Vodafone Group Plc (LON:VOD) has announced its FY22 Preliminary results.
Good financial performance with growth in revenues, profits and cash flows
· Good service revenue growth in FY22 with continued growth in both Europe and Africa throughout the year
· Good financial performance in Germany with 1.1%* service revenue growth and 6.5%* Adjusted EBITDAaL growth
· Strong step up in pre-tax ROCE of 1.7 percentage points to 7.2%, supported by operating profit growth of 11.1%
|Group service revenue||6||38,203||37,141||2.6*|
|Profit for the financial year||6||2,624||536|
|Basic earnings per share||17||7.20c||0.38c|
|Adjusted basic earnings per share2||17||11.03c||8.08c|
|Total dividends per share||27||9.00c||9.00c|
|Cash inflow from operating activities||17||18,081||17,215||5.0|
|Adjusted free cash flow2||18||5,437||5,019|
1. ‘*’ represents organic growth. See page 2.
2. Non-GAAP measure. See page 31.
· Group revenue increased by 4.0% to €45.6 billion driven by service revenue growth in Europe and Africa
· Adjusted EBITDAaL growth of 5.0%* to €15.2 billion driven by good revenue growth and continued cost transformation programme savings
· Adjusted free cash flow of €5.4 billion, with growth enabled by an increase in Adjusted EBITDAaL
· Total dividends per share are 9.0 eurocents, including a final dividend per share of 4.5 eurocents
Nick Read, Vodafone Group Chief Executive, commented:
“We delivered a good financial performance in the year with growth in revenues, profits and cash flows, in line with our medium-term financial ambitions. Our organic growth underpinned a step-change in our return on capital, which improved by 170bps to 7.2%. Whilst we are not immune to the macroeconomic challenges in Europe and Africa, we are positioned well to manage them and we expect to deliver a resilient financial performance in the year ahead.
Our near-term operational and portfolio priorities remain unchanged from those communicated 6 months ago. We are focused on improving the commercial performance in Germany, actively pursuing opportunities with Vantage Towers and strengthening our market positions in Europe. These actions, together with the simplification of our portfolio and the ongoing delivery of our organic growth strategy, will create further value for our shareholders.”
Summary ⫶ Good financial performance
All amounts marked with an ‘*’ in the commentary represent organic growth which presents performance on a comparable basis, excluding the impact of foreign exchange rates, mergers and acquisitions and other adjustments to improve the comparability of results between periods. When calculating organic growth, the FY21 results for Vantage Towers and relevant operating entities have been adjusted to reflect a full year of operation on a pro forma basis in order to be comparable to FY22. Organic growth figures are non-GAAP measures. See non-GAAP measures on page 31 for more information.
Total revenue increased by 4.0% to €45.6 billion (FY21: €43.8 billion), driven by service revenue growth in Europe and Africa, and higher equipment revenue, as well as favourable foreign exchange movements.
Adjusted EBITDAaL increased by 5.0%* to €15.2 billion (FY21: €14.4 billion) due to revenue growth, and strong cost control, supported by a legal settlement in Italy. The Adjusted EBITDAaL margin was 0.5* percentage points higher year-on-year at 33.4%.
Operating profit increased by 11.1% to €5.7 billion (FY21: €5.1 billion), reflecting higher Adjusted EBITDAaL, and lower depreciation and amortisation on owned assets, partly offset by lower other income.
The Group made a profit for the financial year of €2.6 billion (FY21: €0.5 billion). The profit increase was primarily driven by higher Adjusted EBITDAaL, and lower income tax expense.
Basic earnings per share was 7.20 eurocents, compared to basic earnings per share of 0.38 eurocents in the prior year.
Cash flow, funding & capital allocation
Cash inflow from operating activities increased by 5.0% to €18.1 billion (FY21: €17.2 billion).
Free cash flow was an inflow of €3.3 billion (FY21: inflow of €3.1 billion). Higher Adjusted EBITDAaL, and lower licence and spectrum payments were partially offset by lower working capital, lower interest received and paid, and higher restructuring and integration cash expenditure during the year. Adjusted free cash flow was an inflow of €5.4 billion (FY21: inflow of €5.0 billion).
Net debt at 31 March 2022 was €41.6 billion, compared to €40.5 billion as at 31 March 2021. Net debt increased by €1.1 billion due to share buybacks of €2.0 billion (1,441 million shares) used to offset dilution linked to mandatory convertible bonds, partially offset by Free cash flow of €3.3 billion less equity dividends paid of €2.5 billion.
Total dividends per share are 9.0 eurocents (FY21: 9.0 eurocents), including a final dividend per share of 4.5 eurocents. The ex-dividend date for the final dividend is 1 June 2022 for ordinary shareholders, the record date is 6 June 2022 and the dividend is payable on 5 August 2022.
Strategy ⫶ Committed to improving returns through growth
Our strategy focuses on driving shareholder returns through growth, and is delivered through three customer commitments and three enabling strategies. These work together towards our vision to become a new generation connectivity and digital services provider for Europe and Africa, enabling an inclusive and sustainable digital society.
We have made good progress with our strategy during FY22 and highlights include: further deepening our customer relationships with lower customer churn; good results from our increased capital investment with improvements in network quality; increasing penetration of financial services in Africa; and another successful year of digital enabled efficiencies, driving the highest Adjusted EBITDAaL margin over the last decade. Our strategic progress has enabled us to deliver well against our medium-term financial ambitions with growth in pre-tax ROCE to 7.2%. The table below includes a selection of KPIs that illustrates progress in our key areas of focus.
|Best connectivity products & services|
|Europe mobile contract customers1||million||66.4||65.4|
|Europe broadband customers1||million||25.6||25.6|
|Europe Consumer converged customers1||million||9.0||7.9|
|Europe mobile contract customer churn||%||13.6||13.7|
|Africa mobile customers2||million||184.5||178.0|
|Africa data users2||million||89.9||84.9|
|Business service revenue growth*||%||0.8||(0.6)|
|Leading innovation in digital services|
|Europe TV subscribers1||million||21.9||22.2|
|IoT SIM connections||million||150.1||123.3|
|Africa M-Pesa customers2||million||52.4||48.3|
|Africa M-Pesa transaction volume2||billion||19.9||15.2|
|Outstanding digital experiences|
|Digital channel sales mix3||%||25||26|
|End-to-end TOBi completion rate4 5||%||42.9||34.6|
|Leading gigabit networks|
|5G available in European cities1||#||294||240|
|Europe on-net gigabit capable connections1||million||48.5||43.7|
|Europe on-net NGN broadband penetration1||%||30||30|
|Simplified & most efficient operator|
|Pre-tax return on capital employed6 7||%||7.2||5.5|
|Post-tax return on capital employed6 8||%||5.0||3.9|
|Europe markets where 3G switched off1||#||4||3|
1. Including VodafoneZiggo | 2. Africa including Safaricom | 3. Based on Germany, Italy, UK, Spain only | 4. Group excluding Egypt | 5. Defined as percentage of total customer contacts resolved without human interaction through TOBi | 6. These line items are non-GAAP measures. See page 31 for more information. | 7. Controlled operations | 8. Controlled operations and associates/joint ventures
A more detailed review of our strategic progress is contained within an accompanying video presentation available here: investors.vodafone.com/reports-information/results-reports-presentations. In this presentation we outline: we are systematically executing our organic growth strategy and have clear operational priorities; we are well-placed and have actions underway to manage current macro-economic challenges; and we are committed to improving shareholder returns through growth and clear portfolio priorities. Further information on our strategy is also available through the following links.