Vodafone 2012 Annual Report Download - page 47

Business review Performance Governance Financials Additional information
45
Vodafone Group Plc
Annual Report 2012
2011 nancial year compared to the 2010 nancial year
Group1
Europe
£m
Africa,
Middle East
and Asia
Pacic
£m
Non-Controlled
Interests and
Common
Functions2
£m
Eliminations
£m
2011
£m
2010
£m
% change
£ Organic3
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
EBITDA 10,823 3,999 (152) – 14,670 14,735 (0.4) (0.7)
Adjusted operating prot 5,726 1,272 4,820 – 11,818 11,466 3.1 1.8
Adjustments for:
Impairment losses (6,150) (2,100)
Other (income)/expense4(72) 114
Operating prot 5,596 9,480
Non-operating income/(expense)53,022 (10)
Net investment income/(nancing costs) 880 (796)
Prot before taxation 9,498 8,674
Income tax expense (1,628) (56)
Prot for the nancial year 7,870 8,618
Notes:
1 2011 results reect average exchange rates of £1:€1.18 and £1:US$1.56.
2 Common Functions primarily represent the results of the partner markets and the net result of unallocated central Group costs.
3 Organic growth includes Vodacom at the 2011 level of ownership but excludes Australia following the merger with Hutchison 3G Australia on 9 June 2009.
4 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.
5 Non-operating income and expense for the year ended 31 March 2011 includes £3,019 million prot arising on the sale of the Group’s 3.2% interest in China Mobile Limited.
Revenue
Group revenue increased by 3.2% to £45,884 million and Group service
revenue increased by 2.4% to £42,738 million. On an organic basis
Group service revenue increased by 2.1%*, with a 0.8 percentage point
improvement between the rst and second half of the 2011 nancial
year as both Europe and AMAP delivered improved organic service
revenue trends.
In Europe service revenue fell by 0.4%* with a decline of 0.3%* in the
second half of the 2011 nancial year. Both the UK and Germany
performed well delivering full year service revenue growth of 4.7%* and
0.8%* respectively. Spain continued to experience economic pressures
which intensied competition leading to a 6.9%* decline in service
revenue. Service revenue also declined by 2.1%* in Italy driven by a
challenging economic and competitive environment combined with
the impact of MTR cuts. Our improved commercial offers in Turkey
delivered service revenue growth of 28.9%*, despite a 52% cut in MTRs
which was effective from 1 April 2010. Challenging economic and
competitive conditions continued in our other central European
businesses where service revenue growth was also impacted by MTR
cuts. European enterprise revenue increased by 0.5%* with improved
roaming activity and important customer wins.
In AMAP service revenue grew by 9.5%*. Vodacom continued to
performwell, with strong data revenue growth from mobile broadband
offsetting weaker voice revenue which was impacted by two MTR cuts
during the year. In India service revenue increased by 16.2%*, driven
byan increase in the mobile customer base and a more stable pricing
environment towards the end of the 2011 nancial year. In Qatar the
customer base reached 757,000 by 31 March 2011, with 45% of the
population actively using Vodafone services less than two years after
launch. On an organic basis, service revenue in Egypt declined by 0.8%*
where performance was impacted by the socio-political unrest during
the fourth quarter of the 2011 nancial year.
EBITDA and prot
EBITDA decreased by 0.4% to £14,670 million with a 1.1 percentage
point decline in both the reported and organic EBITDA margin.
In Europe EBITDA decreased by 3.7%*, with a decline in EBITDA margin
of 1.7 percentage points, primarily driven by a reduction in service
revenue in most markets and higher investment in acquisition and
retention costs, partially offset by operating cost efciencies.
In AMAP EBITDA increased by 7.5%*, driven primarily by growth in India,
together with improvements in Vodacom, Ghana, New Zealand and
Qatar, partially offset by a slight decline in Egypt. The EBITDA margin fell
0.6* percentage points, the two main factors behind the decline being
higher recurring licence fee costs in India and the change in regional mix
from the strong growth in India.
Adjusted operating prot grew by 3.1% as a result of an increase in the
Group’s share of results of Verizon Wireless partially offset by the decline
in Group EBITDA. The Group’s share of results in Verizon Wireless, the
Group’s associate in the United States, increased by 8.5%* primarily due
to the expanding customer base, robust data revenue, efciencies in
operating expenses and lower acquisition costs partially offset by higher
customer retention costs reecting the increased demand for
smartphones in the United States.
The Group recorded other net income of £5,342 million, primarily in
relation to a £2.8 billion net gain on the sale of the Group’s interest in China
Mobile Limited, £1.8 billion on the settlement of a tax case and £0.5billion
from the disposal of investment in SoftBank Mobile Corp. Limited.
Operating prot decreased by 41.0% primarily due to higher impairment
losses compared to the prior year. Impairment losses totalling
£6,150million were recorded relating to our businesses in Spain
(£2,950million), Italy (£1,050 million), Ireland (£1,000 million), Greece
(£800 million) and Portugal (£350 million) primarily resulting from
increased discount rates as a result of increases in government bond
rates together with lower cash ows within business plans, reecting
weaker country-level macroeconomic environments. The impairment
loss in the 2010 nancial year was £2,100 million.
Prot for the year decreased by 8.7%.