TIDMVOD
RNS Number : 3722G
Vodafone Group Plc
15 November 2022
Vodafone Group Plc H1 FY23 results
15 November 2022
Resilient performance in Europe & Africa, good progress on
operational & portfolio priorities
-- Group service revenue growth of 2.5%* in the first half of FY23
-- Adjusted EBITDAaL declined by 2.6%* driven by a material
prior year legal settlement, and commercial underperformance in
Germany
-- Pre-tax return on capital employed increased by 0.6 percentage points year-on-year to 6.9%
-- Significant progress with portfolio strategy to create
industrial scale, enable accelerated growth and unlock value
Financial results H1 FY23 H1 FY22 Change
-----------------------------------------
Page EURm EURm %
---------------------------------------- ---- -------- -------- ------
Group revenue 6 22,930 22,489 2.0
Group service revenue 6 19,207 19,010 2.5*
Operating profit 6 2,935 2,620 12.0
Adjusted EBITDAaL(1) 6 7,244 7,565 (2.6)*
Profit for the financial period 6 1,243 1,277
Basic earnings per share 17 3.52c 3.40c
Adjusted basic earnings per share(1) 17 6.02c 4.90c
Interim dividend per share 35 4.50c 4.50c
Cash inflow from operating activities 17 6,280 6,455 (2.7)
Adjusted free cash flow(1) 18 (513) 23
Net debt(1) 19 (45,523) (44,298) (2.8)
========================================= ==== ======== ======== ======
* represents organic growth. See page 2. 1. Non-GAAP measure. See
page 41.
-- Group revenue growth of 2.0% to EUR22.9 billion, driven by
service revenue growth and higher equipment sales
-- Operating profit increased by 12.0% to EUR2.9 billion,
reflecting a higher share of income from associates and joint
ventures and lower depreciation and amortisation
-- FY23 Adjusted EBITDAaL is expected to be EUR15.0 - 15.2
billion at the lower end of original guidance
-- Interim dividend per share of 4.5 eurocents, record date 25 November 2022
Nick Read, Group Chief Executive, commented:
"In the context of a challenging macroeconomic environment, we
are delivering a resilient performance this year, alongside making
good progress with our operational and portfolio priorities.
We are pleased the Vantage Towers transaction accomplished our
three key objectives - monetisation, deconsolidation and retaining
co-control of these strategically important assets - and we
continue to deliver portfolio actions to strengthen our businesses
and accelerate growth. In addition, our recently announced
fibre-to-the-home JV in Germany will further enhance our leading
gigabit fixed network position in Europe's largest market.
We are taking a number of steps to mitigate the economic
backdrop of high energy costs and rising inflation. These include
taking pricing action across Europe, whilst at the same time
supporting our most vulnerable customers and driving energy
efficiency measures across the business. We are also announcing
today a new cost savings target of EUR1+ billion focused on
streamlining and further simplifying the Group.
We are confident that the ongoing delivery of our organic
strategy and portfolio actions will underpin long-term growth and
create value for shareholders."
For more information, please contact:
Investor Relations Media Relations
Investors.vodafone.com Vodafone.com/media/contact
ir@vodafone.co.uk GroupMedia@vodafone.com
Registered Office: Vodafone House, The Connection, Newbury,
Berkshire RG14 2FN, England. Registered in England No. 1833679
A webcast Q&A session will be held at 10:00 GMT on 15
November 2022. The webcast and supporting information can be
accessed at investors.vodafone.com
Summary Resilient financial performance
Organic growth
All amounts marked with an '*' in this document represent
organic growth which presents performance on a comparable basis,
excluding the impact of foreign exchange rates, mergers and
acquisitions, the hyperinflation adjustments in Turkey and other
adjustments to improve the comparability of results between
periods. Organic growth figures are non-GAAP measures. See non-GAAP
measures on page 41 for more information.
Financial performance
Total revenue increased by 2.0% to EUR22.9 billion (FY22 H1:
EUR22.5 billion), as service revenue growth and higher equipment
sales was partly offset by unfavourable foreign exchange
movements.
Adjusted EBITDAaL declined by 2.6%* to EUR7.2 billion(1) (FY22
H1: EUR7.6 billion), with revenue growth offset by a prior year
one-off legal settlement in Italy (1.4 percentage point drag
year-on-year) and commercial underperformance in Germany. The
Adjusted EBITDAaL margin was 2.0* percentage points lower
year-on-year at 31.6%.
Operating profit increased by 12.0% to EUR2.9 billion,
reflecting a higher share of income from associates and joint
ventures and lower depreciation and amortisation. The Group made a
profit for the period of EUR1.2 billion (FY22 H1: EUR1.3 billion)
as an increase in operating profit and investment income was offset
by a higher income tax charge, attributable to one-off deferred tax
credits recognised in the prior period.
Basic earnings per share was 3.52 eurocents, compared to basic
earnings per share of 3.40 eurocents in the prior year.
Cash flow, funding & capital allocation
Cash inflow from operating activities decreased by 2.7% to
EUR6.3 billion (FY22 H1: EUR6.5 billion), with higher operating
profit being more than offset by working capital movements and
higher tax payments.
Free cash flow was an outflow of EUR3.2 billion (FY22 H1:
outflow of EUR1.0 billion) reflecting lower Adjusted EBITDAaL and
higher licence and spectrum payments in the period. Adjusted free
cash flow was an outflow of EUR0.5 billion (FY22 H1: inflow of
EUR23 million).
Net debt increased by EUR3.9 billion to EUR45.5 billion (EUR41.6
billion as at 31 March 2022). This was driven by the free cash
outflow of EUR3.2 billion, equity dividends of EUR1.3 billion, and
share buybacks of EUR1.0 billion used to offset dilution linked to
mandatory convertible bonds. These factors were partly offset by
other movements of EUR1.7 billion, relating to the settlement of 5G
spectrum in Italy previously included in net debt. Settlement of
the liability during the period had no impact on net debt, but the
resulting cash payment was included in free cash flow. As at 30
September 2022, the weighted average of cost of debt was around
2.5% and average bond maturity was 11 years, with all bonds held at
fixed interest rates.
Current liquidity, which includes cash and equivalents and
short-term investments, is EUR11.5 billion (EUR12.3 billion as at
31 March 2022). This includes EUR7.6 billion of net collateral
which has been posted to Vodafone from counterparties as a result
of positive mark-to-market movements on derivative instruments
(EUR2.2 billion as at 31 March 2022).
The interim dividend per share is 4.5 eurocents (FY22 H1: 4.5
eurocents). The ex-dividend date for the interim dividend is 24
November 2022 for ordinary shareholders, the record date is 25
November 2022 and the dividend is payable on 3 February 2023.
Hyperinflationary accounting in Turkey
As anticipated and explained in the Group's reporting for the
year ended 31 March 2022, Turkey now meets the requirements to be
designated as a hyperinflationary economy under IAS 29 'Financial
Reporting in Hyperinflationary Economies'. The Group has therefore
applied hyperinflationary accounting, as specified in IAS 29, for
amounts reported by Vodafone Turkey for the period commencing 1
April 2022. See note 1 of the unaudited condensed consolidated
financial statements for further information. Our guidance for FY23
excludes any impact from this change in accounting.
Note:
1. Includes a reduction of EUR26 million resulting from
hyperinflationary accounting in Turkey.
Strategy Committed to improving returns through growth &
portfolio action
Our strategy focuses on driving shareholder returns through
growth, and is delivered through our customer commitments and
enabling strategies. These work together towards our vision to
become a new generation connectivity and digital services provider
for Europe and Africa, enabling an inclusive and sustainable
digital society.
We continued to make progress with our strategy during the first
half of FY23 and highlights include: further deepening our customer
relationships with lower customer churn; good results from our
increased capital investment with improvements in network quality;
increasing penetration of financial services in Africa; and another
successful year of digital enabled efficiencies. The table below
includes a selection of KPIs that illustrates progress in our key
areas of focus.
Units H1 FY23 H1 FY22
================================================= ========== ======= ==================
Customer commitments
Best connectivity products & services
Europe mobile contract customers(1) million 66.7 66.0
Europe broadband customers(1) million 25.5 25.6
Europe Consumer converged customers(1) million 9.3 8.3
Europe mobile contract customer churn % 13.4 13.1
Africa mobile customers(2) million 188.0 186.0
Africa data users(2) million 90.2 88.6
Business service revenue growth* % 2.6 1.2
Leading innovation in digital services
Europe TV subscribers(1) million 21.7 22.2
IoT SIM connections(3) million 152 136
Africa M-Pesa customers(2) million 55.6 49.0
Africa M-Pesa transaction volume(2) billion 11.9 9.3
Outstanding digital experiences
Digital channel sales mix(4) % 26 24
End-to-end TOBi completion rate(5 6) % 51 41
Enabling strategies
Leading gigabit networks
5G available in European cities(1) # 344 244
Europe on-net gigabit capable connections(1) million 50.1 46.5
Europe on-net NGN broadband penetration(1) % 29 30
Simplified & most efficient operator
Pre-tax ROCE (controlled)(7) % 6.9 6.3
Post-tax ROCE (controlled and associates/joint
ventures)(7) % 5.1 4.3
Europe markets where 3G switched off(1) # 4 4
=================================================== ======== ======= ================
1. Including VodafoneZiggo | 2. Africa including Safaricom | 3.
H1 FY23 includes an adjustment to our customer base to remove
inactive SIMs | 4. Based on Germany, Italy, UK, Spain only | 5.
Group excluding Egypt | 6. Defined as percentage of total customer
contacts resolved without human interaction through TOBi | 7. These
line items are non-GAAP measures. See page 41 for more information.
The half-year ROCE calculation is based on returns for the 12
months ended 30 September.
A more detailed review of our strategic progress is contained
within an accompanying video presentation available here:
investors.vodafone.com/reports-information/results-reports-presentations
. In this presentation we outline: we are systematically executing
our organic growth strategy and making significant progress with
our proactive portfolio management plans; we have significant
action plans under way to mitigate the challenging macroeconomic
backdrop; and we are committed to improving shareholder returns
through our long-term organic strategy.
Our action plan to mitigate the current macroeconomic challenges
includes price initiatives and an extension of our ongoing
efficiency programme. Price initiatives have been implemented in 12
out of 13 European markets and include contractual price increases,
reduced promotional discounts and new ARPU accretive product
portfolios. We now have 7 European markets with inflation-linked
pricing structures. The extension of o ur efficiency programme will
generate over EUR1 billion of additional cost savings by FY26
through streamlining and simplifying our group-wide structure and
further accelerating the digitalisation of our operations.
Our purpose We connect for a better future
We believe that Vodafone has a significant role to play in
contributing to the societies in which we operate and we want to
enable an inclusive and sustainable digital society. We continue to
make progress against our purpose strategy and provided a full
update in our FY22 Annual Report and supplementary materials
(available on investors.vodafone.com ). Highlights and achievements
from the first half of FY23 are summarised below.
Energy efficiency initiatives
The expansion of our networks and the significant increase in
data traffic volumes means we now carry 7 times more mobile data
compared to just five years ago, yet our total energy consumption
has remained roughly consistent over the same period. We are
committed to continually improving our energy efficiency,
particularly the efficiency of our base station sites and our
technology centres, which accounted for 96% of our total energy
consumption in FY22.
Our strategy to optimise energy usage and improve energy
efficiency includes modernising our networks. Between FY17 and
FY22, the share of 4G and 5G traffic doubled on our network - and
now accounts for over 90% of our mobile data traffic - as we shut
down 3G networks in favour of more efficient 4G and 5G networks. In
addition, we already put mobile radio capacity layers throughout
Europe into low power modes during low traffic periods. We are now
extending this functionality so that it operates 24 hours a day, 7
days a week, and we will continue to enhance this capability to
maximise energy efficiency.
With respect to our passive infrastructure, we have been
investing in power and cooling upgrades, IoT and smart metering.
For example, we use AI-based algorithms to optimise cooling in 70
technology centres across Europe and Africa and we will increase
our investment in passive infrastructure upgrades going forward.
All these programmes are underpinned by our extensive energy data
management and analytics system, which collects and stores data
feeds from our electricity suppliers and from smart meters. This
system is now live across 13 markets in Europe, with smart meters
installed at 53,000 sites.
Sourcing renewable electricity
Following our energy purchasing hierarchy approach, we
prioritise energy efficient practices, before moving on to on-site
generation of renewable energy, renewable power purchase agreements
('PPAs') and Renewable Electricity Certificates ('RECs'). Whilst
on-site generation of renewable electricity accounted for less than
1% of our overall renewable energy consumption in FY22 due to
technical and space constraints, we continue to drive innovation in
this area. For example, our recent Renewable Power Challenge
encouraged organisations to submit innovative solutions to the
challenge of generating renewable power directly at our mobile base
stations. We have shortlisted partners who develop microgrids in
Africa and manufacturer micro wind turbines and will be supporting
them as they develop proof of concepts to help us assess the
feasibility and scalability of their solutions.
In Europe, we are expanding our PPA strategy and have now signed
PPAs in Germany, Italy, UK, Spain and Greece, which address 15% of
our FY23 electricity supply in Europe. These PPAs trade at a
discount to current wholesale electricity prices and provide us
with more economic certainty against potentially volatile wholesale
electricity prices, as well as helping to create new renewable
capacity. In Africa, Vodacom is pursuing numerous climate-related
initiatives, including renewable energy powered rural sites and a
pilot renewable energy solution in South Africa with the
state-owned utility, Eskom.
Supporting customers in financial hardship
We are conscious of the cost-of-living pressures our customers
are facing during this challenging macroeconomic period. We have
implemented a cost-of-living plan, consisting of three elements:
social or low-cost tariffs in all markets; extra measures to ensure
our consumers and small businesses are supported, including our
free V-Hub service for SMEs; and leveraging our technology &
digital services to help customers reduce their energy usage.
The Spirit of Vodafone
Our employee survey measures progress on how our people
experience our culture, engagement, and connection to our purpose.
The results from the latest survey conducted in September show that
our employee engagement index remained high at 76 (May 2022: 72)
and 88% of employees feel that their daily work contributes to our
purpose.
Outlook
Outlook for FY23
In May 2022, we set out guidance for FY23 for our expectations
of Adjusted EBITDAaL and Adjusted free cash flow. Since this
guidance was set in May 2022, the global macroeconomic climate has
worsened, with energy costs and broader inflation in particular,
impacting our financial performance. A comprehensive action plan is
underway to mitigate the effects of the challenging macroeconomic
environment. Our updated guidance for FY23 financial performance is
set out in the table below.
FY23 Guidance
Original guidance Updated guidance
================== ========================== =====================
Adjusted EBITDAaL EUR15.0 - EUR15.5 billion EUR15.0-15.2 billion
(1)
Adjusted free c. EUR5.3 billion c.EUR5.1 billion
cash flow (1,2)
================== ========================== =====================
In addition to the updated guidance for FY23, we have set out
considerations of factors likely to affect our financial
performance in FY24 within an accompanying video presentation
available here:
investors.vodafone.com/reports-information/results-reports-presentations
.
Assumptions
The guidance above reflects the following:
-- Foreign exchange rates used when setting guidance were as follows:
- EUR 1 : GBP 0.84;
- EUR 1 : ZAR 17.32;
- EUR 1 : TRY 16.75; and
- EUR 1 : EGP 19.28.
-- As anticipated and explained in the Group's reporting for the
year ended 31 March 2022, Turkey now meets the requirements to be
designated as a hyperinflationary economy under IAS 29 'Financial
Reporting in Hyperinflationary Economies'. The Group has therefore
applied hyperinflationary accounting, as specified in IAS 29, for
amounts reported by Vodafone Turkey for the period commencing 1
April 2022. See note 1 of the unaudited condensed consolidated
financial statements for further information. Our guidance as
presented above excludes any impact from this change in
accounting.
-- Our guidance assumes no material change to the structure of the Group.
1. Adjusted EBITDAaL and Adjusted free cash flow are non-GAAP
measures. See page 41 for more information.
2. Adjusted free cash flow is Free cash flow before licences and
spectrum, restructuring costs arising from discrete restructuring
plans, integration capital additions and working capital related
items, M&A, and Vantage Towers growth capital expenditure.
Growth capital expenditure is total capital expenditure excluding
maintenance-type expenditure.
Financial performance Resilient performance in Europe &
Africa
-- Group revenue increased by 2.0% to EUR22.9 billion, driven by
service revenue growth and higher equipment sales
-- Group service revenue trend impacted by decline in Germany,
Italy and Spain, offset by acceleration in the UK and continued
good growth in Other Europe and Africa
-- Service revenue growth in Turkey increased to 39.9%* (Q1:
35.8%*, Q2: 43.9%*), driven by higher inflation. Group service
revenue growth excluding Turkey was 1.5%*
-- Adjusted EBITDAaL declined by 2.6%* driven by a material
prior year legal settlement, and commercial underperformance in
Germany
Group financial performance
H1 FY23
(1) H1 FY22 Reported
EURm EURm change %
========================================= ======= ======= ========
Revenue 22,930 22,489 2.0
- Service revenue 19,207 19,010 1.0
- Other revenue 3,723 3,479
Adjusted EBITDAaL (2,3) 7,244 7,565 (4.2)
Restructuring costs (142) (172)
Interest on lease liabilities(4) 204 199
Loss on disposal of property, plant and
equipment and intangible assets (11) (26)
Depreciation and amortisation of owned
assets (4,807) (4,949)
Share of results of equity accounted
associates and joint ventures 343 111
Other income/(expense) 104 (108)
----------------------------------------- ------- ------- --------
Operating profit 2,935 2,620 12.0
Investment income 211 129
Financing costs (1,418) (1,473)
----------------------------------------- ------- ------- --------
Profit before taxation 1,728 1,276
Income tax (expense)/credit (485) 1
----------------------------------------- ------- ------- --------
Profit for the financial period 1,243 1,277
Attributable to:
- Owners of the parent 986 996
- Non-controlled interests 257 281
----------------------------------------- ------- ------- --------
Profit for the financial period 1,243 1,277
Basic earnings per share 3.52c 3.40c
Adjusted basic earnings per share(2) 6.02c 4.90c
========================================= ======= ======= ========
Further information is available in a spreadsheet at
https://investors.vodafone.com/reports-information/results-reports-presentations
Notes:
1. The H1 FY23 results reflect average foreign exchange rates of
EUR1:GBP0.85, EUR1:INR 81.27, EUR1:ZAR 16.88, EUR1:TRY 17.43 and
EUR1:EGP 19.51.
2. Adjusted EBITDAaL and Adjusted basic earnings per share are
non-GAAP measures. See page 41 for more information.
3. Includes depreciation on leased assets of EUR2,046 million (H1 FY22: EUR2,003 million).
4. Reversal of interest on lease liabilities included within
Adjusted EBITDAaL under the Group's definition of that metric, for
re-presentation in financing costs.
Geographic performance summary
Other Other Vantage Common Elimi-
Germany Italy UK Spain Europe Vodacom Markets Towers Functions nations Group
H1 FY23 EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
================ ======= ===== ===== ===== ====== ======= ======= ======= ============ ======= ======
Total revenue 6,592 2,377 3,392 1,965 2,894 3,202 1,953 657 696 (798) 22,930
Service revenue 5,730 2,125 2,712 1,782 2,552 2,472 1,721 - 268 (155) 19,207
Adjusted
EBITDAaL(1) 2,677 759 685 445 843 1,084 671 330 (250) - 7,244
Adjusted
EBITDAaL margin
(%)(1) 40.6% 31.9% 20.2% 22.6% 29.1% 33.9% 34.4% 50.2% 31.6%
================ ======= ===== ===== ===== ====== ======= ======= ======= ============ ======= ======
Downloadable performance information is available at:
https://investors.vodafone.com/reports-information/results-reports-presentations
FY22 FY23
------------------------------------------------------------- ------------------------
Organic service revenue
growth % *(1) Q1 Q2 H1 Q3 Q4 H2 Total Q1 Q2 H1
========================= ===== ============ ====== ======= ======= ======= ===== ===== ======= ========
Germany 1.4 1.0 1.2 1.1 0.8 1.0 1.1 (0.5) (1.1) (0.8)
Italy (3.6) (1.4) (2.5) (1.3) (0.8) (1.0) (1.8) (2.3) (3.4) (2.8)
UK 2.5 0.6 1.2 0.9 2.0 1.4 1.3 6.5 6.9 6.7
Spain 0.8 (1.9) (0.6) (1.6) (5.1) (3.4) (2.0) (3.0) (6.0) (4.5)
Other Europe 4.2 2.4 3.3 2.9 2.7 2.8 3.0 2.5 2.9 2.7
Vodacom 7.9 3.1 5.4 4.4 3.1 3.7 4.6 2.9 4.8 3.9
Other Markets 18.4 19.7 19.1 19.8 19.8 19.8 19.4 24.7 26.7 25.7
Vantage Towers - - - - - - - - - -
Group 3.3 2.4 2.8 2.7 2.0 2.3 2.6 2.5 2.5 2.5
========================= ===== ============ ====== ======= ======= ======= ===== ===== ======= ========
Note:
1. Organic service revenue growth, Group Adjusted EBITDAaL and
Group Adjusted EBITDAaL margin are non-GAAP measures. See page 41
for more information.
Germany 30% of Group service
revenue
H1 FY23 H1 FY22 Reported Organic
EURm EURm change % change %*
============================== ======= ======= ======== =========
Total revenue 6,592 6,447 2.2
- Service revenue 5,730 5,777 (0.8) (0.8)
- Other revenue 862 670
Adjusted EBITDAaL 2,677 2,892 (7.4) (7.4)
Adjusted EBITDAaL margin 40.6% 44.9%
============================== ======= ======= ======== =========
Total revenue increased by 2.2% to EUR 6.6 billion, driven by
equipment sales.
On an organic basis, service revenue declined by 0.8%* (Q1:
-0.5%*, Q2: -1.1%*), primarily reflecting broadband losses since H2
FY22, related to the implementation of new sector legislation.
Fixed service revenue declined by 1.6%* (Q1: -1.6%*, Q2:
-1.7%*), driven by the lower broadband customer base, as a result
of specific operational challenges related to the implementation of
policies to comply with the new Telecommunications Act, which came
into effect in December 2021. Our cable broadband customer base
declined by 45,000 and we lost 38,000 DSL broadband customers
during H1. Following improvements to both our IT systems and
customer journeys, and the gradual unwind of churn related to the
Telecommunications Act, the scale of customer losses continued to
slow during Q2. In October, we announced an enhanced product
portfolio, with customers now benefiting from up to five times
higher upload speeds, flat rate phone calls, and no upfront
connection fees, in return for a higher monthly fee. Gigabit speeds
are available to 24 million households across our network.
Our TV customer base declined by 165,000 and our converged
customer base decreased by 67,000 to 2.3 million Consumer converged
accounts. These declines reflected the challenges related to
compliance with the new sector legislation and fewer cross-selling
opportunities.
Mobile service revenue increased by 0.2%* (Q1: 0.8%*, Q2:
-0.4%*). Growth in the Business segment and an increase in roaming
and visitor revenue was partly offset by lower MVNO revenues and a
lower ARPU, reflecting mobile termination rate cuts and a change in
the sales channel mix towards indirect and service providers.
Towards the end of Q2 we reduced mobile promotions, supporting
inflow ARPU. We added 71,000 contract customers during the period,
and in Q2 our commercial momentum improved, supported by customer
growth in Business and Consumer. We added a further 4.6 million IoT
connections, driven by continued strong demand from the automotive
sector.
Adjusted EBITDAaL declined by 7.4%*, r eflecting the decline in
service revenue, one-off settlements in the prior year period, and
higher customer acquisition costs. The Adjusted EBITDAaL margin was
4.3* percentage points lower year-on-year at 40.6% .
We achieved our EUR425 million cost and capital expenditure
synergy target for the integration of the Unitymedia assets
acquisition in FY22, over two years ahead of plan.
On 17 October 2022, we announced we are creating a joint venture
with Altice to deploy fibre-to-the-home ('FTTH') to up to 7 million
homes over a six-year period. This partnership with Altice is
complementary to our upgrade plans for our existing hybrid fibre
cable network, which include bringing fibre closer to all connected
homes through 'node splitting', DOCSIS 3.1 'high split', and next
generation technology advances, such as DOCSIS 4.0, which provide a
path to 10Gbps speeds across our hybrid fibre cable network over
time. The transaction is subject to customary conditions, including
regulatory approval and is expected to close in the first half of
2023.
Italy 11% of Group service
revenue
H1 FY23 H1 FY22 Reported Organic
EURm EURm change % change %*
============================ ======= ======= ======== =========
Total revenue 2,377 2,507 (5.2)
- Service revenue 2,125 2,187 (2.8) (2.8)
- Other revenue 252 320
Adjusted EBITDAaL 759 917 (17.2) (17.3)
Adjusted EBITDAaL margin 31.9% 36.6%
============================ ======= ======= ======== =========
Total revenue declined 5.2% to EUR 2.4 billion due to lower
service revenue and equipment sales.
Service revenue declined by 2.8%* (Q1: -2.3%*, Q2: -3.4%*), as a
result of continued price pressure in the mobile value segment .
The slowdown in quarterly trends was due to the migration of
PostePay MVNO customers onto our network in the prior year, partly
offset by good Business demand.
Mobile service revenue declined by 5.2%* (Q1: -4.7%*, Q2:
-5.6%*) as a result of promotional intensity in the mobile value
segment and a lower active prepaid customer base. The
quarter-on-quarter slowdown was due to the migration of PostePay
MVNO customers onto our network in the prior year, partly offset by
improving ARPU following our targeted pricing actions. Our second
brand 'ho.' continued to grow and now has 2.9 million
customers.
Fixed service revenue increased by 3.4%* (Q1: 4.2%*, Q2: 2.6%*),
supported by good Business demand for digital services. We added
23,000 fixed-wireless access customers in the period, which are
included in our mobile customer base. Our Consumer converged
customer base now stands at 1.3 million, an increase of 31,000
during the period, and 55% of our broadband customers are
converged.
Our next generation network ('NGN') broadband services are now
available to 25.9 million households, including 9.3 million through
our own network and our partnership with Open Fiber. In October, we
launched 5G fixed-wireless services and cover around 2 million
households, which will increase to over 3 million by the end of the
financial year. This complements our 4G fixed-wireless access
products, which covers over 2 million additional households.
Adjusted EBITDAaL declined by 17.3%* including a 10.7 percentage
point decline relating to a EUR105 million legal settlement
received in the prior year period. Excluding the impact of the
prior year legal settlement, Adjusted EBITDAaL declined as a result
of lower mobile service revenue, partly offset by continued cost
reductions. The Adjusted EBITDAaL margin was 4.7* percentage points
lower year-on-year at 31.9%.
UK 14% of Group service revenue
H1 FY23 H1 FY22 Reported Organic
EURm EURm change % change %*
================================= ======= ======= ======== =========
Total revenue 3,392 3,161 7.3
- Service revenue 2,712 2,521 7.6 6.7
- Other revenue 680 640
Adjusted EBITDAaL 685 638 7.4 6.6
Adjusted EBITDAaL margin 20.2% 20.2%
================================= ======= ======= ======== =========
Total revenue increased by 7.3% to EUR 3.4 billion driven by
service revenue growth and an appreciation of the pound sterling
against the euro.
On an organic basis, service revenue increased by 6.7%* (Q1:
6.5%*, Q2: 6.9%*). A strong Consumer performance was supported by
customer base growth and contractual annual price increases, as
well as higher MVNO, roaming and visitor revenue. The improvement
in quarterly trends was supported by the return to growth of our
Business segment, partly offset by lower wholesale revenue.
Mobile service revenue grew by 10.5%* (Q1: 10.3%*, Q2: 10.8%*),
d riven by strong commercial momentum and annual price increases in
Consumer, as well as higher roaming and visitor revenue. We
continued to grow our customer base, supported by our flexible
proposition Vodafone 'Evo' and despite implementing price actions,
adding 76,000 contract customers during the period. Contract churn
remained broadly stable year-on-year at 12.7%. Our digital prepaid
sub-brand 'VOXI' continued to grow, and had its best ever sales
month in September following a successful seasonal campaign, adding
72,000 new customers during H1. Our digital sales mix improved by 4
percentage points year-on-year to 37% of total sales in the
period.
Fixed service revenue declined by 2.8%* (Q1: -2.7%*, Q2: -2.9%*)
as strong growth in our Consumer segment was offset by a decline in
Business service revenue due to lower project activity. Consumer
growth was supported by price actions, good demand for our Vodafone
'Pro Broadband' product and continued penetration of our
fibre-to-the-premises product. Our broadband customer base
increased by 61,000 during the period and we now have over 1.1
million broadband customers, of which 54% are converged. Through
our partnerships with CityFibre and Openreach we are able to reach
over 9 million households with full fibre broadband, more than any
other provider in the UK.
Adjusted EBITDAaL grew by 6.6%*, reflecting growth in service
revenue, slightly offset by an increase in our operating expenses
due to inflationary pressures, including energy. Our Adjusted
EBITDAaL margin was stable year-on-year at 20.2% .
On 3 October 2022, we confirmed that we are in discussions with
CK Hutchison Holdings Limited ('CK Hutchison') in relation to a
possible combination of Vodafone UK and Three UK. The envisaged
transaction would entail us combining our UK business with Three
UK, with Vodafone owning 51% and CK Hutchison owning 49% of the
combined business. There can be no certainty that any transaction
will ultimately be agreed.
Spain 9% of Group service revenue
H1 FY23 H1 FY22 Reported Organic
EURm EURm change % change %*
=================================== ======= ======= ======== =========
Total revenue 1,965 2,090 (6.0)
- Service revenue 1,782 1,866 (4.5) (4.5)
- Other revenue 183 224
Adjusted EBITDAaL 445 445 - 0.2
Adjusted EBITDAaL margin 22.6% 21.3%
=================================== ======= ======= ======== =========
Total revenue declined by 6.0% to EUR 2.0 billion due to lower
service revenue and equipment sales.
On an organic basis, service revenue declined by 4.5%* (Q1:
-3.0%*, Q2: -6.0%*) driven by continued growth in the value
segment, a lower customer base, and a reduction in mobile
termination rates, partly offset by higher visitor revenue. The
slowdown in quarterly service revenue trends was largely due to
price increases implemented in Q2 last year, as well as the phasing
of Business revenue and lower wholesale revenue.
The market remained highly competitive in the value segment. In
mobile, our contract customer base was impacted by one-off
disconnections of 123,000 relating to temporary business SIMs
provided to schools and higher education providers during the
pandemic. Excluding these, our mobile contract customer base would
have grown by 97,000 in H1.
In June 2022, we launched a new product portfolio, focusing on
simplified and more transparent tariff plans to further improve
customer loyalty. This has had a positive impact on both our
commercial momentum and ARPU. Mobile contract churn in our Consumer
segment has also improved by 3.6 percentage points year-on-year. In
September 2022, we announced that tariffs will be increased in line
with inflation for Consumer, SME and SOHO customers on the main
Vodafone brand in Q4 and on an annual basis thereafter.
Our broadband customer base declined by 40,000 and our TV
customer base decreased by 10,000 as a result of continued
competitive intensity in the low value segment. However, our
converged customer base increased by 7,000 to over 2.2 million.
We continue to see good demand for our Business products,
including a significant number of registration requests to the
digital toolkit platform launched by the Spanish government in
March 2022 as part of the EU recovery and resilience funding
initiatives. This scheme enables businesses to access fully
subsidised digital services on a single platform , with Vodafone
being the orchestrator of their access to these digital services.
Due to delays with the approval process, the first phase of the
digital toolkit has been extended. The second and third phases,
aimed at smaller businesses, were subsequently launched in
September and October 2022.
Adjusted EBITDAaL grew by 0.2%*, as tax benefits (including
refunds) and ongoing cost efficiencies offset lower service
revenue. The Adjusted EBITDAaL margin was 1.4* percentage points
higher year-on-year at 22.6% .
Other Europe 13% of Group service revenue
H1 FY23 H1 FY22 Reported Organic
EURm EURm change % change %*
================================== ========= ======= ======== =========
Total revenue 2,894 2,810 3.0
- Service revenue 2,552 2,502 2.0 2.7
- Other revenue 342 308
Adjusted EBITDAaL 843 836 0.8 1.5
Adjusted EBITDAaL margin 29.1% 29.8%
================================== ========= ======= ======== =========
Total revenue increased by 3.0% to EUR2.9 billion largely driven
by service revenue growth.
On an organic basis, service revenue increased by 2.7%* (Q1:
2.5%*, Q2: 2.9%*), with good growth in all markets other than
Romania, which was impacted by a mobile termination rate
reduction.
In Portugal, service revenue grew due to strong commercial
momentum and we added 97,000 mobile contract customers and 27,000
fixed broadband customers during the period. On 30 September 2022,
we announced that we had entered into an agreement to buy
Portugal's fourth largest converged operator, Nowo Communications,
from Llorca JVCO Limited, the owner of Masmovil Ibercom S.A.. The
transaction is conditional on regulatory approval, with completion
expected in the first half of the 2023 calendar year.
In Ireland, service revenue increased due to customer base
growth, higher roaming and visitor revenue, and contractual price
increases. During the period, our mobile contract customer base
increased by 28,000 and mobile contract loyalty remained strong,
with churn at 9.6%. Our broadband customer base grew by 10,000 and
broadband churn decreased by 2.0 percentage points year-on-year to
16.0%. In October 2022, we announced that we had agreed a wholesale
network access agreement with Virgin Media Ireland. Vodafone is
already the largest fibre-to-the-home provider in Ireland, covering
over 1 million households, and this agreement will further extend
our footprint and provide customers with even more choice.
Service revenue in Greece increased, reflecting higher roaming
and visitor revenue and good growth in Business fixed. During the
period, we added 49,000 mobile contract customers and broadband
customer loyalty improved, with churn decreasing by 0.7 percentage
points year-on-year to 11.2%.
Adjusted EBITDAaL increased by 1.5%* as revenue growth was
partially offset by higher taxes in Hungary, and higher customer
acquisition and energy costs. The Adjusted EBITDAaL margin
decreased by 0.7* percentage points year-on-year at 29.1%.
On 22 August 2022, we announced that we had entered into heads
of terms with 4iG Public Limited Company and Corvinus Zrt in
relation to the potential sale of 100% of Vodafone Hungary for a
total cash consideration equivalent to an enterprise value of
EUR1.8 billion. The transaction is subject to completion of
confirmatory due diligence, the agreement of binding transaction
documentation and regulatory approval.
Vodacom 13% of Group service
revenue
H1 FY23 H1 FY22 Reported Organic
EURm EURm change % change %*
============================== ======= ======= ======== =========
Total revenue 3,202 2,928 9.4
- Service revenue 2,472 2,271 8.9 3.9
- Other revenue 730 657
Adjusted EBITDAaL 1,084 1,062 2.1 (1.6)
Adjusted EBITDAaL margin 33.9% 36.3%
============================== ======= ======= ======== =========
Total revenue increased by 9.4% to EUR3.2 billion and Adjusted
EBITDAaL increased by 2.1%, primarily due to the strengthening of
the local currencies versus the euro.
On an organic basis, Vodacom's service revenue grew by 3.9%*
(Q1: 2.9%*, Q2: 4.8%*) with growth in both South Africa and
Vodacom's international markets. Growth accelerated in Q2 due to a
strong performance in Vodacom's international markets.
In South Africa, service revenue growth was supported by
contract price increases, partially offset by lower wholesale
revenue and disruptions to the payment of social grants which
impacted consumer discretionary spending. We added 113,000 mobile
contract customers during the period, supported by consistent
growth in both the Consumer and Business segments. Across the
overall active customer base, 72% of our mobile customers now use
data services. Financial Services revenue in South Africa grew by
8.1%* to EUR82 million, supported by good demand for our insurance
services. Our VodaPay 'super-app' has now reached 2.2 million
registered users one year after its launch.
In Vodacom's international markets, service revenue growth was
supported by higher M-Pesa transaction volumes, notably in Tanzania
in Q2, following reductions in levies on mobile money transactions
introduced in the prior year. Growth was also supported by a higher
customer base and continued growth in data revenue. M-Pesa revenue
as a share of service revenue is now at 24.1% , which is 1.3
percentage points higher compared to the prior year. M-Pesa
transaction volume increased by 28.5% over the same period. Our
mobile customer base now stands at 43.9 million with 60.9 % of our
active customer base using data services.
Vodacom's Adjusted EBITDAaL declined by 1.6%* as service revenue
growth was offset by an increase in technology operating expenses
as we continued to improve the resilience of our network, higher
investment in customer growth, and inflationary cost increases. The
Adjusted EBITDAaL margin decreased by 2.2* percentage points to
33.9%.
In November 2021, Vodacom Group announced it had entered into an
agreement to acquire Vodafone's 55.0% shareholding in Vodafone
Egypt for a total consideration of EUR2.4 billion. Following the
transaction, Vodafone Group's ownership in Vodacom Group will
increase from 60.5% to 65.1%. The transaction has received
regulatory approval from the National Telecom Regulatory Authority
of Egypt, and the required exemptions from Egypt's Financial
Regulatory Authority. It is anticipated that the remaining
conditions will be fulfilled soon, following which the transaction
can complete.
Last year, Vodacom announced that it had agreed to acquire a
co-controlling 30% interest in the fibre assets currently owned by
Community Investment Ventures Holdings (Pty) Limited ('CIVH'). CIVH
owns Vumatel and Dark Fibre Africa, which are South Africa's
largest open access fibre operators. Vodacom's investment and
strategic support will further accelerate the growth trajectory of
fibre roll-out in South Africa helping close the digital divide.
The transaction recently received approval to proceed from South
Africa's Independent Communications Authority and remains subject
to regulatory approval from the country's Competition
Commission.
Further information on our operations in Africa can be accessed
here: vodacom.com .
Other Markets 9% of Group service revenue
H1 FY23 H1 FY22 Reported Organic
EURm EURm change % change %*
================================== ========= ======= ======== =========
Total revenue 1,953 1,958 (0.3)
- Service revenue 1,721 1,752 (1.8) 25.7
- Other revenue 232 206
Adjusted EBITDAaL 671 683 (1.8) 28.2
Adjusted EBITDAaL margin 34.4% 34.9%
================================== ========= ======= ======== =========
Total revenue decreased by 0.3% to EUR2.0 billion due to the
depreciation of local currencies versus the euro, notably with
respect to the Turkish lira.
On an organic basis, service revenue continued to grow at 25.7%*
(Q1: 24.7%*, Q2: 26.7%) reflecting a higher contribution from
Turkey, impacted by accelerating inflation, as well as strong
customer base and ARPU growth.
Service revenue growth in Turkey was driven by continued
customer base growth, higher visitor revenue, and ongoing repricing
actions to reflect increasing inflation in a challenging
macroeconomic environment. We maintained our commercial momentum,
with 768,000 mobile contract net additions in the period, including
migrations from prepaid customers. Customer loyalty rates continued
to improve, with mobile contract churn down by 3.3 percentage
points year-on-year to 12.4% .
Service revenue in Egypt continued to grow strongly, reflecting
strong customer base growth and increased data usage . During the
period, we added 1.8 million prepaid mo bile customers.
Adjusted EBITDAaL increased by 28.2%* despite the inflationary
pressure on our cost base due to worsening macroeconomic
conditions. The Adjusted EBITDAaL margin decreased by 0.6*
percentage points year-on-year to 34.4%.
Hyperinflationary accounting in Turkey
Turkey now meets the requirements to be designated as a
hyperinflationary economy under IAS 29 'Financial Reporting in
Hyperinflationary Economies'. The Group has therefore applied
hyperinflationary accounting, as specified in IAS 29, for the
period commencing 1 April 2022. See note 1 'Basis of preparation'
in the unaudited condensed consolidated financial statements for
more information.
During the period, service revenue in Turkey increased by 39.9%*
and Adjusted EBITDAaL grew by 47.7%* due to ongoing repricing
actions to reflect increasing inflation. Organic growth metrics
exclude the impact of the hyperinflation adjustment in the period
in Turkey. Group service revenue growth excluding Turkey was 1.5%*
(Q1: 1.6%*, Q2: 1.4%*) and Adjusted EBITDAaL excluding Turkey
declined 3.8%*.
Vantage Towers
H1 FY23 H1 FY22 Reported Organic
EURm EURm change % change %*
========================== ======= ======= ======== =========
Total revenue 657 611 7.5
- Service revenue - - - -
- Other revenue 657 611
Adjusted EBITDAaL 330 305 8.2 8.6
Adjusted EBITDAaL margin 50.2% 49.9%
========================== ======= ======= ======== =========
Total revenue increased to EUR657 million, with 710 new
tenancies added during the period, bringing the tenancy ratio to
1.45 x . Vantage Towers reached a number of new partnership
agreements with customers during the first half of FY23. Vantage
Towers reported its results on 14 November 2022. Further
information on Vantage Towers can be accessed at: vantagetowers.com
.
On 9 November 2022, we announced that we had entered into a
strategic co-control partnership with GIP and KKR for Vantage
Towers. A new JV will hold our 81.7% stake in Vantage Towers and
will make a voluntary takeover offer for the outstanding Vantage
Towers shares held by minority shareholders. Further detail on the
transaction is available here:
investors.vodafone.com/reports-information/results-reports-presentations
.
Associates and joint ventures
H1 FY23 H1 FY22
EURm EURm
================================================= ======= =======
VodafoneZiggo Group Holding B.V. 162 (14)
Safaricom Limited 110 115
Indus Towers Limited - -
Other 71 10
------------------------------------------------ ------- -------
Share of results of equity accounted associates
and joint ventures 343 111
================================================= ======= =======
VodafoneZiggo Joint Venture (Netherlands)
The results of VodafoneZiggo, in which Vodafone owns a 50%
stake, are reported here under US GAAP, which is broadly consistent
with Vodafone's IFRS basis of reporting.
Total revenue remained stable at EUR2.0 billion, as mobile
contract customer base growth, higher roaming revenue and
contractual price increases were offset by a decline in the fixed
Consumer customer base.
During the period, VodafoneZiggo added 117,000 mobile contract
customers, supported by our best-in-class net promoter score and
higher Consumer demand. VodafoneZiggo's broadband customer base
declined by 12,000 customers to 3.3 million due to increased price
competition. The number of converged households increased by
11,000, with 38% of broadband customers now converged, delivering
significant NPS and customer loyalty benefits. VodafoneZiggo now
offers 1 gigabit speeds to 6.8 million homes and is on track to
provide nationwide coverage by the end of 2022.
During the period, Vodafone received EUR90 million in dividends
from the joint venture, as well as EUR26 million in interest
payments.
Safaricom Associate (Kenya)
Safaricom service revenue grew to EUR1.2 billion due to a higher
customer base and continued growth in M-Pesa revenue. During H1,
Vodafone received EUR183 million in dividends from Safaricom.
Indus Towers Limited Associate (India)
Following the sale of shares in Indus Towers Limited ('Indus
Towers') in February and March 2022, the Group holds 567.2 million
shares in, equivalent to a 21.0% shareholding.
The Group's interest in Indus Towers has been provided as
security against certain bank borrowings secured against Indian
assets and ranking behind this security, as a pledge provided to
Indus Towers under the terms of the merger between Indus Towers and
Bharti Infratel. Indus Towers has been classified as held for sale
in the condensed consolidated statement of financial position since
31 March 2021 and the Group's share of Indus Towers' results is not
reflected in the Group's condensed consolidated income statement
for H1 2023.
Vodafone Idea Limited Joint Venture (India)
On 31 March 2022, Vodafone Idea completed an equity capital
raise, with the Group contributing INR33.75 billion using the
proceeds realised from the sale of shares in Indus in February and
March 2022. Following the capital raise, the Group's holding in
Vodafone Idea is equivalent to a 47.6% shareholding. On 25 July
2022, the residual proceeds from the sale of such shares in Indus
of INR4.36 billion were contributed to Vodafone Idea in exchange
for warrants convertible to equity within 18 months.
See Note 12 'Contingent liabilities and legal proceedings' in
the unaudited condensed consolidated financial statements for more
information'
TPG Telecom Limited Joint Venture (Australia)
Vodafone Group owns an economic interest of 25.05% in TPG
Telecom Limited, a fully integrated telecommunications operator in
Australia. Hutchison Telecommunications (Australia) Limited owns an
equivalent economic interest of 25.05%, with the remaining 49.9%
listed as free float on the Australian stock exchange. The Vodafone
Group also holds a 50% share of a US$ 3.5 billion loan facility
held within the structure that holds the Group's equity stake in
TPG Telecom.
Net financing costs
H1 FY23 H1 FY22 Reported
EURm EURm change %
================================= ======= ======= ========
Investment income 211 129
Financing costs (1,418) (1,473)
---------------------------------- ------- ------- --------
Net financing costs (1,207) (1,344) 10.2
Adjustments for:
Mark-to-market losses 41 397
Foreign exchange losses 299 56
--------------------------------- ------- ------- --------
Adjusted net financing costs (1) (867) (891) 2.7
================================== ======= ======= ========
Note:
1. Adjusted net financing costs is a non-GAAP measure. See page
41 for more information.
Net financing costs decreased by EUR137 million, primarily due
to lower mark-to-market losses on options held relating to the
Group's mandatory convertible bonds partially offset by increased
foreign exchange losses. Adjusted net financing costs remained
broadly stable year-on-year, reflecting consistent average net debt
balances and weighted average borrowing costs for both periods.
Taxation
H1 FY23 H1 FY22 Change
% % pps
================================= ======= ======= ======
Effective tax rate 28.1% (0.1)% 28.2
Adjusted effective tax rate (1) 26.2% 31.5% (5.3)
================================= ======= ======= ======
Note:
1. Adjusted effective tax rate is a non-GAAP measure. See page
41 for more information.
The Group's effective tax rate for H1 FY23 was 28.1%.
The Group's adjusted effective tax rate for H1 FY23 was 26.2%
(H1 FY22: 31.5%). This is in line with our expectations for the
full year tax rate for which we continue to expect a high 20%'s tax
rate. The adjusted effective tax rate is lower than the prior year
primarily due to changes in the mix of the Group's profits.
The effective tax rate for H1 FY22 included an increase in our
deferred tax assets in the UK of EUR498 million following the
increase in the corporate tax rate to 25% and EUR274 million
following the revaluation of assets for tax purposes in Italy. It
also included EUR155 million relating to the use of losses in
Luxembourg. The adjusted effective tax rate for H1 FY22 excluded
these amounts.
Earnings per share
Reported
H1 FY23 H1 FY22 change
eurocents eurocents eurocents
====================================== ========= ========= =========
Basic earnings per share 3.52c 3.40c 0.12c
Adjusted basic earnings per share (1) 6.02c 4.90c 1.12c
======================================= ========= ========= =========
Note:
1. Adjusted basic earnings per share is a non-GAAP measure. See
page 41 for more information.
Basic earnings per share was 3.52 eurocents, compared to 3.40
eurocents for H1 FY22.
Adjusted basic earnings per share was 6.02 eurocents, compared
to 4.90 eurocents for H1 FY22.
Cash flow, capital allocation and funding
Analysis of cash flow
H1 FY23 H1 FY22 Reported
EURm EURm change %
=========================================== ======= ======= ========
Inflow from operating activities 6,280 6,455 (2.7)
Outflow from investing activities (4,089) (2,811) (45.5)
Outflow from financing activities (2,993) (3,795) 21.1
------------------------------------------- ------- ------- --------
Net cash outflow (802) (151) (431.1)
Cash and cash equivalents at beginning
of the financial period 7,371 5,790
Exchange gain on cash and cash equivalents 282 11
------------------------------------------- ------- ------- --------
Cash and cash equivalents at end of
the financial period 6,851 5,650
=========================================== ======= ======= ========
Cash inflow from operating activities decreased to EUR6,280
million which reflects higher operating profit, more than offset by
working capital movements and higher taxation payments.
Outflow from investing activities increased by 45.5% to EUR4,089
million, primarily in relation to a lower net inflow in respect of
short-term investments, which outweighed higher spend on property,
plant and equipment. Short-term investments include highly liquid
government and government-backed securities and managed investment
funds that are in highly rated and liquid money market investments
with liquidity of up to 90 days.
Outflows from financing activities decreased by 21.1% to
EUR2,993 million. Higher inflows from the net movement in short
term borrowings arising from collateral receipts outweighed lower
proceeds from the issue of long-term borrowings and higher
repayment of borrowings, the latter largely resulting from the
repayment of debt in relation to licenses and spectrum, notably in
Italy.
Analysis of cash flow (continued)
H1 FY23 H1 FY22 Reported
EURm EURm change %
=============================================== ======== ======== ========
Adjusted EBITDAaL (1) 7,244 7,565 (4.2)
Capital additions(2) (3,541) (3,365)
Working capital (3,405) (3,296)
Disposal of property, plant and equipment
and intangible assets - 8
Restructuring costs (142) (149)
Integration capital additions(3) (101) (110)
Restructuring and integration working
capital (72) (141)
Licences and spectrum (2,181) (482)
Interest received and paid(4) (688) (593)
Taxation (672) (577)
Dividends received from associates and
joint ventures 463 469
Dividends paid to non-controlling shareholders
in subsidiaries (290) (399)
Other 140 87
----------------------------------------------- -------- -------- --------
Free cash flow (1) (3,245) (983) (230.1)
Acquisitions and disposals (98) 111
Equity dividends paid (1,263) (1,259)
Share buybacks(4) (1,004) (1,062)
Foreign exchange loss (65) (119)
Other movements in net debt(5) 1,730 (443)
----------------------------------------------- -------- -------- --------
Net debt increase (1) (3,945) (3,755)
Opening net debt(1) (41,578) (40,543)
----------------------------------------------- -------- -------- --------
Closing net debt (1) (45,523) (44,298) (2.8)
=============================================== ======== ======== ========
Free cash flow (1) (3,245) (983)
Adjustments:
- Licences and spectrum 2,181 482
- Restructuring costs 142 149
- Integration capital additions(3) 101 110
- Restructuring and integration working
capital 72 141
- Vantage Towers growth capital expenditure 236 124
Adjusted free cash flow (1) (513) 23
=============================================== ======== ======== ========
Notes:
1. Adjusted EBITDAaL, Free cash flow, Adjusted free cash flow
and Net debt are non-GAAP measures. See page 41 for more
information.
2. See page 51 for an analysis of tangible and intangible
additions in the year.
3. Integration capital additions comprises amounts for the
integration of acquired Liberty Global assets and network
integration.
4. Interest received and paid excludes interest on lease
liabilities of EUR153 million outflow (H1 FY22: EUR134 million)
included within Adjusted EBITDAaL, EUR58m of cash outflow (H1 FY22:
EURnil) of interest arising from the repayment of debt in respect
of licenses and spectrum and EUR86 million of cash inflow (H1 FY22:
EUR39 million) from the option structures relating to the issue of
the mandatory convertible bonds which is included within Share
buybacks. The option structures were intended to ensure that the
total cash outflow to execute the programme were broadly equivalent
to the amounts raised on issuing each tranche.
5. 'Other movements on net debt' for H1 FY23 includes
mark-to-market losses recognised in the income statement of EUR127
million (H1 FY22: EUR397 million loss), together with EUR1,739
million (H1 FY22: EUR55 million) in relation to the repayment of
debt in relation to licenses and spectrum in Italy.
Adjusted free cash flow decreased by EUR536 million to an
outflow of EUR513 million in the period. This reflects a decrease
in Adjusted EBITDAaL in the period, coupled with higher capital
additions, an adverse working capital movement, higher interest
payments and higher taxation as the timing of Germany's taxation
payments normalises.
Borrowings and cash position
Period-end Year-end
FY23 FY22 Reported
EURm EURm change %
========================================== ========== ======== ========
Non-current borrowings (59,907) (58,131)
Current borrowings (15,675) (11,961)
------------------------------------------- ---------- -------- --------
Borrowings (75,582) (70,092)
Cash and cash equivalents 7,072 7,496
------------------------------------------- ---------- -------- --------
Borrowings less cash and cash equivalents (68,510) (62,596) (9.4)
=========================================== ========== ======== ========
Borrowings principally includes bonds of EUR50,256 million
(EUR48,031 million as at 31 March 2022), lease liabilities of
EUR12,022 million (EUR12,539 million as at 31 March 2022) and cash
collateral liabilities EUR8,395 million (EUR2,914 million as at 31
March 2022).
The increase in borrowings of EUR5,490 million was principally
driven by an increase in collateral liabilities of EUR5,481 million
and adverse foreign exchange movements on bonds of EUR3,109
million, which were partially offset by a decrease in spectrum
liabilities of EUR1,899 million.
Funding position
Period-end Year-end
FY23 FY22 Reported
EURm EURm change %
==================================== ========== ======== ========
Bonds (50,256) (48,031)
Bank loans (1,582) (1,317)
Other borrowings including spectrum (1,942) (3,909)
------------------------------------- ---------- -------- --------
Gross debt (1) (53,780) (53,257) (1.0)
Cash and cash equivalents 7,072 7,496
Short-term investments(2) 4,402 4,795
Derivative financial instruments(3) 4,424 1,604
Net collateral liabilities(4) (7,641) (2,216)
------------------------------------- ---------- -------- --------
Net debt (1) (45,523) (41,578) (9.5)
===================================== ========== ======== ========
Notes:
1. Gross debt and Net debt are non-GAAP measures. See page 41
for more information.
2. Short-term investments includes EUR998 million (EUR1,446
million as at 31 March 2022) of highly liquid government and
government-backed securities and managed investment funds of
EUR3,404 million (EUR3,349 million as at 31 March 2022) that are in
highly rated and liquid money market investments with liquidity of
up to 90 days.
3. Derivative financial instruments excludes derivative
movements in cash flow hedging reserves of EUR2,559 million gain
(EUR1,350 million gain as at 31 March 2022).
4. Collateral arrangements on derivative financial instruments
result in cash being held as security. This is repayable when
derivatives are settled and is therefore deducted from
liquidity.
Net debt increased by EUR3,945 million to EUR45,523 million.
This was driven by the free cash outflow of EUR3,245 million,
equity dividends of EUR1,263 million and share buybacks of EUR1,004
million (used to offset dilution linked to the conversion of
certain mandatory convertible bonds), partially offset by other
movements in net debt of EUR1,730 million relating to the
settlement of 5G spectrum in Italy previously included in net debt.
Settlement of the liability during the period had no impact on net
debt, with the resulting cash payment included in free cash
flow.
Other funding obligations to be considered alongside net debt
include:
- Lease liabilities of EUR12,022 million (EUR12,539 million as at 31 March 2022)
- KDG put option liabilities of EUR486 million (EUR494 million as at 31 March 2022)
- Guarantee over Australia joint venture loan of EUR1,786
million (EUR1,573 million as at 31 March 2022)
- Pension liabilities of EUR281 million (EUR281 million as at 31 March 2022)
The Group's gross and net debt includes EUR9,942 million
(EUR9,942 million as at 31 March 2022) of long-term borrowings
('Hybrid bonds') for which a 50% equity characteristic of EUR4,971
million (EUR4,971 million as at 31 March 2022) is attributed by
credit rating agencies.
The Group's gross and net debt includes certain bonds which have
been designated in hedge relationships, which are carried at
EUR1,451 million higher value (EUR1,316 million higher as at 31
March 2022) than their euro equivalent redemption value. In
addition, where bonds are issued in currencies other than euro, the
Group has entered into foreign currency swaps to fix the euro cash
outflows on redemption. The impact of these swaps is not reflected
in gross debt and if it were included would decrease the euro
equivalent value of the bonds by EUR4,363 million (EUR1,456 million
as at 31 March 2022).
Return on capital employed
Return on capital employed ('ROCE') reflects how efficiently we
are generating profit with the capital we deploy. We calculate two
ROCE measures: i) Pre-tax ROCE for controlled operations only and
ii) Post-tax ROCE including associates and joint ventures.
H1 FY23(1) H1 FY22(1) Change
% % pps
=============================================== ========== ========== ======
Pre-tax ROCE (controlled)(2) 6.9% 6.3% 0.6
Post-tax ROCE (controlled and associates/joint
ventures)(2) 5.1% 4.3% 0.8
ROCE calculated using GAAP measures(2) 5.2% 3.7% 1.5
=============================================== ========== ========== ======
Notes:
1. The half-year ROCE calculation is based on returns for the 12
months ended 30 September.
2. ROCE is calculated by dividing Operating profit by the
average of capital employed as reported in the consolidated
statement of financial position. Pre-tax ROCE (controlled) and
Post-tax ROCE (controlled and associates/joint ventures) are
non-GAAP measures. See page 41 for more information.
The increase in pre-tax ROCE (controlled) in H1 FY23 compared to
H1 FY22 was largely driven by lower depreciation and amortisation
of owned assets. Post-tax ROCE also improved, benefitting also from
a higher share of income from associates and joint ventures.
Funding facilities
As at 30 September 2022, the Group had undrawn revolving credit
facilities of EUR8.1 billion comprising euro and US dollar
revolving credit facilities of EUR4.0 billion and US$4.0 billion
(EUR4.1 billion) which mature in 2025 and 2027 respectively. Both
committed revolving credit facilities support US and euro
commercial paper programmes of up to US$15 billion and EUR10
billion respectively.
Post employment benefits
As at 30 September 2022, the Group's net surplus of scheme
assets over scheme liabilities was EUR212 million (EUR274 million
net surplus as at 31 March 2022). See note 10 'Post employment
benefits' in the unaudited condensed consolidated financial
statements for more information.
Dividends
Dividends will continue to be declared in euros, aligning the
Group's shareholder returns with the primary currency in which we
generate free cash flow, and paid in euros, pounds sterling and US
dollars. The foreign exchange rate at which future dividends
declared in euros will be converted into pounds sterling and US
dollars will be calculated based on the average World Markets
Company benchmark rates over the five business days during the week
prior to the payment of the dividend.
The Board has announced an interim dividend per share of 4.50
eurocents (H1 FY22: 4.50 eurocents). The ex-dividend date for the
interim dividend is 24 November 2022 for ordinary shareholders, the
record date is 25 November 2022 and the dividend is payable on 3
February 2023. Dividend payments on ordinary shares will be paid
directly into a nominated bank or building society account.
Other significant developments
Board changes
At the Annual General Meeting on 26 July 2022, shareholder
approval was obtained for the appointment of Stephen A. Carter,
Delphine Ernotte Cunci and Simon Segars as non-executive
directors.
Executive Committee changes
On 30 June 2022, Hannes Ametsreiter stepped down from his role
as CEO of Vodafone Germany and as a member of the Group Executive
Committee. On 1 July 2022, Philippe Rogge became CEO of Vodafone
Germany and a member of the Group Executive Committee.
On 29 September, the Group announced the following changes to
the Executive Committee:
- Rosemary Martin, Group General Counsel and Company Secretary, will retire on 31 March 2023.
- Maaike de Bie, currently Group General Counsel and Company
Secretary at easyJet plc, will become Group General Counsel and
Company Secretary on 1 March 2023 and will join the Executive
Committee.
- Johan Wibergh, Group Chief Technology Officer, will retire on 31 December 2022.
- Scott Petty, currently Digital & IT Director, will become
Group Chief Technology Officer on 1 January 2023 and will join the
Executive Committee.
- Alberto Ripepi, Group Chief Network Officer, will join the
Executive Committee on 1 January 2023.
On 14 November 2022, the Group announced that Christine Ramon
will be appointed as a non-executive director with immediate
effect.
Vodafone Hungary
On 22 August 2022, the Group announced that it had entered into
heads of terms with 4iG Public Limited Company and Corvinus Zrt (a
Hungarian state holding company) in relation to the potential sale
of 100% of Vodafone Hungary for a total cash consideration
equivalent to an enterprise value of HUF 715 billion (EUR1.8
billion).
The transaction is subject to completion of confirmatory due
diligence, the agreement of binding transaction documentation and
regulatory approval.
Vodafone Portugal
On 30 September 2022, the Group announced that Vodafone Portugal
had entered into an agreement to purchase Cabonitel S.A., the owner
of Nowo. The transaction is conditional on regulatory approval,
with completion expected in the first half of 2023. Nowo is the
4(th) largest converged operator in Portugal, with approximately
250,000 mobile subscribers, 140,000 fixed customers and 1 million
homes connected.
Vodafone UK
On 3 October 2022, the Group noted press speculation in relation
to Vodafone UK and Three UK. The Group confirmed that it is in
discussions with CK Hutchison in relation to a possible combination
of Vodafone UK and Three UK. The envisaged transaction would
involve both companies combining their UK businesses, with Vodafone
owning 51% and CK Hutchison owning 49% of the combined business.
There can be no certainty that any transaction between the two
companies will ultimately be agreed.
Vantage Towers
On 9 November 2022, the Group announced that it had entered into
a strategic co-control partnership with GIP and KKR for Vantage
Towers. A new JV will hold our 81.7% stake in Vantage Towers and
will make a voluntary takeover offer for the outstanding Vantage
Towers shares held by minority shareholders. Further detail on the
transaction is available here:
investors.vodafone.com/reports-information/results-reports-presentations
.
Risk factors
The key factors and uncertainties that could have a significant
effect on the Group's financial performance, include the
following:
Cyber threat
An external cyber-attack, insider threat or supplier breach
could cause service interruption or the loss of confidential
data.
Supply chain disruption
Disruption in our supply chain could mean that we are unable to
execute our strategic plans, resulting in increased cost and
reduced choice as well as service quality.
Adverse political and policy environment
An adverse political and policy environment could impact our
strategy and result in increased costs, create competitive
disadvantage or have a negative impact on our return on capital
employed.
Strategic transformation
Failure to effectively execute the transformational activities
to deliver on our strategy could result in loss of business value
and/or additional cost.
Disintermediation
Failure to effectively respond to threats from emerging
technology or disruptive business models could lead to a loss of
customer relevance, market share and new/existing revenue
streams.
Adverse changes in macroeconomic conditions
Adverse changes to economic conditions could result in reduced
consumer spending, higher interest rates, adverse inflation, or
foreign exchange rates. Adverse conditions could also lead to
limited debt refinancing options and/or increase in costs.
Infrastructure competitiveness
Failure to meet customers' expectations with best available
broadband technology in our fixed and mobile networks could lead to
loss of revenue.
Portfolio transformation
Failure to effectively execute on plans to transform and shape
the portfolio could result in failure to deliver growth in revenue
and improved returns.
Adverse market conditions
Increasing competition could lead to price wars, reduced
margins, loss of market share and/or damage to market value.
Technology resilience and future readiness
Network, IT or platform outages and/or any delays delivering our
IT modernisation programme could lead to dissatisfied customers
and/or impact revenue.
Watchlist risks
Our watchlist risk process enables us to monitor material risks
to Vodafone Group which fall outside of our top principal risks
list. These include, but are not limited to :
Legal compliance
The legal compliance risk is made up of multiple sub-risks
(sanctions and trade controls, competition law, anti-bribery and
anti-money laundering). Controls are in place to monitor and manage
these risks and for compliance with the relevant regulations and
legislation.
Risk factors
Data management and privacy
As data volumes continue to grow and regulatory and customer
scrutiny increases, it is important that we manage our data and
privacy risks effectively.
Electromagnetic field ('EMF')
The health and safety of our customers and the wider public has
always been, and continues to be, a priority for us. We know that
some people are concerned about whether there are risks to health
from mobile phones and radio masts. We refer to the current body of
scientific evidence so that the services and products we provide
are within prescribed safety limits and adhere to all relevant
standards and national laws.
Climate change
As part of our commitment to operate ethically and sustainably,
we are dedicated to understanding climate-related risks and
opportunities and embedding responses to these into our business
strategy and operations.
Emerging risks
We have a number of uncertainties where an emerging risk may
potentially impact us in the longer term. In some cases, there may
be insufficient information to understand the likelihood, impact or
velocity of the risk. We also might not be able to fully define a
mitigation plan until we have a better understanding of the
threat.
We continue to identify new emerging risk trends, using the
input from analysis of the external environment. Furthermore, we
have strengthened the identification process by involving our
functional experts and our global risk community in this emerging
risk scanning exercise.
Once the emerging risks are prioritised by the functional
experts, scenarios are created to assist in the analysis of each
risk. These emerging risks and scenarios are provided to the Risk
and Compliance Committee and the Audit and Risk Committee for
further scrutiny. During the period, three additional emerging
risks were added to our list:
- Inflation (beyond a three-year period);
- Generation Z as customers; and
- Disintermediation (beyond a three-year period).
Macro factors affecting the risk profile
Whilst the Group does not have significant operations in either
Russia or Ukraine, Vodafone continues to monitor any potential
impacts for the Group and its business. Various countries have
implemented trade restrictions, economic measures and financial
sanctions against Russia. These measures, together with the wider
effects of the war, is having a negative impact on macroeconomic
conditions, give rise to regional instability, increase costs, and
disrupt supply chains.
Responsibility statement
We confirm that to the best of our knowledge:
- The unaudited condensed consolidated financial statements have
been prepared in accordance with IAS 34, "Interim Financial
Reporting", as issued by the International Accounting Standards
Board and as contained in UK-adopted international accounting
standards; and
- The interim management report includes a fair review of the
information required by Disclosure Guidance and Transparency Rules
sourcebook 4.2.7 and Disclosure Guidance and Transparency Rules
sourcebook 4.2.8.
Neither the Company nor the directors accept any liability to
any person in relation to the half-year financial report except to
the extent that such liability could arise under English law.
Accordingly, any liability to a person who has demonstrated
reliance on any untrue or misleading statement or omission shall be
determined in accordance with section 90A and schedule 10A of the
Financial Services and Markets Act 2000.
The names and functions of the Vodafone Group Plc board of
directors can be found at:
https://www.vodafone.com/about-vodafone/who-we-are/leadership/board-of-directors
By Order of the Board
Rosemary Martin
Group General Counsel and Company Secretary
15 November 2022
Unaudited condensed consolidated financial statements
Consolidated income statement
Six months ended
30 September
------------------
2022 2021
Note EURm EURm
------------------------------------------------------- ---- -------- --------
Revenue 2 22,930 22,489
Cost of sales (15,580) (15,097)
------------------------------------------------------- ---- -------- --------
Gross profit 7,350 7,392
Selling and distribution expenses (1,711) (1,675)
Administrative expenses (2,819) (2,870)
Net credit losses on financial assets (332) (230)
Share of results of equity accounted associates
and joint ventures 343 111
Other income/(expense) 104 (108)
------------------------------------------------------- ---- -------- --------
Operating profit 2 2,935 2,620
Investment income 211 129
Financing costs (1,418) (1,473)
------------------------------------------------------- ---- -------- --------
Profit before taxation 1,728 1,276
Income tax (expense)/credit 3 (485) 1
------------------------------------------------------- ---- -------- --------
Profit for the financial period 1,243 1,277
------------------------------------------------------- ---- -------- --------
Attributable to:
- Owners of the parent 986 996
- Non-controlling interests 257 281
------------------------------------------------------- ---- -------- --------
Profit for the financial period 1,243 1,277
------------------------------------------------------- ---- -------- --------
Profit per share
Total Group:
- Basic 5 3.52c 3.40c
- Diluted 5 3.50c 3.39c
------------------------------------------------------- ---- -------- --------
Consolidated statement of comprehensive income/expense
Six months ended
30 September
------------------
2022 2021
EURm EURm
------------------------------------------------------- ---- -------- --------
Profit for the financial period 1,243 1,277
Other comprehensive income/(expense):
Items that may be reclassified to the income
statement in subsequent periods:
Foreign exchange translation differences, net
of tax (424) (117)
Other, net of tax(1) 924 1,286
------------------------------------------------------- ---- -------- --------
Total items that may be reclassified to the
income statement in subsequent periods 500 1,169
Items that will not be reclassified to the
income statement in subsequent periods:
Net actuarial (losses)/gains on defined benefit
pension schemes, net of tax (42) 200
------------------------------------------------------- ---- -------- --------
Total items that will not be reclassified to
the income statement in subsequent periods (42) 200
Other comprehensive income 458 1,369
------------------------------------------------------- ---- -------- --------
Total comprehensive income for the financial
period 1,701 2,646
------------------------------------------------------- ---- -------- --------
Attributable to:
- Owners of the parent 1,415 2,354
- Non-controlling interests 286 292
------------------------------------------------------- ---- -------- --------
1,701 2,646
------------------------------------------------------- ---- -------- --------
Note:
1. Principally includes the impact of the Group's cash flow
hedges deferred to other comprehensive income during the
period.
The accompanying notes are an integral part of the unaudited
condensed consolidated financial statements.
Unaudited condensed consolidated financial statements
Consolidated statement of financial position
30 September 31 March
2022 2022
Note EURm EURm
---------------------------------------------------- ---- ------------ ---------
Non-current assets
Goodwill 31,225 31,884
Other intangible assets 20,470 21,360
Property, plant and equipment 39,843 40,804
Investments in associates and joint ventures 7 4,381 4,268
Other investments 1,128 1,073
Deferred tax assets 18,699 19,089
Post employment benefits 10 493 555
Trade and other receivables 10,869 6,383
---------------------------------------------------- ---- ------------ ---------
127,108 125,416
---------------------------------------------------- ---- ------------ ---------
Current assets
Inventory 991 836
Taxation recoverable 393 296
Trade and other receivables 11,506 11,019
Other investments 7,824 7,931
Cash and cash equivalents 7,072 7,496
---------------------------------------------------- ---- ------------ ---------
27,786 27,578
---------------------------------------------------- ---- ------------ ---------
Assets held for sale 4 2,546 959
---------------------------------------------------- ---- ------------ ---------
Total assets 157,440 153,953
---------------------------------------------------- ---- ------------ ---------
Equity
Called up share capital 4,797 4,797
Additional paid-in capital 149,085 149,018
Treasury shares (7,170) (7,278)
Accumulated losses (122,521) (122,118)
Accumulated other comprehensive income 31,262 30,268
---------------------------------------------------- ---- ------------ ---------
Total attributable to owners of the parent 55,453 54,687
---------------------------------------------------- ---- ------------ ---------
Non-controlling interests 2,284 2,290
---------------------------------------------------- ---- ------------ ---------
Total equity 57,737 56,977
---------------------------------------------------- ---- ------------ ---------
Non-current liabilities
Borrowings 59,907 58,131
Deferred tax liabilities 681 520
Post employment benefits 10 281 281
Provisions 1,924 1,881
Trade and other payables 2,447 2,516
---------------------------------------------------- ---- ------------ ---------
65,240 63,329
---------------------------------------------------- ---- ------------ ---------
Current liabilities
Borrowings 15,675 11,961
Financial liabilities under put option arrangements 486 494
Taxation liabilities 722 864
Provisions 722 667
Trade and other payables 16,614 19,661
---------------------------------------------------- ---- ------------ ---------
34,219 33,647
---------------------------------------------------- ---- ------------ ---------
Liabilities held for sale 4 244 -
---------------------------------------------------- ---- ------------ ---------
Total equity and liabilities 157,440 153,953
---------------------------------------------------- ---- ------------ ---------
The accompanying notes are an integral part of the unaudited
condensed consolidated financial statements.
Unaudited condensed consolidated financial statements
Consolidated statement of changes
in equity
Equity
Additional Accumulated attributable Non-
Share paid-in Treasury comprehensive to the controlling Total
capital capital(1) shares losses(2) owners interests equity
EURm EURm EURm EURm EURm EURm EURm
--------------------- -------- ----------- -------- -------------- ------------- ------------ -------
1 April 2021 brought
forward 4,797 150,812 (6,172) (93,633) 55,804 2,012 57,816
Issue or reissue
of shares - 1 90 (90) 1 - 1
Share-based payments - 73 - - 73 6 79
Transactions with
non-controlling
shareholders in
subsidiaries - - - (38) (38) 236 198
Comprehensive income - - - 2,354 2,354 292 2,646
Dividends - - - (1,254) (1,254) (391) (1,645)
Purchase of treasury
shares - - (1,048) - (1,048) - (1,048)
--------------------- -------- ----------- -------- -------------- ------------- ------------ -------
30 September 2021 4,797 150,886 (7,130) (92,661) 55,892 2,155 58,047
--------------------- -------- ----------- -------- -------------- ------------- ------------ -------
31 March 2022 as
reported 4,797 149,018 (7,278) (91,850) 54,687 2,290 56,977
Adoption of IAS
29(3) - - - 565 565 - 565
1 April 2022 brought
forward 4,797 149,018 (7,278) (91,285) 55,252 2,290 57,542
Issue or reissue
of shares - 1 108 (100) 9 - 9
Share-based payments - 66 - - 66 5 71
Transactions with
non-controlling
shareholders in
subsidiaries - - - (24) (24) (12) (36)
Comprehensive income - - - 1,415 1,415 286 1,701
Dividends - - - (1,265) (1,265) (285) (1,550)
--------------------- -------- ----------- -------- -------------- ------------- ------------ -------
30 September 2022 4,797 149,085 (7,170) (91,259) 55,453 2,284 57,737
--------------------- -------- ----------- -------- -------------- ------------- ------------ -------
Notes:
1. Includes share premium, capital reserve, capital redemption
reserve, merger reserve and share-based payment reserve. The merger
reserve was derived from acquisitions made prior to 31 March 2004
and subsequently allocated to additional paid-in capital on
adoption of IFRS.
2. Includes accumulated losses and accumulated other
comprehensive income.
3. This opening balance adjustment relates to the adoption of
hyperinflationary accounting in Turkey. See Note 1 'Basis of
preparation' for more information.
The accompanying notes are an integral part of the unaudited
condensed consolidated financial statements.
Unaudited condensed consolidated financial statements
Consolidated statement of cash flows
Six months ended
30 September
------------------
2022 2021
Note EURm EURm
----------------------------------------------------- ---- -------- --------
Inflow from operating activities 8 6,280 6,455
----------------------------------------------------- ---- -------- --------
Cash flows from investing activities
Purchase of interests in subsidiaries, net
of cash acquired - (1)
Purchase of interests in associates and joint
ventures (61) (47)
Purchase of intangible assets (1,433) (1,593)
Purchase of property, plant and equipment (3,456) (3,118)
Purchase of investments (871) (580)
Disposal of property, plant and equipment
and intangible assets - 8
Disposal of investments 1,130 1,930
Dividends received from associates and joint
ventures 463 469
Interest received 139 121
----------------------------------------------------- ---- -------- --------
Outflow from investing activities (4,089) (2,811)
----------------------------------------------------- ---- -------- --------
Cash flows from financing activities(1)
Proceeds from issue of long-term borrowings 187 2,282
Repayment of borrowings (5,549) (3,771)
Net movement in short-term borrowings 6,194 1,173
Net movement in derivatives (205) (110)
Interest paid(2) (952) (809)
Purchase of treasury shares (1,090) (1,101)
Issue of ordinary share capital and reissue
of treasury shares 9 1
Equity dividends paid (1,263) (1,259)
Dividends paid to non-controlling shareholders
in subsidiaries (290) (399)
Other transactions with non-controlling shareholders
in subsidiaries (34) 198
----------------------------------------------------- ---- -------- --------
Outflow from financing activities (2,993) (3,795)
----------------------------------------------------- ---- -------- --------
Net cash outflow (802) (151)
Cash and cash equivalents at beginning of
the financial period(3) 7,371 5,790
Exchange gain on cash and cash equivalents 282 11
----------------------------------------------------- ---- -------- --------
Cash and cash equivalents at end of the
financial period (3) 6,851 5,650
----------------------------------------------------- ---- -------- --------
Notes:
1. Includes the issuance of EURnil and repayment of EUR885
million in relation to debt securities (Six months ended 30
September 2021: Issuance of EUR2,000 million and repayment of
EUR657 million).
2. Interest paid includes EUR86 million of cash inflow (Six
months ended 30 September 2021: EUR39 million inflow) on derivative
financial instruments for the share buyback related to maturing
tranches of mandatory convertible bonds.
3. Comprises cash and cash equivalents as presented in the
consolidated statement of financial position of EUR7,072 million
(EUR5,824 million as at 30 September 2021), together with
overdrafts of EUR226 million (EUR174 million as at 30 September
2021) and EUR5 million (EURnil as at 30 September 2021) of cash and
cash equivalents included within assets held for sale.
The accompanying notes are an integral part of the unaudited
condensed consolidated financial statements.
Notes to the unaudited condensed consolidated financial
statements
1 Basis of preparation
The unaudited condensed consolidated financial statements for
the six months ended 30 September 2022:
-- are prepared in accordance with International Accounting
Standard 34 'Interim Financial Reporting' ('IAS 34') as issued by
the International Accounting Standards Board ('IASB') and as
adopted by the United Kingdom;
-- are presented on a condensed basis as permitted by IAS 34 and
therefore do not include all disclosures that would otherwise be
required in a full set of financial statements and should be read
in conjunction with the Group's Annual Report for the year ended 31
March 2022;
-- apply, with the exception of the application of IAS 29
'Financial Reporting in Hyperinflationary Economies' for the
Group's entities reporting in Turkish lira (see below), the same
accounting policies, presentation and methods of calculation as
those followed in the preparation of the Group's consolidated
financial statements for the year ended 31 March 2022, which were
prepared in accordance with UK-adopted International Accounting
Standards ('IAS'), with International Financial Reporting Standards
('IFRS') as issued by the IASB and with the requirements of the UK
Companies Act 2006. Income taxes are accrued using the tax rate
that is expected to be applicable for the full financial year,
adjusted for certain discrete items which occurred in the interim
period in accordance with IAS 34;
-- include all adjustments, consisting of normal recurring
adjustments, necessary for a fair statement of the results for the
periods presented;
-- do not constitute statutory accounts within the meaning of
section 434(3) of the UK Companies Act 2006; and
-- were approved by the Board of directors on 15 November 2022.
The information relating to the year ended 31 March 2022 is
extracted from the Group's published Annual Report for that year,
which has been delivered to the Registrar of Companies, and on
which the auditors' report was unqualified and did not contain any
emphasis of matter or statements under section 498(2) or 498(3) of
the UK Companies Act 2006.
The preparation of the unaudited condensed consolidated
financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the end of the reporting period, and the reported amounts of
revenue and expenses during the period. Actual results could vary
from these estimates. These estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if
the revision affects only that period or in the period of the
revision and future periods if the revision affects both current
and future periods.
Going concern
Trading during the period demonstrated a robust operating model
for the Group. The Group has a strong liquidity position with
EUR6.9 billion of cash and cash equivalents available as at 30
September 2022 which, together with undrawn revolving credit
facilities of EUR8.1 billion, cover all of the Group's reasonably
expected cash requirements over the going concern period. The
Directors have reviewed trading and liquidity forecasts for the
Group, which were based on current trading conditions, and
considered a variety of scenarios including not being able to
access the capital markets during the assessment period. In
addition to the liquidity forecasts prepared, the Directors
considered the availability of the Group's revolving credit
facilities which were undrawn as at 30 September 2022. As a result
of the assessment performed, the Directors have concluded that the
Group is able to continue in operation for the period up to and
including December 2023 and that it is appropriate to continue to
adopt the going concern basis in preparing the unaudited condensed
consolidated financial statements.
War in Ukraine
Whilst the Group does not have any significant operations in
either Russia or Ukraine, a review was undertaken by management to
assess any consequences on the financial statements arising from
the conflict or from the resulting sanctions imposed on Russia and
Belarus. It was concluded there are no material impacts on the
consolidated financial statements for the period ended 30 September
2022.
Critical accounting judgements and estimates
The Group's critical accounting judgements and estimates are
disclosed in the Group's Annual Report for the year ended 31 March
2022.
Notes to the unaudited condensed consolidated financial
statements
1 Basis of preparation (continued)
Judgements relating to potential indicators of impairment
The Group performs its annual impairment test for goodwill and
indefinite lived intangible assets as at 31 March.
At interim reporting periods the Group performs a review to
identify any indicator of impairment that may indicate that the
carrying amount of any of the Group's cash generating units
('CGUs') may not be not recoverable. As part of this assessment as
at 30 September 2022, the Group reviewed the key assumptions
underlying the value in use valuations used in the annual
impairment test at 31 March 2022. This included the year to date
performance of the Group's CGUs against their budgets, trends in
energy and other costs and inflation rates, as well as considering
the valuation implications of changes in other factors such as risk
free discount rates and the assessment of long term growth
rates.
Value in use assessments were performed for Vodafone Italy and
Vodafone Spain as at 30 September 2022 reflecting assumptions
materially similar to those disclosed in note 4 'Impairment losses'
of the consolidated financial statements in the Annual Report for
the year ended 31 March 2022.
The Group's review of the potential impact of indicators of
impairment and recoverable amounts did not indicate that the
carrying amount of any of the Group's CGUs was not recoverable as
at 30 September 2022.
New accounting pronouncements adopted
On 1 April 2022, the Group adopted certain new accounting
policies where necessary to comply with amendments to IFRS, none of
which had a material impact on the consolidated results, financial
position or cash flows of the Group. Further details are provided
in the Group's Annual Report for the year ended 31 March 2022.
Basis of preparation changes adopted on 1 April 2022 -
Hyperinflation in Turkey
As anticipated in the Annual Report for the year ended 31 March
2022 and communicated in the Q1 trading update, Turkey met the
requirements to be designated as a hyperinflationary economy under
IAS 29 'Financial Reporting in Hyperinflationary Economies' in the
quarter ended 30 June 2022. The Group has therefore applied
hyperinflationary accounting, as specified in IAS 29, at its
Turkish operations whose functional currency is the Turkish lira
for the reporting period commencing 1 April 2022. This resulted in
an opening balance adjustment of EUR565 million to consolidated
equity.
In accordance with IAS 21 'The Effects of Changes in Foreign
Exchange Rates', comparative amounts are not restated.
Turkish lira results and non-monetary asset and liability
balances for the six months ended 30 September 2022 have been
revalued to their present value equivalent local currency amount as
at 30 September 2022, based on an inflation index, before
translation to euros at the reporting date exchange rate of
EUR1:18.16 TRL. The gain or loss on net monetary assets resulting
from IAS 29 application is recognised in the income statement
within Other income.
The Group also presents the gain or loss on cash and cash
equivalents as monetary items together with the effect of inflation
on operating, investing and financing cash flows as one number in
the consolidated statement of cash flows.
The Group has presented the IAS 29 opening balance adjustment to
net assets within currency reserves in equity. Subsequent IAS 29
equity restatement effects and the impact of currency movements are
presented within other comprehensive income because such amounts
are judged to meet the definition of 'exchange differences'.
The inflation index selected to reflect the change in purchasing
power was the consumer price index (CPI) issued by the Turkish
Statistical Institute which has risen by 24% in the six months to
30 September 2022.
The main impacts on the consolidated financial statements for
the six months ended 30 September 2022 of the aforementioned
adjustments are shown below.
Six months
ended
30 September
2022
EURm
-------------------------------- -------------
Revenue 21
Operating profit (14)
Profit for the financial period (40)
Non-current assets 780
Equity 659
-------------------------------- -------------
Notes to the unaudited condensed consolidated financial
statements
2 Segmental analysis
Operating segments
The Group's operating segments are established on the basis of
those components of the Group that are evaluated regularly by the
chief operating decision maker in deciding how to allocate
resources and in assessing performance. The Group has determined
the chief operating decision maker to be its Chief Executive
Officer. The Group has a single group of similar services and
products, being the supply of communications services and related
products.
Revenue is attributed to a country based on the location of the
Group company reporting the revenue. With the exception of Vodacom,
which is a legal entity encompassing South Africa and certain other
smaller African markets, and Vantage Towers which comprises
companies providing mobile tower infrastructure in a number of
European markets, segment information is primarily provided on the
basis of geographic areas, being the basis on which the Group
manages the rest of its worldwide interests. Transactions between
operating segments are charged at arm's-length prices.
The operating segments for Germany, Italy, UK, Spain, Vodacom
and Vantage Towers are individually material for the Group and are
each reporting segments for which certain financial information is
provided. The aggregation of other operating segments into the
Other Europe and Other Markets reporting segments reflects, in the
opinion of management, the similar local market economic
characteristics and regulatory environments for each of those
operating segments as well as the similar products and services
sold and comparable classes of customers. In the case of the Other
Europe region (comprising Albania, Czech Republic, Greece, Hungary,
Ireland, Portugal and Romania), this largely reflects membership or
a close association with the European Union, while the Other
Markets segment (comprising Egypt, Ghana and Turkey) largely
includes developing economies with less stable economic or
regulatory environments. Common Functions is a separate reporting
segment and comprises activities which are undertaken primarily in
central Group entities that do not meet the criteria for
aggregation with other reporting segments.
Revenue disaggregation
Revenue reported for the period includes revenue from contracts
with customers, comprising service and equipment revenue, as well
as other revenue items including revenue from leases and interest
revenue arising from transactions with a significant financing
component. The tables below and overleaf disaggregate the Group's
revenue by reporting segment.
The table below presents the results for the six months ended 30
September 2022.
Revenue Total
Service Equipment from contracts Other Interest segment Adjusted
revenue revenue with customers revenue(1) revenue revenue EBITDAaL
EURm EURm EURm EURm EURm EURm EURm
-------------------- -------- --------- --------------- ----------- -------- -------- ---------
Six months ended 30
September 2022
Germany 5,730 675 6,405 178 9 6,592 2,677
Italy 2,125 198 2,323 49 5 2,377 759
UK 2,712 630 3,342 34 16 3,392 685
Spain 1,782 142 1,924 31 10 1,965 445
Other Europe 2,552 281 2,833 53 8 2,894 843
Vodacom 2,472 509 2,981 207 14 3,202 1,084
Other Markets 1,721 230 1,951 2 - 1,953 671
Vantage Towers - - - 657 - 657 330
Common Functions(2) 268 23 291 405 - 696 (250)
Eliminations (155) - (155) (643) - (798) -
-------------------- -------- --------- --------------- ----------- -------- -------- ---------
Group 19,207 2,688 21,895 973 62 22,930 7,244
-------------------- -------- --------- --------------- ----------- -------- -------- ---------
Notes:
1. Other revenue includes lease revenue recognised under IFRS 16
'Leases'.
2. Comprises central teams and business functions.
Notes to the unaudited condensed consolidated financial
statements
2 Segmental analysis (continued)
The table below presents the comparative information for the six
months ended 30 September 2021.
Revenue Total
Service Equipment from contracts Other Interest segment Adjusted
revenue revenue with customers revenue(1) revenue revenue EBITDAaL
EURm EURm EURm EURm EURm EURm EURm
-------------------- -------- --------- --------------- ----------- -------- -------- ---------
Six months ended 30
September 2021
Germany 5,777 475 6,252 183 12 6,447 2,892
Italy 2,187 265 2,452 49 6 2,507 917
UK 2,521 593 3,114 30 17 3,161 638
Spain 1,866 178 2,044 33 13 2,090 445
Other Europe 2,502 248 2,750 52 8 2,810 836
Vodacom 2,271 455 2,726 190 12 2,928 1,062
Other Markets 1,752 201 1,953 5 - 1,958 683
Vantage Towers - - - 611 - 611 305
Common Functions(2) 252 31 283 424 - 707 (213)
Eliminations (118) - (118) (611) (1) (730) -
-------------------- -------- --------- --------------- ----------- -------- -------- ---------
Group 19,010 2,446 21,456 966 67 22,489 7,565
-------------------- -------- --------- --------------- ----------- -------- -------- ---------
Notes:
1. Other revenue includes lease revenue recognised under IFRS 16
'Leases'.
2. Comprises central teams and business functions.
A reconciliation of Adjusted EBITDAaL, the Group's measure of
segment profit, to the Group's profit before taxation for the
financial period is shown below.
Six months ended
30 September
------------------
2022 2021
EURm EURm
---------------------------------------------------- -------- --------
Adjusted EBITDAaL 7,244 7,565
Restructuring costs (142) (172)
Interest on lease liabilities 204 199
Loss on disposal of property, plant & equipment and
intangible assets (11) (26)
Depreciation and amortisation on owned assets (4,807) (4,949)
Share of results of equity accounted associates and
joint ventures 343 111
Other income/(expense) 104 (108)
---------------------------------------------------- -------- --------
Operating profit 2,935 2,620
Investment income 211 129
Financing costs (1,418) (1,473)
---------------------------------------------------- -------- --------
Profit before taxation 1,728 1,276
---------------------------------------------------- -------- --------
The Group's non-current assets are disaggregated as follows:
30 September 31 March
2022 2022
EURm EURm
----------------------- ------------ --------
Non-current assets (1)
Germany 42,709 43,190
Italy 10,129 10,519
UK 5,847 6,226
Spain 6,129 6,433
Other Europe 6,855 8,548
Vodacom 6,319 6,383
Other Markets 3,349 2,467
Vantage Towers 8,190 8,179
Common Functions(2) 2,011 2,103
----------------------- ------------ --------
Group 91,538 94,048
----------------------- ------------ --------
Notes:
1. Comprises goodwill, other intangible assets and property,
plant & equipment.
2. Comprises central teams and business functions.
Notes to the unaudited condensed consolidated financial
statements
3 Taxation
Six months ended
30 September
------------------
2022 2021
EURm EURm
------------------------------------------------------ -------- --------
United Kingdom corporation tax (expense)/income
Current period (4) (6)
Adjustments in respect of prior periods 9 15
Overseas current tax (expense)/income
Current period (446) (730)
Adjustments in respect of prior periods 12 (26)
------------------------------------------------------ -------- --------
Total current tax expense (429) (747)
------------------------------------------------------ -------- --------
Deferred tax on origination and reversal of temporary
differences
United Kingdom deferred tax (10) 544
Overseas deferred tax (46) 204
------------------------------------------------------ -------- --------
Total deferred tax (expense)/credit (56) 748
------------------------------------------------------ -------- --------
Total income tax (expense)/credit (485) 1
------------------------------------------------------ -------- --------
Deferred tax on losses in Luxembourg
The tax charge for the six months ended 30 September 2022
includes deferred tax on the use of losses in Luxembourg. The Group
would not recognise losses in Luxembourg which would be forecast to
be used beyond 60 years. Current volatility in interest rates means
that the period over which we expect to recover the losses is
shorter than the 45 to 48 years disclosed as at 31 March 2022. The
actual use of these losses and the period over which they may be
used is dependent on many factors including the level of
profitability in Luxembourg, changes in tax law and any changes to
the structure of the Group.
Further details about the Group's tax losses can be found in
Note 6 'Taxation' to the consolidated financial statements of
Vodafone Group Plc for the year ended 31 March 2022.
Notes to the unaudited condensed consolidated financial
statements
4 Assets and liabilities held for sale
Assets and liabilities held for sale as at 30 September 2022
comprised (i) Vodafone Hungary and (ii) the Group's 21.0% interest
in Indus Towers. Assets held for sale as at 31 March 2022 comprised
the Group's 21.0% interest in Indus Towers.
On 22 August 2022, the Group announced that it had entered into
heads of terms with 4iG Public Limited Company and Corvinus Zrt (a
Hungarian state holding company) in relation to the potential sale
of 100% of Vodafone Magyarország Távközlési Zrt ('Vodafone
Hungary') for a total cash consideration equivalent to an
enterprise value of HUF 715 billion (EUR1.8 billion).
The Group's interest in Indus Towers has been provided as
security against certain bank borrowings.
The relevant assets and liabilities are detailed in the table
below.
30 September 31 March
2022 2022
EURm EURm
--------------------------------------------- ------------ --------
Non-current assets
Goodwill 412 -
Other intangible assets 474 -
Property, plant and equipment 440 -
Investments in associates and joint ventures 1,014 959
Trade and other receivables 18 -
----------------------------------------------- ------------ --------
2,358 959
--------------------------------------------- ------------ --------
Current assets
Inventory 12 -
Trade and other receivables 171 -
Cash and cash equivalents 5 -
----------------------------------------------- ------------ --------
188 -
--------------------------------------------- ------------ --------
Total assets 2,546 959
----------------------------------------------- ------------ --------
Non-current liabilities
Borrowings 47 -
Deferred tax liabilities 16 -
Provisions 23 -
Trade and other payables 1 -
----------------------------------------------- ------------ --------
87 -
--------------------------------------------- ------------ --------
Current liabilities
Borrowings 15 -
Provisions 6 -
Trade and other payables 136 -
----------------------------------------------- ------------ --------
157 -
--------------------------------------------- ------------ --------
Total liabilities 244 -
--------------------------------------------- ------------ --------
Net assets and liabilities held for sale 2,302 959
----------------------------------------------- ------------ --------
As part of the disposal of Vodafone Hungary, the Group will
realise a loss comprising the cumulative foreign exchange losses
arising from the retranslation of the consolidated net assets of
Vodafone Hungary (which has a functional currency of Hungarian
Forint) to the Group's presentation currency in the period from
acquisition of the Group's interest to the date of disposal. This
foreign exchange is required to be recycled to the income statement
from the translation reserve. Based on the 30 September 2022
exchange rate of EUR:HUF: 423.0, a loss of approximately EUR0.3
billion would arise. The actual loss from the recycling of foreign
exchange previously recognised in equity that would be recognised
on disposal, will depend on the EUR:HUF exchange rate at the date
of completion.
Notes to the unaudited condensed consolidated financial
statements
5 Earnings per share
Six months ended
30 September
--------------------
2022 2021
Millions Millions
------------------------------------------------------- --------- ---------
Weighted average number of shares for basic earnings
per share 28,037 29,331
Effect of dilutive potential shares: restricted shares
and share options 104 84
------------------------------------------------------- --------- ---------
Weighted average number of shares for diluted earnings
per share 28,141 29,415
------------------------------------------------------- --------- ---------
Earnings per share attributable to owners of the
parent during the period
Six months ended
30 September
--------------------
2022 2021
EURm EURm
------------------------------------------------------- --------- ---------
Profit for basic and diluted earnings per share 986 996
------------------------------------------------------- --------- ---------
eurocents eurocents
------------------------------------------------------- --------- ---------
Basic profit per share 3.52 3.40
Diluted profit per share 3.50 3.39
------------------------------------------------------- --------- ---------
6 Equity dividends
Six months ended
30 September
------------------
2022 2021
EURm EURm
---------------------------------------------------- -------- --------
Declared during the financial period:
Final dividend for the year ended 31 March 2022:
4.50 eurocents per share
(2021: 4.50 eurocents per share) 1,265 1,254
---------------------------------------------------- -------- --------
Proposed after the end of the reporting period and
not recognised as a liability:
Interim dividend for the year ending 31 March 2023:
4.50 eurocents per share
(2022: 4.50 eurocents per share) 1,237 1,229
---------------------------------------------------- -------- --------
7 Investment in associates and joint ventures
30 September 31 March
2022 2022
EURm EURm
--------------------------------- ------------ --------
INWIT S.p.A.(1) - 2,851
VodafoneZiggo Group Holding B.V. 893 822
TPG Telecom Limited 123 84
Other 49 24
--------------------------------- ------------ --------
Investment in joint ventures 1,065 3,781
INWIT S.p.A.(1) 2,778 -
Safaricom PLC 478 428
Other 60 59
--------------------------------- ------------ --------
Investment in associates 3,316 487
--------------------------------- ------------ --------
4,381 4,268
--------------------------------- ------------ --------
Note:
1. The shareholders' agreement between the Group and Telecom
Italia was terminated on 3 August 2022 due to a change in Telecom
Italia's shareholding in INWIT S.p.A. As a result, INWIT S.p.A.
ceased to be a joint venture of the Group and is now classified as
an associate .
Notes to the unaudited condensed consolidated financial
statements
8 Reconciliation of net cash flow from operating activities
Six months ended
30 September
2022 2021
EURm EURm
--------------------------------------------------- -------- --------
Profit for the financial period 1,243 1,277
Investment income (211) (129)
Financing costs 1,418 1,473
Income tax expense/(credit) 485 (1)
--------------------------------------------------- -------- --------
Operating profit 2,935 2,620
Adjustments for:
Share-based payments and other non-cash charges 46 98
Depreciation and amortisation 6,853 6,952
Loss on disposal of property, plant & equipment
and intangible assets 9 26
Share of results of equity accounted associates
and joint ventures (343) (111)
Other (income)/expense (104) 108
Increase in inventory (175) (41)
Increase in trade and other receivables (1,381) (1,254)
Decrease in trade and other payables (888) (1,366)
--------------------------------------------------- -------- --------
Cash generated by operations 6,952 7,032
Taxation (672) (577)
--------------------------------------------------- -------- --------
Net cash flow from operating activities 6,280 6,455
--------------------------------------------------- -------- --------
9 Fair value of financial instruments
The table below sets out the financial instruments held at fair
value by the Group.
30 September 31 March
2022 2022
EURm EURm
--------------------------------------------------------------- ------------ --------
Financial assets at fair value:
Money market funds (included within Cash and cash
equivalents)(1) 4,521 5,276
Debt and equity securities (included within Other
investments)(2) 5,992 6,398
Derivative financial instruments (included within
Trade and other receivables)(2,3) 8,769 4,626
Trade receivables at fair value through Other comprehensive
income (included within Trade and 1,967 1,408
other receivables)(2)
--------------------------------------------------------------- ------------ --------
21,249 17,708
--------------------------------------------------------------- ------------ --------
Financial liabilities at fair value:
Derivative financial instruments (included within
Trade and other payables)(2,3) 1,786 1,672
--------------------------------------------------------------- ------------ --------
1,786 1,672
--------------------------------------------------------------- ------------ --------
Notes:
1. Items are measured at fair value and the valuation basis is
Level 1 classification, which comprises financial instruments where
fair value is determined by unadjusted quoted prices in active
markets.
2. Quoted debt and equity securities of EUR2,537 million
(EUR2,997 million as at 31 March 2022) are Level 1 classification
which comprises items where fair value is determined by unadjusted
quoted prices in active markets. The remaining items are measured
at fair value and the basis is Level 2 classification which
comprises items where fair value is determined from inputs other
than quoted prices that are observable for the asset or liability,
either directly or indirectly.
3. EUR8,524 million (EUR4,216 million as at 31 March 2022) of
derivative financial assets and EUR1,596 million (EUR1,506 million
as at 31 March 2022) of derivative financial liabilities are
classified as non-current.
The fair value of the Group's financial liabilities held at
amortised cost approximates to fair value with the exception of
non-current bonds with a carrying value of EUR48,299 million
(EUR46,156 million as at 31 March 2022) and a fair value of
EUR40,722 million (EUR46,348 million as at 31 March 2022). Fair
value is based on Level 1 of the fair value hierarchy using quoted
market prices.
The fair value of the Group's financial assets held at amortised
cost approximate to fair value with the exception of non-current
debt securities with a carrying value of EUR1,003 million (EUR930
million as at 31 March 2022) and a fair value of EUR735 million
(EUR830 million as at 31 March 2022). Fair value is based on Level
2 of the fair value hierarchy which comprises items where fair
value is determined from inputs other than quoted prices that are
observable for the asset or liability, either directly or
indirectly.
Notes to the unaudited condensed consolidated financial
statements
10 Post employments benefits
Significant movements have been recorded in respect of the gross
assets held by and liabilities of the Group's pension schemes in
the period. The Group has obtained valuations for its most material
schemes in the UK, Germany and Ireland. Key financial information
is presented below.
The Group's plan liabilities are measured using the projected
unit credit method using the principal actuarial assumptions set
out below.
30 September 31 March
2022 2022
% %
------------------------------------------------- ------------ --------
Weighted average actuarial assumptions used(1) :
Rate of inflation(2) 3.2% 3.3%
Discount rate 4.7% 2.4%
------------------------------------------------- ------------ --------
Notes:
1. Figures shown represent a weighted average assumption of the
Group's plans in the UK, Germany and Ireland.
2. This rate of increase in pensions in payment and deferred
revaluation are dependent on the rate of inflation.
Assumptions relating to life expectancy are unchanged from 31
March 2022.
Charges made to the consolidated income statement and
consolidated statement of comprehensive income ('SOCI') on the
basis of the assumptions stated above are:
Six months ended
30 September
------------------
2022 2021
EURm EURm
---------------------------------------------------- -------- --------
Total net cost/(credit) included within staff costs 6 (58)
Actuarial (losses)/gains recognised in the SOCI (63) 246
---------------------------------------------------- -------- --------
The Group's overall net surplus is analysed as follows:
30 September 31 March
2022 2022
EURm EURm
------------ ------------ --------
Assets 493 555
Liabilities (281) (281)
------------ ------------ --------
Net surplus 212 274
------------ ------------ --------
An analysis of the net surplus is provided below for the
Vodafone UK Group Pension Scheme, comprising the Vodafone Section
and the Cable & Wireless Section ('CWW Section').
Vodafone Section CWW Section
---------------------- ----------------------
30 September 31 March 30 September 31 March
2022 2022 2022 2022
EURm EURm EURm EURm
----------------------------------- ------------ -------- ------------ --------
Analysis of net surplus:
Total fair value of plan assets 2,026 3,399 1,886 2,850
Present value of plan liabilities (1,856) (3,166) (1,648) (2,565)
----------------------------------- ------------ -------- ------------ --------
Net surplus 170 233 238 285
Net surplus are analysed as:
Assets 170 233 238 285
----------------------------------- ------------ -------- ------------ --------
On 18 October 2022, the Group entered into short term liquidity
facilities with both sections of the Vodafone UK Pension Scheme
('the UK scheme') for an aggregate amount of GBP450 million. These
facilities can be used for short-term liquidity purposes in
connection with potential future collateral calls, with the
intention of reducing the risk the UK Scheme would be required to
dispose of assets at short notice in the event of significant
increases in interest rates. Drawings can be made from the facility
until 27 January 2023, with all amounts borrowed required to be
repaid by 28 February 2023. No amounts were drawn under these
facilities at the date of this report.
Notes to the unaudited condensed consolidated financial
statements
11 Related party transactions
Transactions with joint ventures and associates
Related party transactions with the Group's joint ventures and
associates primarily consists of fees for the use of products and
services including network airtime and access charges, fees for the
provision of network infrastructure and cash pooling ventures. No
related party transactions have been entered into during the period
which might reasonably affect any decisions made by the users of
these unaudited condensed consolidated financial statements except
as disclosed below.
Six months ended
30 September
----------------------
2022 2021
EURm EURm
------------------------------------------------------- ------------ --------
Sales of goods and services to associates 11 10
Purchase of goods and services from associates 65 4
Sales of goods and services to joint arrangements 110 103
Purchase of goods and services from joint arrangements 69 132
Interest expense payable to associates(1) 25 -
Interest income receivable from joint arrangements(1) 22 26
Interest expense payable to joint arrangements(1) - 26
------------------------------------------------------- ------------ --------
30 September 31 March
2022 2022
EURm EURm
------------------------------------------------------- ------------ --------
Trade balances owed:
by associates 16 8
to associates 8 6
by joint arrangements 122 139
to joint arrangements 59 34
Other balances owed by associates - 80
Other balances owed to associates(2) 1,449 -
Other balances owed by joint arrangements(1) 986 1,080
Other balances owed to joint arrangements(2) 189 1,561
------------------------------------------------------- ------------ --------
Notes:
1. Amounts arise primarily through VodafoneZiggo Group Holding
B.V., TPG Telecom Limited and INWIT S.p.A. Interest is charged in
line with market rates.
2. Amounts are primarily in relation to leases of tower space
from INWIT S.p.A. which was classified as a joint venture in the
comparative period but is now classified as an associate. See note
7 'Investment in associates and joint ventures' for more
information.
In the six months ended 30 September 2022, the Group made
contributions to defined benefit pension schemes of EUR11 million
(Six months ended 30 September 2021: EUR12 million).
In the six months ended 30 September 2022, dividends of EUR1.2
million were paid to Board and Executive Committee members (Six
months ended 30 September 2021: EUR1.1 million).
Dividends received from associates and joint ventures are
disclosed in the consolidated statement of cash flows.
12 Contingent liabilities and legal proceedings
Note 28 'Commitments' and Note 29 'Contingent liabilities and
legal proceedings' to the consolidated financial statements of
Vodafone Group Plc for the year ended 31 March 2022 set forth the
Group's commitments, contingent liabilities and legal proceedings
as at 31 March 2022. There have been no material changes during the
period covered by this report.
Notes to the unaudited condensed consolidated financial
statements
13 Subsequent events
On 9 November 2022, the Group announced that it had entered into
a strategic co-control partnership with a consortium of long-term
infrastructure investors led by Global Infrastructure Partners and
KKR (together the 'Consortium') for Vodafone's 81.7% stake in
Vantage Towers A.G. ('Vantage Towers'). Vodafone and the Consortium
have created a joint venture ('JV') which will hold Vodafone's
81.7% stake in Vantage Towers. The JV will make a voluntary
takeover offer ('VTO') for the remaining 18.3% of shares in Vantage
Towers at EUR32 per share.
The Consortium will acquire JV shares from Vodafone for cash
consideration of EUR32 per share. The Consortium has fully
committed equity in place to obtain a shareholding in the JV of
between 32% and 40%, depending on the level of take-up in the VTO
by minority shareholders. The Consortium intends to raise
additional equity before completion to reach a shareholding of 50%.
The Group's minimum net cash proceeds will be EUR3.2bn based on
100% take up in the VTO. The maximum total net cash proceeds to
Vodafone based on a 50% shareholding for the Consortium and 100%
take up in the VTO will be EUR5.8 billion. The transaction is
conditional on regulatory clearance and is expected to close in the
first half of 2023.
On 9 November 2022, RRJ Capital entered into an irrevocable
undertaking to accept the VTO in respect of its 2.4% shareholding
in Vantage Towers. On 13 November 2022, the Group entered into an
agreement to purchase Digital Bridge's 4.1% shareholding in Vantage
Towers at the offer price of EUR32 per share and committed to
tender these shares into the VTO. This means that the JV will hold
a minimum shareholding of 88.3% in Vantage Towers following
completion of the VTO.
Independent review report to Vodafone Group Plc
Conclusion
We have been engaged by Vodafone Group Plc (the Company) to
review the unaudited condensed consolidated financial statements in
the half yearly financial report for the six months ended 30
September 2022 which comprise the consolidated income statement,
the consolidated statement of comprehensive income/expense, the
consolidated statement of financial position, the consolidated
statement of changes in equity, the consolidated statement of cash
flows and the related notes 1 to 13. We have read the other
information contained in the half yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the unaudited
condensed consolidated financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half yearly financial report for the six months ended 30
September 2022 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
Group will be prepared in accordance with UK adopted international
accounting standards and International Financial Reporting
Standards as issued by the IASB. The condensed set of financial
statements included in this half yearly financial report has been
prepared in accordance with UK adopted International Accounting
Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that management have inappropriately adopted
the going concern basis of accounting or that management have
identified material uncertainties relating to going concern that
are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of financial
information
In reviewing the half yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
15 November 2022
Non-GAAP measures
In the discussion of the Group's reported operating results,
non-GAAP measures are presented to provide readers with additional
financial information that is regularly reviewed by management.
This additional information presented is not uniformly defined by
all companies including those in the Group's industry. Accordingly,
it may not be comparable with similarly-titled measures and
disclosures by other companies. Additionally, certain information
presented is derived from amounts calculated in accordance with
IFRS but is not itself a measure defined under GAAP. Such measures
should not be viewed in isolation or as an alternative to the
equivalent GAAP measure. The non-GAAP measures discussed in this
document are listed below.
Defined Closest equivalent Reconciled
Non-GAAP measure on page GAAP measure on page
-------------------------------- --------- ----------------------------- -----------
Performance metrics
-------------------------------- --------- ----------------------------- -----------
Adjusted EBITDAaL Page 42 Operating profit Page 6
-------------------------------- --------- ----------------------------- -----------
Organic Adjusted EBITDAaL Page 42 Not applicable Page 43
growth
-------------------------------- --------- ----------------------------- -----------
Organic revenue growth Page 42 Revenue Pages 43
and 44
-------------------------------- --------- ----------------------------- -----------
Organic Group service revenue Page 42 Service revenue Pages 43
growth excluding Turkey and 44
-------------------------------- --------- ----------------------------- -----------
Organic Group Adjusted Page 42 Not applicable Page 43
EBITDAaL growth excluding
Turkey
-------------------------------- --------- ----------------------------- -----------
Organic service revenue Page 42 Service revenue Pages 43
growth and 44
-------------------------------- --------- ----------------------------- -----------
Organic mobile service Page 42 Service revenue Pages 43
revenue growth and 44
-------------------------------- --------- ----------------------------- -----------
Organic fixed service revenue Page 42 Service revenue Pages 43
growth and 44
-------------------------------- --------- ----------------------------- -----------
Organic Vodafone Business Page 42 Service revenue Pages 43
service revenue growth and 44
-------------------------------- --------- ----------------------------- -----------
Organic financial services Page 42 Service revenue Pages 43
revenue growth in South and 44
Africa
-------------------------------- --------- ----------------------------- -----------
Other metrics
-------------------------------- --------- ----------------------------- -----------
Adjusted profit attributable Page 45 Profit attributable Page 45
to owners of the parent to owners of the parent
-------------------------------- --------- ----------------------------- -----------
Adjusted basic earnings Page 45 Basic earnings per Page 46
per share share
-------------------------------- --------- ----------------------------- -----------
Cash flow, funding and
capital allocation metrics
-------------------------------- --------- ----------------------------- -----------
Free cash flow Page 46 Inflow from operating Page 47
activities
-------------------------------- --------- ----------------------------- -----------
Adjusted free cash flow Page 46 Inflow from operating Pages 18
activities and 47
-------------------------------- --------- ----------------------------- -----------
Gross debt Page 46 Borrowings Page 47
-------------------------------- --------- ----------------------------- -----------
Net debt Page 46 Borrowings less cash Page 47
and cash equivalents
-------------------------------- --------- ----------------------------- -----------
Pre-tax ROCE (controlled) Page 48 ROCE calculated using Pages 48
GAAP measures and 49
-------------------------------- --------- ----------------------------- -----------
Post-tax ROCE (controlled Page 48 ROCE calculated using Pages 48
and associates/joint ventures) GAAP measures and 49
-------------------------------- --------- ----------------------------- -----------
Financing and Taxation
metrics
-------------------------------- --------- ----------------------------- -----------
Adjusted net financing Page 50 Net financing costs Page 16
costs
-------------------------------- --------- ----------------------------- -----------
Adjusted profit before Page 50 Profit before taxation Page 50
taxation
-------------------------------- --------- ----------------------------- -----------
Adjusted income tax expense Page 50 Income tax expense Page 50
-------------------------------- --------- ----------------------------- -----------
Adjusted effective tax Page 50 Income tax expense Page 50
rate
-------------------------------- --------- ----------------------------- -----------
Adjusted share of results Page 50 Share of results of Page 51
of equity accounted associates equity accounted associates
and joint ventures and joint ventures
-------------------------------- --------- ----------------------------- -----------
Adjusted share of results Page 50 Share of results of Page 51
of equity accounted associates equity accounted associates
and joint ventures used and joint ventures
in post-tax ROCE
-------------------------------- --------- ----------------------------- -----------
Non-GAAP measures
Performance metrics
Non-GAAP measure Purpose Definition
------------------ -------------------------------- -------------------------------------
Adjusted EBITDAaL Adjusted EBITDAaL is used Adjusted EBITDAaL is operating
in conjunction with financial profit after depreciation on
measures such as operating lease-related right of use
profit to assess our operating assets and interest on leases
performance and profitability. but excluding depreciation,
It is a key external metric amortisation and gains/losses
used by the investor community on disposal of owned assets
to assess performance of and excluding share of results
our operations. of equity accounted associates
It is our segment performance and joint ventures, impairment
measure in accordance with losses, restructuring costs
IFRS 8 (Operating Segments). arising from discrete restructuring
plans, other income and expense
and significant items that
are not considered by management
to be reflective of the underlying
performance of the Group.
------------------ -------------------------------- -------------------------------------
Adjusted EBITDAaL margin is Adjusted EBITDAaL divided by
Revenue.
Organic growth
All amounts marked with an '*' in this document represent
organic growth which presents performance on a comparable basis,
excluding the impact of foreign exchange rates, mergers and
acquisitions, the hyperinflation adjustments in Turkey and other
adjustments to improve the comparability of results between
periods.
Organic growth is calculated for revenue and profitability
metrics, as follows:
- Adjusted EBITDAaL;
- Revenue;
- Group service revenue excluding Turkey(1) ;
- Group Adjusted EBITDAaL excluding Turkey(1) ;
- Service revenue;
- Mobile service revenue;
- Fixed service revenue;
- Vodafone Business service revenue; and
- Financial services revenue in South Africa.
Whilst organic growth is not intended to be a substitute for
reported growth, nor is it superior to reported growth, we believe
that the measure provides useful and necessary information to
investors and other interested parties for the following
reasons:
- It provides additional information on underlying growth of the
business without the effect of certain factors unrelated to its
operating performance;
- It is used for internal performance analysis; and
- It facilitates comparability of underlying growth with other
companies (although the term 'organic' is not a defined term under
GAAP and may not, therefore, be comparable with similarly-titled
measures reported by other companies).
We have not provided a comparative in respect of organic growth
rates as the current rates describe the change between the
beginning and end of the current period, with such changes being
explained by the commentary in this document. If comparatives were
provided, significant sections of the commentary for prior periods
would also need to be included, reducing the usefulness and
transparency of this document.
Note:
1. This is a new non-GAAP measure for FY23 and has been included
because of the hyperinflationary environment in Turkey.
Non-GAAP measures
Six months ended 30 September
2022
Reported M&A and Foreign Organic
H1 FY23 H1 FY22 growth Other exchange growth*
EURm EURm % pps pps %
------------------------------------ ------- ------- -------- ------- --------- --------
Service revenue
Germany 5,730 5,777 (0.8) - - (0.8)
------- ------- -------- ------- --------- --------
Mobile service revenue 2,546 2,541 0.2 - - 0.2
Fixed service revenue 3,184 3,236 (1.6) - - (1.6)
------------------------------------ ------- ------- -------- ------- --------- --------
Italy 2,125 2,187 (2.8) - - (2.8)
------- ------- -------- ------- --------- --------
Mobile service revenue 1,507 1,589 (5.2) - - (5.2)
Fixed service revenue 618 598 3.3 0.1 - 3.4
------------------------------------ ------- ------- -------- ------- --------- --------
UK 2,712 2,521 7.6 - (0.9) 6.7
------- ------- -------- ------- --------- --------
Mobile service revenue 2,003 1,797 11.5 - (1.0) 10.5
Fixed service revenue 709 724 (2.1) - (0.7) (2.8)
------------------------------------ ------- ------- -------- ------- --------- --------
Spain 1,782 1,866 (4.5) - - (4.5)
Other Europe 2,552 2,502 2.0 - 0.7 2.7
Vodacom 2,472 2,271 8.9 - (5.0) 3.9
Other Markets 1,721 1,752 (1.8) (1.2) 28.7 25.7
Of which: Turkey 676 815 (17.1) (3.5) 60.5 39.9
Vantage Towers - - - - - -
Common Functions 268 252
Eliminations (155) (118)
------------------------------------- ------- ------- -------- ------- --------- --------
Total service revenue 19,207 19,010 1.0 - 1.5 2.5
Other revenue 3,723 3,479
------------------------------------- ------- ------- -------- ------- --------- --------
Revenue 22,930 22,489 2.0 (0.1) 1.5 3.4
------------------------------------- ------- ------- -------- ------- --------- --------
Other growth metrics
Group service revenue excluding
Turkey 18,549 18,212 1.9 - (0.4) 1.5
Group adjusted EBITDAaL excluding
Turkey 7,029 7,283 (3.5) - (0.3) (3.8)
Vodafone Business - Service revenue 5,149 5,086 1.2 0.6 0.8 2.6
South Africa - Financial services
revenue 82 66 24.2 - (16.1) 8.1
------------------------------------- ------- ------- -------- ------- --------- --------
Adjusted EBITDAaL
Germany 2,677 2,892 (7.4) - - (7.4)
Italy 759 917 (17.2) (0.1) - (17.3)
UK 685 638 7.4 - (0.8) 6.6
Spain 445 445 - 0.2 - 0.2
Other Europe 843 836 0.8 - 0.7 1.5
Vodacom 1,084 1,062 2.1 - (3.7) (1.6)
Other Markets 671 683 (1.8) 4.8 25.2 28.2
Of which: Turkey 215 282 (23.8) 16.1 55.4 47.7
Vantage Towers 330 305 8.2 - 0.4 8.6
Common Functions (250) (213)
Eliminations - -
------------------------------------- ------- ------- -------- ------- --------- --------
Group 7,244 7,565 (4.2) 0.4 1.2 (2.6)
------------------------------------- ------- ------- -------- ------- --------- --------
Percentage point change in Adjusted
EBITDAaL margin
Germany 40.6% 44.9% (4.3) - - (4.3)
Italy 31.9% 36.6% (4.7) - - (4.7)
UK 20.2% 20.2% - - - -
Spain 22.6% 21.3% 1.3 0.1 - 1.4
Other Europe 29.1% 29.8% (0.7) - - (0.7)
Vodacom 33.9% 36.3% (2.4) - 0.2 (2.2)
Other Markets 34.4% 34.9% (0.5) 1.7 (1.8) (0.6)
Vantage Towers 50.2% 49.9% 0.3 - 0.2 0.5
------------------------------------- ------- ------- -------- ------- --------- --------
Group 31.6% 33.6% (2.0) 0.1 (0.1) (2.0)
------------------------------------- ------- ------- -------- ------- --------- --------
Non-GAAP measures
Quarter ended 30 September
2022
Reported M&A and Foreign Organic
Q2 FY23 Q2 FY22 growth Other exchange growth*
EURm EURm % pps pps %
---------------------------------- ------- ------- -------- ------- --------- --------
Service revenue
Germany 2,873 2,905 (1.1) - - (1.1)
------- ------- -------- ------- --------- --------
Mobile service revenue 1,282 1,287 (0.4) - - (0.4)
Fixed service revenue 1,591 1,618 (1.7) - - (1.7)
---------------------------------- ------- ------- -------- ------- --------- --------
Italy 1,073 1,111 (3.4) - - (3.4)
------- ------- -------- ------- --------- --------
Mobile service revenue 762 807 (5.6) - - (5.6)
Fixed service revenue 311 304 2.3 0.3 - 2.6
---------------------------------- ------- ------- -------- ------- --------- --------
UK 1,352 1,265 6.9 - - 6.9
------- ------- -------- ------- --------- --------
Mobile service revenue 1,000 902 10.9 - (0.1) 10.8
Fixed service revenue 352 363 (3.0) - 0.1 (2.9)
---------------------------------- ------- ------- -------- ------- --------- --------
Spain 884 941 (6.1) 0.1 - (6.0)
Other Europe 1,298 1,274 1.9 - 1.0 2.9
Vodacom 1,258 1,145 9.9 - (5.1) 4.8
Other Markets 907 923 (1.7) (2.2) 30.6 26.7
Vantage Towers - - - - --
Common Functions 140 127
Eliminations (92) (71)
----------------------------------- ------- ------- -------- ------- --------- --------
Total service revenue 9,693 9,620 0.8 (0.1) 1.8 2.5
Other revenue 1,959 1,768
----------------------------------- ------- ------- -------- ------- --------- --------
Revenue 11,652 11,388 2.3 (0.2) 2.0 4.1
----------------------------------- ------- ------- -------- ------- --------- --------
Other growth metrics
Group service revenue excluding
Turkey 9,344 9,201 1.6 - (0.2) 1.4
Vodafone Business - Service
revenue 2,591 2,544 1.8 0.5 1.1 3.4
South Africa - Financial services
revenue 42 33 27.3 - (15.7) 11.6
----------------------------------- ------- ------- -------- ------- --------- --------
Quarter ended 30 June 2022
Reported M&A and Foreign Organic
Q1 FY23 Q1 FY22 growth Other exchange growth*
EURm EURm % pps pps%
---------------------------------- ------- ------- -------- ------- --------- -------
Service revenue
Germany 2,857 2,872 (0.5) - - (0.5)
------- ------- -------- ------- --------- --------
Mobile service revenue 1,264 1,254 0.8 - - 0.8
Fixed service revenue 1,593 1,618 (1.5) (0.1) - (1.6)
---------------------------------- ------- ------- -------- ------- --------- --------
Italy 1,052 1,076 (2.2) (0.1) - (2.3)
------- ------- -------- ------- --------- --------
Mobile service revenue 745 782 (4.7) - - (4.7)
Fixed service revenue 307 294 4.4 (0.2) - 4.2
---------------------------------- ------- ------- -------- ------- --------- --------
UK 1,360 1,256 8.3 - (1.8) 6.5
------- ------- -------- ------- --------- --------
Mobile service revenue 1,003 895 12.1 - (1.8) 10.3
Fixed service revenue 357 361 (1.1) - (1.6) (2.7)
---------------------------------- ------- ------- -------- ------- --------- --------
Spain 898 925 (2.9) (0.1) - (3.0)
Other Europe 1,254 1,228 2.1 - 0.4 2.5
Vodacom 1,214 1,126 7.8 - (4.9) 2.9
Other Markets 814 829 (1.8) (0.1) 26.6 24.7
Vantage Towers - - - - --
Common Functions 128 125
Eliminations (63) (47)
----------------------------------- ------- ------- -------- ------- --------- --------
Total service revenue 9,514 9,390 1.3 - 1.2 2.5
Other revenue 1,764 1,711
----------------------------------- ------- ------- -------- ------- --------- --------
Revenue 11,278 11,101 1.6 - 1.1 2.7
----------------------------------- ------- ------- -------- ------- --------- --------
Other growth metrics
Group service revenue excluding
Turkey 9,205 9,011 2.2 - (0.6) 1.6
Vodafone Business - Service
revenue 2,558 2,542 0.6 0.7 0.4 1.7
South Africa - Financial services
revenue 40 33 21.2 - (16.6) 4.6
----------------------------------- ------- ------- -------- ------- --------- --------
Non-GAAP measures
Other metrics
Non-GAAP measure Purpose Definition
------------------ ------------------------------ ---------------------------------------
Adjusted profit This metric is used in Adjusted profit attributable
attributable the calculation of adjusted to owners of the parent excludes
to owners of basic earnings per share. restructuring costs arising
the parent from discrete restructuring
plans, amortisation of customer
bases and brand intangible assets,
impairment losses, other income
and expense and mark-to-market
and foreign exchange movements,
together with related tax effects.
------------------ ------------------------------ ---------------------------------------
Adjusted basic This performance measure Adjusted basic earnings per
earnings per is used in discussions share is Adjusted profit attributable
share with the investor community. to owners of the parent divided
by the weighted average number
of shares outstanding. This
is the same denominator used
when calculating basic earnings
per share.
------------------ ------------------------------ ---------------------------------------
Adjusted EBITDAaL and Adjusted profit attributable to owners of
the parent
The table below reconciles Adjusted EBITDAaL and Adjusted profit
attributable to owners of the parent to their closest equivalent
GAAP measures, being Operating profit and Profit attributable to
owners of the parent, respectively.
H1 FY23 H1 FY22
------------------------------- -------------------------------
Reported Adjustments Adjusted Reported Adjustments Adjusted
EURm EURm EURm EURm EURm EURm
---------------------------------- -------- ----------- -------- -------- ----------- --------
Adjusted EBITDAaL 7,244 - 7,244 7,565 - 7,565
Restructuring costs (142) 142 - (172) 172 -
Interest on lease liabilities 204 - 204 199 - 199
Loss on disposal of property,
plant & equipment and intangible
assets (11) - (11) (26) - (26)
Depreciation and amortisation
on owned assets(1) (4,807) 250 (4,557) (4,949) 253 (4,696)
Share of results of equity
accounted associates and
joint ventures(2) 343 120 463 111 137 248
Other income/(expense) 104 (104) - (108) 108 -
---------------------------------- -------- ----------- -------- -------- ----------- --------
Operating profit 2,935 408 3,343 2,620 670 3,290
Investment income 211 - 211 129 - 129
Financing costs (1,418) 340 (1,078) (1,473) 453 (1,020)
---------------------------------- -------- ----------- -------- -------- ----------- --------
Profit before taxation 1,728 748 2,476 1,276 1,123 2,399
Income tax (expense)/credit (485) (42) (527) 1 (679) (678)
---------------------------------- -------- ----------- -------- -------- ----------- --------
Profit for the financial
period 1,243 706 1,949 1,277 444 1,721
---------------------------------- -------- ----------- -------- -------- ----------- --------
Profit attributable to:
- Owners of the parent 986 703 1,689 996 442 1,438
- Non-controlled interests 257 3 260 281 2 283
---------------------------------- -------- ----------- -------- -------- ----------- --------
Profit for the financial
period 1,243 706 1,949 1,277 444 1,721
---------------------------------- -------- ----------- -------- -------- ----------- --------
Notes:
1. Reported depreciation and amortisation excludes depreciation
on leased assets and loss on disposal of leased assets included
within Adjusted EBITDAaL. Refer to Additional Information on page
51 for an analysis of depreciation and amortisation. The
adjustments of EUR250 million (H1 FY22: EUR253 million) relate to
amortisation of customer bases and brand intangible assets.
2. Refer to page 51 for a breakdown of the adjustments to Share
of results of equity accounted associates and joint ventures to
derive Adjusted share of results of equity accounted associates and
joint ventures.
Non-GAAP measures
Adjusted basic earnings per share
The reconciliation of adjusted basic earnings per share to the
closest equivalent GAAP measure, basic earnings per share, is
provided below.
H1 FY23 H1 FY22
EURm EURm
------------------------------------------------------ --------- ---------
Profit attributable to owners of the parent 986 996
Adjusted profit attributable to owners of the parent 1,689 1,438
Million Million
--------- ---------
Weighted average number of shares outstanding - Basic 28,037 29,331
eurocents eurocents
--------- ---------
Basic earnings per share 3.52c 3.40c
Adjusted basic earnings per share 6.02c 4.90c
------------------------------------------------------ --------- ---------
Cash flow, funding and capital allocation metrics
Cash flow and funding
Non-GAAP measure Purpose Definition
----------------- --------------------------------- --------------------------------------
Free cash flow Internal performance reporting. Free cash flow is Adjusted
External metric used by EBITDAaL after cash flows in
investor community. relation to capital additions,
Assists comparability with working capital, disposal of
other companies, although property, plant and equipment,
our metric may not be directly restructuring costs arising
comparable to similarly from discrete restructuring
titled measures used by plans, integration capital
other companies. additions and working capital
related items, licences and
spectrum, interest received
and paid, taxation, dividends
received from associates and
investments, dividends paid
to non-controlling shareholders
in subsidiaries and payments
in respect of lease liabilities.
----------------- --------------------------------- --------------------------------------
Adjusted free Internal performance reporting. Adjusted free cash flow is
cash flow External metric used by Free cash flow before licences
investor community. and spectrum, restructuring
Setting director and management costs arising from discrete
remuneration. restructuring plans, integration
Key external metric used capital additions and working
to evaluate liquidity and capital related items, M&A
the cash generated by our and Vantage Towers growth capital
operations. expenditure.
Growth capital expenditure
is total capital expenditure
excluding maintenance-type
expenditure.
----------------- --------------------------------- --------------------------------------
Gross debt Prominent metric used by Non-current borrowings and
debt rating agencies and current borrowings, excluding
the investor community. lease liabilities, collateral
liabilities and borrowings
specifically secured against
Indian assets.
----------------- --------------------------------- --------------------------------------
Net debt Prominent metric used by Gross debt less cash and cash
debt rating agencies and equivalents, short-term investments,
the investor community. derivative financial instruments
excluding mark-to-market adjustments
and net collateral assets.
----------------- --------------------------------- --------------------------------------
Non-GAAP measures
Cash flow and funding (continued)
The table below presents the reconciliation between Inflow from
operating activities and Free cash flow.
H1 FY23 H1 FY22
EURm EURm
--------------------------------------------------- ------- -------
Inflow from operating activities 6,280 6,455
Net tax paid 672 577
--------------------------------------------------- ------- -------
Cash generated by operations 6,952 7,032
Capital additions (3,541) (3,365)
Working capital movement in respect of capital
additions (966) (739)
Disposal of property, plant and equipment and
intangible assets - 8
Integration capital additions (101) (110)
Working capital movement in respect of integration
capital additions (69) (76)
Licences and spectrum (2,181) (482)
Interest received and paid (841) (727)
Taxation (672) (577)
Dividends received from associates and joint
ventures 463 469
Dividends paid to non-controlling shareholders
in subsidiaries (290) (399)
Payments in respect of lease liabilities (2,003) (2,056)
Other 4 39
--------------------------------------------------- ------- -------
Free cash flow (3,245) (983)
--------------------------------------------------- ------- -------
The table below presents the reconciliation between Borrowings,
Gross debt and Net debt.
Period-end Year-end
FY23 FY22
EURm EURm
----------------------------------------------------- ---------- --------
Borrowings (75,582) (70,092)
Lease liabilities 12,022 12,539
Bank borrowings secured against Indian assets 1,385 1,382
Collateral liabilities 8,395 2,914
------------------------------------------------------ ---------- --------
Gross debt (53,780) (53,257)
Collateral liabilities (8,395) (2,914)
Cash and cash equivalents 7,072 7,496
Short-term investments 4,402 4,795
Collateral assets 754 698
Derivative financial instruments 6,983 2,954
Less mark-to-market gains deferred in hedge reserves (2,559) (1,350)
------------------------------------------------------ ---------- --------
Net debt (45,523) (41,578)
------------------------------------------------------ ---------- --------
Non-GAAP measures
Return on Capital Employed
Non-GAAP measure Purpose Definition
---------------------- ------------------------------ ----------------------------------------------
Return on Capital ROCE is a metric used We calculate ROCE by dividing Operating
Employed ('ROCE') by the investor community profit by the average of capital
and reflects how efficiently employed as reported in the consolidated
we are generating statement of financial position.
profit with the capital Capital employed includes borrowings,
we deploy. cash and cash equivalents, derivative
financial instruments included in
trade and other receivables/payables,
short-term investments, collateral
assets, financial liabilities under
put option arrangements and equity.
---------------------- ------------------------------ ----------------------------------------------
Pre-tax ROCE As above We calculate pre-tax ROCE (controlled)
(controlled) by dividing Operating profit excluding
interest on lease liabilities, restructuring
Post-tax ROCE costs arising from discrete restructuring
(controlled plans, impairment losses, other
and associates/joint income and expense, the impact of
ventures) hyper-inflationary adjustments in
Turkey and the share of results
of equity accounted associates and
joint ventures. On a post-tax basis,
the measure includes our adjusted
share of results from associates
and joint ventures and a notional
tax charge. Capital is equivalent
to net operating assets and is calculated
as the average of opening and closing
balances of: property, plant and
equipment (including leased assets
and lease liabilities), intangible
assets (including goodwill), operating
working capital (including held
for sale assets and excluding derivative
balances) and provisions, excluding
the impact of hyper-inflationary
adjustments in Turkey. Other assets
that do not directly contribute
to returns are excluded from this
measure and include other investments,
current and deferred tax balances
and post employment benefits. On
a post-tax basis, ROCE also includes
our investments in associates and
joint ventures.
---------------------- ------------------------------ ----------------------------------------------
ROCE using GAAP measures
The table below presents the calculation of ROCE using GAAP
measures as reported in the consolidated income statement and
consolidated statement of financial position.
For the purpose of the half-year ROCE calculation, the returns
are based on the 12 months ended 30 September and the denominator
is based on the average of the capital employed as at 30 September
2022 and 30 September 2021.
H1 FY23 H1 FY22
EURm EURm
---------------------------------------------------- ------- -------
Operating profit (1) 5,979 4,363
Borrowings(2) 75,644 69,521
Cash and cash equivalents(2) (7,077) (5,824)
Derivative financial instruments included in trade
and other receivables (8,769) (3,666)
Derivative financial instruments included in trade
and other payables 1,786 3,016
Short-term investments (4,402) (4,043)
Collateral assets (754) (1,654)
Financial liabilities under put option arrangements 486 502
Equity 57,737 58,047
---------------------------------------------------- ------- -------
Capital employed at end of the year 114,651 115,899
Average capital employed for the year 115,275 116,450
ROCE using GAAP measures 5.2% 3.7%
---------------------------------------------------- ------- -------
Notes:
1. Operating profit includes Other income/(expense), which
includes merger and acquisition activity that is non-recurring in
nature.
2. Includes Borrowings (EUR62m) and Cash and cash equivalents
(EUR5m) classified as held for sale. See note 4 for details.
Non-GAAP measures
Return on Capital Employed ('ROCE') : Non-GAAP basis
The table below presents the calculation of ROCE using non-GAAP
measures and reconciliations to the closest equivalent GAAP
measure.
For the purpose of the half-year ROCE calculation, the returns
are based on the 12 months ended 30 September and the denominator
is based on the average of the capital employed as at 30 September
2022 and 30 September 2021.
H1 FY23 H1 FY22
EURm EURm
----------------------------------------------------- -------- --------
Operating profit 5,979 4,363
Interest on lease liabilities (403) (384)
Restructuring costs 315 442
Other income (290) 595
Share of results of equity accounted associates
and joint ventures (443) (193)
Other adjustments to Adjusted operating profit
arising from hyperinflationary accounting in Turkey 128 -
----------------------------------------------------- -------- --------
Adjusted operating profit for calculating pre-tax
ROCE (controlled) 5,286 4,823
Adjusted share of results of equity accounted
associates and joint ventures used in post-tax
ROCE(1) 447 194
Notional tax at adjusted effective tax rate(2) (1,550) (1,463)
----------------------------------------------------- -------- --------
Adjusted operating profit for calculating post-tax
ROCE (controlled and associates/joint ventures) 4,183 3,554
Capital employed for calculating ROCE on a GAAP
basis 114,651 115,899
Adjustments to exclude:
- Leases(3) (12,084) (12,428)
- Deferred tax assets (18,699) (21,800)
- Deferred tax liabilities(3) 697 1,985
- Taxation recoverable (393) (515)
- Taxation liabilities 722 1,079
- Other investments (1,783) (1,609)
- Associates, joint ventures and assets held for
sale (5,395) (5,653)
- Pension assets and liabilities (212) 121
- Other adjustments to Adjusted capital employed
arising from hyperinflationary accounting in Turkey (854) -
----------------------------------------------------- -------- --------
Adjusted capital employed for calculating pre-tax
ROCE (controlled) 76,650 77,079
Associates, joint ventures and assets held for
sale 5,395 5,653
----------------------------------------------------- -------- --------
Adjusted capital employed for calculating post-tax
ROCE (controlled and associates/joint ventures) 82,045 82,732
Average capital employed for calculating pre-tax
ROCE (controlled) 76,865 76,895
Average capital employed for calculating post-tax
ROCE (controlled and associates/joint ventures) 82,389 82,585
Pre-tax ROCE (controlled) 6.9% 6.3%
Post-tax ROCE (controlled and associates/joint
ventures) 5.1% 4.3%
----------------------------------------------------- -------- --------
Notes:
1. Adjusted share of results of equity accounted associates and
joint ventures used in post-tax ROCE is a non-GAAP measure and
excludes restructuring costs.
2. Includes tax for H1 FY23 at the Adjusted effective tax rate
of 26.2%, together with tax for H2 FY22 at the adjusted effective
tax rate of 27.9%.
3. Includes Leases (EUR62m) and Deferred tax liabilities
(EUR16m) classified as held for sale. See note 4 for details.
Non-GAAP measures
Financing and Taxation metrics
Non-GAAP measure Purpose Definition
------------------- ------------------------------ --------------------------------------------
Adjusted net This metric is used Adjusted net financing costs exclude
financing costs by both management mark-to-market and foreign exchange
and the investor community. gains/losses.
This metric is used
in the calculation
of adjusted basic
earnings per share.
------------------- ------------------------------ --------------------------------------------
Adjusted profit This metric is used Adjusted profit before taxation
before taxation in the calculation excludes the tax effects of items
of the adjusted effective excluded from adjusted basic earnings
tax rate (see below). per share, including: impairment
losses, amortisation of customer
bases and brand intangible assets,
restructuring costs arising from
discrete restructuring plans, other
income and expense and mark-to-market
and foreign exchange movements.
------------------- ------------------------------ --------------------------------------------
Adjusted income This metric is used Adjusted income tax expense excludes
tax expense in the calculation the tax effects of items excluded
of the adjusted effective from adjusted basic earnings per
tax rate (see below). share, including: impairment losses,
amortisation of customer bases and
brand intangible assets, restructuring
costs arising from discrete restructuring
plans, other income and expense
and mark-to-market and foreign exchange
movements. It also excludes deferred
tax movements relating to tax losses
in Luxembourg as well as other significant
one-off items.
------------------- ------------------------------ --------------------------------------------
Adjusted effective This metric is used Adjusted income tax expense (see
tax rate by both management above) divided by Adjusted profit
and the investor community. before taxation (see above).
------------------- ------------------------------ --------------------------------------------
Adjusted share This metric is used Share of results of equity accounted
of results of in the calculation associates and joint ventures excluding
equity accounted of adjusted effective restructuring costs, amortisation
associates and tax rate. of acquired customer base and brand
joint ventures intangible assets and other income
and expense.
------------------- ------------------------------ --------------------------------------------
Adjusted share This metric is used Share of results of equity accounted
of results of in the calculation associates and joint ventures excluding
equity accounted of post-tax ROCE (controlled restructuring costs and other income
associates and and associates/joint and expense.
joint ventures ventures).
used in post-tax
ROCE
------------------- ------------------------------ --------------------------------------------
Adjusted tax metrics
The table below reconciles profit before taxation and income tax
expense to adjusted profit before taxation, adjusted income tax
expense and adjusted effective tax rate.
H1 FY23 H1 FY22
EURm EURm
---------------------------------------------------------- ------- -------
Profit before taxation 1,728 1,276
Adjustments to derive adjusted profit before tax 748 1,123
---------------------------------------------------------- ------- -------
Adjusted profit before taxation 2,476 2,399
Adjusted share of results of equity accounted associates
and joint ventures (463) (248)
---------------------------------------------------------- ------- -------
Adjusted profit before tax for calculating adjusted
effective tax rate 2,013 2,151
---------------------------------------------------------- ------- -------
Income tax (expense)/credit (485) 1
Tax on adjustments to derive adjusted profit before
tax (132) (62)
Adjustments:
- UK corporate interest restriction 35 -
- Tax relating to hyperinflation accounting 55 -
- Deferred tax on use of Luxembourg losses in
the year - 155
- Increase in deferred tax assets in the UK as
a result of a change in the corporate tax rate - (498)
- Revaluation of assets for tax purposes in Italy - (274)
---------------------------------------------------------- ------- -------
Adjusted income tax expense for calculating adjusted
tax rate (527) (678)
---------------------------------------------------------- ------- -------
Adjusted effective tax rate 26.2% 31.5%
---------------------------------------------------------- ------- -------
Non-GAAP measures
Adjusted share of results of equity accounted associates and
joint ventures
The table below reconciles adjusted share of results of equity
accounted associates and joint ventures to the closest GAAP
equivalent, share of results of equity accounted associates and
joint ventures.
H1 FY23 H1 FY22
EURm EURm
--------------------------------------------------------- ------- -------
Share of results of equity accounted associates
and joint ventures 343 111
Restructuring costs 3 11
--------------------------------------------------------- ------- -------
Adjusted share of results of equity accounted associates
and joint ventures used in post-tax ROCE 346 122
Amortisation of acquired customer base and brand
intangible assets 117 126
--------------------------------------------------------- ------- -------
Adjusted share of results of equity accounted associates
and joint ventures 463 248
--------------------------------------------------------- ------- -------
Additional information
Analysis of depreciation and amortisation
The table below presents an analysis of the different components
of depreciation and amortisation discussed in the document,
reconciled to the GAAP amounts in the consolidated income
statement.
H1 FY23 H1 FY22
EURm EURm
------------------------------------------------------ ------- -------
Depreciation on leased assets - included in Adjusted
EBITDAaL 2,046 2,003
Depreciation on owned assets 2,869 2,905
Amortisation of owned intangible assets 1,938 2,044
------------------------------------------------------ ------- -------
Depreciation and amortisation on owned assets 4,807 4,949
Total depreciation and amortisation on owned and
leased assets 6,853 6,952
Loss on disposal of owned fixed assets 11 26
Loss on disposal of leased assets (2) -
------------------------------------------------------ ------- -------
Depreciation and amortisation - as recognised in
the consolidated income statement 6,862 6,978
------------------------------------------------------ ------- -------
Analysis of tangible and intangible additions
The table below presents an analysis of the different components
of tangible and intangible additions discussed in the document.
H1 FY23 H1 FY22
EURm EURm
----------------------------------------------- ------- -------
Capital additions 3,541 3,365
Integration related capital additions 101 110
Licence and spectrum additions 193 829
----------------------------------------------- ------- -------
Additions 3,835 4,304
----------------------------------------------- ------- -------
Intangible assets additions 1,316 1,878
Property, plant and equipment owned additions 2,519 2,426
----------------------------------------------- ------- -------
Total additions 3,835 4,304
----------------------------------------------- ------- -------
Definitions
Key terms are defined below. See page 41 for the location of
definitions for non-GAAP measures.
Term Definition
Africa Comprises the Vodacom Group and businesses in Egypt and
Ghana.
------------------------------------------------------------------
ARPU Average revenue per user, defined as customer revenue and
incoming revenue divided by average customers.
------------------------------------------------------------------
Capital additions Comprises the purchase of property, plant and equipment
and intangible assets, other than licence and spectrum payments
and integration capital expenditure.
------------------------------------------------------------------
Churn Total gross customer disconnections in the period divided
by the average total customers in the period.
------------------------------------------------------------------
Common Functions Comprises central teams and business functions.
------------------------------------------------------------------
Converged A customer who receives fixed and mobile services (also
customer known as unified communications) on a single bill or who
receives a discount across both bills.
------------------------------------------------------------------
Depreciation The accounting charge that allocates the cost of tangible
and amortisation or intangible assets, whether owned or leased, to the income
statement over its useful life. The measure includes the
profit or loss on disposal of property, plant and equipment,
software and leased assets.
------------------------------------------------------------------
Eliminations Refers to the removal of intercompany transactions to derive
the consolidated financial statements.
------------------------------------------------------------------
Europe Comprises the Group's European businesses and the UK.
------------------------------------------------------------------
Financial Financial services revenue includes fees generated from
services the provision of advanced airtime, overdraft, financing
revenue and lending facilities, as well as merchant payments and
the sale of insurance products (e.g. device insurance, life
insurance and funeral cover).
------------------------------------------------------------------
Fixed service Service revenue (see below) relating to the provision of
revenue fixed line and carrier services.
------------------------------------------------------------------
GAAP Generally Accepted Accounting Principles.
------------------------------------------------------------------
IFRS International Financial Reporting Standards.
------------------------------------------------------------------
Incoming Comprises revenue from termination rates for voice and messaging
revenue to Vodafone customers.
------------------------------------------------------------------
Integration Capital expenditure incurred in relation to significant
capital expenditure changes in the operating model, such as the integration
of recently acquired subsidiaries.
------------------------------------------------------------------
Internet The network of physical objects embedded with electronics,
of Things software, sensors, and network connectivity, including built-in
('IoT') mobile SIM cards, that enable these objects to collect data
and exchange communications with one another or a database.
------------------------------------------------------------------
Mobile service Service revenue (see below) relating to the provision of
revenue mobile services.
------------------------------------------------------------------
MVNO Mobile Virtual Network Operator: companies that provide
mobile phone services under wholesale contracts with a mobile
network operator, but do not have their own licence or spectrum
or the infrastructure required to operate a network.
------------------------------------------------------------------
Next generation Fibre or cable networks typically providing high-speed broadband.
networks
('NGN')
------------------------------------------------------------------
Operating Comprise primarily sales and distribution costs, network
expenses and IT related expenditure and business support costs.
------------------------------------------------------------------
Other Europe Other Europe markets include Portugal, Ireland, Greece,
Romania, Czech Republic, Hungary and Albania.
------------------------------------------------------------------
Other Markets Other Markets comprise Turkey, Egypt and Ghana.
------------------------------------------------------------------
Other revenue Other revenue principally includes equipment revenue, interest
income, income from partner market arrangements and lease
revenue, including in respect of the lease out of passive
tower infrastructure.
------------------------------------------------------------------
Reported Reported growth is based on amounts reported in euros and
growth determined under IFRS.
------------------------------------------------------------------
Revenue The total of Service revenue (defined below) and Other revenue
(defined above).
------------------------------------------------------------------
Roaming and Roaming: allows customers to make calls, send and receive
Visitor texts and data on our and other operators' mobile networks,
usually while travelling abroad. Visitor: revenue received
from other operators or markets when their customers roam
on one of our markets' networks.
------------------------------------------------------------------
Service revenue Service revenue is all revenue related to the provision
of ongoing services to the Group's consumer and enterprise
customers, together with roaming revenue, revenue from incoming
and outgoing network usage by non-Vodafone customers and
interconnect charges for incoming calls.
------------------------------------------------------------------
SME Small and medium sized enterprises.
------------------------------------------------------------------
Vodafone Vodafone Business is part of the Group and partners with
Business businesses of every size to provide a range of business-related
services.
------------------------------------------------------------------
Notes
1. References to Vodafone are to Vodafone Group Plc and
references to Vodafone Group are to Vodafone Group Plc and its
subsidiaries unless otherwise stated. Vodafone, the Vodafone Speech
Mark Devices, Vodacom and Together we can are trade marks owned by
Vodafone. Vantage Towers is a trade mark owned by Vantage Towers
A.G. Other product and company names mentioned herein may be the
trade marks of their respective owners.
2. All growth rates reflect a comparison to the quarter ended 30
September 2021 unless otherwise stated.
3. References to "Q1", "Q2", "Q3" and "Q4" are to the three
months ended 30 June, 30 September, 31 December and 31 March.
References to "H1" and "H2" are to the six month periods ended 30
September and 31 March, respectively. References to the "year",
"financial year" or "FY23" are to the financial year ending 31
March 2023. References to the "last year", "last financial year" or
"FY22" are to the financial year ended 31 March 2022. References to
"H1 FY23" are to the six month period ended 30 September 2022.
References to "H1 FY22" are to the six month period ended 30
September 2021.
4. Vodacom refers to the Group's interest in Vodacom Group
Limited ('Vodacom') as well as its operations, including
subsidiaries in South Africa, DRC, Tanzania, Mozambique and
Lesotho.
5. Quarterly historical information is provided in a spreadsheet available at https://investors.vodafone.com/reports-information/results-reports-presentations
6. This document contains references to our and our affiliates'
websites. Information on any website is not incorporated into this
update and should not be considered part of this update.
Forward-looking statements and other matters
This report contains "forward-looking statements" within the
meaning of the US Private Securities Litigation Reform Act of 1995
with respect to the Group's financial condition, results of
operations and businesses and certain of the Group's plans and
objectives.
In particular, such forward-looking statements include, but are
not limited to, statements with respect to: expectations regarding
the Group's financial condition or results of operations and the
guidance for Adjusted EBITDAaL and Adjusted free cash flow for the
financial year ending 31 March 2023; the Group's sustainable
business strategy; the sale of Vodafone Egypt, the combination of
Vodafone UK and Three UK, the purchase of Cabonitel S.A. and the
sale of Vodafone Hungary; expectations for the Group's future
performance generally; expectations regarding the operating
environment and market conditions and trends, including customer
usage, competitive position and macroeconomic pressures, price
trends and opportunities in specific geographic markets; intentions
and expectations regarding the development, launch and expansion of
products, services and technologies, either introduced by Vodafone
or by Vodafone in conjunction with third parties or by third
parties independently; expectations regarding the Group's
environmental targets, expectations regarding the integration or
performance of current and future investments, associates, joint
ventures, non-controlled interests and newly acquired
businesses.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
"will", "anticipates", "could", "may", "should", "expects",
"believes", "intends", "plans" or "targets" (including in their
negative form or other variations). By their nature,
forward-looking statements are inherently predictive, speculative
and involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the future.
There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied
by these forward-looking statements. These factors include, but are
not limited to, the following: external cyber-attacks, insider
threats or supplier breaches; general economic and political
conditions including as a consequence of the COVID-19 pandemic and
ongoing war in Ukraine as well as in jurisdictions in which the
Group operates, including as a result of Brexit, and changes to the
associated legal, regulatory and tax environments; inflation;
increased competition; increased disintermediation; levels of
investment in network capacity and the Group's ability to deploy
new technologies, products and services; infrastructure
competitiveness; rapid changes to existing products and services
and the inability of new products and services to perform in
accordance with expectations; the ability of the Group to integrate
new technologies, products and services with existing networks,
technologies, products and services; the Group's ability to
generate and grow revenue; a lower than expected impact of new or
existing products, services or technologies on the Group's future
revenue,
cost structure and capital expenditure outlays; slower than
expected customer growth, reduced customer retention, reductions or
changes in customer spending and increased pricing pressure; the
Group's ability to extend and expand its spectrum position to
support ongoing growth in customer demand for mobile data services;
the Group's ability to secure the timely delivery of high-quality
products from suppliers; loss of suppliers, disruption of supply
chains and greater than anticipated prices of new mobile handsets;
changes in the costs to the Group of, or the rates the Group my
charge for, terminations and roaming minutes; the impact of a
failure or significant interruption to the Group's
telecommunications, networks, IT systems or data protection
systems; the Group's ability to realise expected benefits from
acquisitions, partnerships, joint ventures, franchises, brand
licences, platform sharing or other arrangements with third parties
or portfolio transformation; acquisitions and divestment of Group
businesses and assets and the pursuit of new, unexpected strategic
opportunities; the Group's ability to integrate acquired business
or assets; the extent of any future write-downs or impairment
charges on the Group's assets, or restructuring charges incurred as
a result of an acquisition or disposition; 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 2022. The Annual Report can be found on the Group's
website (https://investors.vodafone.com/reports-information). All
subsequent written or oral forward-looking statements attributable
to the Company or any member of the Group or any persons acting on
their behalf are expressly qualified in their entirety by the
factors referred to above. No assurances can be given that the
forward-looking statements in this document will be realised. Any
forward-looking statements are made as of the date of this
presentation. Subject to compliance with applicable law and
regulations, Vodafone does not intend to update these
forward-looking statements and does not undertake any obligation to
do so.
Copyright (c) Vodafone Group 2022
-End-
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IR FFFLILVLSLIF
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