TIDMVOD
RNS Number : 1233H
Vodafone Group Plc
13 November 2018
Vodafone announces results for the six months ended 30 September
2018
13 November 2018
IFRS 15 was adopted on 1 April 2018 for our statutory reporting,
without restating prior year figures. As a result, the discussion
of our operating results is primarily on an IAS 18 basis for all
periods presented.
Highlights
-- Group revenue of EUR21.8 billion and loss for the financial
period of EUR7.8 billion, primarily due to a loss on the disposal
of Vodafone India (following the completion of the merger
with Idea Cellular) and impairments
-- Organic service revenue (excluding handset financing, IAS
18 basis) up 0.8%** and Q2 up 0.5%** with good commercial
and financial performance in most markets offset by increased
competition in Italy and Spain
-- Growth drivers: good momentum in fixed broadband (384,000
net adds) and convergence (616,000 net adds); Vodafone Business
grew 1.0%*, led by strong growth in IoT; Emerging Consumer
up 7.4%* driven by data growth
-- Organic adjusted EBITDA up 2.9%** (excluding handset financing
and settlements, IAS 18 basis), supported by a third consecutive
year of net reduction in operating expenses
-- Updating full year guidance: underlying organic adjusted EBITDA
growth narrowed to c.3% (previously 1-5%); Free cash flow
(pre-spectrum) raised to c.EUR5.4 billion (previously 'at
least EUR5.2 billion')
-- Stable interim dividend per share of 4.84 eurocents; full
year dividend per share expected to be in-line with FY18
Six months ended 30 September
--------------------------------------------
2018 2017 Reported
IFRS 15 IAS 18(1) Growth
Page EURm EURm %
----------------------------- ----- --------- ---------- --------- ----------
Group revenue 22 21,796 23,075 (5.5)
Operating (loss)/profit 22 (2,071) 2,008 N/M
(Loss)/profit for the
financial period(2) 22 (7,833) 1,235 N/M
Basic (loss)/earnings
per share(2) 22 (29.00c) 4.03c N/M
Interim dividend per share 40 4.84c 4.84c -
Net debt 19 (32,110) (30,188) +6.4
----- --------- ---------- --------- ----------
Growth
---------------------
2018 2017 Reported Organic**
Alternative performance
measures(3) Page EURm EURm % %
------------------------------ ----- --------- ---------- --------- ----------
Group service revenue
(IAS 18 basis) 7 19,711 20,592 (4.3) +0.8
Adjusted EBITDA (IAS 18
basis) 7 7,078 7,385 (4.2) +2.9
Adjusted EBIT (IAS 18
basis) 7 2,305 2,457 (6.2) +8.6
Adjusted earnings per
share 17 3.56c 6.32c (43.7)
Free cash flow pre-spectrum 18 894 1,289 (30.6)
Free cash flow 18 566 415 +36.4
------------------------------ ----- --------- ---------- --------- ----------
Nick Read, Group Chief Executive, commented:
"Our performance in the majority of our markets has been good
during the first half of the year, and we have taken decisive
commercial and operational actions to respond to challenging
competitive conditions in Italy and Spain. We are on track to
reduce net operating expenses for the third year running, and we
are confirming the mid-point of our EBITDA guidance range, with an
increased outlook for free cash flow generation.
Looking ahead, my new strategic priorities focus on driving
greater consistency of commercial execution, accelerating digital
transformation, radically simplifying our operating model and
generating better returns from our infrastructure assets. Our goal
is to deepen customer engagement through a broader offering of
products and services, and to deliver the best digital customer
experience, supported by consistent investment in our leading
Gigabit networks. We expect that this will drive revenue growth,
reduce churn and lower our European net operating expenses by at
least EUR1.2 billion by FY2021.
As part of our effort to improve returns, we are creating a
virtual internal tower company across our European operations, and
we are reviewing the best strategic and financial direction for
these assets.
Our focus on organic growth along with the strategic and
financial benefits of the proposed acquisition of Liberty Global's
assets give confidence in the Group's ability to grow free cash
flow, which underpins our dividend."
CHIEF EXECUTIVE'S STATEMENT
Financial review of the half year
On 20 March 2017 we announced an agreement to merge Vodafone
India with Idea Cellular ('Idea') in India, which completed on 31
August 2018. As a result, Vodafone India has been excluded from
Group figures for all periods up to 31 August 2018 and the results
of Vodafone Idea have been included in all Group figures for all
periods thereafter, unless otherwise stated.
Financial results: Statutory performance measures
Following the adoption of IFRS 15 "Revenue from Contracts with
Customers" on 1 April 2018, the Group's statutory results for the
six months ended 30 September 2018 are on an IFRS 15 basis, whereas
the statutory results for the six months ended 30 September 2017
are, as previously reported, on an IAS 18 basis. Any comparison
between the two bases of reporting is not meaningful. As a result,
the discussion of our operating results is primarily on an IAS 18
basis for all periods presented. See "Alternative performance
measures" on page 48 for more information and reconciliations to
the closest respective equivalent GAAP measures.
Group revenue declined by 5.5% to EUR21.8 billion, reflecting
foreign exchange headwinds, the impact of the adoption of IFRS 15,
which nets certain components of dealer commissions from service
revenues, and the sale of Qatar. Operating loss was EUR2.1 billion,
down EUR4.1 billion, largely driven by impairments of EUR3.5
billion in Spain, Romania and Vodafone Idea.
The loss for the financial period of EUR7.8 billion reflects
these impairments, a loss on disposal of Vodafone India of EUR3.4
billion recognised following the completion of the merger with Idea
Cellular, higher net financing costs (following adverse foreign
exchange movements, mark to market losses and higher gross
borrowings) and the de-recognition of a deferred tax asset in
Spain. Basic loss per share was 29.00 eurocents, compared to
earnings per share of 4.03 eurocents for the period ended 30
September 2017.
Financial results: Alternative performance measures
On an IAS 18 basis, Group organic service revenue excluding
handset financing grew 0.8%** (Q1: 1.1%**, Q2: 0.5%**). Growth was
driven by market share gains in Europe Consumer fixed, strong
mobile data demand and customer base growth in our emerging market
operations, and continued momentum in Vodafone Business supported
by market share gains in fixed and strong IoT sales. These offset
increased competitive pressures in Italy and Spain, and the drag
from lower wholesale revenue.
Group organic adjusted EBITDA grew 2.9%** excluding handset
financing and settlements. This reflected broad based growth across
the majority of our markets, with the exception of Italy and Spain,
and was supported by operating expense reduction across both Europe
and Common functions, which was only partially offset by
inflationary pressures in AMAP.
Consequently, the Group's adjusted organic EBITDA margin
(excluding handset financing and settlements) increased by 0.3
percentage points to 30.8%**, and we remain on-track for a fourth
consecutive year of underlying EBITDA margin expansion. Adjusted
EBIT increased 8.6%** excluding handset financing and settlements,
driven by adjusted EBITDA growth and lower depreciation and
amortisation expenses.
On a reported basis, adjusted EBITDA and adjusted EBIT declined,
reflecting foreign exchange headwinds, a lower benefit from handset
financing in the UK and a regulatory settlement in the UK in the
prior year.
The Group's adjusted effective tax rate for H1 was 25.9%
compared to 22.2% last year. This higher rate is primarily due to a
change in the country mix of the Group's profits, partly driven by
the financing for the acquisition of Liberty Global's assets in
Germany and Central & Eastern Europe, and the impact of non-tax
deductible foreign exchange losses. We expect the Group's
underlying effective tax rate for the full year to remain within
our low to mid-20s range.
Adjusted earnings per share, which exclude impairment losses and
the results of Vodafone India (which were included in discontinued
operations), were 3.56 eurocents, a decrease of 43.7% year-on-year,
as lower adjusted EBIT and higher net financing costs more than
offset the decrease in income tax expense.
Liquidity and capital resources
Free cash flow pre-spectrum was EUR0.9 billion, compared to
EUR1.3 billion in the prior year. The reduction year-on-year was
principally driven by lower adjusted EBITDA and higher capital
creditor outflows, partly offset by lower capital additions (which
decreased to EUR3.1 billion, representing 13.6% of revenues).
Free cash flow post spectrum was EUR0.6 billion, compared to
EUR0.4 billion in the prior year. Spectrum payments were EUR0.2
billion, principally reflecting 3500MHz spectrum acquired in the UK
to support the rollout of 5G services. Cash restructuring costs of
EUR0.1 billion were similar to the prior year.
Net debt as at 30 September 2018 was EUR32.1 billion compared to
EUR29.6 billion as at 31 March 2018. This reflects free cash flow
generation in the period of EUR0.9 billion, proceeds from Verizon
loan notes of EUR2.1 billion, offset by FY18 final dividend
payments of EUR2.7 billion, spectrum purchases of EUR1.0 billion
(including EUR0.6 billion for the Italian auction, which was
ongoing at the period end), and a net cash outflow to India from
Vodafone Group of EUR0.8 billion in connection with the Vodafone
Idea transaction.
Strategic review of the half year
The Group simplified its strategy during the first half of the
financial year, identifying five drivers of sustainable revenue and
free cash flow growth, which are described below. The foundation of
our strategy is our significant investments in leading 4G wireless
and next generation fixed networks, which continue to support an
excellent customer experience. Based on network net promoter
scores, at the end of the period the Group was a leader or
co-leader in 18 out of 20 markets for Consumer and Business, with a
significant performance gap relative to value-focused
competitors.
Europe Consumer: Selling 'one more product' per customer,
lowering churn through convergence
In H1, the European Consumer segment accounted for 49.1% of
Group service revenues.
We aim to drive growth in the Europe Consumer segment by
developing deeper customer relationships, with a strong focus on
our existing base. We intend to both cross-sell additional products
(e.g., broadband, family SIMs, TV) and up-sell new experiences
(including higher speeds with 4G Evo / 5G, low latency mobile
gaming services and a wide range of Consumer IoT devices, enabled
by our leading 'V by Vodafone' global platform). Our objective is
to increase revenue per customer and to significantly reduce churn,
an increasing proportion of our customer base becomes converged
over time.
We intend to launch 5G services in-line with leading local
competitors during calendar 2019 and 2020, with an initial focus on
dense urban areas. 5G's improved spectral and energy efficiency
supports up to a 10x reduction in the cost per Gigabyte, which will
allow the Group to limit the future growth in network operating
costs despite strong expected traffic growth.
Overall, Europe Consumer service revenues excluding UK handset
financing declined by 0.6%** in H1, with fixed growth of 3.6%**
offset by a mobile decline of 2.1%**. Excluding Spain, Italy and
the drag from UK handset financing, service revenues grew by
3.0%**, with fixed growth of 6.1%** and mobile growing by 1.8%**.
Fixed represented 28.3% of segment revenues in the period.
In Consumer Fixed, we continued to expand our NGN footprint,
which is the largest in Europe. On a pro-forma basis for the
acquisition of Liberty Global's cable assets (announced in May), we
covered 117 million households at the end of the period, with 54
million 'on-net' (including VodafoneZiggo). With the potential to
offer superior gigabit-speeds via DOCSIS3.1 on Cable and via FTTH
to most of these homes in the next few years, we see significant
scope to increase on-net broadband customer penetration, which is
currently 28%, at attractive incremental margins.
Including VodafoneZiggo, the Group had 20.4 million broadband
customers, 6.2 million converged customers and 13.7 million TV
customers at the end of the period. We maintained good commercial
momentum in all markets other than Spain, which was impacted by
increased competitive intensity and by our decision not to renew
unprofitable football rights. During H1 we added 384,000 broadband
customers, 744,000 NGN customers and 616,000 converged customers
(partially supported by the first-time recognition of prepaid
customers in Germany). Our TV customer base declined by 71,000,
following football customer losses in Spain.
In Consumer Mobile, data growth remained strong at 57%, with
average smartphone usage increasing to 3.2 GB per month. Our
ability to monetise this growth varied by market. In Germany and
the UK, underlying Consumer ARPU trends improved on the back of
more-for-more offers and RPI-linked price increases, respectively,
although on a reported basis this was offset by a mix shift towards
SIM-only / family SIMs and convergence discounts. In Italy and
Spain, increased competition led to material ARPU declines.
Vodafone Business: A leading international challenger in fixed,
'industrialising' IoT
In H1, Vodafone Business accounted for 29.8% of Group service
revenues.
We are in the process of rebranding our former Enterprise
division as 'Vodafone Business', which we believe will help to
increase our brand recognition as we broaden our service offering.
Our strategy is to drive growth and deepen our existing mobile
customer relationships by cross-selling additional services
including next generation fixed, IoT and Cloud services. We aim to
increase revenue per account and reduce churn, while also improving
productivity through our salesforce transformation initiative and
the rapid digitalisation of our operations.
We believe our unique global footprint and extensive partner
market relationships provide us with a competitive advantage in
selling to select multinational customers, which represent c.20% of
divisional service revenues and are managed centrally by our
'Vodafone Global Enterprise' team.
We aim to build on our strength in connectivity to become the
partner of choice for local corporate / government customers (which
represent c.30% of Business revenues) and for multinationals,
leveraging our leading global IoT platform. We are investing in IoT
solutions for specific industry verticals, expanding from our
current focus on automotive to digital buildings, healthcare and
logistics. Together with good growth in IoT connections (which rose
28% in Q2 to 77 million), this supported IoT revenue growth of
14.0%* in H1.
We also see significant future opportunities to gain share as
the Wide Area Networking (WAN) market transitions to Software
Defined Networking (SDN), which offers large enterprise customers
both greater flexibility and significant cost savings compared to
legacy products.
For SoHo and SME customers, which represent c.50% of divisional
service revenues, we aim to cross-sell fixed and unified
communications propositions and also to position Vodafone as an
integrator of value added digital and IoT services, offsetting the
pressure on mobile prices.
Overall, Vodafone Business service revenues grew by 1.0%* in H1
(Q1: 0.9%*, Q2 1.1%*), led by good growth in Vodacom (4.7%*) and
with a stable performance in Europe (0.2%*). Within Europe, Germany
and the UK improved, while southern Europe slowed. Fixed revenues,
which represent 31.0% of Vodafone Business, grew at 3.9%* (Q1:
3.2%*, Q2 4.7%*), supported by ongoing market share gains in fixed,
security and cloud services. Mobile declined by 0.3%* (Q1: -0.1%*,
Q2 -0.5%*), as customer growth and IoT gains were offset by ARPU
pressure.
The Vodafone Business contribution margin expanded by 90 basis
points in H1, reflecting our salesforce transformation
initiative.
Emerging Consumer: Driving data penetration, growing digital and
financial services
In H1, the Emerging Consumer segment accounted for 16.8% of
Group service revenues.
We continue to see significant growth potential in our African
and Middle Eastern markets. Data growth remained strong at 18% in
Q2, however data penetration is currently still low, with only 22%
of our mobile customer base using 4G services, and with smartphone
penetration at only 43%. As 4G smartphone costs continue to fall,
driving ongoing adoption, we aim to grow ARPU. For example,
customers in South Africa typically spend 22% more when moving from
3G to 4G services.
We also see significant opportunity to grow in digital and
financial services. M-Pesa, our African payments platform, has
moved beyond its origins as a money transfer service, and now
provides enterprise payments, financial services and merchant
payment services for mobile commerce. Over US$10 billion of
payments are processed over the platform every month, across the
seven African markets where M-Pesa services are active. We now have
35 million M-Pesa customers, and in H1 M-Pesa grew revenues by
19.4%* to EUR0.4 billion. M-Pesa represented 12.0% of Emerging
Consumer service revenues in H1.
During H1, the Emerging Consumer segment grew at 7.4%*. In euro
terms service revenue declined by 9.3%, due to a sharp FX
devaluation in Turkey.
Digital Transformation: A new radically simpler, 'digital first'
operating model, leveraging Group scale
We see the emergence of new digital technologies, including big
data analytics, artificial intelligence agents and robotic process
automation (RPA) as a compelling opportunity to transform the
Group's operating model and fundamentally reshape our cost base. We
are accelerating the implementation of our 'Digital Vodafone'
programme, as speed will be a key factor in retaining the benefit
of these new technologies.
During H1, we increased the proportion of mobile customers
acquired through online channels to 13%, compared to less than 10%
a year ago, helping to reduce commissions paid to third party
distributors. In fixed, 30% of customer acquisitions are now
online. In customer operations, we have deployed our TOBi chatbots
in 5 markets, with a further 5 markets due to launch in H2. This
contributed to a 10% year-on-year reduction in the frequency of
customer contacts to our call centres in H1 (excluding the impact
of our commercial repositioning in Spain). In addition, by
deploying RPA 'bots' in our shared service centres, we reduced over
900 FTE roles in H1.
In order to gain the full benefit of this 'digital first'
approach, we intend to shift towards a radically simpler and more
flexible operating model. Over the coming quarters, we will adopt
new simplified pricing models across our markets, and will
proactively phase out complex legacy pricing structures. Lower
complexity will allow both significant savings in IT costs and
greater commercial agility. We are also introducing a number of
'digital only' products, starting with 'Vodafone Bit' in Spain,
which will have lower commissions and operating costs.
We also see additional opportunities to leverage Group scale. We
already have 20,000 employees in our shared service centres in
India, Egypt and Eastern Europe, and have centralised over 80% of
procurement. Looking ahead, we see further opportunities from
centralising European network design and engineering functions, as
well as IT operations.
Together with the benefits of our ongoing 'Fit for Growth'
programme and zero based budgeting efforts, we expect that the
rapid adoption of digital technologies will enable us to reduce
operating expenses in our European operations (including Common
functions) by at least EUR1.2 billion on an absolute organic basis
by FY21, compared to FY18 levels. In AMAP, operating expenses are
expected to continue to grow below local inflation levels,
supporting margins.
In H1, we reduced net operating expenses on an organic basis by
EUR0.2 billion in Europe and Common Functions, and by EUR0.1
billion for the Group overall. For the full year, we aim to reduce
operating expenses on an organic basis by EUR400 million in Europe
and Common Functions. This is the third year in a row in which we
have reduced our net operating expenses, supporting organic EBITDA
margin expansion.
Improving asset utilisation: Capturing synergies, strategic
partnerships and creating a virtual TowerCo in Europe
We aim to improve the utilisation of all of the Group's assets
as part of our focus on improving returns on capital. We have
announced a number of in-market consolidation deals, which we
expect to unlock significant synergies. We have a strong track
record of delivering or exceeding targeted cost and capex synergies
on prior deals, including KDG in Germany and ONO in Spain.
In the Netherlands, VodafoneZiggo has already delivered over
one-third of targeted cost and capex synergies, and is on track to
achieve its goal of EUR210 million of annual run-rate savings by
calendar 2021 (the fifth full year post closing). In India, we are
making a fast start on capturing the US$10 billion NPV of targeted
cost and capex savings following the merger of Vodafone India with
Idea Cellular. Our announced acquisition of Liberty Global's cable
assets in Germany and Central and Eastern Europe ("CEE") targets
expected cost and capex savings of EUR535 million by the fifth full
year post completion, with an NPV of EUR6 billion including
integration costs. We will remain highly focused on capturing these
significant opportunities for value creation.
We also believe that strategic partnerships are another
important potential route towards improving industry returns. We
have been successful in agreeing capital-smart partnerships in
fixed-line, notably in Italy, the UK and Portugal, and we also
intend to explore opportunities for partnerships in mobile,
providing that these do not compromise our network
differentiation.
In this context, we are creating a virtual Tower company to
manage the 58,000 towers in our controlled operations across
Europe. This internal vertical organisation will have a dedicated
management team solely focused on adding new tenancies and reducing
operating expenses. We are also conducting due diligence in order
to determine the optimal strategic and financial direction for all
of our tower assets, including those held in joint ventures.
Notes:
* All amounts in this document marked with an "*" represent
organic growth which presents performance on a comparable basis,
both in terms of merger and acquisition activity and movements in
foreign exchange rates. "Change at constant exchange rates"
presents performance on a comparable basis in terms of foreign
exchange rates only. Organic growth and change at constant exchange
rates are alternative performance measures. See "Alternative
performance measures" on page 48 for further details and
reconciliations to the respective closest equivalent GAAP
measure.
** Organic growth excluding the impact of UK handset financing
and settlements (see page 53 for further details).
1. Following the adoption of IFRS 15 "Revenue from Contracts
with Customers" on 1 April 2018, the Group's statutory results for
the six months ended 30 September 2018 are on an IFRS 15 basis,
whereas the statutory results for the six months ended 30 September
2017 are on an IAS 18 basis as previously reported.
2. Six months ended 30 September 2018 includes EUR3.5 billion of
impairment charges in respect of the Group's investments in Spain,
Romania and Vodafone Idea and a EUR3.4 billion loss on the disposal
of Vodafone India. See note 8 "Acquisitions and disposals" for
further details.
3. Alternative performance measures are non-GAAP measures that
are presented to provide readers with additional financial
information that is regularly reviewed by management and should not
be viewed in isolation or as an alternative to the equivalent GAAP
measure. Group service revenue, adjusted EBITDA and adjusted EBIT
are presented on an IAS 18 basis. See "Alternative performance
measures" on page 48 for reconciliations to the closest respective
equivalent GAAP measure and "Definition of terms" on page 59 for
further details.
GUIDANCE
Please see page 48 for "Alternative performance measures", page
59 for "Definition of terms" and page 61 for "Forward-looking
statements".
2019 financial year guidance(1)
Free cash flow
Adjusted EBITDA (pre-spectrum)
EURbn EURbn
----------------------------- -------------------- --------------------------
Original guidance (excluding 'Organic growth of 'At least EUR5.2 billion'
Vodafone India) 1 - 5% excluding
settlements and UK
handset
financing'
Updated guidance 'Organic growth of 'c.EUR5.4 billion'
c.3% excluding
settlements and UK
handset
financing'
----------------------------- -------------------- --------------------------
Consistent with prior guidance, we now expect to grow our
adjusted organic EBITDA by around 3% in FY19, excluding the impact
of UK handset financing in both years, and the significant benefit
in the prior year from regulatory settlements in the UK and a legal
settlement in Germany. Based on guidance FX rates, and under IAS 18
accounting standards, this implies an adjusted EBITDA range of
EUR14.3-14.5 billion for the year.
Under IFRS 15, we expect our organic service revenue growth will
be slightly higher and our absolute adjusted EBITDA will be
slightly lower, primarily due to the elimination of the impact of
UK handset financing under IAS 18, with no impact on FCF.
We now target a reduction in operating expenses in Europe and
Common functions of at least EUR1.2 billion by FY21 compared to
FY18 on an absolute organic basis, including savings in FY19 of
around EUR400 million.
On an IAS 18 basis, we continue to expect our capital additions,
expressed as a percentage of our revenues to remain in the
'mid-teens', excluding capital additions related to the Gigabit
Investment Plan in Germany and the announced acquisition of Liberty
Global's assets in Germany and CEE.
We now aim to generate FCF pre-spectrum of around EUR5.4
billion, after all capex, before M&A and restructuring costs,
and based on guidance FX rates, reflecting our confidence in
achieving the mid-point of our EBITDA guidance range.
Dividend policy
The Board currently intends to propose a total dividend of 15.07
eurocents per share for the current financial year, in-line with
the FY18 dividend, with an interim dividend of 4.84 eurocents (also
stable YoY). The Board will consider growing the dividend per share
over the long-term, once the Group's financial leverage has reduced
towards the lower end of the revised target range of 2.5x-3.0x net
debt / EBITDA.
Assumptions
We have based guidance for the financial year ending 31 March
2019 on our current assessment of the global macroeconomic outlook
and assume foreign exchange rates of EUR1:GBP0.87, EUR1:ZAR 15.1,
EUR1:TRY 5.1 and EUR1:EGP 22.1. Guidance excludes the impact of
licence and spectrum payments, material one-off tax-related
payments, restructuring payments, changes in shareholder recharges
from India and any fundamental structural change to the Eurozone.
It also assumes no material change to the current structure of the
Group. Actual foreign exchange rates may vary from the foreign
exchange rate assumptions used.
Note:
1. Adjusted EBITDA and free cash flow (pre-spectrum) are
alternative performance measures. Alternative performance measures
are non-GAAP measures that are presented to provide readers with
additional financial information that is regularly reviewed by
management and should not be viewed in isolation or as an
alternative to the equivalent GAAP measure. The adjusted EBITDA and
free cash flow (pre-spectrum) measures are forward-looking
alternative performance measures which at this time cannot be
quantitatively reconciled to comparative GAAP financial
information. See "Alternative performance measures" on page 48 for
more information.
CONTENTS
Page
Financial results 7
Liquidity and capital resources 18
Risk factors 20
Responsibility statement 21
Unaudited condensed consolidated financial statements 22
Alternative performance measurements 48
Additional information 56
Other information (including forward-looking statements) 59
---------------------------------------------------------- -----
FINANCIAL RESULTS
Group(1, 2)
Following the adoption of IFRS 15 "Revenue from Contracts with
Customers" on 1 April 2018, the Group's statutory results for the
six months ended 30 September 2018 are on an IFRS 15 basis, whereas
the statutory results for the six months ended 30 September 2017
are on an IAS 18 basis as previously reported, with any comparison
between the two bases of reporting not being meaningful. As a
result, the discussion of our operating results is primarily on an
IAS 18 basis for all periods presented. See "Alternative
performance measures" on page 48 for more information and
reconciliations to the closest respective equivalent GAAP
measures.
Six months ended 30 September
--------------------------------------------------
2018 2018 2017 IAS 18 Growth
--------------------
IFRS
15 IAS 18 IAS 18 Reported Organic*
EURm EURm EURm % %
------------------------------------------ -------- -------- -------- --------- ---------
Continuing operations
Mobile customer revenue 12,693 13,408
Mobile incoming revenue 916 1,036
Other service revenue 1,055 1,086
------------------------------------------ -------- -------- --------
Mobile service revenue 14,664 15,530
Fixed service revenue 5,047 5,062
------------------------------------------ -------- -------- -------- --------- ---------
Service revenue 18,440 19,711 20,592 (4.3) (0.1)
Other revenue 3,356 2,834 2,483
------------------------------------------ -------- -------- -------- --------- ---------
Revenue 21,796 22,545 23,075 (2.3) 1.5
Direct costs (5,230) (5,154) (5,281)
Customer costs (4,264) (4,889) (4,772)
Operating expenses (5,429) (5,424) (5,637)
------------------------------------------ -------- -------- -------- --------- ---------
Adjusted EBITDA 6,873 7,078 7,385 (4.2) (0.2)
Depreciation and amortisation:
Acquired intangibles (116) (116) (122)
Purchased licences (731) (731) (763)
Other (3,926) (3,926) (4,043)
----------------------------------------- -------- -------- -------- --------- ---------
Adjusted EBIT 2,100 2,305 2,457 (6.2) (1.6)
Share of adjusted results in associates
and joint ventures(3) (8) 41 171
------------------------------------------ -------- -------- -------- --------- ---------
Adjusted operating profit 2,092 2,346 2,628 (10.7) (0.6)
Impairment loss (3,495) -
Restructuring costs (95) (33)
Amortisation of acquired customer
base and brand intangible assets3 (317) (543)
Other income and expense (256) (44)
------------------------------------------ -------- -------- --------
Operating (loss)/profit (2,071) 2,008
Non-operating income and expense (3) (1)
Net (financing costs)/investment
income (815) 152
Income tax expense(4) (1,409) (579)
------------------------------------------ -------- -------- --------
(Loss)/profit for the financial
period from continuing operations (4,298) 1,580
Loss for the financial period
from discontinued operations (3,535) (345)
------------------------------------------ -------- -------- --------
(Loss)/profit for the financial
period (7,833) 1,235
------------------------------------------ -------- -------- --------
Attributable to:
- Owners of the parent (7,965) 1,131
- Non-controlling interests 132 104
------------------------------------------ -------- -------- --------
Notes:
* All amounts in this document marked with an "*" represent
organic growth which presents performance on a comparable basis,
both in terms of merger and acquisition activity and movements in
foreign exchange rates. "Change at constant exchange rates"
presents performance on a comparable basis in terms of foreign
exchange rates only. Organic growth and change at constant exchange
rates are alternative performance measures. See "Alternative
performance measures" on page 48 for further details and
reconciliations to the respective closest equivalent GAAP
measure.
1. Service revenue, adjusted EBITDA, adjusted EBIT and adjusted
operating profit are alternative performance measures. Alternative
performance measures are non-GAAP measures that are presented to
provide readers with additional financial information that is
regularly reviewed by management and should not be viewed in
isolation or as an alternative to the equivalent GAAP measure. See
"Alternative performance measures" on page 48 for more information
and reconciliations to the closest respective equivalent GAAP
measure and "Definition of terms" on page 59 for further
details.
2. Current period reflects average foreign exchange rates of
EUR1:GBP0.88, EUR1:INR 80.77, EUR1:ZAR 15.73, EUR1:TKL 5.90 and
EUR1: EGP 21.01.
3. Share of adjusted results in equity accounted associates and
joint ventures excludes amortisation of acquired customer bases and
brand intangible assets, restructuring costs and other costs of
EUR0.4 billion (2017: EUR0.2 billion) which are included in
amortisation of acquired customer base and brand intangible assets,
restructuring costs and other income and expense respectively.
4. Refer to page 16 for further details.
FINANCIAL RESULTS
Europe(1)
Other IAS 18 Growth
--------------------
Germany Italy UK Spain Europe Eliminations Europe Reported Organic*
IAS 18 basis EURm EURm EURm EURm EURm EURm EURm % %
--------------------- -------- ------- -------- -------- ------- ------------- -------- --------- ---------
30 September 2018
Mobile customer
revenue 2,719 1,685 1,888 1,299 1,654 - 9,245
Mobile incoming
revenue 101 170 141 63 190 (9) 656
Other service
revenue 259 117 134 89 138 (52) 685
--------------------- -------- ------- -------- -------- ------- ------------- --------
Mobile service
revenue 3,079 1,972 2,163 1,451 1,982 (61) 10,586
Fixed service
revenue 2,081 523 734 754 405 (1) 4,496
--------------------- -------- ------- -------- -------- ------- ------------- -------- --------- ---------
Service revenue 5,160 2,495 2,897 2,205 2,387 (62) 15,082 (1.9) (1.8)
Other revenue 291 420 500 216 180 (3) 1,604
--------------------- -------- ------- -------- -------- ------- ------------- -------- --------- ---------
Revenue 5,451 2,915 3,397 2,421 2,567 (65) 16,686 (0.5) (0.5)
Direct costs (963) (577) (767) (717) (654) 65 (3,613)
Customer costs (1,149) (671) (919) (569) (433) - (3,741)
Operating expenses (1,261) (587) (910) (593) (631) - (3,982)
--------------------- -------- ------- -------- -------- ------- ------------- -------- --------- ---------
Adjusted EBITDA 2,078 1,080 801 542 849 - 5,350 (4.2) (4.2)
Depreciation and
amortisation:
Acquired
intangibles - (61) - - (2) - (63)
Purchased licences (353) (36) (218) (33) (54) - (694)
Other (1,110) (544) (598) (597) (490) - (3,339)
-------------------- -------- ------- -------- -------- ------- ------------- -------- --------- ---------
Adjusted EBIT 615 439 (15) (88) 303 - 1,254 (19.4) (19.5)
Share of adjusted
results in
associates
and joint ventures - - - - 42 - 42
--------------------- -------- ------- -------- -------- ------- ------------- -------- --------- ---------
Adjusted operating
profit 615 439 (15) (88) 345 - 1,296 (17.6) (17.7)
--------------------- -------- ------- -------- -------- ------- ------------- -------- --------- ---------
Adjusted EBITDA
margin 38.1% 37.0% 23.6% 22.4% 33.1% 32.1%
--------------------- -------- ------- -------- -------- ------- ------------- --------
30 September 2017
Mobile customer
revenue 2,683 1,889 2,070 1,369 1,624 - 9,635
Mobile incoming
revenue 106 172 152 83 197 (13) 697
Other service
revenue 257 127 155 106 138 (69) 714
--------------------- -------- ------- -------- -------- ------- ------------- --------
Mobile service
revenue 3,046 2,188 2,377 1,558 1,959 (82) 11,046
Fixed service
revenue 2,016 485 697 768 365 (4) 4,327
--------------------- -------- ------- -------- -------- ------- ------------- --------
Service revenue 5,062 2,673 3,074 2,326 2,324 (86) 15,373
Other revenue 215 434 441 186 128 (2) 1,402
--------------------- -------- ------- -------- -------- ------- ------------- --------
Revenue 5,277 3,107 3,515 2,512 2,452 (88) 16,775
Direct costs (969) (607) (736) (683) (663) 88 (3,570)
Customer costs (1,102) (661) (889) (502) (405) - (3,559)
Operating expenses (1,277) (639) (960) (576) (611) - (4,063)
--------------------- -------- ------- -------- -------- ------- ------------- --------
Adjusted EBITDA 1,929 1,200 930 751 773 - 5,583
Depreciation and
amortisation:
Acquired
intangibles - (61) - - (2) - (63)
Purchased licences (350) (22) (214) (33) (55) - (674)
Other (1,081) (553) (595) (586) (476) - (3,291)
-------------------- -------- ------- -------- -------- ------- ------------- --------
Adjusted EBIT 498 564 121 132 240 - 1,555
Share of adjusted
results in
associates
and joint ventures 2 - - - 15 - 17
--------------------- -------- ------- -------- -------- ------- ------------- --------
Adjusted operating
profit 500 564 121 132 255 - 1,572
--------------------- -------- ------- -------- -------- ------- ------------- --------
Adjusted EBITDA
margin 36.6% 38.6% 26.5% 29.9% 31.5% 33.3%
--------------------- -------- ------- -------- -------- ------- ------------- --------
Change at constant exchange rates (%)
Mobile customer
revenue 1.3 (10.8) (8.1) (5.1) 2.0
Mobile incoming
revenue (4.6) (1.1) (6.5) (24.0) (4.2)
Other service
revenue 1.0 (7.7) (13.0) (15.5) (1.3)
--------------------- -------- ------- -------- -------- -------
Mobile service
revenue 1.1 (9.9) (8.4) (6.8) 1.1
Fixed service
revenue 3.2 7.9 6.2 (1.8) 11.0
--------------------- -------- ------- -------- -------- -------
Service revenue 1.9 (6.6) (5.1) (5.2) 2.6
Other revenue 35.0 (3.5) 14.0 16.2 44.2
--------------------- -------- ------- -------- -------- -------
Revenue 3.3 (6.2) (2.7) (3.6) 4.8
Direct costs (0.7) (5.0) 5.1 5.1 (1.1)
Customer costs 4.3 1.5 4.1 13.2 7.4
Operating expenses (1.2) (8.1) (4.5) 3.0 3.0
--------------------- -------- ------- -------- -------- -------
Adjusted EBITDA 7.7 (10.0) (13.4) (27.8) 9.8
Depreciation and
amortisation:
Acquired
intangibles - - - - -
Purchased licences 0.9 61.9 2.7 (1.1) (2.1)
Other 2.7 (1.7) 1.1 2.0 2.9
-------------------- -------- ------- -------- -------- -------
Adjusted EBIT 23.4 (22.1) (112.1) (166.4) 26.2
Share of adjusted
results in
associates
and joint ventures NM - - - 181.9
--------------------- -------- ------- -------- -------- -------
Adjusted operating
profit 23.0 (22.1) (112.1) (166.4) 35.3
--------------------- -------- ------- -------- -------- -------
Adjusted EBITDA
margin (pps) 1.6 (1.6) (2.9) (7.5) 1.5
--------------------- -------- ------- -------- -------- -------
On a statutory basis, revenue decreased by EUR0.7 billion to
EUR16.0 billion, including a EUR0.6 billion decrease due to the
adoption of IFRS 15.
On an IAS 18 basis, revenue decreased 0.5% including a 0.1
percentage point negative impact from foreign exchange movements.
On an organic basis, service revenue excluding the drag from UK
handset financing decreased 0.7%** (Q1 -0.3%**, Q2 -1.1%**),
reflecting competitive pressure in Italy and Spain offset by good
growth in Germany, the UK and Other Europe.
Adjusted EBITDA decreased 4.2%, including a 0.1 percentage point
negative impact from foreign exchange movements. On an organic
basis and excluding UK handset financing impacts and a UK
settlement in the prior year, adjusted EBITDA was almost stable
(-0.2)%** as service revenue declines were offset by lower
operating expenses.
Adjusted EBIT decreased 19.5%*, reflecting lower adjusted
EBITDA.
Other
activity
Reported (including Foreign Organic*
change M&A) exchange change
% pps pps %
---------------------------------- --------- ----------- --------- ---------
Europe revenue (0.5) (0.1) 0.1 (0.5)
---------------------------------- --------- ----------- --------- ---------
Service revenue
Germany 1.9 0.1 - 2.0
Italy (6.7) 0.3 - (6.4)
UK (5.8) 0.1 0.7 (5.0)
Spain (5.2) 0.5 - (4.7)
Other Europe 2.7 (0.2) (0.1) 2.4
Europe service revenue (1.9) - 0.1 (1.8)
---------------------------------- --------- ----------- --------- ---------
Adjusted EBITDA
Germany 7.7 (0.4) - 7.3
Italy (10.0) 0.3 - (9.7)
UK (13.9) (1.0) 0.5 (14.4)
Spain (27.8) 0.6 - (27.2)
Other Europe 9.8 0.5 - 10.3
Europe adjusted EBITDA (4.2) (0.1) 0.1 (4.2)
---------------------------------- --------- ----------- --------- ---------
Europe adjusted EBIT (19.4) (0.1) - (19.5)
---------------------------------- --------- ----------- --------- ---------
Europe adjusted operating profit (17.6) (0.1) - (17.7)
---------------------------------- --------- ----------- --------- ---------
Notes:
* All amounts in this document marked with an "*" represent
organic growth which presents performance on a comparable basis,
both in terms of merger and acquisition activity and movements in
foreign exchange rates. "Change at constant exchange rates"
presents performance on a comparable basis in terms of foreign
exchange rates only. Organic growth and change at constant exchange
rates are alternative performance measures. See "Alternative
performance measures" on page 48 for further details and
reconciliations to the respective closest equivalent GAAP
measure.
** Organic growth excluding the impact of UK handset financing
and settlements (see page 53 for further details).
1 The Financial Results discussion, including the discussion of
service revenue, adjusted EBITDA, adjusted EBIT and adjusted
operating profit, is primarily performed on an IAS 18 basis. 2018
information on an IAS 18 basis and percentage movements on an IAS
18 basis are alternative performance measures. See "Alternative
performance measures" on page 48 for more information and
reconciliations to the closest respective equivalent GAAP measure
and "Definitions of terms" on page 59 for further details.
Germany
Service revenue grew 2.0%* (Q1: 2.4%*, Q2: 1.7%*) driven by
strong customer base growth in both mobile and fixed line. The
slight slowdown in quarterly trends reflects the lapping of a tough
prior year comparator relating to wholesale MVNO revenues.
Mobile service revenue grew 1.3%* (Q1: 1.7%*, Q2: 0.9%*) driven
by a higher contract customer base. We added 466,000 contract
customers in the first half of the year (H1 2017/18: 301,000)
supported by strong sales performances in both branded and indirect
channels, and the success of our GigaCube proposition. Contract
ARPU declined, however it grew excluding the mix shift towards
SIM-only, multi-SIM family contracts and convergence. In Q2, our
consumer segment continued to perform well and Business returned to
growth, however this was partially offset by a tough prior year
comparator relating to wholesale MVNO revenues. We retained our
market leading consumer NPS, and our 4G coverage is now 93% with
the ability to offer 500Mbps in over 45 cities. Narrow-band IoT,
which enables deep indoor coverage at low cost for connected
devices, is now available across 90% of our 4G footprint.
Fixed service revenue grew 3.2%* (Q1: 3.4%*, Q2: 3.0%*) driven
by customer base growth. We added 115,000 broadband customers in
H1, with quarterly trends improving despite an increase in
competitor promotions, reflecting the growing demand for higher
speed offers. We also maintained good momentum in convergence
supported by our GigaKombi proposition, and we added 513,000
consumer converged customers (including prepaid mobile customers
with fixed products for the first time), bringing our consumer
converged customer base to 1.2 million. Our Gigabit investment plan
is well underway. We have successfully completed the analogue
switch off for 42% of our TV customers, enabling the efficient roll
out of DOCSIS 3.1. We are targeting to cover 8 million households
(70%) with this Gigabit capable technology by the end of the
year.
Adjusted EBITDA grew 7.3%* with a 1.5 percentage point
improvement in adjusted EBITDA margin to 38.1%. This was driven by
service revenue growth, our focus on more profitable direct
channels, and a further 1.2%* reduction in operating expenses
despite the strong growth in customer numbers.
Italy
Service revenue declined 6.4%* (Q1: -6.5%*, Q2: -6.3%*),
primarily reflecting increased competition in mobile due to the
arrival of a new entrant.
Mobile service revenue declined 9.5%* (Q1: -9.5%*, Q2: -9.6%*).
Promotional activity in the prepaid segment remained high, and in
Q2 stepped up further following the launch of the new entrant in
late May. As a result, mobile number portability ('MNP') volumes
were 46% higher year-on year in Q2 and 42% higher compared to Q1.
In June, we launched a new secondary brand ('Ho.') to specifically
address customers in the value segment of the market. Customer
take-up to date has been encouraging, mitigating losses on our main
brand. Overall our active consumer prepaid customer base declined
by 213,000 in H1, and consumer prepaid ARPU fell by 5.4%. During
this period we maintained our market leading network position.
In October 2018, we announced that we had acquired 300MHz of
spectrum across 700MHz, 3700MHz, and 26GHz bands for EUR2.4bn, a
significantly greater cost than in other European markets due to an
artificial auction construct. This spectrum will enable the
deployment of 5G, allowing us to maintain our leading network
position in Italy and delivering substantial network operating cost
efficiencies as demand for data continues to grow.
Fixed service revenue grew 7.9%* (Q1: 7.1%*, Q2: 8.6%*). Our
commercial momentum remained strong, as we added 121,000 broadband
households in H1. Through our owned NGN footprint and our rapidly
expanding strategic partnership with Open Fiber, we now cover 5.8
million households. We also added 91,000 converged customers,
taking our total converged customer base to 834,000.
Adjusted EBITDA declined by 9.7%* and the adjusted EBITDA margin
was 1.6 percentage points lower at 37.0%. The decline in service
revenue was partially offset by a tight control of operating
expenses, which declined by 8.1%* year-on-year.
UK
Excluding the drag from handset financing, service revenue grew
0.8%** (Q1: 0.5%**, Q2: 1.1%**), driven by growth in consumer
mobile and fixed line, and by a return to growth in Business fixed.
This improved performance reflects the substantial operational
improvements and commercial actions taken over the past year. On a
reported basis service revenue declined 5.0%* (Q1: -4.9%*, Q2:
-5.1%*), with the drag on growth from handset financing increasing
from 5.4 percentage points in Q1 to 6.2 percentage points in
Q2.
Mobile service revenue excluding handset financing declined by
0.8%** (Q1: -0.9%**, Q2: -0.6%**), with growth in consumer being
offset by lower Business and MVNO revenue. The growth in consumer
was driven by a higher contract customer base and an RPI-linked
price increase. Our commercial momentum accelerated through the
period; excluding Talkmobile, our low-end mobile brand which is
being phased out, we added 181,000 contract customers in the first
half of the year (H1 2017/18: 59,000). This was supported by a 2
percentage point year-on-year improvement in consumer branded
churn, and our best ever network satisfaction and consumer NPS
scores. Our active consumer prepaid base also grew by 100,000 in Q2
supported by VOXI, our targeted youth proposition.
Fixed service revenue grew 6.2%* (Q1: 5.3%*, Q2: 7.0%*) driven
by continued strong momentum in consumer broadband and a return to
service revenue growth in Business. We added 97,000 consumer
broadband net additions in H1, and in total we now serve 479,000
broadband customers. In September, we launched our first
fibre-to-the-home offer in Milton Keynes, leveraging our strategic
partnership with CityFibre. This offer will be rolled out to a
further 9 cities by early 2019.
Adjusted organic EBITDA excluding handset financing and a
one-off settlement in the prior year grew 12.1%**, and our adjusted
EBITDA margin improved by 2.1** percentage points. This improvement
was driven by service revenue growth, a 5.7%* reduction in
operating expenses excluding the one-off settlement, and improved
Business fixed profitability; to date, we have closed 15 legacy
networks and transitioned these customers to our RedStream
next-generation network. On a reported basis adjusted EBITDA
decreased by 14.4%* and the reported adjusted EBITDA margin
decreased by 2.9 percentage points to 23.6%.
Spain
Service revenue declined 4.7%* (Q1: -2.2%*, Q2: -7.2%*). The
slowdown in quarterly trends reflects the commercial actions we
took in May in order to improve the competitiveness of our offers,
particularly in the value segment, and the impact of our decision
not to renew unprofitable football content rights. Going forward,
unless football rights are available on profitable terms, we intend
to focus our content strategy on premium movies and TV series.
Competition in the market remained high during the first half of
the year, resulting in a 20-25% increase in market portability
volumes across both mobile and fixed and a significant increase in
our churn rates. Post our commercial repositioning in May, porting
trends in June and July improved significantly, supported by
improved momentum in our second brand Lowi. However, as a result of
our decision not to renew unprofitable rights for the Champions
League and the 'match of the week' in La Liga, we lost football
customers in August and September. Our performance was further
impacted by discounted TV/football promotions launched by the
incumbent. However, our porting performance versus other operators
remained resilient, and the summer promotions ended at the
beginning of October. Overall, in H1 our mobile contract base grew
by 35,000, our broadband customer base declined by 118,000, and we
lost 98,000 TV customers. We maintained our market leading NPS
position in consumer, and further improved our market leading
network position with 4G coverage of 96% and an NGN footprint
covering 21.5 million households (of which 10.3 million are
on-net).
Adjusted EBITDA declined by 27.2%* and the adjusted EBITDA
margin was 7.5 percentage points lower at 22.4%. This was
principally driven by the reduction in ARPU and fixed customers as
well as higher commercial costs following the commercial
repositioning of the business. Excluding certain one-time items
primarily relating to content costs and intercompany charges,
adjusted EBITDA declined by 20.7%*.
Following challenging current trading and economic conditions,
management has reassessed the expected future business performance
in Spain. Following this reassessment, projected cash flows are
lower and this has led to an impairment charge of EUR2.9 billion
with respect to the Group's investment in Spain for the six months
ended 30 September 2018.
Other Europe
Other Europe, which represents 12.1% of Group service revenue,
grew 2.4%* (Q1: 2.6%*, Q2: 2.3%*) with all major markets growing
during the first half of the year. Adjusted EBITDA grew 10.3%* and
adjusted EBITDA margin grew 1.6 percentage points to 33.1%*
reflecting continued strong cost control, and good customer base
growth.
In Ireland, service revenue grew 2.5%* (Q1: 1.7%*, Q2: 3.3%*)
driven by mobile base growth and prepaid ARPU increases. Portugal
service revenue grew 2.3%* (Q1: 3.6%*, Q2: 1.1%*) supported by
strong customer base growth and higher ARPU in fixed line. The
slowdown in quarterly trends reflects the impact of an MTR cut in
July. In Greece, service revenue grew by 1.6%* (Q1: 2.1%*, Q2:
1.2%*) driven by ARPU growth in consumer mobile and fixed customer
base growth. The slowdown quarter-on-quarter reflect the lapping of
price rises in the prior year.
VodafoneZiggo Joint Venture
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 declined 1.8% during H1 (Q1: -2.9%, Q2: -0.6%).
This reflected continued price competition in mobile, particularly
in the B2B segment, partially offset by growth in fixed line. The
improvement in quarterly trends principally reflected the lapping
of MTR cuts and roaming regulation from the prior year, combined
with continued good customer base growth in both mobile and fixed.
We reached the milestone of 1 million converged customers, and 30%
of broadband customers and 48% of eligible mobile customers are now
converged, driving significant NPS and churn benefits.
Adjusted EBITDA was stable in H1, as declining revenues were
offset by lower operating and direct costs which were down 2.9%
year-on-year. We continued to make good progress on integrating the
businesses and have now realised over one third of the targeted
cost and capital expenditure synergies.
During H1, Vodafone received EUR163 million in dividends from
the joint venture and EUR25 million in interest payments on the
shareholder loan.
Africa, Middle East and Asia Pacific ('AMAP')(1)
IAS 18 Growth
--------------------
Other
Vodacom AMAP Eliminations AMAP Reported Organic*
IAS 18 basis EURm EURm EURm EURm % %
------------------------------------ -------- ------- ------------- -------- --------- ---------
30 September 2018
Mobile customer revenue 2,014 1,424 - 3,438
Mobile incoming revenue 84 205 - 289
Other service revenue 115 72 - 187
------------------------------------ -------- ------- ------------- --------
Mobile service revenue 2,213 1,701 - 3,914
Fixed service revenue 127 332 - 459
------------------------------------ -------- ------- ------------- -------- --------- ---------
Service revenue 2,340 2,033 - 4,373 (9.0) 7.4
Other revenue 484 426 - 910
------------------------------------ -------- ------- ------------- -------- --------- ---------
Revenue 2,824 2,459 - 5,283 (7.3) 9.2
Direct costs (399) (776) - (1,175)
Customer costs (691) (482) - (1,173)
Operating expenses (668) (535) - (1,203)
------------------------------------ -------- ------- ------------- -------- --------- ---------
Adjusted EBITDA 1,066 666 - 1,732 (6.5) 6.8
Depreciation and amortisation:
Acquired intangibles (41) (12) - (53)
Purchased licences (2) (35) - (37)
Other (335) (292) - (627)
----------------------------------- -------- ------- ------------- -------- --------- ---------
Adjusted EBIT 688 327 - 1,015 1.3 6.9
Share of adjusted results
in associates and joint ventures 106 (107) - (1)
------------------------------------ -------- ------- ------------- -------- --------- ---------
Adjusted operating profit 794 220 - 1,014 (12.4) 5.8
------------------------------------ -------- ------- ------------- -------- --------- ---------
Adjusted EBITDA margin 37.7% 27.1% 32.8%
------------------------------------ -------- ------- ------------- --------
30 September 2017
Mobile customer revenue 1,996 1,761 - 3,757
Mobile incoming revenue 80 262 - 342
Other service revenue 121 88 - 209
------------------------------------ -------- ------- ------------- --------
Mobile service revenue 2,197 2,111 - 4,308
Fixed service revenue 113 382 - 495
------------------------------------ -------- ------- ------------- --------
Service revenue 2,310 2,493 - 4,803
Other revenue 489 407 - 896
------------------------------------ -------- ------- ------------- --------
Revenue 2,799 2,900 - 5,699
Direct costs (361) (937) - (1,298)
Customer costs (737) (493) - (1,230)
Operating expenses (638) (680) - (1,318)
------------------------------------ -------- ------- ------------- --------
Adjusted EBITDA 1,063 790 - 1,853
Depreciation and amortisation:
Acquired intangibles (43) (16) - (59)
Purchased licences (2) (87) - (89)
Other (325) (378) - (703)
----------------------------------- -------- ------- ------------- --------
Adjusted EBIT 693 309 - 1,002
Share of adjusted results
in associates and joint ventures 29 126 - 155
------------------------------------ -------- ------- ------------- --------
Adjusted operating profit 722 435 - 1,157
------------------------------------ -------- ------- ------------- --------
Adjusted EBITDA margin 38.0% 27.2% 32.5%
------------------------------------ -------- ------- ------------- --------
Change at constant exchange rates (%)
Mobile customer revenue 5.2 (1.7)
Mobile incoming revenue 9.3 (1.9)
Other service revenue (0.4) (1.6)
------------------------------------ -------- -------
Mobile service revenue 5.1 (1.7)
Other service revenue 16.8 (2.2)
------------------------------------ -------- -------
Service revenue 5.7 (1.8)
Other revenue 3.5 39.5
------------------------------------ -------- -------
Revenue 5.3 3.5
Direct costs 15.2 1.6
Customer costs (2.2) 29.7
Operating expenses 9.1 (7.2)
------------------------------------ -------- -------
Adjusted EBITDA 4.8 0.3
Depreciation and amortisation:
Acquired intangibles - -
Purchased licences (17.4) (53.1)
Other 8.2 (8.6)
----------------------------------- -------- -------
Adjusted EBIT 3.6 26.9
Share of adjusted results
in associates and joint ventures NM NM
------------------------------------ -------- -------
Adjusted operating profit 14.4 (41.6)
------------------------------------ -------- -------
Adjusted EBITDA margin (pps) (0.2) (0.9)
------------------------------------ -------- -------
On a statutory basis, revenue decreased by EUR0.5 billion to
EUR5.2 billion, including a EUR0.1 billion decrease due to the
adoption of IFRS 15.
Revenue decreased 7.3%, with strong organic growth offset by a
4.8 percentage point impact arising from the disposal of Vodafone
Qatar at the end of FY18 and an 11.7 percentage point adverse
impact from foreign exchange movements, particularly with regards
to the Turkish Lira. On an organic basis service revenue was up
7.4%* driven by continued commercial execution, strong growth in
data and the benefit of price increases to adjust for local
inflation.
Adjusted EBITDA decreased 6.5%, including a 3.8 percentage point
impact from the disposal of Vodafone Qatar and a 9.5 percentage
point adverse impact from foreign exchange movements. On an organic
basis, adjusted EBITDA grew 6.8%*, driven by underlying revenue
growth and ongoing cost management to mitigate inflationary
impacts.
Adjusted EBIT increased 6.9%*.
Other
activity
Reported (including Foreign Organic*
change M&A) exchange change
% pps pps %
-------------------------------- --------- ----------- --------- ---------
AMAP revenue (7.3) 4.8 11.7 9.2
-------------------------------- --------- ----------- --------- ---------
Service revenue
Vodacom 1.3 - 4.4 5.7
Other AMAP (18.5) 11.2 16.7 9.4
AMAP service revenue (9.0) 5.3 11.1 7.4
-------------------------------- --------- ----------- --------- ---------
Adjusted EBITDA
Vodacom 0.3 - 4.5 4.8
Other AMAP (15.7) 9.9 16.0 10.2
AMAP adjusted EBITDA (6.5) 3.8 9.5 6.8
-------------------------------- --------- ----------- --------- ---------
AMAP adjusted EBIT 1.3 (3.2) 8.8 6.9
-------------------------------- --------- ----------- --------- ---------
AMAP adjusted operating profit (12.4) 11.1 7.1 5.8
-------------------------------- --------- ----------- --------- ---------
Notes:
* All amounts in this document marked with an "*" represent
organic growth which presents performance on a comparable basis,
both in terms of merger and acquisition activity and movements in
foreign exchange rates. "Change at constant exchange rates"
presents performance on a comparable basis in terms of foreign
exchange rates only. Organic growth and change at constant exchange
rates are alternative performance measures. See "Alternative
performance measures" on page 48 for further details and
reconciliations to the respective closest equivalent GAAP
measure.
1 The Financial Results discussion, including the discussion of
service revenue, adjusted EBITDA, adjusted EBIT and adjusted
operating profit, is primarily performed on an IAS 18 basis. 2018
information on an IAS 18 basis and percentage movements on an IAS
18 basis are alternative performance measures. See "Alternative
performance measures" on page 48 for more information and
reconciliations to the closest respective equivalent GAAP measure
and "Definitions of terms" on page 59 for further details.
Vodacom
Vodacom Group service revenue grew 5.7%* (Q1: 5.1%*, Q2: 6.3%*),
supported by strong customer additions and data growth in South
Africa, as well as growing demand for data and M-Pesa in Vodacom's
International operations. The improvement in quarterly trends was
driven by a further acceleration in the International
operations.
In South Africa, service revenue grew by 4.6%* (Q1: 4.9%*, Q2:
4.3%*). This was supported by continued strong customer base growth
in both contract and prepaid and further improvements in Business.
Q2 service revenue growth was 2.2%* excluding a one-off benefit
relating to a change in revenue deferral policy for our new 'plus'
plans. This underlying slowdown reflected customers optimising
their bundle spend as a result of macroeconomic pressures. In total
we added 2.5 million prepaid customers in the first half of the
year, taking our total prepaid customer base to 47.2 million, an
increase of 3.4% year-on-year.
Data revenue grew by 7.5% and now represents 43.8% of total
service revenue. We continued to drive strong data bundle adoption,
which provides customers with a worry-free experience by reducing
their exposure to out-of-bundle charges. As a result, we have
continued to see strong growth in data bundle sales, which were up
26% year-on-year to 437 million. In total we now have 20.5 million
data customers, of which 8.6 million are on 4G, up 42%
year-on-year. Through our advanced digital platform we have started
to launch new data services such as our video play platform and a
range of financial services. Initial take up of these services has
been encouraging. We maintained our market leading NPS and network
positions, with 4G coverage now reaching 83%.
Vodacom's International operations outside of South Africa,
which represent 23.9% of Vodacom Group service revenue, grew by
12.2%* (Q1: 9.4%*, Q2: 15.0%*). This was driven by strong growth in
Mozambique and the DRC (with growth in Q2 benefitting from the
lapping of the devaluation of the Congolese Franc in the prior
year), and sustained momentum in Tanzania and Lesotho.
Vodacom's adjusted EBITDA grew by 4.8%*, supported by revenue
growth. Adjusted EBITDA margins reduced modestly to 37.7%,
reflecting increased roaming costs in South Africa following a
change in accounting treatment, with these costs now reflected in
operating expenses.
In September 2018, Vodacom concluded its second broad-based BEE
(black economic empowerment) transaction replacing the existing
deal from 2008. This new scheme, valued at EUR1 billion, is the
biggest ever in the telecommunications industry and makes YeboYethu
(Vodacom South Africa BEE shareholders) the third largest
shareholder. The deal secures Vodacom's Level 3 BEE scorecard
credentials, specifically in relation to black ownership, with
effective black ownership of c.20%. This is a key input in
assessments for spectrum allocation, and Government/corporate
business. As a result of this transaction Vodafone Group's
shareholding in Vodacom will fall from 64.5% to 60.5%.
Other AMAP
Service revenue grew 9.4%* (Q1: 9.4%*, Q2: 9.4%*), supported by
continued strong operational performances and local currency
service revenue growth in both Turkey and Egypt. Adjusted EBITDA
grew 10.2%* and the adjusted EBITDA margin declined by 0.1
percentage points to 27.1%.
In Turkey, service revenue grew 14.6%* (Q1: 14.0%*, Q2: 15.2%*)
supported by strong net adds in consumer contract, increased mobile
data revenue, and good fixed line customer base growth. Adjusted
EBITDA grew 17.9%*, however the adjusted EBITDA margin declined by
1.4 percentage points to 21.4% reflecting an increase in costs as a
result of greater inflationary pressures and a 30% devaluation in
the Turkish Lira during H1.
Egypt service revenue grew 16.9%* (Q1: 16.7%*, Q2: 17.0%*) with
successful segmented campaigns, rising data penetration and price
increases supporting ARPU. Adjusted EBITDA grew 17.3%* and the
adjusted EBITDA margin improved by 0.5 percentage points to 45.6%
with revenue growth and strong cost discipline more than offsetting
inflationary pressures.
Associates and joint ventures
Vodafone Idea
On 31 August 2018, the Group completed the transaction to
combine its subsidiary, Vodafone India (excluding its 42% stake in
Indus Towers), with Idea Cellular to form Vodafone Idea, with the
combined company being jointly controlled by Vodafone and the
Aditya Birla Group. See note 5 "Discontinued operations and assets
and liabilities held for sale" for the results of Vodafone India
for the five months ended 31 August 2018 and note 8 "Acquisition
and disposals" for details on the formation of Vodafone Idea.
The Vodafone Idea joint venture's net loss for the month of
September 2018 is reported within 'Share of adjusted results for
associates and joint ventures'. In accordance with applicable IFRS,
the Group also recognised an impairment charge of EUR0.3 billion to
reduce the Group's carrying value of its investment in Vodafone
Idea to fair value at 30 September 2018. See note 3 "Impairment
review" for further details. Note 3 also sets out the primary
assumptions underlying the carrying value of Vodafone Idea, the
risks that these may not materialise and the consequential
potential impact on our investment carrying value.
Vodafone Idea will report its second quarter results on 14
November 2018.
Group results
Revenue
On a statutory basis, Group revenue decreased EUR1.3 billion to
EUR21.8 billion, including a EUR0.7 billion decrease due to the
adoption of IFRS 15 as set out on page 26. On an IAS 18 basis,
Group revenue decreased by 2.3% reflecting the disposal of Vodafone
Qatar in the prior period and adverse foreign exchange
movements.
On an IAS 18 basis, Group service revenue decreased by 0.1%* as
market share gains in European Consumer fixed, strong mobile data
demand and customer base growth in our emerging market operations
and continued momentum in Vodafone Business were offset by
increased competitive pressures in Italy and Spain, the drag from
lower wholesale revenue and the impact of handset financing.
Adjusted EBITDA
On a statutory basis, Group adjusted EBITDA decreased EUR0.5
billion to EUR6.9 billion, including a EUR0.2 billion decrease due
to the adoption of IFRS 15 (see page 26), the disposal of Vodafone
Qatar in the prior period and adverse foreign exchange movements.
On an IAS 18 basis, Group adjusted EBITDA decreased by 0.2%* and
the Group's adjusted EBITDA margin decreased 0.5* percentage points
driven by a lower benefit from handset financing and settlements in
the UK.
Adjusted EBIT
On a statutory basis, adjusted EBIT decreased by EUR0.4 billion
to EUR2.1 billion, including a EUR0.2 billion decrease due to the
adoption of IFRS 15. On an IAS 18 basis, adjusted EBIT decreased by
6.2% to EUR2.3 billion driven as a result of lower adjusted EBITDA
partially offset by lower depreciation and amortisation
expenses.
Operating (loss)/profit
Adjusted EBIT excludes certain income and expenses that we have
identified separately to allow their effect on the results of the
Group to be assessed. The items that are included in statutory
operating (loss)/profit but are excluded from adjusted EBIT are
discussed below.
For the six months ended 30 September 2018, the Group recorded
impairment charges of EUR3.5 billion. The impairment charges relate
solely to goodwill and are recognised in the consolidated income
statement within operating (loss)/profit.
The Group's share of adjusted results in associates and joint
ventures was a loss of EUR0.0 billion, down from a profit of EUR0.2
billion in the prior year, partly due to the inclusion of the
results of Vodafone Idea following the completion of the merger on
31 August 2018.
Restructuring costs and other income and expense increased by
EUR0.3 billion during the period. Amortisation of intangible assets
in relation to customer bases and brands, which are recognised on
the acquisition of businesses, was EUR0.3 billion, a decrease of
EUR0.2 billion compared to the prior period.
Including the above items, the Group reported an operating loss
of EUR2.1 billion, a decrease of EUR4.1 billion on the prior
period.
Net (financing costs)/net investment income
Six months ended
30 September
-------------------
2018 2017
EURm EURm
---------------------------------------------------- --------- --------
Investment income 184 333
Financing costs (999) (181)
--------- --------
Net (financing costs)/net investment income (815) 152
---------------------------------------------------- --------- --------
Analysed as:
Net financing costs before interest on settlement
of tax issues (430) (312)
Net Interest income/(expense) arising on
settlement of outstanding tax issues 15 (33)
---------------------------------------------------- --------- --------
(415) (345)
Mark to market (losses)/gains (185) 195
Foreign exchange(1) (215) 302
--------- --------
(815) 152
---------------------------------------------------- --------- --------
Note:
1. Primarily comprises foreign exchange rate differences
reflected in the income statement in relation to sterling and US
dollar balances.
Net financing costs decreased by EUR967 million primarily driven
by mark to market losses (including economic hedges of the
mandatory convertible bond) and adverse foreign exchange rate
movements. Net financing costs before interest on settlement of tax
issues includes increased interest costs from the bond issuance as
part of the financing for the Liberty Global transaction. Excluding
these, underlying financing costs remained stable, reflecting
consistent weighted average borrowing costs for both periods.
Taxation
Six months ended
30 September
-------------------
2018 2017
EURm EURm
---------------------------------------------------- ---------- -------
Income tax expense: (1,409) (579)
Tax on adjustments to derive adjusted profit
before tax (57) (29)
Deferred tax following revaluation of investments
in Luxembourg (159) -
Luxembourg deferred tax asset recognised in
the period - (159)
Deferred tax on use of Luxembourg losses in
the period 185 168
Tax on the Safaricom transaction - 110
Derecognition of a deferred tax asset in Spain 1,048 -
---------- -------
Adjusted income tax expense for calculating
adjusted tax rate (392) (489)
---------------------------------------------------- ---------- -------
(Loss)/profit before tax (2,889) 2,159
Adjustments to derive adjusted profit before
tax(1) 4,393 214
---------------------------------------------------- ---------- -------
Adjusted profit before tax(2) 1,504 2,373
Share of adjusted results in associates and
joint ventures 8 (171)
---------------------------------------------------- ---------- -------
Adjusted profit before tax for calculating
adjusted effective tax rate 1,512 2,202
---------------------------------------------------- ---------- -------
Adjusted effective tax rate(2) 25.9% 22.2%
---------------------------------------------------- ---------- -------
Notes:
1. See "Earnings per share" on page 17.
2. Adjusted profit before tax and adjusted effective tax are
alternative performance measures. Alternative performance measures
are non-GAAP measures that are presented to provide readers with
additional financial information that is regularly reviewed by
management and should not be viewed in isolation or as an
alternative to the equivalent GAAP measure. See "Alternative
performance measures" on page 48 for further details.
The Group's adjusted effective tax rate for its controlled
businesses for the six months ended 30 September 2018 was 25.9%
compared to 22.2% for the same period during the last financial
year. The higher rate in the current year is primarily due to a
change in the mix of the Group's profit, partly driven by the
financing for the Liberty Global transaction and the impact of
non-tax deductible foreign exchange losses. We expect the Group's
underlying effective tax rate for the full year to remain within
our low to mid-20s range.
The Group's adjusted effective tax rate for both years does not
include the following items: the derecognition of a deferred tax
asset in Spain of EUR1,048 million (2017: EURnil); deferred tax on
the use of Luxembourg losses of EUR185 million (2017: EUR168
million); an increase in the deferred tax asset of EUR159 million
(2017: EURnil) arising from a revaluation of investments based upon
the local GAAP financial statements and tax returns. The last two
items change the total losses we have available for future use
against our profits in Luxembourg and do not affect the amount of
tax we pay in other countries.
The Group's adjusted effective tax rate for the six months ended
30 September 2017 does not include a recognition of deferred tax
asset of EUR159 million due to higher interest rates and a tax
charge in respect of capital gains on the transfer of shares in
Vodafone Kenya Limited to the Vodacom Group of EUR110 million.
Adjusted earnings per share
Adjusted earnings per share, which excludes impairment losses
and the results of Vodafone India (the latter being included in
discontinued operations), were 3.56 eurocents, a decrease of 43.7%
year-on-year, as the impact of the adoption of IFRS 15, lower
adjusted operating profit and higher net financing costs more than
offset the decrease in adjusted income tax expense.
Basic loss per share was 29.00 eurocents, compared to an
earnings per share of 4.03 eurocents for the period ended 30
September 2017, with the increase largely due to impairment charges
of EUR3.5 billion, a EUR3.4 billion loss on the disposal of
Vodafone India recognised during the period, higher net financing
costs from adverse foreign exchange movements, mark to market
losses and higher gross borrowings and the derecognition of a
deferred tax asset in Spain, all of which have been excluded from
adjusted earnings per share.
Six months ended
30 September
----------------------
2018 2017
EURm EURm
------------------------------------------------ ---------- ----------
(Loss)/profit attributable to owners of the
parent (7,965) 1,131
------------------------------------------------ ---------- ----------
Adjustments:
Impairment loss 3,495 -
Amortisation of acquired customer base and
brand intangible assets 317 543
Restructuring costs 95 33
Other income and expense 256 44
Non-operating income and expense 3 1
Investment income and financing costs 227 (407)
------------------------------------------------ ---------- ----------
4,393 214
----------------------------------------------- ---------- ----------
Taxation(1) 1,017 90
India(2) 3,535 345
Non-controlling interests (1) (7)
---------- ----------
Adjusted profit attributable to owners of
the parent(3) 979 1,773
------------------------------------------------ ---------- ----------
Million Million
----------------------------------------------- ---------- ----------
Weighted average number of shares outstanding
- basic(4) 27,462 28,067
------------------------------------------------ ---------- ----------
Earnings per share
------------------------------------------------ ---------- ----------
eurocents eurocents
----------------------------------------------- ---------- ----------
Basic (loss)/earnings per share (29.00c) 4.03c
Adjusted earnings per share(3) 3.56c 6.32c
------------------------------------------------ ---------- ----------
Notes:
1. See page 16.
2. Represents the results of Vodafone India, which has been
accounted for as a discontinued operation for all periods up to 31
August 2018, the date it was combined with Idea Cellular to form
Vodafone Idea.
3. Adjusted profit attributable to owners of the parent and
adjusted earnings per share are alternative performance measures.
Alternative performance measures are non-GAAP measures that are
presented to provide readers with additional financial information
that is regularly reviewed by management and should not be viewed
in isolation or as an alternative to the equivalent GAAP measure.
See "Alternative performance measures" on page 48 for further
details.
4. Weighted average number of shares outstanding includes a
dilution of 765 million shares (2017: 1,292 million shares)
following the issue of GBP2.9 billion of mandatory convertible
bonds in February 2016, of which GBP1.4 billion matured in August
2017, which were classified as equity after taking into account the
cost of future coupon payments.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows and funding
Six months ended 30 September
----------------------------------
IFRS 15 IAS 18 IAS 18
basis basis basis
2018 2018 2017
EURm EURm EURm
------------------------------------------- ----------- --------- ----------
Adjusted EBITDA 6,873 7,078 7,385
Capital additions(1) (3,067) (3,067) (3,263)
Working capital (2,320) (2,525) (2,294)
Disposal of property, plant and equipment 4 4 9
Other 48 48 65
-------------------------------------------- ----------- --------- ----------
Operating free cash flow(2) 1,538 1,538 1,902
Taxation (395) (395) (400)
Dividends received from associates
and investments 305 305 284
Dividends paid to non-controlling
shareholders in subsidiaries (185) (185) (154)
Interest received and paid (369) (369) (343)
-------------------------------------------- ----------- --------- ----------
Free cash flow (pre-spectrum)(2) 894 894 1,289
Licence and spectrum payments (231) (231) (747)
Restructuring payments (97) (97) (127)
-------------------------------------------- ----------- --------- ----------
Free cash flow(2) 566 566 415
Acquisitions and disposals 168 1,079
Equity dividends paid (2,736) (2,637)
Share buybacks - (549)
Foreign exchange 296 693
Other(3) (773) 149
-------------------------------------------- ----------- --------- ----------
Net debt increase (2,479) (850)
Opening net debt(4) (29,631) (29,338)
-------------------------------------------- ----------- --------- ----------
Closing net debt(4) (32,110) (30,188)
-------------------------------------------- ----------- --------- ----------
Notes:
1. Capital additions include the purchase of property, plant and
equipment and intangible assets, other than licence and spectrum,
during the period.
2. Operating free cash flow, free cash flow (pre-spectrum) and
free cash flow are alternative performance measures which are
non-GAAP measures that are presented to provide readers with
additional financial information that is regularly reviewed by
management and should not be viewed in isolation or as an
alternative to the equivalent GAAP measure. See "Alternative
performance measures" on page 48 for more information and
reconciliations to the closest respective equivalent GAAP measure
and "Definition of terms" on page 59 for further details.
3. "Other" for the six months ended 30 September 2018 include
EUR2,135 million (2017: EURnil) received from the repayment of
US$2.5 billion of loan notes issued by Verizon Communications Inc.,
a EUR1,377 million (2017: EURnil) capital injection into Vodafone
India and EUR808 million of debt in relation to licences and
spectrum in Italy and Spain (2017: EURnil).
4. Net debt at 31 March 2018, 30 September 2017 and 31 March
2017 has been revised to exclude EUR1.8 billion of liabilities for
payments due to holders of the equity shares in Kabel Deutschland
AG under the terms of a domination and profit and loss transfer
agreement, which are now separately disclosed in the consolidated
statement of financial position and are no longer presented within
borrowings (see page 23).
Operating free cash flow decreased EUR0.3 billion mainly due to
lower adjusted EBITDA, lower capital additions and higher working
capital cash outflows.
Free cash flow (pre-spectrum) was EUR0.9 billion, a decrease of
EUR0.3 billion, largely driven by the decrease in operating free
cash flow.
Licence and spectrum payments include amounts relating to the
purchase of spectrum in the UK of EUR0.2 billion (2017: EUR0.6
billion in Italy, EUR0.1 billion in Germany).
Acquisitions and disposals include EUR0.3 billion received on
completion of the merger of Vodafone India with Idea Cellular on 31
August 2018.
A foreign exchange gain of EUR0.4 billion was recognised on net
debt as a result of the translation impact of closing foreign
exchange rates, mainly due to movements in the Turkish Lira and
South African Rand against the Euro.
Closing net debt at 30 September 2018 was EUR32.1 billion (31
March 2018: EUR29.6 billion) and excludes the remaining GBP1.4
billion mandatory convertible bond issued in February 2016 which
will be settled in equity shares, liabilities of EUR1.8 billion (31
March 2018: EUR1.8 billion) relating to minority holdings in KDG
and EUR0.9 billion of shareholder loans receivable from
VodafoneZiggo.
Closing net debt also continues to include certain bonds which
are reported at an amount EUR1.6 billion (31 March 2018: EUR1.65
billion) higher than their euro-equivalent cash redemption value as
a result of hedge accounting under IFRS. In addition, where bonds
are issued in currencies other than euros, the Group has entered
into foreign currency swaps to fix the euro cash outflows on
redemption. The impact of these swaps are not reflected in gross
debt and would decrease the euro equivalent redemption value of the
bonds by less than EUR0.1 billion (31 March 2018: EUR0.6 billion
increase).
Analysis of net debt:
Restated(1)
30 September 31 March
2018 2018
EURm EURm
------------------------------------------- ------------- ------------
Bonds (41,969) (33,950)
Commercial paper(2) (791) (2,712)
Bank loans (2,687) (3,316)
Cash collateral liabilities (1,332) (1,070)
Other borrowings(3) (1,393) (373)
-------------------------------------------- ------------- ------------
Gross borrowings (48,172) (41,421)
Derivative financial instruments(4) (2,798) (2,383)
-------------------------------------------- ------------- ------------
Gross debts (50,970) (43,804)
Cash and cash equivalents 6,962 4,674
Other financial instruments:
Derivative financial instruments(5) 3,039 2,629
Short term investments(6) 8,013 6,152
Cash collateral(7) 846 718
-------------------------------------------- ------------- ------------
Total cash and cash equivalents and other
financial instruments 18,860 14,173
-------------------------------------------- ------------- ------------
Net debt (32,110) (29,631)
-------------------------------------------- ------------- ------------
Notes:
1. Liabilities for payments due to holders of the equity shares
in Kabel Deutschland AG under the terms of a domination and profit
and loss transfer agreement are now separately disclosed in the
consolidated statement of financial position and are no longer
presented within borrowings (see page 23); gross borrowings at 31
March 2018 have therefore been revised to exclude EUR1.8 billion in
respect of such liabilities.
2. At 30 September 2018, US$114 million (31 March 2018: US$570
million) was drawn under the US commercial paper programme and
EUR693 million (31 March 2018: EUR2,249 million) was drawn under
the euro commercial paper programme.
3. Amount primarily includes EUR808 million of debt in relation
to licences and spectrum in Italy and Spain (31 March 2018:
EURnil).
4. Comprises mark-to-market adjustments on derivative financial
instruments which are included as a component of trade and other
payables.
5. Comprises mark-to-market adjustments on derivative financial
instruments which are included as a component of trade and other
receivables.
6. At 30 September 2018 the amount primarily includes
EUR4,817million (31 March 2018: EUR3,087 million) in managed
investment funds, EUR2,106 million (31 March 2018: EUR1,974
million) in government bonds of which UK gilts of EUR1,086 million
(31 March 2018: EUR1,112 million) are used primarily as collateral
in relation to derivative financial instruments, and EUR993 million
(31 March 2018: EUR976 million) short-term investments in
portfolios of supply chain and handset receivables, principally in
third party corporate entities.
7. Comprises cash paid under collateral support agreements.
The following table sets out the Group's undrawn committed bank
facilities:
30 September
2018
Maturity EURm
------------------------------------------- -------------- -------------
US$4.2 billion committed revolving credit February
facility(1) 2022 3,586
EUR4.0 billion committed revolving credit
facility(1) January 2025 3,920
Other committed credit facilities Various 145
------------------------------------------- -------------- -------------
Undrawn committed facilities 7,651
----------------------------------------------------------- -------------
Note:
1. Both facilities support US and euro commercial paper
programmes of up to US$15 billion and EUR8 billion
respectively.
Post employment benefits
During the six months ended 30 September 2018, the net deficit
arising from the Group's obligations in respect of its defined
benefit schemes decreased to EUR0.2 billion compared to EUR0.4
billion at 31 March 2018 primarily due to a EUR0.1 billion
reduction in the value of plan assets during the period being
offset by a EUR0.3 billion actuarial gain arising from changes in
financial assumptions, principally due to an increase in the
discount rates in the UK and Eurozone.
Dividends
Dividends will continue to be declared in euros and paid in
euros, pounds sterling and US dollars, aligning the Group's
shareholder returns with the primary currency in which we generate
free cash flow. The foreign exchange rate at which future dividends
declared in euros will be converted into pounds sterling and US
dollars will be calculated based on the average exchange rate over
the five business days during the week prior to the payment of the
dividend.
The Board currently intends to propose a total dividend of 15.07
eurocents per share for the current financial year, in-line with
the dividend for the year ended 31 March 2018, and have announced
an interim dividend of 4.84 eurocents (also stable year-on-year).
The ex-dividend date for the interim dividend is 22 November 2018
for ordinary shareholders, the record date is 23 November 2018 and
the dividend is payable on 1 February 2019. Dividend payments on
ordinary shares will be paid directly into a nominated bank or
building society account.
RISK FACTORS
There are a number of key factors and uncertainties that could
have a significant effect on the Group's financial performance,
including the following:
1. Cyber threat and information security
An external attack, insider threat or supplier breach could
cause service interruption or confidential data breaches.
2. Adverse political and regulatory measures
The scale and complexity of political and regulatory risk is
increasing especially as digital becomes the backbone of economic
growth, potentially resulting in political intervention and
competitive disadvantage. 5G spectrum auctions are also underway in
many jurisdictions which could lead to unfair spectrum allocation
or pricing.
3. Market disruption
New entrants to markets or competitors with lean models could
create pricing pressure. As more competitors push unlimited
bundles, it might impact profitability in the short to medium term
through price erosion.
4. Effective digital and technological transformation
We plan to accelerate the evolution of Vodafone towards a
digital future to improve customer experience, increase speed to
market and operate in an efficient and agile manner. Failure to do
this could lead to missed commercial opportunities, increased cost
of working and customer service failures.
5. Disintermediation
We face increased competition from a variety of new technology
platforms which could impact our customer relationships and
experience. We must be able to keep pace with new technology to
compete in changing markets while maintaining high levels of
customer service.
6. Global economic disruption/adequate liquidity
As a multinational business, we operate in many countries and
currencies, so changes to global economic conditions can impact us.
Any major economic disruption could result in reduced spending
power for our customers and impact our ability to access capital
markets. A relative strengthening or weakening of the major
currencies in which we transact could impact our profitability.
7. Technology resilience
A technology site loss could result in a major impact on our
customers, revenues and reputation. This could involve all major
technology sites including: mobile, fixed, and data centres.
8. Legal and regulatory compliance
Vodafone must comply with a multitude of local and international
laws as well as more specific regulations. These include licence
requirements, privacy regulation, anti-money laundering,
competition law, anti-bribery law, intellectual property rights and
economic sanctions.
9. Maintain investment grade credit rating
We may fail to maintain our investment grade credit rating if we
do not effectively allocate the Group's capital to maximise
returns.
10. Electro-magnetic fields related health risks
Electromagnetic signals emitted by mobile devices and base
stations may be found to pose health risks, with potential impacts
including: changes to national legislation, a reduction in mobile
phone usage or litigation.
There have been two changes to the above risk factors since 31
March:
-- The separate risk on privacy and data management has been merged
into the legal and regulatory compliance risk (8) due to the GDPR
compliance programme moving from the implementation phase into
business as usual.
-- The wording for risk 9 has been updated to reflect the link between
effective allocation of the Group's capital and the impact on
our credit rating.
Brexit implications
The Board continues to keep the possible implications of Brexit
for Vodafone's operations under review. A cross-functional team has
identified ways in which Brexit might affect the Group's
operations. There remains insufficient information about the likely
terms of the post-Brexit arrangements between the UK and the EU, as
well as about any possible transitional arrangements, to draw any
conclusions about the probable impact.
Although we are a UK headquartered company and have put in place
necessary contingency planning, a very large majority of our
customers are in other countries, accounting for most of our
revenue and cash flow. Each of our national operating companies is
a stand-alone business, incorporated and licensed in the
jurisdiction in which it operates, and able to adapt to a wide
range of local developments. As such, our ability to provide
services to our customers in the countries in which we operate,
inside or outside the EU, is unlikely to be affected by Brexit. We
are not a major international trading company, and do not use
passporting for any of our major services or processes.
Depending on the arrangements agreed between the UK and the EU,
there are two primary issues that could directly affect our
operations, in both cases potentially causing us to incur
additional cost:
-- Creation of a data frontier between the UK and the EU: the inability
to move data freely between the UK and EU countries might cause
us to have to move some technical facilities, and affect future
network design; and
-- Inability to access the talent we need to run a multinational
Group operation from the UK: increased controls over or restrictions
to our ability to employ leading talent from non UK markets could
cause us to have to adjust our operating model to ensure that
we attract and retain the best people for the roles we have.
As far as our UK operations are concerned, we are reviewing the
impact of a no deal scenario. One potential impact may be on our
processes for the procurement of handsets and technical equipment,
which may result in a greater investment in working capital at 31
March 2019 and consequently lower cash flow, although this would be
unlikely to have a material impact at a Group level.
A further, indirect, issue that could affect our future
performance would be if the Brexit process caused downward
revisions to macro-economic performance in our major markets
including the UK, impacting the performance of the operating
companies in those markets.
Further information in relation to these risk factors and
uncertainties can be found on pages 38 to 45 of the Group's annual
report for the financial year ended 31 March 2018, which is
available at http://www.vodafone.com/investor.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
-- the unaudited condensed consolidated financial statements have
been prepared in accordance with IAS 34, "Interim Financial Reporting",
as issued by the International Accounting Standards Board and
as adopted by the European Union; and
-- the interim management report includes a fair review of the information
required by Disclosure Guidance and Transparency Rules sourcebook
4.2.7 and Disclosure Guidance and Transparency Rules sourcebook
4.2.8.
Neither the Company nor the directors accept any liability to
any person in relation to the half-year financial report except to
the extent that such liability could arise under English law.
Accordingly, any liability to a person who has demonstrated
reliance on any untrue or misleading statement or omission shall be
determined in accordance with section 90A and schedule 10A of the
Financial Services and Markets Act 2000.
The names and functions of the Vodafone Group Plc board can be
found at:
http://www.vodafone.com/board
By Order of the Board
Rosemary Martin
Group General Counsel and Company Secretary
13 November 2018
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statement
Six months ended
30 September
--------------------
2018 2017
Note EURm EURm
------------------------------------------- ----- --------- ---------
Revenue 2 21,796 23,075
Cost of sales (15,163) (16,208)
------------------------------------------- ----- --------- ---------
Gross profit 6,633 6,867
Selling and distribution expenses (1,907) (1,987)
Administrative expenses (2,781) (2,770)
Share of results of equity accounted
associates and joint ventures (430) (58)
Impairment loss 3 (3,495) -
Other income and expense (91) (44)
------------------------------------------- ----- --------- ---------
Operating (loss)/profit 2 (2,071) 2,008
Non-operating income and expense (3) (1)
Investment income 184 333
Financing costs (999) (181)
------------------------------------------- ----- --------- ---------
(Loss)/profit before taxation (2,889) 2,159
Income tax expense 4 (1,409) (579)
------------------------------------------- ----- --------- ---------
(Loss)/profit for the financial period
from continuing operations (4,298) 1,580
Loss for the financial period from
discontinued operations 5 (3,535) (345)
------------------------------------------- ----- --------- ---------
(Loss)/profit for the financial period (7,833) 1,235
------------------------------------------- ----- --------- ---------
Attributable to:
- Owners of the parent (7,965) 1,131
- Non-controlling interests 132 104
------------------------------------------- ----- --------- ---------
(Loss)/profit for the financial period (7,833) 1,235
------------------------------------------- ----- --------- ---------
(Loss)/earnings per share
From continuing operations:
- Basic 6 (16.13c) 5.26c
- Diluted 6 (16.13c) 5.25c
Total Group:
- Basic 6 (29.00c) 4.03c
- Diluted 6 (29.00c) 4.02c
------------------------------------------- ----- --------- ---------
The accompanying notes are an integral part of the unaudited
condensed consolidated financial statements.
Consolidated statement of comprehensive
income
Six months ended
30 September
--------------------
2018 2017
EURm EURm
------------------------------------------- ----- --------- ---------
(Loss)/profit for the financial period (7,833) 1,235
Other comprehensive income:
Items that may be reclassified to the
income statement in subsequent periods
Foreign exchange translation differences,
net of tax (816) (1,716)
Foreign exchange losses transferred
to the income statement 2,079 -
Other, net of tax (144) (7)
------------------------------------------- ----- --------- ---------
Total items that may be reclassified
to the income statement in subsequent
periods 1,119 (1,723)
Items that will not be reclassified
to the income statement in subsequent
periods
Net actuarial gains/(losses) on defined
benefit pension schemes, net of tax 208 (182)
------------------------------------------- ----- --------- ---------
Total items that will not be reclassified
to the income statement in subsequent
periods 208 (182)
Other comprehensive income/(expense) 1,327 (1,905)
------------------------------------------- ----- --------- ---------
Total comprehensive expense for the
financial period (6,506) (670)
------------------------------------------- ----- --------- ---------
Attributable to:
- Owners of the parent (6,637) (649)
- Non-controlling interests 131 (21)
------------------------------------------- ----- --------- ---------
(6,506) (670)
------------------------------------------- ----- --------- ---------
Consolidated statement of financial
position
30 September 31 March
2018 2018
Note EURm EURm
---------------------------------------- ----- ------------- ----------
Non-current assets
Goodwill 23,316 26,734
Other intangible assets 16,419 16,523
Property, plant and equipment 27,082 28,325
Investments in associates and joint
ventures 9 4,282 2,538
Other investments 1,158 3,204
Deferred tax assets 24,425 26,200
Post employment benefits 151 110
Trade and other receivables 4,847 4,026
---------------------------------------- ----- ------------- ----------
101,680 107,660
---------------------------------------- ----- ------------- ----------
Current assets
Inventory 777 581
Taxation recoverable 115 106
Trade and other receivables 13,399 9,975
Other investments 10,969 8,795
Cash and cash equivalents 6,962 4,674
---------------------------------------- ----- ------------- ----------
32,222 24,131
---------------------------------------- ----- ------------- ----------
Assets held for sale 5 (242) 13,820
---------------------------------------- ----- ------------- ----------
Total assets 133,660 145,611
---------------------------------------- ----- ------------- ----------
Equity
Called up share capital 4,796 4,796
Additional paid-in capital 150,307 150,197
Treasury shares (8,380) (8,463)
Accumulated losses (115,434) (106,695)
Accumulated other comprehensive income 29,160 27,805
---------------------------------------- ----- ------------- ----------
Total attributable to owners of the
parent 60,449 67,640
---------------------------------------- ----- ------------- ----------
Non-controlling interests 927 967
Total non-controlling interests 927 967
---------------------------------------- ----- ------------- ----------
Total equity 61,376 68,607
---------------------------------------- ----- ------------- ----------
Non-current liabilities
Long-term borrowings 42,670 32,908
Deferred tax liabilities 488 644
Post employment benefits 303 520
Provisions 1,075 1,065
Trade and other payables 3,188 2,843
---------------------------------------- ----- ------------- ----------
47,724 37,980
---------------------------------------- ----- ------------- ----------
Current liabilities
Short-term borrowings 5,502 8,513
Financial liabilities under put option
arrangements(1) 1,874 1,838
Taxation liabilities 647 541
Provisions 884 891
Trade and other payables 15,653 16,242
---------------------------------------- ----- ------------- ----------
24,560 28,025
---------------------------------------- ----- ------------- ----------
Liabilities held for sale 5 - 10,999
---------------------------------------- ----- ------------- ----------
Total equity and liabilities 133,660 145,611
---------------------------------------- ----- ------------- ----------
Note:
1. Financial liabilities under put option arrangements comprise
liabilities for payments due to holders of the equity shares in
Kabel Deutschland AG under the terms of a domination and profit and
loss transfer agreement; the amounts as at 31 March 2018 were
previously presented within short-term borrowings.
The accompanying notes are an integral part of the unaudited
condensed consolidated financial statements.
Consolidated statement of changes
in equity
Equity
Additional Accumulated attributable Non-
Share paid-in Treasury comprehensive to controlling Total
capital capital(1) shares losses(2) the owners interests equity
EURm EURm EURm EURm EURm EURm EURm
----------------------- --------- ------------ --------- --------------- -------------- ------------- --------
1 April 2017 4,796 151,808 (8,610) (75,794) 72,200 1,519 73,719
Issue or reissue
of shares(3) 1 (1,741) 1,870 (116) 14 - 14
Share-based
payments - 69 - - 69 - 69
Transactions
with non-controlling
interests in
subsidiaries - - - 814 814 302 1,116
Comprehensive
expense - - - (649) (649) (21) (670)
Dividends - - - (2,670) (2,670) (157) (2,827)
Repurchase of
treasury shares(4) - - (1,735) - (1,735) - (1,735)
----------------------- --------- ------------ --------- --------------- -------------- ------------- --------
30 September
2017 4,797 150,136 (8,475) (78,415) 68,043 1,643 69,686
----------------------- --------- ------------ --------- --------------- -------------- ------------- --------
31 March 2018
as reported 4,796 150,197 (8,463) (78,890) 67,640 967 68,607
Adoption of
IFRS 9 - - - (197) (197) (5) (202)
Adoption of
IFRS 15 - - - 2,383 2,383 81 2,464
----------------------- --------- ------------ --------- --------------- -------------- ------------- --------
1 April 2018
brought forward 4,796 150,197 (8,463) (76,704) 69,826 1,043 70,869
Issue or reissue
of shares - 1 83 (84) - - -
Share-based
payments - 109 - - 109 23 132
Transactions
with non-controlling
interests in
subsidiaries - - - (120) (120) (72) (192)
Comprehensive
(expense)/income - - - (6,637) (6,637) 131 (6,506)
Dividends - - - (2,729) (2,729) (198) (2,927)
30 September
2018 4,796 150,307 (8,380) (86,274) 60,449 927 61,376
----------------------- --------- ------------ --------- --------------- -------------- ------------- --------
Notes:
1. Includes share premium, capital redemption reserve, merger
reserve and share-based payment reserve. The merger reserve was
derived from acquisitions made prior to 31 March 2004 and
subsequently allocated to additional paid-in capital on adoption of
IFRS.
2. Includes accumulated losses and accumulated other
comprehensive income.
3. Includes the reissue of 729.1 million of shares (EUR1,742
million) in August 2017 in order to satisfy the first tranche of
the Mandatory Convertible Bond.
4. This represents the irrevocable and non-discretionary share
buyback programme announced on 25 August 2017.
The accompanying notes are an integral part of the unaudited
condensed consolidated financial statements.
Consolidated statement of cash flows
Six months ended
30 September
-------------------
2018 2017
Note EURm EURm
--------------------------------------------- ----- --------- --------
Inflow from operating activities 10 4,826 5,821
--------------------------------------------- ----- --------- --------
Cash flows from investing activities
Purchase of interests in subsidiaries,
net of cash acquired 8 (62) (6)
Purchase of interests in associates
and joint ventures - (5)
Purchase of intangible assets (1,220) (1,681)
Purchase of property, plant and equipment (2,897) (2,795)
Purchase of investments (2,287) (1,155)
Disposal of interests in subsidiaries,
net of cash disposed 8 (395) -
Disposal of property, plant and equipment 4 9
Disposal of investments 2,156 205
Dividends received from associates
and joint ventures 305 284
Interest received 236 241
Cash flows from discontinued operations (372) (366)
--------------------------------------------- ----- --------- --------
Outflow from investing activities (4,532) (5,269)
--------------------------------------------- ----- --------- --------
Cash flows from financing activities
Issue of ordinary share capital and
reissue of treasury shares 4 18
Net movement in short term borrowings 318 558
Proceeds from issue of long term borrowings 10,118 974
Repayment of borrowings (4,557) (1,879)
Purchase of treasury shares - (549)
Equity dividends paid 7 (2,736) (2,637)
Dividends paid to minority shareholders
in subsidiaries (185) (154)
Other transactions with non-controlling
shareholders in subsidiaries (209) 1,091
Other movements in loans with associates
and joint ventures (9) (147)
Interest paid (605) (539)
Cash flow from discontinued operations (779) (402)
Tax on financing activities - (110)
--------------------------------------------- ----- --------- --------
Inflow/(outflow) from financing activities 1,360 (3,776)
--------------------------------------------- ----- --------- --------
Net cash inflow/(outflow) 1,654 (3,224)
Cash and cash equivalents at beginning
of the financial period(1) 5,394 9,302
Exchange loss on cash and cash equivalents (104) (457)
--------------------------------------------- ----- --------- --------
Cash and cash equivalents at end of
the financial period(1) 6,944 5,621
--------------------------------------------- ----- --------- --------
Note:
1. Includes cash and cash equivalents as presented in the
statement of financial position of EUR6,962 million (31 March 2018:
EUR4,674 million) and cash and cash equivalents presented in assets
held for sale of EURnil (31 March 2018: EUR727 million), together
with overdrafts of EUR18 million (31 March 2018: EUR7 million).
The accompanying notes are an integral part of the unaudited
condensed consolidated financial statements.
Notes to the unaudited condensed consolidated financial
statements
For the six months ended 30 September 2018
1 Basis of preparation
The unaudited condensed consolidated financial statements for
the six months ended 30 September 2018:
-- were prepared in accordance with International Accounting Standard
34 "Interim Financial Reporting" ('IAS 34') as issued by the International
Accounting Standards Board and as adopted by the European Union;
-- are presented on a condensed basis as permitted by IAS 34 and
therefore do not include all disclosures that would otherwise
be required in a full set of financial statements and should be
read in conjunction with the Group's annual report for the year
ended 31 March 2018;
-- apply the same accounting policies, presentation and methods of
calculation as those followed in the preparation of the Group's
consolidated financial statements for the year ended 31 March
2018, which were prepared in accordance with International Financial
Reporting Standards ('IFRS') as issued by the International Accounting
Standards Board and were also prepared in accordance with IFRS
adopted by the European Union ('EU'), the Companies Act 2006 and
Article 4 of the EU IAS Regulations, with the exception of the
adoption of IFRS 15 "Revenue from Contracts with Customers" and
IFRS 9 "Financial Instruments" as set out below. Income taxes
are accrued using the tax rate that is expected to be applicable
for the full financial year, adjusted for certain discrete items
which occurred in the interim period in accordance with IAS 34;
-- include all adjustments, consisting of normal recurring adjustments,
necessary for a fair statement of the results for the periods
presented;
-- do not constitute statutory accounts within the meaning of section
434(3) of the Companies Act 2006; and
-- were approved by the Board of directors on 13 November 2018.
The information relating to the year ended 31 March 2018 is an
extract from the Group's published annual report for that year,
which has been delivered to the Registrar of Companies, and on
which the auditors' report was unqualified and did not contain any
emphasis of matter or statements under section 498(2) or 498(3) of
the UK Companies Act 2006.
After reviewing the Group's budget for the remainder of the
financial year, and longer term plans, the directors are satisfied
that, at the time of approving the unaudited condensed consolidated
financial statements, it is appropriate to continue to adopt a
going concern basis of accounting.
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 reporting period. Actual results
could vary from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in
the period of the revision and future periods if the revision
affects both current and future periods.
New accounting pronouncements adopted
On 1 April 2018 the Group adopted new accounting policies where
necessary to comply with amendments to International Financial
Reporting Standards; the accounting pronouncements considered by
the Group as significant on adoption are IFRS 9 "Financial
Instruments" and IFRS 15 "Revenue from Contracts with Customers" as
set out below.
Other IFRS changes adopted on 1 April 2018, which had also been
issued by the IASB and endorsed by the EU, have no material impact
on the consolidated results, financial position or cash flows of
the Group. Further details are provided on all changes to IFRS
impacting the Group in the Group's annual report for the year ended
31 March 2018.
IFRS 9 "Financial Instruments"
IFRS 9 "Financial Instruments", was adopted by the Group on 1
April 2018 and impacts the classification and measurement of the
Group's financial instruments, revises the requirements for when
hedge accounting can be applied and requires certain additional
disclosures.
The primary impacts of applying IFRS 9 in the current financial
period are disclosed below and on page 31.
Primary impacts of applying the IFRS 9 accounting policy
The cumulative retrospective impact of changes to the
classification and measurement of financial instruments under IFRS
9 has been reflected by the Group as an adjustment to equity on the
date of adoption. The accounting policies for financial instruments
following the adoption of IFRS 9 are consistent with the Group's
pre-existing policy under IAS 39 "Financial Instruments:
Recognition and Measurement", detailed in the Group's consolidated
financial statements for the year ended 31 March 2018, except as
set out below:
-- Certain other cash and cash equivalent and short term investment
amounts previously recorded at amortised cost are now classified
as fair value through profit and loss. The carrying values of
these assets approximated to fair value and therefore there is
no material impact from this reclassification.
-- The carrying values of trade receivables, contract assets and
finance lease receivables are reduced by the lifetime estimated
future credit losses at the date of initial recognition where
previously credit losses were not recognised on such assets until
there was an indicator of impairment, such as a payment default
(see below).
-- Where the Group sells receivables to a third party from time to
time these portfolios, which were previously recorded at amortised
cost, are recorded at fair value through other comprehensive income;
the impact of this remeasurement is not material.
Whilst hedge accounting requirements are revised under IFRS 9,
there are no material changes to the Group's hedge accounting.
Provisions for receivables, reflecting lifetime expected credit
losses from the date of first recognition, have increased. The
application of IFRS 9 resulted in additional impairment allowances
at 1 April 2018 as follows:
EURm
-------------------------------------------------- ------
Loss allowance at 31 March 2018 under IAS 39 1,249
Changes to loss allowance recognised at 1 April
2018:
Release of allowance for trade receivables
reclassified to fair value through OCI (23)
Recognition of additional allowance on trade
and other receivables at 31 March 2018 264
Loss allowance on contract assets recognised
on adoption of IFRS 15 34
--------------------------------------------------- ------
Loss allowance at 1 April 2018 under IFRS 9 1,524
--------------------------------------------------- ------
IFRS 15 "Revenue from Contracts with Customers"
IFRS 15 "Revenue from Contracts with Customers" was adopted by
the Group on 1 April 2018 with the cumulative retrospective impact
reflected as an adjustment to equity on the date of adoption.
The key differences between the Group's IAS 18 accounting policy
(which is disclosed in the Group's Annual Report and Accounts for
the year ended 31 March 2018) and the Group's IFRS 15 accounting
policy (which is provided below), as well as the primary impacts of
applying IFRS 15 in the current financial period are disclosed on
pages 31 to 33 and below.
Primary impacts of applying the IFRS 15 accounting policy
The primary impacts of applying the IFRS 15 ('current')
accounting policy in place of the accounting policy applied in the
annual report and accounts for the year ended 31 March 2018 (the
'previous policy') are:
-- Under the previous policy, revenue allocated to obligations was
restricted to the amount receivable without the delivery of additional
goods or services; this restriction no longer applies under current
policy. The primary impact is that revenue allocated to equipment
typically increases and revenue subsequently recognised for service
delivery during the contract period typically decreases when the
Group sells subsidised devices, such as handsets, together with
airtime service agreements. The recognition of additional up-front
unbilled equipment revenue is the primary driver for the increase
in the contract asset value recorded under IFRS 15 (see pages
31 to 33).
-- Under current policy, direct and incremental contract acquisition
costs, such as commissions, are typically recognised in expenses
over the related contract period; this generally leads to the
later recognition of charges for such costs compared with the
previous policy. Deferred contract acquisition costs recorded
under the current policy are disclosed on pages 31 to 33.
-- The amounts of contract acquisition costs deducted from revenue
as they are considered to relate to the funding of customer discounts
are higher under the current policy than under the previous policy.
-- Contract fulfilment costs are deferred under current policy when
the requirements for the deferral of expense recognition are met
(see above); such costs were generally expensed as incurred under
previous policy. Deferred contract fulfilment costs recorded under
the current policy are disclosed on pages 31 to 33.
IFRS 15 Accounting Policy
When the Group enters into an agreement with a customer, goods
and services deliverable under the contract are identified as
separate performance obligations ('obligations') to the extent that
the customer can benefit from the goods or services on their own
and that the separate goods and services are considered distinct
from other goods and services in the agreement. Where individual
goods and services don't meet the criteria to be identified as
separate obligations they are aggregated with other goods and/or
services in the agreement until a separate obligation is
identified. The obligations identified will depend on the nature of
individual customer contracts, but might typically be separately
identified for mobile handsets, other equipment provided to
customers and services provided to customers such as mobile and
fixed line communication services.
The Group determines the transaction price to which it expects
to be entitled to in return for providing the promised obligations
to the customer based on the committed contractual amounts, net of
sales taxes and discounts. Where indirect channel dealers, such as
retailers, acquire customer contracts on behalf of the Group and
receive commission, any commissions that the dealer is compelled to
use to fund discounts or other incentives to the customer are
treated as payments to the customer when determining the
transaction price and consequently are not included in contract
acquisition costs.
The transaction price is allocated between the identified
obligations according to the relative standalone selling prices of
the obligations. The standalone selling price of each obligation
deliverable in the contract is determined according to the prices
that the Group would achieve by selling the same goods and/or
services included in the obligation to a similar customer on a
standalone basis; where standalone selling prices are not directly
observable, estimation techniques are used maximising the use of
external inputs (see further commentary regarding estimations
below).
Revenue is recognised when the respective obligations in the
contract are delivered to the customer and payment remains
probable.
-- Revenue for the provision of services, such as mobile airtime
and fixed line broadband, is recognised when or as the Group performs
the related service during the agreed service period.
-- Revenue for device sales to end customers is generally recognised
when the device is delivered to the end customer. For device sales
made to intermediaries such as indirect channel dealers, revenue
is recognised if control of the device has transferred to the
intermediary and the intermediary has no right to return the device
to receive a refund; otherwise revenue recognition is deferred
until sale of the device to an end customer by the intermediary
or the expiry of any right of return.
When the Group has control of goods or services prior to
delivery to a customer, then the Group is the principal in the sale
to the customer. As a principal, receipts from, and payments to,
suppliers are reported on a gross basis in revenue and operating
costs. If another party has control of goods or services prior to
transfer to a customer, then the Group is acting as an agent for
the other party and revenue in respect of the relevant obligations
is recognised net of any related payments to the supplier and
recognised revenue represents the margin earned by the Group.
When revenue recognised in respect of a customer contract
exceeds amounts received or receivable from a customer a contract
asset is recognised; contract assets will typically be recognised
for handsets or other equipment provided to customers where payment
is recovered by the Group via future service fees. If amounts
received or receivable from a customer exceed revenue recognised
for a contract, for example if the Group receives an advance
payment from a customer, a contract liability is recognised.
When contract assets or liabilities are recognised, a financing
component may exist in the contract; this is typically the case
when a handset or other equipment is provided to a customer
up-front but payment is received over the term of the related
service agreement, in which case the customer is deemed to have
received financing. If a significant financing component is
provided to the customer, the transaction price is reduced and
interest revenue is recognised over the customer's payment period
using an interest rate reflecting the relevant central bank rates
and customer credit risk.
Contract-related costs
When costs directly relating to a specific contract are incurred
prior to recognising revenue for a related obligation, and those
costs enhance the ability of the Group to deliver an obligation and
are expected to be recovered, then those costs are recognised on
the statement of financial position as fulfilment costs and are
recognised as expenses in line with the recognition of revenue when
the related obligation is delivered.
The direct and incremental costs of acquiring a contract
including, for example, certain commissions payable to staff or
agents for acquiring customers on behalf of the Group, are
recognised as contract acquisition cost assets in the statement of
financial position when the related payment obligation is recorded.
Costs are recognised as an expense in line with the recognition of
the related revenue that is expected to be earned by the Group;
typically this is over the contract period as new commissions are
payable on contract renewal. Certain amounts payable to agents are
deducted from revenue recognised (see above).
Critical accounting judgements and key sources of estimation
relating to IFRS 15
Revenue recognition under IFRS 15 is significantly more complex
than under previous reporting requirements and necessitates the
collation and processing of very large amounts of data and the
increased use of management judgements and estimates to produce
financial information. The most significant critical accounting
judgement and key the source of estimation uncertainty are
disclosed below. Other accounting judgements and estimations made
by management are not considered to be individually critical or
material, but cumulatively have a material impact on reported costs
and revenues particularly as the Group offers a large variety of
bundled goods and services.
Where the Group doesn't sell equivalent goods or services in
similar circumstances on a standalone basis it is necessary to
estimate the standalone price. When estimating the standalone price
the Group maximises the use of external inputs; methods for
estimating standalone prices include determining the standalone
price of similar goods and services sold by the Group, observing
the standalone prices for similar goods and services when sold by
third parties or using a cost-plus reasonable margin approach
(which is sometimes the case for handsets and other equipment).
Where it is not possible to reliably estimate standalone prices due
to lack of observable standalone sales or highly variable pricing,
which is sometimes the case for services, the standalone price of
an obligation may be determined as the transaction price less the
standalone prices of other obligations in the contract. The
standalone price determined for obligations materially impacts the
allocation of revenue between obligations and impacts the timing of
revenue when obligations are provided to customers at different
times - for example, the allocation of revenue between handsets,
which are usually delivered up-front, and services which are
typically delivered over the contract period. However, there is not
considered to be a significant risk of material adjustment to the
carrying value of contract-related assets or liabilities in the 12
months after the balance sheet date if these estimates were
revised.
When the Group has control of goods or services when they are
delivered to a customer, then the Group is the principal in the
sale to the customer; otherwise the Group is acting as an agent.
Whether the Group is considered to be the principal or an agent in
the transaction depends on analysis by management of both the legal
form and substance of the agreement between the Group and its
business partners; such judgements impact the amount of reported
revenue and operating expenses (see above) but do not impact
reported assets, liabilities or cash flows. Scenarios requiring
judgement to determine whether the Group is a principal or an agent
include, for example, those where the Group delivers third-party
branded services (such as premium music or TV content) to
customers.
New accounting pronouncements to be adopted on 1 April 2019
IFRS 16 "Leases" ('IFRS 16')
IFRS 16 "Leases" ('IFRS 16') was issued in January 2016 to
replace IAS 17 "Leases" and has been endorsed by the EU. The
standard is effective for accounting periods beginning on or after
1 January 2019 and will be adopted by the Group on 1 April
2019.
IFRS 16 will have a material impact on Group's consolidated
financial statements. The Group will adopt IFRS 16 with the
cumulative retrospective impact reflected as an adjustment to
equity on the date of adoption. Descriptions of the primary impacts
on the Group's accounting and the Group's adoption approach are
disclosed in the Group's annual report and accounts for the year
ended 31 March 2018.
The impact of adopting IFRS 16 on the Group's consolidated
statement of financial position on 1 April 2019 will depend on the
portfolio of leases and macroeconomic factors such as interest and
foreign exchange rates at that date. The Group's undiscounted
operating lease commitments at 31 March 2018 were EUR9,694 million.
It is expected that had the Group applied IFRS 16 on 1 April 2018
that the incremental lease liabilities recognised by the Group
could have been materially higher than the disclosed commitment as
revisions to estimated lease terms, which will generally increase,
are unlikely to be fully offset by the impact of discounting,
however, it is expected that the increase would only have been
modest. However, the lease liability to be recognised on 1 April
2019 will not be prepared on the basis of factors that existed on
31 March 2018 and changes to the following items over the current
financial year will each impact the amount to be recognised as an
incremental lease liability on 1 April 2019:
-- The Group's lease portfolio as a result of lease terminations
and inceptions;
-- Further estimated lease term changes as a result of events
arising during the year;
-- Interest rates; and
-- Foreign exchange rates.
The Group expensed EUR3,788 million as operating lease costs
under existing reporting requirements for the year to 31 March
2018.
The recognition by the Group of an additional lease liability at
1 April 2019 will have no impact on retained earnings as a
right-of-use asset equal to the additional liability will be
recognised, subject to adjustments to the right-of-use asset for
the derecognition of lease related accruals and prepayments and for
onerous lease provisions already held in the balance sheet.
Whilst net cash flow is not impacted by IFRS 16, both net cash
inflows from operating activities and payments classified within
cash flow from financing activities will increase, as payments made
at lease inception or subsequently will be characterised as a
repayment of lease liabilities.
Impact of the adoption of IFRS 9 and IFRS 15 on the opening
balance sheet at 1 April 2018
The impact of the adoption of IFRS 9 and IFRS 15 on the
consolidated statement of financial position at 1 April 2018 is set
out below:
Impact Impact
of of
adoption adoption
Consolidated statement of 31 March of of 1 April
financial position 2018 IFRS 9 IFRS 15 2018
EURm EURm EURm EURm
----------------------------------------- ---------- ---------- ---------- ----------
Non-current assets
Goodwill 26,734 - - 26,734
Other intangible assets 16,523 - - 16,523
Property, plant and equipment 28,325 - - 28,325
Investments in associates
and joint ventures 2,538 - 227 2,765
Other investments 3,204 (12) - 3,192
Deferred tax assets 26,200 50 (707) 25,543
Post employment benefits 110 - - 110
Trade and other receivables 4,026 (21) 851 4,856
----------------------------------------- ---------- ---------- ---------- ----------
Of which: Contract assets 350 (7) 500 843
Trade receivables 435 (14) - 421
Deferred acquisition costs - - 340 340
Fulfilment costs - - 11 11
----------------------------------------- ---------- ---------- ---------- ----------
107,660 17 371 108,048
----------------------------------------- ---------- ---------- ---------- ----------
Current assets
Inventory 581 - 39 620
Taxation recoverable 106 - - 106
Trade and other receivables 9,975 (220) 2,355 12,110
----------------------------------------- ---------- ---------- ---------- ----------
Of which: Contract assets 2,257 (64) 1,215 3,408
Trade receivables 4,967 (156) - 4,811
Deferred acquisition costs - - 1,097 1,097
Fulfilment costs - - 43 43
----------------------------------------- ---------- ---------- ---------- ----------
Other investments 8,795 - - 8,795
Cash and cash equivalents 4,674 - - 4,674
----------------------------------------- ---------- ---------- ---------- ----------
24,131 (220) 2,394 26,305
----------------------------------------- ---------- ---------- ---------- ----------
Assets held for sale 13,820 - - 13,820
----------------------------------------- ---------- ---------- ---------- ----------
Total assets 145,611 (203) 2,765 148,173
----------------------------------------- ---------- ---------- ---------- ----------
Equity
Called up share capital 4,796 - - 4,796
Additional paid-in capital 150,197 - - 150,197
Treasury shares (8,463) - - (8,463)
Accumulated losses (106,695) (224) 2,383 (104,536)
Accumulated other comprehensive
income 27,805 27 - 27,832
----------------------------------------- ---------- ---------- ---------- ----------
Total attributable to owners
of the parent 67,640 (197) 2,383 69,826
----------------------------------------- ---------- ---------- ---------- ----------
Non-controlling interests 967 (5) 81 1,043
Total non-controlling interests 967 (5) 81 1,043
----------------------------------------- ---------- ---------- ---------- ----------
Total equity 68,607 (202) 2,464 70,869
----------------------------------------- ---------- ---------- ---------- ----------
Non-current liabilities
Long-term borrowings 32,908 - - 32,908
Deferred tax liabilities 644 (1) 114 757
Post employment benefits 520 - - 520
Provisions 1,065 - - 1,065
Trade and other payables 2,843 - 10 2,853
----------------------------------------- ---------- ---------- ---------- ----------
Of which: Contract liabilities 237 - 10 247
----------------------------------------- ---------- ---------- ---------- ----------
37,980 (1) 124 38,103
----------------------------------------- ---------- ---------- ---------- ----------
Current liabilities
Short-term borrowings 8,513 - - 8,513
Financial liabilities under
put option arrangements 1,838 - - 1,838
Taxation liabilities 541 - - 541
Provisions 891 - - 891
Trade and other payables 16,242 - 177 16,419
----------------------------------------- ---------- ---------- ---------- ----------
Of which: Contract liabilities 1,678 - 138 1,816
Other payables 1,346 - 39 1,385
----------------------------------------- ---------- ---------- ---------- ----------
28,025 - 177 28,202
----------------------------------------- ---------- ---------- ---------- ----------
Liabilities held for sale 10,999 - - 10,999
----------------------------------------- ---------- ---------- ---------- ----------
Total equity and liabilities 145,611 (203) 2,765 148,173
----------------------------------------- ---------- ---------- ---------- ----------
Impact of the adoption of IFRS 15
The impact of IFRS 15 on the consolidated income statement for
the six months ended 30 September 2018 and the consolidated
statement of financial position at 30 September 2018 is set out
below.
Six months ended 30 September
Consolidated income statement 2018
----------------------------------
IFRS 15 IAS 18
(reconciliation to IAS 18) basis Adjustments basis
EURm EURm EURm
------------------------------------- --------- ------------ ---------
Revenue 21,796 749 22,545
Cost of sales (15,163) (637) (15,800)
------------------------------------- --------- ------------ ---------
Gross profit 6,633 112 6,745
Selling and distribution expenses (1,907) - (1,907)
Administrative expenses (2,781) 95 (2,686)
Share of result of equity accounted
associates and joint ventures (430) 48 (382)
Impairment losses (3,495) 405 (3,090)
Other income and expense (91) - (91)
------------------------------------- --------- ------------ ---------
Operating loss (2,071) 660 (1,411)
Non-operating income and expense (3) - (3)
Investment income 184 - 184
Financing costs (999) - (999)
------------------------------------- --------- ------------ ---------
Loss before taxation (2,889) 660 (2,229)
Income tax expense (1,409) (117) (1,526)
------------------------------------- --------- ------------ ---------
Loss for the financial period from
continuing operations (4,298) 543 (3,755)
Loss for the financial period from
discontinued operations (3,535) - (3,535)
------------------------------------- --------- ------------ ---------
Loss for the financial period (7,833) 543 (7,290)
------------------------------------- --------- ------------ ---------
Loss per share
From continuing operations:
- Basic (16.13c) 1.98c (14.15c)
- Diluted (16.13c) 1.98c (14.15c)
Total Group
- Basic (29.00c) 1.98c (27.02c)
- Diluted (29.00c) 1.98c (27.02c)
------------------------------------- --------- ------------ ---------
Consolidated statement of financial
position 30 September 2018
------------------------------------
IFRS 15 IAS 18
(reconciliation to IAS 18) basis Adjustments basis
EURm EURm EURm
----------------------------------------- ---------- ------------ ----------
Non-current assets
Goodwill(1) 23,316 411 23,727
Other intangible assets 16,419 - 16,419
Property, plant and equipment 27,082 - 27,082
Investments in associates and joint
ventures 4,282 (164) 4,118
Other investments 1,158 - 1,158
Deferred tax assets 24,425 573 24,998
Post employment benefits 151 - 151
Trade and other receivables 4,847 (655) 4,192
----------------------------------------- ---------- ------------ ----------
Of which: Contract assets 661 (309) 352
Trade receivables 538 - 538
Deferred acquisition costs 336 (336) -
Fulfilment costs 10 (10) -
----------------------------------------- ---------- ------------ ----------
101,680 165 101,845
----------------------------------------- ---------- ------------ ----------
Current assets
Inventory 777 (37) 740
Taxation recoverable 115 - 115
Trade and other receivables 13,399 (2,322) 11,077
----------------------------------------- ---------- ------------ ----------
Of which: Contract assets 3,793 (1,213) 2,580
Trade receivables 5,469 - 5,469
Deferred acquisition costs 1,066 (1,066) -
Fulfilment costs 43 (43) -
----------------------------------------- ---------- ------------ ----------
Other investments 10,969 - 10,969
Cash and cash equivalents 6,962 - 6,962
----------------------------------------- ---------- ------------ ----------
32,222 (2,359) 29,863
----------------------------------------- ---------- ------------ ----------
Assets held for sale (242) (15) (257)
----------------------------------------- ---------- ------------ ----------
Total assets 133,660 (2,209) 131,451
----------------------------------------- ---------- ------------ ----------
Equity
Called up share capital 4,796 - 4,796
Additional paid-in capital 150,307 - 150,307
Treasury shares (8,380) - (8,380)
Accumulated losses (115,434) (1,840) (117,274)
Accumulated other comprehensive income 29,160 40 29,200
----------------------------------------- ---------- ------------ ----------
Total attributable to owners of the
parent 60,449 (1,800) 58,649
----------------------------------------- ---------- ------------ ----------
Non-controlling interests 927 (72) 855
Total non-controlling interests 927 (72) 855
----------------------------------------- ---------- ------------ ----------
Total equity 61,376 (1,872) 59,504
----------------------------------------- ---------- ------------ ----------
Non-current liabilities
Long-term borrowings 42,670 - 42,670
Deferred tax liabilities 488 (103) 385
Post employment benefits 303 - 303
Provisions 1,075 - 1,075
Trade and other payables 3,188 (28) 3,160
----------------------------------------- ---------- ------------ ----------
Of which: Contract liabilities 561 (28) 533
----------------------------------------- ---------- ------------ ----------
47,724 (131) 47,593
----------------------------------------- ---------- ------------ ----------
Current liabilities
Short-term borrowings 5,502 - 5,502
Financial liabilities under put option
arrangements 1,874 - 1,874
Taxation liabilities 647 (9) 638
Provisions 884 - 884
Trade and other payables 15,653 (197) 15,456
----------------------------------------- ---------- ------------ ----------
Of which: Contract liabilities 1,833 (158) 1,675
Other payables 1,392 (39) 1,353
----------------------------------------- ---------- ------------ ----------
24,560 (206) 24,354
----------------------------------------- ---------- ------------ ----------
Liabilities held for sale - - -
----------------------------------------- ---------- ------------ ----------
Total equity and liabilities 133,660 (2,209) 131,451
----------------------------------------- ---------- ------------ ----------
Note:
1. This difference primarily relates to the impairment of
goodwill in respect of Romania and Spain (see note 3);
pre-impairment balance sheet carrying values were higher under IFRS
15 for these entities, consequently impairment charges are higher
on an IFRS 15 basis.
2 Segmental analysis
The Group has a single group of related services and products
being the supply of communications services and products. Revenue
is attributed to a country or region based on the location of the
Group company reporting the revenue.
Following the adoption of IFRS 15 "Revenue from Contracts with
Customers" on 1 April 2018, the Group's statutory results for the
six months ended 30 September 2018 are on an IFRS 15 basis, whereas
the statutory results for the six months ended 30 September 2017
are on an IAS 18 basis as previously reported, with any comparison
between the two bases of reporting not being meaningful.
The segmental analysis set out below is primarily on an IAS 18
basis for all periods presented, as this is the basis on which the
chief operating decision maker currently allocates resources and
assesses performance, with the expectation that this will
transition to an IFRS 15 basis in the financial year ending 31
March 2020. The segmental revenue and profit of Vodafone India were
included in discontinued operations for all periods reported. See
note 5 "Discontinued operations and assets and liabilities held for
sale" for details.
Segment Intra-region Regional Inter-region Group Adjusted
revenue revenue revenue revenue revenue EBITDA
EURm EURm EURm EURm EURm EURm
---------------------- --------- ------------- --------- ------------- --------- ---------
Six months ended 30 September
2018
Germany 5,451 (12) 5,439 (14) 5,425 2,078
Italy 2,915 (12) 2,903 (4) 2,899 1,080
UK 3,397 (8) 3,389 (7) 3,382 801
Spain 2,421 (14) 2,407 - 2,407 542
Other Europe 2,567 (19) 2,548 (15) 2,533 849
---------------------- --------- ------------- --------- ------------- --------- ---------
Europe 16,751 (65) 16,686 (40) 16,646 5,350
---------------------- --------- ------------- --------- ------------- --------- ---------
Vodacom 2,824 - 2,824 (3) 2,821 1,066
Other AMAP 2,459 - 2,459 (8) 2,451 666
---------------------- --------- ------------- --------- ------------- --------- ---------
AMAP 5,283 - 5,283 (11) 5,272 1,732
---------------------- --------- ------------- --------- ------------- --------- ---------
Common Functions 736 - 736 (109) 627 (4)
---------------------- --------- ------------- --------- ------------- --------- ---------
Group (IAS 18 basis) 22,770 (65) 22,705 (160) 22,545 7,078
---------------------- --------- ------------- --------- ------------- --------- ---------
Impact of adoption
of IFRS 15 (749) (205)
---------------------- --------- ------------- --------- ------------- --------- ---------
Group (IFRS 15
basis) 21,796 6,873
---------------------- --------- ------------- --------- ------------- --------- ---------
Revenue on an IFRS 15 basis is further disaggregated below.
Revenue
from
contracts Total
Service Equipment with Interest Other segment
revenue revenue customers income revenue(1) revenue
EURm EURm EURm EURm EURm EURm
--------------------- ---------- ---------- ----------- --------- ------------ ---------
Six months ended 30 September
2018
Germany 4,586 443 5,029 14 73 5,116
Italy 2,512 351 2,863 - 35 2,898
UK 2,554 517 3,071 25 35 3,131
Spain 2,162 205 2,367 9 33 2,409
Other Europe 2,253 262 2,515 10 28 2,553
Eliminations (62) - (62) - (3) (65)
--------------------- ---------- ---------- ----------- --------- ------------ ---------
Europe 14,005 1,778 15,783 58 201 16,042
--------------------- ---------- ---------- ----------- --------- ------------ ---------
Vodacom 2,199 431 2,630 6 82 2,718
Other AMAP 1,990 454 2,444 3 12 2,459
AMAP 4,189 885 5,074 9 94 5,177
--------------------- ---------- ---------- ----------- --------- ------------ ---------
Common Functions 300 13 313 2 422 737
Eliminations (54) - (54) - (106) (160)
--------------------- ---------- ---------- ----------- --------- ------------ ---------
Group 18,440 2,676 21,116 69 611 21,796
--------------------- ---------- ---------- ----------- --------- ------------ ---------
Note:
1. Other revenue largely represents lease revenues recognised
under IAS 17 "Leases".
The segmental analysis below for the six months ended 30
September 2017 is on an IAS 18 basis, as previously reported.
Segment Intra-region Regional Inter-region Group Adjusted
revenue revenue revenue revenue revenue EBITDA
EURm EURm EURm EURm EURm EURm
------------------ --------- ------------- --------- ------------- --------- ---------
Six months ended 30 September
2017
Germany 5,277 (13) 5,264 (10) 5,254 1,929
Italy 3,107 (17) 3,090 (1) 3,089 1,200
UK 3,515 (10) 3,505 (1) 3,504 930
Spain 2,512 (21) 2,491 (1) 2,490 751
Other Europe 2,452 (27) 2,425 (5) 2,420 773
------------------ --------- ------------- --------- ------------- --------- ---------
Europe 16,863 (88) 16,775 (18) 16,757 5,583
------------------ --------- ------------- --------- ------------- --------- ---------
Vodacom 2,799 - 2,799 - 2,799 1,063
Other AMAP 2,900 - 2,900 (14) 2,886 790
------------------ --------- ------------- --------- ------------- --------- ---------
AMAP 5,699 - 5,699 (14) 5,685 1,853
------------------ --------- ------------- --------- ------------- --------- ---------
Common Functions 675 - 675 (42) 633 (51)
------------------ --------- ------------- --------- ------------- --------- ---------
Group 23,237 (88) 23,149 (74) 23,075 7,385
------------------ --------- ------------- --------- ------------- --------- ---------
The Group's measure of segment profit and adjusted EBITDA,
excludes depreciation and amortisation, gains/losses on disposal of
fixed assets, impairment losses, restructuring costs arising from
discrete restructuring plans, the Group's share of adjusted results
in associates and joint ventures and other income and expense. A
reconciliation of adjusted EBITDA to operating (loss)/profit is
shown below. For a reconciliation of operating (loss)/profit to
(loss)/profit for the financial period, see the consolidated income
statement on page 22.
Six months ended
30 September
-------------------
2018 2017
EURm EURm
------------------------------------------------- --------- --------
Adjusted EBITDA 6,873 7,385
Depreciation, amortisation and loss on disposal
of fixed assets (4,773) (4,928)
Share of adjusted results in equity accounted
associates and joint ventures(1) (8) 171
-------------------------------------------------- --------- --------
Adjusted operating profit 2,092 2,628
Impairment loss (3,495) -
Restructuring costs (95) (33)
Amortisation of acquired customer bases and
brand intangible assets (317) (543)
Other income and expense (256) (44)
--------- --------
Operating (loss)/profit (2,071) 2,008
-------------------------------------------------- --------- --------
Note:
1. Share of adjusted results in equity accounted associates and
joint ventures excludes amortisation of acquired customer bases and
brand intangible assets, restructuring costs and other costs of
EUR0.4 billion (2017: EUR0.2 billion) which are included in
amortisation of acquired customer base and brand intangible assets,
restructuring costs and other income and expense respectively.
3 Impairment review
Impairment testing was performed as at 30 September 2018 and 30
September 2017. The methodology adopted for impairment testing for
the six months ended 30 September 2018 was consistent with that
disclosed on page 108 and pages 117 to 121 of the Group's annual
report for the year ended 31 March 2018.
For the six months ended 30 September 2018, the Group recorded
impairment charges of EUR2.9 billion, EUR0.3 billion and EUR0.3
billion in respect of the Group's investments in Spain, Romania and
Vodafone Idea respectively. The impairment charges with respect to
Spain and Romania relate solely to goodwill and the impairment
charge with respect to Vodafone idea relates to the investment's
carrying value. All impairment charges are recognised in the
consolidated income statement within operating (loss)/profit. The
recoverable amounts for Spain and Romania are EUR7.3 billion and
EUR0.7 billion respectively and are based on value in use
calculations. The recoverable amount for the Group's stake in
Vodafone Idea is EUR1.8 billion and is based on its fair value less
costs of disposal.
Following challenging current trading and economic conditions,
management has reassessed the expected future business performance
in Spain. Following this reassessment, projected cash flows are
lower and this has led to an impairment charge with respect to the
Group's investment in Spain. The impairment charge with respect to
the Group's investment in Romania was driven by an increase in the
yield on Romanian government bonds which increased the discount
rate and our reassessment of the long-term growth rate applied
beyond the five-year business plan.
Vodafone Idea Limited
The Group's investment in Vodafone Idea Limited was tested for
impairment at 30 September 2018 in accordance with applicable IFRS.
Impairment testing was considered appropriate as a result of market
conditions and a decline in the quoted share price of the company
in the six months ended 30 September 2018.
The market environment in India remains highly challenging with
significant pricing pressure, which has led to industry
consolidation but a significantly lower level of profitability and
greater pressure on financing. Management continues to consider it
reasonable to assume an overall market and pricing recovery,
however the timing and magnitude remains highly uncertain.
Accordingly, there are a wide range of potential outcomes in
deriving a current view of future business performance, cash flows
and debt financing requirements for value in use purposes.
Management has concluded that the fair value less costs of
disposal based on an observable share price is the appropriate
basis for valuation as at 30 September 2018.
The Vodafone Idea share price as at 30 September 2018 of INR
38.55 implies a recoverable amount of INR 152 billion (EUR1.8
billion). As Vodafone Idea's fair value is observable in a quoted
market and the unadjusted price per share has been considered, the
fair value less costs of disposal quoted above is considered to be
a 'Level 1' valuation under the IFRS 13 fair value hierarchy.
The recoverable amount is lower than the carrying value of the
investment and an impairment of EUR0.3 billion is required as at 30
September 2018. The impairment has been allocated against the joint
venture's carrying value recognised in the Group's consolidated
statement of financial position.
The carrying value of Vodafone Idea is dependent on a wide range
of assumptions, including the level of market pricing and the
realisation of anticipated merger-related operating expenses and
capital expenditure synergies. Should any of the assumptions not
materialise, in whole or in part, these will impact the entity's
expected future cash flows and may result in a future impairment.
The carrying value is also dependent on the ability of the entity
to refinance its liabilities as they fall due. Should this not be
achievable, this will impact the liquidity of Vodafone Idea Limited
and will result in a future impairment, in whole or in part, of the
Group's investment. Based solely on the closing share price of
Vodafone Idea Limited on 12 November 2018, the Group's 45.2%
interest would be valued at EUR2.0 billion.
Value in use assumptions
The table below shows key assumptions used in the value in use
calculations at 30 September 2018:
Assumptions used in value in use calculation
---------------------------------- ---------------------------------------------------
Germany Spain Italy Romania
% % % %
---------------------------------- ------------ ----------- ----------- -----------
Pre-tax risk adjusted
discount rate 8.1 9.5 10.2 10.2
Long-term growth rate 0.5 0.5 1.0 1.0
Projected adjusted
EBITDA(1) 3.0 2.6 (2.2) 1.9
Projected capital expenditure(2) 16.5-18.8 16.7-19.1 11.9-13.3 12.0-14.6
---------------------------------- ------------ ----------- ----------- -----------
Sensitivity analysis
Other than as disclosed below, management believes that no
reasonably possible change in any of the above key assumptions
would cause the carrying value of any cash-generating unit to
materially exceed its recoverable amount.
The estimated recoverable amount of the Group's operations in
Germany and Italy exceed their carrying values by EUR8.7 billion
and EUR2.8 billion respectively. The changes in the following table
to assumptions used in the impairment review would, in isolation,
lead to an impairment loss being recognised for the six months
ended 30 September 2018:
Change required for
carrying value to
equal
recoverable amount
---------------------------------- ----------------------
Germany Italy
pps pps
---------------------------------- ------------ --------
Pre-tax risk adjusted
discount rate 2.4 2.6
Long-term growth rate (2.5) (2.7)
Projected adjusted
EBITDA(1) (5.8) (4.7)
Projected capital expenditure(2) 19.4 12.2
------------------------------------ ------------ --------
The changes in the following table to assumptions used in the
impairment review would, in isolation, lead to an
(increase)/decrease to the aggregate impairment loss recognised in
the six months ended 30 September 2018.
Spain Romania
---------------------------------- --------- --------- --------- ---------
Increase Decrease Increase Decrease
by 2pps by 2pps by 2pps by 2pps
EURbn EURbn EURbn EURbn
---------------------------------- --------- --------- --------- ---------
Pre-tax risk adjusted
discount rate (1.6) 2.5 (0.2) 0.3
Long-term growth rate (1.3) 2.0 (0.1) 0.2
Projected adjusted
EBITDA(1) 0.9 (0.8) 0.1 (0.1)
Projected capital expenditure(2) (0.4) 0.4 (0.1) 0.1
---------------------------------- --------- --------- --------- ---------
The carrying values for Vodafone UK, Ireland, Portugal and Czech
Republic include goodwill arising from their acquisition by the
Group and/or the purchase of operating licences or spectrum rights.
While the recoverable amounts for these operating companies are not
materially greater than their carrying value, each has a lower risk
of giving rise to impairment that would be material to the Group
given their relative size or the composition of their carrying
value.
The changes in the following table to assumptions used in the
impairment review would have, in isolation, led to an impairment
loss being recognised in the six months ended 30 September
2018.
Change required for carrying value to
equal the recoverable amount
---------------------------------- --------------------------------------------
UK Ireland Portugal Czech Republic
pps pps pps pps
---------------------------------- ------ -------- --------- ---------------
Pre-tax risk adjusted
discount rate 0.2 0.1 1.5 2.8
Long-term growth rate (0.2) (0.1) (1.5) (3.4)
Projected adjusted
EBITDA(1) (0.4) (0.2) (3.3) (5.8)
Projected capital expenditure(2) 1.0 0.6 9.1 16.2
---------------------------------- ------ -------- --------- ---------------
Notes:
1. Projected adjusted EBITDA is expressed as the compound annual
growth rates in the initial five years of the plans used for
impairment testing.
2. Projected capital expenditure, which excludes licences and
spectrum, is expressed as the range of capital expenditure as a
percentage of revenue in the initial five years for all cash
generating units of the plans used for impairment testing.
VodafoneZiggo
Following the recent merger, the recoverable amount for
VodafoneZiggo is not materially greater than its carrying value. If
adverse impacts of economic, competitive, regulatory or other
factors were to cause significant deterioration in the operations
of VodafoneZiggo and the entity's expected future cash flows, this
may lead to an impairment loss being recognised.
4 Taxation
Six months ended
30 September
-------------------
2018 2017
EURm EURm
---------------------------------------------------- ---------- -------
United Kingdom corporation tax (expense)/income(1)
:
Current year 1 (71)
Adjustments in respect of prior years (6) 3
Overseas current tax (expense)/income:
Current year (589) (628)
Adjustments in respect of prior years 19 87
---------------------------------------------------- ---------- -------
Total current tax expense (575) (609)
----------------------------------------------------- ---------- -------
Deferred tax on origination and reversal
of temporary differences:
United Kingdom deferred tax 39 (86)
Overseas deferred tax (873) 116
---------------------------------------------------- ---------- -------
Total deferred tax (expense)/income (834) 30
----------------------------------------------------- ---------- -------
Total income tax expense (1,409) (579)
----------------------------------------------------- ---------- -------
Note:
1. UK operating profits are largely offset by statutory
allowances for capital investment in the UK network and systems
plus ongoing interest costs including those arising from the
EUR10.3 billion of spectrum payments to the UK government in 2000
and 2013.
The six months ended 30 September 2018 include an increase in
the deferred tax assets in Luxembourg of EUR159 million resulting
from the tax treatment of the revaluation of investments following
completion and approval of the Luxembourg statutory accounts and
tax returns. The Group expects to use its losses in Luxembourg over
a period of 58 years and the losses in Germany over a period of
between 9 and 11 years; the actual use of these losses, and the
period over which they may be used, is dependent on many factors
which may change. These factors include the level of profitability
in both Luxembourg and Germany, changes in tax law and changes to
the structure of the Group. Further details about the Group's tax
losses can be found in note 6 of the Group's consolidated financial
statements for the year ended 31 March 2018.
The Group also derecognised a deferred tax asset of EUR1,048
million in Spain in the six months ended 30 September 2018
following a reassessment of expected future business performance
and consequently lower projected cash flows. Overseas deferred tax
expense for the six months ended 30 September 2017 included the
recognition of EUR159 million in relation to losses in Luxembourg
expected to be used within 60 years.
5 Discontinued operations and assets and liabilities held for sale
On 20 March 2017, Vodafone announced the agreement to combine
its subsidiary, Vodafone India (excluding its 42% stake in Indus
Towers), with Idea Cellular in India. Consequently, Vodafone India
has been accounted for as a discontinued operation for all periods
up to 31 August 2018, the date the transaction completed, the
results of which are detailed below.
Income statement and segment analysis of
discontinued operations
Five months Six months
ended ended
31 August 30 September
2018 2017
EURm EURm
-------------------------------------------------- ------------ -------------
Revenue 1,561 2,604
Cost of sales (1,185) (1,721)
--------------------------------------------------- ------------ -------------
Gross profit 376 883
Selling and distribution expenses (92) (121)
Administrative expenses (134) (272)
Operating profit 150 490
Financing costs (321) (386)
--------------------------------------------------- ------------ -------------
(Loss)/profit before taxation (171) 104
Income tax credit/(charge) 56 (54)
--------------------------------------------------- ------------ -------------
(Loss)/profit after tax of discontinued
operations (115) 50
--------------------------------------------------- ------------ -------------
Pre-tax loss on the re-measurement of disposal
group - (555)
Income tax credit - 160
------------ -------------
After tax loss on the re-measurement of
disposal group - (395)
--------------------------------------------------- ------------ -------------
Loss on sale of disposal group (3,420) -
--------------------------------------------------- ------------ -------------
Loss for the period from discontinued operations (3,535) (345)
--------------------------------------------------- ------------ -------------
Loss per share from discontinued operations
eurocents eurocents
-------------------------------------------------- ------------ -------------
- Basic (12.87c) (1.23c)
- Diluted (12.87c) (1.23c)
--------------------------------------------------- ------------ -------------
Total comprehensive expense for the period from discontinued
operations
EURm EURm
-------------------------------------------------- ------------ -------------
Attributable to owners of the parent (3,535) (345)
--------------------------------------------------- ------------ -------------
For the five months ended 31 August 2018, the Group recorded a
loss on disposal of Vodafone India of EUR3,420 million as set out
in note 8 "Acquisitions and disposals". This loss is presented
within discontinued operations.
For the six months ended 30 September 2017, the Group recorded a
non-cash charge of EUR555 million (EUR395 million net of tax) to
reduce the carrying value of Vodafone India to fair value less
costs to sell. Vodafone India's fair value less costs to sell was
not observable in a quoted market and accordingly it was determined
with reference to the outcomes from the application of a number of
potential valuation techniques, which are considered to result in a
"level 2" valuation as per IFRS 13. As such significant judgement
was required and involved the use of estimates. Fair value less
costs to sell excluding net debt was assessed to be INR 971 billion
at 30 September 2017, equivalent to EUR12.6 billion at the foreign
exchange rate prevailing at that date.
Assets and liabilities held for sale
Assets and liabilities held for sale at 30 September 2018
represent those parts of our joint venture operations expected to
be disposed of and include a 12.6% interest in Indus Towers and a
24.95% interest in Vodafone Hutchison Australia. Assets and
liabilities held for sale at 31 March 2018 relate to the operations
of Vodafone India. The relevant assets and liabilities are detailed
in the table below.
30 September 31 March
2018 2018
EURm EURm
--------------------------------- ------------- ---------
Non-current assets (242) 10,927
Current assets - 2,893
------------- ---------
Total assets held for sale (242) 13,820
---------------------------------- ------------- ---------
Non-current liabilities - (7,398)
Current liabilities - (3,601)
------------- ---------
Total liabilities held for sale - (10,999)
---------------------------------- ------------- ---------
6 Earnings per share
Six months ended
30 September
----------------------
2018 2017
Millions Millions
--------------------------------------------------- ---------- ----------
Weighted average number of shares for basic
earnings per share 27,462 28,067
Effect of dilutive potential shares: restricted
shares and share options - 74
---------------------------------------------------- ---------- ----------
Weighted average number of shares for diluted
earnings per share 27,462 28,141
---------------------------------------------------- ---------- ----------
Six months ended
30 September
----------------------
Earnings per share attributable to owners
of the parent during the period 2018 2017
EURm EURm
(Loss)/profit for earnings per share from
continuing operations (4,430) 1,476
Loss for earnings per share from discontinued
operations (3,535) (345)
---------- ----------
(Loss)/profit for basic and diluted earnings
per share (7,965) 1,131
---------------------------------------------------- ---------- ----------
eurocents eurocents
--------------------------------------------------- ---------- ----------
Basic (loss)/earnings per share from continuing
operations (16.13c) 5.26c
Basic loss per share from discontinued operations (12.87c) (1.23c)
---------------------------------------------------- ---------- ----------
Basic earnings/(loss) per share (29.00c) 4.03c
---------------------------------------------------- ---------- ----------
Diluted (loss)/earnings per share from continuing
operations (16.13c) 5.25c
Diluted loss per share from discontinued
operations (12.87c) (1.23c)
---------------------------------------------------- ---------- ----------
Diluted (loss)/earnings per share (29.00c) 4.02c
---------------------------------------------------- ---------- ----------
7 Equity dividends
Six months ended
30 September
-------------------
2018 2017
EURm EURm
------------------------------------------------ --------- --------
Declared during the financial period:
Final dividend for the year ended 31 March
2018: 10.23 eurocents per share (2017: 10.03
eurocents per share) 2,729 2,670
------------------------------------------------ --------- --------
Proposed after the end of the reporting period
and not recognised as a liability:
Interim dividend for the year ending 31 March
2019: 4.84 eurocents per share (2018: 4.84
eurocents per share) 1,293 1,291
------------------------------------------------ --------- --------
8 Acquisitions and disposals
Acquisitions
The aggregate cash consideration in respect of purchases in
subsidiaries, net of cash acquired, is as follows:
Six months ended
30 September
2018 2017
EURm EURm
------------------------------ --------- --------
Cash consideration paid
Acquisitions during the year 69 6
Net cash acquired (7) -
--------- --------
62 6
------------------------------- --------- --------
During the six month period ended 30 September 2018 the Group
completed certain acquisitions for an aggregate net cash
consideration of EUR69 million. The aggregate fair values of
goodwill, identifiable assets, and liabilities of the acquired
operations were EUR88 million, EUR96 million and EUR131 million
respectively. In addition, the Group incurred fees of EUR16
million.
Disposals
Vodafone India
On 31 August 2018, the Group combined its operations in its
subsidiary, Vodafone India (excluding its 42% stake in Indus
Towers), with Idea Cellular Limited ('Idea'), to create Vodafone
Idea Limited, a company jointly controlled by Vodafone and the
Aditya Birla Group ('ABG').
As a result, the Group no longer consolidates its previous
interest in Vodafone India, which is presented within discontinued
operations (see Note 5 "Discontinued operations and assets and
liabilities held for sale") and now accounts for its 45.2% interest
in Vodafone Idea Limited as a joint venture using the equity
method.
On disposal, Vodafone India was valued based on the number of
shares the Group held in the merged entity post completion and the
Idea share price on 31 August 2018 (INR 51.50). The value was also
adjusted for the proceeds from the sale of the 4.8% stake in
Vodafone Idea from the Vodafone Group to the Aditya Birla Group. As
the price per share and proceeds from the sale to the Aditya Birla
Group are readily observable and no further adjustments were made,
the valuation is considered to be a "level 1" valuation as per IFRS
13.
As a result of the transaction, the Group recognised a net loss
on the formation of Vodafone Idea Limited of EUR3,420 million as
set out below, including a loss on disposal of EUR1,276 million and
a foreign exchange loss of EUR2,079 million.
EURm
------------------------------------------------ --------
Other intangible assets (6,138)
Property, plant and equipment (3,091)
Trade and other receivables (1,572)
Other investments (6)
Cash and cash equivalents (751)
Current and deferred taxation (2,790)
Short and long-term borrowings 7,896
Trade and other payables 1,669
Provisions 720
------------------------------------------------- --------
Net assets contributed into Vodafone Idea (4,063)
Fair value of investment in Vodafone Idea 2,467
Net cash proceeds arising from the transaction 320
Other effects(1) (2,144)
--------
Net loss on formation of Vodafone Idea(2) (3,420)
------------------------------------------------- --------
Note:
1. Includes EUR2,079 million of recycled foreign exchange losses.
2. Includes a loss of EUR603 million related to the
re-measurement of our retained interest in Vodafone India.
9 Investment in associates and joint arrangements
30 September 31 March
2018 2018
EURm EURm
------------------------------ ------------- ---------
Investment in joint ventures 3,854 2,097
Investment in associates 428 441
------------- ---------
4,282 2,538
------------------------------- ------------- ---------
10 Reconciliation of net cash flow from operating activities
Six months ended
30 September
-------------------
2018 2017
Note EURm EURm
----------------------------------------- ----- ---------- -------
(Loss)/profit for the financial period (7,833) 1,235
Loss from discontinued operations 3,535 345
------------------------------------------ ----- ---------- -------
Loss/(profit) for the financial period
from continuing operations (4,298) 1,580
Non-operating income and expense 3 1
Investment income (184) (333)
Financing costs 999 181
Income tax expense 4 1,409 579
----------------------------------------- ----- ---------- -------
Operating (loss)/profit (2,071) 2,008
Adjustments for:
Share based payments and other non-cash
charges 46 65
Depreciation and amortisation 4,871 5,230
Loss on disposal of property, plant
and equipment and intangible assets 19 14
Share of results of equity accounted
associates and joint ventures 430 58
Impairment losses 3,495 -
Other income and expense 91 44
Increase in inventory (202) (85)
Increase in trade and other receivables (1,401) (858)
Increase/(decrease) in trade and other
payables 47 (871)
----------------------------------------- ----- ---------- -------
Cash generated by operations 5,325 5,605
Net tax paid (428) (400)
Cash flow from discontinued operations (71) 616
------------------------------------------ ----- ---------- -------
Net cash flow from operating activities 4,826 5,821
------------------------------------------ ----- ---------- -------
11 Related party transactions
The Group has a number of related parties including joint
arrangements and associates, pension schemes, directors and
Executive Committee members. Related party transactions with the
Group's joint arrangements and associates primarily comprise fees
for the use of products and services including network airtime and
access charges, and cash pooling arrangements. 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
------------------------
2018 2017
EURm EURm
--------------------------------------------------- ------------- ---------
Sales of goods and services to associates 9 14
Purchase of goods and services from associates 1 1
Sales of goods and services to joint arrangements 106 10
Purchase of goods and services from joint
arrangements 94 102
Net interest income receivable from joint
arrangements 49 60
---------------------------------------------------- ------------- ---------
30 September 31 March
2018 2018
EURm EURm
--------------------------------------------------- ------------- ---------
Trade balances owed:
by associates 5 4
to associates 1 2
by joint arrangements 164 107
to joint arrangements 35 28
Other balances owed by joint arrangements 1,366 1,328
Other balances owed to joint arrangements 160 150
---------------------------------------------------- ------------- ---------
In the six months ended 30 September 2018 the Group made
contributions to defined benefit pension schemes of EUR20 million
(six months ended 30 September 2017: EUR32 million).
In addition, EUR3.9 million of dividends were paid to Board
members and executive committee members (six months ended 30
September 2017: EUR2.2 million). Dividends received from associates
are disclosed in the consolidated statement of cash flows.
12 Fair value of financial instruments
The table below sets out the valuation basis(1,2) of the
financial instruments held at fair value by the Group:
30 September 31 March
2018 2018
EURm EURm
---------------------------------------------- ------------- ---------
Financial assets at fair value:
Money market funds (included within Cash
and cash equivalents) 4,243 -
Debt and equity securities (included within
Other investments)2 9,411 6,471
Derivative financial instruments (included
within Trade and other receivables) 3,039 2,629
Trade receivables at fair value through
Other comprehensive income (included within
Trade and other receivables) 1,017 -
---------------------------------------------- ------------- ---------
17,710 9,100
----------------------------------------------- ------------- ---------
Financial liabilities at fair value:
Derivative financial instruments (included
within Trade and other payables) 2,798 2,383
---------------------------------------------- ------------- ---------
2,798 2,383
----------------------------------------------- ------------- ---------
Notes:
1. There were no changes made during the year to valuation
methods or the processes to determine classification other than the
reclassifications under IFRS 9 and 15, which were effective from 1
April 2018 (see note 1 "Basis of preparation"), and no transfers
were made between the levels in the fair value hierarchy.
2. Quoted debt and equity securities of EUR2,792 million (31
March 2018: EUR2,520 million) are level 1 classification which
comprises items where fair value is determined by unadjusted quoted
prices in active markets. All balances other than quoted securities
are Level 2 classification which comprises items where fair value
is determined from inputs other than quoted prices that are
observable for the asset or liability, either directly or
indirectly.
The fair value of the Group's financial assets and financial
liabilities held at amortised cost approximate to fair value with
the exception of long term bonds with a carrying value of EUR39,677
million (31 March 2018: EUR30,473 million) and a fair value of
EUR38,539 million (31 March 2018: EUR29,724 million).
13 Commitments, contingent liabilities and legal proceedings
There have been no material changes to the Group's commitments,
contingent liabilities or legal proceedings during the period,
except as disclosed below.
Indian tax cases
In August 2007 and September 2007, Vodafone India Limited
('VIL') and Vodafone International Holdings BV ('VIHBV')
respectively received notices from the Indian tax authority
alleging potential liability in connection with an alleged failure
by VIHBV to deduct withholding tax from consideration paid to the
Hutchison Telecommunications International Limited group ('HTIL')
in respect of HTIL's gain on its disposal to VIHBV of its interests
in a wholly-owned Cayman Island incorporated subsidiary that
indirectly holds interests in VIL. Following approximately five
years of litigation in the Indian courts in which VIHBV sought to
set aside the tax demand issued by the Indian tax authority, in
January 2012 the Supreme Court of India handed down its judgement,
holding that VIHBV's interpretation of the Income Tax Act 1961 was
correct, that the HTIL transaction in 2007 was not taxable in
India, and that consequently, VIHBV had no obligation to withhold
tax from consideration paid to HTIL in respect of the transaction.
The Supreme Court of India quashed the relevant notices and demands
issued to VIHBV in respect of withholding tax and interest.
On 28 May 2012 the Finance Act 2012 became law. The Finance Act
2012, which amended various provisions of the Income Tax Act 1961
with retrospective effect, contained provisions intended to tax any
gain on transfer of shares in a non-Indian company, which derives
substantial value from underlying Indian assets, such as VIHBV's
transaction with HTIL in 2007. Further, it seeks to subject a
purchaser, such as VIHBV, to a retrospective obligation to withhold
tax. VIHBV received a letter on 3 January 2013 from the Indian tax
authority reminding it of the tax demand raised prior to the
Supreme Court of India's judgement and purporting to update the
interest element of that demand to a total amount of INR142
billion, which includes principal and interest as calculated by the
Indian tax authority but does not include penalties.
On 10 January 2014, VIHBV served an amended trigger notice on
the Indian Government under the Netherlands-India Bilateral
Investment Treaty ('Dutch BIT'), supplementing a trigger notice
filed on 17 April 2012, immediately prior to the Finance Act 2012
becoming effective, to add claims relating to an attempt by the
Indian Government to tax aspects of the transaction with HTIL under
transfer pricing rules. A trigger notice announces a party's
intention to submit a claim to arbitration and triggers a cooling
off period during which both parties may seek to resolve the
dispute amicably. Notwithstanding their attempts, the parties were
unable to amicably resolve the dispute within the cooling off
period stipulated in the Dutch BIT. On 17 April 2014, VIHBV served
its notice of arbitration under the Dutch BIT, formally commencing
the Dutch BIT arbitration proceedings.
In June 2016, the tribunal was fully constituted with Sir
Franklin Berman KCMG QC appointed as presiding arbitrator. The
Indian Government has raised objections to the application of the
treaty to VIHBV's claims and to the jurisdiction of the tribunal
under the Dutch BIT. On 19 June 2017, the tribunal decided to try
both these jurisdictional objections along with the merits of
VIHBV's claim in a hearing now scheduled for February 2019. More
recent attempts by the Indian Government to have the jurisdiction
arguments heard separately have also failed. VIHBV filed its
response to India's defence in July 2018 and India will respond in
December 2018.
Separately, on 15 June 2015, Vodafone Group Plc and Vodafone
Consolidated Holdings Limited served a trigger notice on the Indian
Government under the United Kingdom-India Bilateral Investment
Treaty ('UK BIT') in respect of retrospective tax claims under the
Income Tax Act 1961 (as amended by the Finance Act 2012). Although
relating to the same underlying facts as the claim under the Dutch
BIT, the claim brought by Vodafone Group Plc and Vodafone
Consolidated Holdings Limited is a separate and distinct claim
under a different treaty. On 24 January 2017, Vodafone Group Plc
and Vodafone Consolidated Holdings Limited served a Notice of
Arbitration on the Indian Government formally commencing the
arbitration.
The Indian Government has indicated that it considers the
arbitration under the UK BIT to be an abuse of process but this is
strongly denied by Vodafone. On 22 August 2017, the Indian
Government obtained an injunction from the Delhi High Court
preventing Vodafone from progressing the UK BIT arbitration.
Vodafone was not present when India obtained this injunction and
applied to dismiss it. On 26 October 2017, the Delhi High Court
varied its order to permit Vodafone to participate in the formation
of the UK BIT tribunal. It now consists of Marcelo Kohen, an
Argentinian national and professor of international law in Geneva
(appointed by India), Neil Kaplan, a British national (appointed by
Vodafone Group Plc) and Professor Campbell McLachlan QC, a New
Zealand national (appointed by the parties as presiding
arbitrator). On 7 May 2018, the Delhi High Court dismissed the
injunction. The Indian Government appealed the decision and the
hearings commenced in September 2018 and are ongoing. In the
meantime, Vodafone has undertaken to take no steps advancing the UK
BIT pending resolution of the Indian Government's appeal.
On 12 February 2016, VIHBV received a notice dated 4 February
2016 of an outstanding tax demand of INR221 billion (which included
interest accruing since the date of the original demand) along with
a statement that enforcement action, including against VIHBV's
indirectly held assets in India, would be taken if the demand was
not satisfied. On 29 September 2017, VIHBV received an
electronically generated demand in respect of alleged principal,
interest and penalties in the amount of INR190.7 billion. This
demand does not appear to have included any element for alleged
accrued interest liability.
Separate proceedings in the Bombay High Court taken against
VIHBV to seek to treat it as an agent of HTIL in respect of its
alleged tax on the same transaction, as well as penalties of up to
100% of the assessed withholding tax for the alleged failure to
have withheld such taxes, were listed for hearing at the request of
the Indian Government on 21 April 2016 despite the issue having
been ruled upon by the Supreme Court of India. The hearing has
since been periodically listed and then adjourned or not reached
hearing. VIHBV and Vodafone Group Plc will continue to defend
vigorously any allegation that VIHBV or VIL is liable to pay tax in
connection with the transaction with HTIL and will continue to
exercise all rights to seek redress including pursuant to the Dutch
BIT and the UK BIT. We have not recorded a provision in respect of
the retrospective provisions of the Income Tax Act 1961 (as amended
by the Finance Act 2012) and any tax demands based upon such
provisions.
Vodafone India
As part of the agreement to combine its subsidiary, Vodafone
India, with Idea Cellular Limited ('Idea') in India, which
completed on 31 August 2018, the parties agreed: (i) Vodafone Group
and Vodafone Idea would indemnify each other for certain events
including in relation to breach of representations, warranties and
covenants relating to Vodafone India and Idea; and (ii) a mechanism
for payments between the Vodafone Group and Vodafone Idea pursuant
to crystallisation of certain identified contingent liabilities and
refunds relating to Vodafone India and Idea.
Other cases in the Group
Patent litigation: Spain
Vodafone Group Plc has been sued in Spain by TOT Power Control
('TOT'), an affiliate of Top Optimized Technologies. The claim
makes a number of allegations including patent infringement, with
TOT seeking over EUR500 million from Vodafone Group Plc as well as
an injunction against using the technology in question. Vodafone's
initial challenge of the appropriateness of Spain as a venue for
this dispute was denied. Vodafone Group Plc appealed the denial and
was partially successful. In a decision dated 30 October 2017, the
court ruled that while it did have jurisdiction to hear the
infringement case relating to the Spanish patent, it was not
competent to hear TOT's contractual and competition law claims.
This decision is subject to appeal. TOT's application for an
injunction was unsuccessful and TOT is appealing. The trial
commenced in September 2018.
Italy: British Telecom (Italy) v Vodafone Italy
The Italian Competition Authority concluded an investigation in
2007 when Vodafone Italy gave certain undertakings in relation to
allegations that it had abused its dominant position in the
wholesale market for mobile termination. In 2010, British Telecom
(Italy) brought a civil damages claim against Vodafone Italy on the
basis of the Competition Authority's investigation and Vodafone
Italy's undertakings. British Telecom (Italy) sought damages in the
amount of EUR280 million for abuse of dominant position by Vodafone
Italy in the wholesale fixed to mobile termination market for the
period from 1999 to 2007. A court appointed expert delivered an
opinion to the Court that the range of damages in the case should
be in the region of EUR10 million to EUR25 million which was
reduced in a further supplementary report published in September
2014 to a range of EUR8 million to EUR11 million. Judgement was
handed down by the court in August 2015, awarding EUR12 million
(including interest) to British Telecom (Italy).
British Telecom (Italy) appealed the amount of the damages to
the Court of Appeal of Milan. In addition, British Telecom (Italy)
has asked again for a reference to the European Court of Justice
for an interpretation of the European community law on antitrust
damages. Vodafone Italy also filed an appeal which was successful.
British Telecom (Italy) were ordered to repay to Vodafone Italy the
EUR12 million with interest and legal costs. BT filed an appeal to
the Supreme Court in September 2018.
Italy: Telecom Italia v Vodafone Italy ('TeleTu')
Telecom Italia brought civil claims against Vodafone Italy in
relation to TeleTu's alleged anti-competitive retention of
customers. Telecom Italia seeks damages in the amount of EUR101
million. The Court decided on 9 June 2015 to appoint an expert to
verify whether TeleTu has put in place anticompetitive retention
activities. The expert prepared a draft report with a range of
damages from EURnil-9 million. The final hearing is set for June
2019.
Greece: Papistas Holdings SA, Mobile Trade Stores (formerly
Papistas SA) and Athanasios and Loukia Papistas v Vodafone Greece,
Vodafone Group Plc and certain former Directors and Officers of
Vodafone
In December 2013, Mr. and Mrs. Papistas, and companies owned or
controlled by them, brought three claims in the Greek court in
Athens against Vodafone Greece, Vodafone Group Plc and certain
Directors and officers of Vodafone Greece and Vodafone Group Plc
for purported damage caused by the alleged abuse of dominance and
wrongful termination of a franchise arrangement with a Papistas
company. Approximately EUR1.0 billion of the claim is directed
exclusively at two former Directors of Vodafone. The balance of the
claim (approximately EUR285.5 million) is sought from Vodafone
Greece and Vodafone Group Plc on a joint and several basis. Both
cases were adjourned to a hearing in September 2018, at which the
plaintiffs withdrew all of their claims against Vodafone and its
Directors. Representatives of Mr and Mrs Papistas and companies
owned or controlled by them have indicated an intention to file a
new claim based on the same subject matter.
Netherlands: Consumer credit/handset case
In February 2016, the Dutch Supreme Court ruled on the Dutch
implementation of the EU Consumer Credit Directive and "instalment
sales agreements" (a Dutch law concept), holding that bundled
"all-in" mobile subscription agreements (i.e. device along with
mobile services) are considered consumer credit agreements. As a
result, the Group, together with the industry, has been working
with the Ministry of Finance and the Competition Authority on
compliance requirements going forward for such offers. The ruling
also has retrospective effect.
A number of small claims have been submitted by individual
customers in the small claims courts. On 15 February 2018,
Consumentenbond (a claims agency) initiated collective claim
proceedings against VodafoneZiggo, Tele2, T-Mobile and now KPN.
South Africa: GH Investments ('GHI') v Vodacom Congo
Vodacom Congo contracted with GHI to install ultra-low cost base
stations on a revenue share basis. After rolling out three sites,
GHI stopped and sought to renegotiate the terms. Vodacom Congo
refused. GHI accused it of bad faith and infringement of
intellectual property rights. In April 2015, GHI issued a formal
notice for a claim of US$1.16 billion, although there does not seem
to be a proper basis nor any substantiation for the compensation
claimed. The dispute was submitted to mediation under the
International Chamber of Commerce. A mediator was appointed in
September 2015 who convened a first meeting which took place in
early November 2015. A follow-up mediation meeting was scheduled
for December 2015 but was postponed without a new date having been
fixed. In July 2016, Vodacom filed a request for arbitration with
the International Chamber of Commerce's International Court of
Arbitration. In their response GHI revised their claim down to
US$256 million. Each party has appointed an arbitrator and the
arbitrators have appointed a third arbitrator to act as presiding
arbitrator of the tribunal. A trial was scheduled for March 2018
but GHI failed to pay its share of the arbitration fees resulting
in a decision by the Court in February 2018 that GHI's claims were
considered withdrawn. In August 2018, Vodacom obtained a favourable
award confirming the withdrawal of GHI's claims and ordering GHI to
pay Vodacom's costs.
14 Other matters
Vodacom Group
On 11 June 2018, the Group announced that Vodacom intended to
support incremental broad-based BEE (black economic empowerment)
and ownership in Vodacom. The transaction completed in September
2018 and, as a result, Vodacom's BEE ownership moved from Vodacom
South Africa to Vodacom Group and Vodafone Group's shareholding in
Vodacom will fall from 64.5% to 60.5%.
Vodafone Greece
On 11 July 2018, Vodafone announced that Vodafone-Panafon
Hellenic Telecommunications Company S.A. ('Vodafone Greece') had
completed the acquisition of CYTA Telecommunications Hellas S.A.
("CYTA Hellas"), a provider of fixed and mobile telecommunication
services in Greece, for a total enterprise value of EUR118
million.
Vodafone Spain
On 25 July 2018, Vodafone Spain acquired 90 MHz of contiguous
spectrum in the 3700 MHz band for mobile data services in the
Economic Ministry's auction for a total cost of EUR198.1 million.
The fee will be paid by 20 equal annual instalments at a 2.35%
interest rate.
Vodafone Hutchison Australia
On 30 August 2018, Vodafone announced that Vodafone Hutchison
Australia Pty Limited ("VHA") and TPG Telecom Limited ("TPG") had
agreed a merger to establish a new fully integrated
telecommunications operator in Australia ("MergeCo"). Vodafone and
Hutchison Telecommunications (Australia) Limited ("HTAL") will each
own an economic interest of 25.05% in MergeCo, with TPG
shareholders owning the remaining 49.9%.
In parallel to the merger agreement, TPG and VHA have signed a
separate Joint Venture Agreement. The scope of the joint venture is
to acquire, hold and licence 3.6 GHz spectrum. It is anticipated
that the merger will complete in 2019, subject to approval from TPG
shareholders and regulatory authorities.
Vodafone Idea
On 31 August 2018, the Group completed both the agreement to
combine Vodafone India with Idea Cellular to form Vodafone Idea and
the separate purchase by the Aditya Birla Group of a 4.8% stake in
Vodafone Idea from Vodafone Group for a total consideration of INR
26 billion (EUR0.3 billion).
After taking these proceeds into account, there is a net cash
outflow to India from Vodafone Group of INR60 billion (EUR0.8
billion). Following completion, Vodafone owns a 45.2% stake in
Vodafone Idea and Aditya Birla Group owns a 26.0% stake, both on a
fully diluted basis.
Board changes
On 27 July 2018, following the Group's Annual General Meeting,
Margherita Della Valle was appointed as Group Chief Financial
Officer and Director of the Company, succeeding Nick Read, who at
the same time was appointed as Group Chief Executive-Designate.
Nick Read succeeded Vittorio Colao as Group Chief Executive Officer
on 1 October 2018.
15 Subsequent events
Vodafone Italy
On 2 October 2018, the Group announced that Vodafone Italy had
acquired spectrum to enable the deployment of new 5G technology for
a total cost of EUR2.4 billion. The spectrum acquired in the
auction hosted by the Ministry of Economic Development
comprised:
-- 3700 MHz - 80 MHz for EUR1,685 million, available from 1
January 2019 with a licence duration of 19 years.
-- 700 MHz - 2 x 10 MHz FDD (Frequency Division Duplexing) for
EUR683 million, available from July 2022 with licence duration of
15.5 years (awarded and recognised prior to 30 September 2018).
-- 26 GHz - 200 MHz for EUR33 million, available from 1 January
2019 with a licence duration of 19 years.
Bonds
In accordance with the Group's announced intention to issue
hybrid bonds as part of its funding of the acquisition of Liberty
Global's cable assets in Germany and Central and Eastern Europe,
the Group issued bonds amounting to EUR4.2 billion, euro equivalent
with cash received on 3 October 2018.
Board changes
On 9 November 2018, the Group announced the appointment of
Sanjiv Ahuja as a Non-Executive Director with immediate effect.
INDEPENT REVIEW REPORT TO VODAFONE GROUP PLC
Report on the unaudited condensed consolidated financial
statements
Our conclusion
We have reviewed Vodafone Group Plc's unaudited condensed
consolidated financial statements (the "interim financial
statements") in the half-year financial report of Vodafone Group
Plc for the 6 month period ended 30 September 2018. Based on our
review, nothing has come to our attention that causes us to believe
that the interim financial statements are not prepared, in all
material respects, in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as issued by the
International Accounting Standards Board and as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the consolidated statement of financial position as at 30 September
2018;
-- the consolidated income statement and consolidated statement of
comprehensive income for the period then ended;
-- the consolidated statement of cash flows for the period then ended;
-- the consolidated statement of changes in equity for the period
then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the half-year
financial report have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as issued by the International Accounting Standards
Board and as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as issued by the International Accounting Standards Board
and as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The half-year financial report, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the
half-year financial report in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the half-year financial report based on our
review. This report, including the conclusion, has been prepared
for and only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half-year
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
13 November 2018
Notes:
1. The maintenance and integrity of the Vodafone Group Plc
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the interim financial statements
since they were initially presented on the website.
2. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
ALTERNATIVE PERFORMANCE MEASURES
In the discussion of the Group's reported operating results,
alternative performance measures are presented to provide readers
with additional financial information that is regularly reviewed by
management. However, this additional information presented is not
uniformly defined by all companies including those in the Group's
industry. Accordingly, it may not be comparable with similarly
titled measures and disclosures by other companies. Additionally,
certain information presented is derived from amounts calculated in
accordance with IFRS but is not itself an expressly permitted GAAP
measure. Such measures should not be viewed in isolation or as an
alternative to the equivalent GAAP measure.
Further information on the use of alternative performance
measures is outlined on pages 207 to 217 of the Group's annual
report for the financial year ended 31 March 2018.
IFRS 15 basis and IAS 18 basis
Following the adoption of IFRS 15 "Revenue from Contracts with
Customers" on 1 April 2018, the Group's statutory results for the
six months ended 30 September 2018 are on an IFRS 15 basis, whereas
the statutory results for the six months ended 30 September 2017
are on an IAS 18 basis as previously reported, with any comparison
between the two bases of reporting not being meaningful. As a
result, the discussion of our operating results in the Financial
Results section is primarily performed on an IAS 18 basis for all
periods presented.
We believe that the IAS 18 basis metrics for the six months
ended 30 September 2018, which are not intended to be a substitute
for, or superior to, our reported metrics on an IFRS 15 basis,
provide useful information to allow comparable growth rates to be
calculated. The impact of the adoption of IFRS 15 on key financial
information for the six months ended 30 September 2018, and a
reconciliation of these financial measures as presented on an IAS
18 basis to their closest respective GAAP measures, is set out in
note 1 'Basis of Preparation' to the unaudited condensed
consolidated financial statements beginning on page 26.
Service revenue
Service revenue comprises all revenue related to the provision
of ongoing services including, but not limited to, monthly access
charges, airtime usage, roaming, incoming and outgoing network
usage by non-Vodafone customers, interconnect charges for incoming
calls and, with effect from 1 April 2018, excludes international
wholesale voice transit revenues. We believe that it is both useful
and necessary to report this measure for the following reasons:
-- It is used for internal performance reporting;
-- It is used in setting director and management remuneration; and
-- It is useful in connection with discussion with the investment
analyst community.
A reconciliation of reported service revenue to the respective
closest equivalent GAAP measure, revenue, are provided in the
section "Financial results" beginning on page 7.
Adjusted EBITDA
Adjusted EBITDA is operating profit excluding share of results
in associates and joint ventures, depreciation and amortisation,
gains/losses on the disposal of fixed assets, impairment losses,
restructuring costs arising from discrete restructuring plans,
other operating income and expense and significant items that are
not considered by management to be reflective of the underlying
performance of the Group. We use adjusted EBITDA, in conjunction
with other GAAP and non-GAAP financial measures such as adjusted
EBIT, adjusted operating profit, operating profit and net profit,
to assess our operating performance. We believe that adjusted
EBITDA is an operating performance measure, not a liquidity
measure, as it includes non-cash changes in working capital and is
reviewed by the Chief Executive to assess internal performance in
conjunction with adjusted EBITDA margin, which is an alternative
sales margin figure. We believe it is both useful and necessary to
report adjusted EBITDA as a performance measure as it enhances the
comparability of profit across segments.
Because adjusted EBITDA does not take into account certain items
that affect operations and performance, adjusted EBITDA has
inherent limitations as a performance measure. To compensate for
these limitations, we analyse adjusted EBITDA in conjunction with
other GAAP and non-GAAP operating performance measures. Adjusted
EBITDA should not be considered in isolation or as a substitute for
a GAAP measure of operating performance.
A reconciliation of adjusted EBITDA to the closest equivalent
GAAP measure, operating profit, is provided in the section
"Financial results" beginning on page 7.
Group adjusted EBIT, adjusted operating profit and adjusted
earnings per share
Group adjusted EBIT and adjusted operating profit exclude
impairment losses, restructuring costs arising from discrete
restructuring plans, amortisation of customer bases and brand
intangible assets, other operating income and expense and other
significant one-off items. Adjusted EBIT also excludes the share of
results in associates and joint ventures. Adjusted earnings per
share also excludes certain foreign exchange rate differences,
together with related tax effects.
We believe that it is both useful and necessary to report these
measures for the following reasons:
-- These measures are used for internal performance reporting;
-- These measures are used in setting director and management remuneration;
and
-- They are useful in connection with discussion with the investment
analyst community and debt rating agencies.
Reconciliations of adjusted EBIT, adjusted operating profit and
adjusted earnings per share to the respective closest equivalent
GAAP measures, operating profit and basic earnings per share,
respectively, are provided in the section "Financial results"
beginning on page 7.
Cash flow measures and capital additions
In presenting and discussing our reported results, free cash
flow (pre-spectrum), free cash flow, capital additions and
operating free cash flow are calculated and presented even though
these measures are not recognised within IFRS. We believe that it
is both useful and necessary to communicate free cash flow to
investors and other interested parties, for the following
reasons:
-- Free cash flow (pre-spectrum) and free cash flow allows us and
external parties to evaluate our liquidity and the cash generated
by our operations. Free cash flow (pre-spectrum) and capital additions
do not include payments for licences and spectrum included within
intangible assets, items determined independently of the ongoing
business, such as the level of dividends, and items which are
deemed discretionary, such as cash flows relating to acquisitions
and disposals or financing activities. In addition, it does not
necessarily reflect the amounts which we have an obligation to
incur. However, it does reflect the cash available for such discretionary
activities, to strengthen the consolidated statement of financial
position or to provide returns to shareholders in the form of
dividends or share purchases;
-- Free cash flow facilitates comparability of results with other
companies, although our measure of free cash flow may not be directly
comparable to similarly titled measures used by other companies;
-- These measures are used by management for planning, reporting
and incentive purposes; and
-- These measures are useful in connection with discussion with the
investment analyst community and debt rating agencies.
A reconciliation of cash generated by operations, the closest
equivalent GAAP measure, to operating free cash flow, free cash
flow (pre-spectrum) and free cash flow, is provided below.
Six months ended
30 September
-------------------
2018 2017
EURm EURm
------------------------------------------- --------- --------
Net cash flow from operating activities 4,826 5,821
Net tax paid 428 400
Cash flow from discontinued operations 71 (616)
--------------------------------------------- --------- --------
Cash generated by operations (refer
to note 10) 5,325 5,605
Capital additions (3,067) (3,263)
Working capital movement in respect
of capital additions (821) (576)
Disposal of property, plant and equipment 4 9
Restructuring payments 97 127
Operating free cash flow 1,538 1,902
Taxation (395) (400)
Dividends received from associates
and investments 305 284
Dividends paid to non-controlling
shareholders in subsidiaries (185) (154)
Interest received and paid (369) (343)
--------------------------------------------- --------- --------
Free cash flow (pre-spectrum) 894 1,289
Licence and spectrum payments (231) (747)
Restructuring payments (97) (127)
--------------------------------------------- --------- --------
Free cash flow 566 415
--------------------------------------------- --------- --------
Other
A summary of certain other alternative performance measures
included in this results announcement, together with details of
where additional information and reconciliation to the nearest
equivalent GAAP measure can be found, is shown below.
Location in this results
Alternative performance Closest equivalent announcement of reconciliation
measure GAAP measure and further information
------------------------ ------------------------- --------------------------------
Adjusted profit Profit before taxation Taxation on page 16
before tax
------------------------ ------------------------- --------------------------------
Adjusted effective Income tax expense Taxation on page 16
tax rate as a percentage of
profit before taxation
------------------------ ------------------------- --------------------------------
Adjusted income Income tax expense Taxation on page 16
tax expense
------------------------ ------------------------- --------------------------------
Adjusted profit Profit attributable Earnings per share on
attributable to to owners of the parent page 17
owners of the parent
------------------------ ------------------------- --------------------------------
Certain of the statements within the section titled "Chief
Executive's Statement" on pages 2 to 5 contain forward-looking
alternative performance measures for which at this time there is no
comparable GAAP measure and which at this time cannot be
quantitatively reconciled to comparable GAAP financial information.
Certain of the statements within the section titled "Guidance" on
page 6 contain forward-looking alternative performance measures
which at this time cannot be quantitatively reconciled to
comparable GAAP financial information.
Organic growth and change at constant exchange rates
All amounts in this document marked with an "*" represent
"organic growth", which presents performance on a comparable basis
in terms of merger and acquisition activity and foreign exchange
rates. "Change at constant exchange rates" presents performance on
a comparable basis in terms of foreign exchange rates only. Whilst
neither of these measures are intended to be a substitute for
reported growth, nor are they superior to reported growth, we
believe that these measures provide useful and necessary
information to investors and other interested parties for the
following reasons:
-- They provide additional information on underlying growth of the
business without the effect of certain factors unrelated to its
operating performance;
-- They are used for internal performance analysis; and
-- They facilitate comparability of underlying growth with other
companies (although the term "organic" is not a defined term under
IFRS and may not, therefore, be comparable with similarly titled
measures reported by other companies).
The Group's organic growth rates for all periods exclude the
results of Vodafone India (excluding its 42% stake in Indus Towers)
which were reported in discontinued operations and the results of
Vodafone Qatar following its disposal in the 2018 financial year.
In addition, operating segment organic service revenue growth rates
for all quarters have been amended to exclude the impact of changes
to intercompany interconnect rates and the impact of excluding
international wholesale voice transit revenues from service revenue
with effect from 1 April 2018.
We have not provided a comparative in respect of organic growth
rates as the current rates describe the change between the
beginning and end of the current period, with such changes being
explained by the commentary in this news release. If comparatives
were provided, significant sections of the commentary from the news
release for prior periods would also need to be included, reducing
the usefulness and transparency of this document.
Reconciliations of organic growth to reported growth are shown
where used or in the tables below.
IAS 18 basis
---------------------------------------------------------------
Other
activity
IAS 18 (including Foreign IAS 18
2018 2017 Reported M&A) exchange Organic*
EURm EURm % pps pps %
------------------------------- ------- ------- --------- ------------ --------- ---------
Six months ended 30 September
Revenue
Germany 5,451 5,277 3.3 0.1 - 3.4
Italy 2,915 3,107 (6.2) 0.2 - (6.0)
UK 3,397 3,515 (3.4) 0.1 0.7 (2.6)
Spain 2,421 2,512 (3.6) 0.4 - (3.2)
Other Europe 2,567 2,452 4.7 (0.2) 0.1 4.6
Eliminations (65) (88)
------- ------- --------- ------------ --------- ---------
Europe 16,686 16,775 (0.5) (0.1) 0.1 (0.5)
-------------------------------- ------- ------- --------- ------------ --------- ---------
Vodacom 2,824 2,799 0.9 - 4.4 5.3
Other AMAP 2,459 2,900 (15.2) 10.7 18.7 14.2
Turkey 1,223 1,437 (14.9) 0.5 37.5 23.1
Egypt 535 475 12.6 - 3.3 15.9
------------------------------- ------- ------- --------- ------------ --------- ---------
AMAP 5,283 5,699 (7.3) 4.8 11.7 9.2
-------------------------------- ------- ------- --------- ------------ --------- ---------
Other 736 675
Eliminations (160) (74)
------- ------- --------- ------------ --------- ---------
Group (IAS 18 basis) 22,545 23,075 (2.3) 0.9 2.9 1.5
-------------------------------- ------- ------- --------- ------------ --------- ---------
Impact of adoption of
IFRS 15 (749)
-------
Group (IFRS 15) 21,796
-------------------------------- -------
Adjusted EBITDA
Germany 2,078 1,929 7.7 (0.4) - 7.3
Italy 1,080 1,200 (10.0) 0.3 - (9.7)
UK 801 930 (13.9) (1.0) 0.5 (14.4)
Spain 542 751 (27.8) 0.6 - (27.2)
Other Europe 849 773 9.8 0.5 - 10.3
Europe 5,350 5,583 (4.2) (0.1) 0.1 (4.2)
-------------------------------- ------- ------- --------- ------------ --------- ---------
Vodacom 1,066 1,063 0.3 - 4.5 4.8
Other AMAP 666 790 (15.7) 9.9 16.0 10.2
Turkey 262 327 (19.9) 1.7 36.1 17.9
Egypt 244 214 14.0 (0.2) 3.5 17.3
------------------------------- ------- ------- --------- ------------ --------- ---------
AMAP 1,732 1,853 (6.5) 3.8 9.5 6.8
-------------------------------- ------- ------- --------- ------------ --------- ---------
Other (4) (51)
Group (IAS 18 basis) 7,078 7,385 (4.2) 1.6 2.4 (0.2)
-------------------------------- ------- ------- --------- ------------ --------- ---------
Impact of adoption of
IFRS 15 (205)
-------
Group (IFRS 15) 6,873
-------------------------------- -------
Percentage point change in adjusted
EBITDA margin
Europe 32.1% 33.3% (1.2) - - (1.2)
AMAP 32.8% 32.5% 0.3 (0.3) (0.7) (0.7)
------- ------- --------- ------------ --------- ---------
Turkey 21.4% 22.8% (1.4) 0.2 0.3 (0.9)
Egypt 45.6% 45.1% 0.5 - 0.1 0.6
------------------------------- ------- ------- --------- ------------ --------- ---------
Group 31.4% 32.0% (0.6) 0.3 (0.2) (0.5)
-------------------------------- ------- ------- --------- ------------ --------- ---------
Adjusted EBIT
Europe 1,254 1,555 (19.4) (0.1) - (19.5)
AMAP 1,015 1,002 1.3 (3.2) 8.8 6.9
Other 36 (100)
Group (IAS 18 basis) 2,305 2,457 (6.2) 1.3 3.3 (1.6)
-------------------------------- ------- ------- --------- ------------ --------- ---------
Impact of adoption of
IFRS 15 (205)
-------
Group (IFRS 15) 2,100
-------------------------------- -------
Adjusted operating profit
Europe 1,296 1,572 (17.6) (0.1) - (17.7)
AMAP 1,014 1,157 (12.4) 11.1 7.1 5.8
Other 36 (101)
Group (IAS 18 basis) 2,346 2,628 (10.7) 7.0 3.1 (0.6)
-------------------------------- ------- ------- --------- ------------ --------- ---------
Impact of adoption of
IFRS 15 (254)
-------
Group (IFRS 15) 2,092
-------------------------------- -------
IAS 18 basis
-----------------------------------------------------------------
Other
activity
IAS 18 (including Foreign IAS 18
2018 2017 Reported M&A) exchange Organic*
EURm EURm % pps pps %
------------------------------------ -------- -------- --------- ------------ --------- ---------
Six months ended 30 September
Service revenue
Germany 5,160 5,062 1.9 0.1 - 2.0
-------- -------- --------- ------------ --------- ---------
Mobile service revenue 3,079 3,046 1.1 0.2 - 1.3
Fixed service revenue 2,081 2,016 3.2 - - 3.2
------------------------------------ -------- -------- --------- ------------ --------- ---------
Italy 2,495 2,673 (6.7) 0.3 - (6.4)
-------- -------- --------- ------------ --------- ---------
Mobile service revenue 1,972 2,188 (9.9) 0.4 - (9.5)
Fixed service revenue 523 485 7.8 0.1 - 7.9
------------------------------------ -------- -------- --------- ------------ --------- ---------
UK 2,897 3,074 (5.8) 0.1 0.7 (5.0)
-------- -------- --------- ------------ --------- ---------
Mobile service revenue 2,163 2,377 (9.0) 0.2 0.6 (8.2)
Fixed service revenue 734 697 5.3 - 0.9 6.2
------------------------------------ -------- -------- --------- ------------ --------- ---------
Spain 2,205 2,326 (5.2) 0.5 - (4.7)
Other Europe 2,387 2,324 2.7 (0.2) (0.1) 2.4
-------- -------- --------- ------------ --------- ---------
Of which: Ireland 480 469 2.3 0.2 - 2.5
Portugal 490 482 1.7 0.6 - 2.3
Greece 438 419 4.5 (2.9) - 1.6
------------------------------------ -------- -------- --------- ------------ --------- ---------
Eliminations (62) (86)
-------- -------- --------- ------------ --------- ---------
Europe 15,082 15,373 (1.9) - 0.1 (1.8)
------------------------------------- -------- -------- --------- ------------ --------- ---------
Vodacom 2,340 2,310 1.3 - 4.4 5.7
-------- -------- --------- ------------ --------- ---------
Of which: South Africa 1,777 1,778 (0.1) - 4.7 4.6
International operations 560 516 8.5 - 3.7 12.2
------------------------------------ -------- -------- --------- ------------ --------- ---------
Other AMAP 2,033 2,493 (18.5) 11.2 16.7 9.4
-------- -------- --------- ------------ --------- ---------
Of which: Turkey 887 1,121 (20.9) 0.7 34.8 14.6
Egypt 522 460 13.5 - 3.4 16.9
Eliminations - -
-------- -------- --------- ------------ --------- ---------
AMAP 4,373 4,803 (9.0) 5.3 11.1 7.4
------------------------------------- -------- -------- --------- ------------ --------- ---------
Other 310 490
Eliminations (54) (74)
------------------------------------- -------- -------- --------- ------------ --------- ---------
Total service revenue 19,711 20,592 (4.3) 1.6 2.6 (0.1)
Other revenue 2,834 2,483
------------------------------------- -------- -------- --------- ------------ --------- ---------
Revenue (IAS 18 basis) 22,545 23,075 (2.3) 0.9 2.9 1.5
------------------------------------- -------- -------- --------- ------------ --------- ---------
Impact of adoption of
IFRS 15 (749)
--------
Revenue (IFRS 15 basis) 21,796
------------------------------------- --------
Other growth metrics
Group - IoT revenue 392 367 6.8 6.1 1.1 14.0
Vodafone Business - Service
revenue 5,883 5,965 (1.4) 0.7 1.7 1.0
Vodafone Business - Vodacom
service revenue 515 513 0.4 - 4.3 4.7
Vodafone Business - Europe
service revenue 4,706 4,701 0.1 (0.1) 0.2 0.2
Vodafone Business - Fixed
service revenue 1,824 1,789 2.0 0.4 1.5 3.9
Vodafone Business - Mobile
service revenue 4,059 4,176 (2.8) 0.7 1.8 (0.3)
M-Pesa revenue 390 332 17.5 - 1.9 19.4
AMAP - Consumer service
revenue 3,319 3,660 (9.3) 5.3 11.4 7.4
German - Operating expenses (1,261) (1,277) (1.3) 0.1 - (1.2)
Italy - Operating expenses (587) (639) (8.1) - - (8.1)
UK - Operating expenses,
excluding the one-off
settlement (910) (960) (5.2) (1.2) 0.7 (5.7)
Spain - Adjusted EBITDA
excluding certain one-time
items primarily relating
to content costs and intercompany
charges 542 751 (27.8) 7.1 - (20.7)
South Africa - Data revenue 778 757 2.8 - 4.7 7.5
------------------------------------- -------- -------- --------- ------------ --------- ---------
IAS 18 basis
-----------------------------------------------------------------
Other
activity
IAS 18 (including Foreign IAS 18
2018 2017 Reported M&A) exchange Organic*
EURm EURm % pps pps %
------------------------------------ -------- -------- --------- ------------ --------- ---------
Six months ended 30 September
Other growth metrics (continued)
Excluding the impact of
UK handset financing and
settlements:
Group - Service revenue 19,711 20,592 (4.3) 2.5 2.6 0.8
Group - Adjusted EBITDA 7,078 7,385 (4.2) 4.7 2.4 2.9
Group - Adjusted EBITDA
margin 31.4% 32.0% (0.6) 0.7 (0.2) (0.1)
Group - Adjusted EBIT 2,305 2,457 (6.2) 11.5 3.3 8.6
Europe - Service revenue 15,082 15,373 (1.9) 1.1 0.1 (0.7)
Europe - Consumer service
revenue 9,682 9.912 (2.3) 1.6 0.1 (0.6)
Europe - Consumer fixed
service revenue 2,741 2,632 4.1 (0.5) - 3.6
Europe - Consumer mobile
service revenue 6,941 7,280 (4.7) 2.4 0.2 (2.1)
Europe - Consumer service
revenue excluding Italy
& Spain 6,553 6,527 0.4 2.4 0.2 3.0
Europe - Consumer fixed
service revenue excluding
Italy & Spain 1,913 1,790 6.9 (0.8) - 6.1
Europe - Consumer mobile
service revenue excluding
Italy & Spain 4,640 4,737 (2.0) 3.6 0.2 1.8
Europe - Adjusted EBITDA 5,350 5,583 (4.2) 3.6 0.1 (0.5)
UK - Service revenue 2,897 3,074 (5.8) 5.9 0.7 0.8
UK - Mobile service
revenue 2,163 2,377 (9.0) 7.6 0.6 (0.8)
UK - Adjusted EBITDA 801 930 (13.9) 25.5 0.5 12.1
UK - Adjusted EBITDA
margin 23.6% 26.5% (2.9) 5.0 - 2.1
------------------------------------ -------- -------- --------- ------------ --------- ---------
IAS 18 Basis
--------------------------------------------------
UK Europe Group
--------------
2018 2017 2018 2017 2018 2017
EURm EURm EURm EURm EURm EURm
-------------------------------- ------ ------ ------- ------- ------- -------
Six months ended 30 September
Other metrics
Revenue 3,397 3,515 16,686 16,775 22,545 23,075
Other activity (including
M&A) - (25) - (25) - (667)
Foreign exchange - (3) (16) (2) (34) (224)
Impact of UK handset financing
and settlements (161) (265) (161) (265) (161) (265)
------ ------ ------- ------- ------- -------
Adjusted revenue excluding
the impact of UK handset
financing and settlements 3,236 3,222 16,509 16,483 22,350 21,919
--------------------------------- ------ ------ ------- ------- ------- -------
Adjusted EBITDA 801 930 5,350 5,583 7,078 7,385
Other activity (including
M&A) - (5) - (5) - (179)
Foreign exchange - 11 - 5 (46) (163)
Impact of UK handset financing
and settlements (147) (352) (147) (352) (147) (352)
------ ------ ------- ------- ------- -------
Adjusted EBITDA excluding
the impact of UK handset
financing and settlements 654 584 5,203 5,231 6,885 6,691
--------------------------------- ------ ------ ------- ------- ------- -------
Adjusted EBITDA margin 23.6% 26.5% 32.1% 33.3% 31.4% 32.0%
--------------------------------- ------ ------ ------- ------- ------- -------
Adjusted EBITDA margin
excluding the impact of
UK handset financing and
settlements 20.2% 18.1% 31.5% 31.7% 30.8% 30.5%
--------------------------------- ------ ------ ------- ------- ------- -------
IAS 18 basis
---------------------------------------------------------------
Other
activity
IAS 18 (including Foreign IAS 18
2018 2017 Reported M&A) exchange Organic*
EURm EURm % pps pps %
--------------------------------- ------- ------- --------- ------------ --------- ---------
Quarter ended 30 September
Service revenue
Germany 2,610 2,569 1.6 0.1 - 1.7
------- ------- --------- ------------ --------- ---------
Mobile service revenue 1,564 1,554 0.6 0.3 - 0.9
Fixed service revenue 1,046 1,015 3.1 (0.1) - 3.0
--------------------------------- ------- ------- --------- ------------ --------- ---------
Italy 1,264 1,354 (6.6) 0.3 - (6.3)
------- ------- --------- ------------ --------- ---------
Mobile service revenue 998 1,109 (10.0) 0.4 - (9.6)
Fixed service revenue 266 245 8.6 - - 8.6
--------------------------------- ------- ------- --------- ------------ --------- ---------
UK 1,438 1,510 (4.8) 0.1 (0.4) (5.1)
------- ------- --------- ------------ --------- ---------
Mobile service revenue 1,073 1,170 (8.3) 0.2 (0.5) (8.6)
Fixed service revenue 365 340 7.4 - (0.4) 7.0
--------------------------------- ------- ------- --------- ------------ --------- ---------
Spain 1,091 1,183 (7.8) 0.6 - (7.2)
Other Europe 1,221 1,189 2.7 (0.6) 0.2 2.3
------- ------- --------- ------------ --------- ---------
Of which: Ireland 241 234 3.0 0.3 - 3.3
Portugal 250 250 - 1.1 - 1.1
Greece 234 219 6.8 (5.6) - 1.2
--------------------------------- ------- ------- --------- ------------ --------- ---------
Eliminations (36) (56)
------- ------- --------- ------------ --------- ---------
Europe 7,588 7,749 (2.1) (0.2) - (2.3)
---------------------------------- ------- ------- --------- ------------ --------- ---------
Vodacom 1,158 1,133 2.2 - 4.1 6.3
------- ------- --------- ------------ --------- ---------
Of which: South Africa 864 874 (1.1) - 5.4 4.3
International operations 293 253 15.8 - (0.8) 15.0
--------------------------------- ------- ------- --------- ------------ --------- ---------
Other AMAP 992 1,240 (20.0) 10.9 18.5 9.4
------- ------- --------- ------------ --------- ---------
Of which: Turkey 411 567 (27.5) 1.1 41.6 15.2
Egypt 273 232 17.7 - (0.7) 17.0
Eliminations - -
------- ------- --------- ------------ --------- ---------
AMAP 2,150 2,373 (9.4) 5.1 12.0 7.7
---------------------------------- ------- ------- --------- ------------ --------- ---------
Other 147 243
Eliminations (24) (55)
---------------------------------- ------- ------- --------- ------------ --------- ---------
Total service revenue 9,861 10,310 (4.4) 1.3 2.6 (0.5)
Other revenue 1,455 1,291
---------------------------------- ------- ------- --------- ------------ --------- ---------
Revenue (IFRS 15 basis) 11,316 11,601 (2.5) 1.0 3.0 1.5
---------------------------------- ------- ------- --------- ------------ --------- ---------
Impact of adoption of
IFRS 15 (377)
-------
Revenue (IFRS 15 basis) 10,939
---------------------------------- -------
Other growth metrics
Vodafone Business - Service
revenue 2,929 2,961 (1.1) 0.6 1.6 1.1
Vodafone Business - Fixed
service revenue 916 887 3.3 0.4 1.0 4.7
Vodafone Business - Mobile
service revenue 2,013 2,074 (2.9) 0.7 1.7 (0.5)
South Africa - Service
revenue excluding a one-off
benefit 864 874 (1.1) (2.1) 5.4 2.2
Excluding the impact of
UK handset financing and
settlements:
Group - Service revenue 9,861 10,310 (4.4) 2.3 2.6 0.5
Europe - Service revenue 7,588 7,749 (2.1) 1.0 - (1.1)
UK - Service revenue 1,438 1,510 (4.8) 6.3 (0.4) 1.1
UK - Mobile service
revenue 1,073 1,170 (8.3) 8.2 (0.5) (0.6)
--------------------------------- ------- ------- --------- ------------ --------- ---------
IAS 18 basis
---------------------------------------------------------------
Other
activity
IAS 18 (including Foreign IAS 18
2018 2017 Reported M&A) exchange Organic*
EURm EURm % pps pps %
--------------------------------- ------- ------- --------- ------------ --------- ---------
Quarter ended 30 June
Service revenue
Germany 2,550 2,493 2.3 0.1 - 2.4
------- ------- --------- ------------ --------- ---------
Mobile service revenue 1,515 1,492 1.5 0.2 - 1.7
Fixed service revenue 1,035 1,001 3.4 - - 3.4
--------------------------------- ------- ------- --------- ------------ --------- ---------
Italy 1,231 1,319 (6.7) 0.2 - (6.5)
------- ------- --------- ------------ --------- ---------
Mobile service revenue 974 1,079 (9.7) 0.2 - (9.5)
Fixed service revenue 257 240 7.1 - - 7.1
--------------------------------- ------- ------- --------- ------------ --------- ---------
UK 1,459 1,564 (6.7) - 1.8 (4.9)
------- ------- --------- ------------ --------- ---------
Mobile service revenue 1,090 1,207 (9.7) 0.1 1.7 (7.9)
Fixed service revenue 369 357 3.4 - 1.9 5.3
--------------------------------- ------- ------- --------- ------------ --------- ---------
Spain 1,114 1,143 (2.5) 0.3 - (2.2)
Other Europe 1,166 1,135 2.7 0.3 (0.4) 2.6
------- ------- --------- ------------ --------- ---------
Of which: Ireland 239 235 1.7 - - 1.7
Portugal 239 232 3.0 0.6 - 3.6
Greece 203 200 1.5 0.6 - 2.1
--------------------------------- ------- ------- --------- ------------ --------- ---------
Eliminations (26) (30)
------- ------- --------- ------------ --------- ---------
Europe 7,494 7,624 (1.7) 0.1 0.3 (1.3)
---------------------------------- ------- ------- --------- ------------ --------- ---------
Vodacom 1,182 1,177 0.4 - 4.7 5.1
------- ------- --------- ------------ --------- ---------
Of which: South Africa 913 903 1.1 - 3.8 4.9
International operations 267 263 1.5 - 7.9 9.4
--------------------------------- ------- ------- --------- ------------ --------- ---------
Other AMAP 1,041 1,253 (16.9) 11.5 14.8 9.4
------- ------- --------- ------------ --------- ---------
Of which: Turkey 476 554 (14.1) 0.3 27.8 14.0
Egypt 249 228 9.2 - 7.5 16.7
Eliminations - -
------- ------- --------- ------------ --------- ---------
AMAP 2,223 2,430 (8.5) 5.4 10.1 7.0
---------------------------------- ------- ------- --------- ------------ --------- ---------
Other 163 247
Eliminations (30) (19)
---------------------------------- ------- ------- --------- ------------ --------- ---------
Total service revenue 9,850 10,282 (4.2) 1.9 2.6 0.3
Other revenue 1,379 1,192
---------------------------------- ------- ------- --------- ------------ --------- ---------
Revenue (IAS 18 basis) 11,229 11,474 (2.1) 0.8 2.8 1.5
---------------------------------- ------- ------- --------- ------------ --------- ---------
Impact of adoption of
IFRS 15 (372)
-------
Revenue (IFRS 15 basis)(1) 10,857
---------------------------------- -------
Other growth metrics
Vodafone Business - Service
revenue 2,953 3,004 (1.7) 0.7 1.9 0.9
Vodafone Business - Fixed
service revenue 908 902 0.7 0.6 1.9 3.2
Vodafone Business - Mobile
service revenue 2,045 2,102 (2.7) 0.8 1.8 (0.1)
Excluding the impact of
UK handset financing and
settlements:
Group - Service revenue 9,850 10,282 (4.2) 2.7 2.6 1.1
Europe - Service revenue 7,494 7,624 (1.7) 1.1 0.3 (0.3)
UK - Service revenue 1,459 1,564 (6.7) 5.4 1.8 0.5
UK - Mobile service
revenue 1,090 1,207 (9.7) 7.1 1.7 (0.9)
--------------------------------- ------- ------- --------- ------------ --------- ---------
Note:
1. Service revenue and total revenue on an IFRS 15 basis for
Germany (and Group) for the quarter ended 30 June 2018, published
on 25 July 2018, have been revised downwards by EUR39 million and
EUR53 million respectively.
ADDITIONAL INFORMATION
Regional results for the six months ended 30 September
IAS 18 basis(1)
Adjusted Operating
Adjusted operating Capital free
Revenue EBITDA profit additions cash flow
---------------- -------------- -------------- -------------- --------------
2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
--------------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Europe
Germany 5,451 5,277 2,078 1,929 615 500 786 768 943 799
Italy 2,915 3,107 1,080 1,200 439 564 282 315 640 833
UK 3,397 3,515 801 930 (15) 121 330 366 106 134
Spain 2,421 2,512 542 751 (88) 132 363 427 (3) 310
Other Europe
Netherlands - - - - 46 21 - - - -
Portugal 520 513 206 188 62 39 95 81 134 100
Greece 461 440 153 145 64 56 59 62 10 7
Other 1,591 1,506 490 440 173 139 193 150 110 163
Eliminations (5) (7) - - - - - - - (2)
--------------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Other Europe 2,567 2,452 849 773 345 255 347 293 254 268
Eliminations (65) (88) - - - - - - - -
--------------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Europe 16,686 16,775 5,350 5,583 1,296 1,572 2,108 2,169 1,940 2,344
AMAP
Vodacom 2,824 2,799 1,066 1,063 794 722 338 356 457 439
Other AMAP
Turkey 1,223 1,437 262 327 121 131 116 154 (253) (362)
Egypt 535 475 244 214 164 145 87 98 198 146
Other 701 989 160 249 (65) 159 84 115 32 121
Eliminations - (1) - - - - - - - -
--------------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Other AMAP 2,459 2,900 666 790 220 435 287 367 (23) (95)
Eliminations - - - - - - - - - -
--------------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------
AMAP 5,283 5,699 1,732 1,853 1,014 1,157 625 723 434 344
Other 736 675 (4) (51) 36 (101) 334 371 (836) (786)
Eliminations (160) (74) - - - - - - - -
--------------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Group 22,545 23,075 7,078 7,385 2,346 2,628 3,067 3,263 1,538 1,902
--------------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------
India(2) 1,561 2,610 157 557 151 544 366 394 (479) 214
Notes:
1. The revenue information above is presented on an IAS 18 basis
for all periods. 2018 information on an IFRS 15 basis are
alternative performance measures. See "Alternative performance
measures" on page 48 for more information and reconciliations to
the closest respective equivalent GAAP measure and "Definition of
terms" on page 59 for further details.
2. In accordance with IFRS, the results of Vodafone India were
classified as discontinued operations.
Service revenue - quarter ended 30 September(1)
Group and Regions Group Europe AMAP
-------------------- -------------------- --------------------
2018 2017 2018 2017 2018 2017
EURm EURm EURm EURm EURm EURm
--------- --------- --------- --------- --------- ---------
IAS 18 basis
Mobile customer
revenue 6,341 6,709 4,648 4,846 1,689 1,851
Mobile incoming
revenue 451 511 322 344 139 169
Other service
revenue 542 582 363 393 93 112
--------- --------- --------- --------- --------- ---------
Mobile service
revenue 7,334 7,802 5,333 5,583 1,921 2,132
Fixed service
revenue 2,527 2,508 2,255 2,166 229 241
--------- --------- --------- --------- --------- ---------
Service revenue 9,861 10,310 7,588 7,749 2,150 2,373
Other revenue 1,455 1,291 869 727 425 445
--------- --------- --------- --------- --------- ---------
Revenue 11,316 11,601 8,457 8,476 2,575 2,818
--------- --------- --------- --------- --------- ---------
Growth
----------------------------------------------------------------
Reported Organic* Reported Organic* Reported Organic*
% EURm % EURm % EURm
--------- --------- --------- --------- --------- ---------
Revenue (2.5)% 1.5% (0.2)% (0.4)% (8.6)% 8.9%
Service revenue (4.4)% (0.5)% (2.1)% (2.3)% (9.4)% 7.7%
--------- --------- --------- --------- --------- ---------
Operating Companies Germany Italy UK
-------------------- -------------------- --------------------
2018 2017 2018 2017 2018 2017
EURm EURm EURm EURm EURm EURm
--------- --------- --------- --------- --------- ---------
IAS 18 basis
Mobile customer
revenue 1,379 1,361 852 951 935 1,016
Mobile incoming
revenue 50 53 81 84 71 75
Other service
revenue 135 140 65 74 67 79
--------- --------- --------- --------- --------- ---------
Mobile service
revenue 1,564 1,554 998 1,109 1,073 1,170
Fixed service
revenue 1,046 1,015 266 245 365 340
--------- --------- --------- --------- --------- ---------
Service revenue 2,610 2,569 1,264 1,354 1,438 1,510
Other revenue 173 114 220 207 264 246
--------- --------- --------- --------- --------- ---------
Revenue 2,783 2,683 1,484 1,561 1,702 1,756
--------- --------- --------- --------- --------- ---------
Growth
----------------------------------------------------------------
Reported Organic* Reported Organic* Reported Organic*
% EURm % EURm % EURm
--------- --------- --------- --------- --------- ---------
Revenue 3.7% 3.8% (4.9)% (4.6)% (3.1)% (3.4)%
Service revenue 1.6% 1.7% (6.6)% (6.3)% (4.8)% (5.1)%
--------- --------- --------- --------- --------- ---------
Discontinued
operations:
Spain Vodacom India
-------------------- -------------------- --------------------
2018 2017 2018 2017 2018 2017
EURm EURm EURm EURm EURm EURm
--------- --------- --------- --------- --------- ---------
IAS 18 basis
Mobile customer
revenue 641 694 994 978 433 879
Mobile incoming
revenue 31 41 42 40 95 216
Other service
revenue 52 63 55 62 29 39
--------- --------- --------- --------- --------- ---------
Mobile service
revenue 724 798 1,091 1,080 557 1,134
Fixed service
revenue 367 385 67 53 44 82
--------- --------- --------- --------- --------- ---------
Service revenue 1,091 1,183 1,158 1,133 601 1,216
Other revenue 115 93 236 242 1 7
--------- --------- --------- --------- --------- ---------
Revenue 1,206 1,276 1,394 1,375 602 1,223
--------- --------- --------- --------- --------- ---------
Growth
----------------------------------------------------------------
Reported Organic* Reported Organic* Reported Organic*
% EURm % EURm % EURm
--------- --------- --------- --------- --------- ---------
Revenue (5.5)% (4.8)% 1.4% 5.6% (50.8)% (46.8)%
Service revenue (7.8)% (7.2)% 2.2% 6.3% (50.6)% (46.7)%
--------- --------- --------- --------- --------- ---------
Notes:
* All amounts in this document marked with an "*" represent
organic growth which presents performance on a comparable basis,
both in terms of merger and acquisition activity and movements in
foreign exchange rates. Organic growth is an alternative
performance measures. See "Alternative performance measures" on
page 48 for further details and reconciliations to the respective
closest equivalent GAAP measure.
1. The revenue information above is presented on an IAS 18 basis
for all periods. 2018 information on an IAS 18 basis are
alternative performance measures. See "Alternative performance
measures" on page 48 for more information and reconciliations to
the closest respective equivalent GAAP measure and "Definition of
terms" on page 59 for further details.
Reconciliation of adjusted earnings
Discontinued
Reported operations Adjustments(1) Adjusted
Six months ended 30 September
2018 EURm EURm EURm EURm
------------------------------------- --------- ------------- --------------- ---------
Operating (loss)/profit (2,071) - 3,846 1,775
Amortisation of acquired customer
base and brand intangible assets - - 317 317
Non-operating income and expense (3) - 3 -
Net financing costs (815) - 227 (588)
------------------------------------- --------- ------------- --------------- ---------
(Loss)/profit before taxation (2,889) - 4,393 1,504
Income tax expense (1,409) - 1,017 (392)
------------------------------------- --------- ------------- --------------- ---------
(Loss)/profit for the financial
period continuing operations (4,298) - 5,410 1,112
Loss for the financial period
from discontinued operations (3,535) 3,535 - -
------------------------------------- --------- ------------- --------------- ---------
(Loss)/profit for the financial
period (7,833) 3,535 5,410 1,112
------------------------------------- --------- ------------- --------------- ---------
Attributable to:
- Owners of the parent (7,965) 3,535 5,409 979
- Non-controlling interests 132 - 1 133
------------------------------------- --------- ------------- --------------- ---------
Basic (loss)/earnings per share (29.00c) 3.56c
------------------------------------- --------- ------------- --------------- ---------
Note:
1. See page 17 for further details.
Discontinued
Reported operations Adjustments(1) Adjusted
Six months ended 30 September
2017 EURm EURm EURm EURm
----------------------------------- --------- ------------- --------------- ---------
Operating profit 2,008 - 77 2,085
Amortisation of acquired customer
base and brand intangible assets - - 543 543
Non-operating income and expense (1) - 1 -
Net financing costs 152 - (407) (255)
----------------------------------- --------- ------------- --------------- ---------
Profit before taxation 2,159 - 214 2,373
Income tax expense (579) - 90 (489)
----------------------------------- --------- ------------- --------------- ---------
Profit for the financial period
continuing operations 1,580 - 304 1,884
Loss for the financial period
from discontinued operations (345) 345 - -
----------------------------------- --------- ------------- --------------- ---------
Profit for the financial period 1,235 345 304 1,884
----------------------------------- --------- ------------- --------------- ---------
Attributable to:
- Owners of the parent 1,131 345 297 1,773
- Non-controlling interests 104 - 7 111
----------------------------------- --------- ------------- --------------- ---------
Basic earnings per share 4.03c 6.32c
----------------------------------- --------- ------------- --------------- ---------
Note:
1. See page 17 for further details.
OTHER INFORMATION
Definition of terms Term Definition
------------------------ --------------------------------------------------------------
Adjusted EBIT Operating profit excluding share of results in associates
and joint ventures, impairment losses, amortisation
of customer bases and brand intangible assets restructuring
costs arising from discrete restructuring plans
and other income and expense. The Group's definition
of adjusted EBIT may not be comparable with similarly
titled measures and disclosures by other companies.
------------------------ --------------------------------------------------------------
Adjusted EBITDA Operating profit excluding share of results in associates
and joint ventures, depreciation and amortisation,
gains/losses on the disposal of fixed assets, impairment
losses, restructuring costs arising from discrete
restructuring plans and other income and expense.
The Group's definition of adjusted EBITDA may not
be comparable with similarly titled measures and
disclosures by other companies.
------------------------ --------------------------------------------------------------
Adjusted operating Group adjusted operating profit excludes impairment
profit losses, restructuring costs, amortisation of customer
bases and brand intangible assets and other income
and expense.
------------------------ --------------------------------------------------------------
ARPU Average revenue per user, defined as customer revenue
and incoming revenue divided by average customers.
------------------------ --------------------------------------------------------------
Capital additions Comprises the purchase of property, plant and equipment
and intangible assets, other than licence and spectrum
payments.
------------------------ --------------------------------------------------------------
Converged customer A customer who receives both fixed and mobile services
(also known as unified communications) on a single
bill or who receives a discount across both bills.
------------------------ --------------------------------------------------------------
Customer costs Includes acquisition costs, retention costs and
expenses related to ongoing commissions.
------------------------ --------------------------------------------------------------
Depreciation The accounting charge that allocates the cost of
and other amortisation a tangible or intangible asset to the income statement
over its useful life. This measure includes the
profit or loss on disposal of property, plant and
equipment and computer software.
------------------------ --------------------------------------------------------------
Direct costs Direct costs include interconnect costs and other
direct costs of providing services.
------------------------ --------------------------------------------------------------
Enterprise The Group's customer segment for businesses.
------------------------ --------------------------------------------------------------
Fixed service Service revenue relating to provision of fixed line
revenue ('fixed') and carrier services.
------------------------ --------------------------------------------------------------
Free cash flow Operating free cash flow after cash flows in relation
(pre-spectrum) to taxation, interest, dividends received from associates
and investments and dividends paid to non-controlling
shareholders in subsidiaries, but before restructuring
and licence and spectrum payments.
------------------------ --------------------------------------------------------------
Free cash flow Operating free cash flow after cash flows in relation
to taxation, interest, dividends received from associates
and investments, dividends paid to non-controlling
shareholders in subsidiaries, restructuring payments
and licence and spectrum payments.
------------------------ --------------------------------------------------------------
IAS 18 International Accounting Standard 18 "Revenue".
The pre-existing revenue accounting standard that
applied to the Group's statutory results for all
reporting periods up to and including the quarter
ended 31 March 2018.
------------------------ --------------------------------------------------------------
IFRS 15 International Financial Reporting Standard 15 "Revenue
from Contracts with Customers". The new accounting
standard adopted by the Group on 1 April 2018 and
applied to the Group's statutory results for the
six months ended 30 September 2018.
------------------------ --------------------------------------------------------------
Incoming revenue Comprises revenue from termination rates for voice
and messaging to Vodafone customers.
------------------------ --------------------------------------------------------------
Internet of The network of physical objects embedded with electronics,
Things ('IoT') software, sensors, and network connectivity, including
built-in mobile SIM cards, that enables these objects
to collect data and exchange communications with
one another or a database.
------------------------ --------------------------------------------------------------
Mobile customer Represents revenue from mobile customers from bundles
revenue that include a specified number of minutes, messages
or megabytes of data that can be used for no additional
charge ('in-bundle') and revenues from minutes,
messages or megabytes of data which are in excess
of the amount included in customer bundles ('out-of-bundle').
Mobile in-bundle and out-of-bundle revenues, previously
disclosed separately, are now combined to simplify
the presentation of the Group's results.
------------------------ --------------------------------------------------------------
Mobile service Service revenue relating to the provision of mobile
revenue services.
------------------------ --------------------------------------------------------------
Net debt Long-term borrowings, short-term borrowings and
mark-to-market adjustments on financing instruments
less cash and cash equivalents.
------------------------ --------------------------------------------------------------
Next generation Fibre or cable networks typically providing high-speed
networks ('NGN') broadband over 30Mbps.
------------------------ --------------------------------------------------------------
Operating expenses Operating expenses comprise primarily sales and
distribution costs, network and IT related expenditure
and business support costs.
------------------------ --------------------------------------------------------------
Operating free Cash generated from operations after cash payments
cash flow for capital additions (excludes capital licence
and spectrum payments) and cash receipts from the
disposal of intangible assets and property, plant
and equipment, but before restructuring costs.
------------------------ --------------------------------------------------------------
Organic growth An alternative performance measure which presents
performance on a comparable basis, both in terms
of merger and acquisition activity and movements
in foreign exchange rates. See "Alternative performance
measures" on page 48 for further details.
------------------------ --------------------------------------------------------------
Other revenue Other revenue includes revenue from connection fees
and equipment sales.
------------------------ --------------------------------------------------------------
Regulation Impact of industry specific law and regulations
covering telecommunication services. The impact
of regulation on service revenue in European markets
comprises the effect of changes in European mobile
termination rates and changes in out-of-bundle roaming
revenues less the increase in visitor revenues.
------------------------ --------------------------------------------------------------
Reported growth Reported growth is based on amounts reported in
euros as determined under IFRS.
------------------------ --------------------------------------------------------------
Restructuring Costs incurred by the Group following the implementation
costs of discrete restructuring plans to improve overall
efficiency.
------------------------ --------------------------------------------------------------
RGUs Revenue Generating Units describes the number of
fixed line services taken by subscribers.
---------------- ----------------------------------------------------------
Roaming Impact of European roaming, defined as the increase
in visitor revenues less the increase in roaming
costs and the decline in out-of-bundle roaming revenues.
---------------- ----------------------------------------------------------
Service revenue Service revenue comprises all revenue related to
the provision of ongoing services including, but
not limited to, monthly access charges, airtime
usage, roaming, incoming and outgoing network usage
by non-Vodafone customers, interconnect charges
for incoming calls and, with effect from 1 April
2018, excludes international wholesale voice transit
revenues. See "Alternative performance measures"
on page 48 for further details.
---------------- ----------------------------------------------------------
VGE Vodafone Global Enterprise (VGE), which serves the
Group's biggest multi-national customers.
---------------- ----------------------------------------------------------
For definitions of other terms please refer to pages 222 to 224
of the Group's annual report for the financial year ended 31
March 2018.
Notes:
1. Copies of this document are available from the Company's registered
office at Vodafone House, The Connection, Newbury, Berkshire,
RG14 2FN. The half-year results will be available on the Vodafone
Group Plc website, vodafone.com/investor, from 13 November 2018.
2. References to Vodafone are to Vodafone Group Plc and references
to Vodafone Group are to Vodafone Group Plc and its subsidiaries
unless otherwise stated. Vodafone, the Vodafone Portrait, the
Vodafone Speechmark, Vodafone Broken Speechmark Outline, Vodacom,
Vodafone One, The future is exciting. Ready? and M-Pesa, are trademarks
of the Vodafone Group. Other product and company names mentioned
herein may be the trademarks of their respective owners.
3. All growth rates reflect a comparison to the six months ended
30 September 2017 unless otherwise stated.
4. References to "Q1" and "Q2" are to the quarters ended 30 June
2018 and 30 September 2018, respectively, unless otherwise stated.
References to "half year", "first half" or "H1" are to the six
months ended 30 September 2018 unless otherwise stated. References
to the "year", "financial year" or "2019 financial year" are to
the financial year ending 31 March 2019 and references to the
"last year" or "last financial year" are to the financial year
ended 31 March 2018 unless otherwise stated.
5. All amounts marked with an "*" represent "organic growth", which
presents performance on a comparable basis, both in terms of merger
and acquisition activity as well as in terms of movements in foreign
exchange rates.
6. Vodacom refers to the Group's interest in Vodacom Group Limited
('Vodacom') in South Africa as well as its subsidiaries, including
its operations in the DRC, Lesotho, Mozambique and Tanzania.
7. The financial results for India have been derived from our consolidated
financial results and this may differ from Vodafone India's financial
statements prepared under Indian GAAP, Indian Accounting Standards
or IFRS.
8. Quarterly historical information, including information for service
revenue, mobile customers, mobile churn, mobile data usage, mobile
ARPU and certain fixed line and convergence metrics, is provided
in a spread sheet available at vodafone.com/investor.
9. This trading update contains references to our website. Information
on our website is not incorporated into this update and should
not be considered part of this update. We have included any website
as an inactive textual reference only.
Forward-looking statements
This report contains "forward-looking statements" within the
meaning of the US Private Securities Litigation Reform Act of 1995
with respect to the Group's financial condition, results of
operations and businesses and certain of the Group's plans and
objectives.
In particular, such forward-looking statements include, but are
not limited to, statements with respect to: expectations regarding
the Group's financial condition or results of operations, including
the Group Chief Executive's statement and financial review of the
half year on pages 2 to 5 of this report and the guidance for
adjusted EBITDA and free cash flow for the 2019 financial year (and
the related underlying assumptions) on page 6; expectations for the
Group's future performance generally, including growth, costs and
capital expenditure; expectations regarding the operating
environment and market conditions and trends, including customer
usage and preferences, competitive position and macroeconomic
pressures, spectrum auctions and awards, price trends and
opportunities in specific geographic markets; intentions and
expectations regarding the development, launch and expansion of
products, services and technologies, either introduced by Vodafone
or by Vodafone in conjunction with third parties or by third
parties independently including the rollout of TV in the United
Kingdom and 5G; expectations regarding free cash flow, foreign
exchange rate movements and tax rates; expectations regarding the
regulatory approval, integration or performance of current and
future investments, associates, joint ventures, non-controlled
interests and newly acquired businesses; expectations regarding MTR
rates in the jurisdictions in which Vodafone operates; expectations
regarding Vodafone India, the outcome and impact of regulatory and
legal proceedings involving Vodafone and of scheduled or potential
legislative and regulatory changes, including approvals, reviews
and consultations.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
"will", "anticipates", "aims", "could", "may", "should", "expects",
"believes", "intends", "plans", "prepares" or "targets" (including
in their negative form or other variations). By their nature,
forward-looking statements are inherently predictive, speculative
and involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the future.
There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied
by these forward-looking statements. These factors include, but are
not limited to, the following: external cyber-attacks, insider
threats or supplier breaches; general economic and political
conditions of the jurisdictions in which the Group operates and
changes to the associated legal, regulatory and tax environments;
increased competition; increased disintermediation; levels of
investment in network capacity and the Group's ability to deploy
new technologies, products and services; rapid changes to existing
products and services and the inability of new products and
services to perform in accordance with expectations; the ability of
the Group to integrate new technologies, products and services with
existing networks, technologies, products and services; the Group's
ability to generate and grow revenue; a lower than expected impact
of new or existing products, services or technologies on the
Group's future revenue, cost structure and capital expenditure
outlays; slower than expected customer growth, reduced customer
retention, reductions or changes in customer spending and increased
pricing pressure; the Group's ability to expand its spectrum
position, win 3G and 4G allocations and realise expected synergies
and benefits associated with 3G and 4G; the Group's ability to
secure the timely delivery of high-quality products from suppliers;
loss of suppliers, disruption of supply chains and greater than
anticipated prices of new mobile handsets; changes in the costs to
the Group of, or the rates the Group my charge for, terminations
and roaming minutes; the impact of a failure or significant
interruption to the Group's telecommunications, networks, IT
systems or data protection systems; the Group's ability to realise
expected benefits from acquisitions, partnerships, joint ventures,
franchises, brand licences, platform sharing or other arrangements
with third parties; acquisitions and divestments of Group
businesses and assets and the pursuit of new, unexpected strategic
opportunities; the Group's ability to integrate acquired business
or assets; the extent of any future write-downs or impairment
charges on the Group's assets, or restructuring charges incurred as
a result of an acquisition or disposition; a developments in the
Group's financial condition, earnings and distributable funds and
other factors that the Board takes into account in determining the
level of dividends; the Group's ability to satisfy working capital
requirements; changes in foreign exchange rates; changes in the
regulatory framework in which the Group operates; the impact of
legal or other proceedings against the Group or other companies in
the communications industry and changes in statutory tax rates and
profit mix. Furthermore, a review of the reasons why actual results
and developments may differ materially from the expectations
disclosed or implied within forward-looking statements can be found
under "Forward-looking statements" and "Principal risk factors and
uncertainties" in the Group's annual report for the financial year
ended 31 March 2018. The annual report can be found on the Group's
website (vodafone.com/investor). All subsequent written or oral
forward-looking statements attributable to the Company or any
member of the Group or any persons acting on their behalf are
expressly qualified in their entirety by the factors referred to
above. No assurances can be given that the forward-looking
statements in this document will be realised. Subject to compliance
with applicable law and regulations, Vodafone does not intend to
update these forward-looking statements and does not undertake any
obligation to do so.
For further information:
Vodafone Group Plc
Investor Relations Media Relations
Telephone: +44 7919 990 230 www.vodafone.com/media/contact
Copyright (c) Vodafone Group 2018
- ends -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LFFEVLTLFLIT
(END) Dow Jones Newswires
November 13, 2018 02:01 ET (07:01 GMT)
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