18 May - 9 min read

Vodacom Group Limited preliminary results for the year ended 31 March 2021 (short form announcement)

Vodacom Group Limited preliminary results for the year ended 31 March 2021 (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)

18 May 2021

Vodacom Group Limited preliminary results for the year ended 31 March 2021 (short form
announcement)
Highlights
  • Group revenue up 8.3% (7.4%*) to R98.3 billion, supported by service revenue growth of 5.8% (4.7%*).
  • South Africa service revenue grew 7.0%, with consistent growth through the financial year.
  • Added 8.2 million customers, to serve a combined 123.7 million customers across the Group, including Safaricom.
  • Total financial services customers, including Safaricom, up 12.9% or 6.6 million to 57.7 million.
  • Earnings per share up 4.2% and headline earnings per share up 3.7%.
  • Declared a final dividend of 410cps.
  • Medium-term operating profit growth target upgraded from mid-single digit to mid-to-high-single digit, on improved
    growth prospects for International and Safaricom.

Statutory performance measures1

                                                                            Year ended 31 March                                     % change
 Rm                                                                               2021                    2020               Reported            Normalised*
 Revenue                                                                       98 302                   90 746                       8.3                      7.4
 Service revenue                                                               77 574                   73 354                       5.8                      4.7
 EBITDA                                                                        39 299                   37 610                       4.5                      3.6
 Net profit from associate and joint venture                                     3 501                   4 149                    (15.6)                      3.9
 Operating profit                                                              27 652                   27 711                      (0.2)                     2.2
 Net profit                                                                    17 071                   16 644                       2.6
 Earnings per share (cents)                                                        978                      939                      4.2
 Headline earnings per share (cents)                                               980                      945                      3.7
 Total dividend per share (cents)                                                  825                      845                     (2.4)
  - Special dividend per share (cents)                                                 –                     60                     n/a
  - Ordinary dividend per share (cents)                                            825                      785                      5.1


Alternative performance measures
                                                                                 Year ended 31 March                                  % change
 Rm                                                                                    2021                          2020                    Reported
 EBITDA margin (%)    1                                                                 40.0                          41.4                      (1.4ppt)
 Capital   expenditure2                                                              13 307                        13 218                               0.7
 Capital intensity (%)2                                                                 13.5                          14.6                      (1.1ppt)
 Operating free cash flow3                                                           22 030                        21 782                               1.1

Notes:
1. EBITDA margin is EBITDA as a percentage of revenue.
2. Detail relating to capital expenditure is contained in the full announcement. Capital intensity is capital expenditure as a percentage of revenue.
3. A reconciliation of operating free cash flow and free cash flow is set out in the full announcement.
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 in the full announcement. The pro-forma financial
information includes:
  * Normalised growth presents performance on a comparable basis. This adjusts for trading foreign exchange, foreign currency fluctuation on a constant currency basis (using
  the current year as base) and excludes the impact of merger, acquisition and disposal activities, at a constant currency basis where applicable, to show a like-for-like comparison
  of results.
  Amounts marked with an * in this document represent normalised growth as defined above.
  All growth rates quoted are year-on-year and refer to the year ended 31 March 2021 compared to the year ended 31 March 2020, unless stated otherwise.
Free cash flow3   14 974   16 284   (8.0)
Shameel Joosub, Vodacom Group CEO commented:
In a year unavoidably shaped by the devastating impacts of the global health crisis, Vodacom Group accelerated the
delivery of our Social Contract with stakeholders to ensure we made meaningful contributions in markets where we
operate. Vodacom Group has been at the forefront of helping governments curb the spread of COVID-19 where we
operate, having swiftly responded earlier this year through strategic partnerships with the likes of Discovery Health
and Microsoft, and a wide range of initiatives including free devices and airtime for healthcare workers, accelerating
support to governments via donations of handsets, connectivity and medical equipment, and making contactless
payments more accessible through zero-rated services and an expanded M-Pesa ecosystem to address social
distancing challenges.
Alongside the Vodafone Foundation, we recently announced a R74 million financial pledge to support the roll-out of
cold-chain technology and provide logistics support to ensure the safe delivery of COVID-19 vaccines to vulnerable
and hard-to-reach communities in South Africa, DRC, Mozambique, Ghana and Tanzania. We also made a R13 million
donation to Lesotho to assist with securing vaccines for the Basotho people. We have partnered with AUDA - NEPAD
to build digital infrastructure to manage the distribution of COVID-19 vaccinations in up to 55 countries, following
successful deployments in South Africa, leveraging our mVacciNation platform.
These latest initiatives are over and above the R2 billion service revenue impact of zero-rating peer-to-peer (P2P) M-
Pesa transactions in our International markets, a R3 billion service revenue impact of lowering data pricing in South
Africa and the
R176 million cash and in-kind donations made by the Vodacom and Vodafone Group Foundations in response to the
pandemic.
We are proud to be standing shoulder to shoulder with the African Union and national governments to provide
practical support for what is an enormous logistical challenge for resource-limited African countries with significant
rural populations.
Given the sudden shifts in customer behaviour patterns, we invested heavily in the resilience of our networks to cope
with significant increases in mobile data traffic volumes to keep families connected, enable businesses to operate,
facilitate online learning and assist governments in providing critical services. We invested R13.3 billion in network
infrastructure during the year, including R10.1 billion in South Africa, and as a Group we have invested R62.4 billion
into our networks over the past five years.
Customers in South Africa have also taken advantage of ConnectU, which provides zero-rated access to a wide range
of websites, including job portals and online learning platforms and discounted offers for poor communities, as well
as the significant data price cuts implemented on 1 April 2020 and the recently announced 14% decline in our
headline monthly data price to R85 per Gigabyte as part of our ongoing commitment to reduce the cost to
communicate.
Underpinned by the recovery in our International portfolio in the second half of the year and strong growth from our
prepaid and Enterprise segments, Financial Services and other new services in South Africa, the Vodacom Group
reported a 5.8% increase in service revenue and an 825 cents per share total ordinary dividend per share. This is
particularly pleasing in a difficult trading environment and is testament to the rapid manner in which the company
and its employees adapted to the crisis.
In South Africa, service revenue grew by 7.0% on the back of increased data usage, our highly successful summer
campaign and demand for financial services – collectively helping to offset numerous initiatives aimed at delivering
greater value to customers, including tariff reductions of up to 40% at the beginning of the financial year and the
successful launch of Vodabucks, our behavioural loyalty programme.
Our International operations reported muted service revenue growth of 1.6% in the year, with a stronger second half
helping offset the significant impacts of COVID-19 earlier in the year. This performance was characterised by
disruption to our commercial activities as a result of the informal structure of the economies in which we operate,
currency volatility, increased pressure on consumer spend, free M-Pesa P2P transactions and the impact of service
barring in Tanzania due to biometric registration compliance.
Zero-rating P2P M-Pesa transactions for the majority of the financial year was the right thing to do for our customers
and facilitated economic activity. This initiative introduced the M-Pesa ecosystem to a significantly broader base and
continues to support accelerated platform growth and customer adoption of digital channels. Through M-Pesa, we
now process US$24.5 billion
(R366.4 billion) a month in transaction value across our International markets, including Safaricom, up 63.5%. We
serve 57.7 million financial services customers, including Safaricom, generating revenue of R19.3 billion in the year.
From January 2021, all our markets, including Safaricom, re-implemented P2P charging.
Our strategic investment in Safaricom comprised almost 13% of our operating profit in the year. Safaricom’s local
currency results reflected the impact of depressed economic activity and free M-Pesa P2P transfers, related to the
COVID-19 pandemic. Positively, Safaricom’s commitment to its strategic goals, supported strong platform growth for
M-Pesa and higher connectivity usage. This supported a notable recovery in service revenue growth through the
financial year, with fourth quarter growth at 6.4%.
Looking forward, while being cognisant that disposable income will remain under pressure, we are increasingly
optimistic about improved growth prospects for our International operations. In South Africa, the allocation of
temporary spectrum has supported network capacity and highlights the urgent need for high demand spectrum to be
allocated through ICASA’s ITA process. We continue to see the assignment of high demand spectrum as instrumental
to data pricing.
We remain focused on entrenching Vodacom Group as a leading pan-African technology company through our
investments into financial, digital and lifestyle services as these increasingly provide opportunities to enhance our
relationship with the 123.7 million customers we serve across our footprint. In particular, we are excited about our
partnership with Alipay and the imminent launch of our single lifestyle app, VodaPay, in South Africa. Our super-app
will offer services ranging from loans and savings, seamless QR and person-to-person payments, to entertainment
and personalised shopping experiences, promoting greater financial inclusion. We see this super-app as a precursor
to M-Pesa’s evolution, supporting accelerated growth across our financial services’ businesses and assisting us in
connecting the next 100 million African customers so that no one is left behind.


Declaration of final dividend number 24 – payable from income reserves

Notice is hereby given that a gross final dividend number 24 of 410 cents per ordinary share in respect of the financial
year ended 31 March 2021 has been declared payable on Monday, 28 June 2021 to shareholders recorded in the
register at the close of business on Friday, 25 June 2021. 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 328.00000
cents per ordinary share.

Last day to trade shares cum dividend                Tuesday, 22 June 2021
Shares commence trading ex-dividend                  Wednesday, 23 June 2021
Record date                                          Friday, 25 June 2021
Payment date                                         Monday, 28 June 2021

Share certificates may not be dematerialised or rematerialised between Wednesday, 23 June 2021 and Friday, 25
June 2021, both days inclusive.
On Monday, 28 June 2021, 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, 28 June 2021.
Vodacom Group Limited tax reference number is 9316/041/71/5.

Dividend policy
The Board maintains its dividend policy of paying at least 90% of adjusted headline earnings, which excludes the
contribution of the attributable net profit or loss from Safaricom and any associated intangible amortisation. In
addition, the Group intends to distribute any dividend it receives from Safaricom, up to a maximum amount of the
dividend received, net of withholding tax.
The Group intends to pay as much of its after tax profits as will be available after retaining such sums and repaying
such borrowings owing to third parties as shall be necessary to meet the requirements reflected in the budget and
business plan, taking into account monies required for investment opportunities. There is no fixed date on which
entitlement to dividends arises and the date of payment will be determined by the Board or shareholders at the time
of declaration, subject to the JSE Listings Requirements.

For and on behalf of the Board




 Sakumzi Justice Macozoma               Shameel Aziz Joosub                  Raisibe Morathi
 Chairman                               Chief Executive Officer              Chief Financial Officer
  Midrand
  17 May 2021
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/2021/jse/isse/VOD/FY21_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: 18-05-2021 07:05:00
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