UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rules 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
Dated November 16, 2020
Commission File Number: 001-10086
VODAFONE GROUP
PUBLIC LIMITED COMPANY
(Translation of registrant’s name into
English)
VODAFONE HOUSE, THE CONNECTION, NEWBURY,
BERKSHIRE, RG14 2FN, ENGLAND
(Address of principal executive offices)
Indicate by check mark whether the registrant
files or will file annual reports under cover Form 20-F or Form 40-F.
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether the registrant
by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule
12g3-2(b) under the Securities Exchange Act of 1934.
If “Yes” is marked, indicate
below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-¨.
This Report on Form 6-K contains a
Stock Exchange Announcement dated 16 November 2020 entitled ‘VODAFONE GROUP PLC ⫶ H1 FY21 RESULTS’.
Vodafone
Group Plc ⫶ H1 FY21 results
16 November 2020
Delivering our strategic priorities at
pace to reshape Vodafone
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·
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Resilient financial performance during
the first half of FY21, in line with our expectations
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·
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Deepening customer engagement, with mobile
contract customer loyalty improved year-on-year for an 8th successive quarter
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·
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Launched 5G in 127 cities across 9 of our
European markets; 52 million marketable homes passed with Gigabit speeds
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·
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Reaffirming FY21 free cash flow guidance
of at least €5 billion (pre-spectrum and restructuring) and adjusted EBITDA expected to be between €14.4 – €14.6
billion
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H1 FY21
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H1 FY20
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Financial results
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Page
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€m
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€m
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Change
(%)
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Group revenue
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33
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21,427
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21,939
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(2.3
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)
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Operating profit
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33
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3,472
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577
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n/m
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Profit/(loss) for the financial period
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33
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1,555
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(1,891
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)
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n/m
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Basic earnings/(loss) per share
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33
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4.45
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c
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(7.24
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c)
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n/m
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Interim dividend per share
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44
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4.50
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c
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4.50
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c
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n/m
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Alternative
performance measures1
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Group service revenue
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13
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18,418
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18,544
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(0.8
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)*
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Adjusted EBITDA
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13
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7,023
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7,105
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(1.9
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)*
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Adjusted earnings per share
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24
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4.11
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c
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0.85
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c
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+383.5
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Free cash flow (pre-spectrum and restructuring)
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25
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451
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394
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+14.5
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Free cash flow
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25
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(101
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)
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34
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n/m
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Net debt**
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25
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(43,983
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)
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(48,107
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)
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+8.6
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Net debt to adjusted EBITDA**
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27
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3.0
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x
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n/m
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n/m
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Pre-tax ROCE (controlled)
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28
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5.1
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%
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n/a
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n/a
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Post-tax ROCE
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28
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4.0
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%
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n/a
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n/a
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1. See page 56 for the reconciliation to the closest equivalent GAAP measure.
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·
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Group revenue declined by 2.3% to €21.4
billion, as good underlying momentum was offset by the effects of COVID-19 on roaming and visitor revenue, as well as lower handset
sales
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·
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Adjusted EBITDA declined by 1.9%* to €7.0
billion as the decline in revenue was partially offset by good cost control with net Europe opex savings of €0.3 billion
realised during H1
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·
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Interim dividend per share of 4.50 eurocents,
record date 18 December 2020
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Nick Read, Group Chief Executive,
commented:
“Today’s
results underline increased confidence in our full year outlook. We are reporting a resilient first half performance and we continue
to see good commercial momentum across the Group. The results demonstrate the success of our strategic priorities to date, namely
increasing customer loyalty, growing our fixed broadband base, driving digitisation to simplify the company and capture significant
cost savings, and deliver 5G efficiently through network sharing.
COVID-19 and
the reduction in roaming revenues, through the significant reduction in international travel, is currently obscuring our underlying
commercial progress, with Q2 service revenue growing by 1.5% excluding roaming. We are now two years into our longer-term strategy
to transform Vodafone into a business that enables a digital society, generating both sustainable growth and attractive returns.
We are executing at pace, but there remains more to be done to achieve our goals.
Now, more than ever, the connectivity services
we provide are critical for society and the demand is growing for our services. I am proud of how our dedicated employees have
worked tirelessly around the clock to keep everyone connected.”
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 9.30 am on 16 November 2020. The webcast and supporting information can be accessed at investors.vodafone.com
Summary
⫶ Resilient performance
Basis
of presentation
All amounts in this document marked with
an “*” represent organic growth, which presents performance on a comparable basis, both in terms of merger and acquisition
activity and movements in foreign exchange rates. Organic growth is an alternative performance measure. See “Alternative
performance measures” on page 54 for further details and page 56 for the location of the reconciliation to the respective
closest equivalent GAAP measure.
Net debt at 30 September 2020 marked with
a “**” has been adjusted to exclude derivative gains in cash flow hedge reserves, the corresponding losses for which
are not recognised on the bonds within net debt and which have significantly increased due to COVID-19 related market conditions.
The ratio of net debt to adjusted EBITDA is calculated using adjusted EBITDA for a rolling 12 month period, normalised for acquisitions
and disposals within the period.
Financial performance
Group revenue declined by 2.3% to €21.4
billion (FY20 H1: €21.9 billion), as good underlying momentum and the benefit from the acquisition of Liberty Global’s
assets in Germany and CEE was offset by lower revenue from roaming, visitors and handset sales, foreign exchange headwinds and
the disposal of Vodafone New Zealand.
The Group made a profit for the period of
€1.6 billion reflecting our resilient financial performance during the first half of FY21. Basic earnings per share was 4.45
eurocents, compared to a loss per share of 7.24 eurocents in the six months ended 30 September 2019. Losses were recognised in
the comparative period relating to Vodafone Idea Limited, which outweighed a €1.1 billion profit recorded on the disposal
of Vodafone New Zealand. The current period includes a gain of €1.0 billion arising on the merger of Vodafone Hutchison Australia
into TPG Telecom Limited.
Group service revenue decreased by 0.8%*
(Q1: -1.3%*, Q2: -0.4%*) to €18.4 billion (FY20 H1: €18.5 billion) as good underlying momentum was offset by lower
revenue from roaming and visitors. Adjusted EBITDA decreased by 1.9%* to €7.0 billion (FY20 H1: €7.1 billion) as a
decline in revenue was partially offset by good cost control, with a net reduction in our Europe and Common Functions operating
expenditure of €300 million during H1. The adjusted EBITDA margin was 0.1* percentage points lower year-on-year at 32.8%.
Cash flow, funding & capital allocation
Free cash flow (pre-spectrum and restructuring)
increased by 14.5% to €0.5 billion (FY20 H1: €0.4 billion) supported by the resilient adjusted EBITDA performance and
higher dividends received from associates and investments, partially offset by higher cash interest and tax. Licence and spectrum
payments for the period totalled €0.3 billion (FY20 H1: €0.1 billion) and restructuring and other payments totalled
€0.3 billion (FY20 H1: €0.3 billion). Free cash flow was -€101 million (FY20 H1: €34 million).
Net debt adjusted for mark-to-market gains
deferred in hedging reserves at 30 September 2020 was €44.0** billion compared to €42.2** billion as at 31 March 2020.
This increase in net debt reflects the FY20 final dividend payment of €1.2 billion, mark-to-market movements on derivatives,
and foreign exchange losses, partially offset by proceeds of €0.4 billion following the subsequent sale of our 4.3% stake
in INWIT in April 2020.
We aim to maintain our financial leverage
within a range of 2.5-3.0x net debt to adjusted EBITDA. As at 30 September 2020, financial leverage was 3.0x**. The interim dividend
per share is 4.5 eurocents (FY20 H1: 4.5 eurocents). The ex-dividend date for the interim dividend is 17 December 2020 for ordinary
shareholders, the record date is 18 December 2020 and the dividend is payable on 5 February 2021.
Strategic
review ⫶ Delivering our strategic priorities
In November
2018, we set out a long-term ambition to reshape Vodafone and establish a foundation from which the Group can grow in the converged
connectivity markets in Europe, and mobile data and payments in Africa. This ambition was to be delivered through three
strategic priorities: to deepen engagement with our customers; to accelerate our transformation to a digital first organisation;
and improve the utilisation of our assets. Given the ambition to reshape Vodafone, we added a fourth strategic priority to optimise
the portfolio of our operations.
During the first half of FY21, we have executed
at pace across all four priorities. Highlights of activity during the period include:
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·
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Deepening customer engagement, with mobile
contract customer loyalty improved year-on-year for an 8th successive quarter
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·
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we have 52 million homes passed with a
1 Gigabit capable fixed-line network;
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·
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we have launched 5G in 127 cities across
9 of our European markets;
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·
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in response to the trading conditions related
to the pandemic, we accelerated a series of cost saving activities, resulting in a €300 million net reduction in our Europe
and Common Functions operating expenditure;
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·
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we have secured mobile wholesale agreements
with PostePay in Italy with more than four million connections, Asda Mobile in the UK, and Forthnet in Greece;
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·
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we completed the merger of Vodafone Hutchison
Australia with TPG Telecom to establish a fully integrated telecommunications operator in Australia. We now hold an economic interest
of 25.05% in the Australian Stock Exchange listed entity; and
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|
·
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we are on track for the IPO of Vantage
Towers in early 2021.
|
The table below summarises the progress
against our strategic priorities in H1 FY21.
Strategic progress summary
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Units
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H1 FY21
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H1 FY20
|
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1. Deepening customer engagement
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Europe mobile contract customers1
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million
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65.0
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63.8
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Europe broadband customers1
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million
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25.4
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24.5
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Europe on-net Gigabit capable connections1
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million
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38.9
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23.5
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Europe Consumer converged customers1
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million
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7.5
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6.8
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Europe mobile contract customer churn
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%
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12.9
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14.6
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Africa data users2
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million
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84.5
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81.2
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M-Pesa transaction volume2
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billion
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6.8
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6.0
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Business fixed-line service revenue growth
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%
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4.2
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2.9
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IoT SIM connections
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million
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|
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112
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|
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94
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|
|
|
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|
|
|
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2. Accelerating digital transformation
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Europe net opex savings3
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billion
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0.3
|
|
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0.2
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Europe digital channel sales mix4
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%
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|
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22
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|
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20
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Europe frequency of customer contacts p.a
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#
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1.4
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1.6
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Europe MyVodafone app penetration
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%
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62
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63
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|
|
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|
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|
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3. Improving asset utilisation
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|
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|
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Average Europe monthly mobile data usage per customer
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GB
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6.2
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|
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4.2
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Europe on-net NGN broadband penetration1
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%
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30
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|
|
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29
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|
Notes:
1. Including VodafoneZiggo | 2. Africa
including Safaricom, Ghana and Egypt | 3. Europe and common function operating costs. | 4. Figure presented in H1 FY21 column
reflects Europe digital channel sales mix in Q2 FY21 as the mix in Q1 FY21 was impacted by retail restrictions due to COVID-19.
It is two years since we set out our strategic
priorities to focus the Group on the converged connectivity market in Europe, and mobile data and payments in Africa. This first
phase of our strategic transformation has progressed well and in this strategic review section we illustrate that:
|
A.
|
We are delivering our strategic priorities at pace to reshape Vodafone; and
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B.
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We are well-positioned for our next phase to create sustainable stakeholder value.
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A ⫶ Delivering our strategic
priorities at pace to reshape Vodafone
The actions we have taken in the last two
years and their results are summarised in the sub-sections below. Our actions have delivered a more consistent revenue growth profile,
with our service revenue trends remaining resilient despite the direct impacts of the COVID-19 pandemic on revenue from roaming
and visitors.
We are firmly on track to deliver our original
three-year target of at least €1.2 billion of net savings from operating expenses in Europe and Group common functions, having
reached €1.1 billion of savings between FY19 and H1 FY21. We have extended our ambition to at least another €1 billion
of savings over the next three years. This focus on efficiency, delivered through standardisation and integration of our technology
support operations, has enabled our adjusted EBITDA margin to be resilient during the pandemic and remain broadly stable at 32.8%.
Through improved asset utilisation and a
disciplined approach to balancing our capital allocation priorities, we have delivered €10.7 billion of free cash flow (before
spectrum payment and restructuring costs) over the last two years. Despite the strong delivery of our strategic priorities at pace,
our post-tax return on capital employed (‘ROCE’) of 4.0% remains below our cost of capital. On page 10, we have set
out our growth model and capital allocation framework, and explained how we will drive shareholder returns through efficiency and
growth.
Deepening customer engagement ⫶
Delivering more consistent commercial performance
In 2018, we set out our plans to deliver
consistent commercial performance in each of our markets, following a period of more mixed results. The major actions we have undertaken
include:
|
·
|
Launching speed-tiered, unlimited data
mobile plans in 9 markets. This has enabled us to stabilise and grow our higher value customer base and increase average revenue
per user (‘ARPU’). In Italy, the UK and Spain, the ARPU uplift was approximately by €2-5 per month. We now have
over six million active unlimited data customers across our markets.
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|
·
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Launching and embedding ‘second’
brands such as, ho. in Italy, VOXI in the UK, Lowi in Spain and Otelo in Germany to compete more effectively and efficiently in
the value segment. Alongside our speed-tiered, unlimited data plans, we are now competing effectively across all segments of the
markets in which we operate. We now have 4.5 million active users across these four brands.
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·
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We have maintained strong commercial momentum
in our fixed business and over the past 24 months we have added 3.1 million NGN fixed-line customers in Europe. We also have converged
customer plans available in all major markets. These include a combination of mobile connectivity, fixed-line connectivity and
a range of additional products and services, such as TV and IoT connections.
|
|
·
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We have invested centrally to develop a
unified digital customer experience through shared online platforms and the MyVodafone mobile app. This investment has supported
an approximate 10% reduction in the frequency of customer contacts per year to 1.4 and the app is used by 62% of our mobile customers
in Europe.
|
Accelerating digital transformation
⫶ Best-in-class operational efficiency through standardisation
Through standardisation, digitalisation
and sharing of processes we recognised an opportunity to significantly improve our operational efficiency. We set an ambitious
goal to generate at least €1.2 billion of net savings from our Europe operating expenses over 3 years. In just over two years,
we have already delivered €1.1 billion of this original target and have clear line-of-sight to the €1 billion targeted
over the FY21-FY23 period. Key activities that have contributed to this performance include:
|
·
|
Whenever possible our back office activities
are delivered though our three Shared Service Centres (‘_VOIS’) in Egypt, India and Eastern Europe. Over a third of
the targeted €1.2 billion net opex savings in Europe and Common Functions are being generated by integrating activities into
_VOIS and driving digitisation at speed.
|
|
·
|
We have invested in customer support technology.
Using a combination of artificial intelligence and machine-learning tools, we have developed ‘TOBi’, a fully automated
customer support assistant available online and via the MyVodafone app. Our investments in this area have resulted in 64% of customer
support interactions with TOBi being resolved with no human interaction.
|
|
·
|
We are investing in shared cross-market
digital sales platforms. These enable best-in-class customer journeys enabling full sales activities without manual intervention.
This has led to over 22% of our contract mobile and fixed sales in Q2 being completed through a fully digital customer journey
in Germany, Italy, the UK and Spain. This in turn has enabled us to reduce our retail footprint by 728 stores over the last two
years.
|
Improving asset utilisation ⫶
Facilitating efficient use of capital through network sharing
Over the last decade, the level of ROCE
achieved by the telecommunications sector has significantly reduced to below its weighted average cost of capital. This has been
driven by a number of factors, including market structures, capital expenditure requirements for advancements in network infrastructure,
mobile spectrum licenses and a challenging regulatory environment. As a result, two years ago we began a series of activities to
improve our asset utilisation to support a recovery in ROCE. These actions have included:
|
·
|
Reaching network sharing agreements with
leading mobile network operators in each of our European markets. This includes Deutsche Telekom in Germany, Telecom Italia in
Italy, Telefonica in the UK and Orange in Spain. We estimate the combined effect of network sharing arrangements in Europe reduces
our future investment requirement to deploy 5G by c. €2.5 billion over 10 years.
|
|
·
|
Established Vantage Towers as a separate
vehicle to consolidate the ownership and operations of our passive mobile network infrastructure, enabling a greater focus on delivering
operational efficiencies through dedicated, commercially-oriented and specialised teams.
|
|
·
|
We have signed significant wholesale agreements
in both our fixed and mobile networks, on terms that maintain the differentiation of our retail offers. In 2019, we began a wholesale
agreement with Telefonica Deutschland for access to our fixed-line infrastructure in Germany and during H1 FY21 we signed mobile
wholesale agreements with PostePay in Italy (more than four million connections), with Asda Mobile in the UK and Forthnet in Greece.
|
Whilst significant progress has been made,
much more work is required to both improve our own asset utilisation and to work collaboratively with policy makers and regulators
to ensure that we can continue to invest in our Europe and Africa communications infrastructure, whilst also earning a fair return
on the capital we deploy.
Vantage Towers
The IPO of Vantage Towers is on track for
early calendar 2021. Vantage Towers is one of Europe’s largest and most geographically diverse infrastructure operators,
with significant growth opportunities alongside long-term, inflation-linked contracts. The three important aspects relating to
Vodafone’s ongoing relationship with Vantage Towers are:
|
1.
|
Vodafone is committed to ensuring that Vantage Towers is operationally independent. This is demonstrated
through the long-term Master Services Agreement (‘MSA’), clear management incentive structures, and a two-tier governance
structure led by an independent Chairman;
|
|
2.
|
Vodafone will strive to ensure that the capital structure for Vantage Towers enables it to take
full advantage of its organic and inorganic growth opportunities; and
|
|
3.
|
Vodafone is committed to supporting Vantage Towers’ growth ambition and will ensure shareholder
value is being optimised.
|
Optimising the portfolio ⫶
Significant & fast execution to enable strategic priorities
In order to achieve our strategic objectives
to focus on converged connectivity markets in Europe, and mobile data and payments in Africa, we began a large programme to rationalise
our portfolio in 2019. Our portfolio optimisation programme had three overriding objectives as set out below.
Objective
|
|
|
Total
value
|
|
|
Transactions
|
1. Focus on Europe & Africa
|
|
|
€4.4 billion
|
|
|
Disposal in New Zealand, Malta and Egypt1
|
|
|
|
€5.1 billion
|
|
|
Mergers in Australia, Africa and India (Vodafone Idea and Indus Towers1)
|
2. Achieved convergence with local scale
|
|
|
€18.6 billion
|
|
|
Acquisitions in Germany, Greece & Eastern Europe
|
3. Enable structural shift in asset utilisation
|
|
|
€6.5 billion
|
|
|
Tower mergers in Italy & Greece1
|
|
|
|
TBA
|
|
|
Ongoing IPO of Vantage Towers1
|
1 Transaction announced but not yet closed
Liberty acquisition ⫶ Transformation
into Europe’s leading connectivity provider
The defining corporate transaction of our
recent history was the acquisition of Liberty Global’s assets in Germany and Central Eastern Europe, which completed in
July 2019. This transaction has enabled Vodafone to become the clear converged Gigabit challenger in Germany with 55.2 million
SIM connections, 10.9 million fixed-line connections and 13.5 million TV subscribers. Following completion of the transaction,
we have worked at pace to upgrade the cable network to Gigabit speeds and deliver the targeted cost and capex synergies. Over
the past year, we have increased the number of homes in the Gigabit capable footprint from 9.7 million to 21.8 million, representing
over half of the country and over 90% of our cable footprint. Our acquisition plans targeted €535 million of cost and capex
synergies over five years. We have already executed actions that will deliver over €250 million of these synergies, which
is around six months ahead of schedule.
B ⫶ Focused on growth with unique
capabilities to create sustainable value
Following our strategic activity to reshape
the Group, we are focused on growing our converged connectivity markets in Europe, and mobile data and payments in Africa. We have
five principle growth levers available to create shareholder value through building our ROCE to a sustainable level above our weighted-average
cost of capital:
|
1.
|
We will develop the best connectivity products and the best connectivity platforms;
|
|
2.
|
We will invest in and operate the co-best Gigabit connectivity infrastructure to support our connectivity products and platforms;
|
|
3.
|
We will integrate and operate leading digital technology architecture to support our digital connectivity infrastructure;
|
|
4.
|
We will drive further simplification in our scaled Group operating model in order to support our investments; and
|
|
5.
|
We will use our Social Contract to build partnerships with governments and regulators, shape a
healthier industry structure, and improve returns for all stakeholders.
|
1 ⫶ Best connectivity products &
platforms
In Europe, we are the leading converged
connectivity provider with 7.5 million converged customers, 114 million mobile connections, 139 million marketable NGN broadband
homes, cover 98% of the population in the markets we operate in with 4G, and have launched 5G in 127 cities in 9 markets in Europe.
We have achieved this leading position by focusing on our core fixed and mobile connectivity. We are enhancing our core connectivity
products through capacity and speed upgrades, unlimited mobile plans, distinct branding across customer segments and convergence
bundles. Alongside optimising our core, we have also developed platforms that leverage our connectivity base further by providing
‘best on Vodafone’ experiences. For example, our TV proposition now has over 22 million subscribers in 11 markets.
Our consumer IoT offering has now connected over 500,000 devices such as the Apple Watch OneNumber service and our ‘Curve’
mobile tracking device. In addition, our new smart kids watch, developed with The Walt Disney Company, will launch before Christmas.
In Africa, we are the leading provider of
mobile data and mobile payment services. We have 171 million customers in 8 markets and these countries represent 40% of Africa’s
total Gross Domestic Product. We are the leading mobile connectivity provider by revenue market share in 7 markets. Excluding Kenya,
we cover 70% of the population in the markets in which we operate with 3G mobile services and 60% with 4G. Our M-Pesa financial
services platform processed almost 13 billion transactions over the last 12 months. M-Pesa offers a unique opportunity to extend
our reach further into financial services. Through a strategic technology partnership with Alipay, we are developing a new ‘super
app’ that will offer customers a unified suite of financial services, entertainment, shopping, merchant services and direct
marketing.
Vodafone Business accounts for 27% of Group
service revenue, has customers in 200 markets, and provides services to SMEs, large national corporates, and 1,240 multinational
customers. In each of our four largest European markets, we have a unique position and focus on digital segments that are growing.
Our incumbent competitors have greater exposure to declining legacy fixed and managed services businesses, whilst we are able
to accelerate our position in digital connectivity services such as SD-WAN, IoT and cloud. As the largest business-to-business
connectivity provider in Europe and as a growth business, we are the strategic partner of choice for large global technology companies
such as Microsoft, Accenture, Amazon, and IBM. Over the last two years, we have signed agreements with each of these firms in
areas such as managed security services, mobile edge computing, managed cloud services and unified connectivity. These strategic
alliances provide us with an unrivalled position to provide SME, large and multi-national business customers with a full suite
of next-generation connectivity services.
2
⫶ Co-best Gigabit connectivity infrastructure
In order
to provide our customers with the best connectivity products and ‘best on Vodafone’ connectivity platforms, we need
to have co-best Gigabit network infrastructure in each of our markets. Importantly, we must also ensure that our customers recognise
and value the quality of our Gigabit network infrastructure.
In mobile,
we are currently deploying mobile network infrastructure to deliver 5G connectivity. So far, we have launched 5G services in 127
cities, in 9 markets in Europe. 5G services provide ‘real world’ speeds well in excess of 100 Mbps, compared with
4G that provides ‘real world’ speeds of 20-35 Mbps. In addition to the speed advantage, 5G networks that are ‘built
right’ and with longer-term competitive advantage in mind, provide significant capacity and efficiency advantages, ultimately
lowering the cost per gigabyte of mobile data provision. However, the European mobile sector is also utilising dynamic spectrum
sharing (‘DSS’) technology to share existing 4G spectrum to provide a more limited 5G experience. DSS 5G does have
a smaller role in a targeted rollout, but requires RAN upgrades and leads to reduced capacity efficiency. We have been targeted
and disciplined with our acquisition of spectrum in each of our local market operations, with spectrum available in each of the
low, mid and high bands in our major Europe markets. This ensures that we do not need to restrict long-term network infrastructure
through DSS technology and can invest in building 5G network the right way, to provide the backbone for Gigabit networks for the
decade ahead.
Complementing
our 5G mobile network infrastructure is our NGN fixed-line network infrastructure. We can now reach 139 million homes across 12
markets in Europe (including VodafoneZiggo). This marketable base is connected through a mix of owned NGN network (55 million
homes, of which 39 million are Gigabit-capable), strategic partnerships (22 million homes) and wholesale arrangements (62 million
homes). This network provides us with the largest marketable footprint of any fixed-line provider in Europe. In Germany, our footprint
of 24.1 million households is being progressively upgraded to the latest DOCSIS 3.1 standard, which provides us with a structural
speed advantage over the incumbent. Over the medium-term we will continue to increase the proportion of our Europe customers that
can receive Gigabit-capable connections through our owned network and continue to work with strategic partners to provide cable
and fibre access.
3
⫶ Leading digital architecture
Enhanced
digital technology is critical for efficient and reliable converged connectivity networks. We are beginning a multi-year journey
to redefine our technology architecture following a ‘Telco as a Service’ (‘TaaS’) model. Our TaaS model
is based on two existing layers of inter-connected digital technology.
|
·
|
We
have created a standardised suite of customer and user-facing interfaces for an entire
omni-channel journey – OnePlatform. The OnePlatform suite includes the MyVodafone
mobile app, our browser-based portal, our TOBi AI assistant, and the Retail Point of
Sale platform that powers our physical and digital stores.
|
|
·
|
The
OnePlatform suite is powered by our Digital eXperience Layer (‘DXL’). DXL
refers to the abstraction layer in our IT architecture which separates customer-facing
micro-services requiring frequent and rapid adjustment, such as prepaid top-ups or customer
onboarding, from heavier back-end systems such as billing and CRM. The platform uses
common software, with open-source components and standardised APIs to enable easy integration
and interconnection.
|
We have
also moved more than half our core network functions to the Cloud in Europe, supporting voice core, data core and service platforms
on over 1,300 virtual network functions. In Europe, we now operate a single digital network architecture across all markets, enabling
the design, build, test and deployment of next generation core network functions more securely, 40% faster and at 50% lower cost.
Similarly, more than half of our IP apps are now virtualised and running in the cloud.
This
standardised approach to development and deployment of digital architecture is enabling us to provide an industry-leading digital
experience, delivered in line with our expectation to be the most efficient in our sector.
4
⫶ Simplified & scaled Group operating model
The
connectivity value chain involves a high degree of repeatable processes across all of our markets, such as procurement, network
deployment, network operations, sales activities, customer support operations, and billing and transaction processing. This has
provided us with a significant opportunity to standardise processes across markets, relocate operations to lower cost centres
of excellence and apply automation at scale.
We have
consolidated our supplier management function into a single, centralised procurement company. The Vodafone Procurement Company
manages global tenders and establishes standard catalogues which are made available to our local market operations through a unified
end-to-end enterprise resource planning (‘ERP’) system. Leveraging the scale of our combined spend, this allows us
to generate over €600m in annual savings compared to standalone operators. Once the equipment is acquired, we efficiently
manage our inventory through our Network Stock System and ensure that we minimise time to deployment, including by moving stock
across markets as needed.
We monitor
Network Operations for all our markets through international centres of excellence that run these processes for the entire Group.
Our regional Network Operations Centres monitor operations of our fixed and mobile networks across geographies following standard
protocols that maximise productivity and automation. As an example, a third of new Network Operations tickets are fully automated.
Similar integrations have been executed across our IT operations as well as Finance and HR processes.
Whenever
possible our back office activities are delivered though our 3 Shared Service Centres (‘_VOIS’) in Egypt, India and
Eastern Europe. Over a third of the targeted €1.2 billion net opex savings in Europe and Common Functions are being generated
through integrating activities into _VOIS and driving digitisation at speed.
Finally,
Vodafone Roaming Services manages our global roaming relationships with other operators and our Partner Market’s team works
with 30 local operators in building strategic alliances and extending our reach into different markets. These functions generate
over €250m revenue and cost savings annually.
Approximately
30% of the Group’s headcount works in _VOIS and shared operations, and in the last two and a half years we have automated
over 4,600 roles. We are continuing to transform the business and evolve the Group digital toolset – including TOBi and
Robotic Process Automation – in order to further our productivity leadership.
5
⫶ Social Contract shaping industry structure to improve returns
Over
the last decade, the performance of the European telecommunications industry has been weaker than other regions, which market
commentators attribute to its regulatory environment. European regulation differs in both its fragmented approach to spectrum
licensing and market structure, compared with North America or Asia. A firm stance on pursuing four-player market structures in
certain Member States has artificially driven further price deflation and has eroded sustainable investment incentives. When combined
with the capital-intensive nature of network infrastructure and higher ongoing spectrum costs, this has led to return on capital
for the industry being below its weighted-average cost of capital. This limits the ability of operators to invest capital in improving
digital connectivity network infrastructure.
In 2019
we introduced our ‘Social Contract’, which represents the partnerships we want to develop with governments, policy
makers and civil society. We believe the industry needs a pro-investment, pro-innovation partnership approach to ensure Europe
can compete in the global digital economy and be at the forefront of technology ecosystems. This requires an end to extractive
spectrum auctions, support for equipment vendor diversity, a defined framework for network sharing, and regulation that enables
the physical deployment of network infrastructure, as well as rewards quality – such as security, resilience and coverage
– with fair prices.
Following
our efforts and society’s increasing reliance on our connectivity infrastructure and services, notably during the COVID-19
pandemic, we are beginning to see positive signs of a more healthy industry structure emerge.
Recent
spectrum auctions in 2020 in the Netherlands and Hungary were conducted in a positive manner and completed with spectrum being
assigned at sustainable prices, in line with European benchmark levels. Authorities are recognising that operators need to be
able to focus available private funds for fast deployment of new infrastructure & services. We have also seen national governments
increase support such as state-subsidies for rural networks in the UK and Germany, and planning permission exemptions for tower
infrastructure in Germany. A key area of focus for 2021 will be shaping Member State recovery funds and how the 20% of the €750
billion EU Recovery Fund targeted for digital initiatives is distributed. Positive progress has already been achieved through
national initiatives with 90% subsidies for infrastructure spend in ‘whitespot’ areas in Germany; vouchers to support
new NGN connections in Italy; funding to support the cessation of 3G networks in Hungary; and €3 billion of funding for
health initiatives, including eHealth, in Germany.
Our
growth model ⫶ Disciplined capital allocation to drive shareholder returns
The
objectives of our portfolio activities over the last two years have been to focus on our two scaled geographic platforms in Europe
and Africa; achieve converged scale in our chosen markets; and deliver a structural shift in asset utilisation. With these objectives
substantially achieved, we are now a matrix of country operations and product & platforms, and will remain disciplined in
managing our portfolio. Our ongoing and rigorous assessment of our portfolio is following three principles. Firstly, we aim to
continue to focus on the converged connectivity markets in Europe, and mobile data and payments in Africa. Secondly, we aim to
achieve returns above the local cost of capital in all of our markets. Thirdly, we consider whether we are the best owner (i.e.
whether the asset adds value to the Group and the Group adds value to the asset) and whether there are any pragmatic and value-creating
alternatives.
Our
growth strategy is grounded in our purpose, to ‘Connect for a better future’ and create value for society and shareholders.
Our goal is to deliver a sustainable improvement in ROCE through a combination of consistent revenue growth, ongoing margin expansion,
strong cash flow conversion, and disciplined allocation of capital. We have five principle growth levers available to create shareholder
value:
|
1.
|
Develop
the best connectivity products and platforms;
|
|
2.
|
Invest
in the co-best Gigabit connectivity infrastructure;
|
|
3.
|
Operate
leading digital technology architecture;
|
|
4.
|
Operate
a simplified and scaled Group operating model; and
|
|
5.
|
Use
our Social Contract to shape a healthier industry structure.
|
Our
capital allocation priorities are to support investment in connectivity infrastructure; reduce leverage towards the lower end
of our target range of 2.5-3.0x net debt to adjusted EBITDA; and deliver attractive returns to shareholders.
Looking
ahead ⫶ Further investor interaction to discuss key growth drivers
We plan
to share further insight into our growth plans during 2021 and will be hosting a series of virtual investor briefings comprising
pre-recorded video presentations from functional and technical specialists, together with live webcast Q&A sessions. These
events include:
|
·
|
Vinod
Kumar (CEO Vodafone Business) provides a deep-dive into Vodafone Business operations
& strategy on 18 March 2021;
|
|
·
|
Nick
Read (Group CEO) & Margherita Della Valle (Group CFO) present full year results and
further detail on the next phase of our transformation on 18 May 2021;
|
|
·
|
Ahmed
Essam (Chief Commercial Officer) presents our strategy for the best connectivity products
and platforms on 9 June 2021;
|
|
·
|
Dr
Hannes Ametsreiter (CEO Germany) presents a deep-dive into our largest market, Germany,
on 7 September 2021; and
|
|
·
|
Johan
Wibergh (Group Technology Officer) presents our 2025 technology vision on 14 December
2021.
|
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 our sustainable business
strategy helps the delivery of our 2025 targets across three pillars: Digital Society; Inclusion for All; and Planet. We have
continued to make progress against our purpose strategy and will provide a full update on our progress at the end of our financial
year.
In
July 2020, we announced that our Europe network will be powered by 100% renewable electricity no later than July 2021. Our Europe-wide
‘Green Gigabit Net’ commitment brings forward by three years an earlier pledge to source 100% renewable electricity
for the company’s fixed and mobile networks by 2025. We have made significant progress as the share of total renewable electricity
purchased in Europe more than doubled to over 75% by September 2020. We remain on target to reach 100% renewable electricity in
our Europe network by July 2021.
Whilst
we are committed to eliminating our own environmental footprint, we are increasingly seeking to use our connectivity and technology
to support a more sustainable society, enabling others to reduce their environmental impact. We have also introduced a new target
to enable our Business customers reduce their own carbon emissions by a cumulative total of 350 million tonnes globally over 10
years between 2020 and 2030. This target will largely be delivered via Vodafone’s IoT services, including logistics and
fleet management, smart metering and manufacturing activities. Other savings are expected to be made through healthcare services,
cloud hosting and home working.
In addition,
we are currently finalising a Science Based Target, which we plan to announce before the end of 2020. Our target will be aligned
to limiting global temperature rise to below 1.5°C and reaching net-zero emissions no later than 2050. This will require a
significant reduction in our direct carbon emissions as well as setting targets for indirect emissions (including suppliers and
joint ventures).
We have
also embedded our purpose commitments in our supplier selection criteria. From October 2020, ‘purpose’ accounts for
20% of our evaluation criteria for ‘Requests For Quotation’ (‘RFQ’) to provide Vodafone with products
or services. Suppliers will be assessed on their commitment to diversity & inclusion, the environment, and health & safety
in categories where it is a risk. Our approach to supplier selection supports our aim of building a digital society that enhances
socio-economic progress, embraces everyone and does not come at the cost of our planet.
COVID-19
⫶ Our five-point plan to support economic recovery
During
the COVID-19 crisis, the connectivity we provided was a lifeline, enabling people to work, allowing businesses to remain operational,
supporting the delivery of emergency services and giving access to education. We enabled people to stay in touch with their families
and their friends. We recognise that our role in society is more vital than ever, underpinned by our commitment to building a
resilient, inclusive and sustainable digital society .
As we
look at the challenging economic period ahead, just as we were there for the emergency response phase, we are committed to playing
a key role in supporting Europe’s economic and social recovery. As a result, we have identified five key areas where Vodafone
can clearly prioritise activity and support governments’ digital agenda. We will:
|
·
|
expand
and future-proof our network infrastructure with next-generation fixed line and mobile
technologies;
|
|
·
|
further
support governments as they seek to integrate eHealth and eEducation solutions into their
“new normal” public service frameworks;
|
|
·
|
enhance
digital access for the most vulnerable and support digital literacy;
|
|
·
|
promote
the widespread adoption of digital technologies for all businesses, with a particular
emphasis on SMEs; and
|
|
·
|
support
governments’ pandemic exit strategies through targeted deployment of digital technology.
|
Vodafone
is ready to do everything in its power to support the recovery, whilst emerging a stronger business, playing an ever more critical
role in society. In our African markets, we have deployed the same five-point plan approach, but are also prioritising furthering
financial inclusion.
Outlook
⫶ Operating model delivering relative resilience
Outlook
for FY21
Our financial
performance during the first six months of the year has been in line with our expectations and demonstrates the relative resilience
of our operating model. We remain focused on the delivery of our strategic priorities and have further improved loyalty, as our
customers place greater value on the quality, speed and reliability of our networks.
FY21 Guidance
As a result
of our resilient performance in H1, and based on the current prevailing assessments of the global macroeconomic outlook:
|
·
|
Adjusted
EBITDA is expected to be between €14.4 – 14.6 billion in FY21; and
|
|
·
|
We
continue to expect free cash flow (pre-spectrum and restructuring) in FY21 to be at least
€5 billion.
|
Financial
modelling considerations & assumptions
The guidance
above reflects the following:
|
·
|
The
de-consolidation of Vodafone Italy Towers following its merger with INWIT (completed
in March 2020);
|
|
·
|
The
sale of Vodafone Malta (completed in March 2020);
|
|
·
|
Vodafone
Egypt remains within guidance;
|
|
·
|
No
significant change in the Group’s effective cash interest rate or cash tax rate
is assumed;
|
|
|
|
|
·
|
Foreign exchange rates used when setting guidance were as follows:
|
|
·
|
Free
cash flow guidance excludes the impact of license and spectrum payments, restructuring
costs, and any material one-off receipts or tax related payments; and
|
|
·
|
Guidance
assumes no material change to the structure of the Group or any fundamental structural
change to the Eurozone
|
Financial
performance ⫶ Resilient performance in line with expectations
|
·
|
Resilient
financial performance during the first half of FY21, in line with our expectations
|
|
·
|
Group
revenue declined by 2.3% to €21.4 billion, as good underlying momentum and the
benefit from the acquisition of Liberty Global’s assets in Germany and CEE was
offset by lower revenue from roaming, visitors and handset sales, foreign exchange headwinds
and the disposal of Vodafone New Zealand
|
|
·
|
Adjusted
EBITDA declined by 1.9%* to €7.0 billion as a decline in revenue was partially
offset by good cost control, with a net reduction in our Europe and Common Functions
operating expenditure of €300 million during H1
|
|
·
|
Free
cash flow (pre-spectrum and restructuring) grew by 14.5% to €0.5 billion, supported
by the resilient EBITDA performance and higher dividends from associates and investments,
partially offset by higher cash interest and tax
|
|
·
|
Interim
dividend per share of 4.50 eurocents, record date 18 December 2020
|
Group
financial performance
|
|
H1 FY211
|
|
|
H1 FY20
|
|
|
|
|
|
|
€m
|
|
|
€m
|
|
|
Change
(%)
|
|
Revenue
|
|
|
21,427
|
|
|
|
21,939
|
|
|
|
(2.3
|
)
|
- Service revenue2
|
|
|
18,418
|
|
|
|
18,544
|
|
|
|
(0.7
|
)
|
- Other revenue
|
|
|
3,009
|
|
|
|
3,395
|
|
|
|
(11.4
|
)
|
Adjusted EBITDA2,5
|
|
|
7,023
|
|
|
|
7,105
|
|
|
|
(1.2
|
)
|
Depreciation
and amortisation
|
|
|
(4,729
|
)
|
|
|
(4,874
|
)
|
|
|
3.0
|
|
Adjusted EBIT2
|
|
|
2,294
|
|
|
|
2,231
|
|
|
|
2.8
|
|
Share
of adjusted results in associates and joint ventures3
|
|
|
255
|
|
|
|
(550
|
)
|
|
|
146.4
|
|
Adjusted operating
profit2
|
|
|
2,549
|
|
|
|
1,681
|
|
|
|
51.6
|
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
|
|
|
- Restructuring costs3
|
|
|
(86
|
)
|
|
|
(163
|
)
|
|
|
|
|
- Amortisation of
acquired customer base and brand intangible assets3
|
|
|
(364
|
)
|
|
|
(232
|
)
|
|
|
|
|
- Adjusted other
income and expense3
|
|
|
1,184
|
|
|
|
(872
|
)
|
|
|
|
|
-
Interest on lease liabilities4
|
|
|
189
|
|
|
|
163
|
|
|
|
|
|
Operating profit
|
|
|
3,472
|
|
|
|
577
|
|
|
|
|
|
Net financing costs
|
|
|
(1,427
|
)
|
|
|
(1,088
|
)
|
|
|
|
|
Income
tax expense
|
|
|
(490
|
)
|
|
|
(1,380
|
)
|
|
|
|
|
Profit/(loss) for
the financial period6
|
|
|
1,555
|
|
|
|
(1,891
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
- Owners of the
parent
|
|
|
1,314
|
|
|
|
(2,128
|
)
|
|
|
|
|
-
Non-controlled interests
|
|
|
241
|
|
|
|
237
|
|
|
|
|
|
Profit/(loss)
for the financial period
|
|
|
1,555
|
|
|
|
(1,891
|
)
|
|
|
|
|
Further detailed income statement
information is available in a downloadable spreadsheet format at https://investors.vodafone.com/reports-information/results-reports-presentations
1.
|
The FY21
results reflect average foreign exchange rates of €1:£0.90, €1:INR
85.27, €1:ZAR 19.77, €1:TRY 8.02 and €1: EGP 18.06.
|
2.
|
Service
revenue, adjusted EBITDA, adjusted EBIT and adjusted operating profit are alternative
performance measures which are non-GAAP measures that are presented to provide readers
with additional financial information that is regularly reviewed by management and should
not be viewed in isolation or as an alternative to the equivalent GAAP measure. See “Alternative
performance measures” on page 54 for more information.
|
3.
|
Share of
results of equity accounted associates and joint ventures presented within the Consolidated
income statement includes €255 million (2019: -€550 million) included within
Adjusted operating profit, €nil (2019: -€33 million) included within Restructuring
costs, -€124 million (2019: -€122 million) included within Amortisation of
acquired customer base and brand intangible assets and €129 million (2019: -€1,896
million) included within Adjusted other income and expense.
|
4.
|
Reversal
of interest on lease liabilities included within adjusted EBITDA under the Group’s
definition of that metric, for re-presentation in net financing costs.
|
5.
|
Includes
depreciation on Right-of-use assets of €1,914 million (2019: €1,821 million).
|
6.
|
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. See Note 9 “Investment in associates and joint ventures”.
|
Geographic
performance summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
Total
|
|
|
|
|
|
Other
|
|
|
|
|
H1 FY21
|
|
Germany
|
|
|
Italy
|
|
|
UK
|
|
|
Spain
|
|
|
Europe
|
|
|
Europe1
|
|
|
Vodacom
|
|
|
Markets
|
|
|
Group1
|
|
Total revenue (€m)
|
|
|
6,371
|
|
|
|
2,506
|
|
|
|
2,983
|
|
|
|
2,050
|
|
|
|
2,720
|
|
|
|
16,583
|
|
|
|
2,423
|
|
|
|
1,898
|
|
|
|
21,427
|
|
Service revenue (€m)
|
|
|
5,723
|
|
|
|
2,249
|
|
|
|
2,401
|
|
|
|
1,880
|
|
|
|
2,411
|
|
|
|
14,617
|
|
|
|
1,949
|
|
|
|
1,679
|
|
|
|
18,418
|
|
Adjusted EBITDA (€m)
|
|
|
2,844
|
|
|
|
800
|
|
|
|
636
|
|
|
|
488
|
|
|
|
870
|
|
|
|
5,638
|
|
|
|
891
|
|
|
|
613
|
|
|
|
7,023
|
|
Adjusted EBITDA margin %
|
|
|
44.6
|
%
|
|
|
31.9
|
%
|
|
|
21.3
|
%
|
|
|
23.8
|
%
|
|
|
32.0
|
%
|
|
|
34.0
|
%
|
|
|
36.8
|
%
|
|
|
32.3
|
%
|
|
|
32.8
|
%
|
Adjusted EBIT (€m)
|
|
|
1,128
|
|
|
|
196
|
|
|
|
(126
|
)
|
|
|
(43
|
)
|
|
|
269
|
|
|
|
1,424
|
|
|
|
552
|
|
|
|
482
|
|
|
|
2,294
|
|
Adjusted operating profit/(loss)
(€m)
|
|
|
1,128
|
|
|
|
212
|
|
|
|
(126
|
)
|
|
|
(43
|
)
|
|
|
276
|
|
|
|
1,447
|
|
|
|
662
|
|
|
|
606
|
|
|
|
2,549
|
|
Further
geographic performance information is available in a downloadable spreadsheet format at https://investors.vodafone.com/reports-information/results-reports-presentations
Note:
1. See
pages 57 to 62 for a full disaggregation of our financial results by geography, including intersegment eliminations.
|
|
FY20
|
|
|
FY21
|
|
Organic service
revenue growth %
|
|
Q1
|
|
|
Q2
|
|
|
H1
|
|
|
Q3
|
|
|
Q4
|
|
|
H2
|
|
|
Total
|
|
|
Q1
|
|
|
Q2
|
|
|
H1
|
|
Europe
|
|
|
(1.7
|
)
|
|
|
(1.4
|
)
|
|
|
(1.6
|
)
|
|
|
(1.4
|
)
|
|
|
(0.4
|
)
|
|
|
(0.9
|
)
|
|
|
(1.2
|
)
|
|
|
(2.6
|
)
|
|
|
(1.8
|
)
|
|
|
(2.2
|
)
|
- of which Germany
|
|
|
0.4
|
|
|
|
(0.2
|
)
|
|
|
0.1
|
|
|
|
–
|
|
|
|
(0.1
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
Vodacom
|
|
|
1.1
|
|
|
|
3.6
|
|
|
|
2.4
|
|
|
|
5.2
|
|
|
|
3.2
|
|
|
|
4.2
|
|
|
|
3.3
|
|
|
|
1.5
|
|
|
|
3.2
|
|
|
|
2.3
|
|
Other Markets
|
|
|
10.0
|
|
|
|
16.4
|
|
|
|
15.4
|
|
|
|
14.5
|
|
|
|
14.2
|
|
|
|
14.4
|
|
|
|
14.9
|
|
|
|
9.1
|
|
|
|
9.0
|
|
|
|
9.0
|
|
Total Group
|
|
|
(0.2
|
)
|
|
|
0.7
|
|
|
|
0.3
|
|
|
|
0.8
|
|
|
|
1.6
|
|
|
|
1.2
|
|
|
|
0.8
|
|
|
|
(1.3
|
)
|
|
|
(0.4
|
)
|
|
|
(0.8
|
)
|
Total
Europe ⫶ 80% of Group Adjusted EBITDA
|
|
H1
FY21
|
|
|
H1
FY20
|
|
|
Organic
|
|
|
|
€m
|
|
|
€m
|
|
|
Change
(%)*
|
|
Total revenue
|
|
|
16,583
|
|
|
|
16,225
|
|
|
|
|
|
- Service revenue
|
|
|
14,617
|
|
|
|
14,120
|
|
|
|
(2.2
|
)
|
- Other revenue
|
|
|
1,966
|
|
|
|
2,105
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
5,638
|
|
|
|
5,348
|
|
|
|
(1.2
|
)
|
Adjusted EBITDA margin
|
|
|
34.0
|
%
|
|
|
33.0
|
%
|
|
|
|
|
Depreciation
and amortisation
|
|
|
(4,214
|
)
|
|
|
(4,221
|
)
|
|
|
|
|
Adjusted EBIT
|
|
|
1,424
|
|
|
|
1,127
|
|
|
|
|
|
Share of adjusted
results in associates and joint ventures
|
|
|
23
|
|
|
|
39
|
|
|
|
|
|
Adjusted
operating profit
|
|
|
1,447
|
|
|
|
1,166
|
|
|
|
|
|
Europe total
revenue and adjusted EBITDA increased by 2.2% and 5.4% respectively, primarily due to the consolidation of the acquired Liberty
Global assets in Germany and CEE.
Service revenue
in H1 decreased by 2.2%* including lower roaming and visitor revenue and other COVID-19 impacts. Excluding roaming and visitor
impacts, organic service revenue growth in Q2 was broadly stable.
Adjusted
EBITDA decreased by 1.2%* including a year-on-year drag of 3.7 percentage points from roaming and visitors, as well as higher
bad debt provisions, partially offset by good cost control during H1.
Europe adjusted
EBIT grew by 26.4%, reflecting the contribution of the acquired Liberty Global assets.
Germany
⫶ 41% of Group Adjusted EBITDA
|
|
H1 FY21
|
|
|
H1 FY20
|
|
|
Organic
|
|
|
|
€m
|
|
|
€m
|
|
|
Change (%)*
|
|
Total revenue
|
|
|
6,371
|
|
|
|
5,590
|
|
|
|
|
|
- Service revenue
|
|
|
5,723
|
|
|
|
4,961
|
|
|
|
(0.1
|
)
|
- Other revenue
|
|
|
648
|
|
|
|
629
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
2,844
|
|
|
|
2,352
|
|
|
|
1.3
|
|
Adjusted EBITDA margin
|
|
|
44.6
|
%
|
|
|
42.1
|
%
|
|
|
|
|
Depreciation and amortisation
|
|
|
(1,716
|
)
|
|
|
(1,588
|
)
|
|
|
|
|
Adjusted EBIT
|
|
|
1,128
|
|
|
|
764
|
|
|
|
|
|
Share of adjusted results in associates and joint ventures
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
Adjusted operating profit
|
|
|
1,128
|
|
|
|
764
|
|
|
|
|
|
Service revenue
was broadly stable at -0.1%* (Q1: 0.0%*, Q2: -0.1%*), as higher variable usage revenue during the COVID-19 lockdown and the lapping
of international call rate regulation was offset by lower roaming, visitor and wholesale revenue. Retail service revenue grew
by 0.5%* (Q1: 0.4%*, Q2: 0.6%*), despite a 1.3 percentage point drag from lower roaming and visitor revenue.
Fixed service
revenue grew by 1.5%* (Q1: 2.4%*, Q2: 0.6%*) supported by customer base growth and ARPU accretive customer migrations to high-speed
plans. Growth slowed in Q2 reflecting lower variable usage revenue, and greater wholesale revenue declines as we lapped prior
year LLU price increases. We added 157,000 cable customers in H1, including 77,000 migrations from DSL. We had 1.8 million customers
on speeds of at least 400Mbps at the end of H1 and 21.8 million customers households are now able to access Gigabit speeds on
our cable network. Our broadband customer base reached 10.9 million.
Our TV customer
base declined by 85,000 reflecting lower retail activity during the COVID-19 pandemic and a lower Premium TV customer base. In
August, we launched a harmonised portfolio across all homes in Germany, bringing Vodafone TV to the Unitymedia footprint, with
a significant improvement in the content portfolio. We maintained our good momentum in convergence supported by our ‘GigaKombi’
proposition, adding 73,000 Consumer converged customers in H1 which took our customer base to 1.6 million.
Mobile service
revenue declined by 2.0%* (Q1: -3.0%*, Q2: -1.0%*) mainly due to the reduction in roaming, visitor and wholesale revenue. Growth
improved in Q2 reflecting a lower drag from roaming and visitor revenue, and the lapping of regulatory impacts. We added 238,000
contract customers in H1, supported by the migration of 187,000 Unitymedia mobile customers onto our network. Contract churn improved
by 0.4 percentage points year-on-year to 12.1%. We added 225,000 prepaid customers, supported by our online-only proposition,
‘CallYa Digital’.
Adjusted
EBITDA increased by 1.3%* supported by synergy delivery and our continued focus on cost discipline, partially offset by a 1.9
percentage point year-on-year drag from lower roaming and visitors. The organic adjusted EBITDA margin was 0.7* percentage points
higher year-on-year and was 44.6%.
We continued
to make good progress on integrating Unitymedia, with the rebranding and TV portfolio harmonisation now complete, and the organisational
integration completed during H1. We are approximately six months ahead of plan with respect to our cost and capital expenditure
synergy targets and remain on track to deliver the remaining synergies.
Italy
⫶ 11% of Group Adjusted EBITDA
|
|
H1 FY21
|
|
|
H1 FY20
|
|
|
Organic
|
|
|
|
€m
|
|
|
€m
|
|
|
change (%)*
|
|
Total revenue
|
|
|
2,506
|
|
|
|
2,709
|
|
|
|
|
|
- Service revenue
|
|
|
2,249
|
|
|
|
2,424
|
|
|
|
(7.2
|
)
|
- Other revenue
|
|
|
257
|
|
|
|
285
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
800
|
|
|
|
1,006
|
|
|
|
(11.1
|
)
|
Adjusted EBITDA margin
|
|
|
31.9
|
%
|
|
|
37.1
|
%
|
|
|
|
|
Depreciation and amortisation
|
|
|
(604
|
)
|
|
|
(623
|
)
|
|
|
|
|
Adjusted EBIT
|
|
|
196
|
|
|
|
383
|
|
|
|
|
|
Share of adjusted results in associates and joint ventures
|
|
|
16
|
|
|
|
–
|
|
|
|
|
|
Adjusted operating profit
|
|
|
212
|
|
|
|
383
|
|
|
|
|
|
Service revenue
declined by 7.2%* (Q1: -6.5%*, Q2: -8.0%*), driven by continued price competition in the low-value segment of the mobile market,
and lower roaming and visitor revenue. The Q2 slowdown primarily reflected a 2.7 percentage point sequential impact from the lapping
of prior year price increases. The year-on-year drag from roaming and visitors in Q2 was 2.4 percentage points.
Mobile service
revenue declined 11.0%* (Q1: -10.0%*, Q2: -11.9 %*) reflecting lower roaming and visitor revenue, a reduction in the active customer
base year-on-year, which subsequently stabilised in H1, and price competition in the low-value segment. The sequential slowdown
in Q2 reflected the lapping of prior year price increases, partially offset by a lower drag from roaming and visitor revenue.
Our net mobile number portability (‘MNP’) volumes remained relatively stable despite market MNP volumes returning
towards pre-COVID levels in Q2. Our second brand ‘ho.’ continued to grow strongly, with 404,000 net additions in H1,
supported by our best-in-class net promoter score, and now has 2.2 million customers.
Fixed service
revenue grew by 4.4%* (Q1: 4.1%*, Q2: 4.8%*) supported by 52,000 broadband customer additions in H1. We now have 3.0 million broadband
customers. Our total Consumer converged customer base is now 1.1 million (representing 37% of our broadband base), an increase
of 41,000 during H1. Through our owned NGN footprint and strategic partnership with Open Fiber we now pass 7.9 million households.
Adjusted
EBITDA declined by 11.1%* reflecting lower service revenue, a 4.7 percentage point year-on-year drag from lower roaming and visitors,
as well as an increase in bad debt provisions, partially offset by strong control with operating expenses declining by 5.5% year-on-year.
The organic adjusted EBITDA margin was 1.4* percentage points lower year-on-year and was 31.9%.
In a first
of its kind, Vodafone Italy has recently signed a new flexible working agreement with the local trade unions. The plan represents
a new model of agile and inclusive work, and provides for 80% of the monthly working hours in agile work for employees working
in customer service areas and 60% for employees in the remaining company areas. On agile working days, colleagues will be asked
to choose the place from which to work remotely. All colleagues will be equipped with the necessary technology and benefit from
a dedicated offer for fixed connectivity from Vodafone.
INWIT
Joint Venture
The results
of INWIT (in which Vodafone owns a 33.2% stake) reported here reflect INWIT’s accounting policies, definitions and disclosures.
Total revenue
in H1 was €371 million and grew 88% year-on-year reflecting the first-time inclusion of Vodafone Towers from 1 April 2020.
Pro forma for the Vodafone Towers merger, organic revenue grew by 1.9% in Q2, driven by increased mobile operator demand for new
mobile sites and distributed antenna systems. Total earnings after lease costs but before other depreciation, amortisation, interest
and tax were €240 million in H1; the margin on these earnings was 65%.
In April
2020, we received a special dividend of €0.2 billion as a result of the transaction in March 2020 and subsequently sold
41.7 million INWIT shares, resulting in gross proceeds of approximately €400 million. As a result of the transaction, Vodafone's
ownership stake in INWIT decreased from 37.5% to 33.2%.
Vodafone
received a further €42 million in dividends from INWIT during the half year.
UK
⫶ 9% of Group Adjusted EBITDA
|
|
H1 FY21
|
|
|
H1 FY20
|
|
|
Organic
|
|
|
|
€m
|
|
|
€m
|
|
|
change*
|
|
Total revenue
|
|
|
2,983
|
|
|
|
3,151
|
|
|
|
|
|
- Service revenue
|
|
|
2,401
|
|
|
|
2,451
|
|
|
|
(1.2
|
)
|
- Other revenue
|
|
|
582
|
|
|
|
700
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
636
|
|
|
|
658
|
|
|
|
(2.3
|
)
|
Adjusted EBITDA margin
|
|
|
21.3
|
%
|
|
|
20.9
|
%
|
|
|
|
|
Depreciation and amortisation
|
|
|
(762
|
)
|
|
|
(820
|
)
|
|
|
|
|
Adjusted EBIT
|
|
|
(126
|
)
|
|
|
(162
|
)
|
|
|
|
|
Share of adjusted results in associates
and joint ventures
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
Adjusted operating profit
|
|
|
(126
|
)
|
|
|
(162
|
)
|
|
|
|
|
Service
revenue decreased by 1.2%* (Q1: -1.9%*, Q2: -0.5%*) as good customer base growth and the lapping of international call rate regulation
was offset by lower roaming, visitor and incoming revenue. The sequential Q2 improvement was driven by Business fixed acceleration
and the lapping of international call rate regulation. The year-on-year drag from roaming and visitors in Q2 was 2.8 percentage
points.
Mobile
service revenue declined 4.0%* (Q1: -4.3%*, Q2: -3.6 %*), as lower roaming, visitor and incoming revenue offset good customer
base growth. The sequential improvement in Q2 reflected the lapping of international call rate regulation. We maintained our good
commercial momentum and our mobile contract customer base increased by 142,000, driven by increased Business demand and the reopening
of our retail stores. Our digital sub-brand ‘VOXI’ continued to grow, with 65,000 customer additions during H1, supported
by the launch of new propositions. Contract churn improved 1.3 percentage point year-on-year to 12.4%.
Fixed
service revenue grew by 6.3%* (Q1: 4.8%*, Q2: 7.8%*) and our commercial momentum remained strong with 119,000 net customer additions,
supported by our ‘need for speed’ campaign. We now have 838,000 broadband customers - of which 437,000 are converged,
with 52,000 converged customers added during H1. The sequential Q2 service revenue improvement was driven by Business, with increased
corporate demand for virtual call centres and core connectivity, and increased SME demand for productivity and security solutions.
Adjusted
EBITDA decreased by 2.3% reflecting a year-on-year drag from lower roaming and visitors of 5.7* percentage points, as well as
higher bad debt expense, partially offset by continued good cost control, with operating expenses 10.3% lower year-on-year. The
organic adjusted EBITDA margin was 0.4* percentage points higher year-on-year at 21.3%.
Spain
⫶ 7% of Group Adjusted EBITDA
|
|
H1 FY21
|
|
|
H1 FY20
|
|
|
Organic
|
|
|
|
€m
|
|
|
€m
|
|
|
change
(%)*
|
|
Total revenue
|
|
|
2,050
|
|
|
|
2,161
|
|
|
|
|
|
- Service revenue
|
|
|
1,880
|
|
|
|
1,966
|
|
|
|
(4.4
|
)
|
- Other revenue
|
|
|
170
|
|
|
|
195
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
488
|
|
|
|
460
|
|
|
|
6.0
|
|
Adjusted EBITDA margin
|
|
|
23.8
|
%
|
|
|
21.3
|
%
|
|
|
|
|
Depreciation and amortisation
|
|
|
(531
|
)
|
|
|
(621
|
)
|
|
|
|
|
Adjusted EBIT
|
|
|
(43
|
)
|
|
|
(161
|
)
|
|
|
|
|
Share of adjusted results in associates
and joint ventures
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
Adjusted operating profit
|
|
|
(43
|
)
|
|
|
(161
|
)
|
|
|
|
|
Service
revenue declined by 4.4%* (Q1: -6.9%*, Q2: -1.8%*) reflecting the impact of COVID-19 on roaming and visitor revenue and service
suspensions during lockdown, in the context of a competitive market. The sequential improvement in Q2 was supported by customer
base growth and the unwinding of temporary suspensions and offers. The year-on-year drag from roaming and visitors in Q2 was 3.0
percentage points.
We
continue to compete effectively across all segments of the market and grew our contract mobile, NGN broadband and TV customer
base for a fifth consecutive quarter in Q2.
After
restrictions were lifted, the market remained highly promotional and mobile number portability increased. Our mobile contract
customer base increased by 95,000 in H1, with Q2 impacted by the disconnection of non-paying customers, who could not be disconnected
in Q1 due to the government’s state of emergency restrictions. Mobile contract churn decreased 4.9 percentage points year-on-year
to 16.7%. Our second brand ‘Lowi’ continued to grow and now has 1.1 million customers.
We
added 58,000 broadband customers, of which 101,000 were NGN connections, as customers continued to transition to higher-speed
plans. Our leadership in movies and series, as well as our new ‘boxless’ TV proposition, supported 114,000 customer
additions in TV. We now have over 2.3 million converged consumer customers.
Adjusted
EBITDA grew by 6.0%* and the adjusted EBITDA margin was 2.5* percentage points higher year-on-year. The growth in EBITDA was primarily
due to lower football content costs and a 9.9%* reduction in operating expenses, partially offset by an 8.1 percentage point year-on-year
drag from lower roaming and visitors, and higher bad debt and TV content costs. The adjusted EBITDA margin was 23.8%.
Other
Europe ⫶ 12% of Group Adjusted EBITDA
|
|
|
|
|
|
H1 FY21
|
|
|
H1 FY20
|
|
|
Organic
|
|
|
|
€m
|
|
|
€m
|
|
|
Change
(%)*
|
|
Total revenue
|
|
|
2,720
|
|
|
|
2,690
|
|
|
|
|
|
- Service revenue
|
|
|
2,411
|
|
|
|
2,392
|
|
|
|
(2.4
|
)
|
- Other revenue
|
|
|
309
|
|
|
|
298
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
870
|
|
|
|
872
|
|
|
|
(2.2
|
)
|
Adjusted EBITDA margin
|
|
|
32.0
|
%
|
|
|
32.4
|
%
|
|
|
|
|
Depreciation and amortisation
|
|
|
(601
|
)
|
|
|
(569
|
)
|
|
|
|
|
Adjusted EBIT
|
|
|
269
|
|
|
|
303
|
|
|
|
|
|
Share of adjusted results in associates
and joint ventures
|
|
|
7
|
|
|
|
39
|
|
|
|
|
|
Adjusted operating profit
|
|
|
276
|
|
|
|
342
|
|
|
|
|
|
Service
revenue declined by 2.4%* (Q1: -3.1%*, Q2: -1.8%*), driven by lower roaming and visitor revenue, lower prepaid top-ups, notably
in Portugal and Greece, and increased competition in Ireland and Greece. The sequential improvement in Q2 reflected a recovery
in prepaid revenue as lockdown restrictions started to ease, and a sequential 0.7 percentage point benefit from the first-time
inclusion of ABCom in our financial results. The year-on-year impact from roaming and visitor revenue was stable at 2.5 percentage
points in Q2, as pressure in Ireland and Greece was offset by an improvement in visitor numbers in other markets.
In
Portugal, service revenue grew by 0.5%* (Q1: 0.7%*, Q2: 0.3%*) as lower roaming, visitor and prepaid revenue was more than offset
by mobile contract and fixed growth. In Ireland, service revenue declined by 6.4%* (Q1: -6.8%*, Q2: -6.1%*) reflecting lower roaming
and visitor revenue and higher competitive intensity, partially offset by an increase in the mobile contract customer base following
the successful launch of unlimited data tariffs. Service revenue in Greece declined by 7.4%* (Q1: -8.8%*, Q2: -6.1%*) reflecting
lower roaming and visitor revenue and higher promotional activity, partially offset by higher prepaid top-ups during Q2 followed
the easing of retail restrictions.
Adjusted
EBITDA declined by 2.2%* including a 4.8 percentage point drag from lower roaming and visitors, and an increase in bad debt provisions.
The organic adjusted EBITDA margin increased by 0.1* percentage points and was 32.0%.
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 2.1% in H1 (Q1: 1.9%, Q2: 2.3%). This reflected growth in fixed revenue, partly offset by lower roaming and visitor
mobile revenue.
We
added 134,000 mobile contract customers, supported by the successful ‘Runners’ campaign. Over 42% of broadband customers
and 71% of all B2C mobile customers are now converged, delivering significant NPS and churn benefits. VodafoneZiggo was the first
operator to launch a nationwide 5G network in the Netherlands. We now offer 1 Gigabit speeds to more than 2 million homes and
expect to connect 3 million households by the end of the 2020 calendar year.
Adjusted
EBITDA grew by 8.7% during H1, supported by top line growth, and lower operating and direct costs, more than offsetting a year-on-year
drag from lower roaming and visitor mobile revenue. We continued to make good progress on integration and remain on track to deliver
our €210 million cost and capital expenditure synergy targets by the end of the 2020 calendar year, one year ahead of the
original plan.
During
the half year, Vodafone received €88 million in dividends from the joint venture, as well as €11 million in interest
payments. The joint venture also drew down an additional €104 million shareholder loan from Vodafone.
Vodacom
⫶ 13% of Group Adjusted EBITDA
|
|
|
|
|
|
H1 FY21
|
|
|
H1 FY20
|
|
|
Organic
|
|
|
|
€m
|
|
|
€m
|
|
|
change
(%)*
|
|
Total revenue
|
|
|
2,423
|
|
|
|
2,734
|
|
|
|
|
|
- Service revenue
|
|
|
1,949
|
|
|
|
2,217
|
|
|
|
2.3
|
|
- Other revenue
|
|
|
474
|
|
|
|
517
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
891
|
|
|
|
1,019
|
|
|
|
3.6
|
|
Adjusted EBITDA margin
|
|
|
36.8
|
%
|
|
|
37.3
|
%
|
|
|
|
|
Depreciation and amortisation
|
|
|
(339
|
)
|
|
|
(386
|
)
|
|
|
|
|
Adjusted EBIT
|
|
|
552
|
|
|
|
633
|
|
|
|
|
|
Share of adjusted results in associates
and joint ventures
|
|
|
110
|
|
|
|
123
|
|
|
|
|
|
Adjusted operating profit
|
|
|
662
|
|
|
|
756
|
|
|
|
|
|
Vodacom
service revenue grew 2.3%* (Q1: 1.5%*, Q2: 3.2%*) as good growth in South Africa was partially offset by revenue declines in Vodacom’s
international operations. The sequential improvement in Q2 reflected stronger growth in South Africa.
In
South Africa, service revenue increased 7.1%* (Q1: 6.4%*, Q2: 7.7%*) driven by increased demand for voice, data and financial
services and price elasticity, supported by an increase in consumer discretionary spend as a result of the ban on alcohol and
tobacco sales and special government social grants during the COVID-19 pandemic. We added 66,000 contract customers, supported
by strong growth in Business connectivity as remote working and mobile broadband demand increased. Overall data traffic increased
by 90% and 49% of our customer base is using data services.
In
Vodacom’s international operations, service revenue declined by 5.1%* (Q1: -5.2%*, Q2: -4.9%*), reflecting economic pressure
and the disruption to our commercial activities during the COVID-19 pandemic, the zero-rating of person-to-person M-Pesa transfers
in DRC, Mozambique, and Lesotho and the impact of service barring in Tanzania due to biometric registration compliance. Digital
adoption across Vodacom’s international operations accelerated with M-Pesa revenue as a share of total service revenue increasing
by 0.9 percentage points to 19.9%, and 53% of our customer base is using data services.
Vodacom’s
adjusted EBITDA increased by 3.6%* as positive operational leverage in South Africa was partially offset by revenue pressure in
Vodacom’s international operations. The adjusted EBITDA margin was 0.1* percentage points lower year-on-year and the adjusted
EBITDA margin was 36.8%. Reported adjusted EBITDA decreased by 12.6% due to the depreciation of the local currencies versus euro.
Safaricom
Associate (Kenya)
Safaricom
service revenue declined by 4.8%* (Q1: -8.4%*, Q2: -1.2%*) due to depressed economic activity and the zero-rating of some M-Pesa
services. The sequential improvement in Q2 was driven by an increase in M-Pesa transaction volumes and higher fixed demand. Adjusted
EBITDA decreased by 7.8% primarily driven by a decline in revenue.
Other
Markets ⫶ 9% of Group Adjusted EBITDA
Turkey
Service
revenue in Turkey grew by 13.8%* (Q1: 13.8%*, Q2: 13.9%*) supported by strong customer contract ARPU growth, increased mobile
data revenue and fixed customer base growth.
Adjusted
EBITDA grew 14.7%* and the adjusted EBITDA margin increased by 0.6* percentage points driven by strong revenue growth ahead of
inflation and operating expenditure efficiencies. The adjusted EBITDA margin was 27.1%.
Egypt
Service
revenue in Egypt grew by 5.4%* (Q1: 6.0%*, Q2: 4.9%*), supported by customer base growth and increased data usage, partially offset
by lower roaming and visitor revenue, and the impact of a government-mandated waiver of transaction fees on our e-money platform.
Adjusted
EBITDA declined by 10.4%* and the organic adjusted EBITDA margin decreased by 7.1* percentage points. This reflected an intra-year
re-phasing of marketing spend into H1, the lapping of a prior year settlement, and the zero-rating of e-money transaction fees
during the COVID-19 pandemic, which will end during H2. The adjusted EBITDA margin was 41.6%.
On
29 January 2020, we announced a Memorandum of Understanding (‘MoU’) with Saudi Telecom Company (‘stc’)
in relation to the sale of Vodafone’s 55% shareholding in Vodafone Egypt to stc for a cash consideration of US$2,392 million
(€2,180 million). On 13 April 2020, the MoU with stc was extended to allow additional time for the completion of due diligence
on Vodafone Egypt by stc, which has now been substantively completed. On 14 September 2020 the extended MoU expired, however we
remain in discussion with stc to finalise the transaction.
Other
associates and joint ventures
Vodafone
Idea Limited (India)
In
October 2019, the Indian Supreme Court gave its judgement in the “Union of India v Association of Unified Telecom Service
Providers of India” case regarding the interpretation of adjusted gross revenue (‘AGR’), a concept used in the
calculation of certain regulatory fees.
Vodafone
Idea Limited (‘Vodafone Idea’) recorded losses for each of the six month periods ended 30 September 2019, 31 March
2020 and 30 September 2020, respectively. For the six months ended 30 September 2019, the Group recognised its share of estimated
Vodafone Idea losses arising from both its operating activities and those in relation to the AGR judgement. The Group has no obligation
to fund Vodafone Idea, consequently the Group’s recognised share of losses in the six months ended 30 September 2019 was
limited to the remaining carrying value of Vodafone Idea which was therefore reduced to €nil at 30 September 2019; no further
losses have been recognised by the Group.
The
Group has a potential exposure to certain contingent liabilities and potential refunds relating to Vodafone India and Idea Cellular
at the time of the merger, including those relating to the AGR judgement, whereby Vodafone Group and Vodafone Idea would reimburse
each other on set dates following any crystallisation of these pre-merger liabilities and assets.
See
‘Other significant developments and legal proceedings’ on page 29 and Note 13 in the unaudited condensed consolidated
financial statements for further information.
Indus
Towers (India)
On
1 September 2020, we announced that Bharti Airtel Limited (‘Bharti Airtel’) and Vodafone Idea Ltd (‘Vodafone
Idea’) had agreed to proceed with completion of the merger of Indus Towers Limited (‘Indus Towers’) and Bharti
Infratel Limited (‘Bharti Infratel’ and, following the completion, the ‘Combined Company’). On 5 October
2020, we announced that lender consent had been received. On 22 October 2020, the National Company Law Tribunal (‘NCLT’)
approved the extension of time for filing of the certified copy of the NCLT order approving the merger scheme with the Registrar
of Companies (‘RoC’). The merger scheme will become effective when the order is filed with the RoC. Following any
agreed closing adjustments, the filing with the RoC is expected to be completed imminently.
Vodafone
Hutchison Australia / TPG Telecom
On
13 July 2020, we announced that Vodafone Hutchison Australia Pty Limited (‘VHA’) and TPG Telecom Limited (‘TPG’)
had 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, with the remaining 49.9% listed
as free float on the ASX.
Net
financing costs
|
|
H1 FY21
|
|
|
H1 FY20
|
|
|
|
|
|
|
€m
|
|
|
€m
|
|
|
Change
(%)
|
|
Adjusted
net financing costs1
|
|
|
(639
|
)
|
|
|
(799
|
)
|
|
|
20.0
|
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark-to-market (losses)/gains
|
|
|
(368
|
)
|
|
|
21
|
|
|
|
|
|
Foreign exchange losses
|
|
|
(231
|
)
|
|
|
(147
|
)
|
|
|
|
|
Interest on
lease liabilities
|
|
|
(189
|
)
|
|
|
(163
|
)
|
|
|
|
|
Net financing costs
|
|
|
(1,427
|
)
|
|
|
(1,088
|
)
|
|
|
(31.2
|
)
|
1.
|
Adjusted
net financing costs is an alternative performance measure which is a non-GAAP measure
that is presented to provide readers with additional financial information that is regularly
reviewed by management and should not be viewed in isolation or as an alternative to
the equivalent GAAP measure. See “Alternative performance measures” on page
54 for more information.
|
Net
financing costs increased by €339 million, primarily due to mark-to-market losses in the period. These were driven by the
lower share price, causing a mark-to-market loss on the options relating to the mandatory convertible bonds and by lower long-term
yields, which led to mark-to-market losses on certain economic hedging instruments. Adjusted net financing costs decreased reflecting
net favourable interest movements on borrowings in relation to foreign operations. Excluding these factors and the impact of interest
on lease liabilities, financing costs remained stable, reflecting consistent average net debt balances and weighted average borrowing
costs for both periods.
|
|
H1 FY21
|
|
|
H1 FY20
|
|
|
|
|
|
|
€m
|
|
|
€m
|
|
|
Change
(%)
|
|
Income tax expense:
|
|
|
(490
|
)
|
|
|
(1,380
|
)
|
|
|
64.5
|
|
Tax on adjustments to derive adjusted profit before
tax
|
|
|
(153
|
)
|
|
|
(82
|
)
|
|
|
|
|
Adjustments1:
|
|
|
|
|
|
|
|
|
|
|
|
|
- Reduction in deferred tax following rate change
in Luxembourg
|
|
|
–
|
|
|
|
868
|
|
|
|
|
|
- Deferred tax on use of
Luxembourg losses in the period
|
|
|
188
|
|
|
|
200
|
|
|
|
|
|
Adjusted income tax expense
for calculating adjusted tax rate
|
|
|
(455
|
)
|
|
|
(394
|
)
|
|
|
(15.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before tax
|
|
|
2,045
|
|
|
|
(511
|
)
|
|
|
500.2
|
|
Adjustments
to derive adjusted profit before tax1
|
|
|
(135
|
)
|
|
|
1,393
|
|
|
|
|
|
Adjusted profit before
tax2
|
|
|
1,910
|
|
|
|
882
|
|
|
|
116.6
|
|
Share of adjusted results in associates
and joint ventures
|
|
|
(255
|
)
|
|
|
550
|
|
|
|
|
|
Adjusted profit before tax
for calculating adjusted effective tax rate
|
|
|
1,655
|
|
|
|
1,432
|
|
|
|
15.6
|
|
Adjusted
effective tax rate2
|
|
|
27.5
|
%
|
|
|
27.5
|
%
|
|
|
–
|
|
1.
|
See
“Earnings per share” on page 24.
|
2.
|
Adjusted
profit before tax and adjusted effective tax are alternative performance measures which
are non-GAAP measures that are presented to provide readers with additional financial
information that is regularly reviewed by management and should not be viewed in isolation
or as an alternative to the equivalent GAAP measure. See “Alternative performance
measures” on page 54 for more information.
|
The
Group’s adjusted effective tax rate for the six months ended 30 September 2020 was 27.5%, in line with the prior period.
The
Group’s adjusted effective tax rate for both years does not include €188 million (2019: €200 million) relating
to the use of losses in Luxembourg.
The
Group’s adjusted effective tax rate for the six months ended 30 September 2019 does not include a reduction in our deferred
tax assets in Luxembourg of €868 million following a reduction in the Luxembourg corporate tax rate.
This
use of our losses changes the total losses we have available for future use against our profits in Luxembourg and neither item
affects the amount of tax we pay in other countries.
Earnings
per share
|
|
H1 FY21
|
|
|
H1 FY20
|
|
|
|
|
|
|
€m
|
|
|
€m
|
|
|
Change
(%)
|
|
Adjusted
operating profit1
|
|
|
2,549
|
|
|
|
1,681
|
|
|
|
51.6
|
|
Adjusted net financing
costs
|
|
|
(639
|
)
|
|
|
(799
|
)
|
|
|
|
|
Adjusted income tax expense
for calculating adjusted tax rate
|
|
|
(455
|
)
|
|
|
(394
|
)
|
|
|
|
|
Adjusted
non-controlling interests
|
|
|
(241
|
)
|
|
|
(238
|
)
|
|
|
|
|
Adjusted
profit attributable to owners of the parent1
|
|
|
1,214
|
|
|
|
250
|
|
|
|
385.6
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation
of acquired customer base and brand intangible assets
|
|
|
(364
|
)
|
|
|
(232
|
)
|
|
|
|
|
Restructuring
costs
|
|
|
(86
|
)
|
|
|
(163
|
)
|
|
|
|
|
Adjusted
other income and expense
|
|
|
1,184
|
|
|
|
(872
|
)
|
|
|
|
|
Mark-to-market
(losses)/gains
|
|
|
(368
|
)
|
|
|
21
|
|
|
|
|
|
Foreign
exchange losses
|
|
|
(231
|
)
|
|
|
(147
|
)
|
|
|
|
|
|
|
|
135
|
|
|
|
(1,393
|
)
|
|
|
109.7
|
|
Taxation2
|
|
|
(35
|
)
|
|
|
(986
|
)
|
|
|
|
|
Non-controlling
interests
|
|
|
–
|
|
|
|
1
|
|
|
|
|
|
Profit/(loss)
attributable to owners of the parent
|
|
|
1,314
|
|
|
|
(2,128
|
)
|
|
|
161.7
|
|
|
|
|
Million
|
|
|
|
Million
|
|
|
|
|
|
Weighted average number of shares outstanding
- basic
|
|
|
29,535
|
|
|
|
29,410
|
|
|
|
0.4
|
|
|
|
|
eurocents
|
|
|
|
eurocents
|
|
|
|
|
|
Basic earnings/(loss) per share
|
|
|
4.45
|
c
|
|
|
(7.24
|
)c
|
|
|
161.5
|
|
Adjusted earnings per
share1
|
|
|
4.11
|
c
|
|
|
0.85
|
c
|
|
|
383.5
|
|
1.
|
Adjusted
operating profit, adjusted profit attributable to owners of the parent and adjusted earnings
per share are alternative performance measures which are non-GAAP measures that are presented
to provide readers with additional financial information that is regularly reviewed by
management and should not be viewed in isolation or as an alternative to the equivalent
GAAP measures. See “Alternative performance measures” on page 54 for more
information.
|
2.
|
See page
23.
|
Adjusted
earnings per share was 4.11 eurocents, compared to 0.85 eurocents in the six months ended 30 September 2019.
Basic earnings
per share was 4.45 eurocents, compared to a loss per share of 7.24 eurocents in the six months ended 30 September 2019. The increase
is primarily due to losses recognised in the comparative period relating to Vodafone Idea Limited, partially offset by a €1.1
billion profit recorded on the disposal of Vodafone New Zealand.
Cash flow,
capital allocation and funding
Cash flow
|
|
H1 FY21
|
|
|
H1 FY20
|
|
|
|
|
|
|
€m
|
|
|
€m
|
|
|
Change
(%)
|
|
Adjusted EBITDA1
|
|
|
7,023
|
|
|
|
7,105
|
|
|
|
(1.2
|
)
|
Capital additions2
|
|
|
(3,363
|
)
|
|
|
(3,000
|
)
|
|
|
|
|
Working capital
|
|
|
(2,503
|
)
|
|
|
(2,952
|
)
|
|
|
|
|
Disposal of property, plant and equipment
|
|
|
6
|
|
|
|
21
|
|
|
|
|
|
Other
|
|
|
119
|
|
|
|
221
|
|
|
|
|
|
Operating free cash
flow1
|
|
|
1,282
|
|
|
|
1,395
|
|
|
|
(8.1
|
)
|
Taxation
|
|
|
(533
|
)
|
|
|
(483
|
)
|
|
|
|
|
Dividends received from associates and investments
|
|
|
355
|
|
|
|
63
|
|
|
|
|
|
Dividends paid to non-controlling shareholders in subsidiaries
|
|
|
(166
|
)
|
|
|
(169
|
)
|
|
|
|
|
Interest
received and paid3
|
|
|
(487
|
)
|
|
|
(412
|
)
|
|
|
|
|
Free cash flow (pre-spectrum
and restructuring)1
|
|
|
451
|
|
|
|
394
|
|
|
|
14.5
|
|
Licence and spectrum payments
|
|
|
(286
|
)
|
|
|
(58
|
)
|
|
|
|
|
Restructuring
and other payments4
|
|
|
(266
|
)
|
|
|
(302
|
)
|
|
|
|
|
Free cash flow1
|
|
|
(101
|
)
|
|
|
34
|
|
|
|
(397.1
|
)
|
Acquisitions and disposals
|
|
|
434
|
|
|
|
(16,715
|
)
|
|
|
|
|
Equity dividends paid
|
|
|
(1,209
|
)
|
|
|
(1,092
|
)
|
|
|
|
|
Share buybacks3
|
|
|
–
|
|
|
|
(1,094
|
)
|
|
|
|
|
Foreign exchange (loss)/gain
|
|
|
(258
|
)
|
|
|
67
|
|
|
|
|
|
Other5
|
|
|
(681
|
)
|
|
|
(2,274
|
)
|
|
|
|
|
Net debt increase1,6
|
|
|
(1,815
|
)
|
|
|
(21,074
|
)
|
|
|
91.4
|
|
Opening
net debt1,6
|
|
|
(42,168
|
)
|
|
|
(27,033
|
)
|
|
|
|
|
Closing
net debt1,6
|
|
|
(43,983
|
)
|
|
|
(48,107
|
)
|
|
|
8.6
|
|
Notes:
1.
|
Adjusted
EBITDA, operating free cash flow, free cash flow (pre-spectrum and restructuring), free
cash flow and net debt are alternative performance measures which are non-GAAP measures
that are presented to provide readers with additional financial information that is regularly
reviewed by management and should not be viewed in isolation or as an alternative to
the equivalent GAAP measures. See “Alternative performance measures” on page
54 for more information.
|
2.
|
Capital
additions includes the purchase of property, plant and equipment and intangible assets,
other than licence and spectrum payments and transformation capital expenditure.
|
3.
|
Interest
received and paid excludes €134 million (2019: €87 million) of interest on
lease liabilities, included within operating free cash flow; €nil (2019: €175
million) of interest costs related to Liberty acquisition financing, included within
Other; and €nil (2019: €273 million) of cash outflow from the option structure
relating to the issue of the mandatory convertible bond in February 2016, included within
Share buybacks. The option structure was intended to ensure that the total cash outflow
to execute the programme was broadly equivalent to the £1,440 million raised on
issuing the second tranche.
|
4.
|
Includes
transformation capital expenditure of €116 million.
|
5.
|
“Other”
for the six months ended 30 September 2019 included €1,559 million of debt incurred
in relation to licences and spectrum acquired in Germany.
|
6.
|
Net
debt balances at 30 September 2020 and 31 March 2020 have been adjusted to exclude derivative
gains in cash flow hedge reserves, the corresponding losses for which are not recognised
on the bonds within net debt and which are significant due to COVID-19 related market
conditions. See page 27.
|
Operating
free cash flow was €0.1 billion lower at €1.3 billion due to a reduction in roaming and visitor revenue, offset by
lower net operating expenses in Europe. A favourable working capital movement of €0.4 billion was offset by an increase
in capital additions of €0.4 billion, including the impact from the first-time inclusion of Unitymedia.
Free cash
flow (pre-spectrum and restructuring) was €0.5 billion, an increase of €0.1 billion. The decrease in operating free
cash flow was outweighed by an increase of €0.3 billion in dividends from associates and investments, partially offset by
higher net interest paid and taxation outflows.
Closing net
debt adjusted for mark-to-market gains deferred in hedging reserves at 30 September 2020 was €44.0 billion (31 March 2020:
€42.2 billion) and excludes borrowings of €11.6 billion (31 March 2020: €12.1 billion) of lease liabilities
recognised under IFRS 16 and a loan of €1.3 billion (31 March 2020: €1.3 billion) specifically secured against Indian
assets. Additionally it excludes £3.44 billion (31 March 2020: £3.44 billion) mandatory convertible bond issued
in February 2019 which will be settled in equity shares, and €0.8 billion (31 March 2020: €0.7 billion) of shareholder
loans receivable from VodafoneZiggo.
The Group’s
borrowings and net debt includes bonds, some of which are or were previously designated in hedge relationships, which are carried
at €1.5 billion higher (31 March 2020: €1.5 billion higher) than their euro equivalent redemption value. In addition,
where bonds are issued in currencies other than euros, the Group has entered into foreign currency swaps to fix the euro cash
outflows on redemption. The impact of these swaps is not reflected in borrowings and would increase the euro equivalent redemption
value of the bonds by €0.2 billion (31 March 2020: €1.3 billion lower).
Analysis
of free cash flow
|
|
H1 FY21
|
|
|
H1 FY20
|
|
|
|
|
|
|
€m
|
|
|
€m
|
|
|
Change
(%)
|
|
Inflow from operating activities
|
|
|
6,009
|
|
|
|
6,139
|
|
|
|
(2.1
|
)
|
Net tax paid
|
|
|
533
|
|
|
|
483
|
|
|
|
|
|
Cash generated by operations
|
|
|
6,542
|
|
|
|
6,622
|
|
|
|
(1.2
|
)
|
Capital additions
|
|
|
(3,363
|
)
|
|
|
(3,000
|
)
|
|
|
|
|
Working capital movement in respect of capital additions
|
|
|
(222
|
)
|
|
|
(713
|
)
|
|
|
|
|
Disposal of property, plant and equipment
|
|
|
6
|
|
|
|
21
|
|
|
|
|
|
Restructuring payments
|
|
|
150
|
|
|
|
302
|
|
|
|
|
|
Other1
|
|
|
(1,831
|
)
|
|
|
(1,837
|
)
|
|
|
|
|
Operating free cash
flow2
|
|
|
1,282
|
|
|
|
1,395
|
|
|
|
(8.1
|
)
|
Taxation
|
|
|
(533
|
)
|
|
|
(483
|
)
|
|
|
|
|
Dividends received from associates and investments
|
|
|
355
|
|
|
|
63
|
|
|
|
|
|
Dividends paid to non-controlling shareholders in subsidiaries
|
|
|
(166
|
)
|
|
|
(169
|
)
|
|
|
|
|
Interest received and paid
|
|
|
(487
|
)
|
|
|
(412
|
)
|
|
|
|
|
Free cash flow (pre-spectrum
and restructuring)2
|
|
|
451
|
|
|
|
394
|
|
|
|
14.5
|
|
Licence and spectrum payments
|
|
|
(286
|
)
|
|
|
(58
|
)
|
|
|
|
|
Restructuring
and other payments3
|
|
|
(266
|
)
|
|
|
(302
|
)
|
|
|
|
|
Free
cash flow2
|
|
|
(101
|
)
|
|
|
34
|
|
|
|
(397.1
|
)
|
1.
|
Predominantly
relates to lease payments.
|
2.
|
Operating
free cash flow, free cash flow (pre-spectrum and restructuring) and free cash flow are
alternative performance measures which are non-GAAP measures that are presented to provide
readers with additional financial information that is regularly reviewed by management
and should not be viewed in isolation or as an alternative to the equivalent GAAP measure.
See “Alternative performance measures” on page 54 for more information.
|
3.
|
Includes
transformation capital expenditure of €116 million.
|
Funding
position
|
|
H1 FY21
|
|
|
Year-end FY20
|
|
|
|
|
|
|
€m
|
|
|
€m
|
|
|
Change
(%)
|
|
Bonds
|
|
|
(48,901
|
)
|
|
|
(49,412
|
)
|
|
|
|
|
Bank loans
|
|
|
(1,277
|
)
|
|
|
(2,728
|
)
|
|
|
|
|
Cash collateral liabilities1
|
|
|
(1,982
|
)
|
|
|
(5,292
|
)
|
|
|
|
|
Other borrowings
|
|
|
(3,748
|
)
|
|
|
(3,877
|
)
|
|
|
|
|
Borrowings included in net debt
|
|
|
(55,908
|
)
|
|
|
(61,309
|
)
|
|
|
8.8
|
|
Cash and cash equivalents
|
|
|
6,612
|
|
|
|
13,284
|
|
|
|
|
|
Other financial instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark-to-market
derivative financial instruments2
|
|
|
(630
|
)
|
|
|
4,409
|
|
|
|
|
|
Short
term investments3
|
|
|
7,172
|
|
|
|
5,247
|
|
|
|
|
|
Total cash and cash equivalents
and other financial instruments
|
|
|
13,154
|
|
|
|
22,940
|
|
|
|
(42.7
|
)
|
Net debt4
|
|
|
(42,754
|
)
|
|
|
(38,369
|
)
|
|
|
(11.4
|
)
|
Less
mark-to-market gains deferred in hedging reserves5
|
|
|
(1,229
|
)
|
|
|
(3,799
|
)
|
|
|
|
|
Net debt adjusted for mark-to-market
gains in hedging reserves
|
|
|
(43,983
|
)
|
|
|
(42,168
|
)
|
|
|
(4.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt to adjusted
EBITDA**4,5,6
|
|
|
3.0
|
x
|
|
|
2.8
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease liabilities
|
|
|
(11,593
|
)
|
|
|
(12,063
|
)
|
|
|
|
|
Bank borrowings secured against
Indian assets
|
|
|
(1,321
|
)
|
|
|
(1,346
|
)
|
|
|
|
|
Borrowings excluded from net
debt
|
|
|
(12,914
|
)
|
|
|
(13,409
|
)
|
|
|
|
|
The
€5.0 billion reduction in mark-to-market derivative financial instruments primarily relates to lower gains deferred in hedging
reserves and foreign exchange that is offset by bond retranslation. Lower borrowings and cash and cash equivalents are driven
by €4.6 billion lower cash collateral assets and liabilities (which taken all together do not impact net debt) and
bank loan repayments of €1.3 billion. The movements in net debt adjusted for mark-to-market gains in hedging reserves
are shown in the table below.
Movement
in funding position
|
|
Net
debt**4,5
|
|
|
Net debt to adjusted
|
|
|
|
€m
|
|
|
EBITDA**4,5,6
|
|
31 March 2020
|
|
|
42,168
|
|
|
|
2.8
|
x
|
Acquisitions and disposals
|
|
|
(434
|
)
|
|
|
|
|
Equity dividends paid
|
|
|
1,209
|
|
|
|
|
|
Other movements
|
|
|
939
|
|
|
|
|
|
Free cash flow (pre-spectrum and restructuring)
|
|
|
(451
|
)
|
|
|
|
|
Licence and spectrum payments
|
|
|
286
|
|
|
|
|
|
Restructuring and other payments
|
|
|
266
|
|
|
|
|
|
30 September 2020
|
|
|
43,983
|
|
|
|
3.0
|
x
|
1.
|
Cash
collateral liabilities relate to a liability to return the cash collateral that has been
paid to Vodafone under collateral arrangements on derivative financial instruments. The
corresponding cash received from banking counterparties is reflected within Cash and
cash equivalents and Short term investments.
|
2.
|
Comprises
mark-to-market adjustments on derivative financial instruments, which are included as
a component of trade and other (payables)/receivables.
|
3.
|
Short
term investments includes €2,202 million (31 March 2020: €1,681 million)
of highly liquid government and government-backed securities; €2,443 million (31
March 2020: €1,115 million) of assets paid to our bank counterparties as collateral
on derivative financial instruments; and managed investment funds of €2,527 million
(31 March 2020: €2,451 million) that are in highly rated and liquid money market
investments with liquidity of up to 90 days.
|
4.
|
Net
debt and the ratio of net debt to adjusted EBITDA are alternative performance measures
which are non-GAAP measures that are presented to provide readers with additional financial
information that is regularly reviewed by management and should not be viewed in isolation
or as an alternative to the equivalent GAAP measure. See “Alternative performance
measures” on page 54 for more information.
|
5.
|
Net
debt balances at 30 September 2020 and 31 March 2020 marked with a “**” have
been adjusted to exclude derivative gains in cash flow hedge reserves, the corresponding
losses for which are not recognised on the bonds within net debt and which are significant
due to COVID-19 related market conditions.
|
6.
|
The
ratio of net debt to adjusted EBITDA is calculated using adjusted EBITDA for a rolling
12 month period, normalised for acquisitions and disposals within the period.
|
Ratio of net debt to adjusted EBITDA
On a rolling 12 month basis, H1 FY21 net debt to adjusted
EBITDA increased by 0.2x to 3.0x (compared to 2.8x as at 31 March 2020), reflecting the intra-year phasing of cash flows.
Funding facilities
The Group has undrawn committed
facilities of €7,739 million, principally euro and US dollar revolving credit facilities of €3.9 billion and
US$4.2 billion (€3.6 billion). All of the euro revolving credit facilities mature in 2025 except for €80 million
which mature in 2023 and all of the US dollar revolving credit facilities mature in 2022 except for US$75 million (€64
million) which mature in 2021. Both committed revolving credit facilities support US and euro commercial paper programmes of
up to US$15 billion and €8 billion respectively.
Return on Capital Employed
Return on capital employed (“ROCE”)
measures how efficiently we generate returns from our asset base and is a key driver of long-term value creation. We calculate
two ROCE measures: i) Pre-tax ROCE for controlled operations only and ii) Post-tax ROCE (including associates & joint ventures).
For the purpose of our interim results, we have provided a brief update below. We will present both measures and the detailed calculations
for the financial year in our full year results.
The methodology adopted for the
post-tax ROCE discussed below is consistent with that disclosed on page 39 of the Group’s annual report for the year ended
31 March 2020. For the purpose of the mid-year ROCE calculation, the returns are based on the 12 months ended 30 September 2020
and the denominator is based on the average of the capital employed as at 30 September 2019 and 30 September 2020.
Our ROCE decreased by 1.0 percentage
points to 5.1% on a pre-tax basis (FY20: 6.1%) and remained flat at 4.0% on a post-tax basis. The decrease in the pre-tax controlled
ROCE was primarily attributable to the first-time inclusion of the Liberty Global assets for the full 12 month period. Pre-tax
returns from controlled operations were broadly stable due to lower EBITDA being offset by a reduction in depreciation and amortisation.
The post-tax ROCE remained flat due to the first-time exclusion of the Group’s interest in Vodafone Idea in both the numerator
and denominator.
Post-employment benefits
The €152 million net surplus
at 31 March 2020 decreased by €381 million to a €229 million net deficit at 30 September 2020 arising from the Group’s
obligations in respect of its defined benefit schemes. The next triennial actuarial valuation of the Vodafone Section and CWW Section
of the Vodafone UK Group Pension Scheme will be as at 31 March 2022.
Dividends
Dividends will continue to be
declared in euros and paid in euros, pounds sterling and US dollars, aligning the Group’s shareholder returns with the primary
currency in which we generate free cash flow. The foreign exchange rate at which future dividends declared in euros will be converted
into pounds sterling and US dollars will be calculated based on the average exchange rate 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 (2019: 4.50 eurocents). The ex-dividend date for the interim dividend is 17 December 2020
for ordinary shareholders, the record date is 18 December 2020 and the dividend is payable on 5 February 2021. Dividend payments
on ordinary shares will be paid directly into a nominated bank or building society account.
Vodafone is in the process of transferring
its registrar services to Equiniti Limited. Consequently, Vodafone has set an ex-dividend date and record date for the interim
dividend later in Vodafone’s financial calendar than in prior years.
Board changes
Jean-Francois van Boxmeer was appointed
as a Non-Executive Director at the annual general meeting held on 28 July 2020.
As announced on 22 May 2020, Gerard Kleisterlee stepped down
and retired from the Board on 3 November 2020 and Jean-Francois van Boxmeer succeeded him as Chairman on that date.
David Thodey resigned as a Non-Executive
Director on 27 July 2020.
Vodafone Idea Limited (‘Vodafone
Idea’)
In October
2019, the Supreme Court of India ruled against the industry in a dispute over the calculation of licence and other regulatory fees,
and Vodafone Idea was liable for very substantial demands made by the Department of Telecommunications (‘DoT’) in relation
to these fees. Based on submissions of the DoT in the Supreme Court proceedings (which the Group is unable to confirm as to their
accuracy), Vodafone Idea reported a total estimated liability of INR 654 billion (€7.6 billion) excluding repayments and
including interest, penalty and interest on penalty up to 30 June 2020.
On 17
February, 20 February, 16 March and 16 July 2020, Vodafone Idea made payments totaling INR 78.5 billion (€0.9 billion) to
the DoT.
In September
2020, the Supreme Court of India directed that telecom operators make payment of 10% of the total dues by 31 March 2021 and thereafter
repay the balance, along with 8% interest, in 10 annual instalments.
An update
in relation to Indian regulatory cases and the contingent liability mechanism, dating back to the creation of Vodafone Idea is
set out in Note 13 to the unaudited condensed consolidated financial statements.
Acquisition and disposal commitments
Indus Towers
Vodafone announced on 1 September 2020 that
it had agreed to proceed with the merger of Indus Towers Limited (‘Indus Towers’) and Bharti Infratel Limited (‘Bharti
Infratel’, together the ‘Combined Company’).
The agreement to proceed was conditional
on consent for a security package for the benefit of the Combined Company (the ‘Security Package’) from Vodafone’s
existing lenders for the €1.3 billion loan utilised to fund Vodafone’s contribution to the Vodafone Idea Ltd rights
issue in 2019. On 5 October 2020 it was announced that this consent has been received. On 22 October 2020, the NCLT approved the
extension of time for filing of the certified copy of the NCLT order approving the merger scheme with the Registrar of Companies
(‘RoC’). The merger scheme will become effective when the order is filed with the RoC. Following any agreed closing
adjustments, the filing with the RoC is expected to be completed imminently.
Vodafone Egypt
The Group signed a Memorandum of Understanding
(‘MoU’) with Saudi Telecom Company (‘stc’) in January 2020 to pursue the sale of the Group’s 55%
equity holding in Vodafone Egypt Telecommunications S.A.E. (‘Vodafone Egypt’) for cash consideration of US$ 2.4 billion
(€2.2 billion).
On 14 September 2020, the Group announced
that due diligence has been substantively completed with respect to the potential sale. Despite the expiry of the MoU, Vodafone
remains in discussion with stc to finalise the transaction in the near future and now looks to stc and Telecom Egypt to find a
suitable agreement to enable the transaction to close.
Risk factors
The key factors and uncertainties that could
have a significant effect on the Group’s financial performance, include the following:
Global economic disruption
A major economic disruption could result
in lower spending power for our customers and therefore reduced demand for our services affecting our profitability and cash flow
generation. Economic disruption can also impact financial markets including currencies, interest rates, borrowing and availability
of debt financing.
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 impact across all of our local markets.
Geo-political risk in supply chain
We operate and develop sophisticated infrastructure
in the countries in which we are present. Our network and systems are dependent on a wide range of suppliers internationally. If
there was a disruption in the supply chain, we might be unable to execute our plans and we, and the industry, would face potential
delays to network improvements and increased costs.
Adverse political and regulatory measures
Operating across many markets and jurisdictions
means we deal with a variety of complex political and regulatory landscapes. In all of these environments, we can face changes
in taxation, political intervention and potential competitive disadvantage. This also includes our participation in spectrum auctions.
Technology failure
Major incidents caused by natural disasters,
deliberate attacks or an extreme technology failure, although rare, could result in the complete loss of key sites in either our
data centres or our mobile/fixed networks causing a major disruption to our service.
Strategic transformation
We are undertaking a large-scale integration
of recently acquired assets across multiple markets and failing to complete it in a timely and efficient manner, would result
in not realising the full benefits or planned synergies and lead to additional costs.
The recent launch of Vantage Towers will
also translate in changes to the way we operate.
We also have a number of joint ventures
in operation and must ensure that these operate effectively.
Market disruption
New entrants with lean models could create
pricing pressure. As more competitors launch unlimited bundles there could be price erosion. Our market position and revenues could
be damaged by failing to provide the services that our customers want.
Digital transformation
Failure in digital or IT transformation
projects could result in business loss, poor customer experience and reputational damage.
Disintermediation
We face increased competition from a variety
of new technology platforms, which aim to build alternative communication services or different touch points, which could potentially
affect our customer relationships. We must be able to keep pace with these new developments and competitors while maintaining high
levels of customer engagement and an excellent customer experience.
Legal and regulatory compliance
Vodafone must comply with a multitude of
local and international laws and applicable industry regulations. These include laws relating to privacy, anti-money laundering,
competition, anti-bribery and economic sanctions. Failure to comply with these laws and regulations could lead to reputational
damage, financial penalties and/or suspension of our licence to operate.
Brexit
The Board continues to monitor the implications
for Vodafone’s operations in light of the new trading relationship between the UK and the EU, which has yet to be negotiated.
A cross-functional steering committee has
identified the impact of the UK and EU failing to reach a free trade agreement on the Group’s operations and has produced
a comprehensive mitigation plan.
Although our headquarters are in the UK,
a large majority of our customers are in other countries, accounting for most of our revenue and cash flow. Each of our operating
companies operates as a standalone business, incorporated and licensed in the jurisdiction in which it operates, and are able to
adapt to a wide range of local developments. As such, our ability to provide services to our customers in the countries in which
we operate, inside or outside the EU, is unlikely to be affected by the lack of a free trade deal. We are not a major international
trading company, and do not use passporting for any of our major services or processes.
The lack of an agreed free trade deal between
the UK and EU could lead to a fall in consumer and business confidence. Such a fall in confidence could, in turn, reduce consumer
and business spend on our products and services.
COVID-19
We continue to conduct thorough assessments
of the potential impacts of COVID-19 across our business, including but not limited to our principal risks. During the initial
stage of the crisis, we reported in the Group’s annual report for the year ended 31 March 2020 (page 70) on the following
topics: health, safety and wellbeing of our employees, disruption in our supply chain as well as an increase in cyber-attacks.
These topics remain relevant, however other significant risks have been identified as detailed below:
|
•
|
Consumption of our products and services has changed due to societal shifts (e.g. working environment,
connectivity needs and travel patterns) and these are likely to continue to evolve in the foreseeable future. By understanding
the needs of our different customer groups, we are in a better position to provide support and adjust our product offering to retain
loyalty while generating new revenue streams.
|
|
•
|
Requirement for ongoing access to capital markets in order to refinance debt. In addition, our
emerging markets are exposed to currency movements. Turmoil in the financial markets can restrict access to capital markets and
cause significant fluctuations in exchange rates. We maintain a conservative approach to liquidity by holding large volumes of
cash and committed credit facilities, as well as limiting our refinancing exposure by maintaining a long average life of debt.
|
|
•
|
Governments will look to rebalance their finances over the coming years and our industry could
be targeted as a funding opportunity with additional taxes and new adverse regulations. We continue to work closely with our stakeholders
and government through our ‘Social Contract’ initiatives to ensure the sustainability and wellbeing of our society.
|
|
•
|
Pressures brought on by the effects of lockdown, social distancing and COVID-19 related restrictions
impacts on our ability to physically service our customers. Therefore, we have accelerated and increased our digital transformation
projects to provide a better customer experience.
|
Our response to the COVID-19 pandemic has
prioritised the safety and wellbeing of our people first from the outset, through a variety of initiatives deployed across markets
and tightly coordinated by the Business Continuity Plan programme management. The move to working from home for almost 100,000
of our people across all markets (approximately 95%) has been a tremendous organisational effort, enabled by our technology and
network infrastructure, collaboration tools deployed at scale, HR policies and digital training.
We have also run a number of short-term ‘pulse’
surveys to gauge employee sentiment during the COVID-19 crisis. Our pulse survey responses have directly contributed to shaping
our direction on our 'Future Ready' strategy around new digital ways of working and the future of work at Vodafone. They influenced
our decisions on remote working, our digital tools and our response to wellbeing of our employees.
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 adopted by the European Union; 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
By Order of the Board
Rosemary Martin
Group General Counsel and Company Secretary
16 November 2020
Unaudited condensed consolidated
financial statements
Consolidated
income statement
|
|
|
|
|
Six months ended 30 September
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
Note
|
|
|
€m
|
|
|
€m
|
|
Revenue
|
|
|
2
|
|
|
|
21,427
|
|
|
|
21,939
|
|
Cost of sales
|
|
|
|
|
|
|
(14,657
|
)
|
|
|
(15,010
|
)
|
Gross profit
|
|
|
|
|
|
|
6,770
|
|
|
|
6,929
|
|
Selling and distribution expenses
|
|
|
|
|
|
|
(1,675
|
)
|
|
|
(1,883
|
)
|
Administrative expenses
|
|
|
|
|
|
|
(2,560
|
)
|
|
|
(2,590
|
)
|
Net credit losses on financial assets
|
|
|
|
|
|
|
(378
|
)
|
|
|
(302
|
)
|
Share of results of equity accounted associates and joint ventures
|
|
|
|
|
|
|
260
|
|
|
|
(2,601
|
)
|
Other income
|
|
|
8,9
|
|
|
|
1,055
|
|
|
|
1,024
|
|
Operating profit
|
|
|
2
|
|
|
|
3,472
|
|
|
|
577
|
|
Investment income
|
|
|
|
|
|
|
183
|
|
|
|
281
|
|
Financing costs
|
|
|
|
|
|
|
(1,610
|
)
|
|
|
(1,369
|
)
|
Profit/(loss) before taxation
|
|
|
|
|
|
|
2,045
|
|
|
|
(511
|
)
|
Income tax expense
|
|
|
4
|
|
|
|
(490
|
)
|
|
|
(1,380
|
)
|
Profit/(loss) for the financial period
|
|
|
|
|
|
|
1,555
|
|
|
|
(1,891
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
– Owners of the parent
|
|
|
|
|
|
|
1,314
|
|
|
|
(2,128
|
)
|
– Non-controlling interests
|
|
|
|
|
|
|
241
|
|
|
|
237
|
|
Profit/(loss) for the financial period
|
|
|
|
|
|
|
1,555
|
|
|
|
(1,891
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Group:
|
|
|
|
|
|
|
|
|
|
|
|
|
– Basic
|
|
|
6
|
|
|
|
4.45
|
c
|
|
|
(7.24
|
)c
|
– Diluted
|
|
|
6
|
|
|
|
4.44
|
c
|
|
|
(7.24
|
)c
|
Consolidated statement of comprehensive
income/expense
|
|
Six months ended 30 September
|
|
|
|
2020
|
|
|
2019
|
|
|
|
€m
|
|
|
€m
|
|
Profit/(loss) for the financial period
|
|
|
1,555
|
|
|
|
(1,891
|
)
|
Other comprehensive income/(expense):
|
|
|
|
|
|
|
|
|
Items that may be reclassified to the income statement in subsequent periods:
|
|
|
|
|
|
|
|
|
Foreign exchange translation differences, net of tax
|
|
|
(770
|
)
|
|
|
(222
|
)
|
Foreign exchange translation differences transferred to the income statement
|
|
|
(77
|
)
|
|
|
(59
|
)
|
Other, net of tax1
|
|
|
(2,058
|
)
|
|
|
(302
|
)
|
Total items that may be reclassified to the income statement in subsequent periods
|
|
|
(2,905
|
)
|
|
|
(583
|
)
|
Items that will not be reclassified to the income statement in subsequent periods:
|
|
|
|
|
|
|
|
|
Net actuarial losses on defined benefit pension schemes, net of tax
|
|
|
(383
|
)
|
|
|
(65
|
)
|
Total items that will not be reclassified to the income statement in subsequent periods
|
|
|
(383
|
)
|
|
|
(65
|
)
|
Other comprehensive expense
|
|
|
(3,288
|
)
|
|
|
(648
|
)
|
Total comprehensive expense for the financial period
|
|
|
(1,733
|
)
|
|
|
(2,539
|
)
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
– Owners of the parent
|
|
|
(1,905
|
)
|
|
|
(2,809
|
)
|
– Non-controlling interests
|
|
|
172
|
|
|
|
270
|
|
|
|
|
(1,733
|
)
|
|
|
(2,539
|
)
|
Note:
|
1.
|
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
|
|
|
|
|
|
|
2020
|
|
|
2020
|
|
|
|
Note
|
|
|
€m
|
|
|
€m
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
|
|
|
31,251
|
|
|
|
31,271
|
|
Other intangible assets
|
|
|
|
|
|
|
20,996
|
|
|
|
22,252
|
|
Property, plant and equipment
|
|
|
|
|
|
|
38,059
|
|
|
|
39,197
|
|
Investments in associates and joint ventures
|
|
|
9
|
|
|
|
5,428
|
|
|
|
5,831
|
|
Other investments
|
|
|
|
|
|
|
899
|
|
|
|
792
|
|
Deferred tax assets
|
|
|
|
|
|
|
23,990
|
|
|
|
23,606
|
|
Post employment benefits
|
|
|
|
|
|
|
198
|
|
|
|
590
|
|
Trade and other receivables
|
|
|
|
|
|
|
6,574
|
|
|
|
10,378
|
|
|
|
|
|
|
|
|
127,395
|
|
|
|
133,917
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory
|
|
|
|
|
|
|
606
|
|
|
|
585
|
|
Taxation recoverable
|
|
|
|
|
|
|
300
|
|
|
|
275
|
|
Trade and other receivables
|
|
|
|
|
|
|
10,457
|
|
|
|
11,411
|
|
Other investments
|
|
|
|
|
|
|
9,180
|
|
|
|
7,089
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
6,612
|
|
|
|
13,284
|
|
|
|
|
|
|
|
|
27,155
|
|
|
|
32,644
|
|
Assets held for sale
|
|
|
5
|
|
|
|
2,312
|
|
|
|
1,607
|
|
Total assets
|
|
|
|
|
|
|
156,862
|
|
|
|
168,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Called up share capital
|
|
|
|
|
|
|
4,797
|
|
|
|
4,797
|
|
Additional paid-in capital
|
|
|
|
|
|
|
152,694
|
|
|
|
152,629
|
|
Treasury shares
|
|
|
|
|
|
|
(7,720
|
)
|
|
|
(7,802
|
)
|
Accumulated losses
|
|
|
|
|
|
|
(120,331
|
)
|
|
|
(120,349
|
)
|
Accumulated other comprehensive income
|
|
|
|
|
|
|
28,916
|
|
|
|
32,135
|
|
Total attributable to owners of the parent
|
|
|
|
|
|
|
58,356
|
|
|
|
61,410
|
|
Non-controlling interests
|
|
|
|
|
|
|
1,224
|
|
|
|
1,215
|
|
Total equity
|
|
|
|
|
|
|
59,580
|
|
|
|
62,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term borrowings
|
|
|
|
|
|
|
61,292
|
|
|
|
62,892
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
1,986
|
|
|
|
2,043
|
|
Post employment benefits
|
|
|
|
|
|
|
427
|
|
|
|
438
|
|
Provisions
|
|
|
|
|
|
|
1,550
|
|
|
|
1,474
|
|
Trade and other payables
|
|
|
|
|
|
|
5,734
|
|
|
|
5,189
|
|
|
|
|
|
|
|
|
70,989
|
|
|
|
72,036
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
|
|
|
|
|
7,530
|
|
|
|
11,826
|
|
Financial liabilities under put option arrangements
|
|
|
|
|
|
|
1,886
|
|
|
|
1,850
|
|
Taxation liabilities
|
|
|
|
|
|
|
578
|
|
|
|
671
|
|
Provisions
|
|
|
|
|
|
|
951
|
|
|
|
1,024
|
|
Trade and other payables
|
|
|
|
|
|
|
14,380
|
|
|
|
17,085
|
|
|
|
|
|
|
|
|
25,325
|
|
|
|
32,456
|
|
Liabilities held for sale
|
|
|
5
|
|
|
|
968
|
|
|
|
1,051
|
|
Total equity and liabilities
|
|
|
|
|
|
|
156,862
|
|
|
|
168,168
|
|
The accompanying
notes are an integral part of the unaudited condensed consolidated financial statements.
Consolidated
statement of changes in equity
|
|
Share
capital
|
|
|
Additional
paid-in
capital1
|
|
|
Treasury
shares
|
|
|
Accumulated
comprehensive
losses2
|
|
|
Equity attributable
to the owners
|
|
|
Non-
controlling
interests
|
|
|
Total equity
|
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
1 April
2019 brought forward
|
|
|
4,796
|
|
|
|
152,503
|
|
|
|
(7,875
|
)
|
|
|
(87,467
|
)
|
|
|
61,957
|
|
|
|
1,231
|
|
|
|
63,188
|
|
Issue or reissue of shares
|
|
|
1
|
|
|
|
1
|
|
|
|
66
|
|
|
|
(63
|
)
|
|
|
5
|
|
|
|
–
|
|
|
|
5
|
|
Share-based
payments
|
|
|
–
|
|
|
|
72
|
|
|
|
–
|
|
|
|
–
|
|
|
|
72
|
|
|
|
–
|
|
|
|
72
|
|
Transactions
with non-controlling interests in subsidiaries
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(48
|
)
|
|
|
(48
|
)
|
|
|
(94
|
)
|
|
|
(142
|
)
|
Comprehensive
(expense)/income
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(2,809
|
)
|
|
|
(2,809
|
)
|
|
|
270
|
|
|
|
(2,539
|
)
|
Dividends
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(1,112
|
)
|
|
|
(1,112
|
)
|
|
|
(187
|
)
|
|
|
(1,299
|
)
|
30
September 2019
|
|
|
4,797
|
|
|
|
152,576
|
|
|
|
(7,809
|
)
|
|
|
(91,499
|
)
|
|
|
58,065
|
|
|
|
1,220
|
|
|
|
59,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 interests in subsidiaries
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
(5
|
)
|
|
|
(16
|
)
|
Comprehensive
(expense)/income
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(1,905
|
)
|
|
|
(1,905
|
)
|
|
|
172
|
|
|
|
(1,733
|
)
|
Dividends
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(1,205
|
)
|
|
|
(1,205
|
)
|
|
|
(162
|
)
|
|
|
(1,367
|
)
|
30
September 2020
|
|
|
4,797
|
|
|
|
152,694
|
|
|
|
(7,720
|
)
|
|
|
(91,415
|
)
|
|
|
58,356
|
|
|
|
1,224
|
|
|
|
59,580
|
|
Notes:
|
1.
|
Includes
share premium, capital redemption reserve, merger reserve and share-based payment reserve.
The merger reserve was derived from acquisitions made prior to 31 March 2004 and subsequently
allocated to additional paid-in capital on adoption of IFRS.
|
|
2.
|
Includes
accumulated losses and accumulated other comprehensive income.
|
The accompanying
notes are an integral part of the unaudited condensed consolidated financial statements.
Consolidated
statement of cash flows
|
|
|
|
|
Six months ended 30 September
|
|
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
Note
|
|
|
€m
|
|
|
€m
|
|
Inflow from operating activities
|
|
|
10
|
|
|
|
6,009
|
|
|
|
6,139
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of interests in subsidiaries, net of cash acquired
|
|
|
8
|
|
|
|
(136
|
)
|
|
|
(10,202
|
)
|
Purchase of interests in associates and joint ventures
|
|
|
|
|
|
|
–
|
|
|
|
(1,413
|
)
|
Purchase of intangible assets
|
|
|
|
|
|
|
(1,092
|
)
|
|
|
(1,002
|
)
|
Purchase of property, plant and equipment
|
|
|
|
|
|
|
(2,771
|
)
|
|
|
(2,769
|
)
|
Purchase of investments
|
|
|
|
|
|
|
(3,153
|
)
|
|
|
(239
|
)
|
Disposal of interests in subsidiaries, net of cash disposed
|
|
|
8
|
|
|
|
174
|
|
|
|
2,049
|
|
Disposal of interests in associates and joint ventures
|
|
|
9
|
|
|
|
420
|
|
|
|
–
|
|
Disposal of property, plant and equipment and intangible assets
|
|
|
|
|
|
|
6
|
|
|
|
21
|
|
Disposal of investments
|
|
|
|
|
|
|
1,031
|
|
|
|
6,043
|
|
Dividends received from associates and joint ventures
|
|
|
|
|
|
|
355
|
|
|
|
63
|
|
Interest received
|
|
|
|
|
|
|
153
|
|
|
|
183
|
|
Outflow from investing activities
|
|
|
|
|
|
|
(5,013
|
)
|
|
|
(7,266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of ordinary share capital and reissue of treasury shares
|
|
|
|
|
|
|
3
|
|
|
|
–
|
|
Net movement in short term borrowings
|
|
|
|
|
|
|
(2,717
|
)
|
|
|
815
|
|
Proceeds from issue of long term borrowings
|
|
|
|
|
|
|
2,125
|
|
|
|
9,107
|
|
Repayment of borrowings
|
|
|
|
|
|
|
(4,330
|
)
|
|
|
(13,277
|
)
|
Purchase of treasury shares
|
|
|
|
|
|
|
–
|
|
|
|
(821
|
)
|
Equity dividends paid
|
|
|
|
|
|
|
(1,209
|
)
|
|
|
(1,092
|
)
|
Dividends paid to non-controlling shareholders in subsidiaries
|
|
|
|
|
|
|
(166
|
)
|
|
|
(169
|
)
|
Other transactions with non-controlling shareholders in subsidiaries
|
|
|
|
|
|
|
(20
|
)
|
|
|
(233
|
)
|
Other movements in loans with associates and joint ventures
|
|
|
|
|
|
|
38
|
|
|
|
–
|
|
Interest paid1
|
|
|
|
|
|
|
(774
|
)
|
|
|
(1,130
|
)
|
Outflow from financing activities
|
|
|
|
|
|
|
(7,050
|
)
|
|
|
(6,800
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash outflow
|
|
|
|
|
|
|
(6,054
|
)
|
|
|
(7,927
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of the financial period2
|
|
|
|
|
|
|
13,288
|
|
|
|
13,605
|
|
Exchange (loss)/gain on cash and cash equivalents
|
|
|
|
|
|
|
(365
|
)
|
|
|
49
|
|
Cash and cash equivalents at end of the financial period2
|
|
|
|
|
|
|
6,869
|
|
|
|
5,727
|
|
Notes:
|
1.
|
Interest
paid includes €nil million (30 September 2019: €273 million) of cash outflow
on derivative financial instruments for the share buyback related to the second tranche
of the mandatory convertible bond that matured during the year ended 31 March 2020.
|
|
2.
|
Includes
cash and cash equivalents as presented in the Consolidated statement of financial position
of €6,612 million (31 March 2020: €13,284 million) and cash and cash equivalents
presented in assets held for sale of €274 million (31 March 2020: €273 million),
together with overdrafts of €17 million (31 March 2020: €269 million).
|
The accompanying
notes are an integral part of the unaudited condensed consolidated financial statements.
Notes to the unaudited condensed consolidated
financial statements
The unaudited condensed consolidated financial
statements for the six months ended 30 September 2020:
|
·
|
are prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting”
(‘IAS 34’) as issued by the International Accounting Standards Board and as adopted by the European Union;
|
|
·
|
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 2020;
|
|
·
|
apply the same accounting policies, presentation and methods of calculation as those followed in
the preparation of the Group’s consolidated financial statements for the year ended 31 March 2020, which were prepared in
accordance with International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards
Board and were also prepared in accordance with IFRS adopted by the European Union (‘EU’), the Companies Act 2006 and
Article 4 of the EU IAS Regulations. 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 2020.
|
The information relating to the year ended
31 March 2020 is an extract 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.
Considerations in respect of COVID-19
Going concern
As outlined on pages 1 and 2, trading in
the first half of the year demonstrates the relative resilience of the Group’s operating model and the Group has a strong
liquidity position with €6.6 billion of cash and cash equivalents available at 30 September 2020 and the Group has access
to committed facilities that 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 have been updated for the expected impact of COVID-19.
The forecasts 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 2020. 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 2022 and that it is appropriate to continue
to adopt a 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 2020. The forecast impact of COVID-19
was factored into certain of our judgements, primarily impairment testing. These judgements and estimates were reassessed during
the six months ended 30 September 2020 and the Group’s latest outlook and best estimate of the COVID-19 impact are considered
in our impairment review.
New accounting pronouncements adopted
On 1 April 2020, the Group adopted certain
new accounting policies where necessary to comply with amendments to IFRS, none of which had a material impact on the consolidated
results, financial position or cash flows of the Group. Further details are provided in the Group’s annual report for the
year ended 31 March 2020.
The Group has a single group of related
services and products being the supply of communications services and products. Revenue is attributed to a country or region based
on the location of the Group company reporting the revenue.
In the prior financial period, the Group
reported the financial results of Vodacom and Other Markets under the Rest of the World (‘RoW’) region. To reflect
changes in internal responsibilities, the RoW reporting segment no longer applies and Vodacom and Other Markets are separate reporting
segments.
The Group’s revenue and profit is
disaggregated as follows:
|
|
Service revenue
|
|
|
Equipment revenue
|
|
|
Revenue from contracts with customers
|
|
|
Interest revenue
|
|
|
Other1
|
|
|
Total segment revenue
|
|
|
|
Adjusted EBITDA
|
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
|
€m
|
|
Six months ended 30 September 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
5,723
|
|
|
|
466
|
|
|
|
6,189
|
|
|
|
6
|
|
|
|
176
|
|
|
|
6,371
|
|
|
|
2,844
|
|
Italy
|
|
|
2,249
|
|
|
|
216
|
|
|
|
2,465
|
|
|
|
5
|
|
|
|
36
|
|
|
|
2,506
|
|
|
|
800
|
|
UK
|
|
|
2,401
|
|
|
|
509
|
|
|
|
2,910
|
|
|
|
24
|
|
|
|
49
|
|
|
|
2,983
|
|
|
|
636
|
|
Spain
|
|
|
1,880
|
|
|
|
132
|
|
|
|
2,012
|
|
|
|
8
|
|
|
|
30
|
|
|
|
2,050
|
|
|
|
488
|
|
Other Europe
|
|
|
2,411
|
|
|
|
252
|
|
|
|
2,663
|
|
|
|
9
|
|
|
|
48
|
|
|
|
2,720
|
|
|
|
870
|
|
Eliminations
|
|
|
(47
|
)
|
|
|
-
|
|
|
|
(47
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(47
|
)
|
|
|
-
|
|
Europe
|
|
|
14,617
|
|
|
|
1,575
|
|
|
|
16,192
|
|
|
|
52
|
|
|
|
339
|
|
|
|
16,583
|
|
|
|
5,638
|
|
Vodacom
|
|
|
1,949
|
|
|
|
335
|
|
|
|
2,284
|
|
|
|
7
|
|
|
|
132
|
|
|
|
2,423
|
|
|
|
891
|
|
Other Markets
|
|
|
1,679
|
|
|
|
212
|
|
|
|
1,891
|
|
|
|
-
|
|
|
|
7
|
|
|
|
1,898
|
|
|
|
613
|
|
Common Functions
|
|
|
219
|
|
|
|
13
|
|
|
|
232
|
|
|
|
-
|
|
|
|
424
|
|
|
|
656
|
|
|
|
(119
|
)
|
Eliminations
|
|
|
(46
|
)
|
|
|
-
|
|
|
|
(46
|
)
|
|
|
-
|
|
|
|
(87
|
)
|
|
|
(133
|
)
|
|
|
-
|
|
Group
|
|
|
18,418
|
|
|
|
2,135
|
|
|
|
20,553
|
|
|
|
59
|
|
|
|
815
|
|
|
|
21,427
|
|
|
|
7,023
|
|
|
|
Service revenue
|
|
|
Equipment revenue
|
|
|
Revenue from contracts with customers
|
|
|
Interest revenue
|
|
|
Other1
|
|
|
Total segment revenue
|
|
|
|
Adjusted EBITDA
|
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
|
€m
|
|
Six months ended 30 September 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
4,961
|
|
|
|
495
|
|
|
|
5,456
|
|
|
|
14
|
|
|
|
120
|
|
|
|
5,590
|
|
|
|
2,352
|
|
Italy
|
|
|
2,424
|
|
|
|
256
|
|
|
|
2,680
|
|
|
|
4
|
|
|
|
25
|
|
|
|
2,709
|
|
|
|
1,006
|
|
UK
|
|
|
2,451
|
|
|
|
598
|
|
|
|
3,049
|
|
|
|
34
|
|
|
|
68
|
|
|
|
3,151
|
|
|
|
658
|
|
Spain
|
|
|
1,966
|
|
|
|
157
|
|
|
|
2,123
|
|
|
|
13
|
|
|
|
25
|
|
|
|
2,161
|
|
|
|
460
|
|
Other Europe
|
|
|
2,392
|
|
|
|
253
|
|
|
|
2,645
|
|
|
|
9
|
|
|
|
36
|
|
|
|
2,690
|
|
|
|
872
|
|
Eliminations
|
|
|
(74
|
)
|
|
|
-
|
|
|
|
(74
|
)
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
(76
|
)
|
|
|
-
|
|
Europe
|
|
|
14,120
|
|
|
|
1,759
|
|
|
|
15,879
|
|
|
|
74
|
|
|
|
272
|
|
|
|
16,225
|
|
|
|
5,348
|
|
Vodacom
|
|
|
2,217
|
|
|
|
416
|
|
|
|
2,633
|
|
|
|
2
|
|
|
|
99
|
|
|
|
2,734
|
|
|
|
1,019
|
|
Other Markets
|
|
|
2,024
|
|
|
|
299
|
|
|
|
2,323
|
|
|
|
2
|
|
|
|
26
|
|
|
|
2,351
|
|
|
|
755
|
|
Common Functions
|
|
|
240
|
|
|
|
24
|
|
|
|
264
|
|
|
|
-
|
|
|
|
523
|
|
|
|
787
|
|
|
|
(17
|
)
|
Eliminations
|
|
|
(57
|
)
|
|
|
-
|
|
|
|
(57
|
)
|
|
|
-
|
|
|
|
(101
|
)
|
|
|
(158
|
)
|
|
|
-
|
|
Group
|
|
|
18,544
|
|
|
|
2,498
|
|
|
|
21,042
|
|
|
|
78
|
|
|
|
819
|
|
|
|
21,939
|
|
|
|
7,105
|
|
Note:
1.
|
Other includes lease revenue.
|
The Group’s measure of segment profit
is adjusted EBITDA which is reported after depreciation on lease-related right of use assets and interest on leases but excluding
depreciation and amortisation, gains/losses on disposal for owned fixed assets, impairment losses, restructuring costs arising
from discrete restructuring plans, the Group’s share of adjusted results in associates and joint ventures and other income
and expense. A reconciliation of adjusted EBITDA to operating profit is shown below. For a reconciliation of operating profit to
profit for the financial period, see the consolidated income statement on page 33.
|
|
Six months ended 30 September
|
|
|
2020
|
|
|
|
2019
|
|
|
|
€m
|
|
|
|
€m
|
|
Adjusted EBITDA
|
|
|
7,023
|
|
|
|
7,105
|
|
Depreciation and amortisation
|
|
|
(4,729
|
)
|
|
|
(4,874
|
)
|
Share of adjusted results in equity accounted associates and joint ventures1
|
|
|
255
|
|
|
|
(550
|
)
|
Adjusted operating profit
|
|
|
2,549
|
|
|
|
1,681
|
|
Restructuring costs
|
|
|
(86
|
)
|
|
|
(163
|
)
|
Amortisation of acquired customer bases and brand intangible assets
|
|
|
(364
|
)
|
|
|
(232
|
)
|
Other income and expense2
|
|
|
1,184
|
|
|
|
(872
|
)
|
Interest on lease liabilities
|
|
|
189
|
|
|
|
163
|
|
Operating profit
|
|
|
3,472
|
|
|
|
577
|
|
Notes:
|
1.
|
Share of results of equity accounted associates and joint ventures presented within the Consolidated
income statement includes €255 million (2019: -€550 million) included within Adjusted operating profit, €nil
(2019: -€33 million) included within Restructuring costs, -€124 million (2019: -€122 million) included within
Amortisation of acquired customer base and brand intangible assets and €129 million (2019: -€1,896 million; principally
related to Vodafone Idea Limited) included within other income and expense.
|
|
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 income and
expense. See Note 9 ‘Investment in associates and joint ventures’. For the six months ended 30 September 2019, the
Group recorded a gain of €1,078 million in relation to the disposal of Vodafone New Zealand, offset by losses incurred in
Vodafone Idea Limited
|
The Group’s non-current assets are
disaggregated as follows:
|
|
30 September
|
|
|
|
31 March
|
|
|
|
2020
|
|
|
|
2020
|
|
|
|
€m
|
|
|
|
€m
|
|
Non-current
assets1
|
|
|
|
|
|
|
|
|
Germany
|
|
|
47,504
|
|
|
|
48,266
|
|
Italy
|
|
|
10,787
|
|
|
|
11,119
|
|
UK
|
|
|
7,215
|
|
|
|
7,790
|
|
Spain
|
|
|
7,051
|
|
|
|
7,229
|
|
Other Europe
|
|
|
9,060
|
|
|
|
9,138
|
|
Europe
|
|
|
81,617
|
|
|
|
83,542
|
|
Vodacom
|
|
|
5,270
|
|
|
|
5,400
|
|
Other Markets
|
|
|
1,309
|
|
|
|
1,561
|
|
Common Functions
|
|
|
2,110
|
|
|
|
2,217
|
|
Group
|
|
|
90,306
|
|
|
|
92,720
|
|
Note:
|
1.
|
Includes goodwill, other intangible assets and property, plant and equipment (including right-of-use
assets).
|
A review for indicators of potential impairment
was performed at 30 September 2020 and 30 September 2019. The methodology adopted for impairment reviews was consistent with that
disclosed on page 149 and pages 159 to 165 of the Group’s annual report for the year ended 31 March 2020.
Management continues to review the impact
of COVID-19. Following analysis of recent business performance and certain changes in expectations on future impacts, management
has made additional adjustments to the five-year business plans used in the Group’s impairment testing. The impairment review
is based on expected cash flows after applying these adjustments.
Impairment testing requires the assessment
of the recoverable amount being the higher of an asset's or cash-generating unit's fair value less costs of disposal and its value
in use. A lack of observable market data on fair values for equivalent assets means that the Group’s valuation approach for
impairment testing focuses primarily on value in use. For a number of reasons, transaction values agreed as part of any business
acquisition or disposal may be higher than the assessed value in use.
Consistent with prior periods, assets are
grouped at the lowest levels for which there are separately identifiable cash flows, known as cash-generating units. Following
the merger of Vodafone’s passive tower infrastructure in Italy with INWIT, management considers Vodafone Italy and Vodafone’s
stake in INWIT to represent two cash-generating units for the purpose of the impairment review as at 30 September 2020. The key
assumptions and sensitivity analysis for Vodafone Italy presented below are prepared on a post-merger basis.
Value in use assumptions
The table below shows key assumptions used
in the value in use calculations at 30 September 2020:
|
|
Assumptions used in value in use calculation
|
|
|
|
Germany
|
|
|
Italy
|
|
|
Spain
|
|
|
Ireland
|
|
|
Romania
|
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
|
Pre-tax risk adjusted discount rate
|
|
|
7.3
|
|
|
|
10.8
|
|
|
|
9.3
|
|
|
|
7.7
|
|
|
|
10.1
|
|
Long-term growth rate
|
|
|
0.5
|
|
|
|
0.5
|
|
|
|
0.5
|
|
|
|
0.5
|
|
|
|
1.0
|
|
Projected adjusted EBITDA1
|
|
|
3.8
|
|
|
|
2.5
|
|
|
|
8.2
|
|
|
|
0.9
|
|
|
|
8.0
|
|
Projected capital expenditure2
|
|
|
20.0 - 20.7
|
|
|
|
12.2 - 14.9
|
|
|
|
16.2 - 18.7
|
|
|
|
13.2 - 15.7
|
|
|
|
13.7 - 16.6
|
|
Sensitivity analysis
The estimated recoverable amounts of the
Group’s operations in Germany, Italy, Spain, Ireland and Romania exceed their carrying values by €7.1 billion, €1.0
billion, €0.2 billion, €0.1 billion and €0.1 billion, respectively. If the assumptions used in the impairment
review were changed to a greater extent than as presented in the following table, the changes would, in isolation, lead to an impairment
loss being recognised for the six months ended 30 September 2020.
|
|
Change required for carrying value to equal recoverable amount
|
|
|
|
Germany
|
|
|
Italy
|
|
|
Spain
|
|
|
Ireland
|
|
|
Romania
|
|
|
|
pps
|
|
|
pps
|
|
|
pps
|
|
|
pps
|
|
|
pps
|
|
Pre-tax risk adjusted discount rate
|
|
|
1.1
|
|
|
|
1.2
|
|
|
|
0.3
|
|
|
|
0.3
|
|
|
|
0.4
|
|
Long-term growth rate
|
|
|
(1.1
|
)
|
|
|
(1.2
|
)
|
|
|
(0.3
|
)
|
|
|
(0.3
|
)
|
|
|
(0.6
|
)
|
Projected adjusted EBITDA1
|
|
|
(3.3
|
)
|
|
|
(1.9
|
)
|
|
|
(0.7
|
)
|
|
|
(0.6
|
)
|
|
|
(1.1
|
)
|
Projected capital expenditure2
|
|
|
13.5
|
|
|
|
4.9
|
|
|
|
1.4
|
|
|
|
1.7
|
|
|
|
1.5
|
|
Notes:
|
1.
|
Projected adjusted EBITDA is expressed as the compound annual growth rates in the initial five
years for all cash-generating units of the plans used for impairment review.
|
|
2.
|
Projected capital expenditure, which excludes licences and spectrum, is expressed as the range
of capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans used for
impairment review.
|
Management considered the following reasonably
possible changes in the key adjusted EBITDA1 and long-term growth rate assumptions, leaving all other assumptions unchanged.
Due to increased uncertainty following the COVID-19 outbreak, management’s range of reasonably possible changes in the key
adjusted EBITDA growth rate assumption is plus or minus 5 percentage points. The sensitivity analysis presented is prepared on
the basis that the reasonably possible change in each key assumption would not have a consequential impact on other assumptions
used in the impairment review. The associated impact on the impairment assessment is presented in the table below.
Management believes that no reasonably possible
or foreseeable change in the pre-tax adjusted discount rate or projected capital expenditure2 would cause the difference
between the carrying value and recoverable amount for any cash-generating unit to be materially different to the base case disclosed
below.
|
|
Recoverable amount less carrying value
|
|
|
|
Germany
|
|
|
Italy
|
|
|
Spain
|
|
|
Ireland
|
|
|
Romania
|
|
|
|
€bn
|
|
|
€bn
|
|
|
€bn
|
|
|
€bn
|
|
|
€bn
|
|
Base case as at 30 September 2020
|
|
|
7.1
|
|
|
|
1.0
|
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
0.1
|
|
Change in projected adjusted EBITDA1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease by 5pps
|
|
|
(3.3
|
)
|
|
|
(1.5
|
)
|
|
|
(1.3
|
)
|
|
|
(0.4
|
)
|
|
|
(0.2
|
)
|
Increase by 5pps
|
|
|
19.4
|
|
|
|
4.0
|
|
|
|
2.0
|
|
|
|
0.7
|
|
|
|
0.3
|
|
Change in long-term growth rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease by 1pps
|
|
|
0.4
|
|
|
|
0.2
|
|
|
|
(0.4
|
)
|
|
|
(0.1
|
)
|
|
|
–
|
|
Increase by 1pps
|
|
|
16.8
|
|
|
|
2.1
|
|
|
|
1.1
|
|
|
|
0.3
|
|
|
|
0.2
|
|
Note:
|
1.
|
Projected adjusted EBITDA is expressed as the compound annual growth rates in the initial five
years for all cash-generating units of the plans used for impairment review.
|
The carrying values for Vodafone UK, Portugal,
Czech Republic and Hungary include goodwill arising from acquisitions and/or the purchase of operating licences or spectrum rights.
The recoverable amounts for these operating companies are also not materially greater than their carrying values and accordingly
are disclosed below.
If the assumptions used in the impairment
review were changed to a greater extent than as presented in the following table, the changes would, in isolation, lead to an impairment
loss being recognized in the period ended 30 September 2020.
|
|
Change required for carrying value to equal recoverable amount
|
|
|
|
UK
|
|
|
Portugal
|
|
|
Czech Republic
|
|
|
Hungary
|
|
|
|
pps
|
|
|
pps
|
|
|
pps
|
|
|
pps
|
|
Pre-tax risk adjusted discount rate
|
|
|
0.5
|
|
|
|
1.3
|
|
|
|
1.6
|
|
|
|
1.2
|
|
Long-term growth rate
|
|
|
(0.5
|
)
|
|
|
(1.3
|
)
|
|
|
(1.6
|
)
|
|
|
(1.4
|
)
|
Projected adjusted EBITDA1
|
|
|
(1.0
|
)
|
|
|
(2.8
|
)
|
|
|
(3.6
|
)
|
|
|
(2.5
|
)
|
Projected capital expenditure2
|
|
|
2.2
|
|
|
|
6.1
|
|
|
|
12.7
|
|
|
|
6.8
|
|
Notes:
|
1.
|
Projected adjusted EBITDA is expressed as the compound annual growth rates in the initial five
years for all cash-generating units of the plans used for impairment review.
|
|
2.
|
Projected capital expenditure, which excludes licences and spectrum, is expressed as capital expenditure
as a percentage of revenue in the initial five years for all cash-generating units of the plans used for impairment review.
|
|
|
Six months ended 30 September
|
|
|
|
2020
|
|
|
2019
|
|
|
|
€m
|
|
|
€m
|
|
United Kingdom corporation tax (expense)/income1
|
|
|
|
|
|
|
|
|
Current period
|
|
|
(17
|
)
|
|
|
(14
|
)
|
Adjustments in respect of prior periods
|
|
|
4
|
|
|
|
(10
|
)
|
Overseas current tax (expense)/income
|
|
|
|
|
|
|
|
|
Current period
|
|
|
(470
|
)
|
|
|
(474
|
)
|
Adjustments in respect of prior periods
|
|
|
93
|
|
|
|
14
|
|
Total current tax expense
|
|
|
(390
|
)
|
|
|
(484
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax on origination and reversal of temporary differences
|
|
|
|
|
|
|
|
|
United Kingdom deferred tax
|
|
|
83
|
|
|
|
144
|
|
Overseas deferred tax
|
|
|
(183
|
)
|
|
|
(1,040
|
)
|
Total deferred tax expense
|
|
|
(100
|
)
|
|
|
(896
|
)
|
Total income tax expense
|
|
|
(490
|
)
|
|
|
(1,380
|
)
|
Note:
|
1.
|
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 2020 includes
deferred tax on the use of Luxembourg losses of €188 million (2019: €200 million). The Group expects to use its losses
in Luxembourg over a period of between 40 and 45 years and the losses in Germany over a period of between 9 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 2020.
Overseas deferred tax expense for the six
months ended 30 September 2019 includes a reduction in our deferred tax assets in Luxembourg of €868 million following a
reduction in the Luxembourg corporate tax rate.
5
|
Assets and liabilities held for sale
|
Assets and liabilities held for sale at
30 September 2020 comprise:
|
·
|
The Group’s 55% interest in Vodafone
Egypt. On 29 January 2020, the Group signed a Memorandum of Understanding (‘MoU’) with Saudi Telecom Company (‘stc’)
for the potential sale of Vodafone Egypt. Despite the expiry of the MoU, Vodafone expects to finalise the transaction in the near
future; and
|
|
·
|
A 13.8% interest from our 42.0% stake in
Indus Towers. Further details are provided in Note 13.
|
Assets and liabilities held for sale at
31 March 2020 comprised: (i) a 24.95% interest in Vodafone Hutchison Australia; and (ii) the Group’s 55% interest in Vodafone
Egypt.
The relevant assets and liabilities are
detailed in the table below.
|
|
30 September
|
|
|
31 March
|
|
|
|
2020
|
|
|
2020
|
|
|
|
€m
|
|
|
€m
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
100
|
|
|
|
107
|
|
Other intangible assets
|
|
|
367
|
|
|
|
379
|
|
Property, plant and equipment
|
|
|
969
|
|
|
|
916
|
|
Investments in associates and joint ventures
|
|
|
299
|
|
|
|
(412
|
)
|
Trade and other receivables
|
|
|
12
|
|
|
|
15
|
|
|
|
|
1,747
|
|
|
|
1,005
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Inventory
|
|
|
14
|
|
|
|
13
|
|
Taxation recoverable
|
|
|
3
|
|
|
|
3
|
|
Trade and other receivables
|
|
|
274
|
|
|
|
313
|
|
Cash and cash equivalents
|
|
|
274
|
|
|
|
273
|
|
|
|
|
565
|
|
|
|
602
|
|
Total assets held for sale
|
|
|
2,312
|
|
|
|
1,607
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
Long-term borrowings
|
|
|
52
|
|
|
|
57
|
|
Deferred tax liabilities
|
|
|
83
|
|
|
|
60
|
|
Provisions
|
|
|
3
|
|
|
|
5
|
|
|
|
|
138
|
|
|
|
122
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
|
175
|
|
|
|
150
|
|
Taxation liabilities
|
|
|
52
|
|
|
|
116
|
|
Provisions
|
|
|
36
|
|
|
|
29
|
|
Trade and other payables
|
|
|
567
|
|
|
|
634
|
|
|
|
|
830
|
|
|
|
929
|
|
Total liabilities held for sale
|
|
|
968
|
|
|
|
1,051
|
|
|
|
Six months ended 30
September
|
|
|
|
2020
|
|
|
2019
|
|
|
|
Millions
|
|
|
Millions
|
|
Weighted average number of shares for basic earnings per share
|
|
|
29,535
|
|
|
|
29,410
|
|
Effect of dilutive potential shares: restricted shares and share options
|
|
|
75
|
|
|
|
–
|
|
Weighted average number of shares for diluted earnings per share
|
|
|
29,610
|
|
|
|
29,410
|
|
Earnings per share attributable to owners of the parent during the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended 30
September
|
|
|
|
2020
|
|
|
2019
|
|
|
|
€m
|
|
|
€m
|
|
Profit/(loss) for basic and diluted earnings per share
|
|
|
1,314
|
|
|
|
(2,128
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
eurocents
|
|
|
|
eurocents
|
|
Basic profit/(loss) per share
|
|
|
4.45
|
|
|
|
(7.24
|
)
|
Diluted profit/(loss) per share
|
|
|
4.44
|
|
|
|
(7.24
|
)
|
|
|
Six months ended 30
September
|
|
|
|
2020
|
|
|
2019
|
|
|
|
€m
|
|
|
€m
|
|
Declared during the financial period:
|
|
|
|
|
|
|
Final dividend for
the year ended 31 March 2020: 4.50 eurocents per share (2019: 4.16 eurocents per share)
|
|
|
1,205
|
|
|
|
1,112
|
|
Proposed after the end of the reporting period and not recognised as a liability:
|
|
|
|
|
|
|
|
|
Interim dividend for the year
ending 31 March 2021: 4.50 eurocents per share (2020: 4.50 eurocents per share)
|
|
|
1,207
|
|
|
|
1,205
|
|
|
8
|
Investment in subsidiaries
|
This note provides details of the acquisitions
and disposals during the period as well as those in the prior period.
Acquisitions
The aggregate cash consideration in respect
of purchases in subsidiaries, net of cash acquired, is as follows:
|
|
Six months ended 30
September
|
|
|
|
2020
|
|
|
2019
|
|
|
|
€m
|
|
|
€m
|
|
Cash consideration paid
|
|
|
|
|
|
|
|
|
Other acquisitions
|
|
|
136
|
|
|
|
29
|
|
European Liberty Global assets
|
|
|
–
|
|
|
|
10,295
|
|
Net cash acquired
|
|
|
–
|
|
|
|
(122
|
)
|
|
|
|
136
|
|
|
|
10,202
|
|
Other acquisitions
In the current period, the Group paid €136
million in respect of acquisitions completed in prior periods.
During the six months ended 30 September
2019, the Group completed certain acquisitions for an aggregate consideration of €185 million, of which €29 million
was paid in cash in that period. The aggregate fair values of goodwill, identifiable assets and liabilities of the acquired operations
were €182 million, €50 million and €47 million, respectively.
Acquisition of European Liberty
Global assets
In the comparative period, on 31 July 2019,
the Group completed the acquisition of a 100% interest in Unitymedia GmBH (‘Unitymedia’) and Liberty Global’s
operations (excluding its ‘Direct Home’ business) in the Czech Republic (‘UPC Czech’), Hungary (‘UPC
Hungary’) and Romania (‘UPC Romania’) for an aggregate net cash consideration of €10,295 million. The primary
reason for acquiring the business was to create a converged national provider of digital infrastructure in Germany, together with
creating converged communications operators in the Czech Republic, Hungary and Romania.
The purchase price allocation is set out
in the table below.
|
|
31 March 2020
|
|
|
|
Fair value
|
|
|
|
€m
|
|
Net assets acquired
|
|
|
|
|
Identifiable intangible assets1
|
|
|
5,818
|
|
Property, plant and equipment2
|
|
|
4,737
|
|
Inventory
|
|
|
2
|
|
Trade and other receivables
|
|
|
856
|
|
Other investments
|
|
|
2
|
|
Cash and cash equivalents
|
|
|
109
|
|
Current and deferred taxation
|
|
|
(1,904
|
)
|
Short and long-term borrowings
|
|
|
(9,527
|
)
|
Trade and other payables
|
|
|
(1,066
|
)
|
Post employment benefits
|
|
|
(40
|
)
|
Provisions
|
|
|
(178
|
)
|
Net identifiable liabilities acquired
|
|
|
(1,191
|
)
|
Goodwill3
|
|
|
11,504
|
|
Total
consideration4
|
|
|
10,313
|
|
Notes:
|
1.
|
Identifiable intangible assets of €5,818 million consisted of customer relationships of €5,569
million, brand of €71 million and software of €178 million.
|
|
2.
|
Includes Right-of-use assets.
|
|
3.
|
The goodwill is attributable to future profits expected to be generated from new customers and
the synergies expected to arise after the Group’s acquisition of the businesses.
|
|
4.
|
Transaction costs of €58 million were charged in the Group’s consolidated income statement
in the six months ended 30 September 2019.
|
From the date of acquisition to 30 September
2019, the acquired entities contributed €491 million of revenue and a loss of €11 million towards the loss before tax
of the Group. If the acquisition had taken place at the beginning of the prior financial period, revenue would have been €22,940
million and the loss before tax would have been €481 million in the comparative period.
Disposals
The difference between the carrying value
of the net assets disposed of and the fair value of consideration received is recorded as a gain or loss on disposal. Foreign exchange
translation gains or losses relating to subsidiaries that the Group has disposed of, and that have previously been recorded in
other comprehensive income or expense, are also recognised as part of the gain or loss on disposal.
Vodafone New Zealand
In the comparative period, on 31 July 2019,
the Group sold its 100% interest in Vodafone New Zealand Limited (‘Vodafone New Zealand’) for consideration of NZD
$3.4 billion (€2.0 billion). The table below summarises the net assets disposed and the resulting net gain on disposal of
€1.1 billion.
|
|
31 March 2020
|
|
|
|
€m
|
|
Goodwill
|
|
|
(243
|
)
|
Other intangible assets
|
|
|
(155
|
)
|
Property, plant and equipment1
|
|
|
(783
|
)
|
Inventory
|
|
|
(29
|
)
|
Trade and other receivables
|
|
|
(244
|
)
|
Investments in associates and joint ventures
|
|
|
(4
|
)
|
Current and deferred taxation
|
|
|
(11
|
)
|
Short and long-term borrowings
|
|
|
215
|
|
Trade and other payables
|
|
|
261
|
|
Provisions
|
|
|
35
|
|
Net assets disposed
|
|
|
(958
|
)
|
Net cash proceeds arising from the transaction
|
|
|
2,023
|
|
Other effects2
|
|
|
13
|
|
Net
gain on transaction3
|
|
|
1,078
|
|
Notes:
|
1.
|
Includes Right-of-use assets.
|
|
2.
|
Includes €59 million of recycled foreign exchange losses.
|
|
3.
|
Recorded within Other income in the Consolidated income statement.
|
9
|
Investment in associates and joint ventures
|
|
|
30 September
|
|
|
31 March
|
|
|
|
2020
|
|
|
2020
|
|
|
|
€m
|
|
|
€m
|
|
VodafoneZiggo Group Holding B.V.
|
|
|
1,457
|
|
|
|
1,630
|
|
INWIT S.p.A.
|
|
|
2,914
|
|
|
|
3,345
|
|
Indus Towers Limited
|
|
|
620
|
|
|
|
766
|
|
TPG Telecom Limited / Vodafone Hutchison Australia Pty Limited
|
|
|
22
|
|
|
|
(466
|
)
|
Other
|
|
|
40
|
|
|
|
48
|
|
Investment
in joint ventures1,2
|
|
|
5,053
|
|
|
|
5,323
|
|
Investment in associates
|
|
|
375
|
|
|
|
508
|
|
|
|
|
5,428
|
|
|
|
5,831
|
|
|
1.
|
Includes the financing structure agreed at the time of the merger.
|
|
2.
|
In the year ended 31 March 2020, the Group’s interest in Vodafone Idea Limited was reduced
to €nil.
|
TPG Telecom Limited / Vodafone Hutchison
Australia Pty Limited
On 13 July 2020, Vodafone announced that
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, with the remaining 49.9% listed as free float on the ASX.
The Group recorded a gain of €1,043
million in relation to the merger, which is reported in Other income within the Consolidated income statement.
INWIT S.p.A.
On 23 April 2020, the Group completed the
sale of 41.7 million shares of Infrastrutture Wireless Italiane S.p.A. (‘INWIT’), equal to approximately 4.3% of INWIT's
share capital, for €400 million. A gain of €13 million in relation to the disposal has been recorded within Other income
and expense in the Consolidated Income Statement. The Group continues to hold 33.2% of INWIT’s equity shares and INWIT continues
to be a joint venture of the Group.
Indus Towers Limited
On 1 September 2020, the Group announced
that it had agreed to proceed with the merger of Indus Towers Limited (‘Indus’) and Bharti Infratel Limited (‘Bharti
Infratel’, together the ‘Combined Company’). As a result of the merger, subject to any agreed closing adjustments,
the Group expects to receive a 28.2% interest in the Combined Company, which will be accounted for using the equity method. Further
details are provided in Note 13.
|
10
|
Reconciliation of net cash flow from operating activities
|
|
|
Six months ended 30
September
|
|
|
|
2020
|
|
|
2019
|
|
|
|
€m
|
|
|
€m
|
|
Profit/(loss) for the financial period
|
|
|
1,555
|
|
|
|
(1,891
|
)
|
Investment income
|
|
|
(183
|
)
|
|
|
(281
|
)
|
Financing costs
|
|
|
1,610
|
|
|
|
1,369
|
|
Income tax expense
|
|
|
490
|
|
|
|
1,380
|
|
Operating profit
|
|
|
3,472
|
|
|
|
577
|
|
Adjustments for:
|
|
|
|
|
|
|
|
|
Share-based payments and other non-cash charges
|
|
|
86
|
|
|
|
78
|
|
Depreciation and amortisation
|
|
|
6,869
|
|
|
|
6,782
|
|
Loss on disposal of property, plant and equipment and intangible assets
|
|
|
14
|
|
|
|
24
|
|
Share of result of equity accounted associates and joint ventures
|
|
|
(260
|
)
|
|
|
2,601
|
|
Other income
|
|
|
(1,055
|
)
|
|
|
(1,024
|
)
|
Increase in inventory
|
|
|
(31
|
)
|
|
|
(6
|
)
|
Increase in trade and other receivables
|
|
|
(15
|
)
|
|
|
(1,069
|
)
|
Decrease in trade and other payables
|
|
|
(2,538
|
)
|
|
|
(1,341
|
)
|
Cash generated by operations
|
|
|
6,542
|
|
|
|
6,622
|
|
Taxation
|
|
|
(533
|
)
|
|
|
(483
|
)
|
Net cash flow from operating activities
|
|
|
6,009
|
|
|
|
6,139
|
|
|
11
|
Related party transactions
|
Transactions with joint arrangements
and associates
Related party transactions with the Group’s
joint arrangements 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 arrangements. 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
|
|
|
|
2020
|
|
|
2019
|
|
|
|
€m
|
|
|
€m
|
|
Sales of goods and services to associates
|
|
|
7
|
|
|
|
12
|
|
Purchase of goods and services from associates
|
|
|
3
|
|
|
|
-
|
|
Sales of goods and services to joint arrangements
|
|
|
100
|
|
|
|
99
|
|
Purchase of goods and services from joint arrangements
|
|
|
90
|
|
|
|
88
|
|
Interest income receivable from joint arrangements1
|
|
|
29
|
|
|
|
45
|
|
Interest expense payable to joint arrangements2
|
|
|
29
|
|
|
|
-
|
|
|
|
30 September
|
|
|
31 March
|
|
|
|
2020
|
|
|
2020
|
|
|
|
€m
|
|
|
€m
|
|
Trade balances owed:
|
|
|
|
|
|
|
|
|
by associates
|
|
|
3
|
|
|
|
4
|
|
to associates
|
|
|
3
|
|
|
|
4
|
|
by joint arrangements
|
|
|
94
|
|
|
|
157
|
|
to joint arrangements
|
|
|
23
|
|
|
|
37
|
|
Other balances owed by joint arrangements1
|
|
|
894
|
|
|
|
1,083
|
|
Other balances owed to joint arrangements2
|
|
|
1,673
|
|
|
|
2,017
|
|
|
1.
|
Amounts arise primarily through VodafoneZiggo, TPG Telecom Limited and INWIT S.p.A. Interest is
charged in line with market rates.
|
|
2.
|
Amounts for the period ended 30 September 2020 and the year ended 31 March 2020 are primarily in
relation to leases of tower space from INWIT S.p.A.
|
In the six months ended 30 September 2020
the Group made contributions to defined benefit pension schemes of €99 million (2019: €11 million). In addition, €1.0
million of dividends were paid to Board and Executive Committee members (2019: €0.7 million). Dividends received from associates
and joint ventures are disclosed in the consolidated statement of cash flows.
12
|
Fair value of financial instruments
|
The table below sets out the financial instruments
held at fair value by the Group.
|
|
30 September
|
|
|
31 March
|
|
|
|
2020
|
|
|
2020
|
|
|
|
€m
|
|
|
€m
|
|
Financial assets at fair value:
|
|
|
|
|
|
|
|
|
Money market funds (included within Cash and cash equivalents)1
|
|
|
4,735
|
|
|
|
9,135
|
|
Debt and equity securities (included within Other investments)2
|
|
|
6,009
|
|
|
|
5,226
|
|
Derivative financial instruments (included within Trade and other receivables)2
|
|
|
4,815
|
|
|
|
9,176
|
|
Trade receivables at fair value through Other comprehensive income (included within Trade and other receivables)2
|
|
|
1,030
|
|
|
|
817
|
|
|
|
|
16,589
|
|
|
|
24,354
|
|
Financial liabilities at fair value:
|
|
|
|
|
|
|
|
|
Derivative financial instruments (included within Trade and other payables)2
|
|
|
5,444
|
|
|
|
4,767
|
|
|
|
|
5,444
|
|
|
|
4,767
|
|
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 €3,411 million (31 March 2020: €2,698 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 approximate to fair value with the exception of long-term
bonds with a carrying value of €47,204 million (31 March 2020: €47,500 million) and a fair value of €51,865
million (31 March 2020: €48,216 million). Fair value is based on Level 1 of the fair value hierarchy using quoted
market prices.
13
|
Commitments, contingent liabilities and legal proceedings
|
There have been no material changes to the
Group’s commitments, contingent liabilities or legal proceedings during the period, except as disclosed below.
Vodafone Idea
As part of the agreement to merge Vodafone
India and Idea Cellular, the parties agreed a mechanism for payments between the Group and Vodafone Idea Limited (‘VIL’)
pursuant to the crystallisation of certain identified contingent liabilities in relation to legal, regulatory, tax and other matters,
including the AGR case, and refunds relating to Vodafone India and Idea Cellular.
Cash payments or cash receipts relating
to the aforementioned matters must have been made or received by VIL before any amount becomes due from or owed to the Group. Any
future payments by the Group to VIL as a result of this agreement would only be made after satisfaction of this and other contractual
conditions. The Group’s potential exposure under this mechanism is capped at INR 84 billion (€973 million).
Having considered the payments made and
refunds received by VIL in relation to certain contingent liabilities relating to Vodafone India and Idea Cellular, including those
relating to the AGR case, and the significant uncertainties in relation to VIL’s ability to settle all liabilities relating
to the AGR judgement, the Group assessed a cash outflow of €235 million under the agreement to be probable at 31 March 2020.
This amount was cash settled in the six months ended 30 September 2020. No further case payments are considered probable at 30
September 2020.
Indus Towers merger
Under the terms of the agreement to merge
Indus and Bharti Infratel into a ‘Combined Company’, and, save for the prepayment below, subject to the initial dividend
of INR 48 billion being paid by the Combined Company to its shareholders within 3 months of completion, a security package will
be provided for the benefit of the Combined Company which can be invoked in the event that Vodafone Idea Limited (‘VIL’)
is unable to satisfy certain payment obligations under its Master Services
Agreements with the Combined Company (the ‘MSAs’). The security package includes:
|
·
|
A prepayment in cash of INR 24 billion (€277 million) to be made at completion of the transaction
by Vodafone Idea to the Combined Company in respect of its payment obligations that are undisputed, due and payable under the MSAs
after the merger closing;
|
|
·
|
A primary pledge over 190.7m shares owned by
Vodafone in the Combined Company with a value of INR 33 billion1 (€386 million); and
|
|
·
|
A secondary pledge over shares owned by Vodafone in the Combined Company (ranking behind
Vodafone's existing lenders for the €1.3 billion loan (‘the Loan’) utilised to fund Vodafone's contribution to
the Vodafone Idea rights issue in 2019) with a maximum liability cap of INR 42.5 billion (€491 million).
|
In the event of non-payment of relevant
MSA obligations by VIL and once the prepayment amount is exhausted in full, the Combined Company will have recourse to the primary
pledge shares and, after repayment of the Loan, any secondary pledged shares, up to the value of the liability cap. VIL’s
ability to make ongoing MSA payments to the Combined Company depends on a number of factors including its ability to raise additional
funding.
1 As valued at 30 September
2020.
Indian tax cases
In August 2007 and September 2007, Vodafone
India Limited (‘Vodafone India’) and Vodafone International Holdings BV (‘VIHBV’) respectively received
notices from the Indian tax authority alleging potential liability in connection with an alleged failure by VIHBV to deduct withholding
tax from consideration paid to the Hutchison Telecommunications International Limited group (‘HTIL’) in respect of
HTIL’s gain on its disposal to VIHBV of its interests in a wholly-owned Cayman Island incorporated subsidiary that indirectly
held interests in Vodafone India. Following approximately five years of litigation in the Indian courts in which VIHBV sought to
set aside the tax demand issued by the Indian tax authority, in January 2012 the Supreme Court of India handed down its judgement,
holding that VIHBV’s interpretation of the Income Tax Act 1961 was correct, that the HTIL transaction in 2007 was not taxable
in India, and that consequently, VIHBV had no obligation to withhold tax from consideration paid to HTIL in respect of the transaction.
The Supreme Court of India quashed the relevant notices and demands issued to VIHBV in respect of withholding tax and interest.
On 28 May 2012 the Finance Act 2012 became
law. The Finance Act 2012, 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. VIHBV received a letter on 3 January 2013 from the Indian tax authority reminding it of the tax demand
raised prior to the Supreme Court of India’s judgement and purporting to update 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 10 January 2014, VIHBV served an amended
trigger notice on the Indian Government under the Netherlands-India Bilateral Investment Treaty (‘Dutch BIT’), supplementing
a trigger notice filed on 17 April 2012, immediately prior to the Finance Act 2012 becoming effective, to add claims relating to
an attempt by the Indian Government to tax aspects of the transaction with HTIL under transfer pricing rules. A trigger notice
announces a party’s intention to submit a claim to arbitration and triggers a cooling off period during which both parties
may seek to resolve the dispute amicably. Notwithstanding their attempts, the parties were unable to amicably resolve the dispute
within the cooling off period stipulated in the Dutch BIT. On 17 April 2014, VIHBV served its notice of arbitration under the Dutch
BIT, formally commencing the Dutch BIT arbitration proceedings. In June 2016, the tribunal was fully constituted with Sir Franklin
Berman KCMG QC appointed as presiding arbitrator. The Indian Government raised objections to the application of the treaty to VIHBV’s
claims and to the jurisdiction of the tribunal under the Dutch BIT. On 19 June 2017, the tribunal decided to try both these jurisdictional
objections along with the merits of VIHBV’s claim in February 2019. Further attempts by the Indian Government to have the
jurisdiction arguments heard separately also failed. VIHBV filed its response to India’s defence in July 2018 and India responded
in December 2018. The arbitration hearing took place in February 2019. The tribunal issued the award on 25 September 2020 and unanimously
ruled in Vodafone’s favour. The Indian Government has three months to decide whether to apply to the Singapore court to set
aside the award.
Separately, on 15 June 2015, Vodafone Group
Plc and Vodafone Consolidated Holdings Limited served a trigger notice on 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. On 24
January 2017, Vodafone Group Plc and Vodafone Consolidated Holdings Limited served a Notice of Arbitration on the Indian Government
formally commencing the arbitration.
The Indian Government considers the arbitration
under the UK BIT to be an abuse of process but this is strongly denied by Vodafone. On 22 August 2017, the Indian Government obtained
an injunction from the Delhi High Court preventing Vodafone from progressing the UK BIT arbitration. Vodafone applied to dismiss
it. On 26 October 2017, the Delhi High Court varied its order to permit Vodafone to participate in the formation of the UK BIT
tribunal. The UK BIT tribunal now consists of Marcelo Kohen, an Argentinian national and professor of international law in Geneva
(appointed by India), Neil Kaplan, a British national (appointed by Vodafone Group Plc) and Professor Campbell McLachlan QC, a
New Zealand national (appointed by the parties as presiding arbitrator). On 7 May 2018, the Delhi High Court dismissed the injunction.
The Indian Government appealed the decision and hearings took place from 2018 to 2020, with frequent adjournments. In the meantime,
Vodafone has undertaken to take no steps advancing the UK BIT pending resolution of the Indian Government’s appeal. The Delhi
High Court will decide how to deal with these proceedings in light of the Government’s intentions concerning any application
to set aside the Dutch BIT in Singapore. Vodafone will seek to maintain the UK BIT pending expiry of the three month period for
the India Government to make that application.
Indian regulatory cases
Adjusted Gross Revenue (‘AGR’)
dispute before the Supreme Court of India: Union of India v Association of Unified Telecom Service Providers of India
The Department of Telecommunications (‘DoT’)
has been in dispute with telecom service providers in India for over a decade concerning the correct interpretation of licence
provisions for fees based on AGR, a concept that is used in the calculation of licence and other fees payable by telecom service
providers. On an appeal to the Supreme Court from a decision of the Telecommunications Dispute Settlement Appellate Tribunal (‘TDSAT’)
substantially upholding the telecom service providers’ interpretation of AGR, the Supreme Court on 24 October 2019 held against
the telecom service providers, including VIL. The Supreme Court’s ruling in favour of the DoT rendered the telecom service
providers, including VIL, liable for principal, interest, penalties and interest on penalties on demands of the DoT in relation
to licence fees. The DoT demands became due and payable within three months of the Supreme Court judgement.
In November 2019, the DoT issued an order
for the AGR judgement debt to be determined through self-assessment and paid on or before 23 January 2020. VIL and other operators
filed review petitions against the judgement, which were heard and dismissed on 16 January 2020. On 23 January 2020, the DoT announced
that it would not take coercive action against telecom service providers which have not repaid their respective AGR judgement debts.
Consequently, VIL and others did not pay any amount to the DoT. On 14 February 2020, after hearing applications from VIL and other
operators, the Supreme Court ordered the DoT to withdraw its non-coercive order as well as requiring all Directors of VIL and other
relevant operators to show cause as to why contempt proceedings should not be brought against them. On 17 February, 20 February,
16 March and 16 July 2020, VIL made payments totalling INR 78.5 billion (€0.9 billion) to the DoT. In September 2020, the
Supreme Court directed that telecom operators make payment of 10% of the total dues by 31 March 2021 and thereafter repay the balance,
along with 8% interest, in 10 annual instalments commencing from 1 April 2021 to 31 March 2031, payable by 31 March of every succeeding
financial year.
Based on submissions of the DoT in the Supreme
Court proceedings (which the Group is unable to confirm as to their accuracy), Vodafone Idea reported a total estimated liability
of INR 654 billion (€7.6 billion) excluding repayments and including interest, penalty and interest on penalty up to 30 June
2020.
One time spectrum charges: Vodafone
India v Union of India
The Indian Government sought to impose one-time
spectrum charges of approximately €400 million on certain operating subsidiaries of Vodafone India. Vodafone India filed
a petition before the TDSAT challenging the one-time spectrum charges on the basis that they are illegal, violate Vodafone India’s
licence terms and are arbitrary, unreasonable and discriminatory. The tribunal stayed enforcement of the Government’s spectrum
demand pending resolution of the dispute. In July 2019, the TDSAT upheld the demand, in part, and in October 2019 VIL filed an
appeal which was heard in the Supreme Court in March 2020. The Court rejected VIL’s appeal, upholding the TDSAT order. The
Government has also filed an appeal along with an application to stay the TDSAT order. The hearing took place in early November
2020 in which the Supreme Court, while issuing notice to Vodafone India on Government’s appeal and stay application, has
granted it two weeks time to submit its reply. The next hearing is expected to take place in the end of November 2020.
Other Indian regulatory cases
Litigation remains pending in the TDSAT,
High Courts and the Supreme Court of India in relation to a number of significant regulatory issues including mobile termination
rates, spectrum and licence fees, licence extension and 3G intracircle roaming.
Other cases in the Group
Patent litigation - UK
On 22 February 2019, IPCom sued Vodafone
Group Plc and Vodafone Limited for alleged patent 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 were 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 of the infringement and validity
issues. The trial on the first patent was in November 2019 and removed the risk of injunction so IPCom gave up the trial on the
second patent listed for May 2020. Both IPCom and Vodafone are appealing certain aspects of the judgement from the first trial.
The appeal hearing is listed for January 2021.
Italy: Iliad v Vodafone Italy
In August 2019, Iliad filed a claim for
€500 million against Vodafone Italy in the Civil Court of Milan. The claim alleges anti-competitive behaviour in relation
to portability and certain advertising campaigns by Vodafone Italy. Preliminary hearings have taken place, including one at which
the Court rejected Iliad’s application for a cease and desist order against alleged misleading advertising by Vodafone. The
main hearing on the merits of the claim is scheduled for 15 December 2020.
Greece: Papistas Holdings SA, Mobile
Trade Stores (formerly Papistas SA) and Athanasios and Loukia Papistas v Vodafone Greece, Vodafone Group Plc and certain Directors
and Officers of Vodafone
In December 2013, Mr. and Mrs. Papistas,
and companies owned or controlled by them, brought three claims in the Greek court in Athens against Vodafone Greece, Vodafone
Group Plc and certain Directors and officers of Vodafone Greece and Vodafone Group Plc for purported damage caused by the alleged
abuse of dominance and wrongful termination of a franchise arrangement with a Papistas company. Approximately €1.0 billion
of the claim was directed exclusively at two former Directors of Vodafone. The balance of the claim (approximately €285.5
million) was sought from Vodafone Greece and Vodafone Group Plc on a joint and several basis. Both cases were adjourned to a hearing
in September 2018, at which the plaintiffs withdrew all of their claims against Vodafone and its Directors. On 31 December 2018,
the plaintiff filed a new, much lower value claim against Vodafone Greece, removing the individual Directors and Vodafone Group
Plc as defendants. On 5 April 2019, Mr Papistas withdrew this latest lawsuit, but in October 2019 filed several new cases against
Vodafone Greece with a total value of approximately €330 million. Vodafone filed a counter claim and all claims were heard
in February 2020. Mr Papistas’ claims have been rejected by the Court as Mr Papistas did not make the stamp duty payments
required to have the case considered. Vodafone Greece’s counter claim was also rejected. Mr Papistas and Vodafone Greece
have each respectively filed appeals and the hearing on these appeals will take place in October 2021.
Netherlands: Consumer credit/handset
case
In February 2016, the Dutch Supreme Court
ruled on the Dutch implementation of the EU Consumer Credit Directive and “instalment sales agreements” (a Dutch law
concept), holding that bundled “all-in” mobile subscription agreements (i.e. device along with mobile services) are
considered consumer credit agreements. As a result, Vodafone Ziggo, together with the industry, has been working with the Ministry
of Finance and the Competition Authority on compliance requirements going forward for such offers. The ruling also has retrospective
effect. A number of small claims were submitted by individual customers in the small claims courts. On 15 February 2018, Consumentenbond
(a claims agency) initiated collective claim proceedings against VodafoneZiggo, Tele2, T-Mobile and now KPN. A settlement agreement
was signed with the claims agency and the Dutch Consumer Federation in October 2020. As a result, the collective claim proceedings
against VodafoneZiggo have been withdrawn.
UK: Phones 4U in Administration v Vodafone
Limited and Vodafone Group Plc and Others
In December 2018 the administrators of former
UK indirect seller Phones 4U sued the three main UK mobile network operators (MNOs), including Vodafone, and their parent companies.
The administrators allege a conspiracy between the MNOs to pull their business from Phones 4U thereby causing its collapse. The
value of the claim is not pleaded but we understand it to be the total value of the business, possibly around £1 billion.
Vodafone’s alleged share of the liability is also not pleaded. Vodafone filed its defence on 18 April 2019, along with several
other defendants, and the Administrators filed their Replies in October 2019. Case management hearings took place in March and
July 2020. Vodafone and others are appealing one aspect of the judge’s Order regarding the scope of disclosure. The Court
of Appeal hearing is in January 2021. The judge has also ordered that there should be a split trial between liability and damages.
The first trial will start in May 2022.
On 4 November 2020, Vodafone Egypt, which
is classified as held for sale by the Group, acquired 40 MHz of 2.6 GHz TDD spectrum from the National Telecommunications Regulatory
Authority. The acquired spectrum has a 10 year licence term through to 2030. Payments will be phased over 3 years, with an initial
payment of $270 million (€230 million) upon receipt of the spectrum and two further payments of $135 million (€115
million) due in 2021 and 2022 respectively.
Introduction
We have been engaged by the Company to review
the unaudited condensed consolidated financial statements in the half yearly financial report for the six months ended 30 September
2020 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 14. 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.
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.
Directors' Responsibilities
The half yearly financial report is the
responsibility of, and has been approved by, 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.
As disclosed in note 1, the annual financial
statements of the group are prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the International
Accounting Standards Board and as adopted by the European Union. The unaudited condensed consolidated financial statements included
in this half yearly financial report have been prepared in accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the
Company a conclusion on the unaudited condensed consolidated financial statements in the half yearly financial report based on
our review.
Scope of Review
We conducted our review in accordance with
International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. 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.
Conclusion
Based on our review, nothing has come to
our attention that causes us to believe that the unaudited condensed consolidated financial statements in the half yearly financial
report for the six months ended 30 September 2020 is not prepared, in all material respects, in accordance with International Accounting
Standard 34 as issued by the International Accounting Standards Board and as adopted by the European Union and the Disclosure Guidance
and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
16 November 2020
Notes:
|
1.
|
The maintenance and integrity of the Vodafone Group Plc website is the responsibility of the directors;
the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility
for any changes that may have occurred to the financial information since it was initially presented on the website.
|
|
2.
|
Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
|
Alternative performance measures
In the discussion of the Group’s reported
operating results, alternative performance 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
an expressly permitted GAAP measure. Such measures should not be viewed in isolation or as an alternative to the equivalent GAAP
measure.
Service revenue
Service revenue comprises all revenue related
to the provision of ongoing services including, but not limited to, monthly access charges, airtime usage, roaming, incoming and
outgoing network usage by non-Vodafone customers and interconnect charges for incoming calls. We believe that it is both useful
and necessary to report this measure for the following reasons:
|
·
|
It is used for internal performance reporting;
|
|
·
|
It is used in setting director and management
remuneration; and
|
|
·
|
It is useful in connection with discussion
with the investment community.
|
Adjusted EBITDA
We use adjusted EBITDA, in conjunction with
other GAAP and non-GAAP financial measures such as adjusted EBIT, adjusted operating profit, operating profit and net profit, to
assess our operating performance. We believe that adjusted EBITDA is an operating performance measure, not a liquidity measure,
as it includes non-cash changes in working capital and is reviewed by the Chief Executive to assess internal performance in conjunction
with adjusted EBITDA margin, which is an alternative sales margin figure. We believe it is both useful and necessary to report
adjusted EBITDA as a performance measure as it enhances the comparability of profit across segments.
Because adjusted EBITDA does not take into
account certain items that affect operations and performance, adjusted EBITDA has inherent limitations as a performance measure.
To compensate for these limitations, we analyse adjusted EBITDA in conjunction with other GAAP and non-GAAP operating performance
measures. Adjusted EBITDA should not be considered in isolation or as a substitute for a GAAP measure of operating performance.
Adjusted EBITDA is operating profit after
depreciation on lease-related right of use assets and interest on leases but excluding depreciation, amortisation and gains/losses
on disposal for owned fixed assets and excluding share of results in associates and joint ventures, impairment losses, restructuring
costs arising from discrete restructuring plans, other operating income and expense and significant items that are not considered
by management to be reflective of the underlying performance of the Group.
Group adjusted EBIT, adjusted operating
profit, adjusted net financing costs and adjusted earnings per share
Group adjusted EBIT and adjusted operating
profit exclude impairment losses, restructuring costs arising from discrete restructuring plans, amortisation of customer bases
and brand intangible assets, other operating income and expense and other significant one-off items. Adjusted EBIT also excludes
the share of results in associates and joint ventures. Adjusted net financing costs exclude mark to market and foreign exchange
gains/losses and interest on lease liabilities. Adjusted earnings per share reflects the exclusions of adjusted EBIT and adjusted
net financing costs, together with related tax effects.
We believe that it is both useful and necessary
to report these measures for the following reasons:
|
·
|
These measures are used for internal performance
reporting;
|
|
·
|
These measures are used in setting director
and management remuneration; and
|
|
·
|
They are useful in connection with discussion
with the investment community and debt rating agencies.
|
Cash flow measures
In presenting and discussing our reported
results, free cash flow (pre-spectrum and restructuring), free cash flow and operating free cash flow are calculated and presented
even though these measures are not recognised within IFRS. We believe that it is both useful and necessary to communicate these
measures to investors and other interested parties, for the following reasons:
|
·
|
Free cash flow (pre-spectrum and restructuring)
and free cash flow allows us and external parties to evaluate our liquidity and the cash generated by our operations. Free cash
flow (pre-spectrum and restructuring) and capital additions do not include payments for licences and spectrum included within intangible
assets, items determined independently of the ongoing business, such as the level of dividends, and items which are deemed discretionary,
such as cash flows relating to acquisitions and disposals or financing activities. In addition, it does not necessarily reflect
the amounts which we have an obligation to incur. However, it does reflect the cash available for such discretionary activities,
to strengthen the consolidated statement of financial position or to provide returns to shareholders in the form of dividends or
share purchases;
|
|
·
|
Free cash flow facilitates comparability
of results with other companies, although our measure of free cash flow may not be directly comparable to similarly titled measures
used by other companies;
|
|
·
|
These measures are used by management for
planning, reporting and incentive purposes; and
|
|
·
|
These measures are useful in connection
with discussion with the investment community and debt rating agencies.
|
Other
Certain of the statements within the Strategic
review contain forward-looking alternative performance measures for which at this time there is no comparable GAAP measure and
which at this time cannot be quantitatively reconciled to comparable GAAP financial information. Certain of the statements within
the section titled “Outlook” on page 12 contain forward-looking non-GAAP financial information which at this time cannot
be quantitatively reconciled to comparable GAAP financial information.
Organic growth
All amounts in this document marked with
an “*” represent organic growth, which presents performance on a comparable basis in terms of merger and acquisition
activity and movements in foreign exchange rates.
Whilst this measure 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 IFRS 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 news release. If comparatives were provided, significant sections of the commentary
from the news release for prior periods would also need to be included, reducing the usefulness and transparency of this document.
Reconciliations of organic growth to reported
growth are shown where used or in the tables overleaf.
Reconciliation between alternative performance
measures and closest equivalent GAAP measure
The location of the reconciliation between
the alternative performance measures in this document and the nearest closest equivalent GAAP measure is shown below.
Alternative performance measure
|
|
Closest equivalent GAAP measure
|
|
Reconciled on page
|
|
Group service revenue
|
|
Revenue
|
|
58
|
|
Organic Group service revenue growth
|
|
Revenue
|
|
58
|
|
Adjusted EBITDA
|
|
Operating profit
|
|
13
|
|
Organic adjusted EBITDA growth
|
|
Operating profit
|
|
57
|
|
Adjusted EBIT
|
|
Operating profit
|
|
13
|
|
Adjusted operating profit
|
|
Operating profit
|
|
13
|
|
Adjusted net financing costs
|
|
Net financing costs
|
|
23
|
|
Adjusted income tax expense
|
|
Income tax expense
|
|
23
|
|
Adjusted profit before tax
|
|
Profit before tax
|
|
23
|
|
Adjusted effective tax rate
|
|
Effective tax rate
|
|
23
|
|
Adjusted profit attributable to owners of the parent
|
|
Profit attributable to owners of the parent
|
|
13
|
|
Adjusted earnings per share
|
|
Basic earnings per share
|
|
24
|
|
Operating free cash flow
|
|
Cash inflow from operating activities
|
|
26
|
|
Free cash flow (pre-spectrum and restructuring)
|
|
Cash inflow from operating activities
|
|
26
|
|
Free cash flow
|
|
Cash inflow from operating activities
|
|
26
|
|
Net debt
|
|
Borrowings
|
|
27
|
|
Ratio of net debt to adjusted EBITDA
|
|
-
|
|
27
|
|
Return on Capital Employed (‘ROCE’)
|
|
-
|
|
28
|
|
Six
months ended 30 September
|
|
H1
FY21
|
|
H1
FY20
|
|
Reported
growth
|
|
Other
activity
(incl. M&A)
|
|
Foreign
exchange
|
|
Organic
growth*
|
|
|
|
€m
|
|
€m
|
|
%
|
|
pps
|
|
pps
|
|
%
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
6,371
|
|
|
5,590
|
|
|
14.0
|
|
|
(14.4
|
)
|
|
–
|
|
|
(0.4
|
)
|
Italy
|
|
|
2,506
|
|
|
2,709
|
|
|
(7.5
|
)
|
|
0.3
|
|
|
–
|
|
|
(7.2
|
)
|
UK
|
|
|
2,983
|
|
|
3,151
|
|
|
(5.3
|
)
|
|
–
|
|
|
0.8
|
|
|
(4.5
|
)
|
Spain
|
|
|
2,050
|
|
|
2,161
|
|
|
(5.1
|
)
|
|
–
|
|
|
–
|
|
|
(5.1
|
)
|
Other
Europe
|
|
|
2,720
|
|
|
2,690
|
|
|
1.1
|
|
|
(4.9
|
)
|
|
1.5
|
|
|
(2.3
|
)
|
Eliminations
|
|
|
(47
|
)
|
|
(76
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
16,583
|
|
|
16,225
|
|
|
2.2
|
|
|
(5.6
|
)
|
|
0.4
|
|
|
(3.0
|
)
|
Vodacom
|
|
|
2,423
|
|
|
2,734
|
|
|
(11.4
|
)
|
|
–
|
|
|
15.3
|
|
|
3.9
|
|
Other
Markets
|
|
|
1,898
|
|
|
2,351
|
|
|
(19.3
|
)
|
|
19.2
|
|
|
8.6
|
|
|
8.5
|
|
Of
which: Turkey
|
|
|
1,043
|
|
|
1,156
|
|
|
(9.8
|
)
|
|
–
|
|
|
21.8
|
|
|
12.0
|
|
Of
which: Egypt
|
|
|
760
|
|
|
694
|
|
|
9.5
|
|
|
–
|
|
|
(3.8
|
)
|
|
5.7
|
|
Other
|
|
|
656
|
|
|
787
|
|
|
(16.5
|
)
|
|
–
|
|
|
0.1
|
|
|
(16.4
|
)
|
Eliminations
|
|
|
(133
|
)
|
|
(158
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
|
|
|
21,427
|
|
|
21,939
|
|
|
(2.3
|
)
|
|
(2.7
|
)
|
|
3.2
|
|
|
(1.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
2,844
|
|
|
2,352
|
|
|
20.9
|
|
|
(19.6
|
)
|
|
–
|
|
|
1.3
|
|
Italy
|
|
|
800
|
|
|
1,006
|
|
|
(20.5
|
)
|
|
9.4
|
|
|
–
|
|
|
(11.1
|
)
|
UK
|
|
|
636
|
|
|
658
|
|
|
(3.3
|
)
|
|
–
|
|
|
1.0
|
|
|
(2.3
|
)
|
Spain
|
|
|
488
|
|
|
460
|
|
|
6.1
|
|
|
(0.1
|
)
|
|
–
|
|
|
6.0
|
|
Other
Europe
|
|
|
870
|
|
|
872
|
|
|
(0.2
|
)
|
|
(3.6
|
)
|
|
1.6
|
|
|
(2.2
|
)
|
Europe
|
|
|
5,638
|
|
|
5,348
|
|
|
5.4
|
|
|
(7.0
|
)
|
|
0.4
|
|
|
(1.2
|
)
|
Vodacom
|
|
|
891
|
|
|
1,019
|
|
|
(12.6
|
)
|
|
–
|
|
|
16.2
|
|
|
3.6
|
|
Other
Markets
|
|
|
613
|
|
|
755
|
|
|
(18.8
|
)
|
|
12.5
|
|
|
6.8
|
|
|
0.5
|
|
Of
which: Turkey
|
|
|
283
|
|
|
309
|
|
|
(8.4
|
)
|
|
–
|
|
|
23.1
|
|
|
14.7
|
|
Of
which: Egypt
|
|
|
316
|
|
|
329
|
|
|
(4.0
|
)
|
|
(3.7
|
)
|
|
(2.7
|
)
|
|
(10.4
|
)
|
Other
|
|
|
(119
|
)
|
|
(17
|
)
|
|
600.0
|
|
|
(0.2
|
)
|
|
(40.4
|
)
|
|
559.4
|
|
Group
|
|
|
7,023
|
|
|
7,105
|
|
|
(1.2
|
)
|
|
(4.2
|
)
|
|
3.5
|
|
|
(1.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage point change in adjusted EBITDA margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
44.6
|
%
|
|
42.1
|
%
|
|
2.5
|
|
|
(1.8
|
)
|
|
–
|
|
|
0.7
|
|
Italy
|
|
|
31.9
|
%
|
|
37.1
|
%
|
|
(5.2
|
)
|
|
3.8
|
|
|
–
|
|
|
(1.4
|
)
|
UK
|
|
|
21.3
|
%
|
|
20.9
|
%
|
|
0.4
|
|
|
–
|
|
|
–
|
|
|
0.4
|
|
Spain
|
|
|
23.8
|
%
|
|
21.3
|
%
|
|
2.5
|
|
|
–
|
|
|
–
|
|
|
2.5
|
|
Other
Europe
|
|
|
32.0
|
%
|
|
32.4
|
%
|
|
(0.4
|
)
|
|
0.5
|
|
|
–
|
|
|
0.1
|
|
Europe
|
|
|
34.0
|
%
|
|
33.0
|
%
|
|
1.0
|
|
|
(0.4
|
)
|
|
–
|
|
|
0.6
|
|
Vodacom
|
|
|
36.8
|
%
|
|
37.3
|
%
|
|
(0.5
|
)
|
|
–
|
|
|
0.4
|
|
|
(0.1
|
)
|
Other
Markets
|
|
|
32.3
|
%
|
|
32.1
|
%
|
|
0.2
|
|
|
(2.0
|
)
|
|
(0.7
|
)
|
|
(2.5
|
)
|
Of
which: Turkey
|
|
|
27.1
|
%
|
|
26.7
|
%
|
|
0.4
|
|
|
–
|
|
|
0.2
|
|
|
0.6
|
|
Of
which: Egypt
|
|
|
41.6
|
%
|
|
47.4
|
%
|
|
(5.8
|
)
|
|
(1.6
|
)
|
|
0.3
|
|
|
(7.1
|
)
|
Group
|
|
|
32.8
|
%
|
|
32.4
|
%
|
|
0.4
|
|
|
(0.6
|
)
|
|
0.1
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
1,424
|
|
|
1,127
|
|
|
26.4
|
|
|
(15.4
|
)
|
|
0.6
|
|
|
11.6
|
|
Vodacom
|
|
|
552
|
|
|
633
|
|
|
(12.8
|
)
|
|
–
|
|
|
17.2
|
|
|
4.4
|
|
Other
Markets
|
|
|
482
|
|
|
483
|
|
|
(0.2
|
)
|
|
(11.1
|
)
|
|
7.4
|
|
|
(3.9
|
)
|
Other
|
|
|
(164
|
)
|
|
(12
|
)
|
|
1,266.7
|
|
|
(0.4
|
)
|
|
(35.5
|
)
|
|
1,230.8
|
|
Group
|
|
|
2,294
|
|
|
2,231
|
|
|
2.8
|
|
|
(9.7
|
)
|
|
7.1
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
operating profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
1,447
|
|
|
1,166
|
|
|
24.1
|
|
|
(15.9
|
)
|
|
0.4
|
|
|
8.6
|
|
Vodacom
|
|
|
662
|
|
|
756
|
|
|
(12.4
|
)
|
|
–
|
|
|
15.1
|
|
|
2.7
|
|
Other
Markets
|
|
|
606
|
|
|
(230
|
)
|
|
(363.5
|
)
|
|
131.3
|
|
|
(32.9
|
)
|
|
(265.1
|
)
|
Other
|
|
|
(166
|
)
|
|
(11
|
)
|
|
1,409.1
|
|
|
(0.5
|
)
|
|
(261.7
|
)
|
|
1,146.9
|
|
Group
|
|
|
2,549
|
|
|
1,681
|
|
|
51.6
|
|
|
(18.0
|
)
|
|
8.9
|
|
|
42.5
|
|
Six months ended 30 September
|
|
H1
FY21
|
|
H1
FY20
|
|
Reported
growth
|
|
Other
activity
(incl. M&A)
|
|
Foreign
exchange
|
|
Organic
growth*
|
|
|
|
€m
|
|
€m
|
|
%
|
|
pps
|
|
pps
|
|
%
|
|
Service
revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
5,723
|
|
|
4,961
|
|
|
15.4
|
|
|
(15.5
|
)
|
|
–
|
|
|
(0.1
|
)
|
Mobile
service revenue
|
|
|
2,503
|
|
|
2,549
|
|
|
(1.8
|
)
|
|
(0.2
|
)
|
|
–
|
|
|
(2.0
|
)
|
Fixed
service revenue
|
|
|
3,220
|
|
|
2,412
|
|
|
33.5
|
|
|
(32.0
|
)
|
|
–
|
|
|
1.5
|
|
Italy
|
|
|
2,249
|
|
|
2,424
|
|
|
(7.2
|
)
|
|
–
|
|
|
–
|
|
|
(7.2
|
)
|
Mobile
service revenue
|
|
|
1,638
|
|
|
1,839
|
|
|
(10.9
|
)
|
|
(0.1
|
)
|
|
–
|
|
|
(11.0
|
)
|
Fixed
service revenue
|
|
|
611
|
|
|
585
|
|
|
4.4
|
|
|
–
|
|
|
–
|
|
|
4.4
|
|
UK
|
|
|
2,401
|
|
|
2,451
|
|
|
(2.0
|
)
|
|
–
|
|
|
0.8
|
|
|
(1.2
|
)
|
Mobile
service revenue
|
|
|
1,700
|
|
|
1,785
|
|
|
(4.8
|
)
|
|
–
|
|
|
0.8
|
|
|
(4.0
|
)
|
Fixed
service revenue
|
|
|
701
|
|
|
666
|
|
|
5.3
|
|
|
–
|
|
|
1.0
|
|
|
6.3
|
|
Spain
|
|
|
1,880
|
|
|
1,966
|
|
|
(4.4
|
)
|
|
–
|
|
|
–
|
|
|
(4.4
|
)
|
Other
Europe
|
|
|
2,411
|
|
|
2,392
|
|
|
0.8
|
|
|
(4.6
|
)
|
|
1.4
|
|
|
(2.4
|
)
|
Of
which: Ireland
|
|
|
396
|
|
|
424
|
|
|
(6.6
|
)
|
|
0.2
|
|
|
–
|
|
|
(6.4
|
)
|
Of
which: Portugal
|
|
|
495
|
|
|
492
|
|
|
0.6
|
|
|
(0.1
|
)
|
|
–
|
|
|
0.5
|
|
Of
which: Greece
|
|
|
421
|
|
|
455
|
|
|
(7.5
|
)
|
|
0.1
|
|
|
–
|
|
|
(7.4
|
)
|
Eliminations
|
|
|
(47
|
)
|
|
(74
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
14,617
|
|
|
14,120
|
|
|
3.5
|
|
|
(6.1
|
)
|
|
0.4
|
|
|
(2.2
|
)
|
Vodacom
|
|
|
1,949
|
|
|
2,217
|
|
|
(12.1
|
)
|
|
–
|
|
|
14.4
|
|
|
2.3
|
|
Of
which: South Africa
|
|
|
1,398
|
|
|
1,589
|
|
|
(12.0
|
)
|
|
–
|
|
|
19.1
|
|
|
7.1
|
|
Of
which: International operations
|
|
|
563
|
|
|
628
|
|
|
(10.4
|
)
|
|
–
|
|
|
5.3
|
|
|
(5.1
|
)
|
Other
Markets
|
|
|
1,679
|
|
|
2,024
|
|
|
(17.0
|
)
|
|
17.9
|
|
|
8.1
|
|
|
9.0
|
|
Of
which: Turkey
|
|
|
855
|
|
|
933
|
|
|
(8.4
|
)
|
|
–
|
|
|
22.2
|
|
|
13.8
|
|
Of
which: Egypt
|
|
|
730
|
|
|
669
|
|
|
9.1
|
|
|
–
|
|
|
(3.7
|
)
|
|
5.4
|
|
Other
|
|
|
219
|
|
|
240
|
|
|
(8.8
|
)
|
|
–
|
|
|
0.4
|
|
|
(8.4
|
)
|
Eliminations
|
|
|
(46
|
)
|
|
(57
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
service revenue
|
|
|
18,418
|
|
|
18,544
|
|
|
(0.7
|
)
|
|
(3.1
|
)
|
|
3.0
|
|
|
(0.8
|
)
|
Other
revenue
|
|
|
3,009
|
|
|
3,395
|
|
|
(11.4
|
)
|
|
0.4
|
|
|
4.0
|
|
|
(7.0
|
)
|
Revenue
|
|
|
21,427
|
|
|
21,939
|
|
|
(2.3
|
)
|
|
(2.7
|
)
|
|
3.2
|
|
|
(1.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
growth metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
- Retail revenue
|
|
|
5,557
|
|
|
4,762
|
|
|
16.7
|
|
|
(16.2
|
)
|
|
–
|
|
|
0.5
|
|
Italy
- Operating expenses
|
|
|
(627
|
)
|
|
(552
|
)
|
|
13.6
|
|
|
(19.1
|
)
|
|
–
|
|
|
(5.5
|
)
|
Spain
- Operating expenses
|
|
|
(510
|
)
|
|
(566
|
)
|
|
(9.9
|
)
|
|
–
|
|
|
–
|
|
|
(9.9
|
)
|
UK
- Operating expenses
|
|
|
(774
|
)
|
|
(870
|
)
|
|
(11.0
|
)
|
|
–
|
|
|
0.7
|
|
|
(10.3
|
)
|
Quarter ended 30 September
|
|
|
Q2
FY21
|
|
Q2
FY20
|
|
Reported
growth
|
|
Other
activity
(incl. M&A)
|
|
Foreign
exchange
|
|
Organic
growth*
|
|
|
|
€m
|
|
€m
|
|
%
|
|
pps
|
|
pps
|
|
%
|
|
Service
revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
2,883
|
|
|
2,696
|
|
|
6.9
|
|
|
(7.0
|
)
|
|
–
|
|
|
(0.1
|
)
|
Mobile
service revenue
|
|
|
1,277
|
|
|
1,289
|
|
|
(0.9
|
)
|
|
(0.1
|
)
|
|
–
|
|
|
(1.0
|
)
|
Fixed
service revenue
|
|
|
1,606
|
|
|
1,407
|
|
|
14.1
|
|
|
(13.5
|
)
|
|
–
|
|
|
0.6
|
|
Italy
|
|
|
1,129
|
|
|
1,226
|
|
|
(7.9
|
)
|
|
(0.1
|
)
|
|
–
|
|
|
(8.0
|
)
|
Mobile
service revenue
|
|
|
823
|
|
|
934
|
|
|
(11.9
|
)
|
|
–
|
|
|
–
|
|
|
(11.9
|
)
|
Fixed
service revenue
|
|
|
306
|
|
|
292
|
|
|
4.8
|
|
|
–
|
|
|
–
|
|
|
4.8
|
|
UK
|
|
|
1,208
|
|
|
1,218
|
|
|
(0.8
|
)
|
|
–
|
|
|
0.3
|
|
|
(0.5
|
)
|
Mobile
service revenue
|
|
|
854
|
|
|
888
|
|
|
(3.8
|
)
|
|
–
|
|
|
0.2
|
|
|
(3.6
|
)
|
Fixed
service revenue
|
|
|
354
|
|
|
330
|
|
|
7.3
|
|
|
–
|
|
|
0.5
|
|
|
7.8
|
|
Spain
|
|
|
960
|
|
|
978
|
|
|
(1.8
|
)
|
|
–
|
|
|
–
|
|
|
(1.8
|
)
|
Other
Europe
|
|
|
1,240
|
|
|
1,264
|
|
|
(1.9
|
)
|
|
(1.0
|
)
|
|
1.1
|
|
|
(1.8
|
)
|
Of
which: Ireland
|
|
|
201
|
|
|
215
|
|
|
(6.5
|
)
|
|
0.4
|
|
|
–
|
|
|
(6.1
|
)
|
Of
which: Portugal
|
|
|
255
|
|
|
254
|
|
|
0.4
|
|
|
(0.1
|
)
|
|
–
|
|
|
0.3
|
|
Of
which: Greece
|
|
|
222
|
|
|
237
|
|
|
(6.3
|
)
|
|
0.2
|
|
|
–
|
|
|
(6.1
|
)
|
Eliminations
|
|
|
(30
|
)
|
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
7,390
|
|
|
7,338
|
|
|
0.7
|
|
|
(2.8
|
)
|
|
0.3
|
|
|
(1.8
|
)
|
Vodacom
|
|
|
999
|
|
|
1,139
|
|
|
(12.3
|
)
|
|
–
|
|
|
15.5
|
|
|
3.2
|
|
Of
which: South Africa
|
|
|
720
|
|
|
811
|
|
|
(11.2
|
)
|
|
–
|
|
|
18.9
|
|
|
7.7
|
|
Of
which: International operations
|
|
|
284
|
|
|
329
|
|
|
(13.7
|
)
|
|
–
|
|
|
8.8
|
|
|
(4.9
|
)
|
Other
Markets
|
|
|
839
|
|
|
988
|
|
|
(15.1
|
)
|
|
10.1
|
|
|
14.0
|
|
|
9.0
|
|
Of
which: Turkey
|
|
|
425
|
|
|
499
|
|
|
(14.8
|
)
|
|
–
|
|
|
28.7
|
|
|
13.9
|
|
Of
which: Egypt
|
|
|
369
|
|
|
356
|
|
|
3.7
|
|
|
–
|
|
|
1.2
|
|
|
4.9
|
|
Other
|
|
|
110
|
|
|
117
|
|
|
(6.0
|
)
|
|
–
|
|
|
0.7
|
|
|
(5.3
|
)
|
Eliminations
|
|
|
(30
|
)
|
|
(32
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
service revenue
|
|
|
9,308
|
|
|
9,550
|
|
|
(2.5
|
)
|
|
(1.3
|
)
|
|
3.4
|
|
|
(0.4
|
)
|
Other
revenue
|
|
|
1,613
|
|
|
1,736
|
|
|
(7.1
|
)
|
|
0.3
|
|
|
4.5
|
|
|
(2.3
|
)
|
Revenue
|
|
|
10,921
|
|
|
11,286
|
|
|
(3.2
|
)
|
|
(1.1
|
)
|
|
3.6
|
|
|
(0.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
growth metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
- Retail revenue
|
|
|
2,802
|
|
|
2,594
|
|
|
8.0
|
|
|
(7.4
|
)
|
|
–
|
|
|
0.6
|
|
Quarter
ended 30 June
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1
FY21
|
|
|
Q1
FY20
|
|
|
Reported
growth
|
|
|
Other
activity
(incl. M&A)
|
|
|
Foreign
exchange
|
|
|
Organic
growth*
|
|
|
|
€m
|
|
|
€m
|
|
|
%
|
|
|
pps
|
|
|
pps
|
|
|
%
|
|
Service
revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
2,840
|
|
|
|
2,265
|
|
|
|
25.4
|
|
|
|
(25.4
|
)
|
|
|
–
|
|
|
|
–
|
|
Mobile
service revenue
|
|
|
1,226
|
|
|
|
1,260
|
|
|
|
(2.7
|
)
|
|
|
(0.3
|
)
|
|
|
–
|
|
|
|
(3.0
|
)
|
Fixed
service revenue
|
|
|
1,614
|
|
|
|
1,005
|
|
|
|
60.6
|
|
|
|
(58.2
|
)
|
|
|
–
|
|
|
|
2.4
|
|
Italy
|
|
|
1,120
|
|
|
|
1,198
|
|
|
|
(6.5
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(6.5
|
)
|
Mobile
service revenue
|
|
|
815
|
|
|
|
905
|
|
|
|
(9.9
|
)
|
|
|
(0.1
|
)
|
|
|
–
|
|
|
|
(10.0
|
)
|
Fixed
service revenue
|
|
|
305
|
|
|
|
293
|
|
|
|
4.1
|
|
|
|
–
|
|
|
|
–
|
|
|
|
4.1
|
|
UK
|
|
|
1,193
|
|
|
|
1,233
|
|
|
|
(3.2
|
)
|
|
|
–
|
|
|
|
1.3
|
|
|
|
(1.9
|
)
|
Mobile
service revenue
|
|
|
846
|
|
|
|
897
|
|
|
|
(5.7
|
)
|
|
|
–
|
|
|
|
1.4
|
|
|
|
(4.3
|
)
|
Fixed
service revenue
|
|
|
347
|
|
|
|
336
|
|
|
|
3.3
|
|
|
|
–
|
|
|
|
1.5
|
|
|
|
4.8
|
|
Spain
|
|
|
920
|
|
|
|
988
|
|
|
|
(6.9
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(6.9
|
)
|
Other
Europe
|
|
|
1,171
|
|
|
|
1,128
|
|
|
|
3.8
|
|
|
|
(8.6
|
)
|
|
|
1.7
|
|
|
|
(3.1
|
)
|
Of which: Ireland
|
|
|
195
|
|
|
|
209
|
|
|
|
(6.7
|
)
|
|
|
(0.1
|
)
|
|
|
–
|
|
|
|
(6.8
|
)
|
Of which: Portugal
|
|
|
240
|
|
|
|
238
|
|
|
|
0.8
|
|
|
|
(0.1
|
)
|
|
|
–
|
|
|
|
0.7
|
|
Of
which: Greece
|
|
|
199
|
|
|
|
218
|
|
|
|
(8.7
|
)
|
|
|
(0.1
|
)
|
|
|
–
|
|
|
|
(8.8
|
)
|
Eliminations
|
|
|
(17
|
)
|
|
|
(30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
7,227
|
|
|
|
6,782
|
|
|
|
6.6
|
|
|
|
(9.7
|
)
|
|
|
0.5
|
|
|
|
(2.6
|
)
|
Vodacom
|
|
|
950
|
|
|
|
1,078
|
|
|
|
(11.9
|
)
|
|
|
–
|
|
|
|
13.4
|
|
|
|
1.5
|
|
Of
which: South Africa
|
|
|
678
|
|
|
|
778
|
|
|
|
(12.9
|
)
|
|
|
–
|
|
|
|
19.3
|
|
|
|
6.4
|
|
Of
which: International operations
|
|
|
279
|
|
|
|
299
|
|
|
|
(6.7
|
)
|
|
|
–
|
|
|
|
1.5
|
|
|
|
(5.2
|
)
|
Other
Markets
|
|
|
840
|
|
|
|
1,036
|
|
|
|
(18.9
|
)
|
|
|
24.6
|
|
|
|
3.4
|
|
|
|
9.1
|
|
Of which: Turkey
|
|
|
430
|
|
|
|
434
|
|
|
|
(0.9
|
)
|
|
|
–
|
|
|
|
14.7
|
|
|
|
13.8
|
|
Of
which: Egypt
|
|
|
361
|
|
|
|
313
|
|
|
|
15.3
|
|
|
|
–
|
|
|
|
(9.3
|
)
|
|
|
6.0
|
|
Other
|
|
|
109
|
|
|
|
123
|
|
|
|
(11.4
|
)
|
|
|
–
|
|
|
|
0.1
|
|
|
|
(11.3
|
)
|
Eliminations
|
|
|
(16
|
)
|
|
|
(25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
service revenue
|
|
|
9,110
|
|
|
|
8,994
|
|
|
|
1.3
|
|
|
|
(5.1
|
)
|
|
|
2.5
|
|
|
|
(1.3
|
)
|
Other
revenue
|
|
|
1,396
|
|
|
|
1,659
|
|
|
|
(15.9
|
)
|
|
|
0.4
|
|
|
|
3.6
|
|
|
|
(11.9
|
)
|
Revenue
|
|
|
10,506
|
|
|
|
10,653
|
|
|
|
(1.4
|
)
|
|
|
(4.1
|
)
|
|
|
2.7
|
|
|
|
(2.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
growth metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
- Retail revenue
|
|
|
2,755
|
|
|
|
2,168
|
|
|
|
27.1
|
|
|
|
(26.7
|
)
|
|
|
–
|
|
|
|
0.4
|
|
Additional information
Regional
results for the six months ended 30 September 2020
|
Revenue
|
|
Adjusted
EBITDA
|
|
Adjusted
operating
profit
|
|
Capital
additions
|
|
Operating
free cash
flow
|
|
|
H1
FY21
|
|
H1
FY20
|
|
H1
FY21
|
|
H1
FY20
|
|
H1
FY21
|
|
H1
FY20
|
|
H1
FY21
|
|
H1
FY20
|
|
H1
FY21
|
|
H1
FY20
|
|
|
€m
|
|
€m
|
|
€m
|
|
€m
|
|
€m
|
|
€m
|
|
€m
|
|
€m
|
|
€m
|
|
€m
|
|
Europe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
6,371
|
|
|
5,590
|
|
|
2,844
|
|
|
2,352
|
|
|
1,128
|
|
|
764
|
|
|
1,161
|
|
|
836
|
|
|
1,309
|
|
|
950
|
|
Italy
|
|
2,506
|
|
|
2,709
|
|
|
800
|
|
|
1,006
|
|
|
212
|
|
|
383
|
|
|
297
|
|
|
229
|
|
|
266
|
|
|
332
|
|
UK
|
|
2,983
|
|
|
3,151
|
|
|
636
|
|
|
658
|
|
|
(126
|
)
|
|
(162
|
)
|
|
313
|
|
|
329
|
|
|
(302
|
)
|
|
24
|
|
Spain
|
|
2,050
|
|
|
2,161
|
|
|
488
|
|
|
460
|
|
|
(43
|
)
|
|
(161
|
)
|
|
297
|
|
|
309
|
|
|
(17
|
)
|
|
41
|
|
Other
Europe
|
|
2,720
|
|
|
2,690
|
|
|
870
|
|
|
872
|
|
|
276
|
|
|
342
|
|
|
359
|
|
|
344
|
|
|
196
|
|
|
248
|
|
Netherlands1
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
12
|
|
|
44
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
Portugal
|
|
537
|
|
|
541
|
|
|
213
|
|
|
207
|
|
|
80
|
|
|
66
|
|
|
83
|
|
|
84
|
|
|
113
|
|
|
119
|
|
Greece
|
|
452
|
|
|
488
|
|
|
138
|
|
|
155
|
|
|
66
|
|
|
64
|
|
|
54
|
|
|
51
|
|
|
(37
|
)
|
|
15
|
|
Other
|
|
1,735
|
|
|
1,668
|
|
|
519
|
|
|
510
|
|
|
118
|
|
|
168
|
|
|
222
|
|
|
209
|
|
|
120
|
|
|
114
|
|
Eliminations
|
|
(4
|
)
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminations
|
|
(47
|
)
|
|
(76
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
16,583
|
|
|
16,225
|
|
|
5,638
|
|
|
5,348
|
|
|
1,447
|
|
|
1,166
|
|
|
2,427
|
|
|
2,047
|
|
|
1,452
|
|
|
1,595
|
|
Vodacom
|
|
2,423
|
|
|
2,734
|
|
|
891
|
|
|
1,019
|
|
|
662
|
|
|
756
|
|
|
333
|
|
|
390
|
|
|
375
|
|
|
484
|
|
Other
Markets
|
|
1,898
|
|
|
2,351
|
|
|
613
|
|
|
755
|
|
|
606
|
|
|
(230
|
)
|
|
245
|
|
|
274
|
|
|
192
|
|
|
159
|
|
Turkey
|
|
1,043
|
|
|
1,156
|
|
|
283
|
|
|
309
|
|
|
169
|
|
|
180
|
|
|
112
|
|
|
114
|
|
|
1
|
|
|
(120
|
)
|
Egypt
|
|
760
|
|
|
694
|
|
|
316
|
|
|
329
|
|
|
313
|
|
|
233
|
|
|
118
|
|
|
106
|
|
|
188
|
|
|
244
|
|
India1
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
104
|
|
|
(692
|
)
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
Other
|
|
95
|
|
|
501
|
|
|
14
|
|
|
117
|
|
|
20
|
|
|
49
|
|
|
15
|
|
|
54
|
|
|
3
|
|
|
35
|
|
Other
|
|
656
|
|
|
787
|
|
|
(119
|
)
|
|
(17
|
)
|
|
(166
|
)
|
|
(11
|
)
|
|
358
|
|
|
289
|
|
|
(737
|
)
|
|
(843
|
)
|
Eliminations
|
|
(133
|
)
|
|
(158
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
|
|
21,427
|
|
|
21,939
|
|
|
7,023
|
|
|
7,105
|
|
|
2,549
|
|
|
1,681
|
|
|
3,363
|
|
|
3,000
|
|
|
1,282
|
|
|
1,395
|
|
|
1.
|
Includes the Group’s share of the joint venture in this market.
|
Revenue
- Quarter ended 30 September
Group and Regions
|
|
Group
|
|
|
Europe
|
|
|
|
|
|
Q2 FY21
|
|
|
Q2 FY20
|
|
|
Q2 FY21
|
|
|
Q2 FY20
|
|
|
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
|
Mobile customer revenue
|
|
|
5,375
|
|
|
|
5,757
|
|
|
|
3,874
|
|
|
|
4,049
|
|
|
|
Mobile incoming revenue
|
|
|
407
|
|
|
|
437
|
|
|
|
287
|
|
|
|
301
|
|
|
|
Other service revenue
|
|
|
451
|
|
|
|
520
|
|
|
|
309
|
|
|
|
348
|
|
|
|
Mobile service revenue
|
|
|
6,233
|
|
|
|
6,714
|
|
|
|
4,470
|
|
|
|
4,698
|
|
|
|
Fixed service revenue
|
|
|
3,075
|
|
|
|
2,836
|
|
|
|
2,920
|
|
|
|
2,640
|
|
|
|
Service revenue
|
|
|
9,308
|
|
|
|
9,550
|
|
|
|
7,390
|
|
|
|
7,338
|
|
|
|
Other revenue
|
|
|
1,613
|
|
|
|
1,736
|
|
|
|
1,038
|
|
|
|
1,095
|
|
|
|
Revenue
|
|
|
10,921
|
|
|
|
11,286
|
|
|
|
8,428
|
|
|
|
8,433
|
|
|
|
|
|
Growth
|
|
|
|
|
|
Reported
|
|
|
Organic*
|
|
|
Reported
|
|
|
Organic*
|
|
|
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
|
Revenue
|
|
|
(3.2
|
)
|
|
|
(0.7
|
)
|
|
|
(0.1
|
)
|
|
|
(2.3
|
)
|
|
|
Service revenue
|
|
|
(2.5
|
)
|
|
|
(0.4
|
)
|
|
|
0.7
|
|
|
|
(1.8
|
)
|
|
|
Operating Companies
|
|
Germany
|
|
|
Italy
|
|
|
UK
|
|
|
|
Q2 FY21
|
|
|
Q2 FY20
|
|
|
Q2 FY21
|
|
|
Q2 FY20
|
|
|
Q2 FY21
|
|
|
Q2 FY20
|
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
Mobile customer revenue
|
|
|
1,119
|
|
|
|
1,127
|
|
|
|
690
|
|
|
|
794
|
|
|
|
739
|
|
|
|
755
|
|
Mobile incoming revenue
|
|
|
54
|
|
|
|
49
|
|
|
|
65
|
|
|
|
71
|
|
|
|
57
|
|
|
|
65
|
|
Other service revenue
|
|
|
104
|
|
|
|
113
|
|
|
|
68
|
|
|
|
69
|
|
|
|
58
|
|
|
|
68
|
|
Mobile service revenue
|
|
|
1,277
|
|
|
|
1,289
|
|
|
|
823
|
|
|
|
934
|
|
|
|
854
|
|
|
|
888
|
|
Fixed service revenue
|
|
|
1,606
|
|
|
|
1,407
|
|
|
|
306
|
|
|
|
292
|
|
|
|
354
|
|
|
|
330
|
|
Service revenue
|
|
|
2,883
|
|
|
|
2,696
|
|
|
|
1,129
|
|
|
|
1,226
|
|
|
|
1,208
|
|
|
|
1,218
|
|
Other revenue
|
|
|
321
|
|
|
|
322
|
|
|
|
147
|
|
|
|
153
|
|
|
|
312
|
|
|
|
364
|
|
Revenue
|
|
|
3,204
|
|
|
|
3,018
|
|
|
|
1,276
|
|
|
|
1,379
|
|
|
|
1,520
|
|
|
|
1,582
|
|
|
|
Growth
|
|
|
|
Reported
|
|
|
Organic*
|
|
|
Reported
|
|
|
Organic*
|
|
|
Reported
|
|
|
Organic*
|
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
|
Revenue
|
|
|
6.2
|
|
|
|
(0.4
|
)
|
|
|
(7.5
|
)
|
|
|
(7.1
|
)
|
|
|
(3.9
|
)
|
|
|
(3.6
|
)
|
Service revenue
|
|
|
6.9
|
|
|
|
(0.1
|
)
|
|
|
(7.9
|
)
|
|
|
(8.0
|
)
|
|
|
(0.8
|
)
|
|
|
(0.5
|
)
|
|
|
Spain
|
|
|
Vodacom
|
|
|
|
|
|
Q2 FY21
|
|
|
Q2 FY20
|
|
|
Q2 FY21
|
|
|
Q2 FY20
|
|
|
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
|
|
Mobile customer revenue
|
|
|
565
|
|
|
|
563
|
|
|
|
845
|
|
|
|
957
|
|
|
|
Mobile incoming revenue
|
|
|
35
|
|
|
|
29
|
|
|
|
34
|
|
|
|
41
|
|
|
|
Other service revenue
|
|
|
38
|
|
|
|
59
|
|
|
|
64
|
|
|
|
71
|
|
|
|
Mobile service revenue
|
|
|
638
|
|
|
|
651
|
|
|
|
943
|
|
|
|
1,069
|
|
|
|
Fixed service revenue
|
|
|
322
|
|
|
|
327
|
|
|
|
56
|
|
|
|
70
|
|
|
|
Service revenue
|
|
|
960
|
|
|
|
978
|
|
|
|
999
|
|
|
|
1,139
|
|
|
|
Other revenue
|
|
|
96
|
|
|
|
101
|
|
|
|
271
|
|
|
|
263
|
|
|
|
Revenue
|
|
|
1,056
|
|
|
|
1,079
|
|
|
|
1,270
|
|
|
|
1,402
|
|
|
|
|
|
Growth
|
|
|
|
|
|
Reported
|
|
|
Organic*
|
|
|
Reported
|
|
|
Organic*
|
|
|
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
|
Revenue
|
|
|
(2.1
|
)
|
|
|
(2.1
|
)
|
|
|
(9.4
|
)
|
|
|
7.1
|
|
|
|
Service revenue
|
|
|
(1.8
|
)
|
|
|
(1.8
|
)
|
|
|
(12.3
|
)
|
|
|
3.2
|
|
|
|
Reconciliation of adjusted earnings
|
|
|
|
|
|
|
|
|
|
|
|
Reported
|
|
|
Adjustments1
|
|
|
Adjusted
|
|
Six months ended 30 September 2020
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
Operating profit
|
|
|
3,472
|
|
|
|
(1,287
|
)
|
|
|
2,185
|
|
Amortisation of acquired customer base and brand intangible assets
|
|
|
–
|
|
|
|
364
|
|
|
|
364
|
|
Non-operating income and expense
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Net financing costs
|
|
|
(1,427
|
)
|
|
|
788
|
|
|
|
(639
|
)
|
Profit before taxation
|
|
|
2,045
|
|
|
|
(135
|
)
|
|
|
1,910
|
|
Income tax (expense)/credit
|
|
|
(490
|
)
|
|
|
35
|
|
|
|
(455
|
)
|
Profit for the financial period
|
|
|
1,555
|
|
|
|
(100
|
)
|
|
|
1,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
– Owners of the parent
|
|
|
1,314
|
|
|
|
(100
|
)
|
|
|
1,214
|
|
– Non-controlling interests
|
|
|
241
|
|
|
|
–
|
|
|
|
241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
4.45
|
c
|
|
|
|
|
|
|
4.11
|
c
|
|
1.
|
Adjustments to operating profit of €1,287 million, further details of which are included
on page 24, comprise a credit of €86 million of restructuring costs, offset by charges of €1,184 million of adjusted
other income and expense and €189 million of lease interest.
|
|
|
Reported
|
|
|
Adjustments1
|
|
|
Adjusted
|
|
Six months ended 30 September 2019
|
|
€m
|
|
|
€m
|
|
|
€m
|
|
Operating profit
|
|
|
577
|
|
|
|
872
|
|
|
|
1,449
|
|
Amortisation of acquired customer base and brand intangible assets
|
|
|
–
|
|
|
|
232
|
|
|
|
232
|
|
Net financing costs
|
|
|
(1,088
|
)
|
|
|
289
|
|
|
|
(799
|
)
|
(Loss)/profit before taxation
|
|
|
(511
|
)
|
|
|
1,393
|
|
|
|
882
|
|
Income tax (expense)/credit
|
|
|
(1,380
|
)
|
|
|
986
|
|
|
|
(394
|
)
|
(Loss)/profit for the financial period
|
|
|
(1,891
|
)
|
|
|
2,379
|
|
|
|
488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
– Owners of the parent
|
|
|
(2,128
|
)
|
|
|
2,378
|
|
|
|
250
|
|
– Non-controlling interests
|
|
|
237
|
|
|
|
1
|
|
|
|
238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss)/earnings per share
|
|
|
(7.24
|
)c
|
|
|
|
|
|
|
0.85
|
c
|
|
1.
|
Adjustments to operating profit of €872 million, further details of which are included on
page 24, comprise credits of €163 million of restructuring costs and €872 million of adjusted other income and expense,
offset by charges of €163 million of lease interest.
|
Definitions
Term
|
|
Definition
|
Adjusted earnings per share
|
|
Adjusted earnings per share reflects the exclusions of adjusted EBIT and adjusted financing costs, together with related tax effects.
|
Adjusted EBIT
|
|
Operating profit after depreciation on lease-related right of use assets and interest on leases but excluding share of results in associates and joint ventures, impairment losses, amortisation of customer bases and brand intangible assets restructuring costs arising from discrete restructuring plans and other income and expense. The Group’s definition of adjusted EBIT may not be comparable with similarly titled measures and disclosures by other companies.
|
Adjusted EBITDA
|
|
Operating profit after depreciation on lease-related right of use assets and interest on leases but excluding depreciation and amortisation and gains/losses on disposal for owned fixed assets and excluding share of results in associates and joint ventures, impairment losses, restructuring costs arising from discrete restructuring plans, other income and expense and significant items that are not considered by management to be reflective of the underlying performance of the Group. The Group’s definition of adjusted EBITDA may not be comparable with similarly titled measures and disclosures by other companies.
|
Adjusted effective tax rate
|
|
Adjusted income tax expense (see definition below) divided by the adjusted profit before tax (see definition below).
|
Adjusted income tax expense
|
|
Adjusted income tax expense excludes the tax effects of items excluded from adjusted earnings per share, including: impairment losses, amortisation of customer bases and brand intangible assets, restructuring costs arising from discrete restructuring plans, lease-related interest, other income and expense and mark to market and foreign exchange movements. It also excludes deferred tax movements relating to losses in Luxembourg as well as other significant one-off items. The Group’s definition of adjusted income tax expense may not be comparable with similarly titled measures and disclosures by other companies.
|
Adjusted net financing costs
|
|
Adjusted net financing costs exclude mark to market and foreign exchange gains/losses and interest on lease liabilities.
|
Adjusted non-controlling interests
|
|
Adjusted non-controlling interests exclude the impact of items adjusted in calculating Adjusted operating profit, Adjusted net financing costs and Adjusted income tax expense.
|
Adjusted operating profit
|
|
Group adjusted operating profit excludes impairment losses, restructuring costs arising from discrete restructuring plans, amortisation of customer bases and brand intangible assets and other income and expense.
|
ARPU
|
|
Average revenue per user, defined as customer revenue and incoming revenue divided by average customers.
|
Capital additions
|
|
Comprises the purchase of property, plant and equipment and intangible assets, other than licence and spectrum payments and transformation capital expenditure.
|
CEE
|
|
Central and eastern Europe.
|
Churn
|
|
Total gross customer disconnections in the period divided by the average total customers in the period.
|
Converged customer
|
|
A customer who receives fixed and mobile services (also known as unified communications) on a single bill or who receives a discount across both bills.
|
Customer costs
|
|
Includes acquisition costs, retention costs and other direct costs of providing services.
|
Depreciation and other 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.
|
Direct costs
|
|
Direct costs include interconnect costs and other direct costs of providing services.
|
Emerging consumer customers
|
|
Consumers in our Emerging Markets.
|
Emerging markets
|
|
Emerging Markets include Turkey, South Africa, Tanzania, the DRC, Mozambique, Lesotho and Egypt.
|
Europe Region
|
|
The Group’s region, Europe, which comprises the European operating segments.
|
Fixed service revenue
|
|
Service revenue relating to provision of fixed line (‘fixed’) and carrier services.
|
Free cash flow (‘FCF’)
|
|
Operating free cash flow after cash flows in relation to taxation, interest, dividends received from associates and investments, dividends paid to non-controlling shareholders in subsidiaries, restructuring costs arising from discrete restructuring plans, transformation capital expenditure and licence and spectrum payments.
|
Free cash flow (pre-spectrum and restructuring)
|
|
Operating free cash flow after cash flows in relation to taxation, interest, dividends received from associates and investments, dividends paid to non-controlling shareholders in subsidiaries, but before restructuring costs arising from discrete restructuring plans, transformation capital expenditure and licence and spectrum payments.
|
IFRS 15
|
|
International Financial Reporting Standard 15 “Revenue from contracts with customers”. The accounting policy adopted by the Group on 1 April 2018.
|
IFRS 16
|
|
International Financial Reporting Standard 16 “Leases”. The accounting policy adopted by the Group on 1 April 2019.
|
Incoming revenue
|
|
Comprises revenue from termination rates for voice and messaging to Vodafone customers.
|
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 relating to the provision of mobile services.
|
Net debt
|
|
Long-term borrowings, short-term borrowings, short-term investments, mark-to-market adjustments and cash collateral on derivative financial instruments less cash and cash equivalents and excluding lease liabilities and borrowings specifically secured against Indian assets.
|
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.
|
Operating free cash flow
|
|
Cash generated from operations after cash payments for capital additions (excludes capital licence and spectrum payments) and cash receipts from the disposal of intangible fixed assets and property, plant and equipment, but before restructuring costs arising from discrete restructuring plans.
|
Organic growth
|
|
An alternative performance measure which presents performance on a comparable basis, in terms of merger and acquisition activity (notably by excluding Vodafone New Zealand and the acquired European Liberty Global assets), movements in foreign exchange rates and the impact of the implementation of IFRS 16 ‘Leases’.
|
Other Europe
|
|
Other Europe markets include Portugal, Ireland, Greece, Romania, Czech Republic, Hungary and Albania.
|
Other Markets
|
|
Other Markets include Turkey, Egypt and Ghana.
|
Other revenue
|
|
Other revenue includes connection fees, equipment revenue, interest income and lease revenue.
|
Ratio of net debt to adjusted EBITDA
|
|
The ratio of net debt to adjusted EBITDA is calculated using adjusted EBITDA for a rolling 12 month period, normalised for acquisitions and disposals within the period.
|
Regulation
|
|
Impact of industry law and regulations covering telecommunication services. The impact of regulation on service revenue in European markets comprises the effect of changes in European mobile termination rates and changes in out-of-bundle roaming revenues less the increase in visitor revenues.
|
Reported growth
|
|
Based on amounts reported in euros as determined under IFRS.
|
Restructuring costs
|
|
Costs incurred by the Group following the implementation of discrete restructuring plans to improve overall efficiency.
|
Return on Capital Employed (‘ROCE’)
|
|
See page 28 for a summary of the basis of calculation.
|
RGUs
|
|
Revenue Generating Units describes the average number of fixed line services taken by subscribers.
|
Roaming
|
|
Allows customers to make calls, send and receive texts and data on other operators’ mobile networks, usually while travelling abroad.
|
Service revenue
|
|
Service revenue comprises all revenue related to the provision of ongoing services including, but not limited to, monthly access charges, airtime usage, roaming, incoming and outgoing network usage by non-Vodafone customers and interconnect charges for incoming calls.
|
SME
|
|
Small and medium sized enterprises.
|
SoHo
|
|
Small-office-Home-office customers.
|
Transformation capital expenditure
|
|
Capital expenditure incurred in relation to significant changes in the operating model, such as the integration of recently acquired subsidiaries.
|
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.
|
Copies of this document are available
from the Company’s registered office at Vodafone House, The Connection, Newbury,
Berkshire, RG14 2FN. The half-year results will be available on the Vodafone Group Plc
website, https://investors.vodafone.com/reports-information/results-reports-presentations,
from 16 November 2020.
|
|
2.
|
References to Vodafone are to Vodafone Group Plc and references to Vodafone Group are to Vodafone
Group Plc and its subsidiaries unless otherwise stated. Vodafone, the Vodafone Portrait, the Vodafone Speech mark, Vodafone Broken
Speech mark Outline, Vodacom, Vodafone One, The future is exciting. Ready? and M-Pesa, are trade marks owned by Vodafone. Other
product and company names mentioned may be the trade marks of their respective owners.
|
|
3.
|
All growth rates reflect a comparison to the six months ended 30 September 2019 unless otherwise
stated.
|
|
4.
|
References to “Q1” and “Q2” are to the three months ended 30 June 2020
and 30 September 2020, respectively, unless otherwise stated. References to the “half year”, “first half”
or “H1” are to the six months ended 30 September 2020 unless otherwise stated. References to the “year”
or “2021 financial year” are to the financial year ending 31 March 2021 and references to the “last year”
or “last financial year” are to the financial year ended 31 March 2020 unless otherwise stated.
|
|
5.
|
Vodacom refers to the Group’s interest in Vodacom Group Limited (‘Vodacom’) in
South Africa as well as its subsidiaries, including its operations in the DRC, Lesotho, Mozambique and Tanzania.
|
|
6.
|
Quarterly historical information, including
information for service revenue, mobile customers, mobile churn, mobile data usage, mobile
ARPU and certain fixed line and convergence metrics, is provided in a spreadsheet available
at https://investors.vodafone.com/reports-information/results-reports-presentations
|
|
7.
|
This trading update contains references to our website. Information on our website is not incorporated
into this update and should not be considered part of this update. We have included any website as an inactive textual reference
only.
|
This report contains “forward-looking
statements” within the meaning of the US Private Securities Litigation Reform Act of 1995 with respect to the Group’s
financial condition, results of operations and businesses and certain of the Group’s plans and objectives.
In particular, such forward-looking statements
include, but are not limited to, statements with respect to: expectations regarding the Group’s financial condition or results
of operations and the guidance for organic adjusted EBITDA and free cash flow (pre-spectrum and restructuring) for the financial
year ending 31 March 2021; the IPO and listing of Vantage Towers; prospects for the 2021 financial year, including the response
to the COVID-19 crisis and Vodafone’s support for national governments’ digital agendas; expectations for the Group’s
future performance generally; expectations regarding the operating environment and market conditions and trends, including customer
usage, competitive position and macroeconomic pressures, price trends and opportunities in specific geographic markets; intentions
and expectations regarding the development, launch and expansion of products, services and technologies, either introduced by Vodafone
or by Vodafone in conjunction with third parties or by third parties independently including 5G networks, sharing infrastructure
and its benefits and sharing mobile networks in Europe; expectations regarding the integration or performance of current and future
investments, associates, joint ventures, non-controlled interests and newly acquired businesses, including in respect of Vodafone
Business’ partnership with Accenture.
Forward-looking statements are sometimes,
but not always, identified by their use of a date in the future or such words as “will”, “anticipates”,
“could”, “may”, “should”, “expects”, “believes”, “intends”,
“plans” or “targets” (including in their negative form or other variations). By their nature, forward-looking
statements are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future. There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited
to, the following: external cyber-attacks, insider threats or supplier breaches; general economic and political conditions including
as a consequence of the COVID-19 pandemic, of the jurisdictions in which the Group operates, including as a result of Brexit, and
changes to the associated legal, regulatory and tax environments; increased competition; increased disintermediation; levels of
investment in network capacity and the Group’s ability to deploy new technologies, products and services; rapid changes to
existing products and services and the inability of new products and services to perform in accordance with expectations; the ability
of the Group to integrate new technologies, products and services with existing networks, technologies, products and services;
the Group’s ability to generate and grow revenue; a lower than expected impact of new or existing products, services or technologies
on the Group’s future revenue, cost structure and capital expenditure outlays; slower than expected customer growth, reduced
customer retention, reductions or changes in customer spending and increased pricing pressure; the Group’s ability to extend
and expand its spectrum position to support ongoing growth in customer demand for mobile data services; the Group’s ability
to secure the timely delivery of high-quality products from suppliers; loss of suppliers, disruption of supply chains and greater
than anticipated prices of new mobile handsets; changes in the costs to the Group of, or the rates the Group my charge for, terminations
and roaming minutes; the impact of a failure or significant interruption to the Group’s telecommunications, networks, IT
systems or data protection systems; the Group’s ability to realise expected benefits from acquisitions, partnerships, joint
ventures, franchises, brand licences, platform sharing or other arrangements with third parties; acquisitions and divestments of
Group businesses and assets and the pursuit of new, unexpected strategic opportunities; the Group’s ability to integrate
acquired business or assets; the extent of any future write-downs or impairment charges on the Group’s assets, or restructuring
charges incurred as a result of an acquisition or disposition; a developments in the Group’s financial condition, earnings
and distributable funds and other factors that the Board takes into account in determining the level of dividends; the Group’s
ability to satisfy working capital requirements; changes in foreign exchange rates; changes in the regulatory framework in which
the Group operates; the impact of legal or other proceedings against the Group or other companies in the communications industry
and changes in statutory tax rates and profit mix.
Furthermore, a review of the reasons why
actual results and developments may differ materially from the expectations disclosed or implied within forward-looking statements
can be found under “Forward-looking statements” and “Principal risk factors and uncertainties” in the Group’s
annual report for the financial year ended 31 March 2020. 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.
Any securities issued in connection with
an IPO of Vantage Towers will not be registered under the US Securities Act of 1933 (the “Securities Act”), and may
not be offered or sold in the United States absent registration under the Securities Act or pursuant to an exemption from registration.
Copyright © Vodafone Group 2020 -ends-
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorised.
|
VODAFONE GROUP
|
|
PUBLIC LIMITED COMPANY
|
|
(Registrant)
|
|
|
|
|
Dated: November 16, 2020
|
By:
|
/s/ R E S MARTIN
|
|
Name:
|
Rosemary E S Martin
|
|
Title:
|
Group General Counsel and Company Secretary
|
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