
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. A stay of the tax
demand on a deposit of GBP20 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
Spain and UK: TOT v Vodafone Group Plc, VGSL, and Vodafone
UK
The Group has been defending cases brought against it in Spain
and the UK by TOT Power Control and Top Optimized Technologies
(jointly 'TOT') alleging breach of confidentiality and patent
infringement. In November 2021 TOT withdrew all of its claims
against the Group in Spain and the UK as part of an agreed
settlement.
Further background relating to these claims is provided in the
Group's Annual Report for the financial year ended 31 March
2021.
Notes to the condensed consolidated financial statements
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 which was rejected by the court in December
2021. Several minority shareholders have filed a further appeal
before the Federal Court of Justice. 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 EUR500 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 took place on 8 June 2021 and we are waiting to receive the
judgement.
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 EUR330 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 early 2023.
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 collusion 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 were filed in December 2021. The
judge has also ordered that there should be a split trial between
liability and damages. The first trial started 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, allegedly equivalent to approximately GBP1 billion
with the addition of alleged exemplary damages. 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
judgment.
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.
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.
Defined Closest equivalent Reconciled
Non-GAAP measure on page GAAP measure on page
-------------------------------- --------- ----------------------------- ---------------
Performance metrics
-------------------------------- --------- ----------------------------- ---------------
Adjusted EBITDAaL Page 32 Operating profit Page 35
-------------------------------- --------- ----------------------------- ---------------
Organic Adjusted EBITDAaL Page 32 Not applicable Not applicable
growth
-------------------------------- --------- ----------------------------- ---------------
Organic percentage point Page 32 Not applicable Not applicable
change in Adjusted EBITDAaL
margin
-------------------------------- --------- ----------------------------- ---------------
Organic revenue growth Page 32 Revenue Pages 33
and 34
-------------------------------- --------- ----------------------------- ---------------
Organic service revenue Page 32 Service revenue Pages 33
growth and 34
-------------------------------- --------- ----------------------------- ---------------
Organic mobile service Page 32 Service revenue Pages 33
revenue growth and 34
-------------------------------- --------- ----------------------------- ---------------
Organic fixed service Page 32 Service revenue Pages 33
revenue growth and 34
-------------------------------- --------- ----------------------------- ---------------
Organic Vodafone Business Page 32 Service revenue Pages 33
service revenue growth and 34
-------------------------------- --------- ----------------------------- ---------------
Organic financial services Page 32 Service revenue Pages 33
revenue growth in South and 34
Africa
-------------------------------- --------- ----------------------------- ---------------
Organic retail service Page 32 Service revenue Pages 33
revenue growth in Germany and 34
-------------------------------- --------- ----------------------------- ---------------
Other metrics
-------------------------------- --------- ----------------------------- ---------------
Adjusted profit attributable Page 35 Profit attributable Page 35
to owners of the parent to owners of the parent
-------------------------------- --------- ----------------------------- ---------------
Adjusted basic earnings Page 35 Basic earnings per share Page 36
per share
-------------------------------- --------- ----------------------------- ---------------
Cash flow, funding and
capital allocation metrics
-------------------------------- --------- ----------------------------- ---------------
Free cash flow Page 36 Inflow from operating Page 37
activities
-------------------------------- --------- ----------------------------- ---------------
Adjusted free cash flow Page 36 Inflow from operating Pages 18
activities and 37
-------------------------------- --------- ----------------------------- ---------------
Gross debt Page 36 Borrowings Page 37
-------------------------------- --------- ----------------------------- ---------------
Net debt Page 36 Borrowings less cash Page 37
and cash equivalents
-------------------------------- --------- ----------------------------- ---------------
Pre-tax ROCE (controlled) Page 38 ROCE calculated using Pages 38
GAAP measures and 39
-------------------------------- --------- ----------------------------- ---------------
Post-tax ROCE (controlled Page 38 ROCE calculated using Pages 38
and associates/joint ventures) GAAP measures and 39
-------------------------------- --------- ----------------------------- ---------------
Financing and Taxation
metrics
-------------------------------- --------- ----------------------------- ---------------
Adjusted net financing Page 40 Net financing costs Page 16
costs
-------------------------------- --------- ----------------------------- ---------------
Adjusted profit before Page 40 Profit before taxation Page 40
taxation
-------------------------------- --------- ----------------------------- ---------------
Adjusted income tax expense Page 40 Income tax expense Page 40
-------------------------------- --------- ----------------------------- ---------------
Adjusted effective tax Page 40 Income tax expense Page 40
rate
-------------------------------- --------- ----------------------------- ---------------
Adjusted share of results Page 40 Share of results of Page 41
of equity accounted associates equity accounted associates
and joint ventures and joint ventures
-------------------------------- --------- ----------------------------- ---------------
Adjusted share of results Page 40 Share of results of Page 41
of equity accounted associates equity accounted associates
and joint ventures used and joint ventures
in post-tax ROCE
-------------------------------- --------- ----------------------------- ---------------
Performance metrics
Non-GAAP measure Purpose Definition
------------------ -------------------------------- -------------------------------------
Adjusted EBITDAaL Adjusted EBITDAaL is used Adjusted EBITDAaL is operating
in conjunction with financial profit after depreciation on
measures such as operating lease-related right of use
profit to assess our operating assets and interest on leases
performance and profitability. but excluding depreciation,
It is a key external metric amortisation and gains/losses
used by the investor community on disposal of owned assets
to assess performance of and excluding share of results
our operations. of equity accounted associates
It is our segment performance and joint ventures, impairment
measure in accordance with losses, restructuring costs
IFRS 8 (Operating Segments). 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.
------------------ -------------------------------- -------------------------------------
Adjusted EBITDAaL margin is Adjusted EBITDAaL divided by
Revenue.
Organic growth
All amounts marked with an '*' in this document represent
organic growth which presents performance on a comparable basis,
excluding the impact of foreign exchange rates, mergers and
acquisitions and other adjustments to improve the comparability of
results between periods. When calculating organic growth, the FY21
results for Vantage Towers and relevant operating entities have
been adjusted to reflect a full year of operation on a pro forma
basis in order to be comparable to FY22.
Organic growth is calculated for revenue and profitability
metrics, as follows:
- Adjusted EBITDAaL;
- Percentage point change in Adjusted EBITDAaL margin;
- Revenue
- Service revenue;
- Mobile service revenue;
- Fixed service revenue;
- Vodafone Business service revenue;
- Financial services revenue in South Africa; and
- Retail service revenue in Germany.
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 2022
Reported M&A and Foreign Organic
FY22 FY21 growth Other exchange growth*
EURm EURm % pps pps %
------------------------------------ ------ ------ -------- ------- --------- --------
Service revenue
Germany 11,616 11,520 0.8 0.3 - 1.1
------ ------ -------- ------- --------- --------
Mobile service revenue 5,124 5,056 1.3 0.5 - 1.8
Fixed service revenue 6,492 6,464 0.4 0.1 - 0.5
------------------------------------ ------ ------ -------- ------- --------- --------
Italy 4,379 4,458 (1.8) - - (1.8)
------ ------ -------- ------- --------- --------
Mobile service revenue 3,141 3,244 (3.2) - - (3.2)
Fixed service revenue 1,238 1,214 2.0 - - 2.0
------------------------------------ ------ ------ -------- ------- --------- --------
UK 5,154 4,848 6.3 - (5.0) 1.3
------ ------ -------- ------- --------- --------
Mobile service revenue 3,697 3,428 7.8 - (5.0) 2.8
Fixed service revenue 1,457 1,420 2.6 - (4.9) (2.3)
------------------------------------ ------ ------ -------- ------- --------- --------
Spain 3,714 3,788 (2.0) - - (2.0)
Other Europe 5,001 4,859 2.9 0.7 (0.6) 3.0
Vodacom 4,635 4,083 13.5 - (8.9) 4.6
Other Markets 3,420 3,312 3.3 - 16.1 19.4
Vantage Towers - - - - - -
Common Functions 522 470
Eliminations (238) (197)
------------------------------------- ------ ------ -------- ------- --------- --------
Total service revenue 38,203 37,141 2.9 0.2 (0.5) 2.6
Other revenue 7,377 6,668
------------------------------------- ------ ------ -------- ------- --------- --------
Revenue 45,580 43,809 4.0 - (0.5) 3.5
------------------------------------- ------ ------ -------- ------- --------- --------
Other growth metrics
Vodafone Business - Service revenue 10,316 10,076 2.4 (0.4) (1.2) 0.8
South Africa - Financial services
revenue 155 125 24.0 - (11.6) 12.4
Germany - Retail service revenue 11,348 11,201 1.3 0.3 - 1.6
------------------------------------- ------ ------ -------- ------- --------- --------
Adjusted EBITDAaL
Germany 5,669 5,634 0.6 5.9 - 6.5
Italy 1,699 1,597 6.4 - - 6.4
UK 1,395 1,367 2.0 6.0 (4.7) 3.3
Spain 957 1,044 (8.3) 7.2 - (1.1)
Other Europe 1,606 1,760 (8.8) 10.8 (0.6) 1.4
Vodacom 2,125 1,873 13.5 - (10.1) 3.4
Other Markets 1,335 1,228 8.7 - 14.3 23.0
Vantage Towers 619 - - - - -
Common Functions(1) (197) (117)
------------------------------------- ------ ------ -------- ------- --------- --------
Group 15,208 14,386 5.7 0.1 (0.8) 5.0
------------------------------------- ------ ------ -------- ------- --------- --------
Percentage point change in Adjusted
EBITDAaL margin
Germany 43.2% 43.4% (0.2) 2.3 - 2.1
Italy 33.8% 31.9% 1.9 - - 1.9
UK 21.2% 22.2% (1.0) 1.3 - 0.3
Spain 22.9% 25.1% (2.2) 1.9 - (0.3)
Other Europe 28.4% 31.7% (3.3) 3.2 (0.1) (0.2)
Vodacom 35.5% 36.2% (0.7) - (0.3) (1.0)
Other Markets 34.9% 32.6% 2.3 - (1.2) 1.1
Vantage Towers 49.4% - - - - -
------------------------------------- ------ ------ -------- ------- --------- --------
Group 33.4% 32.8% 0.6 - (0.1) 0.5
------------------------------------- ------ ------ -------- ------- --------- --------
Note:
1. Common Functions Adjusted EBITDAaL includes a non-recurring
charge in relation to the impairment of prior year receivables.
Quarter ended 31 March 2022
Reported M&A and Foreign Organic
Q4 FY22 Q4 FY21 growth Other exchange growth*
EURm EURm % pps pps %
---------------------------------- ------- ------- -------- ------- --------- --------
Service revenue
Germany 2,903 2,885 0.6 0.2 - 0.8
------- ------- -------- ------- --------- --------
Mobile service revenue 1,282 1,274 0.6 1.8 - 2.4
Fixed service revenue 1,621 1,611 0.6 (1.0) - (0.4)
---------------------------------- ------- ------- -------- ------- --------- --------
Italy 1,085 1,084 0.1 (0.9) - (0.8)
------- ------- -------- ------- --------- --------
Mobile service revenue 758 788 (3.8) 0.7 - (3.1)
Fixed service revenue 327 296 10.5 (5.2) - 5.3
---------------------------------- ------- ------- -------- ------- --------- --------
UK 1,341 1,231 8.9 (2.3) (4.6) 2.0
------- ------- -------- ------- --------- --------
Mobile service revenue 972 880 10.5 - (4.6) 5.9
Fixed service revenue 369 351 5.1 (7.3) (4.8) (7.0)
---------------------------------- ------- ------- -------- ------- --------- --------
Spain 908 951 (4.5) (0.6) - (5.1)
Other Europe 1,242 1,233 0.7 2.6 (0.6) 2.7
Vodacom 1,192 1,078 10.6 (0.1) (7.4) 3.1
Other Markets 801 827 (3.1) (0.1) 23.0 19.8
Vantage Towers - - - - --
Common Functions 134 136
Eliminations (60) (59)
----------------------------------- ------- ------- -------- ------- --------- --------
Total service revenue 9,546 9,366 1.9 (0.1) 0.2 2.0
Other revenue 1,861 1,815
----------------------------------- ------- ------- -------- ------- --------- --------
Revenue 11,407 11,181 2.0 (0.1) 0.2 2.1
----------------------------------- ------- ------- -------- ------- --------- --------
Other growth metrics
Germany - Retail service revenue 2,841 2,812 1.0 0.2 - 1.2
----------------------------------- ------- ------- -------- ------- --------- --------
Quarter ended 31 December 2021
Reported M&A and Foreign Organic
Q3 FY22 Q3 FY21 growth Other exchange growth*
EURm EURm % pps pps%
---------------------------------- ------- ------- -------- ------- --------- -------
Service revenue
Germany 2,936 2,912 0.8 0.3 - 1.1
------- ------- -------- ------- --------- --------
Mobile service revenue 1,301 1,279 1.7 - - 1.7
Fixed service revenue 1,635 1,633 0.1 0.6 - 0.7
---------------------------------- ------- ------- -------- ------- --------- --------
Italy 1,107 1,125 (1.6) 0.3 - (1.3)
------- ------- -------- ------- --------- --------
Mobile service revenue 794 818 (2.9) - - (2.9)
Fixed service revenue 313 307 2.0 1.1 - 3.1
---------------------------------- ------- ------- -------- ------- --------- --------
UK 1,292 1,216 6.3 1.1 (6.5) 0.9
------- ------- -------- ------- --------- --------
Mobile service revenue 928 848 9.4 - (6.8) 2.6
Fixed service revenue 364 368 (1.1) 3.5 (5.7) (3.3)
---------------------------------- ------- ------- -------- ------- --------- --------
Spain 940 957 (1.8) 0.2 - (1.6)
Other Europe 1,257 1,215 3.5 0.2 (0.8) 2.9
Vodacom 1,172 1,056 11.0 - (6.6) 4.4
Other Markets 867 806 7.6 - 12.2 19.8
Vantage Towers - - - - --
Common Functions 136 115
Eliminations (60) (45)
----------------------------------- ------- ------- -------- ------- --------- --------
Total service revenue 9,647 9,357 3.1 0.4 (0.8) 2.7
Other revenue 2,037 1,844
----------------------------------- ------- ------- -------- ------- --------- --------
Revenue 11,684 11,201 4.3 0.2 (0.8) 3.7
----------------------------------- ------- ------- -------- ------- --------- --------
Other growth metrics
South Africa - Financial services
revenue 39 33 18.2 - (6.5) 11.7
Germany - Retail service revenue 2,871 2,832 1.4 0.3 - 1.7
----------------------------------- ------- ------- -------- ------- --------- --------
Other metrics
Non-GAAP measure Purpose Definition
------------------ ------------------------------ ---------------------------------------
Adjusted profit This metric is used in Adjusted profit attributable
attributable the calculation of adjusted to owners of the parent excludes
to owners of basic earnings per share. restructuring costs arising
the parent 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 This performance measure Adjusted basic earnings per
earnings per is used in discussions share is Adjusted profit attributable
share with the investor community. 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 EBITDAaL and Adjusted profit attributable to owners of
the parent
The table below reconciles Adjusted EBITDAaL and Adjusted profit
attributable to owners of the parent to their closest equivalent
GAAP measures, being Operating profit and Profit attributable to
owners of the parent, respectively.
FY22 FY21
------------------------------- -------------------------------
Reported Adjustments Adjusted Reported Adjustments Adjusted
EURm EURm EURm EURm EURm EURm
---------------------------------- -------- ----------- -------- -------- ----------- --------
Adjusted EBITDAaL 15,208 - 15,208 14,386 - 14,386
Restructuring costs (346) 346 - (356) 356 -
Interest on lease liabilities 398 - 398 374 - 374
Loss on disposal of property,
plant & equipment and intangible
assets (28) - (28) (30) - (30)
Depreciation and amortisation
on owned assets(1) (9,858) 509 (9,349) (10,187) 488 (9,699)
Share of results of equity
accounted associates and
joint ventures(2) 211 250 461 342 90 432
Other income 79 (79) - 568 (568) -
---------------------------------- -------- ----------- -------- -------- ----------- --------
Operating profit 5,664 1,026 6,690 5,097 366 5,463
Investment income 254 - 254 330 - 330
Financing costs (1,964) 28 (1,936) (1,027) (1,068) (2,095)
---------------------------------- -------- ----------- -------- -------- ----------- --------
Profit before taxation 3,954 1,054 5,008 4,400 (702) 3,698
Income tax expense (1,330) 61 (1,269) (3,864) 2,985 (879)
---------------------------------- -------- ----------- -------- -------- ----------- --------
Profit for the financial
year 2,624 1,115 3,739 536 2,283 2,819
---------------------------------- -------- ----------- -------- -------- ----------- --------
Profit attributable to:
- Owners of the parent 2,088 1,111 3,199 112 2,278 2,390
- Non-controlled interests 536 4 540 424 5 429
---------------------------------- -------- ----------- -------- -------- ----------- --------
Profit for the financial
year 2,624 1,115 3,739 536 2,283 2,819
---------------------------------- -------- ----------- -------- -------- ----------- --------
Notes:
1. Reported depreciation and amortisation excludes depreciation
on leased assets and loss on disposal of leased assets included
within Adjusted EBITDAaL. Refer to Additional Information on page
41 for an analysis of depreciation and amortisation. The
adjustments of EUR509 million (FY21: EUR488 million) relate to
amortisation of customer bases and brand intangible assets.
2. Refer to page 41 for a breakdown of the adjustments to Share
of results of equity accounted associates and joint ventures to
derive Adjusted 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 earnings per share, is
provided below.
FY22 FY21
EURm EURm
------------------------------------------------------ --------- ---------
Profit attributable to owners of the parent 2,088 112
Adjusted profit attributable to owners of the parent 3,199 2,390
Million Million
--------- ---------
Weighted average number of shares outstanding - Basic 29,012 29,592
eurocents eurocents
--------- ---------
Basic earnings per share 7.20c 0.38c
Adjusted basic earnings per share 11.03c 8.08c
------------------------------------------------------ --------- ---------
Cash flow, funding and capital allocation metrics
Cash flow and funding
Non-GAAP measure Purpose Definition
----------------- --------------------------------- --------------------------------------
Free cash flow Internal performance reporting. Free cash flow is Adjusted
External metric used by EBITDAaL after cash flows in
investor community. relation to capital additions,
Assists comparability with working capital, disposal of
other companies, although property, plant and equipment,
our metric may not be directly restructuring costs arising
comparable to similarly from discrete restructuring
titled measures used by plans, integration capital
other companies. additions and working capital
related items, licences and
spectrum, interest received
and paid, taxation, dividends
received from associates and
investments, dividends paid
to non-controlling shareholders
in subsidiaries and payments
in respect of lease liabilities.
----------------- --------------------------------- --------------------------------------
Adjusted free Internal performance reporting. Adjusted free cash flow is
cash flow External metric used by Free cash flow before licences
investor community. and spectrum, restructuring
Setting director and management costs arising from discrete
remuneration restructuring plans, integration
Key external metric used capital additions and working
to evaluate liquidity and capital related items, M&A
the cash generated by our and Vantage Towers growth capital
operations. expenditure.
This non-GAAP measure has changed
for the year ended 31 March
2022. Adjusted free cash flow
now excludes Vantage Towers
growth capital expenditure.
This change was made so the
measure aligns to the basis
on which outlook guidance is
provided and so is a more useful
metric for the investor community.
Growth capital expenditure
is total capital expenditure
excluding maintenance-type
expenditure.
----------------- --------------------------------- --------------------------------------
Gross debt Prominent metric used by Non-current borrowings and
debt rating agencies and current borrowings, excluding
the investor community. lease liabilities, collateral
liabilities and borrowings
specifically secured against
Indian assets.
----------------- --------------------------------- --------------------------------------
Net debt Prominent metric used by Gross debt less cash and cash
debt rating agencies and equivalents, short-term investments,
the investor community. derivative financial instruments
excluding mark-to-market adjustments
and net collateral assets.
----------------- --------------------------------- --------------------------------------
Cash flow and funding (continued)
The tables below present: (i) the reconciliation between Inflow
from operating activities and Free cash flow and (ii) the
reconciliation between Borrowings, Gross debt and Net debt.
FY22 FY21
EURm EURm
---------------------------------------------------- -------- ----------
Inflow from operating activities 18,081 17,215
Net tax paid 925 1,020
---------------------------------------------------- -------- ----------
Cash generated by operations 19,006 18,235
Capital additions (8,306) (7,854)
Working capital movement in respect of capital
additions 157 410
Disposal of property, plant and equipment and
intangible assets 27 42
Integration capital additions (314) (329)
Working capital movement in respect of integration
capital additions (34) 62
Licences and spectrum (896) (1,221)
Interest received and paid (1,615) (1,860)
Taxation (925) (1,020)
Dividends received from associates and joint
ventures 638 628
Dividends paid to non-controlling shareholders
in subsidiaries (539) (391)
Payments in respect of lease liabilities (3,943) (3,897)
Other 53 305
---------------------------------------------------- -------- ----------
Free cash flow 3,309 3,110
---------------------------------------------------- -------- ----------
FY22 FY21
EURm EURm
--------------------------------------------------- -------- --------
Borrowings (70,092) (67,760)
Lease liabilities 12,539 13,032
Bank borrowings secured against Indian assets 1,382 1,247
Collateral liabilities 2,914 962
---------------------------------------------------- -------- --------
Gross debt (53,257) (52,519)
Collateral liabilities (2,914) (962)
Cash and cash equivalents 7,496 5,821
Short-term investments 4,795 4,007
Collateral assets 698 3,107
Derivative financial instruments 2,954 (859)
Less mark-to-market (gains)/losses deferred in
hedge reserves (1,350) 862
---------------------------------------------------- -------- --------
Net debt (41,578) (40,543)
---------------------------------------------------- -------- --------
Return on Capital Employed
Non-GAAP measure Purpose Definition
---------------------- ------------------------------ -------------------------------------------
Return on Capital ROCE is a metric used We calculate ROCE by dividing Operating
Employed ('ROCE') by the investor community profit by the average of capital
and reflects how efficiently employed as reported in the consolidated
we are generating statement of financial position.
profit with the capital Capital employed includes Borrowings,
we deploy. 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 As above We calculate pre-tax ROCE (controlled
(controlled) operations) by dividing Operating
profit excluding interest on lease
Post-tax ROCE liabilities, restructuring costs
(controlled arising from discrete restructuring
and associates/joint plans, impairment losses, other
ventures) income and expense and the share
of results of equity accounted associates
and joint ventures. On a post-tax
basis, the measure includes our
adjusted 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') using GAAP measures
The table below presents the calculation of ROCE using GAAP
measures as reported in the consolidated income statement and
consolidated statement of financial position.
FY22 FY21
EURm EURm
---------------------------------------------------- ------- -------
Operating profit (1) 5,664 5,097
Borrowings 70,092 67,760
Cash and cash equivalents (7,496) (5,821)
Derivative financial instruments included in trade
and other receivables (4,626) (3,151)
Derivative financial instruments included in trade
and other payables 1,672 4,010
Short-term investments (4,795) (4,007)
Collateral assets (698) (3,107)
Financial liabilities under put option arrangements 494 492
Equity 56,977 57,816
---------------------------------------------------- ------- -------
Capital employed at end of the year 111,620 113,992
Average capital employed for the year 112,806 115,090
ROCE using GAAP measures 5.0% 4.4%
---------------------------------------------------- ------- -------
Note:
1. Operating profit includes Other income/(expense), which
includes merger and acquisition activity that is non-recurring in
nature.
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.
FY22 FY21
EURm EURm
--------------------------------------------------- -------- --------
Operating profit 5,664 5,097
Interest on lease liabilities (398) (374)
Restructuring costs 346 356
Other income (79) (568)
Share of results of equity accounted associates
and joint ventures (211) (342)
--------------------------------------------------- -------- --------
Adjusted operating profit for calculating pre-tax
ROCE (controlled) 5,322 4,169
Adjusted share of results of equity accounted
associates and joint ventures used in post-tax
ROCE(1) 223 203
Notional tax at adjusted effective tax rate(2) (1,547) (1,176)
--------------------------------------------------- -------- --------
Adjusted operating profit for calculating post-tax
ROCE (controlled and associates/joint ventures) 3,998 3,196
Capital employed for calculating ROCE on a GAAP
basis 111,620 113,992
Adjustments to exclude:
- Leases (12,539) (13,032)
- Deferred tax assets (19,089) (21,569)
- Deferred tax liabilities 520 2,095
- Taxation recoverable (296) (434)
- Taxation payable 864 769
- Other investments (1,855) (1,514)
- Associates, joint ventures and assets held for
sale (5,227) (5,927)
- Pension assets and liabilities (274) 453
--------------------------------------------------- -------- --------
Adjusted capital employed for calculating pre-tax
ROCE (controlled) 73,724 74,833
Associates, joint ventures and assets held for
sale 5,227 5,927
--------------------------------------------------- -------- --------
Adjusted capital employed for calculating post-tax
ROCE (controlled and associates/joint ventures) 78,951 80,760
Average capital employed for calculating pre-tax
ROCE (controlled) 74,279 75,470
Average capital employed for calculating post-tax
ROCE (controlled and associates/joint ventures) 79,856 81,143
Pre-tax ROCE (controlled) 7.2% 5.5%
Post-tax ROCE (controlled and associates/joint
ventures) 5.0% 3.9%
--------------------------------------------------- -------- --------
Notes:
1. Adjusted share of results of equity accounted associates and
joint ventures used in post-tax ROCE is a non-GAAP measure.
2. Includes tax at the Adjusted effective tax rate of 27.9%.
Financing and Taxation metrics
Non-GAAP measure Purpose Definition
------------------- ------------------------------ ---------------------------------------------
Adjusted net This metric is used Adjusted net financing costs exclude
financing costs by both management mark-to-market and foreign exchange
and the investor community. gains/losses.
This metric is used
in the calculation
of adjusted basic
earnings per share.
------------------- ------------------------------ ---------------------------------------------
Adjusted profit This metric is used Adjusted profit before taxation
before taxation in the calculation excludes the items excluded from
of the adjusted effective adjusted basic earnings per share,
tax rate (see below). including: 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 This metric is used Adjusted income tax expense excludes
tax expense in the calculation the tax effects of items excluded
of the adjusted effective from adjusted basic earnings per
tax rate (see below). share, including: 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 This metric is used Adjusted income tax expense (see
tax rate by both management above) divided by Adjusted profit
and the investor community. before taxation (see above).
------------------- ------------------------------ ---------------------------------------------
Adjusted share This metric is used Share of results of equity accounted
of results of in the calculation associates and joint ventures excluding
equity accounted of adjusted effective restructuring costs, amortisation
associates and tax rate. of acquired customer base and brand
joint ventures intangible assets and other income
and expense.
------------------- ------------------------------ ---------------------------------------------
Adjusted share This metric is used Share of results of equity accounted
of results of in the calculation associates and joint ventures excluding
equity accounted of post-tax ROCE (controlled restructuring costs and other income
associates and and associates/joint and expense.
joint ventures ventures).
used in post-tax
ROCE
------------------- ------------------------------ ---------------------------------------------
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.
FY22 FY21
EURm EURm
------------------------------------------------------ ------- -------
Profit before taxation 3,954 4,400
Adjustments to derive adjusted profit before tax 1,054 (702)
------------------------------------------------------ ------- -------
Adjusted profit before taxation 5,008 3,698
Adjusted share of results of equity accounted
associates and joint ventures (461) (432)
------------------------------------------------------ ------- -------
Adjusted profit before tax for calculating adjusted
effective tax rate 4,547 3,266
------------------------------------------------------ ------- -------
Income tax expense (1,330) (3,864)
Tax on adjustments to derive adjusted profit before
tax (169) (162)
Adjustments:
- Deferred tax following revaluation of investments
in Luxembourg 1,468 2,128 *
- Deferred tax on use of Luxembourg losses in
the year 327 320
- (Recognition)/de-recognition of a deferred
tax asset in Luxembourg (699) 699(*)
- Increase in deferred tax assets in the UK as
a result of a change in the corporate tax rate (593) -
- Revaluation of assets for tax purposes in Italy (273) -
------------------------------------------------------ ------- -------
Adjusted income tax expense for calculating adjusted
tax rate (1,269) (879)
------------------------------------------------------ ------- -------
Adjusted effective tax rate 27.9% 26.9%
------------------------------------------------------ ------- -------
* During the year ended 31 March 2022, we revised the
calculation of certain impairment reversals recognised by our
Luxembourg holding companies for the year ended 31 March 2021; this
had no impact on the amount of deferred tax assets recognised at
that date but has changed the amount of our unrecognised deferred
tax assets by EUR0.7 billion (unrecognised losses of EUR2.8
billion).
Adjusted share of results of equity accounted associates and
joint ventures
The table below reconciles adjusted share of results of equity
accounted associates and joint ventures to the closest GAAP
equivalent, share of results of equity accounted associates and
joint ventures.
FY22 FY21
EURm EURm
------------------------------------------------- ---- -----
Share of results of equity accounted associates
and joint ventures 211 342
Restructuring costs 12 3
Other income - (142)
------------------------------------------------- ---- -----
Adjusted share of results of equity accounted
associates and joint ventures used in post-tax
ROCE 223 203
Amortisation of acquired customer base and brand
intangible assets 238 229
------------------------------------------------- ---- -----
Adjusted share of results of equity accounted
associates and joint ventures 461 432
------------------------------------------------- ---- -----
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.
FY22 FY21
EURm EURm
----------------------------------------------------------- ------ ------
Depreciation on leased assets - included in Adjusted
EBITDAaL 3,908 3,914
Depreciation on leased assets - included in Restructuring
costs 36 -
----------------------------------------------------------- ------ ------
Depreciation on leased assets 3,944 3,914
Depreciation on owned assets 5,814 5,766
Amortisation of owned intangible assets 4,044 4,421
----------------------------------------------------------- ------ ------
Depreciation and amortisation on owned assets 9,858 10,187
Depreciation and amortisation on owned assets included
in Restructuring costs 43 -
----------------------------------------------------------- ------ ------
Total depreciation and amortisation on owned assets 9,901 10,187
Total depreciation and amortisation on owned and
leased assets 13,845 14,101
Loss on disposal of owned fixed assets 28 30
Loss on disposal of leased assets 2 (13)
----------------------------------------------------------- ------ ------
Depreciation and amortisation - as recognised in
the consolidated income statement 13,875 14,118
----------------------------------------------------------- ------ ------
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.
FY22 FY21
EURm EURm
--------------------------------------- ----- -----
Capital additions 8,306 7,854
Integration related capital additions 314 329
Licence and spectrum additions 901 896
Additions to customer bases - 1
--------------------------------------- ----- -----
Additions 9,521 9,080
Intangible assets additions 3,635 3,367
Property, plant and equipment
owned additions 5,886 5,713
--------------------------------------- ----- -----
Total additions 9,521 9,080
--------------------------------------- ----- -----
Definitions
Key terms are defined below. See page 31 for the location of
definitions for non-GAAP measures.
Term Definition
Africa Comprises the Vodacom Group and businesses in Egypt and
Ghana.
------------------------------------------------------------------
ARPU Average revenue per user, defined as customer revenue and
incoming revenue divided by average customers.
------------------------------------------------------------------
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 A customer who receives fixed and mobile services (also
customer known as unified communications) on a single bill or who
receives a discount across both bills.
------------------------------------------------------------------
Depreciation The accounting charge that allocates the cost of tangible
and amortisation or intangible assets, whether owned or leased, to the income
statement over its useful life. The measure includes the
profit or loss on disposal of property, plant and equipment,
software and right-of-use assets.
------------------------------------------------------------------
Eliminations Refers to the removal of intercompany transactions to derive
the consolidated financial statements.
------------------------------------------------------------------
Europe Comprises the Group's European businesses and the UK.
------------------------------------------------------------------
Financial Financial services revenue includes fees generated from
services the provision of advanced airtime, overdraft, financing
revenue and lending facilities, as well as merchant payments and
the sale of insurance products (e.g. device insurance, life
insurance and funeral cover).
------------------------------------------------------------------
Fixed service Service revenue (see below) relating to the provision of
revenue fixed line and carrier services.
------------------------------------------------------------------
GAAP Generally Accepted Accounting Principles.
------------------------------------------------------------------
IFRS International Financial Reporting Standards.
------------------------------------------------------------------
Incoming Comprises revenue from termination rates for voice and messaging
revenue to Vodafone customers.
------------------------------------------------------------------
Integration Capital expenditure incurred in relation to significant
capital expenditure changes in the operating model, such as the integration
of recently acquired subsidiaries.
------------------------------------------------------------------
Internet The network of physical objects embedded with electronics,
of Things software, sensors, and network connectivity, including built-in
('IoT') mobile SIM cards, that enables these objects to collect
data and exchange communications with one another or a database.
------------------------------------------------------------------
Mobile service Service revenue (see below) relating to the provision of
revenue mobile services.
------------------------------------------------------------------
MVNO Mobile Virtual Network Operator: companies that provide
mobile phone services under wholesale contracts with a mobile
network operator, but do not have their own licence or spectrum
or the infrastructure required to operate a network.
------------------------------------------------------------------
Next generation Fibre or cable networks typically providing high-speed broadband
networks over 30Mbps.
('NGN')
------------------------------------------------------------------
Operating Comprise primarily sales and distribution costs, network
expenses 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 principally includes equipment revenue, interest
income, income from partner market arrangements and lease
revenue, including in respect of the lease out of passive
tower infrastructure.
------------------------------------------------------------------
Reported Reported growth is based on amounts reported in euros and
growth determined under IFRS.
------------------------------------------------------------------
Retail service Retail service revenue comprises service revenue (see below)
revenue excluding Mobile Virtual Network Operator ('MVNO') and Fixed
Virtual Network Operator ('FVNO') wholesale revenue.
------------------------------------------------------------------
Revenue The total of Service revenue (defined below) and Other revenue
(defined above).
------------------------------------------------------------------
Roaming and Roaming: allows customers to make calls, send and receive
Visitor texts and data on our and other operators' mobile networks,
usually while travelling abroad. Visitor: revenue received
from other operators or markets when their customers roam
on one of our markets' networks.
------------------------------------------------------------------
Service revenue Service revenue is all revenue related to the provision
of ongoing services to the Group's consumer and enterprise
customers, together with roaming revenue, revenue from incoming
and outgoing network usage by non-Vodafone customers and
interconnect charges for incoming calls.
------------------------------------------------------------------
SME Small and medium sized enterprises.
------------------------------------------------------------------
Vodafone Vodafone Business is part of the Group and partners with
Business businesses of every size to provide a range of business-related
services.
------------------------------------------------------------------
Notes
1. 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
A.G. Other product and company names mentioned herein may be the
trade marks of their respective owners.
2. All growth rates reflect a comparison to the quarter ended 31
March 2021 unless otherwise stated.
3. References to "Q3" and "Q4" are to the three months ended 31
December 2021 and 31 March 2022, respectively, unless otherwise
stated. References to the "year", "financial year" or "FY22" are to
the financial year ending 31 March 2022. References to the "last
year", "last financial year" or "FY21" are to the financial year
ended 31 March 2021 unless otherwise stated.
4. Vodacom refers to the Group's interest in Vodacom Group
Limited ('Vodacom') as well as its operations, including
subsidiaries in South Africa, DRC, Tanzania, Mozambique and
Lesotho.
5. Quarterly historical information is provided in a spreadsheet available at https://investors.vodafone.com/reports-information/results-reports-presentations
6. This document contains references to our and our affiliates'
websites. Information on any website is not incorporated into this
update and should not be considered part of this update.
Forward-looking statements and other matters
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 EBITDAaL and Adjusted free cash flow for the
financial year ending 31 March 2023; 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 the launch of VodaPay;
expectations regarding the Group's environmental targets,
expectations regarding the integration or performance of current
and future investments, associates, joint ventures, non-controlled
interests and newly acquired businesses.
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 divestment 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 2021 and the half-year results for the six months
ended 30 September 2021. The annual report and the half-year
results can be found on the Group's website
(https://investors.vodafone.com/reports-information). 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 (c) Vodafone Group 2022
-End-
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