Vodafone Group Plc Annual General Meeting 29 July 2014
Gerard Kleisterlee Chairman Vodafone Group Plc
Agenda Gerard Kleisterlee, Chairman Opportunities and challenges Company performance Vittorio Colao, CEO Q1 14/15 financial performance Strategic development Q&A Voting on the resolutions 3
Disclaimer Information in the following communication relating to the price at which relevant investments have been bought or sold in the past, or the yield on such investments, cannot be relied upon as a guide to the future performance of such investments. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for, or otherwise acquire or dispose of, securities in any company within the Group. The presentation contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995 which are subject to risks and uncertainties because they relate to future events. These forward-looking statements include, without limitation, statements in relation to the Group s financial outlook and future performance. A review of the reasons why actual results and developments may differ materially from the expectations disclosed or implied within forward-looking statements can be found by referring to the information contained under the heading Forward-looking statements and Principal risk factors and uncertainties in Vodafone Group Plc s Annual Report for the year ended 31 March 2014. The Annual Report can be found on the Group s website (www.vodafone.com/investor). All subsequent written or oral forward-looking statements attributable to the Company or any member of the Group or any persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. No assurances can be given that the forward-looking statements in this presentation will be realised. Except as otherwise stated herein and as may be required to comply with applicable law and regulations, Vodafone does not intend to update these forward-looking statements and does not undertake any obligation to do so. The presentation also contains certain non-gaap financial information. The Group s management believes these measures provide valuable additional information in understanding the performance of the Group or the Group s businesses because they provide measures used by the Group to assess performance. Although these measures are important in the management of the business, they should not be viewed as replacements for, but rather as complementary to, the comparable GAAP measures. Vodafone, the Vodafone Speech Mark, the Vodafone Portrait, and Vodafone Red are trade marks of the Vodafone Group. The Vodafone Rhombus is a registered design of the Vodafone Group. Other product and company names mentioned herein may be the trade marks of their respective owners. 4
External environment Complex industry European environment Challenge for policymakers 5
Operating responsibly 4.2bn taxes paid worldwide 13.5bn total economic contribution to governments 27.3% corporate tax rate Every 4 of profit generated, we pay over 1 in corporate taxes globally 6
Operating responsibly 29 countries First of its kind worldwide Widely praised 7
Our strategy 8
Our strategy Consumer Europe 9
Our strategy Consumer Europe Unified communications 10
Our strategy Consumer Europe Unified communications Consumer Emerging Markets 11
Our strategy Consumer Europe Unified communications Consumer Emerging Markets Enterprise 12
Project Spring Largest and fastest in our history 19 billion, 2-year programme Sector leadership 13
Project Spring 47,000 new 2G sites for perfect voice 73,000 new 3G sites competitive 3G 106,000 new single RAN installations radio modernisation 70,000 new small cell / WiFi sites for micro coverage 77,000 new 4G sites grow 4G outdoor coverage 87,000 new high capacity backhaul sites for improved data experience 14
FY 14 financial performance Earnings per share Adjusted operating profit 1 Free cash flow 1 17.54p 7.9bn 4.4bn Group revenue 43.6bn 1 Europe -9.1% 1, 2 AMAP +6.1% 1, 2 1. Presented on a management basis, all other information presented on a statutory basis 2. FY14 organic service revenue growth 15
Creating shareholder value: US transaction 51bn 1.60 2.36 1.05 1 1.31 2.42 after 6 for 11 consolidation 16 January 2013 21 February 2014 24 February 2014 1. Cash and Verizon shares translated at $1.6688 16
Creating shareholder value: long-term dividend performance Pence per ordinary share Ordinary dividend Special dividend 10% 1 4.0 4.1 6.1 6.8 7.5 7.8 8.3 8.9 9.5 10.2 11.0 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 1. Compound annual growth rate 17
Creating shareholder value: total shareholder returns ( bn) Return of value 1 Special dividend B share return Ordinary dividends & share buybacks 57.1 19.2 51.0 6.7 9.0 6.7 10.2 3.6 4.0 5.0 4.1 3.6 4.0 5.0 4.1 10.2 2.0 6.6 6.4 6.6 8.2 6.4 6.1 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 Over 80bn returned to shareholders over last 4 years 123bn returned to shareholders over last 10 years 1. FY 14 return of value calculated at 1 = $1.67 18
A more valuable Vodafone: total shareholder returns 1 Over last 3 years 56% 28% 4% Euro Telecoms FTSE 100 Vodafone Source: Factset 1. Data: as at 22 July 2014, in Euro currency 19
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Conclusion All growth rates shown are organic unless otherwise stated 21
Vittorio Colao CEO Vodafone Group Plc
Q1 14/15 highlights Group service revenue -4.2%; (-2.9% excluding MTRs); continued growth in AMAP, up 4.7%; Europe -7.9%, early signs of stabilisation in performance Driving data growth; 6.7m 4G users, data traffic growth accelerating - Europe +53%, Group +73% Strong progress on Project Spring: 4G coverage 52%, up 20ppts since September 2013 Progress on unified communications: KDG integration commenced, new NGN 1 access agreements in Ireland, Portugal and Spain, Ono acquisition completed 23 July M&A: purchase of Cobra (M2M provider, 115m) and sale of Fiji ( 51m) Net debt 14.1bn; free cash outflow 0.6bn All growth rates shown are organic unless otherwise stated. Organic growth includes Italy at 100%, and excludes joint ventures (Indus, Australia and Fiji). 1. All Next growth generation rates shown network are organic unless otherwise stated 23
We are now starting Chapter 3 of the Vodafone story 1996-2002 2002-2012 2013 onwards CHAPTER 1 CHAPTER 2 CHAPTER 3 Ride wave of mobile penetration/voice International expansion Emerging market expansion Portfolio rationalisation and move to control positions Focussed effort on scale synergies A provider of converged data services Deeper and stronger in existing markets Enterprise expansion Continue to leverage group synergies 24
Where we aim to be five years from now Unified communications Converged services in all key markets Consumer Europe A leading mobile communications provider Consumer emerging markets A strong leader in communications and first choice for data Project Spring Investment in mobile and fixed networks, services and retail Enterprise Major enterprise provider with full service offering Best connection Best customer experience Best worry-free solutions 25
Summary: Vodafone transformation progresses Mobile Unified Communications Europe Europe & Emerging Markets Consumer Consumer & Enterprise Metered voice Data & innovation in service Priorities FY 14/15 1. Better performance, leverage on network and customer experience 2. Integration of KDG and completion of Ono 3. Progress in unified communications and enterprise, data leadership in emerging markets 4. Support more favourable regulatory environment 5. Ensure Project Spring returns 26
Q&A 27