TIDMVOD
RNS Number : 3086T
Vodafone Group Plc
14 November 2023
Vodafone Group Plc H1 FY24 results
14 November 2023
Initial strategic progress & improved revenue trends
Margherita Della Valle, Group Chief Executive, commented:
"During the first half of the year, we have delivered improved
revenue growth in nearly all of our markets and have returned to
growth in Germany in the second quarter.
Vodafone's transformation is progressing. Our focus on customers
and simplifying our business is beginning to bear fruit, although
much more needs to be done. We have also announced transactions to
strengthen our position in the UK and exit the challenging Spanish
market in order to right-size our portfolio for growth."
Financial results H1 FY24 H1 FY23 Change
---------------------------------------------
Page EURm EURm %
-------------------------------------------- ----- --------- --------- ------
Group revenue 4 21,937 22,930 (4.3)
Group service revenue 4 18,618 19,207 4.2*
Operating profit(1) 4 1,655 2,968 (44.2)
Adjusted EBITDAaL(2) 4 6,378 7,244 0.3*
(Loss)/profit for the financial
period(1) 4 (155) 1,202
Basic (loss)/earnings per share(1) 15 (1.28)c 3.37c
Adjusted basic earnings per share(1,2) 15 3.43c 5.90c
Interim dividend per share 18 4.50c 4.50c
Cash inflow from operating activities 15 5,544 6,280 (11.7)
Adjusted free cash flow(2) 16 (1,474) (513)
Net debt(2) 17 (36,240) (45,523) 20.4
============================================= ===== ========= ========= ======
* represents organic growth. See page 2. 1. H1 FY23 re-presented for
the reclassification of Indus Towers. See page 33. 2. Non-GAAP measure.
See page 40.
-- Group service revenue growth of 4.2%* in H1 FY24, or 2.3%*
excluding Turkey, with both Europe (Q1: 0.4%*, Q2: 1.5%*) and
Africa (Q1: 9.0%*, Q2: 9.0%*) growing
-- Good improvement in Germany (Q1: -1.3%*, Q2: 1.1%*) and
continued acceleration in Vodafone Business with 4.4%* growth in H1
FY24
-- Group revenue decline of 4.3% to EUR21.9 billion due to
adverse foreign exchange rate movements and the disposal of Vantage
Towers, Vodafone Hungary and Vodafone Ghana in the prior financial
year
-- Operating profit decrease of 44.2% to EUR1.7 billion
reflecting business disposals in the prior financial year, adverse
foreign exchange rate movements and lower share of results of
associates and joint ventures
-- Adjusted EBITDAaL growth of 0.3%* despite a significant increase in energy costs
-- Adjusted free cash outflow of EUR1.5 billion in the period,
reflecting lower Adjusted EBITDAaL and lower dividends from
associates and joint ventures
-- Announced merger in the UK and sale of Vodafone Spain as we right-size Vodafone for growth
-- FY24 guidance reiterated with Adjusted EBITDAaL expected to
be 'broadly flat' at around EUR13.3 billion and Adjusted free cash
flow to be 'around' EUR3.3 billion
-- Interim dividend per share of 4.5 eurocents, record date 24 November 2023
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 14
November 2023. The webcast and supporting information can be
accessed at investors.vodafone.com
Financial summary
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 adjustment 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 40 for more information.
Segmental reporting
From 1 April 2023, the Group revised its segmental reporting by
moving Vodafone Egypt from the Other Markets segment to the Vodacom
segment. This is the effective date on which the Group's reporting
structure changed to reflect the transfer of Vodafone Egypt to the
Vodacom Group. All comparatives for these two segments have been
re-presented on the new basis of segmental reporting. There is no
impact on previously reported Group metrics.
Financial performance
Total revenue declined by 4.3% to EUR21.9 billion (FY23 H1:
EUR22.9 billion) driven by adverse foreign exchange rate movements
and the disposal of Vantage Towers, Vodafone Hungary and Vodafone
Ghana in the prior financial year.
On a reported basis, Adjusted EBITDAaL decreased to EUR6.4
billion (FY23 H1: EUR7.2 billion), with organic growth of 0.3%*
despite a significant increase in energy costs. Adjusted EBITDAaL
margin was 0.8* percentage points lower year-on-year at 29.1%.
Operating profit decreased by 44.2% to EUR1.7 billion and the
Group made a loss for the period of EUR0.2 billion (FY23 H1: EUR1.2
billion profit) reflecting the disposal of Vantage Towers, Vodafone
Hungary and Vodafone Ghana in the prior financial year, adverse
foreign exchange rate movements, and lower share of results of
equity accounted associates and joint ventures in the current
year.
Basic loss per share was 1.28 eurocents, compared to basic
earnings per share of 3.37 eurocents(1) in the prior year
period.
Cash flow, funding & capital allocation
Cash inflow from operating activities decreased to EUR5.5
billion (FY23 H1: EUR6.3 billion), reflecting lower operating
profit and adverse working capital movements, which offset lower
taxation payments.
Adjusted free cash flow decreased by EUR1.0 billion to an
outflow of EUR1.5 billion in the period. This reflects a decrease
in Adjusted EBITDAaL in the period, together with lower dividends
from associates and joint ventures, which outweighed lower
taxation, lower interest received and paid, and lower dividends
paid to non-controlling shareholders in subsidiaries.
Net debt increased by EUR2.9 billion to EUR36.2 billion (EUR33.4
billion as at 31 March 2023). This was primarily driven by the free
cash outflow of EUR2.0 billion and equity dividends of EUR1.2
billion.
Current liquidity, which includes cash and equivalents and
short-term investments, is EUR11.2 billion (EUR16.0 billion as at
31 March 2023). This includes EUR3.8 billion of net collateral
which has been posted to Vodafone from counterparties as a result
of positive mark-to-market movements on derivative instruments
(EUR4.6 billion as at 31 March 2023).
The interim dividend per share is 4.5 eurocents (FY23 H1: 4.5
eurocents). The ex-dividend date for the interim dividend is 23
November 2023 for ordinary shareholders, the record date is 24
November 2023 and the dividend is payable on 2 February 2024.
1. The results for the six months ended 30 September 2022 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. There is no impact on previously
reported Revenue and Adjusted EBITDAaL. However, Operating profit
has increased by EUR33 million whilst Profit before taxation and
Profit for the financial period both decreased by EUR41 million
compared to amounts previously reported. Consequently, Basic
earnings per share decreased by 0.15c and Adjusted basic earnings
per share decreased by 0.12c compared to amounts previously
reported. See note 4 'Assets held for sale' in the unaudited
condensed consolidated financial statements for more
information.
Strategic progress
In May 2023, we set out a new roadmap for Vodafone, based on our
need to change and focus on three priorities: Customers, Simplicity
and Growth. An outline of this plan is contained in a video
presentation available here: investors.vodafone.com/results .
During the first half of FY24, we have made early progress in
executing this plan. Highlights include:
Customers
-- We introduced a series of new initiatives to improve customer
service, supported by re-allocating EUR150 million of investment to
this area. Each of our markets is now executing a detailed action
plan to eliminate customer pain points, and we have aligned our
incentives to this objective.
-- As a result we have seen some early progress in customer
satisfaction, with stable or improving promoter scores in most
markets despite the inflationary environment.
Simplicity
-- In H1 we have completed c.2,700 role reductions out of the 11,000 planned over 3 years.
-- We have concluded a thorough review of our shared operations,
and are preparing to introduce new MSA structures between markets
and shared operations on a price x quantity x quality model. Our
commercialisation of shared operations will be supported by a new
partnership with Accenture.
Growth
-- Germany returned to growth, with service revenue in Q2 FY24 of 1.1%*.
-- Vodafone Business service revenue continued to accelerate at
4.4%* in H1 FY24, with growth across all customer segments and
markets, except Spain.
-- We have taken two significant steps to right-size our portfolio for growth:
- in June 2023, we announced our merger of Vodafone UK and Three UK; and
- in October 2023, we announced our exit from the Spanish market
through the sale of Vodafone Spain.
A more detailed summary of our progress is contained within an
accompanying presentation and video Q&A available here:
investors.vodafone.com/results .
Outlook
In May 2023, we set out guidance for FY24 for our expectations
of Adjusted EBITDAaL and Adjusted free cash flow, which we still
expect to meet.
FY24 guidance
=================== =================================
Adjusted EBITDAaL 'Broadly flat' at around EUR13.3
(1,3) billion
Adjusted free 'Around' EUR3.3 billion
cash flow (1,2,3)
=================== =================================
The guidance above reflects the following:
-- Foreign exchange rates used when setting guidance were as
follows: EUR 1 : GBP 0.88; EUR 1 : ZAR 19.30;
EUR 1 : TRY 21.10; and EUR 1 : EGP 33.38.
-- Our guidance assumes no material change to the structure of the Group(3) .
1. Adjusted EBITDAaL and Adjusted free cash flow are non-GAAP
measures. See page 40 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, and M&A.
3. Guidance for FY24 includes Adjusted EBITDAaL and Adjusted
free cash flow for Vodafone Spain for the 12 months ending 31 March
2024. Following the announcement that Vodafone has entered into a
binding sale agreement, in accordance with IFRS, Vodafone Spain
will be reported as a discontinued operation, with its net result
reported as a single line in the Group's income statement until the
completion of the transaction.
Financial performance Service revenue growth in both Europe
& Africa
-- Group service revenue growth of 4.2%* in the first half of
FY24, with both Europe and Africa growing
-- Service revenue growth in Turkey of 79.3%* driven by higher
inflation. Group service revenue growth excluding Turkey was
2.3%*
-- Group revenue decline of 4.3% to EUR21.9 billion due to
adverse foreign exchange rate movements and the disposal of Vantage
Towers, Vodafone Hungary and Vodafone Ghana in the prior financial
year
-- Organic Adjusted EBITDAaL increase of 0.3%* despite a significant increase in energy costs
-- Lower share of results of equity accounted associates and
joint ventures of -EUR51 million (FY23 H1: EUR376 million),
primarily due to VodafoneZiggo, reflecting lower adjusted EBITDA,
lower gains on derivative instruments and higher interest expense,
and Vantage Towers, due to amortisation of intangible assets
following the completion of the joint venture
-- Operating profit decrease of 44.2% to EUR1.7 billion
reflecting business disposals in the prior financial year, adverse
foreign exchange rate movements and lower share of results of
associates and joint ventures in the current year
Group financial performance
Re-presented(2)
H1 FY24
(1) H1 FY23 Reported
EURm EURm change %
========================================= ======= =============== ========
Revenue 21,937 22,930 (4.3)
- Service revenue 18,618 19,207 (3.1)
- Other revenue 3,319 3,723
Adjusted EBITDAaL (3,4) 6,378 7,244 (12.0)
Restructuring costs (212) (142)
Interest on lease liabilities(5) 281 204
Loss on disposal of property, plant and
equipment and intangible assets (22) (11)
Depreciation and amortisation of owned
assets (4,626) (4,807)
Share of results of equity accounted
associates and joint ventures (51) 376
Impairment reversal 64 -
Other (expense)/income (157) 104
----------------------------------------- ------- --------------- --------
Operating profit 1,655 2,968 (44.2)
Investment income 368 137
Financing costs (1,473) (1,418)
----------------------------------------- ------- --------------- --------
Profit before taxation 550 1,687
Income tax expense (705) (485)
----------------------------------------- ------- --------------- --------
(Loss)/profit for the financial period (155) 1,202
Attributable to:
- Owners of the parent (346) 945
- Non-controlling interests 191 257
----------------------------------------- ------- --------------- --------
(Loss)/profit for the financial period (155) 1,202
Basic (loss)/earnings per share (1.28)c 3.37c
Adjusted basic earnings per share(3) 3.43c 5.90c
========================================= ======= =============== ========
Further information is available in a spreadsheet at
investors.vodafone.com/results
Notes:
1. The H1 FY24 results reflect average foreign exchange rates of
EUR1:GBP0.86, EUR1:INR 89.71, EUR1:ZAR 20.29, EUR1:TRY 25.99 and
EUR1:EGP 33.64.
2. The results for the six months ended 30 September 2022 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. There is no impact on previously
reported Revenue and Adjusted EBITDAaL. However, Operating profit
has increased by EUR33 million whilst Profit before taxation and
Profit for the financial period both decreased by EUR41 million
compared to amounts previously reported. Consequently, Basic
earnings per share decreased by 0.15c and Adjusted basic earnings
per share decreased by 0.12c compared to amounts previously
reported. See note 4 'Assets held for sale' in the unaudited
condensed consolidated financial statements for more
information.
3. Adjusted EBITDAaL and Adjusted basic earnings per share are
non-GAAP measures. See page 40 for more information.
4. Includes depreciation on leased assets of EUR2,157 million (H1 FY23: EUR2,046 million).
5. 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 Common Elimi-
Germany Italy UK Spain Europe Vodacom Markets Functions nations Group
H1 FY24 EURm EURm EURm EURm EURm EURm EURm EURm EURm EURm
================ ======= ======== ======== ========= ====== ======= ========= =========== ========= ======
Total revenue 6,405 2,320 3,377 1,929 2,679 3,590 1,128 721 (212) 21,937
Service revenue 5,722 2,098 2,822 1,731 2,366 2,924 828 282 (155) 18,618
Adjusted
EBITDAaL(1) 2,527 645 640 394 766 1,241 254 (89) - 6,378
Adjusted
EBITDAaL margin
(%)(1) 39.5% 27.8% 19.0% 20.4% 28.6% 34.6% 22.5% 29.1%
================ ======= ======== ======== ========= ====== ======= ========= =========== ========= ======
Downloadable performance information is available at: investors.vodafone.com/results
FY23 FY24
----------------------------------------------------------- ------------------------
Organic service revenue
growth % *(1) Q1 Q2 H1 Q3 Q4 H2 Total Q1 Q2 H1
=============================== ======= ======= ===== ====== ======= ===== ========== ======= ===== ========
Germany (0.5) (1.1) (0.8) (1.8) (2.8) (2.3) (1.6) (1.3) 1.1 (0.1)
Italy (2.3) (3.4) (2.8) (3.3) (2.7) (3.0) (2.9) (1.6) (1.0) (1.3)
UK 6.5 6.9 6.7 5.3 3.8 4.6 5.6 5.7 5.5 5.6
Spain (3.0) (6.0) (4.5) (8.7) (3.7) (6.2) (5.4) (3.0) (2.7) (2.8)
Other Europe 2.5 2.9 2.7 2.1 3.6 2.8 2.8 4.1 3.8 3.9
Vodacom(2) 6.9 8.3 7.6 8.0 7.0 7.5 7.5 9.0 9.0 9.0
Other Markets(2) 32.3 39.7 36.0 48.8 54.9 51.7 43.5 74.1 85.0 79.3
------- ------- ----- ------ ------- ----- ---------- ------- ----- --------
Group 2.5 2.5 2.5 1.8 1.9 1.8 2.2 3.7 4.7 4.2
=============================== ======= ======= ===== ====== ======= ===== ========== ======= ===== ========
Notes:
1. Organic service revenue growth, Group Adjusted EBITDAaL and
Group Adjusted EBITDAaL margin are non-GAAP measures. See page 40
for more information.
2. Organic service revenue growth metrics for FY23 have been
re-presented for the Other Markets and Vodacom segments to reflect
the move of Vodafone Egypt from the Other Markets segment to the
Vodacom segment. This is no impact on previously reported Group
metrics.
Germany 31% of Group service
revenue
H1 FY24 H1 FY23 Reported Organic
EURm EURm change % change %*
============================== ======= ======= ======== =========
Total revenue 6,405 6,592 (2.8)
- Service revenue 5,722 5,730 (0.1) (0.1)
- Other revenue 683 862
Adjusted EBITDAaL 2,527 2,677 (5.6) (5.6)
Adjusted EBITDAaL margin 39.5% 40.6%
============================== ======= ======= ======== =========
Total revenue decreased by 2.8% to EUR6.4 billion, driven by
lower equipment revenue.
On an organic basis, service revenue was broadly stable at
-0.1%* (Q1: -1.3%*, Q2: 1.1%*) as the contribution from higher
broadband and mobile ARPU was offset by the cumulative impact of
customer losses, and a reduction in mobile termination rates. In
Q2, both fixed and mobile service revenue returned to growth,
benefiting from our broadband price increases and higher mobile
ARPU.
Fixed service revenue increased by 0.3%* (Q1: -0.9%*, Q2:
1.4%*), as broadband ARPU growth offset the impact of a lower
broadband and TV customer base. Q2 service revenue returned to
growth, supported by our broadband base price increases, which
started to take effect in May. This impacted our commercial
performance, as expected, and we lost 157,000 cable broadband
customers and 97,000 DSL customers in H1, reflecting anticipated
price increase driven disconnections. The performance of our hybrid
fibre cable gigabit network continued to improve. We achieved
strong results in all four major independent network tests from
Connect, CHIP, Computer BILD and nPerf. Gigabit speeds are now
available to over 24 million households across our hybrid fibre
cable network.
Our TV customer base declined by 213,000 and our converged
customer base increased by 36,000 to 2.3 million Consumer converged
accounts. Ahead of changes to German TV laws, which take effect
from July 2024 and end the practise of bulk TV contracting in Multi
Dwelling Units ('MDUs'), we continue to progress preparations to
manage this transition. We have performed three trials to
re-contract customers, with a success rate of 35-65%. In total, we
have 8.5 million MDU TV customers, and they generate around EUR800
million in basic-TV revenue.
Mobile service revenue declined by 0.6%* (Q1: -1.9%*, Q2: 0.7%*)
reflecting a lower customer base and a reduction in mobile
termination rates, partially offset by higher ARPU. Q2 service
revenue returned to growth, supported by higher non-recurring
payments from service providers and higher roaming and visitor
revenue. We added 93,000 contract customers in the period driven by
an improved Vodafone branded performance. As part of our ongoing
commercial repositioning, we launched refreshed, fully flexible
'FamilyCard' plans.
Vodafone Business service revenue increased by 0.5%* (Q1: 0.0%*,
Q2: 1.0%*) during the period, largely due to growth in the 'SoHo'
customer segment, which was supported by higher fixed line ARPU,
and good demand for our Cloud and Security services. We added 4.3
million IoT connections in the period, driven by strong demand from
the automotive sector. In August, we launched 'Vodafone Zscaler
Security Service', a secure access gateway solution which utilises
the Cloud platform to deliver a safe and productive environment,
specifically designed for small and medium enterprise customers. In
November, we announced a new agreement with BASF, a leading global
chemical manufacturing company. We will become a key partner for
the operations and maintenance of their industrial private 5G
networks globally, with the first being their production site in
Germany.
Adjusted EBITDAaL declined by 5.6%*, reflecting a 4.3 percentage
points impact from higher energy costs, as well as higher wage and
inflation-indexed lease costs. The Adjusted EBITDAaL margin was
1.2* percentage points lower year-on-year at 39.5%.
In September 2023, our fibre-to-the-home ('FTTH') joint venture
started its network rollout in the city of Neuss. This partnership,
which will deploy FTTH to up to seven million homes over a six-year
period, is complementary to our upgrade plans for our existing
hybrid fibre cable network.
UK 15% of Group service revenue
H1 FY24 H1 FY23 Reported Organic
EURm EURm change % change %*
================================= ======= ======= ======== =========
Total revenue 3,377 3,392 (0.4)
- Service revenue 2,822 2,712 4.1 5.6
- Other revenue 555 680
Adjusted EBITDAaL 640 685 (6.6) (5.3)
Adjusted EBITDAaL margin 19.0% 20.2%
================================= ======= ======= ======== =========
Total revenue declined by 0.4% to EUR3.4 billion, as service
revenue growth was largely offset by a decline in equipment revenue
and the depreciation of the pound sterling against the euro.
On an organic basis, service revenue increased by 5.6%* (Q1:
5.7%*, Q2: 5.5%*). This was driven by continued strong growth in
Consumer, and an acceleration in Business growth, partially offset
by lower wholesale MVNO revenue.
Mobile service revenue grew by 6.2%* (Q1: 6.4%*, Q2: 6.1%*),
driven by a higher average customer base and annual price increases
in Consumer, good growth in Business and higher roaming revenue.
Our contract customer base was impacted by the one-off
disconnections of 179,000 zero-ARPU legacy SIMs during the period.
Excluding these, our contract customer base declined by 49,000 (Q1:
-66,000, Q2: 17,000) due to retail price increases implemented in a
competitive environment, particularly from MVNOs. Consumer contract
churn improved by 0.4 percentage points year-on-year to 12.1%,
despite implementing annual contractual price increase during the
period. Our digital prepaid sub-brand 'VOXI' continued to grow,
with 72,000 customers added during the period.
Fixed service revenue grew by 3.8%* (Q1: 3.7%*, Q2: 3.9%*) with
strong growth in Consumer. Our broadband customer base increased by
69,000 during the period and we now have 1.3 million customers.
Through our partnerships with CityFibre and Openreach we can now
reach 13.2 million households with full fibre broadband, more than
any other provider in the UK.
Vodafone Business service revenue increased by 3.8%* (Q1: 4.4%*,
Q2: 3.2%*) in the first half, supported by strong growth in mobile
driven by 'SME' and Corporate customer segments. This was partially
offset by a stable fixed line performance due to customer and
product lifecycle churn. In August, we announced our partnership
with Data Communications Company, providing connectivity for
Britain's smart meter network. Through our 4G managed IoT
connectivity, we will help customers reduce their energy
consumption.
Adjusted EBITDAaL declined by 5.3%*, of which 3.3 percentage
points was due to higher energy costs. Excluding this impact,
Adjusted EBITDAaL declined, as good underlying service revenue
growth was offset by the complete migration of the Virgin Media
MVNO off our network. The Adjusted EBITDAaL margin declined 1.2*
percentage points year-on-year at 19.0%.
In June 2023, we announced a binding agreement to combine our UK
business with Three UK to create a sustainable, and competitive
third scaled network operator in the UK. Following the merger,
which we expect to close before the end of calendar 2024, Vodafone
will own 51% of the combined business and CK Hutchison 49%. This
combination will provide customers with greater choice and more
value, drive greater competition, and enable increased investment
with a clear GBP11 billion plan to create one of Europe's most
advanced standalone 5G networks. Full details of the transaction
can be found here :
investors.vodafone.com/merger-of-vodafone-uk-and-three-uk
Italy 11% of Group service revenue
H1 FY24 H1 FY23 Reported Organic
EURm EURm change % change %*
==================================== ======= ======= ======== =========
Total revenue 2,320 2,377 (2.4)
- Service revenue 2,098 2,125 (1.3) (1.3)
- Other revenue 222 252
Adjusted EBITDAaL 645 759 (15.0) (15.0)
Adjusted EBITDAaL margin 27.8% 31.9%
==================================== ======= ======= ======== =========
Total revenue declined 2.4% to EUR2.3 billion due to lower
service revenue and equipment revenue.
Service revenue declined by 1.3%* (Q1 -1.6%*, Q2: -1.0%*), as a
result of continued price pressure in the value segment, partly
offset by strong Business demand for fixed line connectivity and
digital services. The improvement in quarterly trends was supported
by seasonally higher mobile roaming and visitor revenue.
Mobile service revenue declined by 5.1%* (Q1: -5.8%*, Q2:
-4.4%*). Price competition in the mobile value segment remained
intense during the period. The quarter-on-quarter improvement
reflected roaming and visitor revenue growth during the summer
period, as well as our pricing actions. Our second brand 'ho.'
continued to grow, with 117,000 net additions, and now has 3.1
million customers. In October, we agreed an extension to our
wholesale MVNO agreement with PostePay until the end of 2028.
Fixed service revenue increased by 8.0%* (Q1: 8.7%*, Q2: 7.3%*)
driven by good Business demand for connectivity and digital
services, including strong take up in the Business voucher
programme, an initiative related to the EU Recovery and Resilience
Facility ('ERF') that subsidises high-speed broadband connectivity.
Our broadband customer base declined by 46,000 during the period,
reflecting the impact of new market entrants, but we added 26,000
fixed-wireless access ('FWA') customers, which are reported in our
mobile customer base.
Our next generation network ('NGN') broadband services are now
available to 23.6 million households, including 9.0 million through
our own network and our partnership with Open Fiber. This is
complemented by our fixed-wireless access services which now cover
3.9 million households via 5G FWA and 1.5 million households via 4G
FWA.
Vodafone Business grew by 8.4%* (Q1: 9.4%*, Q2: 7.5%*) during
the period, driven by further acceleration in fixed service
revenue, supported by good demand for both our connectivity and
digital services. We recently announced that Vodafone will provide
hybrid 5G Mobile Private Network infrastructure to SNAM, one of
Europe's largest natural gas transportation companies, with
dedicated coverage enabling innovative solutions for the energy
transition in Italy.
Adjusted EBITDAaL declined by 15.0%* including a 10.1 percentage
point impact due to higher energy costs. Adjusted EBITDAaL growth
was also impacted by lower mobile service revenue and other
inflationary costs, partially offset by our continued strong focus
on cost control. The Adjusted EBITDAaL margin was 4.1* percentage
points lower year-on-year at 27.8%.
Spain 9% of Group service revenue
H1 FY24 H1 FY23 Reported Organic
EURm EURm change % change %*
=================================== ======= ======= ======== =========
Total revenue 1,929 1,965 (1.8)
- Service revenue 1,731 1,782 (2.9) (2.8)
- Other revenue 198 183
Adjusted EBITDAaL 394 445 (11.5) (11.6)
Adjusted EBITDAaL margin 20.4% 22.6%
=================================== ======= ======= ======== =========
Total revenue declined by 1.8% to EUR1.9 billion due to lower
service revenue.
On an organic basis, service revenue declined by 2.8%* (Q1:
-3.0%*, Q2: -2.7%*) driven by a lower customer base, continued
price competition in the Consumer value segment and a reduction in
mobile termination rates. This was partially offset by the positive
contribution from inflation-linked price increases and good demand
for our Business digital services. The acceleration in quarterly
trends was further supported by the improvement in our commercial
performance.
In mobile, our contract customer base declined by 9,000 during
the period, reflecting higher disconnections in Q1, following our
implementation of inflation-linked price increases in January. Our
net additions improved in Q2, supported by strong growth in the
reseller segment due to non-recurring customer acquisitions, our
commercial actions to strengthen the Vodafone brand and lower churn
following the completion of our price actions. Contract churn
improved by 1.7 percentage points year-on-year during the period to
18.2%.
Our broadband customer base declined by 85,000 and our TV
customer base decreased by 49,000 due to intense price competition
in the value segment. Our converged customer base remained broadly
stable at 2.1 million. At the beginning of Q1, we closed 15% of our
retail stores and chose not to renew several dealership channel
contracts in order to increase our distribution efficiency.
Vodafone Business service revenue declined by 2.0%* (Q1: -2.8%*,
Q2: -1.2%*) during the period, as good growth in digital services
and public sector contract wins were offset by declining mobile
connectivity revenue, due to price competition in the 'SoHo'
customer segment.
Adjusted EBITDAaL declined by 11.6%*, which reflects a 4.1
percentage point impact from one-off tax benefits in the prior year
and a 2.9 percentage point impact from higher energy costs.
On 31 October 2023, we announced that Vodafone has entered into
binding agreements with Zegona Communications plc in relation to
the sale of 100% of Vodafone Spain. On completion, which is
expected to take place in the first half of 2024, Vodafone's
consideration will comprise at least EUR4.1 billion in cash and up
to EUR0.9 billion in the form of Redeemable Preference Shares,
which redeem no later than six years after closing. The enterprise
value of EUR5.0 billion is equivalent to a multiple of 5.3x
Adjusted EBITDAaL and 12.7x OpFCF for the 12-month period ended 31
March 2023. Full details of the transaction can be found here:
investors.vodafone.com/sale-of-vodafone-spain .
Other Europe 13% of Group service revenue
H1 FY24 H1 FY23(1) Reported Organic
EURm EURm change % change %*
================================== ========= ========== ======== =========
Total revenue 2,679 2,894 (7.4)
- Service revenue 2,366 2,552 (7.3) 3.9
- Other revenue 313 342
Adjusted EBITDAaL 766 843 (9.1) 0.7
Adjusted EBITDAaL margin 28.6% 29.1%
================================== ========= ========== ======== =========
Note:
1. Comparatives include the results of Vodafone Hungary. As
previously reported, Vodafone Hungary was sold in January 2023.
Total revenue declined by 7.4% to EUR2.7 billion, reflecting the
disposal of Vodafone Hungary in the prior year.
On an organic basis, service revenue increased by 3.9%* (Q1:
4.1%*, Q2: 3.8%*), with all six markets growing during the period,
supported by our price actions in most markets.
In Portugal, both the Consumer and Business segments continued
to perform well, with a further acceleration in service revenue
growth, supported by inflation-linked contractual price increases
implemented in March 2023. We added 80,000 mobile contract
customers and 21,000 fixed broadband customer during the period. In
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.
In Ireland, service revenue increased, driven by good commercial
momentum and a higher average customer base, and supported by our
annual contractual price increases. We added 10,000 mobile contract
customers during the period. Through our fixed wholesale network
access partnerships, we now cover over 1 million households with
FTTH.
Service revenue in Greece grew, reflecting good growth in our
Business fixed segment, supported by public sector demand. During
the period we added 78,000 mobile contract customers, and our
broadband customer base declined by 6,000.
Vodafone Business service revenue increased by 5.8%* (Q1: 6.4%*,
Q2: 5.2%*) during the period, with growth in both connectivity and
digital services, including IoT and SD-WAN solutions. Growth in
connectivity was supported by a higher customer base, price
increases in the 'SoHo' and 'SME' customer segments across markets,
and public sector contract wins in Greece and Romania.
Adjusted EBITDAaL grew by 0.7%*, as service revenue growth and
ongoing cost efficiencies offset the impact from higher energy
costs. The Adjusted EBITDAaL margin decreased by 1.0* percentage
points year-on-year at 28.6%.
Vodacom 16% of Group service revenue
Re-presented(1)
H1 FY24 H1 FY23 Reported Organic
EURm EURm change % change %*
============================== ======== =============== ======== =========
Total revenue 3,590 4,179 (14.1)
- Service revenue 2,924 3,422 (14.6) 9.0
- Other revenue 666 757
Adjusted EBITDAaL 1,241 1,527 (18.7) 4.9
Adjusted EBITDAaL margin 34.6% 36.5%
============================== ======== =============== ======== =========
Note:
1. Comparative metrics for H1 FY23 have been re-presented to
reflect the move of Vodafone Egypt from the Other Markets segment
to the Vodacom segment from 1 April 2023.
Total revenue declined by 14.1% to EUR3.6 billion due to the
depreciation of local currencies versus the euro.
On an organic basis, Vodacom's service revenue grew by 9.0%*
(Q1: 9.0%*, Q2: 9.0%*) with growth in South Africa, Egypt and
Vodacom's international markets. The stable quarterly trend
reflected an acceleration in South Africa, from strong prepaid
revenue growth, offset by a slowdown in the international markets
due to macroeconomic pressures.
In South Africa, service revenue growth was driven by the
Consumer mobile segment, which benefited from price increases, a
higher prepaid customer base, and good fixed line growth. We added
2.2 million mobile prepaid customers in the period, supported by
our Big Data led customer value management capabilities which offer
personalised bundles to customers. Across our active customer base,
74.2% of our mobile customers now use data services, an increase of
2.0 million year-on-year. Financial Services revenue grew by 10.8%*
to EUR77 million, supported by growth in our insurance services.
Our 'VodaPay' super-app has continued to gain traction with 4.1
million registered users.
Service revenue in Egypt continued to grow strongly, reflecting
increased data usage, good commercial momentum with our financial
services product, 'Vodafone Cash', which now has 6.7 million active
users, and our refreshed 'Vodafone Flex' proposition offering
customers flexible in-bundle content options. During the period, we
added 184,000 contract customers and 1.3 million prepaid mobile
customers.
In Vodacom's international markets, service revenue growth was
supported by an increase in data revenue, a higher customer base,
and M-Pesa growth. Growth slowed in Q2, due to price competition in
Mozambique, and macroeconomic pressures in the DRC. M-Pesa revenue
grew by 13.8%* and now represents 26.3% of service revenue. We now
have 53.7 million mobile customers, with 62.5% of active customers
using data services.
Vodacom's Adjusted EBITDAaL increased by 4.9%*, supported by
service revenue growth and cost initiatives, partially offset by an
increase in payroll and technology operating expenses as we
continued to improve the resilience of our network in South Africa.
The Adjusted EBITDAaL margin decreased by 1.2* percentage points to
34.6%.
Further information on our operations in Africa can be accessed
here: vodacom.com .
Other Markets(1) 4% of Group service
revenue
Re-presented(2)
H1 FY24 H1 FY23 Reported Organic
EURm EURm change % change %*
============================== ======== =============== ======== =========
Total revenue 1,128 976 15.6
- Service revenue 828 771 7.4 79.3
- Other revenue 300 205
Adjusted EBITDAaL 254 228 11.4 89.1
Adjusted EBITDAaL margin 22.5% 23.4%
============================== ======== =============== ======== =========
Notes:
1. The Other Markets segment only includes Vodafone Turkey in
FY24. The comparatives include the results of Vodafone Ghana which,
as previously reported, was sold in February 2023.
2. The comparatives for H1 FY23 have been re-presented to
reflect the move of Vodafone Egypt from the Other Markets segment
to the Vodacom segment from 1 April 2023.
Total revenue increased by 15.6% to EUR1.1 billion, with strong
service revenue growth offset by significant currency
devaluation.
On an organic basis, service revenue in Turkey grew by 79.3%*
(Q1: 74.1%*, Q2: 85.0%), and despite material currency devaluation,
also increased in euro terms in H1. This was driven by continued
customer base growth and ongoing repricing actions to reflect the
high inflationary environment. We maintained our good commercial
momentum, adding 688,000 mobile contract customers during the
period, including migrations of prepaid customers.
Adjusted EBITDAaL in Turkey increased by 89.1%* despite
significant inflationary pressure on our cost base, and grew in
euro terms during the period. The Adjusted EBITDAaL margin
increased by 0.1* percentage points year-on-year at 22.5%.
Hyperinflationary accounting in Turkey
Turkey was designated as a hyperinflationary economy on 1 April
2022 in line with IAS 29 'Financial Reporting in Hyperinflationary
Economies'. See note 1 'Basis of preparation' in the condensed
consolidated financial statements for further information.
Organic growth metrics exclude the impact of the hyperinflation
adjustment in the period in Turkey. Group service revenue growth
excluding Turkey was 2.3%* (Q1: 1.8%*, Q2: 2.8%*) and Adjusted
EBITDAaL excluding Turkey declined by 2.0%*.
Associates and joint ventures
Re-presented(1)
H1 FY24 H1 FY23
EURm EURm
================================================= ======= ===============
Vantage Towers (Oak Holdings 1 GmbH) (78) -
VodafoneZiggo Group Holding B.V. (78) 162
Safaricom Limited 89 110
Indus Towers Limited 62 33
Other(2) (including TPG Telecom Limited) (46) 71
------------------------------------------------ ------- ---------------
Share of results of equity accounted associates
and joint ventures (51) 376
================================================= ======= ===============
Notes:
1. The results for the six months ended 30 September 2022 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. The share of results from Indus Towers
Limited has increased to EUR33 million compared to EURnil as
previously reported. See note 4 'Assets held for sale' in the
unaudited condensed consolidated financial statements for more
information.
2. The Group's investment in Vodafone Idea Limited ('VIL') was
reduced to EURnil in the year ended 31 March 2020 and the Group has
not recorded any profit or loss in respect of its share of VIL's
results since that date.
Vantage Towers (Oak Holdings 1 GmbH Joint Venture)
On 23 March 2023, we announced the completion of Oak Holdings
GmbH, our co-control partnership for Vantage Towers with a
consortium of long-term infrastructure investors led by Global
Infrastructure Partners and KKR. We received initial net proceeds
of EUR4.9 billion in March 2023, and a further EUR500 million in
July 2023, taking total net proceeds to EUR5.4 billion and the
Consortium's ownership in Oak Holdings GmbH to 40%. We agreed a
further six-month window for the Consortium to acquire additional
shares in Oak Holdings at the same price, up to a maximum of 50%
ownership, by the end of 2023.
Total revenue increased 7.2% to EUR561 million in H1 FY24,
driven by 920 new tenancies and new macro sites. As a result, the
tenancy ratio increased to 1.48x. Adjusted EBITDAaL increased by
3.7%* to EUR283 million, driven by revenue growth, partly offset by
increased operating expenses and higher ground lease expenses.
Vodafone's share of results in H1 FY24 reflects the amortisation
of intangible assets arising from the completion of the co-control
partnership for Vantage Towers.
See note 2 'Segmental analysis' in the condensed consolidated
financial statements for more information.
VodafoneZiggo Joint Venture (Netherlands)
The results of VodafoneZiggo, in which Vodafone owns a 50%
stake, are prepared under US GAAP, which is broadly consistent with
Vodafone's IFRS basis of reporting.
Total revenue remained broadly stable at EUR2.0 billion, as
contractual price increases and mobile contract customer growth
were offset by a decline in the fixed customer base and lower
handset sales.
During the period, VodafoneZiggo added 67,000 mobile contract
customers, supported by best-in-class net promoter score.
VodafoneZiggo's broadband customer base declined by 65,000
customers to 3.2 million due to price increases, and continued
competitive environment. The number of converged households
remained stable with 47.5% of broadband customers now converged,
delivering significant NPS and customer loyalty benefits.
VodafoneZiggo now offers gigabit speeds to 7.5 million homes,
providing nationwide coverage.
Vodafone's lower share of results in H1 FY24 was largely due to
lower adjusted EBITDA, lower gains on derivative financial
instruments and higher third-party interest expenses.
During the period, Vodafone received EUR26 million in interest
payments from the joint venture.
Safaricom Associate (Kenya)
Safaricom service revenue declined to EUR1.0 billion, as the
benefits of strong mobile data growth and higher customer base were
offset by the devaluation of local currency.
Vodafone's lower share of results was due to the depreciation of
the Kenyan shilling versus the euro.
During the period, Vodafone received EUR63 million in dividends
from Safaricom.
Net financing costs
Re-presented(1)
H1 FY24 H1 FY23 Reported
EURm EURm change %
================================= ======= =============== ========
Investment income 368 137
Financing costs (1,473) (1,418)
---------------------------------- ------- --------------- --------
Net financing costs (1,105) (1,281) 13.7
Adjustments for:
Mark-to-market losses 141 41
Foreign exchange losses 90 299
--------------------------------- ------- --------------- --------
Adjusted net financing costs (2) (874) (941) 7.1
================================== ======= =============== ========
Notes:
1. The results for the six months ended 30 September 2022 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. Consequently, Investment income
decreased by EUR74 million compared to EUR211 million as previously
reported. See note 4 'Assets held for sale' in the unaudited
condensed consolidated financial statements for more
information.
2. Adjusted net financing costs is a non-GAAP measure. See page
40 for more information.
Net financing costs decreased by EUR176 million, primarily due
to non-recurring foreign exchange losses in the prior period on
intercompany funding arrangements with Vodafone Ghana and Vodafone
Hungary partially offset by a mark-to-market loss recognised in the
current period on the revaluation of the embedded derivative option
linked to the Group's bank borrowings secured against Indian
assets.
Adjusted net financing costs decreased by EUR67 million,
reflecting both a decrease in average net debt balances and higher
returns on cash and short-term investments.
Taxation
Re-presented(1)
H1 FY24 H1 FY23 Change
% % pps
================================= ======= =============== ======
Effective tax rate 128.2% 28.7% 99.5
Adjusted effective tax rate (2) 30.3% 27.2% 3.1
================================= ======= =============== ======
Notes:
1. The results for the six months ended 30 September 2022 have
been re-presented to reflect that Indus Towers is no longer
reported as held for sale. Consequently, the Effective tax rate
increased by 0.6pps compared to 28.1% as previously reported.
Similarly, the Adjusted effective tax rate increased by 1.0pps
compared to 26.2% as previously reported. See note 4 'Assets held
for sale' in the unaudited condensed consolidated financial
statements for more information.
2. Adjusted effective tax rate is a non-GAAP measure. See page
40 for more information.
The Group's Effective tax rate for H1 FY24 was 128.2%.
The Group's Adjusted effective tax rate for H1 FY24 was 30.3%
(H1 FY23: 27.2%). This is higher than our expectations for the full
year tax rate, which we continue to expect to be in the high 20%s
and is mainly due to a EUR78 million tax charge arising on proceeds
received as part of the Vantage Towers transaction carried out in
H1 FY24.
The Effective tax rate for H1 FY24 includes EUR250 million
relating to the use of prior year losses in Luxembourg, an increase
in deferred tax assets in Turkey of EUR28 million following the
rise in the corporate tax rate to 25% (previously 20%) as well as
the Vantage Towers transaction mentioned above. The Effective tax
rate for H1 FY23 did not include these amounts. H1 FY24 also
includes a EUR121 million charge as an effect of hyper-inflation
accounting policies in Turkey (H1 FY23: EUR55 million).
Earnings per share
Re-presented(1) Reported
H1 FY24 H1 FY23 change
eurocents eurocents eurocents
====================================== ========= =============== =========
Basic (loss)/earnings per share (1.28)c 3.37c (4.65)c
Adjusted basic earnings per share (2) 3.43c 5.90c (2.47)c
======================================= ========= =============== =========
Notes:
1. The results for the six months ended 30 September 2022 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. Consequently, basic earnings per share
decreased by 0.15c compared to 3.52c as previously reported.
Adjusted basic earnings per share decreased by 0.12c compared to
6.02c as previously reported. See note 4 'Assets held for sale' in
the unaudited condensed consolidated financial statements for more
information.
2. Adjusted basic earnings per share is a non-GAAP measure. See
page 40 for more information.
Basic loss per share was 1.28 eurocents, compared to basic
earnings per share of 3.37 eurocents for H1 FY23, principally due
to lower Operating profit.
Adjusted basic earnings per share was 3.43 eurocents, compared
to 5.90 eurocents for H1 FY23, principally due to lower Adjusted
EBITDAaL.
Cash flow, capital allocation and funding
Analysis of cash flow
H1 FY24 H1 FY23 Reported
EURm EURm change %
=========================================== ======= ======= ========
Inflow from operating activities 5,544 6,280 (11.7)
Outflow from investing activities (3,808) (4,089) 6.9
Outflow from financing activities (6,378) (2,993) (113.1)
------------------------------------------- ------- ------- --------
Net cash outflow (4,642) (802) (478.8)
Cash and cash equivalents at beginning
of the financial period 11,628 7,371
Exchange gain on cash and cash equivalents 45 282
------------------------------------------- ------- ------- --------
Cash and cash equivalents at end of
the financial period 7,031 6,851
=========================================== ======= ======= ========
Cash inflow from operating activities decreased to EUR5,544
million reflecting lower operating profit and adverse working
capital movements, which offset lower taxation payments.
Outflow from investing activities decreased by 6.9% to EUR3,808
million, primarily in relation to lower spend on property, plant
and equipment and proceeds from the sale of 3.9% of Oak Holdings 1
GmbH in the period, which outweighed lower dividends received from
associates and joint ventures and a higher net outflow in respect
of short-term investments. 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 increased by 113.1% to
EUR6,378 million. Lower inflows from the net movement in short-term
borrowings arising from collateral receipts outweighed higher
proceeds from the issue of long-term borrowings and lower outflows
in relation to the purchase of treasury shares.
Analysis of cash flow (continued)
H1 FY24 H1 FY23 Reported
EURm EURm change %
=============================================== ======== ======== ========
Adjusted EBITDAaL (1) 6,378 7,244 (12.0)
Capital additions(2) (3,365) (3,541)
Working capital (3,378) (3,405)
Disposal of property, plant and equipment
and intangible assets 12 -
Integration capital additions (66) (101)
Restructuring costs including working
capital movements(3) (238) (214)
Licences and spectrum (173) (2,181)
Interest received and paid(4) (560) (688)
Taxation (472) (672)
Dividends received from associates and
joint ventures 75 463
Dividends paid to non-controlling shareholders
in subsidiaries (167) (290)
Other 3 140
----------------------------------------------- -------- -------- --------
Free cash flow (1) (1,951) (3,245) 39.9
Acquisitions and disposals 266 (98)
Equity dividends paid (1,210) (1,263)
Share buybacks(4) - (1,004)
Foreign exchange gain/(loss) 14 (65)
Other movements in net debt(5) 16 1,730
----------------------------------------------- -------- -------- --------
Net debt increase (1) (2,865) (3,945)
Opening net debt(1) (33,375) (41,578)
----------------------------------------------- -------- -------- --------
Closing net debt (1) (36,240) (45,523) 20.4
=============================================== ======== ======== ========
Free cash flow (1) (1,951) (3,245)
Adjustments:
- Licences and spectrum 173 2,181
- Restructuring costs including working
capital movements(3) 238 214
- Integration capital additions 66 101
- Vantage Towers growth capital expenditure - 236
----------------------------------------------- -------- -------- --------
Adjusted free cash flow (1) (1,474) (513)
=============================================== ======== ======== ========
Notes:
1. Adjusted EBITDAaL, Free cash flow, Adjusted free cash flow
and Net debt are non-GAAP measures. See page 40 for more
information.
2. See page 52 for an analysis of tangible and intangible
additions in the year.
3. Includes working capital in respect of integration capital
additions.
4. Interest received and paid excludes EUR246 million outflow
(H1 FY23: EUR153 million) in relation to the cash portion of
interest on lease liabilities included within Adjusted EBITDAaL,
EURnil million of cash outflow (H1 FY23: EUR58 million) of interest
arising from the repayment of debt in respect of licenses and
spectrum and EURnil million of cash inflow (H1 FY23: EUR86 million)
from the option structures relating to the issue of the mandatory
convertible bonds which is included within Share buybacks. The
share buyback programmes completed on 15 March 2023.
5. 'Other movements on net debt' for H1 FY24 includes
mark-to-market losses recognised in the income statement of EUR141
million (H1 FY23: EUR127 million loss), together with EURnil
million (H1 FY23: EUR1,739 million) for the repayment of debt in
relation to licenses and spectrum in Italy.
Adjusted free cash flow decreased by EUR961 million to an
outflow of EUR1,474 million in the period. This reflects a decrease
in Adjusted EBITDAaL in the period, together with lower dividends
from associates and joint ventures, which outweighed lower
taxation, lower interest received and paid and lower dividends paid
to non-controlling shareholders in subsidiaries.
Acquisitions and disposals includes EUR500 million in relation
to the disposal of 3.9% of Oak Holdings 1 GmbH in the period.
Borrowings and cash position
Year-end
H1 FY24 FY23 Reported
EURm EURm change %
========================================== ======== ======== ========
Non-current borrowings (52,717) (51,669)
Current borrowings (12,341) (14,721)
------------------------------------------- -------- -------- --------
Borrowings (65,058) (66,390)
Cash and cash equivalents 7,148 11,705
------------------------------------------- -------- -------- --------
Borrowings less cash and cash equivalents (57,910) (54,685) (5.9)
=========================================== ======== ======== ========
Borrowings principally includes bonds of EUR43,316 million
(EUR44,116 million as at 31 March 2023), lease liabilities of
EUR13,039 million (EUR13,364 million as at 31 March 2023), cash
collateral liabilities of EUR4,431 million (EUR4,886 million as at
31 March 2023) and EUR1,597 million (EUR1,485 million as at 31
March 2023) of bank borrowings that are secured against the Group's
shareholdings in Indus Towers and Vodafone Idea.
The decrease in borrowings of EUR1,332 million was principally
driven by repayment of bonds of EUR2,744 million and a decrease in
collateral liabilities of EUR455 million offset by the issuance of
long-term bonds of EUR1,314 million and adverse foreign exchange
movements on bonds of EUR607 million.
Funding position
Year-end
H1 FY24 FY23 Reported
EURm EURm change %
==================================== ======== ======== ========
Bonds (43,316) (44,116)
Bank loans (968) (795)
Other borrowings including spectrum (1,707) (1,744)
------------------------------------- -------- -------- --------
Gross debt (1) (45,991) (46,655) 1.4
Cash and cash equivalents 7,148 11,705
Short-term investments(2) 4,094 4,305
Derivative financial instruments(3) 2,291 1,917
Net collateral liabilities(4) (3,782) (4,647)
------------------------------------- -------- -------- --------
Net debt (1) (36,240) (33,375) (8.6)
===================================== ======== ======== ========
Notes:
1. Gross debt and Net debt are non-GAAP measures. See page 40
for more information.
2. Short-term investments includes EUR1,911 million (EUR1,338
million as at 31 March 2023) of highly liquid government and
government-backed securities and managed investment funds of
EUR2,183 million (EUR2,967 million as at 31 March 2023) 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 EUR1,190 million gain
(EUR2,785 million gain as at 31 March 2023).
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 EUR2,865 million to EUR36,240 million.
This was driven by the free cash outflow of EUR1,952 million and
equity dividends of EUR1,210 million.
Other funding considerations include:
Year-end
H1 FY24 FY23
EURm EURm
==== ======================================= ========= ========= =========
Lease liabilities (13,039) (13,364)
Financial liabilities under put options
(KDG minority interests) (493) (485)
Net pension fund liabilities (235) (258)
Guarantees over loan issued by Australia
joint venture (1,653) (1,611)
Equity characteristic of 50% attributed
by credit rating agencies to 'Hybrid
bonds' included in net debt of EUR8,993
million (EUR9,942 million as at 31 March
2023)(1) 4,497 4,971
============================================= ========= ========= =========
Note:
1. Balance as at 30 September 2023 excludes any equity
characteristic for Hybrid bonds included in net debt of EUR438
million that are expected to be repaid during H2 FY24. The Group
subsequently announced on 7 November 2023 that it will repay these
securities on 3 January 2024.
The Group's gross and net debt includes certain bonds which have
been designated in hedge relationships, which are carried at
EUR1,317 million higher value (EUR1,282 million higher as at 31
March 2023) than their euro equivalent redemption value. In
addition, where bonds are issued in currencies other than the 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, the euro
equivalent value of the bonds would decrease by EUR1,995 million
(EUR1,440 million as at 31 March 2023).
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. ROCE
calculated using GAAP measures for the 12 months ended 30 September
2023 was 11.5% (FY23: 12.9%), arising from lower operating
profit.
The table below presents adjusted ROCE metrics.
Re-presented(1)
H1 FY24(2) H1 FY23(2) Change
% % pps
=============================================== ========== =============== ======
Pre-tax ROCE (controlled)(3) 6.4% 6.9% (0.5)
Post-tax ROCE (controlled and associates/joint
ventures)(3) 4.1% 5.2% (1.1)
=============================================== ========== =============== ======
Notes:
1. The results for the 12 months ended 30 September 2022 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. Consequently, Post-tax ROCE (controlled
and associates/joint ventures) has increased by 0.1pps compared to
5.1% as previously reported. There is no impact on Pre-tax ROCE
(controlled). See note 4 'Assets held for sale' in the unaudited
condensed consolidated financial statements for more
information.
2. The half-year ROCE calculation is based on returns for the 12
months ended 30 September. ROCE calculations for H1 FY24 include
the results of Vantage Towers until its disposal on 22 March 2023
and the results of Oak Holdings 1 GmbH from that date.
3. 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 40 for more information.
Funding facilities
As at 30 September 2023, the Group had undrawn revolving credit
facilities of EUR7.8 billion comprising euro and US dollar
revolving credit facilities of EUR4.0 billion and US$4.0 billion
(EUR3.8 billion) which mature in 2025 and 2028 respectively. Both
committed revolving credit facilities support US and euro
commercial paper programmes of up to US$15 billion (EUR14.2
billion) and EUR10 billion respectively.
Post employment benefits
As at 30 September 2023, the Group's net surplus of scheme
assets over scheme liabilities was EUR30 million (EUR71 million net
surplus as at 31 March 2023).
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 FY23: 4.50 eurocents).
The ex-dividend date for the interim dividend is 23 November
2023 for ordinary shareholders, the record date is 24 November 2023
and the dividend is payable on 2 February 2024. Dividend payments
on ordinary shares will be paid directly into a nominated bank or
building society account.
Other significant developments
Board changes
As previously announced, Sir Crispin Davis, Dame Clara Furse and
Valerie Gooding did not seek re-election at the 2023 Annual General
Meeting and retired from the Board at the conclusion of the meeting
on 25 July 2023.
Consequently, the Senior Independent Director role has
transitioned to David Nish, the Remuneration Committee Chair role
to Amparo Moraleda and both Delphine Ernotte Cunci and Christine
Ramon have been appointed Workforce Engagement Leads.
On 24 July 2023, we announced the appointment of Luka Mucic as
Group Chief Financial Officer and as an Executive Director of
Vodafone, effective from 1 September 2023.
Risk factors
Principal risks
The key factors and uncertainties that could have a significant
effect on the Group's financial performance, include the
following:
Adverse changes in macroeconomic conditions
Adverse changes to economic conditions could result in reduced
consumer spending, higher interest rates, adverse inflation,
currency devaluations or movements in foreign exchange rates.
Adverse conditions could also lead to limited debt refinancing
options and/or an increase in costs.
Adverse market conditions
Significant activity by competition, such as price wars, new
market entrants or business practices, may lead to reduced margins
and market share, and increased customer churn.
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.
Cyber threat
An external attack, insider threat or supplier breach could
cause service interruption or confidential data breaches.
Data management and privacy
Data breaches, misuse of data, data manipulation, inappropriate
data sharing, or data unavailability could lead to fines,
reputational damage, loss of value, loss of business opportunity,
and failure to meet our customers' expectations.
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.
Organisational simplification
Failure to effectively execute on our goal to simplify our
organisation and operating model could result in reduced speed of
decision-making and delivery, reduced clarity on accountabilities,
and higher cost.
Strategic transformation
Failure to effectively execute our transformational activities,
including shaping our portfolio and delivering on product
innovation, could result in loss of business value and/or
additional cost.
Supply chain disruption
Disruption in our supply chain could mean that we are unable to
execute our strategic plans, resulting in increased cost, reduced
choice and lower network quality.
Technology resilience and future readiness
Network, system, or platform outages, or ineffective execution
of the technology strategy could lead to dissatisfied customers
and/or impact revenue.
Watchlist risks
Our watchlist risk process enables us to monitor material risks
to the Group which fall outside principal risks. These include, but
are not limited to :
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.
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 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.
Infrastructure competitiveness
We continue to provide the appropriate broadband technology in
our fixed and mobile networks. Our Technology 2025 Strategy
incorporates our fixed and mobile network evolution steps to
enhance our coverage and network performance.
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 ensure compliance with the relevant regulations and
legislation.
Tax
Tax risk covers our management of tax across the markets in
which we operate and how we respond to changes in tax law, which
may have an impact on the Group. We have controls in place to
govern each of these areas in line with our tax principles.
Emerging risks
We face a number of uncertainties where an emerging risk may
potentially impact us. In some cases, there may be insufficient
information to understand the likelihood, impact or velocity of the
risk. Also, we 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 inputs
from analysis of the external environment and internal sources. We
evaluate our risks across different time periods, allowing us to
provide the appropriate level of focus on these emerging risks.
We work with the relevant experts across the business to assess
the potential impacts and time horizon of these risks. Our emerging
risks, within preferred risk categories, are provided to the
Executive Committee and the Audit and Risk Committee for further
scrutiny.
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:
www.vodafone.com/board
By Order of the Board
Maaike de Bie
Group General Counsel and Company Secretary
14 November 2023
Unaudited condensed consolidated financial statements
Consolidated income statement
Six months ended
30 September
-------------------------
Re-presented(1)
2023 2022
Note EURm EURm
------------------------------------------------------- ---- -------- ---------------
Revenue 2 21,937 22,930
Cost of sales (15,277) (15,580)
------------------------------------------------------- ---- -------- ---------------
Gross profit 6,660 7,350
Selling and distribution expenses (1,557) (1,711)
Administrative expenses (3,009) (2,819)
Net credit losses on financial assets (295) (332)
Share of results of equity accounted associates
and joint ventures (51) 376
Impairment reversal 64 -
Other (expense)/income (157) 104
------------------------------------------------------- ---- -------- ---------------
Operating profit 2 1,655 2,968
Investment income 368 137
Financing costs (1,473) (1,418)
------------------------------------------------------- ---- -------- ---------------
Profit before taxation 550 1,687
Income tax expense 3 (705) (485)
------------------------------------------------------- ---- -------- ---------------
(Loss)/profit for the financial period (155) 1,202
------------------------------------------------------- ---- -------- ---------------
Attributable to:
- Owners of the parent (346) 945
- Non-controlling interests 191 257
------------------------------------------------------- ---- -------- ---------------
(Loss)/profit for the financial period (155) 1,202
------------------------------------------------------- ---- -------- ---------------
(Loss)/earnings per share
Total Group:
- Basic 5 (1.28)c 3.37c
- Diluted 5 (1.28)c 3.36c
------------------------------------------------------- ---- -------- ---------------
Consolidated statement of comprehensive income/expense
Six months ended
30 September
-------------------------
Re-presented(1)
2023 2022
EURm EURm
------------------------------------------------------- ---- -------- ---------------
(Loss)/profit for the financial period (155) 1,202
Other comprehensive (expense)/income:
Items that may be reclassified to the income
statement in subsequent periods:
Foreign exchange translation differences, net
of tax (95) (421)
Foreign exchange translation differences transferred
to the income statement 23 -
Other, net of tax(2) (1,150) 924
------------------------------------------------------- ---- -------- ---------------
Total items that may be reclassified to the
income statement in subsequent periods (1,222) 503
Items that will not be reclassified to the
income statement in subsequent periods:
Net actuarial losses on defined benefit pension
schemes, net of tax (58) (42)
------------------------------------------------------- ---- -------- ---------------
Total items that will not be reclassified to
the income statement in subsequent periods (58) (42)
Other comprehensive (expense)/income (1,280) 461
------------------------------------------------------- ---- -------- ---------------
Total comprehensive (expense)/income for the
financial period (1,435) 1,663
------------------------------------------------------- ---- -------- ---------------
Attributable to:
- Owners of the parent (1,626) 1,377
- Non-controlling interests 191 286
------------------------------------------------------- ---- -------- ---------------
(1,435) 1,663
------------------------------------------------------- ---- -------- ---------------
Notes:
1. The results for the six months ended 30 September 2022 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. See note 4 'Assets held for sale' for
more information.
2. 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
2023 2023
Note EURm EURm
---------------------------------------------------- ---- ------------ ---------
Non-current assets
Goodwill 27,544 27,615
Other intangible assets 18,874 19,592
Property, plant and equipment 37,363 37,992
Investments in associates and joint ventures 7 10,457 11,079
Other investments 1,078 1,093
Deferred tax assets 19,460 19,316
Post employment benefits 265 329
Trade and other receivables 7,226 7,843
---------------------------------------------------- ---- ------------ ---------
122,267 124,859
---------------------------------------------------- ---- ------------ ---------
Current assets
Inventory 1,009 956
Taxation recoverable 296 279
Trade and other receivables 11,459 10,705
Other investments 5,917 7,017
Cash and cash equivalents 7,148 11,705
---------------------------------------------------- ---- ------------ ---------
25,829 30,662
---------------------------------------------------- ---- ------------ ---------
Total assets 148,096 155,521
---------------------------------------------------- ---- ------------ ---------
Equity
Called up share capital 4,797 4,797
Additional paid-in capital 149,211 149,145
Treasury shares (7,647) (7,719)
Accumulated losses (114,891) (113,086)
Accumulated other comprehensive income 28,982 30,262
---------------------------------------------------- ---- ------------ ---------
Total attributable to owners of the parent 60,452 63,399
---------------------------------------------------- ---- ------------ ---------
Non-controlling interests 1,110 1,084
---------------------------------------------------- ---- ------------ ---------
Total equity 61,562 64,483
---------------------------------------------------- ---- ------------ ---------
Non-current liabilities
Borrowings 52,717 51,669
Deferred tax liabilities 728 771
Post employment benefits 235 258
Provisions 1,481 1,572
Trade and other payables 2,375 2,184
---------------------------------------------------- ---- ------------ ---------
57,536 56,454
---------------------------------------------------- ---- ------------ ---------
Current liabilities
Borrowings 12,341 14,721
Financial liabilities under put option arrangements 493 485
Taxation liabilities 453 457
Provisions 732 674
Trade and other payables 14,979 18,247
---------------------------------------------------- ---- ------------ ---------
28,998 34,584
---------------------------------------------------- ---- ------------ ---------
Total equity and liabilities 148,096 155,521
---------------------------------------------------- ---- ------------ ---------
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 2022 Re-presented(3) 4,797 149,018 (7,278) (91,189) 55,348 2,290 57,638
Issue or reissue
of shares - 1 108 (100) 9 - 9
Share-based payments - 66 - - 66 5 71
Transactions with
non-controlling
interests in subsidiaries - - - (24) (24) (12) (36)
Comprehensive income - - - 1,377 1,377 286 1,663
Dividends - - - (1,265) (1,265) (285) (1,550)
------------------------------- -------- ----------- -------- -------------- ------------- ------------ -------
30 September 2022
Re-presented(3) 4,797 149,085 (7,170) (91,201) 55,511 2,284 57,795
------------------------------- -------- ----------- -------- -------------- ------------- ------------ -------
1 April 2023 4,797 149,145 (7,719) (82,824) 63,399 1,084 64,483
Issue or reissue
of shares - 1 72 (72) 1 - 1
Share-based payments - 65 - - 65 4 69
Transactions with
non-controlling
interests in subsidiaries - - - (8) (8) (3) (11)
Share of equity-accounted
entities changes
in equity - - - (164) (164) - (164)
Comprehensive (expense)/income - - - (1,626) (1,626) 191 (1,435)
Dividends - - - (1,215) (1,215) (166) (1,381)
------------------------------- -------- ----------- -------- -------------- ------------- ------------ -------
30 September 2023 4,797 149,211 (7,647) (85,909) 60,452 1,110 61,562
------------------------------- -------- ----------- -------- -------------- ------------- ------------ -------
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. The results for the period ended 30 September 2022 have been
re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. As at 30 September 2022, accumulated
comprehensive losses decreased by EUR58 million, resulting in an
increase of EUR58 million in total equity compared to amounts
previously reported. As at 1 April 2022, accumulated comprehensive
losses decreased by EUR96 million, resulting in an increase of
EUR96 million in total equity compared to amounts previously
reported. See Note 4 'Assets held for sale' 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
------------------
2023 2022
Note EURm EURm
----------------------------------------------------- ---- -------- --------
Inflow from operating activities 8 5,544 6,280
----------------------------------------------------- ---- -------- --------
Cash flows from investing activities
Purchase of interests in subsidiaries, net
of cash acquired - -
Purchase of interests in associates and joint
ventures (52) (61)
Purchase of intangible assets (1,536) (1,433)
Purchase of property, plant and equipment (2,888) (3,456)
Purchase of investments (1,704) (871)
Disposal of interests in subsidiaries, net
of cash disposed (67) -
Disposal of interests in associates and joint
ventures 500 -
Disposal of property, plant and equipment
and intangible assets 12 -
Disposal of investments 1,557 1,130
Dividends received from associates and joint
ventures 75 463
Interest received 295 139
----------------------------------------------------- ---- -------- --------
Outflow from investing activities (3,808) (4,089)
----------------------------------------------------- ---- -------- --------
Cash flows from financing activities
Proceeds from issue of long-term borrowings 1,430 187
Repayment of borrowings (5,492) (5,549)
Net movement in short-term borrowings 40 6,194
Net movement in derivatives 138 (205)
Interest paid(1) (1,101) (952)
Purchase of treasury shares - (1,090)
Issue of ordinary share capital and reissue
of treasury shares 1 9
Equity dividends paid (1,210) (1,263)
Dividends paid to non-controlling shareholders
in subsidiaries (167) (290)
Other transactions with non-controlling shareholders
in subsidiaries (17) (34)
----------------------------------------------------- ---- -------- --------
Outflow from financing activities (6,378) (2,993)
----------------------------------------------------- ---- -------- --------
Net cash outflow (4,642) (802)
Cash and cash equivalents at beginning of
the financial period(2) 11,628 7,371
Exchange gain on cash and cash equivalents 45 282
----------------------------------------------------- ---- -------- --------
Cash and cash equivalents at end of the
financial period (2) 7,031 6,851
----------------------------------------------------- ---- -------- --------
Notes:
1. Interest paid includes EURnil million (Six months ended 30
September 2022: EUR86 million inflow) in relation to derivative
financial instruments for the Share buyback related to maturing
tranches of mandatory convertible bonds.
2. Comprises cash and cash equivalents as presented in the
consolidated statement of financial position of EUR7,148 million
(EUR7,072 million as at 30 September 2022), together with
overdrafts of EUR117 million (EUR226 million as at 30 September
2022) and EURnil million (EUR5 million as at 30 September 2022) 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 2023:
-- 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 2023;
-- with the exception of IFRS 17 'Insurance contracts' (see
below) apply the same accounting policies, presentation and methods
of calculation as those followed in the preparation of the Group's
consolidated financial statements for the year ended 31 March 2023,
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 14 November 2023.
The information relating to the year ended 31 March 2023 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
The Group has a strong liquidity position as at 30 September
2023 with EUR7.1 billion of cash and cash equivalents and EUR4.1
billion of liquid short-term investments available, together with
undrawn revolving credit facilities of EUR7.8 billion (of which
EUR4.0 billion becomes due for renewal in February 2025), which
cover all 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 renew the credit facility in February 2025 and
not being able to access the capital markets during the assessment
period. As a result of the assessment performed, the Directors have
concluded that the Group is able to continue in operation for the
period up to and including March 2025 and that it is appropriate to
continue to adopt the going concern basis in preparing the
unaudited condensed consolidated financial statements.
Notes to the unaudited condensed consolidated financial
statements
1 Basis of preparation (continued)
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
2023.
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 recoverable. As part of this assessment as at
30 September 2023, the Group reviewed the key assumptions
underlying the value in use valuations used in the annual
impairment test at 31 March 2023. This included the year to-date
performance of the Group's CGUs against their budgets, 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.
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 2023.
Hyperinflation accounting
The Group continues to apply hyperinflationary accounting, as
specified in IAS 29, at its Turkish operations whose functional
currency is the Turkish lira and to Safaricom's operations in
Ethiopia where the Ethiopian birr is the functional currency.
Turkish lira and Ethiopian birr results and non-monetary asset
and liability balances for the six months ended 30 September 2023
have been revalued to their present value equivalent local currency
amount as at 30 September 2023, based on an inflation index, before
translation to euros at the reporting date exchange rate of EUR1 :
29.03 TRL and EUR1 : 58.73 ETB, respectively.
For the Group's operations in Turkey, the gain or loss on net
monetary assets resulting from IAS 29 application is recognised in
the consolidated income statement within Other income.
For Safaricom's operations in Ethiopia, the impacts of IAS 29
accounting are reflected as an increase to Investments in
associates and joint ventures and an increase to Profit
attributable to the joint ventures and associates.
The inflation index in Turkey selected to reflect the change in
purchasing power was the consumer price index ('CPI') issued by the
Turkish Statistical Institute which has risen by 30.08% during the
six months ended 30 September 2023. The inflation index selected in
Ethiopia is the CPI issued by the Central Statistics Agency of
Ethiopia which rose 12.09% during the six months ended 30 September
2023.
The main impacts of these adjustments on the consolidated
financial statements are shown below.
Increase/(decrease)
Six months ended 30 September
-------------------------------
2023 2022
EURm EURm
-------------------------------------------- -------------- ---------------
Revenue 35 21
Operating profit (5) (14)
Profit for the financial period (140) (40)
-------------------------------------------- -------------- ---------------
30 September
2023 31 March 2023
-------------------------------------------- -------------- ---------------
Non-current assets 849 814
Equity attributable to owners of the parent 811 777
Non-controlling interests 54 37
-------------------------------------------- -------------- ---------------
Notes to the unaudited condensed consolidated financial
statements
1 Basis of preparation (continued)
New accounting pronouncements adopted
On 1 April 2023, 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, except as described below.
Further details are provided in the Group's Annual Report for the
year ended 31 March 2023.
IFRS 17 'Insurance Contracts'
IFRS 17 'Insurance Contracts' was adopted by the Group on 1
April 2023. The Standard sets out revised principles for the
recognition, measurement, presentation, and disclosure of
obligations relating to insurance contracts issued by preparers in
order to provide a single accounting model for all types of
insurance.
The Group issues certain short and long-term contracts -
primarily being (i) the reinsurance of handset and other device
insurance issued by a fronting insurer to the Group's customers;
and (ii) the reinsurance of a third-party annuity policy issued to
the Vodafone and Cable & Wireless ('CWW') sections of the
Vodafone UK Group Pension Scheme. The adoption of IFRS 17 did not
have a material impact on prior period equity.
The adoption of IFRS 17 will result in separate insurance and
reinsurance liability line items being presented within the Trade
and other payables disclosure notes to be included within the
Group's consolidated financial statements for the year ending 31
March 2024, with corresponding reductions in the Other payables
line item. The reclassification as at 31 March 2023 will be EUR256
million and EUR63 million within the long and short-term Trade and
other payables notes, respectively. The long and short-term
Insurance and reinsurance liability amounts included within Trade
and other payables at 30 September 2023 are EUR236 million and
EUR93 million, respectively.
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.
From 1 April 2023, the Group revised its segments by moving
Vodafone Egypt from the Other Markets segment to the Vodacom
segment to reflect the effective date of changes made to the
Group's internal reporting structure, following the transfer of
Vodafone Egypt to the Vodacom Group in December 2022.
Revenue is attributed to a country based on the location of the
Group company reporting the revenue. Transactions between operating
segments are charged at arm's-length prices.
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.
The operating segments for Germany, Italy, UK, Spain and Vodacom
(which is a legal entity encompassing South Africa, Vodafone Egypt
and certain other smaller African markets) are individually
material for the Group and are each reporting segments for which
certain financial information is provided. In addition, the Vantage
Towers operating segment was a separately listed part of the Group
until its disposal into a joint venture on 22 March 2023.
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
(until disposal in January 2023), Ireland, Portugal and Romania),
this largely reflects membership or a close association with the
European Union, while the Other Markets segment (comprising Turkey
and Ghana (until disposal in February 2023)) 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 2023.
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 2023
Germany 5,722 503 6,225 173 7 6,405 2,527
Italy 2,098 180 2,278 37 5 2,320 645
UK 2,822 526 3,348 17 12 3,377 640
Spain 1,731 167 1,898 26 5 1,929 394
Other Europe 2,366 285 2,651 21 7 2,679 766
Vodacom 2,924 473 3,397 178 15 3,590 1,241
Other Markets 828 297 1,125 3 - 1,128 254
Vantage Towers - - - - - - -
Common Functions(2) 282 24 306 416 (1) 721 (89)
Eliminations (155) - (155) (57) - (212) -
-------------------- -------- --------- --------------- ----------- -------- -------- ---------
Group 18,618 2,455 21,073 814 50 21,937 6,378
-------------------- -------- --------- --------------- ----------- -------- -------- ---------
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 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) 3,422 536 3,958 207 14 4,179 1,527
Other Markets(2) 771 203 974 2 - 976 228
Vantage Towers - - - 657 - 657 330
Common Functions(3) 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. Components of revenue and Adjusted EBITDAaL metrics for the
six months ended 30 September 2022 have been re-presented for the
Other Markets and Vodacom segments to reflect the move of Vodafone
Egypt from the Other Markets segment to the Vodacom segment. There
is no impact on previously reported Group metrics.
3. 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
------------------------
Re-presented(1)
2023 2022
EURm EURm
---------------------------------------------------- ------- ---------------
Adjusted EBITDAaL 6,378 7,244
Restructuring costs (212) (142)
Interest on lease liabilities 281 204
Loss on disposal of property, plant & equipment and
intangible assets (22) (11)
Depreciation and amortisation on owned assets (4,626) (4,807)
Share of results of equity accounted associates and
joint ventures (51) 376
Impairment reversal 64 -
Other (expense)/income (157) 104
---------------------------------------------------- ------- ---------------
Operating profit 1,655 2,968
Investment income 368 137
Financing costs (1,473) (1,418)
---------------------------------------------------- ------- ---------------
Profit before taxation 550 1,687
---------------------------------------------------- ------- ---------------
Note:
1. The results for the six months ended 30 September 2022 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. See note 4 'Assets for sale' for more
information.
Notes to the unaudited condensed consolidated financial
statements
2 Segmental analysis (continued)
The Group's non-current assets are disaggregated as follows:
30 September 31 March
2023 2023
EURm EURm
----------------------- ------------ --------
Non-current assets (1)
Germany 43,301 43,878
Italy 9,956 10,235
UK 6,638 6,629
Spain 5,991 6,331
Other Europe 7,586 7,815
Vodacom(2) 6,789 6,796
Other Markets(2) 1,534 1,502
Common Functions(3) 1,986 2,013
----------------------- ------------ --------
Group 83,781 85,199
----------------------- ------------ --------
Notes:
1. Comprises goodwill, other intangible assets and property,
plant & equipment.
2. Non-current assets at 31 March 2023 have been re-presented
for the Other Markets and Vodacom segments to reflect the move of
Vodafone Egypt from the Other Markets segment to the Vodacom
segment. There is no impact on previously reported Group
metrics
3. Comprises central teams and business functions.
3 Taxation
Six months ended
30 September
------------------
2023 2022
EURm EURm
------------------------------------------------------ -------- --------
United Kingdom corporation tax (expense)/income
Current period (38) (4)
Adjustments in respect of prior periods (19) 9
Overseas current tax (expense)/income
Current period (394) (446)
Adjustments in respect of prior periods - 12
------------------------------------------------------ -------- --------
Total current tax expense (451) (429)
------------------------------------------------------ -------- --------
Deferred tax on origination and reversal of temporary
differences
United Kingdom deferred tax (24) (10)
Overseas deferred tax (230) (46)
------------------------------------------------------ -------- --------
Total deferred tax expense (254) (56)
------------------------------------------------------ -------- --------
Total income tax expense (705) (485)
------------------------------------------------------ -------- --------
Deferred tax on losses in Luxembourg
The tax charge for the six months ended 30 September 2023
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 in
line with the 35 to 39 years disclosed as at 31 March 2023. 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 2023.
IAS 12 amendment
The Group will make additional qualitative and quantitative
disclosures regarding its exposure to Pillar Two income taxes in
the consolidated financial statements for year ending 31 March
2024, in accordance with amendments to IAS 12 'Income Taxes' which
were endorsed by the UK Endorsement Board in July 2023. The Group
has applied the mandatory temporary exception to the accounting for
deferred taxes arising from the jurisdictional implementation of
the Pillar Two rules set out therein. The impact of the rules is
under review but is not expected to be material.
Notes to the unaudited condensed consolidated financial
statements
4 Assets held for sale
Reclassification of Indus Towers Limited
In the condensed consolidated financial statements for the six
months ended 30 September 2022, the Group's 21% interest in Indus
Towers Limited was reported within Assets held for sale. Whilst the
Group remains focused on achieving a sale, the investment was not
assessed as meeting the requirements of held for sale at 31 March
2023 and this remained the position at 30 September 2023.
Impact on the consolidated income statement
Comparative amounts for the six months ended 30 September 2022
have been re-presented to reflect that Indus Towers Limited is no
longer reported as held for sale. The reclassification has no
impact on revenue and gross profit reported in the consolidated
income statement for the six months ended 30 September 2022, but
the following line items have been impacted:
- Share of results of equity accounted associates and joint ventures increased by EUR33 million.
- Investment income decreased by EUR74 million.
Consequently, operating profit increased by EUR33 million.
Profit before taxation and Profit for the financial period both
decreased by EUR41 million and Total comprehensive income decreased
by EUR38 million compared to the amounts previously reported.
5 Earnings per share
Six months ended
30 September
--------------------------
2023 2022
Millions Millions
------------------------------------------------------- --------- ---------------
Weighted average number of shares for basic earnings
per share 27,033 28,037
Effect of dilutive potential shares: restricted shares
and share options - 104
------------------------------------------------------- --------- ---------------
Weighted average number of shares for diluted earnings
per share 27,033 28,141
------------------------------------------------------- --------- ---------------
Earnings per share attributable to owners of the
parent during the period
Six months ended
30 September
--------------------------
Re-presented(1)
2023 2022
EURm EURm
------------------------------------------------------- --------- ---------------
(Loss)/profit for basic and diluted earnings per
share (346) 945
------------------------------------------------------- --------- ---------------
Re-presented(1)
eurocents eurocents
------------------------------------------------------- --------- ---------------
Basic (loss)/earnings per share (1.28) 3.37
Diluted (loss)/earnings per share (1.28) 3.36
------------------------------------------------------- --------- ---------------
Note:
1. The results for the six months ended 30 September 2022 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. Profit for basic and diluted earnings
per share has decreased by EUR41 million compared to the amount
previously reported. Consequently, basic earnings per share
decreased by 0.15 eurocents and diluted earnings per share
decreased by 0.14 eurocents compared to amounts previously
reported. See note 4 'Assets held for sale' for more
information.
Notes to the unaudited condensed consolidated financial
statements
6 Equity dividends
Six months ended
30 September
------------------
2023 2022
EURm EURm
---------------------------------------------------- -------- --------
Declared during the financial period:
Final dividend for the year ended 31 March 2023:
4.50 eurocents per share
(2022: 4.50 eurocents per share) 1,215 1,265
---------------------------------------------------- -------- --------
Proposed after the end of the reporting period and
not recognised as a liability:
Interim dividend for the year ending 31 March 2024:
4.50 eurocents per share
(2023: 4.50 eurocents per share) 1,218 1,237
---------------------------------------------------- -------- --------
7 Investments in associates and joint ventures
30 September 31 March
2023 2023
EURm EURm
--------------------------------- ------------ --------
Oak Holdings 1 GmbH 7,883 8,634
VodafoneZiggo Group Holding B.V. 715 793
TPG Telecom Limited 57 108
Other 77 43
--------------------------------- ------------ --------
Investment in joint ventures 8,732 9,578
Safaricom PLC 554 509
Indus Towers Limited 1,051 908
Other 120 84
--------------------------------- ------------ --------
Investment in associates 1,725 1,501
--------------------------------- ------------ --------
10,457 11,079
--------------------------------- ------------ --------
On 18 July 2023, the Group completed the sale of 3.9% of Oak
Holdings 1 GmbH for cash consideration of EUR500 million. Vodafone
retains an interest of 60.3% in Oak Holdings 1 GmbH.
8 Reconciliation of net cash flow from operating activities
Six months ended
30 September
Re-presented(1)
2023 2022
EURm EURm
--------------------------------------------------- ------- ---------------
(Loss)/profit for the financial period (155) 1,202
Investment income (368) (137)
Financing costs 1,473 1,418
Income tax expense 705 485
--------------------------------------------------- ------- ---------------
Operating profit 1,655 2,968
Adjustments for:
Share-based payments and other non-cash charges 63 46
Depreciation and amortisation 6,802 6,853
Loss on disposal of property, plant & equipment
and intangible assets 20 9
Share of results of equity accounted associates
and joint ventures 51 (376)
Impairment reversal (64) -
Other expense/(income) 157 (104)
Increase in inventory (57) (175)
Increase in trade and other receivables (1,145) (1,381)
Decrease in trade and other payables (1,466) (888)
--------------------------------------------------- ------- ---------------
Cash generated by operations 6,016 6,952
Taxation (472) (672)
--------------------------------------------------- ------- ---------------
Net cash flow from operating activities 5,544 6,280
--------------------------------------------------- ------- ---------------
Note:
1. The results for the six months ended 30 September 2022 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. Profit for the financial period
decreased by EUR41 million and Operating profit decreased by EUR33
million compared to amounts previously reported. The Share of
results of equity accounted associates and joint ventures increased
by EUR33 million compared to the amount previously reported.
Consequently, there was no impact on Cash generated by operations
or Net cash flow from operating activities.
Notes to the unaudited condensed consolidated financial
statements
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
2023 2023
EURm EURm
--------------------------------------------------------------- ------------ --------
Financial assets at fair value:
Money market funds (included within Cash and cash
equivalents)(1) 2,780 7,781
Debt and equity securities (included within Other
investments)(2) 4,671 5,808
Derivative financial instruments (included within
Trade and other receivables)(3,4) 5,273 6,124
Trade receivables at fair value through Other comprehensive
income (included within Trade and 1,329 903
other receivables)(2)
--------------------------------------------------------------- ------------ --------
14,053 20,616
--------------------------------------------------------------- ------------ --------
Financial liabilities at fair value:
Derivative financial instruments (included within
Trade and other payables)(3,4) 1,792 1,422
--------------------------------------------------------------- ------------ --------
1,792 1,422
--------------------------------------------------------------- ------------ --------
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 EUR2,446 million
(EUR2,794 million as at 31 March 2023) 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. Derivative financial assets include EUR31 million (EUR198
million as at 31 March 2023) of embedded derivative option for
which the valuation basis is Level 3 classification where fair
value is determined from inputs that are not based on observable
market data (i.e unobservable inputs). The remaining items are also
measured at fair value and the basis is Level 2 classification.
4. EUR4,904 million (EUR5,642 million as at 31 March 2023) of
derivative financial assets and EUR1,362 million (EUR1,116 million
as at 31 March 2023) of derivative financial liabilities are
classified as non-current.
The fair value of the Group's financial assets held at amortised
cost approximates to fair value with the exception of non-current
debt securities with a carrying value of EUR1,000 million (EUR999
million as at 31 March 2023) and a fair value of EUR769 million
(EUR803 million as at 31 March 2023). 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.
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 EUR41,128 million
(EUR39,512 million as at 31 March 2023) and a fair value of
EUR34,913 million (EUR35,044 million as at 31 March 2023). Fair
value is based on Level 1 of the fair value hierarchy using quoted
market prices.
Level 3 financial instruments
The Group's borrowings include EUR1,597 million (EUR1,485
million as at 31 March 2023) of bank borrowings that are secured
against the Group's shareholdings in Indus Towers and Vodafone Idea
and will be repaid through the realisation of proceeds from those
assets. This arrangement contains an embedded derivative option
which has been separately fair valued. The 30 September 2023
valuation of the embedded derivative asset of EUR31 million (EUR198
million as at 31 March 2023) is presented within derivative assets
within trade and other receivables in current assets in the
consolidated statement of financial position.
The loss in the period of EUR167 million (EUR6 million gain in
the six months ended 30 September 2022) on the revaluation of the
embedded derivative option is recognised within financing costs in
the consolidated income statement.
A Black Scholes model for European put options has been used as
a valuation model and primarily uses market inputs (quoted share
prices and volatilities for Indus Towers and Vodafone Idea) along
with a strike price equal to the amount payable under the loan. The
valuation includes an unobservable adjustment to reflect the
potential timeframe to settle the loan and has been modelled using
a range of potential durations up to 31 March 2025. As a result of
this unobservable adjustment, the option is classified as a level 3
instrument under the fair value hierarchy. An increase/(decrease)
in durations of six months to settle the loan would
increase/(decrease) the derivative asset by EUR77 million/(EUR22
million).
Notes to the unaudited condensed consolidated financial
statements
10 Related party transactions
Transactions with associates and joint ventures
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
----------------------
2023 2022
EURm EURm
------------------------------------------------------- ------------ --------
Sales of goods and services to associates 15 11
Purchase of goods and services from associates 3 65
Sales of goods and services to joint arrangements 133 110
Purchase of goods and services from joint arrangements 392 69
Interest expense payable to associates(1) - 25
Interest income receivable from joint arrangements(1) 26 22
Interest expense payable to joint arrangements(2) 109 -
------------------------------------------------------- ------------ --------
30 September 31 March
2023 2023
EURm EURm
------------------------------------------------------- ------------ --------
Trade balances owed:
by associates 8 7
to associates 1 1
by joint arrangements 143 170
to joint arrangements 287 329
Other balances owed by joint arrangements(1) 1,178 980
Other balances owed to joint arrangements(2) 5,323 5,628
------------------------------------------------------- ------------ --------
Notes:
1. Amounts arise primarily through VodafoneZiggo Group Holding
B.V.. Interest is paid/received in line with market rates.
2. Amounts are primarily in relation to leases of tower space
from Oak Holdings 1 GmbH.
On 28 September 2023 the Group sold M-Pesa Holding Company
Limited ('MPHCL'), which holds funds on trust for M-Pesa customers,
to Safaricom Plc for US$1. Balances included in the Group's
consolidated statement of financial position at the date of
disposal included short-term investments of EUR1,195 million and
EUR1,156 million due to M-Pesa customers recorded within Other
investments and Trade and other payables, respectively.
In the six months ended 30 September 2023, the Group made
contributions to defined benefit pension schemes of EUR26 million
(Six months ended 30 September 2022: EUR11 million).
In the six months ended 30 September 2023, dividends of EUR1.0
million were paid to Board and Executive Committee members (Six
months ended 30 September 2022: EUR1.2 million).
Dividends received from associates and joint ventures are
disclosed in the consolidated statement of cash flows.
Notes to the unaudited condensed consolidated financial
statements
11 Contingent liabilities and legal proceedings
Note 29 'Contingent liabilities and legal proceedings' to the
consolidated financial statements of Vodafone Group Plc for the
year ended 31 March 2023 sets forth the Group's contingent
liabilities and legal proceedings as of 31 March 2023. There have
been no material changes to the Group's contingent liabilities or
legal proceedings during the period covered by this report, except
as disclosed below.
Legal proceedings
Netherlands tax case
Vodafone Europe BV (VEBV) received assessments totalling EUR267
million of tax and interest from the Dutch Tax Authorities, who
challenged the application of the arm's length principle in
relation to various intra-group financing transactions. The Group
entered into a guarantee for the full value of the assessments
issued. VEBV appealed against these assessments to the District
Court of the Hague where a hearing was held in March 2023. The
District Court issued its judgement in July 2023, upholding VEBV's
appeal in relation to the majority of issues and requiring the
Dutch Tax Authorities to significantly reduce its assessments. VEBV
and the Dutch Tax Authorities have since appealed the
judgement.
The Group continues to believe it has robust defences but has
recorded a provision of EUR24 million for tax and interest,
reflecting its current view of the probable financial outflow
required to fully resolve the issue and has reduced the guarantee
to the same value.
Greece: Papistas Holdings SA, Mobile Trade Stores (formerly
Papistas SA) and Athanasios and Loukia Papistas v Vodafone
Greece
In October 2019, Mr. and Mrs. Papistas, and companies owned or
controlled by them, filed several claims against Vodafone Greece
with a total value of approximately EUR330 million for purported
damage caused by the alleged abuse of dominance and wrongful
termination of a franchise arrangement with a Papistas company.
Lawsuits which the Papistas claimants had previously brought
against Vodafone Group Plc and certain directors and officers of
Vodafone were withdrawn. Vodafone Greece filed a counter-claim and
all claims were heard in February 2020. All of the Papistas claims
were rejected by the Athens Court of First Instance because the
stamp duty payments required to have the merits of the case
considered had not been made. Vodafone Greece's counter claim was
also rejected. The Papistas claimants and Vodafone Greece each
filed appeals. The appeal hearings took place on 23 February and 11
May 2023. Judgement has been received in respect of the May appeal
hearing for two of the claims and the Court dismissed the appeals
because the stamp duty payments had again not been made. Whether
the Papistas claimants will appeal the judgement is unknown as of
the date of this report. We are waiting to receive the judgement
relating to the February appeal hearing for the remaining
claim.
We are continuing vigorously to defend the claims and, based on
the progress of the litigation so far, the Group believes that it
is highly unlikely that there will be an adverse ruling for the
Group. On this basis, the Group does not expect the outcome of
these claims to have a material financial impact.
UK: Phones 4U in Administration v Vodafone Limited and Vodafone
Group Plc and Others
In December 2018, the administrators of former UK indirect
seller, Phones 4U, sued the three main UK mobile network operators
('MNOs'), including Vodafone, and their parent companies in the
English High Court. The administrators alleged collusion between
the MNOs to pull their business from Phones 4U, thereby causing its
collapse. The judge ordered that there should be a split trial
between liability and damages. The first trial on liability took
place from May to July 2022. On 10 November 2023, the High Court
issued a judgement in Vodafone's favour and rejected Phones 4U's
allegations that the defendants were in breach of competition law,
confirming our previously stated position that a present obligation
does not exist. It is not known whether Phones 4U will seek to
appeal the judgement as of the date of this report.
Notes to the unaudited condensed consolidated financial
statements
12 Subsequent events
Disposal of Vodafone Spain
On 31 October 2023, the Group announced that it had entered into
binding agreements with Zegona Communications plc ('Zegona') in
relation to the sale of 100% of Vodafone Holdings Europe, S.L.U.
('Vodafone Spain') (the 'Transaction').
On completion, Vodafone's consideration will comprise at least
EUR4.1 billion in cash (subject to customary completion
adjustments) and up to EUR0.9 billion in the form of Redeemable
Preference Shares ('RPS') which redeem, for an amount comprising
the subscription price and accrued preferential dividend, no later
than 6 years after closing.
Completion of the Transaction is conditional on certain
approvals being obtained from current Zegona shareholders as well
as regulatory clearances and is expected to take place in the first
half of 2024.
Minority shareholders in Kabel Deutschland Holding A.G.
The Group's obligations to the minority shareholders in Kabel
Deutschland Holding A.G., reflected as a financial liability under
put option arrangements in the Group's consolidated statement of
financial position, were settled by a final payment of EUR494
million on 20 October 2023.
Hybrid bonds
On 7 November 2023, the Group announced that on 3 January 2024
it will exercise its call option to repurchase and cancel
outstanding capital securities of EUR438 million due on 3 January
2079. This follows a previous bond buyback exercise completed in
June 2023 for EUR1,562 million of the original EUR2,000 million
securities issued.
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 2023, 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 12. 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 unaudited condensed consolidated
financial statements in the half yearly financial report for the
six months ended 30 September 2023 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' (IRSE) 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 'Basis of preparation', the annual
financial statements of the Group are prepared in accordance with
UK adopted international accounting standards, with International
Financial Reporting Standards as issued by the IASB, and with the
requirements of the UK Companies Act 2006. The unaudited condensed
consolidated 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 unaudited condensed
consolidated 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
14 November 2023
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 41 Operating profit Page 4
-------------------------------- --------- ----------------------------- -----------
Organic Adjusted EBITDAaL Page 41 Not applicable -
growth
-------------------------------- --------- ----------------------------- -----------
Organic revenue growth Page 41 Revenue Pages 42
to 44
-------------------------------- --------- ----------------------------- -----------
Organic Group service revenue Page 41 Service revenue Pages 42
growth excluding Turkey to 44
-------------------------------- --------- ----------------------------- -----------
Organic Group Adjusted Page 41 Not applicable -
EBITDAaL growth excluding
Turkey
-------------------------------- --------- ----------------------------- -----------
Organic service revenue Page 41 Service revenue Pages 42
growth to 44
-------------------------------- --------- ----------------------------- -----------
Organic mobile service Page 41 Service revenue Pages 42
revenue growth to 44
-------------------------------- --------- ----------------------------- -----------
Organic fixed service revenue Page 41 Service revenue Pages 42
growth to 44
-------------------------------- --------- ----------------------------- -----------
Organic Vodafone Business Page 41 Service revenue Pages 42
service revenue growth to 44
-------------------------------- --------- ----------------------------- -----------
Organic financial services Page 41 Service revenue Pages 42
revenue growth in South to 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 16
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 14
costs
-------------------------------- --------- ----------------------------- -----------
Adjusted profit before Page 50 Profit before taxation Page 51
taxation
-------------------------------- --------- ----------------------------- -----------
Adjusted income tax expense Page 50 Income tax expense Page 51
-------------------------------- --------- ----------------------------- -----------
Adjusted effective tax Page 50 Income tax expense Page 51
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 lease
performance and profitability. liabilities 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/reversals, restructuring
IFRS 8 (Operating Segments). costs arising from discrete
restructuring plans, other
income and expense and significant
items that are not considered
by management to be reflective
of the underlying performance
of the Group.
------------------ -------------------------------- -----------------------------------------
Adjusted EBITDAaL margin is Adjusted EBITDAaL divided by
Revenue.
Organic growth
All amounts marked with an '*' in this document represent
organic growth which presents performance on a comparable basis,
excluding the impact of foreign exchange rates, mergers and
acquisitions, the hyperinflation adjustments in Turkey and other
adjustments to improve the comparability of results between
periods.
Organic growth is calculated for revenue and profitability
metrics, as follows:
- Adjusted EBITDAaL;
- Revenue;
- Group service revenue excluding Turkey;
- Group Adjusted EBITDAaL excluding Turkey;
- 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.
Non-GAAP measures
Six months ended 30 September Reported M&A and Foreign Organic
2023 H1 FY24 H1 FY23 growth Other exchange growth*
-------------------------------------
EURm EURm % pps pps %
------------------------------------ ------- ------- -------- ------- --------- --------
Service revenue(1)
Germany 5,722 5,730 (0.1) - - (0.1)
------- ------- -------- ------- --------- --------
Mobile service revenue 2,530 2,546 (0.6) - - (0.6)
Fixed service revenue 3,192 3,184 0.3 - - 0.3
------------------------------------ ------- ------- -------- ------- --------- --------
Italy 2,098 2,125 (1.3) - - (1.3)
------- ------- -------- ------- --------- --------
Mobile service revenue 1,431 1,507 (5.0) (0.1) - (5.1)
Fixed service revenue 667 618 7.9 0.1 - 8.0
------------------------------------ ------- ------- -------- ------- --------- --------
UK 2,822 2,712 4.1 - 1.5 5.6
------- ------- -------- ------- --------- --------
Mobile service revenue 2,096 2,003 4.6 - 1.6 6.2
Fixed service revenue 726 709 2.4 - 1.4 3.8
------------------------------------ ------- ------- -------- ------- --------- --------
Spain 1,731 1,782 (2.9) 0.1 - (2.8)
Other Europe(2) 2,366 2,552 (7.3) 12.4 (1.2) 3.9
Vodacom(3) 2,924 3,422 (14.6) - 23.6 9.0
Other Markets(2,3) 828 771 7.4 18.3 53.6 79.3
Common Functions 282 268 - - - -
Eliminations (155) (155)
------------------------------------- ------- ------- -------- ------- --------- --------
Total service revenue 18,618 19,207 (3.1) 2.0 5.3 4.2
Other revenue 3,319 3,723
------------------------------------- ------- ------- -------- ------- --------- --------
Revenue 21,937 22,930 (4.3) 2.2 5.3 3.2
------------------------------------- ------- ------- -------- ------- --------- --------
Other growth metrics
Group service revenue excluding
Turkey 17,809 18,549 (4.0) 2.1 4.2 2.3
Group Adjusted EBITDAaL excluding
Turkey 6,124 7,029 (12.9) 6.4 4.5 (2.0)
Turkey - Service revenue 828 676 22.5 (5.4) 62.2 79.3
Turkey - Adjusted EBITDAaL 254 215 18.1 145.9 (74.9) 89.1
Vodafone Business - Service revenue 5,124 5,149 (0.5) 1.4 3.5 4.4
Germany - Vodafone Business service
revenue 1,205 1,193 1.0 (0.5) - 0.5
Italy - Vodafone Business service
revenue 754 695 8.5 (0.1) - 8.4
UK - Vodafone Business service
revenue 1,059 1,036 2.2 - 1.6 3.8
Spain - Vodafone Business service
revenue 557 569 (2.1) 0.1 - (2.0)
Other Europe - Vodafone Business
service revenue 728 747 (2.5) 9.4 (1.1) 5.8
South Africa - Financial services
revenue 77 82 (6.1) - 16.9 10.8
------------------------------------- ------- ------- -------- ------- --------- --------
Adjusted EBITDAaL
Germany 2,527 2,677 (5.6) - - (5.6)
Italy 645 759 (15.0) - - (15.0)
UK 640 685 (6.6) - 1.3 (5.3)
Spain 394 445 (11.5) (0.1) - (11.6)
Other Europe(2) 766 843 (9.1) 11.1 (1.3) 0.7
Vodacom(3) 1,241 1,527 (18.7) - 23.6 4.9
Other Markets(2,3) 254 228 11.4 21.7 56.0 89.1
Vantage Towers - 330 (100.0) 100.0 - -
Common Functions (89) (250)
Eliminations - -
------------------------------------- ------- ------- -------- ------- --------- --------
Group 6,378 7,244 (12.0) 6.9 5.4 0.3
------------------------------------- ------- ------- -------- ------- --------- --------
Percentage point change in Adjusted
EBITDAaL margin
Germany 39.5% 40.6% (1.1) (0.1) - (1.2)
Italy 27.8% 31.9% (4.1) - - (4.1)
UK 19.0% 20.2% (1.2) - - (1.2)
Spain 20.4% 22.6% (2.2) (0.1) - (2.3)
Other Europe(2) 28.6% 29.1% (0.5) (0.4) (0.1) (1.0)
Vodacom(3) 34.6% 36.5% (1.9) - 0.7 (1.2)
Other Markets(2,3) 22.5% 23.4% (0.9) 0.9 0.1 0.1
------------------------------------- ------- ------- -------- ------- --------- --------
Group 29.1% 31.6% (2.5) 1.5 0.2 (0.8)
------------------------------------- ------- ------- -------- ------- --------- --------
Notes:
1. Prior to disposal, Vantage Towers revenue was reported by the
Group as other revenue, not service revenue.
2. Comparatives include the results of Vodafone Hungary and
Vodafone Ghana which were included in the Other Europe and Other
Markets segments, respectively, until their disposal. As previously
reported, Vodafone Hungary was sold in January 2023 and Vodafone
Ghana was sold in February 2023.
3. From 1 April 2023, the Group revised its segmental reporting
by moving Vodafone Egypt from the Other Markets segment to the
Vodacom segment. This is the effective date on which the Group's
reporting structure changed to reflect the transfer of Vodafone
Egypt to the Vodacom Group. All comparatives for these two segments
have been re-presented on the new basis of segmental reporting.
There is no impact on previously reported Group metrics.
Non-GAAP measures
Quarter ended 30 September 2023 Reported M&A and Foreign Organic
Q2 FY24 Q2 FY23 growth Other exchange growth*
-----------------------------------
EURm EURm % pps pps %
---------------------------------- ------- ------- -------- ------- --------- --------
Service revenue
Germany 2,903 2,873 1.0 0.1 - 1.1
------- ------- -------- ------- --------- --------
Mobile service revenue 1,290 1,282 0.6 0.1 - 0.7
Fixed service revenue 1,613 1,591 1.4 - - 1.4
---------------------------------- ------- ------- -------- ------- --------- --------
Italy 1,063 1,073 (0.9) (0.1) - (1.0)
------- ------- -------- ------- --------- --------
Mobile service revenue 729 762 (4.3) (0.1) - (4.4)
Fixed service revenue 334 311 7.4 (0.1) - 7.3
---------------------------------- ------- ------- -------- ------- --------- --------
UK 1,421 1,352 5.1 - 0.4 5.5
------- ------- -------- ------- --------- --------
Mobile service revenue 1,057 1,000 5.7 - 0.4 6.1
Fixed service revenue 364 352 3.4 - 0.5 3.9
---------------------------------- ------- ------- -------- ------- --------- --------
Spain 860 884 (2.7) - - (2.7)
Other Europe(1) 1,205 1,298 (7.2) 12.1 (1.1) 3.8
Vodacom(2) 1,498 1,758 (14.8) - 23.8 9.0
Other Markets(1,2) 495 407 21.6 (11.3) 74.7 85.0
Common Functions 151 140
Eliminations (88) (92)
----------------------------------- ------- ------- -------- ------- --------- --------
Total service revenue 9,508 9,693 (1.9) 1.0 5.6 4.7
Other revenue 1,689 1,959
----------------------------------- ------- ------- -------- ------- --------- --------
Revenue 11,197 11,652 (3.9) 1.2 5.5 2.8
----------------------------------- ------- ------- -------- ------- --------- --------
Other growth metrics
Group service revenue excluding
Turkey 9,023 9,344 (3.4) 2.1 4.1 2.8
Turkey - Service revenue 495 360 37.5 (41.8) 89.3 85.0
Vodafone Business - Service
revenue 2,589 2,591 (0.1) 1.0 3.4 4.3
Germany - Vodafone Business
service revenue 609 600 1.5 (0.5) - 1.0
Italy - Vodafone Business service
revenue 379 352 7.7 (0.2) - 7.5
UK - Vodafone Business service
revenue 531 517 2.7 - 0.5 3.2
Spain - Vodafone Business service
revenue 276 280 (1.4) 0.2 - (1.2)
Other Europe - Vodafone Business
service revenue 365 376 (2.9) 9.2 (1.1) 5.2
----------------------------------- ------- ------- -------- ------- --------- --------
Notes:
1. Comparatives include the results of Vodafone Hungary and
Vodafone Ghana which were included in the Other Europe and Other
Markets segments, respectively, until their disposal. As previously
reported, Vodafone Hungary was sold in January 2023 and Vodafone
Ghana was sold in February 2023.
2. From 1 April 2023, the Group revised its segmental reporting
by moving Vodafone Egypt from the Other Markets segment to the
Vodacom segment. This is the effective date on which the Group's
reporting structure changed to reflect the transfer of Vodafone
Egypt to the Vodacom Group. All comparatives for these two segments
have been re-presented on the new basis of segmental reporting.
There is no impact on previously reported Group metrics.
Non-GAAP measures
Quarter ended 30 June 2023 Reported M&A and Foreign Organic
Q1 FY24 Q1 FY23 growth Other exchange growth*
-----------------------------------
EURm EURm % pps pps %
---------------------------------- ------- ------- -------- ------- --------- --------
Service revenue
Germany 2,819 2,857 (1.3) - - (1.3)
------- ------- -------- ------- --------- --------
Mobile service revenue 1,240 1,264 (1.9) - - (1.9)
Fixed service revenue 1,579 1,593 (0.9) - - (0.9)
---------------------------------- ------- ------- -------- ------- --------- --------
Italy 1,035 1,052 (1.6) - - (1.6)
------- ------- -------- ------- --------- --------
Mobile service revenue 702 745 (5.8) - - (5.8)
Fixed service revenue 333 307 8.5 0.2 - 8.7
---------------------------------- ------- ------- -------- ------- --------- --------
UK 1,401 1,360 3.0 - 2.7 5.7
------- ------- -------- ------- --------- --------
Mobile service revenue 1,039 1,003 3.6 - 2.8 6.4
Fixed service revenue 362 357 1.4 - 2.3 3.7
---------------------------------- ------- ------- -------- ------- --------- --------
Spain 871 898 (3.0) - - (3.0)
Other Europe(1) 1,161 1,254 (7.4) 12.8 (1.3) 4.1
Vodacom(2) 1,426 1,664 (14.3) - 23.3 9.0
Other Markets(1,2) 333 364 (8.5) 48.7 33.9 74.1
Common Functions 131 128
Eliminations (67) (63)
----------------------------------- ------- ------- -------- ------- --------- --------
Total service revenue 9,110 9,514 (4.2) 3.0 4.9 3.7
Other revenue 1,630 1,764
----------------------------------- ------- ------- -------- ------- --------- --------
Revenue 10,740 11,278 (4.8) 3.4 5.1 3.7
----------------------------------- ------- ------- -------- ------- --------- --------
Other growth metrics
Group service revenue excluding
Turkey 8,786 9,205 (4.6) 2.1 4.3 1.8
Turkey - Service revenue 333 316 5.4 31.4 37.3 74.1
Vodafone Business - Service
revenue 2,535 2,558 (0.9) 1.9 3.5 4.5
Germany - Vodafone Business
service revenue 596 593 0.5 (0.5) - -
Italy - Vodafone Business service
revenue 375 343 9.3 0.1 - 9.4
UK - Vodafone Business service
revenue 528 519 1.7 - 2.7 4.4
Spain - Vodafone Business service
revenue 281 289 (2.8) - - (2.8)
Other Europe - Vodafone Business
service revenue 363 371 (2.2) 9.7 (1.1) 6.4
----------------------------------- ------- ------- -------- ------- --------- --------
Notes:
1. Comparatives include the results of Vodafone Hungary and
Vodafone Ghana which were included in the Other Europe and Other
Markets segments, respectively, until their disposal. As previously
reported, Vodafone Hungary was sold in January 2023 and Vodafone
Ghana was sold in February 2023.
2. From 1 April 2023, the Group revised its segmental reporting
by moving Vodafone Egypt from the Other Markets segment to the
Vodacom segment. This is the effective date on which the Group's
reporting structure changed to reflect the transfer of Vodafone
Egypt to the Vodacom Group. All comparatives for these two segments
have been re-presented on the new basis of segmental reporting.
There is no impact on previously reported Group metrics.
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/reversals,
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.
Re-presented(1)
H1 FY24 H1 FY23
------------------------------- -------------------------------
Reported Adjustments Adjusted Reported Adjustments Adjusted
EURm EURm EURm EURm EURm EURm
---------------------------------- -------- ----------- -------- -------- ----------- --------
Adjusted EBITDAaL 6,378 - 6,378 7,244 - 7,244
Restructuring costs (212) 212 - (142) 142 -
Interest on lease liabilities 281 - 281 204 - 204
Loss on disposal of property,
plant & equipment and intangible
assets (22) - (22) (11) - (11)
Depreciation and amortisation
on owned assets(2) (4,626) 303 (4,323) (4,807) 250 (4,557)
Share of results of equity
accounted associates and
joint ventures(3) (51) 164 113 376 127 503
Impairment reversal 64 (64) - - - -
Other (expense)/income (157) 157 - 104 (104) -
---------------------------------- -------- ----------- -------- -------- ----------- --------
Operating profit 1,655 772 2,427 2,968 415 3,383
Investment income 368 - 368 137 - 137
Financing costs(4) (1,473) 231 (1,242) (1,418) 340 (1,078)
---------------------------------- -------- ----------- -------- -------- ----------- --------
Profit before taxation 550 1,003 1,553 1,687 755 2,442
Income tax expense(5) (705) 269 (436) (485) (42) (527)
---------------------------------- -------- ----------- -------- -------- ----------- --------
(Loss)/profit for the financial
period (155) 1,272 1,117 1,202 713 1,915
---------------------------------- -------- ----------- -------- -------- ----------- --------
Attributable to:
- Owners of the parent (346) 1,272 926 945 710 1,655
- Non-controlling interests 191 - 191 257 3 260
---------------------------------- -------- ----------- -------- -------- ----------- --------
(Loss)/profit for the financial
period (155) 1,272 1,117 1,202 713 1,915
---------------------------------- -------- ----------- -------- -------- ----------- --------
Notes:
1. The results for the six months ended 30 September 2023 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. There is no impact on Adjusted EBITDAaL.
However, Profit attributable to owners of the parent has decreased
by EUR34 million compared to the amount previously reported. See
note 4 'Assets held for sale' in the unaudited condensed
consolidated financial statements for more information.
2. Depreciation and amortisation on owned assets excludes
depreciation on leased assets and loss on disposal of leased assets
included within Adjusted EBITDAaL. See page 52 for an analysis of
depreciation and amortisation. The adjustment of EUR303 million (H1
FY23: EUR250 million) relates to amortisation of customer bases and
brand intangible assets.
3. See 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.
4. See 'Net financing costs' on page 14 for further analysis.
5. See 'Adjusted tax metrics' on page 51 for further analysis.
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.
Re-presented(1)
H1 FY24 H1 FY23
EURm EURm
------------------------------------------------------ --------- ---------------
(Loss)/profit attributable to owners of the parent (346) 945
Adjusted profit attributable to owners of the parent 926 1,655
Million Million
--------- ---------------
Weighted average number of shares outstanding - Basic 27,033 28,037
eurocents eurocents
--------- ---------------
Basic (loss)/earnings per share (1.28)c 3.37c
Adjusted basic earnings per share 3.43c 5.90c
------------------------------------------------------ --------- ---------------
Note:
1. The results for the six months ended 30 September 2023 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. This has resulted in a decrease in
Profit attributable to owners of the parent and Adjusted profit
attributable to owners of the parent of EUR41 million and EUR34
million, respectively. Consequently, Basic earnings per share
decreased by 0.15c compared to 3.52c as previously reported.
Adjusted basic earnings per share decreased by 0.12c compared to
6.02c as previously reported. See note 4 'Assets held for sale' in
the unaudited condensed consolidated financial statements for more
information.
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 movements including
other companies, although in respect of capital additions,
our metric may not be directly disposal of property, plant
comparable to similarly and equipment and intangible
titled measures used by assets, integration capital
other companies. additions and restructuring
costs, together with related
working capital, licences and
spectrum, interest received
and paid, taxation, dividends
received from associates and
joint ventures, dividends paid
to non-controlling shareholders
in subsidiaries, payments in
respect of lease liabilities
and other.
----------------- --------------------------------- --------------------------------------
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 (prior to disposal) Vantage
operations. Towers growth capital 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 FY24 H1 FY23
EURm EURm
--------------------------------------------------- ------- -------
Inflow from operating activities 5,544 6,280
Net tax paid 472 672
--------------------------------------------------- ------- -------
Cash generated by operations 6,016 6,952
Capital additions (3,365) (3,541)
Working capital movement in respect of capital
additions (804) (966)
Disposal of property, plant and equipment and
intangible assets 12 -
Integration capital additions (66) (101)
Working capital movement in respect of integration
capital additions (42) (69)
Licences and spectrum (173) (2,181)
Interest received and paid(1) (806) (841)
Taxation (472) (672)
Dividends received from associates and joint
ventures 75 463
Dividends paid to non-controlling shareholders
in subsidiaries (167) (290)
Payments in respect of lease liabilities (2,252) (2,003)
Other 93 4
--------------------------------------------------- ------- -------
Free cash flow (1,951) (3,245)
--------------------------------------------------- ------- -------
Note:
1. Includes interest on lease liabilities of EUR246 million (H1
FY23: EUR153 million).
The table below presents the reconciliation between Borrowing,
Gross debt and Net debt.
Year-end
H1 FY24 FY23
EURm EURm
----------------------------------------------------- -------- --------
Borrowings (65,058) (66,390)
Lease liabilities 13,039 13,364
Bank borrowings secured against Indian assets 1,597 1,485
Collateral liabilities 4,431 4,886
------------------------------------------------------ -------- --------
Gross debt (45,991) (46,655)
Collateral liabilities (4,431) (4,886)
Cash and cash equivalents 7,148 11,705
Short-term investments 4,094 4,305
Collateral assets 649 239
Derivative financial instruments 3,481 4,702
Less mark-to-market gains deferred in hedge reserves (1,190) (2,785)
------------------------------------------------------ -------- --------
Net debt (36,240) (33,375)
------------------------------------------------------ -------- --------
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 using 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
2023 and 30 September 2022.
Re-presented(1)
H1 FY24 H1 FY23
EURm EURm
---------------------------------------------------- ------- ---------------
Operating profit (2) 12,983 6,078
Borrowings 65,058 75,644
Cash and cash equivalents (7,148) (7,077)
Derivative financial instruments included in trade
and other receivables (5,273) (8,769)
Derivative financial instruments included in trade
and other payables 1,792 1,786
Short-term investments (4,094) (4,402)
Collateral assets (649) (754)
Financial liabilities under put option arrangements 493 486
Equity 61,562 57,795
---------------------------------------------------- ------- ---------------
Capital employed at end of the year 111,741 114,709
Average capital employed for the year 113,225 115,322
ROCE using GAAP measures 11.5% 5.3%
---------------------------------------------------- ------- ---------------
Notes:
1. The results for the 12 months ended 30 September 2022 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. Consequently, ROCE using GAAP measures
has increased by 0.1pps compared to 5.2% as previously reported.
See note 4 'Assets held for sale' in the unaudited condensed
consolidated financial statements for more information.
2. Operating profit includes Other income/(expense), which
includes merger and acquisition activity that is non-recurring in
nature.
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
2023 and 30 September 2022.
Re-presented(2)
H1 FY24(1) H1 FY23
EURm EURm
--------------------------------------------------- ---------- ---------------
Operating profit 12,983 6,078
Interest on lease liabilities (513) (403)
Restructuring costs 657 315
Other income (8,837) (261)
Share of results of equity accounted associates
and joint ventures (6) (571)
Other adjustments(3) 283 128
--------------------------------------------------- ---------- ---------------
Adjusted operating profit for calculating pre-tax
ROCE (controlled) 4,567 5,286
Adjusted share of results of equity accounted
associates and joint ventures used in post-tax
ROCE(4) (9) 575
Notional tax at Adjusted effective tax rate(5) (1,268) (1,615)
--------------------------------------------------- ---------- ---------------
Adjusted operating profit for calculating post-tax
ROCE (controlled and associates/joint ventures) 3,290 4,246
Capital employed for calculating ROCE on a GAAP
basis 111,741 114,709
Adjustments to exclude:
- Leases (13,039) (12,084)
- Deferred tax assets (19,460) (18,699)
- Deferred tax liabilities 728 697
- Taxation recoverable (296) (393)
- Taxation liabilities 453 722
- Other investments (1,630) (1,783)
- Investments in associates and joint ventures (10,457) (5,453)
- Pension assets and liabilities (30) (212)
- Other adjustments(3) (914) (854)
--------------------------------------------------- ---------- ---------------
Adjusted capital employed for calculating pre-tax
ROCE (controlled) 67,096 76,650
Investments in associates and joint ventures 10,457 5,453
--------------------------------------------------- ---------- ---------------
Adjusted capital employed for calculating post-tax
ROCE (controlled and associates/joint ventures) 77,553 82,103
Average capital employed for calculating pre-tax
ROCE (controlled) 71,873 76,865
Average capital employed for calculating post-tax
ROCE (controlled and associates/joint ventures) 79,828 82,436
Pre-tax ROCE (controlled) 6.4% 6.9%
Post-tax ROCE (controlled and associates/joint
ventures) 4.1% 5.2%
--------------------------------------------------- ---------- ---------------
Notes:
1. ROCE calculations for H1 FY24 include the results of Vantage
Towers until its disposal on 22 March 2023 and the results of Oak
Holdings 1 GmbH from that date.
2. The results for the 12 months ended 30 September 2022 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. Consequently, Post-tax ROCE (controlled
and associates/joint ventures) has increased by 0.1pps compared to
5.1% as previously reported. There is no impact on Pre-tax ROCE
(controlled). See note 4 'Assets held for sale' in the unaudited
condensed consolidated financial statements for more
information.
3. Comprises adjustments to exclude hyperinflationary accounting
in Turkey.
4. 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 and other income.
5. Includes tax for H1 FY24 at the Adjusted effective tax rate
of 30.3% and tax for H2 FY23 at the Adjusted effective tax rate of
26.2%.
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
------------------- ------------------------------ --------------------------------------------
Non-GAAP measures
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.
Re-presented(1)
H1 FY24 H1 FY23
EURm EURm
---------------------------------------------------------- ------- ---------------
Profit before taxation 550 1,687
Adjustments to derive Adjusted profit before tax 1,003 755
---------------------------------------------------------- ------- ---------------
Adjusted profit before taxation 1,553 2,442
Adjusted share of results of equity accounted associates
and joint ventures (113) (503)
---------------------------------------------------------- ------- ---------------
Adjusted profit before tax for calculating Adjusted
effective tax rate 1,440 1,939
---------------------------------------------------------- ------- ---------------
Income tax expense (705) (485)
Tax on adjustments to derive Adjusted profit before
tax (150) (132)
Adjustments:
- UK corporate interest restriction 48 35
- Tax relating to hyperinflation accounting 121 55
- Deferred tax on use of Luxembourg losses in
the year 250 -
---------------------------------------------------------- ------- ---------------
Adjusted income tax expense for calculating Adjusted
tax rate (436) (527)
Adjusted effective tax rate 30.3% 27.2%
---------------------------------------------------------- ------- ---------------
Note:
1. The results for the six months ended 30 September 2022 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. This has resulted in a decrease in
Adjusted profit before taxation of EUR34 million and an increase of
EUR40 million in the Adjusted share of results of equity accounted
associates and joint ventures, resulting in a total decrease of
EUR74 million in Adjusted profit before tax for calculating
Adjusted effective tax rate. Consequently, the Adjusted effective
tax rate increased by 1.0pps compared to 26.2% as previously
reported. See note 4 'Assets held for sale' in the unaudited
condensed consolidated financial statements for more
information.
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.
Re-presented(1)
H1 FY24 H1 FY23
EURm EURm
--------------------------------------------------------- ------- ---------------
Share of results of equity accounted associates
and joint ventures (51) 376
Restructuring costs 7 3
Other income (16) -
--------------------------------------------------------- ------- ---------------
Adjusted share of results of equity accounted associates
and joint ventures used in post-tax ROCE (60) 379
Amortisation of acquired customer base and brand
intangible assets 173 124
--------------------------------------------------------- ------- ---------------
Adjusted share of results of equity accounted associates
and joint ventures 113 503
--------------------------------------------------------- ------- ---------------
Note:
1. The results for the six months ended 30 September 2022 have
been re-presented to reflect that Indus Towers Limited is no longer
reported as held for sale. This has resulted in an increase of
EUR33 million in the Adjusted share of results of equity accounted
associates and joint ventures used in post-tax ROCE and an increase
of EUR7 million in the Amortisation of acquired customer base and
brand intangible assets, resulting in a total increase of EUR40
million in the Adjusted share of results of equity accounted
associates and joint ventures. See note 4 'Assets held for sale' in
the unaudited condensed consolidated financial statements for more
information.
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 FY24 H1 FY23
EURm EURm
----------------------------------------------------------- ------- -------
Depreciation on leased assets - included in Adjusted
EBITDAaL 2,157 2,046
Depreciation on leased assets - included in Restructuring
costs 19 -
----------------------------------------------------------- ------- -------
Depreciation on leased assets 2,176 2,046
Depreciation on owned assets 2,586 2,869
Amortisation of owned intangible assets 2,040 1,938
----------------------------------------------------------- ------- -------
Depreciation and amortisation on owned assets 4,626 4,807
Total depreciation and amortisation on owned and
leased assets 6,802 6,853
Loss on disposal of owned fixed assets 22 11
Loss on disposal of leased assets (2) (2)
----------------------------------------------------------- ------- -------
Depreciation and amortisation - as recognised in
the consolidated income statement 6,822 6,862
----------------------------------------------------------- ------- -------
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 FY24 H1 FY23
EURm EURm
----------------------------------------------- ------- -------
Capital additions 3,365 3,541
Integration related capital additions 66 101
Licence and spectrum additions 250 193
----------------------------------------------- ------- -------
Additions 3,681 3,835
----------------------------------------------- ------- -------
Intangible assets additions 1,396 1,316
Property, plant and equipment owned additions 2,285 2,519
----------------------------------------------- ------- -------
Total additions 3,681 3,835
----------------------------------------------- ------- -------
Definitions
Key terms are defined below. See page 40 for the location of
definitions for non-GAAP measures.
Term Definition
Africa Comprises the Vodacom Group.
-------------------------------------------------------------------
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.
-------------------------------------------------------------------
FTTH Fibre to the home.
-------------------------------------------------------------------
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 additions incurred in relation to significant changes
capital additions 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 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 and Albania. The prior period comparative
results include Vodafone Hungary which was disposed of in
January 2023.
-------------------------------------------------------------------
Other Markets Other Markets comprise Turkey. From 1 April 2023, the Group
revised its segmental reporting by moving Vodafone Egypt
from the Other Markets segment to the Vodacom segment. This
is the effective date on which the Group's reporting structure
changed to reflect the transfer of Vodafone Egypt to the
Vodacom Group. The prior period comparative results include
Vodafone Ghana which was disposed of in February 2023.
-------------------------------------------------------------------
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 (see below) and Other revenue
(see above).
-------------------------------------------------------------------
Roaming Roaming allows customers to make calls, send and receive
texts and data on our and other operators' mobile networks,
usually while travelling abroad.
-------------------------------------------------------------------
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 supports organisations in a digital world.
Business With Vodafone's expertise in connectivity, our leading IoT
platform and our global scale, we deliver the results that
organisations need to progress and thrive. We support businesses
of all sizes and sectors.
-------------------------------------------------------------------
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. 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 2022 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 "FY24" are to the financial year ending 31
March 2024. References to "last year", "last financial year" or
"FY23" are to the financial year ended 31 March 2023. References to
"H1 FY24" are to the six month period ended 30 September 2023.
References to "H1 FY23" are to the six month period ended 30
September 2022.
4. Vodacom refers to the Group's interest in Vodacom Group
Limited ('Vodacom') as well as its operations, including
subsidiaries in South Africa, Egypt, DRC, Tanzania, Mozambique and
Lesotho. On 13 December 2022, Vodafone completed the transfer of
its 55% shareholding in Vodafone Egypt to Vodacom. Vodafone Egypt
has been included within the Vodacom reporting segment from 1 April
2023.
5. 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 document 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 EBITDaL and Adjusted free cash flow
for the financial year ending 31 March 2024; the announced
agreement to combine Vodafone UK and Three UK; the announced
agreement to dispose of Vodafone Spain; the Group's FTTH joint
venture's network rollout; changes to German TV laws; expectations
for the Group's future performance generally; the transaction to
purchase Nowo Communicatons; 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 integration or
performance of current and future investments, associates, joint
ventures, non-controlled interests and newly acquired businesses;
certain of the Group's plans and objectives, including the Group's
strategy and its emissions targets and other ESG goals,
commitments, targets and ambitions, climate-related scenarios or
pathways and methodologies it uses to assess its progress in
relation to those.
Forward-looking statements are sometimes but not always
identified by their use of a date in the future or such words as
'will', 'may', 'expects', 'believes', 'plans', 'continues',
'progress', 'further', or 'ongoing'. 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 will 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: general economic and political conditions
in the jurisdictions in which the Group operates and changes to the
associated legal, regulatory and tax environments; increased
competition; levels of investment in network capacity and the
Group's ability to deploy view technologies, products and services;
evolving cyber threats to the Group's services and confidential
data; the Group's ability to embed responses to climate-related
risks into business strategy and operations; 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; slower
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 resources, 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 may 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,
associates, franchises, brand licences, platform sharing or other
arrangements with third parties, including the signed agreement to
combine Vodafone's UK business with Three UK; acquisitions and
divestments of Group businesses and assets and the pursuit of new,
unexpected strategic opportunities; the Group's ability to
integrate acquired business or assets; the extent of any future
write-downs or impairment charges on the Group's assets, or
restructuring charges incurred as a result of an acquisition or
disposition; 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; changes in statutory tax rates and profit mix; climate
change projection risk including, for example, the evolution of
climate change and its impacts, changes in the scientific
assessment of climate change impacts, transition pathways and
future risk exposure and limitations of climate scenario forecasts;
amendments to or new ESG reporting standards, models or
methodologies; changes in ESG data availability and quality which
could result in revisions to reported data going forward; and
climate scenarios and the models that analyse them have limitations
that are sensitive to key assumptions and parameters, which are
themselves subject to some uncertainty.
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 in the summary of our
principal risks in the Group's Annual Report for the year ended 31
March 2023. The Annual Report can be found on the Vodafone Group's
website (vodafone.com/ar2023). All subsequent written or oral
forward-looking statements attributable to Vodafone or any member
of the Vodafone Group or any persons acting on their behalf are
expressly qualified in their entirety by the factors referred to
above. No assurances can be given that the forward-looking
statements in this document will be realised. Subject to compliance
with applicable law and regulations, Vodafone does not intend to
update these forward-looking statements and does not undertake any
obligation to do so.
Copyright (c) Vodafone Group 2023
-End-
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IR FFFIVLALVLIV
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