Chairman’s statement

Your Company continues to deliver strong cash generation, is well positioned to benefit from economic recovery and looks to the future with confidence.

Environment and performance

Dividends per share

Dividends per share (Pence)
  • Against a difficult background, we generated £7.2 billion of free cash flow, up 26.5%.
  • Total dividends per share of 8.31 pence, up 7%; three year dividend per share growth target of at least 7% per annum.
  • Original £1 billion cost programme completed a year ahead of schedule with a further £1 billion initiative underway.
  • Continued strong investment in network capability to maintain and enhance the quality of service.

2009 saw the sharpest contraction in the world’s economy for more than a generation. Unquestionably, this has been the most difficult economic environment in which your Company has ever operated. Against this background, I am very pleased to report that the Group delivered an adjusted operating profit of £11.5 billion (down 2.5%), and generated £7.2 billion of free cash flow (up 26.5%). The Board is recommending a final dividend of 5.65 pence, making a total for the year of 8.31 pence per share (up 7%). The Board is also targeting to maintain growth in dividends per share at no less than 7% per annum for the next three years. This year’s results have been achieved while maintaining the capital expenditure (up slightly at £6.2 billion) needed to serve our customers’ growing demand for voice minutes and data services. The share price has increased by 6% since 1 April 2009, broadly in line with other major European telecommunications companies, but behind the increase in the FTSE 100.

While the Group is not immune from the economic environment in which we operate, with our retail customers seeking to control their expenditure as much as possible and our business customers seeking to control cost, we have responded swiftly with cost reduction and efficiency programmes. On top of our original £1 billion cost programme, delivered a year ahead of plan, we have now committed to a further £1 billion cost programme by the 2013 financial year. With mobile voice prices continuing to decline in Europe by over 10% a year, tight cost control will remain a high priority in the future.

The telecommunications sector as a whole has seen declining revenue through this period but we have not seen the extremely steep declines in revenue experienced by some other sectors of the economy – mobile communications remain an essential element in most people’s lives. We see how our services are allowing people to lead their lives more efficiently and pleasurably, making better use of their time and opportunities. This has resulted in ever increasing demand, with voice minutes up by 22.3%(*) and data revenue up by 19.3%(*) across the Group. This additional demand on our networks means that we need to manage traffic to ensure both good service for our customers and appropriate returns for our shareholders from continued investment in those networks.

Total shareholder return April 2009 to May 2010

Vodafone +13% FTSE 100 +39%

Vodafone share price vs FTSE 100


April 2009 May 2010


  • Continued innovation in our products and services broadens and enhances our business portfolio.
  • The new Vodafone 360 service combines the benefits of mobile communications and the internet to bring your phone, email chat and social network contacts together in one place.

Innovation in the services we offer, and the expansion of those services into other sectors such as health care or communication between different types of machine – smart metering on energy grids or smart communications for delivery truck fleets – can make important contributions to our societies, lowering carbon emissions and enhancing lifestyles. This kind of innovation is important both for the wider benefits it brings but also because it broadens and enhances the base on which our business is built. We have now set-up separate health and machine-to-machine teams to ensure that we maximise these opportunities.

Your Company has also continued to innovate in the services we provide. This year has seen the launch of Vodafone 360, a service designed to help bridge the intersection between mobile communications and the internet making it easier to communicate with friends, colleagues and family from your mobile using social media or more traditional forms of electronic communication. The Vodafone Money Transfer system (branded M-PESA in Kenya and Tanzania) is available in three countries with 13 million customers transferring US$3.6 billion during the 2010 financial year. We expect to roll-out the service to further markets later this year. We recently launched two of the world’s most inexpensive handsets – for example the Vodafone 150 retails in most markets at unsubsidised prices below US $15 – and we are working on low cost handsets which will give access to the internet.

Geographic diversity

Proportionate mobile customers


up 12.7%

  • Wide portfolio of operations including developed and emerging markets.
  • In emerging markets growth prospects remain positive. We now have over 100 million customers in our key Indian market.

One of the benefits of our broad spread of operations in both developed and emerging markets is the diversification of risk that this allows. The Board keeps a close watch on this portfolio of investments, particularly those where we do not exercise management control. In Verizon Wireless we have an outstanding asset whose value has increased substantially over recent years, and SFR has secured a strong market position and provided good dividends. The Board reviews these investments regularly and will remain focused upon the best way of realising maximum shareholder value.

The impairment of our investment in Vodafone Essar in India was a major disappointment to the Board. It results from an intense price war, triggered by the unprecedented and unforeseeable entry of six new competitors into the Indian market. Our operational performance in India however remains strong and we remain confident in the long-term prospects for the Indian market. We recently passed a very important milestone, with Vodafone Essar now having more than 100 million customers – one of only five national mobile operators in the world to have reached this scale, reflecting strong growth from 28 million customers when we acquired control of Vodafone Essar in May 2007. Elsewhere in the emerging markets, the operational turnaround of our company in Turkey has yielded very positive results and we have seen good progress in Ghana.

Your Board

This year we conducted an evaluation on the effectiveness of the Board and its Committees aided by the external advisors MWM Consulting. They concluded that the Board was effective, had the right composition and skills and was generally performing well. More detail is contained in “Performance evaluation”.

Simon Murray, who has been a non-executive Director since July 2007, has decided to step down from the Board after this year’s AGM. His knowledge of telecommunications, entrepreneurial spirit, and experience of the Asia Pacific region have been great assets to the Board, and I am grateful for the contribution he has made.

The Vodafone Foundation

  • The Vodafone Foundation supports communities and societies in the countries in which we operate.
  • Vodafone invested a total of £42 million in foundation programmes and social causes.

We have continued to fund the work of the Vodafone Foundation. Through the Vodafone Foundation and our network of national affiliate foundations we support communities and societies in the countries in which we operate. In this financial year we invested a total of £42 million in foundation programmes and social causes, and our World of Difference programme enabled 604 people to take paid time to work for a charitable purpose of their choice in their own community or in a developing country. Across the Group we have also put in place mechanisms to make it easy for our customers to give money to support charitable appeals following disasters. After the Haiti earthquake, Vodafone foundations donated £0.3 million to the emergency relief and reconstruction effort, and we helped our customers in 14 countries to give a total of £4.7 million by text message.


On behalf of the Board, I would like to thank all Vodafone staff around the world for the great efforts they have made in the past year in such challenging economic conditions. Vodafone would not have been able to deliver these results without the tremendous effort of the team.

The Board is heartened by your Company’s strong results especially in the face of such a sharp economic downturn. It believes that the Group is well positioned to benefit from economic recovery and looks to the future with confidence.

Sir John Bond


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