Slide 1: Vodacom Group Annual Results
Vodacom Group Annual Results For the year ended 31 March 2020 The future is exciting. Ready?
Slide 2: Disclaimer
Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentations may lawfully be communicated (‘relevant persons’). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in the f
Slide 3: COVID-19 | Rapid, comprehensive and coordinated response
COVID-19 | Rapid, comprehensive and coordinated response Essential service, ensuring vital connectivity to keep families connected, enable business to operate, students to learn, health care to be delivered and Government to provide critical services Maintaining • Maintaining reliability • Zero-rati
Slide 4: COVID-19 | Responses and looking ahead
COVID-19 | Responses and looking ahead Phase 1: Phase 2: Phase 3: Crisis Recovery New normal Supporting staff, Societal Governments, Supporting Economic focus customers and business and jobs resilience suppliers Our Enabling critical Supporting broad Platform for new focus response actions societal
Slide 5: COVID-19 what are the trends
COVID-19 what are the trends South Africa Data volumes Voice volumes Recharges Other +20% On average Roaming 80% Flat Consumer slightly up Slightly Up initially then down +110% April High of 40% Enterprise down up evened out Less than 1% of Service revenue yoy Gross connections International and Chu
Slide 6: Highlights
Highlights +4.8% +11.6% +13.2% (+3.5%)* R13.2bn (+2.3%*) (+2.2%*) Revenue Capex EBITDA Operating profit R90.7 billion 14.6% intensity R37.6 billion R27.7 billion 115.5m 61.5m 945cps 845cps Customers1 Data customers1 HEPS Total DPS +5.4% +10.9% +8.9% +6.3% 1. Including Safaricom at 100% * Normalised
Slide 7: Diversified Group | Increasing contribution from International and Safaricom
Diversified Group | Increasing contribution from International and Safaricom Group service revenue Group EBITDA Group customers +R4.9 billion +R5.0 billion 13.9% 14.6% +11.1% 14.2% 15.2% +18.0% +11.5% 33.4% (+4.8%*) (+8.3%*) 15.8% 19.5% +38.8% 23.5% 25.0% +12.5% (+7.1%*) (+9.4%*) -4.3% 35.8% 30.8% +
Slide 8: Highlights | South Africa – Elasticity cements recovery
Highlights | South Africa – Elasticity cements recovery Reported Key indicator FY20 % change Key milestones Service revenue (Rm) 52 712 2.3 Underlying service revenue growth of 3.3% and EBITDA growth of 2.2% EBITDA (Rm) 29 094 4.9 Pricing transformation successfully executed Data customers (‘000) 21
Slide 9: South Africa | New services contribution gaining momentum
South Africa | New services contribution gaining momentum SA service revenue contribution New services contribution to service revenue R billion +4.9% -1.6% YoY % % contribution to Rm service revenue change 14.2 24.2 IoT revenue 893 1.7 38.5 Fixed revenue 3 189 6.0 13.5 Digital lifestyle services 1
Slide 10: Pricing transformation evolution | Elasticity shaping recovery
Pricing transformation evolution | Elasticity shaping recovery 2017 2020 Added Improve 1.9 million More data Affordability Big bundles for data customers to Data plus on contract for prepaid sharing/family customer consumer c40% more data < 30 day bundles Big data discounted experience 21.9 million
Slide 11: Highlights | International - sustained strong growth
Highlights | International - sustained strong growth Reported Normalised* Key indicator FY20 % change % change Key milestones Service revenue (Rm) 21 799 12.5 7.1 Strong M-Pesa and data growth Strong growth in DRC and Data revenue1 (Rm) 3 720 23.2 17.3 Mozambique M-Pesa revenue (Rm) 3 993 29.8 22.7
Slide 12: International | Growth sustained driven by data and M-Pesa
International | Growth sustained driven by data and M-Pesa International service revenue contribution Service revenue R billion LC yoy growth 1.1 Tanzania 1.3 Impacted by customer registration; customer base 74% 6.6 +0.9% biometrically registered. Outperformed competition in highly competitive marke
Slide 13: Commercial progress: International data | potential realising
Commercial progress: International data | potential realising Data1 contribution Data users Million +11.5% +17.3%* R3.7bn +13.1% +4.2% 17.1% 34.6 38.6 17.7 20.0 9.8 10.2 of International service revenue Customers Data customers Active smartphone users FY19 FY20 Expanding data coverage Number of site
Slide 14: Highlights | Safaricom – Mobile data recovery gaining momentum
Highlights | Safaricom – Mobile data recovery gaining momentum Key indicator FY20 FY20 LC Key milestones (KES’bn) (Rm) % change New services growth in Service revenue 251 36 319 4.8 M-Pesa up 43.4% Connected 142 000 homes, Data revenue 41 5 869 12.1 up 31.9% Dividend proposed of M-Pesa revenue 84 12
Slide 15: Strategy | Towards Vision 2025
Strategy | Towards Vision 2025 1 Best customer 7 Our brand and experience reputation Seamless, frictionless, personalised Purpose-led organization, connecting for a digital experience to our customers better future by enabling a digital society, inclusive for all with the least environmental impact
Slide 16: South Africa digital services | Unlocking OTT for everyone
South Africa digital services | Unlocking OTT for everyone Platforms • Direct charge to bill • Advertising • Education platform • Mum & baby 3.5 million 1.9 million 883 000 VideoPlay purchases App downloads Subscribers Platform expansion across our International operations Annual results | 31 March
Slide 17: Group financial services | Overview
Group financial services | Overview R18 billion 53 million total revenue financial services customers R billion Million +12.8% 53.2 18.2 +22.0% 47.2 14.9 FY19 FY20 FY19 FY20 M-Pesa South Africa financial services M-Pesa South Africa financial services Annual results | 31 March 2020 17
Slide 18: Commercial progress: Financial services | expanding new services
Commercial progress: Financial services | expanding new services Financial services revenue • Vodapay – direct airtime, prepaid electricity, bills in South Africa Pay • POS devices R million • Revenue +16.1% +21.5% Insure • 1.9 million policies +45.3% • Portfolio: Devices, funeral, Life • R9.9 billi
Slide 19: Commercial progress: M-Pesa | Securing financial inclusion
Commercial progress: M-Pesa | Securing financial inclusion International M-Pesa Revenue Safaricom R million +19.7% 18.3% 38.2% (12.6%*) 33.6% 70.0% contribution to of customers contribution to of customers service revenue using M-Pesa service revenue using M-Pesa +29.8% (+22.7%*) M-Pesa customers up
Slide 20: New business update | IoT
New business update | IoT 5.3 million SIMs, +17.2% IoT revenue R893 million, +38.5% • Asset tracking • Manufacturing Local company – Engagements in Americas, UK and rest of Europe, Services • Mining • Security going Global China, Singapore, Hong Kong, and of course Africa • Smart building Telecommun
Slide 21: New partnerships update | AWS and Smart Service Offerings
New partnerships update | AWS and Smart Service Offerings AWS Africa region cloud services Digital Smart Service Offering Partnerships create industry-specific approach based on deep know how that will launched in Cape Town: enhance our clients business through digital transformation Sharpening Voda
Slide 22: Financial Review
Financial Review The future is exciting. Ready? Annual results | 31 March 2020
Slide 23: Group income statement
Group income statement Reported Normalised* R million FY20 (IFRS 16) FY19 (IAS 17) % change % change Revenue 90 746 86 627 4.8 3.5 Service revenue 73 354 69 867 5.0 3.5 EBITDA 37 610 33 714 11.6 2.3 EBITDA-aL 33 539 - - Net profit from associate and joint ventures 4 149 2 774 49.6 Operating profit 2
Slide 24: Service revenue | SA growth recovery; International continued strong performance
Service revenue | SA growth recovery; International continued strong performance South Africa International R million / % R million / % 5.0% 5.1% 4.2% 4.6% 3.9% -1.1% 12.1% 1.8% 19.6% 9.0% 10.5% -1.2% 8.3% 9.5% 7.1% 3.5% 12 577 13 220 13 567 13 348 5 112 5 668 5 622 5 397 1Q20 2Q20 3Q20 4Q20 1Q20 2Q
Slide 25: Group expenses | Well contained
Group expenses | Well contained Group expenses1 South Africa total expenses R million +4.1%* (1.3ppts) R million FY20 (IFRS 16) FY19 (IAS 17) Reported Normalised* % change % change (0.5ppts) +2.3% Total expenses 53 229 52 835 0.7 4.6 37 802 40 499 FY20 Total Rain roaming BEE Adjusted FY20 Of which:
Slide 26: Group EBITDA | International performance improving
Group EBITDA | International performance improving Group South Africa International R million / % R million / % R million / % +11.6% +38.8% +4.9% (+2.3%*) (+9.4%*) (0.0%*) 42.0% 41.4% 43.0% 41.8% 37.5% 38.6% 38.9% 40.9% 31.3% 33 714 37 610 27 741 29 094 6 252 8 679 FY19 FY20 FY19 FY20 FY19 FY20 EBIT
Slide 27: Finance charges and debt | Gearing impacted by IFRS 16
Finance charges and debt | Gearing impacted by IFRS 16 Group net finance charges Group net debt R million FY20 (IFRS 16) FY19 (IAS 17 % change R million FY20 (IFRS 16) FY19 (IAS 17 Finance income 884 630 40.3 Cash balances including overdraft 16 191 11 066 Current borrowings (3 707) (10 603) Finance
Slide 28: Group tax | ETR normalising
Group tax | ETR normalising Group effective tax Reconciliation to effective tax rate R million / % % FY20 Statutory tax rate 28.0% -2.2% Net profit from associate -5.0ppts and joint ventures Irrecoverable foreign taxes +2.4ppts 29.7% Non-deductible opex +0.9ppts Non-deductible finance costs +0.7ppts
Slide 29: Cash flow | Free cash flow benefitting from special dividend received
Cash flow | Free cash flow benefitting from special dividend received Group free cash flow R million >200.0% +11.6% 845 +2.0% (13 218) 68 (4 046) 523 +0.6% -1.8% +78.2% (732) +9.5% (6 417) +22.7% (2 743) 4 394 37 610 21 782 16 284 16 284 EBITDA Working Capital Disposal of Lease liability Other Opera
Slide 30: HEPS | Affected by BEE & one-off; boosted by Safaricom
HEPS | Affected by BEE & one-off; boosted by Safaricom Headlines earnings per share Cents 25 (17) (4) +8.9% 1 72 • One-off includes: – Prior year deferral release R389 million 868 941 949 945 945 FY19 Base change BEE related Share of One-offs Core FY20 (shares) expenses Safaricom Annual results | 31
Slide 31: Shareholder returns | Dividend boost to shareholders
Shareholder returns | Dividend boost to shareholders Total dividend declared Dividend policy and final dividend calculation R million/% 15 513 14 030 14 595 90% of pre-Safaricom 7 435 headline earnings R6 999 million @ 90% R6 300 million 7 316 7 343 1 101 Flow through of 6 714 7 252 6 977 Safaricom
Slide 32: COVID-19 | In our operations
COVID-19 | In our operations 15 MAR 22 Mar 29 Mar 5 Apr 12 Apr 19 Apr 26 Apr 3 May 10 May 26/3 South Africa lockdown 30/3 Lesotho lockdown 30/3 Mozambique state of emergency 6/4 DRC Kinshasa lockdown Tanzania no restrictive measures Positive Recovered Fatalities South Africa 8 895 3 153 178 NORTH EU
Slide 33: COVID-19 | Quality stock seen as safe haven
COVID-19 | Quality stock seen as safe haven Share price relative to market R Share price rebased to 100 (R) 110 90 70 50 30 Jan 20 Feb 20 Mar 20 Apr 20 Vodacom MTN Telkom JSE All Share Source: Factset: Date range 1 January 2020 to 8 May 2020 Annual results | 31 March 2020 33
Slide 34: COVID-19 | Balance sheet strength – Low net debt to EBITDA ratio
COVID-19 | Balance sheet strength – Low net debt to EBITDA ratio Net debt/EBITDA R billion / times • Conservative balance sheet gearing R28 billion net debt headroom • Maintained Net debt / EBITDA 1.5 R18 billion between 0.6x and 0.7x for past 5 years EBITDA headroom • Sensitivity: 0.7 Assuming 1.5x
Slide 35: Debt | Profile excluding IFRS 16 leases
Debt | Profile excluding IFRS 16 leases Maturity profile R billion/% 45.0% • Low short-term debt repayments 23.0% 18.0% • Payment profile spread over 5 years 9.0% 5.0% 7.4 18.5 9.4 3.6 2.0 • Low foreign denominated debt FY21 FY22 FY23 FY24 FY25 exposure – limited currency risk Reported Repayment • M
Slide 36: Medium-term targets postponed
Medium-term targets postponed Period of the crisis Post the crisis Targets postponed Targets resumed • Uncertainty • Better visibility of economy • Economic downturn affecting • Better view of impacts and opportunities consumers and business • Changing behaviour • Future more predictable Strong bala
Slide 37: Priorities
Priorities Spectrum COVID-19 Dealing with the effects Platform Digital acceleration Vodacom Financial Data services growth monetisation Annual results | 31 March 2020 37
Slide 38: Q&A
Q&A Please type your questions on the webcast portal Annual results | 31 March 2020
Slide 39: Country data
Country data South Africa Tanzania DRC Mozambique Lesotho Safaricom PopulationŦ (million) 58.6 58.0 86.8 30.4 2.1 52.6 GDP per capitaŦ (USD) 86 791η 1 109 572 511 1 230 1 805 GDP growth estimateŦ 2020 (%) 0.2 6.7 4.4 2.2 0.9 5.4 Ownership (%) 100 75§ 51 85 80 34.94¢ 2021/2026/2028/ Licence expiry pe
Slide 40: Impact of foreign exchange
Impact of foreign exchange Revenue Average YTD exchange rates YoY% growth FY20 Reported Normalised* FY20 FY19 % change USD/ZAR 14.79 13.76 7.5 South Africa 2.5 2.5 ZAR/MZN 4.27 4.42 (3.4) International 12.6 7.1 ZAR/TZS 155.93 166.81 (6.5) Group 4.8 3.5 EUR/ZAR 16.42 15.92 3.1 ZAR/KES 6.93 7.40 (5.8)
Slide 41: IFRS 16 | Impacts
IFRS 16 | Impacts R million FY20 FY19 R million FY20 FY19 Income statement Balance sheet Operational lease expenses Right of use assets Group - 2 670 Group 12 046 - South Africa - 1 426 South Africa 5 665 - International - 1 245 International 6 619 - Depreciation right of use assets Lease liabilitie
Slide 42: EBITDA-aL reconciliation
EBITDA-aL reconciliation EBITDA-aL R million FY20 Group South Africa International EBITDA 37 610 29 094 8 679 Depreciation – right of use (2 697) (1 598) (1 127) assets Finance costs – lease (1 374) (566) (843) liabilities EBITDA-aL 33 539 26 930 6 709 EBITDA-aL Earnings before interest, taxation, d
Slide 43: Definitions
Definitions Customers are based on the total number of mobile customers using any service during the last three months. This includes customers paying a monthly Customers fee that entitles them to use the service even if they do not actually use the service and those customers who are active whilst
Slide 44: Forward-looking statements
Forward-looking statements This presentation which sets out the annual results for Vodacom Group Limited for the year ended 31 March 2020 contains 'forward-looking statements‘, which have not been reviewed or reported on by the Group’s auditors, with respect to the Group’s financial condition, resul
Slide 45: More information | upcoming dates
More information Visit our website for more information http://www.vodacom.com 2020 upcoming dates Integrated report online 12 June 2020 Group AGM 21 July 2020 Q1 results 23 July 2020 Contact us VodacomIR@vodacom.co.za 1H21 results 16 November 2020 Follow us on social media @Vodacom Facebook.com/vod