Vodafone 2010 Annual Report Download - page 4

7.51 7.77
8.31
7.77
7.51
201020092008
2 Vodafone Group Plc Annual Report 2010
Chairman’s statement
Environment and performance
Against a difficult background, we generated £7.2 billion 
of free cash flow, up 26.5%.
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.
2009 saw the sharpest contraction in the world’s economy for more
than a generation. Unquestionably, this has been the most difficult
economic environment in which your Company has ever operated.
Against this background, I am very pleased to report that the Group
delivered an adjusted operating profit of £11.5 billion (down 2.5%),
and generated £7.2 billion of free cash flow (up 26.5%). The Board is
recommending a final dividend of 5.65 pence, making a total for the
year of 8.31 pence per share (up 7%). The Board is also targeting to
maintain growth in dividends per share at no less than 7% per annum
for the next three years. This year’s results have been achieved while
maintaining the capital expenditure (up slightly at £6.2 billion) needed
to serve our customers’ growing demand for voice minutes and data
services. The share price has increased by 6% since 1 April 2009,
broadly in line with other major European telecommunications
companies, but behind the increase in the FTSE 100.
While the Group is not immune from the economic environment in
which we operate, with our retail customers seeking to control their
expenditure as much as possible and our business customers seeking
to control cost, we have responded swiftly with cost reduction
and efficiency programmes. On top of our original £1 billion cost
programme, delivered a year ahead of plan, we have now committed
to a further £1 billion cost programme by the 2013 financial year. With
mobile voice prices continuing to decline in Europe by over 10% a year,
tight cost control will remain a high priority in the future.
The telecommunications sector as a whole has seen declining revenue
through this period but we have not seen the extremely steep declines
in revenue experienced by some other sectors of the economy –
mobile communications remain an essential element in most people’s
lives. We see how our services are allowing people to lead their lives
more efficiently and pleasurably, making better use of their time and
opportunities. This has resulted in ever increasing demand, with voice
minutes up by 22.3%(*) and data revenue up by 19.3%(*) across the
Group. This additional demand on our networks means that we need
to manage traffic to ensure both good service for our customers and
appropriate returns for our shareholders from continued investment
in those networks.
Innovation
Continued innovation in our products and services 
broadens and enhances our business portfolio.
The new Vodafone 360 service combines the benefits

of mobile communications and the internet to bring
your phone, email chat and social network contacts
together in one place.
Innovation in the services we offer, and the expansion of those services
into other sectors such as health care or communication between
different types of machine – smart metering on energy grids or smart
communications for delivery truck fleets – can make important
contributions to our societies, lowering carbon emissions and
enhancing lifestyles. This kind of innovation is important both for the
wider benefits it brings but also because it broadens and enhances the
base on which our business is built. We have now set-up separate
health and machine-to-machine teams to ensure that we maximise
these opportunities.
Your Company has also continued to innovate in the services we
provide. This year has seen the launch of Vodafone 360, a service
designed to help bridge the intersection between mobile
communications and the internet making it easier to communicate
with friends, colleagues and family from your mobile using social
media or more traditional forms of electronic communication. The
Vodafone Money Transfer system (branded M-PESA in Kenya and
Tanzania) is available in three countries with 13 million customers
transferring US$3.6 billion during the 2010 financial year. We expect
to roll-out the service to further markets later this year. We recently
launched two of the world’s most inexpensive handsets – for example
the Vodafone 150 retails in most markets at unsubsidised prices below
US $15 – and we are working on low cost handsets which will give
access to the internet.
Your Company continues to deliver strong cash generation, is well positioned to benet from
economic recovery and looks to the future with condence.
Sir John Bond Chairman
Dividends per share
(Pence)