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Five Fist Financial Consultants Financial Analysis on Vodafone PlcSyndicate 13 - Group PresentationGroup Members: M. Muzni Miftha, Sweta James, Jaspreet, Kamaljit Kaur, Aditi ShresthaLecturer: Tom Downey
Introduction Vodafone is a vibrant and dynamic global company. The Vodafone name came from Voice Data and foneOverviewVodafone made the UKs first mobile call at a few minutes past midnight on 1 January 1985. Within fifteen years, the network was the largest company inEurope and the largest of its kind anywhere in the world. By the turn of the century, almost every second UK citizen had a mobile – and a third of them wereconnected to Vodafone.The Vodafone story is one of investment, innovation and award-winning customer service. Above all, it‟s one of growth and the ability to deliver thetremendous benefits of mobile communications, not just in the UK but worldwide. We‟ve come a long way since the early 80s.Vodafone Group was established in the UK in 1983 and has equity interests in 27 countries over five continents, and partner networks in a further 31countries. At 31 March 2010, based on the registered customers of mobile telecommunications ventures in which it had ownership interests at that date, theGroup had 341 million customers, excluding paging customers, calculated on a proportionate basis in accordance with the Companys percentage interest inthese ventures.Vodafone in New ZealandThe mobile telecommunications industry in New Zealand is vibrant, dynamic and fast-paced. According to the CommerceCommission, more than 4.7 million New Zealanders - thats more than 100% of the population - are now estimated to have amobile connection!We have more than 1300 mobile phone sites around New Zealand making up our mobile network, which covers 97% of where thepopulation live, work and play.Vodafone Group acquired its New Zealand business (previously known as BellSouth New Zealand) in November 1998. At the timeof purchase, Bellsouth had 138,000 customers.As at 31 March 2010, Vodafone New Zealand had a customer base of 2.5 million customers.In New Zealand , Vodafone is a non-listed company. It is wholly owned by the UK-based Vodafone Group Plc. “In a challenging economic environment our financial results exceeded our guidance on all measures, we increased our commercial focus, delivered our cost reduction targets ahead of schedule and maintained strong capital investment levels.”
We will be the communications leader in an increasingly connected world Vodafone Group Plc is the worlds leading mobile telecommunications company, with a significant presence in Europe, the Middle East, Africa, Asia Pacific and the UnitedStates through the Companys subsidiary undertakings, joint ventures, associated undertakings and investments. At 30 June 2010, based on the registered customers of mobile telecommunications ventures in which it had ownership interests at that date, the Group had 347 millioncustomers, excluding paging customers, calculated on a proportionate basis in accordance with the Companys percentage interest in these ventures. The Companys ordinary shares are listed on the London Stock Exchange and the Companys American Depositary Shares (ADSs) are listed on the NASDAQ StockMarket. The Company had a total market capitalisation of approximately £71.2 billion at 12 November 2009. Vodafone Group Plc is a public limited company incorporated in England under registered number 1833679. Its registered office is Vodafone House, TheConnection, Newbury, Berkshire, RG14 2FN, England.New Zealand facts & figuresVodafone Group Plc, the worlds leading mobile telecommunications companies, acquired its New Zealand business (previously known as Bellsouth New Zealand) inNovember 1998. At the time of purchase, Bellsouth had 138,000 customers.StaffApproximately 1400 employees, based in Auckland, Wellington and ChristchurchNetworkVodafones network provides coverage to more than 97 percent of where the population live, work and play. We provide our GSM (Global System for Mobile) digitalcommunication service on the 900 and 1800 megahertz parts of the radio spectrum. Our 3G network operates on both 900 and 2100 megahertz radio spectrum.Distribution NetworkThere are currently more than 800 outlets retailing Vodafone goods throughout New Zealand as theyre spread across all regional centres.RoamingVoice - to over 215 destinationsData - to over 95 destinationsSponsorshipsSport: Vodafone Warriors, Vodafone Wellington Lions, Team New Zealand.Music: Vodafone New Zealand Music Awards.Our Global NetworkThe Group has ownership interests in 31 countries across 5 continents. In addition, the Group has Partner Markets in over a further 40 countries. The Group had aproportionate mobile customer base of 341 million at 31 March 2010.Vodafone Group also has partner networks in Croatia, Denmark, Estonia, Finland, Iceland, Lithuania, Slovenia, Austria, Luxembourg, Bahrain, Cyprus, Kuwait, Singapore andHong Kong.
New Zealand Executive Team People & culture Thinking global, acting local. Our people We think Vodafone New Zealands a pretty special organisation. Weve developed a culture thats unlike any other business in New Zealand. CEO Russell Stanners Sales Technology HR Finance Corporate Affairs Email Russell Grant Hopkins Sandra Pickering Michael Stanley James Marsh Tom Chignell Email Grant Email Sandra Email Michael Email James Email Tom CEOs Business Manager Legal Services Juliet Jones David Kreider Kelly Moore Email Juliet Email David Email KellyVodafone Forum dedicated to New Zealand customers to discuss their issues http://forum.vodafone.co.nz/
Fact Sheet Devices: Over 5.4 million Vodafone branded handsets shipped during the year ended 31 MarchDescription: 20108.7 million PC connectivity users (31 March 2010)Vodafone Group Plc is one of the worlds largest mobile Voice:communications companies by revenue operating across the globe 24.9 million Vodafone Passport customers (31 March 2010)providing a wide range of communications services. Our vision is to be the £28.0 billion service revenue (year ended 31 March 2010)communications leader in an increasingly connected world. Messaging:What we do: Usage growth of 25.2% (year ended 31 March 2010)Provide a wide range of communications services including mobile £4.8 billion service revenuevoice, messaging, data and fixed broadband Data:Established: 19.3% organic data revenue growth (year ended 31 March 2010)Awarded mobile licence in the UK in 1982 31.0 million mobile internet users (31 March 2010) £4.1 billion service revenue (year ended 31 March 2010)Revenue:£44,472 million (year ended 31 March 2010) Fixed and other services: 5.6 million fixed broadband customers (31 March 2010)Group EBITDA: 13 countries, in addition to Gateway, offering fixed line services (31 March 2010)£14,735 million (year ended 31 March 2010) £3.3 billion service revenue (year ended 31 March 2010)Shares in issue:57,809 million (31 March 2010) Global network: Significant global presence with equity interests in over 30 countries and over 40 partnerListings: markets worldwide. The Group operates in three geographic regions – Europe, AfricaLondon and NASDAQ and Central Europe, Asia Pacific and Middle East – and has an investment in Verizon Wireless in the United StatesMarket capitalisation:Approximately £88.0 billion (31 March 2010) Brand names: Our mobile subsidiaries operate under the brand name Vodafone. In the UnitedEmployees: States, our associated undertaking operates as Verizon Wireless.Approximately 85,000 during year ended 31 March 2010 Registered and head office:Customer base:Approximately 341 million registered proportionate mobile customers (31 Vodafone HouseMarch 2010) The Connection Newbury Berkshire RG14 2FN England Tel: +44 (0) 1635 33251 Fax: +44 (0) 1635 45713 Registered details: Registered in England No. 1833679 What is EBITDA? Earnings Before Interest, Tax, Depreciation and Amortization
Financial highlightsTotal revenue of £44.5 billion, up 8.4%, with improving trends in most markets through the year.Adjusted operating profit of £11.5 billion, a 2.5% decrease in a recessionary environment.Data revenue exceeded £4 billion for the first time and is now 10% of service revenue.£1 billion cost reduction programme delivered a year ahead of schedule; further £1 billion programme now underway.Final dividend per share of 5.65 pence, resulting in a total for the year of 8.31 pence, up 7%.Higher dividends supported by £7.2 billion of free cash flow, an increase of 26.5%.Operational highlightsWe are one of the world‟s largest mobile communications companies by revenue with 341.1 million proportionate mobile customers, up 12.7% during the year.Improved performance in emerging markets with increasing revenue market share in India, Turkey and South Africa during the year.Expanded fixed broadband customer base to 5.6 million, up 1 million during the year.Comprehensive Smartphone range, including the iPhone, BlackBerry® Bold and Samsung H1.Launch of Vodafone 360, a new internet service for the mobile and internet.High speed mobile broadband network with peak speeds of up to 28.8 Mbps.Source: http://www.vodafone.com/start/investor_relations.html Environment & Performance Against a difficult background, we generated £7.2 billion of free cash flow, up 26.5%. Dividends Per Share (Pence) Total dividends per share of 8.31 pence, up 7%; three year dividend per share growth target of at least 7% per annum. Original £1 billion cost programme completed a year ahead of schedule with a further £1 billion initiative underway. Continued strong investment in network capability to maintain and enhance the quality of service. What is Free Cash Flow (FCF)? Free cash flow is very important for a business. FCF is reserved from net income after deducting operating expenses/cash flow and capital expenditure. What is dividends? A distribution of a portion of a companys earnings, decided by the board of directors, to a class of its shareholders.
Mobile phone sales Increased after signing a contract/dealership in selling Apple iphonein Europe & rest of the world in year 2009.
Note: Vodafone operates asVerizone Wireless in UnitedStates.
Branches and Retail outlets all over the worldSource: http://vodafone.com/start/investor_relations/shareholder_services/faq/general.html
Committed facilitiesThe following table summarises the committed bank facilities available to us at 31 March 2010.Committed bank facilities Amounts drawn. 14 September 2009 16 November 2006 €0.4 billion loan facility, available €0.4 billion loan facility, for 18 months, repayment is the maturing 14 February 2014 seventh year anniversary of the first advance drawn within the availability period ending The facility was drawn down in full on March 2011 14 February 2007. The facility is available for financing capital expenditure in our No drawings have been made against Turkish operating company. this facility. The facility is available for financing capital expenditure in our 24 June 2005 German operations. US$5 billion revolving credit facility, maturing 22 June 2012 29 September 2009 US$0.7 billion export credit agency loan facility, maturing No drawings have been made against 16 September 2018 this facility. The facility supports our commercial paper programmes and may No drawings have been made against this be used for general corporate purposes facility. The facility is available for financing including acquisitions. eligible Swedish goods and services. 21 December 2005 29 July 2008 ¥258.5 billion term credit facility, US$4.1 billion revolving credit maturing 16 March 2011, entered facility, maturing 28 July 2011 into by Vodafone Finance K.K. No drawings have been made against and guaranteed by the Company this facility. The facility supports our The facility was drawn down in full on commercial paper programmes and may 21 December 2005. be used for general corporate purposes including acquisitions. The facility is available for general corporate purposes, 28 July 2008 although amounts drawn must be on-lent €0.4 billion loan facility, to the Company. maturing 12 August 2015 The 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.
Now lets discuss about the Financial Reports & facts about the company..! Assumed we are explaining to non financial professionals What are Financial statements? And what is it used for? Financial statements are records that provide an indication of an individual‟s, organization‟s, or business‟ financial status. There are four basic types of financial statements: balance sheets, income statements, cash-flow statements, and statements of retained earnings. Typically, financial statements are used in relation to business endeavours. Balance sheet financial statements are used to provide insight into a company‟s assets and debts at a particular point in time. Information about the company‟s shareholder equity is included as well. Typically, a company lists its assets on the left side of the balance sheet and its debts and liabilities on the right. Sometimes, however, a balance sheet has assets listed at the top, debts in the middle, and shareholders‟ equity at the bottom. Income financial statements (Profit & Loss Account) present information concerning the revenue earned by a company in a specified time period. Income statements also show the company‟s expenses in attaining the income and shareholder earnings per share. At the bottom of the income statement, a total of the amount earned or lost is included. Often, income statements provide a record of revenue over a year‟s time. Cash-flow financial statements provide a look at the movement of cash in and out of a company. These financial statements include information from operating, investing, and financing activities. The cash-flow statement can be important in determining whether or not a company has enough cash to pay its bills, handle expenses, and acquire assets. At the bottom of a cash-flow statement, the net cash increase or decrease can be found. Statements of retained earnings show changes in a companys or organization‟s retained earnings over a specific period of time. These statements show the beginning and final balance of retained earnings, as well as any adjustments to the balance that occur during the reporting period. This information is sometimes included as part of the balance sheet, or it may be combined with an income statement. However, it is frequently provided as a completely separate statement. The average individual does not typically have a use for financial statements. However, sole proprietors may use them in the same manner as other businesses. High-net-worth individuals may also use them for the purpose of obtaining loans, participating in investment deals, and developing financial, tax, and business plans.Source: http://www.wisegeek.com/what-are-financial-statements.htm
Lets compare some key percentageConsolidated income statement For the year ended 31st March changes in this statement comparing current year with the last year. The formula to see the percentage changes stated below. 2010 2009 £m £mRevenue 44,472 41,017 (Current year – Previous year) / Previous year x 100Cost of sales (29,439) (25,842)Gross profit 15,033 15,175Selling and distribution expenses (2,981) (2,738) some major changes in the income statement in percentage wiseAdministrative expenses (5,328) (4,771) compared with the last year.Share of result in associates 4,742 4,091 The revenue has increase by 8.4%Impairment losses, net (2,100) (5,900) Cost of sales increased by 13.9% could be due to the increase in demands for latest smart phones (iphone)Other income and expense 114 – Gross Profit is down by 0.9% this could be due to the increase of theOperating profit 9,480 5,857 cost of sales by 13.9% in the year 2010.Non-operating income and expense (10) (44) The operating profit is up by 61.8% comparing with the last yearInvestment income 716 795Financing costs (1,512) (2,419)Profit before taxation 8,674 4,189Income tax expense (56) (1,109)Profit for the financial year 8,618 3,080Attributable to:– Equity shareholders 8,645 3,078– Non-controlling interests (27) 2 8,618 3,080Basic earnings per share 16.44p 5.84pDiluted earnings per share 16.36p 5.81p Download: http://vodafone.com/start/investor_relations/financial_reports/annual_reports.html Source: http://www.vodafone.com/static/annual_report10/performance/financial_position.html
2010 £m 2009 £m Statement of Financial Position Non-current assets As At 31st March Goodwill 51,838 53,958What is Ratio Analysis ? Whats the use of it? Other intangible assets 22,420 20,980 Property, plant and equipment 20,642 19,250Performing Ratio Analysis is very important for a company/small Investments in associates 36,377 34,715business or an individual. Ratio Analysis is basically comparing Other investments 7,591 7,060previous and current financial raw datas/figures making someanalysis, assumptions and predictions for the future well being of the Deferred tax assets 1,033 630business. Not only it says the current and future situation of the Post employment benefits 34 8business but also it helps to bring down the higher volume of data in to Trade and other receivables 2,831 3,069a small volume. 142,766 139,670Ratio Analysis will do.. Current assets Inventory 433 412Comparisons Taxation recoverable 191 77Predictions Trade and other receivables 8,784 7,662Analysis Other investments 388 –AssumptionsSummary of the current & future situations Cash and cash equivalents 4,423 4,878 14,219 13,029It breaks down/ simplify the raw datas in to useful information by Total assets 156,985 152,699In to some Percentages (%) EquityIn to some ratios (2:1) Called up share capital 4,153 4,153In to some units (Sales/ Hours) Additional paid-in capital 153,509 153,348In to how many times to pay (Days/ Time) Treasury shares (7,810) (8,036)In to (stocks) Inventory Retained losses (79,655) (83,820) Accumulated other comprehensive income 20,184 20,517Few Ratio Analysis on the Balance Sheet Total equity shareholders’ funds 90,381 86,162Current Ratio: Non-controlling interests 3,379 1,787The current ratio is an excellent diagnostic tool as it measures whether Put options over non-controlling interests (2,950) (3,172)or not your business has enough money/resources to pay its bills over Total non-controlling interests 429 (1,385)the next 12 months. The formula is: Total equity 90,810 84,777 Non-current liabilitiesCurrent ratio = Current Assets / Current Liabilities Long-term borrowings 28,632 31,749= 14219/ 28616 Deferred tax liabilities 7,377 6,642=0.50:1 Post employment benefits 237 240 Provisions 497 533Explanation: Trade and other payables 816 811 37,559 39,975So far this means that the business is not doing good which means that Current liabilitiesthe every $1 of liability of the business has only 50 Cents to settle. this Short-term borrowings 11,163 9,624doesn’t mean that the business is going down the current liabilities has Current taxation liabilities 2,874 4,552increased due to the short term borrowings how ever the business has a Provisions 497 373very healthy $7.2 billion of free cash flow in order to meet the day to dayliabilities. Trade and other payables 14,082 13,398 28,616 27,947 Total equity and liabilities 156,985 152,699Source: Tom Downey - Finance Enterprise (SIT)
2010 2009Statement of Cash Flow for the £m £m year ended 31 March Net cash flow from operating activities 13,064 12,213 Cash flows from investing activities Purchase of interests in subsidiaries and joint ventures, net of cash acquired (1,777) (1,389) Purchase of intangible assets (2,134) (1,764) Purchase of property, plant and equipment (4,841) (5,204) Purchase of investments (522) (133) Disposal of interests in subsidiaries, net of cash disposed – 4 Disposal of interests in associates – 25 Disposal of property, plant and equipment 48 317 Disposal of investments 17 253 Dividends received from associates 1,436 647 Dividends received from investments 141 108 Interest received 195 302 Net cash flow from investing activities (7,437) (6,834) Cash flows from financing activities Issue of ordinary share capital and reissue of treasury shares 70 22 Net movement in short-term borrowings 227 (25) Proceeds from issue of long-term borrowings 4,217 6,181 Repayment of borrowings (5,184) (2,729) Purchase of treasury shares – (963) B share capital redemption – (15) Equity dividends paid (4,139) (4,013) Dividends paid to non-controlling shareholders in subsidiaries (56) (162) Amounts received from non-controlling shareholders 613 618 Interest paid (1,601) (1,470) Net cash flow from financing activities (5,853) (2,556) Net cash flow (226) 2,823 Cash and cash equivalents at beginning of the financial year 4,846 1,652 Exchange (loss)/gain on cash and cash equivalents (257) 371 Cash and cash equivalents at end of the financial year 4,363 4,846
Vodafone Plc Key performance indicatorsThe Board and the Executive Committee use a number of key performance indicators(1) („KPIs‟) to monitor Group and regional performance against budgetsand forecasts as well as to measure progress against our strategic objectives. There are a number of other KPIs that are used to monitor the results ofindividual operating companies but for which no Group KPI is calculated including revenue market share and EBITDA market share. KPI Purpose of KPI 2010 2009 Provides an evaluation of the cash generated by our operations and available for Free cash flow(2) reinvestment, shareholder returns or debt reduction. Also used in determining £7,241m £5,722m management‟s remuneration. Service revenue and Measure of our success in growing ongoing revenue streams. Also used in £41,719m £38,294m related organic determining management‟s remuneration. (1.6)% (0.3)% growth(2) Data revenue and £4,051m £3,046m related organic Data revenue is expected to be a key driver of the future growth of the business. 19.3% 25.9% growth(2) Fixed line revenue and £3,289m £2,727m related organic Measure of success in offering total communications services 7.9% 2.1% growth(2) Capital expenditure Measure of our investment in capital expenditure to deliver services to customers. £6,192m £5,909m EBITDA and related £14,735m £14,490m Measure used by management to monitor performance at a segment level. organic growth(2) (7.4)% (3.5)% Measure of customer satisfaction across our controlled markets and jointly Customer delight index 73.1 72.9 controlled market in Italy. Also used in determining management‟s remuneration. At the end of the 2010 financial year, most markets migrated to NPS, which is also Net promoter score used to monitor customer satisfaction. In relation to those subsidiaries that have (‘NPS’) migrated, NPS will be incorporated into the competitive performance assessment used in determining management‟s remuneration. Adjusted operating Measure used for the assessment of operating performance, including the results £11,466m £11,757m profit and related of associates. Also used in determining management‟s remuneration. (7.0)% 2.0% organic growth(2) Proportionate mobile Customers are a key driver of revenue growth in all operating companies in which 341.1m 302.6m customers(1) we have an equity interest. Proportionate mobile customer net Measure of our success at attracting new and retaining existing customers. 34.6m 33.6m additions(1) Voice usage (in Voice usage is an important driver of revenue growth, especially given continuing 686.6bn 548.4bn minutes) price reductions in the competitive markets in which we operate.
Debtors 2010 2009 £m £mAmounts falling due within one year: Total debtors fallen down by 7.4% percentAmounts owed by subsidiaries 116,521 126,010Taxation recoverable 200 44Other debtors 184 280 116,905 126,334Amounts falling due after more than one Equity dividendsyear:Deferred taxation 12 18 2010 2009Other debtors 1,902 2,334 £m £m 1,914 2,352 Declared during the financial year: Final dividend for the year ended 31 March 2009: 5.20 pence per share 2,731 2,667 (2008: 5.02 pence per share)Creditors Interim dividend for the year ended 31 March 2010: 2.66 pence per share 1,400 1,350 (2009: 2.57 pence per share) 2010 2009 4,131 4,017 £m £m Proposed after the balance sheet date and not recognised as a liability:Amounts falling due within one year: Final dividend for the year ended 31 March 2010: 5.65 pence per share 2,976 2,731Bank loans and other loans 4,360 7,717 (2009: 5.20 pence per share)Amounts owed to subsidiaries 73,663 84,394Taxation payable 31 – Equity dividend is up by 2.8% percentOther creditors 111 174Accruals and deferred income 20 54 78,185 92,339Amounts falling due after more than one year:Other loans 23,488 21,707Other creditors 352 263 Total creditors up by 15.3% percent 23,840 21,970Included in amounts falling due after more than one year are other loans of£12,468 million, which are due in more than five years from 1 April 2010 andare payable otherwise than by installments. Interest payable on these loansranges from 2.15% to 8.125%.
2010 financial year compared to the 2009 financial year Africa Asia % Verizon Common change Europe and Central Pacific and Eliminations 2010 2009 Wireless Functions(3) £m Europe Middle East £m £m £m £m £m £ £m £mRevenue 29,878 8,026 6,481 – 269 (182) 44,472 41,017 8.4Service revenue 28,310 7,405 6,146 – 6 (148) 41,719 38,294 8.9EBITDA 10,927 2,327 1,840 – (359) – 14,735 14,490 1.7Adjusted operating profit 6,918 527 358 4,112 (449) – 11,466 11,757 (2.5)Adjustments for:Impairment losses, net (2,100) (5,900)Other income and expense 114 −Operating profit 9,480 5,857Non-operating income and expense (10) (44)Net financing costs (796) (1,624)Profit before taxation 8,674 4,189Income tax expense (56) (1,109)Profit for the financial year 8,618 3,080 (Current Figure – Old Figure) / Old Figure * 100 Group service revenue calculated (41719 - 38294) / 38294 * 100 (3428 / 38294) * 100 0.0894 * 100 = 8.9% ( Group service revenue increase)Source: http://www.vodafone.com/static/annual_report10/performance/operating-results.html
Current year compared with the previous year %RevenueGroup revenue increased by 8.4% to £44,472 million, with favourable exchange rates contributing 5.7 percentage points of growth and merger and acquisition activitycontributing 5.0 percentage points. During the year the Group acquired an additional 15% stake in Vodacom and fully consolidated its results from 18 May 2009.Group service revenue increased by 8.9% to £41.7 billion, while organic service revenue declined by 1.6%(*). Service revenue was impacted by challenging economicconditions in Europe and Central Europe offset by growth in Africa, Asia Pacific and the Middle East.In Europe service revenue fell 3.5%(*), a 1.8 percentage point decline on the previous year reflecting challenging economic conditions in most markets offset by growth inItaly and the Netherlands. The decline was primarily driven by reduced voice revenue resulting from continued market and regulatory pressure on pricing and slower usagegrowth partially offset by growth in data and fixed line. Data revenue grew by 17.7%(*) due to an increase in data plans sold with smartphones and good PC connectivityrevenue across the region. Fixed line revenue increased by 7.7%(*) with the number of fixed broadband customers reaching 5.4 million at 31 March 2010, a net increase of960,000 customers during the financial year.In Africa and Central Europe service revenue fell by 1.2%(*), a 4.3 percentage point decline on the previous year resulting from challenging economic conditions inCentral Europe, mobile termination rate cuts across the region and competition led pricing movements in Romania partially offset by strong growth in Vodacom. Turkeyreturned to growth in the second half of the financial year with service revenue growing 31.3%(*) in the fourth quarter. Romania experienced intense competition throughoutthe year with service revenue declining 19.9%(*). Mobile termination rate cuts across Central Europe, which became effective during the year, contributed 3.4 percentagepoints to the decline in service revenue.In Asia Pacific and Middle East service revenue increased by 9.8%(*). India‟s service revenue increased by 14.7%(*), 4.7 percentage points of which was delivered by thenetwork sharing joint venture Indus Towers with the remainder being driven by a 46.7% increase in the mobile customer base offset in part by a decline in mobile voicepricing. In Egypt service revenue grew by 1.3%(*) and Qatar increased its mobile customer base to 465,000, following the launch of services in July. (New/Current Figure – Old/previous Figure) / Old/previous Figure * 100 Group service revenue calculated (41719 - 38294) / 38294 * 100 (3428 / 38294) * 100 0.0894 * 100 = 8.9% ( Group service revenue increase)The major increase in Group revenue growth has taken place in Asian & African due to the new market penetration, where as the Europe and Other developedcountry sales were decline due to the sudden global financial crisis.
Operating profitEBITDA increased by 1.7% to £14,735 million, with favourable exchange rates contributing 5.8 percentage points and the impact of merger andacquisition activity, primarily the full consolidation of Vodacom, contributing 3.3 percentage points to EBITDA growth.In Europe, EBITDA decreased by 7.3%(*), with a decline in the EBITDA margin of 1.0 percentage point, primarily driven by the downward revenue trend andthe growth of lower margin fixed line operations partially offset by operating and direct cost savings.Africa and Central Europe‟s EBITDA decreased by 5.8%(*) resulting from reduced EBITDA margins across the majority of Central Europe due to challengingeconomic conditions and investment in Turkey to drive growth in the second half of the financial year. Strong revenue growth in Vodacom, combined withdirect and customer cost savings partially offset the decline in Central Europe.In Asia Pacific and Middle East EBITDA increased by 1.4%(*), with growth in India being partially offset by declines in other markets due to pricing andrecessionary pressure and the start-up in Qatar.Operating profit increased primarily due to changes in impairment losses. In the 2010 financial year, the Group recorded net impairment losses of £2,100million. Vodafone India was impaired by £2,300 million primarily due to intense price competition following the entry of a number of new operators into themarket. This was partially offset by a £200 million reversal in relation to Vodafone Turkey resulting primarily from movements in discount rates. In the prioryear impairment losses of £5,900 million were recorded.Adjusted operating profit decreased by 2.5%, or 7.0%(*) on an organic basis, with a 6.0 percentage point contribution from favourable exchange rates, whilstthe impact of merger and acquisition activity reduced adjusted operating profit growth by 1.5 percentage points.The share of results in Verizon Wireless, the Group‟s associate in the US, increased by 8.0%(*) primarily due to the expanding customer base, robust datarevenue and operating expenses efficiencies partially offset by higher customer acquisition and retention costs.What is EBITDA? Earnings Before Interest, Tax, Depreciation and Amortization
Current Ratio = Current Assets / Current Liabilities= 14219 / 14579= 0.97This means that for every $1 of debt or liability, Vodafone Plc has $0.97 of Cash to settle the liability which is not enough. The general rule of thumb is the higher the current ratio, the better.Most investors prefer a Current Ratio of 2:1 meaning $2 of Current Assets for every $1 of Current Liabilities.The increase in other current liabilities from £13.8 billion at 31 March 2009 to £14.6 billion at 31 March 2010 was primarily due to foreign exchange differences arising on translation of liabilitiesin foreign subsidiaries and joint ventures.Reason why the current liabilities are higher than the current assets are could be due toExpanding Business Operations Investing in Short Term Securities and earning interest.But the Vodafone Plc has growing earnings and, for the most part, growing cash flows and growing revenues.Current assets have increased in 2010 comparing to the 2009 by Performance indications/ Percentages explained here… How to calculate the growth percentage % (New/Current Figure – Old/previous Figure) / Old/previous Figure * 100 What is Ratio Analysis ? Whats the use of it? Performing Ratio Analysis is very important for a company/small business or an individual. Ratio Analysis is basically comparing previous and current financial raw datas/figures making some analysis, assumptions and predictions for the future well being of the business. Not only it says the current and future situation of the business but also it helps to bring down the higher volume of data in to a small volume. Few Important ratios are discussed below
Ratio Analysis Non current assets are up by 2.21% [(142766 - 139670) / 139670 * 100] Equity is up by 4.8% [(90381 – 86162) / 86162 * 100]Non current liabilities are gone down 6% [(37559 – 39975 ) / 39975 * 100] due the settlement (down) of long term borrowings 9.8% [(28632 - 31749) / 31749 * 100] Return on owners equity This ratio measures the effectiveness of the funds in the business Formula: Net profit before tax / owners equity * 100 = 8674 / 90810 * 100 = 9.5% Measures the return on owners funds invested in the business Return on Assets Measures of return on total assets employed in the business Net profit before tax / total assets * 100 =8674 / 156985 * 100 =5.5% Margins Measures the profitability of the business Gross profit margin Measures the numbers of cents for each dollar of sales available to meet operating expenses Gross profit / sale * 100 =15033 / 44472 * 100 = 33.8% Expense ratio Measures the number of cents for each dollar of sales used on operating expenses Expense / sales * 100 = 10409 / 44472 * 100 = 23.4% Net profit margin Measures the number of cents for each dollar which is available for tax and to the owner as a return Net profit before tax / sales * 100 = 8674 / 44472 * 100 = 19.5%
Turnover Solvency Measures the ability of the business to meet its debts in the long term measure the efficiency with which assets are being managed Equity ratio Assets turn over ratio Measures the level of funds provided by the internal sources Measure the efficiency with which assets are used to generate sales Owners equity / total assets * 100 Sales / total assets = 90381 / 156985 * 100 = 44472 / 156985 =57.5% =28.3% Stock turn over ratio Debt ratio Measure the efficiency of how inventory holdings are being managed Measure the level of funds provided by the external. Sources Cost of goods sold / stock Total liabilities / total assets * 100 = 29439 / 433 = 66175 / 156985 * 100 =67.9 = 42.1% Liquidity Measures the ability of the business to meet its debt in the short term Current ratio Measures the ability of the business to meet its debt Current assets / current liabilities = 14219/ 28616 =0.50:1 Explanation: So far this means that the business is not doing good which means that the every $1 of liability of the business has only 50 Cents to settle. this doesn’t mean that the business is going down thecurrent liabilities has increased due to the short term borrowings how ever the business has a very healthy $7.2 billion of free cash flow in order to meet the day to day liabilities. Liquidity ratio Measures the ability of the business to meet its debts (current assets - stock) / (current liabilities - bank overdraft) =(14219 – 433) / (28616 – 11163) = 13786/17453 =0.78 Average collection period Measure the efficiency of accounts receivable (debtors) collection rates.The revenue for Vodafone is mainly generated in voice/data/ fixed line internet connections by post payment method or prepay method by the subscribers as the payment s are made at the point ofsales financial statement has been made on that basis. However the average collection period for the Vodafone group plc is 65 days.
Principal risk factors and uncertainties The following discussion of principal risk factors and uncertainties identifies the most significant risks that may adversely affect our business, operations, liquidity, financial position or future performance. Additional risks not presently known to us, or that we currently deem immaterial, may also impact our business. Out of many Principal risk factors and uncertainties we chosen few which are relevant to us. Delays in the development of handsets and network compatibility andAdverse macroeconomic conditions in the markets in which we operate could components may hinder the deployment of new technologies.impact our results of operations. Our operations depend in part upon the successful deployment of continuouslyAdverse macroeconomic conditions and deterioration in the global economic evolving telecommunications technologies. We use technologies from a number ofenvironment, such as further economic slowdown in the markets in which we vendors and make significant capital expenditure in connection with the deploymentoperate, may lead to a reduction in the level of demand from our customers for of such technologies. There can be no assurance that common standards andexisting and new products and services. In difficult economic conditions, consumers specifications will be achieved, that there will be inter-operability across Groupmay seek to reduce discretionary spending by reducing their use of our products and another networks, that technologies will be developed according to anticipatedservices, including data services, or by switching to lower-cost alternatives offered schedules, that they will perform according to expectations or that they will achieveby our competitors. Similarly, under these conditions the enterprise customers that commercial acceptance. The introduction of software and other network componentswe serve may delay purchasing decisions, delay full implementation of service may also be delayed. The failure of vendor performance or technology performanceofferings or reduce their use of our services. In addition adverse economic to meet our expectations or the failure of a technology to achieve commercialconditions may lead to an increased number of our consumer and enterprise acceptance could result in additional capital expenditure by us or reduction in ourcustomers that are unable to pay for existing or additional services. If these events profitability.were to occur it could have a material adverse effect on our results of operations.Increased competition may reduce our market share and revenue. Our business and our ability to retain customers and attract new customers may be impaired by actual or perceived health risks associated with theWe face intensifying competition and our ability to compete effectively will depend transmission of radio waves from mobile telephones, transmitters andon, among other things, our network quality, capacity and coverage, pricing of associated equipment.services and equipment, quality of customer service, development of new andenhanced products and services in response to customer demands and changing Concerns have been expressed in some countries where we operate that thetechnology, reach and quality of sales and distribution channels and capital electromagnetic signals emitted by mobile telephone handsets and base stationsresources. Competition could lead to a reduction in the rate at which we add new may pose health risks at exposure levels below existing guideline levels and maycustomers, a decrease in the size of our market share and a decline in our ARPU as interfere with the operation of electronic equipment. In addition, as described undercustomers choose to receive telecommunications services or other competing the heading “Legal proceedings” in note 29 to the consolidated financial statements,services from other providers. Examples include but are not limited to competition several mobile industry participants including Verizon Wireless and ourselves havefrom internet based services and MVNOs. had lawsuits filed against us alleging various health consequences as a result of mobile phone usage including brain cancer. While we are not aware that such health risks have been substantiated, there can be no assurance that the actual or perceived risks associated with radio wave transmission will not impair our ability to retain customers and attract new customers, reduce mobile telecommunications usage or result in further litigation. In such event, because of our strategic focus on mobile telecommunications, our business and results of operations may be more adversely affected than those of other companies in the telecommunications sector.
2011 financial year PredictionsVodafone is ringing up sales well ahead of predictionsRead more: http://www.dailymail.co.uk/money/article-1297224/Vodafone-ringing-sales-ahead-predictions.html - Last updated at 10:54 PM on 23rd July 2010“Bosses at Vodafone yesterday bolstered their defences against attack from dissident shareholders when they unveiled sales figures well ahead of predictions.The £79billion mobile phone group saw its shares rise 0.9p to 149.9p after it announced that revenues from its worldwide operations have shown underlying growth for the firsttime since the onset of the global recession. Over the three months to June, revenues were £10.6billion, an underlying increase of 1.1 per cent on a year earlier. In the UK, salesrose 0.7 per cent to £1.2billion.Earlier this week, one of Vodafones investors, the Ontario Teachers Pension Plan, attacked the company for its poor record on acquisitions and vowed to vote against the re-election of chairman Sir John Bond at next weeks shareholders meeting. “We expect the Group to return to low levels of organic revenue growth during the 2011 financial year although this will be dependent upon the strength of theeconomic environment and the level of unemployment within Europe.In contrast revenue growth in emerging economies, in particular India and Africa, is expected to continue as the Group drives penetration and data in thesemarkets.EBITDA margins are expected to decline but at a significantly lower rate than that experienced in the previous year. Adjusted operating profit is expected to bein the range of £11.2 billion to £12.0 billion. Total depreciation and amortisation charges are expected to be slightly higher than the prior year, before theimpact of licence and spectrum purchases, if any, during the 2011 financial year.Free cash flow is expected to be in excess of £6.5 billion reflecting a continued but lower level of benefit from the working capital improvement programmelaunched in the 2010 financial year. We intend to maintain capital expenditure at a similar level to last year, adjusted for foreign exchange, ensuring that wecontinue to invest in high speed data networks, enhancing our customer experience and increasing the attractiveness of the Group’s data services.The adjusted tax rate percentage is expected to be in the mid 20s for the 2011 financial year with the Group targeting a similar level in the medium-term. TheGroup continues to seek resolution of the UK Controlled Foreign Company and Indiatax cases.Three year free cash flow and dividend per share growth target We expect that annual free cash flow will be between £6.0 billion and £7.0 billion, ineach of the financial years in the period ending 31 March 2013, underpinning a dividend per share growth target of at least 7% per annum for each of thesefinancial years. We therefore expect that total dividends per share will be no less than 10.18p for the 2013 financial year.AssumptionsGuidance is based on our current assessment of the global economic outlook and assumes foreign exchange rates of £1:€1.15 and £1:US$1.50 throughout thisthree year period. It excludes the impact of licence and spectrum purchases, if any, material one-off tax settlements and restructuring costs and assumes nomaterial change to the current structure of the Group. With respect to the dividend growth target, as the Group‟s free cash flow is predominantly generated bycompanies operating within the euro currency zone, we have assumed that the euro to sterling rate remains within 10% of the above guidance exchange rate. A1% change in the euro to sterling exchange rate would impact adjusted operating profit by approximately £70 million and free cash flow by approximately £60million.
Sources: Murry J. Smart, Nazir Awan, Denis H. Bourke , Third Edition (2009) Principles of Accounting Oliver L. & English J., The Small Business Book, New Edition (2006) A New Zealand guide for 21st Century Southern Institute of Technology. (2010) Post Graduate Diploma in Business Enterprise, Reading one: Ratio Analysis, Tom Downey, Financing Enterprise, Southern Institute of Technology financial highlights http://www.vodafone.com/start/investor_relations.html - 23rd September 2010 Vodafone Forum dedicated to New Zealand customers to discuss their issues http://forum.vodafone.co.nz/ - 23rd September 2010 what are financial statements http://www.wisegeek.com/what-are-financial-statements.htm - 03rd October 2010 download version of annual reports http://vodafone.com/start/investor_relations/financial_reports/annual_reports.html - 03rd October 2010 the financial position http://www.vodafone.com/static/annual_report10/performance/financial_position.html - 03rd October 2010 operating results http://www.vodafone.com/static/annual_report10/performance/operating-results.html - 03rd October 2010 Ratio Analysis http://www.bized.co.uk/compfact/ratios/index.htm - 03rd October 2010
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