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Vodafone announces results for the year ended 31 March 2014

20 May 2014Technology

Highlights1

  • Group revenue down 1.9% to £43.6 billion; full year organic service revenue decline 4.3%*

  • Q4 organic service revenue declined 3.8%*2, or 4.0%* including Italy at 100% from 21 February 2014

  • EBITDA3 down 7.4%* at £12.8 billion; organic EBITDA margin down 1.3 percentage points

  • Adjusted operating profit3 £7.9 billion, including £3.2bn for Verizon Wireless to 2 September 2013

  • Pro forma full year 13/14 guidance met: adjusted operating profit £4.94 billion, free cash flow £4.84 billion

  • Completion of Verizon Wireless disposal, US$85 billion returned to shareholders; £45.0 billion pre-tax gain

  • £19.3 billion deferred tax assets recognised in relation to the Group’s historical tax losses, £17.7 billion of this announced H1

  • Impairments totalling £6.6 billion in Germany, Spain, Portugal, Czech Republic and Romania

  • Planned organic investments of around £19 billion over the next two years, including Project Spring

  • Final dividend per share of 7.47 pence, giving total dividends per share of 11.0 pence, up 8% 

Group revenue down 1.9% to £43.6 billion; full year organic service revenue decline 4.3%*

Q4 organic service revenue declined 3.8%*2, or 4.0%* including Italy at 100% from 21 February 2014

EBITDA3 down 7.4%* at £12.8 billion; organic EBITDA margin down 1.3 percentage points

Adjusted operating profit3 £7.9 billion, including £3.2bn for Verizon Wireless to 2 September 2013

Pro forma full year 13/14 guidance met: adjusted operating profit £4.94 billion, free cash flow £4.84 billion

Completion of Verizon Wireless disposal, US$85 billion returned to shareholders; £45.0 billion pre-tax gain

£19.3 billion deferred tax assets recognised in relation to the Group’s historical tax losses, £17.7 billion of this announced H1

Impairments totalling £6.6 billion in Germany, Spain, Portugal, Czech Republic and Romania

Planned organic investments of around £19 billion over the next two years, including Project Spring

Final dividend per share of 7.47 pence, giving total dividends per share of 11.0 pence, up 8% 

Financial highlights Change year-on-year
 Year ended 31 March 2014ReportedOrganic
 £m  
%%
Management basis1    
Group revenue46,616-1.9-3.5
Group service revenue39,529-2.4-4.3
Europe25,977-2-9.1
Africa, Middle East and Asia Pacific (AMAP)13,087-4.76.1
EBITDA312,831-5.4-7.4
Adjusted operating profit37,874-37.4-9.4
Free cash flow4,405-21.5 
Statutory basis   
Revenue38,3460.8-2.2
Profit/(loss) for the financial year from continuing operations11,312n/m 
Profit for the financial year59,420n/m 
Basic earnings per share223.84pn/m 
Total dividends per share11.00p8 
Adjusted earnings per share317.54p-12.8 
  • Significant progress on unified communications strategy: acquisition of Kabel Deutschland (‘KDG’), announced acquisition of Ono, ongoing fibre build in Spain and Portugal, with Italy to commence this year

  • Project Spring underway, initially with increased network investment in India and Germany

  • 4.7 million 4G customers in 14 markets; early 4G data usage more than double that of 3G data usage

  • European smartphone penetration 45%, up 7 percentage points year-on-year

  • Mobile in-bundle revenue grew 7.8%* in the year and Q4, and now represents 51% of Q4 Group mobile service revenue, and 61% in Europe

  • Vodafone Red now in 20 markets; 12 million customers as at 31 March 2014

  • M-Pesa now in 10 markets, 17 million customers 

Significant progress on unified communications strategy: acquisition of Kabel Deutschland (‘KDG’), announced acquisition of Ono, ongoing fibre build in Spain and Portugal, with Italy to commence this year

Project Spring underway, initially with increased network investment in India and Germany

4.7 million 4G customers in 14 markets; early 4G data usage more than double that of 3G data usage

European smartphone penetration 45%, up 7 percentage points year-on-year

Mobile in-bundle revenue grew 7.8%* in the year and Q4, and now represents 51% of Q4 Group mobile service revenue, and 61% in Europe

Vodafone Red now in 20 markets; 12 million customers as at 31 March 2014

M-Pesa now in 10 markets, 17 million customers 

Guidance for the 2015 financial year6

  • EBITDA in the range of £11.4 billion to £11.9 billion, principally reflecting the impact of Project Spring investment and foreign exchange movements

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

  • Total capex programme of around £19 billion in the two years to March 2016, with capital intensity subsequently normalising to 13-14% of annual revenue

  • Intention to grow dividends per share

EBITDA in the range of £11.4 billion to £11.9 billion, principally reflecting the impact of Project Spring investment and foreign exchange movements

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

Total capex programme of around £19 billion in the two years to March 2016, with capital intensity subsequently normalising to 13-14% of annual revenue

Intention to grow dividends per share

Vittorio Colao, Group Chief Executive, commented:

“It has been a year of substantial strategic progress. The sale of our Verizon Wireless stake has rewarded shareholders for their support, and enabled the acceleration of our strategy through the acquisition of KDG, the pending acquisition of Ono and our Project Spring investment programme.

“Our operational performance has been mixed. The Group’s emerging markets businesses have performed strongly throughout the year: we have executed our strategy well and have successfully positioned ourselves for the rapid growth in data we are now witnessing. In Europe, where we continue to face competitive, regulatory and macroeconomic pressures, we have taken steps to improve our commercial performance, particularly in Germany and Italy, and are beginning to see encouraging early signs.

“I am confident about the future of the business given the growth prospects in data, emerging markets, enterprise and unified communications. We have commenced our Project Spring two-year investment programme which will accelerate our plans to establish stronger network and service differentiation for our customers. I expect the first signs of this to become evident later this year, with wider 4G coverage in Europe and 3G coverage in emerging markets, improved network performance and increased customer advocacy. While cash flow will be depressed during this investment phase, our intention to continue to grow dividends per share annually demonstrates our confidence in strong future cash flow generation.”


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