VODAFONE GROUP PLC 
FY24 Results Presentation
FY24 results May 2024
FY24 results ⫶ May 2024
1
FY24 results Highlights
p3 Financial performance p5 Strategic progress p14
Appendices
p26
FY24 results ⫶ May 2024
2
Highlights ⫶ Good financial & strategic progress in FY24 Improved service revenue performance
Group Q4 service revenue Europe Q4 service revenue Germany Q4 service revenue
+7.1% +2.4% +0.6%
Vodafone UK + Three UK merger Announced Vodafone Spain disposal Announced Vodafone Italy disposal Announced Customers Lead/co-lead NPS in EU 1 5 of 9 markets Simplicity Cumulative EU opex savings 1 € 0.4bn Growth Q4 service revenue growth in all segments
Good initial strategic progress with Customers, Simplicity, Growth
Right-sizing the portfolio for growth actioned
Guidance
Outcome 2 € 13.4bn € 3.5bn
FY24 financial guidance delivered
Adjusted EBITDAaL
c. € 13.3bn c. € 3.3bn
Adjusted FCF
FY24 results ⫶ May 2024
1. Definitions for Consumer NPS and EU opex savings are available in Appendix IV 2. Outcome on consistent portfolio and constant FX. See page 13 for further information
3
Highlights ⫶ Transformation gaining momentum Recap of our new strategic roadmap from May'23 Further detail: Results, reports & presentations | Vodafone IR FY24 progress
FY25 focus a) Investing in Germany turnaround b) Vodafone Business capabilities expansion c) Efficiency via simplification & AI d) Portfolio actions completion e) Establish Vodafone Investments
B ⫶ Our transformation | Strategic shifts to drive growth Where we are now What will change
a) Initial operational turnaround impacts supporting growth b) Improving customer satisfaction c) Vodafone structure
Target outcomes
Consumer dominated organisation Inconsistent consumer experience
Balanced focus on Business + Consumer Consumer back-to-basics to win in the market
Maximise Business potential Customer-driven growth Faster execution & productivity
Leaner organisation focused on value Portfolio right-sized for growth
Complex structure
Sustainable ROCE
Sub-optimal capital allocation
FY23 Results ⫶ May 2023
7
B ⫶ Our transformation | A new roadmap for Vodafone
redesigned & executive team complete
Best-in-class telco in Europe & Africa
Balanced focus on Business + Consumer
CUSTOMERS
Consumer back-to-basics to win in the market
d) Portfolio of growth markets with strong positions
Action plan
Ambition
SIMPLICITY
Leaner organisation focused on value
Europe's leading platform for Business
Portfolio right-sized for growth
GROWTH
FY23 Results ⫶ May 2023
8
FY24 results ⫶ May 2024
4
Financial performance
Basis of preparation Following the announcements that we have entered into binding agreements in relation to the sale of Vodafone Spain and Vodafone Italy, we have updated our financial reporting to recognise that Vodafone Spain and Vodafone Italy are now discontinued operations, in accordance with International Financial Reporting Standards ('IFRS'). Accordingly, Vodafone Spain and Vodafone Italy are excluded from the results of continuing operations and are instead presented as a single amount as a loss after tax from discontinued operations in the Group's consolidated income statement. The FY23 comparatives have been re-presented to reflect that Vodafone Spain and Vodafone Italy are discontinued operations and should be used as the basis of comparison to our FY24 results.
FY24 results ⫶ May 2024
5
Financial Highlights ⫶ Service revenue acceleration • All segments growing in FY24 Service revenue growth Adjusted EBITDAaL Group Group excl. Turkey € 14.7bn € 12.4bn (2.3) 6.6% 6.3% 7.1%
+2.2% 2
• On a like-for-like basis +2.2% growth in FY24 • EBITDAaL margin impacted by higher energy costs
€ 11.0bn
• Group growth accelerated in Q4 despite first MDU impacts • Vodafone Business +5.4% (Q3: +5.0%)
5.4%
4.2%
3.9% 3.4%
3.6% 4.0%
33.0% Adj. EBITDAaL margin
30.0% Adj. EBITDAaL margin
3.0%
2.3%
1.6%
FY23 EBITDAaL (reported)
Italy & Spain
FY23 EBITDAaL (re-presented)
FY24 EBITDAaL (reported)
Q3 FY23
Q4 FY23
Q1 FY24
Q2 FY24
Q3 FY24
Q4 FY24
Return on Capital Employed Pre-tax ROCE
Europe
Africa 1
• Both Europe and Africa continued to grow • Europe supported by price actions • Turkey & Egypt growing ahead of inflation in Q4
10.0%
• Higher pre-tax ROCE under the new footprint • Lower operating profit impacting year-over- year
1.4pp
9.0% 9.0% 8.8%
8.0%
8.2%
7.0%
7.5%
6.8%
2.7% 2.2% 2.4%
1.5%
0.7% 0.1%
Q3 FY23
Q4 FY23
Q1 FY24
Q2 FY24
Q3 FY24
Q4 FY24
FY23 (reported)
Italy & Spain
FY23 (re-presented)
FY24 (reported)
FY24 results ⫶ May 2024
1. Vodacom Group only 2. Organic Adjusted EBITDAaL growth. Presents performance on a comparable basis, excl. the impact of FX rates, M&A and the hyperinflation adjustment in Turkey.
6
Germany ⫶ Underlying improvement offset by first MDU impact Germany 46% of Group EBITDAaL 1 +0.2% Service revenue growth
-5.8% Adj. EBITDAaL growth
• Broadly stable Q4 service revenue trend with underlying acceleration • Mobile accelerating with both customer base & ARPU growth • Vodafone Business back to growth supported by IoT • Fixed slowdown due to MDU impact
• Successfully completed price reset across 7.5 million broadband customers, last churn impact in January • Mobile customer additions with greater focus on branded channels, supporting ARPU • Secured 1.9m TV households ahead of MDU single billing transition
• Adjusted EBITDAaL decline from higher energy costs (-2.7pp) & higher wage and inflation-linked lease costs • Also reflects increased commercial investment incl. MDUs • Further 2,000 role reductions announced in March 2024
Service revenue growth (%)
Net additions ('000)
Adj. EBITDAaL ( € billion)
DSL
Cable
Mobile contract
Organic
Organic excl. MDU transition impact
0.1
1.5%
95
1.1%
69
(0.1)
(0.1)
51
€ 5.3bn
0.3%
(0.2)
€ 5.0bn
24
(35) (49) (11) Q4 FY23
(1.3%)
0.6%
(17) (45)
(28) (48)
(46) (87) Q2 FY24
(51) (70) Q1 FY24
(2.8%)
Q4 FY23
Q1 FY24
Q2 FY24
Q3 FY24
Q4 FY24
Q3 FY24
Q4 FY24
FY23 EBITDAaL
Direct margin
Net A&R Opex incl. MDU investment
Energy & extra inflation
FY24 EBITDAaL
FY24 results ⫶ May 2024
7
1. Based on FY24 Adjusted EBITDAaL contribution
Europe & Turkey ⫶ Service revenue growth in all markets UK 13% of Group EBITDAaL 1 +5.0% Service revenue growth Other Europe 14% of Group EBITDAaL 1 +4.2% Service revenue growth Turkey 5% of Group EBITDAaL 1
+88.5% Service revenue growth
• Strong service revenue growth and good commercial momentum in Consumer & Business • Business project phasing & lower pricing benefit driving Q4 slowdown • EBITDAaL +4.0% due to strong service revenue growth, partially offset by higher energy costs & MVNO offboarding
• Growth across all markets in FY24 supported by price actions and good commercial momentum • Public sector project work supporting Q4 acceleration; broad-based Business momentum (FY24: +7.9%) • EBITDAaL growth +1.5% impacted by higher energy costs
• Growth ahead of inflation in FY24 due to repricing actions & value accretive base management • Service revenue, EBITDAaL & Operating FCF growing in euro terms during FY24
Service revenue growth (%)
Service revenue growth (%)
Service revenue growth (%) Reported growth in Euros excl. hyperinflation
5.5%
5.7%
5.5%
5.2%
28.7%
4.1%
24.0%
3.8%
3.8%
22.2%
3.6%
3.6%
3.6%
17.7%
14.6%
Q4 FY23
Q1 FY24
Q2 FY24
Q3 FY24
Q4 FY24
Q4 FY23
Q1 FY24
Q2 FY24
Q3 F24
Q4 FY24
Q4 FY23
Q1 FY24
Q2 FY24
Q3 FY24
Q4 FY24
FY24 results ⫶ May 2024
8
1. Based on FY24 Adjusted EBITDAaL contribution
Africa ⫶ Resilient performance South Africa 14% of Group EBITDAaL 1 +2.6% Service revenue growth
+31.3% Service revenue growth
+5.3% Service revenue growth
Egypt 6% of Group EBITDAaL 1
Internationals 4% of Group EBITDAaL 1
• Good mobile contract & fixed growth • Slowdown mainly due to prior year usage step up during power outages & wholesale pressure • Pricing transformation now started in prepaid • EBITDAaL -0.6% reflecting higher technology spend (energy related)
• Pricing actions supporting good growth & acceleration above inflation in Q4 • Strong demand for Vodafone Cash, revenue more than doubled in FY24 • EBITDAaL (+38.5% organic growth) impacted by currency devaluation
• Strong growth in Tanzania & reacceleration in DRC • Mozambique impacted by heavy price competition • Continued strong M-Pesa growth 13.4% • EBITDAaL +0.5% with margin loss from Mozambique
Service revenue growth (%)
Service revenue growth (%)
Service revenue growth (%)
4.1%
40.3%
3.9%
6.7%
6.3%
5.2%
5.2%
29.1%
28.4%
27.6%
25.9%
1.9%
3.1%
1.4%
0.7%
Q4 FY23
Q1 FY24
Q2 FY24
Q3 FY24
Q4 FY24
Q4 FY23
Q1 FY24
Q2 FY24
Q3 F24
Q4 FY24
Q4 FY23
Q1 FY24
Q2 FY24
Q3 FY24
Q4 FY24
FY24 results ⫶ May 2024
9
1. Based on FY24 Adjusted EBITDAaL contribution
Vodafone Business ⫶ Sustained growth momentum Unique capabilities in digital Strong financial performance
Markets performance
Business organic service revenue growth (%)
Digital services 1 revenue growth (%)
Business organic service revenue growth, FY24 (%)
16.2%
7.9%
5.4%
13.4%
4.8% 4.6% 5.0%
10.5%
9.1% 7.4%
3.8%
3.2%
2.6%
0.0%
Q4 FY23
Q1 FY24
Q2 FY24
Q3 FY24
Q4 FY24
Q4 FY23
Q1 FY24
Q2 FY24
Q3 FY24
Q4 FY24
UK
DE
O EU
SA
• Vodafone Business +5.0% & growing across all markets in FY24 • Further acceleration in Q4 with all customer segments growing • Acceleration driven by digital services adoption, price actions & public sector share gains
• Represents 17% of Business service revenue • 21.6% Q4 growth in Cloud supported by strong demand for SaaS & ERF- funded public sector contract wins • Good momentum maintained in Security & SD-WAN • 187 million IoT connections 2
• UK strong performance in the public sector & IoT, support from price actions • Germany SD-WAN acceleration & SaaS trading offset by IoT phasing • Strong digital services demand & public sector contract wins in Other EU • 4.8 million Business customers
FY24 results ⫶ May 2024
10
1. Digital services include IoT, Cloud & Security services 2. Including Vodafone Italy, Vodafone Spain & Partner Markets
Adjusted EBITDAaL Adjusted EBITDAaL & FCF ⫶ Slightly ahead of expectations Free cash flow
Adjusted EBITDAaL (reporte d) Interest & tax Working capital & other Dividends (assoc. & JV) Capital additions Adjusted free cash flow Spectrum
€ 11.0bn
1.3
(0.2)
€ (2.0)bn
(0.4)
(0.5)
€ 11.1bn
€ 10.9bn
€ (0.3)bn
€ 0.2bn
+0.6% Organic YoY growth
+2.2% Organic YoY growth
€ (6.3)bn
€ 2.6bn
FY23 EBITDAaL (organic)
Direct margin
Net A&R
Europe energy & extra inflation
Non-Europe opex
FY24 EBITDAaL (organic)
€ (0.5)bn
€ 1.8bn Restructuring & integration Free cash flow • Lower tax year-over-year due to lower profitability & prior year tax refund in Germany • Working capital includes initial MDU impact (- € 0.2bn) & unwind of € (0.3)bn
• Good revenue growth supporting direct margin expansion • Customer acquisition & retention costs increased due to channel mix improvement & MDU investment • Energy costs (- € 0.2bn) & other inflationary pressures increased in Europe as anticipated • Underlying Europe opex flat year-over-year despite higher brand, customer care & MDU investment
non-cash gains from Vantage Towers disposal • Dividends include € 0.2bn from Vantage Towers
FY24 results ⫶ May 2024
11
Capital allocation ⫶ € 4bn capital return programme Disciplined capital investment • Current country-level capital intensity broadly maintained
• New leverage policy of 2.25x - 2.75x Net debt to Adjusted EBITDAaL • Targeting to be in bottom half of the range
Maintain robust balance sheet
• FY24 total ordinary dividend maintained at 9c • FY25 total ordinary dividend rebased to 4.5c • Ambition to grow dividend over time
Rebased ordinary dividend
• € 2 billion buybacks upon completion of sale of Spain (FY25) • € 2 billion buybacks upon completion of sale of Italy (FY26) • Subsequent review of potential for further capital return
Capital returns
FY24 results ⫶ May 2024
12
FY25 guidance ⫶ A transition year with portfolio right-sizing ( € billion) Adjusted EBITDAaL Adjusted FCF
FY25 considerations • Expected net cash inflow from discontinued operations (Vodafone Italy and Vodafone Spain) of c. € 0.4bn is excluded from FY25 guidance
FY24 guidance
c.13.3
c.3.3
FY24 outcome - guidance basis 1,2
13.4
3.5
Impact of exchange rates
(0.3)
(0.2)
FY24 actual - constant portfolio
13.1
3.3
Impact of discontinued operations
(2.1)
(0.8)
Impact of exchange rates
(0.3)
(0.1)
Currency
FY25 guidance rate
FY24 re-based 2,3,4
10.7
2.4
ZAR TRY EGP GBP
20.58 34.98 51.75 0.86
at least € 2.4bn
FY25 guidance 2,3,5
c. € 11bn
FY24 results ⫶ May 2024
1. FY24 outcome including Vodafone Spain & Vodafone Italy, based on FY24 guidance FX rates (to € ): ZAR 19.30, TRY 21.10, EGP 33.38, GBP 0.88. 2. Excluding the impact of hyperinflationary accounting in Turkey. 3. Excluding Vodafone Spain & Vodafone Italy. 4. FY24 re-based outcome based on FY25 guidance FX rates. 5. FY25 guidance FX rates (to € ): ZAR 20.58, TRY 34.98, EGP 51.75, GBP 0.86.The guidance assumes no material change to the structure of the Group
13
Strategic progress
FY24 results ⫶ May 2024
14
Recap of our new strategic roadmap Recap of our new strategic roadmap from May'23 Further detail: Results, reports & presentations | Vodafone IR
FY24 progress
FY25 focus
B ⫶ Our transformation | Strategic shifts to drive growth Where we are now What will change
a) Initial operational turnaround impacts supporting growth b) Improving customer satisfaction c) Vodafone structure
a) Investing in Germany turnaround b) Vodafone Business capabilities expansion c) Efficiency via simplification & AI d) Portfolio actions completion e) Establish Vodafone Investments
Target outcomes
Consumer dominated organisation Inconsistent consumer experience
Balanced focus on Business + Consumer Consumer back-to-basics to win in the market
Maximise Business potential Customer-driven growth Faster execution & productivity
Leaner organisation focused on value Portfolio right-sized for growth
Complex structure
Sustainable ROCE
Sub-optimal capital allocation
FY23 Results ⫶ May 2023
7
B ⫶ Our transformation | A new roadmap for Vodafone
redesigned & executive team complete
Best-in-class telco in Europe & Africa
Balanced focus on Business + Consumer
CUSTOMERS
Consumer back-to-basics to win in the market
d) Portfolio of growth markets with strong positions
Action plan
Ambition
SIMPLICITY
Leaner organisation focused on value
Europe's leading platform for Business
Portfolio right-sized for growth
GROWTH
FY23 Results ⫶ May 2023
8
FY24 results ⫶ May 2024
15
FY24 progress ⫶ a) Initial operational turnaround supporting growth CUSTOMERS 1 SIMPLICITY 1 GROWTH
Service revenue growth (YoY) Adjusted EBITDAaL growth (YoY)
€ 0.4bn FY23-FY24 vs. € 1bn targeted savings by FY26 3 c.5k role reductions in FY24 vs.11k in 3-year plan 3
Europe opex savings
+6.3% (FY23: +3.9%)
Consumer NPS (YoY)
Lead / co-lead in 5 of 9 EU markets 2
+2.2% (FY23: +0.6%)
Detractors (YoY)
Productivity
Shared operations NPS
Adjusted Free Cash Flow (Reported)
Revenue market share (YoY)
May'24: 85% (Oct'23: 74%)
€ 2.6bn
'Very good' reliability in all European mobile markets German cable network quality recognised in 4 independent tests
Oct'23: 77% (May'23: 75%)
+7.5% (FY23: 8.2%)
Employee engagement
Pre-tax ROCE
Network quality
FY24 results ⫶ May 2024
1. Definitions for key performance indicators are available in Appendix IV 2. Including Vodafone Italy 3. Including Vodafone Spain & Vodafone Italy
16
FY24 progress ⫶ b) Improving customer satisfaction - UK case study Lowest Ofcom complaints in the industry
• Customer insights processed through real-time AI models feeding to weekly customer experience boards • Deployed digital capabilities to support contact reduction and enable customer self-service (e.g. My Vodafone app) • Merged all customer facing operations to create single view of our customers • Invested in additional call-centre capacity reducing average call waiting times • Expanded opening hours to make it more convenient for customers to contact us • New service-based training 'Trust In Us' for over 11,000 people, focused on improving every service interaction
Ofcom: Mobile complaints per 100,000 customers
7
6
6
3
3
2
2
1
VOD Industry average
Industry best
Industry worst
VOD Industry average
Industry best
Industry worst
Q4'23
Q1'19
Significant reduction in average customer call waiting time
Average call waiting time (second)
67
59
79% reduction
24
14
14
Q4 FY23
Q1 FY24
Q2 FY24
Q3 FY24
Q4 FY24
FY24 results ⫶ May 2024
17
FY24 progress ⫶ c) Vodafone structure redesigned & ExCo complete Actions to redesign structure outlined in May'23 Our new shape from April'24
B ⫶ Our transformation | Structure redesign Future structure
⫶ Right-sized for growth Africa
Priority transformation actions
Investments
Europe
Lean corporate services Finance | HR | Legal | External Affairs | Brand
1 Lean corporate services & 'HoldCo' governance model for investments 2 Establish commercial model for shared operations 3 Scaling European Business platform 4 Local markets simplification 5 Portfolio right-sized for growth over time
Operations
UK
Vodacom
Infrastructure
Vodafone Business
w Ventures - Vantage Towers - Other investments
Germany
Italy Other Europe
Innovation Partner Markets
8 countries 200m mobile customers 76m FinTech users
9 countries 100m mobile customers 17m fixed customers
45 countries
'Commercial' shared operations (captive / 3 rd party) Networks | IT | Back-office | Procurement
Procurement vodafone
vodafone RoamingServices
vodafone Networks
Technology & operations
Roaming & carrier services
Network services
SharedOperations
_VO IS
Procurement
FY23 Results ⫶ May 2023
FY24 results ⫶ May 2024
DRAFT | 2 April 2024
12
9
• Announced: UK merger, € 8bn Italy sale, € 5bn Spain sale • Completed: Vantage sell-down, Hungary & Ghana sale
• Commenced: new Germany restructuring, Investments division, commercialisation of shared operations • In-place: new Executive Committee team
FY24 results ⫶ May 2024
18
FY24 progress ⫶ d) Portfolio of growth markets with strong positions Germany UK Other Europe Africa Market size (CY23 telecoms revenue 4 ) € 57bn € 56bn € 28bn 2 € 18bn Market growth (CY21-23 telecoms revenue CAGR 4 ) 3.2% 3.4% 3.1% 3 6.8% Network operators (# MNOs) 3+1 player 3 player 1 Mostly 3 player 3-4 player
Pro forma Vodafone revenue mix (Proportion of Vodafone total FY24 service revenue)
35%
25%
20% 2
20%
1
Vodafone revenue growth (Vodafone FY24 service revenue growth)
0.2%
5.0%
4.2%
9.2%
3
Vodafone ROCE
Around WACC
Good 1
Good
Good
FY24 results ⫶ May 2024
1. Pro forma including Three UK merger impact 2. Including Turkey
3. Excluding Turkey 4. Source: Analysys Mason & Global Data
19
FY25 focus ⫶ a) Investing in Germany turnaround
MDU TV transition
Fixed • Upgrading our cable experience 1 : - Node-splitting delivering 30% additional upstream segments nationwide - 3m CPEs & 'SuperWiFi' customer upgrades - improving in-home experience - Leading in independent network tests • 33% detractors reduction 1 achieved despite price increase • New customer value management processes from Q2 • Off-footprint fibre wholesale from H2 • Launch of new SoHo portfolio
Mobile
• Refreshing propositions, handset portfolio and 'Family Cards' • Vodafone own brands supporting mobile net additions, with 3 consecutive quarters of contract ARPU growth • Rebalancing channel mix for value over volume • Continuing to drive convergence • Additional investment in brand and customer experience 1&1 National Roaming Agreement • Long-term commercial partnership agreed • Transition to commence in FY25
• Pre-transition: 8.5m households generating € 800m high-margin revenue • Good operational sales & marketing execution • 1.9m households secured by Mar'24 • Expect c.50% retention of MDU TV households
Fibre JV deployment • Targeting 7m households over 6-year build • Work commenced in first 6 cities
Asset utilisation
FY24 results ⫶ May 2024
1. Compared with March 2022
20
FY25 focus ⫶ b) Vodafone Business capabilities expansion Large & growing addressable markets Strengthening product offering
Enhancing sales capabilities
• Driving brand awareness of digital services with 2x marketing investment • New 'V-Hub' campaigns driving increased traffic to 6.4m visitors • Restructuring sales organisation & 400 new team members • Momentum building with significant key account wins: - DE: BASF, Lowell - UK: UK Power Networks - International: SUEZ - IoT: Hyundai
Addressable market spend
Cloud & Security Internet of Things
Connectivity
€ 42bn UK
€ 20bn Other 1
€ 58bn Germany
Comms services
€ 76bn Corporate
€ 33bn SME
€ 11bn SoHo € 16bn IT services
• c. € 1.3 billion FY24 digital services revenue (+11% growth), all product segments growing • Re-allocating c. € 250m investment to support new products & managed services capabilities • Leading partnership ecosystem (e.g. Microsoft SMB managed services) • Launched Mobile Private Network 2.0 solutions - 80 major deployments so far
€ 15bn € 19bn € 9bn Mobile Fixed Unified Comms
IoT € 8bn
Cloud & Security
€ 54bn
Average annual IT & communication spend ( € )
Digital services 2
Core connectivity 2
FY23
0.7k
0.4k
8% CAGR
0.8k
0.9k
FY28E
SoHo
FY23
8.2k
16.1k
13% CAGR
8.4k
36.9k
FY28E
SME
0.7m
1.0m
FY23
13% CAGR
FY28E
0.7m
2.6m
Corporate
FY24 results ⫶ May 2024
1. Other includes Other Europe, Africa & Turkey 2. Includes Fixed & Mobile
21
FY25 focus ⫶ c) Efficiency via simplification & AI Operational simplification Shared operations commercialisation
Competitive AI adoption
Transparency for our markets & new partners
Customer experience & productivity
Supporting reinvestment in Care & Brand
• Transparent MSAs with Price * Quantity * Quality commercial models for all • 50% of shared costs covered in FY25, complete in FY26 • Improving productivity for our markets • Fully flexible cost base responsive to changes in demand of new partners (e.g. Swisscom, Zegona) • Partnership awaiting final regulatory approvals • Underpins fully commercial approach & further productivity gains
Applying GenAI to existing automated customer care, search optimisation & sales capabilities Intelligent Network assistance & AI Tech Operations (maintenance & support co-pilot) 200 use cases piloted 20 specific applications in deployment for scaling
SuperTOBi SuperSearch SuperAgent
€ 0.4bn of € 1bn
5k of 11k Original FY24-6 role efficiency target
Commercial
Original FY23-6 net OpEx reduction target 1
Technology & Networks effectiveness
• New excl. Italy & Spain: € 0.7bn cumulative savings 1 & 10k role efficiencies expected by FY26 • Process & product simplification • Maximising sharing opportunities through _VOIS
Flexible
Leverage Microsoft partnership
FY24 results ⫶ May 2024
1. Cost savings target excluding energy costs & extraordinary inflation
22
FY25 focus ⫶ d) Portfolio actions completion Status & next steps Transaction summary
Target outcomes
• Vodafone Italy 100% sale to Swisscom • € 8bn value • c.26x OpFCF multiple • Vodafone UK merger with Three UK • 51% post-merger holding • > € 7bn cost + capex synergies • Vodafone Spain 100% sale to Zegona • € 5bn value • 12.7x OpFCF multiple
• Expected to complete shortly • € 4.1bn initial cash proceeds • € 2bn buyback starts on completion • Target completion first half 2025 • € 8bn cash proceeds • € 2bn buyback starts on completion • Target completion around end 2024 • Broadly leverage neutral • Adjusted FCF accretive in year 4
• Binding transaction documentation agreed • CMA Phase 2 underway
• Binding transaction documentation agreed • Expecting final Spanish authority approval imminently
• Binding transaction documentation agreed • Approval process commencing
FY24 results ⫶ May 2024
23
FY25 focus ⫶ e) Establish Vodafone Investments Pillar Investment Focus Ownership Key statistics
• 3 pillars:
• € 1.8bn CY23A EBITDAaL • € 151m FY24 distribution
Netherlands converged operator Australia converged operator India mobile operator
50.0% 25.1% 31.4% 53.9% 50.0% 50.0% 21.0%
- Minority / JV
telco operations infrastructure assets
• Publicly listed • Non-consolidated HoldCo debt • Publicly listed • € 2.2bn capital raise done • € 0.6bn FY24 EBITDAaL • € 196m FY24 dividend • Construction in 6 cities now • 7m homes passed by FY30
Telco Operations
- Digital
- Sector
European towers
innovation • Implementing new governance model • Dedicated & highly experienced operational & financial team
Germany FTTH
Infrastructure
• >0.5m homes passed
Ireland FTTH
• Publicly listed • Total return swap in place 1
India towers
Direct-to-mobile low- orbit satellites Economy-of-things
5.2%
• Publicly listed
Innovation
• Early-stage start-up • € 60m seed funding
80.0%
FY24 results ⫶ May 2024
1. The Group's borrowings include € 1.7 billion (2023: € 1.5 billion) of bank borrowings that are secured against the Group's shareholdings in Indus Towers and Vodafone Idea and will be repaid through the realisation of proceeds from those assets.
24
Highlights ⫶ Good financial & strategic progress in FY24 Improved service revenue performance
Group Q4 service revenue Europe Q4 service revenue Germany Q4 service revenue
+7.1% +2.4% +0.6%
Customers Simplicity
Co-leading NPS in EU 1 5 of 9 markets Cumulative EU opex savings 1 € 0.4bn Q4 service revenue growth in all segments
Good initial strategic progress with Customers, Simplicity, Growth
Growth
Vodafone UK + Three UK merger Announced Vodafone Spain disposal Announced Vodafone Italy disposal Announced
Right-sizing the portfolio for growth actioned
Guidance
Outcome 2 € 13.4bn € 3.5bn
FY24 financial guidance delivered
Adjusted EBITDAaL
c. € 13.3bn c. € 3.3bn
Adjusted FCF
FY24 results ⫶ May 2024
1. Definitions for Consumer NPS and EU opex savings are available in Appendix IV 2. Outcome on consistent portfolio and constant FX. See page 13 for further information
25
Appendices
I More information II Vodacom summary
p27 p28 p29 p30 p31 p32 p33
III ESG reporting & performance
IV KPI definitions
V Statutory results summary
VI Net debt, liquidity & total funding obligations VII New shape of Vodafone reconciliation
VIII Importance notice p34 Provide investor feedback here ⫶ investors.vodafone.com/feedback
FY24 results ⫶ May 2024
26
Appendix I More information Vodafone Business ⫶ Virtual investor briefing Connecting people, places & things for a better future • We operate in attractive markets • We have unique scale & capabilities • We have strong operating momentum • We are on a clear growth pathway Materials including videos, presentation, case studies and Q&A: investors.vodafone.com/vbbriefing
Vodafone Technology ⫶ Virtual investor briefing A globally scaled operator • Our customer demand continues to accelerate • We have a strong technology roadmap • We allocate capital to drive returns • We are transforming to deliver growth Materials including videos, presentation, case studies and Q&A: investors.vodafone.com/vtbriefing
Additional data ⫶ Spreadsheet format investors.vodafone.com/results
Social Contract ⫶ Virtual investor briefing Shaping the Digital Society • Historical policy choices have impacted the European telecoms sector • Our 'Social Contract' enabling digital society • Pro-investment policy reform is essential for Europe to meet its digital objectives Materials including presentation & case studies: investors.vodafone.com/social-contract
1. Quarterly revenue 2. Group financial performance 3. Segmental results 4. Segmental analysis 5. Cash Flow 6. Mobile customers 7. Fixed broadband customers
8. Marketable homes passed 9. TV customers 10. Converged customers 11. Mobile churn 12. Mobile data usage 13. Mobile ARPU 14. FX rates
FY24 results ⫶ May 2024
27
Appendix II Vodacom ⫶ Leading African operations have further growth potential >40% of Africa GDP >500m people 50% smartphone penetration 52% financial services penetration Digital & financial ecosystem presents opportunities Africa's leading connectivity provider 1 Vodacom markets Safaricom markets Africa's leading fintech platform 1, 2 Leading connectivity • 206m mobile customers • #1 by revenue market share in all our markets • NPS leader/co-leader in 5 of 6 markets Opportunities in connectivity • Data and smartphone penetration • South Africa fibre deal • Safaricom Ethiopia • Rural funding partnerships (RuralCo) • Pro-investment regulation Operating in attractive markets 1
Financial services customers (million) M-Pesa transaction volume (billion) 71 79
Leading financial services • 79m financial services customers • US$1bn transacted on our mobile money platforms every day • € 0.6bn financial services revenue in Vodacom in FY24
Opportunities in digital & fintech • Scaling and diversifying VodaPay and M-Pesa super-apps • 'Tech-for-good' platforms in agriculture, education & healthcare • Digital partner of choice for enterprise and governments
33.7
33
27.8
32
8
5
19.5
15 22
14 19
15.0
FY23
FY24
FY21 FY22 FY23 FY24 M-Pesa (IB+ SF)
South Africa Egypt (M-Pesa)
IB (M-Pesa) SF (M-Pesa)
FY24 results ⫶ May 2024
1. Including 100% of Safaricom 2. Excluding Vodafone Ghana in FY22-FY23
28
Appendix III ESG reporting & performance Annual Report ⫶ vodafone.com/ar2023 Extensive suite of ESG disclosures
MSCI ESG Rating 1, 2 "A" Sustainalytics ESG Risk Rating 1, 3 "Low risk" Top 6% in sector ISS ESG Corporate Rating 1 "B" Top 5% in sector Refinitiv ESG score 1 "86/100" #2 in sector CDP Climate Change 1 "A" Leadership band ESG Ratings ⫶ investors.vodafone.com/esg-ratings Strong ESG performance
ESG Addendum ⫶ investors.vodafone.com/esgaddendum • >1,200 datapoints, covering >300 indicators, in spreadsheet format • Includes GRI Standards index
• Integrated reporting covering ESG strategy & performance • Complimented by six videos on key ESG topics
Board conversations ⫶ investors.vodafone.com/videos • Eight videos with Chair and Committee chairs • Introductions to new Non-Executive Directors
ESG A-Z ⫶ investors.vodafone.com/esga-z
• >30 links to supporting disclosures, reports & policies • Categorised by E, S or G & searchable
TCFD ⫶ investors.vodafone.com/tcfd
SASB ⫶ investors.vodafone.com/sasb
• Seven disclosure topics • Includes additional information beyond what is required in the SASB Standards
• Aligning to TCFD framework since 2019 • Fully or partially consistent with all 11 TCFD recommendations
FY24 results ⫶ May 2024
1. Unless otherwise stated, ESG ratings and relative position within sector as at 2nd May 2024 See additional disclaimers on page 29. 2. In 2023, Vodafone Group Plc received a rating of A (on a scale of AAA-CCC) in the MSCI ESG Ratings assessment. 3. In 2023, Vodafone Group Plc received an ESG Risk Rating of 16.2 and was assessed by Sustainalytics to be at low risk of experiencing material financial impacts from ESG factors.
29
Appendix IV KPI definitions KPI Definition
KPI
Definition
We regularly measure the reliability of our mobile networks in our controlled European markets (including Turkey) using a combination of internal drive trials and crowdsourced data obtained from an independent benchmarking company. Drive trials are conducted in each market every quarter and assess various customer activities such as voice calls, web browsing, file transfer, video streaming, as well as upload and download data rates. Monthly crowdsourced data monitors other customer experience indicators such as amount of time a device is connected to a 4G or 5G network, as well as sample tests of data rates, latency and data session success rates. Each measure is weighted with an index score for the performance level achieved. Index scores from all measures are aggregated and the total compared to various threshold levels to determine the reliability of the mobile network. A reliability score that achieves at least 85% of the maximum score is considered to have 'very good' or better reliability. In May 2023, we announced the reduction of 11,000 roles in Group and markets over a three-year period, with programmes announced in Germany, Italy and our Group headquarters. The number reported in this presentation represents the number of role reductions that have been completed during the period covered by this presentation. Revenue market share represents Vodafone's share of total communication service revenue in each applicable market (with the exception of South Africa, which is based on mobile service revenue only). The metric is based on internal analysis and public disclosures from competitors and/or regulators. The arrows included within this presentation indicate whether the applicable market's most recent revenue market share (which may be lagged by one quarter) is higher, lower or stable compared to the same quarter from the previous financial year.
Consumer net promotor score (NPS) measures the likelihood that Vodafone and non- Vodafone customers will recommend Vodafone to family, friends and colleagues on a scale of 0 - 10. The aggregated net promoter score can range from -100 to +100. The arrows included within this presentation indicate whether the applicable market's most recent Consumer NPS is higher, lower or stable in absolute terms compared to the same period from the previous financial year. Detractors are customers who score 0, 1 or 2 in surveys for Lifetime NPS, which only includes Vodafone customers. Lifetime NPS measures the likelihood that existing customers will recommend Vodafone to family, friends and colleagues on a scale of 0 - 10 based on experienced customer journeys. The aggregated net promoter score can range from -100 to +100. The arrows included within this presentation indicate whether the applicable market's most recent detractor share is higher, lower or stable in absolute terms compared to the same period from the previous financial year. Where no comparable data is available for the equivalent period in the prior year, the earliest available data is used for the comparator. Operating expenditure (opex) includes, but is not limited to, sales and distribution costs, network and IT related expenditure and business support costs. Europe opex savings refers to the reduction in opex in our European markets and Common Functions, excluding energy costs and extraordinary inflation, for example related to wages and salaries. When presenting progress against our Europe opex savings targets, we adjust for M&A and foreign exchange movements during the target period. The employee engagement index is based on a weighted average index of responses to three questions: satisfaction working at Vodafone; experiencing positive emotions at work; and recommending Vodafone as an employer. The aggregated employee engagement score can range from 0 to 100%.
Consumer NPS
Network quality
Detractors
Productivity
Europe opex savings
Revenue market share
SaaS
Software as a Service
Employee engagement
SD-WAN
Software-defined networking (SDN) in a wide area network (WAN)
Shared operations net promotor score (NPS) measures the likelihood that users of Vodafone's shared operations (_VOIS Group Business Services) would recommend _VOIS' services to colleagues. The net promoter score can range from 0-100%.
Shared operations NPS
MDU
Multi-dwelling units
FY24 results ⫶ May 2024
30
Appendix V Statutory results summary Consolidated income statement
Year ended 31 March 2024 2023 1 € m € m 36,717 37,672 (24,459) (24,359) 12,258 13,313
Revenue Cost of sales Gross profit
Selling and distribution expenses Administrative expenses Net credit losses on financial assets
(2,674) (5,768) (491) (96)
(2,777) (5,351) (505) 433 (64) 9,402 232 (1,609)
Share of results of equity accounted associates and joint ventures
Impairment loss Other income Operating profit Investment income Financing costs Profit before taxation Income tax expense
64 372 581 (50) (65)
3,665 14,451
(2,626)
1,620 13,074 1,570 12,582 (492) (247) 1,505 12,335 1,140 11,838 1,505 12,335 365 497
Profit for the financial year - Continuing operations Loss for the financial year - Discontinued operations Profit for the financial year
Attributable to: - Owners of the parent - Non-controlling interests Profit for the financial year
Earnings per share Continuing operations: - Basic
4.45c 4.44c 4.21c 4.20c
43.66c 43.51c 42.77c 42.62c
- Diluted Total Group: - Basic - Diluted
FY24 results ⫶ May 2024
1. The results for the year ended 31 March 2023 have been re-presented to reflect that the results of Vodafone Spain and Vodafone Italy are now reported as discontinued operations
31
Appendix VI Net debt, liquidity & total funding obligations
Net debt progression ( € billion)
Total funding obligations
FY24
FY23
€40.0bn
€ m
€ m
2.4
0.8
Bonds Bank loans Gross debt
(40,743) (44,116)
€35.0bn
(0.8)
€ 33.4bn FY23 2.5x Net debt/Adj. EBITDAaL 1
€ 33.2bn FY24 2.5x Net debt/Adj. EBITDAaL
(767) (1,457) 6,183 3,225 2,204 (1,887)
(795) (1,744) 11,705 4,305 1,917 (4,647)
(2.6)
€30.0bn
Other borrowings including spectrum Cash and cash equivalents Short-term investments Derivative financial instruments Net collateral (liabilities)/assets
€25.0bn
(42,967) (46,655)
1
€20.0bn
€15.0bn
€10.0bn
FY23
Adjusted FCF FY24
Spectrum/ restructuring
Dividends
M&A & Other
FY24
Net debt (a)
(33,242) (33,375)
Other funding obligations Lease liabilities KDG put option liabilities
Bond maturity profile ( € billion)
(9,672) (13,364)
-
(485) (1,611) (258) 4,971
Current liquidity Senior Hybrid
Guarantees over Australia joint ventures loans
(1,479) (196) 4,497
1 2
Pension liabilities Equity content of hybrid bonds Total funding obligations (b)
0.8
3.1
1 0
(40,092) (44,122) 11,019 14,665
8
Adjusted EBITDAaL (c) Depreciation on right of use assets Interest on leases Adjusted EBITDAaL before leases (d)
10.5
6
9.0
7.5
3,003 440
3,883 436
3.7 0.6
2.8 1.4
4
1.6 2.3
0.3 0.8 FY25
14,462 18,984
2
1.0 FY28
0
Ratio of net debt to adjusted EBITDAaL (a/c) 1 Ratio of total funding obligations to adjusted EBITDAaL before leases (b/d) 1
2.5x 2.4x
2.5x 2.5x
Current liquidity
FY26
FY27
FY29
FY30-40
FY41+
100% of bonds fixed. Average life of bonds 11.8 years
All 3 credit rating agencies at BBB
FY24 results ⫶ May 2024
1. FY24 and FY23 ratios are pro forma for FX and M&A (incl. Vodafone Spain & Vodafone Italy, excl. Hungary, Ghana & Vantage Towers); excluding the impact of hyperinflationary accounting in Turkey.
32
Appendix VII New shape of Vodafone reconciliation
Adjusted EBITDAaL
Adjusted FCF
( € billion)
FY24 outcome - guidance basis 1,2
13.4 (0.3) (0.1) (0.9) (1.3)
3.5 Compared to FY24 guidance of c. € 13.3bn EBITDAaL and c. € 3.3 bn Adjusted FCF (0.2) Difference between guidance FX and weighted average FX during the year in reported results
Remove Add back Remove Remove Add back
Impact of exchange rates
Turkey hyperinflationary accounting
-
Spain
(0.4) (0.5)
Italy
0.2 Income from certain central services provided to Italy & Spain (previously recognised below EBITDAaL), now recognised as income due to discontinued operations accounting.
Group Shared Operations income
0.2
FY24 reported 3
11.0 (0.3)
2.6 New perimeter of the Group excluding Italy & Spain (0.1) Difference between FY24 reported FX and FY25 guidance FX
Remove Remove Remove
Impact of exchange rates
Turkey hyperinflationary accounting
0.1
-
(0.1) Removing shared operations income relating to Spain ( € 0.1bn) that will no longer be recharged
Group Shared Operations income (relating to Spain)
(0.1) 10.7
FY24 re-based 2,3,4
2.4 1. FY24 outcome including Vodafone Spain & Vodafone Italy, based on FY24 guidance FX rates (to € ): ZAR 19.30, TRY 21.10, EGP 33.38, GBP 0.88. 2. Excluding the impact of hyperinflationary accounting in Turkey. 3. Excluding Vodafone Spain & Vodafone Italy. 4. FY24 re-based outcome based on FY25 guidance FX rates. FY25 guidance FX rates (to € ): ZAR 20.58, TRY 34.98, EGP 51.75, GBP 0.86.
FY24 results ⫶ May 2024
33
Appendix VIII Important notice
You have been provided access to this presentation on the basis that you are an investment professional for the purposes of Article 19 or a member of the press for the purposes of Article 47 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. No other person should act or rely on the information presented and you agree to be bound by the following conditions. You may not disseminate these slides or any recording of this conference, in whole or in part, without the prior consent of Vodafone. Following the announcement that we have entered into binding agreements in relation to the sale of Vodafone Spain and Vodafone Italy, we have updated our financial reporting to recognise that Vodafone Spain and Vodafone Italy are now discontinued operations in accordance with International Financial Reporting Standards ("IFRS"). Accordingly, except where otherwise noted, the Group's results for FY24 exclude Vodafone Spain and Vodafone Italy. Discontinued operations are also excluded from the Group's segment reporting. The FY23 comparatives in the tables in this presentation have been re-presented to reflect that Vodafone Spain and Vodafone Italy are discontinued operations and should be used as the basis of comparison to our FY24 results. This presentation contains non-GAAP financial information which the Vodafone Group's management believes is valuable in understanding the performance of the Vodafone Group. These non-GAAP measures include Adjusted EBITDAaL, Adjusted free cash flow, Free cash flow, Pre-tax ROCE, Organic service revenue growth, Europe & Africa service revenue growth, Organic service revenue growth excluding MDU transition impact, Organic Vodafone Business service revenue growth, Reported growth in Euros excluding hyperinflation, Digital services revenue growth and Organic group service revenue growth excluding Turkey. Definitions of these non-GAAP measures can be found in the Vodafone Group Plc preliminary results for the year ended 31 March 2024. This report can be found at investors.vodafone.com. However, non-GAAP financial information is not uniformly defined by all companies and therefore it may not be comparable with similarly titled measures disclosed by other companies, including those in the Vodafone Group's industry. Although these measures are important in the assessment and management of the Vodafone Group's business, they should not be viewed in isolation or as replacements for, but rather as complementary to, the comparable GAAP measures. Information in this presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. This presentation includes certain information from third-party sources. The Vodafone Group has not independently verified the market data or other information (i) contained in third-party sources or (ii) on which such third-party sources are based, nor does the Vodafone Group make any representation or give any warranty as to the accuracy or completeness of such information. The information from third-party sources that is cited here has been reproduced accurately. The use by the Vodafone Group of any MSCI ESG Research LLC or its affiliates ("MSCI") data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement, recommendation, or promotion of the Vodafone Group by MSCI. MSCI services and data are the property of MSCI or its information providers, and are provided 'as-is' and without warranty. MSCI names and logos are trademarks or service marks of MSCI. Copyright ©2022 Sustainalytics. All rights reserved. This presentation contains information developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/legal-disclaimers.
References to Vodafone are to Vodafone Group Plc and references to Vodafone Group are to Vodafone Group Plc and its subsidiaries unless otherwise stated. Vodafone, the Vodafone Speech Mark Devices, Vodacom and Together We Can are trade marks owned by Vodafone. Other product and company names mentioned herein may be the trade marks of their respective owners. This presentation, along with any oral statements made in connection therewith, contains "forward- looking statements" including within the meaning of the US Private Securities Litigation Reform Act of 1995 with respect to the Vodafone Group's financial condition, results of operations and businesses, including guidance on the Vodafone Group's FY25 Adjusted EBITDAaL and Adjusted free cash flow, the information regarding the announced agreement to combine Vodafone UK and Three UK, the sales of Vodafone Spain and Vodafone Italy, including the planned buybacks upon completion of the sales, the commercial and operational step-up in Germany, the plan to increase efficiency via simplification, commercialisation and artificial intelligence (AI) adoption, the strengthening of Vodafone Business capabilities, the establishment of the Vodafone Investments division, the MDU single billing transition in Germany, the 1&1 National Roaming Agreement and fibre JV deployment in Germany, the restructuring of Vodafone Germany, including announced role reductions, the Group's € 4 billion capital return programme, including the Group's FY25 total ordinary dividend and its ambition to grow the dividend over time, and certain of the Vodafone Group's plans and objectives, including its strategy and strategic roadmap and emissions targets and other ESG goals, commitments, targets and ambitions, climate-related scenarios or pathways and methodologies it uses to assess its progress in relation to those. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as "transform", "momentum", "plan", "continue", "pathway", "progress", "roadmap", "expect", "target", "ambition", "transition" or "accelerate" (including in their negative form). 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 may or may not 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. 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 "Forward looking-statements and other matters" and "Risk Management" in the Vodafone Group Plc Annual Report for the year ended 31 March 2023 and under "Risk Factors" and "Forward-looking statements and other matters" in the Vodafone Group Plc preliminary results for the year ended 31 March 2024. These reports can be found at investors.vodafone.com. All subsequent written or oral forward-looking statements attributable to Vodafone, to any member of the Vodafone Group or to 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 or made in connection with this presentation will be realised. Any forward-looking statements are made as of the date of this presentation. Except as otherwise stated and as may be required to comply with applicable law and regulations, Vodafone does not intend to update these forward-looking statements and does not undertake any obligation to do so.
FY24 results ⫶ May 2024
34
Page 1Page 2Page 3Page 4Page 5Page 6Page 7Page 8Page 9Page 10Page 11Page 12Page 13Page 14Page 15Page 16Page 17Page 18Page 19Page 20Page 21Page 22Page 23Page 24Page 25Page 26Page 27Page 28Page 29Page 30Page 31Page 32Page 33Page 34Page 35Powered by FlippingBook
Attachments
- Original Link
- Permalink
Disclaimer
Vodafone Group plc published this content on 14 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 May 2024 06:25:08 UTC.
