UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

Report of Foreign Private Issuer

 

Pursuant to Rules 13a-16 or 15d-16 under

the Securities Exchange Act of 1934

 

Dated November 12, 2009

 

Commission File Number: 001-10086

 

VODAFONE GROUP

PUBLIC LIMITED COMPANY

(Translation of registrant’s name into English)

 

 

VODAFONE HOUSE, THE CONNECTION, NEWBURY, BERKSHIRE, RG14 2FN, ENGLAND

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F    ü       Form 40-F         

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):           

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):        

 

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

 

Yes           

No    ü     

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-        .

 


 

This Report on Form 6-K contains a news release issued by Vodafone Group Plc on, November 10 2009, entitled “HALF-YEAR FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009”.


 

VODAFONE GROUP PLC

 

Embargo:

 

 

Not for publication

HALF-YEAR FINANCIAL REPORT FOR

 

before 07:00 hours

THE SIX MONTHS ENDED 30 SEPTEMBER 2009

 

10 November 2009

 

Key highlights(1):

 

·                  Group revenue of £21.8 billion, an increase of 9.3%; organic down 3.0%

Europe: revenue up 3.0% benefiting from foreign exchange

Africa and Central Europe: revenue growth of 35.9% including Vodacom acquisition

– Asia Pacific and Middle East: revenue growth of 15.9% reflecting the performance in India

– Group data revenue up 35.2% to £1.9 billion

·                  Group adjusted operating profit up 2.4% to £5.9 billion

Group EBITDA increased by 2.9% to £7.5 billion

– Verizon Wireless operating profit up 34.3% driven by 48.1% revenue growth including Alltel

·                  Free cash flow before licence and spectrum payments of £4.0 billion, up 29.1%

Cash generated by operations of £7.6 billion, up 6.1%

·                  Adjusted effective tax rate of 21.5%; underlying full year rate expected to be in the mid 20s

·                  Adjusted earnings per share up 16.0% to 8.72 pence. Basic earnings per share of 9.17 pence

·                  Interim dividend up by 3.5% to 2.66 pence per share

 

Outlook(2):

 

·                  Guidance confirmed

Adjusted operating profit in the range of £11.0 billion to £11.8 billion

Free cash flow before licence and spectrum payments around upper end of £6.0 billion to £6.5 billion range

 

Vittorio Colao, Chief Executive, commented:

 

“The Group has performed in line with our expectations and we have made strong progress with our strategic priorities, in particular in mobile data and cash generation. We have confirmed our guidance for the full year, despite the uncertainties of current economic trends. The £1 billion cost reduction programme is expected to be delivered a year ahead of plan and we have extended this to a further £1 billion of cost savings by 2012. At the same time, we have maintained our capital investment at £2.6 billion in the first half, delivering further improvements in network quality and performance for our customers. We have continued to develop innovative services for businesses and consumers, such as Vodafone One Net and Vodafone 360, and to expand our fixed line services. We will continue our focus on the delivery of our growth strategy, particularly in data services.”

 

 

Notes:

(1)          See page 4 for Group financial highlights, page 34 for use of non-GAAP financial information and page 41 for definition of terms.

(2)          Includes assumptions of foreign exchange rates for the 2010 financial year of approximately £1:€1.12 and £1:US$1.50.

 


 

CHIEF EXECUTIVE’S STATEMENT

 

Financial review

 

Group revenue increased by 9.3% to £21.8 billion. Group adjusted operating profit increased by 2.4% to £5.9 billion with a positive contribution from Verizon Wireless and foreign currency benefits offsetting lower profit in Europe.

 

Cash generation remained robust, with free cash flow of £4.0 billion, up 29.1%, reflecting foreign currency benefits, improved working capital and receipt of the deferred £0.2 billion dividend from Verizon Wireless. Capital expenditure was at a similar level to the same period last year after adjusting for foreign exchange.

 

In Europe organic service revenue declined by 4.5% reflecting the economic and competitive environment. Data growth of 17.8% and fixed line growth of 7.3% are still being offset by ongoing price pressures. In the second quarter the outgoing voice minute growth rate stabilised for the first time for eight quarters at 2.8% . Total costs in Europe declined by 3.3% resulting in an EBITDA margin decline of only 1.0 percentage point. Acquisition and retention expenditure intensity was maintained. Operating free cash flow before licences and spectrum payments was strong at £4.3 billion.

 

In Africa and Central Europe service revenue increased by 34.6% reflecting the full consolidation of Vodacom following completion of the stake purchase in May 2009 and foreign exchange. On an organic basis service revenue declined by 3.2% with continued growth in Vodacom being offset by declines in Turkey and Romania. EBITDA margins declined by around four percentage points primarily reflecting lower profitability in Turkey, consistent with our turnaround plan.

 

In Asia Pacific and Middle East service revenue increased by 17.8% reflecting a strong contribution from India where service revenue grew by 20.5% on a constant currency basis. During the period we added 14.1 million customers in India. Overall EBITDA margin in the region declined by 3.1 percentage points reflecting lower margins in India caused by the pricing environment and investment in new circles, and start up costs in Qatar.

 

Verizon Wireless contributed about 34% of adjusted operating profit. Organic service revenue growth was 7.5%, EBITDA margins were maintained and data revenue continued to grow rapidly. We continue to deepen our commercial relationship with Verizon Wireless with joint initiatives around applications, LTE, enterprise customers and BlackBerry® devices.

 

The Group invested £2.6 billion in capital expenditure, a similar level to the same period last year after adjusting for foreign exchange, including £0.5 billion in India. Capital intensity for Europe and Common Functions was slightly higher at 8.8% .

 

Adjusted earnings per share increased by 16.0% to 8.72 pence driven by favourable foreign exchange.

 

Dividends per share have increased by 3.5% to 2.66 pence consistent with the Group’s dividend policy.

 

Strategy progress

 

The first half results reflect the actions we have taken to implement the strategy announced in November 2008, in particular with respect to our focus on cash generation, cost reduction and data.

 

Drive operational performance

 

We continue to launch services which deliver more value in return for a wider commitment from customers across our footprint and have generated particularly good traction with products in Germany, Spain and Italy.

 

We have accelerated our £1 billion cost reduction programme which will help us to offset the pressures of the competitive environment and cost inflation, and allow us to invest in revenue growth opportunities. We now intend to deliver 100% of the total programme in the current financial year, a year ahead of plan. In the current financial year we expect that around a quarter of the savings will be used for commercial reinvestment and margin enhancement, half will offset inflation and volume increases in Europe and around a quarter will be used for investment in our selected revenue growth opportunities including fixed broadband, the development of new services such as Vodafone 360 and unified communications and direct and on-line sales initiatives.

 

We have extended our cost reduction programme and now target a further £1 billion operating costs savings by the 2012 financial year by leveraging on network, sourcing and infrastructure scale across a wider geographic area, and through further overhead reduction. We expect that around half of these savings will offset inflationary and volume pressures, and the remainder will be used for commercial reinvestment and margin enhancement.

 

 

2


 

Pursue growth opportunities in total communications

 

Data revenue grew by 19.8% on an organic basis and is nearing £4.0 billion on an annualised basis. Despite the economic environment we continue to see good uptake of handheld business devices and mobile broadband and, in recent months, we have seen an increase in usage and revenue from the mobile internet across Europe where around 30% of our customer base are regular monthly users of mobile internet services. As only one third of these customers have a data contract the opportunity to grow data revenue remains significant. During the last 12 months we have launched a number of important steps to support our data strategy including: significant investment in HSPA capability; Vodafone open platform for billing; Joint Innovation Lab for standardisation of mobile applications; and Vodafone 360 branded services.

 

In fixed broadband we continued to grow our customer base in Italy and Spain, and returned to revenue growth in Germany. We now have 5.1 million customers, up around 1.1 million in 12 months, and strong net adds share in Spain, Italy and Germany. The addition of fixed broadband capability is increasing the range of products we can offer to customers, in particular in enterprise, and provides us with the opportunity to compete with integrated competitors.

 

Europe enterprise revenue declined by 5.4% during the period driven by the impact of higher unemployment, lower business travel and aggressive price competition across the region. We continue to invest in our enterprise capability in order that we are better positioned for enterprise customers.

 

Execute in emerging markets

 

We have continued to drive penetration in India and invest in network coverage. Following the recent launches of a number of new entrants, competition in the Indian market is intense and will remain so for some time. During this phase of Indian market development we will focus on leveraging Vodafone’s brand, scale and cost efficiency and disciplined capital expenditure. Economic prospects for India remain attractive and in the medium-term, in-market consolidation should improve returns. Vodafone is well positioned to benefit from the long-term opportunity in India.

 

Twelve months ago we set out a turnaround plan for Turkey to address our underperformance, focused on improving network quality, enhancing our direct and indirect distribution channels and increasing the competitiveness of our offerings. Our investment in these areas is now gaining traction with a significant improvement in customer trends and slowing revenue declines in the period.

 

Our primary focus remains on driving results from our existing emerging market assets.

 

Strengthen capital discipline

 

Net debt remained stable at £34.0 billion since year end, with underlying strong cash generation and foreign currency movements offsetting acquisitions and dividend payments, which have increased in accordance with the Group’s progressive dividend policy. The Group has retained a low single A long-term credit rating in line with its target.

 

Outlook

 

The first half results support our expectations for full year adjusted operating profit in the range of £11.0 billion to £11.8 billion and free cash flow around the upper end of the £6.0 billion to £6.5 billion range. The assumptions for foreign exchange rates used within the outlook ranges for the 2010 financial year are unchanged.

 

Our expectations for capital expenditure for the 2010 financial year remain unchanged and capital expenditure is expected to be similar to last year after adjusting for foreign currency, with slightly slower investment in India and more in Europe to support our revenue growth opportunities.

 

Summary

 

These results including our strong free cash flow generation reflect the benefits of Vodafone’s geographic and customer diversity, our success in our chosen revenue growth initiatives and the impact of our accelerated £1 billion cost reduction programme.

 

 

3


 

GROUP FINANCIAL HIGHLIGHTS

 

 

 

 

 

2009

 

2008

 

Change %

 

 

Page

 

£m

 

£m

 

Reported

 

Organic

 

Financial information(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

23

 

21,761

 

19,902

 

9.3

 

(3.0

)

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

23

 

6,068

 

4,071

 

49.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

 

23

 

5,747

 

3,314

 

73.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

23

 

4,795

 

2,169

 

100+

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share (pence)

 

23

 

9.17p

 

4.04p

 

100+

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditure(2)

 

35

 

2,602

 

2,380

 

9.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash generated by operations

 

18

 

7,577

 

7,144

 

6.1

 

 

 

 

Performance reporting(1)(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group EBITDA

 

6

 

7,455

 

7,243

 

2.9

 

(7.9

)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating profit

 

6, 38

 

5,911

 

5,771

 

2.4

 

(11.5

)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted profit before tax

 

8, 38

 

5,481

 

5,288

 

3.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted effective tax rate

 

8

 

21.5%

 

26.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted profit for the period attributable to equity shareholders

 

8, 38

 

4,582

 

3,985

 

15.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings per share (pence)

 

8, 38

 

8.72p

 

7.52p

 

16.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow(3)

 

18

 

4,003

 

3,101

 

29.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt

 

18, 19

 

34,001

 

27,715

 

22.7

 

 

 

 

Notes:

(1)          Amounts presented at 30 September or for the six months then ended.

(2)          See page 34 for the use of non-GAAP financial information and page 41 for definition of terms.

(3)          All references to free cash flow and operating free cash flow are to amounts before licence and spectrum payments.

 

CONTENTS

 

 

 

 

 

 

 

Page

 

Outlook

 

5

 

Financial results

 

6

 

Liquidity and capital resources

 

18

 

Acquisitions, disposals and subsequent events

 

21

 

Risk factors

 

21

 

Responsibility statement

 

22

 

Condensed consolidated financial statements

 

23

 

Use of non-GAAP financial information

 

34

 

Additional information

 

35

 

Other information (including forward-looking statements)

 

40

 

 

 

 

 

 

 

4


 

OUTLOOK FOR THE 2010 FINANCIAL YEAR

 

Please see page 34 for use of non-GAAP financial information, page 41 for definition of terms and page 42 for forward-looking statements.

 

 

 

 

 

2010 financial

 

 

 

 

 

year outlook

(1)(2)(3)

 

 

 

 

£ billion

 

Adjusted operating profit

 

 

 

11.0 – 11.8

 

 

 

 

 

 

 

Free cash flow(4)

 

 

 

6.0 – 6.5

 

 

 

 

 

 

 

 

Notes:

(1)               As stated on page 37 of the Group’s 2009 annual report.

(2)               Includes assumptions of average foreign exchange rates for the 2010 financial year of approximately £1:€1.12 and £1:US$1.50. A substantial majority of the Group’s adjusted operating profit and free cash flow is denominated in currencies other than sterling, the Group’s reporting currency. A 1% change in the sterling/euro exchange rate would impact adjusted operating profit by approximately £70 million; a 1% change in the sterling/US dollar exchange rate would impact adjusted operating profit by approximately £40 million.

(3)               The outlook does not include the impact of the reorganisation costs arising from the Alltel acquisition by Verizon Wireless, expected to be around £0.2 billion, but includes the impact of the Group’s acquisition of a further 15% stake in Vodacom and the consolidation of that entity from 18 May 2009.

(4)               Before spectrum and licence payments but after payments in respect of long-standing tax issues.

 

Operating conditions across the Group are broadly as envisaged when the outlook ranges were set out at the preliminary results announcement in May, albeit with a slight change in mix. Europe continues to experience economic pressure and similar competitive intensity, though performance in the first half was slightly better than anticipated, whereas economic conditions in Africa and Central Europe were slightly weaker than expected and competition in India has recently intensified.

 

Group EBITDA margin in the first half declined by 2.1 percentage points. Whilst the 1.0 percentage point decline in Europe was better than anticipated, reflecting a slightly better revenue performance and the benefit of the cost reduction programme, margin pressures in emerging markets were higher including the impact of the competitive environment in India and the turnaround plan in Turkey.

 

For the full year Group EBITDA margin is expected to decline by a similar rate to the first half. Total depreciation and amortisation charges are now expected to be around £8.2 billion.

 

In aggregate adjusted operating profit based on the stated foreign exchange assumptions is still expected to be in the £11.0 billion to £11.8 billion range.

 

Free cash flow based on the stated foreign exchange assumptions is expected to be around the upper end of the £6.0 billion to £6.5 billion range. Capitalised fixed asset additions are expected to be at a similar level to the 2009 financial year after adjusting for the impact of foreign exchange and the consolidation of Vodacom. Capital intensity in Europe and Common Functions is expected to be around 10% of revenue.

 

The assumptions for foreign exchange rates used within the outlook ranges for the 2010 financial year are unchanged.

 

The underlying adjusted tax rate percentage is expected to be in the mid 20s for the 2010 financial year with the Group targeting a similar level in the medium-term.

 

 

5


 

FINANCIAL RESULTS

 

Group results(1)

 

 

 

 

 

 

 

Asia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Africa

 

Pacific

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and

 

and

 

 

 

 

 

 

 

Six months ended

 

 

 

 

 

 

 

 

 

Central

 

Middle

 

Verizon

 

Common

 

 

 

30 September

 

 

 

 

 

 

 

Europe

 

Europe

 

East

 

Wireless

 

Functions

(2)

Eliminations

 

2009

(3)

2008

 

 % change

 

 

 

£m

 

£m

 

£m

 

£m

 

£m

 

£m

 

£m

 

£m

 

£

 

Organic(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

8,998

 

2,696

 

2,288

 

 

 

(2

)

13,980

 

13,267

 

 

 

 

 

Messaging revenue

 

1,810

 

274

 

228

 

 

1

 

 

2,313

 

2,171

 

 

 

 

 

Data revenue

 

1,460

 

225

 

195

 

 

 

 

1,880

 

1,391

 

 

 

 

 

Fixed line revenue

 

1,419

 

126

 

38

 

 

 

 

1,583

 

1,237

 

 

 

 

 

Other service revenue

 

473

 

148

 

174

 

 

 

(78

)

717

 

574

 

 

 

 

 

Service revenue

 

14,160

 

3,469

 

2,923

 

 

1

 

(80

)

20,473

 

18,640

 

9.8

 

(2.6

)

Other revenue

 

751

 

270

 

156

 

 

126

 

(15

)

1,288

 

1,262

 

 

 

 

 

Revenue

 

14,911

 

3,739

 

3,079

 

 

127

 

(95

)

21,761

 

19,902

 

9.3

 

(3.0

)

Direct costs

 

(3,431

)

(1,042

)

(883

)

 

(27

)

80

 

(5,303

)

(4,796

)

 

 

 

 

Customer costs

 

(4,129

)

(874

)

(633

)

 

(159

)

 

(5,795

)

(5,283

)

 

 

 

 

Operating expenses

 

(1,747

)

(712

)

(731

)

 

(33

)

15

 

(3,208

)

(2,580

)

 

 

 

 

EBITDA

 

5,604

 

1,111

 

832

 

 

(92

)

 

7,455

 

7,243

 

2.9

 

(7.9

)

Depreciation and amortisation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired intangibles

 

(18

)

(382

)

(192

)

 

 

 

(592

)

(391

)

 

 

 

 

Purchased licences

 

(484

)

(15

)

(48

)

 

 

 

(547

)

(490

)

 

 

 

 

Other

 

(1,760

)

(473

)

(464

)

 

(30

)

 

(2,727

)

(2,383

)

 

 

 

 

Share of result in associates

 

309

 

21

 

4

 

1,988

 

 

 

2,322

 

1,792

 

 

 

 

 

Adjusted operating profit

 

3,651

 

262

 

132

 

1,988

 

(122

)

 

5,911

 

5,771

 

2.4

 

(11.5

)

Impairment losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,700

)

 

 

 

 

Other income and expense

 

 

 

 

 

 

 

 

 

 

 

 

 

157

 

 

 

 

 

 

Operating profit

 

 

 

 

 

 

 

 

 

 

 

 

 

6,068

 

4,071

 

 

 

 

 

Non-operating income and expense

 

 

 

 

 

 

 

 

 

 

 

 

 

(7

)

(14

)

 

 

 

 

Net financing costs

 

 

 

 

 

 

 

 

 

 

 

 

 

(314

)

(743

)

 

 

 

 

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

 

(952

)

(1,145

)

 

 

 

 

Profit for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

4,795

 

2,169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes:

(1)

 

The Group revised how it determines and discloses segmental EBITDA and adjusted operating profit during the period. Further details of this change are provided under the heading change in presentation on page 41.

(2)

 

Common Functions primarily represents the results of the partner markets and the net result of unallocated central Group costs and excludes income from intercompany royalty fees.

(3)

 

Reflects average exchange rates of £1:€1.14 and £1:US$1.60.

(4)

 

Organic growth includes India and Vodacom (except the results of Gateway) at the current level of ownership but excludes Australia following the merger with Hutchison 3G Australia on 9 June 2009. See acquisitions, disposals and subsequent events on page 21 for further details.

 

Revenue

 

Revenue increased by 9.3% with favourable exchange rate movements contributing 7.9 percentage points and the benefit of merger and acquisition activity contributing 4.4 percentage points to revenue growth. Service revenue fell by 2.6% on an organic basis.

 

In Europe service revenue decreased by 4.5% on an organic basis with continued growth in both data and fixed lined revenue offset by a decline in voice revenue resulting from continued market and regulatory pressure on prices. Service revenue decreased in the majority of markets but was partially offset by growth in Italy and the Netherlands.

 

In Africa and Central Europe service revenue declined by 3.2% on an organic basis as growth in Vodacom and the effect of a 6.8% increase in the average customer base for the region were more than offset by an adverse impact of around three percentage points from termination rate cuts as well declines in Romania and Turkey.

 

In Asia Pacific and Middle East service revenue grew by 12.3% on an organic basis driven by a 3.6 percentage point contribution from the revenue stream generated by the network sharing joint venture, Indus Towers, as well as the 48.2% organic rise in the average customer base and continued strong data revenue growth. Substantially all of the organic growth was generated in India.

 

 

6


 

Operating profit

 

EBITDA increased by 2.9% with favourable exchange rates contributing 8.2 percentage points and the impact of merger and acquisition activity contributing 2.6 percentage points to growth.

 

In Europe EBITDA decreased by 8.0% on an organic basis resulting from the decline in service revenue partially offset by cost savings, with declines in every market with the exception of Italy. The EBITDA margin declined by 1.0 percentage point, impacted by the dilutive effect of fixed line services as they continued to grow, with the fall partly mitigated by improvements in Italy and Portugal.

 

EBITDA in Africa and Central Europe decreased by 9.5% on an organic basis due to investment in the turnaround plan in Turkey and increased competition in Romania which more than offset the growth in Vodacom. The EBITDA margin fell in the majority of markets reflecting lower revenue with cost reductions partially mitigating this decline.

 

On an organic basis EBITDA in Asia Pacific and Middle East fell by 2.3%, with a corresponding reduction in the EBITDA margin which was driven by a decline in the margin in India and the lower margin Indian business making up a larger proportion of the region. Start-up costs in Qatar, which launched commercial services on 7 July 2009, also had an impact. EBITDA remained broadly stable across the region with the exception of Qatar.

 

Adjusted operating profit increased by 2.4% with favourable exchange rates contributing 11.5 percentage points and merger and acquisition activity contributing 2.4 percentage points to growth.

 

Operating profit increased by 49.1% as the prior year was impacted by an impairment loss in relation to Turkey.

 

The share of results in Verizon Wireless, the Group’s associate in the US, increased by 7.5% on an organic basis driven by the expanding customer base and growth in mobile broadband data products and applications, and messaging services.

 

Net financing costs

 

 

 

Six months ended 30 September

 

 

 

 

2009

 

 

2008

 

 

 

 

£m

 

 

£m

 

 

 

 

 

 

 

 

 

 

Investment income

 

634

 

 

501

 

 

Financing costs

 

(948

)

 

(1,244

)

 

Net financing costs

 

(314

)

 

(743

)

 

 

 

 

 

 

 

 

 

Analysed as:

 

 

 

 

 

 

 

Net financing costs before income from investments

 

(559

)

 

(436

)

 

Potential interest charges arising on settlement of outstanding tax issues

 

(108

)

 

(221

)

 

Income from investments

 

237

 

 

174

 

 

 

 

(430

)

 

(483

)

 

Foreign exchange(1)

 

(115

)

 

86

 

 

Equity put rights and similar arrangements(2)

 

231

 

 

(346

)

 

 

 

(314

)

 

(743

)

 

 

Notes:

(1)

 

Comprises foreign exchange differences reflected in the income statement in relation to certain intercompany balances and the foreign exchange differences on financial instruments received as consideration on the disposal of Vodafone Japan to SoftBank in April 2006.

(2)

 

Primarily represents foreign exchange movements and accretion expense. Further details of these options are provided on page 20.

 

Net financing costs before income from investments increased by 28.2% to £559 million primarily due to the impact of the 31% increase in average net debt being partially offset by changes in the currency mix of debt and significantly lower interest rates for debt denominated in US dollars and euros. At 30 September 2009 the provision for potential interest charges arising on settlement of outstanding tax issues was £1,749 million (31 March 2009: £1,635 million).

 

 

7


 

Taxation

 

 

 

Six months ended 30 September

 

 

 

 

2009

 

 

2008

 

 

 

 

£m

 

 

£m

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

952

 

 

1,145

 

 

Tax on adjustments to derive adjusted profit before tax

 

(28

)

 

129

 

 

 

 

 

 

 

 

 

 

Adjusted income tax expense

 

924

 

 

1,274

 

 

Share of associates’ tax

 

335

 

 

185

 

 

Adjusted income tax expense for purposes of calculating adjusted tax rate

 

1,259

 

 

1,459

 

 

 

 

 

 

 

 

 

 

Profit before tax

 

5,747

 

 

3,314

 

 

Adjustments to derive adjusted profit before tax(1)

 

(266

)

 

1,974

 

 

Adjusted profit before tax

 

5,481

 

 

5,288

 

 

 

 

 

 

 

 

 

 

Add: Share of associates’ tax and non-controlling interest

 

375

 

 

216

 

 

Adjusted profit before tax for the purpose of calculating adjusted effective tax rate

 

5,856

 

 

5,504

 

 

 

 

 

 

 

 

 

 

Adjusted effective tax rate

 

21.5%

 

 

26.5%

 

 

 

Note:

(1)

See earnings per share below.

 

The underlying adjusted effective tax rate for the year ended 31 March 2010 is expected to be in the mid 20s. This is in line with the underlying adjusted effective tax rate for the year ended 31 March 2009 of 24.5%. The rate for the six months ended 30 September 2009 is lower than the full year rate as a result of the resolution of long-standing tax issues in the first half of the year.

 

Earnings per share

 

Adjusted earnings per share increased by 16.0% to 8.72 pence for the six months ended 30 September 2009 with substantially all of the increase arising from movements in exchange rates. Basic earnings per share increased by 127.0% to 9.17 pence primarily due to the impairment loss in relation to Turkey which occurred in the prior period.

 

 

 

Six months ended 30 September

 

 

 

 

2009
£m

 

 

2008
£m

 

 

 

 

 

 

 

 

 

 

Profit attributable to equity shareholders

 

4,820

 

 

2,140

 

 

Adjustments:

 

 

 

 

 

 

 

Impairment loss

 

 

 

1,700

 

 

Other income and expense

 

(157

)

 

 

 

Non-operating income and expense

 

7

 

 

14

 

 

Investment income and financing costs(1)

 

(116

)

 

260

 

 

 

 

(266

)

 

1,974

 

 

 

 

 

 

 

 

 

 

Tax on above adjustments

 

28

 

 

(129

)

 

 

 

 

 

 

 

 

 

Adjusted profit attributable to equity shareholders

 

4,582

 

 

3,985

 

 

 

 

 

 

 

 

 

 

 

 

Million

 

 

Million

 

 

Weighted average number of shares outstanding – basic

 

52,556

 

 

53,006

 

 

Weighted average number of shares outstanding – diluted

 

52,760

 

 

53,205

 

 

 

Note:

(1)   See notes 1 and 2 in net financing costs on page 7.

 

 

8


 

Europe results(1)

 

 

Germany

 

Italy

 

Spain

 

UK

 

Other

 

Eliminations

 

Europe

 

% change

 

 

 

£m

 

£m

 

£m

 

£m

 

£m

 

£m

 

£m

 

£

 

Organic

 

Six months ended 30 September 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

1,964

 

1,876

 

1,994

 

1,398

 

1,767

 

(1

)

8,998

 

 

 

 

 

Messaging revenue

 

384

 

445

 

203

 

479

 

299

 

 

1,810

 

 

 

 

 

Data revenue

 

470

 

243

 

239

 

282

 

226

 

 

1,460

 

 

 

 

 

Fixed line revenue

 

923

 

255

 

157

 

15

 

69

 

 

1,419

 

 

 

 

 

Other service revenue

 

69

 

69

 

134

 

182

 

174

 

(155

)

473

 

 

 

 

 

Service revenue

 

3,810

 

2,888

 

2,727

 

2,356

 

2,535

 

(156

)

14,160

 

3.7

 

(4.5

)

Other revenue

 

132

 

100

 

221

 

157

 

142

 

(1

)

751

 

 

 

 

 

Revenue

 

3,942

 

2,988

 

2,948

 

2,513

 

2,677

 

(157

)

14,911

 

3.0

 

(5.1

)

Direct costs

 

(863

)

(684

)

(591

)

(786

)

(663

)

156

 

(3,431

)

 

 

 

 

Customer costs

 

(1,058

)

(520

)

(992

)

(859

)

(701

)

1

 

(4,129

)

 

 

 

 

Operating expenses

 

(464

)

(339

)

(293

)

(285

)

(366

)

 

(1,747

)

 

 

 

 

EBITDA

 

1,557

 

1,445

 

1,072

 

583

 

947

 

 

5,604

 

0.3

 

(8.0

)

Depreciation and amortisation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired intangibles

 

 

(10

)

(2

)

(6

)

 

 

(18

)

 

 

 

 

Purchased licences

 

(220

)

(50

)

(4

)

(166

)

(44

)

 

(484

)

 

 

 

 

Other

 

(457

)

(300

)

(321

)

(336

)

(346

)

 

(1,760

)

 

 

 

 

Share of result in associates

 

 

 

 

 

309

 

 

309

 

 

 

 

 

Adjusted operating profit

 

880

 

1,085

 

745

 

75

 

866

 

 

3,651

 

(1.5

)

(10.5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin

 

39.5%

 

48.4%

 

36.4%

 

23.2%

 

35.4%

 

 

 

37.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended 30 September 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

1,977

 

1,721

 

1,997

 

1,638

 

1,814

 

 

9,147

 

 

 

 

 

Messaging revenue

 

364

 

392

 

208

 

472

 

298

 

 

1,734

 

 

 

 

 

Data revenue

 

365

 

182

 

186

 

226

 

186

 

 

1,145

 

 

 

 

 

Fixed line revenue

 

828

 

190

 

121

 

15

 

45

 

 

1,199

 

 

 

 

 

Other service revenue

 

91

 

75

 

158

 

125

 

148

 

(168

)

429

 

 

 

 

 

Service revenue

 

3,625

 

2,560

 

2,670

 

2,476

 

2,491

 

(168

)

13,654

 

 

 

 

 

Other revenue

 

133

 

92

 

218

 

238

 

145

 

 

826

 

 

 

 

 

Revenue

 

3,758

 

2,652

 

2,888

 

2,714

 

2,636

 

(168

)

14,480

 

 

 

 

 

Direct costs

 

(806

)

(602

)

(617

)

(801

)

(633

)

168

 

(3,291

)

 

 

 

 

Customer costs

 

(957

)

(485

)

(941

)

(911

)

(666

)

 

(3,960

)

 

 

 

 

Operating expense

 

(425

)

(311

)

(266

)

(300

)

(342

)

 

(1,644

)

 

 

 

 

EBITDA

 

1,570

 

1,254

 

1,064

 

702

 

995

 

 

5,585

 

 

 

 

 

Depreciation and amortisation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired intangibles

 

 

(27

)

(4

)

(9

)

(5

)

 

(45

)

 

 

 

 

Purchased licences

 

(199

)

(45

)

(3

)

(166

)

(41

)

 

(454

)

 

 

 

 

Other

 

(450

)

(274

)

(287

)

(345

)

(320

)

 

(1,676

)

 

 

 

 

Share of result in associates

 

 

 

 

 

296

 

 

296

 

 

 

 

 

Adjusted operating profit

 

921

 

908

 

770

 

182

 

925

 

 

3,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin

 

41.8%

 

47.3%

 

36.8%

 

25.9%

 

37.7%

 

 

 

38.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

%

 

%

 

%

 

%

 

%

 

 

 

 

 

 

 

 

 

Change at constant exchange rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

(10.4

)

(1.2

)

(9.6

)

(14.7

)

(11.3

)

 

 

 

 

 

 

 

 

Messaging revenue

 

(4.7

)

2.7

 

(11.5

)

1.5

 

(8.8

)

 

 

 

 

 

 

 

 

Data revenue

 

16.9

 

21.1

 

16.7

 

24.8

 

10.3

 

 

 

 

 

 

 

 

 

Fixed line revenue

 

1.0

 

21.9

 

17.7

 

 

37.3

 

 

 

 

 

 

 

 

 

Other service revenue

 

(25.8

)

(16.3

)

(22.8

)

45.6

 

6.9

 

 

 

 

 

 

 

 

 

Service revenue

 

(4.8

)

2.3

 

(7.5

)

(4.8

)

(7.5

)

 

 

 

 

 

 

 

 

Other revenue

 

(8.1

)

(0.7

)

(8.0

)

(34.0

)

(13.5

)

 

 

 

 

 

 

 

 

Revenue

 

(4.9

)

2.2

 

(7.5

)

(7.4

)

(7.8

)

 

 

 

 

 

 

 

 

Direct costs

 

(1.0

)

3.0

 

(13.2

)

(1.9

)

(5.3

)

 

 

 

 

 

 

 

 

Customer costs

 

(1.0

)

(2.9

)

(4.5

)

(5.7

)

(4.3

)

 

 

 

 

 

 

 

 

Operating expenses

 

(2.0

)

(1.0

)

(0.2

)

(5.0

)

(3.0

)

 

 

 

 

 

 

 

 

EBITDA

 

(10.1

)

4.5

 

(8.7

)

(17.0

)

(13.4

)

 

 

 

 

 

 

 

 

Depreciation and amortisation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired intangibles

 

 

(66.7

)

(66.0

)

(33.3

)

(100.0

)

 

 

 

 

 

 

 

 

Purchased licences

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

(8.2

)

(0.7

)

1.9

 

(2.6

)

(2.8

)

 

 

 

 

 

 

 

 

Share of result in associates

 

 

 

 

 

(5.8

)

 

 

 

 

 

 

 

 

Adjusted operating profit

 

(13.2

)

8.3

 

(12.2

)

(58.8

)

(14.8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin movement (pps)

 

(2.3

)

1.1

 

(0.4

)

(2.7

)

(2.3

)

 

 

 

 

 

 

 

 

 

Note:

(1)

The Group revised how it determines and discloses segmental EBITDA and adjusted operating profit during the period. Further details of this change are provided under the heading change in presentation on page 41.

 

 

9


 

Revenue and EBITDA increased by 3.0% and 0.3% respectively. The reported results reflect the impact of merger and acquisition activity and foreign exchange movements together with an organic change. The table below summarises the effect of these factors on service revenue, revenue, EBITDA and adjusted operating profit.

 

 

 

Organic
change
%

 

M&A
activity
pps

 

Foreign
exchange
pps

 

Reported
change
%

 

 

 

 

 

 

 

 

 

 

 

Service revenue

 

 

 

 

 

 

 

 

 

Germany

 

(4.8

)

 

9.9

 

5.1

 

Italy

 

2.3

 

 

10.5

 

12.8

 

Spain

 

(7.5

)

 

9.6

 

2.1

 

UK

 

(5.7

)

0.9

 

 

(4.8

)

Other Europe

 

(7.5

)

 

9.3

 

1.8

 

Europe

 

(4.5

)

0.1

 

8.1

 

3.7

 

 

 

 

 

 

 

 

 

 

 

Revenue - Europe

 

(5.1

)

0.1

 

8.0

 

3.0

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

 

 

 

 

 

 

 

Germany

 

(10.0

)

(0.1

)

9.3

 

(0.8

)

Italy

 

4.5

 

 

10.7

 

15.2

 

Spain

 

(8.7

)

 

9.5

 

0.8

 

UK

 

(18.4

)

1.4

 

 

(17.0

)

Other Europe

 

(13.4

)

 

8.7

 

(4.7

)

Europe

 

(8.0

)

0.1

 

8.2

 

0.3

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating profit

 

 

 

 

 

 

 

 

 

Germany

 

(13.0

)

(0.2

)

8.7

 

(4.5

)

Italy

 

8.3

 

 

11.2

 

19.5

 

Spain

 

(12.2

)

 

9.0

 

(3.2

)

UK

 

(64.7

)

5.9

 

 

(58.8

)

Other Europe

 

(15.3

)

0.5

 

8.4

 

(6.4

)

Europe

 

(10.5

)

0.3

 

8.7

 

(1.5

)

 

 

 

 

 

 

 

 

 

 

 

Service revenue decreased by 4.5% on an organic basis with continued growth in both data and fixed lined revenue offset by a decline in voice revenue resulting from continued market and regulatory pressure on prices. Service revenue decreased in the majority of markets but was partially offset by growth in Italy and the Netherlands.

 

EBITDA decreased by 8.0% on an organic basis resulting from the decline in service revenue partially offset by cost savings, with declines in every market with the exception of Italy. The EBITDA margin declined by 1.0 percentage point, impacted by the decline in revenue partly mitigated by improvements in Italy and Portugal.

 

Germany

 

Organic service revenue declined by 4.8% with the quarterly growth rate in line with the previous quarter. Revenue was negatively impacted by mobile termination rate cuts effective from April 2009, lower roaming partly due to the impact of EU regulation and continued competitive pressure. These factors were partly offset by fixed line and the Superflat tariff portfolio as well as continued data revenue growth supported by growing penetration of mobile internet devices. The fixed broadband customer base increased to 3.3 million with an additional 241,000 wholesale customers.

 

EBITDA declined by 10.0% on an organic basis, with the reported margin falling by 2.3 percentage points, driven by lower revenue, higher access costs from the growing fixed line customer base and the one time benefit of a €20 million (£16 million) VAT refund in the six month period to 30 September 2008. These were partly offset by the impact of termination rate cuts and a reduction of operating expenses arising from the fixed and mobile integration synergies.

 

Italy

 

Service revenue increased by 2.3% at constant exchange rates. Growth in the current quarter slowed slightly in comparison to the previous quarter with positive momentum being maintained despite tougher economic conditions. Optimisation of spending by customers was partially offset by continued penetration of high value contracts and successful usage initiatives. The higher penetration of PC connectivity devices and success of mobile internet services resulted in good growth in data revenue. Fixed line revenue growth accelerated with a closing fixed broadband customer base of 1.1 million on a 100% basis.

 

 

10


 

EBITDA increased by 4.5% at constant exchange rates with the EBITDA margin also growing by 1.1 percentage points, primarily as a result of the increase in revenue, strict control on mobile acquisition and retention unit costs and stable operating expenses, despite continued investment in fixed line services.

 

Spain

 

Service revenue decreased by 7.5% at constant exchange rates with the second quarter improving by 1.2 percentage points when compared to the previous quarter driven by higher usage trends. Service revenue continued to be impacted by weak economic conditions and high unemployment levels also resulting in increased involuntary churn. Data and fixed line revenue continued to grow due to increased penetration of PC connectivity and mobile internet bundles as well as products such as Vodafone Station.

 

EBITDA fell by 8.7% at constant exchange rates, with a 0.4 percentage point reduction in the EBITDA margin. The impact of the decline in revenue, which included the benefit from legal settlements, was partly offset by termination rate cuts effective from April 2009 whilst acquisition and retention costs were maintained in spite of a rise in overall commercial activity.

 

UK

 

Service revenue fell by 5.7% on an organic basis, with the higher decline of 6.6% in the current quarter mainly due to mobile termination rate cuts effective from July 2009. Competitive pricing pressures and continued reduction in active prepaid customers were partially offset by increased data revenue driven by mobile internet bundles and higher wholesale revenue derived from MVNO agreements.

 

On an organic basis EBITDA fell by 18.4%, with the EBITDA margin decreasing by 2.7 percentage points, principally from the decline in revenue. Overall costs fell by 4.5% mainly due to mobile termination rate cuts and cost efficiency initiatives particularly in the technology area.

 

Other Europe

 

Service revenue was 7.5% lower at constant exchange rates with declines in all markets except for the Netherlands where service revenue increased by 1.5% at constant exchange rates supported by strong summer roaming. Service revenue in Greece declined by 15.3% at constant exchange rates resulting from mobile termination rate reductions in January 2009, tariff changes and market conditions.

 

EBITDA declined by 13.4% at constant exchange rates. EBITDA margin fell by 2.3 percentage points with declines in all markets except Portugal. Lower revenue was offset in part by lower acquisition and retention costs and mobile termination rate cuts. The positive EBITDA margin performance in Portugal was mainly driven by ongoing cost efficiency improvements.

 

Vivendi is expected to report its third quarter results, including those of SFR, on 12 November 2009.

 

 

11


 

Africa and Central Europe(1)

 

 

Vodacom

 

Other Africa and
Central Europe

 

Africa and
Central Europe

 

% change

 

 

£m

 

£m

 

£m

 

£

 

Organic(2)

 

 

Six months ended 30 September 2009

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

1,352

 

1,344

 

2,696

 

 

 

 

 

 

Messaging revenue

 

103

 

171

 

274

 

 

 

 

 

 

Data revenue

 

137

 

88

 

225

 

 

 

 

 

 

Fixed line revenue

 

83

 

43

 

126

 

 

 

 

 

 

Other service revenue

 

63

 

85

 

148

 

 

 

 

 

 

Service revenue

 

1,738

 

1,731

 

3,469

 

34.6

 

(3.2

)

 

Other revenue

 

210

 

60

 

270

 

 

 

 

 

 

Revenue

 

1,948

 

1,791

 

3,739

 

35.9

 

(3.5

)

 

Direct costs

 

(468

)

(574

)

(1,042

)

 

 

 

 

 

Customer costs

 

(473

)

(401

)

(874

)

 

 

 

 

 

Operating expenses

 

(356

)

(356

)

(712

)

 

 

 

 

 

EBITDA

 

651

 

460

 

1,111

 

19.2

 

(9.5

)

 

Depreciation and amortisation:

 

 

 

 

 

 

 

 

 

 

 

 

Acquired intangibles

 

(278

)

(104

)

(382

)

 

 

 

 

 

Purchased licences

 

 

(15

)

(15

)

 

 

 

 

 

Other

 

(176

)

(297

)

(473

)

 

 

 

 

 

Share of result in associates

 

(1

)

22

 

21

 

 

 

 

 

 

Adjusted operating profit

 

196

 

66

 

262

 

(35.3

)

(48.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin

 

33.4%

 

25.7%

 

29.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended 30 September 2008

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

623

 

1,498

 

2,121

 

 

 

 

 

 

Messaging revenue

 

44

 

185

 

229

 

 

 

 

 

 

Data revenue

 

45

 

70

 

115

 

 

 

 

 

 

Fixed line revenue

 

 

15

 

15

 

 

 

 

 

 

Other service revenue

 

16

 

82

 

98

 

 

 

 

 

 

Service revenue

 

728

 

1,850

 

2,578

 

 

 

 

 

 

Other revenue

 

101

 

72

 

173

 

 

 

 

 

 

Revenue

 

829

 

1,922

 

2,751

 

 

 

 

 

 

Direct costs

 

(190

)

(574

)

(764

)

 

 

 

 

 

Customer costs

 

(204

)

(416

)

(620

)

 

 

 

 

 

Operating expenses

 

(146

)

(289

)

(435

)

 

 

 

 

 

EBITDA

 

289

 

643

 

932

 

 

 

 

 

 

Depreciation and amortisation:

 

 

 

 

 

 

 

 

 

 

 

 

Acquired intangibles

 

(34

)

(130

)

(164

)

 

 

 

 

 

Purchased licences

 

 

(12

)

(12

)

 

 

 

 

 

Other

 

(80

)

(285

)

(365

)

 

 

 

 

 

Share of result in associates

 

 

14

 

14

 

 

 

 

 

 

Adjusted operating profit

 

175

 

230

 

405

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin

 

34.9%

 

33.5%

 

33.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

%

 

%

 

 

 

 

 

 

 

 

Change at constant exchange rates

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

87.0

 

(10.6

)

 

 

 

 

 

 

 

Messaging revenue

 

100+

 

(8.0

)

 

 

 

 

 

 

 

Data revenue

 

100+

 

24.3

 

 

 

 

 

 

 

 

Fixed line revenue

 

 

100+

 

 

 

 

 

 

 

 

Other service revenue

 

100+

 

5.2

 

 

 

 

 

 

 

 

Service revenue

 

100+

 

(6.8

)

 

 

 

 

 

 

 

Other revenue

 

78.2

 

(19.0

)

 

 

 

 

 

 

 

Revenue

 

100+

 

(7.2

)

 

 

 

 

 

 

 

Direct costs

 

100+

 

1.1

 

 

 

 

 

 

 

 

Customer costs

 

99.0

 

(4.1

)

 

 

 

 

 

 

 

Operating expenses

 

100+

 

22.8

 

 

 

 

 

 

 

 

EBITDA

 

94.1

 

(29.7

)

 

 

 

 

 

 

 

Depreciation and amortisation:

 

 

 

 

 

 

 

 

 

 

 

 

Acquired intangibles

 

100+

 

(21.8

)

 

 

 

 

 

 

 

Purchased licences

 

 

36.4

 

 

 

 

 

 

 

 

Other

 

91.3

 

3.1

 

 

 

 

 

 

 

 

Share of result in associates

 

 

74.1

 

 

 

 

 

 

 

 

Adjusted operating profit

 

(3.5

)

(71.9

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin movement (pps)

 

(1.4

)

(8.2

)

 

 

 

 

 

 

 

 

Notes:

(1)          The Group revised how it determines and discloses segmental EBITDA and adjusted operating profit during the period. Further details of this change are provided under the heading change in presentation on page 41.

(2)          Organic growth includes Vodacom (except the results of Gateway) at the current level of ownership. See acquisitions, disposals and subsequent events on page 21 for further details.

 

 

12


 

Revenue and EBITDA grew by 35.9% and 19.2% respectively. The reported results reflect the impact of merger and acquisition activity, primarily Vodacom, and foreign exchange movements together with an organic change. The table below summarises the effect of these factors on service revenue, revenue, EBITDA and adjusted operating profit.

 

 

 

Organic
change
%

 

M&A
activity
pps

 

Foreign
exchange
pps

 

Reported
change
%

 

 

 

 

 

 

 

 

 

 

 

Service revenue

 

 

 

 

 

 

 

 

 

Vodacom

 

4.2

 

100+

 

32.7

 

100+

 

Other Africa and Central Europe

 

(10.0

)

3.2

 

0.4

 

(6.4

)

Africa and Central Europe

 

(3.2

)

31.7

 

6.1

 

34.6

 

 

 

 

 

 

 

 

 

 

 

Revenue – Africa and Central Europe

 

(3.5

)

32.8

 

6.6

 

35.9

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

 

 

 

 

 

 

 

Vodacom

 

5.5

 

88.6

 

31.2

 

100+

 

Other Africa and Central Europe

 

(24.9

)

(4.8

)

1.2

 

(28.5

)

Africa and Central Europe

 

(9.5

)

21.7

 

7.0

 

19.2

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating profit

 

 

 

 

 

 

 

 

 

Vodacom

 

(46.6

)

43.1

 

15.5

 

12.0

 

Other Africa and Central Europe

 

(51.4

)

(20.5

)

0.6

 

(71.3

)

Africa and Central Europe

 

(48.3

)

8.2

 

4.8

 

(35.3

)

 

 

 

 

 

 

 

 

 

 

 

Service revenue declined by 3.2% on an organic basis as growth in Vodacom and the effect of a 6.8% increase in the average customer base of the region were more than offset by an adverse impact of around three percentage points from termination rate cuts as well as declines in Romania and Turkey.

 

On an organic basis EBITDA decreased by 9.5% due to investment in the turnaround plan in Turkey and increased competition in Romania which more than offset growth in Vodacom. The EBITDA margin fell in the majority of markets reflecting lower revenue with cost reductions partially mitigating this decline.

 

Vodacom

 

On 18 May 2009 Vodacom became a subsidiary. See acquisitions, disposals and subsequent events on page 21 for further details.

 

Service revenue grew by 4.2% on an organic basis although the rate of growth slowed in the current quarter as good growth in South Africa was offset by weakening trends in Vodacom’s non-South African operations. Revenue growth was driven by a 17.2% increase in the average customer base, although the rate of gross additions slowed following the introduction of customer registration in South Africa on 1 August 2009. Data revenue continued to increase strongly following increased penetration of mobile PC connectivity devices. Service revenue in the Democratic Republic of Congo and Tanzania continued to be affected by intense competition and a weaker economic climate. Gateway, the carrier services and business network solutions business, suffered from pricing pressures.

 

EBITDA grew by 5.5% on an organic basis, with the reported margin falling by 1.5 percentage points, impacted by lower revenue particularly in the Democratic Republic of Congo and in Tanzania, although both countries significantly reduced both capital and operating costs in response to the sharp reduction in revenue. These impacts were partially offset by the benefit from a lower regulatory fee in South Africa compared to the first half of the prior financial year and a focus on cost reductions, including the implementation of programmes that are expected to yield longer term benefits, for example transmission self-provisioning and sharing.

 

 

13


 

Other Africa and Central Europe

 

Service revenue declined by 10.0% on an organic basis, as the strong growth in data revenue was more than offset by the decline in voice revenue driven by weak economic conditions throughout Central Europe, the impact of termination rate cuts and a significant fall in revenue in Romania.

 

In Turkey service revenue declined by 7.9% at constant exchange rates, driven by an 11.8% reduction in the average customer base combined with a significant fall in prices as a result of competition and termination rate cuts. However the rate of decline improved in the current quarter driven by an increase in active customers, continued strong leadership in mobile number portability and growth in incoming revenue which continued to benefit from the introduction of cross-network tariffs in the previous quarter. 3G services were successfully launched in 81 cities in August 2009. In Romania service revenue declined by 19.5% at constant exchange rates impacted by weak economic conditions and a 15% year on year decline in local currency against the euro as tariffs are quoted in euros but household incomes are earned in local currency. Competitive price declines and the impact of a termination rate cut effective from January 2009 also had an impact.

 

EBITDA decreased by 24.9% on an organic basis as a result of the reduction in revenue and higher running costs resulting from the expansion of the network infrastructure in Turkey as well as publicity to support the launch of 3G services. EBITDA margins fell slightly across the majority of the region although cost reduction activities partially offset the revenue declines.

 

 

14


 

Asia Pacific and Middle East(1)

 

 

India

 

Other Asia
Pacific and
Middle East

 

 

Eliminations

 

Asia Pacific
and
Middle East

 

 

% change

 

 

£m

 

£m

 

 

£m

 

£m

 

 

£

 

Organic(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended 30 September 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

1,225

 

1,063

 

 

 

2,288

 

 

 

 

 

 

Messaging revenue

 

45

 

183

 

 

 

228

 

 

 

 

 

 

Data revenue

 

83

 

112

 

 

 

195

 

 

 

 

 

 

Fixed line revenue

 

1

 

37

 

 

 

38

 

 

 

 

 

 

Other service revenue

 

105

 

70

 

 

(1

)

174

 

 

 

 

 

 

Service revenue

 

1,459

 

1,465

 

 

(1

)

2,923

 

 

17.8

 

12.3

 

Other revenue

 

26

 

130

 

 

 

156

 

 

 

 

 

 

Revenue

 

1,485

 

1,595

 

 

(1

)

3,079

 

 

15.9

 

11.3

 

Direct costs

 

(427

)

(457

)

 

1

 

(883

)

 

 

 

 

 

Customer costs

 

(210

)

(423

)

 

 

(633

)

 

 

 

 

 

Operating expenses

 

(491

)

(240

)

 

 

(731

)

 

 

 

 

 

EBITDA

 

357

 

475

 

 

 

832

 

 

3.9

 

(2.3)

 

Depreciation and amortisation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired intangibles

 

(168

)

(24

)

 

 

(192

)

 

 

 

 

 

Purchased licences

 

 

(48

)

 

 

(48

)

 

 

 

 

 

Other

 

(232

)

(232

)

 

 

(464

)

 

 

 

 

 

Share of result in associates

 

 

4

 

 

 

4

 

 

 

 

 

 

Adjusted operating profit

 

(43

)

175

 

 

 

132

 

 

(48.4)

 

(42.0)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin

 

24.0%

 

29.8%

 

 

 

 

27.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended 30 September 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

997

 

1,003

 

 

 

2,000

 

 

 

 

 

 

Messaging revenue

 

38

 

170

 

 

 

208

 

 

 

 

 

 

Data revenue

 

67

 

64

 

 

 

131

 

 

 

 

 

 

Fixed line revenue

 

 

23

 

 

 

23

 

 

 

 

 

 

Other service revenue

 

37

 

83

 

 

(1

)

119

 

 

 

 

 

 

Service revenue

 

1,139

 

1,343

 

 

(1

)

2,481

 

 

 

 

 

 

Other revenue

 

39

 

137

 

 

 

176

 

 

 

 

 

 

Revenue

 

1,178

 

1,480

 

 

(1

)

2,657

 

 

 

 

 

 

Direct costs

 

(396

)

(415

)

 

1

 

(810

)

 

 

 

 

 

Customer costs

 

(184

)

(403

)

 

 

(587

)

 

 

 

 

 

Operating expenses

 

(263

)

(196

)

 

 

(459

)

 

 

 

 

 

EBITDA

 

335

 

466

 

 

 

801

 

 

 

 

 

 

Depreciation and amortisation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired intangibles

 

(178

)

(4

)

 

 

(182

)

 

 

 

 

 

Purchased licences

 

 

(24

)

 

 

(24

)

 

 

 

 

 

Other

 

(150

)

(191

)

 

 

(341

)

 

 

 

 

 

Share of result in associates

 

 

2

 

 

 

2

 

 

 

 

 

 

Adjusted operating profit

 

7

 

249

 

 

 

256

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin

 

28.4%

 

31.5%

 

 

 

 

30.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  %

 

%

 

 

 

 

 

 

 

 

 

 

 

Change at constant exchange rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

15.5

 

(3.5

)

 

 

 

 

 

 

 

 

 

 

Messaging revenue

 

13.7

 

1.0

 

 

 

 

 

 

 

 

 

 

 

Data revenue

 

17.7

 

59.5

 

 

 

 

 

 

 

 

 

 

 

Fixed line revenue

 

 

49.2

 

 

 

 

 

 

 

 

 

 

 

Other service revenue

 

100+

 

(23.6

)

 

 

 

 

 

 

 

 

 

 

Service revenue

 

20.5

 

(0.3

)

 

 

 

 

 

 

 

 

 

 

Other revenue

 

(38.0

)

(10.5

)

 

 

 

 

 

 

 

 

 

 

Revenue

 

18.5

 

(1.2

)

 

 

 

 

 

 

 

 

 

 

Direct costs

 

1.4

 

1.0

 

 

 

 

 

 

 

 

 

 

 

Customer costs

 

6.7

 

(1.5

)

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

76.1

 

11.9

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

0.2

 

(8.4

)

 

 

 

 

 

 

 

 

 

 

Depreciation and amortisation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired intangibles

 

(11.1

)

100+

 

 

 

 

 

 

 

 

 

 

 

Purchased licences

 

 

84.6

 

 

 

 

 

 

 

 

 

 

 

Other

 

45.9

 

12.1

 

 

 

 

 

 

 

 

 

 

 

Share of result in associates

 

 

55.0

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating profit

 

(100+

)

(38.2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin movement (pps)

 

(4.4

)

(2.3

)

 

 

 

 

 

 

 

 

 

 

 

Notes:

(1)          The Group revised how it determines and discloses segmental EBITDA and adjusted operating profit during the period. Further details of this change are provided under the heading change in presentation on page 41.

(2)          Organic growth includes India but excludes Australia following the merger with Hutchison 3G Australia on 9 June 2009. See acquisitions, disposals and subsequent events on page 21 for further details.

 

 

15


 

Revenue and EBITDA grew by 15.9% and 3.9%, respectively. The reported results reflect the impact of merger and acquisition activity and foreign exchange movements together with an organic change. The table below summarises the effect of these factors on service revenue, revenue, EBITDA and adjusted operating profit.

 

 

 

Organic
change
%

 

M&A
activity
pps

 

Foreign
exchange
pps

 

Reported
change
%

 

Service revenue

 

 

 

 

 

 

 

 

 

India

 

20.5

 

 

7.6

 

28.1

 

Other Asia Pacific and Middle East

 

1.6

 

(1.9

)

9.4

 

9.1

 

Asia Pacific and Middle East

 

12.3

 

(3.2

)

8.7

 

17.8

 

 

 

 

 

 

 

 

 

 

 

Revenue –
Asia Pacific and Middle East

 

11.3

 

(3.9

)

8.5

 

15.9

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

 

 

 

 

 

 

 

India

 

0.2

 

 

6.4

 

6.6

 

Other Asia Pacific and Middle East

 

(4.3

)

(4.1

)

10.3

 

1.9

 

Asia Pacific and Middle East

 

(2.3

)

(2.6

)

8.8

 

3.9

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating profit

 

 

 

 

 

 

 

 

 

India

 

(100+)

 

 

(78.0

)

(100+)

 

Other Asia Pacific and Middle East

 

(25.4

)

(12.8

)

8.5

 

(29.7

)

Asia Pacific and Middle East

 

(42.0

)

(12.8

)

6.4

 

(48.4

)

 

Service revenue grew by 12.3% on an organic basis driven by a 3.6 percentage point contribution from the revenue stream generated by the network sharing joint venture, Indus Towers, as well as the 48.2% organic rise in the average customer base and continued strong data revenue growth. Substantially all of the organic growth was generated in India.

 

On an organic basis EBITDA fell by 2.3%, with a corresponding reduction in the EBITDA margin which was driven by a decline in the margin in India and the lower margin Indian business making up a larger proportion of the region. Start-up costs in Qatar, which launched commercial services on 7 July 2009, also had an impact. EBITDA remained broadly stable across the region with the exception of Qatar.

 

India

 

Service revenue grew by 20.5% at constant exchange rates including a 6.4 percentage point benefit from Indus Towers. Growth was driven by a 54.8% increase in the average mobile customer base which was partially offset by a fall in the effective rate per minute and a decline in usage per customer as competition intensified and penetration gains shifted towards more rural circles. Growth was also impacted by a termination rate cut effective from April 2009.

 

EBITDA was stable at constant exchange rates, with a 4.4 percentage point decline in the EBITDA margin, primarily as a result of the expansion into rural areas and market price reductions offset by scale efficiencies.

 

Other Asia Pacific and Middle East

 

Service revenue grew by 1.6% on an organic basis as data revenue growth, driven by the higher penetration of mobile internet services, offset slowing voice revenue. In Egypt service revenue increased by 1.3% at constant exchange rates primarily due to the higher average customer base partially offset by the impact of termination rate reductions and pricing pressure. Qatar, after launching commercial services in July 2009, reached a customer base of 151,000 at 30 September 2009, 51% above its publicly stated target. A number of distribution channels in Qatar have been established including online, Vodafone retail stores and indirect partners.

 

EBITDA fell by 4.3% on an organic basis, with the reported margin falling by 1.7 percentage points, as a result of the cost of launching services in Qatar. In Egypt the EBITDA margin remained stable as a termination rate cut and higher usage on the Vodafone network led to lower interconnect costs, which were offset by a lower effective price per minute.

 

On 9 June 2009 Vodafone Australia completed its merger with Hutchison 3G Australia to form a 50:50 joint venture, Vodafone Hutchison Australia Pty Limited. Integration continues according to plan with significant progress being made in reorganising head office, customer services and property locations. Implementation plans on retail stores, networks and IT are advancing well and in line with expectations.

 

 

16


 

Verizon Wireless

 

 

 

 

 

 

 

 

 

 

 

 

  Six months ended 30 September

 

 

 

 

 

 

 

 

2009

 

2008

 

 

% change

 

 

 

£m

 

£m

 

£

 

Organic

 

 

 

 

 

 

 

 

 

 

 

Service revenue

 

7,872

 

5,273

 

49.3

 

7.5

 

Revenue

 

8,583

 

5,795

 

48.1

 

6.2

 

EBITDA

 

3,349

 

2,247

 

49.0

 

7.5

 

Interest

 

(182

)

(28

)

100+

 

 

 

Tax(1)

 

(149

)

(93

)

60.2

 

 

 

Non-controlling interest

 

(43

)

(31

)

38.7

 

 

 

Discontinued operations

 

48

 

 

 

 

 

Group’s share of result in Verizon Wireless

 

1,988

 

1,480

 

34.3

 

7.5

 

 

 

 

 

 

 

 

 

 

 

KPIs (100% basis)

 

 

 

 

 

 

 

 

 

Closing customers (‘000)

 

89,013

 

70,808

 

 

 

 

 

Average monthly ARPU (US$)

 

54.6

 

54.6

 

 

 

 

 

Churn

 

17.2%

 

14.7%

 

 

 

 

 

Messaging and data as a percentage of service revenue

 

27.9%

 

23.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note:

(1)          The Group’s share of the tax attributable to Verizon Wireless relates only to the corporate entities held by the Verizon Wireless partnership and certain state taxes which are levied on the partnership. The tax attributable to the Group’s share of the partnership’s pre-tax profit is included within the Group tax charge.

 

Verizon Wireless achieved 2.4 million net customer additions bringing the closing customer base to 89.0 million. Customer growth was achieved by continued concentration on the high value contract segment alongside market leading customer churn.

 

Service revenue growth of 7.5% on an organic basis was driven by the expanding customer base and robust non-voice ARPU, predominantly driven by growth in mobile broadband data products and applications, and messaging services.

 

The EBITDA margin of 39.0% remained strong despite the tougher competitive and economic environment. Efficiencies in operating expenses have been partly offset by a higher level of customer acquisition and retention costs, particularly for high end data devices including BlackBerry devices.

 

The integration of the Alltel business is going according to plan. Store rebranding is complete and network conversions are well underway and on track. Verizon Wireless has entered into agreements to sell the 105 overlapping properties arising from the acquisition of Alltel. AT&T will acquire the network assets and mobile licences of 79 markets, corresponding to 1.5 million customers for US$2.35 billion. Atlantic Tele-Network will acquire the network assets and mobile licences of the remaining 26 markets and 0.7 million customers for US$0.2 billion. Both transactions are expected to complete in early 2010.

 

 

17


 

LIQUIDITY AND CAPITAL RESOURCES

 

Cash flows and funding

 

 

Six months ended 30 September

 

 

 

 

 

 

2009
£m

 

2008
£m

 

%

 

 

 

 

 

 

 

 

 

Cash generated by operations

 

7,577

 

 

7,144

 

 

6.1

 

 

 

 

 

 

 

 

 

 

 

Cash capital expenditure(1)

 

(2,789

)

 

(2,902

)

 

 

 

Disposal of intangible assets and property, plant and equipment

 

18

 

 

61

 

 

 

 

Operating free cash flow

 

4,806

 

 

4,303

 

 

11.7

 

 

 

 

 

 

 

 

 

 

 

Taxation

 

(848

)

 

(1,079

)

 

 

 

Dividends received from associates and investments(2)

 

725

 

 

340

 

 

 

 

Dividends paid to non-controlling shareholders in subsidiaries

 

(3

)

 

(78

)

 

 

 

Net interest received and paid

 

(677

)

 

(385

)

 

 

 

Free cash flow

 

4,003

 

 

3,101

 

 

29.1

 

 

 

 

 

 

 

 

 

 

 

Acquisitions and disposals(3)

 

(2,628

)

 

(782

)

 

 

 

Licence and spectrum payments(4)

 

(975

)

 

(672

)

 

 

 

Amounts received from non-controlling shareholders(5)

 

613

 

 

624

 

 

 

 

Put options over non-controlling interests

 

(77

)

 

77

 

 

 

 

Equity dividends paid

 

(2,742

)

 

(2,671

)

 

 

 

Purchase of treasury shares

 

 

 

(963

)

 

 

 

Foreign exchange and other

 

2,028

 

 

(1,282

)

 

 

 

Net debt decrease/(increase)

 

222

 

 

(2,568

)

 

 

 

Opening net debt

 

(34,223

)

 

(25,147

)

 

 

 

Closing net debt

 

(34,001

)

 

(27,715

)

 

22.7

 

 

Notes:

(1)

 

Cash paid for purchase of intangible assets other than licence and spectrum payments, and property, plant and equipment.

(2)

 

Six months ended 30 September 2009 includes £584 million (2008: £226 million) from the Group’s interest in Verizon Wireless.

(3)

 

Six months ended 30 September 2009 includes net cash and cash equivalents paid of £1,781 million (2008: £779 million) and assumed debt of £847 million (2008: £3 million).

(4)

 

Six months ended 30 September 2009 includes £549 million (2008: £647 million) in relation to Qatar.

(5)

 

Six months ended 30 September 2009 includes £613 million (2008: £591 million) in relation to Qatar.

 

Free cash flow increased by 29.1% to £4,003 million due to increased cash generated by operations, dividends received and lower taxation payments partially offset by increased interest payments. The Group invested £975 million in licences and spectrum including £549 million in respect of the licence in Qatar and £223 million in respect of Turkey.

 

Cash generated by operations increased by £433 million to £7,577 million, with approximately 70% generated in the Europe region. Cash capital expenditure decreased by £113 million primarily due to lower expenditure in India partially offset by higher reported spend in South Africa following the change from proportionate to full consolidation during the period. Capital intensity in Europe and Common Functions was 8.8% .

 

Payments for taxation decreased by £231 million primarily due to the one-off benefit of additional tax deductions in Italy.

 

Dividends received from associates and investments increased by over 100% to £725 million in line with expectations following the revised agreement on distributions, discussed on page 42 of the Group’s annual report for the year ended 31 March 2009, and the receipt of the delayed US$250 million gross tax distribution from Verizon Wireless in relation to the 2009 financial year in April 2009.

 

Net interest payments increased 75.8% to £677 million primarily due to higher average net debt and unfavourable exchange rate movements impacting the translation of interest payments into sterling.

 

 

18


 

An analysis of net debt is as follows:

 

 

 

30 September
2009
£m

 

 

31 March
2009
£m

 

 

 

 

 

 

 

 

Cash and cash equivalents (as presented in the consolidated statement of financial position)

 

3,738

 

 

4,878

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

 

 

 

 

Bonds

 

(3,236

)

 

(5,025

)

Commercial paper(1)

 

(1,931

)

 

(2,659

)

Bank loans

 

(1,090

)

 

(893

)

Other short-term borrowings(2)

 

(911

)

 

(1,047

)

 

 

(7,168

)

 

(9,624

)

Long-term borrowings

 

 

 

 

 

 

Put options over non-controlling interests

 

(3,296

)

 

(3,606

)

Bonds, loans and other long-term borrowings(3)

 

(28,989

)

 

(28,143

)

 

 

(32,285

)

 

(31,749

)

 

 

 

 

 

 

 

Trade and other receivables(4)

 

2,220

 

 

2,707

 

Trade and other payables(4)

 

(506

)

 

(435

)

 

 

 

 

 

 

 

Net debt

 

(34,001

)

 

(34,223

)

 

Notes:

(1)

 

At 30 September 2009 US$416 million was drawn under the US commercial paper programme and amounts of €1,725 million, £72 million and US$33 million were drawn under the euro commercial paper programme.

(2)

 

At 30 September 2009 amount includes £642 million in relation to collateral support agreements.

(3)

 

At 30 September 2009 £6,573 million related to drawn facilities including £1,800 million for a JPY term loan and £2,280 million for loans within the Indian corporate structure.

(4)

 

Represents mark-to-market adjustments on derivative financial instruments which are included as a component of trade and other receivables and trade and other payables.

 

The impact of foreign exchange decreased net debt by £1,964 million principally due to approximately 42% of net debt being denominated in US dollars and as the sterling/US dollar exchange rate moved from £1:US$1.43 on 31 March 2009 to £1:US$1.60 on 30 September 2009.

 

The following table sets out the Group’s committed bank facilities:

 

 

 

 

 

30 September

 

 

 

 

 

2009

 

 

 

Maturity

 

£m

 

 

 

 

 

 

 

Undrawn facilities

 

 

 

 

 

$5.0 billion committed revolving credit facility provided by 28 banks(1)

 

June 2012

 

3,137

 

$4.1 billion committed revolving credit facility provided by 22 banks(1)

 

July 2011

 

2,569

 

Other committed credit facilities

 

Various

 

2,035

 

Total undrawn committed facilities

 

 

 

7,741

 

 

Note:

(1)          Both facilities support US and euro commercial paper programmes of up to $15 billion and £5 billion respectively.

 

The Group’s £1,931 million of commercial paper maturing within one year is covered 4.0 times by the £7.7 billion of undrawn revolving credit facilities. In addition the Group has historically generated significant amounts of free cash flow which can be allocated to pay dividends, repay maturing borrowings and pay for discretionary spending. The Group currently expects to continue generating significant amounts of free cash flow.

 

The Group has a €30 billion euro medium term note (‘EMTN’) programme and a US shelf programme which are used to meet medium to long-term funding requirements. At 30 September 2009 the total amounts in issue under these programmes split by currency were US$15.1 billion, £2.6 billion, €11.1 billion and other currencies £0.2 billion sterling equivalent.

 

 

19


 

At 30 September 2009 the Group had bonds outstanding with a nominal value of £22,425 million (31 March 2009: £23,754 million). In the six months ended 30 September 2009 the following bonds were issued:

 

 

 

 

 

 

 

 

 

Sterling

 

 

 

 

 

 

 

 

 

Amount

 

equivalent

 

US shelf programme or

 

Date bond issued

 

Maturity of bond

 

Currency

 

Million

 

Million

 

EMTN programme

 

 

 

 

 

 

 

 

 

 

 

 

 

01 April 2009

 

29 November 2012

 

EUR

 

250

 

229

 

EMTN programme

 

 

 

 

 

 

 

 

 

 

 

 

 

05 June 2009

 

5 December 2017

 

GBP

 

600

 

600

 

EMTN programme

 

 

 

 

 

 

 

 

 

 

 

 

 

10 June 2009

 

10 June 2014

 

USD

 

1,250

 

780

 

US shelf programme

 

 

 

 

 

 

 

 

 

 

 

 

 

10 June 2009

 

10 June 2019

 

USD

 

1,250

 

780

 

US shelf programme

 

 

Information on the maturities of the Group’s outstanding bonds is included in the table above and on pages 104 to 106 of the Group’s annual report for the year ended 31 March 2009.

 

Consistent with the development of its strategy the Group targets, on average, a low single A long-term credit rating. At 9 November 2009 the credit ratings were as follows:

 

 

 

Rating Date

 

Type of debt

 

Rating

 

Outlook

 

 

 

 

 

 

 

 

 

 

 

Standard & Poor’s

 

30 May 2006

 

Short-term

 

A-2

 

 

 

 

 

30 May 2006

 

Long-term

 

A-

 

Negative

 

 

 

 

 

 

 

 

 

 

 

Moody’s

 

30 May 2006

 

Short-term

 

P-2

 

 

 

 

 

16 May 2007

 

Long-term

 

Baa1

 

Stable

 

 

 

 

 

 

 

 

 

 

 

Fitch Ratings

 

30 May 2006

 

Short-term

 

F2

 

 

 

 

 

30 May 2006

 

Long-term

 

A-

 

Negative

 

 

The Group’s credit ratings enable it to have access to a wide range of debt finance including commercial paper, bonds and committed bank facilities. Credit ratings are not a recommendation to purchase, hold or sell securities, in as much as ratings do not comment on market price or suitability for a particular investor and are subject to revision or withdrawal at any time by the assigning rating organisation. Each rating should be evaluated independently.

 

Dividends

 

In November 2008 the Board adopted a progressive dividend policy where dividend growth reflects the underlying trading and cash performance of the Group.

 

Accordingly the directors have announced an interim dividend of 2.66 pence per share representing a 3.5% increase over last year’s interim dividend.

 

The ex-dividend date is 18 November 2009 for ordinary shareholders, the record date for the interim dividend is 20 November 2009 and the dividend is payable on 5 February 2010. Dividend payments on ordinary shares will be paid by direct credit into a nominated bank or building society account or, alternatively, into the Company’s dividend reinvestment plan. The Company will no longer pay dividends by cheque. Shareholders who have not already done so should provide appropriate bank account details to the Company. For further information please refer to www.vodafone.com/investor.

 

Option agreements and similar arrangements

 

The Group is party to a number of option agreements which could result in it being required to pay cash to maintain or increase its equity interests in its operations in India and the US. In relation to India, the Group granted put options exercisable between 8 May 2010 and 8 May 2011 to members of the Essar group of companies that, if exercised, would allow the Essar group to sell its 33% shareholding in Vodafone Essar to the Group for US$5 billion or to sell between US$1 billion and US$5 billion worth of Vodafone Essar shares to the Group at an independently appraised fair market value. Details of other agreements, including that in relation to the US, are available on page 44 of the Group’s annual report for the year ended 31 March 2009.

 

 

20


 

ACQUISITIONS, DISPOSALS AND SUBSEQUENT EVENTS

 

The Group invested a net £1,781 million(1) in acquisition and disposal activities, including the purchase and disposal of investments, in the six months ended 30 September 2009. An analysis of the significant transactions is shown below.

 

 

 

£m

 

 

 

 

 

Cash paid for the acquisition of additional 15.0% stake in Vodacom

 

1,572

 

Cash paid for other acquisitions

 

112

 

Net overdraft acquired

 

97

 

 

 

1,781

 

 

Note:

(1)

 

Amounts are shown net of cash and cash equivalents acquired or disposed.

 

On 20 April 2009 the Group acquired an additional 15.0% stake in Vodacom for cash consideration of ZAR20.6 billion (£1.6 billion). On 18 May 2009 Vodacom became a subsidiary following the listing of its shares on the Johannesburg Stock Exchange and concurrent termination of the shareholder agreement with Telkom SA Limited, the seller and previous joint venture partner. During the period from 20 April 2009 to 18 May 2009 the Group continued to account for Vodacom as a joint venture, proportionately consolidating 65% of the results of Vodacom. The average percentage of results consolidated during the six months ended 30 September 2009 was approximately 90%.

 

On 10 May 2009 Qatar completed a public offering of 40.0% of its authorised share capital, raising QAR 3.4 billion (£0.6 billion). The shares were listed on the Qatar exchange on 22 July 2009. Qatar launched full services on its network on 7 July 2009.

 

On 9 June 2009 Vodafone Australia completed its merger with Hutchison 3G Australia to form a 50:50 joint venture, Vodafone Hutchison Australia Pty Limited, which, in due course, will market its products and services solely under the Vodafone brand. To equalise the value difference between the respective businesses, Vodafone will receive a deferred payment of AUS$500 million. The results of the combined business have been proportionately consolidated in the Group’s results as a joint venture from the date of the merger.

 

RISK FACTORS

 

There are a number of risk factors and uncertainties that could have a significant effect on the Group’s financial performance including:

 

·

adverse macro economic conditions in the markets in which the Group operates;

 

 

·

the continued volatility of worldwide financial markets may make it more difficult for the Group to raise capital externally;

 

 

·

the level of competition in the markets in which it and its interests operate which may affect the Group’s revenue and market share;

 

 

·

decisions and changes in the Group’s regulatory environment;

 

 

·

the non achievement of expected benefits from cost reduction initiatives and business acquisitions;

 

 

·

expected benefits from investment in networks, licences and new technology may not be realised;

 

 

·

delays in the development of handsets and network compatibility and components may hinder the deployment of new technologies;

 

 

·

geographic expansion may increase the Group’s exposure to unpredictable economic, political and legal risks;

 

 

·

the Group’s strategic objectives may be impeded by the fact that it does not have a controlling interest in some of its ventures;

 

 

·

the Group’s business may be adversely affected by the non-supply of equipment and support services by a major supplier;

 

 

·

the Group may experience a decline in revenue or profitability notwithstanding its efforts to increase revenue from the introduction of new services; and

 

 

21


 

·

the Group’s business and its ability to retain customers and attract new customers may be impaired by actual or perceived health risks associated with the transmission of radio waves from mobile telephones, transmitters and associated equipment.

 

In addition to the above the Group is exposed to financial risks arising from external factors including the movements in foreign exchange rates, interest rates and other factors such as long-term economic growth rates, all of which may impact the Group’s financial performance. Non-financial risks that could have a significant effect on the Group’s financial performance for the six months ending 31 March 2010 and which are outside the Group’s control include the willingness and ability of third parties, including regulators, tax authorities and commercial partners, to engage and reach agreement on open matters.

 

Any of the above and/or changes in assumptions underlying the carrying value of certain Group assets could result in asset impairments.

 

Further information in relation to these risk factors and uncertainties can be found on pages 38 to 39 of the Group’s annual report for the year ended 31 March 2009 which can be found on www.vodafone.com/investor.

 

RESPONSIBILITY STATEMENT

 

We confirm that to the best of our knowledge:

 

·

the unaudited condensed consolidated financial statements have been prepared in accordance with IAS 34, “Interim Financial Reporting”; and

 

 

·

the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

 

Neither the Company nor the directors accept any liability to any person in relation to the half-year financial report except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A of the Financial Services and Markets Act 2000.

 

By Order of the Board

 

Stephen Scott

Secretary

10 November 2009

 

 

22


 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Consolidated income statement

 

 

 

 

 

Six months ended 30 September

 

 

 

 

Note

 

2009
£m

 

 

2008
£m

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

2

 

21,761

 

 

19,902

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

(14,115

)

 

(12,414

)

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

 

7,646

 

 

7,488

 

 

 

 

 

 

 

 

 

 

 

 

Selling and distribution expenses

 

 

 

(1,479

)

 

(1,349

)

 

Administrative expenses

 

 

 

(2,578

)

 

(2,160

)

 

Share of result in associates

 

 

 

2,322

 

 

1,792

 

 

Impairment loss

 

 

 

 

 

(1,700

)

 

Other income and expense

 

 

 

157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

2

 

6,068

 

 

4,071

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating income and expense

 

 

 

(7

)

 

(14

)

 

Investment income

 

 

 

634

 

 

501

 

 

Financing costs

 

 

 

(948

)

 

(1,244

)

 

 

 

 

 

 

 

 

 

 

 

Profit before taxation

 

 

 

5,747

 

 

3,314

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

3

 

(952

)

 

(1,145

)

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

 

 

4,795

 

 

2,169

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

– Equity shareholders

 

 

 

4,820

 

 

2,140

 

 

– Non-controlling interests

 

 

 

(25

)

 

29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,795

 

 

2,169

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

– Basic

 

4

 

9.17p

 

 

4.04p

 

 

– Diluted

 

4

 

9.14p

 

 

4.02p

 

 

 

Consolidated statement of comprehensive income

 

 

 

Six months ended 30 September

 

 

 

 

2009
£m

 

 

2008
£m

 

 

 

 

 

 

 

 

 

 

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

 

501

 

 

(1,743

)

 

Foreign exchange translation differences, net of tax

 

(2,193

)

 

1,605

 

 

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

 

47

 

 

(49

)

 

Revaluation gain

 

963

 

 

97

 

 

Foreign exchange gains transferred to the income statement

 

(84

)

 

(3

)

 

Fair value losses transferred to the income statement

 

3

 

 

 

 

Other, net of tax

 

25

 

 

 

 

 

 

 

 

 

 

 

 

Net loss recognised directly in equity

 

(738

)

 

(93

)

 

 

 

 

 

 

 

 

 

Profit for the period

 

4,795

 

 

2,169

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

4,057

 

 

2,076

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

– Equity shareholders

 

4,113

 

 

1,989

 

 

– Non-controlling interests

 

(56

)

 

87

 

 

 

 

 

 

 

 

 

 

 

 

4,057

 

 

2,076

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

23


 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Consolidated statement of financial position

 

 

 

30 September

 

 

31 March

 

 

 

2009

 

 

2009

 

 

 

£m

 

 

£m

 

Non-current assets

 

 

 

 

 

 

Goodwill

 

 

54,479

 

 

 

53,958

 

Other intangible assets

 

 

23,185

 

 

 

20,980

 

Property, plant and equipment

 

 

19,709

 

 

 

19,250

 

Investments in associates

 

 

33,215

 

 

 

34,715

 

Other investments

 

 

7,450

 

 

 

7,060

 

Deferred tax assets

 

 

934

 

 

 

630

 

Post employment benefits

 

 

25

 

 

 

8

 

Trade and other receivables

 

 

3,185

 

 

 

3,069

 

 

 

 

142,182

 

 

 

139,670

 

Current assets

 

 

 

 

 

 

 

 

Inventory

 

 

534

 

 

 

412

 

Taxation recoverable

 

 

124

 

 

 

77

 

Trade and other receivables

 

 

8,246

 

 

 

7,662

 

Cash and cash equivalents

 

 

3,738

 

 

 

4,878

 

 

 

 

12,642

 

 

 

13,029

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

154,824

 

 

 

152,699

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Called up share capital

 

 

4,153

 

 

 

4,153

 

Additional paid-in capital

 

 

153,424

 

 

 

153,348

 

Treasury shares

 

 

(7,867

)

 

 

(8,036

)

Accumulated other comprehensive income

 

 

19,810

 

 

 

20,517

 

Retained losses

 

 

(81,924

)

 

 

(83,820

)

Total equity shareholders’ funds

 

 

87,596

 

 

 

86,162

 

 

 

 

 

 

 

 

 

 

Non-controlling interests

 

 

3,288

 

 

 

1,787

 

Put options over non-controlling interests

 

 

(3,122

)

 

 

(3,172

)

Total non-controlling interests

 

 

166

 

 

 

(1,385

)

 

 

 

 

 

 

 

 

 

Total equity

 

 

87,762

 

 

 

84,777

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

Long-term borrowings

 

 

32,285

 

 

 

31,749

 

Deferred tax liabilities

 

 

7,647

 

 

 

6,642

 

Post employment benefits

 

 

171

 

 

 

240

 

Provisions

 

 

514

 

 

 

533

 

Trade and other payables

 

 

721

 

 

 

811

 

 

 

 

41,338

 

 

 

39,975

 

Current liabilities

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

7,168

 

 

 

9,624

 

Current taxation liabilities

 

 

4,592

 

 

 

4,552

 

Provisions

 

 

381

 

 

 

373

 

Trade and other payables

 

 

13,583

 

 

 

13,398

 

 

 

 

25,724

 

 

 

27,947

 

 

 

 

 

 

 

 

 

 

Total equity and liabilities

 

 

154,824

 

 

 

152,699

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

24


 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Consolidated statement of changes in equity

 

 

 

Share
capital

 

Additional
paid-in
capital
(1)

 

Treasury
shares

 

Other(2)

 

Equity
shareholders’
funds

 

Non-
controlling
interests

 

Total

 

 

 

£m

 

£m

 

£m

 

£m

 

£m

 

£m

 

£m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 April 2008

 

4,182

 

153,139

 

(7,856

)

(71,422

)

78,043

 

(1,572

)

76,471

 

Issue or reissue of shares

 

3

 

2

 

41

 

 

46

 

 

46

 

Purchase of own shares

 

 

 

(1,000

)

 

(1,000

)

 

(1,000

)

Redemption or cancellation of shares

 

(33

)

48

 

722

 

(722

)

15

 

 

15

 

Share-based payment

 

 

63

 

 

 

63

 

 

63

 

Acquisition of subsidiary

 

 

 

 

 

 

539

 

539

 

Comprehensive income

 

 

 

 

1,989

 

1,989

 

87

 

2,076

 

Dividends

 

 

 

 

(2,667

)

(2,667

)

(78

)

(2,745

)

Other

 

 

 

 

(117

)

(117

)

(3

)

(120

)

30 September 2008

 

4,152

 

153,252

 

(8,093

)

(72,939

)

76,372

 

(1,027

)

75,345

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 April 2009

 

4,153

 

153,348

 

(8,036

)

(63,303

)

86,162

 

(1,385

)

84,777

 

Issue or reissue of shares

 

 

 

132

 

 

132

 

 

132

 

Share-based payment

 

 

76

 

 

 

76

 

 

76

 

Acquisition of subsidiary

 

 

 

 

 

 

1,610

 

1,610

 

Comprehensive income

 

 

 

 

4,113

 

4,113

 

(56

)

4,057

 

Dividends

 

 

 

 

(2,731

)

(2,731

)

(3

)

(2,734

)

Other

 

 

 

37

 

(193

)

(156

)

 

(156

)

30 September 2009

 

4,153

 

153,424

 

(7,867

)

(62,114

)

87,596

 

166

 

87,762

 

 

Notes:

(1)          Includes share premium account and the capital redemption reserve.

(2)          Includes retained losses and accumulated other comprehensive income.

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

25


 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Consolidated statement of cash flows

 

 

Six months ended 30 September

 

 

 

Note

 

2009
£m

 

 

2008
£m

 

 

 

 

 

 

 

 

 

 

 

Net cash flow from operating activities

6

 

6,729

 

 

6,065

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchase of interests in subsidiaries and joint ventures, net of cash acquired

7

 

(1,650

)

 

(909

)

 

Purchase of intangible assets

 

 

(1,430

)

 

(1,099

)

 

Purchase of property, plant and equipment

 

 

(2,334

)

 

(2,475

)

 

Purchase of investments

 

 

(138

)

 

(102

)

 

Disposal of interests in subsidiaries, net of cash disposed

 

 

 

 

4

 

 

Disposal of interests in associates

 

 

 

 

25

 

 

Disposal of property, plant and equipment

 

 

18

 

 

61

 

 

Disposal of investments

 

 

7

 

 

203

 

 

Dividends received from associates

 

 

584

 

 

232

 

 

Dividends received from investments

 

 

141

 

 

108

 

 

Interest received

 

 

118

 

 

166

 

 

Net cash flow from investing activities

 

 

(4,684

)

 

(3,786

)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Issue of ordinary share capital and reissue of treasury shares

 

 

31

 

 

18

 

 

Net movement in short-term borrowings

 

 

(95

)

 

339

 

 

Proceeds from issue of long-term borrowings

 

 

2,607

 

 

2,454

 

 

Repayment of borrowings

 

 

(2,754

)

 

(2,032

)

 

Purchase of treasury shares

 

 

 

 

(963

)

 

B share capital redemption

 

 

 

 

(15

)

 

Equity dividends paid

 

 

(2,742

)

 

(2,671

)

 

Dividends paid to non-controlling shareholders in subsidiaries

 

 

(3

)

 

(78

)

 

Amounts received from non-controlling shareholders

 

 

613

 

 

624

 

 

Interest paid

 

 

(795

)

 

(551

)

 

Net cash flow from financing activities

 

 

(3,138

)

 

(2,875

)

 

 

 

 

 

 

 

 

 

 

Net cash flow

 

 

(1,093

)

 

(596

)

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of the period

 

 

4,846

 

 

1,652

 

 

Exchange (losses)/gains on cash and cash equivalents

 

 

(216

)

 

15

 

 

Cash and cash equivalents at end of the period

 

 

3,537

 

 

1,071

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

26


 

Notes to the condensed consolidated financial statements

For the six months ended 30 September 2009

 

1                 Basis of preparation

 

The unaudited condensed consolidated financial statements for the six months ended 30 September 2009:

 

·

were prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” (‘IAS 34’) and thereby International Financial Reporting Standards (‘IFRS’), both as issued by the International Accounting Standards Board (‘IASB’) and as adopted by the European Union (‘EU’);

 

 

·

were prepared on the going concern basis as set out within the directors’ statement of responsibility section of the annual report for the year ended 31 March 2009;

 

 

·

are presented on a condensed basis as permitted by IAS 34 and therefore do not include all disclosures that would otherwise be required in a full set of financial statements and should be read in conjunction with the 2009 annual report;

 

 

·

apply the same accounting policies, presentation and methods of calculation as those followed in the preparation of the Group’s annual financial statements for the year ended 31 March 2009 except as stated below;

 

 

·

include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the periods presented; and

 

 

·

do not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006 and were approved by the Board of directors on 10 November 2009.

 

The information relating to the year ended 31 March 2009 is an extract from the published annual report for that year, which has been delivered to the Registrar of Companies, and on which the auditors’ report was unqualified and did not contain statements under section 237(2) or 237(3) of the UK Companies Act 1985.

 

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the end of the reporting period, and the reported amounts of revenue and expenses during the reporting period. Actual results could vary from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

 

IFRIC 13 – “Customer loyalty programmes”

 

The Group adopted IFRIC 13 on 1 April 2009. The interpretation addresses how companies that grant their customers loyalty award credits when buying goods and services should account for their obligations to provide free or discounted goods and services. It requires that consideration received be allocated between the award credits and the other components of the sale. The adoption of this interpretation did not result in a material impact on the Group’s results or financial position.

 

IAS 23 (Revised) – “Borrowing costs”

 

The Group adopted IAS 23 (Revised) on 1 April 2009. This standard requires the capitalisation of borrowing costs to the extent they are directly attributable to the acquisition, production or construction of a qualifying asset. The option of immediate recognition of those borrowing costs as an expense has been removed. The adoption of this standard did not result in a material impact on the Group’s results or financial position.

 

IAS 1 (Revised) – “Presentation of financial statements”

 

The Group adopted IAS 1 (Revised) on 1 April 2009. A separate condensed consolidated statement of changes in equity is now included as part of the primary financial statements. The Group changed the naming of the primary financial statements and adopted certain new terminology set out in the revised standard.

 

 

27


 

Notes to the condensed consolidated financial statements

For the six months ended 30 September 2009

 

2            Segment analysis

 

The Group has a single group of related services and products being the supply of communications services and products. During the six months ended 30 September 2009 the Group revised how it determines and discloses segmental EBITDA in order to ensure that the Group’s disclosures better reflect the contribution of each segment to the Group’s underlying operating performance and remain consistent with internal reporting to management. The tables below present segment information on the revised basis.

 

Six months ended
30 September 2009

 

Segment
revenue
£m

 

Common
Functions
£m

 

Intra-
region
revenue
£m

 

Regional
revenue
£m

 

Inter-
region
revenue
£m

 

Group
revenue
£m

 

EBITDA
£m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Germany

 

3,942

 

 

 

(26

)

3,916

 

(7

)

3,909

 

1,557

 

Italy

 

2,988

 

 

 

(24

)

2,964

 

(3

)

2,961

 

1,445

 

Spain

 

2,948

 

 

 

(52

)

2,896

 

(2

)

2,894

 

1,072

 

UK

 

2,513

 

 

 

(23

)

2,490

 

(6

)

2,484

 

583

 

Other Europe

 

2,677

 

 

 

(32

)

2,645

 

(3

)

2,642

 

947

 

Europe

 

15,068

 

 

 

(157

)

14,911

 

(21

)

14,890

 

5,604

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vodacom

 

1,948

 

 

 

 

1,948

 

(3

)

1,945

 

651

 

Other Africa and Central Europe

 

1,791

 

 

 

 

1,791

 

(33

)

1,758

 

460

 

Africa and Central Europe

 

3,739

 

 

 

 

3,739

 

(36

)

3,703

 

1,111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

India

 

1,485

 

 

 

(1

)

1,484

 

(8

)

1,476

 

357

 

Other Asia Pacific and Middle East

 

1,595

 

 

 

 

1,595

 

(14

)

1,581

 

475

 

Asia Pacific and Middle East

 

3,080

 

 

 

(1

)

3,079

 

(22

)

3,057

 

832

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Functions

 

 

127

 

 

127

 

(16

)

111

 

(92

)

Group(1)

 

21,887

 

127

 

(158

)

21,856

 

(95

)

21,761

 

7,455

 

Verizon Wireless(1)

 

8,583

 

 

 

 

 

 

 

 

 

 

 

3,349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended
30 September 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Germany

 

3,758

 

 

 

(25

)

3,733

 

(8

)

3,725

 

1,570

 

Italy

 

2,652

 

 

 

(22

)

2,630

 

(3

)

2,627

 

1,254

 

Spain

 

2,888

 

 

 

(58

)

2,830

 

(2

)

2,828

 

1,064

 

UK

 

2,714

 

 

 

(24

)

2,690

 

(6

)

2,684

 

702

 

Other Europe

 

2,636

 

 

 

(39

)

2,597

 

(3

)

2,594

 

995

 

Europe

 

14,648

 

 

 

(168

)

14,480

 

(22

)

14,458

 

5,585

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vodacom

 

829

 

 

 

 

829

 

 

829

 

289

 

Other Africa and Central Europe

 

1,922

 

 

 

 

1,922

 

(28

)

1,894

 

643

 

Africa and Central Europe

 

2,751

 

 

 

 

2,751

 

(28

)

2,723

 

932

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

India

 

1,178

 

 

 

(1

)

1,177

 

(9

)

1,168

 

335

 

Other Asia Pacific and Middle East

 

1,480

 

 

 

 

1,480

 

(14

)

1,466

 

466

 

Asia Pacific and Middle East

 

2,658

 

 

 

(1

)

2,657

 

(23

)

2,634

 

801

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Functions

 

 

93

 

 

93

 

(6

)

87

 

(75

)

Group(1)

 

20,057

 

93

 

(169

)

19,981

 

(79

)

19,902

 

7,243

 

Verizon Wireless(1)

 

5,795

 

 

 

 

 

 

 

 

 

 

 

2,247

 

 

Note:

(1)          Values shown for Verizon Wireless are not included in the calculation of Group revenue or EBITDA as Verizon Wireless is an associate.

 

A reconciliation of EBITDA to operating profit is shown below. For a reconciliation of operating profit to profit before taxation see the consolidated income statement on page 23.

 

 

 

Six months ended 30 September

 

 

 

 

2009
£m

 

 

2008
£m

 

 

 

 

 

 

 

 

 

EBITDA

 

 

7,455

 

 

7,243

 

Depreciation and amortisation including loss on disposal of fixed assets

 

 

(3,866

)

 

(3,264

)

Share of results in associates

 

 

2,322

 

 

1,792

 

Impairment loss

 

 

 

 

(1,700

)

Other income and expense

 

 

157

 

 

 

Operating profit

 

 

6,068

 

 

4,071

 

 

 

28


 

Notes to the condensed consolidated financial statements

For the six months ended 30 September 2009

 

3            Taxation

 

 

 

Six months ended 30 September

 

 

 

 

2009

 

 

2008

 

 

 

 

£m

 

 

£m

 

 

 

 

 

 

 

 

 

United Kingdom corporation tax (income)/expense:

 

 

 

 

 

 

 

Current year

 

 

 

 

23

 

Adjustments in respect of prior years

 

 

(17

)

 

 

 

 

 

 

 

 

 

 

Overseas current tax expense/(income):

 

 

 

 

 

 

 

Current year

 

 

1,365

 

 

1,211

 

Adjustments in respect of prior years

 

 

(346

)

 

27

 

Total current tax expense

 

 

1,002

 

 

1,261

 

 

 

 

 

 

 

 

 

Deferred tax on origination and reversal of temporary differences:

 

 

 

 

 

 

 

United Kingdom deferred tax

 

 

(114

)

 

(81

)

Overseas deferred tax

 

 

64

 

 

(35

)

 

 

 

 

 

 

 

 

Total deferred tax income

 

 

(50

)

 

(116

)

Total income tax expense

 

 

952

 

 

1,145

 

 

The following provides an update to factors affecting the Group’s tax charge in future years which were disclosed on page 87 of the Group’s 2009 annual report:

 

The Court of Appeal overturned the High Court’s decision in relation to the Vodafone 2 enquiry. Vodafone 2 has subsequently petitioned the Supreme Court for permission to appeal.

 

The first tier Spanish court has ruled against Vodafone Holdings Europe SL (‘VHESL’) in its dispute with the Spanish tax authority over the deductibility of interest expenses in the accounting periods ended 31 March 2003 and 31 March 2004. VHESL has until 28 December 2009 to appeal the decision.

 

4            Earnings per share

 

 

 

Six months ended 30 September

 

 

 

 

2009

 

 

2008

 

 

 

 

Million

 

 

Million

 

 

 

 

 

 

 

 

 

Weighted average number of shares for basic earnings per share

 

 

52,556

 

 

53,006

 

Effect of dilutive potential shares: restricted shares and share options

 

 

204

 

 

199

 

Weighted average number of shares for diluted earnings per share

 

 

52,760

 

 

53,205

 

 

 

 

 

 

 

 

 

 

 

 

£m

 

 

£m

 

Earnings for basic and diluted earnings per share

 

 

4,820

 

 

2,140

 

 

5            Equity dividends on ordinary shares

 

 

 

Six months ended 30 September

 

 

 

 

2009

 

 

2008

 

 

 

 

£m

 

 

£m

 

 

 

 

 

 

 

 

 

Declared during the period:

 

 

 

 

 

 

 

Final dividend for the year ended 31 March 2009: 5.20 pence per share (2008: 5.02 pence per share)

 

 

2,731

 

 

2,667

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Interim dividend for the year ending 31 March 2010: 2.66 pence per share (2009: 2.57 pence per share)

 

 

1,399

 

 

1,348

 

 

 

29


 

Notes to the condensed consolidated financial statements

For the six months ended 30 September 2009

 

6            Reconciliation to net cash flow from operating activities

 

 

 

Six months ended 30 September

 

 

 

 

2009

 

 

2008

 

 

 

 

£m

 

 

£m

 

 

 

 

 

 

 

 

 

Profit for the period

 

 

4,795

 

 

2,169

 

Adjustments for:

 

 

 

 

 

 

 

Share-based payment

 

 

71

 

 

65

 

Depreciation and amortisation

 

 

3,826

 

 

3,239

 

Loss on disposal of property, plant and equipment

 

 

40

 

 

25

 

Share of result in associates

 

 

(2,322

)

 

(1,792

)

Impairment loss

 

 

 

 

1,700

 

Other income and expense

 

 

(157

)

 

 

Non-operating income and expense

 

 

7

 

 

14

 

Investment income

 

 

(634

)

 

(501

)

Financing costs

 

 

948

 

 

1,244

 

Income tax expense

 

 

952

 

 

1,145

 

Increase in inventory

 

 

(100

)

 

(49

)

Increase in trade and other receivables

 

 

(471

)

 

(49

)

Increase/(decrease) in trade and other payables

 

 

622

 

 

(66

)

Cash generated by operations

 

 

7,577

 

 

7,144

 

 

 

 

 

 

 

 

 

Tax paid

 

 

(848

)

 

(1,079

)

Net cash flow from operating activities

 

 

6,729

 

 

6,065

 

 

7            Acquisitions and disposals

 

The aggregate cash consideration in respect of purchases of interests in subsidiaries and joint ventures, net of cash acquired, is as follows:

 

 

 

Six months ended
30 September 2009
£m

 

Cash consideration paid:

 

 

 

Vodacom Group (Pty) Limited (‘Vodacom’) (15%)

 

 

1,572

 

Other acquisitions completed during the period

 

 

7

 

Acquisitions completed in previous periods

 

 

(24

)

 

 

 

1,555

 

 

 

 

 

 

Net overdraft acquired

 

 

95

 

 

 

 

1,650

 

 

Goodwill acquired of £1,159 million was wholly in relation to Vodacom. In addition, amendments to provisional purchase price allocations on acquisitions completed in previous periods resulted in a reduction in goodwill of £32 million.

 

Vodacom

 

On 20 April 2009 the Group acquired an additional 15% stake in Vodacom for cash consideration of ZAR20.6 billion (£1.6 billion). On 18 May 2009 Vodacom became a subsidiary following the listing of its shares on the Johannesburg Stock Exchange and concurrent termination of the shareholder agreement with Telkom SA Limited, the seller and previous joint venture partner. During the period from 20 April 2009 to 18 May 2009 the Group continued to account for Vodacom as a joint venture, proportionately consolidating 65% of the results of Vodacom.

 

The goodwill is attributable to the expected profitability of the acquired business and the synergies expected to arise after the Group’s acquisition of Vodacom. The results of the acquired entity have been consolidated in the income statement from 18 May 2009. From 18 May 2009 the acquired entity contributed £59 million to the profit attributable to equity shareholders of the Group.

 

 

30


 

Notes to the condensed consolidated financial statements

For the six months ended 30 September 2009

 

The initial purchase price allocation has been determined provisionally pending the completion of the final valuation of the fair value of net assets acquired.

 

 

 

Book value
£m

 

 

Fair value
adjustments
£m

 

 

Fair value
£m

 

Net assets acquired:

 

 

 

 

 

 

 

 

 

Identifiable intangible assets(1)

 

271

 

 

3,212

 

 

3,483

 

Property, plant and equipment

 

1,603

 

 

 

 

1,603

 

Other investments

 

30

 

 

 

 

30

 

Inventory

 

56

 

 

 

 

56

 

Trade and other receivables

 

880

 

 

 

 

880

 

Cash and cash equivalents

 

58

 

 

 

 

58

 

Current and deferred taxation liabilities

 

(140

)

 

(909

)

 

(1,049

)

Short and long-term borrowings

 

(1,312

)

 

 

 

(1,312

)

Trade and other payables

 

(897

)

 

8

 

 

(889

)

 

 

 

 

 

 

 

 

 

 

Net identifiable assets acquired

 

549

 

 

2,311

 

 

2,860

 

Goodwill

 

 

 

 

 

 

 

1,159

 

 

 

 

 

 

 

 

 

 

 

Total assets acquired

 

 

 

 

 

 

 

4,019

 

 

 

 

 

 

 

 

 

 

 

Non-controlling interests

 

 

 

 

 

 

 

(1,050

)

Revaluation gain

 

 

 

 

 

 

 

(963

)

Value of investment held prior to acquisition

 

 

 

 

 

 

 

(429

)

 

 

 

 

 

 

 

 

 

 

Total consideration (including £5 million of directly attributable costs)

 

 

 

 

 

 

 

1,577

 

 

Note:

(1)

Identifiable intangible assets of £3,483 million consist of licences and spectrum fees of £1,567 million and other intangible assets of £1,916 million.

 

The following unaudited pro forma summary presents the Group as if the additional stake in Vodacom had been acquired on 1 April 2009. The pro forma amounts include the results of Vodacom, amortisation of the acquired intangible assets recognised on acquisition and interest expense on the increase in net debt as a result of the acquisition. The pro forma amounts do not include any possible synergies from the acquisition of an additional stake in Vodacom. The pro forma information is provided for comparative purposes only and does not necessarily reflect the actual results that would have occurred, nor is it necessarily indicative of future results of operations of the combined companies.

 

 

 

Six months ended
30 September 2009
£m

 

 

 

 

 

Revenue

 

21,913

 

Profit for the period

 

4,733

 

Profit attributable to equity shareholders

 

 

4,778

 

 

 

 

 

 

 

Pence per share

 

Basic earnings per share

 

9.09p

 

Diluted earnings per share

 

 

9.06p

 

 

Australia

 

On 9 June 2009 Vodafone Australia completed its merger with Hutchison 3G Australia to form a 50:50 joint venture. Vodafone Hutchison Australia (Pty) Limited, which, in due course, will market its products and services solely under the Vodafone brand. To equalise the value difference between the respective businesses, Vodafone will receive a deferred payment of AUS$500 million. The results of the combined business have been proportionately consolidated in the Group’s results as a joint venture from the date of the merger.

 

 

31


 

Notes to the condensed consolidated financial statements

For the six months ended 30 September 2009

 

8  Related party transactions

 

The Group’s related parties are its joint ventures, associates, pension schemes, directors and Executive Committee members.

 

Related party transactions with the Group’s joint ventures and associates primarily comprise fees for the use of products and services including network airtime and access charges, and cash pooling arrangements.

 

No related party transactions have been entered into during the period which might reasonably affect any decisions made by the users of these condensed consolidated financial statements, except as disclosed below. Transactions between the Company and its joint ventures are not material to the extent that they have not been eliminated through proportionate consolidation or disclosed below.

 

 

 

Six months ended 30 September

 

 

 

2009
£m

 

2008
£m

 

 

 

 

 

 

 

Sales of goods and services to associates

 

140

 

102

 

Purchases of goods and services from associates

 

85

 

115

 

Purchases of goods and services from joint ventures

 

92

 

8

 

Net interest income receivable from joint ventures(1)

 

 

19

 

 

8

 

 

 

 

 

 

 

 

 

30 September
2009

£m

 

31 March
2009
£m

 

 

 

 

 

 

 

Trade balances owed:

 

 

 

 

 

by associates

 

75

 

50

 

by joint ventures

 

57

 

10

 

to joint ventures

 

43

 

33

 

Other balances owed by joint ventures(1)

 

 

782

 

 

311

 

 

Note:

(1)

Amounts arise primarily through Vodafone Italy being part of a Group cash pooling arrangement and loans to Vodafone Hutchison Australia and represent amounts not eliminated on consolidation. Interest is paid in line with market rates.

 

In the six months ended 30 September 2009 the Group made contributions to defined benefit pension schemes of £44 million (six months ended 30 September 2008: £40 million). Dividends received from associates are disclosed in the consolidated statement of cash flows. Compensation paid to the Company’s Board of directors and Executive Committee members will be disclosed in the Group’s annual report for the financial year ending 31 March 2010.

 

9  Commitments and contingent liabilities

 

There have been no material changes to the Group’s commitments or contingent liabilities during the period.

 

10 Other matters

 

Seasonality or cyclicality of interim operations

 

The Group’s financial results have not, historically, been subject to significant seasonal trends.

 

Events after the end of the reporting period

 

Developments in the India tax case

 

On 30 October 2009 Vodafone International Holdings B.V. (‘VIHBV’) received a notice from the Indian tax authorities requiring VIHBV to show cause as to why it believes that the Indian tax authorities do not have competent jurisdiction to proceed against VIHBV for the default of non-deduction of withholding tax from consideration paid to Hutchison Telecommunications International Limited group. VIHBV is currently preparing a response. VIHBV continues to believe that neither it nor any other member of the Group is liable for such withholding tax and intends to defend this position vigorously.

 

 

32


 

INDEPENDENT REVIEW REPORT BY DELOITTE LLP TO VODAFONE GROUP PLC

 

Introduction

 

We have been engaged by the Company to review the condensed consolidated financial statements in the half-year financial report for the six months ended 30 September 2009 which comprise the consolidated income statement, the consolidated statement of financial position, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows and related notes 1 to 10. We have read the other information contained in the half-year financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated financial statements.

 

This report is made solely to the Company in accordance with the International Standard on Review Engagements (UK and Ireland) 2410 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

 

Directors’ responsibilities

 

The half-year financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-year financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom’s Financial Services Authority.

 

The annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. As disclosed in note 1, the condensed consolidated financial statements included in this half-year financial report have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting” (‘IAS 34’) as adopted by the European Union and as issued by the International Accounting Standards Board.

 

Our responsibility

 

Our responsibility is to express to the Company a conclusion on the condensed consolidated financial statements in the half-year financial report based on our review.

 

Scope of review

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusions

 

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 as adopted by the European Union and as issued by the International Accounting Standards Board, and the Disclosure and Transparency Rules of the United Kingdom’s Financial Services Authority.

 

Deloitte LLP

 

Chartered Accountants and Statutory Auditors

 

London, United Kingdom

 

10 November 2009

 

 

33


 

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.

 

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

 

 

 

 

 

Location in this results

 

 

 

 

 

 

 

 

 

announcement of reconciliation

 

 

 

 

 

Non-GAAP measure

 

Equivalent GAAP measure

 

and further information

EBITDA

 

Operating profit

 

Group results on page 6

 

 

 

 

 

Adjusted operating profit

 

Operating profit

 

Group results on page 6

 

 

 

 

 

Adjusted profit before tax

 

Profit before tax

 

Taxation on page 8

 

 

 

 

 

Adjusted effective tax rate

 

Income tax expense as a percentage of profit before taxation

 

Taxation on page 8

 

 

 

 

 

Adjusted profit attributable to equity shareholders

 

Profit attributable to equity shareholders

 

Earnings per share on page 8

 

 

 

 

 

Operating free cash flow

 

Cash generated by operations

 

Cash flows and funding beginning on page 18

 

 

 

 

 

Free cash flow

 

Cash generated by operations

 

Cash flows and funding beginning on page 18

 

 

34


 

ADDITIONAL INFORMATION

 

Regional analysis for the six months ended 30 September

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

EBITDA(1)

 

 

 

Adjusted operating profit/(loss)(1)

 

 

Capitalised fixed asset additions

 

 

 

Operating free cash flow(1)

 

 

 

 

2009

 

 

 

 

2008

 

 

 

 

2009

 

 

 

 

2008

 

 

 

 

2009

 

 

 

 

2008

 

 

 

 

2009

 

 

 

 

2008

 

 

 

 

2009

 

 

 

 

2008

 

 

 

 

£m

 

 

 

 

£m

 

 

 

 

£m

 

 

 

 

£m

 

 

 

 

£m

 

 

 

 

£m

 

 

 

 

£m

 

 

 

 

£m

 

 

 

 

£m

 

 

 

 

£m

 

EUROPE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Germany

 

 

3,942

 

 

 

 

3,758

 

 

 

 

1,557

 

 

 

 

1,570

 

 

 

 

880

 

 

 

 

921

 

 

 

 

331

 

 

 

 

289

 

 

 

 

1,429

 

 

 

 

1,261

 

Italy

 

 

2,988

 

 

 

 

2,652

 

 

 

 

1,445

 

 

 

 

1,254

 

 

 

 

1,085

 

 

 

 

908

 

 

 

 

299

 

 

 

 

235

 

 

 

 

1,103

 

 

 

 

913

 

Spain

 

 

2,948

 

 

 

 

2,888

 

 

 

 

1,072

 

 

 

 

1,064

 

 

 

 

745

 

 

 

 

770

 

 

 

 

171

 

 

 

 

226

 

 

 

 

656

 

 

 

 

684

 

UK

 

 

2,513

 

 

 

 

2,714

 

 

 

 

583

 

 

 

 

702

 

 

 

 

75

 

 

 

 

182

 

 

 

 

141

 

 

 

 

164

 

 

 

 

400

 

 

 

 

463

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Europe

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greece

 

 

601

 

 

 

 

642

 

 

 

 

172

 

 

 

 

229

 

 

 

 

66

 

 

 

 

126

 

 

 

 

92

 

 

 

 

77

 

 

 

 

86

 

 

 

 

121

 

Netherlands

 

 

883

 

 

 

 

790

 

 

 

 

283

 

 

 

 

260

 

 

 

 

180

 

 

 

 

163

 

 

 

 

55

 

 

 

 

47

 

 

 

 

296

 

 

 

 

207

 

Portugal

 

 

612

 

 

 

 

605

 

 

 

 

253

 

 

 

 

248

 

 

 

 

166

 

 

 

 

168

 

 

 

 

64

 

 

 

 

57

 

 

 

 

181

 

 

 

 

129

 

Other(2)

 

 

581

 

 

 

 

599

 

 

 

 

239

 

 

 

 

258

 

 

 

 

145

 

 

 

 

174

 

 

 

 

30

 

 

 

 

31

 

 

 

 

181

 

 

 

 

216

 

Associates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

309

 

 

 

 

294

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,677

 

 

 

 

2,636

 

 

 

 

947

 

 

 

 

995

 

 

 

 

866

 

 

 

 

925

 

 

 

 

241

 

 

 

 

212

 

 

 

 

744

 

 

 

 

673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intra-region eliminations

 

 

(157

)

 

 

 

(168

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,911

 

 

 

 

14,480

 

 

 

 

5,604

 

 

 

 

5,585

 

 

 

 

3,651

 

 

 

 

3,706

 

 

 

 

1,183

 

 

 

 

1,126

 

 

 

 

4,332

 

 

 

 

3,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AFRICA AND CENTRAL EUROPE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vodacom

 

 

1,948

 

 

 

 

829

 

 

 

 

651

 

 

 

 

289

 

 

 

 

196

 

 

 

 

175

 

 

 

 

209

 

 

 

 

100

 

 

 

 

392

 

 

 

 

164

 

Other Africa and Central Europe

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Romania

 

 

426

 

 

 

 

488

 

 

 

 

196

 

 

 

 

228

 

 

 

 

68

 

 

 

 

104

 

 

 

 

37

 

 

 

 

75

 

 

 

 

99

 

 

 

 

154

 

Turkey

 

 

557

 

 

 

 

629

 

 

 

 

20

 

 

 

 

127

 

 

 

 

(71

)

 

 

 

5

 

 

 

 

149

 

 

 

 

127

 

 

 

 

(91

)

 

 

 

76

 

Other

 

 

808

 

 

 

 

805

 

 

 

 

244

 

 

 

 

288

 

 

 

 

69

 

 

 

 

121

 

 

 

 

125

 

 

 

 

82

 

 

 

 

105

 

 

 

 

156

 

 

 

 

3,739

 

 

 

 

2,751

 

 

 

 

1,111

 

 

 

 

932

 

 

 

 

262

 

 

 

 

405

 

 

 

 

520

 

 

 

 

384

 

 

 

 

505

 

 

 

 

550

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASIA PACIFIC AND MIDDLE EAST

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

India

 

 

1,485

 

 

 

 

1,178

 

 

 

 

357

 

 

 

 

335

 

 

 

 

(43

)

 

 

 

7

 

 

 

 

529

 

 

 

 

592

 

 

 

 

(31

)

 

 

 

(219

)

Other Asia Pacific and Middle East

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Egypt

 

 

677

 

 

 

 

577

 

 

 

 

335

 

 

 

 

286

 

 

 

 

212

 

 

 

 

194

 

 

 

 

85

 

 

 

 

76

 

 

 

 

293

 

 

 

 

191

 

Other

 

 

918

 

 

 

 

902

 

 

 

 

140

 

 

 

 

180

 

 

 

 

(37

)

 

 

 

55

 

 

 

 

151

 

 

 

 

107

 

 

 

 

28

 

 

 

 

11

 

Intra-region eliminations

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,079

 

 

 

 

2,657

 

 

 

 

832

 

 

 

 

801

 

 

 

 

132

 

 

 

 

256

 

 

 

 

765

 

 

 

 

775

 

 

 

 

290

 

 

 

 

(17

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Verizon Wireless

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,988

 

 

 

 

1,480

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Functions

 

 

127

 

 

 

 

93

 

 

 

 

(92

)

 

 

 

(75

)

 

 

 

(122

)

 

 

 

(76

)

 

 

 

134

 

 

 

 

95

 

 

 

 

(321

)

 

 

 

(224

)

Inter-region eliminations

 

 

(95

)

 

 

 

(79

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group

 

 

21,761

 

 

 

 

19,902

 

 

 

 

7,455

 

 

 

 

7,243

 

 

 

 

5,911

 

 

 

 

5,771

 

 

 

 

2,602

 

 

 

 

2,380

 

 

 

 

4,806

 

 

 

 

4,303

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes:

(1)     The Group revised how it determines and discloses segmental EBITDA, adjusted operating profit and operating free cash flow during the period. Further details of this change are provided under the heading change in presentation on page 41.

(2)     Includes elimination of £8 million (2008: £6 million) of intercompany revenue between operating companies within the Other Europe segment.

See page 34 for use of non-GAAP financial information and page 41 for definition of terms.

 

 

35


 

ADDITIONAL INFORMATION

 

Quarterly information

 

Group

 

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

 

30 June
2009

 

30 September
2009

 

 

30 June
2008

 

30 September
2008

 

 

30 June
% change

 

 

30 September
% change

 

 

 

£m

 

£m

 

 

£m

 

£m

 

 

£

 

Organic

 

 

£

 

Organic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

6,946

 

7,034

 

 

6,587

 

6,680

 

 

5.5

 

(5.6

)

 

5.3

 

(7.1

)

Messaging revenue

 

1,144

 

1,169

 

 

1,067

 

1,104

 

 

7.2

 

(1.5

)

 

5.9

 

(3.4

)

Data revenue

 

888

 

992

 

 

664

 

727

 

 

33.7

 

19.4

 

 

36.5

 

20.1

 

Fixed line revenue

 

788

 

795

 

 

613

 

624

 

 

28.5

 

6.6

 

 

27.4

 

8.9

 

Other service revenue

 

325

 

392

 

 

271

 

303

 

 

19.9

 

7.9

 

 

29.4

 

12.0

 

Service revenue

 

10,091

 

10,382

 

 

9,202

 

9,438

 

 

9.7

 

(2.1

)

 

10.0

 

(3.0

)

 

Europe

 

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

 

30 June
2009

 

30 September
2009

 

 

30 June
 2008

 

30 September
2008

 

 

30 June
% change

 

 

30 September
% change

 

 

 

£m

 

£m

 

 

£m

 

£m

 

 

£

 

Organic

 

 

£

 

Organic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

4,538

 

4,460

 

 

4,560

 

4,587

 

 

(0.5

)

(8.8

)

 

(2.8

)

(9.9

)

Messaging revenue

 

903

 

907

 

 

855

 

879

 

 

5.6

 

(2.1

)

 

3.2

 

(3.8

)

Data revenue

 

708

 

752

 

 

552

 

593

 

 

28.3

 

17.8

 

 

26.8

 

17.9

 

Fixed line revenue

 

707

 

712

 

 

598

 

601

 

 

18.2

 

5.7

 

 

18.5

 

9.0

 

Other service revenue

 

208

 

265

 

 

203

 

226

 

 

2.5

 

(4.9

)

 

17.3

 

3.4

 

Service revenue

 

7,064

 

7,096

 

 

6,768

 

6,886

 

 

4.4

 

(4.4

)

 

3.0

 

(4.6

)

 

Germany

 

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

 

30 June
 2009

 

30 September
2009

 

 

30 June
 2008

 

30 September
2008

 

 

30 June
% change

 

 

30 September
% change

 

 

 

£m

 

£m

 

 

£m

 

£m

 

 

£

 

Organic

 

 

£

 

Organic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

984

 

980

 

 

981

 

996

 

 

 

 

 

 

 

 

 

 

 

Messaging revenue

 

193

 

191

 

 

181

 

183

 

 

 

 

 

 

 

 

 

 

 

Data revenue

 

227

 

243

 

 

176

 

189

 

 

 

 

 

 

 

 

 

 

 

Fixed line revenue

 

462

 

461

 

 

412

 

416

 

 

 

 

 

 

 

 

 

 

 

Other service revenue

 

37

 

32

 

 

47

 

44

 

 

 

 

 

 

 

 

 

 

 

Service revenue

 

1,903

 

1,907

 

 

1,797

 

1,828

 

 

5.9

 

(4.8

)

 

4.3

 

(4.9

)

 

Italy

 

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

 

30 June
 2009

 

30 September
2009

 

 

30 June
 2008

 

30 September
2008

 

 

30 June
% change

 

 

30 September
% change

 

 

 

£m

 

£m

 

 

£m

 

£m

 

 

£

 

Organic

 

 

£

 

Organic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

952

 

924

 

 

862

 

859

 

 

 

 

 

 

 

 

 

 

 

Messaging revenue

 

222

 

223

 

 

189

 

203

 

 

 

 

 

 

 

 

 

 

 

Data revenue

 

115

 

128

 

 

88

 

94

 

 

 

 

 

 

 

 

 

 

 

Fixed line revenue

 

128

 

127

 

 

97

 

93

 

 

 

 

 

 

 

 

 

 

 

Other service revenue

 

34

 

35

 

 

32

 

43

 

 

 

 

 

 

 

 

 

 

 

Service revenue

 

1,451

 

1,437

 

 

1,268

 

1,292

 

 

14.4

 

3.1

 

 

11.2

 

1.4

 

 

Spain

 

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

 

30 June
 2009

 

30 September
2009

 

 

30 June
 2008

 

30 September
2008

 

 

30 June
% change

 

 

30 September
% change

 

 

 

£m

 

£m

 

 

£m

 

£m

 

 

£

 

Organic

 

 

£

 

Organic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

983

 

1,011

 

 

990

 

1,007

 

 

 

 

 

 

 

 

 

 

 

Messaging revenue

 

101

 

102

 

 

101

 

107

 

 

 

 

 

 

 

 

 

 

 

Data revenue

 

117

 

122

 

 

91

 

95

 

 

 

 

 

 

 

 

 

 

 

Fixed line revenue

 

77

 

80

 

 

60

 

61

 

 

 

 

 

 

 

 

 

 

 

Other service revenue

 

62

 

72

 

 

72

 

86

 

 

 

 

 

 

 

 

 

 

 

Service revenue

 

1,340

 

1,387

 

 

1,314

 

1,356

 

 

2.0

 

(8.1

)

 

2.3

 

(6.9

)

 

 

36


 

ADDITIONAL INFORMATION

 

 

UK

 

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

 

30 June
 2009

 

30 September
2009

 

 

30 June
 2008

 

30 September
2008

 

 

30 June
% change

 

 

30 September
% change

 

 

 

£m

 

£m

 

 

£m

 

£m

 

 

£

 

Organic

 

 

£

 

Organic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

726

 

672

 

 

822

 

816

 

 

 

 

 

 

 

 

 

 

 

Messaging revenue

 

236

 

243

 

 

236

 

236

 

 

 

 

 

 

 

 

 

 

 

Data revenue

 

137

 

145

 

 

110

 

116

 

 

 

 

 

 

 

 

 

 

 

Fixed line revenue

 

7

 

8

 

 

8

 

7

 

 

 

 

 

 

 

 

 

 

 

Other service revenue

 

80

 

102

 

 

58

 

67

 

 

 

 

 

 

 

 

 

 

 

Service revenue

 

1,186

 

1,170

 

 

1,234

 

1,242

 

 

(3.9

)

(4.7

)

 

(5.8

)

(6.6

)

 

Africa and Central Europe

 

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

 

30 June
 2009

 

30 September
2009

 

 

30 June
 2008

 

30 September
2008

 

 

30 June
% change

 

 

30 September
% change

 

 

 

£m

 

£m

 

 

£m

 

£m

 

 

£

 

Organic

 

 

£

 

Organic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

1,232

 

1,464

 

 

1,035

 

1,086

 

 

19.0

 

(4.6

)

 

34.8

 

(6.6

)

Messaging revenue

 

127

 

147

 

 

110

 

119

 

 

15.5

 

(0.2

)

 

23.5

 

(5.8

)

Data revenue

 

90

 

135

 

 

54

 

61

 

 

66.7

 

24.0

 

 

100+

 

32.8

 

Fixed line revenue

 

64

 

62

 

 

4

 

11

 

 

100+

 

5.5

 

 

100+

 

(93.1

)

Other service revenue

 

60

 

88

 

 

42

 

56

 

 

42.9

 

4.0

 

 

57.1

 

20.0

 

Service revenue

 

1,573

 

1,896

 

 

1,245

 

1,333

 

 

26.3

 

(2.6

)

 

42.2

 

(3.9

)

 

Vodacom

 

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

 

30 June
 2009

 

30 September
2009

 

 

30 June
 2008

 

30 September
2008

 

 

30 June
% change

 

 

30 September
% change

 

 

 

£m

 

£m

 

 

£m

 

£m

 

 

£

 

Organic

 

 

£

 

Organic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

570

 

782

 

 

299

 

324

 

 

 

 

 

 

 

 

 

 

 

Messaging revenue

 

42

 

61

 

 

21

 

23

 

 

 

 

 

 

 

 

 

 

 

Data revenue

 

50

 

87

 

 

21

 

24

 

 

 

 

 

 

 

 

 

 

 

Fixed line revenue

 

41

 

42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other service revenue

 

22

 

41

 

 

7

 

9

 

 

 

 

 

 

 

 

 

 

 

Service revenue

 

725

 

1,013

 

 

348

 

380

 

 

100+

 

5.2

 

 

100+

 

3.2

 

 

Asia Pacific and Middle East

 

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

 

30 June
 2009

 

30 September
2009

 

 

30 June
 2008

 

30 September
2008

 

 

30 June
% change

 

 

30 September
% change

 

 

 

£m

 

£m

 

 

£m

 

£m

 

 

£

 

Organic

 

 

£

 

Organic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

1,177

 

1,111

 

 

992

 

1,008

 

 

18.6

 

10.7

 

 

10.2

 

7.1

 

Messaging revenue

 

113

 

115

 

 

102

 

106

 

 

10.8

 

5.9

 

 

8.5

 

9.0

 

Data revenue

 

90

 

105

 

 

58

 

73

 

 

55.2

 

30.8

 

 

43.8

 

24.4

 

Fixed line revenue

 

18

 

20

 

 

11

 

12

 

 

63.6

 

58.6

 

 

66.7

 

46.8

 

Other service revenue

 

93

 

81

 

 

61

 

58

 

 

52.5

 

57.1

 

 

39.7

 

41.2

 

Service revenue

 

1,491

 

1,432

 

 

1,224

 

1,257

 

 

21.8

 

14.3

 

 

13.9

 

10.3

 

 

India

 

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

Quarter ended

 

 

 

30 June
 2009

 

30 September
2009

 

 

30 June
 2008

 

30 September
2008

 

 

30 June
% change

 

 

30 September
% change

 

 

 

£m

 

£m

 

 

£m

 

£m

 

 

£

 

Organic

 

 

£

 

Organic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice revenue

 

632

 

593

 

 

495

 

502

 

 

 

 

 

 

 

 

 

 

 

Messaging revenue

 

22

 

23

 

 

18

 

20

 

 

 

 

 

 

 

 

 

 

 

Data revenue

 

43

 

40

 

 

33

 

34

 

 

 

 

 

 

 

 

 

 

 

Fixed line revenue

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other service revenue

 

58

 

47

 

 

19

 

18

 

 

 

 

 

 

 

 

 

 

 

Service revenue

 

755

 

704

 

 

565

 

574

 

 

33.6

 

23.0

 

 

22.6

 

18.0

 

 

 

37


 

ADDITIONAL INFORMATION

 

Reconciliation of adjusted earnings

 

 

 

Reported
£m

 

Adjustments
£m

 

Adjusted
£m

 

Six months ended 30 September 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

6,068

 

(157

)(1)

5,911

 

 

 

 

 

 

 

 

 

Non-operating income and expense

 

(7

)

7

 

 

Investment income and financing costs

 

(314

)

(116

)(2)

(430

)

Profit before taxation

 

5,747

 

(266

)

5,481

 

 

 

 

 

 

 

 

 

Income tax expense

 

(952

)

28

(3)

(924

)

Profit for the period

 

4,795

 

(238

)

4,557

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

– Equity shareholders

 

4,820

 

(238

)

4,582

 

– Non-controlling interests

 

(25

)

 

(25

)

 

 

 

 

 

 

 

 

Basic earnings per share

 

9.17

p

 

 

8.72

p

 

Notes:

(1)

Consists of the gain on disposal arising from the merger of Vodafone Australia with Hutchison 3G Australia.

(2)

Includes a £115 million adjustment in relation to foreign exchange on certain intercompany balances and on financial instruments received as consideration in the disposal of Vodafone Japan to SoftBank which completed in April 2006 offset by a £231 million adjustment in relation to equity put rights and similar arrangements (see note 2 in net financing costs on page 7).

(3)

Represents a £28 million adjustment relating to tax on the adjustments used to derive adjusted profit before tax.

 

 

 

Reported
£m

 

Adjustments
£m

 

Adjusted
£m

 

Six months ended 30 September 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

4,071

 

1,700

(1)

5,771

 

 

 

 

 

 

 

 

 

Non-operating income and expense

 

(14

)

14

(2)

 

Investment income and financing costs

 

(743

)

260

(3)

(483

)

Profit before taxation

 

3,314

 

1,974

 

5,288

 

 

 

 

 

 

 

 

 

Income tax expense

 

(1,145

)

(129

)(4)

(1,274

)

Profit for the period

 

2,169

 

1,845

 

4,014

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

– Equity shareholders

 

2,140

 

1,845

 

3,985

 

– Non-controlling interests

 

29

 

 

29

 

 

 

 

 

 

 

 

 

Basic earnings per share from continuing operations

 

4.04

p

 

 

7.52

p

 

Notes:

(1)

Adjustment relates to the £1,700 million impairment loss for Vodafone Turkey.

(2)

Consists of a £14 million adjustment in relation to disposal of available-for-sale investments.

(3)

Includes a £346 million adjustment in relation to equity put rights and similar arrangements (see note 2 of net financing costs on page 7), offset by a £86 million adjustment in relation to foreign exchange on certain intercompany balances and on financial instruments received as consideration in the disposal of Vodafone Japan to SoftBank, which completed in April 2006.

(4)

Represents a £129 million adjustment relating to tax on the adjustments used to derive adjusted profit before tax.

 

 

38


 

ADDITIONAL INFORMATION

 

Mobile customers(1) – 1 July 2009 to 30 September 2009

 

 

 

QUARTER TO 30 SEPTEMBER 2009

 

 

 

 

 

 

 

 

 

 

 

COUNTRY (in thousands)

 

AT 1 JULY 2009

 

NET ADDITIONS

 

AT 30 SEPTEMBER 2009

 

 

PREPAID

 

Europe

 

 

 

 

 

 

 

 

 

 

Germany

 

34,920

 

(146)

 

34,774

 

 

53.4%

 

Italy

 

22,613

 

(210)

 

22,403

 

 

86.5%

 

Spain

 

16,991

 

78

 

17,069

 

 

40.4%

 

UK

 

18,557

 

147

 

18,704

 

 

56.3%

 

 

 

93,081

 

(131)

 

92,950

 

 

61.4%

 

Other Europe

 

 

 

 

 

 

 

 

 

 

Albania

 

1,515

 

104

 

1,619

 

 

94.0%

 

Greece

 

6,057

 

198

 

6,255

 

 

72.8%

 

Ireland

 

2,129

 

(10)

 

2,119

 

 

68.7%

 

Malta

 

210

 

10

 

220

 

 

85.4%

 

Netherlands

 

4,649

 

59

 

4,708

 

 

40.1%

 

Portugal

 

5,672

 

141

 

5,813

 

 

79.7%

 

 

 

20,232

 

502

 

20,734

 

 

68.7%

 

Europe

 

113,313

 

371

 

113,684

 

 

62.7%

 

Africa and Central Europe

 

 

 

 

 

 

 

 

 

 

Vodacom(2)

 

41,306

 

281

 

41,587

 

 

89.0%

 

Czech Republic

 

2,935

 

49

 

2,984

 

 

48.4%

 

Ghana

 

2,558

 

46

 

2,604

 

 

99.6%

 

Hungary

 

2,504

 

14

 

2,518

 

 

55.0%

 

Poland

 

3,528

 

(77)

 

3,451

 

 

52.1%

 

Romania

 

9,533

 

2

 

9,535

 

 

61.6%

 

Turkey

 

14,965

 

718

 

15,683

 

 

86.3%

 

 

 

77,329

 

1,033

 

78,362

 

 

77.7%

 

Asia Pacific and Middle East

 

 

 

 

 

 

 

 

 

 

India(3)

 

76,450

 

6,396

 

82,846

 

 

93.4%

 

Australia

 

3,215

 

59

 

3,274

 

 

45.4%

 

Egypt

 

20,370

 

1,695

 

22,065

 

 

96.0%

 

Fiji

 

334

 

6

 

340

 

 

95.9%

 

New Zealand

 

2,511

 

(27)

 

2,484

 

 

70.8%

 

Qatar

 

15

 

136

 

151

 

 

74.7%

 

 

 

102,895

 

8,265

 

111,160

 

 

90.7%

 

Group

 

293,537

 

9,669

 

303,206

 

 

76.7%

 

Reconciliation to proportionate

 

 

 

 

 

 

 

 

 

 

Group

 

293,537

 

9,669

 

303,206

 

 

 

 

Non-controlling interests in above(3)

 

(52,509)

 

(3,258)

 

(55,767)

 

 

 

 

Associates and investments:

 

 

 

 

 

 

 

 

 

 

Verizon Wireless

 

39,462

 

594

 

40,056

 

 

7.2%

 

Other

 

34,774

 

996

 

35,770

 

 

97.2%

 

 

 

74,236

 

1,590

 

75,826

 

 

 

 

Proportionate(3)

 

315,264

 

8,001

 

323,265

 

 

83.5%

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

122,141

 

374

 

122,515

 

 

59.5%

 

Africa and Central Europe

 

64,825

 

997

 

65,822

 

 

80.7%

 

Asia Pacific and Middle East

 

88,836

 

6,036

 

94,872

 

 

97.7%

 

Verizon Wireless

 

39,462

 

594

 

40,056

 

 

7.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes:

(1)

Group customers are presented on a controlled (fully consolidated) and jointly controlled (proportionately consolidated) basis in accordance with the Group’s current segments.

(2)

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

(3)

Proportionate customers are based on equity interests at 30 September 2009. The calculation of proportionate customers for India also assumes the exercise of call options that could increase the Group’s equity interest from 51.58% to 66.98%. These call options can only be exercised in accordance with Indian law prevailing at the time of exercise.

 

 

39


 

ADDITIONAL INFORMATION

 

 

Annualised mobile customer churn

 

 

 

QUARTER ENDED 30 SEPTEMBER 2009

COUNTRY

 

 

 

 

 

 

 

 

CONTRACT

 

PREPAID

 

TOTAL

Germany

 

16.0%

 

39.3%

 

28.6%

Italy

 

17.2%

 

31.2%

 

29.3%

Spain

 

20.6%

 

38.5%

 

27.9%

UK

 

18.5%

 

61.2%

 

42.8%

Vodacom

 

8.6%

 

44.9%

 

41.0%

India

 

24.5%

 

33.9%

 

33.3%

 

OTHER INFORMATION

 

1)

 

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

 

 

 

2)

 

This half-year financial report will be available on the Vodafone Group Plc website, www.vodafone.com/investor, from 10 November 2009.

 

 

For further information:

 

 

 

Vodafone Group Plc

 

Investor Relations

Media Relations

Telephone: +44 (0) 1635 676904

Telephone: +44 (0) 1635 664444

 

 

Notes:

 

1.             Vodafone, the Vodafone logos, Vodafone Station, Vodafone 360 and Vodacom are trade marks of the Vodafone Group. Other product and company names mentioned herein may be the trade marks of their respective owners. The RIM® and BlackBerry® families of trade marks, images and symbols are the exclusive properties and trade marks of Research in Motion Limited, used by permission. RIM and BlackBerry are registered with the US Patent and Trademark Office and may be pending or registered in other countries.

2.             All growth rates reflect a comparison to the six months ended 30 September 2008 unless otherwise stated. References to the “previous quarter” are to the quarter ended 30 June 2009 unless otherwise stated. References to the “current quarter” are to the quarter ended 30 September 2009 unless otherwise stated.

3.             All relevant calculations of organic growth include Vodacom (except the results of Gateway) at the current level of ownership and exclude all results of the Group’s business in Australia. The in-country acquisition of Alltel by Verizon Wireless has been included on a pro forma basis assuming the business was acquired at the beginning of the comparative period.

4.             The Group’s outlook for the year ending 31 March 2010 is contained on page 37 of the Group’s 2009 annual report.

5.             Quarterly historical information including customers, churn, voice usage and APRU is provided in a spreadsheet available at www.vodafone.com/investor.

 

Copyright © Vodafone Group 2009

 

 

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OTHER INFORMATION

 

 

Definition of terms

 

Term

Definition

 

 

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.

 

 

Operating costs

Operating expenses plus customer costs other than acquisition and retention costs.

 

 

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.

 

 

Organic growth

The percentage movements in organic growth are presented to reflect operating performance on a comparable basis, both in terms of merger and acquisition activity and foreign exchange rates.

 

 

 

For definitions of other terms please refer to page 143 of the Group’s annual report for the year ended 31 March 2009.

 

Change in presentation

 

During the period, the Group changed how it determines and discloses segmental EBITDA and adjusted operating profit in order to ensure the Group’s disclosures better reflect the contribution of each segment to the Group’s underlying operating performance and remain consistent with internal reporting to management. The changes do not impact Vodafone’s consolidated results.

 

Intercompany revenue and expenses arising from royalty fees for the use of the Vodafone brand, which were previously included within operating expenses, are now excluded from the calculation of EBITDA and adjusted operating profit of each segment and Common Functions. In addition intercompany charges for fixed asset usage, which were also previously included within operating expenses, are now reported within depreciation for purposes of calculating EBITDA of each segment.

 

As a result of the above changes:

·                each operating company’s EBITDA, and therefore operating free cash flow, is now stated before intercompany royalty fees for use of the Vodafone brand and intercompany charges which are based on depreciation;

·                each operating company’s adjusted operating profit is now stated before intercompany royalty fees for use of the Vodafone brand; and

·                Common Functions EBITDA and adjusted operating profit are now primarily comprised of the results of partner markets and the net result of unallocated central Group costs and exclude the income from intercompany royalty fees.

 

All periods are presented on the revised basis.

 

 

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OTHER INFORMATION

 

 

Forward-looking statements

 

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

 

In particular, such forward-looking statements include statements with respect to expectations regarding the Group’s financial condition or results of operations contained within the Chief Executive’s statement on pages 2 and 3 and the outlook for the 2010 financial year on page 5 of this document and expectations for the Group’s future performance generally; expectations regarding the operating environment and market conditions and trends including customer mix and usage, competitive pressures and price trends; intentions and expectations regarding the development and launch of products, services and technologies introduced by Vodafone or by Vodafone in conjunction with third parties; anticipated benefits to the Group from cost reduction or efficiency programmes, including the £1 billion cost reduction programme; growth in customers and usage; growth in mobile data, enterprise and broadband; expectations regarding foreign exchange rates; expectations regarding adjusted operating profit, capitalised fixed asset additions, EBITDA margins, capital expenditure, free cash flow, and tax rates for the 2010 financial year; expectations regarding European capital intensity, capital expenditures and depreciation and amortisation charges; expectations regarding the integration or performance of current and future investments, associates, joint ventures and newly acquired businesses; the 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 “anticipates”, “aims”, “could”, “may”, “should”, “expects”, “believes”, “intends”, “plans” or “targets”. By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, the following: changes in economic or political conditions in markets served by operations of the Group that would adversely affect the level of demand for 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 or make it more difficult 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 will not be commercially accepted or perform according to expectations; the Group’s ability to renew or obtain necessary licences; the Group’s ability to achieve cost savings; the Group’s ability to execute its strategy in mobile data, enterprise and broadband and in emerging markets; changes in foreign exchange rates or interest rates; the ability to realise benefits from entering into partnerships for developing data and internet services and entering into service franchising and brand licensing; unfavourable consequences of acquisitions or disposals; changes in 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; the Group’s ability to satisfy working capital and other requirements through access to, bank facilities, funding in the capital markets and operations; changes in statutory tax rates or profit mix which might impact the weighted average tax rate; changes in tax legislation or final resolution of open tax issues which might impact the Group’s tax payments or effective tax rate; and changes in exchange rates, including, particularly, the exchange rate of pounds sterling to the euro and the US dollar.

 

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 “Principal risk factors and uncertainties” in Vodafone Group Plc’s annual report for the year ended 31 March 2009. All subsequent written or oral forward-looking statements attributable to the Company or any member of the Group or any persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. No assurances can be given that the forward-looking statements in this document will be realised. Subject to compliance with applicable law and regulations neither Vodafone nor any of its affiliates intends to update these forward-looking statements.

 

 

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SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.

 

 

 

VODAFONE GROUP

 

PUBLIC LIMITED COMPANY

 

(Registrant)

 

 

 

 

Dated: November 12, 2009

By:

/s/S R SCOTT

 

Name:

Stephen R. Scott

 

Title:

Group General Counsel and Company Secretary

 

 

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