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  • Vodafone Group PlcVodafone Group Plc

    Annual ReportFor the year ended 31 March 2009

    Registered OfficeVodafone HouseThe ConnectionNewburyBerkshire RG14 2FNEnglandRegistered in England No. 1833679

    Tel: +44 (0) 1635 33251Fax: +44 (0) 1635 45713


    Vodafone Group Plc Annual Report for the year ended 31 M

    arch 2009

  • Investor RelationsTelephone: +44 (0) 1635 664447

    Media RelationsTelephone: +44 (0) 1635 664444

    Corporate Responsibility Fax: +44 (0) 1635 674478E-mail: responsibility@vodafone.comWebsite: www.vodafone.com/responsibility

    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

    Contact details

    This constitutes the annual report of Vodafone Group Plc (the Company) for the year ended 31 March 2009 and is dated 19 May 2009. The content of the Groups website (www.vodafone.com) should not be considered to form part of this annual report or the Companys annual report on Form 20-F.

    In the discussion of the Groups reported financial position, operating results and cash flow for the year ended 31 March 2009, information is presented to provide readers with additional financial information that is regularly reviewed by management. However, this additional information presented is not uniformly defined by all companies, including those in the Groups industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, certain information presented is derived from amounts calculated in accordance with IFRS but is not itself an expressly permitted GAAP measure. Such non-GAAP measures should not be viewed in isolation or as an alternative to the equivalent GAAP measure. For further information see Non-GAAP information on pages 138 to 139 and Definition of terms on page 143.

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

    This document contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995 with respect to the Groups financial condition, results of operations and business management and strategy, plans and objectives for the Group. For further details, please see Forward-looking statements on page 142 and Principal risk factors and uncertainties on pages 38 and 39 for a discussion of the risks associated with these statements.

    Vodafone, the Vodafone logo, Vodafone live!, Vodafone Mobile Broadband, Vodafone Office, Vodafone Wireless Office, Vodafone Passport, Vodafone Speak, Vodafone Email Plus, Vodafone M-PESA, Vodafone Money Transfer, Vodafone Station and Vodacom are trade marks of the Vodafone Group. The RIM and BlackBerry families of trade marks, images and symbols are the exclusive properties and trade marks of Research in Motion Limited, used by permission. RIM and BlackBerry are registered with the US Patent and Trademark Office and may be pending or registered in other countries. Windows Mobile is either a registered trade mark or trade mark of Microsoft Corporation in the United States and/or other countries. Other product and company names mentioned herein may be the trade marks of their respective owners.

    Copyright Vodafone Group 2009

  • Vodafone Group Plc Annual Report 2009 1


    12 Business overview14 Technology and resources18 People20 Customers, marketing and distribution21 Services and devices

    Executive summary*

    2 Chairmans statement4 Performance at a glance6 Chief Executives review8 Operating environment and strategy10 Group at a glance


    24 Key performance indicators25 Operating results37 Outlook38 Principal risk factors and uncertainties40 Financial position and resources45 Corporate responsibility


    68 Contents69 Directors statement of responsibility*

    70 Audit report on internal controls71 Critical accounting estimates73 Audit report on the consolidated

    financial statements74 Consolidated financial statements120 Audit report on the Company

    financial statements121 Company financial statements

    Additional information

    127 Shareholder information*

    134 History and development*

    135 Regulation*

    138 Non-GAAP information*

    140 Form 20-F cross reference guide142 Forward-looking statements 143 Definition of terms144 Selected financial data


    48 Board of directors and Group management51 Corporate governance57 Directors remuneration

    * These sections make up the directors report.

    Executive summaryOur vision is to be the communications leader in an increasingly connected world

  • 2 Vodafone Group Plc Annual Report 2009

    Chairmans statement

    This year your Company has delivered adjusted operating profit of 11.8 billion and generated 5.7 billion of free cash flow before licence and spectrum payments, helped by foreign exchange movements and despite pressure on revenue in challenging economic circumstances. This has allowed us to buy back 1 billion of shares and pursue a progressive dividend policy. The Board is recommending a final dividend of 5.20 pence, making a total for the year of 7.77 pence. Regrettably, the share price has declined by 17% since the beginning of the year, from 154.3 pence to 127.5 pence, but has nonetheless outperformed the FTSE100 which has declined by 24% over the same period. We have seen continuing growth in proportionate customer numbers to 303 million at year end, as well as growth in mobile voice minutes of use and particularly data services.

    There is considerable evidence that the economic crisis has had a significant effect on the environment in which we operate, across our various markets. Inevitably, during rapid economic decline and rising unemployment, our customers enterprise and consumer are looking carefully for ways to reduce their expenditure. We have responded to the pressure on household and business expenses with pricing plans designed to address customers needs.

    So the telecommunications sector is not immune from the impact of the global recession but it has demonstrated a greater degree of resilience than certain other parts of the economy. The services we provide have assumed increasing importance in the day to day lives of our customers. We see this particularly in the way in which our services, particularly data services such as email and internet access, offer new flexibility in the way people lead their business and personal lives. When more stable economic conditions return, this new flexibility should also support more sustainable growth, unlocking important potential social and ecological benefits.

    In addition to the impact of the economic downturn, we continued to see pricing pressure lead to reductions of around 15% year on year in Europe. The period of rapid growth in new mobile customers in much of Europe is now over and we need to adjust our resources accordingly. We are well on our way to delivering the 1 billion reduction in operating costs to which we are committed. We will maintain this focus over the coming year and expect to deliver on our commitment

    by the following financial year. Sadly, this involves reducing our workforce but we nevertheless remain intent that Vodafone should continue to be a good place to work.

    With prudent control of capital expenditure and reductions to operating expenditure, your Company is positioning itself to benefit from the re-invigoration of the economy when it comes, driven by strong cash generation, a sound liquidity position, and the diversity and geographic distribution of our customer base.

    Your Company will continue to promote innovation in products and services across the range of our markets. For example, over 6 million people are now using the Vodafone Money Transfer system (branded M-PESA in Kenya) in Kenya, Tanzania and Afghanistan. In total, they are sending approximately US$200 million a month, mostly as small transactions of less than US$20. With over 4 billion people owning mobile handsets, we believe that for the majority of the worlds population, mobile is likely to be the primary means of access to the internet. Higher speed networks in markets such as South Africa and Egypt increase the speed and range of internet access. Using economies of scale to work with handset manufacturers has allowed approximately eight million customers to gain access to communications through our ultra low cost handsets during the year, at the same time helping to make Vodafone the second largest handset brand in India.

    In our developed markets, we will continue to enhance our customers communication capability, with innovative products such as netbooks and laptops with embedded SIM cards to connect directly to higher speed mobile data networks. We continue to see very strong growth in mobile data usage, over 100% in our European markets. Our industry is undergoing an important change away from the predominance of voice traffic; within a few years most of the traffic on our European network will be data. We will promote services, particularly for small and medium enterprises, which i

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