TIDMVOD
RNS Number : 4904Z
Vodafone Group Plc
16 May 2023
Vodafone Group Plc FY23 Preliminary results
16 May 2023
A new roadmap for Vodafone
Margherita Della Valle, Group Chief Executive, commented:
"Today I am announcing my plans for Vodafone. Our performance
has not been good enough. To consistently deliver, Vodafone must
change.
My priorities are customers, simplicity and growth. We will
simplify our organisation, cutting out complexity to regain our
competitiveness. We will reallocate resources to deliver the
quality service our customers expect and drive further growth from
the unique position of Vodafone Business."
Financial results FY23 FY22 Change
---------------------------------------------
Page EURm EURm %
-------------------------------------------- ----- --------- --------- ------
Group revenue 7 45,706 45,580 0.3
Group service revenue 7 37,969 38,203 2.2*
Operating profit(1) 7 14,296 5,813 145.9
Adjusted EBITDAaL(2) 7 14,665 15,208 (1.3)*
Profit for the financial year(1) 7 12,335 2,773
Basic earnings per share(1) 19 42.77c 7.71c
Adjusted basic earnings per share(1,2) 19 11.45c 11.68c
Total dividends per share 22 9.00c 9.00c
Cash inflow from operating activities 19 18,054 18,081 (0.1)
Adjusted free cash flow(2) 20 4,842 5,437
Net debt(2) 21 (33,375) (41,578) +19.7
============================================= ===== ========= ========= ======
* represents organic growth. See page 3. 1. FY22 re-presented for
the reclassification of Indus Towers. See page 31. 2. Non-GAAP measure.
See page 36.
-- FY23 performance slowdown in line with expectations
-- Germany remains under pressure with -1.6%* service revenue
growth and -6.1%* adjusted EBITDAaL growth
-- Good performance in Vodafone Business with 2.6%* service revenue growth
-- Group revenue increased by 0.3% to EUR45.7 billion driven by
growth in Africa and higher equipment sales, offset by lower
European service revenue and adverse exchange rate movements
-- Adjusted EBITDAaL declined by 1.3%* to EUR14.7 billion due to
higher energy costs, and commercial underperformance in Germany
-- Gain on disposal of Vantage Towers supporting significant
increase in operating profit and basic EPS
-- Adjusted free cash flow of EUR4.8 billion, reflecting lower adjusted EBITDAaL and tax phasing
-- Significant reduction in net debt to EUR33.4 billion,
proforma net debt to adjusted EBITDAaL improved to 2.5x
-- Total dividends per share are 9.0 eurocents, including a
final dividend per share of 4.5 eurocents
See page 4 for our FY24 outlook
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 16 May
2023. The webcast and supporting information can be accessed at
investors.vodafone.com
A new roadmap for Vodafone
Today, we set out a new roadmap for Vodafone, following a
strategic review conducted over the last five months.
1. Vodafone must change
The circumstances of our industry and the position of Vodafone
within it, require us to change.
-- The European telecommunication sector has amongst the lowest
ROCE in Europe, alongside the highest capital investment demands.
This has resulted in ROCE being below WACC for over a decade,
impacting Total Shareholder Returns.
-- More importantly, the comparative performance of Vodafone has
worsened over time, which is connected to the experience of our
customers.
-- Our market position and performance varies by geography and
segment. Where we have the right combination of strong local
execution and a rational market structure, we can grow and drive
returns. There are also material differences between our Consumer
and Business segments, with Business growing in nearly all European
markets.
-- Our turnaround must be built from our strengths, but we need
to overcome some clear challenges. We are more complex than we need
to be, which limits our local commercial agility.
2. Strategic shifts
Our target is to be a best-in-class telco in Europe and Africa,
and become Europe's leading platform for Business. To achieve this,
we must change in four essential areas.
-- We will rebalance our organisation to maximise the potential
of Vodafone Business, which continues to accelerate growth, has a
unique set of capabilities and has a strong position in a large and
growing market as organisations digitise.
-- In order to win in our consumer markets, we will refocus on
the basics and deliver the simple and predictable experience our
customers expect.
-- We will be a leaner and simpler organisation, to increase our
commercial agility and free up resources.
-- We will focus our resources on a portfolio of products and
geographies that is right-sized for growth and returns over
time.
3. Our action plan
To execute the change in these four areas, we have an action
plan already underway, focused around three priorities: Customers,
Simplicity and Growth. Early examples of this action plan
include:
-- Customers: Significant investment reallocated in FY24 towards customer experience and brand
-- Simplicity: 11,000 role reductions planned over three years,
with both HQ and local markets simplification
-- Growth: Germany turnaround plan, continued pricing action and strategic review in Spain
We will change the level of ambition, speed and decisiveness of
execution. We will have empowered markets focused on customers,
scale up Vodafone Business and take out complexity to simplify how
we operate.
A more detailed outline of the new roadmap for the
transformation of Vodafone is contained within an accompanying
video presentation available here: investors.vodafone.com/results
.
Financial summary
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, the hyperinflation adjustments in Turkey and other
adjustments to improve the comparability of results between
periods. Organic growth figures are non-GAAP measures. See non-GAAP
measures on page 36 for more information.
Financial performance
Total revenue increased by 0.3% to EUR45.7 billion (FY22:
EUR45.6 billion) driven by growth in Africa and higher equipment
sales, offset by lower European service revenue and adverse
exchange rate movements.
Adjusted EBITDAaL declined by 1.3%* to EUR14.7 billion (FY22:
EUR15.2 billion), with revenue growth offset by higher energy costs
and commercial underperformance in Germany. The adjusted EBITDAaL
margin was 1.4* percentage points lower year-on-year at 32.1%.
Operating profit increased to EUR14.3 billion and the Group made
a profit for the period of EUR12.3 billion (FY22: EUR2.8 billion),
largely reflecting a gain on disposal of Vantage Towers.
Basic earnings per share was 42.77 eurocents, compared to basic
earnings per share of 7.71 eurocents in the prior year.
Cash flow, funding & capital allocation
Cash inflow from operating activities were broadly stable
year-on-year at EUR18.1 billion.
Free cash flow was an inflow of EUR1.4 billion (FY22: inflow of
EUR3.3 billion) partly reflecting a lower adjusted EBITDAaL, higher
licence and spectrum payments and tax phasing. Adjusted free cash
flow was EUR4.8 billion (FY22: EUR5.4 billion).
Net debt decreased by EUR8.2 billion to EUR33.4 billion (EUR41.6
billion as at 31 March 2022). This was driven by free cash inflow
of EUR1.4 billion, acquisitions and disposals of EUR8.7 billion,
partially offset by equity dividends of EUR2.5 billion, and share
buybacks of EUR1.9 billion (used to offset dilution linked to the
conversion of certain mandatory convertible bonds). Other movements
in net debt includes EUR1.7 billion relating to the settlement of
5G spectrum in Italy previously included in net debt.
Current liquidity, which includes cash and equivalents and
short-term investments, is EUR16.0 billion (EUR12.3 billion as at
31 March 2022). This includes EUR4.6 billion of net collateral
which has been posted to Vodafone from counterparties as a result
of positive mark-to-market movements on derivative instruments
(EUR2.2 billion as at 31 March 2022).
Total dividends per share are 9.0 eurocents (FY22: 9.0
eurocents) including a final dividend per share of 4.5 cents. The
ex-dividend date for the final dividend is 8 June 2023 for ordinary
shareholders, the record date is 9 June 2023 and the dividend is
payable on 4 August 2023.
Hyperinflationary accounting in Turkey
Turkey was designated as a hyperinflationary economy on 1 April
2022 in line with IAS 29 'Financial Reporting in Hyperinflationary
Economies'. See note 1 of the condensed consolidated financial
statements for further information.
Outlook
Performance against FY23 guidance
In May 2022, we set out guidance for FY23 for Group adjusted
EBITDAaL and adjusted free cash flow. In November 2022, this was
updated to reflect the worsening global macroeconomic climate, with
higher energy costs and broader inflation in particular.
For FY23 we reported adjusted EBITDAaL and adjusted free cash
flow of EUR14.7 billion and EUR4.8 billion. This included adverse
foreign exchange rate movements versus those used for the basis of
guidance and other items which in aggregate impacted adjusted
EBITDAaL by EUR0.2 billion and adjusted free cash flow by EUR0.5
billion.
The table below compares the guidance given and our actual
performance.
Original guidance Updated guidance FY23 outcome FY23 outcome
on guidance as reported
basis(1)
====================== =================== ================== ================ ================
EUR15.0 - EUR15.0-15.2
Adjusted EBITDAaL(2) EUR15.5 billion billion EUR14.9 billion EUR14.7 billion
Adjusted free c. EUR5.3
cash flow(2,3) billion c.EUR5.1 billion EUR5.3 billion EUR4.8 billion
====================== =================== ================== ================ ================
FY24 Guidance
In order to provide a basis of comparison for our FY24 guidance,
we have rebased our FY23 financials to reflect the current
structure of the Group and applied foreign exchange rates that are
consistent with FY24 guidance rates. On a comparable basis, the
rebased FY23 adjusted EBITDAaL is EUR13.3 billion and adjusted free
cash flow is EUR4.2 billion.
Based on the current prevailing assessments of the global
macroeconomic outlook, for FY24 we expect:
-- Adjusted EBITDAaL to be 'broadly flat' at around EUR13.3 billion; and
-- Adjusted free cash flow to be 'around' EUR3.3 billion,
reflecting expected working capital movements, interest and
dividend receipts
The guidance above reflects the following:
-- Foreign exchange rates used when setting guidance were as follows:
- EUR 1 : GBP 0.88;
- EUR 1 : ZAR 19.30;
- EUR 1 : TRY 21.10; and
- EUR 1 : EGP 33.38.
-- This guidance assumes no material change to the structure of the Group.
Notes:
1. The FY23 outcome on guidance basis is derived by applying
FY23 guidance foreign exchange rates. The FY23 guidance foreign
exchange rates were EUR1 : GBP 0.84; EUR1 : ZAR 17.32; EUR1 : TRY
16.75; EUR1 : EGP 19.28.
2. Adjusted EBITDAaL and adjusted free cash flow are non-GAAP
measures. See page 36 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.
Operational Key Performance Indicators
Units FY23 FY22
================================================ ============== ========= ===================
Europe mobile contract customers(1) million 64.8 66.4
Europe broadband customers(1) million 24.7 25.6
Europe Consumer converged customers(1) million 9.1 9.0
Europe mobile contract customer churn % 13.5 13.6
Africa mobile customers(2) million 189.9 184.5
Africa data users(2) million 94.8 89.9
Business service revenue growth*(3) % 2.6 0.8
Europe TV subscribers(1) million 20.7 21.9
IoT SIM connections million 162.3 150.1
Africa M-Pesa customers(2) million 56.7 52.4
Africa M-Pesa transaction volume(2) billion 26.0 19.9
Digital channel sales mix(4) % 26 25
End-to-end TOBi completion rate(5) % 56.2 42.9
5G available in European cities(1) # 332 294
Europe on-net gigabit capable connections(1) million 50.0 48.5
Europe on-net NGN broadband penetration(1) % 29 30
Pre-tax ROCE (controlled)(3 6) % 6.8 7.2
Post-tax ROCE (controlled and associates/joint
ventures)(3 6 7) % 5.1 5.2
Europe markets where 3G switched off(1) # 4 4
====================================================== ======== ========= =================
1. Including VodafoneZiggo | 2. Africa including Safaricom | 3.
These line items are non-GAAP measures. See page 36 for more
information | 4. Based on Germany, Italy, UK, Spain only | 5.
Defined as percentage of total customer contacts resolved without
human interaction through TOBi. Group excluding Egypt | 6. The FY23
ROCE excludes Vantage Towers. FY22 excluding Vantage Towers pre-tax
ROCE is 7.0% and post-tax ROCE is 5.0% | 7. The FY22 comparative
for post-tax ROCE has been re-presented for the reclassification of
Indus Towers. See page 31.
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 FY23 Annual Report and supplementary materials
(available on investors.vodafone.com ). Highlights and achievements
from FY23 are summarised below.
Supporting customers in financial hardship
We are conscious of the cost of living pressures our customers
are facing during this challenging macroeconomic period. For
financially vulnerable customers, we have implemented a
cost-of-living plan, consisting of three elements: social or
low-cost tariffs in all markets; extra measures to ensure our
consumers and small businesses are supported, including our free
SME advisory service V-Hub; and leveraging our technology &
digital services to help customers reduce their energy usage.
Access for all
Expanding fixed and mobile coverage to rural networks remains a
focus. Our partnership with AST & Science LLC will help to
deliver more universal coverage as we seek to develop the first
space-based mobile network designed to connect directly to
consumers' 4G and 5G devices without the need for specialised
hardware. This year, AST successfully launched and deployed its
first communications array and announced in April 2023 the first
connection from space to a mobile with no specialised equipment.
The space-based based network has the potential to enable even
those in the hardest to reach areas to connect to the internet,
ultimately reaching an estimated 1.6 billion people across 49
countries.
Supplier sustainability
In March 2023, we launched a new environmentally-linked supply
chain programme, to provide financial incentives for our suppliers
to disclose carbon data to CDP and take action to improve their
score over time. In partnership with CDP, we have developed a
framework consisting of 12 criteria from the CDP survey. Our
suppliers will be invited to share their environmental performance
score with their supply chain financing provider, and in doing so
will have the opportunity to receive preferential financing rates
based on their ranking. In future, CDP plans to make a template of
the framework available to others in the telecoms sector, with a
view to driving industry-wide adoption of the model.
Supporting a circular economy
In November 2022, we formed a new strategic partnership with WWF
and launched a new programme 'one million phones for the planet'
which will help accelerate our circular economy strategy by raising
consumer awareness of e-waste and incentivising our customers to
bring back their used devices for trade-in, donation or recycling.
Our three-year partnership with WWF will also see other strategic
initiatives launched across markets in Europe and Africa. These
will include apps to help customers make more sustainable choices,
as well as projects in South Africa, Germany, and the UK that use
mobile technology to help address conservation and sustainability
challenges.
Reporting
We will shortly be publishing our third standalone report that
summarises our progress towards meeting the recommendations of the
Task Force on Climate-related Financial Disclosures ('TCFD'), as
well as our first standalone cyber security factsheet. We also
publish a comprehensive spreadsheet that includes data on
environmental, social and governance ('ESG') topics ('ESG
Addendum'). We 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').
Financial performance In-line with expectations
-- Group revenue increased by 0.3% to EUR45.7 billion driven by
growth in Africa and higher equipment sales, offset by lower
European service revenue and adverse exchange rate movements
-- Group service revenue trend was impacted by a decline in
Germany, Italy, and Spain, offset by continued growth in the UK,
Other Europe, and Africa
-- Service revenue growth in Turkey increased to 47.6%*, driven
by higher inflation. Group service revenue growth excluding Turkey
was 1.0%*
-- Adjusted EBITDAaL declined by 1.3%* to EUR14.7 billion due to
higher energy costs, and commercial underperformance in Germany
-- Inflationary cost pressures in Europe were mitigated by our
ongoing cost efficiency programme, with a further EUR0.2 billion of
savings in FY23
-- Returns broadly maintained; pre-tax ROCE (ex. Vantage) at 6.8%
Group financial performance
Re-presented(2)
FY23 (1) FY22 Reported
EURm EURm change %
========================================= ======== =============== ========
Revenue 45,706 45,580 0.3
- Service revenue 37,969 38,203 (0.6)
- Other revenue 7,737 7,377
Adjusted EBITDAaL (3,4) 14,665 15,208 (3.6)
Restructuring costs (587) (346)
Interest on lease liabilities(5) 436 398
Loss on disposal of property, plant and
equipment and intangible assets (36) (28)
Depreciation and amortisation of owned
assets (9,649) (9,858)
Share of results of equity accounted
associates and joint ventures 433 389
Impairment loss (64) -
Other income 9,098 50
----------------------------------------- -------- --------------- --------
Operating profit 14,296 5,813 145.9
Investment income 248 254
Financing costs (1,728) (1,964)
----------------------------------------- -------- --------------- --------
Profit before taxation 12,816 4,103
Income tax expense (481) (1,330)
----------------------------------------- -------- --------------- --------
Profit for the financial year 12,335 2,773
Attributable to:
- Owners of the parent 11,838 2,237
- Non-controlled interests 497 536
----------------------------------------- -------- --------------- --------
Profit for the financial year 12,335 2,773
Basic earnings per share 42.77c 7.71c
Adjusted basic earnings per share(3) 11.45c 11.68c
========================================= ======== =============== ========
Further information is available in a spreadsheet at
investors.vodafone.com/results
Notes:
1. The FY23 results reflect average foreign exchange rates of
EUR1:GBP0.86, EUR1:INR 83.69, EUR1:ZAR 17.69, EUR1:TRY 18.53 and
EUR1:EGP 23.72.
2. The results for the year ended 31 March 2022 have been
re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. There is no impact on previously
reported revenue and adjusted EBITDAaL. However, operating profit,
profit before taxation and profit for the financial year have all
increased by EUR149 million compared to amounts previously
reported. Consequently, basic earnings per share increased by 0.51c
and adjusted basic earnings per share increased by 0.65c compared
to amounts previously reported. See note 3 'Assets held for sale'
in the condensed consolidated financial statements for more
information.
3. Adjusted EBITDAaL and adjusted basic earnings per share are
non-GAAP measures. See page 36 for more information.
4. Includes depreciation on leased assets of EUR3,883 million (FY22: EUR3,908 million).
5. Reversal of interest on lease liabilities included within
adjusted EBITDAaL under the Group's definition of that metric, for
re-presentation in financing costs.
Geographic performance summary
Other Other Vantage Common Elimi-
Germany Italy UK Spain Europe Vodacom Markets Towers Functions nations Group
FY23 EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
================ ======= ===== ===== ======= ====== ======= ======= ======= =========== ========= ========
Total revenue 13,113 4,809 6,824 3,907 5,744 6,314 3,834 1,338 1,387 (1,564) 45,706
Service revenue 11,433 4,251 5,358 3,514 5,005 4,849 3,300 - 530 (271) 37,969
Adjusted
EBITDAaL(1) 5,323 1,453 1,350 947 1,632 2,159 1,145 795 (139) - 14,665
Adjusted
EBITDAaL margin
(%)(1) 40.6% 30.2% 19.8% 24.2% 28.4% 34.2% 29.9% 59.4% 32.1%
================ ======= ===== ===== ======= ====== ======= ======= ======= =========== ========= ========
Downloadable performance information is available at: investors.vodafone.com/results
FY23
---------------------------------------------------------------------------------
Organic service revenue
growth % *(1) Q1 Q2 H1 Q3 Q4 H2 Total
================================ ========= ========== ======== ======= ============ ========== =============
Germany (0.5) (1.1) (0.8) (1.8) (2.8) (2.3) (1.6)
Italy (2.3) (3.4) (2.8) (3.3) (2.7) (3.0) (2.9)
UK 6.5 6.9 6.7 5.3 3.8 4.6 5.6
Spain (3.0) (6.0) (4.5) (8.7) (3.7) (6.2) (5.4)
Other Europe 2.5 2.9 2.7 2.1 3.6 2.8 2.8
Vodacom 2.9 4.8 3.9 3.5 2.6 3.1 3.5
Other Markets 24.7 26.7 25.7 34.1 40.0 36.8 30.7
Group 2.5 2.5 2.5 1.8 1.9 1.8 2.2
================================ ========= ========== ======== ======= ============ ========== =============
Note:
1. Organic service revenue growth, Group adjusted EBITDAaL and
Group adjusted EBITDAaL margin are non-GAAP measures. See page 36
for more information.
Germany 30% of Group service
revenue
FY23 FY22 Reported Organic
EURm EURm change % change %*
============================== ====== ====== ======== =========
Total revenue 13,113 13,128 (0.1)
- Service revenue 11,433 11,616 (1.6) (1.6)
- Other revenue 1,680 1,512
Adjusted EBITDAaL 5,323 5,669 (6.1) (6.1)
Adjusted EBITDAaL margin 40.6% 43.2%
============================== ====== ====== ======== =========
Total revenue decreased by 0.1% to EUR13.1 billion, driven by
lower service revenue partially offset by higher equipment
sales.
On an organic basis, service revenue declined by 1.6%* (Q3:
-1.8%*, Q4: -2.8%*) due to broadband customer losses and a lower
mobile ARPU, partially offset by higher roaming revenue and
broadband ARPU growth. The slowdown in quarterly trends was
primarily driven by small one-off benefits in Q4 last year and the
impact of a multi-year IoT contract renewal.
Fixed service revenue declined by 1.8%* (Q3: -2.0%*, Q4:
-2.1%*), driven by a lower broadband customer base, primarily as a
result of specific operational challenges related to the
implementation of policies to comply with the 2021
Telecommunications Act, which are now resolved. This was partially
offset by ARPU growth. In November 2022 we increased prices for new
broadband customers, and in March 2023, we started to communicate
price increases to some of our existing customers, which will be
implemented during H1 FY24. Our cable broadband customer base
declined by 119,000 and we lost 87,000 DSL broadband customers
during the year. As expected, our commercial performance in Q4 was
impacted by the decision to increase retail prices.
Our TV customer base declined by 412,000 and our converged
customer base decreased by 52,000 to 2.3 million Consumer converged
accounts. These declines primarily reflect higher disconnections of
broadband bundle customers, as well as fewer cross-selling
opportunities.
Ahead of changes to German TV laws, which take effect from July
2024 and end the practise of bulk TV contracting in Multi Dwelling
Units ('MDUs'), we are actively working with our Housing
Association partners to manage this transition, and sign customers
up to individual contracts. In total, we have 8.5 million MDU TV
customers, and they generate around EUR800 million in basic-TV
revenue. We have commenced our first trials to re-contract
customers.
Mobile service revenue declined by 1.2%* (Q3: -1.7%*, Q4:
-3.7%*) primarily driven by lower contract ARPU reflecting mobile
termination rate cuts and a change in customer mix, as well as
lower MVNO revenue, partially offset by higher roaming revenue. The
slowdown in quarterly trends was due to small one-off benefits in
the prior year, and the impact of a major IoT automotive contract
renewal in Q4 which will enable us to capture additional future
revenue opportunities. We added 68,000 contract customers in the
year across both Business and Consumer. We also added 8.2 million
IoT connections, driven by continued strong demand from the
automotive sector.
Adjusted EBITDAaL declined by 6.1%*, of which 0.8 percentage
points was due to higher energy costs. Adjusted EBITDAaL growth was
also impacted by lower service revenue and one-off settlements in
the prior year. The adjusted EBITDAaL margin was 2.6* percentage
points lower year-on-year at 40.6%.
On 8 March 2023 we announced the completion of our
fibre-to-the-home ('FTTH') joint venture with Altice, which will
deploy FTTH to up to seven million homes over a six-year period.
This partnership is complementary to our upgrade plans for our
existing hybrid fibre cable network.
Italy 11% of Group service revenue
FY23 FY22 Reported Organic
EURm EURm change % change %*
==================================== ===== ===== ======== =========
Total revenue 4,809 5,022 (4.2)
- Service revenue 4,251 4,379 (2.9) (2.9)
- Other revenue 558 643
Adjusted EBITDAaL 1,453 1,699 (14.5) (14.5)
Adjusted EBITDAaL margin 30.2% 33.8%
==================================== ===== ===== ======== =========
Total revenue declined 4.2% to EUR4.8 billion due to lower
service revenue and equipment sales.
Service revenue declined by 2.9%* (Q3: -3.3%*, Q4: -2.7%*), as a
result of continued price pressure in the mobile value segment,
partly offset by strong Business demand in fixed line and digital
services.
Mobile service revenue declined by 5.4%* (Q3: -5.7%*, Q4:
-5.4%*). Price competition in the mobile value segment has remained
intense, resulting in a lower active prepaid customer base and
ARPU. This was partially offset by targeted pricing actions taken
during the year. Our second brand 'ho.' continued to grow and now
has 3.0 million customers.
Fixed service revenue increased by 3.3%* (Q3: 2.7%*, Q4: 3.6%*)
supported by strong Business demand for connectivity and digital
services, including a good take up of the Business voucher
programme, an initiative related to the EU Recovery and Resilience
Facility that subsidises high-speed broadband connectivity. This
was partially offset by a slightly lower customer base in Consumer
broadband. Our broadband customer base declined by 55,000 during
the year, however this was largely offset by 47,000 fixed-wireless
additions which are reported in mobile. Our Consumer converged
customer base now stands at 1.4 million, and in total 56% of our
broadband customers are converged.
Our next generation network ('NGN') broadband services are now
available to 23.5 million households, including 9.4 million through
our own network and our partnership with Open Fiber. In October
2022, we launched 5G fixed-wireless services and now cover 3.4
million households. This complements our 4G fixed-wireless access
products, which covers an additional 2.2 million households.
Adjusted EBITDAaL declined by 14.5%* including a 5.7 percentage
point impact relating to a EUR105 million legal settlement received
in the prior year, and 3.0 percentage points due to higher energy
costs. Adjusted EBITDAaL growth was also impacted by lower mobile
service revenue, partly offset by our continued strong focus on
cost efficiency. The adjusted EBITDAaL margin was 3.6* percentage
points lower year-on-year at 30.2%.
UK 14% of Group service revenue
FY23 FY22 Reported Organic
EURm EURm change % change %*
================================= ===== ===== ======== =========
Total revenue 6,824 6,589 3.6
- Service revenue 5,358 5,154 4.0 5.6
- Other revenue 1,466 1,435
Adjusted EBITDAaL 1,350 1,395 (3.2) (1.4)
Adjusted EBITDAaL margin 19.8% 21.2%
================================= ===== ===== ======== =========
Total revenue increased by 3.6% to EUR6.8 billion driven by
service revenue growth, partly offset by the depreciation of the
pound sterling against the euro.
On an organic basis, service revenue increased by 5.6%* (Q3:
5.3%*, Q4: 3.8%*). This was driven by continued strong growth in
Consumer and an acceleration in Business. The slowdown in quarterly
trends was driven by lower MVNO revenues.
Mobile service revenue grew by 8.0%* (Q3: 8.1%*, Q4: 2.8%*),
driven by our strong commercial momentum and annual price increases
in Consumer, good growth in Business, and higher roaming revenue.
The slowdown in quarterly trends reflected the complete migration
of the Virgin Media MVNO off our network. We continued to deliver
good customer base growth, supported by our flexible proposition
Vodafone 'Evo', adding 230,000 contract customers. Our digital
prepaid sub-brand 'VOXI' also continued to grow, with 134,000
customers added in FY23. Our digital sales mix improved by 4
percentage points year-on-year to 37% of total sales.
Fixed service revenue declined by 0.3%* (Q3: -1.6%*, Q4: 6.3%*)
with strong growth in Consumer offset by a decline in Business. The
improvement in quarterly trends was driven by Business, which
returned to growth in Q4, supported by several large corporate
contract wins and higher project work. Consumer growth was
supported by our price actions and good demand for our Vodafone
'Pro Broadband' and fibre products. Our broadband customer base
increased by 173,000 during the year and we now have over 1.2
million broadband customers. Through our partnerships with
CityFibre and Openreach we are able to reach over 11 million
households with full fibre broadband, more than any other provider
in the UK.
Adjusted EBITDAaL declined by 1.4%*, of which 5.4 percentage
points was due to higher energy costs. Adjusted EBITDAaL excluding
energy grew, driven by service revenue growth, partially offset by
other inflationary costs, a lower Virgin MVNO contribution and new
annual licence fees. The adjusted EBITDAaL margin declined 1.3*
percentage points year-on-year at 19.8%.
On 3 October 2022, we confirmed that we are in discussions with
CK Hutchison Holdings Limited ('CK Hutchison') in relation to a
possible combination of Vodafone UK and Three UK. The envisaged
transaction would entail us combining our UK business with Three
UK, with Vodafone owning 51% and CK Hutchison owning 49% of the
combined business. There can be no certainty that any transaction
will ultimately be agreed.
Spain 9% of Group service revenue
FY23 FY22 Reported Organic
EURm EURm change % change %*
=================================== ===== ===== ======== =========
Total revenue 3,907 4,180 (6.5)
- Service revenue 3,514 3,714 (5.4) (5.4)
- Other revenue 393 466
Adjusted EBITDAaL 947 957 (1.0) (1.1)
Adjusted EBITDAaL margin 24.2% 22.9%
=================================== ===== ===== ======== =========
Total revenue declined by 6.5% to EUR3.9 billion due to lower
service revenue and equipment sales.
On an organic basis, service revenue declined by 5.4%* (Q3:
-8.7%*, Q4: -3.7%*) driven by continued price competition in the
value segment and a lower customer base. The improvement in
quarterly trends was driven by inflation-linked price increases,
which took effect at the end of January 2023, and increased
Business demand for digital services.
In mobile, our contract customer base declined by 159,000
reflecting one-off disconnections of 123,000 relating to temporary
business SIMs provided to schools and higher education providers
during the pandemic, as well as ongoing price competition in both
the Consumer and SoHo segments. Our Q4 commercial performance was
impacted by our price increases. Consumer contract churn improved
by 2.7 percentage points during the year, supported by our
simplified and more transparent range of tariff plans. Our second
brand 'Lowi' continued to grow, adding 200,000 customers.
Our broadband customer base declined by 121,000 and our TV
customer base decreased by 56,000 due to price competition and the
ongoing shutdown of DSL. Our converged customer base remained
broadly stable at 2.2 million.
Adjusted EBITDAaL declined by 1.1%*, which included 6.7
percentage points of one-off tax benefits and a 1.5 percentage
point impact from higher energy costs. Excluding these impacts,
adjusted EBITDAaL declined due to lower service revenue, partly
offset by our ongoing cost efficiency programme.
On 12 January 2023, we announced that Spain will become part of
the 'Europe Cluster', managed by Serpil Timuray, CEO Europe
Cluster. In March 2023, we announced that Mário Vaz, previously CEO
of Vodafone Portugal, had been appointed as new CEO of Spain,
effective from 1 April 2023.
Other Europe 13% of Group service revenue
FY23 FY22 Reported Organic
EURm EURm change % change %*
==================================== ======= ===== ======== =========
Total revenue 5,744 5,653 1.6
- Service revenue 5,005 5,001 0.1 2.8
- Other revenue 739 652
Adjusted EBITDAaL 1,632 1,606 1.6 4.7
Adjusted EBITDAaL margin 28.4% 28.4%
==================================== ======= ===== ======== =========
Total revenue increased by 1.6% to EUR5.7 billion driven by
service revenue and equipment sales growth.
On an organic basis, service revenue increased by 2.8%* (Q3:
2.1%*, Q4: 3.6%*), with good growth in all markets other than
Romania, which was impacted by a mobile termination rate reduction.
The improvement in quarterly trends was driven by inflation-linked
price increases in several markets, as well as strong Business
growth in Greece.
In Portugal, service revenue grew due to our strong commercial
momentum, with 183,000 mobile contract customers and 48,000 fixed
broadband customer additions during the year. In September 2022, we
announced that we had entered into an agreement to buy Portugal's
fourth largest converged operator, Nowo Communications, from Llorca
JVCO Limited, the owner of Masmovil Ibercom S.A. The transaction is
conditional on regulatory approval, with completion expected in the
second half of the 2023 calendar year.
In Ireland, service revenue increased driven by customer base
growth, higher roaming revenue, and contractual price increases.
Our mobile contract customer base increased by 64,000 and our
broadband customer base grew by 14,000. In October 2022, we
announced that we had agreed a fixed wholesale network access
agreement with Virgin Media Ireland. Vodafone is already the
largest fibre-to-the home provider in Ireland, covering over 1
million households.
Service revenue in Greece grew, reflecting higher roaming
revenue, good growth in Business fixed supported by several public
sector contract wins relating to the EU Recovery Fund, and higher
wholesale revenue. During the year we added 138,000 mobile contract
customers, and our broadband customer base declined by 26,000.
Adjusted EBITDAaL increased by 4.7%*, including a 3.4 percentage
point impact from higher energy costs. Excluding this, adjusted
EBITDAaL grew driven by service revenue growth, ongoing cost
efficiencies and a one-off provision in Greece last year. The
adjusted EBITDAaL margin remained stable year-on-year at 28.4%.
On 31 January 2023, we announced that we had completed the sale
of Vodafone Hungary to 4iG Public Limited Company and Corvinus Zrt
for a cash consideration of HUF 660 billion (EUR1.6 billion),
representing a multiple of 8.4x Adjusted EBITDAaL for the year
ended 31 March 2022.
Vodacom 13% of Group service
revenue
FY23 FY22 Reported Organic
EURm EURm change % change %*
============================== ===== ===== ======== =========
Total revenue 6,314 5,993 5.4
- Service revenue 4,849 4,635 4.6 3.5
- Other revenue 1,465 1,358
Adjusted EBITDAaL 2,159 2,125 1.6 1.4
Adjusted EBITDAaL margin 34.2% 35.5%
============================== ===== ===== ======== =========
Total revenue increased by 5.4% to EUR6.3 billion driven by
service revenue growth and higher equipment sales.
On an organic basis, Vodacom's service revenue grew by 3.5%*
(Q3: 3.5%*, Q4: 2.6%*) with growth in both South Africa and
Vodacom's international markets. The slowdown in quarterly trends
was driven by a tough prior year comparative in Vodacom Business
within South Africa.
In South Africa, service revenue growth was supported by
contract price increases and prepaid ARPU growth, partially offset
by repricing pressure from a government mobile contract renewal. We
added 192,000 mobile contract customers in the year, and now have a
total base of 6.7 million. Across our active customer base, 74.9%
of our mobile customers now use data services, an increase of 2.0
million year-on-year. Financial Services revenue grew by 10.6%* to
EUR167 million, supported by good demand for insurance services.
Our VodaPay 'super-app' has continued to gain traction with 3.3
million registered users.
In Vodacom's international markets, service revenue growth was
supported by strong growth in data, a higher customer base and
strong M-Pesa growth. This was despite disruptions caused by heavy
flooding in both Mozambique and the DRC during the year. M-Pesa
revenue grew by 15.5% and now represents 25.0% of service revenue.
Our mobile customer base now stands at 50.2 million with 63.5% of
active customers using data services.
Vodacom's adjusted EBITDAaL increased by 1.4%*, including a 1.7
percentage point impact from higher energy costs. Excluding this,
adjusted EBITDAaL was supported by service revenue growth and
accelerated cost initiatives, partially offset by an increase in
technology operating expenses as we continued to improve the
resilience and capacity of our network. The adjusted EBITDAaL
margin decreased by 1.2* percentage points to 34.2%.
On 13 December 2022, Vodafone completed the transfer of its 55%
shareholding in Vodafone Egypt to Vodacom. This transfer simplifies
the management of our African assets. Vodafone received cash
proceeds of EUR577 million and 242 million shares in Vodacom in
exchange for Vodafone's shareholding in Vodafone Egypt. Following
completion, Vodafone's shareholding in Vodacom has increased from
60.5% to 65.1%. Vodafone Egypt will be included within the Vodacom
reporting segment from 1 April 2023.
Further information on our operations in Africa can be accessed
here: vodacom.com
Other Markets 9% of Group service revenue
FY23 FY22 Reported Organic
EURm EURm change % change %*
==================================== ======= ===== ======== =========
Total revenue 3,834 3,830 0.1
- Service revenue 3,300 3,420 (3.5) 30.7
- Other revenue 534 410
Adjusted EBITDAaL 1,145 1,335 (14.2) 22.2
Adjusted EBITDAaL margin 29.9% 34.9%
==================================== ======= ===== ======== =========
Total revenue remained broadly unchanged at EUR3.8 billion, with
strong service revenue growth offset by significant currency
devaluations in both Turkey and Egypt.
On an organic basis, service revenue grew by 30.7%* (Q3: 34.1%*,
Q4: 40.0%) reflecting a higher contribution from Turkey, impacted
by accelerating inflation, as well a strong customer base and ARPU
growth.
Service revenue growth in Turkey was driven by continued
customer base growth and ongoing repricing actions to reflect the
high inflationary environment. We maintained our good commercial
momentum, adding 1.6 million mobile contract customers during the
year, including migrations of prepaid customers. Customer loyalty
rates continued to improve, with mobile contract churn down by 1.5
percentage points year-on-year to 13.9%. Our Q4 performance was
impacted by the earthquakes in Turkey.
Service revenue in Egypt continued to grow strongly, reflecting
good customer base growth and increased data usage. During the
year, we added 153,000 contract customers and 2.5 million prepaid
mobile customers.
Adjusted EBITDAaL increased by 22.2%* despite significant
inflationary pressure on our cost base. The adjusted EBITDAaL
margin decreased by 3.8* percentage points year-on-year to
29.9%.
On 21 February 2023, Vodafone completed the sale of our 70%
shareholding in Vodafone Ghana ('GTCL') to Telecel Group, further
simplifying our African portfolio.
Hyperinflationary accounting in Turkey
Turkey was designated as a hyperinflationary economy on 1 April
2022 in line with IAS 29 'Financial Reporting in Hyperinflationary
Economies'. See note 1 'Basis of preparation' in the condensed
consolidated financial statements for further information.
During the year service revenue in Turkey increased by 47.6*%
and adjusted EBITDAaL grew by 49.8%* due to ongoing repricing
actions to reflect increasing inflation. Organic growth metrics
exclude the impact of the hyperinflation adjustment in the period
in Turkey. Group service revenue growth excluding Turkey was 1.0 %*
(Q3: 0.5 %*, Q4: 0.5 %*) and adjusted EBITDAaL excluding Turkey
declined 1.1 %*
Vantage Towers
FY23 FY22 Reported Organic
EURm EURm change % change %*
========================== ===== ===== ======== =========
Total revenue 1,338 1,252 6.9
- Service revenue - - - -
- Other revenue 1,338 1,252
Adjusted EBITDAaL 795 619 28.4 7.9
Adjusted EBITDAaL margin 59.4% 49.4%
========================== ===== ===== ======== =========
Total revenue increased 6.9% to EUR1.3 billion in FY23, driven
by 1,750 new tenancies and new macro sites. As a result, the
tenancy ratio increased to 1.46x.
Adjusted EBITDAaL increased 7.9%* to EUR795 million, driven by
revenue growth, partly offset by increased costs relating to the
ramp up of the build to suit programme and 1&1 rollout.
On 23 March 2023, we announced the completion of our co-control
partnership for Vantage Towers with a consortium of long-term
infrastructure investors led by Global Infrastructure Partners and
KKR. Reflecting the final take-up in the connected voluntary
takeover offer and delisting offer, the co-control partnership, Oak
Holdings GmbH., will own 89.3% of Vantage Towers. Vodafone has
received initial net cash proceeds of EUR4.9 billion and now hold a
64% shareholding in Oak Holdings. The Consortium has the option to
increase its ownership of Oak Holdings up to a maximum of 50% by 30
June 2023, subject to the outcome of its fundraising process.
Associates and joint ventures
Re-presented(1)
FY23 FY22
EURm EURm
================================================= ==== ===============
VodafoneZiggo Group Holding B.V. 137 (19)
Safaricom Limited 195 217
Indus Towers Limited 50 178
Other 51 13
------------------------------------------------ ---- ---------------
Share of results of equity accounted associates
and joint ventures 433 389
================================================= ==== ===============
Note:
1. The results for the year ended 31 March 2022 have been
re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. The share of results from Indus Towers
Limited has increased by EUR178 million compared to EURnil as
previously reported. See note 3 'Assets held for sale' in the
condensed consolidated financial statements for more
information.
VodafoneZiggo Joint Venture (Netherlands)
The results of VodafoneZiggo, in which we own a 50% stake, are
reported here under US GAAP, which is broadly consistent with our
IFRS basis of reporting.
Total revenue remained stable at EUR4.1 billion, as mobile
contract customer base growth, higher roaming revenue and
contractual price increases were offset by a decline in the fixed
Consumer customer base.
During the period, VodafoneZiggo added 181,000 mobile contract
customers, supported by its best-in-class net promoter score.
VodafoneZiggo's broadband customer base declined by 13,000
customers to 3.3 million due to ongoing price competition. The
number of converged households increased by 21,000, with 46% of
broadband customers now converged. VodafoneZiggo now offers
nationwide 1 gigabit speeds across its fixed network.
In FY23, we received EUR165 million in dividends from the joint
venture, as well as EUR51 million in interest payments.
Safaricom Associate (Kenya)
Safaricom service revenue grew to EUR2.3 billion due to a higher
customer base and continued data revenue and M-Pesa growth. In
FY23, we received EUR249 million in dividends from Safaricom.
Indus Towers Limited Associate (India)
Following the sale of shares in Indus Towers Limited ('Indus
Towers') in February and March 2022, the Group holds 567.2 million
shares in Indus Towers, equivalent to a 21.0% shareholding.
Vodafone Idea Limited Joint Venture (India)
See note 4 'Contingent liabilities and legal proceedings' in the
condensed consolidated financial statements for more
information'
TPG Telecom Limited Joint Venture (Australia)
We own an economic interest of 25.05% in TPG Telecom Limited, a
fully integrated telecommunications operator in Australia.
Hutchison Telecommunications (Australia) Limited owns an equivalent
economic interest of 25.05%, with the remaining 49.9% listed as
free float on the Australian stock exchange. We also hold a 50%
share of a US$ 3.5 billion loan facility held within the structure
that holds the Group's equity stake in TPG Telecom.
Net financing costs
FY23 FY22 Reported
EURm EURm change %
================================= ======= ======= ========
Investment income 248 254
Financing costs (1,728) (1,964)
---------------------------------- ------- ------- --------
Net financing costs (1,480) (1,710) (13.5)
Adjustments for:
Mark-to-market gains (534) (256)
Foreign exchange losses 135 284
--------------------------------- ------- ------- --------
Adjusted net financing costs (1) (1,879) (1,682) 11.7
================================== ======= ======= ========
Note:
1. Adjusted net financing costs is a non-GAAP measure. See page
36 for more information.
Net financing costs decreased by EUR230 million, primarily due
to mark-to-market gains recycled from reserves on derivatives that
were previously in cash flow hedge relationships and mark-to-market
gains on embedded derivatives. Adjusted net financing costs
increased by EUR197 million primarily due to interest movements on
lease liabilities and tax provisions and other individually
immaterial movements. Excluding items outside of net debt, net
financing costs remained broadly stable.
Taxation
FY23 FY22 Change
% % pps
================================= ===== ===== ======
Effective tax rate 3.8% 33.6% (29.8)
Adjusted effective tax rate (1) 26.2% 27.9% (1.7)
================================= ===== ===== ======
Note:
1. Adjusted effective tax rate is a non-GAAP measure. See page
36 for more information.
The Group's effective tax rate for the year ended 31 March 2023
was 3.8%, (2022: 33.6%). The rate is lower than the prior year's
due to gains on the disposals of Vantage Towers and Vodafone Ghana.
These gains are largely exempt from tax, except for a EUR88 million
charge relating to the disposal of Vantage Towers.
The effective tax rate also includes a tax credit of EUR309m
relating to the impacts of hyperinflation accounting in Turkey and
a EUR33 million tax charge (2022: EUR327 million) relating to the
use of losses in Luxembourg, which is lower than the prior period
because of an internal restructuring which resulted in a loss in
Luxembourg. As a result of the restructuring, the amount of losses
in Luxembourg are no longer subject to changes in the value of
investments.
The year ended 31 March 2022 includes the following items: i) a
charge of EUR1,468 million for the utilisation of losses against
our profits in Luxembourg. This arose from an increase in the
valuation of investments based upon local GAAP financial statements
and tax returns; ii) 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; iii) an
increase in our deferred tax assets in the UK of EUR593 million
following the increase in the corporate tax rate to 25% and; iv)
EUR273 million following the revaluation of assets for tax purposes
in Italy.
The Group's adjusted effective tax rate for the year ended 31
March 2023 was 26.2% (2022: 27.9%). This is in line with our
expectations for the year.
The adjusted effective tax rate excludes the amounts relating to
Luxembourg, the impact of hyperinflation accounting in Turkey and
the tax charge relating to the disposal of Vantage Towers which are
set out above.
Earnings per share
Re-presented(1) Reported
FY23 FY22 change
eurocents eurocents eurocents
====================================== ========= =============== =========
Basic earnings per share 42.77c 7.71c 35.06c
Adjusted basic earnings per share (2) 11.45c 11.68c (0.23)c
======================================= ========= =============== =========
Notes:
1. The results for the year ended 31 March 2022 have been
re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. Consequently, basic earnings per share
increased by 0.51c, from 7.20c as previously reported, to 7.71c.
Adjusted basic earnings per share increased by 0.65c, from 11.03c
as previously reported, to 11.68c. See note 3 'Assets held for
sale' in the condensed consolidated financial statements for more
information.
2. Adjusted basic earnings per share is a non-GAAP measure. See
page 36 for more information.
Basic earnings per share was 42.77 eurocents, compared to 7.71
eurocents for FY22. The increase is primarily attributable to the
gains on disposal of Vantage Towers A.G. and Vodafone Ghana,
partially offset by the loss on disposal of Vodafone Hungary.
Adjusted basic earnings per share was 11.45 eurocents, compared
to 11.68 eurocents for FY22.
Cash flow, capital allocation and funding
Analysis of cash flow
FY23 FY22 Reported
EURm EURm change %
=========================================== ======== ======= ========
Inflow from operating activities 18,054 18,081 (0.1)
Outflow from investing activities (379) (6,868) 94.5
Outflow from financing activities (13,430) (9,706) (38.4)
------------------------------------------- -------- ------- --------
Net cash inflow 4,245 1,507 181.7
Cash and cash equivalents at beginning
of the financial year 7,371 5,790
Exchange gain on cash and cash equivalents 12 74
------------------------------------------- -------- ------- --------
Cash and cash equivalents at end of
the financial year 11,628 7,371
=========================================== ======== ======= ========
Cash inflow from operating activities decreased to EUR18,054
million, as favourable working capital movements were offset by
lower operating profit, excluding a net gain resulting from the
sale of Vantage Towers, Vodafone Ghana and Vodafone Hungary, and
higher taxation payments.
Outflow from investing activities decreased to EUR379 million,
primarily in relation to proceeds resulting from the disposals of
Vantage Towers and Vodafone Hungary, which outweighed a lower net
inflow in respect of short-term investments. Short-term investments
include highly liquid government and government-backed securities
and managed investment funds that are in highly rated and liquid
money market investments with liquidity of up to 90 days.
Outflows from financing activities increased by 38.4% to
EUR13,430 million, as higher outflows arising from the repayment of
borrowings, including the repayment of debt in relation to licenses
and spectrum, notably in Italy, outweighed higher proceeds from the
issue of long-term borrowings.
Analysis of cash flow (continued)
FY23 FY22 Reported
EURm EURm change %
=============================================== ======== ======== ========
Adjusted EBITDAaL (1) 14,665 15,208 (3.6)
Capital additions(2) (8,378) (8,306)
Working capital 256 (31)
Disposal of property, plant and equipment
and intangible assets 98 27
Integration capital additions(3) (287) (314)
Restructuring costs including working
capital movements(4) (312) (480)
Licences and spectrum (2,467) (896)
Interest received and paid(5) (1,164) (1,254)
Taxation (1,234) (925)
Dividends received from associates and
joint ventures 617 638
Dividends paid to non-controlling shareholders
in subsidiaries (400) (539)
Other 48 181
----------------------------------------------- -------- -------- --------
Free cash flow (1) 1,442 3,309 (56.4)
Acquisitions and disposals 8,727 138
Equity dividends paid (2,484) (2,474)
Share buybacks(5) (1,893) (2,029)
Foreign exchange loss 141 (378)
Other movements in net debt(6) 2,270 399
----------------------------------------------- -------- -------- --------
Net debt decrease/(increase) (1) 8,203 (1,035)
Opening net debt(1) (41,578) (40,543)
----------------------------------------------- -------- -------- --------
Closing net debt (1) (33,375) (41,578) 19.7
=============================================== ======== ======== ========
Free cash flow (1) 1,442 3,309
Adjustments:
- Licences and spectrum 2,467 896
- Restructuring costs including working
capital movements(4) 312 480
- Integration capital additions(3) 287 314
- Vantage Towers growth capital expenditure 497 244
- Other adjustments(7) (163) 194
Adjusted free cash flow (1) 4,842 5,437
=============================================== ======== ======== ========
Notes:
1. Adjusted EBITDAaL, Free cash flow, Adjusted free cash flow
and Net debt are non-GAAP measures. See page 36 for more
information.
2. See page 47 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. Includes working capital in respect of Integration capital
additions.
5. Interest received and paid excludes interest on lease
liabilities of EUR372 million outflow (FY22: EUR361 million)
included within Adjusted EBITDAaL and EUR26 million of cash outflow
(FY22: EUR58 million inflow) 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.
6. Other movements on net debt for the year ended 31 March 2023
includes mark-to-market gains recognised in the income statement of
EUR534 million (FY22: EUR256 million gain), together with EUR1,739
million (FY22: EUR55 million) for the repayment of debt in relation
to licenses and spectrum in Italy.
7. Other adjustments in FY23 includes EUR120 million received in
respect of the Group's new fibre joint venture in Germany and an
allocation of EUR43 million from the Vodafone Hungary proceeds for
future services to be provided by the Group. The amount for FY22
includes a special dividend of EUR194 million paid to the minority
shareholders in Egypt.
Adjusted free cash flow decreased by EUR595 million to EUR4,842
million in the year. This reflected a decrease in Adjusted EBITDAaL
in the year, together with higher payments on lease liabilities,
which outweighed favourable working capital movements and higher
taxation payments.
Borrowings and cash position
FY23 FY22 Reported
EURm EURm change %
========================================== ======== ======== ========
Non-current borrowings (51,669) (58,131)
Current borrowings (14,721) (11,961)
------------------------------------------- -------- -------- --------
Borrowings (66,390) (70,092)
Cash and cash equivalents 11,705 7,496
------------------------------------------- -------- -------- --------
Borrowings less cash and cash equivalents (54,685) (62,596) 12.6
=========================================== ======== ======== ========
Borrowings principally includes bonds of EUR44,116 million
(FY22: EUR48,031 million), lease liabilities of EUR13,364 million
(FY22: EUR12,539 million) and cash collateral liabilities EUR4,886
million (FY22: EUR2,914 million).
The decrease in borrowings of EUR3,702 million was principally
driven by repayments of bonds of EUR5,742 million, Italy licences
and spectrum liabilities of EUR1,739 million and the disposal of
our controlling interest in Vantage Towers of EUR2,188 million,
partially offset by bonds issued of EUR3,577 million, an increase
in collateral liabilities of EUR1,972 million and lease liabilities
of EUR825 million.
Funding position
FY23 FY22 Reported
EURm EURm change %
==================================== ======== ======== ========
Bonds (44,116) (48,031)
Bank loans (795) (1,317)
Other borrowings including spectrum (1,744) (3,909)
------------------------------------- -------- -------- --------
Gross debt (1) (46,655) (53,257) 12.4
Cash and cash equivalents 11,705 7,496
Short-term investments(2) 4,305 4,795
Derivative financial instruments(3) 1,917 1,604
Net collateral liabilities(4) (4,647) (2,216)
------------------------------------- -------- -------- --------
Net debt (1) (33,375) (41,578) 19.7
===================================== ======== ======== ========
Notes:
1. Gross debt and Net debt are non-GAAP measures. See page 36
for more information.
2. Short-term investments includes EUR1,338 million (FY22:
EUR1,446 million) of highly liquid government and government-backed
securities and managed investment funds of EUR2,967 million (FY22:
EUR3,349 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 EUR2,785 million gain
(FY22: EUR1,350 million gain).
4. Collateral arrangements on derivative financial instruments
result in cash being held as security. This is repayable when
derivatives are settled and is therefore deducted from
liquidity.
Net debt decreased by EUR8,203 million to EUR33,375 million.
This was driven by the free cash inflow of EUR1,442 million and
acquisitions and disposals of EUR8,727 million, partially offset by
equity dividends of EUR2,484 million, share buybacks of EUR1,893
million (used to offset dilution linked to the conversion of
certain mandatory convertible bonds). Other movements in net debt
includes EUR1,730 million relating to the settlement of 5G spectrum
in Italy previously included in net debt. Settlement of the
liability during the period had no impact overall on net debt, with
the resulting cash payment included in free cash flow.
Other funding obligations to be considered alongside net debt
include:
- Lease liabilities of EUR13,364 million (EUR12,539 million as at 31 March 2022);
- KDG put option liabilities of EUR485 million (EUR494 million as at 31 March 2022);
- Guarantee over Australia joint venture loan of EUR1,611
million (EUR1,573 million as at 31 March 2022); and
- Pension liabilities of EUR258 million (EUR281 million as at 31 March 2022).
The Group's gross and net debt includes EUR9,942 million
(EUR9,942 million as at 31 March 2022) of long-term borrowings
('Hybrid bonds') for which a 50% equity characteristic of EUR4,971
million (EUR4,971 million as at 31 March 2022) 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
EUR1,282 million higher value (EUR1,316 million higher as at 31
March 2022) than their euro equivalent redemption value. In
addition, where bonds are issued in currencies other than euro, 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 were included would decrease the euro
equivalent value of the bonds by EUR1,440 million (EUR1,456 million
as at 31 March 2022).
Return on capital employed
Return on capital employed ('ROCE') reflects how efficiently we
are generating profit with the capital we deploy. We calculate two
ROCE measures: i) Pre-tax ROCE for controlled operations only and
ii) Post-tax ROCE including associates and joint ventures. ROCE
calculated using GAAP measures(3) for the year was 12.9% (FY22:
5.2%), impacted by the disposal of Vantage Towers to the newly
formed joint venture, resulting in an increase in the average
capital employed.
The table below presents adjusted ROCE metrics.
Excluding
Vantage Towers(2) Re-presented(1)
FY23 FY22 Change
% % pps
=============================================== ================= =============== ======
Pre-tax ROCE (controlled)(3) 6.8% 7.2% (0.4)
Post-tax ROCE (controlled and associates/joint
ventures)(3) 5.1% 5.2% (0.1)
----------------------------------------------- ----------------- --------------- ------
Notes:
1. The results for the year ended 31 March 2022 have been
re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. Consequently, post-tax ROCE (controlled
and associates/joint ventures) has increased by 0.2pps, from 5.0%
as previously reported, to 5.2%. Similarly, ROCE calculated using
GAAP measures has increased by 0.2pps, from 5.0% as previously
reported, to 5.2%. See note 3 'Assets held for sale' in the
condensed consolidated financial statements for more
information.
2. FY23 excludes the results of Vantage Towers following its
disposal on 22 March 2023. FY22 excluding Vantage Towers pre-tax
ROCE is 7.0% and post-tax ROCE is 5.0%.
3. ROCE is calculated by dividing Operating profit by the
average of capital employed as reported in the consolidated
statement of financial position. Pre-tax ROCE (controlled) and
Post-tax ROCE (controlled and associates/joint ventures) are
non-GAAP measures. See page 36 for more information.
Funding facilities
As at 31 March 2023, the Group had undrawn revolving credit
facilities of EUR7.7 billion comprising euro and US dollar
revolving credit facilities of EUR4.0 billion and US$4.0 billion
(EUR3.7 billion) which mature in 2025 and 2028 respectively. Both
committed revolving credit facilities support US dollar and euro
commercial paper programmes of up to US$15 billion and EUR10
billion respectively.
Post employment benefits
As at 31 March 2023, the Group's net surplus of scheme assets
over scheme liabilities was EUR71 million (FY22: EUR274 million net
surplus).
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 8 June 2023 for
ordinary shareholders, the record date is 9 June 2023 and the
dividend is payable on 4 August 2023. Dividend payments on ordinary
shares will be paid directly into a nominated bank or building
society account.
Other significant developments
Board changes
On 5 December 2022, the Group announced that Nick Read had
agreed with the Board to step down as Group Chief Executive and as
a Director of Vodafone on 31 December 2022.
On 27 April 2023, Margherita Della Valle was appointed Group
Chief Executive and will continue as Group Chief Financial Officer
until an external search for a new Group Chief Financial Officer is
complete.
On 14 November 2022, Christine Ramon was appointed as a
non-executive director.
On 28 March 2023, Christine Ramon, non-executive director,
joined the Audit and Risk Committee.
On 10 May 2023, the following changes were announced and will
take effect from the conclusion of the 2023 AGM:
- David Nish, non-executive director, will be appointed Senior
Independent Director and also join the Nominations and Governance
Committee.
- Delphine Ernotte Cunci and Christine Ramon, non-executive
directors, will be appointed Workforce Engagement Leads.
- Amparo Moraleda, non-executive director, will cease to be a
member of the Audit and Risk Committee and will be appointed Chair
of the Remuneration Committee.
- Jean-Francois van Boxmeer, Chair of the Board, and Christine
Ramon, will join the ESG Committee.
In addition, on 10 May 2023, the Board approved the creation of
a Technology Committee as a Committee of the Board. The Committee
will be formed of non-executive directors, chaired by Simon Segars
with Stephen Carter, Delphine Ernotte Cunci and Deborah Kerr as
members.
Executive Committee changes
On 31 December 2022, Johan Wibergh retired from his role as
Group Chief Technology Officer. Scott Petty, formerly Digital &
IT Director, became the Group Chief Technology Officer on 1 January
2023 and joined the Executive Committee.
On 31 December 2022, Alex Froment-Curtil stepped-down as Group
Chief Commercial Officer. On 12 January 2023, Aldo Bisio was
appointed Group Chief Commercial Officer in addition to his
existing role as Chief Executive of Vodafone Italy.
On 1 January 2023, Alberto Ripepi, Group Chief Network Officer,
joined the Executive Committee.
On 12 January 2023, Colman Deegan stepped down from the
Executive Committee and as CEO of Vodafone Spain on 31 March
2023.
On 28 February 2023, Rosemary Martin, former Group General
Counsel and Company Secretary, stepped down from the Executive
Committee and retired on 31 March 2023.
On 1 March 2023, Maaike de Bie was appointed Group General
Counsel and Company Secretary and joined the Executive
Committee.
Vantage Towers
On 22 March 2023, the Group completed the disposal of its
interest in Vantage Towers A.G. to Oak Holdings GmbH, the
co-control partnership of Vodafone, GIP and KKR. Vodafone retained
an interest of 64.2% in Oak Holdings 1 GmbH, which owns 89.3% of
Vantage Towers A.G.
On 18 April 2023, the Management Board and the Supervisory Board
of Vantage Towers A.G. published their joint reasoned statement on
the public delisting tender offer of Oak Holdings GmbH to the
shareholders of Vantage Towers. Both recommended that all remaining
shareholders accept the delisting tender offer.
Vodafone Ghana
On 21 February 2023, the Group announced it had completed the
sale of its 70% shareholding in Ghana Telecommunications Limited
('Vodafone Ghana') to Telecel Group.
Vodafone Hungary
On 31 January 2023, the Group announced it had completed the
sale of Vodafone Magyarország Zrt ('Vodafone Hungary') to 4iG
Public Limited Company and Corvinus Zrt.
Vodafone Egypt
On 13 December 2022, the Group announced it had completed the
transfer of its 55% shareholding in Vodafone Egypt to Vodacom Group
Limited ('Vodacom'). Following completion, Vodafone's shareholding
in Vodacom has increased from 60.5% to 65.1%.
Condensed consolidated financial statements
Consolidated income statement
Year ended 31 March
-------------------------
Re-presented(1)
2023 2022
EURm EURm
----------------------------------------------------- -------- ---------------
Revenue 45,706 45,580
Cost of sales (30,850) (30,574)
-------------------------------------------------------- -------- ---------------
Gross profit 14,856 15,006
Selling and distribution expenses (3,329) (3,358)
Administrative expenses (6,092) (5,713)
Net credit losses on financial assets (606) (561)
Share of results of equity accounted associates
and joint ventures 433 389
Impairment loss (64) -
Other income 9,098 50
-------------------------------------------------------- -------- ---------------
Operating profit 14,296 5,813
Investment income 248 254
Financing costs (1,728) (1,964)
-------------------------------------------------------- -------- ---------------
Profit before taxation 12,816 4,103
Income tax expense (481) (1,330)
-------------------------------------------------------- -------- ---------------
Profit for the financial year 12,335 2,773
-------------------------------------------------------- -------- ---------------
Attributable to:
- Owners of the parent 11,838 2,237
- Non-controlling interests 497 536
-------------------------------------------------------- -------- ---------------
Profit for the financial year 12,335 2,773
-------------------------------------------------------- -------- ---------------
Earnings per share(1)
Total Group
- Basic 42.77c 7.71c
- Diluted 42.62c 7.68c
-------------------------------------------------------- -------- ---------------
Consolidated statement of comprehensive income
Year ended 31 March
-------------------------
Re-presented(1)
2023 2022
EURm EURm
----------------------------------------------------- -------- ---------------
Profit for the financial year 12,335 2,773
Other comprehensive income/(expense):
Items that may be reclassified to the income
statement in subsequent years:
Foreign exchange translation differences, net
of tax (1,236) (30)
Foreign exchange translation differences transferred
to the income statement (334) 19
Other, net of tax(2) 963 1,863
-------------------------------------------------------- -------- ---------------
Total items that may be reclassified to the
income statement in subsequent years (607) 1,852
Items that will not be reclassified to the
income statement in subsequent years:
Net actuarial (losses)/gains on defined benefit
pension schemes, net of tax (160) 483
-------------------------------------------------------- -------- ---------------
Total items that will not be reclassified to
the income statement in subsequent years (160) 483
Other comprehensive (expense)/income (767) 2,335
-------------------------------------------------------- -------- ---------------
Total comprehensive income/(expense) for the
financial year 11,568 5,108
-------------------------------------------------------- -------- ---------------
Attributable to:
- Owners of the parent 11,267 4,546
- Non-controlling interests 301 562
-------------------------------------------------------- -------- ---------------
11,568 5,108
----------------------------------------------------- -------- ---------------
Notes:
1. The results for the year ended 31 March 2022 have been
re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. See note 3 'Assets held for sale' for
more information.
2. 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
Re-presented(1)
31 March 31 March
2023 2022
EURm EURm
---------------------------------------------------- --------- ---------------
Non-current assets
Goodwill 27,615 31,884
Other intangible assets 19,592 21,360
Property, plant and equipment 37,992 40,804
Investments in associates and joint ventures 11,079 5,323
Other investments 1,093 1,073
Deferred tax assets 19,316 19,089
Post employment benefits 329 555
Trade and other receivables 7,843 6,383
------------------------------------------------------ --------- ---------------
124,859 126,471
---------------------------------------------------- --------- ---------------
Current assets
Inventory 956 836
Taxation recoverable 279 296
Trade and other receivables 10,705 11,019
Other investments 7,017 7,931
Cash and cash equivalents 11,705 7,496
------------------------------------------------------ --------- ---------------
30,662 27,578
---------------------------------------------------- --------- ---------------
Total assets 155,521 154,049
------------------------------------------------------ --------- ---------------
Equity
Called up share capital 4,797 4,797
Additional paid-in capital 149,145 149,018
Treasury shares (7,719) (7,278)
Accumulated losses (113,086) (122,022)
Accumulated other comprehensive income 30,262 30,268
------------------------------------------------------ --------- ---------------
Total attributable to owners of the parent 63,399 54,783
------------------------------------------------------ --------- ---------------
Non-controlling interests 1,084 2,290
------------------------------------------------------ --------- ---------------
Total equity 64,483 57,073
------------------------------------------------------ --------- ---------------
Non-current liabilities
Borrowings 51,669 58,131
Deferred tax liabilities 771 520
Post employment benefits 258 281
Provisions 1,572 1,881
Trade and other payables 2,184 2,516
------------------------------------------------------ --------- ---------------
56,454 63,329
---------------------------------------------------- --------- ---------------
Current liabilities
Borrowings 14,721 11,961
Financial liabilities under put option arrangements 485 494
Taxation liabilities 457 864
Provisions 674 667
Trade and other payables 18,247 19,661
------------------------------------------------------ --------- ---------------
34,584 33,647
---------------------------------------------------- --------- ---------------
Total equity and liabilities 155,521 154,049
------------------------------------------------------ --------- ---------------
Note:
1. Balances as at 31 March 2022 have been re-presented to
reflect that Indus Towers Limited is no longer reported as held for
sale. See note 3 'Assets held for sale' for more information.
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 2021 Re-presented(3) 4,797 150,812 (6,172) (93,681) 55,756 2,012 57,768
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 income - - - 4,546 4,546 562 5,108
Dividends - - - (2,483) (2,483) (532) (3,015)
Purchase of treasury
shares - - (3,106) - (3,106) - (3,106)
------------------------------ -------- ----------- -------- -------------- ------------- ------------ -------
31 March 2022 Re-presented(3) 4,797 149,018 (7,278) (91,754) 54,783 2,290 57,073
------------------------------ -------- ----------- -------- -------------- ------------- ------------ -------
Adoption of IAS
29(4) - - - 565 565 - 565
1 April 2022 brought
forward 4,797 149,018 (7,278) (91,189) 55,348 2,290 57,638
Issue or reissue
of shares - 1 122 (113) 10 - 10
Share-based payments - 126 - - 126 9 135
Transactions with
non-controlling
shareholders in
subsidiaries - - - (287) (287) (1,118) (1,405)
Comprehensive income - - - 11,267 11,267 301 11,568
Dividends - - - (2,502) (2,502) (398) (2,900)
Purchase of treasury
shares - - (563) - (563) - (563)
------------------------------ -------- ----------- -------- -------------- ------------- ------------ -------
31 March 2023 4,797 149,145 (7,719) (82,824) 63,399 1,084 64,483
------------------------------ -------- ----------- -------- -------------- ------------- ------------ -------
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/(expense).
3. The results for the year ended 31 March 2022 and 31 March
2021 have been re-presented to reflect that Indus Towers Limited is
no longer classified as held for sale. As at 31 March 2022,
accumulated losses decreased by EUR96 million, resulting in an
increase of EUR96 million in total equity compared to amounts
previously reported. As at 31 March 2021, accumulated comprehensive
losses increased by EUR48 million, resulting in a decrease of EUR48
million in total equity compared to amounts previously reported.
See note 3 'Assets held for sale' for more information.
4. This opening balance adjustment relates to the adoption of
hyperinflationary accounting in Turkey. See Note 1 'Basis of
preparation' for more information.
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
---------------------
2023 2022
EURm EURm
----------------------------------------------------- ----------- --------
Inflow from operating activities 18,054 18,081
------------------------------------------------------- ----------- --------
Cash flows from investing activities
Purchase of interests in associates and joint
ventures (78) (445)
Purchase of intangible assets (2,963) (3,262)
Purchase of property, plant and equipment (6,250) (5,798)
Purchase of investments (767) (2,009)
Disposal of interests in subsidiaries, net
of cash disposed 6,976 -
Disposal of interests in associates and joint
ventures - 446
Disposal of property, plant and equipment
and intangible assets 98 33
Disposal of investments 1,650 3,282
Dividends received from associates and joint
ventures 617 638
Interest received 338 247
------------------------------------------------------- ----------- --------
Outflow from investing activities (379) (6,868)
------------------------------------------------------- ----------- --------
Cash flows from financing activities
Proceeds from issue of long-term borrowings 4,071 2,548
Repayment of borrowings (13,538) (8,248)
Net movement in short-term borrowings 3,172 3,002
Net movement in derivatives 261 (293)
Interest paid(1) (1,951) (1,804)
Payments for settlement of written put options (12) -
Purchase of treasury shares (1,867) (2,087)
Issue of ordinary share capital and reissue
of treasury shares 10 -
Equity dividends paid (2,484) (2,474)
Dividends paid to non-controlling shareholders
in subsidiaries (400) (539)
Other transactions with non-controlling shareholders
in subsidiaries (692) 189
------------------------------------------------------- ----------- --------
Outflow from financing activities (13,430) (9,706)
------------------------------------------------------- ----------- --------
Net cash inflow 4,245 1,507
Cash and cash equivalents at beginning of
the financial year(2) 7,371 5,790
Exchange gain on cash and cash equivalents 12 74
------------------------------------------------------- ----------- --------
Cash and cash equivalents at end of the
financial year (2) 11,628 7,371
------------------------------------------------------- ----------- --------
Notes:
1. Interest paid includes EUR26 million of cash outflow (FY22:
EUR58 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 EUR11,705 million
(FY22: EUR7,496 million), together with overdrafts of EUR77 million
(FY22: EUR125 million).
The accompanying notes are an integral part of the condensed
consolidated financial statements.
Notes to the condensed consolidated financial statements
1 Basis of preparation
The preliminary results for the year ended 31 March 2023 are an
abridged statement of the full Annual Report which was approved by
the Board of Directors on 16 May 2023. 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 2023 will be delivered to
the Registrar of Companies following the Company's Annual General
Meeting on 25 July 2023.
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 2023 are made available on the Company's website in
June 2023.
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 EUR11.6 billion
of cash and cash equivalents available as at 31 March 2023 which,
together with undrawn revolving credit facilities of EUR7.7
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 2023. 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
2023.
New accounting pronouncements adopted
On 1 April 2022, 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 2022.
Notes to the condensed consolidated financial statements
1 Basis of preparation (continued)
Basis of preparation changes adopted on 1 April 2022 -
Hyperinflation
As anticipated in the Annual Report for the year ended 31 March
2022, Turkey met the requirements to be designated as a
hyperinflationary economy under IAS 29 'Financial Reporting in
Hyperinflationary Economies' in the quarter ended 30 June 2022. In
addition, Ethiopia where the Group's associate, Safaricom, has
operations has also become a hyperinflationary economy in the year.
The Group has therefore applied hyperinflationary accounting, as
specified in IAS 29, at its Turkish operations whose functional
currency is the Turkish lira and to Safaricom's operations in
Ethiopia where the Ethiopian birr is the functional currency for
the reporting period commencing 1 April 2022. This resulted in an
opening balance adjustment of EUR565 million to consolidated
equity.
In accordance with IAS 21 'The Effects of Changes in Foreign
Exchange Rates', comparative amounts have not been restated.
Turkish lira and Ethiopian birr results and non-monetary asset
and liability balances for the year ended 31 March 2023 have been
revalued to their present value equivalent local currency amount as
at 31 March 2023, based on an inflation index, before translation
to euros at the reporting date exchange rate of EUR1:20.85 TRL and
EUR1:58.59 ETB, respectively.
For the Group's operations in Turkey:
- The gain or loss on net monetary assets resulting from IAS 29
application is recognised in the consolidated income statement
within Other income.
- The Group also presents the gain or loss on cash and cash
equivalents as monetary items together with the effect of inflation
on operating, investing and financing cash flows as one number in
the consolidated statement of cash flows.
- The Group has presented the IAS 29 opening balance adjustment
to net assets within currency reserves in equity. Subsequent IAS 29
equity restatement effects and the impact of currency movements are
presented within other comprehensive income because such amounts
are judged to meet the definition of 'exchange differences'.
For Safaricom's operations in Ethiopia, the impacts of IAS 29
accounting are reflected as an increase to Investments in
associates and joint ventures and an increase to Equity.
The inflation index in Turkey selected to reflect the change in
purchasing power was the consumer price index (CPI) issued by the
Turkish Statistical Institute which has risen by 50.5% during the
current financial year ended 31 March 2023. The inflation index
selected in Ethiopia is the CPI issued by the Ethiopian Statistics
Service which rose 31.3% in the year ended 31 March 2023.
The main impacts of the aforementioned adjustments on the
consolidated financial statements are shown below.
Year ended
31 March 2023
Increase/(decrease)
EURm
-------------------------------------------- -------------------
Revenue 85
Operating profit (87)
Profit for the financial year (123)
Non-current assets 814
Equity attributable to owners of the parent 777
Non-controlling interests 37
-------------------------------------------- -------------------
Notes to the condensed consolidated financial statements
2 Equity dividends
2023 2022
EURm EURm
------------------------------------------------------ ----- -----
Declared and paid during the financial year:
Final dividend for the year ended 31 March 2022:
4.50 eurocents per share 1,265 1,254
(2021: 4.50 eurocents per share)
Interim dividend for the year ended 31 March 2023:
4.50 eurocents per share
(2022: 4.50 eurocents per share) 1,237 1,229
------------------------------------------------------ ----- -----
2,502 2,483
Proposed after the end of the year and not recognised
as a liability:
Final dividend for the year ending 31 March 2023:
4.50 eurocents per share
(2022: 4.50 eurocents per share) 1,215 1,265
------------------------------------------------------ ----- -----
3 Assets held for sale
Reclassification of Indus Towers Limited
In the condensed consolidated financial statements for the prior
year ended 31 March 2022, the Group's 21% interest in Indus Towers
Limited was reported within assets held for sale. Whilst the Group
remains focused on achieving a sale, the investment is not assessed
as meeting the requirements of held for sale at 31 March 2023.
Consequently, comparative balances as at 31 March 2022 have been
re-presented in these condensed consolidated financial statements
to reflect that Indus Towers Limited is no longer reported as held
for sale.
Impact on the consolidated income statement
The reclassification has no impact on previously reported
revenue and gross profit, as reported in the consolidated income
statement.
In the year ended 31 March 2022, the share of results of equity
accounted associates and joint ventures increased by EUR178
million, offset by a decrease of EUR29 million in other income.
Consequently, operating profit, profit before taxation and profit
for the financial year all increased by EUR149 million compared to
amounts previously reported.
Total comprehensive income for the financial year increased by
EUR144 million, reflecting the increase in profit for the financial
year of EUR149 million, offset by a charge of EUR5 million included
in other comprehensive income.
Impact on the consolidated statement of financial position
The consolidated statement of financial position is on page 26
and has not been reproduced below in its entirety. The table below
only discloses the impacted lines.
Impact
As previously of
presented reclassification Re-presented
2022 2022 2022
EURm EURm EURm
--------------------------------------------- ------------- ---------------- ------------
Non-current assets
Investments in associates and joint ventures 4,268 1,055 5,323
Assets held for sale 959 (959) -
Total assets 153,953 96 154,049
--------------------------------------------- ------------- ---------------- ------------
Equity
Accumulated losses (122,118) 96 (122,022)
Total equity and liabilities 153,953 96 154,049
--------------------------------------------- ------------- ---------------- ------------
Notes to the condensed consolidated financial statements
4 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 (EUR719 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 7 February 2023, VIL issued equity to the Government of India
equivalent to INR 161 (EUR1.8 billion), representing the net
present value of interest accrued on both deferred spectrum auction
instalments and AGR dues pursuant to a relief package announced in
September 2021 which is designed to improve the liquidity and
financial health of the telecom sector. Wider reforms announced as
part of the relief package 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 which VIL elected to accept in October 2021.
VIL remains in need of additional liquidity support from its
lenders and intends to raise additional funding. 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 2023. 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.
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 cash prepayment of INR 24 billion (EUR279 million) by VIL to
Indus Towers in respect of its undisputed payment obligations, due
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. These pledged shares were sold by the
Group in the year ended 31 March 2022; 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 resulting in an
equivalent partial release of the primary pledge. On 14 February
2023, a similar transaction was undertaken with INR 4.4 billion
(EUR49 million) remaining from the sale of the primary pledge
shares, fully releasing the pledge.
- A secondary pledge over shares owned by Vodafone Group in
Indus Towers, ranking behind Vodafone's existing lenders for the
outstanding bank borrowings of EUR1.5 billion as at 31 March 2023
secured against Indian assets ('the bank borrowings'), with a
maximum liability cap of INR 42.5 billion (EUR476 million). In the
event of non-payment of relevant MSA obligations by VIL, Indus
Towers would have recourse to any secondary pledged shares, after
repayment of the bank borrowings in full, up to the value of the
liability cap.
Notes to the condensed consolidated financial statements
4 Contingent liabilities and legal proceedings (continued)
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
The Group has been challenging retrospective tax demands raised
by the Indian tax authority under the Finance Act 2012 against
Vodafone International Holdings BV ('VIHBV') relating to a
transaction in 2007 whereby VIHBV acquired assets in India from
Hutchison Telecommunications International Limited. Pursuant to a
new scheme for resolving tax disputes introduced by legislation in
August 2021, Vodafone and the Indian Government have reached a
final agreement and the demands for outstanding tax (including
interest and penalties) have been withdrawn in full.
Further background relating to this matter is provided in the
Group's Annual Report for the financial year ended 31 March
2022.
VISPL tax claims
VISPL is involved in a number of tax cases. The total value of
the claims is approximately EUR471 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 EUR239 million (plus interest of EUR628
million), which VISPL has been assessed as owing in respect of (i)
a transfer pricing margin charged for the international call centre
of HTIL prior to the 2007 transaction with Vodafone for HTIL assets
in India; (ii) the sale of the international call centre by VISPL
to HTIL; and (iii) the acquisition of and/or the alleged transfer
of options held by VISPL in Vodafone India. The first two of the
three heads of tax are subject to an indemnity by HTIL. The larger
part of the potential claim is not subject to an indemnity. A stay
of the tax demand on a deposit of 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.
Netherlands tax case
Vodafone Europe BV (VEBV) has received assessments totalling
EUR267m of tax and interest from the Dutch tax authorities, who are
challenging the application of the arm's length principle in
relation to various intra-group financing transactions. VEBV has
appealed against these assessments to the District Court of the
Hague where a hearing was held in March 2023 and we are awaiting
the decision which is currently expected in summer 2023. The Group
has entered into a guarantee for the full value of the assessments
issued.
The Group believes it has robust defences and does not consider
it probable that there will be a financial outflow required to
resolve the case.
Notes to the condensed consolidated financial statements
4 Contingent liabilities and legal proceedings (continued)
Other cases in the Group
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 in 2013. 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. The main hearing on the
merits of the claim took place on 8 June 2021. On 17 April 2023,
the Civil Court issued a judgement in Vodafone Italy's favour and
rejected Iliad's claim for damages in full. Whether Iliad will
appeal the judgement is unknown as of the date of this report.
The Group is currently unable to estimate any possible loss in
this claim in the event of an adverse judgement on appeal 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 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 Athens Court of First Instance 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. The appeal hearings took place on 23 February and 11
May 2023 and we are waiting to receive the judgements.
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 in the
English High Court. 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 on
liability took place from May to July 2022. We are waiting to
receive the judgement.
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.
Notes to the condensed consolidated financial statements
5 Subsequent events
M-Pesa Holding Company Limited
On 17 April 2023, the Group entered into an agreement to sell
M-Pesa Holding Company Limited ('MPHCL') to Safaricom Plc, an
associate entity of the Group, for USD 1. MPHCL holds M-Pesa
customer funds on trust for the benefit of M-Pesa customers in
Kenya. Balances included in the Group's consolidated financial
statements for MPHCL at 31 March 2023 include short term
investments of EUR1,247 million and EUR1,226 million due to M-Pesa
customers, recorded within Other investments and Other creditors,
respectively. These sums are shown in the Group's consolidated
financial statements in accordance with IFRS, but MPHCL acts as the
independent trustee for M-Pesa customers, independently
administering the trust and holding all funds from the M-Pesa
customers on trust for the benefit of M-Pesa customers. Any profit
generated by MPHCL, after defraying direct costs, is donated for
use for public charitable purposes only. No material gain or loss
is expected to arise on disposal. Completion of this transaction is
subject to various approvals which are expected to be obtained
before or during July 2023.
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 37 Operating profit Page 7
-------------------------------- --------- ----------------------------- -----------
Organic Adjusted EBITDAaL Page 37 Not applicable -
growth
-------------------------------- --------- ----------------------------- -----------
Organic revenue growth Page 37 Revenue Pages 38
and 39
-------------------------------- --------- ----------------------------- -----------
Organic Group service revenue Page 37 Service revenue Pages 38
growth excluding Turkey and 39
-------------------------------- --------- ----------------------------- -----------
Organic Group Adjusted Page 37 Not applicable -
EBITDAaL growth excluding
Turkey
-------------------------------- --------- ----------------------------- -----------
Organic service revenue Page 37 Service revenue Pages 38
growth and 39
-------------------------------- --------- ----------------------------- -----------
Organic mobile service Page 37 Service revenue Pages 38
revenue growth and 39
-------------------------------- --------- ----------------------------- -----------
Organic fixed service revenue Page 37 Service revenue Pages 38
growth and 39
-------------------------------- --------- ----------------------------- -----------
Organic Vodafone Business Page 37 Service revenue Pages 38
service revenue growth and 39
-------------------------------- --------- ----------------------------- -----------
Organic financial services Page 37 Service revenue Pages 38
revenue growth in South and 39
Africa
-------------------------------- --------- ----------------------------- -----------
Other metrics
-------------------------------- --------- ----------------------------- -----------
Adjusted profit attributable Page 40 Profit attributable Page 40
to owners of the parent to owners of the parent
-------------------------------- --------- ----------------------------- -----------
Adjusted basic earnings Page 40 Basic earnings per Page 41
per share share
-------------------------------- --------- ----------------------------- -----------
Cash flow, funding and
capital allocation metrics
-------------------------------- --------- ----------------------------- -----------
Free cash flow Page 41 Inflow from operating Page 42
activities
-------------------------------- --------- ----------------------------- -----------
Adjusted free cash flow Page 41 Inflow from operating Pages 20
activities and 42
-------------------------------- --------- ----------------------------- -----------
Gross debt Page 41 Borrowings Page 42
-------------------------------- --------- ----------------------------- -----------
Net debt Page 41 Borrowings less cash Page 42
and cash equivalents
-------------------------------- --------- ----------------------------- -----------
Pre-tax ROCE (controlled) Page 43 ROCE calculated using Pages 43
GAAP measures and 44
-------------------------------- --------- ----------------------------- -----------
Post-tax ROCE (controlled Page 43 ROCE calculated using Pages 43
and associates/joint ventures) GAAP measures and 44
-------------------------------- --------- ----------------------------- -----------
Financing and Taxation
metrics
-------------------------------- --------- ----------------------------- -----------
Adjusted net financing Page 45 Net financing costs Page 18
costs
-------------------------------- --------- ----------------------------- -----------
Adjusted profit before Page 45 Profit before taxation Page 46
taxation
-------------------------------- --------- ----------------------------- -----------
Adjusted income tax expense Page 45 Income tax expense Page 46
-------------------------------- --------- ----------------------------- -----------
Adjusted effective tax Page 45 Income tax expense Page 46
rate
-------------------------------- --------- ----------------------------- -----------
Adjusted share of results Page 45 Share of results of Page 46
of equity accounted associates equity accounted associates
and joint ventures and joint ventures
-------------------------------- --------- ----------------------------- -----------
Adjusted share of results Page 45 Share of results of Page 46
of equity accounted associates equity accounted associates
and joint ventures used and joint ventures
in post-tax ROCE
-------------------------------- --------- ----------------------------- -----------
Non-GAAP measures
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 lease
performance and profitability. liabilities 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, the hyperinflation adjustments in Turkey and other
adjustments to improve the comparability of results between
periods.
Organic growth is calculated for revenue and profitability
metrics, as follows(1) :
- Adjusted EBITDAaL;
- Revenue;
- Group service revenue excluding Turkey(2) ;
- Group Adjusted EBITDAaL excluding Turkey(2) ;
- Service revenue;
- Mobile service revenue;
- Fixed service revenue;
- Vodafone Business service revenue; and
- Financial services revenue in South Africa.
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.
Notes:
1. Organic growth in retail service revenue in Germany, a
non-GAAP metric, is no longer reported. Other performance metrics
are considered more relevant for performance commentary.
2. This is a new non-GAAP measure for FY23 and has been included
because of the hyperinflationary environment in Turkey.
Non-GAAP measures
Year ended 31 March 2023
Reported M&A and Foreign Organic
FY23 FY22 growth Other exchange growth*
EURm EURm % pps pps %
------------------------------------ ------ ------ -------- ------- --------- --------
Service revenue(1)
Germany 11,433 11,616 (1.6) - - (1.6)
------ ------ -------- ------- --------- --------
Mobile service revenue 5,060 5,124 (1.2) - - (1.2)
Fixed service revenue 6,373 6,492 (1.8) - - (1.8)
------------------------------------ ------ ------ -------- ------- --------- --------
Italy 4,251 4,379 (2.9) - - (2.9)
------ ------ -------- ------- --------- --------
Mobile service revenue 2,972 3,141 (5.4) - - (5.4)
Fixed service revenue 1,279 1,238 3.3 - - 3.3
------------------------------------ ------ ------ -------- ------- --------- --------
UK 5,358 5,154 4.0 - 1.6 5.6
------ ------ -------- ------- --------- --------
Mobile service revenue 3,928 3,697 6.2 - 1.8 8.0
Fixed service revenue 1,430 1,457 (1.9) - 1.6 (0.3)
------------------------------------ ------ ------ -------- ------- --------- --------
Spain 3,514 3,714 (5.4) - - (5.4)
Other Europe 5,005 5,001 0.1 2.1 0.6 2.8
Vodacom 4,849 4,635 4.6 - (1.1) 3.5
Other Markets 3,300 3,420 (3.5) (2.2) 36.4 30.7
Common Functions 530 522
Eliminations (271) (238)
------------------------------------- ------ ------ -------- ------- --------- --------
Total service revenue 37,969 38,203 (0.6) 0.2 2.6 2.2
Other revenue 7,737 7,377
------------------------------------- ------ ------ -------- ------- --------- --------
Revenue 45,706 45,580 0.3 - 2.7 3.0
------------------------------------- ------ ------ -------- ------- --------- --------
Other growth metrics
Group service revenue excluding
Turkey 36,563 36,773 (0.6) 0.3 1.3 1.0
Group adjusted EBITDAaL excluding
Turkey 14,264 14,717 (3.1) 0.7 1.3 (1.1)
Vodafone Turkey - Service revenue 1,440 1,460 (1.4) (7.2) 56.2 47.6
Vodafone Business - Service revenue 10,332 10,316 0.2 0.7 1.7 2.6
South Africa - Financial services
revenue 167 155 7.7 - 2.9 10.6
------------------------------------- ------ ------ -------- ------- --------- --------
Adjusted EBITDAaL
Germany 5,323 5,669 (6.1) - - (6.1)
Italy 1,453 1,699 (14.5) - - (14.5)
=======
UK 1,350 1,395 (3.2) - 1.8 (1.4)
Spain 947 957 (1.0) (0.1) - (1.1)
Other Europe 1,632 1,606 1.6 2.5 0.6 4.7
Vodacom 2,159 2,125 1.6 - (0.2) 1.4
=======
Other Markets 1,145 1,335 (14.2) 6.7 29.7 22.2
Vantage Towers 795 619 28.4 (21.0) 0.5 7.9
Common Functions (139) (197)
Eliminations - -
------------------------------------- ------ ------ -------- ------- --------- --------
Group 14,665 15,208 (3.6) (0.1) 2.4 (1.3)
------------------------------------- ------ ------ -------- ------- --------- --------
Percentage point change in Adjusted
EBITDAaL margin
Germany 40.6% 43.2% (2.6) - - (2.6)
Italy 30.2% 33.8% (3.6) - - (3.6)
UK 19.8% 21.2% (1.4) - 0.1 (1.3)
Spain 24.2% 22.9% 1.3 - - 1.3
Other Europe 28.4% 28.4% - - - -
Vodacom 34.2% 35.5% (1.3) - 0.1 (1.2)
Other Markets 29.9% 34.9% (5.0) 2.3 (1.1) (3.8)
Vantage Towers 59.4% 49.4% 10.0 (9.7) (0.1) 0.2
------------------------------------- ------ ------ -------- ------- --------- --------
Group 32.1% 33.4% (1.3) (0.1) - (1.4)
------------------------------------- ------ ------ -------- ------- --------- --------
Note:
1. Prior to disposal, Vantage Towers revenue was reported by the
Group as other revenue, not service revenue.
Non-GAAP measures
Quarter ended 31 March 2023
Reported M&A and Foreign Organic
Q4 FY23 Q4 FY22 growth Other exchange growth*
EURm EURm % pps pps %
---------------------------------- ------- ------- -------- ------- --------- --------
Service revenue(1)
Germany 2,821 2,903 (2.8) - - (2.8)
------- ------- -------- ------- --------- --------
Mobile service revenue 1,235 1,282 (3.7) - - (3.7)
Fixed service revenue 1,586 1,621 (2.2) 0.1 - (2.1)
---------------------------------- ------- ------- -------- ------- --------- --------
Italy 1,055 1,085 (2.8) 0.1 - (2.7)
------- ------- -------- ------- --------- --------
Mobile service revenue 715 758 (5.7) 0.3 - (5.4)
Fixed service revenue 340 327 4.0 (0.4) - 3.6
---------------------------------- ------- ------- -------- ------- --------- --------
UK 1,319 1,341 (1.6) - 5.4 3.8
------- ------- -------- ------- --------- --------
Mobile service revenue 948 972 (2.5) - 5.3 2.8
Fixed service revenue 371 369 0.5 - 5.8 6.3
---------------------------------- ------- ------- -------- ------- --------- --------
Spain 874 908 (3.7) - - (3.7)
Other Europe 1,178 1,242 (5.2) 8.6 0.2 3.6
Vodacom 1,143 1,192 (4.1) - 6.7 2.6
Other Markets 777 801 (3.0) (12.0) 55.0 40.0
Common Functions 128 134
Eliminations (53) (60)
----------------------------------- ------- ------- -------- ------- --------- --------
Total service revenue 9,242 9,546 (3.2) 0.4 4.7 1.9
Other revenue 1,896 1,861
----------------------------------- ------- ------- -------- ------- --------- --------
Revenue 11,138 11,407 (2.4) 0.3 4.7 2.6
----------------------------------- ------- ------- -------- ------- --------- --------
Other growth metrics
Group service revenue excluding
Turkey 8,821 9,262 (4.8) 1.2 4.1 0.5
Vodafone Turkey - Service revenue 430 290 48.3 (33.5) 43.5 58.3
Vodafone Business - Service
revenue 2,582 2,626 (1.7) 1.0 3.6 2.9
South Africa - Financial services
revenue 40 40 - - 14.2 14.2
----------------------------------- ------- ------- -------- ------- --------- --------
Quarter ended 31 December 2022
Reported M&A and Foreign Organic
Q3 FY23 Q3 FY22 growth Other exchange growth*
EURm EURm % pps pps%
---------------------------------- ------- ------- -------- ------- --------- -------
Service revenue(1)
Germany 2,882 2,936 (1.8) - - (1.8)
------- ------- -------- ------- --------- --------
Mobile service revenue 1,279 1,301 (1.7) - - (1.7)
Fixed service revenue 1,603 1,635 (2.0) - - (2.0)
---------------------------------- ------- ------- -------- ------- --------- --------
Italy 1,071 1,107 (3.3) - - (3.3)
------- ------- -------- ------- --------- --------
Mobile service revenue 750 794 (5.5) (0.2) - (5.7)
Fixed service revenue 321 313 2.6 0.1 - 2.7
---------------------------------- ------- ------- -------- ------- --------- --------
UK 1,327 1,292 2.7 - 2.6 5.3
------- ------- -------- ------- --------- --------
Mobile service revenue 977 928 5.3 - 2.8 8.1
Fixed service revenue 350 364 (3.8) - 2.2 (1.6)
---------------------------------- ------- ------- -------- ------- --------- --------
Spain 858 940 (8.7) - - (8.7)
Other Europe 1,275 1,257 1.4 - 0.7 2.1
Vodacom 1,234 1,172 5.3 - (1.8) 3.5
Other Markets 802 867 (7.5) 4.0 37.6 34.1
Common Functions 134 136
Eliminations (63) (60)
----------------------------------- ------- ------- -------- ------- --------- --------
Total service revenue 9,520 9,647 (1.3) 0.3 2.8 1.8
Other revenue 2,118 2,037
----------------------------------- ------- ------- -------- ------- --------- --------
Revenue 11,638 11,684 (0.4) 0.3 2.8 2.7
----------------------------------- ------- ------- -------- ------- --------- --------
Other growth metrics
Group service revenue excluding
Turkey 9,193 9,299 (1.1) - 1.6 0.5
Vodafone Turkey - Service revenue 334 355 (5.9) 10.6 48.2 52.9
Vodafone Business - Service
revenue 2,602 2,604 (0.1) 0.5 2.0 2.4
South Africa - Financial services
revenue 45 39 15.4 (3.3) 0.4 12.5
----------------------------------- ------- ------- -------- ------- --------- --------
Note:
1. Prior to disposal, Vantage Towers revenue was reported by the
Group as other revenue, not service revenue.
Non-GAAP measures
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
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.
Re-presented(1)
FY23 FY22
------------------------------- -------------------------------
Reported Adjustments Adjusted Reported Adjustments Adjusted
EURm EURm EURm EURm EURm EURm
---------------------------------- -------- ----------- -------- -------- ----------- --------
Adjusted EBITDAaL 14,665 - 14,665 15,208 - 15,208
Restructuring costs (587) 587 - (346) 346 -
Interest on lease liabilities 436 - 436 398 - 398
Loss on disposal of property,
plant & equipment and intangible
assets (36) - (36) (28) - (28)
Depreciation and amortisation
on owned assets(2) (9,649) 555 (9,094) (9,858) 509 (9,349)
Share of results of equity
accounted associates and
joint ventures(3) 433 220 653 389 263 652
Impairment loss (64) 64 - - - -
Other income 9,098 (9,098) - 50 (50) -
---------------------------------- -------- ----------- -------- -------- ----------- --------
Operating profit 14,296 (7,672) 6,624 5,813 1,068 6,881
Investment income 248 - 248 254 - 254
Financing costs(4) (1,728) (399) (2,127) (1,964) 28 (1,936)
---------------------------------- -------- ----------- -------- -------- ----------- --------
Profit before taxation 12,816 (8,071) 4,745 4,103 1,096 5,199
Income tax expense(5) (481) (591) (1,072) (1,330) 61 (1,269)
---------------------------------- -------- ----------- -------- -------- ----------- --------
Profit for the financial
year 12,335 (8,662) 3,673 2,773 1,157 3,930
---------------------------------- -------- ----------- -------- -------- ----------- --------
Profit attributable to:
- Owners of the parent 11,838 (8,668) 3,170 2,237 1,153 3,390
- Non-controlled interests 497 6 503 536 4 540
---------------------------------- -------- ----------- -------- -------- ----------- --------
Profit for the financial
year 12,335 (8,662) 3,673 2,773 1,157 3,930
---------------------------------- -------- ----------- -------- -------- ----------- --------
Notes:
1. The results for the year ended 31 March 2022 have been
re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. Operating profit and profit for the
financial year have both increased by EUR149 million and adjusted
operating profit and adjusted profit for the financial year have
both increased by EUR191 million compared to amounts previously
reported. See note 3 'Assets held for sale' in the condensed
consolidated financial statements for more information.
2. 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 47 for
an analysis of depreciation and amortisation. The adjustments of
EUR555 million (FY22: EUR509 million) relate to amortisation of
customer bases and brand intangible assets.
3. See page 46 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.
4. See 'Net financing costs' on page 18 for further analysis.
5. See 'Adjusted tax metrics' on page 46 for further analysis.
Non-GAAP measures
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.
Re-presented(1)
FY23 FY22
EURm EURm
------------------------------------------------------ --------- ---------------
Profit attributable to owners of the parent 11,838 2,237
Adjusted profit attributable to owners of the parent 3,170 3,390
Million Million
--------- ---------------
Weighted average number of shares outstanding - Basic 27,680 29,012
eurocents eurocents
--------- ---------------
Basic earnings per share 42.77c 7.71c
Adjusted basic earnings per share 11.45c 11.68c
------------------------------------------------------ --------- ---------------
Note:
1. The results for the year ended 31 March 2022 have been
re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. This has resulted in an increase in
profit attributable to owners of the parent and adjusted profit
attributable to owners of the parent of EUR149 million and EUR191
million, respectively. As a consequence, basic earnings per share
has increased by 0.51c from 7.20c to 7.71c and adjusted basic
earnings per share has increased by 0.65c from 11.03c to 11.68c.
See note 3 'Assets held for sale' in the condensed consolidated
financial statements for more information.
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 movements in
other companies, although respect of capital additions,
our metric may not be directly disposal of property, plant
comparable to similarly and equipment and intangible
titled measures used by assets, integration capital
other companies. additions and working capital
related items, licences and
spectrum, interest received
and paid, taxation, dividends
received from associates and
joint ventures, 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 and other.
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.
----------------- --------------------------------- --------------------------------------
Non-GAAP measures
Cash flow and funding (continued)
The table below presents the reconciliation between Inflow from
operating activities and Free cash flow.
FY23 FY22
EURm EURm
--------------------------------------------------- ------- -------
Inflow from operating activities 18,054 18,081
Net tax paid 1,234 925
--------------------------------------------------- ------- -------
Cash generated by operations 19,288 19,006
Capital additions (8,378) (8,306)
Working capital movement in respect of capital
additions (215) 157
Disposal of property, plant and equipment and
intangible assets 98 27
Integration capital additions (287) (314)
Working capital movement in respect of integration
capital additions (23) (34)
Licences and spectrum (2,467) (896)
Interest received and paid(1) (1,536) (1,615)
Taxation (1,234) (925)
Dividends received from associates and joint
ventures 617 638
Dividends paid to non-controlling shareholders
in subsidiaries (400) (539)
Payments in respect of lease liabilities (4,087) (3,943)
Other 66 53
--------------------------------------------------- ------- -------
Free cash flow 1,442 3,309
--------------------------------------------------- ------- -------
Note:
1. Includes interest on lease liabilities of EUR372 million
(FY22: EUR361 million).
The table below presents the reconciliation between Borrowings,
Gross debt and Net debt.
Year-end Year-end
FY23 FY22
EURm EURm
----------------------------------------------------- -------- --------
Borrowings (66,390) (70,092)
Lease liabilities 13,364 12,539
Bank borrowings secured against Indian assets 1,485 1,382
Collateral liabilities 4,886 2,914
------------------------------------------------------ -------- --------
Gross debt (46,655) (53,257)
Collateral liabilities (4,886) (2,914)
Cash and cash equivalents 11,705 7,496
Short-term investments 4,305 4,795
Collateral assets 239 698
Derivative financial instruments 4,702 2,954
Less mark-to-market gains deferred in hedge reserves (2,785) (1,350)
------------------------------------------------------ -------- --------
Net debt (33,375) (41,578)
------------------------------------------------------ -------- --------
Non-GAAP measures
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) by dividing Operating profit excluding
interest on lease liabilities, restructuring
Post-tax ROCE costs arising from discrete restructuring
(controlled plans, impairment losses, other
and associates/joint income and expense, the impact of
ventures) hyperinflationary adjustments in
Turkey 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 leased assets
and lease liabilities), intangible
assets (including goodwill), operating
working capital (including held
for sale assets and excluding derivative
balances) and provisions, excluding
the impact of hyper-inflationary
adjustments in Turkey and significant
impacts resulting from business
combinations and disposals. 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.
---------------------- ------------------------------ ----------------------------------------------
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.
Re-presented(1)
FY23 FY22
EURm EURm
---------------------------------------------------- -------- ---------------
Operating profit (2) 14,296 5,813
Borrowings(3) 66,390 70,092
Cash and cash equivalents (11,705) (7,496)
Derivative financial instruments included in trade
and other receivables (6,124) (4,626)
Derivative financial instruments included in trade
and other payables 1,422 1,672
Short-term investments (4,305) (4,795)
Collateral assets (239) (698)
Financial liabilities under put option arrangements 485 494
Equity 64,483 57,073
---------------------------------------------------- -------- ---------------
Capital employed at end of the year 110,407 111,716
Average capital employed for the year 111,062 112,830
ROCE using GAAP measures 12.9% 5.2%
---------------------------------------------------- -------- ---------------
Notes:
1. The results for the year ended 31 March 2022 have been
re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. This has resulted in an increase of
EUR149 million in operating profit and an increase of EUR96 million
in capital employed at the end of the year. Consequently, ROCE
using GAAP measures has increased by 0.2pps from 5.0% to 5.2%
compared to amounts previously reported. See note 3 'Assets held
for sale' in the condensed consolidated financial statements for
more information.
2. Operating profit includes Other income, which includes merger
and acquisition activity that is non-recurring in nature. The
results for the year ended 31 March 2023 include a gain on disposal
of Vantage Towers A.G. of EUR8,607 million, a gain on disposal of
Vodafone Ghana of EUR689 million and a loss on disposal of Vodafone
Hungary of EUR69 million.
Non-GAAP measures
Return on Capital Employed ('ROCE') : Non-GAAP basis
The table below presents the calculation of ROCE using non-GAAP
measures and reconciliations to the closest equivalent GAAP
measure.
Excluding
Vantage Towers(2) Re-presented(1)
FY23 FY22
EURm EURm
--------------------------------------------------- ------------------ ---------------
Operating profit 14,296 5,813
Interest on lease liabilities (436) (398)
Restructuring costs 587 346
Other income (9,098) (50)
Share of results of equity accounted associates
and joint ventures (433) (389)
Impairment loss 64 -
Other adjustments(2) (413) -
--------------------------------------------------- ------------------ ---------------
Adjusted operating profit for calculating pre-tax
ROCE (controlled) 4,567 5,322
Adjusted share of results of equity accounted
associates and joint ventures(3) 430 401
Notional tax at adjusted effective tax rate(4) (1,309) (1,597)
--------------------------------------------------- ------------------ ---------------
Adjusted operating profit for calculating post-tax
ROCE (controlled and associates/joint ventures) 3,688 4,126
Capital employed for calculating ROCE on a GAAP
basis 110,407 111,716
Adjustments to exclude:
- Leases (13,364) (12,539)
- Deferred tax assets (19,316) (19,089)
- Deferred tax liabilities 771 520
- Taxation recoverable (279) (296)
- Taxation liabilities 457 864
- Other investments (1,781) (1,855)
- Investments in associates and joint ventures (11,079) (5,323)
- Pension assets and liabilities (71) (274)
- Other adjustments(2) (877) -
--------------------------------------------------- ------------------ ---------------
Adjusted capital employed for calculating pre-tax
ROCE (controlled) 64,868 73,724
Investments in associates and joint ventures(2) 5,223 5,323
--------------------------------------------------- ------------------ ---------------
Adjusted capital employed for calculating post-tax
ROCE (controlled and associates/joint ventures) 70,091 79,047
Average capital employed for calculating pre-tax
ROCE (controlled) 66,959 74,279
Average capital employed for calculating post-tax
ROCE (controlled and associates/joint ventures) 72,232 79,880
Pre-tax ROCE (controlled) 6.8% 7.2%
Post-tax ROCE (controlled and associates/joint
ventures) 5.1% 5.2%
--------------------------------------------------- ------------------ ---------------
Notes:
1. The results for the year ended 31 March 2022 have been
re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. This has resulted in an increase of
EUR128 million in adjusted operating profit for calculating
post-tax ROCE (controlled and associates/joint ventures) and an
increase of EUR96 million in adjusted capital employed for
calculating post-tax ROCE (controlled and associate/joint
ventures). Consequently, post-tax ROCE (controlled and
associates/joint ventures) has increased by 0.2pps from 5.0% to
5.2% compared to amounts previously reported. There is no impact on
pre-tax ROCE (controlled). See note 3 'Assets held for sale' in the
condensed consolidated financial statements for more
information.
2. Comprises adjustments to exclude the results of Vantage
Towers following its disposal on 22 March 2023 and
hyperinflationary accounting in Turkey. Consequently, FY22 capital
employed for calculating pre-tax ROCE (controlled) and capital
employed for calculating post-tax ROCE (controlled and
associates/joint ventures) have been adjusted to EUR69,050 million
and EUR74,373 million, respectively, for the purposes of
calculating relevant FY23 averages.
3. Adjusted share of results of equity accounted associates and
joint ventures used in post-tax ROCE is a non-GAAP measure and
excludes restructuring costs and other income.
4. Includes tax at the Adjusted effective tax rate of 26.2%
(FY22: 27.9%).
Non-GAAP measures
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 tax effects of items
of the adjusted effective excluded from adjusted basic earnings
tax rate (see below). per share, including: impairment
losses, amortisation of customer
bases and brand intangible assets,
restructuring costs arising from
discrete restructuring plans, other
income and expense and mark-to-market
and foreign exchange movements.
------------------- ------------------------------ --------------------------------------------
Adjusted income 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: impairment losses,
amortisation of customer bases and
brand intangible assets, restructuring
costs arising from discrete restructuring
plans, other income and expense
and mark-to-market and foreign exchange
movements. It also excludes deferred
tax movements relating to tax losses
in Luxembourg as well as other significant
one-off items.
------------------- ------------------------------ --------------------------------------------
Adjusted effective 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
------------------- ------------------------------ --------------------------------------------
Non-GAAP measures
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.
Re-presented(1)
FY23 FY22
EURm EURm
---------------------------------------------------------- ------- ---------------
Profit before taxation 12,816 4,103
Adjustments to derive adjusted profit before tax (8,071) 1,096
---------------------------------------------------------- ------- ---------------
Adjusted profit before taxation 4,745 5,199
Adjusted share of results of equity accounted associates
and joint ventures (653) (652)
---------------------------------------------------------- ------- ---------------
Adjusted profit before tax for calculating adjusted
effective tax rate 4,092 4,547
---------------------------------------------------------- ------- ---------------
Income tax expense (481) (1,330)
Tax on adjustments to derive adjusted profit before
tax (264) (157)
Adjustments:
- UK corporate interest restriction 15 (12)
- Tax relating to hyperinflation accounting (309) -
- Tax relating to Vantage Towers disposal (66) -
- Deferred tax following revaluation of investments
in Luxembourg - 1,468
- Deferred tax on use of Luxembourg losses in
the year 33 327
- Recognition of a deferred tax asset in Luxembourg - (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 (1,072) (1,269)
Adjusted effective tax rate 26.2% 27.9%
---------------------------------------------------------- ------- ---------------
Note:
1. The results for the year ended 31 March 2022 have been
re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. This has resulted in an increase in
profit before taxation and adjusted profit before taxation of
EUR149 million and EUR191 million, respectively. This has been
offset by an equivalent decrease of EUR191 million in the adjusted
share of results of equity accounted associates and joint ventures.
Consequently, there is no net impact on the adjusted profit before
tax for calculating adjusted effective tax rate and therefore there
is no change to the adjusted effective tax rate. See note 3 'Assets
held for sale' in the condensed consolidated financial statements
for more information.
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.
Re-presented(1)
FY23 FY22
EURm EURm
--------------------------------------------------------- ---- ---------------
Share of results of equity accounted associates
and joint ventures 433 389
Restructuring costs 6 12
Other income (9) -
--------------------------------------------------------- ---- ---------------
Adjusted share of results of equity accounted associates
and joint ventures used in post-tax ROCE 430 401
Amortisation of acquired customer base and brand
intangible assets 223 251
--------------------------------------------------------- ---- ---------------
Adjusted share of results of equity accounted associates
and joint ventures 653 652
--------------------------------------------------------- ---- ---------------
Note:
1. The results for the year ended 31 March 2022 have been
re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. This has resulted in an increase of
EUR178 million in adjusted share of results of equity accounted
associates and joint ventures used in post-tax ROCE and an increase
of EUR191 million in adjusted share of results of equity accounted
associates and joint ventures. See note 3 'Assets held for sale' in
the condensed consolidated financial statements for more
information.
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.
FY23 FY22
EURm EURm
----------------------------------------------------------- ------ ------
Depreciation on leased assets - included in Adjusted
EBITDAaL 3,883 3,908
Depreciation on leased assets - included in Restructuring
costs 77 36
----------------------------------------------------------- ------ ------
Depreciation on leased assets 3,960 3,944
Depreciation on owned assets 5,618 5,814
Amortisation of owned intangible assets 4,031 4,044
Depreciation and amortisation on owned assets included
in Restructuring costs 9 43
----------------------------------------------------------- ------ ------
Depreciation and amortisation on owned assets 9,658 9,901
Total depreciation and amortisation on owned and
leased assets 13,618 13,845
Loss on disposal of owned fixed assets 36 28
Loss on disposal of leased assets (9) 2
----------------------------------------------------------- ------ ------
Depreciation and amortisation - as recognised in
the consolidated income statement 13,645 13,875
----------------------------------------------------------- ------ ------
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.
FY23 FY22
EURm EURm
----------------------------------------------- ----- -----
Capital additions 8,378 8,306
Integration related capital additions 287 314
Licence and spectrum additions 439 901
----------------------------------------------- ----- -----
Additions 9,104 9,521
----------------------------------------------- ----- -----
Intangible asset additions 3,250 3,635
Property, plant and equipment owned additions 5,854 5,886
----------------------------------------------- ----- -----
Total additions 9,104 9,521
----------------------------------------------- ----- -----
Definitions
Key terms are defined below. See page 36 for the location of
definitions for non-GAAP measures.
Term Definition
Africa Comprises the Vodacom Group and business in Egypt.
------------------------------------------------------------------
ARPU Average revenue per user, defined as customer revenue and
incoming revenue divided by average customers.
------------------------------------------------------------------
Capital additions Comprises the purchase of owned property, plant and equipment
and other intangible assets, other than licence and spectrum
payments and integration capital additions.
------------------------------------------------------------------
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 leased 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 additions incurred in relation to significant changes
capital additions 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 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
('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 and Albania.
------------------------------------------------------------------
Other Markets Other Markets comprise Turkey and Egypt.
------------------------------------------------------------------
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.
------------------------------------------------------------------
Revenue The total of Service revenue (see below) and Other revenue
(see 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.
------------------------------------------------------------------
WACC Weighted average cost of capital.
------------------------------------------------------------------
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. 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 year ended 31 March 2022 unless otherwise stated.
3. References to "Q1", "Q2", "Q3" and "Q4" are to the three
months ended 30 June, 30 September, 31 December and 31 March,
respectively. References to "H1" and "H2" are to the six month
periods ended 30 September and 31 March, respectively. References
to the "last year", "last financial year" or "FY22" are to the
financial year ended 31 March 2022. References to "FY23" are to the
financial year ended 31 March 2023.
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. On 13 December 2022, Vodafone completed the transfer of
its 55% shareholding in Vodafone Egypt to Vodacom. Vodafone Egypt
will be included within the Vodacom reporting segment from 1 April
2023.
5. Quarterly historical information is provided in a spreadsheet
available at investors.vodafone.com/results
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 document contains 'forward-looking statements' within the
meaning of the US Private Securities Litigation Reform Act of 1995
with respect to the Group's financial condition, results of
operations and businesses, and certain of the Group's plans and
objectives.
In particular, such forward looking statements include
statements with respect to: the Group's expectations and guidance
regarding its financial and operating performance, the performance
of associates and joint ventures, other investments and newly
acquired businesses and expectations regarding customers;
intentions and expectations regarding the development of products,
services and initiatives, including the Group's strategy,
introduced by, or together with, Vodafone or by third parties;
expectations regarding the global economy and the Group's operating
environment and market position, including future market conditions
and other trends; revenue and growth expected from Vodafone
Business; mobile penetration and coverage rates, the Group's
ability to acquire spectrum and licences, including 5G licences,
expected growth prospects across our regions and growth in
customers and usage generally; anticipated benefits to the Group
from cost-efficiency programmes, possible future acquisitions,
including increases in ownership in existing investments, the
timely completion of pending acquisition transactions and pending
offers for investments; expectations and assumptions regarding the
Group's future revenue, operating profit, cash flow depreciation
and amortisation charges, foreign exchange rates, tax rates and
capital expenditure; expectations regarding the Group's access to
adequate funding for its working capital requirements and share
buyback programmes, and the Group's future dividends or its
existing investments; the impact of regulatory and legal
proceedings involving the Group and of scheduled or potential
regulatory changes; and climate change, including emissions targets
and other ESG goals, commitments, targets and ambitions,
climate-related scenarios or pathways and methodologies we use to
assess our progress in relation to these.
Forward-looking statements are sometimes but not always
identified by their use of a date in the future or such words as
'anticipates', 'could', 'will', 'may', 'should', 'expects',
'believes', 'intends', 'plans', 'estimates', or 'targets'. By their
nature, forward-looking statements are inherently predictive,
speculative and involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future
There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied
by these forward-looking statements. These factors include, but are
not limited to the following: general economic and political
conditions in the jurisdictions in which the Group operates and
changes to the associated legal, regulatory and tax environments;
increased competition; levels of investment in network capacity and
the Group's ability to deploy view technologies, products and
services; evolving cyber threats to the Group's services and
confidential data; the Group's ability to embed responses to
climate-related risks into business strategy and operations; 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; slower
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 resources, 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 may 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,
associates, franchises, brand licences, platform sharing or other
arrangements with third parties; acquisitions and divestments of
Group businesses and assets and the pursuit of new, unexpected
strategic opportunities; the Group's ability to integrate acquired
business or assets; the extent of any future write-downs or
impairment charges on the Group's assets, or restructuring charges
incurred as a result of an acquisition or disposition; 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; changes in statutory tax
rates and profit mix; climate change projection risk including, for
example, the evolution of climate change and its impacts, changes
in the scientific assessment of climate change impacts, transition
pathways and future risk exposure and limitations of climate
scenario forecasts; amendments to or new ESG reporting standards,
models or methodologies; changes in ESG data availability and
quality which could result in revisions to reported data going
forward; and climate scenarios and the models that analyse them
have limitations that are sensitive to key assumptions and
parameters, which are themselves subject to some uncertainty.
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 in the summary of our
principal risks in the Group's Annual Report for the year ended 31
March 2022 and half-year results for the six months ended 30
September 2022. 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.
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 2023
-End-
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FR NKPBNKBKBNPD
(END) Dow Jones Newswires
May 16, 2023 02:00 ET (06:00 GMT)
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