Vodacom Group Limited · JSE:VOD
Vodacom — Investor Presentation (September 2019)
15 slides from Vodacom's investor presentation, September 2019
Slide 1: IFRS 16 - Leases
IFRS 16 - Leases
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: Why change?
Why change? 1 2 3 Increased comparability Users of financial statements Increased transparency as between companies provided lease liabilities that lease assets with a better picture of the will be recognised and companies that financial position on balance sheet buy assets. of the company. 3 C2 Gen
Slide 4: Summary of accounting changes
Summary of accounting changes • IAS 17 – Did not recognise operating leases on balance sheet. Only commitments disclosed. • IFRS 16 – Recognise right of use asset and lease liability for all leases that meet the definition. IAS 17 IFRS 16 Effect • Recognise right of use asset • R9.7bn • Lease smooth
Slide 5: Contracts that are typically affected
Contracts that are typically affected Period Contract type Number (Years) Site rentals 18 350 3-15 Offices 97 3-34 Stores (Retail) 539 3-5 Movable assets 103 2-5 Other 8 237 m to m Total 27 326 Contracts typically excluded: - Capacity agreements 5 C2 General
Slide 6: Typical example
Typical example Period of lease (y) 6 E Annual payment 150 000 Interest rate 15% Present value (567 672) D Future value - Total payments 900 000 Depreciation per year 94 612 =D/E Year 1 2 3 4 5 6 Total Finance cost (leases) A 85 151 75 423 64 237 51 373 36 578 19 565 332 328 Lease liability repaid B
Slide 7: Typical example
Typical example Income statement 1 2 3 4 5 6 Total IAS 17 …. 3 000 000 3 000 000 3 000 000 3 000 000 3 000 000 3 000 000 18 000 000 Operating lease (150 000) (150 000) (150 000) (150 000) (150 000) (150 000) (900 000) … EBITDA/Operating profit 2 850 000 2 850 000 2 850 000 2 850 000 2 850 000 2 850
Slide 8: Typical example
Typical example Cash flow statement IAS 17 (Statutory) 1 2 3 4 5 6 Total Cash flows from operating activities 0 0 0 0 0 0 0 Cash generated from operations (150 000) (150 000) (150 000) (150 000) (150 000) (150 000) (900 000) Interest received Interest paid Income tax paid Net cash generated from ope
Slide 9: Capex elements
Capex elements Category Details Owned capex (Excluding Spectrum & licenses) Capex guidance as previously disclosed (Guidance) Right of use assets (new under IFRS 16) Additions to capex as a results of increased ROU Spectrum, licenses and acquired intangibles Separately disclosed (Never included) Sta
Slide 10: Impact on guidance
Impact on guidance Group service revenue Group operating profit Capex Mid single digits Mid to high single digits 13% - 14.5% of Group Revenue No impact – Unchanged Low impact - Unchanged Low impact - Unchanged These targets are on average, over the next three years and are on a reported basis in co
Slide 11: Proposed EBITDA reconciliation
Proposed EBITDA reconciliation FY19 a-EBITDA Adjusted EBITDA Assets previously classified as operating leases and finance leases; capitalised and Plus Depreciation - leased assets depreciated Plus Finance cost - leased assets Finance costs associated with leases previously classified as operating le
Slide 12: Impacts – FY 2019
Impacts – FY 2019 FY19 Operating leases Rm Group 2 653 South Africa 1 408 International 1 245 IAS 17 IFRS 16 EBITDA EBITDA EBITDA Group 33 713 +7.9% South Africa 27 740 +5.1% International 6 252 +19.9% IAS 17 IFRS 16 EBITDA margin EBITDA EBITDA Group 38.9% +3.1ppts South Africa 40.9% +2.1ppts Intern
Slide 13: Proposed Operating free cash flow disclosure
Proposed Operating free cash flow disclosure Cash flow statement IAS 17 IFRS 16 EBITDA (150 000) 0 Working capital Cash capex Right of use asset: Payments on lease (150 000) Other Operating free cash flow (150 000) (150 000) Net interest Net taxation Net dividends Free cash flow (150 000) (150 000)
Slide 14: Results announcement disclosure
Results announcement disclosure • Both EBITDA and adjusted-EBITDA will be reported. • Adjusted-EBITDA will be the closest proxy for prior year comparison, adjusting for both the depreciation and interest effect on operating leases. • Disclosing both will also ensure ongoing comparison to our peers.
Slide 15: Effective date and transition
Effective date and transition • IFRS 16 is effective for periods beginning on or after 1 January 2019. • Therefore effective 1 April 2019 (FY20) for Vodacom. • Prior periods will not be restated in statutory accounts. A cumulative adjustment will be made against retained earnings on 1 April 2019. 15
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