Vodafone Group Public Limited Company · LSE:VOD
Vodafone Group Public — Vodafone Group — Merrill Lynch Conference June 2007
25 slides from Vodafone Group Public's conference presentation, Jun 5, 2007
Slide 1: Vodafone Group Plc Preliminary Results
Vodafone Group Plc Preliminary Results Andy Halford, Chief Financial Officer 5 June 2007
Slide 2: Disclaimer
Disclaimer The following presentations are being made only to, and are 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 these presentations or any of their contents. Information i
Slide 3: Key highlights
Key highlights Full year results met or exceeded guidance + Execution of our strategy – delivering results + Customer franchise strengthened – over 206m proportionate customers + Outlook for FY07/08 confirms similar on-going trends in Europe and EMAPA + Increasing shareholder returns – dividend up 1
Slide 4: Group results
Group results Continuing operations FY06/07 Growth1 Proportionate customers 206m 16.5% Revenue £31.1bn 4.3% Group EBITDA £12.0bn 0.2% Adjusted operating profit2 £9.5bn 4.2% Adjusted EPS 11.26p 11.4% Reported free cash flow £6.1bn (4.5)% 1 Year-on-year growth in proportionate customers, revenue, EBIT
Slide 5: Met or exceeded FY06/07 expectations
Met or exceeded FY06/07 expectations Guidance Actual Proportionate organic mobile revenue growth 5% to 6.5% 6.3% Proportionate organic mobile EBITDA margin Around 1pp lower 0.9pp lower Capitalised fixed asset additions £4.2 - 4.6bn £4.2bn Free cash flow before tax settlements £5.2 - 5.7bn £6.5bn Tax
Slide 6: Summary
Summary Adjusted operating Revenue EBITDA profit1 35 £11.8bn £12.0bn 10 £9.4bn £9.5bn 12 £31.1bn £29.4bn 30 10 8 25 8 6 20 6 15 4 4 10 2 5 2 0 0 0 FY05/06 FY06/07 FY05/06 FY06/07 FY05/06 FY06/07 Organic growth +4.3% +0.2% +4.2% rates 1 Excludes non operating income of associates, impairment losses a
Slide 7: Regional review - Europe
Regional review - Europe EBITDA & Adjusted Operating free Revenue operating profit1 cash flow 35 10 12 30 £9.8bn £9.4bn 10 £24.7bn 8 £24.6bn £7.0bn 25 £6.8bn 8 20 6 £6.0bn 6 £5.6bn 15 4 4 10 2 5 2 0 0 0 FY05/06 FY06/07 FY05/06 FY06/07 FY05/06 FY06/07 EBITDA Adjusted operating profit Organic growth +
Slide 8: Regional review - EMAPA
Regional review - EMAPA Adjusted operating Revenue EBITDA profit1 7 2.5 4 £6.4bn £2.3bn £3.8bn 6 £3.2bn 2.0 3 5 £4.6bn £1.7bn 4 1.5 £2.7bn 2 £2.4bn 3 1.0 2 1 0.5 1 £1.1bn £0.8bn 0 0.0 0 FY05/06 FY06/07 FY05/06 FY06/07 FY05/06 FY06/07 Organic Controlled: +27.7% growth +21.1% +20.9% rates Associates:
Slide 9: EMAPA Region - Verizon Wireless
EMAPA Region - Verizon Wireless Key operating and financial metrics1 Continued strong performance • Customer base now over 60m YoY change – 1.7m net adds (~90% contract) in Q4 Customers +15% • Continued industry leading contract Service revenue +18% churn at 11% in Q4 - voice +11% • Fourth consecuti
Slide 10: Delivering on our five key strategic objectives
Delivering on our five key strategic objectives Revenue stimulation and cost reduction in Europe Innovate and deliver on our customers’ total communications needs Deliver strong growth in emerging markets Actively manage our portfolio to maximise returns Align capital structure and shareholder retur
Slide 11: Revenue stimulation
1 Revenue stimulation Driving fixed to mobile substitution • Attractive tariffs – Vitamina, Infinity, KombiPakete, Your Price Plan Customer • Family bundles and best friends offers value focus • Bolt-ons – free weekends • Prepaid to contract migration • 00 Xmas Card “Parole” and “Messaggi” (Italy) P
Slide 12: Cost reduction programmes gaining traction
1 Cost reduction programmes gaining traction All on-going initiatives are on track to deliver targeted savings FY05/06 base IT AD&M Implementation underway in six countries £560m 25-30% unit savings within 2-4 years Network supply chain Over £200m of savings delivered in FY06/07 £3.3bn1 8% saving wi
Slide 13: Europe: meeting operating expense targets in FY07/08
Europe: meeting operating expense1 targets in FY07/08 +3.5% £4.8bn Initiatives per area £4.6bn £4.6bn Marketing & • Reduced Group overheads 1.5 sales • Distribution & Retail cost 1.4 • Off-shoring / outsourcing Customer care • Tiering of services 0.6 0.7 • Supply Chain activities IT & SP • Data cent
Slide 14: Europe: meeting mobile capex targets in FY07/08
Europe: meeting mobile capex1 targets in FY07/08 12.3% 11.8% Initiatives per area £2.9bn £2.8bn 10% Other • Retail stores 0.3 0.3 • AD&M IT & SP • Data Centres 0.6 0.5 • Supply chain activities • Self-build access 0.7 Transmission 0.7 • Capacity expansion • Lower requirements due to 3G 0.4 0.3 2G Ra
Slide 15: Key elements of total communications strategy
2 Key elements of total communications strategy Our total communications strategy has four reporting segments Announced FY06/07 Revenue 30 May 2006 (YoY growth) Mobile & PC Mobile internet includes mobile/PC integration £1.4bn Data integration as well as all non-messaging data (+30%) Fixed Includes
Slide 16: Total communication strategy evolution
2 Total communication strategy evolution Progress on all four core elements • Underlying data revenue up 40% YoY: Data - 3G devices (+100%), 3G Vodafone MCC (+114%), HHBD1 (+88%) • Leading partners - Google, MySpace, YouTube, eBay, MSN, Yahoo! Fixed • Vodafone At Home services available in 7 markets
Slide 17: Deliver strong growth in emerging markets
3 Deliver strong growth in emerging markets Priorities Achievements Deliver strong growth Continued strong customer and revenue growth driven by rising penetration Accelerate penetration Service revenue growth1 Introduction of best practice Manage costs to sustain margins Egypt 40% Outperform acquis
Slide 18: Hutch Essar – continuing strong growth
3 Hutch Essar – continuing strong growth Key operating and financial metrics Update on progress • 3.1 million net adds in Q1 2007 2006 – penetration still only around 14% Customers 23.3m • Total customer base now over 27m Revenue US$2.0bn • Significant capex programme - yoy growth +54.6% – targeting
Slide 19: Actively managing our portfolio
4 Actively managing our portfolio Disposals Acquisitions • Sale of Vodafone Japan • Acquired Vodafone Turkey – net cash proceeds £6.8bn1 – cash consideration £2.6bn • Sale of 25% stake in Proximus, • Acquired additional 4.8% stake in Belgium Vodafone Egypt – net cash proceeds £1.3bn – cash considera
Slide 20: Returns and capital structure
5 Returns and capital structure 5: Dividend Dividend policy • 60% target payout of full year adjusted 6.76p earnings per share 6.07p +11.4% • Targeting a modest increase in dividend in the near term until the payout ratio returns to 60% Total shareholder returns FY05/06 FY06/07 • £9bn return of capi
Slide 21: Outlook for FY07/08 – evolving disclosure
Outlook for FY07/08 – evolving disclosure FY06/07 guidance basis FY07/08 guidance basis Proportionate mobile Statutory Revenue organic growth revenue range Proportionate mobile Statutory adjusted Profitability organic EBITDA margin change operating profit range Capitalised fixed asset Statutory No c
Slide 22: Outlook for FY07/08 - guidance
Outlook for FY07/08 - guidance Revenue £33.3bn - £34.1bn Adjusted operating profit1 £9.3bn - £9.8bn Capitalised fixed asset additions2 £4.7bn - £5.1bn Reported free cash flow2 £4.0bn - £4.5bn Note: Includes Hutch Essar from May 2007. 1 Excludes non-operating income of associates, impairment losses a
Slide 23: Free cash flow - FY07/08
Free cash flow - FY07/08 £ bn FY06/07 FY07/08 Actual Underlying free cash flow 6.2 5.9 - 6.4 Long standing tax issue (0.4) (0.6) Impact of Hutch Essar - (0.8) Turkey VAT - (0.2) Working capital deferred to FY07/08 0.3 (0.3) Reported free cash flow 4.0 - 4.5 6.1 actual/guidance 23 Preliminary Results
Slide 24: Summary
Summary Full year results met or exceeded guidance + Execution of our strategy – delivering results + Customer franchise strengthened – over 206m proportionate customers + Outlook for FY07/08 confirms similar on-going trends in Europe and EMAPA + Increasing shareholder returns – dividend up 11.4% to
Slide 25: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the US Private Securities litigation Reform Act of 1995, in particular with respect to : expected roll out of new initiatives and services; expected growth in emerging markets; expected benefits