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  • Vodafone Group PlcAnnual ReportFor the year ended 31 March 2011

    Vodafone Group PlcRegistered OfficeVodafone HouseThe ConnectionNewburyBerkshire RG14 2FNEnglandRegistered in England No. 1833679

    Telephone: +44 (0) 1635 33251Fax: +44 (0) 1635 238080

    www.vodafone.comVodafone G

    roup Plc Annual Report for the year ended 31 March 2011

    Investor RelationsTelephone: +44 (0) 7919 990230Email: ir@vodafone.co.ukWebsite: www.vodafone.com/investor

    Media RelationsTelephone: +44 (0) 1635 664444Email: groupmediarelations@vodafone.comWebsite: www.vodafone.com/media

    SustainabilityEmail: sustainability@vodafone.comWebsite: www.vodafone.com/sustainability

    Contact details

  • This report has been printed on Revive 75 Special Silk paper. The composition of the paper is 50% de-inked post consumer waste, 25% pre-consumer waste and 25% virgin wood fibre. It has been certified according to the rules of the Forest Stewardship Council (FSC). It is manufactured at a mill that has been awarded the ISO14001 certificate for environmental management. The mill uses pulps that are elemental chlorine free (ECF) and totally chlorine free (TCF) process and the inks used are all vegetable oil based.

    Printed at St Ives Westerham Press Ltd, ISO14001, FSC certified and CarbonNeutral.

    Designed and produced by Addison, www.addison.co.uk

    Vodafone, the Vodafone logo, Vodafone Mobile Broadband, The Vodafone Way, Vodafone Always Best Connected, TeleTu and Tele2, Vodafone TV, Vodafone WebBox, M-PESA, Vodafone One Net, Vodafone Sure Signal, Vodafone Mobile Connect and Vodacom are trade marks of the Vodafone Group. World of Difference and Mobiles for Good are trade marks of the Vodafone Foundation. RIM and BlackBerry are registered with the US Patent and Trademark Office and may be pending or registered in other countries. Microsoft, Windows Mobile and ActiveSync are either registered trade marks or trade marks of Microsoft Corporation in the US and/or other countries. Google, Google Maps and Android are trademarks of Google Inc. Apple, iPhone and iPad are trade marks of Apple Inc., registered in the US and other countries. Other product and company names mentioned herein may be the trade marks of their respective owners.

    The content of our website (www.vodafone.com) should not be considered to form part of this annual report or our annual report on Form 20-F.

    Copyright Vodafone Group 2011

    Delivering a more valuable Vodafone

    Group highlights for the 2011 financial year

    45.9bnRevenue3.2% growth

    11.8bnAdjusted operating profit3.1% growth

    7.0bnFree cash flow2.7% decrease

    370.9mMobile customers14.5% growth

    8.90pTotal dividends7.1% growth

  • Contents

    Business review#

    2 Aboutus4 Vodafoneataglance6 Chairmansstatement8 Mobiletelecommunications industry10 ChiefExecutivesreview12 Strategyinaction28 Keymarketreview30 Sustainablebusiness32 People

    Performance#

    34 Operatingresults44 Guidance45 Principalriskfactors anduncertainties47 Financialposition andresources

    Governance#

    52 Boardofdirectors andGroupmanagement55 Corporategovernance62 Directorsremuneration

    Financials74 Contents75 Directorsstatement

    ofresponsibility#

    76 Auditreportoninternalcontrols

    77 Criticalaccountingestimates79 Auditreportonthe consolidatedfinancial statements80 Consolidatedfinancial statements125 AuditreportontheCompany financialstatements126 Companyfinancial

    statements

    Additional information132 Shareholderinformation#

    139 Historyanddevelopment#

    140 Regulation#

    143 Non-GAAPinformation#

    146 Form20-Fcross referenceguide148 Forward-lookingstatements149 Definitionofterms151 Selectedfinancialdata

    #Thesesectionsmakeupthedirectorsreport.

    The terms Vodafone, the Group, we, our and us refer to the Company and, as applicable, its subsidiaries and/or interests in joint ventures and associates.

    Unless otherwise stated references: to year or 2011 mean the financial year ended 31 March 2011; to 2010 or previous year mean the financial year ended 31 March 2010; to the third quarter, previous quarter or Q3 are to the quarter ended 31 December 2010; and to the fourth quarter or Q4 are to the quarter ended 31 March 2011.

    All amounts marked with an (*) represent organic growth which presents performance on a comparable basis, both in terms of merger and acquisition activity and foreign exchange rates.

    Definitions of terms used throughout the report can be found on page 149.

    This report is dated 17 May 2011.

    Highlights of the year Grouprevenueincreased3.2%to45.9billionwithastrongresultfromemergingmarketsandsignsofrenewedgrowthinsomepartsofEurope.

    Adjustedoperatingprofitrose3.1%to11.8billion,supportedbyagoodperformancefromourUSassociate,VerizonWireless.

    Freecashflowof7.0billion,reflectingconsistentlevelsofcapitalexpenditureandstrongworkingcapitalperformance.

    14.2billionexpectedtoberaisedfromagreeddisposalsofinterestsinChinaMobile(China),SoftBank(Japan)and,afteryearend,SFR(France).

    Totaldividendspershareof8.90pence,up7.1%inlinewithourdividendpersharegrowthtarget.6.8billioncommittedtosharebuybacks.

    Our new strategyInNovember2010weunveiledanupdatedstrategytomoveusfromAStrongerVodafonetoAMoreValuableVodafone.Thenewstrategyiscomposedoffourmainelements:

    FocusonkeyareasofgrowthpotentialMobiledata,emergingmarkets,enterprise,totalcommunicationsandnewservices.

    DelivervalueandefficiencyfromscaleUsingoursizeandscaletodrivecostefficienciesandoperationaleffectiveness.

    Generateliquidityorfreecashflowfromnon-controlledinterestsReleasingliquidityandfreecashflowfromminoritystakesandinvestments.

    ApplyrigorouscapitaldisciplinetoinvestmentdecisionsAllocatingcapitaltomaximiseshareholdervalue.

    Find out more on pages 12 to 27

    You can visit our online annual report at:

    www.vodafone.com/investor

    Vodafone Group PlcAnnualReport20111

  • Techn

    ologies an

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    Ser

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    Distribution

    Devices

    AboutusA business intent on meeting all our customers communication needs

    Technologies and resourcesThelatesttechnologiesofferingourbestcustomerexperience

    Network infrastructureWehaveoneofthelargestmobilefootprintsintheworldwithmorethan224,000basestationsites.Duringtheyearournetworkscarriedaround850billionminutesofvoicetraffic(equivalentto208minutespermonth,percustomer)and161petabytesofdataequivalenttodownloadingover1,400threeminutevideoclipseverysecond.

    Network performanceWecontinuetoinvestaround6billionayeartomaintainleadershipofournetworks.TestsshowthatintheEuroperegion,VodacomandEgypt,Vodafoneofferspeakuserdatadownlinkspeedswhichareonaverage40%fasterthanourbestcompetitors.

    Research and development (R&D)Wedriveinnovationthroughnewtechnologiesandenhancementstoexistingcapabilities.ThisyearR&Dexpenditureamountedto287million.

    Customer support technologiesOurbillingandcustomerrelationshipmanagementsystemsarebeingenhancedtoenableourcustomerstomanageasingleaccount,withasinglebill,formultipledevicesorforseveralpeople.

    Licences and spectrumLicencesandspectrumenableustodeliverfixedandmobilecommunicationsservicesincertainmarkets.Duringtheyearweacquiredadditionallicencesandspectruminseveralmarkets,includingIndiaforthirdgeneration(3G)servicesandGermanyfortheprovisionoffourthgeneration(4G)orLTEservices,toenhancethespeed,coverageandqualityofvoiceanddataservicesinthosemarkets.

    Strategic agreementsWeworkcloselywithsomeoftheworldsleadingcompaniestodeliverinnovativeproductsandservicestoourcustomers.OuragreementswithSamsung,Google,Microsoft,HTCandothershaveenabledustobefirsttomarketwithcutting-edgesmartdevices.WenowdistributetheAppleiPadintheUKandtoourenterprisecustomersinEurope.Forenterprisecustomers,inpartnershipwithMicrosoftweprovidetheMicrosoftOnlinesuitewhichprovideshostedemail,conferencingandcollaborationservices.InconjunctionwithRIMandNokia,VodafonecustomersusingsmartphoneswillbeabletosecurelypayforapplicationsviatheirVodafonebill.

    BrandAccordingtoBrandFinanceplc,theVodafonebrandhasrisentobecomethefifthmostvaluablebrandintheworld.Inthe2010calendaryearwerenewedourtitlepartnershipwiththeVodafoneMcLarenMercedesFormulaOneteam.Ithasbeenastrongyearforthesponsorshipwithincreasedtelevisionviewingfiguresandgreaterexposure.

    PeopleWeemployedapproximately83,900peopleworldwideduringtheyear,comparedto85,000thepreviousyear.

    Employees by activity (%)

    Customer care and administration Operations Selling and distribution

    CustomersInternationalcustomerbasewithdiverseneeds

    Wehaveaninternationalcustomerbaseinbothdevelopedandemergingmarketswithover370millionmobilecustomersinmorethan30countries.Duringtheyearweaddedover40millioncustomers,mostlyinIndia.Weserve

    India Vodacom Germany Egypt Italy UK Spain Other

    Customers by markets (%)

    Customer serviceWe are redesigning and improving our customer care, retail presence and online service to ensure that customers get the best data experience with Vodafone.

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    2Vodafone Group PlcAnnualReport2011

  • Business Review

    Techn

    ologies an

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    Devices

    Consumer contract

    Consumer prepaid

    Enterprise

    abroadrangeofcustomersfromindividualsoneitherprepaidorcontractpriceplanstoenterprisecustomersrangingfromsmallandmediumsizedbusinessestolargerdomesticandmultinationalcompanies.Ourcustomersneedsareevolvingwithincreasingdemandformulti-productofferswhichcombinemobileandfixedbroadbandsolutionswithtraditionalvoiceandSMSservices.

    Customers segments (%)

    DevicesEnsuringthatourservicesareavailablethroughmultipleplatforms

    Smar

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