Vodafone Group Public Limited Company · LSE:VOD
Vodafone Group Public — Vodafone Group — FY2021 Earnings Presentation
48 slides from Vodafone Group Public's earnings presentation, May 18, 2021
Slide 1: FY21 Results
FY21 Results 18 May 2021 (6) vodafone
Slide 2: Agenda & contents
Agenda & contents Highlights Nick Read p3 Chief Executive Financial Margherita Della Valle p8 performance Chief Financial Officer We connect for a better future Strategy Nick Read p22 update Chief Executive The new generation connectivity & digital services provider for Europe & Africa enabling an i
Slide 3: Highlights: Resilient performance and back to growth
Highlights ⫶ Resilient performance and back to growth Service revenue growth Adjusted EBITDA Free cash flow 17 16 FCF Pre-spectrum & restructuring Ex-roaming & visitor revenue 6 15 1.8% €5.7bn 1.7% €14.9bn 1.5% 1.6% €5.4bn 5 14 1.5% €14.4bn €4.9bn €5.0bn 1.0% 13 €13.9bn 0.8% 4 €4.4bn 0.8% 0.5% 0.7%
Slide 4: Highlights: Strong delivery of strategic priorities
Highlights ⫶ Strong delivery of strategic priorities Deepening Accelerating Improving Optimising customer digital asset the engagement transformation utilisation portfolio • 10th consecutive • Accelerated cost • Committed to network • Successful €2.2bn quarter of customer savings with €0.5bn sharing
Slide 5: Highlights: Strong delivery of our strategic priorities over last 3 years
Highlights ⫶ Strong delivery of our strategic priorities over last 3 years Deepening Improving customer asset engagement 18 .00 % European mobile contract churn (LTM) Avg. monthly terabytes transmitted per €1m invested capital 200.0 utilisation 180.0 17 .00 % 160.0 157 16 .00 % 16.1% 140.0 130 15.5%
Slide 6: Highlights: Our next phase to drive returns through growth
Highlights ⫶ Our next phase to drive returns through growth We connect for a better future Our Purpose Inclusion for All Planet Digital Society Enabling the digital society to be accessible Ensuring our commercial success does Connecting people, places & things by all, with no one left behind not co
Slide 7: Highlights: Our medium-term growth ambition
Highlights ⫶ Our medium-term growth ambition Our value Consistent Ongoing Good Disciplined Sustainable model revenue growth + margin expansion + cash conversion + capital allocation value creation Medium Revenue Adjusted EBITDAaL1 Adjusted FCF2 Leverage ROCE3 > WACC term Growth in both + Mid-single
Slide 8: Financial performance
Financial performance Margherita Della Valle Chief Financial Officer FY21 Results May 2021 8
Slide 9: Financial summary: Resilient performance, guidance achieved
Financial summary ⫶ Resilient performance, guidance achieved FY20 FY21 Organic €m €m change • Stable service revenue despite roaming drag Group service revenue 37,871 37,141 (0.1%) • EBITDA - strong progress on efficiency Adjusted EBITDA 14,881 14,386 (1.2%) programmes mitigating COVID impacts EBITD
Slide 10: Trading performance: Back to service revenue growth
Trading performance ⫶ Back to service revenue growth YoY quarterly service revenue growth Ex. roaming & visitor revenue • Recovery in trends through FY21 1.8% 1.6% 1.7% • Positive underlying performance 1.5% 1.5% 0.5% 0.6% 0.8% 0.4% (0.4%) -0 .5% (1.3)% • Lapping roaming drag in Q1 FY22 -1 .5% Q4 Q1
Slide 11: Germany: Good financial performance
Germany ⫶ Good financial performance Service revenue growth 39% of Group EBITDA1 FY21 2.5% 2.5% Q4 FY21 2.5% 2.4% Retail growth €m growth 2.0% 2.0% Service revenue 1.2% 11,520 0.5% Retail (ex. roaming) 1.5% 1.8% 1.8% 1.8% 1.5% 1.5% Adjusted EBITDA 5,634 1.8% Reported organic 1.2% 1.0% 1.0% service r
Slide 12: Germany: Strong progress with synergy delivery
Germany ⫶ Strong progress with synergy delivery Investor briefing FY21 EBITDA bridge (€m)1 Unitymedia integration Germany: 29 Sep’21 29/9 Cost & capex synergies +1.8% 5,800 YoY 66 174 Original Locked-in % On- Areas 5,600 5,634 5yr plan so far delivered track? 5,400 5,532 (83) (55) Network & IT €65m
Slide 13: Italy: Challenging market; UK: Good momentum
Italy ⫶ Challenging market UK ⫶ Good momentum 11% of Group EBITDA1 10% of Group EBITDA1 Q4 FY21 FY21 Q4 FY21 FY21 growth €m growth growth €m growth Service revenue (7.8%) 4,458 (7.5%) Service revenue (0.6%) 4,848 (0.8%) Adjusted EBITDA 1,597 (12.7%) Adjusted EBITDA 1,367 (7.3%) Total FY21 Consumer a
Slide 14: Spain: Competing effectively; Other Europe: Improving trend
Spain ⫶ Competing effectively Other Europe ⫶ Improving trend 7% of Group EBITDA1 12% of Group EBITDA1 Q4 FY21 FY21 Q4 FY21 FY21 growth €m growth growth €m growth Service revenue (1.3%) 3,788 (2.8%) Service revenue (0.2%) 4,859 (1.4%) Adjusted EBITDA 1,044 3.4% Adjusted EBITDA 1,760 (0.5%) Net custom
Slide 15: Vodacom: Strong growth; VodafoneZiggo: Performing well
Vodacom ⫶ Strong growth VodafoneZiggo ⫶ Performing well 13% of Group EBITDA1 50% joint venture Q4 FY21 FY21 growth €m growth 4.0% Total revenue growth* Service revenue 7.3% 4,083 3.9% 3.5% South Africa 8.6% 2,971 7.0% 3.0% Internationals 4.8% 1,136 (1.6%) 2.5% Adjusted EBITDA 1,873 2.9% 2.0% 61.0 61
Slide 16: Adjusted EBITDA: Delivering on 'most efficient operator' ambition
Adjusted EBITDA ⫶ Delivering on ‘most efficient operator’ ambition €14.5bn 14 .6 14 .4 (0.1) €14.4bn Cumulative European net opex savings1 (€bn) (0.4) 0.5 EU costs ≥1.8 14 .2 c.15% 14 .0 (0.2) 0.1 13 .8 1.3 13 .6 13 .4 €0.4bn 0.8 13 .2 0.4 13 .0 Organic FY20 Roaming / Direct Net A&R European Rest of
Slide 17: Free cash flow: In-line with guidance
Free cash flow ⫶ In-line with guidance 0.0 2.0 4.0 6.0 8.0 10 .0 12 .0 14 .0 EBITDA €14.4bn Interest €2.6bn & tax • Financing costs +€0.4bn YoY, inclusion of Working capital €0.9bn LBTY assets & bond buybacks & other Dividends (assoc. & JV) €0.2bn • Working capital contribution (€0.6bn) includes han
Slide 18: Net debt: Maintaining our focus on deleveraging
Net debt ⫶ Maintaining our focus on deleveraging 50 .0 Net debt progression (€ billion) Bond maturity profile (€ billion) 48 .0 0.4 14 Cash & equivalents Senior Hybrid 46 .0 1.2 1.5 5.0 12 44 .0 2.8x 2.4 10 42 .0 1.0 2.0 2.8x 42.0 8 40 .0 38 .0 40.5 6 9.6 8.8 9.5 4 0.6 2.3 2.0 36 .0 1.0 34 .0 2 3.7
Slide 19: Capital allocation: Committed to improving shareholder returns
Capital allocation ⫶ Committed to improving shareholder returns Capital allocation priorities Long-term portfolio management principles 8 1 Transformation €1.8bn 1 7 Invest in connectivity & CPE 6 €1.7bn €1.8bn Focus €1.3bn & digital New products 5 €1.3bn €1.3bn & digital services 4 €4.7bn €4.2bn €4
Slide 20: Capital allocation: Investing in connectivity & digital
Capital allocation ⫶ Investing in connectivity & digital Accelerated investment in network performance in FY21 9.0 Supporting investment in growth opportunities in FY22 FY20 FY21 YoY €m €m ∆ 8.5 c.€8bn Network & IT maintenance 2,326 2,099 (10%) 8.0 €7.9bn Network coverage & capacity 2,037 2,574 +26%
Slide 21: FY22 guidance: Back to growth
FY22 guidance ⫶ Back to growth FY22 Adjusted EBITDAaL FY22 Adjusted FCF 16 .0 15 .5 €15.0-15.4bn 5.4 >€5.2bn 15 .0 5.2 €5.1bn €5.0bn €14.6bn 5.0 14 .5 €14.4bn 4.8 4.6 14 .0 4.4 13 .5 4.2 13 .0 4.0 FY21 FX FY21 Growth FY22 FY21 FX FY21 Growth FY22 reported re-based guidance reported re-based guidance
Slide 22: Strategy update
Strategy update Nick Read Chief Executive FY21 Results May 2021 22
Slide 23: A new generation connectivity & digital services provider
A new generation connectivity & digital services provider A Delivered the first phase of our strategy to reshape Vodafone B Growth opportunities from evolving markets C New generation connectivity & digital services provider D Committed to improving shareholder returns FY21 Results May 2021 23
Slide 24: Executing our strategic priorities at pace over the last 3 years
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 1 ⫶ Executing our strategic priorities at pace over the last 3 years Deepening Improving customer asset engagemen
Slide 25: Delivering tangible operational improvements
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 2 ⫶ Delivering tangible operational improvements Deepening Improving customer asset engagement 18 .00 % European
Slide 26: Creating sustainable value for our stakeholders
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 3 ⫶ Creating sustainable value for our stakeholders Inclusion for All • 48m M-Pesa users with 15bn transactions €
Slide 27: Supporting society through the pandemic
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 4 ⫶ Supporting society through the pandemic 5 point plan to deliver critical national digital infrastructure to k
Slide 28: Accelerating structural trends creating growth opportunities
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 1 ⫶ Accelerating structural trends creating growth opportunities Remote • Pandemic & demographics driving shift S
Slide 29: EU recovery funding: >20% allocated to digital
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 2 ⫶ EU recovery funding: >20% allocated to digital NextGenerationEU ⫶ Total €750 billion recovery funding Distrib
Slide 30: New generation connectivity & digital services provider growing in Europe & Africa
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns C ⫶ New generation connectivity & digital services provider growing in Europe & Africa We connect for a better fu
Slide 31: The best connectivity products & services – Europe & Africa consumer
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 1 ⫶ The best connectivity products & services – Europe & Africa consumer Our connectivity A growing converged con
Slide 32: The best connectivity products & services – Vodafone Business
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 1 ⫶ The best connectivity products & services – Vodafone Business Investor briefing here: A clear growth pathway
Slide 33: Leading innovation in digital services
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 2 ⫶ Leading innovation in digital services A leading European TV platform with 22m customers Accelerating Africa’
Slide 34: Outstanding digital experiences
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 3 ⫶ Outstanding digital experiences 2 1990s ⫶ Highstreet 2 2000s ⫶ Multichannel 2 2010s ⫶ Omnichannel 2020s ⫶ Dig
Slide 35: Simplified & most efficient operator
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 4 ⫶ Simplified & most efficient operator We are evolving our operating model… …to unlock ongoing scale benefits M
Slide 36: Social Contract shaping the digital society
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 5 ⫶ Social Contract shaping the digital society Policy priorities Investor briefing Social Contract: Early 2022 2
Slide 37: Leading gigabit networks
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 6 ⫶ Leading gigabit networks Key gigabit network focus areas 5G already launched in 240 cities1 ‘Very good’ ‘Best
Slide 38: Key areas of investment underpinning our growth plan
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 1 ⫶ Key areas of investment underpinning our growth plan More information here: 5G built right enabling growth In
Slide 39: Our medium-term growth ambition
A ⫶ Delivered first phase of our strategy B ⫶ Growth opportunities from evolving markets C ⫶ New generation connectivity & digital services D ⫶ Committed to improving shareholder returns 2 ⫶ Our medium-term growth ambition Our value Consistent Ongoing Good Disciplined Sustainable model revenue growt
Slide 40: Conclusions
Conclusions Resilient performance inline with expectations & good commercial momentum Deepening Accelerating customer digital engagement transformation Improving Optimising Delivered first phase of strategy to reshape Vodafone asset the utilisation portfolio New generation connectivity & digital ser
Slide 41: Appendices
Appendices I Our regional footprint p42 II Definitions p43 III Supporting information p44 IV Statutory results summary p45 V Total funding obligations p46 VI Importance notice p47 FY21 Results May 2021 41
Slide 42: Appendix I: Our regional footprint
2 ⫶ We are the Appendix I ⫶ Our leading regional connectivity footprintprovider in Europe & Africa. Europe ⫶ converged connectivity leader Africa ⫶ leading data & payments provider 42m 5m 3m 17m m 31m 1m 9m 0.3m 11m 4m 1m 40m 15m 3m 9m 1m 1m 15m 18m 3m 1m 0.1m 13m 5m 8m 3m 1m 24m 4m 1m 1m 2m 48m #m
Slide 43: Appendix II: Definitions
Appendix II ⫶ Definitions Term Definition Term Definition Adds Number of new customers within a defined period LTM Last twelve months Adjusted EBITDA Operating profit after depreciation on lease-related right of use assets and Mbps Megabits (millions) of bits per second interest on leases but exclud
Slide 44: Appendix III: Supporting information
Appendix III ⫶ Supporting information 1. Quarterly revenue The information opposite is available in spreadsheet format 2. Adjusted income statement via investors.vodafone.com 3. Segmental information 4. Income statement information 5. Cash flow 6. Mobile customers 7. Fixed-line broadband customers 8
Slide 45: Appendix IV: Statutory results summary
Appendix IV ⫶ Statutory results summary Consolidated income statement summary (€m) FY21 FY20 Revenue 43,809 44,974 - Service revenue 37,141 37,871 - Other revenue 6,668 7,103 Adjusted EBITDA 14,386 14,881 Restructuring costs (356) (695) Interest on lease liabilities 374 330 D&A on owned assets & los
Slide 46: Appendix V: Total funding obligations
Appendix V ⫶ Total funding obligations Total funding obligations FY21 FY20 €m €m Bonds (46,885) (49,412) Bank loans (1,419) (2,880) Other borrowings including spectrum (4,215) (3,877) Gross debt CPE (52,519) (56,169) Cash and cash equivalents (12%) 5,821 13,557 Short term investments Maintenance 4,0
Slide 47: Appendix VI: Important notice
Appendix VI ⫶ Important notice You have received this presentation on the basis that you are an investment professional for Forward-looking statements are sometimes, but not always, identified by their use of a date in the purposes of Article 19 or a member of the press for the purposes of Article 4
Slide 48: Investor Relations contacts and upcoming events
Group investors.vodafone.com Upcoming events Investor Relations ir@vodafone.co.uk 1 Kingdom Street, London, W2 6BY 17 Technology investor briefing June Matthew Johnson Director matthew.johnson@vodafone.com Group IR Daniel Morris Deputy Director Group IR daniel.morris@vodafone.com 23 Q1 FY22 trading