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Equity dividends
The table below sets out the amounts of interim, final and total cash dividends
paid or, in the case of the final dividend for the 2008 financial year, proposed,
in respect of each financial year, indicated in pence per ordinary share.
Pence per ordinary share
Year ended 31 March Interim Final Total
2004 0.9535 1.0780 2.0315
2005 1.91 2.16 4.07
2006 2.20 3.87 6.07
2007 2.35 4.41 6.76
2008 2.49 5.02 (1) 7.51
Note:
(1) The final dividend for the year ended 31 March 2008 was proposed on 27 May 2008 and is
payable on 1 August 2008 to holders of record as of 6 June 2008. For American Depositary
Share (“ADS”) holders, the dividend will be payable in US dollars under the terms of the ADS
depositary agreement.
The Company has historically paid dividends semi-annually, with a regular interim
dividend in respect of the first six months of the financial year payable in February
and a final dividend payable in August. The Board expects that the Company
will continue to pay dividends semi-annually. In November 2007, the directors
announced an interim dividend of 2.49 pence per share, representing a 6.0%
increase over last year’s interim dividend.
In considering the level of dividends, the Board takes account of the outlook
for earnings growth, operating cash flow generation, capital expenditure
requirements, acquisitions and divestments, together with the amount of debt
and share purchases.
The Board remains committed to its existing policy of distributing 60% of adjusted
earnings per share by way of dividend. The Group targets a low single A rating in
line with the policy established by the Board in 2006. The Group has no current
plans for share purchases or one-time returns.
Accordingly, the directors announced a proposed final dividend of 5.02 pence per
share, representing a 13.8% increase on last year’s final dividend.
Cash dividends, if any, will be paid by the Company in respect of ordinary shares
in pounds sterling or, to holders of ordinary shares with a registered address in
a country which has adopted the euro as its national currency, in euro, unless
shareholders wish to elect to continue to receive dividends in sterling, are
participating in the Company’s Dividend Reinvestment Plan, or have mandated
their dividend payment to be paid directly into a bank or building society account
in the UK. In accordance with the Company’s Articles of Association, the sterling:
euro exchange rate will be determined by the Company shortly before the
payment date.
The Company will pay the ADS Depositary, The Bank of New York, its dividend
in US dollars. The sterling: US dollar exchange rate for this purpose will be
determined by the Company up to ten New York and London business days prior
to the payment date. Cash dividends to ADS holders will be paid by the ADS
Depositary in US dollars.
Liquidity and capital resources
The major sources of Group liquidity for the 2008 and 2007 financial years
were cash generated from operations, dividends from associated undertakings,
borrowings through short term and long term issuances in the capital markets
and, particularly in the 2007 financial year, investment and business disposals.
The Group does not use off-balance sheet special purpose entities as a source
of liquidity or for other financing purposes.
The Group’s key sources of liquidity for the foreseeable future are likely to be
cash generated from operations and borrowings through long term and short
term issuances in the capital markets, as well as committed bank facilities.
The Group’s liquidity and working capital may be affected by a material decrease
in cash flow due to factors such as reduced operating cash flow resulting from
further possible business disposals, increased competition, litigation, timing of
tax payments and the resolution of outstanding tax issues, regulatory rulings,
delays in the development of new services and networks, licences and spectrum
payments, inability to receive expected revenue from the introduction of new
services, reduced dividends from associates and investments or increased
dividend payments to minority shareholders. Please see the section titled
“Principal Risk Factors and Uncertainties”, on pages 52 and 53. In particular,
the Group continues to anticipate significant cash tax payments and associated
interest payments due to the resolution of long standing tax issues.
The Group is also party to a number of agreements that may result in a cash
outflow in future periods. These agreements are discussed further in “Option
agreements and similar arrangements” at the end of this section.
Wherever possible, surplus funds in the Group (except in Egypt and India) are
transferred to the centralised treasury department through repayment of
borrowings, deposits, investments, share purchases and dividends. These are then
on-lent or contributed as equity to fund Group operations, used to retire external
debt or invested externally.
Cash flows
During the 2008 financial year, the Group increased its net cash inflow from
operating activities by 1.4% to £10,474 million. The Group generated £5,540
million of free cash flow from continuing operations, a reduction of 9.6% on the
2007 financial year, primarily as a result of higher payments for taxation and
interest and an increase in capital expenditure.
2008 2007
£m £m
Net cash flows from operating activities 10,474 10,328
Discontinued operations – 135
Continuing operations 10,474 10,193
Taxation 2,815 2,243
Purchase of intangible fixed assets (846) (899)
Purchase of property, plant and equipment (3,852) (3,633)
Disposal of property, plant and equipment 39 34
Operating free cash flow 8,630 8,073
Discontinued operations – (8)
Continuing operations 8,630 8,081
Taxation (2,815) (2,243)
Dividends from associated undertakings 873 791
Dividends paid to minority shareholders
in subsidiary undertakings (113) (34)
Dividends from investments 72 57
Interest received 438 526
Interest paid (1,545) (1,051)
Free cash flow 5,540 6,119
Discontinued operations – (8)
Continuing operations 5,540 6,127
Net cash (outflow)/inflow from acquisitions and disposals (5,957) 7,081
Other cash flows from investing activities 689 (92)
Equity dividends paid (3,658) (3,555)
Other cash flows from financing activities (2,549) (4,712)
Net cash flows in the year (5,935) 4,841
Dividends from associated undertakings and to minority shareholders
Dividends from the Group’s associated undertakings are generally paid at the
discretion of the Board of directors or shareholders of the individual operating and
holding companies and Vodafone has no rights to receive dividends, except where
specified within certain of the companies’ shareholders’ agreements, such as
with SFR, the Group’s associated undertaking in France. Similarly, the Group does
not have existing obligations under shareholders’ agreements to pay dividends
to minority interest partners of Group subsidiaries or joint ventures, except as
specified overleaf.
Vodafone Group Plc Annual Report 2008 55