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 15, 2022
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 þ 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):¨
This Report on Form 6-K contains a Stock Exchange Announcement
dated 15 November 2022 entitled ‘Vodafone Group Plc ⫶ H1 FY23
results’.
Vodafone Group Plc
H1 FY23 results
15 November 2022
Resilient performance in Europe & Africa, good progress on
operational & portfolio priorities
|
● |
Group service revenue
growth of 2.5%* in the first half of FY23 |
|
● |
Adjusted EBITDAaL
declined by 2.6%* driven by a material prior year legal settlement,
and commercial underperformance in Germany |
|
● |
Pre-tax return on
capital employed increased by 0.6 percentage points year-on-year to
6.9% |
|
● |
Significant progress
with portfolio strategy to create industrial scale, enable
accelerated growth and unlock value |
|
|
|
|
|
H1
FY23 |
|
|
H1
FY22 |
|
|
Change |
|
Financial
results |
|
Page |
|
|
€m |
|
|
€m |
|
|
% |
|
Group
revenue |
|
|
6 |
|
|
|
22,930 |
|
|
|
22,489 |
|
|
|
2.0 |
|
Group
service revenue |
|
|
6 |
|
|
|
19,207 |
|
|
|
19,010 |
|
|
|
2.5 |
* |
Operating
profit |
|
|
6 |
|
|
|
2,935 |
|
|
|
2,620 |
|
|
|
12.0 |
|
Adjusted
EBITDAaL1 |
|
|
6 |
|
|
|
7,244 |
|
|
|
7,565 |
|
|
|
(2.6 |
)* |
Profit for
the financial period |
|
|
6 |
|
|
|
1,243 |
|
|
|
1,277 |
|
|
|
|
|
Basic earnings per
share |
|
|
17 |
|
|
|
3.52 |
c |
|
|
3.40 |
c |
|
|
|
|
Adjusted
basic earnings per share1 |
|
|
17 |
|
|
|
6.02 |
c |
|
|
4.90 |
c |
|
|
|
|
Interim dividend per
share |
|
|
35 |
|
|
|
4.50 |
c |
|
|
4.50 |
c |
|
|
|
|
Cash inflow
from operating activities |
|
|
17 |
|
|
|
6,280 |
|
|
|
6,455 |
|
|
|
(2.7 |
) |
Adjusted
free cash flow1 |
|
|
18 |
|
|
|
(513 |
) |
|
|
23 |
|
|
|
|
|
Net
debt1 |
|
|
19 |
|
|
|
(45,523 |
) |
|
|
(44,298 |
) |
|
|
(2.8 |
) |
*
represents organic growth. See page
2. ǀ 1. Non-GAAP measure. See
page 41. |
|
● |
Group revenue growth of
2.0% to €22.9 billion, driven by service revenue growth and higher
equipment sales |
|
● |
Operating profit
increased by 12.0% to €2.9 billion, reflecting a higher share of
income from associates and joint ventures and lower depreciation
and amortisation |
|
● |
FY23 Adjusted EBITDAaL
is expected to be €15.0 – 15.2 billion at the lower end of original
guidance |
|
● |
Interim dividend per
share of 4.5 eurocents, record date 25 November 2022 |
Nick Read, Group Chief Executive, commented:
“In the context of a challenging macroeconomic environment, we are
delivering a resilient performance this year, alongside making good
progress with our operational and portfolio priorities.
We are pleased the Vantage Towers transaction accomplished our
three key objectives – monetisation, deconsolidation and retaining
co-control of these strategically important assets – and we
continue to deliver portfolio actions to strengthen our businesses
and accelerate growth. In addition, our recently announced
fibre-to-the-home JV in Germany will further enhance our leading
gigabit fixed network position in Europe’s largest market.
We are taking a number of steps to mitigate the economic backdrop
of high energy costs and rising inflation. These include taking
pricing action across Europe, whilst at the same time supporting
our most vulnerable customers and driving energy efficiency
measures across the business. We are also announcing today a new
cost savings target of €1+ billion focused on streamlining and
further simplifying the Group.
We are confident that the ongoing delivery of our organic strategy
and portfolio actions will underpin long-term growth and create
value for shareholders.”
For more information, please contact:
Investor
Relations |
Media Relations |
Investors.vodafone.com |
Vodafone.com/media/contact |
ir@vodafone.co.uk |
GroupMedia@vodafone.com |
Registered Office: Vodafone House, The Connection, Newbury,
Berkshire RG14 2FN, England. Registered in England No. 1833679
A webcast Q&A session will be held at 10:00 GMT on 15 November
2022. The webcast and supporting information can be accessed at
investors.vodafone.com
Summary
Resilient financial performance
Organic growth
All amounts marked with an ‘*’ in this document represent organic
growth which presents performance on a comparable basis, excluding
the impact of foreign exchange rates, mergers and acquisitions, the
hyperinflation adjustments in Turkey and other adjustments to
improve the comparability of results between periods. Organic
growth figures are non-GAAP measures. See non-GAAP measures on page
41 for more information.
Financial performance
Total revenue increased by 2.0%
to €22.9 billion (FY22 H1: €22.5 billion), as service revenue
growth and higher equipment sales was partly offset by unfavourable
foreign exchange movements.
Adjusted EBITDAaL declined by
2.6%* to €7.2 billion1 (FY22 H1: €7.6 billion), with
revenue growth offset by a prior year one-off legal settlement in
Italy (1.4 percentage point drag year-on-year) and commercial
underperformance in Germany. The Adjusted EBITDAaL margin was 2.0*
percentage points lower year-on-year at 31.6%.
Operating profit increased by
12.0% to €2.9 billion, reflecting a higher share of income from
associates and joint ventures and lower depreciation and
amortisation. The Group made a profit for the period of €1.2
billion (FY22 H1: €1.3 billion) as an increase in operating profit
and investment income was offset by a higher income tax charge,
attributable to one-off deferred tax credits recognised in the
prior period.
Basic earnings per share was 3.52
eurocents, compared to basic earnings per share of 3.40 eurocents
in the prior year.
Cash flow, funding & capital allocation
Cash inflow from operating activities decreased by 2.7% to €6.3
billion (FY22 H1: €6.5 billion), with higher operating profit being
more than offset by working capital movements and higher tax
payments.
Free cash flow was an outflow of €3.2 billion (FY22 H1: outflow of
€1.0 billion) reflecting lower Adjusted EBITDAaL and higher licence
and spectrum payments in the period. Adjusted free cash flow was an
outflow of €0.5 billion (FY22 H1: inflow of €23 million).
Net debt increased by €3.9 billion to €45.5 billion (€41.6 billion
as at 31 March 2022). This was driven by the free cash outflow of
€3.2 billion, equity dividends of €1.3 billion, and share buybacks
of €1.0 billion used to offset dilution linked to mandatory
convertible bonds. These factors were partly offset by other
movements of €1.7 billion, relating to the settlement of 5G
spectrum in Italy previously included in net debt. Settlement of
the liability during the period had no impact on net debt, but the
resulting cash payment was included in free cash flow. As at 30
September 2022, the weighted average of cost of debt was around
2.5% and average bond maturity was 11 years, with all bonds held at
fixed interest rates.
Current liquidity, which includes cash and equivalents and
short-term investments, is €11.5 billion (€12.3 billion as at 31
March 2022). This includes €7.6 billion of net collateral which has
been posted to Vodafone from counterparties as a result of positive
mark-to-market movements on derivative instruments (€2.2 billion as
at 31 March 2022).
The interim dividend per share is 4.5 eurocents (FY22 H1: 4.5
eurocents). The ex-dividend date for the interim dividend is 24
November 2022 for ordinary shareholders, the record date is 25
November 2022 and the dividend is payable on 3 February 2023.
Hyperinflationary accounting in Turkey
As anticipated and explained in the Group’s reporting for the year
ended 31 March 2022, Turkey now meets the requirements to be
designated as a hyperinflationary economy under IAS 29 ‘Financial
Reporting in Hyperinflationary Economies’. The Group has therefore
applied hyperinflationary accounting, as specified in IAS 29, for
amounts reported by Vodafone Turkey for the period commencing 1
April 2022. See note 1 of the unaudited condensed consolidated
financial statements for further information. Our guidance for FY23
excludes any impact from this change in accounting.
Note:
|
1. |
Includes a reduction of €26 million
resulting from hyperinflationary accounting in Turkey. |
Strategy
Committed to improving returns through growth &
portfolio action
Our strategy focuses on driving shareholder returns through growth,
and is delivered through our customer commitments and enabling
strategies. These work together towards our vision to become a new
generation connectivity and digital services provider for Europe
and Africa, enabling an inclusive and sustainable digital
society.
We continued to make progress with our strategy during the first
half of FY23 and highlights include: further deepening our customer
relationships with lower customer churn; good results from our
increased capital investment with improvements in network quality;
increasing penetration of financial services in Africa; and another
successful year of digital enabled efficiencies. The table below
includes a selection of KPIs that illustrates progress in our key
areas of focus.
|
|
Units |
|
|
H1 FY23 |
|
|
H1 FY22 |
|
Customer commitments |
|
|
|
|
|
|
|
|
|
|
|
|
Best connectivity products & services |
|
|
|
|
|
|
|
|
|
|
|
|
Europe mobile contract customers1 |
|
|
million |
|
|
|
66.7 |
|
|
|
66.0 |
|
Europe
broadband customers1 |
|
|
million |
|
|
|
25.5 |
|
|
|
25.6 |
|
Europe
Consumer converged customers1 |
|
|
million |
|
|
|
9.3 |
|
|
|
8.3 |
|
Europe mobile contract customer churn |
|
|
% |
|
|
|
13.4 |
|
|
|
13.1 |
|
Africa
mobile customers2 |
|
|
million |
|
|
|
188.0 |
|
|
|
186.0 |
|
Africa
data users2 |
|
|
million |
|
|
|
90.2 |
|
|
|
88.6 |
|
Business service revenue growth* |
|
|
% |
|
|
|
2.6 |
|
|
|
1.2 |
|
Leading innovation in digital services |
|
|
|
|
|
|
|
|
|
|
|
|
Europe
TV subscribers1 |
|
|
million |
|
|
|
21.7 |
|
|
|
22.2 |
|
IoT
SIM connections3 |
|
|
million |
|
|
|
152 |
|
|
|
136 |
|
Africa
M-Pesa customers2 |
|
|
million |
|
|
|
55.6 |
|
|
|
49.0 |
|
Africa
M-Pesa transaction volume2 |
|
|
billion |
|
|
|
11.9 |
|
|
|
9.3 |
|
Outstanding digital experiences |
|
|
|
|
|
|
|
|
|
|
|
|
Digital
channel sales mix4 |
|
|
% |
|
|
|
26 |
|
|
|
24 |
|
End-to-end
TOBi completion rate5 6 |
|
|
% |
|
|
|
51 |
|
|
|
41 |
|
Enabling strategies |
|
|
|
|
|
|
|
|
|
|
|
|
Leading gigabit networks |
|
|
|
|
|
|
|
|
|
|
|
|
5G
available in European cities1 |
|
|
# |
|
|
|
344 |
|
|
|
244 |
|
Europe
on-net gigabit capable connections1 |
|
|
million |
|
|
|
50.1 |
|
|
|
46.5 |
|
Europe
on-net NGN broadband penetration1 |
|
|
% |
|
|
|
29 |
|
|
|
30 |
|
Simplified & most efficient operator |
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
ROCE (controlled)7 |
|
|
% |
|
|
|
6.9 |
|
|
|
6.3 |
|
Post-tax
ROCE (controlled and associates/joint
ventures)7 |
|
|
% |
|
|
|
5.1 |
|
|
|
4.3 |
|
Europe
markets where 3G switched off1 |
|
|
# |
|
|
|
4 |
|
|
|
4 |
|
1. Including VodafoneZiggo | 2. Africa including Safaricom | 3. H1
FY23 includes an adjustment to our customer base to remove inactive
SIMs | 4. Based on Germany, Italy, UK, Spain only | 5. Group
excluding Egypt | 6. Defined as percentage of total customer
contacts resolved without human interaction through TOBi | 7. These
line items are non-GAAP measures. See page 41 for more information.
The half-year ROCE calculation is based on returns for the 12
months ended 30 September.
A more detailed review of our strategic progress is contained
within an accompanying video presentation available here:
investors.vodafone.com/reports-information/results-reports-presentations.
In this presentation we outline: we are systematically executing
our organic growth strategy and making significant progress with
our proactive portfolio management plans; we have significant
action plans under way to mitigate the challenging macroeconomic
backdrop; and we are committed to improving shareholder returns
through our long-term organic strategy.
Our action plan to mitigate the current macroeconomic challenges
includes price initiatives and an extension of our ongoing
efficiency programme. Price initiatives have been implemented in 12
out of 13 European markets and include contractual price increases,
reduced promotional discounts and new ARPU accretive product
portfolios. We now have 7 European markets with inflation-linked
pricing structures. The extension of our efficiency programme will
generate over €1 billion of additional cost savings by FY26 through
streamlining and simplifying our group-wide structure and further
accelerating the digitalisation of our operations.
Our purpose
We connect for a better future
We believe that Vodafone has a
significant role to play in contributing to the societies in which
we operate and we want to enable an inclusive and sustainable
digital society. We continue to make progress against our purpose
strategy and provided a full update in our FY22 Annual Report and
supplementary materials (available on
investors.vodafone.com). Highlights and achievements from
the first half of FY23 are summarised below.
Energy efficiency
initiatives
The expansion of our networks and the
significant increase in data traffic volumes means we now carry 7
times more mobile data compared to just five years ago, yet our
total energy consumption has remained roughly consistent over the
same period. We are committed to continually improving our energy
efficiency, particularly the efficiency of our base station sites
and our technology centres, which accounted for 96% of our total
energy consumption in FY22.
Our strategy to optimise energy usage
and improve energy efficiency includes modernising our networks.
Between FY17 and FY22, the share of 4G and 5G traffic doubled on
our network – and now accounts for over 90% of our mobile data
traffic – as we shut down 3G networks in favour of more efficient
4G and 5G networks. In addition, we already put mobile radio
capacity layers throughout Europe into low power modes during low
traffic periods. We are now extending this functionality so that it
operates 24 hours a day, 7 days a week, and we will continue to
enhance this capability to maximise energy efficiency.
With respect to our passive
infrastructure, we have been investing in power and cooling
upgrades, IoT and smart metering. For example, we use AI-based
algorithms to optimise cooling in 70 technology centres across
Europe and Africa and we will increase our investment in passive
infrastructure upgrades going forward. All these programmes are
underpinned by our extensive energy data management and analytics
system, which collects and stores data feeds from our electricity
suppliers and from smart meters. This system is now live across 13
markets in Europe, with smart meters installed at 53,000
sites.
Sourcing renewable
electricity
Following our energy purchasing
hierarchy approach, we prioritise energy efficient practices,
before moving on to on-site generation of renewable energy,
renewable power purchase agreements (‘PPAs’) and Renewable
Electricity Certificates (‘RECs’). Whilst on-site generation of
renewable electricity accounted for less than 1% of our overall
renewable energy consumption in FY22 due to technical and space
constraints, we continue to drive innovation in this area. For
example, our recent Renewable Power Challenge encouraged
organisations to submit innovative solutions to the challenge of
generating renewable power directly at our mobile base stations. We
have shortlisted partners who develop microgrids in Africa and
manufacturer micro wind turbines and will be supporting them as
they develop proof of concepts to help us assess the feasibility
and scalability of their solutions.
In Europe, we are expanding our PPA
strategy and have now signed PPAs in Germany, Italy, UK, Spain and
Greece, which address 15% of our FY23 electricity supply in Europe.
These PPAs trade at a discount to current wholesale electricity
prices and provide us with more economic certainty against
potentially volatile wholesale electricity prices, as well as
helping to create new renewable capacity. In Africa, Vodacom is
pursuing numerous climate-related initiatives, including renewable
energy powered rural sites and a pilot renewable energy solution in
South Africa with the state-owned utility, Eskom.
Supporting customers in financial
hardship
We are conscious of the
cost-of-living pressures our customers are facing during this
challenging macroeconomic period. We have implemented a
cost-of-living plan, consisting of three elements: social or
low-cost tariffs in all markets; extra measures to ensure our
consumers and small businesses are supported, including our free
V-Hub service for SMEs; and leveraging our technology & digital
services to help customers reduce their energy usage.
The Spirit of
Vodafone
Our employee survey measures progress
on how our people experience our culture, engagement, and
connection to our purpose. The results from the latest survey
conducted in September show that our employee engagement index
remained high at 76 (May 2022: 72) and 88% of employees feel that
their daily work contributes to our purpose.
Outlook
Outlook for FY23
In May 2022, we set out guidance for
FY23 for our expectations of Adjusted EBITDAaL and Adjusted free
cash flow. Since this guidance was set in May 2022, the global
macroeconomic climate has worsened, with energy costs and broader
inflation in particular, impacting our financial performance. A
comprehensive action plan is underway to mitigate the effects of
the challenging macroeconomic environment. Our updated guidance for
FY23 financial performance is set out in the table
below.
FY23 Guidance
|
|
Original guidance |
|
Updated guidance |
Adjusted EBITDAaL1 |
|
€15.0 - €15.5 billion |
|
€15.0-15.2 billion |
Adjusted free cash flow1,2 |
|
c. €5.3 billion |
|
c.€5.1 billion |
In addition to the updated guidance
for FY23, we have set out considerations of factors likely to
affect our financial performance in FY24 within an accompanying
video presentation available here:
investors.vodafone.com/reports-information/results-reports-presentations.
Assumptions
The guidance above reflects the
following:
|
· |
Foreign
exchange rates used when setting guidance were as
follows: |
|
· |
As
anticipated and explained in the Group’s reporting for the year
ended 31 March 2022, Turkey now meets the requirements to be
designated as a hyperinflationary economy under IAS 29 ‘Financial
Reporting in Hyperinflationary Economies’. The Group has therefore
applied hyperinflationary accounting, as specified in IAS 29, for
amounts reported by Vodafone Turkey for the period commencing 1
April 2022. See note 1 of the unaudited condensed consolidated
financial statements for further information. Our guidance as
presented above excludes any impact from this change in
accounting. |
|
· |
Our
guidance assumes no material change to the structure of the
Group. |
1. Adjusted EBITDAaL and Adjusted
free cash flow are non-GAAP measures. See page 41 for more
information.
2. Adjusted free cash flow is Free
cash flow before licences and spectrum, restructuring costs arising
from discrete restructuring plans, integration capital additions
and working capital related items, M&A, and Vantage Towers
growth capital expenditure. Growth capital expenditure is total
capital expenditure excluding maintenance-type
expenditure.
Financial performance
Resilient performance in Europe & Africa
|
· |
Group
revenue increased by 2.0% to €22.9 billion, driven by service
revenue growth and higher equipment sales |
|
· |
Group
service revenue trend impacted by decline in Germany, Italy and
Spain, offset by acceleration in the UK and continued good growth
in Other Europe and Africa |
|
· |
Service
revenue growth in Turkey increased to 39.9%* (Q1: 35.8%*, Q2:
43.9%*), driven by higher inflation. Group service revenue growth
excluding Turkey was 1.5%* |
|
· |
Adjusted
EBITDAaL declined by 2.6%* driven by a material prior year legal
settlement, and commercial underperformance in Germany |
Group financial
performance
|
|
H1
FY231 |
|
|
H1 FY22 |
|
|
Reported |
|
|
|
€m |
|
|
€m |
|
|
change % |
|
Revenue |
|
|
22,930 |
|
|
|
22,489 |
|
|
|
2.0 |
|
-
Service revenue |
|
|
19,207 |
|
|
|
19,010 |
|
|
|
1.0 |
|
-
Other revenue |
|
|
3,723 |
|
|
|
3,479 |
|
|
|
|
|
Adjusted
EBITDAaL2,3 |
|
|
7,244 |
|
|
|
7,565 |
|
|
|
(4.2 |
) |
Restructuring costs |
|
|
(142 |
) |
|
|
(172 |
) |
|
|
|
|
Interest
on lease liabilities4 |
|
|
204 |
|
|
|
199 |
|
|
|
|
|
Loss on
disposal of property, plant and equipment and intangible
assets |
|
|
(11 |
) |
|
|
(26 |
) |
|
|
|
|
Depreciation and amortisation of owned assets |
|
|
(4,807 |
) |
|
|
(4,949 |
) |
|
|
|
|
Share
of results of equity accounted associates and joint ventures |
|
|
343 |
|
|
|
111 |
|
|
|
|
|
Other income/(expense) |
|
|
104 |
|
|
|
(108 |
) |
|
|
|
|
Operating profit |
|
|
2,935 |
|
|
|
2,620 |
|
|
|
12.0 |
|
Investment income |
|
|
211 |
|
|
|
129 |
|
|
|
|
|
Financing costs |
|
|
(1,418 |
) |
|
|
(1,473 |
) |
|
|
|
|
Profit before taxation |
|
|
1,728 |
|
|
|
1,276 |
|
|
|
|
|
Income tax (expense)/credit |
|
|
(485 |
) |
|
|
1 |
|
|
|
|
|
Profit for the financial period |
|
|
1,243 |
|
|
|
1,277 |
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
-
Owners of the parent |
|
|
986 |
|
|
|
996 |
|
|
|
|
|
- Non-controlled interests |
|
|
257 |
|
|
|
281 |
|
|
|
|
|
Profit for the financial period |
|
|
1,243 |
|
|
|
1,277 |
|
|
|
|
|
Basic earnings
per share |
|
|
3.52 |
c |
|
|
3.40 |
c |
|
|
|
|
Adjusted
basic earnings per share2 |
|
|
6.02 |
c |
|
|
4.90 |
c |
|
|
|
|
Further information is available in a
spreadsheet at
https://investors.vodafone.com/reports-information/results-reports-presentations
Notes:
|
1. |
The H1 FY23 results reflect average foreign
exchange rates of €1:£0.85, €1:INR 81.27, €1:ZAR 16.88, €1:TRY
17.43 and €1:EGP 19.51. |
|
2. |
Adjusted EBITDAaL and Adjusted basic earnings per
share are non-GAAP measures. See page 41 for more
information. |
|
3. |
Includes depreciation on leased assets of €2,046
million (H1 FY22: €2,003 million). |
|
4. |
Reversal of interest on lease liabilities
included within Adjusted EBITDAaL under the Group’s definition of
that metric, for re-presentation in financing costs. |
Geographic
performance summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
Other |
|
|
Vantage |
|
|
Common |
|
|
Elimi- |
|
|
|
|
|
|
Germany |
|
|
Italy |
|
|
UK |
|
|
Spain |
|
|
Europe |
|
|
Vodacom |
|
|
Markets |
|
|
Towers |
|
|
Functions |
|
|
nations |
|
|
Group |
|
H1 FY23 |
|
€m |
|
|
€m |
|
|
€m |
|
|
€m |
|
|
€m |
|
|
€m |
|
|
€m |
|
|
€m |
|
|
€m |
|
|
€m |
|
|
€m |
|
Total revenue |
|
|
6,592 |
|
|
|
2,377 |
|
|
|
3,392 |
|
|
|
1,965 |
|
|
|
2,894 |
|
|
|
3,202 |
|
|
|
1,953 |
|
|
|
657 |
|
|
|
696 |
|
|
|
(798 |
) |
|
|
22,930 |
|
Service revenue |
|
|
5,730 |
|
|
|
2,125 |
|
|
|
2,712 |
|
|
|
1,782 |
|
|
|
2,552 |
|
|
|
2,472 |
|
|
|
1,721 |
|
|
|
– |
|
|
|
268 |
|
|
|
(155 |
) |
|
|
19,207 |
|
Adjusted
EBITDAaL1 |
|
|
2,677 |
|
|
|
759 |
|
|
|
685 |
|
|
|
445 |
|
|
|
843 |
|
|
|
1,084 |
|
|
|
671 |
|
|
|
330 |
|
|
|
(250 |
) |
|
|
– |
|
|
|
7,244 |
|
Adjusted
EBITDAaL margin (%)1 |
|
|
40.6 |
% |
|
|
31.9 |
% |
|
|
20.2 |
% |
|
|
22.6 |
% |
|
|
29.1 |
% |
|
|
33.9 |
% |
|
|
34.4 |
% |
|
|
50.2 |
% |
|
|
|
|
|
|
|
|
|
|
31.6 |
% |
Downloadable
performance information is available at:
https://investors.vodafone.com/reports-information/results-reports-presentations
|
|
FY22 |
|
|
FY23 |
|
Organic
service revenue growth %*1 |
|
Q1 |
|
|
Q2 |
|
|
H1 |
|
|
Q3 |
|
|
Q4 |
|
|
H2 |
|
|
Total |
|
|
Q1 |
|
|
Q2 |
|
|
H1 |
|
Germany |
|
|
1.4 |
|
|
|
1.0 |
|
|
|
1.2 |
|
|
|
1.1 |
|
|
|
0.8 |
|
|
|
1.0 |
|
|
|
1.1 |
|
|
|
(0.5 |
) |
|
|
(1.1 |
) |
|
|
(0.8 |
) |
Italy |
|
|
(3.6 |
) |
|
|
(1.4 |
) |
|
|
(2.5 |
) |
|
|
(1.3 |
) |
|
|
(0.8 |
) |
|
|
(1.0 |
) |
|
|
(1.8 |
) |
|
|
(2.3 |
) |
|
|
(3.4 |
) |
|
|
(2.8 |
) |
UK |
|
|
2.5 |
|
|
|
0.6 |
|
|
|
1.2 |
|
|
|
0.9 |
|
|
|
2.0 |
|
|
|
1.4 |
|
|
|
1.3 |
|
|
|
6.5 |
|
|
|
6.9 |
|
|
|
6.7 |
|
Spain |
|
|
0.8 |
|
|
|
(1.9 |
) |
|
|
(0.6 |
) |
|
|
(1.6 |
) |
|
|
(5.1 |
) |
|
|
(3.4 |
) |
|
|
(2.0 |
) |
|
|
(3.0 |
) |
|
|
(6.0 |
) |
|
|
(4.5 |
) |
Other Europe |
|
|
4.2 |
|
|
|
2.4 |
|
|
|
3.3 |
|
|
|
2.9 |
|
|
|
2.7 |
|
|
|
2.8 |
|
|
|
3.0 |
|
|
|
2.5 |
|
|
|
2.9 |
|
|
|
2.7 |
|
Vodacom |
|
|
7.9 |
|
|
|
3.1 |
|
|
|
5.4 |
|
|
|
4.4 |
|
|
|
3.1 |
|
|
|
3.7 |
|
|
|
4.6 |
|
|
|
2.9 |
|
|
|
4.8 |
|
|
|
3.9 |
|
Other Markets |
|
|
18.4 |
|
|
|
19.7 |
|
|
|
19.1 |
|
|
|
19.8 |
|
|
|
19.8 |
|
|
|
19.8 |
|
|
|
19.4 |
|
|
|
24.7 |
|
|
|
26.7 |
|
|
|
25.7 |
|
Vantage Towers |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Group |
|
|
3.3 |
|
|
|
2.4 |
|
|
|
2.8 |
|
|
|
2.7 |
|
|
|
2.0 |
|
|
|
2.3 |
|
|
|
2.6 |
|
|
|
2.5 |
|
|
|
2.5 |
|
|
|
2.5 |
|
Note:
|
1. |
Organic service revenue growth, Group Adjusted
EBITDAaL and Group Adjusted EBITDAaL margin are non-GAAP measures.
See page 41 for more information. |
Germany
30% of Group service revenue
|
|
H1 FY23 |
|
|
H1 FY22 |
|
|
Reported |
|
|
Organic |
|
|
|
€m |
|
|
€m |
|
|
change % |
|
|
change %* |
|
Total revenue |
|
|
6,592 |
|
|
|
6,447 |
|
|
|
2.2 |
|
|
|
|
|
-
Service revenue |
|
|
5,730 |
|
|
|
5,777 |
|
|
|
(0.8 |
) |
|
|
(0.8 |
) |
-
Other revenue |
|
|
862 |
|
|
|
670 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDAaL |
|
|
2,677 |
|
|
|
2,892 |
|
|
|
(7.4 |
) |
|
|
(7.4 |
) |
Adjusted EBITDAaL margin |
|
|
40.6 |
% |
|
|
44.9 |
% |
|
|
|
|
|
|
|
|
Total revenue increased by 2.2% to
€6.6 billion, driven by equipment sales.
On an organic basis, service revenue
declined by 0.8%* (Q1: -0.5%*, Q2: -1.1%*), primarily reflecting
broadband losses since H2 FY22, related to the implementation of
new sector legislation.
Fixed service revenue declined by
1.6%* (Q1: -1.6%*, Q2: -1.7%*), driven by the lower broadband
customer base, as a result of specific operational challenges
related to the implementation of policies to comply with the new
Telecommunications Act, which came into effect in December 2021.
Our cable broadband customer base declined by 45,000 and we lost
38,000 DSL broadband customers during H1. Following improvements to
both our IT systems and customer journeys, and the gradual unwind
of churn related to the Telecommunications Act, the scale of
customer losses continued to slow during Q2. In October, we
announced an enhanced product portfolio, with customers now
benefiting from up to five times higher upload speeds, flat rate
phone calls, and no upfront connection fees, in return for a higher
monthly fee. Gigabit speeds are available to 24 million households
across our network.
Our TV customer base declined by
165,000 and our converged customer base decreased by 67,000 to 2.3
million Consumer converged accounts. These declines reflected the
challenges related to compliance with the new sector legislation
and fewer cross-selling opportunities.
Mobile service revenue increased by
0.2%* (Q1: 0.8%*, Q2: -0.4%*). Growth in the Business segment and
an increase in roaming and visitor revenue was partly offset by
lower MVNO revenues and a lower ARPU, reflecting mobile termination
rate cuts and a change in the sales channel mix towards indirect
and service providers. Towards the end of Q2 we reduced mobile
promotions, supporting inflow ARPU. We added 71,000 contract
customers during the period, and in Q2 our commercial momentum
improved, supported by customer growth in Business and Consumer. We
added a further 4.6 million IoT connections, driven by continued
strong demand from the automotive sector.
Adjusted EBITDAaL declined by 7.4%*,
reflecting the decline in service revenue, one-off settlements in
the prior year period, and higher customer acquisition costs. The
Adjusted EBITDAaL margin was 4.3* percentage points lower
year-on-year at 40.6%.
We achieved our €425 million cost and
capital expenditure synergy target for the integration of the
Unitymedia assets acquisition in FY22, over two years ahead of
plan.
On 17 October 2022, we announced we
are creating a joint venture with Altice to deploy
fibre-to-the-home (‘FTTH’) to up to 7 million homes over a six-year
period. This partnership with Altice is complementary to our
upgrade plans for our existing hybrid fibre cable network, which
include bringing fibre closer to all connected homes through ‘node
splitting’, DOCSIS 3.1 ‘high split’, and next generation technology
advances, such as DOCSIS 4.0, which provide a path to 10Gbps speeds
across our hybrid fibre cable network over time. The transaction is
subject to customary conditions, including regulatory approval and
is expected to close in the first half of 2023.
Italy
11% of Group service revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H1 FY23 |
|
|
H1 FY22 |
|
|
Reported |
|
|
Organic |
|
|
|
€m |
|
|
€m |
|
|
change % |
|
|
change %* |
|
Total revenue |
|
|
2,377 |
|
|
|
2,507 |
|
|
|
(5.2 |
) |
|
|
|
|
-
Service revenue |
|
|
2,125 |
|
|
|
2,187 |
|
|
|
(2.8 |
) |
|
|
(2.8 |
) |
-
Other revenue |
|
|
252 |
|
|
|
320 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDAaL |
|
|
759 |
|
|
|
917 |
|
|
|
(17.2 |
) |
|
|
(17.3 |
) |
Adjusted EBITDAaL margin |
|
|
31.9 |
% |
|
|
36.6 |
% |
|
|
|
|
|
|
|
|
Total revenue declined 5.2% to €2.4 billion due to lower service
revenue and equipment sales.
Service revenue declined by 2.8%* (Q1: -2.3%*, Q2: -3.4%*), as a
result of continued price pressure in the mobile value segment. The
slowdown in quarterly trends was due to the migration of PostePay
MVNO customers onto our network in the prior year, partly offset by
good Business demand.
Mobile service revenue declined by 5.2%* (Q1: -4.7%*, Q2: -5.6%*)
as a result of promotional intensity in the mobile value segment
and a lower active prepaid customer base. The quarter-on-quarter
slowdown was due to the migration of PostePay MVNO customers onto
our network in the prior year, partly offset by improving ARPU
following our targeted pricing actions. Our second brand ‘ho.’
continued to grow and now has 2.9 million customers.
Fixed service revenue increased by 3.4%* (Q1: 4.2%*, Q2: 2.6%*),
supported by good Business demand for digital services. We added
23,000 fixed-wireless access customers in the period, which are
included in our mobile customer base. Our Consumer converged
customer base now stands at 1.3 million, an increase of 31,000
during the period, and 55% of our broadband customers are
converged.
Our next generation network (‘NGN’) broadband services are now
available to 25.9 million households, including 9.3 million through
our own network and our partnership with Open Fiber. In October, we
launched 5G fixed-wireless services and cover around 2 million
households, which will increase to over 3 million by the end of the
financial year. This complements our 4G fixed-wireless access
products, which covers over 2 million additional households.
Adjusted EBITDAaL declined by 17.3%* including a 10.7 percentage
point decline relating to a €105 million legal settlement received
in the prior year period. Excluding the impact of the prior year
legal settlement, Adjusted EBITDAaL declined as a result of lower
mobile service revenue, partly offset by continued cost reductions.
The Adjusted EBITDAaL margin was 4.7* percentage points lower
year-on-year at 31.9%.
UK
14% of Group service revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H1 FY23 |
|
|
H1 FY22 |
|
|
Reported |
|
|
Organic |
|
|
|
€m |
|
|
€m |
|
|
change % |
|
|
change %* |
|
Total revenue |
|
|
3,392 |
|
|
|
3,161 |
|
|
|
7.3 |
|
|
|
|
|
-
Service revenue |
|
|
2,712 |
|
|
|
2,521 |
|
|
|
7.6 |
|
|
|
6.7 |
|
-
Other revenue |
|
|
680 |
|
|
|
640 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDAaL |
|
|
685 |
|
|
|
638 |
|
|
|
7.4 |
|
|
|
6.6 |
|
Adjusted EBITDAaL margin |
|
|
20.2 |
% |
|
|
20.2 |
% |
|
|
|
|
|
|
|
|
Total revenue increased by 7.3% to €3.4 billion driven by service
revenue growth and an appreciation of the pound sterling against
the euro.
On an organic basis, service revenue increased by 6.7%* (Q1: 6.5%*,
Q2: 6.9%*). A strong Consumer performance was supported by customer
base growth and contractual annual price increases, as well as
higher MVNO, roaming and visitor revenue. The improvement in
quarterly trends was supported by the return to growth of our
Business segment, partly offset by lower wholesale revenue.
Mobile service revenue grew by 10.5%* (Q1: 10.3%*, Q2: 10.8%*),
driven by strong commercial momentum and annual price increases in
Consumer, as well as higher roaming and visitor revenue. We
continued to grow our customer base, supported by our flexible
proposition Vodafone ‘Evo’ and despite implementing price actions,
adding 76,000 contract customers during the period. Contract churn
remained broadly stable year-on-year at 12.7%. Our digital prepaid
sub-brand ‘VOXI’ continued to grow, and had its best ever sales
month in September following a successful seasonal campaign, adding
72,000 new customers during H1. Our digital sales mix improved by 4
percentage points year-on-year to 37% of total sales in the
period.
Fixed service revenue declined by 2.8%* (Q1: -2.7%*, Q2: -2.9%*) as
strong growth in our Consumer segment was offset by a decline in
Business service revenue due to lower project activity. Consumer
growth was supported by price actions, good demand for our Vodafone
‘Pro Broadband’ product and continued penetration of our
fibre-to-the-premises product. Our broadband customer base
increased by 61,000 during the period and we now have over 1.1
million broadband customers, of which 54% are converged. Through
our partnerships with CityFibre and Openreach we are able to reach
over 9 million households with full fibre broadband, more than any
other provider in the UK.
Adjusted EBITDAaL grew by 6.6%*, reflecting growth in service
revenue, slightly offset by an increase in our operating expenses
due to inflationary pressures, including energy. Our Adjusted
EBITDAaL margin was stable year-on-year at 20.2%.
On 3 October 2022, we
confirmed that we are in discussions with CK Hutchison Holdings
Limited (‘CK Hutchison’) in relation to a possible combination of
Vodafone UK and Three UK. The envisaged transaction would entail us
combining our UK business with Three UK, with Vodafone owning 51%
and CK Hutchison owning 49% of the combined business. There can be
no certainty that any transaction will ultimately be
agreed.
Spain
9% of Group service revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H1 FY23 |
|
|
H1 FY22 |
|
|
Reported |
|
|
Organic |
|
|
|
€m |
|
|
€m |
|
|
change % |
|
|
change %* |
|
Total revenue |
|
|
1,965 |
|
|
|
2,090 |
|
|
|
(6.0 |
) |
|
|
|
|
-
Service revenue |
|
|
1,782 |
|
|
|
1,866 |
|
|
|
(4.5 |
) |
|
|
(4.5 |
) |
-
Other revenue |
|
|
183 |
|
|
|
224 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDAaL |
|
|
445 |
|
|
|
445 |
|
|
|
– |
|
|
|
0.2 |
|
Adjusted EBITDAaL margin |
|
|
22.6 |
% |
|
|
21.3 |
% |
|
|
|
|
|
|
|
|
Total revenue declined by 6.0% to €2.0 billion due to lower service
revenue and equipment sales.
On an organic basis, service revenue declined by 4.5%* (Q1: -3.0%*,
Q2: -6.0%*) driven by continued growth in the value segment, a
lower customer base, and a reduction in mobile termination rates,
partly offset by higher visitor revenue. The slowdown in quarterly
service revenue trends was largely due to price increases
implemented in Q2 last year, as well as the phasing of Business
revenue and lower wholesale revenue.
The market remained highly competitive in the value segment. In
mobile, our contract customer base was impacted by one-off
disconnections of 123,000 relating to temporary business SIMs
provided to schools and higher education providers during the
pandemic. Excluding these, our mobile contract customer base would
have grown by 97,000 in H1.
In June 2022, we launched a new product portfolio, focusing on
simplified and more transparent tariff plans to further improve
customer loyalty. This has had a positive impact on both our
commercial momentum and ARPU. Mobile contract churn in our Consumer
segment has also improved by 3.6 percentage points year-on-year. In
September 2022, we announced that tariffs will be increased in line
with inflation for Consumer, SME and SOHO customers on the main
Vodafone brand in Q4 and on an annual basis thereafter.
Our broadband customer base declined by 40,000 and our TV customer
base decreased by 10,000 as a result of continued competitive
intensity in the low value segment. However, our converged customer
base increased by 7,000 to over 2.2 million.
We continue to see good demand for our Business products, including
a significant number of registration requests to the digital
toolkit platform launched by the Spanish government in March 2022
as part of the EU recovery and resilience funding initiatives. This
scheme enables businesses to access fully subsidised digital
services on a single platform, with Vodafone being the orchestrator
of their access to these digital services. Due to delays with the
approval process, the first phase of the digital toolkit has been
extended. The second and third phases, aimed at smaller businesses,
were subsequently launched in September and October 2022.
Adjusted EBITDAaL grew by 0.2%*, as tax benefits (including
refunds) and ongoing cost efficiencies offset lower service
revenue. The Adjusted EBITDAaL margin was 1.4* percentage points
higher year-on-year at 22.6%.
Other
Europe 13% of Group service revenue |
|
|
|
|
|
|
|
|
|
|
|
H1 FY23 |
|
|
H1 FY22 |
|
|
Reported |
|
|
Organic |
|
|
|
€m |
|
|
€m |
|
|
change % |
|
|
change %* |
|
Total revenue |
|
|
2,894 |
|
|
|
2,810 |
|
|
|
3.0 |
|
|
|
|
|
-
Service revenue |
|
|
2,552 |
|
|
|
2,502 |
|
|
|
2.0 |
|
|
|
2.7 |
|
-
Other revenue |
|
|
342 |
|
|
|
308 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDAaL |
|
|
843 |
|
|
|
836 |
|
|
|
0.8 |
|
|
|
1.5 |
|
Adjusted EBITDAaL margin |
|
|
29.1 |
% |
|
|
29.8 |
% |
|
|
|
|
|
|
|
|
Total revenue increased by 3.0% to €2.9 billion largely driven by
service revenue growth.
On an organic basis, service revenue increased by 2.7%* (Q1: 2.5%*,
Q2: 2.9%*), with good growth in all markets other than Romania,
which was impacted by a mobile termination rate reduction.
In Portugal, service revenue grew due to strong commercial momentum
and we added 97,000 mobile contract customers and 27,000 fixed
broadband customers during the period. On 30 September 2022, we
announced that we had entered into an agreement to buy Portugal’s
fourth largest converged operator, Nowo Communications, from Llorca
JVCO Limited, the owner of Masmovil Ibercom S.A.. The transaction
is conditional on regulatory approval, with completion expected in
the first half of the 2023 calendar year.
In Ireland, service revenue increased due to customer base growth,
higher roaming and visitor revenue, and contractual price
increases. During the period, our mobile contract customer base
increased by 28,000 and mobile contract loyalty remained strong,
with churn at 9.6%. Our broadband customer base grew by 10,000 and
broadband churn decreased by 2.0 percentage points year-on-year to
16.0%. In October 2022, we announced that we had agreed a wholesale
network access agreement with Virgin Media Ireland. Vodafone is
already the largest fibre-to-the-home provider in Ireland, covering
over 1 million households, and this agreement will further extend
our footprint and provide customers with even more choice.
Service revenue in Greece increased, reflecting higher roaming and
visitor revenue and good growth in Business fixed. During the
period, we added 49,000 mobile contract customers and broadband
customer loyalty improved, with churn decreasing by 0.7 percentage
points year-on-year to 11.2%.
Adjusted EBITDAaL increased by 1.5%* as revenue growth was
partially offset by higher taxes in Hungary, and higher customer
acquisition and energy costs. The Adjusted EBITDAaL margin
decreased by 0.7* percentage points year-on-year at 29.1%.
On 22 August 2022, we announced that we had entered into heads of
terms with 4iG Public Limited Company and Corvinus Zrt in relation
to the potential sale of 100% of Vodafone Hungary for a total cash
consideration equivalent to an enterprise value of €1.8 billion.
The transaction is subject to completion of confirmatory due
diligence, the agreement of binding transaction documentation and
regulatory approval.
Vodacom
13% of Group service revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H1 FY23 |
|
|
H1 FY22 |
|
|
Reported |
|
|
Organic |
|
|
|
€m |
|
|
€m |
|
|
change % |
|
|
change %* |
|
Total revenue |
|
|
3,202 |
|
|
|
2,928 |
|
|
|
9.4 |
|
|
|
|
|
-
Service revenue |
|
|
2,472 |
|
|
|
2,271 |
|
|
|
8.9 |
|
|
|
3.9 |
|
-
Other revenue |
|
|
730 |
|
|
|
657 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDAaL |
|
|
1,084 |
|
|
|
1,062 |
|
|
|
2.1 |
|
|
|
(1.6 |
) |
Adjusted EBITDAaL margin |
|
|
33.9 |
% |
|
|
36.3 |
% |
|
|
|
|
|
|
|
|
Total revenue increased by 9.4% to €3.2 billion and Adjusted
EBITDAaL increased by 2.1%, primarily due to the strengthening of
the local currencies versus the euro.
On an organic basis, Vodacom’s service revenue grew by 3.9%* (Q1:
2.9%*, Q2: 4.8%*) with growth in both South Africa and Vodacom’s
international markets. Growth accelerated in Q2 due to a strong
performance in Vodacom’s international markets.
In South Africa, service revenue growth was supported by contract
price increases, partially offset by lower wholesale revenue and
disruptions to the payment of social grants which impacted consumer
discretionary spending. We added 113,000 mobile contract customers
during the period, supported by consistent growth in both the
Consumer and Business segments. Across the overall active customer
base, 72% of our mobile customers now use data services. Financial
Services revenue in South Africa grew by 8.1%* to €82 million,
supported by good demand for our insurance services. Our VodaPay
‘super-app’ has now reached 2.2 million registered users one year
after its launch.
In Vodacom’s international markets, service revenue growth was
supported by higher M-Pesa transaction volumes, notably in Tanzania
in Q2, following reductions in levies on mobile money transactions
introduced in the prior year. Growth was also supported by a higher
customer base and continued growth in data revenue. M-Pesa revenue
as a share of service revenue is now at 24.1%, which is 1.3
percentage points higher compared to the prior year. M-Pesa
transaction volume increased by 28.5% over the same period. Our
mobile customer base now stands at 43.9 million with 60.9% of our
active customer base using data services.
Vodacom’s Adjusted EBITDAaL declined by 1.6%* as service revenue
growth was offset by an increase in technology operating expenses
as we continued to improve the resilience of our network, higher
investment in customer growth, and inflationary cost increases. The
Adjusted EBITDAaL margin decreased by 2.2* percentage points to
33.9%.
In November 2021, Vodacom Group announced it had entered into an
agreement to acquire Vodafone’s 55.0% shareholding in Vodafone
Egypt for a total consideration of €2.4 billion. Following the
transaction, Vodafone Group’s ownership in Vodacom Group will
increase from 60.5% to 65.1%. The transaction has received
regulatory approval from the National Telecom Regulatory Authority
of Egypt, and the required exemptions from Egypt's Financial
Regulatory Authority. It is anticipated that the remaining
conditions will be fulfilled soon, following which the transaction
can complete.
Last year, Vodacom announced that it had agreed to acquire a
co-controlling 30% interest in the fibre assets currently owned by
Community Investment Ventures Holdings (Pty) Limited (‘CIVH’). CIVH
owns Vumatel and Dark Fibre Africa, which are South Africa’s
largest open access fibre operators. Vodacom’s investment and
strategic support will further accelerate the growth trajectory of
fibre roll-out in South Africa helping close the digital divide.
The transaction recently received approval to proceed from South
Africa’s Independent Communications Authority and remains subject
to regulatory approval from the country’s Competition
Commission.
Further information on our operations in Africa can be accessed
here: vodacom.com.
Other
Markets 9% of Group service revenue |
|
|
|
|
|
|
|
|
|
|
|
H1 FY23 |
|
|
H1 FY22 |
|
|
Reported |
|
|
Organic |
|
|
|
€m |
|
|
€m |
|
|
change % |
|
|
change %* |
|
Total revenue |
|
|
1,953 |
|
|
|
1,958 |
|
|
|
(0.3 |
) |
|
|
|
|
-
Service revenue |
|
|
1,721 |
|
|
|
1,752 |
|
|
|
(1.8 |
) |
|
|
25.7 |
|
-
Other revenue |
|
|
232 |
|
|
|
206 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDAaL |
|
|
671 |
|
|
|
683 |
|
|
|
(1.8 |
) |
|
|
28.2 |
|
Adjusted EBITDAaL margin |
|
|
34.4 |
% |
|
|
34.9 |
% |
|
|
|
|
|
|
|
|
Total revenue decreased by 0.3% to €2.0 billion due to the
depreciation of local currencies versus the euro, notably with
respect to the Turkish lira.
On an organic basis, service
revenue continued to grow at 25.7%* (Q1: 24.7%*, Q2: 26.7%)
reflecting a higher contribution from Turkey, impacted by
accelerating inflation, as well as strong customer base and ARPU
growth.
Service revenue growth in Turkey was driven by continued customer
base growth, higher visitor revenue, and ongoing repricing actions
to reflect increasing inflation in a challenging macroeconomic
environment. We maintained our commercial momentum, with 768,000
mobile contract net additions in the period, including migrations
from prepaid customers. Customer loyalty rates continued to
improve, with mobile contract churn down by 3.3 percentage points
year-on-year to 12.4%.
Service revenue in Egypt continued to grow strongly, reflecting
strong customer base growth and increased data usage. During the
period, we added 1.8 million prepaid mobile customers.
Adjusted EBITDAaL increased by 28.2%* despite the inflationary
pressure on our cost base due to worsening macroeconomic
conditions. The Adjusted EBITDAaL margin decreased by 0.6*
percentage points year-on-year to 34.4%.
Hyperinflationary accounting in Turkey
Turkey now meets the requirements to be designated as a
hyperinflationary economy under IAS 29 ‘Financial Reporting in
Hyperinflationary Economies’. The Group has therefore applied
hyperinflationary accounting, as specified in IAS 29, for the
period commencing 1 April 2022. See note 1 ‘Basis of preparation’
in the unaudited condensed consolidated financial statements for
more information.
During the period, service revenue in Turkey increased by 39.9%*
and Adjusted EBITDAaL grew by 47.7%* due to ongoing repricing
actions to reflect increasing inflation. Organic growth metrics
exclude the impact of the hyperinflation adjustment in the period
in Turkey. Group service revenue growth excluding Turkey was 1.5%*
(Q1: 1.6%*, Q2: 1.4%*) and Adjusted EBITDAaL excluding Turkey
declined 3.8%*.
Vantage Towers |
|
|
|
|
|
|
|
|
|
|
|
H1 FY23 |
|
|
H1 FY22 |
|
|
Reported |
|
|
Organic |
|
|
|
€m |
|
|
€m |
|
|
change % |
|
|
change %* |
|
Total revenue |
|
|
657 |
|
|
|
611 |
|
|
|
7.5 |
|
|
|
|
|
-
Service revenue |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
-
Other revenue |
|
|
657 |
|
|
|
611 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDAaL |
|
|
330 |
|
|
|
305 |
|
|
|
8.2 |
|
|
|
8.6 |
|
Adjusted EBITDAaL margin |
|
|
50.2 |
% |
|
|
49.9 |
% |
|
|
|
|
|
|
|
|
Total
revenue increased to €657 million, with 710 new tenancies
added during the period, bringing the tenancy ratio to 1.45x.
Vantage Towers reached a number of new partnership agreements with
customers during the first half of FY23. Vantage Towers reported
its results on 14 November 2022. Further information on Vantage
Towers can be accessed at: vantagetowers.com.
On 9 November 2022, we announced that we had entered into a
strategic co-control partnership with GIP and KKR for Vantage
Towers. A new JV will hold our 81.7% stake in Vantage Towers and
will make a voluntary takeover offer for the outstanding
Vantage Towers shares held by minority shareholders. Further detail
on the transaction is available here:
investors.vodafone.com/reports-information/results-reports-presentations.
|
|
|
|
|
|
|
Associates
and joint ventures |
|
|
|
|
|
|
|
|
H1 FY23 |
|
|
H1 FY22 |
|
|
|
€m |
|
|
€m |
|
VodafoneZiggo Group Holding B.V. |
|
|
162 |
|
|
|
(14 |
) |
Safaricom Limited |
|
|
110 |
|
|
|
115 |
|
Indus Towers Limited |
|
|
– |
|
|
|
– |
|
Other |
|
|
71 |
|
|
|
10 |
|
Share of results of equity accounted associates and joint
ventures |
|
|
343 |
|
|
|
111 |
|
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 remained stable at
€2.0 billion, as mobile contract customer base growth, higher
roaming revenue and contractual price increases were offset by a
decline in the fixed Consumer customer base.
During the period, VodafoneZiggo added 117,000 mobile contract
customers, supported by our best-in-class net promoter score and
higher Consumer demand. VodafoneZiggo’s broadband customer base
declined by 12,000 customers to 3.3 million due to increased price
competition. The number of converged households increased by
11,000, with 38% of broadband customers now converged, delivering
significant NPS and customer loyalty benefits. VodafoneZiggo now
offers 1 gigabit speeds to 6.8 million homes and is on track to
provide nationwide coverage by the end of 2022.
During the period, Vodafone received €90 million in dividends from
the joint venture, as well as €26 million in interest payments.
Safaricom Associate (Kenya)
Safaricom service revenue grew to €1.2 billion due to a higher
customer base and continued growth in M-Pesa revenue. During H1,
Vodafone received €183 million in dividends from Safaricom.
Indus Towers Limited Associate (India)
Following the sale of shares in
Indus Towers Limited (‘Indus Towers’) in February and March 2022,
the Group holds 567.2 million shares in, equivalent to a 21.0%
shareholding.
The Group’s interest in Indus
Towers has been provided as security against certain bank
borrowings secured against Indian assets and ranking behind this
security, as a pledge provided to Indus Towers under the terms of
the merger between Indus Towers and Bharti Infratel. Indus Towers
has been classified as held for sale in the condensed consolidated
statement of financial position since 31 March 2021 and the Group’s
share of Indus Towers’ results is not reflected in the Group’s
condensed consolidated income statement for H1 2023.
Vodafone Idea Limited Joint Venture (India)
On 31 March 2022, Vodafone Idea
completed an equity capital raise, with the Group contributing
INR33.75 billion using the proceeds realised from the sale of
shares in Indus in February and March 2022. Following the capital
raise, the Group’s holding in Vodafone Idea is equivalent to a
47.6% shareholding. On 25 July 2022, the residual proceeds from the
sale of such shares in Indus of INR4.36 billion were contributed to
Vodafone Idea in exchange for warrants convertible to equity within
18 months.
See Note 12 ‘Contingent
liabilities and legal proceedings’ in the unaudited condensed
consolidated financial statements for more information’
TPG Telecom Limited Joint Venture (Australia)
Vodafone Group owns an economic interest of 25.05% in TPG Telecom
Limited, a fully integrated telecommunications operator in
Australia. Hutchison Telecommunications (Australia) Limited owns an
equivalent economic interest of 25.05%, with the remaining 49.9%
listed as free float on the Australian stock exchange. The Vodafone
Group also holds a 50% share of a US$3.5 billion loan facility held
within the structure that holds the Group’s equity stake in TPG
Telecom.
|
|
|
|
|
|
|
|
|
|
Net
financing costs |
|
|
|
|
|
|
|
|
|
|
|
H1 FY23 |
|
|
H1 FY22 |
|
|
Reported |
|
|
|
€m |
|
|
€m |
|
|
change % |
|
Investment income |
|
|
211 |
|
|
|
129 |
|
|
|
|
|
Financing costs |
|
|
(1,418 |
) |
|
|
(1,473 |
) |
|
|
|
|
Net financing costs |
|
|
(1,207 |
) |
|
|
(1,344 |
) |
|
|
10.2 |
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
|
|
|
Mark-to-market losses |
|
|
41 |
|
|
|
397 |
|
|
|
|
|
Foreign exchange losses |
|
|
299 |
|
|
|
56 |
|
|
|
|
|
Adjusted
net financing costs1 |
|
|
(867 |
) |
|
|
(891 |
) |
|
|
2.7 |
|
Note:
|
1. |
Adjusted net financing costs is a
non-GAAP measure. See page 41 for more information. |
Net financing costs decreased by €137 million, primarily due to
lower mark-to-market losses on options held relating to the Group’s
mandatory convertible bonds partially offset by increased foreign
exchange losses. Adjusted net financing costs remained broadly
stable year-on-year, reflecting consistent average net debt
balances and weighted average borrowing costs for both periods.
Taxation |
|
|
|
|
|
|
|
|
|
|
|
H1 FY23 |
|
|
H1 FY22 |
|
|
Change |
|
|
|
% |
|
|
% |
|
|
pps |
|
Effective tax rate |
|
|
28.1 |
% |
|
|
(0.1 |
)% |
|
|
28.2 |
|
Adjusted
effective tax rate1 |
|
|
26.2 |
% |
|
|
31.5 |
% |
|
|
(5.3 |
) |
Note:
|
1. |
Adjusted effective tax rate is a
non-GAAP measure. See page 41 for more information. |
The Group’s effective tax rate for H1 FY23 was 28.1%.
The Group’s adjusted effective tax rate for H1 FY23 was 26.2% (H1
FY22: 31.5%). This is in line with our expectations for the full
year tax rate for which we continue to expect a high 20%’s tax
rate. The adjusted effective tax rate is lower than the prior year
primarily due to changes in the mix of the Group’s profits.
The effective tax rate for H1 FY22 included an increase in our
deferred tax assets in the UK of €498 million following the
increase in the corporate tax rate to 25% and €274 million
following the revaluation of assets for tax purposes in Italy. It
also included €155 million relating to the use of losses in
Luxembourg. The adjusted effective tax rate for H1 FY22 excluded
these amounts.
|
|
|
|
|
|
|
|
|
|
Earnings
per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported |
|
|
|
H1 FY23 |
|
|
H1 FY22 |
|
|
change |
|
|
|
eurocents |
|
|
eurocents |
|
|
eurocents |
|
Basic earnings per share |
|
|
3.52 |
c |
|
|
3.40 |
c |
|
|
0.12 |
c |
Adjusted
basic earnings per share1 |
|
|
6.02 |
c |
|
|
4.90 |
c |
|
|
1.12 |
c |
Note:
|
1. |
Adjusted basic earnings per share
is a non-GAAP measure. See page 41 for more information. |
Basic earnings per share was 3.52 eurocents, compared to 3.40
eurocents for H1 FY22.
Adjusted basic earnings per share was 6.02 eurocents, compared to
4.90 eurocents for H1 FY22.
Cash flow, capital allocation and
funding
Analysis of cash
flow |
|
|
|
|
|
|
|
|
H1 FY23 |
|
|
H1 FY22 |
|
|
Reported |
|
|
|
€m |
|
|
€m |
|
|
change % |
|
Inflow from operating activities |
|
|
6,280 |
|
|
|
6,455 |
|
|
|
(2.7 |
) |
Outflow
from investing activities |
|
|
(4,089 |
) |
|
|
(2,811 |
) |
|
|
(45.5 |
) |
Outflow from financing activities |
|
|
(2,993 |
) |
|
|
(3,795 |
) |
|
|
21.1 |
|
Net cash outflow |
|
|
(802 |
) |
|
|
(151 |
) |
|
|
(431.1 |
) |
Cash
and cash equivalents at beginning of the financial period |
|
|
7,371 |
|
|
|
5,790 |
|
|
|
|
|
Exchange gain on cash and cash equivalents |
|
|
282 |
|
|
|
11 |
|
|
|
|
|
Cash and cash equivalents at end of the financial period |
|
|
6,851 |
|
|
|
5,650 |
|
|
|
|
|
Cash inflow from operating activities decreased to €6,280 million
which reflects higher operating profit, more than offset by working
capital movements and higher taxation payments.
Outflow from investing activities increased by 45.5% to €4,089
million, primarily in relation to a lower net inflow in respect of
short-term investments, which outweighed higher spend on property,
plant and equipment. Short-term investments include highly liquid
government and government-backed securities and managed investment
funds that are in highly rated and liquid money market investments
with liquidity of up to 90 days.
Outflows from financing activities decreased by 21.1% to €2,993
million. Higher inflows from the net movement in short term
borrowings arising from collateral receipts outweighed lower
proceeds from the issue of long-term borrowings and higher
repayment of borrowings, the latter largely resulting from the
repayment of debt in relation to licenses and spectrum, notably in
Italy.
|
|
|
|
|
|
|
|
|
|
Analysis
of cash flow (continued) |
|
|
|
|
|
|
|
|
|
|
|
H1 FY23 |
|
|
H1 FY22 |
|
|
Reported |
|
|
|
€m |
|
|
€m |
|
|
change % |
|
Adjusted
EBITDAaL1 |
|
|
7,244 |
|
|
|
7,565 |
|
|
|
(4.2 |
) |
Capital
additions2 |
|
|
(3,541 |
) |
|
|
(3,365 |
) |
|
|
|
|
Working
capital |
|
|
(3,405 |
) |
|
|
(3,296 |
) |
|
|
|
|
Disposal of property, plant and equipment and intangible
assets |
|
|
– |
|
|
|
8 |
|
|
|
|
|
Restructuring costs |
|
|
(142 |
) |
|
|
(149 |
) |
|
|
|
|
Integration
capital additions3 |
|
|
(101 |
) |
|
|
(110 |
) |
|
|
|
|
Restructuring and integration working capital |
|
|
(72 |
) |
|
|
(141 |
) |
|
|
|
|
Licences and spectrum |
|
|
(2,181 |
) |
|
|
(482 |
) |
|
|
|
|
Interest
received and paid4 |
|
|
(688 |
) |
|
|
(593 |
) |
|
|
|
|
Taxation |
|
|
(672 |
) |
|
|
(577 |
) |
|
|
|
|
Dividends received from associates and joint ventures |
|
|
463 |
|
|
|
469 |
|
|
|
|
|
Dividends paid to non-controlling shareholders in subsidiaries |
|
|
(290 |
) |
|
|
(399 |
) |
|
|
|
|
Other |
|
|
140 |
|
|
|
87 |
|
|
|
|
|
Free
cash flow1 |
|
|
(3,245 |
) |
|
|
(983 |
) |
|
|
(230.1 |
) |
Acquisitions and disposals |
|
|
(98 |
) |
|
|
111 |
|
|
|
|
|
Equity
dividends paid |
|
|
(1,263 |
) |
|
|
(1,259 |
) |
|
|
|
|
Share
buybacks4 |
|
|
(1,004 |
) |
|
|
(1,062 |
) |
|
|
|
|
Foreign
exchange loss |
|
|
(65 |
) |
|
|
(119 |
) |
|
|
|
|
Other
movements in net debt5 |
|
|
1,730 |
|
|
|
(443 |
) |
|
|
|
|
Net
debt increase1 |
|
|
(3,945 |
) |
|
|
(3,755 |
) |
|
|
|
|
Opening
net debt1 |
|
|
(41,578 |
) |
|
|
(40,543 |
) |
|
|
|
|
Closing
net debt1 |
|
|
(45,523 |
) |
|
|
(44,298 |
) |
|
|
(2.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Free
cash flow1 |
|
|
(3,245 |
) |
|
|
(983 |
) |
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
-
Licences and spectrum |
|
|
2,181 |
|
|
|
482 |
|
|
|
|
|
-
Restructuring costs |
|
|
142 |
|
|
|
149 |
|
|
|
|
|
-
Integration capital additions3 |
|
|
101 |
|
|
|
110 |
|
|
|
|
|
-
Restructuring and integration working capital |
|
|
72 |
|
|
|
141 |
|
|
|
|
|
- Vantage Towers growth capital expenditure |
|
|
236 |
|
|
|
124 |
|
|
|
|
|
Adjusted
free cash flow1 |
|
|
(513 |
) |
|
|
23 |
|
|
|
|
|
Notes:
|
1. |
Adjusted
EBITDAaL, Free cash flow, Adjusted free cash flow and Net debt are
non-GAAP measures. See page 41 for more information. |
|
2. |
See page 51
for an analysis of tangible and intangible additions in the
year. |
|
3. |
Integration
capital additions comprises amounts for the integration of acquired
Liberty Global assets and network integration. |
|
4. |
Interest
received and paid excludes interest on lease liabilities of €153
million outflow (H1 FY22: €134 million) included within Adjusted
EBITDAaL, €58m of cash outflow (H1 FY22: €nil) of interest arising
from the repayment of debt in respect of licenses and spectrum and
€86 million of cash inflow (H1 FY22: €39 million) from the option
structures relating to the issue of the mandatory convertible bonds
which is included within Share buybacks. The option structures were
intended to ensure that the total cash outflow to execute the
programme were broadly equivalent to the amounts raised on issuing
each tranche. |
|
5. |
‘Other
movements on net debt’ for H1 FY23 includes mark-to-market losses
recognised in the income statement of €127 million (H1 FY22: €397
million loss), together with €1,739 million (H1 FY22: €55 million)
in relation to the repayment of debt in relation to licenses and
spectrum in Italy. |
Adjusted free cash flow decreased by €536 million to an outflow of
€513 million in the period. This reflects a decrease in Adjusted
EBITDAaL in the period, coupled with higher capital additions, an
adverse working capital movement, higher interest payments and
higher taxation as the timing of Germany’s taxation payments
normalises.
Borrowings
and cash position
|
|
Period-end FY23 |
|
|
Year-end FY22 |
|
|
Reported |
|
|
|
€m |
|
|
€m |
|
|
change % |
|
Non-current borrowings |
|
|
(59,907 |
) |
|
|
(58,131 |
) |
|
|
|
Current borrowings |
|
|
(15,675 |
) |
|
|
(11,961 |
) |
|
|
|
Borrowings |
|
|
(75,582 |
) |
|
|
(70,092 |
) |
|
|
|
Cash and cash equivalents |
|
|
7,072 |
|
|
|
7,496 |
|
|
|
|
Borrowings less cash and cash equivalents |
|
|
(68,510 |
) |
|
|
(62,596 |
) |
|
(9.4 |
) |
Borrowings principally includes bonds of €50,256 million (€48,031
million as at 31 March 2022), lease liabilities of €12,022 million
(€12,539 million as at 31 March 2022) and cash collateral
liabilities €8,395 million (€2,914 million as at 31 March
2022).
The increase in borrowings of €5,490 million was principally driven
by an increase in collateral liabilities of €5,481 million and
adverse foreign exchange movements on bonds of €3,109 million,
which were partially offset by a decrease in spectrum liabilities
of €1,899 million.
Funding
position
|
|
Period-end FY23 |
|
|
Year-end FY22 |
|
|
Reported |
|
|
|
€m |
|
|
€m |
|
|
change % |
|
Bonds |
|
|
(50,256 |
) |
|
|
(48,031 |
) |
|
|
|
Bank loans |
|
|
(1,582 |
) |
|
|
(1,317 |
) |
|
|
|
Other borrowings including spectrum |
|
|
(1,942 |
) |
|
|
(3,909 |
) |
|
|
|
Gross
debt1 |
|
|
(53,780 |
) |
|
|
(53,257 |
) |
|
(1.0 |
) |
Cash and cash equivalents |
|
|
7,072 |
|
|
|
7,496 |
|
|
|
|
Short-term
investments2 |
|
|
4,402 |
|
|
|
4,795 |
|
|
|
|
Derivative
financial instruments3 |
|
|
4,424 |
|
|
|
1,604 |
|
|
|
|
Net
collateral liabilities4 |
|
|
(7,641 |
) |
|
|
(2,216 |
) |
|
|
|
Net
debt1 |
|
|
(45,523 |
) |
|
|
(41,578 |
) |
|
(9.5 |
) |
Notes:
|
1. |
Gross debt and Net debt are non-GAAP measures. See page 41 for more
information. |
|
2. |
Short-term investments includes €998 million (€1,446 million as at
31 March 2022) of highly liquid government and government-backed
securities and managed investment funds of €3,404 million (€3,349
million as at 31 March 2022) that are in highly rated and liquid
money market investments with liquidity of up to 90 days. |
|
3. |
Derivative financial instruments excludes derivative movements in
cash flow hedging reserves of €2,559 million gain (€1,350 million
gain as at 31 March 2022). |
|
4. |
Collateral arrangements on derivative financial instruments result
in cash being held as security. This is repayable when derivatives
are settled and is therefore deducted from liquidity. |
Net debt increased by €3,945 million to €45,523 million. This was
driven by the free cash outflow of €3,245 million, equity dividends
of €1,263 million and share buybacks of €1,004 million (used to
offset dilution linked to the conversion of certain mandatory
convertible bonds), partially offset by other movements in net debt
of €1,730 million relating to the settlement of 5G spectrum in
Italy previously included in net debt. Settlement of the liability
during the period had no impact on net debt, with the resulting
cash payment included in free cash flow.
Other funding obligations to be considered alongside net debt
include:
|
- |
Lease liabilities of €12,022
million (€12,539 million as at 31 March 2022) |
|
- |
KDG put option liabilities of €486
million (€494 million as at 31 March 2022) |
|
- |
Guarantee over Australia joint
venture loan of €1,786 million (€1,573 million as at 31 March
2022) |
|
- |
Pension liabilities of €281 million
(€281 million as at 31 March 2022) |
The Group’s gross and net debt includes €9,942 million (€9,942
million as at 31 March 2022) of long-term borrowings (‘Hybrid
bonds’) for which a 50% equity characteristic of €4,971 million
(€4,971 million as at 31 March 2022) is attributed by credit rating
agencies.
The Group’s gross and net debt includes certain bonds which have
been designated in hedge relationships, which are carried at €1,451
million higher value (€1,316 million higher as at 31 March 2022)
than their euro equivalent redemption value. In addition, where
bonds are issued in currencies other than euro, the Group has
entered into foreign currency swaps to fix the euro cash outflows
on redemption. The impact of these swaps is not reflected in gross
debt and if it were included would decrease the euro equivalent
value of the bonds by €4,363 million (€1,456 million as at 31 March
2022).
Return on capital employed
Return on capital employed (‘ROCE’) reflects how efficiently we are
generating profit with the capital we deploy. We calculate two ROCE
measures: i) Pre-tax ROCE for controlled operations only and ii)
Post-tax ROCE including associates and joint ventures.
|
|
H1
FY231 |
|
|
H1
FY221 |
|
|
Change |
|
|
|
% |
|
|
% |
|
|
pps |
|
Pre-tax
ROCE (controlled)2 |
|
|
6.9 |
% |
|
|
6.3 |
% |
|
|
0.6 |
|
Post-tax
ROCE (controlled and associates/joint
ventures)2 |
|
|
5.1 |
% |
|
|
4.3 |
% |
|
|
0.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROCE
calculated using GAAP measures2 |
|
|
5.2 |
% |
|
|
3.7 |
% |
|
|
1.5 |
|
Notes:
|
1. |
The half-year ROCE calculation is based on returns for the 12
months ended 30 September. |
|
2. |
ROCE is calculated by dividing Operating profit by the average of
capital employed as reported in the consolidated statement of
financial position. Pre-tax ROCE (controlled) and Post-tax ROCE
(controlled and associates/joint ventures) are non-GAAP measures.
See page 41 for more information. |
The increase in pre-tax ROCE (controlled) in H1 FY23 compared to H1
FY22 was largely driven by lower depreciation and amortisation of
owned assets. Post-tax ROCE also improved, benefitting also from a
higher share of income from associates and joint ventures.
Funding facilities
As at 30 September 2022, the Group had undrawn revolving credit
facilities of €8.1 billion comprising euro and US dollar revolving
credit facilities of €4.0 billion and US$4.0 billion (€4.1 billion)
which mature in 2025 and 2027 respectively. Both committed
revolving credit facilities support US and euro commercial paper
programmes of up to US$15 billion and €10 billion respectively.
Post employment benefits
As at 30 September 2022, the Group’s net surplus of scheme assets
over scheme liabilities was €212 million (€274 million net surplus
as at 31 March 2022). See note 10 ‘Post employment benefits’ in the
unaudited condensed consolidated financial statements for more
information.
Dividends
Dividends will continue to be declared in euros, aligning the
Group’s shareholder returns with the primary currency in which we
generate free cash flow, and paid in euros, pounds sterling and US
dollars. The foreign exchange rate at which future dividends
declared in euros will be converted into pounds sterling and US
dollars will be calculated based on the average World Markets
Company benchmark rates over the five business days during the week
prior to the payment of the dividend.
The Board has announced an interim dividend per share of 4.50
eurocents (H1 FY22: 4.50 eurocents). The ex-dividend date for the
interim dividend is 24 November 2022 for ordinary shareholders, the
record date is 25 November 2022 and the dividend is payable on 3
February 2023. Dividend payments on ordinary shares will be paid
directly into a nominated bank or building society account.
Other significant developments
Board changes
At the Annual General Meeting on 26 July 2022, shareholder approval
was obtained for the appointment of Stephen A. Carter, Delphine
Ernotte Cunci and Simon Segars as non-executive directors.
Executive Committee changes
On 30 June 2022, Hannes Ametsreiter stepped down from his role as
CEO of Vodafone Germany and as a member of the Group Executive
Committee. On 1 July 2022, Philippe Rogge became CEO of Vodafone
Germany and a member of the Group Executive Committee.
On 29 September, the Group announced the following changes to the
Executive Committee:
|
- |
Rosemary Martin, Group General
Counsel and Company Secretary, will retire on 31 March 2023. |
|
- |
Maaike de Bie, currently Group
General Counsel and Company Secretary at easyJet plc, will become
Group General Counsel and Company Secretary on 1 March 2023 and
will join the Executive Committee. |
|
- |
Johan Wibergh, Group Chief
Technology Officer, will retire on 31 December 2022. |
|
- |
Scott Petty, currently Digital
& IT Director, will become Group Chief Technology Officer on 1
January 2023 and will join the Executive Committee. |
|
- |
Alberto Ripepi, Group Chief Network
Officer, will join the Executive Committee on 1 January 2023. |
On 14 November 2022, the Group announced that Christine Ramon will
be appointed as a non-executive director with immediate effect.
Vodafone Hungary
On 22 August 2022, the Group
announced that it had entered into heads of terms with 4iG Public
Limited Company and Corvinus Zrt (a Hungarian state holding
company) in relation to the potential sale of 100% of Vodafone
Hungary for a total cash consideration equivalent to an enterprise
value of HUF 715 billion (€1.8 billion).
The transaction is subject to completion of confirmatory due
diligence, the agreement of binding transaction documentation and
regulatory approval.
Vodafone Portugal
On 30 September 2022, the
Group announced that Vodafone Portugal had entered into an
agreement to purchase Cabonitel S.A., the owner of Nowo. The
transaction is conditional on regulatory approval, with completion
expected in the first half of 2023. Nowo is the 4th
largest converged operator in Portugal, with approximately 250,000
mobile subscribers, 140,000 fixed customers and 1 million homes
connected.
Vodafone UK
On 3 October 2022, the Group
noted press speculation in relation to Vodafone UK and Three UK.
The Group confirmed that it is in discussions with CK Hutchison in
relation to a possible combination of Vodafone UK and Three UK. The
envisaged transaction would involve both companies combining their
UK businesses, with Vodafone owning 51% and CK Hutchison owning 49%
of the combined business. There can be no certainty that any
transaction between the two companies will ultimately be
agreed.
Vantage Towers
On 9 November 2022, the Group announced that it had entered
into a strategic co-control partnership with GIP and KKR for
Vantage Towers. A new JV will hold our 81.7% stake in Vantage
Towers and will make a voluntary takeover offer for the
outstanding Vantage Towers shares held by minority shareholders.
Further detail on the transaction is available here:
investors.vodafone.com/reports-information/results-reports-presentations.
Risk factors
The key factors and uncertainties that could have a significant
effect on the Group’s financial performance, include the
following:
Cyber threat
An external cyber-attack, insider
threat or supplier breach could cause service interruption or the
loss of confidential data.
Supply chain disruption
Disruption in our supply chain
could mean that we are unable to execute our strategic plans,
resulting in increased cost and reduced choice as well as service
quality.
Adverse political and policy environment
An adverse political and policy
environment could impact our strategy and result in increased
costs, create competitive disadvantage or have a negative impact on
our return on capital employed.
Strategic transformation
Failure to effectively execute
the transformational activities to deliver on our strategy could
result in loss of business value and/or additional cost.
Disintermediation
Failure to effectively respond to
threats from emerging technology or disruptive business models
could lead to a loss of customer relevance, market share and
new/existing revenue streams.
Adverse changes in macroeconomic conditions
Adverse changes to economic
conditions could result in reduced consumer spending, higher
interest rates, adverse inflation, or foreign exchange rates.
Adverse conditions could also lead to limited debt refinancing
options and/or increase in costs.
Infrastructure competitiveness
Failure to meet customers’
expectations with best available broadband technology in our
fixed and mobile networks could lead to loss of revenue.
Portfolio transformation
Failure to effectively execute on
plans to transform and shape the portfolio could result in failure
to deliver growth in revenue and improved returns.
Adverse market conditions
Increasing competition could lead
to price wars, reduced margins, loss of market share and/or damage
to market value.
Technology resilience and future readiness
Network, IT or platform outages
and/or any delays delivering our IT modernisation programme could
lead to dissatisfied customers and/or impact revenue.
Watchlist risks
Our watchlist risk process
enables us to monitor material risks to Vodafone Group which fall
outside of our top principal risks list. These include, but
are not limited to:
Legal compliance
The legal compliance risk is made up of multiple sub-risks
(sanctions and trade controls, competition law, anti-bribery and
anti-money laundering). Controls are in place to monitor and manage
these risks and for compliance with the relevant regulations and
legislation.
Risk factors
Data management and privacy
As data volumes continue to grow and regulatory and customer
scrutiny increases, it is important that we manage our data and
privacy risks effectively.
Electromagnetic field (‘EMF’)
The health and safety of our customers and the wider public has
always been, and continues to be, a priority for us. We know that
some people are concerned about whether there are risks to health
from mobile phones and radio masts. We refer to the current body of
scientific evidence so that the services and products we provide
are within prescribed safety limits and adhere to all relevant
standards and national laws.
Climate change
As part of our commitment to operate ethically and sustainably, we
are dedicated to understanding climate-related risks and
opportunities and embedding responses to these into our business
strategy and operations.
Emerging risks
We have a number of uncertainties
where an emerging risk may potentially impact us in the longer
term. In some cases, there may be insufficient information to
understand the likelihood, impact or velocity of the risk. We also
might not be able to fully define a mitigation plan until we have a
better understanding of the threat.
We continue to identify new
emerging risk trends, using the input from analysis of the external
environment. Furthermore, we have strengthened the identification
process by involving our functional experts and our global risk
community in this emerging risk scanning exercise.
Once the emerging risks are
prioritised by the functional experts, scenarios are created to
assist in the analysis of each risk. These emerging risks and
scenarios are provided to the Risk and Compliance Committee and the
Audit and Risk Committee for further scrutiny. During the period,
three additional emerging risks were added to our list:
|
- |
Inflation (beyond a three-year
period); |
|
- |
Generation Z as customers; and |
|
- |
Disintermediation (beyond a
three-year period). |
Macro factors affecting the risk profile
Whilst the Group does not have
significant operations in either Russia or Ukraine, Vodafone
continues to monitor any potential impacts for the Group and its
business. Various countries have implemented trade restrictions,
economic measures and financial sanctions against Russia. These
measures, together with the wider effects of the war, is having a
negative impact on macroeconomic conditions, give rise to regional
instability, increase costs, and disrupt supply
chains.
Responsibility
statement
We confirm that to the best of our
knowledge:
|
- |
The unaudited condensed consolidated financial
statements have been prepared in accordance with IAS 34, “Interim
Financial Reporting”, as issued by the International Accounting
Standards Board and as contained in UK-adopted international
accounting standards; and |
|
- |
The interim management report includes a fair
review of the information required by Disclosure Guidance and
Transparency Rules sourcebook 4.2.7 and Disclosure Guidance and
Transparency Rules sourcebook 4.2.8. |
Neither the Company nor the directors
accept any liability to any person in relation to the half-year
financial report except to the extent that such liability could
arise under English law. Accordingly, any liability to a person who
has demonstrated reliance on any untrue or misleading statement or
omission shall be determined in accordance with section 90A and
schedule 10A of the Financial Services and Markets Act
2000.
The names and functions of the
Vodafone Group Plc board of directors can be found at:
https://www.vodafone.com/about-vodafone/who-we-are/leadership/board-of-directors
By Order of the Board
Rosemary Martin
Group General Counsel and Company
Secretary
15 November 2022
Unaudited condensed consolidated
financial statements
Consolidated
income statement
|
|
|
|
|
Six months ended 30 September |
|
|
|
|
|
|
2022 |
|
|
2021 |
|
|
|
Note |
|
|
€m |
|
|
€m |
|
Revenue |
|
|
2 |
|
|
|
22,930 |
|
|
|
22,489 |
|
Cost
of sales |
|
|
|
|
|
|
(15,580 |
) |
|
|
(15,097 |
) |
Gross profit |
|
|
|
|
|
|
7,350 |
|
|
|
7,392 |
|
Selling
and distribution expenses |
|
|
|
|
|
|
(1,711 |
) |
|
|
(1,675 |
) |
Administrative expenses |
|
|
|
|
|
|
(2,819 |
) |
|
|
(2,870 |
) |
Net
credit losses on financial assets |
|
|
|
|
|
|
(332 |
) |
|
|
(230 |
) |
Share
of results of equity accounted associates and joint ventures |
|
|
|
|
|
|
343 |
|
|
|
111 |
|
Other income/(expense) |
|
|
|
|
|
|
104 |
|
|
|
(108 |
) |
Operating profit |
|
|
2 |
|
|
|
2,935 |
|
|
|
2,620 |
|
Investment income |
|
|
|
|
|
|
211 |
|
|
|
129 |
|
Financing costs |
|
|
|
|
|
|
(1,418 |
) |
|
|
(1,473 |
) |
Profit before taxation |
|
|
|
|
|
|
1,728 |
|
|
|
1,276 |
|
Income tax (expense)/credit |
|
|
3 |
|
|
|
(485 |
) |
|
|
1 |
|
Profit for the financial period |
|
|
|
|
|
|
1,243 |
|
|
|
1,277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
–
Owners of the parent |
|
|
|
|
|
|
986 |
|
|
|
996 |
|
– Non-controlling interests |
|
|
|
|
|
|
257 |
|
|
|
281 |
|
Profit for the financial period |
|
|
|
|
|
|
1,243 |
|
|
|
1,277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit per
share |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Group: |
|
|
|
|
|
|
|
|
|
|
|
|
– Basic |
|
|
5 |
|
|
|
3.52 |
c |
|
|
3.40 |
c |
–
Diluted |
|
|
5 |
|
|
|
3.50 |
c |
|
|
3.39 |
c |
Consolidated statement of comprehensive income/expense
|
|
|
|
Six
months ended 30 September |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
€m |
|
|
|
€m |
|
Profit for the financial period |
|
|
|
|
1,243 |
|
|
|
1,277 |
|
Other comprehensive income/(expense): |
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified to the income statement in
subsequent periods: |
|
|
|
|
|
|
|
|
|
|
Foreign
exchange translation differences, net of tax |
|
|
|
|
(424 |
) |
|
|
(117 |
) |
Other,
net of tax1 |
|
|
|
|
924 |
|
|
|
1,286 |
|
Total items that may be reclassified to the income statement in
subsequent periods |
|
|
|
|
500 |
|
|
|
1,169 |
|
Items that will not be reclassified to the income statement in
subsequent periods: |
|
|
|
|
|
|
|
|
|
|
Net actuarial (losses)/gains on defined benefit pension schemes,
net of tax |
|
|
|
|
(42 |
) |
|
|
200 |
|
Total items that will not be reclassified to the income statement
in subsequent periods |
|
|
|
|
(42 |
) |
|
|
200 |
|
Other comprehensive income |
|
|
|
|
458 |
|
|
|
1,369 |
|
Total comprehensive income for the financial period |
|
|
|
|
1,701 |
|
|
|
2,646 |
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
–
Owners of the parent |
|
|
|
|
1,415 |
|
|
|
2,354 |
|
– Non-controlling interests |
|
|
|
|
286 |
|
|
|
292 |
|
|
|
|
|
|
1,701 |
|
|
|
2,646 |
|
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.
Unaudited condensed consolidated
financial statements
Consolidated
statement of financial position
|
|
|
|
|
30
September |
|
|
31
March |
|
|
|
|
|
|
2022 |
|
|
2022 |
|
|
|
Note |
|
|
€m |
|
|
€m |
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
|
|
|
|
31,225 |
|
|
|
31,884 |
|
Other
intangible assets |
|
|
|
|
|
|
20,470 |
|
|
|
21,360 |
|
Property, plant and equipment |
|
|
|
|
|
|
39,843 |
|
|
|
40,804 |
|
Investments in associates and joint ventures |
|
|
7 |
|
|
|
4,381 |
|
|
|
4,268 |
|
Other
investments |
|
|
|
|
|
|
1,128 |
|
|
|
1,073 |
|
Deferred tax assets |
|
|
|
|
|
|
18,699 |
|
|
|
19,089 |
|
Post
employment benefits |
|
|
10 |
|
|
|
493 |
|
|
|
555 |
|
Trade and other receivables |
|
|
|
|
|
|
10,869 |
|
|
|
6,383 |
|
|
|
|
|
|
|
|
127,108 |
|
|
|
125,416 |
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Inventory |
|
|
|
|
|
|
991 |
|
|
|
836 |
|
Taxation recoverable |
|
|
|
|
|
|
393 |
|
|
|
296 |
|
Trade
and other receivables |
|
|
|
|
|
|
11,506 |
|
|
|
11,019 |
|
Other
investments |
|
|
|
|
|
|
7,824 |
|
|
|
7,931 |
|
Cash and cash equivalents |
|
|
|
|
|
|
7,072 |
|
|
|
7,496 |
|
|
|
|
|
|
|
|
27,786 |
|
|
|
27,578 |
|
Assets held for sale |
|
|
4 |
|
|
|
2,546 |
|
|
|
959 |
|
Total assets |
|
|
|
|
|
|
157,440 |
|
|
|
153,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Called
up share capital |
|
|
|
|
|
|
4,797 |
|
|
|
4,797 |
|
Additional paid-in capital |
|
|
|
|
|
|
149,085 |
|
|
|
149,018 |
|
Treasury
shares |
|
|
|
|
|
|
(7,170 |
) |
|
|
(7,278 |
) |
Accumulated losses |
|
|
|
|
|
|
(122,521 |
) |
|
|
(122,118 |
) |
Accumulated other comprehensive income |
|
|
|
|
|
|
31,262 |
|
|
|
30,268 |
|
Total attributable to owners of the parent |
|
|
|
|
|
|
55,453 |
|
|
|
54,687 |
|
Non-controlling interests |
|
|
|
|
|
|
2,284 |
|
|
|
2,290 |
|
Total equity |
|
|
|
|
|
|
57,737 |
|
|
|
56,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings |
|
|
|
|
|
|
59,907 |
|
|
|
58,131 |
|
Deferred tax liabilities |
|
|
|
|
|
|
681 |
|
|
|
520 |
|
Post
employment benefits |
|
|
10 |
|
|
|
281 |
|
|
|
281 |
|
Provisions |
|
|
|
|
|
|
1,924 |
|
|
|
1,881 |
|
Trade and other payables |
|
|
|
|
|
|
2,447 |
|
|
|
2,516 |
|
|
|
|
|
|
|
|
65,240 |
|
|
|
63,329 |
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings |
|
|
|
|
|
|
15,675 |
|
|
|
11,961 |
|
Financial liabilities under put option arrangements |
|
|
|
|
|
|
486 |
|
|
|
494 |
|
Taxation liabilities |
|
|
|
|
|
|
722 |
|
|
|
864 |
|
Provisions |
|
|
|
|
|
|
722 |
|
|
|
667 |
|
Trade and other payables |
|
|
|
|
|
|
16,614 |
|
|
|
19,661 |
|
|
|
|
|
|
|
|
34,219 |
|
|
|
33,647 |
|
Liabilities held for sale |
|
|
4 |
|
|
|
244 |
|
|
|
– |
|
Total equity and liabilities |
|
|
|
|
|
|
157,440 |
|
|
|
153,953 |
|
The accompanying notes are an integral part of the unaudited
condensed consolidated financial statements.
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
2021 brought forward |
|
4,797 |
|
150,812 |
|
(6,172 |
) |
(93,633 |
) |
55,804 |
|
2,012 |
|
57,816 |
|
Issue or
reissue of shares |
|
– |
|
1 |
|
90 |
|
(90 |
) |
1 |
|
– |
|
1 |
|
Share-based payments |
|
– |
|
73 |
|
– |
|
– |
|
73 |
|
6 |
|
79 |
|
Transactions with non-controlling shareholders in subsidiaries |
|
– |
|
– |
|
– |
|
(38 |
) |
(38 |
) |
236 |
|
198 |
|
Comprehensive income |
|
– |
|
– |
|
– |
|
2,354 |
|
2,354 |
|
292 |
|
2,646 |
|
Dividends |
|
– |
|
– |
|
– |
|
(1,254 |
) |
(1,254 |
) |
(391 |
) |
(1,645 |
) |
Purchase of treasury shares |
|
– |
|
– |
|
(1,048 |
) |
– |
|
(1,048 |
) |
– |
|
(1,048 |
) |
30 September 2021 |
|
4,797 |
|
150,886 |
|
(7,130 |
) |
(92,661 |
) |
55,892 |
|
2,155 |
|
58,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 March
2022 as reported |
|
4,797 |
|
149,018 |
|
(7,278 |
) |
(91,850 |
) |
54,687 |
|
2,290 |
|
56,977 |
|
Adoption
of IAS 293 |
|
– |
|
– |
|
– |
|
565 |
|
565 |
|
– |
|
565 |
|
1 April
2022 brought forward |
|
4,797 |
|
149,018 |
|
(7,278 |
) |
(91,285 |
) |
55,252 |
|
2,290 |
|
57,542 |
|
Issue or
reissue of shares |
|
– |
|
1 |
|
108 |
|
(100 |
) |
9 |
|
– |
|
9 |
|
Share-based payments |
|
– |
|
66 |
|
– |
|
– |
|
66 |
|
5 |
|
71 |
|
Transactions with non-controlling shareholders in subsidiaries |
|
– |
|
– |
|
– |
|
(24 |
) |
(24 |
) |
(12 |
) |
(36 |
) |
Comprehensive income |
|
– |
|
– |
|
– |
|
1,415 |
|
1,415 |
|
286 |
|
1,701 |
|
Dividends |
|
– |
|
– |
|
– |
|
(1,265 |
) |
(1,265 |
) |
(285 |
) |
(1,550 |
) |
30 September 2022 |
|
4,797 |
|
149,085 |
|
(7,170 |
) |
(91,259 |
) |
55,453 |
|
2,284 |
|
57,737 |
|
Notes:
|
1. |
Includes share premium, capital
reserve, capital redemption reserve, merger reserve and share-based
payment reserve. The merger reserve was derived from acquisitions
made prior to 31 March 2004 and subsequently allocated to
additional paid-in capital on adoption of IFRS. |
|
2. |
Includes accumulated losses and
accumulated other comprehensive income. |
|
3. |
This opening balance adjustment
relates to the adoption of hyperinflationary accounting in Turkey.
See Note 1 ‘Basis of preparation’ for more information. |
The accompanying notes are an integral part of the unaudited
condensed consolidated financial statements.
Unaudited condensed consolidated
financial statements
Consolidated
statement of cash flows
|
|
|
|
|
Six months ended 30 September |
|
|
|
|
|
|
2022 |
|
|
2021 |
|
|
|
Note |
|
|
€m |
|
|
€m |
|
Inflow from operating activities |
|
|
8 |
|
|
|
6,280 |
|
|
|
6,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of interests in subsidiaries, net of cash acquired |
|
|
|
|
|
|
– |
|
|
|
(1 |
) |
Purchase of interests in associates and joint ventures |
|
|
|
|
|
|
(61 |
) |
|
|
(47 |
) |
Purchase of intangible assets |
|
|
|
|
|
|
(1,433 |
) |
|
|
(1,593 |
) |
Purchase of property, plant and equipment |
|
|
|
|
|
|
(3,456 |
) |
|
|
(3,118 |
) |
Purchase of
investments |
|
|
|
|
|
|
(871 |
) |
|
|
(580 |
) |
Disposal of property, plant and equipment and intangible
assets |
|
|
|
|
|
|
– |
|
|
|
8 |
|
Disposal of
investments |
|
|
|
|
|
|
1,130 |
|
|
|
1,930 |
|
Dividends received from associates and joint ventures |
|
|
|
|
|
|
463 |
|
|
|
469 |
|
Interest received |
|
|
|
|
|
|
139 |
|
|
|
121 |
|
Outflow from investing activities |
|
|
|
|
|
|
(4,089 |
) |
|
|
(2,811 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities1 |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issue of long-term borrowings |
|
|
|
|
|
|
187 |
|
|
|
2,282 |
|
Repayment of
borrowings |
|
|
|
|
|
|
(5,549 |
) |
|
|
(3,771 |
) |
Net
movement in short-term borrowings |
|
|
|
|
|
|
6,194 |
|
|
|
1,173 |
|
Net
movement in derivatives |
|
|
|
|
|
|
(205 |
) |
|
|
(110 |
) |
Interest
paid2 |
|
|
|
|
|
|
(952 |
) |
|
|
(809 |
) |
Purchase of
treasury shares |
|
|
|
|
|
|
(1,090 |
) |
|
|
(1,101 |
) |
Issue
of ordinary share capital and reissue of treasury shares |
|
|
|
|
|
|
9 |
|
|
|
1 |
|
Equity
dividends paid |
|
|
|
|
|
|
(1,263 |
) |
|
|
(1,259 |
) |
Dividends paid to non-controlling shareholders in subsidiaries |
|
|
|
|
|
|
(290 |
) |
|
|
(399 |
) |
Other transactions with non-controlling shareholders in
subsidiaries |
|
|
|
|
|
|
(34 |
) |
|
|
198 |
|
Outflow from financing activities |
|
|
|
|
|
|
(2,993 |
) |
|
|
(3,795 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash outflow |
|
|
|
|
|
|
(802 |
) |
|
|
(151 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of the financial
period3 |
|
|
|
|
|
|
7,371 |
|
|
|
5,790 |
|
Exchange gain on cash and cash equivalents |
|
|
|
|
|
|
282 |
|
|
|
11 |
|
Cash
and cash equivalents at end of the financial
period3 |
|
|
|
|
|
|
6,851 |
|
|
|
5,650 |
|
Notes:
|
1. |
Includes the issuance of €nil and
repayment of €885 million in relation to debt securities (Six
months ended 30 September 2021: Issuance of €2,000 million and
repayment of €657 million). |
|
2. |
Interest paid includes €86 million
of cash inflow (Six months ended 30 September 2021: €39 million
inflow) on derivative financial instruments for the share buyback
related to maturing tranches of mandatory convertible bonds. |
|
3. |
Comprises cash and cash equivalents
as presented in the consolidated statement of financial position of
€7,072 million (€5,824 million as at 30 September 2021), together
with overdrafts of €226 million (€174 million as at 30 September
2021) and €5 million (€nil as at 30 September 2021) of cash and
cash equivalents included within assets held for sale. |
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 2022:
|
· |
are prepared in accordance with
International Accounting Standard 34 ‘Interim Financial Reporting’
(‘IAS 34’) as issued by the International Accounting Standards
Board (‘IASB’) and as adopted by the United Kingdom; |
|
· |
are presented on a condensed basis
as permitted by IAS 34 and therefore do not include all disclosures
that would otherwise be required in a full set of financial
statements and should be read in conjunction with the Group’s
Annual Report for the year ended 31 March 2022; |
|
· |
apply, with the exception of the
application of IAS 29 ‘Financial Reporting in Hyperinflationary
Economies’ for the Group’s entities reporting in Turkish lira (see
below), 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 2022,
which were prepared in accordance with UK-adopted International
Accounting Standards (‘IAS’), with International Financial
Reporting Standards (‘IFRS’) as issued by the IASB and with the
requirements of the UK Companies Act 2006. 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 UK Companies
Act 2006; and |
|
· |
were approved by the Board of
directors on 15 November 2022. |
The information relating to the year ended 31 March 2022 is
extracted from the Group’s published Annual Report for that year,
which has been delivered to the Registrar of Companies, and on
which the auditors’ report was unqualified and did not contain any
emphasis of matter or statements under section 498(2) or 498(3) of
the UK Companies Act 2006.
The preparation of the unaudited condensed consolidated financial
statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the end of the
reporting period, and the reported amounts of revenue and expenses
during the period. Actual results could vary from these estimates.
These estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
Going concern
Trading during the period demonstrated a robust operating model for
the Group. The Group has a strong liquidity position with €6.9
billion of cash and cash equivalents available as at 30 September
2022 which, together with undrawn revolving credit facilities of
€8.1 billion, cover all of the Group’s reasonably expected cash
requirements over the going concern period. The Directors have
reviewed trading and liquidity forecasts for the Group, which were
based on current trading conditions, and considered a variety of
scenarios including not being able to access the capital markets
during the assessment period. In addition to the liquidity
forecasts prepared, the Directors considered the availability of
the Group’s revolving credit facilities which were undrawn as at 30
September 2022. 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 December 2023 and that
it is appropriate to continue to adopt the going concern basis in
preparing the unaudited condensed consolidated financial
statements.
War in Ukraine
Whilst the Group does not have any significant operations in either
Russia or Ukraine, a review was undertaken by management to assess
any consequences on the financial statements arising from the
conflict or from the resulting sanctions imposed on Russia and
Belarus. It was concluded there are no material impacts on the
consolidated financial statements for the period ended 30 September
2022.
Critical accounting judgements and estimates
The Group’s critical accounting judgements and estimates are
disclosed in the Group’s Annual Report for the year ended 31 March
2022.
Notes to the unaudited condensed
consolidated financial statements
|
1 |
Basis of preparation
(continued) |
Judgements relating to potential indicators of
impairment
The Group performs its annual impairment test for goodwill and
indefinite lived intangible assets as at 31 March.
At interim reporting periods the Group performs a review to
identify any indicator of impairment that may indicate that the
carrying amount of any of the Group’s cash generating units
(‘CGUs’) may not be not recoverable. As part of this
assessment as at 30 September 2022, the Group reviewed the key
assumptions underlying the value in use valuations used in the
annual impairment test at 31 March 2022. This included the year to
date performance of the Group’s CGUs against their budgets, trends
in energy and other costs and inflation rates, as well as
considering the valuation implications of changes in other factors
such as risk free discount rates and the assessment of long term
growth rates.
Value in use assessments were performed for Vodafone Italy and
Vodafone Spain as at 30 September 2022 reflecting assumptions
materially similar to those disclosed in note 4 ‘Impairment losses’
of the consolidated financial statements in the Annual Report for
the year ended 31 March 2022.
The Group’s review of the potential impact of indicators of
impairment and recoverable amounts did not indicate that the
carrying amount of any of the Group’s CGUs was not recoverable as
at 30 September 2022.
New accounting pronouncements adopted
On 1 April 2022, the Group adopted certain new accounting policies
where necessary to comply with amendments to IFRS, none of which
had a material impact on the consolidated results, financial
position or cash flows of the Group. Further details are provided
in the Group’s Annual Report for the year ended 31 March 2022.
Basis of preparation changes adopted on 1 April 2022 -
Hyperinflation in Turkey
As anticipated in the Annual Report for the year ended 31 March
2022 and communicated in the Q1 trading update, Turkey met the
requirements to be designated as a hyperinflationary economy under
IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ in the
quarter ended 30 June 2022. The Group has therefore applied
hyperinflationary accounting, as specified in IAS 29, at its
Turkish operations whose functional currency is the Turkish lira
for the reporting period commencing 1 April 2022. This resulted in
an opening balance adjustment of €565 million to consolidated
equity.
In accordance with IAS 21 ‘The Effects of Changes in Foreign
Exchange Rates’, comparative amounts are not restated.
Turkish lira results and non-monetary asset and liability balances
for the six months ended 30 September 2022 have been revalued to
their present value equivalent local currency amount as at 30
September 2022, based on an inflation index, before translation to
euros at the reporting date exchange rate of €1:18.16 TRL. The gain
or loss on net monetary assets resulting from IAS 29 application is
recognised in the income statement within Other
income.
The Group also presents the gain or loss on cash and cash
equivalents as monetary items together with the effect of inflation
on operating, investing and financing cash flows as one number in
the consolidated statement of cash flows.
The Group has presented the IAS 29 opening balance adjustment to
net assets within currency reserves in equity. Subsequent IAS
29 equity restatement effects and the impact of currency movements
are presented within other comprehensive income because such
amounts are judged to meet the definition of ‘exchange
differences’.
The inflation index selected to reflect the change in purchasing
power was the consumer price index (CPI) issued by the Turkish
Statistical Institute which has risen by 24% in the six months to
30 September 2022.
The main impacts on the consolidated financial statements for the
six months ended 30 September 2022 of the aforementioned
adjustments are shown below.
|
|
Six
months ended
30 September 2022 |
|
|
|
€m |
|
Revenue |
|
|
21 |
|
Operating profit |
|
|
(14 |
) |
Profit
for the financial period |
|
|
(40 |
) |
Non-current assets |
|
|
780 |
|
Equity |
|
|
659 |
|
Notes to the unaudited condensed
consolidated financial statements
Operating segments
The Group’s operating segments are established on the basis of
those components of the Group that are evaluated regularly by the
chief operating decision maker in deciding how to allocate
resources and in assessing performance. The Group has determined
the chief operating decision maker to be its Chief Executive
Officer. The Group has a single group of similar services and
products, being the supply of communications services and related
products.
Revenue is attributed to a country based on the location of the
Group company reporting the revenue. With the exception of Vodacom,
which is a legal entity encompassing South Africa and certain other
smaller African markets, and Vantage Towers which comprises
companies providing mobile tower infrastructure in a number of
European markets, segment information is primarily provided on the
basis of geographic areas, being the basis on which the Group
manages the rest of its worldwide interests. Transactions between
operating segments are charged at arm’s-length prices.
The operating segments for Germany, Italy, UK, Spain, Vodacom and
Vantage Towers are individually material for the Group and are each
reporting segments for which certain financial information is
provided. The aggregation of other operating segments into the
Other Europe and Other Markets reporting segments reflects, in the
opinion of management, the similar local market economic
characteristics and regulatory environments for each of those
operating segments as well as the similar products and services
sold and comparable classes of customers. In the case of the Other
Europe region (comprising Albania, Czech Republic, Greece, Hungary,
Ireland, Portugal and Romania), this largely reflects membership or
a close association with the European Union, while the Other
Markets segment (comprising Egypt, Ghana and Turkey) largely
includes developing economies with less stable economic or
regulatory environments. Common Functions is a separate reporting
segment and comprises activities which are undertaken primarily in
central Group entities that do not meet the criteria for
aggregation with other reporting segments.
Revenue disaggregation
Revenue reported for the period includes revenue from contracts
with customers, comprising service and equipment revenue, as well
as other revenue items including revenue from leases and interest
revenue arising from transactions with a significant financing
component. The tables below and overleaf disaggregate the Group’s
revenue by reporting segment.
The table below presents the results for the six months ended 30
September 2022.
|
|
Service
revenue |
|
Equipment
revenue |
|
Revenue from
contracts with
customers |
|
Other
revenue1 |
|
Interest
revenue |
|
Total segment
revenue |
|
Adjusted
EBITDAaL |
|
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
Six months
ended 30 September 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany |
|
5,730 |
|
675 |
|
6,405 |
|
178 |
|
9 |
|
6,592 |
|
2,677 |
|
Italy |
|
2,125 |
|
198 |
|
2,323 |
|
49 |
|
5 |
|
2,377 |
|
759 |
|
UK |
|
2,712 |
|
630 |
|
3,342 |
|
34 |
|
16 |
|
3,392 |
|
685 |
|
Spain |
|
1,782 |
|
142 |
|
1,924 |
|
31 |
|
10 |
|
1,965 |
|
445 |
|
Other
Europe |
|
2,552 |
|
281 |
|
2,833 |
|
53 |
|
8 |
|
2,894 |
|
843 |
|
Vodacom |
|
2,472 |
|
509 |
|
2,981 |
|
207 |
|
14 |
|
3,202 |
|
1,084 |
|
Other
Markets |
|
1,721 |
|
230 |
|
1,951 |
|
2 |
|
– |
|
1,953 |
|
671 |
|
Vantage
Towers |
|
– |
|
– |
|
– |
|
657 |
|
– |
|
657 |
|
330 |
|
Common
Functions2 |
|
268 |
|
23 |
|
291 |
|
405 |
|
– |
|
696 |
|
(250 |
) |
Eliminations |
|
(155 |
) |
– |
|
(155 |
) |
(643 |
) |
– |
|
(798 |
) |
– |
|
Group |
|
19,207 |
|
2,688 |
|
21,895 |
|
973 |
|
62 |
|
22,930 |
|
7,244 |
|
Notes:
|
1. |
Other revenue includes lease
revenue recognised under IFRS 16 ‘Leases’. |
|
2. |
Comprises central teams and
business functions. |
Notes to the unaudited condensed
consolidated financial statements
|
2 |
Segmental analysis
(continued) |
The table below presents the comparative information for the six
months ended 30 September 2021.
|
|
Service
revenue |
|
Equipment
revenue |
|
Revenue from
contracts with
customers |
|
Other
revenue1 |
|
Interest
revenue |
|
Total segment
revenue |
|
Adjusted
EBITDAaL |
|
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
Six months
ended 30 September 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany |
|
5,777 |
|
475 |
|
6,252 |
|
183 |
|
12 |
|
6,447 |
|
2,892 |
|
Italy |
|
2,187 |
|
265 |
|
2,452 |
|
49 |
|
6 |
|
2,507 |
|
917 |
|
UK |
|
2,521 |
|
593 |
|
3,114 |
|
30 |
|
17 |
|
3,161 |
|
638 |
|
Spain |
|
1,866 |
|
178 |
|
2,044 |
|
33 |
|
13 |
|
2,090 |
|
445 |
|
Other
Europe |
|
2,502 |
|
248 |
|
2,750 |
|
52 |
|
8 |
|
2,810 |
|
836 |
|
Vodacom |
|
2,271 |
|
455 |
|
2,726 |
|
190 |
|
12 |
|
2,928 |
|
1,062 |
|
Other
Markets |
|
1,752 |
|
201 |
|
1,953 |
|
5 |
|
– |
|
1,958 |
|
683 |
|
Vantage
Towers |
|
– |
|
– |
|
– |
|
611 |
|
– |
|
611 |
|
305 |
|
Common
Functions2 |
|
252 |
|
31 |
|
283 |
|
424 |
|
– |
|
707 |
|
(213 |
) |
Eliminations |
|
(118 |
) |
– |
|
(118 |
) |
(611 |
) |
(1 |
) |
(730 |
) |
– |
|
Group |
|
19,010 |
|
2,446 |
|
21,456 |
|
966 |
|
67 |
|
22,489 |
|
7,565 |
|
Notes:
|
1. |
Other revenue includes lease
revenue recognised under IFRS 16 ‘Leases’. |
|
2. |
Comprises central teams and
business functions. |
A reconciliation of Adjusted EBITDAaL, the Group’s measure of
segment profit, to the Group’s profit before taxation for the
financial period is shown below.
|
|
Six months ended 30 September |
|
|
|
2022 |
|
|
2021 |
|
|
|
€m |
|
|
€m |
|
Adjusted EBITDAaL |
|
|
7,244 |
|
|
|
7,565 |
|
Restructuring costs |
|
|
(142 |
) |
|
|
(172 |
) |
Interest on lease liabilities |
|
|
204 |
|
|
|
199 |
|
Loss on
disposal of property, plant & equipment and intangible
assets |
|
|
(11 |
) |
|
|
(26 |
) |
Depreciation and amortisation on owned assets |
|
|
(4,807 |
) |
|
|
(4,949 |
) |
Share
of results of equity accounted associates and joint ventures |
|
|
343 |
|
|
|
111 |
|
Other income/(expense) |
|
|
104 |
|
|
|
(108 |
) |
Operating profit |
|
|
2,935 |
|
|
|
2,620 |
|
Investment income |
|
|
211 |
|
|
|
129 |
|
Financing costs |
|
|
(1,418 |
) |
|
|
(1,473 |
) |
Profit before taxation |
|
|
1,728 |
|
|
|
1,276 |
|
The Group’s non-current assets are disaggregated as follows:
|
|
30
September |
|
|
31
March |
|
|
|
2022 |
|
|
2022 |
|
|
|
€m |
|
|
€m |
|
Non-current
assets1 |
|
|
|
|
|
|
|
|
Germany |
|
|
42,709 |
|
|
|
43,190 |
|
Italy |
|
|
10,129 |
|
|
|
10,519 |
|
UK |
|
|
5,847 |
|
|
|
6,226 |
|
Spain |
|
|
6,129 |
|
|
|
6,433 |
|
Other
Europe |
|
|
6,855 |
|
|
|
8,548 |
|
Vodacom |
|
|
6,319 |
|
|
|
6,383 |
|
Other
Markets |
|
|
3,349 |
|
|
|
2,467 |
|
Vantage
Towers |
|
|
8,190 |
|
|
|
8,179 |
|
Common
Functions2 |
|
|
2,011 |
|
|
|
2,103 |
|
Group |
|
|
91,538 |
|
|
|
94,048 |
|
Notes:
|
1. |
Comprises goodwill, other
intangible assets and property, plant & equipment. |
|
2. |
Comprises central teams and
business functions. |
Notes to the unaudited condensed
consolidated financial statements
|
|
Six months ended 30 September |
|
|
|
2022 |
|
|
2021 |
|
|
|
€m |
|
|
€m |
|
United
Kingdom corporation tax (expense)/income |
|
|
|
|
|
|
|
|
Current period |
|
|
(4 |
) |
|
|
(6 |
) |
Adjustments in respect of prior
periods |
|
|
9 |
|
|
|
15 |
|
Overseas current tax (expense)/income |
|
|
|
|
|
|
|
|
Current period |
|
|
(446 |
) |
|
|
(730 |
) |
Adjustments in respect of prior
periods |
|
|
12 |
|
|
|
(26 |
) |
Total current tax expense |
|
|
(429 |
) |
|
|
(747 |
) |
|
|
|
|
|
|
|
|
|
Deferred tax on origination and reversal of temporary
differences |
|
|
|
|
|
|
|
|
United Kingdom deferred tax |
|
|
(10 |
) |
|
|
544 |
|
Overseas deferred tax |
|
|
(46 |
) |
|
|
204 |
|
Total deferred tax (expense)/credit |
|
|
(56 |
) |
|
|
748 |
|
|
|
|
|
|
|
|
|
|
Total income tax (expense)/credit |
|
|
(485 |
) |
|
|
1 |
|
Deferred tax on losses in Luxembourg
The tax charge for the six months ended 30 September 2022 includes
deferred tax on the use of losses in Luxembourg. The Group would
not recognise losses in Luxembourg which would be forecast to be
used beyond 60 years. Current volatility in interest rates means
that the period over which we expect to recover the losses is
shorter than the 45 to 48 years disclosed as at 31 March 2022. The
actual use of these losses and the period over which they may be
used is dependent on many factors including the level of
profitability in Luxembourg, changes in tax law and any changes to
the structure of the Group.
Further details about the Group’s tax losses can be found in Note 6
‘Taxation’ to the consolidated financial statements of Vodafone
Group Plc for the year ended 31 March 2022.
Notes to the unaudited condensed consolidated financial
statements
|
4 |
Assets and liabilities held for
sale |
Assets and liabilities held for sale as at 30 September 2022
comprised (i) Vodafone Hungary and (ii) the Group’s 21.0% interest
in Indus Towers. Assets held for sale as at 31 March 2022 comprised
the Group’s 21.0% interest in Indus Towers.
On 22 August 2022, the Group
announced that it had entered into heads of terms with 4iG Public
Limited Company and Corvinus Zrt (a Hungarian state holding
company) in relation to the potential sale of 100% of Vodafone
Magyarország Távközlési Zrt (‘Vodafone Hungary’) for a total cash
consideration equivalent to an enterprise value of HUF 715 billion
(€1.8 billion).
The Group’s interest in Indus
Towers has been provided as security against certain bank
borrowings.
The relevant assets and liabilities are detailed in the table
below.
|
|
30
September |
|
|
31
March |
|
|
|
2022 |
|
|
2022 |
|
|
|
€m |
|
|
€m |
|
Non-current assets |
|
|
|
|
|
|
|
|
Goodwill |
|
|
412 |
|
|
|
– |
|
Other
intangible assets |
|
|
474 |
|
|
|
– |
|
Property, plant and equipment |
|
|
440 |
|
|
|
– |
|
Investments in associates and joint ventures |
|
|
1,014 |
|
|
|
959 |
|
Trade and other receivables |
|
|
18 |
|
|
|
– |
|
|
|
|
2,358 |
|
|
|
959 |
|
Current assets |
|
|
|
|
|
|
|
|
Inventory |
|
|
12 |
|
|
|
– |
|
Trade
and other receivables |
|
|
171 |
|
|
|
– |
|
Cash and cash equivalents |
|
|
5 |
|
|
|
– |
|
|
|
|
188 |
|
|
|
– |
|
Total assets |
|
|
2,546 |
|
|
|
959 |
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
Borrowings |
|
|
47 |
|
|
|
– |
|
Deferred tax liabilities |
|
|
16 |
|
|
|
– |
|
Provisions |
|
|
23 |
|
|
|
– |
|
Trade and other payables |
|
|
1 |
|
|
|
– |
|
|
|
|
87 |
|
|
|
– |
|
Current liabilities |
|
|
|
|
|
|
|
|
Borrowings |
|
|
15 |
|
|
|
– |
|
Provisions |
|
|
6 |
|
|
|
– |
|
Trade and other payables |
|
|
136 |
|
|
|
– |
|
|
|
|
157 |
|
|
|
– |
|
Total liabilities |
|
|
244 |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
Net assets and liabilities held for sale |
|
|
2,302 |
|
|
|
959 |
|
As part of the disposal of Vodafone Hungary, the Group will realise
a loss comprising the cumulative foreign exchange losses arising
from the retranslation of the consolidated net assets of Vodafone
Hungary (which has a functional currency of Hungarian Forint) to
the Group’s presentation currency in the period from acquisition of
the Group’s interest to the date of disposal. This foreign exchange
is required to be recycled to the income statement from the
translation reserve. Based on the 30 September 2022 exchange rate
of €:HUF: 423.0, a loss of approximately €0.3 billion would arise.
The actual loss from the recycling of foreign exchange previously
recognised in equity that would be recognised on disposal, will
depend on the €:HUF exchange rate at the date of
completion.
Notes to the unaudited condensed consolidated financial
statements
|
|
Six months ended 30 September |
|
|
|
2022 |
|
|
2021 |
|
|
|
Millions |
|
|
Millions |
|
Weighted average number of shares for basic earnings per share |
|
|
28,037 |
|
|
|
29,331 |
|
Effect of dilutive potential shares: restricted shares and share
options |
|
|
104 |
|
|
|
84 |
|
Weighted average number of shares for diluted earnings per
share |
|
|
28,141 |
|
|
|
29,415 |
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to owners of the parent during the
period |
|
|
|
|
|
|
|
|
|
|
Six
months ended 30 September |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
€m |
|
|
|
€m |
|
Profit for basic and diluted earnings per share |
|
|
986 |
|
|
|
996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
eurocents |
|
|
|
eurocents |
|
Basic
profit per share |
|
|
3.52 |
|
|
|
3.40 |
|
Diluted profit per share |
|
|
3.50 |
|
|
|
3.39 |
|
|
|
Six months ended 30 September |
|
|
|
2022 |
|
|
2021 |
|
|
|
€m |
|
|
€m |
|
Declared during the financial period: |
|
|
|
|
|
|
|
|
Final dividend for the year ended 31 March 2022: 4.50 eurocents per
share
(2021: 4.50 eurocents per share) |
|
|
1,265 |
|
|
|
1,254 |
|
Proposed after the end of the reporting period and not recognised
as a liability: |
|
|
|
|
|
|
|
|
Interim dividend for the
year ending 31 March 2023: 4.50 eurocents per share
(2022: 4.50 eurocents
per share)
|
|
|
1,237 |
|
|
|
1,229 |
|
|
7 |
Investment in associates and
joint ventures |
|
|
30
September |
|
|
31
March |
|
|
|
2022 |
|
|
2022 |
|
|
|
€m |
|
|
€m |
|
INWIT
S.p.A.1 |
|
|
– |
|
|
|
2,851 |
|
VodafoneZiggo Group Holding B.V. |
|
|
893 |
|
|
|
822 |
|
TPG
Telecom Limited |
|
|
123 |
|
|
|
84 |
|
Other |
|
|
49 |
|
|
|
24 |
|
Investment in joint ventures |
|
|
1,065 |
|
|
|
3,781 |
|
INWIT
S.p.A.1 |
|
|
2,778 |
|
|
|
– |
|
Safaricom PLC |
|
|
478 |
|
|
|
428 |
|
Other |
|
|
60 |
|
|
|
59 |
|
Investment in associates |
|
|
3,316 |
|
|
|
487 |
|
|
|
|
4,381 |
|
|
|
4,268 |
|
Note:
1. |
The shareholders' agreement between
the Group and Telecom Italia was terminated on 3 August 2022 due to
a change in Telecom Italia's shareholding in INWIT S.p.A. As a
result, INWIT S.p.A. ceased to be a joint venture of the Group and
is now classified as an associate. |
Notes to the unaudited condensed consolidated financial
statements
8 |
Reconciliation of net cash flow
from operating activities |
|
|
Six months ended 30 September |
|
|
|
2022 |
|
|
2021 |
|
|
|
€m |
|
|
€m |
|
Profit for the financial period |
|
|
1,243 |
|
|
|
1,277 |
|
Investment income |
|
|
(211 |
) |
|
|
(129 |
) |
Financing costs |
|
|
1,418 |
|
|
|
1,473 |
|
Income tax expense/(credit) |
|
|
485 |
|
|
|
(1 |
) |
Operating profit |
|
|
2,935 |
|
|
|
2,620 |
|
Adjustments for: |
|
|
|
|
|
|
|
|
Share-based payments and other non-cash charges |
|
|
46 |
|
|
|
98 |
|
Depreciation and amortisation |
|
|
6,853 |
|
|
|
6,952 |
|
Loss on disposal of property, plant & equipment and intangible
assets |
|
|
9 |
|
|
|
26 |
|
Share of results of equity accounted associates and joint
ventures |
|
|
(343 |
) |
|
|
(111 |
) |
Other (income)/expense |
|
|
(104 |
) |
|
|
108 |
|
Increase in inventory |
|
|
(175 |
) |
|
|
(41 |
) |
Increase in trade and other receivables |
|
|
(1,381 |
) |
|
|
(1,254 |
) |
Decrease in trade and other payables |
|
|
(888 |
) |
|
|
(1,366 |
) |
Cash generated by operations |
|
|
6,952 |
|
|
|
7,032 |
|
Taxation |
|
|
(672 |
) |
|
|
(577 |
) |
Net cash flow from operating activities |
|
|
6,280 |
|
|
|
6,455 |
|
9 |
Fair value of financial
instruments |
The table below sets out the financial instruments held at fair
value by the Group.
|
|
30
September |
|
|
31
March |
|
|
|
2022 |
|
|
2022 |
|
|
|
€m |
|
|
€m |
|
Financial assets at fair value: |
|
|
|
|
|
|
|
|
Money market funds (included within Cash and cash
equivalents)1 |
|
|
4,521 |
|
|
|
5,276 |
|
Debt and equity securities (included within Other
investments)2 |
|
|
5,992 |
|
|
|
6,398 |
|
Derivative financial instruments (included within Trade and other
receivables)2,3 |
|
|
8,769 |
|
|
|
4,626 |
|
Trade receivables at fair value through Other comprehensive income
(included within Trade and other receivables)2 |
|
|
1,967 |
|
|
|
1,408 |
|
|
|
|
21,249 |
|
|
|
17,708 |
|
Financial liabilities at fair value: |
|
|
|
|
|
|
|
|
Derivative
financial instruments (included within Trade and other
payables)2,3 |
|
|
1,786 |
|
|
|
1,672 |
|
|
|
|
1,786 |
|
|
|
1,672 |
|
Notes:
1. |
Items are measured at fair value
and the valuation basis is Level 1 classification, which comprises
financial instruments where fair value is determined by unadjusted
quoted prices in active markets. |
2. |
Quoted debt and equity securities
of €2,537 million (€2,997 million as at 31 March 2022) are Level 1
classification which comprises items where fair value is determined
by unadjusted quoted prices in active markets. The remaining items
are measured at fair value and the basis is 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. |
3. |
€8,524 million (€4,216 million as
at 31 March 2022) of derivative financial assets and €1,596 million
(€1,506 million as at 31 March 2022) of derivative financial
liabilities are classified as non-current. |
The fair value of the Group’s financial liabilities held at
amortised cost approximates to fair value with the exception of
non-current bonds with a carrying value of €48,299 million (€46,156
million as at 31 March 2022) and a fair value of €40,722 million
(€46,348 million as at 31 March 2022). Fair value is based on Level
1 of the fair value hierarchy using quoted market prices.
The fair value of the Group's financial assets held at amortised
cost approximate to fair value with the exception of non-current
debt securities with a carrying value of €1,003 million (€930
million as at 31 March 2022) and a fair value of €735 million (€830
million as at 31 March 2022). Fair value is based on Level 2 of the
fair value hierarchy 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.
Notes to the unaudited condensed consolidated financial
statements
10 |
Post employments
benefits |
Significant movements have been recorded in respect of the gross
assets held by and liabilities of the Group’s pension schemes in
the period. The Group has obtained valuations for its most material
schemes in the UK, Germany and Ireland. Key financial information
is presented below.
The Group’s plan liabilities are measured using the projected unit
credit method using the principal actuarial assumptions set out
below.
|
|
30
September |
|
|
31
March |
|
|
|
2022 |
|
|
2022 |
|
|
|
% |
|
|
% |
|
Weighted
average actuarial assumptions used1: |
|
|
|
|
|
|
|
|
Rate
of inflation2 |
|
|
3.2 |
% |
|
|
3.3 |
% |
Discount rate |
|
|
4.7 |
% |
|
|
2.4 |
% |
Notes:
1. |
Figures shown represent a weighted
average assumption of the Group’s plans in the UK, Germany and
Ireland. |
2. |
This rate of increase in pensions
in payment and deferred revaluation are dependent on the rate of
inflation. |
Assumptions relating to life expectancy are unchanged from 31 March
2022.
Charges made to the consolidated income statement and consolidated
statement of comprehensive income (‘SOCI’) on the basis of the
assumptions stated above are:
|
|
Six months ended 30 September |
|
|
|
2022 |
|
|
2021 |
|
|
|
€m |
|
|
€m |
|
Total net cost/(credit) included within staff costs |
|
|
6 |
|
|
|
(58 |
) |
Actuarial (losses)/gains recognised in the SOCI |
|
|
(63 |
) |
|
|
246 |
|
The Group’s overall net surplus is analysed as follows:
|
|
30
September |
|
|
31
March |
|
|
|
2022 |
|
|
2022 |
|
|
|
€m |
|
|
€m |
|
Assets |
|
|
493 |
|
|
|
555 |
|
Liabilities |
|
|
(281 |
) |
|
|
(281 |
) |
Net surplus |
|
|
212 |
|
|
|
274 |
|
An analysis of the net surplus is provided below for the Vodafone
UK Group Pension Scheme, comprising the Vodafone Section and the
Cable & Wireless Section (‘CWW Section’).
|
|
Vodafone Section |
|
|
CWW Section |
|
|
|
30
September |
|
|
31
March |
|
|
30
September |
|
|
31
March |
|
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
|
€m |
|
|
€m |
|
|
€m |
|
|
€m |
|
Analysis of net surplus: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fair value of plan assets |
|
|
2,026 |
|
|
|
3,399 |
|
|
|
1,886 |
|
|
|
2,850 |
|
Present value of plan liabilities |
|
|
(1,856 |
) |
|
|
(3,166 |
) |
|
|
(1,648 |
) |
|
|
(2,565 |
) |
Net surplus |
|
|
170 |
|
|
|
233 |
|
|
|
238 |
|
|
|
285 |
|
Net surplus are analysed as: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
170 |
|
|
|
233 |
|
|
|
238 |
|
|
|
285 |
|
On 18 October 2022, the Group entered into short term liquidity
facilities with both sections of the Vodafone UK Pension Scheme
(‘the UK scheme’) for an aggregate amount of £450 million.
These facilities can be used for short-term liquidity purposes in
connection with potential future collateral calls, with the
intention of reducing the risk the UK Scheme would be required to
dispose of assets at short notice in the event of significant
increases in interest rates. Drawings can be made from the facility
until 27 January 2023, with all amounts borrowed required to be
repaid by 28 February 2023. No amounts were drawn under these
facilities at the date of this report.
Notes to the unaudited condensed consolidated financial
statements
11 |
Related party
transactions |
Transactions with joint ventures and associates
Related party transactions with the Group’s joint ventures and
associates primarily consists of fees for the use of products and
services including network airtime and access charges, fees for the
provision of network infrastructure and cash pooling ventures. No
related party transactions have been entered into during the period
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 |
|
|
|
2022 |
|
|
2021 |
|
|
|
€m |
|
|
€m |
|
Sales of goods and services to associates |
|
|
11 |
|
|
|
10 |
|
Purchase of goods and services from associates |
|
|
65 |
|
|
|
4 |
|
Sales
of goods and services to joint arrangements |
|
|
110 |
|
|
|
103 |
|
Purchase of goods and services from joint arrangements |
|
|
69 |
|
|
|
132 |
|
Interest
expense payable to associates1 |
|
|
25 |
|
|
|
– |
|
Interest
income receivable from joint arrangements1 |
|
|
22 |
|
|
|
26 |
|
Interest
expense payable to joint arrangements1 |
|
|
– |
|
|
|
26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
30
September |
|
|
|
31
March |
|
|
|
|
2022 |
|
|
|
2022 |
|
|
|
|
€m |
|
|
|
€m |
|
Trade
balances owed: |
|
|
|
|
|
|
|
|
by associates |
|
|
16 |
|
|
|
8 |
|
to associates |
|
|
8 |
|
|
|
6 |
|
by joint arrangements |
|
|
122 |
|
|
|
139 |
|
to joint arrangements |
|
|
59 |
|
|
|
34 |
|
Other
balances owed by associates |
|
|
- |
|
|
|
80 |
|
Other
balances owed to associates2 |
|
|
1,449 |
|
|
|
– |
|
Other
balances owed by joint arrangements1 |
|
|
986 |
|
|
|
1,080 |
|
Other
balances owed to joint arrangements2 |
|
|
189 |
|
|
|
1,561 |
|
Notes:
1. |
Amounts arise primarily through
VodafoneZiggo Group Holding B.V., TPG Telecom Limited and INWIT
S.p.A. Interest is charged in line with market rates. |
2. |
Amounts are primarily in relation
to leases of tower space from INWIT S.p.A. which was classified as
a joint venture in the comparative period but is now classified as
an associate. See note 7 ‘Investment in associates and joint
ventures’ for more information. |
In the six months ended 30 September 2022, the Group made
contributions to defined benefit pension schemes of €11 million
(Six months ended 30 September 2021: €12 million).
In the six months ended 30 September 2022, dividends of €1.2
million were paid to Board and Executive Committee members (Six
months ended 30 September 2021: €1.1 million).
Dividends received from associates and joint ventures are disclosed
in the consolidated statement of cash flows.
12 |
Contingent liabilities and legal proceedings |
Note 28 ‘Commitments’ and Note 29 ‘Contingent liabilities and legal
proceedings’ to the consolidated financial statements of Vodafone
Group Plc for the year ended 31 March 2022 set forth the Group’s
commitments, contingent liabilities and legal proceedings as at 31
March 2022. There have been no material changes during the period
covered by this report.
Notes to the unaudited condensed
consolidated financial statements
On 9 November 2022, the Group
announced that it had entered into a strategic co-control
partnership with a consortium of long-term infrastructure investors
led by Global Infrastructure Partners and KKR (together the
‘Consortium’) for Vodafone’s 81.7% stake in Vantage Towers A.G.
(’Vantage Towers’). Vodafone and the Consortium have created a
joint venture (‘JV’) which will hold Vodafone’s 81.7% stake in
Vantage Towers. The JV will make a voluntary takeover offer (‘VTO’)
for the remaining 18.3% of shares in Vantage Towers at €32 per
share.
The Consortium will acquire JV shares
from Vodafone for cash consideration of €32 per share. The
Consortium has fully committed equity in place to obtain a
shareholding in the JV of between 32% and 40%, depending on the
level of take-up in the VTO by minority shareholders. The
Consortium intends to raise additional equity before completion to
reach a shareholding of 50%. The Group’s minimum net cash proceeds
will be €3.2bn based on 100% take up in the VTO. The maximum total
net cash proceeds to Vodafone based on a 50% shareholding for the
Consortium and 100% take up in the VTO will be €5.8 billion. The
transaction is conditional on regulatory clearance and is expected
to close in the first half of 2023.
On 9 November 2022, RRJ Capital
entered into an irrevocable undertaking to accept the VTO in
respect of its 2.4% shareholding in Vantage Towers. On 13 November
2022, the Group entered into an agreement to purchase Digital
Bridge’s 4.1% shareholding in Vantage Towers at the offer price of
€32 per share and committed to tender these shares into the VTO.
This means that the JV will hold a minimum shareholding of 88.3% in
Vantage Towers following completion of the VTO.
Independent review report to
Vodafone Group Plc
Conclusion
We have been engaged by Vodafone
Group Plc (the Company) to review the unaudited condensed
consolidated financial statements in the half yearly financial
report for the six months ended 30 September 2022 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 13. We have read the other information contained in the
half yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the unaudited condensed consolidated financial
statements.
Based on our review, nothing has come
to our attention that causes us to believe that the condensed set
of financial statements in the half yearly financial report for the
six months ended 30 September 2022 is not prepared, in all material
respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom’s Financial Conduct Authority.
Basis for
Conclusion
We conducted our review in accordance
with International Standard on Review Engagements 2410 (UK) "Review
of Interim Financial Information Performed by the Independent
Auditor of the Entity" issued by the Financial Reporting Council. 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.
As disclosed in note 1, the annual
financial statements of the Group will be prepared in accordance
with UK adopted international accounting standards and
International Financial Reporting Standards as issued by the IASB.
The condensed set of financial statements included in this half
yearly financial report has been prepared in accordance with UK
adopted International Accounting Standard 34, “Interim Financial
Reporting”.
Conclusions Relating to Going
Concern
Based on our review procedures, which
are less extensive than those performed in an audit as described in
the Basis for Conclusion section of this report, nothing has come
to our attention to suggest that management have inappropriately
adopted the going concern basis of accounting or that management
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the
review procedures performed in accordance with this ISRE, however
future events or conditions may cause the entity to cease to
continue as a going concern.
Responsibilities of the
directors
The directors are responsible for
preparing the half yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom’s
Financial Conduct Authority.
In preparing the half yearly
financial report, the directors are responsible for assessing the
company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s Responsibilities for the
review of financial information
In reviewing the half yearly report,
we are responsible for expressing to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for
Conclusion paragraph of this report.
Use of our report
This report is made solely to the
Company in accordance with guidance contained in International
Standard on Review Engagements 2410 (UK) “Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity” issued by the Financial Reporting Council. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our work, for this report, or
for the conclusions we have formed.
Ernst & Young
LLP
London
15 November 2022
Non-GAAP measures
In the discussion of the Group’s
reported operating results, non-GAAP measures are presented to
provide readers with additional financial information that is
regularly reviewed by management. This additional information
presented is not uniformly defined by all companies including those
in the Group’s industry. Accordingly, it may not be comparable with
similarly-titled measures and disclosures by other companies.
Additionally, certain information presented is derived from amounts
calculated in accordance with IFRS but is not itself a measure
defined under GAAP. Such measures should not be viewed in isolation
or as an alternative to the equivalent GAAP measure. The non-GAAP
measures discussed in this document are listed below.
Non-GAAP measure |
|
Defined on page |
|
Closest equivalent GAAP
measure |
|
Reconciled on page |
Performance metrics |
|
|
|
|
|
|
Adjusted EBITDAaL |
|
Page 42 |
|
Operating profit |
|
Page 6 |
Organic Adjusted EBITDAaL
growth |
|
Page 42 |
|
Not applicable |
|
Page 43 |
Organic revenue growth |
|
Page 42 |
|
Revenue |
|
Pages 43 and 44 |
Organic Group service revenue growth
excluding Turkey |
|
Page 42 |
|
Service revenue |
|
Pages 43 and 44 |
Organic Group Adjusted EBITDAaL
growth excluding Turkey |
|
Page 42 |
|
Not applicable |
|
Page 43 |
Organic service revenue
growth |
|
Page 42 |
|
Service revenue |
|
Pages 43 and 44 |
Organic mobile service revenue
growth |
|
Page 42 |
|
Service revenue |
|
Pages 43 and 44 |
Organic fixed service revenue
growth |
|
Page 42 |
|
Service revenue |
|
Pages 43 and 44 |
Organic Vodafone Business service
revenue growth |
|
Page 42 |
|
Service revenue |
|
Pages 43 and 44 |
Organic financial services revenue
growth in South Africa |
|
Page 42 |
|
Service revenue |
|
Pages 43 and 44 |
Other metrics |
|
|
|
|
|
|
Adjusted profit attributable to
owners of the parent |
|
Page 45 |
|
Profit attributable to owners of the
parent |
|
Page 45 |
Adjusted basic earnings per
share |
|
Page 45 |
|
Basic earnings per share |
|
Page 46 |
Cash flow, funding and capital
allocation metrics |
|
|
|
|
|
|
Free cash flow |
|
Page 46 |
|
Inflow from operating
activities |
|
Page 47 |
Adjusted free cash flow |
|
Page 46 |
|
Inflow from operating
activities |
|
Pages 18 and 47 |
Gross debt |
|
Page 46 |
|
Borrowings |
|
Page 47 |
Net debt |
|
Page 46 |
|
Borrowings less cash and cash
equivalents |
|
Page 47 |
Pre-tax ROCE (controlled) |
|
Page 48 |
|
ROCE calculated using GAAP
measures |
|
Pages 48 and 49 |
Post-tax ROCE (controlled and
associates/joint ventures) |
|
Page 48 |
|
ROCE calculated using GAAP
measures |
|
Pages 48 and 49 |
Financing and Taxation
metrics |
|
|
|
|
|
|
Adjusted net financing
costs |
|
Page 50 |
|
Net financing costs |
|
Page 16 |
Adjusted profit before
taxation |
|
Page 50 |
|
Profit before taxation |
|
Page 50 |
Adjusted income tax
expense |
|
Page 50 |
|
Income tax expense |
|
Page 50 |
Adjusted effective tax
rate |
|
Page 50 |
|
Income tax expense |
|
Page 50 |
Adjusted share of results of equity
accounted associates and joint ventures |
|
Page 50 |
|
Share of results of equity accounted
associates and joint ventures |
|
Page 51 |
Adjusted share of results of equity
accounted associates and joint ventures used in post-tax
ROCE |
|
Page 50 |
|
Share of results of equity accounted
associates and joint ventures |
|
Page 51 |
Non-GAAP measures
Performance metrics
Non-GAAP
measure |
Purpose |
Definition |
Adjusted
EBITDAaL |
Adjusted EBITDAaL is used in
conjunction with financial measures such as operating profit to
assess our operating performance and profitability.
It is a key external metric used by
the investor community to assess performance of our
operations.
It is our segment performance measure
in accordance with IFRS 8 (Operating Segments).
|
Adjusted
EBITDAaL 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 of owned
assets and excluding share of results of equity accounted
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. |
Adjusted EBITDAaL margin is Adjusted
EBITDAaL divided by Revenue.
Organic growth
All amounts marked with an ‘*’ in
this document represent organic growth which presents performance
on a comparable basis, excluding the impact of foreign exchange
rates, mergers and acquisitions, the hyperinflation adjustments in
Turkey and other adjustments to improve the comparability of
results between periods.
Organic growth is calculated for
revenue and profitability metrics, as follows: