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SECURITIES AND EXCHANGE COMMISSION
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
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Ordinary Shares of 11 3/7 US cents each | 51,577,525,830 | |||||
7% Cumulative Fixed Rate Shares of £1 each | 50,000 |
Large accelerated filerþ | Accelerated filero | Non-accelerated filero |
US GAAPo | International Financial Reportingþ | Othero | ||
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Ordinary shares of 11 3/7 US cents each | NASDAQ Global Select Market* | |
American Depositary Shares (evidenced by American Depositary Receipts) each representing ten ordinary shares | NASDAQ Global Select Market | |
5.00% Notes due December 2013 | New York Stock Exchange | |
4.150% Notes due June 2014 | New York Stock Exchange | |
5.375% Notes due January 2015 | New York Stock Exchange | |
5% Notes due September 2015 | New York Stock Exchange | |
3.375% Notes due November 2015 | New York Stock Exchange | |
2.875% Notes March 2016 | New York Stock Exchange | |
5.75% Notes March 2016 | New York Stock Exchange | |
5.625% Notes due February 2017 | New York Stock Exchange | |
4.625% Notes due July 2018 | New York Stock Exchange | |
5.450% Notes due June 2019 | New York Stock Exchange | |
4.375% Notes due March 2021 | New York Stock Exchange | |
7.875% Notes due February 2030 | New York Stock Exchange | |
6.25% Notes due November 2032 | New York Stock Exchange | |
6.15% Notes due February 2037 | New York Stock Exchange |
* | Listed, not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission. |
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Vodafone GroupAnnual Report on Form 20-FFortheyearended31 March 2011powerto you |
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Delivering a more valuable Vodafone Group highlights for the 2011 financial year^ A^^\I ^^^^^ ^^ L^. u^^^7 ^\U^. k*^ This constitutes the annual report on Form 20-F of Vodafone Group Pic ^™ £j. ^^ ^y [j | I f^ [j [^ ^™ / I I [j | (the ‘Company’) in accordance with the requirements of the US ^^^,,^L^1‘ l™ ‘¦•^l^1¦U f tVL/l I Securities and Exchange Commission (the’SEC’) for the year endedRevenueAdjusted Operating profitFree Cash flOW 31 March 2011 and is dated l June 2011. This document contains certain 3 2% growth 31% growth 2 7% decrease information set out within the Company’s annual report in accordance with International Financial Reporting Standards (‘I FRS’) and with those parts of the UK Companies Act 2006 applicable to companies re porting^£^7f\Qm Q Of^P> under IFRS, dated 17 May 2011, as updated or supplemented ifJjf^^»jyI ^J« Z/ ^^ L/ necessary. Details of events occurring subsequent to the approval of the ., ... _ . .. . . r. annual report on 17 May 2011 are summarise don page A-l. The contentMODIle CUStOmerSlOtal dividendsoftne Group’swebsite (www.vodafone.com) should not be considered 14.5% growth 7.1% growth to form part of this annual report on Form 20-F. |
• | Group revenue increased 3.2% to £45.9 billion with a strong result from emerging markets and signs of renewed growth in some parts of Europe. | |
• | Adjusted operating profit rose 3.1% to £11.8 billion, supported by a good performance from our US associate, Verizon Wireless. | |
• | Free cash flow of £7.0 billion, reflecting consistent levels of capital expenditure and strong working capital performance. | |
• | £14.2 billion expected to be raised from agreed disposals of interests in China Mobile (China), SoftBank (Japan) and, after year end, SFR (France). | |
• | Total dividends per share of 8.90 pence, up 7.1% in line with our dividend per share growth target. £6.8 billion committed to share buybacks. |
You can visit our online annual report at:
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Exhibit 4.35 | ||
Exhibit 4.36 | ||
Exhibit 7 | ||
Exhibit 12 | ||
Exhibit 13 | ||
Exhibit 15.1 | ||
Exhibit 15.2 |
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2 Vodafone Group PicAnnual Report 2011About us |
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Distribution A broad range of channels through which customers can access our services and productsDirect channels We directly own and manage about 2,200 stores around the world and we also havearound 10,300 Vodafone-branded stores run through franchise and exclusive deaLerarrangements. In most of our Local markets sales forces also sell direct to enterprise customers.Vodafone Group PicAnnual Report 2011 3Indirect channels The level of indirect distribution varies between markets and may include using third party service providers, independent dealers, distributors and retailers.Online The internet has also become an increasingly powerfuland cost-effective distribution channel. 51% of ou r Europea n contract customers receive their bills online.Services Services to meet all our customers’ needsVoice We are one of the largest carriers of mobile voice traffic in the world providing domestic, intemationaland roamingvoice services to more than 370 million customers.Messaging Our networks sent and received over 292 billion text, picture, musicand video messagesthisyear.Data More than 75 million customers buy our mobile data services which allowaccess to the internet, emailand applications on their phones, tablets, laptops and netbooks.Fixed line Over six million customers use ourfixed broadband services in 13 markets to meet theirtotal communications needs. In addition, through Gateway, we provide wholesale carrier services to more than 40 African countries.Other service revenue This includes business managed services, such assecure remote networkaccess,and revenue from mobile virtual networkoperators generated from selling access to our networkat the wholesale level.Service revenue by type (%) Devices Ensuring that our services are available through multiple platformsSmartphones and tablets These have advanced capabilities including access to email, the internet and mobile applications such as Google Maps™ and Facebook. Smartphones nowaccountfor 19% of the total number of phones used by ourcustomers in Europe. We now supply the iPhone in 19 markets.Vodafone branded handsets We are making Vodafone designed handsets available to mass market audiences while offering differentiated experiences. During the year 14 new handsets were released under our own brandand we shipped 5.8 million.Other connected devices In addition to handsets, we supply a range of innovative connected smart devices. During the year we launched our first ever USB stick based on 4G/LTE technology and Vodafone WebBox which enables customers to connectto the internet using existing television sets by simply plugging in a keyboard with an embedded mobile SIM.4G/LTE mobile broadband USB stick The Samsung GT-B3740, is our first ever 4G/LTE network device which enables customers to experience super-fast mobile broadband. |
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4 VodafoneGroup Pic Annual Report 2011Vodafone at a glance |
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Vodafone Group Pic Annual Report 2011 5 Our mobile subsidiariesand joint venture Our subsidiariesand joint ventures in AMAP in Europe operate underthe brand name operate underthe’Vodafone’ brand, or in the ‘Vodafone’ and our major fixed Line businesses case of Vodacom and its mobile subsidiaries, operate as’Vodafone’or in the case of Italy as’Vodacom’and’Gateway’brands. In India as ‘TeleTu’ or in Spain as Tele2’. we operate as ‘Vodafone Essar’. Our associate in Kenya operates as ‘Safaricom’. 2.5% decrease 20.0% growth Revenue™ £32.0t>n (2010:£32.8bn) (2010:£11.1bn) 9.8% decrease 55.5% growthAdjusted operating profit(1) £5.7bn £1.3bn (2010:£6.4bn) (2010:£0.8bn) stable 6.2% growthCapital expenditure"' £3.7bn £2.2bn (2010:£3.7bn) (2010:£2.1bn) 9.2% decrease 53.7% growthOperating free cash flow(1) £7.5bn £2.4bn (2010:£8.2bn) (2010:£1.6bn) Mobile customers by market(2)MiLLions .MiLLi°nsGermany 36.7India134.6 Italy 23.4Vodacom43.5UK19.1Egypt31.8 Spain 17.3 Australia 3.6Turkey16.8Ghana3.0 Romania 9.2 New Zealand 2.5Portugal6.1Qatar0.8Netherlands5.0Fiji0.3Greece3.9Total220.1 Czech Republic 3.2 Notes:-——y^—Vodacom consists of: (DThesumoftheseamountsdonotequaLGrouptotaLsdue ^—±-’SouthAfrica 26 5 to Non-Controlled Interests and Common Functions andIreland 2.2 —:r~r. —:—~tt~Tanzania 8.9ntercompanyelimmations.Albania 1 6 (2) Controlled and jointly controlled businesses. ExcludesM ^— —^~Democratic Republic of Congo4.2 3.4millioncustomersrepresentingtheGroup’sshareof —‘-Mozambique 3.1 customers inour Polish jointventure Polkomtel whichTotal147.4 Lesotho0~8 s in our Non-Controlled Interests and Common Functions segment. n addition to the above, our associate Safaricom had 6.9 million mobile customers based on our percentage ownership.Non-ControlledlnterestsarebusinessesinBusinessCountryOwnership at 51 Ma rch 2011C~7AY\r\ which we have an equity interest but do not Verizon Wireless US 45.0%t/iTUl havemanagementcontrol.WeaimtomaximiseAgreed proceeds cpD FranrpAA O0/^ thevalueoftheseinterestseitherbygenerating r^JnameHH,U^°fromthesaleof liquidityorincreasingfreecashflow.Duringthe Polkomtel Poland 24.4%Non-Controlled yearwesoldourinterestsinChinaMobileand ,,,- ..,4.,,, ... . .Ma “Interestsi. ,^ , .. ..,_,,,,., . BhartiAirtel India 4.4%u’ SoftBankandmApnl2011 weannouncedan agreementtosellour44%interestinSFR.China MobileChinaSold’5‘ SoftBank Japan SoldM> Common Functions primarily represent the resultsofthe partner marketsand the net result Notes:ofunallOCatedcentralGroupCOStS.(1) SaleannouncedinApril2011. (2) Indirect interest. (3) We previously held a 3.2% interest in China Mobile Limited. (4) Our interests previously included loan notes and receivables issued by SoftBank. |
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6 VodafoneGroup PicAnnual Report 2011Chairman’s statement |
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Vodafone Group PicAnnual Report 2011 7Vodafone total shareholder return (2011 financialyear)FTSE100 total shareholder return (2011 financialyear)Vodafone share price vs FTSE 100 — Vodafone (share price in pence) — FTSE 100 index200 7000180 xl!L~*yfcA. ^! 625°120™4000 1 Apr 10 1 Jun 10 1 Aug 10 1 Oct 10 1 Dec 10 1 Feb 11 1 Apr 1’ Acrossthe Group we continue to promote text giving, enabling mobile networksthatlead the industryforspeedand reliability, our customers to give money simply and free of charge Thiswillbecrucialascustomers’expectationsgrowinlinewith to support charitable appeals following disasters. Using this their data usage, platform we raised over NZ$1.3 million for the Red Cross to supportthepeopleofChristchurch. Furthermore, we have continually assessed the risks and opportunities of having capital deployed in some of ourThe Boardnon-controlled interests. This is particularly true of Verizon During the year the Board appointed Renee James as a Wireless, from which we have not received a dividend (other non-executive director. Renee is Senior Vice President and than tax related dividend receipts) for six years. It would General Manager of the Software and Services Group for arguably have been easier to sell our stake along the way, but Intel Corporation. She joined the Board in January 2011 and it our decision to remain invested has been strongly vindicated is clear that her industry knowledge and expertise will make by its exceptional operating performance and strong cash a strong contribution to the Group through another period generation,whichhaveledtoasignificantincreaseinthevalue of rapid technological change. of the asset. The Board welcomed the publication in February of the Our approach has led to strong returns to shareholders over Davies Review on Women on Boards and, in line with its the last five years. Total shareholder return since July 2006 recommendations, it is our aspiration to have a minimum has been 85%, compared to 22% for the FTSE 100 and 6% for of 25% female representation on the Board by 2015. The theMSCIGlobalTelecoms Index. Financial Reporting Council is currently consulting on changes to the UK Corporate Governance Code including I am delighted to welcome Gerard Kleisterlee as Vodafone’s a recommendation that companies adopt a boardroom new Chairman. As CEO of Philips, Gerard spent ten successful diversity policy; we expect to comply with any such years at the helm of an international consumer technology recommendation. The Board recognises the importance of business, and the Group is certain to make continued good gender balance throughout the Group and continues to progress under his stewardship. I wish him, and the Group, all support our CEO, Vittorio Colao, in his efforts to build a thebestforthefuture. diverse organisation. Further information can be found in the Corporate Governance section of this report. After five years as Chairman I am retiring from the Board at :—J the AGM in July. It has been a privilege to chaira Board of suchf^~"^5? jC diverse and rich experience, and to help steer the Group through the challenges of a dynamicindustryandan uncertainSir John Bond economic environment. Chairman As a Board, our goal has always been to make the right decisions based on the long-term opportunities for the business. As a result, we now have an established presence in a number of emerging markets that offer attractive potential for sustained growth; and our commitment to maintaining investment throughout the economic cycle means we have |
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8 VodafoneGroup PicAnnual Report 2011Mobile telecommunications industry |
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Vodafone Group PicAnnual Report 20119 A growing industry^^^^^^^^^ Data traffic has more j than doubled year- | ^^_J ‘^^m ff!^_^_ on-yeardue to usage |iI]W^_ ^mEmHs/StM of smart connected ‘^*™"-1^"^ JT ! [ I devices and significant I ^fc- H ^^¦¦—I progress in mobile*.-¦¦^^^^M^^^^^Ktf “^t^^ .”—>. “^""^(^Mobile data and networks Emerging markets ¦Mobile data traffic is driving revenue growth. ¦ Mobile phone usage continues to grow rapidly. ¦Network speeds are increasing dramatically ¦ Data represents a significant growth opportunity, because of improving technology. ¦The pace of product innovation remains high. In 2006 data accounted for 3% of industry revenue, in 2010 Thenumberofcustomersusingmobileservicesinemerging it reached 13% and by 2014 it is expected to be 21%. Demand markets such as India and Africa has grown rapidly over is being driven by the widening range of smart connected the Last ten years, increasing by over 17 times, compared devices, such as mobile broadband sticks, smartphones and to nearly 130% in more mature markets such as Europe, tablets, greater network speeds and an increased range of The key driver of growth has been a fundamental need applications with greater functionality. Smartphone sales for communication services against a background of often grew by 66% in the 2010 calendar year, compared to a 16% low quality alternative fixed line infrastructure and strong increase in the 2009 calendar year, and are expected to economic growth, continue to grow due to lower entry prices, device innovation and attractive applications. Most of the future growth in mobile customers is expected to continue to be in emerging markets where Today’s 3G networks offer typically achieved data download mobile penetration is only around 70% compared to speeds of up to 4 Mbps which is around 100 times faster than approximately 130% in mature markets such as Europe, that delivered by 2G networks ten years ago. The industry has supported by the expectation of continued strong recently begun to deploy 4G/LTE networks which will provide economic growth, typically achieved rates of up to 12 Mbps, depending on the capabilityofthedevicesandthenetwork. Data also represents a substantial growth opportunity in emerging markets both in terms of mobile broadband and Device innovation is a key feature of our industry. Recent mobile internet services. It is being driven partly by the lack developments include femtocells which enhance customers’ of fixed line broadband infrastructure but also by locally indoor 3G signals via a fixed line broadband connection and relevant content and services in local languages, and mobile Wi-Fi devices which allow customers to share their software innovations that give customers a high-quality mobile broadband connection with others. mobile internet experience on affordable handsets.Mobile data demand is being accelerated by devices Emerging market customer growth will be driven by and network improvements rising mobile penetration and GDP growth ¦ Market customers growth2006 2010 (2010-2014 estimated cumulative annual growth rate) (%) Smartphone share of industry handset18% shipments (%) 8 21 ^^^^^^^^h Typically achieved data download speeds (Mbps) 2.2 4 I 6%1A I South Africa Egypt India The industry data on pages 8 and 9 has been sourced from Wireless Intelligence, Strategy Analytics, Merrill Lynch, Informa WCIS and CISCO. |
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10 VodafoneGroup PicAnnual Report 2011Chief Executive’s review |
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VodafoneGroup PicAnnual Report 2011 11Group organic service revenue growth(%) 2.1 ((0.3) |^^A M S¦ fcM ‘, 2009 2010 2011M//¦ Focus on five key areas of growth potentialshareholder, for £6.8 billion. These three transactionsMobile data:data revenue was up 26.4%<*> year-on-year to crystallisedsignificantvalueforshareholders.with£6.8 billion £5.1 billion, and now represents 12.0% of Group service of proceeds being committed to share buyback programmes. revenue. We have continued to increase the penetration of smartphones into our customer base as these are a key driverApplying rigorous capital discipline of data adoption.to investment decisions We continue to apply capital discipline to our investment Network quality is absolutely central to our data strategy and decisions. We apply rigorous commercial analysis and we have made further significant investments over the last demanding hurdle rates to ensure that any investment or 12monthstoimprovethespeedandreliabilityofourcoverage. corporate activity will enhance shareholder returns. We will Based on third party tests performed in 16 of our main 3G continue to undertake regular reviews of Vodafone’s entire markets, we rankfirstfor overall data performancein 13 markets, portfolio to ensure thatwe optimise value for shareholders.Enterprise:revenue in the overall European enterpriseProspects for 2012 financial year segment was up 0.5%<*> year-on-year and represented 29.5% We enter the new financial year in a strong position. We are of our European service revenue. Within this, Vodafone Global gaining or holding market share in most of our major markets, Enterprise, which serves our multinational customers, and are leading our competitors in the drive to migrate delivered revenue growth of around 8%<*> thanks to some customers to smartphones and data packages. We will important customer wins and increased penetration of continue to focus on our key growth areas of data, enterprise existing customer accounts. This market offers attractive and emerging markets, while maintaining investment in growth opportunities, as multinationals and smaller networkqualityandthedevelopmentofnewservices. companies alike look not only to manage costs but also to move to converged platforms and improve mobile However, we continue to face challenging macroeconomic connectivityfortheirworkforces. conditions across our southern European footprint, and we expect further regulated cuts to mobile termination rates toEmerging markets:the Group has an attractive level of have a negative impact of about 2.5 percentage points on exposure to emerging markets where penetration is lower service revenue growth in the 2012 financialyear. and GDP growth higher than in the more mature markets of western Europe. The Group adjusted EBITDA margin is expected to continue to decline, albeit at a lower rate than in the 2011 financial year.Total communications:we continue to develop our fixed The main driver is the persistent revenue decline in some of Linecapabilitiestomeetourcustomers’total communications our southern European operations, needs beyond mobile connectivity. Revenue from our fixed Lineoperationsamountedto£3.4billion,up5.2%<*)year-on-year. Adjusted operating profit is expected to be in the range of £11.0 billion to £11.8 billion, reflecting the loss of ourNew services:machine-to-machine platforms CM2M’), £0.5billionshareofprofitsfromSFRasaresultofthedisposal mobile financial services and near-field communications, ofour44%interest. among other new services, all offer potential for incremental growth. During the year we made good progress in our Free cash flow is expec ted to be in the range of £6.0 to M2M business and continued the growth and expansion of £6.5 billion, reflecting continued strong cash generation our mobile money transfer platform, which now has over offset by the £0.3 billion reduction in dividends from SFR and 20 million customersand is currently being trialled in India. China Mobile Limited in the 2012 financial year, and the more limited working capitalimprovementsavailablegoingforward.Deliver value and efficiency from scaleCapital expenditure is expected to be at a similar level to last The current composition of the Group has enabled us to yearonaconstantcurrencybasis. increase efficiency and achieve favourable comparable cost positionsinmanymarkets.Duringtheyearwealsoestablished We are well positioned to continue to deliver value to a more formal relationship with Verizon to leverage our shareholders through the achievement of our medium-term purchasing poweracrossa wide range of suppliers. targets for revenue, free cash flow and dividend growth; our commitment to investment in profitable growth areas; and ourGenerate liquidity or free cash flow fromclear capital discipline.non-controlled interests¦t/, Duringtheyearweagreeddisposalsofour3.2%stakeinChina . 7/ Mobile Limited and our SoftBank interests for a total cash V^J^_ t/V consideration of £7.4 billion. Subsequent to the year end, ‘**•” we announced the sale of our44% holding in SFR, the numberVittorio Colao two mobile operator in France, to Vivendi, the majority Chief Executive |
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12 Vodafone Group PicAnnual Report 2011Strategy in action |
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Vodafone Group Pic Annual Report 2011 13 Our business in India has grown from 28 millionf customers at the time of73^” ^^-^^k. acquisition in May 2007| ^B^( to become our largestJjjIs -v marketwith over ^^ c^ 134 million customers ^K .-¦ at 31 March /JIHV ¦TTW^fi JP|?<T .’\S>H^M A number of factors may impact the pricesKey revenue performance indicators121 we charge and therefore the revenue we 2009 2010 2011 receive including: Service revenue growth (0.3)% (1.6)% 2.1% ¦ competition; Data revenue growth 25.9% 19.3% 26.4% ¦ regulatory decisions and Legislation on Emerging markets service revenue growth13‘ 6.4%M> 7.9% 11.8% mobile termination rates, international ~ : : ; ~ ., ,,.,,, ttt;m,m;nn ,h,,^ ,n^ *« ^«ii,wiih, Europe enterprise service revenue growth -l5) (4.8)% 0.5% roaming charges and the availability 1 _ f and cost of spectrum; and Fixed line revenue growth 2.1% 7.9% 5.2% ¦ changes in macroeconomic conditions. The net savingsfrom our cost efficiencyOrganic European operating expenses^^^^^™»« programmes may be impacted by inflationary (£bn) U ^^^^^En pressuresandthevolumeoftrafficonour ES networks which can affect our operating costs. Net savings will be used eitherto invest in commercial activities or respond to competitor activity or retained for margin enhancement. 2009 2010 2011 InthosebusinessesinwhichwehaveaDividends and sale proceeds from^^^^^^^ non-controlling interest, matters such as thenon-controlled interests(£bn) timing and amount of cash distribution may ¦ Dividend income from non-controlled interests’9 require the consent of our partners which can ¦ Cash received from the sale of non-controlled influencetheleveloffreecashflowwereceive interests"' I from that business. ^^^^^Rl I KQ I 2009 2010 2011 The returns we make on investments may beReturn to shareholders(£bn) impacted by competitor activity, regulatory ¦ Dividends paid decisions and macroeconomic conditions ¦ Share buybacks ^^^^^^^ that affect our commercial position, financial performanceandthemarketenvironmentin ^^B I which we operate.The cost of financing investmentand hence £15.7bn the return on investment maybe influenced byTotal returns to shareholders changesin credit markets or our credit ratings.over the last three years.2009 2010 2011 Notes: (4) Excludes India, Ghana and Qatar as these were not owned for the full financial year. (7) A further £1.5 billion is expected be received in April 2012 from the sale of the Group’s (5) Information not available. interests in SoftBank. (6) Excludes tax related dividend receipts from Verizon Wireless. |
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Mobile data: strategy Our data revenue was up 26.4%(*)year-on-year to £5.1 billion and now represents 12.0% of Group service revenue. Network quality is central to our data strategy and based on third party tests ^ performed in 16 of our main 3G markets, we rank first for overall data performance in 13 markets. |
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Vodafone Group PicAnnual Report 2011 15 Focus on key areas of growth potential: Mobile data-strategySamsung Galaxy Tab 10.1 vWe were the first operator to launch this Samsung tablet which uses the Android™ 3.0 Honeycomb operating system to deliver mobile entertainment such as gaming, reading eBooks or updating a social network status.How the market is developing Approach The fastest growing sector of the global telecommunications We already have a strong data position in Europe thanks to our market is mobile data. According to industry estimates, significant 3G investment, with over 66,000 3G sites providing between 2010 and 2014 total global revenue from fixed voice high speed mobile data and 65% of our 3G network providing will decline by US$70 billion, mobile voice will increase by theoretical downlink speeds faster than 14.4 Mbps. Some of US$24 billion, fixed data will increase by US$49 billion and ourEuropeantargetsaresetoutinthetablebelow. mobile data will increase by US$138 billion (source: IDC WorldwideBlackBook2010).March20ii bt MaS Mobile data penetration of our customer base in Europe isNumber of 5G sites 66^000 9O000 around 37%, far higher than in developing countries such as Percentage of 3G network India at around 18% which highlights the opportunities in at>14.4Mbps 65% 100% emerging markets. Data usage growth on our networks has been significant, growing by around 69%acrosstheGroup over thelastyearcomparedwith25%forvoice. We have also launched commercial initiatives to encourage mobile data use including: Mobile data demand is being accelerated by the wide range of sophisticated devices available, including mobile broadband ¦ tiered pricing plans to give customers more control sticks, smartphones and tablets, greater network speeds and (see page 19); an increased range of applications. ¦ re-designing customer experience and support systems to provide a better mobile data experience;Our objective is to deliver data faster, with the best ¦a multiplicity of data-enabled devices such asexperienceand more profitablysmartphones, tablets, low-cost handsets and USB To accelerate the opportunities of mobile data we are sticks; and investing in: ¦ managing smartphone and networkyields to deliver profitable growth. ¦ network technologies to deliver the best network experience;Typical achieved speeds in Vodafone’s network(Mbps) ¦ providing a better data experience to our customers ¦ Vodafone’s markets average™ through all our customer channels; and ¦ Best competitor market average ¦ providing leading smart connected devices. 3.0 1.8 Downlink Uplink Note: (1) Europe region plus Egypt and Vodacom. Source: Vodafone commissioned third party drive-by tests on data user speeds (September 2010 — January 2011). |
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Mobile data: technology We have collaborated with our main suppliers to pioneer the development of single RAN base station equipment which enables us to replace our existing 2G and 3G base stations with one solution which also supports LIE, providing significant savings in energy consumption and maintenance, and delivering improvements in capacity and coverage. |
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Vodafone Group PicAnnual Report 2011 17 Focus on key areas of growth potential: Mobile data-technologyVodafone 3G station¦*‘kw^^bBranded as Vodafone I Sure Signal in the UKa I femtocell that guarantees I a 3G signal and super-fast I mobile data transfer where installed in homes:• also available for enterprise customers.Network trialsAs part of a strategy to implement scalable and cost-effective We always aim to deliver a market-leading customer self-build solutions we have deployed high capacity ethemet experience and we use a third party to compare our networks microwave technology and high bandwidth optical fibre with those of our major competitors. During the year we transmission solutions. In Europe about 80% of our radio base benchmarked our 16 main 3G markets. The results showed stations are served by self-built transmission (where we have that weare the leading data services provider in 13 markets.On physically installed and own the infrastructure) and over 20% average across the networks measured we were almost 40% are currently connected using high capacity technologies, faster on data downlink than our best competitor and 40% faster on data uplink, a resultachieved through our investmentNew services and capabilities engineeringin extensive network upgrades and optimisation. We have consolidated the national IP networks in all our major markets into a single IP network giving us the ability to deliverInvesting to increase coverage high quality IPconnectivity to our customers.Continued site deploymentAt 31 March 2011 we had over 66,000 3G sites in Europe,Investing to improve cost efficiencyproviding 83% 3G coverage across our major EuropeanYield management capabilitymarkets.Thisrepresentsanincreaseofover8,500sitesduring We have been supporting the improvement of 3G data the year. service quality by managing the operational effectiveness of our network capacity.This enables us to optimise contentVodafone 3G stationand services as well as manage our costs. We have improved We have continued to introduce Vodafone 3G stations, also 3G data service quality in this way in 18 markets, known asfemtocells in our markets.These innovative devices deliver a personal 3G mobile phone signal to customersNetwork sharingthrough a fixed line broadband connection, giving coverage To reduce the cost of mobile network infrastructure, we to customers where mobile operatorsare unable toprovidea have continued to use network sharing agreements with strong enough signal. At 31 March 2011 Vodafone 3G stations other operators in all of our controlled markets, with 70% of were in service in seven of our markets serving almost the new radio sites throughout the Group being shared with 400,000 customers. other mobile network operators.Investing to improve customer experience Single radio access network (‘RAN’) High speed packet access CHSPA’) upgrades and green technology We have continued to upgrade our HSPA networks with 65%of By 31 March 2011 we had installed over 9,000 of these new our European 3G network equipped with 14.4 Mbpstheoretical single RAN base stations. We are also working hard to reduce peak downlink speeds or above and 90% providing 7.2 Mbps or our carbon impact through the wide-scale adoption of leading above theoretical downlink speeds. Peak download speeds of edge green technology solutions. Across our markets we are up to 43.2 Mbps (downlink) and 5.8 Mbps (uplink) are now equipping our radio sites with advanced carbon-efficient supported in several key traffic areas. These figures are solutionssuchaswind.solarandfuelcelltechnologies. theoretical peak rates deliverable in ideal radio conditions with no customer contention for resources.Research and development (‘R&D’) Our R&D ambition is to pioneer innovative services andLon g-term evolution CLTE’)technology in order to connect anyone and any device to one During the year we commercially launched our 4G/LTE another and to the internet. We have introduced six key technology in Germany and Verizon Wireless launched in programmes to achieve these ambitions: networks of the the US. 4G/LTE can offer better performance than our current future; smart charging; mobile location analysis; consumer 3G/HSPA technology while increasing network capacity. electronics; automotive;andM2M.High capacity backhaul upgradesOur focus over the next year will be on data and smart To support the high speed data capabilities introduced across communication. We are also launching an innovation centre our access networks we have upgraded our backhaul and in the US and have strengthened our patent portfolio backbone transmission networks, which connect our base through strategic patent filing activity in areas relevant to our stationstogether, to the latest high bandwidth IPtechnologies. business interests. |
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Mobile data: customer experience, pricing and connected devices We are enhancing our customer care, retail presence and online service to ensure that customers get the best data experience. We are introducing data centric store formats and we now have 5,000 specialised data customer care representatives in Europe. |
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Vodafone Group PicAnnual Report 201119 Focus on key areas of growth potential: Mobile data-customer experience, pricing and connected devices 1Mobile Wi-Fi R201 A mobile Wi-Fi hotspot device that lets customers share their 3G mobile connectior with up to five users at the press of a button.Customer experience Smart connected devices Toacceleratetheopportunitiesofmobiledataweareinvesting Our handset portfolio is key to our strategy as it helps in providing a better data experience to our customers differentiate us from the competition, acquire customers and through all channels. They interact with us through retail increase data usage. stores, online, through our call centres and by our mobile phones. We place great importance on multi-channelSmartphones and tablets capabilities to make it convenient and easy for people to We aim to have the most attractive portfolio in the market. contact us. We have developed the online self service and Smartphones now account for 19% of the total number of sales function, and website visits have grown to approximately phones used by our customers in Europe and this is expected 133 million a month. to grow strongly. We are also driving down the cost of smartphones in order to make the data experience available Most of our markets are able to propose individually relevant for lower income segments in both European and emerging offers, specific to a particular customer based on their usage markets. Examples of this are the Android-powered Vodafone patterns, and we are seeing as many as 50% of customers 845and945deviceslaunchedduringtheyear. accepting them when offered. We are enhancing our billing and customer management platforms to make it easier for We also aim to lead the tablet segment, which is growing people to have several Vodafone SIMs, subscriptions and rapidly. We were the first operator to launch an Android bundles, using different devices. We are also developing a HoneycombtabletwiththeSamsungGalaxyTab10.1vandwe single view of all our customers which will allow multiple havestartedtodistributetheAppleiPad2. services used by a customer to be managed and presented on a single bill.Vodafone branded handsets We have developed a broad range of Vodafone branded To better understand our customers’ satisfaction, we started handsets focused on mobile internet experience and to use net promoterscore (‘NPS’)thisyearto measure to what design differentiation. The Android-powered Vodafone 845 extent customers would recommend us to others. We are in and 945 are competitively driving mobile internet further a NPS leadership position in either consumer or enterprise into the prepaid segment. The Vodafone 553 accelerated in over 60% of our markets. We are also implementing the widespread use of qwerty devices and related programmes in all our controlled markets to get direct messaging and social network trends. Additionally, devices feedbackfrom customers to help us improve service. such as the Vodafone 543 powered with Opera Mini, enhance mobile internet browsing experiences even on lowPricingbandwidth connections.Tiered data pricing in Europe We have introduced tiered data pricing to give customers moreOther devices control over their mobile data spend and therefore encourage During theyear we introduced the Vodafone K4605 USB stick mobile data use. Customers are charged for the amount of which provides theoretical peak data download speeds of data they use rather than a flat fee for a high level or unlimited 42.2 Mbps using 3G/HSDPA technology and a 4G/LTE USB use.Thebenefitsincludeprovidingsmallerandlessexpensive stick which has the potential for faster download speeds, allowances for people who do not use much data and better We also launched Vodafone WebBox (see page 21 for further cost management for higher users as well as optimising the information) and Vodafone TV services (see page 23 for capacity of the data network. further information).Data roaming Smartphone yield management This year we launched a market leading smartphone roaming Evidence from our main markets shows that smartphones are data plan that allows our European customers to use their driving incremental ARPU uplift and longer customer life home data plan abroad for only €2 a day to access the internet, times relative to non-smartphones. emails and applications, making data roaming easier and more affordable. Acrossourmarketsweareworkingtooptimisethesmartphone migration path by carefully managing how we allocate acquisition and retention subsidies, managingoursmartphone portfolio, and maximising data attachment on smartphones and the penetration of integrated tariffs. As data penetration and usage amongst existing customers grows, we are introducing tiered data allowances. |
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20 Vodafone Group Pic Annual Report 2011 Focus on key areas of growth potential: Emerging marketsCustomer growth will be driven by rising mobile Development impact of products and services penetration and GDPgrowthMobile services are a key driver of economic development in The number of customers using mobile services in emerging emerging markets by increasing access to communications markets such as India and Africa has grown rapidly over the and mobile-enabled services. We continued to market Lasttenyears,increasingbyover17timescomparedtonearly Vodafone-branded competitively priced handsets, selling 130% in more mature markets such as Europe. In the 2010 1.7milliondevicesduringtheyearinouremergingmarkets<2>. calendar year the Indian mobile market increased by more than 225 million customers, nearly four times the size of The uptake of Vodafone M-Pesa, which brings financial the UK population. The key driver of growth has been a services to people without bank accounts, continued to grow, fundamental need for communication services against a making an increasing contribution to economic development background of low quality fixed infrastructure and strong in communities that lack conventional banking services. It economic growth. now has over 20 million customers globally (11 million in 2010), who transferredaround US$500 million a month during Most ofthe future growth in mobile phone users is expected to the year (up from US$300 million a month in the previous continue to be in emerging markets where mobile penetration financial year). We launched Vodafone M-Pesa in South Africa, is still only approximately 70% compared with around QatarandFijiduringtheyear.bringingthetotaltosixmarkets, 130% in Europe, supported by the expectation of continued and began pilotsinlndiawithlCICIBankandHDFC Bank, strong economic growth. We expect to see between 20 to 40 percentage points of additional penetration by 2014 in The Vodafone WebBox (see opposite) was launched in emerging markets01. South Africa in February 2011 and other markets will follow inthe2012financialyear.Data is the next major opportunity Data represents a substantial growth opportunity as only 19%Strong performance ofouractivecustomersinemergingmarketsusedataservices We are either number one or two in six of our seven which isabout half the rate in Europe.There are two significant emerging markets based on revenue. This year’s performance opportunities. One is mobile broadband, helped by the lack of highlights include: a comprehensive fixed broadband infrastructure in emerging markets. Already in South Africa mobile broadband accounts ¦ increased revenue market share in India and Turkey; for around 90% of all broadband. The other is mobile internet ¦ data revenue growth of 43.8%<*> in Vodacom and 37.7%<*i which we are driving by: in Egypt;and ¦ surpassing the 134 million customer mark in India, an ¦ enhancing the mobile internet experience through increaseof 34 million over the year, our Opera Mini browser software which provides faster page downloads; We launched 3G services in India in February 2011 and ¦ driving down the cost of internet enabled handsets anticipate that this will provide further revenue growth powered by Opera Mini, with prices starting at US$45; opportunities going forward. ¦ low day-to-day micro pricing which allows the purchase of individual data services, for example the download . . r Notes: of a single ring tone; and(1) source: mforma was.¦ locally relevant Content and Services in local languages.(2) India, Vodacom, Egypt, Turkey.Ghana, Qatar and Fiji. |
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Vodafone WebBox Dji^UA Vodafone innovation bringing internet access to a customer’s existing television set just by plugging in a keyboard with a built-in mobile SIM card. It wasMadeveloped specifically for customers in emergingBmMMMmarkets where technology and cost barriers oftenWBMexclude people from enjoying readily availableftjjflflllBinternet access. |
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Machine-to-machine CM2M’) services Machine-to-machine communications, commonly known as M2M ortelemetry, enables devices to communicate with one another via built-in mobile SIM cards. This allows key information to be automatically exchanged without human intervention making it possible to reduce costs, and improve efficiency and services to customers, for example, enabling drivers to upload and download real-time information to their sat nav devices on traffic jams which can help reduce journey times and save fuel. Focus on key areas of growth potential: EnterpriseEnterprise customers Multinational companies Mfe"^^*~’~ Our enterprise customers range from small-office-home- Vodafone Global Enterprise manages the communication ¦j“SiJ office CSoHo’) businesses and small to medium-sized needs of over 560 of our largest multinational corporate ‘ ~a|^\\ enterprises CSMEs’), through to large domestic and customers. It provides a range of managed services ™“t»’ multinational companies. Across the Group we have which bring together every aspect of a customer’stM^)^ 34 million enterprise customers accounting for around 9% telecommunications infrastructure, both fixed and mobile, l"* of all customers and around 23% of service revenue. providing greater visibility and control of expenditure. During the year Vodafone Global Enterprise achieved organic ^^1Selected expansion in growth marketsrevenue growth of around 8%<*>. Newcustomersand renewedSoHo and SMEcontracts thisyear included Unilever, Luxottica and Bosch. InVodafone One Net Our focus for SoHos and SMEs is to provide customers with March 2011 Vodafone Global Enterprise received the HP Enables small and integrated fixed and mobile communications solutions Supplier of the Year Award for its role in delivering globally medium size business where we host and maintain the entire service “in the cloud” to consistent managed mobility services to Hewlett Packard. customers to combine help customers reduce costs and simplify administration. theirfixed and mobile Vodafone One Net for example, brings together fixed and In October 2010 we acquired Quickcomm and TnT communications into mobile communications in one system and now has around Expense Management, which are specialist providers of a single service with 1.4 million end users in six markets. Through our partnership telecommunications expense management services. The one number, one voice with Microsoft we provide our customers with hosted acquisitions will strengthen our ability to provide our mailbox and one bill. email, conferencing and collaboration services in a single enterprise customers with greater visibility and control over package called Microsoft Online suite, which is now available their combined fixed lineand mobile expenditure, in four markets. In the area of health, Vodafone Global Enterprise is workingDomestic companieswith partners such as Novartis on innovative health projects. For larger domestic companies we provide unified Further information is contained in “Sustainable business” communications solutions delivering integrated mobile and on page 30. fixed services, fixed voice and data services, IP virtual private networks and network integration services. |
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VodafoneTV This is a new service, Launched in four markets, that provides a wide range of content over the airwaves through a fixed Line broadband connection. In Germany it is supplied through an innovative ‘hybrid’ set-top box which delivers free and pay TV channels transmitted by satellite, cable or broadband. It also provides on-demand films and TV programmes, and other premium content. Focus on key areas of growth potential: Total communications To meet customers’ total communications needs beyond immediately after purchase via the USB broadband modem just mobile we have developed our fixed line capabilities and then later with fixed broadband when this has been including voice calls and broadband data, to provide a full provisioned. During the year we have enriched this product in suite of services. We can integrate customers’ mobile and fixed our largest fixed markets (Germany, Italy and Spain) through Line communications into one service and provide related the integration of digital living network alliance CDLNA’) services such as Vodafone TV. Enterprise customers in capabilities which facilitates the sharing of digital media particular have shown an increasing demand for receiving all between different electronic devices. For example, a DLNA I their communication productsfrom one company. compliant TV can operate with a DLNA compliant PC to play music or videos, or display photos.Approach Vodafone DSL Router Our European strategy is to obtain long-term access to fast We have been offering triple play services (fixed broadband, The DSL Router fixed broadband to service high value customers in a capital voice and TV) in Portugal since 2009. This year we increased comes complete with efficient manner. Access is obtained through wholesale our presence in the home TV market by launching services in a Vodafone Mobile agreements, partnerships oracquisitions. Italy, Spain and Germany. Broadband USB stick so customers can haveFixed services Application servicesinstant access to the Fixed broadband and voice account for around 8% of Weofferarangeoftotalcommunicationsapplicationsaswell internetwhiletheirfixed ourservicerevenue.Wehavefixedservicesin13countrieswith as services for enterprise and consumer customers. For broadband is set-up. 6.1 million fixed broadband customers at 31 March 2011, example Vodafone Always Best Connected software enables a 9.5% increase over the previous year. In addition, through customers to stay connected to the internet on the best Gateway, we provide wholesale carrier services in over 40 available connection wherever they are by automatically African countries. managing the switching between connection types including mobile broadband, Wi-Fi and LAN. Vodafone PC Backup is anCombining fixed and mobile servicesonline back-up and restore service that enables users to The Vodafone DSL Router, now available in 11 markets, up remotely store data securely and automatically via their from six markets the previous year, combines mobileand fixed internet connection, broadband services. This means customers can connect |
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Mobile payments (an application of NFC) Vodafone, ABN AMRO, ING, KPN, Rabobank and T-Mobile signed a Letter of intent this year to create a joint venture company and introduce simple and secure mobile payments at checkouts in the Netherlands. It is an early example of how Vodafone is leading the market for mobile payments in partnership with other mobile network operators and major banks. Focus on key areas of growth potential: New services We have strategically chosen to expand into a number of newFinancial services growth segments to create additional revenue and enhanced VodafoneM-Pesaisnowliveinsixmarkets.Furtherinformation customer experience that complement our core voice and is contained in “Focus on key areas of growth potential: data products. Emerging markets” on page 20.Machine-to-machine CM2M’) Near field communication CN FC) M2M connections allow devices to communicate with one NFC allows communication between devices when they are another via built-in mobile SIM cards. This allows us to offer touched together or brought within a few centimetres of each services such as fleet tracking and asset management, remote other. We aim to make mobile phones the preferred device for monitoring of, for example, vending machines, cash machines most personal transactions including payments, tickets,Vodafone Ad Plus andbuildingmanagement.aswellassecurityandsurveillance. coupons, identification and the provision of information. We in Romania allows We are now serving around 5.3 million M2M connections have been developing mobile NFC standards since 2006, have companies to access around the world. Further information is contained in “Focus conducted trials in several markets and are now developing by SMS an opted in on key areas of growth potential: Enterprise” on page 22 and services and partnerships in preparation for commercial customer base of up to “Sustainable business” on page 30. launch in key markets. five million customers. Research in RomaniaThird party billing Mobile advertisingshows almost 58% We work with third party content and service providers to We have an established mobile advertising business in 18 of our customers like simplify our customers’ experience when they purchase countrieswithawiderangeofcapabilities.Thefastadoptionof to receive relevant applications and content by letting our customers charge smartphone devices is promoting mobile as an alternative adverts on their mobile these services direct to their mobile account (‘charge to bill’), channel to reach consumers and we are collaborating We provide a single technical interface to these providers to with other mobile network operators to make the most of the / ¦»’»•»..g reach all our European customers and we plan to expand this potential of mobile advertising. 1 ^^^¦H^^B reachtootherpartsoftheworldoverthe2012financialyear. I ¦ |
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Delivering cost efficiency from sharing resources This year we established two shared service centres in India to provide quick, simple and cost effective customer contact points for our technology and business operations and data services for our finance and administration functions in seven European markets and across India. We expect to gain significant benefits to help consolidate, standardise and optimise the way we run our operations. Deliver value and efficiency from scale Against a background of continual price pressures due toOur achievements to date~7C\^l/ competition and regulation we continually seek to improve We have been taking advantage of the large scale of ourI \J/O our cost efficiency. During the year we reduced our European networks. We are sharing base station sites where thisNewradiosites operating costs by 4% on an organic basis, equivalent to makes commercial sense in order to reduce site rental anddeployed thisyear saving over £140 million. We have used the savings to fund maintenance costs. We have also renegotiated leases on mostbuiltasshared investment in customer facing activities and growth areas of our sites, are standardising the technology we deploy, andsitestoreduce such as data and enterprise services. have reduced the energy consumption of our sites andoperating costs switching centres. We are reducing costs in maintenance andOur cost advantagefieldactivitiesinparticularthrough outsourcing.C\ir\v Based on external independent benchmarking we have\JVCI favourable comparative cost positions in many markets. This We use the Vodafone Procurement Company, the central O’lAr\v^c\ reflects both our scale as one of the world’s largest mobile Group procurement function based in Luxembourg, tot IH”\yl I I communications companies by revenue and our ongoing leverage our scale to achieve better prices, more value andReduction in organic costfocus. drive standardisation across the business. We have furtherEuropean operating reduced costs by centralising the purchasing of handsets. Ourcosts due to ourcost position vs competitors [argesjzea[s0a[[OWSus to drive ethical, health and safety,costsaving Network: cost to carry a unit of data™ Top quartile position labour and environmental standards with our suppliers and Terminals: cost to purchase aLso t0 9et the best rates on warehousing, inbound anda handset"'Top quartile position outbound logistics, and repair costs. General supplies12’ 4% better than our shared service centres in Hungary, India and Egypt haveglobal benchmark allowed us to reduce costs as well as deliver better service. Notes: Additionally, we have outsourced application development (DATKearneyExecutiveSummaryReport.ancjmajntenance to third party providers on multi-year (2) The Hackett Group’s world class benchmarking.COmDetitive tenders |
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Verizon Wireless In the US, our associate Verizon Wireless has continued to perform strongly. Organic service revenue increased by 5.8%c*) Led by a 3.1% increase in the customer base to 88.4 million and strong data revenue growth driven by increased smartphone penetration. Verizon Wireless launched 4G LTE services in December 2010 and began distribution of the iPhone on its network in February 2011. Generate liquidity or free cash flow from non-controlled interests Non-controlled interests constitute around 40% (based on thirdPolkomtel~7Q0/ party estimates) of the value of the Group’s assets. We aim to Polkomtel trades as Plus in Poland and is a leading operator in «3 -7 /O maximise the value of these interests either by generating Poland. Along with the four other owners we are exploringGroupadjusted Liquidity or increasing free cash flow in order to fund profitable optionsfora sale of the business.operating profit from investmentandenhanceshareholder returns.Verizon Wireless BhartiAirtel(201036%)Verizon WirelessBharti is the market leader in India. Following the purchase of Verizon Wireless is our largest non-controlled interest, in which our controlling interest in Vodafone Essar in India in 2007, we we havean equity interest of 45%. Itisthe revenue marketleader sold 5.6% of our stake in Bharti in 2008 and retained a 4.4% in the US and performed strongly thisyearwith service revenue indirect interest, growth of 5.8%(,). To create additional value we are working closely with Verizon Wireless on several initiatives that leverageSale of interests our combined scaleand scope including purchasing of network In September 2010 we sold our 3.2% interest in China Mobile equipment, IT and services, technology enhancements and Limitedfor£4.3billion.InNovember2010wesoldourinterests propositions for multinational companies. We received around in SoftBank of Japan for £3.1 billion and approximately half of £1.0 billion in dividends this year, in relation to tax related the proceeds have been received to date and used to reduce dividend receipts (see “Dividends from associates and to non- the Group’s net debt.The remaining proceedsare expected to controlling shareholders” on page 48 for further information), be received in April 2012. In April 2011 we announced the sale which was substantially less than our proportionate share of of our44%interestinSFR, the second largest mobile operator Verizon Wireless’ free cash flow which shows the material in France, for £6.8 billion. The transaction, which is subject to opportunity forincremental returns. competition authority and regulatory approvals, isexpected to complete during the second calendar quarter of 2011. Proceeds from the sale of all of these interests are being used to reduce net debt and committed to a £6.8 billion buyback of our shares of which £2.6 billion has been completed to date. |
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Creating value for shareholders We aim to increase shareholder returns through regular dividends and one-off returns. In 2009 we established a target to grow total dividends per share by at least 7% per annum until the financialyear ending 31 March 2013, and consistent with this, total dividends per share increased by 7.1% in 2011 to 8.90 pence per share. In addition, we have committed £6.8 billion to buying back our shares, of which £2.6 billion has been returned to date. Apply rigorous capital discipline to investment decisionsDiscipline of regular business reviews Selective acquisitions~7®/ We are focused on enhancing returns to our shareholders and When managing capital we also consider whether toISO are therefore careful how we invest shareholders’ money. We strengthen the Group by acquiring other companies toTargetannual regularly review the cash needs of each of our businesses increase our operations in a particular market. All potentialincrease in total across the globe, taking into account their performance and acquisitions are judged on strict financial and commercialdividends per share competitive position. criteria, especially whether they would provide meaningfuluntil March 2013 scale in a particular segment, the cost of the acquisition andHow we invest your moneythe ability to enhance the Group’s free cash flow. For example, —.. . .Organic investmentin March 2011 we announced our intention to acquireLUW We make capital investments, such as for new equipment BelCompany BV, the Netherlands’ largest independentnjrtol^ A or spectrum, in our existing businesses to improve their telecom retailer, which will expand our Dutch stores fromjlI IU LCl\ performanceanddriveorganicgrowth. 86to296.Target long-term credit rating Returns to shareholders Investment principles We thoroughly review the best ways to provide returns to our All of our investments, whether in existing businesses shareholders. We have a target of increasing total dividends or acquisitions, are subject to rigorous commercial analysis per share by at least 7% a year until the financial year ending and demanding hurdle rates (the minimum rate of return on an 31 March 2013. When we have surplus funds we consider investment) to ensure they enhance shareholder returns. We additional returns to shareholders through special dividends remain committed to ourtarget credit rating of low single Afor or share buyback programmes. long-term debt as this provides us with a low cost of debt and good access to liquidity from financial institutions. |
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28 Vodafone Group PicAnnual Report 2011Key market review |
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Vodafone Group PicAnnual Report 2011 29—. Ourstrong brand and ncreased customer r^^l focus, supported byJfl^^BJ our leading network performance, is driving our improvedj£^M ^J^^^^^^^ performance. ^^HRevenue by key market (%) Mobile service revenue market share (%)<1 ^^^^ ¦ 2010 ^rt ^ ¦ Germany¦201’ft ^ltalV 54 ¦ ¦ Spain ^^ 53<2; ^. UK 34 34 33 | ^_w-s- ¦¦¦¦¦¦¦¦-.!¦ Germany Italy Spain UK India South Africa0-United Kingdom¦ Significant year-on-year improvement ^^^^^^^in revenue trends. Service revenue growth (%)(,) 4.7¦ Data revenue increased 28.5%(,)due to Adjusted EBITDA margin (%) ~2s7increasing penetration of smartphones.(1.1)1¦ - ¦ Strong contract customer growth due(4.7)Operating free cash flow (£m) 950_to increased commercial focus.2009 2010 2011India¦ Revenue growth improved through the(4)year as the customer base increased^^^^^^^ Service revenue growth (%)(,) 16.2and price declines slowed.147 16.2 Adjusted EBITDA margin (%)~25£¦ Fourthsuccessiveyearofgaining I ^^^H ^^^H - revenue market share. ^^^^^^H ^^^^^^H ^^^^^^HOperating free cash flow (£m) 455_¦ Commenced 3G services in February 20112009 2010 2011with 1.5 million customers by 31 March. Vodacom ¦ Strong revenue growth led by increasing demand for mobile broadband services.^^^^^^^ Service revenue growth (%)(,) 5.8Launched Web Box service for., 58 Adjusted EBITDA mai.nn(%.i 55.7internet access. I ^^^^M ^^^^B - ¦ Continued network investment with over^^^^^^M^^^^^^M^^^^^^MOperating free cash flow (£m)1,5593,200 base stations now 4G/LTE ready.2009 2010 2011 Notes: (3) Market share information relates to South Africa which is Vodacom’s largest business. (1) At31 March (2011 estimated). (4) This figure reflects pro-forma growth which is organic growth adjusted to include acquired business for the whole (2) Q3 2010 and Q3 2011 data; mobile total revenue share. of both periods. |
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Sustainable business |
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VodafoneGroupPlcAnnualReport2011 31 Instant Network Vodafone Foundation and Group Technology worked M with Huawei and Telecoms l^—^^^B ‘ Sans Frontieresto develops|TjL^^^^^^^^^ portable GSM/EDGE mobile JI |fehnetwork that provides‘^MI ‘•^finstant mobile coverage i Jj “ ‘ for emergency situations ¦¦f^^B ‘ ^B; in under 40 minutes, which - “; ^^^^^^^ fits into three suitcase-size ^^ boxes to be transported by plane worldwide. in emerging markets we are setting carbon intensity targets toSustainability governance reduce emissions per network node. The Executive Committee is ultimately responsible for our sustainability performance and receives a formal update every We are deploying more efficient equipment across our year, as does the Board. Each local market has a sustainability network, working with suppliers to develop more efficient management structure and a system for monitoring equipment, and using solar and wind power to generate performance and reporting to the Group. We also influence renewable energyforoff-grid base stations. and monitor the sustainability performance of our joint ventures, outsourcing partners and other organisations withEthical businesswhichwework. Our business and sustainability strategies are underpinned by our business principles and code of conduct which stress The Vodafone Sustainability Expert Advisory Panel met the importance of responsible, ethical and honest behaviour twice during the year to discuss various issues. We engage in everything we do. This means being a responsible a wide range of stakeholders, including customers, employer, maintaining the health and safety of our employees investors, employees, suppliers, communities, governments and contractors (see “People” on page 32), ensuring high and regulators, standards of labour and environmental protection in our supply chain, transparent and ethical business practices, clear Our 11th annualsustainability report, which isassured by Ernst pricing and maintaining a safe internet experience (including & Young LLP using the International Standard on Assurance child safety and privacy). In response to the proposed Engagements(‘ISAE3000’)tocheckadherencetotheAA1000 disclosure requirements on conflict minerals required by Account Ability Principles Standard CAA1000APS’), is available the US Dodd-Frank legislation, we continue to strengthen our atwww.vodafone.com/sustainability. 16 local markets also due diligence activities on the source and chain of custody of publish their own sustainability reports, these materials. The issue of human rights and access to communications has been brought into sharp focus byKey performance indicators’11 continuing eventsin the Middle East and North Africa.2011 2010 2009 Vodafone GroupSocial investment- The Vodafone Foundation and its network of 27 local Energy use (GWh) foundations continue to invest in the communities in which(direct and indirect)4,117 5,278 5,044 Vodafone operates. Specific initiatives include Mobiles for Carbon dioxide emissions Good projects which include the piloting of handsets for (millions of tonnes) 1.96 1.21 1.22 women at risk of domestic violence and an instant network D«,rar,(,n.,,( »r,»^,. Percentage of energy which provides rapid network coverage for emergencies,sourced from renewables 19.42 25 19 Red Alert SMS fundraising services for emergency appeals and its World of Difference programme which enables Number of phones collected for individuals to take paid time to work for a charity of theirreuse and recycling (millions)1.25 1.55 1.55 choice for up to a year. We make grants to a variety of local Network equipment waste charitable organisations meeting the needs of their generated (tonnes) 7,475 5,870 4,944 communities. Total donations for the year were £49.6 million : and included donations of £5.2 million towards foundation Percentage of network equipment operating costs.waste sent for reuse or recycling99 98 97 NJote: (1)These performance indicators were calculated using actual or estimatec data collected by our mobile operating companies. The data is sourced frorr nvoices, purchasing requisitions, direct data measurement and estimations where required. The carbon dioxide emissions figures are calculated using the kWh/CO., conversion factor for the electricity provided by the national grid, suppliers or the International Energy Agency and for other energy sources in each operating company. The 2011 data includes India, Ghana, Qatar and South Africa but excludes all other Vodacom markets. Our joint venture in Italy is included inallyears. |
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People Our people are integral to building and sustaining our successOrganisation effectiveness and change Employment policies and employee relations Employees by We employed an average of around 83,900 people worldwide Our employment policies are developed to reflect local legal,location(%) during the year and saw an increase in the percentage of cultural and employment requirements. We aim to be ^^^^ women in senior roles, up from 14.5% to 16.5%. People recognised as an employer of choice and therefore seek to ^^ numbers have changed in different areas of the business maintain high standards and good employee relations according to overall business strategy. For example: in wherever we operate.t/k Vodacom head count was increased to support the growing^3 enterprise businessand data; in India, we increased headcount Our goal is to create a working culture that is inclusive for all. to grow the business; in Ghana, to drive operational efficiency, We believe that having a diverse workforce helps to meet the we reduced headcount through redundancy and outsourcing different needs ofourcustomersacrosstheglobe.An inclusive ¦ Germany ofnetworkoperations,callcentresandfacilities;andintheUK culture and environment is one which respects, values, ¦ Italy we reduced back office roles and increased investment in celebrates and makes the most of the individual differences ¦ Spair customer facing activities. we each bring to Vodafone, to the benefit of our customers, ¦ UK employees, shareholders, business partners and the wider ¦ India We have also made a number of changes to our structure, communities in which we operate. We do not condone unfair ¦ Vodacom governance and accountabilities to help us concentrate on treatment of any kind and offer equal opportunities in all Other our main commercial and financial priorities. These changes aspects of employment and advancement regardless of race, includethecreationofaGroupCommercialunit.expansionof nationality, gender, age, marital status, sexual orientation, the role and scope of Group Technology to oversee all disability, religious or political beliefs. This also applies to operating companies, the consolidation of our regional agency workers, the self-employed and contract workers who structure into two distinct regions, plus reporting line changes work for us. In our latest people survey, 87% of employees to align teams more closely with theirfunctions. agreed that Vodafone treats people fairly, regardless of their gender, background, age or beliefs. |
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Vodafone Group Pic Annual Report 2011 33Q7Qf\f\The main emphasis of our global diversity strategy has been plans and key individuals, and at our monthly Executive0+D)Js\J\Jon gender diversity and to increase the number of women in Committee meetings we discuss the senior leadership roles.Average employeesmanagement positions which has risen to 16.5%. Efforts to increase the percentage further will continue during the A global graduate and recruitment programme was introduced 2012 financialyear. Our second priority has been to increase with a target to hire 250-300 top graduates across the Group O Q talent from our emerging markets in Group roles and senior during the year. By 31 March 2011 we had recruited 306. InL- Jleadership positions. addition, we partnered with nine leading MBA schools in Europe,Nationalitiesthe US, Africa and India to recruit 15-20 MBA graduates for keyin top seniorDuring the year we ran a series of two-and-a-half day diversity management roles.management rolesand inclusion workshops for over 450 people from human resources teams globally to support their senior leaders whoLearning and capability development had previously all attended inclusive leadership workshops in We are committed to helping people reach their full potential their local market. through ongoing training and development. People identify and agree their development objectives with their managersHealth, safety and wellbeingevery year as part of the performance dialogue process. Local, The health, safety and wellbeing of everyone affected by our functional and global learning programmes are provided to business activities has continued to be a high priority. The meet people’s development needs, delivered through a blend implementation of the Vodafone fatality prevention plan saw of classroom training, e-leaming, coaching, mentoring and on- a significant reduction, of 33%, in fatalities in India, Ghana and the-job experience. Turkey, where there were 14 fatalities in those countries this year compared with 21 in the previous year. Sadly, across the During the year we invested around £55 million in training Group 21 fatalities have occurred this year including four programmes. In our most recent people survey, 72% of our fatalities that occurred within the Vodacom Group operations, employees rated the opportunity to develop the skills that which are included in the Group figure for the first time this theyneedtodotheirjobwellasgoodorverygood, year. The Vodafone fatality prevention plan has now been rolled out across Vodacom’s subsidiaries which has seen a Inspire, our global leadership development programme for reduction in fatal incidents to one in the last six months of the high-potential managers, is in its fourth year. So far, 124 people financial year. Out of the Group total 17 were third-party havecompletedtheprogramme. contractors and four were Vodafone employees. Further detailscan befoundintheGroup’s2011 sustainability report.Performance, rewardand recognition We reward employees based on their performance, potential As part of a more robust governance programme, we and contribution to the success of the business and we aim introduced external health and safety benchmark reviews, to provide competitive and fair rates of pay and benefits in These reviews evaluated health and safety management every country where we operate. We also offer competitive systems in several countries, including New Zealand, Czech retirement and other benefit provisions which vary depending Republic, Hungary, Romania, Vodacom South Africa and Egypt, on conditions and practices in local markets.Culture, communications and engagementGlobal short-term incentive plans are offered to a large In October 2010 we carried out our sixth annual global people percentage of employees an d global long-term incentive survey.The survey measures employees’levelof engagement, plans are offered to our senior managers. Both plans are paid a combination of pride, loyalty and motivation and 90% of according to individualand company performance, those surveyed responded. We achieved an overall employee engagement score of 75 which means we have maintained aKey performance indicators highscoreinemployeeengagementforthethirdyearrunning. 2011 2010 2009 Number of employees™ 83,862 84,990 79,097 Regular, consistent and open communication is fundamental —; —; ; to high levels of employee engagement. Our people have Nationalities in top senior access to information about our business through a globalmanagement roles29 26 25 intranet.withlocaltranslationsandcontentwhereappropriate. Women in top senior TheChiefExecutivecommunicatesdirectlywithallemployees management roles (%) 16.5 14.5 13.1 through regular team meetings, email and video updates and tttt: this is reinforced by local chief executive communications inEmployee turnover rates (%F 15 15 15 all our markets. Relevant performance and change issues are Notes:alSO diSCUSSed With Our employees through team meetings,(1) Represents the average number of employeesinourcontrolled and jointly round table discussions or through elected representative ,,, controlled marketsduring the year 3 r (2) Based on our controlled markets and ourjointventure in Italy. bodiesin some of the European countries. Our culture is based on The Vodafone Way. All of our senior Leadership team (approximately 250 people) have now been through the Leading in The Vodafone Way workshop which provides a picture of howThe Vodafone Way works day-to-day. Local markets will roll out a similar programme for all their managers. We have also created a community of ‘change Leads’, senior leaders who meet regularly to identify what more ^^^^ canbedonetofurtherembedTheVodafoneWay. ^^te*_Diversity and inclusion Talent and resourcing^ Our inclusive culture Duringtheyearouremployeescontinuedtoperformatahigh t respects, values, Level and we strengthened our leadership team. This was i™ \ j tj I celebrates and makes achieved partly by introducing talent identification tools andbA^* ''^ the most of the diversity partly by investing in staff with high potential and helping\Hl.of our people. them with their career planning and development. Quarterly ^B, ‘1 ,r J^W talent reviews are held to discuss performance, succession H. . |
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Non-Controlled | ||||||||||||||||||||||||||||||||
Africa, | Interests and | |||||||||||||||||||||||||||||||
Middle East | Common | |||||||||||||||||||||||||||||||
Europe | and Asia | Functions(3) | Eliminations | 2011 | 2010 | % change | ||||||||||||||||||||||||||
£m | Pacific £m | £m | £m | £m | £m | £ | Organic(4) | |||||||||||||||||||||||||
Revenue | 32,015 | 13,304 | 659 | (94 | ) | 45,884 | 44,472 | 3.2 | 2.8 | |||||||||||||||||||||||
Service revenue | 30,097 | 12,292 | 412 | (63 | ) | 42,738 | 41,719 | 2.4 | 2.1 | |||||||||||||||||||||||
Adjusted EBITDA | 10,823 | 3,999 | (152 | ) | — | 14,670 | 14,735 | (0.4 | ) | (0.7 | ) | |||||||||||||||||||||
Adjusted operating profit | 5,726 | 1,272 | 4,820 | — | 11,818 | 11,466 | 3.1 | 1.8 | ||||||||||||||||||||||||
Adjustments for: | ||||||||||||||||||||||||||||||||
Impairment losses | (6,150 | ) | (2,100 | ) | ||||||||||||||||||||||||||||
Other income and expense(5) | (72 | ) | 114 | |||||||||||||||||||||||||||||
Operating profit | 5,596 | 9,480 | ||||||||||||||||||||||||||||||
Non-operating income and expense(6) | 3,022 | (10 | ) | |||||||||||||||||||||||||||||
Net investment income/(financing costs) | 880 | (796 | ) | |||||||||||||||||||||||||||||
Profit before taxation | 9,498 | 8,674 | ||||||||||||||||||||||||||||||
Income tax expense | (1,628 | ) | (56 | ) | ||||||||||||||||||||||||||||
Profit for the financial year | 7,870 | 8,618 | ||||||||||||||||||||||||||||||
Notes: | ||
(1) | The Group revised its segment structure on 1 October 2010. See note 3 to the consolidated financial statements. | |
(2) | Current period results reflect average exchange rates of £1:€1.18 and £1:US$1.56. | |
(3) | Common Functions primarily represent the results of the partner markets and the net result of unallocated central Group costs. | |
(4) | Organic growth includes Vodacom at the current level of ownership but excludes Australia following the merger with Hutchison 3G Australia on 9 June 2009. | |
(5) | Other income and expense for the year ended 31 March 2011 included £56 million representing the net loss on disposal of certain Alltel investments by Verizon Wireless. This is included within the line item “Share of results in associates” in the consolidated income statement. | |
(6) | Non-operating income and expense for the year ended 31 March 2011 includes £3,019 million profit arising on the sale of the Group’s 3.2% interest in China Mobile Limited. For further details see “Other significant transactions” on page 49. |
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2011 | 2010 | |||||||
£m | £m | |||||||
Investment income | 1,309 | 716 | ||||||
Financing costs | (429 | ) | (1,512 | ) | ||||
Net investment income/(financing costs) | 880 | (796 | ) | |||||
Analysed as: | ||||||||
Net financing costs before income from investments | (852 | ) | (1,024 | ) | ||||
Potential interest charges arising on settlement of outstanding tax issues(1) | (46 | ) | (23 | ) | ||||
Income from investments | 83 | 145 | ||||||
Foreign exchange(2) | 256 | (1 | ) | |||||
Equity put rights and similar arrangements(3) | 95 | (94 | ) | |||||
Interest related to the settlement of tax cases(4) | 872 | 201 | ||||||
Disposal of SoftBank financial instruments(5) | 472 | — | ||||||
880 | (796 | ) | ||||||
Notes: | ||
(1) | Excluding interest credits related a tax case settlement. | |
(2) | Comprises foreign exchange rate differences reflected in the income statement in relation to certain intercompany balances and the foreign exchange rate differences on financial instruments received as consideration on the disposal of Vodafone Japan to SoftBank in April 2006. | |
(3) | Includes foreign exchange rate movements, accretion expense and fair value charges. Further details of these options are provided on page 51. | |
(4) | The £872 million in the year ended 31 March 2011 relates to the settlement of a tax case and the £201 million in the year ended 31 March 2010 relates to the settlement of the German tax loss claim. | |
(5) | See “Other significant transactions” on page 49. |
Net financing costs before income from investments decreased from £1,024 million to £852 million primarily due to a reduction in net debt, partially offset by an increase in average interest rates for debt denominated in US dollars. At 31 March 2011 the provision for potential interest charges arising on settlement of outstanding tax issues was £398 million (31 March 2010: £1,312 million), with the reduction primarily reflecting the settlement of a tax case. |
2011 | 2010 | |||||||
£m | £m | |||||||
Profit attributable to equity shareholders | 7,968 | 8,645 | ||||||
Pre-tax adjustments: | ||||||||
Impairment loss | 6,150 | 2,100 | ||||||
Other income and expense(1)(4) | 72 | (114 | ) | |||||
Non-operating income and expense(2)(4) | (3,022 | ) | 10 | |||||
Investment income and financing costs(3)(4) | (1,695 | ) | (106 | ) | ||||
1,505 | 1,890 | |||||||
Taxation | (697 | ) | (2,064 | ) | ||||
Adjusted profit attributable to equity shareholders | 8,776 | 8,471 | ||||||
Weighted average number of shares outstanding | ||||||||
Basic | 52,408 | 52,595 | ||||||
Diluted | 52,748 | 52,849 | ||||||
Notes: | ||
(1) | The year ended 31 March 2011 includes £56 million representing the net loss on disposal of certain Alltel investments by Verizon Wireless. This is included within the line item “Share of results in associates” in the consolidated income statement. | |
(2) | The year ended 31 March 2011 includes £3,019 million representing the profit arising on the sale of the Group’s 3.2% interest in China Mobile Limited. | |
(3) | See notes 2, 3, 4 and 5 in “Net investment income/(financing costs)” above. | |
(4) | These amounts comprise ‘Other net income’ of £5,342 million |
Germany | Italy | Spain | UK | Other | Eliminations | Europe | % change | |||||||||||||||||||||||||||||
£m | £m | £m | £m | £m | £m | £m | £ | Organic | ||||||||||||||||||||||||||||
Year ended 31 March 2011 | ||||||||||||||||||||||||||||||||||||
Revenue | 7,900 | 5,722 | 5,133 | 5,271 | 8,253 | (264 | ) | 32,015 | (2.5 | ) | 0.6 | |||||||||||||||||||||||||
Service revenue | 7,471 | 5,432 | 4,735 | 4,931 | 7,787 | (259 | ) | 30,097 | (3.4 | ) | (0.4 | ) | ||||||||||||||||||||||||
Adjusted EBITDA | 2,952 | 2,643 | 1,562 | 1,233 | 2,433 | — | 10,823 | (7.1 | ) | (3.7 | ) | |||||||||||||||||||||||||
Adjusted operating profit | 1,548 | 1,903 | 915 | 348 | 1,012 | — | 5,726 | (9.8 | ) | (6.1 | ) | |||||||||||||||||||||||||
Adjusted EBITDA margin | 37.4 | % | 46.2 | % | 30.4 | % | 23.4 | % | 29.5 | % | 33.8 | % | ||||||||||||||||||||||||
Year ended 31 March 2010 | ||||||||||||||||||||||||||||||||||||
Revenue | 8,008 | 6,027 | 5,713 | 5,025 | 8,357 | (297 | ) | 32,833 | ||||||||||||||||||||||||||||
Service revenue | 7,722 | 5,780 | 5,298 | 4,711 | 7,943 | (295 | ) | 31,159 | ||||||||||||||||||||||||||||
Adjusted EBITDA | 3,122 | 2,843 | 1,956 | 1,141 | 2,582 | — | 11,644 | |||||||||||||||||||||||||||||
Adjusted operating profit | 1,695 | 2,107 | 1,310 | 155 | 1,084 | — | 6,351 | |||||||||||||||||||||||||||||
Adjusted EBITDA margin | 39.0 | % | 47.2 | % | 34.2 | % | 22.7 | % | 30.9 | % | 35.5 | % | ||||||||||||||||||||||||
Note: | ||
(1) | The Group revised its segment structure on 1 October 2010. See note 3 to the consolidated financial statements. |
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Organic | M&A | Foreign | Reported | |||||||||||||
change | activity | exchange | change | |||||||||||||
% | pps | pps | % | |||||||||||||
Revenue — Europe | 0.6 | 0.1 | (3.2 | ) | (2.5 | ) | ||||||||||
Service revenue | ||||||||||||||||
Germany | 0.8 | — | (4.1 | ) | (3.3 | ) | ||||||||||
Italy | (2.1 | ) | — | (3.9 | ) | (6.0 | ) | |||||||||
Spain | (6.9 | ) | — | (3.7 | ) | (10.6 | ) | |||||||||
UK | 4.7 | — | — | 4.7 | ||||||||||||
Other Europe | 0.5 | 0.5 | (3.0 | ) | (2.0 | ) | ||||||||||
Europe | (0.4 | ) | 0.1 | (3.1 | ) | (3.4 | ) | |||||||||
Adjusted EBITDA | ||||||||||||||||
Germany | (1.5 | ) | — | (3.9 | ) | (5.4 | ) | |||||||||
Italy | (3.1 | ) | — | (3.9 | ) | (7.0 | ) | |||||||||
Spain | (16.8 | ) | — | (3.3 | ) | (20.1 | ) | |||||||||
UK | 8.0 | — | — | 8.0 | ||||||||||||
Other Europe | (2.4 | ) | 0.2 | (3.6 | ) | (5.8 | ) | |||||||||
Europe | (3.7 | ) | 0.1 | (3.5 | ) | (7.1 | ) | |||||||||
Adjusted operating profit | ||||||||||||||||
Germany | (4.9 | ) | — | (3.8 | ) | (8.7 | ) | |||||||||
Italy | (5.9 | ) | — | (3.8 | ) | (9.7 | ) | |||||||||
Spain | (27.3 | ) | — | (2.9 | ) | (30.2 | ) | |||||||||
UK | 125.1 | — | — | 125.1 | ||||||||||||
Other Europe | (2.0 | ) | 0.3 | (4.9 | ) | (6.6 | ) | |||||||||
Europe | (6.1 | ) | 0.1 | (3.8 | ) | (9.8 | ) | |||||||||
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Africa, Middle East and Asia Pacific(1) | Performance |
Africa, | ||||||||||||||||||||||||||||
Middle East | ||||||||||||||||||||||||||||
and Asia | ||||||||||||||||||||||||||||
India | Vodacom | Other | Eliminations | Pacific | % change | |||||||||||||||||||||||
£m | £m | £m | £m | £m | £ | Organic(2) | ||||||||||||||||||||||
Year ended 31 March 2011 | ||||||||||||||||||||||||||||
Revenue | 3,855 | 5,479 | 3,971 | (1 | ) | 13,304 | 20.0 | 9.5 | ||||||||||||||||||||
Service revenue | 3,804 | 4,839 | 3,650 | (1 | ) | 12,292 | 20.0 | 9.5 | ||||||||||||||||||||
Adjusted EBITDA | 985 | 1,844 | 1,170 | — | 3,999 | 20.7 | 7.5 | |||||||||||||||||||||
Adjusted operating profit | 15 | 827 | 430 | — | 1,272 | 55.5 | 8.6 | |||||||||||||||||||||
Adjusted EBITDA margin | 25.6 | % | 33.7 | % | 29.5 | % | 30.1 | % | ||||||||||||||||||||
Year ended 31 March 2010 | ||||||||||||||||||||||||||||
Revenue | 3,114 | 4,450 | 3,526 | (1 | ) | 11,089 | ||||||||||||||||||||||
Service revenue | 3,069 | 3,954 | 3,224 | (1 | ) | 10,246 | ||||||||||||||||||||||
Adjusted EBITDA | 807 | 1,528 | 977 | — | 3,312 | |||||||||||||||||||||||
Adjusted operating (loss)/profit | (37 | ) | 520 | 335 | — | 818 | ||||||||||||||||||||||
Adjusted EBITDA margin | 25.9 | % | 34.3 | % | 27.7 | % | 29.9 | % | ||||||||||||||||||||
Notes: | ||
(1) | The Group revised its segment structure on 1 October 2010. See note 3 to the consolidated financial statements. | |
(2) | Organic growth includes Vodacom at the current level of ownership and excludes Australia following the merger with Hutchison 3G Australia on 9 June 2009. |
Organic | M&A | Foreign | Reported | |||||||||||||
change | activity | exchange | change | |||||||||||||
% | pps | pps | % | |||||||||||||
Revenue – | ||||||||||||||||
Africa, Middle East and Asia Pacific | 9.5 | 2.0 | 8.5 | 20.0 | ||||||||||||
Service revenue | ||||||||||||||||
India | 16.2 | — | 7.7 | 23.9 | ||||||||||||
Vodacom | 5.8 | 6.7 | 9.9 | 22.4 | ||||||||||||
Other Africa, Middle East and Asia Pacific | 7.2 | (0.9 | ) | 6.9 | 13.2 | |||||||||||
Africa, Middle East and Asia Pacific | 9.5 | 2.2 | 8.3 | 20.0 | ||||||||||||
Adjusted EBITDA | ||||||||||||||||
India | 15.1 | — | 7.0 | 22.1 | ||||||||||||
Vodacom | 4.9 | 4.9 | 10.9 | 20.7 | ||||||||||||
Other Africa, Middle East and Asia Pacific | 5.1 | 10.6 | 4.1 | 19.8 | ||||||||||||
Africa, Middle East and Asia Pacific | 7.5 | 5.3 | 8.0 | 20.8 | ||||||||||||
Adjusted operating profit | ||||||||||||||||
India | 134.0 | — | 6.5 | 140.5 | ||||||||||||
Vodacom | 5.7 | 38.2 | 15.1 | 59.0 | ||||||||||||
Other Africa, Middle East and Asia Pacific | 2.2 | 29.2 | (3.0 | ) | 28.4 | |||||||||||
Africa, Middle East and Asia Pacific | 8.6 | 39.9 | 7.0 | 55.5 | ||||||||||||
Note: | ||
(1) | Data revenue in South Africa grew by 41.8%(*). Excluding the impact of reclassifications between messaging and data revenue during the year, data revenue grew by 35.9%(*). |
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2011 | 2010 | % change | ||||||||||||||
£m | £m | £ | Organic(3) | |||||||||||||
Revenue | 18,711 | 17,222 | 8.6 | 6.0 | ||||||||||||
Service revenue | 17,238 | 15,898 | 8.4 | 5.8 | ||||||||||||
Adjusted EBITDA | 7,313 | 6,689 | 9.3 | 6.7 | ||||||||||||
Interest | (261 | ) | (298 | ) | (12.4 | ) | ||||||||||
Tax(2) | (235 | ) | (205 | ) | 14.6 | |||||||||||
Share of result in Verizon Wireless | 4,569 | 4,112 | 11.1 | 8.5 | ||||||||||||
Notes: | ||
(1) | All amounts represent the Group’s share unless otherwise stated. | |
(2) | The Group’s share of the tax attributable to Verizon Wireless relates only to the corporate entities held by the Verizon Wireless partnership and certain state taxes which are levied on the partnership. The tax attributable to the Group’s share of the partnership’s pre-tax profit is included within the Group tax charge. | |
(3) | Organic growth rates include the impact of a non-cash revenue adjustment which was recorded by Verizon Wireless to defer previously recognised data revenue that will be earned and recognised in future periods. Excluding this the equivalent organic growth rates for service revenue, revenue,adjusted EBITDA and the Group’s share of result in Verizon Wireless would have been 6.4%(*), 6.6%(*), 8.2%(*) and 10.8%(*) respectively. |
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Non- | ||||||||||||||||||||||||||||||||
Africa, | Controlled | |||||||||||||||||||||||||||||||
Middle East | Interests and | |||||||||||||||||||||||||||||||
and Asia | Common | |||||||||||||||||||||||||||||||
Europe | Pacific | Functions(2) | Eliminations | 2010 | 2009 | % change | ||||||||||||||||||||||||||
£m | £m | £m | £m | £m | £m | £ | Organic(3) | |||||||||||||||||||||||||
Revenue | 32,833 | 11,089 | 667 | (117 | ) | 44,472 | 41,017 | 8.4 | (2.3 | ) | ||||||||||||||||||||||
Service revenue | 31,159 | 10,246 | 397 | (83 | ) | 41,719 | 38,294 | 8.9 | (1.6 | ) | ||||||||||||||||||||||
Adjusted EBITDA | 11,644 | 3,312 | (221 | ) | — | 14,735 | 14,490 | 1.7 | (7.4 | ) | ||||||||||||||||||||||
Adjusted operating profit | 6,351 | 818 | 4,297 | — | 11,466 | 11,757 | (2.5 | ) | (7.0 | ) | ||||||||||||||||||||||
Adjustments for: | ||||||||||||||||||||||||||||||||
Impairment losses | (2,100 | ) | (5,900 | ) | ||||||||||||||||||||||||||||
Other income and expense | 114 | — | ||||||||||||||||||||||||||||||
Operating profit | 9,480 | 5,857 | ||||||||||||||||||||||||||||||
Non-operating income and expense | (10 | ) | (44 | ) | ||||||||||||||||||||||||||||
Net financing costs | (796 | ) | (1,624 | ) | ||||||||||||||||||||||||||||
Profit before taxation | 8,674 | 4,189 | ||||||||||||||||||||||||||||||
Income tax expense | (56 | ) | (1,109 | ) | ||||||||||||||||||||||||||||
Profit for the financial year | 8,618 | 3,080 | ||||||||||||||||||||||||||||||
Notes: | ||
(1) | 2010 results reflect average exchange rates of £1:€1.13 and £1:US$1.60. | |
(2) | Common Functions primarily represents the results of the partner markets and the net result of unallocated central Group costs and excludes income from intercompany royalty fees. | |
(3) | Organic growth includes India and Vodacom (except the results of Gateway) at the current level of ownership but excludes Australia following the merger with Hutchison 3G Australia on 9 June 2009. |
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2010 | 2009 | |||||||
£m | £m | |||||||
Investment income | 716 | 795 | ||||||
Financing costs | (1,512 | ) | (2,419 | ) | ||||
Net financing costs | (796 | ) | (1,624 | ) | ||||
Analysed as: | ||||||||
Net financing costs before dividends from investments | (1,024 | ) | (1,480 | ) | ||||
Potential interest charges arising on settlement of outstanding tax issues(1) | (23 | ) | 81 | |||||
Dividends from investments | 145 | 110 | ||||||
Foreign exchange(2) | (1 | ) | 235 | |||||
Equity put rights and similar arrangements(3) | (94 | ) | (570 | ) | ||||
Interest on settlement of German tax claim(4) | 201 | — | ||||||
(796 | ) | (1,624 | ) | |||||
Notes: | ||
(1) | Excluding interest on settlement of German tax claim. | |
(2) | Comprises foreign exchange differences reflected in the income statement in relation to certain intercompany balances and the foreign exchange differences on financial instruments received as consideration in the disposal of Vodafone Japan to SoftBank in April 2006. | |
(3) | Primarily represents foreign exchange movements and accretion expense. Further details of these options are provided on page 51. | |
(4) | See “Taxation” below for further details. |
2010 £m | 2009 £m | |||||||
Profit attributable to equity shareholders | 8,645 | 3,078 | ||||||
Pre-tax adjustments: | ||||||||
Impairment losses, net | 2,100 | 5,900 | ||||||
Other income and expense | (114 | ) | — | |||||
Non-operating income and expense | 10 | 44 | ||||||
Investment income and financing costs(1) | (106 | ) | 335 | |||||
1,890 | 6,279 | |||||||
Taxation | (2,064 | ) | (300 | ) | ||||
Adjusted profit attributable to equity shareholders | 8,471 | 9,057 | ||||||
Weighted average number of shares outstanding | Million | Million | ||||||
Basic | 52,595 | 52,737 | ||||||
Diluted | 52,849 | 52,969 | ||||||
Note: | ||
(1) | See notes 1 and 2 in “Net financing costs” to the left. |
Germany | Italy | Spain | UK | Other | Eliminations | Europe | % change | |||||||||||||||||||||||||||||
£m | £m | £m | £m | £m | £m | £m | £ | Organic | ||||||||||||||||||||||||||||
Year ended 31 March 2010 | ||||||||||||||||||||||||||||||||||||
Revenue | 8,008 | 6,027 | 5,713 | 5,025 | 8,357 | (297 | ) | 32,833 | 0.2 | (4.5 | ) | |||||||||||||||||||||||||
Service revenue | 7,722 | 5,780 | 5,298 | 4,711 | 7,943 | (295 | ) | 31,159 | 0.9 | (3.8 | ) | |||||||||||||||||||||||||
Adjusted EBITDA | 3,122 | 2,843 | 1,956 | 1,141 | 2,582 | — | 11,644 | (3.9 | ) | (8.9 | ) | |||||||||||||||||||||||||
Adjusted operating profit | 1,695 | 2,107 | 1,310 | 155 | 1,084 | — | 6,351 | (7.0 | ) | (12.6 | ) | |||||||||||||||||||||||||
Adjusted EBITDA margin | 39.0 | % | 47.2 | % | 34.2 | % | 22.7 | % | 30.9 | % | 35.5 | % | ||||||||||||||||||||||||
Year ended 31 March 2009 | ||||||||||||||||||||||||||||||||||||
Revenue | 7,847 | 5,547 | 5,812 | 5,392 | 8,514 | (343 | ) | 32,769 | ||||||||||||||||||||||||||||
Service revenue | 7,535 | 5,347 | 5,356 | 4,912 | 8,070 | (343 | ) | 30,877 | ||||||||||||||||||||||||||||
Adjusted EBITDA | 3,225 | 2,565 | 2,034 | 1,368 | 2,920 | — | 12,112 | |||||||||||||||||||||||||||||
Adjusted operating profit | 1,835 | 1,839 | 1,421 | 328 | 1,406 | — | 6,829 | |||||||||||||||||||||||||||||
Adjusted EBITDA margin | 41.1 | % | 46.2 | % | 35.0 | % | 25.4 | % | 34.3 | % | 37.0 | % | ||||||||||||||||||||||||
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Organic | M&A | Foreign | Reported | |||||||||||||
change | activity | exchange | change | |||||||||||||
% | pps | pps | % | |||||||||||||
Revenue — Europe | (4.5 | ) | 0.1 | 4.6 | 0.2 | |||||||||||
Service revenue | ||||||||||||||||
Germany | (3.5 | ) | — | 6.0 | 2.5 | |||||||||||
Italy | 1.9 | — | 6.2 | 8.1 | ||||||||||||
Spain | (7.0 | ) | — | 5.9 | (1.1 | ) | ||||||||||
UK | (4.7 | ) | 0.6 | — | (4.1 | ) | ||||||||||
Other | (6.0 | ) | — | 4.4 | (1.6 | ) | ||||||||||
Europe | (3.8 | ) | 0.1 | 4.6 | 0.9 | |||||||||||
Adjusted EBITDA | ||||||||||||||||
Germany | (8.9 | ) | — | 5.7 | (3.2 | ) | ||||||||||
Italy | 4.3 | — | 6.5 | 10.8 | ||||||||||||
Spain | (9.9 | ) | — | 6.1 | (3.8 | ) | ||||||||||
UK | (17.7 | ) | 1.1 | — | (16.6 | ) | ||||||||||
Other | (16.0 | ) | — | 4.4 | (11.6 | ) | ||||||||||
Europe | (8.9 | ) | 0.1 | 4.9 | (3.9 | ) | ||||||||||
Adjusted operating profit | ||||||||||||||||
Germany | (13.2 | ) | (0.1 | ) | 5.7 | (7.6 | ) | |||||||||
Italy | 7.8 | — | 6.8 | 14.6 | ||||||||||||
Spain | (13.8 | ) | — | 6.0 | (7.8 | ) | ||||||||||
UK | (58.3 | ) | 5.6 | — | (52.7 | ) | ||||||||||
Other | (27.7 | ) | — | 4.8 | (22.9 | ) | ||||||||||
Europe | (12.6 | ) | 0.1 | 5.5 | (7.0 | ) | ||||||||||
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Africa, | ||||||||||||||||||||||||||||
Middle East | ||||||||||||||||||||||||||||
and Asia | ||||||||||||||||||||||||||||
India | Vodacom | Other | Eliminations | Pacific | % change | |||||||||||||||||||||||
£m | £m | £m | £m | £m | £ | Organic(1) | ||||||||||||||||||||||
Year ended 31 March 2010 | ||||||||||||||||||||||||||||
Revenue | 3,114 | 4,450 | 3,526 | (1 | ) | 11,089 | 43.6 | 6.1 | ||||||||||||||||||||
Service revenue | 3,069 | 3,954 | 3,224 | (1 | ) | 10,246 | 44.2 | 7.5 | ||||||||||||||||||||
Adjusted EBITDA | 807 | 1,528 | 977 | — | 3,312 | 38.3 | 5.5 | |||||||||||||||||||||
Adjusted operating profit | (37 | ) | 520 | 335 | — | 818 | (11.4 | ) | (0.3 | ) | ||||||||||||||||||
Adjusted EBITDA margin | 25.9 | % | 34.3 | % | 27.7 | % | 29.9 | % | ||||||||||||||||||||
Year ended 31 March 2009 | ||||||||||||||||||||||||||||
Revenue | 2,689 | 1,778 | 3,258 | (2 | ) | 7,723 | ||||||||||||||||||||||
Service revenue | 2,604 | 1,548 | 2,953 | (2 | ) | 7,103 | ||||||||||||||||||||||
Adjusted EBITDA | 717 | 606 | 1,072 | — | 2,395 | |||||||||||||||||||||||
Adjusted operating profit | (30 | ) | 373 | 580 | — | 923 | ||||||||||||||||||||||
Adjusted EBITDA margin | 26.7 | % | 34.1 | % | 32.9 | % | 31.0 | % | ||||||||||||||||||||
Note: | ||
(1) | Organic growth includes Vodacom (except the results of Gateway) at the current level of ownership and includes India but excludes Australia following the merger with Hutchison 3G Australia on 9 June 2009. |
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Organic | M&A | Foreign | Reported | |||||||||||||
change | activity | exchange | change | |||||||||||||
% | pps | pps | % | |||||||||||||
Revenue – | ||||||||||||||||
Africa, Middle East and Asia Pacific | 6.1 | 25.2 | 12.3 | 43.6 | ||||||||||||
Service revenue | ||||||||||||||||
India | 14.7 | — | 3.2 | 17.9 | ||||||||||||
Vodacom | 4.6 | 112.0 | 38.8 | 155.4 | ||||||||||||
Other | 2.9 | (3.3 | ) | 9.6 | 9.2 | |||||||||||
Africa, Middle East and Asia Pacific | 7.5 | 24.9 | 11.8 | 44.2 | ||||||||||||
Adjusted EBITDA | ||||||||||||||||
India | 9.2 | — | 3.4 | 12.6 | ||||||||||||
Vodacom | 10.4 | 101.8 | 39.9 | 152.1 | ||||||||||||
Other | (4.8 | ) | (11.6 | ) | 7.5 | (8.9 | ) | |||||||||
Africa, Middle East and Asia Pacific | 5.5 | 20.5 | 12.3 | 38.3 | ||||||||||||
Adjusted operating profit | ||||||||||||||||
India | 30.7 | — | (7.4 | ) | 23.3 | |||||||||||
Vodacom | 12.5 | 3.1 | 23.8 | 39.4 | ||||||||||||
Other | (19.7 | ) | (27.6 | ) | 5.1 | (42.2 | ) | |||||||||
Africa, Middle East and Asia Pacific | (0.3 | ) | (22.3 | ) | 11.2 | (11.4 | ) | |||||||||
2010 | 2009 | % change | ||||||||||||||
£m | £m | £ | Organic | |||||||||||||
Revenue | 17,222 | 14,085 | 22.3 | 5.0 | ||||||||||||
Service revenue | 15,898 | 12,862 | 23.6 | 6.3 | ||||||||||||
Adjusted EBITDA | 6,689 | 5,543 | 20.7 | 4.4 | ||||||||||||
Interest | (298 | ) | (217 | ) | 37.3 | |||||||||||
Tax(2) | (205 | ) | (198 | ) | 3.5 | |||||||||||
Non-controlling interests | (80 | ) | (78 | ) | 2.6 | |||||||||||
Discontinued operations | 93 | 57 | 63.2 | |||||||||||||
Group’s share of result in Verizon Wireless | 4,112 | 3,542 | 16.1 | 8.0 | ||||||||||||
Notes: | ||
(1) | All amounts represent the Group’s share unless otherwise stated. | |
(2) | The Group’s share of the tax attributable to Verizon Wireless relates only to the corporate entities held by the Verizon Wireless partnership and certain state taxes which are levied on the partnership. The tax attributable to the Group’s share of the partnership’s pre-tax profit is included within the Group tax charge. |
Note: | ||
(3) | Customers have been restated to reflect retail customers only, as reported externally by Verizon Wireless. |
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2011 | ||||||||
actual | 2012 | |||||||
performance | guidance | |||||||
£bn | £bn | |||||||
Adjusted operating profit | 11.8 | 11.0 – 11.8 | ||||||
Free cash flow | 7.0 | 6.0 – 6.5 | ||||||
Adjusted | ||||||||
operating | Free | |||||||
profit | cash flow | |||||||
£bn | £bn | |||||||
Guidance — May 2010(1) | 11.2 – 12.0 | > 6.5 | ||||||
Guidance — November 2010(1) | 11.8 – 12.2 | > 6.5 | ||||||
2011 performance on guidance basis(3) | 12.2 | 7.2 | ||||||
Foreign exchange(1) | (0.3 | ) | (0.2 | ) | ||||
Verizon Wireless(2) | (0.1 | ) | — | |||||
2011 reported performance(3) | 11.8 | 7.0 | ||||||
Notes: | ||
(1) | The Group’s guidance reflected assumptions for average exchange rates for the 2011 financial year of approximately £1:€1.15 and £1:US$1.50. Actual exchange rates were £1:€1.18 and £1:US$1.56. | |
(2) | The Group’s guidance did not include the impact of the revenue recognition and Alltel related adjustments in Verizon Wireless. | |
(3) | After Verizon iPhone launch costs. |
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2011 | 2010 | |||||||
£m | £m | |||||||
Non-current assets | ||||||||
Intangible assets | 68,558 | 74,258 | ||||||
Property, plant and equipment | 20,181 | 20,642 | ||||||
Investments in associates | 38,105 | 36,377 | ||||||
Other non-current assets | 7,373 | 11,489 | ||||||
134,217 | 142,766 | |||||||
Current assets | 17,003 | 14,219 | ||||||
Total assets | 151,220 | 156,985 | ||||||
Total equity shareholders’ funds | 87,555 | 90,381 | ||||||
Total non-controlling interests | 6 | 429 | ||||||
Total equity | 87,561 | 90,810 | ||||||
Liabilities | ||||||||
Borrowings | ||||||||
Long-term | 28,375 | 28,632 | ||||||
Short-term | 9,906 | 11,163 | ||||||
Taxation liabilities | ||||||||
Deferred tax liabilities | 6,486 | 7,377 | ||||||
Current taxation liabilities | 2,262 | 2,874 | ||||||
Other non-current liabilities | 1,373 | 1,550 | ||||||
Other current liabilities | 15,257 | 14,579 | ||||||
Total liabilities | 63,659 | 66,175 | ||||||
Total equity and liabilities | 151,220 | 156,985 | ||||||
Payments due by period £m | ||||||||||||||||||||
Contractual obligations(1) | Total | <1 year | 1-3 years | 3-5 years | >5 years | |||||||||||||||
Borrowings(2) | 45,226 | 10,864 | 8,727 | 10,093 | 15,542 | |||||||||||||||
Operating lease commitments(3) | 6,513 | 1,225 | 1,704 | 1,240 | 2,344 | |||||||||||||||
Capital commitments(3)(4) | 2,124 | 1,885 | 228 | 11 | — | |||||||||||||||
Purchase commitments(5) | 5,937 | 3,619 | 1,835 | 142 | 341 | |||||||||||||||
Total contractual cash obligations(1) | 59,800 | 17,593 | 12,494 | 11,486 | 18,227 | |||||||||||||||
Notes: | ||
(1) | The above table of contractual obligations includes commitments in respect of options over interests in Group businesses held by non-controlling shareholders (see “Option agreements and similar arrangements”) and obligations to pay dividends to non-controlling shareholders (see “Dividends from associates and to non-controlling shareholders”).The table excludes current and deferred tax liabilities and obligations under post employment benefit schemes, details of which are provided in notes 6 and 23 to the consolidated financial statements respectively. The table also excludes the contractual obligations of associates. | |
(2) | See note 22 to the consolidated financial statements. | |
(3) | See note 27 to the consolidated financial statements. | |
(4) | Primarily related to network infrastructure. | |
(5) | In addition to the purchase commitments disclosed above, Vodafone Netherlands has announced its intention to acquire BelCompany BV, one of the largest telecom retailers in the Netherlands, from the Macintosh Retail Group for €120 million. The transaction is subject to regulatory and other approvals. |
Pence per ordinary share | ||||||||||||
Year ended 31 March | Interim | Final | Total | |||||||||
2007 | 2.35 | 4.41 | 6.76 | |||||||||
2008 | 2.49 | 5.02 | 7.51 | |||||||||
2009 | 2.57 | 5.20 | 7.77 | |||||||||
2010 | 2.66 | 5.65 | 8.31 | |||||||||
2011 | 2.85 | 6.05 | (1) | 8.90 | ||||||||
Note: | ||
(1) | The final dividend for the year ended 31 March 2011 was proposed on 17 May 2011 and is payable on 5 August 2011 to holders on record as of 3 June 2011. For american depositary share (‘ADS’) holders the dividend will be payable in US dollars under the terms of the ADS depositary agreement. Dividend payments on ordinary shares will be paid by direct credit into a nominated bank or building society account or, alternatively, into the Company’s dividend reinvestment plan. The Company no longer pays dividends in respect of ordinary shares by cheque. |
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2011 | 2010 | |||||||||||
£m | £m | % | ||||||||||
Cash generated by operations | 15,392 | 15,337 | 0.4 | |||||||||
Cash capital expenditure(1) | (5,658 | ) | (5,986 | ) | ||||||||
Disposal of intangible assets and property, plant and equipment | 51 | 48 | ||||||||||
Operating free cash flow | 9,785 | 9,399 | 4.1 | |||||||||
Taxation | (2,597 | ) | (2,273 | ) | ||||||||
Dividends received from associates and investments(2) | 1,509 | 1,577 | ||||||||||
Dividends paid to non-controlling shareholders in subsidiaries | (320 | ) | (56 | ) | ||||||||
Interest received and paid | (1,328 | ) | (1,406 | ) | ||||||||
Free cash flow | 7,049 | 7,241 | (2.7 | ) | ||||||||
Other amounts(3) | 45 | — | ||||||||||
Licence and spectrum payments | (2,982 | ) | (989 | ) | ||||||||
Acquisitions and disposals(4) | (183 | ) | (2,683 | ) | ||||||||
Contributions from non-controlling shareholders in subsidiaries(5) | — | 613 | ||||||||||
Equity dividends paid | (4,468 | ) | (4,139 | ) | ||||||||
Purchase of treasury shares | (2,087 | ) | — | |||||||||
Foreign exchange | 834 | 1,038 | ||||||||||
Other(6) | 5,250 | (174 | ) | |||||||||
Net debt decrease | 3,458 | 907 | ||||||||||
Opening net debt | (33,316 | ) | (34,223 | ) | ||||||||
Closing net debt | (29,858 | ) | (33,316 | ) | (10.4 | ) | ||||||
Notes: | ||
(1) | Cash paid for purchase of property, plant and equipment and intangible assets, other than licence and spectrum payments. | |
(2) | Year ended 31 March 2011 includes £373 million (2010:£389 million) from our interest in SFR and £1,024 million (2010:£1,034 million) from our interest in Verizon Wireless. | |
(3) | Comprises items in respect of: the UK CFC settlement (£800 million), tax relating to the disposal of China Mobile Limited (£208 million), the SoftBank disposal (£1,409 million) and the court deposit made in respect of the India tax case (£356 million). The latter is included within the line item “Purchase of interests in subsidiaries and joint ventures, net of cash acquired” in the consolidated statement of cash flows. | |
(4) | Year ended 31 March 2011 includes net cash and cash equivalents paid of £183 million (2010: £1,777 million) and assumed debt of £nil (2010: £906 million). | |
(5) | Year ended 31 March 2010 includes £613 million in relation to Qatar. | |
(6) | Year ended 31 March 2011 includes £4,264 million in relation to the disposal of our 3.2% interest in China Mobile Limited. |
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Total number | Maximum | |||||||||||||||
Average price | of shares | value of shares | ||||||||||||||
paid per share | purchased | that may yet | ||||||||||||||
Number of | inclusive of | under share | be purchased | |||||||||||||
shares | transaction | repurchase | under the | |||||||||||||
purchased(1) | costs | programme(2) | programme(3) | |||||||||||||
Date of share purchase | ’000 | Pence | ’000 | £m | ||||||||||||
September 2010 | 115,400 | 161.78 | 115,400 | 2,613 | ||||||||||||
October 2010 | 187,500 | 165.50 | 302,900 | 2,303 | ||||||||||||
November 2010 | 209,400 | 170.21 | 512,300 | 1,947 | ||||||||||||
December 2010 | 162,900 | 167.44 | 675,200 | 1,674 | ||||||||||||
January 2011 | 177,090 | 176.67 | 852,290 | 1,361 | ||||||||||||
February 2011 | 134,700 | 179.23 | 986,990 | 1,120 | ||||||||||||
March 2011 | 250,900 | 177.26 | 1,237,890 | 675 | ||||||||||||
April 2011 | 135,100 | 176.81 | 1,372,990 | 436 | ||||||||||||
May 2011 | 127,000 | 170.14 | 1,499,990 | 268 | ||||||||||||
Total | 1,499,990 | (4) | 172.01 | 1,499,990 | 220 | |||||||||||
Notes: | ||
(1) | The nominal value of shares purchased is 113/7 US cents each. | |
(2) | No shares were purchased outside the publicly announced share buyback programme. | |
(3) | In accordance with shareholder authority granted at the 2010 AGM. | |
(4) | The total number of shares purchased represents 2.9% of our issued share capital at 16 May 2011. |
Number | ||||||||
Million | £m | |||||||
1 April 2010 | 5,146 | 7,810 | ||||||
Reissue of shares | (150 | ) | (232 | ) | ||||
Purchase of shares | 1,238 | 2,125 | ||||||
Cancelled shares | (1,000 | ) | (1,532 | ) | ||||
31 March 2011 | 5,234 | 8,171 | ||||||
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2011 | 2010 | |||||||
£m | £m | |||||||
Cash and cash equivalents(1) | 6,252 | 4,423 | ||||||
Short-term borrowings: | ||||||||
Bonds | (2,470 | ) | (1,174 | ) | ||||
Commercial paper(2) | (1,660 | ) | (2,563 | ) | ||||
Put options over non-controlling interests | (3,113 | ) | (3,274 | ) | ||||
Bank loans | (2,070 | ) | (3,460 | ) | ||||
Other short-term borrowings(1) | (593 | ) | (692 | ) | ||||
(9,906 | ) | (11,163 | ) | |||||
Long-term borrowings: | ||||||||
Put options over non-controlling interests | (78 | ) | (131 | ) | ||||
Bonds, loans and other long-term borrowings | (28,297 | ) | (28,501 | ) | ||||
(28,375 | ) | (28,632 | ) | |||||
Other financial instruments(3) | 2,171 | 2,056 | ||||||
Net debt | (29,858 | ) | (33,316 | ) | ||||
(1) | At 31 March 2011 the amount includes £531 million (2010: £604 million) in relation to cash received under collateral support agreements. | |
(2) | At 31 March 2011 US$551 million was drawn under the US commercial paper programme and €1,490 million was drawn under the euro commercial paper programme. | |
(3) | Comprises i) mark-to-market adjustments on derivative financial instruments which are included as a component of trade and other receivables (2011: £2,045 million; 2010: £2,128 million) and trade and other payables (2011: £548 million; 2010: £460 million) and ii) short-term investments in index linked government bonds and collateral support agreements included as a component of other investments (2011: £674 million; 2010: £388 million). These government bonds have less than six years to maturity, can be readily converted into cash via the repurchase market and are held on an effective floating rate basis. |
Nominal | Sterling | |||||||
amount | equivalent | |||||||
Date of bond issue | Maturity of bond | Million | Million | |||||
August 2010 | August 2011 | US$100 | 64 | |||||
March 2011 | March 2016 | US$600 | 374 | |||||
March 2011 | March 2021 | US$500 | 311 | |||||
Committed bank facilities | Amounts drawn | |
1 July 2010 | ||
€4.2 billion syndicated revolving credit facility, maturing 1 July 2015 | No drawings have been made against this facility. The facility supports our commercial paper programmes and may be used for general corporate purposes including acquisitions. | |
9 March 2011 | ||
US$4.2 billion syndicated revolving credit facility, maturing 9 March 2016 | No drawings have been made against this facility. The facility supports our commercial paper programmes and may be used for general corporate purposes including acquisitions. | |
16 November 2006 | ||
€0.4 billion loan facility, maturing 14 February 2014 | This facility was drawn down in full on 14 February 2007. The facility is available for financing capital expenditure in our Turkish operating company. | |
28 July 2008 | ||
€0.4 billion loan facility, maturing 12 August 2015 | This facility was drawn down in full on 12 August 2008. The facility is available for financing the roll-out of converged fixed mobile broadband telecommunications network in Italy. | |
15 September 2009 | ||
€0.4 billion loan facility, maturing 30 July 2017 | This facility was drawn down in full on 30 July 2010. The facility is available for financing capital expenditure in our German operations. | |
29 September 2009 | ||
US$0.7 billion export credit agency loan facility, final maturity date 19 September 2018 | An initial drawing was made of US$120 million on 3 November 2010. The facility is available for financing eligible Swedish goods and services. | |
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§ | Audit Committee | |
† | Nominations and Governance Committee | |
‡ | Remuneration Committee |
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• | has final responsibility for the management, direction and performance of our businesses; | |
• | is required to exercise objective judgement on all corporate matters independent from executive management; | |
• | is accountable to shareholders for the proper conduct of the business; and | |
• | is responsible for ensuring the effectiveness of and reporting on our system of corporate governance. |
• | Group strategy and long-term plans; | |
• | major capital projects, acquisitions or divestments; | |
• | annual budget and operating plan; | |
• | group financial structure, including tax and treasury; | |
• | annual and half-year financial results and shareholder communications; | |
• | system of internal control and risk management; and | |
• | senior management structure, responsibilities and succession plans. |
Years | Meetings | |||||||
on Board | attended | |||||||
Sir John Bond | 6 | 8/8 | ||||||
John Buchanan | 8 | 8/8 | ||||||
Vittorio Colao | 4 | 8/8 | ||||||
Michel Combes | 1 | 8/8 | ||||||
Andy Halford | 5 | 8/8 | ||||||
Renee James (since 1 January 2011) | <1 | 3/3 | ||||||
Alan Jebson | 4 | 7/8 | ||||||
Samuel Jonah | 2 | 8/8 | ||||||
Nick Land | 4 | 8/8 | ||||||
Anne Lauvergeon | 5 | 6/8 | ||||||
Simon Murray (until 27 July 2010) | – | 2/2 | ||||||
Stephen Pusey | 1 | 8/8 | ||||||
Luc Vandevelde | 7 | 8/8 | ||||||
Anthony Watson | 5 | 8/8 | ||||||
Philip Yea | 5 | 8/8 | ||||||
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• | bringing a wide range of skills and experience, including independent judgement on issues of strategy, performance, financial controls and systems of risk management; | |
• | constructively challenging the strategy proposed by the Chief Executive and executive directors; | |
• | scrutinising and challenging performance across the Group’s business; | |
• | assessing risk and the integrity of the financial information and controls; and | |
• | ensuring appropriate remuneration and succession planning arrangements are in place in relation to executive directors and other senior executive roles. |
• | the business of the Group; | |
• | their legal and regulatory responsibilities as directors; | |
• | briefings and presentations from relevant executives; and | |
• | opportunities to visit business operations. |
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Meetings attended | ||||
Nick Land, Chairman and financial expert | 4/4 | |||
John Buchanan | 4/4 | |||
Alan Jebson | 4/4 | |||
Anne Lauvergeon | 3/4 | |||
• | overseeing the relationship with the external auditor; | |
• | reviewing our preliminary results announcement, half-year results and annual financial statements; | |
• | monitoring compliance with statutory and listing requirements for any exchange on which our shares and debt instruments are quoted; | |
• | reviewing the scope, extent and effectiveness of the activity of the Group internal audit department; | |
• | engaging independent advisors as it determines is necessary and to perform investigations; | |
• | reporting to the Board on the quality and acceptability of our accounting policies and practices including, without limitation, critical accounting policies and practices; and | |
• | playing an active role in monitoring our compliance efforts in respect of Section 404 of the Sarbanes-Oxley Act. |
Meetings attended | ||||
Sir John Bond, Chairman | 7/7 | |||
John Buchanan | 7/7 | |||
Luc Vandevelde | 7/7 | |||
Anthony Watson (from 26 July 2010) | 5/5 | |||
• | leads the process for identifying and making recommendations to the Board of candidates for appointment as directors giving full consideration to succession planning and the leadership needs of the Group; | |
• | makes recommendations to the Board on the composition of the Nominations and Governance Committee and the composition and chairmanship of the Audit and Remuneration Committees; | |
• | regularly reviews the structure, size and composition of the Board including the balance of skills, knowledge and experience and the independence of the non-executive directors, and makes recommendations to the Board with regard to any change; and | |
• | is responsible for the oversight of all matters relating to corporate governance, bringing any issues to the attention of the Board. |
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Meetings attended | ||||
Luc Vandevelde, Chairman | 5/5 | |||
Samuel Jonah (from 1 June 2010) | 3/3 | |||
Simon Murray (until 27 July 2010) | 1/2 | |||
Anthony Watson | 5/5 | |||
Philip Yea | 5/5 | |||
• | determining, on behalf of the Board, the policy on the remuneration of the Chairman, the executive directors and the senior management team; | |
• | determining the total remuneration packages for these individuals including any compensation on termination of office; and | |
• | appointing any consultants in respect of executive directors’ remuneration. |
• | assists the Chairman in ensuring that all directors have full and timely access to all relevant information; |
• | is responsible for ensuring that the correct Board procedures are followed and advises the Board on corporate governance matters; and | |
• | administers the procedure under which directors can, where appropriate, obtain independent professional advice at the Company’s expense. |
• | formal presentations of full year and half-year results, and interim management statements; | |
• | briefing meetings with major institutional shareholders in the UK, the US and in Continental Europe after the half-year results and preliminary announcement, to ensure that the investor community receives a Balanced and complete view of our performance and the issues we face; | |
• | regular meetings between institutional investors and analysts and the Chief Executive and Chief Financial Officer to discuss business performance; | |
• | hosting investors and analysts sessions at which senior management from relevant operating companies deliver presentations which provide an overview of each of the individual businesses and operations; | |
• | attendance by senior executives across the business at relevant meetings and conferences throughout the year; | |
• | responding to enquiries from shareholders and analysts through our Investor Relations team; and | |
• | www.vodafone.com/investor which is a section dedicated to shareholders on our website. |
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• | a formal annual confirmation provided by the Chief Executive and Chief Financial Officer of each Group company certifying the operation of their control systems and highlighting any weaknesses, the results of which are reviewed by regional management, the Audit Committee and the Board; | |
• | a review of the appropriateness of disclosures undertaken by the Chief Executive and the Chief Financial Officer which includes formal annual meetings with the Group’s Disclosure Committee; and | |
• | periodic examination of business processes on a risk basis including reports on controls throughout the Group undertaken by the Group internal audit department which reports directly to the Audit Committee. |
• | Macroeconomic, political and legal risks are considered by the Group’s strategic planning process and as part of the Group’s processes for capital allocation. | |
• | The Group has in place formal treasury policies that seek to ensure the Group’s financing plans place appropriate weight on the risks arising from volatile capital markets. | |
• | Where we do not have controlling interests in certain of our investments, we work with our partners to maximise alignment of interests through the development of mutually beneficial commercial outcomes and actively involve ourselves in the governance of the company concerned. | |
• | The potential for health risks is comprehensively addressed through a wide range of activities including the close monitoring of developments in areas of science and technology and ensuring the devices sold meet all necessary regulatory requirements including specific absorption rate (‘SAR’) limits in relation to radio frequency emission and absorption. | |
• | We have invested significantly to minimise the risk of disruption of our telecommunications services and have extensive business continuity arrangements to mitigate the risks arising from a critical system failure. |
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• | The NASDAQ rules require that a majority of the Board be comprised of independent directors and the rules include detailed definitions that US companies must use for determining independence. | |
• | The Combined Code requires a company’s board of directors to assess and make a determination as to the independence of its directors. |
• | NASDAQ rules require US companies to have a nominations committee, an audit committee and a compensation committee, each composed entirely of independent directors, with the nominations committee and audit committee required to have a written charter that addresses the committees’ purpose and responsibilities. | |
• | Both our Nominations and Governance Committee and our Remuneration Committee have terms of reference and compositions that comply with the Combined Code’s requirements. | |
• | Our Nominations and Governance Committee is chaired by the Chairman of the Board and its other members are non-executive directors of the Company. | |
• | Our Remuneration Committee is composed entirely of non-executive directors whom the Board has determined to be independent. | |
• | The Audit Committee is composed entirely of non-executive directors whom the Board has determined to be independent and who meet the requirements of Rule 10A-3 under the Exchange Act. |
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• | The NASDAQ rules require companies to conduct appropriate reviews of related party transactions and potential conflicts of interest via the company’s audit committee or other independent body of the board of directors. | |
• | We are subject to extensive provisions under the Listing Rules issued by the FSA in the UK (the “Listing Rules”) governing transactions with related parties, as defined therein, and the Companies Act 2006 also restricts the extent to which companies incorporated in England and Wales may enter into related party transactions. | |
• | Our articles of association contain provisions regarding disclosure of interests by our directors and restrictions on their votes in circumstances involving conflicts of interest. | |
• | In lieu of obtaining an independent review of related party transactions for conflicts of interests, but in accordance with the Listing Rules, the Companies Act 2006 and our articles of association, we seek shareholder approval for related party transactions that meet certain financial thresholds or where transactions have unusual features. |
• | The concept of a related party for the purposes of NASDAQ’s listing rules differs in certain respects from the definition of a transaction with a related party under the Listing Rules. |
• | NASDAQ requires shareholder approval for certain transactions involving the sale or issuance by a listed company of share capital. | |
• | Under the NASDAQ rules, whether shareholder approval is required for such transactions depends on, among other things, the number of shares to be issued or sold in connection with a transaction, while we are bound by the provisions of the Listing Rules which state that shareholder approval is required, among other things, when the size of a transaction exceeds a certain percentage of the size of the listed company undertaking the transaction. | |
• | In accordance with our articles of association we also seek shareholder approval annually for issuing shares and to dis-apply the pre-emption rights that apply under law in line with limit guidelines issued by investor bodies. |
• | the quality and acceptability of accounting policies and practices; | |
• | the clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting requirements; and | |
• | material areas in which significant judgements have been applied. |
On behalf of the Audit Committee
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• | In order to reflect the equal importance of growing revenue and profit we rebalanced the relative weightings of these two measures in the short-term incentive plan. At the same time we also changed the definition of profit from adjusted operating profit to adjusted EBITDA. Details of this are on page 65. | |
• | In order to simplify the long-term incentive awards both the co-investment requirement and the matching awards are now defined in terms of a percentage of gross salary. Details of this plan are on page 64. |
• | In order to ensure greater alignment with shareholders we have re-emphasised the importance of share ownership for executives and have introduced share ownership goals to all our operating company chief executives and to the rest of the senior leadership team. Details of the current ownership levels are on page 63 where it is noted that at the year end the value of shares held by the Executive Committee exceeded £15 million. | |
• | Finally after reviewing base salaries for the Executive Committee it was decided appropriate to make some modest salary increases. Details of the increases for the executive directors are found on page 67 but it should be noted that the average increase for the Executive Committee is 3% which is in line with general increases for employees of the Group based in the UK. |
Chairman of the Remuneration Committee
17 May 2011
Chairman | Luc Vandevelde | |
Committee members | Samuel Jonah (from 1 June 2010) | |
Simon Murray (until 27 July 2010) | ||
Anthony Watson | ||
Philip Yea | ||
Committee meetings
Chief Executive | Vittorio Colao | |
Group HR Director | Ronald Schellekens | |
Group Reward and Policy Director | Adrian Jackson | |
Deputy Group Company Secretary | Philip Howie | |
• | a review of the total compensation packages of the executive directors and the most senior management of the company; | |
• | approval of the global short-term incentive bonus framework and targets; | |
• | approval of the 2011 global short-term incentive bonus payout; | |
• | approval of the long-term incentive framework, targets and 2011 grant levels; | |
• | approval of the July 2008 global long-term incentive vesting level; | |
• | approval of the introduction of share ownership goals to all operating company chief executive officers and selected senior leadership individuals below the Board and Executive Committee; | |
• | a review of the current UK corporate governance environment and the implications for our company; | |
• | a review of the director’s remuneration report; and | |
• | a review of Chairman’s fees. |
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(1) | Proportions for the directors other than the Chief Executive are the same. |
• | Chief Executive — four times base salary; and | |
• | Other executive directors — three times base salary. |
Value of | ||||||||||||||||
Goal as a | Current% | shareholding | Date for goal | |||||||||||||
% of salary | of salary held(1) | (£m)(1) | to be achieved | |||||||||||||
Vittorio Colao | 400 | % | 460 | % | 4.9 | July 2012 | ||||||||||
Andy Halford | 300 | % | 634 | % | 4.4 | July 2010 | ||||||||||
Michel Combes | 300 | % | 154 | % | 1.2 | June 2014 | ||||||||||
Stephen Pusey | 300 | % | 240 | % | 1.3 | June 2014 | ||||||||||
(1) | Based on a share price at 31 March 2011 of 176.5 pence and includes net intrinsic value of any option gains. |
Strategic objectives | Supported by | |
Focus on key areas of growth potential — Aiming to deliver organic service revenue growth of 1 — 4% a year until the year ended 31 March 2014 in five key areas: mobile data, emerging markets, enterprise, total communications and new services. | Revenue and relative performance targets in the Global Short-Term Incentive Plan (‘GSTIP’). | |
Delivering value and efficiency from scale — Continuing to drive benefit from the Group’s scale advantage and maintain our focus on cost. | Adjusted EBITDA, free cash flow and relative performance targets in the GSTIP. | |
Generate liquidity or free cash flow from non-controlled interests — Aim to seek to maximise the value of non-controlled interests through generating liquidity or increasing free cash flow in order to fund profitable investments and enhance shareholders returns. | The use of TSR as a performance measure in GLTI as well as the value of the underlying shares. | |
Apply rigorous capital discipline to investment decisions — Continuing to apply capital discipline to our investment decisions through rigorous commercial analysis and demanding investment criteria to ensure any investment in existing businesses or acquisitions will enhance value for shareholders. | Free cash flow targets in both the GSTIP and GLTI as well as the TSR target in the GLTI. | |
• | the heavy weighting on long-term incentives which reward sustained performance; | |
• | the need for short-term incentive payouts to be used to purchase and hold investment shares in order to fully participate in the long-term arrangements; and | |
• | a considerable weighting on non—financial measures in the short-term plan, which provides an external perspective on our performance by focusing on customer satisfaction and performance relative to our competitors. |
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Objective and practice | Performance period | Award size and performance conditions | ||||
Base salary | • To attract and retain the best talent. • Base salaries are reviewed annually and set on 1 July. | n/a | • Level of skill and experience, scope of responsibilities, individual and business performance, and competitiveness of the total remuneration package are taken into account when determining the appropriate level of base salary. | |||
Global Short-Term Incentive Plan (‘GSTIP’) | • To motivate employees and incentivise delivery of performance over the one-year operating cycle. • Bonus levels and the appropriateness of measures and weightings are reviewed annually to ensure they continue to support our strategy. | 1 year | • Performance over the financial year is measured against stretching financial and non-financial performance targets set at the start of the financial year. • Summary of the plan in the 2011 financial year: | |||
• The annual bonus is paid in cash in June each year for performance over the previous financial year. | – service revenue (30%); – operating profit (20%); – free cash flow (20%); and – competitive performance assessment (30%). • Target bonus is 100% of base salary. • Minimum and maximum bonus is in a range of 0 — 200% of base salary with maximum only paid out for exceptional performance. | |||||
Global Long-Term Incentive Plan (‘GLTI’) base awards | • To motivate and incentivise delivery of sustained performance over the long-term. • Award levels and the framework for determining vesting are reviewed annually to ensure they continue to support our strategy. | 3 years | • Performance over three financial years is measured against stretching targets set at the beginning of the performance period. • Vesting is determined based on a matrix of two measures as follows: | |||
• Long-term incentive awards (base awards) consist of performance shares which are granted each year in June/July and vest three years later based on Group operational and external performance. | – free cash flow as our operational performance measure; and – relative TSR as our external performance measure. • Awards vest to the extent performance conditions are satisfied, three years from grant. • The Chief Executive’s base award will have a target face value of 137.5% of base salary as of June 2011. The base award for the other executive directors will have a target face value of 110% of base salary as of June 2011. • Minimum vesting is zero times and maximum vesting is four times the base award level. | |||||
Global Long-Term Incentive Plan (‘GLTI’) co-investment matching awards | • To support and encourage greater shareholder alignment through a high level of personal financial commitment. • Individuals may purchase Vodafone shares and hold them in trust for three years in order to receive additional performance shares in the form of a GLTI matching award. • GLTI matching awards are granted each year in June/July in line with the investment made, and vest three years later based on Group operational and external performance. | 3 years | • GLTI matching awards are subject to the same performance conditions as the main GLTI award. • Executive directors can co-invest up to their annual gross salary. • Matching awards will be granted on a one for one basis at target performance. • Minimum vesting is zero times and maximum vesting is four times the target award level. | |||
• | Executive directors may choose to participate in the defined contribution pension scheme or to receive a cash allowance in lieu of pension. The cash payment or pension contribution is equal to 30% of annual gross salary. From 6 April 2011 contributions into the defined contribution pension scheme are restricted to £50,000 per annum. Any residual of the 30% pension benefit will be delivered as a cash allowance. | |
• | Company car or cash allowance worth £19,200 per annum. | |
• | Private medical insurance. | |
• | Chauffeur services, where appropriate, to assist with their role. |
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Reward elements | Vittorio Colao | Andy Halford | Michel Combes | Stephen Pusey | ||||
Base salary | Vittorio’s base salary was increased from £975,000 to £1,065,000 in July 2010. | Andy’s base salary was increased from £674,100 to £700,000 in July 2010. | Michel’s base salary was increased from £740,000 to £770,000 in July 2010. | Stephen’s base salary was increased from £500,000 to £550,000 in July 2010. | ||||
Annual bonus | The target bonus was £1,065,000 and the maximum bonus was £2,130,000. | The target bonus was £700,000 and the maximum bonus was £1,400,000. | The target bonus was £770,000 and the maximum bonus was £1,540,000 | The target bonus was £550,000 and the maximum bonus was £1,100,000. | ||||
Long-term incentive plan | In June 2010 the base award had a face value of 137.5% of base salary at target performance. | In June 2010 the base award had a face value of 110% of base salary at target performance. | In June 2010 the base award had a face value of 110% of base salary at target performance. | In June 2010 the base award had a face value of 110% of base salary at target performance. | ||||
Investment opportunity | Vittorio invested the maximum into the GLTI plan (731,796 shares) and therefore received a matching award with a face value of 100% of base salary at target. | Andy invested the maximum into the GLTI plan (506,910 shares) and therefore received a matching award with a face value of 100% of base salary at target. | Michel invested 53% of the maximum into the GLTI plan (275,960 shares) and therefore received a matching award with a face value of 53% of base salary at target. | Stephen invested 37% of the maximum into the GLTI plan (141,834 shares) and therefore received a matching award with a face value of 37% of base salary at target. | ||||
Performance achievement | ||||||||||||||||||||
Between | Between | |||||||||||||||||||
threshold | target and | Above | ||||||||||||||||||
Performance measure | Weighting | Below threshold | and target | maximum | maximum | |||||||||||||||
Service revenue | 30 | % | ü | |||||||||||||||||
Profit | 20 | % | ü | |||||||||||||||||
Cash flow | 20 | % | ü | |||||||||||||||||
Competitive performance assessment | 30 | % | ü | |||||||||||||||||
Total incentive payout level | 124.2 | % | ||||||||||||||||||
• | Service revenue – 25%; | |
• | Profit (“earnings before interest tax depreciation amortisation”) – 25%; | |
• | Free cash flow – 20%; and | |
• | Competitive performance assessment – 30%. |
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• | underlying operational performance as measured by free cash flow; and | |
• | relative TSR against a peer group median. |
• | Verizon Wireless additional distributions; | |
• | the impact of any mergers, acquisitions and disposals; | |
• | certain material one-off tax settlements; and | |
• | foreign exchange rate movements over the performance period. |
Vesting | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||
Performance | percentage | £bn | £bn | £bn | £bn | |||||||||||||||
Threshold | 50 | % | 16.70 | 18.00 | 15.50 | 15.50 | ||||||||||||||
Target | 100 | % | 19.20 | 20.50 | 18.00 | 17.50 | ||||||||||||||
Superior | 150 | % | 20.45 | 21.75 | 19.25 | 18.50 | ||||||||||||||
Maximum | 200 | % | 21.70 | 23.00 | 20.50 | 19.50 | ||||||||||||||
• | BT Group; | |
• | Deutsche Telekom; | |
• | France Telecom; | |
• | Telecom Italia; | |
• | Telefonica; and | |
• | Emerging market composite (consists of the average TSR performance of Bharti, MTN and Turkcell). |
Out- | ||||||||
performance | ||||||||
of peer group | ||||||||
median | Multiplier | |||||||
Median | 0.0% p.a. | No increase | ||||||
65th percentile | 4.5% p.a. | 1.5 times | ||||||
80th percentile (upper quintile) | 9.0% p.a. | 2.0 times | ||||||
TSR performance | ||||||||||||
Free cash flow measure | Up to median | 65th | 80th | |||||||||
Threshold | 50 | % | 75 | % | 100 | % | ||||||
Target | 100 | % | 150 | % | 200 | % | ||||||
Superior | 150 | % | 225 | % | 300 | % | ||||||
Maximum | 200 | % | 300 | % | 400 | % | ||||||
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Vittorio Colao | Andy Halford | Michel Combes | Stephen Pusey | |||||||||||||
Base salary | ||||||||||||||||
Base salary effective from July 2011 | £ | 1,110,000 | £ | 700,000 | £ | 790,000 | £ | 575,000 | ||||||||
GSTIP (Annual bonus)(1) | ||||||||||||||||
Target (100% of base salary at 31 March 2011) | £ | 1,065,000 | £ | 700,000 | £ | 770,000 | £ | 550,000 | ||||||||
Percentage of target achieved for the 2011 financial year | 124.2 | % | 124.2 | % | 96.8 | % | 124.2 | % | ||||||||
Actual bonus payout in June 2011 | £ | 1,322,730 | £ | 869,400 | £ | 745,052 | £ | 683,100 | ||||||||
GLTI performance shares | ||||||||||||||||
GLTI performance base share awarded in July 2008 | 4,126,587 | 2,282,447 | 2,589,782 | 942,132 | ||||||||||||
GLTI performance match share awarded in July 2008 | 3,001,154 | 2,074,952 | 736,919 | 500,844 | ||||||||||||
Vesting percentage based on cumulative adjusted three year free cash flow and TSR out-performance | 30.6 | % | 30.6 | % | 30.6 | % | 30.6 | % | ||||||||
GLTI performance shares vesting in 2011 | 2,181,088 | 1,333,363 | 1,017,970 | 441,550 | ||||||||||||
Note: | ||
(1) | The executive directors’ GSTIP for the 2011 financial year is payable in June 2011 with actual payments detailed in the table above. Vittorio Colao, Andy Halford and Stephen Pusey were measured solely against Group performance, whilst Michel Combes was measured on both Group and Europe region performance. |
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Provision | Detailed items | |||
Notice period | 12 months | |||
Retirement date | Normal retirement date | |||
Termination payment | Up to 12 months salary Bonus paid up to termination day Entitlements under incentive plans and benefits that are consistent with the terms of such plans | |||
Remuneration | Salary, pension, and benefits Company car or cash allowance Participation in the GSTIP, GLTI and the employee share schemes | |||
Non-competition | During employment and for 12 months thereafter | |||
Contract dates | Date of service agreement | Length of Board service | ||
Vittorio Colao | 27 May 2008 | 2 years 10 months | ||
Andy Halford | 20 May 2005 | 5 years 10 months | ||
Michel Combes | 1 June 2009 | 1 year 10 months | ||
Stephen Pusey | 1 June 2009 | 1 year 10 months | ||
Cascade of policy to Executive Committee – 2011 financial year | ||
Total remuneration and base salary | ||
Methodology consistent with the executive directors. | ||
Annual bonus | ||
The annual bonus is based on the same measures. For some individuals these are measured within a region rather than across the whole Group. | ||
Cascade of policy to Executive Committee – 2011 financial year | ||
Long-term incentive | ||
The long-term incentive is consistent with the executive directors including the opportunity to invest in the GLTI to receive matching awards. In addition, Executive Committee members have a share ownership requirement of two times base salary. | ||
Summary of plans | ||
Sharesave | ||
The Vodafone Group 2008 Sharesave Plan is a HM Revenue & Customs (‘HMRC’) approved scheme open to all staff permanently employed by a Vodafone Company in the UK as of the eligibility date. Options under the plan are granted at up to a 20% discount to market value. Executive directors’ participation is included in the option table on page 71. |
Share Incentive Plan | ||
The Vodafone Share Incentive Plan is an HMRC approved plan open to all staff permanently employed by a Vodafone Company in the UK. Participants may contribute up to a maximum of £125 per month (or 5% of salary if less) which the trustee of the plan uses to buy shares on their behalf. An equivalent number of shares are purchased with contributions from the employing company. UK-based executive directors are eligible to participate. |
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The remuneration of executive directors was as follows:
Salary/fees | Incentive schemes(1) | Cash in lieu of pension | Benefits/other(2) | Total | ||||||||||||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||||||||
£’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |||||||||||||||||||||||||||||||
Chief Executive Vittorio Colao | 1,043 | 975 | 1,323 | 1,255 | 313 | 292 | 55 | 146 | 2,734 | 2,668 | ||||||||||||||||||||||||||||||
Other executive directors Andy Halford | 694 | 674 | 869 | 868 | 208 | 169 | 27 | 26 | 1,798 | 1,737 | ||||||||||||||||||||||||||||||
Michel Combes | 763 | 737 | 745 | 818 | 229 | 221 | 22 | 52 | 1,759 | 1,828 | ||||||||||||||||||||||||||||||
Stephen Pusey | 538 | 491 | 683 | 632 | 161 | 147 | 31 | 38 | 1,413 | 1,308 | ||||||||||||||||||||||||||||||
Total | 3,038 | 2,877 | 3,620 | 3,573 | 911 | 829 | 135 | 262 | 7,704 | 7,541 | ||||||||||||||||||||||||||||||
(1) | These figures are the cash payouts from the 2011 financial year Vodafone GSTIP and are in relation to the performance against targets in adjusted operating profit, service revenue, free cash flow and competitive performance for the financial year ended 31 March 2011. | |
(2) | Includes amounts in respect of cost of living allowance, private healthcare and car allowance. |
2011 | 2010 | |||||||
£’000 | £’000 | |||||||
Salaries and fees | 3,151 | 3,655 | ||||||
Incentive schemes(2) | 4,081 | 4,417 | ||||||
Cash in lieu of pension | 456 | 164 | ||||||
Benefits/other | 799 | 3,376 | ||||||
Total | 8,487 | 11,612 | ||||||
(1) | Aggregate remuneration for the Executive Committee is in respect of those individuals who were members of the Executive Committee, other than the executive directors, during the year ended 31 March 2011 and reflects compensation paid from either 1 April 2010 or date of appointment to the Executive Committee, to 31 March 2011 or date of leaving, where applicable. |
(2) | Comprises the incentive scheme information for the Executive Committee members on an equivalent basis to that disclosed for directors in the table at the top of this page. Details of share incentives awarded to directors and other members of the Executive Committee are included in footnotes to “Long-term incentives” on page 70. |
Transfer value | Employer | |||||||||||||||||||||||||||||||
Change in | Change in | of change | allocation/ | |||||||||||||||||||||||||||||
Change in | transfer value | accrued | in accrued | contribution | ||||||||||||||||||||||||||||
Total accrued | accrued | Transfer | Transfer | over year less | benefit in | benefit net | to defined | |||||||||||||||||||||||||
benefit at 31 | benefit over | value at 31 | value at 31 | member | excess of | of member | contribution | |||||||||||||||||||||||||
March 2011(1) | the year(1) | March 2010(2) | March 2011(2) | contributions | inflation(3) | contributions | Plans | |||||||||||||||||||||||||
£’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |||||||||||||||||||||||||
Andy Halford | 17.8 | — | 628.0 | 701.2 | 73.2 | (0.8 | ) | (32.8 | ) | — | ||||||||||||||||||||||
(1) | Andy Halford took the opportunity to take early retirement from the pension scheme due to the closure of the scheme on 31 March 2010 (aged 51 years). In accordance with the scheme rules, his accrued pension at this date was reduced with an early retirement factor for four years to reflect the fact that his pension is being paid before age 55 and is therefore expected to be paid out for a longer period of time. In addition, Andy Halford exchanged part of his early retirement pension at 31 March 2010 for a tax-free cash lump sum of £118,660. The pension in payment at 31 March 2010 was £17,800 per year. This pension is due to increase on 1 April 2011 by 5%, in line with the scheme rules, to £18,700 per year. However, at 31 March 2011 the pension in payment remained at £17,800 per year as shown above. No member contributions are payable as Andy Halford is in receipt of his pension. | |
(2) | The transfer value at 31 March 2011 has been calculated on the basis and methodology set by the trustees after taking actuarial advice. No director elected to pay additional voluntary contributions. The transfer value disclosed above does not represent a sum paid or payable to the individual director. Instead it represents a potential liability of the pension scheme. | |
(3) | Inflation has been taken as the increase in the retail price index over the year to 30 September 2010. |
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Long-term incentives
Performance shares
Total interest | ||||||||||||||||||||||||||||||||
in performance | Shares | Shares | ||||||||||||||||||||||||||||||
shares at | conditionally | forfeited | Shares | Total interest | Market | |||||||||||||||||||||||||||
1 April 2010 | awarded | during | vested during | in performance | price at date | |||||||||||||||||||||||||||
or date of | during the 2011 | the 2011 | the 2011 | shares at | awards | |||||||||||||||||||||||||||
appointment | financial year(1) | financial year(2) | financial year(3) | 31 March 2011(4) | Total value(5) | granted | Vesting date | |||||||||||||||||||||||||
Number | Number | Number | Number | Number | ||||||||||||||||||||||||||||
of shares | of shares | of shares | of shares | of shares | £’000 | Pence | ||||||||||||||||||||||||||
Vittorio Colao | ||||||||||||||||||||||||||||||||
2007 | 1,557,409 | — | (1,168,057 | ) | (389,352 | ) | — | — | 156.00 | Jul 2010 | ||||||||||||||||||||||
2008 – Base award | 4,126,587 | — | — | — | 4,126,587 | 7,283 | 129.95 | Jul 2011 | ||||||||||||||||||||||||
2008 – Match award | 3,001,154 | — | — | — | 3,001,154 | 5,297 | 129.95 | Jul 2011 | ||||||||||||||||||||||||
2009 – Base award | 4,564,995 | — | — | — | 4,564,995 | 8,057 | 117.20 | Jun 2012 | ||||||||||||||||||||||||
2009 – Match award | 1,817,866 | — | — | — | 1,817,866 | 3,209 | 117.20 | Jun 2012 | ||||||||||||||||||||||||
2010 – Base award | — | 4,097,873 | — | — | 4,097,873 | 7,233 | 142.94 | Jun 2013 | ||||||||||||||||||||||||
2010 – Match award | — | 2,980,271 | — | — | 2,980,271 | 5,260 | 142.94 | Jun 2013 | ||||||||||||||||||||||||
Total | 15,068,011 | 7,078,144 | (1,168,057 | ) | (389,352 | ) | 20,588,746 | 36,339 | ||||||||||||||||||||||||
Andy Halford | ||||||||||||||||||||||||||||||||
2007 | 1,190,305 | — | (892,729 | ) | (297,576 | ) | — | — | 156.00 | Jul 2010 | ||||||||||||||||||||||
2008 – Base award | 2,282,447 | — | — | — | 2,282,447 | 4,029 | 129.95 | Jul 2011 | ||||||||||||||||||||||||
2008 – Match award | 2,074,952 | — | — | — | 2,074,952 | 3,662 | 129.95 | Jul 2011 | ||||||||||||||||||||||||
2009 – Base award | 2,524,934 | — | — | — | 2,524,934 | 4,457 | 117.20 | Jun 2012 | ||||||||||||||||||||||||
2009 – Match award | 1,676,756 | — | — | — | 1,676,756 | 2,959 | 117.20 | Jun 2012 | ||||||||||||||||||||||||
2010 – Base award | — | 2,154,750 | — | — | 2,154,750 | 3,803 | 142.94 | Jun 2013 | ||||||||||||||||||||||||
2010 – Match award | — | 1,958,863 | — | — | 1,958,863 | 3,457 | 142.94 | Jun 2013 | ||||||||||||||||||||||||
Total | 9,749,394 | 4,113,613 | (892,729 | ) | (297,576 | ) | 12,672,702 | 22,367 | ||||||||||||||||||||||||
Michel Combes | ||||||||||||||||||||||||||||||||
2008 – Base award | 2,589,782 | — | — | — | 2,589,782 | 4,571 | 129.95 | Nov 2011 | ||||||||||||||||||||||||
2008 – Match award | 736,919 | — | — | — | 736,919 | 1,301 | 129.95 | Nov 2011 | ||||||||||||||||||||||||
2009 – Base award | 2,771,771 | — | — | — | 2,771,771 | 4,892 | 117.20 | Jun 2012 | ||||||||||||||||||||||||
2009 – Match award | 533,854 | — | — | — | 533,854 | 942 | 117.20 | Jun 2012 | ||||||||||||||||||||||||
2010 – Base award | — | 2,370,225 | — | — | 2,370,225 | 4,183 | 142.94 | Jun 2013 | ||||||||||||||||||||||||
2010 – Match award | — | 1,144,116 | — | — | 1,144,116 | 2,019 | 142.94 | Jun 2013 | ||||||||||||||||||||||||
Total | 6,632,326 | 3,514,341 | — | — | 10,146,667 | 17,908 | ||||||||||||||||||||||||||
Stephen Pusey | ||||||||||||||||||||||||||||||||
2007 | 491,325 | — | (368,494 | ) | (122,831 | ) | — | — | 156.00 | Jul 2010 | ||||||||||||||||||||||
2008 – Base award | 942,132 | — | — | — | 942,132 | 1,663 | 129.95 | Jul 2011 | ||||||||||||||||||||||||
2008 – Match award | 500,844 | — | — | — | 500,844 | 884 | 129.95 | Jul 2011 | ||||||||||||||||||||||||
2009 – Base award | 1,872,818 | — | — | — | 1,872,818 | 3,306 | 117.20 | Jun 2012 | ||||||||||||||||||||||||
2009 – Match award | 510,879 | — | — | — | 510,879 | 902 | 117.20 | Jun 2012 | ||||||||||||||||||||||||
2010 – Base award | — | 1,693,018 | — | — | 1,693,018 | 2,988 | 142.94 | Jun 2013 | ||||||||||||||||||||||||
2010 – Match award | — | 571,097 | — | — | 571,097 | 1,008 | 142.94 | Jun 2013 | ||||||||||||||||||||||||
Total | 4,317,998 | 2,264,115 | (368,494 | ) | (122,831 | ) | 6,090,788 | 10,751 | ||||||||||||||||||||||||
(1) | The awards were granted during the year under the Vodafone Global lncentive Plan using an average of the closing share prices on each of the five working days prior to 28 June 2010 being 142.9 pence. These awards have a performance period running from 1 April 2010 to 31 March 2013. The performance conditions are a matrix of free cash flow performance and relative TSR. The vesting date will be in June 2013. |
(2) | Shares granted on 24 July 2007 vested on 24 July 2010. The performance condition on these awards was a relative TSR measure against the companies making up the FTSE Global Telecoms index at the start of the performance period. The threshold relative TSR performance target was met and as such shares vested at 25%. The share price on the vesting date was 151.5 pence. |
(3) | The share vesting gave rise to cash payments equal to the equivalent value of dividends over the vesting period. These cash payments equated to £91,484 for Vittorio Colao, £70,198 for Andy Halford and £28,976 for Stephen Pusey. |
(4) | The total interest at 31 March 2011 includes awards over three different performance periods ending on 31 March 2011, 31 March 2012 and 31 March 2013. The performance conditions for the award vesting in July 2011 are a matrix of free cash flow performance and relative TSR. |
(5) | The total value is calculated using the closing mid-market share price at 31 March 2011 of 176.5 pence. |
Table of Contents
Options | Options | Options | ||||||||||||||||||||||||||||||||||||||
At | granted | exercised | lapsed | |||||||||||||||||||||||||||||||||||||
1 April 2010 | during the | during the | during the | Options | Market | |||||||||||||||||||||||||||||||||||
or date of | 2011 financial | 2011 financial | 2011 financial | held at | Option | price on | ||||||||||||||||||||||||||||||||||
appointment | year | year | year | 31 March 2011 | price | Date from | exercise | |||||||||||||||||||||||||||||||||
Grant | Number | Number | Number | Number | Number | which | Expiry | |||||||||||||||||||||||||||||||||
date | of shares | of shares | of shares | of shares | of shares | Pence(1) | exercisable | date | Pence | |||||||||||||||||||||||||||||||
Vittorio Colao | ||||||||||||||||||||||||||||||||||||||||
GIP | Nov 2006 | 3,472,975 | — | — | — | 3,472,975 | 135.50 | Nov 2009 | Nov 2016 | — | ||||||||||||||||||||||||||||||
GIP(2) | Jul 2007 | 3,003,575 | — | — | — | 3,003,575 | 167.80 | Jul 2010 | Jul 2017 | — | ||||||||||||||||||||||||||||||
SAYE | Jul 2009 | 16,568 | — | — | — | 16,568 | 93.85 | Sep 2014 | Feb 2015 | — | ||||||||||||||||||||||||||||||
Total | 6,493,118 | — | — | — | 6,493,118 | |||||||||||||||||||||||||||||||||||
Andy Halford | ||||||||||||||||||||||||||||||||||||||||
CSOS | Jul 2000 | 200 | — | — | (200 | ) | — | 282.30 | Jul 2003 | Jul 2010 | — | |||||||||||||||||||||||||||||
ESOS | Jul 2000 | 66,700 | — | — | (66,700 | ) | — | 282.30 | Jul 2003 | Jul 2010 | — | |||||||||||||||||||||||||||||
LTSIP | Jul 2001 | 152,400 | — | — | — | 152,400 | 151.56 | Jul 2004 | Jul 2011 | — | ||||||||||||||||||||||||||||||
LTSIP | Jul 2005 | 1,291,326 | — | — | — | 1,291,326 | 145.25 | Jul 2008 | Jul 2015 | — | ||||||||||||||||||||||||||||||
GIP(2) | Jul 2007 | 2,295,589 | — | — | — | 2,295,589 | 167.80 | Jul 2010 | Jul 2017 | — | ||||||||||||||||||||||||||||||
SAYE | Jul 2009 | 9,669 | — | — | — | 9,669 | 93.85 | Sep 2012 | Feb 2013 | — | ||||||||||||||||||||||||||||||
Total | 3,815,884 | — | — | (66,900 | ) | 3,748,984 | ||||||||||||||||||||||||||||||||||
Stephen Pusey | ||||||||||||||||||||||||||||||||||||||||
GIP | Sep 2006 | 1,034,259 | — | — | — | 1,034,259 | 113.75 | Sep 2009 | Sep 2016 | — | ||||||||||||||||||||||||||||||
GIP(2) | Jul 2007 | 947,556 | — | — | — | 947,556 | 167.80 | Jul 2010 | Jul 2017 | — | ||||||||||||||||||||||||||||||
SAYE | Jul 2009 | 9,669 | — | — | — | 9,669 | 93.85 | Sep 2012 | Feb 2013 | — | ||||||||||||||||||||||||||||||
Total | 1,991,484 | — | — | — | 1,991,484 | |||||||||||||||||||||||||||||||||||
Michel Combes | ||||||||||||||||||||||||||||||||||||||||
SAYE | Jul 2009 | 9,669 | — | — | — | 9,669 | 93.85 | Sep 2012 | Feb 2013 | — | ||||||||||||||||||||||||||||||
Total | 9,669 | — | — | — | 9,669 | |||||||||||||||||||||||||||||||||||
(1) | The closing mid-market share price on 31 March 2011 was 176.5 pence. The highest mid-market share price during the year was 185.0 pence and the lowest price was 126.5 pence. |
(2) | The performance condition on these options is a three year cumulative growth in adjusted earnings per share. The options vested at 100% on 24 July 2010. |
Table of Contents
Fee payable (£’000s) | ||||||||
From | From | |||||||
Position/role | 1 April 2011 | 1 April 2010 | ||||||
Chairman(1) | 600 | 600 | ||||||
Deputy Chairman | 175 | 162 | ||||||
Non-executive director | 115 | 115 | ||||||
Chairmanship of Audit Committee | 25 | 25 | ||||||
Chairmanship of Remuneration Committee | 25 | 20 | ||||||
(1) | The Chairman’s fee also includes the fee for the Chairmanship of the Nominations and Governance Committee. |
Date of | Date of | |||||||
letter of appointment | election/re-election | |||||||
John Buchanan | 28 April 2003 | AGM 2011 | ||||||
Renee James | 1 January 2011 | AGM 2011 | ||||||
Alan Jebson | 7 November 2006 | AGM 2011 | ||||||
Samuel Jonah | 9 March 2009 | AGM 2011 | ||||||
Gerard Kleisterlee | 1 April 2011 | AGM 2011 | ||||||
Nick Land | 7 November 2006 | AGM 2011 | ||||||
Anne Lauvergeon | 20 September 2005 | AGM 2011 | ||||||
Luc Vandevelde | 24 June 2003 | AGM 2011 | ||||||
Anthony Watson | 6 February 2006 | AGM 2011 | ||||||
Philip Yea | 14 July 2005 | AGM 2011 | ||||||
Salary/fees | Benefits | Total | ||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
£’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |||||||||||||||||||
Chairman | ||||||||||||||||||||||||
Sir John Bond | 600 | 575 | 3 | 3 | 603 | 578 | ||||||||||||||||||
Deputy Chairman | ||||||||||||||||||||||||
John Buchanan | 162 | 155 | — | — | 162 | 155 | ||||||||||||||||||
Non-executive directors | ||||||||||||||||||||||||
Renee James(1) | 35 | — | — | — | 35 | — | ||||||||||||||||||
Alan Jebson(1) | 151 | 146 | — | — | 151 | 146 | ||||||||||||||||||
Samuel Jonah(1) | 151 | 140 | — | — | 151 | 140 | ||||||||||||||||||
Nick Land | 140 | 135 | — | — | 140 | 135 | ||||||||||||||||||
Anne Lauvergeon | 115 | 110 | — | — | 115 | 110 | ||||||||||||||||||
Simon Murray (retired 26 July 2010) | 38 | 110 | — | — | 38 | 110 | ||||||||||||||||||
Luc Vandevelde | 135 | 130 | — | — | 135 | 130 | ||||||||||||||||||
Anthony Watson | 115 | 110 | — | — | 115 | 110 | ||||||||||||||||||
Philip Yea | 115 | 110 | — | — | 115 | 110 | ||||||||||||||||||
Total | 1,757 | 1,721 | 3 | 3 | 1,760 | 1,724 | ||||||||||||||||||
(1) | Salary/fees includes travel allowances. |
Table of Contents
1 April 2010 or | ||||||||||||
16 May 2011 | 31 March 2011 | date of appointment | ||||||||||
Sir John Bond | 370,677 | 370,677 | 357,584 | |||||||||
John Buchanan | 222,223 | 222,223 | 211,055 | |||||||||
Vittorio Colao | 2,307,663 | 2,307,663 | 1,575,567 | |||||||||
Andy Halford | 2,335,914 | 2,335,622 | 2,186,541 | |||||||||
Michel Combes | 670,589 | 670,297 | 392,223 | |||||||||
Stephen Pusey | 544,733 | 544,733 | 402,599 | |||||||||
Renee James(1) | 50,000 | 50,000 | — | |||||||||
Alan Jebson | 82,340 | 82,340 | 82,340 | |||||||||
Samuel Jonah | 55,350 | 55,350 | — | |||||||||
Gerard Kleisterlee(1) | — | — | — | |||||||||
Nick Land | 35,000 | 35,000 | 35,000 | |||||||||
Anne Lauvergeon | 28,936 | 28,936 | 28,936 | |||||||||
Simon Murray (retired 27 July 2010) | — | — | 246,250 | |||||||||
Luc Vandevelde | 89,030 | 89,030 | 72,829 | |||||||||
Anthony Watson | 115,000 | 115,000 | 115,000 | |||||||||
Philip Yea | 61,250 | 61,250 | 61,250 | |||||||||
(1) | Non-executive directors appointed to the Board as follows: Renee James 1 January 2011, Gerard Kleisterlee 1 April 2011. |
On behalf of the Board
Table of Contents
74 Vodafone Group Plc Annual Report 2011
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Separate financial statements required by Rule 3-09 of Regulation S-X | B-1 | |||
Report of Independent Registered Public Accounting Firm | B-30 |
Table of Contents
Vodafone Group Plc Annual Report 2011 75
• | select suitable accounting policies and apply them consistently; | |
• | make judgements and estimates that are reasonable and prudent; | |
• | state whether the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’) as issued by the IASB, in accordance with IFRS as adopted for use in the EU and Article 4 of the EU IAS Regulations; | |
• | state for the Company financial statements whether applicable UK accounting standards have been followed; and | |
• | prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business. |
• | the consolidated financial statements, prepared in accordance with IFRS as issued by the International Accounting Standards Board (‘IASB’) and IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and | |
• | the directors’ report includes a fair review of the development and performance of the business and the position of the Group together with a description of the principal risks and uncertainties that it faces. |
Company Secretary
17 May 2011
Table of Contents
76 Vodafone Group Plc Annual Report 2011
Deloitte LLP
Chartered Accountants and Registered Auditor
London
United Kingdom
17 May 2011
Table of Contents
Vodafone Group Plc Annual Report 2011 77
• | growth in adjusted EBITDA, calculated as adjusted operating profit before depreciation and amortisation; | |
• | timing and quantum of future capital expenditure; | |
• | long-term growth rates; and | |
• | the selection of discount rates to reflect the risks involved. |
• | the nominal GDP rates for the country of operation;and | |
• | the long-term compound annual growth rate in adjusted EBITDA in years six to ten estimated by management. |
• | the nominal GDP rates for the country of operation;and | |
• | the compound annual growth rate in adjusted EBITDA in years nine to ten of the management plan. |
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78 Vodafone Group Plc Annual Report 2011
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Vodafone Group Plc Annual Report 2011 79
Deloitte LLP
Chartered Accountants and Registered Auditor
London
United Kingdom
17 May 2011
Table of Contents
80 Vodafone Group Plc Annual Report 2011
2011 | 2010 | 2009 | ||||||||||||||
Note | £m | £m | £m | |||||||||||||
Revenue | 3 | 45,884 | 44,472 | 41,017 | ||||||||||||
Cost of sales | (30,814 | ) | (29,439 | ) | (25,842 | ) | ||||||||||
Gross profit | 15,070 | 15,033 | 15,175 | |||||||||||||
Selling and distribution expenses | (3,067 | ) | (2,981 | ) | (2,738 | ) | ||||||||||
Administrative expenses | (5,300 | ) | (5,328 | ) | (4,771 | ) | ||||||||||
Share of result in associates | 14 | 5,059 | 4,742 | 4,091 | ||||||||||||
Impairment losses | 10 | (6,150 | ) | (2,100 | ) | (5,900 | ) | |||||||||
Other income and expense | (16 | ) | 114 | — | ||||||||||||
Operating profit | 4 | 5,596 | 9,480 | 5,857 | ||||||||||||
Non-operating income and expense | 15 | 3,022 | (10 | ) | (44 | ) | ||||||||||
Investment income | 5 | 1,309 | 716 | 795 | ||||||||||||
Financing costs | 5 | (429 | ) | (1,512 | ) | (2,419 | ) | |||||||||
Profit before taxation | 9,498 | 8,674 | 4,189 | |||||||||||||
Income tax expense | 6 | (1,628 | ) | (56 | ) | (1,109 | ) | |||||||||
Profit for the financial year | 7,870 | 8,618 | 3,080 | |||||||||||||
Attributable to: | ||||||||||||||||
– Equity shareholders | 7,968 | 8,645 | 3,078 | |||||||||||||
– Non-controlling interests | (98 | ) | (27 | ) | 2 | |||||||||||
7,870 | 8,618 | 3,080 | ||||||||||||||
Basic earnings per share | 8 | 15.20p | 16.44p | 5.84p | ||||||||||||
Diluted earnings per share | 8 | 15.11p | 16.36p | 5.81p | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Gains/losses) on revaluation of available-for-sale investments, net of tax | 310 | 206 | (2,383 | ) | ||||||||
Foreign exchange translation differences, net of tax | (2,132 | ) | (1,021 | ) | 12,375 | |||||||
Net actuarial gains/losses) on defined benefit pension schemes, net of tax | 136 | (104 | ) | (163 | ) | |||||||
Revaluation gain | — | 860 | 68 | |||||||||
Foreign exchange gains transferred to the income statement | (630 | ) | (84 | ) | (3 | ) | ||||||
Fair value (gains)/losses transferred to the income statement | (2,192 | ) | 3 | — | ||||||||
Other, net of tax | 19 | 67 | (40 | ) | ||||||||
Other comprehensive (loss)/income | (4,489 | ) | (73 | ) | 9,854 | |||||||
Profit for the financial year | 7,870 | 8,618 | 3,080 | |||||||||
Total comprehensive income for the year | 3,381 | 8,545 | 12,934 | |||||||||
Attributable to: | ||||||||||||
– Equity shareholders | 3,567 | 8,312 | 13,037 | |||||||||
– Non-controlling interests | (186 | ) | 233 | (103 | ) | |||||||
3,381 | 8,545 | 12,934 | ||||||||||
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Vodafone Group Plc Annual Report 2011 81
2011 | 2010 | |||||||||||
Note | £m | £m | ||||||||||
Non-current assets | ||||||||||||
Goodwill | 9 | 45,236 | 51,838 | |||||||||
Other intangible assets | 9 | 23,322 | 22,420 | |||||||||
Property, plant and equipment | 11 | 20,181 | 20,642 | |||||||||
Investments in associates | 14 | 38,105 | 36,377 | |||||||||
Other investments | 15 | 1,381 | 7,591 | |||||||||
Deferred tax assets | 6 | 2,018 | 1,033 | |||||||||
Post employment benefits | 23 | 97 | 34 | |||||||||
Trade and other receivables | 17 | 3,877 | 2,831 | |||||||||
134,217 | 142,766 | |||||||||||
Current assets | ||||||||||||
Inventory | 16 | 537 | 433 | |||||||||
Taxation recoverable | 281 | 191 | ||||||||||
Trade and other receivables | 17 | 9,259 | 8,784 | |||||||||
Other investments | 15 | 674 | 388 | |||||||||
Cash and cash equivalents | 18 | 6,252 | 4,423 | |||||||||
17,003 | 14,219 | |||||||||||
Total assets | 151,220 | 156,985 | ||||||||||
Equity | ||||||||||||
Called up share capital | 19 | 4,082 | 4,153 | |||||||||
Additional paid-in capital | 153,760 | 153,509 | ||||||||||
Treasury shares | (8,171 | ) | (7,810 | ) | ||||||||
Retained losses | (77,661 | ) | (79,655 | ) | ||||||||
Accumulated other comprehensive income | 15,545 | 20,184 | ||||||||||
Total equity shareholders’ funds | 87,555 | 90,381 | ||||||||||
Non-controlling interests | 2,880 | 3,379 | ||||||||||
Put options over non-controlling interests | (2,874 | ) | (2,950 | ) | ||||||||
Total non-controlling interests | 6 | 429 | ||||||||||
Total equity | 87,561 | 90,810 | ||||||||||
Non-current liabilities | ||||||||||||
Long-term borrowings | 22 | 28,375 | 28,632 | |||||||||
Taxation liabilities | 350 | — | ||||||||||
Deferred tax liabilities | 6 | 6,486 | 7,377 | |||||||||
Post employment benefits | 23 | 87 | 237 | |||||||||
Provisions | 24 | 482 | 497 | |||||||||
Trade and other payables | 25 | 804 | 816 | |||||||||
36,584 | 37,559 | |||||||||||
Current liabilities | ||||||||||||
Short-term borrowings | 22 | 9,906 | 11,163 | |||||||||
Taxation liabilities | 1,912 | 2,874 | ||||||||||
Provisions | 24 | 559 | 497 | |||||||||
Trade and other payables | 25 | 14,698 | 14,082 | |||||||||
27,075 | 28,616 | |||||||||||
Total equity and liabilities | 151,220 | 156,985 | ||||||||||
Vittorio Colao | Andy Halford | |
Chief Executive | Chief Financial Officer |
Table of Contents
82 Vodafone Group Plc Annual Report 2011
Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
Additional | Other comprehensive income | share- | Non- | |||||||||||||||||||||||||||||||||||||||||||||
Share | paid-in | Treasury | Retained | Currency | Pensions | Investment | Revaluation | holders’ | controlling | |||||||||||||||||||||||||||||||||||||||
capital | capital(1) | shares | losses | reserve | reserve | reserve | surplus | Other | funds | interests | Total | |||||||||||||||||||||||||||||||||||||
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |||||||||||||||||||||||||||||||||||||
1 April 2008 | 4,182 | 153,139 | (7,856 | ) | (81,980 | ) | 5,974 | (96 | ) | 4,531 | 112 | 37 | 78,043 | (1,572 | ) | 76,471 | ||||||||||||||||||||||||||||||||
Issue or reissue of shares | 3 | 4 | 65 | (44 | ) | — | — | — | — | — | 28 | — | 28 | |||||||||||||||||||||||||||||||||||
Purchase of own shares | — | — | (1,000 | ) | — | — | — | — | — | — | (1,000 | ) | — | (1,000 | ) | |||||||||||||||||||||||||||||||||
Redemption or cancellation of shares | (32 | ) | 47 | 755 | (770 | ) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Share-based payment | — | 158 | (2) | — | — | — | — | — | — | — | 158 | — | 158 | |||||||||||||||||||||||||||||||||||
Acquisition of subsidiaries | — | — | — | (87 | ) | — | — | — | — | — | (87 | ) | 436 | 349 | ||||||||||||||||||||||||||||||||||
Comprehensive income | — | — | — | 3,078 | 12,477 | (163 | ) | (2,383 | ) | 68 | (40 | ) | 13,037 | (103 | ) | 12,934 | ||||||||||||||||||||||||||||||||
Profit | — | — | — | 3,078 | — | — | — | — | — | 3,078 | 2 | 3,080 | ||||||||||||||||||||||||||||||||||||
OCI – before tax | — | — | — | — | 12,614 | (220 | ) | (2,383 | ) | 68 | (56 | ) | 10,023 | (105 | ) | 9,918 | ||||||||||||||||||||||||||||||||
OCI – taxes | — | — | — | — | (134 | ) | 57 | — | — | 16 | (61 | ) | — | (61 | ) | |||||||||||||||||||||||||||||||||
Transfer to the income statement | — | — | — | — | (3 | ) | — | — | — | — | (3 | ) | — | (3 | ) | |||||||||||||||||||||||||||||||||
Dividends | — | — | — | (4,017 | ) | — | — | — | — | — | (4,017 | ) | (162 | ) | (4,179 | ) | ||||||||||||||||||||||||||||||||
Other | — | — | — | — | — | — | — | — | — | — | 16 | 16 | ||||||||||||||||||||||||||||||||||||
31 March 2009 | 4,153 | 153,348 | (8,036 | ) | (83,820 | ) | 18,451 | (259 | ) | 2,148 | 180 | (3 | ) | 86,162 | (1,385 | ) | 84,777 | |||||||||||||||||||||||||||||||
Issue or reissue of shares | — | — | 189 | (119 | ) | �� | — | — | — | — | 70 | — | 70 | |||||||||||||||||||||||||||||||||||
Share-based payment | — | 161 | (2) | — | — | — | — | — | — | — | 161 | — | 161 | |||||||||||||||||||||||||||||||||||
Acquisition of subsidiaries | — | — | — | (133 | ) | — | — | — | — | — | (133 | ) | 1,636 | 1,503 | ||||||||||||||||||||||||||||||||||
Comprehensive income | — | — | — | 8,645 | (1,365 | ) | (104 | ) | 209 | 860 | 67 | 8,312 | 233 | 8,545 | ||||||||||||||||||||||||||||||||||
Profit/(loss) | — | — | — | 8,645 | — | — | — | — | — | 8,645 | (27 | ) | 8,618 | |||||||||||||||||||||||||||||||||||
OCI – before tax | — | — | — | — | (1,320 | ) | (149 | ) | 377 | 860 | 79 | (153 | ) | 260 | 107 | |||||||||||||||||||||||||||||||||
OCI – taxes | — | — | — | — | 39 | 45 | (171 | ) | — | (12 | ) | (99 | ) | — | (99 | ) | ||||||||||||||||||||||||||||||||
Transfer to the income statement | — | — | — | — | (84 | ) | — | 3 | — | — | (81 | ) | — | (81 | ) | |||||||||||||||||||||||||||||||||
Dividends | — | — | — | (4,131 | ) | — | — | — | — | — | (4,131 | ) | (56 | ) | (4,187 | ) | ||||||||||||||||||||||||||||||||
Other | — | — | 37 | (97 | ) | — | — | — | — | — | (60 | ) | 1 | (59 | ) | |||||||||||||||||||||||||||||||||
31 March 2010 | 4,153 | 153,509 | (7,810 | ) | (79,655 | ) | 17,086 | (363 | ) | 2,357 | 1,040 | 64 | 90,381 | 429 | 90,810 | |||||||||||||||||||||||||||||||||
Issue or reissue of shares | — | — | 232 | (125 | ) | — | — | — | — | — | 107 | — | 107 | |||||||||||||||||||||||||||||||||||
Redemption or cancellation of shares | (71 | ) | 71 | 1,532 | (1,532 | ) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Purchase of own shares | — | — | (2,125 | ) | — | — | — | — | — | — | (2,125 | ) | — | (2,125 | ) | |||||||||||||||||||||||||||||||||
Share-based payment | — | 180 | (2) | — | — | — | — | — | — | — | 180 | — | 180 | |||||||||||||||||||||||||||||||||||
Acquisition of subsidiaries | — | — | — | (120 | ) | — | — | — | — | — | (120 | ) | 35 | (85 | ) | |||||||||||||||||||||||||||||||||
Comprehensive income | — | — | — | 7,968 | (2,669 | ) | 136 | (1,882 | ) | — | 14 | 3,567 | (186 | ) | 3,381 | |||||||||||||||||||||||||||||||||
Profit/(loss) | — | — | — | 7,968 | — | — | — | — | — | 7,968 | (98 | ) | 7,870 | |||||||||||||||||||||||||||||||||||
OCI – before tax | — | — | — | — | (2,053 | ) | 190 | 347 | — | 14 | (1,502 | ) | (88 | ) | (1,590 | ) | ||||||||||||||||||||||||||||||||
OCI – taxes | — | — | — | — | 14 | (54 | ) | (37 | ) | — | — | (77 | ) | — | (77 | ) | ||||||||||||||||||||||||||||||||
Transfer to the income statement | — | — | — | — | (630 | ) | — | (2,192 | )(3) | — | — | (2,822 | ) | — | (2,822 | ) | ||||||||||||||||||||||||||||||||
Dividends | — | — | — | (4,468 | ) | — | — | — | — | — | (4,468 | ) | (328 | ) | (4,796 | ) | ||||||||||||||||||||||||||||||||
Other | — | — | — | 271 | — | — | (238 | ) | — | — | 33 | 56 | 89 | |||||||||||||||||||||||||||||||||||
31 March 2011 | 4,082 | 153,760 | (8,171 | ) | (77,661 | ) | 14,417 | (227 | ) | 237 | 1,040 | 78 | 87,555 | 6 | 87,561 | |||||||||||||||||||||||||||||||||
Notes: | ||
(1) | Includes share premium and the capital redemption reserve. | |
(2) | Includes a £24 million tax credit (2010: £11 million credit, 2009: £9 million charge). | |
(3) | Amount for 2011 includes a £208 million tax credit. |
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Vodafone Group Plc Annual Report 2011 83
2011 | 2010 | 2009 | ||||||||||||||
Note | £m | £m | £m | |||||||||||||
Net cash flow from operating activities | 26 | 11,995 | 13,064 | 12,213 | ||||||||||||
Cash flows from investing activities | ||||||||||||||||
Purchase of interests in subsidiaries and joint ventures, net of cash acquired | (402 | ) | (1,777 | ) | (1,389 | ) | ||||||||||
Purchase of intangible assets | (4,290 | ) | (2,134 | ) | (1,764 | ) | ||||||||||
Purchase of property, plant and equipment | (4,350 | ) | (4,841 | ) | (5,204 | ) | ||||||||||
Purchase of investments | (318 | ) | (522 | ) | (133 | ) | ||||||||||
Disposal of interests in subsidiaries, net of cash disposed | — | — | 4 | |||||||||||||
Disposal of interests in associates | — | — | 25 | |||||||||||||
Disposal of property, plant and equipment | 51 | 48 | 317 | |||||||||||||
Disposal of investments | 4,467 | 17 | 253 | |||||||||||||
Dividends received from associates | 1,424 | 1,436 | 647 | |||||||||||||
Dividends received from investments | 85 | 141 | 108 | |||||||||||||
Interest received | 1,659 | 195 | 302 | |||||||||||||
Taxation on investing activities | (208 | ) | — | — | ||||||||||||
Net cash flow from investing activities | (1,882 | ) | (7,437 | ) | (6,834 | ) | ||||||||||
Cash flows from financing activities | ||||||||||||||||
Issue of ordinary share capital and reissue of treasury shares | 107 | 70 | 22 | |||||||||||||
Net movement in short-term borrowings | (573 | ) | 227 | (25 | ) | |||||||||||
Proceeds from issue of long-term borrowings | 4,861 | 4,217 | 6,181 | |||||||||||||
Repayment of borrowings | (4,064 | ) | (5,184 | ) | (2,729 | ) | ||||||||||
Purchase of treasury shares | (2,087 | ) | — | (963 | ) | |||||||||||
B share capital redemption | — | — | (15 | ) | ||||||||||||
Equity dividends paid | (4,468 | ) | (4,139 | ) | (4,013 | ) | ||||||||||
Dividends paid to non-controlling shareholders in subsidiaries | (320 | ) | (56 | ) | (162 | ) | ||||||||||
Contributions from non-controlling shareholders in subsidiaries | — | 613 | — | |||||||||||||
Other transactions with non-controlling shareholders in subsidiaries | (137 | ) | — | 618 | ||||||||||||
Interest paid | (1,578 | ) | (1,601 | ) | (1,470 | ) | ||||||||||
Net cash flow from financing activities | (8,259 | ) | (5,853 | ) | (2,556 | ) | ||||||||||
Net cash flow | 1,854 | (226 | ) | 2,823 | ||||||||||||
Cash and cash equivalents at beginning of the financial year | 18 | 4,363 | 4,846 | 1,652 | ||||||||||||
Exchange (loss)/gain on cash and cash equivalents | (12 | ) | (257 | ) | 371 | |||||||||||
Cash and cash equivalents at end of the financial year | 18 | 6,205 | 4,363 | 4,846 | ||||||||||||
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84 Vodafone Group Plc Annual Report 2011
• | Amendments to IFRS 1, “Severe hyperinflation and removal of fixed dates for first-timer adopters”, effective for annual periods beginning on or after 1 July 2011. This standard has not yet been endorsed for use in the EU. | |
• | Amendments to IFRS 7, “Financial Instruments: Disclosure”, effective for annual periods beginning on or after 1 July 2011. This standard has not yet been endorsed for use in the EU. | |
• | “Improvements to IFRSs”, effective over a range of dates, with the earliest being for annual periods beginning on or after 1 January 2011. | |
• | Amendment to IFRS 1, “Limited Exemption from Comparative IFRS 7 disclosures for first time adopters”, effective for annual periods beginning on or after 1 July 2010. | |
• | Amendment to IAS 12, “Deferred tax: Recovery of Underlying Assets”, effective for annual periods beginning on or after 1 January 2012. This standard has not yet been endorsed for use in the EU. | |
• | Amendment to IAS 24, “Related Party Disclosures — State-controlled Entities and the Definition of a Related Party”, effective for annual periods beginning on or after 1 January 2011. | |
• | Amendment to IFRIC 14, “Prepayments on a Minimum Funding Requirement”, effective for annual periods beginning on or after 1 January 2011. | |
• | IFRIC 19, “Extinguishing Financial Liabilities with Equity Instruments”, effective annual periods beginning on or after 1 July 2010 with early adoption permitted. |
• | IFRS 10, ‘Consolidated Financial Statements’, which replaces parts of IAS 27, ‘Consolidated and Separate Financial Statements and all of SIC-12, ‘Consolidation – Special Purpose Entities’, builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The remainder of IAS 27, ‘Separate Financial Statements’, now contains accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates only when an entity prepares separate financial statements and is therefore not applicable in the Group’s consolidated financial statements. |
• | IFRS 11, ‘Joint Arrangements’, which replaces IAS 31, ‘Interests in Joint Ventures’ and SIC-13, ‘Jointly Controlled Entities — Non-monetary Contributions by Venturers’, requires a single method, known as the equity method, to account for interests in jointly controlled entities which is consistent with the accounting treatment currently applied to investments in associates. The proportionate consolidation method currently applied to the Group’s interests in joint ventures is prohibited. IAS 28, ‘Investments in Associates and Joint Ventures’, was amended as a consequence of the issuance of IFRS 11. In addition to prescribing the accounting for investment in associates, it now sets out the requirements for the application of the equity method when accounting for joint ventures. The application of the equity method has not changed as a result of this amendment. |
• | IFRS 12, ‘Disclosure of Interest in Other Entities’, is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The |
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Vodafone Group Plc Annual Report 2011 85
• | standard includes disclosure requirements for entities covered under IFRS 10 and lFRS 11. | |
• | IFRS 13, ‘Fair Value Measurement’, provides guidance on how fair value should be applied where its use is already required or permitted by other standards within IFRS, including a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. |
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86 Vodafone Group Plc Annual Report 2011
• | an asset is created that can be separately identified; | |
• | it is probable that the asset created will generate future economic benefits; and | |
• | the development cost of the asset can be measured reliably. |
• | Licence and spectrum fees | 3 – 25 years | ||
• | Computer software | 3 – 5 years | ||
• | Brands | 1 – 10 years | ||
• | Customer bases | 2 – 7 years |
• | Freehold buildings | 25 – 50 years | ||
• | Leasehold premises | the term of the lease |
• | Network infrastructure | 3 – 25 years | ||
• | Other | 3 – 10 years |
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Vodafone Group Plc Annual Report 2011 87
• | the Group receives an identifiable benefit in exchange for the cash incentive that is separable from sales transactions to that intermediary; and | |
• | the Group can reliably estimate the fair value of that benefit. |
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88 Vodafone Group Plc Annual Report 2011
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Vodafone Group Plc Annual Report 2011 89
• | hedges of the change of fair value of recognised assets and liabilities (‘fair value hedges’); or | |
• | hedges of net investments in foreign operations. |
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90 Vodafone Group Plc Annual Report 2011
Segment | Intra-region | Regional | Inter-region | Group | Adjusted | |||||||||||||||||||
revenue | revenue | revenue | revenue | revenue | EBITDA(1) | |||||||||||||||||||
£m | £m | £m | £m | £m | £m | |||||||||||||||||||
31 March 2011 | ||||||||||||||||||||||||
Germany | 7,900 | (51 | ) | 7,849 | (2 | ) | 7,847 | 2,952 | ||||||||||||||||
Italy | 5,722 | (31 | ) | 5,691 | (3 | ) | 5,688 | 2,643 | ||||||||||||||||
Spain | 5,133 | (62 | ) | 5,071 | (2 | ) | 5,069 | 1,562 | ||||||||||||||||
UK | 5,271 | (50 | ) | 5,221 | (7 | ) | 5,214 | 1,233 | ||||||||||||||||
Other Europe | 8,253 | (70 | ) | 8,183 | (3 | ) | 8,180 | 2,433 | ||||||||||||||||
Europe | 32,279 | (264 | ) | 32,015 | (17 | ) | 31,998 | 10,823 | ||||||||||||||||
India | 3,855 | (1 | ) | 3,854 | (11 | ) | 3,843 | 985 | ||||||||||||||||
Vodacom | 5,479 | — | 5,479 | (8 | ) | 5,471 | 1,844 | |||||||||||||||||
Other Africa, Middle East and Asia Pacific | 3,971 | — | 3,971 | (27 | ) | 3,944 | 1,170 | |||||||||||||||||
Africa, Middle East and Asia Pacific | 13,305 | (1 | ) | 13,304 | (46 | ) | 13,258 | 3,999 | ||||||||||||||||
Non-Controlled Interests and Common Functions | 659 | — | 659 | (31 | ) | 628 | (152 | ) | ||||||||||||||||
Group | 46,243 | (265 | ) | 45,978 | (94 | ) | 45,884 | 14,670 | ||||||||||||||||
Verizon Wireless | 18,711 | (2) | 7,313 | |||||||||||||||||||||
31 March 2010 | ||||||||||||||||||||||||
Germany | 8,008 | (41 | ) | 7,967 | (8 | ) | 7,959 | 3,122 | ||||||||||||||||
Italy | 6,027 | (40 | ) | 5,987 | (2 | ) | 5,985 | 2,843 | ||||||||||||||||
Spain | 5,713 | (81 | ) | 5,632 | (2 | ) | 5,630 | 1,956 | ||||||||||||||||
UK | 5,025 | (47 | ) | 4,978 | (10 | ) | 4,968 | 1,141 | ||||||||||||||||
Other Europe | 8,357 | (88 | ) | 8,269 | (5 | ) | 8,264 | 2,582 | ||||||||||||||||
Europe | 33,130 | (297 | ) | 32,833 | (27 | ) | 32,806 | 11,644 | ||||||||||||||||
India | 3,114 | (1 | ) | 3,113 | (20 | ) | 3,093 | 807 | ||||||||||||||||
Vodacom | 4,450 | — | 4,450 | (7 | ) | 4,443 | 1,528 | |||||||||||||||||
Other Africa, Middle East and Asia Pacific | 3,526 | — | 3,526 | (30 | ) | 3,496 | 977 | |||||||||||||||||
Africa, Middle East and Asia Pacific | 11,090 | (1 | ) | 11,089 | (57 | ) | 11,032 | 3,312 | ||||||||||||||||
Non-Controlled Interests and Common Functions | 667 | — | 667 | (33 | ) | 634 | (221 | ) | ||||||||||||||||
Group | 44,887 | (298 | ) | 44,589 | (117 | ) | 44,472 | 14,735 | ||||||||||||||||
Verizon Wireless | 17,222 | (2) | 6,689 | |||||||||||||||||||||
31 March 2009 | ||||||||||||||||||||||||
Germany | 7,847 | (59 | ) | 7,788 | (9 | ) | 7,779 | 3,225 | ||||||||||||||||
Italy | 5,547 | (39 | ) | 5,508 | (3 | ) | 5,505 | 2,565 | ||||||||||||||||
Spain | 5,812 | (95 | ) | 5,717 | (2 | ) | 5,715 | 2,034 | ||||||||||||||||
UK | 5,392 | (48 | ) | 5,344 | (8 | ) | 5,336 | 1,368 | ||||||||||||||||
Other Europe | 8,514 | (102 | ) | 8,412 | (3 | ) | 8,409 | 2,920 | ||||||||||||||||
Europe | 33,112 | (343 | ) | 32,769 | (25 | ) | 32,744 | 12,112 | ||||||||||||||||
India | 2,689 | (2 | ) | 2,687 | (18 | ) | 2,669 | 717 | ||||||||||||||||
Vodacom | 1,778 | — | 1,778 | — | 1,778 | 606 | ||||||||||||||||||
Other Africa, Middle East and Asia Pacific | 3,258 | — | 3,258 | (32 | ) | 3,226 | 1,072 | |||||||||||||||||
Africa, Middle East and Asia Pacific | 7,725 | (2 | ) | 7,723 | (50 | ) | 7,673 | 2,395 | ||||||||||||||||
Non-Controlled Interests and Common Functions | 614 | — | 614 | (14 | ) | 600 | (17 | ) | ||||||||||||||||
Group | 41,451 | (345 | ) | 41,106 | (89 | ) | 41,017 | 14,490 | ||||||||||||||||
Verizon Wireless | 14,085 | (2) | 5,543 |
Notes: | ||
(1) | The Group’s measure of segment profit, adjusted EBITDA, excludes the Group’s share of results in associates. The Group’s share of results in associates, by segment, for the year ended 31 March 2011 is Other Europe £nil (2010: £nil; 2009 £(3) million), Vodacom £nil (2010: £(2) million; 2009: £(1) million), Other Africa, Middle East and Asia Pacific £51 million (2010: £56 million; 2009: £31 million) and Non-Controlled Interests and Common Functions £5,008 million (2010: £4,688 million; 2009: £4,064 million). | |
(2) | Values shown for Verizon Wireless, which is an associate, are not included in the calculation of Group revenue or adjusted EBITDA. |
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Vodafone Group Plc Annual Report 2011 91
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Adjusted EBITDA | 14,670 | 14,735 | 14,490 | |||||||||
Depreciation, amortisation and loss on disposal of fixed assets | (7,967 | ) | (8,011 | ) | (6,824 | ) | ||||||
Share of results in associates | 5,059 | 4,742 | 4,091 | |||||||||
Impairment losses | (6,150 | ) | (2,100 | ) | (5,900 | ) | ||||||
Other income and expense | (16 | ) | 114 | — | ||||||||
Operating profit | 5,596 | 9,480 | 5,857 | |||||||||
Other | ||||||||||||||||||||
expenditure | ||||||||||||||||||||
on | Depreciation | Impairment | ||||||||||||||||||
Non-current | Capital | intangible | and | (reversal)/ | ||||||||||||||||
assets(1) | expenditure(2) | assets | amortisation | loss | ||||||||||||||||
£m | £m | £m | £m | £m | ||||||||||||||||
31 March 2011 | ||||||||||||||||||||
Germany | 20,764 | 824 | 1,214 | 1,361 | — | |||||||||||||||
Italy | 16,645 | 590 | 12 | 732 | 1,050 | |||||||||||||||
Spain | 9,596 | 517 | — | 641 | 2,950 | |||||||||||||||
UK | 6,665 | 516 | — | 874 | — | |||||||||||||||
Other Europe | 11,438 | 1,230 | 59 | 1,406 | 2,150 | |||||||||||||||
Europe | 65,108 | 3,677 | 1,285 | 5,014 | 6,150 | |||||||||||||||
India | 9,882 | 870 | 1,851 | 973 | — | |||||||||||||||
Vodacom | 7,382 | 572 | 19 | 1,013 | — | |||||||||||||||
Other Africa, Middle East and Asia Pacific | 4,797 | 754 | 2 | 793 | — | |||||||||||||||
Africa, Middle East and Asia Pacific | 22,061 | 2,196 | 1,872 | 2,779 | — | |||||||||||||||
Non-Controlled Interests and Common Functions | 1,570 | 346 | 9 | 83 | — | |||||||||||||||
Group | 88,739 | 6,219 | 3,166 | 7,876 | 6,150 | |||||||||||||||
31 March 2010 | ||||||||||||||||||||
Germany | 20,211 | 766 | 18 | 1,422 | — | |||||||||||||||
Italy | 17,941 | 610 | 60 | 732 | — | |||||||||||||||
Spain | 12,746 | 543 | — | 638 | — | |||||||||||||||
UK | 6,977 | 494 | — | 963 | — | |||||||||||||||
Other Europe | 13,883 | 1,282 | 228 | 1,467 | (200 | ) | ||||||||||||||
Europe | 71,758 | 3,695 | 306 | 5,222 | (200 | ) | ||||||||||||||
India | 8,665 | 853 | — | 848 | 2,300 | |||||||||||||||
Vodacom | 7,783 | 520 | — | 1,005 | — | |||||||||||||||
Other Africa, Middle East and Asia Pacific | 5,062 | 694 | — | 683 | — | |||||||||||||||
Africa, Middle East and Asia Pacific | 21,510 | 2,067 | — | 2,536 | 2,300 | |||||||||||||||
Non-Controlled Interests and Common Functions | 1,632 | 430 | 19 | 152 | — | |||||||||||||||
Group | 94,900 | 6,192 | 325 | 7,910 | 2,100 | |||||||||||||||
31 March 2009 | ||||||||||||||||||||
Germany | 750 | 16 | 1,378 | — | ||||||||||||||||
Italy | 521 | — | 735 | — | ||||||||||||||||
Spain | 632 | — | 606 | 3,400 | ||||||||||||||||
UK | 446 | — | 1,010 | — | ||||||||||||||||
Other Europe | 1,013 | 21 | 1,441 | 2,250 | ||||||||||||||||
Europe | 3,362 | 37 | 5,170 | 5,650 | ||||||||||||||||
India | 1,351 | — | 746 | — | ||||||||||||||||
Vodacom | 237 | — | 231 | — | ||||||||||||||||
Other Africa, Middle East and Asia Pacific | 581 | 1,101 | 527 | 250 | ||||||||||||||||
Africa, Middle East and Asia Pacific | 2,169 | 1,101 | 1,504 | 250 | ||||||||||||||||
Non-Controlled Interests and Common Functions | 378 | — | 140 | — | ||||||||||||||||
Group | 5,909 | 1,138 | 6,814 | 5,900 | ||||||||||||||||
Notes: | ||
(1) | Comprises goodwill, other intangible assets and property, plant and equipment. | |
(2) | Includes additions to property, plant and equipment and computer software, reported within intangible assets. |
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92 Vodafone Group Plc Annual Report 2011
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Net foreign exchange losses/(gains) | 14 | (29 | ) | 30 | ||||||||
Depreciation of property, plant and equipment (note 11): | ||||||||||||
Owned assets | 4,318 | 4,412 | 4,025 | |||||||||
Leased assets | 54 | 44 | 36 | |||||||||
Amortisation of intangible assets (note 9) | 3,504 | 3,454 | 2,753 | |||||||||
Impairment of goodwill (note 10) | 6,150 | 2,300 | 5,650 | |||||||||
(Reversal of impairment)/impairment of licence and spectrum (note 10) | — | (200 | ) | 250 | ||||||||
Research and development expenditure | 287 | 303 | 280 | |||||||||
Staff costs (note 31) | 3,642 | 3,770 | 3,227 | |||||||||
Operating lease rentals payable: | ||||||||||||
Plant and machinery | 127 | 71 | 68 | |||||||||
Other assets including fixed line rentals | 1,761 | 1,587 | 1,331 | |||||||||
Loss on disposal of property, plant and equipment | 91 | 101 | 10 | |||||||||
Own costs capitalised attributable to the construction or acquisition of property, plant and equipment | (331 | ) | (296 | ) | (273 | ) | ||||||
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Audit fees: | ||||||||||||
Parent company | 1 | 1 | 1 | |||||||||
Subsidiaries(1) | 7 | 7 | 5 | |||||||||
8 | 8 | 6 | ||||||||||
Fees for statutory and regulatory filings | 1 | 1 | 2 | |||||||||
Audit and audit-related fees | 9 | 9 | 8 | |||||||||
Other fees: | ||||||||||||
Taxation | 1 | 1 | 1 | |||||||||
Total fees | 10 | 10 | 9 | |||||||||
Note: | ||
(1) | The increase in the year ended 31 March 2010 primarily arose from the consolidation of Vodacom Group Limited as a subsidiary from 18 May 2009. |
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Vodafone Group Plc Annual Report 2011 93
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Investment income: | ||||||||||||
Available-for-sale investments: | ||||||||||||
Dividends received | 83 | 145 | 110 | |||||||||
Loans and receivables at amortised cost | 339 | 423 | 339 | |||||||||
Gain on settlement of loans and receivables(1) | 472 | — | — | |||||||||
Fair value through the income statement (held for trading): | ||||||||||||
Derivatives — foreign exchange contracts | 38 | 3 | 71 | |||||||||
Other(2) | 263 | 92 | 275 | |||||||||
Equity put rights and similar arrangements(3) | 114 | 53 | — | |||||||||
1,309 | 716 | 795 | ||||||||||
Financing costs: | ||||||||||||
Items in hedge relationships: | ||||||||||||
Other loans | 746 | 888 | 782 | |||||||||
Interest rate swaps | (338 | ) | (464 | ) | (180 | ) | ||||||
Dividends on redeemable preference shares | 58 | 56 | 53 | |||||||||
Fair value hedging instrument | (47 | ) | 228 | (1,458 | ) | |||||||
Fair value of hedged item | 40 | (183 | ) | 1,475 | ||||||||
Cash flow hedges transferred from equity | 17 | 82 | — | |||||||||
Other financial liabilities held at amortised cost: | ||||||||||||
Bank loans and overdrafts(4) | 629 | 591 | 452 | |||||||||
Other loans(5) | 121 | 185 | 440 | |||||||||
Potential interest on settlement of tax issues(6) | (826 | ) | (178 | ) | (81 | ) | ||||||
Equity put rights and similar arrangements(3) | 19 | 94 | 627 | |||||||||
Finance leases | 9 | 7 | 1 | |||||||||
Fair value through the income statement (held for trading): | ||||||||||||
Derivatives — forward starting swaps and futures | 1 | 206 | 308 | |||||||||
429 | 1,512 | 2,419 | ||||||||||
Net (investment income)/financing costs | (880 | ) | 796 | 1,624 | ||||||||
Notes: | ||
(1) | Gain on settlement of loans and receivables issued by SoftBank Mobile Corp. | |
(2) | Amounts include foreign exchange gains on investments held following the disposal of Vodafone Japan to SoftBank Corp. and for 2011, foreign exchange gains on net investment in foreign operations. | |
(3) | Includes amounts in relation to the Group’s arrangements with its minority partners in India. | |
(4) | The Group capitalised £138 million of interest expense in the year (2010:£1 million; 2009:£nil). The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation was 9.8%. | |
(5) | Amount for 2010 includes £48 million (2009: £94 million) of foreign exchange losses arising from net investments in foreign operations. | |
(6) | Amounts for 2011, 2010 and 2009 include a reduction of the provision for potential interest on tax issues. |
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94 Vodafone Group Plc Annual Report 2011
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
United Kingdom corporation tax expense/(income): | ||||||||||||
Current year | 141 | 40 | (132 | ) | ||||||||
Adjustments in respect of prior years | (5 | ) | (4 | ) | (318 | ) | ||||||
136 | 36 | (450 | ) | |||||||||
Overseas current tax expense/(income): | ||||||||||||
Current year | 2,152 | 2,377 | 2,111 | |||||||||
Adjustments in respect of prior years | (477 | ) | (1,718 | ) | (934 | ) | ||||||
1,675 | 659 | 1,177 | ||||||||||
Total current tax expense | 1,811 | 695 | 727 | |||||||||
Deferred tax on origination and reversal of temporary differences: | ||||||||||||
United Kingdom deferred tax | (275 | ) | (166 | ) | 20 | |||||||
Overseas deferred tax | 92 | (473 | ) | 362 | ||||||||
Total deferred tax (income)/expense | (183 | ) | (639 | ) | 382 | |||||||
Total income tax expense | 1,628 | 56 | 1,109 | |||||||||
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Current tax (credit)/charge | (14 | ) | (38 | ) | 133 | |||||||
Deferred tax (credit)/charge | (117 | ) | 137 | (72 | ) | |||||||
Total tax (credited)/charged directly to other comprehensive income | (131 | ) | 99 | 61 | ||||||||
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Current tax (credit)/charge | (5 | ) | (1 | ) | 1 | |||||||
Deferred tax (credit)/charge | (19 | ) | (10 | ) | 8 | |||||||
Total tax (credited)/charged directly to equity | (24 | ) | (11 | ) | 9 | |||||||
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Profit before tax as shown in the consolidated income statement | 9,498 | 8,674 | 4,189 | |||||||||
Expected income tax expense on profit at UK statutory tax rate | 2,659 | 2,429 | 1,173 | |||||||||
Effect of taxation of associates, reported within operating profit | 145 | 160 | 118 | |||||||||
Impairment losses with no tax effect | 1,722 | 588 | 1,652 | |||||||||
Impact of agreement of German write down losses(1) | — | (2,103 | ) | — | ||||||||
Expected income tax expense at UK statutory rate on profit from continuing operations, before impairment losses and taxation of associates | 4,526 | 1,074 | 2,943 | |||||||||
Effect of different statutory tax rates of overseas jurisdictions(2) | (141 | ) | 516 | 382 | ||||||||
Effect of current year changes in statutory tax rates | (29 | ) | 35 | (31 | ) | |||||||
Deferred tax on overseas earnings | 143 | 5 | (26 | ) | ||||||||
Assets revalued for tax purposes | 121 | — | (155 | ) | ||||||||
Effect of previously unrecognised temporary differences including losses(3) | (2,122 | ) | (1,040 | ) | (881 | ) | ||||||
Adjustments in respect of prior years(1) | (1,028 | ) | (387 | ) | (1,124 | ) | ||||||
Expenses not deductible for tax purposes and other items | 677 | 425 | 423 | |||||||||
Exclude taxation of associates | (519 | ) | (572 | ) | (422 | ) | ||||||
Income tax expense | 1,628 | 56 | 1,109 | |||||||||
Notes: | ||
(1) | See “Taxation” on page 40. | |
(2) | 2011 includes the impact of the disposal of China Mobile Limited. | |
(3) | See note below regarding deferred tax asset recognition in Luxembourg. |
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Vodafone Group Plc Annual Report 2011 95
£m | ||||
1 April 2010 | (6,344 | ) | ||
Exchange movements | 305 | |||
Credited to the income statement | 183 | |||
Credited directly to OCI | 117 | |||
Credited directly to equity | 19 | |||
Reclassification to current tax(1) | 1,249 | |||
Arising on acquisition | 3 | |||
31 March 2011 | (4,468 | ) | ||
Note: | ||
(1) | See note below regarding CFC settlement. |
Amount | Net | |||||||||||||||||||
credited/ | recognised | |||||||||||||||||||
(charged) | Gross | Gross | Less | deferred tax | ||||||||||||||||
in income | deferred | deferred tax | amounts | asset/ | ||||||||||||||||
statement | tax asset | liability | unrecognised | (liability) | ||||||||||||||||
£m | £m | £m | £m | £m | ||||||||||||||||
Accelerated tax depreciation | (1,374 | ) | 253 | (3,682 | ) | — | (3,429 | ) | ||||||||||||
Tax losses | 1,198 | 27,882 | — | (25,784 | ) | 2,098 | ||||||||||||||
Deferred tax on overseas earnings | 764 | — | (1,775 | ) | — | (1,775 | ) | |||||||||||||
Other short-term temporary differences | (405 | ) | 4,890 | (2,844 | ) | (3,408 | ) | (1,362 | ) | |||||||||||
31 March 2011 | 183 | 33,025 | (8,301 | ) | (29,192 | ) | (4,468 | ) | ||||||||||||
£m | ||||
Deferred tax asset | 2,018 | |||
Deferred tax liability | (6,486 | ) | ||
31 March 2011 | (4,468 | ) | ||
Amount | Net | |||||||||||||||||||
credited/ | recognised | |||||||||||||||||||
(charged) | Gross | Gross | Less | deferred tax | ||||||||||||||||
in income | deferred | deferred tax | amounts | asset/ | ||||||||||||||||
statement | tax asset | liability | unrecognised | (liability) | ||||||||||||||||
£m | £m | £m | £m | £m | ||||||||||||||||
Accelerated tax depreciation | (577 | ) | 627 | (2,881 | ) | (1 | ) | (2,255 | ) | |||||||||||
Tax losses | 493 | 27,816 | — | (27,185 | ) | 631 | ||||||||||||||
Deferred tax on overseas earnings | (22 | ) | — | (4,086 | ) | — | (4,086 | ) | ||||||||||||
Other short-term temporary differences | 745 | 4,796 | (3,135 | ) | (2,295 | ) | (634 | ) | ||||||||||||
31 March 2010 | 639 | 33,239 | (10,102 | ) | (29,481 | ) | (6,344 | ) | ||||||||||||
£m | ||||
Deferred tax asset | 1,033 | |||
Deferred tax liability | (7,377 | ) | ||
31 March 2010 | (6,344 | ) | ||
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96 Vodafone Group Plc Annual Report 2011
Expiring | Expiring | |||||||||||||||
within | within | |||||||||||||||
5 years | 6-10 years | Unlimited | Total | |||||||||||||
£m | £m | £m | £m | |||||||||||||
Losses for which a deferred tax asset is recognised | 1 | — | 8,081 | 8,082 | ||||||||||||
Losses for which no deferred tax is recognised | 2,197 | 559 | 94,851 | 97,607 | ||||||||||||
2,198 | 559 | 102,932 | 105,689 | |||||||||||||
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Declared during the financial year: | ||||||||||||
Final dividend for the year ended 31 March 2010: 5.65 pence per share (2009: 5.20 pence per share, 2008: 5.02 pence per share) | 2,976 | 2,731 | 2,667 | |||||||||
Interim dividend for the year ended 31 March 2011: 2.85 pence per share (2010: | ||||||||||||
2.66 pence per share, 2009: 2.57 pence per share) | 1,492 | 1,400 | 1,350 | |||||||||
4,468 | 4,131 | 4,017 | ||||||||||
Proposed after the end of reporting period and not recognised as a liability: | ||||||||||||
Final dividend for the year ended 31 March 2011:6.05 pence per share (2010: 5.65 pence per share, 2009: 5.20 pence per share) | 3,106 | 2,976 | 2,731 | |||||||||
2011 | 2010 | 2009 | ||||||||||
Millions | Millions | Millions | ||||||||||
Weighted average number of shares for basic earnings per share | 52,408 | 52,595 | 52,737 | |||||||||
Effect of dilutive potential shares: restricted shares and share options | 340 | 254 | 232 | |||||||||
Weighted average number of shares for diluted earnings per share | 52,748 | 52,849 | 52,969 | |||||||||
£m | £m | £m | ||||||||||
Earnings for basic and diluted earnings per share | 7,968 | 8,645 | 3,078 | |||||||||
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Vodafone Group Plc Annual Report 2011 97
Licences and | Computer | |||||||||||||||||||
Goodwill | spectrum | software | Other | Total | ||||||||||||||||
£m | £m | £m | £m | £m | ||||||||||||||||
Cost: | ||||||||||||||||||||
1 April 2009 | 106,664 | 26,138 | 7,359 | 1,471 | 141,632 | |||||||||||||||
Exchange movements | (2,751 | ) | 62 | (72 | ) | 326 | (2,435 | ) | ||||||||||||
Arising on acquisition | 1,185 | 1,454 | 153 | 1,604 | 4,396 | |||||||||||||||
Change in consolidation status | (102 | ) | (413 | ) | (281 | ) | (175 | ) | (971 | ) | ||||||||||
Additions | — | 306 | 1,199 | 19 | 1,524 | |||||||||||||||
Disposals | — | — | (114 | ) | — | (114 | ) | |||||||||||||
31 March 2010 | 104,996 | 27,547 | 8,244 | 3,245 | 144,032 | |||||||||||||||
Exchange movements | (1,120 | ) | (545 | ) | (16 | ) | 8 | (1,673 | ) | |||||||||||
Arising on acquisition | 24 | — | 17 | — | 41 | |||||||||||||||
Additions | — | 3,157 | 1,493 | 9 | 4,659 | |||||||||||||||
Disposals | — | — | (424 | ) | (1 | ) | (425 | ) | ||||||||||||
Other | — | — | 635 | 8 | 643 | |||||||||||||||
31 March 2011 | 103,900 | 30,159 | 9,949 | 3,269 | 147,277 | |||||||||||||||
Accumulated impairment losses and amortisation: | ||||||||||||||||||||
1 April 2009 | 52,706 | 7,552 | 5,223 | 1,213 | 66,694 | |||||||||||||||
Exchange movements | (1,848 | ) | (29 | ) | (104 | ) | 64 | (1,917 | ) | |||||||||||
Amortisation charge for the year | — | 1,730 | 1,046 | 678 | 3,454 | |||||||||||||||
Change in consolidation status | — | (135 | ) | (154 | ) | (181 | ) | (470 | ) | |||||||||||
Impairment losses | 2,300 | (200 | ) | — | — | 2,100 | ||||||||||||||
Disposals | — | — | (87 | ) | — | (87 | ) | |||||||||||||
31 March 2010 | 53,158 | 8,918 | 5,924 | 1,774 | 69,774 | |||||||||||||||
Exchange movements | (644 | ) | (104 | ) | (14 | ) | (6 | ) | (768 | ) | ||||||||||
Amortisation charge for the year | — | 1,809 | 1,166 | 529 | 3,504 | |||||||||||||||
Impairment losses | 6,150 | — | — | — | 6,150 | |||||||||||||||
Disposals | — | — | (426 | ) | — | (426 | ) | |||||||||||||
Other | — | — | 485 | — | 485 | |||||||||||||||
31 March 2011 | 58,664 | 10,623 | 7,135 | 2,297 | 78,719 | |||||||||||||||
Net book value: | ||||||||||||||||||||
31 March 2010 | 51,838 | 18,629 | 2,320 | 1,471 | 74,258 | |||||||||||||||
31 March 2011 | 45,236 | 19,536 | 2,814 | 972 | 68,558 | |||||||||||||||
2011 | 2010 | |||||||||||
Expiry date | £m | £m | ||||||||||
Germany | December 2020/2025 | 5,540 | 4,802 | |||||||||
UK | December 2021 | 3,581 | 3,914 | |||||||||
India | September 2030 | 1,746 | — | |||||||||
Qatar | June 2028 | 1,187 | 1,328 | |||||||||
Italy | December 2021 | 1,002 | 1,097 | |||||||||
£m | ||||
Cash consideration paid: | ||||
Vodacom Group Limited | 1,577 | |||
Other acquisitions completed during the year | 26 | |||
Acquisitions of non-controlling interests | 150 | |||
Acquisitions completed in previous years | (20 | ) | ||
1,733 | ||||
Net overdrafts acquired | 44 | |||
1,777 | ||||
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98 Vodafone Group Plc Annual Report 2011
Fair value | ||||||||||||
Bookvalue | Adjustments | Fairvalue | ||||||||||
£m | £m | £m | ||||||||||
Net assets acquired: | ||||||||||||
Identifiable intangible assets(1) | 271 | 2,931 | 3,202 | |||||||||
Property, plant and equipment | 1,603 | — | 1,603 | |||||||||
Other investments | 25 | — | 25 | |||||||||
Inventory | 56 | — | 56 | |||||||||
Trade and other receivables | 870 | — | 870 | |||||||||
Cash and cash equivalents | 58 | — | 58 | |||||||||
Current and deferred taxation liabilities | (140 | ) | (834 | ) | (974 | ) | ||||||
Short and long-term borrowings | (1,312 | ) | — | (1,312 | ) | |||||||
Trade and other payables | (897 | ) | 8 | (889 | ) | |||||||
Net identifiable assets acquired | 534 | 2,105 | 2,639 | |||||||||
Goodwill(2) | 1,193 | |||||||||||
Total asset acquired | 3,832 | |||||||||||
Non-controlling interests | (973 | ) | ||||||||||
Revaluation gain | (860 | ) | ||||||||||
Value of investment held prior to acquisition | (422 | ) | ||||||||||
Total consideration(3) | 1,577 | |||||||||||
Notes: | ||
(1) | Identifiable intangible assets of £3,202 million consist of licences and spectrum fees of £1,454 million and other intangible assets of £1,748 million. | |
(2) | The goodwill is attributable to the expected profitability of the acquired business and the synergies expected to arise after the Group’s acquisition of Vodacom. | |
(3) | Includes £5 million of directly attributable costs. |
2011(1) | 2010 | 2009 | ||||||||||||
Cash generating unit | Reportable segment | £m | £m | £m | ||||||||||
Italy | Italy | 1,050 | — | — | ||||||||||
Spain | Spain | 2,950 | — | 3,400 | ||||||||||
Greece | Other Europe(2) | 800 | — | — | ||||||||||
Ireland | Other Europe(2) | 1,000 | — | — | ||||||||||
Portugal | Other Europe(2) | 350 | — | — | ||||||||||
Turkey | Other Europe | — | (200 | ) | 2,250 | |||||||||
India | India | — | 2,300 | — | ||||||||||
Ghana | Other Africa, Middle East and Asia Pacific | — | — | 250 | ||||||||||
6,150 | 2,100 | 5,900 | ||||||||||||
Notes: | ||
(1) | Impairment charges for the year ended 31 March 2011 relate solely to goodwill. | |
(2) | Total impairment losses in the Other Europe segment were £2,150 million in the year ended 31 March 2011. |
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Vodafone Group Plc Annual Report 2011 99
Pre-tax adjusted | ||||
discount rate | ||||
Italy | 11.9 | % | ||
Spain | 11.5 | % | ||
Greece | 14.0 | % | ||
Ireland | 14.5 | % | ||
Portugal | 14.0 | % | ||
Pre-tax adjusted | ||||
discount rate | ||||
India | 13.8 | % | ||
Turkey | 17.6 | % | ||
Pre-tax adjusted | ||||
discount rate | ||||
Spain | 10.3 | % | ||
Turkey | 19.5 | % | ||
Ghana | 26.9 | % | ||
2011 | 2010 | |||||||
£m | £m | |||||||
Germany | 12,200 | 12,301 | ||||||
Italy | 13,615 | 14,786 | ||||||
Spain | 7,133 | 10,167 | ||||||
32,948 | 37,254 | |||||||
Other | 12,288 | 14,584 | ||||||
45,236 | 51,838 | |||||||
Table of Contents
The key assumptions used in determining the value in use are:
Assumption | How determined | |
Budgeted adjusted EBITDA | Budgeted adjusted EBITDA has been based on past experience adjusted for the following: | |
• voice and messaging revenue is expected to benefit from increased usage from new customers, the introduction of new services and traffic moving from fixed networks to mobile networks, though these factors will be offset by increased competitor activity, which may result in price declines, and the trend of falling termination rates; | ||
• non-messaging data revenue is expected to continue to grow strongly as the penetration of 3G enabled devices and smartphones rises and new products and services are introduced; and | ||
• margins are expected to be impacted by negative factors such as an increase in the cost of acquiring and retaining customers in increasingly competitive markets and the expectation of further termination rate cuts by regulators and by positive factors such as the efficiencies expected from the implementation of Group initiatives. | ||
Budgeted capital expenditure | The cash flow forecasts for capital expenditure are based on past experience and include the ongoing capital expenditure required to roll out networks in emerging markets, to provide enhanced voice and data products and services and to meet the population coverage requirements of certain of the Group’s licences. Capital expenditure includes cash outflows for the purchase of property, plant and equipment and computer software. | |
Long-term growth rate | For businesses where the five year management plans are used for the Group’s value in use calculations, a long-term growth rate into perpetuity has been determined as the lower of: | |
• the nominal GDP rates for the country of operation; and | ||
• the long-term compound annual growth rate in adjusted EBITDA in years six to ten estimated by management. | ||
For businesses where the plan data is extended for an additional five years for the Group’s value in use calculations,a long-term growth rate into perpetuity has been determined as the lower of: | ||
• the nominal GDP rates for the country of operation; and | ||
• the compound annual growth rate in adjusted EBITDA in years nine to ten of the management plan. | ||
Pre-tax risk adjusted discount rate | The discount rate applied to the cash flows of each of the Group’s operations is generally based on the risk free rate for ten year bonds issued by the government in the respective market. Where government bond rates contain a material component of credit risk, high quality local corporate bond rates may be used. | |
These rates are adjusted for a risk premium to reflect both the increased risk of investing in equities and the systematic risk of the specific Group operating company. In making this adjustment, inputs required are the equity market risk premium (that is the required increased return required over and above a risk free rate by an investor who is investing in the market as a whole) and the risk adjustment, beta, applied to reflect the risk of the specific Group operating company relative to the market as a whole. | ||
In determining the risk adjusted discount rate, management has applied an adjustment for the systematic risk to each of the Group’s operations determined using an average of the betas of comparable listed mobile telecommunications companies and, where available and appropriate, across a specific territory. Management has used a forward-looking equity market risk premium that takes into consideration both studies by independent economists, the average equity market risk premium over the past ten years and the market risk premiums typically used by investment banks in evaluating acquisition proposals. | ||
Table of Contents
Assumptions used in value in use calculation | ||||||||||||||||||||||||||||||||
Italy | Spain | Greece | Ireland | Portugal | Turkey | India | Ghana | |||||||||||||||||||||||||
% | % | % | % | % | % | % | % | |||||||||||||||||||||||||
Pre-tax adjusted discount rate | 11.9 | 11.5 | 14.0 | 14.5 | 14.0 | 14.1 | 14.2 | 20.8 | ||||||||||||||||||||||||
Long-term growth rate | 0.8 | 1.6 | 2.0 | 2.0 | 1.5 | 6.1 | 6.3 | 6.3 | ||||||||||||||||||||||||
Budgeted adjusted EBITDA(1) | (1.0 | ) | — | 1.2 | 2.4 | (1.2 | ) | 16.8 | 16.5 | 41.4 | ||||||||||||||||||||||
Budgeted capital expenditure(2) | 9.6 - 11.3 | 7.8 - 10.6 | 10.7 - 12.3 | 9.4 - 11.6 | 12.4 - 14.1 | 10.0 - 16.6 | 12.9 - 22.7 | 7.3 - 41.3 | ||||||||||||||||||||||||
(1) | Budgeted adjusted EBITDA is expressed as the compound annual growth rates in the initial ten years for Turkey and Ghana and the initial five years for all other cash generating units of the plans used for impairment testing. | |
(2) | Budgeted capital expenditure is expressed as the range of capital expenditure as a percentage of revenue in the initial ten years for Turkey and Ghana and the initial five years for all other cash generating units of the plans used for impairment testing. |
Change required for the carrying value | ||||||||||||
to equal the recoverable amount(1) | ||||||||||||
Turkey | India | Ghana | ||||||||||
pps | pps | pps | ||||||||||
Pre-tax adjusted discount rate | 5.6 | 1.1 | 6.9 | |||||||||
Long-term growth rate | (19.6 | ) | (1.0 | ) | n/a | |||||||
Budgeted adjusted EBITDA(2) | (4.7 | ) | (2.2 | ) | (8.7 | ) | ||||||
Budgeted capital expenditure(3) | 7.0 | 2.5 | 8.9 | |||||||||
(1) | The recoverable amount for Greece, which was impaired at 30 September 2010, equals the carrying value at 31 March 2011. | |
(2) | Budgeted adjusted EBITDA is expressed as the compound annual growth rates in the initial ten years for Turkey and Ghana and the initial five years for all other cash generating units of the plans used for impairment testing. | |
(3) | Budgeted capital expenditure is expressed as the range of capital expenditure as a percentage of revenue in the initial ten years for Turkey and Ghana and the initial five years for all other cash generating units of the plans used for impairment testing. |
Italy | Spain | Greece | Ireland | Portugal | All other | |||||||||||||||||||||||||||||||||||||||||||
Increase | Decrease | Increase | Decrease | Increase | Decrease | Increase | Decrease | Increase | Decrease | Increase | Decrease | |||||||||||||||||||||||||||||||||||||
by 2 pps | by 2 pps | by 2 pps | by 2 pps | by 2 pps | by 2 pps | by 2 pps | by 2 pps | by 2 pps | by 2 pps | by 2 pps | by 2 pps | |||||||||||||||||||||||||||||||||||||
£bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | £bn | |||||||||||||||||||||||||||||||||||||
Pre-tax adjusted discount rate | (2.4 | ) | 1.0 | (1.5 | ) | 2.2 | (0.2 | ) | — | (0.2 | ) | 0.3 | (0.3 | ) | 0.4 | (0.7 | ) | — | ||||||||||||||||||||||||||||||
Long-term growth rate | 1.0 | (2.4 | ) | 2.2 | (1.3 | ) | — | (0.1 | ) | 0.2 | (0.1 | ) | 0.4 | (0.3 | ) | — | (0.7 | ) | ||||||||||||||||||||||||||||||
Budgeted adjusted EBITDA(1) | 1.0 | (2.0 | ) | 1.4 | (1.3 | ) | — | (0.2 | ) | 0.2 | (0.2 | ) | 0.3 | (0.3 | ) | — | — | |||||||||||||||||||||||||||||||
Budgeted capital expenditure(2) | (1.1 | ) | 1.0 | (1.0 | ) | 1.0 | (0.1 | ) | — | (0.1 | ) | 0.3 | (0.2 | ) | 0.2 | — | — | |||||||||||||||||||||||||||||||
(1) | Budgeted adjusted EBITDA is expressed as the compound annual growth rates in the initial ten years for Turkey and Ghana and the initial five years for all other cash generating units of the plans used for impairment testing. | |
(2) | Budgeted capital expenditure is expressed as the range of capital expenditure as a percentage of revenue in the initial ten years for Turkey and Ghana and the initial five years for all other cash generating units of the plans used for impairment testing. |
Assumptions used in value in use calculation | ||||||||||||||||||||||||||||||||||||||||||||
India | Turkey | Germany | Ghana | Greece | Ireland | Italy | Portugal | Romania | Spain | UK | ||||||||||||||||||||||||||||||||||
% | % | % | % | % | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||||
Pre-tax adjusted discount rate | 13.8 | 17.6 | 8.9 | 24.4 | 12.1 | 9.8 | 11.5 | 10.6 | 11.5 | 10.2 | 9.6 | |||||||||||||||||||||||||||||||||
Long-term growth rate | 6.3 | 7.7 | 1.0 | 5.2 | 1.0 | 1.0 | — | 0.5 | 2.1 | 1.5 | 1.5 | |||||||||||||||||||||||||||||||||
Budgeted adjusted EBITDA(1) | 17.5 | 34.4 | n/a | 20.2 | 3.9 | 0.8 | (0.1 | ) | n/a | (2.5 | ) | (0.7 | ) | 4.9 | ||||||||||||||||||||||||||||||
Budgeted capital expenditure(2) | 13.4 - 30.3 | 8.3 - 32.5 | n/a | 8.4 - 39.6 | 11.1 - 13.6 | 7.4 - 9.6 | 8.2 - 11.4 | n/a | 12.0 - 19.0 | 9.1 - 10.9 | 9.3 - 11.2 | |||||||||||||||||||||||||||||||||
(1) | Budgeted adjusted EBITDA is expressed as the compound annual growth rates in the initial ten years for Turkey and Ghana and the initial five years for all other cash generating units of the plans used for impairment testing. | |
(2) | Budgeted capital expenditure is expressed as the range of capital expenditure as a percentage of revenue in the initial ten years for Turkey and Ghana and the initial five years for all other cash generating units of the plans used for impairment testing. |
Table of Contents
Change required for carrying value to equal the recoverable amount | ||||||||||||||||||||||||||||||||||||||||
Turkey | Germany | Ghana | Greece | Ireland | Italy | Portugal | Romania | Spain | UK | |||||||||||||||||||||||||||||||
pps | pps | pps | pps | pps | pps | pps | pps | pps | pps | |||||||||||||||||||||||||||||||
Pre-tax adjusted discount rate | 0.5 | 1.8 | 1.0 | 0.7 | 1.0 | 0.8 | 4.5 | 2.0 | 0.6 | 1.3 | ||||||||||||||||||||||||||||||
Long-term growth rate | (1.1 | ) | (1.9 | ) | (5.1 | ) | (0.9 | ) | (1.2 | ) | (0.8 | ) | (5.6 | ) | (2.6 | ) | (0.6 | ) | (1.6 | ) | ||||||||||||||||||||
Budgeted adjusted EBITDA(1) | (2.0 | ) | n/a | (2.8 | ) | (3.7 | ) | (8.7 | ) | (5.0 | ) | n/a | (14.1 | ) | (4.5 | ) | (7.8 | ) | ||||||||||||||||||||||
Budgeted capital expenditure(2) | 1.5 | n/a | 2.5 | 2.8 | 7.0 | 5.1 | n/a | 13.8 | 3.5 | 5.8 | ||||||||||||||||||||||||||||||
(1) | Budgeted adjusted EBITDA is expressed as the compound annual growth rates in the initial ten years for Turkey and Ghana and the initial five years for all other cash generating units of the plans used for impairment testing. | |
(2) | Budgeted capital expenditure is expressed as the range of capital expenditure as a percentage of revenue in the initial ten years for Turkey and Ghana and the initial five years for all other cash generating units of the plans used for impairment testing. |
Equipment, | ||||||||||||
Land and | fixtures | |||||||||||
buildings | and fittings | Total | ||||||||||
£m | £m | £m | ||||||||||
Cost: | ||||||||||||
1 April 2009 | 1,421 | 43,943 | 45,364 | |||||||||
Exchange movements | (6 | ) | 8 | 2 | ||||||||
Arising on acquisition | 157 | 1,457 | 1,614 | |||||||||
Additions | 115 | 4,878 | 4,993 | |||||||||
Disposals | (27 | ) | (1,109 | ) | (1,136 | ) | ||||||
Change in consolidation status | (107 | ) | (2,274 | ) | (2,381 | ) | ||||||
Other | 24 | (58 | ) | (34 | ) | |||||||
31 March 2010 | 1,577 | 46,845 | 48,422 | |||||||||
Exchange movements | (16 | ) | (678 | ) | (694 | ) | ||||||
Additions | 122 | 4,604 | 4,726 | |||||||||
Disposals | (21 | ) | (3,001 | ) | (3,022 | ) | ||||||
Other | 69 | (732 | ) | (663 | ) | |||||||
31 March 2011 | 1,731 | 47,038 | 48,769 | |||||||||
Accumulated depreciation and impairment: | ||||||||||||
1 April 2009 | 583 | 25,531 | 26,114 | |||||||||
Exchange movements | (12 | ) | (260 | ) | (272 | ) | ||||||
Charge for the year | 102 | 4,354 | 4,456 | |||||||||
Disposals | (10 | ) | (995 | ) | (1,005 | ) | ||||||
Change in consolidation status | (28 | ) | (1,461 | ) | (1,489 | ) | ||||||
Other | (2 | ) | (22 | ) | (24 | ) | ||||||
31 March 2010 | 633 | 27,147 | 27,780 | |||||||||
Exchange movements | (4 | ) | (114 | ) | (118 | ) | ||||||
Charge for the year | 99 | 4,273 | 4,372 | |||||||||
Disposals | (19 | ) | (2,942 | ) | (2,961 | ) | ||||||
Other | — | (485 | ) | (485 | ) | |||||||
31 March 2011 | 709 | 27,879 | 28,588 | |||||||||
Net book value: | ||||||||||||
31 March 2010 | 944 | 19,698 | 20,642 | |||||||||
31 March 2011 | 1,022 | 19,159 | 20,181 | |||||||||
Table of Contents
Country of incorporation | Percentage(2) | |||||||||||
Name | Principal activity | or registration | shareholdings | |||||||||
Vodacom Business Africa Group (PTY) Limited(3)(4) | Holding company | South Africa | 66.0 | |||||||||
Ghana Telecommunications Company Limited | Network operator | Ghana | 70.0 | |||||||||
VM, SA(4)(5) | Network operator | Mozambique | 56.1 | |||||||||
Vodacom Congo (RDC) s.p.r.l.(4) | Network operator | The Democratic Republic of Congo | 33.7 | |||||||||
Vodacom Group Limited(6) | Network operator | South Africa | 66.0 | |||||||||
Vodacom Lesotho (Pty) Limited(4) | Network operator | Lesotho | 52.8 | |||||||||
Vodacom Tanzania Limited(4) | Network operator | Tanzania | 42.9 | |||||||||
Vodafone Albania Sh.A. | Network operator | Albania | 99.9 | |||||||||
Vodafone Americas Inc.(7) | Holding company | US | 100.0 | |||||||||
Vodafone Czech Republic a.s. | Network operator | Czech Republic | 100.0 | |||||||||
Vodafone D2 GmbH | Network operator | Germany | 100.0 | |||||||||
Vodafone Egypt Telecommunications S.A.E. | Network operator | Egypt | 54.9 | |||||||||
Vodafone España S.A.U. | Network operator | Spain | 100.0 | |||||||||
Vodafone Essar Limited(8) | Network operator | India | 59.9 | |||||||||
Vodafone Europe B.V. | Holding company | Netherlands | 100.0 | |||||||||
Vodafone Group Services Limited(9) | Global products and services provider | England | 100.0 | |||||||||
Vodafone Holding GmbH | Holding company | Germany | 100.0 | |||||||||
Vodafone Holdings Europe S.L.U. | Holding company | Spain | 100.0 | |||||||||
Vodafone Magyarorszag Mobile Tavkozlesi Zartkoruen Mukodo Reszvenytarsasag(10) | Network operator | Hungary | 100.0 | |||||||||
Vodafone International Holdings B.V. | Holding company | Netherlands | 100.0 | |||||||||
Vodafone Investments Luxembourg S.a.r.l. | Holding company | Luxembourg | 100.0 | |||||||||
Vodafone Ireland Limited | Network operator | Ireland | 100.0 | |||||||||
Vodafone Libertel B.V. | Network operator | Netherlands | 100.0 | |||||||||
Vodafone Limited | Network operator | England | 100.0 | |||||||||
Vodafone Malta Limited | Network operator | Malta | 100.0 | |||||||||
Vodafone Marketing S.a.r.l. | Provider of partner market services | Luxembourg | 100.0 | |||||||||
Vodafone New Zealand Limited | Network operator | New Zealand | 100.0 | |||||||||
Vodafone-Panafon Hellenic Telecommunications Company S.A. | Network operator | Greece | 99.9 | |||||||||
Vodafone Portugal-Comunicações Pessoais, S.A.(11) | Network operator | Portugal | 100.0 | |||||||||
Vodafone Qatar Q.S.C.(1) | Network operator | Qatar | 23.0 | |||||||||
Vodafone Romania S.A. | Network operator | Romania | 100.0 | |||||||||
Vodafone Telekomunikasyon A.S. | Network operator | Turkey | 100.0 | |||||||||
(1) | The Group has rights that enable it to control the strategic and operating decisions of Vodafone Qatar Q.S.C., Vodacom Congo (RDC) s.p.r.l. and Vodacom Tanzania Limited. | |
(2) | Effective ownership percentages of Vodafone Group Plc at 31 March 2011, rounded to nearest tenth of one percent. | |
(3) | Previous name was Gateway Group (Pty) Limited. | |
(4) | Shareholding is indirect through Vodacom Group Limited. The indirect shareholding is calculated using the 66.0% ownership interest in Vodacom referred to in note 6 below. | |
(5) | The share capital of VM, SA consists of 60,000,000 ordinary shares and 469,690,618 preference shares. | |
(6) | At 31 March 2011 the Group owned 65.0% of the issued share capital of Vodacom Group Limited (‘Vodacom’) with the 66.0% ownership interest in the outstanding shares in Vodacom resulting from the acquisition of treasury shares by Vodacom. | |
(7) | Share capital consists of 395,834,251 ordinary shares and 1.65 million class D and E redeemable preference shares, of which 100% of the ordinary shares are held by the Group. | |
(8) | The Group’s aggregate direct and indirect equity interest in Vodafone Essar Limited (‘VEL’) was 59.9% at 31 March 2011. The Group has call options to acquire shareholdings in companies which indirectly own a further 7.1% interest in VEL. The shareholders of these companies also have put options which, if exercised, would require Vodafone to purchase the remaining shares in the respective company. If these options were exercised, which can only be done in accordance with the Indian law prevailing at the time of exercise, the Group would have a direct and indirect interest of 67.0% of VEL. On 30 March 2011 the Essar Group exercised its underwritten put option over 22.0% of VEL following which, on 31 March 2011, the Group exercised its call option over the remaining 11.0% of VEL owned by the Essar Group. | |
(9) | Share capital consists of 600 ordinary shares and one deferred share, of which 100% of the shares are held indirectly by Vodafone Group Plc. | |
(10) | Trades as Vodafone Hungary Mobile Telecommunications Company Limited. | |
(11) | 38.6% of the issued share capital of Vodafone Portugal-Comunicações Pessoais, S.A. is held directly by Vodafone Group Plc. |
Table of Contents
Country of incorporation | Percentage(1) | |||||||||||
Name | Principal activity | or registration | shareholdings | |||||||||
Indus Towers Limited | Network infrastructure | India | 25.2 | (2) | ||||||||
Polkomtel S.A.(3) | Network operator | Poland | 24.4 | |||||||||
Vodafone Hutchison Australia Pty Limited(3) | Network operator | Australia | 50.0 | |||||||||
Vodafone Fiji Limited | Network operator | Fiji | 49.0 | (4) | ||||||||
Vodafone Omnitel N.V.(5) | Network operator | Netherlands | 76.9 | (6) | ||||||||
(1) | Rounded to nearest tenth of one percent. | |
(2) | Vodafone Essar Limited, in which the Group has a 59.9% equity interest, owns 42.0% of Indus Towers Limited. | |
(3) | Polkomtel S.A. and Vodafone Hutchinson Australia Pty Limited have a year end of 31 December. | |
(4) | The Group holds substantive participating rights which provide it with a veto over the significant financial and operating policies of Vodafone Fiji Limited and which ensure it is able to exercise joint control over Vodafone Fiji Limited with the majority shareholder. | |
(5) | The principal place of operation of Vodafone Omnitel N.V. is Italy. | |
(6) | The Group considered the existence of substantive participating rights held by the non-controlling shareholder provide that shareholder with a veto right over the significant financial and operating policies of Vodafone Omnitel N.V., and determined that, as a result of these rights, the Group does not have control over the financial and operating policies of Vodafone Omnitel N.V., despite the Group’s 76.9% ownership interest. |
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Revenue | 7,849 | 7,896 | 7,737 | |||||||||
Cost of sales | (4,200 | ) | (4,216 | ) | (4,076 | ) | ||||||
Gross profit | 3,649 | 3,680 | 3,661 | |||||||||
Selling, distribution and administrative expenses | (1,624 | ) | (1,369 | ) | (1,447 | ) | ||||||
Impairment losses | (1,050 | ) | — | — | ||||||||
Operating income and expense | — | (12 | ) | — | ||||||||
Operating profit | 975 | 2,299 | 2,214 | |||||||||
Net financing costs | (146 | ) | (152 | ) | (170 | ) | ||||||
Profit before tax | 829 | 2,147 | 2,044 | |||||||||
Income tax expense | (608 | ) | (655 | ) | (564 | ) | ||||||
Profit for the financial year | 221 | 1,492 | 1,480 | |||||||||
2011 | 2010 | |||||||
£m | £m | |||||||
Non-current assets | 19,043 | 20,787 | ||||||
Current assets | 1,908 | 763 | ||||||
Total assets | 20,951 | 21,550 | ||||||
Total shareholders’ funds and total equity | 16,389 | 17,407 | ||||||
Non-current liabilities | 1,887 | 833 | ||||||
Current liabilities | 2,675 | 3,310 | ||||||
Total liabilities | 4,562 | 4,143 | ||||||
Total equity and liabilities | 20,951 | 21,550 | ||||||
Table of Contents
Country of incorporation | Percentage(1) | |||||||||||
Name | Principal activity | or registration | shareholdings | |||||||||
Cellco Partnership(2) | Network operator | US | 45.0 | |||||||||
Société Française du Radiotéléphone S.A. (‘SFR’)(3) | Network operator | France | 44.0 | |||||||||
Safaricom Limited(4)(5) | Network operator | Kenya | 40.0 | |||||||||
(1) | Rounded to nearest tenth of one percent. | |
(2) | Cellco Partnership trades under the name Verizon Wireless. | |
(3) | On 3 April 2011 the Group announced an agreement to sell its entire 44% interest in SFR. See note 32 for further information. | |
(4) | The Group also holds two non-voting shares. | |
(5) | At 31 March 2011 the fair value of Safaricom Limited was KES 61 billion (£456 million) based on the closing quoted share price on the Nairobi Stock Exchange. |
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Share of revenue in associates | 24,213 | 23,288 | 19,307 | |||||||||
Share of result in associates | 5,059 | 4,742 | 4,091 | |||||||||
Share of discontinued operations in associates | 18 | 93 | 57 | |||||||||
2011 | 2010 | |||||||
£m | £m | |||||||
Non-current assets | 45,446 | 47,048 | ||||||
Current assets | 5,588 | 4,901 | ||||||
Share of total assets | 51,034 | 51,949 | ||||||
Non-current liabilities | 5,719 | 8,295 | ||||||
Current liabilities | 6,656 | 6,685 | ||||||
Non-controlling interests | 554 | 592 | ||||||
Share of total liabilities and non-controlling interests | 12,929 | 15,572 | ||||||
Share of equity shareholders’ funds in associates | 38,105 | 36,377 | ||||||
2011 | 2010 | |||||||
£m | £m | |||||||
Included within non-current assets: | ||||||||
Listed securities: | ||||||||
Equity securities | 1 | 4,072 | ||||||
Unlisted securities: | ||||||||
Equity securities | 967 | 879 | ||||||
Public debt and bonds | 3 | 11 | ||||||
Other debt and bonds | 72 | 2,355 | ||||||
Cash held in restricted deposits | 338 | 274 | ||||||
1,381 | 7,591 | |||||||
Included within current assets: | ||||||||
Government bonds | 610 | 388 | ||||||
Other | 64 | — | ||||||
674 | 388 | |||||||
Table of Contents
2011 | 2010 | |||||||
£m | £m | |||||||
Goods held for resale | 537 | 433 | ||||||
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
1 April | 120 | 111 | 118 | |||||||||
Exchange movements | (1 | ) | 5 | 13 | ||||||||
Amounts (credited)/charged to the income statement | (2 | ) | 4 | (20 | ) | |||||||
31 March | 117 | 120 | 111 | |||||||||
2011 | 2010 | |||||||
£m | £m | |||||||
Included within non-current assets: | ||||||||
Trade receivables | 92 | 59 | ||||||
Other receivables | 1,719 | 678 | ||||||
Prepayments and accrued income | 137 | 148 | ||||||
Derivative financial instruments | 1,929 | 1,946 | ||||||
3,877 | 2,831 | |||||||
Included within current assets: | ||||||||
Trade receivables | 4,185 | 4,008 | ||||||
Amounts owed by associates | 53 | 24 | ||||||
Other receivables | 1,606 | 1,122 | ||||||
Prepayments and accrued income | 3,299 | 3,448 | ||||||
Derivative financial instruments | 116 | 182 | ||||||
9,259 | 8,784 | |||||||
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
1 April | 929 | 874 | 664 | |||||||||
Exchange movements | (30 | ) | (27 | ) | 101 | |||||||
Amounts charged to administrative expenses | 460 | 465 | 423 | |||||||||
Trade receivables written off | (353 | ) | (383 | ) | (314 | ) | ||||||
31 March | 1,006 | 929 | 874 | |||||||||
2011 | 2010 | |||||||
£m | £m | |||||||
Included within “Derivative financial instruments”: | ||||||||
Fair value through the income statement (held for trading): | ||||||||
Interest rate swaps | 1,292 | 1,031 | ||||||
Foreign exchange swaps | 99 | 132 | ||||||
1,391 | 1,163 | |||||||
Fair value hedges: | ||||||||
Interest rate swaps | 654 | 965 | ||||||
2,045 | 2,128 | |||||||
Table of Contents
2011 | 2010 | |||||||
£m | £m | |||||||
Cash at bank and in hand | 896 | 745 | ||||||
Money market funds | 5,015 | 3,678 | ||||||
Other | 341 | — | ||||||
Cash and cash equivalents as presented in the statement of financial position | 6,252 | 4,423 | ||||||
Bank overdrafts | (47 | ) | (60 | ) | ||||
Cash and cash equivalents as presented in the statement of cash flows | 6,205 | 4,363 | ||||||
2011 | 2010 | |||||||||||||||
Number | £m | Number | £m | |||||||||||||
Ordinary shares of 113/7 US cents each allotted, issued and fully paid:(1)(2) | ||||||||||||||||
1 April | 57,809,246,732 | 4,153 | 57,806,283,716 | 4,153 | ||||||||||||
Allotted during the year | 1,876,697 | — | 2,963,016 | — | ||||||||||||
Cancelled during the year | (1,000,000,000 | ) | (71 | ) | — | — | ||||||||||
31 March | 56,811,123,429 | 4,082 | 57,809,246,732 | 4,153 | ||||||||||||
(1) | The concept of authorised share capital was abolished under the Companies Act 2006, with effect from 1 October 2009, and consequential amendments to the Company’s articles of association removing all references to authorised share capital were approved by shareholders at the 2010 annual general meeting. | |
(2) | At 31 March 2011 the Group held 5,233,597,599 (2010: 5,146,112,159) treasury shares with a nominal value of £376 million (2010: £370 million). The market value of shares held was £9,237 million (2010: £7,822 million). During the year 150,404,079 (2010: 149,298,942) treasury shares were reissued under Group share option schemes. |
Nominal | Net | |||||||||||
value | proceeds | |||||||||||
Number | £m | £m | ||||||||||
UK share awards and option scheme awards | 35,557 | — | — | |||||||||
US share awards and option scheme awards | 1,841,140 | — | 3 | |||||||||
Total for share awards and option scheme awards | 1,876,697 | — | 3 | |||||||||
Table of Contents
• | 10% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of ordinary shares which have been allocated in the preceding ten year period under all plans; and |
• | 5% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of ordinary shares which have been allocated in the preceding ten year period under all plans, other than any plans which are operated on an all-employee basis. |
ADS options | Ordinary share options | |||||||||||||||||||||||
2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
Millions | Millions | Millions | Millions | Millions | Millions | |||||||||||||||||||
1 April | 1 | 1 | 1 | 266 | 334 | 373 | ||||||||||||||||||
Granted during the year | — | — | — | 4 | 13 | 7 | ||||||||||||||||||
Forfeited during the year | — | — | — | (1 | ) | (2 | ) | (11 | ) | |||||||||||||||
Exercised during the year | — | — | — | (72 | ) | (47 | ) | (16 | ) | |||||||||||||||
Expired during the year | — | — | — | (26 | ) | (32 | ) | (19 | ) | |||||||||||||||
31 March | 1 | 1 | 1 | 171 | 266 | 334 | ||||||||||||||||||
Weighted average exercise price: | ||||||||||||||||||||||||
1 April | $15.07 | $15.37 | $18.15 | £1.41 | £1.41 | £1.42 | ||||||||||||||||||
Granted during the year | — | — | — | £1.14 | £0.94 | £1.21 | ||||||||||||||||||
Forfeited during the year | — | — | — | £1.10 | £1.50 | £1.47 | ||||||||||||||||||
Exercised during the year | — | — | — | £1.33 | £1.11 | £1.09 | ||||||||||||||||||
Expired during the year | — | — | — | £2.25 | £1.67 | £1.55 | ||||||||||||||||||
31 March | $14.82 | $15.07 | $15.37 | £1.32 | £1.41 | £1.41 | ||||||||||||||||||
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Outstanding | Exercisable | |||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||
average | average | |||||||||||||||||||||||
Weighted | remaining | Weighted | remaining | |||||||||||||||||||||
Outstanding | average | contractual | Exercisable | average | contractual | |||||||||||||||||||
shares | exercise | life | shares | exercise | life | |||||||||||||||||||
Millions | price | Months | Millions | price | Months | |||||||||||||||||||
Vodafone Group savings related and Sharesave Plan: | ||||||||||||||||||||||||
£0.01 – £1.00 | 12 | £0.94 | 28 | — | — | — | ||||||||||||||||||
£1.01 – £2.00 | 8 | £1.19 | 34 | — | — | — | ||||||||||||||||||
20 | £1.03 | 31 | — | — | — | |||||||||||||||||||
Vodafone Group executive plans: | ||||||||||||||||||||||||
£1.01 – £2.00 | 3 | £1.63 | 5 | 3 | £1.63 | 5 | ||||||||||||||||||
Vodafone Group 1999 Long-Term Stock Incentive Plan: | ||||||||||||||||||||||||
£0.01 – £1.00 | 42 | £0.90 | 15 | 42 | £0.90 | 15 | ||||||||||||||||||
£1.01 – £2.00 | 106 | £1.52 | 28 | 106 | £1.52 | 28 | ||||||||||||||||||
148 | £1.35 | 24 | 148 | £1.35 | 24 | |||||||||||||||||||
Other share option plans: | ||||||||||||||||||||||||
£1.01 – greater than £3.01 | — | £2.47 | 11 | — | £2.47 | 11 | ||||||||||||||||||
Vodafone Group 1999 Long-Term Stock Incentive Plan: | ||||||||||||||||||||||||
$10.01 – $30.00 | 1 | $14.82 | 18 | 1 | $14.82 | 18 | ||||||||||||||||||
Ordinary share options | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Expected life of option (years) | 3-5 | 3-5 | 3-5 | |||||||||
Expected share price volatility | 27.5-27.6 | % | 32.5-33.5 | % | 30.9-31.0 | % | ||||||
Dividend yield | 5.82 | % | 6.62 | % | 5.04 | % | ||||||
Risk free rates | 1.3-2.2 | % | 2.5-3.0 | % | 4.9 | % | ||||||
Exercise price | £1.14 | £0.94 | £1.21 | |||||||||
Global AllShare Plan | Other | Total | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
average fair | average fair | average fair | ||||||||||||||||||||||
value at | value at | value at | ||||||||||||||||||||||
Millions | grant date | Millions | grant date | Millions | grant date | |||||||||||||||||||
1 April 2010 | 34 | £1.15 | 340 | £1.05 | 374 | £1.06 | ||||||||||||||||||
Granted | — | — | 126 | £1.07 | 126 | £1.07 | ||||||||||||||||||
Vested | (15 | ) | £1.30 | (66 | ) | £1.40 | (81 | ) | £1.38 | |||||||||||||||
Forfeited | (2 | ) | £1.08 | (30 | ) | £0.97 | (32 | ) | £0.97 | |||||||||||||||
31 March 2011 | 17 | £1.02 | 370 | £1.00 | 387 | £1.00 | ||||||||||||||||||
Table of Contents
2011 | 2010 | |||||||
£m | £m | |||||||
Cash and cash equivalents | (6,252 | ) | (4,423 | ) | ||||
Borrowings | 38,281 | 39,795 | ||||||
Other financial instruments | (2,171 | ) | (2,056 | ) | ||||
Net debt | 29,858 | 33,316 | ||||||
Equity | 87,561 | 90,810 | ||||||
Capital | 117,419 | 124,126 | ||||||
2011 | 2010 | |||||||
£m | £m | |||||||
Bank deposits | 896 | 745 | ||||||
Cash held in restricted deposits | 338 | 274 | ||||||
Government bonds | 610 | 388 | ||||||
Money market fund investments | 5,015 | 3,678 | ||||||
Derivative financial instruments | 2,045 | 2,128 | ||||||
Other investments — debt and bonds | 75 | 2,366 | ||||||
Trade receivables | 4,277 | 4,067 | ||||||
Other receivables | 3,325 | 1,800 | ||||||
16,581 | 15,446 | |||||||
2011 | 2010 | |||||||
£m | £m | |||||||
Cash collateral | 531 | 604 | ||||||
Table of Contents
2011 | 2010 | |||||||
£m | £m | |||||||
30 days or less | 1,561 | 1,499 | ||||||
Between 31 – 60 days | 100 | 119 | ||||||
Between 61 – 180 days | 85 | 155 | ||||||
Greater than 180 days | 298 | 183 | ||||||
2,044 | 1,956 | |||||||
Table of Contents
2011 | ||||
£m | ||||
Euro 4% change — Operating profit | 230 | |||
US dollar 13% change — Operating profit | 594 | |||
Level 1(1) | Level 2(2) | Total | ||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
£ m | £ m | £ m | £ m | £ m | £ m | |||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||
Derivative financial instruments: | ||||||||||||||||||||||||
Interest rate swaps | — | — | 1,946 | 1,996 | 1,946 | 1,996 | ||||||||||||||||||
Foreign exchange contracts | — | — | 99 | 132 | 99 | 132 | ||||||||||||||||||
Interest rate futures | — | — | 31 | 20 | 31 | 20 | ||||||||||||||||||
— | — | 2,076 | 2,148 | 2,076 | 2,148 | |||||||||||||||||||
Financial investments available-for-sale: | ||||||||||||||||||||||||
Listed equity securities(3) | 1 | 4,072 | — | — | 1 | 4,072 | ||||||||||||||||||
Unlisted equity securities(3) | — | — | 703 | 623 | 703 | 623 | ||||||||||||||||||
1 | 4,072 | 703 | 623 | 704 | 4,695 | |||||||||||||||||||
1 | 4,072 | 2,779 | 2,771 | 2,780 | 6,843 | |||||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||
Derivative financial instruments: | ||||||||||||||||||||||||
Interest rate swaps | — | — | 395 | 365 | 395 | 365 | ||||||||||||||||||
Foreign exchange contracts | — | — | 153 | 95 | 153 | 95 | ||||||||||||||||||
— | — | 548 | 460 | 548 | 460 | |||||||||||||||||||
(1) | Level 1 classification comprises financial instruments where fair value is determined by unadjusted quoted prices in active markets for identical assets or liabilities. | |
(2) | Level 2 classification comprises where fair value is determined from inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Fair values for unlisted equity securities are derived from observable quoted market prices for similar items. Derivative financial instrument fair values are present values determined from future cash flows discounted at rates derived from market sourced data. | |
(3) | Details of listed and unlisted equity securities are included in note 15 “Other Investments”. |
Table of Contents
2011 | 2010 | |||||||||||||||||||||||
Short-term | Long-term | Short-term | Long-term | |||||||||||||||||||||
borrowings | borrowings | Total | borrowings | borrowings | Total | |||||||||||||||||||
£m | £m | £m | £m | £m | £m | |||||||||||||||||||
Financial liabilities measured at amortised cost: | ||||||||||||||||||||||||
Bank loans | 2,070 | 5,872 | 7,942 | 3,460 | 4,183 | 7,643 | ||||||||||||||||||
Bank overdrafts | 47 | — | 47 | 60 | — | 60 | ||||||||||||||||||
Redeemable preference shares | — | 1,169 | 1,169 | — | 1,242 | 1,242 | ||||||||||||||||||
Commercial paper | 1,660 | — | 1,660 | 2,563 | — | 2,563 | ||||||||||||||||||
Bonds | 2,470 | 16,046 | 18,516 | 1,174 | 12,675 | 13,849 | ||||||||||||||||||
Other liabilities(1)(2) | 3,659 | 1,023 | 4,682 | 3,906 | 385 | 4,291 | ||||||||||||||||||
Bonds in fair value hedge relationships | — | 4,265 | 4,265 | — | 10,147 | 10,147 | ||||||||||||||||||
9,906 | 28,375 | 38,281 | 11,163 | 28,632 | 39,795 | |||||||||||||||||||
(1) | At 31 March 2011 amount includes £531 million (2010: £604 million) in relation to collateral support agreements. | |
(2) | Amounts at 31 March 2011 includes £3,190 million (2010: £3,405 million) in relation to the options disclosed in note 12. |
Sterling equivalent | ||||||||||||||||||||||||
nominal value | Fair value | Carrying value | ||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
£m | £m | £m | £m | £m | £m | |||||||||||||||||||
Financial liabilities measured at amortised cost | 7,316 | 9,910 | 7,425 | 10,006 | 7,436 | 9,989 | ||||||||||||||||||
Bonds: | 2,444 | 1,113 | 2,463 | 1,124 | 2,470 | 1,174 | ||||||||||||||||||
5.875% euro 1.25 billion bond due June 2010 | — | 1,113 | — | 1,124 | — | 1,174 | ||||||||||||||||||
US dollar floating rate note due June 2011 | 171 | — | 171 | — | 171 | — | ||||||||||||||||||
5.5% US dollar 750 million bond due June 2011 | 467 | — | 471 | — | 478 | — | ||||||||||||||||||
1% US dollar 100 million bond due August 2011 | 45 | — | 45 | — | 45 | — | ||||||||||||||||||
Euro floating rate note due January 2012 | 1,144 | — | 1,146 | — | 1,148 | — | ||||||||||||||||||
US dollar floating rate note due February 2012 | 306 | — | 306 | — | 306 | — | ||||||||||||||||||
5.35% US dollar 500 million bond due February 2012 | 311 | — | 324 | — | 322 | — | ||||||||||||||||||
Short-term borrowings | 9,760 | 11,023 | 9,888 | 11,130 | 9,906 | 11,163 | ||||||||||||||||||
Table of Contents
Sterling equivalent | ||||||||||||||||||||||||
nominal value | Fair value | Carrying value | ||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
£m | £m | £m | £m | £m | £m | |||||||||||||||||||
Financial liabilities measured at amortised cost: | ||||||||||||||||||||||||
Bank loans | 5,728 | 4,149 | 5,872 | 4,183 | 5,873 | 4,183 | ||||||||||||||||||
Redeemable preference shares | 1,027 | 1,174 | 1,054 | 1,098 | 1,169 | 1,242 | ||||||||||||||||||
Other liabilities | 1,022 | 385 | 1,023 | 385 | 1,022 | 385 | ||||||||||||||||||
Bonds: | 14,581 | 11,455 | 15,578 | 11,961 | 16,046 | 12,675 | ||||||||||||||||||
US dollar floating rate note due June 2011 | — | 230 | — | 230 | — | 230 | ||||||||||||||||||
5.5% US dollar 750 million bond due June 2011 | — | 494 | — | 518 | — | 524 | ||||||||||||||||||
Euro floating rate note due January 2012 | — | 1,158 | — | 1,157 | — | 1,161 | ||||||||||||||||||
US dollar floating rate note due February 2012 | — | 329 | — | 329 | — | 329 | ||||||||||||||||||
5.35% US dollar 500 million bond due February 2012 | — | 329 | — | 351 | — | 352 | ||||||||||||||||||
3.625% euro 1,250 million bond due November 2012 | 1,104 | 1,113 | 1,125 | 1,157 | 1,132 | 1,149 | ||||||||||||||||||
6.75% Australian dollar 265 million bond due January 2013 | 171 | 160 | 173 | 161 | 176 | 167 | ||||||||||||||||||
Czech krona floating rate note due June 2013 | 19 | 19 | 19 | 19 | 19 | 19 | ||||||||||||||||||
Euro floating rate note due September 2013 | 751 | 757 | 752 | 756 | 752 | 758 | ||||||||||||||||||
5.0% US dollar 1,000 million bond due December 2013 | 623 | 658 | 676 | 704 | 667 | 718 | ||||||||||||||||||
6.875% euro 1,000 million bond due December 2013 | 883 | 891 | 970 | 1,024 | 922 | 936 | ||||||||||||||||||
Euro floating rate note due June 2014 | 1,104 | 1,113 | 1,099 | 1,099 | 1,105 | 1,114 | ||||||||||||||||||
4.15% US dollar 1,250 million bond due June 2014 | 778 | 823 | 826 | 856 | 802 | 852 | ||||||||||||||||||
4.625% sterling 350 million bond due September 2014 | 350 | — | 367 | — | 382 | — | ||||||||||||||||||
4.625% sterling 525 million bond due September 2014 | 525 | — | 551 | — | 544 | — | ||||||||||||||||||
5.125% euro 500 million bond due April 2015 | 442 | 445 | 475 | 496 | 470 | 475 | ||||||||||||||||||
5.0% US dollar 750 million bond due September 2015 | 467 | — | 506 | — | 512 | — | ||||||||||||||||||
3.375% US dollar 500 million bond due November 2015 | 311 | 329 | 317 | 327 | 312 | 330 | ||||||||||||||||||
6.25% euro 1,250 million bond due January 2016 | 1,104 | — | 1,230 | — | 1,139 | — | ||||||||||||||||||
2.875% US dollar 600 million bond due March 2016 | 374 | — | 371 | — | 371 | — | ||||||||||||||||||
5.75% US dollar 750 million bond due March 2016 | 467 | — | 523 | — | 532 | — | ||||||||||||||||||
4.75% euro 500 million bond due June 2016 | 442 | — | 463 | — | 487 | — | ||||||||||||||||||
5.625% US dollar 1,300 million bond due February 2017 | 809 | — | 897 | — | 920 | — | ||||||||||||||||||
5.375% sterling 600 million bond due December 2017 | 600 | — | 638 | — | 629 | — | ||||||||||||||||||
5% euro 750 million bond due June 2018 | 663 | 668 | 697 | 721 | 689 | 694 | ||||||||||||||||||
8.125% sterling 450 million bond due November 2018 | 450 | — | 550 | — | 488 | — | ||||||||||||||||||
4.375% US dollar 500 million bond due March 2021 | 311 | — | 307 | — | 309 | — | ||||||||||||||||||
7.875% US dollar 750 million bond due February 2030 | 467 | 494 | 591 | 589 | 759 | 814 | ||||||||||||||||||
6.25% US dollar 495 million bond due November 2032 | 308 | 326 | 332 | 328 | 425 | 453 | ||||||||||||||||||
6.15% US dollar 1,700 million bond due February 2037 | 1,058 | 1,119 | 1,123 | 1,139 | 1,503 | 1,600 | ||||||||||||||||||
Bonds in fair value hedge relationships: | 3,962 | 9,395 | 4,199 | 10,085 | 4,265 | 10,147 | ||||||||||||||||||
4.625% sterling 350 million bond due September 2014 | — | 350 | — | 367 | — | 388 | ||||||||||||||||||
4.625% sterling 525 million bond due September 2014 | — | 525 | — | 550 | — | 532 | ||||||||||||||||||
2.15% Japanese yen 3,000 million bond due April 2015 | 23 | 21 | 24 | 22 | 23 | 22 | ||||||||||||||||||
5.375% US dollar 900 million bond due January 2015 | 560 | 592 | 616 | 636 | 621 | 650 | ||||||||||||||||||
5.0% US dollar 750 million bond due September 2015 | — | 494 | — | 529 | — | 543 | ||||||||||||||||||
6.25% euro 1,250 million bond due January 2016 | — | 1,113 | — | 1,278 | — | 1,168 | ||||||||||||||||||
5.75% US dollar 750 million bond due March 2016 | — | 494 | — | 536 | — | 556 | ||||||||||||||||||
4.75% euro 500 million bond due June 2016 | — | 445 | — | 477 | — | 503 | ||||||||||||||||||
5.625% US dollar 1,300 million bond due February 2017 | — | 856 | — | 919 | — | 960 | ||||||||||||||||||
5.375% sterling 600 million bond due December 2017 | — | 600 | — | 634 | — | 628 | ||||||||||||||||||
4.625% US dollar 500 million bond due July 2018 | 311 | 329 | 327 | 328 | 338 | 349 | ||||||||||||||||||
8.125% sterling 450 million bond due November 2018 | — | 450 | — | 553 | — | 487 | ||||||||||||||||||
5.45% US dollar 1,250 million bond due June 2019 | 778 | 823 | 850 | 857 | 823 | 849 | ||||||||||||||||||
4.65% euro 1,250 million bond January 2022 | 1,104 | 1,113 | 1,115 | 1,129 | 1,114 | 1,145 | ||||||||||||||||||
5.375% euro 500 million bond June 2022 | 442 | 445 | 470 | 481 | 505 | 525 | ||||||||||||||||||
5.625% sterling 250 million bond due December 2025 | 250 | 250 | 258 | 254 | 284 | 285 | ||||||||||||||||||
6.6324% euro 50 million bond due December 2028 | 44 | 45 | 68 | 64 | 57 | 54 | ||||||||||||||||||
5.9% sterling 450 million bond due November 2032 | 450 | 450 | 471 | 471 | 500 | 503 | ||||||||||||||||||
Long-term borrowings | 26,320 | 26,558 | 27,726 | 27,712 | 28,375 | 28,632 | ||||||||||||||||||
Table of Contents
Vodafone Group Plc Annual Report 2011 115
Redeemable | Loans in fair | |||||||||||||||||||||||||||
Bank | preference | Commercial | Other | value hedge | ||||||||||||||||||||||||
loans | shares | paper | Bonds | liabilities | relationships | Total | ||||||||||||||||||||||
£m | £m | £m | £m | £m | £m | £m | ||||||||||||||||||||||
Within one year | 1,881 | 52 | 1,670 | 3,292 | 3,766 | 203 | 10,864 | |||||||||||||||||||||
In one to two years | 528 | 52 | — | 2,009 | 191 | 203 | 2,983 | |||||||||||||||||||||
In two to three years | 2,510 | 52 | — | 2,919 | 60 | 203 | 5,744 | |||||||||||||||||||||
In three to four years | 321 | 52 | — | 3,251 | 60 | 763 | 4,447 | |||||||||||||||||||||
In four to five years | 885 | 52 | — | 3,613 | 901 | 195 | 5,646 | |||||||||||||||||||||
In more than five years | 1,825 | 1,240 | — | 7,725 | — | 4,752 | 15,542 | |||||||||||||||||||||
7,950 | 1,500 | 1,670 | 22,809 | 4,978 | 6,319 | 45,226 | ||||||||||||||||||||||
Effect of discount/financing rates | (8 | ) | (331 | ) | (10 | ) | (4,293 | ) | (249 | ) | (2,054 | ) | (6,945 | ) | ||||||||||||||
31 March 2011 | 7,942 | 1,169 | 1,660 | 18,516 | 4,729 | 4,265 | 38,281 | |||||||||||||||||||||
Within one year | 3,406 | 93 | 2,572 | 1,634 | 3,983 | 510 | 12,198 | |||||||||||||||||||||
In one to two years | 858 | 56 | — | 3,008 | 145 | 510 | 4,577 | |||||||||||||||||||||
In two to three years | 847 | 56 | — | 1,712 | 156 | 510 | 3,281 | |||||||||||||||||||||
In three to four years | 1,852 | 56 | — | 2,671 | — | 510 | 5,089 | |||||||||||||||||||||
In four to five years | 138 | 56 | — | 2,152 | 31 | 1,977 | 4,354 | |||||||||||||||||||||
In more than five years | 598 | 1,370 | — | 6,009 | 68 | 9,983 | 18,028 | |||||||||||||||||||||
7,699 | 1,687 | 2,572 | 17,186 | 4,383 | 14,000 | 47,527 | ||||||||||||||||||||||
Effect of discount/financing rates | (56 | ) | (445 | ) | (9 | ) | (3,337 | ) | (32 | ) | (3,853 | ) | (7,732 | ) | ||||||||||||||
31 March 2010 | 7,643 | 1,242 | 2,563 | 13,849 | 4,351 | 10,147 | 39,795 | |||||||||||||||||||||
2011 | 2010 | |||||||||||||||
Payable | Receivable | Payable | Receivable | |||||||||||||
£m | £m | £m | £m | |||||||||||||
Within one year | 14,840 | 15,051 | 13,067 | 13,154 | ||||||||||||
In one to two years | 631 | 829 | 929 | 938 | ||||||||||||
In two to three years | 724 | 882 | 1,083 | 974 | ||||||||||||
In three to four years | 667 | 770 | 1,040 | 932 | ||||||||||||
In four to five years | 619 | 690 | 868 | 816 | ||||||||||||
In more than five years | 3,715 | 4,592 | 7,607 | 5,912 | ||||||||||||
21,196 | 22,814 | 24,594 | 22,726 | |||||||||||||
2011 | 2010 | |||||||||||||||
Payable | Receivable | Payable | Receivable | |||||||||||||
£m | £m | £m | £m | |||||||||||||
Sterling | — | 10,198 | — | 8,257 | ||||||||||||
Euro | 11,422 | 2,832 | 8,650 | 3,177 | ||||||||||||
US dollar | 13 | 387 | 1,545 | 55 | ||||||||||||
Japanese yen | 2,164 | 23 | 548 | 21 | ||||||||||||
Other | 727 | 832 | 1,485 | 755 | ||||||||||||
14,326 | 14,272 | 12,228 | 12,265 | |||||||||||||
2011 | 2010 | |||||||
£m | £m | |||||||
Within one year | 14 | 21 | ||||||
In two to five years | 45 | 47 | ||||||
In more than five years | 6 | 7 | ||||||
Table of Contents
116 Vodafone Group Plc Annual Report 2011
Total | Floating rate | Fixed rate | Other | |||||||||||||
borrowings | borrowings | borrowings(1) | borrowings(2) | |||||||||||||
Currency | £m | £m | £m | £m | ||||||||||||
Sterling | 2,831 | 906 | 1,925 | — | ||||||||||||
Euro | 12,361 | 4,198 | 8,163 | — | ||||||||||||
US dollar | 16,030 | 9,488 | 3,352 | 3,190 | ||||||||||||
Japanese yen | 807 | 807 | — | — | ||||||||||||
Other | 6,252 | 2,920 | 3,332 | — | ||||||||||||
31 March 2011 | 38,281 | 18,319 | 16,772 | 3,190 | ||||||||||||
Sterling | 3,022 | 3,022 | — | — | ||||||||||||
Euro | 14,244 | 9,429 | 4,815 | — | ||||||||||||
US dollar | 15,195 | 7,329 | 4,461 | 3,405 | ||||||||||||
Japanese yen | 2,605 | 2,605 | — | — | ||||||||||||
Other | 4,729 | 4,105 | 624 | — | ||||||||||||
31 March 2010 | 39,795 | 26,490 | 9,900 | 3,405 | ||||||||||||
(1) | The weighted average interest rate for the Group’s sterling denominated fixed rate borrowings is 5.7% (2010: n/a). The weighted average time for which these rates are fixed is 5.4 years (2010: n/a). The weighted average interest rate for the Group’s euro denominated fixed rate borrowings is 4.3% (2010: 5.3%). The weighted average time for which the rates are fixed is 3.8 years (2010: 3.4 years). The weighted average interest rate for the Group’s US dollar denominated fixed rate borrowings is 5.4% (2010: 5.5%). The weighted average time for which the rates are fixed is 9.7 years (2010: 12.3 years). The weighted average interest rate for the Group’s other currency fixed rate borrowings is 9.2% (2010: 10.1%). The weighted average time for which the rates are fixed is 2.0 years (2010: 1.5 years). | |
(2) | Other borrowings of £3,190 million (2010: £3,405 million) are the liabilities arising under options over direct and indirect interests in Vodafone Essar. |
Table of Contents
Vodafone Group Plc Annual Report 2011 117
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Defined contribution schemes | 130 | 110 | 73 | |||||||||
Defined benefit schemes | 4 | 50 | 40 | |||||||||
Total amount charged to the income statement (note 31) | 134 | 160 | 113 | |||||||||
2011(1) | 2010(1) | 2009(1) | ||||||||||
% | % | % | ||||||||||
Weighted average actuarial assumptions used at 31 March: | ||||||||||||
Rate of inflation | 3.1 | 3.5 | 2.6 | |||||||||
Rate of increase in salaries | 2.9 | 4.6 | 3.7 | |||||||||
Rate of increase in pensions in payment and deferred pensions | 3.1 | 3.5 | 2.6 | |||||||||
Discount rate | 5.6 | 5.7 | 6.3 | |||||||||
Expected rates of return: | ||||||||||||
Equities | 8.2 | 8.5 | 8.4 | |||||||||
Bonds(2) | 5.1 | 5.1 | 5.7 | |||||||||
(1) | Figures shown represent a weighted average assumption of the individual schemes. | |
(2) | For the year ended 31 March 2011 the expected rate of return for bonds consisted of a 5.3% rate of return for corporate bonds (2010: 5.5%; 2009: 6.1%) and a 3.6% rate of return for government bonds (2010: 4.0%; 2009: 4.0%). |
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Current service cost | 12 | 29 | 46 | |||||||||
Interest cost | 95 | 77 | 83 | |||||||||
Expected return on pension assets | (103 | ) | (76 | ) | (92 | ) | ||||||
Curtailment/settlement | — | 20 | 3 | |||||||||
Total included within staff costs | 4 | 50 | 40 | |||||||||
Actuarial losses recognised in the SOCI | (190 | ) | 149 | 220 | ||||||||
Cumulative actuarial losses recognised in the SOCI | 306 | 496 | 347 | |||||||||
Table of Contents
118 Vodafone Group Plc Annual Report 2011
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Movement in pension assets: | ||||||||||||
1 April | 1,487 | 1,100 | 1,271 | |||||||||
Exchange rate movements | (2 | ) | (10 | ) | 50 | |||||||
Expected return on pension assets | 103 | 76 | 92 | |||||||||
Actuarial (losses)/gains | (6 | ) | 286 | (381 | ) | |||||||
Employer cash contributions | 24 | 133 | 98 | |||||||||
Member cash contributions | 5 | 12 | 15 | |||||||||
Benefits paid | (51 | ) | (45 | ) | (45 | ) | ||||||
Other movements | (2 | ) | (65 | ) | — | |||||||
31 March | 1,558 | 1,487 | 1,100 | |||||||||
Movement in pension liabilities: | ||||||||||||
1 April | 1,690 | 1,332 | 1,310 | |||||||||
Exchange rate movements | (4 | ) | (15 | ) | 69 | |||||||
Arising on acquisition | — | — | 33 | |||||||||
Current service cost | 12 | 29 | 46 | |||||||||
Interest cost | 95 | 77 | 83 | |||||||||
Member cash contributions | 5 | 12 | 15 | |||||||||
Actuarial (gains)/losses | (196 | ) | 435 | (161 | ) | |||||||
Benefits paid | (51 | ) | (79 | ) | (45 | ) | ||||||
Other movements | (3 | ) | (101 | ) | (18 | ) | ||||||
31 March | 1,548 | 1,690 | 1,332 | |||||||||
UK | Group | |||||||||||||||||||||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||||||||||||||||||
£m | £m | £m | £m | £m | £m | £m | £m | £m | £m | |||||||||||||||||||||||||||||||
Analysis of net assets/(deficits): | ||||||||||||||||||||||||||||||||||||||||
Total fair value of scheme assets | 1,180 | 1,131 | 755 | 934 | 954 | 1,558 | 1,487 | 1,100 | 1,271 | 1,251 | ||||||||||||||||||||||||||||||
Present value of funded scheme liabilities | (1,127 | ) | (1,276 | ) | (815 | ) | (902 | ) | (901 | ) | (1,488 | ) | (1,625 | ) | (1,196 | ) | (1,217 | ) | (1,194 | ) | ||||||||||||||||||||
Net assets/(deficit) for funded schemes | 53 | (145 | ) | (60 | ) | 32 | 53 | 70 | (138 | ) | (96 | ) | 54 | 57 | ||||||||||||||||||||||||||
Present value of unfunded scheme liabilities | — | — | (8 | ) | — | — | (60 | ) | (65 | ) | (136 | ) | (93 | ) | (98 | ) | ||||||||||||||||||||||||
Net assets/(deficit) | 53 | (145 | ) | (68 | ) | 32 | 53 | 10 | (203 | ) | (232 | ) | (39 | ) | (41 | ) | ||||||||||||||||||||||||
Net assets/(deficit) are analysed as: | ||||||||||||||||||||||||||||||||||||||||
Assets | 53 | — | — | 32 | 53 | 97 | 34 | 8 | 65 | 82 | ||||||||||||||||||||||||||||||
Liabilities | — | (145 | ) | (68 | ) | — | — | (87 | ) | (237 | ) | (240 | ) | (104 | ) | (123 | ) | |||||||||||||||||||||||
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Actual return on pension assets | 97 | 362 | (289 | ) | ||||||||
Analysis of pension assets at 31 March is as follows: | % | % | % | |||||||||
Equities | 61.6 | 59.6 | 55.6 | |||||||||
Bonds | 36.5 | 37.5 | 41.9 | |||||||||
Property | 0.3 | 0.3 | 0.4 | |||||||||
Other | 1.6 | 2.6 | 2.1 | |||||||||
100.0 | 100.0 | 100.0 | ||||||||||
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Vodafone Group Plc Annual Report 2011 119
2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
£m | £m | £m | £m | £m | ||||||||||||||||
Experience adjustments on pension liabilities: | ||||||||||||||||||||
Amount | 23 | 8 | 6 | (5 | ) | (2 | ) | |||||||||||||
Percentage of pension liabilities | 1 | % | — | — | — | — | ||||||||||||||
Experience adjustments on pension assets: | ||||||||||||||||||||
Amount | (6 | ) | 286 | (381 | ) | (176 | ) | 26 | ||||||||||||
Percentage of pension assets | — | 19 | % | (35 | %) | (14 | %) | 2 | % | |||||||||||
Asset | ||||||||||||
retirement | Other | |||||||||||
obligations | provisions | Total | ||||||||||
£m | £m | £m | ||||||||||
1 April 2009 | 361 | 545 | 906 | |||||||||
Exchange movements | (7 | ) | (6 | ) | (13 | ) | ||||||
Arising on acquisition | — | 20 | 20 | |||||||||
Amounts capitalised in the year | 40 | — | 40 | |||||||||
Amounts charged to the income statement | — | 259 | 259 | |||||||||
Utilised in the year — payments | (3 | ) | (157 | ) | (160 | ) | ||||||
Amounts released to the income statement | — | (37 | ) | (37 | ) | |||||||
Other | (21 | ) | — | (21 | ) | |||||||
31 March 2010 | 370 | 624 | 994 | |||||||||
Exchange movements | (4 | ) | (12 | ) | (16 | ) | ||||||
Amounts capitalised in the year | 4 | — | 4 | |||||||||
Amounts charged to the income statement | — | 300 | 300 | |||||||||
Utilised in the year — payments | (8 | ) | (193 | ) | (201 | ) | ||||||
Amounts released to the income statement | — | (59 | ) | (59 | ) | |||||||
Other | (47 | ) | 66 | 19 | ||||||||
31 March 2011 | 315 | 726 | 1,041 | |||||||||
2011 | 2010 | |||||||
£m | £m | |||||||
Current liabilities | 559 | 497 | ||||||
Non-current liabilities | 482 | 497 | ||||||
1,041 | 994 | |||||||
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120 Vodafone Group Plc Annual Report 2011
2011 | 2010 | |||||||
£m | £m | |||||||
Included within non-current liabilities: | ||||||||
Other payables | 80 | 76 | ||||||
Accruals and deferred income | 329 | 379 | ||||||
Derivative financial instruments | 395 | 361 | ||||||
804 | 816 | |||||||
Included within current liabilities: | ||||||||
Trade payables | 4,453 | 3,254 | ||||||
Amounts owed to associates | 23 | 17 | ||||||
Other taxes and social security payable | 1,140 | 998 | ||||||
Other payables | 520 | 650 | ||||||
Accruals and deferred income | 8,409 | 9,064 | ||||||
Derivative financial instruments | 153 | 99 | ||||||
14,698 | 14,082 | |||||||
2011 | 2010 | |||||||
£m | £m | |||||||
Included within “Derivative financial instruments”: | ||||||||
Fair value through the income statement (held for trading): | ||||||||
Interest rate swaps | 342 | 330 | ||||||
Foreign exchange swaps | 153 | 95 | ||||||
495 | 425 | |||||||
Fair value hedges: | ||||||||
Interest rate swaps | 53 | 35 | ||||||
548 | 460 | |||||||
�� | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Profit for the financial year | 7,870 | 8,618 | 3,080 | |||||||||
Adjustments for: | ||||||||||||
Share-based payments | 156 | 150 | 128 | |||||||||
Depreciation and amortisation | 7,876 | 7,910 | 6,814 | |||||||||
Loss on disposal of property, plant and equipment | 91 | 101 | 10 | |||||||||
Share of result in associates | (5,059 | ) | (4,742 | ) | (4,091 | ) | ||||||
Impairment losses | 6,150 | 2,100 | 5,900 | |||||||||
Other income and expense | 16 | (114 | ) | — | ||||||||
Non-operating income and expense | (3,022 | ) | 10 | 44 | ||||||||
Investment income | (1,309 | ) | (716 | ) | (795 | ) | ||||||
Financing costs | 429 | 1,512 | 2,419 | |||||||||
Income tax expense | 1,628 | 56 | 1,109 | |||||||||
(Increase)/decrease in inventory | (107 | ) | 2 | 81 | ||||||||
(Increase)/decrease in trade and other receivables | (387 | ) | (714 | ) | 80 | |||||||
Increase/(decrease) in trade and other payables | 1,060 | 1,164 | (145 | ) | ||||||||
Cash generated by operations | 15,392 | 15,337 | 14,634 | |||||||||
Tax paid | (3,397 | ) | (2,273 | ) | (2,421 | ) | ||||||
Net cash flow from operating activities | 11,995 | 13,064 | 12,213 | |||||||||
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Vodafone Group Plc Annual Report 2011 121
2011 | 2010 | |||||||
£m | £m | |||||||
Within one year | 1,225 | 1,200 | ||||||
In more than one year but less than two years | 958 | 906 | ||||||
In more than two years but less than three years | 746 | 776 | ||||||
In more than three years but less than four years | 638 | 614 | ||||||
In more than four years but less than five years | 602 | 512 | ||||||
In more than five years | 2,344 | 2,235 | ||||||
6,513 | 6,243 | |||||||
Company and subsidiaries | Share of joint ventures | Group | ||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
£m | £m | £m | £m | £m | £m | |||||||||||||||||||
Contracts placed for future capital expenditure not provided in the financial statements(1) | 1,786 | 1,800 | 338 | 219 | 2,124 | 2,019 | ||||||||||||||||||
(1) | Commitment includes contracts placed for property, plant and equipment and intangible assets. |
2011 | 2010 | |||||||
£m | £m | |||||||
Performance bonds | 94 | 246 | ||||||
Credit guarantees — third party indebtedness | 114 | 76 | ||||||
Other guarantees and contingent liabilities | 1,527 | 496 | ||||||
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122 Vodafone Group Plc Annual Report 2011
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Vodafone Group Plc Annual Report 2011 123
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Salaries and fees | 5 | 5 | 4 | |||||||||
Incentive schemes | 3 | 3 | 2 | |||||||||
Other benefits(1) | 1 | 1 | 1 | (2) | ||||||||
9 | 9 | 7 | ||||||||||
(1) | Includes the value of the cash allowance taken by some individuals in lieu of pension contributions. | |
(2) | Includes the value of payments in respect of loss of office and relocation to the US. |
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Short-term employee benefits | 18 | 21 | 17 | |||||||||
Post-employment benefits — defined contribution schemes | 1 | 1 | 1 | |||||||||
Share-based payments | 22 | 20 | 14 | |||||||||
41 | 42 | 32 | ||||||||||
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Sales of goods and services to associates | 327 | 281 | 205 | |||||||||
Purchase of goods and services from associates | 171 | 159 | 223 | |||||||||
Purchase of goods and services from joint ventures | 206 | 194 | 57 | |||||||||
Net interest receivable from joint ventures(1) | (14 | ) | (44 | ) | (18 | ) | ||||||
Trade balances owed: | ||||||||||||
by associates | 52 | 24 | 50 | |||||||||
to associates | 23 | 17 | 18 | |||||||||
by joint ventures | 27 | 27 | 10 | |||||||||
to joint ventures | 67 | 40 | 33 | |||||||||
Other balances owed by joint ventures(1) | 176 | 751 | 311 | |||||||||
(1) | Amounts arise primarily through Vodafone Italy, Vodafone Hutchison Australia and Indus Towers and represent amounts not eliminated on consolidation. Interest is paid in line with market rates. |
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124 Vodafone Group Plc Annual Report 2011
2011 | 2010 | 2009 | ||||||||||
Employees | Employees | Employees | ||||||||||
By activity: | ||||||||||||
Operations | 14,171 | 14,099 | 13,889 | |||||||||
Selling and distribution | 28,311 | 27,398 | 25,174 | |||||||||
Customer care and administration | 41,380 | 43,493 | 40,034 | |||||||||
83,862 | 84,990 | 79,097 | ||||||||||
By segment: | ||||||||||||
Germany | 12,594 | 13,507 | 13,788 | |||||||||
Italy | 6,121 | 6,207 | 6,247 | |||||||||
Spain | 4,389 | 4,326 | 4,354 | |||||||||
UK | 8,174 | 9,766 | 10,350 | |||||||||
Other Europe | 18,953 | 18,582 | 19,015 | |||||||||
Europe | 50,231 | 52,388 | 53,754 | |||||||||
India | 10,743 | 10,132 | 8,674 | |||||||||
Vodacom | 7,320 | 6,833 | 3,246 | |||||||||
Other Africa, Middle East and Asia Pacific | 10,896 | 10,887 | 9,525 | |||||||||
Africa, Middle East and Asia Pacific | 28,959 | 27,852 | 21,445 | |||||||||
Non-Controlled Interests and Common Functions | 4,672 | 4,750 | 3,898 | |||||||||
Total | 83,862 | 84,990 | 79,097 | |||||||||
2011 | 2010 | 2009 | ||||||||||
£m | £m | £m | ||||||||||
Wages and salaries | 2,960 | 3,045 | 2,607 | |||||||||
Social security costs | 392 | 415 | 379 | |||||||||
Share-based payments (note 20) | 156 | 150 | 128 | |||||||||
Other pension costs (note 23) | 134 | 160 | 113 | |||||||||
3,642 | 3,770 | 3,227 | ||||||||||
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Interim management statement | 22 July 2011 | |||
Half-year financial results announcement | 8 November 2011 | |||
Ex-dividend date | 1 June 2011 | |||
Record date | 3 June 2011 | |||
Dividend reinvestment plan last election date | 15 July 2011 | |||
Dividend payment date(1) | 5 August 2011 | |||
(1) | Payment date for both ordinary shares and american depositary shares (‘ADSs’). |
• | have cash dividends paid direct to a bank or building society account; or | |
• | elect to use the cash dividends to purchase more Vodafone ordinary shares under the dividend reinvestment plan (see below) or, in the case of ADSs, have the dividends reinvested to purchase additional Vodafone ADSs. |
• | resident in the UK automatically receive their dividends in pounds sterling provided that UK bank details have been provided to the Company; | |
• | resident in the eurozone (defined for this purpose as a country that has adopted the euro as its national currency) automatically receive their dividends in euros provided that euro bank details have been provided to the Company; and |
• | resident outside the UK and eurozone automatically receive dividends in pounds sterling by lodging UK bank account details but may elect to receive dividends in local currency into their bank account directly via our registrars’ global payments service. Visit www.investorcentre.co.uk for details, and terms and conditions. |
The Registrars | Holders of ordinary shares resident in Ireland: | |
Computershare Investor Services PLC | Computershare Investor Services (Ireland) Limited | |
The Pavilions | PO Box 9742 | |
Bridgwater Road, Bristol BS99 6ZZ, England | Dublin 18, Ireland | |
Telephone: +44 (0)870 702 0198 | Telephone: +353 (0)818 300 999 | |
www.investorcentre.co.uk/contactus | www.investorcentre.co.uk/contactus |
BNY Mellon
BNY Mellon Shareowner Services
PO Box 358516
Pittsburgh, PA 15252-8516, US
Telephone: +1 800 233 5601 (toll free) or, for calls outside the US,
+1 201 680 6837 (not toll free) and enter company number 2160
Email: shrrelations@bnymellon.com
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• | register to receive electronic shareholder communications. Benefits to shareholders include faster receipt of communications, such as annual reports, with cost and time savings for the Company. Electronic shareholder communications are also more environmentally friendly; | |
• | update registered address or dividend bank mandate instructions; | |
• | view and/or download the 2011 annual report; | |
• | check the current share price; | |
• | calculate dividend payments; and | |
• | use interactive tools to calculate the value of shareholdings, look up the historic price on a particular date and chart Vodafone ordinary share price changes against indices. |
• | access the latest news from their mobile; and | |
• | have news automatically emailed to them. |
London Stock | ||||||||||||||||
Exchange | ||||||||||||||||
Pounds per | NYSE/NASDAQ(1) | |||||||||||||||
ordinary share | Dollars per ADS | |||||||||||||||
Year ended 31 March | High | Low | High | Low | ||||||||||||
2007 | 1.54 | 1.08 | 29.85 | 20.07 | ||||||||||||
2008 | 1.98 | 1.36 | 40.87 | 26.88 | ||||||||||||
2009 | 1.70 | 0.96 | 32.87 | 15.30 | ||||||||||||
2010 | 1.54 | 1.11 | 24.04 | 17.68 | ||||||||||||
2011 | 1.85 | 1.27 | 32.70 | 18.21 | ||||||||||||
London Stock | ||||||||||||||||
Exchange | ||||||||||||||||
Pounds per | NYSE/NASDAQ(1) | |||||||||||||||
ordinary share | Dollars per ADS | |||||||||||||||
Quarter | High | Low | High | Low | ||||||||||||
2009/2010 | ||||||||||||||||
First quarter | 1.33 | 1.11 | 20.08 | 17.68 | ||||||||||||
Second quarter | 1.44 | 1.12 | 23.85 | 18.25 | ||||||||||||
Third quarter | 1.45 | 1.32 | 24.04 | 21.10 | ||||||||||||
Fourth quarter | 1.54 | 1.32 | 23.32 | 21.32 | ||||||||||||
2010/2011 | ||||||||||||||||
First quarter | 1.53 | 1.27 | 23.79 | 18.21 | ||||||||||||
Second quarter | 1.65 | 1.36 | 25.80 | 20.71 | ||||||||||||
Third quarter | 1.80 | 1.57 | 28.52 | 28.84 | ||||||||||||
Fourth quarter | 1.85 | 1.67 | 32.70 | 26.34 | ||||||||||||
2011/2012 | ||||||||||||||||
First quarter(2) | 1.83 | 1.66 | 29.46 | 27.12 | ||||||||||||
London Stock | ||||||||||||||||
Exchange | ||||||||||||||||
Pounds per | NASDAQ | |||||||||||||||
ordinary share | Dollars per ADS | |||||||||||||||
Month | High | Low | High | Low | ||||||||||||
November 2010 | 1.80 | 1.59 | 28.52 | 24.84 | ||||||||||||
December 2010 | 1.72 | 1.60 | 27.10 | 25.62 | ||||||||||||
January 2011 | 1.85 | 1.68 | 32.70 | 26.34 | ||||||||||||
February 2011 | 1.83 | 1.72 | 29.75 | 27.90 | ||||||||||||
March 2011 | 1.85 | 1.67 | 29.67 | 26.71 | ||||||||||||
April 2011 | 1.83 | 1.69 | 29.46 | 28.06 | ||||||||||||
May 2011(2) | 1.74 | 1.66 | 29.27 | 27.12 | ||||||||||||
(1) | The Company transferred its ADSs from the NYSE to NASDAQ on 29 October 2009. | |
(2) | Covering period up to 16 May 2011. |
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31 March | % | |||||||||||
Currency (=£1) | 2011 | 2010 | change | |||||||||
Average: | ||||||||||||
Euro | 1.18 | 1.13 | 4.4 | |||||||||
US dollar | 1.56 | 1.60 | (2.5 | ) | ||||||||
At 31 March: | ||||||||||||
Euro | 1.13 | 1.12 | 0.9 | |||||||||
US dollar | 1.61 | 1.52 | 5.9 | |||||||||
Year ended 31 March | 31 March | Average | High | Low | ||||||||||||
2007 | 1.97 | 1.89 | 1.98 | 1.74 | ||||||||||||
2008 | 1.99 | 2.01 | 2.11 | 1.94 | ||||||||||||
2009 | 1.43 | 1.72 | 2.00 | 1.37 | ||||||||||||
2010 | 1.52 | 1.60 | 1.70 | 1.44 | ||||||||||||
2011 | 1.61 | 1.56 | 1.64 | 1.43 | ||||||||||||
Month | High | Low | ||||||
November 2010 | 1.63 | 1.56 | ||||||
December 2010 | 1.59 | 1.54 | ||||||
January 2011 | 1.60 | 1.55 | ||||||
February 2011 | 1.63 | 1.60 | ||||||
March 2011 | 1.64 | 1.60 | ||||||
April 2011 | 1.67 | 1.61 | ||||||
Number of | % of total | |||||||
Number of ordinary shares held | accounts | issued shares | ||||||
1 – 1,000 | 430,021 | 0.21 | ||||||
1,001 – 5,000 | 79,461 | 0.32 | ||||||
5,001 – 50,000 | 27,629 | 0.61 | ||||||
50,001 – 100,000 | 1,126 | 0.14 | ||||||
100,001 – 500,000 | 1,094 | 0.44 | ||||||
More than 500,000 | 1,636 | 98.28 | ||||||
540,967 | 100.00 | |||||||
Shareholder | Shareholding | |||
Black Rock, Inc. | 6.00 | % | ||
Legal & General Group Plc | 3.59 | % | ||
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• | a citizen or resident of the US; | |
• | a US domestic corporation; | |
• | an estate, the income of which is subject to US federal income tax regardless of its source; or | |
• | a trust, if a US court can exercise primary supervision over the trust’s administration and one or more US persons are authorised to control all substantial decisions of the trust. |
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• | a citizen of the United States resident or ordinarily resident for UK tax purposes in the United Kingdom; | |
• | a citizen of the United States who has been resident or ordinarily resident for UK tax purposes in the United Kingdom, ceased to be so resident or ordinarily resident for a period of less than five years of assessment and who disposed of the shares or ADSs during that period (a ‘temporary non-resident’), unless the shares or ADSs were also acquired during that period, such liability arising on that individual’s return to the UK; | |
• | a US domestic corporation resident in the United Kingdom by reason of being centrally managed and controlled in the United Kingdom; or | |
• | a citizen of the United States or a US domestic corporation that carries on a trade, profession or vocation in the United Kingdom through a branch or agency or, in the case of US domestic companies, through a permanent establishment and that has used the shares or ADSs for the purposes of such trade, profession or vocation or has used, held or acquired the shares or ADSs for the purposes of such branch or agency or permanent establishment. |
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• | the merger with AirTouch Communications, Inc. which completed on 30 June 1999. The Company changed its name to Vodafone AirTouch Plc in June 1999 but then reverted to its former name, Vodafone Group Plc, on 28 July 2000; | |
• | the acquisition of Mannesmann AG which completed on 12 April 2000. Through this transaction we acquired businesses in Germany and Italy and increased our indirect holding in SFR; | |
• | through a series of business transactions between 1999 and 2004 we acquired a 97.7% stake in Vodafone Japan. This was then disposed of on 27 April 2006; and | |
• | on 8 May 2007 we acquired companies with interests in Vodafone Essar for US$10.9 billion (£5.5 billion), following which we control Vodafone Essar. |
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Country by region | 800 MHz expiry date | 900 MHz expiry date | 1800 MHz expiry date | 2.1 GHz expiry date | 2.6 GHz expiry date | |||||||||||||||
Europe | ||||||||||||||||||||
Germany | December 2025 | December 2016 | December 2016 | December 2020 | December 2025 | |||||||||||||||
Italy | n/a | February 2015 | February 2015 | December 2021 | n/a | |||||||||||||||
Spain | n/a | February 2020 | July 2023 | April 2020 | n/a | |||||||||||||||
UK | n/a | See note | (1) | See note | (1) | December 2021 | n/a | |||||||||||||
Albania | n/a | June 2016 | June 2016 | December 2025 | n/a | |||||||||||||||
Czech Republic | n/a | January 2021 | January 2021 | February 2025 | n/a | |||||||||||||||
Greece | n/a | September 2012 | (2) | August 2016 | August 2021 | n/a | ||||||||||||||
Hungary | n/a | July 2014 | (3) | July 2014 | (3) | December 2019 | (3) | n/a | ||||||||||||
Ireland | n/a | May 2011 | December 2015 | October 2022 | n/a | |||||||||||||||
Malta | n/a | May 2011 | May 2011 | August 2020 | n/a | |||||||||||||||
Netherlands | n/a | March 2013 | March 2013 | December 2016 | May 2030 | |||||||||||||||
Portugal | n/a | October 2021 | October 2021 | January 2016 | n/a | |||||||||||||||
Romania | n/a | December 2011 | December 2011 | March 2020 | n/a | |||||||||||||||
Turkey | n/a | April 2023 | — | April 2029 | n/a | |||||||||||||||
Africa, Middle East and Asia Pacific | ||||||||||||||||||||
November 2014 — | November 2014 — | |||||||||||||||||||
India(4) | n/a | December 2026 | December 2026 | September 2030 | n/a | |||||||||||||||
Vodacom: South Africa | n/a | See note | (5) | See note | (5) | See note | (5) | n/a | ||||||||||||
Egypt | n/a | January 2022 | January 2022 | January 2022 | n/a | |||||||||||||||
Ghana | n/a | December 2019 | December 2019 | December 2023 | (6) | n/a | ||||||||||||||
New Zealand | n/a | November 2031 | March 2021 | March 2021 | n/a | |||||||||||||||
Qatar | n/a | June 2028 | June 2028 | June 2028 | n/a | |||||||||||||||
(1) | Indefinite licence with a one year notice of revocation. | |
(2) | One third of the 900 MHz spectrum will expire in 2016. | |
(3) | Options to extend these licences. | |
(4) | India is comprised of 23 separate service area licences with a variety of expiry dates. Option to extend 900/1800 licences by ten years. Vodafone acquired 3G licences in nine of the service areas in May 2010. | |
(5) | Vodacom’s South African spectrum licences are renewed annually. As part of the migration to a new licensing regime the NRA has issued Vodacom a service licence and a network licence which will permit Vodacom to offer mobile and fixed services. The service and network licences have 20 year duration and will expire in 2028. Vodacom also holds licences to provide 2G and/or 3G services in the Democratic Republic of Congo, Lesotho, Mozambique and Tanzania. | |
(6) | The NRA has issued provisional licences with the intention of converting these to full licences once the NRA board has been reconvened. |
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• | these measures are used for internal performance analysis; | |
• | these measures are used in setting director and management remuneration; and | |
• | they are useful in connection with discussion with the investment analyst community and debt rating agencies. |
• | free cash flow allows us and external parties to evaluate our liquidity and the cash generated by our operations. Free cash flow does not include payments for licences and spectrum included within intangible assets, items determined independently of the ongoing business, such as the level of dividends, and items which are deemed discretionary, such as cash flows relating to acquisitions and disposals or financing activities. In addition, it does not necessarily reflect the amounts which we have an obligation to incur. However, it does reflect the cash available for such discretionary activities, to strengthen the consolidated statement of financial position or to provide returns to shareholders in the form of dividends or share purchases; | |
• | free cash flow facilitates comparability of results with other companies although our measure of free cash flow may not be directly comparable to similarly titled measures used by other companies; | |
• | these measures are used by management for planning, reporting and incentive purposes; and | |
• | these measures are useful in connection with discussion with the investment analyst community and debt rating agencies. |
• | it provides additional information on underlying growth of the business without the effect of certain factors unrelated to the operating performance of the business; | |
• | it is used for internal performance analysis; and | |
• | it facilitates comparability of underlying growth with other companies, although the term “organic” is not a defined term under IFRS and may not, therefore, be comparable with similarly titled measures reported by other companies. |
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Organic | M&A | Foreign | Reported | |||||||||||||
change | activity | exchange | change | |||||||||||||
% | pps | pps | % | |||||||||||||
31 March 2011 | ||||||||||||||||
Group | ||||||||||||||||
Service revenue | ||||||||||||||||
H2 2011 | 2.5 | 0.2 | (1.5 | ) | 1.2 | |||||||||||
H1 2011 | 1.7 | 1.5 | 0.5 | 3.7 | ||||||||||||
Change | 0.8 | (1.3 | ) | (2.0 | ) | (2.5 | ) | |||||||||
Revenue | 2.8 | 0.8 | (0.4 | ) | 3.2 | |||||||||||
Service revenue | 2.1 | 0.9 | (0.6 | ) | 2.4 | |||||||||||
Service revenue for the quarter ended 31 March 2011 | 2.5 | 0.1 | (2.2 | ) | 0.4 | |||||||||||
Data revenue | 26.4 | 1.2 | (1.2 | ) | 26.4 | |||||||||||
Fixed line revenue | 5.2 | 1.7 | (3.5 | ) | 3.4 | |||||||||||
Emerging markets service revenue | 11.8 | 3.4 | 6.8 | 22.0 | ||||||||||||
Vodafone Global Enterprise revenue | 8 | — | 3 | 11 | ||||||||||||
Adjusted EBITDA | (0.7 | ) | 1.4 | (1.1 | ) | (0.4 | ) | |||||||||
Adjusted operating profit | 1.8 | 2.5 | (1.2 | ) | 3.1 | |||||||||||
Europe | ||||||||||||||||
Service revenue | ||||||||||||||||
31 March 2010 | (3.8 | ) | 0.1 | 4.6 | 0.9 | �� | ||||||||||
31 March 2009 | (1.7 | ) | 2.5 | 13.2 | 14.0 | |||||||||||
Change | (2.1 | ) | (2.4 | ) | (8.6 | ) | (13.1 | ) | ||||||||
Service revenue for the six months ended 31 March 2011 | (0.3 | ) | 0.2 | (3.5 | ) | (3.6 | ) | |||||||||
Service revenue for the quarter ended 31 March 2011 | (0.8 | ) | 0.2 | (3.2 | ) | (3.8 | ) | |||||||||
Northern Europe service revenue growth | 2.7 | (1.2 | ) | (2.8 | ) | (1.3 | ) | |||||||||
Southern Europe service revenue growth | (2.9 | ) | 1.2 | (3.5 | ) | (5.2 | ) | |||||||||
Enterprise revenue | 0.5 | 0.2 | (3.2 | ) | (2.5 | ) | ||||||||||
Germany — service revenue excluding the impact of termination rate cuts | 2.1 | — | (4.1 | ) | (2.0 | ) | ||||||||||
Germany — data revenue | 27.9 | — | (5.1 | ) | 22.8 | |||||||||||
Germany — enterprise revenue | 3.6 | — | (4.2 | ) | (0.6 | ) | ||||||||||
Italy — data revenue | 21.5 | — | (4.8 | ) | 16.7 | |||||||||||
Spain — data revenue | 14.8 | — | (4.8 | ) | 10.0 | |||||||||||
UK — data revenue | 28.5 | — | — | 28.5 | ||||||||||||
Greece — service revenue | (19.4 | ) | — | (3.2 | ) | (22.6 | ) | |||||||||
Turkey — service revenue | 28.9 | 3.6 | 2.7 | 35.2 | ||||||||||||
Africa, Middle East and Asia Pacific | ||||||||||||||||
Service revenue for the quarter ended 31 March 2011 | 11.8 | (1.3 | ) | 0.7 | 11.2 | |||||||||||
Vodacom — data revenue(1) | 43.8 | 9.7 | 15.2 | 68.7 | ||||||||||||
South Africa — data revenue | 41.8 | 9.5 | 15.6 | 66.9 | ||||||||||||
Egypt — service revenue | (0.8 | ) | — | (1.0 | ) | (1.8 | ) | |||||||||
Egypt — data revenue | 37.7 | — | (1.5 | ) | 36.2 | |||||||||||
Ghana — service revenue | 21.0 | — | 1.6 | 22.6 | ||||||||||||
Indus Towers — contribution to India service revenue growth | 1.7 | — | 0.1 | 1.8 | ||||||||||||
Percentage point reduction in adjusted EBITDA margin | (0.6 | ) | 1.0 | (0.2 | ) | 0.2 | ||||||||||
Verizon Wireless | ||||||||||||||||
Revenue | 6.0 | — | 2.6 | 8.6 | ||||||||||||
Service revenue(2) | 5.8 | — | 2.6 | 8.4 | ||||||||||||
Adjusted EBITDA | 6.7 | (0.1 | ) | 2.7 | 9.3 | |||||||||||
Group’s share of result of Verizon Wireless | 8.5 | (0.1 | ) | 2.7 | 11.1 | |||||||||||
Table of Contents
Organic | M&A | Foreign | Reported | |||||||||||||
change | activity | exchange | change | |||||||||||||
% | pps | pps | % | |||||||||||||
31 March 2010 | ||||||||||||||||
Group | ||||||||||||||||
Service revenue | (1.6 | ) | 4.9 | 5.6 | 8.9 | |||||||||||
Data revenue | 19.3 | 6.9 | 6.8 | 33.0 | ||||||||||||
Fixed line revenue | 7.9 | 6.0 | 6.7 | 20.6 | ||||||||||||
Emerging markets service revenue | 7.9 | 31.3 | 7.9 | 47.1 | ||||||||||||
Europe | ||||||||||||||||
Service revenue | (3.8 | ) | 0.1 | 4.6 | 0.9 | |||||||||||
Data revenue | 17.7 | — | 5.5 | 23.2 | ||||||||||||
Fixed line revenue | 7.5 | — | 6.3 | 13.8 | ||||||||||||
Enterprise revenue | (4.8 | ) | — | 4.5 | (0.3 | ) | ||||||||||
Germany — service revenue for the quarter ended 31 March 2010 | (1.6 | ) | — | (2.4 | ) | (4.0 | ) | |||||||||
Germany — mobile service revenue | (5.0 | ) | — | 6.0 | 1.0 | |||||||||||
Germany — mobile service revenue for the quarter ended 31 March 2010 | (1.8 | ) | — | (2.3 | ) | (4.1 | ) | |||||||||
Germany — fixed line revenue | 1.3 | — | 6.1 | 7.4 | ||||||||||||
Spain — service revenue for the quarter ended 31 March 2010 | (6.2 | ) | — | (2.3 | ) | (8.5 | ) | |||||||||
UK — service revenue for the quarter ended 31 March 2010 | (2.6 | ) | — | — | (2.6 | ) | ||||||||||
Greece — service revenue | (14.5 | ) | — | 5.6 | (8.9 | ) | ||||||||||
Netherlands — service revenue | 3.0 | — | 6.4 | 9.4 | ||||||||||||
Portugal — service revenue | (4.9 | ) | — | 6.1 | 1.2 | |||||||||||
Romania — service revenue | (19.9 | ) | — | 5.2 | (14.7 | ) | ||||||||||
Romania — adjusted EBITDA | (26.5 | ) | — | 4.7 | (21.8 | ) | ||||||||||
Turkey — service revenue for the quarter ended 31 March 2010 | 31.3 | — | 1.5 | 32.8 | ||||||||||||
Africa, Middle East and Asia Pacific | ||||||||||||||||
India — service revenue for the quarter ended 31 March 2010 | 6.5 | — | 0.1 | 6.6 | ||||||||||||
Indus Towers — contribution to India service revenue growth for the quarter ended 31 March 2010 | 0.3 | — | 0.1 | 0.4 | ||||||||||||
Vodacom — data revenue | 32.9 | 155.3 | 57.3 | 245.5 | ||||||||||||
Egypt — service revenue | 1.3 | — | 4.7 | 6.0 | ||||||||||||
Egypt — data and fixed line revenue | 64.2 | — | 4.4 | 68.6 | ||||||||||||
Verizon Wireless | ||||||||||||||||
Revenue | 5.0 | 11.8 | 5.5 | 22.3 | ||||||||||||
Service revenue | 6.3 | 11.7 | 5.6 | 23.6 | ||||||||||||
Adjusted EBITDA | 4.4 | 10.9 | 5.4 | 20.7 | ||||||||||||
Group’s share of result of Verizon Wireless | 8.0 | 2.5 | 5.6 | 16.1 | ||||||||||||
31 March 2009 | ||||||||||||||||
Group | ||||||||||||||||
Service revenue | (0.3 | ) | 3.1 | 13.1 | 15.9 | |||||||||||
Data revenue | 25.9 | 0.7 | 17.1 | 43.7 | ||||||||||||
Fixed line revenue | 2.1 | 21.3 | 22.1 | 45.5 | ||||||||||||
Emerging markets service revenue(3) | 6.4 | 14.2 | 6.4 | 27.0 | ||||||||||||
Europe | ||||||||||||||||
Germany — service revenue | (2.5 | ) | (0.1 | ) | 17.6 | 15.0 | ||||||||||
Italy — service revenue | 1.2 | 4.7 | 19.2 | 25.1 | ||||||||||||
Spain — service revenue | (4.9 | ) | 2.5 | 17.7 | 15.3 | |||||||||||
UK — service revenue | (1.1 | ) | 0.3 | — | (0.8 | ) | ||||||||||
Africa, Middle East and Asia Pacific | ||||||||||||||||
India — pro-forma revenue | 33 | 9 | 6 | 48 | ||||||||||||
Vodacom — service revenue | 13.8 | 2.1 | (5.2 | ) | 10.7 | |||||||||||
Notes: | ||
(1) | Data revenue in South Africa grew by 41.8%(*). Excluding the impact of reclassifications between messaging and data revenue during the year, data revenue grew by 35.9%(*). | |
(2) | Organic growth rates include the impact of a non-cash revenue adjustment which was recorded to properly defer previously recognised data revenue that will be earned and recognised in future periods. Excluding this the equivalent growth rates for service revenue, revenue, adjusted EBITDA and the Group’s share of result in Verizon Wireless would have been 6.4%(*), 6.6%(*), 8.2%(*) and 10.8%(*) respectively. | |
(3) | Excludes India, Ghana and Qatar as these were not owned for the full financial year. |
Table of Contents
Item | Form 20-F caption | Location in this document | Page | ||||||||
1 | Identity of directors, senior management and advisers | Not applicable | — | ||||||||
2 | Offer statistics and expected timetable | Not applicable | — | ||||||||
3 | Key information | ||||||||||
3A Selected financial data | Selected financial data | 151 | |||||||||
Shareholder information — Inflation and foreign currency translation | 134 | ||||||||||
3B Capitalisation and indebtedness | Not applicable | — | |||||||||
3C Reasons for the offer and use of proceeds | Not applicable | — | |||||||||
3D Risk factors | Principal risk factors and uncertainties | 45 to 46 | |||||||||
4 | Information on the Company | ||||||||||
4A History and development of the company | History and development | 139 | |||||||||
Contact details | BC | ||||||||||
4B Business overview | About us | 2 to 3 | |||||||||
Vodafone at a glance | 4 to 5 | ||||||||||
Mobile telecommunications industry | 8 to 9 | ||||||||||
Focus on key areas of growth potential — Mobile data | 15 to 19 | ||||||||||
Focus on key areas of growth potential — Enterprise | 22 | ||||||||||
Focus on key areas of growth potential — Total communications | 23 | ||||||||||
Focus on key areas of growth potential — New services | 24 | ||||||||||
Operating results | 34 to 43 | ||||||||||
4C Organisational structure | Note 12 “Principal subsidiaries” | 103 | |||||||||
Note 13 “Investments in joint ventures” | 104 | ||||||||||
Note 14 “Investments in associates” | 105 | ||||||||||
Note 15 “Other investments” | 105 | ||||||||||
4D Property, plant and equipment | About us | 2 to 3 | |||||||||
Financial position and resources | 47 to 51 | ||||||||||
Sustainable business | 30 to 31 | ||||||||||
4A | Unresolved staff comments | None | — | ||||||||
5 | Operating and financial review and prospects | ||||||||||
5A Operating results | Operating results | 34 to 43 | |||||||||
Note 22 “Borrowings” | 113 to 117 | ||||||||||
Shareholder information — Inflation and foreign currency translation | 134 | ||||||||||
Regulation | 140 to 142 | ||||||||||
5B Liquidity and capital resources | Financial position and resources — Liquidity and capital resources | 48 to 51 | |||||||||
Note 21 “Capital and financial risk management” | 110 to 112 | ||||||||||
Note 22 “Borrowings” | 113 to 117 | ||||||||||
5C Research and development, patents and licences, etc | Focus on key areas of growth potential — Mobile data | 17 | |||||||||
Note 4 “Operating profit” | 92 | ||||||||||
Regulation — Licences | 142 | ||||||||||
5D Trend information | Mobile telecommunications industry | 8 to 9 | |||||||||
5E Off-balance sheet arrangements | Financial position and resources — Off-balance sheet arrangements | 51 | |||||||||
Note 27 “Commitments” | 121 | ||||||||||
Note 28 “Contingent liabilities” | 121 to 122 | ||||||||||
5F Tabular disclosure of contractual obligations | Financial position and resources — Contractual obligations and contingencies | 47 | |||||||||
5G Safe harbor | Forward-looking statements | 148 | |||||||||
6 | Directors, senior management and employees | ||||||||||
6A Directors and senior management | Board of directors and Group management | 52 to 54 | |||||||||
6B Compensation | Directors’ remuneration | 62 to 73 | |||||||||
6C Board practices | Corporate governance | 55 to 61 | |||||||||
Directors’ remuneration | 62 to 73 | ||||||||||
Board of directors and Group management | 52 to 54 | ||||||||||
6D Employees | People | 32 to 33 | |||||||||
Note 31 “Employees” | 124 | ||||||||||
6E Share ownership | Directors’ remuneration | 62 to 73 | |||||||||
Note 20 “Share-based payments” | 108 to 109 | ||||||||||
7 | Major shareholders and related party transactions | ||||||||||
7A Major shareholders | Shareholder information — Major shareholders | 134 | |||||||||
7B Related party transactions | Directors’ remuneration | 62 to 73 | |||||||||
Note 28 “Contingent liabilities” | 121 to 122 | ||||||||||
Note 30 “Related party transactions” | 123 to 124 | ||||||||||
7C Interests of experts and counsel | Not applicable | — | |||||||||
Table of Contents
Item | Form 20-F caption | Location in this document | Page | ||||||
8 | Financial information | ||||||||
8A Consolidated statements and other financial information | Financials | 74 to 124 | |||||||
Audit report on the consolidated financial statements | 79 | ||||||||
Note 28 “Contingent liabilities” | 121 to 122 | ||||||||
Financial position and resources | 47 to 51 | ||||||||
8B Significant changes | Subsequent events | A-1 to A-6 | |||||||
9 | The offer and listing | ||||||||
9A Offer and listing details | Shareholder information — Share price history | 133 | |||||||
9B Plan of distribution | Not applicable | — | |||||||
9C Markets | Shareholder information — Markets | 134 | |||||||
9D Selling shareholders | Not applicable | — | |||||||
9E Dilution | Not applicable | — | |||||||
9F Expenses of the issue | Not applicable | — | |||||||
10 | Additional information | ||||||||
10A Share capital | Not applicable | — | |||||||
10B Memorandum and articles of association | Shareholder information — Articles of association and applicable English law | 134 to 136 | |||||||
10C Material contracts | Shareholder information — Material contracts | 137 | |||||||
10D Exchange controls | Shareholder information — Exchange controls | 137 | |||||||
10E Taxation | Shareholder information — Taxation | 137 to 138 | |||||||
10F Dividends and paying agents | Not applicable | — | |||||||
10G Statement by experts | Not applicable | — | |||||||
10H Documents on display | Shareholder information — Documents on display | 137 | |||||||
10I Subsidiary information | Not applicable | — | |||||||
11 | Quantitative and qualitative disclosures about market risk | Note 21 “Capital and financial risk management” | 110 to 112 | ||||||
12 | Description of securities other than equity securities | ||||||||
12A Debt securities | Not applicable | — | |||||||
12B Warrants and rights | Not applicable | — | |||||||
12C Other securities | Not applicable | — | |||||||
12D American depositary shares | ADR payment information | ||||||||
13 | Defaults, dividend arrearages and delinquencies | Not applicable | — | ||||||
14 | Material modifications to the rights of security holders and use of proceeds | Not applicable | — | ||||||
15 | Controls and procedures | Corporate governance | 55 to 61 | ||||||
Directors’ statement of responsibility — Management’s report on internal control over financial reporting | 75 | ||||||||
Audit report on internal controls | 76 | ||||||||
16 | 16A Audit Committee financial expert | Corporate governance — Board committees | 57 to 58 | ||||||
16B Code of ethics | Corporate governance | 55 to 61 | |||||||
16C Principal accountant fees and services | Note 4 “Operating profit” Corporate governance — Auditor | 92 60 | |||||||
16D Exemptions from the listing standards for audit committees | Not applicable | — | |||||||
16E Purchase of equity securities by the issuer and affiliated purchasers | Financial position and resources | 47 to 51 | |||||||
16F Change in registrant’s certifying accountant | Not applicable | — | |||||||
16G Corporate governance | Corporate governance — US listing requirements | 60 | |||||||
17 | Financial statements | Not applicable | — | ||||||
18 | Financial statements | Financials(1) | 74 to 124 | ||||||
18A Separate financial statements required by Rule 3-09 of Regulation S-X | Financials | B-1 | |||||||
18B Report of Independent Registered Public Accounting Firm | Financials | B-30 | |||||||
19 | Exhibits | Filed with the SEC | Index to Exhibits | ||||||
Table of Contents
• | the Group’s expectations regarding its financial and operating performance, including statements contained within the Chief Executive’s review on pages 10 to 11, the Group’s 7% dividend per share growth target contained on pages 6, 27, 44 and 48, and the guidance statement for the 2012 financial year and the medium-term guidance statement for the three financial years ending 31 March 2014 on page 44 of this document, and the performance of joint ventures, associates, including Verizon Wireless and VHA, other investments and newly acquired businesses; | |
• | intentions and expectations regarding the development of products, services and initiatives introduced by, or together with, Vodafone or by third parties, including new mobile technologies, such as the introduction of 4G, the Vodafone M-Pesa money transfer system, tablets and an increase in download speeds and 3G sites; | |
• | expectations regarding the global economy and the Group’s operating environment, including future market conditions, growth in the number of worldwide mobile phone users and other trends, including increased data usage; | |
• | revenue and growth expected from the Group’s total communications strategy, including data revenue growth, and its expectations with respect to long-term shareholder value growth; | |
• | mobile penetration and coverage rates, termination rate cuts, the Group’s ability to acquire spectrum, expected growth prospects in the Europe, Africa, Middle East and Asia Pacific regions and growth in customers and usage generally; | |
• | expected benefits associated with the merger of Vodafone Australia and Hutchison 3G Australia; | |
• | anticipated benefits to the Group from cost efficiency programmes; | |
• | possible future acquisitions, including increases in ownership in existing investments, the timely completion of pending acquisition transactions and pending offers for investments, including licence acquisitions, and the expected funding required to complete such acquisitions or investments; | |
• | expectations regarding the Group’s future revenue, operating profit, adjusted EBITDA margin, free cash flow, capital intensity, depreciation and amortisation charges, foreign exchange rates, tax rates and capital expenditure; | |
• | expectations regarding the Group’s access to adequate funding for its working capital requirements and share buyback programmes, and the rate of dividend growth by the Group (including the Group’s 7% dividend per share growth target) or its existing investments; and | |
• | the impact of regulatory and legal proceedings involving Vodafone and of scheduled or potential regulatory changes. |
• | general economic and political conditions in the jurisdictions in which the Group operates and changes to the associated legal, regulatory and tax environments; | |
• | increased competition, from both existing competitors and new market entrants, including mobile virtual network operators; | |
• | levels of investment in network capacity and the Group’s ability to deploy new technologies, products and services in a timely manner, particularly data content and services; | |
• | rapid changes to existing products and services and the inability of new products and services to perform in accordance with expectations, |
including as a result of third party or vendor marketing efforts; | ||
• | the ability of the Group to integrate new technologies, products and services with existing networks, technologies, products and services; | |
• | the Group’s ability to generate and grow revenue from both voice and non-voice services and achieve expected cost savings; | |
• | a lower than expected impact of new or existing products, services or technologies on the Group’s future revenue, cost structure and capital expenditure outlays; | |
• | slower than expected customer growth, reduced customer retention, reductions or changes in customer spending and increased pricing pressure; | |
• | the Group’s ability to expand its spectrum position, win 3G and 4G allocations and realise expected synergies and benefits associated with 3G and 4G; | |
• | the Group’s ability to secure the timely delivery of high quality, reliable handsets, network equipment and other key products from suppliers; | |
• | loss of suppliers, disruption of supply chains and greater than anticipated prices of new mobile handsets; | |
• | changes in the costs to the Group of, or the rates the Group may charge for, terminations and roaming minutes; | |
• | the Group’s ability to realise expected benefits from acquisitions, partnerships, joint ventures, franchises, brand licences, platform sharing or other arrangements with third parties, particularly those related to the development of data and internet services; | |
• | acquisitions and divestments of Group businesses and assets and the pursuit of new, unexpected strategic opportunities which may have a negative impact on the Group’s financial condition and results of operations; | |
• | the Group’s ability to integrate acquired business or assets and the imposition of any unfavourable conditions, regulatory or otherwise, on any pending or future acquisitions or dispositions; | |
• | the extent of any future write-downs or impairment charges on the Group’s assets, or restructuring charges incurred as a result of an acquisition or disposition; | |
• | developments in the Group’s financial condition, earnings and distributable funds and other factors that the Board takes into account in determining the level of dividends; | |
• | the Group’s ability to satisfy working capital requirements through borrowing in capital markets, bank facilities and operations; | |
• | changes in foreign exchange rates, including particularly the exchange rate of pounds sterling to the euro and the US dollar; | |
• | changes in the regulatory framework in which the Group operates, including the commencement of legal or regulatory action seeking to regulate the Group’s permitted charging rates; | |
• | the impact of legal or other proceedings against the Group or other companies in the communications industry; and | |
• | changes in statutory tax rates and profit mix, the Group’s ability to resolve open tax issues and the timing and amount of any payments in respect of tax liabilities. |
Table of Contents
2G | 2G networks are operated using global system for mobile (‘GSM’) technology which offer services such as voice, text messaging and basic data. In addition, all the Group’s controlled networks support general packet radio services (‘GPRS’), often referred to as 2.5G. GPRS allows mobile devices to access IP based data services such as the internet and email. | |
3G | A cellular technology based on wide band CDMA delivering voice and data services. | |
4G | 4G or LTE technology offers even faster data transfer speeds than 3G/HSPA, increases network capacity and is able to deliver sustained customer throughputs of between 6-12 Mbps in real network conditions. | |
Acquisition costs | The total of connection fees, trade commissions and equipment costs relating to new customer connections. | |
ADR | American depositary receipts is a mechanism designed to facilitate trading in shares of non-US companies in the US stock markets. The main purpose is to create an instrument which can easily be settled through US stock market clearing systems. | |
ADS | American depositary shares are shares evidenced by american depositary receipts. ADSs are issued by a depositary bank and represent one or more shares of a non-US issuer held by the depositary bank. The main purpose of ADSs is to facilitate trading in shares of non-US companies in the US markets and, accordingly, ADRs which evidence ADSs are in a form suitable for holding in US clearing systems. | |
AGM | Annual general meeting. | |
ARPU | Service revenue excluding fixed line revenue, fixed advertising revenue, revenue related to business managed services and revenue from certain tower sharing arrangements divided by average customers. | |
Capital expenditure | This measure includes the aggregate of capitalised property, plant and equipment additions and capitalised software costs. | |
CDMA | Code-division multiple access refers to any of several protocols used in 2G and 3G communications. It allows numerous signals to occupy a single transmission channel, optimising availability of bandwidth. | |
Churn | Total gross customer disconnections in the period divided by the average total customers in the period. | |
Controlled and jointly controlled | Controlled and jointly controlled measures include 100% for the Group’s mobile operating subsidiaries and the Group’s proportionate share for joint ventures. | |
Customer costs | Customer costs include acquisition costs, being the total of connection fees, trade commissions and equipment costs relating to new customer connections, and retention costs, being the total of trade commissions, loyalty scheme and equipment costs relating to customer retention and upgrades, as well as expenses related to ongoing commissions. | |
Depreciation and other amortisation | This measure includes the profit or loss on disposal of property, plant and equipment and computer software. | |
Direct costs | Direct costs include interconnect costs and other direct costs of providing services. | |
DSL | A digital subscriber line which is a fixed line enabling data to be transmitted at theoretical peak speeds of up to 16 Mbps. | |
DTT | Digital terrestrial television. | |
Adjusted EBITDA | Operating profit excluding share in results of associates, depreciation and amortisation, gains/losses on the disposal of fixed assets, impairment losses and other operating income and expense. | |
EDGE | In most our networks we also provide an advanced version of GPRS called enhanced data rates for GSM evolution (‘EDGE’). This provides download speeds of over 200 kilobits per second (‘kbps’) to customers. | |
Emerging markets | India, Vodacom, Egypt, Turkey, Ghana, Qatar and Fiji. | |
Fixed broadband customer | A fixed broadband customer is defined as a physical connection or access point to a fixed line network. | |
FRC | Financial Reporting Council. | |
Free cash flow | Operating free cash flow after cash flows in relation to taxation, interest, dividends received from associates and investments and dividends paid to non-controlling shareholders in subsidiaries but before licence and spectrum payments and for the year ended 31 March 2011 other items in respect of: the UK CFC settlement, tax relating to the disposal of China Mobile Limited, the SoftBank disposal and the court deposit made in respect of the India tax case. | |
FSA | Financial Services Authority. | |
HSDPA | High speed downlink packet access is a wireless technology enabling theoretical network to mobile data transmission speeds of up to 43.2 Mbps. | |
HSPA | High speed packet access or third generation (‘3G’) is a wireless technology operating wideband code division multiple access (‘W-CDMA’) technology, providing customers with voice, video telephony, multimedia messaging and high speed data services. | |
Impairment | A downward revaluation of an asset. | |
‘in the cloud’ | This means the customer has little or no equipment at their premises and all the equipment and capability is run from the Vodafone network instead. This removes the need for customers to make capital investment and instead they have an operating cost model with a recurring monthly fee. | |
Interconnect costs | A charge paid by Vodafone to other fixed line or mobile operators when a Vodafone customer calls a customer connected to a different network. | |
IP | Internet protocol (‘IP’) is the method by which data is sent from one computer to another on the internet. | |
LAN | A local area network supplies networking capability to a group of computers in close proximity to each other. | |
LTE | Long-term evolution (‘LTE’) is 4G technology which offers even faster data transfer speeds than 3G/HSPA, increases network capacity and is able to deliver sustained customer throughputs of between 6-12 Mbps in real network conditions. | |
Mark-to-market | Mark-to-market or fair value accounting refers to accounting for the value of an asset or liability based on the current market price of the asset or liability. |
Table of Contents
Mobile broadband | Also known as mobile internet (see below). | |
Mobile customer | A mobile customer is defined as a subscriber identity module (‘SIM’), or in territories where SIMs do not exist, a unique mobile telephone number, which has access to the network for any purpose, including data only usage, except telemetric applications. Telemetric applications include, but are not limited to, asset and equipment tracking, mobile payment and billing functionality, e.g. vending machines and meter readings, and include voice enabled customers whose usage is limited to a central service operation, e.g. emergency response applications in vehicles. | |
Mobile internet | Browser based access to the internet or web applications using a mobile device, such as a smartphone, connected to a wireless network. | |
Mobile termination rate (‘MTR’) | A per minute charge paid by a telecommunications network operator when a customer makes a call to another mobile or fixed line network operator. | |
MVNO | Mobile virtual network operators, companies that provide mobile phone services but do not have their own licence of spectrum or the infrastructure required to operate a network. | |
Net debt | Long-term borrowings, short-term borrowings and mark-to-market adjustments on financing instruments less cash and cash equivalents. | |
Net promoter score | Net promoter score (‘NPS’) is a customer loyalty metric used to monitor customer satisfaction. | |
Operating costs | Operating expenses plus customer costs other than acquisition and retention costs. | |
Operating expenses | Operating expenses comprise primarily of network and IT related expenditure, support costs from HR and finance and certain intercompany items. | |
Operating free cash flow | Cash generated from operations after cash payments for capital expenditure (excludes capital licence and spectrum payments) and cash receipts from the disposal of intangible assets and property, plant and equipment. | |
Organic growth | The percentage movements in organic growth are presented to reflect operating performance on a comparable basis, both in terms of merger and acquisition activity and foreign exchange rates. | |
Partner markets | Markets in which the Group has entered into a partner agreement with a local mobile operator enabling a range of Vodafone’s global products and services to be marketed in that operator’s territory and extending Vodafone’s reach into such markets. | |
Penetration | Number of SIMs in a country as a percentage of the country’s population. Penetration can be in excess of 100% due to customers’ owning more than one SIM. | |
Petabyte | A petabyte is a measure of data usage. One petabyte is a million gigabytes. | |
Pps | Percentage points. | |
Pro-forma growth | Pro-forma growth is organic growth adjusted to include acquired business for the whole of both periods. | |
Reported growth | Reported growth is based on amounts reported in pounds sterling as determined under IFRS. | |
RAN | Radio access network is part of a mobile telecommunication system which conceptually sits between the mobile phone and the base station. | |
Retention costs | The total of trade commissions, loyalty scheme and equipment costs relating to customer retention and upgrade. | |
Roaming | Allows our customers to make calls on other operators’ mobile networks while travelling abroad. | |
Service revenue | Service revenue comprises all revenue related to the provision of ongoing services including, but not limited to, monthly access charges, airtime usage, roaming, incoming and outgoing network usage by non-Vodafone customers and interconnect charges for incoming calls. | |
Smartphone devices | A smartphone is a mobile phone offering advanced capabilities including access to email and the internet. | |
Smartphone penetration | The number of smartphone devices divided by the number of registered SIMs, excluding data only SIMs. | |
Spectrum | The radio frequency bands and channels assigned for telecommunication services. | |
Tablet device | A tablet is a slate shaped, mobile or portable, casual computing device equipped with a finger operated touchscreen or stylus, for example, the Apple iPad. | |
Visitor revenue | Amounts received by a Vodafone operating company when customers of another operator, including those of other Vodafone companies, roam onto its network. | |
Wi-Fi | A Wi-Fi enabled device such as a smartphone can connect to the internet when within a range of a wireless network connected to the internet. |
Table of Contents
At/for the year ended 31 March | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||
Consolidated income statement data (£m) | ||||||||||||||||||||
Revenue | 45,884 | 44,472 | 41,017 | 35,478 | 31,104 | |||||||||||||||
Operating profit/(loss) | 5,596 | 9,480 | 5,857 | 10,047 | (1,564 | ) | ||||||||||||||
Profit/(loss) before taxation | 9,498 | 8,674 | 4,189 | 9,001 | (2,383 | ) | ||||||||||||||
Profit/(loss) for the financial year from continuing operations | 7,870 | 8,618 | 3,080 | 6,756 | (4,806 | ) | ||||||||||||||
Profit/(loss) for the financial year | 7,870 | 8,618 | 3,080 | 6,756 | (5,222 | ) | ||||||||||||||
Consolidated statement of financial position data (£m) | ||||||||||||||||||||
Total assets | 151,220 | 156,985 | 152,699 | 127,270 | 109,617 | |||||||||||||||
Total equity | 87,561 | 90,810 | 84,777 | 76,471 | 67,293 | |||||||||||||||
Total equity shareholders’ funds | 87,555 | 90,381 | 86,162 | 78,043 | 67,067 | |||||||||||||||
Earnings per share(1) | ||||||||||||||||||||
Weighted average number of shares (millions) | ||||||||||||||||||||
— Basic | 52,408 | 52,595 | 52,737 | 53,019 | 55,144 | |||||||||||||||
— Diluted | 52,748 | 52,849 | 52,969 | 53,287 | 55,144 | |||||||||||||||
Basic earnings/(loss) per ordinary share (pence) | ||||||||||||||||||||
— Profit/(loss) from continuing operations | 15.20p | 16.44p | 5.84p | 12.56p | (8.94)p | |||||||||||||||
— Profit/(loss) for the financial year | 15.20p | 16.44p | 5.84p | 12.56p | (9.70)p | |||||||||||||||
Diluted earnings/(loss) per ordinary share | ||||||||||||||||||||
— Profit/(loss) from continuing operations | 15.11p | 16.36p | 5.81p | 12.50p | (8.94)p | |||||||||||||||
— Profit/(loss) for the financial year | 15.11p | 16.36p | 5.81p | 12.50p | (9.70)p | |||||||||||||||
Cash dividends(1)(2) | ||||||||||||||||||||
Amount per ordinary share (pence) | 8.90p | 8.31p | 7.77p | 7.51p | 6.76p | |||||||||||||||
Amount per ADS (pence) | 89.0p | 83.1p | 77.7p | 75.1p | 67.6p | |||||||||||||||
Amount per ordinary share (US cents) | 14.33c | 12.62c | 11.11c | 14.91c | 13.28c | |||||||||||||||
Amount per ADS (US cents) | 143.3c | 126.2c | 111.1c | 149.1c | 132.8c | |||||||||||||||
Other data | ||||||||||||||||||||
Ratio of earnings to fixed charges(3) | 5.7 | 3.6 | 1.2 | 3.9 | — | |||||||||||||||
Ratio of earnings to fixed charges deficit(3) | — | — | — | — | (4,389 | ) | ||||||||||||||
Notes: | ||
(1) | See note 8 to the consolidated financial statements, “Earnings per share”. Earnings and dividends per ADS is calculated by multiplying earnings per ordinary share by ten, the number of ordinary shares per ADS. Dividend per ADS is calculated on the same basis. | |
(2) | The final dividend for the year ended 31 March 2011 was proposed by the directors on 17 May 2011 and is payable on 5 August 2011 to holders of record as of 3 June 2011. The total dividends have been translated into US dollars at 31 March 2011 for purposes of the above disclosure but the dividends are payable in US dollars under the terms of the ADS depositary agreement. | |
(3) | For the purposes of calculating these ratios, earnings consist of profit before tax adjusted for fixed charges, dividend income from associates, share of profits and losses from associates, interest capitalised, interest amortised and profits and losses on ordinary activities before taxation from discontinued operations. Fixed charges comprise one third of payments under operating leases, representing the estimated interest element of these payments, interest payable and similar charges, interest capitalised and preferred share dividends. |
Table of Contents
Table of Contents
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 FSC www.fsc.org MIX From responsible sources FSC@ C018444 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 |
Table of Contents
Berkshire RG14 2FN England Registered in England No. 1833679 Telephone: +44 (0) 1635 33251 Fax: +44 (0) 1635 238080 www.vodafone.com Contact detailsInvestor Relations Telephone: +44 (0) 7919 990230 Email: ir@vodafone.co.uk Website: www.vodafone.com/investorMedia Relations Telephone: +44 (0) 1635 664444 Email: groupmediarelations@vodafone.com Website: www.vodafone.com/mediaSustainability Email: sustainability@vodafone.com Website: www.vodafone.com/sustainability |
Table of Contents
A-1
Table of Contents
Total number of | ||||||||||||||||
shares purchased | Maximum value of | |||||||||||||||
Average price paid | under share | shares that may yet | ||||||||||||||
Number of shares | per share inclusive of | repurchase | be purchased under | |||||||||||||
Date of share | purchased(1) | transaction costs | programme(2) | the programme(3) | ||||||||||||
purchase | ‘000 | Pence | ‘000 | £m | ||||||||||||
September 2010 | 115,400 | 161.78 | 115,400 | 2,613 | ||||||||||||
October 2010 | 187,500 | 165.50 | 302,900 | 2,303 | ||||||||||||
November 2010 | 209,400 | 170.21 | 512,300 | 1,947 | ||||||||||||
December 2010 | 162,900 | 167.44 | 675,200 | 1,674 | ||||||||||||
January 2011 | 177,090 | 176.67 | 852,290 | 1,361 | ||||||||||||
February 2011 | 134,700 | 179.23 | 986,990 | 1,120 | ||||||||||||
March 2011 | 250,900 | 177.26 | 1,237,890 | 675 | ||||||||||||
April 2011 | 135,100 | 176.81 | 1,372,990 | 436 | ||||||||||||
May 2011 | 179,300 | 170.84 | 1,552,290 | 130 | ||||||||||||
June 1 to June 14, 2011 (inclusive) | 79,373 | 163.23 | 1,631,663 | — | ||||||||||||
Total | 1,631,663 | (4) | 171.60 | 1,631,663 | ||||||||||||
Notes: | ||
(1) | The nominal value of shares purchased is 113/7US cents each. | |
(2) | No shares were purchased outside the publicly announced share buyback programme. | |
(3) | In accordance with the shareholder authority granted at the 2010 AGM. | |
(4) | The total number of shares purchased represents 3.19% of our issued share capital at 14 June 2011. |
A-2
Table of Contents
1 April 2010 | ||||||||||||||||
or date of | ||||||||||||||||
14 June 2011 | 16 May 2011 | 31 March 2011 | appointment | |||||||||||||
Sir John Bond | 370,677 | 370,677 | 370,677 | 357,584 | ||||||||||||
John Buchanan | 222,223 | 222,223 | 222,223 | 211,055 | ||||||||||||
Vittorio Colao | 2,307,663 | 2,307,663 | 2,307,663 | 1,575,567 | ||||||||||||
Andy Halford | 2,336,070 | 2,335,914 | 2,335,622 | 2,186,541 | ||||||||||||
Michel Combes | 670,745 | 670,589 | 670,297 | 392,223 | ||||||||||||
Stephen Pusey | 544,733 | 544,733 | 544,733 | 402,599 | ||||||||||||
Renee James(1) | 50,000 | 50,000 | 50,000 | — | ||||||||||||
Alan Jebson | 82,340 | 82,340 | 82,340 | 82,340 | ||||||||||||
Samuel Jonah | 55,350 | 55,350 | 55,350 | — | ||||||||||||
Gerard Kleisterlee(1) | — | — | N/A | — | ||||||||||||
Nick Land | 35,000 | 35,000 | 35,000 | 35,000 | ||||||||||||
Anne Lauvergeon | 28,936 | 28,936 | 28,936 | 28,936 | ||||||||||||
Simon Murray (retired 27 July 2010) | N/A | N/A | N/A | 246,250 | ||||||||||||
Luc Vandevelde | 89,030 | 89,030 | 89,030 | 72,829 | ||||||||||||
Anthony Watson | 115,000 | 115,000 | 115,000 | 115,000 | ||||||||||||
Philip Yea | 61,250 | 61,250 | 61,250 | 61,250 |
(1) | Non-executive directors appointed to the Board as follows: Renee James 1 January 2011, Gerard Kleisterlee 1 April 2011. |
A-3
Table of Contents
London Stock Exchange Pounds per | NYSE/NASDAQ(1) | |||||||||||||||
ordinary share | Dollars per ADS | |||||||||||||||
Year ended 31 March | High | Low | High | Low | ||||||||||||
2007 | 1.54 | 1.08 | 29.85 | 20.07 | ||||||||||||
2008 | 1.98 | 1.36 | 40.87 | 26.88 | ||||||||||||
2009 | 1.70 | 0.96 | 32.87 | 15.30 | ||||||||||||
2010 | 1.54 | 1.11 | 24.04 | 17.68 | ||||||||||||
2011 | 1.85 | 1.27 | 32.70 | 18.21 |
London Stock Exchange Pounds per | NYSE/NASDAQ(1) | |||||||||||||||
ordinary share | Dollars per ADS | |||||||||||||||
Quarter | High | Low | High | Low | ||||||||||||
2009/10 | ||||||||||||||||
First quarter | 1.33 | 1.11 | 20.08 | 17.68 | ||||||||||||
Second quarter | 1.44 | 1.12 | 23.85 | 18.25 | ||||||||||||
Third quarter | 1.45 | 1.32 | 24.04 | 21.10 | ||||||||||||
Fourth quarter | 1.54 | 1.32 | 23.32 | 21.32 | ||||||||||||
2010/11 | ||||||||||||||||
First quarter | 1.53 | 1.27 | 23.79 | 18.21 | ||||||||||||
Second quarter | 1.65 | 1.36 | 25.80 | 20.71 | ||||||||||||
Third quarter | 1.80 | 1.57 | 28.52 | 28.84 | ||||||||||||
Fourth quarter | 1.85 | 1.67 | 32.70 | 26.34 | ||||||||||||
2011/2012 | ||||||||||||||||
First quarter(2) | 1.79 | 1.59 | 29.46 | 25.73 |
A-4
Table of Contents
London Stock Exchange Pounds per | NYSE/NASDAQ(1) | |||||||||||||||
ordinary share | Dollars per ADS | |||||||||||||||
Month | High | Low | High | Low | ||||||||||||
November 2010 | 1.80 | 1.59 | 28.52 | 24.84 | ||||||||||||
December 2010 | 1.72 | 1.60 | 27.10 | 25.62 | ||||||||||||
January 2011 | 1.85 | 1.68 | 32.70 | 26.34 | ||||||||||||
February 2011 | 1.83 | 1.72 | 29.75 | 27.90 | ||||||||||||
March 2011 | 1.85 | 1.67 | 29.67 | 26.71 | ||||||||||||
April 2011 | 1.83 | 1.69 | 29.46 | 28.06 | ||||||||||||
May 2011 | 1.74 | 1.66 | 29.27 | 27.12 | ||||||||||||
June 2011(2) | 1.64 | 1.59 | 27.14 | 25.73 |
Notes: | ||
(1) | The Company transferred its ADSs from the NYSE to NASDAQ on 29 October 2009. | |
(2) | Covering period to 14 June 2011. |
Shareholder | Shareholding | |||
Black Rock, Inc. | 6.29 | % | ||
Legal & General Group Plc | 3.61 | % |
A-5
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A-6
Table of Contents
(d/b/a Verizon Wireless)
Report of Independent Registered Public Accounting Firm
Consolidated Financial Statements
For the years ended
December 31, 2010, 2009 and 2008
B-1
For the years ended December 31, 2010, 2009 and 2008 | B-3 | |||
December 31, 2010 and 2009 | B-4 | |||
For the years ended December 31, 2010, 2009 and 2008 | B-5 | |||
For the years ended December 31, 2010, 2009 and 2008 | B-6 | |||
B-7-29 | ||||
B-30 |
B-2
Table of Contents
Cellco Partnership (d/b/a Verizon Wireless)
Years Ended December 31, | ||||||||||||
(Dollars in Millions) | 2010 | 2009 | 2008 | |||||||||
Operating Revenue(including $94, $102 and $106 from affiliates) | ||||||||||||
Service revenue | $ | 55,994 | $ | 53,497 | $ | 42,635 | ||||||
Equipment and other | 7,925 | 8,634 | 6,697 | |||||||||
Total operating revenue | 63,919 | 62,131 | 49,332 | |||||||||
Operating Costs and Expenses(including $1,696, $1,651 and $1,541 from affiliates) | ||||||||||||
Cost of service (exclusive of items shown below) | 8,342 | 7,722 | 6,015 | |||||||||
Cost of equipment | 11,423 | 12,222 | 9,705 | |||||||||
Selling, general and administrative | 18,727 | 18,289 | 14,220 | |||||||||
Depreciation and amortization | 7,458 | 7,347 | 5,405 | |||||||||
Total operating costs and expenses | 45,950 | 45,580 | 35,345 | |||||||||
Operating Income | 17,969 | 16,551 | 13,987 | |||||||||
Other Income (Expenses) | ||||||||||||
Interest expense, net | (316 | ) | (1,141 | ) | (161 | ) | ||||||
Interest income and other, net | 90 | 71 | 265 | |||||||||
Income Before Provision for Income Taxes | 17,743 | 15,481 | 14,091 | |||||||||
Provision for income taxes | (1,067 | ) | (797 | ) | (802 | ) | ||||||
Net Income | $ | 16,676 | $ | 14,684 | $ | 13,289 | ||||||
Net income attributable to non-controlling interest | 295 | 286 | 263 | |||||||||
Net income attributable to Cellco Partnership | 16,381 | 14,398 | 13,026 | |||||||||
Net Income | $ | 16,676 | $ | 14,684 | $ | 13,289 | ||||||
B-3
Table of Contents
Cellco Partnership (d/b/a Verizon Wireless)
As of December 31, | ||||||||
(Dollars in Millions) | 2010 | 2009 | ||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 5,331 | $ | 607 | ||||
Receivables, net of allowances of $328 and $356 | 6,007 | 5,721 | ||||||
Due from affiliates, net | 126 | 58 | ||||||
Inventories, net | 1,072 | 1,373 | ||||||
Prepaid expenses and other current assets | 608 | 3,335 | ||||||
Total current assets | 13,144 | 11,094 | ||||||
Plant, property and equipment, net | 32,253 | 30,850 | ||||||
Wireless licenses | 72,843 | 72,005 | ||||||
Goodwill | 17,434 | 17,303 | ||||||
Other intangibles and other assets, net | 2,370 | 3,100 | ||||||
Total assets | $ | 138,044 | $ | 134,352 | ||||
Liabilities and Partners’ Capital | ||||||||
Current liabilities | ||||||||
Short-term debt, including current maturities | $ | 4,869 | $ | 2,998 | ||||
Due to affiliates | — | 5,003 | ||||||
Accounts payable and accrued liabilities | 7,139 | 6,123 | ||||||
Advance billings | 2,090 | 1,695 | ||||||
Other current liabilities | 912 | 415 | ||||||
Total current liabilities | 15,010 | 16,234 | ||||||
Long-term debt | 11,634 | 18,661 | ||||||
Deferred tax liabilities, net | 10,514 | 10,593 | ||||||
Other non-current liabilities | 1,464 | 1,877 | ||||||
Total liabilities | 38,622 | 47,365 | ||||||
Partners’ capital | ||||||||
Capital | 97,399 | 84,863 | ||||||
Accumulated other comprehensive income | 61 | 136 | ||||||
Non-controlling interest | 1,962 | 1,988 | ||||||
Total Partners’ capital | 99,422 | 86,987 | ||||||
Total liabilities and Partners’ capital | $ | 138,044 | $ | 134,352 | ||||
B-4
Table of Contents
Cellco Partnership (d/b/a Verizon Wireless)
Years Ended December 31, | ||||||||||||
(Dollars in Millions) | 2010 | 2009 | 2008 | |||||||||
Cash Flows from Operating Activities | ||||||||||||
Net income | $ | 16,676 | $ | 14,684 | $ | 13,289 | ||||||
Adjustments to reconcile income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 7,458 | 7,347 | 5,405 | |||||||||
Provision for uncollectible receivables | 746 | 696 | 507 | |||||||||
Provision for deferred income taxes | 65 | 147 | 176 | |||||||||
Changes in current assets and liabilities, net of the effects of acquisition/disposition of businesses: | ||||||||||||
Receivables, net | (1,076 | ) | (1,000 | ) | (1,032 | ) | ||||||
Inventories, net | 308 | (127 | ) | 60 | ||||||||
Prepaid expenses and other current assets | (104 | ) | (42 | ) | (74 | ) | ||||||
Accounts payable and accrued liabilities | 1,505 | (607 | ) | (365 | ) | |||||||
Other operating activities, net | (31 | ) | 830 | 181 | ||||||||
Net cash provided by operating activities | 25,547 | 21,928 | 18,147 | |||||||||
Cash Flows from Investing Activities | ||||||||||||
Capital expenditures (including capitalized software) | (8,438 | ) | (7,152 | ) | (6,510 | ) | ||||||
Acquisition of businesses and licenses, net of cash acquired | (332 | ) | (4,881 | ) | (10,277 | ) | ||||||
Proceeds from dispositions | 2,594 | — | — | |||||||||
Investment in debt obligations | — | — | (4,766 | ) | ||||||||
Other investing activities, net | (495 | ) | (29 | ) | (526 | ) | ||||||
Net cash used in investing activities | (6,671 | ) | (12,062 | ) | (22,079 | ) | ||||||
Cash Flows from Financing Activities | ||||||||||||
Proceeds from affiliates | — | — | 9,363 | |||||||||
Repayments to affiliates | (5,005 | ) | (6,291 | ) | (3,891 | ) | ||||||
Net (decrease) increase in revolving affiliate borrowings | — | (457 | ) | 307 | ||||||||
Issuance of long-term debt | — | 9,223 | 10,324 | |||||||||
Repayment of long-term debt | (5,016 | ) | (17,028 | ) | (1,505 | ) | ||||||
Distributions to partners | (3,845 | ) | (3,138 | ) | (1,529 | ) | ||||||
Other financing activities, net | (286 | ) | (795 | ) | (318 | ) | ||||||
Net cash (used in) provided by financing activities | (14,152 | ) | (18,486 | ) | 12,751 | |||||||
Increase (decrease) in cash and cash equivalents | 4,724 | (8,620 | ) | 8,819 | ||||||||
Cash and cash equivalents, beginning of year | 607 | 9,227 | 408 | |||||||||
Cash and cash equivalents, end of year | $ | 5,331 | $ | 607 | $ | 9,227 | ||||||
B-5
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Cellco Partnership (d/b/a/ Verizon Wireless)
Years Ended December 31, | ||||||||||||
(Dollars in Millions) | 2010 | 2009 | 2008 | |||||||||
Partners’ Capital | ||||||||||||
Balance at beginning of year | $ | 84,863 | $ | 73,387 | $ | 62,404 | ||||||
Cumulative effect of change in accounting for pension and other post-employment benefits (Note 1) | — | — | (23 | ) | ||||||||
Adjusted balance at beginning of year | 84,863 | 73,387 | 62,381 | |||||||||
Net income | 16,381 | 14,398 | 13,026 | |||||||||
Contributed capital | — | (344 | ) | — | ||||||||
Distributions declared to partners | (3,845 | ) | (2,582 | ) | (2,085 | ) | ||||||
Other | — | 4 | 65 | |||||||||
Balance at end of year | 97,399 | 84,863 | 73,387 | |||||||||
Accumulated Other Comprehensive Income (Loss) | ||||||||||||
Balance at beginning of year | 136 | (93 | ) | (50 | ) | |||||||
Cumulative effect of change in accounting for pension and other post-employment benefits (Note 1) | — | — | 23 | |||||||||
Adjusted balance at beginning of year | 136 | (93 | ) | (27 | ) | |||||||
Unrealized (losses) gains on cash flow hedges, net | (66 | ) | 175 | (53 | ) | |||||||
Defined benefit pension and postretirement plans | (9 | ) | 54 | (13 | ) | |||||||
Other comprehensive (loss) income | (75 | ) | 229 | (66 | ) | |||||||
Balance at end of year | 61 | 136 | (93 | ) | ||||||||
Total Partners’ Capital Attributable to Cellco Partnership | 97,460 | 84,999 | 73,294 | |||||||||
Non-controlling Interest | ||||||||||||
Balance at beginning of year | 1,988 | 1,692 | 1,681 | |||||||||
Net income attributable to non-controlling interest | 295 | 286 | 263 | |||||||||
Contributed capital | — | 31 | — | |||||||||
Non-controlling interests in disposed/acquired company | (34 | ) | 497 | — | ||||||||
Distributions | (287 | ) | (280 | ) | (249 | ) | ||||||
Acquisitions of non-controlling partnership interests | — | (240 | ) | — | ||||||||
Other | — | 2 | (3 | ) | ||||||||
Balance at end of year | 1,962 | 1,988 | 1,692 | |||||||||
Total Partners’ Capital | $ | 99,422 | $ | 86,987 | $ | 74,986 | ||||||
Comprehensive Income | ||||||||||||
Net income | $ | 16,676 | $ | 14,684 | $ | 13,289 | ||||||
Other comprehensive (loss) income per above | (75 | ) | 229 | (66 | ) | |||||||
Total Comprehensive Income | $ | 16,601 | $ | 14,913 | $ | 13,223 | ||||||
Comprehensive income attributable to non-controlling interest | $ | 295 | $ | 286 | $ | 263 | ||||||
Comprehensive income attributable to Cellco Partnership | 16,306 | 14,627 | 12,960 | |||||||||
Total Comprehensive Income | $ | 16,601 | $ | 14,913 | $ | 13,223 | ||||||
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Cellco Partnership (d/b/a Verizon Wireless)
B-7
Table of Contents
B-8
Table of Contents
B-9
Table of Contents
B-10
Table of Contents
B-11
Table of Contents
B-12
Table of Contents
(dollars in millions) | ||||
Assets acquired | ||||
Current assets | $ | 2,760 | ||
Plant, property and equipment | 3,513 | |||
Wireless licenses | 9,444 | |||
Goodwill | 16,242 | |||
Intangible assets subject to amortization | 2,391 | |||
Other acquired assets | 2,444 | |||
Total assets acquired | 36,794 | |||
Liabilities assumed | ||||
Current liabilities | 1,833 | |||
Long-term debt | 23,929 | |||
Deferred income taxes and other liabilities | 4,982 | |||
Total liabilities assumed | 30,744 | |||
Net assets acquired | 6,050 | |||
Non-controlling interest | (458 | ) | ||
Contributed capital | 333 | |||
Total cash consideration | $ | 5,925 | ||
B-13
Table of Contents
Year ended | ||||
(dollars in millions) | December 31, 2008 | |||
Operating revenues | $ | 58,572 | ||
Net income | 13,398 |
B-14
Table of Contents
(dollars in millions) | Wireless Licenses (a) | |||
Balance as of January 1, 2009 | $ | 62,392 | ||
Acquisitions | 9,444 | |||
Capitalized interest on wireless licenses | 268 | |||
Reclassifications, adjustments and other(b) | (99 | ) | ||
Balance as of December 31, 2009 | 72,005 | |||
Acquisitions | 178 | |||
Capitalized interest on wireless licenses | 657 | |||
Reclassifications, adjustments and other | 3 | |||
Balance as of December 31, 2010 | $ | 72,843 | ||
(a) | During the years ended December 31, 2010 and 2009, approximately $12.2 billion of wireless licenses were under development for commercial service for which we were capitalizing interest costs. In December 2010, a portion of these licenses were placed in service. Accordingly, approximately $3.3 billion of wireless licenses continue to be under development for commercial service. | |
(b) | Reclassifications, adjustments and other during 2009 primarily includes the reclassification of wireless licenses associated with the pre-merger operations of the Partnership that are included in the Alltel Divestiture Markets (see Note 2) and included in Prepaid expenses and other current assets in the accompanying consolidated balance sheets. |
(dollars in millions) | Goodwill | |||
Balance as of January 1, 2009 | $ | 955 | ||
Acquisitions | 16,242 | |||
Reclassifications, adjustments and other(a) | 106 | |||
Balance as of December 31, 2009 | 17,303 | |||
Acquisitions | 131 | |||
Reclassifications, adjustments and other | — | |||
Balance as of December 31, 2010 | $ | 17,434 | ||
(a) | Reclassifications, adjustments and other during 2009 includes adjustments to goodwill associated with the finalization of the Rural Cellular purchase accounting partially offset by the reclassification of goodwill associated with the pre-merger operations of the Partnership that are included in the Alltel |
B-15
Table of Contents
Divestiture Markets (see Note 2) and included in Prepaid expenses and other current assets in the accompanying consolidated balance sheets. |
At December 31, 2010 | At December 31, 2009 | |||||||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | |||||||||||||||||||
(dollars in millions) | Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||||||
Customer lists (6 to 8 years) | $ | 2,142 | $ | (905 | ) | $ | 1,237 | $ | 2,122 | $ | (497 | ) | $ | 1,625 | ||||||||||
Capitalized software (2 to 5 years) | 1,009 | (457 | ) | 552 | 879 | (377 | ) | 502 | ||||||||||||||||
Other (1 to 3 years) | 382 | (348 | ) | 34 | 397 | (235 | ) | 162 | ||||||||||||||||
Total(a) | $ | 3,533 | $ | (1,710 | ) | $ | 1,823 | $ | 3,398 | $ | (1,109 | ) | $ | 2,289 | ||||||||||
(a) | Based on amortizable intangible assets existing at December 31, 2010, the estimated amortization expense for the five succeeding fiscal years and thereafter is as follows: |
2011 | $ | 565 | ||
2012 | 427 | |||
2013 | 344 | |||
2014 | 247 | |||
2015 | 181 | |||
Thereafter | 59 | |||
Total | $ | 1,823 | ||
(dollars in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | ||||||||||||||||
Prepaid expense and other current assets: | ||||||||||||||||
Derivative contracts—Cross currency swaps (Current) | $ | — | $ | 7 | $ | — | $ | 7 | ||||||||
Other intangibles and other assets, net: | ||||||||||||||||
Derivative contracts—Cross currency swaps (Non-current) | $ | — | $ | 101 | $ | — | $ | 101 |
B-16
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At December 31, 2010 | At December 31, 2009 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
(dollars in millions) | Value | Value | Value | Value | ||||||||||||
Term notes due to affiliates | $ | — | $ | — | $ | 5,003 | $ | 5,008 | ||||||||
Short and long-term debt | 16,503 | 18,697 | 21,659 | 23,597 |
B-17
Table of Contents
At December 31, | ||||||||
(dollars in millions) | 2010 | 2009 | ||||||
Verizon Wireless of the East LP | $ | 1,179 | $ | 1,179 | ||||
Cellular partnerships | 783 | 809 | ||||||
Non-controlling interest in consolidated entities | $ | 1,962 | $ | 1,988 | ||||
At December 31, | ||||||||
(dollars in millions) | 2010 | 2009 | ||||||
Receivables, Net: | ||||||||
Accounts receivable | $ | 5,150 | $ | 4,953 | ||||
Other receivables | 866 | 842 | ||||||
Unbilled revenue | 319 | 282 | ||||||
6,335 | 6,077 | |||||||
Less: allowance for doubtful accounts | (328 | ) | (356 | ) | ||||
Receivables, net | $ | 6,007 | $ | 5,721 | ||||
B-18
Table of Contents
Balance at | Additions | Balance at | ||||||||||||||
beginning of | charged to | Write-offs, net of | end of the | |||||||||||||
(dollars in millions) | the year | expense | recoveries | year | ||||||||||||
Accounts Receivable Allowances: | ||||||||||||||||
2010 | $ | 356 | $ | 746 | $ | (774 | ) | $ | 328 | |||||||
2009 | 244 | 696 | (584 | ) | 356 | |||||||||||
2008 | 217 | 507 | (480 | ) | 244 |
At December 31, | ||||||||
(dollars in millions) | 2010 | 2009 | ||||||
Plant, Property and Equipment, Net: | ||||||||
Land | $ | 262 | $ | 268 | ||||
Buildings (20-40 yrs.) | 9,481 | 8,849 | ||||||
Wireless plant and equipment (3-15 yrs.) | 45,293 | 40,862 | ||||||
Furniture, fixtures and equipment (5 yrs.) | 4,152 | 4,245 | ||||||
Leasehold improvements (5 yrs.) | 3,811 | 3,501 | ||||||
Construction-in-progress(b) | 2,431 | 1,979 | ||||||
65,430 | 59,704 | |||||||
Less: accumulated depreciation | (33,177 | ) | (28,854 | ) | ||||
Plant, property and equipment , net(a) | $ | 32,253 | $ | 30,850 | ||||
(a) | Interest costs of $121 million and $88 million and network engineering costs of $393 million and $351 million were capitalized during the years ended December 31, 2010 and 2009, respectively. | |
(b) | Construction-in-progress includes $919 million and $784 million of accrued but unpaid capital expenditures as of December 31, 2010 and 2009, respectively. |
At December 31, | ||||||||
(dollars in millions) | 2010 | 2009 | ||||||
Accounts Payable and Accrued Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 4,003 | $ | 3,633 | ||||
Accrued payroll | 442 | 390 | ||||||
Related employee benefits | 1,424 | 945 | ||||||
Taxes payable | 529 | 516 | ||||||
Accrued commissions | 518 | 385 | ||||||
Accrued interest | 223 | 254 | ||||||
Accounts payable and accrued liabilities | $ | 7,139 | $ | 6,123 | ||||
For the Years Ended December 31, | ||||||||||||
(dollars in millions) | 2010 | 2009 | 2008 | |||||||||
Service Revenue: | ||||||||||||
Voice revenue | $ | 36,465 | $ | 37,483 | $ | 31,984 | ||||||
Data revenue | 19,529 | 16,014 | 10,651 | |||||||||
Total service revenue | $ | 55,994 | $ | 53,497 | $ | 42,635 | ||||||
B-19
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For the Years Ended December 31, | ||||||||||||
(dollars in millions) | 2010 | 2009 | 2008 | |||||||||
Advertising and Promotional Cost: | $ | 1,801 | $ | 2,036 | $ | 1,779 | ||||||
Employee Benefit Plans: | ||||||||||||
Matching contribution expense | $ | 217 | $ | 216 | $ | 185 | ||||||
Profit sharing expense | 108 | 94 | 103 | |||||||||
Depreciation and Amortization: | ||||||||||||
Depreciation of plant, property and equipment | $ | 6,771 | $ | 6,545 | $ | 5,258 | ||||||
Amortization of other intangibles | 687 | 802 | 147 | |||||||||
Total depreciation and amortization | $ | 7,458 | $ | 7,347 | $ | 5,405 | ||||||
Interest Expense, Net: | ||||||||||||
Interest expense | $ | (1,094 | ) | $ | (1,497 | ) | $ | (490 | ) | |||
Capitalized interest | 778 | 356 | 329 | |||||||||
Interest expense, net | $ | (316 | ) | $ | (1,141 | ) | $ | (161 | ) | |||
For the Years Ended December 31, | ||||||||||||
(dollars in millions) | 2010 | 2009 | 2008 | |||||||||
Net cash paid for income taxes | $ | 1,236 | $ | 384 | $ | 575 | ||||||
Interest paid, net of amounts capitalized | 284 | 738 | 90 |
(dollars in millions) | ||||||||||||||||
At December 31, | ||||||||||||||||
Interest Rates % | Maturities | 2010 | 2009 | |||||||||||||
Debt: | ||||||||||||||||
Notes payable and other | 3.75 - 5.55 | 2011 - 2014 | 7,000 | 7,000 | ||||||||||||
�� | 7.375 - 8.875 | 2011 - 2018 | 5,975 | 6,117 | ||||||||||||
Floating | 2011 | 1,250 | 6,246 | |||||||||||||
Alltel notes | 6.50 - 7.875 | 2012 - 2032 | 2,315 | 2,334 | ||||||||||||
Unamortized discount, net of premium | (37 | ) | (38 | ) | ||||||||||||
Total debt, including current maturities | 16,503 | 21,659 | ||||||||||||||
Less: current maturities | 4,869 | 2,998 | ||||||||||||||
Total long-term debt | $ | 11,634 | $ | 18,661 | ||||||||||||
Term notes payable to Affiliate(a): | ||||||||||||||||
Promissory note | Floating | 2010 | — | 5,003 | ||||||||||||
Total due to affiliates, including current maturities | — | 5,003 | ||||||||||||||
Less: current maturities | — | 5,003 | ||||||||||||||
Total long-term due to affiliates | $ | — | $ | — | ||||||||||||
(a) | All affiliate term notes were payable to Verizon Financial Services LLC (“VFSL”), a wholly-owned subsidiary of Verizon. |
B-20
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B-21
Table of Contents
Years | (dollars in million) | |||
2011 | $ | 4,869 | ||
2012 | 1,550 | |||
2013 | 1,450 | |||
2014 | 3,500 | |||
2015 | 669 | |||
Thereafter | 4,502 |
2010 | 2009 | 2008 | ||||||||||
Ranges | Ranges | Ranges | ||||||||||
Risk-free rate | 0.14% – 0.88% | 0.15% – 1.63% | 0.6% – 3.3% | |||||||||
Expected term (in years) | 0.03 – 2.0 | 0.38 – 2.5 | 1.2 – 3.0 | |||||||||
Expected volatility | 31.05% – 47.56% | 35.37% – 61.51% | 33.9% – 58.5% |
B-22
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Weighted Average | ||||||||||||
Exercise Price | Vested | |||||||||||
(shares in thousands) | VARs(a) | of VARs(a) | VARs(a) | |||||||||
Outstanding, January 1, 2008 | 60,412 | $ | 17.58 | 60,412 | ||||||||
Exercised | (31,817 | ) | 18.47 | |||||||||
Cancelled/Forfeited | (351 | ) | 19.01 | |||||||||
Outstanding, December 31, 2008 | 28,244 | 16.54 | 28,244 | |||||||||
Exercised | (11,442 | ) | 16.53 | |||||||||
Cancelled/Forfeited | (211 | ) | 17.63 | |||||||||
Outstanding, December 31, 2009 | 16,591 | 16.54 | 16,591 | |||||||||
Exercised | (4,947 | ) | 24.47 | |||||||||
Cancelled/Forfeited | (75 | ) | 22.72 | |||||||||
Outstanding, December 31, 2010 | 11,569 | $ | 13.11 | 11,569 | ||||||||
(a) | The weighted average exercise price is presented in actual dollars; VARs are presented in actual units. |
VARs Vested & Outstanding(a) | ||||||||||||
Weighted | ||||||||||||
Average Remaining | Weighted | |||||||||||
(shares in thousands) | Contractual Life | Average | ||||||||||
Range of Exercise Prices | VARs | (Years) | Exercise Price | |||||||||
$8.74 - $14.79 | 9,407 | 2.72 | $ | 12.26 | ||||||||
$14.80 - $22.19 | 2,162 | 0.78 | 16.76 | |||||||||
Total | 11,569 | $ | 13.11 | |||||||||
(a) | As of December 31, 2010 the aggregate intrinsic value of VARs outstanding and vested was $352 million. |
B-23
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For the Years Ended December 31, | ||||||||||||
(dollars in millions) | 2010 | 2009 | 2008 | |||||||||
Current tax provision: | ||||||||||||
Federal | $ | 874 | $ | 356 | $ | 413 | ||||||
State and local | 128 | 294 | 213 | |||||||||
1,002 | 650 | 626 | ||||||||||
B-24
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For the Years Ended December 31, | ||||||||||||
(dollars in millions) | 2010 | 2009 | 2008 | |||||||||
Deferred tax provision: | ||||||||||||
Federal | 1 | 335 | 217 | |||||||||
State and local | 64 | (188 | ) | (41 | ) | |||||||
65 | 147 | 176 | ||||||||||
Provision for income taxes | $ | 1,067 | $ | 797 | $ | 802 | ||||||
For the Years Ended December 31, | ||||||||||||
(dollars in millions) | 2010 | 2009 | 2008 | |||||||||
Income tax provision at the statutory rate | $ | 6,210 | $ | 5,418 | $ | 4,932 | ||||||
State income taxes, net of U.S. federal benefit | 140 | 27 | 120 | |||||||||
Interest and penalties | — | 28 | (8 | ) | ||||||||
Other | 183 | — | — | |||||||||
Partnership income not subject to federal or state income taxes | (5,466 | ) | (4,676 | ) | (4,242 | ) | ||||||
Provision for income tax | $ | 1,067 | $ | 797 | $ | 802 | ||||||
December 31, | ||||||||||||
(dollars in millions) | 2010 | 2009 | ||||||||||
Deferred tax assets: | ||||||||||||
Net operating loss carryforward | $ | 62 | $ | 505 | ||||||||
Valuation allowance | (23 | ) | (23 | ) | ||||||||
State tax deductions | 102 | 103 | ||||||||||
Other | 233 | 262 | ||||||||||
Total deferred tax assets | $ | 374 | $ | 847 | ||||||||
Deferred tax liabilities: | ||||||||||||
Intangible assets | $ | (9,384 | ) | $ | (9,555 | ) | ||||||
Plant, property and equipment | (1,173 | ) | (1,452 | ) | ||||||||
Other | (218 | ) | (116 | ) | ||||||||
Total deferred tax liabilities | $ | (10,775 | ) | $ | (11,123 | ) | ||||||
Net deferred tax asset-current(a) | $ | 113 | $ | 317 | ||||||||
Net deferred tax liability-non-current | $ | (10,514 | ) | $ | (10,593 | ) |
(a) | Included in prepaid expenses and other current assets in the accompanying consolidated balance sheets. |
B-25
Table of Contents
(dollars in millions) | 2010 | 2009 | 2008 | |||||||||
Balance as of January 1 | $ | 506 | $ | 77 | $ | 67 | ||||||
Additions based on tax positions related to the current year | 7 | 212 | 25 | |||||||||
Additions for tax positions of prior years | 8 | 222 | 16 | |||||||||
Reductions due to lapse of applicable statute of limitations | (8 | ) | (5 | ) | (14 | ) | ||||||
Settlements | (120 | ) | — | (17 | ) | |||||||
Balance as of December 31 | $ | 393 | $ | 506 | $ | 77 | ||||||
B-26
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Operating | ||||
(dollars in millions) | Leases | |||
| | ||||
Years | ||||
2011 | $ | 1,384 | ||
2012 | 1,210 | |||
2013 | 1,044 | |||
2014 | 894 | |||
2015 | 734 | |||
Thereafter | 4,263 | |||
Total minimum payments | $ | 9,529 | ||
For the Years Ended December 31, | ||||||||||||
(dollars in millions) | 2010 | 2009 | 2008 | |||||||||
Revenue related to transactions with affiliated companies | $ | 94 | $ | 102 | $ | 106 | ||||||
Cost of service(a) | 1,471 | 1,377 | 1,252 | |||||||||
Selling, general and administrative expenses(b) | 225 | 274 | 289 | |||||||||
Interest incurred(c) | 9 | 66 | 319 |
(a) | Affiliate cost of service primarily represents charges for long distance, direct telecommunication and roaming services provided by affiliates. | |
(b) | Affiliate selling, general and administrative expenses include charges from affiliates for services provided, including insurance, leases, office telecommunications, and billing and lockbox services, as well as services billed from the Verizon Service Organization (“VSO”) and Verizon Corporate Services for functions performed under service level agreements. | |
(c) | Interest costs of $7, $56 and $252 were capitalized in Wireless licenses and Plant, property and equipment, net in the years ended December 31, 2010, 2009 and 2008, respectively (See Notes 3 and 6). |
B-27
Table of Contents
December 31, | ||||||||||||
(dollars in millions) | 2010 | 2009 | ||||||||||
Unrealized gains on cash flow hedges, net | $ | 56 | $ | 122 | ||||||||
Defined benefit pension and postretirement plans | 5 | 14 | ||||||||||
Accumulated other comprehensive income | $ | 61 | $ | 136 | ||||||||
B-28
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B-29
Table of Contents
Cellco Partnership d/b/a Verizon Wireless:
February 28, 2011 (June 16, 2011 as to Notes 7 and 11)
B-30
Table of Contents
Persons depositing or withdrawing | ||
shares must pay: | For: | |
$5.00 (or less) per 100 ADRs (or portion of 100 ADRs) | • Issuance of ADRs, including issuances resulting from a distribution of shares or rights or other property • Cancellation of ADRs for the purpose of withdrawal, including if the deposit agreement terminates | |
$.02 (or less) per ADR (or portion thereof). The current per ADR fee to be charged for an interim dividend is $0.01 per ADR and for a final dividend is $0.02 per ADR. | • Any cash distribution to ADR registered holders | |
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADRs | • Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADR registered holders | |
Registration or transfer fees | • Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares | |
Expenses of the depositary | • Cable, telex, facsimile transmissions and delivery expenses (when expressly provided in the deposit agreement) • Converting foreign currency to US dollars | |
Taxes and other governmental charges the depositary or the custodian have to pay on any ADR or share underlying an ADR, for example, stock transfer taxes, stamp duty or withholding taxes | • As necessary | |
Any charges incurred by the depositary or its agents for servicing the deposited securities | • As necessary |
C-1
Table of Contents
C-2
Table of Contents
VODAFONE GROUP PUBLIC LIMITED COMPANY (Registrant) | ||||
/s/ R E S Martin | ||||
Rosemary E S Martin | ||||
Group General Counsel and Company Secretary | ||||
Table of Contents
1.1 | Articles of Association, as adopted on June 30, 1999 and including all amendments made on July 25, 2001, July 26, 2005, July 25, 2006, July 24, 2007, July 29, 2008, July 28, 2009 and July 27, 2010, of the Company. | |
2.1 | Indenture, dated as of February 10, 2000, between the Company and Citibank, N.A. as Trustee, including forms of debt securities (incorporated by reference to Exhibit 4(a) of Amendment No. 1 to the Company’s Registration Statement on Form F-3, dated November 24, 2000). | |
2.2 | Agreement of Resignation, Appointment and Acceptance dated as of July 24, 2007, among the Company, Citibank N.A. and the Bank of New York (incorporated by reference to Exhibit 2.2 to the Company’s Annual Report of Form 20-F for the financial year ended March 31, 2008). | |
2.3 | Eighth supplemental Trust Deed dated July 10, 2009, between the Company and the Law Debenture Trust Corporation p.l.c. further modifying the provisions of the Trust Deed dated July 16, 1999 relating to a €30,000,000,000 Euro Medium Term Note Programme (incorporated by reference to Exhibit 2.3 to the Company’s Annual Report of Form 20-F for the financial year ended March 31, 2010). | |
4.1 | Agreement for US$4,675,000,000 7 year Revolving Credit Facility (subsequently increased by accession of further lenders to US$5,025,000,000), dated June 24, 2005, among the Company and various lenders, (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2006). | |
4.2 | Notice of cancellation dated March 7, 2011 in respect of the US$5,025,000,000 Revolving Credit Facility dated June 24, 2005. | |
4.3 | Agreement for US$4,015,000,000 5 year Revolving Credit Facility dated March 9, 2011, among the Company and various lenders. | |
4.4 | Lender Accession Agreement with Bank of China Limited, London Branch, effective as of March 17, 2011. | |
4.5 | Agreement for US$4,315,000,000 3 year Revolving Credit Facility dated 29 July 2008 among the Company and various lenders. (incorporated by reference to Exhibit 4.29 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2009). | |
4.6 | Notice of cancellation dated June 29, 2010 in respect of the US$4,315,000,000 Revolving Credit Facility dated July 29, 2008. | |
4.7 | Agreement for € 4,000,000,000 5 year Revolving Credit Facility dated July 1, 2010 among the Company and various lenders. | |
4.8 | Lender Accession Agreement with Bank of China Limited, London Branch, effective as of March 17, 2011. | |
4.9 | Vodafone Group Long Term Incentive Plan (incorporated by reference to Exhibit 4.5 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2001). |
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4.10 | Vodafone Group Short Term Incentive Plan (incorporated by reference to Exhibit 4.6 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2001). | |
4.11 | Vodafone Group 1999 Long Term Stock Incentive Plan (incorporated by reference to Exhibit 4.7 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2001). | |
4.12 | Vodafone Group 1998 Company Share Option Scheme (incorporated by reference to Exhibit 4.8 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2001). | |
4.13 | Vodafone Group 1998 Executive Share Option Scheme (incorporated by reference to Exhibit 4.9 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2001). | |
4.14 | Vodafone Group 2005 Global Incentive Plan (incorporated by reference to Exhibit 4.8 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2006). | |
4.15 | Service Contract of Andrew Halford (incorporated by reference to Exhibit 4.16 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2006). | |
4.16 | Agreement for Services for Sir John Bond (incorporated by reference to Exhibit 4.13 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2007). | |
4.17 | Letter of Appointment of Dr. John Buchanan(incorporated by reference to Exhibit 4.11 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2003). | |
4.18 | Letter of Appointment of Anne Lauvergeon (incorporated by reference to Exhibit 4.22 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2006). | |
4.19 | Letter of Appointment of Luc Vandevelde (incorporated by reference to Exhibit 4.22 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2004). | |
4.20 | Letter of Appointment of Anthony Watson (incorporated by reference to Exhibit 4.26 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2006). | |
4.21 | Letter of Appointment of Philip Yea (incorporated by reference to Exhibit 4.27 to the Company’s Annual Report for the financial year ended March 31, 2006). | |
4.22 | Service contract of Vittorio Colao (incorporated by reference to Exhibit 4.22 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2009). | |
4.23 | Letter of appointment of Alan Jebson (incorporated by reference to Exhibit 4.23 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2007). | |
4.24 | Letter of appointment of Nick Land (incorporated by reference to Exhibit 4.24 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2007). | |
4.25 | Letter of appointment of Simon Murray (incorporated by reference to Exhibit 4.25 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2008). | |
4.26 | Letter of Appointment of Sam Jonah (incorporated by reference to Exhibit 4.26 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2009). | |
4.27 | Service contract of Michel Combes (incorporated by reference to Exhibit 4.27 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2009). |
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4.28 | Service contract of Stephen Pusey (incorporated by reference to Exhibit 4.28 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2009). | |
4.29 | Letter of indemnification for Andy Halford (incorporated by reference to Exhibit 4.25 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2010). | |
4.30 | Letter of indemnification for Michel Combes (incorporated by reference to Exhibit 4.26 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2010). | |
4.31 | Letter of indemnification for Steve Pusey (incorporated by reference to Exhibit 4.27 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2010). | |
4.32 | Letter of indemnification for Dr. John Buchanan (incorporated by reference to Exhibit 4.28 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2010). | |
4.33 | Letter of indemnification for Philip Yea (incorporated by reference to Exhibit 4.29 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2010). | |
4.34 | Letter of indemnification for Luc Vandevelde (incorporated by reference to Exhibit 4.30 to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2010). | |
4.35 | Letter of Appointment of Renee James. | |
4.36 | Letter of Appointment of Gerard Kleisterlee. | |
7. | Computation of ratio of earnings to fixed charges for the years ended March 31, 2011, 2010, 2009, 2008, and 2007. | |
8. | The list of the Company’s subsidiaries is incorporated by reference to note 12 to the Consolidated Financial Statements included in the Annual Report. | |
12. | Rule 13a – 14(a) Certifications. | |
13. | Rule 13a – 14(b) Certifications. These certifications are furnished only and are not filed as part of the Annual Report on Form 20-F. | |
15.1 | Consent letter of Deloitte LLP, London. | |
15.2 | Consent letter of Deloitte LLP, New York. |