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Vodacom Group Limited preliminary results for the year ended 31 March 2020 (short form announcement)
Vodacom Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1993/005461/06)
ISIN: ZAE000132577 Share code: VOD
ISIN: US92858D2009 ADR code: VDMCY
(Vodacom)
11 May 2020
Vodacom Group Limited preliminary results for the year ended 31 March 2020 (short form
announcement)
Highlights
- Group revenue up 4.8% (3.5 %*) supported by Group service revenue growth of 5.0% (3.5%*).
- Added 5.9 million customers, to serve a combined 116 million customers across the Group.
- Total financial services customers up 12.8%, to 53.2 million, adding 6 million customers in the year.
- South Africa service revenue grew 2.3%, with data usage elasticity supporting recovery to growth in the second half.
- International operations delivered strong service revenue growth of 12.5% (7.1%*), with foreign currency translations
boosting reported Group growth.
- Earnings per share were up 7.7% and headline earnings per share up 8.9%, boosted by the one-off BEE costs of
R1.5 billion (including transaction costs) included in the prior period.
- Declared a final dividend of 405cps.
Statutory performance measures
Year ended 31 March % change
Rm 2020 2019
Reported Normalised*
IFRS 16 IAS 17
Revenue 90 746 86 627 4.8 3.5
Net profit from associate and joint ventures 4 149 2 774 49.6
Operating profit 27 711 24 490 13.2 2.2
Net profit 16 644 15 532 7.2
Earnings per share (EPS) (cents) 939 872 7.7
Headline earnings per share (HEPS) (cents) 1 945 868 8.9
Total dividend per share declared (cents) 845 795 6.3
Alternative performance measures
Year ended 31 March % change
Rm 2020 2019
Reported Normalised*
IFRS 16 IAS 17
Notes:
Certain financial information presented in this results announcement constitutes pro-forma financial information in terms of the JSE Listings Requirements. The applicable criteria
on the basis of which this pro-forma financial information has been prepared is set out in the supplementary information contained in the full announcement. The pro-forma
financial information includes:
* Normalised growth, which presents performance on a comparable basis. This excludes merger, acquisition and disposal activities where applicable and adjusting for trading
foreign exchange, foreign currency fluctuation on a constant currency basis (using the current year as base) and IFRS 16 related adjustments in the current year and IAS 17
related adjustments in the prior year, to show a like-for-like comparison of results.
Amounts marked with an * in this document, represents normalised growth as defined above.
All growth rates quoted are year-on-year and refer to the year ended 31 March 2020 compared to the year ended 31 March 2019, unless stated otherwise.
Service revenue 73 354 69 867 5.0 3.5
EBITDA 37 610 33 714 11.6 2.3
EBITDA-aL 33 539 n/a n/a
Capital expenditure 13 218 12 957 2.0
Operating free cash flow 21 782 21 643 0.6
Free cash flow 16 284 14 865 9.5
Note with regard to the adoption of IFRS 16
IFRS 16 was adopted by the Group on 01 April 2019 with the cumulative retrospective impact reflected as an adjustment to
equity on the date of adoption. As a result, information presented for the year ended 31 March 2019 is presented under the
previous statement IAS 17, while the year ended 31 March 2020 is presented in accordance with IFRS 16. The reported
change reflected in this document is done on this basis while normalised growth adjusts for differences in reporting of the
current year and the prior year, to give the reader a like-for-like comparison of underlying performance.
Shameel Joosub, Vodacom Group CEO commented:
An improved second half performance in South Africa and the sustained growth of our International businesses contributed
to the Group’s 8.9% increase in headline earnings per share to 945cps and a dividend return of 845cps to shareholders.
This follows last year’s substantial investment in South Africa’s largest ever Broad-Based Black Economic Empowerment
transaction in the telecommunication sector. Group service revenue rose 5.0%.
The past year has been characterised by strong customer growth - we now connect 116 million customers across the
Group, including Safaricom – and the benefits of prudent portfolio diversification.
In South Africa, sharp data price reductions, specifically out-of-bundle data rates, announced in the first quarter led to a
steady increase in data traffic as the year progressed with 1.9 million more data customers connecting to the Vodacom
network, a 9.7% increase to 21.9 million.
While it is still early days, the trend of increased data usage has continued into the current financial year following reductions
in
30-day data bundle tariffs of up to 40% from 1 April 2020 and the launch of our ConnectU platform, which provides easy
access to numerous zero-rated essential service websites. These initiatives will provide savings of R2.7 billion to customers
at a time when economies around the world are suffering from the COVID-19 pandemic.
Despite deteriorating economic pressures and the proactive price cuts to our out-of-bundle rates, service revenue rose 2.3%
in our biggest market, where initiatives to deliver greater value to customers through pricing transformation and sustained
investment in network infrastructure and IT systems are being rewarded.
As part of our strategy to build diverse and sustainable revenue streams, our efforts to introduce “one more service” to
customers continue to gain momentum. For instance, revenue from our Financial Services business in South Africa jumped
by 21.5% to R2.0 billion, on the back of our popular Airtime Advance, insurance and VodaPay services. Our digital services
business has also produced solid growth, contributing R1.5 billion in revenues on the back of increasing purchases of our
video-on-demand offering and our music, sports, gaming and other video services.
It has been another stellar year for our International portfolio, where we recorded margin expansion for a second year, and
further diversifies our currency exposure from the South African rand. An additional 4.0 million customers and increased
demand for data and M-Pesa services in each of our operations contributed to a 12.5% increase in service revenue across
our International operations.
Our investment in Safaricom, Africa’s second biggest Telco by market capitalisation after Vodacom, delivered a 30.4% boost
in profits from this associate, with growth bolstered by currency factors and inclusion of the new M-Pesa joint venture.
Significant investments in network and infrastructure, an acceleration in pricing transformation and a 17.2% underlying
increase in revenue from M-Pesa, all contributed to Safaricom’s success.
M-Pesa continues to deliver on its promise of delivering financial inclusion, while at the same time positively contributing to
economic growth in markets where it is ubiquitous. Having expanded the M-Pesa ecosystem, customers in our International
markets, including Safaricom, now process more than US$14.7 billion a month in transactions through the platform.
We currently have 40 million customers transacting on M-Pesa across all our operations, generating total revenue of R16.2
billion and growing at 22% a year. Our focus, with our newly created joint venture, is to ensure that we align all product
roadmaps across our operations and continue to expand the M-Pesa ecosystem across all countries. This will include the
roll-out of nano lending platforms and getting the system ready for a smartphone world, where we can on-board more
partners in this space. Our nano lending platform is already being used by 17 million customers in Kenya and Tanzania
where it is driving our commitment to promote financial inclusion.
Over the past 12 months, the Group has made significant progress on a number of regulatory matters, including finality on
the Competition Commission’s data services market inquiry in South Africa. The assignment of available high-demand
spectrum seems imminent, with ICASA indicating that this process will be concluded by the end of this year. Looking ahead,
our immediate collective emphasis is to assist in addressing pressing societal challenges in each of the markets where we
operate, particularly as the world strives to halt the spread of COVID-19 and recovers from the economic impacts of the
pandemic. We remain committed to supporting governments where we operate in whatever way we can. Through numerous
public and private sector partnerships across our footprint, Vodacom’s teams are working hard in difficult conditions to keep
communities, businesses and governments connected. The assignment of temporary spectrum in South Africa and
elsewhere is welcomed and will assist in alleviating network congestion as more people work and are entertained at home.
At the same time, we are executing on our robust, scalable operational continuity plans by anticipating and reacting to the
current extraordinary environment to ensure our long-term sustainability.
We believe that collaborative efforts will be instrumental in defeating the pandemic, which is why we have partnered, for
example, with Discovery Health to launch a simple but powerful online healthcare platform to help citizens understand their
personal risk for COVID-19 and to immediately schedule free healthcare professional consultations where necessary. We
have also partnered with the National Department of Health a to deploy 20 000 smartphones with free voice call minutes
and data, to be used by frontline health workers to collect and transmit data in real time for resource planning purposes, as
government accelerates its COVID-19 testing campaign.
We have consolidated all our existing zero-rated data services with new essential services aimed at social upliftment into our
single ConnectU platform. This social platform provides Vodacom customers with access to a wide range of zero-rated
content that will assist customers during the lockdown and recovery period. The platform includes free access to job portals,
where youth can search for employment and upload their CVs as well as access to our e-School platform that provides
CAPS curriculum aligned content from Grades R – 12. In addition to launching special tariffs for virtual classrooms, we have
expanded our zero-rated offering to all public schools, universities and T-Vet colleges across the country to ensure that
students enrolled into these institutions will be able to access relevant information for free via these portals. In our
International operations, we have zero-rated M-Pesa and greatly reduced fees below certain thresholds for person to person
transfers, to minimise the use of cash for payments.
These are just some of the numerous activities that we have implemented across our markets to assist governments in their
response to COVID-19. We continue to prioritise network quality so that we deliver on our purpose of connecting people to a
better tomorrow.
Dividend
Declaration of final dividend number 22 – payable from income reserves
Notice is hereby given that a gross final dividend number 22 of 405 cents per ordinary share in respect of the financial year
ended 31 March 2020 has been declared payable on Monday 29 June 2020 to shareholders recorded in the register at the
close of business on Friday 26 June 2020. The number of ordinary shares in issue at the date of this declaration is 1 835
864 961. The dividend will be subject to a local dividend withholding tax rate of 20% which will result in a net final dividend to
those shareholders not exempt from paying dividend withholding tax of 324.00000 cents per ordinary share.
Last day to trade shares cum dividend Tuesday 23 June 2020
Shares commence trading ex-dividend Wednesday 24 June 2020
Record date Friday 26 June 2020
Payment date Monday 29 June 2020
Share certificates may not be dematerialised or rematerialised between Wednesday 24 June 2020 and Friday 26 June
2020, both days inclusive.
On Monday 29 June 2020, the final dividend will be electronically transferred into the bank accounts of all certificated
shareholders where this facility is available. Shareholders who hold dematerialised shares will have their accounts at their
CSDP or broker credited on Monday 29 June 2020.
Vodacom Group Limited tax reference number is 9316/041/71/5.
For and on behalf of the Board
Jabu Moleketi Shameel Aziz Joosub Till Streichert
Chairman Chief Executive Officer Chief Financial Officer
Midrand
8 May 2020
The preliminary condensed consolidated financial statements have been reviewed by Ernst & Young Inc., who expressed an unmodified review conclusion.
A copy of the auditor's review report is available for inspection at the Group's registered office, together with the financial statements identified in the
auditor's report, as well as on the Company’s website at www.vodacom.com.
This short-form announcement is the responsibility of the directors and is only a summary of the information in the full announcement and does not contain
full or complete details. Any investment decision should be based on the full announcement that has been published on SENS
https://senspdf.jse.co.za/documents/2020/jse/isse/VOD/FY20_SENS.pdf and is also available on our website www.vodacom.com.
The full announcement is also available at our registered office and our sponsor’s office for inspection, at no charge, during office hours. Copies of the full
announcement may be requested by contacting Investor Relations on telephone: +27 (0) 11 653 5000 or email: vodacomir@vodacom.co.za.
Sponsor: UBS South Africa (Pty) Limited
Date: 11-05-2020 07:05:00
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