Financial performance

Financial performance

The 2012/2013 financial year, which ended on 31 March 2013, was a relatively good year. In spite of the challenges associated with the current economic situation, Vodafone Netherlands managed to consolidate its market share. The Netherlands was faced with a continuing economic crisis, which made itself felt in the form of a decline in Gross National Product (GNP) and a drop in employment. This is having direct consequences for the purchasing power of both consumers and companies.

In addition to these macroeconomic trends, the telecom industry is increasingly having to contend with regulation and is also seeing a change in customer behaviour, with traditional voice and SMS traffic being replaced by data traffic. This is having a direct impact on the results of the telecom companies. Vodafone Netherlands' results are also being affected by this and our profit fell compared with last year. This decline in profit is also a consequence of one-off events, such as the disruption to our network caused by a fire at a network exchange in April 2012.

Market development

Consumer market

In 2013 the global economic crisis had an impact on the consumer market; Dutch consumers are cutting back their spending on telecommunications, resulting in increasing demand for lower tariffs with no additional service (the 'no-frills' concept).

An increasing number of customers are also favouring SIM-only subscriptions over regular subscriptions, as they want to use their old mobile phones for longer. Turnover from mobile data continued to increase, although this rise did not compensate entirely for the drop in call and SMS turnover.

In 2012 almost 60% of consumers had a smartphone (12 to 80 years of age). On the prepaid market a third of customers own a smartphone. The increase in the number of smartphone users means that the way in which our mobile services are used is also changing. Although texting is still the most frequently used mobile service, the use of online applications is on the rise. More than a third of all consumers use their mobile phone to send and receive e-mails and 22% mainly use instant messaging. Amongst postpaid customers this percentage is even higher: 43% of postpaid customers use their phone to send and receive e-mails and more than a quarter use instant messaging.

Enterprise market

A negative development can also be seen on the enterprise market. Companies are constantly seeking out better deals and are rapidly moving towards integrated solutions, e.g. by means of cable. Smartphone penetration is lower within the enterprise market than amongst consumers, although there are few no-frills providers, given that these providers are not yet able to offer the (technical) solutions that business customers want.

Financial performance in 2012/2013 financial year

Vodafone's total turnover fell from EUR 2,058 million to EUR 1,997 million, a drop of 3%. This decline was mainly due to the impact of the lowering of mobile termination rates (MTRs), increased competition (fixed-line telecom companies entering the mobile market), lower turnover from bundles being exceeded, the aftermath of the fire in April last year, the difficult economic conditions and the change in consumer behaviour. The number of customers, on the other hand, rose slightly by 0.3% to 5.3 million (rounded) as at 31 March 2013.

Gross profit fell from EUR 748 million in 2012 to EUR 714 million in 2013, a drop of 4.8%, although the gross profit margin improved from 36.3% in 2012 to 35.7% in 2013. Operating profit declined from EUR 357 million in 2012 to EUR 287 million in 2013, falling by 19.6%. This drop in operating profit was due to the disruption to the network caused by the fire, a rise in operating costs that can mainly be attributed to the acquisition of BelCompany and Telespectrum, reorganisational costs (redundancies and the closure of locations) and higher costs for outsourcing operations. The operating profit margin fell from 17.3% in 2012 to 14.4% in 2013.

Net profit declined from EUR 272 million to EUR 267 million. Free cash flow (net cash flow after investing activities and adjusted for dividend payments to Vodafone International Holding B.V.) was EUR -2 million (EUR 5 million in 2012). During the year Vodafone paid out EUR 800 million in dividends to Vodafone International Holding B.V.

2012 2013 en Vodafone Magazine