Vodafone Group Plc ⫶ FY23 Preliminary results

A new roadmap for Vodafone

Margherita Della Valle, Group Chief Executive, commented: 

"Today I am announcing my plans for Vodafone. Our performance has not been good enough. To consistently deliver, Vodafone must change.

My priorities are customers, simplicity and growth. We will simplify our organisation, cutting out complexity to regain our competitiveness. We will reallocate resources to deliver the quality service our customers expect and drive further growth from the unique position of Vodafone Business."

Financial results









Group revenue





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Operating profit1





Adjusted EBITDAaL2





Profit for the financial year1











Basic earnings per share1





Adjusted basic earnings per share1,2











Total dividends per share











Cash inflow from operating activities





Adjusted free cash flow2











Net debt2











* represents organic growth. See page 3. ǀ 1. FY22 re-presented for the reclassification of Indus Towers. See page 31. ǀ 2. Non-GAAP measure. See page 36.

·   FY23 performance slowdown in line with expectations

·   Germany remains under pressure with -1.6%* service revenue growth and -6.1%* adjusted EBITDAaL growth

·   Good performance in Vodafone Business with 2.6%* service revenue growth

·   Group revenue increased by 0.3% to €45.7 billion driven by growth in Africa and higher equipment sales, offset by lower European service revenue and adverse exchange rate movements

·   Adjusted EBITDAaL declined by 1.3%* to €14.7 billion due to higher energy costs, and commercial underperformance in Germany

·   Gain on disposal of Vantage Towers supporting significant increase in operating profit and basic EPS

·   Adjusted free cash flow of €4.8 billion, reflecting lower adjusted EBITDAaL and tax phasing

·   Significant reduction in net debt to €33.4 billion, proforma net debt to adjusted EBITDAaL improved to 2.5x

·   Total dividends per share are 9.0 eurocents, including a final dividend per share of 4.5 eurocents


A new roadmap for Vodafone

Today, we set out a new roadmap for Vodafone, following a strategic review conducted over the last five months.

1.   Vodafone must change

The circumstances of our industry and the position of Vodafone within it, require us to change.

·   The European telecommunication sector has amongst the lowest ROCE in Europe, alongside the highest capital investment demands. This has resulted in ROCE being below WACC for over a decade, impacting Total Shareholder Returns.

·   More importantly, the comparative performance of Vodafone has worsened over time, which is connected to the experience of our customers.

·   Our market position and performance varies by geography and segment. Where we have the right combination of strong local execution and a rational market structure, we can grow and drive returns. There are also material differences between our Consumer and Business segments, with Business growing in nearly all European markets.

·   Our turnaround must be built from our strengths, but we need to overcome some clear challenges. We are more complex than we need to be, which limits our local commercial agility.

2.   Strategic shifts

Our target is to be a best-in-class telco in Europe and Africa, and become Europe's leading platform for Business. To achieve this, we must change in four essential areas.

·   We will rebalance our organisation to maximise the potential of Vodafone Business, which continues to accelerate growth, has a unique set of capabilities and has a strong position in a large and growing market as organisations digitise.

·   In order to win in our consumer markets, we will refocus on the basics and deliver the simple and predictable experience our customers expect.

·   We will be a leaner and simpler organisation, to increase our commercial agility and free up resources.

·   We will focus our resources on a portfolio of products and geographies that is right-sized for growth and returns over time.

3.   Our action plan

To execute the change in these four areas, we have an action plan already underway, focused around three priorities: Customers, Simplicity and Growth. Early examples of this action plan include:

·   Customers: Significant investment reallocated in FY24 towards customer experience and brand

·   Simplicity: 11,000 role reductions planned over three years, with both HQ and local markets simplification

·   Growth: Germany turnaround plan, continued pricing action and strategic review in Spain

We will change the level of ambition, speed and decisiveness of execution. We will have empowered markets focused on customers, scale up Vodafone Business and take out complexity to simplify how we operate.

A more detailed outline  of the new roadmap for the transformation of Vodafone is contained within an accompanying video presentation available here: investors.vodafone.com/results.

Financial performance

Total revenue increased by 0.3% to €45.7 billion (FY22: €45.6 billion) driven by growth in Africa and higher equipment sales, offset by lower European service revenue and adverse exchange rate movements.

Adjusted EBITDAaL declined by 1.3%* to €14.7 billion (FY22: €15.2 billion), with revenue growth offset by higher energy costs and commercial underperformance in Germany. The adjusted EBITDAaL margin was 1.4* percentage points lower year-on-year at 32.1%.

Operating profit increased to €14.3 billion and the Group made a profit for the period of €12.3 billion (FY22: €2.8 billion), largely reflecting a gain on disposal of Vantage Towers.

Basic earnings per share was 42.77 eurocents, compared to basic earnings per share of 7.71 eurocents in the prior year.

Cash flow, funding & capital allocation

Cash inflow from operating activities were broadly stable year-on-year at €18.1 billion.

Free cash flow was an inflow of €1.4 billion (FY22: inflow of €3.3 billion) partly reflecting a lower adjusted EBITDAaL, higher licence and spectrum payments and tax phasing. Adjusted free cash flow was €4.8 billion (FY22: €5.4 billion).

Net debt decreased by €8.2 billion to €33.4 billion (€41.6 billion as at 31 March 2022). This was driven by free cash inflow of €1.4 billion, acquisitions and disposals of €8.7 billion, partially offset by equity dividends of €2.5 billion, and share buybacks of €1.9 billion (used to offset dilution linked to the conversion of certain mandatory convertible bonds). Other movements in net debt includes €1.7 billion relating to the settlement of 5G spectrum in Italy previously included in net debt.

Current liquidity, which includes cash and equivalents and short-term investments, is €16.0 billion (€12.3 billion as at 31 March 2022). This includes €4.6 billion of net collateral which has been posted to Vodafone from counterparties as a result of positive mark-to-market movements on derivative instruments (€2.2 billion as at 31 March 2022).

Total dividends per share are 9.0 eurocents (FY22: 9.0 eurocents) including a final dividend per share of 4.5 cents. The ex-dividend date for the final dividend is 8 June 2023 for ordinary shareholders, the record date is 9 June 2023 and the dividend is payable on 4 August 2023.

Hyperinflationary accounting in Turkey

Turkey was designated as a hyperinflationary economy on 1 April 2022 in line with IAS 29 'Financial Reporting in Hyperinflationary Economies'. See note 1 of the condensed consolidated financial statements for further information.


Performance against FY23 guidance

In May 2022, we set out guidance for FY23 for Group adjusted EBITDAaL and adjusted free cash flow. In November 2022, this was updated to reflect the worsening global macroeconomic climate, with higher energy costs and broader inflation in particular.

For FY23 we reported adjusted EBITDAaL and adjusted free cash flow of €14.7 billion and €4.8 billion. This included adverse foreign exchange rate movements versus those used for the basis of guidance and other items which in aggregate impacted adjusted EBITDAaL by €0.2 billion and adjusted free cash flow by €0.5 billion.

The table below compares the guidance given and our actual performance.


Original guidance

Updated guidance

FY23 outcome on guidance basis1

FY23 outcome as reported

Adjusted EBITDAaL2

€15.0 - €15.5 billion

€15.0-15.2 billion

€14.9 billion

€14.7 billion

Adjusted free cash flow2,3

c. €5.3 billion

c.€5.1 billion

€5.3 billion

€4.8 billion

FY24 Guidance

In order to provide a basis of comparison for our FY24 guidance, we have rebased our FY23 financials to reflect the current structure of the Group and applied foreign exchange rates that are consistent with FY24 guidance rates. On a comparable basis, the rebased FY23 adjusted EBITDAaL is €13.3 billion and adjusted free cash flow is €4.2 billion. 

Based on the current prevailing assessments of the global macroeconomic outlook, for FY24 we expect:

·      Adjusted EBITDAaL to be 'broadly flat' at around €13.3 billion; and

·      Adjusted free cash flow to be 'around' €3.3 billion, reflecting expected working capital movements, interest and dividend receipts

The guidance above reflects the following:

·      Foreign exchange rates used when setting guidance were as follows:

-   EUR 1 : GBP 0.88;

-   EUR 1 : ZAR 19.30;

-   EUR 1 : TRY 21.10; and

-   EUR 1 : EGP 33.38.

·      This guidance assumes no material change to the structure of the Group.


The full detailed results including breakdown for each market can be found here.

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