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
February 16, 2021
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.
Form
20-F x 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.
Yes
¨ No
x
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 15 February 2021 entitled ‘VODAFONE GROUP PLC: VANTAGE
TOWERS Q3 UPDATE’.
RNS Number : 0287P
Vodafone Group
Plc
15 February 2021
Vodafone
Group Plc
Vantage Towers Q3 update
15
February 2021
Building momentum to unlock the full
potential of Vantage Towers' leading grids
|
·
|
Vantage
Towers' portfolio increased to c.82,000 macro sites and to a presence in 10 European
markets - with leading positions in 9 of them - following recent addition of 50% stake
in Cornerstone, the UK's #1 tower company
|
|
·
|
Strong
commercial momentum
|
|
-
|
c.1,400
new tenancies added in first 9 months of FY21 to 31 December 2020, including c.500 previously
non-committed tenancies¹ - strong progress towards our medium term guidance
of >1.50x tenancy ratio
|
|
-
|
c.450
new macro sites added in first 9 months of FY21. Confident of hitting our target of c.550
new sites by 31 March 2021
|
|
-
|
New
agreements signed with Eir and Three in Ireland and AOTEC, the industry body representing
over 150 local operators, in Spain
|
|
-
|
IoT
contract signed with Sigfox Germany
|
|
·
|
Our
programme to optimise ground leases through buyouts or renegotiations is showing encouraging
results with pilots underway in 6 countries
|
|
·
|
Reaffirming
our targets and FY21 pro forma Recurring Free Cash Flow ("RFCF") guidance of
€375-385m
|
|
·
|
Supervisory
Board appointed with strong mix of sector, financial, technical and M&A experience
|
Vivek Badrinath, Vantage Towers
Chief Executive, commented:
"The growth opportunity in Europe
is considerable, as the roll out of 5G accelerates and mobile operators look to expand their networks to manage ever increasing
data traffic.
I am very pleased with the commercial
momentum we are building at Vantage Towers. Customers are appreciating the high quality of our grid and their response to our
focused commercial approach is encouraging. This underscores our confidence in our tenancy targets.
Adding Cornerstone, the UK's number
one tower company, to our portfolio in early January was a significant step. Cornerstone is a great addition - it's a market leader,
with broad and dense coverage, providing services to two market leaders who already have a network sharing agreement in place.
In January, we also finalised the appointments for our Supervisory Board, securing members with deep towers, entrepreneurial and
M&A experience, alongside world class governance and technical expertise."
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
Consolidated Vantage Towers performance
summary (€m)2
|
|
FY20PF
|
|
|
9m
FY21PF
|
|
Macro sites
|
|
|
45.4
|
k
|
|
|
45.7
|
k
|
Tenancy ratio
|
|
|
1.37
|
x
|
|
|
1.39
|
x
|
Revenue (ex. pass through)
|
|
|
945
|
|
|
|
723
|
|
Adj. EBITDA
|
|
|
814
|
|
|
|
620
|
|
Adj. EBITDAaL
|
|
|
513
|
|
|
|
394
|
|
Recurring free cash flow (RFCF)
|
|
|
375
|
|
|
|
291
|
|
Cornerstone
share of RFCF3
|
|
|
54
|
|
|
|
39
|
|
Strong progress - building on our
key strengths with momentum across all levers
Following our Capital Markets Day in
November 2020, we have made strong progress across our commercial, operational and strategic levers by building on our core strengths
as we seek to unlock the full potential of our high quality, leading grids:
|
·
|
High
quality portfolio and tenants: Our portfolio increased to c.82,000 macro sites and
to a presence in 10 European markets - with leading positions in 9 of them - following
the recent addition of a 50% stake in Cornerstone, the UK's #1 tower company, and the
completion of the acquisition of Wind Hellas's towers in Greece. The superior quality
of our grid was further highlighted by the signing of framework agreements with Eir and
Three in Ireland.
|
|
·
|
Highly
secured short and medium-term growth: We delivered encouraging commercial momentum
with c.1,400 new tenancies added in the first 9 months of FY21, including c.500 previously
non-committed tenancies or approximately one quarter of the tenancies needed to deliver
our medium term tenancy ratio target of >1.50x. This progress is expected to enable
more focus on the upsides to our plan and on long-term growth opportunities.
|
|
·
|
Competitive
MSA: We deployed our "future fit" Master Service Agreement approach successfully
in the UK and Greece to secure long-term contractual relationships with market leading
mobile operators. Our balanced approach positions us well to capture growth and gain
market share.
|
|
·
|
Margin
uplift through lease-up and efficiencies: We expanded our ground lease optimisation
programme to reduce costs with pilots now underway in 6 countries. We saw encouraging
results already from our two initial pilots in Germany and Spain, two of our largest
markets. Our commercial organisation is in place to deliver on upsides, including enabling
sharing on German rooftops.
|
|
·
|
Optimal
capital structure and dividends: Vantage Towers' investment grade rating has been
confirmed and external financing secured. The company is on track for 4.0x leverage
at year end FY21, enabling Vantage Towers to balance growth, investments and returns
with a 60% dividend payout ratio, including a €280m dividend for FY21, and €1
billion of leverage capacity for organic growth beyond the plan and/or strategic M&A.
|
Building good commercial momentum
At our Capital Markets Day in November
2020, we spoke about our focused independent commercial mindset at Vantage Towers. Combining this with the leading grids
we have is proving to be a powerful proposition. A recent example is Ireland, where Eir and Three have signed 10-year framework
agreements to govern new tenancies they intend to take up with Vantage Towers, potentially adding more than 250 and 200 future
tenancies, respectively. In Spain, AOTEC, the industry body representing over 150 local operators, has entered into a 5-year collaboration
agreement with Vantage Towers to add tenancies and densify coverage in rural locations.
Broad connectivity for the Internet
of Things (IoT) represents a significant opportunity for Europe and we intend to be at the forefront of enabling its adoption,
capturing growth opportunities as various industries unlock value through efficiencies enabled by this connectivity. Executing
on this agenda, we have signed a 10 year framework agreement with Sigfox in Germany forming a partnership to help it scale its
IoT infrastructure. The agreement is expected to generate at least 350 tenancies by 31 March 2022 and at least 500 new tenancies
by 31 December 2023. This is an excellent example of our successful collaboration with our customers and partners to progress
on the mission of enabling a "Digital Europe".
In parallel, we remain focused on our
goal of becoming a 5G superhost in Europe, offering bespoke solutions which enable 5G connectivity using our towers across various
verticals, including manufacturing, healthcare, e-gaming and agriculture.
We are also rapidly progressing on 5G
indoor coverage solutions and we are announcing the deployment of the first 5G Distributed Antenna System (DAS) solution for a
building complex in the Czech Republic where we will act as a neutral host to deliver efficient connectivity solutions.
Initial evidence of our progress can
be seen in the c.1,400 net tenancies added during the first 9 months of FY21. Of these, c.1,100 are from non-Vodafone customers,
including c.500 from previously non-committed sources which represents approximately one quarter of the non-committed tenancies
we need to deliver our medium-term tenancy ratio target of >1.50x.
During the first 9 months of FY21, we
have also added approximately 450 new sites, putting our target of approximately 550 new sites for the full year well within reach.
We have also made encouraging progress
on our ground lease optimisation programme, which includes buying out leases or agreeing improved terms with landowners. In Germany
and Spain - two of our largest markets - we expect to enter into approximately 100 agreements for the purchase of land or long-term
rights of use by the end of FY21 as the programme ramps up. We have launched 4 further pilots in Portugal, the Czech Republic,
Hungary and Ireland.
Finally, the deployment of our proprietary
integrated software suite (TIMS), which will enhance efficiencies across our tower estate, is on track and expected to go live
shortly, with the full roll out expected by August 2021.
Executing our strategic agenda
In recent months we have reached a number
of key milestones as we ramp up our operations:
|
·
|
The
commercialisation of Cornerstone and transfer of Vodafone's 50% stake to Vantage Towers
|
|
·
|
The
completion of the merger of Wind Hellas and Vodafone Greece's towers
|
|
·
|
The
contribution and capitalisation of all countries in our consolidated perimeter, including
the transfer of Vodafone's 33.2% stake in INWIT
|
|
·
|
The
appointment of our high quality and diverse Supervisory Board
|
As we announced in early January, Vantage
Towers further established its position as a leading European infrastructure operator in Europe with the contribution of Vodafone's
50% stake in Cornerstone, its co-controlled joint venture in the UK. The acquisition adds approximately 14,200 towers to our footprint
and a business with an attractive financial profile, supported by commitments for new sites and tenancies from Cornerstone's two
anchor tenants, Vodafone and O2, which account for 56% of UK subscribers and have an active sharing agreement in place.
This followed the completion of the merger of Wind Hellas and Vodafone Greece's towers in December 2020 which created Vantage
Towers Greece, the largest tower company in Greece, with approximately 4,800 towers.
Separately, all of the other markets
in our consolidated perimeter have now been contributed to Vantage Towers including our 33.2% stake in INWIT.
On 1 February 2021, we announced the
appointment of our Supervisory Board. The appointed members of the Supervisory Board are highly skilled and diverse with independent
leadership from our Chairman, Dr. Rüdiger Grube. Our three newly nominated independent directors, Katja van Doren, Terry
Rhodes and Chuck Green bring a wealth of experience in their respective areas of expertise. With Katja, who will chair the Remuneration
and Nomination Committee we receive robust financial and remuneration best practice, while with Chuck, who will chair the Audit,
Risk and Compliance Committee, and Terry, we will benefit from entrepreneurial, financial and M&A expertise in the tower industry.
The independent directors are complemented by experienced senior Vodafone executives across a range of key skillsets including
technology, legal, finance, HR and M&A.
Financial update
Our financial performance through the
first 9 months of FY21 on a pro forma basis has been in line with our expectations. We have generated €723m of revenue (excluding
pass through revenue) and €291m of RFCF in our consolidated markets on a pro forma basis. In addition, Cornerstone contributed
a further €39m of RFCF for the first 9 months of FY21 pro forma based on our 50% share. Our other co-controlled joint-venture,
INWIT, is expected to report its full-year results on 4 March.
As announced at the Capital Markets
Day, the finalisation of the carve-out of Vantage Towers and completion of the planned IFRS 16 lease reassessment exercise triggered
by the new MSAs with Vodafone has resulted in some minor technical restatements to our pro forma financial performance as presented
below. The impact of the IFRS 16 lease reassessment is an accounting based increase in our ground lease expense of approximately
€10m on an annualised basis. The adjustment is non-cash, and therefore has no impact on our RFCF.
We are today reaffirming our FY21 pro
forma guidance and medium-term targets, with a technical update to our Adjusted EBITDAaL guidance for FY21 pro forma to €520-530m
to reflect the IFRS 16 lease accounting reassessment effect. As we build momentum in our commercial operations and ground lease
optimisation programme, we continue to target a medium term Adjusted EBITDAaL margin percentage in the high fifties, albeit these
initiatives are not expected to have a meaningful impact on margins during FY22 as the programmes ramp up.
Financial performance
Consolidated
Vantage Towers Pro Forma (€m)
|
|
FY20PF4,5
|
|
|
9m
FY21PF4,5
|
|
Revenue (ex.
pass through)
|
|
|
945
|
|
|
|
723
|
|
Capex recharge revenue
|
|
|
-
|
|
|
|
2
|
|
Revenue
|
|
|
945
|
|
|
|
725
|
|
Maintenance costs
|
|
|
(35
|
)
|
|
|
(28
|
)
|
Staff costs
|
|
|
(38
|
)
|
|
|
(29
|
)
|
Administrative & Other
|
|
|
(58
|
)
|
|
|
(48
|
)
|
Adj. EBITDA
|
|
|
814
|
|
|
|
620
|
|
margin (%)
|
|
|
86
|
%
|
|
|
86
|
%
|
Capex recharge revenue
|
|
|
(0
|
)
|
|
|
(2
|
)
|
Ground
lease expense6
|
|
|
(301
|
)
|
|
|
(224
|
)
|
Adj. EBITDAaL
|
|
|
513
|
|
|
|
394
|
|
margin (%)
|
|
|
54
|
%
|
|
|
54
|
%
|
Reversal of non-cash lease adjustment
|
|
|
10
|
|
|
|
6
|
|
Maintenance capex
|
|
|
(29
|
)
|
|
|
(23
|
)
|
Recurring OpFCF
|
|
|
494
|
|
|
|
377
|
|
Cash conversion (%)
|
|
|
96
|
%
|
|
|
96
|
%
|
(-) Tax paid
|
|
|
(103
|
)
|
|
|
(74
|
)
|
(-) Interest
|
|
|
(16
|
)
|
|
|
(12
|
)
|
Recurring
free cash flow (RFCF)
|
|
|
375
|
|
|
|
291
|
|
FY21 targets and medium term guidance
Consolidated
Vantage Towers
|
|
FY21
Pro forma7
|
|
Medium
Term Targets8
|
Tenancy Ratio for Consolidated
Vantage Towers
|
|
~1.38x
|
|
>1.50x
|
Revenue (ex. pass-through)
|
|
€955-970m
|
|
Mid-single digit CAGR
|
Adj. EBITDAaL
|
|
€520-530m
|
|
High 50s percentage margin
(based on revenue (ex. pass through))
|
RFCF
|
|
€375-385m
|
|
Mid to high single digit CAGR
|
Co-controlled
joint ventures
|
|
Guidance
|
INWIT RFCF
|
|
RFCF of ~€700m by FY269
|
INWIT Dividends
|
|
€0.30 DPS for CY20 (VT
share:~€96m) growing to €0.37 by CY239
|
Cornerstone RFCF
|
|
Mid-single digit CAGR
|
Cornerstone dividends
|
|
100% of excess cash with additional
distributions over time to maintain target leverage10
|
Balance sheet update
Today, we are also reporting on our
balance sheet for the first time, with our financial position as at 31 December 2020. The balance sheet includes all of our operations
with the exception of Cornerstone, which was included in the portfolio from January 2021. By the end of Q4 FY21, we expect to
reach a normalised working capital position and our target financial leverage of 4.0x. This will result from the implementation
of our MSAs with Vodafone taking full effect, the completion of the final payment for our Greece acquisition (pre-funded by Vodafone),
and completing our carve out from Vodafone.
We are targeting Net Financial Debt
/ Adj. EBITDAaL of 4.0x by the end of FY21, allowing for approximately €1 billion leverage capacity to fund other growth
investments or M&A. Recently, S&P and Moody's have announced that they had each assigned an investment grade credit rating
to Vantage Towers, with ratings of BBB- (stable) and Baa3 (strong), respectively, which was in line with our expectations. We
have also secured external bank debt financing to replace our existing intercompany facility.
Consolidated
Vantage Towers
|
|
31 March
2021 Target
|
|
Net Financial Debt
/ EBITDAaL
|
|
4.0x
|
|
Net Financial
Debt
|
|
c.€2.1
billion
|
|
We are also providing details of our
net working capital, which we classify as Operational Working Capital and Non-operational Working Capital.
We expect our operational working capital,
relating to recurring cash flows (excluding, for example, growth and recharged capex) to normalise by the end of FY21 and to average
approximately 12-15% of revenue (excluding pass through) over the medium term. Over the medium-term, we expect movements in net
working capital to average single digit euro million annual outflows.
Our non-operational working capital
movements, relating to non-recurring cash flows (e.g. recharged and growth capex), are expected to have a net positive impact
on free cash flow in the near-term, as our capital expenditure related to our Build To Suit programme ramps up.
Appendix
Vantage Towers KPIs - 31 December
2020
Fully-owned
operations
|
|
Co-controlled
operations
|
|
|
|
|
31 December
2020
|
|
DE
|
|
|
ES
|
|
|
GR11
|
|
|
CZ
|
|
|
PT
|
|
|
RO
|
|
|
HU
|
|
|
IE
|
|
|
Consolidated
|
|
|
IT12
|
|
|
UK13
|
|
|
Aggregated
|
|
Macro sites
|
|
|
19.4
|
k
|
|
|
8.8
|
k
|
|
|
4.8
|
k
|
|
|
3.8
|
k
|
|
|
3.5
|
k
|
|
|
2.3
|
k
|
|
|
1.9
|
k
|
|
|
1.2
|
k
|
|
|
45.7
|
k
|
|
|
22.1
|
k
|
|
|
14.2
|
k
|
|
|
82.0
|
k
|
Tenancy ratio
|
|
|
1.2
|
x
|
|
|
1.7
|
x
|
|
|
1.6
|
x
|
|
|
1.1
|
x
|
|
|
1.2
|
x
|
|
|
2.0
|
x
|
|
|
1.4
|
x
|
|
|
1.5
|
x
|
|
|
1.4
|
x
|
|
|
1.9
|
x
|
|
|
2.0
|
x
|
|
|
1.6
|
x
|
Market
position14
|
|
|
#2
|
|
|
|
#2
|
|
|
|
#1
|
|
|
|
#2
|
|
|
|
#2
|
|
|
|
#4
|
|
|
|
#2
|
|
|
|
#2
|
|
|
|
|
|
|
|
#1
|
|
|
|
#1
|
|
|
|
|
|
9m
FY21PF
Adjusted EBITDAaL
|
|
€
|
219m
|
|
|
€
|
52m
|
|
|
€
|
41m
|
|
|
€
|
82m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
€
|
394m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vantage Towers Consolidated H1 FY21
KPIs and Financials
Mar YE (€m),
Consolidated Vantage Towers
|
|
Restated15 H1
FY21PF
|
|
Macro sites
|
|
|
45,700
|
|
Tenancy
ratio
|
|
|
1.39
|
x
|
Revenue (ex. pass through)
|
|
|
482
|
|
Capex recharge revenue
|
|
|
-
|
|
Revenue
|
|
|
482
|
|
Maintenance costs
|
|
|
(16
|
)
|
Staff costs
|
|
|
(19
|
)
|
Administrative & Other
|
|
|
(31
|
)
|
Adj. EBITDA
|
|
|
416
|
|
Adjusted EBITDA margin
(%)
|
|
|
86
|
%
|
Recharged capital expenditure
revenue
|
|
|
-
|
|
Ground lease expense
|
|
|
(150
|
)
|
Adjusted EBITDAaL
|
|
|
266
|
|
Adjusted EBITDAaL margin
(%)
|
|
|
55
|
%
|
Reversal of non-cash lease adjustment
|
|
|
4
|
|
Maintenance capital expenditure
|
|
|
(14
|
)
|
ROpFCF
|
|
|
256
|
|
Cash conversion
|
|
|
95
|
%
|
(-) Tax paid
|
|
|
(48
|
)
|
(-) Interest
|
|
|
(8
|
)
|
RFCF
|
|
|
200
|
|
Vantage Towers Consolidated Balance
Sheet
Balance sheet
(€m)
|
|
31-Dec-20
|
|
Non-current
assets
|
|
|
9,238
|
|
Goodwill and intangible assets
|
|
|
3,446
|
|
Property, plant and equipment
|
|
|
2,847
|
|
Investments in joint ventures
|
|
|
2,918
|
|
Deferred tax assets
|
|
|
18
|
|
Trade and other receivables
|
|
|
9
|
|
|
|
|
|
|
Current assets
|
|
|
1,174
|
|
Receivables due from related
parties
|
|
|
1,127
|
|
Trade and other receivables
|
|
|
41
|
|
Cash and cash equivalents
|
|
|
6
|
|
|
|
|
|
|
Total Assets
|
|
|
10,412
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
2,312
|
|
Lease liabilities
|
|
|
1,786
|
|
Provisions
|
|
|
309
|
|
Post employment benefits
|
|
|
1
|
|
Deferred tax liabilities
|
|
|
18
|
|
Payables due to related parties
|
|
|
195
|
|
Trade and other payables
|
|
|
3
|
|
|
|
|
|
|
Current liabilities
|
|
|
3,100
|
|
Lease liabilities
|
|
|
263
|
|
Current income tax liabilities
|
|
|
24
|
|
Provisions
|
|
|
17
|
|
Payables due to related parties
|
|
|
2,633
|
|
Trade and other payables
|
|
|
160
|
|
Overdrafts
|
|
|
3
|
|
|
|
|
|
|
Total liabilities
|
|
|
5,412
|
|
|
|
|
|
|
Equity
|
|
|
5,000
|
|
Net investment of parent
|
|
|
4,945
|
|
Non-controlling interest
|
|
|
55
|
|
|
|
|
|
|
Total
equity and liabilities
|
|
|
10,412
|
|
Cornerstone KPIs and financials
Cornerstone
(£m), Mar YE
|
|
Adjusted16
FY20PF
|
|
|
Adjusted
H1 FY21PF
|
|
|
Adjusted
9m FY21PF
|
|
Macro sites
|
|
|
|
|
|
|
14,200
|
|
|
|
14,200
|
|
Tenancy
ratio
|
|
|
|
|
|
|
2.0
|
x
|
|
|
2.0
|
x
|
Revenue (ex. pass through)
|
|
|
280
|
|
|
|
139
|
|
|
|
210
|
|
Pass
through revenue17
|
|
|
67
|
|
|
|
38
|
|
|
|
56
|
|
Total Revenue
|
|
|
347
|
|
|
|
177
|
|
|
|
266
|
|
Opex (incl. pass through)
|
|
|
(119
|
)
|
|
|
(63
|
)
|
|
|
(95
|
)
|
Adjusted
EBITDA18
|
|
|
228
|
|
|
|
114
|
|
|
|
171
|
|
Adjusted
EBITDA margin (%)19
|
|
|
81
|
%
|
|
|
82
|
%
|
|
|
81
|
%
|
Recharged capital expenditure
revenue
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Ground
lease expense20
|
|
|
(121
|
)
|
|
|
(61
|
)
|
|
|
(91
|
)
|
Adjusted EBITDAaL
|
|
|
107
|
|
|
|
53
|
|
|
|
80
|
|
Adjusted
EBITDAaL margin (%)21
|
|
|
38
|
%
|
|
|
38
|
%
|
|
|
38
|
%
|
Maintenance capital expenditure
|
|
|
(9
|
)
|
|
|
(5
|
)
|
|
|
(8
|
)
|
Reversal of non-cash lease adjustment
|
|
|
4
|
|
|
|
3
|
|
|
|
5
|
|
ROpFCF
|
|
|
102
|
|
|
|
51
|
|
|
|
77
|
|
Cash conversion
|
|
|
95
|
%
|
|
|
96
|
%
|
|
|
96
|
%
|
Interest22
|
|
|
(5
|
)
|
|
|
(3
|
)
|
|
|
(4
|
)
|
Tax23
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(3
|
)
|
RFCF
|
|
|
95
|
|
|
|
46
|
|
|
|
70
|
|
Basis of preparation
Introduction
The financial
information presented in this announcement sets out certain summary pro forma consolidated financial results for Vantage Towers
for the twelve months ended 31 March 2020, the six months ended 30 September 2020 and as of and for the 9 months ended 31 December
2020.
The basis of
the pro forma information for the consolidated group reflects the historical results of Vantage Towers (including its operations
in Germany, Spain, Greece, Ireland, Portugal, Romania, Hungary and Czech Republic).
The pro forma
results of operations are adjusted for the expected financial impact of the separation of the business from Vodafone Group Plc
("Vodafone"). The impact of commercial agreements, including, amongst others, the Master Services Agreements ("Vodafone
MSAs") and Long Term Agreements ("LTAs"), which have been entered into with Vodafone, together with expected incremental
running costs of Vantage Towers, are included as if they had been in place throughout the twelve month, six month and 9 month
periods, respectively.
The pro forma
results relating to Vantage Towers Greece are based on the historical results of the tower assets contributed by Vodafone-Panafon
Hellenic Telecommunications Company S.A ("Vodafone Greece") and Wind Hellas Telecommunications SA ("Wind Hellas")
and reflect the commercial arrangements (including the Master Services Agreements) between Vantage Towers Greece, Vodafone Greece
and Wind Hellas, and certain expected incremental costs of Vantage Towers Greece on a standalone basis, as if they had been in
place for 100% of both businesses throughout the twelve month period and 9 month period respectively.
In addition,
Vantage Towers holds Vodafone's equity stakes in Infrastrutture Wireless Italiane S.p.A ("INWIT") and Cornerstone Telecommunications
Infrastructure Limited ("Cornerstone"). Selected financial information in relation to Cornerstone is set out separately.
These investments are classified as equity accounted joint ventures and will therefore not be included in consolidated Adjusted
EBITDA measures for financial reporting purposes.
The financial
information presented herein has been neither audited nor reviewed by Vodafone or Vantage Towers' independent auditors and may
be subject to change.
Pro forma financial information for
Consolidated Vantage Towers
Historical financial information
for the twelve months ended 31 March 2020
The summary
historical financial information used as the basis for the pro forma financial information for the twelve months ended 31 March
2020 contained herein has been prepared by extracting the directly attributable revenues and costs of the infrastructure assets
to be included in Vantage Towers from the accounting records of Vodafone. The financial statement line items that can be directly
identified are:
|
·
|
Revenues
from tenants other than Vodafone;
|
|
·
|
Costs
which are directly attributable to the tower infrastructure assets, such as energy, maintenance,
depreciation of property, plant and equipment ("PPE") and lease costs recognised
under IFRS 16; and
|
|
·
|
The
non-current PPE assets and related asset retirement obligations.
|
The same accounting
policies and measurement principles as were applied by Vodafone in preparing its consolidated financial information for inclusion
in its Annual Report for the year ended 31 March 2020 have been used for the preparation of the historical financial information,
which forms the basis of the pro forma financial information. This includes IFRS 16 "Leases" which was adopted by Vodafone
on 1 April 2019.
Historical financial information
for the six months ended 30 September 2020
The summary
historical financial information used as the basis for the pro forma financial information for the six months ended 30 September
2020 contained herein is derived from the accounting records of the markets that demerged during the period from the following
dates:
|
·
|
Vantage
Towers S.L.U ("Vantage Towers Spain") - 1 April 2020;
|
|
·
|
Vantage
Towers GmbH ("Vantage Towers Germany") - 25 May 2020;
|
|
·
|
Vantage
Towers Limited ("Vantage Towers Ireland") - 1 June 2020;
|
|
·
|
Vodafone
Towers Portugal S.A. ("Vantage Towers Portugal") - 16 July 2020; and
|
|
·
|
Vantage
Towers s.r.o. ("Vantage Towers Czech Republic") - 1 September 2020.
|
Historical financial information
as of and for the 9 months ended 31 December 2020
The summary
historical financial information used as the basis for the pro forma financial information as of and for the 9 months ended 31
December 2020 contained herein is derived from the accounting records of the markets that demerged during the period from the
dates set out above for the markets that demerged during the six months ended 30 September 2020 and from the following dates for
the remaining markets:
|
·
|
Vodafone
Towers Hungary (Vodafone Magyarország zrt) ("Vantage Towers Hungary")
- 1 November 2020;
|
|
·
|
Vodafone
Towers Romania S.R.L. ("Vantage Towers Romania") - 13 November 2020;
|
|
·
|
Vodafone
Greek TowerCo - 17 November 2020 (followed by the Group's 62% acquisition of Vantage
Towers Greece on 23 December 2020, which contained the assets of both Vodafone Greek
TowerCo and Wind Hellas Greek TowerCo respectively); and
|
|
·
|
the
Group's investment in the joint venture of Infrastrutture Wireless Italiane S.p.A ("INWIT")
- 19 November 2020.
|
Pro forma adjustments
Pro forma financial
adjustments have then been made to present what the material effects of the separation of Vantage Towers from Vodafone would have
had on the historical financial information if Vantage Towers had existed in the structure set out in the introduction above for
the twelve months ended 31 March 2020, the six months ended 30 September and as of and for the 9 months ended 31 December 2020.
The main adjustments that have been made in preparing the pro forma financial information arise from:
|
·
|
Revenue
from Vodafone based on the terms of the relevant Vodafone MSA that are/will be in place
for each market. This adjustment includes the anchor tenant rental income from Vodafone.
|
|
·
|
Costs
required to run Vantage Towers on a standalone basis. This adjustment includes charges
for local Vodafone markets, such as maintenance and other support services, and group
services and other contractual arrangements covering, inter alia, maintenance and insurance
costs.
|
|
·
|
Employment
and other general and administrative costs.
|
The adjustments
set out above are based on the commercial arrangements that have been entered into between Vantage Towers and other members of
the Vodafone group, and with Wind Hellas in Greece, and the expected future costs of Vantage Towers, and are subject to potential
change. These changes might result from amendments to the proposed portfolio of assets and equity investments to be held by Vantage
Towers, the scope and pricing of services supplied by Vantage Towers, the actual incremental costs of Vantage Towers, changes
to accounting policies and related estimates and other potential business developments. The pro forma results exclude any one-off
costs in relation to the separation of Vantage Towers from Vodafone.
The post-demerger
financial information has been combined with historical results for the pre-demerger periods for the above markets to give results
for the respective periods.
Pro forma historical financial
information for INWIT
Vodafone transferred
its 33.2% stake in INWIT into Vantage Towers on 19 November 2020. This stake is equity accounted by Vantage Towers. The merger
of Vodafone Towers Srl ("Vodafone Towers Italy") and INWIT was effective from 31 March 2020 (the "INWIT Transaction").
The financial
information presented in respect of INWIT for the 12 months ended 31 March 2020 is directly extracted from the INWIT prospectus
dated 10 June 2020, is prepared in accordance with EU-IFRS and with the legal and regulatory provisions in force in Italy (in
particular, the measures adopted in implementation of Section 9 of Italian Legislative Decree no. 38 of 28 February 2005). Lease
costs have been derived from the INWIT prospectus and INWIT's CY19 Annual Report.
The pro forma
income statement in the INWIT prospectus represents INWIT's financial performance for the 12 months ended 31 December 2019 combined
with the Vodafone Towers Italy carve out financial information and adjusted to reflect the performance of the combined group as
though the INWIT Transaction had taken place as at 1 January 2019. The pro forma adjustments include adjustments to reflect the
MSA between Telecom Italia S.p.A. ("TIM"), Vodafone Italia S.p.A. ("Vodafone Italy") and INWIT, as if it had
been in place for the full year presented, and adjustments to align the Vodafone Towers Italy carve out financial information
to INWIT's accounting policies and adjustments for one-off and standalone costs.
The financial
information presented in respect of INWIT for the 6 months ended 30 September 2020 is directly extracted from the INWIT Q3 2020
results announcement as the sum of INWIT's Q2 and Q3 results, based on INWIT's accounting policies.
The financial
information presented in respect of INWIT for the 9 months ended 31 December 2020 is based on INWIT's disclosures on pro forma
revenue and pro forma EBIT for INWIT and Vodafone Towers Italy on a combined basis for the 9 month period ended 30 September 2020,
as disclosed in INWIT's interim report as at 30 September 30 2020.
The financial
information for the 12 month, six month and 9 month periods is adjusted on a pro forma basis for the purchase price allocation
exercise performed by Vodafone Group following the acquisition of its stake in INWIT on 31 March 2020, in line with IFRS 3.
Pro forma financial information for
Cornerstone
Historical financial information
for the twelve months ended 31 March 2020
The summary
historical financial information used as the basis for the pro forma financial information for the twelve months ended 31 March
2020 contained herein has been extracted from the Cornerstone Annual Report for the year ended 31 March 2020 and adjusted for
Vantage Towers' accounting policies and measurement principles and certain pro forma adjustments.
Historical financial information
for the six months ended 30 September 2020 and the 9 months ended 31 December 2020
The summary
historical financial information used as the basis for the pro forma financial information for the six months ended 30 September
2020 and the 9 months ended 31 December 2020 contained herein is derived from Cornerstone's accounting records and adjusted Vantage
Towers' accounting policies and measurement principles and certain pro forma adjustments.
Cornerstone Pro forma and accounting
policy adjustments
The same accounting
policies and measurement principles as were applied by Vantage Towers in preparing its condensed combined interim income statement
for the six months ended September 30, 2020 and three months ended December 31, 2020 have been used for the preparation of the
pro forma financial information. Pro forma adjustments have then been made to present the material effects of the application
of MSAs that will be in place for the twelve months ended 31 March 2020, for the six months ended 30 September 2020 and for the
9 months ended 31 December 2020. These adjustments reflect the revenue from the anchor tenants based on the terms of the MSAs
that are in place, including the anchor tenant rental income from Vodafone UK and O2 UK.
A further pro
forma adjustment has been made to reflect a reassessment of Cornerstone's lease portfolio as at 1 January 2021 in line with IFRS
16 arising from implementation of the MSAs between Cornerstone and Vodafone UK and Cornerstone and Telefónica UK, which
has been applied from 1 April 2020.
The summary
pro forma financial results for Cornerstone for the twelve months ended 31 March 2020, the six months ended 30 September 2020
and the 9 months ended 31 December 2020 have been further adjusted for changes to Cornerstone's staff capitalisation methodology
that will result in an adjustment to the capitalisation rate going forward. This is captured through the reallocation of costs
from capex to opex and estimated £12m, £7m and £10m reduction in pro forma Adj. EBITDA and pro forma Adj. EBITDAaL
in FY20PF, 1H21PF and 9 months ended 31 December 2020 respectively
KPIs and financial terms
A number of
Alternative Performance Measures ("APMs") are presented in this announcement, which are used in addition to IFRS statutory
performance measures. These APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders
with additional helpful information on the performance of the business.
Adjusted EBITDA
is operating profit before depreciation on lease-related right of use assets, depreciation, amortization and gains/losses
on disposal for fixed assets, and excluding 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.
Adjusted EBITDAaL is Adjusted EBITDA
less recharged capital expenditure revenue, and after depreciation on lease-related right of use assets and deduction of interest
on lease liabilities. Recharged capital expenditure revenue represents direct recharges to Vodafone of capital expenditure
in connection with upgrades to existing Sites.
Recurring Operating
Free Cash Flow ("ROpFCF") is Adjusted EBITDAaL plus depreciation on lease-related right of use assets and
interest on lease liabilities, less cash lease costs and maintenance capital expenditure. On a pro forma basis cash
lease costs are calculated based on the sum of depreciation on lease-related right of use assets and interest on lease liabilities
that were incurred by the Group excluding the effects from lease reassessment of the IFRS 16 lease liability and right of use
asset on the sum of the associated depreciation on lease-related right of use assets and interest on lease liabilities, which
have a non-cash impact in the respective period.
Maintenance
capital expenditure is defined as capital expenditure required to maintain and continue the operation of the existing
tower network and other Passive Infrastructure, excluding capital investment in new Sites or growth initiatives ("maintenance
capital expenditure").
Recurring Free
Cash Flow ("RFCF") is OpFCF less tax paid and interest paid and adjusted for changes in operating working capital.
Net Financial
Debt is defined as long-term borrowings, short-term borrowings, borrowings from Vodafone Group companies and
mark-to-market adjustments, less cash and cash equivalents and short-term investments and excluding lease liabilities.
Net Financial
Debt to Adjusted EBITDAaL is Net Financial Debt divided by Adjusted EBITDAaL for a rolling 12-month period.
Cash Conversion is defined as Recurring
Operating Free Cash Flow divided by Adjusted EBITDAaL.
Glossary
"BTS"
|
build-to-suit arrangements which corresponds
to committed new build site programs and related services that have been contracted with different clients, including
ad-hoc capital expenditure which might be required.
|
|
|
"Company"
|
Vantage Towers AG.
|
|
|
"Consolidated Vantage Towers"
|
the European tower infrastructure
business in Germany, Spain, Greece, Portugal, Romania, Czech Republic, Hungary and Ireland in which Vantage Towers has,
or is planned to have, a controlling interest.
|
|
|
"Cornerstone"
|
Cornerstone Telecommunications
Infrastructure Limited
|
"DAS"
|
distributed antenna system, which
is a network of spatially separated antenna nodes connected to a common source via a transport medium that provides
wireless service within a geographic area or structure.
|
|
|
"INWIT"
|
Infrastrutture Wireless Italiane
S.p.A.
|
|
|
"IoT"
|
Internet of Things
|
|
|
|
|
"Macro sites"
|
the physical infrastructure, either ground-based ("Ground
Based Tower" or "GBT") or located on the top a building ("Rooftop Tower" or "RTT") where
communications equipment is placed to create a cell in a mobile network including streetworks and long-term mobile sites.
|
|
|
"MNO"
|
mobile network operator.
|
|
|
"MSA"
|
master services agreement.
|
|
|
"Passive Infrastructure"
|
an installation comprising a set of different elements
located at a Site and used to provide support to the Active Equipment.
|
|
|
"Site"
|
the Passive Infrastructure on
which Active Equipment is mounted as well as its physical location.
|
|
|
"Small cells"
|
low-powered radio access nodes used in the completion
of macrocells and in areas of high traffic concentration.
|
|
|
"Tenancy ratio"
|
the total number of tenancies (including both Vodafone
and another MNO where there is existing active sharing on a macro site) of Vantage Towers divided by the total number of macro
sites.
|
|
|
"TIMS"
|
Tower Information Management System
|
Forward-looking statements
This announcement contains "forward-looking
statements" within the meaning of the US Private Securities Litigation Reform Act of 1995 with respect to the Company's results
of operations, financial condition, liquidity, prospects, growth and strategies. Forward-looking statements include, but are not
limited to, statements regarding objectives, targets, strategies, outlook and growth prospects, including guidance for the financial
year ending March 31, 2021, medium-term targets, new site builds, tenancy targets and the tenancy pipeline; the Company's working
capital, capital structure and dividend policy; future plans, events or performance, economic outlook and industry trends.
Forward-looking statements are sometimes,
but not always, identified by their use of a date in the future or such words as "will", "could", "may",
"should", "expects", "intends", "prepares" 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. All subsequent written or oral forward-looking statements attributable to the Company or
any member of the Vodafone Group, including any member of Vantage Towers, 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 announcement. Subject to compliance
with applicable law and regulations, neither Vodafone nor Vantage Towers intend to update these forward-looking statements and
do not undertake any obligation to do so.
Important Information
This announcement is not directed to,
or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state,
country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation
of such jurisdiction or which would require any registration or licensing within such jurisdiction. Any failure to comply with
these restrictions may constitute a violation of the laws of any such jurisdiction. This announcement does not constitute an offering
of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire
or dispose of securities in any company within the Vodafone Group, including, for the avoidance of doubt, any company within Vantage
Towers.
This announcement contains certain summary
pro forma financial information of Vantage Towers for the financial year ended 31 March 2020, the six months ended 30 September
2020 and the 9 months ended 31 December 2020, as well as certain financial information related to Cornerstone (together, the "PF
Financial Information"). For a description of the basis of preparation of the PF Financial Information, please see "Basis
of Preparation" above. The PF Financial Information has been prepared for illustrative purposes only and, by its nature,
addresses a hypothetical situation and does not, therefore, represent Vantage Towers' or Cornerstone's actual results of operations.
Such information may not, therefore, give a true picture of Vantage Towers' or Cornerstone's results of operations nor is it indicative
of its results. The PF Financial Information is subject to change.
This announcement also contains non-IFRS
financial information which Vodafone's and Vantage Towers' management teams believe is valuable in understanding the performance
of Vantage Towers. For a description of this information, please see "KPIs and financial terms" above. In this announcement,
the Company utilises certain alternative performance measures, including but not limited to revenue (excluding pass through revenue),
Adjusted EBITDA, Adjusted EBITDAaL, Recurring OpFCF, RFCF, Net Financial Debt and Net Financial Debt to Adjusted EBITDAaL that
in each case are not recognized under International Financial Reporting Standards ("IFRS"). These non-IFRS measures
are presented as the Company believes that they and similar measures are widely used in the markets in which it operates as a
means of evaluating a company's operating performance and financing structure. They may not be comparable to other similarly titled
measures of other companies and are not measurements under IFRS or other generally accepted accounting principles, nor should
they be considered as substitutes for the information contained in the financial statements included in this document.
This announcement does not purport to
contain all information required to evaluate the Company and/or its financial position. Financial information in this announcement
is preliminary and unaudited and certain financial information (including percentages) has been rounded according to established
commercial standards. Certain market positioning data about Vantage Towers included in this announcement is sourced from third
party sources. Third party industry publications, studies and surveys generally state that the data contained therein have been
obtained from sources believed to be reliable, but that there is no guarantee of the fairness, quality, accuracy, relevance, completeness
or sufficiency of such data. Such research and estimates, and their underlying methodology and assumptions, have not been verified
by any independent source for accuracy or completeness and are subject to change without notice. Accordingly, Vodafone and Vantage
Towers expressly disclaim any responsibility for, or liability in respect of, such information and undue reliance should not be
placed on such data.
References to Vodafone are to Vodafone
Group Plc and references to Vodafone Group are to Vodafone Group Plc and its subsidiaries unless otherwise stated. References
to Vantage Towers are either a reference to a member of the group of entities and investments comprising Vodafone's European towers
business as described in this announcement, or to the group as a whole, depending on the context and unless otherwise stated. Vodafone,
the Vodafone Speech Mark Devices, Vodacom and The future is exciting. Ready? are trade marks owned by Vodafone. Vantage Towers
is a trade mark owned by Vantage Towers. Other product and company names mentioned herein may be the trade marks of their respective
owners.
[1] "Non-committed"
tenancies refers to additional lease-up not committed at Capital Markets Day
[2] See basis of preparation
for further information on pro forma adjustments. Consolidated metrics excl. co-controlled joint ventures Cornerstone and
INWIT
[3] Not included within
consolidated Vantage Towers performance
[4] See p.10-12 for definitions
of non-IFRS measures and basis of preparation
[5] Includes the full
estimated impact of the lease term reassessment for FY20PF and 9m FY21PF
[6] Reflects impact from
completed lease reassessment
[7] FY21 guidance
on pro forma numbers; excluding the UK
[8] Medium term
guidance on actuals; excluding the UK
[9] As communicated
by INWIT at its Capital Markets Day on 5 November 2020; based on INWIT accounting policies
[10] No dividend in
respect of FY21
[11] Incl. 100% of Greece
[12] Incl. 100% of macro
sites from Italy
[13] Incl. 100% of macro
sites from UK
[14] Estimated based
on total number of macro sites compared to other market participants
[15] Restated mostly
for the IFRS 16 lease reassessment and phasing effects following the finalisation of reorganisation
[16] Adjustments, basis
of preparation and definitions described on p.10-12
[17] Pass through revenue
consists of recovery of business rates passed through to the tenants (FY20PF: £67m, H1 FY21PF: £38m, 9m FY21PF: £56m)
and recharged capex revenue (FY20PF: £0m, H1 FY21PF: £0m, 9m FY21PF: £0m)
[18] Includes the impact
of the reassessment of the capitalisation policy for internal staff costs from FY21
[19] Adj. EBITDA divided
by revenue (ex. pass through)
[20] Sum of depreciation
of lease-related right-of-use asset and interest expense on lease liability and net interest on finance sublease arrangements.
Cornerstone has performed a lease term re-assessment, which has resulted in a minor historical restatement of the pro forma depreciation
of lease-related right of use assets and interest on leases
[21] Adj. EBITDAaL divided
by revenue (ex. pass through)
[22] Based on 3.0-4.0x
Net Financial Debt / Adj. EBITDAaL. Please see p.10-12 for the definition of net financial debt
[23] Effective cash
tax rate of 8-9% in FY20PF, H1 FY21PF and 9MFY21PF. These estimations are considering factors such as timing difference between
capital allowance and accounting depreciation, one-off positive impact in FY20PF from tax relief on previously disallowed interest
cost and utilisation of tax losses carried forward
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: February 16, 2021
|
|
By:
|
/s/
R E S MARTIN
|
|
Name:
|
Rosemary
E S Martin
|
|
Title:
|
Group
General Counsel and Company Secretary
|
Vodafone (NASDAQ:VOD)
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