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Vodafone Announces Results for the Year Ended 31 March 2010

18 Jun 2010Technology

2010 guidance exceeded, revenue trends improve in fourth quarter

  • Group revenue increased by 8.4% to £44.5 billion. Group service revenue increased by 8.9% to £41.7 billion. Q4 organic service revenue fell 0.2%(*)(1), a second successive quarterly improvement

  • Europe service revenue declined 3.5%(*) to £28.3 billion. In Q4 service revenue declined 1.7%(*)(1), an improvement on Q3. Strong revenue growth continued in data and fixed broadband. In mobile, improvements were driven by data, enterprise and roaming, with voice usage and price trends broadly similar to the previous quarter

  • Africa and Central Europe service revenue declined 1.2%(*) to £7.4 billion. In Q4 service revenue increased by 2.4%(*), a 2.9 percentage point improvement on Q3, driven by strong revenue growth in Turkey (+31.3%(*)) and continued growth at Vodacom (+4.6%(*))

  • Asia Pacific and Middle East service revenue increased by 9.8%(*) to £6.1 billion. In Q4 service revenue increased by 5.0%(*),, lower than the previous quarter due to the start-up of Indus Towers in Q1 2009. India again generated quarter on quarter revenue growth. Its customer base now exceeds 100 million

  • Group EBITDA was £14.7 billion, up 1.7%. The EBITDA margin declined in line with expectations

  • Verizon Wireless posted another set of strong results for the financial year with service revenue growth of 6.3%(*)

  • Adjusted operating profit was £11.9 billion using guidance assumptions(2), exceeding revised guidance. On a reported basis adjusted operating profit was £11.5 billion

  • Although our operational performance in India since acquisition in 2007 has been strong, the award of six new national licences in the market one year after our entry and the resulting intense price competition have led to an impairment charge of £2.3 billion, partially offset by a £0.2 billion reversal related to Turkey

  • Adjusted earnings per share was 16.11 pence with growth impacted by the inclusion of a tax benefit and associated interest credit in the prior year. Excluding this benefit adjusted earnings per share increased by 6.6%

  • Free cash flow grew 26.5% to £7.2 billion, exceeding guidance and reflecting the benefits of a working capital improvement programme. Capital investment was maintained at prior year levels

  • Proportionate mobile customer base was 341 million with 8.5 million net additions during Q4

Positive results on our strategic priorities

  • In Europe we targeted commercial investment in high value and data customers, increased our range of value enhancement products and improved our device portfolio to increase competitiveness; in India we increased revenue market share; and the impact of our turnaround strategy is now evident in Turkey

  • Data revenue exceeded £4 billion for the first time, up 19.3%(*), with increased take up of data-enabled smartphones across Europe. The Group’s active data users now exceed 50 million

  • Fixed line revenue grew by 7.9%(*) to £3.3 billion with strong broadband customer growth and increased market share. The Group’s fixed broadband customer base is now 5.6 million

  • We have launched integrated services for enterprise customers across Europe. Vodafone Global Enterprise delivered organic revenue growth and now has a customer base of over 550 multinational businesses

  • £1 billion cost savings programme delivered one year ahead of schedule, partially used to finance growth initiatives and volume increases. New two-year £1 billion cost programme, announced in November 2009, now under execution

Final dividend +9%; 3 year dividend per share growth target of 7% per annum(3)

  • Final dividend per share 5.65 pence up 9% making total dividends 8.31 pence per share, up 7% reflecting strong

  • underlying business performance and cash generation

  • Expect free cash flow to be between £6.0 billion and £7.0 billion per annum for the next three financial years,

  • reflecting strong operational performance and delivery in emerging markets over this time period

  • Annual dividend per share growth target of no less than 7% for the next three financial years

  • We expect that total dividends per share will be no less than 10.18 pence per share for the 2013 financial year

Guidance for the 2011 financial year(3)

  • Adjusted operating profit expected to be in the range of £11.2 billion to £12.0 billion

    • Return to organic service revenue growth expected during 2011 financial year

    • Capital expenditure should be similar to 2010 financial year, adjusted for foreign exchange

  • Return to organic service revenue growth expected during 2011 financial year

  • Capital expenditure should be similar to 2010 financial year, adjusted for foreign exchange

  • Free cash flow expected to be in excess of £6.5 billion consistent with three year target

  • Return to organic service revenue growth expected during 2011 financial year

  • Capital expenditure should be similar to 2010 financial year, adjusted for foreign exchange

Vittorio Colao, Chief Executive, commented:

“Vodafone’s financial results exceeded our upgraded guidance on all measures. Revenue trends have improved again in Q4 driven by growth in mobile data and fixed broadband. Cost reduction targets were delivered ahead of schedule enabling commercial reinvestment to improve market share and further strengthen our technology platforms. Free cash flow of £7.2 billion and confidence in Vodafone’s prospects have enabled us to increase dividends by 7% and to target 7% per annum growth in total dividends per share for the next three years. We are
creating a stronger Vodafone, which is positioned to return to revenue growth during the 2011 financial year, as economic recovery should benefit our key markets.”

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 foreign exchange rates.
(1) Excluding the impact of IFRIC 13 (accounting for customer incentive schemes) in Italy in Q4, Europe service revenue declined 2.4% and Group
service revenue declined by 0.6%.
(2) Adjusted operating profit recalculated to reflect assumptions used in the guidance issued for the 2010 financial year including foreign
exchange rates of £1:€1.12 and £1:US$1.50 and excluding Alltel restructuring costs of c.£0.2 billion.
(3) For the 2011 financial year and three year guidance and dividend assumptions see page 8.