REG - Vodafone Group Plc - Half-year Report
16/11/2021 07:05
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20211116:nRSP4542Sa&default-theme=true
RNS Number : 4542S Vodafone Group Plc 16 November 2021
Vodafone Group Plc ⫶ H1 FY22 results
16 November 2021
Demonstrating sustainable growth in both Europe and Africa
· Group service revenue growth of 2.8%* in the first half of FY22
· Adjusted EBITDAaL growth of 6.5%* and margin expansion of 0.7*
percentage points year-on-year to 33.6%
· Good performance in Germany with 1.2%* service revenue growth and 7.7%*
Adjusted EBITDAaL growth
· Pre-tax return on capital employed increased by 0.8 percentage points
to 6.3%
· Committed to improving returns through growth and portfolio action
Financial results H1 FY22 H1 FY21 Change(1)
Page €m €m %
Group revenue 12 22,489 21,427 5.0
Group service revenue 12 19,010 18,418 2.8*
Operating profit(2) 12 2,620 3,354 (21.9)
Adjusted EBITDAaL(2,3) 12 7,565 7,011 6.5*
Profit for the financial period(2) 12 1,277 1,468
Basic earnings per share(2) 23 3.40c 4.30c
Adjusted basic earnings per share(2,3) 23 4.90c 3.96c
Interim dividend per share 39 4.50c 4.50c
Cash inflow from operating activities 23 6,455 6,009 7.4
Adjusted free cash flow(3) 24 23 451
Net debt(2,3) 25 (44,298) (43,886) (0.9)
1. "*" represents organic growth. See page 2. ǀ 2. Prior period re-presented
for Vodafone Egypt which is no longer held for sale. See pages 24 and 30.
3. Non-GAAP measure. See page 46.
· Group revenue increased by 5.0% to €22.5 billion, mainly driven by
service revenue growth in Europe and Africa
· FY22 Adjusted EBITDAaL guidance narrowed to top end of range €15.2 -
€15.4 billion (from €15.0 - €15.4 billion), and Adjusted free cash flow
upgraded to at least €5.3 billion (from at least €5.2 billion)
· Interim dividend per share of 4.5 eurocents, record date 26 November
2021
Nick Read, Group Chief Executive, commented:
"The results show we have demonstrated good sustainable growth and solid
commercial momentum. Our strengthened performance in Africa and Europe puts us
on track to be at the top end of our guidance for this year, as well as firmly
within our medium-term financial ambitions.
We know there is more to do and our focus remains on driving growth. We are
structured for value creation, with operational priorities and portfolio
actions which are designed to improve returns at pace."
For more information, please contact:
Investor
Relations
Media Relations
Investors.vodafone.com
Vodafone.com/media/contact
ir@vodafone.co.uk
GroupMedia@vodafone.com
Registered Office: Vodafone House, The Connection, Newbury, Berkshire RG14
2FN, England. Registered in England No. 1833679
A webcast Q&A session will be held at 10am on 16 November 2021. The
webcast and supporting information can be accessed at investors.vodafone.com
Summary ⫶ Good financial performance
Organic growth
All amounts marked with an "*" in the commentary represent organic growth
which presents performance on a comparable basis, excluding the impact of
foreign exchange rates, mergers and acquisitions and other adjustments to
improve the comparability of results between periods. When calculating organic
growth, the FY21 results for Vantage Towers have been adjusted to reflect a
full year of operation on a proforma basis in order to be comparable to FY22.
Organic growth figures are non-GAAP measures. See non-GAAP measures on page 46
for more information.
Adjusted EBITDAaL
Adjusted EBITDA is now referred to as Adjusted EBITDAaL for FY22, with no
change in the underlying definition. Adjusted EBITDAaL is a non-GAAP measure.
See page 46 for more information.
Adjusted free cash flow
Adjusted free cash flow was previously referred to as free cash flow (pre
spectrum, restructuring and integration costs). For the year ending 31 March
2022, the metric excludes Vantage Towers growth capital expenditure. Adjusted
free cash flow is a non-GAAP measure. See page 46 for more information.
Financial performance
Total revenue increased by 5.0% to €22.5 billion (FY21 H1: €21.4 billion),
driven by service revenue growth in Europe and Africa and a recovery in
handset sales following COVID-19 disruption in the prior year, as well as
favourable foreign exchange movements.
Adjusted EBITDAaL increased by 6.5%* to €7.6 billion (FY21 H1: €7.0
billion) due to revenue growth and a legal settlement in Italy. The Adjusted
EBITDAaL margin was 0.7* percentage points higher year-on-year at 33.6%.
Operating profit decreased by 21.9% to €2.6 billion (FY21 H1: €3.4
billion), reflecting a prior year gain of €1.0 billion arising on the merger
of Vodafone Hutchison Australia into TPG Telecom Limited. Excluding this,
operating profit increased, reflecting higher Adjusted EBITDAaL and lower
depreciation and amortisation, partly offset by a lower share of profits from
associates and joint ventures.
The Group made a profit for the period of €1.3 billion (FY21 H1: €1.5
billion). The profit decrease was primarily driven by lower operating profit
more than offsetting lower financing costs and a net income tax credit. The
tax credit was attributable to one-off deferred tax credits in the UK and
Italy reflecting the increase in the future statutory tax rate in the UK and
the revaluation of assets in Italy.
Basic earnings per share was 3.40 eurocents, compared to basic earnings per
share of 4.30 eurocents in the prior year.
Cash flow, funding & capital allocation
Cash inflow from operating activities increased by 7.4% to €6.5 billion
(FY21 H1: €6.0 billion).
Free cash flow was an outflow of €1.0 billion (FY21 H1: outflow of €0.1
billion). Higher Adjusted EBITDAaL was offset by higher working capital
attributed to seasonal phasing, higher dividends paid to non-controlling
shareholders in subsidiaries, and higher licence and spectrum payments during
the period. Adjusted free cash flow was an inflow of €23 million (FY21 H1:
inflow of €0.5 billion) and is now expected to be higher than initially
guided and at least €5.3 billion in FY22. See page 11 for further
information.
Net debt at 30 September 2021 was €44.3 billion, compared to €40.5 billion
as at 31 March 2021. Net debt increased by €3.8 billion due to the free cash
outflow of €1.0 billion, equity dividends of €1.3 billion, share buybacks
used to offset share dilution linked to mandatory convertible bonds of €1.1
billion, and other movements relating to mark-to-market losses recognised in
the income statement of €0.4 billion.
The interim dividend per share is 4.5 eurocents (FY21 H1: 4.5 eurocents). The
ex-dividend date for the interim dividend is 25 November 2021 for ordinary
shareholders, the record date is 26 November 2021 and the dividend is payable
on 4 February 2022.
Strategy ⫶ Focused on growth
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 provided a full update in our FY21 Annual Report and
supplementary materials (available on investors.vodafone.com
(https://investors.vodafone.com/reports-information/results-reports-presentations?tab=fy21)
). We have also made further progress with respect to our purpose strategy
during the first half of FY22.
In November 2018, we set out our ambition to reshape Vodafone and establish a
foundation from which the Group can grow in the converged connectivity markets
in Europe, and mobile data and financial services markets in Africa. As we
begin the second phase of this transformation to become a new generation
connectivity and digital services provider, in this section we outline that:
1. our strategy is focused on growth and improving shareholder
returns;
2. we have clear near-term operational priorities; and
3. we have further strategic opportunities through portfolio
optimisation.
1 ⫶ Strategy focused on growth & improving shareholder returns
We have now substantially delivered the first phase of our strategic ambition
to reshape Vodafone into a stronger connectivity provider. This has been
delivered through four key strategic priorities: (i) deepening customer
engagement; (ii) accelerating our transformation to a digital first
organisation; (iii) improving the utilisation of our assets; and (iv)
optimising our portfolio. We executed at pace across all four priorities
between FY19 and FY21 and by the end of March 2021, the three year highlights
included:
· mobile contract customer loyalty in Europe improved by 2.3 percentage
points;
· we added 4.3 million NGN broadband customers in Europe;
· we increased the number of homes passed with our 1 gigabit capable
fixed-line network in Europe to 43.7 million;
· we launched 5G in 240 cities across 10 of our European markets;
· we delivered a €1.3 billion net reduction in operating expenditure
in Europe and Common Functions;
· we agreed 8 strategic network sharing partnerships with 9 mobile
network operators in 7 markets; and
· we executed 19 significant corporate transactions to optimise our
portfolio.
The systematic execution of our strategy translated into more consistent
commercial performance and stronger financial performance, which can be
summarised as:
· a significant improvement in service revenue performance;
· ongoing improvements in Adjusted EBITDAaL margins, growing from 31.6%
in FY18 to 33.6% in H1 FY22;
· consistent free cash flow generation, resulting in a sustainable
dividend policy of at least 9 eurocents per annum; and
· a continued focus on return on capital employed, with a 0.4
percentage point improvement in pre-tax ROCE to 6.3% between FY19 and H1 FY22.
The next phase of our strategy focuses on driving shareholder returns through
growth. This will be delivered through three customer commitments and three
enabling strategies, all of which work together towards realising our vision
to become a new generation connectivity and digital services provider for
Europe and Africa, enabling an inclusive and sustainable digital society.
A ⫶ Strategic Progress Summary
Customer commitments Enabling strategies
· Best connectivity products and services · Simplified and most efficient operator
· Leading innovation in digital services · Social contract shaping the digital society
· Outstanding digital experiences · Leading gigabit networks
Customer commitments Units H1 FY22 H1 FY21
Best connectivity products & services
Europe mobile contract customers(1) million 66.0 65.0
Europe broadband customers(1) million 25.6 25.4
Europe Consumer converged customers(1) million 8.3 7.6
Europe mobile contract customer churn % 13.1 12.9
Africa mobile customers(2) million 186.0 170.9
Africa data users(2) million 87.6 84.5
Business service revenue growth* % 1.2 (1.5)
Leading innovation in digital services
Europe TV subscribers(1) million 22.2 22.3
IoT SIM connections million 136 112
Africa M-Pesa customers(2) million 49.0 45.3
Africa M-Pesa transaction volume(2) billion 9.3 6.8
Outstanding digital experiences
Digital channel sales mix(3 4) % 24 22
End-to-end TOBi completion rate(5 6) % 41 33
1. Including VodafoneZiggo | 2. Africa including Safaricom | 3. Based on
Germany, Italy, UK, Spain only | 4. Figure presented in H1 FY21 column
reflects Europe digital channel sales mix in Q2 FY21 as the mix in Q1 was
impacted by retail restrictions due do COVID-19 | 5. Group excluding Egypt |
6. Defined as percentage of total customer contacts resolved without human
interaction through TOBi
Enabling strategies Units H1 FY22 H1 FY21
Leading gigabit networks
5G available in European cities(1) # 244 127
Europe on-net gigabit capable connections(1) million 46.5 39.4
Europe on-net NGN broadband penetration(1) % 30 30
Simplified & most efficient operator H1 FY22 FY21
Pre-tax return on capital employed(2 3) % 6.3 5.5
Post-tax return on capital employed(2 4) % 4.3 3.9
Europe markets where 3G switched off(1) # 4 1
1. Including VodafoneZiggo | 2. These line items are non-GAAP measures. See
page 46 for more information. The half-year ROCE calculation is based on
returns for the 12 months ended 30 September 2021. | 3. Controlled | 4.
Controlled and associates/joint ventures
Further information on our strategy can be found through the following links:
Resource Link
Second phase of strategy vodafone.com/ar2021
(https://investors.vodafone.com/sites/vodafone-ir/files/2021-05/vodafone-annual-report-2021.pdf#page=18)
Digital services & outstanding experience investors.vodafone.com/digital-services
(http://www.investors.vodafone.com/digital-services)
Leading gigabit networks investors.vodafone.com/vtbriefing (http://investors.vodafone.com/vtbriefing)
Vodafone Business investors.vodafone.com/vbbriefing (http://investors.vodafone.com/vbbriefing)
Vantage Towers vantagetowers.com (https://www.vantagetowers.com/)
2 ⫶ Clear near-term operational priorities
In addition to the ongoing systematic execution of the second phase of our
strategy, we have three operational areas that are currently being
prioritised:
A. strengthen commercial momentum in Germany;
B. accelerate operational transformation in Spain; and
C. position Vodafone Business to maximise EU recovery funding
opportunities.
A ⫶ Strengthen commercial momentum in Germany
Germany is both the largest connectivity market in Europe and Vodafone's
biggest market, representing 38.2% of Group Adjusted EBITDAaL in the first
half of FY22. Germany has benefited from a more rational competitive
environment compared to many other markets in Europe and is the only top five
European market to have experienced ARPU growth for both mobile and fixed
connectivity since 2017. Alongside the scale and rational market structure,
Germany also presents the most significant converged connectivity opportunity
of our larger markets, with only 18% of our mobile customers taking a fixed
connectivity product, compared with 54% in Spain. Similarly, only 14% of our
fixed connectivity customers in Germany take a mobile connectivity product,
compared with 90% in Spain.
We are focused on taking advantage of this significant opportunity through the
structural advantage we have created with our fixed connectivity services.
Following the acquisition and commercial integration of the former Unitymedia
assets, we can now reach over 23 million homes in Germany with 1 gigabit per
second fixed line connectivity. Gigabit availability will also be rolled out
to a further 1 million homes by the end of the financial year. Beyond this, we
have clear upgrade plans for our hybrid fibre cable network that include a mix
of demand-driven node-splitting - bringing fibre closer to our customers - and
options for upgrading the last stretch of cable into customers' homes.
Compared with other markets, we have a more traditional sales mix with respect
to retail, online and call centres in Germany. This has contributed to a lower
rate of winning new customers as our traditional retail channels have been
significantly impacted by COVID-19, with lockdowns and lower footfall. As
retail footfall recovers, we are focused on strengthening our commercial
momentum through stronger marketing campaigns, enhanced targeting of existing
customers with attractive cross-selling and up-selling products, and further
leveraging of the shared Group capabilities we have created for effective
digital marketing.
B ⫶ Accelerate operational transformation in Spain
Over the last four years, the competitive environment in Spain has intensified
as the number of customer-facing brands has increased from around 60 in 2017
to almost 80 in 2021. This has resulted in significant price deflation, with
mobile contract ARPU across the market declining by 16% since 2017. Given the
relatively high operating leverage within the sector, this price deflation has
had a significant impact on our financial performance in Spain.
Following a series of measures conducted between FY19 and FY21, we have
stabilised our financial performance and are working to further support
returns. We have recently concluded a restructuring plan, mainly affecting
owned retail stores, as a part of our operational transformation and announced
a reorganisation of the local executive committee, with new operational units
focused on competitiveness and digitalisation in the Consumer segment.
Given the market backdrop, we have also conducted extensive interaction with
policy makers and regulators at both the national and European level. We are
pleased that a series of spectrum and taxation reforms are being pursued,
including:
· a well-structured spectrum auction, with an outcome below European
benchmark levels;
· longer duration for new licences with an extension of 20 years after
the initial 20-year term;
· the consideration of the reduction of spectrum licence fees; and
· the consideration of the cessation of television taxation for network
operators.
In addition to these improvements, we are also actively pursuing further
market structure opportunities including enhancing strategic network
partnerships and in-market consolidation. We are also working to maximise the
opportunities available for Vodafone Business from EU recovery funding
programmes, which will be particularly significant in Spain.
C ⫶ Position Vodafone Business to maximise EU funding opportunities
The European Commission has launched a series of funding programmes with
€750 billion available under the banner "NextGenerationEU". These include
the Recovery & Resilience facility, which combines €360 billion of loans
and €312.5 billion of grants available to European Union Member States. Of
these grants, approximately 70% will be allocated to European Union Member
States in which Vodafone has an operating presence. These grants are planned
to be 70% committed by the end of 2022. The range of funding presents a direct
and indirect opportunity given that at least 20% of the total funding is
planned to support the European Commission's digital transformation agenda. We
are tracking the progress of funding applications and approvals at the project
level. The table below summarises the current funding status by country.
Country Total funds Digital allocation Green allocation Released so far
Germany €25.6bn grants 52% 42% €2bn
Italy €68.9bn grants + €122.6bn loans 25% 37% €25bn
Spain €69.5bn grants 28% 40% €9bn
Greece €17.8bn grants + €12.7bn loans 23% 38% €4bn
Portugal €13.9bn grants + €2.7bn loans 22% 38% €2bn
Czechia €7bn 22% 42% €1bn
Ireland €1bn 32% 42% None
Romania €14.2bn grants + €14.9bn loans 21% 41% None
In order to maximise our access to these opportunities, we have mobilised a
dedicated cross-functional team comprising product specialists, business
development executives and experienced regulatory affairs professionals. Our
plans are focused on five core cross-market opportunities: digitalisation of
SMEs; eHealth investments; smart cities; digital initiatives for a greener
Europe; and connected education. We have an attractive and relevant suite of
products and services designed to access funding opportunities available and
further detailed information on the opportunity and our progress will be
outlined in a dedicated virtual investor briefing in 2022.
3 ⫶ Strategic opportunities through portfolio optimisation
Following the launch of the second phase of our strategy to be the new
generation connectivity and digital services provider for Europe and Africa,
we conducted an extensive portfolio review to assess the optimal structure to
deliver our strategy.
Historically, our Group has been managed as a combination of geographically
focused operating companies, which draw from a range of shared services. Over
the last three years, we have been evolving our business model and
organisational structures to operate in a more streamlined and agile matrix.
We continue to recognise the importance of local, in-market scale and
capabilities, but also strive to generate further value from the scale and
breadth of our footprint.
Increasingly, we are managing our Group through four group-wide operational
layers:
A. infrastructure assets;
B. shared operations;
C. growth platforms; and
D. retail & customer service.
A ⫶ Infrastructure assets
Our converged connectivity infrastructure is largely managed through three
components: passive mobile, active mobile and fixed.
Our passive mobile infrastructure is now primarily held and operated through
Vantage Towers' network of 82,000 towers across ten European markets. The
Vantage Towers IPO was completed successfully in March 2021 and the company
has a current market capitalisation of €15 billion. Further information on
Vantage Towers is available at vantagetowers.com
(https://www.vantagetowers.com/) . We continue to own and operate our active
mobile infrastructure in Europe directly, which includes 135,000 radios. In
addition, our African operations operate a further 41,000 radios and 22,000
towers. We reached network sharing partnerships in 7 markets between FY19 and
FY21 and are committed to enhancing asset utilisation through network sharing.
Our fixed connectivity infrastructure comprises consumer connectivity
networks, mobile backhaul, and international terrestrial and submarine
connections. Across the Group, our fixed connectivity networks include over
1.1 million kilometres of fibre infrastructure and more than 0.5 million
kilometres of coaxial cable. Our approach to operating our connectivity
infrastructure was discussed at a recent investor briefing
(investors.vodafone.com/vtbriefing (http://investors.vodafone.com/vtbriefing)
), where we outlined our unified pan-European technology organisational
structure. We are actively exploring further opportunities for our fixed
network assets to improve asset utilisation.
B ⫶ Shared operations
The connectivity value chain involves a high degree of repeatable processes
across all our markets, such as procurement, network deployment, network
operations, sales activities, customer support operations, and billing and
transaction processing. As one of the largest global connectivity providers,
we have a significant opportunity to standardise processes across markets,
relocate operations to lower cost centres of excellence and apply automation
at scale, delivering best-in-class efficiency levels.
We have consolidated our supplier management function into a single,
centralised procurement company. The Vodafone Procurement Company manages
global tenders and allows us to generate over €600 million in annual savings
compared to standalone operators.
We manage our IT operations, network operating centres and back-office
activities through three Shared Service Centres ('_VOIS') in Egypt, India and
Eastern Europe. Over a third of the cumulative €1.3 billion net opex
savings made between FY19 and FY21 in Europe and Common Functions were
generated through integrating activities into _VOIS and driving digitisation
at speed. Approximately 30% of the Group's headcount works in _VOIS and other
shared operations, and over the last three years we have automated over 5,500
roles.
Vodafone Roaming Services manages our global roaming relationships with other
operators and our Partner Markets team works with 30 local operators in
building strategic alliances and extending our reach into different markets.
These functions generate over €250 million revenue and cost savings
annually.
Last year, we simplified our operating model and initiated one of our largest
ever organisational changes to accelerate our transformation into a new
generation connectivity and digital services provider for Europe and Africa.
As part of this, we have moved to a unified technology operating model with
one integrated European network and IT/digital team to drive efficiency,
increase speed of execution, standardise key processes, and codify the best
solutions for implementation across all of our markets.
We have made good progress over the last three years, however there is still
scope for further efficiencies, particularly with respect to network
operations and digital services platforms.
C ⫶ Growth platforms
Over the last few years, we have invested in digital capabilities and scalable
technology to build three digital growth platforms, which were discussed at a
recent investor briefing (investors.vodafone.com/digital-services
(http://www.investors.vodafone.com/digital-services) ).
1. Leading digital consumer services ⫶ Complementary digital services
play a crucial role in deepening relationships with consumers, in addition to
having attractive economic models. We now have over 50 million customers
subscribing to a digital service, which leads to higher ARPU, improved
distribution efficiency, higher NPS and lower churn. We are focused on further
developing our strong positions in Consumer IoT, Vodafone TV, home services,
device lifecycle services and loyalty applications.
2. The global IoT connectivity leader ⫶ Our IoT service was established
in 2008 and has grown to be the largest IoT connectivity provider globally,
with 136 million devices connected. Vodafone IoT has been recognised as a
leader in managed connectivity by Gartner every year since 2014. Vodafone IoT
currently generates €0.9 billion annual revenue with double-digit revenue
growth and a strong double-digit ROCE. The total addressable market is €10
billion and expected to grow 16% p.a., with further stimulus from the
NextGenerationEU recovery plan funding, supporting Vodafone's further
expansion into end-to-end IoT services.
3. The leading FinTech in Africa ⫶ Since formation in 2007 as a
money transfer service, our financial services businesses in Africa -
encompassing Vodacom Group, Safaricom and Vodafone Egypt - have collectively
grown to be the leading FinTech in Africa. Vodacom Group and Safaricom
together have 57 million customers, with M-Pesa transaction value of US$26.8
billion per month in the first six months of FY22. Our African FinTech
business has significant growth opportunities through penetration growth in
existing markets, expanding into new markets and scaling new products,
including the recent launch of the VodaPay 'super-app' in South Africa. The
Vodacom Group has clear financial ambitions to grow its new services, which
include financial services, at or above 20% CAGR.
We will continue to incubate our three digital growth platforms and ensure we
capture the opportunities available. We will also regularly assess ownership
structures and our own financial reporting to maximise visibility and
optionality.
D ⫶ Retail & customer service
Our retail and customer service operations are currently organised in three
segments summarised in the table below.
Europe Consumer Africa Consumer Business
Annualised H1 FY22 Vodafone Vodacom Vodafone Business
Service Revenue €20 billion €6 billion €10 billion
Market capitalisation - €15 billion -
Further information investors.vodafone.com/about-us/what-we-do vodacom.com/investor-relations investors.vodafone.com/vbbriefing (http://investors.vodafone.com/vbbriefing)
(https://investors.vodafone.com/about-us/what-we-do) (https://www.vodacom.com/investor-relations.php)
1. Europe Consumer ⫶ In Europe, we are a leading converged
connectivity provider with 8.3 million converged customers, 114 million mobile
connections, 143 million marketable NGN broadband homes, and we have launched
5G in 244 cities in 10 markets in Europe.
2. Africa Consumer ⫶ In Africa, we are the leading provider of mobile
data and mobile payment services. We have 186 million mobile customers in 8
markets and we are the leading mobile connectivity provider by revenue market
share in 7 markets. Our M-Pesa financial services platform processed over 9
billion transactions during the first six months of FY22 and has 49 million
customers.
3. Vodafone Business ⫶ Vodafone Business is a key growth driver for
the Group, representing 27% of service revenue in the period. We operate in
attractive markets with a compelling structural opportunity, with expected
addressable market growth of c.8% per annum. Our strategy is grounded in our
purpose to connect for a better future and is focused on three core elements.
Firstly, to be the trusted partner for small and medium-sized enterprises.
Secondly, to be the gigabit connectivity provider of choice to large
enterprises. Thirdly, to be the leading end-to-end provider of IoT solutions
for every organisation.
Alongside the active optimisation of our portfolio over the medium-term, we
have three initial priority areas to enable our strategy and realise value for
our shareholders:
I. actively pursue opportunities for Vantage Towers;
II. actively pursue in-market consolidation opportunities in major European
markets; and
III. integrate Vodafone Egypt into Vodacom to create a pan-African
powerhouse.
I ⫶ Vantage Towers
By separating and listing Vantage Towers at pace, it is now in a prime
position to drive consolidation within the European sector. We are actively
pursuing accretive bolt-on transactions and industrial merger opportunities.
We expect to deconsolidate Vantage Towers from the Group and monetise part of
our holding over time, reserving strategic flexibility for our mobile
business.
II ⫶ European in-market consolidation
Over the last decade, the performance of the European telecommunications
industry has been weaker than other regions, which market commentators largely
attribute to its regulatory environment. European regulation has been driving
increasingly fragmented market structures compared with North America or Asia.
Sustained price deflation and the inability to derive cost synergies from
scale have impacted sector returns, which in turn limits the sustainability of
capital investment in critical national infrastructure. As noted above,
Germany has benefited from a more sustainable competitive environment
compared to many other markets in Europe and those markets would benefit from
in-market consolidation. We are pragmatically pursuing value accretive
in-market consolidation to deliver sustainable market structures in our major
European markets.
III ⫶ Vodafone Egypt
On 10 November, we announced that we have agreed to transfer our 55%
shareholding in Vodafone Egypt to Vodacom Group, our African subsidiary, for
€2,722 million on a debt free, cash free basis. Based on Vodafone's 55%
share of net debt in Vodafone Egypt as at 30 September 2021, the total
purchase consideration is €2,365 million. Approximately 80% of the
consideration (€1,892 million) will be settled by the issuance of 242
million new ordinary Vodacom Group shares to Vodafone Group. As a result,
Vodafone Group's ownership in Vodacom Group will increase from 60.5% to 65.1%.
The remaining 20% of the consideration (€473 million) will be settled in
cash. The transaction is subject to a number of conditions but is expected to
close before 31 March 2022.
The integration of Vodafone Egypt into Vodacom follows a series of other
portfolio simplification transactions which have helped Vodacom become a
pan-African connectivity and financial services powerhouse. Including
Ethiopia, Vodacom will operate in markets with combined populations over more
than 500 million people and including Egypt, Vodacom currently has number 1
market positions in seven countries. We will move at pace with the imminent
integration of Vodafone Egypt, which will benefit from closer cooperation with
Vodacom, enabling it to accelerate growth in financial services and IoT.
Further information on the proposed transaction and the Vodacom Group is
available here: vodacom.com/investor-relations
(https://www.vodacom.com/investor-relations.php) .
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 provided a full update in our FY21 Annual Report and
supplementary materials (available on investors.vodafone.com
(https://investors.vodafone.com/reports-information/results-reports-presentations?tab=fy21)
). We have also made further progress with respect to our purpose strategy
during the first half of FY22.
Europe's largest network, powered by 100% renewable electricity
From July 2021, our entire European operations - including mobile and fixed
networks, data centres, retail and offices - are 100% powered by electricity
from renewable sources. This marks a key step towards our goal of reducing our
own carbon emissions to 'net zero' by 2030 and across our entire value chain
by 2040.
Eco Rating
We have announced that the pan-industry Eco Rating labelling scheme we
launched with four other major European operators in May is set to roll out
globally. The announcement paves the way for Eco Rating to become a global
harmonised labelling system, giving consumers everywhere consistent and
transparent insight on the environmental impact of new smartphones. The Eco
Rating scheme was initially launched in 24 European countries and has since
been rolled out in Brazil and by Vodacom in South Africa. Eco Rating is now
expected to launch in other countries including Argentina, Chile, Colombia,
Ecuador, Mexico, Peru and Uruguay. More than 150 mobile phones from 15
manufacturers are now assessed by the Eco Rating initiative, nearly doubling
the range of devices rated at launch.
Eco-SIM cards
We have recently announced that we are launching Eco-SIM cards made from
recycled plastic as part of our commitment to reduce our impact on the
environment. Starting from October 2021, we are providing customers with new
Eco-SIMs in the half-sized format made from recycled plastic, progressively
replacing SIM cards that are currently made from new plastic. Eco-SIM will be
rolled out across all of our European markets, as well as in Egypt, Turkey and
South Africa. The introduction of Eco-SIM - in the same material-efficient,
half-sized card format - further eliminates the need for 320 tonnes of virgin
plastic to be manufactured each year. This has the potential to save an
additional 1,280 tonnes of CO(2)e per year from not manufacturing new plastic
to be used for the cards.
Vodafone Spirit
Spirit Beat is our bi-annual employee survey that measures progress on how
people experience our culture (Vodafone Spirit), engagement, and connection to
our purpose. It also includes a nudge engine which provides personalised
coaching tips to employees based on results.
The results from the latest survey conducted in September show stability
against the backdrop of a challenging environment and unprecedented change.
Our employee engagement index remained high at 73 (January 2021: 74) and 93%
of employees feel that their daily work contributes significantly to
Vodafone's purpose ("We connect for a better future"). As we reported in our
FY21 Annual report, managers who demonstrate Vodafone Spirit continue to
create a higher Spirit Index and employee engagement scores, compared to
managers who do not.
As part of our future ready framework, we have introduced further flexibility
to our working practices and set global standards for new hybrid ways of
working. Results from the latest survey show that those who are hybrid-working
feel more connected to Spirit and purpose and are also more engaged. Our first
quarterly Global Spirit day also took place in October and was designed to
provide dedicated space for personal growth, wellbeing, and connection.
Outlook ⫶ Operating model supporting guidance
Outlook for FY22
Our good financial performance during the first six months of the year has
demonstrated the strong execution of our strategy.
FY22 Guidance
As a result of our good performance in H1 FY22 and based on the current
prevailing assessments of the global macroeconomic outlook, we are on track to
achieve the upper half of our original Adjusted EBITDAaL guidance range,
implying 4.5-5.9%* Adjusted EBITDAaL growth for the financial year. We are
also increasing our expectation for Adjusted free cash flow to at least €5.3
billion in FY22.
Original guidance Updated guidance
Adjusted EBITDAaL(1) €15.0 - €15.4 billion €15.2 - €15.4 billion
Adjusted free cash flow(1) At least €5.2 billion At least €5.3 billion
Financial modelling considerations & assumptions
The guidance above reflects the following:
· Foreign exchange rates used when setting guidance were as
follows:
- EUR 1 : GBP 0.86;
- EUR 1 : ZAR 17.15;
- EUR 1 : TRY 9.74; and
- EUR 1 : EGP 18.89.
· In May 2020, we set out our medium-term financial ambition,
alongside our financial guidance for FY22. More detail can be found on
investors.vodafone.com (https://investors.vodafone.com/) ;
· Guidance and our medium-term financial ambition assume no
material change to the structure of the Group.
(1) Adjusted free cash flow is Free cash flow before licence and spectrum
payments, restructuring costs arising from discrete restructuring plans,
integration costs and Vantage Towers growth capital expenditure. Growth
capital expenditure is on a cash basis and includes expenditure on new sites,
ground lease optimisation and other adjacency opportunities as defined by
Vantage Towers. Adjusted EBITDAaL and Adjusted free cash flow are non-GAAP
measures. See page 46 for more information.
Financial performance ⫶ Sustainable growth in both Europe and Africa
· Group revenue increased by 5.0% to €22.5 billion, driven by a
return to growth of service revenue, strong recovery in handset sales
following COVID disruption in the previous year and favourable foreign
exchange movements during the period
· Adjusted EBITDAaL growth of 6.5%* and margin expansion of 0.7*
percentage points year-on-year to 33.6%
· Operating profit decreased by 21.9% as the prior year included a gain
on disposal of €1.0 billion
· Returns improving and pre-tax return on capital employed increased by
0.8 percentage points to 6.3%
Group financial performance
H1 FY22(1) H1 FY21(2) Reported
€m €m change %
Revenue 22,489 21,427 5.0
- Service revenue 19,010 18,418 3.2
- Other revenue 3,479 3,009
Adjusted EBITDAaL(3,4) 7,565 7,011 7.9
Restructuring costs (172) (86)
Interest on lease liabilities(5) 199 189
Loss on disposal of property, plant & equipment and intangible assets (26) (13)
Depreciation and amortisation on owned assets (4,949) (5,062)
Share of results of equity accounted associates and joint ventures 111 260
Other (expense)/income (108) 1,055
Operating profit 2,620 3,354 (21.9)
Investment income 129 183
Financing costs (1,473) (1,610)
Profit before taxation 1,276 1,927
Income tax credit/(expense) 1 (459)
Profit for the financial period 1,277 1,468
Attributable to:
- Owners of the parent 996 1,269
- Non-controlled interests 281 199
Profit for the financial period 1,277 1,468
Basic earnings per share 3.40c 4.30c
Adjusted basic earnings per share(3) 4.90c 3.96c
Further information is available in a spreadsheet at
https://investors.vodafone.com/reports-information/results-reports-presentations
Notes:
1. The H1 FY22 results reflect average foreign exchange rates of
€1:£0.86, €1:INR 88.11, €1:ZAR 17.13, €1:TRY 10.09 and €1: EGP
18.70.
2. In the previously published results for the six months ended 30
September 2020, the Group's 55% interest in Vodafone Egypt was held for sale.
In December 2020, we announced that discussions with the potential purchaser
had terminated. Consequently, the held for sale classification was reversed
resulting in the following changes to the previously published results for the
six months ended 30 September 2020: Adjusted EBITDAaL has declined by €12
million, Operating profit has declined by €118 million, Profit before tax
has declined by €118 million, Profit for the financial period has declined
by €87 million, Basic earnings per share declined by 0.15 eurocents and
Adjusted basic earnings per share declined by 0.15 eurocents.
3. Adjusted EBITDAaL and adjusted basic earnings per share are non-GAAP
measures. See page 46 for more information.
4. Includes depreciation on Right-of-use assets of €2,003 million (H1
FY21: €1,925 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.
Organic growth
All amounts marked with an "*" in the commentary represent organic growth
which presents performance on a comparable basis, excluding the impact of
foreign exchange rates, mergers and acquisitions and other adjustments to
improve the comparability of results between periods. When calculating organic
growth, the FY21 results for Vantage Towers have been adjusted to reflect a
full year of operation on a proforma basis in order to be comparable to FY22.
Organic growth figures are non-GAAP measures. See non-GAAP measures on page 46
for more information.
Segmental reporting
Following the IPO of Vantage Towers A.G. in March 2021, the business is a new
reporting segment for the year ending 31 March 2022 ('FY22'). Comparative
information for the year ended 31 March 2021 has not been re-presented. Total
revenue is unaffected because charges from Vantage Towers A.G. to operating
companies are eliminated on consolidation. The segmental results of Vantage
Towers A.G. include the contribution from Cornerstone Technologies
Infrastructure Limited as a joint operation with Telefonica in the UK.
Adjusted EBITDAaL
Adjusted EBITDA is now referred to as Adjusted EBITDAaL for FY22, with no
change in the underlying definition. Adjusted EBITDAaL is a non-GAAP measure.
See page 46 for more information.
Adjusted free cash flow
Adjusted free cash flow was previously referred to as Free cash flow (pre
spectrum, restructuring and integration costs). For the year ending 31 March
2022, the metric excludes Vantage Towers growth capital expenditure. Adjusted
free cash flow is a non-GAAP measure. See page 46 for more information.
Geographic performance summary
Other Other Vantage Common Elimi-
H1 FY22 Germany Italy UK Spain Europe Vodacom Markets Towers Functions(1) nations Group
Total revenue (€m) 6,447 2,507 3,161 2,090 2,810 2,928 1,958 611 707 (730) 22,489
Service revenue (€m) 5,777 2,187 2,521 1,866 2,502 2,271 1,752 - 252 (118) 19,010
Adjusted EBITDAaL (€m)(2) 2,892 917 638 445 836 1,062 683 305 (213) - 7,565
Adjusted EBITDAaL margin (%)(2) 44.9% 36.6% 20.2% 21.3% 29.8% 36.3% 34.9% 49.9% 33.6%
Downloadable performance information is available at:
https://investors.vodafone.com/reports-information/results-reports-presentations
FY21 FY22
Service revenue growth % Q1 Q2 H1 Q3 Q4 H2 Total Q1 Q2 H1
Germany 25.4 6.9 15.4 1.0 1.2 1.1 7.7 1.1 0.8 0.9
Italy (6.5) (7.9) (7.2) (7.8) (8.8) (8.3) (7.8) (3.9) (1.6) (2.8)
UK (3.2) (0.8) (2.0) (5.1) (4.4) (4.7) (3.4) 5.3 4.7 5.0
Spain (6.9) (1.8) (4.4) (0.9) (2.2) (1.5) (3.0) 0.5 (2.0) (0.7)
Other Europe 3.8 (1.9) 0.8 (4.0) - (2.0) (0.6) 4.9 2.7 3.8
Vodacom (11.9) (12.3) (12.1) (9.1) (1.2) (5.3) (8.7) 18.5 14.6 16.5
Other Markets (18.9) (15.1) (17.0) (9.5) (6.1) (7.8) (12.8) (1.3) 10.0 4.3
Vantage Towers - - - - - - - - - -
Group 1.3 (2.5) (0.7) (3.9) (2.4) (3.1) (1.9) 3.1 3.4 3.2
FY21 FY22
Organic service revenue growth %*(2) Q1 Q2 H1 Q3 Q4 H2 Total Q1 Q2 H1
Germany - (0.1) (0.1) 1.0 1.2 1.1 0.5 1.4 1.0 1.2
Italy (6.5) (8.0) (7.2) (7.8) (7.8) (7.8) (7.5) (3.6) (1.4) (2.5)
UK (1.9) (0.5) (1.2) (0.4) (0.6) (0.5) (0.8) 2.5 0.6 1.2
Spain (6.9) (1.8) (4.4) (1.1) (1.3) (1.2) (2.8) 0.8 (1.9) (0.6)
Other Europe (3.1) (1.8) (2.4) (0.7) (0.2) (0.4) (1.4) 4.2 2.4 3.3
Vodacom 1.5 3.2 2.3 3.3 7.3 5.3 3.9 7.9 3.1 5.4
Other Markets 9.1 9.0 9.0 12.3 13.1 12.7 10.8 18.4 19.7 19.1
Vantage Towers - - - - - - - - - -
Group (1.3) (0.4) (0.8) 0.4 0.8 0.6 (0.1) 3.3 2.4 2.8
Notes:
1. Common Functions Adjusted EBITDAaL includes a non-recurring charge in
relation to the impairment of prior year receivables.
2. Adjusted EBITDAaL, Adjusted EBITDAaL margin and organic service revenue
growth are non-GAAP measures. See page 46 for more information.
Germany ⫶ 30% of Group service revenue
H1 FY22 H1 FY21 Reported Organic
€m €m change % change %*
Total revenue 6,447 6,371 1.2
- Service revenue 5,777 5,723 0.9 1.2
- Other revenue 670 648
Adjusted EBITDAaL 2,892 2,844 1.7 7.7
Adjusted EBITDAaL margin 44.9% 44.6%
Reported total revenue increased by 1.2% to €6.4 billion, supported by
service revenue growth.
On an organic basis, service revenue grew by 1.2%* (Q1: 1.4%*, Q2: 1.0%*),
reflecting a higher customer base, broadband ARPU growth, and higher roaming
and visitor revenue, which was partially offset by lower variable call usage
revenue. Retail service revenue grew by 1.7%* (Q1: 1.9%*, Q2: 1.5%*).
Fixed service revenue grew by 0.9%* (Q1: 0.6%*, Q2: 1.2%*) supported by ARPU
and customer base growth. The sequential improvement in trends was primarily
driven by the lapping of the variable usage revenue peak in Q1 in the prior
year. Our commercial momentum started to improve during the second quarter,
reflecting a gradual recovery in retail footfall, however it is still below
pre-pandemic levels. We added 86,000 cable customers during the period,
including 38,000 migrations from legacy DSL broadband. Half of our cable
broadband customers now subscribe to speeds of at least 250Mbps, and gigabit
speeds are available to 23.1 million households across our hybrid fibre cable
network.
Our TV customer base declined by 101,000, as reduced retail activity during
the COVID-19 pandemic led to fewer gross customer additions. Our converged
propositions, led by 'GigaKombi', allow customers to combine their mobile,
landline, broadband and TV subscriptions for one monthly fee. During the
period, we accelerated convergence penetration following a successful campaign
and our converged customer base increased by 330,000 to almost 2 million
Consumer converged accounts.
Mobile service revenue increased by 1.5%* (Q1: 2.3%*, Q2: 0.8%*), reflecting
customer base growth, and higher roaming and visitor revenue. The slowdown in
quarterly trends was attributable to the delayed retail recovery impacting
commercial performance, and a reduction in mobile termination rates which took
effect as of July. We added 54,000 contract customers during the period and
contract churn improved by 1.1 percentage points year-on-year to 11.0%. In
June, we successfully launched our digital-only second brand, SIMon mobile.
We added a further 3.4 million IoT connections during the period, supported by
strong demand from the automotive sector.
Adjusted EBITDAaL grew by 7.7%*, supported by synergy delivery, ongoing cost
efficiencies, higher service revenue, as well as some small one-off
settlements, partially offset by higher publicity costs. The Adjusted EBITDAaL
margin was 2.7* percentage points higher year-on-year at 44.9%.
We continue to make strong progress in integrating the acquired Unitymedia
assets and are executing faster than planned with respect to our cost and
capital expenditure synergy targets.
We switched off our 3G network on 1 July 2021, with spectrum re-assigned to
increase the capacity, speed and coverage of our 4G networks. Our 5G network
is now available to more than 35 million people. We launched Europe's first 5G
standalone network in April. Standalone 5G enables higher speeds, enhanced
reliability and ultra-low latency, in addition to using 20% less energy on
customers' devices.
Italy ⫶ 12% of Group service revenue
H1 FY22 H1 FY21 Reported Organic
€m €m change % change %*
Total revenue 2,507 2,506 -
- Service revenue 2,187 2,249 (2.8) (2.5)
- Other revenue 320 257
Adjusted EBITDAaL 917 800 14.6 14.7
Adjusted EBITDAaL margin 36.6% 31.9%
Reported total revenue was stable at €2.5 billion as lower service revenue
was offset by higher equipment revenue.
On an organic basis, service revenue declined by 2.5%* (Q1: -3.6%*, Q2:
-1.4%*) as a result of continued price pressure. The improvement in quarterly
trends was supported by the migration of PostePay MVNO customers onto our
network, which completed in early August.
Mobile service revenue declined by 3.0%* (Q1: -4.0%*, Q2: -1.9%*) as greater
competition in the value segment and a lower active prepaid customer base
year-on-year were partly offset by targeted pricing actions. Market mobile
number portability volumes remained below prior year period levels, despite
the easing of national lockdown measures. The quarter-on-quarter improvement
in service revenue was supported by the positive contribution from PostePay
MVNO customer migrations onto our network. Our second brand 'ho.' continued to
grow, with 201,000 net additions supported by our best-in-class net promoter
score, and now has 2.7 million customers.
Fixed service revenue declined by 1.3%* (Q1: -2.7%*, Q2: 0.1%*) driven by a
shift in consumer demand towards fixed-wireless access connectivity, which was
partially offset by higher Business activity compared to the prior year. We
added 33,000 fixed-wireless access customers during the period, which are
included in our mobile customer base. We now have over 3 million broadband
customers, and 48% of our broadband base is converged. Our total Consumer
converged customer base is 1.2 million, an increase of 41,000 during the
period. Through our own next generation network and partnership with Open
Fiber, our broadband services are now available to 8.6 million households. We
also cover over 4 million households with fixed-wireless access, offering
speeds of up to 100Mbps.
Adjusted EBITDAaL increased by 14.7%*, reflecting a 13.1 percentage point
benefit from a €105 million legal settlement, and also supported by lower
bad debt provisions. The Adjusted EBITDAaL margin was 4.6* percentage points
higher year-on-year at 36.6%.
UK ⫶ 13% of Group service revenue
H1 FY22 H1 FY21 Reported Organic
€m €m change % change %*
Total revenue 3,161 2,983 6.0
- Service revenue 2,521 2,401 5.0 1.2
- Other revenue 640 582
Adjusted EBITDAaL 638 636 0.3 1.8
Adjusted EBITDAaL margin 20.2% 21.3%
Reported total revenue increased by 6.0% to €3.2 billion, due to higher
service revenue and equipment revenue, as well as an appreciation of pound
sterling versus the euro.
On an organic basis, service revenue grew by 1.2%* (Q1: 2.5%*, Q2: 0.6%*),
driven by a strong performance in the Consumer segment, and supported by
higher roaming and visitor revenue, partially offset by a reduction in mobile
termination rates.
Mobile service revenue grew by 1.3%* (Q1: 2.7%*, Q2: 1.0%*) driven by strong
commercial momentum in Consumer, partially offset by post-pandemic slowdown in
Business connections, as well as ARPU pressure on re-contracting multinational
corporations. We added 149,000 mobile contract customers, supported by our new
proposition 'Vodafone EVO' which offers customers a combination of flexible
contracts, trade-in options, and early upgrades. Our digital sales now account
for 33% of total sales. Contract churn remained broadly stable year-on-year at
12.5%. Our digital sub-brand 'VOXI' also continued to grow strongly, with
54,000 customers added in the period. We also announced an exclusive retail
partnership with the Dixons Carphone Group, covering 300 stores and digital
channels, with improved terms compared to our previous arrangement.
Fixed service revenue grew by 0.9%* (Q1: 2.1%*, Q2: -0.3%*) and was impacted
by a tougher comparative as delayed Business fixed project work resumed in Q2
last year. Performance in the current period was also driven by the decision
to end a large but unprofitable multinational contract, and a reseller
entering into administration. Our commercial momentum in Consumer remained
strong with 51,000 net customer additions during the period, with good demand
for our Vodafone 'Pro Broadband' product. We now have almost 1 million
broadband customers, of which 482,000 are converged.
Adjusted EBITDAaL increased by 1.8%*, as growth in service revenue, lower bad
debt provisions, and continued strong cost control were partially offset by
higher publicity costs. Our Adjusted EBITDAaL margin was stable* year-on-year
at 20.2%.
In November 2021, we announced the expansion of our long-term strategic
partnership agreement with CityFibre. The extended wholesale agreement in
conjunction with our existing partnership with Openreach, will enable us to
reach 8 million households with full fibre broadband by Spring 2022.
Spain ⫶ 10% of Group service revenue
H1 FY22 H1 FY21 Reported Organic
€m €m change % change %*
Total revenue 2,090 2,050 2.0
- Service revenue 1,866 1,880 (0.7) (0.6)
- Other revenue 224 170
Adjusted EBITDAaL 445 488 (8.8) (0.6)
Adjusted EBITDAaL margin 21.3% 23.8%
Reported total revenue increased by 2.0% to €2.1 billion, primarily due to
higher equipment revenue.
On an organic basis, service revenue declined by 0.6%* (Q1: 0.8%*, Q2 -1.9%*)
driven by ongoing continued price competition in the value segment. The
quarterly trend was largely driven by stronger prior year comparatives,
reflecting the impact of easing COVID-19 restrictions in Q2 of the prior
year.
The market remained highly competitive in the value segment. In mobile, we
grew our contract customer base by 67,000, supported by strong public sector
demand. In May, we announced price increases applying to the main Vodafone
brand, effective across our customer base from 15 July 2021. Mobile contract
churn increased by 3.9 percentage points year-on-year to 20.6% reflecting
exceptionally low churn in the prior Q1 period due to portability
restrictions, as well as the impact of the price increases implemented this
year. Our second brand 'Lowi' added 144,000 customers during the period and
now has a total base of 1.3 million.
Our broadband customer base decreased by 82,000 as a result of higher
competitive intensity during the period and our price increases. Our TV
customer base decreased by 38,000 as we concluded a promotion. We have
recently renewed our exclusive agreement with HBO Max, and through our
partnerships with other content providers such as Disney, we have the most
extensive library of movies and TV series in the market.
Adjusted EBITDAaL declined by 0.6%* and the Adjusted EBITDAaL margin was 0.6*
percentage points lower year-on-year at 21.3%. The marginal decrease in
EBITDAaL reflects higher publicity and commercial content costs, partially
offset by further cost reduction and lower bad debt provisions.
On 15 September, we announced a restructuring plan, mainly affecting owned
retail stores, as part of our operational transformation. At the same time, we
have committed to create new jobs in digital and technology. Negotiations were
concluded in October. We have also announced a reorganisation of the local
executive committee, with new operational units focused on competitiveness and
digitalisation in the consumer business, as well as expanding our portfolio of
products and services beyond connectivity.
Other Europe ⫶ 13% of Group service revenue
H1 FY22 H1 FY21 Reported Organic
€m €m change % change %*
Total revenue 2,810 2,720 3.3
- Service revenue 2,502 2,411 3.8 3.3
- Other revenue 308 309
Adjusted EBITDAaL 836 870 (3.9) 4.5
Adjusted EBITDAaL margin 29.8% 32.0%
Total revenue increased by 3.3% to €2.8 billion, primarily reflecting
service revenue growth, also supported by the appreciation of local currencies
versus the euro.
On an organic basis, service revenue increased by 3.3%* (Q1: 4.2%*, Q2:
2.4%*), with all markets growing during the period. The growth in service
revenue was supported by higher roaming and visitor revenue, partially offset
by a reduction in mobile termination rates in Ireland, Czech Republic and
Romania. The quarterly trend was due to stronger prior year comparatives,
reflecting the impact of easing COVID-19 restrictions and high prepaid
activity in Q2 in the prior year.
In Portugal, service revenue grew due to customer base growth and higher
mobile ARPU. During the period, we added 66,000 mobile contract customers and
33,000 fixed broadband customers. In October, we announced that Vodafone
Portugal had acquired 90MHz of 3,600MHz and 2x10MHz of 700MHz spectrum, with a
20-year licence through to 2041. The spectrum will enable us to significantly
expand network capacity to meet growing demand for reliable, high quality
voice and data services.
In Ireland, service revenue increased reflecting higher visitor revenue,
supported by good mobile contract customer growth as competitive intensity
stabilised. During the period, our mobile contract customer base increased by
40,000 and mobile contract churn improved 0.3 percentage point year-on-year to
8.2%.
Service revenue in Greece increased reflecting higher roaming and visitor
revenue as international tourism grew year-on-year. During the period, we
added 25,000 mobile contract customers and 82,000 prepaid customers as
lockdown restrictions eased.
Adjusted EBITDAaL increased by 4.5%*, supported by good revenue growth and
strong cost control. The Adjusted EBITDAaL margin increased by 0.4* percentage
points and was 29.8%.
We have continued to make good progress on integrating the assets acquired
from Liberty Global in Central Eastern Europe and we remain on track to
deliver our targeted synergies.
Vodacom ⫶ 12% of Group service revenue
H1 FY22 H1 FY21 Reported Organic
€m €m change % change %*
Total revenue 2,928 2,423 20.8
- Service revenue 2,271 1,949 16.5 5.4
- Other revenue 657 474
Adjusted EBITDAaL 1,062 891 19.2 5.6
Adjusted EBITDAaL margin 36.3% 36.8%
Total revenue increased by 20.8% to €2.9 billion and reported Adjusted
EBITDAaL increased by 19.2%, primarily due to the strengthening of the local
currencies versus the euro.
On an organic basis, Vodacom's total service revenue grew by 5.4%* (Q1: 7.9%*,
Q2 3.1%*). Growth across Vodacom's international markets accelerated in the
first 6 months following significant growth in our financial services platform
(M-Pesa), however slowed in Q2 due to a strong prior year comparative in South
Africa and the introduction of mobile money levies in Tanzania.
In South Africa, service revenue grew year-on-year, supported by sustained
demand, incremental wholesale services and growth in new services such as
fixed, IoT and financial services. We added 1.1 million prepaid
customers and 140,000 mobile contract customers, with the latter supported by
our new more-for-more 'Vodafone Red' proposition introduced in June and new
contract wins in Business. Financial Services revenue in South Africa
increased by 15.0%* to €75.9 million, reflecting the expansion of our
service offerings, and 70% of our mobile customer base now uses data services.
In October 2021, we launched our new 'VodaPay' super-app in South Africa,
bringing consumer and business capabilities under one platform. The
application enables customers to access financial, insurance and eCommerce
services and supports businesses with additional resource planning and
'business-to-business' functionalities. For more detail about Vodacom
Financial Services, please watch our Digital Services & Experiences
briefing at investors.vodafone.com/digital-services
(http://www.investors.vodafone.com/digital-services) .
In Vodacom's international markets, service revenue increased during the half
year. Growth was supported by an increase in M-Pesa transaction volumes and
data revenue. This benefit was partially offset by the introduction of mobile
money levies in Tanzania during Q2. M-Pesa transaction value increased by
49.7%, while M-Pesa revenue as a share of total service revenue increased by
3.4 percentage points to 22.8%, and 64.3% of our customer base is now using
data services.
Vodacom's Adjusted EBITDAaL increased by 5.6%* supported by good revenue
growth, and positive operational leverage in Vodacom's international
operations. The Adjusted EBITDAaL margin decreased by 1.0* percentage point
and was 36.3%.
On 10 November 2021, Vodacom Group announced it had entered into an agreement
to acquire Vodafone Egypt from Vodafone for total consideration of €2.4
billion. See page 9 and Note 12 'Subsequent events' in the unaudited condensed
consolidated financial statements on page 44 for more information.
At the same time, Vodacom also announced that it had agreed to acquire a
co-controlling 30% interest in the fibre assets currently owned by Community
Investment Ventures Holdings (Pty) Limited ("CIVH"). CIVH owns Vumatel and
Dark Fibre Africa, which are South Africa's largest open access fibre
operators. Vodacom's investment and strategic support will further accelerate
the growth trajectory of fibre roll-out in South Africa.
Further information on our operations in Africa can be accessed here:
vodacom.com (https://vodacom.com) .
Other Markets ⫶ 9% of Group service revenue
H1 FY22 H1 FY21 Reported Organic
€m €m change % change %*
Total revenue 1,958 1,898 3.2
- Service revenue 1,752 1,679 4.3 19.1
- Other revenue 206 219
Adjusted EBITDAaL 683 601 13.6 28.3
Adjusted EBITDAaL margin 34.9% 31.7%
Reported total revenue increased by 3.2% to €2.0 billion, as higher service
revenue was partially offset by the depreciation of local currencies versus
the euro.
On an organic basis, service revenue increased by 19.1%* (Q1: 18.4%*, Q2:
19.7%*) as a result of strong customer base and ARPU growth. The improvement
in quarterly trends reflected higher roaming and visitor revenue, as well as
increased demand for data as lockdown restrictions eased.
Service revenue in Turkey grew ahead of inflation, reflecting strong mobile
customer base and ARPU growth. Mobile contract customer additions were 620,000
- the highest amongst any of our markets - including migrations from prepaid
customers. We also added 363,000 prepaid customers as tourism to the market
improved. Mobile contract churn improved by 4.8 percentage points year-on-year
to 15.7%.
Service revenue in Egypt also grew ahead of inflation, supported by customer
base growth and increased data usage. During the period, we added 134,000
mobile contract customers and 1.2 million prepaid mobile customers.
Adjusted EBITDAaL increased by 28.3%* and the Adjusted EBITDAaL margin
increased by 2.7* percentage points. This reflected strong revenue growth and
operating efficiencies in all markets. The Adjusted EBITDAaL margin was 34.9%.
Vantage Towers ⫶ Delivering on our plan
H1 FY22 H1 FY21(1) Reported Organic
€m €m change % change %*
Total revenue 611 - -
- Service revenue - - - -
- Other revenue 611 -
Adjusted EBITDAaL 305 - - -
Adjusted EBITDAaL margin 49.9% -
Note:
1. Vantage Towers is a new reporting segment for the year ending 31 March
2022. See page 13 for more information. A separate announcement that presents
FY21 performance on a proforma basis for the new segmental reporting was
published on 22 July 2021 and can be found on our website:
investors.vodafone.com (https://investors.vodafone.com) .
Total revenue increased to €611 million as more than 570 new tenancies were
added during the period, bringing the tenancy ratio to 1.42x. Vantage Towers
continued to contribute to Europe's digital transformation and reached a
number of new partnership agreements with customers during the period. Vantage
Towers reported its results on 15 November 2021. Further information on
Vantage Towers can be accessed here: vantagetowers.com
(https://www.vantagetowers.com/) .
Associates and joint ventures
H1 FY22 H1 FY21
€m €m
VodafoneZiggo Group Holding B.V. (14) (86)
Safaricom Limited 115 108
Indus Towers Limited - 233
Other 10 5
Share of results of equity accounted associates and joint ventures 111 260
VodafoneZiggo Joint Venture (Netherlands)
The results of VodafoneZiggo (in which Vodafone owns a 50% stake) are reported
here under US GAAP, which is broadly consistent with Vodafone's IFRS basis of
reporting.
Total revenue grew to €2.0 billion, primarily driven by mobile contract
customer base growth and fixed ARPU growth, supported by higher roaming and
visitor revenue.
During the period, VodafoneZiggo added 122,000 mobile contract customers,
mainly driven by higher Consumer demand. Strong Business fixed performance was
supported by an increase in the customer base, as well as higher demand for
unified communications. The number of converged households increased by
23,000, with 45% of broadband customers now converged, delivering significant
NPS and churn benefits. VodafoneZiggo now offers 1 gigabit speeds to 4.6
million homes and is on track to provide nationwide coverage in 2022.
During the period, Vodafone received €204 million in dividends from the
joint venture, as well as €24 million in interest payments. The joint
venture also drew down an additional loan from shareholders to fund an
instalment arising from spectrum licences acquired in July 2020, with
Vodafone's share being €104 million.
Safaricom Associate (Kenya)
Safaricom service revenue grew to €1.1 billion due to strong Business fixed
demand, and a recovery in M-Pesa revenue as transaction volumes increased and
peer-to-peer transaction fees normalised.
Indus Towers Associate (India)
Indus Towers is classified as held for sale at 30 September 2021 in the
consolidated statement of financial position. The Group's interest in Indus
Towers has been provided as security against certain bank borrowings secured
against Indian assets and partly to the pledges provided to the new Indus
Towers entity under the terms of the merger between erstwhile Indus Towers and
Bharti Infratel.
Vodafone Idea Limited Joint Venture (India)
See Note 11 'Contingent liabilities and legal proceedings' in the unaudited
condensed consolidated financial statements on page 42 for further
information.
Vodafone Hutchison Australia / TPG Telecom Limited Joint Venture (Australia)
In July 2020, Vodafone Hutchison Australia Pty Limited ('VHA') and TPG Telecom
Limited ('TPG') completed their merger to establish a fully integrated
telecommunications operator in Australia. The merged entity was admitted to
the Australian Securities Exchange ('ASX') on 30 June 2020 and is known as TPG
Telecom Limited. Vodafone and Hutchison Telecommunications (Australia) Limited
each own an economic interest of 25.05% in the merged unit.
Net financing costs
H1 FY22 H1 FY21 Reported
€m €m change %
Investment income 129 183
Financing costs (1,473) (1,610)
Net financing costs (1,344) (1,427) 5.8
Adjustments for:
Mark-to-market losses 397 368
Foreign exchange losses 56 231
Adjusted net financing costs(1) (891) (828) (7.6)
Note:
1. Adjusted net financing costs is a non-GAAP measure. See page 46 for more
information. The H1 FY21 adjusted net financing costs has been aligned to the
FY21 year-end presentation which no longer excluded lease interest. This
increased adjusted net financing costs for H1 FY21 by €189 million.
Net financing costs decreased by €83 million, primarily due to lower foreign
exchange movements on intercompany funding arrangements. Mark-to-market losses
were driven by the lower share price, causing a mark-to-market loss on options
held relating to the Group's mandatory convertible bonds. Adjusted net
financing costs remained stable year on year, reflecting consistent average
net debt balances and weighted average borrowing costs for both periods.
Taxation
H1 FY22 H1 FY21(1) Change
% % pps
Effective tax rate (0.1)% 23.8% (23.9)
Adjusted effective tax rate(2) 31.5% 27.6% 3.9
Notes:
1. In the previously published results for the six months ended 30 September
2020, the Group's 55% interest in Vodafone Egypt was held for sale. In
December 2020, we announced that discussions with the potential purchaser had
been terminated. Consequently, the held for sale classification was reversed,
resulting in a decrease in the Effective tax rate and increase in the Adjusted
effective tax rate of 0.2 pps and 0.1 pps, respectively, compared to the
previously published results.
2. Adjusted effective tax rate is a non-GAAP measure. See page 46 for more
information.
The Group's Adjusted effective tax rate for the six months ended 30 September
2021 was 31.5% (2020: 27.6%). The Adjusted effective tax rate in the current
period does not include an increase in our deferred tax assets in the UK of
€498 million (2020: €nil) following the increase in the corporate tax rate
to 25% and €274 million (2020 €nil) following the revaluation of assets
for tax purposes in Italy. It also does not include €155 million (2020:
€188 million) relating to the use of losses in Luxembourg.
The Group's Adjusted effective tax rate for the full year is forecast to be
line with our expectations of a high 20%s tax rate.
Earnings per share
Reported
H1 FY22 H1 FY21(1) change
eurocents eurocents eurocents
Basic earnings per share 3.40c 4.30c (0.90c)
Adjusted basic earnings per share(2) 4.90c 3.96c 0.94c
Notes:
1. In the previously published results for the six months ended 30 September
2020, the Group's 55% interest in Vodafone Egypt was held for sale. In
December 2020, we announced that discussions with the potential purchaser had
been terminated. Consequently, the held for sale classification was reversed,
resulting in a decrease in Basic earnings per share and Adjusted basic
earnings per share of 0.15 eurocents compared to the previously published
results.
2. Adjusted basic earnings per share is a non-GAAP measure. See page 46 for
more information.
Basic earnings per share was 3.40 eurocents, compared to 4.30 eurocents for
six months ended 30 September 2020.
Adjusted basic earnings per share was 4.90 eurocents compared to 3.96
eurocents for the six months ended 30 September 2020.
Cash flow, capital allocation and funding
Analysis of cash flow
H1 FY22 H1 FY21 Reported
€m €m change %
Inflow from operating activities 6,455 6,009 7.4
Outflow from investing activities (2,811) (5,013) 43.9
Outflow from financing activities (3,795) (7,050) 46.2
Cash inflow from operating activities increased by 7.4% to €6,455 million.
Outflow from investing activities decreased by 43.9% to €2,811 million,
primarily due to lower outflows in relation to the purchase of short-term
investments which outweighed higher spend on intangible assets and property,
plant and equipment. 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 decreased by 46.2% to €3,795 million
principally due to lower net outflow on borrowings which outweighed cash spent
on our share buyback programme.
Analysis of cash flow (continued)
H1 FY22 H1 FY21 Reported
€m €m change %
Adjusted EBITDAaL(1,2) 7,565 7,011 7.9
Capital additions(3) (3,365) (3,363)
Working capital (3,296) (2,503)
Disposal of property, plant and equipment 8 6
Restructuring costs (149) (86)
Integration capital additions(4) (110) (88)
Restructuring and integration working capital (141) (92)
Licences and spectrum (482) (286)
Interest received and paid(5) (593) (487)
Taxation (577) (533)
Dividends received from associates and joint ventures 469 355
Dividends paid to non-controlling shareholders in subsidiaries (399) (166)
Other 87 131
Free cash flow(2) (983) (101) (873.3)
Acquisitions and disposals 111 434
Equity dividends paid (1,259) (1,209)
Share buybacks(5) (1,062) -
Foreign exchange loss (119) (267)
Other movements on net debt(6) (443) (696)
Net debt increase(2) (3,755) (1,839)
Opening net debt(2) (40,543) (42,047)
Closing net debt(1,2) (44,298) (43,886) (0.9)
Free cash flow(2) (983) (101)
Adjustments:
- Licences and spectrum 482 286
- Restructuring costs 149 86
- Integration capital additions(4) 110 88
- Restructuring and integration working capital 141 92
- Vantage Towers growth capital expenditure 124 n/a
Adjusted free cash flow(2) 23 451
Notes:
1. In the previously published results for the six months ended 30 September
2020, the Group's 55% interest in Vodafone Egypt was held for sale. In
December 2020, we announced that discussions with the potential purchaser had
been terminated. Consequently, the held for sale classification was reversed
resulting in a reduction of €12 million in Adjusted EBITDAaL and a reduction
in Net debt of €97 million compared to the previously published results for
the six months ended 30 September 2020.
2. Adjusted EBITDAaL, Adjusted free cash flow, Free cash flow and Net debt are
non-GAAP measures. See page 46 for more information.
3. See page 56 for an analysis of tangible and intangible additions in the
period.
4. Integration capital additions comprises amounts for the integration of
acquired Liberty Global assets and network integration.
5. Interest received and paid excludes interest on lease liabilities of €134
million outflow (H1 FY21: €134 million outflow) included within Adjusted
EBITDAaL and €39 million of cash inflow (H1 FY21: nil) 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 six months ended 30 September 2021
includes mark-to-market losses recognised in the income statement of €397
million (H1 FY21: €368 million). The H1 FY21 figure also included a payment
to Vodafone Idea Limited of €235m in respect of the contingent liability
mechanism.
The increase in Adjusted EBITDAaL was more than offset by adverse working
capital movements and an increase in dividends paid to non-controlling
shareholders in subsidiaries. Consequently, Adjusted free cash flow declined
by €428 million to an inflow of €23 million.
Borrowings and cash position
H1 FY22 Year-end FY21 Reported
€m €m change %
Non-current borrowings (58,109) (59,272)
Current borrowings (11,412) (8,488)
Borrowings (69,521) (67,760)
Cash and cash equivalents 5,824 5,821
Borrowings less cash and cash equivalents (63,697) (61,939) 2.8
Borrowings principally includes bonds of €48,584 million (FY21: €46,885
million) and lease liabilities of €12,428 million (FY21: €13,032 million).
The increase in borrowings is principally driven by the issuance of bonds with
a nominal value of US$2,450 million (€2,114 million) utilising the US Shelf
Programme.
Funding position
H1 FY22 Year-end FY21 Reported
€m €m change %
Bonds (48,584) (46,885)
Bank loans (1,508) (1,419)
Other borrowings including spectrum (4,166) (4,215)
Gross debt(1) (54,258) (52,519) (3.3)
Cash and cash equivalents 5,824 5,821
Short-term investments(2) 4,043 4,007
Derivative financial instruments(3) (63) 3
Net collateral assets(4) 156 2,145
Net debt(1) (44,298) (40,543) (9.3)
Notes:
1. Gross debt and net debt are non-GAAP measures. See page 46 for more
information.
2. Short-term investments includes €1,075 million (FY21: €1,053 million)
of highly liquid government and government-backed securities and managed
investment funds of €2,968 million (FY21: €2,954 million) that are in
highly rated and liquid money market investments with liquidity of up to 90
days.
3. Derivative financial instruments excludes derivative movements in cash flow
hedging reserves of €713 million gain (FY21: €862 million loss).
4. Collateral arrangements on derivative financial instruments result in cash
being paid/(held) as security. This is repayable when derivatives are settled
and is therefore deducted from liquidity.
Net debt increased by €3,755 million primarily as a result of Adjusted free
cash outflow of €983 million, equity dividends of €1,259 million, share
buybacks used to offset dilution linked to mandatory convertible bonds of
€1,062 million (748 million shares) and mark-to-market losses recognised in
the income statement of €397 million .
Other funding obligations to be considered alongside net debt include:
- Lease liabilities of €12,428 million (FY21: €13,032 million)
- Mandatory convertible bonds recognised in equity of €1,904
million (FY21: €1,904 million)
- KDG put option liabilities of €502 million (FY21: €492
million)
- Guarantees over Australia joint venture loans of €1,510
million (FY21: €1,489 million)
- Pension liabilities of €329 million (FY21: €513 million)
The Group's gross and net debt includes certain long-term borrowings ("Hybrid
bonds") for which a 50% equity characteristic of €4,971 million (FY21:
€3,971 million) is attributed by credit rating agencies.
The Group's gross and net debt includes certain bonds which have been
designated in hedge relationships, which are carried at €1,403 million
higher value (FY21: €1,390 million higher) than their euro equivalent
redemption value. In addition, where bonds are issued in currencies other than
euros, the Group has entered into foreign currency swaps to fix the euro cash
outflows on redemption. The impact of these swaps is not reflected in gross
debt and if it was included would decrease the euro equivalent value of the
bonds by €379 million (FY21: €127 million).
Return on capital employed
Return on Capital Employed ('ROCE') reflects how efficiently we are generating
profit with the capital we deploy.
H1 FY22(1) FY21 Change
% % pps
ROCE calculated using GAAP measures 3.7% 4.4% (0.7)
Pre-tax ROCE (controlled)(2) 6.3% 5.5% 0.8
Post-tax ROCE (controlled and associates/joint ventures)(2) 4.3% 3.9% 0.4
Notes:
1. The half-year ROCE calculation is based on returns for the 12 months ended
30 September 2021. ROCE is calculated by dividing Operating profit by the
average of capital employed as reported in the consolidated statement of
financial position. See pages 53 and 54 for the detail of the calculation.
2. Pre-tax ROCE (controlled) and Post-tax ROCE (controlled and
associates/joint ventures) are non-GAAP measures. See page 46 for more
information.
ROCE decreased to 3.7% (FY21: 4.4%). The decrease reflects a lower operating
profit during the rolling 12 months ended 30 September 2021 coupled with
slightly increased average capital employed.
We calculate two further ROCE measures: i) Pre-tax ROCE for controlled
operations only and ii) Post-tax ROCE (including associates & joint
ventures).
ROCE increased to 6.3% on a pre-tax basis (FY21: 5.5%). The increase reflects
higher adjusted operating profit, slightly offset by higher average capital
employed. Similarly, ROCE on a post-tax basis increased to 4.3% (FY21: 3.9%).
Funding facilities
The Group has undrawn revolving credit facilities of €7.4 billion comprising
euro and US dollar revolving credit facilities of €4.0 billion and US$4.0
billion (€3.4 billion) which mature in 2025 and 2026 respectively. Both
committed revolving credit facilities support US and euro commercial paper
programmes of up to US$15.0 billion and €8.0 billion respectively.
Post employment benefits
The €453 million net deficit at 31 March 2021 of scheme assets over scheme
liabilities, arising from the Group's obligations in respect of its defined
benefit schemes, decreased by €332 million to a €121 million net deficit
at 30 September 2021. The next triennial actuarial valuation of the Vodafone
Section and CWW Section of the Vodafone UK Group Pension Scheme will be as at
31 March 2022.
Dividends
Dividends will continue to be declared in euros and paid in euros, pounds
sterling and US dollars, aligning the Group's shareholder returns with the
primary currency in which we generate free cash flow. The foreign exchange
rate at which future dividends declared in euros will be converted into pounds
sterling and US dollars will be calculated based on the average World Markets
Company benchmark rates over the five business days during the week prior to
the payment of the dividend.
The Board has announced an interim dividend per share of 4.50 eurocents (H1
FY21: 4.50 eurocents). The ex-dividend date for the interim dividend is 25
November 2021 for ordinary shareholders, the record date is 26 November 2021
and the dividend is payable on 4 February 2022. Dividend payments on ordinary
shares will be paid directly into a nominated bank or building society
account.
Other significant developments
Board changes
On 27 July 2021, Renée James and Sanjiv Ahuja stepped-down as Non-Executive
Directors.
Olaf Swantee was appointed as a Non-Executive Director at Vodafone's Annual
General Meeting on 27 July 2021 and subsequently resigned with effect from 25
September 2021 in light of a professional development which impacted his
ability to serve on the Board.
On 30 September 2021 it was announced that Deborah Kerr will be appointed as a
Non-Executive Director with effect from 1 March 2022.
Telecom services in Ethiopia
In May 2021, an international consortium named the Global Partnership for
Ethiopia was awarded a licence to operate telecom services in Ethiopia.
The partners in the consortium are led by Safaricom Plc and will establish a
new operating company in Ethiopia which aims to start providing
telecommunications services from 2022. In addition to Safaricom, the
partnership includes: Vodacom Group; Vodafone Group; Sumitomo Corporation and
CDC Group.
Ethiopia is home to over 112 million people, making it the second largest
country in Africa by population. It is one of the last countries in the world
to introduce competition in the telecom industry, a process started by the
government in 2019 as part of its economic reform agenda, with the support of
the International Finance Corporation. The reforms aim to increase jobs,
reduce poverty and grow the local economy in an inclusive and sustainable
manner.
The consortium is proceeding with and adapting its plans for operational
readiness, mindful of the recent declaration of a state of emergency in
Ethiopia.
Spectrum acquisition in Spain
In July 2021, Vodafone Spain acquired 2x10 MHz of spectrum in the 700 MHz band
from the Spanish Ministry of Economic Affairs and Digital Transformation
('MINECO') for €350 million (reserve price for the acquired block). The
total amount was payable in a single instalment at the end of the auction
process. In addition, a licensing fee of €15.5m will be payable each year.
The spectrum acquired has initial holding rights until 2041, with an automatic
renewal with no additional fees for a further 20 years (until 2061), subject
to meeting the licence obligations.
Risk factors
The key factors and uncertainties that could have a significant effect on the
Group's financial performance, include the following:
Cyber threat and information security
An external cyber-attack, insider threat or supplier breach could cause
service interruption or the loss of confidential data. Cyber threats could
lead to major customer, financial, reputational and regulatory impacts.
Geo-political risk in supply chain
Our operation is dependent on a wide range of global suppliers. Disruption to
our supply chain could mean that we are unable to execute our strategic plans,
resulting in increased cost, reduced choice and network quality.
Adverse political and regulatory measures
Adverse political and regulatory measures impacting our strategy could result
in increased costs, create a competitive disadvantage or have negative impact
on our return on capital employed.
Strategic transformation
Failure to execute on organisational transformation and portfolio activity
(includes integrations, mergers or separations) could result in loss of
business value and additional cost.
Global economic disruption
A global economic crisis could result in reduced telecommunication spend from
businesses and consumers, as well as limit our access to financial markets and
availability of liquidity, increasing our cost of capital and limiting debt
financing options.
Technology failures
Network, system or platform outages resulting from internal or external events
could lead to reduced customer satisfaction, reputational damage and/or
regulatory penalties.
Market disruption
New telecoms entering the market could lead to significant price competition
and lower margins.
Disintermediation and failure to innovate
Failure in product innovation or ineffective response to threats from emerging
technology or disruptive business models could lead to a loss of customer
relevance, market share and new/existing revenue streams.
Legal and regulatory compliance
Failure to comply with laws and regulations could lead to a loss of trust,
financial penalties and/or suspension of our licence to operate.
IT transformation
Failure to design and execute IT transformation of our legacy estate could
lead to business loss, customer dissatisfaction or reputational exposure.
TCFD disclosure
We recognise that climate change poses a number of physical (i.e. caused by
the increased frequency and severity of extreme weather events) and
transition-related (i.e. economic, technology or regulatory challenges related
to moving to a greener economy) risks and opportunities for our business. As
part of our commitment to operate ethically and sustainably, we are dedicated
to understanding climate-related risks and opportunities and embedding
responses to these into our business strategy and operations. We are aligning
internal processes with the recommendations of the Task Force on
Climate-related Financial Disclosures ('TCFD') focusing on four thematic areas
that are core elements of how organisations operate: governance, strategy,
risk management, metrics and targets.
Responsibility statement
We confirm that to the best of our knowledge:
· The unaudited condensed consolidated financial statements have been
prepared in accordance with IAS 34, "Interim Financial Reporting", as issued
by the International Accounting Standards Board and as contained in UK-adopted
international accounting standards; and
· The interim management report includes a fair review of the information
required by Disclosure Guidance and Transparency Rules sourcebook 4.2.7 and
Disclosure Guidance and Transparency Rules sourcebook 4.2.8.
Neither the Company nor the directors accept any liability to any person in
relation to the half-year financial report except to the extent that such
liability could arise under English law. Accordingly, any liability to a
person who has demonstrated reliance on any untrue or misleading statement or
omission shall be determined in accordance with section 90A and schedule 10A
of the Financial Services and Markets Act 2000.
The names and functions of the Vodafone Group Plc board of directors can be
found at:
http://www.vodafone.com/about/board-of-directors
(http://www.vodafone.com/about/board-of-directors)
By Order of the Board
Rosemary Martin
Group General Counsel and Company Secretary
16 November 2021
Unaudited condensed consolidated financial statements
Consolidated income statement
Six months ended 30 September
2021 2020(1)
Note €m €m
Revenue 2 22,489 21,427
Cost of sales (15,097) (14,754)
Gross profit 7,392 6,673
Selling and distribution expenses (1,675) (1,676)
Administrative expenses (2,870) (2,580)
Net credit losses on financial assets (230) (378)
Share of results of equity accounted associates and joint ventures 111 260
Other (expense)/income (108) 1,055
Operating profit 2 2,620 3,354
Investment income 129 183
Financing costs (1,473) (1,610)
Profit before taxation 1,276 1,927
Income tax credit/(expense) 3 1 (459)
Profit for the financial period 1,277 1,468
Attributable to:
- Owners of the parent 996 1,269
- Non-controlling interests 281 199
Profit for the financial period 1,277 1,468
Profit per share
Total Group:
- Basic 5 3.40c 4.30c
- Diluted 5 3.39c 4.29c
Consolidated statement of comprehensive income/expense
Six months ended 30 September
2021 2020(1)
€m €m
Profit for the financial period 1,277 1,468
Other comprehensive income/(expense):
Items that may be reclassified to the income statement in subsequent periods:
Foreign exchange translation differences, net of tax (117) (768)
Foreign exchange translation differences transferred to the income statement - (77)
Other, net of tax(2) 1,286 (2,058)
Total items that may be reclassified to the income statement in subsequent 1,169 (2,903)
periods
Items that will not be reclassified to the income statement in subsequent
periods:
Net actuarial gains/(losses) on defined benefit pension schemes, net of tax 200 (383)
Total items that will not be reclassified to the income statement in 200 (383)
subsequent periods
Other comprehensive income/(expense) 1,369 (3,286)
Total comprehensive income/(expense) for the financial period 2,646 (1,818)
Attributable to:
- Owners of the parent 2,354 (1,950)
- Non-controlling interests 292 132
2,646 (1,818)
Notes:
1. In the previously published results for the six months ended 30 September
2020, the Group's 55% interest in Vodafone Egypt was classified as held for
sale. In December 2020, the Group announced that discussions with the
potential purchaser had been terminated. Consequently, the held for sale
classification was reversed resulting in the following changes to the
previously published results for the six months ended 30 September 2020: gross
profit has declined by €97 million, operating profit has declined by €118
million, profit before taxation has declined by €118 million, profit for the
financial period has declined by €87 million, total comprehensive expense
for the financial period has increased by €85 million and basic profit per
share and diluted profit per share has declined by 0.15 eurocents.
2. Principally includes the impact of the Group's cash flow hedges deferred to
other comprehensive income during the period.
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
Consolidated statement of financial position
30 September 31 March
2021 2021
Note €m €m
Non-current assets
Goodwill 31,729 31,731
Other intangible assets 21,697 21,818
Property, plant and equipment 40,116 41,243
Investments in associates and joint ventures 7 4,397 4,670
Other investments 1,043 925
Deferred tax assets 21,800 21,569
Post employment benefits 208 60
Trade and other receivables 5,690 4,777
126,680 126,793
Current assets
Inventory 714 676
Taxation recoverable 515 434
Trade and other receivables 11,330 10,923
Other investments 7,778 9,159
Cash and cash equivalents 5,824 5,821
26,161 27,013
Assets held for sale 4 1,256 1,257
Total assets 154,097 155,063
Equity
Called up share capital 4,797 4,797
Additional paid-in capital 150,886 150,812
Treasury shares (7,130) (6,172)
Accumulated losses (121,973) (121,587)
Accumulated other comprehensive income 29,312 27,954
Total attributable to owners of the parent 55,892 55,804
Non-controlling interests 2,155 2,012
Total equity 58,047 57,816
Non-current liabilities
Borrowings 58,109 59,272
Deferred tax liabilities 1,985 2,095
Post employment benefits 329 513
Provisions 1,810 1,747
Trade and other payables 3,674 4,909
65,907 68,536
Current liabilities
Borrowings 11,412 8,488
Financial liabilities under put option arrangements 502 492
Taxation liabilities 1,079 769
Provisions 867 892
Trade and other payables 16,283 18,070
30,143 28,711
Total equity and liabilities 154,097 155,063
The accompanying notes are an integral part of the unaudited 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 2020 brought forward 4,797 152,629 (7,802) (88,214) 61,410 1,215 62,625
Issue or reissue of shares - 1 82 (80) 3 - 3
Share-based payments - 64 - - 64 4 68
Transactions with non-controlling shareholders in subsidiaries - - - (11) (11) (5) (16)
Comprehensive (expense)/income(3) - - - (1,950) (1,950) 132 (1,818)
Dividends - - - (1,205) (1,205) (162) (1,367)
30 September 2020 4,797 152,694 (7,720) (91,460) 58,311 1,184 59,495
1 April 2021 brought forward 4,797 150,812 (6,172) (93,633) 55,804 2,012 57,816
Issue or reissue of shares - 1 90 (90) 1 - 1
Share-based payments - 73 - - 73 6 79
Transactions with non-controlling shareholders in subsidiaries - - - (38) (38) 236 198
Comprehensive (expense)/income - - - 2,354 2,354 292 2,646
Dividends - - - (1,254) (1,254) (391) (1,645)
Purchase of treasury shares - - (1,048) - (1,048) - (1,048)
30 September 2021 4,797 150,886 (7,130) (92,661) 55,892 2,155 58,047
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.
3. In the previously published results for the six months ended 30 September
2020, the Group's 55% interest in Vodafone Egypt was classified as held for
sale. In December 2020, the Group announced that discussions with the
potential purchaser had been terminated. Consequently, the held for sale
classification was reversed resulting in the following changes to the
previously published results for the six months ended 30 September 2020: Total
comprehensive expense for the financial period has increased by €85 million.
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
Consolidated statement of cash flows
Six months ended 30 September
2021 2020
Note €m €m
Inflow from operating activities 8 6,455 6,009
Cash flows from investing activities
Purchase of interests in subsidiaries, net of cash acquired (1) (136)
Purchase of interests in associates and joint ventures (47) -
Purchase of intangible assets (1,593) (1,092)
Purchase of property, plant and equipment (3,118) (2,771)
Purchase of investments (580) (3,153)
Disposal of interests in subsidiaries, net of cash disposed - 174
Disposal of interests in associates and joint ventures - 420
Disposal of property, plant and equipment and intangible assets 8 6
Disposal of investments 1,930 1,031
Dividends received from associates and joint ventures 469 355
Interest received 121 153
Outflow from investing activities (2,811) (5,013)
Cash flows from financing activities(1)
Proceeds from issue of long-term borrowings 2,282 2,125
Repayment of borrowings (3,771) (4,330)
Net movement in short-term borrowings 1,173 (3,238)
Net movement in derivatives(2) (110) 521
Interest paid(3) (809) (774)
Purchase of treasury shares (1,101) -
Issue of ordinary share capital and reissue of treasury shares 1 3
Equity dividends paid (1,259) (1,209)
Dividends paid to non-controlling shareholders in subsidiaries (399) (166)
Other transactions with non-controlling shareholders in subsidiaries 198 (20)
Other movements with associates and joint ventures - 38
Outflow from financing activities (3,795) (7,050)
Net cash outflow (151) (6,054)
Cash and cash equivalents at beginning of the financial period(4) 5,790 13,288
Exchange gain/(loss) on cash and cash equivalents 11 (365)
Cash and cash equivalents at end of the financial period(4) 5,650 6,869
Notes:
1. See page 25 for commentary on bond issuances, loan repayments and share
buybacks in the period.
2. Amounts for the six months ended 30 September 2020 were previously
presented within net movement in short-term borrowings.
3. Interest paid includes €39 million of cash inflow (H1 FY21: €nil) on
derivative financial instruments for the share buyback related to maturing
tranches of mandatory convertible bonds.
4. Comprises cash and cash equivalents as presented in the consolidated
statement of financial position of €5,824 million (H1 FY21: €6,612
million), after adjustment to include overdrafts of €174 million (H1 FY21:
€17 million) and, for H1 FY21, €274 million of cash and cash equivalents
previously presented in assets held for sale relating to the Group's 55%
interest in Vodafone Egypt.
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
Notes to the unaudited condensed consolidated financial
statements
1 Basis of preparation
The unaudited condensed consolidated financial statements for the six months
ended 30 September 2021:
· are prepared in accordance with International Accounting Standard 34
"Interim Financial Reporting" ('IAS 34') as issued by the International
Accounting Standards Board ('IASB') and as adopted by the United Kingdom;
· are presented on a condensed basis as permitted by IAS 34 and
therefore do not include all disclosures that would otherwise be required in a
full set of financial statements and should be read in conjunction with the
Group's annual report for the year ended 31 March 2021;
· apply the same accounting policies, presentation and methods of
calculation as those followed in the preparation of the Group's consolidated
financial statements for the year ended 31 March 2021, which were prepared in
accordance with International Accounting Standards in conformity with the
requirements of the UK Companies Act 2006, International Financial Reporting
Standards ('IFRS') adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union and IFRS as issued by the IASB. Income taxes are
accrued using the tax rate that is expected to be applicable for the full
financial year, adjusted for certain discrete items which occurred in the
interim period in accordance with IAS 34;
· include all adjustments, consisting of normal recurring adjustments,
necessary for a fair statement of the results for the periods presented;
· do not constitute statutory accounts within the meaning of section
434(3) of the Companies Act 2006; and
· were approved by the Board of directors on 16 November 2021.
The information relating to the year ended 31 March 2021 is extracted from the
Group's published annual report for that year, which has been delivered to the
Registrar of Companies, and on which the auditors' report was unqualified and
did not contain any emphasis of matter or statements under section 498(2) or
498(3) of the UK Companies Act 2006.
The preparation of the unaudited condensed consolidated financial statements
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the end of the reporting period, and the reported amounts of
revenue and expenses during the period. Actual results could vary from these
estimates. These 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
As outlined on pages 1 and 2, trading during the period demonstrated a robust
operating model for the Group. The Group has a strong liquidity position with
€5.7 billion of cash and cash equivalents available at 30 September 2021
which, together with undrawn revolving credit facilities of €7.4 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 30 September 2021. As a result of
the assessment performed, the Directors have concluded that the Group is able
to continue in operation for the period up to and including March 2023 and
that it is appropriate to continue to adopt the going concern basis in
preparing the unaudited condensed consolidated financial statements.
Critical accounting judgements and estimates
The Group's critical accounting judgements and estimates were disclosed in the
Group's annual report for the year ended 31 March 2021; in addition,
accounting judgements exercised by management as at 30 September 2021 relating
to identifying indicators of impairment are disclosed below. The ongoing
impact of COVID-19 has been factored into our latest forecasts, including
those considered as part of management's review of potential indicators of
impairment; judgements relating to this review are discussed below.
1 Basis of preparation (continued)
Judgements relating to potential indicators of impairment
The Group performs its annual impairment test for goodwill and indefinite
lived intangible assets at 31 March and when there is an indicator of
impairment of an asset. At each reporting period date judgement is exercised
by management in determining whether any internal or external sources of
information observed are indicative that the carrying amount of any of the
Group's cash generating units ('CGUs') is not recoverable.
As part of this assessment, management reviews the key assumptions underlying
the valuation process performed during the annual impairment test at 31 March
2021, as well as other market factors. Indicators assessed include the year to
date performance of the Group's CGUs against their latest forecast, as well as
considering any valuation implications from observable movements in share
prices, market multiples, risk free rates and long-term growth rate estimates.
Based on management's assessment, no indications of impairment were identified
for the Group's CGUs during the period to 30 September 2021 that would
indicate the carrying amount of any of the Group's CGUs is not recoverable.
New accounting pronouncements adopted
On 1 April 2021, the Group adopted certain new accounting policies where
necessary to comply with amendments to IFRS, none of which had a material
impact on the consolidated results, financial position or cash flows of the
Group. Further details are provided in the Group's annual report for the year
ended 31 March 2021.
2 Segmental analysis
Updated segmental reporting structure
Following the IPO of Vantage Towers A.G. ('Vantage Towers') in March 2021,
Vodafone has updated its segmental reporting structure to reflect the way in
which the Group now manages its operations. Vantage Towers is now reported as
a new segment within the Vodafone Group's financial results. This change in
reporting structure has taken effect for the year ending 31 March 2022 onwards
and has no impact on service revenue. Total revenue is unaffected as charges
from Vantage Towers to operating companies are eliminated on consolidation.
There has been no change to the segmental presentation of amounts derived from
the income statement for comparative periods, which will remain as previously
disclosed. Segmental information for the half year to 30 September 2021 is
also presented on the previous basis of segmental reporting.
Operating segments
The Group's operating segments are established on the basis of those
components of the Group that are evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. The Group has determined the chief operating decision maker to be
its Chief Executive Officer. The Group has a single group of similar services
and products, being the supply of communications services and related
products.
Revenue is attributed to a country based on the location of the Group company
reporting the revenue. Transactions between operating segments are charged at
arm's-length prices. With the exception of Vodacom, which is a legal entity
encompassing South Africa and certain other smaller African markets, and
Vantage Towers which comprises companies providing mobile tower infrastructure
in a number of European markets, segment information is primarily provided on
the basis of geographic areas, being the basis on which the Group manages the
rest of its worldwide interests.
The operating segments for Germany, Italy, UK, Spain, Vodacom and Vantage
Towers are individually material for the Group and are each reporting segments
for which certain financial information is provided. The aggregation of other
operating segments into the Other Europe and Other Markets reporting segments
reflects, in the opinion of management, the similar local market economic
characteristics and regulatory environments for each of those operating
segments as well as the similar products and services sold and comparable
classes of customers. In the case of the Other Europe region (comprising
Albania, Czech Republic, Greece, Hungary, Ireland, Portugal and Romania), this
largely reflects membership or a close association with the European Union,
while the Other Markets segment (comprising Egypt, Ghana and Turkey) largely
includes developing economies with less stable economic or regulatory
environments. Common Functions is a separate reporting segment and comprises
activities which are undertaken primarily in central Group entities that do
not meet the criteria for aggregation with other reporting segments.
Revenue disaggregation
Revenue reported for the period includes revenue from contracts with
customers, comprising service and equipment revenue, as well as other revenue
items including revenue from leases and interest revenue arising from
transactions with a significant financing component. The tables overleaf
disaggregate the Group's revenue by reporting segment.
2 Segmental analysis (continued)
The table below presents the results for the six months ended 30 September
2021 in line with our updated segmental reporting structure.
Service revenue Equipment revenue Revenue from contracts with customers Other revenue(1) Interest revenue Total segment revenue Adjusted EBITDAaL
€m €m €m €m €m €m €m
Six months ended 30 September 2021
Germany 5,777 475 6,252 183 12 6,447 2,892
Italy 2,187 265 2,452 49 6 2,507 917
UK 2,521 593 3,114 30 17 3,161 638
Spain 1,866 178 2,044 33 13 2,090 445
Other Europe 2,502 248 2,750 52 8 2,810 836
Vodacom 2,271 455 2,726 190 12 2,928 1,062
Other Markets 1,752 201 1,953 5 - 1,958 683
Vantage Towers - - - 611 - 611 305
Common Functions(2) 252 31 283 424 - 707 (213)
Eliminations (118) - (118) (611) (1) (730) -
Group 19,010 2,446 21,456 966 67 22,489 7,565
The tables below present the results for the six months ended 30 September
2021 and 30 September 2020 under the previous basis of segmental reporting.
Service revenue Equipment revenue Revenue from contracts with customers Other revenue(1) Interest revenue Total segment revenue Adjusted EBITDAaL
€m €m €m €m €m €m €m
Six months ended 30 September 2021
Germany 5,777 475 6,252 211 12 6,475 3,045
Italy 2,187 265 2,452 49 6 2,507 917
UK 2,521 593 3,114 30 17 3,161 667
Spain 1,866 178 2,044 46 13 2,103 483
Other Europe 2,502 248 2,750 92 8 2,850 921
Vodacom 2,271 455 2,726 190 12 2,928 1,062
Other Markets 1,752 201 1,953 5 - 1,958 683
Common Functions(2) 252 31 283 424 - 707 (213)
Eliminations (118) - (118) (81) (1) (200) -
Group 19,010 2,446 21,456 966 67 22,489 7,565
Service revenue Equipment revenue Revenue from contracts with customers Other revenue(1) Interest revenue Total segment revenue Adjusted EBITDAaL
€m €m €m €m €m €m €m
Six months ended 30 September 2020
Germany 5,723 466 6,189 176 6 6,371 2,844
Italy 2,249 216 2,465 36 5 2,506 800
UK 2,401 509 2,910 49 24 2,983 636
Spain 1,880 132 2,012 30 8 2,050 488
Other Europe 2,411 252 2,663 48 9 2,720 870
Vodacom 1,949 335 2,284 132 7 2,423 891
Other Markets(3) 1,679 212 1,891 7 - 1,898 601
Common Functions(2) 219 13 232 424 - 656 (119)
Eliminations (93) - (93) (87) - (180) -
Group(3) 18,418 2,135 20,553 815 59 21,427 7,011
Notes:
1. Other revenue includes lease revenue recognised under IFRS 16 "Leases".
2. Comprises central teams and business functions.
3. In the previously published results for the six months ended 30 September
2020, the Group's 55% interest in Vodafone Egypt was held for sale. In
December 2020, we announced that discussions with the potential purchaser had
been terminated. Consequently, the held for sale classification was reversed
resulting in Adjusted EBITDAaL declining by €12 million compared to the
previously published results for the six months ended 30 September 2020.
2 Segmental analysis (continued)
A reconciliation of Adjusted EBITDAaL, the Group's measure of segment profit,
to the Group's profit before taxation for the financial period is shown below.
Six months ended 30 September
2021 2020(1)
€m €m
Adjusted EBITDAaL 7,565 7,011
Restructuring costs (172) (86)
Interest on lease liabilities 199 189
Loss on disposal of property, plant & equipment and intangible assets (26) (13)
Depreciation and amortisation on owned assets (4,949) (5,062)
Share of results of equity accounted associates and joint ventures 111 260
Other (expense)/income(2) (108) 1,055
Operating profit 2,620 3,354
Investment income 129 183
Financing costs (1,473) (1,610)
Profit before taxation 1,276 1,927
Notes:
1. In the previously published results for the six months ended 30 September
2020, the Group's 55% interest in Vodafone Egypt was held for sale. In
December 2020, we announced that discussions with the potential purchaser had
been terminated. Consequently, the held for sale classification was reversed
resulting in the following changes to the previously published results for the
six months ended 30 September 2020: Adjusted EBITDAaL has declined by €12
million, Operating profit has declined by €118 million and Profit before
taxation has declined by €118 million.
2. For the six months ended 30 September 2020, the Group recorded a gain of
€1,043 million in relation to the merger of Vodafone Hutchison Australia Pty
Limited and TPG Telecom Limited which is reported in Other (expense)/income.
The Group's non-current assets are disaggregated as follows:
30 September 31 March
2021 2021(1)
€m €m
Non-current assets(2)
Germany 43,052 43,755
Italy 10,593 10,707
UK 6,306 6,529
Spain 6,601 6,609
Other Europe 8,253 8,361
Vodacom 5,872 5,839
Other Markets 2,997 2,988
Vantage Towers 7,824 7,859
Common Functions(3) 2,044 2,145
Group 93,542 94,792
Notes:
1. Non-current assets at 31 March 2021 have been re-presented to reflect the
updated segmental reporting structure.
2. Comprises goodwill, other intangible assets and property, plant &
equipment.
3. Comprises central teams and business functions.
3 Taxation
Six months ended 30 September
2021 2020(1)
€m €m
United Kingdom corporation tax (expense)/income(2)
Current period (6) (17)
Adjustments in respect of prior periods 15 4
Overseas current tax (expense)/income
Current period (730) (470)
Adjustments in respect of prior periods (26) 93
Total current tax expense (747) (390)
Deferred tax on origination and reversal of temporary differences
United Kingdom deferred tax 544 83
Overseas deferred tax 204 (152)
Total deferred tax credit/(expense) 748 (69)
Total income tax credit/(expense) 1 (459)
Notes:
1. In the previously published results for the six months ended 30
September 2020, the Group's 55% interest in Vodafone Egypt was held for sale.
In December 2020, we announced that discussions with the potential purchaser
had been terminated. Consequently, the held for sale classification was
reversed, resulting in the following changes to the previously published
results for the six months ended 30 September 2020: Total deferred tax expense
declined by €31 million.
2. UK operating profits are more than offset by statutory allowances for
capital investment in the UK network and systems plus ongoing interest costs
including those arising from the €10.7 billion of spectrum payments to the
UK government in 2000, 2013 and 2018.
The six months ended 30 September 2021 includes deferred tax on the use of
Luxembourg losses of €155 million (2020: €188 million). The Group expects
to use its losses in Luxembourg over a period of between 59 and 62 years and
the losses in Germany over a period of between 8 and 16 years. The actual use
of these losses and the period over which they may be used is dependent on
many factors which may change. These factors include the level of
profitability in both Luxembourg and Germany, changes in tax law and changes
to the structure of the Group. Further details about the Group's tax losses
can be found in note 6 of the Group's consolidated financial statements for
the year ended 31 March 2021.
4 Assets held for sale
Assets held for sale at 30 September 2021 and 31 March 2021 comprise the
Group's 28.1% interest in Indus Towers. The Group's interest in Indus Towers
has been provided as security against both certain bank borrowings and partly
to the pledges provided to the new Indus Towers entity under the terms of the
merger between erstwhile Indus Towers and Bharti Infratel. See note 11
"Contingent liabilities and legal proceedings".
The relevant assets are detailed in the table below.
30 September 31 March
2021 2021
€m €m
Non-current assets
Investments in associates and joint ventures 1,256 1,257
Total assets held for sale 1,256 1,257
5 Earnings per share
Six months ended 30 September
2021 2020
Millions Millions
Weighted average number of shares for basic earnings per share 29,331 29,535
Effect of dilutive potential shares: restricted shares and share options 84 75
Weighted average number of shares for diluted earnings per share 29,415 29,610
Earnings per share attributable to owners of the parent during the period
Six months ended 30 September
2021 2020(1)
€m €m
Profit for basic and diluted earnings per share 996 1,269
eurocents eurocents
Basic profit per share 3.40 4.30
Diluted profit per share 3.39 4.29
Note:
1. In the previously published results for the six months ended 30 September
2020, the Group's 55% interest in Vodafone Egypt was held for sale. In
December 2020, we announced that discussions with the potential purchaser had
been terminated. Consequently, the held for sale classification was reversed
resulting in the following changes to the previously published results for the
six months ended 30 September 2020: Profit for basic and diluted earnings per
share has declined by €45 million, Basic profit per share and diluted profit
per share have declined by 0.15 eurocents.
6 Equity dividends
Six months ended 30 September
2021 2020
€m €m
Declared during the financial period:
Final dividend for the year ended 31 March 2021: 4.50 eurocents per share
(2020: 4.50 eurocents per share) 1,254 1,205
Proposed after the end of the reporting period and not recognised as a
liability:
Interim dividend for the year ending 31 March 2022: 4.50 eurocents per share
(2021: 4.50 eurocents per share) 1,229 1,207
7 Investment in associates and joint ventures
30 September 31 March
2021 2021
€m €m
VodafoneZiggo Group Holding B.V. 974 1,190
INWIT S.p.A. 2,837 2,920
TPG Telecom Limited 90 104
Other 75 35
Investment in joint ventures 3,976 4,249
Investment in associates 421 421
4,397 4,670
8 Reconciliation of net cash flow from operating activities
Six months ended 30 September
2021 2020(1)
€m €m
Profit for the financial period 1,277 1,468
Investment income (129) (183)
Financing costs 1,473 1,610
Income tax (credit)/expense (1) 459
Operating profit 2,620 3,354
Adjustments for:
Share-based payments and other non-cash charges 98 86
Depreciation and amortisation 6,952 6,987
Loss on disposal of property, plant and equipment and intangible assets 26 14
Share of result of equity accounted associates and joint ventures (111) (260)
Other income expense/(income) 108 (1,055)
Increase in inventory (41) (31)
Increase in trade and other receivables (1,254) (15)
Decrease in trade and other payables (1,366) (2,538)
Cash generated by operations 7,032 6,542
Taxation (577) (533)
Net cash flow from operating activities 6,455 6,009
Note:
1. In the previously published results for the six months ended 30 September
2020, the Group's 55% interest in Vodafone Egypt was held for sale. In
December 2020, we announced that discussions with the potential purchaser had
been terminated. Consequently, the held for sale classification was reversed
resulting in the following changes to the previously published results for the
six months ended 30 September 2020: Operating profit has declined by €118
million and Profit for the financial period has declined by €87 million.
9 Fair value of financial instruments
The table below sets out the financial instruments held at fair value by the
Group.
30 September 31 March
2021 2021
€m €m
Financial assets at fair value:
Money market funds (included within Cash and cash equivalents)(1) 4,307 3,116
Debt and equity securities (included within Other investments)(2) 5,388 5,292
Derivative financial instruments (included within Trade and other 3,666 3,151
receivables)(2)
Trade receivables at fair value through Other comprehensive income (included 1,384 744
within Trade and other receivables)(2)
14,745 12,303
Financial liabilities at fair value:
Derivative financial instruments (included within Trade and other payables)(2) 3,016 4,010
3,016 4,010
Notes:
1. Items are measured at fair value and the valuation basis is Level 1
classification, which comprises financial instruments where fair value is
determined by unadjusted quoted prices in active markets.
2. Quoted debt and equity securities of €2,274 million (FY21: €2,210
million) are Level 1 classification which comprises items where fair value is
determined by unadjusted quoted prices in active markets. All balances other
than quoted securities are Level 2 classification which comprises items where
fair value is determined from inputs other than quoted prices that are
observable for the asset or liability, either directly or indirectly.
The fair value of the Group's financial assets and financial liabilities held
at amortised cost approximates to fair value with the exception of non-current
bonds with a carrying value of €46,162 million (FY21: €44,634 million) and
a fair value of €50,777 million (FY21: €48,630 million). Fair value is
based on Level 1 of the fair value hierarchy using quoted market prices.
10 Related party transactions
Transactions with joint ventures and associates
Related party transactions with the Group's joint ventures and associates
primarily consists of fees for the use of products and services including
network airtime and access charges, fees for the provision of network
infrastructure and cash pooling ventures. No related party transactions have
been entered into during the year which might reasonably affect any decisions
made by the users of these unaudited condensed consolidated financial
statements except as disclosed below.
Six months ended 30 September
2021 2020
€m €m
Sales of goods and services to associates 10 7
Purchase of goods and services from associates 4 3
Sales of goods and services to joint ventures 103 100
Purchase of goods and services from joint ventures 132 90
Interest income receivable from joint ventures(1) 26 29
Interest expense payable to joint ventures(2) 26 29
30 September 31 March
2021 2021
€m €m
Trade balances owed:
from associates 9 3
to associates 4 5
from joint ventures 99 88
to joint ventures 30 31
Other balances owed from associates - 56
Other balances owed from joint ventures(1) 997 955
Other balances owed to joint ventures(2) 1,484 1,575
Notes:
1. Amounts arise primarily through VodafoneZiggo, TPG Telecom Limited and
INWIT S.p.A. Interest is charged in line with market rates.
2. Amounts are primarily in relation to leases of tower space from INWIT
S.p.A.
In the six months ended 30 September 2021 the Group made contributions to
defined benefit pension schemes of €12 million (2020: €99 million).
Dividends of €1.1 million were paid to Board and Executive Committee members
(2020: €1.0 million).
Dividends received from associates and joint ventures are disclosed in the
consolidated statement of cash flows.
11 Contingent liabilities and legal proceedings
Note 29 "Contingent liabilities and legal proceedings" to the consolidated
financial statements of Vodafone Group Plc for the year ended 31 March 2021
sets forth the Group's commitments, contingent liabilities and legal
proceedings as of 31 March 2021. There have been no material changes to the
Group's commitments, contingent liabilities or legal proceedings during the
period covered by this report, except as disclosed below.
Vodafone Idea
As part of the agreement to merge Vodafone India and Idea Cellular in 2017,
the parties agreed a mechanism for payments between the Group and Vodafone
Idea Limited ('VIL') pursuant to the difference between the crystallisation of
certain identified contingent liabilities in relation to legal, regulatory,
tax and other matters, and refunds relating to Vodafone India and Idea
Cellular. Cash payments or cash receipts relating to these matters must have
been made or received by VIL before any amount becomes due from or owed to the
Group. Any future payments by the Group to VIL as a result of this agreement
would only be made after satisfaction of this and other contractual
conditions.
The Group's potential exposure under this mechanism is now capped at INR 64
billion (€743 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 15 September 2021, the Government of India announced a relief package and a
series of reforms for the telecom sector including a four-year moratorium on
spectrum and AGR payments designed to improve the liquidity and financial
health of the telecom sector. VIL also requires additional liquidity support
from its lenders and intends to raise additional equity capital.
There are significant uncertainties in relation to VIL's ability to make
payments in relation to liabilities covered by the mechanism and no further
cash payments are considered probable from the Group as at 30 September 2021.
The carrying value of the Group's investment in VIL is €nil and the Group is
recording no further share of losses in respect of VIL. The Group's potential
exposure to liabilities within VIL is capped by the mechanism described above.
As a consequence, contingent liabilities arising from litigation in India
concerning operations of Vodafone India are not reported below.
Indus Towers merger
The merger of Indus and Bharti Infratel completed on 19 November 2020 and the
combined entity was renamed Indus Towers Ltd ("Indus Towers"). Under the terms
of the merger a security package was agreed for the benefit of Indus Towers
which can be invoked in the event that VIL is unable to satisfy certain
payment obligations under its Master Services Agreements with Indus Towers
(the 'MSAs'). The security package includes:
- A prepayment in cash of INR 24 billion (€279 million) by VIL to
Indus Towers in respect of its payment obligations that are undisputed, due
and payable under the MSAs after the merger closing. The prepayment has been
fully utilised in the period;
- A primary pledge over 190.7 million shares owned by Vodafone Group
in Indus Towers having a value of INR 59 billion (€684 million); and
- A secondary pledge over shares owned by Vodafone Group in Indus
Towers (ranking behind Vodafone's existing lenders for the remaining €1.3
billion bank borrowings secured against Indian assets (see note 21) utilised
to fund Vodafone's contribution to the VIL rights issue in 2019) ("the Bank
Borrowings") with a maximum liability cap of INR 42.5 billion (€494
million).
In the event of non-payment of relevant MSA obligations by VIL, Indus Towers
will have recourse to the primary pledge shares and, after repayment of the
Bank Borrowings in full, any secondary pledged shares, up to the value of the
liability cap. VIL's ability to make MSA payments to Indus Towers is uncertain
and depends on a number of factors including its ability to raise additional
funding.
Indian tax cases
In January 2012, the Supreme Court of India found against the Indian tax
authority and in favour of Vodafone International Holdings BV ('VIHBV') in
proceedings brought after the Indian tax authority alleged potential liability
under the Income Tax Act 1961 for the failure by VIHBV to deduct withholding
tax from consideration paid to the Hutchison Telecommunications International
Limited group ('HTIL') in connection with its 2007 disposal to VIHBV of its
interests in a wholly-owned Cayman Island incorporated subsidiary that
indirectly held interests in Vodafone India Limited ('Vodafone India').
The Finance Act 2012 of India, which amended various provisions of the Income
Tax Act 1961 with retrospective effect, contained provisions intended to tax
any gain on transfer of shares in a non-Indian company, which derives
substantial value from underlying Indian assets, such as VIHBV's transaction
with HTIL in 2007. Further, it sought to subject a purchaser, such as VIHBV,
to a retrospective obligation to withhold tax. On 3 January 2013, VIHBV
received a letter from the Indian tax authority reminding it of the tax demand
raised prior to the Supreme Court of India's judgement and updating the
interest element of that demand to a total amount of INR142 billion, which
included principal and interest as calculated by the Indian tax authority but
did not include penalties. On 12 February 2016, VIHBV received a notice dated
4 February 2016 of an outstanding tax demand of INR221 billion (plus interest)
along with a statement that enforcement action, including against VIHBV's
indirectly held assets in India, would be taken if the demand was not
satisfied. On 29 September 2017, VIHBV received an electronically generated
demand in respect of alleged principal, interest and penalties in the amount
of INR190.7 billion. This demand does not appear to have included any element
for alleged accrued interest liability.
In response to the 2013 letter, VIHBV initiated arbitration proceedings under
the Netherlands-India Bilateral Investment Treaty ('Dutch BIT'). The
arbitration hearing took place in February 2019. In September 2020, the
arbitration tribunal issued its award unanimously ruling in VIHBV's favour.
The Indian Government applied in Singapore to set aside the award primarily on
jurisdictional grounds. The proceedings have been transferred to the Singapore
International Commercial Court ('SICC').
Separately, on 24 January 2017, Vodafone Group Plc and Vodafone Consolidated
Holdings Limited formally commenced arbitration with the Indian Government
under the United Kingdom-India Bilateral Investment Treaty ('UK BIT') in
respect of retrospective tax claims under the Income Tax Act 1961 (as amended
by the Finance Act 2012). Although relating to the same underlying facts as
the claim under the Dutch BIT, the claim brought by Vodafone Group Plc and
Vodafone Consolidated Holdings Limited is a separate and distinct claim under
a different treaty. After the Delhi High Court first upheld, and
subsequently dismissed, the Indian Government's application for an injunction
preventing Vodafone from progressing the UK BIT arbitration as an abuse of
process, the Indian Government appealed the dismissal. Hearings took place
from 2018 to 2020 with frequent adjournments. Following the award in the Dutch
BIT, the Delhi High Court dismissed the injunction appeal proceedings.
Vodafone has undertaken to proceed with the arbitration commenced under the UK
BIT only if the award already published under the Dutch BIT is set aside. The
Delhi High Court also permitted the formation of the UK BIT tribunal.
In August 2021 the Indian Parliament passed new tax legislation which affects
the retrospective effect of the Finance Act 2012. The impact of this
legislation on the Dutch and UK BIT proceedings, in particular whether the
Indian Government will withdraw its challenge to the arbitration award in the
Dutch BIT, is unknown as of the date of this report. The SICC granted a stay
in the Dutch BIT proceedings and agreed not to set a date for the hearing
until after 1 January 2022.
VIHBV and Vodafone Group Plc will continue to defend vigorously any allegation
that VIHBV or Vodafone India is liable to pay tax in connection with the
transaction with HTIL. Based on the facts and circumstances of this matter,
including the outcome of legal proceedings to date, the Group considers that
it is more likely than not that no present obligation exists at 30 September
2021.
UK: IPCom v Vodafone Group Plc and Vodafone UK
On 22 February 2019, IPCom sued Vodafone Group Plc and Vodafone Limited for
alleged infringement of two patents claimed to be essential to UMTS and LTE
network standards. If IPCom could have established that one or more of its
patents was valid and infringed, it could have sought an injunction against
the UK network if a global licence for the patents was not agreed. The Court
ordered expedited trials on the infringement and validity issues. The trial on
the first patent was in November 2019 and removed the risk of an injunction so
IPCom withdrew the second patent trial listed for May 2020, although the court
did find that there had been limited infringement of the patent. Both IPCom
and Vodafone appealed certain aspects of the judgement from the first trial at
a hearing in January 2021 with the Court of Appeal finding in favour of both
parties on different issues. The validity of the first patent was considered
by the Board of Appeal of the European Patent Office at a hearing in July
2021. The patent was found to be invalid and was revoked. As a result Vodafone
has no liability for patent infringement and the case is resolved.
12 Subsequent events
Vodafone Egypt
On 10 November 2021, the Group announced that it had agreed to transfer its
55% shareholding in Vodafone Egypt to its subsidiary, Vodacom Group Limited
('Vodacom').
The total consideration is €2,365 million of which approximately €1,892
million will be settled by the issue of 242 million new ordinary Vodacom
shares to Vodafone at an issue price of ZAR 135.75 per share; the remaining
€473 million will be settled in cash. As a result, Vodafone's ownership in
Vodacom will increase from 60.5% to 65.1%.
Under the terms of the sale and purchase agreement, the cash element of the
Purchase Consideration will be adjusted for any movement in the net debt and
agreed working capital of Vodafone Egypt between signing and closing.
Completion of the transaction is subject to a number of regulatory approvals,
but is expected to close before 31 March 2022.
Independent review report to Vodafone Group Plc
Conclusion
We have been engaged by Vodafone Plc (the Company) to review the unaudited
condensed consolidated financial statements in the half yearly financial
report for the six months ended 30 September 2021 which comprise the
consolidated income statement, the consolidated statement of comprehensive
income/expense, the consolidated statement of financial position, the
consolidated statement of changes in equity, the consolidated statement of
cash flows and the related notes 1 to 12. We have read the other information
contained in the half yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies with the
information in the unaudited condensed consolidated financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2021 is not prepared,
in all material respects, in accordance with UK adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
The annual financial statement of the group will be prepared in accordance
with UK adopted international accounting standards. The condensed set of
financial statements included in this half-yearly financial report has been
prepared in accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Auditor's Responsibilities for the review of financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion is based on procedure that are
less extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the Company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK and
Ireland) "Review of Interim Financial Information Performed by the Independent
Auditor of the Entity" issued by the Auditing Practices Board. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company, for our work, for this report, or for the conclusions
we have formed.
Ernst & Young LLP
London
16 November 2021
Non-GAAP measures
In the discussion of the Group's reported operating results, non-GAAP measures
are presented to provide readers with additional financial information that is
regularly reviewed by management. However, this additional information
presented is not uniformly defined by all companies including those in the
Group's industry. Accordingly, it may not be comparable with similarly-titled
measures and disclosures by other companies. Additionally, certain information
presented is derived from amounts calculated in accordance with IFRS but is
not itself a measure defined under GAAP. Such measures should not be viewed in
isolation or as an alternative to the equivalent GAAP measure.
The non-GAAP measures discussed in this document are listed below, together
with the location of the definition and the reconciliation between the
non-GAAP measure and the closest equivalent GAAP measure.
Non-GAAP measure Defined on page Closest equivalent GAAP measure Reconciled on page
Performance metrics
Adjusted EBITDAaL Page 47 Operating profit Pages 12 and 37
Previously referred to as Adjusted EBITDA. The metrics have the same
definition.
Organic Adjusted EBITDAaL growth Page 47 Not applicable Not applicable
Organic percentage point change in Adjusted EBITDAaL margin Page 47 Not applicable Not applicable
Organic revenue growth Page 47 Revenue Pages 48 and 49
Organic service revenue growth Page 47 Service revenue Pages 48 and 49
Organic mobile service revenue growth Page 47 Service revenue Pages 48 and 49
Organic fixed service revenue growth Page 47 Service revenue Pages 48 and 49
Organic retail service revenue growth Page 47 Service revenue Pages 48 and 49
Other metrics
Adjusted profit attributable to owners of the parent Page 50 Profit attributable to owners of the parent Page 50
Adjusted basic earnings per share Page 50 Basic earnings per share Pages 50 and 51
Cash flow, funding and capital allocation metrics
Free cash flow Page 51 Inflow from operating activities Page 52
Adjusted free cash flow Page 51 Inflow from operating activities Pages 24 and 52
Previously referred to as Free cash flow (pre spectrum, restructuring and
integration costs) but now excludes Vantage Towers growth capital
expenditure.
Gross debt Page 51 Borrowings Page 52
Net debt Page 51 Borrowings less cash and cash equivalents Page 52
Pre-tax ROCE (controlled) Page 53 ROCE calculated using GAAP measures Pages 53 and 54
Post-tax ROCE (controlled and associates/joint ventures) Page 53 ROCE calculated using GAAP measures Pages 53 and 54
Financing and Taxation metrics
Adjusted net financing costs Page 55 Net financing costs Page 22
Adjusted profit before taxation Page 55 Profit before taxation Page 55
Adjusted income tax expense Page 55 Income tax expense Page 55
Adjusted effective tax rate Page 55 Income tax expense Page 55
Share of adjusted results in equity accounted associates and joint ventures Page 55 Share of results in equity accounted associates and joint ventures Page 56
Share of adjusted results in equity accounted associates and joint ventures Page 55 Share of results in equity accounted associates and joint ventures Page 56
used in post-tax ROCE
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 leases but excluding depreciation,
amortisation and gains/losses on disposal of owned fixed assets and excluding
It is a key external metric used by the investor community to assess share of results in equity accounted associates and joint ventures, impairment
performance of our operations. losses, restructuring costs arising from discrete restructuring plans, other
income and expense and significant items that are not considered by management
It is our segment performance measure in accordance with IFRS 8 (Operating 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 and other adjustments to improve the
comparability of results between periods. When calculating organic growth, the
FY21 results for Vantage Towers have been adjusted to reflect a full year of
operation on a proforma basis in order to be comparable to FY22.
Organic growth is calculated for revenue and profitability metrics, as
follows:
- Adjusted EBITDAaL;
- Percentage point change in Adjusted EBITDAaL margin;
- Revenue
- Service revenue;
- Mobile service revenue;
- Fixed service revenue; and
- Retail service revenue.
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.
Six months ended 30 September 2021 Reported growth M&A and Other Foreign exchange Organic growth*
H1 FY22 H1 FY21
€m €m % pps pps %
Service revenue
Germany 5,777 5,723 0.9 0.3 - 1.2
Mobile service revenue 2,541 2,503 1.5 - - 1.5
Fixed service revenue 3,236 3,220 0.5 0.4 - 0.9
Italy 2,187 2,249 (2.8) 0.3 - (2.5)
Mobile service revenue 1,589 1,638 (3.0) - - (3.0)
Fixed service revenue 598 611 (2.1) 0.8 - (1.3)
UK 2,521 2,401 5.0 0.6 (4.4) 1.2
Mobile service revenue 1,797 1,700 5.7 - (4.4) 1.3
Fixed service revenue 724 701 3.3 2.0 (4.4) 0.9
Spain 1,866 1,880 (0.7) 0.1 - (0.6)
Other Europe 2,502 2,411 3.8 0.1 (0.6) 3.3
Vodacom 2,271 1,949 16.5 - (11.1) 5.4
Other Markets 1,752 1,679 4.3 - 14.8 19.1
Vantage Towers - - - - - -
Common Functions 252 219
Eliminations (118) (93)
Total service revenue 19,010 18,418 3.2 0.2 (0.6) 2.8
Other revenue 3,479 3,009
Revenue 22,489 21,427 5.0 0.1 (0.9) 4.2
Other growth metrics
Vodafone Business - Service revenue 5,086 4,984 2.0 0.5 (1.3) 1.2
Germany - Retail service revenue 5,636 5,557 1.4 0.3 - 1.7
Adjusted EBITDAaL(1,2)
Germany 2,892 2,844 1.7 6.0 - 7.7
Italy 917 800 14.6 0.1 - 14.7
UK 638 636 0.3 5.8 (4.3) 1.8
Spain 445 488 (8.8) 8.2 - (0.6)
Other Europe 836 870 (3.9) 9.2 (0.8) 4.5
Vodacom 1,062 891 19.2 - (13.6) 5.6
Other Markets 683 601 13.6 - 14.7 28.3
Vantage Towers 305 -
Common Functions(3) (213) (119)
Group 7,565 7,011 7.9 (0.2) (1.2) 6.5
Percentage point change in Adjusted EBITDAaL margin(1,2)
Germany 44.9% 44.6% 0.3 2.4 - 2.7
Italy 36.6% 31.9% 4.7 (0.1) - 4.6
UK 20.2% 21.3% (1.1) 1.2 (0.1) -
Spain 21.3% 23.8% (2.5) 1.9 - (0.6)
Other Europe 29.8% 32.0% (2.2) 2.7 (0.1) 0.4
Vodacom 36.3% 36.8% (0.5) - (0.5) (1.0)
Other Markets 34.9% 31.7% 3.2 - (0.5) 2.7
Vantage Towers 49.9% -
Group 33.6% 32.7% 0.9 (0.1) (0.1) 0.7
Notes:
1. In the previously published results for the six months ended 30 September
2020, the Group's 55% interest in Vodafone Egypt was held for sale. In
December 2020, we announced that discussions with the potential purchaser had
been terminated. Consequently, the held for sale classification was reversed
resulting in the following changes to the previously published results for the
six months ended 30 September 2020: Adjusted EBITDAaL for Other Markets and
therefore the Group declined by €12 million. As a result, the Adjusted
EBITDAaL margin for Other Markets and the Group declined by 0.6 pps and 0.1
pps, respectively.
2. In respect of Adjusted EBITDAaL and Adjusted EBITDAaL margin information
presented in the tables above, the 'M&A and Other' column includes
adjustments for Vantage Towers to reflect a full year of operation on a
proforma basis so that organic metrics are calculated on a comparable
basis.
3. Common Functions Adjusted EBITDAaL includes a non-recurring charge in
relation to the impairment of prior year receivables.
Quarter ended 30 September 2021 M&A and Other Foreign exchange
Reported growth Organic growth*
Q2 FY22 Q2 FY21
€m €m % pps pps %
Service revenue
Germany 2,905 2,883 0.8 0.2 - 1.0
Mobile service revenue 1,287 1,277 0.8 - - 0.8
Fixed service revenue 1,618 1,606 0.7 0.5 - 1.2
Italy 1,111 1,129 (1.6) 0.2 - (1.4)
Mobile service revenue 807 823 (1.9) - - (1.9)
Fixed service revenue 304 306 (0.7) 0.8 - 0.1
UK 1,265 1,208 4.7 1.6 (5.7) 0.6
Mobile service revenue 902 854 5.6 1.0 (5.6) 1.0
Fixed service revenue 363 354 2.5 3.0 (5.8) (0.3)
Spain 941 960 (2.0) 0.1 - (1.9)
Other Europe 1,274 1,240 2.7 0.1 (0.4) 2.4
Vodacom 1,145 999 14.6 - (11.5) 3.1
Other Markets 923 839 10.0 - 9.7 19.7
Vantage Towers - - - - - -
Common Functions 127 110
Eliminations (71) (60)
Total service revenue 9,620 9,308 3.4 0.4 (1.4) 2.4
Other revenue 1,768 1,613
Revenue 11,388 10,921 4.3 0.1 (1.5) 2.9
Other growth metrics
Vodafone Business - Service revenue 2,544 2,520 1.0 1.0 (1.9) 0.1
Germany - Retail service revenue 2,836 2,802 1.2 0.3 - 1.5
Quarter ended 30 June 2021 M&A and Other Foreign exchange
Reported growth Organic growth*
Q1 FY22 Q1 FY21
€m €m % pps pps %
Service revenue
Germany 2,872 2,840 1.1 0.3 - 1.4
Mobile service revenue 1,254 1,226 2.3 - - 2.3
Fixed service revenue 1,618 1,614 0.2 0.4 - 0.6
Italy 1,076 1,120 (3.9) 0.3 - (3.6)
Mobile service revenue 782 815 (4.0) - - (4.0)
Fixed service revenue 294 305 (3.6) 0.9 - (2.7)
UK 1,256 1,193 5.3 0.2 (3.0) 2.5
Mobile service revenue 895 846 5.8 - (3.1) 2.7
Fixed service revenue 361 347 4.0 0.9 (2.8) 2.1
Spain 925 920 0.5 0.3 - 0.8
Other Europe 1,228 1,171 4.9 0.1 (0.8) 4.2
Vodacom 1,126 950 18.5 - (10.6) 7.9
Other Markets 829 840 (1.3) - 19.7 18.4
Vantage Towers - - - - - -
Common Functions 125 109
Eliminations (47) (33)
Total service revenue 9,390 9,110 3.1 0.2 - 3.3
Other revenue 1,711 1,396
Revenue 11,101 10,506 5.7 0.1 (0.2) 5.6
Other growth metrics
Vodafone Business - Service revenue 2,542 2,464 3.2 0.3 (0.8) 2.7
Germany - Retail service revenue 2,800 2,755 1.6 0.3 - 1.9
Other metrics
Non-GAAP measure Purpose Definition
Adjusted profit attributable to owners of the parent This metric is used in the calculation of adjusted basic earnings per share. Adjusted profit attributable to owners of the parent excludes restructuring
costs arising from discrete restructuring plans, amortisation of customer
bases and brand intangible assets, impairment losses, other income and expense
and mark-to-market and foreign exchange movements, together with related tax
effects.
Adjusted basic earnings per share This performance measure is used in discussions with the investor community. Adjusted basic earnings per share is Adjusted profit attributable to owners of
the parent divided by the weighted average number of shares outstanding. This
is the same denominator used when calculating basic earnings / (loss) per
share.
Adjusted profit attributable to owners of the parent
The reconciliation of adjusted profit attributable to owners of the parent to
the closest equivalent GAAP measure, profit attributable to owners of the
parent, is provided below.
H1 FY22 H1 FY21(1)
Reported Adjustments Adjusted Reported Adjustments Adjusted
€m €m €m €m €m €m
Adjusted EBITDAaL 7,565 - 7,565 7,011 - 7,011
Restructuring costs (172) 172 - (86) 86 -
Interest on lease liabilities 199 - 199 189 - 189
Loss on disposal of property, plant & equipment and intangible assets (26) - (26) (13) - (13)
Depreciation and amortisation on owned assets(2) (4,949) 253 (4,696) (5,062) 240 (4,822)
Share of results of equity accounted associates and joint ventures(3) 111 137 248 260 (5) 255
Other (expense)/income (108) 108 - 1,055 (1,055) -
Operating profit 2,620 670 3,290 3,354 (734) 2,620
Investment income 129 - 129 183 - 183
Financing costs (1,473) 453 (1,020) (1,610) 599 (1,011)
Profit before taxation 1,276 1,123 2,399 1,927 (135) 1,792
Income tax expense 1 (679) (678) (459) 35 (424)
Profit for the financial period 1,277 444 1,721 1,468 (100) 1,368
Profit attributable to:
- Owners of the parent 996 442 1,438 1,269 (100) 1,169
- Non-controlled interests 281 2 283 199 - 199
Profit for the financial period 1,277 444 1,721 1,468 (100) 1,368
Notes:
1. In the previously published results for the six
months ended 30 September 2020, the Group's 55% interest in Vodafone Egypt was
held for sale. In December 2020, we announced that discussions with the
potential purchaser had been terminated. Consequently, the held for sale
classification was reversed resulting in the following changes to the
previously published results for the six months ended 30 September 2020:
Adjusted EBITDAaL has declined by €12 million, Operating profit has declined
by €118 million, Profit before tax has declined by €118 million and Profit
for the financial period has declined by €87 million.
2. Reported depreciation and amortisation excludes
depreciation on leased assets and loss on disposal of Right-of-use assets
included within Adjusted EBITDAaL. Refer to Additional Information on page 56
for an analysis of depreciation and amortisation. The adjustments of €253
million (H1 FY21: €240 million) relate to amortisation of customer bases and
brand intangible assets.
3. Refer to page 56 for a breakdown of the adjustments
to Share of results of equity accounted associates and joint ventures to
derive Adjusted share of results of equity accounted associates and joint
ventures.
Adjusted basic earnings per share
The reconciliation of adjusted basic earnings per share to the closest
equivalent GAAP measure, basic earnings per share, is provided below.
H1 FY22 H1 FY21(1)
€m €m
Profit attributable to owners of the parent 996 1,269
Adjusted profit attributable to owners of the parent 1,438 1,169
Million Million
Weighted average number of shares outstanding - Basic 29,331 29,535
eurocents eurocents
Basic earnings per share 3.40c 4.30c
Adjusted basic earnings per share 4.90c 3.96c
Note:
1. In the previously published results for the six months ended 30 September
2020, the Group's 55% interest in Vodafone Egypt was held for sale. In
December 2020, we announced that discussions with the potential purchaser had
been terminated. Consequently, the held for sale classification was reversed
resulting in the following changes to the previously published results for the
six months ended 30 September 2020: Profit attributable to owners of the
parent has declined by €45 million, Adjusted profit attributable to owners
of the parent has declined by €45 million, Basic earnings per share and
Adjusted basic earnings per share have declined by 0.15 eurocents.
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, disposal of property, plant and equipment,
External metric used by investor community. restructuring costs arising from discrete restructuring plans, integration
capital additions and working capital related items, licences and spectrum,
Assists comparability with other companies, although our metric may not be interest received and paid, taxation, dividends received from associates and
directly comparable to similarly titled measures used by other companies. investments, 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 and Vantage Towers growth
capital expenditure.
Setting director and management remuneration
The definition of this non-GAAP measure has changed for the year ending 31
Key external metric used to evaluate liquidity and the cash generated by our March 2022. Adjusted free cash flow now excludes Vantage Towers growth capital
operations. expenditure. This change was made so the measure aligns to the basis on which
Outlook guidance is provided and so is a more useful metric for the investor
community.
Growth capital expenditure is total capital expenditure excluding
maintenance-type expenditure.
Gross debt Prominent metric used by 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.
Cash flow and funding (continued)
The tables below present: (i) the reconciliation between Inflow from operating
activities and Free cash flow and (ii) the reconciliation between Borrowings,
Gross debt and Net debt.
H1 FY22 H1 FY21
€m €m
Inflow from operating activities 6,455 6,009
Net tax paid 577 533
Cash generated by operations 7,032 6,542
Capital additions (3,365) (3,363)
Working capital movement in respect of capital additions (739) (222)
Disposal of property, plant and equipment and intangible assets 8 6
Integration capital additions (110) (88)
Working capital movement in respect of integration capital additions (76) (28)
Licences and spectrum (482) (286)
Interest received and paid (727) (621)
Taxation (577) (533)
Dividends received from associates and joint ventures 469 355
Dividends paid to non-controlling shareholders in subsidiaries (399) (166)
Payments in respect of lease liabilities (2,056) (1,936)
Other 39 239
Free cash flow (983) (101)
H1 FY22 Year-end FY21
€m €m
Borrowings (69,521) (67,760)
Adjustments:
Lease liabilities 12,428 13,032
Bank borrowings secured against Indian assets 1,337 1,247
Collateral liabilities 1,498 962
Gross debt (54,258) (52,519)
Collateral liabilities (1,498) (962)
Cash and cash equivalents 5,824 5,821
Short-term investments 4,043 4,007
Collateral assets 1,654 3,107
Derivative financial instruments 650 (859)
Less mark-to-market (gains)/losses deferred in hedge reserves (713) 862
Net debt (44,298) (40,543)
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 operations) by dividing Operating profit
excluding interest on lease liabilities, restructuring costs arising from
discrete restructuring plans, impairment losses, other income and expense and
the share of results in equity accounted associates and joint ventures. On a
Post-tax ROCE (controlled and associates/joint ventures) post-tax basis, the measure includes our share of adjusted results from
associates and joint ventures and a notional tax charge. Capital is equivalent
to net operating assets and is calculated as the average of opening and
closing balances of: property, plant and equipment (including Right-of-Use
assets and liabilities), intangible assets (including goodwill), operating
working capital (including held for sale assets and excluding derivative
balances) and provisions. Other assets that do not directly contribute to
returns are excluded from this measure and include other investments, current
and deferred tax balances and post employment benefits. On a post-tax basis,
ROCE also includes our investments in associates and joint ventures.
Return on Capital Employed ('ROCE') using GAAP measures
The table below presents the calculation of ROCE using GAAP measures as
reported in the consolidated income statement and consolidated statement of
financial position.
For the purpose of the half-year ROCE calculation the returns are based on the
12 months ended 30 September 2021 and the denominator is based on the average
of the capital employed as at 30 September 2021 and 30 September 2020.
H1 FY22 FY21
€m €m
Operating profit(1) 4,363 5,097
Borrowings 69,521 67,760
Cash and cash equivalents (5,824) (5,821)
Derivative financial instruments included in trade and other receivables (3,666) (3,151)
Derivative financial instruments included in trade and other payables 3,016 4,010
Short-term investments (4,043) (4,007)
Collateral assets (1,654) (3,107)
Financial liabilities under put option arrangements 502 492
Equity 58,047 57,816
Capital employed at end of the period 115,899 113,992
Average capital employed for the period 116,450 115,090
ROCE using GAAP measures 3.7% 4.4%
Note:
1. FY21 Operating profit included a gain of €1.0 billion arising on the
merger of Vodafone Hutchison Australia into TPG Telecom Limited.
Return on Capital Employed ('ROCE') : Non-GAAP basis
The table below presents the calculation of ROCE using non-GAAP measures and
reconciling to the closest equivalent GAAP measure.
For the purpose of the half-year ROCE calculation the returns are based on the
12 months ended 30 September 2021 and the denominator is based on the average
of the capital employed as at 30 September 2021 and 30 September 2020.
H1 FY22 FY21
€m €m
Operating profit 4,363 5,097
Interest on lease liabilities (384) (374)
Restructuring costs 442 356
Impairment loss - -
Other income 595 (568)
Share of results in equity accounted associates and joint ventures (193) (342)
Adjusted operating profit for calculating pre-tax ROCE (controlled) 4,823 4,169
Share of adjusted results in equity accounted associates and joint ventures 194 203
used in post-tax ROCE(1)
Notional tax at adjusted effective tax rate(2) (1,463) (1,176)
Adjusted operating profit for calculating post-tax ROCE (controlled and 3,554 3,196
associates/joint ventures)
Capital employed for calculating ROCE on a GAAP basis 115,899 113,992
Adjustments to exclude:
- Leases (12,428) (13,032)
- Deferred tax assets (21,800) (21,569)
- Deferred tax liabilities 1,985 2,095
- Taxation recoverable (515) (434)
- Taxation payable 1,079 769
- Other investments (1,609) (1,514)
- Associates and joint ventures (5,653) (5,927)
- Pension assets and liabilities 121 453
Adjusted capital employed for calculating pre-tax ROCE (controlled) 77,079 74,833
Associates and joint ventures 5,653 5,927
Adjusted capital employed for calculating post-tax ROCE (controlled and 82,732 80,760
associates/joint ventures)
Average capital employed for calculating pre-tax ROCE (controlled) 76,895 75,470
Average capital employed for calculating post-tax ROCE (controlled and 82,585 81,143
associates/joint ventures)
Pre-tax ROCE (controlled) 6.3% 5.5%
Post-tax ROCE (controlled and associates/joint ventures) 4.3% 3.9%
Notes:
1. Share of Adjusted results in equity accounted associates and joint ventures
used in post-tax ROCE is a non-GAAP measure.
2. Includes tax for H1 FY22 at the Adjusted effective tax rate of 31.5%,
together with tax for H2 FY21 at the adjusted effective tax rate of 26.4%.
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).
Share of adjusted results in equity accounted associates and joint ventures This metric is used in the calculation of adjusted effective tax rate. Share of results in equity accounted associates and joint ventures excluding
restructuring costs, amortisation of acquired customer base and brand
intangible assets and other income and expense.
Share of adjusted results in equity accounted associates and joint ventures This metric is used in the calculation of post-tax ROCE (controlled and Share of results in equity accounted associates and joint ventures excluding
used in post-tax ROCE associates/joint ventures). restructuring costs and other income and expense.
Adjusted tax metrics
The table below reconciles profit before taxation and income tax expense to
adjusted profit before taxation, adjusted income tax expense and adjusted
effective tax rate.
H1 FY22 H1 FY21(1)
€m €m
Profit before taxation 1,276 1,927
Adjustments to derive adjusted profit before tax 1,123 (135)
Adjusted profit before taxation 2,399 1,792
Share of adjusted results in equity accounted associates and joint ventures (248) (255)
Adjusted profit before tax for calculating adjusted effective tax rate 2,151 1,537
Income tax credit/(expense) 1 (459)
Tax on adjustments to derive adjusted profit before tax (62) (153)
Adjustments:
- Deferred tax on use of Luxembourg losses in the year 155 188
- Increase in deferred tax assets in the UK as a result of a change in the (498) -
corporate tax rate
- Revaluation of assets for tax purposes in Italy (274) -
Adjusted income tax expense for calculating adjusted tax rate (678) (424)
Adjusted effective tax rate 31.5% 27.6%
Note:
1. In the previously published results for the six
months ended 30 September 2020, the Group's 55% interest in Vodafone Egypt was
held for sale. In December 2020, we announced that discussions with the
potential purchaser had been terminated. Consequently, the held for sale
classification was reversed resulting in an increase in the Adjusted effective
tax rate of 0.1 pps compared to the previously published results.
Share of adjusted results in equity accounted associates and joint ventures
The table below reconciles share of adjusted results in equity accounted
associates and joint ventures to the closest GAAP equivalent, share of results
in equity accounted associates and joint ventures.
H1 FY22 H1 FY21
€m €m
Share of results in equity accounted associates and joint ventures 111 260
Amortisation of acquired customer base and brand intangible assets 126 124
Share of adjusted results in equity accounted associates and joint ventures 237 384
used in post-tax ROCE
Restructuring costs 11 -
Other expense/(income) - (129)
Share of adjusted results in equity accounted associates and joint ventures 248 255
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.
H1 FY22 H1 FY21
€m €m
Depreciation on leased assets 2,003 1,925
Depreciation on owned assets 2,905 2,834
Amortisation of intangible assets 2,044 2,228
Depreciation and amortisation 6,952 6,987
Loss on disposal of owned assets 26 13
Loss on disposal of Right-of-Use assets - 1
Depreciation, amortisation and loss on disposal of assets - as recognised in 6,978 7,001
the consolidated income 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.
H1 FY22 H1 FY21
€m €m
Capital additions 3,365 3,363
Integration related capital additions 110 88
Licence and spectrum additions 829 126
Additions to customer bases - 1
Additions 4,304 3,578
Intangible assets additions 1,878 1,104
Property, plant and equipment owned additions 2,426 2,474
Total additions 4,304 3,578
Definitions
Key terms are defined below. See page 46 for the location of non-GAAP measure
definitions.
Term Definition
Africa Comprises the Vodacom Group and businesses in Egypt and Ghana.
ARPU Average revenue per user, defined as customer revenue and incoming revenue
divided by average customers.
B2C Business-to-Consumer refers to the process of selling products and services
directly between a business and consumers who are the end-users.
Capital additions Comprises the purchase of property, plant and equipment and intangible assets,
other than licence and spectrum payments and integration capital expenditure.
Churn Total gross customer disconnections in the period divided by the average total
customers in the period.
Common Functions Comprises central teams and business functions.
Converged customer A customer who receives fixed and mobile services (also known as unified
communications) on a single bill or who receives a discount across both bills.
Depreciation and amortisation The accounting charge that allocates the cost of a tangible or intangible
asset to the income statement over its useful life. This measure includes the
profit or loss on disposal of property, plant and equipment and computer
software. Includes Right-of-use assets.
Direct costs Direct costs include interconnect costs and other direct costs of providing
services.
Eliminations Refers to the removal of intercompany transactions to derive the consolidated
financial statements.
Europe Comprises the Group's European businesses and the UK.
Fixed service revenue Service revenue (see below) relating to the provision of fixed line and
carrier services.
GAAP Generally Accepted Accounting Principles.
IFRS International Financial Reporting Standard.
Incoming revenue Comprises revenue from termination rates for voice and messaging to Vodafone
customers.
Integration capital expenditure Capital expenditure incurred in relation to significant changes in the
operating model, such as the integration of recently acquired subsidiaries.
Internet of Things ('IoT') The network of physical objects embedded with electronics, software, sensors,
and network connectivity, including built-in mobile SIM cards, that enables
these objects to collect data and exchange communications with one another or
a database.
Mobile customer revenue Represents revenue from mobile customers from bundles that include a specified
number of minutes, messages or megabytes of data that can be used for no
additional charge ('in-bundle') and revenues from minutes, messages or
megabytes of data which are in excess of the amount included in customer
bundles ('out-of-bundle'). Mobile in-bundle and out-of-bundle revenues are
combined to simplify presentation.
Mobile service revenue Service revenue (see below) relating to the provision of mobile services.
MVNO Mobile Virtual Network Operator.
Next generation networks ('NGN') Fibre or cable networks typically providing high-speed broadband over 30Mbps.
Operating expenses Comprise primarily sales and distribution costs, network and IT related
expenditure and business support costs.
Other Europe Other Europe markets include Portugal, Ireland, Greece, Romania, Czech
Republic, Hungary and Albania.
Other Markets Other Markets comprise Turkey, Egypt and Ghana.
Other revenue Other revenue includes connection fees, equipment revenue, interest income and
lease revenue.
Reported growth Reported growth is based on amounts reported in euros and determined under
IFRS.
Retail revenue Retail revenue comprises service revenue (see below) excluding Mobile Virtual
Network Operator ('MVNO') and Fixed Virtual Network Operator ('FVNO')
wholesale revenue.
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.
Visitors: 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 or ongoing services
including but not limited to, monthly access changes, airtime usage, roaming,
incoming and outgoing network usage by non-Vodafone customers and interconnect
charges for incoming calls.
SME Small and medium sized enterprises.
Vodafone Business Vodafone Business is part of the Group and partners with businesses of every
size to provide a range of business-related services.
Notes
1. References to Vodafone are to Vodafone Group Plc and references
to Vodafone Group are to Vodafone Group Plc and its subsidiaries unless
otherwise stated. Vodafone, the Vodafone Speech Mark Devices, Vodacom and
Together we can are trade marks owned by Vodafone. Vantage Towers is a trade
mark owned by Vantage Towers AG. Other product and company names mentioned
herein may be the trade marks of their respective owners.
2. All growth rates reflect a comparison to the quarter ended 30
September 2020 unless otherwise stated.
3. References to "Q1" and "Q2" are to the three months ended 30
June 2021 and 30 September 2021, respectively, unless otherwise stated.
References to the "year", "financial year" or "FY22" are to the financial year
ending 31 March 2022. References to the "last year", "last financial year" or
"FY21" are to the financial year ended 31 March 2021 unless otherwise stated.
4. Vodacom refers to the Group's interest in Vodacom Group Limited
('Vodacom') as well as its operations, including subsidiaries in South Africa,
DRC, Tanzania, Mozambique and Lesotho.
5. Quarterly historical information is provided in a spreadsheet
available at
https://investors.vodafone.com/reports-information/results-reports-presentations
6. This trading update contains references to our and our
affiliates' websites. Information on any website is not incorporated into this
update and should not be considered part of this update.
Forward-looking statements and other matters
This report contains "forward-looking statements" within the meaning of the US
Private Securities Litigation Reform Act of 1995 with respect to the Group's
financial condition, results of operations and businesses and certain of the
Group's plans and objectives.
In particular, such forward-looking statements include, but are not limited
to, statements with respect to: expectations regarding the Group's financial
condition or results of operations and the guidance for Adjusted EBITDAaL and
Adjusted free cash flow for the financial year ending 31 March 2022; the
Group's sustainable business strategy and 2025 targets; expectations for the
Group's future performance generally; expectations regarding the operating
environment and market conditions and trends, including customer usage,
competitive position and macroeconomic pressures, price trends and
opportunities in specific geographic markets; intentions and expectations
regarding the development, launch and expansion of products, services and
technologies, either introduced by Vodafone or by Vodafone in conjunction with
third parties or by third parties independently, including the launch of
VodaPay; expectations regarding the Group's environmental targets,
expectations regarding the integration or performance of current and future
investments, associates, joint ventures, non-controlled interests and newly
acquired businesses.
Forward-looking statements are sometimes, but not always, identified by their
use of a date in the future or such words as "will", "anticipates", "could",
"may", "should", "expects", "believes", "intends", "plans" or "targets"
(including in their negative form or other variations). By their nature,
forward-looking statements are inherently predictive, speculative and involve
risk and uncertainty because they relate to events and depend on circumstances
that may or may not occur in the future. There are a number of factors that
could cause actual results and developments to differ materially from those
expressed or implied by these forward-looking statements. These factors
include, but are not limited to, the following: external cyber-attacks,
insider threats or supplier breaches; general economic and political
conditions including as a consequence of the COVID-19 pandemic, of the
jurisdictions in which the Group operates, including as a result of Brexit,
and changes to the associated legal, regulatory and tax environments;
increased competition; increased disintermediation; levels of investment in
network capacity and the Group's ability to deploy new technologies, products
and services; rapid changes to existing products and services and the
inability of new products and services to perform in accordance with
expectations; the ability of the Group to integrate new technologies, products
and services with existing networks, technologies, products and services; the
Group's ability to generate and grow revenue; a lower than expected impact of
new or existing products, services or technologies on the Group's future
revenue, cost structure and capital expenditure outlays; slower than expected
customer growth, reduced customer retention, reductions or changes in customer
spending and increased pricing pressure; the Group's ability to extend and
expand its spectrum position to support ongoing growth in customer demand for
mobile data services; the Group's ability to secure the timely delivery of
high-quality products from suppliers; loss of suppliers, disruption of supply
chains and greater than anticipated prices of new mobile handsets; changes in
the costs to the Group of, or the rates the Group my charge for, terminations
and roaming minutes; the impact of a failure or significant interruption to
the Group's telecommunications, networks, IT systems or data protection
systems; the Group's ability to realise expected benefits from acquisitions,
partnerships, joint ventures, franchises, brand licences, platform sharing or
other arrangements with third parties; acquisitions and divestment of Group
businesses and assets and the pursuit of new, unexpected strategic
opportunities; the Group's ability to integrate acquired business or assets;
the extent of any future write-downs or impairment charges on the Group's
assets, or restructuring charges incurred as a result of an acquisition or
disposition; a developments in the Group's financial condition, earnings and
distributable funds and other factors that the Board takes into account in
determining the level of dividends; the Group's ability to satisfy working
capital requirements; changes in foreign exchange rates; changes in the
regulatory framework in which the Group operates; the impact of legal or other
proceedings against the Group or other companies in the communications
industry and changes in statutory tax rates and profit mix.
Furthermore, a review of the reasons why actual results and developments may
differ materially from the expectations disclosed or implied within
forward-looking statements can be found under "Forward-looking statements" and
"Principal risk factors and uncertainties" in the Group's annual report for
the financial year ended 31 March 2021. The annual report can be found on the
Group's website
(https://investors.vodafone.com/reports-information/latest-annual-results).
All subsequent written or oral forward-looking statements attributable to the
Company or any member of the Group or any persons acting on their behalf are
expressly qualified in their entirety by the factors referred to above. No
assurances can be given that the forward-looking statements in this document
will be realised. Any forward-looking statements are made of the date of this
presentation. Subject to compliance with applicable law and regulations,
Vodafone does not intend to update these forward-looking statements and does
not undertake any obligation to do so.
Copyright © Vodafone Group
2021
-End-
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FFFIILELELILRecent news on Vodafone
See all newsREG - Vodafone Group Plc - Transaction in Own Shares
AnnouncementREG - Vodafone Group Plc - Vodafone sells stake in VodafoneZiggo
AnnouncementREG - Vodafone Group Plc - Transaction in Own Shares
AnnouncementREG - Vodafone Group Plc - Transaction in Own Shares
AnnouncementREG - Vodafone Group Plc - Transaction in Own Shares
Announcement