REG - Vodafone Group Plc - FY23 Preliminary Results
16/05/2023 07:00
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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 €m €m %
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. ǀ 1. FY22 re-presented for the
reclassification of Indus Towers. See page 31. ǀ 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 €45.7 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 €14.7 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 €4.8 billion, reflecting lower adjusted
EBITDAaL and tax phasing
· Significant reduction in net debt to €33.4 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
(https://investors.vodafone.com/reports-information/results-reports-presentations)
.
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 €45.7 billion (FY22: €45.6 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 €14.7 billion (FY22: €15.2
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 €14.3 billion and the Group made a profit for
the period of €12.3 billion (FY22: €2.8 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
€18.1 billion.
Free cash flow was an inflow of €1.4 billion (FY22: inflow of €3.3
billion) partly reflecting a lower adjusted EBITDAaL, higher licence and
spectrum payments and tax phasing. Adjusted free cash flow was €4.8 billion
(FY22: €5.4 billion).
Net debt decreased by €8.2 billion to €33.4 billion (€41.6 billion as at
31 March 2022). This was driven by free cash inflow of €1.4 billion,
acquisitions and disposals of €8.7 billion, partially offset by equity
dividends of €2.5 billion, and share buybacks of €1.9 billion (used to
offset dilution linked to the conversion of certain mandatory convertible
bonds). Other movements in net debt includes €1.7 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 €16.0 billion (€12.3 billion as at 31 March 2022). This
includes €4.6 billion of net collateral which has been posted to Vodafone
from counterparties as a result of positive mark-to-market movements on
derivative instruments (€2.2 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 €14.7
billion and €4.8 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 €0.2 billion and adjusted free cash
flow by €0.5 billion.
The table below compares the guidance given and our actual performance.
Original guidance Updated guidance FY23 outcome on guidance basis(1) FY23 outcome as reported
Adjusted EBITDAaL(2) €15.0 - €15.5 billion €15.0-15.2 billion €14.9 billion €14.7 billion
Adjusted free cash flow(2,3) c. €5.3 billion c.€5.1 billion €5.3 billion €4.8 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 €13.3 billion
and adjusted free cash flow is €4.2 billion.
Based on the current prevailing assessments of the global macroeconomic
outlook, for FY24 we expect:
· Adjusted EBITDAaL to be 'broadly flat' at around €13.3 billion;
and
· Adjusted free cash flow to be 'around' €3.3 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
€1 : GBP 0.84; €1 : ZAR 17.32; €1 : TRY 16.75; €1 : 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
(https://investors.vodafone.com/reports-information/results-reports-presentations?tab=fy21)
). 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 €45.7 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 €14.7 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 €0.2 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
€m €m 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 €1:£0.86,
€1:INR 83.69, €1:ZAR 17.69, €1:TRY 18.53 and €1: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 €149 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 €3,883 million (FY22:
€3,908 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 €m €m €m €m €m €m €m €m €m €m €m
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
€m €m 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 €13.1 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 €800 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
€m €m 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 €4.8 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 €105 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
€m €m 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 €6.8 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
€m €m 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 €3.9 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
€m €m 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 €5.7 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 (€1.6 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
€m €m 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 €6.3 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 €167 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 €577 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 (https://vodacom.com/)
Other Markets ⫶ 9% of Group service revenue
FY23 FY22 Reported Organic
€m €m 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 €3.8 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
€m €m 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 €1.3 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 €795 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 €4.9 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
€m €m
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 €178 million
compared to €nil 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 €4.1 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 €165 million in dividends from the joint venture, as
well as €51 million in interest payments.
Safaricom Associate (Kenya)
Safaricom service revenue grew to €2.3 billion due to a higher customer base
and continued data revenue and M-Pesa growth. In FY23, we received €249
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
€m €m 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 €230 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 €197 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 €88 million charge relating to the disposal of
Vantage Towers.
The effective tax rate also includes a tax credit of €309m relating to the
impacts of hyperinflation accounting in Turkey and a €33 million tax charge
(2022: €327 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
€1,468 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 €699
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 €593 million
following the increase in the corporate tax rate to 25% and; iv) €273
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
€m €m 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 €18,054 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 €379 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 €13,430 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
€m €m 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
€372 million outflow (FY22: €361 million) included within Adjusted
EBITDAaL and €26 million of cash outflow (FY22: €58 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 €534 million
(FY22: €256 million gain), together with €1,739 million (FY22: €55
million) for the repayment of debt in relation to licenses and spectrum in
Italy.
7. Other adjustments in FY23 includes €120 million received in respect of
the Group's new fibre joint venture in Germany and an allocation of €43
million from the Vodafone Hungary proceeds for future services to be provided
by the Group. The amount for FY22 includes a special dividend of €194
million paid to the minority shareholders in Egypt.
Adjusted free cash flow decreased by €595 million to €4,842 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
€m €m 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 €44,116 million (FY22: €48,031
million), lease liabilities of €13,364 million (FY22: €12,539 million) and
cash collateral liabilities €4,886 million (FY22: €2,914 million).
The decrease in borrowings of €3,702 million was principally driven by
repayments of bonds of €5,742 million, Italy licences and spectrum
liabilities of €1,739 million and the disposal of our controlling interest
in Vantage Towers of €2,188 million, partially offset by bonds issued of
€3,577 million, an increase in collateral liabilities of €1,972 million
and lease liabilities of €825 million.
Funding position
FY23 FY22 Reported
€m €m 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 €1,338 million (FY22: €1,446 million)
of highly liquid government and government-backed securities and managed
investment funds of €2,967 million (FY22: €3,349 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 €2,785 million gain (FY22: €1,350 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 €8,203 million to €33,375 million. This was driven
by the free cash inflow of €1,442 million and acquisitions and disposals of
€8,727 million, partially offset by equity dividends of €2,484 million,
share buybacks of €1,893 million (used to offset dilution linked to the
conversion of certain mandatory convertible bonds). Other movements in net
debt includes €1,730 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 €13,364 million (€12,539 million as at 31
March 2022);
- KDG put option liabilities of €485 million (€494 million as at
31 March 2022);
- Guarantee over Australia joint venture loan of €1,611 million
(€1,573 million as at 31 March 2022); and
- Pension liabilities of €258 million (€281 million as at 31 March
2022).
The Group's gross and net debt includes €9,942 million (€9,942 million as
at 31 March 2022) of long-term borrowings ('Hybrid bonds') for which a 50%
equity characteristic of €4,971 million (€4,971 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 €1,282 million
higher value (€1,316 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 €1,440 million (€1,456 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
€7.7 billion comprising euro and US dollar revolving credit facilities of
€4.0 billion and US$4.0 billion (€3.7 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 €10
billion respectively.
Post employment benefits
As at 31 March 2023, the Group's net surplus of scheme assets over scheme
liabilities was €71 million (FY22: €274 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
€m €m
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
€m €m
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 (607) 1,852
years
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 (160) 483
subsequent years
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
€m €m
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
Share Additional Treasury Accumulated Equity attributable to the owners Non- Total equity
capital paid-in shares comprehensive controlling
capital(1) losses(2) interests
€m €m €m €m €m €m €m
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 €96
million, resulting in an increase of €96 million in total equity compared to
amounts previously reported. As at 31 March 2021, accumulated comprehensive
losses increased by €48 million, resulting in a decrease of €48 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
€m €m
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 €26 million of cash outflow (FY22: €58 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 €11,705 million (FY22: €7,496 million),
together with overdrafts of €77 million (FY22: €125 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 €11.6 billion of cash and
cash equivalents available as at 31 March 2023 which, together with undrawn
revolving credit facilities of €7.7 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 €565 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 €1:20.85 TRL and €1:58.59 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)
€m
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
€m €m
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 €178 million, offset by a
decrease of €29 million in other income. Consequently, operating profit,
profit before taxation and profit for the financial year all increased by
€149 million compared to amounts previously reported.
Total comprehensive income for the financial year increased by €144 million,
reflecting the increase in profit for the financial year of €149 million,
offset by a charge of €5 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.
As previously Impact of
presented reclassification Re-presented
2022 2022 2022
€m €m €m
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 (€719 million) following payments made under this mechanism from
Vodafone to VIL, in the year ended 31 March 2021, totalling INR 19 billion
(€235 million).
On 7 February 2023, VIL issued equity to the Government of India equivalent to
INR 161 (€1.8 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 €nil and the Group is recording no
further share of losses in respect of VIL. The Group's potential exposure to
liabilities within VIL is capped by the mechanism described above;
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 (€279 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 (€544 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 (€393 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 (€49 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 €1.5 billion as at 31 March 2023 secured against Indian assets
('the bank borrowings'), with a maximum liability cap of INR 42.5 billion
(€476 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 €471 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 €239 million (plus interest of €628 million), which VISPL
has been assessed as owing in respect of (i) a transfer pricing margin charged
for the international call centre of HTIL prior to the 2007 transaction with
Vodafone for HTIL assets in India; (ii) the sale of the international call
centre by VISPL to HTIL; and (iii) the acquisition of and/or the alleged
transfer of options held by VISPL in Vodafone India. The first two of the
three heads of tax are subject to an indemnity by HTIL. The larger part of the
potential claim is not subject to an indemnity. A stay of the tax demand on a
deposit of £20 million and a corporate guarantee by VIHBV for the balance of
tax assessed are in place. On 8 October 2015, the Bombay High Court ruled in
favour of Vodafone in relation to the options and the call centre sale. The
Indian Tax Authority has appealed to the Supreme Court of India. The appeal
hearing has been adjourned indefinitely.
While there is some uncertainty as to the outcome of the tax cases involving
VISPL, the Group believes it has valid defences and does not consider it
probable that a financial outflow will be required to settle these cases.
Netherlands tax case
Vodafone Europe BV (VEBV) has received assessments totalling €267m 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 €500 million against Vodafone Italy in
the Civil Court of Milan. The claim alleges anti-competitive behaviour in
relation to portability and certain advertising campaigns by Vodafone Italy.
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 €330 million for purported damage caused by the alleged abuse
of dominance and wrongful termination of a franchise arrangement with a
Papistas company. Lawsuits which the Papistas claimants had previously brought
against Vodafone Group Plc and certain directors and officers of Vodafone were
withdrawn. Vodafone Greece filed a counter claim and all claims were heard in
February 2020. All of the Papistas claims were rejected by the 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 £1 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 €1,247 million and €1,226 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.
Non-GAAP measure Defined on page Closest equivalent GAAP measure Reconciled on page
Performance metrics
Adjusted EBITDAaL Page 37 Operating profit Page 7
Organic Adjusted EBITDAaL growth Page 37 Not applicable -
Organic revenue growth Page 37 Revenue Pages 38 and 39
Organic Group service revenue growth excluding Turkey Page 37 Service revenue Pages 38 and 39
Organic Group Adjusted EBITDAaL growth excluding Turkey Page 37 Not applicable -
Organic service revenue growth Page 37 Service revenue Pages 38 and 39
Organic mobile service revenue growth Page 37 Service revenue Pages 38 and 39
Organic fixed service revenue growth Page 37 Service revenue Pages 38 and 39
Organic Vodafone Business service revenue growth Page 37 Service revenue Pages 38 and 39
Organic financial services revenue growth in South Africa Page 37 Service revenue Pages 38 and 39
Other metrics
Adjusted profit attributable to owners of the parent Page 40 Profit attributable to owners of the parent Page 40
Adjusted basic earnings per share Page 40 Basic earnings per share Page 41
Cash flow, funding and capital allocation metrics
Free cash flow Page 41 Inflow from operating activities Page 42
Adjusted free cash flow Page 41 Inflow from operating activities Pages 20 and 42
Gross debt Page 41 Borrowings Page 42
Net debt Page 41 Borrowings less cash and cash equivalents Page 42
Pre-tax ROCE (controlled) Page 43 ROCE calculated using GAAP measures Pages 43 and 44
Post-tax ROCE (controlled and associates/joint ventures) Page 43 ROCE calculated using GAAP measures Pages 43 and 44
Financing and Taxation metrics
Adjusted net financing costs Page 45 Net financing costs Page 18
Adjusted profit before taxation Page 45 Profit before taxation Page 46
Adjusted income tax expense Page 45 Income tax expense Page 46
Adjusted effective tax rate Page 45 Income tax expense Page 46
Adjusted share of results of equity accounted associates and joint ventures Page 45 Share of results of equity accounted associates and joint ventures Page 46
Adjusted share of results of equity accounted associates and joint ventures Page 45 Share of results of equity accounted associates and joint ventures Page 46
used in post-tax ROCE
Non-GAAP measures
Performance metrics
Non-GAAP measure Purpose Definition
Adjusted EBITDAaL Adjusted EBITDAaL is used in conjunction with financial measures such as Adjusted EBITDAaL is operating profit after depreciation on lease-related
operating profit to assess our operating performance and profitability. right of use assets and interest on lease liabilities but excluding
depreciation, amortisation and gains/losses on disposal of owned assets and
It is a key external metric used by the investor community to assess excluding share of results of equity accounted associates and joint ventures,
performance of our operations. impairment losses, restructuring costs arising from discrete restructuring
plans, other income and expense and significant items that are not considered
It is our segment performance measure in accordance with IFRS 8 (Operating by management to be reflective of the underlying performance of the Group.
Segments).
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 growth M&A and Other Foreign exchange Organic growth*
FY23 FY22
€m €m % 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 growth M&A and Other Foreign exchange Organic growth*
Q4 FY23 Q4 FY22
€m €m % 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 growth M&A and Other Foreign exchange Organic growth*
Q3 FY23 Q3 FY22
€m €m % 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 attributable to owners of the parent This metric is used in the calculation of adjusted basic earnings per share. Adjusted profit attributable to owners of the parent excludes restructuring
costs arising from discrete restructuring plans, amortisation of customer
bases and brand intangible assets, impairment losses, other income and expense
and mark-to-market and foreign exchange movements, together with related tax
effects.
Adjusted basic earnings per share This performance measure is used in discussions with the investor community. Adjusted basic earnings per share is Adjusted profit attributable to owners of
the parent divided by the weighted average number of shares outstanding. This
is the same denominator used when calculating basic earnings 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
€m €m €m €m €m €m
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 €149 million and adjusted operating
profit and adjusted profit for the financial year have both increased by
€191 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 €555
million (FY22: €509 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
€m €m
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 €149 million and €191 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 EBITDAaL after cash flows in relation to capital
additions, working capital movements in respect of capital additions, disposal
External metric used by investor community. of property, plant and equipment and intangible assets, integration capital
additions and working capital related items, licences and spectrum, interest
Assists comparability with other companies, although our metric may not be received and paid, taxation, dividends received from associates and joint
directly comparable to similarly titled measures used by other companies. ventures, dividends paid to non-controlling shareholders in subsidiaries and
payments in respect of lease liabilities.
Adjusted free cash flow Internal performance reporting. Adjusted free cash flow is Free cash flow before licences and spectrum,
restructuring costs arising from discrete restructuring plans, integration
External metric used by investor community. capital additions and working capital related items, M&A and Vantage
Towers growth capital expenditure and other.
Setting director and management remuneration.
Growth capital expenditure is total capital expenditure excluding
Key external metric used to evaluate liquidity and the cash generated by our maintenance-type expenditure.
operations.
Gross debt Prominent metric used by debt rating agencies and the investor community. Non-current borrowings and current borrowings, excluding lease liabilities,
collateral liabilities and borrowings specifically secured against Indian
assets.
Net debt Prominent metric used by debt rating agencies and the investor community. Gross debt less cash and cash equivalents, short-term investments, 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
€m €m
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 €372 million (FY22: €361 million).
The table below presents the reconciliation between Borrowings, Gross debt and
Net debt.
Year-end FY23 Year-end FY22
€m €m
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 Employed ('ROCE') ROCE is a metric used by the investor community and reflects how efficiently We calculate ROCE by dividing Operating profit by the average of capital
we are generating profit with the capital we deploy. employed as reported in the consolidated statement of financial position.
Capital employed includes borrowings, cash and cash equivalents, derivative
financial instruments included in trade and other receivables/payables,
short-term investments, collateral assets, financial liabilities under put
option arrangements and equity.
Pre-tax ROCE (controlled) As above We calculate pre-tax ROCE (controlled) by dividing Operating profit excluding
interest on lease liabilities, restructuring costs arising from discrete
restructuring plans, impairment losses, other income and expense, the impact
of hyperinflationary adjustments in Turkey and the share of results of equity
Post-tax ROCE (controlled and associates/joint ventures) 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
€m €m
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 €149 million in operating profit and an
increase of €96 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
€8,607 million, a gain on disposal of Vodafone Ghana of €689 million and a
loss on disposal of Vodafone Hungary of €69 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
€m €m
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 3,688 4,126
associates/joint ventures)
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 70,091 79,047
associates/joint ventures)
Average capital employed for calculating pre-tax ROCE (controlled) 66,959 74,279
Average capital employed for calculating post-tax ROCE (controlled and 72,232 79,880
associates/joint ventures)
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 €128 million in adjusted operating profit for
calculating post-tax ROCE (controlled and associates/joint ventures) and an
increase of €96 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 €69,050 million and
€74,373 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 financing costs This metric is used by both management and the investor community. Adjusted net financing costs exclude mark-to-market and foreign exchange
gains/losses.
This metric is used in the calculation of adjusted basic earnings per share.
Adjusted profit before taxation This metric is used in the calculation of the adjusted effective tax rate (see Adjusted profit before taxation excludes the tax effects of items excluded
below). from adjusted basic earnings per share, including: impairment losses,
amortisation of customer bases and brand intangible assets, restructuring
costs arising from discrete restructuring plans, other income and expense and
mark-to-market and foreign exchange movements.
Adjusted income tax expense This metric is used in the calculation of the adjusted effective tax rate (see Adjusted income tax expense excludes the tax effects of items excluded from
below). adjusted basic earnings per share, including: impairment losses, amortisation
of customer bases and brand intangible assets, restructuring costs arising
from discrete restructuring plans, other income and expense and mark-to-market
and foreign exchange movements. It also excludes deferred tax movements
relating to tax losses in Luxembourg as well as other significant one-off
items.
Adjusted effective tax rate This metric is used by both management and the investor community. Adjusted income tax expense (see above) divided by Adjusted profit before
taxation (see above).
Adjusted share of results of equity accounted associates and joint ventures This metric is used in the calculation of adjusted effective tax rate. Share of results of equity accounted associates and joint ventures excluding
restructuring costs, amortisation of acquired customer base and brand
intangible assets and other income and expense.
Adjusted share of results of equity accounted associates and joint ventures This metric is used in the calculation of post-tax ROCE (controlled and Share of results of equity accounted associates and joint ventures excluding
used in post-tax ROCE associates/joint ventures). restructuring costs and other income and expense.
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
€m €m
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 - (593)
corporate tax rate
- 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 €149 million and €191 million, respectively. This has
been offset by an equivalent decrease of €191 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
€m €m
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 430 401
used in post-tax ROCE
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 €178 million in adjusted share of results of
equity accounted associates and joint ventures used in post-tax ROCE and an
increase of €191 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
€m €m
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 13,645 13,875
statement
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
€m €m
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 customer A customer who receives fixed and mobile services (also known as unified
communications) on a single bill or who receives a discount across both bills.
Depreciation and amortisation The accounting charge that allocates the cost of tangible 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 services revenue Financial services revenue includes fees generated from the provision of
advanced airtime, overdraft, financing 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 revenue Service revenue (see below) relating to the provision of fixed line and
carrier services.
GAAP Generally Accepted Accounting Principles.
IFRS International Financial Reporting Standards.
Incoming revenue Comprises revenue from termination rates for voice and messaging to Vodafone
customers.
Integration capital additions Capital additions incurred in relation to significant changes in the operating
model, such as the integration of recently acquired subsidiaries.
Internet of Things ('IoT') The network of physical objects embedded with electronics, software, sensors,
and network connectivity, including built-in mobile SIM cards, that enables
these objects to collect data and exchange communications with one another or
a database.
Mobile service revenue Service revenue (see below) relating to the provision of mobile services.
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 networks ('NGN') Fibre or cable networks typically providing high-speed broadband.
Operating expenses Comprise primarily sales and distribution costs, network and IT related
expenditure and business support costs.
Other Europe Other Europe markets include Portugal, Ireland, Greece, Romania, Czech
Republic 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 growth Reported growth is based on amounts reported in euros and determined under
IFRS.
Revenue The total of Service revenue (see below) and Other revenue (see above).
Roaming and Visitor Roaming: allows customers to make calls, send and receive 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 Business Vodafone Business is part of the Group and partners with 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
(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 © Vodafone Group
2023
-End-
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