Slide 1: Vodacom annual results presentation
19/05/2014 Vodacom annual results presentation for the year ended 31 March 2014 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 n
Slide 2: Highlights
19/05/2014 Highlights 1993 Vodacom was awarded a licence to operate a GSM cellular network in South Africa and switched on its operations in March 1994, just in time for the country’s first democratic elections Power highlights Group revenue 8.3% R75 711 million Group EBITDA Group data revenue 8.2%
Slide 3: Operating review
19/05/2014 Uncertain regulatory environment Challenging Challenging macro environment environment Pressure on SA consumer spending Pressure on costs Intensifying competition 5 Operating review 1996 Vodacom launched the world’s first prepaid service on Intelligent Network platforms 3
Slide 4: South Africa: Service revenue returned to growth; International performance
19/05/2014 South Africa: Service revenue returned to growth • Improved service revenue trends (3.0% excl MTR) – Revenue up 5.5% boosted by 28.6% increase in equipment sales • 2.3 million net additions in active customers • Data revenue growth of 23.6% Key indicators FY 2014 % change Service revenue
Slide 5: Strategic review
19/05/2014 Strategic review 2001 Vodacom continued its impressive growth, reaching 5 MILLION customers Strategic pillars Customer Customer Growth Growth Operations Operations People People Reputation Clear NPS leadership Diversify revenue to Deliver cost and process Best talent, best practice Transf
Slide 6: SA Customer: Reducing the cost to communicate; lead in network
19/05/2014 SA Customer: Reducing the cost to communicate Pricing: Blended and prepaid Contract: Integrated plans Hybrid: Smart and flexi plans R % 1.00 0.79 43.7 0.72 56.3 0.55 FY2013 FY2014 Voice plans Integrated plans Blended ppm Prepaid ppm • 23.6% decrease in effective • Converted >56% of voice
Slide 7: SA Customer: Evolving to a smarter service; mobile data take-up
19/05/2014 SA Customer: Evolving to a smarter service New retail concept stores My Vodacom Smartphone App Online • #1 Net Promoter Score (NPS) • New retail concept stores achieving 10% uplift in overall retail experience, 15.4% increase in contract connection and 4% improvement in touch point NPS •
Slide 8: SA Growth: Expanding innovative services; International contribution
19/05/2014 SA Growth: Expanding innovative services Device insurance policies ‘000 25.5% 298 374 FY2013 FY2014 • >R300 million in revenue • <6% of devices insured 15 International Growth: Increasing contribution to Group Service revenue EBITDA Active customers 23.4% 55.4% 21.8% R13.9bn R4.3bn 26m 22
Slide 9: International Growth: Commercial execution; Driving M-Pesa
19/05/2014 International Growth: Successful commercial execution Active customers Active data customers ‘000 ‘000 1 344 86.4% 1 108 4 333 802 3 045 2 784 5 643 7 706 10 008 9 665 9 468 10 284 2 922 4 117 7 675 FY2012 FY2013 FY2014 FY2012 FY2013 FY2014 TZN DRC MOZ LSL • Active customers up 21.8% • 86
Slide 10: Group Enterprise: Gaining momentum; Operations efficiency
19/05/2014 Group Enterprise: Gaining momentum Enterprise contribution Managed services revenue R million 21.7% R10.2bn 16.5% 1 145 of Group 789 service 632 revenue 726 961 1 304 FY2012 FY2013 FY2014 International SA • 16.5% contribution to Group service revenue (2013: 14.0% ) • Managed services reve
Slide 11: People: Building a talented and diverse team; Mobiles for good
19/05/2014 People: Building a talented and diverse team Pipeline Learners Leadership • Female leaders in waiting • Bursaries • New talent • Females in technology • Training • International assignments • Learnerships 21 Reputation: Mobiles for good R104 million committed through the Vodacom Foundatio
Slide 12: Financial review
19/05/2014 Reputation: Serious about transformation Vodacom South Africa…Proudly a LEVEL 2 BBBEE Contributor • Commenced OTC trading of BEE shares on 3 Feb • R53 average trading price, 112% growth from 2008 • Deal funding extended to 2018 to drive more value 23 Financial review 2005 Vodacom was the
Slide 13: Group income statement; Service revenue boosted by data growth
19/05/2014 Group income statement R million 2014 2013 % change % change* Service revenue 62 047 59 261 4.7 3.7 Revenue 75 711 69 917 8.3 7.3 EBITDA 27 314 25 253 8.2 5.1 Operating profit before BBBEE charge 20 626 18 897 9.1 BBBEE charge (232) - n/a Operating profit 20 394 18 897 7.9 5.2 Profit on s
Slide 14: Delivering positive service revenue growth; Focused on managing costs
19/05/2014 Delivering positive service revenue growth SA service revenue growth International service revenue growth R million R million 6.9% 30.0% 27.4% 23.4% 4.4% 3.0% 26.1% 2.6% 11.0% 0.3% (0.3%) 15.1% 48 308 48 159 48 316 10 141 11 258 13 895 FY2012 FY2013 FY2014 FY2012 FY2013 FY2014 Service rev
Slide 15: Maintaining healthy margins; Adequate capacity for debt expansion
19/05/2014 Maintaining healthy margins 36.1% EBITDA Group EBITDA margin R million 8.2% 132 1 171 88 648 692 977 25 253 25 901 27 314 FY2013 Trading and FY2013 Trading FX SA MTR South Africa International Corporate FY2014 1 EBITDA translation FX EBITDA impact EBITDA excl EBITDA 2 and EBITDA MTR 2 eli
Slide 16: Taxation increased by non-deductible expenses; Headline earnings per share
19/05/2014 Taxation increased by non-deductible expenses Group tax Group tax reconciliation R million 36.0% R million 2014 Rate (%) 30.2% Profit before tax 19 585 28.3% Normal tax 5 484 28.0 Non-deductible BBBEE 95 0.5 charge Withholding tax 137 0.7 5 730 5 210 5 918 Non-deductible expenses 281 1.4
Slide 17: Group statement of financial position; PPE and intangible assets
19/05/2014 Group statement of financial position R million 2014 2013 Movement Assets Property, plant and equipment 30 802 27 741 3 061 Intangible assets 5 369 5 332 37 Other non-current assets 1 783 1 361 422 Current assets 22 787 21 157 1 630 Total assets 60 741 55 591 5 150 Equity and liabilities
Slide 18: Maintaining high levels of investment; Growth in free cash flow
19/05/2014 Maintaining high levels of investment Group capital expenditure Capital intensity R million 27.3% 14.2% 24.7% 13.5% 12.9% 16.1% 12.3% 11.9% 11.1% 8 662 9 456 10 779 FY'2012 FY2013 FY2014 FY2012 FY2013 FY2014 Capital expenditure Capital intensity South Africa International 35 Growth in fre
Slide 19: Track record of shareholder returns; Medium term guidance unchanged
19/05/2014 Track record of delivering shareholder returns Dividend per share Cents per share 825 785 710 460 430 430 450 280 23% TSR Bloomberg 180 260 355 395 FY2011 FY2012 FY2013 FY2014 Interim dividend Final dividend • 5.1% growth in total dividend for the year to 825 cents per share • Dividend po
Slide 20: So what's next? Nashua customer strategy
19/05/2014 So what’s next? 2006 Vodacom launched a state of the art 3G HSDPA (mobile broadband) network in South Africa Nashua: consolidating our customer strategy • Buy back c.400k customer base • Vodacom to manage customer relationships directly • No change in revenue and customer base • Deal subj
Slide 21: Neotel background; Acquisition rationale
19/05/2014 Neotel background • Second fixed line operator in South Africa • Started operations in 2007 • Tata majority shareholder, Nexus Connexion minority BEE partner • Product offers: - Transmission services for wholesale and enterprise markets - National internet points of presence - Voice servi
Slide 22: Transaction detail; Massive capital investment
19/05/2014 Transaction detail • 100% of the issued share capital and shareholder loan claims against Neotel for a total cash Value consideration equivalent to an enterprise value (‘EV’) of R7.0bn - 8.8x annualised 2014 Operating free cash flows, adjusted for cost and capex synergies1 • Neotel is exp
Slide 23: Vodacom of the future; Strategic pillars: Priorities for 2015
19/05/2014 Vodacom of the future Single service offering Vodacom LTE 2012 - 2013 Best data Total communications Vodacom network 2013 - 2014 Pricing transformation New retail concept Vodacom M-Pesa 2014 - 2017 FTTx DSL like OneNet for services SME Online Cloud acceleration Digital 3G Data where servi
Slide 24: Thank you
19/05/2014 Thank you Did you know? 2012 - Vodacom was the first operator to launch LTE (or 4G) services in South Africa Country data South Africa Tanzania DRC Mozambique Lesotho Population (million) 53 51 69 27 2 GDP per capita* (USD) 7 140 727 308 652 1 250 GDP growth estimate* 2013 (%) 3.3 8.2 8.2
Slide 25: Impact of foreign exchange; Definitions
19/05/2014 Impact of foreign exchange Revenue Average exchange rates YoY % growth 2014 Reported Normalised* 2014 2013 % change South Africa 5.5 5.5 USD/ZAR 10.13 8.51 19.0 International 23.9 18.1 ZAR/MZN 3.01 3.42 (12.0) Group 8.3 7.3 ZAR/TZS 160.44 187.30 (14.3) EUR/ZAR 13.59 10.97 23.9 EBITDA Oper
Slide 26: Forward-looking statements
19/05/2014 Forward-looking statements This presentation which sets out the annual results for Vodacom Group Limited for the year ended 31 March 2013 contains 'forward-looking statements‘, which have not been reviewed or reported on by the Group’s auditors, with respect to the Group’s financial condi