Vodafone 2016 Annual Report Download - page 5

Chairman’s statement
Good progress.
Financial improvement
is following
The nancial year 2016 has been a year
of solid progress, both with respect to the
further implementation of our strategy as well
as regarding our focus on customer experience
excellence and operational execution.
Vodafone has been undergoing a substantial
transformation over the last ve years.
While historically we developed as a business
that was almost exclusively focused on mobile
voice and text services, we now cover most
of our markets with advanced mobile data
networks, we reach 72 million homes
in Europe with Vodafone-branded high speed
broadband services, of which 41% are on our
own bre or cable networks, and we offer
a broad portfolio of market-leading, integrated
xed and mobile communications
services across a footprint of 26 countries.
Vittorio covers this progress in more detail
in his review on pages 10 to 13.
Our progress has come about through
signicant organic investment and
acquisitions. Our total spend in the last three
years – across capital expenditure, spectrum
licences and acquisitions – has exceeded
£47 billion. We have funded this through
the sale of valuable but non-controlled
assets such as Verizon Wireless, while still
maintaining a strong balance sheet and paying
an attractive and growing dividend. This is one
of the key roles of the Board: nding the right
balance between long-term investment
to secure the sustainability of the business;
a strong credit position to weather uncertain
economic times; and a regular and reliable
return for shareholders.
The crucial next step for Vodafone is to
translate these investments into improving
nancial performance, and I am extremely
pleased to report that Vodafone returned
to organic growth this year in both revenue
and EBITDA, aided by our Project Spring
investment programme which completed
inMarch 2016.
Our performance will be further enhanced
by our Customer eXperience eXcellence
programme (CXX), which we launched last
year and which, with Vittorio’s personal
leadership, will continue to have the highest
attention from the Board. These improvements
are necessary to maintain our strong nancial
framework and underpin our dividend policy.
Nick sets out in more detail our plans for
continued growth, supported by increasing
efciency, on pages 14 and 15.
The Board continues to view the dividend
as the key element of shareholder returns and
consistent with this policy we have raised the
dividend per share by 2% to 11.45 pence for
the year. For the nancial year ending 31 March
2017 and beyond, dividends will be declared
in euros and paid in euros, pounds sterling and
US dollars. This is consistent with the change
in the Group’s reporting currency to euros
from pounds sterling.
The regulatory agenda is still
unresolved in key areas
At Vodafone we are aiming for a regulatory
environment that enables investment,
innovation and returns for business,
while always maintaining adequate levels
of competition to provide customers choice
and value for money. So far in several
geographies we are still some way from
such a position and this will remain a point
of concern for the Board when making its
investment decisions.
In Europe, inconsistent industry regulations
and spectrum policies, exacerbated
by overly fragmented market structures,
have led to a steep deterioration in return
on capital employed over recent years.
With the advent of new technologies designed
to squeeze higher broadband speeds from
outdated copper infrastructures, the risk
of “re-monopolisation” is rising, at the expense
of investment in 21st century bre networks.
Additionally, a number of incumbents are
trying to use exclusive content ownership
as a further lever to limit competition.
Recent initiatives by the European Commission
have started to address some of these issues,
but we believe more needs to be done.
In emerging markets, the positive economic
impacts of mobile communications are
well documented, but there too we face
continued pressures from regulatory and
scal intervention. For example, while India
represents an excellent long-term investment
opportunity, the present regulatory challenges
are hampering economic development.
Spectrum auction structures, combined
with the piecemeal release of new spectrum,
leave less capital available for investment
in networks, and this is exacerbated by other
ongoing regulatory and scal burdens.
Vodafone Foundation
This year we are celebrating 25 years of the
Vodafone Foundation, the Group platform
for charitable giving. In reality it is not one
single Foundation, but a unique network
of 27 local foundations and social investment
programmes in Vodafone markets. We have
raised and invested over £560 million
since its formation in helping charities and
philanthropic organisations to achieve their
goals, more recently providing connectivity
in refugee camps, access to healthcare for
women in Tanzania, and emergency support
for victims of domestic violence, among
many other causes. The Foundation remains
committed to connecting communities
around the world to save lives and improve
thelivelihood and education of children.
Gerard Kleisterlee
Chairman
A year of
solid progress
This has been a year of continued strategy implementation
and improved operational execution, with a return to growth
enabling consistent attractive returns to shareholders.
Our Project Spring investment programme is bearing fruit
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Vodafone Group Plc
Annual Report 2016
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