Final Results

RNS Number : 5718N
Vodafone Group Plc
19 May 2015
 

Vodafone announces results for the year ended 31 March 2015

 

19 May 2015

 

 

Highlights

·      Group revenue up 10.1% to £42.2 billion; full year organic service revenue declined 1.6%*

·      Return to growth in Q4: organic service revenue up 0.1%*; Europe -2.4%*, AMAP 6.0%*

·      EBITDA down 6.9%* at £11.9 billion; H2 EBITDA down 3.6%*

·      EBITDA on a guidance basis £11.7 billion, in line with £11.6 - £11.9 billion guidance range

·      Free cash flow £1.1 billion; capital expenditure £9.2 billion, up 45.7% year-on-year

·      £5.5 billion deferred tax assets recognised and reported in H1

·      Net debt of £22.3 billion, or £18.7 billion including $5.2 billion Verizon loan notes

·      Final dividend per share of 7.62 pence, up 2.0%, giving total dividends per share of 11.22 pence

 

Year ended

Change


31 March 2015

Reported 

Organic*


£m 

%

% 

Group revenue

42,227 

+10.1 

(0.8)

Group service revenue

38,497 

+9.4 

(1.6)

Europe

25,972 

+15.0 

(4.7)

Africa, Middle East and Asia Pacific ('AMAP')

12,035 

(0.8)

+5.8 

EBITDA

11,915 

+7.5 

(6.9)

Adjusted operating profit

3,507 

(18.6)

(24.1)

Operating profit

1,967 

(150.3)


Free cash flow1

1,088 

(75.2)


Profit for the financial year from continuing operations2

5,860 

(48.2)


Basic earnings per share2

21.75p

(90.3)


Adjusted earnings per share from continuing operations3

5.55p

(27.8)


Total dividends per share 

11.22p

+2.0 


 

 

·      Strong progress on Project Spring: 63% through mobile build, European 4G coverage 72%; 28 million homes reached with next generation network; significant development of Enterprise products and services

·      20.2 million 4G customers in 18 markets; data volumes up 81% year-on-year in Q4

·      Continued take-up of data in emerging markets: 115.5 million data customers in AMAP, 3G coverage in India now at 90% of target urban areas

·      Further strong progress on unified communications strategy: 12.0 million broadband customers, improving revenue trend, fixed line now 25.2% of European service revenue

·      Integration of KDG and Ono on track, synergies in line with expectations

·      Continued enhancement of Enterprise capabilities, with return to growth in Q4: acquisition of Cobra Automotive, international expansion of IP-VPN to 62 countries, good momentum in machine-to-machine revenue (+24.7%*)

 

Guidance for the 2016 financial year4

·      Organic EBITDA growth: EBITDA in the range of £11.5 billion to £12.0 billion

·      Positive free cash flow after all capex, before M&A, spectrum and restructuring costs

·      Capex of £8.5 billion to £9.0 billion, reflecting the second year of Project Spring investment

·      Intention to grow dividends per share annually, demonstrating confidence in future cash flow generation

 

Vittorio Colao, Group Chief Executive, commented:

"It has been a year of continued progress, culminating with a return to organic growth in Q4. We have seen increasing signs of stabilisation in many of our European markets, supported by improvements in our commercial execution and very strong demand for data. In fixed line, revenue trends are improving supported by accelerating customer growth, and our recent cable acquisitions provide a strong platform for further growth. In emerging markets, our good growth trend has continued, driven by rising data penetration and leading network quality and distribution.

 

"Our Project Spring investment programme is on plan, delivering a significantly improved experience to customers. In Europe, 4G coverage now extends to over 70% of our footprint, and voice quality and reliability have improved noticeably. We now reach 28 million homes with our own, next generation cable and fibre networks. In India, our 3G footprint now reaches 90% of target areas, with 3G data revenue up 125% year-on-year in Q4.

 

"We have significant opportunities ahead of us, with only 13% of our European mobile customers using 4G, and our market share in fixed services only a fraction of our share in mobile. In addition, businesses around the world are increasingly looking to put mobility at the centre of their own strategies. With the assets and skills we have today, further enhanced by the completion of Project Spring, we will be strongly positioned to provide ever improving services to customers and seize these opportunities."

 

 

Note:

*

All amounts in this document marked with an "*" represent organic growth which presents performance on a comparable basis, both in terms of merger and acquisition activity and movements in foreign exchange rates. See page 28 for "Use of non-GAAP financial information".

1

Free cash flow for the year ended 31 March 2015 excludes £336 million of restructuring costs (2014: £210 million), a £365 million UK pensions contribution payment, £359 million of Verizon Wireless tax distributions received after the completion of the disposal, £328 million of interest paid on the settlement of the Piramal option, £116 million of KDG incentive scheme payments in respect of liabilities assumed on acquisition and a £100 million (2014: £100 million) payment in respect of the Group's historical UK tax settlement.

2

Year ended 31 March 2015 includes the recognition of £5,468 million of deferred tax assets in respect of tax losses in Luxembourg. Year ended 31 March 2014 included the recognition of a deferred tax asset in respect of tax losses in Germany (£1,916 million) and Luxembourg (£17,402 million) and the tax liability related to the rationalisation and reorganisation of our non-US assets prior to the disposal of our stake in Verizon Wireless (£2,210 million). Basic earnings per share for the year ended 31 March 2014 also includes the gain on disposal, results and related tax charge of the Group's former investment in Verizon Wireless.

3

Adjusted earnings per share from continuing operations excludes the gain on disposal, results and related tax charge of the Group's former investment in Verizon Wireless in the prior year and the recognition of deferred tax assets in both years.

4

See "Guidance" on page 8.

 

 

REVIEW OF THE YEAR

 

Financial review of the year

It has been a year of continued strong growth in most of our emerging markets, and signs of stabilisation in many European ones. A slight easing of aggressive price competition in some countries, combined with a clear inflection point in the growth of data usage, has underpinned our performance. In addition, the increased commercial investments which we began to make in the prior year have translated into an improved performance relative to our competitors in Europe, with revenue trends improving in each of the last three quarters.

Across our markets we have witnessed an acceleration in consolidation both within the mobile sector and between fixed and mobile, as operators look to gain scale and position themselves to seize the opportunity to deliver customers an enhanced experience as demand for high speed data takes off. This mirrors our own important strategic moves with the acquisitions of Kabel Deutschland ('KDG') and Grupo Corporativo Ono, S.A. ('Ono'), and our continued fixed infrastructure build in a number of markets. In our core European markets, we are increasingly positioning Vodafone as a top tier, fully integrated provider of high speed fixed and mobile communications to consumers and businesses.

We have continued to make good progress with our strategic priorities:

·      We have completed 63% of the mobile network element of Project Spring, with 72% 4G coverage in Europe and 90% 3G coverage in target areas of India;

·      We now have 20.2 million 4G customers across the Group, who are on average using twice the data of 3G customers;

·      We have significantly strengthened our unified communications capabilities, with extended fibre builds in several European markets, and the ongoing integrations of KDG and Ono;

·      We continue to invest in key growth areas in Enterprise, with machine-to-machine ('M2M') revenue growing 24.7% and our proposition enhanced by the acquisition of Cobra Automotive, and our IP-VPN footprint expanded to 62 countries;

·      We have consolidated our position as an industry leader in mobile financial services, with 19.9 million M-Pesa customers; and

·      We continue to grow the dividend per share and maintain a strong balance sheet.

Group

Group revenue for the year increased by 10.1% to £42.2 billion, with Group organic service revenue down 1.6%* (down 0.8% excluding the impact of regulated mobile termination rate ('MTR') cuts). The Group returned to organic service revenue growth in Q4 at +0.1%* (+0.9% excluding MTRs), reflecting a steady recovery in Europe and continued good growth in Africa, Middle East and Asia Pacific ('AMAP').

Group EBITDA rose 7.5% to £11.9 billion, with organic EBITDA down 6.9%*, mainly affected by revenue declines in Europe. The Group EBITDA margin fell 0.7 percentage points to 28.2%, or 1.8* percentage points on an organic basis. This reflects ongoing revenue declines in Europe and the growth in operating expenses as a result of Project Spring, partially offset by operating efficiencies. H2 EBITDA fell 3.6%*, with the improved trend supported by the better revenue performance and continued good cost control.

Adjusted operating profit fell by 18.6% to £3.5 billion as the increase in reported EBITDA year-on-year was offset by the increase in depreciation and amortisation resulting from the acquisitions of KDG and Ono.

The adjusted effective tax rate for the year was 29.4%, including the impact of foreign exchange losses. Excluding this impact, the adjusted effective tax rate was 27.2%. We recognised an additional deferred tax asset of £5.5 billion in the first half of the financial year taking our total deferred tax assets to £23.8 billion.

Adjusted earnings per share1 from continuing operations fell 27.8% to 5.55 pence, mainly reflecting the decline in adjusted operating profit.

Free cash flow2 was £1.1 billion (2014: £4.4 billion), this decline reflecting higher reported EBITDA offset by the increase in capital expenditure under the Project Spring programme. Total capital expenditure was £9.2 billion (2014: £6.3 billion).

Net debt as at 31 March 2015 was £22.3 billion (March 2014: £13.7 billion), or £18.7 billion taking into account the $5.2 billion Verizon loan notes. Net debt includes the impact of the acquisitions of Ono in July 2014 for £5.8 billion and Cobra Automotive in August 2014 for £0.2 billion. In addition, we renewed or acquired spectrum in India, Italy, Greece, Hungary and New Zealand, for a cash cost in the year of £0.4 billion. The remaining liability of £2.7 billion relating to the March 2015 India spectrum auction is expected to be recognised in the 2016 financial year.

The Board is recommending a final dividend per share of 7.62 pence, up 2.0% year-on-year, in line with our intention to increase the full year dividend per share annually.

Europe

Organic service revenue in Europe declined 4.7%* year-on-year, reflecting ongoing pressures from competition, regulation and the macroeconomic environment. Excluding the impact of MTR cuts, service revenue fell 4.1%*. Performance in H2 began to stabilise in most markets.

Mobile service revenue declined 5.5%*, with a better trend in H2 (Q3 -3.9%*, Q4 -3.4%*). The main factors supporting this recovery were consistent growth in the contract customer base in a number of markets, some evidence of ARPU stability, and accelerating demand for data stimulated by the roll-out of 4G coverage. The UK, Netherlands and the Czech Republic all returned to growth in H2, while Germany, Italy, Spain, Greece and Romania all reduced their rate of decline in H2. Hungary grew strongly throughout the year.

Fixed service revenue declined 0.7%*, but also showed an improving trend in H2 (Q3 +2.3%*, Q4 +1.6%*). Growth in Spain, Italy and Portugal was offset by continued declines in Germany and the UK. KDG continued to grow strongly with service revenue up 7.1%3 on a local GAAP basis in Q4. Broadband net additions for the year, including KDG, were 0.9 million, taking the European base to 11.3 million.

Organic EBITDA fell 12.3%* to £7.9 billion, and the EBITDA margin was flat at 28.2%, or a decline of 2.4* percentage points on an organic basis. This reflects the decline in revenue and the growth in operating expenses as a result of Project Spring, partially offset by operating efficiencies. The trend in H2 was better, with organic EBITDA down 7.6% and the margin down 1.8* percentage points.

AMAP

Organic service revenue in AMAP was up 5.8%* year-on-year (or 7.1%* excluding the impact of MTR cuts), with continued good growth in most major markets. India, Turkey and Egypt achieved service revenue growth of 12.6%*, 9.4%* and 2.8%* respectively. Performance at Vodacom (-1.0%*) was affected by price competition and a significant MTR cut in South Africa, but the trend improved in Q4 (-0.2%*).

The region continues to benefit from strong customer growth, increased usage of voice and data services, and effective marketing and distribution. During the year the mobile customer base grew 6.6% to 323.7 million, driven by strong momentum in India. Voice and data usage were up 8% and 106% respectively, and there are now 115.5 million data users in the region.

Organic EBITDA rose 5.8%* and the EBITDA margin was 30.4%. The EBITDA margin fell 0.4* percentage points on an organic basis, as increased operating costs from Project Spring and inflationary pressures in some markets offset the scale benefits of revenue growth.

Strategic progress

Project Spring

First communicated in detail in November 2013, Project Spring is our two-year, £19 billion investment programme designed to place Vodafone at the forefront of the growth in mobile data and the increasing trend towards the convergence of fixed and mobile services. The key elements of the Spring infrastructure build are:

·      Building 4G to 90% of the population in our European markets and 3G to up to 95% of targeted areas of India;

·      Modernising our mobile network, with high speed backhaul giving us the capacity to provide a consistently good network experience to our customers;

·      Making calls more reliable - still the number one priority for most customers;

·      Upgrading our retail presence, to offer customers modern shops focused on service as well as sales;

·      Increasing our next-generation fixed line infrastructure in Spain, Italy and Portugal; and

·      Enhancing our suite of Enterprise products and services, and taking them into new geographical areas.

We have made significant progress on all of these elements during the year, and are on track to hit our key March 2016 targets. Highlights of our progress include:

·      Extending our European 4G footprint to 72% population coverage, up from 32% in September 2013;

·      Adding a further 33,000 2G and 42,000 3G sites, to deepen our existing coverage and improve voice reliability;

·      Reaching 90% of targeted urban areas with 3G in India; and

·      Covering an additional 3.9 million homes across Europe with our own fibre.

These investments have already seen the customer experience improve significantly, with 88% of customers' data sessions in Europe now at 3 Mbps or better (the level required to watch uninterrupted high-definition video), and dropped call rates in Europe falling by 34%.

Data

We have witnessed exceptional demand for data this year, whether 4G in Europe or 3G in emerging markets, with data growth totalling 80% for the full year, and accelerating every quarter in Europe. As video and music services proliferate, and data coverage widens and becomes more consistent, customers are increasingly using their smartphones and tablets for entertainment, work and social interaction.

We now provide 4G services in 18 countries, with a further four countries launched during the year. Our 4G customer base has quadrupled to 20.2 million. While progress has been rapid, still only 13% of our European customer base is on 4G, providing us with a very substantial opportunity for future growth.

With quicker network response times, better in-building penetration and higher peak speeds, 4G is stimulating significant growth in data, with usage typically doubling when customers migrate from 3G to 4G. In addition, our successful commercial approach of bundling content packages with 4G in a number of European markets is boosting data consumption further, and enabling us to introduce larger data bundles to customers. Our ability to translate this strong data demand into revenue growth will be a key driver of our financial performance in the years ahead.

In emerging markets, the data story is equally positive. In India, for example, we already have 19 million 3G customers (up from 7 million a year ago), smartphone penetration in urban areas is already 44%, and 3G data usage per customer is at similar levels to Europe. For many, their first experience of the internet will be on mobile, given the lack of fixed line infrastructure. Our rapid roll-out of 3G networks this year is generating a rapid payback, with 3G browsing revenues growing at 140% during the year.

Unified communications

We are well on the way to becoming a full service, integrated operator in our main markets. Through organic investment and acquisition, we now cover 28 million households (and thousands of businesses) across Europe with our own fibre or cable infrastructure. In addition, we can reach a further 21 million households by accessing the incumbent operators' networks. In the 2015 financial year, 25% of our service revenue in Europe came from fixed line, compared to just 10% five years ago. We now have 11.3 million broadband customers and 9.1 million TV customers in Europe.

During the year we completed the acquisition of Ono, Spain's number one cable operator covering 7 million homes. We made strong progress on the integration of both Ono and KDG in Germany, combining our fixed and mobile networks and beginning to migrate Vodafone broadband customers to our new infrastructure.

We are also demonstrating strong commercial momentum. We increased our European broadband customer base by over 850,000 (excluding acquisitions) during the year, with revenue trends improving through the year. In the coming weeks, we will launch our consumer broadband proposition in the UK, with TV to follow later in 2015, and as a result will be offering integrated fixed and mobile services in all of our major European markets.

Enterprise

Services to business comprise around 27% of our Group service revenue, and 32% in Europe. Vodafone has a strong position in mobile enterprise, leveraging our trusted brand and network reliability. We are increasingly using this strong platform to win more international business and move more deeply into fixed line, which is a rapidly growing trend within Enterprise as well. Half of all new proposal requests in Vodafone Global Enterprise ('VGE') ask for converged solutions, and fixed is now 25% of Enterprise service revenue. At the same time, through Project Spring, we are investing in strategic growth areas such as Cloud & Hosting and M2M, which promise to be significant growth drivers in the future.

VGE, which provides services to our biggest international customers, achieved revenue growth of 1.8%*, as multi-national corporations continued their trend of seeking a single provider of services across borders. In M2M, we increased the number of connections to 21.5 million from 16.1 million last year, and acquired Cobra Automotive, a provider of value-added security and telematics services to the automotive industry. M2M revenue grew 24.7%*.

Unified communications continues to be a rapidly growing trend within Enterprise. Vodafone One Net, our cloud-based integrated fixed/mobile service, now has 3.9 million users across 11 markets - up 13% year-on-year.

Prospects for the 2016 financial year4

 

The coming year will be another very important one for execution, as we complete the Project Spring build programme and continue the integration of KDG and Ono. At the same time, we will take further measures to stabilise ARPU as usage continues to grow strongly.

Our priority is to ensure that we give customers - whether individuals or businesses, mobile or fixed - the best possible service. This is not just about providing the best coverage and connectivity, but also about making everything about being a Vodafone customer easier, clearer and more reliable. Signing a contract, adding more services, understanding or challenging a bill, seeking help and advice online, over the phone or in one of our shops: we aim to improve every aspect of the customer relationship with Vodafone.

By the end of the coming financial year we expect that the clear improvements in network performance delivered by Project Spring, combined with a more consistent customer service experience, will begin to be reflected in stronger customer satisfaction. This in turn should reduce churn and, combined with continued strong growth in data usage, stabilise average revenue per user ('ARPU'). Although cash flow will continue to be depressed in the coming year given the high levels of investment, our intention to continue to grow dividends per share annually demonstrates our confidence in strong future cash flow generation.

We expect EBITDA to be in the range of £11.5 billion to £12.0 billion for the 2016 financial year, and free cash flow to be positive, after all capex, before M&A, spectrum and restructuring costs.

 

Notes:

*

All amounts in this document marked with an "*" represent organic growth which presents performance on a comparable basis, both in terms of merger and acquisition activity and movements in foreign exchange rates. See page 28 for "Use of non-GAAP financial information".

1

Adjusted earnings per share from continuing operations excludes the results and related tax charge of the Group's former investment in Verizon Wireless in the prior year and the recognition of deferred tax assets in both years.

2

Free cash flow for the year ended 31 March 2015 excludes £336 million of restructuring costs (2014: £210 million), a £365 million UK pensions contribution payment, £359 million of Verizon Wireless tax distributions received after the completion of the disposal, £328 million of interest paid on the settlement of the Piramal option, £116 million of KDG incentive scheme payments in respect of liabilities assumed on acquisition and a £100 million (2014: £100 million) payment in respect of the Group's historical UK tax settlement.

3

Revenue growth for KDG is reported using local GAAP, not Vodafone IFRS accounting policies, and is therefore not directly comparable to Vodafone's revenue growth.

4

See "Guidance" on page 8.

 

 

GROUP FINANCIAL HIGHLIGHTS

 




Change



2015 

2014 

Reported 

Organic*


Page

£m 

£m 

% 

% 

Statutory basis1

 

 

 

 

 

Group revenue

23, 29

42,227 

38,346 

10.1 

(0.8)

Operating profit/(loss)

23 

1,967 

(3,913)

(150.3)


Profit/(loss) before taxation

23 

1,095 

(5,270)

(120.8)


Profit for the financial year from continuing operations2

23 

5,860 

11,312 

(48.2)


Basic earnings per share2

23 

21.75p

223.84p

(90.3)


Net cash flow from operating activities

26 

9,715 

6,227 

56.0 








Adjusted statutory basis3

 

 

 

 

 

 

 

 

 

 

 

Group service revenue

9 

38,497 

35,190 

9.4 

(1.6)

EBITDA

9 

11,915 

11,084 

7.5 

(6.9)

EBITDA margin  

9, 29

28.2%

28.9%

(0.7pp)

(1.8pp)

Adjusted operating profit

9, 29

3,507 

4,310 

(18.6)

(24.1)

Adjusted profit before tax

11 

2,217 

3,180 

(30.3)


Adjusted effective tax rate4

11 

29.4%

32.9%



Adjusted profit attributable to owners of the parent

12 

1,471 

2,035 

(27.7)


Adjusted earnings per share from continuing operations5

12 

5.55p

7.69p

(27.8)


Capital expenditure

19, 29

9,197 

6,313 

45.7 


Free cash flow6

19 

1,088 

4,393 

(75.2)


Net debt

19, 20

(22,271)

(13,700)

62.6 


Notes:

*

All amounts in this document marked with an "*" represent organic growth which presents performance on a comparable basis, both in terms of merger and acquisition activity and movements in foreign exchange rates. See page 28 for "Use of non-GAAP financial information".

1

Statutory basis prepared in accordance with IFRS accounting principles, including the results of the Group's joint ventures using the equity accounting basis and the profit contribution from Verizon Wireless to 2 September 2013 and gain on disposal as discontinued operations.

2

Year ended 31 March 2015 includes the recognition of £5,468 million of deferred tax assets in respect of tax losses in Luxembourg. Year ended 31 March 2014 included the recognition of a deferred tax asset in respect of tax losses in Germany (£1,916 million) and Luxembourg (£17,402 million) and the tax liability related to the rationalisation and reorganisation of our non-US assets prior to the disposal of our stake in Verizon Wireless (£2,210 million). Basic earnings per share for the year ended 31 March 2014 also includes the gain on disposal, results and related tax charge of the Group's former investment in Verizon Wireless.

3

See page 28 for "Use of non-GAAP financial information" and page 35 for "Definitions of terms".

4

The adjusted effective tax rate for the year ended 31 March 2014 has been restated to exclude results and related tax expense of Verizon Wireless and to show the adjusted tax rate as calculated on the same basis as the current year.

5

Adjusted earnings per share from continuing operations excludes the gain on disposal, results and related tax charge of the Group's former investment in Verizon Wireless in the prior year and the recognition of deferred tax assets in both years.

6

Free cash flow for the year ended 31 March 2015 excludes £336 million of restructuring costs (2014: £210 million), a £365 million UK pensions contribution payment, £359 million of Verizon Wireless tax distributions received after the completion of the disposal, £328 million of interest paid on the settlement of the Piramal option, £116 million of KDG incentive scheme payments in respect of liabilities assumed on acquisition and a £100 million (2014: £100 million) payment in respect of the Group's historical UK tax settlement.

 

 

GUIDANCE

 

Please see page 28 for "Non-GAAP financial information", page 35 for "Definitions of terms" and page 36 for "Forward-looking statements".

Performance against 2015 financial year guidance

Based on guidance foreign exchange rates, EBITDA for the 2015 financial year was £11.7 billion, in line with the £11.6 billion to £11.9 billion range set in November 2014. On the same basis our free cash flow was £1.3 billion, in line with our positive free cash flow guidance.

 

 

2016 financial year guidance

 

 

EBITDA

£bn

Free cash flow

£bn

11.5 - 12.0

Positive




 

We expect EBITDA to be in the range of £11.5 billion to £12.0 billion. We expect free cash flow to be positive after all capex, before the impact of M&A, spectrum purchases and restructuring costs. Total capex is expected to be around £8.5 billion to £9.0 billion (including Ono). In the following year, we anticipate capital intensity normalising to a level of 13-14% of annual revenue.

 

Dividend policy

The Board intends to grow dividends per share annually.

 

Assumptions

We have based guidance for the 2016 financial year on our current assessment of the global macroeconomic outlook and assume foreign exchange rates of £1:€ 1.37, £1:INR 95.2 and £1:ZAR 18.1. It excludes the impact of licences and spectrum purchases, material one-off tax-related payments, restructuring costs and any fundamental structural change to the Eurozone. It also assumes no material change to the current structure of the Group.

 

Actual foreign exchange rates may vary from the foreign exchange rate assumptions used. A 1% change in the euro to sterling exchange rate would impact EBITDA by £60 million and free cash flow by £10 million. A 1% change in the Indian rupee to sterling exchange rate would impact EBITDA by £10 million and would have no impact on free cash flow. A 1% change in the South African rand to sterling exchange rate would impact EBITDA by £15 million and free cash flow by £5 million.

 

 

CONTENTS

 

 

Page

Financial results

9 

Liquidity and capital resources

19 

Other significant developments

21 

Consolidated financial statements

23 

Use of non-GAAP financial information

28 

Additional information

29 

Other information (including forward-looking statements)

34 



 

 

FINANCIAL RESULTS

 

Group1







Change



Europe 

AMAP 

Other2

Eliminations 

2015 

2014 

Reported

Organic*


£m  

£m 

£m 

£m 

£m 

£m 

%

%

Mobile in-bundle revenue

12,120 

3,620 

262 

- 

16,002 

14,159 



Mobile out-of-bundle revenue

4,839 

5,752 

8 

- 

10,599 

11,051 



Mobile incoming revenue

1,388 

1,364 

(1)

- 

2,751 

2,861 



Fixed line revenue

6,546 

859 

205 

(41)

7,569 

5,597 



Other service revenue

1,079 

440 

95 

(38)

1,576 

1,522 



Service revenue3

25,972 

12,035 

569 

(79)

38,497 

35,190 

9.4 

(1.6)

Other revenue

2,099 

1,447 

185 

(1)

3,730 

3,156 



Revenue

28,071 

13,482 

754 

(80)

42,227 

38,346 

10.1 

(0.8)

Direct costs

(6,476)

(3,630)

(412)

67 

(10,451)

(9,333)



Customer costs

(6,604)

(2,191)

32 

2 

(8,761)

(8,235)



Operating expenses

(7,067)

(3,564)

(480)

11 

(11,100)

(9,694)



EBITDA

7,924 

4,097 

(106)

- 

11,915 

11,084 

7.5 

(6.9)

Depreciation and amortisation:










Acquired intangibles

(135)

(318)

- 

- 

(453)

(406)




Purchased licences

(1,060)

(238)

- 

- 

(1,298)

(1,259)




Other

(4,966)

(1,666)

38 

- 

(6,594)

(5,433)



Share of result in associates and joint ventures

- 

(62)

(1)

- 

(63)

324 



Adjusted operating profit

1,763 

1,813 

(69)

- 

3,507 

4,310 

(18.6)

(24.1)

Impairment loss

-

(6,600)



Restructuring costs

(157)

(355)



Amortisation of acquired customer base and brand intangible assets

(1,269)

(551)



Other income and expense 

(114)

(717)



Operating profit/(loss)  

1,967

(3,913)



Non-operating income and expense

(19)

(149)



Net financing costs

(853)

(1,208)



Income tax, excluding the recognition of additional deferred tax

(703)

(2,736)



Recognition of additional deferred tax4 

5,468

19,318



Profit for the financial year from continuing operations

5,860

11,312



Profit for the financial year from discontinued operations

57

48,108



Profit for the financial year  

5,917

59,420



Notes:

*

All amounts in this document marked with an "*" represent organic growth which presents performance on a comparable basis, both in terms of merger and acquisition activity and movements in foreign exchange rates. See page 28 for "Use of non-GAAP financial information".

1

Current year results reflect average foreign exchange rates of £1:€1.28, £1:INR 98.51 and £1:ZAR 17.82.

2

The "Other" segment primarily represents the results of partner markets and the net result of unallocated central Group costs.

3

The analysis of mobile and fixed line service revenue for the year ended 31 March 2014 has been restated following the integration of CWW into the UK business.

4

Refer to page 11 for further details.

 

 

FINANCIAL RESULTS

 

Revenue

Group revenue increased by 10.1% to £42.2 billion and service revenue increased 9.4% to £38.5 billion. Reported growth rates reflect the acquisitions of KDG in October 2013 and of Ono in July 2014, as well as the consolidation of Italy after we increased our ownership to 100% in February 2014.

 

In Europe, organic service revenue declined by 4.7%* as growing demand for 4G and data services continues to be offset by challenging competitive and macroeconomic pressures and the impact of MTR cuts.

 

In AMAP, organic service revenue increased by 5.8%* driven by continued growth in India, Turkey, Ghana, Qatar and Egypt, partially offset by declines in Vodacom and New Zealand.

 

EBITDA and operating profit

Group EBITDA increased 7.5% to £11.9 billion primarily reflecting the acquisitions of KDG and Ono. On an organic basis, EBITDA fell 6.9%* and the Group's EBITDA margin fell 0.7 percentage points to 28.2% (or 1.8* percentage points on an organic basis), reflecting ongoing revenue declines in Europe and the growth in operating expenses as a result of the Project Spring programme, offset by operating efficiencies.

 

Operating profit increased to £2.0 billion from a £3.9billion operating loss in the prior year primarily as a result of the £6.6 billion impairment charge in the year ended 31 March 2014.

 

Discontinued operations

On 2 September 2013 the Group announced it had reached an agreement with Verizon Communications Inc. to dispose of its US group whose principal asset was its 45% interest in Verizon Wireless. The Group ceased recognising its share of results in Verizon Wireless on 2 September 2013, and classified its investment as a held for sale asset and the results as a discontinued operation. The transaction completed on 21 February 2014.

 

Net financing costs


2015 

2014 



£m 

£m 

Investment income

883 

346 

Financing costs

(1,736)

(1,554)

Net financing costs

(853)

(1,208)

Analysed as:




Net financing costs before interest on settlement of tax issues

(1,160)

(1,273)


Interest expense arising on settlement of outstanding tax issues

4 

15 


Income from investments

- 

10 



(1,156)

(1,248)

Mark to market (losses)/gains

(134)

118 

Loss on US bond redemption

- 

(99)

Foreign exchange1

437 

21 


(853)

(1,208)

Note:

1    Comprises foreign exchange rate differences reflected in the income statement in relation to certain intercompany balances.

 

Net financing costs includes £437 million of foreign exchange gains (2014: £21 million gain), £134 million of mark to market losses (2014: £118 million gain) and in the prior year, a £99 million loss on US bond redemption. Excluding these items, net financing costs decreased by 7.4% primarily due to the impact of lower average net debt levels following the disposal of the Group's investment in Verizon Wireless and the acquisition of Ono.

 

 

Taxation


2015 

2014 



£m 

£m 

Income tax expense:



 - Continuing operations before recognition of deferred tax

703 

2,736 

 - Recognition of additional deferred tax - continuing operations

(5,468)

(19,318)

Total tax credit - continuing items

(4,765)

(16,582)

Tax on adjustments to derive adjusted profit before tax

305 

290 

Recognition of deferred tax asset for losses in Germany and Luxembourg

3,341 

19,318 

Deferred tax recognised on additional losses in Luxembourg

2,127 

- 

Tax liability on US rationalisation and reorganisation

- 

(2,210)

Deferred tax on use of Luxembourg losses in the year

(439)

113 

Adjusted income tax expense

569 

929 

Share of associates' and joint ventures' tax

117 

173 

Adjusted income tax expense for calculating adjusted tax rate

686 

1,102 

Profit/(loss) before tax:



Total profit/(loss) before tax - continuing operations

1,095 

(5,270)

Adjustments to derive adjusted profit before tax1

1,122 

8,450 

Adjusted profit before tax

2,217 

3,180 

Share of associates' and joint ventures' tax and non-controlling interest

117 

173 

Adjusted profit before tax for calculating adjusted effective tax rate

2,334 

3,353 

Adjusted effective tax rate

29.4% 

32.9% 

Note:

1

See "Earnings per share" on page 12.

 

 

The adjusted effective tax rate for the year ended 31 March 2015 was 29.4%. The rate is in line with our expectation of a high twenties tax rate. The adjusted effective tax rate includes a £185 million impact from foreign exchange losses for which we are unable to take a tax deduction. Excluding this impact the adjusted effective tax rate would be 27.2%. The adjusted effective tax rate is expected to remain in the high twenties over the medium term.

 

This tax rate does not include the impact of the recognition of an additional £3,341 million deferred tax asset in respect of the Group's historical tax losses in Luxembourg. The losses have been recognised as a consequence of the financing arrangements for the acquisition of Ono. The rate also excludes the deferred tax impact of the use of Luxembourg losses in the year (£439 million) and an additional asset in the year of £2,127 million arising from the revaluation of investments based upon the local GAAP financial statements.

 

The adjusted effective tax rate for the year ended 31 March 2014 has been restated to exclude the results and related tax expense of Verizon Wireless and to show the adjusted tax rate as calculated on the same basis as the current year. The rate excludes the recognition of an additional deferred tax asset in respect of the Group's historical tax losses in Germany of £1,916 million and Luxembourg of £17,402 million, the US tax liability of £2,210 million relating to the rationalisation and reorganisation of our non-US assets prior to the disposal of our interest in Verizon Wireless and excludes the deferred tax impact of the use of Luxembourg losses in the year (£113 million).

 

Earnings per share

Adjusted earnings per share from continuing operations, which excludes the results and related tax charge of the Group's former investment in Verizon Wireless in the prior year and the recognition of deferred tax assets in both years, was 5.55 pence, a decrease of 27.8% year-on-year, reflecting the Group's lower adjusted operating profit.

 

Basic earnings per share decreased to 21.75 pence (2014: 223.84 pence) due to the prior year impact of the disposal of the Group's investment in Verizon Wireless and the recognition of a higher deferred tax assets in the prior year compared to the current year, as described above.

 

 


2015

2014



£m

£m

Profit attributable to owners of the parent

5,761

59,254

Adjustments:




Impairment loss

-

6,600


Amortisation of acquired customer base and brand intangible assets

1,269

551


Restructuring costs

157

355


Other income and expense

114

717


Non-operating income and expense

19

149


Investment income and financing costs

(437)

78



1,122

8,450

Taxation1 

(5,334)

(17,511)

Discontinued operations2 

(57)

(48,108)

Non-controlling interests

(21)

(50)

Adjusted profit attributable to owners of the parent

1,471

2,035



Million

Million

Weighted average number of shares outstanding - basic

26,489

26,472

Weighted average number of shares outstanding - diluted

26,629

26,682





Earnings per share





Pence

Pence

Basic earnings per share

21.75p

223.84p

Adjusted earnings per share from continuing operations

5.55p

7.69p

Notes:

1

Year ended 31 March 2015 includes the recognition of £5,468 million of deferred tax assets in respect of tax losses in Luxembourg. Year ended 31 March 2014 included the recognition of a deferred tax asset in respect of tax losses in Germany (£1,916 million) and Luxembourg (£17,402 million) and the estimated tax liability related to the rationalisation and reorganisation of our non-US assets prior to the disposal of our stake in Verizon Wireless (£2,210 million).

2

Discontinued operations represent the gain on disposal, results, related tax charge and dividends received subsequent to the disposal of our US group whose principal asset was its 45% interest in Verizon Wireless, the disposal of which was announced on 2 September 2013 and completed on 21 February 2014.

 

 

FINANCIAL RESULTS

Europe


Germany 

Italy

UK 

Spain

Other

Europe

Eliminations 

Europe

% change



£m 

£m

£m 

£m 

£m 

£m 

£m 

£ 

Organic 

31 March 2015










Mobile in-bundle revenue

3,376 

1,960 

2,570 

1,763 

2,451 

- 

12,120 



Mobile out-of-bundle revenue

877 

997 

1,244 

506 

1,215 

- 

4,839 



Mobile incoming revenue

248 

284 

357 

111 

397 

(9)

1,388 



Fixed line revenue

2,990 

694 

1,637 

851 

415 

(41)

6,546 



Other service revenue

338 

181 

301 

140 

186 

(67)

1,079 



Service revenue

7,829 

4,116 

6,109 

3,371 

4,664 

(117)

25,972 

15.0 

(4.7)

Other revenue

638 

525 

305 

293 

343 

(5)

2,099 



Revenue

8,467 

4,641 

6,414 

3,664 

5,007 

(122)

28,071 

15.9 

(4.2)

Direct costs

(2,007)

(1,016)

(1,617)

(853)

(1,100)

117 

(6,476)



Customer costs

(1,879)

(979)

(1,644)

(1,092)

(1,015)

5 

(6,604)



Operating expenses

(1,911)

(1,109)

(1,793)

(936)

(1,318)

- 

(7,067)



EBITDA

2,670 

1,537 

1,360 

783 

1,574 

- 

7,924 

16.2 

(12.3)

Depreciation and amortisation:











Acquired intangibles

- 

(131)

- 

- 

(4)

- 

(135)




Purchased licences

(472)

(6)

(374)

(18)

(190)

- 

(1,060)




Other

(1,659)

(753)

(940)

(762)

(852)

- 

(4,966)



Share of result in associates and joint ventures

2 

- 

(5)

- 

3 

- 

- 



Adjusted operating profit

541 

647 

41 

3 

531 

- 

1,763 

(24.4)

(40.2)

EBITDA margin

31.5%

33.1%

21.2%

21.4%

31.4%


28.2%



31 March 2014










Mobile in-bundle revenue

3,644 

210 

2,478 

1,908 

2,519 

- 

10,759 



Mobile out-of-bundle revenue

1,091 

129 

1,295 

679 

1,565 

- 

4,759 



Mobile incoming revenue

296 

33 

380 

141 

471 

- 

1,321 



Fixed line revenue

2,359 

70 

1,649 

325 

337 

(1)

4,739 



Other service revenue

349 

23 

293 

177 

211 

(39)

1,014 



Service revenue

7,739 

465 

6,095 

3,230 

5,103 

(40)

22,592 



Other revenue

533 

57 

332 

288 

423 

(3)

1,630 



Revenue

8,272 

522 

6,427 

3,518 

5,526 

(43)

24,222 



Direct costs

(1,823)

(104)

(1,688)

(715)

(1,167)

40 

(5,457)



Customer costs

(1,961)

(128)

(1,642)

(1,197)

(1,192)

3 

(6,117)



Operating expenses

(1,790)

(108)

(1,679)

(819)

(1,431)

- 

(5,827)



EBITDA

2,698 

182 

1,418 

787 

1,736 

- 

6,821 



Depreciation and amortisation:











Acquired intangibles

- 

(14)

- 

- 

(6)

- 

(20)




Purchased licences

(507)

- 

(357)

(11)

(191)

- 

(1,066)




Other

(1,274)

(97)

(859)

(595)

(865)

- 

(3,690)



Share of result in associates and joint ventures

1 

300 

(15)

- 

2 

- 

288 



Adjusted operating profit

918 

371 

187 

181 

676 

- 

2,333 



EBITDA margin

32.6%

34.9%

22.1%

22.4%

31.4%


28.2%



Change at constant exchange rates

% 

% 

% 

% 

% 





Mobile in-bundle revenue

(0.5)

968.5 

3.7 

(0.8)

5.0 





Mobile out-of-bundle revenue

(13.8)

783.1 

(4.0)

(20.1)

(16.2)





Mobile incoming revenue

(10.2)

880.6 

(6.1)

(16.3)

(8.6)





Fixed line revenue

36.6 

1,026.5 

(0.7)

181.2 

32.3 





Other service revenue

4.3 

799.8 

2.3 

(15.1)

(3.9)





Service revenue

8.7 

911.3 

0.2 

12.0 

(1.3)





Other revenue

28.5 

949.2 

(7.7)

8.9 

(13.5)





Revenue

10.0 

915.4 

(0.2)

11.7 

(2.3)





Direct costs

(18.4)

(1,006.5)

4.2 

(27.9)

(1.8)





Customer costs

(3.0)

(772.9)

(0.1)

2.1 

8.2 





Operating expenses

(14.9)

(1,076.2)

(6.7)

(22.6)

0.5 





EBITDA

6.3 

868.0 

(4.1)

6.8 

(2.3)





Depreciation and amortisation:











Acquired intangibles

- 

(956.2)

- 

- 

13.0 






Purchased licences

- 

- 

(5.0)

(1.7)

(6.5)






Other

(40.6)

(791.9)

(9.4)

(39.3)

(6.7)





Share of result in associates and joint ventures

167.7 

(100.0)

69.1 

- 

(6.7)





Adjusted operating profit

(37.2)

84.0 

(78.0)

(98.1)

(16.1)





EBITDA margin movement (pps)

(1.1)

(1.6)

(0.9)

(1.0)

(0.1)





 

Revenue increased 15.9%. M&A activity, including KDG, Ono and the consolidation of Vodafone Italy, contributed a 26.6 percentage point positive impact, while foreign exchange movements contributed a 6.5 percentage point negative impact. On an organic basis, service revenue declined 4.7%*, driven primarily by price competition and the impact of MTR cuts.

EBITDA increased 16.2%, including a 35.5 percentage point positive impact from M&A activity and a 7.0 percentage point negative impact from foreign exchange movements. On an organic basis EBITDA declined 12.3%*, reflecting the weak organic revenue trend.






Organic*

Other

Foreign 

Reported 


change 

activity

exchange 

change 


% 

pps 

pps 

% 

Europe revenue

(4.2)

26.6

(6.5)

15.9 

Service revenue





Germany

(3.2)

11.9

(7.5)

1.2 

Italy

(9.7)

921.0

(126.1)

785.2 

UK

(1.2)

1.4

- 

0.2 

Spain

(10.5)

22.5

(7.6)

4.4 

Other Europe

(2.1)

0.8

(7.3)

(8.6)

Europe service revenue

(4.7)

26.1

(6.4)

15.0 

EBITDA





Germany

(10.9)

17.2

(7.3)

(1.0)

Italy

(15.2)

883.2

(123.5)

744.5 

UK

(12.5)

8.4

- 

(4.1)

Spain

(29.5)

36.3

(7.3)

(0.5)

Other Europe

(2.8)

0.5

(7.0)

(9.3)

Europe EBITDA

(12.3)

35.5

(7.0)

16.2 

Europe adjusted operating profit

(40.2)

20.4

(4.6)

(24.4)

Note:

*

All amounts in this document marked with an "*" represent organic growth which presents performance on a comparable basis, both in terms of merger and acquisition activity and movements in foreign exchange rates. See page 28 for "Use of non-GAAP financial information".

 

 

 

Germany

Service revenue decreased 3.2%* excluding KDG. Q4 service revenue was down 3.1%* and KDG service revenue grew 7.1%1 in Q4 on a local GAAP basis.

Mobile service revenue fell 3.5%*, mainly as a result of price reductions in the prior year continuing to penetrate the consumer customer base. The contract customer base grew, supported by a stronger commercial performance as we look to increase our focus on direct, branded channels, falling churn and the ongoing substantial investment in network infrastructure. We increased our 4G coverage to 77% of the population and significantly improved voice coverage and reliability, as evidenced in independent tests. At the end of the period we had 5.0 million 4G customers.

Fixed service revenue excluding KDG fell 2.1%*, reflecting ongoing declines in our Vodafone DSL customer base, in part from migrations to KDG cable infrastructure. The rate of decline eased during the year (H1 -2.9%*; H2 -1.2%*), with an improving rate of gross customer additions and increasing demand for high speed broadband ('VDSL'), as well as stronger growth in carrier services. KDG maintained its strong rate of growth, contributing £1,492 million to service revenue and £676 million to EBITDA, and adding 0.4 million broadband customers (excluding migrations from Vodafone DSL) during the year. The integration of KDG has continued, including the launch of a combined fixed/mobile proposition in H2.

EBITDA declined 10.9%*, with a 3.1* percentage point decline in EBITDA margin, driven by lower service revenue and a higher level of customer investment year-on-year, partially compensated by a year-on-year reduction in operating expenses.

Italy

Service revenue declined 9.7%*. Trends in both mobile and fixed line improved in H2, and Q4 service revenue declined 3.7%*.

Mobile service revenue fell 12.1%* as a result of a decline in the prepaid customer base and lower ARPU following last year's price cuts. We took a number of measures to stabilise ARPU during the year, and in Q4, consumer prepaid ARPU was up 6% year-on-year. We also began to take a more active stance on stabilising the customer base in the second half of the year, in what remains a very competitive market. Enterprise performed strongly, returning to growth in H2. We now have 4G coverage of 84%, and 2.8 million 4G customers at March 2015.

Fixed service revenue was up 4.5%*. Broadband revenue continued to grow and we added 134,000 broadband customers over the year, but overall growth was partially offset by an ongoing decline in fixed voice usage. We accelerated our fibre roll-out plans in H2, and by March 2015 we had installed more than 5,000 cabinets.

EBITDA declined 15.2%*, with a 2.6* percentage point decline in EBITDA margin. The decline in service revenue was partially offset by continued strong cost control, with operating expenses down 3.1%* and customer investment down 3.0%*.

UK

Service revenue fell 1.2%* as a good performance in consumer mobile was offset by a decline in fixed line. The UK returned to service revenue growth in H2. Q4 service revenue was up 0.6%*.

Mobile service revenue grew 0.5%*. Consumer contract service revenue grew strongly, supported by customer growth and a successful commercial strategy bundling content with 4G. Enterprise mobile revenue returned to growth in H2, as a result of growing data demand. During the year we acquired 139 stores from the administrator of Phones 4U, taking our total portfolio to over 500 and accelerating our direct distribution strategy. 4G coverage reached 63% at March 2015 (or 71% based on the OFCOM definition), and we had 3.0 million 4G customers at the year end.

Fixed service revenue declined 5.8%*, excluding the one-off benefit of a settlement with another network operator in Q4. Underlying performance improved from -10.4%* in H1 to -1.3%* in H2, driven by a strong pick-up in carrier services revenue and improving enterprise pipeline conversion. We plan to launch our consumer fibre broadband proposition in the coming weeks.

EBITDA declined 12.5%*, with a 2.5* percentage point decline in EBITDA margin due mainly to a reclassification of some central costs to the UK business. Reported EBITDA benefited from one-off settlements with two network operators.

Spain

Service revenue declined 10.5%* excluding Ono, as growth in fixed line continued to be offset by price pressure in mobile and converged services. Q4 service revenue growth was -7.8%*. Ono Q4 local currency revenue growth was -1.9% excluding wholesale.

Mobile service revenue fell 12.7%*, although there was some improvement in H2 with the contract customer base stabilising year-on-year. However, ARPU continued to be under pressure throughout the year as a result of aggressive convergence offers. During H2, we saw an increase in the take-up of handset financing arrangements as a result of a change in the commercial model. We reduced handset subsidies in Q4 and introduced bigger data allowances at slightly higher price points. Our 4G network roll-out has now reached 75% population coverage, and we had 2.9 million 4G customers at March 2015. We continue to lead the market in net promoter scores ('NPS') in both consumer and enterprise.

Fixed service revenue rose 8.7%* excluding Ono, supported by consistently strong broadband net additions. Since its acquisition in July 2014, Ono contributed £698 million to service revenue and £267 million to EBITDA. Including our joint fibre network build with Orange, we now reach 8.5 million premises with fibre. We have made good progress with the integration of Ono, and launched in April 2015 a fully converged service, "Vodafone One", a new ultra high-speed fixed broadband service with Ono Fibre, home landline, 4G mobile telephony and Vodafone TV.

EBITDA declined 29.5%* year-on-year, with a 5.0* percentage point decline in EBITDA margin. The margin was impacted by falling mobile service revenue and growth in lower margin fixed line revenue, partially offset by lower direct costs and operating expenses, and the change in the commercial model described above.

Other Europe

Service revenue declined 2.1%* due to price competition, the generally weak macroeconomic environment and MTR cuts. Again, we saw a recovery in H2, with Q3 service revenue -1.0%* and Q4 service revenue -0.8%*. Hungary grew by 8.6%* for the full year, the Netherlands and Czech Republic returned to growth in H2, and Greece and Ireland showed a clear improvement in trends over the year.

In the Netherlands, we have nationwide 4G coverage, and the return to growth has been driven by continued contract customer growth, stabilising ARPU and growth in fixed revenue. In Portugal, we continue to see a decline in mobile service revenue driven by convergence pricing pressure reflecting a prolonged period of intense competition, partially offset by strong fixed revenue growth. We now reach 1.6 million homes with fibre, including our network sharing deal with Portugal Telecom. In Ireland, 4G coverage has reached 87%, and we have begun trials on our FTTH roll-out, with a commercial launch planned for later in 2015. In Greece, the steady recovery in revenue trends through the year stalled in Q4 as a result of the worsening macroeconomic conditions. The integration of Hellas Online is continuing in line with expectations.

EBITDA declined 2.8%*, with a 0.1* percentage point increase in EBITDA margin, as the impact of lower service revenue was largely offset by strong cost control.

 

Note:

1

Revenue growth for KDG is reported using local GAAP, not Vodafone IFRS accounting policies, and is therefore not directly comparable to Vodafone's revenue growth.

 

 

 

Africa, Middle East and Asia Pacific


India

Vodacom 

Other 

AMAP 

Eliminations 

AMAP

% change



£m 

£m 

£m 

£m 

£m 

£ 

Organic 

31 March 2015








Mobile in-bundle revenue

842 

1,106 

1,672 

- 

3,620 



Mobile out-of-bundle revenue

2,566 

1,891 

1,295 

- 

5,752 



Incoming revenue

593 

203 

568 

- 

1,364 



Fixed line revenue

182 

76 

601 

- 

859 



Other service revenue

123 

213 

115 

(11)

440 



Service revenue

4,306 

3,489 

4,251 

(11)

12,035 

(0.8)

5.8 

Other revenue

18 

852 

577 

- 

1,447 



Revenue

4,324 

4,341 

4,828 

(11)

13,482 

0.1 

7.0 

Direct costs

(1,358)

(614)

(1,669)

11 

(3,630)



Customer costs

(191)

(1,262)

(738)

- 

(2,191)



Operating expenses

(1,494)

(938)

(1,132)

- 

(3,564)



EBITDA

1,281 

1,527 

1,289 

- 

4,097 

(1.2)

5.8 

Depreciation and amortisation:









Acquired intangibles

(210)

(71)

(37)

- 

(318)




Purchased licences

(114)

(3)

(121)

- 

(238)




Other

(519)

(413)

(734)

- 

(1,666)



Share of result in associates and joint ventures

19 

(10)

(71)

- 

(62)



Adjusted operating profit

457 

1,030 

326 

- 

1,813 

(6.9)

- 

EBITDA margin

29.6%

35.2%

26.7%


30.4%



31 March 2014








Mobile in-bundle revenue

612 

1,070 

1,466 

- 

3,148 



Mobile out-of-bundle revenue

2,518 

2,176 

1,587 

- 

6,281 



Incoming revenue

679 

331 

531 

- 

1,541 



Fixed line revenue

26 

1 

632 

- 

659 



Other service revenue

92 

288 

121 

- 

501 



Service revenue

3,927 

3,866 

4,337 

- 

12,130 



Other revenue

18 

852 

473 

- 

1,343 



Revenue

3,945 

4,718 

4,810 

- 

13,473 



Direct costs

(1,231)

(732)

(1,655)

- 

(3,618)



Customer costs

(159)

(1,314)

(670)

- 

(2,143)



Operating expenses

(1,420)

(956)

(1,191)

- 

(3,567)



EBITDA

1,135 

1,716 

1,294 

- 

4,145 



Depreciation and amortisation:









Acquired intangibles

(264)

(79)

(43)

- 

(386)




Purchased licences

(72)

(4)

(121)

- 

(197)




Other

(494)

(405)

(749)

- 

(1,648)



Share of result in associates and joint ventures

21 

- 

12 

- 

33 



Adjusted operating profit

326 

1,228 

393 

- 

1,947 



EBITDA margin

28.8%

36.4%

26.9%


30.8%



Change at constant exchange rates








Mobile in-bundle revenue

40.3 

13.4 

24.8 





Mobile out-of-bundle revenue

4.8 

(4.5)

(10.6)





Incoming revenue

(10.2)

(32.7)

19.5 





Fixed line revenue

598.3 

8,346.5 

2.3 





Other service revenue

39.3 

(20.1)

(1.1)





Service revenue

12.6 

(1.0)

7.2 





Other revenue

1.5 

10.5 

32.6 





Revenue

12.6 

1.1 

9.7 





Direct costs

(13.2)

8.7 

(10.6)





Customer costs

(23.0)

(6.3)

(21.4)





Operating expenses

(7.9)

(7.3)

(4.9)





EBITDA

16.3 

(2.1)

6.9 





Depreciation and amortisation:









Acquired intangibles

18.1 

- 

- 






Purchased licences

(62.3)

7.2 

(3.4)






Other

(8.1)

(11.2)

(6.9)





Share of result in associates and joint ventures

(29.3)

(6,317.4)

(669.9)





Adjusted operating profit

42.3 

(7.6)

(13.5)





EBITDA margin movement (pps)

0.9 

(1.1)

(0.7)





 

 

Revenue grew 0.1% as a result of a 7.4 percentage point adverse impact from foreign exchange movements, particularly with regards to the Indian rupee, South African rand and the Turkish lira. On an organic basis service revenue was up 5.8%* driven by a growth in the customer base, increased voice usage, strong demand for data and continued good commercial execution. Overall growth was offset by MTR cuts, particularly in South Africa. Excluding MTRs, organic growth was 7.1%.

EBITDA declined 1.2%, including a 7.1 percentage point adverse impact from foreign exchange movements. On an organic basis, EBITDA grew 5.8%* driven by growth in India, Turkey, Qatar and Egypt, offset by Vodacom and New Zealand.






Organic*

Other 

Foreign 

Reported 


change 

activity 

exchange 

change 


% 

pps 

pps 

% 

AMAP revenue

7.0 

0.5 

(7.4)

0.1 

Service revenue





India

12.6 

- 

(2.9)

9.7 

Vodacom

(1.0)

- 

(8.8)

(9.8)

Other AMAP

5.5 

1.7 

(9.2)

(2.0)

AMAP service revenue

5.8 

0.6 

(7.2)

(0.8)

EBITDA





India

16.3 

- 

(3.4)

12.9 

Vodacom

(2.1)

- 

(8.9)

(11.0)

Other AMAP

6.6 

0.3 

(7.3)

(0.4)

AMAP EBITDA

5.8 

0.1 

(7.1)

(1.2)

AMAP adjusted operating profit

- 

- 

(6.9)

(6.9)

Note:

*

All amounts in this document marked with an "*" represent organic growth which presents performance on a comparable basis, both in terms of merger and acquisition activity and movements in foreign exchange rates. See page 28 for "Use of non-GAAP financial information".

 

 

India

Service revenue increased 12.6%*, driven by continued customer base growth, an acceleration in 3G data uptake and stable voice pricing. Q4 service revenue grew 12.1%*.

We added 17.2 million mobile customers during the year, taking the total to 183.8 million. Voice yields were relatively flat after a period of improvement, but we saw a decline in average minutes of use in H2 as competition increased in some circles.

Customer demand for data services has been very strong. Total data usage grew 86% year-on-year, with the active data customer base increasing 23% to 64 million. Within this, the 3G customer base increased to over 19 million, reflecting the significant investment in our 3G network build. During the year we added 12,585 new 3G sites, taking the total to over 35,000 and our coverage of target urban areas to 90%. 3G internet revenue rose 140%.

In March 2015 we successfully bid for spectrum in 12 telecom circles for a total cost of INR 258.1 billion (£2.78 billion). This included spectrum in all six of our 900 MHz circles due for extension in December 2015. We also successfully bid for new 3G spectrum in seven circles, allowing us to address 88% of our revenue base with 3G services.

We have continued to expand our M-Pesa mobile money transfer service, and now have 89,000 agents, with a nationwide presence. At March 2015 we had 3.1 million registered customers and 378,000 active users. Our strategy is to focus on building scale on specific migratory corridors.

EBITDA grew 16.3%*, with a 0.9* percentage point improvement in EBITDA margin as economies of scale from growing service revenue were partly offset by the increase in operating costs related to the Project Spring network build and higher acquisition costs.

Vodacom

Vodacom Group service revenue declined 1.0%*, as the negative impact of MTR cuts and a more competitive environment in South Africa offset growth in Vodacom's operations outside South Africa. Q4 service revenue was -0.2%*, reflecting some easing of competition in South Africa.

In South Africa, organic service revenue declined -2.7%*. Excluding the impact of MTR cuts, service revenue grew 1.4%*. Strong growth in smartphone penetration and data adoption drove 23.4% growth in local currency data revenue, although this was offset by aggressive voice price competition. We have increased our 3G footprint to 96% population coverage and 4G to 35% coverage as part of the Project Spring programme, with 81% of sites now connected to high capacity backhaul. During the year we began to trial our first fibre to the business services, and fibre to the home. The regulatory authorities continue to review our proposed acquisition of Neotel, a fibre-based fixed line operator.

Service revenue growth in Vodacom's operations outside South Africa was 4.8%*, driven by customer base growth, data take-up and M-Pesa. Active M-Pesa customers totalled 5.6 million, with M-Pesa now representing 23% of service revenue in Tanzania.

Vodacom Group EBITDA fell 2.1%*, with a 1.1* percentage point decline in EBITDA margin. The significant negative impact of MTR cuts on the EBITDA margin was substantially offset by good cost control.

Other AMAP

Service revenue increased 5.5%*, with growth in Turkey, Egypt, Qatar and Ghana partially offset by a decline in New Zealand.

Service revenue in Turkey was up 9.4%*, reflecting continued strong growth in consumer contract and enterprise revenue, including higher ARPU and data usage, partly offset by a 1.8 percentage point negative impact from voice and SMS MTR cuts. In Egypt, service revenue grew 2.8%* as a result of an increase in data and voice usage and a more stable economic environment. In New Zealand, service revenue was down 2.6%* as a result of aggressive competition, but the contract mobile base grew 4.6% year-on-year and the fixed base benefited from continued uptake of VDSL, TV and unlimited broadband. Service revenue in Ghana grew 18.9%* driven by growth in customers, voice bundles and data. Total revenue growth in Qatar was 16.0%*, but slowed in H2 due to significantly increased price competition.

EBITDA grew 6.6%* with a 0.4* percentage point decline in EBITDA margin.

Associates

Vodafone Hutchison Australia ('VHA'), in which Vodafone owns a 50% stake, continued its good recovery, returning to local currency service revenue growth in Q4 as a result of improving trends in both customer numbers and ARPU, supported by significant network enhancements.

Safaricom, Vodafone's 40% associate which is the number one mobile operator in Kenya, saw local currency service revenue growth of 12.9% for the year, with local currency EBITDA up 16.8%. The total value of deposits, customer transfers, withdrawals and other payments handled through the M-Pesa system grew 26% to KES 4,181 billion in the 2015 financial year.

Indus Towers, the Indian towers company in which Vodafone has a 42% interest, achieved local currency revenue growth of 4.3%. Indus owns 116,000 towers, with a tenancy ratio of 2.19x. Our share of Indus Towers' EBITDA and adjusted operating profit was £285 million and £19 million respectively.

 

 

LIQUIDITY AND CAPITAL RESOURCES

 

Cash flows and funding

2015 

2014 


£m 

£m 

EBITDA

11,915 

11,084 

Working capital

(883)

1,181 

Other

88 

92 

Cash generated by operations (excluding restructuring and other costs)1

11,120 

12,357 

Cash capital expenditure2

(8,435)

(5,857)

  Capital expenditure

(9,197)

(6,313)

  Working capital movement in respect of capital expenditure

762 

456 

Disposal of property, plant and equipment

178 

79 

Operating free cash flow1

2,863 

6,579 

Taxation

(758)

(3,449)

Dividends received from associates and investments

224 

2,842 

  Tax distribution from VZW

- 

2,763 

  Other

224 

79 

Dividends paid to non-controlling shareholders in subsidiaries

(247)

(264)

Interest received and paid

(994)

(1,315)

Free cash flow1

1,088 

4,393 

Licence and spectrum payments

(443)

(862)

Acquisitions and disposals3

(7,040)

27,372 

Equity dividends paid

(2,927)

(5,076)

Special dividend

- 

(14,291)

Purchase of treasury shares

- 

(1,033)

Foreign exchange

895 

2,423 

Income dividend from VZW

- 

2,065 

Other4

(144)

(3,337)

Net debt (increase)/decrease

(8,571)

11,654 

Opening net debt

(13,700)

(25,354)

Closing net debt

(22,271)

(13,700)

Notes:

1

Cash generated by operations, operating free cash flow and free cash flow have been redefined to exclude restructuring costs for the year ended 31 March 2015 of £336 million (2014: £210 million). Cash generated by operations for the year ended 31 March 2015 also excludes £387 million of other movements including a £365 million UK pensions contribution payment and £116 million of KDG incentive scheme payments in respect of liabilities assumed on acquisition. See also note 4 below.

2

Cash capital expenditure comprises the purchase of property, plant and equipment and intangible assets, other than licence and spectrum payments, during the year.

3

Acquisitions and disposals for the year ended 31 March 2015 primarily includes a £2,945 million payment in relation to the acquisition of the entire share capital of Ono plus £2,858 million of associated net debt acquired, a £563 million payment in relation to the acquisition of the remaining 10.97% equity interest in Vodafone India, a £131 million payment in relation to acquisition of the entire share capital of Cobra Automotive plus £40 million of associated debt acquired and a £70 million payment in relation to the acquisition of a 72.7% of the share capital of Hellas Online plus £115 million of associated debt. The year ended 31 March 2014 includes £35,231 million received on the disposal of our US group whose principal asset was its 45% interest in Verizon Wireless plus £999 million from the assumption by Verizon of Vodafone's net liabilities relating to its US group, a £4,855 million payment in relation to the acquisition of 76.57% of the share capital of KDG plus £2,148 million of associated debt acquired and £1,447 million recognised in respect of the remaining non-controlling interests.

4

Other amounts for the year ended 31 March 2015 include £336 million of restructuring costs (2014: £210 million), a £365 million UK pensions contribution payment, £359 million of Verizon Wireless tax distributions received after the completion of the disposal, £328 million of interest paid on the settlement of the Piramal option, £116 million of KDG incentive scheme payments in respect of liabilities assumed on acquisition, £176 million tax refund (2014: £2,372 tax payment) relating to the rationalisation and reorganisation of our non-US assets prior to the disposal of our stake in Verizon Wireless and a £100 million (2014: £100 million) payment in respect of the Group's historical UK tax settlement. Other amounts for the year ended 31 March 2014 also includes a £1,387 million outflow relating to payment obligations in connection with the purchase of licences and spectrum, principally in India

 

 

Cash generated by operations excluding restructuring and other costs decreased 10.0% to £11.1 billion, primarily driven by working capital movements which more than offset the higher EBITDA.

 

Free cash flow decreased to £1.1 billion compared to £4.4 billion in the prior year as lower payments for taxation were offset by higher cash capital expenditure and lower dividends received from associates and investments.

 

Capital expenditure increased £2.9 billion to £9.2 billion primarily driven by investments in the Group's networks as a result of Project Spring.

 

Payments for taxation decreased 78.0% to £0.8 billion and dividends received from associates and investments decreased by £2.6 billion to £0.2 billion primarily as a result of the Group's disposal of its 45% interest in Verizon Wireless.

 

A foreign exchange gain of £0.9 billion was recognised on net debt due to favourable exchange rate movements resulting primarily from the weakening of the euro and the Indian rupee against pounds sterling.

 

Analysis of net debt:

 

 


2015 

2014 



£m 

£m 

Cash and cash equivalents

6,882 

10,134 

Short-term borrowings




Bonds

(1,786)

(1,783)


Commercial paper1

(5,077)

(950)


Put options over non-controlling interests

(1,307)

(2,330)


Bank loans

(1,876)

(1,263)


Other short-term borrowings2

(2,577)

(1,421)



(12,623)

(7,747)

Long-term borrowings




Put options over non-controlling interests

(7)

(6)


Bonds, loans and other long-term borrowings

(22,428)

(21,448)



(22,435)

(21,454)

Other financial instruments3

5,905 

5,367 

Net debt  

(22,271)

(13,700)

Notes:

1

At 31 March 2015 US$3,321 million (2014: US$578 million) was drawn under the US commercial paper programme and €3,928 million (2014:€731 million) was drawn under the euro commercial paper programme.

2

At 31 March 2015 the amount includes £2,542 million (2014: £1,185 million) in relation to cash received under collateral support agreements.

3

Comprises mark to market adjustments on derivative financial instruments which are included as a component of trade and other receivables (2015: £4,005  million; 2014: £2,443 million) and trade and other payables (2015: £984 million; 2014: £881 million) and short-term investments primarily in index linked government bonds and a managed investment fund included as a component of other investments (2015: £2,884 million, 2014: £3,805 million).

 

Dividends

 

The Directors have announced a final dividend per share of 7.62 pence, representing a 2.0% increase over the prior financial year's final dividend. The ex-dividend date for the final dividend is 11 June 2015 for ordinary shareholders, the record date is 12 June 2015 and the dividend is payable on 5 August 2015. Dividend payments on ordinary shares will be paid directly into a nominated bank or building society account.

 

 

OTHER SIGNIFICANT DEVELOPMENTS

 

Telecom Egypt Arbitration

In October 2009, Telecom Egypt commenced arbitration against Vodafone Egypt in Cairo alleging breach of non-discrimination provisions in an interconnection agreement as a result of lower interconnection rates paid to Vodafone Egypt by Mobinil. Telecom Egypt also sought to join Vodafone International Holdings BV ('VIHBV'), Vodafone Europe BV ('VEBV') and Vodafone Group Plc to the arbitration. In January 2015, the arbitral tribunal issued its decision. It held unanimously that it had no jurisdiction to arbitrate the claim against VIHBV, VEBV and Vodafone Group Plc. The tribunal also held by a 3 to 2 majority that Telecom Egypt had failed to establish any liability on the part of Vodafone Egypt. Telecom Egypt has applied to the Egyptian court to set aside the decision.

 

India tax case

In August 2007 and September 2007, Vodafone India Limited ('VIL') and VIHBV respectively received notices from the Indian tax authority alleging potential liability in connection with an alleged failure by VIHBV to deduct withholding tax from consideration paid to the Hutchison Telecommunications International Limited group ('HTIL') in respect of HTIL's gain on its disposal to VIHBV of its interests in a wholly-owned subsidiary that indirectly holds interests in VIL. In January 2012 the Indian Supreme Court handed down its judgement, holding that VIHBV's interpretation of the Income Tax Act 1961 was correct, that the HTIL transaction in 2007 was not taxable in India, and that consequently, VIHBV had no obligation to withhold tax from consideration paid to HTIL in respect of the transaction. The Indian Supreme Court quashed the relevant notices and demands issued to VIHBV in respect of withholding tax and interest. On 20 March 2012, the Indian Government returned VIHBV's deposit of INR 25 billion and released the guarantee for INR 85 billion, which was based on the demand for payment issued by the Indian tax authority in October 2010, for tax of INR 79 billion plus interest.

 

On 28 May 2012 the Finance Act 2012 became law. The Finance Act 2012 is intended to tax any gain on transfer of shares in a non-Indian company, which derives substantial value from underlying Indian assets, such as VIHBV's transaction with HTIL in 2007. Further it seeks to subject a purchaser, such as VIHBV, to a retrospective obligation to withhold tax.

 

VIHBV has not received any formal demand for taxation in respect of the HTIL transaction following the effective date of the Finance Act 2012, but it did receive a letter on 3 January 2013 reminding it of the tax demand raised prior to the Indian Supreme Court's judgement and purporting to update the interest element of that demand to a total amount of INR 142 billion. The separate proceedings taken against VIHBV to seek to treat it as an agent of HTIL in respect of its alleged tax on the same transaction, as well as penalties of up to 100% of the assessed withholding tax for the alleged failure to have withheld such taxes, remain pending despite the issue having been ruled upon by the Indian Supreme Court. Should a further demand for taxation be received by VIHBV or any member of the Group as a result of the new retrospective legislation, we believe it is probable that we will be able to make a successful claim under the Dutch-India Bilateral Investment Treaty ('Dutch BIT'). On 17 January 2014, VIHBV served an amended trigger notice on the Indian Government under the Dutch BIT, supplementing a trigger notice filed on 17 April 2012, immediately prior to the Finance Act 2012 becoming effective, to add claims relating to an attempt by the Indian Government to tax aspects of the transaction with HTIL under transfer pricing rules.

 

On 17 April 2014, VIHBV served its notice of arbitration under the Dutch BIT, formally commencing the Dutch BIT arbitration proceedings. An arbitrator has been appointed by VIHBV. The Indian Government appointed an arbitrator but he resigned in May 2015. The third arbitrator, who will act as chairman of the tribunal, had been agreed by the two party-appointed arbitrators (prior to the Government's arbitrator's resignation) but declined to accept the appointment. There is now likely to be a delay in appointing the chairman pending the Indian Government appointing a replacement for its party-appointed arbitrator. If there is no subsequent agreement on appointment of a chairman, the International Court of Justice will appoint the third arbitrator.

 

We did not carry a provision for this litigation or in respect of the retrospective legislation at 31 March 2015, or at previous reporting dates.

 

British Telecom (Italy) v Vodafone Italy

The Italian Competition Authority concluded an investigation in 2007 when Vodafone Italy gave certain undertakings in relation to allegations that it had abused its dominant position in the wholesale market for mobile termination. In 2010, British Telecom (Italy) brought a civil damages claim against Vodafone Italy on the basis of the Competition Authority's investigation and Vodafone Italy's undertakings. British Telecom (Italy) seeks damages in the amount of €280 million for abuse of dominant position by Vodafone Italy in the wholesale fixed to mobile termination market for the period from 1999 to 2007. A court appointed expert delivered an opinion to the Court that the range of damages in the case should be in the region of €10 million to €25 million which was reduced in a further supplemental report published in September 2014 to a range of €8 million to €11 million. The expert's report will be considered by the Court before it passes judgment on the case.

 

FASTWEB v Vodafone Italy

The Italian Competition Authority concluded an investigation in 2007 when Vodafone Italy gave certain undertakings in relation to allegations it had abused its dominant position in the wholesale market for mobile termination. In 2010, FASTWEB brought a civil damages claim against Vodafone Italy on the basis of the Competition Authority's investigation and Vodafone Italy's undertakings. FASTWEB sought damages in the amount of €360 million for abuse of dominant position by Vodafone Italy in the wholesale fixed to mobile termination market. A court appointed expert delivered an opinion to the Court that the range of damages in the case should be in the region of €0.5 million to €2.3 million. On 15 October 2014, the Court decided to reject FASTWEB's damages claim in its entirety.

 

Board changes

On 10 December 2014, the Group announced that Omid Kordestani had notified the Board of his intention to stand down as a Non-Executive Director of the Company with effect from 31 December 2014 in order to focus full-time on his executive responsibilities with Google, Inc. in the United States.

 

On 15 January 2015, the Group announced that its Chief Technology Officer Steve Pusey would stand down from the Board following the Company's Annual General Meeting on 28 July 2015.

 

On 30 March 2015, the Group announced the appointment of Dr Mathias Döpfner as a Non-Executive Director with effect from 1 April 2015. Dr Döpfner is Chairman and CEO of the German media group Axel Springer SE in Berlin. Dr Döpfner has been with Axel Springer SE since 1998, initially as editor-in-chief of Die Welt and since 2000 as a member of the Management Board.

 

On 30 March 2015, the Group also announced that Luc Vandevelde will stand down from the Board with effect from the Company's Annual General Meeting on 28 July 2015. Luc Vandevelde joined the Board in September 2003 and became the Senior Independent Director in July 2012. Philip Yea will be appointed as Senior Independent Director with effect from the Annual General Meeting.

 

 

CONSOLIDATED FINANCIAL STATEMENTS

 

Consolidated income statement

 

2015 

2014 


£m 

£m 

Continuing operations



Revenue

42,227 

38,346 

Cost of sales

(30,882)

(27,942)

Gross profit

11,345 

10,404 

Selling and distribution expenses

(3,455)

(3,033)

Administrative expenses

(5,746)

(4,245)

Share of result of equity accounted associates and joint ventures

(63)

278 

Impairment losses

- 

(6,600)

Other income and expense

(114)

(717)

Operating profit/(loss)

1,967 

(3,913)

Non-operating income and expense

(19)

(149)

Investment income

883 

346 

Financing costs

(1,736)

(1,554)

Profit/(loss) before taxation

1,095 

(5,270)

Income tax credit

4,765 

16,582 

Profit for the financial year from continuing operations

5,860 

11,312 

Profit for the financial year from discontinued operations

57 

48,108 

Profit for the financial year  

5,917 

59,420 




Attributable to:



- Owners of the parent

5,761 

59,254 

- Non-controlling interests

156 

166 

Profit for the financial year  

5,917 

59,420 




Earnings per share



From continuing operations:



- Basic

21.53p

42.10p

- Diluted

21.42p

41.77p




Total Group:



- Basic

21.75p

223.84p

- Diluted

21.63p

222.07p




Consolidated statement of comprehensive income







2015 

2014 


£m 

£m 

Profit for the financial year

5,917 

59,420 

Other comprehensive income:



Items that may be reclassified to profit or loss in subsequent years



Gains/(losses) on revaluation of available-for-sale investments, net of tax

4 

(119)

Foreign exchange translation differences, net of tax

(6,516)

(4,104)

Foreign exchange (gains)/losses transferred to the income statement

(1)

1,493 

Fair value gains transferred to the income statement

(9)

(25)

Other, net of tax

7 

- 

Total items that may be classified to profit or loss in subsequent years

(6,515)

(2,755)

Items that will not be reclassified to profit or loss in subsequent years



Net actuarial (losses)/gains on defined benefit pension schemes, net of tax

(212)

37 

Total items will not be classified to profit or loss in subsequent years

(212)

37 

Other comprehensive expense

(6,727)

(2,718)

Total comprehensive (expense)/income for the financial year

(810)

56,702 




Attributable to:



- Owners of the parent

(1,076)

56,711 

- Non-controlling interests

266 

(9)


(810)

56,702 


 

Consolidated statement of financial position 

 

 

2015 

2014 


£m 

£m 

Non-current assets

 

 

Goodwill

22,537 

23,315 

Other intangible assets

20,953 

23,373 

Property, plant and equipment

26,603 

22,851 

Investments in associates and joint ventures

(3)

114 

Other investments

3,757 

3,553 

Deferred tax assets

23,845 

20,607 

Post employment benefits

169 

35 

Trade and other receivables

4,865 

3,270 


102,726 

97,118 

Current assets

 

 

Inventory

482 

441 

Taxation recoverable

575 

808 

Trade and other receivables

8,053 

8,886 

Other investments

3,855 

4,419 

Cash and cash equivalents

6,882 

10,134 

Assets held for sale

- 

34 


19,847 

24,722 

Total assets

122,573 

121,840 




Equity

 

 

Called up share capital

3,792 

3,792 

Additional paid-in capital

117,054 

116,973 

Treasury shares

(7,045)

(7,187)

Accumulated losses

(49,471)

(51,428)

Accumulated other comprehensive income

1,815 

8,652 

Total equity attributable to owners of the parent

66,145 

70,802 

Non-controlling interests

1,595 

1,733 

Put options over non-controlling interests

(7)

(754)

Total non-controlling interests

1,588 

979 




Total equity

67,733 

71,781 

Non-current liabilities

 

 

Long-term borrowings

22,435 

21,454 

Taxation liabilities

- 

50 

Deferred tax liabilities

595 

747 

Post employment benefits

567 

584 

Provisions

1,082 

846 

Trade and other payables

1,264 

1,339 


25,943 

25,020 

Current liabilities

 

 

Short-term borrowings

12,623 

7,747 

Taxation liabilities

599 

873 

Provisions

767 

963 

Trade and other payables

14,908 

15,456 


28,897 

25,039 

Total equity and liabilities

122,573 

121,840 

 

 

 

Consolidated statement of changes in equity

 

Share 

capital 

Additional 

paid-in 

capital1

Treasury 

shares 

Accumulated 

comprehensive

income2

Equity

attributable

to the

owners

Non- 

controlling 

interests 

Total equity


£m 

£m 

£m 

£m 

£m 

£m 

£m 

1 April 2013

3,866 

154,279

(9,029)

(77,639)

71,477 

1,011 

72,488 

Issue or reissue of shares

- 

2

194

(173)

23 

- 

23 

Redemption or cancellation of shares

(74)

74

1,648

(1,648)

- 

- 

- 

Capital reduction and creation of B and C shares

16,613 

(37,470)

-

20,857

- 

- 

- 

Cancellation of B shares

(16,613)

-

-

1,115

(15,498)

- 

(15,498)

Share-based payments

- 

883 

-

-

88 

- 

88 

Transactions with non-controlling interests in subsidiaries

- 

-

-

(1,451)

(1,451)

260 

(1,191)

Comprehensive income

- 

-

-

56,711

56,711 

(9)

56,702 

Dividends

- 

-

-

(40,566)

(40,566)

(284)

(40,850)

Other

- 

-

-

18

18 

1 

19 

31 March 2014

3,792 

116,973

(7,187)

(42,776)

70,802 

979 

71,781 

Issue or reissue of shares

- 

2

142

(126)

18 

- 

18 

Share-based payments

- 

953 

-

-

95 

- 

95 

Transactions with non-controlling interests in subsidiaries

- 

-

-

(756)

(756)

605 

(151)

Comprehensive income

- 

-

-

(1,076)

(1,076)

266 

(810)

Dividends

- 

-

-

(2,930)

(2,930)

(262)

(3,192)

Other

- 

(16)

-

8

(8)

- 

(8)

31 March 2015

3,792 

117,054

(7,045)

(47,656)

66,145 

1,588 

67,733 

Notes:

1

Includes share premium, capital redemption reserve and merger reserve. The merger reserve was derived from acquisitions made prior to 31 March 2004 and subsequently allocated to additional paid-in capital on adoption of IFRS.

2

Includes accumulated losses and accumulated other comprehensive income.

3

Includes £7 million tax credit (2014: £12 million tax charge).

 

 

Consolidated statement of cash flows

 

 

 

2015 

2014 


£m 

£m 

Net cash flow from operating activities

9,715 

6,227 




Cash flows from investing activities



Purchase of interests in subsidiaries, net of cash acquired

(3,093)

(4,279)

Purchase of interests in associates and joint ventures

(85)

(11)

Purchase of intangible assets

(2,315)

(2,327)

Purchase of property, plant and equipment

(6,568)

(4,396)

Purchase of investments

(207)

(214)

Disposal of interests in associates and joint ventures

27 

34,919 

Disposal of property, plant and equipment

178 

79 

Disposal of investments

899 

1,483 

Dividends received from associates and joint ventures

583 

4,897 

Dividends received from investments

- 

10 

Interest received

254 

582 

Net cash flow from investing activities

(10,327)

30,743 




Cash flows from financing activities



Issue of ordinary share capital and reissue of treasury shares

18 

38 

Net movement in short-term borrowings

4,722 

(2,887)

Proceeds from issue of long-term borrowings

2,432 

1,060 

Repayment of borrowings

(4,070)

(9,788)

Purchase of treasury shares

- 

(1,033)

B and C share payments

- 

(14,291)

Equity dividends paid

(2,927)

(5,076)

Dividends paid to non-controlling shareholders in subsidiaries  

(247)

(264)

Other transactions with non-controlling interests in subsidiaries  

(718)

(111)

Other movements in loans with associates and joint ventures

(52)

- 

Interest paid  

(1,576)

(1,897)

Net cash flow used in financing activities

(2,418)

(34,249)




Net cash flow

(3,030)

2,721 

Cash and cash equivalents at beginning of the financial year

10,112 

7,506 

Exchange loss on cash and cash equivalents

(221)

(115)

Cash and cash equivalents at end of the financial year

6,861 

10,112 

 

 

CONSOLIDATED FINANCIAL STATEMENTS

 

1    Basis of preparation

The preliminary results for the year ended 31 March 2015 are an abridged statement of the full annual report which was approved by the Board of Directors on 19 May 2015. The consolidated financial statements within the full annual report are prepared in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board. They are also prepared in accordance with IFRS as adopted by the European Union ('EU'), the Companies Act 2006 and Article 4 of the EU IAS Regulations.

The auditor's report on those consolidated financial statements was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report, and did not contain statements under section 498(2) or 498(3) of the Companies Act 2006. The preliminary results do not comprise statutory accounts within the meaning of section 434(3) of the Companies Act 2006. The annual report for the year ended 31 March 2015 will be delivered to the Registrar of Companies following the Company's annual general meeting to be held on 28 July 2015.

The financial information included in this preliminary announcement does not itself contain sufficient information to comply with IFRS. The Company will publish full financial statements that comply with IFRS in June 2015.

The preparation of the preliminary results requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the end of the reporting period and the reported amounts of revenue and expenses during the reporting period. Actual results could vary from these estimates. The estimates and underlying assumptions are reviewed on an on-going 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.

On 1 April 2014, the Group adopted certain new accounting policies where necessary to comply with amendments to IFRS, none of which had a material impact on the consolidated results, financial position or cash flows of the Group; further details are provided in the Group's annual report for the year ended 31 March 2014.

 

2   Equity dividends

 


2015 

2014 



£m 

£m 

Declared during the financial year:



Final dividend for the year ended 31 March 2014: 7.47 pence per share (2013: 6.92 pence)

1,975 

3,365 

Interim dividend for the year ended 31 March 2015: 3.60 pence per share (2014: 3.53 pence)

955 

1,711 

Special dividend for the year ended 31 March 2015: nil (2014: 172.94 US cents per share)

- 

35,490 


2,930 

40,566 





Proposed after the end of the reporting period and not recognised as a liability:



Final dividend for the year ended 31 March 2015: 7.62 pence per share (2014: 7.47 pence)

2,020 

1,975 

 

 

USE OF NON-GAAP FINANCIAL INFORMATION

 

In the discussion of the Group's reported financial position, operating results and cash flows, information is presented to provide readers with additional financial information that is regularly reviewed by management. However, this additional information presented is not uniformly defined by all companies including those in the Group's industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, certain information presented is derived from amounts calculated in accordance with IFRS but is not itself an expressly permitted GAAP measure. Such non-GAAP measures should not be viewed in isolation or as an alternative to the equivalent GAAP measure.

Organic growth

All amounts in this document marked with an "*" represent "organic growth" which presents performance on a comparable basis in terms of merger and acquisition activity and foreign exchange rates. While "organic growth" is neither 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 IFRS and may not, therefore, be comparable with similarly titled measures reported by other companies).

For the 2015 financial year, the Group's organic service revenue growth rate has been adjusted to exclude the beneficial impact of a settlement of an historical interconnect rate dispute in the UK, the beneficial impact of an upward revision to interconnect revenue in Egypt from a re-estimation by management of the appropriate historical mobile interconnection rate, and the adverse impact of an adjustment to intercompany revenue. The adjustments in relation to Vodafone UK and Vodafone Egypt also impact the disclosed organic growth rates for those countries.

A summary of certain non-GAAP measures included in this results announcement, together with details of where additional information and reconciliation to the nearest equivalent GAAP measure can be found, is shown below.

 

Non-GAAP measure

Closest equivalent

GAAP measure

Location in this results announcement of reconciliation and further information

EBITDA

Operating profit

Group results on page 9

Adjusted operating profit

Operating profit

Group results on page 9

Adjusted profit before tax

Profit before taxation

Taxation on page 11

Adjusted effective tax rate

Income tax expense as a percentage of profit before taxation

Taxation on page 11

Adjusted income tax expense

Income tax expense

Taxation on page 11

Adjusted profit attributable to owners of the parent

Profit attributable to owners of the parent

Earnings per share on page 12

Adjusted earnings per share (from continuing operations)

Basic earnings per share

Earnings per share on page 12 and Reconciliation of adjusted earnings on page 31

Operating free cash flow

Cash generated by operations

Cash flows and funding beginning on page 19

Free cash flow

Cash generated by operations

Cash flows and funding beginning on page 19

Cash generated by operations (excluding restructuring costs)

Cash generated by operations

Cash flows and funding beginning on page 19

See page 31 for a reconciliation of adjusted earnings to reported earnings.

 

 

ADDITIONAL INFORMATION

 

Regional results for the year ended 31 March

 


Revenue


EBITDA


Adjusted operating

profit


Capital expenditure


Operating free

cash flow1



2015 

2014 


2015 

2014 


2015 

2014 


2015 

2014 


2015 

2014 



£m 

£m 


£m 

£m 




Europe















Germany2 

8,467 

8,272 


2,670 

2,698 


541 

918 


2,003 

1,312 


1,002 

1,706 

Italy3 

4,641 

522 


1,537 

182 


647 

372 


1,105 

180 


544 

251 

UK

6,414 

6,427 


1,360 

1,418 


41 

187 


980 

932 


200 

621 

Spain4 

3,664 

3,518 


783 

787 


3 

181 


858 

511 


(29)

255 

Other Europe
















Netherlands

1,482 

1,608 


507 

548 


157 

220 


303 

230 


218 

338 


Portugal

771 

889 


289 

309 


108 

140 


273 

157 


41 

163 


Greece

576 

597 


158 

165 


54 

54 


76 

70 


70 

117 


Other

2,185 

2,436 


620 

714 


212 

262 


431 

342 


214 

362 


Eliminations

(7)

(5)


- 

- 


- 

- 


- 

- 


- 

- 


Other Europe

5,007 

5,525 


1,574 

1,736 


531 

676 


1,083 

799 


543 

980 

Eliminations

(122)

(42)


- 

- 


- 

- 


- 

- 


- 

- 

Europe

28,071 

24,222 


7,924 

6,821 


1,763 

2,334 


6,029 

3,734 


2,260 

3,813 

















AMAP















India

4,324 

3,945 


1,281 

1,135 


457 

326 


882 

633 


332 

812 

Vodacom

4,341 

4,718 


1,527 

1,716 


1,030 

1,228 


745 

663 


762 

1,174 

Other AMAP
















Turkey

2,079 

2,017 


376 

358 


87 

61 


343 

252 


39 

84 


Egypt

1,190 

1,163 


522 

517 


285 

271 


314 

218 


256 

342 


Other

1,560 

1,633 


391 

419 


(46)

61 


262 

241 


114 

193 


Eliminations

(1)

(3)


- 

- 


- 

- 


- 

- 


- 

- 


Other AMAP

4,828 

4,810 


1,289 

1,294 


326 

393 


919 

711 


409 

619 

Eliminations

(11)

- 


- 

- 


- 

- 


- 

- 


- 

- 

AMAP

13,482 

13,473 


4,097 

4,145 


1,813 

1,947 


2,546 

2,007 


1,503 

2,605 
















Other

754 

686 


(106)

118 


(69)

29 


622 

572 


(900)

161 

Eliminations

(80)

(35)


- 

- 


- 

- 


- 

- 


- 

- 

Group

42,227 

38,346 


11,915 

11,084 


3,507 

4,310 


9,197 

6,313 


2,863 

6,579 

 

Notes:

 

1

Free cash flow for the year ended 31 March 2015 excludes £336 million of restructuring costs (2014: £210 million), a £365 million UK pensions contribution payment, £359 million of Verizon Wireless tax distributions received after the completion of the disposal, £328 million of interest paid on the settlement of the Piramal option, £116 million of KDG incentive scheme payments in respect of liabilities assumed on acquisition and a £100 million (2014: £100 million) payment in respect of the Group's historical UK tax settlement.

2

On 14 October 2013 the Group acquired 76.57% of the share capital of KDG and the results of KDG have been fully consolidated into the results of Germany from that date.

3

On 21 February 2014 the Group acquired the remaining 23.1% equity interest in Vodafone Italy.

4

On 23 July 2014 the Group acquired 100% of the share capital of Ono and the results of Ono have been fully consolidated into the results of Spain from that date.

 

 

Service revenue - quarter ended 31 March1, 2

 













Group and Regions










Group


Europe


AMAP


2015

2014


2015

2014


2015

2014


£m 

£m 


£m 

£m 


£m 

£m 

Mobile in-bundle

4,030 

3,693 


2,929 

2,806 


986 

822 

Mobile out-of-bundle

2,448 

2,520 


1,037 

1,150 


1,416 

1,366 

Mobile incoming

713 

685 


321 

333 


393 

354 

Fixed line

2,003 

1,653 


1,728 

1,441 


253 

158 

Other

375 

395 


248 

263 


94 

123 

Service revenue

9,569 

8,946 


6,263 

5,993 


3,142 

2,823 











Change


Group


Europe


AMAP


Reported

Organic


Reported

Organic


Reported

Organic


%

%


%

%


%

%

Mobile in-bundle

9.1 

5.4 


4.4 

2.2 


20.0 

18.1 

Mobile out-of-bundle

(2.9)

(7.7)


(9.8)

(15.7)


3.7 

(0.3)

Mobile incoming

4.1 

(9.9)


(3.6)

(8.0)


11.0 

(11.7)

Fixed line

21.2 

8.7 


19.9 

1.6 


60.1 

64.5 

Other

(5.1)

(7.2)


(5.7)

(0.3)


(23.6)

(23.0)

Service revenue

7.0 

0.1 


4.5 

(2.4)


11.3 

6.0 



















Operating Companies










Germany 


Italy


UK3


2015

2014


2015

2014


2015

2014


£m 

£m 


£m 

£m 


£m 

£m 

Mobile in-bundle

797 

898 


466 

210 


657 

626 

Mobile out-of-bundle

183 

232 


202 

129 


289 

300 

Mobile incoming

56 

67 


65 

33 


88 

91 

Fixed line

705 

776 


167 

70 


504 

423 

Other

79 

86 


40 

23 


76 

79 

Service revenue

1,820 

2,059 


940 

465 


1,614 

1,519 











Change


Germany 


Italy


UK


Reported

Organic


Reported

Organic


Reported

Organic


%

%


%

%


%

%

Service revenue

(11.6)

(3.1)


102.2 

(3.7)


6.3 

0.6 




















Spain 


India


Vodacom


2015

2014


2015

2014


2015

2014


£m 

£m 


£m 

£m 


£m 

£m 

Mobile in-bundle

411 

452 


244 

162 


296 

294 

Mobile out-of-bundle

117 

151 


670 

597 


449 

425 

Mobile incoming

27 

26 


148 

163 


49 

75 

Fixed line

267 

82 


53 

7 


41 

- 

Other

29 

37 


41 

23 


43 

74 

Service revenue

851 

748 


1,156 

952 


878 

868 











Change


Spain 


India


Vodacom


Reported 

Organic 


Reported 

Organic 


Reported 

Organic 










Service revenue

13.8 

(7.8)


21.4 

12.1 


1.2 

(0.2)

Notes:

1

The sum of the regional amounts may not be equal to Group totals due to Non-Controlled Interests and Common Functions, and intercompany eliminations.

2

Organic growth presents performance on a comparable basis in terms of merger and acquisition activity and foreign exchange.

3

The analysis of UK mobile and fixed line service revenue for the year ended 31 March 2014 has been restated following the integration of CWW into the UK business.

 

Reconciliation of adjusted earnings

 

 


Reported 

Discontinued 

operations

Adjustments

Adjusted

Year ended 31 March 2015

£m 

£m 

£m 

£m 

Operating profit

1,967 

- 

271 

2,238 

Amortisation of acquired customer base and brand intangible assets

- 

- 

1,269 

1,269 

Non-operating income and expense

(19)

- 

19 

- 

Net financing costs

(853)

- 

(437)

(1,290)

Profit before taxation

1,095 

- 

1,122 

2,217 

Income tax credit/(expense)1

4,765 

- 

(5,334)

(569)

Profit for the financial year from continuing operations

5,860 

- 

(4,212)

1,648 

Profit for the financial year from discontinued operations

57 

(57)

- 

- 

Profit for the financial year

5,917 

(57)

(4,212)

1,648 







Attributable to:





- Owners of the parent

5,761 

(57)

(4,233)

1,471 

- Non-controlling interests

156 

- 

21 

177 

Basic earnings per share from continuing and discontinued operations

21.75p 



5.55p 

Note:

1

Adjustments include the recognition of tax losses in Luxembourg following the acquisition of Ono (£3,341 million) and losses arising in the year from the write down of investments for local GAAP purposes (£2,127 million).

 


Reported 

Discontinued 

operations

Adjustments

Adjusted

Year ended 31 March 2014

£m 

£m 

£m 

£m 

Operating (loss)/profit1

(3,913)

- 

7,672 

3,759 

Amortisation of acquired customer base and brand intangible assets

- 

- 

551 

551 

Non-operating income and expense

(149)

- 

149 

- 

Net financing costs

(1,208)

- 

78 

(1,130)

(Loss)/profit before taxation

(5,270)

- 

8,450 

3,180 

Income tax credit/(expense)2

16,582 

- 

(17,511)

(929)

Profit for the financial year from continuing operations

11,312 

- 

(9,061)

2,251 

Profit for the financial year from discontinued operations

48,108 

(48,108)

- 

- 

Profit for the financial year

59,420 

(48,108)

(9,061)

2,251 







Attributable to:





- Owners of the parent

59,254 

(48,108)

(9,111)

2,035 

- Non-controlling interests

166 

- 

50 

216 







Basic earnings per share from continuing and discontinued operations

223.84p 



7.69p 

Note:

1

Adjustment primarily relates to the £6,600 million impairment loss relating to our businesses in Germany, Spain, Portugal, Czech Republic and Romania and the £712 million loss on the deemed disposal of Vodafone Italy.

2

Adjustment includes the recognition of a deferred tax asset in respect of tax losses in Germany (£1,916 million) and Luxembourg (£17,402 million) and the tax liability related to the rationalisation and reorganisation of our non-US assets prior to the disposal of our stake in Verizon Wireless (£2,210 million).

 

 

Mobile customers - quarter ended 31 March 2015

 

(in thousands)






Country 

1 January 2015

Net 

additions/ 

(disconnections)

Other

movements

31 March 2015

Prepaid







Europe






Germany

31,515 

(572)

- 

30,943 

47.5% 

Italy

25,507 

(337)

- 

25,170 

81.6% 

UK1 

19,853 

262 

(1,700)

18,415 

35.2% 

Spain2 

14,811 

(32)

(600)

14,179 

22.9% 


91,686 

(679)

(2,300)

88,707 

50.7% 







Other Europe






Netherlands

5,180 

(20)

- 

5,160 

24.8% 

Ireland

2,048 

(37)

- 

2,011 

53.0% 

Portugal

5,207 

(164)

- 

5,043 

68.6% 

Romania

8,016 

40 

- 

8,056 

58.1% 

Greece

5,050 

68 

- 

5,118 

68.6% 

Czech Republic

3,238 

29 

- 

3,267 

35.6% 

Hungary3 

2,670 

5 

66 

2,741 

44.7% 

Albania4 

1,968 

(30)

(238)

1,700 

94.8% 

Malta

309 

2 

- 

311 

81.0% 


33,686 

(107)

(172)

33,407 

54.6% 

Europe

125,372 

(786)

(2,472)

122,114 

51.8% 







AMAP






India

178,676 

5,127 

- 

183,803 

93.3% 

Vodacom5 

68,953 

(445)

- 

68,508 

92.5% 


247,629 

4,682 

- 

252,311 

93.1% 







Other AMAP






Turkey 

20,547 

200 

- 

20,747 

58.6% 

Egypt

39,209 

508 

- 

39,717 

93.8% 

New Zealand

2,330 

32 

- 

2,362 

63.5% 

Qatar

1,414 

30 

- 

1,444 

88.9% 

Ghana

7,051 

90 

- 

7,141 

99.7% 


70,551 

860 

- 

71,411 

83.1% 

AMAP

318,180 

5,542 

- 

323,722 

90.9% 







Group

443,552 

4,756 

(2,472)

445,836 

80.2% 

Notes:

1

Other movements in the UK reflect the restatement of the customer base.

2

Other movements in Spain reflect the restatement of the customer base.

3

Other movements in Hungary reflect the acquisition of a local MVNO.

4

Other movements in Albania reflect the restatement of the customer base.

5

Vodacom refers to the Group's interests in Vodacom Group Limited and its subsidiaries, including those located outside of South Africa.

 

 

Fixed broadband customers - quarter ended 31 March 2015

 

(in thousands)





Country 

1 January 2015

Net 

additions/ 

(disconnections)

Other 

movements

31 March 2015






Europe





Germany

5,357 

93 

- 

5,450 

Italy

1,756 

46 

- 

1,802 

UK

64 

2 

- 

66 

Spain

2,776 

34 

- 

2,810 


9,953 

175 

- 

10,128 






Other Europe





Netherlands1 

56 

11 

(18)

49 

Ireland

215 

7 

- 

222 

Portugal

299 

31 

- 

330 

Romania

40 

3 

- 

43 

Greece

475 

18 

- 

493 

Czech Republic

12 

1 

- 

13 

Hungary

- 

- 

- 

- 

Albania

- 

- 

- 

- 

Malta

2 

(1)

- 

1 


1,099 

70 

(18)

1,151 

Europe

11,052 

245 

(18)

11,279 






AMAP





India

4 

1 

- 

5 

Vodacom2 

- 

- 

- 

- 


4 

1 

- 

5 






Other AMAP





Turkey 

67 

30 

- 

97 

Egypt

210 

14 

- 

224 

New Zealand3 

424 

(1)

(14)

409 

Qatar

7 

- 

- 

7 

Ghana

28 

- 

- 

28 


736 

43 

(14)

765 

AMAP

740 

44 

(14)

770 






Group

11,792 

289 

(32)

12,049 

Notes:

1

Other movements in the Netherlands reflect the restatement of the customer base.

2

Vodacom refers to the Group's interests in Vodacom Group Limited and its subsidiaries, including those located outside of South Africa.

3

Other movements in New Zealand reflect the restatement of the customer base.

 

 

OTHER INFORMATION

 

 

Definitions of terms

Term

Definition

ARPU

Average revenue per user, defined as mobile customer revenue and mobile incoming revenue divided by average customers.

EBITDA

Operating profit excluding share of results in associates, depreciation and amortisation, gains/losses on the disposal of fixed assets, impairment losses, restructuring costs and other operating income and expense. The Group's definition of EBITDA may not be comparable with similarly titled measures and disclosures by other companies.

Adjusted operating profit

Group adjusted operating profit excludes non-operating income from associates, impairment losses, restructuring costs, amortisation of customer bases and brand intangible assets and other income and expense.

Mobile in-bundle revenue

Represents revenue from bundles that include a specified number of minutes, messages or megabytes of data that can be used for no additional charge, with some expectation of recurrence. Includes revenue from all contract bundles and add-ons lasting 30 days or more as well as revenue from prepay bundles lasting seven days or more.

Mobile out-of-bundle

Revenue from minutes, messages or megabytes of data which are in excess of the amount included in customer bundles.

Mobile incoming revenue

Comprises revenue from termination rates for voice and messaging to Vodafone customers.

Operating free cash flow

Cash generated from operations after cash payments for capital expenditure (excludes capital licence and spectrum payments) and cash receipts from the disposal of intangible assets and property, plant and equipment, but before restructuring costs.

For the years ended 31 March 2015 and 2014 other items excluded special one-off UK pensions contribution payments and KDG incentive scheme payments.

Free cash flow

Operating free cash flow after cash flows in relation to taxation, interest, dividends received from associates and investments and dividends paid to non-controlling shareholders in subsidiaries, but before restructuring costs and licence and spectrum payments.

For the years ended 31 March 2015 and 2014 other items excluded income dividends received from Verizon Wireless, Verizon Wireless tax distributions received after the completion of the disposal, special UK pensions contribution payments, interest paid on the settlement of the Piramal option, KDG incentive scheme payments and payments in respect of the Group's historical UK tax settlement.

For definitions of other terms please refer to pages 211 to 212 of the Group's annual report for the year ended 31 March 2014.

 

1) Copies of this document are available from the Company's registered office at Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN.

 

2) The preliminary results will be available on the Vodafone Group Plc website, vodafone.com/investor, from 19 May 2015.

 

Notes:

 

1.  Vodafone, the Vodafone Portrait, the Vodafone Speechmark, Vodacom, M-Pesa and Vodafone One Net are trademarks of the Vodafone Group. The Vodafone Rhombus is a registered design of the Vodafone Group. Other product and company names mentioned herein may be the trademarks of their respective owners.

2.  All growth rates reflect a comparison to the year ended 31 March 2015 unless otherwise stated.

3.  References to "Q4" are to the quarter ended 31 March 2015 unless otherwise stated. References to the "second half of the year" or "H2" are to the six months ended 31 March 2015 unless otherwise stated. References to the "year" or "financial year" are to the financial year ended 31 March 2015 and references to the "prior financial year" are to the financial year ended 31 March 2014 unless otherwise stated.

4.  All amounts marked with an "*" represent "organic growth", which presents performance on a comparable basis, both in terms of merger and acquisition activity as well as in terms of movements in foreign exchange rates. For the 2015 financial year, the Group's organic service revenue growth rate has been adjusted to exclude the beneficial impact of a settlement of an historical interconnect rate dispute in the UK, the beneficial impact of an upward revision to interconnect revenue in Egypt from a re-estimation by management of the appropriate historical mobile interconnection rate, and the adverse impact of an adjustment to intercompany revenue. The adjustments in relation to Vodafone UK and Vodafone Egypt also impact the disclosed organic growth rates for those countries.

5.  Reported growth is based on amounts in pounds sterling as determined under IFRS.

6.  Vodacom refers to the Group's interest in Vodacom Group Limited ('Vodacom') in South Africa as well as its subsidiaries, including its operations in the DRC, Lesotho, Mozambique and Tanzania.

7.  Quarterly historical information, including information for service revenue, mobile customers, churn, voice usage, messaging volumes, data volumes, ARPU, smartphones and fixed broadband customers, is provided in a spreadsheet available at vodafone.com/investor.

 

Copyright © Vodafone Group 2015

 

 

 

 

Forward-looking statements

 

This report contains "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act of 1995 with respect to the Group's financial condition, results of operations and businesses and certain of the Group's plans and objectives.

 

In particular, such forward-looking statements include, but are not limited to: statements with respect to: expectations regarding the Group's financial condition or results of operations, including the Group Chief Executive's statement and Review of the year on pages 1 to 7 of this report and the guidance for EBITDA and free cash flow for the 2016 financial year (and the related underlying assumptions) on page 8; expectations for the Group's future performance generally, including EBITDA growth and capital expenditure; statements relating to the Group's Project Spring investment programme; expectations regarding the operating environment and market conditions and trends, including customer usage, competitive 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, including Vodafone One Net, M-Pesa, and the launch of a number of additional features; growth in customers and usage; expectations regarding spectrum licence acquisitions, including anticipated new 3G and 4G availability and the customer uptake associated therewith; expectations regarding adjusted operating profit, EBITDA margins, capital expenditure, free cash flow, and foreign exchange rate movements; expectations regarding the integration or performance of current and future investments, associates, joint ventures, non-controlled interests and newly acquired businesses, including KDG, Ono and Neotel; and the outcome and impact of regulatory and legal proceedings involving Vodafone and of scheduled or potential regulatory changes.

 

Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as "will", "anticipates", "aims", "could", "may", "should", "expects", "believes", "intends", "plans" or "targets" (including in their negative form). By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, the following: changes in economic or political conditions in markets served by operations of the Group that would adversely affect the level of demand for its mobile services; greater than anticipated competitive activity, from both existing competitors and new market entrants, which could require changes to the Group's pricing models, lead to customer churn, affect the relative appeal of the Group's products and services as compared to those of its competitors or make it more difficult for the Group to acquire new customers; the impact of investment in network capacity and the deployment of new technologies, or the rapid obsolescence of existing technology; higher than expected costs or capital expenditures; slower than expected customer growth and reduced customer retention; changes in the spending patterns of new and existing customers and the possibility that new products and services offered by the Group will not be commercially accepted or do not perform according to expectations; the Group's ability to expand its spectrum position or renew or obtain necessary licences, including for spectrum; the Group's ability to achieve cost savings; the Group's ability to execute its strategy in fibre deployment, network expansion, new product and service roll-outs, mobile data, enterprise and broadband and in emerging markets; changes in foreign exchange rates, including, in particular, changes in the exchange rate of pounds sterling, the currency in which the Group prepares its financial statements, to the euro, the US dollar and other currencies in which the Group generates its revenue, as well as changes in interest rates; the Group's ability to realise benefits from entering into partnerships or joint ventures and entering into service franchising and brand licensing; unfavourable consequences to the Group of making and integrating acquisitions or disposals; changes to the regulatory framework in which the Group operates, including possible action by regulators in markets in which the Group operates or by the EU to regulate rates the Group is permitted to charge; the impact of legal or other proceedings against the Group or other companies in the mobile telecommunications industry; loss of suppliers or disruption of supply chains; developments in the Group's financial condition, earnings and distributable funds and other factors that the Board takes into account when determining levels of dividends; the Group's ability to satisfy working capital and other requirements through access to bank facilities, funding in the capital markets and its operations; changes in statutory tax rates or profit mix which might impact the Group's weighted average tax rate; and/or changes in tax legislation or final resolution of open tax issues which might impact the Group's tax payments or effective tax rate.

 

Furthermore, a review of the reasons why actual results and developments may differ materially from the expectations disclosed or implied within forward-looking statements can be found under "Forward-looking statements" and "Principal risk factors and uncertainties" in the Group's annual report for the year ended 31 March 2014. The annual report can be found on the Group's website (vodafone.com/investor). All subsequent written or oral forward-looking statements attributable to the Company, to any member of the Group or to any persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. No assurances can be given that the forward-looking statements in this document will be realised. Subject to compliance with applicable law and regulations, Vodafone does not intend to update these forward-looking statements and does not undertake any obligation to do so.

 

 

 

 

 

For further information:

 

Vodafone Group Plc

 

Investor Relations

Media Relations

Telephone: +44 7919 990 230

www.vodafone.com/media/contact

 

Copyright © Vodafone Group 2015

- ends -

 


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