Vodafone 2008 Annual Report Download - page 6

Chief Executive’s Review
Our strategy is delivering results and continuing to position
us as a leader in the communications industry.
Review of the year
We have made strong progress over the past year with our
strategy and met or exceeded our stated financial expectations
in all areas.
Our cash flow generation remains strong, supporting our robust
financial position and shareholder returns, with free cash flow
of £5.5 billion. Adjusted earnings per share increased by 11.0%
to 12.50 pence, enabling dividends per share to increase by
11.1% to 7.51 pence.
Group revenue increased by 14.1% to £35.5 billion, or 4.2% on
an organic basis. In Europe, organic revenue growth was 2.0%
with competitive and regulatory pressures continuing to impact
on solid underlying growth. EMAPA delivered further strong
growth with revenue increasing by 45.1%, or 14.5% on an organic
basis, with double digit growth across many markets. Group
adjusted operating profit increased by 5.7% to £10.1 billion,
with a continued strong contribution from Verizon Wireless in
the US, which continues to be an important and attractive
market. We remain committed to our investment in Verizon
Wireless, which continues to perform very well on all key
metrics, with constant currency growth of 14.5% in revenue
and 24.8% in adjusted operating profit and market leadership
in contract customers, churn and profitability.
We invested £5.1 billion in capitalised fixed asset additions,
including £1.0 billion in our operations in India, in line with our
plans, to support the rapid growth.
Vodafone now has over 260 million proportionate mobile
customers worldwide with strong growth during the year in our
EMAPA region, in particular in our new business in India which has
been successfully integrated into the Group and now has over
44 million customers, with over 50% pro forma revenue growth.
In a challenging operating environment, we are stimulating
greater usage and introducing new services to offset falling
prices and continue to drive cost efficiency across the Group.
Importantly, we have positioned ourselves to deliver total
communications to our customers by investing significantly in
our mobile broadband networks, establishing fixed broadband
capability across our European markets and developing services
specifically for the mobile internet.
There have been a number of key achievements against our five
strategic objectives in the last 12 months which are discussed
below, together with an overview of how the communications
environment is evolving and why we believe Vodafone is
uniquely positioned to succeed.
Revenue stimulation and cost reduction in Europe
Our core revenue initiatives continue to focus on offering
innovative tariffs, larger minute bundles and targeted promotions
to stimulate additional usage as well as improving customer
lifetime value. Overall, voice usage increased by 16.7% in the
year, with good growth across our major markets. We are
particularly strong in the business segment where our unique
footprint and innovative services have enabled us to create a
market leading position, which we strengthened earlier in the
year by establishing Vodafone Global Enterprise to service our
largest multinational customers.
Pricing pressure from competition and regulation remains
strong, with a 15.8% fall in the effective voice price per
minute for our Europe region, offsetting the benefits from
growth in usage.
Strategic objectives
Revenue stimulation and cost
reduction in Europe
Innovate and deliver on our customers’
total communications needs
Deliver strong growth in emerging
markets
Actively manage our portfolio to
maximise returns
Align capital structure and shareholder
returns policy to strategy
4 Vodafone Group Plc Annual Report 2008
Vodafone – Executive Summary