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Press Release -- November 12th, 2014
Source: Vodafone Group
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Vodafone announces results for the six months ended 30 September 2014

11 November 2014

Highlights

  • H1 Group revenue up 8.9% to £20.8 billion; organic service revenue down 2.8%* to £19.1 billon
  • Q2 Group organic service revenue down 1.5%* compared to -4.2%* in Q1 due to improved commercial performance and reduced impact of mobile termination rate (‘MTR’) cuts
  • Improved service revenue performance in all key markets in Q2: Germany -3.4%*, Italy -9.7%*; UK -3.0%*, Spain -9.3%*, India 13.2%*; and Vodacom 0.3%*
  • H1 EBITDA down 10%* to £5.9 billion; organic EBITDA margin down 2.1* percentage points; reported margin 28.4%
  • Free cash flow2 break even (£0.0 billion) reflecting Project Spring investments; total capex £3.9 billion, up £1.6 billion year-on-year
  • Full year guidance: EBITDA now £11.6 billion to £11.9 billion, free cash flow remains positive. Guidance excludes Ono
  • Additional £5.5 billion deferred tax assets recognised
  • Net debt of £21.8 billion (or £18.6 billion including Verizon loan notes) including £5.8 billion in relation to Ono
  • Interim dividend per share of 3.60 pence, up 2.0%
Six months ended Change
30 September 2014
£m
Reported
%
Organic
*%
Group revenue 20,752 +8.9 (3.0)
Group service revenue 19,139 +9.2 (2.8)
Europe 13,083 +19.0 (6.5)
Africa, Middle East and Asia Pacific ('AMAP') 5,831 (7.7) +5.7
EBITDA 5,884 +5.5 (10.0)
Adjusted operating profit1 1,756 (29.5) (29.9)
Operating profit 917 (58.2)
Free cash flow2 1 (99.9)
Profit for the financial period3 5,501 (69.5)
Basic earnings per share3 20.48p (69.8)
Adjusted earnings per share from continuing operations4 2.63p (46.5)
Interim dividend per share 3.60p +2.0
  • Strong momentum on £19 billion Project Spring investment programme: mobile network deployment 40% complete; European 4G coverage up to 59%; 10.5 million 4G customers across the Group
  • 16.1 million Vodafone Red customers; European contract base penetration 26%; ARPU dilution on Vodafone Red migrations continues to stabilise
  • H1 Group data traffic up 77% year-on-year, accelerating to +80% in Q2, driven by 4G in Europe and 3G in India
  • Unified communications capabilities strengthening: completion of Ono acquisition, ongoing integration of KDG, fibre build progress in Italy, Spain, Portugal and Ireland. Consumer launches announced in Netherlands and UK
  • Fixed: 11.2 million broadband customers including 1.6 million from Ono; organic growth 0.2 million in Q2, fixed now represents 23.7% of service revenue in Europe
  • Enterprise: strong performance in strategic segments: Q2 service revenue up 1%* in Vodafone Global Enterprise and 24%* in machine-to-machine

Vittorio Colao, Group Chief Executive, commented:

“We have made encouraging progress during the quarter. There is growing evidence of stabilisation in a number of our European markets, supported by improvements in our commercial execution and very strong demand for data. Our two year, £19 billion investment programme is well underway, and customers are beginning to see the benefits: in wider 3G and 4G data coverage, improved voice quality and reliability, and increased access to next generation fixed line services. Customers are showing an increasing propensity to trade up to bigger data allowances as a result of the 4G experience. In India, growth has accelerated, stimulated by investment in our 3G network. Our unified communications strategy continues to advance, with accelerating customer growth, further progress on fibre deployment, and the ongoing integration of recent acquisitions.

“Our markets continue to be highly competitive, and regulatory and macroeconomic risks remain. However, we are not yet half way through our investment programme, and there is still much more we will do to build a differentiated service for customers and improve perception. Today in Europe, only 6% of our customers are using 4G. In the next 18 months, we will reach 90% 4G coverage in Europe, giving us a great opportunity to increase penetration, stimulate data usage and grow customer spend. At the same time, we remain committed to shareholder returns, as the growth in the interim dividend demonstrates.”

Notes:
* All amounts in this document marked with an “*” represent organic growth which presents performance on a comparable basis, both in terms

of merger and acquisition activity and movements in foreign exchange rates. See page 38 for “Use of non-GAAP financial information”.

  1. Adjusted operating profit has been redefined to exclude amortisation of customer bases and brand intangible assets of £637 million for the six months ended 30 September 2014 (2013: £125 million).
  2. Free cash flow for the six months ended 30 September 2014 excludes £167 million of restructuring costs (2013: £107 million), a £365 million UK pensions contribution payment, £359 million of Verizon Wireless tax dividends received after the completion of the disposal, £328 million of interest paid on the settlement of the Piramal option, £116 million of KDG incentive scheme payments that vested upon acquisition and a £100 million (2013: £100 million) payment in respect of the Group’s historic UK tax settlement.
  3. Six months ended 30 September 2014 includes the recognition of £5,468 million of deferred tax assets in respect of tax losses in Luxembourg. Six months ended 30 September 2013 included the recognition of a deferred tax asset in respect of tax losses in Germany (£1,838 million) and Luxembourg (£16,069 million) and the estimated tax liability related to the rationalisation and reorganisation of our non- US assets prior to the disposal of our stake in Verizon Wireless (£3,016 million).
  4. Adjusted earnings per share from continuing operations excludes the results and related tax charge of the Group’s former investment in Verizon Wireless in the prior period and the recognition of deferred tax assets in both periods.

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