Vodafone announces results for the year ended 31 March 2015

Highlights

• Group revenue up 10.1% to £42.2 billion; full year organic service revenue declined 1.6%*
• Return to growth in Q4: organic service revenue up 0.1%*; Europe -2.4%*, AMAP 6.0%*
• EBITDA down 6.9%* at £11.9 billion; H2 EBITDA down 3.6%*
• EBITDA on a guidance basis £11.7 billion, in line with £11.6 – £11.9 billion guidance range
• Free cash flow £1.1 billion; capital expenditure £9.2 billion, up 45.7% year-on-year
• £5.5 billion deferred tax assets recognised and reported in H1
• Net debt of £22.3 billion, or £18.7 billion including $5.2 billion Verizon loan notes
• Final dividend per share of 7.62 pence, up 2.0%, giving total dividends per share of 11.22 pence

• Strong progress on Project Spring: 63% through mobile build, European 4G coverage 72%; 28 million homes reached with next generation network; significant development of Enterprise products and services
• 20.2 million 4G customers in 18 markets; data volumes up 81% year-on-year in Q4
• Continued take-up of data in emerging markets: 115.5 million data customers in AMAP, 3G coverage in India now at 90% of target urban areas
• Further strong progress on unified communications strategy: 12.0 million broadband customers, improving revenue trend, fixed line now 25.2% of European service revenue
• Integration of KDG and Ono on track, synergies in line with expectations
• Continued enhancement of Enterprise capabilities, with return to growth in Q4: acquisition of Cobra Automotive, international expansion of IP-VPN to 62 countries, good momentum in machine-to-machine revenue (+24.7%*)

Guidance for the 2016 financial year⁴

• Organic EBITDA growth: EBITDA in the range of £11.5 billion to £12.0 billion
• Positive free cash flow after all capex, before M&A, spectrum and restructuring costs
• Capex of £8.5 billion to £9.0 billion, reflecting the second year of Project Spring investment
• Intention to grow dividends per share annually, demonstrating confidence in future cash flow generation

Vittorio Colao, Group Chief Executive, commented:

“It has been a year of continued progress, culminating with a return to organic growth in Q4. We have seen increasing signs of stabilisation in many of our European markets, supported by improvements in our commercial execution and very strong demand for data. In fixed line, revenue trends are improving supported by accelerating customer growth, and our recent cable acquisitions provide a strong platform for further growth. In emerging markets, our good growth trend has continued, driven by rising data penetration and leading network quality and distribution.

“Our Project Spring investment programme is on plan, delivering a significantly improved experience to customers. In Europe, 4G coverage now extends to over 70% of our footprint, and voice quality and reliability have improved noticeably. We now reach 28 million homes with our own, next generation cable and fibre networks. In India, our 3G footprint now reaches 90% of target areas, with 3G data revenue up 125% year-on-year in Q4.

“We have significant opportunities ahead of us, with only 13% of our European mobile customers using 4G, and our market share in fixed services only a fraction of our share in mobile. In addition, businesses around the world are increasingly looking to put mobility at the centre of their own strategies. With the assets and skills we have today, further enhanced by the completion of Project Spring, we will be strongly positioned to provide ever improving services to customers and seize these opportunities.”

For further information:

Investor Relations
Telephone: +44 7919 990230

Media Relations
www.vodafone.com/media/contact

Note:

*   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 28 for “Use of non-GAAP financial information”.

1   Free cash flow for the year ended 31 March 2015 excludes £336 million of restructuring costs (2014: £210 million), a £365 million UK pensions contribution payment, £359 million of Verizon Wireless tax distributions 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 in respect of liabilities assumed on acquisition and a £100 million (2014: £100 million) payment in respect of the Group’s historical UK tax settlement.

2   Year ended 31 March 2015 includes the recognition of £5,468 million of deferred tax assets in respect of tax losses in Luxembourg. Year ended 31 March 2014 included the recognition of a deferred tax asset in respect of tax losses in Germany (£1,916 million) and Luxembourg (£17,402 million) and the tax liability related to the rationalisation and reorganisation of our non-US assets prior to the disposal of our stake in Verizon Wireless (£2,210 million). Basic earnings per share for the year ended 31 March 2014 also includes the gain on disposal, results and related tax charge of the Group’s former investment in Verizon Wireless.

3   Adjusted earnings per share from continuing operations excludes the gain on disposal, results and related tax charge of the Group’s former investment in Verizon Wireless in the prior year and the recognition of deferred tax assets in both years.

4   See “Guidance” on page 8.