Vodafone Group Plc
Annual Report 2021
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Contents
Strategic Report
01
02
04
06
07
08
10
12
14
16
18
21
23
32
34
34
38
41
42
43
52
53
S
S
S
Our strategic framework
About Vodafone
Financial and non-financial performance
Chairman’s message
Chief Executive’s statement
Market and strategy
S
Mega trends
Stakeholder engagement
Strategic review
S
Business model
Strategic review (continued)
Our people strategy
Our financial performance
S
Purpose, sustainability
and responsible business
Our purpose
Inclusion for All
Planet
Digital Society
Contribution to Sustainable Development Goals
Responsible business
Non-financial information
Risk management
Governance
62
64
S
Governance at a glance
Chairman’s governance statement
Board of Directors, leadership and responsibilities
Executive management
Board activities and principal decisions
Board evaluation
Nominations and Governance Committee
Audit and Risk Committee
Remuneration Committee
Remuneration Policy
Annual Report on Remuneration
66
70
71
73
74
76
82
84
90
104 US listing requirements
105 Directors’ report
Financials
107 Reporting on our financial performance
108 Directors’ statement of responsibility
110 Auditor’s report
121 Consolidated financial statements and notes
209 Company financial statements and notes
Other information
217 Non-GAAP measures
227 Shareholder information
233 History and development
233 Regulation
241 Form 20-F cross reference guide
244 Forward-looking statements
245 Definition of terms
This document is the Group’s UK Annual Report and is not
the Group’s Annual Report on Form 20-F that will be filed
separately with the US SEC at a later date.
This Report contains references to Vodafone’s
website, and other supporting disclosures located
thereon such as videos, our ESG Addendum and
our TCFD Report, amongst others. These references
are for readers’ convenience only and information
included on Vodafone’s website is not incorporated
in, and does not form part of, this Annual Report.
Welcome to our 2021 Annual Report
Our new approach to reporting
This year we have adopted a digital first approach reflecting how we operate as a business. As a
result, while the Annual Report continues to be a core part of our reporting suite, we have simplified
the format and included links to interactive online content, such as videos. This online material
brings to life what we do, how we do it, and provides you with a better overall understanding
of our business. We have also introduced new summaries at the start of each key section
(denoted by an S in the contents to the left).
For the first time we have also published a separate report that summarises our progress towards
meeting the recommendations of the Task Force on Climate-related Financial Disclosures (‘TCFD’),
as well as a comprehensive addendum that includes data on environmental, social and governance
(‘ESG’) topics.
vodafone.com
investors.vodafone.com/tcfd
investors.vodafone.com
investors.vodafone.com/esgaddendum
References
The Annual Report has been redesigned to aid navigation. We have cross-referenced relevant
material and navigation buttons are ‘clickable’ when using the digital version of the Annual Report.
Online content can be accessed by clicking links on the digital version of this Annual Report,
copying the website address into an internet browser, or scanning the QR code on a mobile device.
Read more
page reference
Click to see related
content online
Scan or click to watch
related video content online
We have also reported against a number of voluntary reporting frameworks to help our
stakeholders understand our sustainable business performance. Disclosures prepared in
accordance with the Global Reporting Initiative (‘GRI’) or Sustainability Accounting Standards
Board (‘SASB’) guidance can be found in our ESG Addendum or on investors.vodafone.com.
investors.vodafone.com/esgaddendum
investors.vodafone.com/sasb
Videos:
Our new brand
Scan or click to watch a video summarising our new brand positioning,
‘Together we can’: investors.vodafone.com/videos-brand
Strategy
Scan or click to watch our Chief Executive, Nick Read, summarise our performance
this year and introduce the next phase of our strategy:
investors.vodafone.com/videos-strategy
Financial performance
Scan or click to watch our Chief Financial Officer, Margherita Della Valle,
summarise our financial performance in FY21:
investors.vodafone.com/videos-cfo
Governance
Scan or click to watch our Chairman, Jean-François van Boxmeer,
share his views on his first months at Vodafone:
investors.vodafone.com/videos-chair
Scan or click to watch the Chair of the Audit and Risk Committee, David Nish,
explain his role: investors.vodafone.com/videos-arc
Scan or click to watch the Senior Independent Director and Chair of the
Remuneration Committee, Valerie Gooding, explain her role:
investors.vodafone.com/videos-rem
Scan or click to watch our prospective Non-Executive Director, Olaf Swantee,
introduce himself: investors.vodafone.com/videos-ned
Contents
Strategic Report
Welcome to our 2021 Annual Report
Our new approach to reporting
01
02
04
06
07
08
10
12
14
16
18
21
23
32
34
34
38
41
42
43
52
53
62
64
66
70
71
73
74
76
82
84
90
Our strategic framework
About Vodafone
S
S
S
Financial and non-financial performance
Chairman’s message
Chief Executive’s statement
S
Market and strategy
Mega trends
Stakeholder engagement
Strategic review
S
Business model
Strategic review (continued)
Our people strategy
Our financial performance
S
Purpose, sustainability
and responsible business
Our purpose
Inclusion for All
Planet
Digital Society
Contribution to Sustainable Development Goals
Responsible business
Non-financial information
Risk management
Governance
S
Governance at a glance
Chairman’s governance statement
Board of Directors, leadership and responsibilities
Executive management
Board activities and principal decisions
Board evaluation
Nominations and Governance Committee
Audit and Risk Committee
Remuneration Committee
Remuneration Policy
104 US listing requirements
105 Directors’ report
Financials
107 Reporting on our financial performance
108 Directors’ statement of responsibility
110 Auditor’s report
121 Consolidated financial statements and notes
209 Company financial statements and notes
Other information
217 Non-GAAP measures
227 Shareholder information
233 History and development
233 Regulation
241 Form 20-F cross reference guide
244 Forward-looking statements
245 Definition of terms
This document is the Group’s UK Annual Report and is not
the Group’s Annual Report on Form 20-F that will be filed
separately with the US SEC at a later date.
This Report contains references to Vodafone’s
website, and other supporting disclosures located
thereon such as videos, our ESG Addendum and
our TCFD Report, amongst others. These references
are for readers’ convenience only and information
included on Vodafone’s website is not incorporated
in, and does not form part of, this Annual Report.
This year we have adopted a digital first approach reflecting how we operate as a business. As a
result, while the Annual Report continues to be a core part of our reporting suite, we have simplified
the format and included links to interactive online content, such as videos. This online material
brings to life what we do, how we do it, and provides you with a better overall understanding
of our business. We have also introduced new summaries at the start of each key section
(denoted by an S in the contents to the left).
For the first time we have also published a separate report that summarises our progress towards
meeting the recommendations of the Task Force on Climate-related Financial Disclosures (‘TCFD’),
as well as a comprehensive addendum that includes data on environmental, social and governance
investors.vodafone.com
investors.vodafone.com/esgaddendum
investors.vodafone.com/tcfd
(‘ESG’) topics.
vodafone.com
References
The Annual Report has been redesigned to aid navigation. We have cross-referenced relevant
material and navigation buttons are ‘clickable’ when using the digital version of the Annual Report.
Online content can be accessed by clicking links on the digital version of this Annual Report,
copying the website address into an internet browser, or scanning the QR code on a mobile device.
Read more
page reference
Click to see related
content online
Scan or click to watch
related video content online
We have also reported against a number of voluntary reporting frameworks to help our
stakeholders understand our sustainable business performance. Disclosures prepared in
accordance with the Global Reporting Initiative (‘GRI’) or Sustainability Accounting Standards
Board (‘SASB’) guidance can be found in our ESG Addendum or on investors.vodafone.com.
investors.vodafone.com/esgaddendum
investors.vodafone.com/sasb
Videos:
Our new brand
Scan or click to watch a video summarising our new brand positioning,
‘Together we can’: investors.vodafone.com/videos-brand
Scan or click to watch our Chief Executive, Nick Read, summarise our performance
this year and introduce the next phase of our strategy:
investors.vodafone.com/videos-strategy
Financial performance
Scan or click to watch our Chief Financial Officer, Margherita Della Valle,
summarise our financial performance in FY21:
investors.vodafone.com/videos-cfo
Governance
Scan or click to watch our Chairman, Jean-François van Boxmeer,
share his views on his first months at Vodafone:
investors.vodafone.com/videos-chair
Scan or click to watch the Senior Independent Director and Chair of the
Remuneration Committee, Valerie Gooding, explain her role:
investors.vodafone.com/videos-rem
Scan or click to watch our prospective Non-Executive Director, Olaf Swantee,
introduce himself: investors.vodafone.com/videos-ned
Annual Report on Remuneration
Strategy
1
Vodafone Group Plc
Annual Report 2021
Our strategic framework
Strategic report
Governance
Financials
Other information
Our next phase to drive returns
through growth
Our purpose: We connect for a better future
Inclusion for All
Ensuring everyone has access to the benefits
of a digital society
Planet
Reducing our environmental impact
and helping society decarbonise
Digital Society
Connecting people and things and digitalising
critical sectors
Read more
on pages 34-37
Read more
on pages 38-40
Read more
on pages 41-42
Our strategy: The new generation connectivity and digital services provider
for Europe & Africa, enabling an inclusive & sustainable digital society
Customer commitments
Best connectivity
products & services
Providing the best core connectivity
for consumers and businesses
Enabling strategies
Simplified & most efficient operator
Through digital transformation,
standardisation, and automation
of processes at scale
Leading innovation in digital services
Outstanding digital experiences
Leveraging our unique platforms and
partnering with leading technology firms
to provide customers with a ’best on
Vodafone’ user experience
Social contract shaping the
digital society
Influencing policy and regulation to
shape a more healthy industry structure,
and build a resilient, inclusive and
sustainable digital society
Using our leading digital architecture to
provide a seamless customer experience
Leading gigabit networks
Maintaining our leading gigabit networks
as we provide our customers with the
best connectivity products and ‘best on
Vodafone’ user experience
Our advantage: Leading connectivity provider
Scan or click to watch the Chair of the Audit and Risk Committee, David Nish,
explain his role: investors.vodafone.com/videos-arc
Our people & culture
The ‘Vodafone Spirit’
Europe & Africa
Two attractive regions with scale
Governance & Risk Management
Strong frameworks in place
Read more
on pages 21-22
Read more
on pages 16-20
Read more
on page 81
Creating value for society and shareholders
2
Vodafone Group Plc
Annual Report 2021
About Vodafone
Strategic report
Governance
Financials
Other information
A new generation connectivity
and digital services provider
Our business
Our strategy (2019-21)
We offer a range of leading connectivity products
and platforms to consumers and businesses across
Europe and Africa.
We have delivered the first phase of our strategy
to become a new generation connectivity
& digital services provider.
Consumer
Europe
Mobile
We provide a range of market
leading mobile services, enabling
customers to reliably call, text and
access data.
Fixed
Our fixed-line services include
broadband, TV and voice. We offer
high-speed connectivity through our
next-generation network (‘NGN’).
Convergence
Our converged plans, which
combine mobile, fixed and TV
services, provide simplicity and
better value for customers.
Other value added services
These include our Consumer
Internet of Things (‘IoT’)
propositions, as well as security
and insurance products.
Africa
Mobile
We provide a range of mobile
services, enabling customers
to call, text and access data.
The demand for mobile data is
growing rapidly driven by the lack
of fixed broadband access and by
increased smartphone penetration.
M-Pesa & financial services
M-Pesa is our African payment
platform, which has moved
beyond its origins as a money
transfer service. Together with
Vodacom’s own platform, we
now provide a range of financial
services, as well as business and
merchant payment services.
Business
We serve private & public sector customers of all sizes with a broad range
of connectivity services, supported by our dedicated global network.
We have unique scale and capabilities, and are expanding our portfolio
of products and services beyond core mobile and fixed connectivity into
new growth areas, such as:
– Unified communications
– Internet of Things
– Cloud & security
Revenue contribution (FY21)
Total revenue
€43.8bn
Total revenue
Europe
Europe
Africa
Africa
Other
Other
77%
77%
16%
16%
7%
7%
Service revenue
69%
27%
4%
Consumer
Business
Other
Delivering our strategic priorities at pace
During the first phase of our transformation we have focused on
reshaping the Group and establishing a foundation from which to grow
in the converged connectivity markets in Europe, and mobile data and
payments in Africa.
This has been delivered through four key strategic priorities:
Deepening customer engagement
Deepening the relationship we have with our customers by
offering additional products and services in order to deliver
a more consistent commercial performance and improve
customer loyalty.
Accelerating digital transformation
Capturing the significant opportunities we have through
standardisation, digitalisation and the sharing of processes to
deliver best-in-class operational efficiencies and a structurally
lower cost base.
Improve asset utilisation
Undertaking a series of actions to improve the utilisation
of the Group’s assets as part of our focus on improving
return on capital employed.
Optimising the portfolio
Actively managing our portfolio to simplify the Group and
strengthen our position in converged connectivity markets
in Europe, and mobile data and payments in Africa.
Over the last three years we have made strong progress against all
of these strategic priorities – reshaping Vodafone to be a stronger
connectivity provider.
Read more
on pages 14-15
Purpose pillars
Our strategy helps us to deliver our targets across three purpose pillars:
Inclusion for All, Planet, and Digital Society.
Inclusion for All
Ensuring everyone has access to the benefits of a digital society.
Planet
Reducing our environmental impact and helping society
decarbonise.
Digital Society
Connecting people and things and digitalising critical sectors.
Read more on
pages 32-42
2
Vodafone Group Plc
Annual Report 2021
About Vodafone
A new generation connectivity
and digital services provider
Africa
Mobile
Consumer
Europe
Mobile
access data.
Fixed
We provide a range of market
We provide a range of mobile
leading mobile services, enabling
services, enabling customers
customers to reliably call, text and
to call, text and access data.
The demand for mobile data is
growing rapidly driven by the lack
of fixed broadband access and by
increased smartphone penetration.
Our fixed-line services include
broadband, TV and voice. We offer
high-speed connectivity through our
M-Pesa & financial services
next-generation network (‘NGN’).
M-Pesa is our African payment
platform, which has moved
beyond its origins as a money
transfer service. Together with
Vodacom’s own platform, we
now provide a range of financial
services, as well as business and
merchant payment services.
We serve private & public sector customers of all sizes with a broad range
of connectivity services, supported by our dedicated global network.
We have unique scale and capabilities, and are expanding our portfolio
of products and services beyond core mobile and fixed connectivity into
Convergence
Our converged plans, which
combine mobile, fixed and TV
services, provide simplicity and
better value for customers.
Other value added services
These include our Consumer
Internet of Things (‘IoT’)
propositions, as well as security
and insurance products.
Business
new growth areas, such as:
– Unified communications
– Internet of Things
– Cloud & security
Revenue contribution (FY21)
Total revenue
€43.8bn
Total revenue
Europe
Europe
Africa
Africa
Other
Other
77%
77%
16%
16%
7%
7%
Service revenue
Consumer
Business
Other
69%
27%
4%
Delivering our strategic priorities at pace
During the first phase of our transformation we have focused on
reshaping the Group and establishing a foundation from which to grow
in the converged connectivity markets in Europe, and mobile data and
payments in Africa.
This has been delivered through four key strategic priorities:
Deepening customer engagement
Deepening the relationship we have with our customers by
offering additional products and services in order to deliver
a more consistent commercial performance and improve
customer loyalty.
Accelerating digital transformation
Capturing the significant opportunities we have through
standardisation, digitalisation and the sharing of processes to
deliver best-in-class operational efficiencies and a structurally
lower cost base.
Improve asset utilisation
Undertaking a series of actions to improve the utilisation
of the Group’s assets as part of our focus on improving
return on capital employed.
Optimising the portfolio
Actively managing our portfolio to simplify the Group and
strengthen our position in converged connectivity markets
in Europe, and mobile data and payments in Africa.
Over the last three years we have made strong progress against all
of these strategic priorities – reshaping Vodafone to be a stronger
connectivity provider.
Read more
on pages 14-15
Purpose pillars
Inclusion for All
Planet
decarbonise.
Digital Society
Read more on
pages 32-42
Our strategy helps us to deliver our targets across three purpose pillars:
Inclusion for All, Planet, and Digital Society.
Ensuring everyone has access to the benefits of a digital society.
Reducing our environmental impact and helping society
Connecting people and things and digitalising critical sectors.
Strategic report
Governance
Financials
Other information
3
3
Vodafone Group Plc
Vodafone Group Plc
Annual Report 2021
Annual Report 2021
Strategic report
Strategic report
Governance
Governance
Financials
Financials
Other information
Other information
Our business
Our strategy (2019-21)
How we manage our Group
How we measure success
We offer a range of leading connectivity products
and platforms to consumers and businesses across
We have delivered the first phase of our strategy
to become a new generation connectivity
Europe and Africa.
& digital services provider.
Our business model is underpinned by our strong
governance and risk management framework.
We track a range of measures that reflect our financial,
operational and strategic progress and performance.
Governance
The Board held seven scheduled meetings this year to
deliberate on key strategic matters, our purpose and culture,
our people and stakeholder interests.
Nominations and Governance Committee
This Committee evaluates the composition and performance
of the Board to ensure it remains comprised of an appropriate
balance of independence, skills, knowledge, experience
and diversity.
Audit and Risk Committee
This Committee provides effective governance over the
appropriateness of financial reporting of the Group, including
the adequacy of related disclosures, the performance of both
the internal audit function and the external auditor and oversight
of the Group’s systems of internal control, business risks and
related compliance activities.
Remuneration Committee
This Committee assesses and makes recommendations to the
Board on the policies for executive remuneration and reward
packages for the individual Executive Directors.
ESG Committee
On 11 May 2021, the Board approved the establishment of a
new Committee to oversee our ESG programme and monitor
progress against ESG key performance indicators.
Risk management
As the risk landscape becomes more complex and fast moving,
we have to be more agile and adaptive in our identification and
response to risks. We continue to evolve our risk processes to
support the organisation’s goals and strategy.
Risk framework
Our risk framework clearly defines roles and responsibilities
and sets out a consistent end-to-end process for identifying and
managing risks. We have embedded the risk framework across
the Group as it allows us to take a holistic approach and to make
meaningful comparisons. This year our framework was further
enhanced, enabling us to be more dynamic in risk detection,
modelling of risk interconnectedness and the use of data, all
of which are improving our risk visibility and our responses.
Board oversight of principal and emerging risks
To provide adequate oversight, we report on our principal
and emerging risks throughout the year to the different
management committees and the Board. Additionally,
risk owners are invited to present in-depth reviews to ensure
that risks are managed within the defined tolerance levels.
Read more
on pages 53-61
Financial targets
The Group provides guidance on adjusted EBITDAaL1 and adjusted free
cash flow2.
Senior management incentive plans include organic service revenue,
adjusted EBIT, adjusted free cash flow, customer appreciation metrics,
relative total shareholder return and ESG measures.
Read more
on pages 20 and 101-103
Return on capital employed (‘ROCE’)
This is a key area of focus for the Group, reflecting how efficiently we are
generating profit with the capital we deploy.
Our goal is to deliver a sustainable improvement in ROCE through a
combination of consistent revenue growth, ongoing margin expansion,
strong cash flow conversion, and disciplined allocation of capital.
Read more
on pages 20 and 31
Operational metrics
We have a number of commercial metrics that are used to monitor
our progress against our key strategic priorities and reflect the strong
underlying momentum across the business.
Read more
on pages 14-15
Social contract
Monitoring the success we have in shaping a healthier industry
structure that is pro-investment, supportive of returns, and build a
resilient, inclusive and sustainable digital society.
Read more
on page 19
Sustainability metrics
We monitor metrics that are aligned to the three pillars of our purpose.
– Inclusion for All: Rural connectivity, our commercial propositions for
equality, as well as workplace equality.
– Planet: Our carbon footprint across the full value chain, enabling our
customers to reduce their own emissions, and waste.
– Digital Society: Customers connected to our gigabit networks,
supporting SMEs, and the digitalisation of critical sectors.
We have also included Environmental, Social and Governance (‘ESG’)
KPIs in the long-term incentive plan for our senior leaders.
Read more
on pages 32-42
Notes:
1. Adjusted EBITDAaL is equivalent to FY21 definition and calculation of adjusted EBITDA.
2. Adjusted free cash flow is free cash flow before spectrum, restructuring, integration costs and
Vantage Towers growth capital additions.
4
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Financial and non-financial performance
Key Performance Indicators
Our progress
We measure our success by tracking key performance indicators that reflect
our strategic, operational and financial progress and performance.
Financial results summary1
Group revenue
Group service revenue
Operating profit/(loss)
Adjusted EBITDA (non-GAAP 2)
Profit/(loss) for the year
Basic earnings/(loss) per share
Adjusted basic earnings per share (non-GAAP 2)
Cash flow from operating activities
Free cash flow (pre spectrum, restructuring and integration costs) (non-GAAP 2)
Borrowings less cash & cash equivalents
Net debt (non-GAAP 2)
Total dividends per share
Strategic progress
Deepening customer engagement
Europe mobile contract customers4
Europe broadband customers4
Europe on-net gigabit capable connections4
Europe Consumer converged customers4
Europe mobile contract customer churn
Africa data users6
M-Pesa transaction volume6
Business fixed-line service revenue growth7
IoT SIM connections
Accelerating digital transformation
Europe net opex savings8
Europe digital channel sales mix9
Europe frequency of customer contact
Europe MyVodafone app penetration
Improving asset utilisation
Average mobile data usage per customer in Europe
Europe on-net NGN broadband penetration4
Pre-tax return on capital employed (controlled)10 (non-GAAP 2)
Post-tax return on capital employed
(controlled and associates/joint ventures10 (non-GAAP 2)
Our people
Average number of employees and contractors
Employee engagement index11
Employee turnover rate (voluntary)
Women on the Board
Women in management and leadership roles
Women in total workforce
2021
IFRS 15/16
43,809
€m
37,141
€m
€m
5,097
€m 14,386
536
€m
0.38
€c
8.08
€c
€m
17,215
€m 5,019
(61,939)
€m
€m (40,543)
9.00
€c
2020
IFRS 15/16
44,974
37,871
4,099
14,881
(455)
(3.13)
5.60
17,379
5,700
(61,368)3
(42,047) 3
9.00
2019
IFRS 15/ IAS 17
43,666
36,458
(951)
13,918
(7,644)
(29.05)
6.27
12,980
5,443
(39,318)
(27,033)
9.00
2021
2020
2019
million
million
million
million
%
million
billion
%
million
€bn
%
contacts per year
%
GB/month
%
%
%
thousand
%
%
%
%
%
65.4
25.6
43.7
7.9
13.7
84.9
15.2
3.0
123.3
0.5
26
1.4
63
7.2
30
5.5
3.9
2021
105
74
8
45
32
40
64.4
25.0
31.9
7.2
14.65
82.6
12.2
3.3
102.9
0.4
21
1.4
65
5.7
30
6.3
3.9
2020
104
77
12
42
31
39
63.2
18.8
21.9
6.6
15.5
75.6
11.0
3.8
84.9
0.4
17
1.5
62
3.7
28
5.9
3.5
2019
102
80
13
42
31
40
Notes:
1. IFRS 16 “Leases” was adopted on 1 April 2019 for our statutory reporting, without restating
prior period figures. As a result, the Group’s statutory results for the years ended 31 March 2021
and 31 March 2020 are on an IFRS 16 basis, whereas the comparative period for the year ended
31 March 2019 is on an IAS 17 basis.
2. These line items are alternative performance measures which are non-GAAP measures that are
presented to provide readers with additional financial information that is regularly reviewed by
management and should not be viewed in isolation or as an alternative to the equivalent GAAP
measure. See “Non-GAAP measures” on page 217 for more information.
3. FY20 borrowings and net debt has been aligned to the FY21 presentation which excludes
derivative movements in cash flow hedging reserves.
4. Including VodafoneZiggo.
5. Excluding the impact of inactive data only SIM losses in Italy during Q3 and Q4 FY20.
6. Africa including Egypt, Ghana and Safaricom.
7. Organic growth.
8. Europe and Common Function operating costs.
9. Based on Germany, Italy, UK and Spain.
10. We calculate two ROCE measures: i) Pre-tax ROCE for controlled operations only, and ii) Post-tax
ROCE which also includes our share of adjusted results in equity accounted associates and joint
ventures. See pages 223 and 224 for more information.
11. For 2020 and 2021, our employee engagement index is based on a weighted average index of
responses to three questions: satisfaction working at Vodafone, experiencing positive emotions
at work, and recommending us as an employer. Different methodology applied in 2019.
4
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
5
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Financial and non-financial performance
Key Performance Indicators
Our progress
We measure our success by tracking key performance indicators that reflect
our strategic, operational and financial progress and performance.
Free cash flow (pre spectrum, restructuring and integration costs) (non-GAAP 2)
Financial results summary1
Group revenue
Group service revenue
Operating profit/(loss)
Adjusted EBITDA (non-GAAP 2)
Profit/(loss) for the year
Basic earnings/(loss) per share
Adjusted basic earnings per share (non-GAAP 2)
Cash flow from operating activities
Borrowings less cash & cash equivalents
Net debt (non-GAAP 2)
Total dividends per share
Strategic progress
Deepening customer engagement
Europe mobile contract customers4
Europe broadband customers4
Europe on-net gigabit capable connections4
Europe Consumer converged customers4
Europe mobile contract customer churn
Africa data users6
M-Pesa transaction volume6
Business fixed-line service revenue growth7
IoT SIM connections
Accelerating digital transformation
Europe net opex savings8
Europe digital channel sales mix9
Europe frequency of customer contact
Europe MyVodafone app penetration
Improving asset utilisation
Average mobile data usage per customer in Europe
Europe on-net NGN broadband penetration4
Pre-tax return on capital employed (controlled)10 (non-GAAP 2)
Post-tax return on capital employed
(controlled and associates/joint ventures10 (non-GAAP 2)
Our people
Average number of employees and contractors
Employee engagement index11
Employee turnover rate (voluntary)
Women on the Board
Women in management and leadership roles
Women in total workforce
2021
IFRS 15/16
43,809
37,141
5,097
536
0.38
8.08
17,215
€m
€m
€m
€m
€c
€c
€m
€m 14,386
2020
2019
IFRS 15/16
IFRS 15/ IAS 17
44,974
37,871
4,099
14,881
(455)
(3.13)
5.60
17,379
5,700
43,666
36,458
(951)
13,918
(7,644)
(29.05)
6.27
12,980
5,443
(39,318)
(27,033)
9.00
€m 5,019
€m
(61,939)
(61,368)3
€m (40,543)
(42,047) 3
€c
9.00
9.00
2021
2020
2019
million
123.3
102.9
contacts per year
GB/month
million
million
million
million
million
billion
%
%
€bn
%
%
thousand
%
%
%
%
%
%
%
%
65.4
25.6
43.7
7.9
13.7
84.9
15.2
3.0
0.5
26
1.4
63
7.2
30
5.5
3.9
2021
105
74
8
45
32
40
64.4
25.0
31.9
7.2
14.65
82.6
12.2
3.3
0.4
21
1.4
65
5.7
30
6.3
3.9
2020
104
77
12
42
31
39
63.2
18.8
21.9
6.6
15.5
75.6
11.0
3.8
84.9
0.4
17
1.5
62
3.7
28
5.9
3.5
2019
102
80
13
42
31
40
Purpose, sustainability and responsible business
We want to enable an inclusive and sustainable digital society.
We are also dedicated to ensuring that Vodafone operates responsibly and ethically.
Purpose, sustainability and responsible business
Inclusion for All
4G population coverage (outdoor 1Mbps) – Europe1
4G population coverage (outdoor 1Mbps) – Africa2
Estimated number of additional female customers in Africa4 & Turkey since 2016
M-Pesa and mobile money customers4
2021
2020
2019
%
%
million
million
98
623
15.9
48
97
53
9.65
42
95
42
9.55
37
Planet6
Energy use
Total electricity cost
Total energy use
Energy use on base stations & technology centres
Purchased electricity from renewable sources (Group)
Purchased electricity from renewable sources (Europe)
Greenhouse gas emissions (‘GHGs’)
Total Scope 1 and Scope 2 GHG emissions (market-based method)
Total Scope 3 GHG emissions
Total customer emissions avoided due to our IoT platform
Waste
Total waste (including hazardous waste)
Network waste recovered and recycled
Digital Society
Europe gigabit capable connections1
5G available in countries1
5G available in cities (>100k population)1
Responsible business
Code of Conduct
Completed ‘Doing What’s Right’ employee training
Number of ‘Speak Up’ reports
Employee trust in Speak Up
Health & safety
Number of lost-time employee incidents
Lost time incident rate per 1,000 employees
Responsible supply chain
Total spend
Direct suppliers
Number of site assessments (conducted by Vodafone or Joint Audit Cooperation)
Tax and economic contribution
Total tax and economic contribution9
€m
GWh
%
%
%
m tonnes CO2e
m tonnes CO2e
m tonnes CO2e
metric tonnes
%
million
#
#
%
#
%
#
#
€bn
thousand
#
€bn
760
5,832
96
56
80
1.37
9.4
7.1
7,900
99
69
12
244
84
623
87
7
0.06
24
11
76
–
–
5,790
95
23
33
1.95
9.5
6.9
9,500
99
42
8
75
92
602
–7
33
0.35
24
11
74
–
5,770
94
14
19
2.14
10.7
5.9
8,500
94
26
1
1
–
738
84
648
0.628
22
11
85
12.4
12.7
Notes:
5. Excluding the impact of inactive data only SIM losses in Italy during Q3 and Q4 FY20.
1. IFRS 16 “Leases” was adopted on 1 April 2019 for our statutory reporting, without restating
6. Africa including Egypt, Ghana and Safaricom.
prior period figures. As a result, the Group’s statutory results for the years ended 31 March 2021
and 31 March 2020 are on an IFRS 16 basis, whereas the comparative period for the year ended
7. Organic growth.
31 March 2019 is on an IAS 17 basis.
2. These line items are alternative performance measures which are non-GAAP measures that are
presented to provide readers with additional financial information that is regularly reviewed by
management and should not be viewed in isolation or as an alternative to the equivalent GAAP
measure. See “Non-GAAP measures” on page 217 for more information.
3. FY20 borrowings and net debt has been aligned to the FY21 presentation which excludes
derivative movements in cash flow hedging reserves.
4. Including VodafoneZiggo.
8. Europe and Common Function operating costs.
9. Based on Germany, Italy, UK and Spain.
10. We calculate two ROCE measures: i) Pre-tax ROCE for controlled operations only, and ii) Post-tax
ROCE which also includes our share of adjusted results in equity accounted associates and joint
ventures. See pages 223 and 224 for more information.
11. For 2020 and 2021, our employee engagement index is based on a weighted average index of
responses to three questions: satisfaction working at Vodafone, experiencing positive emotions
at work, and recommending us as an employer. Different methodology applied in 2019.
Notes:
1. Includes VodafoneZiggo.
2. Based on coverage in Africa, including Egypt. Excludes Safaricom.
3. Includes Ghana.
4. Africa including Egypt, Ghana and Safaricom.
5. 2019 and 2020 restated to include Egypt.
6. Data calculated using local market actual or estimated data sources from invoices, purchasing
requisitions, direct data measurement and estimations. Carbon emissions calculated in line with
GHG Protocol standards. Scope 2 emissions are reported using the market-based methodology.
For full methodology see our ESG Addendum 2021.
7. Figure not available due to change in employee survey methodology during the year.
8. Data includes lost-time incidents in Vodafone India up until 1 September 2018.
9. Includes direct taxes, non-taxation based revenue mechanisms, such as payments for the right to
use spectrum, and indirect taxes collected on behalf of governments around the world. Our tax
report for 2021 will be published in the next year following the submission of our tax returns and
payment of all applicable taxes. For more information, refer to our Tax and Economic
Contribution reports, available at: vodafone.com/tax.
6
Vodafone Group Plc
Annual Report 2021
Chairman’s message
Strategic report
Governance
Financials
Other information
Enabling an inclusive,
sustainable digital society
It is a great privilege to be able to share my thoughts with you for the first time
since becoming Chairman of Vodafone in November 2020. Before I comment
on the strong progress we have made this year, and the key role Vodafone
has played in keeping society connected during the COVID-19 pandemic,
I would first like to comment on what attracted to me to joining your Board.
The attraction of Vodafone
Vodafone is a dynamic and fast paced business, operating in an essential
industry. It has a clear vision and purpose for society, which in light of
the current pandemic is even more relevant than ever. Under Nick’s
leadership not only has a lot already been achieved over the last three
years, there is still a great opportunity ahead of us.
The opportunity to oversee and support the long-term success of Vodafone in
the next phase of its transformation to become a new generation connectivity
and digital services provider for Europe and Africa, enabling an inclusive,
sustainable digital society is, I believe, an exceptionally exciting one – and
one I’m fully committed to.
Whilst my induction to Vodafone has been almost entirely digital, I am
grateful to the Board, Executive Committee and broader team for the
comprehensive on-boarding that I have received and the many extensive
engagements covering all aspects of the business. I would also like to thank
my predecessor, Gerard Kleisterlee, for his strong support and counsel during
my transition to Vodafone.
Supporting society during the COVID-19 crisis
Since I joined the Board, I have been impressed by the Company’s ability
to adapt quickly to the changes in circumstances for the business and the
demand placed on our service, across all of our markets. The ongoing COVID
crisis represents a significant challenge for many businesses and citizens. Yet,
Vodafone has continuously adapted throughout this period. The passion and
commitment of all of our 105,000 people, combined with the ‘can-do’ spirit to
get things done together, has been essential over the last year.
The connectivity we provide has been a lifeline for society, enabling people
to work, businesses to remain operational, public services to function and
people to stay in touch with their family and friends. As a result, the pace of
the business has actually accelerated to address many of the challenges we
and our customers are facing, but also to capture the opportunities that have
arisen as societies embrace digital transition more than ever.
Resilient performance in a challenging backdrop
Despite the tough operating environment, and unprecedented period of
global uncertainty, we delivered a resilient financial performance that was
in line with our expectations and guidance for the year.
This was the result of the strong execution against our strategy, as we
further deepened customer engagement and delivered a more consistent
commercial performance, accelerated our digital transformation, continued
to improve asset utilisation and optimised our portfolio.
Total revenue declined by 2.6% to €43.8 billion, with Group organic service
revenue returning to growth in the second half of the year. This was despite
lower roaming and visitor revenue following a significant reduction in
international travel due to COVID-19. Group operating profit increased
by €1.0 billion to €5.1 billion and basic earnings per share increased to
0.38 eurocents.
The significant progress we’ve made in improving asset utilisation and
reshaping the Group, including the successful IPO of Vantage Towers, is
also helping to drive improved returns on capital and a reduction in net
debt across the Group – however there is clearly still more to be done.
This good financial performance, solid commercial momentum and robust
financial position provides the Board with the confidence to declare a total
dividend per share of 9.00 eurocents for the year, implying a final dividend
per share of 4.5 eurocents which will be paid on 6 August 2021.
Shaping industry structure to support
the COVID-19 recovery
As we now look to the challenges faced by governments, regulators
and policy makers in enabling and supporting both economic and social
recovery, it is clear that the services we provide to people, businesses and
public sector organisations are increasingly essential to this broader recovery.
Yet, it is also clear to me that policy and regulatory decisions of the last
decade have had a material impact on returns for the telecommunications
industry, which still weighs heavily on operators’ ability to invest in everything
from connectivity infrastructure to new services.
Looking forward, and considering Europe and Africa’s important digital
ambitions, there is an ever more urgent need to overcome the shortcomings
of the past. Clear actions – and better cooperation between governments
and industry – are required to create a more healthy and sustainable
industry structure that is truly pro-investment, pro-innovation and
supportive of returns.
Our social contract embraces this new collaborative, partnership approach
with governments, policy makers, regulators and external stakeholders.
Through a shared future vision, we believe that both Europe and Africa
can overcome their many digital divides and sizeable investment gaps,
thereby allowing them to compete more effectively on the global stage
and even become pioneers in many areas of the technology ecosystem.
At the same time, while we have started to see some positive signs of a
more healthy industry structure emerge, it is also clear that the steps to
date fall far short of what is needed to close the widening investment gaps
and build a resilient, inclusive and sustainable digital society.
Vodafone is fully committed to deliver its part to achieve truly inclusive
digital societies in all communities that we serve. Guided by our purpose,
our ‘social contract’ response to the COVID crisis (so-called ‘five point plan’)
has been significant and, as we did even before this crisis, we will continue
to do whatever we can to support the most vulnerable among us. We
are also committed to taking urgent action to address the climate change
emergency both in our own and our business customers’ footprint. Our
high-speed connectivity and digital tools will be critical enablers of the
green transition. Similarly, we are rapidly reducing our own environmental
footprint, taking the lead in the sector, and demonstrating the value of digital.
All of our European networks will be fully powered by renewable energy
by July this year, and we have set a target to reach ‘net zero’ for our own
carbon emissions by 2030 and across our complete value chain by 2040.
We have also reported for the first time our progress towards meeting
the recommendations of the Task Force on Climate-related Financial
Disclosures (‘TCFD’) in a standalone TCFD report.
Looking ahead
On behalf of the Board, I would like to thank all of our people who have
worked tirelessly over the last year to keep our customers and society reliably
connected, as well as our shareholders for their continued support. As we
enter FY22, we will continue to focus on delivering our purpose and strategy
at pace, supported by the good underlying momentum in the business. Never
has our role of ‘connecting people for a better future’ been more important.
Jean-François van Boxmeer
Chairman
Scan or click to watch our Chairman, Jean-François
van Boxmeer, share his views on his first months at
Vodafone: investors.vodafone.com/videos-chair
6
Vodafone Group Plc
Annual Report 2021
Chairman’s message
Enabling an inclusive,
sustainable digital society
It is a great privilege to be able to share my thoughts with you for the first time
dividend per share of 9.00 eurocents for the year, implying a final dividend
since becoming Chairman of Vodafone in November 2020. Before I comment
per share of 4.5 eurocents which will be paid on 6 August 2021.
on the strong progress we have made this year, and the key role Vodafone
has played in keeping society connected during the COVID-19 pandemic,
I would first like to comment on what attracted to me to joining your Board.
Shaping industry structure to support
the COVID-19 recovery
The attraction of Vodafone
Vodafone is a dynamic and fast paced business, operating in an essential
industry. It has a clear vision and purpose for society, which in light of
the current pandemic is even more relevant than ever. Under Nick’s
leadership not only has a lot already been achieved over the last three
years, there is still a great opportunity ahead of us.
The opportunity to oversee and support the long-term success of Vodafone in
the next phase of its transformation to become a new generation connectivity
and digital services provider for Europe and Africa, enabling an inclusive,
sustainable digital society is, I believe, an exceptionally exciting one – and
one I’m fully committed to.
Whilst my induction to Vodafone has been almost entirely digital, I am
grateful to the Board, Executive Committee and broader team for the
comprehensive on-boarding that I have received and the many extensive
engagements covering all aspects of the business. I would also like to thank
my predecessor, Gerard Kleisterlee, for his strong support and counsel during
my transition to Vodafone.
Supporting society during the COVID-19 crisis
Since I joined the Board, I have been impressed by the Company’s ability
to adapt quickly to the changes in circumstances for the business and the
demand placed on our service, across all of our markets. The ongoing COVID
crisis represents a significant challenge for many businesses and citizens. Yet,
Vodafone has continuously adapted throughout this period. The passion and
commitment of all of our 105,000 people, combined with the ‘can-do’ spirit to
get things done together, has been essential over the last year.
The connectivity we provide has been a lifeline for society, enabling people
to work, businesses to remain operational, public services to function and
people to stay in touch with their family and friends. As a result, the pace of
the business has actually accelerated to address many of the challenges we
and our customers are facing, but also to capture the opportunities that have
arisen as societies embrace digital transition more than ever.
Resilient performance in a challenging backdrop
Despite the tough operating environment, and unprecedented period of
global uncertainty, we delivered a resilient financial performance that was
in line with our expectations and guidance for the year.
This was the result of the strong execution against our strategy, as we
further deepened customer engagement and delivered a more consistent
commercial performance, accelerated our digital transformation, continued
to improve asset utilisation and optimised our portfolio.
Total revenue declined by 2.6% to €43.8 billion, with Group organic service
revenue returning to growth in the second half of the year. This was despite
lower roaming and visitor revenue following a significant reduction in
international travel due to COVID-19. Group operating profit increased
by €1.0 billion to €5.1 billion and basic earnings per share increased to
0.38 eurocents.
As we now look to the challenges faced by governments, regulators
and policy makers in enabling and supporting both economic and social
recovery, it is clear that the services we provide to people, businesses and
public sector organisations are increasingly essential to this broader recovery.
Yet, it is also clear to me that policy and regulatory decisions of the last
decade have had a material impact on returns for the telecommunications
industry, which still weighs heavily on operators’ ability to invest in everything
from connectivity infrastructure to new services.
Looking forward, and considering Europe and Africa’s important digital
ambitions, there is an ever more urgent need to overcome the shortcomings
of the past. Clear actions – and better cooperation between governments
and industry – are required to create a more healthy and sustainable
industry structure that is truly pro-investment, pro-innovation and
supportive of returns.
Our social contract embraces this new collaborative, partnership approach
with governments, policy makers, regulators and external stakeholders.
Through a shared future vision, we believe that both Europe and Africa
can overcome their many digital divides and sizeable investment gaps,
thereby allowing them to compete more effectively on the global stage
and even become pioneers in many areas of the technology ecosystem.
At the same time, while we have started to see some positive signs of a
more healthy industry structure emerge, it is also clear that the steps to
date fall far short of what is needed to close the widening investment gaps
and build a resilient, inclusive and sustainable digital society.
Vodafone is fully committed to deliver its part to achieve truly inclusive
digital societies in all communities that we serve. Guided by our purpose,
our ‘social contract’ response to the COVID crisis (so-called ‘five point plan’)
has been significant and, as we did even before this crisis, we will continue
to do whatever we can to support the most vulnerable among us. We
are also committed to taking urgent action to address the climate change
emergency both in our own and our business customers’ footprint. Our
high-speed connectivity and digital tools will be critical enablers of the
green transition. Similarly, we are rapidly reducing our own environmental
footprint, taking the lead in the sector, and demonstrating the value of digital.
All of our European networks will be fully powered by renewable energy
by July this year, and we have set a target to reach ‘net zero’ for our own
carbon emissions by 2030 and across our complete value chain by 2040.
We have also reported for the first time our progress towards meeting
the recommendations of the Task Force on Climate-related Financial
Disclosures (‘TCFD’) in a standalone TCFD report.
Looking ahead
On behalf of the Board, I would like to thank all of our people who have
worked tirelessly over the last year to keep our customers and society reliably
connected, as well as our shareholders for their continued support. As we
enter FY22, we will continue to focus on delivering our purpose and strategy
at pace, supported by the good underlying momentum in the business. Never
has our role of ‘connecting people for a better future’ been more important.
The significant progress we’ve made in improving asset utilisation and
Jean-François van Boxmeer
reshaping the Group, including the successful IPO of Vantage Towers, is
Chairman
also helping to drive improved returns on capital and a reduction in net
debt across the Group – however there is clearly still more to be done.
This good financial performance, solid commercial momentum and robust
financial position provides the Board with the confidence to declare a total
Scan or click to watch our Chairman, Jean-François
van Boxmeer, share his views on his first months at
Vodafone: investors.vodafone.com/videos-chair
Strategic report
Governance
Financials
Other information
7
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Chief Executive’s statement
Resilient performance in FY21 and
announcing next phase in our strategy
I am pleased that we achieved full year results in line with our
guidance and we exited the year with accelerating service revenue
growth across the business, with a particularly good performance in
our largest market, Germany.
We have delivered on the first phase of our strategy to reshape
Vodafone as a stronger connectivity provider – including the
simplification of the group to Europe and Africa, the successful IPO of
Vantage Towers (€13.2 billion market capitalisation), the fast roll out of
our next generation mobile and fixed networks, share gain in broadband
subscriptions and continued reduction in customer churn. Our digital
transformation initiatives have generated savings of €0.5 billion over the
year and the integration of the assets acquired from Liberty Global is well
ahead of plan.
The world has changed. The pandemic has shown how critical
connectivity and digital services are to society. Vodafone is strongly
positioned and through increased investment, we are taking action now
to ensure we play a leadership role and capture the opportunities that
these changes create. The increased demand for our services supports
our ambition to grow revenues and cash flow over the medium-term. We
remain fully focused on driving shareholder returns through deleveraging,
improving our return on capital, and a firm commitment to our dividend.
Nick Read
Chief Executive
Scan or click to watch our Chief Executive summarise our
performance this year and introduce the next phase of
our strategy: investors.vodafone.com/videos-ceo
Our strategy (2019-21) ü
We have delivered the first phase of our strategy
to become a new generation connectivity &
digital services provider.
Delivering our strategic priorities at pace
During the first phase of our transformation we have focused on
reshaping the Group and establishing a foundation from which to
grow in the converged connectivity markets in Europe, and mobile
data and payments in Africa.
This has been delivered through four key strategic priorities:
Deepening customer engagement
Deepening the relationship we have with our customers by
offering additional products and services in order to deliver
a more consistent commercial performance and improve
customer loyalty.
Accelerating digital transformation
Capturing the significant opportunities we have through
standardisation, digitalisation and the sharing of processes
to deliver best-in-class operational efficiencies and a
structurally lower cost base.
Improve asset utilisation
Undertaking a series of actions to improve the utilisation of
the Group’s assets as part of our focus on improving return
on capital employed.
Optimising the portfolio
Actively managing our portfolio to simplify the Group and
strengthen our position in converged connectivity markets
in Europe, and mobile data and payments in Africa.
Over the last three years we have made strong progress against all
of these strategic priorities – reshaping Vodafone to be a stronger
connectivity provider.
Read more
on pages 14-15
The next phase of our strategy
We are now well positioned for the next phase in our
multi-year transformation.
Our customer commitments
Best connectivity products & services
Grow revenue through providing the best core
connectivity products and services in each of our
markets for both consumers and businesses.
Leading innovation in digital services
Leveraging our unique platforms and partnering
with leading technology firms to provide customers
with a ’best on Vodafone’ user experience.
Outstanding digital experiences
Using our leading digital architecture to provide a
seamless customer experience across all channels
– app, online, retail and physical delivery at home.
Our enabling strategies
Simplified & most efficient operator
Delivering further efficiencies through digital
transformation, standardisation of products and
procedures, and automation of processes at scale.
Social contract shaping digital society
Influencing policy and regulation to shape a more
healthy industry structure, and build a resilient,
inclusive and sustainable digital society.
Leading gigabit networks
Maintaining our leading gigabit networks as we
provide our customers with the best connectivity
products and ‘best on Vodafone’ user experience
During this next phase of our ongoing transformation to be
a new generation connectivity and digital services provider,
we are committed to improving returns.
Read more
on pages 18-20
8
Vodafone Group Plc
Annual Report 2021
Market and strategy
Strategic report
Governance
Financials
Other information
Operating in a rapidly
changing industry
Mega trends
Our stakeholders
The long-term trends that are shaping our industry
and driving new growth opportunities.
The demands of our stakeholders are continuously
evolving. Engaging with them regularly is fundamental
to how we operate.
Remote working
The trend towards remote working for employees is growing and this has
been further accelerated by the COVID-19 pandemic. Providing reliable
high-speed connections for consumers and businesses working from
home or remotely is becoming increasingly essential.
Connected devices
The demand for connected devices, beyond smartphones, is growing
rapidly. The Internet of Things is expected to drive huge operational
efficiencies, deliver real-time information, and can be applied to a broad
range of use cases.
Adoption of cloud technology
Businesses and consumers are increasingly moving away from using
their own hardware and device-specific software and instead using more
efficient, shared capacity and services over the cloud.
Digital and green transformation for the private &
public sector
The European Union has launched a series of support mechanisms
totalling €750 billion under the banner “NextGenerationEU”. This
includes a Recovery & Resilience facility, which combines €360 billion
of loans and €312 billion of grants available to European Union Member
States. This funding presents a direct and indirect opportunity given
at least 20% of the total funding is planned to support the European
Commission’s digital transformation agenda.
In addition, in order to remain competitive and fulfil their social and
environmental commitments, companies are increasingly looking
to digitalise their operations to become more efficient and limit their
environmental impact.
Digital payments & financial services
The trend towards more digital forms of payment is growing, with a
broader range of financial services now being delivered through apps
and online. In Africa, the growth in smartphone penetration is allowing
consumers to access digital financial services for the first time, enabling
money transfers, loans, insurance and even merchant payments.
Read more
on pages 10-11
Our customers1
We are focused on deepening our engagement
with our customers to develop long-term
valuable and sustainable relationships.
Vodafone is the largest mobile and fixed
network operator in Europe and a leading
global IoT connectivity provider. We have
millions of customers across Europe and
Africa, ranging from individual consumers
to large multinational corporates.
315m
mobile customers
28m
broadband
customers
22m
TV customers
Our people
Our people are critical to the successful delivery
of our strategy. It is essential they are engaged
and embrace our purpose and values.
105,000
employees and
contractors
10,500
suppliers
Our suppliers
Our suppliers provide us with the products
and services we need to deliver our strategy
and connect our customers. In total we have
more than 10,500 suppliers who partner with
us, ranging from start-ups and small businesses
to large multinational companies.
Our local communities and NGOs
We believe the long-term success of our
business is closely tied to the success of the
communities in which we operate. We interact
with local communities and NGOs, seeking to
be a force for good wherever we operate.
€150m
donated in
contributions and
services in-kind in
response to the
COVID-19 crisis
Government and regulators
Our relationship with governments and
regulators is important to ensure policies are
developed in the interests of our customers
and the industry, while also enabling them
to better understand the positive impact
we can have on the environment and
communities we operate in.
Our investors
Our investors include individual and
institutional shareholders, as well as debt
investors. We maintain an active dialogue
with our investors through our extensive
investor relations programme.
€12.4bn
total tax and
economic
contribution
in 2020
>1,000
investor
interactions in
FY21
Note:
1. Includes VodafoneZiggo and Safaricom
Read more
on pages 12-13
Strategic report
Governance
Financials
Other information
9
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Mega trends
Our stakeholders
Our strategy (2019-21)
Our progress
The long-term trends that are shaping our industry
and driving new growth opportunities.
The demands of our stakeholders are continuously
evolving. Engaging with them regularly is fundamental
Reflecting the long-term opportunities and challenges
that we face.
We have made strong progress and executed at pace
across all four of our strategic priorities. As a result we
have completed the first phase of our transformation.
Our strategic priorities
FY21 achievements
Deepening customer engagement
Consumer
We are deepening the relationship we have with our customers
by selling additional products and services, particularly fixed and
converged products in Europe and mobile data and financial
services in Africa.
We believe this will enable us to deliver a more consistent
commercial performance, drive revenue growth and improve
customer loyalty.
Europe
NGN broadband
customers added
Customer
loyalty
+1.4m
0.9pp
year-on-year
improvement in
mobile contract
customer churn
Africa1
Data
users
84.9m
M-Pesa
transaction
volume
15.2bn
+ 25% year-on-year
Business
We are expanding our portfolio of products and services
beyond core connectivity into new growth areas such as
unified communications, Internet of Things, and cloud
& security.
Business
Fixed line service revenue growth
3.0%
IoT SIM connections
+20m
total base now 123 million
Accelerating digital transformation
Through standardisation, digitalisation and sharing of processes
we are capturing the significant opportunities available to us to
deliver best-in-class operational efficiencies and a structurally
lower cost base.
Cumulative European
net opex savings2
€1.3bn
c.15% reduction over 3 years
Role efficiencies
in shared services
5,500
over 3 years
Improving asset utilisation
Through a series of initiatives we are improving the utilisation of
the Group’s assets as part of our focus on improving the Group’s
return on capital.
Unitymedia cost & capex
synergies realised
>65%
Countries with network
sharing agreements
7
Optimising portfolio
We are actively managing our portfolio of assets in order to
simplify the Group, and strengthen our position in converged
connectivity markets in Europe, and mobile and data payments
in Africa.
Vantage Towers IPO
€2.2bn
proceeds3
Read more
on pages 14-15
Scan or click to watch our Chief Executive, Nick Read, summarise our
performance this year and introduce the next phase of our strategy:
investors.vodafone.com/videos-strategy
Portfolio optimisation
19
M&A transactions since FY19
Notes:
1. Africa including Ghana, Egypt
and Safaricom.
2. Europe and Common Functions.
3. Includes greenshoe proceeds of
€0.2 billion received in April 2021.
8
Vodafone Group Plc
Annual Report 2021
Market and strategy
Operating in a rapidly
changing industry
Remote working
The trend towards remote working for employees is growing and this has
been further accelerated by the COVID-19 pandemic. Providing reliable
high-speed connections for consumers and businesses working from
home or remotely is becoming increasingly essential.
Connected devices
The demand for connected devices, beyond smartphones, is growing
rapidly. The Internet of Things is expected to drive huge operational
efficiencies, deliver real-time information, and can be applied to a broad
range of use cases.
Adoption of cloud technology
Businesses and consumers are increasingly moving away from using
their own hardware and device-specific software and instead using more
efficient, shared capacity and services over the cloud.
Digital and green transformation for the private &
public sector
The European Union has launched a series of support mechanisms
totalling €750 billion under the banner “NextGenerationEU”. This
includes a Recovery & Resilience facility, which combines €360 billion
of loans and €312 billion of grants available to European Union Member
States. This funding presents a direct and indirect opportunity given
at least 20% of the total funding is planned to support the European
Commission’s digital transformation agenda.
In addition, in order to remain competitive and fulfil their social and
environmental commitments, companies are increasingly looking
to digitalise their operations to become more efficient and limit their
environmental impact.
Digital payments & financial services
The trend towards more digital forms of payment is growing, with a
broader range of financial services now being delivered through apps
and online. In Africa, the growth in smartphone penetration is allowing
consumers to access digital financial services for the first time, enabling
money transfers, loans, insurance and even merchant payments.
Read more
on pages 10-11
to how we operate.
Our customers1
We are focused on deepening our engagement
mobile customers
with our customers to develop long-term
valuable and sustainable relationships.
Vodafone is the largest mobile and fixed
network operator in Europe and a leading
global IoT connectivity provider. We have
millions of customers across Europe and
Africa, ranging from individual consumers
to large multinational corporates.
315m
28m
broadband
customers
22m
TV customers
105,000
employees and
10,500
suppliers
Our people
Our people are critical to the successful delivery
of our strategy. It is essential they are engaged
contractors
and embrace our purpose and values.
Our suppliers
Our suppliers provide us with the products
and services we need to deliver our strategy
and connect our customers. In total we have
more than 10,500 suppliers who partner with
us, ranging from start-ups and small businesses
to large multinational companies.
Our local communities and NGOs
We believe the long-term success of our
€150m
donated in
business is closely tied to the success of the
communities in which we operate. We interact
with local communities and NGOs, seeking to
be a force for good wherever we operate.
contributions and
services in-kind in
response to the
COVID-19 crisis
Government and regulators
Our relationship with governments and
regulators is important to ensure policies are
developed in the interests of our customers
and the industry, while also enabling them
to better understand the positive impact
we can have on the environment and
communities we operate in.
Our investors
Our investors include individual and
institutional shareholders, as well as debt
investors. We maintain an active dialogue
with our investors through our extensive
investor relations programme.
€12.4bn
total tax and
economic
contribution
in 2020
>1,000
investor
interactions in
FY21
Note:
1. Includes VodafoneZiggo and Safaricom
Read more
on pages 12-13
10
Vodafone Group Plc
Annual Report 2021
Mega trends
Strategic report
Governance
Financials
Other information
For businesses, the demand for IoT and potential use cases is even more
evident. These include solutions such as automated monitoring of energy
usage across national grids, tracking consumption in smart buildings and
detecting traffic and congestion in cities.
In environments that are more localised, such as factories and ports,
network operators are building and running Mobile Private Networks
(‘MPNs’). MPNs offer corporate customers unparalleled security and
bespoke network control. As an example, MPNs enable autonomous
factories to connect to thousands of robots, enabling them to work
in a synchronised way. Once a product leaves the factory it can also
be tracked seamlessly through global supply chain management
applications, whether it is delivered through the post, a vehicle or
even via drones.
In areas where the same solution can be deployed across multiple
sectors, network operators are moving beyond connectivity to
provide complex end-to-end hardware and software solutions such as
surveillance, smart metering and remote monitoring; and it is often more
efficient for these solutions to be created in-house. Scaled operators can
leverage their unique position to co-create or partner with nimble
start-ups at attractive economics.
Adoption of cloud technology
Over the last decade, large technology companies have invested heavily
in advanced centralised data storage and processing capabilities that
organisations and consumers can access remotely through connectivity
services (commonly termed ‘cloud’ technology). As a result, organisations
and consumers are increasingly moving away from using their own
expensive hardware and device-specific software to using more efficient
shared hardware capacity or services over the cloud. This is popular
as it allows upfront capital investment savings, the ability to efficiently
scale resources to meet demand, easily update systems and increase
resiliency. This is driving demand for fast, reliable and secure connectivity
with lower latency.
Many small businesses increasingly understand the benefits of
cloud technology, however they lack the technical expertise or direct
relationships with large enterprise and cloud specialists. This presents an
opportunity for network operators, who have strong existing relationships
and can effectively navigate moving to the cloud at scale.
Long-term trends
shaping our industry
The world continues to evolve rapidly. In part, this is
due to the availability of new and transformational
technologies, but it is also to do with the way society
connects, adapts and makes use of these new digital
advances. We have identified five ‘mega trends’ that will
shape our industry in the years to come: remote working,
connected devices, adoption of cloud technology, the
digital and green transformation of public and private
sectors, and digital payments.
Remote working
The trend towards remote working for employees and businesses was
strong before the impact of the pandemic, driven by the changing lifestyle
priorities of different demographics. COVID-19 has driven a step-change in
demand, driving multiple benefits including a more flexible organisational
culture and greater productivity. This trend is driving demand for fast
and reliable fixed and mobile connectivity for individual workers, but also
emerging cloud architecture, digital security and unified communications
solutions for employers.
The majority of large multinationals already have remote working
capabilities, however they are now moving to more efficient technologies.
For smaller companies, ranging from corporates to small/medium-sized
offices, they rely on network operators such as Vodafone to provide
secure remote working solutions. These solutions include virtual
private networks, unified communication services and the migration of
enterprise applications to the cloud. This is vital for business continuity,
and it provides network operators an opportunity to further deepen
customer relationships – offering them a broader range of services.
Connected devices
The world is becoming ever more connected, and it is not just driven
by smartphones. A wide range of new devices, across all sectors and
applications, are increasingly being connected to the internet. The
number of connected devices, known as the Internet of Things, is
expected to more than double to 25 billion by 20251. This is driven by
continued reductions in the cost of computing components, advances
in cross-device operability and software, and the near-ubiquity of
mobile networks.
For consumers, there is a growing range of applications such
as smartwatches, tracking devices for pets, bags and bicycles,
and connected vehicles – which can lower insurance premiums and
enable a range of advanced in-vehicle solutions. Network operators are
increasingly not only providing the connectivity, but also building the
complete end-to-end hardware and software solutions for these devices.
Note:
1. GSMA Intelligence, The Mobile Economy 2020.
10
Vodafone Group Plc
Annual Report 2021
Mega trends
Long-term trends
shaping our industry
The world continues to evolve rapidly. In part, this is
due to the availability of new and transformational
technologies, but it is also to do with the way society
connects, adapts and makes use of these new digital
advances. We have identified five ‘mega trends’ that will
shape our industry in the years to come: remote working,
connected devices, adoption of cloud technology, the
digital and green transformation of public and private
sectors, and digital payments.
Remote working
The trend towards remote working for employees and businesses was
strong before the impact of the pandemic, driven by the changing lifestyle
priorities of different demographics. COVID-19 has driven a step-change in
demand, driving multiple benefits including a more flexible organisational
culture and greater productivity. This trend is driving demand for fast
and reliable fixed and mobile connectivity for individual workers, but also
emerging cloud architecture, digital security and unified communications
solutions for employers.
The majority of large multinationals already have remote working
capabilities, however they are now moving to more efficient technologies.
For smaller companies, ranging from corporates to small/medium-sized
offices, they rely on network operators such as Vodafone to provide
secure remote working solutions. These solutions include virtual
private networks, unified communication services and the migration of
enterprise applications to the cloud. This is vital for business continuity,
and it provides network operators an opportunity to further deepen
customer relationships – offering them a broader range of services.
Connected devices
The world is becoming ever more connected, and it is not just driven
by smartphones. A wide range of new devices, across all sectors and
applications, are increasingly being connected to the internet. The
number of connected devices, known as the Internet of Things, is
expected to more than double to 25 billion by 20251. This is driven by
continued reductions in the cost of computing components, advances
in cross-device operability and software, and the near-ubiquity of
mobile networks.
For consumers, there is a growing range of applications such
as smartwatches, tracking devices for pets, bags and bicycles,
and connected vehicles – which can lower insurance premiums and
enable a range of advanced in-vehicle solutions. Network operators are
increasingly not only providing the connectivity, but also building the
complete end-to-end hardware and software solutions for these devices.
For businesses, the demand for IoT and potential use cases is even more
evident. These include solutions such as automated monitoring of energy
usage across national grids, tracking consumption in smart buildings and
detecting traffic and congestion in cities.
In environments that are more localised, such as factories and ports,
network operators are building and running Mobile Private Networks
(‘MPNs’). MPNs offer corporate customers unparalleled security and
bespoke network control. As an example, MPNs enable autonomous
factories to connect to thousands of robots, enabling them to work
in a synchronised way. Once a product leaves the factory it can also
be tracked seamlessly through global supply chain management
applications, whether it is delivered through the post, a vehicle or
even via drones.
In areas where the same solution can be deployed across multiple
sectors, network operators are moving beyond connectivity to
provide complex end-to-end hardware and software solutions such as
surveillance, smart metering and remote monitoring; and it is often more
efficient for these solutions to be created in-house. Scaled operators can
leverage their unique position to co-create or partner with nimble
start-ups at attractive economics.
Adoption of cloud technology
Over the last decade, large technology companies have invested heavily
in advanced centralised data storage and processing capabilities that
organisations and consumers can access remotely through connectivity
services (commonly termed ‘cloud’ technology). As a result, organisations
and consumers are increasingly moving away from using their own
expensive hardware and device-specific software to using more efficient
shared hardware capacity or services over the cloud. This is popular
as it allows upfront capital investment savings, the ability to efficiently
scale resources to meet demand, easily update systems and increase
resiliency. This is driving demand for fast, reliable and secure connectivity
with lower latency.
Many small businesses increasingly understand the benefits of
cloud technology, however they lack the technical expertise or direct
relationships with large enterprise and cloud specialists. This presents an
opportunity for network operators, who have strong existing relationships
and can effectively navigate moving to the cloud at scale.
Strategic report
Governance
Financials
Other information
11
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Larger corporates who may already use the cloud today, are progressively
moving away from complex systems based on their own servers or single
cloud solutions, to multi-cloud offers, sold by network operators and their
partners. This approach reduces supplier risk and increases corporate
agility and resilience. Large corporates continue to drive higher demand
for robust, secure and efficient connectivity services as they transition
from their own legacy hardware and services. Cloud providers also
recognise the criticality of telecommunications networks. Many
cloud providers are partnering with the largest network operators,
sometimes through revenue sharing agreements, to develop edge
computing solutions which integrate data centres at the edge of
telecommunication networks to deliver customers reduced latency.
The opportunity is significant as the total addressable market in B2B
cloud & security is expected to reach over €60 billion by 2024
compared to €40 billion today1.
Consumers use cloud solutions for a variety of reasons, including digital
storage and online media consumption. Consumer hardware is also now
being replaced by cloud-first solutions. For example, new cloud-based
gaming services allow consumers to stream complex, bandwidth-heavy
computer games directly to their phones or tablets, without the need for
expensive dedicated hardware. Fast and reliable connectivity will act as a
catalyst for further innovation and consumer applications, many of which
do not currently exist today.
Read more about Vodafone’s leading gigabit connectivity
infrastructure and digital platforms on pages 18-20
Digital and green transformation
of the public and private sectors
As part of the fiscal response to the COVID-19 pandemic, the European
Union has launched a series of support mechanisms with €750 billion
available under the banner “NextGenerationEU”. This includes the
Recovery & Resilience facility, which combines €360 billion of loans
and €312 billion of grants available to European Union Member States.
Of these grants, approximately 70% of the total will be allocated to
European Union Member States in which Vodafone has an operating
presence. 70% of these grants are planned to be distributed by the end
of 2022. The range of funding presents a direct and indirect opportunity
given at least 20% of the total funding is planned to support the European
Commission’s digital transformation agenda.
The UK and many of our African markets have similar stimulus measures
in place.
These support measures will help connect schools, hospitals and
businesses to gigabit networks and provide hardware, such as tablets to
millions of schoolchildren.
Read more about how Vodafone is helping revolutionise
healthcare on page 42
Similarly, the European Union has committed to be carbon-neutral by
2050. Mobile network operators across Europe will be able to benefit
from these funds as they seek to limit their impact on the climate, and
help other customers from across the private and public sectors reduce
their own energy use and carbon emissions.
Small and medium-sized enterprises (‘SMEs’) in Europe can often lag
behind in terms of digital adoption. However, under various government-
led support mechanisms, SMEs will be eligible for vouchers, grants and
loans to transition to eCommerce, upskill employees, and transition to
cloud-based solutions whilst ensuring they are secure as they do so.
SMEs will look to trusted and experienced network operators which can
offer a full suite of solutions, whilst also help them navigate technical and
regulatory processes. Finally, to ensure the benefits of these projects are
spread equitably, funding is also being allocated towards rural inclusion
to subsidise the building of network infrastructure where it is currently
uneconomical for operators to do so.
Read more about how Vodafone is ensuring society and
communities have access to connectivity wherever they are
on pages 34-36
Digital payments
Businesses in Europe continue to expand and migrate sales channels
from physical premises to online channels such as websites and mobile
applications. As a result, businesses increasingly transact through
mobile-enabled payment services which remove the need for legacy
fixed sales terminals. Consequently, businesses demand reliable and
secure mobile connectivity. Consumers are also increasingly transitioning
away from using cash, to digital payment methods conducted directly via
mobile phones or smartwatches, further increasing the importance of
mobile networks.
In Africa, digital payments are primarily conducted via mobile phones
through payment networks owned and operated by network operators,
and the value of transactions processed per day is expected to reach over
$3 billion globally by 2022, compared to $2.1 billion in 20202. Consumers
are also moving beyond peer-to-peer transactions as rising smartphone
penetration drives the adoption of mobile payment applications. Network
operators are using these applications to sell additional financial services
focused products, ranging from advances on mobile airtime and device
insurance to more complex offerings such as life insurance. This plays a
critical role in improving financial inclusion for millions of people across
Africa where the traditional banking sector has not been able to reach.
Read more about how Vodafone is building platforms
on pages 18 and 36
Businesses are also increasingly reliant on operator-owned payment
infrastructure for consumer-to-business payments, but also for large
business-to-business transfers. These payment networks drive scale
benefits for the largest operators by allowing customers to save on
transaction fees whilst also driving both business and consumer
customers to seek reliable and secure networks.
Note:
1. GSMA Intelligence, The Mobile Economy 2020.
Notes:
1. Vodafone, Business Investor Briefing, March 2021.
2. GSMA Intelligence, State of the Industry Report on Mobile Money 2021.
12
Vodafone Group Plc
Annual Report 2021
Stakeholder engagement
Strategic report
Governance
Financials
Other information
Engaging regularly with our stakeholders
is fundamental to the way we do business
Regular engagement ensures we operate in a balanced
and responsible way, both in the short and longer term.
We are committed to maintaining good communications and building
positive relationships with all of our stakeholders, as we see this as essential
to strengthening our sustainable business. We have summarised our
interactions with key stakeholders during the year below.
Vodafone is required to provide information on how the Directors have
performed their duty under section 172 of the Companies Act 2006 to
promote the success of Vodafone, including how those matters and the
interests of Vodafone’s key stakeholders have been taken into account
by the Directors. The engagement mechanisms directly involving the
Directors are indicated below with a B symbol.
Read more about how the Board considered stakeholder interests
on pages 71-72
Our customers
We are focused on deepening our engagement with our customers to
develop long-term valuable and sustainable relationships. In total we have
hundreds of millions of customers across Europe and Africa, ranging from
individual consumers to large multinational corporates.
How did we engage with them?
– Digital channels (MyVodafone app, TOBi chatbots, social media
interaction and the Vodafone website)
– Call centres
– Branded retail stores
What were the key topics raised?
– Better value offerings
– Faster data networks and wider coverage
– Making it simple and quick to deal with us
– Managing the challenge of data-usage transparency
– Converged solutions for consumer and business customers
– Prompt feedback/resolution on service-related issues
How did the Board engage?
– The Board participated in a dedicated review of the Group’s Net
Promoter Scores, facilitated by Executive Committee members
How did we respond?
– Launched speed-tiered worry-free unlimited data offers in 10 markets
– Launched 5G in 12 markets and expanded our 4G coverage
– Leveraged our digital channels to support easy access for all of our
customers during the COVID-19 crisis
– Upgraded MyVodafone app – new functionality and easier navigation
– Scaled up TOBi (our Artificial Intelligence ‘AI’ agent ) to include voice as
well as chat capabilities
– Implemented the highest safety standards possible in our stores in
order to keep our customers and colleagues safe
– Introduced integrated packages offering internet, TV and mobile
– Extended our range of consumer IoT products
– Facilitated working from home and increased data allowances during
the COVID-19 crisis
Our people
Our people are critical to the successful delivery of our strategy. It is
essential that they are engaged and embrace our purpose and values.
Throughout the year we focused on a number of areas to ensure that
our people are highly motivated and we remained focused on wellbeing.
How did we engage with them?
– Regular meetings with managers
– B European Employee Consultative Committee
– B National Consultative Committee (South Africa)
– B Internal website & live webinars
– B Executive Committee discussions
– B Newsletters and electronic communication
– B Employee Speak Up channel
– B Global Pulse and Spirit Beat surveys
What were the key topics raised?
– Opportunities for personal and career development
– Communication and knowledge sharing across the Group
– Enhancing leadership coaching capacity
– Deepening digital skills
– Impacts of COVID-19 and Brexit
– Global Pulse & Spirit Beat survey actions
How did the Board engage?
– Valerie Gooding, in her capacity as Workforce Engagement Lead,
updated the Board on employee voice engagements, and the Chief
Human Resources Officer provided updates on the Vodafone Spirit
How did we respond?
– Training courses including developing new skills such as digital
marketing, e-commerce, coding, big data and analytics
– Internal communication to staff on the impacts of COVID-19 and Brexit
– Introduced new digital tools and apps to improve our people
experience as the majority of our employees (95%) continued to work
effectively and safely from home during the year
– Provided a range of physical and mental wellbeing services
– Survey actions and monitoring progress at Executive Committee and
Board level
– Launched a leadership programme called the Senior Leadership Team
(‘SLT’) Spirit Accelerator for 277 of our senior leaders
Our suppliers
Our business is helped by more than 10,500 suppliers who partner with
us. These range from start-ups and small businesses to large multinational
companies. Our suppliers provide us with the products and services we
need to deliver our strategy and connect our customers.
How did we engage with them?
– Virtual safety forums, events, conferences and site visits
– Tenders and requests for audits
– Supplier audits and assessments
What were the key topics raised?
– Improving health and safety standards
– Promoting diversity and inclusion
– Partnering on environmental solutions
– Timely payment and fair terms
– Supplier/product innovation
12
Vodafone Group Plc
Annual Report 2021
Stakeholder engagement
Engaging regularly with our stakeholders
is fundamental to the way we do business
Regular engagement ensures we operate in a balanced
and responsible way, both in the short and longer term.
Our people
We are committed to maintaining good communications and building
positive relationships with all of our stakeholders, as we see this as essential
to strengthening our sustainable business. We have summarised our
interactions with key stakeholders during the year below.
Vodafone is required to provide information on how the Directors have
performed their duty under section 172 of the Companies Act 2006 to
promote the success of Vodafone, including how those matters and the
interests of Vodafone’s key stakeholders have been taken into account
by the Directors. The engagement mechanisms directly involving the
Directors are indicated below with a B symbol.
Read more about how the Board considered stakeholder interests
on pages 71-72
Our customers
We are focused on deepening our engagement with our customers to
develop long-term valuable and sustainable relationships. In total we have
hundreds of millions of customers across Europe and Africa, ranging from
individual consumers to large multinational corporates.
How did we engage with them?
– Digital channels (MyVodafone app, TOBi chatbots, social media
interaction and the Vodafone website)
– Call centres
– Branded retail stores
What were the key topics raised?
– Better value offerings
– Faster data networks and wider coverage
– Making it simple and quick to deal with us
– Managing the challenge of data-usage transparency
– Converged solutions for consumer and business customers
– Prompt feedback/resolution on service-related issues
How did the Board engage?
– The Board participated in a dedicated review of the Group’s Net
Promoter Scores, facilitated by Executive Committee members
How did we respond?
– Launched speed-tiered worry-free unlimited data offers in 10 markets
– Launched 5G in 12 markets and expanded our 4G coverage
– Leveraged our digital channels to support easy access for all of our
customers during the COVID-19 crisis
– Upgraded MyVodafone app – new functionality and easier navigation
– Scaled up TOBi (our Artificial Intelligence ‘AI’ agent ) to include voice as
Our people are critical to the successful delivery of our strategy. It is
essential that they are engaged and embrace our purpose and values.
Throughout the year we focused on a number of areas to ensure that
our people are highly motivated and we remained focused on wellbeing.
How did we engage with them?
– Regular meetings with managers
– B European Employee Consultative Committee
– B National Consultative Committee (South Africa)
– B Internal website & live webinars
– B Executive Committee discussions
– B Newsletters and electronic communication
– B Employee Speak Up channel
– B Global Pulse and Spirit Beat surveys
What were the key topics raised?
– Opportunities for personal and career development
– Communication and knowledge sharing across the Group
– Enhancing leadership coaching capacity
– Deepening digital skills
– Impacts of COVID-19 and Brexit
– Global Pulse & Spirit Beat survey actions
How did the Board engage?
– Valerie Gooding, in her capacity as Workforce Engagement Lead,
updated the Board on employee voice engagements, and the Chief
Human Resources Officer provided updates on the Vodafone Spirit
How did we respond?
– Training courses including developing new skills such as digital
marketing, e-commerce, coding, big data and analytics
– Internal communication to staff on the impacts of COVID-19 and Brexit
– Introduced new digital tools and apps to improve our people
experience as the majority of our employees (95%) continued to work
effectively and safely from home during the year
– Provided a range of physical and mental wellbeing services
– Survey actions and monitoring progress at Executive Committee and
Board level
– Launched a leadership programme called the Senior Leadership Team
(‘SLT’) Spirit Accelerator for 277 of our senior leaders
Our suppliers
Our business is helped by more than 10,500 suppliers who partner with
us. These range from start-ups and small businesses to large multinational
companies. Our suppliers provide us with the products and services we
need to deliver our strategy and connect our customers.
well as chat capabilities
How did we engage with them?
– Implemented the highest safety standards possible in our stores in
– Virtual safety forums, events, conferences and site visits
order to keep our customers and colleagues safe
– Introduced integrated packages offering internet, TV and mobile
– Extended our range of consumer IoT products
– Tenders and requests for audits
– Supplier audits and assessments
What were the key topics raised?
– Facilitated working from home and increased data allowances during
– Improving health and safety standards
the COVID-19 crisis
– Promoting diversity and inclusion
– Partnering on environmental solutions
– Timely payment and fair terms
– Supplier/product innovation
Strategic report
Governance
Financials
Other information
13
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
How did the Board engage?
– The Board received updates on the role of our key suppliers and
geo-political factors impacting our global supply chains
How did we respond?
– Held safety forums virtually every quarter
– Hosted a technology event to encourage our suppliers to explore
the latest technologies
– Provided faster payment terms to support over 1,200 smaller
businesses during the COVID-19 crisis
Our local communities and non-
governmental organisations (‘NGOs’)
We believe that the long-term success of our business is closely tied to the
success of the communities in which we operate. We interact with local
communities and NGOs seeking to be a force for good wherever we operate.
How did we engage with them?
– Through our products and services
– Community interaction on projects relating to education, health,
agriculture and inclusive finance
– Participation in key international forums and working groups
– Vodafone Foundation/community partnerships
– Worked with different NGOs around the world
What were the key topics raised?
– Access to connectivity and digital services, and closing the digital divide
– Maintaining connectivity services during the COVID-19 pandemic and
providing data analytics support
– Free-to-use social media, education and job sites
– Investment in infrastructure
– Delivery of global and national development goals, including
UN Sustainable Development Goals
How did the Board engage?
– A comprehensive update on Vodafone’s purpose and Vodafone
Foundation was presented to the Board, including progress made
against KPIs
How did we respond?
– Responded to COVID-19 with dedicated plans in Europe and Africa,
providing donations and services in-kind, and data analytics support to
World Bank, UNICEF & IMF
– Launched ConnectU in South Africa – a “free-to-use” portal providing
essential services to customers
– Ensured that our technology continues to be compliant with national
regulations and international guidelines
– We continued work as the largest corporate partner for Connected
Education for United Nations High Commissioner for Refugees
Governments and regulators
Our relationship with governments and regulators is important to ensure
policies are developed in the interests of our customers and the industry,
while also enabling them to better understand the positive impact we can
have on the environment and communities we operate in.
How did we engage with them?
– B Participation and attendance at company and industry
meetings with government and regulators, public forums and
parliamentary processes
– B Meetings with ministers, elected representatives, policy officials
and regulators
– Hosting workshops to improve sector understanding
What were the key topics raised?
– Security and supply chain resilience
– The Digital Economy and Society
– Responses to COVID-19
– The European Green Deal
– Data protection and privacy
– Regulatory environment and compliance
How did the Board engage?
– Management updated the Board on how Vodafone has worked
with governments and regulators during the COVID-19 pandemic
– Management provided regular updates on legal and regulatory matters
How did we respond?
– Held workshops with European and US governments as well as the
European Commission
– Communications on the impact of electromagnetic fields (‘EMF’)
– Engaged on network design and deployment (e.g. Open RAN)
– Engaged on issues such as the allocation of spectrum and the
protection of consumers
– Discussion on an environment that facilitates investment in technology
– Engaged on the Green and Digital Transformation of the EU
– Engaged on digitisation of Industries and SMEs
Our investors
Our investors include individual and institutional shareholders as well
as debt investors. We maintain an active dialogue with our investors
through our extensive investor relations programme.
How did we engage with them?
– B Personal meetings, virtual roadshows, conferences
– B Annual & interim reports and presentations
– Capital markets days
– Stock Exchange News Service (‘SENS’) announcements
– Re-platformed Investor relations website to enhance digital
communication capabilities
– B Annual General Meeting (‘AGM’)
– B Investor perception study and regular feedback survey
What were the key topics raised?
– Strategy to deliver sustained financial growth
– Impact of COVID-19
– Allocation of capital
– Corporate governance practices
– ESG strategy and targets
– Dividend policy
– Deleveraging strategy
How did the Board engage?
– Due to restrictions on large gatherings, the 2020 AGM was closed.
However, shareholders were able to submit questions to the Board
– Investor roadshows are attended by Directors for direct Q&A sessions
How did we respond?
– We conducted over 1,000 investor interactions through meetings with
major institutional shareholders, debt investors, individual shareholder
groups and financial analysts, and attended several conferences
– Meetings were attended by the appropriate mix of Directors and senior
management, including our Chairman, Chief Executive, Chief Financial
Officer, and Executive Committee members
– Capital markets day as part of the IPO of Vantage Towers and a virtual
investor briefing for Vodafone Business
14
Vodafone Group Plc
Annual Report 2021
Strategic review
Strategic report
Governance
Financials
Other information
A new generation connectivity
and digital services provider
In November 2018, we set out our ambition to reshape Vodafone and
establish a foundation from which the Group can grow in the converged
connectivity markets in Europe, and mobile data and payments in Africa.
During the first phase of our transformation we have executed at pace to
deliver on our priorities, and in this strategic review we highlight that:
We have delivered the first phase of
our strategy to reshape Vodafone
Read more
on pages 14-15
The next phase of our strategy
is to become a new generation
connectivity and digital services
provider for Europe and Africa
Read more
on pages 18-20
We are committed to
improving returns
Read more
on page 20
Strategic progress summary
We have delivered the first phase
of our strategy to reshape Vodafone
We have now substantially delivered the first phase
of our strategic ambition to reshape Vodafone into a
stronger connectivity provider.
This has been delivered through four key strategic priorities: (i) deepening
customer engagement; (ii) accelerating our transformation to a digital first
organisation; (iii) improving the utilisation of our assets; and (iv) optimising
our portfolio.
During FY21, we have continued to execute at pace across all four
priorities. Highlights of activity during the period include:
– mobile contract customer loyalty improved by 0.9 percentage points
year-on-year;
– we have added 1.4 million NGN broadband customers and 44 million
homes are now passed with our 1 gigabit capable fixed-line network
in Europe;
– we have launched 5G in 240 cities across 10 of our European markets;
– in response to the trading conditions related to the COVID-19
pandemic, we accelerated a series of cost saving activities, resulting
in a €0.5 billion net reduction in operating expenditure in Europe
and Common Functions;
– we have secured mobile wholesale agreements with PostePay in Italy
and Asda Mobile in the UK; and
– we completed the IPO of Vantage Towers March 2021, with a market
capitalisation of €13.2 billion as at 17 May 2021.
The table below summarises the progress against our strategic priorities
in FY21.
Units
FY21
FY20
Deepening customer engagement
Europe mobile contract customers1
Europe broadband customers1
Europe on-net gigabit capable connections1
Europe Consumer converged customers1
Europe mobile contract customer churn
Africa data users3
M-Pesa transaction volume3
Business fixed-line service revenue growth4
IoT SIM connections
Accelerating digital transformation
Europe net opex savings5
Europe digital channel sales mix6
Europe frequency of customer contacts p.a
Europe MyVodafone app penetration
Improving asset utilisation
Average mobile data usage per customer in Europe
Europe on-net NGN broadband penetration1
Pre-tax return on capital employed (controlled)7
Post-tax return on capital employed (controlled and associates/joint ventures)7
million
million
million
million
%
million
billion
%
million
€bn
%
#
%
GB/month
%
%
%
65.4
25.6
43.7
7.9
13.7
84.9
15.2
3.0
123.3
0.5
26
1.4
63
7.2
30
5.5
3.9
64.4
25.0
31.9
7.2
14.62
82.6
12.2
3.3
102.9
0.4
21
1.4
65
5.7
30
6.3
3.9
Notes:
1. Including VodafoneZiggo.
2. Excluding the impact of inactive data-only SIM losses in Italy during Q3 and Q4 FY20.
3. Africa including Ghana, Egypt and Safaricom.
4. Organic growth.
5. Europe & Common Function operating costs.
6. Based on Germany, Italy, UK and Spain.
7. We calculate two ROCE measures: i) Pre-tax ROCE for controlled operations only, and ii) Post-tax
ROCE which also includes our share of adjusted results in equity accounted associates and joint
ventures. See pages 223-224 for more information.
14
Vodafone Group Plc
Annual Report 2021
Strategic review
A new generation connectivity
and digital services provider
In November 2018, we set out our ambition to reshape Vodafone and
establish a foundation from which the Group can grow in the converged
connectivity markets in Europe, and mobile data and payments in Africa.
During the first phase of our transformation we have executed at pace to
deliver on our priorities, and in this strategic review we highlight that:
We have delivered the first phase of
our strategy to reshape Vodafone
Read more
on pages 14-15
The next phase of our strategy
is to become a new generation
connectivity and digital services
provider for Europe and Africa
Strategic progress summary
in FY21.
Read more
on pages 18-20
We are committed to
improving returns
Read more
on page 20
Deepening customer engagement
Europe mobile contract customers1
Europe broadband customers1
Europe on-net gigabit capable connections1
Europe Consumer converged customers1
Europe mobile contract customer churn
Africa data users3
M-Pesa transaction volume3
Business fixed-line service revenue growth4
IoT SIM connections
Accelerating digital transformation
Europe net opex savings5
Europe digital channel sales mix6
Europe frequency of customer contacts p.a
Europe MyVodafone app penetration
Improving asset utilisation
We have delivered the first phase
of our strategy to reshape Vodafone
We have now substantially delivered the first phase
of our strategic ambition to reshape Vodafone into a
stronger connectivity provider.
This has been delivered through four key strategic priorities: (i) deepening
customer engagement; (ii) accelerating our transformation to a digital first
organisation; (iii) improving the utilisation of our assets; and (iv) optimising
our portfolio.
During FY21, we have continued to execute at pace across all four
priorities. Highlights of activity during the period include:
– mobile contract customer loyalty improved by 0.9 percentage points
year-on-year;
in Europe;
– we have added 1.4 million NGN broadband customers and 44 million
homes are now passed with our 1 gigabit capable fixed-line network
– we have launched 5G in 240 cities across 10 of our European markets;
– in response to the trading conditions related to the COVID-19
pandemic, we accelerated a series of cost saving activities, resulting
in a €0.5 billion net reduction in operating expenditure in Europe
and Common Functions;
– we have secured mobile wholesale agreements with PostePay in Italy
and Asda Mobile in the UK; and
– we completed the IPO of Vantage Towers March 2021, with a market
capitalisation of €13.2 billion as at 17 May 2021.
The table below summarises the progress against our strategic priorities
Units
FY21
FY20
123.3
102.9
million
million
million
million
million
billion
%
%
million
€bn
%
#
%
%
%
%
GB/month
65.4
25.6
43.7
7.9
13.7
84.9
15.2
3.0
0.5
26
1.4
63
7.2
30
5.5
3.9
64.4
25.0
31.9
7.2
14.62
82.6
12.2
3.3
0.4
21
1.4
65
5.7
30
6.3
3.9
Average mobile data usage per customer in Europe
Europe on-net NGN broadband penetration1
Pre-tax return on capital employed (controlled)7
Post-tax return on capital employed (controlled and associates/joint ventures)7
Notes:
1. Including VodafoneZiggo.
5. Europe & Common Function operating costs.
6. Based on Germany, Italy, UK and Spain.
2. Excluding the impact of inactive data-only SIM losses in Italy during Q3 and Q4 FY20.
3. Africa including Ghana, Egypt and Safaricom.
4. Organic growth.
7. We calculate two ROCE measures: i) Pre-tax ROCE for controlled operations only, and ii) Post-tax
ROCE which also includes our share of adjusted results in equity accounted associates and joint
ventures. See pages 223-224 for more information.
Strategic report
Governance
Financials
Other information
15
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Deepening customer engagement
Optimising the portfolio
In order to achieve our strategic objectives to focus on converged
connectivity markets in Europe, and mobile data and payments in
Africa, we began a large programme to rationalise our portfolio in 2019.
Our portfolio optimisation programme has had three overriding objectives
as summarised below:
Objective
Transactions
1. Focus on Europe
& Africa
5 disposals including New Zealand and Malta
4 acquisitions, including purchase of KDG
shares from minority shareholders
3 mergers in Australia and India
(Vodafone Idea & Indus Towers)
3 acquisitions in Germany, Greece and
Eastern Europe
2. Achieve
convergence
with local scale
3. Enable structural
shift in asset utilisation
2 tower mergers in Italy and Greece, as well
as subsequent sale of INWIT stake
IPO of Vantage Towers
Scan or click to watch our Chief Executive summarise
our performance this year and introduce the next phase
of our strategy:
investors.vodafone.com/videos-strategy
Our actions have delivered a more consistent commercial performance,
and our service revenue trends have remained resilient, despite the direct
impacts of the COVID-19 pandemic on revenue from roaming and visitors.
In mobile, we have launched speed-tiered, unlimited data plans in
10 markets. This has enabled us to stabilise and grow our higher value
customer base and increase average revenue per user (‘ARPU’). We have
also launched and embedded ‘second’ brands across our markets and
now have over 5 million active users across our second brands in
Germany, Italy, the UK and Spain.
We have maintained strong commercial momentum in our fixed business
and over the past three years we have added 4.3 million NGN broadband
customers in Europe. We also have converged customer plans available
in all major markets. By deepening the relationship we have with our
customers we have been able to drive a significant improvement in
customer loyalty, with mobile contract churn in Europe reducing by
2.3 percentage points over the last three years.
In Africa, demand for mobile data remains significant given the lack of
fixed line infrastructure. There is also a substantial opportunity to grow
M-Pesa (our mobile payments platform) and expand it into new financial
and digital services. During the last three years, we have continued to
see significant demand for mobile data and monthly average data usage
in our markets outside Europe has increased to 4.6 GB (FY18: 2.2 GB).
The total number of data users in Africa has grown from 72.4 million to
84.9 million. The number of M-Pesa and other mobile money customers
has continued to grow strongly, with a total of 48.3 million active users
now registered.
Accelerating digital transformation
We have now exceeded our original three-year target of at least €1.2 billion
of net savings from operating expenses in Europe and Common Functions,
with cumulative savings of €1.3 billion, equivalent to a c.15% net reduction.
This focus on efficiency, delivered through standardisation, integration
and digitalisation of our operations, has enabled our adjusted EBITDA
margin to be resilient during the pandemic and remain broadly stable at
32.8%. In the last three years, we have introduced 5,500 role efficiencies
in our shared service centres (‘_VOIS’) and approximately 30% of Group
employees now work in our shared operations. We are continuing to
transform the business and evolve the Group digital toolset – including
our AI assistant, TOBi, and Robotic Process Automation (‘RPA’) – in order
to further our productivity leadership. We have also increased our digital
sales, now 26% of total sales across Germany, Italy, the UK and Spain, and
optimised our retail footprint.
Improving asset utilisation
Three years ago, we began a series of activities to improve our asset
utilisation to support a recovery in return on capital employed (‘ROCE’).
We have reached network sharing agreements with leading mobile
network operators in most of our European markets, established
Vantage Towers as a separate business to consolidate the ownership
and operations of our passive mobile network infrastructure, and signed
significant wholesale agreements in both our fixed and mobile networks.
Despite the strong delivery of our strategic priorities at pace, our post-tax
return ROCE of 3.9% remains below our cost of capital. In a subsequent
section, we have set out our growth model and capital allocation
framework and explained how we will drive shareholder returns through
efficiency and growth.
16
Vodafone Group Plc
Annual Report 2021
Business model
Strategic report
Governance
Financials
Other information
Creating a new generation connectivity
& digital services provider
The next phase of our strategy
Investing in our key differentiators
We have completed the first phase of our strategy to
reshape Vodafone. We are now well positioned for the
next phase in our multi-year transformation.
Our leading scale and assets provide us with a
significant advantage.
The next phase of our strategy focuses on three customer commitments
and three enabling strategies, all of which work towards growing our
revenues, expanding our margins, improving our cash conversion, and
ensuring capital is allocated effectively.
These areas of focus, combined with our existing strategic execution,
will create sustainable value for our shareholders and returns above our
weighted average cost of capital.
Our customer commitments
Best connectivity products & services
Grow revenue through providing the best core connectivity
products and services in each of our markets for both
consumers and businesses.
Leading innovation in digital services
Leveraging our unique platforms and partnering with leading
technology firms to provide customers with a ’best on
Vodafone’ user experience.
Outstanding digital experiences
Using our leading digital architecture to provide a seamless
customer experience across all channels – app, online, retail
and physical delivery at home.
Our enabling strategies
Simplified & most efficient operator
Delivering further efficiencies through digital transformation,
standardisation of products and procedures, and automation
of processes at scale.
Social contract shaping digital society
Influencing policy and regulation to shape a more healthy
industry structure, and build a resilient, inclusive and
sustainable digital society.
Leading gigabit networks
Maintaining our leading gigabit networks as we provide
our customers with the best connectivity products and
‘best on Vodafone’ user experience.
Read more
on pages 18-20
Scan or click to watch our Chief Executive summarise
our performance this year and introduce the next phase
of our strategy:
investors.vodafone.com/videos-strategy
Leading scale in core connectivity
In Europe1, we are the leading converged connectivity provider with
7.9 million converged customers, 113 million mobile connections,
142 million marketable NGN broadband homes, cover 98% of the
population in the markets we operate in with 4G, and have launched
5G in 240 cities across 10 markets.
In Africa2, we are the leading provider of mobile data and mobile
payment services. We have 178 million customers and are the leading
connectivity provider in seven out of eight of the markets we operate in
covering 62% of the population where we operate with 4G services.
Differentiated platforms
We have developed a range of unique and differentiated platforms that
leverage on our connectivity base, and provide customers with a ‘best on
Vodafone’ experience. These platforms also make us a ‘strategic partner of
choice’ for large global technology companies, enabling them to distribute
their content and services across multiple markets via a single platform.
We have:
– one of Europe’s leading TV platforms with over 22 million users1
– a market leading IoT platform with over 123 million connections
– M-Pesa – Africa’s leading mobile payment platform processed over
15 billion transactions during the year, and has 48 million active users
– MyVodafone app – digitally serving customers
– scaled shared service centres – centralising and automating our processes
Our people & culture
Our employees’ passion, commitment and expertise are key to delivering
our strategy and purpose. It is important that we continue to invest in
the right talent and skills for the future in order to help accelerate our
digital transformation.
Read more about our people strategy
on pages 21-22
Governance & risk management
We have strong governance and risk management frameworks that ensure
that we operate responsibly and take a consistent and holistic approach to
the identification, management and oversight of risks.
Our brand
We have one of the world’s most recognised brands. Our purpose is also
the basis of our new brand positioning: ‘Together we can’. It conveys our
belief that technology and innovation can help millions of people and their
communities to stay connected. We feel positively about the opportunity
technology gives us all when combined with the right human spirit.
Notes:
1. Including VodafoneZiggo
2. Africa including Egypt, Ghana and Safaricom
Strategic report
Governance
Financials
Other information
17
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
The next phase of our strategy
Investing in our key differentiators
Our financial strengths
Our medium-term ambitions
We have completed the first phase of our strategy to
Our leading scale and assets provide us with a
reshape Vodafone. We are now well positioned for the
significant advantage.
next phase in our multi-year transformation.
We have a resilient operating model, a robust financial
position, and a disciplined approach to capital allocation.
Disciplined capital allocation to drive
shareholder returns.
Value model
Medium-term ambition
Consistent
revenue growth
Growth in both Europe & Africa
+
+
+
=
Ongoing
margin
expansion
Mid-single digit adjusted
EBITDAaL1 growth
Good cash
conversion
Mid-single digit adjusted
FCF2 growth
Disciplined
capital
allocation
Sustainable
value
creation
Net debt to adjusted EBITDA:
2.5-3.0x
ROCE3 greater than WACC
A minimum dividend of 9.00
eurocents per share per annum
Notes:
1. Adjusted EBITDAaL is equivalent to FY21 definition and calculation of adjusted EBITDA.
2. Adjusted free cash flow is free cash flow before spectrum, restructuring, integration costs and
Vantage Towers growth capital additions. Growth capital additions is on a cash basis and includes
expenditure on new sites, ground lease optimisation and other adjacency opportunities as
defined by Vantage Towers.
3. Pre-tax return on capital employed (controlled).
Our sustainable business strategy
Our purpose is to connect for a better future. We believe that Vodafone
has a significant role to play in contributing to the societies in which
we operate and we want to enable an inclusive and sustainable digital
society. Our sustainable business strategy helps the delivery of our targets
across three purpose pillars: Inclusion for All, Planet and Digital Society.
We have clear and robust short, medium and long-term targets across
all three pillars.
Read more
on pages 32-52
Resilient and growing revenue streams
We generate revenue primarily through monthly recurring contracts or
subscriptions – providing us with robust and resilient revenue streams.
We are also growing quickly in new growth areas such as IoT, cloud &
security, and next-generation fixed-line services.
Significant opportunities to lower our cost base
By being Digital First, radically simpler, and leveraging our Group scale
we are able to structurally transform our cost base. Over the past three
years we have delivered €1.3 billion of net opex savings in Europe, and
are targeting a 20% reduction in our European cost base over five years
to FY23.
Robust balance sheet
Our average tenure of debt is 12 years (excluding debt issued by
Vantage Towers), we have no significant short-term refinancing needs,
and we have a strong liquidity position with cash and short term Investments
of €9.8 billion and unused facilities of €7.4 billion.
Read more
on pages 23-31
Disciplined approach to capital
allocation
Our capital allocation framework
Enabling us to balance our three capital allocation priorities:
Invest in critical infrastructure
1 €7.9 billion
cash capital additions in FY21
Maintain a robust balance sheet
2 2.8x
net debt/adjusted EBITDA
Shareholder distribution
3 9.00 eurocents
dividends per share in FY21
Read more on our capital allocation
framework on page 20
Scan or click to watch our Chief Financial Officer
summarise our financial performance in FY21:
investors.vodafone.com/videos-cfo
16
Vodafone Group Plc
Annual Report 2021
Business model
Creating a new generation connectivity
& digital services provider
The next phase of our strategy focuses on three customer commitments
and three enabling strategies, all of which work towards growing our
revenues, expanding our margins, improving our cash conversion, and
ensuring capital is allocated effectively.
These areas of focus, combined with our existing strategic execution,
will create sustainable value for our shareholders and returns above our
weighted average cost of capital.
Our customer commitments
Best connectivity products & services
Grow revenue through providing the best core connectivity
products and services in each of our markets for both
consumers and businesses.
Leading innovation in digital services
Leveraging our unique platforms and partnering with leading
technology firms to provide customers with a ’best on
We have:
Vodafone’ user experience.
Outstanding digital experiences
Using our leading digital architecture to provide a seamless
customer experience across all channels – app, online, retail
and physical delivery at home.
Our enabling strategies
Our people & culture
Simplified & most efficient operator
Delivering further efficiencies through digital transformation,
standardisation of products and procedures, and automation
of processes at scale.
Social contract shaping digital society
Influencing policy and regulation to shape a more healthy
industry structure, and build a resilient, inclusive and
sustainable digital society.
Leading gigabit networks
Maintaining our leading gigabit networks as we provide
our customers with the best connectivity products and
‘best on Vodafone’ user experience.
Our brand
Read more
on pages 18-20
Scan or click to watch our Chief Executive summarise
our performance this year and introduce the next phase
Notes:
of our strategy:
investors.vodafone.com/videos-strategy
1. Including VodafoneZiggo
2. Africa including Egypt, Ghana and Safaricom
Leading scale in core connectivity
In Europe1, we are the leading converged connectivity provider with
7.9 million converged customers, 113 million mobile connections,
142 million marketable NGN broadband homes, cover 98% of the
population in the markets we operate in with 4G, and have launched
5G in 240 cities across 10 markets.
In Africa2, we are the leading provider of mobile data and mobile
payment services. We have 178 million customers and are the leading
connectivity provider in seven out of eight of the markets we operate in
covering 62% of the population where we operate with 4G services.
Differentiated platforms
We have developed a range of unique and differentiated platforms that
leverage on our connectivity base, and provide customers with a ‘best on
Vodafone’ experience. These platforms also make us a ‘strategic partner of
choice’ for large global technology companies, enabling them to distribute
their content and services across multiple markets via a single platform.
– one of Europe’s leading TV platforms with over 22 million users1
– a market leading IoT platform with over 123 million connections
– M-Pesa – Africa’s leading mobile payment platform processed over
15 billion transactions during the year, and has 48 million active users
– MyVodafone app – digitally serving customers
– scaled shared service centres – centralising and automating our processes
Our employees’ passion, commitment and expertise are key to delivering
our strategy and purpose. It is important that we continue to invest in
the right talent and skills for the future in order to help accelerate our
digital transformation.
Read more about our people strategy
on pages 21-22
Governance & risk management
We have strong governance and risk management frameworks that ensure
that we operate responsibly and take a consistent and holistic approach to
the identification, management and oversight of risks.
We have one of the world’s most recognised brands. Our purpose is also
the basis of our new brand positioning: ‘Together we can’. It conveys our
belief that technology and innovation can help millions of people and their
communities to stay connected. We feel positively about the opportunity
technology gives us all when combined with the right human spirit.
18
Vodafone Group Plc
Annual Report 2021
Strategic review (continued)
Strategic report
Governance
Financials
Other information
The next phase in our strategy – a new
generation connectivity and digital
services provider
Following the significant actions we have taken to
reshape the Group, we are focused on growing our
converged connectivity markets in Europe, and mobile
data and payments in Africa. The next phase of our
strategy focuses on three customer commitments
and three enabling strategies, all of which work together
towards realising our vision to become a new generation
connectivity and digital services provider for Europe
and Africa, enabling an inclusive and sustainable
digital society.
Best connectivity products & services
Consumer Europe
In Europe, we are a leading converged connectivity provider with 7.9 million
converged customers, 113 million mobile connections, 142 million
marketable NGN broadband homes, we cover 98% of the population in
the markets we operate in with 4G, and we have launched 5G in 240 cities
in 10 markets in Europe. We have achieved this leading position by focusing
on our core fixed and mobile connectivity. We are enhancing our products
through capacity and speed upgrades, unlimited mobile plans, a distinct
tiered branding hierarchy and convergent product bundles.
Consumer Africa
In Africa, we are the leading provider of mobile data and mobile
payment services. We have 178 million mobile customers in 8 markets
which represent 40% of Africa’s total Gross Domestic Product. We are
the leading mobile connectivity provider by revenue market share
in 7 markets. Excluding Kenya, we cover 62% of the population in
the markets in which we operate with 4G services. Our M-Pesa financial
services platform processed over 15 billion transactions during the year.
Click to read more about our operations in Africa:
vodacom.com
Vodafone Business
In March 2021, we held a virtual briefing on Vodafone Business
for investors and analysts. This briefing outlined the following four
key messages.
1. We operate in attractive markets
We serve over 6 million private and public sector customers of all
sizes, across Europe and Africa, in addressable markets totalling over
€100 billion. With more employees seeking flexible working, gigabit
connectivity with low latency and both public and private organisations
driving digitalisation, we have a compelling structural opportunity, with
expected addressable market growth of c.8% per annum.
2. We have unique scale & capabilities
We have the scale, expertise and technology to successfully compete
in these attractive markets. We are expanding our portfolio of products
and services to enhance our provision of core connectivity services,
with in-house innovation in IoT and partnerships with leading
technology companies to offer cloud, security and unified
communications services.
3. We have strong operating momentum
Over the last three years, we have delivered a step-change in our
commercial performance, leading to service revenue growth (excluding
roaming and visitor revenue) of 1.8% in FY21, with total service revenue
now over €10 billion. This has been driven by ongoing improvements
in our commercial momentum, strong support to our customers
throughout the pandemic, clear understanding of our economic
model and disciplined prioritisation of high marginal return on
capital opportunities.
4. We are on a clear growth pathway
Our strategy is grounded in our purpose to connect for a better future
and is focused on three core elements. Firstly, to be the trusted partner
for small and medium-sized enterprises. Secondly, to be the gigabit
connectivity provider of choice to large enterprises. Thirdly, to be the
leading end-to-end provider of IoT solutions for every organisation.
Scan or click to watch our virtual investor briefing at:
investors.vodafone.com/vbbriefing
Leading innovation in digital services
Alongside optimising our core connectivity services, we are building
platforms that will allow ‘best on Vodafone’ experiences. Our primary
areas of focus are premium TV in Europe; financial services in Africa;
Vodafone Business specific digital platforms across the Group; and the
IoT for both consumers and businesses.
Premium TV
Our consumer TV proposition now has over 22 million subscribers in
11 markets, making Vodafone the 2nd largest TV provider in Europe.
We partner with 18 leading global content producers and distributors
such as Disney, ViacomCBS, WarnerMedia, Netflix, Amazon and Comcast.
Our premium TV offering is delivered through a seamlessly integrated,
multi-device platform. This enables consumers to watch whatever they
want, whenever they want on any connected device.
Financial services
We remain focused on embedding Vodacom as a leading pan-African
technology company and M-Pesa offers a unique opportunity to extend
our reach further into financial services through our investments in
financial, digital and lifestyle services. This provides us with opportunities
to enhance our relationship with the 178 million mobile customers we
serve across our African footprint. In particular, we note our partnership
with Alipay and the imminent launch of our single lifestyle app for
customers and merchants in South Africa that promotes 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 hundreds of millions more in Africa so that
no one is left behind.
Vodafone Business digital platforms
We are extending the breadth of our propositions to private and public
sector organisations beyond connectivity. We estimate the addressable
market for unified communications, cloud applications and digital security
is over €50 billion and growing at over 10% per annum. We are partnering
with leading technology firms such as Microsoft, Accenture, IBM, Google,
Cisco and Amazon to provide our customers with best-in-class products
and services. We provided further information on this growth opportunity
as part of the Vodafone Business virtual investor briefing.
IoT
Our end-to-end IoT proposition is the largest of its kind globally. Our
Business IoT offering for private and public sector clients was discussed
at our recent virtual investor briefing. Our addressable market has already
reached €10 billion and is expected to grow at 16% per annum over the
medium term. At the end of March 2021, we had over 120 million devices
connected to our network, including 33 million connected cars. We have
also developed over 100 tailored end-to-end solutions for a range of
sectors including healthcare, distribution, manufacturing and automotive.
Our consumer IoT offering has now connected over 1.4 million devices
such as the watches through our OneNumber service and our ‘Curve’
mobile tracking device. In addition, we recently launched a new smart kids
18
Vodafone Group Plc
Annual Report 2021
Strategic review (continued)
The next phase in our strategy – a new
generation connectivity and digital
services provider
Following the significant actions we have taken to
reshape the Group, we are focused on growing our
converged connectivity markets in Europe, and mobile
data and payments in Africa. The next phase of our
strategy focuses on three customer commitments
and three enabling strategies, all of which work together
towards realising our vision to become a new generation
connectivity and digital services provider for Europe
and Africa, enabling an inclusive and sustainable
digital society.
Consumer Europe
Best connectivity products & services
throughout the pandemic, clear understanding of our economic
model and disciplined prioritisation of high marginal return on
capital opportunities.
4. We are on a clear growth pathway
Our strategy is grounded in our purpose to connect for a better future
and is focused on three core elements. Firstly, to be the trusted partner
for small and medium-sized enterprises. Secondly, to be the gigabit
connectivity provider of choice to large enterprises. Thirdly, to be the
leading end-to-end provider of IoT solutions for every organisation.
Scan or click to watch our virtual investor briefing at:
investors.vodafone.com/vbbriefing
Leading innovation in digital services
Alongside optimising our core connectivity services, we are building
platforms that will allow ‘best on Vodafone’ experiences. Our primary
areas of focus are premium TV in Europe; financial services in Africa;
Vodafone Business specific digital platforms across the Group; and the
IoT for both consumers and businesses.
In Europe, we are a leading converged connectivity provider with 7.9 million
converged customers, 113 million mobile connections, 142 million
marketable NGN broadband homes, we cover 98% of the population in
Premium TV
the markets we operate in with 4G, and we have launched 5G in 240 cities
Our consumer TV proposition now has over 22 million subscribers in
in 10 markets in Europe. We have achieved this leading position by focusing
11 markets, making Vodafone the 2nd largest TV provider in Europe.
on our core fixed and mobile connectivity. We are enhancing our products
We partner with 18 leading global content producers and distributors
through capacity and speed upgrades, unlimited mobile plans, a distinct
such as Disney, ViacomCBS, WarnerMedia, Netflix, Amazon and Comcast.
tiered branding hierarchy and convergent product bundles.
Consumer Africa
Our premium TV offering is delivered through a seamlessly integrated,
multi-device platform. This enables consumers to watch whatever they
want, whenever they want on any connected device.
In Africa, we are the leading provider of mobile data and mobile
payment services. We have 178 million mobile customers in 8 markets
Financial services
which represent 40% of Africa’s total Gross Domestic Product. We are
the leading mobile connectivity provider by revenue market share
in 7 markets. Excluding Kenya, we cover 62% of the population in
the markets in which we operate with 4G services. Our M-Pesa financial
services platform processed over 15 billion transactions during the year.
Click to read more about our operations in Africa:
vodacom.com
We remain focused on embedding Vodacom as a leading pan-African
technology company and M-Pesa offers a unique opportunity to extend
our reach further into financial services through our investments in
financial, digital and lifestyle services. This provides us with opportunities
to enhance our relationship with the 178 million mobile customers we
serve across our African footprint. In particular, we note our partnership
with Alipay and the imminent launch of our single lifestyle app for
customers and merchants in South Africa that promotes 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 hundreds of millions more in Africa so that
Vodafone Business
In March 2021, we held a virtual briefing on Vodafone Business
for investors and analysts. This briefing outlined the following four
no one is left behind.
key messages.
1. We operate in attractive markets
We serve over 6 million private and public sector customers of all
sizes, across Europe and Africa, in addressable markets totalling over
€100 billion. With more employees seeking flexible working, gigabit
connectivity with low latency and both public and private organisations
driving digitalisation, we have a compelling structural opportunity, with
expected addressable market growth of c.8% per annum.
2. We have unique scale & capabilities
We have the scale, expertise and technology to successfully compete
in these attractive markets. We are expanding our portfolio of products
and services to enhance our provision of core connectivity services,
with in-house innovation in IoT and partnerships with leading
technology companies to offer cloud, security and unified
IoT
communications services.
3. We have strong operating momentum
Over the last three years, we have delivered a step-change in our
commercial performance, leading to service revenue growth (excluding
roaming and visitor revenue) of 1.8% in FY21, with total service revenue
now over €10 billion. This has been driven by ongoing improvements
in our commercial momentum, strong support to our customers
Vodafone Business digital platforms
We are extending the breadth of our propositions to private and public
sector organisations beyond connectivity. We estimate the addressable
market for unified communications, cloud applications and digital security
is over €50 billion and growing at over 10% per annum. We are partnering
with leading technology firms such as Microsoft, Accenture, IBM, Google,
Cisco and Amazon to provide our customers with best-in-class products
and services. We provided further information on this growth opportunity
as part of the Vodafone Business virtual investor briefing.
Our end-to-end IoT proposition is the largest of its kind globally. Our
Business IoT offering for private and public sector clients was discussed
at our recent virtual investor briefing. Our addressable market has already
reached €10 billion and is expected to grow at 16% per annum over the
medium term. At the end of March 2021, we had over 120 million devices
connected to our network, including 33 million connected cars. We have
also developed over 100 tailored end-to-end solutions for a range of
sectors including healthcare, distribution, manufacturing and automotive.
Our consumer IoT offering has now connected over 1.4 million devices
such as the watches through our OneNumber service and our ‘Curve’
mobile tracking device. In addition, we recently launched a new smart kids
Strategic report
Governance
Financials
Other information
19
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
watch, developed with The Walt Disney Company. We will be expanding
on the opportunity for consumer IoT and other consumer growth
opportunities at a virtual investor briefing in December 2021.
Outstanding digital experiences
Over the last thirty years, Vodafone’s approach to retail, distribution and
customer care has evolved in line with broader social and technological
development. During the 1990s, we operated primarily through a
traditional retail ‘high street’ store mode, whereby the vast majority of
customer interaction was face-to-face and involved a high degree of
manual process. In the 2000s, we introduced a multi-channel model, in
which customers could also choose to interact with us through dedicated
websites or contact centres, in addition to the retail stores. In the 2010s,
we began to combine the models into an omni-channel experience,
through which our customers could move between different channels
for different missions.
In the new decade, our ambition is for customers to primarily interact
with us in a ‘Digital First’ manner. Our investments in this area have already
resulted in our artificial intelligence-enabled assistant (‘TOBi’) resolving
63% of customer support interactions with no human interaction and
an approximate 5% reduction in the frequency of customer contacts per
year to 1.4. As we look ahead, we expect the majority of new customers
will join Vodafone through digital channels and the overwhelming
majority of customer interaction and queries will be fulfilled through
either the MyVodafone app or support provided through ‘TOBi’. We will
then support the ongoing customer relationship through data-driven and
automated targeting of upselling, cross-selling and contract extension.
This Digital First customer experience will improve customer loyalty and
reduce the service cost per customer.
We will be expanding on our plans for outstanding digital experiences at
a virtual investor briefing in December 2021.
Simplified, most efficient operations
The connectivity value chain involves a high degree of repeatable
processes across all of our markets, such as procurement, network
deployment, network operations, sales activities, customer support
operations, and billing and transaction processing. This has provided us
with a significant opportunity to standardise processes across markets,
relocate operations to lower cost centres of excellence and apply
automation at scale, delivering best in class efficiency levels.
In the next phase of our strategy, we are pursuing these opportunities
through two significant evolutions in our operating model. Firstly,
integrating our network and digital teams in Europe and, secondly,
streamlining our approach to product development and customer
care within our European commercial teams. These programmes will be
key components in delivering the next phase of our ongoing efficiency
programme, which targets a total net reduction of Europe and Common
Function operating expenses of 20% by FY23 (versus a FY18 baseline).
Integrating network & digital teams
We are integrating our European network and digital teams. This
new structure will drive effectiveness, increase our speed of execution,
standardise key processes, and support the codification of what is the
best solution for Group implementation. We will increase our IT and
digital capabilities, standardise key development environments and
enhance coding collaboration, while internalising software engineering
capabilities, further leveraging our _VOIS shared services environment.
This new operating model for our technology teams will enable our
multi-year journey to redefine our technology architecture following
a ‘Telco as a Service’ (‘TaaS’) model. Our TaaS model is based on two
existing layers of inter-connected digital technology. We have created
a standardised suite of customer and user-facing interfaces for an entire
omni-channel journey and called it OnePlatform. The OnePlatform suite
is powered by our Digital eXperience Layer (‘DXL’). DXL refers to the
abstraction layer in our IT architecture which separates customer-facing
micro-services requiring frequent and rapid adjustment from back-end
systems such as billing and CRM.
We have already moved more than half our core network functions to the
cloud in Europe, supporting voice core, data core and service platforms on
over 1,300 virtual network functions. In Europe, we now operate a single
digital network architecture across all markets, enabling the design, build,
test and deployment of next generation core network functions more
securely, 40% faster and at 50% lower cost. Similarly, more than half of
our IP applications are now virtualised and running in the cloud.
Product development consistency & common customer care
To meet the needs of our customers, both individuals and businesses, we
need to bring innovative and differentiated products to market and scale
them across our footprint much faster than we do today. We also need
to further leverage the scale of our footprint and avoid duplication and
fragmentation of our resources. We are simplifying and unifying our
approach to product development, reducing time and resources for new
products from the idea creation phase to launch, with a new process to
allocate and sustain funding across our markets.
We are also accelerating the deployment and adoption of digital tools
through common digital platforms with the ambition to move to one
‘My Vodafone’ app and, over time, one TOBi chatbot platform. This will
also help us deliver a more consistent customer experience regardless
of geography, with further automation and simplification.
Social contract shaping industry structure
to improve returns
Over the last decade, the performance of the European telecommunications
industry has been weaker than other regions, which market commentators
largely attribute to its regulatory environment. European regulation differs
in both its fragmented approach to spectrum licensing and market structure,
compared with North America or Asia.
In 2019, we introduced our ‘social contract’, which represents the
partnerships we want to develop with governments, policy makers
and civil society. We believe the industry needs a pro-investment,
pro-innovation partnership approach to ensure Europe can compete
in the global digital economy and be at the forefront of technology
ecosystems. This requires healthy market structures, an end to extractive
spectrum auctions, support for equipment vendor diversity, a defined
framework for network sharing, and regulation that enables the physical
deployment of network infrastructure, as well as rewards quality – such
as security, resilience and coverage – with fair prices.
Following our efforts and society’s increasing reliance on our connectivity
infrastructure and services, notably during the COVID-19 pandemic, we
are beginning to see positive signs of a healthier industry structure emerge.
Recent spectrum auctions in the UK, Greece and Hungary were conducted
in a positive manner and completed with spectrum being assigned at
sustainable prices, in line or below European benchmark levels. Authorities
are recognising that operators need to be able to focus available private
funds for fast deployment of new infrastructure and services.
We have also seen national governments increase support, such as
state-subsidies for rural networks in the UK and Germany. A key area
will be shaping Member State recovery funds and how at least 20% of
the €750 billion NextGenerationEU funding targeted for digital initiatives
is distributed.
We will play our part by investing in our high-quality network infrastructure
and will continue to work closely with regulators and policy makers in
order to create a more healthy and sustainable industry structure that is
truly pro-investment, pro-innovation and supportive of returns.
20
Vodafone Group Plc
Annual Report 2021
Strategic review (continued)
Strategic report
Governance
Financials
Other information
Leading gigabit networks
In order to provide our customers with the best connectivity products
and ‘best on Vodafone’ connectivity platforms, we need to have leading
gigabit network infrastructure in each of our markets. Importantly, we
must also ensure that our customers recognise and value the quality of
our gigabit network infrastructure. We will be hosting a dedicated virtual
investor briefing on technology and our approach on 17 June 2021.
In mobile, we are currently deploying mobile network infrastructure to
deliver 5G connectivity. So far, we have launched 5G services in 240 cities,
in 10 markets in Europe. 5G services provide ‘real world’ speeds well in
excess of 100 Mbps, compared with 4G which provides ‘real world’ speeds
of 20-35 Mbps. In addition to the speed advantage, 5G networks that are
‘built right’ and with longer-term competitive advantage in mind, provide
more uses cases, and significant capacity and efficiency advantages,
ultimately lowering the cost per gigabyte of mobile data provision.
However, the European mobile sector is also utilising dynamic spectrum
sharing (‘DSS’) technology to share existing 4G spectrum to provide a
more limited 5G experience.
Underpinning our 5G network infrastructure is our majority shareholding
in Vantage Towers AG.
Click to read more about Vantage Towers:
vantagetowers.com
Alongside our 5G mobile network infrastructure is our NGN fixed-line
network infrastructure. We can now reach 142 million homes across 12
markets in Europe (including VodafoneZiggo). This marketable base is
connected through a mix of owned NGN network (56 million homes, of
which 44 million are gigabit-capable), strategic partnerships (24 million
homes) and wholesale arrangements (62 million homes). This network
provides us with the largest marketable footprint of any fixed-line
provider in Europe. In Germany, our owned network covering 24 million
households is being progressively upgraded to the latest DOCSIS 3.1
standard, which provides us with a structural speed advantage over the
incumbent. Over the medium-term we will continue to increase the
proportion of our Europe customers that can receive gigabit-capable
connections through our owned network and continue to work with
strategic partners to provide cable and fibre access.
Committed to improving returns
Outlook for FY22
Our performance during FY21 has been in line with our expectations and
demonstrates the relative resilience of our operating model. We remain
focused on the delivery of the next phase of our strategy.
Adjusted EBITDA will be referred to as ‘adjusted EBITDAaL’ from FY22
onwards, with no change to the underlying definition. Free cash flow
(pre spectrum, restructuring and integration costs) will be referred to
as ‘adjusted free cash flow’1, and excludes Vantage Towers growth
capital additions.
Based on the current prevailing assessments of the global
macroeconomic outlook:
– Adjusted EBITDAaL1 is expected to be between €15.0 - €15.4 billion
in FY22; and
– Adjusted free cash flow2 is expected to be at least €5.2 billion in FY22.
Disciplined capital allocation to drive
shareholder returns
The objectives of our portfolio activities over the last three years have
been to focus on our two scaled geographic platforms in Europe and
Africa; achieve converged scale in our chosen markets; and deliver
a structural shift in asset utilisation. We are now a matrix of country
operations, products and platforms and will continue to be disciplined
in managing our portfolio, following three principles:
– we aim to continue to focus on the converged connectivity markets
in Europe, and mobile data and payments in Africa;
– we aim to achieve returns above the local cost of capital in all of our
markets; and
– we consider whether we are the best owner (i.e. whether the asset adds
value to the Group and the Group adds value to the asset) and whether
there are any pragmatic and value-creating alternatives.
Our capital allocation priorities are to support investment in connectivity
infrastructure; maintain a robust balance sheet; and support improved
shareholder distribution.
Our growth strategy requires a greater level of investment, in four
major areas.
– We will continue to invest in leading gigabit networks by upgrading our
fixed networks and rolling out 5G ‘built right’. To help fund this, our new
Technology operating model will drive a higher level of efficiency in
unitary spend, while greater standardisation will eliminate duplication.
– We will have a stronger, more comprehensive product offering in every
market, particularly in Vodafone Business, to accelerate our revenue
and profit growth.
– We will accelerate our digital capabilities, which will ultimately help us
sustain margin expansion, strengthen our direct channels and build
further differentiation in our customer offer.
– We are retaining the flexibility to support Vantage Towers in realising
its own growth ambitions, particularly in the high incremental returns
opportunities of new build-to-suit sites and ground-lease buyouts.
Medium-term financial ambition
During this next phase of our ongoing transformation to be a new
generation connectivity and digital services provider, we are committed to
improving returns. The table below sets our model for value creation,
alongside our medium-term financial ambition.
Value model
Consistent
revenue growth
+ Ongoing
margin expansion
Medium-term ambition
Growth in both Europe & Africa
Mid-single digit adjusted EBITDAaL1 growth
+ Good cash conversion Mid-single digit adjusted FCF2 growth
+ Disciplined
capital allocation
= Sustainable
value creation
Net debt to adjusted EBITDA: 2.5-3.0x
ROCE3 greater than WACC
A minimum dividend of 9.00 eurocents
per share per annum
Notes:
1. Adjusted EBITDAaL is equivalent to FY21 definition and calculation of adjusted EBITDA.
2. Adjusted free cash flow is free cash flow before spectrum, restructuring, integration costs and
Vantage Towers growth capital additions. Growth capital additions is on a cash basis and includes
expenditure on new sites, ground lease optimisation and other adjacency opportunities as
defined by Vantage Towers.
3. Pre-tax return on capital employed (controlled).
20
Vodafone Group Plc
Annual Report 2021
Strategic review (continued)
Leading gigabit networks
In order to provide our customers with the best connectivity products
and ‘best on Vodafone’ connectivity platforms, we need to have leading
gigabit network infrastructure in each of our markets. Importantly, we
must also ensure that our customers recognise and value the quality of
our gigabit network infrastructure. We will be hosting a dedicated virtual
investor briefing on technology and our approach on 17 June 2021.
In mobile, we are currently deploying mobile network infrastructure to
deliver 5G connectivity. So far, we have launched 5G services in 240 cities,
in 10 markets in Europe. 5G services provide ‘real world’ speeds well in
Disciplined capital allocation to drive
shareholder returns
The objectives of our portfolio activities over the last three years have
been to focus on our two scaled geographic platforms in Europe and
Africa; achieve converged scale in our chosen markets; and deliver
a structural shift in asset utilisation. We are now a matrix of country
operations, products and platforms and will continue to be disciplined
in managing our portfolio, following three principles:
– we aim to continue to focus on the converged connectivity markets
in Europe, and mobile data and payments in Africa;
excess of 100 Mbps, compared with 4G which provides ‘real world’ speeds
– we aim to achieve returns above the local cost of capital in all of our
of 20-35 Mbps. In addition to the speed advantage, 5G networks that are
markets; and
‘built right’ and with longer-term competitive advantage in mind, provide
more uses cases, and significant capacity and efficiency advantages,
ultimately lowering the cost per gigabyte of mobile data provision.
However, the European mobile sector is also utilising dynamic spectrum
sharing (‘DSS’) technology to share existing 4G spectrum to provide a
more limited 5G experience.
Underpinning our 5G network infrastructure is our majority shareholding
in Vantage Towers AG.
Click to read more about Vantage Towers:
vantagetowers.com
Alongside our 5G mobile network infrastructure is our NGN fixed-line
network infrastructure. We can now reach 142 million homes across 12
markets in Europe (including VodafoneZiggo). This marketable base is
connected through a mix of owned NGN network (56 million homes, of
which 44 million are gigabit-capable), strategic partnerships (24 million
homes) and wholesale arrangements (62 million homes). This network
provides us with the largest marketable footprint of any fixed-line
provider in Europe. In Germany, our owned network covering 24 million
households is being progressively upgraded to the latest DOCSIS 3.1
standard, which provides us with a structural speed advantage over the
incumbent. Over the medium-term we will continue to increase the
proportion of our Europe customers that can receive gigabit-capable
connections through our owned network and continue to work with
strategic partners to provide cable and fibre access.
Committed to improving returns
Outlook for FY22
Our performance during FY21 has been in line with our expectations and
demonstrates the relative resilience of our operating model. We remain
focused on the delivery of the next phase of our strategy.
Adjusted EBITDA will be referred to as ‘adjusted EBITDAaL’ from FY22
onwards, with no change to the underlying definition. Free cash flow
(pre spectrum, restructuring and integration costs) will be referred to
as ‘adjusted free cash flow’1, and excludes Vantage Towers growth
capital additions.
Based on the current prevailing assessments of the global
macroeconomic outlook:
Value model
Consistent
revenue growth
+ Ongoing
margin expansion
+ Disciplined
capital allocation
= Sustainable
value creation
– Adjusted EBITDAaL1 is expected to be between €15.0 - €15.4 billion
in FY22; and
– Adjusted free cash flow2 is expected to be at least €5.2 billion in FY22.
Notes:
– we consider whether we are the best owner (i.e. whether the asset adds
value to the Group and the Group adds value to the asset) and whether
there are any pragmatic and value-creating alternatives.
Our capital allocation priorities are to support investment in connectivity
infrastructure; maintain a robust balance sheet; and support improved
shareholder distribution.
Our growth strategy requires a greater level of investment, in four
major areas.
– We will continue to invest in leading gigabit networks by upgrading our
fixed networks and rolling out 5G ‘built right’. To help fund this, our new
Technology operating model will drive a higher level of efficiency in
unitary spend, while greater standardisation will eliminate duplication.
– We will have a stronger, more comprehensive product offering in every
market, particularly in Vodafone Business, to accelerate our revenue
and profit growth.
– We will accelerate our digital capabilities, which will ultimately help us
sustain margin expansion, strengthen our direct channels and build
further differentiation in our customer offer.
– We are retaining the flexibility to support Vantage Towers in realising
its own growth ambitions, particularly in the high incremental returns
opportunities of new build-to-suit sites and ground-lease buyouts.
Medium-term financial ambition
During this next phase of our ongoing transformation to be a new
generation connectivity and digital services provider, we are committed to
improving returns. The table below sets our model for value creation,
alongside our medium-term financial ambition.
Medium-term ambition
Growth in both Europe & Africa
Mid-single digit adjusted EBITDAaL1 growth
+ Good cash conversion Mid-single digit adjusted FCF2 growth
Net debt to adjusted EBITDA: 2.5-3.0x
ROCE3 greater than WACC
A minimum dividend of 9.00 eurocents
per share per annum
1. Adjusted EBITDAaL is equivalent to FY21 definition and calculation of adjusted EBITDA.
2. Adjusted free cash flow is free cash flow before spectrum, restructuring, integration costs and
Vantage Towers growth capital additions. Growth capital additions is on a cash basis and includes
expenditure on new sites, ground lease optimisation and other adjacency opportunities as
defined by Vantage Towers.
3. Pre-tax return on capital employed (controlled).
Strategic report
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21
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
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Other information
Our people strategy
Our vision is to create an inclusive environment, which
is supportive of growth and where everyone has the
opportunity to thrive.
We are now beginning the next phase in our transformation to become a
new generation connectivity and digital services provider for Europe and
Africa. Our people strategy will accelerate this transition, by creating a
place where everyone can truly belong, innovate, work effectively and
fulfil their potential.
Vodafone Spirit
Our culture – called the ‘Vodafone Spirit’ – outlines the beliefs we stand
for and the four key behaviours enabling our strategy and purpose. The
Vodafone Spirit is the catalyst for change, underpinning the successful
and sustainable delivery of our transformation.
This year we focused on embedding Spirit at the individual, team, leader
and organisation level.
At the start of the financial year, we launched a survey called ‘Spirit Beat’
to replace our annual employee survey. We use Spirit Beat surveys to
measure our culture and its impact. The results – shown in the table
below – show a strong adoption of the Spirit beliefs and behaviours.
In the second survey undertaken in January 2021, scores remained
relatively consistent in a time of unprecedented change. The scores
also outlined strengths and areas of focus to embed our culture further.
Our Spirit Beat surveys are conducted using artificial intelligence and
the results are used to encourage the adoption of our Spirit behaviours.
Following completion and based on confidential survey responses, all
employees receive automated and personalised coaching tips called
‘nudges’ over a 20-week period, to support behaviour change and the
creation of new habits. These personalised nudges create a continuous
feedback loop and over 750,000 nudges have been sent to employees
so far. Subsequent analysis has shown the value of these nudges: 71%
of colleagues found nudges useful, and data shows that teams with
managers who embraced the Vodafone Spirit had a higher Spirit Index
(+13) and employee engagement score (+15) compared to managers
who did not.
Spirit Beat surveys
Earn customer loyalty
Experiment, learn fast
Create the future
Get it done, together
Overall Spirit index1
Response rate
2021
72
77
75
76
75
86%
2020
74
78
75
77
76
84%
Note:
1. The overall Spirit index reflects the average of the four Spirit behaviour scores.
Insights from our Spirit Beat surveys have informed our approach as we
plan the next phase of embedding the Vodafone Spirit within our culture.
We will continue to use AI-driven nudges and reinforce Spirit behaviours
through our reward and recognition tools. We are embedding Spirit into
our performance development approach to help us attract, retain and
develop future talent to deliver our strategy, and are refreshing our global
leadership development suite to support leaders to role-model Spirit
behaviours. Aligned with Spirit, a new leadership assessment will be
introduced to support leadership selection and we will continue to
activate Spirit through Future Ready ways of working such as remote
hiring and hybrid working.
Our senior leadership are accountable for our culture transformation.
The Board has monitored the launch and progress of Spirit, and our
Executive Committee is regularly involved in discussions on survey
results and actions.
As leadership is essential for driving the transformation, we have invested
in developing inclusive leaders who drive growth and innovation, act as
role models, coach and empower teams, and lead with Spirit behaviours.
In June 2020, we launched a leadership programme called the Senior
Leadership Team (‘SLT’) Spirit Accelerator for 277 of our senior leaders.
This consisted of a series of leadership talks on the topics of resilience,
psychological safety, adaptability, the future of work and growth mindset,
as well as coaching delivered through a digital platform.
Agile and efficient operating model
During the year, we have worked to simplify our operating model,
leveraging our global scale. We initiated one of our largest ever
organisational changes to accelerate our transformation into a new
generation connectivity and digital services provider for Europe and
Africa. This consists of three major initiatives, effective from 1 April 2021:
– Product operating model: We will establish a simplified and unified
approach to product development, to shorten the time between idea
creation of new products and launch. The new model will help us to
leverage our scale when bringing innovative products to market and
scale them across our footprint faster.
– Technology operating model: We will create one integrated
European network and IT/digital team across the Group, to drive
efficiency, increase speed of execution, standardise key processes, and
codify the best solutions for implementation across all of our markets.
– Customer operations model: To prevent duplication in the creation
of digital tools to serve our customers, we will move to common digital
platforms across our entire footprint to deliver a consistent experience.
Our transformation has provided a critical opportunity to embed Spirit
more deeply into our operating model, organisation, and ways of working.
As we have accelerated our transformation, we have codified the critical
enablers of successful strategy execution, building on the results of
the McKinsey Execution Excellence survey sent to 1,193 senior leaders
from Vodafone. Vodafone scored above the benchmark in all areas, and
together with structured leadership interviews and best practice sharing,
the survey has provided us with the data and insights to define key
success metrics for execution excellence.
We also continued to build an agile culture in order to accelerate our
digital transformation, simplify our ways of working and enable quick and
insight-led decision-making. We made good progress on implementing
our new digital operating model, with 67 active tribes and 441 squads in
13 different markets.
Lastly, to support our transformation into Europe’s leading connectivity
provider, we integrated the Liberty Global organisations and people
in Germany and central eastern Europe, as well as AbCom in Albania
following recent acquisitions. We also successfully established Vantage
Towers, our European tower company which listed on the Frankfurt stock
exchange in March 2021.
22
Vodafone Group Plc
Annual Report 2021
Strategic review (continued)
Strategic report
Governance
Financials
Other information
Diverse talent and future ready skills
As we evolve our operating model and execute our strategy, we have
focused on developing diverse talent for the future, and accelerating
reskilling and upskilling at scale.
This year, we created talent and succession pools for our most senior
roles, as well as a pool for our female talent. These pools are reviewed
and updated at the annual Executive Committee talent review and are
considered by the Board.
The transformation into a new generation connectivity and digital services
provider requires new skills and capabilities in our organisation, such as
software engineering, automation and data analysis. To develop future
skills at scale, we ran a skills transformation pilot in Italy, involving 10
functions, and more than 4,600 people (86% of local headcount). The
results were encouraging, showing that there are almost as many future
opportunities as there are roles that will change, highlighting the need for
reskilling and upskilling programmes at scale. As part of the Italy pilot, we
have successfully reskilled 2,000 people to date, of whom 115 have been
redeployed to new roles. Through the pandemic, we have also prioritised
reskilling for those whose roles were paused during lockdowns, such as
retail employees reskilling as call support staff.
We have also continued to support the personal and professional
growth of our people through the pandemic by moving all of
our learning initiatives online. During the year, 85% of employees
completed non-mandatory training during the year, with an average
of 2.8 hours per month (including the skills transformation pilot in Italy).
During the year, we invested an average of €470 into training for each
employee to build future capabilities.
We continue to accelerate our skills transformation programme and
will shortly launch a new tool which allows employees to update their
skills profiles. This new functionality will help us measure and validate
proficiency levels, as well as support our new global mentoring tool.
We are targeting an 80% completion rate for our new skills profiles and a
year-on-year increase in employees completing non-mandatory training.
To execute our strategy and bring our purpose to life, we also invested
in youth hiring (6,974 hires, of which 757 graduates) whilst providing
digital learning experiences to 30,601 young people, through local
work experience programmes and initiatives.
To attract, engage and retain diverse talent, we launched our new
Employer Value Proposition “Together We Can” in March 2021,
bringing our culture and purpose to life for candidates and employees.
Digital and personalised experience
Our people experience is informed by employee insights and guided
by our culture. Ensuring employees are excited about the opportunities
our transformation brings and placing them at the heart of the change is
critical to drive our strategy at pace.
Future ready framework
This year, we introduced our future ready framework as an immediate
response to the pandemic and began to rethink future ways of working.
The framework is based on the outcomes of internal and external
research, including two internal surveys, a business customer survey,
70 interviews and almost 100 video diaries, alongside the analysis of
internal data and external trends. The data confirmed that our office-
based employees, while missing the social office connection, strongly
support increased adoption of remote working, and our leaders foresee
their teams using office spaces to collaborate rather than for individual
work. At the same time, we observed sustained levels of productivity.
As a result, we have introduced further flexibility to our working practices
through new policies issued in March 2021. Our remote working policy
sets global standards for new hybrid ways of working including an average
split between remote and in-office working of 60:40 (depending on the
specific role). Where appropriate, our remote hiring policy will also allow
our teams to source skills irrespective of location.
We recognise that effective hybrid ways of working require new
technology and policies. We have deployed digital collaboration and
time management tools, such as Microsoft Teams and MyAnalytics,
and introduced meeting guidelines to reduce meeting duration by 25%.
We have also started to reimagine how we will use our offices going
forward, with the target of having approximately 80% of our office space
dedicated to collaboration and co-creation. We have initiated pilots in
offices in the Czech Republic and UK, leveraging our own IoT technology
tracking how office space is used, as well as room booking.
We maintained strong relationships with the workers councils and
unions, with approximately 22,000 people covered by collective
bargaining agreements globally. This year, we reached several
agreements with the unions as we began to shape the future of work.
For example, in Italy, employees will work between 60-80% remotely
post-COVID depending on their role and have guaranteed rights to
disconnect during non-working hours.
Pulse surveys
We place significant importance on listening to the feedback of our
colleagues. During the year we ran six pulse surveys to listen to employee
feedback and used the results to inform our COVID-19 response plans.
Pulse surveys
How are you feeling?
Support you need to
do your job effectively?
Connected to
your team?
Response rate
Nov
2020
74
Sept
2020
76
July
2020
76
April
20201
76
April
20201
75
April
20201
73
82
83
83
85
84
85
81
79
83
64% 59% 57% 62% 60% 55%
84
84
81
Note:
1. During the early stages of the pandemic, we ran a number of pulse surveys to regularly check
in with our employees.
Pay, benefits and wellbeing
As part of our people experience, we continued to ensure pay, benefits,
and wellbeing propositions are competitive and fair.
We have simplified our reward approach to encourage collective
performance and increased focus on recognition, launching our
peer-to-peer recognition tool ‘Thank You’ (with 30,864 awarded during
the year) and increasing the available budget for Vodafone Stars, our
cash recognition programme. We also continued to apply our Fair Pay
principles across all markets, working with the Fair Wage Network to
ensure a good standard of living in each market.
We remained focused on physical and mental wellbeing, with a variety
of training and services available in each market. In the UK, we moved
onsite medical services to online, including GP and Cognitive Behavioural
Therapy (‘CBT’) services. Provision of employee assistance programmes
and psychological support services continued to grow, particularly in
Italy, Albania, Romania, as well our shared service centres in Romania
and Hungary.
Digital tools
Our people experience and strategy execution is powered by our digital
tools and systems. We have established SuccessFactors as the single
foundational platform and integrated new tools and apps such as Humu
for Spirit Beat, DocuSign, our diversity data profile page, and domestic
violence portal. To effectively support the transformation, we kicked off
the “future ready HR” programme aiming to build a more digital and
agile HR team. We have started to experiment with new solutions in our
markets, such as a new digital onboarding process in Spain, and we will
continue to implement advanced digital tools to support reskilling at
scale, strategic workforce planning and recruiting.
22
Vodafone Group Plc
Annual Report 2021
Strategic review (continued)
Strategic report
Governance
Financials
Other information
23
Vodafone Group Plc
Annual Report 2021
Our financial performance
Strategic report
Governance
Financials
Other information
Diverse talent and future ready skills
As we evolve our operating model and execute our strategy, we have
focused on developing diverse talent for the future, and accelerating
reskilling and upskilling at scale.
This year, we created talent and succession pools for our most senior
roles, as well as a pool for our female talent. These pools are reviewed
and updated at the annual Executive Committee talent review and are
considered by the Board.
The transformation into a new generation connectivity and digital services
provider requires new skills and capabilities in our organisation, such as
software engineering, automation and data analysis. To develop future
skills at scale, we ran a skills transformation pilot in Italy, involving 10
functions, and more than 4,600 people (86% of local headcount). The
results were encouraging, showing that there are almost as many future
opportunities as there are roles that will change, highlighting the need for
reskilling and upskilling programmes at scale. As part of the Italy pilot, we
have successfully reskilled 2,000 people to date, of whom 115 have been
redeployed to new roles. Through the pandemic, we have also prioritised
reskilling for those whose roles were paused during lockdowns, such as
retail employees reskilling as call support staff.
We have also continued to support the personal and professional
growth of our people through the pandemic by moving all of
our learning initiatives online. During the year, 85% of employees
completed non-mandatory training during the year, with an average
of 2.8 hours per month (including the skills transformation pilot in Italy).
During the year, we invested an average of €470 into training for each
employee to build future capabilities.
We continue to accelerate our skills transformation programme and
will shortly launch a new tool which allows employees to update their
skills profiles. This new functionality will help us measure and validate
proficiency levels, as well as support our new global mentoring tool.
specific role). Where appropriate, our remote hiring policy will also allow
our teams to source skills irrespective of location.
We recognise that effective hybrid ways of working require new
technology and policies. We have deployed digital collaboration and
time management tools, such as Microsoft Teams and MyAnalytics,
and introduced meeting guidelines to reduce meeting duration by 25%.
We have also started to reimagine how we will use our offices going
forward, with the target of having approximately 80% of our office space
dedicated to collaboration and co-creation. We have initiated pilots in
offices in the Czech Republic and UK, leveraging our own IoT technology
tracking how office space is used, as well as room booking.
We maintained strong relationships with the workers councils and
unions, with approximately 22,000 people covered by collective
bargaining agreements globally. This year, we reached several
agreements with the unions as we began to shape the future of work.
For example, in Italy, employees will work between 60-80% remotely
post-COVID depending on their role and have guaranteed rights to
disconnect during non-working hours.
Pulse surveys
We place significant importance on listening to the feedback of our
colleagues. During the year we ran six pulse surveys to listen to employee
feedback and used the results to inform our COVID-19 response plans.
Pulse surveys
How are you feeling?
Support you need to
do your job effectively?
Connected to
your team?
Response rate
Nov
2020
74
82
79
Sept
2020
76
83
81
July
2020
76
83
81
April
20201
76
85
84
April
20201
75
84
84
April
20201
73
85
83
64% 59% 57% 62% 60% 55%
We are targeting an 80% completion rate for our new skills profiles and a
year-on-year increase in employees completing non-mandatory training.
Note:
To execute our strategy and bring our purpose to life, we also invested
in youth hiring (6,974 hires, of which 757 graduates) whilst providing
digital learning experiences to 30,601 young people, through local
work experience programmes and initiatives.
To attract, engage and retain diverse talent, we launched our new
Employer Value Proposition “Together We Can” in March 2021,
bringing our culture and purpose to life for candidates and employees.
Digital and personalised experience
Our people experience is informed by employee insights and guided
by our culture. Ensuring employees are excited about the opportunities
our transformation brings and placing them at the heart of the change is
critical to drive our strategy at pace.
Future ready framework
This year, we introduced our future ready framework as an immediate
response to the pandemic and began to rethink future ways of working.
The framework is based on the outcomes of internal and external
research, including two internal surveys, a business customer survey,
70 interviews and almost 100 video diaries, alongside the analysis of
internal data and external trends. The data confirmed that our office-
based employees, while missing the social office connection, strongly
support increased adoption of remote working, and our leaders foresee
their teams using office spaces to collaborate rather than for individual
work. At the same time, we observed sustained levels of productivity.
As a result, we have introduced further flexibility to our working practices
through new policies issued in March 2021. Our remote working policy
sets global standards for new hybrid ways of working including an average
split between remote and in-office working of 60:40 (depending on the
1. During the early stages of the pandemic, we ran a number of pulse surveys to regularly check
in with our employees.
Pay, benefits and wellbeing
As part of our people experience, we continued to ensure pay, benefits,
and wellbeing propositions are competitive and fair.
We have simplified our reward approach to encourage collective
performance and increased focus on recognition, launching our
peer-to-peer recognition tool ‘Thank You’ (with 30,864 awarded during
the year) and increasing the available budget for Vodafone Stars, our
cash recognition programme. We also continued to apply our Fair Pay
principles across all markets, working with the Fair Wage Network to
ensure a good standard of living in each market.
We remained focused on physical and mental wellbeing, with a variety
of training and services available in each market. In the UK, we moved
onsite medical services to online, including GP and Cognitive Behavioural
Therapy (‘CBT’) services. Provision of employee assistance programmes
and psychological support services continued to grow, particularly in
Italy, Albania, Romania, as well our shared service centres in Romania
and Hungary.
Digital tools
Our people experience and strategy execution is powered by our digital
tools and systems. We have established SuccessFactors as the single
foundational platform and integrated new tools and apps such as Humu
for Spirit Beat, DocuSign, our diversity data profile page, and domestic
violence portal. To effectively support the transformation, we kicked off
the “future ready HR” programme aiming to build a more digital and
agile HR team. We have started to experiment with new solutions in our
markets, such as a new digital onboarding process in Spain, and we will
continue to implement advanced digital tools to support reskilling at
scale, strategic workforce planning and recruiting.
Resilient performance,
in line with our expectations
– Total revenue declined by 2.6% to €43.8 billion (FY20: €45.0 billion), as
our good underlying momentum and the benefit from the acquisition
of Liberty Global’s assets in Germany and Central and Eastern Europe
was offset by lower revenue from roaming, visitors and handset sales,
adverse foreign exchange movements and the disposal of Vodafone
New Zealand.
– Operating profit increased by 24.3% to €5.1 billion (FY20: €4.1 billion).
Compared to the prior year period, we recognised lower gains on
disposals, no impairment losses, and we no longer recognised
Vodafone’s share of losses related to Vodafone Idea following the write
down of the asset to nil in FY20. On an underlying basis, performance
was broadly stable as lower adjusted EBITDA was partially offset by
lower restructuring costs, depreciation and amortisation and a higher
share of profits from associates and joint ventures.
– Adjusted EBITDA decreased by 1.2%* to €14.4 billion (FY20: €14.9 billion)
as the decline in revenue was partially offset by strong cost control,
with a net reduction in our Europe and Common Functions operating
expenditure of €0.5 billion.
– Cash inflow from operating activities decreased by 0.9% to €17.2 billion
(FY20: €17.4 billion).
– Free cash flow (pre spectrum, restructuring and integration costs)
decreased by 11.9% to €5.0 billion (FY20: €5.7 billion) due to lower
adjusted EBITDA and increased investment in network performance
during the pandemic, partially offset by working capital movements
including lower cash commissions.
– Income tax expense increased by €2.6 billion, primarily due to a
non-cash charge of €2.8 billion following a decrease in the carrying
value of deferred tax assets.
– Total dividends per share are 9.0 eurocents (FY20: 9.0 eurocents),
including a final dividend per share of 4.5 eurocents. The ex-dividend
date for the final dividend is 24 June 2021 for ordinary shareholders,
the record date is 25 June 2021 and the dividend is payable on 6
August 2021.
All amounts marked with an “*” represent organic growth, which
presents performance on a comparable basis, including merger
and acquisition activity and foreign exchange rates. Organic growth
is a non-GAAP measure that is presented to provide readers with
additional financial information and should not be viewed in isolation
or as an alternative to the equivalent GAAP measure.
Read more about non-GAAP measures
on page 217
Group financial performance
Revenue
– Service revenue
– Other revenue
Adjusted EBITDA2,3
Restructuring costs
Interest on lease liabilities4
Loss on disposal of property, plant & equipment and intangible assets
Depreciation and amortisation on owned assets
Share of results of equity accounted associates and joint ventures
Impairment losses
Other income and expense
Operating profit
Non-operating expense
Investment income
Financing costs
Profit before taxation
Income tax expense
Profit / (loss) for the financial year
Attributable to:
– Owners of the parent
– Non-controlled interests
Profit/(loss) for the financial year
Basic earnings/(loss) per share
Adjusted basic earnings per share2
Notes:
1. The FY21 results reflect average foreign exchange rates of €1:£0.89, €1:INR 86.60, €1:ZAR 19.04, €1:TRY 8.58 and €1: EGP 18.44.
2. Adjusted EBITDA and adjusted basic earnings per share are Non-GAAP measures. See page 217 for more information.
3. Includes depreciation on Right-of-use assets of €3,914 million (FY20: €3,720 million).
4. Reversal of interest on lease liabilities included within adjusted EBITDA under the Group’s definition of that metric, for re-presentation in financing costs.
Reported
change %
(2.6)
(1.9)
(3.3)
24.3
FY211
€m
43,809
37,141
6,668
14,386
(356)
374
(30)
(10,187)
342
–
568
5,097
–
330
(1,027)
4,400
(3,864)
536
FY20
€m
44,974
37,871
7,103
14,881
(695)
330
(54)
(10,454)
(2,505)
(1,685)
4,281
4,099
(3)
248
(3,549)
795
(1,250)
(455)
112
424
536
(920)
465
(455)
0.38c
8.08c
(3.13)c
5.60c
24
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Our financial performance (continued)
FY21 geographic performance summary
Total revenue (€m)
Service revenue (€m)
Adjusted EBITDA (€m)
Adjusted EBITDA margin (%)
Common
Germany
Functions
€m
€m
1,368
12,984
470
11,520
5,634
(117)
43.4% 31.9% 22.2% 25.1% 31.7% 36.2% 32.6% (8.6)%
Other Europe
€m
5,549
4,859
1,760
Other
Markets
€m
3,765
3,312
1,228
Vodacom
€m
5,181
4,083
1,873
Spain
€m
4,166
3,788
1,044
UK
€m
6,151
4,848
1,367
Italy
€m
5,014
4,458
1,597
Eliminations
€m
(369)
(197)
Group
€m
43,809
37,141
14,386
32.8%
FY21 Service revenue growth %
Germany
Italy
UK
Spain
Other Europe
Vodacom
Other Markets
Group
FY21 Organic service revenue growth %*
Germany
Italy
UK
Spain
Other Europe
Vodacom
Other Markets
Group
Germany: 31% of Group service revenue
Total revenue
Service revenue
Other revenue
Adjusted EBITDA1
Adjusted EBITDA
margin1
Reported
change
%
7.5
7.7
11.0
Organic
change*
%
0.5
1.8
FY21
€m
12,984
11,520
1,464
5,634
FY20
€m
12,076
10,696
1,380
5,077
43.4% 42.0%
Note:
1. Adjusted EBITDA and Adjusted EBITDA margin are Non-GAAP measures. See page 217
for more information.
Reported total revenue increased by 7.5% to €13.0 billion, primarily
reflecting the consolidation of the acquired Liberty Global assets for the
full year.
On an organic basis, service revenue grew by 0.5%* (Q3: 1.0%*, Q4:
1.2%*), with growth across all customer segments in the second half of
the year. Growth was supported by good customer and ARPU growth, a
strong performance in Business fixed and higher variable usage revenue
during the COVID-19 lockdown, offset by lower roaming, visitor and
wholesale revenue. The year-on-year impact from the decline in roaming
and visitor revenue was -1.0 percentage points (Q3: -1.0 percentage
points, Q4: -0.5 percentage points). Retail service revenue grew by 1.1%*
(Q3: 1.5%*, Q4: 1.8%*).
Fixed service revenue grew by 1.4%* (Q3: 1.4%*, Q4: 1.4%*). This was
driven by customer base and ARPU growth, higher variable usage during
the pandemic and growing demand for new services, such as cloud &
security. Business fixed service revenue grew strongly by 9.8%* in FY21.
We added 301,000 cable customers in the year, including 140,000
Q1
25.4
(6.5)
(3.2)
(6.9)
3.8
(11.9)
(18.9)
1.3
Q1
–
(6.5)
(1.9)
(6.9)
(3.1)
1.5
9.1
(1.3)
Q2
6.9
(7.9)
(0.8)
(1.8)
(1.9)
(12.3)
(15.1)
(2.5)
Q2
(0.1)
(8.0)
(0.5)
(1.8)
(1.8)
3.2
9.0
(0.4)
H1
15.4
(7.2)
(2.0)
(4.4)
0.8
(12.1)
(17.0)
(0.7)
H1
(0.1)
(7.2)
(1.2)
(4.4)
(2.4)
2.3
9.0
(0.8)
Q3
1.0
(7.8)
(5.1)
(0.9)
(4.0)
(9.1)
(9.5)
(3.9)
Q3
1.0
(7.8)
(0.4)
(1.1)
(0.7)
3.3
12.3
0.4
Q4
1.2
(8.8)
(4.4)
(2.2)
–
(1.2)
(6.1)
(2.4)
Q4
1.2
(7.8)
(0.6)
(1.3)
(0.2)
7.3
13.1
0.8
H2
1.1
(8.3)
(4.7)
(1.5)
(2.0)
(5.3)
(7.8)
(3.1)
H2
1.1
(7.8)
(0.5)
(1.2)
(0.4)
5.3
12.7
0.6
Total
7.7
(7.8)
(3.4)
(3.0)
(0.6)
(8.7)
(12.8)
(1.9)
Total
0.5
(7.5)
(0.8)
(2.8)
(1.4)
3.9
10.8
(0.1)
migrations from legacy broadband DSL. Almost half of our cable
broadband customer base now subscribes to speeds of at least 250Mbps,
and gigabit speeds are now available to 22.4 million households across
our network. Our total broadband customer base increased by 161,000
to 10.9 million despite the majority of our retail stores being closed for
four months during the year due to the COVID-19 pandemic, including
during most of Q4.
Our TV customer base declined by 236,000 reflecting lower retail
activity during the COVID-19 pandemic. During the year, we launched
a harmonised portfolio across all homes in Germany, aligning our sales
activities and brought Vodafone TV to the Unitymedia footprint. We also
launched the ‘DAZN’ Pay-TV channel and our new Apple set-top box
product during the year. The full benefit from these actions was not
visible in our commercial results due to lockdown restrictions affecting
retail activity. Our converged propositions, led by ‘GigaKombi’, allow
customers to combine their mobile, landline, broadband and TV
subscriptions for one monthly fee. Our converged customer base
continued to grow, with 130,000 Consumer additions during the
year. We now have over 1.6 million Consumer converged accounts.
Mobile service revenue declined by 0.7%* (Q3: 0.5%*, Q4: 0.9%*) mainly
due to the reduction in roaming, visitor and wholesale revenue. Service
revenue grew in the second half of the year, supported by higher variable
usage and increased demand from business customers, particularly in
the public and health sectors. We added 317,000 contract customers
during the year, supported by the migration of 187,000 Unitymedia
mobile customers onto our network. Contract churn improved by 0.8
percentage points year-on-year to 11.8%. We also added 437,000 prepaid
customers, supported by our online-only proposition, ‘CallYa Digital’. We
added a further 5.9 million IoT connections during the year, supported by
a strong demand from SMEs.
24
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
25
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Our financial performance (continued)
FY21 geographic performance summary
Total revenue (€m)
Service revenue (€m)
Adjusted EBITDA (€m)
Germany
€m
12,984
11,520
5,634
Italy
€m
5,014
4,458
1,597
UK
€m
6,151
4,848
1,367
Spain
Other Europe
Vodacom
€m
4,166
3,788
1,044
€m
5,549
4,859
1,760
€m
5,181
4,083
1,873
Adjusted EBITDA margin (%)
43.4% 31.9% 22.2% 25.1% 31.7% 36.2% 32.6% (8.6)%
Other
Markets
€m
3,765
3,312
1,228
Common
Functions
€m
1,368
470
(117)
Eliminations
€m
(369)
(197)
Group
€m
43,809
37,141
14,386
32.8%
FY21 Service revenue growth %
Germany
Italy
UK
Spain
Other Europe
Vodacom
Other Markets
Group
Germany
Italy
UK
Spain
Other Europe
Vodacom
Other Markets
Group
Total revenue
Service revenue
Other revenue
Adjusted EBITDA1
Adjusted EBITDA
margin1
Note:
for more information.
full year.
FY21 Organic service revenue growth %*
Germany: 31% of Group service revenue
Reported
change
%
7.5
7.7
11.0
Organic
change*
%
0.5
1.8
FY21
€m
12,984
11,520
1,464
5,634
FY20
€m
12,076
10,696
1,380
5,077
43.4% 42.0%
Q1
25.4
(6.5)
(3.2)
(6.9)
3.8
(11.9)
(18.9)
1.3
Q1
–
(6.5)
(1.9)
(6.9)
(3.1)
1.5
9.1
(1.3)
Q2
6.9
(7.9)
(0.8)
(1.8)
(1.9)
(12.3)
(15.1)
(2.5)
Q2
(0.1)
(8.0)
(0.5)
(1.8)
(1.8)
3.2
9.0
H1
15.4
(7.2)
(2.0)
(4.4)
0.8
(12.1)
(17.0)
(0.7)
H1
(0.1)
(7.2)
(1.2)
(4.4)
(2.4)
2.3
9.0
(0.4)
(0.8)
Q3
1.0
(7.8)
(5.1)
(0.9)
(4.0)
(9.1)
(9.5)
(3.9)
Q3
1.0
(7.8)
(0.4)
(1.1)
(0.7)
3.3
12.3
0.4
Q4
1.2
(8.8)
(4.4)
(2.2)
–
(1.2)
(6.1)
(2.4)
Q4
1.2
(7.8)
(0.6)
(1.3)
(0.2)
7.3
13.1
0.8
H2
1.1
(8.3)
(4.7)
(1.5)
(2.0)
(5.3)
(7.8)
(3.1)
H2
1.1
(7.8)
(0.5)
(1.2)
(0.4)
5.3
12.7
0.6
Total
7.7
(7.8)
(3.4)
(3.0)
(0.6)
(8.7)
(12.8)
(1.9)
Total
0.5
(7.5)
(0.8)
(2.8)
(1.4)
3.9
10.8
(0.1)
migrations from legacy broadband DSL. Almost half of our cable
broadband customer base now subscribes to speeds of at least 250Mbps,
and gigabit speeds are now available to 22.4 million households across
our network. Our total broadband customer base increased by 161,000
to 10.9 million despite the majority of our retail stores being closed for
four months during the year due to the COVID-19 pandemic, including
during most of Q4.
Our TV customer base declined by 236,000 reflecting lower retail
activity during the COVID-19 pandemic. During the year, we launched
a harmonised portfolio across all homes in Germany, aligning our sales
activities and brought Vodafone TV to the Unitymedia footprint. We also
launched the ‘DAZN’ Pay-TV channel and our new Apple set-top box
product during the year. The full benefit from these actions was not
visible in our commercial results due to lockdown restrictions affecting
customers to combine their mobile, landline, broadband and TV
subscriptions for one monthly fee. Our converged customer base
continued to grow, with 130,000 Consumer additions during the
year. We now have over 1.6 million Consumer converged accounts.
Mobile service revenue declined by 0.7%* (Q3: 0.5%*, Q4: 0.9%*) mainly
due to the reduction in roaming, visitor and wholesale revenue. Service
1. Adjusted EBITDA and Adjusted EBITDA margin are Non-GAAP measures. See page 217
Reported total revenue increased by 7.5% to €13.0 billion, primarily
reflecting the consolidation of the acquired Liberty Global assets for the
retail activity. Our converged propositions, led by ‘GigaKombi’, allow
On an organic basis, service revenue grew by 0.5%* (Q3: 1.0%*, Q4:
1.2%*), with growth across all customer segments in the second half of
the year. Growth was supported by good customer and ARPU growth, a
strong performance in Business fixed and higher variable usage revenue
during the COVID-19 lockdown, offset by lower roaming, visitor and
wholesale revenue. The year-on-year impact from the decline in roaming
revenue grew in the second half of the year, supported by higher variable
and visitor revenue was -1.0 percentage points (Q3: -1.0 percentage
points, Q4: -0.5 percentage points). Retail service revenue grew by 1.1%*
(Q3: 1.5%*, Q4: 1.8%*).
Fixed service revenue grew by 1.4%* (Q3: 1.4%*, Q4: 1.4%*). This was
driven by customer base and ARPU growth, higher variable usage during
the pandemic and growing demand for new services, such as cloud &
security. Business fixed service revenue grew strongly by 9.8%* in FY21.
We added 301,000 cable customers in the year, including 140,000
usage and increased demand from business customers, particularly in
the public and health sectors. We added 317,000 contract customers
during the year, supported by the migration of 187,000 Unitymedia
mobile customers onto our network. Contract churn improved by 0.8
percentage points year-on-year to 11.8%. We also added 437,000 prepaid
customers, supported by our online-only proposition, ‘CallYa Digital’. We
added a further 5.9 million IoT connections during the year, supported by
a strong demand from SMEs.
In April 2021, we became the first operator in Europe to launch
a standalone 5G network. This enables higher speeds, enhanced
reliability and ultra-low latency, in addition to using 20% less energy
on customers’ devices.
Adjusted EBITDA grew by 1.8%* as the benefit synergy delivery and
ongoing cost efficiencies were partially offset by a -1.5 percentage
point year-on-year impact from lower roaming and visitors, and lower
wholesale revenue. The adjusted EBITDA margin was 0.4* percentage
points higher year-on-year and was 43.4%.
We have continued to make good progress on integrating Unitymedia,
with the rebranding, harmonisation of our internet & TV portfolio, and
the organisational integration completed during the year. We are eight
months ahead of plan with respect to our cost and capital expenditure
synergy targets and remain on track to deliver the remaining synergies.
Italy: 12 % of Group service revenue
Total revenue
Service revenue
Other revenue
Adjusted EBITDA1
Adjusted EBITDA
margin1
Reported
change
%
(9.3)
(7.8)
Organic
change*
%
(7.5)
(22.8)
(12.7)
FY21
€m
5,014
4,458
556
1,597
FY20
€m
5,529
4,833
696
2,068
31.9%
37.4%
Note:
1. Adjusted EBITDA and Adjusted EBITDA margin are Non-GAAP measures. See page 217
for more information.
Reported total revenue decreased by 9.3% to €5.0 billion, driven by
continued price competition in the mobile market, as well as lower
roaming, visitor and equipment revenue.
On an organic basis, service revenue declined by 7.5%* (Q3: -7.8%*,
Q4: -7.8%*). The year-on-year impact from the decline in roaming and
visitor revenue was -2.1 percentage points (Q3: -1.9 percentage points,
Q4: -1.2 percentage points).
Mobile service revenue declined 10.5%* (Q3: -10.7%*, Q4: -9.3%*)
reflecting lower roaming and visitor revenue, a reduction in the active
prepaid customer base year-on-year, which began to stabilise in Q4,
and price competition in the value segment. Market mobile number
portability (‘MNP’) volumes were approximately 20% lower year-on-year,
reflecting retail lockdowns. Our second brand ‘ho.’ continued to grow,
with 662,000 net additions during the year and now has 2.5 million
customers. Quarterly net additions slowed in Q4, although returned to
growth towards the end of the quarter. During the year, we signed mobile
wholesale agreements with PostePay and Digi. We will start to migrate
PostePay customers onto our network in the first quarter of FY22.
Fixed service revenue grew by 1.4%* (Q3: 1.1%*, Q4:-3.8%*) driven by
90,000 broadband customer additions. In total, we now have almost
3.0 million broadband customers. The quarter-on-quarter slowdown in
Q4 service revenue trends reflected higher Business project revenue in
the prior year. However, Business demand was strong overall, supported
by our NPS leadership and now represents approximately 40% of fixed
revenue. Our total Consumer converged customer base is now 1.2 million
(39% of our broadband base), an increase of 105,000 during the year.
Through our own next generation network and partnership with Open
Fiber, our broadband services are now available to 8.4 million households.
We also cover 3.4 million households with fixed-wireless access, offering
speeds of up to 100Mbps.
Adjusted EBITDA declined by 12.7%* reflecting a -4.0 percentage point
year-on-year impact from lower roaming and visitors, and lower service
revenue, partially offset by continued good cost control. The adjusted EBITDA
margin was 1.3* percentage points lower year-on-year and was 31.9%.
UK: 13 % of Group service revenue
Total revenue
Service revenue
Other revenue
Adjusted EBITDA1
Adjusted EBITDA
margin1
Reported
change
%
(5.1)
(3.4)
Organic
change*
%
(0.8)
(8.9)
(7.3)
FY21
€m
6,151
4,848
1,303
1,367
FY20
€m
6,484
5,020
1,464
1,500
22.2%
23.1%
Note:
1. Adjusted EBITDA and Adjusted EBITDA margin are Non-GAAP measures. See page 217
for more information.
Reported total revenue decreased by 5.1% to €6.2 billion, primarily due to
the depreciation of the local currency versus the euro, and lower roaming,
visitor and equipment revenue.
On an organic basis, service revenue decreased by 0.8%* (Q3: -0.4%*,
Q4: -0.6%*) as good customer base growth and strong Business
demand, was offset by lower roaming, visitor and incoming revenue.
The year-on-year impact from the decline in roaming and visitor
revenue was -2.4 percentage points (Q3: -2.3 percentage points,
Q4: -1.5 percentage points).
Mobile service revenue declined 3.3%* (Q3: -3.6%*, Q4: -1.8%*), as lower
roaming, visitor and incoming revenue offset good customer base growth.
During the year, we maintained our good commercial momentum,
supported by a significant shift in sales mix, with digital sales growing
significantly to 39%. We also benefited from Business demand, strong
iPhone sales, and improved customer loyalty. Contract churn improved
1.1 percentage point year-on-year to 13.0%. In total, we added 219,000
customers to our mobile contract base in FY21. Our digital sub-brand
‘VOXI’ also continued to grow strongly, with 176,000 customers added
during the year, supported by the launch of new propositions.
Fixed service revenue grew by 5.6%* (Q3: 7.9%*, Q4: 2.2%*) and our
commercial momentum remained strong with 192,000 net customer
additions during the year. The quarter-on-quarter slowdown in Q4 was
driven by the lapping of strong Business fixed performance in the prior
year and lower wholesale revenue. In March, we launched Vodafone
‘Pro Broadband’ which combines fixed and mobile connectivity to
provide ‘unbreakable’ connectivity. Pro Broadband customers also
benefit from super Wi-Fi and dedicated customer support. We now
have 911,000 broadband customers, of which 459,000 are converged.
Business demand for our SME and corporate products remained strong,
including productivity and security solutions.
Adjusted EBITDA decreased by 7.3%* reflecting the year-on-year
impacts from lower roaming and visitors of -4.8 percentage points and
a prior year one-off licence fee settlement of -4.6 percentage points. On
an underlying basis, we continued to grow adjusted EBITDA, supported by
strong cost control, with operating expenses 7.5% lower year-on-year. Our
adjusted EBITDA margin was 1.1* percentage points lower year-on-year
at 22.2%.
To support our continued investment in our networks, products and
services, we announced that an annual price increase of Consumer Price
Index plus 3.9% will be applied to all broadband and mobile contracts
signed from 9 December 2020, taking effect from April 2021.
In March 2021, we acquired 40MHz of spectrum in the 3.6GHz band
for next-generation 5G mobile services at a cost of €206 million. The
new spectrum acquired will enable us to significantly expand 5G network
capacity to meet the growing demand for fast, reliable, high-quality
data services.
26
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Our financial performance (continued)
Spain: 10% of Group service revenue
Total revenue
Service revenue
Other revenue
Adjusted EBITDA1
Adjusted EBITDA
margin1
Reported
change
%
(3.0)
(3.0)
Organic
change*
%
(2.8)
3.5
3.4
FY21
€m
4,166
3,788
378
1,044
FY20
€m
4,296
3,904
392
1,009
25.1%
23.5%
Other Europe: 13% of Group service revenue
Reported
change
%
0.1
(0.6)
Total revenue
Organic
change*
%
(1.4)
Service revenue
Other revenue
Adjusted EBITDA1
Adjusted EBITDA
margin1
FY21
€m
5,549
4,859
690
1,760
FY20
€m
5,541
4,890
651
1,738
31.7%
31.4%
1.3
(0.5)
Note:
1. Adjusted EBITDA and Adjusted EBITDA margin are Non-GAAP measures. See page 217
Note:
1. Adjusted EBITDA and Adjusted EBITDA margin are Non-GAAP measures. See page 217
for more information.
for more information.
Reported total revenue decreased by 3.0% to €4.2 billion, primarily due to
lower roaming and visitor revenue and other COVID-19 related impacts.
On an organic basis, service revenue declined by 2.8%* (Q3: -1.1%*,
Q4: -1.3%*) reflecting price competition in the market and lower roaming
and visitor revenue. The year-on-year impact from the decline in roaming
and visitor revenue was -2.0 percentage points (Q3: -1.7 percentage points,
Q4: -1.1 percentage points). The service revenue slowdown quarter-on-
quarter mainly reflected a change in premium calling regulation.
In mobile, we are competing effectively across all segments, and grew our
contract customer base by 70,000, despite the market remaining highly
competitive following the easing of restrictions in the second half of the
year and an increase in mobile number portability. Mobile contract churn
decreased 1.0 percentage points year-on-year to 20.2% reflecting our
continued focus on improving customer loyalty. Our second brand ‘Lowi’
added 236,000 customers during the year and now has a total base of
1.2 million.
Our broadband customer base increased by 21,000 despite our
more-for-more pricing actions, and higher competitive intensity during
the second half of the year. We added 109,000 customers to our NGN
network as customers continued to transition to higher-speed plans.
Our extensive library of movies and TV series, as well as our new ‘boxless’
TV app proposition, supported continued good customer growth in TV
with 156,000 customers added during the year.
Adjusted EBITDA grew by 3.4%* and the adjusted EBITDA margin was
1.5* percentage points higher year-on-year at 25.1%. The growth in
EBITDA reflects lower commercial and football content costs, and a 5.8%
reduction in operating expenses, partially offset by a -5.7 percentage point
year-on-year impact from lower roaming and visitors.
Total revenue increased by 0.1% to €5.5 billion, primarily reflecting the
consolidation of the acquired Liberty Global assets in Central Eastern
Europe for a full year, offset by lower roaming and visitor revenue and
the disposal of Vodafone Malta in the prior year.
On an organic basis, service revenue declined by 1.4%* (Q3: -0.7%*,
Q4: -0.2%*), as growth in Portugal, Czech Republic, and Hungary
was offset by declines in Ireland, Greece and Romania. The decline
in service revenue was driven by lower roaming and visitor revenue,
lower prepaid top-ups (notably in Greece), and increased competition in
some markets. The year-on-year impact from the decline in roaming and
visitor revenue was -2.0 percentage points (Q3: -1.8 percentage points,
Q4: -1.3 percentage points).
In Portugal, service revenue grew as mobile contract and fixed base
growth was partially offset by lower roaming and visitor revenue. During
the year, we added 62,000 mobile contract customers and 71,000 fixed
broadband customers. Almost a third of our broadband customer base
is converged.
In Ireland, service revenue declined reflecting lower roaming and visitor
revenue and higher competitive intensity, partially offset by the successful
launch of unlimited Consumer mobile data tariffs. During the year, our
mobile contract customer base increased by 68,000 and mobile contract
churn improved 0.6 percentage point year-on-year to 9.9%.
Service revenue in Greece declined, reflecting lower roaming, visitor and
prepaid revenue and higher promotional intensity during the COVID-19
pandemic, partially offset by strong fixed demand, notably from business
customers. Mobile contract churn improved 1.8 percentage point
year-on-year to 9.3%.
Adjusted EBITDA declined by 0.5%*, including a -4.4 percentage point
year-on-year impact from lower roaming and visitors. The adjusted
EBITDA margin increased by 0.2* percentage points and was 31.7%.
We have continued to make good progress on integrating the assets
acquired from Liberty Global in Central Eastern Europe and we remain
on track to deliver our targeted synergies.
Our financial performance (continued)
Total revenue
Service revenue
Other revenue
Adjusted EBITDA1
Adjusted EBITDA
margin1
Note:
for more information.
Reported
change
%
(3.0)
(3.0)
Organic
change*
%
(2.8)
FY21
€m
4,166
3,788
378
1,044
FY20
€m
4,296
3,904
392
1,009
25.1%
23.5%
3.5
3.4
Adjusted EBITDA1
Total revenue
Service revenue
Other revenue
Adjusted EBITDA
margin1
Note:
for more information.
Reported
change
%
0.1
(0.6)
Organic
change*
%
(1.4)
1.3
(0.5)
FY21
€m
5,549
4,859
690
1,760
FY20
€m
5,541
4,890
651
1,738
31.7%
31.4%
1. Adjusted EBITDA and Adjusted EBITDA margin are Non-GAAP measures. See page 217
1. Adjusted EBITDA and Adjusted EBITDA margin are Non-GAAP measures. See page 217
Reported total revenue decreased by 3.0% to €4.2 billion, primarily due to
Total revenue increased by 0.1% to €5.5 billion, primarily reflecting the
lower roaming and visitor revenue and other COVID-19 related impacts.
consolidation of the acquired Liberty Global assets in Central Eastern
On an organic basis, service revenue declined by 2.8%* (Q3: -1.1%*,
Q4: -1.3%*) reflecting price competition in the market and lower roaming
Europe for a full year, offset by lower roaming and visitor revenue and
the disposal of Vodafone Malta in the prior year.
and visitor revenue. The year-on-year impact from the decline in roaming
On an organic basis, service revenue declined by 1.4%* (Q3: -0.7%*,
and visitor revenue was -2.0 percentage points (Q3: -1.7 percentage points,
Q4: -0.2%*), as growth in Portugal, Czech Republic, and Hungary
Q4: -1.1 percentage points). The service revenue slowdown quarter-on-
was offset by declines in Ireland, Greece and Romania. The decline
quarter mainly reflected a change in premium calling regulation.
in service revenue was driven by lower roaming and visitor revenue,
In mobile, we are competing effectively across all segments, and grew our
contract customer base by 70,000, despite the market remaining highly
competitive following the easing of restrictions in the second half of the
year and an increase in mobile number portability. Mobile contract churn
lower prepaid top-ups (notably in Greece), and increased competition in
some markets. The year-on-year impact from the decline in roaming and
visitor revenue was -2.0 percentage points (Q3: -1.8 percentage points,
Q4: -1.3 percentage points).
decreased 1.0 percentage points year-on-year to 20.2% reflecting our
In Portugal, service revenue grew as mobile contract and fixed base
continued focus on improving customer loyalty. Our second brand ‘Lowi’
growth was partially offset by lower roaming and visitor revenue. During
added 236,000 customers during the year and now has a total base of
the year, we added 62,000 mobile contract customers and 71,000 fixed
1.2 million.
broadband customers. Almost a third of our broadband customer base
Our broadband customer base increased by 21,000 despite our
is converged.
more-for-more pricing actions, and higher competitive intensity during
In Ireland, service revenue declined reflecting lower roaming and visitor
the second half of the year. We added 109,000 customers to our NGN
revenue and higher competitive intensity, partially offset by the successful
network as customers continued to transition to higher-speed plans.
launch of unlimited Consumer mobile data tariffs. During the year, our
Our extensive library of movies and TV series, as well as our new ‘boxless’
mobile contract customer base increased by 68,000 and mobile contract
TV app proposition, supported continued good customer growth in TV
churn improved 0.6 percentage point year-on-year to 9.9%.
with 156,000 customers added during the year.
Adjusted EBITDA grew by 3.4%* and the adjusted EBITDA margin was
prepaid revenue and higher promotional intensity during the COVID-19
1.5* percentage points higher year-on-year at 25.1%. The growth in
pandemic, partially offset by strong fixed demand, notably from business
EBITDA reflects lower commercial and football content costs, and a 5.8%
customers. Mobile contract churn improved 1.8 percentage point
Service revenue in Greece declined, reflecting lower roaming, visitor and
reduction in operating expenses, partially offset by a -5.7 percentage point
year-on-year to 9.3%.
year-on-year impact from lower roaming and visitors.
Adjusted EBITDA declined by 0.5%*, including a -4.4 percentage point
year-on-year impact from lower roaming and visitors. The adjusted
EBITDA margin increased by 0.2* percentage points and was 31.7%.
We have continued to make good progress on integrating the assets
acquired from Liberty Global in Central Eastern Europe and we remain
on track to deliver our targeted synergies.
26
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
27
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Spain: 10% of Group service revenue
Other Europe: 13% of Group service revenue
Vodacom: 11% of Group service revenue
Total revenue
Service revenue
Other revenue
Adjusted EBITDA1
Adjusted EBITDA
margin1
Reported
change
%
(6.3)
(8.7)
(10.3)
Organic
change*
%
3.9
2.9
FY21
€m
5,181
4,083
1,098
1,873
FY20
€m
5,531
4,470
1,061
2,088
36.2%
37.8%
Service revenue
Other revenue
Adjusted EBITDA1
Adjusted EBITDA
margin1
Other Markets: 9% of Group service revenue
Reported
change
%
(14.2)
(12.8)
Total revenue
Organic
change*
%
10.8
FY21
€m
3,765
3,312
453
1,228
FY20
€m
4,386
3,796
590
1,400
32.6%
31.9%
(12.3)
8.5
Note:
1. Adjusted EBITDA and Adjusted EBITDA margin are Non-GAAP measures. See page 217
Note:
1. Adjusted EBITDA and Adjusted EBITDA margin are Non-GAAP measures. See page 217
for more information.
for more information.
Reported total revenue decreased by 6.3% to €5.2 billion and reported
adjusted EBITDA decreased by 10.3%, primarily due to the depreciation
of the local currencies versus the euro.
Reported total revenue decreased by 14.2% to €3.8 billion, primarily
due to the depreciation of the local currencies versus the euro and the
disposal of Vodafone New Zealand in the prior year.
On an organic basis, service revenue increased by 10.8%* (Q3: 12.3%*,
Q4: 13.1%*), driven by customer base growth and increased demand
for data across our markets. The year-on-year impact from the decline
in roaming and visitor revenue was -1.5 percentage points (Q3: -1.0
percentage points, Q4: -0.5 percentage points).
Service revenue in Turkey grew ahead of inflation, reflecting strong
customer contract ARPU growth and increased demand for mobile data
and fixed broadband. Mobile contract customer additions were 1.1 million
during the year – the highest amongst any of our markets – supported
by migrations from prepaid customers. Contract churn improved by
3.3 percentage points year-on-year to 19.3%.
Service revenue in Egypt also grew ahead of inflation, supported by
customer base growth and increased data usage, partially offset by lower
roaming and visitor revenue. During the year, we added 402,000 mobile
contract customers and 1.1 million prepaid mobile customers. Mobile
contract churn in Egypt was the lowest in the entire Group at 6.5%.
Adjusted EBITDA increased by 8.5%* and the adjusted EBITDA margin
decreased by 0.7* percentage points. This reflected strong revenue
growth and operating efficiencies in Turkey, offset by the lapping of a prior
year settlement and the impact of the temporary zero-rating of e-money
transaction fees in Egypt. The adjusted EBITDA margin was 32.6%.
In November 2020, we announced that Vodafone Egypt had acquired
40MHz of 2.6Ghz spectrum, with a 10-year licence through to 2030. The
spectrum will enable us to significantly expand network capacity to meet
growing demand for reliable, high quality voice and data services.
In December 2020, we announced that discussions with Saudi Telecom
Company in relation to the sale of Vodafone’s 55% shareholding in
Vodafone Egypt had been terminated. Vodafone Egypt has a strong
market position in an attractive market and generates a strong return on
capital employed, in excess of its local cost of capital. We are committed
to retaining our presence in Egypt.
On an organic basis, Vodacom’s total service revenue grew 3.9%* (Q3:
3.3%*, Q4: 7.3%*) as good growth in South Africa was partially offset
by revenue pressure in Vodacom’s international operations due to
macroeconomic pressure and the zero-rating of person-to-person
M-Pesa transfers for most of the year. The quarter-on-quarter
improvement in growth in Q4 reflected stronger growth in South
Africa and an acceleration in Vodacom’s international markets as
M-Pesa service fees normalised across all markets from January 2021.
In South Africa, service revenue growth achieved a 10-year high, as the
business benefited from higher demand for voice, data and financial
services, and an increase in consumer discretionary spend as a result of
government measures and social grants during the COVID-19 pandemic.
We added 133,000 contract customers, supported by strong growth in
Business connectivity as remote working and mobile broadband demand
increased. We also added 2.5 million prepaid customers supported by our
successful ‘Shake-off’ summer campaign and new behavioural loyalty
programme launched during the second half of the year. Data traffic
increased by c.60% year-on-year, and 45% of our customer base is now
using data services. Our ‘ConnectU’ platform continues to promote digital
inclusion via zero-rated access to a wide range of websites, including job
portals and online learning platforms, with total unique users reaching
15.5 million at year end. Financial Services customers in South Africa
increased by 15.4% to 13.3 million, reflecting our strong execution
and the ongoing expansion of our service offerings. In January 2021, we
announced an expanded wholesale agreement with Cell-C for its mobile
contract and mobile broadband customers to roam on our network.
In Vodacom’s international markets, service revenue slightly declined,
reflecting economic pressure, the disruption to our commercial activities
during the COVID-19 pandemic, the zero-rating of person-to-person
M-Pesa transfers in DRC, Mozambique, and Lesotho, and the impact
of service barring in Tanzania due to biometric registration compliance.
There was a significant improvement in trends in the second half of the
year, driven by the reinstatement of person-to-person M-Pesa transfer
fees across all markets and improved commercial momentum. Digital
adoption across Vodacom’s international markets accelerated. M-Pesa
transaction value increased by 28.4%, while M-Pesa revenue as a share
of total service revenue increased by 1.6 percentage points to 20.9%,
and 52% of our customer base is now using data services.
Vodacom’s adjusted EBITDA increased by 2.9%* as growth in South
Africa was partially offset by revenue pressure in Vodacom’s international
operations, notably in the first half of the year. The adjusted EBITDA margin
was 1.3* percentage points lower year-on-year, partly driven by 5G
roaming investment in South Africa. The adjusted EBITDA margin
was 36.2%.
28
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Our financial performance (continued)
Associates and joint ventures
VodafoneZiggo Group Holding B.V.
Indus Towers Limited
Safaricom Limited
Vodafone Idea Limited
Other
Share of results of equity accounted
associates and joint ventures
FY21
€m
(232)
274
217
–
83
FY20
€m
(64)
19
247
(2,546)
(161)
342
(2,505)
VodafoneZiggo Joint Venture (Netherlands)
The results of VodafoneZiggo (in which Vodafone owns a 50% stake)
are reported here under US GAAP, which is broadly consistent with
Vodafone’s IFRS basis of reporting.
Total revenue grew 1.6% (Q3: 0.5%, Q4: 1.8%) to €4.0 billion. This reflected
mobile contract customer base growth and strong Business fixed demand,
partly offset by lower roaming, visitor and handset revenue.
During the year, VodafoneZiggo added 262,000 mobile contract
customers, supported by the successful ‘Runners’ campaign and higher
demand from businesses. Strong Business fixed performance was
supported by an increase in the customer base, as well as higher demand
for unified communications and remote-working solutions. The number
of converged households increased by 81,000, with 44% of broadband
customers and 71% of all B2C mobile customers now converged,
delivering significant NPS and churn benefits. VodafoneZiggo was the first
operator to launch a nationwide 5G network in the Netherlands and also
completed its analogue TV switch-off during April 2021. VodafoneZiggo
now offers 1 gigabit speeds to more than 3.1 million homes and is on
track to provide nationwide coverage in 2022.
Adjusted EBITDA grew by 5.2%, supported by top line growth and cost
synergies realisation, more than offsetting a year-on-year impact from
lower roaming and visitor mobile revenue. VodafoneZiggo has now
successfully delivered the €210 million cost and capital expenditure
synergies targeted, one year ahead of the original plan.
During the year, Vodafone received €209 million in dividends from
the joint venture, as well as €43 million in interest payments. The joint
venture also drew down an additional €104 million shareholder loan
from Vodafone to fund spectrum licences acquired in July 2020.
Indus Towers Associate (India)
In November 2020, we announced that the merger of Indus Towers
Limited (‘Indus Towers’) and Bharti Infratel Limited (‘Bharti Infratel’) had
completed. The merged company is listed on the National Stock Exchange
of India and the Bombay Stock Exchange and was renamed Indus Towers
Limited following the merger. Vodafone was issued with 757.8 million
shares in the merged company in exchange for its 42% shareholding
in Indus Towers and this is equivalent to a 28.1% shareholding in the
combined company.
Indus Towers is classified as held for sale at 31 March 2021 in the
consolidated statement of financial position. The Group’s interest in Indus
Towers has been provided as security against certain bank borrowings
secured against Indian assets and partly to the pledges provided to
the new Indus Towers entity under the terms of the merger between
erstwhile Indus Towers and Bharti Infratel.
Safaricom Associate (Kenya)
Safaricom service revenue declined by 0.3%* (Q3: 1.6%*, Q4: 6.4%*)
due to depressed economic activity and the zero-rating of some M-Pesa
services in the first half of the year. The quarter-on-quarter improvement
in Q4 was driven by an increase in M-Pesa revenue as service fees
normalised and higher demand for fixed broadband. Adjusted EBITDA
decreased by 3.3% primarily driven by a decline in revenue.
Vodafone Idea Limited Joint Venture (India)
In October 2019, the Indian Supreme Court gave its judgement in the
Union of India v Association of Unified Telecom Service Providers of
India case regarding the interpretation of adjusted gross revenue (‘AGR’),
a concept used in the calculation of certain regulatory fees. Vodafone
Idea was liable for very substantial demands made by the Department
of Telecommunications (‘DoT’) in relation to these fees. Based on
submissions of the DoT in the Supreme Court proceedings (which
the Group is unable to confirm as to their accuracy), Vodafone Idea
reported a total estimated liability of INR 654 billion (€7.6 billion) excluding
repayments and including interest, penalty and interest on penalty up to
30 June 2020. On 17 February, 20 February, 16 March and 16 July 2020,
Vodafone Idea made payments totalling INR 78.5 billion (€0.9 billion)
to the DoT. In September 2020, the Supreme Court of India directed
that telecom operators make payment of 10% of the total dues by
31 March 2021 and thereafter repay the balance, along with 8%
interest, in 10 annual instalments.
Vodafone Idea Limited (‘Vodafone Idea’) recorded losses for each of
the six month periods ended 30 September 2019, 31 March 2020
and 30 September 2020, respectively. For the six months ended
30 September 2019, the Group recognised its share of estimated
Vodafone Idea losses arising from both its operating activities and those
in relation to the AGR judgement. The Group has no obligation to fund
Vodafone Idea, consequently the Group’s recognised share of losses in
the six months ended 30 September 2019 was limited to the remaining
carrying value of Vodafone Idea which was therefore reduced to €nil
at 30 September 2019; no further losses have been recognised by
the Group.
As part of the agreement to merge Vodafone India and Idea Cellular in
2017, the parties agreed a mechanism for payments between the Group
and Vodafone Idea pursuant to the crystallisation of certain identified
contingent liabilities in relation to legal, regulatory, tax and other matters,
and refunds relating to Vodafone India and Idea Cellular. Cash payments
or cash receipts relating to these matters must have been made or
received by Vodafone Idea before any amount becomes due from or
owed to the Group. Any future payments by the Group to Vodafone Idea
as a result of this agreement would only be made after satisfaction of this
and other contractual conditions. The Group’s potential exposure under
this mechanism is now capped at INR 64 billion (€747 million). See note 29
‘Contingent liabilities and legal proceedings’ to the consolidated financial
statements for further information.
Vodafone Hutchison Australia / TPG Telecom Limited
Joint Venture (Australia)
In July 2020, Vodafone Hutchison Australia Pty Limited (‘VHA’) and
TPG Telecom Limited (‘TPG’) completed their merger to establish a
fully integrated telecommunications operator in Australia. The merged
entity was admitted to the Australian Securities Exchange (‘ASX’)
on 30 June 2020 and is known as TPG Telecom Limited. Vodafone
and Hutchison Telecommunications (Australia) Limited each own an
economic interest of 25.05% in the merged unit.
28
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
29
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Our financial performance (continued)
Associates and joint ventures
VodafoneZiggo Group Holding B.V.
Indus Towers Limited
Safaricom Limited
Vodafone Idea Limited
Other
Share of results of equity accounted
associates and joint ventures
Safaricom Associate (Kenya)
Safaricom service revenue declined by 0.3%* (Q3: 1.6%*, Q4: 6.4%*)
due to depressed economic activity and the zero-rating of some M-Pesa
services in the first half of the year. The quarter-on-quarter improvement
in Q4 was driven by an increase in M-Pesa revenue as service fees
normalised and higher demand for fixed broadband. Adjusted EBITDA
decreased by 3.3% primarily driven by a decline in revenue.
FY21
€m
(232)
274
217
–
83
FY20
€m
(64)
19
247
(2,546)
(161)
Vodafone Idea Limited Joint Venture (India)
In October 2019, the Indian Supreme Court gave its judgement in the
342
(2,505)
Union of India v Association of Unified Telecom Service Providers of
VodafoneZiggo Joint Venture (Netherlands)
The results of VodafoneZiggo (in which Vodafone owns a 50% stake)
are reported here under US GAAP, which is broadly consistent with
Vodafone’s IFRS basis of reporting.
Total revenue grew 1.6% (Q3: 0.5%, Q4: 1.8%) to €4.0 billion. This reflected
mobile contract customer base growth and strong Business fixed demand,
partly offset by lower roaming, visitor and handset revenue.
During the year, VodafoneZiggo added 262,000 mobile contract
customers, supported by the successful ‘Runners’ campaign and higher
demand from businesses. Strong Business fixed performance was
supported by an increase in the customer base, as well as higher demand
for unified communications and remote-working solutions. The number
of converged households increased by 81,000, with 44% of broadband
customers and 71% of all B2C mobile customers now converged,
delivering significant NPS and churn benefits. VodafoneZiggo was the first
operator to launch a nationwide 5G network in the Netherlands and also
completed its analogue TV switch-off during April 2021. VodafoneZiggo
now offers 1 gigabit speeds to more than 3.1 million homes and is on
track to provide nationwide coverage in 2022.
Adjusted EBITDA grew by 5.2%, supported by top line growth and cost
synergies realisation, more than offsetting a year-on-year impact from
lower roaming and visitor mobile revenue. VodafoneZiggo has now
successfully delivered the €210 million cost and capital expenditure
synergies targeted, one year ahead of the original plan.
During the year, Vodafone received €209 million in dividends from
the joint venture, as well as €43 million in interest payments. The joint
venture also drew down an additional €104 million shareholder loan
from Vodafone to fund spectrum licences acquired in July 2020.
Indus Towers Associate (India)
In November 2020, we announced that the merger of Indus Towers
Limited (‘Indus Towers’) and Bharti Infratel Limited (‘Bharti Infratel’) had
completed. The merged company is listed on the National Stock Exchange
of India and the Bombay Stock Exchange and was renamed Indus Towers
Limited following the merger. Vodafone was issued with 757.8 million
shares in the merged company in exchange for its 42% shareholding
in Indus Towers and this is equivalent to a 28.1% shareholding in the
combined company.
Indus Towers is classified as held for sale at 31 March 2021 in the
consolidated statement of financial position. The Group’s interest in Indus
Towers has been provided as security against certain bank borrowings
secured against Indian assets and partly to the pledges provided to
the new Indus Towers entity under the terms of the merger between
erstwhile Indus Towers and Bharti Infratel.
India case regarding the interpretation of adjusted gross revenue (‘AGR’),
a concept used in the calculation of certain regulatory fees. Vodafone
Idea was liable for very substantial demands made by the Department
of Telecommunications (‘DoT’) in relation to these fees. Based on
submissions of the DoT in the Supreme Court proceedings (which
the Group is unable to confirm as to their accuracy), Vodafone Idea
reported a total estimated liability of INR 654 billion (€7.6 billion) excluding
repayments and including interest, penalty and interest on penalty up to
30 June 2020. On 17 February, 20 February, 16 March and 16 July 2020,
Vodafone Idea made payments totalling INR 78.5 billion (€0.9 billion)
to the DoT. In September 2020, the Supreme Court of India directed
that telecom operators make payment of 10% of the total dues by
31 March 2021 and thereafter repay the balance, along with 8%
interest, in 10 annual instalments.
Vodafone Idea Limited (‘Vodafone Idea’) recorded losses for each of
the six month periods ended 30 September 2019, 31 March 2020
and 30 September 2020, respectively. For the six months ended
30 September 2019, the Group recognised its share of estimated
Vodafone Idea losses arising from both its operating activities and those
in relation to the AGR judgement. The Group has no obligation to fund
Vodafone Idea, consequently the Group’s recognised share of losses in
the six months ended 30 September 2019 was limited to the remaining
carrying value of Vodafone Idea which was therefore reduced to €nil
at 30 September 2019; no further losses have been recognised by
the Group.
As part of the agreement to merge Vodafone India and Idea Cellular in
2017, the parties agreed a mechanism for payments between the Group
and Vodafone Idea pursuant to the crystallisation of certain identified
contingent liabilities in relation to legal, regulatory, tax and other matters,
and refunds relating to Vodafone India and Idea Cellular. Cash payments
or cash receipts relating to these matters must have been made or
received by Vodafone Idea before any amount becomes due from or
owed to the Group. Any future payments by the Group to Vodafone Idea
as a result of this agreement would only be made after satisfaction of this
and other contractual conditions. The Group’s potential exposure under
this mechanism is now capped at INR 64 billion (€747 million). See note 29
‘Contingent liabilities and legal proceedings’ to the consolidated financial
statements for further information.
Vodafone Hutchison Australia / TPG Telecom Limited
Joint Venture (Australia)
In July 2020, Vodafone Hutchison Australia Pty Limited (‘VHA’) and
TPG Telecom Limited (‘TPG’) completed their merger to establish a
fully integrated telecommunications operator in Australia. The merged
entity was admitted to the Australian Securities Exchange (‘ASX’)
on 30 June 2020 and is known as TPG Telecom Limited. Vodafone
and Hutchison Telecommunications (Australia) Limited each own an
economic interest of 25.05% in the merged unit.
Net financing costs
Earnings per share
Investment income
Financing costs
Net financing costs
Adjustments for:
Mark-to-market (gains)/losses
Foreign exchange losses
Adjusted net financing costs1
FY21
€m
330
(1,027)
(697)
(1,091)
23
(1,765)
FY20
€m
248
(3,549)
(3,301)
1,128
205
(1,968)
Reported
change %
78.9
10.3
Note:
1. Adjusted net financing costs is a Non-GAAP measure. See page 217 for more information. The
FY20 adjusted net financing costs has been aligned to the FY21 presentation which no longer
excludes lease interest. This increased adjusted net financing costs for FY20 by €330 million.
Net financing costs decreased by €2.6 billion, primarily due to mark-to-
market gains of €1.1 billion (compared to losses of €1.1 billion in FY20).
This was driven by a higher share price, causing a gain on options held
relating to €3.8 billion of mandatory convertible bonds. Adjusted net
financing costs decreased reflecting net favourable interest movements
on borrowings in relation to foreign operations.
Taxation
Effective tax rate
Adjusted effective tax rate1
FY21
%
87.8%
26.9%
FY20
%
157.2%
25.3%
Change
pps
(69.4)
1.6
Note:
1. Adjusted effective tax rate is a Non-GAAP measure. See page 217 for more information.
The Group’s effective tax rate for the year ended 31 March 2021
was 87.8%.
The Group’s effective tax rate for both years includes the following items:
a €2,827 million charge (2020: €346 million credit) for the utilisation of
losses in Luxembourg which arises from an increase (2020: decrease) in
the valuation of investments based upon local GAAP financial statements
and tax returns. The increase in the current year was principally driven by
increases in the value of our operating businesses, listed associates and
joint ventures. These items change the total losses we have available for
future use against our profits in Luxembourg and neither item affects the
amount of tax we pay in other countries.
The Group’s effective tax rate for the year ended 31 March 2020 included
a reduction in our deferred tax assets in Luxembourg of €881 million
following a reduction in the Luxembourg corporate tax rate.
The Group’s adjusted effective tax rate for the year ended 31 March 2021
was 26.9%. The rate increased as a result of the mix of profits in the Group
and a lower use of our Luxembourg losses in the year.
The Group’s adjusted effective tax rate for both years does not include
the following items:, €320 million relating to Luxembourg losses (2020:
€348 million) and €2,827 million charge (2020: €346 million credit) arising
from an increase (2020: decrease) in the valuation of investments based
upon the local GAAP financial statements and tax returns as stated above.
We expect the adjusted effective tax rate to rise to the high 20’s over the
medium term reflecting the forecast profit mix, a reducing annual use of
our Luxembourg deferred tax asset as market conditions drive margins
lower on existing financing activities, the impact of an anticipated
reduction in levels of intercompany debt over the medium term and
the impact of government responses to the COVID pandemic resulting
in increased tax liabilities.
The Group’s adjusted effective tax rate for the year ended 31 March 2020
does not include the reduction in our deferred tax assets in Luxembourg
referred to above.
Basic earnings/(loss) per share
Adjusted basic earnings
per share1
FY21
eurocents
0.38c
FY20
eurocents
(3.13)c
Reported
change
eurocents
3.51c
8.08c
5.60c
2.48c
Note:
1. Adjusted basic earnings per share is a Non-GAAP measure. See page 217 for more information.
Basic earnings per share was 0.38 eurocents, compared to a loss per
share of 3.13 eurocents for the year ended 31 March 2020.
Adjusted basic earnings per share was 8.08 eurocents compared to
5.60 eurocents for the year ended 31 March 2020.
Consolidated statement of financial position
The consolidated statement of financial position is set out on page 122.
Details on the major movements of both our assets and liabilities in the
year are set out below.
Assets
Goodwill and other intangible assets decreased by €0.5 billion
between 31 March 2020 and 31 March 2021 to €53.5 billion. This
reflects the amortisation of computer software, partially offset by
software and purchased licence additions in the period.
Property, plant and equipment increased by €1.1 billion between
31 March 2020 and 31 March 2021 to €41.2 billion. This reflects
additions in the period, partially offset by the depreciation charge.
Other non-current assets decreased by €9.2 billion between
31 March 2020 and 31 March 2021 to €32.0 billion, primarily due to
a €5.5 billion decrease in derivative assets included in trade and other
receivables, a €2.0 billion decrease in deferred tax assets and a €1.2 billion
decrease in investments in associates and joint ventures, reflecting the
reclassification of the Group’s interest in Indus Towers Limited as held
for sale at 31 March 2021. Further detail is provided in note 7 to the
consolidated financial statements.
Current assets decreased by €6.2 billion between 31 March 2020
and 31 March 2021 to €27.0 billion, primarily due to a €7.7 billion
decrease in cash and cash equivalents and a €0.8 billion decrease in
trade and other receivables, partially offset by an increase of €2.1 billion
in other investments.
Total equity and liabilities
Total equity decreased by €4.8 billion between 31 March 2020 and
31 March 2021 to €57.8 billion largely due to €2.4 billion of dividends
paid to the Group’s shareholders, €0.4 billion of dividends paid to
non-controlling interests and total comprehensive expense for the
period of €3.6 billion, partially offset by an increase of €1.9 billion
arising from transactions with non-controlling interests in subsidiaries.
Non-current liabilities decreased by €3.6 billion between 31 March 2020
and 31 March 2021 to €68.5 billion, primarily due to a €3.7 billion
decrease in borrowings.
Current liabilities decreased by €4.7 billion between 31 March 2020 and
31 March 2021 to €28.7 billion, primarily due to a €3.5 billion decrease in
borrowings, a €1.4 billion decrease in financial liabilities under put option
arrangements, partially offset by an increase of €0.4 billion in trade and
other payables.
Inflation
Inflation did not have a significant effect on the Group’s consolidated
results of operations and financial condition during the year ended
31 March 2021.
30
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes:
1. Adjusted EBITDA, free cash flow (pre spectrum, restructuring and integration costs), free cash
flow and net debt are Non-GAAP measures. See page 217 for more information.
2. See page 226 for an analysis of tangible and intangible additions in the year.
3. Interest received and paid excluded interest on lease liabilities of €307 million (FY20:
€305 million outflow); €nil (FY20: €175 million) of interest costs related to Liberty acquisition
financing, included within Other; and €9 million of cash inflow (FY20: €273 million outflow) from
the option structures relating to the issue of the mandatory convertible bonds, included within
Share buybacks. The option structures were intended to ensure that the total cash outflow to
execute the programme were broadly equivalent to the amounts raised on issuing each tranche .
4. Integration capital expenditure comprises amounts for the integration of acquired Liberty Global
assets and network integration.
5. “Other movements on net debt” for the year ended 31 March 2021 includes mark-to-market
gains recognised in the income statement of €1,091 million, offset by payments in respect of
bank borrowings secured against Indian assets (€83m) and payments to Vodafone Idea Limited
of €235m in respect of the contingent liability mechanism. The comparative figure primarily
included €1,510 million of debt in relation to licences and spectrum in Germany and
mark-to-market losses recognised in the income statement of €1,128 million
6. Net debt as at 31 March 2020 has been aligned to the FY21 presentation, increasing
by €3,799 million to exclude derivative movements in cash flow hedging reserves and
decreasing by €121 million to reflect that Vodafone Egypt is no longer held for sale.
Free cash flow (pre spectrum, restructuring and integration costs)
decreased by 11.9% to €5.0 billion (FY20: €5.7 billion) due to lower
adjusted EBITDA and increased investment in network performance
during the pandemic, partially offset by working capital movements
including lower cash commissions.
Acquisitions and disposals in the current year included proceeds from the
Vantage Towers public offering of €2.0 billion, partially offset by payments
to purchase shares from KDG minorities of €1.5 billion. The prior year
included €2.0 billion received on completion of the sale of Vodafone
New Zealand on 31 July 2019, together with €2.1 billion received
on completion of the sale of Italian tower assets on 31 March 2020.
It also included €10.3 billion paid on completion of the acquisition of
the Liberty Global assets on 31 July 2019 and acquired net debt of
€8.2 billion.
Net debt at 31 March 2021 was €40.5 billion, compared to €42.0 billion
as at 31 March 2020.
Borrowings and cash position
Non-current borrowings
Current borrowings
Borrowings
Cash and cash equivalents
Borrowings less cash and
cash equivalents
Reported
change %
FY21
€m
(59,272)
(8,488)
(67,760)
5,821
FY20
€m
(62,949)
(11,976)
(74,925)
13,557
(61,939)
(61,368)
0.9
Our financial performance (continued)
Cash flow, capital allocation and funding
Analysis of cash flow
Inflow from operating activities
Outflow from investing activities
Outflow from financing activities
FY21
€m
17,215
(9,262)
(15,196)
FY20
€m
17,379
(8,088)
(9,352)
Reported
change %
(0.9)
(14.5)
(62.5)
Cash inflow from operating activities decreased by 0.9% to €17.2 billion
(FY20: €17.4 billion) due to an increase in the net working capital outflow
compared to the prior year. Working capital movements in FY21 include
a €0.3 billion inflow from handset purchases and the associated sale of
customer receivables.
Outflow from investing activities primarily increased by 14.5% to
€9.3 billion (FY20: €8.1 billion) due to lower inflows from disposals of
subsidiaries and disposals of short term investments, increased investment
in network performance during the pandemic, partially offset by reduced
outflows on purchases of subsidiaries and associates.
Outflows from financing activities increased by 62.5% to €15.2 billion
(FY20: €9.4 billion) principally due to higher net outflows on borrowings.
Inflows from transactions with non-controlling shareholders, mostly from
the Vantage Towers public offering, were partially offset by payments to
purchase shares from KDG minorities.
Analysis of cash flow (continued)
FY21
€m
14,386
(7,854)
564
Reported
change %
(3.3)
FY20
€m
14,881
(7,411)
(127)
41
(1,160)
(930)
42
(1,553)
(1,020)
628
417
(391)
217
(348)
337
Adjusted EBITDA1
Capital additions2
Working capital
Disposal of property, plant and
equipment
Interest received and paid3
Taxation
Dividends received from associates
and joint ventures
Dividends paid to non-controlling
shareholders in subsidiaries
Other
Free cash flow (pre spectrum,
restructuring and integration
costs)1
Licence and spectrum payments
Restructuring and integration
payments
Integration capital expenditure4
Free cash flow1
Acquisitions and disposals
Equity dividends paid
Share buybacks3
Foreign exchange (loss)/gain
Other movements on net debt5
Net debt decrease/(increase)1,6
Opening net debt1,6
Closing net debt1,6
5,019
(1,221)
5,700
(181)
(11.9)
Borrowings principally includes bonds of €46,885 million (FY20: €49,412
million) and lease liabilities of €13,032 million (FY20: €12,118 million).
(421)
(267)
3,110
447
(2,427)
(53)
(219)
646
1,504
(42,047)
(40,543)
(570)
–
4,949
(14,454)
(2,296)
(1,094)
309
(2,428)
(15,014)
(27,033)
(42,047)
Reductions in borrowings are offset by movements in cash and
cash equivalents and are principally driven by the early repayment
of €3.4 billion of bonds due to mature up to 2024 and lower derivative
collateral positions which impact both cash and short term borrowings.
(37.2)
3.6
30
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
31
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Our financial performance (continued)
Analysis of cash flow
Inflow from operating activities
Outflow from investing activities
Outflow from financing activities
(15,196)
FY21
€m
17,215
(9,262)
FY20
€m
Reported
change %
17,379
(8,088)
(9,352)
(0.9)
(14.5)
(62.5)
Cash inflow from operating activities decreased by 0.9% to €17.2 billion
(FY20: €17.4 billion) due to an increase in the net working capital outflow
compared to the prior year. Working capital movements in FY21 include
a €0.3 billion inflow from handset purchases and the associated sale of
customer receivables.
Outflow from investing activities primarily increased by 14.5% to
€9.3 billion (FY20: €8.1 billion) due to lower inflows from disposals of
subsidiaries and disposals of short term investments, increased investment
in network performance during the pandemic, partially offset by reduced
outflows on purchases of subsidiaries and associates.
Outflows from financing activities increased by 62.5% to €15.2 billion
(FY20: €9.4 billion) principally due to higher net outflows on borrowings.
Inflows from transactions with non-controlling shareholders, mostly from
the Vantage Towers public offering, were partially offset by payments to
purchase shares from KDG minorities.
Analysis of cash flow (continued)
Adjusted EBITDA1
Capital additions2
Working capital
Disposal of property, plant and
Interest received and paid3
equipment
Taxation
Dividends received from associates
and joint ventures
Dividends paid to non-controlling
shareholders in subsidiaries
Other
costs)1
Free cash flow (pre spectrum,
restructuring and integration
Licence and spectrum payments
Restructuring and integration
payments
Integration capital expenditure4
Free cash flow1
Acquisitions and disposals
Equity dividends paid
Share buybacks3
Foreign exchange (loss)/gain
Other movements on net debt5
Net debt decrease/(increase)1,6
Opening net debt1,6
Closing net debt1,6
FY21
€m
14,386
(7,854)
564
42
(1,553)
(1,020)
FY20
€m
14,881
(7,411)
(127)
41
(1,160)
(930)
628
417
(391)
217
(348)
337
5,019
(1,221)
(421)
(267)
3,110
447
(2,427)
(53)
(219)
646
1,504
(42,047)
5,700
(181)
(570)
–
4,949
(14,454)
(2,296)
(1,094)
309
(2,428)
(15,014)
(27,033)
(40,543)
(42,047)
3.6
1. Adjusted EBITDA, free cash flow (pre spectrum, restructuring and integration costs), free cash
flow and net debt are Non-GAAP measures. See page 217 for more information.
2. See page 226 for an analysis of tangible and intangible additions in the year.
3. Interest received and paid excluded interest on lease liabilities of €307 million (FY20:
€305 million outflow); €nil (FY20: €175 million) of interest costs related to Liberty acquisition
financing, included within Other; and €9 million of cash inflow (FY20: €273 million outflow) from
the option structures relating to the issue of the mandatory convertible bonds, included within
Share buybacks. The option structures were intended to ensure that the total cash outflow to
execute the programme were broadly equivalent to the amounts raised on issuing each tranche .
4. Integration capital expenditure comprises amounts for the integration of acquired Liberty Global
assets and network integration.
5. “Other movements on net debt” for the year ended 31 March 2021 includes mark-to-market
gains recognised in the income statement of €1,091 million, offset by payments in respect of
bank borrowings secured against Indian assets (€83m) and payments to Vodafone Idea Limited
of €235m in respect of the contingent liability mechanism. The comparative figure primarily
included €1,510 million of debt in relation to licences and spectrum in Germany and
mark-to-market losses recognised in the income statement of €1,128 million
6. Net debt as at 31 March 2020 has been aligned to the FY21 presentation, increasing
by €3,799 million to exclude derivative movements in cash flow hedging reserves and
decreasing by €121 million to reflect that Vodafone Egypt is no longer held for sale.
Free cash flow (pre spectrum, restructuring and integration costs)
decreased by 11.9% to €5.0 billion (FY20: €5.7 billion) due to lower
adjusted EBITDA and increased investment in network performance
during the pandemic, partially offset by working capital movements
including lower cash commissions.
Acquisitions and disposals in the current year included proceeds from the
Vantage Towers public offering of €2.0 billion, partially offset by payments
to purchase shares from KDG minorities of €1.5 billion. The prior year
included €2.0 billion received on completion of the sale of Vodafone
New Zealand on 31 July 2019, together with €2.1 billion received
on completion of the sale of Italian tower assets on 31 March 2020.
It also included €10.3 billion paid on completion of the acquisition of
the Liberty Global assets on 31 July 2019 and acquired net debt of
Net debt at 31 March 2021 was €40.5 billion, compared to €42.0 billion
as at 31 March 2020.
Borrowings and cash position
Non-current borrowings
Current borrowings
Borrowings
Cash and cash equivalents
Borrowings less cash and
cash equivalents
FY21
€m
FY20
€m
Reported
change %
(59,272)
(8,488)
(62,949)
(11,976)
(67,760)
(74,925)
5,821
13,557
(61,939)
(61,368)
0.9
Reported
change %
(3.3)
€8.2 billion.
(11.9)
Borrowings principally includes bonds of €46,885 million (FY20: €49,412
million) and lease liabilities of €13,032 million (FY20: €12,118 million).
Reductions in borrowings are offset by movements in cash and
cash equivalents and are principally driven by the early repayment
(37.2)
of €3.4 billion of bonds due to mature up to 2024 and lower derivative
collateral positions which impact both cash and short term borrowings.
Cash flow, capital allocation and funding
Notes:
Funding position
Bonds
Bank loans
Other borrowings incl. spectrum
Gross debt1
Cash and cash equivalents
Short term investments2
Derivative financial instruments
Net collateral liabilities3
Net debt1
FY21
€m
(46,885)
(1,419)
(4,215)
(52,519)
5,821
4,007
3
2,145
(40,543)
FY20
€m
(49,412)
(2,880)
(3,877)
(56,169)
13,557
4,132
610
(4,177)
(42,047)
Reported
change %
(6.5)
(3.6)
Notes:
1. Gross debt and net debt are Non-GAAP measures. See page 217 for more information. Net debt
as at 31 March 2020 has been aligned to the FY21 presentation, increasing by €3,799 million
to exclude derivative movements in cash flow hedging reserves and decreasing by €121 million
to reflect that Vodafone Egypt is no longer held for sale.
2. Short term investments includes €1,053 million (FY20: €1,681 million) of highly liquid
government and government-backed securities and managed investment funds of
€2,954 million (FY20: €2,451 million) that are in highly rated and liquid money market
investments with liquidity of up to 90 days.
3. Collateral arrangements on derivative financial instruments result in cash being paid/(held)
as security. This is repayable when derivatives are settled and is therefore deducted from liquidity.
Net debt decreased by €1.5 billion primarily as a result of free cash flow of
€3.1 billion and €2.0 billion of proceeds from the Vantage Towers public
offering, partially offset by €2.4 billion of equity dividends and €1.5 billion
of payments to purchase KDG shares from minority shareholders.
Other funding obligations to be considered alongside net debt include:
– Lease liabilities of €13,032 million (31 March 2020: €12,118 million)
– Mandatory convertible bonds recognised in equity of €1,904 million
(31 March 2020: €3,848 million)
– KDG put option liabilities of €492 million (31 March 2020:
€1,850 million)
– Guarantees over Australia joint venture loans of €1,489 million
(31 March 2020: €2,062 million)
– Pension liabilities of €513 million (31 March 2020: €438 million)
The Group’s gross and net debt does not consider the 50% equity
characteristic of the long term “Hybrid bonds” being €3,971 million
(31 March 2020: €2,971 million). The Group’s gross and net debt includes
certain bonds which have been designated in hedge relationships, which
are carried at €1.4 billion higher value (31 March 2020: €1.5 billion higher)
than their euro equivalent redemption value. In addition, where bonds are
issued in currencies other than euros, the Group has entered into foreign
currency swaps to fix the euro cash outflows on redemption. The impact
of these swaps are not reflected in gross debt and would decrease
the euro equivalent redemption value of the bonds by €0.1 billion
(31 March 2020: €1.3 billion).
Return on capital employed
Return on Capital Employed (‘ROCE’) reflects how efficiently we are
generating profit with the capital we deploy.
ROCE2
Pre-tax ROCE (controlled)3
Post-tax ROCE (controlled and
associates/joint ventures)3
FY21
€m
4.4%
5.5%
FY201
€m
3.9%
6.3%
Change
bps
0.5
(0.8)
3.9%
3.9%
–
ROCE increased to 4.4% (FY20: 3.9%). The increase reflects the increase
in operating profit in the year coupled with broadly stable average
capital employed.
We calculate two further ROCE measures: i) Pre-tax ROCE for controlled
operations only and ii) Post-tax ROCE (including associates & joint
ventures). See “Non-GAAP measures” on pages 223 and 224 for an
explanation how ROCE is calculated and a reconciliation to the GAAP
basis discussed above.
ROCE decreased to 5.5% on a pre-tax basis (FY20: 6.3%). The decrease
reflects stable adjusted operating profit, offset by higher average capital
employed. ROCE remained stable at 3.9% on a post-tax basis (FY20: 3.9%).
Share buybacks
On 19 March 2021, Vodafone announced the commencement of a
new irrevocable and non-discretionary share buyback programme
(the ‘programme’). The sole purpose of the Programme was to reduce
the issued share capital of Vodafone to partially offset the increase in the
issued share capital as a result of the maturing of the first tranche of the
mandatory convertible bond (‘MCB’) in March 2021.
In order to satisfy the second tranche of the MCB, 1,426.8 million shares
were reissued from treasury shares in March 2021 at a conversion
price of £1.2055. This reflected the conversion price at issue (£1.3505)
adjusted for the pound sterling equivalent of aggregate dividends paid
in August 2019, February 2020, August 2020 and February 2021.
The programme started on 22 March 2021 and is expected to
complete by 18 May 2021. Details of the shares purchased under the
programme, including those purchased under irrevocable instructions,
are shown below.
Number of shares
purchased1
000s
52,682
131,704
Average price paid
for share inclusive of
transaction costs
Pence
134.60
135.34
Total number of
shares purchased
under publicly
announced share
buyback
programme2
000s
52,682
184,386
Maximum number of
shares that may yet
be purchased under
the programme3
000s
204,141
72,437
65,852
250,238
141.09
136.70
250,238
250,238
6,585
6,585
Date of share
purchase
March 2021
April 2021
May 2021
(to 17 May)
Total4
Notes:
1. The nominal value of shares purchased is 2020/21 US cents each.
2. No shares were purchased outside the publicly announced share buyback programme.
3. In accordance with shareholder authority granted at the 2020 Annual General Meeting.
4. The total number of shares purchased represented 0.9% of our issued share capital, excluding
treasury shares, at 18 May 2021.
Dividends
The Board is recommending total dividends per share of 9.0 eurocents
for the year. This includes a final dividend of 4.5 eurocents compared to
4.5 eurocents in the prior year.
This year’s report contains the Strategic Report on pages 1 to 61,
which includes an analysis of our performance and position,
a review of the business during the year, and outlines the principal
risks and uncertainties we face. The Strategic Report was approved
by the Board and signed on its behalf by the Chief Executive and
Chief Financial Officer.
Notes:
1. The presentation of FY20 ROCE has been aligned to the FY21 presentation. See page 224.
2. ROCE is calculated by dividing operating profit by the average of capital employed as reported in
the consolidated statement of financial position. See page 223 for the detail of the calculation.
3. Pre-tax ROCE (controlled) and Post-tax ROCE (controlled and associates/joint ventures) are
Non-GAAP measures. See page 217 for more information.
Nick Read
Chief Executive
18 May 2021
Margherita Della Valle
Chief Financial Officer
18 May 2021
32
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Purpose, sustainability and responsible business
We connect for
a better future
Purpose pillars
Our strategy helps to deliver our targets across three purpose pillars: Digital Society; Inclusion for All; and Planet –
and ensures Vodafone acts responsibly and ethically, wherever we operate. We are also committed to supporting
the delivery of the UN Sustainable Development Goals (‘SDGs’).
Inclusion for All
Planet
Digital Society
Ensuring everyone has access to the
benefits of a digital society.
Reducing our environmental impact and
helping society decarbonise.
Connecting people and things and
digitalising critical sectors.
Access for all
Net zero
Gigabit network
We are finding new ways to roll-out our
network to rural locations in our markets,
through a number of initiatives, including
network sharing.
Propositions for equality
We are providing relevant products and
services to address specific societal challenges
such as access to education, gender equality,
financial inclusion and poverty.
48.3 million
customers using M-Pesa (or equivalent)
15.9 million
additional female customers in Africa
and Turkey since 2016
This year, we set a 2030 Science-Based
Target and committed to reaching ‘net zero’
emissions across our full value chain by 2040.
56%
renewable electricity purchased
Enabling our customers to reduce
emissions
We have committed to helping our customers
reduce their own carbon emissions by a
cumulative total of 350 million tonnes
between 2020 and 2030.
7.1 million
avoided tonnes of CO2e as a consequence
of our IoT technologies and services in FY21
Workplace equality
Building a circular economy
We are focused on reducing e-waste,
progressing against our target to reuse,
resell or recycle 100% of our network
waste by 2025, and driving action to reduce
device waste.
We continue to invest in our network
infrastructure and coverage to deliver a
high-quality service that allows individuals and
businesses to connect anywhere, at any time.
Over 150 million
customers connected to our
next-generation networks
Small and medium-sized enterprises
(‘SMEs’)
Through Vodafone Business, we provide
products and services which are specifically
tailored for SMEs.
One million
business customers across Europe now
using our free digital V-Hub service
Healthcare sector
Our connectivity and platforms are supporting
the digitalisation of healthcare, ranging from
enhanced hospital connectivity to connected
IoT monitoring devices.
Scope 1 and 2 GHG emissions
Smart cities
2.142.14
1.881.88
1.951.95
1.671.67
1.371.37
1.101.10
0.260.26
FY19
0.280.28
FY20
0.270.27
FY21
Scope 1 emissions (million tonnes CO2e)
Scope 2 emissions (million tonnes CO2e)
Our IoT platform and technology are
supporting cities to become smarter to adapt
to the demands of urban growth, as well as
improve the lives of the citizens within them.
Agriculture sector
We are helping to increase the amount of
information that farmers have available to
them, enabling the optimisation of operations
and use of resources.
2.1 million
smallholder farmers across Africa registered
to our Connected Farmer platform
We are committed to developing a diverse
and inclusive global workforce that reflects
the customers and societies we serve. This
year, our diversity and inclusion focus has
been on removing barriers to workplace
equality, by accelerating momentum
on gender equality, sustaining focus on
LGBT+, setting solid foundations on race
and ethnicity, and ensuring our physical
and digital workplace is fully accessible.
Women in management
and leadership roles
Overall Group
Women
Women
Men
Men
40%
40%
60%
60%
Management and
senior leadership
Women
Women
Men
Men
Board
Women
Women
Men
Men
32%
32%
68%
68%
45%
45%
55%
55%
Click to read about our three purpose pillars:
vodafone.com/our-purpose
32
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
33
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Purpose, sustainability and responsible business
We connect for
a better future
Purpose pillars
Our strategy helps to deliver our targets across three purpose pillars: Digital Society; Inclusion for All; and Planet –
and ensures Vodafone acts responsibly and ethically, wherever we operate. We are also committed to supporting
the delivery of the UN Sustainable Development Goals (‘SDGs’).
Inclusion for All
Planet
Digital Society
Ensuring everyone has access to the
Reducing our environmental impact and
Connecting people and things and
benefits of a digital society.
helping society decarbonise.
digitalising critical sectors.
Access for all
Net zero
Gigabit network
We are finding new ways to roll-out our
network to rural locations in our markets,
through a number of initiatives, including
network sharing.
56%
This year, we set a 2030 Science-Based
We continue to invest in our network
Target and committed to reaching ‘net zero’
infrastructure and coverage to deliver a
emissions across our full value chain by 2040.
high-quality service that allows individuals and
Propositions for equality
renewable electricity purchased
We are providing relevant products and
services to address specific societal challenges
such as access to education, gender equality,
financial inclusion and poverty.
48.3 million
Enabling our customers to reduce
emissions
We have committed to helping our customers
reduce their own carbon emissions by a
cumulative total of 350 million tonnes
(‘SMEs’)
customers using M-Pesa (or equivalent)
between 2020 and 2030.
15.9 million
additional female customers in Africa
and Turkey since 2016
7.1 million
avoided tonnes of CO2e as a consequence
of our IoT technologies and services in FY21
Workplace equality
Building a circular economy
We are focused on reducing e-waste,
progressing against our target to reuse,
resell or recycle 100% of our network
waste by 2025, and driving action to reduce
device waste.
Scope 1 and 2 GHG emissions
Smart cities
We are committed to developing a diverse
and inclusive global workforce that reflects
the customers and societies we serve. This
year, our diversity and inclusion focus has
been on removing barriers to workplace
equality, by accelerating momentum
on gender equality, sustaining focus on
LGBT+, setting solid foundations on race
and ethnicity, and ensuring our physical
and digital workplace is fully accessible.
Women in management
and leadership roles
2.142.14
1.881.88
1.951.95
1.671.67
1.371.37
1.101.10
0.260.26
FY19
0.280.28
FY20
0.270.27
FY21
Scope 1 emissions (million tonnes CO2e)
Scope 2 emissions (million tonnes CO2e)
Overall Group
Women
Women
Men
Men
Management and
senior leadership
Women
Women
Men
Men
Board
Women
Women
Men
Men
40%
40%
60%
60%
32%
32%
68%
68%
45%
45%
55%
55%
Click to read about our three purpose pillars:
vodafone.com/our-purpose
businesses to connect anywhere, at any time.
Over 150 million
customers connected to our
next-generation networks
Small and medium-sized enterprises
Through Vodafone Business, we provide
products and services which are specifically
tailored for SMEs.
One million
business customers across Europe now
using our free digital V-Hub service
Healthcare sector
Our connectivity and platforms are supporting
the digitalisation of healthcare, ranging from
enhanced hospital connectivity to connected
IoT monitoring devices.
Our IoT platform and technology are
supporting cities to become smarter to adapt
to the demands of urban growth, as well as
improve the lives of the citizens within them.
Agriculture sector
We are helping to increase the amount of
information that farmers have available to
them, enabling the optimisation of operations
and use of resources.
2.1 million
smallholder farmers across Africa registered
to our Connected Farmer platform
Responsible business
To underpin the delivery of our purpose, we ensure that we operate in a responsible way.
Acting ethically, lawfully and with integrity is critical to our long-term success.
Code of Conduct
Our Code of Conduct outlines the requirements that every single person
working for and with Vodafone must comply with, regardless of location.
Protecting data
Data privacy
We respect the right to privacy and always seek to protect our customers’
lawful rights to hold and express opinions and share information and
ideas without interference. We are committed to looking after our
customers’ data, only using it for its stated purpose, and we are always
open about what we collect.
Cyber security
Our networks connect millions of people, homes, businesses and things
to each other and the internet. The security of our networks, systems and
customers is a top priority and a fundamental part of our purpose.
Protecting people
Health and safety
Keeping our people safe is one of the most important responsibilities
we hold as an employer. Our ongoing focus is to create a safe working
environment for everyone working for, and on behalf of, Vodafone and
the communities in which we operate.
Mobiles, masts and health
We always operate our mobile networks strictly within national
regulations, which are typically based on, or go beyond, international
guidelines set by the independent scientific body the International
Commission for Non-Ionizing Radiation Protection (‘ICNIRP’).
Human rights
We believe that wherever we operate, our contributions help to advance
the protection and promotion of a number of fundamental human rights
and freedoms, supporting socio-economic development.
Responsible supply chain
We spend approximately €24 billion a year with more than 10,500
direct suppliers around the world. This year we updated our processes
to evaluate suppliers on their commitments to diversity, inclusion and
the environment when they tender for new work.
Business integrity
Tax and economic contribution
As a major investor, taxpayer and employer, we make a significant
contribution to the economies of all the countries in which we operate.
Anti-bribery and corruption
We have a policy of zero tolerance towards bribery or corruption.
Our policy provides guidance on what constitutes a bribe and prohibits
giving or receiving any excessive or improper gifts and hospitality.
Click to read about how we operate responsibly:
vodafone.com/operating-responsibly
Governance
The Executive Committee has overall accountability to the Board
for Vodafone’s sustainable business strategy and regularly reviews
progress. In addition, each pillar of our purpose has an executive-level
sponsor: Digital Society (Vinod Kumar, CEO Vodafone Business),
Inclusion for All (Serpil Timuary, CEO Europe Cluster) and Planet
(Joakim Reiter, Group External Affairs Director).
Reflecting its ownership of environmental, social and governance
matters (‘ESG’), the Board has approved the establishment of a new ESG
Committee as a Committee of the Board and the Board will benefit from
its dedicated oversight of our ESG programme. We have also included
ESG measures in the long-term incentive plan for our senior leaders.
Read more about our new ESG Committee
on page 72
Materiality
We have conducted a materiality assessment to identify the material
and emerging ESG issues relevant to our business, our stakeholders and
the societies in which we operate.
More information on our 2021 materiality assessment
can be found on our website: vodafone.com
Reporting frameworks
Vodafone reports against a number of voluntary reporting frameworks
to help stakeholders understand our sustainable business performance.
GRI
The Global Reporting Initiative (‘GRI’) is the most widely
accepted global standard for sustainability reporting. The GRI
Standards allow companies to report their material impacts
for a range of economic, environmental and social issues.
Our 2021 disclosure is included in our 2021 ESG Addendum.
Click to download our ESG Addendum:
investors.vodafone.com/esgaddendum
SASB
Due to increasing demand for sustainability information that
is comparable, consistent and financially material, we have
published disclosures in accordance with the Sustainability
Accounting Standards Board’s (‘SASB’) Standards.
Click to read our SASB disclosures:
investors.vodafone.com/sasb
CDP
UNGC
Vodafone participates in the CDP’s annual climate change
questionnaire. This year we secured a place on CDP’s climate
change ‘A List’.
Vodafone is a participant in the United Nations Global Compact
(‘UNGC’). As part of this, Vodafone supports the Ten Principles
of the United Nations Global Compact on human rights, labour,
environment and anti-corruption. Our 2021 Communication
on Progress can be found in our 2021 ESG Addendum.
34
34
Vodafone Group Plc
Vodafone Group Plc
Annual Report 2021
Annual Report 2021
Purpose
Strategic report
Governance
Financials
Other information
Our purpose
Inclusion for All
Our purpose – to connect for a better future by
enabling inclusive and sustainable digital societies –
serves as the framework for what we do at Vodafone.
It is underpinned by our focus on three specific pillars:
Inclusion for All, Planet and Digital Society.
In response to the COVID-19 crisis, we reviewed and adapted the focus
areas under our three purpose pillars so they would respond better to the
evolving socio-economic challenges and to society’s needs.
We call the difference we make in supporting the communities in which
we operate our social contract. Launched in 2019, our social contract is
how we drive and activate many of our purpose initiatives. For example,
our social contract creates new partnerships with governments and other
stakeholders to overcome some of the most important challenges that
our customers and societies are facing. In return, we want governments,
policy-makers and regulators to adopt a pro-investment, pro-innovation
approach to allow network operators to make sufficient returns on
their investments.
In responding to the pandemic – specifically through the five-point plan
we implemented in Europe and the six-point plan in Africa – our social
contract has accelerated the delivery of our purpose during the last
12 months.
As a Group, through the consistent delivery against our plans in Europe
and Africa, we have:
– sent over 250 million text messages with free public health information;
– supported 1.5 million healthcare workers through €6 million of
donated funds and devices;
– helped more than 15 million people through zero-rating health sites;
– helped over 100 million people in Europe and Africa through
€150 million in donations and in-kind benefits; and
– donated €10 million in cash and in-kind donations through
Vodafone Foundation.
Read more on Vodafone’s social contract
on page 19
Our purpose is also the basis of our new brand positioning: ‘Together
we can’. It conveys our belief that technology and innovation can help
millions of people and their communities to stay connected. We feel
positively about the opportunity technology gives us all when combined
with the right human spirit.
The following sections provide an overview of the purpose programmes
and targets we have set, as well as the achievements over the past year as
a result of the acceleration of purpose driven by our social contract.
Our Inclusion for All strategy seeks to ensure no one
is left behind. It focuses on access to connectivity,
digital skills and creating relevant products and services,
such as access to education, healthcare and finance.
We are also committed to developing a diverse and
inclusive global workforce that reflects the customers
and societies we serve.
Whilst the past year has seen an unparalleled acceleration in society’s
reliance on connectivity, it has also shone a light on the existing digital
divides. Millions of people are still unable to take advantage of the
benefits digital technology can bring.
Through our social contract acceleration, we have broadened the focus
of Inclusion for All, and accelerated programmes to deliver benefit for
groups affected by the crisis. Highlights have included:
– 5.2 million students accessing free digital education;
– over 18,000 devices donated for education;
– we launched Jobseekers.Connected proposition in multiple markets;
and
– removed transaction fees for mobile money users.
Access for all
The use of fixed and mobile services is accelerating globally. For
example, GSMA estimates that 5.1 billion people have a mobile phone
and 3.8 billion use mobile internet1. But many remain unconnected,
with 600 million people globally still living outside areas covered by
mobile networks.
We know that when people can access mobile internet, they are able
to use services that improve their lives. For example 1.6 billion mobile
subscribers have used mobile to monitor their health and 1.2 billion
people have a mobile money account2.
Access for all is therefore a priority – and rural connectivity is a specific
focus area for us. Within the EU, 29% of the population live in rural areas3.
In Africa, the number is much higher. In Tanzania, for example, over 70%
live in rural areas.
Expanding rural networks can often be more challenging and have a
lower return on investment due to lower population densities. That is why
we are finding new ways to roll-out our network to rural locations in our
markets, through a number of initiatives and innovative partnerships,
including network sharing.
Notes:
1. GSMA, 2020.
2. GSMA, 2021.
3. Eurostat, 2020.
34
34
Vodafone Group Plc
Vodafone Group Plc
Annual Report 2021
Annual Report 2021
Purpose
Our purpose
Inclusion for All
Our purpose – to connect for a better future by
enabling inclusive and sustainable digital societies –
serves as the framework for what we do at Vodafone.
Our Inclusion for All strategy seeks to ensure no one
is left behind. It focuses on access to connectivity,
digital skills and creating relevant products and services,
It is underpinned by our focus on three specific pillars:
such as access to education, healthcare and finance.
Inclusion for All, Planet and Digital Society.
In response to the COVID-19 crisis, we reviewed and adapted the focus
areas under our three purpose pillars so they would respond better to the
evolving socio-economic challenges and to society’s needs.
We call the difference we make in supporting the communities in which
we operate our social contract. Launched in 2019, our social contract is
how we drive and activate many of our purpose initiatives. For example,
our social contract creates new partnerships with governments and other
stakeholders to overcome some of the most important challenges that
our customers and societies are facing. In return, we want governments,
policy-makers and regulators to adopt a pro-investment, pro-innovation
approach to allow network operators to make sufficient returns on
their investments.
We are also committed to developing a diverse and
inclusive global workforce that reflects the customers
and societies we serve.
Whilst the past year has seen an unparalleled acceleration in society’s
reliance on connectivity, it has also shone a light on the existing digital
divides. Millions of people are still unable to take advantage of the
benefits digital technology can bring.
Through our social contract acceleration, we have broadened the focus
of Inclusion for All, and accelerated programmes to deliver benefit for
groups affected by the crisis. Highlights have included:
– 5.2 million students accessing free digital education;
– over 18,000 devices donated for education;
– we launched Jobseekers.Connected proposition in multiple markets;
In responding to the pandemic – specifically through the five-point plan
we implemented in Europe and the six-point plan in Africa – our social
contract has accelerated the delivery of our purpose during the last
and
– removed transaction fees for mobile money users.
As a Group, through the consistent delivery against our plans in Europe
Access for all
12 months.
and Africa, we have:
– sent over 250 million text messages with free public health information;
– supported 1.5 million healthcare workers through €6 million of
donated funds and devices;
mobile networks.
The use of fixed and mobile services is accelerating globally. For
example, GSMA estimates that 5.1 billion people have a mobile phone
and 3.8 billion use mobile internet1. But many remain unconnected,
with 600 million people globally still living outside areas covered by
– helped more than 15 million people through zero-rating health sites;
– helped over 100 million people in Europe and Africa through
€150 million in donations and in-kind benefits; and
– donated €10 million in cash and in-kind donations through
Vodafone Foundation.
Read more on Vodafone’s social contract
on page 19
Our purpose is also the basis of our new brand positioning: ‘Together
we can’. It conveys our belief that technology and innovation can help
millions of people and their communities to stay connected. We feel
positively about the opportunity technology gives us all when combined
with the right human spirit.
The following sections provide an overview of the purpose programmes
and targets we have set, as well as the achievements over the past year as
a result of the acceleration of purpose driven by our social contract.
We know that when people can access mobile internet, they are able
to use services that improve their lives. For example 1.6 billion mobile
subscribers have used mobile to monitor their health and 1.2 billion
people have a mobile money account2.
Access for all is therefore a priority – and rural connectivity is a specific
focus area for us. Within the EU, 29% of the population live in rural areas3.
In Africa, the number is much higher. In Tanzania, for example, over 70%
live in rural areas.
Expanding rural networks can often be more challenging and have a
lower return on investment due to lower population densities. That is why
we are finding new ways to roll-out our network to rural locations in our
markets, through a number of initiatives and innovative partnerships,
including network sharing.
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Other information
35
35
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Annual Report 2021
Annual Report 2021
Strategic report
Strategic report
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Governance
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Financials
Other information
Other information
FY21 network deployment
4G sites deployed
(000s)
100.1
50.5
150.6
% base covered
91%
86%
89%
4G population
coverage
98%
69%
75%
Europe*
Africa and Turkey**
Group
Notes:
* excluding Vodafone Ziggo.
** excluding Safaricom.
New approaches and a blend of technologies will help us to deliver
universal mobile coverage to Europe and Africa. For example, we are
piloting OpenRAN – a new promising way to engineer the access network
– in rural communities. We have also continued to work with our partners
AST & Science LLC to develop the first space-based mobile network
to connect directly to 4G and 5G smartphones without the need for
specialised hardware. The aim is to transform mobile coverage in the DRC,
Ghana, Mozambique, Kenya and Tanzania. The mobile network will also
reach 1.6 billion people across 49 countries from 2023.
In addition, this year, Vodafone Group Chief Executive, Nick Read, was
appointed as a Commissioner to the UN Broadband Commission for
Sustainable Development, which brings together governments, civil
society, industry and international organisations to address the digital
divide, achieve universal broadband connectivity and accelerate progress
toward the Sustainable Development Goals by 2030.
Enabling quality education and digital skills
Even before the COVID-19 crisis, an estimated 258 million children around
the world were not in school. More than half of all children globally were
not meeting the minimum expected standards in reading and maths4.
The COVID-19 crisis has made things worse, impacting nearly 1.6 billion
learners in over 190 countries5. Lack of access to devices and poor
connectivity hindered home learning. Across our markets, we have
responded by providing devices and connectivity to students and
families, as well as growing our existing education platforms across
Europe and Africa.
We expanded Connected Education, which was launched in January 2020,
by our social enterprise Vodafone Business Ventures to provide access to
connectivity, devices and classroom collaboration software for students
and teachers across the world. To date, over 800,000 students in over
2,900 educational institutions across 10 countries have benefited from
this digital learning solution.
In South Africa, the Vodacom e-School solution allows learners to access
curriculum-aligned content and educators to access learning materials
on their smartphone with no data charges. We currently have over one
million users on the platform.
This year, we announced an investment of €20 million6 by Vodafone
Foundation to expand digital skills and education programmes across
Europe, aiming to reach over 16 million learners by 2025. One example
is Vodafone Foundation Germany’s ‘Coding for Tomorrow’ which teaches
students and their teachers about how to use digital technologies in
an independent, critical and creative way. To date, the programme
has reached 119,500 students and teachers.
In the UK, we launched Schools.Connected to help improve connectivity
for learners from low income families. The programme provided an initial
250,000 SIMs with a 30GB data allowance valid for 90 days. All SIMs were
ordered by 6,970 primary and secondary schools in just four working days,
so we doubled the number of SIMs and distributed 500,000. We estimate
that each SIM used potentially prevented a student missing 60 days
of schooling.
Supporting jobseekers and disadvantaged groups
Supporting jobseekers has been a focus area for years, in particular
building programmes to respond to the growing youth unemployment
crisis. In the EU the youth unemployment rate is 17%7 and in South Africa
it is 56%8. In 2018, we launched the Future Jobs Finder, for jobseekers
whose background is in non-technology fields. The Future Jobs Finder
helps identify transferable skills and strengths, giving recommendations
on tech professions and e-learning suited to people’s backgrounds and
aptitudes. Since its launch, the Future Jobs Finder has supported over
600,000 people.
In South Africa, our ConnectU platform provides over 15.5 million Vodacom
customers with free access to a range of services covering health, education,
safety and security, social media and jobs. ConnectU’s job portal has enabled
3.1 million people to access seven different job search websites for free,
with over a third of users being in the lowest income bracket.
We also developed a temporary immediate response initiative to address
the contraction in economic activity caused by the COVID-19 crisis. Our
‘Jobseekers.Connected’ offer across our European markets, Egypt, Turkey
and South Africa includes discounted connectivity to help jobseekers
remain connected and supports them while they are searching for a new
career opportunity. It includes free access to over 600 curated courses
on global e-learning platform Udemy to help people re-skill.
Bringing mobile to more women
Goal: To connect an additional 20 million women living in Africa
and Turkey to mobile by 2025
Mobile technology enables women in many of our markets to access
essential services from maternal healthcare to agricultural information
for female smallholder farmers. 54% of women in emerging markets now
use mobile internet, but the gender gap for internet usage is substantial
with over 300 million fewer women than men accessing the internet on
a mobile phone9.
We develop commercial programmes that support education, skills
and jobs, better health and wellbeing and safety for women, and
enable economic empowerment. For example, this year, we expanded
Vodacom’s Mum & Baby service from South Africa to the DRC. Mum &
Baby is a free-to-use (no data charges) mobile health service which gives
customers maternal, neonatal and child health information. The service
has helped over 1.9 million parents and caregivers to take positive actions
to improve their children’s health since its launch in 2017.
Through these programmes we aim to connect an additional 20 million
women living in Africa and Turkey to mobile by 2025. Since 2016 we
estimate to have added an additional 15.9 million female customers.
The increase of women in our customer base also makes good
business sense; women have a higher Net Promoter Score (+4pp
compared to men).
Notes:
1. GSMA, 2020.
2. GSMA, 2021.
3. Eurostat, 2020.
Notes:
4. UNESCO, 2018.
5. UN, 2020.
6. Beyond digital training, the Vodafone Foundation builds programmes around the world that
combine Vodafone’s charitable giving and technology to deliver public benefit and improve
people’s lives. The total amount donated by Vodafone to Vodafone Foundation in 2021
was €44.2 million.
7. Eurostat, 2021.
8. Statistics South Africa, 2021.
9. GSMA, 2021.
36
Vodafone Group Plc
Annual Report 2021
Purpose (continued)
Strategic report
Governance
Financials
Other information
Workplace equality
We are passionate about making the world more connected, inclusive
and sustainable, and committed to creating a place where everyone
can truly be themselves and belong. We bring the human touch to our
technology to create a better digital future for all, starting with our people.
Our people
We are committed to developing a diverse and inclusive global workforce
that reflects the customers and societies we serve.
Key information
Average number of employees
Average number of contractors
Employee contract types
Permanent
Fixed term contracts
Full-time
Part-time
Number of markets where we operate
Employee nationalities
Our people across the Group
Germany1
UK 1
Italy1
Spain1
Vodacom1
_VOIS and Shared Operations²
Other3
Employee experience
Employee engagement index 4
Alignment to purpose4
Voluntary turnover rate5
Involuntary turnover rate5
2021
94,274
10,481
2020
92,866
11,269
87%
13%
93%
7%
19
137
14%
9%
5%
4%
11%
31%
26%
74
93%
8%
3%
87%
13%
92%
8%
21
126
14%
10%
5%
4%
11%
30%
26%
77
94%
12%
7%
Notes:
All headcount figures exclude non-controlled operations such in the Netherlands, Kenya,
Australia and India.
1. The percentages reflect headcount in each operating company or group of operating
companies such as Vodacom. The percentages exclude headcount in our shared services
businesses (‘_VOIS’) and other shared operations.
2. _VOIS + Shared Operations constitute a significant number of our employees, and includes
_VOIS headcount across our footprint (India, Romania, Hungary and Egypt) as well as in our
global Group entities.
3. Other includes employees based in all other operating companies (Albania, Czech Republic,
Egypt, Ghana, Greece, Hungary, Ireland, Portugal, Romania, Turkey) and other countries.
4. More detail on our employee survey is included on page 21. Our employee engagement index
is based on a weighted average index of responses to three questions: satisfaction working
at Vodafone; experiencing positive emotions at work; and recommending us as an employer.
Alignment to purpose is based on a single question that asks whether employees feel their
daily work contributes significantly to Vodafone’s purpose.
5. Turnover rates have decreased since 2020 due to the COVID-19 pandemic and a lower number
of involuntary leavers. Wherever possible, we have protected the employment of our people.
We have not used furlough schemes in any of our markets during the pandemic. The voluntary
turnover rate includes retirements and death-in-service.
Building platforms for financial inclusion
Goal: To connect over 50 million people and their families to
mobile money services by 2025
Financial inclusion is key to reducing extreme poverty. Nevertheless,
many people, especially women, still lack access to financial services
with close to 1.7 billion adults currently un-banked1. Without the ability
to transfer money, people are limited in their ability to save, access loans,
start a business and even be paid.
In 2007, together with our Kenyan associate, Safaricom, we developed
the first mobile money transfer service, M-Pesa. This provides financial
services to millions of people who have a mobile phone but limited
access to a bank account. It is also widely used to manage business
transactions and to pay salaries, pensions, agricultural subsidies and
government grants, and reduces the associated risks of robbery and
corruption in a cash-based society.
In April 2020, Vodacom and Safaricom completed the acquisition of the
M-Pesa brand and the product development team from Vodafone Group
through M-Pesa Africa, a newly created joint venture. The joint venture
will help consolidate M-Pesa as the largest FinTech company in Africa
and accelerate the growth of M-Pesa across the continent.
As of March 2021, 48.3 million customers were using M-Pesa
(or equivalent), with over 15.2 billion transactions made in the year
(1.7 million per hour on average) through a network of more than
918,500 agents.
In the last year we disbursed €4 billion in loans and overdrafts across
our markets. We also launched a lending marketplace in Tanzania and
Mozambique to enable lenders to easily integrate and offer a range of
credit products with tailored pricing and terms to millions of customers
and businesses.
During the COVID-19 crisis, we implemented measures to support
customers across our markets and promote digital payments as a
safer way to transact than cash. These included removing fees on
person-to-person transactions, increasing transaction and balance limits
in partnership with the regulators and creating more flexible customer
registration processes.
This year we have seen a significant increase in mobile money customers,
as the COVID-19 crisis has accelerated consumers moving to cashless
transactions. Over the next year, we plan to evaluate our 2025 goal to
ensure it better reflects our commercial ambition and opportunity.
M-Pesa and mobile money services adoption
Number of mobile
money customers
(million)
28.3
7.4
4.9
3.0
0.9
1.6
2.3
% of service revenue
33%
37%
19%
10%
10%
3%
1%
% M-Pesa penetration
on GSM base
90%
62%
73%
26%
69%
40%
7%
Kenya
Tanzania
Mozambique
DRC
Lesotho
Ghana
Egypt
Note:
1. World Bank 2017.
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Other information
37
Vodafone Group Plc
Annual Report 2021
Strategic report
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Other information
Diversity and inclusion
This year, our diversity and inclusion focus has been on removing barriers
to workplace equality, by accelerating momentum on gender equality,
sustaining focus on LGBT+, setting solid foundations on race and ethnicity,
and ensuring our physical and digital workplace is fully accessible. Our
expanded focus on multiple dimensions of diversity reflects our ambition
to be a company with a global workforce that reflects the customers,
communities and businesses we serve, as well as the wider societies
in which we operate.
Goal: We aim to have 40% women in management roles by 2030.
We have reached 32%, and continue to drive progress through
our programmes, policies and leadership incentives. Our progress and
achievements to increase diversity were recognised with the inclusion
of Vodafone in the Bloomberg Gender Equality Index and Refinitiv’s D&I
Top 100 during the year. As part of our approach, we ensure that there
is gender diversity when resourcing for senior leadership roles and our
leadership team is accountable for maintaining and encouraging diversity
amongst their teams. Women in management targets are also embedded
in our long-term incentive plans. We hired 53% women for our graduate
roles, and to date have supported 564 people back into employment
after a career break through our Reconnect programme, of whom 470
were women. We have also connected with over 5,000 girls via our digital
skills programme ‘Code Like a Girl’ since 2017, including 576 this year,
and continued this programme during the COVID-19 pandemic by
launching a digital coding classroom experience, available to all markets.
Gender diversity
Women on the Board
Women on the Executive Committee
Women in senior leadership positions1
Women in management and senior leadership roles2
Women as a percentage of external hires
Women as a percentage of graduates
Women in overall workforce
2021
45%
29%
30%
32%
43%
53%
40%
2020
42%
29%
29%
31%
38%
53%
39%
Notes:
1. Percentage of senior women in our top 178 positions (FY20: 173).
2. Percentage of women in our 6,609 management and leadership roles (FY20: 6,372).
In 2019, Vodafone launched the first global domestic violence policy,
which set out comprehensive workplace resources, security and other
measures for employees at risk of experiencing, and recovering from,
domestic violence and abuse. As the majority of the global workforce
shifted to home working in the outbreak of COVID-19, reports of a
‘shadow pandemic’ of domestic violence intensified worldwide. Our
markets considered the policy very important for supporting employees
affected by domestic violence and abuse. Of those affected, the most
frequent forms of support were counselling and advice, paid safe leave
and referrals to specialist organisations with adaptations to working
hours and workload. We reinforced our commitment to this area
through training, technology, modified remote working policies and
support for other employers. Our technology includes free apps such
as Bright Sky, which provides support and information to anyone in an
abusive relationship or those concerned about someone they know,
reaching over 75,000 users.
To support the health and wellbeing of our people through different life
stages, we commissioned a global research project which identified that
62% of women with symptoms of menopause found it impacted their
work. In March 2021, we made a global commitment to support women
experiencing menopause, estimated to currently affect 37% of women
in Vodafone. The virtual global launch event was held during International
Women’s Week in March with over 1,400 participants, and was followed
by the release of digital supporting toolkits and resources. During the year,
we also implemented our global parental leave policy across our markets,
giving every parent the opportunity to take 16 weeks of fully paid leave
with a phased return to work over six months where parents work the
equivalent of four days and are paid for five to spend time with new
children in their family. Alongside gender equality, we retained focus
on supporting the LGBT+ community, being recognised as a Top
Global Employer by Stonewall. Our global LGBT+ network is thriving,
with over 3,000 allies and active support from senior executives who
champion inclusion.
We marked International Day of People with Disabilities with a global
event attended by over 600 people, highlighting initiatives across markets
that create inclusive environments for customers and colleagues with
visible and invisible differences. We have also hosted training on neurodiversity
and accessibility webinars to ensure our colleagues are aware of the
accessibility features in our digital workplace and how to use them.
This year, we have expanded our existing diversity and inclusion
agenda and focused on race and ethnicity, starting with our Global
Black Lives Matter webinar listening to colleagues share their experience.
To build capability in holding conversations on race in the workplace,
we launched a ‘Let’s talk about race’ session in partnership with “Business
in the Community”. We delivered Race Fluency sessions for our senior
leaders, and launched cross-company reciprocal mentoring schemes.
In October 2020, we hosted a global Black History Month webinar to
reiterate our commitment, with the sponsorship of our Vodafone
Business CEO, Vinod Kumar.
To better understand representation across our organisation and target
diversity and inclusion programmes more effectively, we launched a
campaign called #CountMeIn in November 2020, which encourages
employees to voluntarily self-declare their diversity demographics. These
include race, ethnicity, disability, sexual orientation, gender identity and
caring responsibilities, in line with local privacy and legal requirements.
Our intention is to use this data to set leadership targets around race and
ethnicity, to complement our commitments on gender, by the end of
2021. We are still in the process of collecting robust and complete data
for our entire workforce, however 29% of our Executive Committee
members are from ethnically diverse backgrounds.
Our commitment to diversity and inclusion is reflected across our
global policies and principles, such as our Code of Conduct and our
Fair Pay principles.
Read more about our Fair Pay principles
on page 97
Click to read about our approach to fair pay:
vodafone.com/fair-pay
36
Vodafone Group Plc
Annual Report 2021
Purpose (continued)
Building platforms for financial inclusion
Workplace equality
Goal: To connect over 50 million people and their families to
mobile money services by 2025
We are passionate about making the world more connected, inclusive
and sustainable, and committed to creating a place where everyone
Financial inclusion is key to reducing extreme poverty. Nevertheless,
can truly be themselves and belong. We bring the human touch to our
many people, especially women, still lack access to financial services
technology to create a better digital future for all, starting with our people.
with close to 1.7 billion adults currently un-banked1. Without the ability
to transfer money, people are limited in their ability to save, access loans,
Our people
start a business and even be paid.
We are committed to developing a diverse and inclusive global workforce
that reflects the customers and societies we serve.
In 2007, together with our Kenyan associate, Safaricom, we developed
the first mobile money transfer service, M-Pesa. This provides financial
services to millions of people who have a mobile phone but limited
access to a bank account. It is also widely used to manage business
transactions and to pay salaries, pensions, agricultural subsidies and
government grants, and reduces the associated risks of robbery and
corruption in a cash-based society.
In April 2020, Vodacom and Safaricom completed the acquisition of the
M-Pesa brand and the product development team from Vodafone Group
through M-Pesa Africa, a newly created joint venture. The joint venture
will help consolidate M-Pesa as the largest FinTech company in Africa
and accelerate the growth of M-Pesa across the continent.
As of March 2021, 48.3 million customers were using M-Pesa
(or equivalent), with over 15.2 billion transactions made in the year
(1.7 million per hour on average) through a network of more than
918,500 agents.
In the last year we disbursed €4 billion in loans and overdrafts across
our markets. We also launched a lending marketplace in Tanzania and
Mozambique to enable lenders to easily integrate and offer a range of
credit products with tailored pricing and terms to millions of customers
and businesses.
During the COVID-19 crisis, we implemented measures to support
customers across our markets and promote digital payments as a
safer way to transact than cash. These included removing fees on
person-to-person transactions, increasing transaction and balance limits
in partnership with the regulators and creating more flexible customer
registration processes.
This year we have seen a significant increase in mobile money customers,
as the COVID-19 crisis has accelerated consumers moving to cashless
transactions. Over the next year, we plan to evaluate our 2025 goal to
ensure it better reflects our commercial ambition and opportunity.
M-Pesa and mobile money services adoption
Key information
Average number of employees
Average number of contractors
Employee contract types
Permanent
Fixed term contracts
Full-time
Part-time
Number of markets where we operate
Employee nationalities
Our people across the Group
Germany1
UK 1
Italy1
Spain1
Vodacom1
Other3
_VOIS and Shared Operations²
Employee experience
Employee engagement index 4
Alignment to purpose4
Voluntary turnover rate5
Involuntary turnover rate5
Notes:
Australia and India.
2021
94,274
10,481
2020
92,866
11,269
87%
13%
93%
7%
19
137
14%
9%
5%
4%
11%
31%
26%
74
93%
8%
3%
87%
13%
92%
8%
21
126
14%
10%
5%
4%
11%
30%
26%
77
94%
12%
7%
All headcount figures exclude non-controlled operations such in the Netherlands, Kenya,
1. The percentages reflect headcount in each operating company or group of operating
companies such as Vodacom. The percentages exclude headcount in our shared services
businesses (‘_VOIS’) and other shared operations.
2. _VOIS + Shared Operations constitute a significant number of our employees, and includes
_VOIS headcount across our footprint (India, Romania, Hungary and Egypt) as well as in our
global Group entities.
3. Other includes employees based in all other operating companies (Albania, Czech Republic,
Egypt, Ghana, Greece, Hungary, Ireland, Portugal, Romania, Turkey) and other countries.
4. More detail on our employee survey is included on page 21. Our employee engagement index
is based on a weighted average index of responses to three questions: satisfaction working
at Vodafone; experiencing positive emotions at work; and recommending us as an employer.
Alignment to purpose is based on a single question that asks whether employees feel their
daily work contributes significantly to Vodafone’s purpose.
5. Turnover rates have decreased since 2020 due to the COVID-19 pandemic and a lower number
of involuntary leavers. Wherever possible, we have protected the employment of our people.
We have not used furlough schemes in any of our markets during the pandemic. The voluntary
turnover rate includes retirements and death-in-service.
Number of mobile
money customers
(million)
% of service revenue
on GSM base
% M-Pesa penetration
28.3
7.4
4.9
3.0
0.9
1.6
2.3
33%
37%
19%
10%
10%
3%
1%
90%
62%
73%
26%
69%
40%
7%
Kenya
Tanzania
Mozambique
DRC
Lesotho
Ghana
Egypt
Note:
1. World Bank 2017.
Strategic report
Governance
Financials
Other information
38
Vodafone Group Plc
Annual Report 2021
Purpose (continued)
Planet
We believe that urgent and sustained action is required
to address the climate emergency. Business success
should not come at a cost to the environment, and
we are committed to ensure the greening of all of
our activities. We also see a key role for our digital
networks and technologies in helping to address
climate change. Digitalisation is key to saving energy,
using natural resources more efficiently and creating
a circular economy.
This year, as part of the acceleration guided by our social contract, and
our commitment to “build back better”, we brought forward our target to
purchase 100% renewable electricity in Europe, from 2025 to July 2021.
Building on previous commitments, we set a new Science-Based Target
to reduce our carbon emissions and we set a ‘net zero’ goal.
To help deliver a twin digital and green transformation, we also
set a target to enable our customers to reduce their emissions; and
we updated our supplier evaluation criteria to include environmental
considerations. In addition, we continue to focus on reducing
electronic waste (e-waste), progressing against our target to reuse,
resell or recycle 100% of our network waste by 2025, and driving
action to reduce device waste.
We were recognised by global environmental non-profit organisation
CDP for our actions and transparency on our environmental impact
and secured a place on CDP’s climate change ‘A List’. This places us
in the top 5% of companies that responded to CDP’s 2020 climate
change questionnaire.
We also continued our work to identify potential climate change risks
and opportunities through conducting Task Force on Climate-related
Financial Disclosures (‘TCFD’) scenario-based risk and opportunity
assessments across key markets. We are using the insights to create
mitigating controls and identify ways to embed climate risk into our risk
management system and processes.
Our Planet goals
2021
– Purchase 100% of the electricity we use in Europe from
renewable sources by July 2021
2025
– Purchase 100% of the electricity we use globally from
renewable sources
– Reuse, resell or recycle 100% of our network waste
2030
– Eliminate all carbon emissions (‘net zero’) from our
own activities and from energy we purchase and use
(Scope 1 and 2)
– Halve carbon emissions from our carbon footprint
(against a 2020 baseline), including joint ventures, all
supply chain purchases, the use of products we have
sold and business travel (Scope 3)
– Enable our business customers who use our services to
reduce their own carbon emissions by a cumulative total
of 350 million tonnes between 2020 and 2030
2040
– Eliminate Scope 3 emissions completely to reach ‘net zero’
across our full carbon footprint
Read more on Vodafone’s approach to climate change risk aligned
to the TCFD on page 59
Click to download our ESG Addendum:
investors.vodafone.com/esgaddendum
Reducing carbon emissions
Goal: To reduce our own carbon emissions to ‘net zero’ by 2030 and
across the full value chain by 2040.
We set an approved 2030 Science-Based Target in line with reductions
required to keep warming to 1.5°C, becoming the first major telecoms
operator to follow the emission reduction pathway developed for the
ICT sector (setting out specific emissions reduction trajectories for mobile,
fixed and data centres).
We also committed to reaching full value chain ‘net zero’ emissions
by 2040.
Driving energy efficiency
Despite ever-growing use of data and expansion of our networks, this year
our total Scope 1 and 2 GHG emissions decreased by 30% to 1.37 million
tonnes of CO2e (carbon dioxide equivalent), due to our ongoing focus on
energy efficiency and an increase in the proportion of renewable
electricity purchased.
We are committed to continually improving the energy efficiency of our
base station sites and in our technology centres, which together account
for 96% of our total global energy consumption. During FY21, we invested
€65 million of capital expenditure in energy efficiency and on-site
renewable projects across our business, which has led to annual energy
savings of 135 GWh.
This has been underpinned by the implementation of the ‘best-in-class’
ISO 50001 Energy Management System framework. To date, Albania,
Germany, Greece, Ireland, Spain, Turkey and the UK have been awarded
certification, with other markets due to implement the framework in the
next year. Key energy efficiency initiatives we have focused on during the
year include:
– sourcing and deploying more efficient network equipment and
powering-down carriers during times of low traffic;
– gradually switching off the 3G network (which is typically 70% less
energy efficient than 4G) and decommissioning legacy equipment in
our core network;
– deploying high-density pods (modular blocks with concentrated power
and cooling technology) to maximise the performance of servers and
minimise cooling requirements within data centres;
– reducing energy demand by installing lower-energy power and cooling
technologies; and
– using AI algorithms in our passive infrastructure, allowing us to optimise
energy use in cooling.
We continue to work with eSight Energy to implement an energy data
management system using data feeds from our electricity suppliers and
from smart meters. This system is now live across 12 markets in Europe,
with smart meters installed at 62,000 sites. This year, we developed
additional functionality, including a module to validate energy savings
from projects, forecasting of energy consumption, tenant billing reports
and capacity and meter calibration reports.
38
Vodafone Group Plc
Annual Report 2021
Purpose (continued)
Planet
We believe that urgent and sustained action is required
to address the climate emergency. Business success
should not come at a cost to the environment, and
we are committed to ensure the greening of all of
our activities. We also see a key role for our digital
networks and technologies in helping to address
climate change. Digitalisation is key to saving energy,
using natural resources more efficiently and creating
a circular economy.
This year, as part of the acceleration guided by our social contract, and
our commitment to “build back better”, we brought forward our target to
purchase 100% renewable electricity in Europe, from 2025 to July 2021.
Building on previous commitments, we set a new Science-Based Target
to reduce our carbon emissions and we set a ‘net zero’ goal.
To help deliver a twin digital and green transformation, we also
set a target to enable our customers to reduce their emissions; and
we updated our supplier evaluation criteria to include environmental
considerations. In addition, we continue to focus on reducing
electronic waste (e-waste), progressing against our target to reuse,
resell or recycle 100% of our network waste by 2025, and driving
action to reduce device waste.
We were recognised by global environmental non-profit organisation
CDP for our actions and transparency on our environmental impact
and secured a place on CDP’s climate change ‘A List’. This places us
in the top 5% of companies that responded to CDP’s 2020 climate
change questionnaire.
We also continued our work to identify potential climate change risks
and opportunities through conducting Task Force on Climate-related
Financial Disclosures (‘TCFD’) scenario-based risk and opportunity
assessments across key markets. We are using the insights to create
mitigating controls and identify ways to embed climate risk into our risk
management system and processes.
Our Planet goals
2021
– Purchase 100% of the electricity we use in Europe from
renewable sources by July 2021
2025
– Purchase 100% of the electricity we use globally from
renewable sources
– Reuse, resell or recycle 100% of our network waste
2030
– Eliminate all carbon emissions (‘net zero’) from our
own activities and from energy we purchase and use
(Scope 1 and 2)
– Halve carbon emissions from our carbon footprint
(against a 2020 baseline), including joint ventures, all
supply chain purchases, the use of products we have
sold and business travel (Scope 3)
– Enable our business customers who use our services to
reduce their own carbon emissions by a cumulative total
of 350 million tonnes between 2020 and 2030
2040
– Eliminate Scope 3 emissions completely to reach ‘net zero’
across our full carbon footprint
Read more on Vodafone’s approach to climate change risk aligned
to the TCFD on page 59
Click to download our ESG Addendum:
investors.vodafone.com/esgaddendum
Reducing carbon emissions
Goal: To reduce our own carbon emissions to ‘net zero’ by 2030 and
across the full value chain by 2040.
We set an approved 2030 Science-Based Target in line with reductions
required to keep warming to 1.5°C, becoming the first major telecoms
operator to follow the emission reduction pathway developed for the
ICT sector (setting out specific emissions reduction trajectories for mobile,
We also committed to reaching full value chain ‘net zero’ emissions
fixed and data centres).
by 2040.
Driving energy efficiency
Despite ever-growing use of data and expansion of our networks, this year
our total Scope 1 and 2 GHG emissions decreased by 30% to 1.37 million
tonnes of CO2e (carbon dioxide equivalent), due to our ongoing focus on
energy efficiency and an increase in the proportion of renewable
electricity purchased.
We are committed to continually improving the energy efficiency of our
base station sites and in our technology centres, which together account
for 96% of our total global energy consumption. During FY21, we invested
€65 million of capital expenditure in energy efficiency and on-site
renewable projects across our business, which has led to annual energy
savings of 135 GWh.
This has been underpinned by the implementation of the ‘best-in-class’
ISO 50001 Energy Management System framework. To date, Albania,
Germany, Greece, Ireland, Spain, Turkey and the UK have been awarded
certification, with other markets due to implement the framework in the
next year. Key energy efficiency initiatives we have focused on during the
year include:
– sourcing and deploying more efficient network equipment and
powering-down carriers during times of low traffic;
– gradually switching off the 3G network (which is typically 70% less
energy efficient than 4G) and decommissioning legacy equipment in
our core network;
– deploying high-density pods (modular blocks with concentrated power
and cooling technology) to maximise the performance of servers and
minimise cooling requirements within data centres;
– reducing energy demand by installing lower-energy power and cooling
– using AI algorithms in our passive infrastructure, allowing us to optimise
technologies; and
energy use in cooling.
We continue to work with eSight Energy to implement an energy data
management system using data feeds from our electricity suppliers and
from smart meters. This system is now live across 12 markets in Europe,
with smart meters installed at 62,000 sites. This year, we developed
additional functionality, including a module to validate energy savings
from projects, forecasting of energy consumption, tenant billing reports
and capacity and meter calibration reports.
Strategic report
Governance
Financials
Other information
39
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Our performance
Total Scope 1 and Scope 2 emissions
Scope 1 emissions
Scope 2 emissions
Scope 3 emissions
Joint ventures and associates*
Purchased goods and services
Use of sold products
Fuel and energy-related activities
Other (business travel, upstream leased assets, waste)
*Of which India (Vodafone Idea and Indus Towers)
Renewable electricity
Percentage of purchased electricity from renewable sources
Percentage of purchased electricity from renewable sources in Europe
GHG emissions per petabyte (‘PB’) of mobile data carried
Mobile Data Traffic (petabytes)
Scope 1 and 2 GHG emissions per petabyte of mobile data
carried by our networks
Unit
Million tonnes of CO2e
Million tonnes of CO2e
Million tonnes of CO2e
Million tonnes of CO2e
Million tonnes of CO2e
Million tonnes of CO2e
Million tonnes of CO2e
Million tonnes of CO2e
Million tonnes of CO2e
Million tonnes of CO2e
%
%
2021
1.37
0.27
1.10
9.4
3.2
4.0
1.5
0.6
0.1
2.5
56
80
2020
1.95
0.28
1.67
9.5
2.9
3.7
2.1
0.7
0.1
2.4
23
33
Petabytes
11,714
7,983
Tonnes of CO2e
117
245
Note:
Data calculated using local market actual or estimated data sources from invoices, purchasing requisitions, direct data measurement and estimations. Carbon emissions calculated in line with GHG Protocol
standards. Scope 2 emissions are reported using the market-based methodology. For full methodology see our ESG Addendum 2021.
Vodafone energy use
Base stations
Technology centres
Offices
Retail stores
Total
Unit
Gigawatt hours / %
Gigawatt hours / %
Gigawatt hours / %
Gigawatt hours / %
Gigawatt hours / %
2021
4,239 / 73
1,358 / 23
201 / 3
33 / 1
5,832 / 100
2020
3,993 / 69
1,488 / 26
263 / 5
46 / 1
5,790 / 100
Purchasing renewable electricity
This year, we spent approximately €760 million on purchasing electricity.
During the year, 56% of our electricity purchased was from renewable
sources (2020: 23%).
In July 2020, we committed that all of our European operations would
be purchasing 100% renewable electricity no later than July 2021,
significantly accelerating our previous target of 2025. This year, 80% of
our purchased electricity in Europe was from renewable sources (2020:
33%) and we are confident that we will meet our July 2021 target.
We currently have Power Purchase Agreements (‘PPAs’) in Spain and the
UK. Electricity prices agreed under PPA contracts are broadly comparable
to wholesale electricity prices and also provide us with more certainty, as
well as helping to create new capacity within the markets. In addition, Italy,
Germany, Ireland, Hungary, Romania, Spain, Greece and Czech Republic
all sourced Renewable Energy Certificates (‘RECs’) or tariffs during the
year. The incremental cost of RECs (or their equivalent) is small in the
context of our overall energy spend.
Working with our partners to reduce Scope 3 emissions
Scope 3 emissions are indirect GHG emissions which we cannot control
but may be able to influence. As part of our Science-Based Target,
we have committed to halve our Scope 3 carbon emissions by 2030
(against a 2020 baseline) and eliminate them entirely by 2040, as part
of our ‘net zero’ target. The main sources of Scope 3 emissions are
investments (joint ventures and associates), purchased goods and
services, and the use of sold products.
This year, our estimated Scope 3 emissions were 9.4 million tonnes
of CO2e. We worked with the Carbon Trust to analyse our Scope 3
emissions and prioritise reduction opportunities, mostly by working
with our suppliers.
From October 2020, we introduced a 20% weighting for environmental
and social criteria in our supplier evaluation criteria in ‘Request For
Quotation’ (‘RFQ’) processes. The updated process examines whether
suppliers have environmental policies to address carbon reduction,
renewable energy, plastic reduction, circular economy and product
life-cycle (in addition to diversity and health and safety).
Read page 50 for further information
on our supplier evaluation criteria
The assessment awards positive scoring for suppliers that have set (or
are willing to set) a Science-Based Target. In addition, suppliers which offer
product-specific CO2 data and pathways for reduction over the contract
period are positively scored.
Our supplier performance management programme also covers
environmental factors, and suppliers’ GHG performance is one of the
factors evaluated in our annual assessment process. We ask selected
suppliers to provide details of their GHG emissions and management
programmes through CDP. Last year, 88% of those suppliers responded,
with 77% reporting that they had set a target for GHG emissions. This
work was recently acknowledged by CDP, with Vodafone joining its
Supplier Engagement Rating Leaderboard, which recognises companies
which engage with their suppliers to tackle climate change.
In addition to suppliers, we also work with our joint ventures and
associates, which represent the most significant proportion of our Scope 3
emissions. Actions include:
– In India, Vodafone Idea has developed an Energy and
Carbon Management Policy, with actions to save energy and
reduce carbon emissions;
– In Kenya, Safaricom has committed to becoming a zero carbon-
emitting company by 2050;
40
Vodafone Group Plc
Annual Report 2021
Purpose (continued)
Strategic report
Governance
Financials
Other information
– In the Netherlands, VodafoneZiggo launched its first green bond, which
will be used to finance green projects that will lower its environmental
impact; and
– In Australia, TPG Telecom recently committed to purchase 100%
Our global policy on waste management prioritises the reuse, resale or
recycling of unwanted equipment. We aim to keep resources in use for as
long as possible, extracting the maximum value from equipment while in
use and then recovering and reusing materials responsibly.
renewable electricity by 2025.
The third most significant source of our Scope 3 emissions is the use
of sold products (e.g. charging devices). As countries de-carbonise their
electricity grids, these associated emissions will also reduce.
Enabling our customers to reduce their emissions
For Vodafone, our most important contribution to tackling climate change
is through enabling our customers (which include both businesses and
governments) to reduce their environmental footprint using our digital
technologies and services.
In July 2020, we committed to helping our business customers reduce
their own carbon emissions by a cumulative total of 350 million tonnes
globally over 10 years between 2020 and 2030 – the equivalent to Italy’s
total annual carbon emissions for 2019.
Our IoT service offer, including logistics and fleet management, smart
metering and manufacturing activities, will be central in delivering this
target. Other savings are expected to be made through healthcare
services, cloud hosting and home working.
We work with the Carbon Trust to calculate the total GHG emissions
avoided as a consequence of our IoT technologies and services. We
estimate that over 54% of our 123 million IoT connections directly
enabled customers to reduce their emissions in the past year. During the
year, we estimate an avoidance of 7.1 million tonnes CO2e, which is 5.2
times the emissions generated from our own operations (Scope 1 and 2).
In March 2021, we became a founding member of the European Green
Digital Coalition, which brings together ICT sector companies to work
together with EU policymakers and experts, to drive investment in, and
implementation of, digital solutions in action against climate change.
Carbon enablement overview
Smart meters
Smart logistics
Healthcare
Other (cloud/street lighting/
EV charging)
Total
Enablement ratio
Total GHG enablement saving
(Million tonnes CO2e)
Scope 1 and Scope 2 emissions
(Million tonnes of CO2e)
Enablement ratio
Number of connections
(million)
15.4
38.1
11.8
GHG emission saving
(million tonnes CO2e)
1.8
4.4
0.6
1.1
66.4
2021
7.1
1.37
5.2
0.4
7.1
2020
6.9
1.95
3.5
Reducing waste and helping to build
a circular economy
Goal: To reuse, resell or recycle 100% of our network waste by 2025
Apart from carbon emissions, electronic waste is a material environmental
issue for our business. We have consistently sought to manage our own
impact in a responsible manner and also support our customers with
their efforts.
We implement resource efficiency and waste disposal management
programmes in all our markets to minimise environmental impacts
from network waste, IT equipment and waste. This year, we generated an
estimated 7,900 tonnes of waste (which includes hazardous waste) and
we recovered and recycled 79%. Globally, 98.7% of our network waste
was sent for reuse and recycling (excluding hazardous waste).
To deliver our 2025 goal to reuse, resell or recycle 100% of our network
waste, we have launched an internal asset marketplace, a business-to-
business solution within Vodafone that allows us to re-sell and re-purpose
excess stock or large decommissioned electrical items like masts and
antennae. Since launching at the start of 2020, we estimate that we have
saved over €10 million of spend and avoided over 1,250 tonnes of CO2e.
We are assessing the possibility of expanding the solution to partner
markets and other operators.
Network waste management (excluding
hazardous waste)
Reused
Recycled
Landfilled
Total network waste (metric tonnes)
2021
20%
79%
1%
6,307
2020
15%
84%
1%
8,138
Apart from addressing our network waste, we are working on a series
of actions to reduce device waste. We are increasingly adopting circular
economy approaches and take a life-cycle management approach, which
includes extending the lifespan of devices through repair, refurbishment
and resale before encouraging the responsible recycling of devices at the
end of their useful life.
Most of our markets operate trade-in and device buyback schemes
and repair services to encourage customers to repair or return their old
devices. For example, this year Vodafone UK launched a phone trade-in
tool, accessible via the MyVodafone app. The tool assesses device
eligibility and provides a guaranteed trade-in price, encouraging
greater trade-in rates.
We also strive to refurbish and reuse fixed-line equipment multiple times,
with significant associated environmental and cost savings.
Given a large part of the solution to drive circularity for devices depends
on industry action, we recently joined the Circular Electronics Partnership,
which brings together leaders across the value chain – from manufacturing,
reverse logistics, material recovery, to e-waste management – to drive
circularity solutions for electronics.
Beyond what we can directly and indirectly influence we also support
societal change to more circular economy models. Digital and connected
solutions are an essential part of the solution towards lower resource
use and improved reuse and recycling. For example, through enabling
material tracing or shifting from product-based business models to
service-based ones.
We are also eliminating all unnecessary plastics and other disposable
single-use items where there are lower impact alternatives across all our
retail stores and offices.
Engaging our people
More than 15,000 colleagues are currently members of our
“#RedLovesGreen” employee engagement initiative, which aims to
raise awareness of the individual actions that employees can take to
reduce energy and other resource uses.
40
Vodafone Group Plc
Annual Report 2021
Purpose (continued)
– In the Netherlands, VodafoneZiggo launched its first green bond, which
Our global policy on waste management prioritises the reuse, resale or
will be used to finance green projects that will lower its environmental
recycling of unwanted equipment. We aim to keep resources in use for as
impact; and
– In Australia, TPG Telecom recently committed to purchase 100%
renewable electricity by 2025.
The third most significant source of our Scope 3 emissions is the use
of sold products (e.g. charging devices). As countries de-carbonise their
electricity grids, these associated emissions will also reduce.
Enabling our customers to reduce their emissions
long as possible, extracting the maximum value from equipment while in
use and then recovering and reusing materials responsibly.
We implement resource efficiency and waste disposal management
programmes in all our markets to minimise environmental impacts
from network waste, IT equipment and waste. This year, we generated an
estimated 7,900 tonnes of waste (which includes hazardous waste) and
we recovered and recycled 79%. Globally, 98.7% of our network waste
was sent for reuse and recycling (excluding hazardous waste).
For Vodafone, our most important contribution to tackling climate change
To deliver our 2025 goal to reuse, resell or recycle 100% of our network
is through enabling our customers (which include both businesses and
governments) to reduce their environmental footprint using our digital
technologies and services.
In July 2020, we committed to helping our business customers reduce
their own carbon emissions by a cumulative total of 350 million tonnes
globally over 10 years between 2020 and 2030 – the equivalent to Italy’s
total annual carbon emissions for 2019.
Our IoT service offer, including logistics and fleet management, smart
metering and manufacturing activities, will be central in delivering this
target. Other savings are expected to be made through healthcare
services, cloud hosting and home working.
We work with the Carbon Trust to calculate the total GHG emissions
avoided as a consequence of our IoT technologies and services. We
estimate that over 54% of our 123 million IoT connections directly
enabled customers to reduce their emissions in the past year. During the
year, we estimate an avoidance of 7.1 million tonnes CO2e, which is 5.2
times the emissions generated from our own operations (Scope 1 and 2).
In March 2021, we became a founding member of the European Green
Digital Coalition, which brings together ICT sector companies to work
together with EU policymakers and experts, to drive investment in, and
implementation of, digital solutions in action against climate change.
Carbon enablement overview
Number of connections
GHG emission saving
(million)
(million tonnes CO2e)
Smart meters
Smart logistics
Healthcare
EV charging)
Total
Other (cloud/street lighting/
Enablement ratio
Total GHG enablement saving
(Million tonnes CO2e)
Scope 1 and Scope 2 emissions
(Million tonnes of CO2e)
Enablement ratio
15.4
38.1
11.8
1.1
66.4
2021
7.1
1.37
5.2
1.8
4.4
0.6
0.4
7.1
2020
6.9
1.95
3.5
waste, we have launched an internal asset marketplace, a business-to-
business solution within Vodafone that allows us to re-sell and re-purpose
excess stock or large decommissioned electrical items like masts and
antennae. Since launching at the start of 2020, we estimate that we have
saved over €10 million of spend and avoided over 1,250 tonnes of CO2e.
We are assessing the possibility of expanding the solution to partner
markets and other operators.
Network waste management (excluding
hazardous waste)
Reused
Recycled
Landfilled
2021
20%
79%
1%
6,307
2020
15%
84%
1%
8,138
Total network waste (metric tonnes)
Apart from addressing our network waste, we are working on a series
of actions to reduce device waste. We are increasingly adopting circular
economy approaches and take a life-cycle management approach, which
includes extending the lifespan of devices through repair, refurbishment
and resale before encouraging the responsible recycling of devices at the
end of their useful life.
Most of our markets operate trade-in and device buyback schemes
and repair services to encourage customers to repair or return their old
devices. For example, this year Vodafone UK launched a phone trade-in
tool, accessible via the MyVodafone app. The tool assesses device
eligibility and provides a guaranteed trade-in price, encouraging
greater trade-in rates.
We also strive to refurbish and reuse fixed-line equipment multiple times,
with significant associated environmental and cost savings.
Given a large part of the solution to drive circularity for devices depends
on industry action, we recently joined the Circular Electronics Partnership,
which brings together leaders across the value chain – from manufacturing,
reverse logistics, material recovery, to e-waste management – to drive
circularity solutions for electronics.
Beyond what we can directly and indirectly influence we also support
societal change to more circular economy models. Digital and connected
solutions are an essential part of the solution towards lower resource
use and improved reuse and recycling. For example, through enabling
material tracing or shifting from product-based business models to
service-based ones.
We are also eliminating all unnecessary plastics and other disposable
single-use items where there are lower impact alternatives across all our
More than 15,000 colleagues are currently members of our
“#RedLovesGreen” employee engagement initiative, which aims to
raise awareness of the individual actions that employees can take to
reduce energy and other resource uses.
Reducing waste and helping to build
a circular economy
Goal: To reuse, resell or recycle 100% of our network waste by 2025
retail stores and offices.
Apart from carbon emissions, electronic waste is a material environmental
issue for our business. We have consistently sought to manage our own
impact in a responsible manner and also support our customers with
Engaging our people
their efforts.
Strategic report
Governance
Financials
Other information
41
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Digital Society
We believe in the power of connectivity and digital
services to strengthen the resilience of economies.
Through our mobile and fixed networks, data flows
at speed, connecting people and communities.
Over the past year, the COVID-19 crisis has tested the resilience of
our societies, of businesses small and large, and of public services.
We have also seen how connectivity and digital services became a
lifeline allowing people to work, learn, stay in touch with friends and
family, access healthcare and more.
This year, in response to the COVID-19 crisis and informed by our
social contract, we shifted the focus of the Digital Society pillar towards
digitalising critical sectors, whilst continuing to invest in our network
infrastructure and coverage. We have specifically focused on small and
medium-sized enterprises (‘SMEs’), smart cities, agriculture and health.
The following outlines our approach and progress in these areas.
Building a gigabit network
We continue to invest in our network infrastructure and coverage to
deliver a high-quality service that allows individuals and businesses to
connect confidently anywhere and at any time, with benefits for the
economy, for quality of life and for the environment.
Read how Vodafone’s gigabit network is connecting rural
communities on page 34
Currently, we have over 150 million customers connected to our
next-generation mobile and fixed networks .1
Supporting small businesses
SMEs are a critical part of the economy, but many have been
disproportionally affected by the crisis. The OECD found that in 2020,
more than half of SMEs were facing severe losses in revenues due to
COVID-19, with one third fearing for their future without further support2.
SMEs also provide opportunities for socio-economic participation and
social mobility for women, young people, and ethnic minorities; groups
of the workforce that have been particularly vulnerable during the
COVID-19 crisis.
Through Vodafone Business, we provide products and services which
are specifically tailored for SME and small-office home-office (‘SOHO’)
businesses, helping guide them through technology choices and
improving their digital readiness. These segments also represent a
significant commercial opportunity for Vodafone, with the overall
market expected to grow a combined €6 billion over three years3.
To better support SMEs across Europe, Vodafone Business launched
V-Hub this year. The free service provides access to online information
putting businesses in direct touch with experts to advise on digitalising
their business. As at 31 March 2021, over one million businesses were
using V-Hub across our four largest European markets. We plan to
continue the expansion of the service, to support over three million
customers by April 2022.
Notes:
1. Customers connected to our next-generation networks include active 4G and 5G customers,
as well as customers connected to fixed networks with speeds higher than 30Mbps.
2. OECD, 2020.
3. Vodafone Business investor day, 2021.
4. Food and Agriculture Organization (FAO), 2017.
5. Eurostat, 2021.
6. World Bank, 2019.
To assist businesses most at risk within our supply chain, Vodafone
ensured that all new orders issued to micro and small suppliers by
Vodafone’s European operations were paid within 15 days (instead of the
customary 30 to 60 days) between April and October 2020, benefiting
over 1,200 small businesses. We also offer optional supply chain financing
which allows suppliers to leverage Vodafone’s credit position to access
cheaper funding and liquidity. This has no impact on Vodafone’s
commercially negotiated payments terms.
In South Africa, Vodacom Financial Services has built a supplier portal
called VodaTrade, where small suppliers can connect with bigger
business partners.
Digitalising agriculture
According to the Food and Agriculture Organization, by 2050, the world
will need to produce 50 % more food than current levels4. There is also
a growing need to address the environmental impact of agriculture. In
Europe, agriculture accounts for 10% of the EU’s total greenhouse gas
emissions and over 40% of EU land use5, in many cases leading to habitat
loss and deforestation.
Through our connectivity and platforms (including our IoT platform),
we are helping to increase the amount of information that farmers have
available to them, enabling the optimisation of operations and use of
resources. This allows a farmer to reduce the use of pesticides and
fertiliser (which reduces emissions), water use and resource consumption,
as well as improving the protection of biodiversity and increasing yields.
Through Vodacom’s subsidiary, Mezzanine, we are digitalising
agriculture in sub-Saharan Africa by giving smallholder farmers access
to agricultural inputs, financial services like insurance, logistics suppliers,
buyers and markets and knowledge through a digital agri-ecosystem
called Connected Farmer. With over 2.1 million smallholder farmers
registered, the platform allows an ecosystem of partners to register,
profile, communicate and transact (using M-Pesa in some cases) with
each other.
To support larger commercial farmers, Mezzanine developed
MyFarmWeb, a cloud-based web platform that allows a producer to
capture agricultural information (physical, chemical, and microbial soil
analysis, pest presence, satellite and remote sensing information and
data from various internet connected farming sensors) into a system
that aggregates and calibrates the data to assist in best practice
decision-making. This helps farmers to increase yield whilst not
damaging the environment.
Over 6,800 farms across Africa, USA, Australia and New Zealand use
MyFarmWeb, and we are excited about the potential of further expansion
of this platform.
Creating smarter cities
With 55% of the world’s population living in cities6, digitalisation can play
a key role in tackling many of our cities’ most pressing challenges. Acting
as a close partner with municipal governments, Vodafone’s data platform
and extensive IoT solutions help to make cities smarter by, for example,
intelligently managing energy use and pollution right across the built
environment. They can also protect citizens and businesses from crime
more effectively and safeguard vulnerable citizens in their homes.
This year, Vodafone Spain continued work with the Sevilla municipal
government to integrate the Vodafone Smart Cities Platform to monitor
its services. The Security Vertical service, for example, monitors visitor
flows and, by integrating different sources of anonymised and aggregated
data with analytical capabilities, can help identify security risks. Smart
management of parking, water use, waste collection, energy, and air
quality are also being piloted.
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Purpose (continued)
Strategic report
Governance
Financials
Other information
Revolutionising healthcare
The need for a fast response to the health crisis has accelerated the
digitalisation of healthcare, which will also mean national healthcare
systems will be in a better place to address the backlog that the
COVID-19 crisis has created in a more cost efficient and faster way.
Vodafone’s connectivity services and platforms include:
– Connected (IoT) wearable or implanted devices, which allow
patients to be monitored as they recover at home while healthcare
professionals can monitor and treat more patients;
– Artificial Reality and robotics to aid surgeries and remote
expert support, increasing both the quality of care delivered through
digital assistants and access to healthcare for more people;
– Large-scale device (IoT) connectivity within hospitals, enabling
monitoring and optimal allocation of limited resources, such as beds,
medical devices and even hospital staff; and
– Auxiliary robotics, which have the future potential to take care of
non-patient-facing work in hospitals, such as cleaning and restocking,
so that doctors and nurses can spend more time with patients.
In Greece, we have implemented the Vodafone Telemedicine
Programme, an end-to-end telemedicine care system to support
patient management, monitoring and clinical care. Since launching in
2013, more than 500 doctors have been trained in the programme
and over 51,000 virtual appointments were conducted. Almost 75% of
patients reported a reduction in the number of hospital visits and 90% of
doctors thought that the greatest benefit was the ability to deliver better
quality care to their patients.
Over the last year, Vodafone has played a significant role in supporting
government responses to the COVID-19 health crisis. For example, across
Europe, Vodafone provided connectivity to emergency hospitals. In Spain,
we connected 500 wireless IoT alarms by beds in the largest field hospital
in Madrid. In South Africa, our subsidiary Mezzanine, provided a PPE stock
visibility solution to 350 hospitals to monitor and optimise the stock of
3,500 facilities spread across the country.
We contribute to
the Sustainable
Development Goals
The UN Sustainable Development Goals (‘SDG’s) provide
a blueprint for human progress and a clear call to action
for businesses to contribute to a better future.
The COVID-19 crisis has posed a huge challenge to society and has led to
a reversal of progress on a number of SDGs: for example, over 100 million1
additional people have been pushed into extreme poverty, 1.6 billion2
children have missed school during the last year and the pandemic has
widened gender inequalities. Digital technology can help accelerate
progress towards delivering the SDGs as society builds back better.
Vodafone is committed to playing our role and we believe we can
increase the speed and scale of delivery across a wide number of SDGs
through leveraging our technology and services, and through partnering
with others.
We enable inclusive and sustainable digital societies
Vodafone is committed to accelerating connectivity and digitisation
in order to meet the United Nations’ Sustainable Development
Goals (SDGs) by 2030. We have identified two priority SDGs (SDG9
build resilient infrastructure and innovation, and SDG17 strengthen
the means of implementation and partnerships for sustainable
development) that will enable us and our partners to find lasting
solutions to social, economic and environmental challenges and
thereby accelerate the delivery of many other SDGs.
Partnerships: We are
building new models
of cooperation between
business, governments,
international organisations
and civil society to deliver
process and scale, for
example to connect
the unconnected.
Connectivity: We want
everyone – whoever they
are and wherever they live –
to have access to reliable
and affordable internet.
Digital innovations: We will build
digital innovations such as IoT
solutions and digital platforms
like M-Pesa to contribute to
the sustainable development
across a range of sectors
including manufacturing,
transport, health, agriculture,
education and energy.
Through connectivity infrastructure, digital innovations and
partnerships, we deliver impact across many of the SDGs:
Notes:
1. World Bank, 2020.
2. World Bank, 2021.
42
Vodafone Group Plc
Annual Report 2021
Purpose (continued)
Revolutionising healthcare
The need for a fast response to the health crisis has accelerated the
digitalisation of healthcare, which will also mean national healthcare
systems will be in a better place to address the backlog that the
COVID-19 crisis has created in a more cost efficient and faster way.
Vodafone’s connectivity services and platforms include:
– Connected (IoT) wearable or implanted devices, which allow
patients to be monitored as they recover at home while healthcare
professionals can monitor and treat more patients;
– Artificial Reality and robotics to aid surgeries and remote
expert support, increasing both the quality of care delivered through
digital assistants and access to healthcare for more people;
– Large-scale device (IoT) connectivity within hospitals, enabling
monitoring and optimal allocation of limited resources, such as beds,
medical devices and even hospital staff; and
– Auxiliary robotics, which have the future potential to take care of
non-patient-facing work in hospitals, such as cleaning and restocking,
so that doctors and nurses can spend more time with patients.
In Greece, we have implemented the Vodafone Telemedicine
Programme, an end-to-end telemedicine care system to support
patient management, monitoring and clinical care. Since launching in
2013, more than 500 doctors have been trained in the programme
and over 51,000 virtual appointments were conducted. Almost 75% of
patients reported a reduction in the number of hospital visits and 90% of
doctors thought that the greatest benefit was the ability to deliver better
quality care to their patients.
Over the last year, Vodafone has played a significant role in supporting
government responses to the COVID-19 health crisis. For example, across
Europe, Vodafone provided connectivity to emergency hospitals. In Spain,
we connected 500 wireless IoT alarms by beds in the largest field hospital
in Madrid. In South Africa, our subsidiary Mezzanine, provided a PPE stock
visibility solution to 350 hospitals to monitor and optimise the stock of
3,500 facilities spread across the country.
We contribute to
the Sustainable
Development Goals
The UN Sustainable Development Goals (‘SDG’s) provide
a blueprint for human progress and a clear call to action
for businesses to contribute to a better future.
The COVID-19 crisis has posed a huge challenge to society and has led to
a reversal of progress on a number of SDGs: for example, over 100 million1
additional people have been pushed into extreme poverty, 1.6 billion2
children have missed school during the last year and the pandemic has
widened gender inequalities. Digital technology can help accelerate
progress towards delivering the SDGs as society builds back better.
Vodafone is committed to playing our role and we believe we can
increase the speed and scale of delivery across a wide number of SDGs
through leveraging our technology and services, and through partnering
with others.
We enable inclusive and sustainable digital societies
Vodafone is committed to accelerating connectivity and digitisation
in order to meet the United Nations’ Sustainable Development
Goals (SDGs) by 2030. We have identified two priority SDGs (SDG9
build resilient infrastructure and innovation, and SDG17 strengthen
the means of implementation and partnerships for sustainable
development) that will enable us and our partners to find lasting
solutions to social, economic and environmental challenges and
thereby accelerate the delivery of many other SDGs.
Partnerships: We are
building new models
of cooperation between
business, governments,
international organisations
and civil society to deliver
process and scale, for
example to connect
the unconnected.
Connectivity: We want
everyone – whoever they
are and wherever they live –
to have access to reliable
and affordable internet.
Digital innovations: We will build
digital innovations such as IoT
solutions and digital platforms
like M-Pesa to contribute to
the sustainable development
across a range of sectors
including manufacturing,
transport, health, agriculture,
education and energy.
Through connectivity infrastructure, digital innovations and
partnerships, we deliver impact across many of the SDGs:
Notes:
1. World Bank, 2020.
2. World Bank, 2021.
Strategic report
Governance
Financials
Other information
43
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Responsible business
To underpin the delivery of our purpose, we ensure that
we operate in a responsible way. Acting ethically, lawfully
and with integrity is critical to our long-term success.
Our Code of Conduct sets out what we expect from every single person
working for and with Vodafone, regardless of location. We also expect
our suppliers and business partners to uphold the same standards and
to abide by our Code of Ethical Purchasing.
Click here to read our Code of Conduct:
vodafone.com/code-of-conduct
Our ‘Doing What’s Right’ training and communication programme is
key to embedding a shared understanding of the Code of Conduct
across Vodafone. Throughout the year, Doing What’s Right training
communications promoted different areas of our Code of Conduct,
including Speak Up, anti-bribery and privacy to competition law, security,
and health and safety. Training on our Code of Conduct is included in
our standard induction processes for new employees. We expect every
employee to complete refresher training when assigned, and this is
typically every two years. Of those employees assigned induction or
refresher training during the period, 84% had completed the training
as at 31 March 2021.
A new Code of Conduct module was produced and launched to over
34,000 English speaking employees this financial year – with 88%
completing it. The module pushes the boundaries of e-learning with high
impact video-based scenarios that are designed to reinforce behaviours
rather than just give employees information or test knowledge. The
course is currently being translated and will be rolled out to the rest of
Vodafone over the next year.
During the year, we updated our Global policy portal and the digital
version of our Code of Conduct. These new tools provide employees
easy access to the information and policies that they need. Since
launch, 28,000 users accessed our Global policy portal and 25,000
users accessed the new digital Code of Conduct.
Our Code of Conduct is well understood throughout Vodafone. In our
latest Spirit Beat employee survey, 96% of respondents agreed with
the statement “Our team lives by the Code of Conduct”.
Speak Up
Everyone who works for or on behalf of Vodafone has a responsibility to
report any behaviour at work that may be unlawful or criminal or could
amount to an abuse of our policies, systems or processes and therefore
a breach of our Code of Conduct. Employees are able to raise concerns
with a line manager, with a colleague from human resources or through
our confidential third-party hotline – Speak Up – accessible online or
by telephone.
Speak Up operates under a non-retaliatory policy, meaning that
everyone who raises a concern in good faith is treated fairly, with no
negative consequences for their employment with Vodafone, regardless
of the outcome of any subsequent investigation.
All Speak Up reports are confidentially investigated by local specialist
teams, with a senior team in place to triage reports. Each grievance is
formally and robustly investigated and is monitored to verify that any
corrective action plan or remediation has been conducted. Our Group
Risk and Compliance Committee reviews the effectiveness of the Speak
Up process, and the Audit and Risk Committee receives periodic updates.
Our employees trust our Speak Up process, as evidenced by our latest
Spirit Beat survey, with 87% of respondents agreeing that they believe
appropriate action would be taken as a result of using our Speak Up
process. We also track the proportion of ‘named’ versus ‘anonymous’
reports as a higher number of named reports suggests higher levels
of trust in the Speak Up process. During the year, 64% of reports were
‘named’ and this was higher than available industry benchmarks.
This year, 623 separate concerns were reported using Speak Up. Speak
Up reports could relate to matters of unlawful behaviour or matters
of integrity, such as bribery, fraud, price fixing, a conflict of interest, or a
breach of data privacy. Reports could also relate to people issues such
as discrimination, bullying or harassment, danger to the health and
safety of employees or the public, or potential abuses of human rights.
If we decide to proceed with an investigation, a qualified expert will
investigate, keeping the person who raised the concern informed
throughout the process. Where reports made to Speak Up require
remedial action, this could include consequences at the individual level,
or changes to internal processes and procedures.
Speak Up topics raised during the year
Speak Up
reports
47%
41%
11%
1%
Topic
People issues
Integrity
Other (e.g. breach of policies)
Health and safety
Requiring
remedial action
28%
35%
41%
33%
Speak Up is also made available to our suppliers and is communicated
through our Code of Ethical Purchasing. For suppliers that decide
to maintain their own grievance mechanisms, we require that they
inform us of any grievances raised relating to work done on behalf of
Vodafone directly.
Protecting data
Millions of people communicate and share information
over our networks, enabling them to connect, innovate
and prosper. Customers trust us with their data and
maintaining this trust is at the heart of everything we do.
Data privacy
We believe that everyone has a right to privacy wherever they live in
the world, and our commitment to our customers’ privacy goes beyond
legal compliance. As a result, our privacy programme applies globally,
irrespective of whether there are local data protection or privacy laws.
Our privacy management policy is based on the European Union General
Data Protection Regulation (‘GDPR’) and this is applied across Vodafone
markets both inside and outside the European Economic Area. Our
privacy management policy establishes a framework within which local
data protection and privacy laws are respected and sets a baseline for
those markets where there are no equivalent legal requirements.
44
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Responsible business (continued)
We always seek to respect and protect the right to privacy, including
our customers’ lawful rights to hold and express opinions and share
information and ideas without interference. At the same time, as a
licensed national operator, we are obliged to comply with lawful orders
from national authorities and the judiciary, including law enforcement.
Privacy risks
As data volumes continue to grow and regulatory and customer scrutiny
increases, it is more important than ever to be clear on the privacy risks
we face, as well as how our policies and programmes can mitigate these
risks. We separate data privacy risk into three main areas of risk:
– Collection: collection of personal data without permissions or
excessive collection of data;
– Access & Use: use of personal data for unauthorised purposes,
excessive data retention or poor data quality; and
– Sharing: unauthorised disclosure of personal data, including supplier
non-compliance.
To help us identify and manage emerging risks, we constantly evaluate
our business strategy, new technologies, products and services as well
as government policies and regulation.
Privacy principles
Our privacy programme governs how we collect, use and manage our
customers’ personal data to ensure we respect the confidentiality of their
communications and any choices that they have made regarding the use
of their data. Our privacy programme is based on the following principles:
– Accountability: We are accountable for living up to our commitments
throughout Vodafone and with our partners and suppliers.
– Privacy by design: Respect for privacy is a key component in the
design, development and delivery of our products and services.
– Fairness and lawfulness: We comply with privacy laws and act
with integrity and fairness. We also actively engage with stakeholders,
including civil society, academic institutions, industry and government,
in order to share our expertise, learn from others, and shape better,
more meaningful privacy laws and standards.
– Openness and honesty: We communicate clearly about our actions
that may impact privacy. We ensure our actions reflect our words and
we are open to feedback.
– Choice and access: We give people the ability to make simple and
meaningful choices about their privacy and allow individuals, where
appropriate, to access, update or delete their personal data.
– Responsible data management: We apply appropriate data
management practices to govern the processing of personal data.
We carefully select external partners and we limit disclosure of
personal data to what is described in our privacy notices or to what
has been authorised by our customers. We also ensure personal data
is not stored for longer than necessary or as is required by applicable
laws and to maintain accuracy of data.
– Security safeguards: We implement appropriate technical and
organisational measures to protect personal data against unauthorised
access, use, modification or loss.
– Balance: When we are required to balance the right to privacy against
other obligations necessary for a free and secure society, we work to
minimise privacy impacts.
Using customer data
We want to enable our customers to get the most out of our products
and services. In order to provide these services, we need to use our
customers’ personal information. We are committed to looking after our
customers’ data, using it for its stated purpose, and we are always open
about what we collect.
Key uses of customer data are outlined below.
– Provision of services: We process customer personal data to provide
our customers with the products and services they have requested,
to fulfil our contractual and legal obligations, and to provide customer
care. To provide our services and to charge our customers the correct
amount, we must process communications metadata regarding calls,
texts and data usage.
– Quality, development and security of services: We monitor
the quality and use of our connectivity and other services so that
we can continually improve and optimise them. This information
also helps detect and prevent fraud, as well as keep our networks
and services secure. We also do not sell data tied to specific individuals
to third parties.
– Marketing: With customer permission, we will use customer data
to market our products and services and provide more accurate
recommendations. This means we can present our customers with
offers when they need them most; for example, when they are about
to run out of data.
– Permissions: Our multi-channel permission management platforms,
deployed across all our channels (MyVodafone app, website, call
centres and retail stores) allow our customers to control how we use
their data for marketing and other purposes. For example, customers
can express their opt-in consent to the use of their communications
metadata for marketing purposes or for receiving third-party marketing
messages, or they can opt-out from marketing entirely. All permissions
can be revoked and choices can be changed at any time.
– Rights of individuals: Our businesses provide their customers
with access to their data through online and physical channels.
These channels can be used to request deletion of data that is no
longer necessary or correction of outdated or incorrect data. Our
customer privacy statements and other customer facing documents
provide information on how these rights can be exercised and how
to raise complaints. Our frontline staff are trained to respond to the
customers’ requests.
– Sharing of data: Where we rely on external suppliers and service
providers to process data on our behalf, they are subject to security
and privacy due diligence processes, and appropriate data processing
agreements govern their activities. We do not share customers’
personal data otherwise, unless required by law or with the consent
of the customer.
Each local market publishes a Privacy Statement to provide clear, transparent
and relevant information on how we collect and use personal data, what
choices are available regarding its use and how customers can exercise
their rights.
Click to read more about our privacy policies:
vodafone.com/privacy-centre
Operating model
Vodafone has an experienced team of privacy specialists dedicated to
ensuring compliance with data protection laws and our policies in the
countries where we operate.
We apply a process-based approach to managing privacy risks across
the data life-cycle and teams from across Vodafone ensure end-to-end
coverage. Dedicated security teams ensure appropriate technical and
organisational information security measures are applied to protect
personal data against unauthorised access, disclosure, loss or use during
transit and at rest.
Read more about cyber security
on page 45-47 and 54
44
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
45
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Responsible business (continued)
We always seek to respect and protect the right to privacy, including
Key uses of customer data are outlined below.
our customers’ lawful rights to hold and express opinions and share
information and ideas without interference. At the same time, as a
licensed national operator, we are obliged to comply with lawful orders
from national authorities and the judiciary, including law enforcement.
Privacy risks
As data volumes continue to grow and regulatory and customer scrutiny
texts and data usage.
increases, it is more important than ever to be clear on the privacy risks
we face, as well as how our policies and programmes can mitigate these
risks. We separate data privacy risk into three main areas of risk:
– Collection: collection of personal data without permissions or
excessive collection of data;
– Access & Use: use of personal data for unauthorised purposes,
excessive data retention or poor data quality; and
– Sharing: unauthorised disclosure of personal data, including supplier
non-compliance.
To help us identify and manage emerging risks, we constantly evaluate
our business strategy, new technologies, products and services as well
as government policies and regulation.
Privacy principles
Our privacy programme governs how we collect, use and manage our
customers’ personal data to ensure we respect the confidentiality of their
communications and any choices that they have made regarding the use
of their data. Our privacy programme is based on the following principles:
– Accountability: We are accountable for living up to our commitments
throughout Vodafone and with our partners and suppliers.
– Privacy by design: Respect for privacy is a key component in the
design, development and delivery of our products and services.
– Fairness and lawfulness: We comply with privacy laws and act
with integrity and fairness. We also actively engage with stakeholders,
including civil society, academic institutions, industry and government,
in order to share our expertise, learn from others, and shape better,
more meaningful privacy laws and standards.
– Openness and honesty: We communicate clearly about our actions
that may impact privacy. We ensure our actions reflect our words and
we are open to feedback.
– Choice and access: We give people the ability to make simple and
meaningful choices about their privacy and allow individuals, where
appropriate, to access, update or delete their personal data.
– Responsible data management: We apply appropriate data
management practices to govern the processing of personal data.
We carefully select external partners and we limit disclosure of
personal data to what is described in our privacy notices or to what
has been authorised by our customers. We also ensure personal data
is not stored for longer than necessary or as is required by applicable
laws and to maintain accuracy of data.
– Provision of services: We process customer personal data to provide
our customers with the products and services they have requested,
to fulfil our contractual and legal obligations, and to provide customer
care. To provide our services and to charge our customers the correct
amount, we must process communications metadata regarding calls,
– Quality, development and security of services: We monitor
the quality and use of our connectivity and other services so that
we can continually improve and optimise them. This information
also helps detect and prevent fraud, as well as keep our networks
and services secure. We also do not sell data tied to specific individuals
to third parties.
– Marketing: With customer permission, we will use customer data
to market our products and services and provide more accurate
recommendations. This means we can present our customers with
offers when they need them most; for example, when they are about
to run out of data.
– Permissions: Our multi-channel permission management platforms,
deployed across all our channels (MyVodafone app, website, call
centres and retail stores) allow our customers to control how we use
their data for marketing and other purposes. For example, customers
can express their opt-in consent to the use of their communications
metadata for marketing purposes or for receiving third-party marketing
messages, or they can opt-out from marketing entirely. All permissions
can be revoked and choices can be changed at any time.
– Rights of individuals: Our businesses provide their customers
with access to their data through online and physical channels.
These channels can be used to request deletion of data that is no
longer necessary or correction of outdated or incorrect data. Our
customer privacy statements and other customer facing documents
provide information on how these rights can be exercised and how
to raise complaints. Our frontline staff are trained to respond to the
customers’ requests.
– Sharing of data: Where we rely on external suppliers and service
providers to process data on our behalf, they are subject to security
and privacy due diligence processes, and appropriate data processing
agreements govern their activities. We do not share customers’
personal data otherwise, unless required by law or with the consent
of the customer.
Each local market publishes a Privacy Statement to provide clear, transparent
and relevant information on how we collect and use personal data, what
choices are available regarding its use and how customers can exercise
their rights.
Click to read more about our privacy policies:
vodafone.com/privacy-centre
Operating model
– Security safeguards: We implement appropriate technical and
organisational measures to protect personal data against unauthorised
Vodafone has an experienced team of privacy specialists dedicated to
ensuring compliance with data protection laws and our policies in the
access, use, modification or loss.
countries where we operate.
– Balance: When we are required to balance the right to privacy against
other obligations necessary for a free and secure society, we work to
minimise privacy impacts.
Using customer data
We apply a process-based approach to managing privacy risks across
the data life-cycle and teams from across Vodafone ensure end-to-end
coverage. Dedicated security teams ensure appropriate technical and
organisational information security measures are applied to protect
We want to enable our customers to get the most out of our products
personal data against unauthorised access, disclosure, loss or use during
and services. In order to provide these services, we need to use our
transit and at rest.
customers’ personal information. We are committed to looking after our
customers’ data, using it for its stated purpose, and we are always open
about what we collect.
Read more about cyber security
on page 45-47 and 54
All products, services and processes are subject to privacy impact
assessments as part of their development and throughout their life-cycle.
We maintain Personal Data Processing Records, Supplier Privacy Compliance,
Data Breach Management and Individual Rights processes, as well Internal
and International Data Transfer compliance frameworks, and training and
awareness programmes.
Our teams monitor and influence regulatory and industry developments
and work to build and maintain relationships with local data protection
authorities and other key stakeholders.
Our privacy control frameworks are subject to continuous risk-based
improvements. In addition to introducing updates to our global privacy
controls, we also require every employee and where possible contractors,
to complete privacy-specific training within six weeks of joining and then
every two years. We have also refined training for high-risk roles aimed at
teams with a key role in personal data processing. With this approach we
aim to achieve a 90% completion rate on both types of training across all
target groups across our global footprint.
The effectiveness of control implementation is subject to regular reporting
and testing by the privacy teams and internal audit. Any findings are
subject to remedial actions by the responsible control operator, and
completion is monitored.
Governance
The Group General Counsel and Company Secretary, a member of the
Group Executive Committee, oversees the global privacy programme.
The Group Privacy Officer, reporting to the Group General Counsel, is
responsible for managing and overseeing the privacy programme on a
day-to-day basis across the markets and provides regular status reports
to Group General Counsel and Company Secretary and an annual update
to the Group Audit and Risk Committee.
Whilst each employee is responsible for protecting personal data they
are trusted with, accountability for compliance sits with each operating
company. A member of the local executive committee oversees the local
implementation of our privacy programme. Each operating company also
has a dedicated privacy officer, privacy legal counsel and other privacy
specialists. Local privacy officers provide reports to the Group Privacy
Officer throughout the year.
The Privacy Leadership team brings together Group and local privacy
officers. It approves new standards and guidelines and monitors the
implementation of global privacy plans. Operating companies also
maintain privacy steering committees that bring together privacy and
security teams and senior management from relevant business functions.
Privacy incidents
We have a strong culture of data privacy and our assurance and
monitoring activities are capable of identifying potential issues before
they materialise. However, during the financial year, Vodafone was fined
a combined €20 million for separate data privacy issues in Italy, Spain
and Romania. The fines in Italy and Spain related to Vodafone’s use of
third-party marketing agencies, some of which had conducted direct
marketing activities towards people who had opted-out. These activities
were in violation of existing supplier agreements. In limited instances,
there were also delays and issues in adding people to opt-out lists as a
result of human and system errors, as well as related fraudulent activities
which Vodafone reported to the relevant authorities. In addition, we received
a fine in Spain due to a supplier’s sub-contractor’s non-compliance with
international data transfer rules. The fine in Romania related to a delayed
response to a subject access request.
Our rules on telesales have been reviewed and compliance with these
rules is subject to increased assurance and monitoring. Where necessary,
improved controls have been introduced to monitor and enforce suppliers’
compliance. Such measures include, for example, introduction of tools to
automatically prevent or detect calls to opted-out customers, verification
that commission is only paid for authorised calls, enforcement of contractual
penalties for non-compliance, and discontinuation of contracts with a
number of suppliers.
For detail on how we respond to a data breach,
refer to the cyber security section on page 46
Location Insights
Vodafone provides anonymous and aggregated insights which are
based on network location data to our public sector and business
customers. The Location Insights product harnesses the power
of anonymised geospatial movement data of our customers to
give organisations adopting the product a better understanding of
how populations move in space and time, all while protecting the
privacy of our customers. These insights are being used by Vodafone
Business customers for transport or retail planning purposes as cities
and urban areas become ‘smart’. It is important to note that once
we have aggregated and anonymised customer-level data, individual
customers cannot be identified or targeted with personal advertisements.
Our customer privacy statements are open and transparent about this
use of data and we allow customers to opt-out.
Anonymous and aggregated location insights were also shared with
government authorities to help them understand how populations
moved during the COVID-19 pandemic. These initiatives were subject
to detailed privacy assessments.
Our Location Insights product received an honourable mention by the
International Association of Privacy Professionals in 2018 for the most
innovative privacy safeguarding product.
Cyber security
Our purpose is to enable connectivity in society and as a provider of
critical national infrastructure we recognise the importance of cyber
and information security. No organisation, government or person will
ever be fully immune to cyber-attacks; however, the telecommunications
industry is faced with a unique set of risks as we provide connectivity
services and handle private communication data.
Our networks connect millions of people, homes, businesses and things
to each other and the internet. The security of our networks, systems
and customers is a top priority and a fundamental part of our purpose.
Our customers use Vodafone products and services because of our
next-generation connectivity, but also because they trust that their
information is secure.
Identification of vulnerabilities & risks
Cyber security is a principal risk. We recognise that if not managed
effectively, there could be major customer, financial, reputation or
regulatory impacts. Risk and threat management are fundamental
to maintaining the security of our services across every aspect of our
business. We separate cyber security risk into three main areas of risk:
– External: Attackers and criminals targeting our systems, networks,
or people to conduct malicious attacks;
– Insider: Accidental leakage of information or malicious misuse of
access privileges by our employees; and
– Supply chain: A supplier is breached or used as a conduit to gain
access to our systems, data or people.
To help us identify and manage emerging and evolving risks, we constantly
evaluate and challenge our business strategy, new technologies, government
policies and regulation, and cyber threats. We conduct regular reviews
of the most significant security risks affecting our business and develop
strategies to detect, prevent and respond to them. Our cyber security
approach focuses on minimising the risk of cyber incidents that affect
our networks and services.
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Strategic report
Governance
Financials
Other information
Responsible business (continued)
Understanding the threat landscape is key to managing cyber risk.
Over the course of the year, two of the biggest cyber security threats
faced by all organisations significantly increased – phishing and
ransomware attacks. Cyber criminals exploited the emotion and
uncertainty associated with the pandemic to deceive users into engaging
with malicious emails or pay a sum of money to regain access to systems.
Cyber criminals also increasingly targeted smaller suppliers to large
organisations as a way to more easily compromise their targets.
Organisations across all industries also continued to experience other
forms of threats, such as sophisticated espionage attempts and the
exploitation of unpatched vulnerabilities.
Controls
Controls can prevent, detect or respond to risks. Most risks and
threats are prevented from occurring and most will be detected before
they cause harm and need a response. A small minority will need
recovery actions.
We use a common global framework called the Cyber Security Baseline
and it is mandatory across the entire Group. The baseline includes
key security controls which significantly reduce cyber security risk, by
preventing, detecting or responding to events and attacks. Our framework
was initially developed based on an international standard mapped to
our key risks in the way that provides the most comprehensive protection.
Each year, we review the framework in the light of changing threats and
create new or enhanced controls to counter these threats.
A dedicated assurance team reviews and validates the effectiveness of
our security controls, and our control environment is subject to regular
internal audit. The security of our global networks is also independently
tested every year to assure we are maintaining the highest standards and
our controls are operating effectively. We maintain independently audited
information security certifications, including ISO 27001, which cover
our global technology function and 15 local markets. We also comply
with local requirements or certifications and actively contribute to
consultations and debates with regard to laws and regulations that
aim to improve and assure the security of communications networks.
Read more on our identification of cyber threat and information
security risks on page 54
New technologies
We adopt new technologies to better serve our customers and gain
operational efficiency. For every technology programme, new or existing,
we follow our Security by Design process, evaluating suppliers’ hardware
and software, modelling threats and understanding the risks before
designing and implementing the necessary security controls and
testing them.
Every new mobile network generation has brought increased
performance and capability, along with new opportunities in security.
5G improves existing security, with additional protection against threats
such as location tracking, call or message interception and modification
of network traffic. Similarly, 5G includes enhanced features to protect
signalling between different operators’ networks, which helps prevent
tracking or interception while roaming. Vodafone is working at pace to
embed these new security features into our 5G network deployments.
Getting the right security by design across all operators is vital as
5G and other mobile technologies will connect billions of devices.
Vodafone has helped establish the GSMA IoT Security Guidelines,
and the accompanying self-assessment scheme. Where we work
with partners or third parties to build and deploy IoT solutions, we
also advocate the approach co-developed between Vodafone and
Consumers International, as seen in their publication of the Consumer
IoT Trust by Design Guidelines.
We also track and monitor potential future threats to our networks,
systems and customers, such as quantum computing and its effect on
encryption. While such a risk is not specific to Vodafone, we have started
work to address the potential negative effects and maintain a robust level
of encryption that is quantum safe within our network and systems.
Operating model
We have implemented an operating model based on the leading
industry security standards published by the US Department of
Commerce, specifically the National Institute of Standards and
Technology. We have an international team of over 800 employees
who are focused on constantly monitoring, protecting and defending
our systems and our customers’ data. We also work with third-party
experts and consultants, to maintain specialist skills and continue to
follow leading practice. Our scale means we benefit from global
collaboration, technology sharing, deep expertise and ultimately
have greater visibility of emerging threats. Although the Cyber team
leads on detect, respond and recover, preventative and protective
controls are embedded across all of our technology and throughout
the entire business.
Set Policy and Sta
n
I d e ntify
Assess
risk
T e c h & Business
Risk & Threat-
based Security
d
a
r
d
s
Select &
Design
Controls
n
g
i
s
e
y D
Security b
t
c
e
t
o
r
P
Maintain
systems,
threats &
network
Internal Au d i
t
Cyber Pr e v e n t
Deploy
Controls
cover
d re
n
a
d
n
o
p
s
e
R
Measure & T e st
Respond
to events
C
y
b
e
r
D
e
f
e
n
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etect
Every employee has responsibility for cyber security and must follow
the Vodafone Cyber Code, be sensitive to threats and report suspicious
activity. Embedded in our Code of Conduct, the Cyber Code is the
cornerstone of how we expect all employees to behave when it comes to
best practice in cyber security. It consists of seven areas where employees
need to follow security good practice. Our cyber security awareness
programme is delivered digitally via our internal social media platform,
videos and webinars. In addition, we perform regular phishing simulations
to raise awareness and train employees. In the last year we sent 161,000
simulated phishing emails across 23 markets and Group functions, and
employee reporting improved during 2020.
We have also performed incident simulations for the senior management
team in all markets and the main Group functions. These simulations
allowed the CEOs and their teams to experience what a real incident
is like and exercise their responsibilities, as well as identifying areas for
improvement in internal processes.
Click to read more about Vodafone’s Cyber Code in our
Code of Conduct: vodafone.com/code-of-conduct
46
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
47
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Responsible business (continued)
Understanding the threat landscape is key to managing cyber risk.
We also track and monitor potential future threats to our networks,
Over the course of the year, two of the biggest cyber security threats
systems and customers, such as quantum computing and its effect on
faced by all organisations significantly increased – phishing and
ransomware attacks. Cyber criminals exploited the emotion and
encryption. While such a risk is not specific to Vodafone, we have started
work to address the potential negative effects and maintain a robust level
uncertainty associated with the pandemic to deceive users into engaging
of encryption that is quantum safe within our network and systems.
with malicious emails or pay a sum of money to regain access to systems.
Cyber criminals also increasingly targeted smaller suppliers to large
organisations as a way to more easily compromise their targets.
Organisations across all industries also continued to experience other
forms of threats, such as sophisticated espionage attempts and the
exploitation of unpatched vulnerabilities.
Controls
Controls can prevent, detect or respond to risks. Most risks and
threats are prevented from occurring and most will be detected before
they cause harm and need a response. A small minority will need
recovery actions.
We use a common global framework called the Cyber Security Baseline
and it is mandatory across the entire Group. The baseline includes
key security controls which significantly reduce cyber security risk, by
preventing, detecting or responding to events and attacks. Our framework
was initially developed based on an international standard mapped to
our key risks in the way that provides the most comprehensive protection.
Each year, we review the framework in the light of changing threats and
create new or enhanced controls to counter these threats.
A dedicated assurance team reviews and validates the effectiveness of
our security controls, and our control environment is subject to regular
internal audit. The security of our global networks is also independently
tested every year to assure we are maintaining the highest standards and
our controls are operating effectively. We maintain independently audited
information security certifications, including ISO 27001, which cover
our global technology function and 15 local markets. We also comply
with local requirements or certifications and actively contribute to
consultations and debates with regard to laws and regulations that
aim to improve and assure the security of communications networks.
Read more on our identification of cyber threat and information
security risks on page 54
New technologies
We adopt new technologies to better serve our customers and gain
operational efficiency. For every technology programme, new or existing,
we follow our Security by Design process, evaluating suppliers’ hardware
and software, modelling threats and understanding the risks before
designing and implementing the necessary security controls and
testing them.
Every new mobile network generation has brought increased
performance and capability, along with new opportunities in security.
5G improves existing security, with additional protection against threats
such as location tracking, call or message interception and modification
of network traffic. Similarly, 5G includes enhanced features to protect
signalling between different operators’ networks, which helps prevent
tracking or interception while roaming. Vodafone is working at pace to
embed these new security features into our 5G network deployments.
Getting the right security by design across all operators is vital as
5G and other mobile technologies will connect billions of devices.
Vodafone has helped establish the GSMA IoT Security Guidelines,
and the accompanying self-assessment scheme. Where we work
with partners or third parties to build and deploy IoT solutions, we
also advocate the approach co-developed between Vodafone and
Consumers International, as seen in their publication of the Consumer
IoT Trust by Design Guidelines.
Operating model
We have implemented an operating model based on the leading
industry security standards published by the US Department of
Commerce, specifically the National Institute of Standards and
Technology. We have an international team of over 800 employees
who are focused on constantly monitoring, protecting and defending
our systems and our customers’ data. We also work with third-party
experts and consultants, to maintain specialist skills and continue to
follow leading practice. Our scale means we benefit from global
collaboration, technology sharing, deep expertise and ultimately
have greater visibility of emerging threats. Although the Cyber team
leads on detect, respond and recover, preventative and protective
controls are embedded across all of our technology and throughout
the entire business.
I d e ntify
Assess
risk
Set Policy and Sta
T e c h & Business
n
d
a
r
d
s
Measure & T e st
cover
d re
n
a
d
n
o
p
s
e
R
Respond
to events
C
y
b
e
r
D
e
f
e
n
c
e
D
etect
Select &
Design
Controls
n
g
i
s
e
y D
Security b
t
c
e
t
o
r
P
Risk & Threat-
based Security
Maintain
systems,
threats &
network
Internal Au d i
t
Cyber Pr e v e n t
Deploy
Controls
Every employee has responsibility for cyber security and must follow
the Vodafone Cyber Code, be sensitive to threats and report suspicious
activity. Embedded in our Code of Conduct, the Cyber Code is the
cornerstone of how we expect all employees to behave when it comes to
best practice in cyber security. It consists of seven areas where employees
need to follow security good practice. Our cyber security awareness
programme is delivered digitally via our internal social media platform,
videos and webinars. In addition, we perform regular phishing simulations
to raise awareness and train employees. In the last year we sent 161,000
simulated phishing emails across 23 markets and Group functions, and
employee reporting improved during 2020.
We have also performed incident simulations for the senior management
team in all markets and the main Group functions. These simulations
allowed the CEOs and their teams to experience what a real incident
is like and exercise their responsibilities, as well as identifying areas for
improvement in internal processes.
Click to read more about Vodafone’s Cyber Code in our
Code of Conduct: vodafone.com/code-of-conduct
Governance
The Group’s Chief Technology Officer is the Executive Committee
member responsible for managing the risks associated with cyber
threats and information security. The Vodafone Cyber Security Director is
responsible for managing and overseeing the cyber security programme
on a day-to-day basis and reports to the Chief Technology Officer.
Cyber threats and information security are a major area of focus for
the Audit and Risk Committee and detailed updates including threat
landscape, risk position and security programme progress are provided
at least twice a year. The Board is also regularly updated on cyber
security matters.
Read more on our identification of cyber threat
and information security risks on page 54
Cyber incidents
As a global connectivity provider, we are subject to cyber threats,
which we work to identify, block and mitigate with our robust control
environment without any impact. Where a security incident occurs, we
have a consistent incident management framework and an experienced
team to manage our response. The focus of our incident responders is
always fast risk mitigation and customer security.
We actively engage with stakeholders, including academic institutions,
industry and government, in order to protect Vodafone, respond to cyber
threats and work together to share best practice. Given our expertise and
extensive experience, we also engage with a wide range of organisations
to help improve the understanding of cyber security thinking and practice,
and contribute to public policy, technical standards, information sharing
and analysis, risk assessment, and governance.
In the event of a cyber breach, disclosure is made in line with local
regulations and laws, and based on a risk assessment considering
customers, law enforcement, relevant authorities and our external
auditor. The European Union’s General Data Protection Regulation
(‘GDPR’) provides a framework for notifying customers in the event there
is a loss of customer data as a result of a data breach and this framework
is a baseline across all our markets.
Vodafone holds cyber liability and professional indemnity insurance
policies and these policies may cover the costs of an information security
breach, in whole or in part.
In December 2020, ho. Mobile, a second brand in Italy, suffered a data
breach and part of a database holding customer data was accessed by
a third-party; no financial information, passwords, or mobile traffic data
relating to calls, texts or web activity was involved. We utilised our existing
global incident management framework. Ho. Mobile took a proactive
approach and immediately informed affected customers and regulators,
enhanced security protections, remotely reissued SIM serial numbers
to prevent any misuse, and offered free replacement SIMs to the entire
customer base. Ho. Mobile also notified local law enforcement and
made the required disclosures to the Italian Data Protection Authority.
Ho. Mobile uses distinct and separate IT systems to Vodafone Italy and
the rest of the Vodafone Group.
Vodafone classifies security incidents according to severity, measured
by business and customer impact. The highest severity category
corresponds to a significant data breach or loss of service caused by
the incident. In the past financial year, the only such incident was the
ho. Mobile incident discussed above.
Protecting people
Wherever we operate, we have an opportunity to
contribute to the advancement of fundamental
rights for our customers, colleagues and communities.
We are also conscious of the risks associated with
our operations and we work hard to mitigate negative
impacts, ensuring we keep people safe.
Health and safety
Keeping our people safe is one of the most important responsibilities
we hold as an employer. Our ongoing focus is to create a safe working
environment for everyone working for and on behalf of Vodafone and
the communities in which we operate. We want everyone working with
Vodafone to return home safely every day.
Our health and safety framework provides a consistent approach to
safety leadership, planning, performance monitoring, governance and
assurance. Our commitment to safety does not differentiate between
employees, contractors and suppliers, all of whom benefit from the
same focus on preventing harm, both on worksites and when working
or moving between sites.
Health and safety risks
We focus our initiatives on our top health and safety risks, which continue
to account for the majority of reported incidents and remain a focus area
globally: occupational road risk; falls from height; working with electricity;
and fibre operations.
Road traffic incidents continue to be the primary cause of major injuries
and fatalities reported globally, accounting for 60% of all reported
incidents within Vodafone. As a result, we have included a specific
requirement to focus on road safety and driver behaviour within our
health and safety strategy and annual objectives. In addition, local market
road risk controls are reviewed as part of our internal assurance plans.
In recognition of our top risks, we have established the ‘Vodafone
Absolute Rules’. These rules focus on risks that present the greatest
potential for harm for anyone working for or on behalf of Vodafone. The
Absolute Rules are clear and underpinned by a zero-tolerance approach
to unsafe behaviours in all of our businesses. The Absolute Rules must
be followed by all Vodafone employees and contractors, as well as our
suppliers’ employees and contractors. In the most recent Spirit Beat
survey, 96% of employees agreed that the Absolute Rules are taken
seriously at Vodafone.
Leadership engagement
The importance of senior leadership and commitment to health and
safety remains key to our approach. Our senior leaders are actively
engaged, carrying out regular site tours throughout the year. Despite the
restrictions imposed by COVID-19, our senior leaders have continued to
carry out tours virtually, recognising the importance of connecting with
teams and critical workers as they continued to maintain our networks,
work in our retail stores and on customer sites.
Health and safety governance
Health and safety is managed through a global safety framework, which
includes the monitoring and assessing of risks, setting targets, reviewing
progress and reporting performance. Our health and safety management
system is based on international standards for occupational health and
safety, is aligned to internationally recognised best practice, and always
meets local requirements at a minimum. In addition, some of our local
markets have chosen to undergo certification to OHSAS 18001 or
ISO 45001, the international standard for occupational health and
safety. Our operations in Albania, Egypt, Greece, Ireland, Italy and the
UK are either certified to OHSAS 18001 or ISO 45001.
48
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Responsible business (continued)
All incidents relating to our top risks and breaches of our Vodafone
Absolute Rules are reported and investigated in adherence with
timescales contained within our Incident Reporting Standard. We ensure
that incidents are investigated thoroughly and appropriate remedial
actions and improvements are identified and implemented. We strongly
believe in the importance of prevention, however we also believe that
incidents should be treated as an opportunity for learning.
Health and safety is a high-risk policy and included within our risk and
compliance governance programme. Due to restrictions introduced as
a consequence of the COVID-19 pandemic, in-country audits have not
been possible this year. However, we have updated our risk control matrix
to help enhance the effectiveness of our assurance programme, ensuring
a single set of standards and mandatory controls which local markets
self-assess against.
Training
This year we introduced our updated health and safety module as part of
our mandatory ‘Doing What’s Right’ training. The training module includes
a video from our Group Chief Human Resources Officer demonstrating
senior-level support for our Vodafone Absolute Rules. Every employee
must complete the training within six weeks of joining and then typically
every two years. During 2021, 47,732 employees working for Vodafone
completed the health and safety module. Contractors are required to
complete separate training relevant to their role and position.
Furthermore, each local market is responsible for delivering health and
safety training which supports the development of appropriate safety
leadership skills, behaviours and identification of health and safety risks.
Additional training is specific to an individual’s role and aligned to each
market’s local safety legislation.
Key performance indicators
We have a global set of key performance indicators as part of our safety
framework, which are reported monthly to our Executive Committee,
and bi-annually to our Board:
– Number of fatalities;
– Number of employee lost time incidents; and
– Number of top safety risks, including breaches of our Absolute Rules.
After a thorough investigation, we record all fatal incidents related to
our operations where we conclude that our controls were not operating
as effectively as required and may have prevented the incident from
occurring. We also consider circumstances where if our controls could
have reasonably been enhanced, the outcome could have been different.
Each fatality is presented for review, chaired by the Group Chief Human
Resources Officer. We also share any lessons learned from each fatality
across the relevant Group functions.
Any injury is one too many and any loss of life related to our operations
is unacceptable. It is therefore with great regret that there was sadly
one recordable fatality during the year – a road traffic incident involving
a member of the public in Mozambique. A thorough investigation
was overseen by the respective local market Chief Executive, who
is responsible for ensuring that the causes of the incident are widely
understood and that any necessary corrective actions are implemented.
This incident further reinforces our ongoing focus to reduce the number
of road risk related incidents, with a focus on our road safety initiatives and
awareness campaigns within our local communities.
We track and investigate incidents relating to our top risks and breaches
of our Vodafone Absolute Rules. During the year, 621 breaches of our
Vodafone Absolute Rules and 1,211 incidents relating to our top risks
were recorded. Each incident is investigated and we seek to identify
the root cause and ensure suitable corrective action is taken where
necessary. An investigation into each incident is conducted at a scale
proportionate to the indicative level of risk.
Lost-time incidents (‘LTI’) is the term we use when an employee is injured
while carrying out a work-related task and is consequently unable to
perform his or her regular duties for a complete shift or period of time
after the incident. Of the seven incidents, five were attributed to slips,
trips or falls in and around the workplace and two were vehicle-related.
Key Performance Indicators
Work-related injuries or ill health
(excluding fatalities)
Employees
Suppliers’ employees/contractors
Lost-time incidents (‘LTI’)
Number of lost-time employee incidents
Lost-time incident rate per 1,000 employees
Total recordable fatalities
Employees
Suppliers’ employees/contractors
Members of the public
2021
2020
7
24
7
0.06
0
0
1
33
21
33
0.35
0
1
2
COVID-19
Our response to the COVID-19 pandemic has prioritised the safety
and wellbeing of our people from the outset. This includes a variety of
initiatives deployed across markets, tightly coordinated by the COVID-19
Business Continuity Plan programme management team, chaired by the
Chief Human Resources Officer.
Throughout the pandemic, we have closely observed World Health
Organization (‘WHO’) recommendations and control measures,
which complement our internal COVID-19 plans, instructions and
communications. WHO controls and guidance were implemented
as a minimum across all our markets.
A limited number of positive COVID-19 cases amongst employees were
reported during the year. All positive cases are reviewed to identify any
themes, such as locations or functions requiring additional focus to
ensure controls are adequate, or if they require strengthening.
The majority of our employees (95%) continued to work effectively
and safely from home during the year and we continue to monitor the
situation. Local requirements and rules differ across our markets and in
some countries, there are regional variations. This adds to the complexity
as markets review control measures and plans that enable the safe return
of employees, contractors and suppliers back to their workplaces.
As we continue to manage through the pandemic, we have committed
to the following to support our employees:
– All our employees will have access to physical, mental health and
wellbeing support.
– We will continue to be flexible with our policies as required by local
conditions while exploring other policies that we could adjust/
implement to support employees.
– Digital learning will be available to all our employees and their families.
– Local plans will ensure all our employees have a safe place to
work, whether they are working on site or at home. We will enable
employees to access our offices whenever possible, if that is required
to better protect their personal safety. As we maintain our guidance for
employees with underlying health conditions, we will ensure they are
able to engage and connect with their teams productively.
We will continue to listen to our employees and ensure they are
consulted as part of any plans to return to the workplace. We remain
confident that our current controls remain appropriate to look after the
health, safety and wellbeing of our people and suppliers who work on
our sites, however will continue to assess and monitor the risks and follow
local market health authority requirements as a minimum.
Read more about employee wellbeing
on page 22 and 35-37
48
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
49
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Responsible business (continued)
All incidents relating to our top risks and breaches of our Vodafone
Lost-time incidents (‘LTI’) is the term we use when an employee is injured
Absolute Rules are reported and investigated in adherence with
while carrying out a work-related task and is consequently unable to
timescales contained within our Incident Reporting Standard. We ensure
perform his or her regular duties for a complete shift or period of time
that incidents are investigated thoroughly and appropriate remedial
after the incident. Of the seven incidents, five were attributed to slips,
actions and improvements are identified and implemented. We strongly
trips or falls in and around the workplace and two were vehicle-related.
believe in the importance of prevention, however we also believe that
incidents should be treated as an opportunity for learning.
Key Performance Indicators
Health and safety is a high-risk policy and included within our risk and
compliance governance programme. Due to restrictions introduced as
a consequence of the COVID-19 pandemic, in-country audits have not
been possible this year. However, we have updated our risk control matrix
to help enhance the effectiveness of our assurance programme, ensuring
a single set of standards and mandatory controls which local markets
Work-related injuries or ill health
(excluding fatalities)
Employees
Suppliers’ employees/contractors
Lost-time incidents (‘LTI’)
Number of lost-time employee incidents
self-assess against.
Training
This year we introduced our updated health and safety module as part of
our mandatory ‘Doing What’s Right’ training. The training module includes
Employees
2021
2020
7
24
7
0
0
1
33
21
33
0.35
0
1
2
Lost-time incident rate per 1,000 employees
0.06
Total recordable fatalities
Suppliers’ employees/contractors
Members of the public
COVID-19
Our response to the COVID-19 pandemic has prioritised the safety
and wellbeing of our people from the outset. This includes a variety of
initiatives deployed across markets, tightly coordinated by the COVID-19
Business Continuity Plan programme management team, chaired by the
Chief Human Resources Officer.
Throughout the pandemic, we have closely observed World Health
Organization (‘WHO’) recommendations and control measures,
which complement our internal COVID-19 plans, instructions and
communications. WHO controls and guidance were implemented
as a minimum across all our markets.
A limited number of positive COVID-19 cases amongst employees were
reported during the year. All positive cases are reviewed to identify any
themes, such as locations or functions requiring additional focus to
ensure controls are adequate, or if they require strengthening.
The majority of our employees (95%) continued to work effectively
and safely from home during the year and we continue to monitor the
situation. Local requirements and rules differ across our markets and in
some countries, there are regional variations. This adds to the complexity
as markets review control measures and plans that enable the safe return
of employees, contractors and suppliers back to their workplaces.
As we continue to manage through the pandemic, we have committed
to the following to support our employees:
– All our employees will have access to physical, mental health and
wellbeing support.
– We will continue to be flexible with our policies as required by local
conditions while exploring other policies that we could adjust/
implement to support employees.
– Digital learning will be available to all our employees and their families.
– Local plans will ensure all our employees have a safe place to
work, whether they are working on site or at home. We will enable
employees to access our offices whenever possible, if that is required
to better protect their personal safety. As we maintain our guidance for
employees with underlying health conditions, we will ensure they are
We will continue to listen to our employees and ensure they are
consulted as part of any plans to return to the workplace. We remain
confident that our current controls remain appropriate to look after the
health, safety and wellbeing of our people and suppliers who work on
our sites, however will continue to assess and monitor the risks and follow
local market health authority requirements as a minimum.
Read more about employee wellbeing
on page 22 and 35-37
a video from our Group Chief Human Resources Officer demonstrating
senior-level support for our Vodafone Absolute Rules. Every employee
must complete the training within six weeks of joining and then typically
every two years. During 2021, 47,732 employees working for Vodafone
completed the health and safety module. Contractors are required to
complete separate training relevant to their role and position.
Furthermore, each local market is responsible for delivering health and
safety training which supports the development of appropriate safety
leadership skills, behaviours and identification of health and safety risks.
Additional training is specific to an individual’s role and aligned to each
market’s local safety legislation.
Key performance indicators
and bi-annually to our Board:
– Number of fatalities;
We have a global set of key performance indicators as part of our safety
framework, which are reported monthly to our Executive Committee,
– Number of employee lost time incidents; and
– Number of top safety risks, including breaches of our Absolute Rules.
After a thorough investigation, we record all fatal incidents related to
our operations where we conclude that our controls were not operating
as effectively as required and may have prevented the incident from
occurring. We also consider circumstances where if our controls could
have reasonably been enhanced, the outcome could have been different.
Each fatality is presented for review, chaired by the Group Chief Human
Resources Officer. We also share any lessons learned from each fatality
across the relevant Group functions.
Any injury is one too many and any loss of life related to our operations
is unacceptable. It is therefore with great regret that there was sadly
one recordable fatality during the year – a road traffic incident involving
a member of the public in Mozambique. A thorough investigation
was overseen by the respective local market Chief Executive, who
is responsible for ensuring that the causes of the incident are widely
understood and that any necessary corrective actions are implemented.
This incident further reinforces our ongoing focus to reduce the number
of road risk related incidents, with a focus on our road safety initiatives and
awareness campaigns within our local communities.
of our Vodafone Absolute Rules. During the year, 621 breaches of our
Vodafone Absolute Rules and 1,211 incidents relating to our top risks
were recorded. Each incident is investigated and we seek to identify
the root cause and ensure suitable corrective action is taken where
necessary. An investigation into each incident is conducted at a scale
proportionate to the indicative level of risk.
We track and investigate incidents relating to our top risks and breaches
able to engage and connect with their teams productively.
Human rights
We want to make sure that we have a positive impact on people and
society and bring human rights into everything we do. As a global
telecommunications provider, we acknowledge that we can be faced
with human rights challenges.
Click to read our Human Rights Policy Statement
vodafone.com/human-rights-policy-statement
Human rights risks
As a telecommunications operator, our most significant human rights
risks relate to our customers’ rights to privacy and freedom of expression.
This is because governments in the countries where we operate have the
legal right, under certain circumstances, to impose limits on their citizens’
ability to access and use digital networks and services, or to request lawful
interception of citizens’ communications. Governments exercise this right
through operators’ licence requirements. These requirements can vary
significantly from country to country.
Our Freedom of Expression principles, Privacy Management Policy and
Law Enforcement Assistance Policy set out our approach to managing
these risks.
Click to read more about how we handle
Law Enforcement Demands:
vodafone.com/handling-law-enforcement-demands
Our approach
We conduct due diligence to help make sure that we respect human
rights. This year, we assessed our approach to children’s rights by
piloting UNICEF’s draft revised Mobile Operators Children’s Rights
Impact Assessment tool. We found areas of good practice, such as the
wide range of programmes that use technology to support the realisation
of children’s rights. But there is still more to do to make sure our internal
policies consistently reflect our commitment to children.
We also commissioned external expert guidance on heightened
due diligence needed when operating in higher-risk countries such as
those affected by conflict. For example, risks to free expression can be
particularly pronounced in countries which are politically unstable or
going through a time of transition such as an election.
Governance
The Group’s External Affairs Director oversees Vodafone’s human rights
programme and is a member of the Executive Committee. A senior
human rights manager manages our programme, with the support of a
cross-functional internal Human Rights Advisory Group, comprising senior
managers responsible for: privacy, security, responsible sourcing, and
diversity and inclusion, amongst others. We report regularly on our
progress to the Reputation and Policy Steering Committee.
Collaboration
Global business’ understanding of human rights impacts continues to
mature. We play our part in the debate by collaborating and learning from
others to improve our approach: we are an active member of the Global
Network Initiative, alongside other initiatives such as the United Nations
B-Tech Project which convenes business, civil society and government to
advance implementation of the UN Guiding Principles in the tech sector.
Mobiles, masts and health
The health and safety of our people, customers and the wider public is
a priority for Vodafone. We always operate our mobile networks strictly
within national regulations, which are typically based on, or go beyond,
international guidelines set by the independent scientific body, the
International Commission for Non-Ionizing Radiation Protection (‘ICNIRP’).
In March 2020, the ICNIRP confirmed that there are no adverse effects on
human health from mobile networks, including from 5G frequencies if
exposure is within their guidelines. This followed an extensive review of
scientific studies published during the last 20 years.
As well as complying with national regulations, where Vodafone markets
have rolled out 5G we have implemented a “Smart PowerLock” (‘SPL’)
feature. This innovative technology, designed for use with adaptive
antennas used for 5G, ensures that the transmitted radio frequency
power of the antenna is always below a threshold when averaged
over a predefined time window. This guarantees compliance with
electromagnetic field (‘EMF’) regulations under all possible operating
conditions for 5G sites. Currently, all our markets that have rolled out 5G
have activated the feature in some or all radio sites. During the last year,
we have demonstrated the feature to regulators, to evidence compliance
with EMF regulations. The feature has been accepted as effective, even
in those markets (such as Italy) where EMF regulations are stricter than
international science-based guidelines.
COVID-19
At the start of the COVID-19 crisis, it was regrettable that unproven,
unsubstantiated theories circulating primarily on social media incited
individuals to damage masts and base stations in a number of countries.
The levels of misinformation alleging links between COVID-19 and 5G
has reduced considerably in Europe over the past year. This is due to
improved government public health communications; effective policing
from both law enforcement and regulators; improved public education;
and social media platforms taking action. We have supported all these
actions, both at a global level and in markets where the misinformation
has encouraged criminal action.
Vodafone markets have used a common strategy to rebut the
misinformation and condemn arson attacks on our base stations.
The most recent wave of misinformation and criminal damage was
in South Africa, in January 2021. By reacting swiftly in partnership
with other operators, and providing clear messages that there is no
scientific evidence to link the spread of COVID-19 to 5G, we limited
further damage.
Science monitoring
There has been scientific research on mobile frequencies for decades.
Scientific reviews have made a vital contribution to establishing industry
guidelines and standards. We follow the results of these independent
expert reviews to understand developments in scientific research related
to mobile devices, base stations and health. We consider the opinions of
panels commissioned by recognised national or international health
agencies such as the World Health Organization (WHO), the European
Commission’s Scientific Committee on Health, Environmental and
Emerging Risks (SCHEER) and the International Commission on
Non-Ionizing Radiation Protection (ICNIRP).
Operating model
We have robust governance mechanisms in place and conduct regular
compliance assessments to ensure that our masts and devices meet
the standards set by the Group policy and national regulations. We also
conduct network measurements and calculations of EMF exposure from
the network masts, and review the test reports we receive on EMF testing
on devices. With travel restrictions due to the COVID-19 crisis, we have
found new and innovative ways to carry out remote checks on labs that
carry out EMF tests on devices. With the use of cameras and one on-site
resource, we have successfully checked four labs in China remotely and
audited one European lab in person as normal.
50
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Responsible business (continued)
Responsible supply chain
We spend approximately €24 billion a year with around 10,500 direct
suppliers around the world to meet our businesses’ and customers’
needs. The majority of our external spend is with suppliers that provide
us with network infrastructure, IT and related services, fixed lines, mobile
masts and data centres that run our networks.
Supply chain risks
The main areas of risk in our supply chain relate to three key areas:
health and safety matters related to non-compliant fire safety measures;
excessive working hours due to needing better demand management;
and environmental matters related to non-compliant chemical storage
and lack of carbon reduction programmes. This year they made up
74% of all non-compliances found in our supply chain through our
assessments. Suppliers that do not meet our standards are provided
with a corrective action plan to address any areas for improvement
and are required to submit evidence that this has been completed.
Policy
Every supplier that works for Vodafone is required to comply with
our Code of Ethical Purchasing. These commitments extend down
through the supply chain so that a supplier with which we have a direct
contractual relationship (Tier 1 supplier) in turn is required to ensure
compliance across its own direct supply chain (Tier 2 supplier from
Vodafone’s perspective) and beyond. The Code of Ethical Purchasing is
based on international standards including the Universal Declaration of
Human Rights and the International Labour Organization’s Fundamental
Conventions on Labour Standards. It stipulates the social, ethical, and
environmental standards that we expect, including areas such as child
and forced labour, health and safety, working hours, discrimination and
disciplinary processes.
Click here to read our Code of Ethical Purchasing:
vodafone.com/code-of-ethical-purchasing
Our approach
When new suppliers tender for work, they are asked to demonstrate
policies and procedures that support safe working, diversity in the
workplace and to address carbon reduction, renewable energy, plastic
reduction, circular economy and product life-cycle which account for
up to 20% of the overall evaluation criteria. Suppliers are assessed on
their commitment and performance towards diversity & inclusion (5%),
the environment (5%) and health & safety (10%) in categories where
there is a safety risk.
Our requirements are backed up by risk assessments, audits and
operational improvement processes, which are included in suppliers’
contractual commitments. Some site audits are conducted under
the Joint Audit Cooperation (‘JAC’) initiative, an association of
telecommunications operators established to improve ethical, labour and
environmental standards in the ICT supply chain, which Vodafone chairs.
This year, 76 site assessments were conducted (either by Vodafone or
through JAC).
Vodafone has continued to promote Trust Your Supplier (‘TYS’). This is
a cross-industry initiative that utilises block chain and external verifiers
to evaluate supplier compliance against a number of risk areas. This
increases the accuracy of vetting compliance for our supply base and
also means suppliers only need to go through the process once. We
have a target to on-board over 50% of suppliers by total spend onto the
TYS solution by the end of FY22. We currently have 7% of suppliers by
total spend on-boarded, with a further 25% already having confirmed
they will on-board over the next year.
We report on our approach to preventing modern slavery and human
trafficking in our business and supply chain in our annual Modern
Slavery Statement.
Click here to read our Modern Slavery Statement:
vodafone.com/modern-slavery-statement
Governance
The Group Chief Financial Officer oversees our supply chain and is a
member of the Executive Committee and Board. Reporting to the Chief
Financial Officer, the Chief Executive Officer of the Vodafone Procurement
Company is responsible for the implementation of our Code of Ethical
Purchasing. Progress is reported regularly to the Vodafone Procurement
Company Board meeting. Procurement is a highly centralised function
within the business and approximately three quarters of our external
spend is managed by VPC. This enables us to maintain a consistent
approach to supplier management and makes it easier to monitor
and improve supplier performance across our markets.
Business integrity
We are committed to ensuring that our business
operates ethically, lawfully and with integrity wherever
we operate as this is critical to our long-term success.
Tax and economic contribution
As a major investor, taxpayer and employer, we make a significant
contribution to the economies of all the countries in which we operate.
In addition to direct and indirect taxation, our financial contributions to
governments also include other areas such as radio spectrum fees and
auction proceeds.
Tax transparency
Our most recent tax report sets out our total contribution to public
finances on a cash-paid basis for both 2019 and 2020. In 2020, we
contributed – directly and indirectly – more than €12.4 billion to public
finances worldwide, compared with €12.7 billion in 2019. The year-on-
year decrease was due to lower direct taxes outside of Europe and
currency devaluations in some of our markets. In 2020, we paid nearly
€2.6 billion in direct taxes, including more than €1.0 billion in corporate
income taxes, nearly €2.3 billion via non-taxation based revenue
mechanisms, such as payments for the right to use spectrum, and
collected €7.5 billion of indirect taxes for governments around the world.
Acting with integrity in the creation and execution of our tax strategy,
policies and practices is absolutely core to our approach to tax, as is our
commitment to transparency. We disclose our financial contributions to
governments at a country level, as we believe this is an important way to
demonstrate that it is possible to achieve an effective balance between
a company’s responsibilities to society as a whole, through the payment
of taxes (and other government revenue-raising mechanisms), and its
obligations to its shareholders. The information we share aims to help
our stakeholders understand our approach, policies and principles.
We also share our views on key topics of relevance, including the
latest on the taxation of the digital economy, as well as publishing
our OECD country-by-country disclosure, as submitted to the UK’s
tax authority (HMRC).
Our tax report for 2021 will be published in the next year following the
submission of our tax returns and payment of all applicable taxes.
Click to read more about tax and our total economic
contribution to public finances: vodafone.com/tax
50
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
51
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Responsible business (continued)
Responsible supply chain
Governance
We spend approximately €24 billion a year with around 10,500 direct
suppliers around the world to meet our businesses’ and customers’
needs. The majority of our external spend is with suppliers that provide
us with network infrastructure, IT and related services, fixed lines, mobile
masts and data centres that run our networks.
Supply chain risks
The main areas of risk in our supply chain relate to three key areas:
health and safety matters related to non-compliant fire safety measures;
excessive working hours due to needing better demand management;
and environmental matters related to non-compliant chemical storage
and lack of carbon reduction programmes. This year they made up
74% of all non-compliances found in our supply chain through our
assessments. Suppliers that do not meet our standards are provided
with a corrective action plan to address any areas for improvement
and are required to submit evidence that this has been completed.
Policy
Every supplier that works for Vodafone is required to comply with
our Code of Ethical Purchasing. These commitments extend down
through the supply chain so that a supplier with which we have a direct
contractual relationship (Tier 1 supplier) in turn is required to ensure
compliance across its own direct supply chain (Tier 2 supplier from
Vodafone’s perspective) and beyond. The Code of Ethical Purchasing is
based on international standards including the Universal Declaration of
Human Rights and the International Labour Organization’s Fundamental
Conventions on Labour Standards. It stipulates the social, ethical, and
environmental standards that we expect, including areas such as child
and forced labour, health and safety, working hours, discrimination and
disciplinary processes.
Click here to read our Code of Ethical Purchasing:
vodafone.com/code-of-ethical-purchasing
Our approach
When new suppliers tender for work, they are asked to demonstrate
policies and procedures that support safe working, diversity in the
workplace and to address carbon reduction, renewable energy, plastic
reduction, circular economy and product life-cycle which account for
up to 20% of the overall evaluation criteria. Suppliers are assessed on
their commitment and performance towards diversity & inclusion (5%),
the environment (5%) and health & safety (10%) in categories where
there is a safety risk.
Our requirements are backed up by risk assessments, audits and
operational improvement processes, which are included in suppliers’
contractual commitments. Some site audits are conducted under
the Joint Audit Cooperation (‘JAC’) initiative, an association of
The Group Chief Financial Officer oversees our supply chain and is a
member of the Executive Committee and Board. Reporting to the Chief
Financial Officer, the Chief Executive Officer of the Vodafone Procurement
Company is responsible for the implementation of our Code of Ethical
Purchasing. Progress is reported regularly to the Vodafone Procurement
Company Board meeting. Procurement is a highly centralised function
within the business and approximately three quarters of our external
spend is managed by VPC. This enables us to maintain a consistent
approach to supplier management and makes it easier to monitor
and improve supplier performance across our markets.
Business integrity
We are committed to ensuring that our business
operates ethically, lawfully and with integrity wherever
we operate as this is critical to our long-term success.
Tax and economic contribution
As a major investor, taxpayer and employer, we make a significant
contribution to the economies of all the countries in which we operate.
In addition to direct and indirect taxation, our financial contributions to
governments also include other areas such as radio spectrum fees and
auction proceeds.
Tax transparency
Our most recent tax report sets out our total contribution to public
finances on a cash-paid basis for both 2019 and 2020. In 2020, we
contributed – directly and indirectly – more than €12.4 billion to public
finances worldwide, compared with €12.7 billion in 2019. The year-on-
year decrease was due to lower direct taxes outside of Europe and
currency devaluations in some of our markets. In 2020, we paid nearly
€2.6 billion in direct taxes, including more than €1.0 billion in corporate
income taxes, nearly €2.3 billion via non-taxation based revenue
mechanisms, such as payments for the right to use spectrum, and
collected €7.5 billion of indirect taxes for governments around the world.
Acting with integrity in the creation and execution of our tax strategy,
policies and practices is absolutely core to our approach to tax, as is our
commitment to transparency. We disclose our financial contributions to
governments at a country level, as we believe this is an important way to
demonstrate that it is possible to achieve an effective balance between
a company’s responsibilities to society as a whole, through the payment
of taxes (and other government revenue-raising mechanisms), and its
obligations to its shareholders. The information we share aims to help
our stakeholders understand our approach, policies and principles.
telecommunications operators established to improve ethical, labour and
environmental standards in the ICT supply chain, which Vodafone chairs.
This year, 76 site assessments were conducted (either by Vodafone or
We also share our views on key topics of relevance, including the
latest on the taxation of the digital economy, as well as publishing
our OECD country-by-country disclosure, as submitted to the UK’s
through JAC).
tax authority (HMRC).
Our tax report for 2021 will be published in the next year following the
submission of our tax returns and payment of all applicable taxes.
Click to read more about tax and our total economic
contribution to public finances: vodafone.com/tax
Vodafone has continued to promote Trust Your Supplier (‘TYS’). This is
a cross-industry initiative that utilises block chain and external verifiers
to evaluate supplier compliance against a number of risk areas. This
increases the accuracy of vetting compliance for our supply base and
also means suppliers only need to go through the process once. We
have a target to on-board over 50% of suppliers by total spend onto the
TYS solution by the end of FY22. We currently have 7% of suppliers by
total spend on-boarded, with a further 25% already having confirmed
they will on-board over the next year.
We report on our approach to preventing modern slavery and human
trafficking in our business and supply chain in our annual Modern
Slavery Statement.
Click here to read our Modern Slavery Statement:
vodafone.com/modern-slavery-statement
Anti-bribery and corruption
At Vodafone, we support and foster a culture of zero tolerance towards
bribery or corruption in all our activities.
The bribery risks we face are constantly evolving. The table below
summarises the principal risk categories and the mitigation
measures adopted.
Our anti-bribery policy
Our policy on this issue is summarised in our Code of Conduct and states
that employees or others working on our behalf must never offer or
accept any kind of bribe.
Our anti-bribery policy is consistent with the UK Bribery Act and the
US Foreign Corrupt Practices Act, and provides guidance about what
constitutes a bribe and prohibits giving or receiving any excessive or
improper gifts and hospitality. Any policy breaches can lead to dismissal
or termination of contract.
Facilitation payments are strictly prohibited and our employees are
provided with practical training and guidance on how to respond to
demands for facilitation payments. The only exception is when an
employee’s personal safety is at risk. In such circumstances, when a
payment under duress is made, the incident must be reported as soon
as possible afterwards.
One of the ways to help the fight against COVID-19 is through charitable
donations and contributions, either monetary or in kind. We have issued
guidance to all markets and Foundations to assist them in their assessment
of different initiatives, to ensure donations are given in line with our policies.
To support our approach, Vodafone is also a member of Transparency
International UK’s Business Integrity Forum.
Governance and risk assessment
Our Chief Executive and Executive Committee oversee our efforts to
prevent bribery. They are supported by local market chief executives,
who are responsible for ensuring that our anti-bribery programme is
implemented effectively in their local market. They in turn are supported
by local specialists and by a dedicated Group team that is solely focused
on anti-bribery policy and compliance. The Risk and Compliance
Committee assists the Executive Committee in fulfilling duties with
regards to risk management and policy compliance.
As part of our anti-bribery programme, every Vodafone business must
adhere to minimum global standards, which include:
– ensuring there is a due diligence process for suppliers and business
partners at the start of the business relationship;
– completion of the global e-learning training for all employees, as well
as tailored training for higher risk teams; and
– using Vodafone’s global online gift and hospitality registration platform,
as well as ensuring there is a process for approving local sponsorships
and charitable contributions.
Engaging employees to raise awareness of bribery risk
We run a multi-channel high profile global communications programme,
Doing What’s Right, to engage with employees and raise awareness and
understanding of the policy. The Doing What’s Right programme also
features e-learning training, which includes a specific anti-bribery module.
The next module, DWR 3.0, will be launched in 2021 and is a video-based
module requiring employees to identify risks they see playing out in the
conversations on screen. This will be an engaging and interesting way to
raise awareness of bribery risks in the everyday activities of employees.
Risk
Response
Operating in
high-risk markets
We undertake biennial risk assessments in each of our local
operating companies and at Group level, so we can understand
and limit our exposure to risk.
Business
acquisition and
integration
Anti-bribery pre and post due diligence is carried out on a target
company. Red flags identified during the due diligence process
are reviewed and assessed. Following acquisition, we implement
our anti-bribery programme.
Spectrum
licensing
Building and
upgrading
networks
Working with
third parties
Winning and
retaining business
To reduce the risk of attempted bribery, a specialist spectrum
policy team oversees our participation in all negotiations and
auctions. We provide appropriate training and guidance for
employees who interact with government officials on
spectrum matters.
Our anti-bribery policy makes it clear that we never offer any
form of inducement to secure a permit, lease or access to a site.
We regularly remind all employees and contractors in network
roles of this prohibition, through tailored training sessions
and communications.
Suppliers and other relevant third parties working for or on
behalf of Vodafone, must comply with the principles set out in
our Code of Conduct and Code of Ethical Purchasing, as well
as have programmes in place to ensure suppliers’ employees
and contractors are aware of these policies. Third-party due
diligence is completed at the start of our business relationship
with suppliers, other third parties and partners. Through their
contracts with us, our suppliers, partners and other third parties
make a commitment to implement and maintain proportionate
and effective anti-bribery compliance measures.
We regularly remind current suppliers of our policy
requirements and complete detailed compliance assessments
across a sample of higher-risk and higher-value suppliers.
Select high-risk third parties are trained to ensure awareness
of our zero-tolerance policy.
We provide targeted training for our Vodafone Business and
Partner Markets sales teams. In addition, we also maintain
and monitor a global register of gifts and hospitality to ensure
that inappropriate offers are not accepted or extended by
our employees.
Assurance
Implementation of the anti-bribery policy is monitored regularly in all
local markets as part of the annual Group assurance process, which
reviews key anti-bribery controls. The assurance programme was
modified during the last financial year due to travel restrictions and
instead of local market visits, guided self-assessments were undertaken
in Albania, Turkey, South Africa, Mozambique and the DRC. There were
no emerging or consistent themes from the reviews undertaken and
all identified areas for improvement have action plans to improve the
control environment and anti-bribery programme. As we adjust our way
of conducting assurance to the new environment, the assurance plan
for the coming year will include thematic reviews across the key areas
of high risk sales intermediaries and representatives and training to high
risk employees. Internal Audit will also undertake a programme of audits
covering the anti-bribery programme in a number of local markets in
Vodafone and Vodacom.
52
Vodafone Group Plc
Annual Report 2021
Non-Financial information
Strategic report
Governance
Financials
Other information
Non-financial information statement
The table below outlines where the key content requirements of the non-financial information statement can be found within this document
(as required by sections 414CA and 414CB of the Companies Act 2006).
Vodafone’s sustainable business reporting also follows other international reporting frameworks, including the Global Reporting Initiative,
the SASB Standards, CDP and GHG Reporting Protocol.
Click to download our ESG Addendum:
investors.vodafone.com/esgaddendum
Click to read our SASB disclosures:
investors.vodafone.com/sasb
Reporting requirement
Environmental matters
Employees
Social and community matters
Human rights
Anti-bribery and corruption
Vodafone policies and approach Section within Annual Report
Page(s)
Planet performance
Climate change risk
Code of Conduct
Occupational health and safety
Diversity and inclusion
Driving positive societal transformation
performance
Stakeholder engagement
Mobiles, masts and health
Human rights approach
Code of Ethical Purchasing
Modern Slavery Statement
Code of Conduct
Anti-bribery policy
Speak Up process
Planet
Risk management
Responsible business and anti-bribery
and corruption
Health and safety
Workplace equality
Inclusion for All
Digital Society
Stakeholder engagement
Mobiles, masts and health
Human rights
Responsible supply chain
Responsible supply chain
Responsible business
Anti-bribery and corruption
Responsible business
38-40
53-61
43, 51
47-48
36-37
34-37
41-42
12-13
49
49
50
50
43
51
43
Policy embedding, due diligence and outcomes
Purpose, sustainability and responsible business 32-51
Description of principal risks and impact of business activity
Description of business model
Non-financial key performance indicators
Risk management
Risk management
Business model
Financial and non-financial performance
53-61
53-61
16
4-5
Purpose, sustainability and responsible business
32-51
UK Streamlined Energy and Carbon Reporting (‘SECR’)
In accordance with SECR requirements, this provides a summary of GHG emissions and energy data for Vodafone UK, in comparison with
global performance.
Scope 1 GHG emissions (m tonnes CO2e)
Scope 2 market-based GHG emissions (m tonnes CO2e)
Scope 2 location-based GHG emissions (m tonnes CO2e)
GHG emissions per petabyte (‘PB’) of mobile data carried (tonnes of CO2e)
Total energy consumption (GWh)
Global (excluding
Vodafone UK)
0.25
1.06
1.89
122
5,131
Vodafone UK
0.02
0.04
0.14
59
701
52
Vodafone Group Plc
Annual Report 2021
Non-Financial information
Strategic report
Governance
Financials
Other information
53
Vodafone Group Plc
Annual Report 2021
Risk management
Strategic report
Governance
Financials
Other information
Non-financial information statement
The table below outlines where the key content requirements of the non-financial information statement can be found within this document
(as required by sections 414CA and 414CB of the Companies Act 2006).
Vodafone’s sustainable business reporting also follows other international reporting frameworks, including the Global Reporting Initiative,
Managing uncertainty
in our business
Social and community matters
Driving positive societal transformation
Inclusion for All
the SASB Standards, CDP and GHG Reporting Protocol.
Click to download our ESG Addendum:
investors.vodafone.com/esgaddendum
Click to read our SASB disclosures:
investors.vodafone.com/sasb
Reporting requirement
Environmental matters
Employees
Human rights
Anti-bribery and corruption
Description of principal risks and impact of business activity
Description of business model
Non-financial key performance indicators
Vodafone policies and approach Section within Annual Report
Page(s)
Planet performance
Climate change risk
Code of Conduct
Occupational health and safety
Diversity and inclusion
performance
Stakeholder engagement
Mobiles, masts and health
Human rights approach
Code of Ethical Purchasing
Modern Slavery Statement
Code of Conduct
Anti-bribery policy
Speak Up process
Responsible business and anti-bribery
Planet
Risk management
and corruption
Health and safety
Workplace equality
Digital Society
Stakeholder engagement
Mobiles, masts and health
Human rights
Responsible supply chain
Responsible supply chain
Responsible business
Anti-bribery and corruption
Responsible business
Risk management
Risk management
Business model
38-40
53-61
43, 51
47-48
36-37
34-37
41-42
12-13
49
49
50
50
43
51
43
53-61
53-61
16
4-5
Financial and non-financial performance
Purpose, sustainability and responsible business
32-51
Policy embedding, due diligence and outcomes
Purpose, sustainability and responsible business 32-51
UK Streamlined Energy and Carbon Reporting (‘SECR’)
In accordance with SECR requirements, this provides a summary of GHG emissions and energy data for Vodafone UK, in comparison with
global performance.
Scope 1 GHG emissions (m tonnes CO2e)
Scope 2 market-based GHG emissions (m tonnes CO2e)
Scope 2 location-based GHG emissions (m tonnes CO2e)
GHG emissions per petabyte (‘PB’) of mobile data carried (tonnes of CO2e)
Total energy consumption (GWh)
Global (excluding
Vodafone UK)
Vodafone UK
0.25
1.06
1.89
122
5,131
0.02
0.04
0.14
59
701
Managing risks and uncertainty is an integral part
of successfully delivering on our strategic objectives.
We have embedded a global risk management
framework which aims to ensure consistency and
the right level of oversight is provided across both
Group entities and our local markets.
Identifying our risks
All local markets and Group entities identify and assess risks which
could affect the local strategy and operations. A consolidated list of
these risks is then presented to a selection of Group senior leaders and
executives, alongside the outputs from an external environment scan and
specialised risk focus groups. Applying a Group-wide perspective, these
executives evaluate and determine our top risks and which emerging risks
warrant further exploration. The proposed principal risks, emerging risks
and risk watchlist are defined and agreed by our Executive Committee
(‘ExCo’) before being submitted to the Audit and Risk Committee and the
Board for the final challenge and approval.
Managing our risks
During the risk evaluation phase, we assign each of our risks to a category
(strategic, technological, operational or financial – see next page) and
identify the source of the threat (internal or external). This approach
enables a better understanding of how we should treat the risk and
ensure the right level of oversight and assurance is provided. The assigned
executive risk owners are accountable for confirming adequate controls
are in place and that the necessary treatment plans are implemented
to bring the risk within an acceptable tolerance. We continue to monitor
the status of risk treatment strategies across the year and hold in-depth
reviews of our risks.
For each of the principal risks, we also develop severe but plausible
scenarios which provide additional insights into possible threats and
enable a better risk treatment strategy. Scenarios are also used for the
purpose of assessing our viability.
Read more about our viability statement
on page 61
The diagram below shows a simplified, high-level governance structure
for risk management.
Overview of risk governance structure
Vodafone Group
Local markets or
Group entity
Board/Audit and Risk Committee
Provides oversight for the Vodafone Group
Risk and Compliance
Committee
– Reviews principal
and emerging risks
– Reviews effectiveness
of risk management
across the Group
Group risk team
– Responsible for the
application of the global risk
management framework
– Supports the Board/ExCo
by creating programmes to
strengthen our risk culture
Assurance
Business assurance
functions
Review and provide
assurance over business
controls for the Group and
local markets
Internal Audit
Support the Audit and Risk
Committee in reviewing
the effectiveness of the risk
management framework
and individual risks
Group risk owners
– ExCo risk owners
have responsibility
for management
of the risk assigned
to them
– Senior executive risk
champions identify
and implement
mitigating actions
Local oversight committees
Provide oversight for the local risk management programme
Local market CEOs
Set local objectives, identify priority risks and alignment tolerance levels with the Vodafone
Group guidance
Local risk owners
Senior managers in local management teams responsible for local risks and the local risk
programme to manage, measure, monitor and report on the risks
Local risk managers
Contact point for each market/entity on risk, facilitate all activities as defined by the global risk
management framework
54
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Risk management (continued)
Risk categorisation and interdependencies
Principal risks
We continue to consider risks both individually and collectively in order to fully understand
our risk landscape. By analysing the correlation between risks, we can identify those that
have the potential to impact or increase other risks and therefore are weighted appropriately.
This exercise informs our scenario analysis, particularly the combined scenario used in the
Long-Term Viability Statement.
Read more about our viability statement
on page 61
Strategic
The influence of stakeholders and industry players on our business and our response to them:
A Geo-political risk in the supply chain
B Adverse political and regulatory measures
C Market disruption
D Disintermediation and failure to innovate
Financial
Our financial status, standing and continued growth:
E Global economic disruption
Technological
The network, IT systems and platforms that support our business and the data they hold:
F Cyber threat and information security
G Technology failures
Operational
The ability to achieve our optimal business model:
H Strategic transformation
I
J
Legal and regulatory compliance
IT transformation
B
A
C
I
H
Strategic
D
F
O
p
e
r
a
ti
o
n
a
l
J
T
e
c
h
n
o
lo
gical
G
E
Financial
Key:
External
Internal
Bidirectional
Unidirectional
Cyber threat and
information security
Description
An external cyber-attack, insider threat or
supplier breach could cause service interruption
or the loss of confidential data. Cyber threats
could lead to major customer, financial,
reputational and regulatory impacts.
Change in
risk profile
Risk owner Group Technology Officer
Our strategy
Mitigation activities
We have a risk-based approach to managing
cyber security. We actively identify risks and
threats, design layers of control and implement
controls across all parts of the Company. The
approach balances controls that prevent the
majority of attacks, detect events and respond
quickly to reduce harm.
Target tolerance
Security underpins our company purpose to
enable connectivity in society and maintain our
customers’ trust. A breach with material adverse
customer, reputation, financial or regulatory
impact is outside our risk tolerance. We will
never be fully immune to cyber-attacks,
however, layers of effective controls will
reduce the likelihood and impact.
Scenario
Each year we model a severe but plausible
scenario. These have included attacks on core
infrastructure, a bulk data breach and loss of
major customer facing systems. We perform
regular cyber crisis simulations with senior
management in our markets and Group
functions using a tailored set of scenarios.
Emerging threats
Cyber risk is constantly evolving in line with
technological and geo-political developments.
We anticipate threats will continue from existing
sources, but also evolve in areas such as 5G, IoT,
vendor software integrity, quantum computing
and the use of AI and machine learning.
Read more about cyber security
on pages 45-47
Risk profile change
Increasing
Decreasing
Stable
Our strategy
Customer commitments
Enabling strategies
Best connectivity products & services
Simplified & most efficient operator
Leading innovation in digital services
Social contract shaping digital society
Outstanding digital experiences
Leading gigabit networks
Strategic report
Governance
Financials
Other information
55
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Geo-political risk
in supply chain
Adverse political and
regulatory measures
Strategic transformation
Description
Our operation is dependent on a wide range of
global suppliers. Disruption to our supply chain
could mean that we are unable to execute
our strategic plans, resulting in increased cost,
reduced choice and network quality.
Description
Adverse political and regulatory measures
impacting our strategy could result in increased
costs, create a competitive disadvantage
or have negative impact on our return on
capital employed.
Description
Failure to execute our strategy as described on
pages 18 to 20 including on organisational
transformation and portfolio activity (such as
integrations, mergers or separations) could result
in loss of business value and additional cost.
The influence of stakeholders and industry players on our business and our response to them:
Risk owner Group Technology Officer
Risk owner Group External Affairs Director
Change in
risk profile
Our strategy
Mitigation activities
Partial mitigation can be achieved through
close monitoring of the political situation around
key suppliers, engagement with governments,
experts and equipment vendors. This enables
Vodafone to respond accordingly and to
ensure compliance with the latest regulations,
economic sanctions and trade rulings. Broader
issues of international politics which strongly
influence the level of risk are, and will remain,
outside Vodafone’s control.
Target tolerance
The existence of a broader range of scale
suppliers of key equipment. A multi-vendor
strategy in place across our markets to mitigate
against supply chain disruption.
Scenario
Disruption to our supply chain due to
geo-political decisions affecting our ability
to select or continue to use equipment from
specific vendors or decisions that affect trade
and supply chains.
Emerging threats
We operate in a global environment where
political landscape changes could influence
our operations. The increasing political tension
between the US and China shows no sign of
easing and this presents a potentially significant
risk to our supply chain and customer base.
Change in
risk profile
Risk owner
Our strategy
Group External Affairs Director
and Chief Financial Officer
Change in
risk profile
Risk owner
Our strategy
Group Technology Officer and
Group Chief Commercial Officer
Mitigation activities
We actively address issues openly with policy
makers and regulatory authorities to find
mutually acceptable ways forward. As a
last resort we uphold our rights through
legal means.
Mitigation activities
We have specialist teams executing and
monitoring our organisational transformation
and portfolio activities. We also have robust
governance structures in place to protect the
Group’s interests.
Target tolerance
To have strategies that are based on
common objectives with political, policy
and regulatory stakeholders to reduce the
risk that our business could be undermined
by unpredictable and disproportionate political
and regulatory environments and interventions.
Target tolerance
We are executing our programmes effectively
to maximise synergies/benefits realisation;
optimising cost and increasing speed of
delivery, while ensuring our core organisation
and cultural values remains safeguarded
throughout.
Scenario
Exposure to additional liabilities by regulatory
authorities or if tax laws were to adversely
change in the markets in which we operate.
Emerging threats
Regulation is becoming geographically
diverse with increases in protectionist
behaviours and fragmented regulation.
Additionally, governments could seek to
recover the costs of the COVID-19 pandemic
through tax increases.
Scenario
The inability to achieve the expected benefit
through transformation activities whilst evolving
to the new generation connectivity and digital
services provider for Europe & Africa.
Emerging threats
The increased pace of change in the
organisation means we have to maintain the
required culture and skillset to support our
transformational initiatives. Externally, as
customer behaviours and their preferences
change, we might have to accelerate or adapt
our transformation programmes.
Risk categorisation and interdependencies
Principal risks
We continue to consider risks both individually and collectively in order to fully understand
our risk landscape. By analysing the correlation between risks, we can identify those that
have the potential to impact or increase other risks and therefore are weighted appropriately.
This exercise informs our scenario analysis, particularly the combined scenario used in the
54
Vodafone Group Plc
Annual Report 2021
Risk management (continued)
Long-Term Viability Statement.
Read more about our viability statement
on page 61
Strategic
A Geo-political risk in the supply chain
B Adverse political and regulatory measures
C Market disruption
D Disintermediation and failure to innovate
Financial
Our financial status, standing and continued growth:
E Global economic disruption
F Cyber threat and information security
G Technology failures
Operational
The ability to achieve our optimal business model:
H Strategic transformation
Legal and regulatory compliance
I
J
IT transformation
B
A
C
O
p
e
r
a
ti
o
n
a
l
I
H
J
Strategic
D
F
T
e
c
h
n
o
lo
gical
G
E
Financial
Key:
External
Internal
Bidirectional
Unidirectional
Technological
The network, IT systems and platforms that support our business and the data they hold:
Cyber threat and
information security
Description
An external cyber-attack, insider threat or
supplier breach could cause service interruption
or the loss of confidential data. Cyber threats
could lead to major customer, financial,
reputational and regulatory impacts.
Change in
risk profile
Our strategy
Mitigation activities
We have a risk-based approach to managing
cyber security. We actively identify risks and
threats, design layers of control and implement
controls across all parts of the Company. The
approach balances controls that prevent the
majority of attacks, detect events and respond
quickly to reduce harm.
Target tolerance
Security underpins our company purpose to
enable connectivity in society and maintain our
customers’ trust. A breach with material adverse
customer, reputation, financial or regulatory
impact is outside our risk tolerance. We will
never be fully immune to cyber-attacks,
however, layers of effective controls will
reduce the likelihood and impact.
Scenario
Each year we model a severe but plausible
scenario. These have included attacks on core
infrastructure, a bulk data breach and loss of
major customer facing systems. We perform
regular cyber crisis simulations with senior
management in our markets and Group
functions using a tailored set of scenarios.
Emerging threats
Cyber risk is constantly evolving in line with
technological and geo-political developments.
We anticipate threats will continue from existing
sources, but also evolve in areas such as 5G, IoT,
vendor software integrity, quantum computing
and the use of AI and machine learning.
Read more about cyber security
on pages 45-47
Risk profile change
Increasing
Decreasing
Stable
Our strategy
Customer commitments
Enabling strategies
Best connectivity products & services
Simplified & most efficient operator
Leading innovation in digital services
Social contract shaping digital society
Risk profile change
Increasing
Decreasing
Stable
Our strategy
Customer commitments
Enabling strategies
Best connectivity products & services
Simplified & most efficient operator
Leading innovation in digital services
Social contract shaping digital society
Outstanding digital experiences
Leading gigabit networks
Outstanding digital experiences
Leading gigabit networks
56
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Risk management (continued)
Global economic disruption
Technology failures
Market disruption
Description
A global economic crisis could result in reduced
telco spend from businesses and consumers, as
well as limit our access to financial markets and
availability of liquidity, increasing our cost of
capital and limiting debt financing options.
Description
Network, system or platform outages resulting
from internal or external events could lead to
reduced customer satisfaction, reputational
damage and/or regulatory penalties.
Description
New telecoms entering the market could
lead to significant price competition and
lower margins.
Change in
risk profile
Change in
risk profile
Change in
risk profile
Risk owner
Chief Financial Officer
Risk owner Group Technology Officer
Risk owner Group Chief Commercial Officer
Our strategy
Our strategy
Our strategy
Mitigation activities
We have a relatively resilient business model.
Our offers are competitive in the markets
in which we operate. We are supporting our
business customers’ efficiencies through our
innovative products. We have a long average
life of debt which minimises refinancing
requirements, and the vast majority of our
interest costs are fixed.
Target tolerance
Conservative management of the balance
sheet to avoid potential consequences of
unstable economic conditions. Access to
sufficient liquidity at favourable terms.
Scenario
A severe contraction in economic activity leads
to lower cash flow generation for the Group and
disruption in global financial markets impacts
our ability to refinance debt obligations as they
fall due.
Emerging threats
Because this is an externally driven risk, the
threat environment is continually changing.
External factors such as the COVID-19
pandemic or a potential sovereign debt crisis
could have future impacts on economic activity
across our markets. The financial markets are
currently experiencing high levels of volatility
and sovereign debts levels have reached record
levels. These could lead to a significant change
in the availably and cost of financing.
Mitigation activities
Unique recovery targets are set for critical
assets to limit the impact of service outages.
A global policy supports these targets with
requisite controls to provide effective resilience.
Target tolerance
Our customer promise is based on reliable
availability of our network; therefore, the
recovery of key mobile, fixed, IT services
and platforms must be fast and robust.
Scenario
We have a low tolerance to network, IT or
platform disruptions which cause significant
impact to our customers.
Emerging threats
Potential impact of an increase in extreme
weather events caused by climate change
may increase the likelihood or frequency of
technology failure.
New assets inherited from acquired businesses
may not be aligned to our target resilience
level which may increase the likelihood of a
technology failure.
Mitigation activities
We closely monitor the competitive
environment in all markets and react
appropriately to both consumer and
business needs. We have launched ‘second’
brands in a number of markets to compete
more effectively and efficiently in the value
segment. Alongside our speed-tiered, unlimited
data plans, we are now competing effectively
across all segments of the markets in which
we operate.
Additionally, we evolve our offers and
adopt agile commercial models to mitigate
competitive risks using simple, targeted
offers, smart pricing models and differentiated
customer experience.
Target tolerance
Our tolerance focus is on the loss of market
value or market share or margin resulting from
competitor pricing or new market entrants.
Scenario
Aggressive pricing, accelerated customer
losses to MVNO (Mobile Virtual Network
Operator) and disruptive new market entrants
in key European markets result in greater
customer churn and pricing pressures
impacting our financial position.
Emerging threats
Emerging threats depend on individual market
structures and the competitive landscape.
Risk profile change
Increasing
Decreasing
Stable
Our strategy
Customer commitments
Enabling strategies
Best connectivity products & services
Simplified & most efficient operator
Leading innovation in digital services
Social contract shaping digital society
Outstanding digital experiences
Leading gigabit networks
56
Vodafone Group Plc
Annual Report 2021
Risk management (continued)
Strategic report
Governance
Financials
Other information
57
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Global economic disruption
Technology failures
Market disruption
Description
Description
Description
A global economic crisis could result in reduced
Network, system or platform outages resulting
New telecoms entering the market could
telco spend from businesses and consumers, as
from internal or external events could lead to
lead to significant price competition and
well as limit our access to financial markets and
reduced customer satisfaction, reputational
lower margins.
availability of liquidity, increasing our cost of
damage and/or regulatory penalties.
capital and limiting debt financing options.
Disintermediation and
failure to innovate
Legal and regulatory
compliance
IT transformation
Description
Failure in product innovation or ineffective
response to threats from emerging technology
or disruptive business models could lead to a
loss of customer relevance, market share and
new/existing revenue streams.
Description
Failure to comply with laws and regulations
could lead to a loss of trust, financial penalties
and/or suspension of our licence to operate.
Description
Failure to design and execute IT transformation
of our legacy estate could lead to business loss,
customer dissatisfaction or reputational exposure.
Change in
risk profile
Change in
risk profile
Change in
risk profile
Change in
risk profile
Change in
risk profile
Change in
risk profile
Risk owner
Chief Financial Officer
Risk owner Group Technology Officer
Risk owner Group Chief Commercial Officer
Risk owner Group Chief Commercial Officer
Risk owner Group General Counsel and
Risk owner Group Technology Officer
Company Secretary
Our strategy
Our strategy
Our strategy
Our strategy
Our strategy
Our strategy
Mitigation activities
Mitigation activities
We have a relatively resilient business model.
Unique recovery targets are set for critical
Our offers are competitive in the markets
assets to limit the impact of service outages.
in which we operate. We are supporting our
A global policy supports these targets with
Mitigation activities
We closely monitor the competitive
environment in all markets and react
appropriately to both consumer and
business customers’ efficiencies through our
requisite controls to provide effective resilience.
business needs. We have launched ‘second’
innovative products. We have a long average
life of debt which minimises refinancing
requirements, and the vast majority of our
interest costs are fixed.
Target tolerance
Conservative management of the balance
sheet to avoid potential consequences of
unstable economic conditions. Access to
sufficient liquidity at favourable terms.
Scenario
A severe contraction in economic activity leads
to lower cash flow generation for the Group and
disruption in global financial markets impacts
our ability to refinance debt obligations as they
fall due.
Emerging threats
Because this is an externally driven risk, the
threat environment is continually changing.
External factors such as the COVID-19
pandemic or a potential sovereign debt crisis
could have future impacts on economic activity
across our markets. The financial markets are
currently experiencing high levels of volatility
and sovereign debts levels have reached record
levels. These could lead to a significant change
in the availably and cost of financing.
Target tolerance
Our customer promise is based on reliable
availability of our network; therefore, the
recovery of key mobile, fixed, IT services
and platforms must be fast and robust.
Scenario
We have a low tolerance to network, IT or
platform disruptions which cause significant
impact to our customers.
Emerging threats
Potential impact of an increase in extreme
weather events caused by climate change
may increase the likelihood or frequency of
technology failure.
New assets inherited from acquired businesses
may not be aligned to our target resilience
level which may increase the likelihood of a
technology failure.
brands in a number of markets to compete
more effectively and efficiently in the value
segment. Alongside our speed-tiered, unlimited
data plans, we are now competing effectively
across all segments of the markets in which
we operate.
Additionally, we evolve our offers and
adopt agile commercial models to mitigate
competitive risks using simple, targeted
offers, smart pricing models and differentiated
customer experience.
Target tolerance
Our tolerance focus is on the loss of market
value or market share or margin resulting from
competitor pricing or new market entrants.
Scenario
Aggressive pricing, accelerated customer
losses to MVNO (Mobile Virtual Network
Operator) and disruptive new market entrants
in key European markets result in greater
customer churn and pricing pressures
impacting our financial position.
Emerging threats
Emerging threats depend on individual market
structures and the competitive landscape.
Mitigation activities
We have subject matter experts and a robust
policy and control compliance framework.
We train our employees in ‘Doing What’s Right’.
These training and awareness programmes set
out our ethical culture across the organisation
and assist employees to understand their role
in ensuring compliance.
Target tolerance
We seek to comply with all applicable laws and
regulations in all our markets.
Scenario
Breaches of legal compliance could lead to
reputational damage, investigation costs,
fines and/or personal sanctions.
Emerging threats
Changes to our operating model could require
us to adapt our compliance and risk processes.
In addition, ongoing changes to workplace
dynamics and demographics may challenge
our control environment.
Read more about our Code of Conduct
and Speak Up policy on page 43
Mitigation activities
We continually strive to introduce innovative
propositions and services, which enable us to
deepen customer engagement. We are focused
on simplifying our product portfolio, improving
our operating model and processes, and
accelerating our digital transformation, in order
to offer the best customer experience.
Target tolerance
Offer a superior customer experience and
continually improve our offering through a
wide range of innovative products and services.
We also develop innovative new products and
explore new growth areas to continue to meet
our customers’ needs.
Scenario
Large technology players invest on products
impacting our customer relationships,
cannibalising existing revenues and limiting
future growth opportunities in digital services
in Vodafone Business.
Emerging threats
Emerging risks span both Consumer and
Business segments. In the Consumer segment,
growing choice of communication solutions
could threatening our core, while streaming
services could threatening our TV business. In
the Business segment, large technology players
could attempt to move up further along the
telecommunication sectors value chain.
Mitigation activities
Through the assessment of the design
and operating effectiveness of the controls,
we identify the relevant risks for the IT
programmes to determine whether they
are being effectively mitigated. Where gaps
are identified, recommendations for mitigation
are raised and followed up to make sure
programmes are effectively de-risked.
Target tolerance
Deliver IT transformation programmes with
the correct mix of efficient systems, relevant
skills and digital expertise in alignment with
the original planned spend, timelines and
business benefits.
Scenario
Failure to deliver business benefits causes cost
escalation, budget overruns and increased
customer dissatisfaction which could negatively
impact our financial performance.
Emerging threats
Long implementation timelines of
transformation programmes and rapidly
changing market conditions pose a risk that
programme original scope and objectives might
not be valid to achieve the expected business
benefits defined at the outset of the programme.
Ongoing changes to the organisation strategy
might also have an impact on transformation
programmes which might need to adjust scope
and objectives therefore increasing the risk of
time and cost overruns.
Risk profile change
Increasing
Decreasing
Stable
Our strategy
Customer commitments
Enabling strategies
Best connectivity products & services
Simplified & most efficient operator
Leading innovation in digital services
Social contract shaping digital society
Risk profile change
Increasing
Decreasing
Stable
Our strategy
Customer commitments
Enabling strategies
Best connectivity products & services
Simplified & most efficient operator
Leading innovation in digital services
Social contract shaping digital society
Outstanding digital experiences
Leading gigabit networks
Outstanding digital experiences
Leading gigabit networks
58
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Brexit
The EU-UK Trade and Cooperation Agreement, which came into effect
on 1 January 2021, provides greater clarity on the trading relationship
between the UK and the EU. Vodafone’s cross-functional steering
committee established early in the Brexit process identified risks and
produced a comprehensive mitigation plan. Since the signing of the
agreement, any outstanding risks have been managed by operational
teams. The impact of the agreement, and any legal challenges to
elements of the agreement, continue to be monitored, with further
mitigations put in place where necessary.
Emerging risk
We face a number of uncertainties where an emerging risk may
potentially impact us in the longer term. In some cases, there may be
insufficient information to understand the likely scale, impact or velocity
of the risk. We also might not be able to fully define a mitigation plan until
we have a better understanding of the threat.
We continue to identify new emerging risk trends, using the input from
analysis of the external environmental as well as internal participation
from key stakeholders.
Using the identified emerging risks, we evaluate the impact and the effect
it would have on our organisation (including the changes to our principal
risks). The sub-set of our latest emerging risks are:
– Additional regulations or investor pressure brought on by
Environmental, Social and Governance (‘ESG’) requirements;
– Depopulation of city centres;
– Ageing population; and
– Next-generation digitalisation.
Strengthening our framework
Over the course of the year, we have:
– Continued to improve our process for the identification and
assessment of emerging risks;
– Further enhanced the process of collecting key risk indicators
and monitoring early-warning signals in both the internal and
external environment;
– Continued to align with the TCFD recommendations for climate-
related risks and opportunities; and
– Defined a more dynamic approach to risk identification, assessment
and escalation.
Risk management (continued)
Key changes to our principal risks:
– The Adverse political and regulatory measures risk has
reduced, as we continue to build relationships with governments
and key stakeholders through our social contract. However, against
the backdrop of COVID-19, we continue to monitor for any changes
in tax regulation.
– The Technology failure risk has reduced as more of our markets
achieve the set recovery targets.
– The Global economic disruption risk has reduced due to
telecommunications proving resilient during the COVID-19
pandemic. We anticipate a similar trend for FY22. However, the
full effect of this risk could be delayed, and the risk might increase
over a longer time horizon.
– We have split the IT transformation risk from our Digital
transformation risk.
– We anticipate additional changes to risk exposure as we become
a new generation connectivity and digital services provider
for Europe & Africa. For this reason, we have expanded the
Strategic transformation risk to include all portfolio related
changes (integration, mergers, separations) including the
transformation to our operating model.
– We have renamed the Disintermediation risk to include
‘failure to innovate’ to focus on our success to innovate as well
as external disintermediation threats.
Watchlist risk
Our watchlist risk process enables us to monitor material risks to
Vodafone Group which fall outside of our top 10 principal risks list.
These include, but are not limited to:
EMF (Electromagnetic Field)
This risk can be broken down into three areas:
– failure to comply with national legislation or international guidelines set
by the International Commission on Non-Ionizing Radiation Protection
(‘ICNIRP’) as it applies to EMF, or failure to meet policy requirements;
– the risk arising from concerted campaigns or negative community
sentiment towards location or installation of radio base stations,
resulting in planning delays; and
– changes in the radio technology we use or the body of credible
scientific evidence which may impact either of the two risks above.
We have an established governance for EMF risk management
(a Group leadership team that reports to the Board, and a network
of EMF leaders across all markets). The EMF task group, which was set
up in FY20 to focus on assessing and reporting on the impact of 5G on
EMF, has merged with the Group leadership team. The Group leadership
team continues to update the Executive Committee twice a year on the
impact of EMF restrictions in those markets with limits that do not align
with international, science-based guidelines, as well as coordinating
engagement with policy makers relating to 5G and EMF and assessing
the impact of social media campaigns on public concern.
Vodafone continues to advocate for national EMF regulations to be
harmonised with international guidelines. The 2020 updated guidelines
from ICNIRP confirmed that there are no adverse effects on human
health from 5G frequencies if exposure is within their guidelines. Vodafone
always operates its mobile networks strictly within national regulations,
which are typically based on, or go beyond, ICNIRP’s guidelines, and we
regularly monitor our operations in each country to meet
those regulations.
Read more about EMF
on page 49
Brexit
The EU-UK Trade and Cooperation Agreement, which came into effect
on 1 January 2021, provides greater clarity on the trading relationship
between the UK and the EU. Vodafone’s cross-functional steering
committee established early in the Brexit process identified risks and
produced a comprehensive mitigation plan. Since the signing of the
agreement, any outstanding risks have been managed by operational
teams. The impact of the agreement, and any legal challenges to
elements of the agreement, continue to be monitored, with further
mitigations put in place where necessary.
Emerging risk
We face a number of uncertainties where an emerging risk may
potentially impact us in the longer term. In some cases, there may be
insufficient information to understand the likely scale, impact or velocity
of the risk. We also might not be able to fully define a mitigation plan until
we have a better understanding of the threat.
We continue to identify new emerging risk trends, using the input from
analysis of the external environmental as well as internal participation
from key stakeholders.
Using the identified emerging risks, we evaluate the impact and the effect
it would have on our organisation (including the changes to our principal
risks). The sub-set of our latest emerging risks are:
– Additional regulations or investor pressure brought on by
Environmental, Social and Governance (‘ESG’) requirements;
– Depopulation of city centres;
– Ageing population; and
– Next-generation digitalisation.
Strengthening our framework
Over the course of the year, we have:
– Continued to improve our process for the identification and
assessment of emerging risks;
– Further enhanced the process of collecting key risk indicators
and monitoring early-warning signals in both the internal and
external environment;
– Continued to align with the TCFD recommendations for climate-
related risks and opportunities; and
– Defined a more dynamic approach to risk identification, assessment
and escalation.
58
Vodafone Group Plc
Annual Report 2021
Risk management (continued)
Key changes to our principal risks:
– The Adverse political and regulatory measures risk has
reduced, as we continue to build relationships with governments
and key stakeholders through our social contract. However, against
the backdrop of COVID-19, we continue to monitor for any changes
in tax regulation.
– The Technology failure risk has reduced as more of our markets
achieve the set recovery targets.
– The Global economic disruption risk has reduced due to
telecommunications proving resilient during the COVID-19
pandemic. We anticipate a similar trend for FY22. However, the
full effect of this risk could be delayed, and the risk might increase
– We have split the IT transformation risk from our Digital
over a longer time horizon.
transformation risk.
– We anticipate additional changes to risk exposure as we become
a new generation connectivity and digital services provider
for Europe & Africa. For this reason, we have expanded the
Strategic transformation risk to include all portfolio related
changes (integration, mergers, separations) including the
transformation to our operating model.
– We have renamed the Disintermediation risk to include
‘failure to innovate’ to focus on our success to innovate as well
as external disintermediation threats.
Watchlist risk
Our watchlist risk process enables us to monitor material risks to
Vodafone Group which fall outside of our top 10 principal risks list.
These include, but are not limited to:
EMF (Electromagnetic Field)
This risk can be broken down into three areas:
– failure to comply with national legislation or international guidelines set
by the International Commission on Non-Ionizing Radiation Protection
(‘ICNIRP’) as it applies to EMF, or failure to meet policy requirements;
– the risk arising from concerted campaigns or negative community
sentiment towards location or installation of radio base stations,
resulting in planning delays; and
– changes in the radio technology we use or the body of credible
scientific evidence which may impact either of the two risks above.
We have an established governance for EMF risk management
(a Group leadership team that reports to the Board, and a network
of EMF leaders across all markets). The EMF task group, which was set
up in FY20 to focus on assessing and reporting on the impact of 5G on
EMF, has merged with the Group leadership team. The Group leadership
team continues to update the Executive Committee twice a year on the
impact of EMF restrictions in those markets with limits that do not align
with international, science-based guidelines, as well as coordinating
engagement with policy makers relating to 5G and EMF and assessing
the impact of social media campaigns on public concern.
Vodafone continues to advocate for national EMF regulations to be
harmonised with international guidelines. The 2020 updated guidelines
from ICNIRP confirmed that there are no adverse effects on human
health from 5G frequencies if exposure is within their guidelines. Vodafone
always operates its mobile networks strictly within national regulations,
which are typically based on, or go beyond, ICNIRP’s guidelines, and we
regularly monitor our operations in each country to meet
those regulations.
Read more about EMF
on page 49
Strategic report
Governance
Financials
Other information
59
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
TCFD disclosure
We recognise that climate change poses a number of physical
(i.e. caused by the increased frequency and severity of extreme
weather events) and transition-related (i.e. economic, technology
or regulatory challenges related to moving to a greener economy)
risks and opportunities for our business. As part of our commitment to
operate ethically and sustainably, we are dedicated to understanding
climate-related risks and opportunities and embedding responses to
these into our business strategy and operations. We are aligning internal
processes with the recommendations of the Task Force on Climate-related
Financial Disclosures (‘TCFD’). The summarised progress is detailed in this
section as we aim to be fully aligned by 2022.
More in-depth information on our work to date on climate-related risks
and opportunities, as well as further plans as we continue the TCFD
programme can be found in our first standalone TCFD report.
Click to read our TCFD report:
investors.vodafone.com/tcfd
Governance
The Group External Affairs Director, a member of the Group Executive
Committee, is the executive-level sponsor for the Planet agenda as part
of our purpose-led strategy (pages 38-40) and has overall accountability
for the climate change action within the Group. This includes providing
updates to the Board on the progress towards our climate-related
goals. In addition, at the 2020 AGM shareholders approved the current
Remuneration Policy which incorporates our environmental, social and
governance (‘ESG’) priorities in the executive long-term incentive plan.
For FY21, this measure included a specific greenhouse gas reduction
ambition linked to our 2025 target of reducing our emissions by 50%
from the FY17 baseline. More details can be found in the Directors’
Remuneration Report on pages 82-103. Further details on how TCFD is
managed at Group and in key markets are available in our TCFD Report.
Strategy
This year, we have made progress in understanding the current
and potential climate-related impacts on our business, strategy,
and financial planning.
We have adopted three scenarios in line with the Bank of England’s
reference climate scenarios as outlined in their consultation document
released in December 2019. This year, we conducted the required
assessments to quantify the business impacts of all material climate-
related risks under each scenario and over different time horizons to
better understand the financial impact on our business.
To continue our TCFD programme, we will use the outputs of the scenario
analysis to assist us in either adjusting or introducing policies, as well as
considering the available opportunities. We continue to review each
material climate-related risk and opportunity and build mitigation
strategies to improve the resilience across our infrastructure portfolio
and our key markets.
Risk management
We have continued to align the climate-related risk management process
with the global risk management framework. The following data sources
were used for this year’s process:
– Climate-change publications and data;
– Relevant literature on the potential impacts of climate change on the
ICT sector;
– Guidance from TCFD on potential risks and opportunities; and
– CDP (formerly Carbon Disclosure Project) data and disclosures from
other companies in the ICT sector.
We evaluated the materiality of the identified risks and opportunities by
assessing their likelihood and impact using our global risk management
framework. This process helped us determine the relative significance of
the climate-related risks in relation to other risks. We are currently working
to further embed applicable climate-related risks, controls and monitoring
metrics into our risk management framework using our emerging
risks process.
Metrics and targets
We use a wide variety of metrics to measure climate-related current
and potential impact. We have been measuring and reporting on energy
and carbon emissions since 2001. In addition, we have set a number of
ambitious targets to manage climate-related risks and reduce our impact
on the environment, such as reaching ‘net zero’ emissions across our
full value chain by 2040 and purchasing 100% renewable electricity
in Europe by July 2021, and all markets by 2025. We constantly review
whether any additional metrics and key risk indicators can be identified
to measure and manage climate-related risks, and track and act on the
opportunities resulting from the impact of climate change.
Material risks and opportunities
Physical risks:
– Damage to infrastructure caused by increasing frequency
and severity of extreme weather events, including wildfires,
flooding, storms
– Damage to infrastructure caused by sea level rise
– Interruption or reduction in the quality of our wireless services due
to increased precipitation
Transition risks:
– Changing consumer preferences impacting our revenues and
market share
– Increasing energy consumption due to increased global temperatures
– Changing cost of carbon impacting costs to meet Vodafone’s net
zero target
– Increasing risk of litigation around climate action
– Increase in carbon taxation
– Changes in regulation over infrastructure efficiency
Opportunities:
– Change in market valuation as a result of changing investor
expectations with regard to climate change and Vodafone’s
ESG performance
– Change in the availability and cost of capital impacted by
sustainability performance
– Increasing consumer attractiveness and ability to meet net
zero targets through increased energy efficiency of products
and services
60
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Risk management (continued)
COVID-19
The vital role telecommunications companies play in
society has become more evident during the COVID-19
pandemic. Telecommunications services are critical in
enabling people to work remotely, allowing businesses
to remain operational, supporting emergency services
and government responses, and providing access to
online education. Through our infrastructure, we have
kept people and societies connected.
We have closely monitored the evolution of COVID-19 as it has continued
to impact different countries to varying degrees over time and adapted
our risk profile as required. We continue to maintain close contact with
local health authorities and government agencies in all of our geographies,
so that we minimise the risk to Vodafone, our operations and employees.
Governance
During the early stages of the pandemic, we initiated our response to this
crisis by invoking the Group’s crisis management process. This process
enabled us to prepare a number of planning scenarios based on a range
of assumptions and potential outcomes. A Crisis Steering Committee
(‘Steerco’) continues to meet with representatives from the Group and our
local markets. The Steerco receives updates and feedback on measures
implemented locally, collects best practice, and assesses the adequacy of
the Vodafone response as we monitor changes in the virus patterns and
the impact it has on our operations.
Impact on our principal risks
We do not consider the COVID-19 pandemic as an individual risk but
rather monitor how the pandemic amplifies our principal, emerging and
operational risks see pages 54-58.
Using this approach, we are able to manage the ‘domino effect’ of different
risk types while identifying both the negative and positive impacts on our
operations. As shown on page 54, we assign each of our risks to a category
(strategic, technological, operational and financial) which allows us to
prioritise and provide the required assurance. The section below summarises
the impact the pandemic had on the different risk categories.
Strategic
Given the nature of the telecommunications industry and the important
role communication services have played during the pandemic, external
stakeholders have focused more on our sector during the COVID-19
pandemic. We have continued to build stronger relationships and
partnerships through our social contract with our stakeholders,
industry players and governments when managing strategic risks.
Read more about social contracts
on page 19
We continue to monitor external impacts caused by the COVID-19
pandemic. For example we monitor potential adverse changes in
regulations or further scrutiny by regulatory authorities which could
lead to higher taxes as governments address the potential budget deficit
following the pandemic.
More positively, we have seen an increase in consumers and business
customers adopting more data services such as video conferencing and
video on demand streaming.
Financial
The COVID-19 pandemic has caused significant volatility in the financial
markets. This can affect both our access to capital markets and the cost
of debt. However, the telecommunications industry has not been as
severely impacted. We anticipate a delayed impact as inflation rises due
to an expected increase in spending, once countries begin to exit
lock-downs. These inflation expectations can drive interest rates higher,
which can make long-term borrowing more expensive.
Commercially, the biggest impact was related to our roaming and visitor
revenue, however, we expect this to recover as vaccinations programmes
are successful and travel restrictions are lifted. We anticipate that as
furlough and other government support schemes start to be withdrawn,
there might be a decrease in our customers’ spending power.
Technological
We have seen a significant increase in data usage during the pandemic
and therefore, we have focused on our capacity management processes.
Additionally, some of our local markets operate critical national infrastructure
which was increasingly needed during the pandemic, and we made sure
that we implemented mitigations to better support our infrastructure.
With travel restrictions implemented in most countries, we were not
always able to perform physical site visits for business continuity or to
test our EMF exposure and therefore ran either robust desktop exercises
or used new innovative ways to remotely evaluate our sites.
Read more about EMF operating model
on page 49
All organisations have seen an increase in the number of phishing cyber
security attacks as cyber criminals attempted to exploit the uncertainty of
the pandemic.
Read more about cyber security
on page 46
At the start of the crisis, telecommunications companies were exposed to
unsubstantiated and misinformed allegations linking COVID-19 to our 5G
rollout plan. This incited some vandalism to network equipment affecting
our ability to service some of our customers.
Read more about EMF
on page 49
Operational
We prioritised the safety and wellbeing of our people, ensuring that we
had the business continuity plans in place to operate while most of our
people moved to working from home.
Read more about our people wellbeing and safety
on page 48
Additionally, to lessen the potential burden on our suppliers, we have
implemented controls to assist them through our COVID-19 payment
relief policy.
Read more about the supporting of small businesses
on page 41
Due to lock-down, social distancing and COVID-19 related restrictions,
our ability to physically serve our customers was restricted. We have
accelerated and increased our digital transformation projects providing
a better customer experience and to capture opportunities as consumer
confidence and markets rebound.
Conclusion
To be better prepared for future events such as the COVID-19 pandemic,
we have updated our risk process. This approach, which runs parallel to
our principal risk process, allows for a quicker identification of threats and
risks. The process provides better visibility to our internal stakeholders and
more oversight and governance across our risks. We continue to monitor
the risks and threats arising from COVID-19 and similar events.
60
Vodafone Group Plc
Annual Report 2021
Risk management (continued)
COVID-19
The vital role telecommunications companies play in
society has become more evident during the COVID-19
pandemic. Telecommunications services are critical in
enabling people to work remotely, allowing businesses
to remain operational, supporting emergency services
and government responses, and providing access to
online education. Through our infrastructure, we have
kept people and societies connected.
We have closely monitored the evolution of COVID-19 as it has continued
to impact different countries to varying degrees over time and adapted
our risk profile as required. We continue to maintain close contact with
local health authorities and government agencies in all of our geographies,
so that we minimise the risk to Vodafone, our operations and employees.
Governance
During the early stages of the pandemic, we initiated our response to this
crisis by invoking the Group’s crisis management process. This process
enabled us to prepare a number of planning scenarios based on a range
of assumptions and potential outcomes. A Crisis Steering Committee
(‘Steerco’) continues to meet with representatives from the Group and our
local markets. The Steerco receives updates and feedback on measures
implemented locally, collects best practice, and assesses the adequacy of
the Vodafone response as we monitor changes in the virus patterns and
the impact it has on our operations.
to an expected increase in spending, once countries begin to exit
lock-downs. These inflation expectations can drive interest rates higher,
which can make long-term borrowing more expensive.
Commercially, the biggest impact was related to our roaming and visitor
revenue, however, we expect this to recover as vaccinations programmes
are successful and travel restrictions are lifted. We anticipate that as
furlough and other government support schemes start to be withdrawn,
there might be a decrease in our customers’ spending power.
Technological
We have seen a significant increase in data usage during the pandemic
and therefore, we have focused on our capacity management processes.
Additionally, some of our local markets operate critical national infrastructure
which was increasingly needed during the pandemic, and we made sure
that we implemented mitigations to better support our infrastructure.
With travel restrictions implemented in most countries, we were not
always able to perform physical site visits for business continuity or to
test our EMF exposure and therefore ran either robust desktop exercises
or used new innovative ways to remotely evaluate our sites.
Read more about EMF operating model
on page 49
All organisations have seen an increase in the number of phishing cyber
security attacks as cyber criminals attempted to exploit the uncertainty of
the pandemic.
Read more about cyber security
on page 46
Impact on our principal risks
We do not consider the COVID-19 pandemic as an individual risk but
At the start of the crisis, telecommunications companies were exposed to
unsubstantiated and misinformed allegations linking COVID-19 to our 5G
rollout plan. This incited some vandalism to network equipment affecting
rather monitor how the pandemic amplifies our principal, emerging and
our ability to service some of our customers.
operational risks see pages 54-58.
Using this approach, we are able to manage the ‘domino effect’ of different
on page 49
Read more about EMF
risk types while identifying both the negative and positive impacts on our
operations. As shown on page 54, we assign each of our risks to a category
(strategic, technological, operational and financial) which allows us to
prioritise and provide the required assurance. The section below summarises
the impact the pandemic had on the different risk categories.
Strategic
Given the nature of the telecommunications industry and the important
role communication services have played during the pandemic, external
stakeholders have focused more on our sector during the COVID-19
pandemic. We have continued to build stronger relationships and
partnerships through our social contract with our stakeholders,
industry players and governments when managing strategic risks.
Read more about social contracts
on page 19
Operational
We prioritised the safety and wellbeing of our people, ensuring that we
had the business continuity plans in place to operate while most of our
people moved to working from home.
Read more about our people wellbeing and safety
on page 48
Additionally, to lessen the potential burden on our suppliers, we have
implemented controls to assist them through our COVID-19 payment
relief policy.
on page 41
Read more about the supporting of small businesses
Due to lock-down, social distancing and COVID-19 related restrictions,
our ability to physically serve our customers was restricted. We have
accelerated and increased our digital transformation projects providing
a better customer experience and to capture opportunities as consumer
confidence and markets rebound.
We continue to monitor external impacts caused by the COVID-19
pandemic. For example we monitor potential adverse changes in
regulations or further scrutiny by regulatory authorities which could
lead to higher taxes as governments address the potential budget deficit
following the pandemic.
Conclusion
More positively, we have seen an increase in consumers and business
To be better prepared for future events such as the COVID-19 pandemic,
customers adopting more data services such as video conferencing and
we have updated our risk process. This approach, which runs parallel to
video on demand streaming.
Financial
The COVID-19 pandemic has caused significant volatility in the financial
markets. This can affect both our access to capital markets and the cost
of debt. However, the telecommunications industry has not been as
severely impacted. We anticipate a delayed impact as inflation rises due
our principal risk process, allows for a quicker identification of threats and
risks. The process provides better visibility to our internal stakeholders and
more oversight and governance across our risks. We continue to monitor
the risks and threats arising from COVID-19 and similar events.
Strategic report
Governance
Financials
Other information
61
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Long Term Viability Statement
The preparation of the LTVS includes an assessment of the Group’s
long-term prospects in addition to an assessment of the ability to meet
future commitments and liabilities as they fall due over the three-year
review period.
Assessment of viability
Vodafone continues to adopt a three-year period to assess the
Group’s viability, a period in which we believe our principal risks tend to
develop. This time horizon is also in line with the structure of long-term
management incentives and the outputs from the long range business
planning cycle.
For 2021, as a result of the increased pressures on the global financial
markets due to the COVID-19 pandemic, we conducted financial stress
testing and sensitivity analysis, considering revenues at risk as well as the
impact of our response plan to the crisis.
The assessment of the viability started with the available headroom as
of 31 March 2021 and considered the plans and projections prepared
as part of the forecasting cycle, which include the Group’s cash flows,
planned commitments, required funding and other key financial ratios.
We also assumed that debt refinance will remain available in all plausible
market conditions.
Finally, we estimated impact of severe but plausible scenarios for all
of our principal and emerging risks on the three-year plan and, in
addition, stress tested a combined scenario taking into account the risk
interdependencies as defined on the diagram on page 54, where the
following risks were modelled as materialising in parallel over the
three-year period:
Cyber threat and information security: An external cyber-attack exploits
vulnerabilities and leads to a GDPR fine.
Geo-political risk in supply chain: International and political decisions
may affect our supply chain and restrict our ability to use critical suppliers.
Global economic disruption: A global economic crisis could result in
reduced telco spend from businesses and consumers, as well as limit
our access to financial markets and availability of liquidity.
Disintermediation and failure to innovate: A continued and interrupted
growth of technology giants and new entrants could impact our
business revenue and overall financial performance.
Assessment of long-term prospects
Each year the Board conducts a strategy session, reviewing the internal
and external environment as well as significant threats and opportunities
to the sustainable creation of long-term shareholder value (note that
known emerging threats related to each principal risk are described in
pages 54-57).
Read more about mega trends
on pages 10-11
As an input to the strategy discussion, the Board considers the
principal risks that are longer term in nature, (including Adverse political
and regulatory measures, Market disruption and Disintermediation
and failure to innovate) with the focus on identifying underlying
opportunities and setting the Group’s future strategy. The output from
this session is reflected in the strategic section of the Annual Report
(pages 8-11), which provides a view of the Group’s long-term prospects.
Conclusions
The Board assessed the prospects and viability of the Group in
accordance with provision 31 of the UK Corporate Governance Code,
considering the Group’s strategy and business model, and the principal
risks to the Group’s future performance, solvency, liquidity and reputation.
The assessment takes into account possible mitigating actions available
to management were any risk or combination of risks materialise.
Cash and cash equivalents available of €5.8bn page 168 as of
31 March 2021, along with options available to reduce cash outgoings
over the period considered, provide the Group with sufficient positive
headroom in all scenarios tested. Reverse stress testing on revenue and
EBITDA over the review period confirmed that the Group has sufficient
headroom available to face uncertainty. The Board deemed the stress
test conducted to be adequate and therefore confirm that they have a
reasonable expectation that the Group will remain in operation and be
able to meet its liabilities as they fall due up to 31 March 2024.
Assessment of prospects
Outlook, Strategy & Business Model
Outlook of possible long-term scenarios expected in the sector and the Group’s current position to face them
Assessment of the key principal risks that may influence the Group’s long-term prospects
Articulation of the main levers in the Group’s strategy and business model ensuring the sustainability of value creation
Long Range Plan is the three-year forecast approved by the Board on an annual basis, used to calculate cash position and headroom
Assessment of viability
Headroom is calculated using cash, cash equivalents and other available facilities, at year end
Sensitivity analysis
Principal risks
Combined scenario
Sensitivity analysis to assess the level of decline
in performance that the Group could withstand,
were a black swan event to occur
Severe but plausible scenarios modelled to
quantify the cash impact of an individual principal
risk materialising over the three-year period
Quantification of the cash impact of combined
scenarios where multiple risks materialise across
one or more markets, over the three year period
Viability results from comparing the cash impact of severe but plausible scenarios on the available headroom, considering additional liquidity options
Long-Term Viability Statement
Directors confirm that they have reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due over the three-year period
62
Vodafone Group Plc
Annual Report 2021
Governance at a glance
Strategic report
Governance
Financials
Other information
Leadership, governance
and engagement
Our Board
The Nominations and Governance Committee regularly reviews the Board’s composition to ensure a diverse mix
of backgrounds, skills, knowledge and experience as well as deep expertise in technology and telecommunications.
Each year, the Board monitors and improves its performance by conducting an annual performance review.
Tenure
Independence
2
3
6
1
2
8
0-3 years
0-3 years
4-6 years
4-6 years
6
6
3
3
7-10 years
7-10 years
2
2
Independent 8
Independent 8
2
Executive
2
Executive
Independent 1
Independent 1
Non-Executive
Non-Executive
Chair
Chair
Gender diversity
Ethnicity
45.5%
9.1%
Female representation
Female representation
Ethnically diverse
Ethnically diverse
Skills and expertise of Non-Executive Directors
Attendance
Seven scheduled meetings of the Board were held during the year as
well as five meetings of the Audit and Risk Committee, four meetings of
the Remuneration Committee and three meetings of the Nominations
and Governance Committee. Ad hoc meetings of the Board and its
Committees were also held during the year, as required.
Name
Sanjiv Ahuja
Sir Crispin Davis
Margherita Della Valle
Michel Demare
Dame Clara Furse
Valerie Gooding
Renee James2
Gerard Kleisterlee
Amparo Moraleda
David Nish
Nick Read
David Thodey
Jean-François van
Boxmeer
Nominations
and
Governance
Committee1
–
3/3
–
–
–
3/3
3/3
1/1
–
–
–
–
Board1
7/7
7/7
7/7
7/7
7/7
7/7
6/7
4/4
7/7
7/7
7/7
1/1
Audit and Risk
Committee1
5/5
1/1
–
5/5
–
–
–
–
5/5
5/5
–
–
Remuneration
Committee1
–
–
–
4/4
4/4
4/4
4/4
–
–
–
–
–
5/5
2/2
–
–
Notes:
1. The number of attendances is shown next to the maximum number of meetings the Director
was entitled to attend.
2. Renee James was unable to attend one scheduled meeting of the Board due to a prior
business engagement.
5
5
4
Board evaluation
Progress in the year
3
Consumer
goods and
services/
Marketing
2
1
Finance
Emerging
markets
Media
Technology/
Telecom
Political/
Regulatory
Scan or click to watch our Chairman share his views
on his first months at Vodafone:
investors.vodafone.com/videos-chair
– Jean-François’ succession to the Chairman
role completed and induction progressed.
– Presentations to the Board to enhance
understanding of emerging risks
and opportunities.
– The Board’s strategy meeting was
successfully held via video conference
where a range of senior managers
presented to the Board.
Actions for coming year
– Varied forms of engagement between
Directors.
– Review the mix of skills in light of the next
phase of our strategy.
– Concentration on organic improvement
and growth.
– Monitoring progress on ESG and
cultural change.
Read more
on page 73
Strategic report
Governance
Financials
Other information
63
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Our Board
Committee activities
The Nominations and Governance Committee regularly reviews the Board’s composition to ensure a diverse mix
of backgrounds, skills, knowledge and experience as well as deep expertise in technology and telecommunications.
Each year, the Board monitors and improves its performance by conducting an annual performance review.
The Committees undertake focused oversight of Board composition and performance, internal processes
and controls and remuneration practices. On 11 May 2021, the Board approved the establishment of an
ESG Committee to enhance its oversight of the ESG programme.
ESG Committee
The objective of our new ESG Committee is to provide oversight of
Vodafone’s ESG programme: Purpose (Inclusion for All; Planet; and
Digital Society), sustainability and responsible business practices as well
as Vodafone’s contribution to the societies we operate in under the social
contract. The Committee also monitors progress against key performance
indicators and external ESG index results.
Nomination and induction
The Nominations and Governance Committee is normally responsible
for the nomination of Directors, however the Chairman search was
conducted by a sub-committee led by Valerie Gooding. An overview
of the process for the nomination and induction of Jean-François is
shown below. At the date of this report, Step 7 was completed.
Audit and risk: In-depth reviews
The Audit and Risk Committee regularly performs deep dive reviews
of our principal risks and key markets and operations. In addition to
being provided with regular updates in these areas, deep dives were
undertaken in legal and regulatory compliance, including our Group
procurement company, Vodafone Business, Vodacom and M-Pesa,
Germany and the UK, global economic disruption, cyber threat and
information security, strategic transformation, technology failure, and
geo-political risk in supply chain.
Scan or click to watch the Chair of the Audit and Risk
Committee, David Nish, explain his role:
investors.vodafone.com/videos-arc
Step
1
Step
2
Step
3
Step
4
Engaged two
search
consultancies.
Search specification
included Board skills
gaps and diversity.
Shortlisting
of candidates by
Committee.
Interviews with
Committee
members and
Chief Executive.
Remuneration across the Group
The Remuneration Committee takes account of the pay policies in place
across the wider business. Remuneration arrangements were reviewed
across the business to ensure they fully aligned with our strategy,
supported our purpose, and celebrated the Vodafone Spirit.
Step
8
Step
7
Step
6
Step
5
Site visits scheduled
for local markets &
operations in FY22.
Virtual meetings
with senior
management and
broader team.
Elected by
shareholders
at AGM on
28 July 2020.
Recommendation
to the Board on the
chosen candidate.
Appointment terms
drafted and agreed.
New Non-Executive Director
It is intended that Olaf Swantee will join the Board as a Non-Executive
Director following the AGM on 27 July 2021, subject to shareholder
approval. Olaf has extensive experience of the telecommunications
sector and a consistent record of creating shareholder value.
Read more
on page 68
Principles of fair pay:
1. Market competitive
2. Free from discrimination
3. Ensure a good standard of living
4. Share in our successes
5. Provide benefits for all
6. Open and transparent
96%
shareholder support for the current Remuneration Policy
Read more
on pages 84-89
Scan or click to watch our prospective Non-Executive
Director introduce himself:
investors.vodafone.com/videos-ned
Scan or click to watch the Senior Independent Director
and Chair of the Remuneration Committee explain her
role: investors.vodafone.com/videos-rem
62
Vodafone Group Plc
Annual Report 2021
Governance at a glance
Leadership, governance
and engagement
45.5%
9.1%
Female representation
Female representation
Ethnically diverse
Ethnically diverse
Tenure
Independence
Attendance
2
3
6
1
2
8
0-3 years
0-3 years
4-6 years
4-6 years
6
6
3
3
7-10 years
7-10 years
2
2
Independent 8
Independent 8
Executive
Executive
2
2
Independent 1
Independent 1
Non-Executive
Non-Executive
Chair
Chair
Gender diversity
Ethnicity
Seven scheduled meetings of the Board were held during the year as
well as five meetings of the Audit and Risk Committee, four meetings of
the Remuneration Committee and three meetings of the Nominations
and Governance Committee. Ad hoc meetings of the Board and its
Committees were also held during the year, as required.
Nominations
and
Governance
Committee1
Audit and Risk
Remuneration
Committee1
Committee1
Board1
7/7
7/7
7/7
7/7
7/7
7/7
6/7
4/4
7/7
7/7
7/7
1/1
5/5
3/3
3/3
3/3
1/1
–
–
–
–
–
–
–
–
2/2
5/5
1/1
5/5
5/5
5/5
–
–
–
–
–
–
–
–
4/4
4/4
4/4
4/4
–
–
–
–
–
–
–
–
–
Name
Sanjiv Ahuja
Sir Crispin Davis
Margherita Della Valle
Michel Demare
Dame Clara Furse
Valerie Gooding
Renee James2
Gerard Kleisterlee
Amparo Moraleda
David Nish
Nick Read
David Thodey
Jean-François van
Boxmeer
Notes:
was entitled to attend.
business engagement.
Board evaluation
Skills and expertise of Non-Executive Directors
1. The number of attendances is shown next to the maximum number of meetings the Director
2. Renee James was unable to attend one scheduled meeting of the Board due to a prior
5
5
4
Progress in the year
– Jean-François’ succession to the Chairman
3
Consumer
goods and
services/
Marketing
2
1
Scan or click to watch our Chairman share his views
on his first months at Vodafone:
investors.vodafone.com/videos-chair
Read more
on page 73
role completed and induction progressed.
– Presentations to the Board to enhance
understanding of emerging risks
and opportunities.
– The Board’s strategy meeting was
successfully held via video conference
where a range of senior managers
presented to the Board.
Directors.
– Review the mix of skills in light of the next
phase of our strategy.
– Concentration on organic improvement
and growth.
– Monitoring progress on ESG and
cultural change.
Finance
Emerging
markets
Media
Technology/
Telecom
Political/
Regulatory
Actions for coming year
– Varied forms of engagement between
64
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Chairman’s governance statement
Strong corporate governance supports
our continued strategy execution,
business resilience and contribution
to societies in which we operate
I am pleased to present the Corporate Governance Report for the year
ended 31 March 2021 on behalf of the Board.
An effective and diverse Board
I was honoured to become Chairman of the Board on 3 November 2020
when Gerard Kleisterlee retired after a decade of service to Vodafone.
I am grateful to him for the quality of the Board I have joined.
The restrictions imposed by the COVID-19 pandemic have meant my
introduction to Vodafone has been almost entirely digital. This has
reinforced for me the immense value of the connectivity Vodafone
provides to customers, businesses, governments and society, enabling
them to run their daily lives and operate smoothly and efficiently.
The restrictions on travel during the year meant that we held all our
Board and Committee meetings by video conference. I am pleased
that we were able to hold our meetings with the same cadence as usual,
adjusting meeting times to account for different time zones. We also held
a number of ad hoc meetings in the early days of the pandemic to ensure
the Company was adapting quickly to the rapidly evolving situation.
This past year, we have seen the way the world works change
profoundly and I have been impressed with the flexibility, creativity
and dynamism of Vodafone in its response to the significant challenges
we’ve faced. During the year, the Board worked with the executive team
to ensure Vodafone developed and executed its strategy as well as
contributing meaningfully to the efforts of governments and communities
to manage the pandemic and to support our customers and employees
during this unprecedented period.
The last year has been extremely challenging and I am grateful to my
fellow Directors, the executive team and the people of Vodafone for their
hard work and strong spirit throughout.
My colleagues on the Board are experienced business leaders who bring a
wealth of knowledge and experience from diverse sectors and countries.
This supports the Board’s discussions on the strategic, operational and
sustainability issues which affect the Company today or may do so in the
future. As Vodafone moves ahead at pace with its strategy, I am working
with my fellow Directors on the Nominations and Governance Committee
to ensure our Board continues to comprise a mix of people who have
diverse backgrounds, experiences, cultures and thinking styles and deep
knowledge of the telecommunications and technology sectors. I am
therefore pleased that shareholders will have the opportunity at our
2021 annual general meeting to appoint a new Director to our Board,
Olaf Swantee, who has a wealth of experience in the telecommunications
sector. I would also like to thank Renee James, ahead of her retirement
from the Board on 27 July 2021, for her many valuable contributions to
Vodafone during her tenure.
Purpose
Vodafone is a purpose led company. We connect for a better future,
enabling inclusive and sustainable digital societies. The relevance of
our purpose became very apparent during 2020, a year of pandemic,
extreme climate events, and demands for more inclusive societies.
Vodafone can, and will, play an important role in working with
governments and others to address these issues. We have clear plans
with targets for enabling inclusive digital societies and helping to tackle
climate change. In the shorter term, we are committed to playing a key
role in supporting the post-COVID economic and social recovery in the
countries where we operate.
Opportunities and risks
As described in the Strategic Report, we see opportunities to grow
Vodafone’s business by deepening our relationship with customers
and by developing new products and services for them.
We are driving forward energetically to capture these opportunities
and doing so whilst also maintaining a strong focus on risk management.
The Board and the Audit and Risk Committee have reviewed each of the
Company’s top 10 risks and during the year received detailed updates on
risks relating to, amongst other topics, technology failure, geo-political risk
in the supply chain, cyber threats, and information security. Furthermore,
additional financial stress testing and liquidity impact analyses were
carried out to reflect the impact of COVID-19 and to inform the Group’s
long-term viability statement.
Continued stakeholder engagement
In March, I had individual meetings with 20 of the Company’s largest
shareholders. Topics discussed included Vodafone’s strategy, challenges
and opportunities, the Company’s portfolio of assets, our Board and my
induction into the Company.
Our annual general meeting was held as a closed meeting on 28 July 2020
due to the restrictions imposed by the UK government at that time. It was
disappointing for the Board not to be able to engage with shareholders in
person. Nonetheless, the former Chairman, Gerard Kleisterlee, delivered a
presentation to shareholders online and answers to questions submitted
by shareholders were published on our website. These materials are
available to view at vodafone.com/agm
Valerie Gooding continues to serve as the Board’s Workforce Engagement
Lead, gathering the views of employees through a number of employee
consultative committees across all our European and African markets.
As well as COVID-19 impacting the format for those meetings, it
also dominated discussion at the forums. Valerie was impressed by
employees’ overwhelming support for Vodafone’s efforts to respond
to the COVID-19 pandemic.
64
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
65
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Chairman’s governance statement
Strong corporate governance supports
our continued strategy execution,
business resilience and contribution
to societies in which we operate
I am pleased to present the Corporate Governance Report for the year
Purpose
ended 31 March 2021 on behalf of the Board.
An effective and diverse Board
Vodafone is a purpose led company. We connect for a better future,
enabling inclusive and sustainable digital societies. The relevance of
our purpose became very apparent during 2020, a year of pandemic,
I was honoured to become Chairman of the Board on 3 November 2020
extreme climate events, and demands for more inclusive societies.
when Gerard Kleisterlee retired after a decade of service to Vodafone.
Vodafone can, and will, play an important role in working with
I am grateful to him for the quality of the Board I have joined.
The restrictions imposed by the COVID-19 pandemic have meant my
introduction to Vodafone has been almost entirely digital. This has
reinforced for me the immense value of the connectivity Vodafone
provides to customers, businesses, governments and society, enabling
them to run their daily lives and operate smoothly and efficiently.
The restrictions on travel during the year meant that we held all our
Board and Committee meetings by video conference. I am pleased
that we were able to hold our meetings with the same cadence as usual,
adjusting meeting times to account for different time zones. We also held
a number of ad hoc meetings in the early days of the pandemic to ensure
the Company was adapting quickly to the rapidly evolving situation.
This past year, we have seen the way the world works change
profoundly and I have been impressed with the flexibility, creativity
and dynamism of Vodafone in its response to the significant challenges
we’ve faced. During the year, the Board worked with the executive team
to ensure Vodafone developed and executed its strategy as well as
contributing meaningfully to the efforts of governments and communities
to manage the pandemic and to support our customers and employees
during this unprecedented period.
The last year has been extremely challenging and I am grateful to my
fellow Directors, the executive team and the people of Vodafone for their
hard work and strong spirit throughout.
My colleagues on the Board are experienced business leaders who bring a
wealth of knowledge and experience from diverse sectors and countries.
This supports the Board’s discussions on the strategic, operational and
sustainability issues which affect the Company today or may do so in the
future. As Vodafone moves ahead at pace with its strategy, I am working
with my fellow Directors on the Nominations and Governance Committee
to ensure our Board continues to comprise a mix of people who have
diverse backgrounds, experiences, cultures and thinking styles and deep
knowledge of the telecommunications and technology sectors. I am
therefore pleased that shareholders will have the opportunity at our
2021 annual general meeting to appoint a new Director to our Board,
Olaf Swantee, who has a wealth of experience in the telecommunications
sector. I would also like to thank Renee James, ahead of her retirement
from the Board on 27 July 2021, for her many valuable contributions to
Vodafone during her tenure.
governments and others to address these issues. We have clear plans
with targets for enabling inclusive digital societies and helping to tackle
climate change. In the shorter term, we are committed to playing a key
role in supporting the post-COVID economic and social recovery in the
countries where we operate.
Opportunities and risks
As described in the Strategic Report, we see opportunities to grow
Vodafone’s business by deepening our relationship with customers
and by developing new products and services for them.
We are driving forward energetically to capture these opportunities
and doing so whilst also maintaining a strong focus on risk management.
The Board and the Audit and Risk Committee have reviewed each of the
Company’s top 10 risks and during the year received detailed updates on
risks relating to, amongst other topics, technology failure, geo-political risk
in the supply chain, cyber threats, and information security. Furthermore,
additional financial stress testing and liquidity impact analyses were
carried out to reflect the impact of COVID-19 and to inform the Group’s
long-term viability statement.
Continued stakeholder engagement
In March, I had individual meetings with 20 of the Company’s largest
shareholders. Topics discussed included Vodafone’s strategy, challenges
and opportunities, the Company’s portfolio of assets, our Board and my
induction into the Company.
Our annual general meeting was held as a closed meeting on 28 July 2020
due to the restrictions imposed by the UK government at that time. It was
disappointing for the Board not to be able to engage with shareholders in
person. Nonetheless, the former Chairman, Gerard Kleisterlee, delivered a
presentation to shareholders online and answers to questions submitted
by shareholders were published on our website. These materials are
available to view at vodafone.com/agm
Valerie Gooding continues to serve as the Board’s Workforce Engagement
Lead, gathering the views of employees through a number of employee
consultative committees across all our European and African markets.
As well as COVID-19 impacting the format for those meetings, it
also dominated discussion at the forums. Valerie was impressed by
employees’ overwhelming support for Vodafone’s efforts to respond
to the COVID-19 pandemic.
Culture
The Board regards culture as a key enabling factor for our strategic,
organisational and digital transformation. The Vodafone Spirit campaign
was launched successfully in December 2019, galvanising our culture
with our purpose and strategy. One of our key values ‘Get it done,
together’ could not have been more important during the last year as
our employees worked tirelessly to keep our customers and others
connected during the pandemic and to keep our people safe.
By April 2020, our global workforce had successfully transitioned
to remote working and eight global employee feedback surveys
conducted during the year showed that our employees were extremely
satisfied they had the tools and support they needed to work safely at
home and elsewhere.
Induction
Before succeeding Gerard Kleisterlee as Chairman, on 28 July 2020
I joined the Board as a Non-Executive Director. This three-month period
of orderly transition and thorough handover was hugely valuable for me
to draw from Gerard’s knowledge and experience. Due to the restrictions
imposed by the COVID-19 pandemic, my induction has been largely
digital. It began with the executives compiling for me a comprehensive
briefing document about the Group. Each section was written by an
expert in their part of the business so I gained a valuable perspective
in advance of my induction meetings.
During my induction I’ve been able to meet each of my fellow Board
members and attended 16 meetings with executives and senior
managers to discuss various topics, including technology, people
and culture, strategy, commercial, finance, Vodafone Business, internal
controls, risk and compliance, corporate governance and shareholders
and investors. As travel restrictions ease, I look forward to visiting our
key local markets. Of course, the Board cycle continued alongside my
induction and I have attended 12 Board and Committee meetings to date.
The year ahead
During the coming year, the Board’s focus will be on maintaining resilient
financial performance through the execution of our strategy at pace.
Reflecting its ownership of environmental, social and governance matters,
the Board has approved the establishment of a new ESG Committee as
a Committee of the Board and the Board will benefit from its dedicated
oversight of our ESG programme.
Jean-François van Boxmeer
Chairman of the Board
Compliance with the 2018 UK Corporate
Governance Code (the ‘Code’)
In respect of the year ended 31 March 2021 Vodafone Group Plc
was subject to the Code (available from www.frc.org.uk). The Board is
pleased to confirm that Vodafone applied the principles and complied
with all of the provisions of the Code throughout the year. Further
information on compliance with the Code can be found as follows:
Board leadership and Company purpose
Read more
Long-term value and sustainability
32-51
59
66
69-70
Culture
12
21-22
43
66
71-72
Shareholder engagement
Other stakeholder engagement
Conflicts of interest
12-13
71-72
12-13 71-72
75
Division of responsibilities
Read more
Role of the Chairman
Division of responsibilities
Non-Executive Directors
Independence
67
69
62
69-70
67-69
62
74
Composition, succession and evaluation
Read more
Appointments and succession planning
Skills, experience and knowledge
Length of service
Evaluation
Diversity
63
73-75
62
67-68
62
67-68
75
62
73
22
36-37
62
75
Audit, risk and internal control
Read more
Committee
Integrity of financial statements
Fair, balanced and understandable
Internal controls and risk management
Scan or click to watch our Chairman share his views on
his first months at Vodafone:
investors.vodafone.com/videos-chair
External auditor
Principal and emerging risks
Remuneration
Policies and practices
76-77
61
77-78
109
77
108-109
79-80
80
53-61
77
Read more
82-103
82-86
83
91
Alignment with purpose, values and long-term strategy
Independent judgement and discretion
Disclosure Guidance and Transparency Rules
We comply with the Corporate Governance Statement requirements
pursuant to the FCA’s Disclosure Guidance and Transparency Rules
by virtue of the information included in this “Governance” section
of the Annual Report together with information contained in the
“Shareholder information” section on pages 227 to 232.
66
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Annual Report 2021
Governance
Strategic report
Governance
Financials
Other information
Board leadership and Company purpose
Values and culture
The Board has a critical role in setting the tone of our organisation
and championing the behaviours we expect to see. Having launched
in December 2019, the Vodafone Spirit galvanises our culture with our
purpose and strategy. Eight global employee surveys were conducted
during FY21 and the survey data was shared widely with employees
and the Board. It was encouraging to see a very strong, positive response
amongst employees to the Vodafone Spirit launch and that over 50,000
employees had engaged with local plans. The Board were interested in
the areas measured by the surveys, the desire indicated by employees
to improve ‘Earn Customer Loyalty’, and plans to attach indicators from
surveys to business KPIs.
The cultural climate in Vodafone is comprehensively measured through
a number of mechanisms including policy and compliance processes,
internal audit and formal and informal channels for employees to raise
concerns (including our annual people survey and our whistleblowing
programme, Speak Up, which is also available to the contractors and
suppliers working with us). The Board is appraised of any material
whistleblowing incidents.
More information on Speak Up is provided
on page 43
Governance
The Board ensures the highest standard of corporate governance is
maintained by regularly reviewing developments in governance best
practice and ensuring these are adopted by the Company. The Board
dedicated time during the year to thoroughly consider the independence
and time commitment of all Directors, the arrangements in place to
monitor conflicts of interest, as well as evaluating the effectiveness of
the Board and each of the Directors.
All Directors have access to the advice of the Company Secretary, who is
responsible for advising the Board on all governance matters.
Read about our governance structure and roles
and responsibilities on pages 69 to 70
The Board is collectively responsible for ensuring
leadership through effective oversight and review.
It sets the strategic direction with the goal of delivering
sustainable stakeholder value over the longer term,
and has oversight of cultural and ethical programmes.
The Board also oversees the implementation of appropriate risk
assessment systems and processes to identify, manage and mitigate
Vodafone’s principal risks. It is also responsible for matters relating
to finance, audit and internal control, reputation, listed company
management, corporate governance and effective succession
planning, much of which is overseen through its principal Committees.
Full details of the Committees’ responsibilities are detailed within
the respective Committee reports starting on pages 74, 76 and 82
Purpose
The Board established our purpose pillars: Digital Society, Inclusion
for All and Planet. Our purpose is aligned with our culture and strategy,
placed at the forefront of our decision-making and strategy development,
and the Board considers how the initiatives progressed by management
throughout the year have advanced our purpose. This oversight ensures
that product innovation realises our ambition, our services continue
to improve people’s lives with better connectivity, and our operations
continue to be enhanced to reduce our impact on the environment.
Read in detail about our purpose
on pages 32 to 42
Strategy
The Board monitors the Company’s progress against established strategic
objectives and performance against competitors. Board meetings are
planned with reference to the Company’s strategic priorities and meeting
agendas are constructed to deliver information at appropriate junctures,
and from a broad range of management, to ensure the Board’s effective
review and challenge. In furtherance of the 2019 Board effectiveness
review, sufficient time continues to be allocated to items relating to
the execution of the strategy to allow time for deeper discussion.
During the year, this was particularly important for matters related to
the shape of Vodafone (for example, the carve-out of our new Vantage
Towers business), developing and launching new consumer products
and services (such as 5G and Curve), our ‘big four’ markets in Europe
(Germany, Italy, Spain and the UK) and Vodacom in Africa, and the
competitive, legal and regulatory landscape in which we operate
(particularly in the light of COVID-19).
Read about the next phase of our strategy
on pages 18 to 22
66
Vodafone Group Plc
Annual Report 2021
Governance
Board leadership and Company purpose
The Board is collectively responsible for ensuring
leadership through effective oversight and review.
It sets the strategic direction with the goal of delivering
sustainable stakeholder value over the longer term,
and has oversight of cultural and ethical programmes.
Values and culture
The Board has a critical role in setting the tone of our organisation
and championing the behaviours we expect to see. Having launched
in December 2019, the Vodafone Spirit galvanises our culture with our
purpose and strategy. Eight global employee surveys were conducted
during FY21 and the survey data was shared widely with employees
The Board also oversees the implementation of appropriate risk
and the Board. It was encouraging to see a very strong, positive response
assessment systems and processes to identify, manage and mitigate
amongst employees to the Vodafone Spirit launch and that over 50,000
Vodafone’s principal risks. It is also responsible for matters relating
to finance, audit and internal control, reputation, listed company
management, corporate governance and effective succession
employees had engaged with local plans. The Board were interested in
the areas measured by the surveys, the desire indicated by employees
to improve ‘Earn Customer Loyalty’, and plans to attach indicators from
planning, much of which is overseen through its principal Committees.
surveys to business KPIs.
Full details of the Committees’ responsibilities are detailed within
The cultural climate in Vodafone is comprehensively measured through
the respective Committee reports starting on pages 74, 76 and 82
a number of mechanisms including policy and compliance processes,
Purpose
The Board established our purpose pillars: Digital Society, Inclusion
for All and Planet. Our purpose is aligned with our culture and strategy,
placed at the forefront of our decision-making and strategy development,
and the Board considers how the initiatives progressed by management
throughout the year have advanced our purpose. This oversight ensures
that product innovation realises our ambition, our services continue
to improve people’s lives with better connectivity, and our operations
continue to be enhanced to reduce our impact on the environment.
on page 43
Governance
internal audit and formal and informal channels for employees to raise
concerns (including our annual people survey and our whistleblowing
programme, Speak Up, which is also available to the contractors and
suppliers working with us). The Board is appraised of any material
whistleblowing incidents.
More information on Speak Up is provided
The Board ensures the highest standard of corporate governance is
maintained by regularly reviewing developments in governance best
practice and ensuring these are adopted by the Company. The Board
dedicated time during the year to thoroughly consider the independence
and time commitment of all Directors, the arrangements in place to
monitor conflicts of interest, as well as evaluating the effectiveness of
the Board and each of the Directors.
All Directors have access to the advice of the Company Secretary, who is
responsible for advising the Board on all governance matters.
Read about our governance structure and roles
and responsibilities on pages 69 to 70
Read in detail about our purpose
on pages 32 to 42
Strategy
The Board monitors the Company’s progress against established strategic
objectives and performance against competitors. Board meetings are
planned with reference to the Company’s strategic priorities and meeting
agendas are constructed to deliver information at appropriate junctures,
and from a broad range of management, to ensure the Board’s effective
review and challenge. In furtherance of the 2019 Board effectiveness
review, sufficient time continues to be allocated to items relating to
the execution of the strategy to allow time for deeper discussion.
During the year, this was particularly important for matters related to
the shape of Vodafone (for example, the carve-out of our new Vantage
Towers business), developing and launching new consumer products
and services (such as 5G and Curve), our ‘big four’ markets in Europe
(Germany, Italy, Spain and the UK) and Vodacom in Africa, and the
competitive, legal and regulatory landscape in which we operate
(particularly in the light of COVID-19).
Read about the next phase of our strategy
on pages 18 to 22
Strategic report
Governance
Financials
Other information
67
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Extensive and diverse skills,
knowledge and experience
Our business is led by our Board of Directors.
Biographical details of the Directors and senior
management as at 18 May 2021 are provided.
External appointments listed are only those required
to be disclosed pursuant to Listing Rule 9.6.
Click to find full biographical information for the Directors:
vodafone.com/board
Jean-François van Boxmeer N
Chairman – Independent on appointment
Tenure: <1 year
Skills and experience:
Jean-François brings to the Vodafone Board his extensive international experience
in driving growth through both business-to-business and business-to-consumer
business models and in-depth knowledge of the countries in which Vodafone operates.
Jean-François is highly-regarded as having been one of the longest standing and most
successful CEOs in Europe. He was the Chief Executive of Heineken for 15 years, having
been with the company for 36 years. Jean-François held a number of senior roles in
Africa and Europe before joining Heineken’s Executive Board in 2001 with worldwide
responsibility for supply chain and technical services, as well as regional responsibility
for the operating businesses in North-West Europe, Central and Eastern Europe and
Sub-Saharan Africa.
External appointments:
– Mondelez International, Inc., non-executive lead director
– Heineken Holding N.V. , non-executive director
Nick Read
Chief Executive – Executive Director
Tenure: 2 years (as Chief Executive)
Skills and experience:
As Chief Executive, Nick combines strong commercial and operational leadership with
a detailed understanding of the telecoms sector and its opportunities and challenges.
Prior to becoming Chief Executive in October 2018, Nick served as Group Chief Financial
Officer from April 2014, and held a variety of senior roles including Chief Executive for
Africa, Middle East and Asia-Pacific for five years and Chief Executive of Vodafone UK.
Prior to joining Vodafone, he held senior global finance positions with United Business
Media Plc and Federal Express Worldwide.
External appointments:
– Booking Holdings Inc., non-executive director and member of nominating and
corporate governance committee
Margherita Della Valle
Chief Financial Officer – Executive Director
Tenure: 2 years
Skills and experience:
Margherita brings considerable corporate finance and accounting experience to the
Board. She was Deputy Chief Financial Officer from 2015 to 2018, Group Financial
Controller from 2010 to 2015, Chief Financial Officer of Vodafone’s European region
from 2007 to 2010 and Chief Financial Officer of Vodafone Italy from 2004 to 2007.
Margherita joined Omnitel Pronto Italia in Italy in 1994 and held various consumer
marketing positions in business analytics and customer base management before
moving to finance. Omnitel was acquired by Vodafone in 2000.
External appointments:
– Reckitt Benckiser Group plc, non-executive director and member of audit committee
Valerie Gooding CBE N R
Senior Independent Director and Workforce Engagement Lead
Tenure: 7 years
Skills and experience:
Valerie brings a wealth of international business experience obtained at companies with
high levels of customer service including British Airways and as chief executive of BUPA
which, together with her focus on leadership and talent, is valuable to Board discussions.
Sanjiv Ahuja A
Non-Executive Director
Tenure: 2 years
Skills and experience:
Sanjiv is the founder and chairman of Tillman Global Holdings, which provides
telecommunications and renewable energy project development services. He has
broad telecoms expertise, having led mobile, broadband and infrastructure companies,
such as Telcordia (formerly Bellcore), Orange SA, Bell Communications Research and
Lightsquared, as well as considerable international experience from operating in Europe,
the United States, Africa and Asia.
His comprehensive knowledge of the telecoms sector is valuable to Board discussions.
Sir Crispin Davis N
Non-Executive Director
Tenure: 6 years
Skills and experience:
Sir Crispin has broad-ranging experience as a business leader within international
content and technology markets from his roles as chief executive of RELX Group
(formerly Reed Elsevier) and the digital agency, Aegis Group plc, and group managing
director of Guinness PLC (now Diageo plc). He was knighted in 2004 for services
to publishing and information. He brings a strong commercial perspective to
Board discussions.
External appointments:
– Hasbro Inc., non-executive director and member of compensation committee and
nominating, governance & social responsibility committee
Committee key
A
N
Audit and Risk Committee
R
Remuneration Committee
Nominations and
Governance Committee
Solid background signifies
Committee Chair
68
Vodafone Group Plc
Annual Report 2021
Governance (continued)
Strategic report
Governance
Financials
Other information
Michel Demaré A R
Non-Executive Director
Tenure: 3 years
Skills and experience:
Michel brings extensive international finance, strategy and M&A experience to the
Board, gained during his 18-year career at Dow Chemical as CFO-Global Polyolefins &
Elastomers Division, as CFO of Baxter International (Europe), and as CFO and head of
global markets of ABB Group. He was the non-executive chairman of Syngenta until the
company was sold to ChemChina in 2017 and was the vice chairman of UBS Group AG
for 10 years.
External appointments:
– AstraZeneca PLC, non-executive director and chair of the remuneration
committee and member of the nomination and governance committee
and the audit committee
Amparo Moraleda A
Non-Executive Director
Tenure: 3 years
Skills and experience:
Amparo brings strong international technology experience to the Board from her
previous role as chief executive officer of the international division of Iberdola and a
career spanning 20 years at IBM, where she held a number of positions across a range
of global locations.
External appointments:
– Airbus Group, senior independent director, chair of nominations and
governance committee and remuneration committee and member of ethics &
compliance committee
– CaixaBank, non-executive director and chair of remuneration committee
– A.P. Moller - Maersk, non-executive director and member of the audit committee,
remuneration committee and technology and innovation committee
Dame Clara Furse DBE R
Non-Executive Director
Tenure: 6 years
Skills and experience:
Dame Clara brings to the Board a deep understanding of international capital markets,
regulation, service industries and business transformation developed from her previous
roles as chief executive officer of the London Stock Exchange Group plc and Credit
Lyonnais Rouse Ltd. Her financial proficiency is highly valued. In 2008 she was
appointed Dame Commander of the Order of the British Empire.
External appointments:
– Amadeus IT Group SA, non-executive director and chair of nominations and
remuneration committee
Renee James N R
Non-Executive Director
Tenure: 10 years
Skills and experience:
Renee brings comprehensive knowledge of the high technology sector developed
from her long career at Intel Corporation where she was president. She is currently the
chairman and CEO of Ampere Computing. Her extensive experience of international
management, technology and the development and implementation of corporate
strategy is an asset to the Board and the Committees of which she is a member.
External appointments:
– Oracle Corporation, non-executive director
– Citigroup Inc., non-executive director and member of risk management committee
and operations & technology committee
David Nish A
Non-Executive Director
Tenure: 5 years
Skills and experience:
David has wide-ranging operational and strategic experience as a senior leader and
has a strong understanding of financial and capital markets through his previous
directorships which include chief executive officer and chief financial officer of
Standard Life plc and chief financial officer of Scottish Power plc.
External appointments:
– HSBC Holdings plc, senior independent director, chair of the audit
committee and member of the risk committee and nomination & corporate
governance committee
New Non-Executive Director
On 11 February 2021, it was announced that Olaf Swantee would stand
for election by shareholders at the 2021 AGM. His biographical details can
be found below:
Olaf Swantee
Prospective Non-Executive Director
Skills and experience:
Olaf brings a wealth of communications expertise, has a strong track record of value
creation and has presided over a number of Europe’s leading telecoms businesses. He
is also passionate about technology and its potential to change society for the better.
Olaf was CEO of Sunrise Communications between 2016-2020 and transformed the
company’s brand, network and services to establish it as the quality challenger in the
Swiss market. Prior to that he was CEO of EE, where he successfully merged Orange UK
and T-Mobile.
External appointments:
– Mobile Zone, Chairman
Committee key
A
N
Audit and Risk Committee
R
Remuneration Committee
Nominations and
Governance Committee
Solid background signifies
Committee Chair
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Governance (continued)
Michel Demaré A R
Non-Executive Director
Tenure: 3 years
Skills and experience:
Amparo Moraleda A
Non-Executive Director
Tenure: 3 years
Skills and experience:
Michel brings extensive international finance, strategy and M&A experience to the
Amparo brings strong international technology experience to the Board from her
Board, gained during his 18-year career at Dow Chemical as CFO-Global Polyolefins &
previous role as chief executive officer of the international division of Iberdola and a
Elastomers Division, as CFO of Baxter International (Europe), and as CFO and head of
career spanning 20 years at IBM, where she held a number of positions across a range
global markets of ABB Group. He was the non-executive chairman of Syngenta until the
of global locations.
company was sold to ChemChina in 2017 and was the vice chairman of UBS Group AG
External appointments:
for 10 years.
External appointments:
– AstraZeneca PLC, non-executive director and chair of the remuneration
committee and member of the nomination and governance committee
and the audit committee
– Airbus Group, senior independent director, chair of nominations and
governance committee and remuneration committee and member of ethics &
compliance committee
– CaixaBank, non-executive director and chair of remuneration committee
– A.P. Moller - Maersk, non-executive director and member of the audit committee,
remuneration committee and technology and innovation committee
Dame Clara Furse DBE R
Non-Executive Director
Tenure: 6 years
Skills and experience:
Dame Clara brings to the Board a deep understanding of international capital markets,
regulation, service industries and business transformation developed from her previous
roles as chief executive officer of the London Stock Exchange Group plc and Credit
Lyonnais Rouse Ltd. Her financial proficiency is highly valued. In 2008 she was
appointed Dame Commander of the Order of the British Empire.
External appointments:
remuneration committee
– Amadeus IT Group SA, non-executive director and chair of nominations and
Renee James N R
Non-Executive Director
Tenure: 10 years
Skills and experience:
Renee brings comprehensive knowledge of the high technology sector developed
from her long career at Intel Corporation where she was president. She is currently the
chairman and CEO of Ampere Computing. Her extensive experience of international
management, technology and the development and implementation of corporate
strategy is an asset to the Board and the Committees of which she is a member.
External appointments:
– Oracle Corporation, non-executive director
– Citigroup Inc., non-executive director and member of risk management committee
and operations & technology committee
David Nish A
Non-Executive Director
Tenure: 5 years
Skills and experience:
David has wide-ranging operational and strategic experience as a senior leader and
has a strong understanding of financial and capital markets through his previous
directorships which include chief executive officer and chief financial officer of
Standard Life plc and chief financial officer of Scottish Power plc.
External appointments:
– HSBC Holdings plc, senior independent director, chair of the audit
committee and member of the risk committee and nomination & corporate
governance committee
New Non-Executive Director
On 11 February 2021, it was announced that Olaf Swantee would stand
for election by shareholders at the 2021 AGM. His biographical details can
be found below:
Olaf Swantee
Prospective Non-Executive Director
Skills and experience:
Olaf brings a wealth of communications expertise, has a strong track record of value
creation and has presided over a number of Europe’s leading telecoms businesses. He
is also passionate about technology and its potential to change society for the better.
Olaf was CEO of Sunrise Communications between 2016-2020 and transformed the
company’s brand, network and services to establish it as the quality challenger in the
Swiss market. Prior to that he was CEO of EE, where he successfully merged Orange UK
and T-Mobile.
External appointments:
– Mobile Zone, Chairman
Committee key
A
N
Audit and Risk Committee
R
Remuneration Committee
Nominations and
Governance Committee
Solid background signifies
Committee Chair
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Financials
Other information
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Other information
Roles and responsibilities of the Board
The Board’s role is to provide entrepreneurial leadership
of Vodafone within a framework of effective controls
which enables risks to be assessed and managed. The
Board establishes the Company’s purpose and values,
approves strategy, and satisfies itself that these and its
culture are aligned. It is responsible for ensuring the
necessary resources are in place for the Company
to meet its objectives and for measuring performance
against them. The Board is accountable for promoting
the long-term sustainable success of the Company,
generating value for shareholders and contributing
to wider society.
Operation of the Board and its Committees
The Board currently comprises the Non-Executive Chairman, two
Executive Directors and eight Non-Executive Directors. Our Non-Executive
Directors bring independent judgement, and wide and varied commercial
and financial experience to the Board and Committees. A summary of
each role can be found below.
The Matters Reserved for the Board and Committee terms of reference
were last reviewed in March 2021.
Matters reserved and terms of reference are available
on our website vodafone.com
Board meetings are structured to allow open discussions. At each
meeting the Directors are made aware of the key discussions and
decisions of the principal Committees by the respective Committee
Chairs. Minutes of Board and Committee meetings are circulated to all
Directors after each meeting. Details of the Board’s activities during the
year can be found on pages 71 and 72.
Chairman
– Leads the Board, sets each meeting agenda and ensures the Board
receives accurate, timely and clear information in order to monitor,
challenge, guide and take sound decisions;
– Promotes a culture of open debate between Executive and Non-
Executive Directors and holds meetings with the Non-Executive
Directors, without the Executive Directors present;
– Regularly meets with the Chief Executive and other senior
management to stay informed;
– Ensures effective communication with shareholders and
other stakeholders;
– Promotes high standards of corporate governance and
ensures Directors understand the views of the Company’s
shareholders and other key stakeholders, and the section 172
Companies Act 2006 duties;
– Promotes and safeguards the interests and reputation of the
Company; and
– Represents the Company to customers, suppliers, governments,
shareholders, financial institutions, the media, the community and
the public.
Senior Independent Director
– Provides a sounding board for the Chairman and acts as a trusted
intermediary for the Directors as required;
– Meets with the Non-Executive Directors (without the Chairman
present) when necessary and at least once a year to appraise the
Chairman’s performance and communicates the results to the
Chairman; and
– Together with the Nominations and Governance Committee, leads
an orderly succession process for the Chairman.
Non-Executive Directors
– Monitor and challenge the performance of management;
– Assist in development, approval and review of strategy;
– Review Group financial information and provide advice to
management;
– Engage with stakeholders and provide insight as to their views,
including in relation to workforce and the culture of Vodafone; and
– As part of the Nominations and Governance Committee, review the
succession plans for the Board and key members of senior management.
Workforce Engagement Lead
– Engages with the workforce in key regions where we operate,
answers direct questions from workforce-elected representatives,
and provides the Board with feedback on the content and outcome
of those discussions.
The Board
Responsible for the overall conduct of the Group’s business including our long-term success; setting our purpose; monitoring culture and
values; standards and strategic objectives; reviewing our performance; and maintaining positive dialogue with our stakeholders.
Audit and Risk Committee
Reviews the adequacy of the Group’s
system of internal control, including
the risk management framework
and related compliance activities.
Monitors the integrity of financial
statements, reviews significant
financial reporting judgements,
advises the Board on fair, balanced
and understandable reporting and
the long-term viability statement.
Nominations and
Governance Committee
Evaluates Board composition
and ensures Board diversity
and a balance of skills.
Reviews Board and Executive Committee
succession plans to maintain continuity
of skilled resource.
Oversees matters relating to
corporate governance.
Remuneration Committee
Sets, reviews and recommends
the policy on remuneration of
the Chairman, executives and
senior management team.
Monitors the implementation
of the Remuneration Policy.
Oversees general pay practices
across the Group.
ESG Committee *
Oversees the ESG programme,
purpose (Inclusion for All,
Planet and Digital Society)
and the social contract.
Monitors progress against
key performance indicators
and external ESG index results.
Oversees progress on ESG
commitments and targets.
Note:
* The Board approved the establishment of an ESG Committee on 11 May 2021.
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Governance (continued)
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Financials
Other information
Executive management
The Executive Committee is comprised of Nick Read,
Chief Executive, Margherita Della Valle, Chief Financial
Officer, a number of senior executives responsible
for global commercial operations, human resources,
technology, external affairs and legal, as well as the
Chief Executive Officers of our largest operating
companies in Germany, the UK, Italy, Spain,
Europe Cluster and Vodacom Group.
Click to find biographies for each member of the
Executive Committee: vodafone.com/exco
Executive Committee
Each year, the Executive Committee conducts a strategy review to
identify key strategic issues facing Vodafone to be presented to the Board.
The agreed strategy is then used as a basis for developing the upcoming
budget and three-year operating plans.
The Committee met 10 times during the year to consider the items noted
below. In addition, in response to the COVID-19 pandemic, additional
meetings were held weekly in the first part of FY21 to assess our response
to the critical needs of our business, people and communities throughout
the Group.
– Purpose and strategy;
– Updates on the Group’s financial performance;
– Commercial and business performance updates;
– Sustainable business strategy and social contract;
– Developments in our business and portfolio;
– Brexit and COVID-19;
– Talent and succession plan updates; and
– Updates and reports on health and safety matters.
A new Executive sub-committee, the Global Products Board, was
established during the year. This is led by Nick Read and is dedicated to
overseeing our global product strategy, helping to coordinate commercial
programmes by strategically evaluating capital allocation opportunities
and identifying those capable of achieving scale across the Group.
Chief Executive
– Provides leadership of the Company, including representing the
Company to customers, suppliers, governments, shareholders, financial
institutions, employees, the media, the community and the public and
enhances the Group’s reputation;
– Leads the Executive Directors and senior management team in running
the Group’s business, including chairing the Executive Committee;
– Develops and implements Group objectives and strategy having regard
to shareholders and other stakeholders;
– Recommends remuneration, terms of employment and succession
planning for the senior executive team;
– Manages the Group’s risk profile and ensures appropriate internal
controls are in place;
– Ensures compliance with legal, regulatory, corporate governance,
social, ethical and environmental requirements and best practice; and
– Ensures there are effective processes for engaging with,
communicating with, and listening to, employees and others working
for the Company.
Chief Financial Officer
– Supports the Chief Executive in developing and implementing the
Group strategy;
– Leads the global finance function and develops key finance talent;
– Ensures effective financial reporting, processes and controls are in place;
– Recommends the annual budget and long-term strategic and financial
plan; and
– Oversees Vodafone’s relationships with the investment community.
Company Secretary
– Ensures compliance with Board procedures and provides support
to the Chairman, to ensure Board effectiveness;
– Assists the Chairman by organising induction and training
programmes and ensures that all Directors have full and timely
access to all relevant information;
– Ensures the Board has high-quality information, adequate time and
appropriate resources in order to function effectively and efficiently; and
– Provides advice and keeps the Board updated on corporate
governance developments.
Chief Executive
Chief Financial Officer
Executive Committee
Focuses on strategy implementation, financial and competitive performance,
commercial and technological developments, succession planning
and organisational development.
Disclosure Committee
Oversees the accuracy and timeliness of Group disclosures and
approves controls and procedures in relation to the public disclosure
of financial information.
Risk and Compliance Committee
Assists the Executive Committee in fulfilling
its accountabilities with regard to
risk management and policy compliance.
Reputation and
Policy Steering Committee
Advises the Executive Committee on
reputational risks and policy matters.
Global Products Board
Supports the Executive Committee by providing
visibility of global product strategy and life-cycle
and identifies capital allocation opportunities.
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Executive management
Board activities and principal decisions
The Executive Committee is comprised of Nick Read,
Chief Executive, Margherita Della Valle, Chief Financial
Officer, a number of senior executives responsible
for global commercial operations, human resources,
technology, external affairs and legal, as well as the
Chief Executive Officers of our largest operating
companies in Germany, the UK, Italy, Spain,
Europe Cluster and Vodacom Group.
Click to find biographies for each member of the
Executive Committee: vodafone.com/exco
Executive Committee
Each year, the Executive Committee conducts a strategy review to
identify key strategic issues facing Vodafone to be presented to the Board.
Chief Executive
– Provides leadership of the Company, including representing the
Company to customers, suppliers, governments, shareholders, financial
institutions, employees, the media, the community and the public and
enhances the Group’s reputation;
– Leads the Executive Directors and senior management team in running
the Group’s business, including chairing the Executive Committee;
– Develops and implements Group objectives and strategy having regard
to shareholders and other stakeholders;
– Recommends remuneration, terms of employment and succession
planning for the senior executive team;
– Manages the Group’s risk profile and ensures appropriate internal
controls are in place;
– Ensures compliance with legal, regulatory, corporate governance,
social, ethical and environmental requirements and best practice; and
– Ensures there are effective processes for engaging with,
The agreed strategy is then used as a basis for developing the upcoming
communicating with, and listening to, employees and others working
budget and three-year operating plans.
for the Company.
The Committee met 10 times during the year to consider the items noted
Chief Financial Officer
below. In addition, in response to the COVID-19 pandemic, additional
meetings were held weekly in the first part of FY21 to assess our response
Group strategy;
– Supports the Chief Executive in developing and implementing the
to the critical needs of our business, people and communities throughout
– Leads the global finance function and develops key finance talent;
the Group.
– Purpose and strategy;
– Updates on the Group’s financial performance;
– Commercial and business performance updates;
– Sustainable business strategy and social contract;
– Developments in our business and portfolio;
– Brexit and COVID-19;
– Talent and succession plan updates; and
– Updates and reports on health and safety matters.
A new Executive sub-committee, the Global Products Board, was
established during the year. This is led by Nick Read and is dedicated to
overseeing our global product strategy, helping to coordinate commercial
programmes by strategically evaluating capital allocation opportunities
and identifying those capable of achieving scale across the Group.
– Ensures effective financial reporting, processes and controls are in place;
– Recommends the annual budget and long-term strategic and financial
– Oversees Vodafone’s relationships with the investment community.
plan; and
Company Secretary
– Ensures compliance with Board procedures and provides support
to the Chairman, to ensure Board effectiveness;
– Assists the Chairman by organising induction and training
programmes and ensures that all Directors have full and timely
access to all relevant information;
– Ensures the Board has high-quality information, adequate time and
appropriate resources in order to function effectively and efficiently; and
– Provides advice and keeps the Board updated on corporate
governance developments.
Chief Executive
Chief Financial Officer
Executive Committee
Disclosure Committee
Focuses on strategy implementation, financial and competitive performance,
Oversees the accuracy and timeliness of Group disclosures and
commercial and technological developments, succession planning
approves controls and procedures in relation to the public disclosure
and organisational development.
of financial information.
Risk and Compliance Committee
Assists the Executive Committee in fulfilling
its accountabilities with regard to
risk management and policy compliance.
Reputation and
Policy Steering Committee
Advises the Executive Committee on
reputational risks and policy matters.
Global Products Board
Supports the Executive Committee by providing
visibility of global product strategy and life-cycle
and identifies capital allocation opportunities.
Board activities were structured to oversee the first
phase of the Group’s strategy and develop the next
phase, to oversee our purpose and values, to review
financial performance and to oversee the management
of risks and internal controls. The key topics discussed
are set out below.
Additional information on principal decisions taken
by the Board, assessed as those decisions which are
material to the Group’s strategy, and a summary of
the interests of key stakeholders and likely impact
of decisions are shown in boxes.
Details of Vodafone’s key stakeholders and how the
Board engaged with them during the year is available
on pages 12 and 13.
Deeper customer engagement
Improved quality and experience of service
for our customers
Net Promoter Score
Targeted network capital allocation focused on the drivers of satisfaction
for consumer and business customers.
Customer churn and net additions
Understanding the response of customers to our revised commercial
offerings, which vary across markets, is crucial to developing the Board’s
understanding of performance against KPIs and the overall success of
strategic initiatives.
Understanding customers’ evolving needs
In addition to the above, the Board regularly received information from
Executive Committee members and senior managers to understand in
greater depth the evolving needs of consumers and business customers .
Network sharing
The Board reviewed a number of network sharing arrangements across
our major European markets.
Accelerating digital transformation
Strengthened digital channel capabilities
Digitalisation and transformation of sales and service
The Board considered Digital First sales channels and its implications for
the retail footprint, remote working arrangements and customer journeys.
Digital First: agile and culture
The Board received dedicated updates on the strategy for, and pace of,
change within the business as we digitalise our processes and promote a
culture that is passionate about Digital Society.
Improving asset utilisation
Improving the Group’s return on capital
Vantage Towers
During 2021, the Board regularly reviewed progress on the creation
of Vantage Towers, one of Europe’s largest tower companies. In
March 2021, the Board took a decision to sell 18.3% of the Group’s
interest in Vantage Towers AG on the Frankfurt stock exchange,
enabling the realisation of €2.3 billion value whilst retaining a
majority interest and management control.
Key stakeholder interests considered:
– Investors: executing on our strategy to improve asset utilisation
and focus on lowering debt
– Suppliers: building stronger and broader relationships
– People: encouraging talent and diversity
Decision-making:
Different options to monetise the newly created Vantage Towers
were presented to the Board. The Board acknowledged the interest
expressed by investors in the proposed IPO, since the sale would
realise value with the opportunity of reducing overall debt for the
Vodafone Group. The Frankfurt market was considered well-suited
for the European business.
It was considered desirable to retain management control in the near
term in order to progress the strategy for the newly created Vantage
Towers group.
Optimising the portfolio
Focus on two scale platforms in Europe and Africa
Integration of Liberty Global’s assets
The Board considered the key integration outcomes of the acquisition,
including synergies and stand-alone benefits and the commercial
performance of the local markets in Germany, the Czech Republic,
Hungary and Romania.
Vodafone Egypt
The Board agreed to sign a non-binding Memorandum of Understanding
with Saudi Telecom Company (‘stc’) regarding the sale of Vodafone’s
55% shareholding in Vodafone Egypt. Discussions with stc have since
been terminated.
Merger of Indus Towers with Bharti Infratel
The Board was kept informed on the regulatory clearance for the merger
of our Indus Towers assets with Bharti Infratel in India in November 2020.
TPG Telecom
The Board agreed the merger of Vodafone Hutchison Australia with TPG
Telecom, which completed in July 2020 and resulted in Vodafone owning
a 25.05% economic interest in the Australian listed company.
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Governance (continued)
Our people
Investing in our talent and skills
Employee voice – Spirit
Progress with our newly launched cultural programme, ‘The Spirit of
Vodafone’, was reported to, and monitored by, the Board. It was important
for the Board to capture the sentiment of the workforce and measure the
success of the programme.
Health and safety
The Board received reports on health and safety initiatives, considering
the wellbeing of the people working for and with us throughout the
Group. For incidents resulting in the death of an employee, the Board
requests detailed reports on the ongoing work being undertaken to
eliminate the risk of fatalities and work-related safety incidents.
Modern slavery
The Board monitors our compliance with the requirements of the UK
Modern Slavery Act 2015.
Financial strength
Revenue, cost, free cash flow and balance sheet
US bonds
As part of its oversight of our business’s long-term funding requirements,
the Board receives annual updates on activity related to our two bond
programmes; the US shelf programme listed on NASDAQ and the Euro
Medium Term Note programme listed in both London and Dublin, to
ensure cost efficient and dependable financial resources are available to
the business. The first tranche of mandatory convertible bond matured
in March 2021 and the Company issued a series of notes due between
November 2021 and January 2024.
Dividend
To support each dividend approved by the Board, detailed updates
are received from Group Investor Relations and Group Finance
relating to financial resilience, performance outlook and external
views and the Board has an opportunity to discuss those and other
relevant considerations.
Key stakeholder interests considered:
– Investors: whilst reliable cash returns are generally positive for
shareholders and attractive to prospective investors, the COVID-19
pandemic caused a divergence in views amongst institutional
investors. Some were supportive of businesses retaining cash to
protect themselves from the prolonged period of uncertainty,
whilst others preferred that cash returns be maintained
where appropriate.
– Governments and regulators: during COVID-19, the UK
government expressed concerns over the long-term viability of
businesses and encouraged businesses to consider retaining cash
to ‘weather the storm’.
Decision-making:
The concerns of our key stakeholders were considered by the Board.
The Board’s decision was supported by a robust assessment of the
position, performance and viability of the business carried out by
management. The Board was mindful that the Directors had continued
to adopt the going concern basis in preparing the annual report and
accounts and was also cognisant of available reserves to support
the dividend.
On 16 November 2020, we announced a dividend of 4.5 eurocents
per share and have recommended a dividend of 4.5 eurocents per
share to be paid on 6 August 2021. This was consistent with dividends
declared during FY20 and the expectations of our shareholders.
Other
System of internal control
Details of the operation of our internal risk and compliance
processes informed the Board’s discussions on cultural change
and operational matters.
Risk tolerance and risk management
The Board reviewed management’s identification and assessment
of the top 10 principal risks and their impact on strategy and
commercial initiatives.
Regulatory landscape
Executives provided regular and detailed updates on various regulatory
matters, including the classification of the telecommunications sector as
an ‘essential service’ during COVID-19, restrictions on our key suppliers,
and spectrum auction structures.
COVID-19
The COVID-19 global pandemic has created an unprecedented
challenge for the global economy. The Board was provided with
comprehensive updates on the financial and business impact on
Vodafone and the changes to the regulatory environment. The Board
endorsed management’s five-point plan which was launched in Spring
2020 to contribute to public efforts to respond to the COVID-19 pandemic.
The Board kept under review the action taken by management to protect
the health and safety of our people and continue to provide critical
services to our customers, the emergency services and wider society.
Brexit
The Board considered the likelihood and potential impact of a no-deal
Brexit on the Company and its stakeholders, with particular focus on
Vodafone UK and Business. Following the withdrawal of the United
Kingdom from the European Union on 31 January 2021, the Board
continued to monitor any potential impact on our business.
ESG Committee
On 11 May 2021, the Board formally approved the establishment of
a new Committee of the Board, the ESG Committee. The objectives
of the ESG Committee include the oversight of Vodafone’s ESG
programme: Purpose (Inclusion for All; Planet; and Digital Society),
sustainability and responsible business practices, as well as Vodafone’s
contribution to the societies we operate in under the social contract.
The Committee also monitors progress against key performance
indicators and external ESG index results.
Key stakeholder interests considered:
– Investors: strong ESG governance has become a key requirement
of an ESG programme.
– Governments and regulators: ensure compliance with local and
international legal and regulatory obligations.
– Local Communities and NGOs: ESG matters affect the
day-to-day lives of the people in our local communities.
– Suppliers and customers: seek high ethical standards to be
upheld end-to-end in the supply chain.
– Employees: seek protection from health and safety risks, but also
take pride in being part of our commitment to ESG matters.
Decision-making:
The Board believed that the ESG Committee will promote the
long-term success of Vodafone, for the benefit of its members as
a whole and our key stakeholders, by providing the Board with
enhanced oversight of ESG matters.
The establishment of a new ESG Committee is a strong signal to all
our key stakeholders, and wider society, of the strength of Vodafone’s
commitment to its ESG programme and goals, and enhances the
commitments made in the social contract.
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Effective use of our skills and experience
and improving our performance
Summary of findings
Progress against 2020 actions
The evaluation determined that Jean-François’ succession to the Chairman
role had been successfully completed and the comprehensive induction
could be improved only with personal visits to Vodafone’s main operating
locations once travel restrictions are eased.
Presentations to the Board on regulatory developments and consumer
behaviours had enhanced the Board’s understanding of emerging risks
and opportunities for Vodafone.
The Board’s Strategy meeting could not be held in person because of
the COVID-19 pandemic but was successfully held via video conference
and the Board benefited from receiving a range of presentations from
senior managers.
Actions for the FY22 financial year
The 2021 Board review reported that virtual working had somewhat
blunted the liveliness of discussions and the Directors, recognising the
need to continue to improve the quality of conversations, agreed with
Consilium’s recommendations for:
– more and different forms of engagement between Directors, with and
without the Executive Directors;
– refreshing the Board’s composition and reviewing the mix of skills and
experience on the Board in light of the next phase of strategy;
– continuing to ensure Board agendas concentrate on the specifics of
organic improvement and growth and their underlying drivers; and
– understanding closely the organisation’s capacity, capabilities and
cultural change and monitoring progress on new proposition
developments, ESG and culture change.
Details of the next Board evaluation and progress made on the above
actions will be reported in the 2022 Governance Report.
The Board recognises that it needs to continually
monitor and improve its performance. This is
achieved through the annual performance evaluation,
full induction of new Board members and ongoing
Board development. The conclusions of this year’s
review have been positive and confirmed that the
Board remains effective.
Process undertaken for our Board evaluation
Since the appointment of a new Chairman of the Board in 2020, the
Board decided to have an externally facilitated review of its effectiveness
early in the new Chairman’s tenure. Therefore it appointed Consilium
Limited, an independent board review firm, to conduct the 2021
Board evaluation. Consilium had conducted the last externally
facilitated review in 2019. The Board asked Consilium to assess
whether the recommendations it had made in its 2019 review had
been implemented and to make a new assessment of the Board’s
current effectiveness. Consilium is considered fully independent as
it does not have a relationship with the Board or any Director.
Consilium took input from the Chairman, Senior Independent Director,
Chief Executive and Company Secretary on the design of the review
process and the areas to be covered by the questionnaire that was used
to gather input to enable a rigorous review of the Board as a whole, its
Committees and individual Directors’ contributions to Board discussions
and decision-making. The objectives of the review were to provide an
assessment of Vodafone Group’s Board effectiveness and governance.
A tailored Board questionnaire was compiled to gather and distil feedback.
Consilium collated the responses from Directors, held interviews with
selected Directors and the Company Secretary, made an independent
assessment of the effectiveness of the Board and presented a report on
its findings and recommendations to the Board which was considered at
Board and Committee meetings in March 2021.
The evaluation was designed in part to evaluate the progress made on the
four actions identified by the 2020 evaluation. Those were:
– Developing the Board’s understanding of relevant regulatory
authorities and further attention on customers.
– The effective induction of Jean-François van Boxmeer and seamless
transfer of the Chairman role.
– A better understanding of customer insights and the development of
its understanding and oversight of Vodafone Business.
– Enhancing the Board’s Strategy meeting.
72
Vodafone Group Plc
Annual Report 2021
Governance (continued)
Our people
Investing in our talent and skills
Employee voice – Spirit
Progress with our newly launched cultural programme, ‘The Spirit of
Vodafone’, was reported to, and monitored by, the Board. It was important
for the Board to capture the sentiment of the workforce and measure the
success of the programme.
Health and safety
The Board received reports on health and safety initiatives, considering
the wellbeing of the people working for and with us throughout the
Group. For incidents resulting in the death of an employee, the Board
requests detailed reports on the ongoing work being undertaken to
eliminate the risk of fatalities and work-related safety incidents.
Modern slavery
Modern Slavery Act 2015.
The Board monitors our compliance with the requirements of the UK
Financial strength
Revenue, cost, free cash flow and balance sheet
US bonds
As part of its oversight of our business’s long-term funding requirements,
the Board receives annual updates on activity related to our two bond
programmes; the US shelf programme listed on NASDAQ and the Euro
Medium Term Note programme listed in both London and Dublin, to
ensure cost efficient and dependable financial resources are available to
the business. The first tranche of mandatory convertible bond matured
in March 2021 and the Company issued a series of notes due between
November 2021 and January 2024.
Other
System of internal control
Details of the operation of our internal risk and compliance
processes informed the Board’s discussions on cultural change
and operational matters.
Risk tolerance and risk management
The Board reviewed management’s identification and assessment
of the top 10 principal risks and their impact on strategy and
commercial initiatives.
Regulatory landscape
Executives provided regular and detailed updates on various regulatory
matters, including the classification of the telecommunications sector as
an ‘essential service’ during COVID-19, restrictions on our key suppliers,
and spectrum auction structures.
COVID-19
The COVID-19 global pandemic has created an unprecedented
challenge for the global economy. The Board was provided with
comprehensive updates on the financial and business impact on
Vodafone and the changes to the regulatory environment. The Board
endorsed management’s five-point plan which was launched in Spring
2020 to contribute to public efforts to respond to the COVID-19 pandemic.
The Board kept under review the action taken by management to protect
the health and safety of our people and continue to provide critical
services to our customers, the emergency services and wider society.
Brexit
The Board considered the likelihood and potential impact of a no-deal
Brexit on the Company and its stakeholders, with particular focus on
Vodafone UK and Business. Following the withdrawal of the United
Kingdom from the European Union on 31 January 2021, the Board
continued to monitor any potential impact on our business.
Dividend
ESG Committee
To support each dividend approved by the Board, detailed updates
On 11 May 2021, the Board formally approved the establishment of
are received from Group Investor Relations and Group Finance
relating to financial resilience, performance outlook and external
a new Committee of the Board, the ESG Committee. The objectives
of the ESG Committee include the oversight of Vodafone’s ESG
views and the Board has an opportunity to discuss those and other
programme: Purpose (Inclusion for All; Planet; and Digital Society),
relevant considerations.
Key stakeholder interests considered:
– Investors: whilst reliable cash returns are generally positive for
shareholders and attractive to prospective investors, the COVID-19
sustainability and responsible business practices, as well as Vodafone’s
contribution to the societies we operate in under the social contract.
The Committee also monitors progress against key performance
indicators and external ESG index results.
pandemic caused a divergence in views amongst institutional
Key stakeholder interests considered:
investors. Some were supportive of businesses retaining cash to
– Investors: strong ESG governance has become a key requirement
protect themselves from the prolonged period of uncertainty,
of an ESG programme.
whilst others preferred that cash returns be maintained
where appropriate.
– Governments and regulators: during COVID-19, the UK
government expressed concerns over the long-term viability of
businesses and encouraged businesses to consider retaining cash
to ‘weather the storm’.
Decision-making:
The concerns of our key stakeholders were considered by the Board.
The Board’s decision was supported by a robust assessment of the
position, performance and viability of the business carried out by
management. The Board was mindful that the Directors had continued
to adopt the going concern basis in preparing the annual report and
accounts and was also cognisant of available reserves to support
the dividend.
On 16 November 2020, we announced a dividend of 4.5 eurocents
per share and have recommended a dividend of 4.5 eurocents per
share to be paid on 6 August 2021. This was consistent with dividends
declared during FY20 and the expectations of our shareholders.
– Governments and regulators: ensure compliance with local and
international legal and regulatory obligations.
– Local Communities and NGOs: ESG matters affect the
day-to-day lives of the people in our local communities.
– Suppliers and customers: seek high ethical standards to be
upheld end-to-end in the supply chain.
– Employees: seek protection from health and safety risks, but also
take pride in being part of our commitment to ESG matters.
Decision-making:
The Board believed that the ESG Committee will promote the
long-term success of Vodafone, for the benefit of its members as
a whole and our key stakeholders, by providing the Board with
enhanced oversight of ESG matters.
The establishment of a new ESG Committee is a strong signal to all
our key stakeholders, and wider society, of the strength of Vodafone’s
commitment to its ESG programme and goals, and enhances the
commitments made in the social contract.
74
Vodafone Group Plc
Annual Report 2021
Governance (continued)
Strategic report
Governance
Financials
Other information
Nominations and Governance Committee
The Nominations and Governance Committee
(‘the Committee’) continues to focus on evaluating the
composition of the Board. The Committee ensures that
the Board is comprised with an appropriate balance of
skills, knowledge, experience and diversity so that it is
effective in discharging its responsibilities and in having
oversight of all matters relating to corporate governance.
Chairman
Jean-François van Boxmeer
Members
Sir Crispin Davis
Valerie Gooding
Renee James
Key Responsibilities
– Assessing the composition, structure and size of the Board and its
Committees and leading the process for appointments to the Board;
– Succession planning for the Board and Executive Committee, taking
into account diversity and the need for an orderly succession;
– Overseeing the performance evaluation of the Board, its Committees
and individual Directors; and
– Monitoring developments in all matters relating to corporate
governance, bringing any issues to the attention of the Board.
The Committee is comprised solely of independent Non-Executive
Directors. The Committee had four scheduled meetings during the
year which were fully attended by all members.
Due to the COVID-19 pandemic, Committee meetings were attended
virtually by Committee members with other individuals and external
advisers invited to attend all or part of the meetings as appropriate. The
Committee’s key areas for its focus in the coming year are set out below.
Key focus for the year
The key areas of focus for the next year:
– The completion of Jean-François van Boxmeer’s induction;
– Subject to shareholder approval, the onboarding and induction of
Olaf Swantee;
– Board and Executive Committee succession planning in order to
maintain their necessary balance of skills, knowledge and experience
to remain effective;
– Continuing to review Board independence and ensuring Directors
have sufficient time to fulfil their Board responsibilities;
– Continuing to monitor compliance with the Code and future
regulatory updates.
Letter from Committee Chairman
On behalf of the Board, I am pleased to present my first Nominations and
Governance Committee Report for the year ended 31 March 2021. This
past year, the main focus of the Committee has been Board and Executive
Committee composition, succession planning and corporate governance
matters, with a continued focus on the appointment of Non-Executive
Directors with telecoms and technology expertise. I joined the Board
on 28 July 2020 and was appointed Chair of the Board and joined the
Committee with effect from 3 November 2020.
As Chairman of the Committee, I take an active role in overseeing
the progress made towards improving diversity on the Board and
the Executive Committee. Succession planning and the appointment
process are key in promoting diversity in a way that is consistent with
the long-term strategy of the Group. The Committee ensures we have
sufficiently diverse, deep and broad expertise on the Board.
Our commitment to diversity and technology skills extends beyond the
Board and Executive Committee. The Committee reviews initiatives which
aim to develop the talent pipeline.
Further details of our programmes to manage talent can be found
on page 22
Changes to the Board and Executive Committee
On 27 July 2020, David Thodey stepped down from the Board.
Following the AGM and effective from 28 July 2020, I joined the Board
as a Non-Executive Director, becoming Chairman on 3 November 2020
following Gerard Kleisterlee’s resignation after 10 years of service.
I am pleased that shareholders will have the opportunity to appoint Olaf
Swantee as a new Non-Executive Director at the AGM on 27 July 2021.
Olaf has extensive experience of the telecommunications sector and a
consistent record of creating shareholder value.
Renee James will not be standing for re-election at the AGM on
27 July 2021. Over her 10-year tenure, Renee has provided invaluable
expertise and contribution to the Board and as a Committee member.
On behalf of the Board I would like to extend my gratitude and thanks
to Renee.
The Committee is regularly informed on succession planning and
changes on the membership of the Executive Committee. During the year
the following changes were made:
– On 1 November 2020 Colman Deegan was appointed as CEO
Vodafone Spain and a member of the Executive Committee replacing
Antonio Coimbra.
– Effective 15 February 2021 Nick Jeffery resigned as CEO of Vodafone
UK and a member of the Executive Committee. On the same date,
Ahmed Essam became CEO of Vodafone UK, retaining his place on
the Executive Committee, and Alex Froment-Curtil became Group
Chief Commercial Officer and joined the Executive Committee.
Assessment of the independence of the
Non-Executive Directors
All Non-Executive Directors have submitted themselves for re-election at
the 2021 AGM, other than Renee James who will retire from the Board at
the 2021 AGM.
In accordance with the Code, the independence of all the Non-Executive
Directors was considered by the Committee, including the circumstances
for Gerard Kleisterlee and Renee James’ tenures exceeding nine years
to support succession planning and maintain diversity on the Board. All
Non-Executive Directors are considered independent and they continue to
make independent contributions and effectively challenge management.
The Executive Directors’ service contracts and Non-Executive Directors’
appointment letters are available for inspection at our registered office
and will be available on display at the 2021 AGM.
74
Vodafone Group Plc
Annual Report 2021
Governance (continued)
Nominations and Governance Committee
The Nominations and Governance Committee
(‘the Committee’) continues to focus on evaluating the
composition of the Board. The Committee ensures that
the Board is comprised with an appropriate balance of
skills, knowledge, experience and diversity so that it is
effective in discharging its responsibilities and in having
oversight of all matters relating to corporate governance.
Chairman
Jean-François van Boxmeer
Members
Sir Crispin Davis
Valerie Gooding
Renee James
Key Responsibilities
– Assessing the composition, structure and size of the Board and its
Committees and leading the process for appointments to the Board;
– Succession planning for the Board and Executive Committee, taking
into account diversity and the need for an orderly succession;
– Overseeing the performance evaluation of the Board, its Committees
and individual Directors; and
– Monitoring developments in all matters relating to corporate
governance, bringing any issues to the attention of the Board.
The Committee is comprised solely of independent Non-Executive
Directors. The Committee had four scheduled meetings during the
year which were fully attended by all members.
to Renee.
Due to the COVID-19 pandemic, Committee meetings were attended
virtually by Committee members with other individuals and external
advisers invited to attend all or part of the meetings as appropriate. The
Committee’s key areas for its focus in the coming year are set out below.
Key focus for the year
The key areas of focus for the next year:
– The completion of Jean-François van Boxmeer’s induction;
– Subject to shareholder approval, the onboarding and induction of
– Board and Executive Committee succession planning in order to
maintain their necessary balance of skills, knowledge and experience
Olaf Swantee;
to remain effective;
– Continuing to review Board independence and ensuring Directors
have sufficient time to fulfil their Board responsibilities;
– Continuing to monitor compliance with the Code and future
regulatory updates.
Letter from Committee Chairman
On behalf of the Board, I am pleased to present my first Nominations and
Governance Committee Report for the year ended 31 March 2021. This
past year, the main focus of the Committee has been Board and Executive
Committee composition, succession planning and corporate governance
matters, with a continued focus on the appointment of Non-Executive
Directors with telecoms and technology expertise. I joined the Board
on 28 July 2020 and was appointed Chair of the Board and joined the
Committee with effect from 3 November 2020.
As Chairman of the Committee, I take an active role in overseeing
the progress made towards improving diversity on the Board and
the Executive Committee. Succession planning and the appointment
process are key in promoting diversity in a way that is consistent with
the long-term strategy of the Group. The Committee ensures we have
sufficiently diverse, deep and broad expertise on the Board.
Our commitment to diversity and technology skills extends beyond the
Board and Executive Committee. The Committee reviews initiatives which
aim to develop the talent pipeline.
Further details of our programmes to manage talent can be found
on page 22
Changes to the Board and Executive Committee
On 27 July 2020, David Thodey stepped down from the Board.
Following the AGM and effective from 28 July 2020, I joined the Board
as a Non-Executive Director, becoming Chairman on 3 November 2020
following Gerard Kleisterlee’s resignation after 10 years of service.
I am pleased that shareholders will have the opportunity to appoint Olaf
Swantee as a new Non-Executive Director at the AGM on 27 July 2021.
Olaf has extensive experience of the telecommunications sector and a
consistent record of creating shareholder value.
Renee James will not be standing for re-election at the AGM on
27 July 2021. Over her 10-year tenure, Renee has provided invaluable
expertise and contribution to the Board and as a Committee member.
On behalf of the Board I would like to extend my gratitude and thanks
The Committee is regularly informed on succession planning and
changes on the membership of the Executive Committee. During the year
the following changes were made:
– On 1 November 2020 Colman Deegan was appointed as CEO
Vodafone Spain and a member of the Executive Committee replacing
Antonio Coimbra.
– Effective 15 February 2021 Nick Jeffery resigned as CEO of Vodafone
UK and a member of the Executive Committee. On the same date,
Ahmed Essam became CEO of Vodafone UK, retaining his place on
the Executive Committee, and Alex Froment-Curtil became Group
Chief Commercial Officer and joined the Executive Committee.
Assessment of the independence of the
Non-Executive Directors
All Non-Executive Directors have submitted themselves for re-election at
the 2021 AGM, other than Renee James who will retire from the Board at
the 2021 AGM.
In accordance with the Code, the independence of all the Non-Executive
Directors was considered by the Committee, including the circumstances
for Gerard Kleisterlee and Renee James’ tenures exceeding nine years
to support succession planning and maintain diversity on the Board. All
Non-Executive Directors are considered independent and they continue to
make independent contributions and effectively challenge management.
The Executive Directors’ service contracts and Non-Executive Directors’
appointment letters are available for inspection at our registered office
and will be available on display at the 2021 AGM.
Strategic report
Governance
Financials
Other information
75
Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Management of conflicts of interest
The Companies Act 2006 provides that directors have a duty to avoid a
situation in which they have or may have a direct or indirect interest that
conflicts or might conflict with the interests of the Company. This duty is
in addition to the existing duty owed to the Company to disclose to the
Board any interest in a transaction or arrangement under consideration
by the Company.
Our Directors must report any changes to their commitments to the
Board, immediately notify the Company of actual or potential conflicts
or a change in circumstances relating to an existing authorisation and
complete an annual conflicts questionnaire. Any conflicts or potential
conflicts identified are considered and, as appropriate, authorised by the
Board in accordance with the Company’s Articles of Association. A register
of authorised conflicts is also reviewed periodically.
The Committee and the Board are satisfied that the external commitments
of the Non-Executive Directors and of me, your Chairman, do not conflict
with our duties and commitments as Directors of the Company, and
that each Non-Executive Director is able to dedicate sufficient time to
the Company’s affairs. During the financial year, the Board noted that
Sanjiv Ahuja, who is the Chairman of Tillman Global Holdings (‘Tillman’)
which provides tower/fibre constructions ownership and maintenance,
has a potential conflict of interest which has arisen as a result of Tillman
operating in Europe where Vantage Towers also operates. The conflict
of interest has been, and will continue to be, monitored and managed
by Mr Ahuja not receiving materials or taking part in decisions relating to
the Company’s interest in Vantage Towers or towers matters generally.
The Committee is comfortable that it has adequate measures in place
to manage and mitigate any actual or potential conflicts of interests that
may arise in the future.
Board evaluation
In accordance with the Code, Vodafone conducts an annual evaluation
of the performance of Board and Board Committee, which every Director
engages in. This year an external evaluation took place; the outcome of
the evaluation and the actions to be addressed during the financial year
ending 31 March 2021 can be found on page 73.
Time commitment
In accordance with the Code, the Committee actively reviews the time
commitments of the Board. All Directors are engaged in providing their
external commitments to establish that they have sufficient time to meet
their Board responsibilities. The Committee is satisfied that the Board does
meet this requirement and all Directors provide constructive challenge,
strategic guidance and hold the management to account.
Succession planning
An overview of my search and induction process can be found on
page 63. The search and appointment process for your new Chairman
began in 2019 via a sub-committee of the Committee, led by our
Senior Independent Director, Valerie Gooding. Two external search
consultancies were engaged to support, MWM Consulting and Spencer
Stuart (both have no other connections with Vodafone or our Directors).
The sub-committee recommended to the Board that I be appointed
because it had concluded that I enhanced the mix of diversity, skills and
experience for the Board, due to my extensive international experience,
particularly across Europe and Africa, and for my expertise at Heineken
for managing transformation and creating shareholder value.
The Committee monitors the length of tenure and the skills and
experience of the Non-Executive Directors to assist in succession
planning. Details of the length of tenure of each Director and summary of
the skills and experience of the Non-Executives can be found on pages 67
and 68. The Committee is confident that the Board has the necessary mix
of skills and experience to contribute to the Company’s strategic objectives.
Diversity
In line with Vodafone’s Board Diversity Policy, the Committee is firmly
committed to supporting diversity and inclusion in the boardroom in
compliance with the Code and acknowledges the importance of diversity
and inclusion to the effective functioning of the Board.
As set out in our Board Diversity Policy, Vodafone’s long-term ambition is
to increase diversity on our Board in all its forms. The Committee annually
reviews and agrees the Board Diversity Policy and monitors the progress
made at Board and senior management levels during the financial year.
For the technology sector to reach its full social and economic potential
it needs to more fairly reflect the world in which we operate. Diversity
at Vodafone extends beyond the Board to the global workforce. The
Committee has been and continues to monitor Vodafone’s compliance
with targets and best practice recommendations set for gender diversity
by the Hampton-Alexander Review and for ethnic diversity by the
Parker Review.
The Hampton-Alexander Review recommended that by 2020 there
would be at least 33% female representation at the Board, Executive
Committee positions and direct reports of the Executive Committee
(the ‘Senior Leadership Team’). We are pleased to report that as at
31 March 2021, five women and six men served on the Board, which
meant that 45.5% of our Board were female. Our Executive Committee
has four positions held by women (28.6%). In the Senior Leadership
Team, 50 roles are held by women (30.7%), which is an increase from
2020 (28.9%). We are confident that the initiatives detailed on page 37
will support us to reach the Hampton-Alexander Review target and to
achieve our ambition to have 40% of women holding management
and leadership roles by 2030.
The Committee is mindful of the recommendation of the Parker Review
Report to have at least one Director from a non-white ethnic minority by
2021 and is satisfied that our Board currently meets this recommendation,
with 9.1% of the Board being ethnically diverse. Vodafone has implemented
a self-declaration process on diversity characteristics including ethnicity
on our people system to improve visibility in this area and inform decisions
on actions required to support ethnic diversity within the organisation.
Read more about how we build a diverse and inclusive
organisation on pages 34 to 37
Read more about our recognition in diversity indexes
on pages 37
Governance
The Committee continues to review action taken to comply with the
Code and other legal and regulatory obligations during the year. The
Committee received regular governance updates and is satisfied that
Vodafone has complied with the Code in full during the year.
The Matters Reserved for the Board and the terms of reference of the
Nominations and Governance Committee, the Audit and Risk Committee
and the Remuneration Committee were reviewed in March 2021.
Jean-François van Boxmeer
On behalf of the Nominations and Governance Committee
18 May 2021
Scan or click to watch our Chairman share his views on
his first months at Vodafone:
investors.vodafone.com/videos-chair
76
Vodafone Group Plc
Annual Report 2021
Governance (continued)
Strategic report
Governance
Financials
Other information
Audit and Risk Committee
The Committee plays a key role in the governance
of the Group’s financial reporting, risk management,
internal control and assurance processes and the
external audit. Cyber threat and information security
remained a key focus for the Committee along with
the impact of COVID-19 and the IPO readiness of
Vantage Towers prior to its listing on 18 March 2021.
Chairman and financial expert
David Nish
Members
Sanjiv Ahuja
Michel Demaré
Amparo Moraleda
I am pleased to present our report to you as Chair of the Audit and Risk
Committee. This report provides an overview of how the Committee
operates, an insight into the Committee’s activities and its role in ensuring
the integrity of the Group’s published financial information and the
effectiveness of its risk management, controls and related processes.
The membership of the Committee changed during the year. Sir Crispin
Davis stepped down to become a member of the Remuneration Committee.
I would like to thank Sir Crispin for his significant contribution to the work
of the Committee.
This year, the Committee focused on the following areas:
– Cyber threat and information security. External threats in this area
continue to grow. The Committee met with the cyber security
leadership team twice during the year to challenge the cyber
security operating model and to ensure the security risks across
the IT landscape are assessed and managed;
– Monitored progress before the initial public offering (‘IPO’) of Vantage
Towers A.G. on 18 March 2021;
– The ongoing impacts of COVID-19 on Group risk management,
cash flow and funding, accounting, disclosure and financial controls;
– Ongoing assessment of the risk and control environments at selected
business units; and
– Deep-dive reviews with management on a range of topics related to
the Committee’s accountabilities and which are summarised in this
report on page 81.
The Committee met seven times during the year, five times as part of
its regular schedule of meetings and two supplementary meetings in
December and February to review the IPO readiness of Vantage Towers.
The attendance by members at Committee meetings can be seen on
page 62. The external auditor is invited to each meeting.
Each regular meeting included reviews of risk and compliance related
matters, although these areas received particular focus at the January
meeting. At the September and March meetings we considered the
anticipated matters impacting the Group’s half-year and year-end
reporting and approved the principal and emerging risks. In November
and May, we concluded our risk assessment and advised the Board of
the outcome prior to the release of the Group’s half-year and year-end
financial results.
Our external auditor, Ernst & Young LLP (‘EY’), completed its second
annual audit. EY continues to provide robust challenge to management
and provides its independent view to the Committee on specific financial
reporting judgements and the control environment.
Every three years the Board appoints an external organisation to perform
an independent review of the Committee to evaluate its performance.
The last review was performed in March 2019 and concluded that the
Board members considered the Committee to be thorough and fully
effective in meeting its objectives. A finding of the Board effectiveness
review conducted by Consilium in March 2021 was that the Committee
was operating effectively.
David Nish
On behalf of the Audit and Risk Committee
Scan or click to watch the Chair of the Audit
and Risk Committee explain his role:
investors.vodafone.com/videos-arc
Objective
The Committee’s objective is the provision of effective governance
over the appropriateness of financial reporting of the Group, including
the adequacy of related disclosures, the performance of both the
Internal Audit function and the external auditor and oversight of
the Group’s systems of internal control, business risks and related
compliance activities.
Key responsibilities
The responsibilities of the Committee are to:
– Monitor the integrity of the financial statements, including the review
of significant financial reporting judgements;
– Provide advice to the Board on whether the Annual Report is fair,
balanced and understandable and on the appropriateness of the
long-term viability statement;
– Review and monitor the external auditor’s independence and
objectivity and the effectiveness of the external audit;
– Review the system of internal financial control and compliance with
section 404 of the US Sarbanes-Oxley Act;
– Review and provide advice to the Board on the approval of the Group’s
US annual report on Form 20-F;
– Monitor the activities and review the effectiveness of the Internal Audit
function; and
– Monitor the Group’s risk management system, review of the principal
risks and the management of those risks.
Click to read the Committee’s terms of reference:
vodafone.com/board
Committee governance
Committee meetings normally take place the day before Board
meetings. The Chair reports to the Board, as a separate agenda item,
on the activity of the Committee and matters of particular relevance.
The Board has access to the Committee’s papers and receives copies
of the Committee minutes.
The Committee regularly meets separately with the external auditor,
the Chief Financial Officer and the Group Audit Director without others
being present. The Chair also meets regularly with the external lead audit
partner throughout the year outside of the formal Committee process.
76
Vodafone Group Plc
Annual Report 2021
Governance (continued)
Audit and Risk Committee
The Committee plays a key role in the governance
of the Group’s financial reporting, risk management,
internal control and assurance processes and the
external audit. Cyber threat and information security
remained a key focus for the Committee along with
the impact of COVID-19 and the IPO readiness of
Vantage Towers prior to its listing on 18 March 2021.
Chairman and financial expert
and provides its independent view to the Committee on specific financial
reporting judgements and the control environment.
Every three years the Board appoints an external organisation to perform
an independent review of the Committee to evaluate its performance.
The last review was performed in March 2019 and concluded that the
Board members considered the Committee to be thorough and fully
effective in meeting its objectives. A finding of the Board effectiveness
review conducted by Consilium in March 2021 was that the Committee
was operating effectively.
David Nish
Members
Sanjiv Ahuja
Michel Demaré
Amparo Moraleda
I am pleased to present our report to you as Chair of the Audit and Risk
Committee. This report provides an overview of how the Committee
operates, an insight into the Committee’s activities and its role in ensuring
the integrity of the Group’s published financial information and the
effectiveness of its risk management, controls and related processes.
The membership of the Committee changed during the year. Sir Crispin
Davis stepped down to become a member of the Remuneration Committee.
I would like to thank Sir Crispin for his significant contribution to the work
of the Committee.
This year, the Committee focused on the following areas:
– Cyber threat and information security. External threats in this area
continue to grow. The Committee met with the cyber security
leadership team twice during the year to challenge the cyber
security operating model and to ensure the security risks across
the IT landscape are assessed and managed;
– Monitored progress before the initial public offering (‘IPO’) of Vantage
Towers A.G. on 18 March 2021;
– The ongoing impacts of COVID-19 on Group risk management,
cash flow and funding, accounting, disclosure and financial controls;
– Ongoing assessment of the risk and control environments at selected
– Deep-dive reviews with management on a range of topics related to
the Committee’s accountabilities and which are summarised in this
business units; and
report on page 81.
The Committee met seven times during the year, five times as part of
its regular schedule of meetings and two supplementary meetings in
December and February to review the IPO readiness of Vantage Towers.
The attendance by members at Committee meetings can be seen on
page 62. The external auditor is invited to each meeting.
Each regular meeting included reviews of risk and compliance related
matters, although these areas received particular focus at the January
meeting. At the September and March meetings we considered the
anticipated matters impacting the Group’s half-year and year-end
reporting and approved the principal and emerging risks. In November
and May, we concluded our risk assessment and advised the Board of
the outcome prior to the release of the Group’s half-year and year-end
financial results.
Our external auditor, Ernst & Young LLP (‘EY’), completed its second
annual audit. EY continues to provide robust challenge to management
David Nish
On behalf of the Audit and Risk Committee
Scan or click to watch the Chair of the Audit
and Risk Committee explain his role:
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Objective
The Committee’s objective is the provision of effective governance
over the appropriateness of financial reporting of the Group, including
the adequacy of related disclosures, the performance of both the
Internal Audit function and the external auditor and oversight of
the Group’s systems of internal control, business risks and related
compliance activities.
Key responsibilities
The responsibilities of the Committee are to:
– Monitor the integrity of the financial statements, including the review
of significant financial reporting judgements;
– Provide advice to the Board on whether the Annual Report is fair,
balanced and understandable and on the appropriateness of the
long-term viability statement;
– Review and monitor the external auditor’s independence and
objectivity and the effectiveness of the external audit;
– Review the system of internal financial control and compliance with
section 404 of the US Sarbanes-Oxley Act;
– Review and provide advice to the Board on the approval of the Group’s
US annual report on Form 20-F;
– Monitor the activities and review the effectiveness of the Internal Audit
function; and
– Monitor the Group’s risk management system, review of the principal
risks and the management of those risks.
Click to read the Committee’s terms of reference:
vodafone.com/board
Committee governance
Committee meetings normally take place the day before Board
meetings. The Chair reports to the Board, as a separate agenda item,
on the activity of the Committee and matters of particular relevance.
The Board has access to the Committee’s papers and receives copies
of the Committee minutes.
The Committee regularly meets separately with the external auditor,
the Chief Financial Officer and the Group Audit Director without others
being present. The Chair also meets regularly with the external lead audit
partner throughout the year outside of the formal Committee process.
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The Chair is designated as the financial expert on the Committee for the
purposes of the US Sarbanes-Oxley Act and the UK Corporate Governance
Code. The Committee continues to have competence relevant to
the sector in which the Group operates. The skills and experience of
Committee members is detailed on pages 67 and 68.
Financial reporting
The Committee’s primary responsibility in relation to the Group’s
financial reporting is to review, with management and the external
auditors, the appropriateness of the half-year and annual consolidated
financial statements. The Committee focuses on:
COVID-19
The COVID-19 pandemic continues to have a range of implications on risk
management and corporate reporting in the year. The key considerations
are summarised below.
Principal and emerging risks
The impact of COVID-19 has been accounted for in the assessment of the
Group’s principal and emerging risks and uncertainties.
Corporate governance
The financial close process and external audit
As restrictions regarding social distancing and travel remained mostly in
place during the year, the Group’s employees involved in the preparation
of ongoing management information, financial reporting and supporting
the external audit continue to work from home, as do the external auditor
teams. Our second year-end close process under restrictions benefited
from the increase in our capabilities and the efficiencies we have
developed over the year, working away from our offices.
Internal controls systems
The controls we implemented last year to support remote working
remain in place.
Financial reporting
The impact of COVID-19 on current trading conditions has been factored
into significant financial reporting judgements, notably our business plans
used in impairment testing and amounts provided against receivables
and contract assets for expected credit losses. See significant reporting
judgements on page 78.
Long-term viability statement and going concern assessment
The Committee provides advice to the Board on the form and basis of
conclusion underlying the long-term viability statement as set out on
page 61 and the going concern assessment on page 109.
The Committee challenged management on its financial risk assessment
as part of its consideration of the long-term viability statement. This
included scrutiny of forecast liquidity, balance sheet stress tests, the
availability of cash and cash equivalents through new or existing financing
facilities and a review of counter-party risk to assess the likelihood of third
parties not being able to meet contractual obligations. Certain elements
of this exercise supplemented the normal annual process and
assessment of the Group’s prospects made by management, and
included consideration of:
– The review period and alignment with the Group’s internal long-
term forecasts;
– The quality and acceptability of accounting policies and practices;
– Material areas in which significant judgements have been applied or
where significant issues have been discussed with the external auditor;
– An assessment of whether the Annual Report, taken as a whole, is fair,
balanced and understandable and whether our US annual report
on Form 20-F complies with relevant US regulations;
– The clarity of the disclosures and compliance with financial
reporting standards and relevant financial and governance
reporting requirements;
– Providing advice to the Board on the form and basis underlying
the long-term viability statement; and
– Any correspondence from regulators in relation to our
financial reporting.
Accounting policies and practices
The Committee received reports from management in relation to:
– The identification of critical accounting judgements and key sources
of estimation uncertainty;
– Significant accounting policies; and
– Proposed disclosures of these in the 2021 Annual Report.
Following discussions with management and the external auditor, the
Committee approved the disclosures of the accounting policies and
practices set out in note 1 “Basis of preparation” and within other notes
to the consolidated financial statements.
Fair, balanced and understandable
The Committee assessed whether the Annual Report, taken as a whole,
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position and
performance, business model and strategy. The Committee reviewed
the processes and controls that underpin its preparation, ensuring that
all contributors, the core reporting team and senior management are
fully aware of the requirements and their responsibilities. This included
the financial reporting responsibilities of the Directors under section 172
of the Companies Act 2006 to promote the success of the Company for
the benefit of its members as well as considering the interests of other
stakeholders which will have an impact on the Company’s long-term
success of the entity.
The Committee reviewed a draft of the Annual Report to enable input
and comment. The Committee also reviewed the results announcements,
supported by the work of the Group’s Disclosure Committee, which also
reviews and assesses the Annual Report and investor communications.
– The assessment of the capacity of the Group to remain viable after
consideration of future cash flows, expected debt service requirements,
undrawn facilities and access to capital markets;
This work enabled the Committee to provide positive assurance to the
Board to assist them in making the statement required by the 2018 UK
Corporate Governance Code.
– The modelling of the financial impact of certain of the Group’s
principal risks materialising using severe but plausible scenarios;
– Ensuring clear and enhanced disclosures in the Annual Report
as to why the assessment period selected was appropriate to
the Group, what qualifications and assumptions were made and
how the underlying analysis was performed, consistent with
FRC pronouncements: and
– Comprehensive disclosure in relation to the Group’s liquidity provided
in the consolidated financial statements. See note 22 “Capital and
financial risk management”.
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Significant financial reporting judgements
The areas considered and actions taken by the Committee in relation to the 2021 Annual Report are outlined below. For each area, the Committee was
satisfied with the accounting and disclosures in the financial statements.
Area of focus
Revenue recognition
Revenue is a risk area given the inherent complexity of IFRS 15 accounting
requirements and the underlying billing and related IT systems.
See note 1 “Basis of preparation”.
M&A transactions
Actions taken
The accounting policy for, and related disclosure requirements of IFRS 15 that have
been presented in the Annual Report, were reviewed in March and May 2021. The
Committee challenged EY on the scope of their revenue audit processes as part of
the agreement of the audit plan.
There have been a range of transactions in the year requiring accounting
consideration. These include:
The Committee reviewed and discussed the accounting of these transactions with
management at the September 2020, March 2021 and May 2021 meetings.
– Vantage Towers related matters, focused mostly around lease accounting and
goodwill allocation;
– The buy-out offer to KDG minority shareholders;
– The combination of the Group’s interest in Indus Towers with Bharti Infratel;
– The merger of Vodafone Hutchison Australia with TPG Telecom;
– The sale of a portion of the Group’s interest in INWIT;
– The combination of the tower infrastructure assets of Vodafone Greece with
Wind Hellas Telecommunications SA; and
– Reversal of held for sale accounting for Vodafone Egypt.
Vodafone Idea
The Committee also received detailed reporting from the external auditor on its
assessment on the accounting judgements and disclosures made by management
in both the half-year and annual consolidated financial statements.
The disclosure and accounting judgements in relation to the impacts of Vodafone
Idea Limited’s (‘VIL’) adjusted gross revenue (‘AGR’) judgement debt on the Group’s
conditional and capped obligations to make certain payments to VIL under a payment
mechanism agreed at the time of the merger between Vodafone India and Idea
Cellular in 2017.
The Committee reviewed the appropriateness of the Group’s provisioning in relation
to potential liabilities under the payment mechanism agreed with VIL considering
VIL’s ability to make any further material payments of its AGR judgement debt.
These reviews occurred at the September 2020, March 2021 and May 2021
Committee meetings.
See note 29 “Contingent liabilities and legal proceedings”.
Indus Towers
The valuation of the security package provided by the Group to Indus Towers (‘Indus’)
in respect of commitments of VIL to Indus. The classification of the investment in Indus
as held for sale.
See note 29 ”Contingent liabilities and legal proceedings”.
Liability provisioning
The Committee reviewed the classification of Indus as held for sale during the May
2021 Committee meeting considering (i) VIL’s commitments to Indus and its ability to
settle its obligations, (ii) the terms of the pledges contained within the security package,
and (iii) the Group’s obligations with respect to the loan secured against the Group’s
interests in VIL and Indus.
The Group is subject to a range of claims and legal actions from a number of sources,
including competitors, regulators, customers, suppliers and, on occasion, fellow
shareholders in Group subsidiaries.
See note 16 “Provisions” and note 29 “Contingent liabilities and legal proceedings”.
The Committee met with the Director of Litigation in November 2020 and May 2021
in advance of the half-year and year-end reporting, respectively. The Committee
reviewed and challenged management’s assessment of the current status of the most
significant claims, together with relevant legal advice received by the Group, to form a
view on the level of provisioning and disclosure in the financial statements.
Impairments
Judgements in relation to impairment testing relate primarily to the assumptions
underlying the calculation of the value in use of the Group’s businesses, being the
achievability of the long-term business plans and the macroeconomic and related
modelling assumptions underlying the valuation process.
See note 4 “Impairment losses”.
The Committee reviewed and discussed detailed reporting with management and
challenged the appropriateness of the assumptions made, including:
– The consistent application of management’s methodology;
– The achievability of the business plans;
– Assumptions in relation to terminal growth in the businesses at the end of the plan
Taxation
The Group is subject to a range of tax claims and related legal actions in a number
of jurisdictions where it operates.
Further, the Group has extensive accumulated tax losses and a key management
judgement is whether a deferred tax asset should be recognised in respect of
those losses.
See note 6 “Taxation” and note 29 “Contingent liabilities and legal proceedings”.
period; and
– Discount rates.
The ongoing impact of COVID-19 has been factored into the latest business plans.
The Group Head of Planning presented the output of the impairment exercise at the
May meeting.
During the year, the Group recorded no impairments in respect of its investments.
The Committee met with the Group Tax Director in November 2020 and May 2021
in advance of the half-year and year-end reporting, respectively. The Committee
challenged the judgements underpinning both the provisioning and disclosures
adopted for the most significant components of contingent taxation liabilities and
the underlying assumptions for the recognition of deferred tax assets, principally the
assessment of the amount of tax losses and the availability of future taxable profits in
Luxembourg. The Group tax charge includes a €2.8 billion charge from the utilisation
of deferred tax assets in Luxembourg as a result of a reduction in tax losses arising
from an increase in the valuation of investments in local GAAP accounts.
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Significant financial reporting judgements
The areas considered and actions taken by the Committee in relation to the 2021 Annual Report are outlined below. For each area, the Committee was
satisfied with the accounting and disclosures in the financial statements.
Actions taken
Area of focus
Revenue recognition
See note 1 “Basis of preparation”.
M&A transactions
Revenue is a risk area given the inherent complexity of IFRS 15 accounting
The accounting policy for, and related disclosure requirements of IFRS 15 that have
requirements and the underlying billing and related IT systems.
been presented in the Annual Report, were reviewed in March and May 2021. The
Committee challenged EY on the scope of their revenue audit processes as part of
the agreement of the audit plan.
There have been a range of transactions in the year requiring accounting
The Committee reviewed and discussed the accounting of these transactions with
consideration. These include:
management at the September 2020, March 2021 and May 2021 meetings.
– Vantage Towers related matters, focused mostly around lease accounting and
The Committee also received detailed reporting from the external auditor on its
assessment on the accounting judgements and disclosures made by management
in both the half-year and annual consolidated financial statements.
goodwill allocation;
– The buy-out offer to KDG minority shareholders;
– The combination of the Group’s interest in Indus Towers with Bharti Infratel;
– The merger of Vodafone Hutchison Australia with TPG Telecom;
– The sale of a portion of the Group’s interest in INWIT;
– The combination of the tower infrastructure assets of Vodafone Greece with
Wind Hellas Telecommunications SA; and
– Reversal of held for sale accounting for Vodafone Egypt.
Vodafone Idea
Cellular in 2017.
Indus Towers
as held for sale.
See note 29 “Contingent liabilities and legal proceedings”.
The valuation of the security package provided by the Group to Indus Towers (‘Indus’)
in respect of commitments of VIL to Indus. The classification of the investment in Indus
See note 29 ”Contingent liabilities and legal proceedings”.
Liability provisioning
The disclosure and accounting judgements in relation to the impacts of Vodafone
The Committee reviewed the appropriateness of the Group’s provisioning in relation
Idea Limited’s (‘VIL’) adjusted gross revenue (‘AGR’) judgement debt on the Group’s
to potential liabilities under the payment mechanism agreed with VIL considering
conditional and capped obligations to make certain payments to VIL under a payment
VIL’s ability to make any further material payments of its AGR judgement debt.
mechanism agreed at the time of the merger between Vodafone India and Idea
These reviews occurred at the September 2020, March 2021 and May 2021
Committee meetings.
The Committee reviewed the classification of Indus as held for sale during the May
2021 Committee meeting considering (i) VIL’s commitments to Indus and its ability to
settle its obligations, (ii) the terms of the pledges contained within the security package,
and (iii) the Group’s obligations with respect to the loan secured against the Group’s
interests in VIL and Indus.
The Group is subject to a range of claims and legal actions from a number of sources,
The Committee met with the Director of Litigation in November 2020 and May 2021
including competitors, regulators, customers, suppliers and, on occasion, fellow
in advance of the half-year and year-end reporting, respectively. The Committee
shareholders in Group subsidiaries.
See note 16 “Provisions” and note 29 “Contingent liabilities and legal proceedings”.
reviewed and challenged management’s assessment of the current status of the most
significant claims, together with relevant legal advice received by the Group, to form a
view on the level of provisioning and disclosure in the financial statements.
Impairments
Judgements in relation to impairment testing relate primarily to the assumptions
The Committee reviewed and discussed detailed reporting with management and
underlying the calculation of the value in use of the Group’s businesses, being the
challenged the appropriateness of the assumptions made, including:
achievability of the long-term business plans and the macroeconomic and related
modelling assumptions underlying the valuation process.
See note 4 “Impairment losses”.
– The consistent application of management’s methodology;
– The achievability of the business plans;
– Assumptions in relation to terminal growth in the businesses at the end of the plan
The Group is subject to a range of tax claims and related legal actions in a number
The Committee met with the Group Tax Director in November 2020 and May 2021
Taxation
those losses.
of jurisdictions where it operates.
Further, the Group has extensive accumulated tax losses and a key management
judgement is whether a deferred tax asset should be recognised in respect of
See note 6 “Taxation” and note 29 “Contingent liabilities and legal proceedings”.
Luxembourg. The Group tax charge includes a €2.8 billion charge from the utilisation
period; and
– Discount rates.
May meeting.
The ongoing impact of COVID-19 has been factored into the latest business plans.
The Group Head of Planning presented the output of the impairment exercise at the
During the year, the Group recorded no impairments in respect of its investments.
in advance of the half-year and year-end reporting, respectively. The Committee
challenged the judgements underpinning both the provisioning and disclosures
adopted for the most significant components of contingent taxation liabilities and
the underlying assumptions for the recognition of deferred tax assets, principally the
assessment of the amount of tax losses and the availability of future taxable profits in
of deferred tax assets in Luxembourg as a result of a reduction in tax losses arising
from an increase in the valuation of investments in local GAAP accounts.
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Regulators and our financial reporting
The FRC publishes thematic reviews to help companies improve the
quality of corporate reporting around new accounting standards and
also provides guidance and reviews the quality of reporting across
public companies. The Group routinely reviews FRC publications, the
most relevant publications for the 2021 financial close process being:
– Year-end advice to Audit Committee Chairs, CEOs and CFOs;
– Thematic review on existing disclosure requirements for IFRS 15 and
IFRS 16; and
– Consolidated COVID-19 disclosure requirements issued in December
2020 which superseded previous publications on this topic.
The Group already complied with the majority of the recommendations
and the 2021 Annual Report has been updated to adopt best practice
where applicable.
In March 2021, the Corporate Reporting Review department of the
Financial Reporting Council (‘FRC’) advised that our Annual Report for
the year ended 31 March 2020 had been subject to their review and
explanations were requested on certain accounting and disclosure
matters. Our responses were accepted by the FRC and their review
was closed in May 2021. This review resulted in enhancements to our
disclosures which are reflected within this Annual Report.
Also in March 2021, the US Securities and Exchange Commission raised a
number of matters in relation to disclosures within our Form 20-F for the
year ended 31 March 2020. We submitted our written responses to the
SEC and, as a result, our US Form 20-F for the year ended 31 March 2021
will reflect enhancements to our disclosures.
Internal control and risk management
The Committee has the primary responsibility for the oversight of the
Group’s system of internal control, including the risk management
framework, the compliance framework and the work of the Internal
Audit function.
Internal Audit
The Internal Audit function provides independent and objective assurance
over the design and operating effectiveness of the system of internal
control, through a risk based approach. The function reports into the
Committee and, administratively, to the Group Chief Financial Officer. The
function is composed of teams across Group functions and local markets.
This enables access to specialist skills through centres of excellence and
ensures local knowledge and experience. Cooperation with professional
bodies and an information technology research firm has ensured access
to additional specialist skills and an advanced knowledge base.
Internal Audit activities are based on a robust methodology and the
internal quality assurance improvement programme ensures compliance
with the Standards of the Institute of Internal Auditors. The function has
invested in several initiatives to improve its effectiveness, particularly in
the adoption of new technologies. The increased use of data analytics has
provided broader and deeper audit testing and driven increased insights.
The Committee has a standing agenda item to cover Internal Audit
related topics. Prior to the start of each financial year, the Committee
reviews and approves the annual audit plan, assesses the adequacy
of the budget and resources and reviews the operational initiatives
for the continuous improvement of the function’s effectiveness.
The audit plan was revisited in April 2020 to reflect the risks from
the COVID-19 pandemic.
The Committee reviews the progress against the approved audit plan and
the results of audit activities, with a focus on unsatisfactory audit results
and “cross-entity audits” which are audits that are performed across
multiple markets with the same scope. Audit results are analysed by
process and geography to highlight changes in the control environment
and areas that require attention.
During the year, Internal Audit coverage focused on principal risks,
which included: Global economic disruption, Cyber threat and
information security, Legal and regulatory compliance and Technology
failure. Relevant audit results are reported at the same time as the
Committee’s in-depth review with the risk owner, which allows the
Committee to have an integrated view on the way the risk is managed.
Assurance was also provided across a range of areas, including data loss
prevention and phishing, data privacy, network change management,
sourcing, tariff and discounts management, credit vetting and collection,
Vodafone Business solution delivery and M-Pesa. The activities performed
by the shared service organisation also received attention due to their
significant bearing on the effectiveness of global processes.
Management is responsible for ensuring that issues raised by Internal
Audit are addressed within an agreed timetable, and the Committee
reviews their timely completion.
Assessment of Group’s system of internal control, including
the risk management framework
The Group’s risk assessment process and the way in which significant
business risks are managed is an area of focus for the Committee. The
Committee’s activity here was led primarily, but not solely, by the Group’s
assessment of its principal and emerging risks and uncertainties, as set
out on pages 53 to 58. In particular, Cyber threat and information security
remains a major focus for the Committee given the ongoing risks in
this area.
The Group has an internal control environment designed to protect the
business from the material risks which have been identified. Management
is responsible for establishing and maintaining adequate internal controls
and the Committee has responsibility for ensuring the effectiveness of
those controls.
The Committee reviewed the process by which Group management
assessed the control environment, in accordance with the requirements
of the Guidance on Risk Management, Internal Control and related
Financial and Business Reporting published by the FRC. Activity here
was driven by reports from the Group Audit Director, the Director of Risk
and a range of functional specialists covering areas such as anti-money
laundering and policy compliance on the effectiveness of internal
controls. Although not relevant in the financial period, this would include
any identified incident of fraud, including those involving management
or employees with a significant role in internal controls.
The Committee has completed its review of the effectiveness of the
Group’s system of internal control, including risk management, during
the year and up to the date of this Annual Report. The review covered
all material controls including financial, operating and compliance
controls. The Committee confirms that the system of internal control
operated effectively for the 2021 financial year. Where specific areas
for improvement were identified, mitigating alternative controls and
processes were in place. This allows us to provide positive assurance
to the Board to help fulfil its obligations under the 2018 UK Corporate
Governance Code.
Compliance with section 404 of the US Sarbanes-Oxley Act
Oversight of the Group’s compliance activities in relation to section 404
of the US Sarbanes-Oxley Act and policy compliance reviews also falls
within the Committee’s remit.
Management is responsible for establishing and maintaining adequate
internal controls over financial reporting and we have responsibility for
ensuring the effectiveness of these controls. The Committee received
updates on the Group’s work in relation to section 404 compliance and
the Group’s broader financial control environment during the year. As
the Group continues to centralise processes and controls into shared
service centres, we continue to challenge management on ensuring
the nature and scope of control activities change to ensure key risks
continue to be adequately mitigated. The deeper use of automated
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EY audit and non-audit fees
Total fees payable to EY for audit and non-audit services in the year
ended 31 March 2021 amounted to €28 million (2020: €29 million).
This included fees of €9 million which were incurred as part of the IPO
of Vantage Towers A.G. This comprised fees of €1 million for financial
statement audit services and non-audit fees of €8 million for IPO services
and Reporting Accountant procedures.
Audit fees
The Committee reviewed and discussed the fee proposal, was engaged
in agreeing audit scope changes and, following the receipt of formal
assurance that their fees were appropriate for the scope of the work
required, agreed an audit fee of €20 million for statutory audit services
in the year (2020: €22 million).
Non-audit fees
To protect the independence and objectivity of the external auditor, the
Committee has a policy for the engagement of the external auditor to
provide non-audit services. The policy prohibits EY from playing any part
in management or decision-making, providing certain services such as
valuation work and the provision of accounting services. The Group’s
non-audit services policy incorporates the requirements of the FRC’s
Ethical Standard, including a ‘whitelist’ of permitted non-audit services
which mirrors the FRC’s Ethical Standard.
The Committee has pre-approved that EY can be engaged by
management, subject to the policies set out above, and subject to:
– A €60,000 fee limit for individual engagements;
– A €500,000 total fee limit for services where there is no legal
alternative; and
– A €500,000 total fee limit for services where there is no practical
alternative supplier.
For those permitted services that exceed these specified fee limits, the
Committee Chair pre-approves the service.
Non-audit fees were €8 million (2020: €7 million) and represented
40% of audit fees for the 2021 financial year (2020: 32%). See note 3
“Operating profit/(loss)” for further details.
controls embedded within our systems is part of this ongoing evolution
in the control environment.
The Committee also took an active role in monitoring the Group’s
compliance activities, including receiving reports from management in
the year covering programme-level changes, the scope of compliance
work performed and the results of controls testing. The external auditor
also reports the status of its work in relation to controls in its reports to
the Committee.
External audit
The Committee has primary responsibility for overseeing the relationship
with the external auditor, Ernst & Young LLP (‘EY’). This includes making
the recommendation on the appointment, reappointment and removal
of the external auditor, assessing their independence on an ongoing basis
and approving the statutory audit fee, the scope of the statutory audit and
the appointment of the lead audit engagement partner. Alison Duncan
has held this role since the appointment of EY in the prior financial year.
EY presented to the Committee its detailed audit plan for the 2021
financial year, which outlined its audit scope, planning materiality and its
assessment of key audit risks. The identification of key audit risks is critical
in the overall effectiveness of the external audit process and these are
outlined in the Audit Report on pages 110 to 120.
The Committee also received reports from EY on its assessment of
the accounting and disclosures in the financial statements and
financial controls.
The Committee will continue to review the auditor appointment and
anticipates that the audit will be put out to tender at least every 10 years.
The Company has complied with the Statutory Audit Services Order 2014
for the financial year under review. The last external audit tender took
place in 2019 which resulted in the appointment of EY.
Independence and objectivity
In its assessment of the independence of the auditor, and in accordance
with the US Public Company Accounting Oversight Board’s (‘PCAOB’)
standard on independence, the Committee received details of all
relationships between the Company and EY that may have a bearing
on their independence and received confirmation from EY that it is
independent of the Company in accordance with US federal securities
law and the applicable rules and regulations of the Securities and
Exchange Commission (‘SEC’) and the PCAOB.
Effectiveness of the external audit process
The Committee reviewed the quality of the external audit throughout
the year and considered the performance of EY, taking into account the
Committee’s own assessment, feedback, and the results of a detailed
survey of senior finance personnel across the Group. Based on these
reviews, the Committee concluded that there had been appropriate
focus and challenge by EY on the primary areas of the audit and that
EY had applied robust challenge and scepticism throughout the audit.
In January 2021, the FRC notified the Group that an audit quality review
was completed in respect of the EY audit of the Group for the year ended
31 March 2020. The FRC’s findings were reviewed by the Committee with
EY. No issues were identified in the report and certain areas of good
practice were noted.
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In-depth reviews
The Committee requested management to provide in-depth reviews as part of the meeting agendas. These reviews are summarised below,
together with the Group’s principal risk to which the review relates.
Subject of in-depth review
Principal risk
(see pages 54 to 57)
Principal risk deep-dive with the Group External Affairs Director, the Global Supply Chain Director and the Group Corporate Security Director. Geo-political risk in supply chain
Business risk impact of COVID-19 which considered risks around supply chain management and the impact of the pandemic on the Group’s
principal risks.
Global economic disruption
This was undertaken with the Group Strategy Director, the Global Supply Chain Director and the Group Head of Risk.
Review of the Long Term Viability Statement and the going concern assessment including the financial risk impact of COVID-19.
Global economic disruption
This was undertaken with the Group Financial Controller, the Group Treasury Director, the Group Corporate Finance Director and the Group
Head of FP&A.
Principal risk deep-dive and mitigating measures that are being taken.
Global economic disruption.
Cyber security briefings provided by the Group CTO and the Cyber Security Director. This included a threat assessment on the implications
of remote working and details of oversight activities.
Cyber threat and information
security
Principal risk deep-dive with a focus on the Italian market, from the Group CTO, the Group Cyber Security Director and the CEO of
Vodafone Italy. This was in response to the reported data breach at Ho Mobile, a brand in Italy owned by the Group.
Cyber threat and information
security
Principal risk deep-dive with the Group CTO and the Director of Strategy, R&D and Assurance.
Pre-IPO readiness assessments of Vantage Towers, including (i) status of preparations for it to become an effective listed company,
(ii) the risk and control environment and (iii) a review of the financial statements including basis of preparation and accounting judgements.
Input was provided by the Group General Counsel, the Group M&A Director, the Vantage Towers CFO and external legal counsel.
Technology failure
Strategic transformation
Deep-dive into the risk and control environment of the procurement company in Luxembourg from the Global Supply Chain Director.
Geo-political risk in supply chain
Deep-dive into the risk, compliance and governance at Vodafone Business from the Vodafone Business CEO and CFO.
Deep-dive into the risk, compliance and governance at Vodacom, including M-Pesa, from the Vodacom Group CEO, South Africa CFO
and team.
Deep-dive into the risk, compliance and governance at Vodafone Germany from the market CEO and CFO.
Deep-dive into the risk and control environment at Vodafone UK, together with an overview of compliance with FCA obligations and
preparations for Brexit. This was provided by the market CEO, CFO, CTO, General Counsel and External Affairs Director.
Details of (i) year-end accounting and reporting matters and (ii) s404 compliance status from the Group Financial Controlling and
Operations Director.
Details of legal contingencies and key investigations from the Group Litigation Director.
Tax update from the Group Tax Director.
Reports from the Group Audit Director on (i) Internal Audit activities and results, (ii) the Annual Report on market-level Audit and Risk
Committee activities and (iii) the Internal Audit plan for FY22.
Legal and regulatory compliance
Disintermediation and failure
to innovate
Legal and regulatory compliance
Strategic transformation
Legal and regulatory compliance
Strategic transformation
Legal and regulatory compliance
Technology failure
Legal and regulatory compliance
Legal and regulatory compliance
Legal and regulatory compliance
Legal and regulatory compliance
Legal and regulatory compliance
Update from the ‘Speak Up’ channel that enables employees to raise concerns about possible irregularities in financial reporting or other
issues and the outputs of any resulting investigations.
Legal and regulatory compliance
Briefings from the Group Head of Risk who provided a mid-year update and an overview of the principal risks for FY22.
All principal risks
controls embedded within our systems is part of this ongoing evolution
EY audit and non-audit fees
Total fees payable to EY for audit and non-audit services in the year
ended 31 March 2021 amounted to €28 million (2020: €29 million).
This included fees of €9 million which were incurred as part of the IPO
of Vantage Towers A.G. This comprised fees of €1 million for financial
statement audit services and non-audit fees of €8 million for IPO services
and Reporting Accountant procedures.
Audit fees
The Committee reviewed and discussed the fee proposal, was engaged
in agreeing audit scope changes and, following the receipt of formal
assurance that their fees were appropriate for the scope of the work
required, agreed an audit fee of €20 million for statutory audit services
in the year (2020: €22 million).
Non-audit fees
To protect the independence and objectivity of the external auditor, the
Committee has a policy for the engagement of the external auditor to
provide non-audit services. The policy prohibits EY from playing any part
in management or decision-making, providing certain services such as
valuation work and the provision of accounting services. The Group’s
non-audit services policy incorporates the requirements of the FRC’s
Ethical Standard, including a ‘whitelist’ of permitted non-audit services
which mirrors the FRC’s Ethical Standard.
The Committee has pre-approved that EY can be engaged by
management, subject to the policies set out above, and subject to:
– A €60,000 fee limit for individual engagements;
– A €500,000 total fee limit for services where there is no legal
– A €500,000 total fee limit for services where there is no practical
For those permitted services that exceed these specified fee limits, the
Committee Chair pre-approves the service.
Non-audit fees were €8 million (2020: €7 million) and represented
40% of audit fees for the 2021 financial year (2020: 32%). See note 3
“Operating profit/(loss)” for further details.
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Governance (continued)
in the control environment.
The Committee also took an active role in monitoring the Group’s
compliance activities, including receiving reports from management in
the year covering programme-level changes, the scope of compliance
work performed and the results of controls testing. The external auditor
also reports the status of its work in relation to controls in its reports to
the Committee.
External audit
The Committee has primary responsibility for overseeing the relationship
with the external auditor, Ernst & Young LLP (‘EY’). This includes making
the recommendation on the appointment, reappointment and removal
of the external auditor, assessing their independence on an ongoing basis
and approving the statutory audit fee, the scope of the statutory audit and
the appointment of the lead audit engagement partner. Alison Duncan
has held this role since the appointment of EY in the prior financial year.
EY presented to the Committee its detailed audit plan for the 2021
financial year, which outlined its audit scope, planning materiality and its
assessment of key audit risks. The identification of key audit risks is critical
in the overall effectiveness of the external audit process and these are
outlined in the Audit Report on pages 110 to 120.
The Committee also received reports from EY on its assessment of
the accounting and disclosures in the financial statements and
financial controls.
Independence and objectivity
In its assessment of the independence of the auditor, and in accordance
with the US Public Company Accounting Oversight Board’s (‘PCAOB’)
standard on independence, the Committee received details of all
relationships between the Company and EY that may have a bearing
on their independence and received confirmation from EY that it is
independent of the Company in accordance with US federal securities
law and the applicable rules and regulations of the Securities and
Exchange Commission (‘SEC’) and the PCAOB.
Effectiveness of the external audit process
The Committee reviewed the quality of the external audit throughout
the year and considered the performance of EY, taking into account the
Committee’s own assessment, feedback, and the results of a detailed
survey of senior finance personnel across the Group. Based on these
reviews, the Committee concluded that there had been appropriate
focus and challenge by EY on the primary areas of the audit and that
EY had applied robust challenge and scepticism throughout the audit.
In January 2021, the FRC notified the Group that an audit quality review
was completed in respect of the EY audit of the Group for the year ended
31 March 2020. The FRC’s findings were reviewed by the Committee with
EY. No issues were identified in the report and certain areas of good
practice were noted.
The Committee will continue to review the auditor appointment and
anticipates that the audit will be put out to tender at least every 10 years.
The Company has complied with the Statutory Audit Services Order 2014
for the financial year under review. The last external audit tender took
place in 2019 which resulted in the appointment of EY.
alternative; and
alternative supplier.
82
Vodafone Group Plc
Annual Report 2021
Remuneration Committee
Strategic report
Governance
Financials
Other information
Letter from the Remuneration
Committee Chairman
On behalf of the Board, I present our 2021 Directors’
Remuneration Report.
This report includes both our Policy Report (as approved by shareholders
at the 2020 AGM), and our 2021 Annual Report on Remuneration, which
sets out how our policy was implemented during the year under review,
and how it will be applied for the year ahead.
Response to COVID-19
The last year has been a challenging period for our colleagues, customers,
and the societies in which we operate.
During this period our business has shown a high degree of resilience and
has continued to provide vital services at a time when communication
and connectivity is proving to be more important than ever both in our
personal and professional lives.
This resilience is illustrated through how our operations have continued
to function without needing to take the type of decisions that have been
necessary in other industries and businesses. For example, we have not
furloughed any of our employees and have continued our all-employee
global reward review in both 2020 and 2021, including the delivery of
performance related pay in line with our normal approach. We have also
continued to pay a dividend throughout this period.
Such actions formed part of the Committee’s consideration when
determining a number of matters in the year including executive salaries,
incentive outcomes, and package structures for the year ahead. The
Committee has also continued to work within the spirit of its principles
which aim to ensure our pay arrangements drive the behaviours critical
to the delivery of our strategy, are aligned with performance, encourage
shareholder alignment, and support our Fair Pay principles. Further details
of the Committee’s principles can be found online as part of our new
digital content using the link on this page.
The remainder of this letter and report provides further information on
the nature of and reasons for such decisions.
Stakeholder engagement during the year
As set out in last year’s letter, we launched our remuneration policy
consultation with our largest shareholders in November 2019 and the
Committee would like to thank all shareholders who took the time to
provide feedback during the period leading up to the shareholder vote
at our 2020 AGM. Our Policy Report was approved by over 96% of
shareholders, reflecting the importance and effectiveness of genuine
two-way dialogue during such consultations. The intention continues to
be for the current Policy Report to remain in place for its full three-year
regulatory life-cycle.
In terms of engaging the employee voice, whilst COVID-19 prevented
our European and South African employee forums from meeting
face-to-face, both were able to take place online. As Senior Independent
Director I attended one meeting with each forum, with feedback from
the meetings subsequently reported back directly to the Board. The
key topics raised by employee representatives this year focused on our
response to COVID-19 including matters of remote working, employee
well-being and communication during the period. I would like to thank
the representatives from both forums for inviting me and demonstrating
enthusiasm and diligence in our discussions.
Scan or click to watch the Senior Independent Director
and Chair of the Remuneration Committee explain her
role: investors.vodafone.com/videos-rem
When looking at the feedback from these forums and our other
channels of engagement (including senior leader ‘town hall’ webinars/
Q&A sessions, regular pulse surveys, and engagement through our digital
collaboration platforms) it is clear that our colleagues valued the open
and regular updates the business had given throughout the year in
respect of our response to COVID-19. Colleagues have also expressed
their pride in working for Vodafone during a period when our services
have proved critical to so many areas of society.
Further details on our stakeholder engagement activities can be found
on pages 12 and 13 of this Annual Report.
Arrangements for 2022
Base salary and pension arrangements
Neither the Chief Executive nor the Chief Financial Officer have received
a salary increase since their appointment to their current roles in 2018.
In light of their strong performance and growing experience in role,
the Committee agreed an increase would be justified. However, in line
with the restraint on salary increases for the wider leadership team, the
Committee felt that salaries for both Executive Directors should remain
unchanged for the year ahead. The Committee acknowledges the
importance of our arrangements remaining fair and competitive
and will review this situation again next year.
Pension arrangements for both Executive Directors will continue to
remain aligned with the wider UK workforce at 10% of base salary.
Annual bonus (‘GSTIP’)
Given the importance of growth to our strategy, the Committee agreed it
was appropriate to re-introduce service revenue as a performance measure
for the 2022 short-term incentive. As set out in last year’s report this
measure had been removed from the 2021 plan due to the difficulty in
setting an appropriate target given the uncertainty caused by COVID-19
at the time.
In light of the evolving external circumstances and our renewed
confidence in being able to set a robust target for 2022 it was agreed
this measure should be restored in the 2022 plan with a weighting of
25%. The remaining measures of free cash flow, EBIT, and customer
appreciation KPIs which have been retained from the 2021 structure,
will also be equally weighted at 25% for the 2022 plan.
Global long-term incentive (‘GLTI’)
Following the approval of the Policy Report at our 2020 AGM, the first
grant under our new GLTI structure which incorporates an ESG measure
was made in November 2020. For 2022 the intention is to keep the same
structure in line with our agreed normal policy. The intention is for such
awards to be made in August 2021 with the Committee reviewing both
internal and external considerations prior to formally approving the
awards at the July 2021 meeting. Further details can be found on
pages 101 and 102.
82
Vodafone Group Plc
Annual Report 2021
Remuneration Committee
Letter from the Remuneration
Committee Chairman
On behalf of the Board, I present our 2021 Directors’
Remuneration Report.
This report includes both our Policy Report (as approved by shareholders
at the 2020 AGM), and our 2021 Annual Report on Remuneration, which
sets out how our policy was implemented during the year under review,
and how it will be applied for the year ahead.
Response to COVID-19
The last year has been a challenging period for our colleagues, customers,
and the societies in which we operate.
During this period our business has shown a high degree of resilience and
has continued to provide vital services at a time when communication
and connectivity is proving to be more important than ever both in our
personal and professional lives.
This resilience is illustrated through how our operations have continued
to function without needing to take the type of decisions that have been
necessary in other industries and businesses. For example, we have not
furloughed any of our employees and have continued our all-employee
global reward review in both 2020 and 2021, including the delivery of
performance related pay in line with our normal approach. We have also
continued to pay a dividend throughout this period.
Such actions formed part of the Committee’s consideration when
Scan or click to watch the Senior Independent Director
and Chair of the Remuneration Committee explain her
role: investors.vodafone.com/videos-rem
When looking at the feedback from these forums and our other
channels of engagement (including senior leader ‘town hall’ webinars/
Q&A sessions, regular pulse surveys, and engagement through our digital
collaboration platforms) it is clear that our colleagues valued the open
and regular updates the business had given throughout the year in
respect of our response to COVID-19. Colleagues have also expressed
their pride in working for Vodafone during a period when our services
have proved critical to so many areas of society.
Further details on our stakeholder engagement activities can be found
on pages 12 and 13 of this Annual Report.
Arrangements for 2022
Base salary and pension arrangements
Neither the Chief Executive nor the Chief Financial Officer have received
a salary increase since their appointment to their current roles in 2018.
In light of their strong performance and growing experience in role,
the Committee agreed an increase would be justified. However, in line
with the restraint on salary increases for the wider leadership team, the
Committee felt that salaries for both Executive Directors should remain
determining a number of matters in the year including executive salaries,
unchanged for the year ahead. The Committee acknowledges the
incentive outcomes, and package structures for the year ahead. The
importance of our arrangements remaining fair and competitive
Committee has also continued to work within the spirit of its principles
and will review this situation again next year.
which aim to ensure our pay arrangements drive the behaviours critical
to the delivery of our strategy, are aligned with performance, encourage
shareholder alignment, and support our Fair Pay principles. Further details
Pension arrangements for both Executive Directors will continue to
remain aligned with the wider UK workforce at 10% of base salary.
of the Committee’s principles can be found online as part of our new
Annual bonus (‘GSTIP’)
digital content using the link on this page.
The remainder of this letter and report provides further information on
the nature of and reasons for such decisions.
Stakeholder engagement during the year
As set out in last year’s letter, we launched our remuneration policy
consultation with our largest shareholders in November 2019 and the
Committee would like to thank all shareholders who took the time to
provide feedback during the period leading up to the shareholder vote
at our 2020 AGM. Our Policy Report was approved by over 96% of
shareholders, reflecting the importance and effectiveness of genuine
two-way dialogue during such consultations. The intention continues to
be for the current Policy Report to remain in place for its full three-year
regulatory life-cycle.
In terms of engaging the employee voice, whilst COVID-19 prevented
our European and South African employee forums from meeting
face-to-face, both were able to take place online. As Senior Independent
Director I attended one meeting with each forum, with feedback from
the meetings subsequently reported back directly to the Board. The
key topics raised by employee representatives this year focused on our
response to COVID-19 including matters of remote working, employee
well-being and communication during the period. I would like to thank
the representatives from both forums for inviting me and demonstrating
enthusiasm and diligence in our discussions.
Given the importance of growth to our strategy, the Committee agreed it
was appropriate to re-introduce service revenue as a performance measure
for the 2022 short-term incentive. As set out in last year’s report this
measure had been removed from the 2021 plan due to the difficulty in
setting an appropriate target given the uncertainty caused by COVID-19
at the time.
In light of the evolving external circumstances and our renewed
confidence in being able to set a robust target for 2022 it was agreed
this measure should be restored in the 2022 plan with a weighting of
25%. The remaining measures of free cash flow, EBIT, and customer
appreciation KPIs which have been retained from the 2021 structure,
will also be equally weighted at 25% for the 2022 plan.
Global long-term incentive (‘GLTI’)
Following the approval of the Policy Report at our 2020 AGM, the first
grant under our new GLTI structure which incorporates an ESG measure
was made in November 2020. For 2022 the intention is to keep the same
structure in line with our agreed normal policy. The intention is for such
awards to be made in August 2021 with the Committee reviewing both
internal and external considerations prior to formally approving the
awards at the July 2021 meeting. Further details can be found on
pages 101 and 102.
Strategic report
Governance
Financials
Other information
83
Vodafone Group Plc
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Strategic report
Governance
Financials
Other information
Performance outcomes during 2021
GSTIP performance (1 April 2020 – 31 March 2021)
Annual bonus performance during the year was measured against both
financial and strategic measures. Due to the difficulty in setting a service
revenue target in light of the uncertainty created by COVID-19 at the start
of the financial year the financial measures were adjusted free cash flow
and adjusted EBIT whilst the strategic measure was assessed against
customer appreciation KPIs. All three measures were equally weighted
at 1/3 of total bonus opportunity.
Performance under both of the financial measures and the strategic
measure was above the mid-point of the target range. The combined
performance resulted in an overall bonus payout of 62.0% of maximum.
Further details on performance can be found on pages 91 and 92.
GLTI performance (1 April 2018 – 31 March 2021)
The 2019 GLTI award (granted June 2018) was subject to free cash flow
(2/3 of total award) and relative TSR (1/3 of total award) performance.
Both performance conditions were measured over the three-year period
ending 31 March 2021.
Final FCF performance finished below the mid-point of the target range
resulting in 33.6% of the FCF element vesting. TSR performance was
below the median of the peer group resulting in no vesting under this
element. This resulted in an overall vesting percentage of 22.4% of
maximum. Further details of this vesting calculation can be found on
pages 92 and 93.
Consideration of discretion
The Committee reviewed the outcomes of both the annual bonus
and long-term incentive plan and considered the results both against
the relevant performance targets and the wider internal and external
context. As set out at the start of this letter, it was noted that the business
had remained resilient during the pandemic and that the bonus outcome
for the year reflected this. The Committee also agreed that the outcome
under the long-term incentive was appropriate given performance against
the three-year targets, particularly noting that the TSR element would
lapse in full. The Committee therefore concluded discretion was not
required. Further details can be found on page 91.
Looking forward
Renee James will be stepping down from the Board at the 2021 AGM.
I would like to take this opportunity to thank Renee for her service to
both this Committee and the wider Board.
This year has once again been one of disruption and adaptation as our
colleagues, customers and societies have dealt with the developing
COVID-19 pandemic. Our people and business alike have shown resilience
and strength in the face of these challenges and it is this dedication and
commitment which will enable the next stage of our transformation
towards becoming the new generation connectivity and digital services
provider for Europe and Africa.
The rest of this report sets out both our Policy Report, as approved at
the 2020 AGM, and our Annual Report on Remuneration which sets out
the decisions and outcomes summarised in this letter in further detail.
Valerie Gooding
Chairman of the Remuneration Committee
18 May 2021
Remuneration at a glance
Component
2021 (year ending 31 March 2021)
2022 (year ending 31 March 2022)
Fixed pay
Base salary
Benefits
Pension
Annual bonus
GSTIP
Long-term incentive
GLTI
Effective 1 July 2020:
Chief Executive: £1,050,000 (no increase).
Chief Financial Officer: £700,000 (no increase).
Effective 1 July 2021:
Chief Executive: £1,050,000 (no increase).
Chief Financial Officer: £700,000 (no increase).
Travel related benefits and private medical cover.
Travel related benefits and private medical cover.
Pension contribution of 10% of salary for
all Executive Directors.
Pension contribution of 10% of salary for
all Executive Directors.
Opportunity (% of salary):
Target: 100%/Maximum: 200%
Opportunity (% of salary):
Target: 100%/Maximum: 200%
Measures:
.Adjusted EBIT (1/3), adjusted FCF (1/3), and customer
appreciation KPIs (1/3).
Measures:
Service revenue (25%), adjusted EBIT (25%), adjusted
FCF (25%), and customer appreciation KPIs (25%).
Opportunity (% of salary – maximum):
Chief Executive: 500%/Other Executive Directors: 450%
Opportunity (% of salary – maximum):
Chief Executive: 500%/Other Executive Directors: 450%
Measures:
Adjusted free cash flow (60%) , relative TSR (30%),
and ESG (10%).
Measures:
Adjusted free cash flow (60%) , relative TSR (30%),
and ESG (10%).
Performance/holding periods:
Three-year performance + two-year holding period.
Performance/holding periods:
Three-year performance + two-year holding period.
84
Vodafone Group Plc
Annual Report 2021
Remuneration Policy
Strategic report
Governance
Financials
Other information
Remuneration Policy – notes to reader
No changes have been made to our policy since its approval at the 2020 Annual General Meeting which was held on 28 July 2020. Our approved
Policy Report is available on our website at vodafone.com, and has been reproduced below in the shaded boxes exactly as it was set out in the
2020 Annual Report. As such, some of the policy wording is now out of date; this includes references to the 2020 Annual General Meeting and
page number references.
Remuneration Policy
In this forward-looking section we describe our Remuneration Policy for the Board. This includes our considerations when determining policy,
a description of the elements of the reward package, including an indication of the potential future value of this package for each of the
Executive Directors, and the policy applied to the Chairman and Non-Executive Directors.
We will be seeking shareholder approval for our Remuneration Policy at the 2020 AGM and we intend to implement it at that point. A summary
and explanation of the proposed changes to the current Remuneration Policy is provided on page 100. Subject to approval, we will review our
policy each year to ensure that it continues to support our company strategy and if it is necessary to make a change to our policy within the next
three years, we will seek shareholder approval.
Considerations when determining our Remuneration Policy
Our remuneration principles which are outlined on page 97 guide the Remuneration Committee when making decisions on our policy and its
implementation. A critical consideration for the Remuneration Committee when determining our Remuneration Policy is to ensure that it supports
our company purpose, strategy, and business objectives.
A variety of stakeholder views are taken into account when determining executive pay, including those of our shareholders, colleagues, and
external bodies. Further details on how we engage with, and consider the views of, each of these stakeholders are set out on page 115.
In advance of submitting our policy for shareholder approval we ran a thorough consultation exercise with our major shareholders. We invited
our top 20 shareholders and a number of key governance stakeholders to comment on remuneration at Vodafone and to provide feedback
on the proposed changes to the current policy which was approved at the 2017 AGM. A number of meetings between shareholders and the
Remuneration Committee Chairman took place during this consultation period. Further details of this consultation are provided on pages 97
and 98 whilst a summary of the proposed changes to our current policy, which are incorporated in this revised Remuneration Policy report,
is provided on page 100.
Listening to and consulting with our employees is very important and the Committee is supportive of the growing focus on engaging the
employee voice, which has accompanied recent changes to the UK Corporate Governance Code. Our engagement with colleagues can take
different forms in different markets but includes a variety of channels and approaches including our annual people survey which attracts very
high levels of participation and engagement, regular business leader Q&A sessions, and a number of internal digital communication platforms.
Our Senior Independent Director also undertakes an annual attendance at our European employee forum, and a similar body in South Africa,
with any questions or concerns raised by the employee representatives fed back directly to the Board for consideration and discussion.
We do not formally consult directly with employees on the executive Remuneration Policy nor is any fixed remuneration comparison
measurement used. However, when determining the policy for Executive Directors, the Remuneration Committee is briefed on pay and
employment conditions of employees in Vodafone Group as a whole, with particular reference to the market in which the executive is based.
Further information on our approach to remuneration for other employees is given on page 105.
Performance measures and targets
Our Company strategy and business objectives are the primary consideration when we are selecting performance measures for our incentive
plans. The targets within our incentive plans that are related to internal financial measures (such as revenue, profit and cash flow) are typically
determined based on our budgets. Targets for strategic and external measures (such as customer appreciation KPIs, ESG measures, and total
shareholder return (‘TSR’)) are set based on company objectives and in light of the competitive marketplace. The threshold and maximum levels
of performance are set to reflect minimum acceptable levels at threshold and very stretching levels at maximum.
As in previous Remuneration Reports we will disclose the details of our performance targets for our short and long-term incentive plans. However,
our annual bonus targets are commercially sensitive and therefore we will only disclose our targets in the Remuneration Report following the
completion of the financial year. We will normally disclose the targets for each long-term award in the Remuneration Report for the financial year
preceding the start of the performance period – where this is not possible, such targets will be disclosed at the time of grant and published in the
next Remuneration Report.
At the end of each performance period we review performance against the targets, using judgement to account for items such as (but not limited
to) mergers, acquisitions, disposals, foreign exchange rate movements, changes in accounting treatment, material one-off tax settlements etc.
The application of judgement is important to ensure that the final assessments of performance are fair and appropriate.
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Annual Report 2021
Remuneration Policy
page number references.
Remuneration Policy
Remuneration Policy – notes to reader
No changes have been made to our policy since its approval at the 2020 Annual General Meeting which was held on 28 July 2020. Our approved
Policy Report is available on our website at vodafone.com, and has been reproduced below in the shaded boxes exactly as it was set out in the
2020 Annual Report. As such, some of the policy wording is now out of date; this includes references to the 2020 Annual General Meeting and
In this forward-looking section we describe our Remuneration Policy for the Board. This includes our considerations when determining policy,
a description of the elements of the reward package, including an indication of the potential future value of this package for each of the
Executive Directors, and the policy applied to the Chairman and Non-Executive Directors.
We will be seeking shareholder approval for our Remuneration Policy at the 2020 AGM and we intend to implement it at that point. A summary
and explanation of the proposed changes to the current Remuneration Policy is provided on page 100. Subject to approval, we will review our
policy each year to ensure that it continues to support our company strategy and if it is necessary to make a change to our policy within the next
three years, we will seek shareholder approval.
Considerations when determining our Remuneration Policy
Our remuneration principles which are outlined on page 97 guide the Remuneration Committee when making decisions on our policy and its
implementation. A critical consideration for the Remuneration Committee when determining our Remuneration Policy is to ensure that it supports
our company purpose, strategy, and business objectives.
A variety of stakeholder views are taken into account when determining executive pay, including those of our shareholders, colleagues, and
external bodies. Further details on how we engage with, and consider the views of, each of these stakeholders are set out on page 115.
In advance of submitting our policy for shareholder approval we ran a thorough consultation exercise with our major shareholders. We invited
our top 20 shareholders and a number of key governance stakeholders to comment on remuneration at Vodafone and to provide feedback
on the proposed changes to the current policy which was approved at the 2017 AGM. A number of meetings between shareholders and the
Remuneration Committee Chairman took place during this consultation period. Further details of this consultation are provided on pages 97
and 98 whilst a summary of the proposed changes to our current policy, which are incorporated in this revised Remuneration Policy report,
is provided on page 100.
Listening to and consulting with our employees is very important and the Committee is supportive of the growing focus on engaging the
employee voice, which has accompanied recent changes to the UK Corporate Governance Code. Our engagement with colleagues can take
different forms in different markets but includes a variety of channels and approaches including our annual people survey which attracts very
high levels of participation and engagement, regular business leader Q&A sessions, and a number of internal digital communication platforms.
Our Senior Independent Director also undertakes an annual attendance at our European employee forum, and a similar body in South Africa,
with any questions or concerns raised by the employee representatives fed back directly to the Board for consideration and discussion.
We do not formally consult directly with employees on the executive Remuneration Policy nor is any fixed remuneration comparison
measurement used. However, when determining the policy for Executive Directors, the Remuneration Committee is briefed on pay and
employment conditions of employees in Vodafone Group as a whole, with particular reference to the market in which the executive is based.
Further information on our approach to remuneration for other employees is given on page 105.
Performance measures and targets
Our Company strategy and business objectives are the primary consideration when we are selecting performance measures for our incentive
plans. The targets within our incentive plans that are related to internal financial measures (such as revenue, profit and cash flow) are typically
determined based on our budgets. Targets for strategic and external measures (such as customer appreciation KPIs, ESG measures, and total
shareholder return (‘TSR’)) are set based on company objectives and in light of the competitive marketplace. The threshold and maximum levels
of performance are set to reflect minimum acceptable levels at threshold and very stretching levels at maximum.
As in previous Remuneration Reports we will disclose the details of our performance targets for our short and long-term incentive plans. However,
our annual bonus targets are commercially sensitive and therefore we will only disclose our targets in the Remuneration Report following the
completion of the financial year. We will normally disclose the targets for each long-term award in the Remuneration Report for the financial year
preceding the start of the performance period – where this is not possible, such targets will be disclosed at the time of grant and published in the
next Remuneration Report.
At the end of each performance period we review performance against the targets, using judgement to account for items such as (but not limited
to) mergers, acquisitions, disposals, foreign exchange rate movements, changes in accounting treatment, material one-off tax settlements etc.
The application of judgement is important to ensure that the final assessments of performance are fair and appropriate.
Strategic report
Governance
Financials
Other information
85
Vodafone Group Plc
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Strategic report
Governance
Financials
Other information
Malus and clawback
In addition, the Remuneration Committee reviews the incentive plan results before any payments are made to executives or any shares vest and
has full discretion to adjust the final payment or vesting downwards if they believe circumstances warrant it. In particular, the Committee has the
discretion to use either malus or clawback as it sees appropriate. In the case of malus, the award may lapse wholly or in part, may vest to a lesser
extent than it would otherwise have vested or vesting may be delayed.
In the case of clawback, the Committee may recover bonus amounts that have been paid up to three years after the relevant payment date,
or recover share awards that have vested up to five years after the relevant grant date. The key trigger events for the use of the clawback
arrangements include material misstatement of performance, material miscalculation of performance condition outcomes, gross misconduct,
and reputational damage.
Subject to approval of this Remuneration Policy, these arrangements will be applicable to all bonus amounts paid, or share awards granted,
following the 2020 AGM. The current clawback arrangements, which are set out in the Remuneration Policy approved by shareholders at the
2017 AGM, have been applicable to all bonus amounts paid, or share awards granted, since the 2017 AGM.
The Remuneration Policy table
The table below summarises the main components of the reward package for Executive Directors.
Fixed pay: Base salary
Purpose and link
to strategy
To attract and retain the best talent
Operation
Salaries are usually reviewed annually and fixed for 12 months commencing 1 July. Decision is influenced by:
– level of skill, experience and scope of responsibilities of individual;
– business performance, scarcity of talent, economic climate and market conditions;
– increases elsewhere within the Group; and
– external comparator groups (which are used for reference purposes only) made up of companies of similar size
and complexity to Vodafone.
Average salary increases for existing Executive Committee members (including Executive Directors) will not normally
exceed average increases for employees in other appropriate parts of the Group. Increases above this level may be
made in specific situations. These situations could include (but are not limited to) internal promotions, changes to role,
material changes to the business and exceptional company performance.
Opportunity
Performance metrics
None.
Fixed pay: Pension
Purpose and link
to strategy
To remain competitive within the marketplace
Operation
– Executive Directors may choose to participate in the defined contribution pension scheme or to receive a cash
allowance in lieu of pension.
Opportunity
– The pension contribution or cash payment is equal to the maximum employer contribution available to our UK
employees under our Defined Contribution scheme (currently 10% of annual gross salary).
Performance metrics
None.
Fixed pay: Benefits
Purpose and link
to strategy
To aid retention and remain competitive within the marketplace
Operation
– Travel related benefits. This may include (but is not limited to) company car or cash allowance, fuel and access to a
driver where appropriate.
– Private medical, death and disability insurance and annual health checks.
– In the event that we ask an individual to relocate we would offer them support in line with Vodafone’s relocation or
international assignment policies. This may cover (but is not limited to) relocation, cost of living allowance, housing,
home leave, education support, tax equalisation and advice.
– Legal fees if appropriate.
– Other benefits are also offered in line with the benefits offered to other employees, for example, our all-employee
share plan, mobile phone discounts, maternity/paternity benefits, sick leave, paid holiday, etc.
Opportunity
– Benefits will be provided in line with appropriate levels indicated by local market practice in the country of employment.
– We expect to maintain benefits at the current level but the value of benefit may fluctuate depending on, amongst
other things, personal situation, insurance premiums and other external factors.
Performance metrics
None.
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Remuneration Policy (continued)
Annual bonus – Global Short-Term Incentive Plan (‘GSTIP’)
Purpose and link
to strategy
To drive behaviour and communicate the key priorities for the year.
To motivate employees and incentivise delivery of performance over the one year operating cycle.
The financial metrics drive our growth strategies whilst also focusing on improving operating efficiencies.
The strategic measures aim to ensure a great customer experience remains at the heart of what we do.
Operation
– Bonus levels and the appropriateness of measures and weightings are reviewed annually to ensure they continue to
support our strategy.
– Performance over the financial year is measured against stretching financial and non-financial performance targets
set at the start of the financial year.
– The annual bonus is usually paid in cash in June each year for performance over the previous year. A mandatory
deferral of 25% of post-tax bonus earned into shares for two years will normally apply except where an executive has
met or exceeded their share ownership requirement.
Opportunity
– Bonuses can range from 0–200% of base salary, with 100% paid for on-target performance. Maximum is only paid
out for exceptional performance.
Performance metrics
– Performance over each financial year is measured against stretching targets set at the beginning of the year.
– The performance measures normally comprise a mix of financial and strategic measures. Financial measures may
include (but are not limited to) profit, revenue and cash flow with a weighting of no less than 50%. Strategic measures
may include (but are not limited to) customer appreciation KPIs such as churn, revenue market share, and NPS.
Long-term incentive – Global Long-Term Incentive Plan (‘GLTI’)
Purpose and link
to strategy
To motivate and incentivise delivery of sustained performance over the long term.
To support and encourage greater shareholder alignment through a high level of personal
share ownership.
Operation
The use of free cash flow as the principal performance measure ensures we apply prudent cash
management and rigorous capital discipline to our investment decisions.
The use of TSR along with a performance period of not less than three years means that we are focused
on the long-term interests of our shareholders.
– Award levels and the framework for determining vesting are reviewed annually.
– Long-term incentive awards consist of shares subject to performance conditions which are granted each year.
– Awards will normally vest not less than three years after the respective award grant date based on Group
performance against the performance metrics set out below. In exceptional circumstances, such as but not limited
to where a delay to the grant date is required, the Committee may set a vesting period of less than three years,
although awards will continue to be subject to a performance period of at least three years.
– All post-tax shares are subject to a mandatory two year holding from the date of vest prior to release.
– Dividend equivalents are paid in cash after the vesting date.
Opportunity
– Maximum long-term incentive face value at award of 500% of base salary for the Chief Executive and 450% for other
Performance metrics
Executive Directors.
– Threshold long-term incentive face value at award is 20% of maximum opportunity. Minimum vesting is 0% of
maximum opportunity. Awards vest on a straight-line basis between threshold and maximum.
– The Committee has the discretion to reduce long-term incentive grant levels for Directors who have neither met
their shareholding guideline nor increased their shareholding by 100% of salary during the year.
– The awards that vest accrue cash dividend equivalents over the three year vesting period.
– Awards vest to the extent performance conditions are satisfied.
– Performance is measured against stretching targets set at the time of grant.
– Vesting is determined based on the following measures: adjusted free cash flow as our operational performance
measure, relative TSR against a peer group of companies as our external performance measure, ESG as a measure of
our external impact and commitment to our purpose.
– Weightings will be determined each year and will normally constitute 60% on adjusted free cash flow, 30% on
relative total shareholder return, and 10% on ESG. The Committee will determine the actual weighting of an award
prior to grant, taking into account all relevant information.
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Remuneration Policy (continued)
Annual bonus – Global Short-Term Incentive Plan (‘GSTIP’)
Purpose and link
To drive behaviour and communicate the key priorities for the year.
to strategy
To motivate employees and incentivise delivery of performance over the one year operating cycle.
The financial metrics drive our growth strategies whilst also focusing on improving operating efficiencies.
The strategic measures aim to ensure a great customer experience remains at the heart of what we do.
Operation
– Bonus levels and the appropriateness of measures and weightings are reviewed annually to ensure they continue to
– Performance over the financial year is measured against stretching financial and non-financial performance targets
support our strategy.
set at the start of the financial year.
– The annual bonus is usually paid in cash in June each year for performance over the previous year. A mandatory
deferral of 25% of post-tax bonus earned into shares for two years will normally apply except where an executive has
met or exceeded their share ownership requirement.
Opportunity
– Bonuses can range from 0–200% of base salary, with 100% paid for on-target performance. Maximum is only paid
out for exceptional performance.
Performance metrics
– Performance over each financial year is measured against stretching targets set at the beginning of the year.
– The performance measures normally comprise a mix of financial and strategic measures. Financial measures may
include (but are not limited to) profit, revenue and cash flow with a weighting of no less than 50%. Strategic measures
may include (but are not limited to) customer appreciation KPIs such as churn, revenue market share, and NPS.
Long-term incentive – Global Long-Term Incentive Plan (‘GLTI’)
Purpose and link
To motivate and incentivise delivery of sustained performance over the long term.
to strategy
To support and encourage greater shareholder alignment through a high level of personal
share ownership.
Operation
– Award levels and the framework for determining vesting are reviewed annually.
The use of free cash flow as the principal performance measure ensures we apply prudent cash
management and rigorous capital discipline to our investment decisions.
The use of TSR along with a performance period of not less than three years means that we are focused
on the long-term interests of our shareholders.
– Long-term incentive awards consist of shares subject to performance conditions which are granted each year.
– Awards will normally vest not less than three years after the respective award grant date based on Group
performance against the performance metrics set out below. In exceptional circumstances, such as but not limited
to where a delay to the grant date is required, the Committee may set a vesting period of less than three years,
although awards will continue to be subject to a performance period of at least three years.
– All post-tax shares are subject to a mandatory two year holding from the date of vest prior to release.
– Dividend equivalents are paid in cash after the vesting date.
Executive Directors.
– Threshold long-term incentive face value at award is 20% of maximum opportunity. Minimum vesting is 0% of
maximum opportunity. Awards vest on a straight-line basis between threshold and maximum.
– The Committee has the discretion to reduce long-term incentive grant levels for Directors who have neither met
their shareholding guideline nor increased their shareholding by 100% of salary during the year.
– The awards that vest accrue cash dividend equivalents over the three year vesting period.
– Awards vest to the extent performance conditions are satisfied.
Opportunity
– Maximum long-term incentive face value at award of 500% of base salary for the Chief Executive and 450% for other
Performance metrics
– Performance is measured against stretching targets set at the time of grant.
– Vesting is determined based on the following measures: adjusted free cash flow as our operational performance
measure, relative TSR against a peer group of companies as our external performance measure, ESG as a measure of
our external impact and commitment to our purpose.
– Weightings will be determined each year and will normally constitute 60% on adjusted free cash flow, 30% on
relative total shareholder return, and 10% on ESG. The Committee will determine the actual weighting of an award
prior to grant, taking into account all relevant information.
Notes to the Remuneration Policy table
Existing arrangements
We will honour existing awards, incentives, benefits and contractual arrangements made to individuals prior to their promotion to the Board
and/or prior to the approval and implementation of this policy. For the avoidance of doubt this includes payments in respect of any award granted
under any previous Remuneration Policy. This will last until the existing incentives vest (or lapse) or the benefits or contractual arrangements no
longer apply.
Long-term incentive (‘GLTI’)
When referring to our long-term incentive awards we use the financial year end in which the award was made. For example, the “2020 award”
was made in the financial year ending 31 March 2020. The awards are usually made in the first half of the financial year.
The extent to which awards vest depends on three performance conditions:
– underlying operational performance as measured by adjusted free cash flow;
– relative Total Shareholder Return (‘TSR’) against a peer group median; and
– performance against our Environmental, Social, and Governance (‘ESG’) targets.
Adjusted free cash flow
The free cash flow performance is based on the cumulative adjusted free cash flow figure over the performance period. The detailed targets and
the definition of adjusted free cash flow are determined each year as appropriate. The target adjusted free cash flow level is set by reference to
our long-range plan and market expectations. We consider the targets to be critical to the Company’s long-term success and its ability to maximise
shareholder value, and to be in line with the strategic goals of the Company. The Remuneration Committee sets these targets to be sufficiently
demanding with significant stretch where only outstanding performance will be rewarded with a maximum payout.
The cumulative adjusted free cash flow vesting levels as a percentage of the award subject to this performance element are shown in the table
below (with linear interpolation between points):
Performance
Below threshold
Threshold
Maximum
Vesting percentage
(% of FCF element)
0%
20%
100%
TSR outperformance of a peer group median
We have a limited number of appropriate peers and this makes the measurement of a relative ranking system volatile. As such, the outperformance
of the median of a peer group is felt to be the most appropriate TSR measure. The peer group for the performance condition is reviewed each year
and amended as appropriate.
The TSR vesting levels as a percentage of the award subject to this performance element are shown in the table below (with linear interpolation
between points):
Below median
Median
Percentage outperformance of the peer group median equivalent to 80th percentile
Vesting percentage
(% of TSR element)
0%
20%
100%
In order to determine the percentages for the equivalent outperformance levels above median, the Remuneration Committee seeks independent
external advice.
ESG performance
Our ESG targets will be set on an annual basis (as per the approach for our other performance measures), and will be aligned to our externally
communicated ambitions in this area. Where performance is below the agreed ambition, the Committee will use its discretion to assess vesting
based on performance against the stated ambition and any other relevant information.
Remuneration policy for other employees
While our remuneration policy follows the same fundamental principles across the Group, packages offered to employees reflect differences in
market practice in the different countries, role and seniority.
For example, the remuneration package elements for our Executive Committee are essentially the same as for the Executive Directors with
some minor differences, for example smaller levels of share awards and local variances where appropriate. The remuneration for the next level
of management, our senior leadership team, again follows the same principles with local and individual performance aspects in the annual bonus
targets and performance share awards. They also receive lower levels of share awards which are partly delivered in conditional share awards without
performance conditions.
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Remuneration Policy (continued)
Estimates of total future potential remuneration from 2021 pay packages
The tables below provide estimates of the potential future remuneration for each of the Executive Directors based on the remuneration opportunity
to be granted in the 2021 financial year. Potential outcomes based on different performance scenarios are provided for each Executive Director.
The assumptions underlying each scenario are described below1.
Fixed
Consists of base salary, benefits and pension.
Base salary is at 1 July 2020.
Benefits are valued using the figures in the total remuneration for the 2020 financial year table on page 109 (of the 2020 report).
Pensions are valued by applying cash allowance rate of 10% of base salary at 1 July 2020.
Pension
(£’000)
105
70
Base
(£’000)
1,050
700
Benefits
(£’000)
42
Chief Executive
22
Chief Financial Officer
Based on what a Director would receive if performance was in line with plan.
The opportunity for the annual bonus (‘GSTIP’) is 100% of base salary under this scenario.
The opportunity for the long-term incentive (‘GLTI’) reflects assumed achievement mid-way between threshold and
maximum performance.
The maximum award opportunity for the GSTIP is 200% of base salary.
The maximum GLTI opportunity reflects full vesting based on the maximum award levels set out in this Remuneration Policy
(i.e. 500% of base salary for the Chief Executive and 450% of base salary for the Chief Financial Officer).
Long-term incentives consist of share awards only which are measured at face value i.e. no assumption for cash dividend
equivalents payable.
Total fixed
(£’000)
1,197
792
Mid-point
Maximum
All scenarios
Nick Read Chief Executive
£’000
Margherita Della Valle Chief Financial Officer
£’000
£5,397
£5,397
58%58%
20%20%
22%22%
Mid-point
£1,197
£1,197
Fixed
£8,547
£8,547
61%61%
25%25%
14%14%
Maximum
£11,172
£11,172
70%70%
19%19%
11%11%
Maximum
(assuming 50%
share price growth)
£3,382
£3,382
56%56%
21%21%
23%23%
Mid-point
£792£792
Fixed
£5,342
£5,342
59%59%
26%26%
15%15%
Maximum
£6,917
£6,917
68%68%
20%20%
12%12%
Maximum
(assuming 50%
share price growth)
Salary, Benefits, and Pension
Annual Bonus
Long-Term Incentive
Salary, Benefits, and Pension
Annual Bonus
Long-Term Incentive
Note:
1. In line with UK reporting requirements, the fourth bar in each chart reflects the same assumptions as per the Maximum scenario but with an assumed share price increase of 50%
(which subsequently increases the hypothetical value of the long-term incentive under this scenario by the same percentage).
Recruitment remuneration
Our approach to recruitment remuneration is to pay no more than is necessary and appropriate to attract the right talent to the role.
The Remuneration Policy table (pages 103 and 104) sets out the various components which would be considered for inclusion in the remuneration
package for the appointment of an Executive Director. Any new Director’s remuneration package would include the same elements, and be subject
to the same constraints, as those of the existing Directors performing similar roles. This means a potential maximum bonus opportunity of 200% of
base salary and long-term incentive maximum face value of opportunity at award of 500% of base salary.
When considering the remuneration arrangements of individuals recruited from external roles to the Board, we will take into account the
remuneration package of that individual in their prior role. We only provide additional compensation to individuals for awards foregone. If necessary
we will seek to replicate, as far as practicable, the level and timing of such remuneration, taking into account also any remaining performance
requirements applying to it. This will be achieved by granting awards of cash or shares that vest over a timeframe similar to those forfeited and if
appropriate based on performance conditions. A commensurate reduction in quantum will be applied where it is determined that the new awards
are either not subject to performance conditions or subject to performance conditions that are not as stretching as those of the awards forfeited.
Service contracts of Executive Directors
Executive Directors’ contracts have rolling terms and are terminable on no more than 12 months’ notice.
The key elements of the service contract for executives relate to remuneration, payments on loss of office (see below), and restrictions during active
employment (and for 12 months thereafter). These restrictions include non-competition, non-solicitation of customers and employees etc.
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Remuneration Policy (continued)
Estimates of total future potential remuneration from 2021 pay packages
The tables below provide estimates of the potential future remuneration for each of the Executive Directors based on the remuneration opportunity
to be granted in the 2021 financial year. Potential outcomes based on different performance scenarios are provided for each Executive Director.
The assumptions underlying each scenario are described below1.
Fixed
Consists of base salary, benefits and pension.
Base salary is at 1 July 2020.
Benefits are valued using the figures in the total remuneration for the 2020 financial year table on page 109 (of the 2020 report).
Pensions are valued by applying cash allowance rate of 10% of base salary at 1 July 2020.
Chief Executive
Chief Financial Officer
Base
(£’000)
1,050
700
Benefits
(£’000)
42
22
Pension
(£’000)
105
70
Total fixed
(£’000)
1,197
792
Mid-point
Based on what a Director would receive if performance was in line with plan.
The opportunity for the annual bonus (‘GSTIP’) is 100% of base salary under this scenario.
The opportunity for the long-term incentive (‘GLTI’) reflects assumed achievement mid-way between threshold and
maximum performance.
Maximum
The maximum award opportunity for the GSTIP is 200% of base salary.
The maximum GLTI opportunity reflects full vesting based on the maximum award levels set out in this Remuneration Policy
(i.e. 500% of base salary for the Chief Executive and 450% of base salary for the Chief Financial Officer).
All scenarios
Long-term incentives consist of share awards only which are measured at face value i.e. no assumption for cash dividend
equivalents payable.
Nick Read Chief Executive
£’000
Margherita Della Valle Chief Financial Officer
£’000
£5,397
£5,397
58%58%
20%20%
22%22%
£1,197
£1,197
£8,547
£8,547
61%61%
25%25%
14%14%
£11,172
£11,172
70%70%
19%19%
11%11%
Maximum
(assuming 50%
share price growth)
£5,342
£5,342
59%59%
26%26%
15%15%
£3,382
£3,382
56%56%
21%21%
23%23%
£792£792
Fixed
£6,917
£6,917
68%68%
20%20%
12%12%
Maximum
(assuming 50%
share price growth)
Fixed
Mid-point
Maximum
Mid-point
Maximum
Salary, Benefits, and Pension
Annual Bonus
Long-Term Incentive
Salary, Benefits, and Pension
Annual Bonus
Long-Term Incentive
Note:
1. In line with UK reporting requirements, the fourth bar in each chart reflects the same assumptions as per the Maximum scenario but with an assumed share price increase of 50%
(which subsequently increases the hypothetical value of the long-term incentive under this scenario by the same percentage).
Recruitment remuneration
Our approach to recruitment remuneration is to pay no more than is necessary and appropriate to attract the right talent to the role.
The Remuneration Policy table (pages 103 and 104) sets out the various components which would be considered for inclusion in the remuneration
package for the appointment of an Executive Director. Any new Director’s remuneration package would include the same elements, and be subject
to the same constraints, as those of the existing Directors performing similar roles. This means a potential maximum bonus opportunity of 200% of
base salary and long-term incentive maximum face value of opportunity at award of 500% of base salary.
When considering the remuneration arrangements of individuals recruited from external roles to the Board, we will take into account the
remuneration package of that individual in their prior role. We only provide additional compensation to individuals for awards foregone. If necessary
we will seek to replicate, as far as practicable, the level and timing of such remuneration, taking into account also any remaining performance
requirements applying to it. This will be achieved by granting awards of cash or shares that vest over a timeframe similar to those forfeited and if
appropriate based on performance conditions. A commensurate reduction in quantum will be applied where it is determined that the new awards
are either not subject to performance conditions or subject to performance conditions that are not as stretching as those of the awards forfeited.
Service contracts of Executive Directors
Executive Directors’ contracts have rolling terms and are terminable on no more than 12 months’ notice.
The key elements of the service contract for executives relate to remuneration, payments on loss of office (see below), and restrictions during active
employment (and for 12 months thereafter). These restrictions include non-competition, non-solicitation of customers and employees etc.
Treatment of corporate events
All of the Company’s share plans contain provisions relating to a change of control. Outstanding awards and options would normally vest and
become exercisable on a change of control to the extent that any performance condition has been satisfied and pro-rated to reflect the acceleration
of vesting, unless the Committee determines otherwise.
In the event of a demerger, distribution (other than an ordinary dividend) or other transaction which would affect the current or future value of any
award, the Committee may allow awards to vest on the same basis as for a change of control described above. Alternatively, an adjustment may be
made to the number of shares if considered appropriate.
Payments for departing Executive Directors
In the table below we summarise the key elements of our policy on payment for loss of office. We will of course, always comply both with the
relevant plan rules and local employment legislation.
Provision
Policy
Notice period and
compensation for
loss of office in
service contracts
– 12 months’ notice from the Company to the Executive Director.
– Up to 12 months’ base salary (in line with the notice period). Notice period payments will either be made as normal
(if the executive continues to work during the notice period or is on gardening leave) or they will be made as monthly
payments in lieu of notice (subject to mitigation if alternative employment is obtained).
Treatment of annual
bonus (‘GSTIP’) on
termination under
plan rules
Treatment of unvested
long-term incentive
awards (‘GLTI’)
on termination
under plan rules
– The annual bonus will be pro-rated for the period of service during the financial year and will reflect the extent to which
Company performance has been achieved.
– The Remuneration Committee has discretion to reduce the entitlement to an annual bonus to reflect the individual’s
performance and the circumstances of the termination.
– An Executive Director’s award will vest in accordance with the terms of the plan and satisfaction of performance
conditions measured at the normal completion of the performance period, with the award pro-rated for the proportion
of the vesting period that had elapsed at the date of cessation of employment.
– The Remuneration Committee has discretion to vary the level of vesting as deemed appropriate, and in particular to
determine that awards should not vest for reasons which may include, at their absolute discretion, departure in case of
poor performance, departure without the agreement of the Board, or detrimental competitive activity.
Pension and benefits
– Generally pension and benefit provisions will continue to apply until the termination date.
– Where appropriate other benefits may be receivable, such as (but not limited to) payments in lieu of accrued holiday
and legal fees or tax advice costs in relation to the termination.
– Benefits of relative small value may continue after termination where appropriate, such as (but not limited to) mobile
phone provision.
In exceptional circumstances, an arrangement may be established specifically to facilitate the exit of a particular individual albeit that any such
arrangement would be made within the context of minimising the cost to the Group. We will only take such a course of action in exceptional
circumstances and where it is considered to be in the best interests of shareholders.
Chairman and Non-Executive Directors’ remuneration
Our policy is for the Chairman to review the remuneration of Non-Executive Directors annually following consultation with the Remuneration
Committee Chairman. Fees for the Chairman are set by the Remuneration Committee.
Element
Policy
Fees
– We aim to pay competitively for the role including consideration of the time commitment required. We benchmark the fees
against an appropriate external comparator group. We pay a fee to our Chairman which includes fees for chairmanship of
any committees. We pay a fee to each of our other Non-Executive Directors and they receive an additional fee if they chair a
committee and/or hold the position of Senior Independent Director. Non-executive fee levels are set within the maximum level
as approved by shareholders as part of our Articles of Association. We review the structure of fees from time to time and may, as
appropriate, make changes to the manner in which total fees are structured, including but not limited to any additional chair or
membership fees.
Allowances
– Under a legacy arrangement, an allowance is payable each time certain non-Europe-based Non-Executive Directors are
required to travel to attend Board and committee meetings to reflect the additional time commitment involved.
Incentives
– Non-Executive Directors do not participate in any incentive plans.
Benefits
– Non-Executive Directors do not participate in any benefit plans. The Company does not provide any contribution to their
pension arrangements. The Chairman is entitled to the use of a car and a driver whenever and wherever he is providing
his services to or representing the Company. We have been advised that for Non-Executive Directors, certain travel and
accommodation expenses in relation to attending Board meetings should be treated as a taxable benefit therefore we also
cover the tax liability for these expenses.
Non-Executive Director letters of appointment
Non-Executive Directors are engaged on letters of appointment that set out their duties and responsibilities. The appointment of Non-Executive
Directors may be terminated without compensation. Non-Executive Directors are generally not expected to serve for a period exceeding nine years.
For further information refer to the Nominations and Governance Committee section of the Annual Report.
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Annual Report on Remuneration
Remuneration Committee
In this section we give details of the composition of the Remuneration Committee and activities undertaken during the 2021 financial year.
The Committee’s function is to exercise independent judgement and consists only of the following independent Non-Executive Directors:
Chairman: Valerie Gooding
Committee members: Michel Demaré, Dame Clara Furse and Renee James
The Committee regularly consults with Nick Read, the Chief Executive, and Leanne Wood, the Chief Human Resources Officer, on various matters
relating to the appropriateness of awards for Executive Directors and senior executives, though they are not present when their own compensation is
discussed. In addition, Adrian Jackson, the Group Reward and Policy Director, provides a perspective on information provided to the Committee, and
requests information and analysis from external advisers as required. Rosemary Martin, the Group General Counsel and Company Secretary, advises
the Committee on corporate governance guidelines and is Secretary to the Committee.
External advisers
The Remuneration Committee seeks and considers advice from independent remuneration advisers where appropriate. The appointed advisers, Willis
Towers Watson, were selected following a thorough process led by the Chairman of the Remuneration Committee at the time and were appointed by
the Committee in 2007. The Chairman of the Remuneration Committee has direct access to the advisers as and when required, and the Committee
determines the protocols by which the advisers interact with management in support of the Committee. The advice and recommendations of the
external advisers are used as a guide, but do not serve as a substitute for thorough consideration of the issues by each Committee member. Advisers
attend Committee meetings occasionally, as and when required by the Committee.
Willis Towers Watson is a member of the Remuneration Consultants’ Group and, as such, voluntarily operates under the Remuneration Consultants’
Group Code of Conduct in relation to executive remuneration consulting in the UK. This is based upon principles of transparency, integrity, objectivity,
competence, due care and confidentiality by executive remuneration consultants. Willis Towers Watson has confirmed that it adheres to that Code of
Conduct throughout the year for all remuneration services provided to Vodafone and therefore the Committee is satisfied that it is independent and
objective. The Remuneration Consultants’ Group Code of Conduct is available at remunerationconsultantsgroup.com.
Adviser
Willis Towers Watson Remuneration
Appointed by
Committee
in 2007
Services provided to the Committee
Advice on market practice; governance;
provision of market data on executive
reward; reward consultancy; advice specific
to remuneration matters in the context of
COVID-19; and performance analysis.
Note:
1. Fees are determined on a time spent basis.
Fees for services provided
to the Committee
£’0001
£158
Other services provided to the Company
Reward and benefits consultancy;
provision of benchmark data; outsourced
pension administration; and insurance
consultancy services.
2020 Annual General Meeting – Remuneration Policy voting results
At the 2020 Annual General Meeting there was a binding vote on our Remuneration Policy. Details of the voting outcomes are provided in the
table below.
Remuneration Policy
Votes for
17,195,227,349
%
96.41
Votes against
639,935,461
%
3.59
Total votes
17,835,162,810
Withheld
185,334,870
2020 Annual General Meeting – Remuneration Report voting results
At the 2020 Annual General Meeting there was an advisory vote on our Remuneration Report. Details of the voting outcomes are provided in the
table below.
Remuneration Report
Votes for
17,153,884,741
%
95.50
Votes against
807,934,531
%
4.50
Total votes
17,961,819,272
Withheld
58,861,777
Meetings
The Remuneration Committee had five formal meetings during the year. In addition, informal conference calls can also take place. The principal agenda
items at the formal meetings were as follows:
Meeting
May 2020
Agenda items
– 2020 annual bonus achievement and 2021 targets/ranges
– 2018 long-term incentive award vesting and 2021 targets/ranges
– External market update
– 2020 Directors’ Remuneration Report
July 2020
– 2020 AGM update
November 2020
– 2021 long-term incentive award grant
January 2021
– Share plan update
March 2021
– Risk assessment of incentive plans
– 2022 short-term incentive structure
– Remuneration arrangements across Vodafone
– Committee’s terms of reference
– Vantage Towers update
– Share plan update
– Gender Pay Gap reporting
– Chairman and Non-Executive Director fee levels
– 2022 reward packages for the Executive Committee
– Remuneration Committee performance review
– 2021 Directors’ Remuneration Report
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Financials
Other information
2021 remuneration
In this section we summarise the pay packages awarded to our Executive Directors for performance in the 2021 financial year versus 2020. Specifically
we have provided a table that shows all remuneration that was earned by each individual during the year and computed a single total remuneration
figure for the year. The value of the annual bonus (‘GSTIP’) reflects what was earned in respect of the year but will be paid out in cash in the following
year. Similarly the value of the long-term incentive (‘GLTI’) reflects the share awards which will vest in June 2021 as a result of the performance through
the three-year period ended at the completion of our financial year on 31 March 2021.
Consideration of the use of discretion
The Remuneration Committee reviews all incentive awards prior to payment and uses judgement to ensure that the final assessments of performance
are fair and appropriate. If circumstances warrant it, the Committee may adjust the final payment or vesting downwards.
The Committee reviewed incentive outcomes at the May 2021 meeting and determined them to be appropriate in light of business performance
across the relevant performance periods. The Committee agreed that the business had remained resilient during the COVID-19 pandemic, noting
how the business had responded in an agile and effective manner during the year under review. In particular the Committee noted that no employees
had been furloughed (either in the year under review, or the prior year), the business was continuing to maintain a dividend, and wider employee pay
reviews, including the delivery of performance-related pay, had been carried out in both years of the pandemic. It was subsequently agreed that no
adjustments were required to either the short-term or long-term incentive outcomes this year.
Total remuneration for the 2021 financial year (audited)
Salary/fees
Taxable benefits1
Annual bonus: GSTIP (see below for further detail)
Total long-term incentive2:
GLTI awards 3
GLTI dividends 4
Pension/cash in lieu of pension
Other5
Total
Total Fixed Remuneration
Total Variable Remuneration
2021
£’000
1,050
32
1,301
1,126
952
174
105
1
3,615
1,188
2,427
Nick Read
2020
£’000
1,050
42
1,090
1,241
995
246
105
1
3,529
1,198
2,331
2021
£’000
700
21
867
686
580
106
70
–
2,344
791
1,553
Margherita Della Valle
2020
£’000
700
22
727
257
218
39
70
–
1,776
792
984
Notes:
1. Taxable benefits include amounts in respect of: – Private healthcare (2021: Nick Read £2,683, Margherita Della Valle £2,153; 2020: £2,583 for both Executive Directors);
– Cash car allowance £19,200 p.a.; and
– Travel (2021: Nick Read £10,114, Margherita Della Valle £nil; 2020: Nick Read £19,759, Margherita Della Valle £325).
2. The share prices used for both the 2021 and 2020 values, as set out in note 3 below, are lower than the grant prices for both respective awards. As such, no amount of the values shown in either
column are attributable to share price appreciation during the performance or vesting periods.
3. The value shown in the 2020 column is the award which vested on 4 August 2020 in respect of Nick Read and 26 June 2020 in respect of Margherita Della Valle, and is valued using the respective
execution share prices on 4 August 2020 of 118.02 pence and on 26 June 2020 of 127.28 pence. The value shown in the 2020 column for Margherita Della Valle reflects the vesting of a share award
granted in June 2017 prior to her appointment to the Board. The value shown in the 2021 column is the award which vests on 26 June 2021 and is valued using an average closing share price over
the last quarter of the 2021 financial year of 129.73 pence.
4. Nick Read and Margherita Della Valle receive a cash award equivalent in value to the dividends that would have been paid during the vesting period on any shares that vest. The dividend value shown
in 2021 relates to awards vesting on 26 June 2021. The value in the 2020 column for Margherita Della Vale reflects the value of dividend equivalent shares accrued during the performance period in
respect of the award which vested on 26 June 2020 (which was granted prior to her appointment to the Board).
5. Reflects the value of the SAYE benefit which is calculated as £375 x 12 months x 20% to reflect the discount applied based on savings made during the year.
2021 annual bonus (‘GSTIP’) payout (audited)
In the table below we disclose our achievement against each of the performance measures and targets in our annual bonus (‘GSTIP’) and the resulting
total annual bonus payout level for the year ended 31 March 2021 of 62.0% of maximum. This is applied to the maximum bonus level of 200% of base
salary for each executive. Commentary on our performance against each measure is provided below the table.
Annual Report on Remuneration
Remuneration Committee
In this section we give details of the composition of the Remuneration Committee and activities undertaken during the 2021 financial year.
The Committee’s function is to exercise independent judgement and consists only of the following independent Non-Executive Directors:
Chairman: Valerie Gooding
Committee members: Michel Demaré, Dame Clara Furse and Renee James
The Committee regularly consults with Nick Read, the Chief Executive, and Leanne Wood, the Chief Human Resources Officer, on various matters
relating to the appropriateness of awards for Executive Directors and senior executives, though they are not present when their own compensation is
discussed. In addition, Adrian Jackson, the Group Reward and Policy Director, provides a perspective on information provided to the Committee, and
requests information and analysis from external advisers as required. Rosemary Martin, the Group General Counsel and Company Secretary, advises
the Committee on corporate governance guidelines and is Secretary to the Committee.
External advisers
The Remuneration Committee seeks and considers advice from independent remuneration advisers where appropriate. The appointed advisers, Willis
Towers Watson, were selected following a thorough process led by the Chairman of the Remuneration Committee at the time and were appointed by
the Committee in 2007. The Chairman of the Remuneration Committee has direct access to the advisers as and when required, and the Committee
determines the protocols by which the advisers interact with management in support of the Committee. The advice and recommendations of the
external advisers are used as a guide, but do not serve as a substitute for thorough consideration of the issues by each Committee member. Advisers
attend Committee meetings occasionally, as and when required by the Committee.
Willis Towers Watson is a member of the Remuneration Consultants’ Group and, as such, voluntarily operates under the Remuneration Consultants’
Group Code of Conduct in relation to executive remuneration consulting in the UK. This is based upon principles of transparency, integrity, objectivity,
competence, due care and confidentiality by executive remuneration consultants. Willis Towers Watson has confirmed that it adheres to that Code of
Conduct throughout the year for all remuneration services provided to Vodafone and therefore the Committee is satisfied that it is independent and
objective. The Remuneration Consultants’ Group Code of Conduct is available at remunerationconsultantsgroup.com.
Adviser
Appointed by
Services provided to the Committee
Willis Towers Watson Remuneration
Advice on market practice; governance;
Committee
provision of market data on executive
in 2007
reward; reward consultancy; advice specific
to remuneration matters in the context of
COVID-19; and performance analysis.
Note:
1. Fees are determined on a time spent basis.
Fees for services provided
to the Committee
£’0001
£158
Other services provided to the Company
Reward and benefits consultancy;
provision of benchmark data; outsourced
pension administration; and insurance
consultancy services.
table below.
Remuneration Policy
table below.
Remuneration Report
Meetings
Meeting
May 2020
2020 Annual General Meeting – Remuneration Policy voting results
At the 2020 Annual General Meeting there was a binding vote on our Remuneration Policy. Details of the voting outcomes are provided in the
Votes for
17,195,227,349
%
96.41
Votes against
639,935,461
%
3.59
Total votes
Withheld
17,835,162,810
185,334,870
2020 Annual General Meeting – Remuneration Report voting results
At the 2020 Annual General Meeting there was an advisory vote on our Remuneration Report. Details of the voting outcomes are provided in the
Votes for
17,153,884,741
%
95.50
Votes against
807,934,531
%
4.50
Total votes
Withheld
17,961,819,272
58,861,777
The Remuneration Committee had five formal meetings during the year. In addition, informal conference calls can also take place. The principal agenda
items at the formal meetings were as follows:
Agenda items
– 2020 annual bonus achievement and 2021 targets/ranges
– External market update
– 2018 long-term incentive award vesting and 2021 targets/ranges
– 2020 Directors’ Remuneration Report
July 2020
– 2020 AGM update
November 2020
– 2021 long-term incentive award grant
January 2021
– Share plan update
March 2021
– Risk assessment of incentive plans
– 2022 short-term incentive structure
– Remuneration arrangements across Vodafone
– Committee’s terms of reference
– Vantage Towers update
– Share plan update
– Gender Pay Gap reporting
– Chairman and Non-Executive Director fee levels
– 2022 reward packages for the Executive Committee
– Remuneration Committee performance review
– 2021 Directors’ Remuneration Report
Performance measure
Adjusted EBIT
Adjusted free cash flow
Customer appreciation KPIs
Total annual bonus payout level
Payout at
maximum
performance
(% of salary)
66.6%
66.6%
66.6%
Actual payout
(% of salary)
40.9%
42.8%
40.2%
200.0% 123.9%
Actual payout
(% of overall
bonus
maximum)
20.5%
21.4%
20.1%
62.0%
Note:
1. These figures are adjusted for the impact of M&A, foreign exchange movements and any changes in accounting treatment.
Threshold
performance
level
€bn
3.3
4.2
See overleaf for further details
Target
performance
level
€bn
4.2
5.0
Maximum
performance
level
€bn
5.1
5.9
Actual
performance
level1
€bn
4.4
5.3
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Annual Report on Remuneration (continued)
Financial metrics
As set out in the table above, free cash flow and EBIT finished above the midpoints of the respective target ranges reflecting strong performance in
markets including Germany, Spain, Turkey and South Africa.
Customer appreciation KPIs
An assessment of performance under the customer appreciation KPIs measure was conducted on a market by market basis. Each market was assessed
against a number of different metrics which included:
– Churn is defined as total gross customer disconnections in the period divided by the average total customers in the period.
– Revenue market share is based on our total service revenue and that of our competitors in the markets we operate in.
– Net Promoter Score (‘NPS’) for both Consumer and Vodafone Business – defined as the extent to which our customers would recommend us.
All measures utilise data from our local markets which is collected and validated for quality and consistency by independent third-party agencies
where possible.
Our overall customer appreciation KPI outcome reflects good performance during the year including in a number of our largest markets (most notably
Germany and the UK). Further details on performance against each key metric are set out below. The Committee agreed that a final payout slightly
above the mid-point of the target range was appropriate for this measure.
In respect of churn, the business recorded very strong Group results with year-on-year underlying performance also showing an improvement. Such
improvement was primarily driven by strong performance in Germany and the UK. Italy and Spain also finished the year off well despite increased
competition in these markets.
Revenue market share in our four largest European markets improved slightly during the year with the increases recorded in Germany and the UK
offset by less favourable performance in Spain and Italy. The gap to the market leader reduced in all four of these markets, with the UK also improving
its position to joint second. Our market position in Germany and Spain remained stable whilst our position in Italy fell.
Elsewhere in the business performance was mixed with a number of markets gaining market share and reducing the gap to the leader (with Portugal
improving in both of these areas) albeit a number of others, including Turkey, recording a fall in market share and a widening in the gap to the market
leader. Market position across these operations remained stable with the exception of Romania where we improved our position to second.
Consumer NPS performance during the year saw us becoming the new market leader or co-leader in Germany and Italy, with the UK also moving into
second place in the market for the first time. In Turkey we closed the gap to our competitors (albeit in the context of declining NPS scores across all
local competitors) whilst in South Africa increased pressure saw us move from outright leader to co-leader in this market.
Business NPS performance remained strong during the year and we continue to hold leadership or co-leadership positions in the large majority of our
markets including Italy, Spain and South Africa. In Spain we became the market leader for the first time in four years following a significant improvement
against our competition, whilst in Germany and Turkey we retained second place whilst also reducing the gap to our competitors. During the year the
UK lost its co-leadership position in what is an extremely close and competitive market.
It is within this context that overall performance against our customer appreciation KPIs metrics during the year was judged to be above the mid-point
of the target range. The aggregated performance for the Group is calculated on a revenue-weighted average to give an overall achievement. The overall
Group achievement for the year was 60.4% which reflects consistently good performance across our largest markets in both Europe and Africa.
Overall outcome
2021 annual bonus (‘GSTIP’) amounts
Nick Read
Margherita Della Valle
Base salary
£’000
1,050
700
Maximum bonus
% of base salary
200%
200%
2021 payout
% of maximum
62.0%
62.0%
Actual payment
£’000
1,301
867
In line with our shareholder approved Remuneration Policy, as Margherita Della Valle is still building towards her shareholding requirement 25% of her
post-tax bonus will be deferred into shares for two years. Further details on shareholding requirements can be found on pages 94 and 95.
Long-term incentive (‘GLTI’) award vesting in June 2021 (audited)
Vesting outcome
The 2019 long-term incentive (‘GLTI’) awards which were made to executives in June 2018 will vest at 22.4% of maximum in June 2021. The performance
conditions for the three-year period ending in the 2021 financial year are as follows:
Adjusted FCF performance – 2/3 of total award (€bn)
<15.15
Below threshold
15.15
Threshold
18.85
Maximum
TSR outperformance – 1/3 of total award
Below threshold
Threshold
Maximum
Below median
Median
10.0% p.a.
TSR peer group
Bharti
BT Group
Deutsche Telekom
Liberty Global
MTN
Orange
Royal KPN
Telecom Italia
Telefónica
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Annual Report on Remuneration (continued)
Financial metrics
markets including Germany, Spain, Turkey and South Africa.
Customer appreciation KPIs
against a number of different metrics which included:
As set out in the table above, free cash flow and EBIT finished above the midpoints of the respective target ranges reflecting strong performance in
An assessment of performance under the customer appreciation KPIs measure was conducted on a market by market basis. Each market was assessed
– Churn is defined as total gross customer disconnections in the period divided by the average total customers in the period.
– Revenue market share is based on our total service revenue and that of our competitors in the markets we operate in.
– Net Promoter Score (‘NPS’) for both Consumer and Vodafone Business – defined as the extent to which our customers would recommend us.
All measures utilise data from our local markets which is collected and validated for quality and consistency by independent third-party agencies
where possible.
Our overall customer appreciation KPI outcome reflects good performance during the year including in a number of our largest markets (most notably
Germany and the UK). Further details on performance against each key metric are set out below. The Committee agreed that a final payout slightly
above the mid-point of the target range was appropriate for this measure.
In respect of churn, the business recorded very strong Group results with year-on-year underlying performance also showing an improvement. Such
improvement was primarily driven by strong performance in Germany and the UK. Italy and Spain also finished the year off well despite increased
competition in these markets.
Revenue market share in our four largest European markets improved slightly during the year with the increases recorded in Germany and the UK
offset by less favourable performance in Spain and Italy. The gap to the market leader reduced in all four of these markets, with the UK also improving
its position to joint second. Our market position in Germany and Spain remained stable whilst our position in Italy fell.
Elsewhere in the business performance was mixed with a number of markets gaining market share and reducing the gap to the leader (with Portugal
improving in both of these areas) albeit a number of others, including Turkey, recording a fall in market share and a widening in the gap to the market
leader. Market position across these operations remained stable with the exception of Romania where we improved our position to second.
Consumer NPS performance during the year saw us becoming the new market leader or co-leader in Germany and Italy, with the UK also moving into
second place in the market for the first time. In Turkey we closed the gap to our competitors (albeit in the context of declining NPS scores across all
local competitors) whilst in South Africa increased pressure saw us move from outright leader to co-leader in this market.
Business NPS performance remained strong during the year and we continue to hold leadership or co-leadership positions in the large majority of our
markets including Italy, Spain and South Africa. In Spain we became the market leader for the first time in four years following a significant improvement
against our competition, whilst in Germany and Turkey we retained second place whilst also reducing the gap to our competitors. During the year the
UK lost its co-leadership position in what is an extremely close and competitive market.
It is within this context that overall performance against our customer appreciation KPIs metrics during the year was judged to be above the mid-point
of the target range. The aggregated performance for the Group is calculated on a revenue-weighted average to give an overall achievement. The overall
Group achievement for the year was 60.4% which reflects consistently good performance across our largest markets in both Europe and Africa.
Overall outcome
2021 annual bonus (‘GSTIP’) amounts
Nick Read
Margherita Della Valle
Base salary
£’000
1,050
700
Maximum bonus
% of base salary
2021 payout
% of maximum
Actual payment
200%
200%
62.0%
62.0%
£’000
1,301
867
In line with our shareholder approved Remuneration Policy, as Margherita Della Valle is still building towards her shareholding requirement 25% of her
post-tax bonus will be deferred into shares for two years. Further details on shareholding requirements can be found on pages 94 and 95.
The 2019 long-term incentive (‘GLTI’) awards which were made to executives in June 2018 will vest at 22.4% of maximum in June 2021. The performance
Long-term incentive (‘GLTI’) award vesting in June 2021 (audited)
Vesting outcome
conditions for the three-year period ending in the 2021 financial year are as follows:
Adjusted FCF performance – 2/3 of total award (€bn)
TSR outperformance – 1/3 of total award
Below threshold
Threshold
Maximum
<15.15
15.15
18.85
Below threshold
Below median
Threshold
Maximum
Median
10.0% p.a.
TSR peer group
Bharti
BT Group
Deutsche Telekom
Liberty Global
MTN
Orange
Royal KPN
Telecom Italia
Telefónica
The adjusted free cash flow for the three-year period ended on
31 March 2021 was €16.5 billion and equates to vesting under the
FCF element of 33.6% of maximum.
The chart to the right shows that our TSR performance over the
three-year period ended on 31 March 2021 was below that of the
median of our comparator group resulting in no vesting under the
TSR element.
When the weighting of each condition is applied to the respective
performance outcomes, this results in a calculated payout of 22.4%
of overall maximum.
The vesting impact of this outcome when applied to the number of
shares granted is set out in the table below.
2019 GLTI award: TSR performance
Growth in the value of a hypothetical US$100 holding
over the performance period, six month averaging
100
120
110
100
90
80
70
60
50
94
88
98
88
70
94
80
66
93
75
73
98
72
68
86
65
59
03/18
09/18
03/19
09/19
03/20
09/20
03/21
Vodafone Group
Median of peer group
Outperformance of
median 10% p.a.
2019 GLTI share awards subject to performance conditions vesting in June 2021
Nick Read
Margherita Della Valle
Maximum
number
of shares
Adjusted free cash flow
performance payout
% of maximum
Relative TSR
performance payout
% of maximum
Weighted
performance payout
% of maximum
3,278,043
1,995,330
33.6%
33.6%
0.0%
0.0%
22.4%
22.4%
Number of
shares vesting
733,953
446,754
Value of
shares vesting
(’000)
£952
£580
Specified procedures are performed by our internal audit team over the adjusted free cash flow to assist with the Committee’s assessment of performance.
The performance assessment in respect of the TSR measure is undertaken by Willis Towers Watson. Details of how the plan works can be found in the
Remuneration Policy.
Long-term incentive (‘GLTI’) awarded during the year (audited)
As set out in last year’s Directors’ Remuneration Report, due to the exceptional market conditions created by COVID-19, the Committee agreed to delay
the grant of the 2021 award, including any decision on the exact weightings of the performance measures, until November 2020.
The Committee met shortly prior to the grant to agree the details of the November 2020 award. During its discussion the Committee agreed that
the business had continued to show resilience despite COVID-19 as illustrated through how no employees had been furloughed, the business had
continued to pay a dividend and the share price was stable.
The Committee therefore agreed it was appropriate to grant the 2021 award in line with what had been communicated as the normal policy
approach and approved by shareholders as part of the Policy Report at the July 2020 AGM. This included balancing the performance conditions in
line with the expected normal weightings (as set out below), granting awards in line with the newly reduced maximum opportunity levels for both
Executive Directors, and calculating awards using the closing share price of the day immediately prior to grant, as per the Committee’s normal approach.
The independent performance conditions for the 2021 long-term incentive awards made in November 2020, and subject to a three-year performance
period ending 31 March 2023, are adjusted free cash flow (60% of total award), relative TSR (30% of total award) and ESG (10% of total award)
performance as follows:
Adjusted FCF performance
(60% of total award)
Below threshold
Threshold
Maximum
TSR performance
(30% of total award)
Below threshold
Threshold
Maximum
TSR peer group
BT Group
Orange
Telefónica Deutschland
Adjusted FCF performance
(€bn)
<14.70
14.70
16.70
Vesting percentage
(% of FCF element)
0%
20%
100%
TSR outperformance
Below median
Median
8.50% p.a. (80th percentile equivalent)
Vesting percentage
(% of TSR element)
0%
20%
100%
Deutsche Telekom
Royal KPN
Liberty Global
Telecom Italia
MTN
Telefónica
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Annual Report on Remuneration (continued)
Purpose pillar
Planet
ESG metric for 2021 GLTI
Greenhouse gas reduction
Overall ambition
50% reduction from FY17
baseline by 2025
Baseline position for 2021 GLTI
11% reduction from FY17
baseline at 31 March 2020
Ambition for 2021 GLTI (10% of total award)
40% reduction from FY17
baseline by 31 March 2023
Inclusion for All
Women in management
Digital Society
M-Pesa connections
40% representation of
women in management
by 2030
31% representation of
women in management at
31 March 2020
34% representation of
women in management
by 31 March 2023
Connect >50m people
and their families to
mobile money by 2025
40.5m connections
at 31 March 2020
56m connections
by 31 March 2023
The table below sets out the conditional awards of shares made to the Executive Directors in November 2020.
2021 GLTI performance share awards made in November 2020
Nick Read
Margherita Della Valle
Maximum
vesting level
(number of shares)
4,203,362
2,522,017
Maximum
vesting level
(face value1)
£5,249,999
£3,149,999
Proportion of
maximum award vesting at
minimum performance
1/5th
1/5th
Performance
period end
31 Mar 2023
31 Mar 2023
Note:
1. Face value calculated based on the closing share price on 29 November 2020 (day immediately preceding the date of grant) of 124.9 pence.
Dividend equivalents on the shares that vest are paid in cash after the vesting date.
Outstanding awards
The structure for awards made in June 2019 (vesting June 2022) and November 2020 (vesting August 2023) is set out on the previous page.
Further details on the structure of these awards, and relevant targets, can be found in the Annual Report on Remuneration of the relevant year.
All-employee share plans
During the year the Executive Directors were eligible to participate in the Vodafone Group Sharesave Plan which is open to all UK employees.
The Vodafone Sharesave Plan is an HM Revenue & Customs (‘HMRC’) approved scheme open to all staff permanently employed by a Vodafone
company in the UK as of the eligibility date. Options under the plan are granted at up to a 20% discount to market value. Executive Directors’
participation is included in the option table on page 96.
Pensions (audited)
During the 2021 financial year Nick Read received a cash allowance of 10% of base salary. Margherita Della Valle accrued benefits under the defined
contribution pension plan of £3,999.96 with the remainder of her 10% of base salary pension benefit for the year delivered as a cash allowance.
Nick Read is a deferred member of the Vodafone Group Pension Scheme which closed to future accrual in 2010 before he was an Executive Director.
Margherita Della Valle has not participated in a Vodafone sponsored defined benefit scheme during her employment.
The Executive Directors are provided benefits in the event of death in service. In the event of ill health, an entitlement to benefit of 2/3 of base salary,
up to a maximum benefit determined by the insurer, may be provided up until State Pension Age. In respect of the Executive Committee members,
the Group has made aggregate contributions of £194,955 (2020: £273,771) into defined contribution pension schemes.
Alignment to shareholder interests (audited)
Current levels of ownership by the Executive Directors, and the date by which the goal should be or should have been achieved, are shown below.
Based on a share price of 129.73 pence, Nick Read is currently above, and Margherita Della Valle currently below, the respective shareholding
requirement. As shown in the charts below, both Executive Directors increased their shareholding levels during the year. Margherita Della Valle joined
the Board on 27 July 2018 and will continue to work towards achieving her goal prior to July 2023.
At 31 March 2021
Nick Read
Margherita Della Valle
Nick Read
Actual holding
(number of shares)
Requirement
as a % of salary
500%
400%
Current %
of salary held
545%
275%
% of requirement
achieved
109%
69%
Number of
shares owned
4,409,649
1,484,621
Value of
shareholding
£5.7m
£1.9m
Date for requirement
to be achieved
July 2023
July 2023
Holding scenario
(% of salary)
Goal Deadline:
July 2023
Margherita Della Valle
Actual holding
(number of shares)
Holding scenario
(% of salary)
Goal Deadline:
July 2023
4.4m4.4m
25%
increase
3.5m3.5m
654%654%
545%545%
500%500%
495%495%
436%436%
1.5m
43%
increase
1.0m
400%
330%330%
275%
219% 220%220%
31/03
2021
31/03
2020
Goal Actual
31/03
2021
Actual
31/03
2020
Illustrative
20% SP
decrease
Illustrative
20% SP
increase
31/03
2021
31/03
2020
Goal Actual
31/03
2021
Actual
31/03
2020
Illustrative
20% SP
decrease
Illustrative
20% SP
increase
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Other information
Annual Report on Remuneration (continued)
Purpose pillar
Planet
ESG metric for 2021 GLTI
Overall ambition
Baseline position for 2021 GLTI
Ambition for 2021 GLTI (10% of total award)
Greenhouse gas reduction
50% reduction from FY17
11% reduction from FY17
40% reduction from FY17
baseline by 2025
baseline at 31 March 2020
baseline by 31 March 2023
Inclusion for All
Women in management
40% representation of
31% representation of
34% representation of
women in management
women in management at
women in management
Digital Society
M-Pesa connections
by 2030
Connect >50m people
and their families to
mobile money by 2025
31 March 2020
40.5m connections
at 31 March 2020
by 31 March 2023
56m connections
by 31 March 2023
The table below sets out the conditional awards of shares made to the Executive Directors in November 2020.
Maximum
vesting level
(number of shares)
4,203,362
2,522,017
Maximum
vesting level
(face value1)
Proportion of
maximum award vesting at
minimum performance
£5,249,999
£3,149,999
1/5th
1/5th
Performance
period end
31 Mar 2023
31 Mar 2023
2021 GLTI performance share awards made in November 2020
Nick Read
Margherita Della Valle
Note:
Outstanding awards
All-employee share plans
1. Face value calculated based on the closing share price on 29 November 2020 (day immediately preceding the date of grant) of 124.9 pence.
Dividend equivalents on the shares that vest are paid in cash after the vesting date.
The structure for awards made in June 2019 (vesting June 2022) and November 2020 (vesting August 2023) is set out on the previous page.
Further details on the structure of these awards, and relevant targets, can be found in the Annual Report on Remuneration of the relevant year.
During the year the Executive Directors were eligible to participate in the Vodafone Group Sharesave Plan which is open to all UK employees.
The Vodafone Sharesave Plan is an HM Revenue & Customs (‘HMRC’) approved scheme open to all staff permanently employed by a Vodafone
company in the UK as of the eligibility date. Options under the plan are granted at up to a 20% discount to market value. Executive Directors’
participation is included in the option table on page 96.
Pensions (audited)
During the 2021 financial year Nick Read received a cash allowance of 10% of base salary. Margherita Della Valle accrued benefits under the defined
contribution pension plan of £3,999.96 with the remainder of her 10% of base salary pension benefit for the year delivered as a cash allowance.
Nick Read is a deferred member of the Vodafone Group Pension Scheme which closed to future accrual in 2010 before he was an Executive Director.
Margherita Della Valle has not participated in a Vodafone sponsored defined benefit scheme during her employment.
The Executive Directors are provided benefits in the event of death in service. In the event of ill health, an entitlement to benefit of 2/3 of base salary,
up to a maximum benefit determined by the insurer, may be provided up until State Pension Age. In respect of the Executive Committee members,
the Group has made aggregate contributions of £194,955 (2020: £273,771) into defined contribution pension schemes.
Alignment to shareholder interests (audited)
Current levels of ownership by the Executive Directors, and the date by which the goal should be or should have been achieved, are shown below.
Based on a share price of 129.73 pence, Nick Read is currently above, and Margherita Della Valle currently below, the respective shareholding
requirement. As shown in the charts below, both Executive Directors increased their shareholding levels during the year. Margherita Della Valle joined
the Board on 27 July 2018 and will continue to work towards achieving her goal prior to July 2023.
At 31 March 2021
Nick Read
Margherita Della Valle
Nick Read
Actual holding
(number of shares)
Current %
% of requirement
Value of
Date for requirement
of salary held
545%
275%
achieved
109%
69%
Number of
shares owned
4,409,649
1,484,621
shareholding
£5.7m
£1.9m
to be achieved
July 2023
July 2023
Requirement
as a % of salary
500%
400%
Goal Deadline:
July 2023
Holding scenario
(% of salary)
Margherita Della Valle
Actual holding
(number of shares)
Holding scenario
(% of salary)
Goal Deadline:
July 2023
4.4m4.4m
25%
increase
3.5m3.5m
654%654%
545%545%
500%500%
495%495%
436%436%
1.5m
43%
increase
1.0m
400%
330%330%
275%
219% 220%220%
31/03
2021
31/03
2020
Goal Actual
31/03
2021
Actual
31/03
2020
Illustrative
Illustrative
20% SP
decrease
20% SP
increase
31/03
2021
31/03
2020
Goal Actual
31/03
2021
Actual
31/03
2020
Illustrative
Illustrative
20% SP
decrease
20% SP
increase
The shareholding requirements include a post employment condition whereby the Executive Directors will need to continue to hold shares equivalent
to the value of their requirement at the date of departure (or actual holding on departure if the requirement has not been reached during employment)
for a further two years post employment. The Committee has a number of processes in place to ensure this condition is met, including executives
agreeing to these terms prior to receiving an award, executives holding the majority of their shares (and at least up to the value of their requirement)
in a nominee rather than a personal account, and the Committee having the ability to lapse any unvested GLTI awards if the condition is not met.
Collectively the Executive Committee including the Executive Directors owned 24,478,674 Vodafone shares at 31 March 2021, with a value of over
£31.7 million. None of the Executive Committee members’ shareholdings amounts to more than 1% of the issued shares in that class of share,
excluding treasury shares.
Directors’ interests in the shares of the Company (audited)
A summary of interests in shares and scheme interests of the Directors who served during the year is given below. More details of the outstanding
shares subject to award and options are set out in the table below and on page 96.
At 31 March 2021
Executive Directors
Nick Read
Margherita Della Valle
Total
Total number
of interests in shares
(at maximum)1
Unvested with
performance conditions
(at target)
Unvested with
performance conditions
(at maximum)
Share options
SAYE
(unvested without
performance conditions)
15,791,982
8,368,355
24,160,337
5,388,288
3,257,896
8,646,184
11,369,041
6,883,734
18,252,775
13,292
–
13,292
Note:
1. This includes both owned shares and the maximum number of unvested share awards.
The total number of interests in shares includes interests of connected persons, unvested share awards and share options. During the year the
Committee was informed that Vittorio Colao (who retired from the Board on 30 September 2018) had been appointed as Minister for Technological
Innovation and Digital Transition within the Italian government. In order to avoid any conflicts of interest, Mr Colao was required to sell his shareholding
in Vodafone Group Plc. This included 122,075 vested shares due to be released on 1 July 2021 and a further 141,799 vested shares due to be released
on 4 August 2022. In light of the circumstances, the Committee agreed to release these shares from their respective holding periods early in order to
allow Mr Colao to meet the compliance requirements of his new role.
At 31 March 2021
Non-Executive Directors
Sanjiv Ahuja
Sir Crispin Davis
Michel Demaré
Dame Clara Furse
Valerie Gooding
Renee James
Gerard Kleisterlee (position at retirement)
Maria Amparo Moraleda Martinez
David Nish
David Thodey (position at retirement)
Jean-François van Boxmeer2
Total number of interests in shares
14,000 (ADRs)1
34,500
100,000
75,000
28,970
27,272
220,000
30,000
107,018
303,653
–
Notes:
1. One ADR is equivalent to 10 ordinary shares.
2. On 18 May 2021 Jean-François van Boxmeer acquired an interest in 305,000 shares resulting in a total interest in 305,000 shares as at 18 May 2021.
At 18 May 2021, and during the period from 1 April 2021 to 18 May 2021, no Director had any interest in the shares of any subsidiary company. Other
than those individuals included in the tables above who were Board members at 31 March 2021, members of the Group’s Executive Committee at
31 March 2021 had an aggregate beneficial interest in 18,584,404 ordinary shares of the Company. At 18 May 2021, the Directors had an aggregate
beneficial interest in 6,742,030 ordinary shares of the Company and the Executive Committee members had an aggregate beneficial interest in
18,584,404 ordinary shares of the Company. None of the Directors or the Executive Committee members had an individual beneficial interest
amounting to greater than 1% of the Company’s ordinary shares.
With the exception of the acquisition of an interest in 305,000 shares by Jean-François van Boxmeer as outlined above, the Directors’ total number of
interests in shares did not change during the period from 1 April 2021 to 18 May 2021.
Performance share awards
The maximum number of shares subject to outstanding awards that have been granted to Directors under the long-term incentive (‘GLTI’) plan are
currently as follows:
GLTI performance share awards
Nick Read
Margherita Della Valle
2019 award
Awarded: June 2018
Performance period ending: March 2021
Vesting date: June 2021
Share price at grant: 184.2 pence
3,278,043
1,995,330
2020 award1
Awarded: June 2019
Performance period ending: March 2022
Vesting date: June 2022
Share price at grant: 124.2 pence
3,887,636
2,366,387
2021 award
Awarded: November 2020
Performance period ending: March 2023
Vesting date: August 2023
Share price at grant: 124.9 pence
4,203,362
2,522,017
Note:
1. Reflects shares subject to outstanding awards following voluntary reduction as set out in the 2020 Annual Report on Remuneration.
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Other information
Annual Report on Remuneration (continued)
Details of the performance conditions for the awards can be found on pages 92 to 94 or in the Remuneration Report from the relevant year.
Share options
The following information summarises the Executive Directors’ options under the HMRC approved Vodafone Group 2008 Sharesave Plan (‘SAYE’).
No other Directors have options under any schemes and, other than under the SAYE, no options have been granted since 2007. Options under the
SAYE were granted at a discount of 20% to the market value of the shares at the time of the grant. No other options may be granted at a discount.
At
1 April 2020
or date of
appointment
Number
of shares
4,854
8,438
13,292
Grant date
Mar 2017
Jul 2017
Nick Read
SAYE
SAYE
Total
Options
granted
during the
2021 financial
year
Number
of shares
Options
exercised
during the
2021 financial
year
Options
lapsed
during the
2021 financial
year
Number
of shares
Number
of shares
Options
held at
31 March 2021
Number
of shares
Option
price
Pence1
Date from
which
exercisable
Market
price on
exercise
Expiry date
Pence
Gain on
exercise
–
–
–
–
–
–
–
–
–
4,854
8,438
13,292
154.51 Apr 2022 Sep 2022
177.75 Sep 2022 Feb 2023
–
–
–
–
–
–
Note:
1. The closing trade share price on 31 March 2021 was 131.88 pence. The highest trade share price during the year was 141.12 pence and the lowest price was 101.70 pence.
At 18 May 2021 there had been no change to the Directors’ interests in share options from 31 March 2021. Other than those individuals included
in the table above, at 18 May 2021 members of the Group’s Executive Committee held options for 25,241 ordinary shares at prices ranging from
102.6 pence to 111.7 pence per ordinary share, with a weighted average exercise price of 107.0 pence per ordinary share exercisable at dates ranging
from 1 September 2022 to 1 September 2023.
Margherita Della Valle, Hannes Ametsreiter, Aldo Bisio, Colman Deegan, Ahmed Essam, Alexandre Froment-Curtil, Shameel Joosub, Vinod Kumar,
Rosemary Martin, Serpil Timuray, and Johan Wibergh held no options at 18 May 2021.
Loss of office payments (audited)
Other than amounts already disclosed in prior year reports, no loss of office payments were made during the year.
Payments to past Directors (audited)
During the 2021 financial year Lord MacLaurin received benefit payments in respect of security costs as per his contractual arrangements. These costs
exceeded our de minimis threshold of £5,000 p.a. and, including the tax paid, were £23,513 (2020: £23,513).
Fees retained for external non-executive directorships
Executive Directors may hold positions in other companies as non-executive directors and retain the fees.
During the year ended 31 March 2021 Nick Read served as a non-executive director on the board of Booking Holdings Inc. where he retained fees
of US$277,389 (2020: US$294,424). Margherita Della Valle served as a non-executive director on the board of Reckitt Benckiser Group plc (effective
1 July 2020) where she retained fees of £112,000 (2020: £11,270 in respect of services to Centrica plc until 12 May 2019).
2021 remuneration for the Chairman and Non-Executive Directors (audited)
Chairman
Jean-François van Boxmeer (appointed 28 July 20202)
Senior Independent Director
Valerie Gooding
Non-Executive Directors
Sanjiv Ahuja
Sir Crispin Davis
Michel Demaré
Dame Clara Furse
Renee James3
Maria Amparo Moraleda Martinez
David Nish
Former Non-Executive Directors
2021
£’000
297
165
115
115
115
115
115
115
140
–
165
115
115
115
115
133
115
140
Salary/fees
2020
£’000
2021
£’000
Benefits1
2020
£’000
2021
£’000
297
165
116
116
115
115
115
115
141
Total
2020
£’000
–
170
118
138
126
118
144
129
171
–
5
3
23
11
3
11
14
31
–
–
1
1
–
–
–
–
1
–
4
7
David Thodey (stepped down 27 July 2020)
Gerard Kleisterlee (stepped down 3 November 2020)
Total
38
385
1,715
67
650
1,730
19
53
173
38
389
1,722
86
703
1,903
Notes:
1. We have been advised that for Non-Executive Directors, certain travel and accommodation expenses in relation to attending Board meetings should be treated as a taxable benefit. The table above
includes these travel expenses and the corresponding tax contribution.
2. Jean-François van Boxmeer was appointed to the Board as a Non-Executive Director on 28 July 2020 and subsequently became Chairman on 3 November 2020.
3. Salary/fees for 2020 include an additional allowance of £6,000 per meeting for Directors based outside of Europe.
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Other information
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Other information
Annual Report on Remuneration (continued)
Details of the performance conditions for the awards can be found on pages 92 to 94 or in the Remuneration Report from the relevant year.
Share options
The following information summarises the Executive Directors’ options under the HMRC approved Vodafone Group 2008 Sharesave Plan (‘SAYE’).
No other Directors have options under any schemes and, other than under the SAYE, no options have been granted since 2007. Options under the
SAYE were granted at a discount of 20% to the market value of the shares at the time of the grant. No other options may be granted at a discount.
or date of
2021 financial
2021 financial
2021 financial
Options
exercised
during the
year
Number
of shares
Options
lapsed
during the
Number
of shares
year
31 March 2021
Options
held at
Number
of shares
Option
price
Pence1
Date from
which
exercisable
Expiry date
Pence
Gain on
exercise
At
1 April 2020
appointment
Number
of shares
4,854
8,438
13,292
Options
granted
during the
year
Number
of shares
–
–
–
Grant date
Mar 2017
Jul 2017
Nick Read
SAYE
SAYE
Total
Note:
–
–
–
–
–
–
4,854
8,438
13,292
154.51 Apr 2022 Sep 2022
177.75 Sep 2022 Feb 2023
–
–
–
Market
price on
exercise
–
–
–
1. The closing trade share price on 31 March 2021 was 131.88 pence. The highest trade share price during the year was 141.12 pence and the lowest price was 101.70 pence.
At 18 May 2021 there had been no change to the Directors’ interests in share options from 31 March 2021. Other than those individuals included
in the table above, at 18 May 2021 members of the Group’s Executive Committee held options for 25,241 ordinary shares at prices ranging from
102.6 pence to 111.7 pence per ordinary share, with a weighted average exercise price of 107.0 pence per ordinary share exercisable at dates ranging
from 1 September 2022 to 1 September 2023.
Margherita Della Valle, Hannes Ametsreiter, Aldo Bisio, Colman Deegan, Ahmed Essam, Alexandre Froment-Curtil, Shameel Joosub, Vinod Kumar,
Rosemary Martin, Serpil Timuray, and Johan Wibergh held no options at 18 May 2021.
Other than amounts already disclosed in prior year reports, no loss of office payments were made during the year.
Loss of office payments (audited)
Payments to past Directors (audited)
During the 2021 financial year Lord MacLaurin received benefit payments in respect of security costs as per his contractual arrangements. These costs
exceeded our de minimis threshold of £5,000 p.a. and, including the tax paid, were £23,513 (2020: £23,513).
Fees retained for external non-executive directorships
Executive Directors may hold positions in other companies as non-executive directors and retain the fees.
During the year ended 31 March 2021 Nick Read served as a non-executive director on the board of Booking Holdings Inc. where he retained fees
of US$277,389 (2020: US$294,424). Margherita Della Valle served as a non-executive director on the board of Reckitt Benckiser Group plc (effective
1 July 2020) where she retained fees of £112,000 (2020: £11,270 in respect of services to Centrica plc until 12 May 2019).
2021 remuneration for the Chairman and Non-Executive Directors (audited)
Jean-François van Boxmeer (appointed 28 July 20202)
Chairman
Senior Independent Director
Valerie Gooding
Non-Executive Directors
Sanjiv Ahuja
Sir Crispin Davis
Michel Demaré
Dame Clara Furse
Renee James3
Maria Amparo Moraleda Martinez
David Nish
Former Non-Executive Directors
David Thodey (stepped down 27 July 2020)
Gerard Kleisterlee (stepped down 3 November 2020)
Total
Notes:
Salary/fees
2020
£’000
2021
£’000
Benefits1
2020
£’000
2021
£’000
297
165
115
115
115
115
115
115
140
38
385
–
165
115
115
115
115
133
115
140
67
650
2021
£’000
297
165
116
116
115
115
115
115
141
38
389
Total
2020
£’000
–
170
118
138
126
118
144
129
171
86
703
–
5
3
23
11
3
11
14
31
19
53
–
–
1
1
–
–
–
–
1
–
4
7
1,715
1,730
173
1,722
1,903
1. We have been advised that for Non-Executive Directors, certain travel and accommodation expenses in relation to attending Board meetings should be treated as a taxable benefit. The table above
includes these travel expenses and the corresponding tax contribution.
2. Jean-François van Boxmeer was appointed to the Board as a Non-Executive Director on 28 July 2020 and subsequently became Chairman on 3 November 2020.
3. Salary/fees for 2020 include an additional allowance of £6,000 per meeting for Directors based outside of Europe.
Pay in the wider context
Fair pay at Vodafone
As part of its review of executive remuneration arrangements, the Committee takes account of the pay policies in place across the wider business. This
includes considering the structure of remuneration offerings at each level of the business to ensure there is a strong rationale for how packages evolve
across the different levels of the organisation.
During the year the Committee was updated on how a revised remuneration structure had been implemented across the business to ensure
arrangements fully aligned with our strategy, supported our purpose, and celebrated our spirit. The update also set out the growing use of our digital
recognition tools across the business including our peer to peer ‘Thank You’ awards and instant ‘Vodafone Star’ cash awards – the latter of which are
primarily focused on rewarding our non-management colleagues. The Committee was also updated on the results of the latest annual fair pay review,
including where the key focus areas were and what actions had been agreed locally to implement any required adjustments. In addition to being a core
principle of the Committee, there is a clear culture in our business of ensuring we offer competitive and fair pay to all employees. Our approach, across
our business, is guided by the following six principles:
1. Market competitive
The pay of our people is reflective of their skills, role and function and the external market.
We annually review the pay of each employee and actively manage any who fall below the market competitive range.
2. Free from discrimination
Our pay should not be affected by gender, age, disability, gender identity and expression, sexual orientation, race, ethnicity, cultural heritage or belief.
We annually compare the average position of our men and women against their market benchmark, grade and function to identify and understand any
differences, and take action if necessary.
3. Ensure a good standard of living
We work with the independent organisation, the Fair Wage Network, to assess how our pay compares to the “living wage” in each of our markets
because we are committed to providing a good standard of living for our people and their family.
4. Share in our successes
All our people should have the opportunity to share in our success by being eligible to receive some form of performance related pay, e.g. a bonus,
shares or sales incentive.
5. Provide benefits for all
Our global standard is to offer all our people life insurance, parental leave and access to either Company or state provided healthcare and
pension provision.
6. Open and transparent
We ensure that our people understand their pay. We do this through a series of user-friendly guides, webpages and an annual reward statement,
which help explain our peoples’ pay and outline the value of their core reward package.
In addition, they also receive monthly or weekly payslips and a payment schedule.
Click to read more about Fair Pay at Vodafone:
vodafone.com/fair-pay
Stakeholder engagement
The Committee considers all stakeholder groups when setting executive pay including:
Colleagues
The Committee is fully briefed on pay arrangements across the business to ensure any decisions on executive pay are made within our wider business
context. We engage with our employees through a variety of means including employee forums, town hall meetings (including with our executives),
global Spirit Beat surveys and digital platforms – all of which give our people the chance to voice their opinion on any area of interest – including
executive pay.
Shareholders
The Committee values the active participation of our shareholders during our consultations and fully considers all feedback as part of the review
process. Last year we started our consultation in November 2019 (for the July 2020 AGM) to ensure all parties had adequate time for engagement.
Government
The Committee actively engages with external professional bodies/government departments when they issue consultations on proposed changes to
legislation/reporting guidelines.
Wider society
The Committee is fully aware that society has grown increasingly concerned about executive pay in the wider market. The Committee believes that
through transparent reporting and active engagement in explaining both the operation of, and rationale for, executive pay decisions, trust in this area
can be rebuilt.
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Other information
Annual Report on Remuneration (continued)
UK Gender Pay Gap reporting
Each year we publish our UK Gender Pay Gap in line with the statutory UK methodology. The nature of the statutory calculation means the gap will
fluctuate year on year, influenced by changes in our business structure, Company performance and the percentage of men and women at all levels and
positions. The existence of a UK gender pay gap in our business is primarily a consequence of more men than women holding senior or specialist, and
therefore higher-paid, roles.
With our commitment to embed an inclusive culture, we continue our work to reduce the gap and have made good progress since the publication of
the first report in 2017. Our global programmes aim to support all women across different roles, areas, and geographies of our business and will, over
time, reduce our specific UK Gender Pay Gap (which this year was calculated as 12.0% – a slight increase from our 2019 figure of 10.9% but below our
2018 figure of 16.1%). While we have made progress, we are committed to doing more.
Click to learn more about our initiatives, case studies, and key statistics on our dedicated UK Gender Pay Gap webpage at
vodafone.com/uk-gender-pay-gap
Relative spend on pay
The chart below shows both the dividends distributed in the year and the total cost of remuneration in the Group.
For more details on dividends and expenditure on remuneration for all employees, please see pages 152 and 184 respectively.
€m
5,462
5,462
5,157
5,157
2,317
2,317
2,412
2,412
2021
2020
Distributed by way
of dividends
2020
2021
Overall expenditure on
remuneration for all employees
CEO pay ratio
The following table sets out our CEO pay ratio figures in respect of 2021, 2020 and 2019:
Year
2021
2020
20191
CEO single figure
£3,615k
£3,529k
£4,359k
Method
Option B
Option B
Option B
25th percentile pay ratio
108:1
113.1
154:1
Median pay ratio
88:1
69.1
107:1
75th percentile pay ratio
42:1
45.1
56:1
Note:
1. The CEO single figure used in the calculation of the 2019 ratios reflects a blended figure for Vittorio Colao and Nick Read, recognising the change in incumbency for the role during this year.
The pay ratio figures in the above table are calculated using the following total pay and benefits information:
Year
2021
2020
2019
Supporting information
Salary
Total pay and benefits
Salary
Total pay and benefits
Salary
Total pay and benefits
25th percentile pay ratio
£30.0k
£33.5k
£28.0k
£31.3k
£23.1k
£28.3k
Median pay ratio
£37.1k
£41.0k
£42.8k
£51.1k
£36.4k
£40.8k
75th percentile pay ratio
£71.2k
£85.3k
£65.0k
£78.6k
£65.0k
£78.2k
The calculation methodology used reflects Option B as defined under the relevant regulations. In line with the relevant regulations this utilises the most
recently collected and disclosed data analysed within our Gender Pay Gap report, with employees at the three quartiles identified from this analysis and
their respective single figure values calculated.
To ensure this data accurately reflects individuals at such quartiles, the single figure values for individuals immediately above and below the identified
employee at each quartile within the Gender Pay Gap analysis were also reviewed.
This year our ratios have remained relatively stable when viewed on a year-on-year basis. This reflects how the single figures for both the Chief Executive
and employees at the quartile positions have remained consistent when viewed over the period set out in the table above. We expect the ratios to be
primarily driven by the valuation of the long-term incentive that is included in the Chief Executive’s single figure for the year.
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Change in remuneration for Directors and all employees between 2020 and 2021
In line with the new regulatory requirements, the table below calculates the percentage change in Directors’ remuneration (salary, taxable benefits and
annual bonus payment) between the 2020 and 2021 financial years compared to the average remuneration for other Vodafone Group employees
who are measured on comparable business objectives and who have been employed in the UK since 2021 (per capita). Vodafone has employees
based all around the world and some of these individuals work in countries with very high inflation; therefore a comparison to Vodafone’s UK-based
Group employees is deemed the most appropriate employee group for this comparison.
Base salary / fee
Taxable benefits
Annual bonus
Percentage change from 2020 to 2021
Executive Directors
Nick Read
Margherita Della Valle
Non-Executive Directors
Jean-François van Boxmeer (appointed 28 July 2020)
Valerie Gooding
Sanjiv Ahuja
Sir Crispin Davis
Michel Demaré
Dame Clara Furse
Renee James
Maria Amparo Moraleda Martinez
David Nish
Former Non-Executive Directors
David Thodey (stepped down 27 July 2020)
Gerard Kleisterlee (stepped down 3 November 2020)
Other Vodafone Group employees employed in the UK
0.0%
0.0%
–
0.0%
0.0%
0.0%
0.0%
0.0%
-13.5%
0.0%
0.0%
-43.3%
-40.8%
3.8%
-23.8%
-4.5%
–
-100.0%
-66.7%
-95.7%
-100.0%
-100.0%
-100.0%
-100.0%
-96.8%
-100.0%
-92.5%
0.2%
19.4%
19.3%
–
–
–
–
–
–
–
–
–
–
–
30.2%
Annual Report on Remuneration (continued)
UK Gender Pay Gap reporting
therefore higher-paid, roles.
Each year we publish our UK Gender Pay Gap in line with the statutory UK methodology. The nature of the statutory calculation means the gap will
fluctuate year on year, influenced by changes in our business structure, Company performance and the percentage of men and women at all levels and
positions. The existence of a UK gender pay gap in our business is primarily a consequence of more men than women holding senior or specialist, and
With our commitment to embed an inclusive culture, we continue our work to reduce the gap and have made good progress since the publication of
the first report in 2017. Our global programmes aim to support all women across different roles, areas, and geographies of our business and will, over
time, reduce our specific UK Gender Pay Gap (which this year was calculated as 12.0% – a slight increase from our 2019 figure of 10.9% but below our
2018 figure of 16.1%). While we have made progress, we are committed to doing more.
Click to learn more about our initiatives, case studies, and key statistics on our dedicated UK Gender Pay Gap webpage at
vodafone.com/uk-gender-pay-gap
Relative spend on pay
The chart below shows both the dividends distributed in the year and the total cost of remuneration in the Group.
For more details on dividends and expenditure on remuneration for all employees, please see pages 152 and 184 respectively.
€m
Year
2021
2020
20191
Note:
Year
2021
2020
2019
5,462
5,462
5,157
5,157
2,317
2,317
2,412
2,412
2020
2021
Distributed by way
of dividends
2020
2021
Overall expenditure on
remuneration for all employees
CEO pay ratio
The following table sets out our CEO pay ratio figures in respect of 2021, 2020 and 2019:
CEO single figure
£3,615k
£3,529k
£4,359k
Method
Option B
Option B
Option B
108:1
113.1
154:1
88:1
69.1
107:1
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
1. The CEO single figure used in the calculation of the 2019 ratios reflects a blended figure for Vittorio Colao and Nick Read, recognising the change in incumbency for the role during this year.
The pay ratio figures in the above table are calculated using the following total pay and benefits information:
Supporting information
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
Salary
Salary
Salary
Total pay and benefits
Total pay and benefits
Total pay and benefits
£30.0k
£33.5k
£28.0k
£31.3k
£23.1k
£28.3k
£37.1k
£41.0k
£42.8k
£51.1k
£36.4k
£40.8k
42:1
45.1
56:1
£71.2k
£85.3k
£65.0k
£78.6k
£65.0k
£78.2k
The calculation methodology used reflects Option B as defined under the relevant regulations. In line with the relevant regulations this utilises the most
recently collected and disclosed data analysed within our Gender Pay Gap report, with employees at the three quartiles identified from this analysis and
their respective single figure values calculated.
To ensure this data accurately reflects individuals at such quartiles, the single figure values for individuals immediately above and below the identified
employee at each quartile within the Gender Pay Gap analysis were also reviewed.
This year our ratios have remained relatively stable when viewed on a year-on-year basis. This reflects how the single figures for both the Chief Executive
and employees at the quartile positions have remained consistent when viewed over the period set out in the table above. We expect the ratios to be
primarily driven by the valuation of the long-term incentive that is included in the Chief Executive’s single figure for the year.
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Annual Report on Remuneration (continued)
Assessing pay and performance
In the table below we summarise the Chief Executive’s single figure remuneration over the past 10 years, as well as how our variable pay plans have
paid out in relation to the maximum opportunity. This can be compared with the historic TSR performance over the same period. The chart below
shows the performance of the Company relative to the STOXX Europe 600 Index over a 10-year period. The STOXX Europe 600 Index was selected
as this is a broad-based index that includes many of our closest competitors. It should be noted that the TSR element of the 2019 GLTI is based on
the TSR performance shown in the chart on page 93 and not this chart.
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
10–year historical TSR performance
Growth in the value of a hypothetical
€100 holding over 10 years
190
166
182
146
157
135
171
168
171
162
218
137
181
128
159
106
100
112
99
127
115
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Vodafone Group
STOXX Europe
600 index
Financial year remuneration
for Chief Executive
Annual Bonus
average 51%
LTI
average 44%
250
230
210
190
170
150
130
110
90
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Single figure of total remuneration £’000
Annual bonus
(actual award versus max opportunity)
Long-term incentive
(vesting versus max opportunity)
2012
2013
2014
2015
2016
2017
2018
15,767 11,099
8,014
2,810
5,224
6,332
7,389
2020
2019
2,7401
/1,6192 3,529
2021
3,615
47%
33%
44%
56%
58%
47%
64%
44%
52%
62%
100%
57%
37%
0%
23%
44%
67%
40%
50%
22%
Notes:
1. Reflects the single figure in respect of Vittorio Colao for the period to 30 September 2018.
2. Reflects the single figure in respect of Nick Read for the period from 1 October 2018.
Annual Report on Remuneration (continued)
Assessing pay and performance
In the table below we summarise the Chief Executive’s single figure remuneration over the past 10 years, as well as how our variable pay plans have
paid out in relation to the maximum opportunity. This can be compared with the historic TSR performance over the same period. The chart below
shows the performance of the Company relative to the STOXX Europe 600 Index over a 10-year period. The STOXX Europe 600 Index was selected
as this is a broad-based index that includes many of our closest competitors. It should be noted that the TSR element of the 2019 GLTI is based on
the TSR performance shown in the chart on page 93 and not this chart.
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
190
166
182
146
157
135
171
168
171
162
218
137
181
128
159
106
100
112
99
127
115
10–year historical TSR performance
Growth in the value of a hypothetical
€100 holding over 10 years
Vodafone Group
STOXX Europe
600 index
Financial year remuneration
for Chief Executive
Annual Bonus
average 51%
LTI
average 44%
250
230
210
190
170
150
130
110
90
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Single figure of total remuneration £’000
15,767 11,099
8,014
2,810
5,224
6,332
7,389
/1,6192 3,529
3,615
2012
2013
2014
2015
2016
2017
2018
2019
2,7401
2020
2021
(actual award versus max opportunity)
47%
33%
44%
56%
58%
47%
64%
44%
52%
62%
100%
57%
37%
0%
23%
44%
67%
40%
50%
22%
Annual bonus
Long-term incentive
(vesting versus max opportunity)
Notes:
1. Reflects the single figure in respect of Vittorio Colao for the period to 30 September 2018.
2. Reflects the single figure in respect of Nick Read for the period from 1 October 2018.
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2022 remuneration
Details of how the Remuneration Policy will be implemented for the 2022 financial year are set out below.
Prior to reviewing executive remuneration arrangements the Committee was fully briefed on remuneration arrangements elsewhere in the business.
This included a detailed discussion on the structure of remuneration offerings at each level of the business and how pay at these levels is determined.
The Committee also considered the wider external context in light of the developing COVID-19 situation, and the commitments made to our wider
employee population.
The cumulative effect of these discussions was that the Committee was able to make decisions in respect of executive remuneration within the context
of how, and appreciating the rationale for why, remuneration arrangements evolve across the different levels within the organisation.2021
2022 Base salaries
In March 2021 the Committee reviewed executive remuneration arrangements against the following comparator groups:
1. A EuroTop peer group constituting the top 50 European companies (excluding financial services companies) and a few other select companies
relevant to the telco sector; and
2. The FTSE 30 (excluding financial services companies).
As set out on page 82 in the Letter from the Remuneration Committee Chairman, neither the Chief Executive nor the Chief Financial Officer have
received a salary increase since their appointment to their current roles in 2018. In the light of their strong performance and growing experience in
role the Committee agreed an increase would be justified. However, in line with the restraint on salary increases for the wider leadership team, the
Committee felt that salaries for both Executive Directors should remain unchanged for the year ahead at the current levels of:
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
– Chief Executive: Nick Read £1,050,000; and
– Chief Financial Officer: Margherita Della Valle £700,000.
The Committee acknowledges the importance of our arrangements remaining fair and competitive and will review this situation again next year.
The Committee further determined that salaries for Executive Committee members will also remain unchanged.
Pension
Pension arrangements for both the Chief Executive and the Chief Financial Officer will remain unchanged at 10% of salary, in line with the maximum
employer contribution level for the wider UK population.
2022 Annual Bonus (‘GSTIP’)
In light of the uncertainty caused by COVID-19 and the subsequent difficulty to set an accurate one-year service revenue target for the 2021 financial
year, the decision was taken to remove the service revenue condition from the 2021 plan and retain the remaining three measures.
As set out on page 82 of the Letter from the Remuneration Committee Chairman, for the 2022 plan the Committee has agreed to re-introduce service
revenue given the strategic importance of growth to our business and our ability to now accurately forecast an appropriate target.
The performance measures and weightings for 2022, are outlined below:
– service revenue (25%);
– adjusted EBIT (25%);
– adjusted free cash flow (25%); and
– customer appreciation KPIs (25%). This includes an assessment of churn, revenue market share and Net Promoter Score1 (‘NPS’).
Note:
1. The assessment of NPS utilises data collected in our local markets which is validated for quality and consistency by independent third party agencies.
Due to the potential impact on our commercial interests, annual bonus targets are considered commercially sensitive and therefore will be disclosed
in the 2022 Remuneration Report following the completion of the financial year.
Long-term incentive (‘GLTI’) awards for 2022
Awards for 2022 will be made in line with the arrangements described in our policy on pages 86 and 87. Vesting of the 2022 award will be subject
to adjusted free cash flow (60% of total award), relative TSR (30% of total award), and ESG (10% of total award) performance. Performance will be
measured over the three financial years ending 31 March 2024, and any net vested shares will be subject to an additional two-year holding period
(i.e. the ‘3+2’ model). It is anticipated that the final awards will be reviewed by the Committee at the July 2021 meeting and, subject to the Committee’s
approval, will be granted shortly after in August 2021.
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Annual Report on Remuneration (continued)
Further details for the 2022 award targets are provided below.
Adjusted free cash flow (60% of total award)
Details of the three-year adjusted FCF target for the 2022 award are set out in the table below.
Adjusted FCF performance (60% of total award)
(% of FCF element)
Below threshold
Threshold
Maximum
Adjusted FCF performance (€bn)
<15.00
15.00
17.00
Vesting percentage
(% of FCF element)
0%
20%
100%
Relative TSR (30% of total award)
Following the annual review of the performance measures which included a review of analysis provided by the Committee’s external advisers,
the Committee determined that the TSR outperformance range for the 2022 award should continue to be set at the 80th percentile equivalent
for maximum performance. For the 2022 award, this equates to outperformance of 8.50% p.a. at maximum.
The Committee further determined that the TSR peer group should remain unchanged for the 2022 award. Further details are set out in the
tables below.
Relative TSR (30% of total award)
Below threshold
Threshold
Maximum
TSR peer group
BT Group
Royal KPN
TSR outperformance
Below median
Median
8.50% p.a. (80th percentile equivalent)
Vesting (% of relative TSR element)
0.0%
20.0%
100.0%
Deutsche Telekom
Telecom Italia
Liberty Global
Telefónica
MTN
Telefónica Deutschland
Orange
Linear interpolation (i.e. straight-line vesting) occurs for performance between threshold and maximum.
ESG (10% of total award)
The table below sets out how performance under the ESG measure for the 2022 award will be assessed against three quantitative ambitions:
Purpose pillar
Planet
Metric for 2022 GLTI
Greenhouse gas reduction 50% reduction from FY17
Overall ambition
Inclusion for All
Digital Society /
Inclusion for All
Female representation
in management
M-Pesa connections
baseline by 2025
40% representation of women
in management by 2030
Connect >50m people and
their families to mobile
money by 2025
Baseline position for 2022 GLTI
37% reduction from FY17
baseline at 31 March 2021
32% representation of women in
management at 31 March 2021
Ambition for 2022 GLTI (10% of total award)
60% reduction from FY17
baseline by 31 March 2024
35% representation of women in
management by 31 March 2024
48.3m connections
at 31 March 2021
68.2m connections
by 31 March 2024
Each ambition for the 2022 award has been set by considering both our externally communicated targets and our internal progress as at 31 March 2021.
Where we are ahead of our originally communicated external ambition we have set our target recognising this so as to ensure all ambitions remain
stretching against actual current performance.
At the end of the performance period the Committee will assess achievement across the three metrics against the stated ambitions and determine
vesting under this element. Full disclosure of the rationale for the final vesting decision will be provided in the relevant Directors’ Remuneration Report.
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Annual Report on Remuneration (continued)
Further details for the 2022 award targets are provided below.
Adjusted free cash flow (60% of total award)
Details of the three-year adjusted FCF target for the 2022 award are set out in the table below.
Adjusted FCF performance (60% of total award)
Adjusted FCF performance (€bn)
<15.00
15.00
17.00
Vesting percentage
(% of FCF element)
0%
20%
100%
(% of FCF element)
Below threshold
Threshold
Maximum
tables below.
Relative TSR (30% of total award)
Below threshold
Threshold
Maximum
TSR peer group
BT Group
Royal KPN
Relative TSR (30% of total award)
Following the annual review of the performance measures which included a review of analysis provided by the Committee’s external advisers,
the Committee determined that the TSR outperformance range for the 2022 award should continue to be set at the 80th percentile equivalent
for maximum performance. For the 2022 award, this equates to outperformance of 8.50% p.a. at maximum.
The Committee further determined that the TSR peer group should remain unchanged for the 2022 award. Further details are set out in the
TSR outperformance
Below median
Median
8.50% p.a. (80th percentile equivalent)
Vesting (% of relative TSR element)
0.0%
20.0%
100.0%
Deutsche Telekom
Telecom Italia
Liberty Global
Telefónica
MTN
Telefónica Deutschland
Orange
Linear interpolation (i.e. straight-line vesting) occurs for performance between threshold and maximum.
ESG (10% of total award)
The table below sets out how performance under the ESG measure for the 2022 award will be assessed against three quantitative ambitions:
Purpose pillar
Planet
Metric for 2022 GLTI
Overall ambition
Baseline position for 2022 GLTI
Ambition for 2022 GLTI (10% of total award)
Greenhouse gas reduction 50% reduction from FY17
baseline by 2025
37% reduction from FY17
baseline at 31 March 2021
60% reduction from FY17
baseline by 31 March 2024
Inclusion for All
Female representation
40% representation of women
32% representation of women in
35% representation of women in
in management
in management by 2030
management at 31 March 2021
management by 31 March 2024
Digital Society /
M-Pesa connections
Connect >50m people and
48.3m connections
Inclusion for All
their families to mobile
at 31 March 2021
68.2m connections
by 31 March 2024
money by 2025
Each ambition for the 2022 award has been set by considering both our externally communicated targets and our internal progress as at 31 March 2021.
Where we are ahead of our originally communicated external ambition we have set our target recognising this so as to ensure all ambitions remain
stretching against actual current performance.
At the end of the performance period the Committee will assess achievement across the three metrics against the stated ambitions and determine
vesting under this element. Full disclosure of the rationale for the final vesting decision will be provided in the relevant Directors’ Remuneration Report.
2022 remuneration for the Chairman and Non-Executive Directors
Fees for our Chairman and Non-Executive Directors have been benchmarked against the FTSE 30 (excluding financial services companies).
Following this year’s review it was agreed that no changes will be made to the current fee levels which are set out in the table below.
Position/role
Chairman1
Non-Executive Director
Additional combined fee for Senior Independent Director and Chairman of the Remuneration Committee
Additional fee for Chairmanship of Audit and Risk Committee
Note:
1. The Chairman’s fee also includes the fee for the Chairmanship of the Nominations and Governance Committee.
Fee payable
£’000
650
115
50
25
For 2022 the allowance payable each time a non-Europe-based Non-Executive Director eligible for this legacy arrangement is required to travel to
attend Board and Committee meetings to reflect the additional time commitment involved is £6,000.
Further remuneration information
Dilution
All awards are made under plans that incorporate dilution limits as set out in the guidelines for share incentive schemes published by the
Investment Association. The current estimated dilution from subsisting executive awards is approximately 2.6% of the Company’s share capital at
31 March 2021 (2.6% at 31 March 2020), whilst from all-employee share awards it is approximately 0.3% (0.3% at 31 March 2020). This gives a total
dilution of 2.9% (2.9% at 31 March 2020).
Service contracts
The terms and conditions of appointment of our Directors are available for inspection at the Company’s registered office during normal business hours
and at the Annual General Meeting (for 15 minutes prior to the meeting and during the meeting). The Executive Directors have notice periods in their
service contracts of 12 months. The Non-Executive Directors’ letters of appointment do not contain provision for notice periods or for compensation if
their appointments are terminated.
This report on remuneration has been approved by the Board of Directors and signed on its behalf by:
Valerie Gooding
Chairman of the Remuneration Committee
18 May 2021
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Our US listing requirements
As Vodafone’s American depositary shares are listed on NASDAQ Stock Market LLC (‘NASDAQ’), we are required to disclose a summary of any material
differences between the corporate governance practices we follow and those of US companies listed on NASDAQ. Vodafone’s corporate governance
practices are primarily based on UK requirements but substantially conform to those required of US companies listed on NASDAQ.
The material differences are set out in the following table:
Board member independence
Committees
Code of Ethics and Code of Conduct
Quorum
Related party transactions
Shareholder approval
Different tests of independence for Board members are applied under the 2018 UK Corporate
Governance Code (the ‘Code’) and the NASDAQ listing rules. The Board is not required to take
into consideration NASDAQ’s detailed definitions of independence as set out in the NASDAQ
listing rules. The Board has carried out an assessment based on the independence requirements
of the Code and has determined that, in its judgement, each of Vodafone’s Non-Executive Directors
is independent within the meaning of those requirements.
The NASDAQ listing rules require US companies to have a nominations committee, an audit
committee and a compensation committee, each composed entirely of independent directors,
with the nominations committee and the audit committee each required to have a written
charter which addresses the committee’s purpose and responsibilities, and the compensation
committee having sole authority and adequate funding to engage compensation consultants,
independent legal counsel and other compensation advisers.
– Our Nominations and Governance Committee is chaired by the Chairman of the Board and its
other members are independent Non-Executive Directors.
– Our Remuneration Committee is composed entirely of independent Non-Executive Directors.
– Our Audit and Risk Committee is composed entirely of Non-Executive Directors, each
of whom (i) the Board has determined to be independent based on the independence
requirements of the Code and (ii) meets the independence requirements of the Securities
Exchange Act of 1934.
– We have terms of reference for our Nominations and Governance Committee, Audit and Risk
Committee and Remuneration Committee, each of which comply with the requirements of
the Code and are available for inspection on our website at vodafone.com/governance
– These terms of reference are generally responsive to the relevant NASDAQ listing rules, but
may not address all aspects of these rules.
Under the NASDAQ listing rules, US companies must adopt a Code of Conduct applicable to all
directors, officers and employees that complies with the definition of a “code of ethics” set out in
section 406 of the Sarbanes-Oxley Act.
– We have adopted a Code of Ethics that complies with section 406 of the Sarbanes-Oxley Act
which is applicable only to the senior financial and principal executive officers, and which is
available on our website at vodafone.com/governance.
– We have also adopted a separate Code of Conduct which applies to all employees.
The quorum required for shareholder meetings, in accordance with our Articles of Association, is
two shareholders, regardless of the level of their aggregate share ownership, while US companies
listed on NASDAQ are required by the NASDAQ listing rules to have a minimum quorum of
33.33% of the shareholders of ordinary shares for shareholder meetings.
In lieu of obtaining an independent review of related party transactions for conflicts of interests
in accordance with the NASDAQ listing rules, we seek shareholder approval for related party
transactions that (i) meet certain financial thresholds or (ii) have unusual features in accordance
with the Listing Rules issued by the FCA in the UK (the ‘Listing Rules’), the Companies Act 2006
and our Articles of Association.
Further, we use the definition of a transaction with a related party as set out in the Listing Rules,
which differs in certain respects from the definition of related party transaction in the NASDAQ
listing rules.
When determining whether shareholder approval is required for a proposed transaction, we
comply with both the NASDAQ listing rules and the Listing Rules. Under the NASDAQ listing rules,
whether shareholder approval is required for a transaction depends on, among other things, the
percentage of shares to be issued or sold in connection with the transaction. Under the Listing
Rules, whether shareholder approval is required for a transaction depends on, among other
things, whether the size of a transaction exceeds a certain percentage of the size of the listed
company undertaking the transaction.
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As Vodafone’s American depositary shares are listed on NASDAQ Stock Market LLC (‘NASDAQ’), we are required to disclose a summary of any material
differences between the corporate governance practices we follow and those of US companies listed on NASDAQ. Vodafone’s corporate governance
practices are primarily based on UK requirements but substantially conform to those required of US companies listed on NASDAQ.
The material differences are set out in the following table:
Board member independence
Different tests of independence for Board members are applied under the 2018 UK Corporate
Code of Ethics and Code of Conduct
Under the NASDAQ listing rules, US companies must adopt a Code of Conduct applicable to all
directors, officers and employees that complies with the definition of a “code of ethics” set out in
Committees
Quorum
Governance Code (the ‘Code’) and the NASDAQ listing rules. The Board is not required to take
into consideration NASDAQ’s detailed definitions of independence as set out in the NASDAQ
listing rules. The Board has carried out an assessment based on the independence requirements
of the Code and has determined that, in its judgement, each of Vodafone’s Non-Executive Directors
is independent within the meaning of those requirements.
The NASDAQ listing rules require US companies to have a nominations committee, an audit
committee and a compensation committee, each composed entirely of independent directors,
with the nominations committee and the audit committee each required to have a written
charter which addresses the committee’s purpose and responsibilities, and the compensation
committee having sole authority and adequate funding to engage compensation consultants,
independent legal counsel and other compensation advisers.
– Our Nominations and Governance Committee is chaired by the Chairman of the Board and its
other members are independent Non-Executive Directors.
– Our Remuneration Committee is composed entirely of independent Non-Executive Directors.
– Our Audit and Risk Committee is composed entirely of Non-Executive Directors, each
of whom (i) the Board has determined to be independent based on the independence
requirements of the Code and (ii) meets the independence requirements of the Securities
Exchange Act of 1934.
– We have terms of reference for our Nominations and Governance Committee, Audit and Risk
Committee and Remuneration Committee, each of which comply with the requirements of
the Code and are available for inspection on our website at vodafone.com/governance
– These terms of reference are generally responsive to the relevant NASDAQ listing rules, but
may not address all aspects of these rules.
section 406 of the Sarbanes-Oxley Act.
– We have adopted a Code of Ethics that complies with section 406 of the Sarbanes-Oxley Act
which is applicable only to the senior financial and principal executive officers, and which is
available on our website at vodafone.com/governance.
– We have also adopted a separate Code of Conduct which applies to all employees.
The quorum required for shareholder meetings, in accordance with our Articles of Association, is
two shareholders, regardless of the level of their aggregate share ownership, while US companies
listed on NASDAQ are required by the NASDAQ listing rules to have a minimum quorum of
33.33% of the shareholders of ordinary shares for shareholder meetings.
in accordance with the NASDAQ listing rules, we seek shareholder approval for related party
transactions that (i) meet certain financial thresholds or (ii) have unusual features in accordance
with the Listing Rules issued by the FCA in the UK (the ‘Listing Rules’), the Companies Act 2006
and our Articles of Association.
Further, we use the definition of a transaction with a related party as set out in the Listing Rules,
which differs in certain respects from the definition of related party transaction in the NASDAQ
listing rules.
comply with both the NASDAQ listing rules and the Listing Rules. Under the NASDAQ listing rules,
whether shareholder approval is required for a transaction depends on, among other things, the
percentage of shares to be issued or sold in connection with the transaction. Under the Listing
Rules, whether shareholder approval is required for a transaction depends on, among other
things, whether the size of a transaction exceeds a certain percentage of the size of the listed
company undertaking the transaction.
Related party transactions
In lieu of obtaining an independent review of related party transactions for conflicts of interests
Shareholder approval
When determining whether shareholder approval is required for a proposed transaction, we
The Directors of the Company present their report together with
the audited consolidated financial statements for the year ended
31 March 2021.
Strategic Report
The Strategic Report is set out on pages 1 to 61 and is incorporated into
this Directors’ report by reference.
This report has been prepared in accordance with requirements outlined
within The Large and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008 and forms part of the management report
as required under Disclosure Guidance and Transparency Rule (‘DTR’) 4.
Certain information that fulfils the requirements of the Directors’ report
can be found elsewhere in this document and is referred to below. This
information is incorporated into this Directors’ report by reference.
Responsibility statement
As required under the DTRs, a statement made by the Board regarding
the preparation of the financial statements is set out on pages 108 and
109 which also provides details regarding the disclosure of information to
the Company’s auditor and management’s report on internal control over
financial information.
Directors and their interests
The Directors of the Company who served during the financial year
ended 31 March 2021 and up to the date of signing the financial
statements are as follows: Jean-François van Boxmeer (appointed
on 28 July 2020), Nick Read, Margherita Della Valle, Sanjiv Ahuja,
Sir Crispin Davis, Michel Demaré, Dame Clara Furse, Valerie Gooding,
Renee James, Maria Amparo Moraleda Martinez, David Nish, David
Thodey (stepped down on 27 July 2020) and Gerard Kleisterlee
(stepped down on 3 November 2020). A summary of the rules related
to the appointment and replacement of Directors and Directors’ powers
can be found on page 229. Details of Directors’ interests in the Company’s
ordinary shares, options held over ordinary shares, interests in share
options and long-term incentive plans are set out on pages 82 to 103.
Going concern
The going concern statement required by the Listing Rules and
the UK Corporate Governance Code (the ‘Code’) is set out in the
“Directors’ statement of responsibility” on page 109.
Directors’ conflicts of interest
Established within the Company is a procedure for managing and
monitoring conflicts of interest for Directors. Details of this procedure
are set out on page 75.
System of risk management and internal control
The Board is responsible for maintaining a risk management and internal
control system and for managing principal risks faced by the Group. Such
a system is designed to manage rather than eliminate business risks and
can only provide reasonable and not absolute assurance against material
mistreatment or loss. This is described in more detail in the Audit and Risk
Committee Report on pages 76 to 81.
Directors’ indemnities
In accordance with our Articles of Association and to the extent permitted
by law, Directors are granted an indemnity from the Company in respect
of liability incurred as a result of their office. In addition, we maintained
a Directors’ and officers’ liability insurance policy throughout the year.
Neither our indemnity nor the insurance provides cover in the event
that a Director is proven to have acted dishonestly or fraudulently.
The Board has implemented in full the FRC “Guidance on Risk Management,
Internal Control and related Financial and Business Reporting” for the year
and to the date of this Annual Report. The resulting procedures, which are
subject to regular monitoring and review, provide an ongoing process for
identifying, evaluating and managing the Company’s principal risks (which
can be found on pages 53 to 61).
Disclosures required under Listing Rule 9.8.4
The information on the amount of interest capitalised and the treatment
of tax relief can be found in notes 5 and 6 to the consolidated financial
statements respectively. The remaining disclosures required by Listing
Rule 9.8.4 are not applicable to Vodafone.
Corporate Governance Statement
The Corporate Governance Statement setting out how the Company
complies with the Code and which includes a description of the main
features of our internal control and risk management arrangements
in relation to the financial reporting process is set out on page 65. The
information required by DTR 7.2.6R can be found in the “Shareholder
information” section on pages 227 to 232. A description of the
composition and operation of the Board and its Committees including
the Board Diversity Policy is set out on page 69, pages 74 to 81 and
page 90. The Code can be viewed in full at frc.org.uk.
Capital structure and rights attaching to shares
Ordinary shares of Vodafone Group Plc are traded on the London Stock
Exchange and in the form of ADSs on NASDAQ.
ADSs, each representing 10 ordinary shares, are traded on NASDAQ
under the symbol “VOD”. The ADSs are evidenced by ADRs issued
by Deutsche Bank, as depositary, under a deposit agreement, dated
27 February 2017 between the Company, the depositary and the
holders from time to time of ADRs issued thereunder.
ADS holders are not shareholders in the Company but may instruct
Deutsche Bank on the exercise of voting rights relative to the number
of ordinary shares represented by their ADSs. See “Articles of Association
and applicable English law” and “Rights attaching to the Company’s
shares – Voting rights” on page 229.
106 Vodafone Group Plc
Annual Report 2021
Directors’ report (continued)
Strategic report
Governance
Financials
Other information
All information relating to the Company’s capital structure, rights
attaching to shares, dividends, the policy to repurchase the Company’s
own shares, details of Company share repurchases and details of other
shareholder information is contained on page 31 and pages 227 to 232.
Change of control
Details of change of control provisions in the Company’s revolving credit
facilities are set out in note 22 “Capital and financial risk management”.
Information on agreements between the Company and its Directors
providing for compensation for loss of office of employment (including
details of change of control provisions in share schemes) is set out on
pages 88 and 89. Subject to that, there are no agreements between the
Company and its employees providing for compensation for loss of office
or employment that occurs because of a takeover bid.
Dividends
Full details of the Company’s dividend policy and proposed final dividend
payment for the year ended 31 March 2021 are set out on page 23 and
note 9 to the consolidated financial statements.
Sustainability
Information about the Company’s approach to sustainability risks and
opportunities is set out on pages 32 to 52. Also included on these pages
are details of our greenhouse gas emissions.
Political donations
No political donations or contributions to political parties under the
Companies Act 2006 have been made during the financial year.
The Group policy is that no political donations be made or political
expenditure incurred.
Financial risk management objectives and policies
Disclosures relating to financial risk management objectives and
policies, including our policy for hedging are set out in note 22 to the
consolidated financial statements and disclosures relating to exposure
to credit risk, liquidity risk and market risk are outlined in note 22.
Important events since the end of the financial year
There were no important events affecting the Company which have
occurred since the end of the financial year.
Future developments within the Group
The Strategic Report contains details of likely future developments within
the Group.
Group policy compliance
Each Group policy is owned by a member of the Executive Committee so
that there is clear accountability and authority for ensuring the associated
business risk is adequately managed. Regional Chief Executives and the
Senior Leadership Team member responsible for each Group function
have primary accountability for ensuring compliance with all Group
policies by all our markets and entities.
Our Group compliance team and policy champions support the policy
owners and local markets in implementing policies and monitoring
compliance. All of the key Group policies have been consolidated into
the Vodafone Code of Conduct which applies to all employees and
those who work for or on behalf of Vodafone. It sets out the standards
of behaviour expected in relation to areas such as insider dealing,
bribery and raising concerns through the whistle blowing process
(known internally as Speak Up).
Branches
The Group, through various subsidiaries, has branches in a number of
different jurisdictions in which the business operates. Further details are
included in note 31.
Employee disclosures
Vodafone is an inclusive employer and diversity is important to us.
We give full and fair consideration to applications for employment by
disabled persons and the continued employment of anyone incurring
a disability while employed by us. Training, career development and
promotion opportunities are equally applied for all our employees,
regardless of disability. Our disclosures relating to the employment of
women in senior management roles, diversity, employee engagement
and policies are set out on pages 12 and 13, page 37, page 72 and
page 75.
By order of the Board
Rosemary Martin
Group General Counsel and Company Secretary
18 May 2021
106 Vodafone Group Plc
Annual Report 2021
Directors’ report (continued)
All information relating to the Company’s capital structure, rights
attaching to shares, dividends, the policy to repurchase the Company’s
own shares, details of Company share repurchases and details of other
shareholder information is contained on page 31 and pages 227 to 232.
Change of control
Group policy compliance
Each Group policy is owned by a member of the Executive Committee so
that there is clear accountability and authority for ensuring the associated
business risk is adequately managed. Regional Chief Executives and the
Senior Leadership Team member responsible for each Group function
have primary accountability for ensuring compliance with all Group
Details of change of control provisions in the Company’s revolving credit
policies by all our markets and entities.
facilities are set out in note 22 “Capital and financial risk management”.
Our Group compliance team and policy champions support the policy
Information on agreements between the Company and its Directors
owners and local markets in implementing policies and monitoring
providing for compensation for loss of office of employment (including
compliance. All of the key Group policies have been consolidated into
details of change of control provisions in share schemes) is set out on
the Vodafone Code of Conduct which applies to all employees and
pages 88 and 89. Subject to that, there are no agreements between the
those who work for or on behalf of Vodafone. It sets out the standards
Company and its employees providing for compensation for loss of office
of behaviour expected in relation to areas such as insider dealing,
or employment that occurs because of a takeover bid.
bribery and raising concerns through the whistle blowing process
(known internally as Speak Up).
Dividends
Full details of the Company’s dividend policy and proposed final dividend
Branches
payment for the year ended 31 March 2021 are set out on page 23 and
The Group, through various subsidiaries, has branches in a number of
note 9 to the consolidated financial statements.
different jurisdictions in which the business operates. Further details are
opportunities is set out on pages 32 to 52. Also included on these pages
Vodafone is an inclusive employer and diversity is important to us.
Sustainability
Information about the Company’s approach to sustainability risks and
are details of our greenhouse gas emissions.
Political donations
No political donations or contributions to political parties under the
Companies Act 2006 have been made during the financial year.
The Group policy is that no political donations be made or political
expenditure incurred.
Financial risk management objectives and policies
Disclosures relating to financial risk management objectives and
policies, including our policy for hedging are set out in note 22 to the
consolidated financial statements and disclosures relating to exposure
to credit risk, liquidity risk and market risk are outlined in note 22.
included in note 31.
Employee disclosures
We give full and fair consideration to applications for employment by
disabled persons and the continued employment of anyone incurring
a disability while employed by us. Training, career development and
promotion opportunities are equally applied for all our employees,
regardless of disability. Our disclosures relating to the employment of
women in senior management roles, diversity, employee engagement
and policies are set out on pages 12 and 13, page 37, page 72 and
page 75.
By order of the Board
Rosemary Martin
Group General Counsel and Company Secretary
Important events since the end of the financial year
18 May 2021
There were no important events affecting the Company which have
occurred since the end of the financial year.
Future developments within the Group
The Strategic Report contains details of likely future developments within
the Group.
Strategic report
Governance
Financials
Other information
107 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Reporting on our financial performance
Index
108 Directors’ statement of responsibility
Additional disclosures
110 Audit report on the consolidated and Company financial statements
191 27. Acquisitions and disposals
194 28. Commitments
194 29. Contingent liabilities and legal proceedings
198 30. Related party transactions
199 31. Related undertakings
208 32. Subsidiaries exempt from audit
209 Company financial statements of
Vodafone Group Plc
209 Company statement of financial position of Vodafone Group Plc
210 Company statement of changes in equity of Vodafone Group Plc
211 Notes to the Company financial statements
211 1. Basis of preparation
213 2. Fixed assets
214 3. Debtors
214 4. Other investments
214 5. Creditors
215 6. Called up share capital
215 7. Share-based payments
215 8. Reserves
216 9. Equity dividends
216 10. Contingent liabilities and legal proceedings
216 11. Other matters
217 Non-GAAP measures (unaudited information)
226 Additional information (unaudited information)
121 Consolidated financial statements
121 Consolidated income statement
121 Consolidated statement of comprehensive income
122 Consolidated statement of financial position
123 Consolidated statement of changes in equity
124 Consolidated statement of cash flows
125 Notes to the consolidated financial statements
125 1. Basis of preparation
Income statement
131 2. Revenue disaggregation and segmental analysis
135 3. Operating profit / (loss)
136 4.
Impairment losses
144 5.
Investment income and financing costs
145 6. Taxation
150 7. Discontinued operations and assets and liabilities held for sale
152 8. Earnings per share
152 9. Equity dividends
Financial position
153 10. Intangible assets
155 11. Property, plant and equipment
157 12. Investments in associates and joint arrangements
163 13. Other investments
164 14. Trade and other receivables
165 15. Trade and other payables
166 16. Provisions
167 17. Called up share capital
Cash flows
168 18. Reconciliation of net cash flow from operating activities
168 19. Cash and cash equivalents
169 20. Leases
172 21. Borrowings
174 22. Capital and financial risk management
Employee remuneration
183 23. Directors and key management compensation
184 24. Employees
185 25. Post employment benefits
189 26. Share-based payments
108 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Directors’ statement of responsibility
The Directors are responsible for preparing the
financial statements in accordance with applicable
law and regulations and keeping proper accounting
records. Detailed below are statements made by the
Directors in relation to their responsibilities, disclosure
of information to the Company’s auditor, going
concern and management’s report on internal
control over financial reporting.
Financial statements and accounting records
Company law of England and Wales requires the Directors to prepare
financial statements for each financial year which give a true and fair
view of the state of affairs of the Company and of the Group at the end
of the financial year and of the profit or loss of the Group for that period.
In preparing those financial statements the Directors are required to:
– select suitable accounting policies and apply them consistently;
– make judgements and estimates that are reasonable and prudent;
– present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
– state whether the consolidated financial statements have been
prepared in accordance with International Accounting Standards in
conformity with the requirements of the UK Companies Act 2006,
International Financial Reporting Standards (‘IFRS’) adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union and
IFRS as issued by the International Accounting Standards Board (‘IASB’).
The Directors also ensure that the consolidated financial statements
have been prepared in accordance with IFRS as issued by the
International Accounting Standards Board (‘IASB’);
– state for the Company’s financial statements whether applicable UK
accounting standards have been followed; and
– prepare the financial statements on a going concern basis unless it
is inappropriate to presume that the Company and the Group will
continue in business.
The Directors are responsible for keeping proper accounting records
which disclose with reasonable accuracy at any time the financial
position of the Company and of the Group and enable them to
ensure that the financial statements are prepared in accordance with
International Accounting Standards in conformity with the requirements
of the UK Companies Act 2006 adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union. They are also
responsible for the system of internal control, for safeguarding the
assets of the Company and the Group and, hence, for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ responsibility statement
Each of the Directors, whose names and functions are listed on pages 67
and 68, confirms that, to the best of his or her knowledge:
– the consolidated financial statements, prepared in accordance
with International Accounting Standards in conformity with the
requirements of the UK Companies Act 2006, International Financial
Reporting Standards (‘IFRS’) adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union and IFRS as issued
by the International Accounting Standards Board (‘IASB’), give a true
and fair view of the assets, liabilities, financial position and profit of
the Group;
– the parent company financial statements, prepared in accordance with
United Kingdom generally accepted accounting practice, give a true
and fair view of the assets, liabilities, financial position and profit of the
Company; and
– the Strategic Report includes a fair review of the development and
performance of the business and the position of the Group, together
with a description and robust assessment of the principal risks and
uncertainties that it faces.
The Directors are also responsible under section 172 of the Companies
Act 2006 to promote the success of the Company for the benefit of its
members as a whole and in doing so have regard for the needs of wider
society and stakeholders, including customers, consistent with the
Group’s core and sustainable business objectives.
Having taken advice from the Audit and Risk Committee, the Board
considers the Annual Report, taken as a whole, is fair, balanced and
understandable and that it provides the information necessary for
shareholders to assess the Company’s position and performance,
business model and strategy.
Neither the Company nor the Directors accepts any liability to any person
in relation to the Annual Report except to the extent that such liability
could arise under English law. Accordingly, any liability to a person who
has demonstrated reliance on any untrue or misleading statement or
omission shall be determined in accordance with section 90A and
schedule 10A of the Financial Services and Markets Act 2000.
Disclosure of information to the auditors
Having made the requisite enquiries, so far as the Directors are aware,
there is no relevant audit information (as defined by section 418(3) of
the Companies Act 2006) of which the Company’s auditor is unaware and
the Directors have taken all the steps they ought to have taken to make
themselves aware of any relevant audit information and to establish that
the Company’s auditor is aware of that information.
108 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
109 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Directors’ statement of responsibility
The Directors are responsible for preparing the
financial statements in accordance with applicable
law and regulations and keeping proper accounting
records. Detailed below are statements made by the
Directors in relation to their responsibilities, disclosure
of information to the Company’s auditor, going
concern and management’s report on internal
control over financial reporting.
Financial statements and accounting records
Company law of England and Wales requires the Directors to prepare
financial statements for each financial year which give a true and fair
view of the state of affairs of the Company and of the Group at the end
of the financial year and of the profit or loss of the Group for that period.
In preparing those financial statements the Directors are required to:
– select suitable accounting policies and apply them consistently;
– make judgements and estimates that are reasonable and prudent;
– present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
– state whether the consolidated financial statements have been
prepared in accordance with International Accounting Standards in
conformity with the requirements of the UK Companies Act 2006,
International Financial Reporting Standards (‘IFRS’) adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union and
IFRS as issued by the International Accounting Standards Board (‘IASB’).
The Directors also ensure that the consolidated financial statements
have been prepared in accordance with IFRS as issued by the
International Accounting Standards Board (‘IASB’);
– state for the Company’s financial statements whether applicable UK
accounting standards have been followed; and
– prepare the financial statements on a going concern basis unless it
is inappropriate to presume that the Company and the Group will
continue in business.
The Directors are responsible for keeping proper accounting records
which disclose with reasonable accuracy at any time the financial
position of the Company and of the Group and enable them to
ensure that the financial statements are prepared in accordance with
International Accounting Standards in conformity with the requirements
of the UK Companies Act 2006 adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union. They are also
responsible for the system of internal control, for safeguarding the
assets of the Company and the Group and, hence, for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Directors’ responsibility statement
Each of the Directors, whose names and functions are listed on pages 67
and 68, confirms that, to the best of his or her knowledge:
– the consolidated financial statements, prepared in accordance
with International Accounting Standards in conformity with the
requirements of the UK Companies Act 2006, International Financial
Reporting Standards (‘IFRS’) adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union and IFRS as issued
by the International Accounting Standards Board (‘IASB’), give a true
and fair view of the assets, liabilities, financial position and profit of
– the parent company financial statements, prepared in accordance with
United Kingdom generally accepted accounting practice, give a true
and fair view of the assets, liabilities, financial position and profit of the
the Group;
Company; and
– the Strategic Report includes a fair review of the development and
performance of the business and the position of the Group, together
with a description and robust assessment of the principal risks and
uncertainties that it faces.
The Directors are also responsible under section 172 of the Companies
Act 2006 to promote the success of the Company for the benefit of its
members as a whole and in doing so have regard for the needs of wider
society and stakeholders, including customers, consistent with the
Group’s core and sustainable business objectives.
Having taken advice from the Audit and Risk Committee, the Board
considers the Annual Report, taken as a whole, is fair, balanced and
understandable and that it provides the information necessary for
shareholders to assess the Company’s position and performance,
business model and strategy.
Neither the Company nor the Directors accepts any liability to any person
in relation to the Annual Report except to the extent that such liability
could arise under English law. Accordingly, any liability to a person who
has demonstrated reliance on any untrue or misleading statement or
omission shall be determined in accordance with section 90A and
schedule 10A of the Financial Services and Markets Act 2000.
Disclosure of information to the auditors
Having made the requisite enquiries, so far as the Directors are aware,
there is no relevant audit information (as defined by section 418(3) of
the Companies Act 2006) of which the Company’s auditor is unaware and
the Directors have taken all the steps they ought to have taken to make
themselves aware of any relevant audit information and to establish that
the Company’s auditor is aware of that information.
In reaching their conclusion on the going concern assessment,
the Directors also considered the findings of the work performed to
support the statement on the long-term viability of the Group. As noted
on page 61, this included key changes to relevant principal risks in light
of global economic and political uncertainty, sensitivity analysis, scenario
assessments, and combinations thereof, including that of a longer-term
global recession post the COVID-19 pandemic over the viability
assessment period.
Conclusion
Based on the review, the Directors have a reasonable expectation that
the Company and the Group have adequate resources to continue
in operational existence for the foreseeable future. Accordingly, the
Directors continue to adopt the going concern basis in preparing the
Annual Report and accounts.
Controls over financial reporting
Management is responsible for establishing and maintaining adequate
internal control over financial reporting for the Group.
The Group’s internal control over financial reporting includes policies
and procedures that:
– pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect transactions and dispositions of assets;
– are designed to provide reasonable assurance that transactions are
recorded as necessary to permit the preparation of financial statements
in conformity with IFRS, adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union and IFRS as issued by
the IASB, and that receipts and expenditures are being made only in
accordance with authorisation of management and the Directors of the
Company; and
– provide reasonable assurance regarding prevention or timely detection
of unauthorised acquisition, use or disposition of the Group’s assets that
could have a material effect on the financial statements.
Any internal control framework, no matter how well designed, has
inherent limitations including the possibility of human error and the
circumvention or overriding of the controls and procedures, and may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions or because the
degree of compliance with the policies or procedures may deteriorate.
By Order of the Board
Rosemary Martin
Group General Counsel and Company Secretary
18 May 2021
Going concern
The Group’s business activities, performance, position, principal risks and
uncertainties and the Directors’ assessment of its long term viability are
set out on page 61.
In addition, the funding position of the Group is included in “Borrowings”
and “Capital and financial risk management” in notes 21 and 22,
respectively, to the consolidated financial statements. Notes 21 and
22 include disclosure in relation to the Group’s objectives, policies and
processes for managing as well as details regarding its capital, its financial
risk management objectives; details of its financial instruments and
hedging activities; and its exposures to credit risk and liquidity risk.
As noted on page 176, the Group has access to substantial cash and
financing facilities.
The Group also believes it adequately manages or mitigates its solvency
and liquidity risks through two primary processes, described below.
Business planning process and performance management
The Group’s forecasting and planning cycle consists of three in-year
forecasts, a budget and a long-range plan. These generate income
statement, cash flow and net debt projections for assessment by
Group management and the Board. Each forecast is compared with prior
forecasts and actual results so as to identify variances and understand the
drivers of the changes and their future impact so as to allow management
to take action where appropriate. Additional analysis is undertaken to
review and sense check the key assumptions underpinning the forecasts.
Cash flow and liquidity reviews
The business planning process provides outputs for detailed cash flow
and liquidity reviews, to ensure that the Group maintains adequate
liquidity throughout the forecast periods. The prime output is a liquidity
forecast which is prepared and updated at least on a monthly basis which
highlights the extent of the Group’s liquidity based on controlled cash
flows and the headroom under the Group’s undrawn revolving credit
facility. The key inputs into this forecast are:
– free cash flow forecasts with information taken from the business
planning process;
– bond and other debt maturities; and
– expectations for shareholder returns, spectrum auctions and
M&A activity.
The liquidity forecast is reviewed by the Group Chief Financial Officer
and included in each of her reports to the Board. In addition, the Group
continues to manage its foreign exchange and interest rate risks within
the framework of policies and guidelines authorised and reviewed by
the Board, with oversight provided by the Treasury Risk Committee.
The Group’s financial performance has been resilient during the
COVID-19 pandemic and the ongoing impact has been considered as
part of the business planning process and reflected in the Group’s cash
flow forecasts. The Directors have also considered sensitivities in respect
of potential downside scenarios in concluding that the Group is able
to continue in operation for the period to 30 June 2022 from the date
of approving the consolidated financial statements. Those sensitivities
include the non-refinancing of debt maturities in the assessment period
and the repayment of the EIB loans which have covenants. A reverse
stress test was also reviewed to understand how severe conditions would
have to be to breach liquidity including the required reduction in EBITDA.
In addition to the liquidity forecasts, downside scenarios and reverse stress
test prepared, the Director’s considered the availability of the Group’s
€7.4 billion revolving credit facilities, undrawn as at 31 March 2021.
110 Vodafone Group Plc
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Other information
Independent auditor’s report to the members of Vodafone Group plc
Opinion
In our opinion:
– Vodafone Group Plc’s Consolidated financial statements and Company
financial statements (the “financial statements”) give a true and fair
view of the state of the Group’s and of the Company’s affairs as at
31 March 2021 and of the Group’s profit for the year then ended;
– the Consolidated financial statements have been properly prepared
in accordance with International Accounting Standards in conformity
with the requirements of the UK Companies Act 2006 and International
Financial Reporting Standards (“IFRS”) adopted pursuant to Regulation
(EC) No. 1606/2002 as it applies in the European Union;
– the Company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice; and
– the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements of Vodafone Group Plc for the
year ended 31 March 2021 which comprise:
Group
Consolidated statement of financial position as at 31 March 2021
Consolidated income statement for the year then ended
Consolidated statement of comprehensive income for the year
then ended
Consolidated statement of changes in equity for the year then ended
Consolidated statement of cash flows for the year then ended
Related notes 1 to 32 to the financial statements, including a summary
of significant accounting policies
Company
Company statement of financial position as at 31 March 2021
Company statement of changes in equity for the year then ended
Related notes 1 to 11 to the financial statements including a summary
of significant accounting policies
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law,
International Accounting Standards in conformity with the requirements
of the UK Companies Act 2006 and International Financial Reporting
Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it
applies in the European Union. The financial reporting framework that
has been applied in the preparation of the Company financial statements
is applicable law and United Kingdom Accounting Standards, including
FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally
Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We are
independent of the Group and Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’
use of the going concern basis of accounting in the preparation of
the financial statements is appropriate. Our evaluation of the directors’
assessment of the Group and Company’s ability to continue to adopt
the going concern basis of accounting included:
– confirming our understanding of the directors’ going concern
assessment process, including the controls over the review and
approval of the budget and long-range plan;
– assessing the appropriateness of the duration of the going concern
assessment period to 30 June 2022 and considering the existence
of any significant events or conditions beyond this period based on
our procedures on the Group’s long-range plan and from knowledge
arising from other areas of the audit;
– verifying inputs against board-approved forecasts and debt facility
terms and reconciled the opening liquidity position to the prior year
end and half year interim going concern assessments;
– reviewing borrowing facilities to confirm both their availability to the
Group and the forecast debt repayments through the going concern
assessment period and to validate that there is a financial covenant
solely in relation to a single loan arrangement;
– evaluating management’s historical forecasting accuracy and the
consistency of the going concern assessment with information
obtained from other areas of the audit, such as our audit procedures
on the long range plans which underpin management’s goodwill
impairment assessments;
– testing the assessment, including forecast liquidity under base and
downside scenarios, for clerical accuracy;
– assessing whether assumptions made were reasonable and in
the case of downside scenarios, appropriately severe, in light of
the Group’s relevant principal risks and uncertainties and our own
independent assessment of those risks;
– evaluated the amount and timing of identified mitigating actions
available to respond to a severe downside scenario, and whether
those actions are feasible and within the Group’s control;
– considering the appropriateness of management’s ‘reverse stress test’
downside scenario, to understand how severe conditions would have
to be to breach liquidity and whether the reduction in EBITDA required
has no more than a remote possibility of occurring;
110 Vodafone Group Plc
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Other information
111 Vodafone Group Plc
Annual Report 2021
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Financials
Other information
Independent auditor’s report to the members of Vodafone Group plc
Opinion
In our opinion:
– Vodafone Group Plc’s Consolidated financial statements and Company
financial statements (the “financial statements”) give a true and fair
view of the state of the Group’s and of the Company’s affairs as at
31 March 2021 and of the Group’s profit for the year then ended;
– the Consolidated financial statements have been properly prepared
in accordance with International Accounting Standards in conformity
with the requirements of the UK Companies Act 2006 and International
Financial Reporting Standards (“IFRS”) adopted pursuant to Regulation
(EC) No. 1606/2002 as it applies in the European Union;
– the Company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice; and
– the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements of Vodafone Group Plc for the
year ended 31 March 2021 which comprise:
Consolidated statement of financial position as at 31 March 2021
Consolidated income statement for the year then ended
Consolidated statement of comprehensive income for the year
Consolidated statement of changes in equity for the year then ended
Consolidated statement of cash flows for the year then ended
Related notes 1 to 32 to the financial statements, including a summary
of significant accounting policies
Group
then ended
Company
Company statement of financial position as at 31 March 2021
Company statement of changes in equity for the year then ended
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law,
International Accounting Standards in conformity with the requirements
of the UK Companies Act 2006 and International Financial Reporting
Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it
applies in the European Union. The financial reporting framework that
has been applied in the preparation of the Company financial statements
is applicable law and United Kingdom Accounting Standards, including
FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally
Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We are
independent of the Group and Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’
use of the going concern basis of accounting in the preparation of
the financial statements is appropriate. Our evaluation of the directors’
assessment of the Group and Company’s ability to continue to adopt
the going concern basis of accounting included:
– confirming our understanding of the directors’ going concern
assessment process, including the controls over the review and
approval of the budget and long-range plan;
– assessing the appropriateness of the duration of the going concern
assessment period to 30 June 2022 and considering the existence
of any significant events or conditions beyond this period based on
our procedures on the Group’s long-range plan and from knowledge
arising from other areas of the audit;
– verifying inputs against board-approved forecasts and debt facility
terms and reconciled the opening liquidity position to the prior year
end and half year interim going concern assessments;
– reviewing borrowing facilities to confirm both their availability to the
Group and the forecast debt repayments through the going concern
assessment period and to validate that there is a financial covenant
solely in relation to a single loan arrangement;
– evaluating management’s historical forecasting accuracy and the
obtained from other areas of the audit, such as our audit procedures
on the long range plans which underpin management’s goodwill
impairment assessments;
– testing the assessment, including forecast liquidity under base and
downside scenarios, for clerical accuracy;
– assessing whether assumptions made were reasonable and in
the case of downside scenarios, appropriately severe, in light of
the Group’s relevant principal risks and uncertainties and our own
independent assessment of those risks;
– evaluated the amount and timing of identified mitigating actions
available to respond to a severe downside scenario, and whether
those actions are feasible and within the Group’s control;
– considering the appropriateness of management’s ‘reverse stress test’
downside scenario, to understand how severe conditions would have
to be to breach liquidity and whether the reduction in EBITDA required
has no more than a remote possibility of occurring;
Related notes 1 to 11 to the financial statements including a summary
consistency of the going concern assessment with information
of significant accounting policies
An overview of the scope of the Company
and Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our
allocation of performance materiality determine our audit scope for
each company within the Group. Taken together, this enables us to
form an opinion on the consolidated financial statements. We take into
account size, risk profile, the organisation of the Group and effectiveness
of group-wide controls, changes in the business environment and other
factors such as recent internal audit results when assessing the level of
work to be performed at each component.
In assessing the risk of material misstatement to the Consolidated financial
statements, and to ensure we had adequate quantitative coverage of
significant accounts in the Consolidated financial statements, of the
364 reporting components of the Group, we identified 21 components
covering entities within Germany, South Africa, Italy, United Kingdom,
Spain, Turkey, Greece, Romania, Egypt, Luxembourg and corporate
entities which represent the principal business units within the Group.
Full scope components – Of the 21 components selected, we
performed an audit of the complete financial information of 9
components (“full scope components”) which were selected based
on their size or risk characteristics.
Specified procedures components – For the remaining 12 components
(“specified procedures components”), we performed audit procedures
on specific accounts within those components that we considered had
the potential for the greatest impact on the significant accounts in the
Group financial statements, either because of the size of these accounts
or their risk profile, in order to ensure that, at the overall Group level,
we reduced and appropriately covered the residual risk of error.
Depending on the component or type of procedures, these procedures
were undertaken by the Primary audit team or separate component
audit team.
The remaining 355 components where we did not perform full audit
procedures together represent 24% of the Group’s Adjusted EBITDA,
none are individually greater than 5% of the Group’s Adjusted EBITDA.
For the remaining components, we performed other procedures,
including analytical review at both the Group and individual component
levels, inquiry of management, testing entity level controls, testing
group wide controls and testing of journals across the Group
to respond to potential risks of material misstatement to the
Consolidated Financial Statements.
– performing independent sensitivity analysis on management’s
assumptions including applying incremental adverse cashflow
sensitivities. These sensitivities included the impact of certain severe
but plausible scenarios, evaluated as part of management’s work
on the Group’s long term viability, materialising within the going
concern assessment; and
– assessing the appropriateness of the going concern disclosure
on page 109.
Our key observations
– The directors’ assessment forecasts that the Group will maintain
sufficient liquidity throughout the going concern assessment period in
both the base case and plausible downside scenarios. This included the
scenario of non-refinancing of debt maturities in the assessment period
and also the availability of the Group’s €7.4 billion revolving credit
facilities, undrawn as at 31 March 2021.
– The controllable mitigating actions available to management to
increase liquidity over the going concern assessment period were
not modelled by management, nor the audit team, due to the level
of headroom in both management’s plausible downside scenario
and the audit team’s additional downside sensitivities.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group
and the Company’s ability to continue as going concerns for a period
of at least twelve months from when the financial statements are
authorised for issue to 30 June 2022.
In relation to the Group and Company’s reporting on how they have
applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the directors’ statement in the
Annual Report about whether the directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect
to going concern are described in the relevant sections of this report.
However, because not all future events or conditions can be predicted,
this statement is not a guarantee as to the Group and Company’s ability
to continue as a going concern.
Overview of our audit approach
Audit scope
– We performed an audit of the complete
financial information of 9 components,
specified audit procedures on specific
balances for a further 12 components
and other procedures on the remaining
343 components.
Key audit matters
– The components where we performed
full audit procedures accounted for 76% of
Adjusted EBITDA and where we performed
full and specified audit procedures accounted
for 79% of Revenue.
– Revenue recognition
– Carrying value of cash generating units,
including goodwill
– Recognition and recoverability of deferred
tax assets on tax losses – Luxembourg
Materiality
– Overall Group materiality of €280m
(FY20: €282m) has been calculated based
on Adjusted EBITDA calculations as defined
in the ‘Our application of materiality’ section
of this report. This materiality represents
2% of the Group’s Adjusted EBITDA as
reported in Note 2 in the Consolidated
financial statements.
112 Vodafone Group Plc
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Financials
Other information
Independent auditor’s report to the members of Vodafone Group plc (continued)
The table below illustrates the coverage obtained from the work performed by our audit teams.
Reporting components
Full scope
Specified procedures
Full and specified procedures coverage
Remaining components
Total reporting components
2021
% of Group
Adjusted
EBITDA*
76%
0%
76%
24%
100%
% of
Group Revenue
71%
8%
79%
21%
100%
Number
9
12
21
343
364
Note
1, 2, 4
2, 3,4
5,6,7
2020
% of Group
Adjusted
EBITDA*
80%
0%
80%
20%
100%
% of
Group Revenue
76%
5%
81%
19%
100%
Number
10
9
19
243
262
Notes
1. 2 of the 9 full scope components relate to the Company and another corporate entity whose activities include consolidation adjustments which are audited by the Primary audit team. Procedures on
3 of the other full scope locations are undertaken by component audit teams based in Germany and the remaining 4 full scope components are Italy, South Africa, Spain, and the UK.
2. The Group audit risks in relation to revenue recognition were subject to audit procedures at each of the full and specified procedures scope locations with significant revenue streams (being 7 full scope
components and 3 specific scope components).
3. For the Turkey, Greece and Romania components, specified procedures were defined by the Group team in respect of Revenue, Cost of sales, Intangible assets, Property, Plant and Equipment,
Trade receivables, Trade and other payables and Cash. For the Egypt component specified procedures were performed in respect of certain Intangible Assets and Cash. Specified procedures were
also performed over Right of use assets and Lease liabilities within 2 components established in the year as part of the formation of Vantage Towers. The Primary Audit team also performed specified
procedures over a further 6 Finance and corporate entities across a range of significant accounts. The audit procedures did not include testing of all significant accounts of the components but will have
contributed to the coverage of significant accounts selected for testing by the Primary audit team, including those within Group Adjusted EBITDA.
4. The Group audit risks in relation to Carrying value of cash generating units, including goodwill and Recognition and recoverability of deferred tax assets on tax losses – Luxembourg were subject to audit
procedures by the Primary audit team on the entire balance, with support from component audit teams on certain procedures.
5. The contribution of specified procedures components to Group Adjusted EBITDA is included within ‘remaining components’ as audit procedures were performed on certain, but not all, significant
accounts of the specified procedures component contributing to Group Adjusted EBITDA.
6. Included within the 364 reporting components are the Group’s joint venture investments in Vodafone Ziggo and INWIT, and Safaricom, an associate, which were subject to review procedures.
7. Changes in the number of “remaining components” compared to prior year reflect increases in the number of entities within the Group’s consolidation system.
* Adjusted EBITDA as defined in ‘Our application of materiality’ section of this report.
Changes from the prior year
The approach to audit scoping is similar to the prior year audit with
the rotation of a number of markets designated specified procedures
scope for selected significant accounts to extend the Group audit
procedures beyond the Group’s main markets and to introduce a level
of unpredictability through rotational testing. This approach resulted in:
– a specified procedure scope being assigned to components in
Romania, Greece and Egypt which were not subject to direct audit
procedures in the prior year;
– Turkey being reassessed as specified procedures in the current year
(FY20: full scope); and
– following the carve out of tower assets into Vantage Towers Group
during the year we designated 2 components, Vantage Towers
Germany and Vantage Towers Spain, as specified procedures scope
in respect of the Right of Use Asset and Lease Liability balances.
Impact of the COVID-19 pandemic – audit logistics
– Consistent with the prior year-end audit, the performance of the
entire FY21 audit remotely at both component and Group locations
was supported through remote user access to the Group’s financial
systems and the use of EY software collaboration platforms for the
secure and timely delivery of requested audit evidence.
– We were alert to instances requiring physical verification of
original documents and we used secure encrypted data exchanges.
In instances when physical access to site was restricted due to
social distancing measures, we conducted inventory counts
remotely using mobile video technology. There was no significant
impact in the execution of our controls testing from the remote
working environment.
– We engaged with Vodafone throughout the audit, using video calls and
share-screen functionality. Key meetings, such as closing meetings and
Audit and Risk Committees, were performed via video conference calls.
Involvement with component audit teams
In establishing our overall approach to the Group audit, we determined
the type of work that needed to be undertaken at each of the components
by us, as the Primary audit engagement team, or by component auditors
from other EY global network firms operating under our instruction. Of
the 9 full scope components, audit procedures were performed on 2
of these directly by the Primary audit team, with the remaining 7 being
performed by component audit teams. For 6 specified procedures scope
components work was performed directly by the Primary audit team
with the remaining 6 being performed by component audit teams. Where
the work was performed by component audit teams we determined the
appropriate level of involvement to enable us to determine that sufficient
audit evidence had been obtained as a basis for our opinion on the Group
financial statements as a whole.
Vodafone has centralised processes and controls over certain areas
within its Vodafone Intelligent Solutions (“VOIS”) finance shared service
centre locations. The Primary audit team provide direct oversight, review,
and coordination of the EY audit teams at VOIS locations whose work
includes centralised testing for certain controls and accounts, including
specified procedures on revenue, leases, cash and centralised purchase
to pay processes.
Impact of the COVID-19 pandemic – direction, supervision and review
of component audit teams
Due to the ongoing travel restrictions imposed by the COVID-19
pandemic, no physical site visits were possible throughout the FY21
audit We replaced the planned site visits with alternative procedures,
including video conference call meetings and virtual reviews of our
local audit teams’ working papers. The Senior Statutory Auditor, and other
members of the Primary Team, completed their reviews remotely for the
component audit teams in Germany, Italy, Spain, South Africa, UK, Turkey,
Greece, Romania, Egypt, Hungary and India.
112 Vodafone Group Plc
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Other information
113 Vodafone Group Plc
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Financials
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Independent auditor’s report to the members of Vodafone Group plc (continued)
The table below illustrates the coverage obtained from the work performed by our audit teams.
Reporting components
Full scope
Specified procedures
Full and specified procedures coverage
Remaining components
Total reporting components
Notes
2021
% of Group
Adjusted
EBITDA*
76%
0%
76%
24%
% of
Group Revenue
71%
8%
79%
21%
Number
9
12
21
343
364
Note
1, 2, 4
2, 3,4
5,6,7
Number
10
9
19
243
262
2020
% of Group
Adjusted
EBITDA*
80%
0%
80%
20%
% of
Group Revenue
76%
5%
81%
19%
100%
100%
100%
100%
1. 2 of the 9 full scope components relate to the Company and another corporate entity whose activities include consolidation adjustments which are audited by the Primary audit team. Procedures on
3 of the other full scope locations are undertaken by component audit teams based in Germany and the remaining 4 full scope components are Italy, South Africa, Spain, and the UK.
2. The Group audit risks in relation to revenue recognition were subject to audit procedures at each of the full and specified procedures scope locations with significant revenue streams (being 7 full scope
components and 3 specific scope components).
3. For the Turkey, Greece and Romania components, specified procedures were defined by the Group team in respect of Revenue, Cost of sales, Intangible assets, Property, Plant and Equipment,
Trade receivables, Trade and other payables and Cash. For the Egypt component specified procedures were performed in respect of certain Intangible Assets and Cash. Specified procedures were
also performed over Right of use assets and Lease liabilities within 2 components established in the year as part of the formation of Vantage Towers. The Primary Audit team also performed specified
procedures over a further 6 Finance and corporate entities across a range of significant accounts. The audit procedures did not include testing of all significant accounts of the components but will have
contributed to the coverage of significant accounts selected for testing by the Primary audit team, including those within Group Adjusted EBITDA.
4. The Group audit risks in relation to Carrying value of cash generating units, including goodwill and Recognition and recoverability of deferred tax assets on tax losses – Luxembourg were subject to audit
procedures by the Primary audit team on the entire balance, with support from component audit teams on certain procedures.
5. The contribution of specified procedures components to Group Adjusted EBITDA is included within ‘remaining components’ as audit procedures were performed on certain, but not all, significant
accounts of the specified procedures component contributing to Group Adjusted EBITDA.
6. Included within the 364 reporting components are the Group’s joint venture investments in Vodafone Ziggo and INWIT, and Safaricom, an associate, which were subject to review procedures.
7. Changes in the number of “remaining components” compared to prior year reflect increases in the number of entities within the Group’s consolidation system.
* Adjusted EBITDA as defined in ‘Our application of materiality’ section of this report.
Changes from the prior year
Involvement with component audit teams
The approach to audit scoping is similar to the prior year audit with
In establishing our overall approach to the Group audit, we determined
the rotation of a number of markets designated specified procedures
the type of work that needed to be undertaken at each of the components
scope for selected significant accounts to extend the Group audit
by us, as the Primary audit engagement team, or by component auditors
procedures beyond the Group’s main markets and to introduce a level
from other EY global network firms operating under our instruction. Of
of unpredictability through rotational testing. This approach resulted in:
the 9 full scope components, audit procedures were performed on 2
– a specified procedure scope being assigned to components in
Romania, Greece and Egypt which were not subject to direct audit
– Turkey being reassessed as specified procedures in the current year
procedures in the prior year;
(FY20: full scope); and
– following the carve out of tower assets into Vantage Towers Group
during the year we designated 2 components, Vantage Towers
Germany and Vantage Towers Spain, as specified procedures scope
in respect of the Right of Use Asset and Lease Liability balances.
Impact of the COVID-19 pandemic – audit logistics
– Consistent with the prior year-end audit, the performance of the
entire FY21 audit remotely at both component and Group locations
was supported through remote user access to the Group’s financial
systems and the use of EY software collaboration platforms for the
secure and timely delivery of requested audit evidence.
– We were alert to instances requiring physical verification of
original documents and we used secure encrypted data exchanges.
In instances when physical access to site was restricted due to
social distancing measures, we conducted inventory counts
remotely using mobile video technology. There was no significant
impact in the execution of our controls testing from the remote
working environment.
– We engaged with Vodafone throughout the audit, using video calls and
share-screen functionality. Key meetings, such as closing meetings and
Audit and Risk Committees, were performed via video conference calls.
of these directly by the Primary audit team, with the remaining 7 being
performed by component audit teams. For 6 specified procedures scope
components work was performed directly by the Primary audit team
with the remaining 6 being performed by component audit teams. Where
the work was performed by component audit teams we determined the
appropriate level of involvement to enable us to determine that sufficient
audit evidence had been obtained as a basis for our opinion on the Group
financial statements as a whole.
Vodafone has centralised processes and controls over certain areas
within its Vodafone Intelligent Solutions (“VOIS”) finance shared service
centre locations. The Primary audit team provide direct oversight, review,
and coordination of the EY audit teams at VOIS locations whose work
includes centralised testing for certain controls and accounts, including
specified procedures on revenue, leases, cash and centralised purchase
to pay processes.
Impact of the COVID-19 pandemic – direction, supervision and review
of component audit teams
Due to the ongoing travel restrictions imposed by the COVID-19
pandemic, no physical site visits were possible throughout the FY21
audit We replaced the planned site visits with alternative procedures,
including video conference call meetings and virtual reviews of our
local audit teams’ working papers. The Senior Statutory Auditor, and other
members of the Primary Team, completed their reviews remotely for the
component audit teams in Germany, Italy, Spain, South Africa, UK, Turkey,
Greece, Romania, Egypt, Hungary and India.
We used our global audit software, screen sharing or the provision of
copies of work papers direct to the Primary audit team, to enable the
Senior Statutory Auditor, and other members of the Primary audit team,
to complete reviews of key component audit team working papers,
particularly focussing on the Group’s risk areas. We conducted meetings
using video conferencing to discuss the audit approach and execution
with the component audit teams and to discuss audit issues arising from
their work. The Senior Statutory Auditor, or other members of the Primary
audit team, attended key meetings with local management via video
conference, to discuss the component’s business performance and
matters relating to the local finance organisation including the internal
financial control environment.
The Primary audit team interacted regularly with the local EY component
audit teams during each stage of the audit and were responsible for the
scope and direction of the audit process. We maintained continuous and
open dialogue with the component audit teams in addition to holding
formal meetings to ensure that we were fully aware of their progress
and the results of their procedures. Close meetings for full and specified
procedures components were held via tele and video conference in
April 2021 and were attended by the Senior Statutory Auditor and other
members of the Primary audit team. These activities, together with the
additional procedures performed at Group level, gave us appropriate
evidence for our opinion on the Group financial statements.
Based upon the above approach we are satisfied that we have been
able to perform sufficient and appropriate oversight of our component
audit teams.
Key audit matters
Key audit matters are those matters that, in our professional judgment,
were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on: the overall
audit strategy, the allocation of resources in the audit; and directing
the efforts of the engagement team. These matters were addressed
in the context of our audit of the financial statements as a whole, and
in our opinion thereon, and we do not provide a separate opinion on
these matters.
114 Vodafone Group Plc
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Independent auditor’s report to the members of Vodafone Group plc (continued)
Risk
Revenue recognition
As more fully described in Note 2, Note 14 and Note 15 to the consolidated
financial statements, the Group reported revenue of €43,809 million (FY20:
€44,974 million), contract assets of €3,566 million (FY20: €3,563 million) and
contract liabilities of €2,490 million (FY20: €2,603 million) at as 31 March 2021.
Management records revenue according to the principles of IFRS 15, Revenue
from Contracts with Customers, including following the 5-step model therein.
Under IFRS 15, management must determine if there are separate performance
obligations for the services and goods it provides to customers and assign
values thereto, based on the selling prices of goods or services in separate
transactions under similar conditions to similar customers (the “stand-alone
selling price”).
Auditing the revenue recorded by the Group is complex due to the multiple
IT systems and tools utilised in the initiation, processing and recording of
transactions, which includes a high volume of individually low monetary
value transactions. Furthermore, judgement was required to determine
the audit approach to evaluate the relevant data that was captured and
aggregated, and to assess the sufficiency of the audit evidence obtained.
IT professionals were utilised in the design of the audit approach and testing
of IT systems and automated processes.
Our response to the risk
We performed full or specified audit procedures over this risk area in
7 full scope and 3 specified procedure components with significant
revenue streams, which covered 79% of the Group’s revenue.
Our audit procedures at full scope component locations included,
among others, obtaining an understanding of, evaluating the design and
testing the operating effectiveness of controls over the Group’s revenue
recognition process, which includes management’s review of contracts,
their identification of performance obligations, the estimation of the relative
standalone selling price for each performance obligation, and the determination
of the timing of revenue recorded. We also evaluated the design and tested
the operating effectiveness of controls over the processing of relevant billing
data, assisted by our IT professionals. For specified procedures components,
we obtained an understanding of the design of controls over the revenue
recognition process and at certain locations tested operating effectiveness.
Where there had been migrations of IT systems which support the revenue
recognition process during the year, we tested controls over access and
change management for the new IT systems.
We evaluated management’s accounting policies and the methodology used
by management to determine the standalone selling price, where relevant to
the requirements of IFRS 15.
For significant revenue streams, our audit procedures included the following,
on a sample basis:
– We obtained a list of new propositions/tariff plans introduced during
the period and tested the completeness of the listing. We evaluated
management’s assessment of the accounting treatment for new
propositions/tariff plans for compliance with IFRS 15.
– For each significant revenue stream system, we obtained the billing data
to general ledger reconciliation which included the relevant adjustments to
deferred and accrued revenue balances. We reperformed these end-to-end
reconciliations, including validating the accuracy of the data inputs to
underlying source documentation including contractual agreements
where applicable. In addition, we tested the mathematical accuracy and
completeness of the reconciliations and any material reconciling items
including significant revenue postings outside of the billing systems.
Key observations communicated to the Audit and Risk Committee
In addition, determining the stand-alone selling price and therefore
the allocation of revenue to the different performance obligations,
which impacts timing of the related revenue recognition, is
complex and judgmental, particularly on new product offerings
and non-standard enterprise contracts.
We have also identified a risk of management override through
inappropriate manual topside revenue journal entries, given
revenue is a key performance indicator, both in external
communication and for management incentives.
– We recalculated the revenue recognised to evaluate that
the processing of the revenue recognition engines was
materially correct.
– We corroborated the standalone selling price allocated
to individual elements of bundled contracts, including to
observable market pricing where available.
– We used data analytic tools to identify revenue related manual
journals posted to the general ledger and traced these back
to source systems. This included analytical procedures to
consider the completeness of journal postings. We obtained
and evaluated underlying source documentation to test the
completeness and accuracy of the postings, including those
journals we considered unusual in nature.
In respect of the IT systems migrations which support the revenue
recognition process, we:
– obtained an understanding of the IFRS 15 transformation
process in the new IT systems related to the revenue
accounting process flow;
– reviewed process documentation under the new IT system and
for a sample of transactions confirmed that the transaction flow
was consistent with that included in process documentation;
– considered the impact of changes on the IT general control
environment and performed testing as required; and
– tested the reconciliation of opening balance between
the legacy IT system and the new IT system to assess
completeness and accuracy of the data migration.
We also assessed the adequacy of the Group’s disclosures in
respect to the accounting policies on revenue recognition.
Based on the procedures performed, including those in respect of manual adjustments to revenue, we did not identify any evidence of material
misstatement in the revenue recognised in the year nor in amounts capitalised or deferred at 31 March 2021.
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Risk
Revenue recognition
As more fully described in Note 2, Note 14 and Note 15 to the consolidated
In addition, determining the stand-alone selling price and therefore
financial statements, the Group reported revenue of €43,809 million (FY20:
the allocation of revenue to the different performance obligations,
€44,974 million), contract assets of €3,566 million (FY20: €3,563 million) and
which impacts timing of the related revenue recognition, is
contract liabilities of €2,490 million (FY20: €2,603 million) at as 31 March 2021.
complex and judgmental, particularly on new product offerings
Management records revenue according to the principles of IFRS 15, Revenue
and non-standard enterprise contracts.
We have also identified a risk of management override through
inappropriate manual topside revenue journal entries, given
revenue is a key performance indicator, both in external
communication and for management incentives.
from Contracts with Customers, including following the 5-step model therein.
Under IFRS 15, management must determine if there are separate performance
obligations for the services and goods it provides to customers and assign
values thereto, based on the selling prices of goods or services in separate
transactions under similar conditions to similar customers (the “stand-alone
selling price”).
Auditing the revenue recorded by the Group is complex due to the multiple
IT systems and tools utilised in the initiation, processing and recording of
transactions, which includes a high volume of individually low monetary
value transactions. Furthermore, judgement was required to determine
the audit approach to evaluate the relevant data that was captured and
aggregated, and to assess the sufficiency of the audit evidence obtained.
IT professionals were utilised in the design of the audit approach and testing
of IT systems and automated processes.
Our response to the risk
We performed full or specified audit procedures over this risk area in
7 full scope and 3 specified procedure components with significant
revenue streams, which covered 79% of the Group’s revenue.
Our audit procedures at full scope component locations included,
among others, obtaining an understanding of, evaluating the design and
testing the operating effectiveness of controls over the Group’s revenue
recognition process, which includes management’s review of contracts,
their identification of performance obligations, the estimation of the relative
standalone selling price for each performance obligation, and the determination
of the timing of revenue recorded. We also evaluated the design and tested
the operating effectiveness of controls over the processing of relevant billing
data, assisted by our IT professionals. For specified procedures components,
we obtained an understanding of the design of controls over the revenue
recognition process and at certain locations tested operating effectiveness.
Where there had been migrations of IT systems which support the revenue
recognition process during the year, we tested controls over access and
change management for the new IT systems.
the requirements of IFRS 15.
on a sample basis:
For significant revenue streams, our audit procedures included the following,
– We obtained a list of new propositions/tariff plans introduced during
the period and tested the completeness of the listing. We evaluated
management’s assessment of the accounting treatment for new
propositions/tariff plans for compliance with IFRS 15.
deferred and accrued revenue balances. We reperformed these end-to-end
reconciliations, including validating the accuracy of the data inputs to
underlying source documentation including contractual agreements
where applicable. In addition, we tested the mathematical accuracy and
completeness of the reconciliations and any material reconciling items
including significant revenue postings outside of the billing systems.
Key observations communicated to the Audit and Risk Committee
We evaluated management’s accounting policies and the methodology used
by management to determine the standalone selling price, where relevant to
accounting process flow;
– For each significant revenue stream system, we obtained the billing data
We also assessed the adequacy of the Group’s disclosures in
to general ledger reconciliation which included the relevant adjustments to
respect to the accounting policies on revenue recognition.
Based on the procedures performed, including those in respect of manual adjustments to revenue, we did not identify any evidence of material
misstatement in the revenue recognised in the year nor in amounts capitalised or deferred at 31 March 2021.
– We recalculated the revenue recognised to evaluate that
the processing of the revenue recognition engines was
materially correct.
– We corroborated the standalone selling price allocated
to individual elements of bundled contracts, including to
observable market pricing where available.
– We used data analytic tools to identify revenue related manual
journals posted to the general ledger and traced these back
to source systems. This included analytical procedures to
consider the completeness of journal postings. We obtained
and evaluated underlying source documentation to test the
completeness and accuracy of the postings, including those
journals we considered unusual in nature.
In respect of the IT systems migrations which support the revenue
recognition process, we:
– obtained an understanding of the IFRS 15 transformation
process in the new IT systems related to the revenue
– reviewed process documentation under the new IT system and
for a sample of transactions confirmed that the transaction flow
was consistent with that included in process documentation;
– considered the impact of changes on the IT general control
environment and performed testing as required; and
– tested the reconciliation of opening balance between
the legacy IT system and the new IT system to assess
completeness and accuracy of the data migration.
Risk
Carrying value of cash generating units, including goodwill
As more fully described in Note 4 to the consolidated financial statements,
in accordance with IAS 36 Impairment of Assets, the Group calculates the
value in use (‘VIU’) for cash generating units (‘CGU’) to determine whether
an adjustment to the carrying value of the CGU, and therefore, goodwill,
is required. As of 31 March 2021, the Group has recorded €31,731 million
of goodwill, primarily in respect of Germany and Italy.
The Group’s assessment of the VIU of its CGUs involves estimation about
the future performance of the local market businesses. In particular, the
determination of the VIUs was sensitive to the significant assumptions
of projected adjusted EBITDA growth, long-term growth rates, and
discount rates.
Our response to the risk
The recoverability of the Group’s goodwill balances was subject to full scope
audit procedures performed by the Primary audit team with support from
relevant component audit teams on certain procedures.
We obtained an understanding, evaluated the design and tested the
operating effectiveness of controls over the Group’s goodwill impairment
review process. This included testing management’s controls over the
significant assumptions, including projected adjusted EBITDA growth,
long-term growth rates, and discount rates and, in the current year, controls
over the allocation of goodwill to the newly created Vantage Tower CGUs.
To test the determination of the VIU of the Group’s goodwill, we performed
audit procedures that included, among others, evaluating the CGUs identified
and testing the allocation of assets and liabilities to the carrying value of each
CGU. For the newly created Vantage Towers CGUs we:
– evaluated the judgement applied in determining the quantum of existing
goodwill in certain markets that should be subject to the allocation process
based on our assessment of the sources of the goodwill balances and their
relevance to the tower assets; and
– with the support of EY Valuation specialists, we tested the methodology
and inputs utilised to perform the allocation exercise on a relative basis for
consistency with the requirements of IAS 36, Impairment of Assets.
Auditing the Group’s annual impairment test was complex,
given the significant judgment related to assumptions described
above and data used in the VIU models and the sensitivity of
the VIU models to fluctuations in assumptions. We focussed
our procedures on those CGUs with the most significant
goodwill balances, history of recent impairments or other
factors which resulted in low headroom.
In the current year, determining the quantum of existing
goodwill to be allocated to the newly created Vantage Towers
CGUs in certain markets involved complex judgements and
estimation techniques.
For the annual impairment assessment as at 31 March 2021,
we also tested the methodology applied in the VIU models,
as compared to the requirements of IAS 36, including the
mathematical accuracy of management’s model. We performed
audit procedures to test and assess the significant assumptions
used in the VIU models, including:
– evaluating projected adjusted EBITDA growth, for example
by comparing underlying assumptions to external data such
as economic and industry forecasts for the relevant markets
and for consistency with findings from other areas of our audit;
– comparing long-term growth rates and discount rates to EY
independently determined acceptable ranges;
– performing sensitivity analyses on certain assumptions in
the model to evaluate the parameters that, should they arise,
would cause an impairment of the CGU or indicated additional
disclosures were appropriate; and
– for management’s assessment of implied recoverable value,
we compared CGU EBITDA multiples to market listed peers.
For each CGU, we compared the cash flow projections used in the
VIU models to the information approved by the Group’s Board of
Directors and evaluated the historical accuracy of management’s
business plans, which underpin the VIU models.
We involved a valuation specialist in our team to assist us with
certain of these audit activities.
We also assessed the adequacy of the related disclosures provided
in Note 4 of the consolidated financial statements, in particular the
sensitivity disclosures in relation to reasonably possible changes in
assumptions that could result in impairment.
Key observations communicated to the Audit and Risk Committee
The judgements and methodology applied in allocating goodwill to the newly created Vantage Towers CGUs are reasonable. Furthermore, we agree
with management’s conclusion that the carrying value of the Group’s CGUs are supportable as at 31 March 2021 and that no impairment charge is
required to be recognised in the year.
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Risk
Recognition and recoverability of deferred tax assets on tax losses – Luxembourg
As more fully described in Note 6 to the consolidated financial statements,
the Group recognises deferred tax assets in accordance with IAS 12 Income
Taxes based on their estimated recoverability and whether management
judge that it is probable that there will be sufficient and suitable taxable profits
in the relevant legal entity or tax group against which to utilise the assets in
the future.
Furthermore, Luxembourg owns direct and indirect interests in
the Group’s operating activities. The value of these investments is
primarily based on the Group’s value in use calculations. Changes
in the value for the purposes of local Luxembourg statutory
financial statements can result in impairment movements which
are taxable / tax deductible under local law. In the current year
there has been a reversal of historical impairment, which has
resulted in the utilisation of brought forward tax losses, thereby
reducing the carrying value of the deferred tax asset recognised.
Auditing the Group’s recognition and recoverability of deferred
tax assets in Luxembourg is significant to the audit because it
involves material amounts, and the judgements and estimates
in relation to future taxable profits and the period of time over
which it is expected to utilise these assets results in increased
estimation uncertainty.
– corroborating the reasonableness of the forecast procurement
and roaming taxable profits with reference to historical actual
profits and with knowledge arising from other areas of our audit;
– evaluating the forecast finance income by comparing future
interest rates utilised in the forecasts to relevant external
benchmarks and the assumed reductions in intergroup debt
for consistency with our understanding of relevant guidance in
respect of transfer pricing of financial transactions;
– assessing whether contrary evidence exists that is not consistent
with either management’s stated intention that the financing
structures will remain in place or that it is probable that future
taxable profits will exist; and
– reviewing the adequacy of the disclosures in respect of the
recognition of the deferred tax asset which explain the evidence
supporting the recognition, judgements in respect of the
utilisation profile including longer term uncertainties and the
key drivers of changes in the carrying value of the asset and the
utilisation period.
We also considered the adequacy of the Group’s disclosures in
Note 6 of the Consolidated financial statements as to the basis for
recognition of the asset and the forecast utilisation period.
A deferred tax asset in Luxembourg of €17,394 million (FY20: €20,544 million)
has been recognised in respect of losses, as management concluded it is
probable that the Luxembourg entities will continue to generate taxable
profits in the future against which they can utilise these assets. Management
estimates that the losses will be utilised over a period of between 59-62 years.
The Luxembourg companies’ income is derived from the Group’s internal
financing and procurement and roaming activities. The forecast future
finance income can vary based on forecast interest rates and intercompany
debt levels which in turn impacts the timeframe over which the deferred tax
asset is forecast to be recovered.
Our response to the risk
Audit procedures on the recognition and recoverability of deferred tax assets
on tax losses in Luxembourg were performed by the Primary audit team and
its tax professionals with support from Luxembourg tax and transfer pricing
specialists on certain procedures.
We obtained an understanding, evaluated the design and tested the
operating effectiveness of management’s controls around the recognition
of deferred tax assets in Luxembourg, including the calculation of the gross
amount of deferred tax assets recorded, the preparation of the prospective
financial information used to determine the Group’s future taxable income,
the future reversal of any existing taxable temporary differences, and
management’s identification and use of available commercial strategies.
To test the realisability of the deferred tax assets in Luxembourg, with the
support of tax specialists, our audit procedures included, among others;
– validating the existence of available losses including the impact of current
year taxable profits resulting from operating and finance income and the
reversal of previously recognised impairments within the local statutory
financial statements;
– evaluating management’s position on the recoverability of the losses
with respect to local tax law and tax planning strategies adopted;
– re-performing the calculation of the reversal of previous impairments by
agreeing the value in use calculations to our goodwill impairment audit
work and confirming the Luxembourg ownership structure. This included
agreeing that changes to the ownership structure during the year
as a result of Vantage Towers had been appropriately reflected in
the calculation;
Key observations communicated to the Audit and Risk Committee
We agree with the recognition of the deferred tax assets, and consequently the long recoverability period, on the basis of forecast profits which are
considered probable given management’s intention to retain current activities in Luxembourg over the long term and the track record of historical
profitability in these operations.
We consider that the enhanced disclosures included within Note 6:
– provide greater clarity as to the impact of impairment losses and reversal on both the deferred tax asset balance and utilisation timeframe; and
– acknowledges both the judgement made in respect of the timing and profile of the utilisation of the losses in the short to medium term and the
longer term uncertainties in relation to the carrying value of the related deferred tax asset.
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Risk
the future.
Recognition and recoverability of deferred tax assets on tax losses – Luxembourg
As more fully described in Note 6 to the consolidated financial statements,
Furthermore, Luxembourg owns direct and indirect interests in
the Group recognises deferred tax assets in accordance with IAS 12 Income
the Group’s operating activities. The value of these investments is
Taxes based on their estimated recoverability and whether management
primarily based on the Group’s value in use calculations. Changes
judge that it is probable that there will be sufficient and suitable taxable profits
in the value for the purposes of local Luxembourg statutory
in the relevant legal entity or tax group against which to utilise the assets in
financial statements can result in impairment movements which
A deferred tax asset in Luxembourg of €17,394 million (FY20: €20,544 million)
has been recognised in respect of losses, as management concluded it is
probable that the Luxembourg entities will continue to generate taxable
are taxable / tax deductible under local law. In the current year
there has been a reversal of historical impairment, which has
resulted in the utilisation of brought forward tax losses, thereby
reducing the carrying value of the deferred tax asset recognised.
profits in the future against which they can utilise these assets. Management
Auditing the Group’s recognition and recoverability of deferred
estimates that the losses will be utilised over a period of between 59-62 years.
tax assets in Luxembourg is significant to the audit because it
The Luxembourg companies’ income is derived from the Group’s internal
financing and procurement and roaming activities. The forecast future
finance income can vary based on forecast interest rates and intercompany
debt levels which in turn impacts the timeframe over which the deferred tax
involves material amounts, and the judgements and estimates
in relation to future taxable profits and the period of time over
which it is expected to utilise these assets results in increased
estimation uncertainty.
asset is forecast to be recovered.
Our response to the risk
Audit procedures on the recognition and recoverability of deferred tax assets
– corroborating the reasonableness of the forecast procurement
on tax losses in Luxembourg were performed by the Primary audit team and
and roaming taxable profits with reference to historical actual
its tax professionals with support from Luxembourg tax and transfer pricing
profits and with knowledge arising from other areas of our audit;
specialists on certain procedures.
We obtained an understanding, evaluated the design and tested the
operating effectiveness of management’s controls around the recognition
of deferred tax assets in Luxembourg, including the calculation of the gross
amount of deferred tax assets recorded, the preparation of the prospective
financial information used to determine the Group’s future taxable income,
the future reversal of any existing taxable temporary differences, and
management’s identification and use of available commercial strategies.
To test the realisability of the deferred tax assets in Luxembourg, with the
support of tax specialists, our audit procedures included, among others;
– validating the existence of available losses including the impact of current
year taxable profits resulting from operating and finance income and the
reversal of previously recognised impairments within the local statutory
financial statements;
– evaluating management’s position on the recoverability of the losses
with respect to local tax law and tax planning strategies adopted;
– re-performing the calculation of the reversal of previous impairments by
agreeing the value in use calculations to our goodwill impairment audit
work and confirming the Luxembourg ownership structure. This included
agreeing that changes to the ownership structure during the year
as a result of Vantage Towers had been appropriately reflected in
the calculation;
Key observations communicated to the Audit and Risk Committee
– evaluating the forecast finance income by comparing future
interest rates utilised in the forecasts to relevant external
benchmarks and the assumed reductions in intergroup debt
for consistency with our understanding of relevant guidance in
respect of transfer pricing of financial transactions;
– assessing whether contrary evidence exists that is not consistent
with either management’s stated intention that the financing
structures will remain in place or that it is probable that future
taxable profits will exist; and
– reviewing the adequacy of the disclosures in respect of the
recognition of the deferred tax asset which explain the evidence
supporting the recognition, judgements in respect of the
utilisation profile including longer term uncertainties and the
key drivers of changes in the carrying value of the asset and the
utilisation period.
We also considered the adequacy of the Group’s disclosures in
Note 6 of the Consolidated financial statements as to the basis for
recognition of the asset and the forecast utilisation period.
We agree with the recognition of the deferred tax assets, and consequently the long recoverability period, on the basis of forecast profits which are
considered probable given management’s intention to retain current activities in Luxembourg over the long term and the track record of historical
profitability in these operations.
We consider that the enhanced disclosures included within Note 6:
– provide greater clarity as to the impact of impairment losses and reversal on both the deferred tax asset balance and utilisation timeframe; and
– acknowledges both the judgement made in respect of the timing and profile of the utilisation of the losses in the short to medium term and the
longer term uncertainties in relation to the carrying value of the related deferred tax asset.
Starting basis
Adjusted EBITDA of €14,386 million*
Adjustments
Add back adjustments
– Group restructuring costs
(€356 million)
Materiality
Adjusted EBITDA for materiality basis:
€14,030 million
Materiality of €280 million
(2% of materiality basis)
* See Note 2 to the Consolidated financial statements and definition of this Alternative
Performance Measure at page 218.
We determined materiality for the Company to be €445 million (2020:
€471 million), which is 1% (2020: 1%) of the Company’s equity. However,
since the Company was a full scope component, for accounts that were
relevant for the Group financial statements, a performance materiality
of €39 million was applied.
During the course of our audit, we reassessed initial materiality with
the only change in the final materiality from our original assessment
at planning, being to reflect the actual reported performance during
the year.
In the prior year, our auditor’s report included the following key audit
matters, which have not been included as key audit matters for the
current year audit:
– Assessment of contingent liabilities – The developments in the
current fiscal year in respect of (i) Indian withholding taxes on the
acquisition of Hutchison Essar Limited; and (ii) the Group’s exposure
under a contingent liability mechanism agreed on the formation of
Vodafone Idea Limited (‘VIL’) and the knowledge gained as part of our
first year audit in FY20 meant that the effect of these matters on the
overall audit strategy, the allocation of resources in the audit and the
direction of the wider engagement team was reduced relative to the
prior year and accordingly, the assessment of contingent liabilities
is not considered a key audit matter for the current year audit.
– Valuation of identifiable assets for the acquisition of European Liberty
Global assets – this key audit matter related to the purchase price
allocation exercise for this acquisition which was concluded upon
during the prior year audit.
Our application of materiality
We apply the concept of materiality in planning and performing the audit,
in evaluating the effect of identified misstatements on the audit and in
forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in
the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a
basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be €280 million (2020:
€282 million), which is 2% (2020: 2%) of Adjusted EBITDA modified to
include the impact of certain restructuring costs and certain elements
of ‘Other income and expenses’ which we have assessed as recurring
in nature. We believe that Adjusted EBITDA provides us with the most
relevant performance measure on which to determine materiality,
given the prominence of this metric throughout the Annual Report and
Consolidated financial statements, investor presentations, profit metrics
focussed on by analysts and its alignment to the management
remuneration metric of adjusted EBIT.
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Performance materiality
The application of materiality at the individual account or balance
level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the
Group’s overall control environment, our judgement was that performance
materiality was 50% (2020: 50%) of our planning materiality, calculated
as €140m (2020: €141m). This was based upon a combination of risk
factors including:
– the level of corporate activity in the period, and specifically the carve
out of the Group’s towers infrastructure from the operating companies
in certain local markets and the formation and IPO of the Vantage
Towers Group;
– the audit findings from the prior year audit; and
– the ongoing uncertainty in relation to the macro economic
environment across the Group’s markets, in light of the ongoing
COVID-19 pandemic.
Audit work at component locations for the purpose of obtaining audit
coverage over significant financial statement accounts is undertaken
based on a percentage of total performance materiality. The performance
materiality set for each component is based on the relative scale and risk
of the component to the Group as a whole and our assessment of the
risk of misstatement at that component. In the current year, the range
of performance materiality allocated to components was €28m to
€140m (2020: €15m to €138m).
Reporting threshold
An amount below which identified misstatements are considered as
being clearly trivial.
We agreed with the Audit and Risk Committee that we would report to
them all uncorrected audit differences in excess of €14m (2020: €14m),
which is set at 5% of planning materiality, as well as differences below that
threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative
measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the Annual
Report set out on pages 1 to 109, other than the financial statements and
our auditor’s report thereon. The directors are responsible for the other
information contained within the Annual Report.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required
to determine whether there is a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of the other information,
we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the directors’ report
for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
– the strategic report and the directors’ report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report
by exception
In the light of the knowledge and understanding of the Group and the
Company and its environment obtained in the course of the audit, we
have not identified material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following matters in relation
to which the Companies Act 2006 requires us to report to you if, in
our opinion:
– adequate accounting records have not been kept by the Company, or
returns adequate for our audit have not been received from branches
not visited by us; or
– the Company financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
– certain disclosures of directors’ remuneration specified by law are not
made; or
– we have not received all the information and explanations we require
for our audit.
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Independent auditor’s report to the members of Vodafone Group plc (continued)
Performance materiality
The application of materiality at the individual account or balance
level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the
Group’s overall control environment, our judgement was that performance
materiality was 50% (2020: 50%) of our planning materiality, calculated
as €140m (2020: €141m). This was based upon a combination of risk
factors including:
– the level of corporate activity in the period, and specifically the carve
out of the Group’s towers infrastructure from the operating companies
in certain local markets and the formation and IPO of the Vantage
Towers Group;
– the audit findings from the prior year audit; and
– the ongoing uncertainty in relation to the macro economic
environment across the Group’s markets, in light of the ongoing
COVID-19 pandemic.
Audit work at component locations for the purpose of obtaining audit
coverage over significant financial statement accounts is undertaken
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required
to determine whether there is a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of the other information,
we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the strategic report and the directors’ report
for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
based on a percentage of total performance materiality. The performance
– the strategic report and the directors’ report have been prepared in
materiality set for each component is based on the relative scale and risk
accordance with applicable legal requirements.
of the component to the Group as a whole and our assessment of the
risk of misstatement at that component. In the current year, the range
of performance materiality allocated to components was €28m to
€140m (2020: €15m to €138m).
Reporting threshold
being clearly trivial.
An amount below which identified misstatements are considered as
Matters on which we are required to report
by exception
In the light of the knowledge and understanding of the Group and the
Company and its environment obtained in the course of the audit, we
have not identified material misstatements in the strategic report or the
directors’ report.
We agreed with the Audit and Risk Committee that we would report to
them all uncorrected audit differences in excess of €14m (2020: €14m),
We have nothing to report in respect of the following matters in relation
to which the Companies Act 2006 requires us to report to you if, in
which is set at 5% of planning materiality, as well as differences below that
our opinion:
threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative
measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
not visited by us; or
Other information
The other information comprises the information included in the Annual
Report set out on pages 1 to 109, other than the financial statements and
information contained within the Annual Report.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
made; or
for our audit.
– adequate accounting records have not been kept by the Company, or
returns adequate for our audit have not been received from branches
– the Company financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
– certain disclosures of directors’ remuneration specified by law are not
our auditor’s report thereon. The directors are responsible for the other
– we have not received all the information and explanations we require
Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation
to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Group and Company’s compliance
with the provisions of the UK Corporate Governance Code specified for
our review.
Based on the work undertaken as part of our audit, we have concluded
that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or
our knowledge obtained during the audit:
– Directors’ statement with regards to the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified set out on page 109;
– Directors’ explanation as to its assessment of the Company’s prospects,
the period this assessment covers and why the period is appropriate set
out on page 61;
– Directors’ statement on fair, balanced and understandable set out on
page 108;
– Board’s confirmation that it has carried out a robust assessment of the
emerging and principal risks set out on page 105;
– The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set out
on pages 79-80; and
– The section describing the work of the Audit and Risk Committee set
out on pages 76-81.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set
out on pages 108-109, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible
for assessing the Group and Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either
intend to liquidate the Group or the Company or to cease operations,
or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these
financial statements.
Explanation as to what extent the audit was considered
capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect irregularities, including fraud. The risk of not
detecting a material misstatement due to fraud is higher than the risk
of not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional misrepresentations,
or through collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of
fraud rests with both those charged with governance of the Company
and management.
– We obtained an understanding of the legal and regulatory frameworks
that are applicable to the Group and determined that the most
significant are those that relate to the reporting framework (IFRS,
FRS 101, the UK Companies Act 2006 and UK Corporate Governance
Code), the relevant tax compliance regulations in the jurisdictions in
which the Group operates and the EU General Data Protection
Regulation (GDPR).
– We understood how the Group is complying with those frameworks
by making enquiries of management, internal audit, those responsible
for legal and compliance procedures and the company secretary. We
corroborated our enquiries through our review of board minutes and
papers provided to the Audit and Risk Committee, correspondence
received from regulatory bodies and attendance at all meetings of the
Audit and Risk Committee, as well as consideration of the results of our
audit procedures across the Group.
120 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Independent auditor’s report to the members of Vodafone Group plc (continued)
Other matters we are required to address
– Following the recommendation from the Audit and Risk Committee we
were appointed by the Company on 23 July 2019 to audit the financial
statements for the year ending 31 March 2020 and subsequent
financial periods.
– The period of total uninterrupted engagement including previous
renewals and reappointments is two years, covering the years ending
31 March 2020 to 31 March 2021.
– The non-audit services prohibited by the FRC’s Ethical Standard were
not provided to the Group or the Company and we remain independent
of the Group and the Company in conducting the audit.
– The audit opinion is consistent with the additional report to the
audit committee.
Use of our report
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Alison Duncan (Senior statutory auditor)
for and on behalf of Ernst & Young LLP,
Statutory Auditor
London
18 May 2021
– We assessed the susceptibility of the Group’s financial statements
to material misstatement, including how fraud might occur by
meeting with management from various parts of the business
including management and finance teams of the local markets
designated as full and specified procedures scope locations, Head
Office, the Audit and Risk Committee, the internal audit function,
the Group legal function and individuals in the fraud and compliance
department to understand where it considered there was susceptibility
to fraud; and assessing whistleblowing incidences for those with a
potential financial reporting impact. We also considered performance
targets and their propensity to influence on efforts made by
management to manage earnings or influence the perceptions of
analysts. We considered the programmes and controls that the Group
has established to address risks identified, or that otherwise prevent,
deter and detect fraud, and how senior management monitors those
programmes and controls.
– Based on our understanding, at a Group level our procedures involved:
enquiries of Group management and those charged with governance,
legal counsel, the corporate security team, the fraud investigation team
and the whistleblowing and investigation team; journal entry testing,
with a focus on manual consolidation journals and journals indicating
large or unusual transactions, based on our understanding of the
business; and challenging the assumptions and judgements made
by management in respect of significant one-off transactions in the
financial year and significant accounting estimates as referred to in
the key audit matters section above. At a component level, our full
and specified procedure scope component audit teams’ procedures
included enquiries of component management; journal entry testing;
and focused testing, including in respect of the key audit matter of
revenue recognition. We also leveraged our data analytics capabilities
in performing work on the purchase to pay process and property, plant
and equipment balances, to assist in identifying higher risk transactions
and balances, respectively, for testing.
– Where the risk was considered to be higher, including areas impacting
Group key performance indicators or management remuneration,
we performed audit procedures to address each identified fraud risk
or other risk of material misstatement. These procedures included
those on revenue recognition referred to in the key audit matter
section above and testing manual journals and were designed to
provide reasonable assurance that the financial statements were
free from fraud or error.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
120 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
121 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Independent auditor’s report to the members of Vodafone Group plc (continued)
– We assessed the susceptibility of the Group’s financial statements
Other matters we are required to address
to material misstatement, including how fraud might occur by
meeting with management from various parts of the business
including management and finance teams of the local markets
– Following the recommendation from the Audit and Risk Committee we
were appointed by the Company on 23 July 2019 to audit the financial
statements for the year ending 31 March 2020 and subsequent
designated as full and specified procedures scope locations, Head
financial periods.
Office, the Audit and Risk Committee, the internal audit function,
the Group legal function and individuals in the fraud and compliance
department to understand where it considered there was susceptibility
to fraud; and assessing whistleblowing incidences for those with a
potential financial reporting impact. We also considered performance
targets and their propensity to influence on efforts made by
management to manage earnings or influence the perceptions of
analysts. We considered the programmes and controls that the Group
has established to address risks identified, or that otherwise prevent,
deter and detect fraud, and how senior management monitors those
programmes and controls.
– Based on our understanding, at a Group level our procedures involved:
enquiries of Group management and those charged with governance,
legal counsel, the corporate security team, the fraud investigation team
and the whistleblowing and investigation team; journal entry testing,
with a focus on manual consolidation journals and journals indicating
large or unusual transactions, based on our understanding of the
business; and challenging the assumptions and judgements made
by management in respect of significant one-off transactions in the
financial year and significant accounting estimates as referred to in
the key audit matters section above. At a component level, our full
and specified procedure scope component audit teams’ procedures
– The period of total uninterrupted engagement including previous
renewals and reappointments is two years, covering the years ending
31 March 2020 to 31 March 2021.
– The non-audit services prohibited by the FRC’s Ethical Standard were
not provided to the Group or the Company and we remain independent
of the Group and the Company in conducting the audit.
– The audit opinion is consistent with the additional report to the
audit committee.
Use of our report
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Alison Duncan (Senior statutory auditor)
for and on behalf of Ernst & Young LLP,
included enquiries of component management; journal entry testing;
Statutory Auditor
and focused testing, including in respect of the key audit matter of
revenue recognition. We also leveraged our data analytics capabilities
in performing work on the purchase to pay process and property, plant
and equipment balances, to assist in identifying higher risk transactions
London
18 May 2021
and balances, respectively, for testing.
– Where the risk was considered to be higher, including areas impacting
Group key performance indicators or management remuneration,
we performed audit procedures to address each identified fraud risk
or other risk of material misstatement. These procedures included
those on revenue recognition referred to in the key audit matter
section above and testing manual journals and were designed to
provide reasonable assurance that the financial statements were
free from fraud or error.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Consolidated income statement
for the years ended 31 March
Revenue
Cost of sales
Gross profit
Selling and distribution expenses
Administrative expenses
Net credit losses on financial assets
Share of results of equity accounted associates and joint ventures
Impairment loss
Other income/(expense)
Operating profit/(loss)
Non-operating expense
Investment income
Financing costs
Profit/(loss) before taxation
Income tax expense
Profit/(loss) for the financial year from continuing operations
Loss for the financial year from discontinued operations
Profit/(loss) for the financial year
Attributable to:
– Owners of the parent
– Non-controlling interests
Profit/(loss) for the financial year
Earnings/(loss) per share
From continuing operations:
– Basic
– Diluted
Total Group:
– Basic
– Diluted
Note
2
22
12
4
3
3
5
5
6
7
8
8
8
8
2021
€m
43,809
(30,086)
13,723
(3,522)
(5,350)
(664)
342
–
568
5,097
–
330
(1,027)
4,400
(3,864)
536
–
536
112
424
536
0.38c
0.38c
0.38c
0.38c
2020
€m
44,974
(30,682)
14,292
(3,814)
(5,810)
(660)
(2,505)
(1,685)
4,281
4,099
(3)
248
(3,549)
795
(1,250)
(455)
–
(455)
(920)
465
(455)
(3.13)c
(3.13)c
(3.13)c
(3.13)c
2019
€m
43,666
(30,160)
13,506
(3,891)
(5,410)
(575)
(908)
(3,525)
(148)
(951)
(7)
433
(2,088)
(2,613)
(1,496)
(4,109)
(3,535)
(7,644)
(8,020)
376
(7,644)
(16.25)c
(16.25)c
(29.05)c
(29.05)c
Consolidated statement of comprehensive income
for the years ended 31 March
Profit/(loss) for the financial year:
Other comprehensive income/(expense):
Items that may be reclassified to the income statement in subsequent years:
Foreign exchange translation differences, net of tax
Foreign exchange translation differences transferred to the income statement
Other, net of tax1
Total items that may be reclassified to the income statement in subsequent
years
Items that will not be reclassified to the income statement in subsequent years:
Net actuarial (losses)/gains on defined benefit pension schemes, net of tax
Total items that will not be reclassified to the income statement in
subsequent years
Other comprehensive (expense)/income
Total comprehensive (expense)/income for the financial year
Attributable to:
– Owners of the parent
– Non-controlling interests
Note
2021
€m
536
2020
€m
(455)
2019
€m
(7,644)
133
(17)
(3,743)
(982)
(36)
3,066
(533)
2,079
243
(3,627)
2,048
1,789
25
(555)
526
(33)
(555)
(4,182)
(3,646)
(4,069)
423
(3,646)
526
2,574
2,119
1,696
423
2,119
(33)
1,756
(5,888)
(6,333)
445
(5,888)
Note:
1 Principally includes the impact of the Group’s cash flow hedges deferred to other comprehensive income during the year.
Further details on items in the Consolidated statement of comprehensive income can be found in the consolidated statement of changes in equity on
page 123.
122 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Consolidated statement of financial position
at 31 March
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments in associates and joint ventures
Other investments
Deferred tax assets
Post employment benefits
Trade and other receivables
Current assets
Inventory
Taxation recoverable
Trade and other receivables
Other investments
Cash and cash equivalents
Assets held for sale
Total assets
Equity
Called up share capital
Additional paid-in capital
Treasury shares
Accumulated losses
Accumulated other comprehensive income
Total attributable to owners of the parent
Non-controlling interests
Total equity
Non-current liabilities
Borrowings
Deferred tax liabilities
Post employment benefits
Provisions
Trade and other payables
Current liabilities
Borrowings
Financial liabilities under put option arrangements
Taxation liabilities
Provisions
Trade and other payables
Total equity and liabilities
31 March 2021
Note
€m
31 March 2020
Re-presented1
€m
10
10
11
12
13
6
25
14
14
13
19
7
17
21
6
25
16
15
21
22
16
15
31,731
21,818
41,243
4,670
925
21,569
60
4,777
126,793
676
434
10,923
9,159
5,821
27,013
1,257
155,063
4,797
150,812
(6,172)
(121,587)
27,954
55,804
2,012
57,816
59,272
2,095
513
1,747
4,909
68,536
8,488
492
769
892
18,070
28,711
155,063
31,378
22,631
40,113
5,831
792
23,606
590
10,393
135,334
598
278
11,724
7,089
13,557
33,246
(412)
168,168
4,797
152,629
(7,802)
(120,349)
32,135
61,410
1,215
62,625
62,949
2,103
438
1,479
5,189
72,158
11,976
1,850
787
1,053
17,719
33,385
168,168
Note:
1
In the Annual Report for the year ended 31 March 2020, the Group’s 55% interest in Vodafone Egypt was presented within assets and liabilities held for sale following the announcement on 29 January 2020 that the Group had
signed a memorandum of understanding to sell its interest to Saudi Telecom. On 21 December 2020, the Group announced that its discussions with Saudi Telecom had ended and the memorandum of understanding had been
terminated. Consequently, the balances as at 31 March 2020 have been re-presented to reflect that Vodafone Egypt is no longer held for sale. There is no impact on Total assets and Total equity and liabilities, although certain
classifications have changed. This is explained in Note 7.
The consolidated financial statements on pages 121 to 208 were approved by the Board of Directors and authorised for issue on 18 May 2021
and were signed on its behalf by:
Nick Read
Chief Executive
Margherita Della Valle
Chief Financial Officer
122 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
123 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Consolidated statement of financial position
Consolidated statement of financial position
at 31 March
at 31 March
Consolidated statement of changes in equity
for the years ended 31 March
Non-current assets
Non-current assets
Goodwill
Goodwill
Other intangible assets
Other intangible assets
Property, plant and equipment
Property, plant and equipment
Investments in associates and joint ventures
Investments in associates and joint ventures
Other investments
Other investments
Deferred tax assets
Deferred tax assets
Post employment benefits
Post employment benefits
Trade and other receivables
Trade and other receivables
Current assets
Current assets
Inventory
Inventory
Taxation recoverable
Taxation recoverable
Trade and other receivables
Trade and other receivables
Other investments
Other investments
Cash and cash equivalents
Cash and cash equivalents
Assets held for sale
Assets held for sale
Total assets
Total assets
Equity
Equity
Called up share capital
Called up share capital
Additional paid-in capital
Additional paid-in capital
Treasury shares
Treasury shares
Accumulated losses
Accumulated losses
Non-controlling interests
Non-controlling interests
Total equity
Total equity
Non-current liabilities
Non-current liabilities
Borrowings
Borrowings
Deferred tax liabilities
Deferred tax liabilities
Post employment benefits
Post employment benefits
Provisions
Provisions
Trade and other payables
Trade and other payables
Current liabilities
Current liabilities
Borrowings
Borrowings
Taxation liabilities
Taxation liabilities
Provisions
Provisions
Trade and other payables
Trade and other payables
Accumulated other comprehensive income
Accumulated other comprehensive income
Total attributable to owners of the parent
Total attributable to owners of the parent
Financial liabilities under put option arrangements
Financial liabilities under put option arrangements
31 March 2021
31 March 2021
Note
Note
€m
€m
31 March 2020
31 March 2020
Re-presented1
Re-presented1
€m
€m
10
10
10
10
11
11
12
12
13
13
6
6
25
25
14
14
14
14
13
13
19
19
7
7
17
17
21
21
6
6
25
25
16
16
15
15
21
21
22
22
16
16
15
15
31,731
31,731
21,818
21,818
41,243
41,243
4,670
4,670
925
925
21,569
21,569
60
60
4,777
4,777
126,793
126,793
676
676
434
434
10,923
10,923
9,159
9,159
5,821
5,821
27,013
27,013
1,257
1,257
31,378
31,378
22,631
22,631
40,113
40,113
5,831
5,831
792
792
23,606
23,606
590
590
10,393
10,393
135,334
135,334
598
598
278
278
11,724
11,724
7,089
7,089
13,557
13,557
33,246
33,246
(412)
(412)
155,063
155,063
168,168
168,168
4,797
4,797
150,812
150,812
4,797
4,797
152,629
152,629
(6,172)
(6,172)
(7,802)
(7,802)
(121,587)
(121,587)
(120,349)
(120,349)
27,954
27,954
55,804
55,804
2,012
2,012
57,816
57,816
59,272
59,272
2,095
2,095
513
513
1,747
1,747
4,909
4,909
8,488
8,488
492
492
769
769
892
892
18,070
18,070
28,711
28,711
32,135
32,135
61,410
61,410
1,215
1,215
62,625
62,625
62,949
62,949
2,103
2,103
438
438
1,479
1,479
5,189
5,189
11,976
11,976
1,850
1,850
787
787
1,053
1,053
17,719
17,719
33,385
33,385
68,536
68,536
72,158
72,158
155,063
155,063
168,168
168,168
Total equity and liabilities
Total equity and liabilities
Note:
Note:
classifications have changed. This is explained in Note 7.
classifications have changed. This is explained in Note 7.
and were signed on its behalf by:
and were signed on its behalf by:
1
1
In the Annual Report for the year ended 31 March 2020, the Group’s 55% interest in Vodafone Egypt was presented within assets and liabilities held for sale following the announcement on 29 January 2020 that the Group had
In the Annual Report for the year ended 31 March 2020, the Group’s 55% interest in Vodafone Egypt was presented within assets and liabilities held for sale following the announcement on 29 January 2020 that the Group had
signed a memorandum of understanding to sell its interest to Saudi Telecom. On 21 December 2020, the Group announced that its discussions with Saudi Telecom had ended and the memorandum of understanding had been
signed a memorandum of understanding to sell its interest to Saudi Telecom. On 21 December 2020, the Group announced that its discussions with Saudi Telecom had ended and the memorandum of understanding had been
terminated. Consequently, the balances as at 31 March 2020 have been re-presented to reflect that Vodafone Egypt is no longer held for sale. There is no impact on Total assets and Total equity and liabilities, although certain
terminated. Consequently, the balances as at 31 March 2020 have been re-presented to reflect that Vodafone Egypt is no longer held for sale. There is no impact on Total assets and Total equity and liabilities, although certain
The consolidated financial statements on pages 121 to 208 were approved by the Board of Directors and authorised for issue on 18 May 2021
The consolidated financial statements on pages 121 to 208 were approved by the Board of Directors and authorised for issue on 18 May 2021
Nick Read
Nick Read
Chief Executive
Chief Executive
Margherita Della Valle
Margherita Della Valle
Chief Financial Officer
Chief Financial Officer
Share
capital1
€m
4,796
–
–
–
–
–
–
–
–
–
1 April 2018
Issue or reissue of shares6
Share-based payments
Issue of mandatory convertible
bonds7
Transactions with non-
controlling interests ('NCI') in
subsidiaries
Dividends
Comprehensive
(expense)/income
(Loss)/profit
Other comprehensive income
('OCI') - before tax
OCI - taxes
Transfer to the income
–
statement
Purchase of treasury shares8
–
31 March 2019 as reported 4,796
Adoption of IFRS 169
–
1 April 2019 brought forward 4,796
1
Issue or reissue of shares
Share-based payments
–
Transactions with NCI in
subsidiaries
Dividends
Comprehensive
(expense)/income
(Loss)/profit
OCI - before tax
OCI - taxes
Transfer to the income
statement
31 March 2020
Issue or reissue of shares6
Share-based payments
Transactions with NCI in
subsidiaries10
Dividends
Comprehensive
income/(expense)
Profit
OCI - before tax
OCI - taxes
Transfer to the income
statement
Purchase of treasury shares11
31 March 2021
Notes:
1 See note 17 “Called up share capital”.
2
–
4,797
–
–
–
–
4,797
–
–
–
–
–
–
–
–
–
–
–
–
Additional
paid-in
capital2
€m
150,197
(1,741)
199
3,848
–
–
–
–
–
–
Accumulated other comprehensive income
Treasury
shares
€m
(8,463)
1,834
–
Accumulated
Currency
losses
reserve3
€m
€m
(104,462) 27,807
–
–
(92)
–
Pensions Revaluation
reserve
surplus4
€m
€m
(1,172) 1,227
–
–
–
–
Equity
Other5
€m
Non-
attributable controlling
interests
€m
1,043
–
34
to owners
€m
(30) 69,900
1
199
–
–
Total
equity
€m
70,943
1
233
–
–
–
–
–
–
–
–
(129)
(4,022)
–
–
–
(8,020)
(8,020)
1,477
–
–
–
(594)
(8)
–
–
–
(33)
–
(33)
–
–
–
–
–
–
–
–
–
3,848
–
3,848
–
–
(129)
(4,022)
307
(602)
178
(4,624)
243
–
(6,333)
(8,020)
445
376
(5,888)
(7,644)
290
(47)
(337)
(55)
73
(4)
(264)
(59)
–
–
152,503
–
152,503
1
125
–
(1,246)
(7,875)
–
(7,875)
73
–
2,079
–
–
–
(116,725) 29,284
–
(116,986) 29,284
–
–
(68)
–
(261)
–
–
–
–
(1,205) 1,227
–
(1,205) 1,227
–
–
–
–
–
–
–
–
–
2,079
(1,246)
2,079
(1,246)
213 62,218 1,227 63,445
(257)
63,188
7
136
(261)
61,957
7
125
4
1,231
–
11
–
213
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(58)
(2,317)
(920)
(920)
–
–
–
–
(976)
–
(951)
19
–
–
526
–
640
(114)
–
–
–
–
–
–
–
–
(58)
(2,317)
(102)
(348)
(160)
(2,665)
3,066
–
3,771
(705)
1,696
(920)
3,460
(800)
423
465
(46)
(4)
2,119
(455)
3,414
(804)
–
152,629
(1,943)
126
–
(7,802)
2,033
–
(44)
–
(120,349) 28,308
–
(87)
–
–
–
–
–
(36)
(679) 1,227 3,279 61,410 1,215 62,625
3
136
3
126
–
10
(44)
–
–
–
–
–
–
8
–
–
–
–
–
–
–
–
–
–
–
–
1,149
(2,412)
112
112
–
–
–
–
117
–
124
6
–
–
(555)
–
(686)
131
–
–
–
–
–
–
–
–
1,149
(2,412)
748
(384)
1,897
(2,796)
(3,743)
–
(4,630)
887
(4,069)
112
(5,192)
1,024
423
424
–
3
(3,646)
536
(5,192)
1,027
–
–
150,812
–
(403)
(6,172)
(13)
–
–
–
(121,587) 28,425
–
–
–
–
(1,234) 1,227
–
–
(17)
(403)
(464) 55,804 2,012 57,816
(13)
(403)
(4)
–
Includes share premium, capital reserve, capital redemption reserve, merger reserve and share-based payment reserve. The merger reserve was derived from acquisitions made prior to 31 March 2004 and
subsequently allocated to additional paid-in capital on adoption of IFRS.
3 The currency reserve is used to record cumulative translation differences on the assets and liabilities of foreign operations. The cumulative translation differences are recycled to the income statement on
disposal of the foreign operation.
4 The revaluation surplus derives from acquisitions of subsidiaries made before the Group’s adoption of IFRS 3 (Revised) on 1 April 2010 and comprises the amounts arising from recognising the Group’s pre-
existing equity interest in the acquired subsidiary at fair value.
5 Principally includes the impact of the Group’s cash flow hedges with €5,892 million net loss deferred to other comprehensive income during the year (2020: €4,113 million net gain; 2019: €1,555 million net gain)
and €1,226 million net loss (2020: €408 million net gain; 2019: €1,279 million net gain) recycled to the income statement. These hedges primarily relate to foreign exchange exposure on fixed borrowings, with
any foreign exchange on nominal balances directly impacting income statement in each period but interest cash flows unwinding to the income statement over the life of the hedges (up to 2059). See note 22
“Capital and financial risk management” for further details.
6 Movements include the re-issue of 799.1 million shares (€1,742 million) in February 2019 to satisfy the second tranche of the Mandatory Convertible Bond issued in February 2016 and the re-issue of 1,426.8
million shares (€1,944 million) in March 2021 to satisfy the first tranche of the Mandatory Convertible Bond issued in March 2019.
Includes the equity component of the subordinated mandatory convertible bonds which were compound instruments issued in the year ended 31 March 2019.
7
8 Represents the irrevocable and non-discretionary share buyback programme announced on 28 January 2019.
9
10 Principally relates to the IPO of Vantage Towers AG, see note 27 for details.
11 Represents the irrevocable and non-discretionary share buyback programme announced on 19 March 2021.
Impact on adoption of IFRS 16 on 1 April 2019.
124 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Consolidated statement of cash flows
for the years ended 31 March
Inflow from operating activities
Cash flows from investing activities
Purchase of interests in subsidiaries, net of cash acquired
Purchase of interests in associates and joint ventures
Purchase of intangible assets
Purchase of property, plant and equipment
Purchase of investments
Disposal of interests in subsidiaries, net of cash disposed
Disposal of interests in associates and joint ventures
Disposal of property, plant and equipment and intangible assets
Disposal of investments
Dividends received from associates and joint ventures
Interest received
Cash flows from discontinued operations
Outflow from investing activities
Cash flows from financing activities
Proceeds from issue of long-term borrowings
Repayment of borrowings
Net movement in short-term borrowings
Net movement in derivatives
Interest paid1
Payments for settlement of written put options2
Purchase of treasury shares
Issue of ordinary share capital and reissue of treasury shares
Issue of subordinated mandatory convertible bonds3
Equity dividends paid
Dividends paid to non-controlling shareholders in subsidiaries
Other transactions with non-controlling shareholders in subsidiaries
Other movements with associates and joint ventures
Cash flows from discontinued operations
(Outflow)/inflow from financing activities
Note
18
2021
€m
17,215
2020
€m
17,379
2019
€m
12,980
27
12
13
27
17
9
27
(136)
(13)
(3,227)
(5,413)
(3,726)
157
420
43
1,704
628
301
–
(9,262)
4,359
(12,237)
(2,791)
279
(2,152)
(1,482)
(62)
5
–
(2,427)
(391)
1,663
40
–
(15,196)
(10,295)
(1,424)
(2,423)
(5,182)
(1,832)
4,427
–
61
7,792
417
371
–
(8,088)
9,933
(16,028)
2,488
98
(2,284)
–
(821)
7
–
(2,296)
(348)
(160)
59
–
(9,352)
(87)
–
(3,098)
(5,053)
(3,629)
(412)
–
45
2,269
498
622
(372)
(9,217)
14,681
(6,180)
(497)
(44)
(1,297)
–
(475)
7
3,848
(4,064)
(584)
(221)
42
(779)
4,437
Net cash (outflow)/inflow
(7,243)
(61)
8,200
Cash and cash equivalents at beginning of the financial year
Exchange (loss)/gain on cash and cash equivalents
Cash and cash equivalents at end of the financial year
Notes:
1 Amount for 2021 includes €9 million (2020: €273 million outflow; 2019: €131 million outflow) of cash inflow on derivative financial instruments for the share buyback related to maturing tranches
13,605
(256)
13,288
13,288
(255)
5,790
5,394
11
13,605
19
19
of mandatory convertible bonds.
2 Reflects the settlement of a tender offer made to other shareholders of Kabel Deutschland Holding AG.
3 See note 21 “Borrowings” for further details.
Consolidated statement of cash flows
Consolidated statement of cash flows
for the years ended 31 March
for the years ended 31 March
Inflow from operating activities
Inflow from operating activities
Cash flows from investing activities
Cash flows from investing activities
Purchase of interests in subsidiaries, net of cash acquired
Purchase of interests in subsidiaries, net of cash acquired
Purchase of interests in associates and joint ventures
Purchase of interests in associates and joint ventures
Purchase of intangible assets
Purchase of intangible assets
Purchase of property, plant and equipment
Purchase of property, plant and equipment
Purchase of investments
Purchase of investments
Disposal of interests in subsidiaries, net of cash disposed
Disposal of interests in subsidiaries, net of cash disposed
Disposal of interests in associates and joint ventures
Disposal of interests in associates and joint ventures
Disposal of property, plant and equipment and intangible assets
Disposal of property, plant and equipment and intangible assets
Disposal of investments
Disposal of investments
Dividends received from associates and joint ventures
Dividends received from associates and joint ventures
Interest received
Interest received
Cash flows from discontinued operations
Cash flows from discontinued operations
Outflow from investing activities
Outflow from investing activities
Cash flows from financing activities
Cash flows from financing activities
Proceeds from issue of long-term borrowings
Proceeds from issue of long-term borrowings
Repayment of borrowings
Repayment of borrowings
Net movement in short-term borrowings
Net movement in short-term borrowings
Net movement in derivatives
Net movement in derivatives
Interest paid1
Interest paid1
Payments for settlement of written put options2
Payments for settlement of written put options2
Purchase of treasury shares
Purchase of treasury shares
Issue of ordinary share capital and reissue of treasury shares
Issue of ordinary share capital and reissue of treasury shares
Issue of subordinated mandatory convertible bonds3
Issue of subordinated mandatory convertible bonds3
Equity dividends paid
Equity dividends paid
Dividends paid to non-controlling shareholders in subsidiaries
Dividends paid to non-controlling shareholders in subsidiaries
Other transactions with non-controlling shareholders in subsidiaries
Other transactions with non-controlling shareholders in subsidiaries
Other movements with associates and joint ventures
Other movements with associates and joint ventures
Cash flows from discontinued operations
Cash flows from discontinued operations
(Outflow)/inflow from financing activities
(Outflow)/inflow from financing activities
Net cash (outflow)/inflow
Net cash (outflow)/inflow
Cash and cash equivalents at beginning of the financial year
Cash and cash equivalents at beginning of the financial year
Exchange (loss)/gain on cash and cash equivalents
Exchange (loss)/gain on cash and cash equivalents
Cash and cash equivalents at end of the financial year
Cash and cash equivalents at end of the financial year
Notes:
Notes:
of mandatory convertible bonds.
of mandatory convertible bonds.
2 Reflects the settlement of a tender offer made to other shareholders of Kabel Deutschland Holding AG.
2 Reflects the settlement of a tender offer made to other shareholders of Kabel Deutschland Holding AG.
3 See note 21 “Borrowings” for further details.
3 See note 21 “Borrowings” for further details.
Note
Note
18
18
27
27
12
12
13
13
27
27
17
17
9
9
27
27
19
19
19
19
1,704
1,704
7,792
7,792
(9,262)
(9,262)
(8,088)
(8,088)
(136)
(136)
(13)
(13)
(3,227)
(3,227)
(5,413)
(5,413)
(3,726)
(3,726)
157
157
420
420
43
43
628
628
301
301
–
–
4,359
4,359
(12,237)
(12,237)
(2,791)
(2,791)
279
279
(2,152)
(2,152)
(1,482)
(1,482)
(62)
(62)
5
5
–
–
(2,427)
(2,427)
(391)
(391)
1,663
1,663
40
40
–
–
(10,295)
(10,295)
(1,424)
(1,424)
(2,423)
(2,423)
(5,182)
(5,182)
(1,832)
(1,832)
4,427
4,427
–
–
61
61
417
417
371
371
–
–
9,933
9,933
(16,028)
(16,028)
2,488
2,488
98
98
(2,284)
(2,284)
–
–
7
7
–
–
(2,296)
(2,296)
(348)
(348)
(160)
(160)
59
59
–
–
(87)
(87)
–
–
(3,098)
(3,098)
(5,053)
(5,053)
(3,629)
(3,629)
(412)
(412)
–
–
45
45
2,269
2,269
498
498
622
622
(372)
(372)
(9,217)
(9,217)
14,681
14,681
(6,180)
(6,180)
(497)
(497)
(44)
(44)
(1,297)
(1,297)
–
–
7
7
3,848
3,848
(4,064)
(4,064)
(584)
(584)
(221)
(221)
42
42
(779)
(779)
(821)
(821)
(475)
(475)
(15,196)
(15,196)
(9,352)
(9,352)
4,437
4,437
(7,243)
(7,243)
(61)
(61)
8,200
8,200
13,288
13,288
(255)
(255)
5,790
5,790
13,605
13,605
(256)
(256)
13,288
13,288
5,394
5,394
11
11
13,605
13,605
1 Amount for 2021 includes €9 million (2020: €273 million outflow; 2019: €131 million outflow) of cash inflow on derivative financial instruments for the share buyback related to maturing tranches
1 Amount for 2021 includes €9 million (2020: €273 million outflow; 2019: €131 million outflow) of cash inflow on derivative financial instruments for the share buyback related to maturing tranches
124 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
125 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
2021
2021
€m
€m
2020
2020
€m
€m
2019
2019
€m
€m
17,215
17,215
17,379
17,379
12,980
12,980
1. Basis of preparation
Notes to the consolidated financial statements
Notes to the consolidated financial statements
This section describes the critical accounting judgements and estimates that management has identified as
having a potentially material impact on the Group’s consolidated financial statements and sets out our
significant accounting policies that relate to the financial statements as a whole. Where an accounting
policy is generally applicable to a specific note to the financial statements, the policy is described within
that note. We have also detailed below the new accounting pronouncements that we will adopt in future
years and our current view of the impact they will have on our financial reporting.
The consolidated financial statements are prepared in accordance with International Accounting Standards in conformity with the requirements
of the UK companies Act 2006 (‘the Act’), International Financial Reporting Standards (“IFRS”) adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union and IFRS as issued by the International Accounting Standards Board (IASB). The consolidated
financial statements are prepared on a going concern basis (see page 109).
Vodafone Group Plc is incorporated and domiciled in England and Wales (registration number 1833679). The registered address of the
Company is Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, England.
IFRS requires the Directors to adopt accounting policies that are the most appropriate to the Group’s circumstances. These have been applied
consistently to all the years presented, unless otherwise stated. In determining and applying accounting policies, Directors and management
are required to make judgements and estimates in respect of items where the choice of specific policy, accounting judgement, estimate or
assumption to be followed could materially affect the Group’s reported financial position, results or cash flows and disclosure of contingent
assets or liabilities during the reporting period; it may later be determined that a different choice may have been more appropriate.
The Group’s critical accounting judgements and key sources of estimation uncertainty are detailed below. Actual outcomes could differ from
those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period; they are recognised in the period of the revision
and future periods if the revision affects both current and future periods.
Management regularly reviews, and revises as necessary, the accounting judgements that significantly impact the amounts recognised in the
financial statements and the estimates that are considered to be “critical estimates” due to their potential to give rise to material adjustments in
the Group’s financial statements in the year to 31 March 2022. As at 31 March 2021, management has identified critical judgements in respect
of revenue recognition, lease accounting, valuing assets and liabilities acquired in business combinations, the accounting for tax disputes in
India, the classification of joint arrangements and whether to recognise provisions or to disclose contingent liabilities. In addition, management
has identified critical accounting estimates in relation to the recovery of deferred tax assets, post employment benefits and impairments;
estimates have also been identified that are not considered to be critical in respect of the allocation of revenue to goods and services, the useful
economic lives of finite lived intangibles and property, plant and equipment.
The majority of the Group’s provisions are either long-term in nature (such as asset retirement obligations) or relate to shorter-term liabilities
(such as those relating to restructuring and property) where there is not considered to be a significant risk of material adjustment in the next
financial year. Critical judgements exercised in respect of tax disputes in India, include the cases relating to our acquisition of Hutchison Essar
Limited (Vodafone India).
These critical accounting judgements, estimates and related disclosures have been discussed with the Group’s Audit and Risk Committee.
Critical accounting judgements and key sources of estimation uncertainty
Revenue recognition
Revenue recognition under IFRS 15 necessitates the collation and processing of very large amounts of data and the use of management
judgements and estimates to produce financial information. The most significant accounting judgements and source of estimation uncertainty
are disclosed below.
Gross versus net presentation
If the Group has control of goods or services when they are delivered to a customer, then the Group is the principal in the sale to the customer;
otherwise the Group is acting as an agent. Whether the Group is considered to be the principal or an agent in the transaction depends on
analysis by management of both the legal form and substance of the agreement between the Group and its business partners; such
judgements impact the amount of reported revenue and operating expenses (see note 2 “Revenue disaggregation and segmental analysis”) but
do not impact reported assets, liabilities or cash flows. Scenarios requiring judgement to determine whether the Group is a principal or an agent
include, for example, those where the Group delivers third-party branded services (such as premium music or TV content) to customers.
126 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
1. Basis of preparation (continued)
Allocation of revenue to goods and services provided to customers
Revenue is recognised when goods and services are delivered to customers (see note 2 “Revenue disaggregation and segmental analysis”). Goods
and services may be delivered to a customer at different times under the same contract, hence it is necessary to allocate the amount payable by
the customer between goods and services on a ‘relative standalone selling price basis’; this requires the identification of performance obligations
(‘obligations’) and the determination of standalone selling prices for the identified obligations. The determination of obligations is, for the primary
goods and services sold by the Group, not considered to be a critical accounting judgement; the Group’s policy on identifying obligations is
disclosed in note 2 “Revenue disaggregation and segmental analysis”. The determination of standalone selling prices for identified obligations is
discussed below.
It is necessary to estimate the standalone price when the Group does not sell equivalent goods or services in similar circumstances on a standalone
basis. When estimating the standalone price the Group maximises the use of external inputs; methods for estimating standalone prices include
determining the standalone price of similar goods and services sold by the Group, observing the standalone prices for similar goods and services
when sold by third parties or using a cost-plus reasonable margin approach (which is sometimes the case for devices and other equipment). Where
it is not possible to reliably estimate standalone prices due to a lack of observable standalone sales or highly variable pricing, which is sometimes the
case for services, the standalone price of an obligation may be determined as the transaction price less the standalone prices of other obligations in
the contract. The standalone price determined for obligations materially impacts the allocation of revenue between obligations and impacts the
timing of revenue when obligations are provided to customers at different times – for example, the allocation of revenue between devices, which are
usually delivered up-front, and services which are typically delivered over the contract period. However, there is not considered to be a significant
risk of material adjustment to the carrying value of contract-related assets or liabilities in the 12 months after the balance sheet date if these
estimates were revised.
Lease accounting
Lease accounting under IFRS 16 is complex and necessitates the collation and processing of very large amounts of data and the increased use of
management judgements and estimates to produce financial information. The most significant accounting judgements are disclosed below.
Lease identification
Whether the arrangement is considered a lease or a service contract depends on the analysis by management of both the legal form and substance
of the arrangement between the Group and the counter-party to determine if control of an identified asset has been passed between the parties; if
not, the arrangement is a service arrangement. Control exists if the Group obtains substantially all of the economic benefit from the use of the asset,
and has the ability to direct its use, for a period of time. An identified asset exists where an agreement explicitly or implicitly identifies an asset or a
physically distinct portion of an asset which the lessor has no substantive right to substitute.
The scenarios requiring the greatest judgement include those where the arrangement is for the use of fibre or other fixed telecommunication lines.
Generally, where the Group has exclusive use of a physical line it is determined that the Group can also direct the use of the line and therefore leases
will be recognised. Where the Group provides access to fibre or other fixed telecommunication lines to another operator on a wholesale basis the
arrangement will generally be identified as a lease, whereas when the Group provides fixed line services to an end-user, generally control over such
lines is not passed to the end-user and a lease is not identified.
The impact of determining whether an agreement is a lease or a service depends on whether the Group is a potential lessee or lessor in the
arrangement and, where the Group is a lessor, whether the arrangement is classified as an operating or finance lease. The impacts for each scenario
are described below where the Group is potentially:
- A lessee. The judgement impacts the nature and timing of both costs and reported assets and liabilities. A lease results in an asset and a liability
being reported and depreciation and interest being recognised; the interest charge will decrease over the life of the lease. A service contract
results in operating expenses being recognised evenly over the life of the contract and no assets or liabilities being recorded (other than trade
payables, prepayments and accruals).
- An operating lessor. The judgement impacts the nature of income recognised. An operating lease results in lease income being recognised whilst
a service contract results in service revenue. Both are recognised evenly over the life of the contract.
- A finance lessor. The judgement impacts the nature and timing of both income and reported assets. A finance lease results in the lease income
being recognised at commencement of the lease and an asset (the net investment in the lease) being recorded.
Lease term
Where leases include additional optional periods after an initial lease term, significant judgement is required in determining whether these optional
periods should be included when determining the lease term. The impact of this judgement is significantly greater where the Group is a lessee. As a
lessee, optional periods are included in the lease term if the Group is reasonably certain it will exercise an extension option or will not exercise a
termination option; this depends on an analysis by management of all relevant facts and circumstances including the leased asset’s nature and
purpose, the economic and practical potential for replacing the asset and any plans that the Group has in place for the future use of the asset. Where
a leased asset is highly customised (either when initially provided or as a result of leasehold improvements) or it is impractical or uneconomic to
replace then the Group is more likely to judge that lease extension options are reasonably certain to be exercised. The value of the right-of-use asset
and lease liability will be greater when extension options are included in the lease term. The normal approach adopted for lease term by asset class
is described below.
126 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
127 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
1. Basis of preparation (continued)
1. Basis of preparation (continued)
Allocation of revenue to goods and services provided to customers
Allocation of revenue to goods and services provided to customers
Revenue is recognised when goods and services are delivered to customers (see note 2 “Revenue disaggregation and segmental analysis”). Goods
Revenue is recognised when goods and services are delivered to customers (see note 2 “Revenue disaggregation and segmental analysis”). Goods
and services may be delivered to a customer at different times under the same contract, hence it is necessary to allocate the amount payable by
and services may be delivered to a customer at different times under the same contract, hence it is necessary to allocate the amount payable by
the customer between goods and services on a ‘relative standalone selling price basis’; this requires the identification of performance obligations
the customer between goods and services on a ‘relative standalone selling price basis’; this requires the identification of performance obligations
(‘obligations’) and the determination of standalone selling prices for the identified obligations. The determination of obligations is, for the primary
(‘obligations’) and the determination of standalone selling prices for the identified obligations. The determination of obligations is, for the primary
goods and services sold by the Group, not considered to be a critical accounting judgement; the Group’s policy on identifying obligations is
goods and services sold by the Group, not considered to be a critical accounting judgement; the Group’s policy on identifying obligations is
disclosed in note 2 “Revenue disaggregation and segmental analysis”. The determination of standalone selling prices for identified obligations is
disclosed in note 2 “Revenue disaggregation and segmental analysis”. The determination of standalone selling prices for identified obligations is
discussed below.
discussed below.
It is necessary to estimate the standalone price when the Group does not sell equivalent goods or services in similar circumstances on a standalone
It is necessary to estimate the standalone price when the Group does not sell equivalent goods or services in similar circumstances on a standalone
basis. When estimating the standalone price the Group maximises the use of external inputs; methods for estimating standalone prices include
basis. When estimating the standalone price the Group maximises the use of external inputs; methods for estimating standalone prices include
determining the standalone price of similar goods and services sold by the Group, observing the standalone prices for similar goods and services
determining the standalone price of similar goods and services sold by the Group, observing the standalone prices for similar goods and services
when sold by third parties or using a cost-plus reasonable margin approach (which is sometimes the case for devices and other equipment). Where
when sold by third parties or using a cost-plus reasonable margin approach (which is sometimes the case for devices and other equipment). Where
it is not possible to reliably estimate standalone prices due to a lack of observable standalone sales or highly variable pricing, which is sometimes the
it is not possible to reliably estimate standalone prices due to a lack of observable standalone sales or highly variable pricing, which is sometimes the
case for services, the standalone price of an obligation may be determined as the transaction price less the standalone prices of other obligations in
case for services, the standalone price of an obligation may be determined as the transaction price less the standalone prices of other obligations in
the contract. The standalone price determined for obligations materially impacts the allocation of revenue between obligations and impacts the
the contract. The standalone price determined for obligations materially impacts the allocation of revenue between obligations and impacts the
timing of revenue when obligations are provided to customers at different times – for example, the allocation of revenue between devices, which are
timing of revenue when obligations are provided to customers at different times – for example, the allocation of revenue between devices, which are
usually delivered up-front, and services which are typically delivered over the contract period. However, there is not considered to be a significant
usually delivered up-front, and services which are typically delivered over the contract period. However, there is not considered to be a significant
risk of material adjustment to the carrying value of contract-related assets or liabilities in the 12 months after the balance sheet date if these
risk of material adjustment to the carrying value of contract-related assets or liabilities in the 12 months after the balance sheet date if these
estimates were revised.
estimates were revised.
Lease accounting
Lease accounting
Lease identification
Lease identification
Lease accounting under IFRS 16 is complex and necessitates the collation and processing of very large amounts of data and the increased use of
Lease accounting under IFRS 16 is complex and necessitates the collation and processing of very large amounts of data and the increased use of
management judgements and estimates to produce financial information. The most significant accounting judgements are disclosed below.
management judgements and estimates to produce financial information. The most significant accounting judgements are disclosed below.
Whether the arrangement is considered a lease or a service contract depends on the analysis by management of both the legal form and substance
Whether the arrangement is considered a lease or a service contract depends on the analysis by management of both the legal form and substance
of the arrangement between the Group and the counter-party to determine if control of an identified asset has been passed between the parties; if
of the arrangement between the Group and the counter-party to determine if control of an identified asset has been passed between the parties; if
not, the arrangement is a service arrangement. Control exists if the Group obtains substantially all of the economic benefit from the use of the asset,
not, the arrangement is a service arrangement. Control exists if the Group obtains substantially all of the economic benefit from the use of the asset,
and has the ability to direct its use, for a period of time. An identified asset exists where an agreement explicitly or implicitly identifies an asset or a
and has the ability to direct its use, for a period of time. An identified asset exists where an agreement explicitly or implicitly identifies an asset or a
physically distinct portion of an asset which the lessor has no substantive right to substitute.
physically distinct portion of an asset which the lessor has no substantive right to substitute.
The scenarios requiring the greatest judgement include those where the arrangement is for the use of fibre or other fixed telecommunication lines.
The scenarios requiring the greatest judgement include those where the arrangement is for the use of fibre or other fixed telecommunication lines.
Generally, where the Group has exclusive use of a physical line it is determined that the Group can also direct the use of the line and therefore leases
Generally, where the Group has exclusive use of a physical line it is determined that the Group can also direct the use of the line and therefore leases
will be recognised. Where the Group provides access to fibre or other fixed telecommunication lines to another operator on a wholesale basis the
will be recognised. Where the Group provides access to fibre or other fixed telecommunication lines to another operator on a wholesale basis the
arrangement will generally be identified as a lease, whereas when the Group provides fixed line services to an end-user, generally control over such
arrangement will generally be identified as a lease, whereas when the Group provides fixed line services to an end-user, generally control over such
lines is not passed to the end-user and a lease is not identified.
lines is not passed to the end-user and a lease is not identified.
The impact of determining whether an agreement is a lease or a service depends on whether the Group is a potential lessee or lessor in the
The impact of determining whether an agreement is a lease or a service depends on whether the Group is a potential lessee or lessor in the
arrangement and, where the Group is a lessor, whether the arrangement is classified as an operating or finance lease. The impacts for each scenario
arrangement and, where the Group is a lessor, whether the arrangement is classified as an operating or finance lease. The impacts for each scenario
are described below where the Group is potentially:
are described below where the Group is potentially:
- A lessee. The judgement impacts the nature and timing of both costs and reported assets and liabilities. A lease results in an asset and a liability
- A lessee. The judgement impacts the nature and timing of both costs and reported assets and liabilities. A lease results in an asset and a liability
being reported and depreciation and interest being recognised; the interest charge will decrease over the life of the lease. A service contract
being reported and depreciation and interest being recognised; the interest charge will decrease over the life of the lease. A service contract
results in operating expenses being recognised evenly over the life of the contract and no assets or liabilities being recorded (other than trade
results in operating expenses being recognised evenly over the life of the contract and no assets or liabilities being recorded (other than trade
payables, prepayments and accruals).
payables, prepayments and accruals).
- An operating lessor. The judgement impacts the nature of income recognised. An operating lease results in lease income being recognised whilst
- An operating lessor. The judgement impacts the nature of income recognised. An operating lease results in lease income being recognised whilst
a service contract results in service revenue. Both are recognised evenly over the life of the contract.
a service contract results in service revenue. Both are recognised evenly over the life of the contract.
- A finance lessor. The judgement impacts the nature and timing of both income and reported assets. A finance lease results in the lease income
- A finance lessor. The judgement impacts the nature and timing of both income and reported assets. A finance lease results in the lease income
being recognised at commencement of the lease and an asset (the net investment in the lease) being recorded.
being recognised at commencement of the lease and an asset (the net investment in the lease) being recorded.
Lease term
Lease term
Where leases include additional optional periods after an initial lease term, significant judgement is required in determining whether these optional
Where leases include additional optional periods after an initial lease term, significant judgement is required in determining whether these optional
periods should be included when determining the lease term. The impact of this judgement is significantly greater where the Group is a lessee. As a
periods should be included when determining the lease term. The impact of this judgement is significantly greater where the Group is a lessee. As a
lessee, optional periods are included in the lease term if the Group is reasonably certain it will exercise an extension option or will not exercise a
lessee, optional periods are included in the lease term if the Group is reasonably certain it will exercise an extension option or will not exercise a
termination option; this depends on an analysis by management of all relevant facts and circumstances including the leased asset’s nature and
termination option; this depends on an analysis by management of all relevant facts and circumstances including the leased asset’s nature and
purpose, the economic and practical potential for replacing the asset and any plans that the Group has in place for the future use of the asset. Where
purpose, the economic and practical potential for replacing the asset and any plans that the Group has in place for the future use of the asset. Where
a leased asset is highly customised (either when initially provided or as a result of leasehold improvements) or it is impractical or uneconomic to
a leased asset is highly customised (either when initially provided or as a result of leasehold improvements) or it is impractical or uneconomic to
replace then the Group is more likely to judge that lease extension options are reasonably certain to be exercised. The value of the right-of-use asset
replace then the Group is more likely to judge that lease extension options are reasonably certain to be exercised. The value of the right-of-use asset
and lease liability will be greater when extension options are included in the lease term. The normal approach adopted for lease term by asset class
and lease liability will be greater when extension options are included in the lease term. The normal approach adopted for lease term by asset class
is described below.
is described below.
The lease terms can vary significantly by type and use of asset and geography. In addition, the exact lease term is subject to the non-cancellable
period and rights and options in each contract. Generally, lease terms are judged to be the longer of the minimum lease term and:
- Between 5 and 10 years for land and buildings (excluding retail), with terms at the top end of this range if the lease relates to assets that are
considered to be difficult to exit sooner for economic, practical or reputational reasons;
- To the next contractual lease break date for retail premises (excluding breaks within the next 12 months);
- Where leases are used to provide internal connectivity the lease term for the connectivity is aligned to the lease term or useful economic life of
the assets connected;
- The customer service agreement length for leases of local loop connections or other assets required to provide fixed line services to individual
customers; and
- Where there are contractual agreements to provide services using leased assets, the lease term for these assets is generally set in accordance
with the above principles or for the lease term required to provide the services for the agreed service period, if longer.
In most instances the Group has options to renew or extend leases for additional periods after the end of the lease term which are assessed using
the criteria above.
Lease terms are reassessed if a significant event or change in circumstances occurs relating to the leased assets that is within the control of the
Group; such changes usually relate to commercial agreements entered into by the Group, or business decisions made by the Group. Where such
changes change the Group’s assessment of whether it is reasonably certain to exercise options to extend, or not terminate leases, then the lease
term is reassessed and the lease liability is remeasured, which in most cases will increase the lease liability.
Taxation
The Group’s tax charge on ordinary activities is the sum of the total current and deferred tax charges. The calculation of the Group’s total tax
charge involves estimation and judgement in respect of certain matters, being principally:
Recognition of deferred tax assets
Significant items on which the Group has exercised accounting estimation and judgement include the recognition of deferred tax assets in
respect of losses in Luxembourg, Germany and Spain as well as capital allowances in the United Kingdom. The recognition of deferred tax
assets, particularly in respect of tax losses, is based upon whether management judge that it is probable that there will be sufficient and suitable
taxable profits in the relevant legal entity or tax group against which to utilise the assets in the future. The Group assesses the availability of
future taxable profits using the same undiscounted five year forecasts for the Group’s operations as are used in the Group’s value in use
calculations (see note 4 “Impairment losses”).
Where tax losses are forecast to be recovered beyond the five year period, the availability of taxable profits is assessed using the cash flows and
long-term growth rates used for the value in use calculations.
The estimated cash flows inherent in these forecasts include the unsystematic risks of operating in the telecommunications business including
the potential impacts of changes in the market structure, trends in customer pricing, the costs associated with the acquisition and retention of
customers, future technological evolutions and potential regulatory changes, such as our ability to acquire and/or renew spectrum licences.
Changes in the estimates which underpin the Group’s forecasts could have an impact on the amount of future taxable profits and could have a
significant impact on the period over which the deferred tax asset would be recovered.
The Group only considers substantively enacted tax laws when assessing the amount and availability of tax losses to offset against the future
taxable profits. See note 6 “Taxation” to the consolidated financial statements.
Uncertain tax positions
The tax impact of a transaction or item can be uncertain until a conclusion is reached with the relevant tax authority or through a legal process.
The Group uses in-house tax experts when assessing uncertain tax positions and seeks the advice of external professional advisors where
appropriate. The most significant judgement in this area relates to the Group’s tax disputes in India, including the cases relating to the Group’s
acquisition of Hutchison Essar Limited (Vodafone India) and the impact of the European Commission’s challenge to the UK’s Controlled Foreign
Company rules. Further details of the tax disputes in India are included in note 29 “Contingent liabilities and legal proceedings” and further
information on the European Commission’s challenge are include in note 6 “Taxation” to the consolidated financial statements.
Business combinations and goodwill
When the Group completes a business combination, the fair values of the identifiable assets and liabilities acquired, including intangible assets, are
recognised. The determination of the fair values of acquired assets and liabilities is based, to a considerable extent, on management’s judgement. If
the purchase consideration exceeds the fair value of the net assets acquired then the incremental amount paid is recognised as goodwill. If the
purchase price consideration is lower than the fair value of the assets acquired then the difference is recorded as a gain in the income statement.
Allocation of the purchase price between finite lived assets (discussed below) and indefinite lived assets such as goodwill affects the subsequent
results of the Group as finite lived intangible assets are amortised, whereas indefinite lived intangible assets, including goodwill, are not amortised.
See note 27 “Acquisitions and disposals” to the consolidated financial statements for further details.
128 Vodafone Group Plc
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Financials
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Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
1. Basis of preparation (continued)
Joint arrangements
The Group participates in a number of joint arrangements where control of the arrangement is shared with one or more other parties. Judgement is
required to classify joint arrangements in a separate legal entity as either a joint operation or as a joint venture, which depends on management’s
assessment of the legal form and substance of the arrangement taking into account relevant facts and circumstances such as whether the owners
have rights to substantially all the economic outputs and, in substance, settle the liabilities of the entity.
The classification can have a material impact on the consolidated financial statements. The Group’s share of assets, liabilities, revenue, expenses and
cash flows of joint operations are included in the consolidated financial statements on a line-by-line basis, whereas the Group’s investment and
share of results of joint ventures are shown within single line items in the consolidated statement of financial position and consolidated income
statement respectively. See note 12 “Investments in associates and joint arrangements” to the consolidated financial statements.
Finite lived intangible assets
Other intangible assets include amounts spent by the Group acquiring licences and spectrum, customer bases and the costs of purchasing and
developing computer software.
Where intangible assets are acquired through business combinations and no active market for the assets exists, the fair value of these assets is
determined by discounting estimated future net cash flows generated by the asset. Estimates relating to the future cash flows and discount rates
used may have a material effect on the reported amounts of finite lived intangible assets.
Estimation of useful life
The useful life over which intangible assets are amortised depends on management’s estimate of the period over which economic benefit will be
derived from the asset. Useful lives are periodically reviewed to ensure that they remain appropriate. Management’s estimates of useful life have a
material impact on the amount of amortisation recorded in the year, but there is not considered to be a significant risk of material adjustment to the
carrying values of intangible assets in the year to 31 March 2022 if these estimates were revised. The basis for determining the useful life for the
most significant categories of intangible assets are discussed below.
Customer bases
The estimated useful life principally reflects management’s view of the average economic life of the customer base and is assessed by reference to
customer churn rates. An increase in churn rates may lead to a reduction in the estimated useful life and an increase in the amortisation charge.
Capitalised software
For computer software, the estimated useful life is based on management’s view, considering historical experience with similar products as well as
anticipation of future events which may impact their life such as changes in technology. The useful life will not exceed the duration of a licence.
Property, plant and equipment
Property, plant and equipment represents 26.6% of the Group’s total assets (2020: 23.7%, re-presented from 23.3% to reflect that Vodafone Egypt is
no longer held for sale, see note 7 “Discontinued operations and assets and liabilities held for sale”). Estimates and assumptions made may have a
material impact on their carrying value and related depreciation charge. See note 11 “Property, plant and equipment” to the consolidated financial
statements for further details.
Estimation of useful life
The depreciation charge for an asset is derived using estimates of its expected useful life and expected residual value, which are reviewed annually.
Management’s estimates of useful life have a material impact on the amount of depreciation recorded in the year, but there is not considered to be
a significant risk of material adjustment to the carrying values of property, plant and equipment in the year to 31 March 2022 if these estimates were
revised.
Management determines the useful lives and residual values for assets when they are acquired, based on experience with similar assets and taking
into account other relevant factors such as any expected changes in technology.
Post employment benefits
Management uses estimates when determining the Group’s liabilities and expenses arising for defined benefit pension schemes. Management is
required to estimate the future rates of inflation, salary increases, discount rates and longevity of members, each of which may have a material
impact on the defined benefit obligations that are recorded. Further details, including a sensitivity analysis, are included in note 25
“Post employment benefits” to the consolidated financial statements.
Contingent liabilities
The Group exercises judgement to determine whether to recognise provisions and the exposures to contingent liabilities related to pending
litigations or other outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation, as well as other contingent
liabilities (see note 29 “Contingent liabilities and legal proceedings” to the consolidated financial statements). Judgement is necessary to assess the
likelihood that a pending claim will succeed, or a liability will arise.
128 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
129 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
1. Basis of preparation (continued)
1. Basis of preparation (continued)
Joint arrangements
Joint arrangements
The Group participates in a number of joint arrangements where control of the arrangement is shared with one or more other parties. Judgement is
The Group participates in a number of joint arrangements where control of the arrangement is shared with one or more other parties. Judgement is
required to classify joint arrangements in a separate legal entity as either a joint operation or as a joint venture, which depends on management’s
required to classify joint arrangements in a separate legal entity as either a joint operation or as a joint venture, which depends on management’s
assessment of the legal form and substance of the arrangement taking into account relevant facts and circumstances such as whether the owners
assessment of the legal form and substance of the arrangement taking into account relevant facts and circumstances such as whether the owners
have rights to substantially all the economic outputs and, in substance, settle the liabilities of the entity.
have rights to substantially all the economic outputs and, in substance, settle the liabilities of the entity.
The classification can have a material impact on the consolidated financial statements. The Group’s share of assets, liabilities, revenue, expenses and
The classification can have a material impact on the consolidated financial statements. The Group’s share of assets, liabilities, revenue, expenses and
cash flows of joint operations are included in the consolidated financial statements on a line-by-line basis, whereas the Group’s investment and
cash flows of joint operations are included in the consolidated financial statements on a line-by-line basis, whereas the Group’s investment and
share of results of joint ventures are shown within single line items in the consolidated statement of financial position and consolidated income
share of results of joint ventures are shown within single line items in the consolidated statement of financial position and consolidated income
statement respectively. See note 12 “Investments in associates and joint arrangements” to the consolidated financial statements.
statement respectively. See note 12 “Investments in associates and joint arrangements” to the consolidated financial statements.
Other intangible assets include amounts spent by the Group acquiring licences and spectrum, customer bases and the costs of purchasing and
Other intangible assets include amounts spent by the Group acquiring licences and spectrum, customer bases and the costs of purchasing and
Finite lived intangible assets
Finite lived intangible assets
developing computer software.
developing computer software.
Where intangible assets are acquired through business combinations and no active market for the assets exists, the fair value of these assets is
Where intangible assets are acquired through business combinations and no active market for the assets exists, the fair value of these assets is
determined by discounting estimated future net cash flows generated by the asset. Estimates relating to the future cash flows and discount rates
determined by discounting estimated future net cash flows generated by the asset. Estimates relating to the future cash flows and discount rates
used may have a material effect on the reported amounts of finite lived intangible assets.
used may have a material effect on the reported amounts of finite lived intangible assets.
Estimation of useful life
Estimation of useful life
The useful life over which intangible assets are amortised depends on management’s estimate of the period over which economic benefit will be
The useful life over which intangible assets are amortised depends on management’s estimate of the period over which economic benefit will be
derived from the asset. Useful lives are periodically reviewed to ensure that they remain appropriate. Management’s estimates of useful life have a
derived from the asset. Useful lives are periodically reviewed to ensure that they remain appropriate. Management’s estimates of useful life have a
material impact on the amount of amortisation recorded in the year, but there is not considered to be a significant risk of material adjustment to the
material impact on the amount of amortisation recorded in the year, but there is not considered to be a significant risk of material adjustment to the
carrying values of intangible assets in the year to 31 March 2022 if these estimates were revised. The basis for determining the useful life for the
carrying values of intangible assets in the year to 31 March 2022 if these estimates were revised. The basis for determining the useful life for the
most significant categories of intangible assets are discussed below.
most significant categories of intangible assets are discussed below.
The estimated useful life principally reflects management’s view of the average economic life of the customer base and is assessed by reference to
The estimated useful life principally reflects management’s view of the average economic life of the customer base and is assessed by reference to
customer churn rates. An increase in churn rates may lead to a reduction in the estimated useful life and an increase in the amortisation charge.
customer churn rates. An increase in churn rates may lead to a reduction in the estimated useful life and an increase in the amortisation charge.
Customer bases
Customer bases
Capitalised software
Capitalised software
For computer software, the estimated useful life is based on management’s view, considering historical experience with similar products as well as
For computer software, the estimated useful life is based on management’s view, considering historical experience with similar products as well as
anticipation of future events which may impact their life such as changes in technology. The useful life will not exceed the duration of a licence.
anticipation of future events which may impact their life such as changes in technology. The useful life will not exceed the duration of a licence.
Property, plant and equipment
Property, plant and equipment
Property, plant and equipment represents 26.6% of the Group’s total assets (2020: 23.7%, re-presented from 23.3% to reflect that Vodafone Egypt is
Property, plant and equipment represents 26.6% of the Group’s total assets (2020: 23.7%, re-presented from 23.3% to reflect that Vodafone Egypt is
no longer held for sale, see note 7 “Discontinued operations and assets and liabilities held for sale”). Estimates and assumptions made may have a
no longer held for sale, see note 7 “Discontinued operations and assets and liabilities held for sale”). Estimates and assumptions made may have a
material impact on their carrying value and related depreciation charge. See note 11 “Property, plant and equipment” to the consolidated financial
material impact on their carrying value and related depreciation charge. See note 11 “Property, plant and equipment” to the consolidated financial
statements for further details.
statements for further details.
Estimation of useful life
Estimation of useful life
revised.
revised.
Post employment benefits
Post employment benefits
The depreciation charge for an asset is derived using estimates of its expected useful life and expected residual value, which are reviewed annually.
The depreciation charge for an asset is derived using estimates of its expected useful life and expected residual value, which are reviewed annually.
Management’s estimates of useful life have a material impact on the amount of depreciation recorded in the year, but there is not considered to be
Management’s estimates of useful life have a material impact on the amount of depreciation recorded in the year, but there is not considered to be
a significant risk of material adjustment to the carrying values of property, plant and equipment in the year to 31 March 2022 if these estimates were
a significant risk of material adjustment to the carrying values of property, plant and equipment in the year to 31 March 2022 if these estimates were
Management determines the useful lives and residual values for assets when they are acquired, based on experience with similar assets and taking
Management determines the useful lives and residual values for assets when they are acquired, based on experience with similar assets and taking
into account other relevant factors such as any expected changes in technology.
into account other relevant factors such as any expected changes in technology.
Management uses estimates when determining the Group’s liabilities and expenses arising for defined benefit pension schemes. Management is
Management uses estimates when determining the Group’s liabilities and expenses arising for defined benefit pension schemes. Management is
required to estimate the future rates of inflation, salary increases, discount rates and longevity of members, each of which may have a material
required to estimate the future rates of inflation, salary increases, discount rates and longevity of members, each of which may have a material
impact on the defined benefit obligations that are recorded. Further details, including a sensitivity analysis, are included in note 25
impact on the defined benefit obligations that are recorded. Further details, including a sensitivity analysis, are included in note 25
“Post employment benefits” to the consolidated financial statements.
“Post employment benefits” to the consolidated financial statements.
Contingent liabilities
Contingent liabilities
The Group exercises judgement to determine whether to recognise provisions and the exposures to contingent liabilities related to pending
The Group exercises judgement to determine whether to recognise provisions and the exposures to contingent liabilities related to pending
litigations or other outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation, as well as other contingent
litigations or other outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation, as well as other contingent
liabilities (see note 29 “Contingent liabilities and legal proceedings” to the consolidated financial statements). Judgement is necessary to assess the
liabilities (see note 29 “Contingent liabilities and legal proceedings” to the consolidated financial statements). Judgement is necessary to assess the
likelihood that a pending claim will succeed, or a liability will arise.
likelihood that a pending claim will succeed, or a liability will arise.
Impairment reviews
IFRS requires management to perform impairment tests annually for indefinite lived assets, for finite lived assets and for equity accounted
investments, if events or changes in circumstances indicate that their carrying amounts may not be recoverable.
Impairment testing requires management to judge whether the carrying value of assets can be supported by the net present value of future
cash flows that they generate. Calculating the net present value of the future cash flows requires estimates to be made in respect of highly
uncertain matters including management’s expectations of:
− growth in adjusted EBITDA, calculated as adjusted operating profit before depreciation and amortisation;
− timing and amount of future capital expenditure, licence and spectrum payments;
− long-term growth rates; and
− appropriate discount rates to reflect the risks involved.
A lack of observable market data on fair values for equivalent assets means that the Group’s valuation approach for impairment testing focuses
primarily on value in use. For a number of reasons, transaction values agreed as part of any business acquisition or disposal may be higher than
the assessed value in use. Where the Group has interests in listed entities, market data, such as share price, is used to assess the fair value of
those interests.
Management prepares formal five year forecasts for the Group’s operations, which are used to estimate their value in use; a long-term growth
rate into perpetuity has been determined as the lower of:
− the nominal GDP growth rates for the country of operation; and
− the long-term compound annual growth rate in adjusted EBITDA in years six to ten, as estimated by management.
Management continues to review the impact of COVID-19 and the impairment review is based on expected cash flows that include
management’s best estimate of potential COVID-19 impacts.
Changing the assumptions selected by management, in particular the adjusted EBITDA and growth rate assumptions used in the cash flow
projections, could significantly affect the Group’s impairment evaluation and hence reported assets and profits or losses. Further details,
including a sensitivity analysis, are included in note 4 “Impairment losses” to the consolidated financial statements.
For operations that are classified as held for sale, management is required to determine whether the carrying value of the discontinued
operation can be supported by the fair value less costs to sell. Where not observable in a quoted market, management has determined fair
value less costs to sell by reference to the outcomes from the application of a number of potential valuation techniques, determined from
inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
Significant accounting policies applied in the current reporting period that relate to the financial
statements as a whole
Accounting convention
The consolidated financial statements are prepared on a historical cost basis except for certain financial and equity instruments that have been
measured at fair value.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company, subsidiaries controlled by the Company (see note
31 “Related undertakings” to the consolidated financial statements), joint operations that are subject to joint control and the results of joint
ventures and associates (see note 12 “Investments in associates and joint arrangements” to the consolidated financial statements).
Foreign currencies
The consolidated financial statements are presented in euro, which is also the Company’s functional currency. Each entity in the Group
determines its own functional currency and items included in the financial statements of each entity are measured using that functional
currency.
Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on
the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing on the initial transaction dates. Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.
Changes in the fair value of monetary securities denominated in foreign currency are analysed between translation differences and other
changes in the carrying amount of the security. Translation differences are recognised in the consolidated income statement and other
changes in carrying amount are recognised in the consolidated statement of comprehensive income.
Translation differences on non-monetary financial assets, such as investments in equity securities classified at fair value through other
comprehensive income, are reported as part of the fair value gain or loss and are included in the consolidated statement of comprehensive
income.
Share capital, share premium and other capital reserves are initially recorded at the functional currency rate prevailing at the date of the
transaction and are not retranslated.
For the purpose of presenting consolidated financial statements, the assets and liabilities of entities with a functional currency other than euro
are expressed in euro using exchange rates prevailing at the reporting period date.
130 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
1. Basis of preparation (continued)
Income and expense items and cash flows are translated at the average exchange rates for each month and exchange differences arising are
recognised directly in other comprehensive income. On disposal of a foreign entity, the cumulative amount previously recognised in the
consolidated statement of comprehensive income relating to that particular foreign operation is recognised in profit or loss in the consolidated
income statement.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation
and translated accordingly.
The net foreign exchange loss recognised in the consolidated income statement for the year ended 31 March 2021 is €13 million (31 March
2020: €146 million loss; 2019: €2,277 million loss). The net gains and net losses are recorded within operating profit (2021: €1 million charge;
2020: €24 million credit; 2019: €1 million charge), non-operating expense (2021: €4 million credit; 2020: €37 million credit; 2019: €nil),
investment income (2021: €23 million charge 2020: €205 million charge; 2019: €190 million charge), income tax expense (2021: €7 million
credit; 2020: €2 million charge; 2019: €7 million charge) and loss for the financial year from discontinued operations (2021: €nil, 2020: €nil,
2019: €2,079 million charge). The foreign exchange gains and losses included within other income and expense and non-operating expense
arise on the disposal of subsidiaries, interests in joint ventures, associates and investments from the recycling of foreign exchange gains and
losses previously recognised in the consolidated statement of comprehensive income.
Current or non-current classification
Assets are classified as current in the consolidated statement of financial position where recovery is expected within 12 months of the reporting
date. All assets where recovery is expected more than 12 months from the reporting date and all deferred tax assets, goodwill and intangible
assets, property, plant and equipment and investments in associates and joint ventures are reported as non-current.
Liabilities are classified as current unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the
reporting date. For provisions, where the timing of settlement is uncertain, amounts are classified as non-current where settlement is expected
more than 12 months from the reporting date. In addition, deferred tax liabilities and post-employment benefits are reported as non-current.
Inventory
Inventory is stated at the lower of cost and net realisable value. Cost is determined on the basis of weighted average costs and comprises direct
materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present
location and condition.
New accounting pronouncements adopted on 1 April 2020
The Group adopted the following new accounting policies on 1 April 2020 to comply with amendments to IFRS. The accounting
pronouncements, none of which had a material impact on the Group’s financial reporting on adoption, are:
− Amendments to IFRS 3 “Definition of a Business”;
− Amendments to IAS 1 and IAS 8 “Definition of Material”; and
− Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform”.
New accounting pronouncements to be adopted on or after 1 April 2021
The IASB has issued the following pronouncements for annual periods beginning on or after 1 January 2021.
− Amendments to IFRS 16 “Covid-19-Related Rent Concessions” and “Covid-19-Related Rent Concessions beyond 30 June 2021”;
− Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”; and
− Amendments to IFRS 9, IAS 39, IFRS 4, IFRS 7 and IFRS 16 “Interest Rate Benchmark Reform – Phase 2”.
These amendments have either been endorsed by the EU before 31 December 2020 or by the UK Endorsement Board thereafter. The Group’s
financial reporting will be presented in accordance with the above new standards from 1 April 2021. The changes are not expected to have a
material impact on the consolidated income statement, consolidated statement of financial position or consolidated cash flow statement.
New accounting pronouncements to be adopted on or after 1 April 2022
The following narrow-scope amendments have been issued by the IASB and are effective for annual periods beginning on or after 1 January
2022; they were not endorsed by the EU at 31 December 2020 and have not yet been endorsed by the UK Endorsement Board.
− Annual improvements to IFRS Standards 2018-2020;
− Amendments to IAS 16 “Property, Plant and Equipment: Proceeds before Intended Use”;
− Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”; and
− Amendment to IFRS 3 “Reference to the Conceptual Framework”.
The following new standards have also been issued by the IASB and are effective for periods beginning on or after 1 January 2023; they were
not endorsed by the EU at 31 December 2020 and have not yet been endorsed by the UK Endorsement Board.
− IFRS 17 “Insurance Contracts” and Amendments to IFRS 17 “Insurance Contracts”;
− Amendments to IAS 1 “Classification of Liabilities as Current or Non-Current” (including deferral of its effective date);
− Amendments to IAS 1 “Disclosure of Accounting Policies” and Amendments to IAS 8 “Definition of Accounting Estimates”; and
− Amendment to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”.
The Group is assessing the impact of these new standards and the Group’s financial reporting and will be presented in accordance with these
standards from 1 April 2022 or 1 April 2023 as applicable.
130 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
131 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
1. Basis of preparation (continued)
1. Basis of preparation (continued)
income statement.
income statement.
and translated accordingly.
and translated accordingly.
Income and expense items and cash flows are translated at the average exchange rates for each month and exchange differences arising are
Income and expense items and cash flows are translated at the average exchange rates for each month and exchange differences arising are
recognised directly in other comprehensive income. On disposal of a foreign entity, the cumulative amount previously recognised in the
recognised directly in other comprehensive income. On disposal of a foreign entity, the cumulative amount previously recognised in the
consolidated statement of comprehensive income relating to that particular foreign operation is recognised in profit or loss in the consolidated
consolidated statement of comprehensive income relating to that particular foreign operation is recognised in profit or loss in the consolidated
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation
The net foreign exchange loss recognised in the consolidated income statement for the year ended 31 March 2021 is €13 million (31 March
The net foreign exchange loss recognised in the consolidated income statement for the year ended 31 March 2021 is €13 million (31 March
2020: €146 million loss; 2019: €2,277 million loss). The net gains and net losses are recorded within operating profit (2021: €1 million charge;
2020: €146 million loss; 2019: €2,277 million loss). The net gains and net losses are recorded within operating profit (2021: €1 million charge;
2020: €24 million credit; 2019: €1 million charge), non-operating expense (2021: €4 million credit; 2020: €37 million credit; 2019: €nil),
2020: €24 million credit; 2019: €1 million charge), non-operating expense (2021: €4 million credit; 2020: €37 million credit; 2019: €nil),
investment income (2021: €23 million charge 2020: €205 million charge; 2019: €190 million charge), income tax expense (2021: €7 million
investment income (2021: €23 million charge 2020: €205 million charge; 2019: €190 million charge), income tax expense (2021: €7 million
credit; 2020: €2 million charge; 2019: €7 million charge) and loss for the financial year from discontinued operations (2021: €nil, 2020: €nil,
credit; 2020: €2 million charge; 2019: €7 million charge) and loss for the financial year from discontinued operations (2021: €nil, 2020: €nil,
2019: €2,079 million charge). The foreign exchange gains and losses included within other income and expense and non-operating expense
2019: €2,079 million charge). The foreign exchange gains and losses included within other income and expense and non-operating expense
arise on the disposal of subsidiaries, interests in joint ventures, associates and investments from the recycling of foreign exchange gains and
arise on the disposal of subsidiaries, interests in joint ventures, associates and investments from the recycling of foreign exchange gains and
losses previously recognised in the consolidated statement of comprehensive income.
losses previously recognised in the consolidated statement of comprehensive income.
Current or non-current classification
Current or non-current classification
Assets are classified as current in the consolidated statement of financial position where recovery is expected within 12 months of the reporting
Assets are classified as current in the consolidated statement of financial position where recovery is expected within 12 months of the reporting
date. All assets where recovery is expected more than 12 months from the reporting date and all deferred tax assets, goodwill and intangible
date. All assets where recovery is expected more than 12 months from the reporting date and all deferred tax assets, goodwill and intangible
assets, property, plant and equipment and investments in associates and joint ventures are reported as non-current.
assets, property, plant and equipment and investments in associates and joint ventures are reported as non-current.
Liabilities are classified as current unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the
Liabilities are classified as current unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the
reporting date. For provisions, where the timing of settlement is uncertain, amounts are classified as non-current where settlement is expected
reporting date. For provisions, where the timing of settlement is uncertain, amounts are classified as non-current where settlement is expected
more than 12 months from the reporting date. In addition, deferred tax liabilities and post-employment benefits are reported as non-current.
more than 12 months from the reporting date. In addition, deferred tax liabilities and post-employment benefits are reported as non-current.
Inventory is stated at the lower of cost and net realisable value. Cost is determined on the basis of weighted average costs and comprises direct
Inventory is stated at the lower of cost and net realisable value. Cost is determined on the basis of weighted average costs and comprises direct
materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present
materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present
Inventory
Inventory
location and condition.
location and condition.
New accounting pronouncements adopted on 1 April 2020
New accounting pronouncements adopted on 1 April 2020
The Group adopted the following new accounting policies on 1 April 2020 to comply with amendments to IFRS. The accounting
The Group adopted the following new accounting policies on 1 April 2020 to comply with amendments to IFRS. The accounting
pronouncements, none of which had a material impact on the Group’s financial reporting on adoption, are:
pronouncements, none of which had a material impact on the Group’s financial reporting on adoption, are:
− Amendments to IFRS 3 “Definition of a Business”;
− Amendments to IFRS 3 “Definition of a Business”;
− Amendments to IAS 1 and IAS 8 “Definition of Material”; and
− Amendments to IAS 1 and IAS 8 “Definition of Material”; and
− Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform”.
− Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform”.
New accounting pronouncements to be adopted on or after 1 April 2021
New accounting pronouncements to be adopted on or after 1 April 2021
The IASB has issued the following pronouncements for annual periods beginning on or after 1 January 2021.
The IASB has issued the following pronouncements for annual periods beginning on or after 1 January 2021.
− Amendments to IFRS 16 “Covid-19-Related Rent Concessions” and “Covid-19-Related Rent Concessions beyond 30 June 2021”;
− Amendments to IFRS 16 “Covid-19-Related Rent Concessions” and “Covid-19-Related Rent Concessions beyond 30 June 2021”;
− Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”; and
− Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”; and
− Amendments to IFRS 9, IAS 39, IFRS 4, IFRS 7 and IFRS 16 “Interest Rate Benchmark Reform – Phase 2”.
− Amendments to IFRS 9, IAS 39, IFRS 4, IFRS 7 and IFRS 16 “Interest Rate Benchmark Reform – Phase 2”.
These amendments have either been endorsed by the EU before 31 December 2020 or by the UK Endorsement Board thereafter. The Group’s
These amendments have either been endorsed by the EU before 31 December 2020 or by the UK Endorsement Board thereafter. The Group’s
financial reporting will be presented in accordance with the above new standards from 1 April 2021. The changes are not expected to have a
financial reporting will be presented in accordance with the above new standards from 1 April 2021. The changes are not expected to have a
material impact on the consolidated income statement, consolidated statement of financial position or consolidated cash flow statement.
material impact on the consolidated income statement, consolidated statement of financial position or consolidated cash flow statement.
New accounting pronouncements to be adopted on or after 1 April 2022
New accounting pronouncements to be adopted on or after 1 April 2022
The following narrow-scope amendments have been issued by the IASB and are effective for annual periods beginning on or after 1 January
The following narrow-scope amendments have been issued by the IASB and are effective for annual periods beginning on or after 1 January
2022; they were not endorsed by the EU at 31 December 2020 and have not yet been endorsed by the UK Endorsement Board.
2022; they were not endorsed by the EU at 31 December 2020 and have not yet been endorsed by the UK Endorsement Board.
− Annual improvements to IFRS Standards 2018-2020;
− Annual improvements to IFRS Standards 2018-2020;
− Amendments to IAS 16 “Property, Plant and Equipment: Proceeds before Intended Use”;
− Amendments to IAS 16 “Property, Plant and Equipment: Proceeds before Intended Use”;
− Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”; and
− Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”; and
− Amendment to IFRS 3 “Reference to the Conceptual Framework”.
− Amendment to IFRS 3 “Reference to the Conceptual Framework”.
The following new standards have also been issued by the IASB and are effective for periods beginning on or after 1 January 2023; they were
The following new standards have also been issued by the IASB and are effective for periods beginning on or after 1 January 2023; they were
not endorsed by the EU at 31 December 2020 and have not yet been endorsed by the UK Endorsement Board.
not endorsed by the EU at 31 December 2020 and have not yet been endorsed by the UK Endorsement Board.
− IFRS 17 “Insurance Contracts” and Amendments to IFRS 17 “Insurance Contracts”;
− IFRS 17 “Insurance Contracts” and Amendments to IFRS 17 “Insurance Contracts”;
− Amendments to IAS 1 “Classification of Liabilities as Current or Non-Current” (including deferral of its effective date);
− Amendments to IAS 1 “Classification of Liabilities as Current or Non-Current” (including deferral of its effective date);
− Amendments to IAS 1 “Disclosure of Accounting Policies” and Amendments to IAS 8 “Definition of Accounting Estimates”; and
− Amendments to IAS 1 “Disclosure of Accounting Policies” and Amendments to IAS 8 “Definition of Accounting Estimates”; and
− Amendment to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”.
− Amendment to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”.
The Group is assessing the impact of these new standards and the Group’s financial reporting and will be presented in accordance with these
The Group is assessing the impact of these new standards and the Group’s financial reporting and will be presented in accordance with these
standards from 1 April 2022 or 1 April 2023 as applicable.
standards from 1 April 2022 or 1 April 2023 as applicable.
2. Revenue disaggregation and segmental analysis
The Group’s businesses are managed on a geographical basis. Selected financial data is presented on this
basis below.
Accounting policies
Revenue
When the Group enters into an agreement with a customer, goods and services deliverable under the contract are identified as separate
performance obligations (‘obligations’) to the extent that the customer can benefit from the goods or services on their own and that the
separate goods and services are considered distinct from other goods and services in the agreement. Where individual goods and services do
not meet the criteria to be identified as separate obligations they are aggregated with other goods and/or services in the agreement until a
separate obligation is identified. The obligations identified will depend on the nature of individual customer contracts, but might typically be
separately identified for mobile handsets, other equipment such as set-top boxes and routers provided to customers and services provided to
customers such as mobile and fixed line communication services. Where goods and services have a functional dependency (for example, a fixed
line router can only be used with the Group’s services) this does not, in isolation, prevent those goods or services from being assessed as
separate obligations. Activities relating to connecting customers to the Group’s network for the future provision of services are not considered
to meet the criteria to be recognised as performance obligations except to the extent that the control of related equipment passes to
customers.
The Group determines the transaction price to which it expects to be entitled in return for providing the promised obligations to the customer
based on the committed contractual amounts, net of sales taxes and discounts. Where indirect channel dealers, such as retailers, acquire
customer contracts on behalf of the Group and receive commission, any commissions that the dealer is compelled to use to fund discounts or
other incentives to the customer are treated as payments to the customer when determining the transaction price and consequently are not
included in contract acquisition costs.
The transaction price is allocated between the identified obligations according to the relative standalone selling prices of the obligations. The
standalone selling price of each obligation deliverable in the contract is determined according to the prices that the Group would achieve by
selling the same goods and/or services included in the obligation to a similar customer on a standalone basis; where standalone selling prices
are not directly observable, estimation techniques are used maximising the use of external inputs. See “Critical accounting judgements and key
sources of estimation uncertainty” in note 1 for details. Revenue is recognised when the respective obligations in the contract are delivered to
the customer and cash collection is considered probable. Revenue for the provision of services, such as mobile airtime and fixed line broadband,
is recognised when the Group provides the related service during the agreed service period.
Revenue for device sales to end customers is generally recognised when the device is delivered to the end customer. For device sales made to
intermediaries such as indirect channel dealers, revenue is recognised if control of the device has transferred to the intermediary and the
intermediary has no right to return the device to receive a refund; otherwise revenue recognition is deferred until sale of the device to an end
customer by the intermediary or the expiry of any right of return.
Where refunds are issued to customers they are deducted from revenue in the relevant service period.
When the Group has control of goods or services prior to delivery to a customer, then the Group is the principal in the sale to the customer. As a
principal, receipts from, and payments to, suppliers are reported on a gross basis in revenue and operating costs. If another party has control of
goods or services prior to transfer to a customer, then the Group is acting as an agent for the other party and revenue in respect of the relevant
obligations is recognised net of any related payments to the supplier and recognised revenue represents the margin earned by the Group. See
“Critical accounting judgements and key sources of estimation uncertainty” in note 1 for details.
Customers typically pay in advance for prepay mobile services and monthly for other communication services. Customers typically pay for
handsets and other equipment either up-front at the time of sale or over the term of the related service agreement.
When revenue recognised in respect of a customer contract exceeds amounts received or receivable from a customer at that time a contract
asset is recognised; contract assets will typically be recognised for handsets or other equipment provided to customers where payment is
recovered by the Group via future service fees. If amounts received or receivable from a customer exceed revenue recognised for a contract, for
example if the Group receives an advance payment from a customer, a contract liability is recognised.
When contract assets or liabilities are recognised, a financing component may exist in the contract; this is typically the case when a handset or
other equipment is provided to a customer up-front but payment is received over the term of the related service agreement, in which case the
customer is deemed to have received financing. If a significant financing component is provided to the customer, the transaction price is
reduced and interest revenue is recognised over the customer’s payment period using an interest rate reflecting the relevant central bank rates
and customer credit risk.
Contract-related costs
When costs directly relating to a specific contract are incurred prior to recognising revenue for a related obligation, and those costs enhance the
ability of the Group to deliver an obligation and are expected to be recovered, then those costs are recognised on the statement of financial
position as fulfilment costs and are recognised as expenses in line with the recognition of revenue when the related obligation is delivered.
The direct and incremental costs of acquiring a contract including, for example, certain commissions payable to staff or agents for acquiring
customers on behalf of the Group, are recognised as contract acquisition cost assets in the statement of financial position when the related
payment obligation is recorded. Costs are recognised as an expense in line with the recognition of the related revenue that is expected to be
earned by the Group; typically this is over the customer contract period as new commissions are payable on contract renewal. Certain amounts
payable to agents are deducted from revenue recognised (see above).
132 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
2. Revenue disaggregation and segmental analysis (continued)
Revenue disaggregation
Revenue reported for the year includes revenue from contracts with customers, comprising service and equipment revenue, as well as other
revenue items including revenue from leases and interest revenue arising from transactions with a significant financing component. The table
below disaggregates the Group’s revenue by reporting segment.
31 March 2021
Germany
Italy
UK
Spain
Other Europe
Vodacom
Other Markets
Common Functions2
Eliminations
Group
31 March 2020
Germany
Italy
UK
Spain
Other Europe
Vodacom
Other Markets
Common Functions2
Eliminations
Group
Service
revenue
€m
11,520
4,458
4,848
3,788
4,859
4,083
3,312
470
(197)
37,141
Service
revenue
€m
10,696
4,833
5,020
3,904
4,890
4,470
3,796
494
(232)
37,871
Equipment
revenue
€m
1,055
446
1,206
292
549
800
441
36
(1)
4,824
Equipment
revenue
€m
1,055
583
1,333
318
539
864
552
53
(2)
5,295
Revenue from
contracts with
customers
€m
12,575
4,904
6,054
4,080
5,408
4,883
3,753
506
(198)
41,965
Revenue from
contracts with
customers
€m
11,751
5,416
6,353
4,222
5,429
5,334
4,348
547
(234)
43,166
Other
revenue1
€m
380
97
44
64
124
282
12
862
(171)
1,694
Other
revenue1
€m
300
101
63
51
94
190
36
1,020
(202)
1,653
Interest
revenue
€m
29
13
53
22
17
16
–
–
–
150
Interest
revenue
€m
25
12
68
23
18
7
2
–
–
155
Total
segment
revenue
€m
12,984
5,014
6,151
4,166
5,549
5,181
3,765
1,368
(369)
43,809
Total
segment
revenue
€m
12,076
5,529
6,484
4,296
5,541
5,531
4,386
1,567
(436)
44,974
Adjusted
EBITDA
€m
5,634
1,597
1,367
1,044
1,760
1,873
1,228
(117)
–
14,386
Adjusted
EBITDA
€m
5,077
2,068
1,500
1,009
1,738
2,088
1,400
1
–
14,881
31 March 2019
Germany
Italy
UK
Spain
Other Europe
Vodacom
Other Markets
Common Functions2
Eliminations
Group
Notes:
1 Other revenue includes lease revenue recognised under IFRS 16 “Leases” for the years ended 31 March 2021 and 31 March 2020 and under IAS 17 for the year ended 31 March 2019
(see note 20 “Leases”).
2 Comprises central teams and business functions.
Service
revenue
€m
9,145
5,030
4,952
4,203
4,460
4,391
4,011
477
(211)
36,458
Other
revenue1
€m
139
97
56
58
61
171
29
1,003
(206)
1,408
Equipment
revenue
€m
1,077
722
1,207
392
529
873
816
37
(1)
5,652
Interest
revenue
€m
29
8
57
16
22
8
8
–
–
148
Revenue from
contracts with
customers
€m
10,222
5,752
6,159
4,595
4,989
5,264
4,827
514
(212)
42,110
Total
segment
revenue
€m
10,390
5,857
6,272
4,669
5,072
5,443
4,864
1,517
(418)
43,666
Adjusted
EBITDA
€m
4,079
2,202
1,364
1,038
1,606
2,157
1,404
68
–
13,918
The total future revenue from the Group’s contracts with customers with performance obligations not satisfied at 31 March 2021 is €21,038
million (2020: €20,336 million; 2019: €18,447 million); of which €14,110 million (2020: €13,456 million; 2019: €12,566 million) is expected to
be recognised within the next year and the majority of the remaining amount in the following 12 months.
132 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
133 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
2. Revenue disaggregation and segmental analysis (continued)
2. Revenue disaggregation and segmental analysis (continued)
Revenue disaggregation
Revenue disaggregation
Revenue reported for the year includes revenue from contracts with customers, comprising service and equipment revenue, as well as other
Revenue reported for the year includes revenue from contracts with customers, comprising service and equipment revenue, as well as other
revenue items including revenue from leases and interest revenue arising from transactions with a significant financing component. The table
revenue items including revenue from leases and interest revenue arising from transactions with a significant financing component. The table
below disaggregates the Group’s revenue by reporting segment.
below disaggregates the Group’s revenue by reporting segment.
31 March 2021
31 March 2021
Germany
Germany
Italy
Italy
UK
UK
Spain
Spain
Other Europe
Other Europe
Vodacom
Vodacom
Other Markets
Other Markets
Common Functions2
Common Functions2
Eliminations
Eliminations
Group
Group
31 March 2020
31 March 2020
Germany
Germany
Italy
Italy
UK
UK
Spain
Spain
Other Europe
Other Europe
Vodacom
Vodacom
Other Markets
Other Markets
Common Functions2
Common Functions2
Eliminations
Eliminations
Group
Group
31 March 2019
31 March 2019
Germany
Germany
Italy
Italy
UK
UK
Spain
Spain
Other Europe
Other Europe
Vodacom
Vodacom
Other Markets
Other Markets
Common Functions2
Common Functions2
Eliminations
Eliminations
Group
Group
Notes:
Notes:
37,141
37,141
4,824
4,824
41,965
41,965
150
150
43,809
43,809
14,386
14,386
Service
Service
revenue
revenue
€m
€m
11,520
11,520
4,458
4,458
4,848
4,848
3,788
3,788
4,859
4,859
4,083
4,083
3,312
3,312
470
470
(197)
(197)
Service
Service
revenue
revenue
€m
€m
10,696
10,696
4,833
4,833
5,020
5,020
3,904
3,904
4,890
4,890
4,470
4,470
3,796
3,796
494
494
(232)
(232)
Service
Service
revenue
revenue
€m
€m
9,145
9,145
5,030
5,030
4,952
4,952
4,203
4,203
4,460
4,460
4,391
4,391
4,011
4,011
477
477
(211)
(211)
Equipment
Equipment
revenue
revenue
€m
€m
1,055
1,055
446
446
1,206
1,206
292
292
549
549
800
800
441
441
36
36
(1)
(1)
Equipment
Equipment
revenue
revenue
€m
€m
1,055
1,055
583
583
1,333
1,333
318
318
539
539
864
864
552
552
53
53
(2)
(2)
Equipment
Equipment
revenue
revenue
€m
€m
1,077
1,077
722
722
1,207
1,207
392
392
529
529
873
873
816
816
37
37
(1)
(1)
Revenue from
Revenue from
contracts with
contracts with
customers
customers
€m
€m
12,575
12,575
4,904
4,904
6,054
6,054
4,080
4,080
5,408
5,408
4,883
4,883
3,753
3,753
506
506
(198)
(198)
Revenue from
Revenue from
contracts with
contracts with
customers
customers
€m
€m
11,751
11,751
5,416
5,416
6,353
6,353
4,222
4,222
5,429
5,429
5,334
5,334
4,348
4,348
547
547
(234)
(234)
Revenue from
Revenue from
contracts with
contracts with
customers
customers
€m
€m
10,222
10,222
5,752
5,752
6,159
6,159
4,595
4,595
4,989
4,989
5,264
5,264
4,827
4,827
514
514
(212)
(212)
Other
Other
revenue1
revenue1
€m
€m
380
380
97
97
44
44
64
64
124
124
282
282
12
12
862
862
(171)
(171)
1,694
1,694
Other
Other
revenue1
revenue1
€m
€m
300
300
101
101
63
63
51
51
94
94
190
190
36
36
1,020
1,020
(202)
(202)
1,653
1,653
Other
Other
revenue1
revenue1
€m
€m
139
139
97
97
56
56
58
58
61
61
171
171
29
29
1,003
1,003
(206)
(206)
1,408
1,408
Interest
Interest
revenue
revenue
€m
€m
29
29
13
13
53
53
22
22
17
17
16
16
–
–
–
–
–
–
25
25
12
12
68
68
23
23
18
18
7
7
2
2
–
–
–
–
29
29
8
8
57
57
16
16
22
22
8
8
8
8
–
–
–
–
Interest
Interest
revenue
revenue
€m
€m
Interest
Interest
revenue
revenue
€m
€m
Total
Total
segment
segment
revenue
revenue
€m
€m
12,984
12,984
5,014
5,014
6,151
6,151
4,166
4,166
5,549
5,549
5,181
5,181
3,765
3,765
1,368
1,368
(369)
(369)
Total
Total
segment
segment
revenue
revenue
€m
€m
12,076
12,076
5,529
5,529
6,484
6,484
4,296
4,296
5,541
5,541
5,531
5,531
4,386
4,386
1,567
1,567
(436)
(436)
Total
Total
segment
segment
revenue
revenue
€m
€m
10,390
10,390
5,857
5,857
6,272
6,272
4,669
4,669
5,072
5,072
5,443
5,443
4,864
4,864
1,517
1,517
(418)
(418)
Adjusted
Adjusted
EBITDA
EBITDA
€m
€m
5,634
5,634
1,597
1,597
1,367
1,367
1,044
1,044
1,760
1,760
1,873
1,873
1,228
1,228
(117)
(117)
–
–
Adjusted
Adjusted
EBITDA
EBITDA
€m
€m
5,077
5,077
2,068
2,068
1,500
1,500
1,009
1,009
1,738
1,738
2,088
2,088
1,400
1,400
1
1
–
–
Adjusted
Adjusted
EBITDA
EBITDA
€m
€m
4,079
4,079
2,202
2,202
1,364
1,364
1,038
1,038
1,606
1,606
2,157
2,157
1,404
1,404
68
68
–
–
37,871
37,871
5,295
5,295
43,166
43,166
155
155
44,974
44,974
14,881
14,881
36,458
36,458
5,652
5,652
42,110
42,110
148
148
43,666
43,666
13,918
13,918
1 Other revenue includes lease revenue recognised under IFRS 16 “Leases” for the years ended 31 March 2021 and 31 March 2020 and under IAS 17 for the year ended 31 March 2019
1 Other revenue includes lease revenue recognised under IFRS 16 “Leases” for the years ended 31 March 2021 and 31 March 2020 and under IAS 17 for the year ended 31 March 2019
(see note 20 “Leases”).
(see note 20 “Leases”).
2 Comprises central teams and business functions.
2 Comprises central teams and business functions.
The total future revenue from the Group’s contracts with customers with performance obligations not satisfied at 31 March 2021 is €21,038
The total future revenue from the Group’s contracts with customers with performance obligations not satisfied at 31 March 2021 is €21,038
million (2020: €20,336 million; 2019: €18,447 million); of which €14,110 million (2020: €13,456 million; 2019: €12,566 million) is expected to
million (2020: €20,336 million; 2019: €18,447 million); of which €14,110 million (2020: €13,456 million; 2019: €12,566 million) is expected to
be recognised within the next year and the majority of the remaining amount in the following 12 months.
be recognised within the next year and the majority of the remaining amount in the following 12 months.
Segmental analysis
The Group’s operating segments are established on the basis of those components of the Group that are evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing performance. The Group has determined the chief operating
decision maker to be its Chief Executive Officer. The Group has a single group of similar services and products, being the supply of
communications services and related products. Revenue is attributed to a country based on the location of the Group company reporting the
revenue. Transactions between operating segments are charged at arm’s-length prices.
With the exception of Vodacom, which is a legal entity encompassing South Africa and certain other smaller African markets, segment
information is primarily provided on the basis of geographic areas, being the basis on which the Group manages its worldwide interests.
The operating segments for Germany, Italy, UK, Spain, and Vodacom are individually material for the Group and are each reporting segments for
which certain financial information is provided. The aggregation of smaller operating segments into the Other Europe and Other Markets
reporting segments reflects, in the opinion of management, the similar local market economic characteristics and regulatory environments for
each of those operating segments as well as the similar products and services sold and comparable classes of customers. In the case of the
Other Europe region this largely reflects membership or a close association with the European Union, while the Other Markets segment largely
includes developing economies with less stable economic or regulatory environments. Common Functions is a separate reporting segment and
comprises activities which are undertaken primarily in central Group entities that do not meet the criteria for aggregation with other reporting
segments.
A reconciliation of adjusted EBITDA, the Group’s measure of segment profit, to the Group’s profit or loss before taxation for the financial year is
shown below.
Adjusted EBITDA
Restructuring costs
Interest on lease liabilities
Loss on disposal of owned assets
Depreciation and amortisation on owned assets1
Share of results in equity accounted associates and joint ventures
Impairment losses
Other income/(expense)
Operating profit/(loss)
Non-operating expense
Investment income
Finance costs
Profit/(loss) before taxation
Note:
1 Comparative figure for 2019 includes €59 million depreciation on assets held under finance leases under IAS 17, prior to the adoption of IFRS 16 ‘Leases.’.
2021
€m
14,386
(356)
374
(30)
(10,187)
342
–
568
5,097
–
330
(1,027)
4,400
2020
€m
14,881
(695)
330
(54)
(10,454)
(2,505)
(1,685)
4,281
4,099
(3)
248
(3,549)
795
2019
€m
13,918
(460)
–
(33)
(9,795)
(908)
(3,525)
(148)
(951)
(7)
433
(2,088)
(2,613)
134 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
2. Revenue disaggregation and segmental analysis (continued)
Segmental assets
31 March 2021
Germany
Italy
UK
Spain
Other Europe
Vodacom
Other Markets
Common Functions
Group
31 March 2020
Germany
Italy
UK
Spain
Other Europe
Vodacom
Other Markets4
Common Functions
Group4
Non-current
assets1
€m
Capital
additions2
€m
Right-of-use
asset additions
€m
Other additions to
intangible assets3
€m
47,563
10,707
7,968
7,213
10,369
5,839
2,988
2,145
94,792
48,266
11,119
7,790
7,229
9,138
5,400
2,963
2,217
94,122
2,772
805
822
772
968
703
512
829
8,183
2,278
697
753
761
823
802
587
821
7,522
1,133
758
1,138
700
1,016
174
247
140
5,306
912
1,645
733
386
298
174
290
155
4,593
1
17
–
9
431
–
439
–
897
1,613
24
–
–
29
55
55
–
1,776
Depreciation
and
amortisation
€m
4,836
2,025
2,202
1,579
1,727
872
666
194
14,101
4,805
1,958
2,160
1,763
1,706
939
672
171
14,174
Impairment loss
€m
–
–
–
–
–
–
–
–
–
–
–
–
(840)
(740)
–
–
(105)
(1,685)
31 March 2019
Germany
Italy
UK
Spain
Other Europe
Vodacom
Other Markets
Common Functions
Group
Notes:
1 Comprises goodwill, other intangible assets and property, plant and equipment.
2
3
4 Comparative figures for the year ended 31 March 2020 have been re-presented to reflect that Egypt is no longer held for sale. See note 7 ‘Discontinued operations and assets and liabilities held
Includes additions to property, plant and equipment (excluding right-of-use assets,), computer software and development costs, reported within Intangible assets.
Includes additions to licences and spectrum and customer base acquisitions.
24,529
11,031
7,405
7,438
7,093
5,503
3,429
2,009
68,437
3,017
1,337
1,612
1,318
1,073
758
673
7
9,795
1,816
784
804
813
775
810
626
799
7,227
2
2,219
408
216
42
91
34
–
3,012
–
–
–
(2,930)
(310)
–
(255)
(30)
(3,525)
–
–
–
–
–
–
–
–
–
for sale’.
134 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
135 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
2. Revenue disaggregation and segmental analysis (continued)
2. Revenue disaggregation and segmental analysis (continued)
Segmental assets
Segmental assets
Non-current
Non-current
assets1
assets1
€m
€m
Capital
Capital
additions2
additions2
€m
€m
Right-of-use
Right-of-use
Other additions to
Other additions to
asset additions
asset additions
intangible assets3
intangible assets3
€m
€m
€m
€m
Depreciation
Depreciation
and
and
€m
€m
amortisation
amortisation
Impairment loss
Impairment loss
€m
€m
8,183
8,183
5,306
5,306
897
897
14,101
14,101
47,563
47,563
10,707
10,707
7,968
7,968
7,213
7,213
10,369
10,369
5,839
5,839
2,988
2,988
2,145
2,145
94,792
94,792
48,266
48,266
11,119
11,119
7,790
7,790
7,229
7,229
9,138
9,138
5,400
5,400
2,963
2,963
2,217
2,217
24,529
24,529
11,031
11,031
7,405
7,405
7,438
7,438
7,093
7,093
5,503
5,503
3,429
3,429
2,009
2,009
2,772
2,772
805
805
822
822
772
772
968
968
703
703
512
512
829
829
2,278
2,278
697
697
753
753
761
761
823
823
802
802
587
587
821
821
1,816
1,816
784
784
804
804
813
813
775
775
810
810
626
626
799
799
1,133
1,133
758
758
1,138
1,138
700
700
1,016
1,016
174
174
247
247
140
140
912
912
1,645
1,645
733
733
386
386
298
298
174
174
290
290
155
155
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
1
17
17
–
–
9
9
–
–
–
–
431
431
439
439
1,613
1,613
24
24
–
–
–
–
29
29
55
55
55
55
–
–
2
2
2,219
2,219
408
408
216
216
42
42
91
91
34
34
–
–
4,836
4,836
2,025
2,025
2,202
2,202
1,579
1,579
1,727
1,727
872
872
666
666
194
194
4,805
4,805
1,958
1,958
2,160
2,160
1,763
1,763
1,706
1,706
939
939
672
672
171
171
3,017
3,017
1,337
1,337
1,612
1,612
1,318
1,318
1,073
1,073
758
758
673
673
7
7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(840)
(840)
(740)
(740)
(105)
(105)
(1,685)
(1,685)
(2,930)
(2,930)
(310)
(310)
(255)
(255)
(30)
(30)
94,122
94,122
7,522
7,522
4,593
4,593
1,776
1,776
14,174
14,174
31 March 2021
31 March 2021
Germany
Germany
Italy
Italy
UK
UK
Spain
Spain
Other Europe
Other Europe
Vodacom
Vodacom
Other Markets
Other Markets
Common Functions
Common Functions
Group
Group
31 March 2020
31 March 2020
Germany
Germany
Italy
Italy
UK
UK
Spain
Spain
Other Europe
Other Europe
Vodacom
Vodacom
Other Markets4
Other Markets4
Common Functions
Common Functions
Group4
Group4
31 March 2019
31 March 2019
Germany
Germany
Italy
Italy
UK
UK
Spain
Spain
Other Europe
Other Europe
Vodacom
Vodacom
Other Markets
Other Markets
Common Functions
Common Functions
Group
Group
Notes:
Notes:
2
2
3
3
for sale’.
for sale’.
1 Comprises goodwill, other intangible assets and property, plant and equipment.
1 Comprises goodwill, other intangible assets and property, plant and equipment.
Includes additions to property, plant and equipment (excluding right-of-use assets,), computer software and development costs, reported within Intangible assets.
Includes additions to property, plant and equipment (excluding right-of-use assets,), computer software and development costs, reported within Intangible assets.
Includes additions to licences and spectrum and customer base acquisitions.
Includes additions to licences and spectrum and customer base acquisitions.
4 Comparative figures for the year ended 31 March 2020 have been re-presented to reflect that Egypt is no longer held for sale. See note 7 ‘Discontinued operations and assets and liabilities held
4 Comparative figures for the year ended 31 March 2020 have been re-presented to reflect that Egypt is no longer held for sale. See note 7 ‘Discontinued operations and assets and liabilities held
68,437
68,437
7,227
7,227
3,012
3,012
9,795
9,795
(3,525)
(3,525)
3. Operating profit/(loss)
Detailed below are the key amounts recognised in arriving at our operating profit/(loss)
Amortisation of intangible assets (note 10)
Depreciation of property, plant and equipment (note 11):
Owned assets
Leased assets
Impairment of goodwill in subsidiaries, associates and joint arrangements (note 4)
Staff costs (note 24)
Amounts related to inventory included in cost of sales
Operating lease rentals payable
Own costs capitalised attributable to the construction or acquisition of property, plant and
equipment
Net gain on formation of TPG Telecom1 (note 12)
Net gain on formation of Indus Towers Limited1 (note 12)
Pledge arrangements in respect of Indus Towers Limited1 (note 29)
Settlement of tender offer to KDG shareholders1
Net gain on disposal of Vodafone New Zealand1 (note 27)
Net gain on disposal of tower infrastructure in Italy1 (note 27)
Net gain on disposal of Vodafone Malta1 (note 27)
Note:
1 Included in Other income and expense in the Consolidated income statement.
2021
€m
4,421
5,766
3,914
–
5,157
5,160
–
(995)
1,043
292
(429)
(204)
–
–
–
2020
€m
4,459
2019
€m
3,941
5,995
3,720
1,685
5,462
5,699
–
(902)
–
–
–
–
(1,078)
(3,356)
(170)
5,795
59
3,525
5,267
5,886
3,826
(844)
–
–
–
–
–
–
–
The total remuneration of the Group’s auditor, Ernst & Young LLP and other member firms of Ernst & Young Global Limited, for services
provided to the Group during the year ended 31 March 2021 is analysed below.
Ernst & Young LLP was appointed as the Group’s auditor for the year ended 31 March 2020. Accordingly, comparative figures in the table below
for the year ended 31 March 2019 are in respect of remuneration paid to the Group’s previous auditor, PricewaterhouseCoopers LLP and other
member firms of PricewaterhouseCoopers International.
Parent company
Subsidiaries
Subsidiaries - Vantage Towers2
Subsidiaries - new accounting standards3
Audit fees4
Vantage Towers IPO2
Audit-related5
Corporate finance6
Non-audit fees
2021
€m
3
16
1
–
20
8
–
–
8
2020
Re-presented1
€m
4
17
–
1
22
5
1
1
7
2019
€m
2
14
–
1
17
–
2
–
2
Total fees
Notes:
1 Audit fees for the year ended 31 March 2020 have increased by €2 million compared to the amount previously reported. This is to include fees agreed during the year ended 31 March 2021 but
19
28
29
which related to the year ended 31 March 2020.
2 Fees incurred in preparations for the IPO of Vantage Towers A.G. During the year ended 31 March 2021, fees of €1 million related to financial statement audit services and fees of €8 million related
to IPO services and Reporting Accountant procedures.
3 Fees in relation to the implementation of new accounting standards, notably IFRS 15 “Revenue from Contracts with Customers” and IFRS 16 “Leases” which were effective for the first time for the
4
years ended 31 March 2019 and 31 March 2020 respectively.
Includes fees in connection with the interim review, preliminary announcement and controls audit required under Section 404 of the Sarbanes Oxley Act. In total this amounted to €1 million in
each year for the years ended 31 March 2020 and 31 March 2021.
5 Fees for statutory and regulatory filings during the year. Fees were less than €1 million during the years ended 31 March 2021 and 31 March 2020.
6 At the time of the Board decision to recommend Ernst & Young LLP as the statutory auditor for the year ended 31 March 2020 in February 2019, Ernst & Young LLP were providing a range of
services to the Group. All services that were prohibited by the Financial Reporting Council (‘FRC’) or Securities and Exchange Commission (‘SEC’) for a statutory auditor to provide ceased by 31
March 2019. All engagements that were not prohibited by the FRC or SEC but were not in accordance with the Group’s own internal approval policy for non-audit services, ceased early in the
financial year ended 31 March 2020 to enable a smooth transition to alternative suppliers, where required.
136 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
4. Impairment losses
Impairment occurs when the carrying value of assets is greater than the present value of the net cash flows
they are expected to generate. We review the carrying value of assets for each country in which we operate
at least annually. For further details of our impairment review process see “Critical accounting judgements
and key sources of estimation uncertainty” in note 1 “Basis of preparation” to the consolidated financial
statements.
Accounting policies
Goodwill
Goodwill is not subject to amortisation but is tested for impairment annually or whenever there is an indication that the asset may be impaired.
For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash flows, known as
cash-generating units. The determination of the Group’s cash-generating units is primarily based on the geographic area where the Group
supplies communications services and products. If cash flows from assets within one jurisdiction are largely independent of the cash flows from
other assets in that same jurisdiction and management monitors performance separately, multiple cash-generating units are identified within
that geographic area.
If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying
amount of each asset in the unit. Impairment losses recognised for goodwill are not reversible in subsequent periods.
The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Management prepares formal five year plans for the Group’s cash-generating units, which are the basis for the value in use calculations.
Property, plant and equipment, finite lived intangible assets and equity accounted investments
At each reporting period date, the Group reviews the carrying amounts of its property, plant and equipment, finite lived intangible assets and
equity-accounted investments to determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where it is not
possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset
or cash-generating unit is reduced to its recoverable amount and an impairment loss is recognised immediately in the income statement.
Where there has been a change in the estimates used to determine recoverable amount and an impairment loss subsequently reverses, the
carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, not to exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior years and an
impairment loss reversal is recognised immediately in the income statement.
Impairment losses
Following our annual impairment review, the impairment charges recognised in the consolidated income statement within operating profit are
stated below. Further detail on the events and circumstances that led to the recognition of the impairment charges is included below.
Cash-generating unit
Spain
Ireland
Romania
Vodafone Automotive
Vodafone Idea
Reportable segment
Spain
Other Europe
Other Europe
Common Functions
Other Markets
2021
€m
–
–
–
–
–
–
2020
€m
840
630
110
105
–
1,685
2019
€m
2,930
–
310
30
255
3,525
For the year ended 31 March 2019, the Group recorded a loss on disposal of Vodafone India of €3,420 million, including a loss on disposal of
€1,276 million and a foreign exchange loss of €2,079 million which is included in discontinued operations. See note 27 “Acquisitions and
disposals” for further details.
136 Vodafone Group Plc
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Financials
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137 Vodafone Group Plc
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Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
4. Impairment losses
4. Impairment losses
Impairment occurs when the carrying value of assets is greater than the present value of the net cash flows
Impairment occurs when the carrying value of assets is greater than the present value of the net cash flows
they are expected to generate. We review the carrying value of assets for each country in which we operate
they are expected to generate. We review the carrying value of assets for each country in which we operate
at least annually. For further details of our impairment review process see “Critical accounting judgements
at least annually. For further details of our impairment review process see “Critical accounting judgements
and key sources of estimation uncertainty” in note 1 “Basis of preparation” to the consolidated financial
and key sources of estimation uncertainty” in note 1 “Basis of preparation” to the consolidated financial
statements.
statements.
Accounting policies
Accounting policies
Goodwill
Goodwill
Goodwill is not subject to amortisation but is tested for impairment annually or whenever there is an indication that the asset may be impaired.
Goodwill is not subject to amortisation but is tested for impairment annually or whenever there is an indication that the asset may be impaired.
For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash flows, known as
For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash flows, known as
cash-generating units. The determination of the Group’s cash-generating units is primarily based on the geographic area where the Group
cash-generating units. The determination of the Group’s cash-generating units is primarily based on the geographic area where the Group
supplies communications services and products. If cash flows from assets within one jurisdiction are largely independent of the cash flows from
supplies communications services and products. If cash flows from assets within one jurisdiction are largely independent of the cash flows from
other assets in that same jurisdiction and management monitors performance separately, multiple cash-generating units are identified within
other assets in that same jurisdiction and management monitors performance separately, multiple cash-generating units are identified within
that geographic area.
that geographic area.
If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to
If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying
reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying
amount of each asset in the unit. Impairment losses recognised for goodwill are not reversible in subsequent periods.
amount of each asset in the unit. Impairment losses recognised for goodwill are not reversible in subsequent periods.
The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash
The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Management prepares formal five year plans for the Group’s cash-generating units, which are the basis for the value in use calculations.
Management prepares formal five year plans for the Group’s cash-generating units, which are the basis for the value in use calculations.
Property, plant and equipment, finite lived intangible assets and equity accounted investments
Property, plant and equipment, finite lived intangible assets and equity accounted investments
At each reporting period date, the Group reviews the carrying amounts of its property, plant and equipment, finite lived intangible assets and
At each reporting period date, the Group reviews the carrying amounts of its property, plant and equipment, finite lived intangible assets and
equity-accounted investments to determine whether there is any indication that those assets have suffered an impairment loss. If any such
equity-accounted investments to determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where it is not
indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where it is not
possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to
possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
which the asset belongs.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset
or cash-generating unit is reduced to its recoverable amount and an impairment loss is recognised immediately in the income statement.
or cash-generating unit is reduced to its recoverable amount and an impairment loss is recognised immediately in the income statement.
Where there has been a change in the estimates used to determine recoverable amount and an impairment loss subsequently reverses, the
Where there has been a change in the estimates used to determine recoverable amount and an impairment loss subsequently reverses, the
carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, not to exceed the carrying
carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, not to exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior years and an
amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior years and an
impairment loss reversal is recognised immediately in the income statement.
impairment loss reversal is recognised immediately in the income statement.
Following our annual impairment review, the impairment charges recognised in the consolidated income statement within operating profit are
Following our annual impairment review, the impairment charges recognised in the consolidated income statement within operating profit are
stated below. Further detail on the events and circumstances that led to the recognition of the impairment charges is included below.
stated below. Further detail on the events and circumstances that led to the recognition of the impairment charges is included below.
Impairment losses
Impairment losses
Cash-generating unit
Cash-generating unit
Spain
Spain
Ireland
Ireland
Romania
Romania
Vodafone Automotive
Vodafone Automotive
Vodafone Idea
Vodafone Idea
Goodwill
The remaining carrying value of goodwill at 31 March was as follows:
Vodafone Germany
Vantage Towers Germany
Italy
Other
2021
€m
20,335
2,565
2,481
25,381
6,350
31,731
2020
Re-presented1
€m
22,900
–
2,480
25,380
5,998
31,378
Note:
1 Comparative figures for the year ended 31 March 2020 have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See note 7 ‘Discontinued operations and assets and
liabilities held for sale’.
Key assumptions used in the value in use calculations
The key assumptions used in determining the value in use are:
Assumption
Projected adjusted
EBITDA
Projected capital
expenditure
Projected licence and
spectrum payments
How determined
Projected adjusted EBITDA has been based on past experience adjusted for the following:
- In Europe, mobile revenue is expected to benefit from increased usage as customers transition to higher data
bundles, and new products and services are introduced. Fixed revenue is expected to continue to grow as
penetration is increased and more products and services are sold to customers;
- Outside of Europe, revenue is expected to continue to grow as the penetration of faster data-enabled devices
rises along with higher data bundle attachment rates, and new products and services are introduced. The
Other Markets segment is also expected to benefit from increased usage and penetration of M-Pesa in Africa;
and
- Margins are expected to be impacted by negative factors such as the cost of acquiring and retaining
customers in increasingly competitive markets and by positive factors such as the efficiencies expected from
the implementation of Group initiatives.
The cash flow forecasts for capital expenditure are based on past experience and include the ongoing capital
expenditure required to maintain our networks, provide products and services in line with customer
expectations, including of higher data volumes and speeds, and to meet the population coverage requirements
of certain of the Group’s licences. In Europe, capital expenditure is required to roll out capacity-building next
generation 5G and gigabit networks. Outside of Europe, capital expenditure will be required for the continued
rollout of current and next generation mobile networks in emerging markets. Capital expenditure includes cash
outflows for the purchase of property, plant and equipment and computer software.
To enable the continued provision of products and services, the cash flow forecasts for licence and spectrum
payments for each relevant cash-generating unit include amounts for expected renewals and newly available
spectrum. Beyond the five year forecast period, a long-run cost of spectrum is assumed.
Long-term growth rate For the purposes of the Group’s value in use calculations, a long
term growth rate into perpetuity is applied
Reportable segment
Reportable segment
Spain
Spain
Other Europe
Other Europe
Other Europe
Other Europe
Common Functions
Common Functions
Other Markets
Other Markets
2021
2021
€m
€m
–
–
–
–
–
–
–
–
–
–
–
–
2020
2020
€m
€m
840
840
630
630
110
110
105
105
–
–
2019
2019
€m
€m
2,930
2,930
–
–
310
310
30
30
255
255
1,685
1,685
3,525
3,525
Pre-tax risk adjusted
discount rate
For the year ended 31 March 2019, the Group recorded a loss on disposal of Vodafone India of €3,420 million, including a loss on disposal of
For the year ended 31 March 2019, the Group recorded a loss on disposal of Vodafone India of €3,420 million, including a loss on disposal of
€1,276 million and a foreign exchange loss of €2,079 million which is included in discontinued operations. See note 27 “Acquisitions and
€1,276 million and a foreign exchange loss of €2,079 million which is included in discontinued operations. See note 27 “Acquisitions and
disposals” for further details.
disposals” for further details.
‑
immediately at the end of the five year forecast period and is based on the lower of:
- the nominal GDP growth rate forecasts for the country of operation; and
- the long-term compound annual growth rate in adjusted EBITDA as estimated by management.
Long-term compound annual growth rates determined by management may be lower than forecast nominal
GDP growth rates due to the following market-specific factors: competitive intensity levels, maturity of business,
regulatory environment or sector-specific inflation expectations.
The discount rate applied to the cash flows of each of the Group’s cash-generating units is generally based on
the risk free rate for ten year bonds issued by the government in the respective market. Where government
bond rates contain a material component of credit risk, high-quality local corporate bond rates may be used.
These rates are adjusted for a risk premium to reflect both the increased risk of investing in equities and the
systematic risk of the specific cash-generating unit. In making this adjustment, inputs required are the equity
market risk premium (that is the required return over and above a risk free rate by an investor who is investing in
the market as a whole) and the risk adjustment, beta, applied to reflect the risk of the specific cash-generating
unit relative to the market as a whole.
In determining the risk adjusted discount rate, management has applied an adjustment for the systematic risk to
each of the Group’s cash-generating companies determined using an average of the betas of comparable listed
telecommunications companies and, where available and appropriate, across a specific territory. Management
has used a forward-looking equity market risk premium that takes into consideration both studies by
independent economists, the long-term average equity market risk premium and the market risk premiums
typically used by valuations practitioners.
The risk adjusted discount rate is also based on typical leverage ratios of telecommunications companies in
each cash-generating unit's respective market or region.
138 Vodafone Group Plc
Annual Report 2021
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Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
4. Impairment losses (continued)
Year ended 31 March 2021
Following the carve-out of Vodafone’s tower infrastructure to Vantage Towers A.G. (‘Vantage Towers’) during the year in Germany, Spain,
Portugal, Ireland, Greece, Romania, Czech Republic and Hungary and the acquisitions by Vantage Towers of Vodafone UK’s 50% shareholding in
Cornerstone Telecommunications Infrastructure Limited (‘CTIL’) and the remaining shareholding in the Vantage Towers Greece, management
considers Vodafone’s operating companies and Vantage Tower’s operating companies in the affected geographical areas to represent two
cash-generating units for the purpose of impairment testing as at 31 March 2021. Vodafone’s investment in Infrastructure Wireless Italiane S.p.A.
(‘INWIT’) was also transferred to Vantage Towers during the year.
Goodwill has been allocated on a relative values basis to the Vantage Towers cash-generating units, where applicable, as part of the tower
business carve out from Vodafone’s operations. The cash-generating units described below relate to Vodafone’s mobile and fixed line trading
businesses, unless otherwise indicated as being part of Vantage Towers.
Value in use assumptions
The table below shows key assumptions used in the value in use calculations.
Pre-tax risk adjusted discount rate
Long-term growth rate
Projected adjusted EBITDA1
Projected capital expenditure2
Assumptions used in value in use calculation
Germany
%
7.4
0.5
1.2
19.7-21.5
Italy
%
10.5
0.5
2.1
14.4-15.9
Spain
%
9.2
0.5
4.9
15.7-17.6
Ireland
%
7.7
0.5
0.5
12.6-15.1
Romania
%
9.9
1.0
0.9
12.3-15.2
Vantage Towers
Germany
%
6.0
1.5
8.4
39.1-56.2
Sensitivity analysis
The estimated recoverable amounts of the Group’s operations in Germany, Italy, Spain, Ireland, Romania and Vantage Towers Germany exceed
their carrying values by €7.4 billion, €0.6 billion, €0.3 billion, €0.1 billion, €0.1 billion and €3.5 billion, respectively. If the assumptions used in the
impairment review were changed to a greater extent than as presented in the following table, the changes would, in isolation, lead to an
impairment loss being recognised for the year ended 31 March 2021.
Pre-tax risk adjusted discount rate
Long-term growth rate
Projected adjusted EBITDA1
Projected capital expenditure2
Change required for carrying value to equal recoverable amount
Germany
pps
1.3
(1.3)
(4.0)
12.7
Italy
pps
0.7
(0.8)
(1.5)
3.0
Spain
pps
0.4
(0.5)
(1.5)
1.6
Ireland
pps
0.7
(0.7)
(1.6)
2.8
Romania
pps
0.7
(0.9)
(1.9)
1.9
Vantage Towers
Germany
pps
5.2
(4.9)
(19.3)
162.6
138 Vodafone Group Plc
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Financials
Other information
139 Vodafone Group Plc
Annual Report 2021
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Other information
Management considered the following reasonably possible changes in key assumptions for projected adjusted EBITDA1 and long-term growth
rate, leaving all other assumptions unchanged. Consistent with the prior year, and due to the uncertainty of future COVID-19 impacts,
management’s range of reasonably possible changes in projected adjusted EBITDA is plus or minus 5 percentage points (2020: +/- 5
percentage points). The sensitivity analysis presented is prepared on the basis that the reasonably possible change in each key assumption
would not have a consequential impact on other assumptions used in the impairment review. The associated impact on the impairment
assessment is presented in the table below.
Management believes that no reasonably possible or foreseeable change in the pre-tax adjusted discount rate or projected capital expenditure2
would cause the difference between the carrying value and recoverable amount for any cash-generating unit to be materially different from the
base case disclosed below.
Recoverable amount less carrying value
Base case as at 31 March 2021
Change in projected adjusted EBITDA1
Decrease by 5pps
Increase by 5pps
Change in long-term growth rate
Decrease by 1pps
Increase by 1pps
Germany
€bn
7.4
(1.6)
18.2
1.5
16.0
Italy
€bn
0.6
(1.3)
2.9
(0.1)
1.6
Spain
€bn
0.3
(0.6)
1.4
(0.3)
1.0
Ireland
€bn
0.1
(0.2)
0.5
–
0.3
Romania
€bn
0.1
Vantage Towers
Germany
€bn
3.5
(0.1)
0.3
–
0.2
2.4
5.0
2.2
6.1
The carrying values for Vodafone UK, Portugal, Czech Republic, and Hungary include goodwill arising from acquisitions and/or the purchase of
operating licences or spectrum rights. The recoverable amounts for these operating companies are also not materially greater than their
carrying values and accordingly are disclosed below.
If the assumptions used in the impairment review were changed to a greater extent than as presented in the following table, the changes would,
in isolation, lead to an impairment loss being recognised in the year ended 31 March 2021.
Change required for carrying value to equal recoverable amount
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
4. Impairment losses (continued)
4. Impairment losses (continued)
Year ended 31 March 2021
Year ended 31 March 2021
Following the carve-out of Vodafone’s tower infrastructure to Vantage Towers A.G. (‘Vantage Towers’) during the year in Germany, Spain,
Following the carve-out of Vodafone’s tower infrastructure to Vantage Towers A.G. (‘Vantage Towers’) during the year in Germany, Spain,
Portugal, Ireland, Greece, Romania, Czech Republic and Hungary and the acquisitions by Vantage Towers of Vodafone UK’s 50% shareholding in
Portugal, Ireland, Greece, Romania, Czech Republic and Hungary and the acquisitions by Vantage Towers of Vodafone UK’s 50% shareholding in
Cornerstone Telecommunications Infrastructure Limited (‘CTIL’) and the remaining shareholding in the Vantage Towers Greece, management
Cornerstone Telecommunications Infrastructure Limited (‘CTIL’) and the remaining shareholding in the Vantage Towers Greece, management
considers Vodafone’s operating companies and Vantage Tower’s operating companies in the affected geographical areas to represent two
considers Vodafone’s operating companies and Vantage Tower’s operating companies in the affected geographical areas to represent two
cash-generating units for the purpose of impairment testing as at 31 March 2021. Vodafone’s investment in Infrastructure Wireless Italiane S.p.A.
cash-generating units for the purpose of impairment testing as at 31 March 2021. Vodafone’s investment in Infrastructure Wireless Italiane S.p.A.
(‘INWIT’) was also transferred to Vantage Towers during the year.
(‘INWIT’) was also transferred to Vantage Towers during the year.
Goodwill has been allocated on a relative values basis to the Vantage Towers cash-generating units, where applicable, as part of the tower
Goodwill has been allocated on a relative values basis to the Vantage Towers cash-generating units, where applicable, as part of the tower
business carve out from Vodafone’s operations. The cash-generating units described below relate to Vodafone’s mobile and fixed line trading
business carve out from Vodafone’s operations. The cash-generating units described below relate to Vodafone’s mobile and fixed line trading
businesses, unless otherwise indicated as being part of Vantage Towers.
businesses, unless otherwise indicated as being part of Vantage Towers.
Value in use assumptions
Value in use assumptions
The table below shows key assumptions used in the value in use calculations.
The table below shows key assumptions used in the value in use calculations.
Assumptions used in value in use calculation
Assumptions used in value in use calculation
Germany
Germany
%
%
7.4
7.4
0.5
0.5
1.2
1.2
Italy
Italy
%
%
10.5
10.5
0.5
0.5
2.1
2.1
Spain
Spain
%
%
9.2
9.2
0.5
0.5
4.9
4.9
Ireland
Ireland
%
%
7.7
7.7
0.5
0.5
0.5
0.5
Romania
Romania
%
%
9.9
9.9
1.0
1.0
0.9
0.9
Vantage Towers
Vantage Towers
Germany
Germany
%
%
6.0
6.0
1.5
1.5
8.4
8.4
19.7-21.5
19.7-21.5
14.4-15.9
14.4-15.9
15.7-17.6
15.7-17.6
12.6-15.1
12.6-15.1
12.3-15.2
12.3-15.2
39.1-56.2
39.1-56.2
The estimated recoverable amounts of the Group’s operations in Germany, Italy, Spain, Ireland, Romania and Vantage Towers Germany exceed
The estimated recoverable amounts of the Group’s operations in Germany, Italy, Spain, Ireland, Romania and Vantage Towers Germany exceed
their carrying values by €7.4 billion, €0.6 billion, €0.3 billion, €0.1 billion, €0.1 billion and €3.5 billion, respectively. If the assumptions used in the
their carrying values by €7.4 billion, €0.6 billion, €0.3 billion, €0.1 billion, €0.1 billion and €3.5 billion, respectively. If the assumptions used in the
impairment review were changed to a greater extent than as presented in the following table, the changes would, in isolation, lead to an
impairment review were changed to a greater extent than as presented in the following table, the changes would, in isolation, lead to an
impairment loss being recognised for the year ended 31 March 2021.
impairment loss being recognised for the year ended 31 March 2021.
Pre-tax risk adjusted discount rate
Pre-tax risk adjusted discount rate
Long-term growth rate
Long-term growth rate
Projected adjusted EBITDA1
Projected adjusted EBITDA1
Projected capital expenditure2
Projected capital expenditure2
Sensitivity analysis
Sensitivity analysis
Pre-tax risk adjusted discount rate
Pre-tax risk adjusted discount rate
Long-term growth rate
Long-term growth rate
Projected adjusted EBITDA1
Projected adjusted EBITDA1
Projected capital expenditure2
Projected capital expenditure2
Change required for carrying value to equal recoverable amount
Change required for carrying value to equal recoverable amount
Germany
Germany
pps
pps
1.3
1.3
(1.3)
(1.3)
(4.0)
(4.0)
12.7
12.7
Italy
Italy
pps
pps
0.7
0.7
(0.8)
(0.8)
(1.5)
(1.5)
3.0
3.0
Spain
Spain
pps
pps
0.4
0.4
(0.5)
(0.5)
(1.5)
(1.5)
1.6
1.6
Ireland
Ireland
pps
pps
0.7
0.7
(0.7)
(0.7)
(1.6)
(1.6)
2.8
2.8
Romania
Romania
pps
pps
0.7
0.7
(0.9)
(0.9)
(1.9)
(1.9)
1.9
1.9
Vantage Towers
Vantage Towers
Germany
Germany
pps
pps
5.2
5.2
(4.9)
(4.9)
(19.3)
(19.3)
162.6
162.6
Pre-tax risk adjusted discount rate
Long-term growth rate
Projected adjusted EBITDA1
Projected capital expenditure2
Notes:
1 Projected adjusted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing. A pro-rata adjustment
has been made to true up 31 March 2021 adjusted EBITDA to a full year where the towers business carve-out occurred during the year.
2 Projected capital expenditure, which excludes licences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans
used for impairment testing.
Czech Republic
pps
1.2
(1.3)
(3.0)
7.5
Hungary
pps
0.3
(0.4)
(0.7)
1.5
Portugal
pps
0.9
(1.0)
(2.2)
3.7
UK
pps
0.8
(0.8)
(1.7)
2.5
140 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
4. Impairment losses (continued)
Year ended 31 March 2020
The disclosures below for the year ended 31 March 2020 are as previously disclosed in the 31 March 2020 Annual Report.
For the year ended 31 March 2020, the Group recorded impairment charges of €0.8 billion, €0.6 billion, €0.1 billion and €0.1 billion with respect
to the Group’s investments in Spain, Ireland, Romania and Vodafone Automotive respectively. The impairment charges relate solely to goodwill
and are recognised in the consolidated income statement within operating profit/(loss). The recoverable amounts for Spain, Ireland, Romania
and Vodafone Automotive are €5.6 billion, €1.2 billion, €0.9 billion and €0.0 billion respectively, and based on value in use calculations.
The COVID-19 outbreak developed rapidly in early 2020. Many countries have required businesses to limit or suspend operations and
implemented travel restrictions and quarantine measures. The measures taken to contain the virus have adversely affected economic activity
and disrupted many businesses. As the outbreak continues to progress and evolve, it is extremely challenging to predict the full extent and
duration of its impact on Vodafone’s businesses and the countries where Vodafone operates. Based on information available as at 31 March
2020, management made additional adjustments to the five year business plans used in the Group’s impairment testing in order to reflect the
estimated impact. The impairment charges recognised and discussed immediately below, were based on expected cash flows after applying
these adjustments.
Challenging trading and economic conditions in Spain materialised in the prior financial year and management recognised an impairment
charge following a reduction in projected cash flows. During the year ended 31 March 2020 there was an observable repositioning towards low-
cost brands and competitive intensity within the multi-branded market was expected to remain elevated in the medium term. These factors led
to management projecting lower cash flows and recognising an impairment charge with respect to the Group’s investment in Spain.
The impairment charge recognised with respect to Ireland was attributable to increased competition and the aforementioned increased
economic uncertainty. As a consequence, growth and ARPUs were expected to be lower. Management reflected these assumptions in
expected cash flows.
The impairment charges recognised with respect to Romania and Vodafone Automotive reflect management’s latest assessment of likely
trading and economic conditions in the five year business plan. Management’s view of the long-term potential in these markets remains
unchanged.
The European Liberty Global assets acquired in July 2019 (see note 27 ‘Acquisitions and disposals’) were subsumed within existing cash-
generating units in Germany, Czech Republic, Hungary and Romania. The primary reason for acquiring the businesses was to create a
converged national provider of digital infrastructure in Germany, together with creating converged communications operators in the Czech
Republic, Hungary and Romania. Following the integration of the acquired businesses, management considered the cash flows within these
cash-generating units to be largely interdependent and monitors performance on a country-level basis.
On 31 March 2020, the Group merged its passive tower infrastructure in Italy with INWIT (see note 27 ‘Acquisitions and disposals’). On the date
of the merger, management monitored performance of its operations in Italy on a country-wide basis and considered Vodafone Italy, including
its passive tower infrastructure, to be one cash-generating unit for the purpose of impairment testing as at 31 March 2020. No impairment in
relation to Vodafone Italy would be necessary if impairment testing was performed on a post-merger basis at 31 March 2020.
Value in use assumptions
The table below shows key assumptions used in the value in use calculations.
Pre-tax risk adjusted discount rate
Long-term growth rate
Projected adjusted EBITDA1
Projected capital expenditure2
Assumptions used in value in use calculation
Germany
%
7.5
0.5
3.8
Italy
%
10.3
0.5
0.2
20.1-20.7 12.5-13.4
Spain
%
9.2
0.5
8.2
Ireland
%
7.6
0.5
3.0
16.2-18.1 10.7-15.2
Vodafone
Automotive
%
9.1
1.9
31.3
13.7-18.5 14.1-23.4
Romania
%
10.2
1.0
8.0
Sensitivity analysis
The estimated recoverable amount of the Group’s operations in Germany and Italy exceed their carrying values by €6.6 billion and €1.8 billion
respectively. If the assumptions used in the impairment review were changed to a greater extent than as presented in the following table, the
changes would, in isolation, lead to an impairment loss being recognised for the year ended 31 March 2020.
Pre-tax risk adjusted discount rate
Long-term growth rate
Projected adjusted EBITDA1
Projected capital expenditure2
Change required for carrying value to
equal recoverable amount
Germany
pps
1.1
(1.0)
(3.2)
11.4
Italy
pps
1.7
(2.0)
(3.1)
7.9
140 Vodafone Group Plc
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141 Vodafone Group Plc
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Management considered the following reasonably possible changes in the key adjusted EBITDA1 and long-term growth rate assumptions,
leaving all other assumptions unchanged. Due to increased uncertainty following the COVID-19 outbreak, management has widened the range
of reasonably possible changes in the key adjusted EBITDA growth rate assumption to plus or minus 5 percentage points (2019: 2 percentage
points). The sensitivity analysis presented is prepared on the basis that the reasonably possible change in each key assumption would not have
a consequential impact on other assumptions used in the impairment review. The associated impact on the impairment assessment is
presented in the table below, with the exception of Vodafone Automotive, where no reasonably possible change in the key assumptions would
materially change the impairment charge recognised.
Management believes that no reasonably possible or foreseeable change in the pre-tax adjusted discount rate or projected capital expenditure2
would cause the difference between the carrying value and recoverable amount for any cash-generating unit to be materially different to the
base case disclosed below.
Base case as at 31 March 2020
Change in projected adjusted EBITDA1
Decrease by 5pps
Increase by 5pps
Change in long-term growth rate
Decrease by 1pps
Increase by 1pps
Recoverable amount less carrying value (prior to recognition of impairment charges)
Germany
€bn
6.6
Spain
€bn
(0.8)
Ireland
€bn
(0.6)
Italy
€bn
1.8
(3.3)
18.4
0.2
15.8
(1.0)
5.1
0.8
3.0
(2.3)
0.9
(1.5)
–
(1.1)
–
(0.8)
(0.4)
Romania
€bn
(0.1)
(0.3)
0.1
(0.2)
–
The impairment charges recognised with respect to Romania and Vodafone Automotive reflect management’s latest assessment of likely
The impairment charges recognised with respect to Romania and Vodafone Automotive reflect management’s latest assessment of likely
trading and economic conditions in the five year business plan. Management’s view of the long-term potential in these markets remains
trading and economic conditions in the five year business plan. Management’s view of the long-term potential in these markets remains
If the assumptions used in the impairment review were changed to a greater extent than as presented in the following table, the changes would,
in isolation, lead to an impairment loss being recognised in the year ended 31 March 2020.
Change required for carrying value to equal recoverable amount
The carrying values for Vodafone UK, Portugal, Czech Republic and Hungary include goodwill arising from acquisitions and/or the purchase of
operating licences or spectrum rights. While the recoverable amounts for these operating companies are not materially greater than their
carrying value, each has a lower risk of giving rise to an impairment that would be material to the Group given their relative size or the
composition of their carrying value.
Pre-tax risk adjusted discount rate
Long-term growth rate
Projected adjusted EBITDA1
Projected capital expenditure2
Notes:
1 Projected adjusted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing.
2 Projected capital expenditure, which excludes licences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans
used for impairment testing.
VodafoneZiggo
The recoverable amount for VodafoneZiggo is not materially greater than its carrying value. If adverse impacts of economic, competitive,
regulatory or other factors were to cause significant deterioration in the operations of VodafoneZiggo and the entity’s expected future cash
flows, this may lead to an impairment loss being recognised.
Portugal
pps
1.5
(1.6)
(3.4)
7.1
Czech Republic
pps
1.7
(1.8)
(4.0)
12.5
Hungary
pps
1.9
(2.2)
(3.9)
9.1
UK
pps
1.1
(1.3)
(2.3)
4.5
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
4. Impairment losses (continued)
4. Impairment losses (continued)
Year ended 31 March 2020
Year ended 31 March 2020
The disclosures below for the year ended 31 March 2020 are as previously disclosed in the 31 March 2020 Annual Report.
The disclosures below for the year ended 31 March 2020 are as previously disclosed in the 31 March 2020 Annual Report.
For the year ended 31 March 2020, the Group recorded impairment charges of €0.8 billion, €0.6 billion, €0.1 billion and €0.1 billion with respect
For the year ended 31 March 2020, the Group recorded impairment charges of €0.8 billion, €0.6 billion, €0.1 billion and €0.1 billion with respect
to the Group’s investments in Spain, Ireland, Romania and Vodafone Automotive respectively. The impairment charges relate solely to goodwill
to the Group’s investments in Spain, Ireland, Romania and Vodafone Automotive respectively. The impairment charges relate solely to goodwill
and are recognised in the consolidated income statement within operating profit/(loss). The recoverable amounts for Spain, Ireland, Romania
and are recognised in the consolidated income statement within operating profit/(loss). The recoverable amounts for Spain, Ireland, Romania
and Vodafone Automotive are €5.6 billion, €1.2 billion, €0.9 billion and €0.0 billion respectively, and based on value in use calculations.
and Vodafone Automotive are €5.6 billion, €1.2 billion, €0.9 billion and €0.0 billion respectively, and based on value in use calculations.
The COVID-19 outbreak developed rapidly in early 2020. Many countries have required businesses to limit or suspend operations and
The COVID-19 outbreak developed rapidly in early 2020. Many countries have required businesses to limit or suspend operations and
implemented travel restrictions and quarantine measures. The measures taken to contain the virus have adversely affected economic activity
implemented travel restrictions and quarantine measures. The measures taken to contain the virus have adversely affected economic activity
and disrupted many businesses. As the outbreak continues to progress and evolve, it is extremely challenging to predict the full extent and
and disrupted many businesses. As the outbreak continues to progress and evolve, it is extremely challenging to predict the full extent and
duration of its impact on Vodafone’s businesses and the countries where Vodafone operates. Based on information available as at 31 March
duration of its impact on Vodafone’s businesses and the countries where Vodafone operates. Based on information available as at 31 March
2020, management made additional adjustments to the five year business plans used in the Group’s impairment testing in order to reflect the
2020, management made additional adjustments to the five year business plans used in the Group’s impairment testing in order to reflect the
estimated impact. The impairment charges recognised and discussed immediately below, were based on expected cash flows after applying
estimated impact. The impairment charges recognised and discussed immediately below, were based on expected cash flows after applying
these adjustments.
these adjustments.
Challenging trading and economic conditions in Spain materialised in the prior financial year and management recognised an impairment
Challenging trading and economic conditions in Spain materialised in the prior financial year and management recognised an impairment
charge following a reduction in projected cash flows. During the year ended 31 March 2020 there was an observable repositioning towards low-
charge following a reduction in projected cash flows. During the year ended 31 March 2020 there was an observable repositioning towards low-
cost brands and competitive intensity within the multi-branded market was expected to remain elevated in the medium term. These factors led
cost brands and competitive intensity within the multi-branded market was expected to remain elevated in the medium term. These factors led
to management projecting lower cash flows and recognising an impairment charge with respect to the Group’s investment in Spain.
to management projecting lower cash flows and recognising an impairment charge with respect to the Group’s investment in Spain.
The impairment charge recognised with respect to Ireland was attributable to increased competition and the aforementioned increased
The impairment charge recognised with respect to Ireland was attributable to increased competition and the aforementioned increased
economic uncertainty. As a consequence, growth and ARPUs were expected to be lower. Management reflected these assumptions in
economic uncertainty. As a consequence, growth and ARPUs were expected to be lower. Management reflected these assumptions in
expected cash flows.
expected cash flows.
unchanged.
unchanged.
The European Liberty Global assets acquired in July 2019 (see note 27 ‘Acquisitions and disposals’) were subsumed within existing cash-
The European Liberty Global assets acquired in July 2019 (see note 27 ‘Acquisitions and disposals’) were subsumed within existing cash-
generating units in Germany, Czech Republic, Hungary and Romania. The primary reason for acquiring the businesses was to create a
generating units in Germany, Czech Republic, Hungary and Romania. The primary reason for acquiring the businesses was to create a
converged national provider of digital infrastructure in Germany, together with creating converged communications operators in the Czech
converged national provider of digital infrastructure in Germany, together with creating converged communications operators in the Czech
Republic, Hungary and Romania. Following the integration of the acquired businesses, management considered the cash flows within these
Republic, Hungary and Romania. Following the integration of the acquired businesses, management considered the cash flows within these
cash-generating units to be largely interdependent and monitors performance on a country-level basis.
cash-generating units to be largely interdependent and monitors performance on a country-level basis.
On 31 March 2020, the Group merged its passive tower infrastructure in Italy with INWIT (see note 27 ‘Acquisitions and disposals’). On the date
On 31 March 2020, the Group merged its passive tower infrastructure in Italy with INWIT (see note 27 ‘Acquisitions and disposals’). On the date
of the merger, management monitored performance of its operations in Italy on a country-wide basis and considered Vodafone Italy, including
of the merger, management monitored performance of its operations in Italy on a country-wide basis and considered Vodafone Italy, including
its passive tower infrastructure, to be one cash-generating unit for the purpose of impairment testing as at 31 March 2020. No impairment in
its passive tower infrastructure, to be one cash-generating unit for the purpose of impairment testing as at 31 March 2020. No impairment in
relation to Vodafone Italy would be necessary if impairment testing was performed on a post-merger basis at 31 March 2020.
relation to Vodafone Italy would be necessary if impairment testing was performed on a post-merger basis at 31 March 2020.
Value in use assumptions
Value in use assumptions
The table below shows key assumptions used in the value in use calculations.
The table below shows key assumptions used in the value in use calculations.
Assumptions used in value in use calculation
Assumptions used in value in use calculation
Germany
Germany
%
%
7.5
7.5
0.5
0.5
3.8
3.8
Italy
Italy
%
%
10.3
10.3
0.5
0.5
0.2
0.2
Spain
Spain
%
%
9.2
9.2
0.5
0.5
8.2
8.2
Ireland
Ireland
%
%
7.6
7.6
0.5
0.5
3.0
3.0
Romania
Romania
%
%
10.2
10.2
1.0
1.0
8.0
8.0
Vodafone
Vodafone
Automotive
Automotive
%
%
9.1
9.1
1.9
1.9
31.3
31.3
20.1-20.7 12.5-13.4
20.1-20.7 12.5-13.4
16.2-18.1 10.7-15.2
16.2-18.1 10.7-15.2
13.7-18.5 14.1-23.4
13.7-18.5 14.1-23.4
The estimated recoverable amount of the Group’s operations in Germany and Italy exceed their carrying values by €6.6 billion and €1.8 billion
The estimated recoverable amount of the Group’s operations in Germany and Italy exceed their carrying values by €6.6 billion and €1.8 billion
respectively. If the assumptions used in the impairment review were changed to a greater extent than as presented in the following table, the
respectively. If the assumptions used in the impairment review were changed to a greater extent than as presented in the following table, the
changes would, in isolation, lead to an impairment loss being recognised for the year ended 31 March 2020.
changes would, in isolation, lead to an impairment loss being recognised for the year ended 31 March 2020.
Pre-tax risk adjusted discount rate
Pre-tax risk adjusted discount rate
Long-term growth rate
Long-term growth rate
Projected adjusted EBITDA1
Projected adjusted EBITDA1
Projected capital expenditure2
Projected capital expenditure2
Sensitivity analysis
Sensitivity analysis
Pre-tax risk adjusted discount rate
Pre-tax risk adjusted discount rate
Long-term growth rate
Long-term growth rate
Projected adjusted EBITDA1
Projected adjusted EBITDA1
Projected capital expenditure2
Projected capital expenditure2
Change required for carrying value to
Change required for carrying value to
equal recoverable amount
equal recoverable amount
Germany
Germany
pps
pps
1.1
1.1
(1.0)
(1.0)
(3.2)
(3.2)
11.4
11.4
Italy
Italy
pps
pps
1.7
1.7
(2.0)
(2.0)
(3.1)
(3.1)
7.9
7.9
142 Vodafone Group Plc
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Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
4. Impairment losses (continued)
Year ended 31 March 2019
The disclosures below for the year ended 31 March 2019 are as previously disclosed in the 31 March 2019 and 31 March 2020 Annual Reports.
For the year ended 31 March 2019, the Group recorded impairment charges of €2.9 billion, €0.3 billion, and €0.3 billion in respect of the Group’s
investments in Spain, Romania and Vodafone Idea respectively. The impairment charges with respect to Spain and Romania relate solely to
goodwill and the impairment charge with respect to Vodafone Idea relates to the joint venture’s carrying value. All impairment charges are
recognised in the consolidated income statement within operating (loss)/profit. The recoverable amounts for Spain and Romania are €7.1
billion and €0.7 billion respectively and are based on value in use calculations. The recoverable amount for the Group’s stake in Vodafone Idea is
€1.6 billion and is based on its fair value less costs of disposal.
Following challenging current trading and economic conditions, management reassessed the expected future business performance in Spain.
Following this reassessment, projected cash flows are lower and this led to an impairment charge with respect to the Group’s investment in
Spain. The impairment charge with respect to the Group’s investment in Romania was driven by an increase in the yield on Romanian
government bonds which increased the discount rate and management’s reassessment of the long-term growth rate applied beyond the five
year business plan.
Vodafone Idea Limited
The Group’s investment in Vodafone Idea was tested for impairment at 31 March 2019 in accordance with applicable IFRS. Impairment testing
was considered appropriate as a result of market conditions and declines in the quoted share price of the company during the period.
The market environment in India remained highly challenging with significant pricing pressure, which led to industry consolidation but a
significantly lower level of profitability and greater pressure on financing. Management continues to consider it reasonable to assume an overall
market and pricing recovery, however the timing and magnitude remains highly uncertain. Accordingly, there are a wide range of potential
outcomes in deriving a current view of future business performance, cash flows and debt financing requirements for value in use purposes.
Management concluded that the fair value less costs of disposal based on an observable share price is the appropriate basis to determine the
recoverable amount of the Group’s investment in Vodafone Idea for the purpose of impairment testing for the year ended 31 March 2019.
Where the recoverable amount is less than the investment’s carrying amount, the carrying amount is reduced to the recoverable amount and
an impairment is recognised.
The investment in Vodafone Idea was also tested for impairment as at 30 September 2018. The share price of INR38.55 implied a recoverable
amount of INR152 billion (€1.8 billion) which was lower than the carrying value of the investment at the same date. An impairment charge of
€0.3 billion was recognised to reduce the carrying value of the joint venture in the Group’s consolidated statement of financial position.
Following the formal announcement of the terms of Vodafone Idea’s rights issue on 20 March 2019, the Vodafone Idea share price went ‘ex-
rights’ on 29 March 2019 and closed at INR18.25. Based on information available to management on 31 March 2019, the recoverable amount
of the Group’s investment in Vodafone Idea was determined based on key assumptions relating to the number of new shares to which
management intended to subscribe (8.8 billion) and the associated cost under the terms of the rights issue (INR12.5 per share). After taking into
account these key assumptions and the quoted share price, the recoverable amount of the Group’s interest in Vodafone Idea was determined
to be INR123 billion (€1.6 billion) as at 31 March 2019.
Vodafone Idea’s share price is observable in a quoted market and is considered a level 1 input under the IFRS 13 fair value hierarchy. As
management also considered the observable and unquoted inputs related to the number and cost of the new shares to be issued under the
rights issue, the recoverable amount quoted above is considered to be a level 2 valuation under the IFRS 13 fair value hierarchy.
The recoverable amount is €0.2 billion higher than the carrying value of the investment as at 31 March 2019 and no further changes to the
carrying value or impairment charge recognised in September 2018 are required.
The carrying value of Vodafone Idea that was tested for impairment was dependent on a wide range of assumptions, including the level of
market pricing and the realisation of anticipated merger-related operating expenses and capital expenditure synergies. Should any of the
assumptions not materialise, in whole or in part, these will impact the entity’s expected future cash flows and may result in a future impairment.
The carrying value is also dependent on the ability of the entity to refinance its liabilities as they fall due. Should this not be achievable, this will
impact the liquidity of Vodafone Idea and will result in a future impairment, in whole or in part, of the Group’s investment.
Based solely on the closing share price of Vodafone Idea on 13 May 2019, the recoverable amount of the Group’s 45.2% interest would be €0.6
billion lower than the recoverable amount as at 31 March 2019. No adjustment was made to the carrying value of the Vodafone Idea joint
venture as this was considered a non-adjusting event.
Value in use assumptions
The table below shows key assumptions used in the value in use calculations.
Assumptions used in value in use calculation
Pre-tax adjusted discount rate
Long-term growth rate
Projected adjusted EBITDA1
Projected capital expenditure2
Notes:
1 Projected adjusted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing.
2 Projected capital expenditure, which excludes licences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans
Germany
%
8.3
0.5
2.9
16.9–19.9
Italy
%
10.5
1.0
(0.1)
12.2–12.5
Spain
%
9.3
0.5
9.2
17.1–18.4
Romania
%
11.1
1.0
3.8
12.1–12.7
used for impairment testing.
142 Vodafone Group Plc
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Sensitivity analysis
The estimated recoverable amount of the Group’s operations in Germany, Italy, Spain and Romania exceed their carrying values by €7.4 billion,
€2.7 billion, €0.5 billion and €0.1 billion respectively. If the assumptions used in the impairment review were changed to a greater extent than as
presented in the following table, the changes would, in isolation, lead to an impairment loss being recognised for the year ended 31 March
2019.
Change required for carrying value to equal recoverable amount
Germany
pps
2.1
(2.2)
(4.9)
15.4
Italy
pps
2.5
(2.9)
(4.6)
11.2
Spain
pps
0.5
(0.7)
(1.3)
2.7
Romania
pps
1.2
(1.5)
(2.0)
3.3
Pre-tax adjusted discount rate
Long-term growth rate
Projected adjusted EBITDA1
Projected capital expenditure2
Notes:
1 Projected adjusted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing.
2 Projected capital expenditure, which excludes licences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans
used for impairment testing.
Management considered the following reasonably possible changes in the key EBITDA1 assumption while leaving all other assumptions
unchanged. The associated impact on the impairment assessment is presented in the table below.
Management believes that no reasonably possible or foreseeable change in any of the other assumptions included in the table above would
cause the carrying value of any cash-generating unit to materially exceed its recoverable amount.
Recoverable amount less carrying value
Germany
Italy
Spain
Romania
Note:
1 Projected adjusted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing.
Decrease by 2pps
€bn
4.2
1.5
(0.3)
–
Base case
€bn
7.4
2.7
0.5
0.1
Increase by 2pps
€bn
10.8
4.1
1.4
0.2
The carrying values for Vodafone UK, Portugal and Ireland include goodwill arising from their acquisition by the Group and/or the purchase of
operating licences or spectrum rights. While the recoverable amounts for these operating companies are not materially greater than their
carrying value, each has a lower risk of giving rise to impairment that would be material to the Group given their relative size or the composition
of their carrying value.
The changes in the following table to assumptions used in the impairment review would have, in isolation, led to an impairment loss being
recognised in the year ended 31 March 2019.
Change required for carrying value to equal recoverable
amount
Pre-tax risk adjusted discount rate
Long-term growth rate
Projected adjusted EBITDA1
Projected capital expenditure2
Notes:
1 Projected adjusted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing.
2 Projected capital expenditure, which excludes licences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans
used for impairment testing.
VodafoneZiggo
Following the merger, the recoverable amount for VodafoneZiggo is not materially greater than its carrying value. If adverse impacts of
economic, competitive, regulatory or other factors were to cause significant deterioration in the operations of VodafoneZiggo and the entity’s
expected future cash flows, this may lead to an impairment loss being recognised.
UK
pps
0.7
(0.9)
(1.9)
3.3
Ireland
pps
1.2
(1.4)
(2.7)
8.4
Portugal
pps
0.7
(0.7)
(1.4)
3.4
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
4. Impairment losses (continued)
4. Impairment losses (continued)
Year ended 31 March 2019
Year ended 31 March 2019
The disclosures below for the year ended 31 March 2019 are as previously disclosed in the 31 March 2019 and 31 March 2020 Annual Reports.
The disclosures below for the year ended 31 March 2019 are as previously disclosed in the 31 March 2019 and 31 March 2020 Annual Reports.
For the year ended 31 March 2019, the Group recorded impairment charges of €2.9 billion, €0.3 billion, and €0.3 billion in respect of the Group’s
For the year ended 31 March 2019, the Group recorded impairment charges of €2.9 billion, €0.3 billion, and €0.3 billion in respect of the Group’s
investments in Spain, Romania and Vodafone Idea respectively. The impairment charges with respect to Spain and Romania relate solely to
investments in Spain, Romania and Vodafone Idea respectively. The impairment charges with respect to Spain and Romania relate solely to
goodwill and the impairment charge with respect to Vodafone Idea relates to the joint venture’s carrying value. All impairment charges are
goodwill and the impairment charge with respect to Vodafone Idea relates to the joint venture’s carrying value. All impairment charges are
recognised in the consolidated income statement within operating (loss)/profit. The recoverable amounts for Spain and Romania are €7.1
recognised in the consolidated income statement within operating (loss)/profit. The recoverable amounts for Spain and Romania are €7.1
billion and €0.7 billion respectively and are based on value in use calculations. The recoverable amount for the Group’s stake in Vodafone Idea is
billion and €0.7 billion respectively and are based on value in use calculations. The recoverable amount for the Group’s stake in Vodafone Idea is
€1.6 billion and is based on its fair value less costs of disposal.
€1.6 billion and is based on its fair value less costs of disposal.
Following challenging current trading and economic conditions, management reassessed the expected future business performance in Spain.
Following challenging current trading and economic conditions, management reassessed the expected future business performance in Spain.
Following this reassessment, projected cash flows are lower and this led to an impairment charge with respect to the Group’s investment in
Following this reassessment, projected cash flows are lower and this led to an impairment charge with respect to the Group’s investment in
Spain. The impairment charge with respect to the Group’s investment in Romania was driven by an increase in the yield on Romanian
Spain. The impairment charge with respect to the Group’s investment in Romania was driven by an increase in the yield on Romanian
government bonds which increased the discount rate and management’s reassessment of the long-term growth rate applied beyond the five
government bonds which increased the discount rate and management’s reassessment of the long-term growth rate applied beyond the five
year business plan.
year business plan.
Vodafone Idea Limited
Vodafone Idea Limited
The Group’s investment in Vodafone Idea was tested for impairment at 31 March 2019 in accordance with applicable IFRS. Impairment testing
The Group’s investment in Vodafone Idea was tested for impairment at 31 March 2019 in accordance with applicable IFRS. Impairment testing
was considered appropriate as a result of market conditions and declines in the quoted share price of the company during the period.
was considered appropriate as a result of market conditions and declines in the quoted share price of the company during the period.
The market environment in India remained highly challenging with significant pricing pressure, which led to industry consolidation but a
The market environment in India remained highly challenging with significant pricing pressure, which led to industry consolidation but a
significantly lower level of profitability and greater pressure on financing. Management continues to consider it reasonable to assume an overall
significantly lower level of profitability and greater pressure on financing. Management continues to consider it reasonable to assume an overall
market and pricing recovery, however the timing and magnitude remains highly uncertain. Accordingly, there are a wide range of potential
market and pricing recovery, however the timing and magnitude remains highly uncertain. Accordingly, there are a wide range of potential
outcomes in deriving a current view of future business performance, cash flows and debt financing requirements for value in use purposes.
outcomes in deriving a current view of future business performance, cash flows and debt financing requirements for value in use purposes.
Management concluded that the fair value less costs of disposal based on an observable share price is the appropriate basis to determine the
Management concluded that the fair value less costs of disposal based on an observable share price is the appropriate basis to determine the
recoverable amount of the Group’s investment in Vodafone Idea for the purpose of impairment testing for the year ended 31 March 2019.
recoverable amount of the Group’s investment in Vodafone Idea for the purpose of impairment testing for the year ended 31 March 2019.
Where the recoverable amount is less than the investment’s carrying amount, the carrying amount is reduced to the recoverable amount and
Where the recoverable amount is less than the investment’s carrying amount, the carrying amount is reduced to the recoverable amount and
an impairment is recognised.
an impairment is recognised.
The investment in Vodafone Idea was also tested for impairment as at 30 September 2018. The share price of INR38.55 implied a recoverable
The investment in Vodafone Idea was also tested for impairment as at 30 September 2018. The share price of INR38.55 implied a recoverable
amount of INR152 billion (€1.8 billion) which was lower than the carrying value of the investment at the same date. An impairment charge of
amount of INR152 billion (€1.8 billion) which was lower than the carrying value of the investment at the same date. An impairment charge of
€0.3 billion was recognised to reduce the carrying value of the joint venture in the Group’s consolidated statement of financial position.
€0.3 billion was recognised to reduce the carrying value of the joint venture in the Group’s consolidated statement of financial position.
Following the formal announcement of the terms of Vodafone Idea’s rights issue on 20 March 2019, the Vodafone Idea share price went ‘ex-
Following the formal announcement of the terms of Vodafone Idea’s rights issue on 20 March 2019, the Vodafone Idea share price went ‘ex-
rights’ on 29 March 2019 and closed at INR18.25. Based on information available to management on 31 March 2019, the recoverable amount
rights’ on 29 March 2019 and closed at INR18.25. Based on information available to management on 31 March 2019, the recoverable amount
of the Group’s investment in Vodafone Idea was determined based on key assumptions relating to the number of new shares to which
of the Group’s investment in Vodafone Idea was determined based on key assumptions relating to the number of new shares to which
management intended to subscribe (8.8 billion) and the associated cost under the terms of the rights issue (INR12.5 per share). After taking into
management intended to subscribe (8.8 billion) and the associated cost under the terms of the rights issue (INR12.5 per share). After taking into
account these key assumptions and the quoted share price, the recoverable amount of the Group’s interest in Vodafone Idea was determined
account these key assumptions and the quoted share price, the recoverable amount of the Group’s interest in Vodafone Idea was determined
to be INR123 billion (€1.6 billion) as at 31 March 2019.
to be INR123 billion (€1.6 billion) as at 31 March 2019.
Vodafone Idea’s share price is observable in a quoted market and is considered a level 1 input under the IFRS 13 fair value hierarchy. As
Vodafone Idea’s share price is observable in a quoted market and is considered a level 1 input under the IFRS 13 fair value hierarchy. As
management also considered the observable and unquoted inputs related to the number and cost of the new shares to be issued under the
management also considered the observable and unquoted inputs related to the number and cost of the new shares to be issued under the
rights issue, the recoverable amount quoted above is considered to be a level 2 valuation under the IFRS 13 fair value hierarchy.
rights issue, the recoverable amount quoted above is considered to be a level 2 valuation under the IFRS 13 fair value hierarchy.
The recoverable amount is €0.2 billion higher than the carrying value of the investment as at 31 March 2019 and no further changes to the
The recoverable amount is €0.2 billion higher than the carrying value of the investment as at 31 March 2019 and no further changes to the
carrying value or impairment charge recognised in September 2018 are required.
carrying value or impairment charge recognised in September 2018 are required.
The carrying value of Vodafone Idea that was tested for impairment was dependent on a wide range of assumptions, including the level of
The carrying value of Vodafone Idea that was tested for impairment was dependent on a wide range of assumptions, including the level of
market pricing and the realisation of anticipated merger-related operating expenses and capital expenditure synergies. Should any of the
market pricing and the realisation of anticipated merger-related operating expenses and capital expenditure synergies. Should any of the
assumptions not materialise, in whole or in part, these will impact the entity’s expected future cash flows and may result in a future impairment.
assumptions not materialise, in whole or in part, these will impact the entity’s expected future cash flows and may result in a future impairment.
The carrying value is also dependent on the ability of the entity to refinance its liabilities as they fall due. Should this not be achievable, this will
The carrying value is also dependent on the ability of the entity to refinance its liabilities as they fall due. Should this not be achievable, this will
impact the liquidity of Vodafone Idea and will result in a future impairment, in whole or in part, of the Group’s investment.
impact the liquidity of Vodafone Idea and will result in a future impairment, in whole or in part, of the Group’s investment.
Based solely on the closing share price of Vodafone Idea on 13 May 2019, the recoverable amount of the Group’s 45.2% interest would be €0.6
Based solely on the closing share price of Vodafone Idea on 13 May 2019, the recoverable amount of the Group’s 45.2% interest would be €0.6
billion lower than the recoverable amount as at 31 March 2019. No adjustment was made to the carrying value of the Vodafone Idea joint
billion lower than the recoverable amount as at 31 March 2019. No adjustment was made to the carrying value of the Vodafone Idea joint
venture as this was considered a non-adjusting event.
venture as this was considered a non-adjusting event.
Value in use assumptions
Value in use assumptions
The table below shows key assumptions used in the value in use calculations.
The table below shows key assumptions used in the value in use calculations.
Pre-tax adjusted discount rate
Pre-tax adjusted discount rate
Long-term growth rate
Long-term growth rate
Projected adjusted EBITDA1
Projected adjusted EBITDA1
Projected capital expenditure2
Projected capital expenditure2
Notes:
Notes:
used for impairment testing.
used for impairment testing.
1 Projected adjusted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing.
1 Projected adjusted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing.
2 Projected capital expenditure, which excludes licences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans
2 Projected capital expenditure, which excludes licences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans
Assumptions used in value in use calculation
Assumptions used in value in use calculation
Germany
Germany
%
%
8.3
8.3
0.5
0.5
2.9
2.9
Italy
Italy
%
%
10.5
10.5
1.0
1.0
(0.1)
(0.1)
Spain
Spain
%
%
9.3
9.3
0.5
0.5
9.2
9.2
Romania
Romania
%
%
11.1
11.1
1.0
1.0
3.8
3.8
16.9–19.9
16.9–19.9
12.2–12.5
12.2–12.5
17.1–18.4
17.1–18.4
12.1–12.7
12.1–12.7
144 Vodafone Group Plc
Annual Report 2021
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Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
5. Investment income and financing costs
Investment income comprises interest received from short-term investments and other receivables.
Financing costs mainly arise from interest due on bonds and commercial paper issued, bank loans and the
results of hedging transactions used to manage foreign exchange and interest rate movements.
Investment income:
Financial assets measured at amortised cost
Financial assets measured at fair value through profit and loss
Financing costs1:
Financial liabilities measured at amortised cost
Bonds
Lease liabilities
Bank loans and other liabilities2
Interest on derivatives
Mark-to-market on derivatives
Foreign exchange
2021
€m
306
24
330
2020
€m
157
91
248
2019
€m
286
147
433
1,722
374
463
(485)
(1,070)
23
1,027
697
1,580
330
626
(354)
1,162
205
3,549
3,301
1,194
–
419
(139)
424
190
2,088
1,655
Net financing costs
Notes:
1 Components of financing costs for 2020 and 2019 have been represented to align with the 2021 presentation, primarily combining interest costs on derivatives that were previously shown as
items within hedging relationships and other liabilities. There is no impact on total financing costs.
Interest capitalised for the year ended 31 March 2021 was €17 million (2020: €25 million, 2019: €nil)
2
144 Vodafone Group Plc
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Financials
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145 Vodafone Group Plc
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Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
5. Investment income and financing costs
5. Investment income and financing costs
6. Taxation
Investment income comprises interest received from short-term investments and other receivables.
Investment income comprises interest received from short-term investments and other receivables.
Financing costs mainly arise from interest due on bonds and commercial paper issued, bank loans and the
Financing costs mainly arise from interest due on bonds and commercial paper issued, bank loans and the
results of hedging transactions used to manage foreign exchange and interest rate movements.
results of hedging transactions used to manage foreign exchange and interest rate movements.
This note explains how our Group tax charge arises. The deferred tax section of the note also provides
information on our expected future tax charges and sets out the tax assets held across the Group together
with our view on whether or not we expect to be able to make use of these in the future.
Investment income:
Investment income:
Financial assets measured at amortised cost
Financial assets measured at amortised cost
Financial assets measured at fair value through profit and loss
Financial assets measured at fair value through profit and loss
Financial liabilities measured at amortised cost
Financial liabilities measured at amortised cost
Financing costs1:
Financing costs1:
Bonds
Bonds
Lease liabilities
Lease liabilities
Bank loans and other liabilities2
Bank loans and other liabilities2
Interest on derivatives
Interest on derivatives
Mark-to-market on derivatives
Mark-to-market on derivatives
Foreign exchange
Foreign exchange
Net financing costs
Net financing costs
Notes:
Notes:
2021
2021
€m
€m
306
306
24
24
330
330
1,722
1,722
374
374
463
463
(485)
(485)
(1,070)
(1,070)
23
23
1,027
1,027
697
697
2020
2020
€m
€m
157
157
91
91
248
248
1,580
1,580
330
330
626
626
(354)
(354)
1,162
1,162
205
205
3,549
3,549
3,301
3,301
2019
2019
€m
€m
286
286
147
147
433
433
1,194
1,194
–
–
419
419
(139)
(139)
424
424
190
190
2,088
2,088
1,655
1,655
1 Components of financing costs for 2020 and 2019 have been represented to align with the 2021 presentation, primarily combining interest costs on derivatives that were previously shown as
1 Components of financing costs for 2020 and 2019 have been represented to align with the 2021 presentation, primarily combining interest costs on derivatives that were previously shown as
items within hedging relationships and other liabilities. There is no impact on total financing costs.
items within hedging relationships and other liabilities. There is no impact on total financing costs.
2
2
Interest capitalised for the year ended 31 March 2021 was €17 million (2020: €25 million, 2019: €nil)
Interest capitalised for the year ended 31 March 2021 was €17 million (2020: €25 million, 2019: €nil)
Accounting policies
Income tax expense represents the sum of the current and deferred taxes.
Current tax payable or recoverable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement
because some items of income or expense are taxable or deductible in different years or may never be taxable or deductible. The Group’s
liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the reporting period date.
The Group recognises provisions for uncertain tax positions when the Group has a present obligation as a result of a past event and
management judge that it is probable that there will be a future outflow of economic benefits from the Group to settle the obligation. Uncertain
tax positions are assessed and measured on an issue by issue basis within the jurisdictions that we operate either using management’s estimate
of the most likely outcome where the issues are binary, or the expected value approach where the issues have a range of possible outcomes.
The Group recognises interest on late paid taxes as part of financing costs, and any penalties, if applicable, as part of the income tax expense.
Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. It is accounted for
using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that temporary differences or taxable profits will be available against
which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business
combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are
not recognised to the extent they arise from the initial recognition of non-tax deductible goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in
joint arrangements, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting period date and adjusted to reflect changes in the Group’s assessment
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on tax
rates that have been enacted or substantively enacted by the reporting period date.
Tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when
they either relate to income taxes levied by the same taxation authority on either the same taxable entity or on different taxable entities which
intend to settle the current tax assets and liabilities on a net basis.
Tax is charged or credited to the income statement, except when it relates to items charged or credited to other comprehensive income or
directly to equity, in which case the tax is recognised in other comprehensive income or in equity.
Income tax expense
United Kingdom corporation tax expense/(credit):
Current year
Adjustments in respect of prior years
Overseas current tax expense/(credit):
Current year
Adjustments in respect of prior years
Total current tax expense
Deferred tax on origination and reversal of temporary differences:
United Kingdom deferred tax
Overseas deferred tax
Total deferred tax expense
Total income tax expense
2021
€m
24
3
27
872
(30)
842
869
(94)
3,089
2,995
3,864
2020
€m
42
(6)
36
900
80
980
1,016
(318)
552
234
1,250
2019
€m
21
(9)
12
1,098
(48)
1,050
1,062
(232)
666
434
1,496
UK operating profits are more than offset by statutory allowances for capital investment in the UK network and systems plus ongoing interest
costs including those arising from the €10.7 billion of spectrum payments to the UK government in 2000, 2013 and 2018.
146 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
6. Taxation (continued)
Tax on discontinued operations
Tax credit on profit from ordinary activities of discontinued operations
Tax (credited)/charged directly to other comprehensive income
Current tax
Deferred tax
Total tax (credited)/charged directly to other comprehensive income
Tax (credited)/charged directly to equity
Deferred tax
Total tax (credited)/charged directly to equity
2021
€m
–
2020
€m
–
2019
€m
(56)
2021
€m
(17)
(1,009)
(1,026)
2021
€m
(2)
(2)
2020
€m
(26)
830
804
2020
€m
–
–
2019
€m
3
56
59
2019
€m
4
4
Factors affecting the tax expense for the year
The table below explains the differences between the expected tax expense, being the aggregate of the Group’s geographical split of
profits multiplied by the relevant local tax rates and the Group’s total tax expense for each year.
Continuing profit/(loss) before tax as shown in the consolidated income statement
Aggregated expected income tax expense/(credit)
Impairment losses with no tax effect
Disposal of Group investments1
Effect of taxation of associates and joint ventures, reported within profit before tax
(Recognition)/derecognition of deferred tax assets for losses in Luxembourg and Spain2
Deferred tax following revaluation of investments in Luxembourg2
Previously unrecognised temporary differences we expect to use in the future
Current year temporary differences (including losses) that we currently do not expect to use
Adjustments in respect of prior year tax liabilities
Impact of tax credits and irrecoverable taxes
Deferred tax on overseas earnings
Effect of current year changes in statutory tax rates on deferred tax balances3
Financing costs not deductible for tax purposes
Expenses not deductible for tax purposes
Income tax expense
2021
€m
4,400
1,124
–
(332)
56
–
2,819
(45)
170
(10)
90
–
(45)
(62)
99
3,864
2020
€m
795
2019
€m
(2,613)
226
332
(1,113)
728
–
(348)
(14)
352
(86)
52
3
757
174
187
1,250
(457)
807
–
262
1,186
(488)
–
78
(94)
79
(39)
(2)
67
97
1,496
Notes:
1 2021 includes the tax tax exempt gains relating to the TPG Telecom Limited merger in Australia and Indus Towers Limited in India. 2020 relates to tax exempt disposal gains of New
Zealand, Malta and merger of our Italian Towers with INWIT
2 See note below regarding deferred tax asset recognition in Luxembourg and Spain on pages 128 and 129.
3 2020 includes the impact of a lower corporate tax rate in Luxembourg and the impact of the retention of the 19% corporate tax rate in the UK
146 Vodafone Group Plc
Annual Report 2021
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Governance
Financials
Other information
147 Vodafone Group Plc
Annual Report 2021
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Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
6. Taxation (continued)
6. Taxation (continued)
Tax on discontinued operations
Tax on discontinued operations
Tax credit on profit from ordinary activities of discontinued operations
Tax credit on profit from ordinary activities of discontinued operations
2021
2021
€m
€m
–
–
2020
2020
€m
€m
–
–
2019
2019
€m
€m
(56)
(56)
Tax (credited)/charged directly to other comprehensive income
Tax (credited)/charged directly to other comprehensive income
Current tax
Current tax
Deferred tax
Deferred tax
Tax (credited)/charged directly to equity
Tax (credited)/charged directly to equity
Deferred tax
Deferred tax
Total tax (credited)/charged directly to equity
Total tax (credited)/charged directly to equity
2021
2021
€m
€m
(17)
(17)
(1,009)
(1,009)
(1,026)
(1,026)
2021
2021
€m
€m
(2)
(2)
(2)
(2)
2021
2021
€m
€m
4,400
4,400
1,124
1,124
–
–
(332)
(332)
56
56
–
–
2,819
2,819
(45)
(45)
170
170
(10)
(10)
90
90
–
–
(45)
(45)
(62)
(62)
99
99
2020
2020
€m
€m
(26)
(26)
830
830
804
804
2020
2020
€m
€m
–
–
–
–
226
226
332
332
(1,113)
(1,113)
728
728
–
–
(348)
(348)
(14)
(14)
352
352
(86)
(86)
52
52
3
3
757
757
174
174
187
187
2019
2019
€m
€m
3
3
56
56
59
59
2019
2019
€m
€m
4
4
4
4
(457)
(457)
807
807
–
–
262
262
1,186
1,186
(488)
(488)
–
–
78
78
(94)
(94)
79
79
(39)
(39)
(2)
(2)
67
67
97
97
2020
2020
€m
€m
795
795
2019
2019
€m
€m
(2,613)
(2,613)
3,864
3,864
1,250
1,250
1,496
1,496
Factors affecting the tax expense for the year
Factors affecting the tax expense for the year
The table below explains the differences between the expected tax expense, being the aggregate of the Group’s geographical split of
The table below explains the differences between the expected tax expense, being the aggregate of the Group’s geographical split of
profits multiplied by the relevant local tax rates and the Group’s total tax expense for each year.
profits multiplied by the relevant local tax rates and the Group’s total tax expense for each year.
Continuing profit/(loss) before tax as shown in the consolidated income statement
Continuing profit/(loss) before tax as shown in the consolidated income statement
Aggregated expected income tax expense/(credit)
Aggregated expected income tax expense/(credit)
Impairment losses with no tax effect
Impairment losses with no tax effect
Disposal of Group investments1
Disposal of Group investments1
Effect of taxation of associates and joint ventures, reported within profit before tax
Effect of taxation of associates and joint ventures, reported within profit before tax
(Recognition)/derecognition of deferred tax assets for losses in Luxembourg and Spain2
(Recognition)/derecognition of deferred tax assets for losses in Luxembourg and Spain2
Deferred tax following revaluation of investments in Luxembourg2
Deferred tax following revaluation of investments in Luxembourg2
Previously unrecognised temporary differences we expect to use in the future
Previously unrecognised temporary differences we expect to use in the future
Current year temporary differences (including losses) that we currently do not expect to use
Current year temporary differences (including losses) that we currently do not expect to use
Effect of current year changes in statutory tax rates on deferred tax balances3
Effect of current year changes in statutory tax rates on deferred tax balances3
Adjustments in respect of prior year tax liabilities
Adjustments in respect of prior year tax liabilities
Impact of tax credits and irrecoverable taxes
Impact of tax credits and irrecoverable taxes
Deferred tax on overseas earnings
Deferred tax on overseas earnings
Financing costs not deductible for tax purposes
Financing costs not deductible for tax purposes
Expenses not deductible for tax purposes
Expenses not deductible for tax purposes
Income tax expense
Income tax expense
Notes:
Notes:
1 2021 includes the tax tax exempt gains relating to the TPG Telecom Limited merger in Australia and Indus Towers Limited in India. 2020 relates to tax exempt disposal gains of New
1 2021 includes the tax tax exempt gains relating to the TPG Telecom Limited merger in Australia and Indus Towers Limited in India. 2020 relates to tax exempt disposal gains of New
Zealand, Malta and merger of our Italian Towers with INWIT
Zealand, Malta and merger of our Italian Towers with INWIT
2 See note below regarding deferred tax asset recognition in Luxembourg and Spain on pages 128 and 129.
2 See note below regarding deferred tax asset recognition in Luxembourg and Spain on pages 128 and 129.
3 2020 includes the impact of a lower corporate tax rate in Luxembourg and the impact of the retention of the 19% corporate tax rate in the UK
3 2020 includes the impact of a lower corporate tax rate in Luxembourg and the impact of the retention of the 19% corporate tax rate in the UK
Total tax (credited)/charged directly to other comprehensive income
Total tax (credited)/charged directly to other comprehensive income
Deferred tax assets and liabilities, before offset of balances within countries, are as follows:
Deferred tax
Analysis of movements in the net deferred tax balance during the year:
1 April 20201
Foreign exchange movements
Charged to the income statement (continuing operations)
Charged directly to OCI
Charged directly to equity
Arising on acquisitions and disposals
31 March 20212
Accelerated tax depreciation
Intangible assets
Tax losses
Treasury related items
Temporary differences relating to revenue recognition
Temporary differences relating to leases
Other temporary differences
31 March 20212
Amount
credited/
(expensed)
in income
statement
€m
716
336
(3,292)
(9)
(84)
(34)
(627)
(2,994)
Gross
deferred
tax asset
€m
2,331
434
29,791
761
3
611
1,159
35,090
Gross
deferred tax
liability
€m
(1,842)
(2,169)
–
(37)
(651)
(429)
(352)
(5,480)
Less
amounts
unrecognised
€m
(9)
13
(9,701)
(392)
–
–
(47)
(10,136)
Analysed in the balance sheet, after offset of balances within countries, as:
Deferred tax asset
Deferred tax liability
31 March 20212
At 31 March 2020, deferred tax assets and liabilities, before offset of balances within countries, were as follows:
Accelerated tax depreciation
Intangible assets
Tax losses
Treasury related items
Temporary differences relating to revenue recognition
Temporary differences relating to leases
Other temporary differences
31 March 20201,2
Amount
credited/
(expensed)
in income
statement
€m
964
(719)
(926)
144
187
205
(89)
(234)
Gross
deferred
tax asset
€m
1,581
383
32,121
530
4
260
1,207
36,086
Gross
deferred tax
liability
€m
(1,876)
(1,965)
–
(770)
(559)
(41)
(302)
(5,513)
Less
amounts
unrecognised
€m
13
14
(8,725)
(301)
–
–
(71)
(9,070)
€m
21,502
18
(2,995)
1,009
2
(62)
19,474
Net
recognised
deferred tax
(liability)/
asset
€m
480
(1,722)
20,090
332
(648)
182
760
19,474
€m
21,569
(2,095)
19,474
Net
recognised
deferred tax
(liability)/
asset
€m
(282)
(1,568)
23,396
(541)
(555)
219
834
21,503
At 31 March 2020, analysed in the balance sheet, after offset of balances within countries, as:
Deferred tax asset
Deferred tax liability
31 March 20201,2
Notes:
1 Comparatives for the year ended 31 March 2020 have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See note 7 "Discontinued operations and assets and
liabilities held for sale".
2 The Group does not discount its deferred tax assets. This is in accordance with the requirements of IAS 12.
€m
23,606
(2,103)
21,503
148 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
6. Taxation (continued)
Factors affecting the tax charge in future years
The Group’s future tax charge, and effective tax rate, could be affected by several factors including: tax reform in countries around the world,
including any arising from the OECD’s or European Commission’s work on the taxation of the digital economy and European Commission
initiatives such as the proposed tax and financial reporting directive or as a consequence of state aid investigations, future corporate acquisitions
and disposals, any restructuring of our businesses and the resolution of open tax issues (see below).
On 25 April 2019, the European Commission published its full decision in relation to its investigation into the ‘group financing exemption’ (GFE)
in the UK’s controlled foreign company rules and whether the GFE constituted unlawful State Aid. It concluded the GFE does not constitute
unlawful state aid when the managing of the financing activities is outside the UK. As the Group’s Luxembourg financing activities are properly
established and operate in accordance with EU and local law as well as the OECD’s transfer pricing guidelines, we do not anticipate any
significant impact as a result of the Commission’s findings.
In March 2021, the UK government announced its intention to increase the corporation tax rate from 19% to 25% effective from 1 April 2023.
The increased rate is not yet substantively enacted but when it does this will increase the value of our deferred tax assets by approximately
€350 million.
The Group is routinely subject to audit by tax authorities in the territories in which it operates. The Group considers each issue on its merits and,
where appropriate, holds provisions in respect of the potential tax liability that may arise. As at 31 March 2021, the Group holds provisions for
such potential liabilities of €606 million (2020: €638 million). These provisions relate to multiple issues, across the jurisdictions in which the
Group operates.
As the tax impact of a transaction can be uncertain until a conclusion is reached with the relevant tax authority or through a legal process, the
amount ultimately paid may differ materially from the amount accrued and could therefore affect the Group's overall profitability and cash
flows in future periods. See note 29 "Contingent liabilities and legal proceedings" to the consolidated financial statements.
At 31 March 2021, the gross amount and expiry dates of losses available for carry forward are as follows:
Losses for which a deferred tax asset is recognised
Losses for which no deferred tax is recognised
Expiring
within
5 years
€m
63
245
308
Expiring
beyond
6 years
€m
222
13,217
13,439
Unlimited
€m
86,623
23,479
110,102
Total
€m
86,908
36,941
123,849
At 31 March 2020, the gross amount and expiry dates of losses available for carry forward were as follows:
Losses for which a deferred tax asset is recognised
Losses for which no deferred tax is recognised
Expiring
within
5 years
€m
531
759
1,290
Expiring
beyond
6 years
€m
143
9,404
9,547
Unlimited
€m
99,828
22,772
122,600
Total
€m
100,502
32,935
133,437
Deferred tax assets on losses in Luxembourg
Included in the table above are losses of €69,742 million (2019: €82,372 million) that have arisen in Luxembourg companies. A deferred tax
asset of €17,394 million (2020: €20,544 million) has been recognised in respect of these losses, as we conclude it is probable that the
Luxembourg entities will continue to generate taxable profits in the future against which we can utilise these losses. These tax losses principally
arose from historical impairments, primarily following the acquisition of the Mannesmann Group in 2000. These losses arose prior to the 2017
tax reform in Luxembourg and are available to carry forward indefinitely.
The Luxembourg companies hold investments in the Group’s operating companies which are assessed for impairment for local GAAP financial
statements using the Group’s value in use calculations (see note 4 “Impairment losses”). Impairments and reversals of impairments are recorded
in the local GAAP financial statements and therefore carrying values and valuation methodology differs from the goodwill assessment for the
Group’s consolidated financial statements. This assessment can give rise to tax deductible impairments or taxable reversals of previous
impairments.
Following the 2017 tax reform in Luxembourg, tax losses expire after 17 years and are only used after any pre-existing losses. In the years ended
31 March 2019 and 31 March 2020 the Luxembourg companies had tax deductible impairments resulting in additional tax losses. No deferred
tax asset is recognised for these losses on the basis that they are not forecast to be used prior to the expiry of their 17 year life. In a period where
pre-existing tax losses are not utilised due to impairments arising the forecast utilisation timeframe extends by one year.
The reversal of impairments can result in a significant reduction to our deferred tax assets and the period over which these assets can be
utilised. In the year ended 31 March 2021 a reversal of previous impairments of €12 billion has arisen in Luxembourg. This represents taxable
income against which the brought forward losses can be used. This is the main driver of the reduction in the losses, and the associated deferred
tax asset, compared to the prior period.
148 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
149 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
6. Taxation (continued)
6. Taxation (continued)
Factors affecting the tax charge in future years
Factors affecting the tax charge in future years
The Group’s future tax charge, and effective tax rate, could be affected by several factors including: tax reform in countries around the world,
The Group’s future tax charge, and effective tax rate, could be affected by several factors including: tax reform in countries around the world,
including any arising from the OECD’s or European Commission’s work on the taxation of the digital economy and European Commission
including any arising from the OECD’s or European Commission’s work on the taxation of the digital economy and European Commission
initiatives such as the proposed tax and financial reporting directive or as a consequence of state aid investigations, future corporate acquisitions
initiatives such as the proposed tax and financial reporting directive or as a consequence of state aid investigations, future corporate acquisitions
and disposals, any restructuring of our businesses and the resolution of open tax issues (see below).
and disposals, any restructuring of our businesses and the resolution of open tax issues (see below).
On 25 April 2019, the European Commission published its full decision in relation to its investigation into the ‘group financing exemption’ (GFE)
On 25 April 2019, the European Commission published its full decision in relation to its investigation into the ‘group financing exemption’ (GFE)
in the UK’s controlled foreign company rules and whether the GFE constituted unlawful State Aid. It concluded the GFE does not constitute
in the UK’s controlled foreign company rules and whether the GFE constituted unlawful State Aid. It concluded the GFE does not constitute
unlawful state aid when the managing of the financing activities is outside the UK. As the Group’s Luxembourg financing activities are properly
unlawful state aid when the managing of the financing activities is outside the UK. As the Group’s Luxembourg financing activities are properly
established and operate in accordance with EU and local law as well as the OECD’s transfer pricing guidelines, we do not anticipate any
established and operate in accordance with EU and local law as well as the OECD’s transfer pricing guidelines, we do not anticipate any
significant impact as a result of the Commission’s findings.
significant impact as a result of the Commission’s findings.
In March 2021, the UK government announced its intention to increase the corporation tax rate from 19% to 25% effective from 1 April 2023.
In March 2021, the UK government announced its intention to increase the corporation tax rate from 19% to 25% effective from 1 April 2023.
The increased rate is not yet substantively enacted but when it does this will increase the value of our deferred tax assets by approximately
The increased rate is not yet substantively enacted but when it does this will increase the value of our deferred tax assets by approximately
€350 million.
€350 million.
Group operates.
Group operates.
The Group is routinely subject to audit by tax authorities in the territories in which it operates. The Group considers each issue on its merits and,
The Group is routinely subject to audit by tax authorities in the territories in which it operates. The Group considers each issue on its merits and,
where appropriate, holds provisions in respect of the potential tax liability that may arise. As at 31 March 2021, the Group holds provisions for
where appropriate, holds provisions in respect of the potential tax liability that may arise. As at 31 March 2021, the Group holds provisions for
such potential liabilities of €606 million (2020: €638 million). These provisions relate to multiple issues, across the jurisdictions in which the
such potential liabilities of €606 million (2020: €638 million). These provisions relate to multiple issues, across the jurisdictions in which the
As the tax impact of a transaction can be uncertain until a conclusion is reached with the relevant tax authority or through a legal process, the
As the tax impact of a transaction can be uncertain until a conclusion is reached with the relevant tax authority or through a legal process, the
amount ultimately paid may differ materially from the amount accrued and could therefore affect the Group's overall profitability and cash
amount ultimately paid may differ materially from the amount accrued and could therefore affect the Group's overall profitability and cash
flows in future periods. See note 29 "Contingent liabilities and legal proceedings" to the consolidated financial statements.
flows in future periods. See note 29 "Contingent liabilities and legal proceedings" to the consolidated financial statements.
At 31 March 2021, the gross amount and expiry dates of losses available for carry forward are as follows:
At 31 March 2021, the gross amount and expiry dates of losses available for carry forward are as follows:
At 31 March 2020, the gross amount and expiry dates of losses available for carry forward were as follows:
At 31 March 2020, the gross amount and expiry dates of losses available for carry forward were as follows:
Losses for which a deferred tax asset is recognised
Losses for which a deferred tax asset is recognised
Losses for which no deferred tax is recognised
Losses for which no deferred tax is recognised
Losses for which a deferred tax asset is recognised
Losses for which a deferred tax asset is recognised
Losses for which no deferred tax is recognised
Losses for which no deferred tax is recognised
Expiring
Expiring
within
within
5 years
5 years
€m
€m
63
63
245
245
308
308
Expiring
Expiring
within
within
5 years
5 years
€m
€m
531
531
759
759
1,290
1,290
Expiring
Expiring
beyond
beyond
6 years
6 years
€m
€m
222
222
13,217
13,217
13,439
13,439
Expiring
Expiring
beyond
beyond
6 years
6 years
€m
€m
143
143
9,404
9,404
9,547
9,547
Unlimited
Unlimited
€m
€m
86,623
86,623
23,479
23,479
Total
Total
€m
€m
86,908
86,908
36,941
36,941
110,102
110,102
123,849
123,849
Unlimited
Unlimited
€m
€m
99,828
99,828
22,772
22,772
122,600
122,600
Total
Total
€m
€m
100,502
100,502
32,935
32,935
133,437
133,437
Deferred tax assets on losses in Luxembourg
Deferred tax assets on losses in Luxembourg
Included in the table above are losses of €69,742 million (2019: €82,372 million) that have arisen in Luxembourg companies. A deferred tax
Included in the table above are losses of €69,742 million (2019: €82,372 million) that have arisen in Luxembourg companies. A deferred tax
asset of €17,394 million (2020: €20,544 million) has been recognised in respect of these losses, as we conclude it is probable that the
asset of €17,394 million (2020: €20,544 million) has been recognised in respect of these losses, as we conclude it is probable that the
Luxembourg entities will continue to generate taxable profits in the future against which we can utilise these losses. These tax losses principally
Luxembourg entities will continue to generate taxable profits in the future against which we can utilise these losses. These tax losses principally
arose from historical impairments, primarily following the acquisition of the Mannesmann Group in 2000. These losses arose prior to the 2017
arose from historical impairments, primarily following the acquisition of the Mannesmann Group in 2000. These losses arose prior to the 2017
tax reform in Luxembourg and are available to carry forward indefinitely.
tax reform in Luxembourg and are available to carry forward indefinitely.
The Luxembourg companies hold investments in the Group’s operating companies which are assessed for impairment for local GAAP financial
The Luxembourg companies hold investments in the Group’s operating companies which are assessed for impairment for local GAAP financial
statements using the Group’s value in use calculations (see note 4 “Impairment losses”). Impairments and reversals of impairments are recorded
statements using the Group’s value in use calculations (see note 4 “Impairment losses”). Impairments and reversals of impairments are recorded
in the local GAAP financial statements and therefore carrying values and valuation methodology differs from the goodwill assessment for the
in the local GAAP financial statements and therefore carrying values and valuation methodology differs from the goodwill assessment for the
Group’s consolidated financial statements. This assessment can give rise to tax deductible impairments or taxable reversals of previous
Group’s consolidated financial statements. This assessment can give rise to tax deductible impairments or taxable reversals of previous
impairments.
impairments.
Following the 2017 tax reform in Luxembourg, tax losses expire after 17 years and are only used after any pre-existing losses. In the years ended
Following the 2017 tax reform in Luxembourg, tax losses expire after 17 years and are only used after any pre-existing losses. In the years ended
31 March 2019 and 31 March 2020 the Luxembourg companies had tax deductible impairments resulting in additional tax losses. No deferred
31 March 2019 and 31 March 2020 the Luxembourg companies had tax deductible impairments resulting in additional tax losses. No deferred
tax asset is recognised for these losses on the basis that they are not forecast to be used prior to the expiry of their 17 year life. In a period where
tax asset is recognised for these losses on the basis that they are not forecast to be used prior to the expiry of their 17 year life. In a period where
pre-existing tax losses are not utilised due to impairments arising the forecast utilisation timeframe extends by one year.
pre-existing tax losses are not utilised due to impairments arising the forecast utilisation timeframe extends by one year.
The reversal of impairments can result in a significant reduction to our deferred tax assets and the period over which these assets can be
The reversal of impairments can result in a significant reduction to our deferred tax assets and the period over which these assets can be
utilised. In the year ended 31 March 2021 a reversal of previous impairments of €12 billion has arisen in Luxembourg. This represents taxable
utilised. In the year ended 31 March 2021 a reversal of previous impairments of €12 billion has arisen in Luxembourg. This represents taxable
income against which the brought forward losses can be used. This is the main driver of the reduction in the losses, and the associated deferred
income against which the brought forward losses can be used. This is the main driver of the reduction in the losses, and the associated deferred
tax asset, compared to the prior period.
tax asset, compared to the prior period.
The Luxembourg companies’ recurring profits are derived from the Group’s internal financing, centralised procurement and international
roaming activities. These activities have consistently generated taxable profits of over €1bn per annum throughout their existence. The Group
has reviewed the latest 5 year forecasts for the Luxembourg companies, including their ability to continue to generate income beyond this
period. The forecasts consider the impact of the current market conditions on the existing financing activities, including the current view of
interest rates, levels of intragroup financing, as well as the future profits generated from the procurement and roaming activities. The value in
use calculations take into account all information at the balance sheet and the Group does not forecast potential future impairments or
reversals of impairments.
This assessment also included a review of the commercial structures supporting the profits generated from these activities and considered the
factors, under the Group’s control, which could impact the ability of these activities to generate taxable profits. We have assessed that the
current structure continues to be sustainable under the tax laws substantively enacted at the balance sheet date and the Group’s intentions to
keep these activities in Luxembourg remains unchanged.
Based on the current forecasts, €2,881 million of the deferred tax asset is forecast to be used within the next 10 years, and €4,891 million used
within 20 years. The losses are projected to be fully utilised over the next 59 to 62 years. The increase in the recovery period over the prior year
is principally a result of market conditions, including lower interest rates, driving margins lower on existing financing activities and the impact of a
forecast reduction in levels of intercompany debt over the 5 year period as the Group's operating companies align their debt metrics more
closely to those of Vodafone Group Plc.
An increase or decrease in the forecast income in Luxembourg in each year of 5%-10% would change the period over which the losses will be
fully utilised by 2 to 5 years. The Group uses a change in forecast income to understand the impact that a change in interest rates or level of
debt advanced by the Luxembourg companies could have on the recovery period of the losses.
Any future changes in tax law, including those driven by OECD, EU or domestic tax reforms or the structure of the Group could have a significant
effect on the use of the Luxembourg losses, including the period over which these losses can be utilised. On the basis that future changes in tax
laws are unknown, the profit forecasts assume that existing tax laws continue.
Based on the above factors the Group concludes that it is probable that the Luxembourg companies will continue to generate taxable profits in
the future against which it will use these losses.
In addition to the above, €12,975 million (2020: €9,242 million) of the Group’s Luxembourg losses expire after 13 to 17 years and no deferred
tax asset is recognised as they will expire before we can use these losses. The remaining losses do not expire. We also have €9,136 million
(2020: €9,136 million) of Luxembourg losses in a former Cable & Wireless Worldwide Group company, for which no deferred tax asset has been
recognised as it is uncertain whether these losses will be utilised.
Deferred tax assets on losses in Germany
The Group has tax losses of €16,296 million (2020: €17,160 million) in Germany arising on the write down of investments in Germany in 2000.
The losses are available to use against both German federal and trade tax liabilities and they do not expire.
A deferred tax asset of €2,529 million (2020: €2,662 million) has been recognised in respect of these losses as we conclude it is probable that
the German business will continue to generate taxable profits in the future against which we can utilise these losses. The Group has reviewed
the latest forecasts for the German business which incorporate the unsystematic risks of operating in the telecommunications business. In the
period beyond the 5 year forecast we have reviewed the profits inherent in the terminal period and based on these and our expectations for the
German business we believe it is probable the German losses will be fully utilised.
Based on the current forecasts the losses will be fully utilised over the next 8 to 16 years. A 5% -10% change in the forecast profits of the
German business would alter the utilisation period by 1 to 2 years.
Deferred tax assets on losses in Spain
The Group has tax losses of €4,334 million (2020: €4,281 million) in Spain which are available to offset against the future profits of the Grupo
Corporativo ONO business. The losses do not expire and no deferred tax asset is recognised for these losses due to the trading environment in
Spain.
Other tax losses
The Group has losses amounting to €8,285 million (2020: €7,500 million) in respect of UK subsidiaries which are only available for offset against
future capital gains and since it is uncertain whether these losses will be utilised, no deferred tax asset has been recognised, in line with the prior
year.
The remaining losses relate to a number of other jurisdictions across the Group. There are also €2,092 million (2020: €1,514 million) of
unrecognised temporary differences relating to treasury items and other items.
No deferred tax liability has been recognised in respect of a further €7,522 million (2020: €7,130 million) of unremitted earnings of subsidiaries,
associates and joint ventures because the Group is in a position to control the timing of the reversal of the temporary difference and it is
probable that such differences will not reverse in the foreseeable future. It is not practicable to estimate the amount of unrecognised deferred
tax liabilities in respect of these unremitted earnings.
150 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
7. Discontinued operations and assets and liabilities held for sale
The Group classifies certain of its assets that it expects to dispose as either discontinued operations or as
held for sale.
The Group classifies non-current assets and assets and liabilities within disposal groups (‘assets’) as held for sale if the assets are available
immediately for sale in their present condition, management is committed to a plan to sell the assets under usual terms, it is highly probable
that their carrying amounts will be recovered principally through a sale transaction rather than through continuing use and the sale is expected
to be completed within one year from the date of the initial classification.
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated statement of financial position and
are measured at the lower of their carrying amount and fair value less costs to sell. Property, plant and equipment and intangible assets are not
depreciated or amortised once classified as held for sale; this also applies in respect of assets held by equity accounted associates and joint
ventures.
Where operations constitute a separately reportable segment (see note 2 “Revenue disaggregation and segmental analysis”) and have been
disposed of, or are classified as held for sale, the Group classifies such operations as discontinued.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax
from discontinued operations in the Group consolidated income statement. Discontinued operations are also excluded from segment reporting.
All other notes to the financial statements include amounts for continuing operations, unless indicated otherwise.
Discontinued operations
On 20 March 2017, Vodafone announced the agreement to combine its subsidiary, Vodafone India Limited (excluding its 42% stake in Indus
Towers Limited), with Idea Cellular in India. Consequently, Vodafone India Limited has been accounted for as a discontinued operation for the
period up to 31 August 2018, the date the transaction completed, the results of which are detailed below.
Income statement and segment analysis of discontinued operations
Revenue
Cost of sales
Gross profit
Selling and distribution expenses
Administrative expenses
Operating profit
Financing costs
Loss before taxation
Income tax credit
Loss after tax of discontinued operations
Loss on sale of disposal group
Loss for the financial year from discontinued operations
Loss per share from discontinued operations
– Basic
– Diluted
Total comprehensive expense for the financial year from discontinued operations
Attributable to owners of the parent
Note:
1 Results for the five months ended 31 August 2018 when the transaction completed.
2021
€m
–
–
–
–
–
–
–
–
–
–
–
–
2020
€m
–
–
–
–
–
–
–
–
–
–
–
–
20191
€m
1,561
(1,185)
376
(92)
(134)
150
(321)
(171)
56
(115)
(3,420)
(3,535)
2021
eurocents
–
–
2020
eurocents
–
–
2019
eurocents
(12.80)c
(12.80)c
2021
€m
–
2020
€m
–
2019
€m
(3,535)
150 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
151 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
7. Discontinued operations and assets and liabilities held for sale
7. Discontinued operations and assets and liabilities held for sale
The Group classifies certain of its assets that it expects to dispose as either discontinued operations or as
The Group classifies certain of its assets that it expects to dispose as either discontinued operations or as
held for sale.
held for sale.
The Group classifies non-current assets and assets and liabilities within disposal groups (‘assets’) as held for sale if the assets are available
The Group classifies non-current assets and assets and liabilities within disposal groups (‘assets’) as held for sale if the assets are available
immediately for sale in their present condition, management is committed to a plan to sell the assets under usual terms, it is highly probable
immediately for sale in their present condition, management is committed to a plan to sell the assets under usual terms, it is highly probable
that their carrying amounts will be recovered principally through a sale transaction rather than through continuing use and the sale is expected
that their carrying amounts will be recovered principally through a sale transaction rather than through continuing use and the sale is expected
to be completed within one year from the date of the initial classification.
to be completed within one year from the date of the initial classification.
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated statement of financial position and
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated statement of financial position and
are measured at the lower of their carrying amount and fair value less costs to sell. Property, plant and equipment and intangible assets are not
are measured at the lower of their carrying amount and fair value less costs to sell. Property, plant and equipment and intangible assets are not
depreciated or amortised once classified as held for sale; this also applies in respect of assets held by equity accounted associates and joint
depreciated or amortised once classified as held for sale; this also applies in respect of assets held by equity accounted associates and joint
ventures.
ventures.
Where operations constitute a separately reportable segment (see note 2 “Revenue disaggregation and segmental analysis”) and have been
Where operations constitute a separately reportable segment (see note 2 “Revenue disaggregation and segmental analysis”) and have been
disposed of, or are classified as held for sale, the Group classifies such operations as discontinued.
disposed of, or are classified as held for sale, the Group classifies such operations as discontinued.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax
from discontinued operations in the Group consolidated income statement. Discontinued operations are also excluded from segment reporting.
from discontinued operations in the Group consolidated income statement. Discontinued operations are also excluded from segment reporting.
All other notes to the financial statements include amounts for continuing operations, unless indicated otherwise.
All other notes to the financial statements include amounts for continuing operations, unless indicated otherwise.
Discontinued operations
Discontinued operations
On 20 March 2017, Vodafone announced the agreement to combine its subsidiary, Vodafone India Limited (excluding its 42% stake in Indus
On 20 March 2017, Vodafone announced the agreement to combine its subsidiary, Vodafone India Limited (excluding its 42% stake in Indus
Towers Limited), with Idea Cellular in India. Consequently, Vodafone India Limited has been accounted for as a discontinued operation for the
Towers Limited), with Idea Cellular in India. Consequently, Vodafone India Limited has been accounted for as a discontinued operation for the
period up to 31 August 2018, the date the transaction completed, the results of which are detailed below.
period up to 31 August 2018, the date the transaction completed, the results of which are detailed below.
Income statement and segment analysis of discontinued operations
Income statement and segment analysis of discontinued operations
2021
2021
€m
€m
2020
2020
€m
€m
Revenue
Revenue
Cost of sales
Cost of sales
Gross profit
Gross profit
Selling and distribution expenses
Selling and distribution expenses
Administrative expenses
Administrative expenses
Operating profit
Operating profit
Financing costs
Financing costs
Loss before taxation
Loss before taxation
Income tax credit
Income tax credit
Loss after tax of discontinued operations
Loss after tax of discontinued operations
Loss on sale of disposal group
Loss on sale of disposal group
Loss for the financial year from discontinued operations
Loss for the financial year from discontinued operations
Loss per share from discontinued operations
Loss per share from discontinued operations
– Basic
– Basic
– Diluted
– Diluted
Total comprehensive expense for the financial year from discontinued operations
Total comprehensive expense for the financial year from discontinued operations
Attributable to owners of the parent
Attributable to owners of the parent
Note:
Note:
1 Results for the five months ended 31 August 2018 when the transaction completed.
1 Results for the five months ended 31 August 2018 when the transaction completed.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
20191
20191
€m
€m
1,561
1,561
(1,185)
(1,185)
376
376
(92)
(92)
(134)
(134)
150
150
(321)
(321)
(171)
(171)
56
56
(115)
(115)
(3,420)
(3,420)
(3,535)
(3,535)
2019
2019
eurocents
eurocents
(12.80)c
(12.80)c
(12.80)c
(12.80)c
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2021
2021
eurocents
eurocents
2020
2020
eurocents
eurocents
2021
2021
€m
€m
–
–
2020
2020
€m
€m
–
–
2019
2019
€m
€m
(3,535)
(3,535)
Assets and liabilities held for sale
Assets and liabilities held for sale at 31 March 2021 comprise the Group’s 28.1% interest in Indus Towers. The Group’s interest in Indus Towers
has been provided as security against both certain bank borrowings (see note 21 “Borrowings”) and partly to the pledges provided to the new
Indus Towers entity under the terms of the merger between erstwhile Indus Towers and Bharti Infratel (see note 29 “Contingent liabilities and
legal proceedings”).
Assets and liabilities held for sale at 31 March 2020 comprised a 24.95% interest in Vodafone Hutchison Australia Pty Limited (‘VHA’) and the
Group’s 55% interest in Vodafone Egypt. On 26 June 2020, VHA and TPG Telecom Limited completed their merger (see note 12 “Investments in
associates and joint arrangements” for further details). On 21 December 2020, the Group announced that its discussions with Saudi Telecom
Company had ended. Consequently, the prior year comparatives in the consolidated statement of financial position have been re-presented to
reflect that Vodafone Egypt is no longer held for sale. There is no net impact on either Total assets or Total equity and liabilities, although certain
line items have been re-presented, as detailed below.
Assets and liabilities held for sale and the impact of the reclassification of Vodafone Egypt
The table below discloses the impacted line items only. The consolidated statement of financial position is on page 122 and has not
been reproduced below in its entirety.
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments in associates and joint ventures
Trade and other receivables
Current assets
Inventory
Taxation recoverable
Trade and other receivables
Cash and cash equivalents
Assets held for sale
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Current liabilities
Borrowings
Taxation liabilities
Provisions
Trade and other payables
Liabilities held for sale
As previously
presented
2020
€m
Impact of Egypt
reclassification
2020
€m
2021
€m
Re-presented
2020
€m
–
–
–
1,257
–
1,257
–
–
–
–
–
107
379
916
(412)
15
1,005
13
3
313
273
602
(107)
(379)
(916)
–
(15)
(1,417)
(13)
(3)
(313)
(273)
(602)
–
–
–
(412)
–
(412)
–
–
–
–
–
1,257
1,607
(2,019)
(412)
–
–
–
–
–
–
–
–
–
–
57
60
5
122
150
116
29
634
929
(57)
(60)
(5)
(122)
(150)
(116)
(29)
(634)
(929)
1,051
(1,051)
–
–
–
–
–
–
–
–
–
–
152 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
8. Earnings per share
Basic earnings per share is the amount of profit generated for the financial year attributable to equity
shareholders divided by the weighted average number of shares in issue during the year.
Weighted average number of shares for basic earnings per share
Effect of dilutive potential shares: restricted shares and share options
Weighted average number of shares for diluted earnings per share
Profit/(loss) for earnings per share from continuing operations
Loss for earnings per share from discontinued operations
Profit/(loss) for basic and diluted earnings per share
Basic earnings/(loss) per share from continuing operations
Loss per share from discontinued operations
Basic earnings/(loss) per share
Diluted earnings/(loss) per share from continuing operations
Diluted loss per share from discontinued operations
Diluted earnings/(loss) per share
9. Equity dividends
2021
Millions
29,592
91
29,683
2020
Millions
29,422
–
29,422
2021
€m
112
–
112
eurocents
0.38c
–
0.38c
eurocents
0.38c
–
0.38c
2020
€m
(920)
–
(920)
eurocents
(3.13)c
–
(3.13)c
eurocents
(3.13)c
–
(3.13)c
2019
Millions
27,607
–
27,607
2019
€m
(4,485)
(3,535)
(8,020)
eurocents
(16.25)c
(12.80)c
(29.05)c
eurocents
(16.25)c
(12.80)c
(29.05)c
Dividends are one type of shareholder return, historically paid to our shareholders in February and August.
Declared during the financial year:
Final dividend for the year ended 31 March 2020: 4.50 eurocents per share
(2019: 4.16 eurocents per share, 2018: 10.23 eurocents per share)
Interim dividend for the year ended 31 March 2021: 4.50 eurocents per share
(2020: 4.50 eurocents per share, 2019: 4.84 eurocents per share)
Proposed after the end of the year and not recognised as a liability:
Final dividend for the year ended 31 March 2021: 4.50 eurocents per share
(2020: 4.50 eurocents per share, 2019: 4.16 eurocents per share)
2021
€m
2020
€m
2019
€m
1,205
1,112
2,729
1,207
2,412
1,205
2,317
1,293
4,022
1,260
1,205
1,112
152 Vodafone Group Plc
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Financials
Other information
153 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
8. Earnings per share
8. Earnings per share
10. Intangible assets
Basic earnings per share is the amount of profit generated for the financial year attributable to equity
Basic earnings per share is the amount of profit generated for the financial year attributable to equity
shareholders divided by the weighted average number of shares in issue during the year.
shareholders divided by the weighted average number of shares in issue during the year.
Weighted average number of shares for basic earnings per share
Weighted average number of shares for basic earnings per share
Effect of dilutive potential shares: restricted shares and share options
Effect of dilutive potential shares: restricted shares and share options
Weighted average number of shares for diluted earnings per share
Weighted average number of shares for diluted earnings per share
29,683
29,683
29,422
29,422
27,607
27,607
Profit/(loss) for earnings per share from continuing operations
Profit/(loss) for earnings per share from continuing operations
Loss for earnings per share from discontinued operations
Loss for earnings per share from discontinued operations
Profit/(loss) for basic and diluted earnings per share
Profit/(loss) for basic and diluted earnings per share
Basic earnings/(loss) per share from continuing operations
Basic earnings/(loss) per share from continuing operations
Loss per share from discontinued operations
Loss per share from discontinued operations
Basic earnings/(loss) per share
Basic earnings/(loss) per share
Diluted earnings/(loss) per share from continuing operations
Diluted earnings/(loss) per share from continuing operations
Diluted loss per share from discontinued operations
Diluted loss per share from discontinued operations
Diluted earnings/(loss) per share
Diluted earnings/(loss) per share
9. Equity dividends
9. Equity dividends
Declared during the financial year:
Declared during the financial year:
Final dividend for the year ended 31 March 2020: 4.50 eurocents per share
Final dividend for the year ended 31 March 2020: 4.50 eurocents per share
(2019: 4.16 eurocents per share, 2018: 10.23 eurocents per share)
(2019: 4.16 eurocents per share, 2018: 10.23 eurocents per share)
Interim dividend for the year ended 31 March 2021: 4.50 eurocents per share
Interim dividend for the year ended 31 March 2021: 4.50 eurocents per share
(2020: 4.50 eurocents per share, 2019: 4.84 eurocents per share)
(2020: 4.50 eurocents per share, 2019: 4.84 eurocents per share)
Proposed after the end of the year and not recognised as a liability:
Proposed after the end of the year and not recognised as a liability:
Final dividend for the year ended 31 March 2021: 4.50 eurocents per share
Final dividend for the year ended 31 March 2021: 4.50 eurocents per share
(2020: 4.50 eurocents per share, 2019: 4.16 eurocents per share)
(2020: 4.50 eurocents per share, 2019: 4.16 eurocents per share)
2021
2021
Millions
Millions
29,592
29,592
91
91
2021
2021
€m
€m
112
112
–
–
112
112
29,422
29,422
27,607
27,607
2020
2020
Millions
Millions
–
–
2020
2020
€m
€m
(920)
(920)
–
–
(920)
(920)
2019
2019
Millions
Millions
–
–
2019
2019
€m
€m
(4,485)
(4,485)
(3,535)
(3,535)
(8,020)
(8,020)
eurocents
eurocents
0.38c
0.38c
–
–
eurocents
eurocents
(3.13)c
(3.13)c
–
–
eurocents
eurocents
(16.25)c
(16.25)c
(12.80)c
(12.80)c
0.38c
0.38c
(3.13)c
(3.13)c
(29.05)c
(29.05)c
eurocents
eurocents
0.38c
0.38c
–
–
eurocents
eurocents
(3.13)c
(3.13)c
–
–
eurocents
eurocents
(16.25)c
(16.25)c
(12.80)c
(12.80)c
0.38c
0.38c
(3.13)c
(3.13)c
(29.05)c
(29.05)c
2021
2021
€m
€m
2020
2020
€m
€m
2019
2019
€m
€m
1,205
1,205
1,112
1,112
2,729
2,729
1,207
1,207
2,412
2,412
1,205
1,205
2,317
2,317
1,293
1,293
4,022
4,022
1,260
1,260
1,205
1,205
1,112
1,112
Dividends are one type of shareholder return, historically paid to our shareholders in February and August.
Dividends are one type of shareholder return, historically paid to our shareholders in February and August.
The statement of financial position contains significant intangible assets, mainly in relation to goodwill and
licences and spectrum. Goodwill, which arises when we acquire a business and pay a higher amount than
the fair value of its net assets primarily due to the synergies we expect to create, is not amortised but is
subject to annual impairment reviews. Licences and spectrum are amortised over the life of the licence. For
further details see “Critical accounting judgements and key sources of estimation uncertainty” in note 1 to
the consolidated financial statements.
Accounting policies
Identifiable intangible assets are recognised when the Group controls the asset, it is probable that future economic benefits attributed to the
asset will flow to the Group and the cost of the asset can be reliably measured. Identifiable intangible assets are recognised at fair value when
the Group completes a business combination. The determination of the fair values of the separately identified intangibles, is based, to a
considerable extent, on management’s judgement.
Goodwill
Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the Group’s interest in the net fair value of
the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition.
Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is
not subject to amortisation but is tested for impairment annually or whenever there is evidence that it may be impaired. Goodwill is
denominated in the currency of the acquired entity and revalued to the closing exchange rate at each reporting period date.
Negative goodwill arising on an acquisition is recognised directly in the income statement.
On disposal of a subsidiary or a joint arrangement, the attributable amount of goodwill is included in the determination of the profit or loss
recognised in the income statement on disposal.
Finite lived intangible assets
Intangible assets with finite lives are stated at acquisition or development cost, less accumulated amortisation. The amortisation period and
method is reviewed at least annually. Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in
accounting estimates.
Licence and spectrum fees
Amortisation periods for licence and spectrum fees are determined primarily by reference to the unexpired licence period, the conditions for
licence renewal and whether licences are dependent on specific technologies. Amortisation is charged to the income statement on a straight-
line basis over the estimated useful lives from the commencement of related network services.
Computer software
Computer software comprises software purchased from third parties as well as the cost of internally developed software. Computer software
licences are capitalised on the basis of the costs incurred to acquire and bring into use the specific software. Costs that are directly associated
with the production of identifiable and unique software products controlled by the Group, and are probable of producing future economic
benefits, are recognised as intangible assets. Direct costs of software development include employee costs and directly attributable overheads.
Software integral to an item of hardware equipment is classified as property, plant and equipment.
Costs associated with maintaining software programs are recognised as an expense when they are incurred.
Amortisation is charged to the income statement on a straight-line basis over the estimated useful life from the date the software is available for
use.
Other intangible assets
Other intangible assets, including brands and customer bases, are recorded at fair value at the date of acquisition. Amortisation is charged to the
income statement, over the estimated useful lives of intangible assets from the date they are available for use, on a straight-line basis. The
amortisation basis adopted for each class of intangible asset reflects the Group’s consumption of the economic benefit from that asset. From 1
April 2019, the Group revised the method of allocating the amortisation of acquired customer base intangibles over their useful economic lives
from a sum of digits calculation to a straight-line basis.
Estimated useful lives
The estimated useful lives of finite lived intangible assets are as follows:
– Licence and spectrum fees
– Computer software
– Brands
– Customer bases
3 - 25 years
3 - 5 years
1 - 10 years
2 - 32 years
154 Vodafone Group Plc
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Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
10. Intangible assets (continued)
Cost:
1 April 2019
Exchange movements
Arising on acquisition
Disposal of subsidiaries
Additions
Disposals
Other
31 March 20202
Exchange movements
Arising on acquisition
Additions
Disposals
Other
31 March 2021
Accumulated impairment losses and
amortisation:
1 April 2019
Exchange movements
Impairments
Disposal of subsidiaries
Amortisation charge for the year
Disposals
Other
31 March 20202
Exchange movements
Amortisation charge for the year
Disposals
Other
31 March 2021
Goodwill
€m
Licence and
spectrum fees
€m
Computer
software
€m
Customer
bases1
€m
89,563
(563)
11,752
(1,582)
–
–
–
99,170
107
87
–
–
–
99,364
66,210
(103)
1,685
–
–
–
–
67,792
(159)
–
–
–
67,633
31,606
(479)
–
(129)
1,776
(83)
–
32,691
234
–
896
(293)
–
33,528
19,004
(338)
–
(69)
1,833
(70)
–
20,360
255
1,721
(293)
–
22,043
17,209
(196)
184
(409)
2,278
(2,383)
85
16,768
43
–
2,462
(1,651)
211
17,833
12,232
(119)
–
(305)
2,203
(2,353)
79
11,737
3
2,210
(1,643)
189
12,496
6,716
(271)
5,585
(66)
–
–
–
11,964
144
200
1
(1)
–
12,308
6,653
(231)
–
(66)
349
–
–
6,705
131
488
–
–
7,324
Other1
€m
471
(39)
71
(10)
7
(47)
–
453
11
–
8
(2)
(4)
466
461
(34)
–
(10)
74
(48)
–
443
11
2
(1)
(1)
454
Total
€m
145,565
(1,548)
17,592
(2,196)
4,061
(2,513)
85
161,046
539
287
3,367
(1,947)
207
163,499
104,560
(825)
1,685
(450)
4,459
(2,471)
79
107,037
241
4,421
(1,937)
188
109,950
Net book value:
31 March 20202
31 March 2021
Notes:
1 Customer bases and Other elements of intangible assets have been presented separately for the current reporting period and the comparative period has been re-presented on the same basis.
2 The comparative balances as at 31 March 2020 have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See note 7 “Discontinued operations and assets and liabilities
12,331
11,485
31,378
31,731
5,031
5,337
5,259
4,984
10
12
54,009
53,549
held for sale”. The impact of the re-presentation is to increase the net book value of Goodwill by €107 million, licence and spectrum fees by €324 million, Computer software by €57 million and
decrease Other by €2 million compared to amounts previously reported.
For licences and spectrum and other intangible assets, amortisation is included within the cost of sales line within the consolidated income
statement.
The net book value and expiry dates of the most significant licences are as follows:
Germany
Italy
UK
Expiry dates
2025/2033/2040
2029/2037
2022/2023/2033/2038/
2041
2021
€m
3,564
3,429
2020
€m
4,208
3,683
1,383
1,801
The remaining amortisation period for each of the licences in the table above corresponds to the expiry date of the respective licence. A
summary of the Group’s most significant spectrum licences can be found on pages 238 and 239.
154 Vodafone Group Plc
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Financials
Other information
155 Vodafone Group Plc
Annual Report 2021
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Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
11. Property, plant and equipment
The Group makes significant investments in network equipment and infrastructure – the base stations and
technology required to operate our networks – that form the majority of our tangible assets. All assets are
depreciated over their useful economic lives. For further details on the estimation of useful economic lives,
see “Critical accounting judgements and key sources of estimation uncertainty” in note 1 to the
consolidated financial statements.
Accounting policies
Land and buildings held for use are stated in the statement of financial position at their cost, less any accumulated depreciation and any
accumulated impairment losses.
Amounts for equipment, fixtures and fittings, which includes network infrastructure assets are stated at cost less accumulated depreciation and
any accumulated impairment losses.
Assets in the course of construction are carried at cost, less any recognised impairment losses. Depreciation of these assets commences when
the assets are ready for their intended use.
The cost of property, plant and equipment includes directly attributable incremental costs incurred in their acquisition and installation.
Depreciation is charged so as to write off the cost of assets, other than land, using the straight-line method, over their estimated useful lives, as
follows:
Land and buildings
– Freehold buildings
– Leasehold premises
25 - 50 years
the term of the lease
Equipment, fixtures and fittings
– Network infrastructure and other
1 - 35 years
Depreciation is not provided on freehold land.
Right-of-use assets arising from the Group’s lease arrangements are depreciated over their reasonably certain lease term, as determined under
the Group’s leases policy (see note 20 “Leases” and “Critical accounting judgements and key sources of estimation uncertainty” in note 1 for
details).
The gain or loss arising on the disposal, retirement or granting of a finance lease on an item of property, plant and equipment is determined as
the difference between any proceeds from sale or receivables arising on a lease and the carrying amount of the asset and is recognised in the
income statement.
10. Intangible assets (continued)
10. Intangible assets (continued)
Cost:
Cost:
1 April 2019
1 April 2019
Exchange movements
Exchange movements
Arising on acquisition
Arising on acquisition
Disposal of subsidiaries
Disposal of subsidiaries
Additions
Additions
Disposals
Disposals
Other
Other
31 March 20202
31 March 20202
Exchange movements
Exchange movements
Arising on acquisition
Arising on acquisition
Additions
Additions
Disposals
Disposals
Other
Other
31 March 2021
31 March 2021
amortisation:
amortisation:
1 April 2019
1 April 2019
Exchange movements
Exchange movements
Impairments
Impairments
Disposal of subsidiaries
Disposal of subsidiaries
Amortisation charge for the year
Amortisation charge for the year
Disposals
Disposals
Other
Other
31 March 20202
31 March 20202
Exchange movements
Exchange movements
Amortisation charge for the year
Amortisation charge for the year
Disposals
Disposals
Other
Other
31 March 2021
31 March 2021
Net book value:
Net book value:
31 March 20202
31 March 20202
31 March 2021
31 March 2021
Notes:
Notes:
statement.
statement.
Germany
Germany
Italy
Italy
UK
UK
Accumulated impairment losses and
Accumulated impairment losses and
99,364
99,364
33,528
33,528
17,833
17,833
12,308
12,308
466
466
163,499
163,499
66,210
66,210
19,004
19,004
12,232
12,232
104,560
104,560
Goodwill
Goodwill
€m
€m
Licence and
Licence and
spectrum fees
spectrum fees
€m
€m
Computer
Computer
software
software
€m
€m
Other1
Other1
€m
€m
Total
Total
€m
€m
31,606
31,606
17,209
17,209
471
471
145,565
145,565
99,170
99,170
32,691
32,691
16,768
16,768
11,964
11,964
89,563
89,563
(563)
(563)
11,752
11,752
(1,582)
(1,582)
107
107
87
87
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(103)
(103)
1,685
1,685
(159)
(159)
(479)
(479)
–
–
(129)
(129)
1,776
1,776
(83)
(83)
–
–
234
234
–
–
896
896
(293)
(293)
–
–
(338)
(338)
–
–
(69)
(69)
1,833
1,833
(70)
(70)
–
–
255
255
1,721
1,721
(293)
(293)
–
–
(196)
(196)
184
184
(409)
(409)
2,278
2,278
(2,383)
(2,383)
85
85
43
43
–
–
2,462
2,462
(1,651)
(1,651)
211
211
(119)
(119)
–
–
(305)
(305)
2,203
2,203
(2,353)
(2,353)
79
79
3
3
2,210
2,210
(1,643)
(1,643)
189
189
Customer
Customer
bases1
bases1
€m
€m
6,716
6,716
(271)
(271)
5,585
5,585
(66)
(66)
–
–
–
–
–
–
144
144
200
200
1
1
(1)
(1)
–
–
6,653
6,653
(231)
(231)
–
–
(66)
(66)
349
349
6,705
6,705
131
131
488
488
–
–
–
–
–
–
–
–
(39)
(39)
71
71
(10)
(10)
(47)
(47)
7
7
–
–
453
453
11
11
–
–
8
8
(2)
(2)
(4)
(4)
461
461
(34)
(34)
–
–
(10)
(10)
74
74
(48)
(48)
–
–
11
11
2
2
(1)
(1)
(1)
(1)
(1,548)
(1,548)
17,592
17,592
(2,196)
(2,196)
4,061
4,061
(2,513)
(2,513)
85
85
161,046
161,046
539
539
287
287
3,367
3,367
(1,947)
(1,947)
207
207
(825)
(825)
1,685
1,685
(450)
(450)
4,459
4,459
(2,471)
(2,471)
79
79
241
241
4,421
4,421
(1,937)
(1,937)
188
188
67,792
67,792
20,360
20,360
11,737
11,737
443
443
107,037
107,037
67,633
67,633
22,043
22,043
12,496
12,496
7,324
7,324
454
454
109,950
109,950
31,378
31,378
31,731
31,731
12,331
12,331
11,485
11,485
5,031
5,031
5,337
5,337
5,259
5,259
4,984
4,984
10
10
12
12
54,009
54,009
53,549
53,549
1 Customer bases and Other elements of intangible assets have been presented separately for the current reporting period and the comparative period has been re-presented on the same basis.
1 Customer bases and Other elements of intangible assets have been presented separately for the current reporting period and the comparative period has been re-presented on the same basis.
2 The comparative balances as at 31 March 2020 have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See note 7 “Discontinued operations and assets and liabilities
2 The comparative balances as at 31 March 2020 have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See note 7 “Discontinued operations and assets and liabilities
held for sale”. The impact of the re-presentation is to increase the net book value of Goodwill by €107 million, licence and spectrum fees by €324 million, Computer software by €57 million and
held for sale”. The impact of the re-presentation is to increase the net book value of Goodwill by €107 million, licence and spectrum fees by €324 million, Computer software by €57 million and
decrease Other by €2 million compared to amounts previously reported.
decrease Other by €2 million compared to amounts previously reported.
For licences and spectrum and other intangible assets, amortisation is included within the cost of sales line within the consolidated income
For licences and spectrum and other intangible assets, amortisation is included within the cost of sales line within the consolidated income
The net book value and expiry dates of the most significant licences are as follows:
The net book value and expiry dates of the most significant licences are as follows:
Expiry dates
Expiry dates
2025/2033/2040
2025/2033/2040
2029/2037
2029/2037
2022/2023/2033/2038/
2022/2023/2033/2038/
2021
2021
€m
€m
3,564
3,564
3,429
3,429
2020
2020
€m
€m
4,208
4,208
3,683
3,683
2041
2041
1,383
1,383
1,801
1,801
The remaining amortisation period for each of the licences in the table above corresponds to the expiry date of the respective licence. A
The remaining amortisation period for each of the licences in the table above corresponds to the expiry date of the respective licence. A
summary of the Group’s most significant spectrum licences can be found on pages 238 and 239.
summary of the Group’s most significant spectrum licences can be found on pages 238 and 239.
156 Vodafone Group Plc
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Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
11. Property, plant and equipment (continued)
Cost:
1 April 2019
Exchange movements
Arising on acquisition
Additions
Disposals
Disposals of subsidiaries
Other
31 March 20201
Exchange movements
Arising on acquisition
Additions
Disposals
Other
31 March 2021
Accumulated depreciation and impairment:
1 April 2019
Exchange movements
Charge for the year
Disposals
Disposals of subsidiaries
Other
31 March 20201
Exchange movements
Charge for the year
Disposals
Other
31 March 2021
Land and
buildings
€m
2,257
(58)
49
76
(51)
(22)
10
2,261
25
74
47
(100)
8
2,315
1,244
(21)
109
(42)
(17)
(4)
1,269
8
39
(97)
(3)
1,216
Equipment,
fixtures
and fittings
€m
70,260
(1,000)
3,642
5,161
(3,218)
(2,851)
311
72,305
188
19
5,666
(2,512)
308
75,974
44,603
(498)
5,886
(3,145)
(2,017)
104
44,933
114
5,727
(2,448)
77
48,403
Total
€m
72,517
(1,058)
3,691
5,237
(3,269)
(2,873)
321
74,566
213
93
5,713
(2,612)
316
78,289
45,847
(519)
5,995
(3,187)
(2,034)
100
46,202
122
5,766
(2,545)
74
49,619
Net book value:
31 March 20201
31 March 2021
Note:
1 The comparative balances as at 31 March 2020 have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See note 7 “Discontinued operations and assets and liabilities held
for sale”. The impact of the re-presentation is to increase the net book value of owned assets including Land and buildings by €37 million and Equipment, fixtures and fittings by €818 million,
compared to amounts previously reported.
27,372
27,571
28,364
28,670
992
1,099
Included in the net book value of land and buildings and equipment, fixtures and fittings are assets in the course of construction, which are not
depreciated, with a cost of €15 million (2020: €34 million) and €2,243 million (2020: €1,914 million) respectively. Also included in the book
value of equipment, fixtures and fittings are assets leased out by the Group under operating leases, with a cost of €2,930 million (2020: €2,966
million), accumulated depreciation of €1,828 million (2020: €1,678 million) and net book value of €1,102 million (2020: €1,288 million).
Right-of-use assets arising from the Group’s lease arrangements are recorded within property, plant and equipment:
Property, plant and equipment (owned assets)
Right-of-use assets2
31 March
Note:
2 Additions of €5,306 million (2020: €4,593 million) and a depreciation charge of €3,914 million (2020: €3,720 million) were recorded in respect of right-of-use assets during the year to 31 March
2021. The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”.
The impact of the re-presentation is to increase the net book value of right-of-use assets by €61 million, compared to amounts previously reported.
2021
€m
28,670
12,573
41,243
2020
€m
28,364
11,749
40,113
156 Vodafone Group Plc
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Strategic report
Governance
Financials
Other information
157 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
11. Property, plant and equipment (continued)
11. Property, plant and equipment (continued)
Accumulated depreciation and impairment:
Accumulated depreciation and impairment:
Cost:
Cost:
1 April 2019
1 April 2019
Exchange movements
Exchange movements
Arising on acquisition
Arising on acquisition
Additions
Additions
Disposals
Disposals
Disposals of subsidiaries
Disposals of subsidiaries
Other
Other
31 March 20201
31 March 20201
Exchange movements
Exchange movements
Arising on acquisition
Arising on acquisition
Additions
Additions
Disposals
Disposals
Other
Other
31 March 2021
31 March 2021
1 April 2019
1 April 2019
Exchange movements
Exchange movements
Charge for the year
Charge for the year
Disposals
Disposals
Disposals of subsidiaries
Disposals of subsidiaries
Other
Other
31 March 20201
31 March 20201
Exchange movements
Exchange movements
Charge for the year
Charge for the year
Disposals
Disposals
Other
Other
31 March 2021
31 March 2021
Net book value:
Net book value:
31 March 20201
31 March 20201
31 March 2021
31 March 2021
Note:
Note:
2,261
2,261
72,305
72,305
74,566
74,566
Land and
Land and
buildings
buildings
€m
€m
2,257
2,257
(58)
(58)
49
49
76
76
(51)
(51)
(22)
(22)
10
10
25
25
74
74
47
47
(100)
(100)
8
8
(21)
(21)
109
109
(42)
(42)
(17)
(17)
(4)
(4)
8
8
39
39
(97)
(97)
(3)
(3)
Equipment,
Equipment,
fixtures
fixtures
and fittings
and fittings
€m
€m
70,260
70,260
(1,000)
(1,000)
3,642
3,642
5,161
5,161
(3,218)
(3,218)
(2,851)
(2,851)
311
311
188
188
19
19
5,666
5,666
(2,512)
(2,512)
308
308
(498)
(498)
5,886
5,886
(3,145)
(3,145)
(2,017)
(2,017)
104
104
114
114
5,727
5,727
(2,448)
(2,448)
77
77
Total
Total
€m
€m
72,517
72,517
(1,058)
(1,058)
3,691
3,691
5,237
5,237
(3,269)
(3,269)
(2,873)
(2,873)
321
321
213
213
93
93
5,713
5,713
(2,612)
(2,612)
316
316
(519)
(519)
5,995
5,995
(3,187)
(3,187)
(2,034)
(2,034)
100
100
122
122
5,766
5,766
(2,545)
(2,545)
74
74
1,269
1,269
44,933
44,933
46,202
46,202
1,216
1,216
48,403
48,403
49,619
49,619
992
992
1,099
1,099
27,372
27,372
27,571
27,571
28,364
28,364
28,670
28,670
2,315
2,315
75,974
75,974
78,289
78,289
1,244
1,244
44,603
44,603
45,847
45,847
1 The comparative balances as at 31 March 2020 have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See note 7 “Discontinued operations and assets and liabilities held
1 The comparative balances as at 31 March 2020 have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See note 7 “Discontinued operations and assets and liabilities held
for sale”. The impact of the re-presentation is to increase the net book value of owned assets including Land and buildings by €37 million and Equipment, fixtures and fittings by €818 million,
for sale”. The impact of the re-presentation is to increase the net book value of owned assets including Land and buildings by €37 million and Equipment, fixtures and fittings by €818 million,
compared to amounts previously reported.
compared to amounts previously reported.
Included in the net book value of land and buildings and equipment, fixtures and fittings are assets in the course of construction, which are not
Included in the net book value of land and buildings and equipment, fixtures and fittings are assets in the course of construction, which are not
depreciated, with a cost of €15 million (2020: €34 million) and €2,243 million (2020: €1,914 million) respectively. Also included in the book
depreciated, with a cost of €15 million (2020: €34 million) and €2,243 million (2020: €1,914 million) respectively. Also included in the book
value of equipment, fixtures and fittings are assets leased out by the Group under operating leases, with a cost of €2,930 million (2020: €2,966
value of equipment, fixtures and fittings are assets leased out by the Group under operating leases, with a cost of €2,930 million (2020: €2,966
million), accumulated depreciation of €1,828 million (2020: €1,678 million) and net book value of €1,102 million (2020: €1,288 million).
million), accumulated depreciation of €1,828 million (2020: €1,678 million) and net book value of €1,102 million (2020: €1,288 million).
Right-of-use assets arising from the Group’s lease arrangements are recorded within property, plant and equipment:
Right-of-use assets arising from the Group’s lease arrangements are recorded within property, plant and equipment:
Property, plant and equipment (owned assets)
Property, plant and equipment (owned assets)
Right-of-use assets2
Right-of-use assets2
31 March
31 March
Note:
Note:
2 Additions of €5,306 million (2020: €4,593 million) and a depreciation charge of €3,914 million (2020: €3,720 million) were recorded in respect of right-of-use assets during the year to 31 March
2 Additions of €5,306 million (2020: €4,593 million) and a depreciation charge of €3,914 million (2020: €3,720 million) were recorded in respect of right-of-use assets during the year to 31 March
2021. The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”.
2021. The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”.
The impact of the re-presentation is to increase the net book value of right-of-use assets by €61 million, compared to amounts previously reported.
The impact of the re-presentation is to increase the net book value of right-of-use assets by €61 million, compared to amounts previously reported.
2021
2021
€m
€m
28,670
28,670
12,573
12,573
41,243
41,243
2020
2020
€m
€m
28,364
28,364
11,749
11,749
40,113
40,113
12. Investments in associates and joint arrangements
The Group holds interests in associates in Kenya and in India, where we have significant influence, as well as
in a number of joint arrangements in the UK, Italy, the Netherlands, India and Australia, where we share
control with one or more third parties. For further details see “Critical accounting judgements and key
sources of estimation uncertainty” in note 1 to the consolidated financial statements.
Accounting policies
Interests in joint arrangements
A joint arrangement is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint
control; that is, when the relevant activities that significantly affect the investee’s returns require the unanimous consent of the parties sharing
control. Joint arrangements are either joint operations or joint ventures.
Gains or losses resulting from the contribution or sale of a subsidiary as part of the formation of a joint arrangement are recognised in respect of
the Group’s entire equity holding in the subsidiary.
Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control have the rights to the assets, and obligations for the liabilities,
relating to the arrangement or that other facts and circumstances indicate that this is the case. The Group’s share of assets, liabilities, revenue,
expenses and cash flows are combined with the equivalent items in the financial statements on a line-by-line basis.
Any goodwill arising on the acquisition of the Group’s interest in a joint operation is accounted for in accordance with the Group’s accounting
policy for goodwill arising on the acquisition of a subsidiary.
Joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control have the rights to the net assets of the arrangement.
At the date of acquisition, any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and
contingent liabilities of the joint venture is recognised as goodwill. The goodwill is included within the carrying amount of the investment.
The results and assets and liabilities of joint ventures, other than those joint ventures or part thereof that are held for sale (see note 7
“Discontinued operations and assets and liabilities held for sale”), are incorporated in the consolidated financial statements using the equity
method of accounting. Under the equity method, investments in joint ventures are carried in the consolidated statement of financial position at
cost adjusted for post-acquisition changes in the Group’s share of the net assets of the joint venture, less any impairment in the value of the
investment. The Group’s share of post-tax profits or losses are recognised in the consolidated income statement. Losses of a joint venture in
excess of the Group’s interest in that joint venture are recognised only to the extent that the Group has incurred legal or constructive obligations
or made payments on behalf of the joint venture.
Associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint arrangement.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but where the Group does not
have control or joint control over those policies.
At the date of acquisition, any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities
and contingent liabilities of the associate is recognised as goodwill. The goodwill is included within the carrying amount of the investment.
The results and assets and liabilities of associates are incorporated in the consolidated financial statements using the same equity method of
accounting used for joint ventures, described above.
Joint operations
The Company’s principal joint operation has share capital consisting solely of ordinary shares and is indirectly held, and principally operates in
the UK. The financial and operating activities of the operation are jointly controlled by the participating shareholders and are primarily designed
for all but an insignificant amount of the output to be consumed by the shareholders.
Name of joint operation
Cornerstone Telecommunications Infrastructure Limited
Note:
1 Effective ownership percentages of Vodafone Group Plc rounded to the nearest tenth of one percent.
Principal activity
Network infrastructure
Country of
incorporation or
registration
UK
Percentage
shareholdings1
2021
50.0
Percentage
shareholdings1
2020
50.0
158 Vodafone Group Plc
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Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
12. Investments in associates and joint arrangements (continued)
Joint ventures and associates
Investment in joint ventures
Investment in associates
31 March
2021
€m
4,249
421
4,670
2020
€m
5,323
508
5,831
Joint ventures
The financial and operating activities of the Group’s joint ventures are jointly controlled by the participating shareholders. The participating
shareholders have rights to the net assets of the joint ventures through their equity shareholdings. Unless otherwise stated, the Company’s
principal joint ventures all have share capital consisting solely of ordinary shares and are all indirectly held. The country of incorporation or
registration of all joint ventures is also their principal place of operation.
On 26 November 2020, the Group announced the completion of the merger between Indus Towers Limited and Bharti Infratel Limited.
(together ‘Indus Towers Limited’), an entity listed on the National Stock Exchange of India and the Bombay Stock Exchange. Vodafone holds a
28.1% shareholding in Indus Towers Limited, an associate of the Group and so is included in the associates section of this note. Prior to this
transaction, Vodafone held a 42.0% shareholding in Indus Towers Limited, a joint venture of the Group up to the merger date.
Percentage
shareholdings1
2021
44.4
50.0
33.2
25.1
–
Vodafone Idea Limited2
VodafoneZiggo Group Holding B.V.
Infrastructture Wireless Italiane (INWIT) S.p.A.3
TPG Telecom Limited4
Indus Towers Limited
Notes:
1 Effective ownership percentages of Vodafone Group Plc rounded to the nearest tenth of one percent.
2 At 31 March 2021 the fair value of the Group’s interest in Vodafone Idea Limited was INR 118 billion (€1,373 million) (2020: INR 40 billion (€476 million)) based on the quoted share price on the
Country of
incorporation or
registration
Principal activity
Network operator
India
Network operator Netherlands
Italy
Australia
India
Network infrastructure
Network operator
Network infrastructure
Percentage
shareholdings1
2020
44.4
50.0
37.5
50.0
42.0
Name of joint venture
National Stock Exchange of India.
3 At 31 March 2021 the fair value of the Group’s interest in INWIT S.p.A.was €3,026 million (2020: €3,345 million) based on the quoted share price on the Milan Stock Exchange.
4 On 26 June 2020, Vodafone Hutchison Australia Pty Limited and TPG Telecom Limited completed their merger. The merged entity was admitted to the Australian Securities Exchange (‘ASX’) on
30 June 2020 and is known as TPG Telecom Limited. At 31 March 2021 the fair value of the Group’s interest in TPG Telecom Limited was AUD 2,948 million (€1,911 million), based on the quoted
share price on ASX.
Vodafone Idea Limited
The Group’s carrying value in Vodafone Idea Limited (‘VIL’) reduced to €nil at 30 September 2019. The Group’s share of VIL’s losses not
recognised at 31 March 2021 is €3,562 million (31 March 2020: €1,804 million). Significant uncertainties exist in relation to VIL’s ability to
generate the cash flow it requires to settle or its ability to refinance its liabilities and guarantees as they fall due, including those relating to the
AGR judgement (see note 29 “Contingent liabilities and legal proceedings”).
The value of the Group’s 28.1% shareholding in Indus Towers Limited is, in part, dependent on the income generated by Indus Towers Limited
from tower rentals to major customers, including VIL. Any inability of these major customers to pay such amounts in the future may result in an
impairment in the carrying value (31 March 2021: €1.3 billion) of the Group’s investment in Indus Towers Limited.
TPG Telecom Limited / Vodafone Hutchison Australia Pty Limited
On 26 June 2020, Vodafone Hutchison Australia Pty Limited (‘VHA’) and TPG Telecom Limited (‘TPG’) completed their merger to establish a fully
integrated telecommunications operator in Australia. The merged entity was admitted to the Australian Securities Exchange (‘ASX’) on 30 June
2020 and is known as TPG Telecom Limited. Vodafone and Hutchison Telecommunications (Australia) Limited each own an economic interest
of 25.05% in the merged unit, with the remaining 49.9% listed as free float on the ASX. The Group recorded a gain of €1,043 million in relation to
the merger, which is reported in Other income/(expense) within the Consolidated income statement. The financial information presented in the
tables below includes debt held within the structure that holds the Group’s interest in TPG.
The following table provides aggregated financial information for the Group’s joint ventures as it relates to the amounts recognised in the
income statement, statement of comprehensive income and statement of financial position.
Vodafone Idea Limited
VodafoneZiggo Group Holding B.V.
INWIT S.p.A.
TPG Telecom Limited1
Indus Towers Limited
Other
Total
Investment in joint ventures
(Loss)/profit from
continuing operations2
2021
€m
–
1,190
2,920
104
–
35
4,249
2020
€m
–
1,630
3,345
(466)
766
48
5,323
2021
€m
–
(232)
3
98
–
(15)
(146)
2020
€m
(2,546)
(64)
–
(35)
19
(125)
(2,751)
2019
€m
(903)
(239)
–
(23)
55
(14)
(1,124)
Notes:
1 Amounts presented reflect Vodafone Hutchison Australia Pty Limited results only until the date of the merger with TPG Telecom Limited on 26 June 2020, subsequent of which the combined
results are presented.
2 Total Other comprehensive (expense)/income is not materially different to (loss)/profit from continuing operations.
158 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
159 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
2021
2021
€m
€m
4,249
4,249
421
421
4,670
4,670
2020
2020
€m
€m
5,323
5,323
508
508
5,831
5,831
Summarised financial information
Summarised financial information for each of the Group’s material joint ventures on a 100% ownership basis is set out below.
Financial information is presented for Vodafone Idea Limited (‘VIL’) for the six month period to, and as at 30 September 2020 on the basis that
full-year information in relation to VIL has not been released at the date of approval of these financial statements and as such is market sensitive
for VIL. Financial information presented for the year to, and as at 31 March 2020, has been updated to reflect the release of full year financial
information for by VIL As disclosed above, the Group’s investment in VIL was reduced to €nil in the prior financial year and the Group has not
recorded any profit or loss in respect of its share of VIL’s results since that date.
Income statement
Revenue
Operating expenses
Depreciation and amortisation
Other income
Operating profit/(loss)
Interest income
Interest expense
Profit/(loss) before tax
Income tax
Profit/(loss) from continuing
operations1
Income statement
Revenue
Operating expenses
Depreciation and amortisation
Other expense
Operating loss
Interest income
Interest expense
Loss before tax
Income tax
Loss from continuing
operations1
INWIT S.p.A.
2021
€m
2020
€m
VodafoneZiggo Group Holding B.V.
TPG Telecom Limited
2021
€m
2020
€m
2019
€m
2021
€m
2020
€m
2019
€m
562
(46)
(398)
–
118
–
(101)
17
(7)
10
–
–
–
–
–
–
–
–
–
–
4,010
(2,058)
(1,658)
25
319
–
(658)
(339)
(125)
3,948
(2,163)
(1,528)
–
257
–
(343)
(86)
(42)
3,868
(2,169)
(2,012)
–
(313)
–
(602)
(915)
437
3,010
(2,096)
(769)
–
145
1
(201)
(55)
495
2,108
(1,489)
(508)
–
111
4
(256)
(141)
–
2,290
(1,634)
(494)
–
162
3
(240)
(75)
–
(464)
(128)
(478)
440
(141)
(75)
Vodafone Idea Limited
2021
€m
2020
€m
2019
€m
2,515
(1,689)
(1,255)
(1,079)
(1,508)
24
(870)
(2,354)
–
5,704
(4,938)
(2,426)
(6,627)
(8,287)
147
(1,740)
(9,880)
–
3,379
(2,999)
(1,364)
(253)
(1,237)
56
(817)
(1,998)
1
(2,354)
(9,880)
(1,997)
Note:
1 Total Other comprehensive income/(expense) is not materially different to profit/(loss) from continuing operations.
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
12. Investments in associates and joint arrangements (continued)
12. Investments in associates and joint arrangements (continued)
Joint ventures and associates
Joint ventures and associates
Investment in joint ventures
Investment in joint ventures
Investment in associates
Investment in associates
31 March
31 March
Joint ventures
Joint ventures
The financial and operating activities of the Group’s joint ventures are jointly controlled by the participating shareholders. The participating
The financial and operating activities of the Group’s joint ventures are jointly controlled by the participating shareholders. The participating
shareholders have rights to the net assets of the joint ventures through their equity shareholdings. Unless otherwise stated, the Company’s
shareholders have rights to the net assets of the joint ventures through their equity shareholdings. Unless otherwise stated, the Company’s
principal joint ventures all have share capital consisting solely of ordinary shares and are all indirectly held. The country of incorporation or
principal joint ventures all have share capital consisting solely of ordinary shares and are all indirectly held. The country of incorporation or
registration of all joint ventures is also their principal place of operation.
registration of all joint ventures is also their principal place of operation.
On 26 November 2020, the Group announced the completion of the merger between Indus Towers Limited and Bharti Infratel Limited.
On 26 November 2020, the Group announced the completion of the merger between Indus Towers Limited and Bharti Infratel Limited.
(together ‘Indus Towers Limited’), an entity listed on the National Stock Exchange of India and the Bombay Stock Exchange. Vodafone holds a
(together ‘Indus Towers Limited’), an entity listed on the National Stock Exchange of India and the Bombay Stock Exchange. Vodafone holds a
28.1% shareholding in Indus Towers Limited, an associate of the Group and so is included in the associates section of this note. Prior to this
28.1% shareholding in Indus Towers Limited, an associate of the Group and so is included in the associates section of this note. Prior to this
transaction, Vodafone held a 42.0% shareholding in Indus Towers Limited, a joint venture of the Group up to the merger date.
transaction, Vodafone held a 42.0% shareholding in Indus Towers Limited, a joint venture of the Group up to the merger date.
Principal activity
Principal activity
Network operator
Network operator
Network operator Netherlands
Network operator Netherlands
Network infrastructure
Network infrastructure
Network operator
Network operator
Network infrastructure
Network infrastructure
Country of
Country of
incorporation or
incorporation or
registration
registration
India
India
Italy
Italy
Australia
Australia
India
India
Percentage
Percentage
shareholdings1
shareholdings1
2021
2021
Percentage
Percentage
shareholdings1
shareholdings1
2020
2020
44.4
44.4
50.0
50.0
33.2
33.2
25.1
25.1
–
–
44.4
44.4
50.0
50.0
37.5
37.5
50.0
50.0
42.0
42.0
Name of joint venture
Name of joint venture
Vodafone Idea Limited2
Vodafone Idea Limited2
VodafoneZiggo Group Holding B.V.
VodafoneZiggo Group Holding B.V.
Infrastructture Wireless Italiane (INWIT) S.p.A.3
Infrastructture Wireless Italiane (INWIT) S.p.A.3
TPG Telecom Limited4
TPG Telecom Limited4
Indus Towers Limited
Indus Towers Limited
Notes:
Notes:
National Stock Exchange of India.
National Stock Exchange of India.
share price on ASX.
share price on ASX.
Vodafone Idea Limited
Vodafone Idea Limited
1 Effective ownership percentages of Vodafone Group Plc rounded to the nearest tenth of one percent.
1 Effective ownership percentages of Vodafone Group Plc rounded to the nearest tenth of one percent.
2 At 31 March 2021 the fair value of the Group’s interest in Vodafone Idea Limited was INR 118 billion (€1,373 million) (2020: INR 40 billion (€476 million)) based on the quoted share price on the
2 At 31 March 2021 the fair value of the Group’s interest in Vodafone Idea Limited was INR 118 billion (€1,373 million) (2020: INR 40 billion (€476 million)) based on the quoted share price on the
3 At 31 March 2021 the fair value of the Group’s interest in INWIT S.p.A.was €3,026 million (2020: €3,345 million) based on the quoted share price on the Milan Stock Exchange.
3 At 31 March 2021 the fair value of the Group’s interest in INWIT S.p.A.was €3,026 million (2020: €3,345 million) based on the quoted share price on the Milan Stock Exchange.
4 On 26 June 2020, Vodafone Hutchison Australia Pty Limited and TPG Telecom Limited completed their merger. The merged entity was admitted to the Australian Securities Exchange (‘ASX’) on
4 On 26 June 2020, Vodafone Hutchison Australia Pty Limited and TPG Telecom Limited completed their merger. The merged entity was admitted to the Australian Securities Exchange (‘ASX’) on
30 June 2020 and is known as TPG Telecom Limited. At 31 March 2021 the fair value of the Group’s interest in TPG Telecom Limited was AUD 2,948 million (€1,911 million), based on the quoted
30 June 2020 and is known as TPG Telecom Limited. At 31 March 2021 the fair value of the Group’s interest in TPG Telecom Limited was AUD 2,948 million (€1,911 million), based on the quoted
The Group’s carrying value in Vodafone Idea Limited (‘VIL’) reduced to €nil at 30 September 2019. The Group’s share of VIL’s losses not
The Group’s carrying value in Vodafone Idea Limited (‘VIL’) reduced to €nil at 30 September 2019. The Group’s share of VIL’s losses not
recognised at 31 March 2021 is €3,562 million (31 March 2020: €1,804 million). Significant uncertainties exist in relation to VIL’s ability to
recognised at 31 March 2021 is €3,562 million (31 March 2020: €1,804 million). Significant uncertainties exist in relation to VIL’s ability to
generate the cash flow it requires to settle or its ability to refinance its liabilities and guarantees as they fall due, including those relating to the
generate the cash flow it requires to settle or its ability to refinance its liabilities and guarantees as they fall due, including those relating to the
AGR judgement (see note 29 “Contingent liabilities and legal proceedings”).
AGR judgement (see note 29 “Contingent liabilities and legal proceedings”).
The value of the Group’s 28.1% shareholding in Indus Towers Limited is, in part, dependent on the income generated by Indus Towers Limited
The value of the Group’s 28.1% shareholding in Indus Towers Limited is, in part, dependent on the income generated by Indus Towers Limited
from tower rentals to major customers, including VIL. Any inability of these major customers to pay such amounts in the future may result in an
from tower rentals to major customers, including VIL. Any inability of these major customers to pay such amounts in the future may result in an
impairment in the carrying value (31 March 2021: €1.3 billion) of the Group’s investment in Indus Towers Limited.
impairment in the carrying value (31 March 2021: €1.3 billion) of the Group’s investment in Indus Towers Limited.
TPG Telecom Limited / Vodafone Hutchison Australia Pty Limited
TPG Telecom Limited / Vodafone Hutchison Australia Pty Limited
On 26 June 2020, Vodafone Hutchison Australia Pty Limited (‘VHA’) and TPG Telecom Limited (‘TPG’) completed their merger to establish a fully
On 26 June 2020, Vodafone Hutchison Australia Pty Limited (‘VHA’) and TPG Telecom Limited (‘TPG’) completed their merger to establish a fully
integrated telecommunications operator in Australia. The merged entity was admitted to the Australian Securities Exchange (‘ASX’) on 30 June
integrated telecommunications operator in Australia. The merged entity was admitted to the Australian Securities Exchange (‘ASX’) on 30 June
2020 and is known as TPG Telecom Limited. Vodafone and Hutchison Telecommunications (Australia) Limited each own an economic interest
2020 and is known as TPG Telecom Limited. Vodafone and Hutchison Telecommunications (Australia) Limited each own an economic interest
of 25.05% in the merged unit, with the remaining 49.9% listed as free float on the ASX. The Group recorded a gain of €1,043 million in relation to
of 25.05% in the merged unit, with the remaining 49.9% listed as free float on the ASX. The Group recorded a gain of €1,043 million in relation to
the merger, which is reported in Other income/(expense) within the Consolidated income statement. The financial information presented in the
the merger, which is reported in Other income/(expense) within the Consolidated income statement. The financial information presented in the
tables below includes debt held within the structure that holds the Group’s interest in TPG.
tables below includes debt held within the structure that holds the Group’s interest in TPG.
The following table provides aggregated financial information for the Group’s joint ventures as it relates to the amounts recognised in the
The following table provides aggregated financial information for the Group’s joint ventures as it relates to the amounts recognised in the
income statement, statement of comprehensive income and statement of financial position.
income statement, statement of comprehensive income and statement of financial position.
Vodafone Idea Limited
Vodafone Idea Limited
VodafoneZiggo Group Holding B.V.
VodafoneZiggo Group Holding B.V.
INWIT S.p.A.
INWIT S.p.A.
TPG Telecom Limited1
TPG Telecom Limited1
Indus Towers Limited
Indus Towers Limited
Other
Other
Total
Total
Notes:
Notes:
Investment in joint ventures
Investment in joint ventures
(Loss)/profit from
(Loss)/profit from
continuing operations2
continuing operations2
2021
2021
€m
€m
–
–
1,190
1,190
2,920
2,920
104
104
–
–
35
35
2020
2020
€m
€m
–
–
1,630
1,630
3,345
3,345
(466)
(466)
766
766
48
48
4,249
4,249
5,323
5,323
2021
2021
€m
€m
–
–
(232)
(232)
3
3
98
98
–
–
(15)
(15)
(146)
(146)
2020
2020
€m
€m
(2,546)
(2,546)
(64)
(64)
–
–
(35)
(35)
19
19
(125)
(125)
(2,751)
(2,751)
2019
2019
€m
€m
(903)
(903)
(239)
(239)
–
–
(23)
(23)
55
55
(14)
(14)
(1,124)
(1,124)
1 Amounts presented reflect Vodafone Hutchison Australia Pty Limited results only until the date of the merger with TPG Telecom Limited on 26 June 2020, subsequent of which the combined
1 Amounts presented reflect Vodafone Hutchison Australia Pty Limited results only until the date of the merger with TPG Telecom Limited on 26 June 2020, subsequent of which the combined
results are presented.
results are presented.
2 Total Other comprehensive (expense)/income is not materially different to (loss)/profit from continuing operations.
2 Total Other comprehensive (expense)/income is not materially different to (loss)/profit from continuing operations.
160 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
12. Investments in associates and joint arrangements (continued)
Statement of financial position
Non-current assets
Current assets
Total assets
Equity shareholders’ funds
Non-current liabilities
Current liabilities
Cash and cash equivalents within current assets
Non-current liabilities excluding trade and other payables and
provisions
Current liabilities excluding trade and other payables and
provisions
INWIT S.p.A.
2021
€m
2020
€m
VodafoneZiggo Group Holding B.V.
2020
2021
€m
14,422
256
14,678
8,801
5,536
341
120
14,517
288
14,805
8,917
4,907
981
40
16,978
911
17,889
2,380
13,025
2,484
330
€m
17,745
752
18,497
3,260
12,974
2,263
116
TPG Telecom Limited
2021
€m
2020
€m
10,272
679
10,951
3,121
6,884
946
268
2,965
767
3,732
(2,047)
5,146
633
196
5,314
4,684
12,466
12,550
6,825
5,137
185
218
1,154
1,108
83
124
Vodafone Idea Limited1
2021
€m
2020
€m
Statement of financial position
Non-current assets
Current assets
Total assets
Equity shareholders’ funds
Non-current liabilities
Current liabilities
Cash and cash equivalents within current assets
Non-current liabilities excluding trade and other payables and
provisions
Current liabilities excluding trade and other payables and
provisions
Notes:
1 Includes certain amounts subject to an adjustment mechanism agreed as part of the formation of Vodafone Idea Limited. See note 29 “Contingent liabilities and legal proceedings” for more detail.
19,387
2,548
21,935
(5,615)
21,749
5,801
200
14,992
2,917
21,240
3,235
24,475
(3,475)
15,835
12,115
320
15,790
2,979
The Group received dividends in the year ended 31 March 2021 from VodafoneZiggo Group Holding B.V. of €209 million (2020: €148 million,
2019: €200 million) and from INWIT S.p.A of €42 million (2020: €nil).
160 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
161 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
12. Investments in associates and joint arrangements (continued)
12. Investments in associates and joint arrangements (continued)
Statement of financial position
Statement of financial position
Non-current assets
Non-current assets
Current assets
Current assets
Total assets
Total assets
Equity shareholders’ funds
Equity shareholders’ funds
Non-current liabilities
Non-current liabilities
Current liabilities
Current liabilities
Cash and cash equivalents within current assets
Cash and cash equivalents within current assets
Non-current liabilities excluding trade and other payables and
Non-current liabilities excluding trade and other payables and
Current liabilities excluding trade and other payables and
Current liabilities excluding trade and other payables and
provisions
provisions
provisions
provisions
Statement of financial position
Statement of financial position
Non-current assets
Non-current assets
Current assets
Current assets
Total assets
Total assets
Equity shareholders’ funds
Equity shareholders’ funds
Non-current liabilities
Non-current liabilities
Current liabilities
Current liabilities
Cash and cash equivalents within current assets
Cash and cash equivalents within current assets
Non-current liabilities excluding trade and other payables and
Non-current liabilities excluding trade and other payables and
Current liabilities excluding trade and other payables and
Current liabilities excluding trade and other payables and
provisions
provisions
provisions
provisions
Notes:
Notes:
INWIT S.p.A.
INWIT S.p.A.
VodafoneZiggo Group Holding B.V.
VodafoneZiggo Group Holding B.V.
TPG Telecom Limited
TPG Telecom Limited
2021
2021
€m
€m
2020
2020
€m
€m
2021
2021
€m
€m
2020
2020
€m
€m
2021
2021
€m
€m
2020
2020
€m
€m
14,422
14,422
14,517
14,517
16,978
16,978
17,745
17,745
10,272
10,272
256
256
288
288
14,678
14,678
14,805
14,805
8,801
8,801
5,536
5,536
341
341
120
120
8,917
8,917
4,907
4,907
981
981
40
40
911
911
17,889
17,889
2,380
2,380
13,025
13,025
2,484
2,484
330
330
752
752
679
679
18,497
18,497
10,951
10,951
3,260
3,260
12,974
12,974
2,263
2,263
116
116
3,121
3,121
6,884
6,884
946
946
268
268
2,965
2,965
767
767
3,732
3,732
(2,047)
(2,047)
5,146
5,146
633
633
196
196
5,314
5,314
4,684
4,684
12,466
12,466
12,550
12,550
6,825
6,825
5,137
5,137
185
185
218
218
1,154
1,154
1,108
1,108
83
83
124
124
Vodafone Idea Limited1
Vodafone Idea Limited1
2021
2021
€m
€m
2020
2020
€m
€m
19,387
19,387
2,548
2,548
21,935
21,935
(5,615)
(5,615)
21,749
21,749
5,801
5,801
200
200
21,240
21,240
3,235
3,235
24,475
24,475
(3,475)
(3,475)
15,835
15,835
12,115
12,115
320
320
14,992
14,992
15,790
15,790
2,917
2,917
2,979
2,979
1 Includes certain amounts subject to an adjustment mechanism agreed as part of the formation of Vodafone Idea Limited. See note 29 “Contingent liabilities and legal proceedings” for more detail.
1 Includes certain amounts subject to an adjustment mechanism agreed as part of the formation of Vodafone Idea Limited. See note 29 “Contingent liabilities and legal proceedings” for more detail.
The Group received dividends in the year ended 31 March 2021 from VodafoneZiggo Group Holding B.V. of €209 million (2020: €148 million,
The Group received dividends in the year ended 31 March 2021 from VodafoneZiggo Group Holding B.V. of €209 million (2020: €148 million,
2019: €200 million) and from INWIT S.p.A of €42 million (2020: €nil).
2019: €200 million) and from INWIT S.p.A of €42 million (2020: €nil).
Reconciliation of summarised financial information
The reconciliation of summarised financial information presented to the carrying amount of our interest in joint ventures is set out below:
INWIT S.p.A.
2021
€m
2020
€m
VodafoneZiggo Group Holding B.V.
TPG Telecom Limited
2021
€m
2020
€m
2019
€m
2021
€m
2020
€m
2019
€m
Equity shareholders’
funds/(deficit)
Interest in joint ventures1
Impairment
Goodwill
Transferred to assets held for
sale
Investment proportion not
recognised
Carrying value
Profit/(loss) from continuing
operations
Share of profit/(loss)1
Profit/(loss) proportion not
recognised
Share of profit/(loss)
Equity shareholders’
funds/(deficit)
Interest in joint ventures1
Impairment
Goodwill
Transferred to assets held for
sale
Investment proportion not
recognised
Carrying value
(Loss)/profit from continuing
operations
Share of (loss)/profit1
(Loss)/profit proportion not
recognised
Share of (loss)/profit
8,801
2,920
–
–
8,917
3,345
–
–
2,380
1,190
–
–
3,260
1,630
–
–
3,121
50
–
54
(2,047)
(1,024)
–
94
–
–
–
–
–
412
–
2,920
–
3,345
–
1,190
–
1,630
10
3
–
3
–
–
–
–
(464)
(232)
–
(232)
(128)
(64)
–
(64)
(478)
(239)
–
(239)
(75)
(38)
15
(23)
2019
€m
–
104
440
98
–
98
52
(466)
(141)
(70)
35
(35)
Vodafone Idea Limited
2021
€m
2020
€m
(5,615)
(2,493)
(250)
–
(3,475)
(1,543)
(261)
–
–
–
2,743
–
1,804
–
(2,354)
(1,045)
(9,880)
(4,386)
(1,997)
(903)
1,045
–
1,840
(2,546)
–
(903)
Note:
1 The Group’s effective ownership percentages of Vodafone Idea Limited, VodafoneZiggo Group Holding B.V., Inwit S.p.A. and TPG Telecom Limited are 44.4%, 50.0%, 33.2% and 25.1% respectively,
rounded to the nearest tenth of one percent.
Associates
Unless otherwise stated, the Company’s principal associates all have share capital consisting solely of ordinary shares and are all indirectly held.
The country of incorporation or registration of all associates is also their principal place of operation.
Financial information for Indus Towers Limited, including comparative periods previously reported in the Joint Venture section of this note, is
disclosed here following the completion of the merger described on page 158.
Name of associate
Indus Towers Limited2
Safaricom Limited3
Notes:
1 Effective ownership percentages of Vodafone Group Plc rounded to the nearest tenth of one percent.
2 At 31 March 2021, the fair value of the Group’s interest in Indus Towers Limited was INR 186 billion (€2,161 million) based on the closing quoted share price on the National Stock Exchange of
Principal activity
Network infrastructure
Network operator
India.
3 At 31 March 2021, the fair value of the Group’s interest in Safaricom Limited was KES 580 billion (€4,513 million) (2020: KES 423 billion (€3,672 million)) based on the closing quoted share price
on the Nairobi Stock Exchange. The Group also holds two non-voting shares.
Country of
incorporation or
registration
India
Kenya
Percentage
shareholding1
2021
28.1
40.0
Percentage
shareholding1
2020
–
40.0
162 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
12. Investments in associates and joint arrangements (continued)
The following table provides aggregated financial information for the Group’s associates as it relates to the amounts recognised in the income
statement, statement of comprehensive income and consolidated statement of financial position.
Investment in associates
Profit from continuing operations1
Safaricom Limited
Indus Towers Limited1
Other
Total
Note:
1 The Group’s interest in Indus Towers Limited was classified as held for sale at 31 March 2021. See note 7 “Discontinued operations and assets and liabilities held for sale”.
2020
€m
488
–
20
508
2021
€m
217
274
(3)
488
2020
€m
247
–
(1)
246
2021
€m
421
–
–
421
2019
€m
214
–
2
216
Income statement
Revenue
Operating expenses
Depreciation and amortisation
Other income/(expense)
Operating profit
Interest income
Interest expense
Profit before tax
Income tax
Profit from continuing operations and total
comprehensive income
Safaricom Limited
2020
€m
2021
€m
Indus Towers Limited
2019
€m
2021
€m
2020
€m
2019
€m
2,083
(1,030)
(299)
–
754
12
(27)
739
(197)
2,310
(1,122)
(295)
–
893
26
(18)
901
(282)
2,140
(1,078)
(301)
–
761
20
(1)
780
(245)
2,421
(1,247)
(477)
412
1,109
61
(194)
976
(168)
2,365
(1,336)
(268)
(592)
169
32
(196)
5
39
2,227
(1,438)
(305)
–
484
11
(79)
416
(238)
542
619
535
808
44
178
Statement of financial position
Non-current assets
Current assets
Total assets
Equity shareholders' funds
Non-current liabilities
Current liabilities
Cash and cash equivalents within current assets
Non-current liabilities excluding trade and other payables and
provisions
Current liabilities excluding trade and other payables and
provisions
1,333
438
1,771
1,045
131
595
208
93
149
1,398
424
1,822
1,212
119
491
234
101
99
5,271
1,198
6,469
3,083
1,936
1,450
230
2,448
562
3,010
566
1,327
1,117
16
1,656
1,095
906
658
The reconciliation of summarised financial information presented to the carrying amount of our interest in the associate is set out below.
Equity shareholders' funds
Interest in joint ventures
Impairment
Goodwill
Transferred to assets held for sale
Investment proportion not recognised
Carrying value
Profit from continuing operations
Share of profit
(Loss)/profit proportion not recognised
Share of (loss)/profit
1,045
418
–
3
–
–
421
542
217
–
217
1,212
485
–
3
–
–
488
619
247
–
247
3,083
867
–
342
(1,257)
48
–
808
306
(32)
274
566
238
–
528
–
–
766
44
19
–
19
535
214
–
214
178
75
(20)
55
The Group received a dividend from Indus Towers Limited of €201 million (2020: €nil, 2019: €141 million) in the year ended 31 March 2021 and
a dividend from Safaricom Limited of €171m (2020: €261m).
162 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
163 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
12. Investments in associates and joint arrangements (continued)
12. Investments in associates and joint arrangements (continued)
13. Other investments
The Group holds a number of other listed and unlisted investments, mainly comprising managed funds,
deposits and government bonds.
Accounting policies
Other investments comprising debt and equity instruments are recognised and derecognised on a trade date where a purchase or sale of an
investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and
are initially measured at fair value, including transaction costs.
Debt securities that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest
are measured at amortised cost using the effective interest method, less any impairment. Debt securities that do not meet the criteria for
amortised cost are measured at fair value through profit and loss.
Equity securities are classified and measured at fair value through other comprehensive income, there is no subsequent reclassification of fair
value gains and losses to profit or loss following derecognition of the investment.
Included within non-current assets:
Equity securities1
Debt securities2
Debt securities include €0.8 billion (2020: €0.7 billion) of loan notes issued by VodafoneZiggo Holding B.V.
Current other investments comprise the following:
Included within current assets:
Short-term investments:
Bonds and debt securities3,4
Managed investment funds1
Collateral assets4
Other investments5
2021
€m
128
797
925
2020
€m
77
715
792
2021
€m
2020
€m
1,053
2,954
4,007
3,107
2,045
9,159
1,681
2,451
4,132
1,115
1,842
7,089
Notes:
1
Items are measured at fair value and the valuation basis is level 2 classification, which comprises items where fair value is determined from inputs other than quoted prices that are observable for
the asset or liability, either directly or indirectly.
Items are measured at amortised cost and the carrying amount approximates fair value.
Items are measured at fair value and the valuation basis is level 1 classification, which comprises financial instruments where fair value is determined by unadjusted quoted prices in active markets
for identical assets or liabilities.
2
3
4 Collateral assets are measured at amortised cost and were previously presented as part of short-term investments within bonds and debt securities.
5 €1,057 million (2020: €1,017 million) is measured at fair value and the valuation basis is level 1. The remaining items are measured at amortised cost and the carrying amount approximates fair
value.
The Group invests surplus cash positions across a portfolio of short-term investments to manage liquidity and credit risk whilst achieving
suitable returns. Collateral arrangements on derivative financial instruments result in cash being paid/(held), repayable when the derivatives are
settled. These assets do not meet the definition of cash and cash equivalents but are included in the Group’s net debt based on their liquidity.
Bonds and debt securities includes €nil (2020: €194 million) of highly liquid Japanese; €499 million (2020: €nil) German and €554 million (2020:
€nil) French government securities; €nil (2020: €1,016 million) of German government backed securities and €nil (2020: €471 million) of UK
government bonds.
Managed investment funds of €2,954 million (2020: €2,451 million) are in funds with liquidity of up to 90 days.
Collateral assets of €3,107 million (2020: €1,115 million) represents collateral paid on derivative financial instruments.
Other investments are excluded from net debt based on their liquidity and primarily consist of restricted debt securities including amounts held
in qualifying assets by Group insurance companies to meet regulatory requirements.
The following table provides aggregated financial information for the Group’s associates as it relates to the amounts recognised in the income
The following table provides aggregated financial information for the Group’s associates as it relates to the amounts recognised in the income
statement, statement of comprehensive income and consolidated statement of financial position.
statement, statement of comprehensive income and consolidated statement of financial position.
1 The Group’s interest in Indus Towers Limited was classified as held for sale at 31 March 2021. See note 7 “Discontinued operations and assets and liabilities held for sale”.
1 The Group’s interest in Indus Towers Limited was classified as held for sale at 31 March 2021. See note 7 “Discontinued operations and assets and liabilities held for sale”.
Safaricom Limited
Safaricom Limited
Indus Towers Limited1
Indus Towers Limited1
Other
Other
Total
Total
Note:
Note:
Income statement
Income statement
Revenue
Revenue
Operating expenses
Operating expenses
Depreciation and amortisation
Depreciation and amortisation
Other income/(expense)
Other income/(expense)
Operating profit
Operating profit
Interest income
Interest income
Interest expense
Interest expense
Profit before tax
Profit before tax
Income tax
Income tax
Investment in associates
Investment in associates
Profit from continuing operations1
Profit from continuing operations1
2021
2021
€m
€m
421
421
–
–
–
–
421
421
2020
2020
€m
€m
488
488
–
–
20
20
508
508
2021
2021
€m
€m
217
217
274
274
(3)
(3)
488
488
2020
2020
€m
€m
247
247
–
–
(1)
(1)
246
246
2019
2019
€m
€m
214
214
–
–
2
2
216
216
Safaricom Limited
Safaricom Limited
Indus Towers Limited
Indus Towers Limited
2021
2021
€m
€m
2020
2020
€m
€m
2019
2019
€m
€m
2021
2021
€m
€m
2020
2020
€m
€m
2019
2019
€m
€m
2,083
2,083
(1,030)
(1,030)
(299)
(299)
–
–
754
754
12
12
(27)
(27)
739
739
(197)
(197)
2,310
2,310
(1,122)
(1,122)
(295)
(295)
–
–
893
893
26
26
(18)
(18)
901
901
(282)
(282)
2,140
2,140
(1,078)
(1,078)
(301)
(301)
–
–
761
761
20
20
(1)
(1)
780
780
(245)
(245)
2,421
2,421
(1,247)
(1,247)
(477)
(477)
412
412
1,109
1,109
61
61
(194)
(194)
976
976
(168)
(168)
542
542
619
619
535
535
808
808
2,227
2,227
(1,438)
(1,438)
(305)
(305)
–
–
484
484
11
11
(79)
(79)
416
416
(238)
(238)
178
178
Profit from continuing operations and total
Profit from continuing operations and total
comprehensive income
comprehensive income
Statement of financial position
Statement of financial position
Non-current assets
Non-current assets
Current assets
Current assets
Total assets
Total assets
Equity shareholders' funds
Equity shareholders' funds
Non-current liabilities
Non-current liabilities
Current liabilities
Current liabilities
Cash and cash equivalents within current assets
Cash and cash equivalents within current assets
Non-current liabilities excluding trade and other payables and
Non-current liabilities excluding trade and other payables and
Current liabilities excluding trade and other payables and
Current liabilities excluding trade and other payables and
provisions
provisions
provisions
provisions
Equity shareholders' funds
Equity shareholders' funds
Interest in joint ventures
Interest in joint ventures
Impairment
Impairment
Goodwill
Goodwill
Transferred to assets held for sale
Transferred to assets held for sale
Investment proportion not recognised
Investment proportion not recognised
Carrying value
Carrying value
Profit from continuing operations
Profit from continuing operations
Share of profit
Share of profit
(Loss)/profit proportion not recognised
(Loss)/profit proportion not recognised
Share of (loss)/profit
Share of (loss)/profit
1,333
1,333
438
438
1,771
1,771
1,045
1,045
131
131
595
595
208
208
93
93
149
149
–
–
3
3
–
–
–
–
542
542
217
217
–
–
217
217
1,398
1,398
424
424
1,822
1,822
1,212
1,212
119
119
491
491
234
234
101
101
99
99
–
–
3
3
–
–
–
–
619
619
247
247
–
–
247
247
1,045
1,045
418
418
1,212
1,212
485
485
421
421
488
488
The Group received a dividend from Indus Towers Limited of €201 million (2020: €nil, 2019: €141 million) in the year ended 31 March 2021 and
The Group received a dividend from Indus Towers Limited of €201 million (2020: €nil, 2019: €141 million) in the year ended 31 March 2021 and
a dividend from Safaricom Limited of €171m (2020: €261m).
a dividend from Safaricom Limited of €171m (2020: €261m).
535
535
214
214
–
–
214
214
178
178
75
75
(20)
(20)
55
55
2,365
2,365
(1,336)
(1,336)
(268)
(268)
(592)
(592)
169
169
32
32
(196)
(196)
5
5
39
39
44
44
2,448
2,448
562
562
3,010
3,010
566
566
1,327
1,327
1,117
1,117
16
16
566
566
238
238
528
528
–
–
–
–
–
–
766
766
44
44
19
19
–
–
19
19
1,656
1,656
1,095
1,095
906
906
658
658
5,271
5,271
1,198
1,198
6,469
6,469
3,083
3,083
1,936
1,936
1,450
1,450
230
230
3,083
3,083
867
867
–
–
342
342
48
48
–
–
(1,257)
(1,257)
808
808
306
306
(32)
(32)
274
274
The reconciliation of summarised financial information presented to the carrying amount of our interest in the associate is set out below.
The reconciliation of summarised financial information presented to the carrying amount of our interest in the associate is set out below.
164 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
14. Trade and other receivables
Trade and other receivables mainly consist of amounts owed to us by customers and amounts that we pay
to our suppliers in advance. Derivative financial instruments with a positive market value are reported within
this note as are contract assets, which represent an asset for accrued revenue in respect of goods or
services delivered to customers for which a trade receivable does not yet exist, and finance lease
receivables recognised where the Group acts as a lessor. See note 20 “Leases” for more information on the
Group’s leasing activities.
Accounting policies
Trade receivables represent amounts owed by customers where the right to receive payment is conditional only on the passage of time. Trade
receivables that are recovered in instalments from customers over an extended period are discounted at market rates and interest revenue is
accreted over the expected repayment period. Other trade receivables do not carry any interest and are stated at their nominal value. When the
Group establishes a practice of selling portfolios of receivables from time to time these portfolios are recorded at fair value through other
comprehensive income; all other trade receivables are recorded at amortised cost.
The carrying value of all trade receivables, contract assets and finance lease receivables recorded at amortised cost is reduced by allowances
for lifetime estimated credit losses. Estimated future credit losses are first recorded on the initial recognition of a receivable and are based on
the ageing of the receivable balances, historical experience and forward looking considerations. Individual balances are written off when
management deems them not to be collectible.
Included within non-current assets:
Trade receivables
Trade receivables held at fair value through other comprehensive income
Net investment in leases
Contract assets
Contract-related costs
Other receivables
Prepayments
Derivative financial instruments2
Included within current assets:
Trade receivables
Trade receivables held at fair value through other comprehensive income
Net investment in leases
Contract assets
Contract-related costs
Amounts owed by associates and joint ventures
Other receivables
Prepayments
Derivative financial instruments2
2021
€m
2020
Re-presented1
€m
52
278
104
528
580
76
247
2,912
4,777
3,625
466
36
3,038
1,364
184
889
1,082
239
10,923
68
261
118
583
628
84
227
8,424
10,393
3,848
556
32
3,012
1,293
362
916
953
752
11,724
Notes:
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See note 7 “Discontinued operations and assets and liabilities held for sale”. The
2
impact of the re-presentation is to increase Trade and other receivables within non-current assets and within current assets by €15 million and €313 million, respectively.
Items are measured at fair value and the valuation basis is level 2 classification, which comprises items where fair value is determined from inputs other than quoted prices that are observable for
the asset or liability, either directly or indirectly.
The Group’s trade receivables and contract assets are classified at amortised cost unless stated otherwise and are measured after allowances
for future expected credit losses, see note 22 “Capital and financial risk management” for more information on credit risk.
The carrying amounts of trade and other receivables, which are measured at amortised cost, approximate their fair value and are predominantly
non-interest bearing.
The Group’s contract-related costs comprise €1,883 million (2020: €1,855 million) relating to costs incurred to obtain customer contracts and
€61 million (2020: €66 million) relating to costs incurred to fulfil customer contracts; an amortisation and impairment expense of €1,497 million
(2020: €1,475 million) was recognised in operating profit during the year.
In February 2020 €357m of trade receivables were reclassified from amortised cost to fair value through other comprehensive income as the
balances may now be sold to a third party. The fair values of the derivative financial instruments are calculated by discounting the future cash
flows to net present values using appropriate market interest rates and foreign currency rates prevailing at 31 March.
164 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
165 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
14. Trade and other receivables
14. Trade and other receivables
15. Trade and other payables
Trade and other payables mainly consist of amounts owed to suppliers that have been invoiced or are
accrued and contract liabilities relating to consideration received from customers in advance. They also
include taxes and social security amounts due in relation to the Group’s role as an employer. Derivative
financial instruments with a negative market value are reported within this note.
Accounting policies
Trade payables are not interest-bearing and are stated at their nominal value.
Included within non-current liabilities:
Other payables
Accruals
Contract liabilities
Derivative financial instruments2
Included within current liabilities:
Trade payables
Amounts owed to associates and joint ventures
Other taxes and social security payable
Other payables
Accruals3
Contract liabilities
Derivative financial instruments2
2021
€m
2020
Re-presented1
€m
424
47
519
3,919
4,909
6,739
36
1,196
2,349
5,688
1,971
91
18,070
340
60
612
4,177
5,189
6,696
51
1,185
2,040
5,077
2,081
589
17,719
Notes:
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See note 7 “Discontinued operations and assets and liabilities held for sale”. The
impact of the re-presentation is to increase Trade and other payables included within current liabilities by €634 million compared to the amount previously reported.
Items are measured at fair value and the valuation basis is level 2 classification, which comprises items where fair value is determined from inputs other than quoted prices that are observable for
the asset or liability, either directly or indirectly.
Includes €339 million (2020: €nil) payable in relation to the irrevocable and non-discretionary share buyback programme announced in March 2021.
2
3
The carrying amounts of trade and other payables approximate their fair value.
Materially all of the €2,081 million recorded as current contract liabilities at 1 April 2020 was recognised as revenue during the year.
Other payables included within non-current liabilities include €383 million (2020: €294 million) in respect of the re-insurance of a third party
annuity policy related to the Vodafone and CWW Sections of the Vodafone UK Group Pension Scheme.
The fair values of the derivative financial instruments are calculated by discounting the future cash flows to net present values using appropriate
market interest rates and foreign currency rates prevailing at 31 March.
Trade and other receivables mainly consist of amounts owed to us by customers and amounts that we pay
Trade and other receivables mainly consist of amounts owed to us by customers and amounts that we pay
to our suppliers in advance. Derivative financial instruments with a positive market value are reported within
to our suppliers in advance. Derivative financial instruments with a positive market value are reported within
this note as are contract assets, which represent an asset for accrued revenue in respect of goods or
this note as are contract assets, which represent an asset for accrued revenue in respect of goods or
services delivered to customers for which a trade receivable does not yet exist, and finance lease
services delivered to customers for which a trade receivable does not yet exist, and finance lease
receivables recognised where the Group acts as a lessor. See note 20 “Leases” for more information on the
receivables recognised where the Group acts as a lessor. See note 20 “Leases” for more information on the
Group’s leasing activities.
Group’s leasing activities.
Accounting policies
Accounting policies
Trade receivables represent amounts owed by customers where the right to receive payment is conditional only on the passage of time. Trade
Trade receivables represent amounts owed by customers where the right to receive payment is conditional only on the passage of time. Trade
receivables that are recovered in instalments from customers over an extended period are discounted at market rates and interest revenue is
receivables that are recovered in instalments from customers over an extended period are discounted at market rates and interest revenue is
accreted over the expected repayment period. Other trade receivables do not carry any interest and are stated at their nominal value. When the
accreted over the expected repayment period. Other trade receivables do not carry any interest and are stated at their nominal value. When the
Group establishes a practice of selling portfolios of receivables from time to time these portfolios are recorded at fair value through other
Group establishes a practice of selling portfolios of receivables from time to time these portfolios are recorded at fair value through other
comprehensive income; all other trade receivables are recorded at amortised cost.
comprehensive income; all other trade receivables are recorded at amortised cost.
The carrying value of all trade receivables, contract assets and finance lease receivables recorded at amortised cost is reduced by allowances
The carrying value of all trade receivables, contract assets and finance lease receivables recorded at amortised cost is reduced by allowances
for lifetime estimated credit losses. Estimated future credit losses are first recorded on the initial recognition of a receivable and are based on
for lifetime estimated credit losses. Estimated future credit losses are first recorded on the initial recognition of a receivable and are based on
the ageing of the receivable balances, historical experience and forward looking considerations. Individual balances are written off when
the ageing of the receivable balances, historical experience and forward looking considerations. Individual balances are written off when
management deems them not to be collectible.
management deems them not to be collectible.
Included within non-current assets:
Included within non-current assets:
Trade receivables
Trade receivables
Trade receivables held at fair value through other comprehensive income
Trade receivables held at fair value through other comprehensive income
Net investment in leases
Net investment in leases
Contract assets
Contract assets
Contract-related costs
Contract-related costs
Other receivables
Other receivables
Prepayments
Prepayments
Derivative financial instruments2
Derivative financial instruments2
Included within current assets:
Included within current assets:
Trade receivables
Trade receivables
Net investment in leases
Net investment in leases
Contract assets
Contract assets
Contract-related costs
Contract-related costs
Amounts owed by associates and joint ventures
Amounts owed by associates and joint ventures
Other receivables
Other receivables
Prepayments
Prepayments
Derivative financial instruments2
Derivative financial instruments2
Trade receivables held at fair value through other comprehensive income
Trade receivables held at fair value through other comprehensive income
2021
2021
€m
€m
Re-presented1
Re-presented1
2020
2020
€m
€m
2,912
2,912
4,777
4,777
8,424
8,424
10,393
10,393
52
52
278
278
104
104
528
528
580
580
76
76
247
247
3,625
3,625
466
466
36
36
3,038
3,038
1,364
1,364
184
184
889
889
1,082
1,082
239
239
68
68
261
261
118
118
583
583
628
628
84
84
227
227
3,848
3,848
556
556
32
32
3,012
3,012
1,293
1,293
362
362
916
916
953
953
752
752
10,923
10,923
11,724
11,724
Notes:
Notes:
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See note 7 “Discontinued operations and assets and liabilities held for sale”. The
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See note 7 “Discontinued operations and assets and liabilities held for sale”. The
impact of the re-presentation is to increase Trade and other receivables within non-current assets and within current assets by €15 million and €313 million, respectively.
impact of the re-presentation is to increase Trade and other receivables within non-current assets and within current assets by €15 million and €313 million, respectively.
2
2
Items are measured at fair value and the valuation basis is level 2 classification, which comprises items where fair value is determined from inputs other than quoted prices that are observable for
Items are measured at fair value and the valuation basis is level 2 classification, which comprises items where fair value is determined from inputs other than quoted prices that are observable for
the asset or liability, either directly or indirectly.
the asset or liability, either directly or indirectly.
The Group’s trade receivables and contract assets are classified at amortised cost unless stated otherwise and are measured after allowances
The Group’s trade receivables and contract assets are classified at amortised cost unless stated otherwise and are measured after allowances
for future expected credit losses, see note 22 “Capital and financial risk management” for more information on credit risk.
for future expected credit losses, see note 22 “Capital and financial risk management” for more information on credit risk.
The carrying amounts of trade and other receivables, which are measured at amortised cost, approximate their fair value and are predominantly
The carrying amounts of trade and other receivables, which are measured at amortised cost, approximate their fair value and are predominantly
non-interest bearing.
non-interest bearing.
The Group’s contract-related costs comprise €1,883 million (2020: €1,855 million) relating to costs incurred to obtain customer contracts and
The Group’s contract-related costs comprise €1,883 million (2020: €1,855 million) relating to costs incurred to obtain customer contracts and
€61 million (2020: €66 million) relating to costs incurred to fulfil customer contracts; an amortisation and impairment expense of €1,497 million
€61 million (2020: €66 million) relating to costs incurred to fulfil customer contracts; an amortisation and impairment expense of €1,497 million
(2020: €1,475 million) was recognised in operating profit during the year.
(2020: €1,475 million) was recognised in operating profit during the year.
In February 2020 €357m of trade receivables were reclassified from amortised cost to fair value through other comprehensive income as the
In February 2020 €357m of trade receivables were reclassified from amortised cost to fair value through other comprehensive income as the
balances may now be sold to a third party. The fair values of the derivative financial instruments are calculated by discounting the future cash
balances may now be sold to a third party. The fair values of the derivative financial instruments are calculated by discounting the future cash
flows to net present values using appropriate market interest rates and foreign currency rates prevailing at 31 March.
flows to net present values using appropriate market interest rates and foreign currency rates prevailing at 31 March.
166 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
16. Provisions
A provision is a liability recorded in the statement of financial position, where there is uncertainty over the
timing or amount that will be paid, and is therefore often estimated. The main provisions we hold are in
relation to asset retirement obligations, which include the cost of returning network infrastructure sites to
their original condition at the end of the lease and claims for legal and regulatory matters.
Accounting policies
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required
to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the Directors’ best estimate of the
expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material. Where the timing of
settlement is uncertain amounts are classified as non-current where settlement is expected more than 12 months from the reporting date.
Asset retirement obligations
In the course of the Group’s activities, a number of sites and other assets are utilised which are expected to have costs associated with decommissioning. The
associated cash outflows are substantially expected to occur at the dates of decommissioning of the assets to which they relate, and are long term in nature.
Legal and regulatory
The Group is involved in a number of legal and other disputes, including where the Group has received notifications of possible claims. The
Directors of the Company, after taking legal advice, have established provisions considering the facts of each case. For a discussion of certain
legal issues potentially affecting the Group see note 29 “Contingent liabilities and legal proceedings” to the consolidated financial statements.
Other provisions
Other provisions comprise various amounts including those for restructuring costs. The associated cash outflows for restructuring costs are
primarily less than one year.
31 March 2019
Exchange movements
Acquisition of subsidiaries
Disposal of subsidiaries
Amounts capitalised in the year
Amounts charged to the income statement
Utilised in the year - payments
Amounts released to the income statement
31 March 20201
Exchange movements
Acquisition of subsidiaries
Amounts capitalised in the year
Amounts charged to the income statement
Utilised in the year - payments
Amounts released to the income statement
31 March 2021
Note:
1 The comparative balances as at 31 March 2020 have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities
Restructuring
€m
434
(2)
33
(4)
–
549
(452)
(13)
545
4
–
–
153
(243)
(33)
426
Other
€m
619
5
71
(2)
–
163
(127)
(199)
530
7
–
–
167
(175)
(66)
463
Total
€m
2,317
(15)
178
(75)
270
834
(711)
(266)
2,532
6
6
294
458
(504)
(153)
2,639
Legal and
regulatory
€m
507
(2)
18
–
–
122
(98)
(45)
502
(11)
–
–
138
(54)
(47)
528
Asset
retirement
obligations
€m
757
(16)
56
(69)
270
–
(34)
(9)
955
6
6
294
–
(32)
(7)
1,222
held for sale”. The impact of the re-presentation is to increase non-current provisions by €5 million and current provisions by €29 million, respectively, compared to amounts previously reported.
166 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
167 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Provisions have been analysed between current and non-current as follows:
31 March 2021
Current liabilities
Non-current liabilities
31 March 2020
Current liabilities
Non-current liabilities
Asset
retirement
obligations
€m
43
1,179
1,222
Asset
retirement
obligations
€m
23
932
955
Legal and
regulatory
€m
273
255
528
Legal and
regulatory
€m
319
183
502
Restructuring
€m
353
73
426
Restructuring
€m
415
130
545
Other
€m
223
240
463
Other
€m
296
234
530
Total
€m
892
1,747
2,639
Total
€m
1,053
1,479
2,532
17. Called up share capital
Called up share capital is the number of shares in issue at their par value. A number of shares were allotted
during the year in relation to employee share schemes.
Accounting policies
Equity instruments issued by the Group are recorded at the amount of the proceeds received, net of direct issuance costs.
2021
Number
€m
2020
Number
€m
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
16. Provisions
16. Provisions
A provision is a liability recorded in the statement of financial position, where there is uncertainty over the
A provision is a liability recorded in the statement of financial position, where there is uncertainty over the
timing or amount that will be paid, and is therefore often estimated. The main provisions we hold are in
timing or amount that will be paid, and is therefore often estimated. The main provisions we hold are in
relation to asset retirement obligations, which include the cost of returning network infrastructure sites to
relation to asset retirement obligations, which include the cost of returning network infrastructure sites to
their original condition at the end of the lease and claims for legal and regulatory matters.
their original condition at the end of the lease and claims for legal and regulatory matters.
Accounting policies
Accounting policies
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required
to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the Directors’ best estimate of the
to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the Directors’ best estimate of the
expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material. Where the timing of
expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material. Where the timing of
settlement is uncertain amounts are classified as non-current where settlement is expected more than 12 months from the reporting date.
settlement is uncertain amounts are classified as non-current where settlement is expected more than 12 months from the reporting date.
In the course of the Group’s activities, a number of sites and other assets are utilised which are expected to have costs associated with decommissioning. The
In the course of the Group’s activities, a number of sites and other assets are utilised which are expected to have costs associated with decommissioning. The
associated cash outflows are substantially expected to occur at the dates of decommissioning of the assets to which they relate, and are long term in nature.
associated cash outflows are substantially expected to occur at the dates of decommissioning of the assets to which they relate, and are long term in nature.
The Group is involved in a number of legal and other disputes, including where the Group has received notifications of possible claims. The
The Group is involved in a number of legal and other disputes, including where the Group has received notifications of possible claims. The
Directors of the Company, after taking legal advice, have established provisions considering the facts of each case. For a discussion of certain
Directors of the Company, after taking legal advice, have established provisions considering the facts of each case. For a discussion of certain
legal issues potentially affecting the Group see note 29 “Contingent liabilities and legal proceedings” to the consolidated financial statements.
legal issues potentially affecting the Group see note 29 “Contingent liabilities and legal proceedings” to the consolidated financial statements.
Other provisions comprise various amounts including those for restructuring costs. The associated cash outflows for restructuring costs are
Other provisions comprise various amounts including those for restructuring costs. The associated cash outflows for restructuring costs are
Asset retirement obligations
Asset retirement obligations
Legal and regulatory
Legal and regulatory
Other provisions
Other provisions
primarily less than one year.
primarily less than one year.
31 March 2019
31 March 2019
Exchange movements
Exchange movements
Acquisition of subsidiaries
Acquisition of subsidiaries
Disposal of subsidiaries
Disposal of subsidiaries
Amounts capitalised in the year
Amounts capitalised in the year
Amounts charged to the income statement
Amounts charged to the income statement
Utilised in the year - payments
Utilised in the year - payments
Amounts released to the income statement
Amounts released to the income statement
31 March 20201
31 March 20201
Exchange movements
Exchange movements
Acquisition of subsidiaries
Acquisition of subsidiaries
Amounts capitalised in the year
Amounts capitalised in the year
Amounts charged to the income statement
Amounts charged to the income statement
Utilised in the year - payments
Utilised in the year - payments
Amounts released to the income statement
Amounts released to the income statement
31 March 2021
31 March 2021
Note:
Note:
Asset
Asset
retirement
retirement
obligations
obligations
€m
€m
757
757
(16)
(16)
56
56
(69)
(69)
270
270
–
–
(34)
(34)
(9)
(9)
955
955
6
6
6
6
–
–
294
294
(32)
(32)
(7)
(7)
1,222
1,222
Legal and
Legal and
regulatory
regulatory
€m
€m
507
507
Restructuring
Restructuring
€m
€m
434
434
(2)
(2)
18
18
–
–
–
–
122
122
(98)
(98)
(45)
(45)
502
502
(11)
(11)
–
–
–
–
138
138
(54)
(54)
(47)
(47)
528
528
(2)
(2)
33
33
(4)
(4)
–
–
549
549
(452)
(452)
(13)
(13)
545
545
4
4
–
–
–
–
153
153
(243)
(243)
(33)
(33)
426
426
Other
Other
€m
€m
619
619
5
5
71
71
(2)
(2)
–
–
163
163
(127)
(127)
(199)
(199)
530
530
7
7
–
–
–
–
167
167
(175)
(175)
(66)
(66)
463
463
Total
Total
€m
€m
2,317
2,317
(15)
(15)
178
178
(75)
(75)
270
270
834
834
(711)
(711)
(266)
(266)
6
6
6
6
294
294
458
458
(504)
(504)
(153)
(153)
2,532
2,532
2,639
2,639
1 The comparative balances as at 31 March 2020 have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities
1 The comparative balances as at 31 March 2020 have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities
held for sale”. The impact of the re-presentation is to increase non-current provisions by €5 million and current provisions by €29 million, respectively, compared to amounts previously reported.
held for sale”. The impact of the re-presentation is to increase non-current provisions by €5 million and current provisions by €29 million, respectively, compared to amounts previously reported.
Ordinary shares of 20 20⁄21 US cents each allotted,
issued and fully paid:1, 2, 3
1 April
Allotted during the year
31 March
Notes:
1 At 31 March 2021 there were 50,000 (2020: 50,000) 7% cumulative fixed rate shares of £1 each in issue.
2 At 31 March 2021 the Group held 592,642,309 (2020: 2,043,750,434) treasury shares with a nominal value of €99 million (2020: €340 million). The market value of shares held was €918 million
(2020: €2,610 million). During the year, 63,830,400 (2020: 49,629,851) treasury shares were reissued under Group share schemes.
3 On 5 March 2019 the Group announced the placing of subordinated mandatory convertible bonds totalling £1.72 billion with a 2 year maturity date in 2021 and £1.72 billion with a 3 year
maturity date due in 2022. During the year, 1,426,788,937 treasury shares were issued in settlement of tranche 1 of the maturing subordinated mandatory convertible bond. The remaining bonds
are convertible into a total of 1,426,793,872 ordinary shares with a conversion price of £1.2055 per share. For further details see note 21 “Borrowings”.
28,815,258,178
656,800
28,815,914,978
28,815,914,978
920,800
28,816,835,778
4,796
1
4,797
4,797
–
4,797
168 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
18. Reconciliation of net cash flow from operating activities
The table below shows how our profit/(loss) for the year from continuing operations translates into cash
flows generated from our operating activities.
Profit/(loss) for the financial year
Loss for the financial year from discontinued operations
Profit/(loss) for the financial year from continuing operations
Non-operating expense
Investment income
Financing costs
Income tax expense
Operating profit/(loss)
Adjustments for:
Share-based payments and other non-cash charges
Depreciation and amortisation
Loss on disposal of property, plant and equipment and intangible assets
Share of result of equity accounted associates and joint ventures
Impairment losses
Other (income)/expense
(Increase)/decrease in inventory
Decrease/(Increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated by operations
Net tax paid
Cash flows from discontinued operations
Net cash flow from operating activities
19. Cash and cash equivalents
Notes
7
5
5
6
10, 11
12
4
14
15
2021
€m
536
–
536
–
(330)
1,027
3,864
5,097
146
14,101
17
(342)
–
(568)
(68)
582
(730)
18,235
(1,020)
–
17,215
2020
€m
(455)
–
(455)
3
(248)
3,549
1,250
4,099
146
14,174
51
2,505
1,685
(4,281)
68
(38)
(100)
18,309
(930)
–
17,379
2019
€m
(7,644)
3,535
(4,109)
7
(433)
2,088
1,496
(951)
147
9,795
33
908
3,525
148
(131)
(31)
739
14,182
(1,131)
(71)
12,980
The majority of the Group’s cash is held in bank deposits or money market funds which have a maturity of
three months or less from acquisition to enable us to meet our short-term liquidity requirements.
Accounting policies
Cash and cash equivalents comprise cash in hand and call deposits, and other short-term highly liquid investments that are readily convertible
to a known amount of cash and are subject to an insignificant risk of changes in value. Assets in money market funds, whose contractual cash
flows do not represent solely payments of interest and principal, are measured at fair value with gains and losses arising from changes in fair
value included in net profit or loss for the period. All other cash and cash equivalents are measured at amortised cost.
Cash at bank and in hand
Repurchase agreements and bank deposits
Money market funds2
Cash and cash equivalents as presented in the statement of financial position1
Bank overdrafts
Cash and cash equivalents as presented in the statement of cash flows
Notes:
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”. The
2021
€m
2,705
–
3,116
5,821
(31)
5,790
2020
Re-presented1
€m
2,220
2,202
9,135
13,557
(269)
13,288
impact of the re-presentation is to increase cash and cash equivalents as presented in the statement of financial position by €273 million.
Items are measured at fair value and the valuation basis is level 1 classification, which comprises financial instruments where fair value is determined by unadjusted quoted prices in active markets.
2
The carrying amount of balances at amortised cost approximates their fair value.
Cash and cash equivalents of €1,741 million (2020: €1,460 million) are held in countries with restrictions on remittances but where the balances
could be used to repay subsidiaries’ third party liabilities. In addition, those balances could also be used to repay €879 million (2020: €885
million) of intercompany liabilities as at 31 March 2021.
168 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
169 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
18. Reconciliation of net cash flow from operating activities
18. Reconciliation of net cash flow from operating activities
20. Leases
The table below shows how our profit/(loss) for the year from continuing operations translates into cash
The table below shows how our profit/(loss) for the year from continuing operations translates into cash
flows generated from our operating activities.
flows generated from our operating activities.
Profit/(loss) for the financial year
Profit/(loss) for the financial year
Loss for the financial year from discontinued operations
Loss for the financial year from discontinued operations
Profit/(loss) for the financial year from continuing operations
Profit/(loss) for the financial year from continuing operations
Non-operating expense
Non-operating expense
Investment income
Investment income
Financing costs
Financing costs
Income tax expense
Income tax expense
Operating profit/(loss)
Operating profit/(loss)
Adjustments for:
Adjustments for:
Share-based payments and other non-cash charges
Share-based payments and other non-cash charges
Depreciation and amortisation
Depreciation and amortisation
Loss on disposal of property, plant and equipment and intangible assets
Loss on disposal of property, plant and equipment and intangible assets
Share of result of equity accounted associates and joint ventures
Share of result of equity accounted associates and joint ventures
Impairment losses
Impairment losses
Other (income)/expense
Other (income)/expense
(Increase)/decrease in inventory
(Increase)/decrease in inventory
Decrease/(Increase) in trade and other receivables
Decrease/(Increase) in trade and other receivables
(Decrease)/increase in trade and other payables
(Decrease)/increase in trade and other payables
Cash generated by operations
Cash generated by operations
Net tax paid
Net tax paid
Cash flows from discontinued operations
Cash flows from discontinued operations
Net cash flow from operating activities
Net cash flow from operating activities
19. Cash and cash equivalents
19. Cash and cash equivalents
Notes
Notes
7
7
5
5
5
5
6
6
12
12
4
4
14
14
15
15
10, 11
10, 11
2021
2021
€m
€m
536
536
536
536
–
–
–
–
(330)
(330)
1,027
1,027
3,864
3,864
5,097
5,097
146
146
14,101
14,101
17
17
(342)
(342)
–
–
(568)
(568)
(68)
(68)
582
582
(730)
(730)
18,235
18,235
(1,020)
(1,020)
–
–
2020
2020
€m
€m
(455)
(455)
(455)
(455)
–
–
3
3
(248)
(248)
3,549
3,549
1,250
1,250
4,099
4,099
146
146
14,174
14,174
51
51
2,505
2,505
1,685
1,685
(4,281)
(4,281)
68
68
(38)
(38)
(100)
(100)
(930)
(930)
–
–
18,309
18,309
2019
2019
€m
€m
(7,644)
(7,644)
3,535
3,535
(4,109)
(4,109)
7
7
(433)
(433)
2,088
2,088
1,496
1,496
(951)
(951)
147
147
9,795
9,795
33
33
908
908
3,525
3,525
148
148
(131)
(131)
(31)
(31)
739
739
14,182
14,182
(1,131)
(1,131)
(71)
(71)
17,215
17,215
17,379
17,379
12,980
12,980
The majority of the Group’s cash is held in bank deposits or money market funds which have a maturity of
The majority of the Group’s cash is held in bank deposits or money market funds which have a maturity of
three months or less from acquisition to enable us to meet our short-term liquidity requirements.
three months or less from acquisition to enable us to meet our short-term liquidity requirements.
Accounting policies
Accounting policies
Cash and cash equivalents comprise cash in hand and call deposits, and other short-term highly liquid investments that are readily convertible
Cash and cash equivalents comprise cash in hand and call deposits, and other short-term highly liquid investments that are readily convertible
to a known amount of cash and are subject to an insignificant risk of changes in value. Assets in money market funds, whose contractual cash
to a known amount of cash and are subject to an insignificant risk of changes in value. Assets in money market funds, whose contractual cash
flows do not represent solely payments of interest and principal, are measured at fair value with gains and losses arising from changes in fair
flows do not represent solely payments of interest and principal, are measured at fair value with gains and losses arising from changes in fair
value included in net profit or loss for the period. All other cash and cash equivalents are measured at amortised cost.
value included in net profit or loss for the period. All other cash and cash equivalents are measured at amortised cost.
Cash at bank and in hand
Cash at bank and in hand
Repurchase agreements and bank deposits
Repurchase agreements and bank deposits
Money market funds2
Money market funds2
Cash and cash equivalents as presented in the statement of financial position1
Cash and cash equivalents as presented in the statement of financial position1
Bank overdrafts
Bank overdrafts
Notes:
Notes:
Cash and cash equivalents as presented in the statement of cash flows
Cash and cash equivalents as presented in the statement of cash flows
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”. The
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”. The
impact of the re-presentation is to increase cash and cash equivalents as presented in the statement of financial position by €273 million.
impact of the re-presentation is to increase cash and cash equivalents as presented in the statement of financial position by €273 million.
2
2
Items are measured at fair value and the valuation basis is level 1 classification, which comprises financial instruments where fair value is determined by unadjusted quoted prices in active markets.
Items are measured at fair value and the valuation basis is level 1 classification, which comprises financial instruments where fair value is determined by unadjusted quoted prices in active markets.
The carrying amount of balances at amortised cost approximates their fair value.
The carrying amount of balances at amortised cost approximates their fair value.
Cash and cash equivalents of €1,741 million (2020: €1,460 million) are held in countries with restrictions on remittances but where the balances
Cash and cash equivalents of €1,741 million (2020: €1,460 million) are held in countries with restrictions on remittances but where the balances
could be used to repay subsidiaries’ third party liabilities. In addition, those balances could also be used to repay €879 million (2020: €885
could be used to repay subsidiaries’ third party liabilities. In addition, those balances could also be used to repay €879 million (2020: €885
million) of intercompany liabilities as at 31 March 2021.
million) of intercompany liabilities as at 31 March 2021.
2021
2021
€m
€m
Re-presented1
Re-presented1
2020
2020
€m
€m
2,705
2,705
–
–
3,116
3,116
5,821
5,821
(31)
(31)
2,220
2,220
2,202
2,202
9,135
9,135
13,557
13,557
(269)
(269)
5,790
5,790
13,288
13,288
The Group leases assets from other parties (the Group is a lessee) and also leases assets to other parties (the
Group is a lessor). This note describes how the Group accounts for leases and provides details about its lease
arrangements.
Lease accounting policy under IFRS 16
As a lessee
When the Group leases an asset, a ‘right-of-use asset’ is recognised for the leased item and a lease liability is recognised for any lease payments
to be paid over the lease term at the lease commencement date. The right-of-use asset is initially measured at cost, being the present value of
the lease payments paid or payable, plus any initial direct costs incurred in entering the lease and less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis from the commencement date to the earlier of the end of the asset’s useful life or
the end of the lease term. The lease term is the non-cancellable period of the lease plus any periods for which the Group is ‘reasonably certain’
to exercise any extension options (see below). The useful life of the asset is determined in a manner consistent to that for owned property, plant
and equipment (as described in note 11). If right-of-use assets are considered to be impaired, the carrying value is reduced accordingly.
Lease liabilities are initially measured at the value of the lease payments over the lease term that are not paid at the commencement date and
are usually discounted using the incremental borrowing rates of the applicable Group entity (the rate implicit in the lease is used if it is readily
determinable). Lease payments included in the lease liability include both fixed payments and in-substance fixed payments during the term of
the lease.
After initial recognition, the lease liability is recorded at amortised cost using the effective interest method. It is remeasured when there is a
change in future lease payments arising from a change in an index or rate (e.g. an inflation related increase) or if the Group’s assessment of the
lease term changes; any changes in the lease liability as a result of these changes also results in a corresponding change in the recorded right-
of-use asset.
As a lessor
Where the Group is a lessor, it determines at inception whether the lease is a finance or an operating lease. When a lease transfers substantially
all the risks and rewards of ownership of the underlying asset then the lease is a finance lease; otherwise the lease is an operating lease.
Where the Group is an intermediate lessor, the interests in the head lease and the sub-lease are accounted for separately and the lease
classification of a sub-lease is determined by reference to the right-of-use asset arising from the head lease.
Income from operating leases is recognised on a straight-line basis over the lease term. Income from finance leases is recognised at lease
commencement with interest income recognised over the lease term.
Lease income is recognised as revenue for transactions that are part of the Group’s ordinary activities (primarily leases of handsets or other
equipment to customers, leases of wholesale access to the Group’s fibre and cable networks). The Group uses IFRS 15 principles to allocate the
consideration in contracts between any lease and non-lease components.
Accounting policies under IAS 17 and IFRIC 4 for the year ended 31 March 2019
The Group adopted IFRS 16 on 1 April 2019 using the modified retrospective approach and comparative information was not restated. Financial
information for the year ended 31 March 2019 is reported in accordance with IAS 17 and IFRIC 4, as described below.
As a lessee
Leases were classified as finance leases whenever the terms of the lease transferred substantially all the risks and rewards of ownership of the
asset to the lessee; all other leases were classified as operating leases.
Assets held under finance leases were recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present
value of the minimum lease payments as determined at the inception of the lease. The corresponding liability to the lessor was included in the
statement of financial position as a finance lease obligation. Lease payments were apportioned between finance charges and reduction of the
lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Depreciation and finance charges were
recognised in the income statement.
Rentals payable under operating leases were charged, and lease incentives received, were credited to the income statement on a straight-line
basis over the term of the relevant lease.
As a lessor
Lessor accounting applied for the year ended 31 March 2019 was consistent with that described for IFRS 16 above, except for the lease
classification, as a finance or operating lease, of a sub-lease which was determined by reference to the underlying asset.
170 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
20. Leases (continued)
The Group’s leasing activities
As a lessee
The Group leases buildings for its retail stores, offices and data centres, land on which to construct mobile base stations, space on mobile base
stations to place active RAN equipment and network space (primarily rack space or duct space). In addition, the Group leases fibre and other
fixed connectivity to provide internal connectivity for the Group’s operations and on a wholesale basis from other operators to provide fixed
connectivity services to the Group’s customers.
The Group’s general approach to determining lease term by class of asset is described in note 1 under critical accounting judgements and key
sources of estimation uncertainty.
Most of the Group’s leases include future price increases through fixed percentage increases, indexation to inflation measures on a periodic
basis or rent review clauses. Other than fixed percentage increases the lease liability does not reflect the impact of these future increases unless
the measurement date has passed. The Group’s leases contain no material variable payments clauses other than those related to the number of
operators sharing space on third party mobile base stations.
The Group sub-leases excess retail and office properties under both operating and finance leases; see disclosure on the Group’s leasing activities
as a lessor below.
Operational lease periods
Where practicable the Group seeks to include extension or break options in leases to provide operational flexibility, therefore many of the
Group’s lease contracts contain optional periods. The Group’s policy on assessing and reassessing whether it is reasonably certain that the
optional period will be included in the lease term is described in note 1 under critical accounting judgements and key sources of estimation
uncertainty.
After initial recognition of a lease, the Group only reassesses the lease term when there is a significant event or a significant change in
circumstances, which was not anticipated at the time of the previous assessment. Significant events or significant changes in circumstances
could include merger and acquisition or similar activity, significant expenditure on the leased asset not anticipated in the previous assessment,
or detailed management plans indicating a different conclusion on optional periods to the previous assessment. Where a significant event or
significant change in circumstances does not occur, the lease term and therefore lease liability and right-of-use asset value, will decline over
time.
The Group’s cash outflow for leases in the year ended 31 March 2021 was €4,234 million (2020: €3,902 million) and, absent significant future
changes in the volume of the Group’s activities or strategic changes to use more or fewer owned assets this level of cash outflow from leases
would be expected to continue for future periods, subject to contractual price increases. The future cash outflows included within lease liabilities
are shown in the maturity analysis below on page 171. The maturity analysis only includes the reasonably certain payments to be made; cash
outflows in these future periods will likely exceed these amounts as payments will be made on optional periods not considered reasonably
certain at present and on new leases entered into in future periods.
The Group’s leases for customer connectivity are normally either under regulated access or network sharing or similar preferential access
arrangements and as a result the Group normally has significant flexibility over the term it can lease such connections for; generally the notice
period required to cancel the lease is less than the notice period included in the service contract with the end customer. As a result, the Group
does not have any significant cash exposure to optional periods on customer connectivity as the Group can cancel the lease when the service
agreement ends. In some circumstances the Group is committed to minimum spend amounts for connectivity leases, which are included within
reported lease liabilities.
Sale and leaseback
In the year ended 31 March 2020, the Group sold its Italian mobile base station assets to Infrastrutture Wireless Italiane S.p.A. (‘INWIT’) (see note
27 “Acquisitions and disposals” for additional details), and entered into an agreement to lease back space on these and other INWIT mobile base
station towers to locate network equipment for 8 years (see note 30 “Related party transactions”). The Group de-recognised assets related to
the mobile base stations with a net book value of €548 million. A total gain on disposal of €4,100 million was realised as a result of the disposal;
€744 million of this gain, reflecting the gain on the proportion of sold towers that has been retained through the leaseback, was recorded in the
year ended 31 March 2020 as a reduction in the value of the right-of-use asset recognised for the leaseback of tower space and will be realised
as a reduction in depreciation over the lease term.
Other sale and leaseback transactions entered into by the Group were not material, individually or in aggregate.
Amounts recognised in the primary financial statements in relation to lessee transactions
The carrying value of the Group’s right-of-use assets, depreciation charge for the year and additions during the year are disclosed in note 11
Right-of-use assets
“Property, plant and equipment”.
Lease liabilities
The Group’s lease liabilities are disclosed in note 21 “Borrowings”. The maturity profile of the Group’s lease liabilities is as follows:
Within one year
In more than one year but less than two years
In more than two years but less than three years
In more than three years but less than four years
In more than four years but less than five years
In more than five years
Effect of discounting
Lease liability (note 21 "Borrowings")
2021
€m
3,419
2,142
1,661
1,457
1,316
4,696
14,691
(1,659)
13,032
Re-presented1
2020
€m
3,198
2,018
1,542
1,337
1,128
4,443
13,666
(1,548)
12,118
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”. The
impact of the re-presentation is to increase total undiscounted lease liabilities by €75 million and total discounted lease liabilities by €55 million, respectively, compared to the amount previously
At 31 March 2021 the Group has entered into lease contracts with payment obligations with an undiscounted value of €82 million (2020: €67
million) that had not commenced at 31 March 2021.
Interest expense on lease liabilities for the year is disclosed in note 5 “Investment income and financing costs”.
The Group has no material liabilities under residual value guarantees and makes no material payments for variable payments not included in
the lease liability. The Group does not apply either the short term or low value expedient options in IFRS 16.
Note:
reported.
As a lessor
The Group has a wide range of lessor activities with consumer and enterprise customers, other telecommunication companies and other
companies. With consumer and enterprise customers, the Group generates lease income from the provision of handsets, routers and other
communications equipment. The Group provides wholesale access to the Group’s fibre and cable networks and leases out space on the Group’s
owned mobile base stations to other telecommunication companies. In addition, the Group sub-leases retail stores to franchise partners in
certain markets and leases out surplus assets (e.g. vacant offices and retail stores) to other companies.
Lessor transactions are classified as operating or finance leases based on whether the lease transfers substantially all of the risks and rewards
incidental to ownership of the asset. Leases are individually assessed, but generally, the Group’s lessor transactions are classified as:
- Operating leases where the Group is lessor of space on owned mobile base stations, provides wholesale access to its fibre and cable
networks or provides routers or similar equipment to fixed customers; and
-
Finance leases where the Group is sub-lessor of handsets or similar items in back-to-back arrangements or where surplus assets are sublet
out for all or substantially all of the remaining head lease term.
The Group’s income as a lessor in the year is as follows:
Operating leases
Lease revenue (note 2 "Revenue disaggregation and segmental analysis")
Income from leases not recognised as revenue
2021
€m
559
180
2020
€m
502
203
The Group’s net investments in leases are disclosed in note 14 “Trade and other receivables”. The committed amounts to be received from the
Group’s operating leases are as follows:
Within one
In one to two
In two to
In three to four
In four to five
In more than
year
€m
years
€m
three years
€m
years
€m
years
€m
five years
€m
Total
€m
Maturity
31 March 2021
Group as a lessor
31 March 2020
Group as a lessor
Committed operating lease income due to the
510
261
175
134
115
395
1,590
Committed operating lease income due to the
The Group has no material lease income arising from variable lease payments.
442
211
114
53
44
223
1,087
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
20. Leases (continued)
20. Leases (continued)
The Group’s leasing activities
The Group’s leasing activities
As a lessee
As a lessee
The Group leases buildings for its retail stores, offices and data centres, land on which to construct mobile base stations, space on mobile base
The Group leases buildings for its retail stores, offices and data centres, land on which to construct mobile base stations, space on mobile base
stations to place active RAN equipment and network space (primarily rack space or duct space). In addition, the Group leases fibre and other
stations to place active RAN equipment and network space (primarily rack space or duct space). In addition, the Group leases fibre and other
fixed connectivity to provide internal connectivity for the Group’s operations and on a wholesale basis from other operators to provide fixed
fixed connectivity to provide internal connectivity for the Group’s operations and on a wholesale basis from other operators to provide fixed
connectivity services to the Group’s customers.
connectivity services to the Group’s customers.
sources of estimation uncertainty.
sources of estimation uncertainty.
The Group’s general approach to determining lease term by class of asset is described in note 1 under critical accounting judgements and key
The Group’s general approach to determining lease term by class of asset is described in note 1 under critical accounting judgements and key
Most of the Group’s leases include future price increases through fixed percentage increases, indexation to inflation measures on a periodic
Most of the Group’s leases include future price increases through fixed percentage increases, indexation to inflation measures on a periodic
basis or rent review clauses. Other than fixed percentage increases the lease liability does not reflect the impact of these future increases unless
basis or rent review clauses. Other than fixed percentage increases the lease liability does not reflect the impact of these future increases unless
the measurement date has passed. The Group’s leases contain no material variable payments clauses other than those related to the number of
the measurement date has passed. The Group’s leases contain no material variable payments clauses other than those related to the number of
operators sharing space on third party mobile base stations.
operators sharing space on third party mobile base stations.
The Group sub-leases excess retail and office properties under both operating and finance leases; see disclosure on the Group’s leasing activities
The Group sub-leases excess retail and office properties under both operating and finance leases; see disclosure on the Group’s leasing activities
as a lessor below.
as a lessor below.
Operational lease periods
Operational lease periods
uncertainty.
uncertainty.
time.
time.
Where practicable the Group seeks to include extension or break options in leases to provide operational flexibility, therefore many of the
Where practicable the Group seeks to include extension or break options in leases to provide operational flexibility, therefore many of the
Group’s lease contracts contain optional periods. The Group’s policy on assessing and reassessing whether it is reasonably certain that the
Group’s lease contracts contain optional periods. The Group’s policy on assessing and reassessing whether it is reasonably certain that the
optional period will be included in the lease term is described in note 1 under critical accounting judgements and key sources of estimation
optional period will be included in the lease term is described in note 1 under critical accounting judgements and key sources of estimation
After initial recognition of a lease, the Group only reassesses the lease term when there is a significant event or a significant change in
After initial recognition of a lease, the Group only reassesses the lease term when there is a significant event or a significant change in
circumstances, which was not anticipated at the time of the previous assessment. Significant events or significant changes in circumstances
circumstances, which was not anticipated at the time of the previous assessment. Significant events or significant changes in circumstances
could include merger and acquisition or similar activity, significant expenditure on the leased asset not anticipated in the previous assessment,
could include merger and acquisition or similar activity, significant expenditure on the leased asset not anticipated in the previous assessment,
or detailed management plans indicating a different conclusion on optional periods to the previous assessment. Where a significant event or
or detailed management plans indicating a different conclusion on optional periods to the previous assessment. Where a significant event or
significant change in circumstances does not occur, the lease term and therefore lease liability and right-of-use asset value, will decline over
significant change in circumstances does not occur, the lease term and therefore lease liability and right-of-use asset value, will decline over
The Group’s cash outflow for leases in the year ended 31 March 2021 was €4,234 million (2020: €3,902 million) and, absent significant future
The Group’s cash outflow for leases in the year ended 31 March 2021 was €4,234 million (2020: €3,902 million) and, absent significant future
changes in the volume of the Group’s activities or strategic changes to use more or fewer owned assets this level of cash outflow from leases
changes in the volume of the Group’s activities or strategic changes to use more or fewer owned assets this level of cash outflow from leases
would be expected to continue for future periods, subject to contractual price increases. The future cash outflows included within lease liabilities
would be expected to continue for future periods, subject to contractual price increases. The future cash outflows included within lease liabilities
are shown in the maturity analysis below on page 171. The maturity analysis only includes the reasonably certain payments to be made; cash
are shown in the maturity analysis below on page 171. The maturity analysis only includes the reasonably certain payments to be made; cash
outflows in these future periods will likely exceed these amounts as payments will be made on optional periods not considered reasonably
outflows in these future periods will likely exceed these amounts as payments will be made on optional periods not considered reasonably
certain at present and on new leases entered into in future periods.
certain at present and on new leases entered into in future periods.
The Group’s leases for customer connectivity are normally either under regulated access or network sharing or similar preferential access
The Group’s leases for customer connectivity are normally either under regulated access or network sharing or similar preferential access
arrangements and as a result the Group normally has significant flexibility over the term it can lease such connections for; generally the notice
arrangements and as a result the Group normally has significant flexibility over the term it can lease such connections for; generally the notice
period required to cancel the lease is less than the notice period included in the service contract with the end customer. As a result, the Group
period required to cancel the lease is less than the notice period included in the service contract with the end customer. As a result, the Group
does not have any significant cash exposure to optional periods on customer connectivity as the Group can cancel the lease when the service
does not have any significant cash exposure to optional periods on customer connectivity as the Group can cancel the lease when the service
agreement ends. In some circumstances the Group is committed to minimum spend amounts for connectivity leases, which are included within
agreement ends. In some circumstances the Group is committed to minimum spend amounts for connectivity leases, which are included within
reported lease liabilities.
reported lease liabilities.
Sale and leaseback
Sale and leaseback
In the year ended 31 March 2020, the Group sold its Italian mobile base station assets to Infrastrutture Wireless Italiane S.p.A. (‘INWIT’) (see note
In the year ended 31 March 2020, the Group sold its Italian mobile base station assets to Infrastrutture Wireless Italiane S.p.A. (‘INWIT’) (see note
27 “Acquisitions and disposals” for additional details), and entered into an agreement to lease back space on these and other INWIT mobile base
27 “Acquisitions and disposals” for additional details), and entered into an agreement to lease back space on these and other INWIT mobile base
station towers to locate network equipment for 8 years (see note 30 “Related party transactions”). The Group de-recognised assets related to
station towers to locate network equipment for 8 years (see note 30 “Related party transactions”). The Group de-recognised assets related to
the mobile base stations with a net book value of €548 million. A total gain on disposal of €4,100 million was realised as a result of the disposal;
the mobile base stations with a net book value of €548 million. A total gain on disposal of €4,100 million was realised as a result of the disposal;
€744 million of this gain, reflecting the gain on the proportion of sold towers that has been retained through the leaseback, was recorded in the
€744 million of this gain, reflecting the gain on the proportion of sold towers that has been retained through the leaseback, was recorded in the
year ended 31 March 2020 as a reduction in the value of the right-of-use asset recognised for the leaseback of tower space and will be realised
year ended 31 March 2020 as a reduction in the value of the right-of-use asset recognised for the leaseback of tower space and will be realised
as a reduction in depreciation over the lease term.
as a reduction in depreciation over the lease term.
Other sale and leaseback transactions entered into by the Group were not material, individually or in aggregate.
Other sale and leaseback transactions entered into by the Group were not material, individually or in aggregate.
170 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
171 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Amounts recognised in the primary financial statements in relation to lessee transactions
Amounts recognised in the primary financial statements in relation to lessee transactions
Right-of-use assets
Right-of-use assets
The carrying value of the Group’s right-of-use assets, depreciation charge for the year and additions during the year are disclosed in note 11
The carrying value of the Group’s right-of-use assets, depreciation charge for the year and additions during the year are disclosed in note 11
“Property, plant and equipment”.
“Property, plant and equipment”.
Lease liabilities
Lease liabilities
The Group’s lease liabilities are disclosed in note 21 “Borrowings”. The maturity profile of the Group’s lease liabilities is as follows:
The Group’s lease liabilities are disclosed in note 21 “Borrowings”. The maturity profile of the Group’s lease liabilities is as follows:
2021
2021
€m
€m
3,419
3,419
2,142
2,142
1,661
1,661
1,457
1,457
1,316
1,316
4,696
4,696
14,691
14,691
(1,659)
(1,659)
13,032
13,032
2020
2020
Re-presented1
Re-presented1
€m
€m
3,198
3,198
2,018
2,018
1,542
1,542
1,337
1,337
1,128
1,128
4,443
4,443
13,666
13,666
(1,548)
(1,548)
12,118
12,118
Within one year
Within one year
In more than one year but less than two years
In more than one year but less than two years
In more than two years but less than three years
In more than two years but less than three years
In more than three years but less than four years
In more than three years but less than four years
In more than four years but less than five years
In more than four years but less than five years
In more than five years
In more than five years
Effect of discounting
Effect of discounting
Lease liability (note 21 "Borrowings")
Lease liability (note 21 "Borrowings")
Note:
Note:
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”. The
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”. The
impact of the re-presentation is to increase total undiscounted lease liabilities by €75 million and total discounted lease liabilities by €55 million, respectively, compared to the amount previously
impact of the re-presentation is to increase total undiscounted lease liabilities by €75 million and total discounted lease liabilities by €55 million, respectively, compared to the amount previously
reported.
reported.
At 31 March 2021 the Group has entered into lease contracts with payment obligations with an undiscounted value of €82 million (2020: €67
At 31 March 2021 the Group has entered into lease contracts with payment obligations with an undiscounted value of €82 million (2020: €67
million) that had not commenced at 31 March 2021.
million) that had not commenced at 31 March 2021.
Interest expense on lease liabilities for the year is disclosed in note 5 “Investment income and financing costs”.
Interest expense on lease liabilities for the year is disclosed in note 5 “Investment income and financing costs”.
The Group has no material liabilities under residual value guarantees and makes no material payments for variable payments not included in
The Group has no material liabilities under residual value guarantees and makes no material payments for variable payments not included in
the lease liability. The Group does not apply either the short term or low value expedient options in IFRS 16.
the lease liability. The Group does not apply either the short term or low value expedient options in IFRS 16.
As a lessor
As a lessor
The Group has a wide range of lessor activities with consumer and enterprise customers, other telecommunication companies and other
The Group has a wide range of lessor activities with consumer and enterprise customers, other telecommunication companies and other
companies. With consumer and enterprise customers, the Group generates lease income from the provision of handsets, routers and other
companies. With consumer and enterprise customers, the Group generates lease income from the provision of handsets, routers and other
communications equipment. The Group provides wholesale access to the Group’s fibre and cable networks and leases out space on the Group’s
communications equipment. The Group provides wholesale access to the Group’s fibre and cable networks and leases out space on the Group’s
owned mobile base stations to other telecommunication companies. In addition, the Group sub-leases retail stores to franchise partners in
owned mobile base stations to other telecommunication companies. In addition, the Group sub-leases retail stores to franchise partners in
certain markets and leases out surplus assets (e.g. vacant offices and retail stores) to other companies.
certain markets and leases out surplus assets (e.g. vacant offices and retail stores) to other companies.
Lessor transactions are classified as operating or finance leases based on whether the lease transfers substantially all of the risks and rewards
Lessor transactions are classified as operating or finance leases based on whether the lease transfers substantially all of the risks and rewards
incidental to ownership of the asset. Leases are individually assessed, but generally, the Group’s lessor transactions are classified as:
incidental to ownership of the asset. Leases are individually assessed, but generally, the Group’s lessor transactions are classified as:
- Operating leases where the Group is lessor of space on owned mobile base stations, provides wholesale access to its fibre and cable
- Operating leases where the Group is lessor of space on owned mobile base stations, provides wholesale access to its fibre and cable
networks or provides routers or similar equipment to fixed customers; and
networks or provides routers or similar equipment to fixed customers; and
-
-
Finance leases where the Group is sub-lessor of handsets or similar items in back-to-back arrangements or where surplus assets are sublet
Finance leases where the Group is sub-lessor of handsets or similar items in back-to-back arrangements or where surplus assets are sublet
out for all or substantially all of the remaining head lease term.
out for all or substantially all of the remaining head lease term.
The Group’s income as a lessor in the year is as follows:
The Group’s income as a lessor in the year is as follows:
Operating leases
Operating leases
Lease revenue (note 2 "Revenue disaggregation and segmental analysis")
Lease revenue (note 2 "Revenue disaggregation and segmental analysis")
Income from leases not recognised as revenue
Income from leases not recognised as revenue
2021
2021
€m
€m
559
559
180
180
2020
2020
€m
€m
502
502
203
203
The Group’s net investments in leases are disclosed in note 14 “Trade and other receivables”. The committed amounts to be received from the
The Group’s net investments in leases are disclosed in note 14 “Trade and other receivables”. The committed amounts to be received from the
Group’s operating leases are as follows:
Group’s operating leases are as follows:
31 March 2021
31 March 2021
Committed operating lease income due to the
Committed operating lease income due to the
Group as a lessor
Group as a lessor
31 March 2020
31 March 2020
Committed operating lease income due to the
Committed operating lease income due to the
Group as a lessor
Group as a lessor
Within one
Within one
year
year
€m
€m
In one to two
In one to two
years
years
€m
€m
In two to
In two to
three years
three years
€m
€m
Maturity
Maturity
In three to four
In three to four
years
years
€m
€m
In four to five
In four to five
years
years
€m
€m
In more than
In more than
five years
five years
€m
€m
Total
Total
€m
€m
510
510
261
261
175
175
134
134
115
115
395
395
1,590
1,590
442
442
211
211
114
114
53
53
44
44
223
223
1,087
1,087
The Group has no material lease income arising from variable lease payments.
The Group has no material lease income arising from variable lease payments.
172 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
21. Borrowings
The Group’s sources of borrowing for funding and liquidity purposes come from a range of committed bank
facilities and through short-term and long-term issuances in the capital markets including bond and
commercial paper issues and bank loans. Liabilities arising from the Group’s lease arrangements are also
reported in borrowings; see note 20 “Leases”. We manage the basis on which we incur interest on debt
between fixed interest rates and floating interest rates depending on market conditions using interest rate
derivatives. The Group enters into foreign exchange contracts to mitigate the impact of exchange rate
movements on certain monetary items.
Accounting policies
Interest-bearing loans and overdrafts are initially measured at fair value (which is equal to cost at inception), and are subsequently measured at
amortised cost, using the effective interest rate method. Where they are identified as a hedged item in a designated fair value hedge
relationship, fair value adjustments are recognised in accordance with our policy (see note 22 “Capital and financial risk management”). Any
difference between the proceeds net of transaction costs and the amount due on settlement or redemption of borrowings is recognised over
the term of the borrowing. Where bonds issued with certain conversion rights are identified as compound instruments they are initially
measured at fair value with the nominal amounts recognised as a component in equity and the fair value of future coupons included in
borrowings. These are subsequently measured at amortised cost using the effective interest rate method.
Borrowings
Non-current borrowings
Bonds
Bank loans
Lease liabilities (note 20)
Bank borrowings secured against Indian assets
Other borrowings2
Current borrowings
Bonds
Bank loans
Lease liabilities (note 20)
Collateral liabilities
Bank borrowings secured against Indian assets
Other borrowings
Borrowings
2021
€m
2020
Re-presented1
€m
(44,634)
(761)
(9,909)
(385)
(3,583)
(59,272)
(2,251)
(658)
(3,123)
(962)
(862)
(632)
(8,488)
(67,760)
(47,500)
(1,500)
(9,134)
(1,346)
(3,469)
(62,949)
(1,912)
(1,380)
(2,984)
(5,292)
–
(408)
(11,976)
(74,925)
Notes:
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”. The
impact of the re-presentation is to increase current borrowings and non-current borrowings by €150 million and €57 million, respectively, compared to amounts previously reported.
Includes €3,312 million (2020: €3,215 million) of spectrum licence payables.
2
The fair value of the Group’s financial assets and financial liabilities held at amortised cost approximate to fair value with the exception of long-
term bonds with a carrying value of €44,634 million (2020: €47,500 million) which have a fair value of €48,630 million (2020: €48,216 million).
Fair value is based on level 1 of the fair value hierarchy using quoted market prices.
The Group’s borrowings include certain bonds which have been designated in hedge relationships, which are carried at €1.4 billion higher than
their euro equivalent redemption value. In addition, where bonds are issued in currencies other than euros, the Group has entered into foreign
currency swaps to fix the euro cash outflows on redemption. The impact of these swaps are not reflected in borrowings and would decrease the
euro equivalent redemption value of the bonds by €0.1 billion.
Commercial paper programmes
We currently have US and euro commercial paper programmes of US$15 billion and €8 billion respectively which are available to be used to
meet short-term liquidity requirements. At 31 March 2021 €nil (2020: €nil) was drawn under the euro commercial paper programme. The US
commercial paper programme remained undrawn.
The commercial paper facilities were supported by US$4.0 billion (€3.4 billion) and €4.0 billion of syndicated committed bank facilities. No
amounts had been drawn under these facilities.
172 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
173 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Bonds
We have a €30 billion euro medium-term note programme and a US shelf programme which are used to meet medium to long-term funding
requirements. At 31 March 2021 the total amounts in issue under these programmes split by currency were USD22.9 billion, €18.4 billion, £3
billion, AUD1.2 billion, HKD2.1 billion, NOK2.2 billion, CHF0.7 billion and JPY10 billion.
At 31 March 2021 the Group had bonds outstanding with a nominal value equivalent to €45.4 billion. During the year ended 31 March 2021,
bonds with a nominal value of €2 billion were issued under stand-alone documentation and bonds with a nominal value €2.2 billion were issued
by Vantage Towers A.G. under their own €5 billion debt issuance programme.
In March 2021, the Group also repurchased its own bonds with a nominal value of €1.5 billion and USD2.1 billion.
Bonds mature between 2021 and 2059 (2020: 2020 and 2059) and have interest rates between 0.0% and 7.875% (2020: 0.0% and 7.875%).
Mandatory convertible bonds
On 12 March 2019 the Group issued £3.4 billion of subordinated mandatory convertible bonds (‘MCBs’) split into two equal tranches of £1.7
billion, the first tranche matured on 12 March 2021 and the second tranche matures on 12 March 2022 with coupons of 1.2% and 1.5%
respectively. These were recognised as compound instruments with nominal values of £3.4 billion (€3.8 billion) recognised as a component of
shareholders’ funds in equity and the fair value of future coupons £0.1 billion (€0.1billion) recognised as a financial liability in borrowings. At 31
March 2021, the conversion price of the bonds was £1.2055 per share. The Group’s strategy is to hedge the equity risk associated with the MCB
issuance to any future movement in its share price by an option strategy designed to hedge the economic impact of share price movements
during the term of the bonds. Should the Group decide to buy back ordinary shares to mitigate dilution resulting from the conversion the
hedging strategy will provide a hedge for the repurchase price.
Treasury shares
The Group held a maximum of 2,043,732,147 (2020: 2,091,894,691) of its own shares during the year which represented 7.1% (2020: 7.3%) of
issued share capital at that time.
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
21. Borrowings
21. Borrowings
The Group’s sources of borrowing for funding and liquidity purposes come from a range of committed bank
The Group’s sources of borrowing for funding and liquidity purposes come from a range of committed bank
facilities and through short-term and long-term issuances in the capital markets including bond and
facilities and through short-term and long-term issuances in the capital markets including bond and
commercial paper issues and bank loans. Liabilities arising from the Group’s lease arrangements are also
commercial paper issues and bank loans. Liabilities arising from the Group’s lease arrangements are also
reported in borrowings; see note 20 “Leases”. We manage the basis on which we incur interest on debt
reported in borrowings; see note 20 “Leases”. We manage the basis on which we incur interest on debt
between fixed interest rates and floating interest rates depending on market conditions using interest rate
between fixed interest rates and floating interest rates depending on market conditions using interest rate
derivatives. The Group enters into foreign exchange contracts to mitigate the impact of exchange rate
derivatives. The Group enters into foreign exchange contracts to mitigate the impact of exchange rate
movements on certain monetary items.
movements on certain monetary items.
Accounting policies
Accounting policies
Interest-bearing loans and overdrafts are initially measured at fair value (which is equal to cost at inception), and are subsequently measured at
Interest-bearing loans and overdrafts are initially measured at fair value (which is equal to cost at inception), and are subsequently measured at
amortised cost, using the effective interest rate method. Where they are identified as a hedged item in a designated fair value hedge
amortised cost, using the effective interest rate method. Where they are identified as a hedged item in a designated fair value hedge
relationship, fair value adjustments are recognised in accordance with our policy (see note 22 “Capital and financial risk management”). Any
relationship, fair value adjustments are recognised in accordance with our policy (see note 22 “Capital and financial risk management”). Any
difference between the proceeds net of transaction costs and the amount due on settlement or redemption of borrowings is recognised over
difference between the proceeds net of transaction costs and the amount due on settlement or redemption of borrowings is recognised over
the term of the borrowing. Where bonds issued with certain conversion rights are identified as compound instruments they are initially
the term of the borrowing. Where bonds issued with certain conversion rights are identified as compound instruments they are initially
measured at fair value with the nominal amounts recognised as a component in equity and the fair value of future coupons included in
measured at fair value with the nominal amounts recognised as a component in equity and the fair value of future coupons included in
borrowings. These are subsequently measured at amortised cost using the effective interest rate method.
borrowings. These are subsequently measured at amortised cost using the effective interest rate method.
Borrowings
Borrowings
Non-current borrowings
Non-current borrowings
Bonds
Bonds
Bank loans
Bank loans
Lease liabilities (note 20)
Lease liabilities (note 20)
Bank borrowings secured against Indian assets
Bank borrowings secured against Indian assets
Other borrowings2
Other borrowings2
Current borrowings
Current borrowings
Bonds
Bonds
Bank loans
Bank loans
Lease liabilities (note 20)
Lease liabilities (note 20)
Collateral liabilities
Collateral liabilities
Borrowings
Borrowings
Notes:
Notes:
Bank borrowings secured against Indian assets
Bank borrowings secured against Indian assets
Other borrowings
Other borrowings
2021
2021
€m
€m
Re-presented1
Re-presented1
2020
2020
€m
€m
(44,634)
(44,634)
(47,500)
(47,500)
(59,272)
(59,272)
(62,949)
(62,949)
(761)
(761)
(9,909)
(9,909)
(385)
(385)
(3,583)
(3,583)
(2,251)
(2,251)
(658)
(658)
(3,123)
(3,123)
(962)
(962)
(862)
(862)
(632)
(632)
(1,500)
(1,500)
(9,134)
(9,134)
(1,346)
(1,346)
(3,469)
(3,469)
(1,912)
(1,912)
(1,380)
(1,380)
(2,984)
(2,984)
(5,292)
(5,292)
–
–
(408)
(408)
(8,488)
(8,488)
(67,760)
(67,760)
(11,976)
(11,976)
(74,925)
(74,925)
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”. The
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”. The
impact of the re-presentation is to increase current borrowings and non-current borrowings by €150 million and €57 million, respectively, compared to amounts previously reported.
impact of the re-presentation is to increase current borrowings and non-current borrowings by €150 million and €57 million, respectively, compared to amounts previously reported.
2
2
Includes €3,312 million (2020: €3,215 million) of spectrum licence payables.
Includes €3,312 million (2020: €3,215 million) of spectrum licence payables.
The fair value of the Group’s financial assets and financial liabilities held at amortised cost approximate to fair value with the exception of long-
The fair value of the Group’s financial assets and financial liabilities held at amortised cost approximate to fair value with the exception of long-
term bonds with a carrying value of €44,634 million (2020: €47,500 million) which have a fair value of €48,630 million (2020: €48,216 million).
term bonds with a carrying value of €44,634 million (2020: €47,500 million) which have a fair value of €48,630 million (2020: €48,216 million).
Fair value is based on level 1 of the fair value hierarchy using quoted market prices.
Fair value is based on level 1 of the fair value hierarchy using quoted market prices.
The Group’s borrowings include certain bonds which have been designated in hedge relationships, which are carried at €1.4 billion higher than
The Group’s borrowings include certain bonds which have been designated in hedge relationships, which are carried at €1.4 billion higher than
their euro equivalent redemption value. In addition, where bonds are issued in currencies other than euros, the Group has entered into foreign
their euro equivalent redemption value. In addition, where bonds are issued in currencies other than euros, the Group has entered into foreign
currency swaps to fix the euro cash outflows on redemption. The impact of these swaps are not reflected in borrowings and would decrease the
currency swaps to fix the euro cash outflows on redemption. The impact of these swaps are not reflected in borrowings and would decrease the
euro equivalent redemption value of the bonds by €0.1 billion.
euro equivalent redemption value of the bonds by €0.1 billion.
Commercial paper programmes
Commercial paper programmes
We currently have US and euro commercial paper programmes of US$15 billion and €8 billion respectively which are available to be used to
We currently have US and euro commercial paper programmes of US$15 billion and €8 billion respectively which are available to be used to
meet short-term liquidity requirements. At 31 March 2021 €nil (2020: €nil) was drawn under the euro commercial paper programme. The US
meet short-term liquidity requirements. At 31 March 2021 €nil (2020: €nil) was drawn under the euro commercial paper programme. The US
commercial paper programme remained undrawn.
commercial paper programme remained undrawn.
amounts had been drawn under these facilities.
amounts had been drawn under these facilities.
The commercial paper facilities were supported by US$4.0 billion (€3.4 billion) and €4.0 billion of syndicated committed bank facilities. No
The commercial paper facilities were supported by US$4.0 billion (€3.4 billion) and €4.0 billion of syndicated committed bank facilities. No
174 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
22. Capital and financial risk management
This note details the treasury management and financial risk management objectives and policies, as well
as the exposure and sensitivity of the Group to credit, liquidity, interest and foreign exchange risk, and the
policies in place to monitor and manage these risks.
Accounting policies
Financial instruments
Financial assets and financial liabilities, in respect of financial instruments, are recognised on the Group’s consolidated statement of financial
position when the Group becomes a party to the contractual provisions of the instrument.
Financial liabilities and equity instruments
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements
entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that provides a residual
interest in the assets of the Group after deducting all of its liabilities and includes no obligation to deliver cash or other financial assets. The
accounting policies adopted for specific financial liabilities and equity instruments are set out below.
Financial liabilities under put option arrangements
The Group has an obligation to pay a fixed rate of return to minority equity shareholders in the Group’s subsidiary Kabel Deutschland AG, under
the terms of a court-imposed domination and profit and loss transfer agreement. This agreement also provides the minority shareholders the
option to put their shareholding to Vodafone at a fixed price per share. The obligation to purchase the shares has been recognised as a financial
liability and no non-controlling interests are recognised in respect of minority shareholders. Interest costs are accrued at the agreed rate of
return and recognised in financing costs.
Derivative financial instruments and hedge accounting
The Group’s activities expose it to the financial risks of changes in foreign exchange rates and interest rates which it manages using derivative
financial instruments. The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which provide
written principles on the use of financial derivatives consistent with the Group’s risk management strategy. The Group does not use derivative
financial instruments for speculative purposes.
The Group designates certain derivatives as:
− hedges of the change in fair value of recognised assets and liabilities (‘fair value hedges’);
− hedges of highly probable forecast transactions or hedges of foreign currency or interest rate risks of firm commitments (‘cash flow hedges’); or
− hedges of net investments in foreign operations.
Derivative financial instruments are initially measured at fair value on the contract date and are subsequently re-measured to fair value at each
reporting date. Changes in values of all derivatives of a financing nature are included within investment income and financing costs in the
income statement unless designated in an effective cash flow hedge relationship or a hedge of a net investment in foreign operations when the
effective portion of changes in value are deferred to other comprehensive income. Hedge effectiveness is determined at the inception of the
hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the
hedged item and hedging instrument. For fair value hedges, the carrying value of the hedged item is also adjusted for changes in fair value for
the hedged risk, with gains and losses recognised in the income statement for the period.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for hedge
accounting. When hedge accounting is discontinued, any gain or loss recognised in other comprehensive income at that time remains in equity
and is recognised in the income statement when the hedged transaction is ultimately recognised in the income statement.
For cash flow hedges, when the hedged item is recognised in the income statement, amounts previously recognised in other comprehensive
income and accumulated in equity for the hedging instrument are reclassified to the income statement. However, when the hedged transaction
results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised in other comprehensive
income and accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or
non
financial liability. If a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately
in the income statement.
(cid:486)
For net investment hedges, gains and losses accumulated in other comprehensive income are included in the income statement when the
foreign operation is disposed of.
174 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
175 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
22. Capital and financial risk management
22. Capital and financial risk management
This note details the treasury management and financial risk management objectives and policies, as well
This note details the treasury management and financial risk management objectives and policies, as well
as the exposure and sensitivity of the Group to credit, liquidity, interest and foreign exchange risk, and the
as the exposure and sensitivity of the Group to credit, liquidity, interest and foreign exchange risk, and the
policies in place to monitor and manage these risks.
policies in place to monitor and manage these risks.
Accounting policies
Accounting policies
Financial instruments
Financial instruments
Financial assets and financial liabilities, in respect of financial instruments, are recognised on the Group’s consolidated statement of financial
Financial assets and financial liabilities, in respect of financial instruments, are recognised on the Group’s consolidated statement of financial
position when the Group becomes a party to the contractual provisions of the instrument.
position when the Group becomes a party to the contractual provisions of the instrument.
Financial liabilities and equity instruments
Financial liabilities and equity instruments
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements
entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that provides a residual
entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that provides a residual
interest in the assets of the Group after deducting all of its liabilities and includes no obligation to deliver cash or other financial assets. The
interest in the assets of the Group after deducting all of its liabilities and includes no obligation to deliver cash or other financial assets. The
accounting policies adopted for specific financial liabilities and equity instruments are set out below.
accounting policies adopted for specific financial liabilities and equity instruments are set out below.
Financial liabilities under put option arrangements
Financial liabilities under put option arrangements
The Group has an obligation to pay a fixed rate of return to minority equity shareholders in the Group’s subsidiary Kabel Deutschland AG, under
The Group has an obligation to pay a fixed rate of return to minority equity shareholders in the Group’s subsidiary Kabel Deutschland AG, under
the terms of a court-imposed domination and profit and loss transfer agreement. This agreement also provides the minority shareholders the
the terms of a court-imposed domination and profit and loss transfer agreement. This agreement also provides the minority shareholders the
option to put their shareholding to Vodafone at a fixed price per share. The obligation to purchase the shares has been recognised as a financial
option to put their shareholding to Vodafone at a fixed price per share. The obligation to purchase the shares has been recognised as a financial
liability and no non-controlling interests are recognised in respect of minority shareholders. Interest costs are accrued at the agreed rate of
liability and no non-controlling interests are recognised in respect of minority shareholders. Interest costs are accrued at the agreed rate of
return and recognised in financing costs.
return and recognised in financing costs.
Derivative financial instruments and hedge accounting
Derivative financial instruments and hedge accounting
financial instruments for speculative purposes.
financial instruments for speculative purposes.
The Group designates certain derivatives as:
The Group designates certain derivatives as:
The Group’s activities expose it to the financial risks of changes in foreign exchange rates and interest rates which it manages using derivative
The Group’s activities expose it to the financial risks of changes in foreign exchange rates and interest rates which it manages using derivative
financial instruments. The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which provide
financial instruments. The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which provide
written principles on the use of financial derivatives consistent with the Group’s risk management strategy. The Group does not use derivative
written principles on the use of financial derivatives consistent with the Group’s risk management strategy. The Group does not use derivative
− hedges of the change in fair value of recognised assets and liabilities (‘fair value hedges’);
− hedges of the change in fair value of recognised assets and liabilities (‘fair value hedges’);
− hedges of highly probable forecast transactions or hedges of foreign currency or interest rate risks of firm commitments (‘cash flow hedges’); or
− hedges of highly probable forecast transactions or hedges of foreign currency or interest rate risks of firm commitments (‘cash flow hedges’); or
− hedges of net investments in foreign operations.
− hedges of net investments in foreign operations.
Derivative financial instruments are initially measured at fair value on the contract date and are subsequently re-measured to fair value at each
Derivative financial instruments are initially measured at fair value on the contract date and are subsequently re-measured to fair value at each
reporting date. Changes in values of all derivatives of a financing nature are included within investment income and financing costs in the
reporting date. Changes in values of all derivatives of a financing nature are included within investment income and financing costs in the
income statement unless designated in an effective cash flow hedge relationship or a hedge of a net investment in foreign operations when the
income statement unless designated in an effective cash flow hedge relationship or a hedge of a net investment in foreign operations when the
effective portion of changes in value are deferred to other comprehensive income. Hedge effectiveness is determined at the inception of the
effective portion of changes in value are deferred to other comprehensive income. Hedge effectiveness is determined at the inception of the
hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the
hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the
hedged item and hedging instrument. For fair value hedges, the carrying value of the hedged item is also adjusted for changes in fair value for
hedged item and hedging instrument. For fair value hedges, the carrying value of the hedged item is also adjusted for changes in fair value for
the hedged risk, with gains and losses recognised in the income statement for the period.
the hedged risk, with gains and losses recognised in the income statement for the period.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for hedge
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for hedge
accounting. When hedge accounting is discontinued, any gain or loss recognised in other comprehensive income at that time remains in equity
accounting. When hedge accounting is discontinued, any gain or loss recognised in other comprehensive income at that time remains in equity
and is recognised in the income statement when the hedged transaction is ultimately recognised in the income statement.
and is recognised in the income statement when the hedged transaction is ultimately recognised in the income statement.
For cash flow hedges, when the hedged item is recognised in the income statement, amounts previously recognised in other comprehensive
For cash flow hedges, when the hedged item is recognised in the income statement, amounts previously recognised in other comprehensive
income and accumulated in equity for the hedging instrument are reclassified to the income statement. However, when the hedged transaction
income and accumulated in equity for the hedging instrument are reclassified to the income statement. However, when the hedged transaction
results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised in other comprehensive
results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised in other comprehensive
income and accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or
income and accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or
non
non
financial liability. If a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately
financial liability. If a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately
in the income statement.
in the income statement.
(cid:486)
(cid:486)
foreign operation is disposed of.
foreign operation is disposed of.
For net investment hedges, gains and losses accumulated in other comprehensive income are included in the income statement when the
For net investment hedges, gains and losses accumulated in other comprehensive income are included in the income statement when the
Capital management
The following table summarises the capital of the Group at 31 March:
Borrowings (note 21)
Cash and cash equivalents (note 19)
Derivative financial instruments included in trade and other receivables (note 14)
Derivative financial instruments included in trade and other payables (note 15)
Short-term investments (note 13)
Collateral assets (note 13)
Financial liabilities under put option arrangements
Equity
Capital
Note:
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale, as outlined in the notes referenced above.
2021
€m
67,760
(5,821)
(3,151)
4,010
(4,007)
(3,107)
492
57,816
113,992
2020
Re-presented1
€m
74,925
(13,557)
(9,176)
4,767
(4,132)
(1,115)
1,850
62,625
116,187
The Group’s policy is to borrow centrally using a mixture of long-term and short-term capital market issues and borrowing facilities to meet
anticipated funding requirements. These borrowings, together with cash generated from operations, are loaned internally or contributed as
equity to certain subsidiaries.
Dividends from associates and to non-controlling shareholders
Dividends from our associates are generally paid at the discretion of the Board of Directors or shareholders of the individual operating and
holding companies, and we have no rights to receive dividends except where specified within certain of the Group’s shareholders’ agreements.
Similarly, other than ongoing dividend obligations to the Kabel Deutschland A.G. minority shareholders, should they continue to hold their
minority stake, we do not have existing obligations under shareholders’ agreements to pay dividends to non-controlling interest partners of our
subsidiaries or joint ventures. The amount of dividends received and paid in the year are disclosed in the consolidated statement of cash flows.
Potential cash outflows from option agreements and similar arrangements
Put options issued as part of the hedging strategy for the MCBs permit the holders to exercise against the Group at maturity of the option if
there is a decrease in our share price. Under the terms of the options, settlement must be made in cash which will equate to the reduced value
of shares from the initial conversion price, adjusted for dividends declared, on 2,494 million shares.
Sale of trade receivables
During the year, the Group sold certain trade receivables to a number of financial institutions. Whilst there are no repurchase obligations in
respect of these receivables, the Group provided credit guarantees which would only become payable if default rates were significantly higher
than historical rates. The credit guarantee is not considered substantive and substantially all risks and rewards associated with the receivables
passed to the purchaser at the date of sale, therefore the receivables were derecognised. The maximum payable under the guarantees at 31
March 2021 was €1,503 million (2020: €1,283 million). No provision has been made in respect of these guarantees as the likelihood of a cash
outflow has been assessed as remote.
Supplier financing arrangements
The Group offers suppliers the opportunity to use supply chain financing (‘SCF’). SCF allows suppliers that decide to use it to receive funding
earlier than the invoice due date. At 31 March 2021, the financial institutions that run the SCF programmes had purchased €2.3 billion (2020:
€2.4 billion) of supplier invoices, principally from larger suppliers. The Group does not provide any financial guarantees to the financial
institutions under this programme and continues to cash settle supplier payables in accordance with their contractual terms. As such, the
programme does not change the Group’s net debt, trade payable balances or cash flows.
The Group evaluates supplier arrangements against a number of indicators to assess if the payable continues to hold the characteristics of a
trade payable or should be classified as borrowings; these indicators include whether the payment terms exceed the shorter of customary
payment terms in the industry or 180 days. At 31 March 2021, none of the payables subject to supplier financing arrangements met the criteria
to be reclassified as borrowings.
Financial risk management
The Group’s treasury function centrally manages the Group’s funding requirement, net foreign exchange exposure, interest rate management
exposures and counterparty risk arising from investments and derivatives. Treasury operations are conducted within a framework of policies and
guidelines authorised and reviewed by the Board, most recently in May 2021. A treasury risk committee comprising of the Group’s Chief
Financial Officer, Group General Counsel and Company Secretary, Group Financial Controller, Group Corporate Finance Director, Group Treasury
Director and Group Director of Financial Controlling and Operations meets three times a year to review treasury activities and its members
receive management information relating to treasury activities on a quarterly basis. The Group’s accounting function, which does not report to
the Group Treasury Director, provides regular update reports of treasury activity to the Board. The Group’s Internal Auditor reviews the internal
control environment regularly.
No bonds issued by the Group or the Revolving Credit Facilities are subject to financial covenant ratios. Approximately €35 billion of issued bonds
have a change of control clause. Only €350 million of EIB loans have a financial covenant requirement, which broadly equates to a net debt to
EBITDA calculation. As at 31 March 2021, Vodafone was compliant with this financial covenant. The Group uses a number of derivative instruments
for currency and interest rate risk management purposes only that are transacted by specialist treasury personnel. The Group mitigates banking
sector credit risk by the use of collateral support agreements.
176 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
22. Capital and financial risk management (continued)
COVID-19
The Group did not experience any significant issues as a result of disruption to financial markets as a result of COVID in FY21. The ongoing
macro economic impact appears to be reducing, but remains uncertain. The Group’s financial risk management policies seek to reduce the
Group’s exposure to any future disruption to financial markets, including any future impacts from COVID.
The Group has combined cash and cash equivalent and short-term investments of €9.8 billion, providing significant headroom over short-term
liquidity requirements. Additionally the Group maintains undrawn revolving credit facilities of €7.4 billion euro equivalent. As at 31 March 2021
and after hedging, substantially all the Group’s borrowings are held on a fixed interest basis, mitigating exposure to interest rate risk. The Group
has no significant currency exposures other than positions in economic hedging relationships. The Group’s credit risk under financing activities is
spread across a portfolio of highly rated institutions to reduce counterparty exposures and derivative balances are substantially all collateralised.
The Group’s operating activities result in customer credit risk, for which provisions for expected credit losses are recognised. This customer
related credit risk is generally short-term in duration and while COVID impacts on our customers had no material impact on credit loss
provisioning at 31 March 2021.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial asset leading to a financial loss for the Group. The Group is
exposed to credit risk from its operating activities and from its financing activities, the Group considers its maximum exposure to credit risk at 31
March to be:
Cash at bank and in hand (note 19)
Repurchase agreements and bank deposits (note 19)
Money market funds (note 19)
Managed investment funds (note 13)
Current bonds and debt securities (note 13)
Non-current debt securities (note 13)
Collateral assets (note 13)
Other investments (note 13)
Derivative financial instruments (note 14)
Trade receivables (note 14)2
Contract assets and other receivables (note 14)
Performance bonds and other guarantees (note 29)
2021
€m
2,705
–
3,116
2,954
1,053
797
3,107
2,045
3,151
5,924
4,531
2,728
32,111
2020
Re-presented1
€m
2,220
2,202
9,135
2,451
1,681
715
1,115
1,842
9,176
6,017
4,595
3,322
44,471
Note:
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale and to include guarantees on trade receivables, performance bonds and other
guarantees.
Includes amounts guaranteed under sales of trade receivables.
2
Expected credit loss
The Group has financial assets classified and measured at amortised cost and fair value through other comprehensive income that are subject
to the expected credit loss model requirements of IFRS 9. Cash at bank and in hand and certain other investments are both classified and
measured at amortised cost and subject to these impairment requirements. However, the identified expected credit loss is considered to be
immaterial.
Information about expected credit losses for trade receivables and contract assets can be found under “operating activities” on page 177.
Financing activities
The Group invests in government securities on the basis they generate a fixed rate of return and are amongst the most creditworthy of
investments available.
Money market investments are made in accordance with established internal treasury policies which dictate that an investment’s long-term
credit rating is no lower than mid BBB. Additionally, the Group invests in AAA unsecured money market mutual funds where the investment is
limited to 10% of each fund.
The Group has two managed investment funds that hold fixed income euro securities with an average credit quality of AA.
In respect of financial instruments used by the Group’s treasury function, the aggregate credit risk the Group may have with one counterparty is
limited by (i) reference to the long-term credit ratings assigned for that counterparty by Moody’s, Fitch Ratings and Standard & Poor’s; (ii) that
counterparty’s five year credit default swap (‘CDS’) spread; and (iii) the sovereign credit rating of that counterparty’s principal operating
jurisdiction. Furthermore, collateral support agreements reduce the Group’s exposure to counterparties who must post cash collateral when
there is value due to the Group under outstanding derivative contracts that exceeds a contractually agreed threshold amount. When value is
due to the counterparty the Group is required to post collateral on identical terms. Such cash collateral is adjusted daily as necessary.
176 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
177 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
In the event of any default, ownership of the cash collateral would revert to the respective holder at that point. Detailed below is the value of the
cash collateral, which is reported within current borrowings, held by the Group at 31 March:
Collateral liabilities
2021
€m
962
2020
€m
5,292
As discussed in note 29 “Contingent liabilities and legal proceedings”, the Group has covenanted to provide security in favour of the trustee of
the Vodafone Group UK Pension Scheme in respect of the funding deficit in the scheme and pledged security in relation to the Indus Towers
merger. The Group has also pledged cash as collateral against derivative financial instruments as disclosed in note 13 “Other investments”.
Operating activities
Customer credit risk is managed by the Group’s business units which each have policies, procedures and controls relating to customer credit
risk management. Outstanding trade receivables and contract assets are regularly reviewed to monitor any changes in credit risk with
concentrations of credit risk considered to be limited given that the Group’s customer base is large and unrelated. The Group applies the
simplified approach and records lifetime expected credit losses for trade receivables and contract assets. Expected credit losses are measured
using historical cash collection data for periods of at least 24 months wherever possible and grouped into various customer segments based on
product or customer type. The historical loss rates are adjusted where macroeconomic factors, for example changes in interest rates or
unemployment rates, or other commercial factors are expected to have a significant impact when determining future expected credit loss rates.
For trade receivables the expected credit loss provision is calculated using a provision matrix, in which the provision increases as balances age,
and for receivables paid in instalments and contract assets a weighted loss rate is calculated to reflect the period over which the amounts
become due for payment by the customer. Trade receivables and contract assets are written off when each business unit determines there to
be no reasonable expectation of recovery and enforcement activity has ceased.
Movements in the allowance for expected credit losses during the year were as follows:
Contract assets
Trade receivables held
at amortised cost
Trade receivables held
at fair value through
other comprehensive income
1 April
Exchange movements
Amounts charged to credit losses on financial assets
Other1
31 March2
Notes:
1 Primarily utilisation of the provision.
2 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”. The
impact of the re-presentation is to increase the allowance for expected credit losses on trade receivables held at amortised cost by €65 million, compared to amounts previously reported.
2020
€m
129
(2)
73
(63)
137
2021
€m
1,431
(47)
592
(496)
1,480
2020
€m
1,347
(26)
576
(466)
1,431
2021
€m
137
2
63
(101)
101
2021
€m
51
–
9
(3)
57
20201
€m
40
–
11
–
51
Expected credit losses are presented as net impairment losses within operating profit and subsequent recoveries of amounts previously written
off are credited against the same line item.
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
22. Capital and financial risk management (continued)
22. Capital and financial risk management (continued)
COVID-19
COVID-19
The Group did not experience any significant issues as a result of disruption to financial markets as a result of COVID in FY21. The ongoing
The Group did not experience any significant issues as a result of disruption to financial markets as a result of COVID in FY21. The ongoing
macro economic impact appears to be reducing, but remains uncertain. The Group’s financial risk management policies seek to reduce the
macro economic impact appears to be reducing, but remains uncertain. The Group’s financial risk management policies seek to reduce the
Group’s exposure to any future disruption to financial markets, including any future impacts from COVID.
Group’s exposure to any future disruption to financial markets, including any future impacts from COVID.
The Group has combined cash and cash equivalent and short-term investments of €9.8 billion, providing significant headroom over short-term
The Group has combined cash and cash equivalent and short-term investments of €9.8 billion, providing significant headroom over short-term
liquidity requirements. Additionally the Group maintains undrawn revolving credit facilities of €7.4 billion euro equivalent. As at 31 March 2021
liquidity requirements. Additionally the Group maintains undrawn revolving credit facilities of €7.4 billion euro equivalent. As at 31 March 2021
and after hedging, substantially all the Group’s borrowings are held on a fixed interest basis, mitigating exposure to interest rate risk. The Group
and after hedging, substantially all the Group’s borrowings are held on a fixed interest basis, mitigating exposure to interest rate risk. The Group
has no significant currency exposures other than positions in economic hedging relationships. The Group’s credit risk under financing activities is
has no significant currency exposures other than positions in economic hedging relationships. The Group’s credit risk under financing activities is
spread across a portfolio of highly rated institutions to reduce counterparty exposures and derivative balances are substantially all collateralised.
spread across a portfolio of highly rated institutions to reduce counterparty exposures and derivative balances are substantially all collateralised.
The Group’s operating activities result in customer credit risk, for which provisions for expected credit losses are recognised. This customer
The Group’s operating activities result in customer credit risk, for which provisions for expected credit losses are recognised. This customer
related credit risk is generally short-term in duration and while COVID impacts on our customers had no material impact on credit loss
related credit risk is generally short-term in duration and while COVID impacts on our customers had no material impact on credit loss
Credit risk is the risk that a counterparty will not meet its obligations under a financial asset leading to a financial loss for the Group. The Group is
Credit risk is the risk that a counterparty will not meet its obligations under a financial asset leading to a financial loss for the Group. The Group is
exposed to credit risk from its operating activities and from its financing activities, the Group considers its maximum exposure to credit risk at 31
exposed to credit risk from its operating activities and from its financing activities, the Group considers its maximum exposure to credit risk at 31
provisioning at 31 March 2021.
provisioning at 31 March 2021.
Credit risk
Credit risk
March to be:
March to be:
Cash at bank and in hand (note 19)
Cash at bank and in hand (note 19)
Repurchase agreements and bank deposits (note 19)
Repurchase agreements and bank deposits (note 19)
Money market funds (note 19)
Money market funds (note 19)
Managed investment funds (note 13)
Managed investment funds (note 13)
Current bonds and debt securities (note 13)
Current bonds and debt securities (note 13)
Non-current debt securities (note 13)
Non-current debt securities (note 13)
Collateral assets (note 13)
Collateral assets (note 13)
Other investments (note 13)
Other investments (note 13)
Derivative financial instruments (note 14)
Derivative financial instruments (note 14)
Trade receivables (note 14)2
Trade receivables (note 14)2
Contract assets and other receivables (note 14)
Contract assets and other receivables (note 14)
Performance bonds and other guarantees (note 29)
Performance bonds and other guarantees (note 29)
2021
2021
€m
€m
Re-presented1
Re-presented1
2020
2020
€m
€m
2,705
2,705
–
–
3,116
3,116
2,954
2,954
1,053
1,053
797
797
3,107
3,107
2,045
2,045
3,151
3,151
5,924
5,924
4,531
4,531
2,728
2,728
2,220
2,220
2,202
2,202
9,135
9,135
2,451
2,451
1,681
1,681
715
715
1,115
1,115
1,842
1,842
9,176
9,176
6,017
6,017
4,595
4,595
3,322
3,322
32,111
32,111
44,471
44,471
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale and to include guarantees on trade receivables, performance bonds and other
1 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale and to include guarantees on trade receivables, performance bonds and other
2
2
Includes amounts guaranteed under sales of trade receivables.
Includes amounts guaranteed under sales of trade receivables.
The Group has financial assets classified and measured at amortised cost and fair value through other comprehensive income that are subject
The Group has financial assets classified and measured at amortised cost and fair value through other comprehensive income that are subject
to the expected credit loss model requirements of IFRS 9. Cash at bank and in hand and certain other investments are both classified and
to the expected credit loss model requirements of IFRS 9. Cash at bank and in hand and certain other investments are both classified and
measured at amortised cost and subject to these impairment requirements. However, the identified expected credit loss is considered to be
measured at amortised cost and subject to these impairment requirements. However, the identified expected credit loss is considered to be
Information about expected credit losses for trade receivables and contract assets can be found under “operating activities” on page 177.
Information about expected credit losses for trade receivables and contract assets can be found under “operating activities” on page 177.
The Group invests in government securities on the basis they generate a fixed rate of return and are amongst the most creditworthy of
The Group invests in government securities on the basis they generate a fixed rate of return and are amongst the most creditworthy of
Note:
Note:
guarantees.
guarantees.
Expected credit loss
Expected credit loss
immaterial.
immaterial.
Financing activities
Financing activities
investments available.
investments available.
Money market investments are made in accordance with established internal treasury policies which dictate that an investment’s long-term
Money market investments are made in accordance with established internal treasury policies which dictate that an investment’s long-term
credit rating is no lower than mid BBB. Additionally, the Group invests in AAA unsecured money market mutual funds where the investment is
credit rating is no lower than mid BBB. Additionally, the Group invests in AAA unsecured money market mutual funds where the investment is
limited to 10% of each fund.
limited to 10% of each fund.
The Group has two managed investment funds that hold fixed income euro securities with an average credit quality of AA.
The Group has two managed investment funds that hold fixed income euro securities with an average credit quality of AA.
In respect of financial instruments used by the Group’s treasury function, the aggregate credit risk the Group may have with one counterparty is
In respect of financial instruments used by the Group’s treasury function, the aggregate credit risk the Group may have with one counterparty is
limited by (i) reference to the long-term credit ratings assigned for that counterparty by Moody’s, Fitch Ratings and Standard & Poor’s; (ii) that
limited by (i) reference to the long-term credit ratings assigned for that counterparty by Moody’s, Fitch Ratings and Standard & Poor’s; (ii) that
counterparty’s five year credit default swap (‘CDS’) spread; and (iii) the sovereign credit rating of that counterparty’s principal operating
counterparty’s five year credit default swap (‘CDS’) spread; and (iii) the sovereign credit rating of that counterparty’s principal operating
jurisdiction. Furthermore, collateral support agreements reduce the Group’s exposure to counterparties who must post cash collateral when
jurisdiction. Furthermore, collateral support agreements reduce the Group’s exposure to counterparties who must post cash collateral when
there is value due to the Group under outstanding derivative contracts that exceeds a contractually agreed threshold amount. When value is
there is value due to the Group under outstanding derivative contracts that exceeds a contractually agreed threshold amount. When value is
due to the counterparty the Group is required to post collateral on identical terms. Such cash collateral is adjusted daily as necessary.
due to the counterparty the Group is required to post collateral on identical terms. Such cash collateral is adjusted daily as necessary.
178 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
22. Capital and financial risk management (continued)
The majority of the Group’s trade receivables are due for maturity within 90 days and largely comprise amounts receivable from consumers and business
customers.
The following table presents information on trade receivables past due¹ and their associated expected credit losses:
31 March 2021
Gross carrying amount
Expected credit loss allowance
Net carrying amount
31 March 20202
Due
€m
2,568
(30)
2,538
30 days
or less
€m
717
(72)
645
Trade receivables at amortised cost past due
31–60
days
€m
177
(62)
115
61–180
days
€m
405
(211)
194
180
days+
€m
1,290
(1,105)
185
Total
€m
5,157
(1,480)
3,677
Trade receivables at amortised cost past due
Due
€m
2,513
(64)
2,449
30 days
or less
€m
836
(76)
760
31–60
days
€m
236
(56)
180
61–180
days
€m
513
(215)
298
180
days+
€m
1,249
(1,020)
229
Total
€m
5,347
(1,431)
3,916
Gross carrying amount
Expected credit loss allowance
Net carrying amount
Note:
1 Contract assets relate to amounts not yet due from customers. These amounts will be reclassified as trade receivables before they become due. Trade receivables at fair value through other
comprehensive income are not materially past due.
2 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”. The
impact of the re-presentation is to increase the gross carrying amount, expected credit loss allowance and net carrying amount of trade receivables held at amortised cost by €207 million, €65
million and €142 million, respectively, compared to amounts previously reported.
Liquidity risk
Liquidity is reviewed daily on at least a 12 month rolling basis and stress tested on the assumption that any commercial paper outstanding
matures and is not reissued. The Group maintains substantial cash and cash equivalents which at 31 March 2021 amounted to cash €5.8 billion
(2020: €13.6 billion) and undrawn committed facilities of €8.0 billion (2020: €7.7 billion), principally euro and US dollar revolving credit facilities
of €4.0 billion and US$4.0 billion (€3.4 billion) which mature in 2025 and 2026 respectively.
The Group manages liquidity risk on non-current borrowings by maintaining a varied maturity profile with a cap on the level of debt maturity in
any one calendar year, therefore minimising refinancing risk. Non-current borrowings mature between 1 and 38 years.
The maturity profile of the anticipated future cash flows including interest in relation to the Group’s non-derivative financial liabilities on an
undiscounted basis which, therefore, differs from both the carrying value and fair value, is as follows:
Maturity profile1
Within one year
In one to two years
In two to three years
In three to four years
In four to five years
In more than five years
Effect of discount/financing rates
31 March 2021
Within one year
In one to two years
In two to three years
In three to four years
In four to five years
In more than five years
Bank loans
€m
674
174
440
173
2
23
1,486
(67)
1,419
1,500
746
279
369
181
–
3,075
(195)
2,880
Bonds
€m
3,774
3,329
5,964
2,784
5,506
45,538
66,895
(20,010)
46,885
3,617
4,682
3,852
8,242
2,845
47,947
71,185
(21,773)
49,412
Lease liabilities
€m
3,419
2,142
1,661
1,457
1,316
4,696
14,691
(1,659)
13,032
3,198
2,018
1,542
1,337
1,128
4,443
13,666
(1,548)
12,118
Other2
€m
2,516
2,575
399
166
199
986
6,841
(417)
6,424
5,750
316
3,270
390
166
1,185
11,077
(562)
10,515
Total borrowings
€m
10,383
8,220
8,464
4,580
7,023
51,243
89,913
(22,153)
67,760
14,065
7,762
8,943
10,338
4,320
53,575
99,003
(24,078)
74,925
Trade payables and
other financial
liabilities3
€m
15,304
49
–
–
–
–
15,353
(2)
15,351
15,250
67
–
–
–
–
15,317
(6)
15,311
Total
€m
25,687
8,269
8,464
4,580
7,023
51,243
105,266
(22,155)
83,111
29,315
7,829
8,943
10,338
4,320
53,575
114,320
(24,084)
90,236
Effect of discount/financing rates
31 March 20204
Notes:
1 Maturities reflect contractual cash flows applicable except in the event of a change of control or event of default, upon which lenders have the right, but not the obligation, to request payment
within 30 days. This also applies to undrawn committed facilities. Only €30million (2020: €81 million) of debt in relation to the mandatorily convertible bonds is subject to a material adverse
change clause (which would also accelerate conversion of the £1.7 billion (2020: £3.4 billion) principal recognised in equity – see note 21 “Borrowings”).
2 Includes spectrum licence payables with maturity profile €381 million (2020: €344 million) within one year, €2,171 million (2020: €227 million) in one to two years, €165 million (2020: €1,905
million) in two to three years, €165 million (2020: €166 million) in three to four years, €199 million (2020: €166 million) in four to five years and €986 million (2020: €1,185 million) in more than
five years. Also includes €962 million (2020: €5,292 million) in relation to cash received under collateral support agreements shown within 1 year.
Includes financial liabilities under put option arrangements and non-derivative financial liabilities presented within trade and other payables.
3
4 Prior year comparatives for bank loans and lease liabilities have been re-presented to reflect that Vodafone Egypt is no longer held for sale, see notes 20 and 21.
178 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
179 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
22. Capital and financial risk management (continued)
22. Capital and financial risk management (continued)
The majority of the Group’s trade receivables are due for maturity within 90 days and largely comprise amounts receivable from consumers and business
The majority of the Group’s trade receivables are due for maturity within 90 days and largely comprise amounts receivable from consumers and business
The following table presents information on trade receivables past due¹ and their associated expected credit losses:
The following table presents information on trade receivables past due¹ and their associated expected credit losses:
customers.
customers.
31 March 2021
31 March 2021
Gross carrying amount
Gross carrying amount
Expected credit loss allowance
Expected credit loss allowance
Net carrying amount
Net carrying amount
31 March 20202
31 March 20202
Gross carrying amount
Gross carrying amount
Expected credit loss allowance
Expected credit loss allowance
Net carrying amount
Net carrying amount
Note:
Note:
Due
Due
€m
€m
2,568
2,568
(30)
(30)
2,538
2,538
Due
Due
€m
€m
2,513
2,513
(64)
(64)
2,449
2,449
30 days
30 days
or less
or less
€m
€m
717
717
(72)
(72)
645
645
30 days
30 days
or less
or less
€m
€m
836
836
(76)
(76)
760
760
Trade receivables at amortised cost past due
Trade receivables at amortised cost past due
31–60
31–60
days
days
€m
€m
177
177
(62)
(62)
115
115
31–60
31–60
days
days
€m
€m
236
236
(56)
(56)
180
180
61–180
61–180
days
days
€m
€m
405
405
(211)
(211)
194
194
61–180
61–180
days
days
€m
€m
513
513
(215)
(215)
298
298
180
180
days+
days+
€m
€m
1,290
1,290
(1,105)
(1,105)
185
185
180
180
days+
days+
€m
€m
1,249
1,249
(1,020)
(1,020)
229
229
Total
Total
€m
€m
5,157
5,157
(1,480)
(1,480)
3,677
3,677
Total
Total
€m
€m
5,347
5,347
(1,431)
(1,431)
3,916
3,916
Trade receivables at amortised cost past due
Trade receivables at amortised cost past due
1 Contract assets relate to amounts not yet due from customers. These amounts will be reclassified as trade receivables before they become due. Trade receivables at fair value through other
1 Contract assets relate to amounts not yet due from customers. These amounts will be reclassified as trade receivables before they become due. Trade receivables at fair value through other
comprehensive income are not materially past due.
comprehensive income are not materially past due.
2 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”. The
2 The prior year comparatives have been re-presented to reflect that Vodafone Egypt is no longer held for sale. See Note 7 “Discontinued operations and assets and liabilities held for sale”. The
impact of the re-presentation is to increase the gross carrying amount, expected credit loss allowance and net carrying amount of trade receivables held at amortised cost by €207 million, €65
impact of the re-presentation is to increase the gross carrying amount, expected credit loss allowance and net carrying amount of trade receivables held at amortised cost by €207 million, €65
million and €142 million, respectively, compared to amounts previously reported.
million and €142 million, respectively, compared to amounts previously reported.
Liquidity risk
Liquidity risk
Liquidity is reviewed daily on at least a 12 month rolling basis and stress tested on the assumption that any commercial paper outstanding
Liquidity is reviewed daily on at least a 12 month rolling basis and stress tested on the assumption that any commercial paper outstanding
matures and is not reissued. The Group maintains substantial cash and cash equivalents which at 31 March 2021 amounted to cash €5.8 billion
matures and is not reissued. The Group maintains substantial cash and cash equivalents which at 31 March 2021 amounted to cash €5.8 billion
(2020: €13.6 billion) and undrawn committed facilities of €8.0 billion (2020: €7.7 billion), principally euro and US dollar revolving credit facilities
(2020: €13.6 billion) and undrawn committed facilities of €8.0 billion (2020: €7.7 billion), principally euro and US dollar revolving credit facilities
of €4.0 billion and US$4.0 billion (€3.4 billion) which mature in 2025 and 2026 respectively.
of €4.0 billion and US$4.0 billion (€3.4 billion) which mature in 2025 and 2026 respectively.
The Group manages liquidity risk on non-current borrowings by maintaining a varied maturity profile with a cap on the level of debt maturity in
The Group manages liquidity risk on non-current borrowings by maintaining a varied maturity profile with a cap on the level of debt maturity in
any one calendar year, therefore minimising refinancing risk. Non-current borrowings mature between 1 and 38 years.
any one calendar year, therefore minimising refinancing risk. Non-current borrowings mature between 1 and 38 years.
The maturity profile of the anticipated future cash flows including interest in relation to the Group’s non-derivative financial liabilities on an
The maturity profile of the anticipated future cash flows including interest in relation to the Group’s non-derivative financial liabilities on an
undiscounted basis which, therefore, differs from both the carrying value and fair value, is as follows:
undiscounted basis which, therefore, differs from both the carrying value and fair value, is as follows:
Maturity profile1
Maturity profile1
Within one year
Within one year
In one to two years
In one to two years
In two to three years
In two to three years
In three to four years
In three to four years
In four to five years
In four to five years
In more than five years
In more than five years
31 March 2021
31 March 2021
Within one year
Within one year
In one to two years
In one to two years
In two to three years
In two to three years
In three to four years
In three to four years
In four to five years
In four to five years
In more than five years
In more than five years
Effect of discount/financing rates
Effect of discount/financing rates
Effect of discount/financing rates
Effect of discount/financing rates
31 March 20204
31 March 20204
Notes:
Notes:
Bank loans
Bank loans
€m
€m
Bonds
Bonds
€m
€m
Lease liabilities
Lease liabilities
€m
€m
Other2
Other2
Total borrowings
Total borrowings
674
674
174
174
440
440
173
173
2
2
23
23
1,486
1,486
(67)
(67)
1,419
1,419
1,500
1,500
746
746
279
279
369
369
181
181
–
–
3,075
3,075
(195)
(195)
2,880
2,880
3,774
3,774
3,329
3,329
5,964
5,964
2,784
2,784
5,506
5,506
45,538
45,538
66,895
66,895
(20,010)
(20,010)
46,885
46,885
3,617
3,617
4,682
4,682
3,852
3,852
8,242
8,242
2,845
2,845
47,947
47,947
71,185
71,185
(21,773)
(21,773)
49,412
49,412
3,419
3,419
2,142
2,142
1,661
1,661
1,457
1,457
1,316
1,316
4,696
4,696
14,691
14,691
(1,659)
(1,659)
13,032
13,032
3,198
3,198
2,018
2,018
1,542
1,542
1,337
1,337
1,128
1,128
4,443
4,443
13,666
13,666
(1,548)
(1,548)
12,118
12,118
€m
€m
2,516
2,516
2,575
2,575
399
399
166
166
199
199
986
986
6,841
6,841
(417)
(417)
6,424
6,424
5,750
5,750
316
316
3,270
3,270
390
390
166
166
1,185
1,185
11,077
11,077
(562)
(562)
10,515
10,515
€m
€m
10,383
10,383
8,220
8,220
8,464
8,464
4,580
4,580
7,023
7,023
51,243
51,243
89,913
89,913
(22,153)
(22,153)
67,760
67,760
14,065
14,065
7,762
7,762
8,943
8,943
10,338
10,338
4,320
4,320
53,575
53,575
99,003
99,003
(24,078)
(24,078)
74,925
74,925
Trade payables and
Trade payables and
other financial
other financial
liabilities3
liabilities3
€m
€m
15,304
15,304
49
49
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2)
(2)
15,351
15,351
15,250
15,250
67
67
Total
Total
€m
€m
25,687
25,687
8,269
8,269
8,464
8,464
4,580
4,580
7,023
7,023
51,243
51,243
(22,155)
(22,155)
83,111
83,111
29,315
29,315
7,829
7,829
8,943
8,943
10,338
10,338
4,320
4,320
53,575
53,575
15,353
15,353
105,266
105,266
15,317
15,317
114,320
114,320
(6)
(6)
15,311
15,311
(24,084)
(24,084)
90,236
90,236
1 Maturities reflect contractual cash flows applicable except in the event of a change of control or event of default, upon which lenders have the right, but not the obligation, to request payment
1 Maturities reflect contractual cash flows applicable except in the event of a change of control or event of default, upon which lenders have the right, but not the obligation, to request payment
within 30 days. This also applies to undrawn committed facilities. Only €30million (2020: €81 million) of debt in relation to the mandatorily convertible bonds is subject to a material adverse
within 30 days. This also applies to undrawn committed facilities. Only €30million (2020: €81 million) of debt in relation to the mandatorily convertible bonds is subject to a material adverse
change clause (which would also accelerate conversion of the £1.7 billion (2020: £3.4 billion) principal recognised in equity – see note 21 “Borrowings”).
change clause (which would also accelerate conversion of the £1.7 billion (2020: £3.4 billion) principal recognised in equity – see note 21 “Borrowings”).
2 Includes spectrum licence payables with maturity profile €381 million (2020: €344 million) within one year, €2,171 million (2020: €227 million) in one to two years, €165 million (2020: €1,905
2 Includes spectrum licence payables with maturity profile €381 million (2020: €344 million) within one year, €2,171 million (2020: €227 million) in one to two years, €165 million (2020: €1,905
million) in two to three years, €165 million (2020: €166 million) in three to four years, €199 million (2020: €166 million) in four to five years and €986 million (2020: €1,185 million) in more than
million) in two to three years, €165 million (2020: €166 million) in three to four years, €199 million (2020: €166 million) in four to five years and €986 million (2020: €1,185 million) in more than
five years. Also includes €962 million (2020: €5,292 million) in relation to cash received under collateral support agreements shown within 1 year.
five years. Also includes €962 million (2020: €5,292 million) in relation to cash received under collateral support agreements shown within 1 year.
3
3
Includes financial liabilities under put option arrangements and non-derivative financial liabilities presented within trade and other payables.
Includes financial liabilities under put option arrangements and non-derivative financial liabilities presented within trade and other payables.
4 Prior year comparatives for bank loans and lease liabilities have been re-presented to reflect that Vodafone Egypt is no longer held for sale, see notes 20 and 21.
4 Prior year comparatives for bank loans and lease liabilities have been re-presented to reflect that Vodafone Egypt is no longer held for sale, see notes 20 and 21.
The maturity profile of the Group’s financial derivatives (which include interest rate swaps, cross-currency interest rate swaps and foreign
exchange swaps) using undiscounted cash flows, is as follows:
Within one year
In one to two years
In two to three years
In three to four years
In four to five years
In more than five years
Effect of discount/financing rates
Financial derivative net (payable)/receivable
Payable
€m
(16,218)
(3,121)
(5,623)
(2,518)
(3,305)
(33,777)
(64,562)
2021
Receivable
€m
16,864
3,723
5,978
2,903
3,620
37,399
70,487
Payable
€m
(20,519)
(4,217)
(3,680)
(3,733)
(2,562)
(38,126)
(72,837)
2020
Receivable
€m
21,239
4,582
4,143
4,429
3,102
43,933
81,428
Total
€m
646
602
355
385
315
3,622
5,925
(6,784)
(859)
Total
€m
720
365
463
696
540
5,807
8,591
(4,182)
4,409
Payables and receivables are stated separately in the table above as cash settlement is on a gross basis.
Market risk
Interest rate management
Under the Group’s interest rate management policy, interest rates on long-term monetary assets and liabilities are principally maintained on a
fixed rate basis.
At 31 March 2021 and after hedging, substantially all of our outstanding liabilities are held on a fixed interest rate basis in accordance with
treasury policy.
For each one hundred basis point rise in market interest rates for all currencies in which the Group had borrowings at 31 March 2021 there
would be an increase in profit before tax by €782 million (2020: €695 million) including mark to market revaluations of interest rate and other
derivatives and the potential interest on cash and short-term investments. There would be no material impact on equity.
At 31 March 2021, the Group had limited exposure through interest rate derivatives and floating rate bonds referencing LIBOR and other
interbank offered rates (IBORs).
Foreign exchange management
As Vodafone’s primary listing is on the London Stock Exchange its share price is quoted in sterling. Since the sterling share price represents the
value of its future multi-currency cash flows, principally in euro, South African rand and sterling, the Group maintains the currency of debt and
interest charges in proportion to its expected future principal cash flows and has a policy to hedge external foreign exchange risks on
transactions denominated in other currencies above a certain de minimis level.
At 31 March 2021 13% of net debt was denominated in currencies other than euro (9% sterling, 3% South African rand and 1% other). This
allows sterling, South African rand and other debt to be serviced in proportion to expected future cash flows and therefore provides a partial
economic hedge against income statement translation exposure, as interest costs will be denominated in foreign currencies.
Under the Group’s foreign exchange management policy, foreign exchange transaction exposure in Group companies is generally maintained at
the lower of €5 million per currency per month or €15 million per currency over a six month period.
The Group recognises foreign exchange movements in equity for the translation of net investment hedging instruments and balances treated
as investments in foreign operations. However, there is no net impact on equity for exchange rate movements on net investment hedging
instruments as there would be an offset in the currency translation of the foreign operation. At 31 March 2021 the Group held financial liabilities
in a net investment hedge against the Group’s South African rand operations. Sensitivity to foreign exchange movements on the hedging
liabilities, analysed against a strengthening of the South African rand by 15% (2020: 11%) would result in a decrease in equity of €285 million
(2020: €212 million) which would be fully offset by foreign exchange movements on the hedged net assets. In addition, cash flow hedges of
principally US dollar borrowings would result in an increase in equity of €469 million (2020: €713 million) against a strengthening of US dollar
by 6% (2020: 5%).
The Group profit and loss account is exposed to foreign exchange risk within both operating profit and financing income and expense. The
principal reporting segment not generating income in euro is Vodacom, whose functional currency is predominantly South African Rand.
Financing income and expense includes foreign currency gains/losses incurred on the translation of balance sheet items not held in functional
currency. These are principally on certain borrowings, derivatives, and other investments denominated in sterling and US dollar.
180 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
22. Capital and financial risk management (continued)
The following table details the Group’s sensitivity to foreign exchange risk. The percentage movement applied to the currency is based on the
average movements in the previous three annual reporting periods.
ZAR 15% change (2020: 11%) - Increase in operating profit
USD 6% change (2020: 9%) - (Decrease) in profit before taxation
GBP 3% change (2020: 2%) - (Decrease)/Increase in profit before taxation
2021
€m
152
(46)
(23)
2020
€m
126
(64)
63
Equity risk
There is no material equity risk relating to the Group’s equity investments which are detailed in note 13 “Other investments”.
The Group has hedged its exposure under the subordinated mandatory convertible bonds to any future movements in its share price by an
option strategy designed to hedge the economic impact of share price movements during the term of the bonds. As at 31 March 2021 the
Group’s sensitivity to a movement of 7% (2020: 23%) in its share price would result in an increase or decrease in profit before tax of €283 million
(2020: €767 million).
Risk management strategy of hedge relationships
The risk strategies of the designated cash flow, fair value, and net investment hedges reflect the above market risk strategies.
The objective of the cash flow hedges is principally to convert foreign currency denominated fixed rate borrowings in US dollar, pound sterling,
Australian dollar, Swiss Franc, Hong Kong dollar, Japanese yen, Norwegian krona and euro and US dollar floating rate borrowings into euro fixed
rate borrowings and hedge the foreign exchange spot rate and interest rate risk. Derivative financial instruments designated in cash flow hedges
are cross-currency interest rate swaps and foreign exchange swaps. The swap maturity dates and liquidity profiles of the nominal cash flows
match those of the underlying borrowings.
The objective of the net investment hedges is to hedge foreign exchange risk in foreign operations. Derivative financial instruments designated
in net investment hedges are cross-currency interest rate swaps and foreign exchange swaps. The hedging instruments are rolled on an
ongoing basis as determined by the nature of the business.
The objective of the fair value hedges is to hedge a proportion of the Group’s fixed rate euro denominated borrowing to a euro floating rate
borrowing. The swap maturity dates match those of the underlying borrowing and the nominal cash flows are converted to quarterly payments.
Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to
ensure that an economic relationship exists between the hedged item and hedging instrument.
For hedges of foreign currency denominated borrowings and investments, the Group uses a combination of cross-currency and foreign
exchange swaps to hedge its exposure to foreign exchange risk and interest rate risk and enters into hedge relationships where the critical terms
of the hedging instrument match with the terms of the hedged item. Therefore the Group expects a highly effective hedging relationship with
the swap contracts and the value of the corresponding hedged items to change systematically in the opposite direction in response to
movements in the underlying exchange rates and interest rates. The Group therefore performs a qualitative assessment of effectiveness. If
changes in circumstances affect the terms of the hedged item such that the critical terms no longer match with the critical terms of the hedging
instrument, the Group uses the hypothetical derivative method to assess effectiveness.
Hedge ineffectiveness may occur due to:
a) The fair value of the hedging instrument on the hedge relationship designation date if the fair value is not nil;
b) Changes in the contractual terms or timing of the payments on the hedged item; and
c) A change in the credit risk of the Group or the counterparty with the hedging instrument.
The hedge ratio for each designation will be established by comparing the quantity of the hedging instrument and the quantity of the hedged
item to determine their relative weighting; for all of the Group’s existing hedge relationships the hedge ratio has been determined as 1:1.
The fair values of the derivative financial instruments are calculated by discounting the future cash flows to net present values using appropriate
market rates and foreign currency rates prevailing at 31 March. The valuation basis is level 2. This classification comprises items where fair value
is determined from inputs other than quoted prices that are observable for the asset and liability, either directly or indirectly. Derivative financial
assets and liabilities are included within trade and other receivables and trade and other payables in the statement of financial position.
180 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
181 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
22. Capital and financial risk management (continued)
22. Capital and financial risk management (continued)
The following table represents the carrying values and nominal amounts of derivatives in a continued hedge relationship as at 31 March.
The following table details the Group’s sensitivity to foreign exchange risk. The percentage movement applied to the currency is based on the
The following table details the Group’s sensitivity to foreign exchange risk. The percentage movement applied to the currency is based on the
At 31 March 2021
average movements in the previous three annual reporting periods.
average movements in the previous three annual reporting periods.
ZAR 15% change (2020: 11%) - Increase in operating profit
ZAR 15% change (2020: 11%) - Increase in operating profit
USD 6% change (2020: 9%) - (Decrease) in profit before taxation
USD 6% change (2020: 9%) - (Decrease) in profit before taxation
GBP 3% change (2020: 2%) - (Decrease)/Increase in profit before taxation
GBP 3% change (2020: 2%) - (Decrease)/Increase in profit before taxation
2021
2021
€m
€m
152
152
(46)
(46)
(23)
(23)
2020
2020
€m
€m
126
126
(64)
(64)
63
63
Equity risk
Equity risk
There is no material equity risk relating to the Group’s equity investments which are detailed in note 13 “Other investments”.
There is no material equity risk relating to the Group’s equity investments which are detailed in note 13 “Other investments”.
The Group has hedged its exposure under the subordinated mandatory convertible bonds to any future movements in its share price by an
The Group has hedged its exposure under the subordinated mandatory convertible bonds to any future movements in its share price by an
option strategy designed to hedge the economic impact of share price movements during the term of the bonds. As at 31 March 2021 the
option strategy designed to hedge the economic impact of share price movements during the term of the bonds. As at 31 March 2021 the
Group’s sensitivity to a movement of 7% (2020: 23%) in its share price would result in an increase or decrease in profit before tax of €283 million
Group’s sensitivity to a movement of 7% (2020: 23%) in its share price would result in an increase or decrease in profit before tax of €283 million
(2020: €767 million).
(2020: €767 million).
Risk management strategy of hedge relationships
Risk management strategy of hedge relationships
The risk strategies of the designated cash flow, fair value, and net investment hedges reflect the above market risk strategies.
The risk strategies of the designated cash flow, fair value, and net investment hedges reflect the above market risk strategies.
The objective of the cash flow hedges is principally to convert foreign currency denominated fixed rate borrowings in US dollar, pound sterling,
The objective of the cash flow hedges is principally to convert foreign currency denominated fixed rate borrowings in US dollar, pound sterling,
Australian dollar, Swiss Franc, Hong Kong dollar, Japanese yen, Norwegian krona and euro and US dollar floating rate borrowings into euro fixed
Australian dollar, Swiss Franc, Hong Kong dollar, Japanese yen, Norwegian krona and euro and US dollar floating rate borrowings into euro fixed
rate borrowings and hedge the foreign exchange spot rate and interest rate risk. Derivative financial instruments designated in cash flow hedges
rate borrowings and hedge the foreign exchange spot rate and interest rate risk. Derivative financial instruments designated in cash flow hedges
are cross-currency interest rate swaps and foreign exchange swaps. The swap maturity dates and liquidity profiles of the nominal cash flows
are cross-currency interest rate swaps and foreign exchange swaps. The swap maturity dates and liquidity profiles of the nominal cash flows
match those of the underlying borrowings.
match those of the underlying borrowings.
The objective of the net investment hedges is to hedge foreign exchange risk in foreign operations. Derivative financial instruments designated
The objective of the net investment hedges is to hedge foreign exchange risk in foreign operations. Derivative financial instruments designated
in net investment hedges are cross-currency interest rate swaps and foreign exchange swaps. The hedging instruments are rolled on an
in net investment hedges are cross-currency interest rate swaps and foreign exchange swaps. The hedging instruments are rolled on an
ongoing basis as determined by the nature of the business.
ongoing basis as determined by the nature of the business.
The objective of the fair value hedges is to hedge a proportion of the Group’s fixed rate euro denominated borrowing to a euro floating rate
The objective of the fair value hedges is to hedge a proportion of the Group’s fixed rate euro denominated borrowing to a euro floating rate
borrowing. The swap maturity dates match those of the underlying borrowing and the nominal cash flows are converted to quarterly payments.
borrowing. The swap maturity dates match those of the underlying borrowing and the nominal cash flows are converted to quarterly payments.
Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to
Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to
ensure that an economic relationship exists between the hedged item and hedging instrument.
ensure that an economic relationship exists between the hedged item and hedging instrument.
For hedges of foreign currency denominated borrowings and investments, the Group uses a combination of cross-currency and foreign
For hedges of foreign currency denominated borrowings and investments, the Group uses a combination of cross-currency and foreign
exchange swaps to hedge its exposure to foreign exchange risk and interest rate risk and enters into hedge relationships where the critical terms
exchange swaps to hedge its exposure to foreign exchange risk and interest rate risk and enters into hedge relationships where the critical terms
of the hedging instrument match with the terms of the hedged item. Therefore the Group expects a highly effective hedging relationship with
of the hedging instrument match with the terms of the hedged item. Therefore the Group expects a highly effective hedging relationship with
the swap contracts and the value of the corresponding hedged items to change systematically in the opposite direction in response to
the swap contracts and the value of the corresponding hedged items to change systematically in the opposite direction in response to
movements in the underlying exchange rates and interest rates. The Group therefore performs a qualitative assessment of effectiveness. If
movements in the underlying exchange rates and interest rates. The Group therefore performs a qualitative assessment of effectiveness. If
changes in circumstances affect the terms of the hedged item such that the critical terms no longer match with the critical terms of the hedging
changes in circumstances affect the terms of the hedged item such that the critical terms no longer match with the critical terms of the hedging
instrument, the Group uses the hypothetical derivative method to assess effectiveness.
instrument, the Group uses the hypothetical derivative method to assess effectiveness.
Hedge ineffectiveness may occur due to:
Hedge ineffectiveness may occur due to:
a) The fair value of the hedging instrument on the hedge relationship designation date if the fair value is not nil;
a) The fair value of the hedging instrument on the hedge relationship designation date if the fair value is not nil;
b) Changes in the contractual terms or timing of the payments on the hedged item; and
b) Changes in the contractual terms or timing of the payments on the hedged item; and
c) A change in the credit risk of the Group or the counterparty with the hedging instrument.
c) A change in the credit risk of the Group or the counterparty with the hedging instrument.
The hedge ratio for each designation will be established by comparing the quantity of the hedging instrument and the quantity of the hedged
The hedge ratio for each designation will be established by comparing the quantity of the hedging instrument and the quantity of the hedged
item to determine their relative weighting; for all of the Group’s existing hedge relationships the hedge ratio has been determined as 1:1.
item to determine their relative weighting; for all of the Group’s existing hedge relationships the hedge ratio has been determined as 1:1.
The fair values of the derivative financial instruments are calculated by discounting the future cash flows to net present values using appropriate
The fair values of the derivative financial instruments are calculated by discounting the future cash flows to net present values using appropriate
market rates and foreign currency rates prevailing at 31 March. The valuation basis is level 2. This classification comprises items where fair value
market rates and foreign currency rates prevailing at 31 March. The valuation basis is level 2. This classification comprises items where fair value
is determined from inputs other than quoted prices that are observable for the asset and liability, either directly or indirectly. Derivative financial
is determined from inputs other than quoted prices that are observable for the asset and liability, either directly or indirectly. Derivative financial
assets and liabilities are included within trade and other receivables and trade and other payables in the statement of financial position.
assets and liabilities are included within trade and other receivables and trade and other payables in the statement of financial position.
Cash flow hedges - foreign currency
risk2
Cross-currency and foreign exchange
swaps
US dollar bonds
Australian dollar bonds
Swiss franc bonds
Pound sterling bonds
Hong Kong dollar bonds
Japanese yen bonds
Norwegian krona bonds
Cash flow hedges - foreign currency
and interest rate risk2
Cross currency swaps - US dollar bonds
Cash flow hedges - interest rate risk2
Interest rate swaps - Euro loans
Fair value hedges - interest rate risk3
Interest rate swaps - Eurobonds
Net investment hedge - foreign
exchange risk4
Cross-currency and foreign exchange
swaps - South African rand investment
At 31 March 2020
Cash flow hedges - foreign currency
risk2
Cross-currency and foreign exchange
swaps
US dollar bonds
Australian dollar bonds
Swiss franc bonds
Pound sterling bonds
Hong Kong dollar bonds
Japanese yen bonds
Norwegian krona bonds
Cash flow hedges - foreign currency
and interest rate risk2
Cross-currency swaps - US dollar bonds
Cash flow hedges - interest rate risk2
Interest rate swaps - Euro loans
Fair value hedges - interest rate risk3
Interest rate swaps - Eurobonds
Net investment hedge - foreign
exchange risk4
Cross-currency and foreign exchange
swaps - South African rand investment
Nominal
amounts
€m
Carrying
value
Assets
€m
Carrying
value
Liabilities
€m
18,995
736
624
2,585
233
78
241
417
568
621
38
–
40
–
–
–
–
–
186
131
1,070
–
45
199
13
12
22
8
–
–
Opening
balance
Other comprehensive income
(Gain)/ Gain/(Loss)
recycled to
financing
costs
€m
Loss
1 April deferred to
OCI
€m
2020
€m
Weighted average
Closing
balance
31 March
20211
€m
Maturity
year
FX rate
Euro
interest
rate
%
(3,922) 5,900
(102)
28
1
34
13
(23)
(26)
28
94
(4)
6
(3)
(1,477)
104
(26)
228
(17)
(8)
29
501
(24)
30
323
13
11
3
1.18 2.82
2036
1.56 0.92
2024
1.08 1.26
2026
0.89 2.59
2047
2028
9.08 1.48
2037 128.53 2.47
9.15 1.12
2026
18
52
(62)
8
2023
1.17 1.07
7
–
(11)
–
3
–
(1)
2021
–
2028
–
–
1.21
–
1,785
26,448
–
830
23
1,392
631
328
(3,171) 6,220
–
959
(1,226) 1,823
2021
17.30 0.31
Nominal
amounts
€m
Carrying
value
Assets
€m
Carrying
value
Liabilities
€m
Other comprehensive income
Opening
balance
1 April
2019
€m
(Gain)/
Loss
deferred to
OCI
€m
Gain/(Loss)
recycled to
financing
costs
€m
Closing
balance
31 March
20201
€m
Weighted average
Maturity
year
FX rate
Euro
interest
rate
%
20,383
736
624
3,180
233
78
241
5,371
–
–
29
22
1
–
905
668
46
–
186
131
–
65
17
186
–
–
46
–
13
–
(179)
(17)
22
38
13
2
1
(4,233)
77
(27)
79
(25)
–
34
490
(86)
33
(23)
8
4
(38)
(3,922)
(26)
28
94
(4)
6
(3)
1.18 2.67
2035
1.56 0.92
2024
1.08 1.26
2026
0.85 2.04
2043
2028
9.08 1.48
2037 128.53 2.47
9.15 1.12
2026
12
11
–
(14)
20
18
2023
1.17 1.05
(4)
–
–
–
7
2021
– 1.21
–
2028
–
–
2,138
29,372
314
5,914
–
327
810
713
(179)
(4,292)
–
408
631
(3,171)
2020 16.55 0.17
Notes:
1 Fair value movement deferred into other comprehensive income includes €1,164 million loss (2020: €1,271 million loss) and €2 million gain (2020: €nil) of foreign currency basis outside the cash
flow and net investment hedge relationships respectively.
2 For cash flow hedges, the movement in the hypothetical derivative (hedged item) mirrors that of the hedging instrument. Hedge ineffectiveness of the swaps designated in a cash flow hedge
during the period was €nil (2020: €nil).
3 The carrying value of the bond includes €76 million loss (2020: €85 million loss) of cumulative fair value adjustment for the hedged interest rate risk. Net ineffectiveness on the fair value hedges,
€8 million gain (2020: €8 million gain) is recognised in the income statement. The carrying value of bonds includes an additional €774 million loss (2020: €889 million loss) in relation to fair value
of bonds previously designated in fair value hedge relationships.
4 Hedge ineffectiveness of swaps designated in a net investment hedge during the period was €nil (2020: €nil).
182 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
22. Capital and financial risk management (continued)
Changes in assets and liabilities arising from financing activities
Borrowings
€m
74,925
Derivative assets and
liabilities
€m
(4,409)
Financial liabilities
under put options
€m
1,850
Assets and liabilities
arising from financing
activities
€m
72,536
Other liabilities
€m
170
4,359
(12,237)
(2,791)
–
(2,421)
–
–
(9)
(1,480)
2,459
4,578
234
143
67,760
–
–
–
279
452
–
–
3,594
1,428
(485)
–
–
–
859
–
–
–
–
(141)
–
(1,482)
–
–
62
–
–
203
492
–
–
–
–
(42)
(62)
–
–
(2)
11
–
–
416
491
4,359
(12,237)
(2,791)
279
(2,152)
(62)
(1,482)
3,585
(54)
2,047
4,578
234
762
69,602
Borrowings
€m
52,955
Derivative assets and
liabilities
€m
(1,190)
Financial liabilities
under put options
€m
1,844
Assets and liabilities
arising from financing
activities
€m
54,558
Other liabilities
€m
949
9,933
(16,028)
2,488
–
(2,320)
–
–
–
–
98
150
–
–
–
–
–
(72)
–
–
–
–
–
(42)
(821)
9,933
(16,028)
2,488
98
(2,284)
(821)
1 April 2020
Cash movements
Proceeds from issuance of long-term borrowings
Repayment of borrowings
Net movement in short-term borrowings
Net movement in derivatives
Interest paid
Purchase of treasury shares
Payments for settlements of written put options
Non-cash movements
Fair value movements
Foreign exchange
Interest costs
Lease additions
Acquisitions of subsidiaries
Other
31 March 2021
1 April 20191
Cash movements
Proceeds from issuance of long-term borrowings
Repayment of borrowings
Net movement in short-term borrowings
Net movement in derivatives
Interest paid
Purchase of treasury shares
Non-cash movements
Fair value movements
Foreign exchange
Interest costs
Lease additions2
Acquisitions and disposals of subsidairies
Other3
31 March 20201
Notes:
1 Amounts for the year ended 31 March 2020 have been re-presented to provide further disaggregation and to additionally include €170 million (1 April 2019: €949 million) of other financial
6
(31)
2,425
15,187
9,040
1,270
74,925
(2,543)
(424)
(354)
–
(146)
–
(4,409)
–
(1)
79
–
–
–
1,850
–
(4)
88
–
–
–
170
(2,537)
(460)
2,238
15,187
8,894
1,270
72,536
liabilities. The prior year comparatives for borrowings have also been re-presented for Vodafone Egypt (see note 21).
Includes €10,040 million recognised on transition to IFRS 16 on 1 April 2019.
2
3 Primarily includes the recognition of spectrum licence payables.
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
22. Capital and financial risk management (continued)
22. Capital and financial risk management (continued)
Changes in assets and liabilities arising from financing activities
Changes in assets and liabilities arising from financing activities
1 April 2020
1 April 2020
Cash movements
Cash movements
Proceeds from issuance of long-term borrowings
Proceeds from issuance of long-term borrowings
Repayment of borrowings
Repayment of borrowings
Net movement in short-term borrowings
Net movement in short-term borrowings
Payments for settlements of written put options
Payments for settlements of written put options
Net movement in derivatives
Net movement in derivatives
Interest paid
Interest paid
Purchase of treasury shares
Purchase of treasury shares
Non-cash movements
Non-cash movements
Fair value movements
Fair value movements
Foreign exchange
Foreign exchange
Interest costs
Interest costs
Lease additions
Lease additions
Acquisitions of subsidiaries
Acquisitions of subsidiaries
Other
Other
31 March 2021
31 March 2021
1 April 20191
1 April 20191
Cash movements
Cash movements
Proceeds from issuance of long-term borrowings
Proceeds from issuance of long-term borrowings
Repayment of borrowings
Repayment of borrowings
Net movement in short-term borrowings
Net movement in short-term borrowings
Net movement in derivatives
Net movement in derivatives
Interest paid
Interest paid
Purchase of treasury shares
Purchase of treasury shares
Non-cash movements
Non-cash movements
Fair value movements
Fair value movements
Foreign exchange
Foreign exchange
Interest costs
Interest costs
Lease additions2
Lease additions2
Other3
Other3
31 March 20201
31 March 20201
Notes:
Notes:
Acquisitions and disposals of subsidairies
Acquisitions and disposals of subsidairies
Derivative assets and
Derivative assets and
liabilities
liabilities
€m
€m
(4,409)
(4,409)
Financial liabilities
Financial liabilities
under put options
under put options
€m
€m
1,850
1,850
Assets and liabilities
Assets and liabilities
arising from financing
arising from financing
activities
activities
€m
€m
72,536
72,536
Other liabilities
Other liabilities
€m
€m
170
170
Borrowings
Borrowings
€m
€m
74,925
74,925
4,359
4,359
(12,237)
(12,237)
(2,791)
(2,791)
(2,421)
(2,421)
–
–
–
–
–
–
(9)
(9)
(1,480)
(1,480)
2,459
2,459
4,578
4,578
234
234
143
143
Borrowings
Borrowings
€m
€m
52,955
52,955
9,933
9,933
(16,028)
(16,028)
2,488
2,488
(2,320)
(2,320)
–
–
–
–
6
6
(31)
(31)
2,425
2,425
15,187
15,187
9,040
9,040
1,270
1,270
74,925
74,925
67,760
67,760
859
859
Derivative assets and
Derivative assets and
liabilities
liabilities
€m
€m
(1,190)
(1,190)
Financial liabilities
Financial liabilities
under put options
under put options
€m
€m
1,844
1,844
Assets and liabilities
Assets and liabilities
arising from financing
arising from financing
activities
activities
€m
€m
54,558
54,558
Other liabilities
Other liabilities
€m
€m
949
949
279
279
452
452
3,594
3,594
1,428
1,428
(485)
(485)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
98
98
150
150
–
–
(2,543)
(2,543)
(424)
(424)
(354)
(354)
(146)
(146)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(141)
(141)
(1,482)
(1,482)
62
62
–
–
–
–
–
–
–
–
203
203
492
492
–
–
–
–
–
–
–
–
–
–
(72)
(72)
–
–
(1)
(1)
79
79
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(42)
(42)
(62)
(62)
–
–
–
–
(2)
(2)
11
11
–
–
–
–
416
416
491
491
–
–
–
–
–
–
–
–
(42)
(42)
(821)
(821)
–
–
(4)
(4)
88
88
–
–
–
–
–
–
4,359
4,359
(12,237)
(12,237)
(2,791)
(2,791)
279
279
(2,152)
(2,152)
(62)
(62)
(1,482)
(1,482)
3,585
3,585
(54)
(54)
2,047
2,047
4,578
4,578
234
234
762
762
69,602
69,602
9,933
9,933
(16,028)
(16,028)
2,488
2,488
98
98
(2,284)
(2,284)
(821)
(821)
(2,537)
(2,537)
(460)
(460)
2,238
2,238
15,187
15,187
8,894
8,894
1,270
1,270
72,536
72,536
1 Amounts for the year ended 31 March 2020 have been re-presented to provide further disaggregation and to additionally include €170 million (1 April 2019: €949 million) of other financial
1 Amounts for the year ended 31 March 2020 have been re-presented to provide further disaggregation and to additionally include €170 million (1 April 2019: €949 million) of other financial
liabilities. The prior year comparatives for borrowings have also been re-presented for Vodafone Egypt (see note 21).
liabilities. The prior year comparatives for borrowings have also been re-presented for Vodafone Egypt (see note 21).
2
2
Includes €10,040 million recognised on transition to IFRS 16 on 1 April 2019.
Includes €10,040 million recognised on transition to IFRS 16 on 1 April 2019.
3 Primarily includes the recognition of spectrum licence payables.
3 Primarily includes the recognition of spectrum licence payables.
(4,409)
(4,409)
1,850
1,850
170
170
182 Vodafone Group Plc
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Financials
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183 Vodafone Group Plc
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Fair value and carrying value information
The carrying value and valuation basis of the Group’s financial assets are set out in notes 13 “Other investments”, 14 “Trade and other
receivables” and 19 “Cash and cash equivalents”. For all financial assets held at amortised cost the carrying values approximate fair value.
The carrying value and valuation basis of the Group’s financial liabilities are set out in notes 15 “Trade and other payables” and 21 “Borrowings”.
The carrying values approximate fair value for the Group’s trade payables and other payables categories. For other financial liabilities a
comparison of fair value and carrying value is disclosed in note 21 “Borrowings”.
Net financial instruments
The table below shows the Group’s financial assets and liabilities that are subject to offset in the balance sheet and the impact of enforceable
master netting or similar agreements.
At 31 March 2021
Derivative financial assets
Derivative financial liabilities
Total
At 31 March 2020
Gross amount
€m
3,151
(4,010)
(859)
Amount set off
€m
–
–
–
Amounts
presented in
balance sheet
€m
3,151
(4,010)
(859)
Related amounts not set off in the balance sheet
Right of set off
with derivative
counterparties
€m
(1,989)
1,989
–
Collateral
assets/liabilities1
€m
(962)
2,194
1,232
Net amount
€m
200
173
373
Related amounts not set off in the balance sheet
Derivative financial assets
Derivative financial liabilities
Total
Note:
1 Excludes collateral of €913 million (2020: €nil) pledged as initial margin that does not offset against existing mark to market balances as at 31 March.
Gross amount
€m
9,176
(4,767)
4,409
Amount set off
€m
–
–
–
Amounts
presented in
balance sheet
€m
9,176
(4,767)
4,409
Right of set off
with derivative
counterparties
€m
(3,556)
3,556
–
Collateral
assets/liabilities 1
€m
(5,292)
1,115
(4,177)
Net amount
€m
328
(96)
232
Financial assets and liabilities are offset and the net amount reported in the consolidated balance sheet when there is a legally enforceable right
to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
Derivative financial instruments that do not meet the criteria for offset could be settled net in certain circumstances under ISDA (‘International
Swaps and Derivatives Association’) agreements where each party has the option to settle amounts on a net basis in the event of default from
the other. Collateral may be offset and net settled against derivative financial instruments in the event of default by either party. The
aforementioned collateral balances are recorded in “other investments” or “current borrowings” respectively.
23. Directors and key management compensation
This note details the total amounts earned by the Company’s Directors and members of the Executive
Committee.
Directors
Aggregate emoluments of the Directors of the Company were as follows:
Salaries and fees
Incentive schemes1
Other benefits2
2021
€m
4
3
–
7
2020
€m
4
2
1
7
2019
€m
4
2
–
6
Notes:
1 Excludes gains from long-term incentive plans.
2
Includes the value of the cash allowance taken by some individuals in lieu of pension contributions.
No Directors serving during the year exercised share options in the year ended 31 March 2021 (2020: None; 2019: None).
Key management compensation
Aggregate compensation for key management, being the Directors and members of the Executive Committee, was as follows:
Short-term employee benefits
Share-based payments
2021
€m
28
23
51
2020
€m
27
30
57
2019
€m
23
35
58
184 Vodafone Group Plc
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Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
24. Employees
This note shows the average number of people employed by the Group during the year, in which areas of
our business our employees work and where they are based. It also shows total employment costs.
By activity:
Operations
Selling and distribution
Customer care and administration
By segment:
Germany
Italy
Spain
UK
Other Europe
India (Discontinued operations)
Vodacom
Other Markets
Common Functions
Total
The cost incurred in respect of these employees (including Directors) was:
Wages and salaries
Social security costs
Other pension costs (note 25)
Share-based payments (note 26)
India (Discontinued operations)
Total
2021
Employees
2020
Employees
2019
Employees
14,893
26,874
54,739
96,506
15,798
5,818
4,257
9,584
15,460
–
7,810
9,498
28,281
96,506
2021
€m
4,238
549
235
135
5,157
–
5,157
14,616
28,133
52,470
95,219
15,199
5,980
4,316
10,295
14,646
–
7,773
10,515
26,495
95,219
2020
€m
4,571
531
226
134
5,462
–
5,462
15,872
30,596
52,528
98,996
13,414
6,536
5,140
11,525
12,413
4,554
7,695
12,837
24,882
98,996
2019
€m
4,333
579
223
132
5,267
84
5,351
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
This note shows the average number of people employed by the Group during the year, in which areas of
This note shows the average number of people employed by the Group during the year, in which areas of
our business our employees work and where they are based. It also shows total employment costs.
our business our employees work and where they are based. It also shows total employment costs.
By activity:
By activity:
Operations
Operations
Selling and distribution
Selling and distribution
Customer care and administration
Customer care and administration
By segment:
By segment:
Germany
Germany
Italy
Italy
Spain
Spain
UK
UK
Other Europe
Other Europe
India (Discontinued operations)
India (Discontinued operations)
Vodacom
Vodacom
Other Markets
Other Markets
Common Functions
Common Functions
Total
Total
Wages and salaries
Wages and salaries
Social security costs
Social security costs
Other pension costs (note 25)
Other pension costs (note 25)
Share-based payments (note 26)
Share-based payments (note 26)
India (Discontinued operations)
India (Discontinued operations)
Total
Total
The cost incurred in respect of these employees (including Directors) was:
The cost incurred in respect of these employees (including Directors) was:
2021
2021
Employees
Employees
2020
2020
Employees
Employees
2019
2019
Employees
Employees
14,893
14,893
26,874
26,874
54,739
54,739
96,506
96,506
15,798
15,798
5,818
5,818
4,257
4,257
9,584
9,584
15,460
15,460
–
–
7,810
7,810
9,498
9,498
28,281
28,281
96,506
96,506
2021
2021
€m
€m
4,238
4,238
549
549
235
235
135
135
5,157
5,157
–
–
5,157
5,157
14,616
14,616
28,133
28,133
52,470
52,470
95,219
95,219
15,199
15,199
5,980
5,980
4,316
4,316
10,295
10,295
14,646
14,646
–
–
7,773
7,773
10,515
10,515
26,495
26,495
95,219
95,219
2020
2020
€m
€m
4,571
4,571
531
531
226
226
134
134
5,462
5,462
–
–
5,462
5,462
15,872
15,872
30,596
30,596
52,528
52,528
98,996
98,996
13,414
13,414
6,536
6,536
5,140
5,140
11,525
11,525
12,413
12,413
4,554
4,554
7,695
7,695
12,837
12,837
24,882
24,882
98,996
98,996
2019
2019
€m
€m
4,333
4,333
579
579
223
223
132
132
5,267
5,267
84
84
5,351
5,351
184 Vodafone Group Plc
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185 Vodafone Group Plc
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24. Employees
24. Employees
25. Post employment benefits
The Group operates a number of Defined Benefit and Defined Contribution retirement plans for our
employees. The Group’s largest defined benefit plan is in the UK. For further details see “Critical accounting
judgements and key sources of estimation uncertainty” in note 1 “Basis of preparation”.
Accounting policies
For defined benefit retirement plans, the difference between the fair value of the plan assets and the present value of the plan liabilities is
recognised as an asset or liability on the statement of financial position. Defined benefit plan liabilities are assessed using the projected unit
funding method and applying the principal actuarial assumptions at the reporting period date. Assets are valued at market value.
Actuarial gains and losses are taken to the statement of comprehensive income as incurred. For this purpose, actuarial gains and losses
comprise both the effects of changes in actuarial assumptions and experience adjustments arising from differences between the previous
actuarial assumptions and what has actually occurred. The return on plan assets, in excess of interest income, and costs incurred for the
management of plan assets are also taken to other comprehensive income.
Other movements in the net surplus or deficit are recognised in the income statement, including the current service cost, any past service cost
and the effect of any settlements. The interest cost less the expected interest income on assets is also charged to the income statement. The
amount charged to the income statement in respect of these plans is included within operating costs or in the Group’s share of the results of
equity accounted operations, as appropriate.
The Group’s contributions to defined contribution pension plans are charged to the income statement as they fall due.
Background
At 31 March 2021 the Group operated a number of retirement plans for the benefit of its employees throughout the world, with varying rights
and obligations depending on the conditions and practices in the countries concerned. The Group’s philosophy is to provide access to defined
contribution retirement plans where feasible and to manage legacy defined benefit retirement arrangements. Defined benefit plans provide
benefits based on the employees’ length of pensionable service and their final pensionable salary or other criteria. Defined contribution plans
offer employees individual funds that are converted into benefits at the time of retirement.
The Group operates defined benefit plans in Germany, India, Ireland, Italy, the UK, the United States and the Group operates defined benefit
indemnity plans in Greece and Turkey. Defined contribution plans are currently provided in Egypt, Germany, Greece, Hungary, India, Ireland,
Italy, Portugal, South Africa, Spain and the UK.
Income statement expense
Defined contribution plans
Defined benefit plans
Total amount charged to income statement (note 24)
2021
€m
204
31
235
2020
€m
180
46
226
2019
€m
166
57
223
Defined benefit plans
The Group’s retirement policy is to provide competitive pension provision, in each operating country, in line with the market median for that
location. The Group’s preferred retirement provision is focused on Defined Contribution (‘DC’) arrangements and/or State provision for future
service.
The Group’s main defined benefit funding liability is the Vodafone UK Group Pension Scheme (‘Vodafone UK plan’). Since June 2014 the
Vodafone UK plan has consisted of two segregated sections: the Vodafone Section and the Cable & Wireless Section (‘CWW Section’). Both
sections are closed to new entrants and to future accrual. The Group also operates smaller funded and unfunded plans in the UK, funded and
unfunded plans in Germany and funded plans in Ireland. Defined benefit pension provision exposes the Group to actuarial risks such as longer
than expected longevity of participants, lower than expected return on investments and higher than expected inflation, which may increase the
liabilities or reduce the value of assets of the plans.
The main defined benefit plans are administered by trustee boards which are legally separate from the Group and consist of representatives
who are employees, former employees or are independent from the Group. The trustee boards of the pension plans are required by legislation
to act in the best interest of the participants, set the investment strategy and contribution rates and are subject to statutory funding regimes.
The Vodafone UK plan is registered as an occupational pension plan with HM Revenue and Customs (‘HMRC’) and is subject to UK legislation
and operates within the framework outlined by the Pensions Regulator. UK legislation requires that pension plans are funded prudently and that
valuations are undertaken at least every three years. Separate valuations are required for the Vodafone Section and CWW Section.
The trustees obtain regular actuarial valuations to check whether the statutory funding objective is met and whether a recovery plan is required
to restore funding to the level of the agreed technical provisions. The 31 March 2019 triennial actuarial valuation for the Vodafone Section and
CWW Section of the Vodafone UK plan showed a net deficit of £78 million (€90 million) on the funding basis, comprising of a £173 million (€200
million) deficit for the Vodafone Section and a £95 million (€110 million) surplus for the CWW Section.
186 Vodafone Group Plc
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Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
25. Post employment benefits (continued)
These plan-specific actuarial valuations will differ to the IAS 19 accounting basis, which is used to measure pension assets and liabilities
presented in the Group’s consolidated statement of financial position.
Following the 2019 triennial valuation, the Group and trustees of the Vodafone UK plan agreed a funding plan to address the valuation deficit in
the Vodafone Section over the period to 31 March 2025 and made a cash contribution on 4 September 2020 of £80 million (€90 million) into
the Vodafone Section. This cash payment was invested into an annuity policy issued by a third party insurance company which in turn entered
into a reinsurance policy covering these risks with the Group’s captive insurance company, see note 15 “Trade and other payables”. No further
contributions are due in respect of the deficit revealed at the 2019 valuation.
Funding plans are individually agreed for each of the Group’s other defined benefit plans with the respective trustees or governing board, taking
into account local regulatory requirements. It is expected that ordinary contributions of €78 million will be paid into the Group’s defined benefit
plans during the year ending 31 March 2022. The Group has also provided certain guarantees in respect of the Vodafone UK plan; further details
are provided in note 29 “Contingent liabilities and legal proceedings” to the consolidated financial statements.
The investment strategy for the UK plans is controlled by the trustees in consultation with the Group and the plans have no direct investments
in the Group’s equity securities or in property or other assets currently used by the Group. The allocation of assets between different classes of
investment is reviewed regularly and is a key factor in the trustee investment policy. The trustees aim to achieve the plan’s investment
objectives through investing partly in a diversified mix of growth assets which, over the long term, are expected to grow in value by more than
the low risk assets. The low risk assets include cash and gilts, inflation and interest rate hedging and in substance insured pensioner annuity
policies in both the Vodafone Section and CWW Sections of the Vodafone UK plan. A number of investment managers are appointed to
promote diversification by assets, organisation and investment style and current market conditions and trends are regularly assessed, which
may lead to adjustments in the asset allocation.
Actuarial assumptions
The Group’s plan liabilities are measured using the projected unit credit method using the principal actuarial assumptions set out below:
Weighted average actuarial assumptions used at 31 March1:
Rate of inflation2
Rate of increase in salaries
Discount rate
Notes:
1 Figures shown represent a weighted average assumption of the individual plans.
2 The rate of increase in pensions in payment and deferred revaluation are dependent on the rate of inflation.
2021
%
2.9
2.7
1.8
2020
%
2.2
2.5
2.0
2019
%
2.9
2.7
2.3
Mortality assumptions used are based on recommendations from the individual local actuaries which include adjustments for the experience of
the Group where appropriate. The Group’s largest plan is the Vodafone UK plan. Further life expectancies assumed for the UK plans are
23.4/25.4 years (2020: 23.2/25.2 years) for a male/female pensioner currently aged 65 years and 25.4/27.4 (2020: 25.1/27.2 years) from age
65 for a male/female non-pensioner member currently aged 40.
Charges made to the consolidated income statement and consolidated statement of comprehensive income (‘SOCI’) on the basis of the
assumptions stated above are:
Current service cost
Past service costs1, 2
Net interest (income)/charge
Total included within staff costs
Actuarial (losses)/gains recognised in the SOCI
Notes:
1 Following a High Court judgement on 21 October 2018 which concluded that affected defined benefit plans should equalise pension benefits for men and women in relation to guaranteed
minimum pension (‘GMP’) benefits the Group has recorded a pre-tax past service cost of €16 million (£14 million) in the year ended 31 March 2019.
2 Following a further judgement on 20 November 2020 which concluded that effected defined benefit plans should also equalise transfer value payments for men and women in relation to
guaranteed minimum pension (‘GMP’) benefits the Group has recorded a pre-tax past service cost of €2 million (£2 million) in the year ended 31 March 2021.
Duration of the benefit obligations
The weighted average duration of the defined benefit obligation at 31 March 2021 is 21 years (2020: 21 years).
2021
€m
37
2
(8)
31
(686)
2020
€m
37
–
9
46
640
2019
€m
31
16
10
57
(33)
186 Vodafone Group Plc
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Fair value of the assets and present value of the liabilities of the plans
The amount included in the statement of financial position arising from the Group’s obligations in respect of its Defined benefit plans is as
follows:
1April 2019
Service cost
Interest income/(cost)
Return on plan assets excluding interest income
Actuarial gains arising from changes in demographic assumptions
Actuarial gains arising from changes in financial assumptions
Actuarial losses arising from experience adjustments
Employer cash contributions
Member cash contributions
Benefits paid
Exchange rate movements
Other movements
31 March 2020
Service cost
Interest income/(cost)
Return on plan assets excluding interest income
Actuarial losses arising from changes in financial assumptions
Actuarial losses arising from experience adjustments
Employer cash contributions
Member cash contributions
Benefits paid
Exchange rate movements
Other movements
31 March 2021
An analysis of the net (deficit)/surplus is provided below for the Group as a whole.
Assets
€m
6,974
–
154
108
–
–
–
42
10
(237)
(143)
(2)
6,906
–
137
466
–
–
125
10
(243)
244
(13)
7,632
Liabilities
€m
(7,431)
(37)
(163)
–
252
383
(103)
–
(10)
237
156
(38)
(6,754)
(39)
(129)
–
(1,118)
(34)
–
(10)
243
(249)
5
(8,085)
Net deficit
€m
(457)
(37)
(9)
108
252
383
(103)
42
–
–
13
(40)
152
(39)
8
466
(1,118)
(34)
125
–
–
(5)
(8)
(453)
2021
€m
2020
€m
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
25. Post employment benefits (continued)
25. Post employment benefits (continued)
These plan-specific actuarial valuations will differ to the IAS 19 accounting basis, which is used to measure pension assets and liabilities
These plan-specific actuarial valuations will differ to the IAS 19 accounting basis, which is used to measure pension assets and liabilities
presented in the Group’s consolidated statement of financial position.
presented in the Group’s consolidated statement of financial position.
Following the 2019 triennial valuation, the Group and trustees of the Vodafone UK plan agreed a funding plan to address the valuation deficit in
Following the 2019 triennial valuation, the Group and trustees of the Vodafone UK plan agreed a funding plan to address the valuation deficit in
the Vodafone Section over the period to 31 March 2025 and made a cash contribution on 4 September 2020 of £80 million (€90 million) into
the Vodafone Section over the period to 31 March 2025 and made a cash contribution on 4 September 2020 of £80 million (€90 million) into
the Vodafone Section. This cash payment was invested into an annuity policy issued by a third party insurance company which in turn entered
the Vodafone Section. This cash payment was invested into an annuity policy issued by a third party insurance company which in turn entered
into a reinsurance policy covering these risks with the Group’s captive insurance company, see note 15 “Trade and other payables”. No further
into a reinsurance policy covering these risks with the Group’s captive insurance company, see note 15 “Trade and other payables”. No further
contributions are due in respect of the deficit revealed at the 2019 valuation.
contributions are due in respect of the deficit revealed at the 2019 valuation.
Funding plans are individually agreed for each of the Group’s other defined benefit plans with the respective trustees or governing board, taking
Funding plans are individually agreed for each of the Group’s other defined benefit plans with the respective trustees or governing board, taking
into account local regulatory requirements. It is expected that ordinary contributions of €78 million will be paid into the Group’s defined benefit
into account local regulatory requirements. It is expected that ordinary contributions of €78 million will be paid into the Group’s defined benefit
plans during the year ending 31 March 2022. The Group has also provided certain guarantees in respect of the Vodafone UK plan; further details
plans during the year ending 31 March 2022. The Group has also provided certain guarantees in respect of the Vodafone UK plan; further details
are provided in note 29 “Contingent liabilities and legal proceedings” to the consolidated financial statements.
are provided in note 29 “Contingent liabilities and legal proceedings” to the consolidated financial statements.
The investment strategy for the UK plans is controlled by the trustees in consultation with the Group and the plans have no direct investments
The investment strategy for the UK plans is controlled by the trustees in consultation with the Group and the plans have no direct investments
in the Group’s equity securities or in property or other assets currently used by the Group. The allocation of assets between different classes of
in the Group’s equity securities or in property or other assets currently used by the Group. The allocation of assets between different classes of
investment is reviewed regularly and is a key factor in the trustee investment policy. The trustees aim to achieve the plan’s investment
investment is reviewed regularly and is a key factor in the trustee investment policy. The trustees aim to achieve the plan’s investment
objectives through investing partly in a diversified mix of growth assets which, over the long term, are expected to grow in value by more than
objectives through investing partly in a diversified mix of growth assets which, over the long term, are expected to grow in value by more than
the low risk assets. The low risk assets include cash and gilts, inflation and interest rate hedging and in substance insured pensioner annuity
the low risk assets. The low risk assets include cash and gilts, inflation and interest rate hedging and in substance insured pensioner annuity
policies in both the Vodafone Section and CWW Sections of the Vodafone UK plan. A number of investment managers are appointed to
policies in both the Vodafone Section and CWW Sections of the Vodafone UK plan. A number of investment managers are appointed to
promote diversification by assets, organisation and investment style and current market conditions and trends are regularly assessed, which
promote diversification by assets, organisation and investment style and current market conditions and trends are regularly assessed, which
may lead to adjustments in the asset allocation.
may lead to adjustments in the asset allocation.
Actuarial assumptions
Actuarial assumptions
The Group’s plan liabilities are measured using the projected unit credit method using the principal actuarial assumptions set out below:
The Group’s plan liabilities are measured using the projected unit credit method using the principal actuarial assumptions set out below:
Weighted average actuarial assumptions used at 31 March1:
Weighted average actuarial assumptions used at 31 March1:
Rate of inflation2
Rate of inflation2
Rate of increase in salaries
Rate of increase in salaries
Discount rate
Discount rate
Notes:
Notes:
1 Figures shown represent a weighted average assumption of the individual plans.
1 Figures shown represent a weighted average assumption of the individual plans.
2 The rate of increase in pensions in payment and deferred revaluation are dependent on the rate of inflation.
2 The rate of increase in pensions in payment and deferred revaluation are dependent on the rate of inflation.
Mortality assumptions used are based on recommendations from the individual local actuaries which include adjustments for the experience of
Mortality assumptions used are based on recommendations from the individual local actuaries which include adjustments for the experience of
the Group where appropriate. The Group’s largest plan is the Vodafone UK plan. Further life expectancies assumed for the UK plans are
the Group where appropriate. The Group’s largest plan is the Vodafone UK plan. Further life expectancies assumed for the UK plans are
23.4/25.4 years (2020: 23.2/25.2 years) for a male/female pensioner currently aged 65 years and 25.4/27.4 (2020: 25.1/27.2 years) from age
23.4/25.4 years (2020: 23.2/25.2 years) for a male/female pensioner currently aged 65 years and 25.4/27.4 (2020: 25.1/27.2 years) from age
65 for a male/female non-pensioner member currently aged 40.
65 for a male/female non-pensioner member currently aged 40.
Charges made to the consolidated income statement and consolidated statement of comprehensive income (‘SOCI’) on the basis of the
Charges made to the consolidated income statement and consolidated statement of comprehensive income (‘SOCI’) on the basis of the
2021
2021
%
%
2.9
2.9
2.7
2.7
1.8
1.8
2020
2020
%
%
2.2
2.2
2.5
2.5
2.0
2.0
2021
2021
€m
€m
37
37
2
2
(8)
(8)
31
31
(686)
(686)
2020
2020
€m
€m
37
37
–
–
9
9
46
46
640
640
2019
2019
%
%
2.9
2.9
2.7
2.7
2.3
2.3
2019
2019
€m
€m
31
31
16
16
10
10
57
57
(33)
(33)
assumptions stated above are:
assumptions stated above are:
Current service cost
Current service cost
Past service costs1, 2
Past service costs1, 2
Net interest (income)/charge
Net interest (income)/charge
Total included within staff costs
Total included within staff costs
Actuarial (losses)/gains recognised in the SOCI
Actuarial (losses)/gains recognised in the SOCI
Notes:
Notes:
1 Following a High Court judgement on 21 October 2018 which concluded that affected defined benefit plans should equalise pension benefits for men and women in relation to guaranteed
1 Following a High Court judgement on 21 October 2018 which concluded that affected defined benefit plans should equalise pension benefits for men and women in relation to guaranteed
minimum pension (‘GMP’) benefits the Group has recorded a pre-tax past service cost of €16 million (£14 million) in the year ended 31 March 2019.
minimum pension (‘GMP’) benefits the Group has recorded a pre-tax past service cost of €16 million (£14 million) in the year ended 31 March 2019.
2 Following a further judgement on 20 November 2020 which concluded that effected defined benefit plans should also equalise transfer value payments for men and women in relation to
2 Following a further judgement on 20 November 2020 which concluded that effected defined benefit plans should also equalise transfer value payments for men and women in relation to
guaranteed minimum pension (‘GMP’) benefits the Group has recorded a pre-tax past service cost of €2 million (£2 million) in the year ended 31 March 2021.
guaranteed minimum pension (‘GMP’) benefits the Group has recorded a pre-tax past service cost of €2 million (£2 million) in the year ended 31 March 2021.
Duration of the benefit obligations
Duration of the benefit obligations
The weighted average duration of the defined benefit obligation at 31 March 2021 is 21 years (2020: 21 years).
The weighted average duration of the defined benefit obligation at 31 March 2021 is 21 years (2020: 21 years).
Analysis of net (deficit)/surplus:
Total fair value of plan assets
Present value of funded plan liabilities
Net (deficit)/surplus for funded plans
Present value of unfunded plan liabilities
Net (deficit)/surplus
Net (deficit)/surplus is analysed as:
Assets1
Liabilities
Note:
1 Pension assets are deemed to be recoverable and there are no adjustments in respect of minimum funding requirements as economic benefits are available to the Group either in the form of
future refunds or, for plans still open to benefit accrual, in the form of possible reductions in future contributions.
7,632
(7,968)
(336)
(117)
(453)
6,906
(6,641)
265
(113)
152
590
(438)
60
(513)
188 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
25. Post employment benefits (continued)
An analysis of net surplus/(deficit) is provided below for the Vodafone UK plan, which is a funded plan. As part of the merger of the Vodafone UK
plan and the Cable and Wireless Worldwide Retirement Plan (‘CWWRP’) plan on 6 June 2014 the assets and liabilities of the CWW Section are
segregated from the Vodafone Section and hence are reported separately below.
Analysis of net surplus/(deficit):
Total fair value of plan assets
Present value of plan liabilities
Net surplus/(deficit)
Net surplus/(deficit) are analysed as:
Assets
Liabilities
Fair value of plan assets
Cash and cash equivalents
Equity investments:
With quoted prices in an active market
Without quoted prices in an active market
Debt instruments:
With quoted prices in an active market
Without quoted prices in an active market
Property:
With quoted prices in an active market
Without quoted prices in an active market
Derivatives:1
Without quoted prices in an active market
Investment fund
Annuity policies
With quoted prices in an active market
Without quoted prices
CWW Section
2021
€m
2020
€m
Vodafone Section
2021
€m
2020
€m
2,912
(2,852)
60
60
–
2,842
(2,393)
449
449
–
3,298
(3,457)
(159)
–
(159)
2,873
(2,731)
142
142
–
2021
€m
247
1,376
294
4,589
559
26
494
2020
€m
96
1,018
197
4,446
513
18
391
(1,557)
604
(1,110)
533
4
996
7,632
3
801
6,906
Total
Note:
1 Derivatives include collateral held in the form of cash. Assets are valued using ‘level 2’ inputs under IFRS 13 “Fair Value Measurement” principles and classified as unquoted accordingly.
The fair value of plan assets, which have been measured in accordance with IFRS 13 “Fair Value Measurement”, are analysed by asset category
above and are subdivided by assets that have a quoted market price in an active market and those that do not, such as investment funds. Where
available, the fair values are quoted prices (e.g. listed equity, sovereign debt and corporate bonds). Unlisted investments without quoted prices in
an active market (e.g. private equity) are included at values provided by the fund manager in accordance with relevant guidance. Other
significant assets are valued based on observable inputs such as yield curves. The Vodafone UK plan annuity policies fully match the pension
obligations of those pensioners insured and therefore are set equal to the present value of the related obligations. Investment funds of €604
million at 31 March 2021 include investments in diversified alternative beta funds held in the Vodafone Section of the Vodafone UK plan.
The actual return on plan assets over the year to 31 March 2021 was a gain of €603 million (2020: €262 million gain).
Sensitivity analysis
Measurement of the Group’s defined benefit retirement obligation is sensitive to changes in certain key assumptions. The sensitivity analysis
below shows how a reasonably possible increase or decrease in a particular assumption would, in isolation, result in an increase or decrease in
the present value of the defined benefit obligation as at 31 March 2021.
Rate of inflation
Rate of increase in salaries
Discount rate
Life expectancy
Decrease by 0.5%
€m
Increase by 0.5% Decrease by 0.5%
€m
€m
Increase by 0.5% Decrease by 0.5%
€m
€m
Increase by 0.5% Decrease by 1 year
€m
€m
Increase by 1 year
€m
(Decrease)/increase in present
value of defined benefit obligation1
Note:
1 The sensitivity analysis may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another. In
(278)
(738)
(572)
854
641
(4)
4
275
presenting this sensitivity analysis, the change in the present value of the defined benefit obligation has been calculated on the same basis as prior years using the projected unit credit method at
the end of the year, which is the same as that applied in calculating the defined benefit obligation liability recognised in the statement of financial position. The rate of inflation assumption
sensitivity factors in the impact of changes to all assumptions relating to inflation including the rate of increase in salaries, pension increases and deferred revaluations.
188 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
189 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
25. Post employment benefits (continued)
25. Post employment benefits (continued)
An analysis of net surplus/(deficit) is provided below for the Vodafone UK plan, which is a funded plan. As part of the merger of the Vodafone UK
An analysis of net surplus/(deficit) is provided below for the Vodafone UK plan, which is a funded plan. As part of the merger of the Vodafone UK
plan and the Cable and Wireless Worldwide Retirement Plan (‘CWWRP’) plan on 6 June 2014 the assets and liabilities of the CWW Section are
plan and the Cable and Wireless Worldwide Retirement Plan (‘CWWRP’) plan on 6 June 2014 the assets and liabilities of the CWW Section are
segregated from the Vodafone Section and hence are reported separately below.
segregated from the Vodafone Section and hence are reported separately below.
Analysis of net surplus/(deficit):
Analysis of net surplus/(deficit):
Total fair value of plan assets
Total fair value of plan assets
Present value of plan liabilities
Present value of plan liabilities
Net surplus/(deficit)
Net surplus/(deficit)
Net surplus/(deficit) are analysed as:
Net surplus/(deficit) are analysed as:
Assets
Assets
Liabilities
Liabilities
Fair value of plan assets
Fair value of plan assets
Cash and cash equivalents
Cash and cash equivalents
Equity investments:
Equity investments:
With quoted prices in an active market
With quoted prices in an active market
Without quoted prices in an active market
Without quoted prices in an active market
Debt instruments:
Debt instruments:
With quoted prices in an active market
With quoted prices in an active market
Without quoted prices in an active market
Without quoted prices in an active market
Property:
Property:
With quoted prices in an active market
With quoted prices in an active market
Without quoted prices in an active market
Without quoted prices in an active market
Without quoted prices in an active market
Without quoted prices in an active market
Derivatives:1
Derivatives:1
Investment fund
Investment fund
Annuity policies
Annuity policies
With quoted prices in an active market
With quoted prices in an active market
Without quoted prices
Without quoted prices
Total
Total
Note:
Note:
CWW Section
CWW Section
2021
2021
€m
€m
2020
2020
€m
€m
Vodafone Section
Vodafone Section
2021
2021
€m
€m
2020
2020
€m
€m
2,912
2,912
(2,852)
(2,852)
60
60
60
60
–
–
2,842
2,842
(2,393)
(2,393)
449
449
449
449
–
–
3,298
3,298
(3,457)
(3,457)
(159)
(159)
–
–
(159)
(159)
2,873
2,873
(2,731)
(2,731)
142
142
142
142
–
–
2021
2021
€m
€m
247
247
1,376
1,376
294
294
4,589
4,589
559
559
26
26
494
494
2020
2020
€m
€m
96
96
1,018
1,018
197
197
4,446
4,446
513
513
18
18
391
391
(1,557)
(1,557)
604
604
(1,110)
(1,110)
533
533
4
4
996
996
7,632
7,632
3
3
801
801
6,906
6,906
1 Derivatives include collateral held in the form of cash. Assets are valued using ‘level 2’ inputs under IFRS 13 “Fair Value Measurement” principles and classified as unquoted accordingly.
1 Derivatives include collateral held in the form of cash. Assets are valued using ‘level 2’ inputs under IFRS 13 “Fair Value Measurement” principles and classified as unquoted accordingly.
The fair value of plan assets, which have been measured in accordance with IFRS 13 “Fair Value Measurement”, are analysed by asset category
The fair value of plan assets, which have been measured in accordance with IFRS 13 “Fair Value Measurement”, are analysed by asset category
above and are subdivided by assets that have a quoted market price in an active market and those that do not, such as investment funds. Where
above and are subdivided by assets that have a quoted market price in an active market and those that do not, such as investment funds. Where
available, the fair values are quoted prices (e.g. listed equity, sovereign debt and corporate bonds). Unlisted investments without quoted prices in
available, the fair values are quoted prices (e.g. listed equity, sovereign debt and corporate bonds). Unlisted investments without quoted prices in
an active market (e.g. private equity) are included at values provided by the fund manager in accordance with relevant guidance. Other
an active market (e.g. private equity) are included at values provided by the fund manager in accordance with relevant guidance. Other
significant assets are valued based on observable inputs such as yield curves. The Vodafone UK plan annuity policies fully match the pension
significant assets are valued based on observable inputs such as yield curves. The Vodafone UK plan annuity policies fully match the pension
obligations of those pensioners insured and therefore are set equal to the present value of the related obligations. Investment funds of €604
obligations of those pensioners insured and therefore are set equal to the present value of the related obligations. Investment funds of €604
million at 31 March 2021 include investments in diversified alternative beta funds held in the Vodafone Section of the Vodafone UK plan.
million at 31 March 2021 include investments in diversified alternative beta funds held in the Vodafone Section of the Vodafone UK plan.
The actual return on plan assets over the year to 31 March 2021 was a gain of €603 million (2020: €262 million gain).
The actual return on plan assets over the year to 31 March 2021 was a gain of €603 million (2020: €262 million gain).
Sensitivity analysis
Sensitivity analysis
Measurement of the Group’s defined benefit retirement obligation is sensitive to changes in certain key assumptions. The sensitivity analysis
Measurement of the Group’s defined benefit retirement obligation is sensitive to changes in certain key assumptions. The sensitivity analysis
below shows how a reasonably possible increase or decrease in a particular assumption would, in isolation, result in an increase or decrease in
below shows how a reasonably possible increase or decrease in a particular assumption would, in isolation, result in an increase or decrease in
the present value of the defined benefit obligation as at 31 March 2021.
the present value of the defined benefit obligation as at 31 March 2021.
Rate of inflation
Rate of inflation
Rate of increase in salaries
Rate of increase in salaries
Discount rate
Discount rate
Life expectancy
Life expectancy
Decrease by 0.5%
Decrease by 0.5%
Increase by 0.5% Decrease by 0.5%
Increase by 0.5% Decrease by 0.5%
Increase by 0.5% Decrease by 0.5%
Increase by 0.5% Decrease by 0.5%
Increase by 0.5% Decrease by 1 year
Increase by 0.5% Decrease by 1 year
Increase by 1 year
Increase by 1 year
€m
€m
€m
€m
€m
€m
€m
€m
€m
€m
€m
€m
(Decrease)/increase in present
(Decrease)/increase in present
Note:
Note:
value of defined benefit obligation1
value of defined benefit obligation1
(572)
(572)
641
641
854
854
(738)
(738)
(278)
(278)
275
275
1 The sensitivity analysis may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another. In
1 The sensitivity analysis may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another. In
presenting this sensitivity analysis, the change in the present value of the defined benefit obligation has been calculated on the same basis as prior years using the projected unit credit method at
presenting this sensitivity analysis, the change in the present value of the defined benefit obligation has been calculated on the same basis as prior years using the projected unit credit method at
the end of the year, which is the same as that applied in calculating the defined benefit obligation liability recognised in the statement of financial position. The rate of inflation assumption
the end of the year, which is the same as that applied in calculating the defined benefit obligation liability recognised in the statement of financial position. The rate of inflation assumption
sensitivity factors in the impact of changes to all assumptions relating to inflation including the rate of increase in salaries, pension increases and deferred revaluations.
sensitivity factors in the impact of changes to all assumptions relating to inflation including the rate of increase in salaries, pension increases and deferred revaluations.
€m
€m
(4)
(4)
€m
€m
4
4
26. Share-based payments
The Group has a number of share plans used to award shares to Executive Directors and employees as part
of their remuneration package. A charge is recognised over the vesting period in the consolidated income
statement to record the cost of these, based on the fair value of the award on the grant date.
Accounting policies
The Group issues equity-settled share-based awards to certain employees. Equity-settled share-based awards are measured at fair value
(excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-
settled share-based award is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the shares that will
eventually vest and adjusted for the effect of non-market-based vesting conditions. A corresponding increase in additional paid-in capital is also
recognised.
Some share awards have an attached market condition, based on total shareholder return (‘TSR’), which is taken into account when calculating
the fair value of the share awards. The valuation for the TSR is based on Vodafone’s ranking within the same group of companies, where
possible, over the past five years.
The fair value of awards of non-vested shares is an average calculation of the closing price of the Group’s shares on the days prior to the grant
date, adjusted for the present value of the delay in receiving dividends where appropriate.
The maximum aggregate number of ordinary shares which may be issued in respect of share options or share plans will not (without
shareholder approval) exceed:
− 10% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of
ordinary shares which have been allocated in the preceding ten year period under all plans; and
− 5% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of
ordinary shares which have been allocated in the preceding ten year period under all plans, other than any plans which are operated
on an all-employee basis.
Share options
Vodafone Group executive plans
No share options have been granted to any Directors or employees under the Company’s discretionary share option plans in the year ended 31
March 2021 (2020: nil).
Vodafone Sharesave Plan
Under the Vodafone Sharesave Plan UK staff may acquire shares in the Company through monthly savings of up to £375 over a three and/or
five year period, at the end of which they may also receive a tax-free bonus. The savings and bonus may then be used to purchase shares at the
option price, which is set at the beginning of the invitation period and usually at a discount of 20% to the then prevailing market price of the
Company’s shares.
Share plans
Vodafone Group executive plans
Under the Vodafone Global Incentive Plan awards of shares are granted to Directors and certain employees. The release of these shares is
conditional upon continued employment and for some awards achievement of certain performance targets measured over a three year period.
Vodafone Share Incentive Plan
Following a review of the UK all-employee plans it was decided that with effect from 1 April 2017 employees would no longer be able to
contribute to the Share Incentive Plan and would therefore no longer receive matching shares. Individuals who hold shares in the plan will
continue to receive dividend shares.
190 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
26. Share-based payments (continued)
Movements in outstanding ordinary share options
1April
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
31 March
Weighted average exercise price:
1April
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
31 March
Summary of options outstanding
Vodafone Group savings related and Sharesave Plan:
£0.98 – £1.89
Share awards
Movements in non-vested shares are as follows:
1 April
Granted
Vested
Forfeited
31 March
Ordinary share options
2021
Millions
53
35
(1)
–
(25)
62
£1.19
£1.03
£1.16
£1.23
£1.27
£1.07
2020
Millions
46
39
(1)
–
(31)
53
£1.40
£1.06
£1.36
£1.50
£1.34
£1.19
31 March 2021
31 March 2020
Outstanding
shares
Millions
Weighted
average
exercise
price
Weighted
remaining
average
contractual
life
Months
Outstanding
shares
Millions
Weighted
average
exercise
price
2019
Millions
40
33
(2)
(2)
(23)
46
£1.64
£1.30
£1.52
£1.67
£1.64
£1.40
Weighted
remaining
average
contractual
life
Months
62
£1.07
30
53
£1.19
30
2021
2020
2019
Weighted
average fair
value at
grant date
£1.41
£0.99
£1.56
£1.10
£1.20
Millions
245
108
(56)
(30)
267
Weighted
average fair
value at
grant date
£1.92
£1.00
£2.10
£1.76
£1.41
Millions
200
135
(44)
(46)
245
Weighted
average fair
value at
grant date
£2.04
£1.82
£2.21
£1.97
£1.92
Millions
182
88
(39)
(31)
200
Other information
The total fair value of shares vested during the year ended 31 March 2021 was £108 million (2020: £92 million; 2019: £86 million).
The compensation cost included in the consolidated income statement in respect of share options and share plans was €135 million (2020:
€134 million; 2019: €132 million) which is comprised principally of equity-settled transactions.
The average share price for the year ended 31 March 2021 was 120.8 pence (2020: 135.9 pence; 2019: 168.3 pence).
190 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
191 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
26. Share-based payments (continued)
26. Share-based payments (continued)
Movements in outstanding ordinary share options
Movements in outstanding ordinary share options
1April
1April
Granted during the year
Granted during the year
Forfeited during the year
Forfeited during the year
Exercised during the year
Exercised during the year
Expired during the year
Expired during the year
Weighted average exercise price:
Weighted average exercise price:
31 March
31 March
1April
1April
Granted during the year
Granted during the year
Forfeited during the year
Forfeited during the year
Exercised during the year
Exercised during the year
Expired during the year
Expired during the year
31 March
31 March
Summary of options outstanding
Summary of options outstanding
Vodafone Group savings related and Sharesave Plan:
Vodafone Group savings related and Sharesave Plan:
£0.98 – £1.89
£0.98 – £1.89
Share awards
Share awards
Movements in non-vested shares are as follows:
Movements in non-vested shares are as follows:
1 April
1 April
Granted
Granted
Vested
Vested
Forfeited
Forfeited
31 March
31 March
Other information
Other information
Ordinary share options
Ordinary share options
2021
2021
Millions
Millions
53
53
35
35
(1)
(1)
–
–
(25)
(25)
62
62
£1.19
£1.19
£1.03
£1.03
£1.16
£1.16
£1.23
£1.23
£1.27
£1.27
£1.07
£1.07
2020
2020
Millions
Millions
46
46
39
39
(1)
(1)
–
–
(31)
(31)
53
53
£1.40
£1.40
£1.06
£1.06
£1.36
£1.36
£1.50
£1.50
£1.34
£1.34
£1.19
£1.19
2019
2019
Millions
Millions
40
40
33
33
(2)
(2)
(2)
(2)
(23)
(23)
46
46
£1.64
£1.64
£1.30
£1.30
£1.52
£1.52
£1.67
£1.67
£1.64
£1.64
£1.40
£1.40
Weighted
Weighted
remaining
remaining
average
average
contractual
contractual
life
life
Months
Months
31 March 2021
31 March 2021
31 March 2020
31 March 2020
Outstanding
Outstanding
shares
shares
Millions
Millions
Weighted
Weighted
average
average
exercise
exercise
price
price
Outstanding
Outstanding
shares
shares
Millions
Millions
Weighted
Weighted
average
average
exercise
exercise
price
price
Weighted
Weighted
remaining
remaining
average
average
contractual
contractual
life
life
Months
Months
62
62
£1.07
£1.07
30
30
53
53
£1.19
£1.19
30
30
2021
2021
2020
2020
2019
2019
Weighted
Weighted
average fair
average fair
value at
value at
grant date
grant date
£1.41
£1.41
£0.99
£0.99
£1.56
£1.56
£1.10
£1.10
£1.20
£1.20
Millions
Millions
245
245
108
108
(56)
(56)
(30)
(30)
267
267
Weighted
Weighted
average fair
average fair
value at
value at
grant date
grant date
£1.92
£1.92
£1.00
£1.00
£2.10
£2.10
£1.76
£1.76
£1.41
£1.41
Millions
Millions
200
200
135
135
(44)
(44)
(46)
(46)
245
245
Weighted
Weighted
average fair
average fair
value at
value at
grant date
grant date
£2.04
£2.04
£1.82
£1.82
£2.21
£2.21
£1.97
£1.97
£1.92
£1.92
Millions
Millions
182
182
88
88
(39)
(39)
(31)
(31)
200
200
The total fair value of shares vested during the year ended 31 March 2021 was £108 million (2020: £92 million; 2019: £86 million).
The total fair value of shares vested during the year ended 31 March 2021 was £108 million (2020: £92 million; 2019: £86 million).
The compensation cost included in the consolidated income statement in respect of share options and share plans was €135 million (2020:
The compensation cost included in the consolidated income statement in respect of share options and share plans was €135 million (2020:
€134 million; 2019: €132 million) which is comprised principally of equity-settled transactions.
€134 million; 2019: €132 million) which is comprised principally of equity-settled transactions.
The average share price for the year ended 31 March 2021 was 120.8 pence (2020: 135.9 pence; 2019: 168.3 pence).
The average share price for the year ended 31 March 2021 was 120.8 pence (2020: 135.9 pence; 2019: 168.3 pence).
27. Acquisitions and disposals
The note below provides details of acquisition and disposal transactions for the current year as well as those
completed in the prior year. For further details see “Critical accounting judgements and key sources of estimation
uncertainty” in note 1 “Basis of preparation” to the consolidated financial statements.
Accounting policies
Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair
values at the date of exchange of assets given, liabilities incurred or assumed and equity instruments issued by the Group. Acquisition-related costs
are recognised in the income statement as incurred. The acquiree’s identifiable assets and liabilities are recognised at their fair values at the
acquisition date, which is the date on which control is transferred to the Group. Goodwill is measured as the excess of the sum of the consideration
transferred, the amount of any non-controlling interests in the acquiree and the fair value of the Group’s previously held equity interest in the
acquiree, if any, over the net amounts of identifiable assets acquired and liabilities assumed at the acquisition date. The interest of the non-
controlling shareholders in the acquiree may initially be measured either at fair value or at the non-controlling shareholders’ proportion of the net
fair value of the identifiable assets acquired, liabilities and contingent liabilities assumed. The choice of measurement basis is made on an acquisition-
by-acquisition basis.
Acquisition of interests from non-controlling shareholders
In transactions with non-controlling parties that do not result in a change in control, the difference between the fair value of the consideration paid
or received and the amount by which the non-controlling interest is adjusted is recognised in equity.
Aggregate cash consideration
The aggregate cash consideration in respect of purchases of subsidiaries, net of cash acquired, is as follows:
Cash consideration paid
European Liberty Global Assets
Other acquisitions during the year
Net cash acquired
2021
€m
–
138
(2)
136
2020
€m
10,313
108
(126)
10,295
Acquisition of European Liberty Global assets
In the comparative period, on 31 July 2019, the Group completed the acquisition of a 100% interest in Unitymedia GmBH (‘Unitymedia’) and Liberty
Global’s operations (excluding its ‘Direct Home’ business) in the Czech Republic (‘UPC Czech’), Hungary (‘UPC Hungary’) and Romania (‘UPC
Romania’) for an aggregate net cash consideration of €10,313 million. The primary reason for acquiring the businesses was to create a converged
national provider of digital infrastructure in Germany, together with creating converged communications operators in the Czech Republic, Hungary
and Romania.
The purchase price allocation is set out in the table below.
Net assets acquired
Identifiable intangible assets1
Property, plant and equipment2
Inventory
Trade and other receivables
Other investments
Cash and cash equivalents
Current and deferred taxation
Short and long-term borrowings
Trade and other payables
Post employment benefits
Provisions
Net identifiable liabilities acquired
Goodwill3
Total consideration4
Notes:
1 Identifiable intangible assets of €5,818 million consisted of customer relationships of €5,569 million, brand of €71 million and software of €178 million.
2 Includes Right-of-use assets.
3 The goodwill is attributable to future profits expected to be generated from new customers and the synergies expected to arise after the Group’s acquisition of the businesses.
4 Transaction costs of €46 million were charged to Other income and expense in the consolidated income statement in the year ended 31 March 2020.
Fair value
€m
5,818
4,737
2
856
2
109
(1,904)
(9,527)
(1,066)
(40)
(178)
(1,191)
11,504
10,313
192 Vodafone Group Plc
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Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
27. Acquisitions and disposals (continued)
From the date of acquisition to 31 March 2020, the acquired entities contributed €1,993 million of revenue and a loss of €247 million towards the
profit before tax of the Group. If the acquisition had taken place at the beginning of the prior financial year, revenue would have been €45,975
million and the profit before tax would have been €822 million.
Other acquisitions
During the year ended 31 March 2021, the Group completed certain acquisitions for an aggregate consideration of €178 million, of which
€nil has been paid in cash. The aggregate provisional fair values acquired of goodwill, identifiable assets, liabilities and non-controlling
interests recognised on acquisition were €92 million, €445 million, €306 million and €53 million, respectively. In addition, the Group paid
€138 million in respect of acquisitions completed in prior periods.
During the year ended 31 March 2020 the Group completed certain acquisitions for an aggregate consideration of €276 million, of which €108
million was paid in that year. The aggregate provisional fair values of goodwill, identifiable assets and liabilities of the acquired operations were €248
million, €113 million and €85 million, respectively.
Disposals
The difference between the carrying value of the net assets disposed of and the fair value of consideration received is recorded as a gain or loss on
disposal. Foreign exchange translation gains or losses relating to subsidiaries, joint arrangements and associates that the Group has disposed of, and
that have previously recorded in other comprehensive income or expense, are also recognised as part of the gain or loss on disposal.
Aggregate cash consideration
The aggregate cash consideration in respect of the disposal of subsidiaries, net of cash disposed, is as follows:
Cash consideration received
Vodafone New Zealand
Tower infrastructure in Italy
Vodafone Malta
Other disposals during the period
Net cash disposed
2021
€m
(37)
192
–
3
(1)
157
2020
€m
2,023
2,140
242
35
(13)
4,427
Vodafone New Zealand
In the comparative period, on 31 July 2019, the Group sold its 100% interest in Vodafone New Zealand Limited (‘Vodafone New Zealand’) for
consideration of NZD $3.4 billion (€2.0 billion). The table below summarises the net assets disposed and the resulting net gain on disposal of €1.1
billion.
Goodwill
Other intangible assets
Property, plant and equipment1
Inventory
Trade and other receivables
Investments in associates and joint ventures
Current and deferred taxation
Short and long-term borrowings
Trade and other payables
Provisions
Net assets disposed
Net cash proceeds arising from the transaction
Other effects2
Net gain on transaction3
Notes:
1 Includes Right-of-use assets.
2 Includes €59 million of recycled foreign exchange losses.
3 Recorded within Other income and expense in the consolidated income statement.
€m
(243)
(155)
(783)
(29)
(244)
(4)
(11)
215
261
35
(958)
2,023
13
1,078
192 Vodafone Group Plc
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Financials
Other information
193 Vodafone Group Plc
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Financials
Other information
Tower infrastructure in Italy
In the comparative period, on 31 March 2020, the Group merged its passive tower infrastructure in Italy with Infrastrutture Wireless Italiane S.p.A.
(‘INWIT’), (the ‘combination’). As part of the combination, Vodafone received proceeds of €2,140 million and a 37.5% shareholding in the combined
entity. As a result of the transaction, we no longer consolidate the tower assets and account for our interest as a joint venture using the equity
method. We have also entered into an agreement to lease back space on the mobile base stations to locate network equipment (see note 20
“Leases”). The Group recognised a net gain on the combination of €3,356 million.
Goodwill
Property, plant and equipment1
Trade and other receivables
Current and deferred taxation
Short and long-term borrowings
Trade and other payables
Provisions
Net assets contributed into INWIT
Fair value of investment in INWIT2
Net cash proceeds arising from the transaction
Restriction of gain (note 20)
Net gain on formation3
€m
(1,320)
(548)
(164)
44
270
79
40
(1,599)
3,559
2,140
(744)
3,356
Notes:
1 Includes Right-of-use assets.
2 The fair value of €3,559 million comprises an investment of €3,345 million recorded within Investments in associates and joint arrangements (note 12) and a dividend receivable of €214 million, recorded
within Other receivables (note 14).
3 Recorded within Other income and expense in the consolidated income statement.
Vodafone Malta
In the comparative period, on 31 March 2020, the Group sold its 100% interest in Vodafone Malta Limited (‘Vodafone Malta’) for consideration of
€242 million. A net gain on disposal of €170 million has been recorded within Other income and expense in the consolidated income statement.
Other transactions with non-controlling shareholders in subsidiaries
In the comparative period, on 31 July 2019, the Group sold its 100% interest in Vodafone New Zealand Limited (‘Vodafone New Zealand’) for
In the comparative period, on 31 July 2019, the Group sold its 100% interest in Vodafone New Zealand Limited (‘Vodafone New Zealand’) for
consideration of NZD $3.4 billion (€2.0 billion). The table below summarises the net assets disposed and the resulting net gain on disposal of €1.1
consideration of NZD $3.4 billion (€2.0 billion). The table below summarises the net assets disposed and the resulting net gain on disposal of €1.1
Cash consideration received/(paid)
Vantage Towers IPO
Vantage Towers Greece
Other
2021
€m
2,000
(288)
(49)
1,663
2020
€m
–
–
(160)
(160)
Vantage Towers IPO
During the period, the Group completed an initial public offering of Vantage Towers AG, with the first day of trading on the Regulated Market
of the Frankfurt Stock Exchange being 18 March 2021. The offer consisted solely of a secondary sell-down of existing shares held by
Vodafone GmbH. Cash consideration of €2,000 million was received in the period. A further €217m was received in April 2021, following
completion of the market stabilisation period described in the Vantage Towers prospectus.
Vantage Towers Greece
On 25 March 2021, the Group exercised its option to purchase the remaining 38% of Vantage Towers Greece for cash consideration of €288
million, taking its shareholding to 100%.
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
27. Acquisitions and disposals (continued)
27. Acquisitions and disposals (continued)
From the date of acquisition to 31 March 2020, the acquired entities contributed €1,993 million of revenue and a loss of €247 million towards the
From the date of acquisition to 31 March 2020, the acquired entities contributed €1,993 million of revenue and a loss of €247 million towards the
profit before tax of the Group. If the acquisition had taken place at the beginning of the prior financial year, revenue would have been €45,975
profit before tax of the Group. If the acquisition had taken place at the beginning of the prior financial year, revenue would have been €45,975
million and the profit before tax would have been €822 million.
million and the profit before tax would have been €822 million.
Other acquisitions
Other acquisitions
During the year ended 31 March 2021, the Group completed certain acquisitions for an aggregate consideration of €178 million, of which
During the year ended 31 March 2021, the Group completed certain acquisitions for an aggregate consideration of €178 million, of which
€nil has been paid in cash. The aggregate provisional fair values acquired of goodwill, identifiable assets, liabilities and non-controlling
€nil has been paid in cash. The aggregate provisional fair values acquired of goodwill, identifiable assets, liabilities and non-controlling
interests recognised on acquisition were €92 million, €445 million, €306 million and €53 million, respectively. In addition, the Group paid
interests recognised on acquisition were €92 million, €445 million, €306 million and €53 million, respectively. In addition, the Group paid
€138 million in respect of acquisitions completed in prior periods.
€138 million in respect of acquisitions completed in prior periods.
During the year ended 31 March 2020 the Group completed certain acquisitions for an aggregate consideration of €276 million, of which €108
During the year ended 31 March 2020 the Group completed certain acquisitions for an aggregate consideration of €276 million, of which €108
million was paid in that year. The aggregate provisional fair values of goodwill, identifiable assets and liabilities of the acquired operations were €248
million was paid in that year. The aggregate provisional fair values of goodwill, identifiable assets and liabilities of the acquired operations were €248
million, €113 million and €85 million, respectively.
million, €113 million and €85 million, respectively.
Disposals
Disposals
The difference between the carrying value of the net assets disposed of and the fair value of consideration received is recorded as a gain or loss on
The difference between the carrying value of the net assets disposed of and the fair value of consideration received is recorded as a gain or loss on
disposal. Foreign exchange translation gains or losses relating to subsidiaries, joint arrangements and associates that the Group has disposed of, and
disposal. Foreign exchange translation gains or losses relating to subsidiaries, joint arrangements and associates that the Group has disposed of, and
that have previously recorded in other comprehensive income or expense, are also recognised as part of the gain or loss on disposal.
that have previously recorded in other comprehensive income or expense, are also recognised as part of the gain or loss on disposal.
Aggregate cash consideration
Aggregate cash consideration
The aggregate cash consideration in respect of the disposal of subsidiaries, net of cash disposed, is as follows:
The aggregate cash consideration in respect of the disposal of subsidiaries, net of cash disposed, is as follows:
Cash consideration received
Cash consideration received
Vodafone New Zealand
Vodafone New Zealand
Tower infrastructure in Italy
Tower infrastructure in Italy
Vodafone Malta
Vodafone Malta
Other disposals during the period
Other disposals during the period
Net cash disposed
Net cash disposed
Vodafone New Zealand
Vodafone New Zealand
billion.
billion.
Goodwill
Goodwill
Other intangible assets
Other intangible assets
Property, plant and equipment1
Property, plant and equipment1
Inventory
Inventory
Trade and other receivables
Trade and other receivables
Current and deferred taxation
Current and deferred taxation
Short and long-term borrowings
Short and long-term borrowings
Trade and other payables
Trade and other payables
Provisions
Provisions
Net assets disposed
Net assets disposed
Other effects2
Other effects2
Net gain on transaction3
Net gain on transaction3
Notes:
Notes:
1 Includes Right-of-use assets.
1 Includes Right-of-use assets.
Investments in associates and joint ventures
Investments in associates and joint ventures
Net cash proceeds arising from the transaction
Net cash proceeds arising from the transaction
2 Includes €59 million of recycled foreign exchange losses.
2 Includes €59 million of recycled foreign exchange losses.
3 Recorded within Other income and expense in the consolidated income statement.
3 Recorded within Other income and expense in the consolidated income statement.
2021
2021
€m
€m
(37)
(37)
192
192
–
–
3
3
(1)
(1)
157
157
2020
2020
€m
€m
2,023
2,023
2,140
2,140
242
242
35
35
(13)
(13)
4,427
4,427
€m
€m
(243)
(243)
(155)
(155)
(783)
(783)
(29)
(29)
(244)
(244)
(4)
(4)
(11)
(11)
215
215
261
261
35
35
(958)
(958)
2,023
2,023
13
13
1,078
1,078
194 Vodafone Group Plc
Annual Report 2021
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Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
28. Commitments
A commitment is a contractual obligation to make a payment in the future, mainly in relation to agreements to
buy assets such as mobile devices, network infrastructure and IT systems and leases that have not commenced.
These amounts are not recorded in the consolidated statement of financial position since we have not yet
received the goods or services from the supplier. The amounts below are the minimum amounts that we are
committed to pay.
Capital commitments
Contracts placed for future capital
expenditure not provided in the financial
statements1
Company and subsidiaries
Share of joint operations
2021
€m
2020
€m
2021
€m
2020
€m
Group
2021
€m
2020
€m
3,993
3,046
133
103
4,126
3,149
Note:
1 Commitment includes contracts placed for property, plant and equipment and intangible assets.
Leases entered into by the Group but not commenced at 31 March 2021 are disclosed in note 20.
29. Contingent liabilities and legal proceedings
Contingent liabilities are potential future cash outflows, where the likelihood of payment is considered more than
remote, but is not considered probable or cannot be measured reliably.
Performance bonds1
Other guarantees2
2021
€m
381
2,347
2020
€m
414
2,908
Notes:
1 Performance bonds require the Group to make payments to third parties in the event that the Group does not perform what is expected of it under the terms of any related contracts or commercial
arrangements.
2 Other guarantees principally comprise Vodafone Group Plc’s guarantee of the Group’s 50% share of a US$3.5 billion loan facility (2020: AUD1.7 billion and US$3.5 billion loan facilities), which forms part of
the Group’s overall joint venture investment in TPG Telecom Ltd (2020: Vodafone Hutchison Australia Pty Limited). The Group’s share of these loan balances is included in the net investment in joint
venture (see note 12 “Investments in associates and joint arrangements”). Other guarantees also includes INR42.5 billion (2020: nil) in relation to the secondary pledge over shares owned by Vodafone
Group in Indus Towers (see “Indus Tower merger” paragraph on page 195).
UK pension schemes
The Group’s main defined benefit plan is the Vodafone UK Group Pension Scheme (‘Vodafone UK Plan’) which has two segregated sections, the
Vodafone Section and the CWW Section, as detailed in note 25 “Post employment benefits”.
The Group has covenanted to provide security in favour of both the Vodafone Section and CWW Section whilst a deficit remains. The deficit is
measured on a prescribed basis agreed between the Group and trustee. The Group provides surety bonds as the security.
The level of the security has varied since inception in line with the movement in the Vodafone UK Plan deficit. At 31 March 2021 the Vodafone UK
Plan retains security over €822 million (notional value) for the Vodafone Section and €176 million (notional value) for the CWW Section. The security
may be substituted either on a voluntary or mandatory basis. The Company has also provided two guarantees to the Vodafone Section of the
Vodafone UK Plan for a combined value up to €1.47 billion to provide security over the deficit under certain defined circumstances, including
insolvency of the employers. The Company has also agreed a similar guarantee of up to €1.47 billion for the CWW Section.
An additional smaller UK defined benefit plan, the THUS Plc Group Scheme, has a guarantee from the Company for up to €117 million.
194 Vodafone Group Plc
Annual Report 2021
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Financials
Other information
195 Vodafone Group Plc
Annual Report 2021
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Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
28. Commitments
28. Commitments
A commitment is a contractual obligation to make a payment in the future, mainly in relation to agreements to
A commitment is a contractual obligation to make a payment in the future, mainly in relation to agreements to
buy assets such as mobile devices, network infrastructure and IT systems and leases that have not commenced.
buy assets such as mobile devices, network infrastructure and IT systems and leases that have not commenced.
These amounts are not recorded in the consolidated statement of financial position since we have not yet
These amounts are not recorded in the consolidated statement of financial position since we have not yet
received the goods or services from the supplier. The amounts below are the minimum amounts that we are
received the goods or services from the supplier. The amounts below are the minimum amounts that we are
committed to pay.
committed to pay.
Capital commitments
Capital commitments
Contracts placed for future capital
Contracts placed for future capital
expenditure not provided in the financial
expenditure not provided in the financial
statements1
statements1
Note:
Note:
Company and subsidiaries
Company and subsidiaries
Share of joint operations
Share of joint operations
2021
2021
€m
€m
2020
2020
€m
€m
2021
2021
€m
€m
2020
2020
€m
€m
Group
Group
2021
2021
€m
€m
2020
2020
€m
€m
3,993
3,993
3,046
3,046
133
133
103
103
4,126
4,126
3,149
3,149
1 Commitment includes contracts placed for property, plant and equipment and intangible assets.
1 Commitment includes contracts placed for property, plant and equipment and intangible assets.
Leases entered into by the Group but not commenced at 31 March 2021 are disclosed in note 20.
Leases entered into by the Group but not commenced at 31 March 2021 are disclosed in note 20.
29. Contingent liabilities and legal proceedings
29. Contingent liabilities and legal proceedings
Contingent liabilities are potential future cash outflows, where the likelihood of payment is considered more than
Contingent liabilities are potential future cash outflows, where the likelihood of payment is considered more than
remote, but is not considered probable or cannot be measured reliably.
remote, but is not considered probable or cannot be measured reliably.
2021
2021
€m
€m
381
381
2,347
2,347
2020
2020
€m
€m
414
414
2,908
2,908
Performance bonds1
Performance bonds1
Other guarantees2
Other guarantees2
Notes:
Notes:
arrangements.
arrangements.
1 Performance bonds require the Group to make payments to third parties in the event that the Group does not perform what is expected of it under the terms of any related contracts or commercial
1 Performance bonds require the Group to make payments to third parties in the event that the Group does not perform what is expected of it under the terms of any related contracts or commercial
2 Other guarantees principally comprise Vodafone Group Plc’s guarantee of the Group’s 50% share of a US$3.5 billion loan facility (2020: AUD1.7 billion and US$3.5 billion loan facilities), which forms part of
2 Other guarantees principally comprise Vodafone Group Plc’s guarantee of the Group’s 50% share of a US$3.5 billion loan facility (2020: AUD1.7 billion and US$3.5 billion loan facilities), which forms part of
the Group’s overall joint venture investment in TPG Telecom Ltd (2020: Vodafone Hutchison Australia Pty Limited). The Group’s share of these loan balances is included in the net investment in joint
the Group’s overall joint venture investment in TPG Telecom Ltd (2020: Vodafone Hutchison Australia Pty Limited). The Group’s share of these loan balances is included in the net investment in joint
venture (see note 12 “Investments in associates and joint arrangements”). Other guarantees also includes INR42.5 billion (2020: nil) in relation to the secondary pledge over shares owned by Vodafone
venture (see note 12 “Investments in associates and joint arrangements”). Other guarantees also includes INR42.5 billion (2020: nil) in relation to the secondary pledge over shares owned by Vodafone
Group in Indus Towers (see “Indus Tower merger” paragraph on page 195).
Group in Indus Towers (see “Indus Tower merger” paragraph on page 195).
UK pension schemes
UK pension schemes
The Group’s main defined benefit plan is the Vodafone UK Group Pension Scheme (‘Vodafone UK Plan’) which has two segregated sections, the
The Group’s main defined benefit plan is the Vodafone UK Group Pension Scheme (‘Vodafone UK Plan’) which has two segregated sections, the
Vodafone Section and the CWW Section, as detailed in note 25 “Post employment benefits”.
Vodafone Section and the CWW Section, as detailed in note 25 “Post employment benefits”.
The Group has covenanted to provide security in favour of both the Vodafone Section and CWW Section whilst a deficit remains. The deficit is
The Group has covenanted to provide security in favour of both the Vodafone Section and CWW Section whilst a deficit remains. The deficit is
measured on a prescribed basis agreed between the Group and trustee. The Group provides surety bonds as the security.
measured on a prescribed basis agreed between the Group and trustee. The Group provides surety bonds as the security.
The level of the security has varied since inception in line with the movement in the Vodafone UK Plan deficit. At 31 March 2021 the Vodafone UK
The level of the security has varied since inception in line with the movement in the Vodafone UK Plan deficit. At 31 March 2021 the Vodafone UK
Plan retains security over €822 million (notional value) for the Vodafone Section and €176 million (notional value) for the CWW Section. The security
Plan retains security over €822 million (notional value) for the Vodafone Section and €176 million (notional value) for the CWW Section. The security
may be substituted either on a voluntary or mandatory basis. The Company has also provided two guarantees to the Vodafone Section of the
may be substituted either on a voluntary or mandatory basis. The Company has also provided two guarantees to the Vodafone Section of the
Vodafone UK Plan for a combined value up to €1.47 billion to provide security over the deficit under certain defined circumstances, including
Vodafone UK Plan for a combined value up to €1.47 billion to provide security over the deficit under certain defined circumstances, including
insolvency of the employers. The Company has also agreed a similar guarantee of up to €1.47 billion for the CWW Section.
insolvency of the employers. The Company has also agreed a similar guarantee of up to €1.47 billion for the CWW Section.
An additional smaller UK defined benefit plan, the THUS Plc Group Scheme, has a guarantee from the Company for up to €117 million.
An additional smaller UK defined benefit plan, the THUS Plc Group Scheme, has a guarantee from the Company for up to €117 million.
Vodafone Idea
As part of the agreement to merge Vodafone India and Idea Cellular in 2017, the parties agreed a mechanism for payments between the
Group and Vodafone Idea Limited (‘VIL’) pursuant to the difference between the crystallisation of certain identified contingent liabilities in
relation to legal, regulatory, tax and other matters, and refunds relating to Vodafone India and Idea Cellular. Cash payments or cash
receipts relating to these matters must have been made or received by VIL before any amount becomes due from or owed to the Group.
Any future payments by the Group to VIL as a result of this agreement would only be made after satisfaction of this and other contractual
conditions.
The Group’s potential exposure under this mechanism is now capped at INR 64 billion (€747 million) following payments made under this
mechanism from Vodafone to VIL totalling INR 19 billion (€235 million). The matters covered by the mechanism include the Adjusted
Group Revenue (‘AGR’) judgement debt levied on VIL for an amount materially in excess of the cap. There are significant uncertainties in
relation to VIL’s ability to settle all liabilities relating to the AGR judgement and no further cash payments are considered probable at 31
March 2021.
The carrying value of the Group’s investment in VIL is €nil and the Group is recording no further share of losses in respect of VIL (see note
12). The Group’s potential exposure to liabilities within VIL is capped by the mechanism described above. As a consequence, contingent
liabilities arising from litigation in India concerning operations of Vodafone India are no longer reported below.
Indus Towers merger
The merger of Indus and Bharti Infratel completed on 19 November 2020 and the combined entity was renamed Indus Towers Ltd (“Indus
Towers”). Under the terms of the merger a security package was agreed for the benefit of Indus Towers which can be invoked in the event
that VIL is unable to satisfy certain payment obligations under its Master Services Agreements with Indus Towers (the ‘MSAs’). The security
package includes:
- A prepayment in cash of INR 24 billion (€279 million) by VIL to Indus Towers in respect of its payment obligations that are undisputed,
due and payable under the MSAs after the merger closing;
- A primary pledge over 190.7 million shares owned by Vodafone Group in Indus Towers having a value of INR 47 billion (€544 million)
as at 31 March 2021; and
- A secondary pledge over shares owned by Vodafone Group in Indus Towers (ranking behind Vodafone’s existing lenders for the
remaining €1.2 billion bank borrowings secured against Indian assets (see note 21) utilised to fund Vodafone’s contribution to the VIL
rights issue in 2019) (“the Bank Borrowings”) with a maximum liability cap of INR 42.5 billion (€495 million).
In the event of non-payment of relevant MSA obligations by VIL, Indus Towers will have recourse to the primary pledge shares and, after
repayment of the Bank Borrowings in full, any secondary pledged shares, up to the value of the liability cap. VIL’s ability to make MSA
payments to Indus Towers is uncertain and depends on a number of factors including its ability to raise additional funding.
Legal Proceedings
The Group is currently involved in a number of legal proceedings, including inquiries from, or discussions with, government authorities
that are incidental to their operations.
Legal proceedings where the Group considers that the likelihood of material future outflows of cash or other resources is more than
remote are disclosed below. Where the Group assesses that it is probable that the outcome of legal proceedings will result in a financial
outflow, and a reliable estimate can be made of the amount of that obligation, a provision is recognised for these amounts.
In all cases, determining the probability of successfully defending a claim against the Group involves the application of judgement as the
outcome is inherently uncertain. The determination of the value of any future outflows of cash or other resources, and the timing of such
outflows, involves the use of estimates. The costs incurred in complex legal proceedings, regardless of outcome, can be significant.
The Group is not involved in any material proceedings in which any of the Group’s Directors, members of senior management or affiliates
are either a party adverse to the Group or have a material interest adverse to the Group.
Indian tax cases
In January 2012, the Supreme Court of India found against the Indian tax authority and in favour of Vodafone International Holdings BV
(‘VIHBV’) in proceedings brought after the Indian tax authority alleged potential liability under the Income Tax Act 1961 for the failure by
VIHBV to deduct withholding tax from consideration paid to the Hutchison Telecommunications International Limited group (‘HTIL’) in
connection with its 2007 disposal to VIHBV of its interests in a wholly-owned Cayman Island incorporated subsidiary that indirectly held
interests in Vodafone India Limited (‘Vodafone India’).
196 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
29. Contingent liabilities and legal proceedings (continued)
The Finance Act 2012 of India, which amended various provisions of the Income Tax Act 1961 with retrospective effect, contained provisions
intended to tax any gain on transfer of shares in a non-Indian company, which derives substantial value from underlying Indian assets, such as
VIHBV’s transaction with HTIL in 2007. Further, it sought to subject a purchaser, such as VIHBV, to a retrospective obligation to withhold tax. On 3
January 2013, VIHBV received a letter from the Indian tax authority reminding it of the tax demand raised prior to the Supreme Court of India’s
judgement and updating the interest element of that demand to a total amount of INR142 billion, which included principal and interest as
calculated by the Indian tax authority but did not include penalties. On 12 February 2016, VIHBV received a notice dated 4 February 2016 of an
outstanding tax demand of INR221 billion (plus interest) along with a statement that enforcement action, including against VIHBV’s indirectly held
assets in India, would be taken if the demand was not satisfied. On 29 September 2017, VIHBV received an electronically generated demand in
respect of alleged principal, interest and penalties in the amount of INR190.7 billion. This demand does not appear to have included any element for
alleged accrued interest liability.
In response to the 2013 letter, VIHBV initiated arbitration proceedings under the Netherlands-India Bilateral Investment Treaty (‘Dutch BIT’). The
arbitration hearing took place in February 2019. In September 2020, the arbitration tribunal issued its award unanimously ruling in VIHBV’s favour.
The Indian Government applied in Singapore to set aside the award primarily on jurisdictional grounds. The proceedings have been transferred to a
senior court, with a hearing date set for September 2021.
Separately, on 24 January 2017, Vodafone Group Plc and Vodafone Consolidated Holdings Limited formally commenced arbitration with the Indian
Government under the United Kingdom-India Bilateral Investment Treaty (‘UK BIT’) in respect of retrospective tax claims under the Income Tax Act
1961 (as amended by the Finance Act 2012). Although relating to the same underlying facts as the claim under the Dutch BIT, the claim brought by
Vodafone Group Plc and Vodafone Consolidated Holdings Limited is a separate and distinct claim under a different treaty. After the Delhi High Court
first upheld, and subsequently dismissed, the Indian Government’s application for an injunction preventing Vodafone from progressing the UK BIT
arbitration as an abuse of process, the Indian Government appealed the dismissal. Hearings took place from 2018 to 2020 with frequent
adjournments. Following the award in the Dutch BIT, the Delhi High Court dismissed the injunction appeal proceedings. Vodafone has undertaken to
take no steps advancing the UK BIT arbitration proceedings pending the outcome of the Indian Government’s application to set aside the Dutch BIT
award in Singapore. The Delhi High Court also permitted the formation of the UK BIT tribunal.
VIHBV and Vodafone Group Plc will continue to defend vigorously any allegation that VIHBV or Vodafone India is liable to pay tax in connection with
the transaction with HTIL and will continue to exercise all rights to seek redress including pursuant to the Dutch BIT and the UK BIT. Based on the
facts and circumstances of this matter, including the outcome of legal proceedings to date, the Group considers that it is more likely than not that
no present obligation exists at 31 March 2021.
VISPL tax claims
Vodafone India Services Private Limited (‘VISPL’) is involved in a number of tax cases. The total value of the claims is approximately €500 million plus
interest, and penalties of up to 300% of the principal.
Of the individual tax claims, the most significant is in the amount of approximately €249 million (plus interest of €554 million), which VISPL has been
assessed as owing in respect of (i) a transfer pricing margin charged for the international call centre of HTIL prior to the 2007 transaction with
Vodafone for HTIL assets in India; (ii) the sale of the international call centre by VISPL to HTIL; and (iii) the acquisition of and/or the alleged transfer of
options held by VISPL in Vodafone India. The first two of the three heads of tax are subject to an indemnity by HTIL. The larger part of the potential
claim is not subject to an indemnity. A stay of the tax demand on a deposit of £20 million and a corporate guarantee by VIHBV for the balance of tax
assessed are in place. On 8 October 2015, the Bombay High Court ruled in favour of Vodafone in relation to the options and the call centre sale. The
Indian Tax Authority has appealed to the Supreme Court of India. The appeal hearing has been adjourned indefinitely.
While there is some uncertainty as to the outcome of the tax cases involving VISPL, the Group believes it has valid defences and does not consider it
probable that a financial outflow will be required to settle these cases.
Other cases in the Group
UK : IPCom v Vodafone Group Plc and Vodafone UK
On 22 February 2019, IPCom sued Vodafone Group Plc and Vodafone Limited for alleged infringement of two patents claimed to be essential to
UMTS and LTE network standards. If IPCom could have established that one or more of its patents was valid and infringed, it could have sought an
injunction against the UK network if a global licence for the patents was not agreed. The Court ordered expedited trials on the infringement and
validity issues. The trial on the first patent was in November 2019 and removed the risk of an injunction so IPCom withdrew the second patent trial
listed for May 2020. Both IPCom and Vodafone appealed certain aspects of the judgement from the first trial at a hearing in January 2021. The Court
of Appeal found in favour of both IPCom and Vodafone on different issues. Vodafone is seeking permission to appeal a discrete issue from the
Supreme Court of the United Kingdom. The validity of the first patent will be considered by the Board of Appeal of the European Patent Office at a
hearing in July 2021. Although the outcome of this hearing is unknown, we believe that there is a high probability that the first patent will be found
to be invalid and as a result Vodafone has no liability for patent infringement which would mean that the Group has no present obligation. IPCom
has indicated that it wishes to pursue a damages assessment for the limited infringement found by the trial court. However, IPCom has suggested
that these proceedings be deferred until the outcome of the Board of Appeal of the European Patent Office. In any event, were the patent found to
be valid the Group believes that the resulting damages would be minimal.
196 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
197 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
29. Contingent liabilities and legal proceedings (continued)
29. Contingent liabilities and legal proceedings (continued)
The Finance Act 2012 of India, which amended various provisions of the Income Tax Act 1961 with retrospective effect, contained provisions
The Finance Act 2012 of India, which amended various provisions of the Income Tax Act 1961 with retrospective effect, contained provisions
intended to tax any gain on transfer of shares in a non-Indian company, which derives substantial value from underlying Indian assets, such as
intended to tax any gain on transfer of shares in a non-Indian company, which derives substantial value from underlying Indian assets, such as
VIHBV’s transaction with HTIL in 2007. Further, it sought to subject a purchaser, such as VIHBV, to a retrospective obligation to withhold tax. On 3
VIHBV’s transaction with HTIL in 2007. Further, it sought to subject a purchaser, such as VIHBV, to a retrospective obligation to withhold tax. On 3
January 2013, VIHBV received a letter from the Indian tax authority reminding it of the tax demand raised prior to the Supreme Court of India’s
January 2013, VIHBV received a letter from the Indian tax authority reminding it of the tax demand raised prior to the Supreme Court of India’s
judgement and updating the interest element of that demand to a total amount of INR142 billion, which included principal and interest as
judgement and updating the interest element of that demand to a total amount of INR142 billion, which included principal and interest as
calculated by the Indian tax authority but did not include penalties. On 12 February 2016, VIHBV received a notice dated 4 February 2016 of an
calculated by the Indian tax authority but did not include penalties. On 12 February 2016, VIHBV received a notice dated 4 February 2016 of an
outstanding tax demand of INR221 billion (plus interest) along with a statement that enforcement action, including against VIHBV’s indirectly held
outstanding tax demand of INR221 billion (plus interest) along with a statement that enforcement action, including against VIHBV’s indirectly held
assets in India, would be taken if the demand was not satisfied. On 29 September 2017, VIHBV received an electronically generated demand in
assets in India, would be taken if the demand was not satisfied. On 29 September 2017, VIHBV received an electronically generated demand in
respect of alleged principal, interest and penalties in the amount of INR190.7 billion. This demand does not appear to have included any element for
respect of alleged principal, interest and penalties in the amount of INR190.7 billion. This demand does not appear to have included any element for
alleged accrued interest liability.
alleged accrued interest liability.
In response to the 2013 letter, VIHBV initiated arbitration proceedings under the Netherlands-India Bilateral Investment Treaty (‘Dutch BIT’). The
In response to the 2013 letter, VIHBV initiated arbitration proceedings under the Netherlands-India Bilateral Investment Treaty (‘Dutch BIT’). The
arbitration hearing took place in February 2019. In September 2020, the arbitration tribunal issued its award unanimously ruling in VIHBV’s favour.
arbitration hearing took place in February 2019. In September 2020, the arbitration tribunal issued its award unanimously ruling in VIHBV’s favour.
The Indian Government applied in Singapore to set aside the award primarily on jurisdictional grounds. The proceedings have been transferred to a
The Indian Government applied in Singapore to set aside the award primarily on jurisdictional grounds. The proceedings have been transferred to a
senior court, with a hearing date set for September 2021.
senior court, with a hearing date set for September 2021.
Separately, on 24 January 2017, Vodafone Group Plc and Vodafone Consolidated Holdings Limited formally commenced arbitration with the Indian
Separately, on 24 January 2017, Vodafone Group Plc and Vodafone Consolidated Holdings Limited formally commenced arbitration with the Indian
Government under the United Kingdom-India Bilateral Investment Treaty (‘UK BIT’) in respect of retrospective tax claims under the Income Tax Act
Government under the United Kingdom-India Bilateral Investment Treaty (‘UK BIT’) in respect of retrospective tax claims under the Income Tax Act
1961 (as amended by the Finance Act 2012). Although relating to the same underlying facts as the claim under the Dutch BIT, the claim brought by
1961 (as amended by the Finance Act 2012). Although relating to the same underlying facts as the claim under the Dutch BIT, the claim brought by
Vodafone Group Plc and Vodafone Consolidated Holdings Limited is a separate and distinct claim under a different treaty. After the Delhi High Court
Vodafone Group Plc and Vodafone Consolidated Holdings Limited is a separate and distinct claim under a different treaty. After the Delhi High Court
first upheld, and subsequently dismissed, the Indian Government’s application for an injunction preventing Vodafone from progressing the UK BIT
first upheld, and subsequently dismissed, the Indian Government’s application for an injunction preventing Vodafone from progressing the UK BIT
arbitration as an abuse of process, the Indian Government appealed the dismissal. Hearings took place from 2018 to 2020 with frequent
arbitration as an abuse of process, the Indian Government appealed the dismissal. Hearings took place from 2018 to 2020 with frequent
adjournments. Following the award in the Dutch BIT, the Delhi High Court dismissed the injunction appeal proceedings. Vodafone has undertaken to
adjournments. Following the award in the Dutch BIT, the Delhi High Court dismissed the injunction appeal proceedings. Vodafone has undertaken to
take no steps advancing the UK BIT arbitration proceedings pending the outcome of the Indian Government’s application to set aside the Dutch BIT
take no steps advancing the UK BIT arbitration proceedings pending the outcome of the Indian Government’s application to set aside the Dutch BIT
award in Singapore. The Delhi High Court also permitted the formation of the UK BIT tribunal.
award in Singapore. The Delhi High Court also permitted the formation of the UK BIT tribunal.
VIHBV and Vodafone Group Plc will continue to defend vigorously any allegation that VIHBV or Vodafone India is liable to pay tax in connection with
VIHBV and Vodafone Group Plc will continue to defend vigorously any allegation that VIHBV or Vodafone India is liable to pay tax in connection with
the transaction with HTIL and will continue to exercise all rights to seek redress including pursuant to the Dutch BIT and the UK BIT. Based on the
the transaction with HTIL and will continue to exercise all rights to seek redress including pursuant to the Dutch BIT and the UK BIT. Based on the
facts and circumstances of this matter, including the outcome of legal proceedings to date, the Group considers that it is more likely than not that
facts and circumstances of this matter, including the outcome of legal proceedings to date, the Group considers that it is more likely than not that
no present obligation exists at 31 March 2021.
no present obligation exists at 31 March 2021.
VISPL tax claims
VISPL tax claims
interest, and penalties of up to 300% of the principal.
interest, and penalties of up to 300% of the principal.
Vodafone India Services Private Limited (‘VISPL’) is involved in a number of tax cases. The total value of the claims is approximately €500 million plus
Vodafone India Services Private Limited (‘VISPL’) is involved in a number of tax cases. The total value of the claims is approximately €500 million plus
Of the individual tax claims, the most significant is in the amount of approximately €249 million (plus interest of €554 million), which VISPL has been
Of the individual tax claims, the most significant is in the amount of approximately €249 million (plus interest of €554 million), which VISPL has been
assessed as owing in respect of (i) a transfer pricing margin charged for the international call centre of HTIL prior to the 2007 transaction with
assessed as owing in respect of (i) a transfer pricing margin charged for the international call centre of HTIL prior to the 2007 transaction with
Vodafone for HTIL assets in India; (ii) the sale of the international call centre by VISPL to HTIL; and (iii) the acquisition of and/or the alleged transfer of
Vodafone for HTIL assets in India; (ii) the sale of the international call centre by VISPL to HTIL; and (iii) the acquisition of and/or the alleged transfer of
options held by VISPL in Vodafone India. The first two of the three heads of tax are subject to an indemnity by HTIL. The larger part of the potential
options held by VISPL in Vodafone India. The first two of the three heads of tax are subject to an indemnity by HTIL. The larger part of the potential
claim is not subject to an indemnity. A stay of the tax demand on a deposit of £20 million and a corporate guarantee by VIHBV for the balance of tax
claim is not subject to an indemnity. A stay of the tax demand on a deposit of £20 million and a corporate guarantee by VIHBV for the balance of tax
assessed are in place. On 8 October 2015, the Bombay High Court ruled in favour of Vodafone in relation to the options and the call centre sale. The
assessed are in place. On 8 October 2015, the Bombay High Court ruled in favour of Vodafone in relation to the options and the call centre sale. The
Indian Tax Authority has appealed to the Supreme Court of India. The appeal hearing has been adjourned indefinitely.
Indian Tax Authority has appealed to the Supreme Court of India. The appeal hearing has been adjourned indefinitely.
While there is some uncertainty as to the outcome of the tax cases involving VISPL, the Group believes it has valid defences and does not consider it
While there is some uncertainty as to the outcome of the tax cases involving VISPL, the Group believes it has valid defences and does not consider it
probable that a financial outflow will be required to settle these cases.
probable that a financial outflow will be required to settle these cases.
Other cases in the Group
Other cases in the Group
UK : IPCom v Vodafone Group Plc and Vodafone UK
UK : IPCom v Vodafone Group Plc and Vodafone UK
On 22 February 2019, IPCom sued Vodafone Group Plc and Vodafone Limited for alleged infringement of two patents claimed to be essential to
On 22 February 2019, IPCom sued Vodafone Group Plc and Vodafone Limited for alleged infringement of two patents claimed to be essential to
UMTS and LTE network standards. If IPCom could have established that one or more of its patents was valid and infringed, it could have sought an
UMTS and LTE network standards. If IPCom could have established that one or more of its patents was valid and infringed, it could have sought an
injunction against the UK network if a global licence for the patents was not agreed. The Court ordered expedited trials on the infringement and
injunction against the UK network if a global licence for the patents was not agreed. The Court ordered expedited trials on the infringement and
validity issues. The trial on the first patent was in November 2019 and removed the risk of an injunction so IPCom withdrew the second patent trial
validity issues. The trial on the first patent was in November 2019 and removed the risk of an injunction so IPCom withdrew the second patent trial
listed for May 2020. Both IPCom and Vodafone appealed certain aspects of the judgement from the first trial at a hearing in January 2021. The Court
listed for May 2020. Both IPCom and Vodafone appealed certain aspects of the judgement from the first trial at a hearing in January 2021. The Court
of Appeal found in favour of both IPCom and Vodafone on different issues. Vodafone is seeking permission to appeal a discrete issue from the
of Appeal found in favour of both IPCom and Vodafone on different issues. Vodafone is seeking permission to appeal a discrete issue from the
Supreme Court of the United Kingdom. The validity of the first patent will be considered by the Board of Appeal of the European Patent Office at a
Supreme Court of the United Kingdom. The validity of the first patent will be considered by the Board of Appeal of the European Patent Office at a
hearing in July 2021. Although the outcome of this hearing is unknown, we believe that there is a high probability that the first patent will be found
hearing in July 2021. Although the outcome of this hearing is unknown, we believe that there is a high probability that the first patent will be found
to be invalid and as a result Vodafone has no liability for patent infringement which would mean that the Group has no present obligation. IPCom
to be invalid and as a result Vodafone has no liability for patent infringement which would mean that the Group has no present obligation. IPCom
has indicated that it wishes to pursue a damages assessment for the limited infringement found by the trial court. However, IPCom has suggested
has indicated that it wishes to pursue a damages assessment for the limited infringement found by the trial court. However, IPCom has suggested
that these proceedings be deferred until the outcome of the Board of Appeal of the European Patent Office. In any event, were the patent found to
that these proceedings be deferred until the outcome of the Board of Appeal of the European Patent Office. In any event, were the patent found to
be valid the Group believes that the resulting damages would be minimal.
be valid the Group believes that the resulting damages would be minimal.
Spain and UK: TOT v Vodafone Group Plc, VGSL, and Vodafone UK
Vodafone Group Plc has been sued in Spain by TOT Power Control (‘TOT’), an affiliate of Top Optimized Technologies. The claim makes a
number of allegations including patent infringement, with TOT initially seeking over €500 million in damages from Vodafone Group Plc as
well as an injunction against using the technology in question. Huawei has also been sued by TOT in the same action.
In a decision dated 30 October 2017, the Commercial Court of Madrid ruled that while it did have jurisdiction to hear the infringement
case relating to the Spanish patent, it was not competent to hear TOT’s contractual and competition law claims against Vodafone. The trial
took place in September 2018 and in January 2020 judgement was handed down in Vodafone and Huawei’s favour. TOT appealed but
limited its claims against Vodafone to seek approximately €4 million in damages and injunctive relief. The appeal judgement was issued
on 23 April 2021 and TOT’s claims for damages and injunctive relief against both Vodafone and Huawei were rejected, therefore the
Group does not believe that any present obligation exists.
In December 2019 TOT brought a similar claim in the English High Court against Vodafone Group and Vodafone UK alleging breach of
confidentiality and patent infringement. The value of the claim is not pleaded. Proceedings have been stayed until 30 September 2021
pending the outcome of the appeal in Spain. Vodafone has issued an application seeking to strike out certain aspects of TOT’s case which
will be heard once the stay has been lifted. It remains unclear how much of the claim will remain after the strike out application.
Vodafone has not yet filed its defence. At this stage of proceedings, we are not able reliably to evaluate the likelihood of, or amount of,
any financial outflow.
Germany: Kabel Deutschland takeover - class actions
The German courts have been determining the adequacy of the mandatory cash offer made to minority shareholders in Vodafone’s
takeover of Kabel Deutschland. Hearings took place in May 2019 and a decision was delivered in November 2019 in Vodafone’s favour,
rejecting all claims by minority shareholders. A number of shareholders appealed. The appeal process is ongoing. While the outcome is
uncertain, the Group believes it has valid defences and that the outcome of the appeal will be favourable to Vodafone.
Italy: Iliad v Vodafone Italy
In July 2019, Iliad filed a claim for €500 million against Vodafone Italy in the Civil Court of Milan. The claim alleges anti-competitive
behaviour in relation to portability and certain advertising campaigns by Vodafone Italy. Preliminary hearings have taken place, including
one at which the Court rejected Iliad’s application for a cease and desist order against alleged misleading advertising by Vodafone. The
main hearing on the merits of the claim is scheduled for 8 June 2021.
The Group is currently unable to estimate any possible loss in this claim in the event of an adverse judgement but while the outcome is
uncertain, the Group believes it has valid defences and that it is probable that no present obligation exists.
Greece: Papistas Holdings SA, Mobile Trade Stores (formerly Papistas SA) and Athanasios and Loukia Papistas v Vodafone Greece
In October 2019, Mr. and Mrs. Papistas, and companies owned or controlled by them, filed several new claims against Vodafone Greece
with a total value of approximately €330 million for purported damage caused by the alleged abuse of dominance and wrongful
termination of a franchise arrangement with a Papistas company. Lawsuits which the Papistas claimants had previously brought against
Vodafone Group Plc and certain Directors and officers of Vodafone were withdrawn. Vodafone Greece filed a counter claim and all claims
were heard in February 2020. All of the Papistas claims were rejected by the Greek Court because the stamp duty payments required to
have the merits of the case considered had not been made. Vodafone Greece’s counter claim was also rejected. The Papistas claimants
and Vodafone Greece have each filed appeals and, subject to the Papistas claimants paying the requisite stamp duty, the hearing on the
merits of these appeals will take place in late 2021 and early 2022.
The amount claimed in these lawsuits is substantial and, if the claimants are successful, the total potential liability could be material.
However, we are continuing vigorously to defend the claims and based on the progress of the litigation so far the Group believes that it is
highly unlikely that there will be an adverse ruling for the Group. On this basis, the Group does not expect the outcome of these claims to
have a material financial impact.
UK: Phones 4U in Administration v Vodafone Limited and Vodafone Group Plc and Others
In December 2018, the administrators of former UK indirect seller, Phones 4U, sued the three main UK mobile network operators (‘MNOs’),
including Vodafone, and their parent companies. The administrators allege a conspiracy between the MNOs to pull their business from
Phones 4U thereby causing its collapse. Vodafone and the other defendants filed their defences in April 2019 and the Administrators filed
their replies in October 2019. Disclosure has taken place and witness statements are due to be filed by the end of July 2021. The judge
has also ordered that there should be a split trial between liability and damages. The first trial will start in May 2022.
Taking into account all available evidence, the Group assesses it to be more likely than not that a present obligation does not exist and
that the allegations of collusion are completely without merit; the Group is vigorously defending the claim. The value of the claim is not
pleaded but we understand it to be the total value of the business, possibly equivalent to approximately £1 billion. Vodafone’s alleged
share of the liability is also not pleaded. The Group is not able to estimate any possible loss in the event of an adverse judgement.
198 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
30. Related party transactions
The Group has a number of related parties including joint arrangements and associates, pension schemes and
Directors and Executive Committee members (see note 12 “Investments in associates and joint arrangements”,
note 25 “Post employment benefits” and note 23 “Directors and key management compensation”).
Transactions with joint arrangements and associates
Related party transactions with the Group’s joint arrangements and associates primarily comprise fees for the use of products and services including
network airtime and access charges, fees for the provision of network infrastructure and cash pooling arrangements. No related party transactions
have been entered into during the year which might reasonably affect any decisions made by the users of these consolidated financial statements
except as disclosed below.
Sales of goods and services to associates
Purchase of goods and services from associates
Sales of goods and services to joint arrangements
Purchase of goods and services from joint arrangements
Net interest income receivable from joint arrangements1
Net interest expense payable to joint arrangements1,2
Trade balances owed:
by associates
to associates
by joint arrangements
to joint arrangements
Other balances owed by associates
Other balances owed by joint arrangements1
Other balances owed to joint arrangements2
2021
€m
14
5
203
109
65
56
3
5
88
31
56
955
1,575
2020
€m
32
4
305
97
71
–
4
4
157
37
–
1,083
2,017
2019
€m
27
3
242
192
96
–
1
3
193
25
–
997
169
Notes:
1 Amounts arise primarily through VodafoneZiggo, TPG Telecom Limited and INWIT S.p.A.. Interest is paid in line with market rates.
2 Amounts for years ended 31 March 2021 and 2020 are primarily in relation to leases of tower space from INWIT S.p.A.
Dividends received from associates and joint ventures are disclosed in the consolidated statement of cash flows.
Transactions with Directors other than compensation
During the three years ended 31 March 2021 and as of 18 May 2021, no Director nor any other executive officer, nor any associate of any Director
or any other executive officer, was indebted to the Company. During the three years ended 31 March 2021 and as of 18 May 2021, the Company
has not been a party to any other material transaction, or proposed transactions, in which any member of the key management personnel
(including Directors, any other executive officer, senior manager, any spouse or relative of any of the foregoing or any relative of such spouse) had or
was to have a direct or indirect material interest.
198 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
199 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
30. Related party transactions
30. Related party transactions
31. Related undertakings
The Group has a number of related parties including joint arrangements and associates, pension schemes and
The Group has a number of related parties including joint arrangements and associates, pension schemes and
Directors and Executive Committee members (see note 12 “Investments in associates and joint arrangements”,
Directors and Executive Committee members (see note 12 “Investments in associates and joint arrangements”,
note 25 “Post employment benefits” and note 23 “Directors and key management compensation”).
note 25 “Post employment benefits” and note 23 “Directors and key management compensation”).
Transactions with joint arrangements and associates
Transactions with joint arrangements and associates
Related party transactions with the Group’s joint arrangements and associates primarily comprise fees for the use of products and services including
Related party transactions with the Group’s joint arrangements and associates primarily comprise fees for the use of products and services including
network airtime and access charges, fees for the provision of network infrastructure and cash pooling arrangements. No related party transactions
network airtime and access charges, fees for the provision of network infrastructure and cash pooling arrangements. No related party transactions
have been entered into during the year which might reasonably affect any decisions made by the users of these consolidated financial statements
have been entered into during the year which might reasonably affect any decisions made by the users of these consolidated financial statements
except as disclosed below.
except as disclosed below.
Sales of goods and services to associates
Sales of goods and services to associates
Purchase of goods and services from associates
Purchase of goods and services from associates
Sales of goods and services to joint arrangements
Sales of goods and services to joint arrangements
Purchase of goods and services from joint arrangements
Purchase of goods and services from joint arrangements
Net interest income receivable from joint arrangements1
Net interest income receivable from joint arrangements1
Net interest expense payable to joint arrangements1,2
Net interest expense payable to joint arrangements1,2
Trade balances owed:
Trade balances owed:
by associates
by associates
to associates
to associates
by joint arrangements
by joint arrangements
to joint arrangements
to joint arrangements
Other balances owed by associates
Other balances owed by associates
Other balances owed by joint arrangements1
Other balances owed by joint arrangements1
Other balances owed to joint arrangements2
Other balances owed to joint arrangements2
Notes:
Notes:
2021
2021
€m
€m
14
14
5
5
203
203
109
109
65
65
56
56
3
3
5
5
88
88
31
31
56
56
955
955
1,575
1,575
2020
2020
€m
€m
32
32
4
4
305
305
97
97
71
71
–
–
4
4
4
4
157
157
37
37
–
–
1,083
1,083
2,017
2,017
2019
2019
€m
€m
27
27
3
3
242
242
192
192
96
96
–
–
1
1
3
3
193
193
25
25
–
–
997
997
169
169
1 Amounts arise primarily through VodafoneZiggo, TPG Telecom Limited and INWIT S.p.A.. Interest is paid in line with market rates.
1 Amounts arise primarily through VodafoneZiggo, TPG Telecom Limited and INWIT S.p.A.. Interest is paid in line with market rates.
2 Amounts for years ended 31 March 2021 and 2020 are primarily in relation to leases of tower space from INWIT S.p.A.
2 Amounts for years ended 31 March 2021 and 2020 are primarily in relation to leases of tower space from INWIT S.p.A.
Dividends received from associates and joint ventures are disclosed in the consolidated statement of cash flows.
Dividends received from associates and joint ventures are disclosed in the consolidated statement of cash flows.
Transactions with Directors other than compensation
Transactions with Directors other than compensation
During the three years ended 31 March 2021 and as of 18 May 2021, no Director nor any other executive officer, nor any associate of any Director
During the three years ended 31 March 2021 and as of 18 May 2021, no Director nor any other executive officer, nor any associate of any Director
or any other executive officer, was indebted to the Company. During the three years ended 31 March 2021 and as of 18 May 2021, the Company
or any other executive officer, was indebted to the Company. During the three years ended 31 March 2021 and as of 18 May 2021, the Company
has not been a party to any other material transaction, or proposed transactions, in which any member of the key management personnel
has not been a party to any other material transaction, or proposed transactions, in which any member of the key management personnel
(including Directors, any other executive officer, senior manager, any spouse or relative of any of the foregoing or any relative of such spouse) had or
(including Directors, any other executive officer, senior manager, any spouse or relative of any of the foregoing or any relative of such spouse) had or
was to have a direct or indirect material interest.
was to have a direct or indirect material interest.
A full list of all of our subsidiaries, joint arrangements and associated undertakings is detailed below.
A full list of subsidiaries, joint arrangements and associated undertakings (as defined in the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008) as at 31 March 2021 is detailed below. No subsidiaries are excluded from the Group consolidation.
Unless otherwise stated the Company’s subsidiaries all have share capital consisting solely of ordinary shares and are indirectly held. The
percentage held by Group companies reflect both the proportion of nominal capital and voting rights unless otherwise stated.
Subsidiaries
Accounting policies
A subsidiary is an entity directly or indirectly controlled by the Company. Control is achieved where the Company has existing rights that give it
the current ability to direct the activities that affect the Company’s returns and exposure or rights to variable returns from the entity. The results
of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition
or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with those used by the Group. All intra-group transactions, balances, income and expenses are
eliminated on consolidation. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s
equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-
controlling shareholder’s share of changes in equity since the date of the combination. Total comprehensive income is attributed to non-
controlling interests even if this results in the non-controlling interests having a deficit balance.
Company name
Albania
% of share
class held by
Group
Companies
Share class
Company name
% of share
class held by
Group
Companies
Share class
Company name
% of share
class held by
Group
Companies
Share class
Avenida Cidade Jardim, 400, 7th and 20th Floors,
Jardim Paulistano, São Paulo, Brazil, 01454-000
Building 21, 11, Kangding St., BDA, Beijing, 100176 – China,
China
Rruga "Ibrahim Rugova", Sky Tower, Kati i 5, Hyrja 2, Tiranë,
Shqipëri. Albania
Vodafone Serviços Empresariais Brasil
Ltda.
100.00
Ordinary shares
Vodafone Automotive Technologies
(Beijing) Co, Ltd
100.00
Ordinary shares
_VOIS Albania ShpK.
100.00 Ordinary shares
Autostrada Tirane-Durres, Rruga: “Pavaresia”, Nr 61, Kashar,
Tirana, Albania
Vodafone Albania Sh.A
99.94
Ordinary shares
Argentina
Cerrito 348, 5 to B, C1010AAH, Buenos Aires, Argentina
CWGNL S.A. (in process of dissolution)
100.00
Ordinary shares
Australia
Mills Oakley, Level 7, 151 Clarence Street, Sydney NSW 2000,
Australia
Vodafone Enterprise Australia Pty
Limited
100.00
Ordinary shares
Av José Rocha Bonfim, 214, Cond Praça Capital – Edifício
Toronto, sls 228/229 13080-900 Jardim Santa Genebra –
Campinas, São Paulo, Brazil
Cobra do Brasil Serviços de
Telemàtica ltda. (in process
of dissolution)
70.00
Ordinary shares
Av Paulista 74-4 andar, Sala 427, Bela Vista, CEP, 01311 – 902,
São Paulo, Brazil
Vodafone Empresa Brasil
Telecomunicações Ltda
Bulgaria
100.00
Ordinary shares
10 Tsar Osvoboditel Blvd., 3rd Floor, Spredets Region, Sofia,
1000, Bulgaria
Level 9, Tower 2, China Central Place, Room 940, No.79 Jianguo
Road, Chaoyang District, Beijing, 100025, China
Vodafone China Limited (China) (in
process of dissolution)
100.00
Equity interest
shares
Level 9, Tower 2, China Central Place, Room 941, No.79 Jianguo
Road, Chaoyang District, Beijing, 100025, China
Vodafone Enterprise
Communications Technical Service
(Shanghai) Co., Ltd. Beijing Branch2
100.00
Branch
Room 1603, 16th Floor, 1200 Pudong Avenue, China (S, 1200
Pudong Avenue, Free Trade Zone, Shanghai, China
Vodafone Enterprise
Communications Technical Service
(Shanghai) Co., Ltd.
100.00
Ordinary shares
Vodafone Enterprise Bulgaria EOOD
100.00
Ordinary shares
Congo, The Democratic Republic of the
Austria
Canada
c/o Stolitzka & Partner Rechtsanwälte OG,
Kärntner Ring 12, 3. Stock, 1010, Wien, Austria
3280 Bloor Street West, Suite 1140, 11 Floor, Centre Tower,
Toronto ON M8X 2X3, Canada
Vodafone Enterprise Austria GmbH
100.00
Ordinary shares
Vodafone Canada Inc.
100.00 Common shares
Bahrain
Cayman Islands
RSM Bahrain, 3rd floor Falcon Tower, Diplomatic Area,
Manama, PO BOX 11816, Bahrain
One Nexus Way, Camana Bay, Grand Cayman, KY1-9005,
Cayman Islands
Vodafone Enterprise Bahrain W.L.L.
100.00
Ordinary shares
CGP Investments (Holdings) Limited
100.00
Ordinary shares
Belgium
Chile
Malta House, rue Archimède 25, 1000 Bruxelles, Belgium
222 Miraflores, P.28, Santiago, Metrop, 97-763, Chile
Vodafone Belgium SA/NV
100.00
Ordinary shares
Vodafone Enterprise Chile S.A.
100.00
Ordinary shares
Brazil
China
292 Avenue de La Justice, Commune de la Gombe, Kinshasa,
Congo
Vodacom Congo (RDC) SA5
30.85 Ordinary shares
Building Comimmo II Ground Floor Right, 3157 Boulevard du 30
Juin, Commune de la Gombe, Kinshasa, DRC Congo, The
Democratic Republic of the
Vodacash S.A.5
Cyprus
30.85
Ordinary shares
Ali Rıza Efendi Caddesi No:33/A Ortaköy, Lefkoşa, Cyprus
Vodafone Mobile Operations Limited
100.00
Ordinary shares
200 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
31. Related undertakings (continued)
Czech Republic
Arena Sport Rechte Marketing GmbH
i.L (in liquidation)
100.00 Ordinary shares
Company Limited
Preference
shares
70.00 Ordinary shares
70.00 Ordinary shares
náměstí Junkových 2, Prague 5, Czech Republic, 155 00, Czech
Republic
Oskar Mobil S.R.O.
100.00 Ordinary shares
Nadace Vodafone Česká Republika
100.00
Trustee
Vodafone Czech Republic A.S.
100.00 Ordinary shares
Vodafone Enterprise Europe (UK)
Limited - Czech Branch2
100.00
Branch
Vodafone Administration GmbH
100.00 Ordinary shares
Vodafone BW GmbH
100.00 Ordinary shares
Vodafone Hessen GmbH & Co. KG
100.00 Ordinary shares
National Communications Backbone
Company Limited
Vodafone Ghana Mobile Financial
Services Limited
Vodafone Management GmbH
100.00 Ordinary shares
Vodafone NRW GmbH
Vodafone West GmbH
100.00 Ordinary shares
100.00 Ordinary shares
Greece
1-3 Tzavella str, 152 31 Halandri, Athens, Greece
Praha 4, Nusle, Závišova 502/5, 14000, Czech Republic
Altes Forsthaus 2, 67661, Kaiserslautern, Germany
Vantage Towers s.r.o. 4
81.05 Ordinary shares
Vantage Towers 2 s.r.o.
100.00 Ordinary shares
Závišova Real Estate, s.r.o.
100.00 Ordinary shares
Denmark
TKS Telepost Kabel-Service
Kaiserslautern GmbH3
93.84 Ordinary shares
Betastraße 6-8, 85774 Unterföhring, Germany
Kabel Deutschland Holding AG3
93.84 Ordinary shares
Vodafone Deutschland GmbH
93.84 Ordinary shares
Vantage Towers Single Member
Societe Anonyme (previously
Vantage Towers Societe Anonyme,
16 April 2021)4
Vodafone-Panafon Hellenic
Telecommunications Company S.A.
Vodafone Greece Towers Societe
Anonyme4
81.05 Ordinary shares
99.87 Ordinary shares
81.05 Ordinary shares
Tuborg Boulevard 12, 2900, Hellerup, Denmark
Vodafone Customer Care GmbH3
93.84 Ordinary shares
2 Adrianeiou str, Athens, 11525, Greece
Vodafone Enterprise Denmark A/S
100.00 Ordinary (DKK)
shares
Egypt
17 Port Said Street, Maadi El Sarayat, Cairo, Egypt
Vodafone For Trading
54.95 Ordinary shares
37 Kaser El Nil St, 4th. Floor, Cairo, Egypt
Starnet
55.00 Ordinary shares
54 El Batal Ahmed Abed El Aziz, Mohandseen, Giza, Egypt
Sarmady Communications
55.00 Ordinary shares
Buschurweg 4, 76870, Kandel, Germany
Crystal Almond Towers Single Member S.A.4
81.05 Ordinary shares
Vodafone Automotive Deutschland
GmbH
100.00 Ordinary shares
12,5 km National Road Athens – Lamia,
Metamorfosi / Athens, 14452, Greece
Ferdinand-Braun-Platz 1, 40549, Duesseldorf, Germany
Vodafone Innovus S.A.
99.87 Ordinary shares
Vodafone Enterprise Germany GmbH
100.00 Ordinary shares
Pireos 163 & Ehelidon, Athens, 11854, Greece
Vodafone GmbH
100.00
Ordinary A
shares, Ordinary
B shares
360 Connect S.A.
Guernsey
99.87 Ordinary shares
Vodafone Group Services GmbH
100.00 Ordinary shares
Vodafone Institut für Gesellschaft und
Kommunikation GmbH
100.00 Ordinary shares
Martello Court, Admiral Park, St. Peter Port, GY1 3HB,
Guernsey
FB Holdings Limited
100.00 Ordinary shares
Le Bunt Holdings Limited
100.00 Ordinary shares
Building no. 2109 “VHUB1”, Smart Village, Cairo Alexandria,
Egypt
Vodafone Stiftung Deutschland
Gemeinnutzige GmbH
100.00 Ordinary shares
Vodafone International Services LLC
100.00 Ordinary shares
Vodafone Vierte Verwaltungs AG
100.00 Ordinary shares
Silver Stream Investments Limited
100.00 Ordinary shares
Site No 15/3C, Central Axis, 6th October City, Egypt
Friedrich-Wilhelm-Strasse 2, 38100, Braunschweig, Germany
Roseneath, The Grange, St Peter Port, GY1 2QJ, Guernsey
Vodafone Egypt
Telecommunications S.A.E.
55.00 Ordinary shares
Smart Village C3 Vodafone Building, Egypt
KABELCOM Braunschweig
Gesellschaft Fur Breitbandkabel-
Kommunikation Mit Beschrankter
Haftung3
93.84 Ordinary shares
VBA Holdings Limited5
Vodafone Data
Finland
55.00 Ordinary shares
Helmholtzstaße. 2-9, Gerbäude F10587, Berlin, Germany
Vodafone Service GmbH
100.00 Ordinary shares
VBA International Limited5
c/o Eversheds Asianajotoimisto Oy, Fabianinkatu 29 B, Helsinki,
00100, Finland
Holzmarkt 1, 50676, Köln, North Rhine-Westphalia, Germany
Grandcentrix GmbH
100.00 Ordinary shares
Vodafone Enterprise Finland OY
100.00 Ordinary shares
Nobelstrasse 55, 18059, Rostock, Germany
60.50 Ordinary shares
and non-voting,
irredeemable,
non-cumulative
preference
shares
60.50 Ordinary shares,
and non-voting,
irredeemable,
non-convertible,
non-cumulative
preference
shares
France
“Urbana Teleunion” Rostock GmbH &
Co.KG3
65.69 Ordinary shares
Hong Kong
1300 route de Cretes, Le WTC, Bat I1, 06560, Valbonne Soph,
France
Vodafone Automotive Telematics
Development S.A.S
100.00 Ordinary shares
Prinzenallee 11-13, 40549, Düsseldorf, Germany
Vantage Towers AG
81.05 Ordinary shares
Seilerstrasse 18, 38440, Wolfsburg, Germany
Level 24, Dorset House, Taikoo Place, 979 King’s Road, Quarry
Bay, Hong Kong
Vodafone Enterprise Hong Kong Ltd
100.00 Ordinary shares
93.84 Ordinary shares
Hungary
EuroPlaza Tour, 20 Avenue Andre Prothin, La Défense Cedex-
France (149153), 92400, Courbevoie, France
Vodafone Automotive France S.A.S
100.00 Ordinary shares
KABELCOM Wolfsburg Gesellschaft
Fur Breitbandkabel-Kommunikation
Mit Beschrankter Haftung3
Vodafone Enterprise France SAS
100.00
New euro
shares
Ghana
Rue Champollion, 22300, Lannion, France
Apollo Submarine Cable System Ltd
– French Branch2
100.00
Branch
Manet Tower A, South Liberation Link, Accra, Ghana
Vodacom Business (Ghana) Limited
70.00 Ordinary shares,
Preference
shares
Germany
Telecom House, Nsawam Road, Accra-North,
Greater Accra Region, PMB 221, Ghana
Aachener Str. 746-750, 50933, Köln, Germany
Ghana Telecommunications
70.00 Ordinary shares,
40-44 Hungaria Krt., Budapest, H-1087, Hungary
VSSB Vodafone Szolgáltató Központ
Budapest Zártkörűen Működő
Részvénytársaság
100.00
Registered
ordinary shares
6 Lechner Ödön fasor, Budapest, 1096, Hungary
Vantage Towers Zártkörűen Működő
Részvénytársaság4
81.05 Ordinary shares
Vodafone Magyarország Távközlési
Zártkörűen Működő
Részvénytársaság
100.00
Series A
Registered
common shares
200 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
201 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
31. Related undertakings (continued)
31. Related undertakings (continued)
Czech Republic
Czech Republic
Republic
Republic
Oskar Mobil S.R.O.
Oskar Mobil S.R.O.
Arena Sport Rechte Marketing GmbH
Arena Sport Rechte Marketing GmbH
100.00 Ordinary shares
100.00 Ordinary shares
Company Limited
Company Limited
i.L (in liquidation)
i.L (in liquidation)
Preference
Preference
shares
shares
náměstí Junkových 2, Prague 5, Czech Republic, 155 00, Czech
náměstí Junkových 2, Prague 5, Czech Republic, 155 00, Czech
Vodafone Administration GmbH
Vodafone Administration GmbH
100.00 Ordinary shares
100.00 Ordinary shares
National Communications Backbone
National Communications Backbone
70.00 Ordinary shares
70.00 Ordinary shares
Vodafone BW GmbH
Vodafone BW GmbH
100.00 Ordinary shares
100.00 Ordinary shares
Company Limited
Company Limited
100.00 Ordinary shares
100.00 Ordinary shares
Vodafone Ghana Mobile Financial
Vodafone Ghana Mobile Financial
70.00 Ordinary shares
70.00 Ordinary shares
Vodafone Hessen GmbH & Co. KG
Vodafone Hessen GmbH & Co. KG
100.00 Ordinary shares
100.00 Ordinary shares
Services Limited
Services Limited
Nadace Vodafone Česká Republika
Nadace Vodafone Česká Republika
100.00
100.00
Trustee
Trustee
Vodafone Czech Republic A.S.
Vodafone Czech Republic A.S.
100.00 Ordinary shares
100.00 Ordinary shares
Vodafone Enterprise Europe (UK)
Vodafone Enterprise Europe (UK)
100.00
100.00
Branch
Branch
Limited - Czech Branch2
Limited - Czech Branch2
Vodafone Management GmbH
Vodafone Management GmbH
100.00 Ordinary shares
100.00 Ordinary shares
Vodafone NRW GmbH
Vodafone NRW GmbH
Vodafone West GmbH
Vodafone West GmbH
100.00 Ordinary shares
100.00 Ordinary shares
100.00 Ordinary shares
100.00 Ordinary shares
Greece
Greece
Praha 4, Nusle, Závišova 502/5, 14000, Czech Republic
Praha 4, Nusle, Závišova 502/5, 14000, Czech Republic
Altes Forsthaus 2, 67661, Kaiserslautern, Germany
Altes Forsthaus 2, 67661, Kaiserslautern, Germany
Vantage Towers s.r.o. 4
Vantage Towers s.r.o. 4
81.05 Ordinary shares
81.05 Ordinary shares
Vantage Towers 2 s.r.o.
Vantage Towers 2 s.r.o.
100.00 Ordinary shares
100.00 Ordinary shares
Závišova Real Estate, s.r.o.
Závišova Real Estate, s.r.o.
100.00 Ordinary shares
100.00 Ordinary shares
TKS Telepost Kabel-Service
TKS Telepost Kabel-Service
Kaiserslautern GmbH3
Kaiserslautern GmbH3
93.84 Ordinary shares
93.84 Ordinary shares
Betastraße 6-8, 85774 Unterföhring, Germany
Betastraße 6-8, 85774 Unterföhring, Germany
1-3 Tzavella str, 152 31 Halandri, Athens, Greece
1-3 Tzavella str, 152 31 Halandri, Athens, Greece
Vantage Towers Single Member
Vantage Towers Single Member
Societe Anonyme (previously
Societe Anonyme (previously
Vantage Towers Societe Anonyme,
Vantage Towers Societe Anonyme,
16 April 2021)4
16 April 2021)4
Vodafone-Panafon Hellenic
Vodafone-Panafon Hellenic
Telecommunications Company S.A.
Telecommunications Company S.A.
81.05 Ordinary shares
81.05 Ordinary shares
99.87 Ordinary shares
99.87 Ordinary shares
Kabel Deutschland Holding AG3
Kabel Deutschland Holding AG3
93.84 Ordinary shares
93.84 Ordinary shares
Vodafone Deutschland GmbH
Vodafone Deutschland GmbH
93.84 Ordinary shares
93.84 Ordinary shares
Anonyme4
Anonyme4
Vodafone Greece Towers Societe
Vodafone Greece Towers Societe
81.05 Ordinary shares
81.05 Ordinary shares
Tuborg Boulevard 12, 2900, Hellerup, Denmark
Tuborg Boulevard 12, 2900, Hellerup, Denmark
Vodafone Customer Care GmbH3
Vodafone Customer Care GmbH3
93.84 Ordinary shares
93.84 Ordinary shares
2 Adrianeiou str, Athens, 11525, Greece
2 Adrianeiou str, Athens, 11525, Greece
Vodafone Enterprise Denmark A/S
Vodafone Enterprise Denmark A/S
100.00 Ordinary (DKK)
100.00 Ordinary (DKK)
Buschurweg 4, 76870, Kandel, Germany
Buschurweg 4, 76870, Kandel, Germany
Crystal Almond Towers Single Member S.A.4
Crystal Almond Towers Single Member S.A.4
81.05 Ordinary shares
81.05 Ordinary shares
17 Port Said Street, Maadi El Sarayat, Cairo, Egypt
17 Port Said Street, Maadi El Sarayat, Cairo, Egypt
Vodafone For Trading
Vodafone For Trading
54.95 Ordinary shares
54.95 Ordinary shares
37 Kaser El Nil St, 4th. Floor, Cairo, Egypt
37 Kaser El Nil St, 4th. Floor, Cairo, Egypt
Starnet
Starnet
55.00 Ordinary shares
55.00 Ordinary shares
54 El Batal Ahmed Abed El Aziz, Mohandseen, Giza, Egypt
54 El Batal Ahmed Abed El Aziz, Mohandseen, Giza, Egypt
shares
shares
GmbH
GmbH
Vodafone Automotive Deutschland
Vodafone Automotive Deutschland
100.00 Ordinary shares
100.00 Ordinary shares
12,5 km National Road Athens – Lamia,
12,5 km National Road Athens – Lamia,
Metamorfosi / Athens, 14452, Greece
Metamorfosi / Athens, 14452, Greece
Ferdinand-Braun-Platz 1, 40549, Duesseldorf, Germany
Ferdinand-Braun-Platz 1, 40549, Duesseldorf, Germany
Vodafone Innovus S.A.
Vodafone Innovus S.A.
99.87 Ordinary shares
99.87 Ordinary shares
Vodafone Enterprise Germany GmbH
Vodafone Enterprise Germany GmbH
100.00 Ordinary shares
100.00 Ordinary shares
Pireos 163 & Ehelidon, Athens, 11854, Greece
Pireos 163 & Ehelidon, Athens, 11854, Greece
Vodafone GmbH
Vodafone GmbH
100.00
100.00
Ordinary A
Ordinary A
360 Connect S.A.
360 Connect S.A.
99.87 Ordinary shares
99.87 Ordinary shares
shares, Ordinary
shares, Ordinary
B shares
B shares
Guernsey
Guernsey
Vodafone Group Services GmbH
Vodafone Group Services GmbH
100.00 Ordinary shares
100.00 Ordinary shares
Vodafone Institut für Gesellschaft und
Vodafone Institut für Gesellschaft und
100.00 Ordinary shares
100.00 Ordinary shares
Guernsey
Guernsey
Martello Court, Admiral Park, St. Peter Port, GY1 3HB,
Martello Court, Admiral Park, St. Peter Port, GY1 3HB,
Denmark
Denmark
Egypt
Egypt
Sarmady Communications
Sarmady Communications
55.00 Ordinary shares
55.00 Ordinary shares
Kommunikation GmbH
Kommunikation GmbH
Building no. 2109 “VHUB1”, Smart Village, Cairo Alexandria,
Building no. 2109 “VHUB1”, Smart Village, Cairo Alexandria,
Egypt
Egypt
Vodafone Stiftung Deutschland
Vodafone Stiftung Deutschland
Gemeinnutzige GmbH
Gemeinnutzige GmbH
100.00 Ordinary shares
100.00 Ordinary shares
Le Bunt Holdings Limited
Le Bunt Holdings Limited
100.00 Ordinary shares
100.00 Ordinary shares
Vodafone International Services LLC
Vodafone International Services LLC
100.00 Ordinary shares
100.00 Ordinary shares
Vodafone Vierte Verwaltungs AG
Vodafone Vierte Verwaltungs AG
100.00 Ordinary shares
100.00 Ordinary shares
Silver Stream Investments Limited
Silver Stream Investments Limited
100.00 Ordinary shares
100.00 Ordinary shares
Site No 15/3C, Central Axis, 6th October City, Egypt
Site No 15/3C, Central Axis, 6th October City, Egypt
Friedrich-Wilhelm-Strasse 2, 38100, Braunschweig, Germany
Friedrich-Wilhelm-Strasse 2, 38100, Braunschweig, Germany
Roseneath, The Grange, St Peter Port, GY1 2QJ, Guernsey
Roseneath, The Grange, St Peter Port, GY1 2QJ, Guernsey
55.00 Ordinary shares
55.00 Ordinary shares
KABELCOM Braunschweig
KABELCOM Braunschweig
93.84 Ordinary shares
93.84 Ordinary shares
VBA Holdings Limited5
VBA Holdings Limited5
60.50 Ordinary shares
60.50 Ordinary shares
Vodafone Egypt
Vodafone Egypt
Telecommunications S.A.E.
Telecommunications S.A.E.
Smart Village C3 Vodafone Building, Egypt
Smart Village C3 Vodafone Building, Egypt
Gesellschaft Fur Breitbandkabel-
Gesellschaft Fur Breitbandkabel-
Kommunikation Mit Beschrankter
Kommunikation Mit Beschrankter
Haftung3
Haftung3
55.00 Ordinary shares
55.00 Ordinary shares
Helmholtzstaße. 2-9, Gerbäude F10587, Berlin, Germany
Helmholtzstaße. 2-9, Gerbäude F10587, Berlin, Germany
Vodafone Service GmbH
Vodafone Service GmbH
100.00 Ordinary shares
100.00 Ordinary shares
VBA International Limited5
VBA International Limited5
60.50 Ordinary shares,
60.50 Ordinary shares,
c/o Eversheds Asianajotoimisto Oy, Fabianinkatu 29 B, Helsinki,
c/o Eversheds Asianajotoimisto Oy, Fabianinkatu 29 B, Helsinki,
Holzmarkt 1, 50676, Köln, North Rhine-Westphalia, Germany
Holzmarkt 1, 50676, Köln, North Rhine-Westphalia, Germany
Grandcentrix GmbH
Grandcentrix GmbH
100.00 Ordinary shares
100.00 Ordinary shares
Vodafone Enterprise Finland OY
Vodafone Enterprise Finland OY
100.00 Ordinary shares
100.00 Ordinary shares
Nobelstrasse 55, 18059, Rostock, Germany
Nobelstrasse 55, 18059, Rostock, Germany
“Urbana Teleunion” Rostock GmbH &
“Urbana Teleunion” Rostock GmbH &
65.69 Ordinary shares
65.69 Ordinary shares
Co.KG3
Co.KG3
Hong Kong
Hong Kong
1300 route de Cretes, Le WTC, Bat I1, 06560, Valbonne Soph,
1300 route de Cretes, Le WTC, Bat I1, 06560, Valbonne Soph,
Prinzenallee 11-13, 40549, Düsseldorf, Germany
Prinzenallee 11-13, 40549, Düsseldorf, Germany
Level 24, Dorset House, Taikoo Place, 979 King’s Road, Quarry
Level 24, Dorset House, Taikoo Place, 979 King’s Road, Quarry
Vodafone Automotive Telematics
Vodafone Automotive Telematics
100.00 Ordinary shares
100.00 Ordinary shares
Development S.A.S
Development S.A.S
Seilerstrasse 18, 38440, Wolfsburg, Germany
Seilerstrasse 18, 38440, Wolfsburg, Germany
Vodafone Enterprise Hong Kong Ltd
Vodafone Enterprise Hong Kong Ltd
100.00 Ordinary shares
100.00 Ordinary shares
Vantage Towers AG
Vantage Towers AG
81.05 Ordinary shares
81.05 Ordinary shares
Bay, Hong Kong
Bay, Hong Kong
EuroPlaza Tour, 20 Avenue Andre Prothin, La Défense Cedex-
EuroPlaza Tour, 20 Avenue Andre Prothin, La Défense Cedex-
France (149153), 92400, Courbevoie, France
France (149153), 92400, Courbevoie, France
Vodafone Automotive France S.A.S
Vodafone Automotive France S.A.S
100.00 Ordinary shares
100.00 Ordinary shares
KABELCOM Wolfsburg Gesellschaft
KABELCOM Wolfsburg Gesellschaft
Fur Breitbandkabel-Kommunikation
Fur Breitbandkabel-Kommunikation
Mit Beschrankter Haftung3
Mit Beschrankter Haftung3
Vodafone Enterprise France SAS
Vodafone Enterprise France SAS
100.00
100.00
New euro
New euro
shares
shares
Ghana
Ghana
93.84 Ordinary shares
93.84 Ordinary shares
Hungary
Hungary
40-44 Hungaria Krt., Budapest, H-1087, Hungary
40-44 Hungaria Krt., Budapest, H-1087, Hungary
VSSB Vodafone Szolgáltató Központ
VSSB Vodafone Szolgáltató Központ
100.00
100.00
Registered
Registered
ordinary shares
ordinary shares
Budapest Zártkörűen Működő
Budapest Zártkörűen Működő
Részvénytársaság
Részvénytársaság
Rue Champollion, 22300, Lannion, France
Rue Champollion, 22300, Lannion, France
Apollo Submarine Cable System Ltd
Apollo Submarine Cable System Ltd
100.00
100.00
Branch
Branch
– French Branch2
– French Branch2
Germany
Germany
Manet Tower A, South Liberation Link, Accra, Ghana
Manet Tower A, South Liberation Link, Accra, Ghana
Vodacom Business (Ghana) Limited
Vodacom Business (Ghana) Limited
70.00 Ordinary shares,
70.00 Ordinary shares,
6 Lechner Ödön fasor, Budapest, 1096, Hungary
6 Lechner Ödön fasor, Budapest, 1096, Hungary
Telecom House, Nsawam Road, Accra-North,
Telecom House, Nsawam Road, Accra-North,
Greater Accra Region, PMB 221, Ghana
Greater Accra Region, PMB 221, Ghana
Vodafone Magyarország Távközlési
Vodafone Magyarország Távközlési
100.00
100.00
Series A
Series A
Registered
Registered
common shares
common shares
Részvénytársaság4
Részvénytársaság4
Zártkörűen Működő
Zártkörűen Működő
Részvénytársaság
Részvénytársaság
Preference
Preference
shares
shares
Vantage Towers Zártkörűen Működő
Vantage Towers Zártkörűen Működő
81.05 Ordinary shares
81.05 Ordinary shares
Aachener Str. 746-750, 50933, Köln, Germany
Aachener Str. 746-750, 50933, Köln, Germany
Ghana Telecommunications
Ghana Telecommunications
70.00 Ordinary shares,
70.00 Ordinary shares,
Vodafone Data
Vodafone Data
Finland
Finland
00100, Finland
00100, Finland
France
France
France
France
and non-voting,
and non-voting,
irredeemable,
irredeemable,
non-cumulative
non-cumulative
preference
preference
shares
shares
and non-voting,
and non-voting,
irredeemable,
irredeemable,
non-convertible,
non-convertible,
non-cumulative
non-cumulative
preference
preference
shares
shares
India
10th Floor, Tower A&B, Global Technology Park, (Maple Tree
Building), Marathahalli Outer Ring Road, Devarabeesanahalli
Village, Varthur Hobli, Bengaluru, Karnataka, 560103, India
Cable and Wireless (India) Limited –
Branch2
100.00
Branch
100.00
Equity shares
VND S.p.A
Japan
Cable and Wireless Global (India)
Private Limited
Cable & Wireless Networks India
Private Limited
Vodafone Enterprise Italy S.r.L
100.00
Euro shares
Vodafone Gestioni S.p.A.
100.00
Ordinary shares
Vodafone Enterprise Global
Businesses S.à r.l.
100.00
Ordinary shares
Vodafone Servizi E Tecnologie S.R.L.
100.00
Equity shares
Vodafone Enterprise Luxembourg S.A.
100.00
Ordinary euro
shares
Via per Carpi 26/B, 42015, Correggio (RE), Italy
Vodafone International 1 S.à r.l.
100.00
Ordinary shares
100.00
Ordinary shares
Vodafone International M S.à r.l.
100.00
Ordinary shares
100.00
Equity shares
KAKiYa building, 9F, 2-7-17 Shin-Yokohama, Kohoku-ku,
Yokoha- City, Kanagawa, 222-0033, Japan
Vodafone Automotive Japan KK
100.00
Ordinary shares
Marunouchi Trust Tower North 15F, 8-1, Marunouchi 1-chome,
Level 15, Chiyoda-ku, Tokyo, Japan
Vodafone Enterprise U.K. –
Japanese Branch2
100.00
Branch
Vodafone Investments Luxembourg
S.à r.l.
100.00
Ordinary shares
Vodafone Luxembourg 5 S.à r.l.
100.00
Ordinary shares
Vodafone Luxembourg S.à r.l.
100.00
Ordinary shares
Vodafone Procurement Company S.à
r.l.
100.00
Ordinary shares
Vodafone Roaming Services S.à r.l.
100.00
Ordinary shares
Vodafone Services Company S.à r.l.
100.00
Ordinary shares
201 - 206, Shiv Smriti Chambers, 49/A, Dr. Annie Besant Road,
Worli, Mumbai, Maharashtra, 400018, India
Omega Telecom Holdings Private
Limited
100.00
Equity shares
Vodafone India Services Private Ltd
100.00
Equity shares
Business @ Mantri, Tower A, 3rd Floor, S No.197,
Wing A1 & A2, Near Hotel Four Points, Lohegaon, Pune,
Maharashtra, 411014, India
Vodafone Global Services Private Ltd
100.00
Equity shares
E-47, Bankra Super Market, Bankra, Howrah, West Bengal,
711403, India
Usha Martin Telematics Limited
100.00
Equity shares
Ireland
2nd Floor, Palmerston House, Fenian Street, Dublin 2, Ireland
Vodafone International Financing
Designated Activity Company
100.00 Ordinary shares
Mountainview, Leopardstown, Dublin 18, Ireland
Vantage Towers Limited4
81.05
Ordinary shares
FB Holdings Limited
FB Holdings Limited
100.00 Ordinary shares
100.00 Ordinary shares
VF Ireland Property Holdings Limited
100.00
Ordinary euro
shares
Vodafone Enterprise Global Limited
100.00
Ordinary shares
Vodafone Global Network Limited
100.00
Ordinary shares
Vodafone Group Services Ireland
Limited
100.00
Ordinary shares
Vodafone Ireland Distribution Limited
100.00
Ordinary shares
Vodafone Ireland Limited
100.00
Ordinary shares
Vodafone Global Enterprise (Japan)
K.K.
100.00
Ordinary shares
Malaysia
Jersey
44 Esplanade, St Helier, JE4 9WG, Jersey
Suite 13.03, 13th Floor, Menara Tan & Tan,
207 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia
Vodafone Global Enterprise (Malaysia)
Sdn Bhd
100.00
Ordinary shares
Aztec Limited
Globe Limited
Plex Limited
100.00
Ordinary shares
100.00
Ordinary shares
Malta
100.00
Ordinary shares
Vizzavi Finance Limited
99.99
Ordinary shares
Vodafone International 2 Limited
100.00
Ordinary shares
Vodafone Jersey Dollar Holdings
Limited
Vodafone Jersey Finance
100.00
100.00
Limited Liability
shares
Ordinary shares,
B shares, C shares, D
shares, F shares,
G shares
Vodafone Jersey Yen Holdings
Unlimited
100.00
Limited liability
shares
Kenya
6th Floor, ABC Towers, ABC Place, Waiyaki Way, Nairobi,
00100, Kenya
Portomaso Business Tower, Level 15B, St Julians, STJ 4011,
Malta
Vodafone Holdings Limited
Vodafone Insurance Limited
Mauritius
100.00
‘A’ ordinary shares,
‘B’ ordinary shares
100.00
‘A’ ordinary shares,
‘B’ ordinary shares
10th Floor, Standard Chartered Towers, 19 Cybercity, Ebene,
Mauritius
Mobile Wallet VM15
Mobile Wallet VM25
60.50
Ordinary shares
60.50
Ordinary shares
VBA (Mauritius) Limited5
60.50
Ordinary shares,
Redeemable
preference shares
Ordinary shares,
Non-cumulative
preference shares
M-PESA Holding Co. Limited
100.00
Equity shares
Vodacom International Limited5
60.50
Vodafone Ireland Marketing Limited
100.00
Ordinary shares
Vodafone Kenya Limited5
65.43
Ordinary voting
shares
Vodafone Ireland Retail Limited
100.00
Ordinary shares
Italy
Piazzale Luigi Cadorna, 4, 20123, Milano, Italy
The Riverfront, 4th floor, Prof. David Wasawo Drive, Off Riverside
Drive, Nairobi, Kenya
Vodacom Business (Kenya) Limited5
48.40
Ordinary shares,
Ordinary B shares
Vodafone Global Enterprise (Italy)
S.R.L.
100.00
Ordinary shares
Korea, Republic of
SS 33 del Sempione KM 35, 212, 21052 Busto Arsizio (VA), Italy
Vodafone Automotive Italia S.p.A
100.00
Ordinary shares
ASEM Tower Level 37, 517 Yeongdong-daero, Gangnam-gu,
Seoul, 135-798, Korea, Republic of
Fifth Floor, Ebene Esplanade, 24 Cybercity, Ebene, Mauritius
Al-Amin Investments Limited
100.00
Ordinary shares
Array Holdings Limited
100.00
Ordinary shares
Asian Telecommunication
Investments (Mauritius) Limited
100.00
Ordinary shares
CCII (Mauritius), Inc.
100.00
Ordinary shares
CGP India Investments Ltd.
100.00
Ordinary shares
Vodafone Enterprise Korea Limited
100.00
Ordinary shares
Euro Pacific Securities Ltd.
100.00
Ordinary shares
Via Astico 41, 21100 Varese, Italy
Vodafone Automotive Electronic
Systems S.r.L
100.00
Ordinary shares
Lesotho
Vodafone Automotive SpA
100.00
Ordinary shares
Vodafone Automotive Telematics Srl
100.00
Ordinary shares
Via Jervis 13, 10015, Ivrea, Tourin, Italy
VEI S.r.l.
100.00 Partnership interest
shares
Vodafone Italia S.p.A.
100.00
Ordinary shares
Via Lorenteggio 240, 20147, Milan, Italy
585 Mabile Road, Vodacom Park, Maseru, Lesotho
Vodacom Lesotho (Pty) Limited5
48.40
Ordinary shares
Luxembourg
15 rue Edward Steichen, Luxembourg, 2540, Luxembourg
Tomorrow Street GP S.à r.l.
100.00
Ordinary shares
Vodafone Asset Management
Services S.à r.l.
100.00
Ordinary shares
Mobilvest
Prime Metals Ltd.
Trans Crystal Ltd.
100.00
Ordinary shares
100.00
Ordinary shares
100.00
Ordinary shares
Vodafone Mauritius Ltd.
100.00
Ordinary shares
Vodafone Tele-Services (India)
Holdings Limited
Vodafone Telecommunications
(India) Limited
100.00
Ordinary shares
100.00
Ordinary shares
202 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
31. Related undertakings (continued)
Mexico
Avenida Insurgentes Sur No. 1647, Piso 12, despacho 1202,
Colonia San José Insurgentes, Alcaldía Benito Juárez, C.P.
03900, Ciudad de México, Mexico
Vodafone Empresa México S.de R.L.
de C.V.
100.00 Corporate certificate
series A shares,
Corporate certificate
series B shares
Mozambique
Rua dos Desportistas, Numero 649, Cidade de Maputo,
Mozambique
VM, SA5
51.42
Ordinary shares
Vodafone M-Pesa, S.A5
51.42
Ordinary shares
Netherlands
Rivium Quadrant 173, 15th Floor, 2909 LC, Capelle aan den
IJssel, Netherlands
Vodafone Enterprise Netherlands B.V.
100.00
Ordinary shares
Vodafone Europe B.V.
100.00
Ordinary shares
Vodafone International Holdings B.V.
100.00
Ordinary shares
Oni Way - Infocomunicacoes, S.A
100.00
Ordinary shares
Prievozská 6, Bratislava, 821 09, Slovakia
Vodafone Portugal - Comunicacoes
Pessoais, S.A.
Vodafone Enterprise Spain, S.L.U. -
Portugal Branch2
100.00
Ordinary shares
Vodafone Czech Republic A.S. –
Slovakia Branch2
100.00
Branch
100.00
Branch
Suché mýto 1, Bratislava, 811 03, Slovakia
Vodafone Towers Portugal, S.A.4
81.05
Ordinary shares
Vodafone Global Network Limited –
Slovakia Branch2
100.00
Branch
Romania
South Africa
1 A Constantin Ghercu Street, Floors 8 – 10, 6th District,
Bucharest, Romania
UPC Services S.R.L.
100.00
Ordinary shares
201 Barbu Vacarescu, 5th Floor, 2nd District,
Bucharest, Romania
Vodafone External Services S.R.L.
100.00 Ordinary shares
319 Frere Road, Glenwood, 4001, South Africa
Cable and Wireless Worldwide South
Africa (Pty) Ltd
100.00
Ordinary shares
9 Kinross Street, Germiston South, 1401, South Africa
Vodafone Holdings (SA) Proprietary
Limited
100.00
Ordinary shares
201 Barbu Vacarescu, 8th Floor, 2nd District,
Bucharest, Romania
Vodafone Investments (SA)
Proprietary Limited
100.00 Ordinary A shares,
“B” ordinary no par
value shares
Vodafone Romania S.A
100.00
Ordinary shares
201 Barbu Vacarescu Street, Mezzanine, District 2, Bucharest,
Romania
Vodafone Foundation
100.00
Sole member
IoT.nxt USA BV5
IOT.NXT BV.5
IoT.nxt Europe BV5
New Zealand
Vodafone Panafon International
Holdings B.V.
99.87
Ordinary shares
201 Barbu Vacarescu Street, Mezzanine, Room 1, District 2,
Bucharest, Romania
Rivium Quadrant 175, 6th Floor, 2909 LC, Capelle aan den IJssel,
Netherlands
Central Tower Holding Company B.V. 4
81.05
Ordinary shares
and special
shares
Zuid-hollanden 7, Rode Olifant, Spaces, 2596AL, den Haag,
Netherlands
30.87 Ordinary shares
30.87 Ordinary shares
Vantage Towers S.R.L.4
81.05
Ordinary shares
62D Nordului Street, District 1, Bucharest, Romania
UPC Foundation
100.00
Sole member
Sectorul 2, Strada Barbu Văcărescu, Nr. 201, Etaj 1, Bucureşti,
Romania
Vodafone România M - Payments
SRL
100.00
Ordinary shares
Sectorul 2, Strada Barbu Văcărescu, Nr. 201, Etaj 3, Bucureşti,
Romania
30.87 Ordinary shares
Vodafone România Technologies SRL
99.55
Ordinary shares
Sectorul 4, Strada Oltenitei, Nr. 2, Etaj 3, Bucureşti, Romania
Vodafone Shared Services Romania
SRL
90.48
Ordinary shares
74 Taharoto Road, Takapuna, Auckland, 0622, New Zealand
Vodafone Enterprise Hong Kong
Limited - New Zealand Branch2
100.00
Branch
Șoseaua Vestului no. 1A, West Mall Ploiești, First Floor, Ploiești,
Romania
Norway
Evotracking SRL
100.00
Ordinary shares
c/o EconPartner AS, Dronning Mauds gate 15, Oslo, 0250,
Norway
Vodafone Enterprise Norway AS
100.00
Ordinary shares
Russian Federation
Build. 2, 14/10, Chayanova str., 125047, Moscow, Russian
Federation
Vodafone House, The Connection, Newbury, Berkshire, RG14
2FN, United Kingdom
Cable & Wireless CIS Svyaz LLC
100.00
Charter capital
shares
Vodafone Limited – Norway Branch2
100.00
Branch
Serbia
Oman
Vladimira Popovića 38-40, New Belgrade, 11070, Serbia
Knowledge Oasis Muscat, Al-seeb, Muscat, Governorate P.O Box
104 135, Oman
Vodafone Services LLC
100.00
Shares
Vodafone Enterprise Equipment
Limited Ogranak u Beogradu - Serbia
Branch2
100.00
Branch
Poland
Singapore
Ul. Złota 59, 00-120, Warszawa, Poland
Vodafone Business Poland sp. z o.o.
100.00
Ordinary shares
Portugal
Asia Square Tower 2, 12 Marina View, #17-01, Singapore,
018961, Singapore
Vodafone Enterprise Singapore
Pte.Ltd
100.00
Ordinary shares
Av. D. João II, nº 36 – 8º Piso, 1998 – 017, Parque das Nações,
Lisboa, Portugal
Slovakia
Bylsbridge Office Park, Building 14m Block C, 1st Floor,
Alexandra Road, Centurion, Highveld Ext 73, 0046, South Africa
10T Holdings (Proprietary) Limited5
30.87
Ordinary shares
IoT.nxt (Pty) Limited5
30.87
Ordinary shares
IOT.nxt Development (Pty) Limited5
30.87
Ordinary shares
Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand,
1685, South Africa
GS Telecom (Pty) Limited5
60.50
Ordinary shares
Jupicol (Proprietary) Limited5
42.35
Ordinary shares
Mezzanine Ware Proprietary Limited
(RF)5
54.45
Ordinary shares
Motifprops 1 (Proprietary) Limited5
60.50
Ordinary shares
Scarlet Ibis Investments 23 (Pty)
Limited5
Storage Technology Services (Pty)
Limited5
Vodacom (Pty) Limited5
Vodacom Business Africa Group (Pty)
Limited5
Vodacom Financial Services
(Proprietary) Limited5
60.50
Ordinary shares
30.85
Ordinary shares
60.50
Ordinary shares,
Ordinary A shares
60.50
Ordinary shares
60.50
Ordinary shares
Vodacom Group Limited
60.50
Ordinary shares
Vodacom Insurance Administration
Company (Proprietary) Limited5
Vodacom Insurance Company (RF)
Limited5
Vodacom International Holdings (Pty)
Limited5
Vodacom Life Assurance Company
(RF) Limited5
Vodacom Payment Services
(Proprietary) Limited5
Vodacom Properties No 1
(Proprietary) Limited5
Vodacom Properties No.2 (Pty)
Limited5
Wheatfields Investments 276
(Proprietary) Limited5
60.50
Ordinary shares
60.50
Ordinary shares
60.50
Ordinary shares
60.50
Ordinary shares
60.50
Ordinary shares
60.50
Ordinary shares
60.50
Ordinary shares
60.50
Ordinary shares
XLink Communications (Proprietary)
Limited5
60.50 Ordinary A Shares
202 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
203 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Oni Way - Infocomunicacoes, S.A
Oni Way - Infocomunicacoes, S.A
100.00
100.00
Ordinary shares
Ordinary shares
Prievozská 6, Bratislava, 821 09, Slovakia
Prievozská 6, Bratislava, 821 09, Slovakia
Vodafone Portugal - Comunicacoes
Vodafone Portugal - Comunicacoes
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Czech Republic A.S. –
Vodafone Czech Republic A.S. –
100.00
100.00
Branch
Branch
Vodafone Automotive Iberia S.L.
100.00
Ordinary shares
Vodafone Teknoloji Hizmetleri A.S.
100.00 Registered shares
Spain
Vodafone Telekomunikasyon A.S.
100.00 Registered shares
Vodafone Enabler España, S.L.
100.00
Ordinary shares
Maslak Mah. AOS 55 Sk. 42 Maslak Sit. B Blok Apt. No: 4/663,
Sarıyer Istanbul, Turkey
Vodafone Enterprise Spain SLU
100.00
Ordinary shares,
Ordinary euro
shares
Vodafone Sigorta Aracilik Hismetleri A.S.
100.00 Ordinary shares
Vodafone Elektronik Para Ve Ödeme
Hizmetleri A.S.
100.00 Registered shares
Vodafone Espana S.A.U.
100.00
Ordinary shares
Vodafone Holdings Europe S.L.U.
100.00
Ordinary shares
Vodafone ONO, S.A.U.
100.00
Ordinary shares
Vodafone Servicios S.L.U.
100.00
Ordinary shares
Ukraine
LLC Vodafone Enterprise Ukraine
100.00
Ordinary shares
Vantage Towers, S.L.U. 4
81.05
Ordinary shares
United Arab Emirates
Sweden
Vodafone Enterprise Europe (UK)
Limited – Dubai Branch2
100.00
Branch
Vodafone Enterprise Sweden AB
100.00
Ordinary shares,
Shareholder’s
contribution shares
United Kingdom
Switzerland
Thus Group Holdings Limited
100.00
Ordinary shares
Cable & Wireless Aspac Holdings
Limited
Ordinary C shares,
Ordinary D shares
100.00
Ordinary shares
Cable & Wireless CIS Services Limited
100.00
Ordinary shares
Cable & Wireless Communications
Data Network Services Limited
100.00
‘A’ ordinary shares,
‘B’ ordinary shares
Cable & Wireless Europe Holdings
Limited
Cable & Wireless Global Business
Services Limited
Cable & Wireless Global Holding
Limited
100.00
Ordinary shares
100.00
Ordinary shares
100.00
Ordinary shares
Cable & Wireless Global
Telecommunication Services Limited
100.00
Ordinary shares
Cable & Wireless UK Holdings Limited
100.00
Ordinary shares
Cable & Wireless Worldwide Limited
100.00
Ordinary shares,
Redeemable
preference shares
Cable & Wireless Worldwide Voice
Messaging Limited
100.00
Ordinary shares
Cable and Wireless (India) Limited
100.00
Ordinary shares
Cable and Wireless Nominee Limited
100.00
Ordinary shares
Cellops Limited (in process of
dissolution)
100.00
Ordinary shares
Vantage Towers S.R.L.4
Vantage Towers S.R.L.4
81.05
81.05
Ordinary shares
Ordinary shares
Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand,
Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand,
Vodafone Enterprise Switzerland AG
100.00
Ordinary shares
Taiwan
Vodafone Global Enterprise Taiwan
Limited
100.00
Ordinary shares
Tanzania, United Republic of
Shared Networks Tanzania Limited5
45.37
Ordinary shares
Vodacom Tanzania Public Limited
Company5
45.37
Ordinary shares
Gateway Communications Tanzania
Limited (in liquidation)5
59.89
Ordinary shares
Plot No. 23, Ursino Estate, Bagamoyo Road, Dar es Salaam,
Tanzania, United Republic of
Thus Group Limited
100.00
Ordinary shares
Thus Profit Sharing Trustees Limited
100.00
Ordinary shares
Central Communications Group
Limited
100.00
Ordinary shares,
Ordinary A shares
Energis Communications Limited
100.00
Ordinary shares
Energis Squared Limited
100.00
Ordinary shares
Vodafone (NI) Limited
100.00
Ordinary shares
General Mobile Corporation Limited
100.00
Ordinary shares
Pinnacle Cellular Group Limited
100.00
Ordinary shares
Pinnacle Cellular Limited
100.00
Ordinary shares
Vodafone (Scotland) Limited
100.00
Ordinary shares
Woodend Group Limited (in process
of dissolution)
100.00
Ordinary shares
Energis (Ireland) Limited
100.00 A Ordinary shares, B
Ordinary shares, C
Ordinary shares, D
Ordinary
London Hydraulic Power Company
100.00 Ordinary shares, 5%
Non-Cumulative
preference shares
MetroHoldings Limited
100.00
Ordinary shares
ML Integration Group Limited
100.00
Ordinary shares,
Redeemable
preference shares
Navtrak Limited
100.00
Ordinary shares
Project Telecom Holdings Limited1
100.00
Ordinary shares
Rian Mobile Limited
100.00
Ordinary shares
Singlepoint (4U) Limited (in process of
dissolution)
100.00
Ordinary shares
Talkland International Limited
100.00
Ordinary shares
Talkmobile Limited
100.00
Ordinary shares
M-Pesa Limited5
45.37 Ordinary A shares,
Ordinary B shares
Vodacom Business Africa Group
Services Limited5
60.50
Ordinary shares,
Preference shares
Talkmobile U.K. Limited (in process of
dissolution)
100.00
Ordinary shares
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
31. Related undertakings (continued)
31. Related undertakings (continued)
Mexico
Mexico
de C.V.
de C.V.
Mozambique
Mozambique
Mozambique
Mozambique
VM, SA5
VM, SA5
Netherlands
Netherlands
IJssel, Netherlands
IJssel, Netherlands
Holdings B.V.
Holdings B.V.
Netherlands
Netherlands
Netherlands
Netherlands
IoT.nxt USA BV5
IoT.nxt USA BV5
IOT.NXT BV.5
IOT.NXT BV.5
IoT.nxt Europe BV5
IoT.nxt Europe BV5
New Zealand
New Zealand
Norway
Norway
Norway
Norway
Oman
Oman
104 135, Oman
104 135, Oman
Poland
Poland
Portugal
Portugal
Lisboa, Portugal
Lisboa, Portugal
Avenida Insurgentes Sur No. 1647, Piso 12, despacho 1202,
Avenida Insurgentes Sur No. 1647, Piso 12, despacho 1202,
Pessoais, S.A.
Pessoais, S.A.
Colonia San José Insurgentes, Alcaldía Benito Juárez, C.P.
Colonia San José Insurgentes, Alcaldía Benito Juárez, C.P.
03900, Ciudad de México, Mexico
03900, Ciudad de México, Mexico
Portugal Branch2
Portugal Branch2
Vodafone Empresa México S.de R.L.
Vodafone Empresa México S.de R.L.
100.00 Corporate certificate
100.00 Corporate certificate
series A shares,
series A shares,
Corporate certificate
Corporate certificate
series B shares
series B shares
Romania
Romania
Vodafone Enterprise Spain, S.L.U. -
Vodafone Enterprise Spain, S.L.U. -
100.00
100.00
Branch
Branch
Suché mýto 1, Bratislava, 811 03, Slovakia
Suché mýto 1, Bratislava, 811 03, Slovakia
Vodafone Towers Portugal, S.A.4
Vodafone Towers Portugal, S.A.4
81.05
81.05
Ordinary shares
Ordinary shares
Slovakia Branch2
Slovakia Branch2
Vodafone Global Network Limited –
Vodafone Global Network Limited –
100.00
100.00
Branch
Branch
Slovakia Branch2
Slovakia Branch2
South Africa
South Africa
Rua dos Desportistas, Numero 649, Cidade de Maputo,
Rua dos Desportistas, Numero 649, Cidade de Maputo,
1 A Constantin Ghercu Street, Floors 8 – 10, 6th District,
1 A Constantin Ghercu Street, Floors 8 – 10, 6th District,
319 Frere Road, Glenwood, 4001, South Africa
319 Frere Road, Glenwood, 4001, South Africa
Bucharest, Romania
Bucharest, Romania
UPC Services S.R.L.
UPC Services S.R.L.
100.00
100.00
Ordinary shares
Ordinary shares
Africa (Pty) Ltd
Africa (Pty) Ltd
Cable and Wireless Worldwide South
Cable and Wireless Worldwide South
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone M-Pesa, S.A5
Vodafone M-Pesa, S.A5
51.42
51.42
Ordinary shares
Ordinary shares
Vodafone External Services S.R.L.
Vodafone External Services S.R.L.
100.00 Ordinary shares
100.00 Ordinary shares
Limited
Limited
51.42
51.42
Ordinary shares
Ordinary shares
Bucharest, Romania
Bucharest, Romania
201 Barbu Vacarescu, 5th Floor, 2nd District,
201 Barbu Vacarescu, 5th Floor, 2nd District,
9 Kinross Street, Germiston South, 1401, South Africa
9 Kinross Street, Germiston South, 1401, South Africa
Vodafone Holdings (SA) Proprietary
Vodafone Holdings (SA) Proprietary
100.00
100.00
Ordinary shares
Ordinary shares
Rivium Quadrant 173, 15th Floor, 2909 LC, Capelle aan den
Rivium Quadrant 173, 15th Floor, 2909 LC, Capelle aan den
201 Barbu Vacarescu, 8th Floor, 2nd District,
201 Barbu Vacarescu, 8th Floor, 2nd District,
Bucharest, Romania
Bucharest, Romania
Vodafone Investments (SA)
Vodafone Investments (SA)
Proprietary Limited
Proprietary Limited
Vodafone Romania S.A
Vodafone Romania S.A
100.00
100.00
Ordinary shares
Ordinary shares
100.00 Ordinary A shares,
100.00 Ordinary A shares,
“B” ordinary no par
“B” ordinary no par
value shares
value shares
Vodafone Enterprise Netherlands B.V.
Vodafone Enterprise Netherlands B.V.
100.00
100.00
Ordinary shares
Ordinary shares
201 Barbu Vacarescu Street, Mezzanine, District 2, Bucharest,
201 Barbu Vacarescu Street, Mezzanine, District 2, Bucharest,
Vodafone Europe B.V.
Vodafone Europe B.V.
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone International Holdings B.V.
Vodafone International Holdings B.V.
100.00
100.00
Ordinary shares
Ordinary shares
Romania
Romania
Vodafone Panafon International
Vodafone Panafon International
99.87
99.87
Ordinary shares
Ordinary shares
Bucharest, Romania
Bucharest, Romania
Vodafone Foundation
Vodafone Foundation
100.00
100.00
Sole member
Sole member
201 Barbu Vacarescu Street, Mezzanine, Room 1, District 2,
201 Barbu Vacarescu Street, Mezzanine, Room 1, District 2,
Bylsbridge Office Park, Building 14m Block C, 1st Floor,
Bylsbridge Office Park, Building 14m Block C, 1st Floor,
Alexandra Road, Centurion, Highveld Ext 73, 0046, South Africa
Alexandra Road, Centurion, Highveld Ext 73, 0046, South Africa
10T Holdings (Proprietary) Limited5
10T Holdings (Proprietary) Limited5
30.87
30.87
Ordinary shares
Ordinary shares
IoT.nxt (Pty) Limited5
IoT.nxt (Pty) Limited5
30.87
30.87
Ordinary shares
Ordinary shares
IOT.nxt Development (Pty) Limited5
IOT.nxt Development (Pty) Limited5
30.87
30.87
Ordinary shares
Ordinary shares
Rivium Quadrant 175, 6th Floor, 2909 LC, Capelle aan den IJssel,
Rivium Quadrant 175, 6th Floor, 2909 LC, Capelle aan den IJssel,
1685, South Africa
1685, South Africa
62D Nordului Street, District 1, Bucharest, Romania
62D Nordului Street, District 1, Bucharest, Romania
Central Tower Holding Company B.V. 4
Central Tower Holding Company B.V. 4
81.05
81.05
Ordinary shares
Ordinary shares
UPC Foundation
UPC Foundation
100.00
100.00
Sole member
Sole member
and special
and special
shares
shares
Sectorul 2, Strada Barbu Văcărescu, Nr. 201, Etaj 1, Bucureşti,
Sectorul 2, Strada Barbu Văcărescu, Nr. 201, Etaj 1, Bucureşti,
Zuid-hollanden 7, Rode Olifant, Spaces, 2596AL, den Haag,
Zuid-hollanden 7, Rode Olifant, Spaces, 2596AL, den Haag,
Vodafone România M - Payments
Vodafone România M - Payments
100.00
100.00
Ordinary shares
Ordinary shares
Romania
Romania
SRL
SRL
30.87 Ordinary shares
30.87 Ordinary shares
30.87 Ordinary shares
30.87 Ordinary shares
Romania
Romania
Sectorul 2, Strada Barbu Văcărescu, Nr. 201, Etaj 3, Bucureşti,
Sectorul 2, Strada Barbu Văcărescu, Nr. 201, Etaj 3, Bucureşti,
GS Telecom (Pty) Limited5
GS Telecom (Pty) Limited5
60.50
60.50
Ordinary shares
Ordinary shares
Jupicol (Proprietary) Limited5
Jupicol (Proprietary) Limited5
42.35
42.35
Ordinary shares
Ordinary shares
Mezzanine Ware Proprietary Limited
Mezzanine Ware Proprietary Limited
54.45
54.45
Ordinary shares
Ordinary shares
Motifprops 1 (Proprietary) Limited5
Motifprops 1 (Proprietary) Limited5
60.50
60.50
Ordinary shares
Ordinary shares
Scarlet Ibis Investments 23 (Pty)
Scarlet Ibis Investments 23 (Pty)
60.50
60.50
Ordinary shares
Ordinary shares
30.87 Ordinary shares
30.87 Ordinary shares
Vodafone România Technologies SRL
Vodafone România Technologies SRL
99.55
99.55
Ordinary shares
Ordinary shares
Storage Technology Services (Pty)
Storage Technology Services (Pty)
30.85
30.85
Ordinary shares
Ordinary shares
Sectorul 4, Strada Oltenitei, Nr. 2, Etaj 3, Bucureşti, Romania
Sectorul 4, Strada Oltenitei, Nr. 2, Etaj 3, Bucureşti, Romania
Vodacom (Pty) Limited5
Vodacom (Pty) Limited5
Vodafone Shared Services Romania
Vodafone Shared Services Romania
90.48
90.48
Ordinary shares
Ordinary shares
60.50
60.50
Ordinary shares,
Ordinary shares,
Ordinary A shares
Ordinary A shares
74 Taharoto Road, Takapuna, Auckland, 0622, New Zealand
74 Taharoto Road, Takapuna, Auckland, 0622, New Zealand
SRL
SRL
Vodafone Enterprise Hong Kong
Vodafone Enterprise Hong Kong
Limited - New Zealand Branch2
Limited - New Zealand Branch2
100.00
100.00
Branch
Branch
Șoseaua Vestului no. 1A, West Mall Ploiești, First Floor, Ploiești,
Șoseaua Vestului no. 1A, West Mall Ploiești, First Floor, Ploiești,
Romania
Romania
Evotracking SRL
Evotracking SRL
100.00
100.00
Ordinary shares
Ordinary shares
c/o EconPartner AS, Dronning Mauds gate 15, Oslo, 0250,
c/o EconPartner AS, Dronning Mauds gate 15, Oslo, 0250,
Russian Federation
Russian Federation
Vodafone Enterprise Norway AS
Vodafone Enterprise Norway AS
100.00
100.00
Ordinary shares
Ordinary shares
Federation
Federation
Build. 2, 14/10, Chayanova str., 125047, Moscow, Russian
Build. 2, 14/10, Chayanova str., 125047, Moscow, Russian
Vodafone House, The Connection, Newbury, Berkshire, RG14
Vodafone House, The Connection, Newbury, Berkshire, RG14
Cable & Wireless CIS Svyaz LLC
Cable & Wireless CIS Svyaz LLC
100.00
100.00
Charter capital
Charter capital
Vodacom Business Africa Group (Pty)
Vodacom Business Africa Group (Pty)
60.50
60.50
Ordinary shares
Ordinary shares
Vodacom Financial Services
Vodacom Financial Services
(Proprietary) Limited5
(Proprietary) Limited5
60.50
60.50
Ordinary shares
Ordinary shares
Vodacom Group Limited
Vodacom Group Limited
60.50
60.50
Ordinary shares
Ordinary shares
Vodacom Insurance Administration
Vodacom Insurance Administration
60.50
60.50
Ordinary shares
Ordinary shares
Company (Proprietary) Limited5
Company (Proprietary) Limited5
Vodacom Insurance Company (RF)
Vodacom Insurance Company (RF)
60.50
60.50
Ordinary shares
Ordinary shares
(RF)5
(RF)5
Limited5
Limited5
Limited5
Limited5
Limited5
Limited5
Limited5
Limited5
Limited5
Limited5
2FN, United Kingdom
2FN, United Kingdom
Vodafone Limited – Norway Branch2
Vodafone Limited – Norway Branch2
100.00
100.00
Branch
Branch
Serbia
Serbia
Knowledge Oasis Muscat, Al-seeb, Muscat, Governorate P.O Box
Knowledge Oasis Muscat, Al-seeb, Muscat, Governorate P.O Box
100.00
100.00
Branch
Branch
Vladimira Popovića 38-40, New Belgrade, 11070, Serbia
Vladimira Popovića 38-40, New Belgrade, 11070, Serbia
Vodafone Enterprise Equipment
Vodafone Enterprise Equipment
Limited Ogranak u Beogradu - Serbia
Limited Ogranak u Beogradu - Serbia
Branch2
Branch2
Vodafone Services LLC
Vodafone Services LLC
100.00
100.00
Shares
Shares
Ul. Złota 59, 00-120, Warszawa, Poland
Ul. Złota 59, 00-120, Warszawa, Poland
Asia Square Tower 2, 12 Marina View, #17-01, Singapore,
Asia Square Tower 2, 12 Marina View, #17-01, Singapore,
Limited5
Limited5
Vodafone Business Poland sp. z o.o.
Vodafone Business Poland sp. z o.o.
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Enterprise Singapore
Vodafone Enterprise Singapore
100.00
100.00
Ordinary shares
Ordinary shares
(RF) Limited5
(RF) Limited5
Vodacom Payment Services
Vodacom Payment Services
(Proprietary) Limited5
(Proprietary) Limited5
Vodacom Properties No 1
Vodacom Properties No 1
(Proprietary) Limited5
(Proprietary) Limited5
60.50
60.50
Ordinary shares
Ordinary shares
60.50
60.50
Ordinary shares
Ordinary shares
Vodacom Properties No.2 (Pty)
Vodacom Properties No.2 (Pty)
60.50
60.50
Ordinary shares
Ordinary shares
Wheatfields Investments 276
Wheatfields Investments 276
(Proprietary) Limited5
(Proprietary) Limited5
60.50
60.50
Ordinary shares
Ordinary shares
XLink Communications (Proprietary)
XLink Communications (Proprietary)
60.50 Ordinary A Shares
60.50 Ordinary A Shares
Limited5
Limited5
Singapore
Singapore
018961, Singapore
018961, Singapore
Pte.Ltd
Pte.Ltd
Slovakia
Slovakia
Av. D. João II, nº 36 – 8º Piso, 1998 – 017, Parque das Nações,
Av. D. João II, nº 36 – 8º Piso, 1998 – 017, Parque das Nações,
shares
shares
Vodacom International Holdings (Pty)
Vodacom International Holdings (Pty)
60.50
60.50
Ordinary shares
Ordinary shares
Vodacom Tanzania Limited Zanzibar5
45.37 Ordinary shares
Vodacom UK Limited5
60.50
Vodacom Life Assurance Company
Vodacom Life Assurance Company
60.50
60.50
Ordinary shares
Ordinary shares
Turkey
Ordinary shares,
Non-redeemable
ordinary A shares,
Ordinary B shares,
Non-redeemable
preference shares
Vodafone Bilgi Ve Iletisim Hizmetleri
AS
Vodafone Dagitim, Servis ve Icerik
Hizmetleri A.S.
Vodafone Dijital Yayincilik Hizmetleri
A.S.
100.00 Registered shares
100.00
Ordinary shares
100.00
Ordinary shares
Vodafone Holding A.S.
100.00 Registered shares
Vodafone Kule ve Altyapi Hizmetleri
A.S.
100.00
Ordinary shares
Vodafone Medya Icerik Hizmetleri A.S.
100.00
Ordinary shares
Vodafone Net İletişim Hizmetleri A.S.
100.00
Ordinary shares
AAA (Euro) Limited (in process of
dissolution)
Apollo Submarine Cable System
Limited
Aspective Limited (in process of
dissolution)
Astec Communications Limited (in
process of dissolution)
Bluefish Communications Limited
100.00
Ordinary shares
Vodafone (New Zealand) Hedging
Limited
100.00
Ordinary shares
Vodafone 2.
100.00
Ordinary shares
Vodafone 4 UK
100.00
Ordinary shares
100.00
Ordinary shares
100.00
Ordinary shares,
Zero coupon
redeemable
preference shares
100.00
Ordinary shares
100.00
Ordinary shares
100.00
Ordinary shares
Vodafone 5 Limited
100.00
Ordinary shares
100.00
Ordinary shares
100.00 Ordinary A shares,
Ordinary B shares,
Vodafone 5 UK
Vodafone 6 UK
100.00
Ordinary shares
100.00
Ordinary shares
Vodafone Americas 4
100.00
Ordinary shares
The Eastern Leasing Company
Limited
100.00
Ordinary shares
Thus Limited
Vizzavi Limited
Voda Limited
204 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
31. Related undertakings (continued)
Vodafone Automotive UK Limited
100.00
Ordinary shares
Limited1
Vodafone Panafon UK
99.87
Ordinary shares
Vodafone Benelux Limited
100.00
Ordinary shares,
Preference shares
Vodafone Group Pension Trustee
Limited1
100.00
Ordinary shares
Vodafone Partner Services Limited
100.00
Ordinary shares,
Redeemable
preference shares
Vodafone Business Solutions Limited
(in process of dissolution)
100.00
Ordinary shares
Vodafone Group Services Limited
100.00
Ordinary shares,
Deferred shares
Vodafone Cellular Limited1
100.00
Ordinary shares
Vodafone Connect Limited (in
process of dissolution)
Vodafone Consolidated Holdings
Limited
100.00
Ordinary shares
100.00
Ordinary shares
Vodafone Corporate Limited
100.00
Ordinary shares
Vodafone Group Services No.2
Limited1
Vodafone Group Share Trustee
Limited1
Vodafone Hire Limited (in process of
dissolution)
100.00
Ordinary shares
Vodafone Property Investments
Limited
100.00
Ordinary shares
Vodafone Retail (Holdings) Limited
100.00
Ordinary shares
100.00
Ordinary shares
Vodafone Retail Limited (in process of
dissolution)
100.00
Ordinary shares
100.00
Ordinary shares
Vodafone Sales & Services Limited
100.00
Ordinary shares
Vodafone Corporate Secretaries
Limited1
Vodafone DC Pension Trustee
Company Limited1
Vodafone Distribution Holdings
Limited
Vodafone Enterprise Corporate
Secretaries Limited
Vodafone Enterprise Equipment
Limited
Vodafone Enterprise Europe (UK)
Limited
100.00
Ordinary shares
Vodafone Holdings Luxembourg
Limited
100.00
Ordinary shares
Vodafone UK Foundation
100.00
Sole member
Vodafone UK Limited1
100.00
Ordinary shares
100.00
Ordinary shares
100.00
Ordinary shares
Vodafone Intermediate Enterprises
Limited
Vodafone International 2 Limited –
UK Branch2
100.00
Ordinary shares
Vodafone International Holdings
Limited
100.00
Ordinary shares
Vodafone Ventures Limited1
100.00
Ordinary shares
100.00
Branch
Vodafone Worldwide Holdings
Limited
100.00
Ordinary shares;
Cumulative
preference
100.00
Ordinary shares
Vodafone Yen Finance Limited
100.00
Ordinary shares
100.00
Ordinary shares
Vodafone International Operations
Limited
100.00
Ordinary shares
100.00
Ordinary shares
Vodafone Investment UK
100.00
Ordinary shares
Vodafone-Central Limited
100.00
Ordinary shares
Vodaphone Limited
100.00
Ordinary shares
Vodata Limited
100.00
Ordinary shares
Vodafone Enterprise U.K.
100.00
Ordinary shares
Vodafone Euro Hedging Limited
100.00
Ordinary shares
Vodafone Euro Hedging Two
100.00
Ordinary shares
Vodafone Europe UK
100.00
Ordinary shares
Vodafone European Investments1
100.00
Ordinary shares
Vodafone European Portal Limited1
100.00
Ordinary shares
Vodafone Finance Limited 1
100.00
Ordinary shares
Vodafone Finance Luxembourg
Limited
Vodafone Finance Sweden
100.00
Ordinary shares
100.00
Ordinary shares,
Ordinary deferred
Vodafone Investments Australia
Limited
100.00
Ordinary shares
Your Communications Group Limited
100.00 B ordinary shares,
Redeemable
preference shares
Vodafone Investments Limited1
100.00
Ordinary shares,
Zero coupon
redeemable
preference shares
United States
145 West 45th St., 8th Floor, New York NY 10036, United States
Vodafone IP Licensing Limited1
100.00
Ordinary shares
Vodafone Limited
100.00
Ordinary shares
Vodafone Marketing UK
100.00
Ordinary shares
Cable & Wireless Americas Systems,
Inc.
100.00
Vodafone Americas Virginia Inc.
100.00
100.00
Ordinary shares
Vodafone US Inc.
100.00
Vodafone Mobile Communications
Limited
Vodafone Mobile Enterprises Limited
Common stock
shares
Common stock
shares
Common stock
shares
100.00 A-ordinary shares,
Ordinary one pound
shares
100.00 A-ordinary shares,
Ordinary one pound
shares
1209 Orange, Orange Street, Wilmington, New Castle DE 19801,
United States
IoT nxt USA Inc5
30.87
Common stock
2711 Centerville Road, Suite 400, Wilmington, Delaware 19808,
United States
Unitymedia Finance LLC
100.00
Sole member
1615 Platte Street, Suite 02-115, Denver CO 80202, United States
Vodafone Americas Foundation
100.00
Trustee
Vodafone Finance UK Limited
100.00
Ordinary shares
Vodafone Mobile Network Limited
Vodafone Financial Operations
100.00
Ordinary shares
Vodafone Global Content Services
Limited
100.00 Ordinary shares, 5%
fixed rate non-voting
preference shares
Vodafone Nominees Limited1
100.00
Ordinary shares
Vodafone Oceania Limited
100.00
Ordinary shares
Vodafone Global Enterprise Limited
100.00
Ordinary shares,
Deferred shares, B
deferred shares
Vodafone Old Show Ground Site
Management Limited
100.00
Ordinary shares
Vodafone Overseas Finance Limited
100.00
Ordinary shares
Vodafone Group (Directors) Trustee
100.00
Ordinary shares
Vodafone Overseas Holdings Limited
100.00
Ordinary shares
204 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
205 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Associated undertakings and
joint arrangements
Australia
Level 1, 177 Pacific Highway, North Sydney NSW 2060,
Australia
AAPT Limited
25.05
Ordinary shares
ACN 088 889 230 Pty Ltd
25.05
Ordinary shares
Netspace Online Systems Pty Ltd
25.05
Ordinary shares
Bermuda
Numillar IPS Pty Ltd
25.05
Ordinary shares
Orchid Human Resources Pty Ltd
25.05
Ordinary shares
PIPE International (Australia) Pty Ltd
25.05
Ordinary shares
PIPE Networks Pty Limited
25.05
Ordinary shares
Clarendon House, 2 Church St, Hamilton, HM11, Bermuda
PPC 1 Limited
25.05
Ordinary shares
Czech Republic
PIPE Transmission Pty Limited
25.05
Ordinary shares
U Rajské zahrady 1912/3, Praha 3, 130 00, Czech Republic
PowerTel Limited
25.05
Ordinary shares
COOP Mobil s.r.o.
33.33
Ordinary shares
ACN 139 798 404 Pty Ltd
25.05
Ordinary shares
Request Broadband Pty Ltd
25.05
Ordinary shares
Egypt
Adam Internet Holdings Pty Ltd
25.05
Ordinary shares
Adam Internet Pty Ltd
Agile Pty Ltd
Alchemyit Pty Ltd
Blue Call Pty Ltd
25.05 A shares, B shares,
Ordinary shares
25.05
Ordinary shares
25.05
Ordinary shares
25.05
Ordinary shares
Cable Licence Holdings Pty Ltd
25.05 A shares, B shares
Chariot Pty Ltd
25.05
Ordinary shares
Chime Communications Pty Ltd
25.05
Ordinary shares
Connect Internet Solutions Pty
Limited
Connect West Pty Ltd
25.05
Ordinary shares
25.05
No 1 Ordinary
shares
Destra Communications Pty Ltd
25.05
Ordinary shares
Digiplus Contracts Pty Ltd
25.05
Ordinary shares
Digiplus Holdings Pty Ltd
25.05
Ordinary shares
Digiplus Investments Pty Ltd
25.05
Ordinary shares
Digiplus Pty Ltd
25.05
Ordinary shares
FTTB Wholesale Pty Ltd
25.05
Ordinary shares
H3GA Properties (No.3) Pty Limited
25.05
Ordinary shares
Soul Communications Pty Ltd
25.05
Ordinary shares
Soul Contracts Pty Ltd
25.05
Ordinary shares
23 Kasr El Nil St, Cairo, Egypt, 11211, Egypt
Wataneya Telecommunications S.A.E
50.00
Ordinary shares
Soul Pattinson Telecommunications
Pty Ltd
25.05
Ordinary shares
Germany
SPT Telecommunications Pty Ltd
25.05
Ordinary shares
38 Berliner Allee, 40212, Düsseldorf, Germany
SPTCom Pty Ltd
Telecom Enterprises Australia Pty
Limited
Telecom New Zealand Australia Pty
Ltd
25.05
Ordinary shares
25.05
Ordinary shares
MNP Deutschland Gesellschaft
bürgerlichen Rechts
33.33
Partnership
share
Nobelstrasse 55, 18059, Rostock, Germany
25.05
Ordinary shares,
Redeemable
preference shares
Verwaltung “Urbana Teleunion”
Rostock GmbH3
38.38
Ordinary shares
TPG Corporation Limited
25.05
Ordinary shares
Greece
TPG Energy Pty Ltd
TPG Holdings Pty Ltd
TPG Internet Pty Ltd
25.05
Ordinary shares
25.05
Ordinary shares
25.05
Ordinary shares
TPG JV Company Pty Ltd
25.05
Ordinary shares
43-45 Valtetsiou Str., Athens, Greece
Safenet N.P,A.
24.97
Ordinary shares
56 Kifisias Avenue & Delfwn, Marousi, 151 25
Tilegnous IKE
33.29
Ordinary shares
TPG Network Pty Ltd
25.05
Ordinary shares
TPG Telecom Limited
25.05
Ordinary shares
Marathonos Ave 18 km & Pylou, Pallini, Attica, Pallini, Attica,
15351, Greece
TransACT Broadcasting Pty Ltd
25.05
Ordinary shares
Victus Networks S.A.
49.94
Ordinary shares
TransACT Capital Communications
Pty Ltd
25.05
Ordinary shares
India
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
31. Related undertakings (continued)
31. Related undertakings (continued)
Vodafone Automotive UK Limited
Vodafone Automotive UK Limited
100.00
100.00
Ordinary shares
Ordinary shares
Limited1
Limited1
Vodafone Panafon UK
Vodafone Panafon UK
99.87
99.87
Ordinary shares
Ordinary shares
Vodafone Benelux Limited
Vodafone Benelux Limited
100.00
100.00
Ordinary shares,
Ordinary shares,
Vodafone Group Pension Trustee
Vodafone Group Pension Trustee
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Partner Services Limited
Vodafone Partner Services Limited
100.00
100.00
Ordinary shares,
Ordinary shares,
Preference shares
Preference shares
Limited1
Limited1
Redeemable
Redeemable
preference shares
preference shares
Vodafone Business Solutions Limited
Vodafone Business Solutions Limited
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Group Services Limited
Vodafone Group Services Limited
100.00
100.00
(in process of dissolution)
(in process of dissolution)
Vodafone Property Investments
Vodafone Property Investments
100.00
100.00
Ordinary shares
Ordinary shares
Ordinary shares,
Ordinary shares,
Deferred shares
Deferred shares
Limited
Limited
Vodafone Cellular Limited1
Vodafone Cellular Limited1
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Group Services No.2
Vodafone Group Services No.2
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Retail (Holdings) Limited
Vodafone Retail (Holdings) Limited
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Connect Limited (in
Vodafone Connect Limited (in
process of dissolution)
process of dissolution)
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Consolidated Holdings
Vodafone Consolidated Holdings
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Group Share Trustee
Vodafone Group Share Trustee
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Retail Limited (in process of
Vodafone Retail Limited (in process of
100.00
100.00
Ordinary shares
Ordinary shares
dissolution)
dissolution)
Vodafone Hire Limited (in process of
Vodafone Hire Limited (in process of
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Sales & Services Limited
Vodafone Sales & Services Limited
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Corporate Limited
Vodafone Corporate Limited
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Corporate Secretaries
Vodafone Corporate Secretaries
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Holdings Luxembourg
Vodafone Holdings Luxembourg
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone UK Foundation
Vodafone UK Foundation
100.00
100.00
Sole member
Sole member
Vodafone UK Limited1
Vodafone UK Limited1
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone DC Pension Trustee
Vodafone DC Pension Trustee
100.00
100.00
Ordinary shares
Ordinary shares
Company Limited1
Company Limited1
Vodafone Distribution Holdings
Vodafone Distribution Holdings
100.00
100.00
Ordinary shares
Ordinary shares
UK Branch2
UK Branch2
Vodafone Intermediate Enterprises
Vodafone Intermediate Enterprises
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Ventures Limited1
Vodafone Ventures Limited1
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone International 2 Limited –
Vodafone International 2 Limited –
100.00
100.00
Branch
Branch
Limited
Limited
Vodafone Worldwide Holdings
Vodafone Worldwide Holdings
100.00
100.00
Ordinary shares;
Ordinary shares;
Cumulative
Cumulative
preference
preference
Vodafone International Holdings
Vodafone International Holdings
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Yen Finance Limited
Vodafone Yen Finance Limited
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Enterprise Corporate
Vodafone Enterprise Corporate
100.00
100.00
Ordinary shares
Ordinary shares
Secretaries Limited
Secretaries Limited
Vodafone Enterprise Equipment
Vodafone Enterprise Equipment
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone International Operations
Vodafone International Operations
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Enterprise Europe (UK)
Vodafone Enterprise Europe (UK)
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Investment UK
Vodafone Investment UK
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Investments Australia
Vodafone Investments Australia
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone-Central Limited
Vodafone-Central Limited
100.00
100.00
Ordinary shares
Ordinary shares
Vodaphone Limited
Vodaphone Limited
100.00
100.00
Ordinary shares
Ordinary shares
Vodata Limited
Vodata Limited
100.00
100.00
Ordinary shares
Ordinary shares
Your Communications Group Limited
Your Communications Group Limited
100.00 B ordinary shares,
100.00 B ordinary shares,
Redeemable
Redeemable
preference shares
preference shares
Limited1
Limited1
Limited1
Limited1
dissolution)
dissolution)
Limited
Limited
Limited
Limited
Limited
Limited
Limited
Limited
Limited
Limited
Limited
Limited
Limited1
Limited1
Limited
Limited
Limited
Limited
Limited
Limited
Vodafone Enterprise U.K.
Vodafone Enterprise U.K.
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Euro Hedging Limited
Vodafone Euro Hedging Limited
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Euro Hedging Two
Vodafone Euro Hedging Two
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Europe UK
Vodafone Europe UK
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Investments Limited1
Vodafone Investments Limited1
100.00
100.00
Ordinary shares,
Ordinary shares,
Zero coupon
Zero coupon
redeemable
redeemable
preference shares
preference shares
United States
United States
145 West 45th St., 8th Floor, New York NY 10036, United States
145 West 45th St., 8th Floor, New York NY 10036, United States
Vodafone European Investments1
Vodafone European Investments1
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Limited
Vodafone Limited
100.00
100.00
Ordinary shares
Ordinary shares
Inc.
Inc.
Vodafone European Portal Limited1
Vodafone European Portal Limited1
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Americas Virginia Inc.
Vodafone Americas Virginia Inc.
100.00
100.00
Common stock
Common stock
Vodafone IP Licensing Limited1
Vodafone IP Licensing Limited1
100.00
100.00
Ordinary shares
Ordinary shares
Cable & Wireless Americas Systems,
Cable & Wireless Americas Systems,
100.00
100.00
Common stock
Common stock
Vodafone Marketing UK
Vodafone Marketing UK
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Mobile Communications
Vodafone Mobile Communications
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Finance Limited 1
Vodafone Finance Limited 1
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Finance Luxembourg
Vodafone Finance Luxembourg
100.00
100.00
Ordinary shares
Ordinary shares
Limited
Limited
Limited
Limited
Vodafone Finance Sweden
Vodafone Finance Sweden
100.00
100.00
Ordinary shares,
Ordinary shares,
Ordinary deferred
Ordinary deferred
Ordinary one pound
Ordinary one pound
shares
shares
United States
United States
Vodafone Mobile Enterprises Limited
Vodafone Mobile Enterprises Limited
100.00 A-ordinary shares,
100.00 A-ordinary shares,
1209 Orange, Orange Street, Wilmington, New Castle DE 19801,
1209 Orange, Orange Street, Wilmington, New Castle DE 19801,
Vodafone Finance UK Limited
Vodafone Finance UK Limited
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Mobile Network Limited
Vodafone Mobile Network Limited
100.00 A-ordinary shares,
100.00 A-ordinary shares,
Vodafone Financial Operations
Vodafone Financial Operations
100.00
100.00
Ordinary shares
Ordinary shares
IoT nxt USA Inc5
IoT nxt USA Inc5
30.87
30.87
Common stock
Common stock
Ordinary one pound
Ordinary one pound
shares
shares
United States
United States
2711 Centerville Road, Suite 400, Wilmington, Delaware 19808,
2711 Centerville Road, Suite 400, Wilmington, Delaware 19808,
Vodafone Global Content Services
Vodafone Global Content Services
100.00 Ordinary shares, 5%
100.00 Ordinary shares, 5%
Vodafone Nominees Limited1
Vodafone Nominees Limited1
100.00
100.00
Ordinary shares
Ordinary shares
Limited
Limited
fixed rate non-voting
fixed rate non-voting
preference shares
preference shares
Vodafone Oceania Limited
Vodafone Oceania Limited
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Global Enterprise Limited
Vodafone Global Enterprise Limited
100.00
100.00
Ordinary shares,
Ordinary shares,
Vodafone Old Show Ground Site
Vodafone Old Show Ground Site
100.00
100.00
Ordinary shares
Ordinary shares
Unitymedia Finance LLC
Unitymedia Finance LLC
100.00
100.00
Sole member
Sole member
1615 Platte Street, Suite 02-115, Denver CO 80202, United States
1615 Platte Street, Suite 02-115, Denver CO 80202, United States
Vodafone Americas Foundation
Vodafone Americas Foundation
100.00
100.00
Trustee
Trustee
Vodafone Group (Directors) Trustee
Vodafone Group (Directors) Trustee
100.00
100.00
Ordinary shares
Ordinary shares
Deferred shares, B
Deferred shares, B
deferred shares
deferred shares
Management Limited
Management Limited
Vodafone Overseas Finance Limited
Vodafone Overseas Finance Limited
100.00
100.00
Ordinary shares
Ordinary shares
Vodafone Overseas Holdings Limited
Vodafone Overseas Holdings Limited
100.00
100.00
Ordinary shares
Ordinary shares
shares
shares
shares
shares
shares
shares
Vodafone US Inc.
Vodafone US Inc.
100.00
100.00
Common stock
Common stock
Hosteddesktop.com Pty Ltd
25.05
Ordinary shares
TransACT Communications Pty Ltd
25.05
Ordinary shares
iHug Pty Ltd
25.05
No 1 Ordinary
shares
TransACT Victoria Communications
Pty Ltd
25.05
Ordinary shares
iiNet (Ozemail) Pty Ltd
25.05
Ordinary shares
TransACT Victoria Holdings Pty Ltd
25.05
Ordinary shares
iiNet Labs Pty Ltd
iiNet Limited
Internode Pty Ltd
25.05
Ordinary shares
Transflicks Pty Ltd
25.05
Ordinary shares
Trusted Cloud Pty Ltd
25.05
Ordinary shares
25.05
Ordinary shares
25.05 B shares, Ordinary
shares
Trusted Cloud Solutions Pty Ltd
25.05
Ordinary shares
Value Added Network Pty Ltd
25.05
Ordinary shares
Virtual Desktop Pty Ltd
25.05
Ordinary shares
Vodafone Australia Pty Limited
25.05
Ordinary shares,
Class B shares,
Redeemable
preference shares
10th Floor, Birla Centurion, Century Mills Compound,
Pandurang Budhkar Marg, Worli, Mumbai, Maharashtra,
400030, India
Vodafone Foundation7
Vodafone Idea Technology Solutions
Limited7
Vodafone Idea Communications
Systems Limited7
Vodafone Idea Shared Services
Limited7
Vodafone m-pesa Limited7
You Broadband India Limited7
43.72
44.39
Equity shares
Equity shares
44.39
Equity shares
44.39
Equity shares
44.39
44.39
Equity shares
Equity shares,
Ordinary shares
901 Park Centra, Sector – 30, NH – 8, Gurugram, Haryana,
122001, India
Indus Towers Limited
28.12
Ordinary shares
A-19, Mohan Co-operative Industrial Estate, Mathura Road,
New Delhi, New Delhi, Delhi, 110044, India
FireFly Networks Limited7
21.79
Equity shares
IntraPower Pty Limited
25.05
Ordinary shares
Intrapower Terrestrial Pty Ltd
25.05
Ordinary shares
IP Group Pty Ltd
25.05
Ordinary shares
IPN Services Xchange Pty Ltd
25.05 A shares, B shares
Jiva Pty Ltd
25.05
Ordinary shares
Kooee Comms Pty Ltd
25.05
Ordinary shares
Kooee Mobile Pty Ltd
25.05
Ordinary shares
Kooee Pty Ltd
Mercury Connect Pty Ltd
25.05 A shares, B shares
25.05 E shares, Ordinary
shares
Mobile JV Pty Limited
25.05
Ordinary shares
Vodafone Foundation Australia Pty
Limited
Vodafone Hutchison Finance Pty
Limited (in process of dissolution)
Vodafone Hutchison Receivables Pty
Limited
Vodafone Hutchison Spectrum Pty
Limited
25.05
Ordinary shares
50.00
Ordinary shares
25.05
Ordinary shares
Mobileworld Communications Pty
Limited
25.05
Ordinary shares
Vodafone Network Pty Limited
25.05
Ordinary shares
Vodafone Pty Limited
25.05
Ordinary shares
Aditya Birla Idea Payments Bank
Limited (in liquidation)7
21.75
Equity shares
Mobileworld Operating Pty Ltd
25.05
Ordinary shares
VtalkVoip Pty Ltd
Westnet Pty Ltd
25.05
Ordinary shares
25.05
Ordinary shares
25.05
Ordinary shares
A4, Aditya Birla Centre, S.K. Ahire Marg, Worli, Mumbai,
Maharashtra, 400059, India
206 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
31. Related undertakings (continued)
31. Related undertakings (continued)
Skyline Ikon, 1st Floor, 86/92, Andheri Kurla Road, Marol Naka,
Andheri East, Mumbai, Maharashtra, 400059, India
LGE HoldCo V B.V.
LGE HoldCo VI B.V.
Connect (India) Mobile Technologies
Private Limited7
44.39
Equity shares
LGE Holdco VII B.V.
Suman Tower Plot No. 18, Sector No. 11, Gandhinagar, 382011,
Gujarat, India
50.00
Ordinary shares
50.00
Ordinary shares
50.00
Ordinary shares
Portugal
Rua Actor António Silva, nº 9, Campo Grande, 1600-404,
Lisboa, Portugal
LGE HoldCo VIII B.V.
50.00
Ordinary shares
Vodafone Financial Services B.V.
50.00
Ordinary shares
Dualgrid – Gestão de Redes
Partilhadas, S.A.
50.00
Ordinary shares
Vodafone Idea Manpower Services
Limited7
43.86
Equity shares
Vodafone Nederland Holding I B.V.
50.00
Ordinary shares
Vodafone Nederland Holding II B.V.
50.00
Ordinary shares
Vodafone Idea Limited
44.39
Equity shares
VodafoneZiggo Employment B.V.
50.00
Ordinary shares
Rua Pedro e Inês, Lote 2.08.01, 1990-075,
Parque das Nações, Lisboa, Portugal
Sport TV Portugal, S.A.
25.00 Nominative shares
Vodafone House, Corporate Road, Prahladnagar, Off S. G.
Highway, Ahmedabad, Gujarat, 380051, India
44.39
Equity shares
Vodafone Idea Business Services
Limited7
Vodafone Idea Telecom Infrastructure
Limited7
Ireland
Two Gateway, East Wall Road, Dublin 3, Ireland
VodafoneZiggo Group B.V.
50.00
Ordinary shares
Romania
VodafoneZiggo Group Holding B.V.
50.00
Ordinary shares
VZ Financing I B.V.
50.00
Ordinary shares
Floor 3, Module 2, Connected Buildings III, Nr. 10A,
Dimitrie Pompei Boulevard, Bucharest, Sector 2, Romania
Netgrid Telecom SRL
50.00
Ordinary shares
VZ FinCo B.V.
VZ PropCo B.V.
XB Facilities B.V.
50.00
Ordinary shares
Russian Federation
50.00
Ordinary shares
Building 3, 11, Promyshlennaya Street, Moscow 115 516
50.00
Ordinary shares
Autoconnex Limited
35.00
Ordinary shares
44.39
Equity shares
VZ Financing II B.V.
50.00
Ordinary shares
50.00
Ordinary shares
Ziggo B.V.
50.00
Ordinary shares
Siro Limited
Italy
Via Gaetana Negri 1, 20123, Milano, Italy
Infrastrutture Wireless Italiane S.p.A4
26.89
Ordinary shares
Kenya
LR No. 13263, Safaricom House, Waiyaki Way, PO Box 66827-
00800, Nairobi, Kenya
Safaricom PLC6
26.13
Ordinary shares
Safaricom House, Waiyaki Way Westlands, Nairobi, Kenya,
0000, Kenya
M-PESA Africa Limited5
43.31 Ordinary shares
Luxembourg
15 rue Edward Steichen, Luxembourg, 2540, Luxembourg
Tomorrow Street SCA
Netherlands
50.00 Ordinary A shares,
Ordinary B shares,
Ordinary C shares
Ziggo Deelnemingen B.V.
50.00
Ordinary shares
Ziggo Finance 2 B.V.
Ziggo Netwerk II B.V.
50.00
Ordinary shares
50.00
Ordinary shares
Ziggo Real Estate B.V.
50.00
Ordinary shares
Ziggo Services B.V.
50.00
Ordinary shares
Ziggo Services Employment B.V.
50.00
Ordinary shares
Ziggo Services Netwerk 2 B.V.
50.00
Ordinary shares
Ziggo Zakelijk Services B.V.
50.00
Ordinary shares
ZUM B.V.
50.00
Ordinary shares
Media Parkboulevard 2, 1217 WE Hilversum, Netherlands
Liberty Global Content Netherlands
B.V.
50.00
Ordinary shares
South Africa
76 Maude Street, Sandton, Johannesberg, 2196, South Africa
Waterberg Lodge (Proprietary)
Limited5
30.25
Ordinary shares
Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand,
1685, South Africa
K2019102008 (South Africa)
(Proprietary) Limited5
43.31
Ordinary shares
Tanzania, United Republic of
Plot No. 23, Ursino Estate, Bagamoyo Road, Dar es Salaam,
Tanzania, United Republic of
Vodacom Trust Limited (in
liquidation)5
45.37 Ordinary A shares,
Ordinary B shares
Winschoterdiep 60, 9723 AB Groningen, Netherlands
United Kingdom
Zesko B.V.
50.00
Ordinary shares
Ziggo Bond Company B.V.
50.00
Ordinary shares
24/25 The Shard, 32 London Bridge Street, London, SE1 9SG,
United Kingdom
Ziggo Netwerk B.V.
50.00
Ordinary shares
New Zealand
Digital Mobile Spectrum Limited
25.00
Ordinary shares
Griffin House, 161 Hammersmith Road, London, W6 8BS,
United Kingdom
Assendorperdijk 2, 8012 EH Zwolle, The Netherlands
Zoranet Connectivity Services B.V.
50.00
Ordinary shares
Tompkins Wake, Level 11, 41 Shortland Street, Auckland 1010,
New Zealand
Cable & Wireless Trade Mark
Management Limited
50.00 Ordinary A shares,
Ordinary B shares
Avenue Ceramique 300, 6221 Kx, Maastricht, Netherlands
iiNet (New Zealand) AKL Limited
25.05
Ordinary shares
Vodafone Libertel B.V.
50.00
Ordinary shares
Boven Vredenburgpassage 128, 3511 WR, Utrecht,
Netherlands
Unit 17, 24 Allright Place, Mt Wellington, Auckland, New
Zealand
TPG (NZ) Pty Ltd
25.05
Ordinary shares
50.00
Ordinary shares
Philippines
Hive 2, 1530 Arlington Business Park, Theale, Reading,
Berkshire, RG7 4SA, United Kingdom
Cornerstone Telecommunications
Infrastructure Limited4
40.53
Ordinary shares
Vodafone House, The Connection, Newbury, Berkshire, RG14
2FN, United Kingdom
50.00
Ordinary shares
50.00
Ordinary shares
22F Robinson Equitable Tower, ADB Ave, Corner Povega St,
Ortigas Center, Pasig City, Philippines
Vodafone Hutchison (Australia) Holdings
Limited
50.00 Ordinary shares
Orchid Cybertech Services Inc
25.05
Ordinary shares
Amsterdamse Beheer- en
Consultingmaatschappij B.V.
Esprit Telecom B.V.
FinCo Partner 1 B.V.
206 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
207 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Rua Actor António Silva, nº 9, Campo Grande, 1600-404,
Rua Actor António Silva, nº 9, Campo Grande, 1600-404,
LG Financing Partnership
50.00 Partnership interest
United States
2711 Centerville Road, Suite 400, Wilmington,
DE 19808 Delaware
PPC 1 (US) Inc.
25.05
Ordinary shares
Ziggo Financing Partnership
50.00 Partnership interest
Notes:
1 Directly held by Vodafone Group Plc.
2 Branches.
3 Shareholding is indirect through Vodafone Deutschland GmbH.
4 Shareholding is indirect through Vantage Towers AG.
5 Shareholding is indirect through Vodacom Group Limited. The
indirect shareholding is calculated using the 60.50% ownership
interest in Vodacom Group Limited.
6 At 31 March 2021 the fair value of Safaricom Plc was KES 1,450
billion (€11,282 million) based on the closing quoted share price
on the Nairobi Stock Exchange.
Includes the indirect interest held through Vodafone Idea
Limited.
7
Selected financial information
The table below shows selected financial information in respect of subsidiaries that have non-controlling interests that are material to the Group1.
Summary comprehensive income information
Revenue
Profit for the financial year
Other comprehensive (expense)/income
Total comprehensive income
Other financial information
Profit for the financial year allocated to non-controlling interests
Dividends paid to non-controlling interests
Summary financial position information
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total assets less total liabilities
Equity shareholders’ funds
Non-controlling interests
Total equity
Statement of cash flows
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash outflow from financing activities
Net cash inflow
Cash and cash equivalents brought forward
Exchange gain/(loss) on cash and cash equivalents
Cash and cash equivalents
Vodacom Group Limited
Vodafone Egypt
Telecommunications S.A.E
2021
€m
2020
€m
2021
€m
2020
€m
5,181
891
(17)
874
310
307
6,592
2,671
9,263
(2,617)
(2,406)
4,240
3,332
908
4,240
1,711
(424)
(1,251)
36
826
14
876
5,531
980
9
989
353
322
6,155
2,444
8,599
(2,807)
(1,866)
3,926
3,056
870
3,926
1,992
(555)
(1,214)
223
684
(81)
826
1,537
271
–
271
122
84
1,765
640
2,405
(198)
(1,217)
990
587
403
990
523
(418)
(7)
98
273
(23)
348
1,454
287
–
287
129
26
1,417
602
2,019
(122)
(929)
968
577
391
968
477
(239)
(192)
46
226
1
273
Note:
1 Vantage Towers A.G. was listed on the Frankfurt Stock exchange on 18 March 2021, resulting in the recognition of non-controlling interests of €1,019 million in the Group’s consolidated Statement of
financial position. Non-current assets, current assets, non-current liabilities and current liabilities for Vantage Towers A.G. were €10,899 million, €490 million, €4,976 million and €958 million respectively.
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
VZ Financing I B.V.
VZ Financing I B.V.
VZ Financing II B.V.
VZ Financing II B.V.
VZ FinCo B.V.
VZ FinCo B.V.
VZ PropCo B.V.
VZ PropCo B.V.
XB Facilities B.V.
XB Facilities B.V.
Ziggo Finance 2 B.V.
Ziggo Finance 2 B.V.
Ziggo Netwerk II B.V.
Ziggo Netwerk II B.V.
31. Related undertakings (continued)
31. Related undertakings (continued)
31. Related undertakings (continued)
31. Related undertakings (continued)
Skyline Ikon, 1st Floor, 86/92, Andheri Kurla Road, Marol Naka,
Skyline Ikon, 1st Floor, 86/92, Andheri Kurla Road, Marol Naka,
Andheri East, Mumbai, Maharashtra, 400059, India
Andheri East, Mumbai, Maharashtra, 400059, India
Connect (India) Mobile Technologies
Connect (India) Mobile Technologies
44.39
44.39
Equity shares
Equity shares
Private Limited7
Private Limited7
Gujarat, India
Gujarat, India
Limited7
Limited7
Suman Tower Plot No. 18, Sector No. 11, Gandhinagar, 382011,
Suman Tower Plot No. 18, Sector No. 11, Gandhinagar, 382011,
Vodafone Idea Manpower Services
Vodafone Idea Manpower Services
43.86
43.86
Equity shares
Equity shares
LGE HoldCo V B.V.
LGE HoldCo V B.V.
LGE HoldCo VI B.V.
LGE HoldCo VI B.V.
LGE Holdco VII B.V.
LGE Holdco VII B.V.
LGE HoldCo VIII B.V.
LGE HoldCo VIII B.V.
50.00
50.00
Ordinary shares
Ordinary shares
50.00
50.00
Ordinary shares
Ordinary shares
Portugal
Portugal
50.00
50.00
Ordinary shares
Ordinary shares
Lisboa, Portugal
Lisboa, Portugal
50.00
50.00
Ordinary shares
Ordinary shares
Dualgrid – Gestão de Redes
Dualgrid – Gestão de Redes
Partilhadas, S.A.
Partilhadas, S.A.
Vodafone Financial Services B.V.
Vodafone Financial Services B.V.
50.00
50.00
Ordinary shares
Ordinary shares
Vodafone Nederland Holding I B.V.
Vodafone Nederland Holding I B.V.
50.00
50.00
Ordinary shares
Ordinary shares
Vodafone Nederland Holding II B.V.
Vodafone Nederland Holding II B.V.
50.00
50.00
Ordinary shares
Ordinary shares
Rua Pedro e Inês, Lote 2.08.01, 1990-075,
Rua Pedro e Inês, Lote 2.08.01, 1990-075,
Parque das Nações, Lisboa, Portugal
Parque das Nações, Lisboa, Portugal
Sport TV Portugal, S.A.
Sport TV Portugal, S.A.
25.00 Nominative shares
25.00 Nominative shares
50.00
50.00
Ordinary shares
Ordinary shares
Vodafone Idea Limited
Vodafone Idea Limited
44.39
44.39
Equity shares
Equity shares
VodafoneZiggo Employment B.V.
VodafoneZiggo Employment B.V.
50.00
50.00
Ordinary shares
Ordinary shares
Vodafone House, Corporate Road, Prahladnagar, Off S. G.
Vodafone House, Corporate Road, Prahladnagar, Off S. G.
VodafoneZiggo Group B.V.
VodafoneZiggo Group B.V.
50.00
50.00
Ordinary shares
Ordinary shares
Romania
Romania
Highway, Ahmedabad, Gujarat, 380051, India
Highway, Ahmedabad, Gujarat, 380051, India
Vodafone Idea Business Services
Vodafone Idea Business Services
44.39
44.39
Equity shares
Equity shares
VodafoneZiggo Group Holding B.V.
VodafoneZiggo Group Holding B.V.
50.00
50.00
Ordinary shares
Ordinary shares
Vodafone Idea Telecom Infrastructure
Vodafone Idea Telecom Infrastructure
44.39
44.39
Equity shares
Equity shares
Floor 3, Module 2, Connected Buildings III, Nr. 10A,
Floor 3, Module 2, Connected Buildings III, Nr. 10A,
Dimitrie Pompei Boulevard, Bucharest, Sector 2, Romania
Dimitrie Pompei Boulevard, Bucharest, Sector 2, Romania
Netgrid Telecom SRL
Netgrid Telecom SRL
50.00
50.00
Ordinary shares
Ordinary shares
50.00
50.00
Ordinary shares
Ordinary shares
50.00
50.00
Ordinary shares
Ordinary shares
50.00
50.00
Ordinary shares
Ordinary shares
Russian Federation
Russian Federation
50.00
50.00
Ordinary shares
Ordinary shares
Building 3, 11, Promyshlennaya Street, Moscow 115 516
Building 3, 11, Promyshlennaya Street, Moscow 115 516
50.00
50.00
Ordinary shares
Ordinary shares
Autoconnex Limited
Autoconnex Limited
35.00
35.00
Ordinary shares
Ordinary shares
Two Gateway, East Wall Road, Dublin 3, Ireland
Two Gateway, East Wall Road, Dublin 3, Ireland
50.00
50.00
Ordinary shares
Ordinary shares
Ziggo B.V.
Ziggo B.V.
50.00
50.00
Ordinary shares
Ordinary shares
South Africa
South Africa
Ziggo Deelnemingen B.V.
Ziggo Deelnemingen B.V.
50.00
50.00
Ordinary shares
Ordinary shares
Via Gaetana Negri 1, 20123, Milano, Italy
Via Gaetana Negri 1, 20123, Milano, Italy
Infrastrutture Wireless Italiane S.p.A4
Infrastrutture Wireless Italiane S.p.A4
26.89
26.89
Ordinary shares
Ordinary shares
50.00
50.00
Ordinary shares
Ordinary shares
50.00
50.00
Ordinary shares
Ordinary shares
Limited5
Limited5
76 Maude Street, Sandton, Johannesberg, 2196, South Africa
76 Maude Street, Sandton, Johannesberg, 2196, South Africa
Waterberg Lodge (Proprietary)
Waterberg Lodge (Proprietary)
30.25
30.25
Ordinary shares
Ordinary shares
Ziggo Real Estate B.V.
Ziggo Real Estate B.V.
50.00
50.00
Ordinary shares
Ordinary shares
Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand,
Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand,
Ziggo Services B.V.
Ziggo Services B.V.
50.00
50.00
Ordinary shares
Ordinary shares
1685, South Africa
1685, South Africa
LR No. 13263, Safaricom House, Waiyaki Way, PO Box 66827-
LR No. 13263, Safaricom House, Waiyaki Way, PO Box 66827-
Ziggo Services Employment B.V.
Ziggo Services Employment B.V.
50.00
50.00
Ordinary shares
Ordinary shares
K2019102008 (South Africa)
K2019102008 (South Africa)
(Proprietary) Limited5
(Proprietary) Limited5
43.31
43.31
Ordinary shares
Ordinary shares
00800, Nairobi, Kenya
00800, Nairobi, Kenya
Safaricom PLC6
Safaricom PLC6
26.13
26.13
Ordinary shares
Ordinary shares
Ziggo Services Netwerk 2 B.V.
Ziggo Services Netwerk 2 B.V.
50.00
50.00
Ordinary shares
Ordinary shares
Ziggo Zakelijk Services B.V.
Ziggo Zakelijk Services B.V.
50.00
50.00
Ordinary shares
Ordinary shares
Tanzania, United Republic of
Tanzania, United Republic of
Safaricom House, Waiyaki Way Westlands, Nairobi, Kenya,
Safaricom House, Waiyaki Way Westlands, Nairobi, Kenya,
ZUM B.V.
ZUM B.V.
50.00
50.00
Ordinary shares
Ordinary shares
Plot No. 23, Ursino Estate, Bagamoyo Road, Dar es Salaam,
Plot No. 23, Ursino Estate, Bagamoyo Road, Dar es Salaam,
M-PESA Africa Limited5
M-PESA Africa Limited5
43.31 Ordinary shares
43.31 Ordinary shares
Media Parkboulevard 2, 1217 WE Hilversum, Netherlands
Media Parkboulevard 2, 1217 WE Hilversum, Netherlands
Liberty Global Content Netherlands
Liberty Global Content Netherlands
50.00
50.00
Ordinary shares
Ordinary shares
liquidation)5
liquidation)5
B.V.
B.V.
Winschoterdiep 60, 9723 AB Groningen, Netherlands
Winschoterdiep 60, 9723 AB Groningen, Netherlands
United Kingdom
United Kingdom
Tanzania, United Republic of
Tanzania, United Republic of
Vodacom Trust Limited (in
Vodacom Trust Limited (in
45.37 Ordinary A shares,
45.37 Ordinary A shares,
Ordinary B shares
Ordinary B shares
15 rue Edward Steichen, Luxembourg, 2540, Luxembourg
15 rue Edward Steichen, Luxembourg, 2540, Luxembourg
Zesko B.V.
Zesko B.V.
50.00
50.00
Ordinary shares
Ordinary shares
24/25 The Shard, 32 London Bridge Street, London, SE1 9SG,
24/25 The Shard, 32 London Bridge Street, London, SE1 9SG,
50.00 Ordinary A shares,
50.00 Ordinary A shares,
Ordinary B shares,
Ordinary B shares,
Ordinary C shares
Ordinary C shares
Ziggo Bond Company B.V.
Ziggo Bond Company B.V.
50.00
50.00
Ordinary shares
Ordinary shares
Ziggo Netwerk B.V.
Ziggo Netwerk B.V.
50.00
50.00
Ordinary shares
Ordinary shares
United Kingdom
United Kingdom
Assendorperdijk 2, 8012 EH Zwolle, The Netherlands
Assendorperdijk 2, 8012 EH Zwolle, The Netherlands
Zoranet Connectivity Services B.V.
Zoranet Connectivity Services B.V.
50.00
50.00
Ordinary shares
Ordinary shares
New Zealand
New Zealand
Tompkins Wake, Level 11, 41 Shortland Street, Auckland 1010,
Tompkins Wake, Level 11, 41 Shortland Street, Auckland 1010,
New Zealand
New Zealand
Avenue Ceramique 300, 6221 Kx, Maastricht, Netherlands
Avenue Ceramique 300, 6221 Kx, Maastricht, Netherlands
iiNet (New Zealand) AKL Limited
iiNet (New Zealand) AKL Limited
25.05
25.05
Ordinary shares
Ordinary shares
Hive 2, 1530 Arlington Business Park, Theale, Reading,
Hive 2, 1530 Arlington Business Park, Theale, Reading,
Vodafone Libertel B.V.
Vodafone Libertel B.V.
50.00
50.00
Ordinary shares
Ordinary shares
Unit 17, 24 Allright Place, Mt Wellington, Auckland, New
Unit 17, 24 Allright Place, Mt Wellington, Auckland, New
Boven Vredenburgpassage 128, 3511 WR, Utrecht,
Boven Vredenburgpassage 128, 3511 WR, Utrecht,
Zealand
Zealand
TPG (NZ) Pty Ltd
TPG (NZ) Pty Ltd
25.05
25.05
Ordinary shares
Ordinary shares
Infrastructure Limited4
Infrastructure Limited4
Netherlands
Netherlands
Amsterdamse Beheer- en
Amsterdamse Beheer- en
Consultingmaatschappij B.V.
Consultingmaatschappij B.V.
Esprit Telecom B.V.
Esprit Telecom B.V.
FinCo Partner 1 B.V.
FinCo Partner 1 B.V.
50.00
50.00
Ordinary shares
Ordinary shares
Philippines
Philippines
50.00
50.00
Ordinary shares
Ordinary shares
50.00
50.00
Ordinary shares
Ordinary shares
22F Robinson Equitable Tower, ADB Ave, Corner Povega St,
22F Robinson Equitable Tower, ADB Ave, Corner Povega St,
Ortigas Center, Pasig City, Philippines
Ortigas Center, Pasig City, Philippines
Limited
Limited
Orchid Cybertech Services Inc
Orchid Cybertech Services Inc
25.05
25.05
Ordinary shares
Ordinary shares
Digital Mobile Spectrum Limited
Digital Mobile Spectrum Limited
25.00
25.00
Ordinary shares
Ordinary shares
Griffin House, 161 Hammersmith Road, London, W6 8BS,
Griffin House, 161 Hammersmith Road, London, W6 8BS,
United Kingdom
United Kingdom
Cable & Wireless Trade Mark
Cable & Wireless Trade Mark
Management Limited
Management Limited
50.00 Ordinary A shares,
50.00 Ordinary A shares,
Ordinary B shares
Ordinary B shares
Berkshire, RG7 4SA, United Kingdom
Berkshire, RG7 4SA, United Kingdom
Cornerstone Telecommunications
Cornerstone Telecommunications
40.53
40.53
Ordinary shares
Ordinary shares
Vodafone House, The Connection, Newbury, Berkshire, RG14
Vodafone House, The Connection, Newbury, Berkshire, RG14
2FN, United Kingdom
2FN, United Kingdom
Vodafone Hutchison (Australia) Holdings
Vodafone Hutchison (Australia) Holdings
50.00 Ordinary shares
50.00 Ordinary shares
Limited7
Limited7
Limited7
Limited7
Ireland
Ireland
Siro Limited
Siro Limited
Italy
Italy
Kenya
Kenya
0000, Kenya
0000, Kenya
Luxembourg
Luxembourg
Tomorrow Street SCA
Tomorrow Street SCA
Netherlands
Netherlands
208 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
32. Subsidiaries exempt from audit
The following UK subsidiaries will take advantage of the audit exemption set out within section 479A of the
Companies Act 2006 for the year ended 31 March 2021.
Name
Bluefish Communications Limited
Cable & Wireless Aspac Holdings Limited
Cable & Wireless CIS Services Limited
Cable & Wireless Europe Holdings Limited
Cable & Wireless Global Business Services Limited
Cable & Wireless Global Holding Limited
Cable & Wireless UK Holdings Limited
Cable & Wireless Worldwide Limited
Cable & Wireless Worldwide Voice Messaging
Limited
Cable & Wireless Nominee Limited
Central Communications Group Limited
Energis (Ireland) Limited
Energis Communications Limited
Energis Squared Limited
General Mobile Corporation Limited
London Hydraulic Power Company (The)
MetroHoldings Limited
ML Integration Group Limited
Project Telecom Holdings Limited
The Eastern Leasing Company Limited
Thus Group Holdings Limited
Thus Group Limited
Voda Limited
Vodafone (New Zealand) Hedging Limited
Vodafone (Scotland) Limited
Vodafone 2.
Vodafone 4 UK
Vodafone 5 Limited
Vodafone 5 UK
Vodafone 6 UK
Vodafone Americas 4
Vodafone Benelux Limited
Vodafone Cellular Limited
Vodafone-Central Limited
Vodafone Consolidated Holdings Limited
Vodafone Corporate Limited
Vodafone Corporate Secretaries Limited
Vodafone Distribution Holdings Limited
Registration number
Name
5142610 Vodafone Enterprise Corporate Secretaries Limited
4705342 Vodafone Enterprise Equipment Limited
2964774 Vodafone Enterprise Europe (UK) Limited
4659719 Vodafone Euro Hedging Limited
3537591 Vodafone Euro Hedging Two
3740694 Vodafone Europe UK
3840888 Vodafone European Investments
7029206 Vodafone European Portal Limited
1981417 Vodafone Finance Luxembourg Limited
Vodafone Finance Sweden
3249884 Vodafone Finance UK Limited
4625248 Vodafone Financial Operations
NI035793 Vodafone Global Content Services Limited
2630471 Vodafone Holdings Luxembourg Limited
3037442 Vodafone Intermediate Enterprises Limited
2585763 Vodafone International Holdings Limited
ZC000055 Vodafone International Operations Limited
3511122 Vodafone Investment UK
3252903 Vodafone Investments Limited
3891879 Vodafone IP Licensing Limited
1672832 Vodafone Marketing UK
SC192666 Vodafone Mobile Communications Limited
SC226738 Vodafone Mobile Enterprises Limited
1847509 Vodafone Mobile Network Limited
4158469 Vodafone Nominees Limited
SC170238 Vodafone Oceania Limited
4083193 Vodafone Overseas Finance Limited
6357658 Vodafone Overseas Holdings Limited
6688527 Vodafone Panafon UK
2960479 Vodafone Property Investments Limited
8809444 Vodafone Retail (Holdings) Limited
6389457 Vodafone UK Limited
4200960 Vodafone Worldwide Holdings Limited
896318 Vodafone Yen Finance Limited
1913537 Vodaphone Limited
5754561 Vodata Limited
1786055 Your Communications Group Limited
2357692
3357115
Registration number
2303594
1648524
3137479
3954207
4055111
5798451
3961908
3973442
5754479
2139168
3922620
4016558
4064873
4200970
3869137
2797426
2797438
5798385
1530514
6846238
6858585
3942221
3961390
3961482
1172051
3973427
4171115
2809758
6326918
3903420
3381659
2227940
3294074
4373166
2373469
2502373
4171876
208 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
209 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
Notes to the consolidated financial statements (continued)
32. Subsidiaries exempt from audit
32. Subsidiaries exempt from audit
The following UK subsidiaries will take advantage of the audit exemption set out within section 479A of the
The following UK subsidiaries will take advantage of the audit exemption set out within section 479A of the
Companies Act 2006 for the year ended 31 March 2021.
Companies Act 2006 for the year ended 31 March 2021.
Name
Name
Registration number
Registration number
Name
Name
Registration number
Registration number
Bluefish Communications Limited
Bluefish Communications Limited
Cable & Wireless Aspac Holdings Limited
Cable & Wireless Aspac Holdings Limited
Cable & Wireless CIS Services Limited
Cable & Wireless CIS Services Limited
Cable & Wireless Europe Holdings Limited
Cable & Wireless Europe Holdings Limited
5142610 Vodafone Enterprise Corporate Secretaries Limited
5142610 Vodafone Enterprise Corporate Secretaries Limited
4705342 Vodafone Enterprise Equipment Limited
4705342 Vodafone Enterprise Equipment Limited
2964774 Vodafone Enterprise Europe (UK) Limited
2964774 Vodafone Enterprise Europe (UK) Limited
4659719 Vodafone Euro Hedging Limited
4659719 Vodafone Euro Hedging Limited
Cable & Wireless Global Business Services Limited
Cable & Wireless Global Business Services Limited
3537591 Vodafone Euro Hedging Two
3537591 Vodafone Euro Hedging Two
Cable & Wireless Global Holding Limited
Cable & Wireless Global Holding Limited
Cable & Wireless UK Holdings Limited
Cable & Wireless UK Holdings Limited
Cable & Wireless Worldwide Limited
Cable & Wireless Worldwide Limited
3740694 Vodafone Europe UK
3740694 Vodafone Europe UK
3840888 Vodafone European Investments
3840888 Vodafone European Investments
7029206 Vodafone European Portal Limited
7029206 Vodafone European Portal Limited
Cable & Wireless Worldwide Voice Messaging
Cable & Wireless Worldwide Voice Messaging
1981417 Vodafone Finance Luxembourg Limited
1981417 Vodafone Finance Luxembourg Limited
Limited
Limited
Cable & Wireless Nominee Limited
Cable & Wireless Nominee Limited
Central Communications Group Limited
Central Communications Group Limited
Energis (Ireland) Limited
Energis (Ireland) Limited
Energis Communications Limited
Energis Communications Limited
Energis Squared Limited
Energis Squared Limited
General Mobile Corporation Limited
General Mobile Corporation Limited
London Hydraulic Power Company (The)
London Hydraulic Power Company (The)
MetroHoldings Limited
MetroHoldings Limited
ML Integration Group Limited
ML Integration Group Limited
Project Telecom Holdings Limited
Project Telecom Holdings Limited
The Eastern Leasing Company Limited
The Eastern Leasing Company Limited
Thus Group Holdings Limited
Thus Group Holdings Limited
Thus Group Limited
Thus Group Limited
Voda Limited
Voda Limited
Vodafone 2.
Vodafone 2.
Vodafone 4 UK
Vodafone 4 UK
Vodafone 5 Limited
Vodafone 5 Limited
Vodafone 5 UK
Vodafone 5 UK
Vodafone 6 UK
Vodafone 6 UK
Vodafone Americas 4
Vodafone Americas 4
Vodafone Benelux Limited
Vodafone Benelux Limited
Vodafone Cellular Limited
Vodafone Cellular Limited
Vodafone-Central Limited
Vodafone-Central Limited
Vodafone Finance Sweden
Vodafone Finance Sweden
3249884 Vodafone Finance UK Limited
3249884 Vodafone Finance UK Limited
4625248 Vodafone Financial Operations
4625248 Vodafone Financial Operations
NI035793 Vodafone Global Content Services Limited
NI035793 Vodafone Global Content Services Limited
2630471 Vodafone Holdings Luxembourg Limited
2630471 Vodafone Holdings Luxembourg Limited
3037442 Vodafone Intermediate Enterprises Limited
3037442 Vodafone Intermediate Enterprises Limited
2585763 Vodafone International Holdings Limited
2585763 Vodafone International Holdings Limited
ZC000055 Vodafone International Operations Limited
ZC000055 Vodafone International Operations Limited
3511122 Vodafone Investment UK
3511122 Vodafone Investment UK
3252903 Vodafone Investments Limited
3252903 Vodafone Investments Limited
3891879 Vodafone IP Licensing Limited
3891879 Vodafone IP Licensing Limited
1672832 Vodafone Marketing UK
1672832 Vodafone Marketing UK
SC192666 Vodafone Mobile Communications Limited
SC192666 Vodafone Mobile Communications Limited
SC226738 Vodafone Mobile Enterprises Limited
SC226738 Vodafone Mobile Enterprises Limited
1847509 Vodafone Mobile Network Limited
1847509 Vodafone Mobile Network Limited
4083193 Vodafone Overseas Finance Limited
4083193 Vodafone Overseas Finance Limited
6357658 Vodafone Overseas Holdings Limited
6357658 Vodafone Overseas Holdings Limited
6688527 Vodafone Panafon UK
6688527 Vodafone Panafon UK
2960479 Vodafone Property Investments Limited
2960479 Vodafone Property Investments Limited
8809444 Vodafone Retail (Holdings) Limited
8809444 Vodafone Retail (Holdings) Limited
6389457 Vodafone UK Limited
6389457 Vodafone UK Limited
4200960 Vodafone Worldwide Holdings Limited
4200960 Vodafone Worldwide Holdings Limited
896318 Vodafone Yen Finance Limited
896318 Vodafone Yen Finance Limited
1913537 Vodaphone Limited
1913537 Vodaphone Limited
5754561 Vodata Limited
5754561 Vodata Limited
1786055 Your Communications Group Limited
1786055 Your Communications Group Limited
Vodafone (New Zealand) Hedging Limited
Vodafone (New Zealand) Hedging Limited
Vodafone (Scotland) Limited
Vodafone (Scotland) Limited
4158469 Vodafone Nominees Limited
4158469 Vodafone Nominees Limited
SC170238 Vodafone Oceania Limited
SC170238 Vodafone Oceania Limited
Vodafone Consolidated Holdings Limited
Vodafone Consolidated Holdings Limited
Vodafone Corporate Limited
Vodafone Corporate Limited
Vodafone Corporate Secretaries Limited
Vodafone Corporate Secretaries Limited
Vodafone Distribution Holdings Limited
Vodafone Distribution Holdings Limited
2357692
2357692
3357115
3357115
2303594
2303594
1648524
1648524
3137479
3137479
3954207
3954207
4055111
4055111
5798451
5798451
3961908
3961908
3973442
3973442
5754479
5754479
2139168
2139168
3922620
3922620
4016558
4016558
4064873
4064873
4200970
4200970
3869137
3869137
2797426
2797426
2797438
2797438
5798385
5798385
1530514
1530514
6846238
6846238
6858585
6858585
3942221
3942221
3961390
3961390
3961482
3961482
1172051
1172051
3973427
3973427
4171115
4171115
2809758
2809758
6326918
6326918
3903420
3903420
3381659
3381659
2227940
2227940
3294074
3294074
4373166
4373166
2373469
2373469
2502373
2502373
4171876
4171876
Company statement of financial position of Vodafone Group Plc
at 31 March
Fixed assets
Shares in Group undertakings
Current assets
Debtors: amounts falling due after more than one year
Debtors: amounts falling due within one year
Other investments
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve
Other reserves
Own shares held
Profit and loss account1
Total equity shareholders’ funds
Note:
1 The profit for the financial year dealt with in the financial statements of the Company is €3,863 million (2020: €476 million).
Note
2021
€m
2020
€m
2
3
3
4
5
5
6
83,385
83,466
3,128
164,149
3,107
586
170,970
(162,761)
8,209
91,594
(47,122)
44,472
4,797
20,383
111
2,970
(6,307)
22,518
44,472
8,424
225,819
1,115
188
235,546
(217,322)
18,224
101,690
(54,628)
47,062
4,797
20,382
111
4,865
(7,937)
24,844
47,062
The Company financial statements on pages 209 to 216 were approved by the Board of Directors and authorised for issue on 18 May 2021 and
were signed on its behalf by:
Nick Read
Chief Executive
Margherita Della Valle
Chief Financial Officer
The accompanying notes are an integral part of these financial statements.
210 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Company statement of changes in equity of Vodafone Group Plc
For the years ended 31 March
1 April 2019
Issue or re-issue of shares
Profit for the financial year
Dividends
Capital contribution given relating to share-based payments4
Contribution received relating to share-based payments
Other movements5
31 March 2020
Issue or re-issue of shares6
Profit for the financial year
Dividends
Capital contribution given relating to share-based payments4
Contribution received relating to share-based payments
Repurchase of treasury shares7
Other movements5
31 March 2021
Called up share
capital
€m
4,796
1
–
–
–
–
–
4,797
Share premium
account1
€m
20,381
1
–
–
–
–
–
20,382
–
–
–
–
–
–
–
4,797
1
–
–
–
–
–
–
20,383
Capital
redemption
reserve1 Other reserves1
€m
4,797
–
–
–
136
(68)
–
4,865
€m
111
–
–
–
–
–
–
111
–
–
–
–
–
–
–
111
(1,944)
–
–
136
(87)
–
–
2,970
Reserve for
own shares2
€m
(8,010)
73
–
–
–
–
–
Profit and loss
account3
€m
23,686
–
476
(2,317)
–
–
2,999
(7,937) 24,844
2,033
–
–
–
–
(403)
–
–
3,863
(2,412)
–
–
–
(3,777)
(6,307) 22,518
Total equity
shareholders’
funds
€m
45,761
75
476
(2,317)
136
(68)
2,999
47,062
90
3,863
(2,412)
136
(87)
(403)
(3,777)
44,472
Notes:
1 These reserves are not distributable.
2 Own shares relate to treasury shares which are purchased out of distributable profits and therefore reduce reserves available for distribution.
3 The Company has determined what amounts within this reserve are distributable and non-distributable in accordance with the guidance provided by ICAEW TECH 02/17BL and the requirements of UK
law. In accordance with UK Companies Act 2006 s831(2), a public company may make a distribution only if, after giving effect to such distribution, the amount of its net assets is not less than the
aggregate of its called up share capital and non-distributable reserves.
4 Includes €1 million tax credit (2020: €nil).
5 Includes the impact of the Company’s cash flow hedges with €5,892 million net loss deferred to other comprehensive income during the year (2020: €4,113 million net gain); €1,226 million net loss
(2020: €408 million net gain) recycled to the income statement; and €887 million credited (2020: €705 million charged) on related tax movements. These hedges primarily relate to foreign exchange
exposure on fixed borrowings, with any foreign exchange on nominal balances directly impacting income statement in each period but interest cash flows unwinding to the income statement over the life
of the hedges (up to 2059). See note 22 “Capital and financial risk management” in the consolidated financial statements for further details.
6 Includes the reissue of 1,426.8 million (€1,944 million) in March 2021 in order to satisfy the first tranche of the mandatory convertible bond issued in March 2019.
7 These represent the irrevocable and non-discretionary share buyback programme announced on 19 March 2021.
Notes to the Company financial statements
1. Basis of preparation
The separate financial statements of the Company are drawn up in accordance with the Companies Act 2006 and Financial Reporting
Standard 101 “Reduced disclosure framework”, (‘FRS 101’). The Company will continue to prepare its financial statements in accordance with
FRS 101 on an ongoing basis until such time as it notifies shareholders of any change to its chosen accounting framework.
The Company financial statements have been prepared using the historical cost convention, as modified by the revaluation of certain financial assets
and financial liabilities and in accordance with the UK Companies Act 2006. The financial statements have been prepared on a going concern basis.
The following exemptions available under FRS 101 have been applied:
− Paragraphs 45(b) and 46 to 52 of IFRS 2, “Shared-based payment” (details of the number and weighted-average exercise prices of share
options, and how the fair value of goods or services received was determined);
− IFRS 7 “Financial Instruments: Disclosures”;
assets and liabilities);
− Paragraph 91 to 99 of IFRS 13, “Fair value measurement” (disclosure of valuation techniques and inputs used for fair value measurement of
− Paragraph 38 of IAS 1 “Presentation of financial statements” comparative information requirements in respect of paragraph 79(a)(iv) of IAS 1;
− The following paragraphs of IAS 1 “Presentation of financial statements”:
− 10(d) (statement of cash flows);
− 16 (statement of compliance with all IFRS);
− 38A (requirement for minimum of two primary statements, including cash flow statements);
− 38B-D (additional comparative information);
− 40A-D (requirements for a third statement of financial position);
− 111 (cash flow statement information); and
− 134-136 (capital management disclosures).
− IAS 7 “Statement of cash flows”;
− Paragraph 30 and 31 of IAS 8 “Accounting policies, changes in accounting estimates and errors” (requirement for the disclosure of
information when an entity has not applied a new IFRS that has been issued but is not yet effective);
− The requirements in IAS 24 “Related party disclosures” to disclose related party transactions entered into between two or more members of a group;
− The requirements in IAS 36 to disclose valuation technique and assumptions used in determining recoverable amount.
As permitted by section 408(3) of the Companies Act 2006, the income statement of the Company is not presented in this Annual Report.
These separate financial statements are not intended to give a true and fair view of the profit or loss or cash flows of the Company. The
Company has not published its individual cash flow statement as its liquidity, solvency and financial adaptability are dependent on the Group
rather than its own cash flows.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of Company financial statements in conformity with FRS 101 requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Company financial
statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both
current and future periods. Management regularly reviews the accounting judgements that significantly impact the amounts recognised in the
financial statements and the estimates that are considered to be “critical estimates” due to their potential to give rise to material adjustments in
the Company’s financial statements in the year ending 31 March 2021.
A source of estimation uncertainty for the Company relates to the review for impairment of investment carrying values and the estimates used
when determining the recoverable value of the investment. However, there is not considered to be a significant risk of material adjustment from
revisions to these assumptions within the next financial year (see note 2).
Significant accounting policies applied in the current reporting period that relate to the financial statements as a whole
Foreign currencies
Transactions in foreign currencies are initially recorded at the functional rate of currency prevailing on the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are retranslated into the Company’s functional currency at the rates prevailing on the
reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing on the initial transaction dates. Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the income
statement for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the
income statement for the period.
Borrowing costs
All borrowing costs are recognised in the income statement in the period in which they are incurred.
Company statement of changes in equity of Vodafone Group Plc
Company statement of changes in equity of Vodafone Group Plc
For the years ended 31 March
For the years ended 31 March
Capital contribution given relating to share-based payments4
Capital contribution given relating to share-based payments4
Contribution received relating to share-based payments
Contribution received relating to share-based payments
Capital contribution given relating to share-based payments4
Capital contribution given relating to share-based payments4
Contribution received relating to share-based payments
Contribution received relating to share-based payments
1 April 2019
1 April 2019
Issue or re-issue of shares
Issue or re-issue of shares
Profit for the financial year
Profit for the financial year
Dividends
Dividends
Other movements5
Other movements5
31 March 2020
31 March 2020
Issue or re-issue of shares6
Issue or re-issue of shares6
Profit for the financial year
Profit for the financial year
Dividends
Dividends
Repurchase of treasury shares7
Repurchase of treasury shares7
Other movements5
Other movements5
31 March 2021
31 March 2021
Notes:
Notes:
1 These reserves are not distributable.
1 These reserves are not distributable.
Called up share
Called up share
Share premium
Share premium
redemption
redemption
reserve1 Other reserves1
reserve1 Other reserves1
capital
capital
€m
€m
account1
account1
€m
€m
4,796
4,796
20,381
20,381
Capital
Capital
€m
€m
111
111
Total equity
Total equity
Reserve for
Reserve for
own shares2
own shares2
€m
€m
Profit and loss
Profit and loss
shareholders’
shareholders’
account3
account3
€m
€m
funds
funds
€m
€m
4,797
4,797
(8,010)
(8,010)
23,686
23,686
45,761
45,761
4,797
4,797
20,382
20,382
111
111
4,865
4,865
(7,937) 24,844
(7,937) 24,844
47,062
47,062
2,999
2,999
2,999
2,999
1
1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
1
–
–
–
–
–
–
–
–
–
–
1
1
–
–
–
–
–
–
–
–
–
–
–
–
€m
€m
–
–
–
–
–
–
136
136
(68)
(68)
–
–
136
136
(87)
(87)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
73
73
–
–
476
476
(2,317)
(2,317)
(2,317)
(2,317)
75
75
476
476
136
136
(68)
(68)
90
90
3,863
3,863
(2,412)
(2,412)
136
136
(87)
(87)
(403)
(403)
–
–
–
–
–
–
–
–
–
–
–
–
3,863
3,863
(2,412)
(2,412)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(403)
(403)
(3,777)
(3,777)
(3,777)
(3,777)
4,797
4,797
20,383
20,383
111
111
2,970
2,970
(6,307) 22,518
(6,307) 22,518
44,472
44,472
2 Own shares relate to treasury shares which are purchased out of distributable profits and therefore reduce reserves available for distribution.
2 Own shares relate to treasury shares which are purchased out of distributable profits and therefore reduce reserves available for distribution.
3 The Company has determined what amounts within this reserve are distributable and non-distributable in accordance with the guidance provided by ICAEW TECH 02/17BL and the requirements of UK
3 The Company has determined what amounts within this reserve are distributable and non-distributable in accordance with the guidance provided by ICAEW TECH 02/17BL and the requirements of UK
law. In accordance with UK Companies Act 2006 s831(2), a public company may make a distribution only if, after giving effect to such distribution, the amount of its net assets is not less than the
law. In accordance with UK Companies Act 2006 s831(2), a public company may make a distribution only if, after giving effect to such distribution, the amount of its net assets is not less than the
aggregate of its called up share capital and non-distributable reserves.
aggregate of its called up share capital and non-distributable reserves.
4 Includes €1 million tax credit (2020: €nil).
4 Includes €1 million tax credit (2020: €nil).
5 Includes the impact of the Company’s cash flow hedges with €5,892 million net loss deferred to other comprehensive income during the year (2020: €4,113 million net gain); €1,226 million net loss
5 Includes the impact of the Company’s cash flow hedges with €5,892 million net loss deferred to other comprehensive income during the year (2020: €4,113 million net gain); €1,226 million net loss
(2020: €408 million net gain) recycled to the income statement; and €887 million credited (2020: €705 million charged) on related tax movements. These hedges primarily relate to foreign exchange
(2020: €408 million net gain) recycled to the income statement; and €887 million credited (2020: €705 million charged) on related tax movements. These hedges primarily relate to foreign exchange
exposure on fixed borrowings, with any foreign exchange on nominal balances directly impacting income statement in each period but interest cash flows unwinding to the income statement over the life
exposure on fixed borrowings, with any foreign exchange on nominal balances directly impacting income statement in each period but interest cash flows unwinding to the income statement over the life
of the hedges (up to 2059). See note 22 “Capital and financial risk management” in the consolidated financial statements for further details.
of the hedges (up to 2059). See note 22 “Capital and financial risk management” in the consolidated financial statements for further details.
6 Includes the reissue of 1,426.8 million (€1,944 million) in March 2021 in order to satisfy the first tranche of the mandatory convertible bond issued in March 2019.
6 Includes the reissue of 1,426.8 million (€1,944 million) in March 2021 in order to satisfy the first tranche of the mandatory convertible bond issued in March 2019.
7 These represent the irrevocable and non-discretionary share buyback programme announced on 19 March 2021.
7 These represent the irrevocable and non-discretionary share buyback programme announced on 19 March 2021.
210 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
211 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the Company financial statements
Notes to the Company financial statements
Notes to the Company financial statements
1. Basis of preparation
1. Basis of preparation
The separate financial statements of the Company are drawn up in accordance with the Companies Act 2006 and Financial Reporting
The separate financial statements of the Company are drawn up in accordance with the Companies Act 2006 and Financial Reporting
Standard 101 “Reduced disclosure framework”, (‘FRS 101’). The Company will continue to prepare its financial statements in accordance with
Standard 101 “Reduced disclosure framework”, (‘FRS 101’). The Company will continue to prepare its financial statements in accordance with
FRS 101 on an ongoing basis until such time as it notifies shareholders of any change to its chosen accounting framework.
FRS 101 on an ongoing basis until such time as it notifies shareholders of any change to its chosen accounting framework.
The Company financial statements have been prepared using the historical cost convention, as modified by the revaluation of certain financial assets
The Company financial statements have been prepared using the historical cost convention, as modified by the revaluation of certain financial assets
and financial liabilities and in accordance with the UK Companies Act 2006. The financial statements have been prepared on a going concern basis.
and financial liabilities and in accordance with the UK Companies Act 2006. The financial statements have been prepared on a going concern basis.
The following exemptions available under FRS 101 have been applied:
The following exemptions available under FRS 101 have been applied:
− Paragraphs 45(b) and 46 to 52 of IFRS 2, “Shared-based payment” (details of the number and weighted-average exercise prices of share
− Paragraphs 45(b) and 46 to 52 of IFRS 2, “Shared-based payment” (details of the number and weighted-average exercise prices of share
options, and how the fair value of goods or services received was determined);
options, and how the fair value of goods or services received was determined);
− IFRS 7 “Financial Instruments: Disclosures”;
− IFRS 7 “Financial Instruments: Disclosures”;
− Paragraph 91 to 99 of IFRS 13, “Fair value measurement” (disclosure of valuation techniques and inputs used for fair value measurement of
− Paragraph 91 to 99 of IFRS 13, “Fair value measurement” (disclosure of valuation techniques and inputs used for fair value measurement of
(1,944)
(1,944)
2,033
2,033
assets and liabilities);
assets and liabilities);
− Paragraph 38 of IAS 1 “Presentation of financial statements” comparative information requirements in respect of paragraph 79(a)(iv) of IAS 1;
− Paragraph 38 of IAS 1 “Presentation of financial statements” comparative information requirements in respect of paragraph 79(a)(iv) of IAS 1;
− The following paragraphs of IAS 1 “Presentation of financial statements”:
− The following paragraphs of IAS 1 “Presentation of financial statements”:
− 10(d) (statement of cash flows);
− 10(d) (statement of cash flows);
− 16 (statement of compliance with all IFRS);
− 16 (statement of compliance with all IFRS);
− 38A (requirement for minimum of two primary statements, including cash flow statements);
− 38A (requirement for minimum of two primary statements, including cash flow statements);
− 38B-D (additional comparative information);
− 38B-D (additional comparative information);
− 40A-D (requirements for a third statement of financial position);
− 40A-D (requirements for a third statement of financial position);
− 111 (cash flow statement information); and
− 111 (cash flow statement information); and
− 134-136 (capital management disclosures).
− 134-136 (capital management disclosures).
− IAS 7 “Statement of cash flows”;
− IAS 7 “Statement of cash flows”;
− Paragraph 30 and 31 of IAS 8 “Accounting policies, changes in accounting estimates and errors” (requirement for the disclosure of
− Paragraph 30 and 31 of IAS 8 “Accounting policies, changes in accounting estimates and errors” (requirement for the disclosure of
information when an entity has not applied a new IFRS that has been issued but is not yet effective);
information when an entity has not applied a new IFRS that has been issued but is not yet effective);
− The requirements in IAS 24 “Related party disclosures” to disclose related party transactions entered into between two or more members of a group;
− The requirements in IAS 24 “Related party disclosures” to disclose related party transactions entered into between two or more members of a group;
− The requirements in IAS 36 to disclose valuation technique and assumptions used in determining recoverable amount.
− The requirements in IAS 36 to disclose valuation technique and assumptions used in determining recoverable amount.
As permitted by section 408(3) of the Companies Act 2006, the income statement of the Company is not presented in this Annual Report.
As permitted by section 408(3) of the Companies Act 2006, the income statement of the Company is not presented in this Annual Report.
These separate financial statements are not intended to give a true and fair view of the profit or loss or cash flows of the Company. The
These separate financial statements are not intended to give a true and fair view of the profit or loss or cash flows of the Company. The
Company has not published its individual cash flow statement as its liquidity, solvency and financial adaptability are dependent on the Group
Company has not published its individual cash flow statement as its liquidity, solvency and financial adaptability are dependent on the Group
rather than its own cash flows.
rather than its own cash flows.
Critical accounting judgements and key sources of estimation uncertainty
Critical accounting judgements and key sources of estimation uncertainty
The preparation of Company financial statements in conformity with FRS 101 requires management to make estimates and assumptions that
The preparation of Company financial statements in conformity with FRS 101 requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Company financial
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Company financial
statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both
which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both
current and future periods. Management regularly reviews the accounting judgements that significantly impact the amounts recognised in the
current and future periods. Management regularly reviews the accounting judgements that significantly impact the amounts recognised in the
financial statements and the estimates that are considered to be “critical estimates” due to their potential to give rise to material adjustments in
financial statements and the estimates that are considered to be “critical estimates” due to their potential to give rise to material adjustments in
the Company’s financial statements in the year ending 31 March 2021.
the Company’s financial statements in the year ending 31 March 2021.
A source of estimation uncertainty for the Company relates to the review for impairment of investment carrying values and the estimates used
A source of estimation uncertainty for the Company relates to the review for impairment of investment carrying values and the estimates used
when determining the recoverable value of the investment. However, there is not considered to be a significant risk of material adjustment from
when determining the recoverable value of the investment. However, there is not considered to be a significant risk of material adjustment from
revisions to these assumptions within the next financial year (see note 2).
revisions to these assumptions within the next financial year (see note 2).
Significant accounting policies applied in the current reporting period that relate to the financial statements as a whole
Significant accounting policies applied in the current reporting period that relate to the financial statements as a whole
Foreign currencies
Foreign currencies
Transactions in foreign currencies are initially recorded at the functional rate of currency prevailing on the date of the transaction. Monetary
Transactions in foreign currencies are initially recorded at the functional rate of currency prevailing on the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are retranslated into the Company’s functional currency at the rates prevailing on the
assets and liabilities denominated in foreign currencies are retranslated into the Company’s functional currency at the rates prevailing on the
reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing on the initial transaction dates. Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.
prevailing on the initial transaction dates. Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the income
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the income
statement for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the
statement for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the
income statement for the period.
income statement for the period.
Borrowing costs
Borrowing costs
All borrowing costs are recognised in the income statement in the period in which they are incurred.
All borrowing costs are recognised in the income statement in the period in which they are incurred.
212 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the Company financial statements (continued)
Notes to the Company financial statements (continued)
1. Basis of preparation (continued)
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws
that have been enacted or substantively enacted by the reporting period date.
Deferred tax is provided in full on temporary differences that exist at the reporting period date and that result in an obligation to pay more tax, or
a right to pay less tax in the future. The deferred tax is measured at the rate expected to apply in the periods in which the temporary differences
are expected to reverse, based on the tax rates and laws that are enacted or substantively enacted at the reporting period date. Temporary
differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they
are included in the Company financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not
that they will be recovered. Deferred tax assets and liabilities are not discounted.
Financial instruments
Financial assets and financial liabilities, in respect of financial instruments, are recognised on the Company statement of financial position when
the Company becomes a party to the contractual provisions of the instrument.
Financial liabilities and equity instruments
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements
entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual
interest in the assets of the Company after deducting all of its liabilities and includes no obligation to deliver cash or other financial assets. The
accounting policies adopted for specific financial liabilities and equity instruments are set out below.
Derivative financial instruments and hedge accounting
The Company’s activities expose it to the financial risks of changes in foreign exchange rates and interest rates which it manages using derivative
financial instruments.
The use of derivative financial instruments is governed by the Group’s policies approved by the Board of Directors, which provide written
principles on the use of derivative financial instruments consistent with the Group’s risk management strategy. Changes in values of all
derivative financial instruments are included within the income statement unless designated in an effective cash flow hedge relationship when
changes in value are deferred to other comprehensive income or equity respectively. The Company does not use derivative financial
instruments for speculative purposes.
Derivative financial instruments are initially measured at fair value on the contract date and are subsequently remeasured to fair value at each
reporting date. The Company designates certain derivatives as hedges of the change of fair value of recognised assets and liabilities (‘fair value
hedges’) or hedges of highly probable forecast transactions or hedges of foreign currency or interest rate risks of firm commitments (‘cash flow
hedges’). Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for
hedge accounting.
Fair value hedges
The Company’s policy is to use derivative financial instruments (primarily interest rate swaps) to convert a proportion of its fixed rate debt to
floating rates in order to hedge the interest rate risk arising, principally, from capital market borrowings. The Company designates these as fair
value hedges of interest rate risk with changes in fair value of the hedging instrument recognised in the income statement for the period
together with the changes in the fair value of the hedged item due to the hedged risk, to the extent the hedge is effective. Gains and losses
relating to any ineffective portion are recognised immediately in the income statement.
Cash flow hedges
Cash flow hedging is used by the Company to hedge certain exposures to variability in future cash flows. The portion of gains or losses relating
to changes in the fair value of derivatives that are designated and qualify as effective cash flow hedges is recognised in other comprehensive
income; gains or losses relating to any ineffective portion are recognised immediately in the income statement. However, when the hedged
transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised in other
comprehensive income and accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-
financial asset or non-financial liability. When the hedged item is recognised in the income statement, amounts previously recognised in other
comprehensive income and accumulated in equity for the hedging instrument are reclassified to the income statement. When hedge
accounting is discontinued, any gain or loss recognised in other comprehensive income at that time remains in equity and is recognised in the
income statement when the hedged transaction is ultimately recognised in the income statement. If a forecast transaction is no longer
expected to occur, the gain or loss accumulated in equity is recognised immediately in the income statement.
Pensions
The Company is the sponsoring employer of the Vodafone Group UK Pension Scheme, a defined benefit pension scheme. There is insufficient
information available to enable the scheme to be accounted for as a defined benefit scheme because the Company is unable to identify its
share of the underlying assets and liabilities on a consistent and reasonable basis. Therefore, the Company has applied the guidance within IAS
19 to account for defined benefit schemes as if they were defined contribution schemes and recognise only the contribution payable each year.
The Company had no contributions payable for the year ended 31 March 2021 (2020: €nil). The defined benefit scheme is recognised in the
financial statements of the participating employers, Vodafone UK Limited and Vodafone Group Services Limited.
New accounting pronouncements
To the extent applicable the Company will adopt new accounting policies as set out in note 1 “Basis of preparation” in the consolidated financial statements.
212 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
213 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
2. Fixed assets
Accounting policies
Shares in Group undertakings are stated at cost less any provision for impairment and capital related to share-based payments. Contributions in
respect of share-based payments are recognised in line with the policy set out in note 7 “Share-based payments”.
The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an
investment may not be recoverable. If any such indication of impairment exists, the Company makes an estimate of the recoverable amount. If
the recoverable amount of the cash-generating unit is less than the value of the investment, the investment is considered to be impaired and is
written down to its recoverable amount. An impairment loss is recognised immediately in the income statement.
Where there has been a change in the estimates used to determine recoverable amount and an impairment loss subsequently reverses, the
carrying amount of the cash-generating unit is increased to the revised estimate of its recoverable amount, not to exceed the carrying amount
that would have been determined had no impairment loss been recognised for the cash-generating unit in prior years and an impairment loss
reversal is recognised immediately in the income statement.
The Company applies the same methodology and assumptions used by the Group for goodwill impairment testing purposes, as set out in note
4 “Impairment losses” to the consolidated financial statements. For the purposes of the Company’s own impairment assessment, the Group’s
operations are considered to be a single cash generating unit (‘CGU’) held within the Company’s principal subsidiary, Vodafone European
Investments. The pooling of the Company’s interests within a single CGU significantly reduces the risk that movements in individual
assumptions used during the goodwill impairment testing will impact the result of the investment impairment assessment. Whilst the
underlying assumptions used are a source of estimation uncertainty, they do not give rise to a significant risk of adjustment within the next
financial year, including the additional assumption for the current uncertainty surrounding the economic impact of the COVID-19 pandemic.
Shares in Group undertakings
Cost:
1 April
Disposals
Capital contributions arising from share-based payments
Contributions received in relation to share-based payments
31 March
Amounts provided for:
1 April
Eliminated on disposals
Impairment losses1
Impairment reversals
31 March
2021
€m
2020
€m
84,264
–
136
(87)
84,313
798
–
130
–
928
84,812
(616)
136
(68)
84,264
1,039
(144)
15
(112)
798
Notes to the Company financial statements (continued)
Notes to the Company financial statements (continued)
Notes to the Company financial statements (continued)
1. Basis of preparation (continued)
1. Basis of preparation (continued)
Taxation
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws
that have been enacted or substantively enacted by the reporting period date.
that have been enacted or substantively enacted by the reporting period date.
Deferred tax is provided in full on temporary differences that exist at the reporting period date and that result in an obligation to pay more tax, or
Deferred tax is provided in full on temporary differences that exist at the reporting period date and that result in an obligation to pay more tax, or
a right to pay less tax in the future. The deferred tax is measured at the rate expected to apply in the periods in which the temporary differences
a right to pay less tax in the future. The deferred tax is measured at the rate expected to apply in the periods in which the temporary differences
are expected to reverse, based on the tax rates and laws that are enacted or substantively enacted at the reporting period date. Temporary
are expected to reverse, based on the tax rates and laws that are enacted or substantively enacted at the reporting period date. Temporary
differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they
differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they
are included in the Company financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not
are included in the Company financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not
that they will be recovered. Deferred tax assets and liabilities are not discounted.
that they will be recovered. Deferred tax assets and liabilities are not discounted.
Financial instruments
Financial instruments
Financial assets and financial liabilities, in respect of financial instruments, are recognised on the Company statement of financial position when
Financial assets and financial liabilities, in respect of financial instruments, are recognised on the Company statement of financial position when
the Company becomes a party to the contractual provisions of the instrument.
the Company becomes a party to the contractual provisions of the instrument.
Financial liabilities and equity instruments
Financial liabilities and equity instruments
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements
entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual
entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual
interest in the assets of the Company after deducting all of its liabilities and includes no obligation to deliver cash or other financial assets. The
interest in the assets of the Company after deducting all of its liabilities and includes no obligation to deliver cash or other financial assets. The
accounting policies adopted for specific financial liabilities and equity instruments are set out below.
accounting policies adopted for specific financial liabilities and equity instruments are set out below.
Derivative financial instruments and hedge accounting
Derivative financial instruments and hedge accounting
The Company’s activities expose it to the financial risks of changes in foreign exchange rates and interest rates which it manages using derivative
The Company’s activities expose it to the financial risks of changes in foreign exchange rates and interest rates which it manages using derivative
financial instruments.
financial instruments.
The use of derivative financial instruments is governed by the Group’s policies approved by the Board of Directors, which provide written
The use of derivative financial instruments is governed by the Group’s policies approved by the Board of Directors, which provide written
principles on the use of derivative financial instruments consistent with the Group’s risk management strategy. Changes in values of all
principles on the use of derivative financial instruments consistent with the Group’s risk management strategy. Changes in values of all
derivative financial instruments are included within the income statement unless designated in an effective cash flow hedge relationship when
derivative financial instruments are included within the income statement unless designated in an effective cash flow hedge relationship when
changes in value are deferred to other comprehensive income or equity respectively. The Company does not use derivative financial
changes in value are deferred to other comprehensive income or equity respectively. The Company does not use derivative financial
instruments for speculative purposes.
instruments for speculative purposes.
Derivative financial instruments are initially measured at fair value on the contract date and are subsequently remeasured to fair value at each
Derivative financial instruments are initially measured at fair value on the contract date and are subsequently remeasured to fair value at each
reporting date. The Company designates certain derivatives as hedges of the change of fair value of recognised assets and liabilities (‘fair value
reporting date. The Company designates certain derivatives as hedges of the change of fair value of recognised assets and liabilities (‘fair value
hedges’) or hedges of highly probable forecast transactions or hedges of foreign currency or interest rate risks of firm commitments (‘cash flow
hedges’) or hedges of highly probable forecast transactions or hedges of foreign currency or interest rate risks of firm commitments (‘cash flow
hedges’). Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for
hedges’). Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for
hedge accounting.
hedge accounting.
Fair value hedges
Fair value hedges
Cash flow hedges
Cash flow hedges
The Company’s policy is to use derivative financial instruments (primarily interest rate swaps) to convert a proportion of its fixed rate debt to
The Company’s policy is to use derivative financial instruments (primarily interest rate swaps) to convert a proportion of its fixed rate debt to
floating rates in order to hedge the interest rate risk arising, principally, from capital market borrowings. The Company designates these as fair
floating rates in order to hedge the interest rate risk arising, principally, from capital market borrowings. The Company designates these as fair
value hedges of interest rate risk with changes in fair value of the hedging instrument recognised in the income statement for the period
value hedges of interest rate risk with changes in fair value of the hedging instrument recognised in the income statement for the period
together with the changes in the fair value of the hedged item due to the hedged risk, to the extent the hedge is effective. Gains and losses
together with the changes in the fair value of the hedged item due to the hedged risk, to the extent the hedge is effective. Gains and losses
relating to any ineffective portion are recognised immediately in the income statement.
relating to any ineffective portion are recognised immediately in the income statement.
Cash flow hedging is used by the Company to hedge certain exposures to variability in future cash flows. The portion of gains or losses relating
Cash flow hedging is used by the Company to hedge certain exposures to variability in future cash flows. The portion of gains or losses relating
to changes in the fair value of derivatives that are designated and qualify as effective cash flow hedges is recognised in other comprehensive
to changes in the fair value of derivatives that are designated and qualify as effective cash flow hedges is recognised in other comprehensive
income; gains or losses relating to any ineffective portion are recognised immediately in the income statement. However, when the hedged
income; gains or losses relating to any ineffective portion are recognised immediately in the income statement. However, when the hedged
transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised in other
transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised in other
comprehensive income and accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-
comprehensive income and accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-
financial asset or non-financial liability. When the hedged item is recognised in the income statement, amounts previously recognised in other
financial asset or non-financial liability. When the hedged item is recognised in the income statement, amounts previously recognised in other
comprehensive income and accumulated in equity for the hedging instrument are reclassified to the income statement. When hedge
comprehensive income and accumulated in equity for the hedging instrument are reclassified to the income statement. When hedge
accounting is discontinued, any gain or loss recognised in other comprehensive income at that time remains in equity and is recognised in the
accounting is discontinued, any gain or loss recognised in other comprehensive income at that time remains in equity and is recognised in the
income statement when the hedged transaction is ultimately recognised in the income statement. If a forecast transaction is no longer
income statement when the hedged transaction is ultimately recognised in the income statement. If a forecast transaction is no longer
expected to occur, the gain or loss accumulated in equity is recognised immediately in the income statement.
expected to occur, the gain or loss accumulated in equity is recognised immediately in the income statement.
Pensions
Pensions
The Company is the sponsoring employer of the Vodafone Group UK Pension Scheme, a defined benefit pension scheme. There is insufficient
The Company is the sponsoring employer of the Vodafone Group UK Pension Scheme, a defined benefit pension scheme. There is insufficient
information available to enable the scheme to be accounted for as a defined benefit scheme because the Company is unable to identify its
information available to enable the scheme to be accounted for as a defined benefit scheme because the Company is unable to identify its
share of the underlying assets and liabilities on a consistent and reasonable basis. Therefore, the Company has applied the guidance within IAS
share of the underlying assets and liabilities on a consistent and reasonable basis. Therefore, the Company has applied the guidance within IAS
19 to account for defined benefit schemes as if they were defined contribution schemes and recognise only the contribution payable each year.
19 to account for defined benefit schemes as if they were defined contribution schemes and recognise only the contribution payable each year.
The Company had no contributions payable for the year ended 31 March 2021 (2020: €nil). The defined benefit scheme is recognised in the
The Company had no contributions payable for the year ended 31 March 2021 (2020: €nil). The defined benefit scheme is recognised in the
financial statements of the participating employers, Vodafone UK Limited and Vodafone Group Services Limited.
financial statements of the participating employers, Vodafone UK Limited and Vodafone Group Services Limited.
New accounting pronouncements
New accounting pronouncements
To the extent applicable the Company will adopt new accounting policies as set out in note 1 “Basis of preparation” in the consolidated financial statements.
To the extent applicable the Company will adopt new accounting policies as set out in note 1 “Basis of preparation” in the consolidated financial statements.
of the decrease in the investment’s carrying value.
At 31 March 2021 the Company had the following principal subsidiary:
Name
Vodafone European Investments
Principal activity
Holding Company
Country of incorporation
England
Percentage shareholding
100
Details of direct and indirect related undertakings are set out in note 31 “Related undertakings” to the consolidated financial statements.
Net book value:
31 March
Note:
1 During March 2021, the Company received a dividend from one of its subsidiary investments. The dividend income is partially offset by an impairment loss of €130 million recognised as a result
83,466
83,385
214 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the Company financial statements (continued)
Notes to the Company financial statements (continued)
3. Debtors
Accounting policies
Amounts owed by subsidiaries are classified and recorded at amortised cost and reduced by allowances for expected credit losses. Estimated
future credit losses are first recorded on initial recognition of a receivable and are based on estimated probability of default. Individual balances
are written off when management deems them not to be collectible. Derivative financial instruments are measured at fair value through profit
and loss.
Amounts falling due within one year:
Amounts owed by subsidiaries1
Taxation recoverable
Other debtors
Derivative financial instruments
Amounts falling due after more than one year:
Deferred tax
Derivative financial instruments
2021
€m
2020
€m
163,667
194
14
274
164,149
164
2,964
3,128
224,799
268
71
681
225,819
–
8,424
8,424
Note:
1 Amounts owned by subsidiaries are unsecured, have no fixed date of repayment and are repayable on demand with sufficient liquidity in the group to flow funds if required. Therefore expected credit
losses are considered to be immaterial.
4. Other Investments
Accounting policies
Investments are classified and measured at amortised cost using the effective interest rate method, less any impairment.
Collateral
2021
€m
3,107
2020
€m
1,115
5. Creditors
Accounting policies
Capital market and bank borrowings
Interest-bearing loans and overdrafts are initially measured at fair value (which is equal to cost at inception) and are subsequently measured at
amortised cost using the effective interest rate method, except where they are identified as a hedged item in a designated fair value hedge
relationship. Any difference between the proceeds net of transaction costs and the amount due on settlement or redemption of borrowings is
recognised over the term of the borrowing.
Amounts falling due within one year:
Bonds
Bank loans
Collateral liabilities
Other borrowings
Bank borrowings secured against Indian assets
Amounts owed to subsidiaries2
Derivative financial instruments
Other creditors
Accruals and deferred income3
Amounts falling due after more than one year:
Deferred tax
Bonds
Bank loans
Bank borrowings secured against Indian assets
Derivative financial instruments
2021
€m
20201
€m
2,251
–
962
36
862
158,017
109
92
432
162,761
–
42,447
350
385
3,940
47,122
2,259
708
5,292
56
–
208,258
559
101
89
217,322
722
47,432
1,346
951
4,177
54,628
Notes:
1 Components for 2020 have been represented to align with the 2021 presentation, separating borrowings that were previously shown together as bonds and other loans. There is no impact on
total amounts falling due within one year or total amounts falling due after more than one year.
2 Amounts owed to subsidiaries are unsecured, have no fixed date of repayment and are repayable on demand.
3 Includes €339 million (2020: €nil) payable in relation to the irrevocable and non-discretionary share buyback programme announced in March 2021.
Included in amounts falling due after more than one year are bonds of €30,337 million which are due in more than five years from 1 April 2021
and are payable otherwise than by instalments. Interest payable on these bonds ranges from 0.0% to 7.875%.
4,797
–
4,797
4,796
1
4,797
28,815,914,978
920,800
28,816,835,778
28,815,258,178
656,800
28,815,914,978
Ordinary shares of 20 20⁄21 US cents each allotted,
issued and fully paid:1,2,3
1 April
Allotted during the year
31 March
Notes:
1 At 31 March 2021 there were 50,000 (2020: 50,000) 7% cumulative fixed rate shares of £1 each in issue.
2 At 31 March 2021 the Company held 592,642,309 (2020: 2,043,750,434) treasury shares with a nominal value of €99 million (2020: €340 million). The market value of shares held was €918
214 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
215 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the Company financial statements (continued)
Notes to the Company financial statements (continued)
Notes to the Company financial statements (continued)
Amounts owed by subsidiaries are classified and recorded at amortised cost and reduced by allowances for expected credit losses. Estimated
Amounts owed by subsidiaries are classified and recorded at amortised cost and reduced by allowances for expected credit losses. Estimated
future credit losses are first recorded on initial recognition of a receivable and are based on estimated probability of default. Individual balances
future credit losses are first recorded on initial recognition of a receivable and are based on estimated probability of default. Individual balances
are written off when management deems them not to be collectible. Derivative financial instruments are measured at fair value through profit
are written off when management deems them not to be collectible. Derivative financial instruments are measured at fair value through profit
6. Called up share capital
Accounting policies
Equity instruments issued by the Company are recorded at the amount of the proceeds received, net of direct issuance costs.
2021
Number
€m
2020
Number
€m
3. Debtors
3. Debtors
Accounting policies
Accounting policies
and loss.
and loss.
Amounts falling due within one year:
Amounts falling due within one year:
Amounts owed by subsidiaries1
Amounts owed by subsidiaries1
Taxation recoverable
Taxation recoverable
Other debtors
Other debtors
Derivative financial instruments
Derivative financial instruments
Amounts falling due after more than one year:
Amounts falling due after more than one year:
Deferred tax
Deferred tax
Derivative financial instruments
Derivative financial instruments
Note:
Note:
losses are considered to be immaterial.
losses are considered to be immaterial.
4. Other Investments
4. Other Investments
Accounting policies
Accounting policies
Collateral
Collateral
5. Creditors
5. Creditors
Accounting policies
Accounting policies
Capital market and bank borrowings
Capital market and bank borrowings
recognised over the term of the borrowing.
recognised over the term of the borrowing.
Amounts falling due within one year:
Amounts falling due within one year:
Bonds
Bonds
Bank loans
Bank loans
Collateral liabilities
Collateral liabilities
Other borrowings
Other borrowings
Bank borrowings secured against Indian assets
Bank borrowings secured against Indian assets
Amounts owed to subsidiaries2
Amounts owed to subsidiaries2
Derivative financial instruments
Derivative financial instruments
Other creditors
Other creditors
Accruals and deferred income3
Accruals and deferred income3
Amounts falling due after more than one year:
Amounts falling due after more than one year:
Deferred tax
Deferred tax
Bonds
Bonds
Bank loans
Bank loans
Notes:
Notes:
Bank borrowings secured against Indian assets
Bank borrowings secured against Indian assets
Derivative financial instruments
Derivative financial instruments
Investments are classified and measured at amortised cost using the effective interest rate method, less any impairment.
Investments are classified and measured at amortised cost using the effective interest rate method, less any impairment.
Interest-bearing loans and overdrafts are initially measured at fair value (which is equal to cost at inception) and are subsequently measured at
Interest-bearing loans and overdrafts are initially measured at fair value (which is equal to cost at inception) and are subsequently measured at
amortised cost using the effective interest rate method, except where they are identified as a hedged item in a designated fair value hedge
amortised cost using the effective interest rate method, except where they are identified as a hedged item in a designated fair value hedge
relationship. Any difference between the proceeds net of transaction costs and the amount due on settlement or redemption of borrowings is
relationship. Any difference between the proceeds net of transaction costs and the amount due on settlement or redemption of borrowings is
1 Components for 2020 have been represented to align with the 2021 presentation, separating borrowings that were previously shown together as bonds and other loans. There is no impact on
1 Components for 2020 have been represented to align with the 2021 presentation, separating borrowings that were previously shown together as bonds and other loans. There is no impact on
total amounts falling due within one year or total amounts falling due after more than one year.
total amounts falling due within one year or total amounts falling due after more than one year.
2 Amounts owed to subsidiaries are unsecured, have no fixed date of repayment and are repayable on demand.
2 Amounts owed to subsidiaries are unsecured, have no fixed date of repayment and are repayable on demand.
3 Includes €339 million (2020: €nil) payable in relation to the irrevocable and non-discretionary share buyback programme announced in March 2021.
3 Includes €339 million (2020: €nil) payable in relation to the irrevocable and non-discretionary share buyback programme announced in March 2021.
Included in amounts falling due after more than one year are bonds of €30,337 million which are due in more than five years from 1 April 2021
Included in amounts falling due after more than one year are bonds of €30,337 million which are due in more than five years from 1 April 2021
and are payable otherwise than by instalments. Interest payable on these bonds ranges from 0.0% to 7.875%.
and are payable otherwise than by instalments. Interest payable on these bonds ranges from 0.0% to 7.875%.
2021
2021
€m
€m
2020
2020
€m
€m
163,667
163,667
224,799
224,799
164,149
164,149
225,819
225,819
194
194
14
14
274
274
164
164
2,964
2,964
3,128
3,128
268
268
71
71
681
681
–
–
8,424
8,424
8,424
8,424
2021
2021
€m
€m
3,107
3,107
2020
2020
€m
€m
1,115
1,115
2021
2021
€m
€m
2,251
2,251
–
–
962
962
36
36
862
862
109
109
92
92
432
432
20201
20201
€m
€m
2,259
2,259
708
708
5,292
5,292
56
56
–
–
559
559
101
101
89
89
158,017
158,017
208,258
208,258
162,761
162,761
217,322
217,322
–
–
42,447
42,447
350
350
385
385
3,940
3,940
47,122
47,122
722
722
47,432
47,432
1,346
1,346
951
951
4,177
4,177
54,628
54,628
1 Amounts owned by subsidiaries are unsecured, have no fixed date of repayment and are repayable on demand with sufficient liquidity in the group to flow funds if required. Therefore expected credit
1 Amounts owned by subsidiaries are unsecured, have no fixed date of repayment and are repayable on demand with sufficient liquidity in the group to flow funds if required. Therefore expected credit
7. Share-based payments
million (2020: €2,610 million). During the year, 63,830,400 (2020: 49,629,851) treasury shares were reissued under Group share schemes.
3 On 5 March 2019 the Company announced the placing of subordinated mandatory convertible bonds totalling £1.72 billion with a 2 year maturity date in 2021 and £1.72 billion with a 3 year
maturity date due in 2022. During the year, 1,426,788,937 treasury shares were issued in settlement of tranche 1 of the maturing subordinated mandatory convertible bond. The remaining bonds
are convertible into a total of 1,426,793,872 ordinary shares with a conversion price of £1.2055 per share. For further details see note 21 “Borrowings” in the consolidated financial statements.
Accounting policies
The Group operates a number of equity-settled share-based payment plans for the employees of subsidiaries using the Company’s equity
instruments. The fair value of the compensation given in respect of these share-based payment plans is recognised as a capital contribution to
the Company’s subsidiaries over the vesting period. The capital contribution is reduced by any payments received from subsidiaries in respect of
these share-based payments.
The Company currently uses a number of equity-settled share plans to grant options and shares to the Directors and employees of its
subsidiaries.
At 31 March 2021, the Company had 62 million ordinary share options outstanding (2020: 53 million).
The Company has made capital contributions to its subsidiaries in relation to share-based payments. At 31 March 2021, the cumulative capital
contribution net of payments received from subsidiaries was €218 million (2020: €169 million). During the year ended 31 March 2021, the total
capital contribution arising from share-based payments was €136 million (2020: €136 million), with payments of €87 million (2020: €68 million)
received from subsidiaries.
Full details of share-based payments, share option schemes and share plans are disclosed in note 26 “Share-based payments” to the
consolidated financial statements.
8. Reserves
The Board is responsible for the Group’s capital management including the approval of dividends. This includes an assessment of both the level
of reserves legally available for distribution and consideration as to whether the Company would be solvent and retain sufficient liquidity
following any proposed distribution.
As Vodafone Group Plc is a Group holding company with no direct operations, its ability to make shareholder distributions is dependent on its
ability to receive funds for such purposes from its subsidiaries in a manner which creates profits available for distribution for the Company. The
major factors that impact the ability of the Company to access profits held in subsidiary companies at an appropriate level to fulfil its needs for
distributable reserves on an ongoing basis include:
− the absolute size of the profit pools either currently available for distribution or capable of realisation into distributable reserves in the relevant
entities;
− the location of these entities in the Group’s corporate structure;
− profit and cash flow generation in those entities; and
− the risk of adverse changes in business valuations giving rise to investment impairment charges, reducing profits available for distribution.
The Group’s consolidated reserves set out on page 123 do not reflect the profits available for distribution in the Group.
216 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the Company financial statements (continued)
Notes to the Company financial statements (continued)
9. Equity dividends
Accounting policies
Dividends paid and received are included in the Company financial statements in the period in which the related dividends are actually paid or
received or, in respect of the Company’s final dividend for the year, approved by shareholders.
Declared during the financial year:
Final dividend for the year ended 31 March 2020: 4.50 eurocents per share
(2019: 4.16 eurocents per share)
Interim dividend for the year ended 31 March 2021: 4.50 eurocents per share
(2020: 4.50 eurocents per share)
Proposed after the balance sheet date and not recognised as a liability:
Final dividend for the year ended 31 March 2021: 4.50 eurocents per share
(2020: 4.50 eurocents per share)
10. Contingent liabilities and legal proceedings
Other guarantees
2021
€m
2020
€m
1,205
1,112
1,207
2,412
1,205
2,317
1,260
1,205
2021
€m
3,340
2020
€m
3,979
Other guarantees and contingent liabilities
Other guarantees principally comprise the Company’s guarantee of the Group’s 50% share of a US$3.5 billion loan facility (2020: AUD1.7 billion
and US$3.5 billion loan facilities), which forms part of the Group’s overall joint venture investment in TPG Telecom Ltd (2020: Vodafone
Hutchison Australia Pty Limited), and the guarantee of €1.8 billion (2020: €1.9 billion) of subsidiary spectrum payments.
The Company will guarantee the debts and liabilities of certain of its UK subsidiaries at the balance sheet date in accordance with section 479C
of the Companies Act 2006. The Company has assessed the probability of loss under these guarantees as remote.
As detailed in note 25 “Post employment benefits” to the consolidated financial statements, the Company is the sponsor of the Group’s main
defined benefit scheme in the UK, being the Vodafone Group UK Pension Scheme (‘Vodafone UK plan’). The results, assets and liabilities
associated with the Vodafone UK plan are recognised in the financial statements of Vodafone UK Limited and Vodafone Group Services Limited.
As detailed in note 29 “Contingent liabilities and legal proceedings” to the consolidated financial statements, the Company has covenanted to
provide security on the Group’s performance bonds and also in favour of the trustee of the Vodafone Group UK Pension Scheme and the
Trustees of THUS Plc Group Scheme.
Legal proceedings
Details regarding certain legal actions which involve the Company are set out in note 29 “Contingent liabilities and legal proceedings” to the
consolidated financial statements.
11. Other matters
The auditor’s remuneration for the current year in respect of audit and audit-related services was €3 million (2020: €4 million) and for non-audit
services was €nil (2020: €1 million).
The Directors are remunerated by the Company for their services to the Group as a whole. No remuneration was paid to them specifically in
respect of their services to Vodafone Group Plc for either year. Full details of the Directors’ remuneration are disclosed in the “Annual Report on
Remuneration” on pages 82 to 103.
The Company had two (2020: two) employees throughout the year.
Vodafone Group Plc is incorporated and domiciled in England and Wales (registration number 1833679). The registered address of the
Company is Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, England.
216 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
217 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Notes to the Company financial statements (continued)
Notes to the Company financial statements (continued)
Notes to the Company financial statements (continued)
9. Equity dividends
9. Equity dividends
Accounting policies
Accounting policies
Dividends paid and received are included in the Company financial statements in the period in which the related dividends are actually paid or
Dividends paid and received are included in the Company financial statements in the period in which the related dividends are actually paid or
received or, in respect of the Company’s final dividend for the year, approved by shareholders.
received or, in respect of the Company’s final dividend for the year, approved by shareholders.
Declared during the financial year:
Declared during the financial year:
Final dividend for the year ended 31 March 2020: 4.50 eurocents per share
Final dividend for the year ended 31 March 2020: 4.50 eurocents per share
(2019: 4.16 eurocents per share)
(2019: 4.16 eurocents per share)
Interim dividend for the year ended 31 March 2021: 4.50 eurocents per share
Interim dividend for the year ended 31 March 2021: 4.50 eurocents per share
(2020: 4.50 eurocents per share)
(2020: 4.50 eurocents per share)
Proposed after the balance sheet date and not recognised as a liability:
Proposed after the balance sheet date and not recognised as a liability:
Final dividend for the year ended 31 March 2021: 4.50 eurocents per share
Final dividend for the year ended 31 March 2021: 4.50 eurocents per share
(2020: 4.50 eurocents per share)
(2020: 4.50 eurocents per share)
10. Contingent liabilities and legal proceedings
10. Contingent liabilities and legal proceedings
Other guarantees
Other guarantees
Other guarantees and contingent liabilities
Other guarantees and contingent liabilities
2021
2021
€m
€m
2020
2020
€m
€m
1,205
1,205
1,112
1,112
1,207
1,207
2,412
2,412
1,205
1,205
2,317
2,317
1,260
1,260
1,205
1,205
2021
2021
€m
€m
3,340
3,340
2020
2020
€m
€m
3,979
3,979
Other guarantees principally comprise the Company’s guarantee of the Group’s 50% share of a US$3.5 billion loan facility (2020: AUD1.7 billion
Other guarantees principally comprise the Company’s guarantee of the Group’s 50% share of a US$3.5 billion loan facility (2020: AUD1.7 billion
and US$3.5 billion loan facilities), which forms part of the Group’s overall joint venture investment in TPG Telecom Ltd (2020: Vodafone
and US$3.5 billion loan facilities), which forms part of the Group’s overall joint venture investment in TPG Telecom Ltd (2020: Vodafone
Hutchison Australia Pty Limited), and the guarantee of €1.8 billion (2020: €1.9 billion) of subsidiary spectrum payments.
Hutchison Australia Pty Limited), and the guarantee of €1.8 billion (2020: €1.9 billion) of subsidiary spectrum payments.
The Company will guarantee the debts and liabilities of certain of its UK subsidiaries at the balance sheet date in accordance with section 479C
The Company will guarantee the debts and liabilities of certain of its UK subsidiaries at the balance sheet date in accordance with section 479C
of the Companies Act 2006. The Company has assessed the probability of loss under these guarantees as remote.
of the Companies Act 2006. The Company has assessed the probability of loss under these guarantees as remote.
As detailed in note 25 “Post employment benefits” to the consolidated financial statements, the Company is the sponsor of the Group’s main
As detailed in note 25 “Post employment benefits” to the consolidated financial statements, the Company is the sponsor of the Group’s main
defined benefit scheme in the UK, being the Vodafone Group UK Pension Scheme (‘Vodafone UK plan’). The results, assets and liabilities
defined benefit scheme in the UK, being the Vodafone Group UK Pension Scheme (‘Vodafone UK plan’). The results, assets and liabilities
associated with the Vodafone UK plan are recognised in the financial statements of Vodafone UK Limited and Vodafone Group Services Limited.
associated with the Vodafone UK plan are recognised in the financial statements of Vodafone UK Limited and Vodafone Group Services Limited.
As detailed in note 29 “Contingent liabilities and legal proceedings” to the consolidated financial statements, the Company has covenanted to
As detailed in note 29 “Contingent liabilities and legal proceedings” to the consolidated financial statements, the Company has covenanted to
provide security on the Group’s performance bonds and also in favour of the trustee of the Vodafone Group UK Pension Scheme and the
provide security on the Group’s performance bonds and also in favour of the trustee of the Vodafone Group UK Pension Scheme and the
Details regarding certain legal actions which involve the Company are set out in note 29 “Contingent liabilities and legal proceedings” to the
Details regarding certain legal actions which involve the Company are set out in note 29 “Contingent liabilities and legal proceedings” to the
Trustees of THUS Plc Group Scheme.
Trustees of THUS Plc Group Scheme.
Legal proceedings
Legal proceedings
consolidated financial statements.
consolidated financial statements.
11. Other matters
11. Other matters
services was €nil (2020: €1 million).
services was €nil (2020: €1 million).
The auditor’s remuneration for the current year in respect of audit and audit-related services was €3 million (2020: €4 million) and for non-audit
The auditor’s remuneration for the current year in respect of audit and audit-related services was €3 million (2020: €4 million) and for non-audit
The Directors are remunerated by the Company for their services to the Group as a whole. No remuneration was paid to them specifically in
The Directors are remunerated by the Company for their services to the Group as a whole. No remuneration was paid to them specifically in
respect of their services to Vodafone Group Plc for either year. Full details of the Directors’ remuneration are disclosed in the “Annual Report on
respect of their services to Vodafone Group Plc for either year. Full details of the Directors’ remuneration are disclosed in the “Annual Report on
Remuneration” on pages 82 to 103.
Remuneration” on pages 82 to 103.
The Company had two (2020: two) employees throughout the year.
The Company had two (2020: two) employees throughout the year.
Vodafone Group Plc is incorporated and domiciled in England and Wales (registration number 1833679). The registered address of the
Vodafone Group Plc is incorporated and domiciled in England and Wales (registration number 1833679). The registered address of the
Company is Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, England.
Company is Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, England.
Non-GAAP measures
Unaudited information
Introduction
In the discussion of the Group’s reported operating results, non-GAAP measures are presented to provide readers with additional financial
information that is regularly reviewed by management. However, this additional information presented is not uniformly defined by all
companies including those in the Group’s industry. Accordingly, it may not be comparable with similarly titled measures and disclosures by
other companies. Additionally, certain information presented is derived from amounts calculated in accordance with IFRS but is not itself a
measure defined under GAAP. Such measures should not be viewed in isolation or as an alternative to the equivalent GAAP measure.
The non-GAAP measures discussed in this document are listed below, together with the location of the definition and the reconciliation
between the non-GAAP measure and the closest equivalent GAAP measure.
Non-GAAP measure
Defined on page
Closest equivalent GAAP measure
Reconciled on page
Performance metrics
Adjusted EBITDA
Organic adjusted EBITDA growth
Organic percentage point change in
adjusted EBITDA margin
Organic revenue growth
Organic service revenue growth
Organic mobile service revenue growth
Organic fixed service revenue growth
Organic retail revenue growth
Page 218
Page 218
Page 218
Page 218
Page 218
Page 218
Page 218
Page 218
Operating profit
Not applicable
Not applicable
Page 23
Not applicable
Not applicable
Reported revenue growth
Reported service revenue growth
Reported mobile service revenue growth
Reported fixed service revenue growth
Reported retail revenue growth
Page 219
Pages 219 to 220
Pages 219 to 220
Pages 219 to 220
Pages 219 to 220
Other metrics
Adjusted profit attributable to owners of the
parent
Adjusted basic earnings per share
Cash flow, funding and capital
allocation metrics
Free cash flow (pre spectrum, restructuring
and integration costs)
Free cash flow
Gross debt
Net debt
Return on Capital Employed ('ROCE')
Financing and Taxation metrics
Adjusted net financing costs
Adjusted profit before taxation
Adjusted income tax expense
Adjusted effective tax rate
Share of adjusted results in equity
accounted associates and joint ventures
Page 221
Profit attributable to owners of the parent
Page 221
Page 221
Basic earnings per share
Page 221
Page 222
Inflow from operating activities
Page 222
Page 222
Page 222
Page 222
Page 223
Page 225
Page 225
Page 225
Page 225
Page 225
Pages 30 and 222
Inflow from operating activities
Page 222
Borrowings
Borrowings less cash and cash equivalents Page 222
ROCE calculated on a GAAP basis
Pages 223 to 224
Net financing costs
Profit before taxation
Income tax expense
Effective tax rate
Share of results in equity accounted
associates and joint ventures
Page 29
Page 225
Page 225
Page 225
Page 226
218 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Non-GAAP measures (continued)
Non-GAAP measures (continued)
Unaudited information
Performance metrics
Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA is our segment performance measure. Adjusted EBITDA margin is adjusted EBITDA divided by Revenue.
To simplify our reporting, the Group no longer discloses adjusted operating profit and EBIT. These metrics were non-GAAP measures disclosed in
the year ended 31 March 2020.
Non-GAAP measure
Adjusted EBITDA
Purpose
It is used for internal performance reporting.
It is used in conjunction with financial measures such
as operating profit to assess our operating
performance and profitability.
It is a key external metric used by the investor
community to assess performance of our operations.
Definition
Adjusted EBITDA is operating profit after depreciation
on lease-related right of use assets and interest on
leases but excluding depreciation, amortisation and
gains/losses on disposal of owned fixed assets and
excluding share of results in associates and joint
ventures, impairment losses, restructuring costs
arising from discrete restructuring plans, other
income and expense and significant items that are
not considered by management to be reflective of
the underlying performance of the Group.
Organic growth
All amounts in this document marked with an “*” represent organic growth. This measure presents performance on a comparable basis,
including merger and acquisition activity and movements in foreign exchange rates.
Organic growth is calculated for revenue and profitability metrics, as follows:
− Service revenue;
− Mobile service revenue;
− Fixed service revenue;
− Retail revenue;
− Adjusted EBITDA; and
− Percentage point change in adjusted EBITDA margin.
Whilst organic growth is not intended to be a substitute for reported growth, nor is it superior to reported growth, we believe that the measure
provides useful and necessary information to investors and other interested parties for the following reasons:
− It provides additional information on underlying growth of the business without the effect of certain factors unrelated to its operating
performance;
− It is used for internal performance analysis; and
− It facilitates comparability of underlying growth with other companies (although the term “organic” is not a defined term under GAAP and
may not, therefore, be comparable with similarly titled measures reported by other companies).
We have not provided a comparative in respect of organic growth rates as the current rates describe the change between the beginning and
end of the current period, with such changes being explained by the commentary in this document. If comparatives were provided, significant
sections of the commentary for prior periods would also need to be included, reducing the usefulness and transparency of this document.
218 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
219 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Non-GAAP measures (continued)
Non-GAAP measures (continued)
Non-GAAP measures (continued)
Unaudited information
Unaudited information
Performance metrics
Performance metrics
Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA and Adjusted EBITDA margin
the year ended 31 March 2020.
the year ended 31 March 2020.
Non-GAAP measure
Non-GAAP measure
Purpose
Purpose
Adjusted EBITDA is our segment performance measure. Adjusted EBITDA margin is adjusted EBITDA divided by Revenue.
Adjusted EBITDA is our segment performance measure. Adjusted EBITDA margin is adjusted EBITDA divided by Revenue.
To simplify our reporting, the Group no longer discloses adjusted operating profit and EBIT. These metrics were non-GAAP measures disclosed in
To simplify our reporting, the Group no longer discloses adjusted operating profit and EBIT. These metrics were non-GAAP measures disclosed in
Adjusted EBITDA
Adjusted EBITDA
It is used for internal performance reporting.
It is used for internal performance reporting.
Adjusted EBITDA is operating profit after depreciation
Adjusted EBITDA is operating profit after depreciation
It is used in conjunction with financial measures such
It is used in conjunction with financial measures such
as operating profit to assess our operating
as operating profit to assess our operating
performance and profitability.
performance and profitability.
It is a key external metric used by the investor
It is a key external metric used by the investor
community to assess performance of our operations.
community to assess performance of our operations.
Definition
Definition
on lease-related right of use assets and interest on
on lease-related right of use assets and interest on
leases but excluding depreciation, amortisation and
leases but excluding depreciation, amortisation and
gains/losses on disposal of owned fixed assets and
gains/losses on disposal of owned fixed assets and
excluding share of results in associates and joint
excluding share of results in associates and joint
ventures, impairment losses, restructuring costs
ventures, impairment losses, restructuring costs
arising from discrete restructuring plans, other
arising from discrete restructuring plans, other
income and expense and significant items that are
income and expense and significant items that are
not considered by management to be reflective of
not considered by management to be reflective of
the underlying performance of the Group.
the underlying performance of the Group.
All amounts in this document marked with an “*” represent organic growth. This measure presents performance on a comparable basis,
All amounts in this document marked with an “*” represent organic growth. This measure presents performance on a comparable basis,
including merger and acquisition activity and movements in foreign exchange rates.
including merger and acquisition activity and movements in foreign exchange rates.
Organic growth is calculated for revenue and profitability metrics, as follows:
Organic growth is calculated for revenue and profitability metrics, as follows:
Organic growth
Organic growth
− Service revenue;
− Service revenue;
− Mobile service revenue;
− Mobile service revenue;
− Fixed service revenue;
− Fixed service revenue;
− Retail revenue;
− Retail revenue;
− Adjusted EBITDA; and
− Adjusted EBITDA; and
− Percentage point change in adjusted EBITDA margin.
− Percentage point change in adjusted EBITDA margin.
Whilst organic growth is not intended to be a substitute for reported growth, nor is it superior to reported growth, we believe that the measure
Whilst organic growth is not intended to be a substitute for reported growth, nor is it superior to reported growth, we believe that the measure
provides useful and necessary information to investors and other interested parties for the following reasons:
provides useful and necessary information to investors and other interested parties for the following reasons:
− It provides additional information on underlying growth of the business without the effect of certain factors unrelated to its operating
− It provides additional information on underlying growth of the business without the effect of certain factors unrelated to its operating
performance;
performance;
− It is used for internal performance analysis; and
− It is used for internal performance analysis; and
− It facilitates comparability of underlying growth with other companies (although the term “organic” is not a defined term under GAAP and
− It facilitates comparability of underlying growth with other companies (although the term “organic” is not a defined term under GAAP and
may not, therefore, be comparable with similarly titled measures reported by other companies).
may not, therefore, be comparable with similarly titled measures reported by other companies).
We have not provided a comparative in respect of organic growth rates as the current rates describe the change between the beginning and
We have not provided a comparative in respect of organic growth rates as the current rates describe the change between the beginning and
end of the current period, with such changes being explained by the commentary in this document. If comparatives were provided, significant
end of the current period, with such changes being explained by the commentary in this document. If comparatives were provided, significant
sections of the commentary for prior periods would also need to be included, reducing the usefulness and transparency of this document.
sections of the commentary for prior periods would also need to be included, reducing the usefulness and transparency of this document.
Year ended 31 March 2021
Service revenue
Germany
Mobile service revenue
Fixed service revenue
Italy
Mobile service revenue
Fixed service revenue
UK
Mobile service revenue
Fixed service revenue
Spain
Other Europe
Vodacom
Other Markets
Common Functions
Eliminations
Total service revenue
Other revenue
Revenue
Other growth metrics
Germany - Business fixed service revenue
Italy - Business fixed service revenue
Germany - Retail revenue
Adjusted EBITDA
Germany
Italy
UK
Spain
Other Europe
Vodacom
Other Markets
Common Functions
Group
Percentage point change in adjusted EBITDA margin
Germany
Italy
UK
Spain
Other Europe
Vodacom
Other Markets
Group
FY21
€m
FY20
€m
Reported
growth
%
Other activity
(incl. M&A)
pps
Foreign
exchange
pps
Organic
growth*
%
11,520
5,056
6,464
4,458
3,244
1,214
4,848
3,428
1,420
3,788
4,859
4,083
3,312
470
(197)
37,141
6,668
43,809
10,696
5,084
5,612
4,833
3,625
1,208
5,020
3,618
1,402
3,904
4,890
4,470
3,796
494
(232)
37,871
7,103
44,974
893
490
11,201
813
453
10,315
5,634
1,597
1,367
1,044
1,760
1,873
1,228
(117)
14,386
43.4%
31.9%
22.2%
25.1%
31.7%
36.2%
32.6%
32.8%
5,077
2,068
1,500
1,009
1,738
2,088
1,400
1
14,881
42.0%
37.4%
23.1%
23.5%
31.4%
37.8%
31.9%
33.1%
7.7
(0.6)
15.2
(7.8)
(10.5)
0.5
(3.4)
(5.3)
1.3
(3.0)
(0.6)
(8.7)
(12.8)
(1.9)
(6.1)
(2.6)
9.8
8.2
8.6
11.0
(22.8)
(8.9)
3.5
1.3
(10.3)
(12.3)
(7.2)
(0.1)
(13.8)
0.3
-
0.9
0.7
-
2.3
0.2
(2.1)
0.1
10.2
(1.4)
-
(1.2)
-
(0.2)
(7.5)
(9.2)
10.1
-
(0.1)
(3.3)
-
9.0
-
-
-
-
-
-
1.9
2.0
2.0
-
1.3
12.5
13.4
3.2
4.1
3.4
-
-
-
-
-
1.6
-
1.5
13.2
11.8
0.5
(0.7)
1.4
(7.5)
(10.5)
1.4
(0.8)
(3.3)
5.6
(2.8)
(1.4)
3.9
10.8
(0.1)
(2.0)
(0.4)
9.8
8.0
1.1
1.8
(12.7)
(7.3)
3.4
(0.5)
2.9
8.5
(3.3)
(1.1)
3.2
(1.2)
1.4
(5.5)
(0.9)
1.6
0.3
(1.6)
0.7
(0.3)
(1.0)
4.2
(0.1)
(0.1)
(0.2)
-
(0.6)
0.1
-
-
(0.1)
-
0.1
0.3
(0.8)
-
0.4
(1.3)
(1.1)
1.5
0.2
(1.3)
(0.7)
(0.2)
220 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Non-GAAP measures (continued)
Non-GAAP measures (continued)
Unaudited information
Quarter ended 31 March 2021
Service revenue
Germany
Mobile service revenue
Fixed service revenue
Italy
Mobile service revenue
Fixed service revenue
UK
Mobile service revenue
Fixed service revenue
Spain
Other Europe
Vodacom
Other Markets
Common Functions
Eliminations
Total service revenue
Other revenue
Revenue
Other growth metrics
Germany - Retail revenue
Quarter ended 31 December 2020
Service revenue
Germany
Mobile service revenue
Fixed service revenue
Italy
Mobile service revenue
Fixed service revenue
UK
Mobile service revenue
Fixed service revenue
Spain
Other Europe
Vodacom
Other Markets
Common Functions
Eliminations
Total service revenue
Other revenue
Revenue
Other growth metrics
Germany - Retail revenue
Q4 FY21
€m
Q4 FY20
€m
Reported
growth
%
Other activity
(incl. M&A)
pps
Foreign
exchange
pps
Organic
growth*
%
2,885
1,274
1,611
1,084
788
296
1,231
880
351
951
1,233
1,078
827
136
(59)
9,366
1,815
11,181
2,852
1,262
1,590
1,189
870
319
1,287
909
378
972
1,233
1,091
881
137
(48)
9,594
1,691
11,285
1.2
1.0
1.3
(8.8)
(9.4)
(7.2)
(4.4)
(3.2)
(7.1)
(2.2)
-
(1.2)
(6.1)
(2.4)
7.3
(0.9)
–
(0.1)
0.1
1.0
0.1
3.4
2.4
–
8.3
0.9
(1.1)
0.1
0.2
0.4
(0.8)
0.2
–
–
–
–
–
–
1.4
1.4
1.0
-
0.9
8.4
19.0
2.8
3.6
2.9
1.2
0.9
1.4
(7.8)
(9.3)
(3.8)
(0.6)
(1.8)
2.2
(1.3)
(0.2)
7.3
13.1
0.8
10.1
2.2
2,812
2,762
1.8
-
-
1.8
Q3 FY21
€m
Q3 FY20
€m
Reported
growth
%
Other activity
(incl. M&A)
pps
Foreign
exchange
pps
Organic
growth*
%
2,912
1,279
1,633
1,125
818
307
1,216
848
368
957
1,215
1,056
806
115
(45)
9,357
1,844
11,201
2,883
1,273
1,610
1,220
916
304
1,282
924
358
966
1,265
1,162
891
117
(53)
9,733
2,017
11,750
1.0
0.5
1.4
(7.8)
(10.7)
1.0
(5.1)
(8.2)
2.8
(0.9)
(4.0)
(9.1)
(9.5)
(3.9)
(8.6)
(4.7)
–
–
–
–
–
0.1
–
–
–
(0.2)
1.5
–
–
0.2
–
0.2
–
–
–
–
–
–
4.7
4.6
5.1
–
1.8
12.4
21.8
4.1
4.8
4.2
1.0
0.5
1.4
(7.8)
(10.7)
1.1
(0.4)
(3.6)
7.9
(1.1)
(0.7)
3.3
12.3
0.4
(3.8)
(0.3)
2,832
2,791
1.5
–
–
1.5
220 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
221 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Non-GAAP measures (continued)
Non-GAAP measures (continued)
Non-GAAP measures (continued)
Unaudited information
Unaudited information
Quarter ended 31 March 2021
Quarter ended 31 March 2021
Service revenue
Service revenue
Germany
Germany
Mobile service revenue
Mobile service revenue
Fixed service revenue
Fixed service revenue
Mobile service revenue
Mobile service revenue
Fixed service revenue
Fixed service revenue
Italy
Italy
UK
UK
Mobile service revenue
Mobile service revenue
Fixed service revenue
Fixed service revenue
Spain
Spain
Other Europe
Other Europe
Vodacom
Vodacom
Other Markets
Other Markets
Common Functions
Common Functions
Eliminations
Eliminations
Total service revenue
Total service revenue
Other revenue
Other revenue
Revenue
Revenue
Other growth metrics
Other growth metrics
Germany - Retail revenue
Germany - Retail revenue
Service revenue
Service revenue
Germany
Germany
Mobile service revenue
Mobile service revenue
Fixed service revenue
Fixed service revenue
Italy
Italy
UK
UK
Mobile service revenue
Mobile service revenue
Fixed service revenue
Fixed service revenue
Mobile service revenue
Mobile service revenue
Fixed service revenue
Fixed service revenue
Spain
Spain
Other Europe
Other Europe
Vodacom
Vodacom
Other Markets
Other Markets
Common Functions
Common Functions
Eliminations
Eliminations
Total service revenue
Total service revenue
Other revenue
Other revenue
Revenue
Revenue
Other growth metrics
Other growth metrics
Germany - Retail revenue
Germany - Retail revenue
Quarter ended 31 December 2020
Quarter ended 31 December 2020
Q4 FY21
Q4 FY21
€m
€m
Q4 FY20
Q4 FY20
€m
€m
Reported
Reported
Other activity
Other activity
growth
growth
%
%
(incl. M&A)
(incl. M&A)
pps
pps
Foreign
Foreign
exchange
exchange
pps
pps
Organic
Organic
growth*
growth*
%
%
11,181
11,181
11,285
11,285
2,885
2,885
1,274
1,274
1,611
1,611
1,084
1,084
788
788
296
296
1,231
1,231
880
880
351
351
951
951
1,233
1,233
1,078
1,078
827
827
136
136
(59)
(59)
9,366
9,366
1,815
1,815
2,912
2,912
1,279
1,279
1,633
1,633
1,125
1,125
818
818
307
307
1,216
1,216
848
848
368
368
957
957
1,215
1,215
1,056
1,056
806
806
115
115
(45)
(45)
9,357
9,357
1,844
1,844
2,852
2,852
1,262
1,262
1,590
1,590
1,189
1,189
870
870
319
319
1,287
1,287
909
909
378
378
972
972
1,233
1,233
1,091
1,091
881
881
137
137
(48)
(48)
9,594
9,594
1,691
1,691
2,883
2,883
1,273
1,273
1,610
1,610
1,220
1,220
916
916
304
304
1,282
1,282
924
924
358
358
966
966
1,265
1,265
1,162
1,162
891
891
117
117
(53)
(53)
9,733
9,733
2,017
2,017
11,201
11,201
11,750
11,750
1.2
1.2
1.0
1.0
1.3
1.3
(8.8)
(8.8)
(9.4)
(9.4)
(7.2)
(7.2)
(4.4)
(4.4)
(3.2)
(3.2)
(7.1)
(7.1)
(2.2)
(2.2)
-
-
(1.2)
(1.2)
(6.1)
(6.1)
(2.4)
(2.4)
7.3
7.3
(0.9)
(0.9)
1.0
1.0
0.5
0.5
1.4
1.4
(7.8)
(7.8)
(10.7)
(10.7)
1.0
1.0
(5.1)
(5.1)
(8.2)
(8.2)
2.8
2.8
(0.9)
(0.9)
(4.0)
(4.0)
(9.1)
(9.1)
(9.5)
(9.5)
(3.9)
(3.9)
(8.6)
(8.6)
(4.7)
(4.7)
–
–
(0.1)
(0.1)
0.1
0.1
1.0
1.0
0.1
0.1
3.4
3.4
2.4
2.4
–
–
8.3
8.3
0.9
0.9
(1.1)
(1.1)
0.1
0.1
0.2
0.2
0.4
0.4
(0.8)
(0.8)
0.2
0.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.1
0.1
(0.2)
(0.2)
1.5
1.5
0.2
0.2
–
–
0.2
0.2
–
–
–
–
–
–
–
–
–
–
–
–
1.4
1.4
1.4
1.4
1.0
1.0
-
-
0.9
0.9
8.4
8.4
19.0
19.0
2.8
2.8
3.6
3.6
2.9
2.9
–
–
–
–
–
–
–
–
–
–
–
–
4.7
4.7
4.6
4.6
5.1
5.1
–
–
1.8
1.8
12.4
12.4
21.8
21.8
4.1
4.1
4.8
4.8
4.2
4.2
1.2
1.2
0.9
0.9
1.4
1.4
(7.8)
(7.8)
(9.3)
(9.3)
(3.8)
(3.8)
(0.6)
(0.6)
(1.8)
(1.8)
2.2
2.2
(1.3)
(1.3)
(0.2)
(0.2)
7.3
7.3
13.1
13.1
0.8
0.8
10.1
10.1
2.2
2.2
1.0
1.0
0.5
0.5
1.4
1.4
(7.8)
(7.8)
(10.7)
(10.7)
1.1
1.1
(0.4)
(0.4)
(3.6)
(3.6)
7.9
7.9
(1.1)
(1.1)
(0.7)
(0.7)
3.3
3.3
12.3
12.3
0.4
0.4
(3.8)
(3.8)
(0.3)
(0.3)
2,812
2,812
2,762
2,762
1.8
1.8
-
-
-
-
1.8
1.8
Q3 FY21
Q3 FY21
€m
€m
Q3 FY20
Q3 FY20
€m
€m
Reported
Reported
Other activity
Other activity
growth
growth
%
%
(incl. M&A)
(incl. M&A)
pps
pps
Foreign
Foreign
exchange
exchange
pps
pps
Organic
Organic
growth*
growth*
%
%
2,832
2,832
2,791
2,791
1.5
1.5
–
–
–
–
1.5
1.5
Other metrics
Non-GAAP measure
Adjusted profit attributable
to owners of the parent
Adjusted basic earnings per
share
Purpose
This metric is used in the calculation of adjusted basic
earnings per share.
This performance measure is used in discussions with
the investor community.
Definition
Adjusted profit attributable to owners of the parent
excludes restructuring costs arising from discrete
restructuring plans, amortisation of customer bases
and brand intangible assets, impairment losses, other
income and expense and mark-to-market and foreign
exchange movements, together with related tax
effects.
Adjusted basic earnings per share is Adjusted profit
attributable to owners of the parent divided by the
weighted average number of shares outstanding. This
is the same denominator used when calculating basic
earnings / (loss) per share.
Adjusted profit attributable to owners of the parent
The reconciliation of adjusted profit attributable to owners of the parent to the closest equivalent GAAP measure, profit attributable to owners of
the parent, is provided below.
Adjusted EBITDA
Restructuring costs
Interest on lease liabilities
Depreciation and amortisation1
Share of results of equity accounted associates
and joint ventures2
Impairment losses
Other income and expense
Operating profit
Non-operating expense
Investment income
Financing costs
Profit/(loss) before taxation
Income tax expense
Profit/(loss) for the financial year
FY21
FY20
Reported
Adjustments
Adjusted
Reported
Adjustments
Adjusted
€m
14,386
(356)
374
(10,217)
342
–
568
5,097
–
330
(1,027)
4,400
(3,864)
536
€m
–
356
–
488
90
–
(568)
366
–
–
(1,068)
(702)
2,985
2,283
€m
14,386
–
374
(9,729)
432
–
–
5,463
–
330
(2,095)
3,698
(879)
2,819
€m
14,881
(695)
330
(10,508)
(2,505)
(1,685)
4,281
4,099
(3)
248
(3,549)
795
(1,250)
(455)
€m
–
695
–
423
2,264
1,685
(4,281)
786
3
–
1,333
2,122
451
2,573
€m
14,881
–
330
(10,085)
(241)
–
–
4,885
–
248
(2,216)
2,917
(799)
2,118
Profit attributable to:
- Owners of the parent
- Non-controlled interests
Profit/(loss) for the financial year
Note:
1. Reported depreciation and amortisation excludes depreciation on leased assets and loss on disposal of Right-of-use assets. Refer to Additional Information on page 226 for an analysis of
2,278
5
2,283
2,390
429
2,819
2,567
6
2,573
(920)
465
(455)
112
424
536
1,647
471
2,118
depreciation and amortisation. The adjustments of €488 million (FY20: €423 million) relate to amortisation of customer bases and brand intangible assets.
2. Refer to page 226 for an analysis of the adjustments to share of results of equity accounted associates and joint ventures.
Adjusted basic earnings per share
The reconciliation of adjusted basic earnings per share to the closest equivalent GAAP measure, basic loss per share, is provided below.
Profit attributable to owners of the parent
Adjusted profit attributable to owners of the parent
Weighted average number of shares outstanding - Basic
Basic earnings/(loss) per share
Adjusted basic earnings per share
FY21
€m
112
2,390
FY20
€m
(920)
1,647
Million
29,592
Million
29,422
eurocents
0.38c
8.08c
eurocents
(3.13)c
5.60c
222 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Non-GAAP measures (continued)
Non-GAAP measures (continued)
Unaudited information
Cash flow, funding and capital allocation metrics
Cash flow and funding
Non-GAAP measure
Free cash flow (pre
spectrum, restructuring
and integration costs)
Purpose
Internal performance reporting.
External metric used by investor community.
Setting director and management remuneration.
Key external metric used to evaluate liquidity and
the cash generated by our operations.
Free cash flow
Gross debt
Net debt
Internal performance reporting.
External metric used by investor community.
Assists comparability with other companies,
although our metric may not be directly
comparable to similarly titled measures used by
other companies.
Prominent metric used by debt rating agencies and
the investor community.
Prominent metric used by debt rating agencies and
the investor community.
Definition
Free cash flow (pre spectrum, restructuring and
integration costs) is Adjusted EBITDA after cash flows
in relation to cash capital additions, working capital,
disposal of property, plant and equipment, interest
received and paid, dividends received from associates
and investments, dividends paid to non-controlling
shareholders in subsidiaries and payments in respect
of lease liabilities but before restructuring costs
arising from discrete restructuring plans, licence and
spectrum payments and integration costs.
Free cash flow is Free cash flow (pre spectrum,
restructuring and integration costs) adjusted for
licence and spectrum payments, restructuring and
integration payments and integration capital
expenditure.
Non-current borrowings and current borrowings,
excluding lease liabilities, collateral liabilities and
borrowings specifically secured against Indian assets.
Gross debt less short-term investments, collateral
assets, mark-to-market adjustments and cash and
cash equivalents.
The tables below present: (i) the reconciliation between Inflow from operating activities and Free cash flow (pre spectrum, restructuring and
integration costs) and (ii) the reconciliation between Borrowings, Gross debt and Net debt.
Inflow from operating activities
Net tax paid
Cash generated by operations
Capital additions
Working capital movement in respect of capital additions
Disposal of property, plant and equipment
Interest received and paid
Taxation
Dividends received from associates and investments
Dividends paid to non-controlling shareholders in subsidiaries
Payments in respect of lease liabilities
Restructuring and integration payments
Other
Free cash flow (pre spectrum, restructuring and integration costs)
Borrowings
Adjustments:
- Lease liabilities
- Bank borrowings secured against Indian assets
- Collateral liabilities
Gross debt
Collateral liabilities
Cash and cash equivalents
Short-term investments
Collateral assets
Derivative financial instruments
Mark-to-market gains deferred in hedge reserves
Net debt1
FY21
€m
17,215
1,020
18,235
(7,854)
410
42
(1,860)
(1,020)
628
(391)
(3,897)
421
305
5,019
FY20
€m
17,379
930
18,309
(7,411)
(11)
41
(1,465)
(930)
417
(348)
(3,552)
570
80
5,700
(67,760)
(74,925)
13,032
1,247
962
(52,519)
(962)
5,821
4,007
3,107
(859)
862
(40,543)
12,118
1,346
5,292
(56,169)
(5,292)
13,557
4,132
1,115
4,409
(3,799)
(42,047)
Note:
1 Net debt as at 31 March 2020 has been aligned to the FY21 presentation, increasing by €3,799 million to exclude derivative movements in cash flow hedging reserves and decreasing by €121
million to reflect that Vodafone Egypt is no longer held for sale.
222 Vodafone Group Plc
Annual Report 2021
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Governance
Financials
Other information
223 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Non-GAAP measures (continued)
Non-GAAP measures (continued)
Non-GAAP measures (continued)
Unaudited information
Unaudited information
Cash flow, funding and capital allocation metrics
Cash flow, funding and capital allocation metrics
Non-GAAP measure
Non-GAAP measure
Purpose
Purpose
Free cash flow (pre
Free cash flow (pre
Internal performance reporting.
Internal performance reporting.
Cash flow and funding
Cash flow and funding
spectrum, restructuring
spectrum, restructuring
and integration costs)
and integration costs)
External metric used by investor community.
External metric used by investor community.
Setting director and management remuneration.
Setting director and management remuneration.
Key external metric used to evaluate liquidity and
Key external metric used to evaluate liquidity and
the cash generated by our operations.
the cash generated by our operations.
Free cash flow
Free cash flow
Internal performance reporting.
Internal performance reporting.
External metric used by investor community.
External metric used by investor community.
Assists comparability with other companies,
Assists comparability with other companies,
although our metric may not be directly
although our metric may not be directly
comparable to similarly titled measures used by
comparable to similarly titled measures used by
other companies.
other companies.
Definition
Definition
Free cash flow (pre spectrum, restructuring and
Free cash flow (pre spectrum, restructuring and
integration costs) is Adjusted EBITDA after cash flows
integration costs) is Adjusted EBITDA after cash flows
in relation to cash capital additions, working capital,
in relation to cash capital additions, working capital,
disposal of property, plant and equipment, interest
disposal of property, plant and equipment, interest
received and paid, dividends received from associates
received and paid, dividends received from associates
and investments, dividends paid to non-controlling
and investments, dividends paid to non-controlling
shareholders in subsidiaries and payments in respect
shareholders in subsidiaries and payments in respect
of lease liabilities but before restructuring costs
of lease liabilities but before restructuring costs
arising from discrete restructuring plans, licence and
arising from discrete restructuring plans, licence and
spectrum payments and integration costs.
spectrum payments and integration costs.
Free cash flow is Free cash flow (pre spectrum,
Free cash flow is Free cash flow (pre spectrum,
restructuring and integration costs) adjusted for
restructuring and integration costs) adjusted for
licence and spectrum payments, restructuring and
licence and spectrum payments, restructuring and
integration payments and integration capital
integration payments and integration capital
expenditure.
expenditure.
Gross debt
Gross debt
Prominent metric used by debt rating agencies and
Prominent metric used by debt rating agencies and
Non-current borrowings and current borrowings,
Non-current borrowings and current borrowings,
the investor community.
the investor community.
excluding lease liabilities, collateral liabilities and
excluding lease liabilities, collateral liabilities and
borrowings specifically secured against Indian assets.
borrowings specifically secured against Indian assets.
Net debt
Net debt
Prominent metric used by debt rating agencies and
Prominent metric used by debt rating agencies and
Gross debt less short-term investments, collateral
Gross debt less short-term investments, collateral
the investor community.
the investor community.
assets, mark-to-market adjustments and cash and
assets, mark-to-market adjustments and cash and
cash equivalents.
cash equivalents.
The tables below present: (i) the reconciliation between Inflow from operating activities and Free cash flow (pre spectrum, restructuring and
The tables below present: (i) the reconciliation between Inflow from operating activities and Free cash flow (pre spectrum, restructuring and
integration costs) and (ii) the reconciliation between Borrowings, Gross debt and Net debt.
integration costs) and (ii) the reconciliation between Borrowings, Gross debt and Net debt.
Inflow from operating activities
Inflow from operating activities
Net tax paid
Net tax paid
Cash generated by operations
Cash generated by operations
Capital additions
Capital additions
Working capital movement in respect of capital additions
Working capital movement in respect of capital additions
Disposal of property, plant and equipment
Disposal of property, plant and equipment
Interest received and paid
Interest received and paid
Taxation
Taxation
Dividends received from associates and investments
Dividends received from associates and investments
Dividends paid to non-controlling shareholders in subsidiaries
Dividends paid to non-controlling shareholders in subsidiaries
Payments in respect of lease liabilities
Payments in respect of lease liabilities
Restructuring and integration payments
Restructuring and integration payments
Other
Other
Free cash flow (pre spectrum, restructuring and integration costs)
Free cash flow (pre spectrum, restructuring and integration costs)
Borrowings
Borrowings
Adjustments:
Adjustments:
- Lease liabilities
- Lease liabilities
- Collateral liabilities
- Collateral liabilities
Gross debt
Gross debt
Collateral liabilities
Collateral liabilities
- Bank borrowings secured against Indian assets
- Bank borrowings secured against Indian assets
Cash and cash equivalents
Cash and cash equivalents
Short-term investments
Short-term investments
Collateral assets
Collateral assets
Derivative financial instruments
Derivative financial instruments
Mark-to-market gains deferred in hedge reserves
Mark-to-market gains deferred in hedge reserves
Net debt1
Net debt1
Note:
Note:
FY21
FY21
€m
€m
17,215
17,215
1,020
1,020
18,235
18,235
(7,854)
(7,854)
410
410
42
42
(1,860)
(1,860)
(1,020)
(1,020)
628
628
(391)
(391)
(3,897)
(3,897)
421
421
305
305
5,019
5,019
13,032
13,032
1,247
1,247
962
962
(52,519)
(52,519)
(962)
(962)
5,821
5,821
4,007
4,007
3,107
3,107
(859)
(859)
862
862
(40,543)
(40,543)
FY20
FY20
€m
€m
17,379
17,379
930
930
18,309
18,309
(7,411)
(7,411)
(11)
(11)
41
41
(1,465)
(1,465)
(930)
(930)
417
417
(348)
(348)
(3,552)
(3,552)
570
570
80
80
5,700
5,700
12,118
12,118
1,346
1,346
5,292
5,292
(56,169)
(56,169)
(5,292)
(5,292)
13,557
13,557
4,132
4,132
1,115
1,115
4,409
4,409
(3,799)
(3,799)
(42,047)
(42,047)
(67,760)
(67,760)
(74,925)
(74,925)
1 Net debt as at 31 March 2020 has been aligned to the FY21 presentation, increasing by €3,799 million to exclude derivative movements in cash flow hedging reserves and decreasing by €121
1 Net debt as at 31 March 2020 has been aligned to the FY21 presentation, increasing by €3,799 million to exclude derivative movements in cash flow hedging reserves and decreasing by €121
million to reflect that Vodafone Egypt is no longer held for sale.
million to reflect that Vodafone Egypt is no longer held for sale.
Return on Capital Employed
Non-GAAP measure
Return on Capital
Employed ('ROCE')
Purpose
ROCE is a metric used by the investor community
and reflects how efficiently we are generating profit
with the capital we deploy.
Pre-tax ROCE for
controlled operations.
As above.
Post-tax ROCE (including
Associates and Joint
Ventures)
Definition
We calculate ROCE by dividing Operating profit by
the average of capital employed as reported in the
consolidated statement of financial position. Capital
employed includes total borrowings, cash and cash
equivalents, derivative financial instruments included
in trade and other receivables/payables, short term
investments, collateral assets, financial liabilities
under put option arrangements and equity.
We calculate pre-tax ROCE (controlled operations)
by dividing Operating profit excluding impairment
losses, amortisation of customer bases and brand
intangible assets, restructuring costs arising from
discrete restructuring plans, lease-related interest
and other income and expense and excluding the
share of results in associates and joint ventures. On a
post-tax basis, the measure includes our share of
results from associates and joint ventures and a
notional tax charge. Capital is equivalent to net
operating assets and is calculated as the average of
opening and closing balances of: property, plant and
equipment (including Right-of-Use assets and
liabilities), intangible assets (including goodwill),
operating working capital (including held for sale
assets and excluding derivative balances) and
provisions. Other assets that do not directly
contribute to returns are excluded from this measure
and include: other investments, current and deferred
tax balances and post employment benefits. On a
post-tax basis, ROCE also includes our investments in
associates and joint ventures
Return on Capital Employed (‘ROCE’)
The table below presents the calculation of ROCE using GAAP measures as reported in the consolidated income statement and consolidated
statement of financial position.
Operating profit
Total borrowings
Cash and cash equivalents
Derivative financial instruments included in trade and other receivables
Derivative financial instruments included in trade and other payables
Short term investments
Collateral assets
Financial liabilities under put option arrangements
Equity
Capital employed at end of the year
Average capital employed for the year1
ROCE
FY21
€m
5,097
FY20
€m
4,099
67,760
(5,821)
(3,151)
4,010
(4,007)
(3,107)
492
57,816
113,992
74,925
(13,557)
(9,176)
4,767
(4,132)
(1,115)
1,850
62,625
116,187
115,090
104,255
4.4%
3.9%
Note:
1 Average capital employed for FY20 is calculated with reference to the Group’s published results for FY19, which were prepared in accordance with IAS 17.
224 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Non-GAAP measures (continued)
Non-GAAP measures (continued)
Unaudited information
Return on Capital Employed (‘ROCE’): Non-GAAP basis
The table below presents the calculation of ROCE using non-GAAP measures and reconciling to the closest equivalent GAAP measure.
Operating profit
Interest on lease liabilities
Restructuring costs
Impairment loss
Other income
Share of results in equity accounted associates and joint ventures
Adjusted operating profit for calculating pre-tax ROCE (controlled)
Share of adjusted results in equity accounted associates and joint ventures (excluding amortisation of
acquired customer base and brand intangible assets)2
Notional tax at adjusted effective tax rate
Adjusted operating profit for calculating post-tax ROCE (controlled and associates/joint
ventures)
Capital employed for calculating ROCE on a GAAP basis
Adjustments:
- Leases
- Deferred tax assets
- Deferred tax liabilities
- Taxation recoverable
- Taxation payable
- Other investments
- Excluding associates and joint ventures
- Pension assets and liabilities
Adjusted capital employed for calculating pre-tax ROCE (controlled)
Associates and joint ventures
Adjusted capital employed for calculating post-tax ROCE (controlled and associates/joint
ventures)
FY21
€m
5,097
(374)
356
–
(568)
(342)
4,169
203
(1,176)
FY20
Re-presented1
€m
4,099
(330)
695
1,685
(4,281)
2,505
4,373
(456)
(991)
3,196
2,926
113,992
116,187
(13,032)
(21,569)
2,095
(434)
769
(1,514)
(5,927)
453
74,833
5,927
(12,118)
(23,606)
2,103
(278)
787
(1,397)
(5,419)
(152)
76,107
5,419
80,760
81,526
Average capital employed for calculating pre-tax ROCE (controlled)
75,470
69,743
Average capital employed for calculating post-tax ROCE (controlled and associates/joint
ventures)
81,143
74,308
Pre-tax ROCE (controlled)
Post-tax ROCE (controlled and associates/joint ventures)
5.5%
3.9%
6.3%
3.9%
Notes:
1 The presentation of FY20 ROCE has been aligned to the FY21 presentation. As a result, the FY20 ROCE has been amended to exclude the amortisation of acquired customer base and brand
intangible assets of €215 million from Adjusted operating profit for calculating pre-tax ROCE (controlled) and from the Share of adjusted results in equity accounted associates and joint ventures.
Furthermore, Other investments now excludes amounts owed to M-Pesa account holders of €1,237 million for FY20 and €1,048 million for FY19.
2 Share of adjusted results in equity accounted associates and joint ventures is a Non-GAAP measure. See 217 for more information.
224 Vodafone Group Plc
Annual Report 2021
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Governance
Financials
Other information
225 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Non-GAAP measures (continued)
Non-GAAP measures (continued)
Non-GAAP measures (continued)
Unaudited information
Unaudited information
Return on Capital Employed (‘ROCE’): Non-GAAP basis
Return on Capital Employed (‘ROCE’): Non-GAAP basis
The table below presents the calculation of ROCE using non-GAAP measures and reconciling to the closest equivalent GAAP measure.
The table below presents the calculation of ROCE using non-GAAP measures and reconciling to the closest equivalent GAAP measure.
Share of results in equity accounted associates and joint ventures
Share of results in equity accounted associates and joint ventures
Adjusted operating profit for calculating pre-tax ROCE (controlled)
Adjusted operating profit for calculating pre-tax ROCE (controlled)
Share of adjusted results in equity accounted associates and joint ventures (excluding amortisation of
Share of adjusted results in equity accounted associates and joint ventures (excluding amortisation of
acquired customer base and brand intangible assets)2
acquired customer base and brand intangible assets)2
Notional tax at adjusted effective tax rate
Notional tax at adjusted effective tax rate
Adjusted operating profit for calculating post-tax ROCE (controlled and associates/joint
Adjusted operating profit for calculating post-tax ROCE (controlled and associates/joint
Capital employed for calculating ROCE on a GAAP basis
Capital employed for calculating ROCE on a GAAP basis
- Excluding associates and joint ventures
- Excluding associates and joint ventures
- Pension assets and liabilities
- Pension assets and liabilities
Adjusted capital employed for calculating pre-tax ROCE (controlled)
Adjusted capital employed for calculating pre-tax ROCE (controlled)
Associates and joint ventures
Associates and joint ventures
Adjusted capital employed for calculating post-tax ROCE (controlled and associates/joint
Adjusted capital employed for calculating post-tax ROCE (controlled and associates/joint
Average capital employed for calculating pre-tax ROCE (controlled)
Average capital employed for calculating pre-tax ROCE (controlled)
75,470
75,470
69,743
69,743
Average capital employed for calculating post-tax ROCE (controlled and associates/joint
Average capital employed for calculating post-tax ROCE (controlled and associates/joint
Pre-tax ROCE (controlled)
Pre-tax ROCE (controlled)
Post-tax ROCE (controlled and associates/joint ventures)
Post-tax ROCE (controlled and associates/joint ventures)
1 The presentation of FY20 ROCE has been aligned to the FY21 presentation. As a result, the FY20 ROCE has been amended to exclude the amortisation of acquired customer base and brand
1 The presentation of FY20 ROCE has been aligned to the FY21 presentation. As a result, the FY20 ROCE has been amended to exclude the amortisation of acquired customer base and brand
intangible assets of €215 million from Adjusted operating profit for calculating pre-tax ROCE (controlled) and from the Share of adjusted results in equity accounted associates and joint ventures.
intangible assets of €215 million from Adjusted operating profit for calculating pre-tax ROCE (controlled) and from the Share of adjusted results in equity accounted associates and joint ventures.
Furthermore, Other investments now excludes amounts owed to M-Pesa account holders of €1,237 million for FY20 and €1,048 million for FY19.
Furthermore, Other investments now excludes amounts owed to M-Pesa account holders of €1,237 million for FY20 and €1,048 million for FY19.
2 Share of adjusted results in equity accounted associates and joint ventures is a Non-GAAP measure. See 217 for more information.
2 Share of adjusted results in equity accounted associates and joint ventures is a Non-GAAP measure. See 217 for more information.
Operating profit
Operating profit
Interest on lease liabilities
Interest on lease liabilities
Restructuring costs
Restructuring costs
Impairment loss
Impairment loss
Other income
Other income
ventures)
ventures)
Adjustments:
Adjustments:
- Leases
- Leases
- Deferred tax assets
- Deferred tax assets
- Deferred tax liabilities
- Deferred tax liabilities
- Taxation recoverable
- Taxation recoverable
- Taxation payable
- Taxation payable
- Other investments
- Other investments
ventures)
ventures)
ventures)
ventures)
Notes:
Notes:
FY21
FY21
€m
€m
5,097
5,097
(374)
(374)
356
356
–
–
(568)
(568)
(342)
(342)
4,169
4,169
203
203
(1,176)
(1,176)
(13,032)
(13,032)
(21,569)
(21,569)
2,095
2,095
(434)
(434)
769
769
(1,514)
(1,514)
(5,927)
(5,927)
453
453
74,833
74,833
5,927
5,927
Re-presented1
Re-presented1
FY20
FY20
€m
€m
4,099
4,099
(330)
(330)
695
695
1,685
1,685
(4,281)
(4,281)
2,505
2,505
4,373
4,373
(456)
(456)
(991)
(991)
(12,118)
(12,118)
(23,606)
(23,606)
2,103
2,103
(278)
(278)
787
787
(1,397)
(1,397)
(5,419)
(5,419)
(152)
(152)
76,107
76,107
5,419
5,419
3,196
3,196
2,926
2,926
113,992
113,992
116,187
116,187
80,760
80,760
81,526
81,526
81,143
81,143
74,308
74,308
5.5%
5.5%
3.9%
3.9%
6.3%
6.3%
3.9%
3.9%
Financing and Taxation metrics
Non-GAAP measure
Adjusted net financing
costs
Adjusted profit before
taxation
Purpose
This metric is used by both management and the
investor community.
This metric is used in the calculation of adjusted
basic earnings per share.
This metric is used in the calculation of the adjusted
effective tax rate (see below).
Adjusted income tax
expense
This metric is used in the calculation of the adjusted
effective tax rate (see below).
Adjusted effective tax rate This metric is used by both management and the
investor community.
This metric is used in the calculation of adjusted
effective tax rate and ROCE.
Share of adjusted results
in equity accounted
associates and joint
ventures
Definition
Adjusted net financing costs exclude mark-to-market
and foreign exchange gains/losses.
Adjusted profit before taxation excludes the tax
effects of items excluded from adjusted basic
earnings per share, including: impairment losses,
amortisation of customer bases and brand intangible
assets, restructuring costs arising from discrete
restructuring plans, other income and expense and
mark to market and foreign exchange movements.
Adjusted income tax expense excludes the tax effects
of items excluded from adjusted basic earnings per
share, including: impairment losses, amortisation of
customer bases and brand intangible assets,
restructuring costs arising from discrete restructuring
plans, other income and expense and mark to market
and foreign exchange movements. It also excludes
deferred tax movements relating to tax losses in
Luxembourg as well as other significant one-off
items.
Adjusted income tax expense (see above) divided by
Adjusted profit before taxation (see above).
Share of results in equity accounted associates and
joint ventures excluding restructuring costs,
amortisation of acquired customer base and brand
intangible assets and other income and expense.
Adjusted tax metrics
The table below reconciles profit before taxation and income tax expense to adjusted profit before taxation, adjusted income tax expense and
adjusted effective tax rate.
Profit before taxation
Adjustments to derive adjusted profit before tax
Adjusted profit before taxation
Share of adjusted results in associates and joint ventures
Adjusted profit before tax for calculating adjusted effective tax rate
Income tax expense
Tax on adjustments to derive adjusted profit before tax
Adjustments
- Deferred tax following revaluation of investments in Luxembourg
- Reduction in deferred tax following rate change in Luxembourg
- Deferred tax on use of Luxembourg losses in the year
Adjusted income tax expense for calculating adjusted tax rate
FY21
€m
4,400
(702)
3,698
(432)
3,266
(3,864)
(162)
2,827
-
320
(879)
FY20
€m
795
2,122
2,917
241
3,158
(1,250)
(432)
(346)
881
348
(799)
Adjusted effective tax rate
26.9%
25.3%
226 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Non-GAAP measures (continued)
Non-GAAP measures (continued)
Unaudited information
Share of adjusted results in equity accounted associates and joint ventures
The table below reconciles share of adjusted results in equity accounted associates and joint ventures to the closest GAAP equivalent, share of
results in equity accounted associates and joint ventures.
Share of results in equity accounted associates and joint ventures
Restructuring costs
Amortisation of acquired customer base and brand intangible assets
Other income and expense
Share of adjusted results in equity accounted associates and joint ventures
FY21
€m
342
3
229
(142)
432
FY20
€m
(2,505)
25
215
2,024
(241)
Additional information
Analysis of depreciation and amortisation
The table below presents an analysis of the difference components of depreciation and amortisation discussed in the document, reconciled to
the GAAP amounts in the consolidated income statement.
Depreciation on leased assets
Depreciation on owned assets
Amortisation of intangible assets
Total depreciation and amortisation
Loss on disposal of owned fixed assets
Loss on disposal of Right-of-Use assets
Total depreciation, amortisation and loss on disposal of fixed assets - as recognised in the
consolidated income statement
FY21
€m
3,914
5,766
4,421
14,101
30
(13)
FY20
€m
3,720
5,995
4,459
14,174
54
(3)
14,118
14,225
Analysis of tangible and intangible additions
The table below presents an analysis of the difference components of tangible and intangible additions discussed in the document.
Capital additions
Integration related capital additions
Licence additions
Additions to customer bases
Additions
Intangible assets - additions
Property, plant and equipment (owned) - additions
Total additions
FY21
€m
7,854
329
896
1
9,080
3,367
5,713
9,080
FY20
€m
7,411
111
1,776
-
9,298
4,061
5,237
9,298
226 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Non-GAAP measures (continued)
Non-GAAP measures (continued)
Unaudited information
Share of adjusted results in equity accounted associates and joint ventures
The table below reconciles share of adjusted results in equity accounted associates and joint ventures to the closest GAAP equivalent, share of
results in equity accounted associates and joint ventures.
Share of results in equity accounted associates and joint ventures
Restructuring costs
Other income and expense
Amortisation of acquired customer base and brand intangible assets
Share of adjusted results in equity accounted associates and joint ventures
The table below presents an analysis of the difference components of depreciation and amortisation discussed in the document, reconciled to
the GAAP amounts in the consolidated income statement.
Total depreciation, amortisation and loss on disposal of fixed assets - as recognised in the
Analysis of tangible and intangible additions
The table below presents an analysis of the difference components of tangible and intangible additions discussed in the document.
Additional information
Analysis of depreciation and amortisation
Depreciation on leased assets
Depreciation on owned assets
Amortisation of intangible assets
Total depreciation and amortisation
Loss on disposal of owned fixed assets
Loss on disposal of Right-of-Use assets
consolidated income statement
Capital additions
Integration related capital additions
Licence additions
Additions to customer bases
Additions
Intangible assets - additions
Property, plant and equipment (owned) - additions
Total additions
FY21
€m
342
3
229
(142)
432
FY20
€m
(2,505)
25
215
2,024
(241)
14,101
14,174
14,118
14,225
FY21
€m
3,914
5,766
4,421
30
(13)
FY21
€m
7,854
329
896
1
9,080
3,367
5,713
9,080
FY20
€m
3,720
5,995
4,459
54
(3)
FY20
€m
7,411
111
1,776
-
9,298
4,061
5,237
9,298
227 Vodafone Group Plc
Annual Report 2021
Shareholder information
Strategic report
Governance
Financials
Other information
2020/21 Financial calendar key dates
Ex-dividend date for final dividend
Record date for final dividend
AGM
Final dividend payment
24 June 2021
25 June 2021
27 July 2021
6 August 2021
Shareholder information
Managing your shares via Shareview
Our share Registrar, Equiniti operates a portfolio service, Shareview, for
investors in ordinary shares. This provides our shareholders with online
access to information about their investments as well as a facility to help
manage their holdings online, such as being able to:
Useful contacts
The Registrar
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Telephone: +44 (0) 371 384 2532
See help.shareview.co.uk for more information
about this service
ADS holders
AST
Operations Center
6201 15th Avenue
Brooklyn, NY 11219
United States of America
Telephone: +1 800 233 5601 (toll free) or, for calls outside the
United States: +1 201 806 4103
Email: db@astfinancial.com
See astfinancial.com for more information
about this service
– update your details online including your address and dividend
payment instructions;
– buy and sell shares easily;
– receive certain shareholder communications electronically;
– send your general meeting voting instructions in advance of
shareholder meetings;
– view information about and join the Vodafone Group plc Dividend
Reinvestment Plan (‘DRIP’); and
– access your online statements.
Equiniti also offers an internet and telephone share dealing
service to existing shareholders. The service can be obtained at
www.shareview.co.uk.
Shareholders with any queries regarding their holding should contact
Equiniti on the contact details above.
Shareholders may also find the investors section of our corporate website,
vodafone.com/investor, useful for general queries and information about
the Company.
AGM
Our thirty-seventh AGM will be held at The Pavilion, Vodafone House,
Newbury RG14 2FN on 27 July 2021 at 10.00 am.
Shareholder communications
We are taking significant steps to reduce our impact on our planet. The
use of electronic communications, rather than printed paper documents,
means information about the Company can be accessed through emails
or the Company’s website, thus reducing our impact on the environment.
A growing number of our shareholders have opted to receive
communications from us electronically. Shareholders who have done
so will be sent an email alert containing a link to the relevant documents.
We encourage all our shareholders to sign up for this service. You can
register for this service at www.shareview.co.uk or by contacting Equiniti
by the telephone number provided on the left of this page.
See vodafone.com/investor
for further information about this service
228 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Shareholder information (continued)
ShareGift
We support ShareGift, the charity share donation scheme (registered
charity number 1052686). Through ShareGift, shareholders who
have only a very small number of shares, which might be considered
uneconomic to sell, are able to donate them to charity. Donated shares
are aggregated and sold by ShareGift with the proceeds being passed
on to a wide range of UK charities.
See sharegift.org or call +44 (0)20 7930 3737 for further details.
Landmark Financial Asset Search
We participate in an online service which provides a search facility
for solicitors and probate professionals to quickly and easily trace
UK shareholdings relating to deceased estates.
Visit www.landmarkfas.co.uk or call +44 (0)844 844 9967 for
further information.
Warning to shareholders (“boiler room” scams)
Over recent years we have become aware of investors who have received
unsolicited calls or correspondence, in some cases purporting to have
been issued by us, concerning investment matters. These callers typically
make claims of highly profitable investment opportunities which turn out
to be worthless or simply do not exist. These approaches are usually made
by unauthorised companies and individuals and are commonly known as
“boiler room” scams. Investors are advised to be wary of any unsolicited
advice or offers to buy shares. If it sounds too good to be true, it often is.
See the FCA website at fca.org.uk/scamsmart for more detailed
information about this or similar activities.
Dividends
See pages 23 and 152 for details on dividend amount per share.
Euro dividends
Dividends are declared in euros and paid in euros and pounds sterling
according to where the shareholder is resident. Cash dividends to ADS
holders are paid by the ADS depositary bank in US dollars. This aligns
the Group’s shareholder returns with the primary currency in which we
generate free cash flow. The foreign exchange rates at which dividends
declared in euros are converted into pounds sterling and US dollars are
calculated based on the average exchange rate of the five business days
during the week prior to the payment of the dividend.
Payment of dividends by direct credit
We pay cash dividends directly to shareholders’ bank or building society
accounts. This ensures secure delivery and means dividend payments
are credited to shareholders’ designated accounts on the same day as
payment. A dividend confirmation covering both the interim and final
dividends paid during the financial year is sent to shareholders at the
time of the interim dividend in February. ADS holders may choose to
have their cash dividends paid by cheque from our ADS depository
bank, Deutsche Bank.
Dividend reinvestment plan
We offer a dividend reinvestment plan which allows holders of ordinary
shares who choose to participate to use their cash dividends to acquire
additional shares in the Company. These are purchased on their behalf by
the plan administrator, Equiniti, through a low-cost dealing arrangement.
For ADS holders, Deutsche Bank, through its transfer agent, American
Stock Transfer & Trust Company, LLC (‘AST’), maintains the DB Global
Direct Investor Services Program which is a direct purchase and sale plan
for depositary receipts with a dividend reinvestment facility. See vodafone.
com/dividends for further information about dividend payments or,
alternatively, please contact our registrar, Equiniti or AST for ADS holders
as applicable.
Contact information for Equiniti and AST
can be found on page 227
Taxation of dividends
See page 231 for details on dividend taxation.
Shareholders as at 31 March 2021
Number of ordinary
1-1,000
1,001-5,000
5,001-50,000
50,001-100,000
100,001-500,000
More than 500,000
Number of accounts
297,155
39,967
11,002
452
637
1,098
% of total of issued shares
0.21
0.30
0.46
0.11
0.52
98.40
Major shareholders
As at 17 May 2021, Deutsche Bank, as custodian of our ADR programme,
held approximately 13.68% of our ordinary shares of 20 20/21 US cents
each as nominee.
At this date, the total number of ADRs outstanding was 383,236,963 and
1,442 holders of ordinary shares had registered addresses in the United
States and held a total of approximately 0.008% of the ordinary shares of
the Company.
At 31 March 2021, the following percentage interests in the ordinary
share capital of the Company, disclosable under the Disclosure Guidance
and Transparency Rules, (‘DTR 5’), have been notified to the Directors.
Shareholder
BlackRock, Inc.2
Norges Bank
Shareholding1
6.90%
3.0004%
Notes:
1. The percentage of voting rights detailed above was calculated at the time of the relevant
disclosures made in accordance with Rule 5 of the Disclosure Guidance and Transparency Rules.
2. On 1 February 2021, BlackRock, Inc. disclosed by way of a Schedule 13G filed with the SEC,
beneficial ownership of 2,333,163,274 ordinary shares of the Company as of 31 December 2020,
representing 8.7% of that class of shares at that date.
The Company is not aware of any changes in the interests disclosed
under DTR 5 between 31 March 2021 and 17 May 2021.
As far as the Company is aware, between 1 April 2016 and 17 May 2021,
no shareholder, other than described above, held 3% or more of the voting
rights attributable to the ordinary shares of the Company other than
(i) Deutsche Bank, as custodian of our ADR programme, (ii) Blackrock, Inc
and Norges Bank (as described above) and (iii) Morgan Stanley, which owned
3.6% of the Company’s ordinary shares at 13 February 2018.
The rights attaching to the ordinary shares of the Company held by
these shareholders are identical in all respects to the rights attaching to
all the ordinary shares of the Company. As at 17 May 2021 the Directors
are not aware of any other interest of 3% or more in the ordinary share
capital of the Company. The Company is not directly or indirectly owned
or controlled by any foreign government or any other legal entity. There
are no arrangements known to the Company that could result in a change
of control of the Company.
Other information
Articles of Association and applicable English law
The following description summarises certain provisions of the
Company’s Articles of Association and applicable English law. This
summary is qualified in its entirety by reference to the Companies Act
2006 and the Company’s Articles of Association. The Company is a public
limited company under the laws of England and Wales. The Company is
registered in England and Wales under the name Vodafone Group Public
Limited Company with the registration number 1833679.
Full details on where copies of the Articles of Association can be
obtained are detailed on page 230 under “Documents on display”
228 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
229 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Shareholder information (continued)
ShareGift
Taxation of dividends
We support ShareGift, the charity share donation scheme (registered
See page 231 for details on dividend taxation.
Shareholders as at 31 March 2021
charity number 1052686). Through ShareGift, shareholders who
have only a very small number of shares, which might be considered
uneconomic to sell, are able to donate them to charity. Donated shares
are aggregated and sold by ShareGift with the proceeds being passed
on to a wide range of UK charities.
See sharegift.org or call +44 (0)20 7930 3737 for further details.
Landmark Financial Asset Search
We participate in an online service which provides a search facility
for solicitors and probate professionals to quickly and easily trace
UK shareholdings relating to deceased estates.
Visit www.landmarkfas.co.uk or call +44 (0)844 844 9967 for
further information.
Number of ordinary
1-1,000
1,001-5,000
5,001-50,000
50,001-100,000
100,001-500,000
More than 500,000
Major shareholders
each as nominee.
Number of accounts
% of total of issued shares
297,155
39,967
11,002
452
637
1,098
0.21
0.30
0.46
0.11
0.52
98.40
As at 17 May 2021, Deutsche Bank, as custodian of our ADR programme,
held approximately 13.68% of our ordinary shares of 20 20/21 US cents
Warning to shareholders (“boiler room” scams)
Over recent years we have become aware of investors who have received
unsolicited calls or correspondence, in some cases purporting to have
been issued by us, concerning investment matters. These callers typically
make claims of highly profitable investment opportunities which turn out
At this date, the total number of ADRs outstanding was 383,236,963 and
1,442 holders of ordinary shares had registered addresses in the United
States and held a total of approximately 0.008% of the ordinary shares of
the Company.
to be worthless or simply do not exist. These approaches are usually made
At 31 March 2021, the following percentage interests in the ordinary
by unauthorised companies and individuals and are commonly known as
share capital of the Company, disclosable under the Disclosure Guidance
“boiler room” scams. Investors are advised to be wary of any unsolicited
and Transparency Rules, (‘DTR 5’), have been notified to the Directors.
advice or offers to buy shares. If it sounds too good to be true, it often is.
See the FCA website at fca.org.uk/scamsmart for more detailed
information about this or similar activities.
See pages 23 and 152 for details on dividend amount per share.
Dividends
Euro dividends
Dividends are declared in euros and paid in euros and pounds sterling
according to where the shareholder is resident. Cash dividends to ADS
holders are paid by the ADS depositary bank in US dollars. This aligns
the Group’s shareholder returns with the primary currency in which we
Shareholder
BlackRock, Inc.2
Norges Bank
Notes:
1. The percentage of voting rights detailed above was calculated at the time of the relevant
disclosures made in accordance with Rule 5 of the Disclosure Guidance and Transparency Rules.
2. On 1 February 2021, BlackRock, Inc. disclosed by way of a Schedule 13G filed with the SEC,
beneficial ownership of 2,333,163,274 ordinary shares of the Company as of 31 December 2020,
representing 8.7% of that class of shares at that date.
The Company is not aware of any changes in the interests disclosed
under DTR 5 between 31 March 2021 and 17 May 2021.
Shareholding1
6.90%
3.0004%
generate free cash flow. The foreign exchange rates at which dividends
As far as the Company is aware, between 1 April 2016 and 17 May 2021,
declared in euros are converted into pounds sterling and US dollars are
no shareholder, other than described above, held 3% or more of the voting
calculated based on the average exchange rate of the five business days
rights attributable to the ordinary shares of the Company other than
during the week prior to the payment of the dividend.
Payment of dividends by direct credit
We pay cash dividends directly to shareholders’ bank or building society
(i) Deutsche Bank, as custodian of our ADR programme, (ii) Blackrock, Inc
and Norges Bank (as described above) and (iii) Morgan Stanley, which owned
3.6% of the Company’s ordinary shares at 13 February 2018.
accounts. This ensures secure delivery and means dividend payments
The rights attaching to the ordinary shares of the Company held by
are credited to shareholders’ designated accounts on the same day as
these shareholders are identical in all respects to the rights attaching to
payment. A dividend confirmation covering both the interim and final
dividends paid during the financial year is sent to shareholders at the
time of the interim dividend in February. ADS holders may choose to
have their cash dividends paid by cheque from our ADS depository
bank, Deutsche Bank.
Dividend reinvestment plan
We offer a dividend reinvestment plan which allows holders of ordinary
shares who choose to participate to use their cash dividends to acquire
additional shares in the Company. These are purchased on their behalf by
the plan administrator, Equiniti, through a low-cost dealing arrangement.
For ADS holders, Deutsche Bank, through its transfer agent, American
Stock Transfer & Trust Company, LLC (‘AST’), maintains the DB Global
Direct Investor Services Program which is a direct purchase and sale plan
for depositary receipts with a dividend reinvestment facility. See vodafone.
com/dividends for further information about dividend payments or,
as applicable.
Contact information for Equiniti and AST
can be found on page 227
all the ordinary shares of the Company. As at 17 May 2021 the Directors
are not aware of any other interest of 3% or more in the ordinary share
capital of the Company. The Company is not directly or indirectly owned
or controlled by any foreign government or any other legal entity. There
are no arrangements known to the Company that could result in a change
of control of the Company.
Other information
Articles of Association and applicable English law
The following description summarises certain provisions of the
Company’s Articles of Association and applicable English law. This
summary is qualified in its entirety by reference to the Companies Act
2006 and the Company’s Articles of Association. The Company is a public
limited company under the laws of England and Wales. The Company is
registered in England and Wales under the name Vodafone Group Public
Full details on where copies of the Articles of Association can be
obtained are detailed on page 230 under “Documents on display”
alternatively, please contact our registrar, Equiniti or AST for ADS holders
Limited Company with the registration number 1833679.
All of the Company’s ordinary shares are fully paid. Accordingly, no further
contribution of capital may be required by the Company from the holders
of such shares.
English law specifies that any alteration to the Articles of Association must
be approved by a special resolution of the Company’s shareholders.
Articles of Association
The Company’s Articles of Association do not specifically restrict the
objects of the Company.
Directors
The Directors are empowered under the Articles of Association to exercise
all the powers of the Company subject to any restrictions in the Articles
of Association, the Companies Act 2006 (as defined in the Articles of
Association) and any special resolution.
Under the Company’s Articles of Association a Director cannot vote in
respect of any proposal in which the Director, or any person connected
with the Director, has a material interest other than by virtue of the
Director’s interest in the Company’s shares or other securities. However,
this restriction on voting does not apply in certain circumstances as set
out in the Articles of Association.
The Directors are empowered to exercise all the powers of the Company
to borrow money, subject to the limitation that the aggregate amount of
all liabilities and obligations of the Group outstanding at any time shall not
exceed an amount equal to 1.5 times the aggregate of the Group’s share
capital and reserves calculated in the manner prescribed in the Articles
of Association unless sanctioned by an ordinary resolution of the
Company’s shareholders.
The Company can make market purchases of its own shares or agree
to do so in the future provided it is duly authorised by its members in a
general meeting and subject to and in accordance with section 701 of
the Companies Act 2006. Such authority was given at the 2020 AGM.
On 19 March 2021, the Company announced the commencement of an
irrevocable and non-discretionary share buy-back programme as a result
of the maturing of the second tranche of the mandatory convertible bond
(‘MCB’) on 12 March 2021. In order to satisfy the conversion of the first
tranche of the MCB, 1,426,710,898 shares were issued from existing
shares held in treasury. Under this programme the Company is expected
to purchase up to the number of ordinary shares of 20 20/21 US cents
each announced for the programme on 19 March 2021. The number of
shares expected to be purchased is below the number permitted to be
purchased by the Company pursuant to the authority granted by the
shareholders at the 2020 AGM.
Further details of the programme
can be found on page 31
At each AGM all Directors shall offer themselves for re-election in
accordance with the Company’s Articles of Association and in the
interests of good corporate governance.
Directors are not required under the Company’s Articles of Association
to hold any shares of the Company as a qualification to act as a Director,
although the Executive Directors are required to under the Company’s
Remuneration Policy.
Full details of the Remuneration Policy
can be found on pages 84 to 89
Rights attaching to the Company’s shares
At 31 March 2021, the issued share capital of the Company was
comprised of 50,000 7% cumulative fixed rate shares of £1.00 each and
28,224,193,469 ordinary shares (excluding treasury shares) of 20 20/21
US cents each. As at 31 March 2021, 592,642,309 ordinary shares were
held in Treasury.
Dividend rights
Holders of 7% cumulative fixed rate shares are entitled to be paid
in respect of each financial year, or other accounting period of the
Company, a fixed cumulative preferential dividend of 7% p.a. on the
nominal value of the fixed rate shares. A fixed cumulative preferential
dividend may only be paid out of available distributable profits which
the Directors have resolved should be distributed.
The fixed rate shares do not have any other right to share in the
Company’s profits.
Holders of the Company’s ordinary shares may, by ordinary resolution,
declare dividends but may not declare dividends in excess of the amount
recommended by the Directors. The Board of Directors may also pay
interim dividends. No dividend may be paid other than out of profits
available for distribution.
Dividends on ordinary shares can be paid to shareholders in whatever
currency the Directors decide, using an appropriate exchange rate for
any currency conversions which are required.
If a dividend has not been claimed for one year after the date of the
resolution passed at a general meeting declaring that dividend or the
resolution of the Directors providing for payment of that dividend, the
Directors may invest the dividend or use it in some other way for the
benefit of the Company until the dividend is claimed. If the dividend
remains unclaimed for 12 years after the relevant resolution either
declaring that dividend or providing for payment of that dividend,
it will be forfeited and belong to the Company.
Voting rights
At a general meeting of the Company, when voting on substantive
resolutions (i.e. any resolution which is not a procedural resolution) each
shareholder who is entitled to vote and is present in person or by proxy
has one vote for every share held (a poll vote). Procedural resolutions
(such as a resolution to adjourn a general meeting or a resolution on the
choice of Chairman of a general meeting) shall be decided on a show of
hands, where each shareholder who is present at the meeting has one
vote regardless of the number of shares held, unless a poll is demanded.
Shareholders entitled to vote at general meetings may appoint proxies
who are entitled to vote, attend and speak at general meetings. Two
shareholders present in person or by proxy constitute a quorum for
purposes of a general meeting of the Company.
Under English law, shareholders of a public company such as the
Company are not permitted to pass resolutions by written consent.
Record holders of the Company’s ADSs are entitled to attend, speak
and vote on a poll or a show of hands at any general meeting of the
Company’s shareholders by the depositary’s appointment of them
as corporate representatives or proxies with respect to the underlying
ordinary shares represented by their ADSs. Alternatively, holders of ADSs
are entitled to vote by supplying their voting instructions to the depositary
or its nominee who will vote the ordinary shares underlying their ADSs in
accordance with their instructions.
Holders of the Company’s ADSs are entitled to receive notices of
shareholders’ meetings under the terms of the deposit agreement
relating to the ADSs.
Employees who hold shares in a vested nominee share account are able
to vote through the respective plan’s trustees. Note there is now a vested
share account with Computershare (in respect of shares arising from a
SAYE exercise) and Equatex (MyShareBank).
Holders of the Company’s 7% cumulative fixed rate shares are only
entitled to vote on any resolution to vary or abrogate the rights attached
to the fixed rate shares. Holders have one vote for every fully paid 7%
cumulative fixed rate share.
230 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Shareholder information (continued)
Liquidation rights
In the event of the liquidation of the Company, after payment of all
liabilities and deductions in accordance with English law, the holders of
the Company’s 7% cumulative fixed rate shares would be entitled to a
sum equal to the capital paid up on such shares, together with certain
dividend payments, in priority to holders of the Company’s ordinary
shares. The holders of the fixed rate shares do not have any other right
to share in the Company’s surplus assets.
Pre-emptive rights and new issues of shares
Under section 549 of the Companies Act 2006 Directors are, with certain
exceptions, unable to allot the Company’s ordinary shares or securities
convertible into the Company’s ordinary shares without the authority
of the shareholders in a general meeting. In addition, section 561 of the
Companies Act 2006 imposes further restrictions on the issue of equity
securities (as defined in the Companies Act 2006 which include the
Company’s ordinary shares and securities convertible into ordinary
shares) which are, or are to be, paid up wholly in cash and not first
offered to existing shareholders. The Company’s Articles of Association
allow shareholders to authorise Directors for a period specified in the
relevant resolution to allot (i) relevant securities generally up to an
amount fixed by the shareholders; and (ii) equity securities for cash
other than in connection with a pre-emptive offer up to an amount
specified by the shareholders and free of the pre-emption restriction in
section 561. At the 2020 AGM the amount of relevant securities fixed by
shareholders under (i) above and the amount of equity securities specified
by shareholders under (ii) above were in line with the Pre-Emption Group’s
Statement of Principles.
Further details of such proposals are provided in the 2021 Notice of AGM.
Disclosure of interests in the Company’s shares
There are no provisions in the Articles of Association whereby persons
acquiring, holding or disposing of a certain percentage of the Company’s
shares are required to make disclosure of their ownership percentage
although such requirements exist under the Disclosure Guidance and
Transparency Rules.
General meetings and notices
Subject to the Articles of Association, AGMs are held at such times and
place as determined by the Directors of the Company. The Directors
may also, when they think fit, convene other general meetings of the
Company. General meetings may also be convened on requisition as
provided by the Companies Act 2006.
An AGM is required to be called on not less than 21 days’ notice in
writing. Subject to obtaining shareholder approval on an annual basis,
the Company may call other general meetings on 14 days’ notice.
The Directors may determine that persons entitled to receive notices
of meetings are those persons entered on the register at the close of
business on a day determined by the Directors but not later than 21 days
before the date the relevant notice is sent. The notice may also specify
the record date, the time of which shall be determined in accordance
with the Articles of Association and the Companies Act 2006.
Under section 336 of the Companies Act 2006 the AGM must be held
each calendar year and within six months of the Company’s year end.
Variation of rights
If at any time the Company’s share capital is divided into different classes
of shares, the rights attached to any class may be varied, subject to the
provisions of the Companies Act 2006, either with the consent in writing
of the holders of three quarters in nominal value of the shares of that
class or at a separate meeting of the holders of the shares of that class.
At every such separate meeting all of the provisions of the Articles of
Association relating to proceedings at a general meeting apply, except
that (i) the quorum is to be the number of persons (which must be at least
two) who hold or represent by proxy not less than one third in nominal
value of the issued shares of the class or, if such quorum is not present
on an adjourned meeting, one person who holds shares of the class
regardless of the number of shares he holds; (ii) any person present in
person or by proxy may demand a poll; and (iii) each shareholder will have
one vote per share held in that particular class in the event a poll is taken.
Class rights are deemed not to have been varied by the creation or issue
of new shares ranking equally with or subsequent to that class of shares
in sharing in profits or assets of the Company or by a redemption or
repurchase of the shares by the Company.
Limitations on transfer, voting and shareholding
As far as the Company is aware there are no limitations imposed on the
transfer, holding or voting of the Company’s ordinary shares other than
those limitations that would generally apply to all of the shareholders,
those that apply by law (e.g. due to insider dealing rules) or those that
apply as a result of failure to comply with a notice under section 793 of
the Companies Act 2006.
No shareholder has any securities carrying special rights with regard to
control of the Company. The Company is not aware of any agreements
between holders of securities that may result in restrictions on the transfer
of securities.
Documents on display
The Company is subject to the information requirements of the
Exchange Act applicable to foreign private issuers. In accordance with
these requirements the Company files its Annual Report on Form 20-F
and other related documents with the SEC. These documents may be
inspected at the SEC’s public reference rooms located at 100 F Street,
NE Washington, DC 20549. Information on the operation of the public
reference room can be obtained in the United States by calling the SEC
on +1-800-SEC-0330. In addition, some of the Company’s SEC filings,
including all those filed on or after 4 November 2002, are available on
the SEC’s website at sec.gov. Shareholders can also obtain copies of the
Company’s Articles of Association from our website at vodafone.com/
governance or from the Company’s registered office.
Material contracts
At the date of this Annual Report the Group is not party to any contracts
that are considered material to its results or operations except for:
– its €3,860,000,000 and US$ 3,935,000,000 revolving credit
facilities which are discussed in note 21 “Borrowings” to the
consolidated statements;
– Contribution and Transfer Agreement dated 31 December 2016,
as amended, relating to the contribution and/or transfer of shares in
Ziggo Group Holding B.V. and Vodafone Libertel B.V. to Lynx Global
Europe II B.V. and the formation of the Netherlands joint venture;
– the Implementation Agreement dated 20 March 2017, as amended,
relating to the combination of the Indian mobile telecommunications
businesses of Vodafone Group and Idea Group as detailed in note 27
“Acquisitions and disposals” to the consolidated financial statements;
– the Implementation Agreement dated 25 April 2018 relating to the
combination of the businesses of Indus Towers and Bharti Infratel;
– the Sale and Purchase Agreement dated 9 May 2018 relating to the
purchase of Liberty Global plc’s businesses in Germany, Romania,
Hungary and the Czech Republic;
– the Transitional Services Agreement dated 31 July 2019 relating to
services and cooperation relating to the sale of Liberty Global plc’s
businesses in Germany, Romania, Hungary and the Czech Republic;
– the Sale and Purchase Agreement dated 31 July 2019 relating to the
sale of Vodafone New Zealand; and
– the Deed of Merger dated 31 March 2020 relating to the combination
of Vodafone Italy’s towers with INWIT’s passive network infrastructure.
230 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
231 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Shareholder information (continued)
Liquidation rights
two) who hold or represent by proxy not less than one third in nominal
In the event of the liquidation of the Company, after payment of all
value of the issued shares of the class or, if such quorum is not present
liabilities and deductions in accordance with English law, the holders of
on an adjourned meeting, one person who holds shares of the class
the Company’s 7% cumulative fixed rate shares would be entitled to a
regardless of the number of shares he holds; (ii) any person present in
sum equal to the capital paid up on such shares, together with certain
person or by proxy may demand a poll; and (iii) each shareholder will have
dividend payments, in priority to holders of the Company’s ordinary
one vote per share held in that particular class in the event a poll is taken.
shares. The holders of the fixed rate shares do not have any other right
Class rights are deemed not to have been varied by the creation or issue
to share in the Company’s surplus assets.
of new shares ranking equally with or subsequent to that class of shares
in sharing in profits or assets of the Company or by a redemption or
Pre-emptive rights and new issues of shares
repurchase of the shares by the Company.
Under section 549 of the Companies Act 2006 Directors are, with certain
exceptions, unable to allot the Company’s ordinary shares or securities
convertible into the Company’s ordinary shares without the authority
of the shareholders in a general meeting. In addition, section 561 of the
Companies Act 2006 imposes further restrictions on the issue of equity
securities (as defined in the Companies Act 2006 which include the
Company’s ordinary shares and securities convertible into ordinary
shares) which are, or are to be, paid up wholly in cash and not first
offered to existing shareholders. The Company’s Articles of Association
allow shareholders to authorise Directors for a period specified in the
relevant resolution to allot (i) relevant securities generally up to an
amount fixed by the shareholders; and (ii) equity securities for cash
other than in connection with a pre-emptive offer up to an amount
specified by the shareholders and free of the pre-emption restriction in
section 561. At the 2020 AGM the amount of relevant securities fixed by
shareholders under (i) above and the amount of equity securities specified
by shareholders under (ii) above were in line with the Pre-Emption Group’s
Statement of Principles.
Further details of such proposals are provided in the 2021 Notice of AGM.
Disclosure of interests in the Company’s shares
There are no provisions in the Articles of Association whereby persons
acquiring, holding or disposing of a certain percentage of the Company’s
shares are required to make disclosure of their ownership percentage
although such requirements exist under the Disclosure Guidance and
Transparency Rules.
General meetings and notices
Subject to the Articles of Association, AGMs are held at such times and
place as determined by the Directors of the Company. The Directors
may also, when they think fit, convene other general meetings of the
Company. General meetings may also be convened on requisition as
provided by the Companies Act 2006.
An AGM is required to be called on not less than 21 days’ notice in
writing. Subject to obtaining shareholder approval on an annual basis,
the Company may call other general meetings on 14 days’ notice.
The Directors may determine that persons entitled to receive notices
of meetings are those persons entered on the register at the close of
business on a day determined by the Directors but not later than 21 days
before the date the relevant notice is sent. The notice may also specify
the record date, the time of which shall be determined in accordance
with the Articles of Association and the Companies Act 2006.
Under section 336 of the Companies Act 2006 the AGM must be held
each calendar year and within six months of the Company’s year end.
Variation of rights
If at any time the Company’s share capital is divided into different classes
of shares, the rights attached to any class may be varied, subject to the
provisions of the Companies Act 2006, either with the consent in writing
of the holders of three quarters in nominal value of the shares of that
class or at a separate meeting of the holders of the shares of that class.
At every such separate meeting all of the provisions of the Articles of
Association relating to proceedings at a general meeting apply, except
that (i) the quorum is to be the number of persons (which must be at least
Limitations on transfer, voting and shareholding
As far as the Company is aware there are no limitations imposed on the
transfer, holding or voting of the Company’s ordinary shares other than
those limitations that would generally apply to all of the shareholders,
those that apply by law (e.g. due to insider dealing rules) or those that
apply as a result of failure to comply with a notice under section 793 of
the Companies Act 2006.
No shareholder has any securities carrying special rights with regard to
control of the Company. The Company is not aware of any agreements
between holders of securities that may result in restrictions on the transfer
of securities.
Documents on display
The Company is subject to the information requirements of the
Exchange Act applicable to foreign private issuers. In accordance with
these requirements the Company files its Annual Report on Form 20-F
and other related documents with the SEC. These documents may be
inspected at the SEC’s public reference rooms located at 100 F Street,
NE Washington, DC 20549. Information on the operation of the public
reference room can be obtained in the United States by calling the SEC
on +1-800-SEC-0330. In addition, some of the Company’s SEC filings,
including all those filed on or after 4 November 2002, are available on
the SEC’s website at sec.gov. Shareholders can also obtain copies of the
Company’s Articles of Association from our website at vodafone.com/
governance or from the Company’s registered office.
Material contracts
At the date of this Annual Report the Group is not party to any contracts
that are considered material to its results or operations except for:
– its €3,860,000,000 and US$ 3,935,000,000 revolving credit
facilities which are discussed in note 21 “Borrowings” to the
consolidated statements;
– Contribution and Transfer Agreement dated 31 December 2016,
as amended, relating to the contribution and/or transfer of shares in
Ziggo Group Holding B.V. and Vodafone Libertel B.V. to Lynx Global
Europe II B.V. and the formation of the Netherlands joint venture;
– the Implementation Agreement dated 20 March 2017, as amended,
relating to the combination of the Indian mobile telecommunications
businesses of Vodafone Group and Idea Group as detailed in note 27
“Acquisitions and disposals” to the consolidated financial statements;
– the Implementation Agreement dated 25 April 2018 relating to the
combination of the businesses of Indus Towers and Bharti Infratel;
– the Sale and Purchase Agreement dated 9 May 2018 relating to the
purchase of Liberty Global plc’s businesses in Germany, Romania,
Hungary and the Czech Republic;
– the Transitional Services Agreement dated 31 July 2019 relating to
services and cooperation relating to the sale of Liberty Global plc’s
businesses in Germany, Romania, Hungary and the Czech Republic;
– the Sale and Purchase Agreement dated 31 July 2019 relating to the
sale of Vodafone New Zealand; and
– the Deed of Merger dated 31 March 2020 relating to the combination
of Vodafone Italy’s towers with INWIT’s passive network infrastructure.
Exchange controls
There are no UK Government laws, decrees or regulations that restrict or
affect the export or import of capital including, but not limited to, foreign
exchange controls on remittance of dividends on the ordinary shares or
on the conduct of the Group’s operations.
Taxation
As this is a complex area investors should consult their own tax
adviser regarding the US federal, state and local, the UK and other tax
consequences of owning and disposing of shares and ADSs in their
particular circumstances.
This section describes, primarily for a US holder (as defined below),
in general terms, the principal US federal income tax and UK tax
consequences of owning or disposing of shares or ADSs in the Company
held as capital assets (for US and UK tax purposes). This section does not,
however, cover the tax consequences for members of certain classes of
holders subject to special rules including, for example, US expatriates and
former long-term residents of the United States; officers and employees
of the Company; holders that, directly, indirectly or by attribution, hold 5%
or more of the Company’s stock (by vote or value); financial institutions;
insurance companies; individual retirement accounts and other
tax-deferred accounts; tax-exempt organisations; dealers in securities
or currencies; investors that will hold shares or ADSs as part of straddles,
hedging transactions or conversion transactions for US federal income
tax purposes; investors holding shares or ADSs in connection with a trade
or business conducted outside of the US; or US holders whose functional
currency is not the US dollar.
A US holder is a beneficial owner of shares or ADSs that is for US federal
income tax purposes:
– an individual citizen or resident of the United States;
– US domestic corporation;
– an estate, the income of which is subject to US federal income tax
regardless of its source; or
– a trust, if a US court can exercise primary supervision over the trust’s
administration and one or more US persons are authorised to control
all substantial decisions of the trust, or the trust has validly elected to
be treated as a domestic trust for US federal income tax purposes.
If an entity or arrangement treated as a partnership for US federal
income tax purposes holds the shares or ADSs, the US federal income
tax treatment of a partner will generally depend on the status of the
partner and the tax treatment of the partnership. Holders that are
entities or arrangements treated as partnerships for US federal income
tax purposes should consult their tax advisers concerning the US federal
income tax consequences to them and their partners of the ownership
and disposition of shares or ADSs by the partnership.
This section is based on the US Internal Revenue Code of 1986, as
amended, its legislative history, existing and proposed regulations
thereunder, published rulings and court decisions, and on the tax laws
of the UK, the Double Taxation Convention between the United States
and the UK (the ‘treaty’) and current HM Revenue and Customs (‘HMRC’)
published practice, all as of the date hereof. These laws and such practice
are subject to change, possibly on a retroactive basis.
This section is further based in part upon the representations of the
depositary and assumes that each obligation in the deposit agreement
and any related agreement will be performed in accordance with
its terms.
For the purposes of the treaty and the US-UK double taxation convention
relating to estate and gift taxes (the ‘Estate Tax Convention’), and for US
federal income tax and UK tax purposes, this section is based on the
assumption that a holder of ADRs evidencing ADSs will generally be
treated as the owner of the shares in the Company represented by
those ADRs. Investors should note that a ruling by the first-tier tax
tribunal in the UK has cast doubt on this view, but HMRC have stated that
they will continue to apply their long-standing practice of regarding the
holder of such ADRs as holding the beneficial interest in the underlying
shares. Similarly, the US Treasury has expressed concern that US holders
of depositary receipts (such as holders of ADRs representing our ADSs)
may be claiming foreign tax credits in situations where an intermediary in
the chain of ownership between such holders and the issuer of the security
underlying the depositary receipts, or a party to whom depositary receipts
or deposited shares are delivered by the depositary prior to the receipt
by the depositary of the corresponding securities, has taken actions
inconsistent with the ownership of the underlying security by the person
claiming the credit, such as a disposition of such security. Such actions
may also be inconsistent with the claiming of the reduced tax rates that
may be applicable to certain dividends received by certain non-corporate
holders, as described below. Accordingly, (i) the creditability of any UK
taxes and (ii) the availability of the reduced tax rates for any dividends
received by certain non-corporate US holders, each as described below,
could be affected by actions taken by such parties or intermediaries.
Generally exchanges of shares for ADRs and ADRs for shares will not be
subject to US federal income tax or to UK tax other than stamp duty or
stamp duty reserve tax (see the section on these taxes on page 219).
Taxation of dividends
UK taxation
Under current UK law, there is no requirement to withhold tax from the
dividends that we pay. Shareholders who are within the charge to UK
corporation tax will be subject to corporation tax on the dividends we
pay unless the dividends fall within an exempt class and certain other
conditions are met. It is expected that the dividends we pay would
generally be exempt.
Individual shareholders in the Company who are resident in the UK will
be subject to the income tax on the dividends we pay. Dividends will
be taxable in the UK at the dividend rates applicable where the income
received is above the dividend allowance (currently £2,000 per tax year)
which is taxed at a nil rate. Dividend income is treated as the highest
part of an individual shareholder’s income and the dividend allowance
will count towards the basic or higher rate limits (as applicable) which
may affect the rate of tax due on any dividend income in excess of
the allowance.
US federal income taxation
Subject to the passive foreign investment company (‘PFIC’) rules
described below, a US holder is subject to US federal income taxation
on the gross amount of any dividend we pay out of our current or
accumulated earnings and profits (as determined for US federal
income tax purposes). Distributions in excess of current and accumulated
earnings and profits will be treated as a non-taxable return of capital to
the extent of the US holder’s basis in the shares or ADSs and thereafter
as capital gain.
However, the Company does not maintain calculations of its earnings
and profits in accordance with US federal income tax accounting
principles. US holders should therefore assume that any distribution by
the Company with respect to shares will be reported as ordinary dividend
income. Dividends paid to a non-corporate US holder will be taxable to
the holder at the reduced rate normally applicable to long-term capital
gains provided that certain requirements are met.
Dividends must be included in income when the US holder, in the case
of shares, or the depositary, in the case of ADSs, actually or constructively
receives the dividend and will not be eligible for the dividends-received
deduction generally allowed to US corporations in respect of dividends
received from other US corporations.
The amount of the dividend distribution to be included in income will
be the US dollar value of the pound sterling or euro payments made
determined at the spot pound sterling/US dollar rate or the spot euro/
US dollar rate, as applicable, on the date the dividends are received
232 Vodafone Group Plc
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Financials
Other information
Shareholder information (continued)
by the US holder, in the case of shares, or the depositary, in the case of
ADSs, regardless of whether the payment is in fact converted into US
dollars at that time. If dividends received in pounds sterling or euros are
converted into US dollars on the day they are received, the US holder
generally will not be required to recognise any foreign currency gain or
loss in respect of the dividend income.
Where UK tax is payable on any dividends received, a US holder may be
entitled, subject to certain limitations, to a foreign tax credit in respect of
such taxes.
Taxation of capital gains
UK taxation
A US holder that is not resident in the UK will generally not be liable for
UK tax in respect of any capital gain realised on a disposal of our shares
or ADSs.
However, a US holder may be liable for both UK and US tax in respect of
a gain on the disposal of our shares or ADSs if the US holder:
– is a citizen of the United States and is resident in the UK;
– is an individual who realises such a gain during a period of “temporary
non-residence” (broadly, where the individual becomes resident in the
UK, having ceased to be so resident for a period of five years or less,
and was resident in the UK for at least four out of the seven tax years
immediately preceding the year of departure from the UK);
– is a US domestic corporation resident in the UK by reason of being
centrally managed and controlled in the UK; or
– is a citizen or a resident of the United States, or a US domestic
corporation, that has used, held or acquired the shares or ADSs in
connection with a branch, agency or permanent establishment in the
UK through which it carries on a trade, profession or vocation in the UK.
In such circumstances, relief from double taxation may be available
under the treaty. Holders who may fall within one of the above categories
should consult their professional advisers.
US federal income taxation
Subject to the PFIC rules described below, a US holder that sells or
otherwise disposes of our shares or ADSs generally will recognise a capital
gain or loss for US federal income tax purposes equal to the difference, if
any, between the US dollar value of the amount realised and the holder’s
adjusted tax basis, determined in US dollars, in the shares or ADSs. This
capital gain or loss will be a long-term capital gain or loss if the US holder’s
holding period in the shares or ADSs exceeds one year.
The gain or loss will generally be income or loss from sources within the
US for foreign tax credit limitation purposes. The deductibility of losses is
subject to limitations.
Additional tax considerations
UK inheritance tax
An individual who is domiciled in the United States (for the purposes of
the Estate Tax Convention) and is not a UK national will not be subject
to UK inheritance tax in respect of our shares or ADSs on the individual’s
death or on a transfer of the shares or ADSs during the individual’s lifetime,
provided that any applicable US federal gift or estate tax is paid, unless
the shares or ADSs are part of the business property of a UK permanent
establishment or pertain to a UK fixed base used for the performance
of independent personal services. Where the shares or ADSs have been
placed in trust by a settlor they may be subject to UK inheritance tax
unless, when the trust was created, the settlor was domiciled in the
United States and was not a UK national. Where the shares or ADSs
are subject to both UK inheritance tax and to US federal gift or estate
tax, the estate tax convention generally provides a credit against
US federal tax liabilities for UK inheritance tax paid.
UK stamp duty and stamp duty reserve tax
Stamp duty will, subject to certain exceptions, be payable on any
instrument transferring our shares to the custodian of the depositary at
the rate of 1.5% on the amount or value of the consideration if on sale or
on the value of such shares if not on sale. Stamp duty reserve tax (‘SDRT’),
at the rate of 1.5% of the amount or value of the consideration or the
value of the shares, could also be payable in these circumstances but
no SDRT will be payable if stamp duty equal to such SDRT liability is paid.
Following rulings of the European Court of Justice and the first-tier tax
tribunal in the UK, HMRC have confirmed that the 1.5% SDRT charge will
not be levied on an issue of shares to a depositary receipt system on the
basis that such a charge is contrary to EU law.
No stamp duty should in practice be required to be paid on any transfer of
our ADSs provided that the ADSs and any separate instrument of transfer
are executed and retained at all times outside the UK.
A transfer of our shares in registered form will attract ad valorem stamp
duty generally at the rate of 0.5% of the purchase price of the shares.
There is no charge to ad valorem stamp duty on gifts.
SDRT is generally payable on an unconditional agreement to transfer
our shares in registered form at 0.5% of the amount or value of the
consideration for the transfer, but if, within six years of the date of the
agreement, an instrument transferring the shares is executed and
stamped, any SDRT which has been paid would be repayable or, if the
SDRT has not been paid, the liability to pay the tax (but not necessarily
interest and penalties) would be cancelled. However, an agreement to
transfer our ADSs will not give rise to SDRT.
PFIC rules
We do not believe that our shares or ADSs will be stock of a PFIC for
US federal income tax purposes for our current taxable year or the
foreseeable future. This conclusion is a factual determination that is
made annually and thus is subject to change. If we are a PFIC, US holders
of shares would be required (i) to pay a special US addition to tax on certain
distributions and (ii) any gain realised on the sale or other disposition of the
shares or ADSs would in general not be treated as a capital gain unless a
US holder elects to be taxed annually on a mark-to-market basis with
respect to the shares or ADSs.
Otherwise a US holder would be treated as if he or she has realised such
gain and certain “excess distributions” rateably over the holding period
for the shares or ADSs and would be taxed at the highest tax rate in effect
for each such year to which the gain was allocated. An interest charge in
respect of the tax attributable to each such preceding year beginning with
the first such year in which our shares or ADSs were treated as stock in a
PFIC would also apply. In addition, dividends received from us would not
be eligible for the reduced rate of tax described above under “Taxation of
dividends – US federal income taxation”.
Back-up withholding and information reporting
Payments of dividends and other proceeds to a US holder with respect
to shares or ADSs, by a US paying agent or other US intermediary will
be reported to the Internal Revenue Service and to the US holder as may
be required under applicable regulations. Back-up withholding may apply
to these payments if the US holder fails to provide an accurate taxpayer
identification number or certification of exempt status or fails to comply
with applicable certification requirements.
Certain US holders are not subject to back-up withholding. US holders
should consult their tax advisers about these rules and any other reporting
obligations that may apply to the ownership or disposition of shares or
ADSs, including requirements related to the holding of certain foreign
financial assets.
232 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
233 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Shareholder information (continued)
History and development
Regulation
A US holder that is not resident in the UK will generally not be liable for
UK tax in respect of any capital gain realised on a disposal of our shares
No stamp duty should in practice be required to be paid on any transfer of
by the US holder, in the case of shares, or the depositary, in the case of
UK stamp duty and stamp duty reserve tax
ADSs, regardless of whether the payment is in fact converted into US
Stamp duty will, subject to certain exceptions, be payable on any
dollars at that time. If dividends received in pounds sterling or euros are
instrument transferring our shares to the custodian of the depositary at
converted into US dollars on the day they are received, the US holder
the rate of 1.5% on the amount or value of the consideration if on sale or
generally will not be required to recognise any foreign currency gain or
on the value of such shares if not on sale. Stamp duty reserve tax (‘SDRT’),
loss in respect of the dividend income.
Where UK tax is payable on any dividends received, a US holder may be
entitled, subject to certain limitations, to a foreign tax credit in respect of
such taxes.
Taxation of capital gains
UK taxation
or ADSs.
However, a US holder may be liable for both UK and US tax in respect of
a gain on the disposal of our shares or ADSs if the US holder:
– is a citizen of the United States and is resident in the UK;
– is an individual who realises such a gain during a period of “temporary
non-residence” (broadly, where the individual becomes resident in the
UK, having ceased to be so resident for a period of five years or less,
and was resident in the UK for at least four out of the seven tax years
immediately preceding the year of departure from the UK);
– is a US domestic corporation resident in the UK by reason of being
centrally managed and controlled in the UK; or
– is a citizen or a resident of the United States, or a US domestic
corporation, that has used, held or acquired the shares or ADSs in
connection with a branch, agency or permanent establishment in the
UK through which it carries on a trade, profession or vocation in the UK.
In such circumstances, relief from double taxation may be available
under the treaty. Holders who may fall within one of the above categories
should consult their professional advisers.
US federal income taxation
Subject to the PFIC rules described below, a US holder that sells or
otherwise disposes of our shares or ADSs generally will recognise a capital
gain or loss for US federal income tax purposes equal to the difference, if
any, between the US dollar value of the amount realised and the holder’s
adjusted tax basis, determined in US dollars, in the shares or ADSs. This
capital gain or loss will be a long-term capital gain or loss if the US holder’s
holding period in the shares or ADSs exceeds one year.
The gain or loss will generally be income or loss from sources within the
US for foreign tax credit limitation purposes. The deductibility of losses is
subject to limitations.
Additional tax considerations
UK inheritance tax
at the rate of 1.5% of the amount or value of the consideration or the
value of the shares, could also be payable in these circumstances but
no SDRT will be payable if stamp duty equal to such SDRT liability is paid.
Following rulings of the European Court of Justice and the first-tier tax
tribunal in the UK, HMRC have confirmed that the 1.5% SDRT charge will
not be levied on an issue of shares to a depositary receipt system on the
basis that such a charge is contrary to EU law.
our ADSs provided that the ADSs and any separate instrument of transfer
are executed and retained at all times outside the UK.
A transfer of our shares in registered form will attract ad valorem stamp
duty generally at the rate of 0.5% of the purchase price of the shares.
There is no charge to ad valorem stamp duty on gifts.
SDRT is generally payable on an unconditional agreement to transfer
our shares in registered form at 0.5% of the amount or value of the
consideration for the transfer, but if, within six years of the date of the
agreement, an instrument transferring the shares is executed and
stamped, any SDRT which has been paid would be repayable or, if the
SDRT has not been paid, the liability to pay the tax (but not necessarily
interest and penalties) would be cancelled. However, an agreement to
transfer our ADSs will not give rise to SDRT.
PFIC rules
We do not believe that our shares or ADSs will be stock of a PFIC for
US federal income tax purposes for our current taxable year or the
foreseeable future. This conclusion is a factual determination that is
made annually and thus is subject to change. If we are a PFIC, US holders
of shares would be required (i) to pay a special US addition to tax on certain
distributions and (ii) any gain realised on the sale or other disposition of the
shares or ADSs would in general not be treated as a capital gain unless a
US holder elects to be taxed annually on a mark-to-market basis with
respect to the shares or ADSs.
Otherwise a US holder would be treated as if he or she has realised such
gain and certain “excess distributions” rateably over the holding period
for the shares or ADSs and would be taxed at the highest tax rate in effect
for each such year to which the gain was allocated. An interest charge in
respect of the tax attributable to each such preceding year beginning with
the first such year in which our shares or ADSs were treated as stock in a
PFIC would also apply. In addition, dividends received from us would not
be eligible for the reduced rate of tax described above under “Taxation of
dividends – US federal income taxation”.
An individual who is domiciled in the United States (for the purposes of
the Estate Tax Convention) and is not a UK national will not be subject
to UK inheritance tax in respect of our shares or ADSs on the individual’s
death or on a transfer of the shares or ADSs during the individual’s lifetime,
provided that any applicable US federal gift or estate tax is paid, unless
the shares or ADSs are part of the business property of a UK permanent
establishment or pertain to a UK fixed base used for the performance
of independent personal services. Where the shares or ADSs have been
Back-up withholding and information reporting
Payments of dividends and other proceeds to a US holder with respect
to shares or ADSs, by a US paying agent or other US intermediary will
be reported to the Internal Revenue Service and to the US holder as may
be required under applicable regulations. Back-up withholding may apply
to these payments if the US holder fails to provide an accurate taxpayer
identification number or certification of exempt status or fails to comply
with applicable certification requirements.
placed in trust by a settlor they may be subject to UK inheritance tax
unless, when the trust was created, the settlor was domiciled in the
United States and was not a UK national. Where the shares or ADSs
are subject to both UK inheritance tax and to US federal gift or estate
tax, the estate tax convention generally provides a credit against
US federal tax liabilities for UK inheritance tax paid.
Certain US holders are not subject to back-up withholding. US holders
should consult their tax advisers about these rules and any other reporting
obligations that may apply to the ownership or disposition of shares or
ADSs, including requirements related to the holding of certain foreign
financial assets.
The Company was incorporated under English law in 1984 as Racal
Strategic Radio Limited (registered number 1833679). After various
name changes, 20% of Racal Telecom Plc share capital was offered to
the public in October 1988. The Company was fully demerged from
Racal Electronics Plc and became an independent company in
September 1991 at which time it changed its name to
Vodafone Group Plc.
Since then we have entered into various transactions which impacted
on the development of the Group. The most significant in the year ended
31 March 2021 are summarised below.
– On 13 July 2020, the Group announced that Vodafone Hutchison
Australia Pty Limited (‘VHA’) and TPG Telecom Limited (‘TPG’) had
completed their merger. The merged entity was admitted to the
Australian Securities Exchange (‘ASX’) on 30 June 2020 and is known as
TPG Telecom Limited. Vodafone and Hutchison Telecommunications
(Australia) Limited each own an economic interest of 25.05% in the
merged unit, with the remaining 49.9% listed as free float on the ASX.
– On 26 November 2020, the Group announced that the merger of
Indus Towers Limited and Bharti Infratel Limited had completed. The
combined company is listed on the National Stock Exchange of India
and the Bombay Stock Exchange and was renamed Indus Towers
Limited following the merger. Vodafone holds a 28.1% shareholding
in the combined company.
– On 21 December 2020, the Group announced that it had completed
the combination of the tower infrastructure assets of Vodafone Greece
with those of Wind Hellas Telecommunications SA. The combined
entity (‘Vantage Towers Greece’) is the largest tower infrastructure
company in Greece.
– On 11 January 2021, Vodafone Limited (‘Vodafone UK’) and Telefonica
UK Limited announced the commercialisation of Cornerstone
Telecommunications Infrastructure Limited (‘Cornerstone’), the 50:50
joint venture company that owns and manages their passive tower
infrastructure in the UK. Vodafone subsequently transferred its 50%
shareholding to Vantage Towers A.G on 14 January 2020.
– Vantage Towers A.G. completed an initial public offering and the
first day of trading on the Regulated Market of the Frankfurt Stock
Exchange was 18 March 2021. The offer consisted solely of a
secondary sell-down of existing shares held by Vodafone GmbH.
Introduction
Our operating companies are generally subject to regulation governing
the operation of their business activities. Such regulation typically takes the
form of industry specific law and regulation covering telecommunications
services and general competition (antitrust) law applicable to all activities.
The following section describes the regulatory frameworks and the
key regulatory developments at national and regional level and in the
European Union (‘EU’), in which we had significant interests during the
year ended 31 March 2021. Many of the regulatory developments
reported in the following section involve ongoing proceedings or
consideration of potential proceedings that have not reached a conclusion.
Accordingly, we are unable to attach a specific level of financial risk to our
performance from such matters.
European Union (‘EU’)
The new European Electronic Communications Code (‘Code’) has
updated the telecoms regulatory framework in Europe. The Code
was required to be implemented by Member States in Europe by
December 2020. In February 2021, the European Commission (‘EC’)
started infringement procedures against the 24 Member States that
did not meet the deadline including Czech Republic, Germany, Ireland,
Italy, Netherlands, Portugal, Romania, and Spain. The Code has been
transposed and is in force in Hungary and Greece.
In November 2020, the EC tabled the first legislative initiative under
the EU Data Strategy and the Data Governance Act, which intended
to facilitate sharing and reuse of public sector data by increasing trust,
reducing barriers to data sharing and increasing citizen control. In
December 2020, the EC published the Digital Services Act package,
comprising a Digital Services Act and Digital Markets Act, intended
to reshape the regulatory environment for digital services in Europe
regarding security, fairness and competition.
In December 2020, the EC published two legal acts mandated under the
European Electronic Communications Code: (1) EC’s Recommendation
on relevant markets to identify those product and service markets in
which ex ante regulation may be justified; (2) the Delegated Act setting a
single maximum Union-wide mobile voice termination rate and a single
maximum Union-wide fixed voice termination rate applicable to any
provider of fixed and mobile termination services across the Union in
the next five years.
In February 2021, the EC proposed the prolongation of the Roaming
Regulation for 10 years in order to ensure the continuation of Roam-Like-
at-Home. The EC proposes to reduce the wholesale caps for all services
(data, voice and SMS) and bring new measures on transparency, quality
of service and access to emergency communications.
In March 2021, the EC published a “Connectivity Toolbox”, which
is a joint deliverable of Member States and the EC containing best
practices on network cost reduction, spectrum authorisation for 5G,
the environmental footprint and environmental impact assessment
of networks as well as Electronic Magnetic Fields. The objective of this
toolbox is to reduce the cost of broadband deployment in Europe for
Network Operators while the EC is in the process of revising the
Broadband Cost Reduction Directive.
In March 2021, the EC presented the 2030 Digital Decade Compass,
setting the EU’s digital ambitions for the next decade, including two
overarching targets for all European households to have gigabit
connectivity by 2030, and for all populated areas to be covered by 5G.
The EC proposes to publish a new Annual European Digital Decade report
which will include ‘traffic lights’ on the EU’s and Member States’ progress
towards the 2030 digital ambition.
234 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Addressing the challenges posed by the COVID-19 pandemic, the
Next Generation EU package is the Union’s means to support the
recovery processes in EU Member States. The bulk of the proposed
recovery measures will be powered by a new temporary recovery
instrument worth €750 billion. A significant amount will be allocated
towards digital and green initiatives, with a proposed minimum of 20%
of the Recovery and Resilience Facility to be allocated to digital and 37%
to green initiatives.
Europe region
Germany
In May 2017, the national regulatory authority (‘BNetzA’) initiated the
market review process for wholesale access at fixed locations in the
markets for access to unbundled local loop (‘ULL’) and for virtual
unbundled local access (‘VULA’) as well as for access to bitstream
wholesale products. However, mainly due to the delay of the new
German telecoms law implementing the Code, BNetzA has not yet
published a draft regulatory order on possible remedies and the future
of fibre access regulation. It is expected that BNetzA will publish the draft
shortly after adoption of the telecoms law.
In September 2019, BNetzA published a draft decision regarding the
fixed access market review that indicated that Deutsche Telekom has
significant market power across all speeds, technologies and regions.
Cable operators are not defined as being dominant.
As part of the process of implementing the Code, the German
Parliament approved an abolishment of the right to bill TV services
via ancillary costs in Multi Dwelling Units with a transition period for the
existing footprint until June 2024. The law is expected to enter into force
on December 2021.
Italy
In March 2017, the national regulatory authority (‘AGCOM’) imposed a
minimum billing period of one month for fixed and convergent offers,
effective by the end of June 2017. The operators appealed AGCOM’s
resolution before the Administrative Court and the appeal was rejected in
February 2018. Vodafone Italy filed an appeal before the Council of State
and after the public hearing held in July 2020, the Council of State issued
a Preliminary referral to the Court of Justice in order to assess if the NRA
has the power to impose minimum and binding billing periods under
EU law.
In January 2020, the national competition authority (‘AGCM’) ruled that
Vodafone, TIM, Fastweb and WindTre would have coordinated their
commercial strategies relating to the transition from four-week billing
(28 days) to monthly billing, with the maintenance of a 8.6% price
increase, in violation of art.101 of TFEU. Vodafone’s appeal on the
Authority’s decision is pending before the Administrative Tribunal.
The hearing will take place in May 2021.
The frequencies in the 2.1 GHz band are being renewed until 2029.
The cost has already been defined and is different for the single advance
payment or with annual instalments. For renewal, Vodafone Italy will have
to pay €240m (single payment) by April 2021 or the first of eight annual
instalments of €36m for a total amount of €276m. In the event of
non-payment, the frequencies will expire in December 2021.
In April 2021, AGCOM started a public consultation on the co-investment
commitments presented by TIM in January 2021 to verify the applicability
of art. 76 of the Code.
United Kingdom
The national regulatory authority (‘Ofcom’) issued its Fixed Wholesale
Telecoms Market statement setting regulation for consumer and
business connectivity services until 2026. Ofcom are keen to encourage
wider investment in fibre, with wholesale pricing anticipated to rise to fund
this. While basic services will be subject to +CPI price caps, most other
services will not be directly price-regulated, however equivalence and
supply obligations will be retained in most UK areas.
In March 2021, Vodafone acquired 40MHz of 3.6GHz spectrum expiring
in 2041 for £176 million. Vodafone’s total holdings in 3.4-3.6 GHz are
90 MHz. The assignment stage, which will determine the final location of
the spectrum, is currently taking place and is expected to be completed
in April.
Spain
Vodafone Spain has requested a three-year extension and modification
of the commitments which ended in April 2020 in relation to the
Movistar–DTS merger in 2015. Following Vodafone Spain’s extension
request in February 2020, the national regulatory authority (‘CNMC’)
rendered public its Resolution extending the term of most of the initial
commitments for an additional period of three years, ensuring access
to Movistar Estrenos and Movistar Series channels. The Resolution has
eliminated the commitment that limited the terms in which Telefónica
could acquire SVOD content, which has been appealed by Vodafone.
In May 2019, the Ministry of Economy and Enterprise launched a 5G
public consultation on 700MHz, 1.5GHz and 26GHz spectrum bands. In
December 2019, the Ministry launched a public consultation to modify
the Spanish National Frequencies Plan relative to the 700MHz auction.
The Ministry approved the final cap that will apply for the 700 MHz band,
expected to be auctioned in Q1 FY2021. In December 2020 there was a
public consultation on 700 MHz auction rules, which included stringent
obligations related to price, coverage and wholesale access.
The Spanish Government approved a strategic digitalisation plan ‘España
Digital 2025’. The plan contains 10 strategic pillars, including a €2.3 billion
Connectivity Plan and a €2 billion 5G Boosting Plan for 2021-2025.
In November 2020, a public consultation on the new Audiovisual Act,
intended to transpose the Audio-Visual Services Directive into national
legislation, launched for comments and is expected to be approved
in 2021.
In November 2020, CNMC published a public consultation on Market
3a and 3b review which is expected to be approved in Q1 FY2021. The
proposal implies an increase in the number of deregulated municipalities
and would reduce the period for closure of copper exchanges from five to
two years.
In December 2020, the government approved a Royal Decree modifying
the current Consumers Law, in which companies providing telephony
customer care services must offer an alternative number (mobile or
landline) where the cost of a call must be equal to or less than the cost
of a call to a standard geographic or mobile number.
Ireland
In April 2019, the national regulatory authority (‘ComReg’) published its
final decision on Universal Service funding applications by eircom Ltd (‘eir’)
for 2010 to 2015. ComReg found that the net cost of the USO did not
represent an unfair burden on eir. Subsequently, eir have challenged this
decision. The proceedings are ongoing, and Vodafone Ireland is a notice
party to these proceedings.
In May 2019, ComReg initiated a review of the regulated Weighted
Average Cost of Capital (WACC). In its draft decision notified to the EC
in June 2020, ComReg proposed the regulated fixed WACC should fall
from 8.18% to 5.61%. In line with the decrease of the WACC, the EC urged
ComReg to update relevant fixed pricing decisions as soon as possible,
to ensure that prices in the Irish wholesale markets reflect current market
conditions. ComReg issued its decision on the WACC in October 2020
and decided to update WACC as part of an overall review of the Access
Network Model. The final decision is expected in the second half of 2021.
234 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
235 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Addressing the challenges posed by the COVID-19 pandemic, the
Next Generation EU package is the Union’s means to support the
In March 2021, Vodafone acquired 40MHz of 3.6GHz spectrum expiring
in 2041 for £176 million. Vodafone’s total holdings in 3.4-3.6 GHz are
recovery processes in EU Member States. The bulk of the proposed
90 MHz. The assignment stage, which will determine the final location of
recovery measures will be powered by a new temporary recovery
the spectrum, is currently taking place and is expected to be completed
instrument worth €750 billion. A significant amount will be allocated
towards digital and green initiatives, with a proposed minimum of 20%
of the Recovery and Resilience Facility to be allocated to digital and 37%
in April.
Spain
to green initiatives.
Europe region
Germany
In May 2017, the national regulatory authority (‘BNetzA’) initiated the
market review process for wholesale access at fixed locations in the
markets for access to unbundled local loop (‘ULL’) and for virtual
unbundled local access (‘VULA’) as well as for access to bitstream
wholesale products. However, mainly due to the delay of the new
German telecoms law implementing the Code, BNetzA has not yet
published a draft regulatory order on possible remedies and the future
of fibre access regulation. It is expected that BNetzA will publish the draft
shortly after adoption of the telecoms law.
In September 2019, BNetzA published a draft decision regarding the
fixed access market review that indicated that Deutsche Telekom has
significant market power across all speeds, technologies and regions.
Cable operators are not defined as being dominant.
As part of the process of implementing the Code, the German
Parliament approved an abolishment of the right to bill TV services
via ancillary costs in Multi Dwelling Units with a transition period for the
existing footprint until June 2024. The law is expected to enter into force
on December 2021.
Italy
In March 2017, the national regulatory authority (‘AGCOM’) imposed a
minimum billing period of one month for fixed and convergent offers,
effective by the end of June 2017. The operators appealed AGCOM’s
resolution before the Administrative Court and the appeal was rejected in
February 2018. Vodafone Italy filed an appeal before the Council of State
and after the public hearing held in July 2020, the Council of State issued
a Preliminary referral to the Court of Justice in order to assess if the NRA
has the power to impose minimum and binding billing periods under
EU law.
In January 2020, the national competition authority (‘AGCM’) ruled that
Vodafone, TIM, Fastweb and WindTre would have coordinated their
commercial strategies relating to the transition from four-week billing
(28 days) to monthly billing, with the maintenance of a 8.6% price
increase, in violation of art.101 of TFEU. Vodafone’s appeal on the
Authority’s decision is pending before the Administrative Tribunal.
The hearing will take place in May 2021.
The frequencies in the 2.1 GHz band are being renewed until 2029.
The cost has already been defined and is different for the single advance
payment or with annual instalments. For renewal, Vodafone Italy will have
to pay €240m (single payment) by April 2021 or the first of eight annual
instalments of €36m for a total amount of €276m. In the event of
non-payment, the frequencies will expire in December 2021.
In April 2021, AGCOM started a public consultation on the co-investment
commitments presented by TIM in January 2021 to verify the applicability
of art. 76 of the Code.
United Kingdom
The national regulatory authority (‘Ofcom’) issued its Fixed Wholesale
Telecoms Market statement setting regulation for consumer and
business connectivity services until 2026. Ofcom are keen to encourage
wider investment in fibre, with wholesale pricing anticipated to rise to fund
this. While basic services will be subject to +CPI price caps, most other
services will not be directly price-regulated, however equivalence and
supply obligations will be retained in most UK areas.
Vodafone Spain has requested a three-year extension and modification
of the commitments which ended in April 2020 in relation to the
Movistar–DTS merger in 2015. Following Vodafone Spain’s extension
request in February 2020, the national regulatory authority (‘CNMC’)
rendered public its Resolution extending the term of most of the initial
commitments for an additional period of three years, ensuring access
to Movistar Estrenos and Movistar Series channels. The Resolution has
eliminated the commitment that limited the terms in which Telefónica
could acquire SVOD content, which has been appealed by Vodafone.
In May 2019, the Ministry of Economy and Enterprise launched a 5G
public consultation on 700MHz, 1.5GHz and 26GHz spectrum bands. In
December 2019, the Ministry launched a public consultation to modify
the Spanish National Frequencies Plan relative to the 700MHz auction.
The Ministry approved the final cap that will apply for the 700 MHz band,
expected to be auctioned in Q1 FY2021. In December 2020 there was a
public consultation on 700 MHz auction rules, which included stringent
obligations related to price, coverage and wholesale access.
The Spanish Government approved a strategic digitalisation plan ‘España
Digital 2025’. The plan contains 10 strategic pillars, including a €2.3 billion
Connectivity Plan and a €2 billion 5G Boosting Plan for 2021-2025.
In November 2020, a public consultation on the new Audiovisual Act,
intended to transpose the Audio-Visual Services Directive into national
legislation, launched for comments and is expected to be approved
in 2021.
two years.
In November 2020, CNMC published a public consultation on Market
3a and 3b review which is expected to be approved in Q1 FY2021. The
proposal implies an increase in the number of deregulated municipalities
and would reduce the period for closure of copper exchanges from five to
In December 2020, the government approved a Royal Decree modifying
the current Consumers Law, in which companies providing telephony
customer care services must offer an alternative number (mobile or
landline) where the cost of a call must be equal to or less than the cost
of a call to a standard geographic or mobile number.
Ireland
In April 2019, the national regulatory authority (‘ComReg’) published its
final decision on Universal Service funding applications by eircom Ltd (‘eir’)
for 2010 to 2015. ComReg found that the net cost of the USO did not
represent an unfair burden on eir. Subsequently, eir have challenged this
decision. The proceedings are ongoing, and Vodafone Ireland is a notice
party to these proceedings.
In May 2019, ComReg initiated a review of the regulated Weighted
Average Cost of Capital (WACC). In its draft decision notified to the EC
in June 2020, ComReg proposed the regulated fixed WACC should fall
from 8.18% to 5.61%. In line with the decrease of the WACC, the EC urged
ComReg to update relevant fixed pricing decisions as soon as possible,
to ensure that prices in the Irish wholesale markets reflect current market
conditions. ComReg issued its decision on the WACC in October 2020
and decided to update WACC as part of an overall review of the Access
Network Model. The final decision is expected in the second half of 2021.
In December 2020, ComReg published its decision on the Multi-Band
Spectrum Auction. In late January 2021, Three Ireland (Hutchison) Ltd
and Three Ireland Services (Hutchison) Ltd (collectively ‘Three’) lodged
an appeal to the decision. The proceedings were given a hearing for
June 2021.
ComReg and the Irish government have continued to extend the
Temporary Spectrum Measures. The measures have extended for
two further three-month periods until October 2021. As part of these
measures the 2.1GHz licenses have been liberalised and there is a facility
to apply for 2.6GHz spectrum for specific hotspots as required.
Portugal
In June 2019, Vodafone Portugal launched a court action against the
national regulatory authority (‘ANACOM’) seeking the revocation of Dense
Air’s spectrum licence under the ‘use it or lose it’ principle. In March 2020,
Vodafone Portugal launched another court action against an ANACOM
December 2019 decision which amends – instead of revoking – Dense
Air’s spectrum license. On November 2020, Vodafone Portugal brought
a precautionary proceeding against ANACOM regarding the restrictive
impact in the 5G auction of maintaining Dense Air’s spectrum licence.
Legal proceedings are ongoing.
In February 2020, the Portuguese Government put forward a Resolution
setting out its 5G Strategy. Following this, ANACOM launched a public
consultation on the 5G Auction Regulation and in November 2020
ANACOM published its final decision. Vodafone submitted a court action
against ANACOM in relation to discriminatory measures between new
entrants and current MNOs, which is pending decision. In the meantime,
the auction, which began in December 2020, is ongoing.
In July 2020, the national competition authority (‘AdC’) sent Vodafone
Portugal and three other national operators a statement of objections
(‘SO’) alleging that operators may have formed a cartel to limit
competition in telecoms services advertising via the Google search
engine. In October 2020, Vodafone Portugal responded to the SO and
proceedings are ongoing. Vodafone has also filed motions and appeals
with different authorities regarding procedural irregularities and invalidity
of evidence collected during the December 2018 raid at Vodafone
Portugal´s premises. In December 2020, a Court decision declared email
evidence collected at Vodafone Portugal´s premises to be inadmissible.
Vodafone Portugal continues to challenge payment notices totalling
€34.8 million issued by ANACOM regarding 2012-2014 extraordinary
compensation of Universal Service net costs.
In March 2021, ANACOM decided on the annual review of prices
applicable to circuits connecting the mainland and the autonomous
regions of Azores and Madeira (CAM circuits) and the various islands
in Azores (inter-island circuits) which are managed by the operator
with significant market power and subject to cost-orientation. Prices
applicable to traditional/non-Ethernet circuits and inter-islands circuits
were maintained, whereas prices applicable to CAM Ethernet circuits
were lowered by 10%. New prices apply retroactively as of October 2020.
Romania
In August 2020, the Government initiated the 5G Security Draft Law
following the administrative approval process; however, the final
parliamentary process has not yet been finalised. The 5G spectrum
auction is delayed until the second of half of 2021.
In October 2020, following a review of the wholesale markets for fixed
access, the national regulatory authority (‘ANCOM’) decided to maintain
its previous decision regarding market competitiveness, therefore markets
3a and 3b continue to be free of significant market power-based remedies.
In November 2020, fixed termination rates decreased by 30% to
€0.098 cents/min.
Greece
Forthnet has filed a complaint with the Administrative Court requesting
the annulment of the Vectoring/FTTH allocation decisions. The hearing
date has been postponed to November 2021.
In December 2020, Vodafone Greece acquired 2x10 MHz of 700 MHz,
2x20 MHz of 2.1GHz, 140 MHz of 3.5 GHz, and 400 MHz of 26 GHz in the
recent auction for €130m. The spectrum acquired has a 15-year duration
to 2035, with the option of a further five-year extension.
Following the publication of the 5G Auction Tender document, a
petition by Greek residents for its annulment, as well as for any future
administrative acts, was filed before the Council of the State on the
grounds it infringed environmental protection provisions. The hearing
date is set for May 2021.
The national regulatory authority’s (‘EETT’) decision in relation to Wind’s
complaint against Vodafone Greece and Cosmote alleging abuse of
dominance in relation to calls to mobile networks in Albania is pending.
Vodafone Greece appealed EETT’s decision on the MVNO access
dispute resolution between Vodafone and Forthnet. The hearing of the
case is pending.
In June 2020, the BU-LRIC + model for access services to the local
loop/sub-loop, virtual products including FTTC/H and related services
took effect.
The development of a margin squeeze test model based on non-
discrimination obligation for OTE’s retail plans is currently in progress.
The public consultation for the model’s main principles and methodology
was completed in November 2019 and the public consultation was
completed in March 2021. Vodafone Greece has requested a second
short-term consultation before the final decision is notified to EC.
Czech Republic
Following statement of objections sent by EC in August 2019 to O2
Czech Republic, CETIN and T-Mobile Czech Republic for their network
sharing agreement, the Commission‘s investigation continued in 2020.
In April 2020, the 900MHz band was reshuffled to provide one contiguous
block to each 900MHz holder.
In August 2020 and September 2020, Vodafone appealed against the
terms of the 5G spectrum auction to both the CTU Council and the
administrative court respectively; and both were dismissed. In March 2021,
the Supreme Administrative Court dismissed Vodafone’s appeal. Vodafone
filed a complaint to the EC after the auction was completed, arguing that
the auction terms set by the CTU infringed EU law. The case is pending.
In November 2020, the CTU ruled to uphold the mobile termination rate
at CZK 0.248/0.95 eurocent set by November 2020.
In January 2021, Vodafone acquired 2x10MHz of 700MHz and 20 MHz
(TDD) of 3.4-3.6 GHz for CZK 1.568bn. Refarming of 3.4-3.8GHz spectrum
should take place in Q1 FY2021-22 to provide contiguous spectrum to
each spectrum holder in this band.
Hungary
In January 2021, the national regulatory authority (‘NMHH’) published its
market analysis decision for wholesale voice call termination on individual
mobile networks. Each mobile network operator and mobile virtual
network operator in Hungary is found to have significant market power.
Magyar Telekom requested a review of the decision in court which
is ongoing.
In March 2020, Vodafone Hungary acquired 2x10 MHz of 700MHz
spectrum and 2x5 MHz of 2.1GHz spectrum and 1x50MHz of 3.6GHz
spectrum for €108.02 million. In January 2021, Vodafone Hungary
acquired 2x9 MHz of 900 MHz and 2x20 MHz of 1800 MHz for
€131.8 million. The spectrum has a 15-year duration to 2037,
with the option of a further five-year extension.
236 Vodafone Group Plc
Annual Report 2021
Regulation (continued)
Strategic report
Governance
Financials
Other information
The Economic Competition Office investigation into the network and
spectrum sharing and possible collusion in the previous spectrum tender
by Magyar Telekom and Telenor is ongoing.
Albania
In April 2020, the national regulatory authority (‘AKEP’) issued its final
decision on the market analysis of the wholesale mobile market for
access and origination, whereby it states that the three criteria test is
not met and therefore no operator has significant market power and
consequently no regulatory obligations are imposed.
In June 2020, AKEP issued its final decision on national and international
mobile termination rates (‘MTRs’). The National MTRs will remain
unchanged at 1.11 ALL/min. In November 2020, AKEP issued a public
consultation on its intention to develop its own cost model to ensure that
MTRs reflect Albanian market conditions and characteristics accurately,
and to set an appropriate glide path for the application of the target rates.
In July 2020, Vodafone Albania implemented the new regulated roaming
tariffs for Western Balkan six. The new tariffs declined as per the glide path
set by the national regulatory authority (‘AKEP’), following the April 2019
agreement between the governments of Serbia, Montenegro, North
Macedonia, Bosnia & Herzegovina, Albania & Kosovo to abolish roaming
charges between their countries.
In December 2020, Vodafone Albania’s acquisition of Abcom sh.p.k was
approved by AKEP and the National Competition Authority.
The 5G auction for the 3.5 GHz band has been pushed back to the
second half of 2021. The 700MHz band is currently allocated to Digital
Terrestrial TV and planned to be released in 2022.
Africa, Middle East and Asia-Pacific region
Vodacom: South Africa
In March 2021, the national regulatory authority (‘ICASA’) published a
findings document on its market inquiry into mobile broadband services.
ICASA found insufficient competition and designated Vodacom as a
significant market power in several relevant markets at wholesale (site
access, national roaming) and retail levels, proposing remedies primarily
at the wholesale level. ICASA also published the Draft Regulations for
comment and public hearings.
In October 2020, ICASA issued an Invitation to Apply (‘ITA’) notice on the
licensing process for international mobile telecommunications in respect
of the provision of mobile broadband wireless access services for urban
and rural areas. Using the complimentary bands, IMT700, IMT800, IMT2600
and IMT3500 with applications closing in December 2020. ICASA also
issued a composite ITA for an individual electronic communications
network service license and radio frequency spectrum license for the
wireless open access network with a closing date of March 2021.
In March 2021, an interdict following applications by Telkom and MTN
was granted against the ITA process pending the finalisation of the review
proceedings set for July 2021 relating to the ITA.
As part of the COVID-19 response measures, Vodacom received a
temporary assignment of 160MHz spectrum until May 2021.
On 31 March 2021, ICASA published Final Equity Ownership Regulations,
which promotes equity ownership by historically disadvantaged groups
(HDGs) and B-BBEE. Key requirements include licensees being required
to have a minimum of 30% of its ownership equity held by black people
(determined using “the flow though” principle of the ICT Sector Code) and
must have a minimum B-BBEE contributor status of Level 4. Licensees will
be required to provide a compliance report to ICASA annually.
In December 2019, the Competition Commission published the Final Report
on the Data Services Market Inquiry. Following this, Vodacom and the
Competition Commission concluded a consent agreement in March 2020,
implemented during this financial year, on mutually accepted solutions
aimed at addressing the concerns raised in the Final Report.
Vodacom: Democratic Republic of the Congo
In August 2018, the Customs Authority issued a draft infringement
report assessing that there were unpaid duties for alleged smuggled
devices bought by Vodacom DRC amounted to US $44 million, to
which Vodacom DRC objected. In May 2019, Vodacom DRC filed an
administrative appeal at the Council of State, which is yet to be heard.
The national regulatory authority (‘ARPTC’) assigned temporary spectrum
(2x2 MHz of 900 MHz and 2x5 MHz 2.1 GHz) until August 2020. This
temporary licence was extended until February 2021 and has been
returned on this date. The Central Bank issued temporary measures
on free person to person (‘P2P’) mobile money transaction fees until
December 2020, which have since lapsed.
In April 2020, a new decree introduced a Central Equipment Register
System (‘CEIR’) and handset certification fees. In November 2020,
Vodacom DRC was fined US $2.5 million by way of a Ministerial Decree
for alleged shortcomings in its cooperation and implementation of
charging mechanisms related to the CEIR system. Assessment of the
Ministerial Decree indicated that its issuance was not in accordance
with applicable laws and procedures and Vodacom appealed the fine
and sought interim suspension of the decree. A decision on the petition
for interim suspension and its respective implementation measure was
to be issued by December 2020; however, this has been delayed to date
due to COVID-19.
In January 2021, Vodacom DRC received notice by the Minister of
Communications, stating that a December 2020 investigation found non-
compliant SIM cards without providing further details. Vodacom DRC sent
a letter requesting further information on the details of the investigation.
While awaiting a response to its letter in February 2021, Vodacom DRC
was fined US $3.65 million by way of a Ministerial Decree for alleged
non-compliance. Vodacom DRC initiated legal action and appealed for
a stay of the execution of the fine for the duration of the appeal, which
was granted.
Vodacom: Tanzania
In February 2020, the national regulatory authority (‘TCRA’) issued new
SIM Card Registration Regulations to formalise the ‘biometric only’ SIM
registration requirement and restrict ownership of the number of SIMs
by customers. Vodacom Tanzania is participating in TCRA’s process on
intended barring of non-compliant SIMs, whereby a final deadline is still
to be set.
In February 2021, TCRA issued a letter stating that Vodacom Tanzania
has been found non-compliant with QoS regulations and imposed a fine
of US $3.5 million. However, instead of payment of this fine, Vodacom
Tanzania entered a binding commitment to invest the equivalent value
into its network.
In February 2021, TCRA issued new Rules on Bundle Tariffs, Promotions
and Special Offers and a Directive on a minimum data price floor to
be implemented by April 2021. Vodacom and all operators complied
with the request.
Strategic report
Governance
Financials
Other information
237 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Vodacom: Mozambique
The Communications Regulator assigned temporary spectrum (2x5 MHz
of 800 band), which remains in force whilst the “State of Calamity” related
to Covid-19 continues.
Vodacom: Lesotho
In December 2019, the Lesotho Communications Authority (‘LCA’) issued
a notice of enforcement against Vodacom Lesotho premised on its view
that the company’s statutory external auditors were not independent,
as required by the Companies Act. In September 2020, the LCA issued
a penalty of M 134 million against Vodacom Lesotho. Despite Vodacom
Lesotho reserving its rights for appeal within the statuary timeframe, in
October 2020, the LCA issued a notice of revocation of the operating
licence of Vodacom Lesotho for failure to pay a penalty of R134 million.
Thirty percent of this fine was determined by the LCA to be payable in
October 2020 and the balance was suspended for a period of five years,
on the condition that Vodacom Lesotho is not found guilty for breach
of any of its regulatory obligations in the future. Vodacom Lesotho
has launched an application in the Lesotho High Court to have both
determinations of the LCA imposing the fine and revoking its operating
licence, respectively, reviewed and set aside. The Lesotho High Court
has, in the meantime, issued an order interdicting the LCA from, inter
alia, enforcing the payment of the said fine and revoking Vodacom
Lesotho’s operating licence. The Lesotho High Court heard the matter
in December 2020, and Vodacom Lesotho is awaiting judgement.
Turkey
In December 2019, the national regulatory authority (‘ICTA’) approved
and published its Fixed Broadband Wholesale Market Analysis, stating
that Vodafone Turkey will have access to Türk Telekom fibre at different
network levels based on regulated terms and fees and retail tariffs will
be subject to an ex-ante margin squeeze test. In February 2021, ICTA
published the rules and procedures for this test.
ICTA’s proposed action to broaden the scope of the 3G coverage to
include new metropolitan areas was suspended by the Council of State
motion, as Vodafone Turkey appealed to the administrative court. In
April 2019, the Council of State accepted the case and annulled the
ICTA decision. As of March 2021, Plenary Session of Administrative Law
Divisions rejected ICTA’s requests and finalised the judgment in favour
of Vodafone Turkey.
In August 2019, Vodafone Turkey received the payment order for
the administrative penalty of TL 138 million due to the breach of
pre-information obligations as per the District Sales Regulation &
Consumer Law on Value Added Services. In September 2019, the
Administrative Court annulled the penalty, with the procedure of appeal
pending. At the appellate phase, the State Council reversed the judgment
against the competition. Engagement with the Ministry is ongoing, and
a legislative proposal has been drafted for the Ministry’s previous and
upcoming penalties to ensure a healthy investment environment.
Egypt
In September 2020, Vodafone Egypt submitted its proposal to acquire
40 MHz in response to the national regulatory authority (‘NTRA’)
issuance of a bid for spectrum acquisition in the 2600 MHz band. In
December 2020, Vodafone Egypt’s technical and financial proposal
was accepted, and a new License Annex was signed between NTRA
and Vodafone after payment of US $270 million and the remaining
50% to be paid over two years in two equal instalments.
In January 2020, Vodafone Group Plc (‘Vodafone’) concluded a MoU
with Saudi Telecom Company (‘STC’) for the sale of Vodafone’s 55%
shareholding in Vodafone Egypt to STC. In December 2020, Vodafone
ended talks with STC.
Ghana
In January 2018, Vodafone Ghana paid 30% of the judgment debt into
court (€4.8 million) in line with a Conditional Stay of Execution in relation
to a High Court decision, affirmed by a panel of the Court of Appeal,
on a parcel of land located at Afransi in the Central Region of Ghana.
In May 2019, the Court of Appeal affirmed the High Court’s decision.
An appeal is pending before the Supreme Court and another application
which seeks to stop the plaintiff from enforcing the judgment was expected
in April 2020. In July 2020, the Supreme Court granted Vodafone Ghana’s
application to produce this new evidence as part of the documents to be
relied on. The Plaintiff in December 2020 also filed for leave to produce
new evidence at the trial. The Supreme Court heard this application in
January 2021 and a date will be given by the Court for a mini trial of the
matter to be conducted at the Supreme Court after which the Court will
deliver its judgment.
In June 2020, the national regulatory authority (‘NRA’) declared MTN
Ghana as a significant market power in Ghana. With immediate effect,
several corrective market interventions were announced as follows:
Asymmetric MTR Pricing, National Roaming, Price Floor/Ceiling as
well as Technology Neutrality in the 1800MHz frequency band. While
asymmetric pricing was implemented in October 2020 for a two-year
period, national roaming and the other market interventions are still
under discussion with a view to implementation in the first half of 2021.
In January 2020, Vodafone Ghana successfully renewed its 900MHz
and 1800MHz licenses for 10 years, until 2029, pending payment of
US $25 million. Vodafone Ghana entered negotiations with the Ministry of
Communications and Ministry of Finance to amend the terms of renewal
in relation to increasing duration of license, payment terms, re-farming
rights, and additional 800MHz spectrum, which continue.
The NRA assigned 2x5MHz of 800MHz frequency band on a temporary
basis until June 2021 as part of Covid-19 measures.
The NRA has requested customer information from licensees as part of
the Government’s tracking and tracing programme, which following an
application was found by the High Court in June 2020 to be compliant
with the emergency order. Information is still being provided to the
government for this purpose.
236 Vodafone Group Plc
Annual Report 2021
Regulation (continued)
The Economic Competition Office investigation into the network and
In December 2019, the Competition Commission published the Final Report
spectrum sharing and possible collusion in the previous spectrum tender
on the Data Services Market Inquiry. Following this, Vodacom and the
by Magyar Telekom and Telenor is ongoing.
Albania
In April 2020, the national regulatory authority (‘AKEP’) issued its final
Competition Commission concluded a consent agreement in March 2020,
implemented during this financial year, on mutually accepted solutions
aimed at addressing the concerns raised in the Final Report.
decision on the market analysis of the wholesale mobile market for
Vodacom: Democratic Republic of the Congo
access and origination, whereby it states that the three criteria test is
In August 2018, the Customs Authority issued a draft infringement
not met and therefore no operator has significant market power and
report assessing that there were unpaid duties for alleged smuggled
consequently no regulatory obligations are imposed.
In June 2020, AKEP issued its final decision on national and international
mobile termination rates (‘MTRs’). The National MTRs will remain
devices bought by Vodacom DRC amounted to US $44 million, to
which Vodacom DRC objected. In May 2019, Vodacom DRC filed an
administrative appeal at the Council of State, which is yet to be heard.
unchanged at 1.11 ALL/min. In November 2020, AKEP issued a public
The national regulatory authority (‘ARPTC’) assigned temporary spectrum
consultation on its intention to develop its own cost model to ensure that
(2x2 MHz of 900 MHz and 2x5 MHz 2.1 GHz) until August 2020. This
MTRs reflect Albanian market conditions and characteristics accurately,
temporary licence was extended until February 2021 and has been
and to set an appropriate glide path for the application of the target rates.
returned on this date. The Central Bank issued temporary measures
In July 2020, Vodafone Albania implemented the new regulated roaming
tariffs for Western Balkan six. The new tariffs declined as per the glide path
on free person to person (‘P2P’) mobile money transaction fees until
December 2020, which have since lapsed.
set by the national regulatory authority (‘AKEP’), following the April 2019
In April 2020, a new decree introduced a Central Equipment Register
agreement between the governments of Serbia, Montenegro, North
System (‘CEIR’) and handset certification fees. In November 2020,
Macedonia, Bosnia & Herzegovina, Albania & Kosovo to abolish roaming
Vodacom DRC was fined US $2.5 million by way of a Ministerial Decree
charges between their countries.
In December 2020, Vodafone Albania’s acquisition of Abcom sh.p.k was
approved by AKEP and the National Competition Authority.
The 5G auction for the 3.5 GHz band has been pushed back to the
second half of 2021. The 700MHz band is currently allocated to Digital
Terrestrial TV and planned to be released in 2022.
Africa, Middle East and Asia-Pacific region
Vodacom: South Africa
In March 2021, the national regulatory authority (‘ICASA’) published a
findings document on its market inquiry into mobile broadband services.
ICASA found insufficient competition and designated Vodacom as a
significant market power in several relevant markets at wholesale (site
access, national roaming) and retail levels, proposing remedies primarily
at the wholesale level. ICASA also published the Draft Regulations for
for alleged shortcomings in its cooperation and implementation of
charging mechanisms related to the CEIR system. Assessment of the
Ministerial Decree indicated that its issuance was not in accordance
with applicable laws and procedures and Vodacom appealed the fine
and sought interim suspension of the decree. A decision on the petition
for interim suspension and its respective implementation measure was
to be issued by December 2020; however, this has been delayed to date
due to COVID-19.
In January 2021, Vodacom DRC received notice by the Minister of
Communications, stating that a December 2020 investigation found non-
compliant SIM cards without providing further details. Vodacom DRC sent
a letter requesting further information on the details of the investigation.
While awaiting a response to its letter in February 2021, Vodacom DRC
was fined US $3.65 million by way of a Ministerial Decree for alleged
non-compliance. Vodacom DRC initiated legal action and appealed for
a stay of the execution of the fine for the duration of the appeal, which
comment and public hearings.
was granted.
In October 2020, ICASA issued an Invitation to Apply (‘ITA’) notice on the
Vodacom: Tanzania
licensing process for international mobile telecommunications in respect
of the provision of mobile broadband wireless access services for urban
and rural areas. Using the complimentary bands, IMT700, IMT800, IMT2600
and IMT3500 with applications closing in December 2020. ICASA also
issued a composite ITA for an individual electronic communications
network service license and radio frequency spectrum license for the
wireless open access network with a closing date of March 2021.
In March 2021, an interdict following applications by Telkom and MTN
was granted against the ITA process pending the finalisation of the review
proceedings set for July 2021 relating to the ITA.
As part of the COVID-19 response measures, Vodacom received a
temporary assignment of 160MHz spectrum until May 2021.
On 31 March 2021, ICASA published Final Equity Ownership Regulations,
which promotes equity ownership by historically disadvantaged groups
(HDGs) and B-BBEE. Key requirements include licensees being required
to have a minimum of 30% of its ownership equity held by black people
(determined using “the flow though” principle of the ICT Sector Code) and
must have a minimum B-BBEE contributor status of Level 4. Licensees will
be required to provide a compliance report to ICASA annually.
In February 2020, the national regulatory authority (‘TCRA’) issued new
SIM Card Registration Regulations to formalise the ‘biometric only’ SIM
registration requirement and restrict ownership of the number of SIMs
by customers. Vodacom Tanzania is participating in TCRA’s process on
intended barring of non-compliant SIMs, whereby a final deadline is still
to be set.
In February 2021, TCRA issued a letter stating that Vodacom Tanzania
has been found non-compliant with QoS regulations and imposed a fine
of US $3.5 million. However, instead of payment of this fine, Vodacom
Tanzania entered a binding commitment to invest the equivalent value
into its network.
In February 2021, TCRA issued new Rules on Bundle Tariffs, Promotions
and Special Offers and a Directive on a minimum data price floor to
be implemented by April 2021. Vodacom and all operators complied
with the request.
238 Vodafone Group Plc
Annual Report 2021
Regulation (continued)
Strategic report
Governance
Financials
Other information
Overview of spectrum licences at 31 March 2021
800Mhz
Quantity1
(Expiry Date)
2x10
(2025)
900Mhz
1400/1500Mhz
Quantity1
(Expiry Date)
2x10
(2033)
Quantity1
(Expiry Date)
20
(2033)
1800MHz
Quantity1
(Expiry Date)
2x25
(2033)
2.1GHz
2.6GHz
Quantity1
(Expiry Date)
2x20+25
(2025)
3.5GHz
Quantity1
(Expiry Date)
90
(2040)
Germany
Italy
UK5
Spain
Ireland
Portugal
Romania
Greece
Czech Republic
Hungary
700MHz
Quantity1
(Expiry Date)
2x10
(2033)
2x10
(2037)
n/a
n/a
n/a
n/a
n/a
2x10
(2036)
2x10
(2036)
2x10
(2035)7
2x10
(2029)
2x10
(2033)
2x10
(2031)
2x10
(2030)
2x10
(2027)
2x10
(2029)
2x10
(2030)
2x10
(2029)
2x10
(2029)
Albania
n/a
2x10
(2034)
Quantity1
(Expiry Date)
2x152
(2040)
2x52
(2025)3
2x15+5
(2029)
2x15
(2029)4
80
(2037)
50
(2038)
40
(2041)
90
(2038)
1056
(2032)
n/a
40
(2025)
140
(2035)
60
(2032)
60
(2034)
50 3
(2035)7
n/a
2x14.8
(2022)
2x20+25
(2033)
2x15+5
(2030)
2x15
(2022)
2x20
(2033)
2x20+20
(2030)
n/a
2x20+25
(2027)
2x15
(2031)
2x20
(2036)
15
(2029)
2x20+20
(2030)
2x20
(2029)
2x20+25
(2029)
2x20+20
(2030)
2x20
(2025)
2x15
(2027)
2x53
(2035)7
2x15+5
(2025)
2x53
(2029)
2x53
(2021)8
2x10
(2029)
2x17.4
2x10
(2028)
2x10
(2030)
2x5
(2021)
2x53
(2027)
2x10
(2029)
2x15
(2027)
2x10
(2029)
2x10
(2022)
2x13
(2029)
2x93
(2037)7
2x8
(2031)
2x23
(2030)
2x43
(2024)8
20
(2029)
20
(2023)
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2x15
(2029)
2x53
(2029)
2x5.8
2x20
(2030)
2x25
(2030)
2x6
(2021)
2x143
(2027)
2x30
(2029)
2x10
(2027)
2x153
(2035)
2x27
(2029)
2x15
(2022)
2x203
(2037)7
2x9
(2031)
2x143
(2030)
2x53
(2024)8
238 Vodafone Group Plc
Annual Report 2021
Regulation (continued)
Overview of spectrum licences at 31 March 2021
Germany
Italy
UK5
Spain
Ireland
Portugal
Romania
Greece
Czech Republic
Hungary
(Expiry Date)
(Expiry Date)
1400/1500Mhz
Quantity1
(Expiry Date)
20
(2033)
1800MHz
Quantity1
(Expiry Date)
2x25
(2033)
2.1GHz
Quantity1
(Expiry Date)
2x152
(2040)
2x52
(2025)3
2x15+5
(2029)
2.6GHz
Quantity1
(Expiry Date)
2x20+25
(2025)
3.5GHz
Quantity1
(Expiry Date)
90
(2040)
2x15
(2029)4
80
(2037)
700MHz
Quantity1
(Expiry Date)
2x10
(2033)
2x10
(2037)
n/a
n/a
n/a
n/a
n/a
2x10
(2036)
2x10
(2036)
2x10
(2035)7
800Mhz
Quantity1
2x10
(2025)
2x10
(2029)
2x10
(2033)
2x10
(2031)
2x10
(2030)
2x10
(2027)
2x10
(2029)
2x10
(2030)
2x10
(2029)
2x10
(2029)
900Mhz
Quantity1
2x10
(2033)
2x10
(2029)
2x17.4
2x10
(2028)
2x10
(2030)
2x5
(2021)
2x53
(2027)
2x10
(2029)
2x15
(2027)
2x10
(2029)
2x10
(2022)
2x13
(2029)
2x93
(2037)7
2x8
(2031)
2x23
(2030)
2x43
(2024)8
20
(2029)
20
(2023)
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2x15
(2029)
2x53
(2029)
2x5.8
2x20
(2030)
2x25
(2030)
2x6
(2021)
2x143
(2027)
2x30
(2029)
2x10
(2027)
2x153
(2035)
2x27
(2029)
2x15
(2022)
2x203
(2037)7
2x9
(2031)
2x143
(2030)
2x53
(2024)8
2x14.8
(2022)
2x20+25
(2033)
2x15+5
2x20+20
(2030)
n/a
2x20+25
(2027)
15
(2029)
2x20+20
(2030)
2x20
(2029)
2x20+25
(2029)
(2030)
(2030)
2x15
(2022)
2x20
(2033)
2x15
(2031)
2x20
(2036)
2x20
(2025)
2x15
(2027)
2x53
(2035)7
(2025)
2x53
(2029)
2x53
(2021)8
50
(2038)
40
(2041)
90
(2038)
1056
(2032)
n/a
40
(2025)
140
(2035)
60
(2032)
60
(2034)
50 3
(2035)7
Albania
n/a
2x10
(2034)
n/a
2x15+5
2x20+20
n/a
Strategic report
Governance
Financials
Other information
239 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Vodacom South Africa9
Vodacom: Democratic
Republic of Congo
Lesotho
Mozambique
Tanzania
Turkey
Egypt
Ghana
900Mhz
1400/1500Mhz
700MHz
Quantity1
(Expiry Date)
2x10
n/a
n/a
n/a
2x10
(2033)
n/a
800Mhz
Quantity1
(Expiry Date)
2x10
2x10
(2038)
2x2010
Quantity1
(Expiry Date)
2x11
2x6
(2038)
2x2210
2x10
(2039)
2x8
(2039)
n/a
2x10
(2029)
2x12.5
(2031)
2x11
(2023)
2x1.43
(2029)
2x12.5
(2031)
n/a
n/a
n/a
2x15
(2034)13
2x8
(2034)13
Quantity1
(Expiry Date)
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
1800MHz
Quantity1
(Expiry Date)
2x12
2x18
(2038)
2x3010
2.1GHz
Quantity1
(Expiry Date)
2x15+5
2x10+15
(2032)
2x2010
2x15+5
(2039)
2x53
(2022)
2x15
(2031)
2.6GHz
Quantity1
(Expiry Date)
n/a
n/a
n/a
n/a
3.5GHz
Quantity1
(Expiry Date)
n/a
2x15
(2026)
2110
100
(Trial)
6011
(2022)
n/a
2x7+2x14
(2031)
2x15+5
(2029)
2x15+10
(2029)
n/a
2x20
(2031)
2x15
(2023)14
n/a12
n/a
n/a
n/a
2x20
(2039)
2x10
(2031)
2x10
(2029)
2x10
(2031)
2x153
(2030)
2x10
(2034)13
Notes:
1. Single (or unpaired) blocks of spectrum are used for asymmetric data (non-voice) use; block quantity has been rounded to the nearest whole number.
2. Germany – The allocation of 2.1GHz will change to the following: in January 2021 will have 2x15 MHz (2040) and 2x5 (2025); in January 2026 will have 2x20 MHz (2040).
3. Blocks within the same spectrum band but with different licence expiry dates are separately identified.
4. Italy – The frequencies in the 2.1 GHz band are being renewed until 2029. The cost has already been defined and is different for the single advance payment or with annual installments, in the event of
non-payment, the frequencies will expire on 31 December 2021.
5. UK – all UK spectrum licences are perpetual so any dates given are the ones from which licence fees become payable, and where no date is given this means that licence fees already apply.
6. Ireland – 105MHz in cities, 85MHz in regions.
7. Hungary – 700MHz, 2.1GHz and 3.5GHz-conditional options of a further five-year extension to 2040; 900MHz, 1.8GHz – the 15-year right of use begins in 2022; conditional options of a further five-year
extension to 2042.
8. Albania – spectrum acquired from PLUS’ exit from market.
9. Vodacom South Africa – spectrum licences are renewed annually. As part of the migration to a new licensing regime the national regulator has issued Vodacom a service licence and a network licence
which will permit Vodacom to offer mobile and fixed services. The service and network licences have a 20 year duration and will expire in 2029. Temporary COVID assignment:
– 700 MHz & 800 MHz assignment expiring 31 May 2021, unless extended further by the authority. Includes temporary spectrum allocation of 1x20MHz in the 2.3GHz band.
10. Vodacom Lesotho – spectrum licences are renewed annually. 1x100MHz of 3.5GHz has been licensed on a temporary basis and is pending renewal.
11. Mozambique – 3.7GHz spectrum for 5G trial, which was launched during December 2019. 2x5 of 2.1GHz has been acquired on a 3 year lease expiring in November 2022.
12. Egypt – The 40MHz of newly acquired is planned to be availed on two phases, 1st 20 MHz available by January 2022 and 2nd 20MHz planned to be available by January 2023.
13. Ghana – Vodafone Ghana has established an agreement with the MoF to renew its license for 15 years along with the permanent assignment of an additional 2x5 800MHz. The agreement is pending
written finalisation.
14. Ghana – NCA submitted a provisional licence for comments, to which Vodafone Ghana submitted feedback and final licence is pending.
240 Vodafone Group Plc
Annual Report 2021
Regulation (continued)
MTR Rates
Country by Region
Europe
Germany (€ cents)
Italy (€ cents)
UK (GB£ pence)
Spain (€ cents)
Ireland (€ cents)
Portugal (€ cents)
Romania (€ cents)
Greece (€ cents)
Czech Republic (CZK)
Hungary (HUF)
Albania (ALL)
Africa, Middle East and Asia Pacific
Vodacom: South Africa (ZAR)
Vodacom: Democratic Republic of Congo (USD)
Lesotho (LSL/ZAR)
Mozambique3 (MZN)
Tanzania (TSH)
Turkey (lira)
Egypt (PTS/Piastres)
Ghana4 (peswas)
Strategic report
Governance
Financials
Other information
20191
20201
20211
01/04/20212
0.70
0.55
0.379
0.70
0.95
0.90
0.489
0.67
0.79
0.39
0.96
0.946
0.248
1.71
1.22
0.12
0.02
0.15
0.39
10.40
0.03
11.00
4.00
0.90
0.76
0.479
0.64
0.55
0.39
0.76
0.622
0.248
1.71
1.11
0.10
0.02
0.12
0.37
5.20
0.03
11.00
2.80
0.78
0.67
0.468
0.64
0.43
0.36
0.76
0.622
0.248
1.71
1.11
0.10
0.02
0.09
0.37
2.60
0.03
11.00
2.80
Notes:
1. All MTRs are based on end of financial year values.
2. MTR changes already announced to be implemented after 1 April 2021 are included at the current rate or where a glide-path or a final decision has been determined by the national regulatory authority.
3. Mozambique – NRA is conducting a cost model at this time. The intention is to retroactively introduce the newly calculated rate with effect from 1 Jan 2021. We expect the rate to decrease.
4. Ghana – since the declaration of MTN as Significant Market Power, the regulator has introduced asymmetrical MTRs.
Strategic report
Governance
Financials
Other information
241 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Form 20-F cross reference guide
The information in this document that is referenced in the following table will be included in our Annual Report on Form 20-F for 2021 filed with
the SEC (the ‘2021 Form 20-F’). The information in this document will be updated and supplemented at the time of filing with the SEC or later
amended if necessary. No other information in this document is included in the 2021 Form 20-F or incorporated by reference into any filings by us
under the Securities Act. Please see “Documents on display” on page 230 for information on how to access the 2021 Form 20-F as filed with the SEC.
The 2021 Form 20-F has not been approved or disapproved by the SEC nor has the SEC passed judgement upon the adequacy or accuracy of the
2021 Form 20-F.
Location in this document
Item Form 20-F caption
1
2
3
Identity of Directors, senior management and advisers Not applicable
Offer statistics and expected timetable
Not applicable
Key information
3B Capitalisation and indebtedness
3C Reasons for the offer and use of proceeds
3D Risk factors
Information on the Company
4A History and development of the Company
4
Not applicable
Not applicable
Principal risk factors and uncertainties
240 Vodafone Group Plc
Annual Report 2021
Regulation (continued)
MTR Rates
Country by Region
Europe
Germany (€ cents)
Italy (€ cents)
UK (GB£ pence)
Spain (€ cents)
Ireland (€ cents)
Portugal (€ cents)
Romania (€ cents)
Greece (€ cents)
Czech Republic (CZK)
Hungary (HUF)
Albania (ALL)
Lesotho (LSL/ZAR)
Mozambique3 (MZN)
Tanzania (TSH)
Turkey (lira)
Egypt (PTS/Piastres)
Ghana4 (peswas)
Notes:
Africa, Middle East and Asia Pacific
Vodacom: South Africa (ZAR)
Vodacom: Democratic Republic of Congo (USD)
20191
20201
20211
01/04/20212
0.70
0.55
0.379
0.70
0.95
0.90
0.489
0.67
0.79
0.39
0.96
0.946
0.248
1.71
1.22
0.12
0.02
0.15
0.39
10.40
0.03
11.00
4.00
0.90
0.76
0.479
0.64
0.55
0.39
0.76
0.622
0.248
1.71
1.11
0.10
0.02
0.12
0.37
5.20
0.03
11.00
2.80
0.78
0.67
0.468
0.64
0.43
0.36
0.76
0.622
0.248
1.71
1.11
0.10
0.02
0.09
0.37
2.60
0.03
11.00
2.80
1. All MTRs are based on end of financial year values.
2. MTR changes already announced to be implemented after 1 April 2021 are included at the current rate or where a glide-path or a final decision has been determined by the national regulatory authority.
3. Mozambique – NRA is conducting a cost model at this time. The intention is to retroactively introduce the newly calculated rate with effect from 1 Jan 2021. We expect the rate to decrease.
4. Ghana – since the declaration of MTN as Significant Market Power, the regulator has introduced asymmetrical MTRs.
4B Business overview
4C Organisation structure
4D Property, plant and equipment
4A
5
Unresolved staff comments
Operating and financial review and prospects
5A Operating results
5B Liquidity and capital resources
History and development
Contact details
Shareholder information: Contact details for Equiniti and AST
Shareholder information: Articles of Association and applicable English law
Strategic review
Note 1 “Basis of preparation”
Note 2 “Revenue disaggregation and segmental analysis”
Note 7 “Discontinued operations and assets and liabilities held for sale”
Note 11 “Property, plant and equipment”
Note 27 “Acquisitions and disposals”
Note 28 “Commitments”
Our strategy framework
About Vodafone
Financial and non-financial performance
Chairman’s message
Chief Executive’s statement
Market and strategy
Mega trends
Strategic review
Our financial performance
Purpose, sustainability and responsible business
Note 2 “Revenue disaggregation and segmental analysis”
Regulation
Note 32 “Related undertakings”
Note 12 “Investments in associates and joint arrangements”
Note 13 “Other investments”
Strategic review
Note 11 “Property, plant and equipment”
None
Our financial performance
Note 21 “Borrowings”
Regulation
Our financial performance: Cash flow, funding and capital allocation
Directors’ statement of responsibility: Going concern
Note 21 “Borrowings”
Note 22 “Capital and financial risk management”
Note 28 “Commitments”
Page
–
–
–
–
–
53 to 61
233
Back cover
227
228 to 229
14 to 22
125 to 130
131 to 134
150 to 151
155 to 156
191 to 193
194
1
2 to 3
4 to 5
6
7
8 to 9
10 to 11
14 to 22
23 to 31
32 to 52
131 to 134
233 to 240
199 to 207
157 to 162
163
14 to 22
155 to 156
–
23 to 31
172 to 173
233 to 240
30 to 31
109
172 to 173
174 to 183
194
14 to 22
153 to 154
238 to 239
4 to 5
10 to 11
61
172 to 173
194
194 to 197
244
5C Research and development, patents and licences etc. Strategic review
5D Trend information
5E Off-Balance sheet arrangements
5G Safe harbor
Note 10 “Intangible assets”
Regulation: Overview of spectrum licences
Financial and non-financial performance
Mega trends
Long-Term Viability Statement
Note 21 “Borrowings”
Note 28 “Commitments”
Note 29 “Contingent liabilities and legal proceedings”
Forward-looking statements
242 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Form 20-F cross reference guide (continued)
Item Form 20-F caption
Location in this document
6
Directors, senior management and employees
6A Directors and senior management
6B Compensation
6C Board practices
6D Employees
6E Share ownership
Board of Directors
Executive Committee
Board leadership and Company purpose
Roles and responsibilities of the Board
Annual Report on Remuneration: 2021 Remuneration
Remuneration policy
Note 23 “Directors and key management compensation”
Shareholder information: Articles of Association and applicable English law
Remuneration policy
Board of Directors
Audit and Risk Committee
Remuneration Committee
Board leadership and Company purpose
Roles and responsibilities of the Board
Our people strategy
Note 24 “Employees”
Annual Report on Remuneration: 2021 Remuneration
Remuneration policy
All-employee share plans
Note 26 “Share-based payments”
7
8
9
10
Major shareholders and related party transactions
7A Major shareholders
Shareholder information: Major shareholders
7B Related party transactions
Annual Report on Remuneration: 2021 Remuneration
Note 23 “Directors and key management compensation”
Note 29 “Contingent liabilities and legal proceedings”
Note 30 “Related party transactions”
7C Interests of experts and counsel
Not applicable
Financial information
8A Consolidated statements and other financial
information
8B Significant changes
The offer and listing
9A Offer and listing details
9B Plan of distribution
9C Markets
9D Selling shareholders
9E Dilution
9F Expenses of the issue
Additional information
10A Share capital
Financials1
Reports of independent registered public accounting firm
Note 29 “Contingent liabilities and legal proceedings”
Dividend rights
Note 31 “Subsequent events”
Shareholder information
Not applicable
Shareholder information: Capital structure and rights attaching to shares
Not applicable
Not applicable
Not applicable
Not applicable
10B Memorandum and Articles of Association
Shareholder information
10C Material contracts
10D Exchange controls
10E Taxation
10F Dividends and paying agents
10G Statements by experts
10H Documents on display
10I Subsidiary information
Shareholder information: Material contracts
Shareholder information: Exchange controls
Shareholder information: Taxation
Not applicable
Not applicable
Shareholder information: Documents on display
Not applicable
Page
67 to 68
70
66
69
91 to 100
84 to 89
183
228 to 229
84 to 89
67 to 68
76 to 81
82 to 83
66
69
21 to 22
184
91 to 100
84 to 89
94
189 to 190
228
91 to 100
183
194 to 197
198
–
121 to 208
–
194 to 197
229
198
227 to 232
–
105 to 106
–
–
–
–
227 to 232
230
231
231 to 232
–
–
230
–
Note:
1. The parent company financial statements together with the associated notes and the audit report relating thereto, on pages 209 to 216 and pages 110 to 120, respectively, should not be considered to
form part of the Company’s Annual Report on Form 20-F.
242 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
243 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Form 20-F cross reference guide (continued)
Item Form 20-F caption
Location in this document
Item Form 20-F caption
Location in this document
11
12
13
14
15
16
17
18
19
Quantitative and qualitative disclosures about market
risk
Description of securities other than equity securities
12A Debt securities
12B Warrants and rights
12C Other securities
12D American depositary shares
Defaults, dividend arrearages and delinquencies
Material modifications to the rights of security holders
and use of proceeds
Controls and procedures
Note 22 “Capital and financial risk management”
Not applicable
Not applicable
Not applicable
Fees payable by ADR holders
Not applicable
Not applicable
Governance
Directors’ statement of responsibility: Management’s report on internal control
over financial reporting
Report of independent registered public accounting firm
Reserved
16A Audit Committee financial expert
16B Code of ethics
16C Principal accountant fees and services
16D Exemptions from the listing standards
for audit committees
16E Purchase of equity securities by the issuer
and affiliated purchasers
16F Change in registrant’s certifying accountant
16G Corporate governance
16H Mine safety disclosure
Financial statements
Financial statements
Exhibits
Board Committees
Our US listing requirements
Note 3 “Operating profit / (loss)”
Board Committees: Audit and Risk Committee – External audit
Not applicable
Not applicable
Not applicable
Our US listing requirements
Not applicable
Not applicable
Financials1
Report of independent registered public accounting firm
Index to Exhibits
6
Directors, senior management and employees
6A Directors and senior management
6B Compensation
Annual Report on Remuneration: 2021 Remuneration
6C Board practices
Shareholder information: Articles of Association and applicable English law
Board of Directors
Executive Committee
Board leadership and Company purpose
Roles and responsibilities of the Board
Remuneration policy
Note 23 “Directors and key management compensation”
Remuneration policy
Board of Directors
Audit and Risk Committee
Remuneration Committee
Board leadership and Company purpose
Roles and responsibilities of the Board
Our people strategy
Note 24 “Employees”
Remuneration policy
All-employee share plans
Note 26 “Share-based payments”
Shareholder information: Major shareholders
Annual Report on Remuneration: 2021 Remuneration
Note 23 “Directors and key management compensation”
Note 29 “Contingent liabilities and legal proceedings”
Note 30 “Related party transactions”
Reports of independent registered public accounting firm
Note 29 “Contingent liabilities and legal proceedings”
Dividend rights
Note 31 “Subsequent events”
Shareholder information
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Shareholder information: Material contracts
Shareholder information: Exchange controls
Shareholder information: Taxation
Shareholder information: Documents on display
6D Employees
6E Share ownership
Annual Report on Remuneration: 2021 Remuneration
7
Major shareholders and related party transactions
7A Major shareholders
7B Related party transactions
7C Interests of experts and counsel
Not applicable
8
Financial information
8A Consolidated statements and other financial
Financials1
information
8B Significant changes
9
The offer and listing
9A Offer and listing details
9B Plan of distribution
9C Markets
9E Dilution
9D Selling shareholders
9F Expenses of the issue
10
Additional information
10A Share capital
10C Material contracts
10D Exchange controls
10E Taxation
10F Dividends and paying agents
10G Statements by experts
10H Documents on display
10I Subsidiary information
10B Memorandum and Articles of Association
Shareholder information
Page
67 to 68
70
66
69
91 to 100
84 to 89
183
228 to 229
84 to 89
67 to 68
76 to 81
82 to 83
66
69
21 to 22
184
91 to 100
84 to 89
94
189 to 190
91 to 100
194 to 197
121 to 208
194 to 197
227 to 232
228
183
198
–
–
229
198
–
–
–
–
–
–
–
–
230
231
230
227 to 232
231 to 232
Shareholder information: Capital structure and rights attaching to shares
105 to 106
Page
174 to 183
–
–
–
–
–
–
62 to 83
109
–
74 to 83
104
135
80
–
–
–
104
–
–
121 to 208
–
–
Note:
form part of the Company’s Annual Report on Form 20-F.
1. The parent company financial statements together with the associated notes and the audit report relating thereto, on pages 209 to 216 and pages 110 to 120, respectively, should not be considered to
Note:
1. The parent company financial statements together with the associated notes and the audit report relating thereto, on pages 209 to 216 and pages 110 to 120, respectively, should not be considered to
form part of the Company’s Annual Report on Form 20-F.
244 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Forward-looking statements
unaudited information
This document contains “forward-looking statements” within the
meaning of the US Private Securities Litigation Reform Act of 1995
with respect to the Group’s financial condition, results of operations
and businesses, and certain of the Group’s plans and objectives. In
particular, such forward-looking statements include statements
with respect to:
– the Group’s expectations and guidance regarding its financial and
operating performance, the performance of associates and joint
ventures, other investments and newly acquired businesses,
preparation for 5G and expectations regarding customers;
– intentions and expectations regarding the development of products,
services and initiatives introduced by, or together with, Vodafone or by
third parties;
– expectations regarding the global economy and the Group’s operating
environment and market position, including future market conditions,
growth in the number of worldwide mobile phone users and
other trends;
– revenue and growth expected from Vodafone Business’ and total
communications strategy;
– mobile penetration and coverage rates, MTR cuts, the Group’s ability to
acquire spectrum and licences, including 5G licences, expected growth
prospects in the Europe and Rest of the World regions and growth in
customers and usage generally;
– anticipated benefits to the Group from cost-efficiency programmes,
including their impact on the absolute indirect cost base;
– possible future acquisitions, including increases in ownership in existing
investments, the timely completion of pending acquisition transactions
and pending offers for investments;
– expectations and assumptions regarding the Group’s future revenue,
operating profit, adjusted EBITDA, adjusted EBITDA margin, free cash
flow, depreciation and amortisation charges, foreign exchange rates,
tax rates and capital expenditure;
– expectations regarding the Group’s access to adequate funding for its
working capital requirements and share buyback programmes, and
the Group’s future dividends or its existing investments; and
– the impact of regulatory and legal proceedings involving the Group
and of scheduled or potential regulatory changes.
Forward-looking statements are sometimes, but not always, identified
by their use of a date in the future or such words as “will”, “anticipates”,
“aims”, “could”, “may”, “should”, “expects”, “believes”, “intends”, “plans”
or “targets”. By their nature, forward-looking statements are inherently
predictive, speculative and involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the
future. There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied by
these forward-looking statements. These factors include, but are not
limited to, the following:
– general economic and political conditions in the jurisdictions in which
the Group operates and changes to the associated legal, regulatory
and tax environments;
– increased competition;
– levels of investment in network capacity and the Group’s ability to
deploy new technologies, products and services;
– rapid changes to existing products and services and the inability of new
products and services to perform in accordance with expectations;
– the ability of the Group to integrate new technologies, products and
services with existing networks, technologies, products and services;
– the Group’s ability to generate and grow revenue;
– a lower than expected impact of new or existing products, services
or technologies on the Group’s future revenue, cost structure and
capital expenditure outlays;
– slower than expected customer growth, reduced customer
retention, reductions or changes in customer spending and
increased pricing pressure;
– the Group’s ability to extend and expand its spectrum resources, to
support ongoing growth in customer demand for mobile data services;
– the Group’s ability to secure the timely delivery of high-quality products
from suppliers;
– loss of suppliers, disruption of supply chains and greater than
anticipated prices of new mobile handsets;
– changes in the costs to the Group of, or the rates the Group may
charge for, terminations and roaming minutes;
– the impact of a failure or significant interruption to the Group’s
telecommunications, networks, IT systems or data protection systems;
– the Group’s ability to realise expected benefits from acquisitions,
partnerships, joint ventures, franchises, brand licences, platform sharing
or other arrangements with third parties;
– acquisitions and divestments of Group businesses and assets and
the pursuit of new, unexpected strategic opportunities;
– the Group’s ability to integrate acquired business or assets;
– the extent of any future write-downs or impairment charges on the
Group’s assets, or restructuring charges incurred as a result of an
acquisition or disposition;
– developments in the Group’s financial condition, earnings and
distributable funds and other factors that the Board takes into
account in determining the level of dividends;
– the Group’s ability to satisfy working capital requirements;
– changes in foreign exchange rates;
– changes in the regulatory framework in which the Group operates;
– the impact of legal or other proceedings against the Group or other
companies in the communications industry;
– changes in statutory tax rates and profit mix; and
– changes resulting directly or indirectly from the COVID-19 pandemic.
A review of the reasons why actual results and developments may
differ materially from the expectations disclosed or implied within
forward-looking statements can be found under “Risk management”
on pages 53 to 61 of this document. All subsequent written or oral
forward-looking statements attributable to the Company or any member
of the Group or any persons acting on their behalf are expressly qualified
in their entirety by the factors referred to above. No assurances can
be given that the forward-looking statements in this document will
be realised. Subject to compliance with applicable law and regulations,
Vodafone does not intend to update these forward-looking statements
and does not undertake any obligation to do so.
References in this document to information on websites (and/or social
media sites) are included as an aid to their location and such information
is not incorporated in, and does not form part of, the 2021 Annual Report
on Form 20-F.
244 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Forward-looking statements
unaudited information
245 Vodafone Group Plc
Annual Report 2021
Definition of terms
unaudited information
Strategic report
Governance
Financials
Other information
This document contains “forward-looking statements” within the
– rapid changes to existing products and services and the inability of new
The definitions of Non-GAAP measures are included in the “Non-GAAP measures” section on pages 217 to 226.
3G
4G
5G
ADR
ADS
AGM
support ongoing growth in customer demand for mobile data services;
Applications (‘apps’)
ARPU
B2C
Capital additions
Churn
Cloud services
A cellular technology based on wide band code division multiple access delivering voice and faster data services.
4G or long-term evolution (‘LTE’) technology offers even faster data transfer speeds than 3G/HSPA.
5G is the fifth-generation wireless broadband technology which provides better speeds and coverage than the current 4G.
American depositary receipts is a mechanism designed to facilitate trading in shares of non-US companies in the US stock
markets. The main purpose is to create an instrument which can easily be settled through US stock market clearing systems.
American depositary shares are shares evidenced by American depositary receipts. ADSs are issued by a depositary bank and
represent one or more shares of a non-US issuer held by the depositary bank. The main purpose of ADSs is to facilitate trading in
shares of non-US companies in the US markets and, accordingly, ADRs which evidence ADSs are in a form suitable for holding in
US clearing systems.
Annual General Meeting.
Apps are software applications usually designed to run on a smartphone or tablet device and provide a convenient means for the
user to perform certain tasks. They cover a wide range of activities including banking, ticket purchasing, travel arrangements, social
networking and games. For example, the MyVodafone app lets customers check their bill totals on their smartphone and see the
minutes, texts and data allowance remaining.
Average revenue per user, defined as customer revenue and incoming revenue divided by average customers.
Business-to-Consumer refers to the process of selling products and services directly between a business and consumers who are
the end-users.
Comprises the purchase of property, plant and equipment and intangible assets, other than licence and spectrum payments and
integration capital expenditure.
Total gross customer disconnections in the period divided by the average total customers in the period.
This means the customer has little or no equipment, data and software at their premises. The capability associated with the service
is run from the Vodafone network and data centres instead. This removes the need for customers to make capital investments and
instead they have an operating cost model with a recurring monthly fee.
Common Functions
Comprises central teams and business functions.
Converged customer
A customer who receives fixed and mobile services (also known as unified communications) on a single bill or who receives a
discount across both bills.
Customer costs
Includes acquisition costs, retention costs and other direct costs of providing services.
Depreciation and amortisation
The accounting charge that allocates the cost of a tangible or intangible asset to the income statement over its useful
life. This measure includes the profit or loss on disposal of property, plant and equipment and computer software. Includes
right-of-use assets.
Direct costs
Europe
FCA
Direct costs include interconnect costs and other direct costs of providing services.
Comprises the Group’s operations in Europe.
Financial Conduct Authority.
Fixed service revenue
Service revenue relating to the provision of fixed line and carrier services.
FTTC
FTTH
GAAP
GSMA
IAS 17
ICT
IFRS
IFRS 15
IFRS 16
Fibre-to-the-Cabinet involves running fibre optic cables from the telephone exchange or distribution point to the street cabinets
which then connect to a standard phone line to provide broadband.
Fibre-to-the-Home provides an end-to-end fibre optic connection the full distance from the exchange to the customer’s premises.
Generally Accepted Accounting Principles.
Global System for Mobile Communications Association
International Accounting Standard 17 “Leases”. The previous lease accounting standard that applied to the Group’s statutory
results for all reporting periods up to and including the quarter ended 31 March 2019.
Information and communications technology.
International Financial Reporting Standards.
International Financial Reporting Standard 15 “Revenue from Contracts with Customers”. The accounting policy adopted by the
Group on 1 April 2018.
International Financial Reporting Standard 16 “Leases”. The accounting policy adopted by the Group on 1 April 2019.
Integration capital expenditure
Capital expenditure incurred in relation to significant changes in the operating model, such as the integration of recently
acquired subsidiaries.
Internet of Things (‘IoT’)
The network of physical objects embedded with electronics, software, sensors, and network connectivity, including built-in mobile
SIM cards, that enables these objects to collect data and exchange communications with one another or a database.
meaning of the US Private Securities Litigation Reform Act of 1995
with respect to the Group’s financial condition, results of operations
and businesses, and certain of the Group’s plans and objectives. In
particular, such forward-looking statements include statements
with respect to:
– the Group’s expectations and guidance regarding its financial and
operating performance, the performance of associates and joint
ventures, other investments and newly acquired businesses,
preparation for 5G and expectations regarding customers;
products and services to perform in accordance with expectations;
– the ability of the Group to integrate new technologies, products and
services with existing networks, technologies, products and services;
– the Group’s ability to generate and grow revenue;
– a lower than expected impact of new or existing products, services
or technologies on the Group’s future revenue, cost structure and
capital expenditure outlays;
– slower than expected customer growth, reduced customer
retention, reductions or changes in customer spending and
– intentions and expectations regarding the development of products,
increased pricing pressure;
services and initiatives introduced by, or together with, Vodafone or by
– the Group’s ability to extend and expand its spectrum resources, to
third parties;
other trends;
– expectations regarding the global economy and the Group’s operating
– the Group’s ability to secure the timely delivery of high-quality products
environment and market position, including future market conditions,
from suppliers;
growth in the number of worldwide mobile phone users and
– revenue and growth expected from Vodafone Business’ and total
– changes in the costs to the Group of, or the rates the Group may
communications strategy;
– mobile penetration and coverage rates, MTR cuts, the Group’s ability to
acquire spectrum and licences, including 5G licences, expected growth
prospects in the Europe and Rest of the World regions and growth in
customers and usage generally;
– anticipated benefits to the Group from cost-efficiency programmes,
including their impact on the absolute indirect cost base;
– possible future acquisitions, including increases in ownership in existing
investments, the timely completion of pending acquisition transactions
and pending offers for investments;
– expectations and assumptions regarding the Group’s future revenue,
operating profit, adjusted EBITDA, adjusted EBITDA margin, free cash
flow, depreciation and amortisation charges, foreign exchange rates,
tax rates and capital expenditure;
– expectations regarding the Group’s access to adequate funding for its
working capital requirements and share buyback programmes, and
the Group’s future dividends or its existing investments; and
– the impact of regulatory and legal proceedings involving the Group
and of scheduled or potential regulatory changes.
Forward-looking statements are sometimes, but not always, identified
by their use of a date in the future or such words as “will”, “anticipates”,
“aims”, “could”, “may”, “should”, “expects”, “believes”, “intends”, “plans”
or “targets”. By their nature, forward-looking statements are inherently
predictive, speculative and involve risk and uncertainty because they
relate to events and depend on circumstances that will occur in the
future. There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied by
these forward-looking statements. These factors include, but are not
limited to, the following:
– general economic and political conditions in the jurisdictions in which
the Group operates and changes to the associated legal, regulatory
and tax environments;
– increased competition;
– levels of investment in network capacity and the Group’s ability to
deploy new technologies, products and services;
– loss of suppliers, disruption of supply chains and greater than
anticipated prices of new mobile handsets;
charge for, terminations and roaming minutes;
– the impact of a failure or significant interruption to the Group’s
telecommunications, networks, IT systems or data protection systems;
– the Group’s ability to realise expected benefits from acquisitions,
partnerships, joint ventures, franchises, brand licences, platform sharing
or other arrangements with third parties;
– acquisitions and divestments of Group businesses and assets and
the pursuit of new, unexpected strategic opportunities;
– the Group’s ability to integrate acquired business or assets;
– the extent of any future write-downs or impairment charges on the
Group’s assets, or restructuring charges incurred as a result of an
acquisition or disposition;
– developments in the Group’s financial condition, earnings and
distributable funds and other factors that the Board takes into
account in determining the level of dividends;
– the Group’s ability to satisfy working capital requirements;
– changes in foreign exchange rates;
– changes in the regulatory framework in which the Group operates;
– the impact of legal or other proceedings against the Group or other
companies in the communications industry;
– changes in statutory tax rates and profit mix; and
– changes resulting directly or indirectly from the COVID-19 pandemic.
A review of the reasons why actual results and developments may
differ materially from the expectations disclosed or implied within
forward-looking statements can be found under “Risk management”
on pages 53 to 61 of this document. All subsequent written or oral
forward-looking statements attributable to the Company or any member
of the Group or any persons acting on their behalf are expressly qualified
in their entirety by the factors referred to above. No assurances can
be given that the forward-looking statements in this document will
be realised. Subject to compliance with applicable law and regulations,
Vodafone does not intend to update these forward-looking statements
and does not undertake any obligation to do so.
References in this document to information on websites (and/or social
media sites) are included as an aid to their location and such information
is not incorporated in, and does not form part of, the 2021 Annual Report
on Form 20-F.
246 Vodafone Group Plc
Annual Report 2021
Strategic report
Governance
Financials
Other information
Definitions of terms (continued)
Mark-to-market
Mbps
Mobile broadband
Mark-to-market or fair value accounting refers to accounting for the value of an asset or liability based on the current market price
of the asset or liability.
Megabits (millions) of bits per second.
Mobile broadband allows internet access through a browser or a native application using any portable or mobile device such as
smartphone, tablet or laptop connected to a cellular network.
Mobile service revenue
Service revenue relating to the provision of mobile services.
Mobile termination rate (‘MTR’)
A per minute charge paid by a telecommunications network operator when a customer makes a call to another mobile or fixed
network operator.
MVNO
Mobile virtual network operators, companies that provide mobile phone services under wholesale contracts with a mobile network
operator, but do not have their own licence or spectrum or the infrastructure required to operate a network.
Next-generation networks (‘NGN’) Fibre or cable networks typically providing high-speed broadband over 30Mbps.
Net Promoter Score (‘NPS’)
Operating expenses (‘Opex’)
Other Europe
Other Markets
Other revenue
Partner markets
Penetration
Petabyte
Pps
RAN
Regulation
Reported growth
Restructuring costs
Retail revenue
Roaming
Smartphone penetration
Service revenue
SME
SOHO
Spectrum
Vodafone Business
VZW
Net Promoter Score is a customer loyalty metric used to monitor customer satisfaction.
Comprise primarily sales and distribution costs, network and IT related expenditure and business support costs.
Other Europe markets include Portugal, Ireland, Greece, Romania, Czech Republic, Hungary and Albania.
Other Markets comprise Turkey, Egypt and Ghana.
Other revenue includes connection fees, equipment revenue, interest income and lease revenue.
Markets in which the Group has entered into a partner agreement with a local mobile operator enabling a range of Vodafone’s
global products and services to be marketed in that operator’s territory and extending Vodafone’s reach into such markets.
Number of SIMs in a country as a percentage of the country’s population. Penetration can be in excess of 100% due to customers
owning more than one SIM.
A petabyte is a measure of data usage. One petabyte is a million gigabytes.
Percentage points.
Radio access network is the part of a mobile telecommunications system which provides cellular coverage to mobile phones via
a radio interface, managed by thousands of base stations installed on towers and rooftops across the coverage area, and linked to
the core nodes through a backhaul infrastructure which can be owned, leased or a mix of both.
Impact of industry specific law and regulations covering telecommunication services. The impact of regulation on service revenue
in European markets comprises the effect of changes in European mobile termination rates and changes in out-of-bundle
roaming revenue less the increase in visitor revenue.
Reported growth is based on amounts reported in euros and determined under IFRS.
Costs incurred by the Group following the implementation of discrete restructuring plans to improve overall efficiency.
Retail revenue comprises Service revenue excluding Mobile Virtual Network Operator (‘MVNO’) and Fixed Virtual Network Operator
(‘FVNO’) wholesale revenue.
Allows customers to make calls, send and receive texts and data on other operators’ mobile networks, usually while travelling abroad.
The number of smartphone devices divided by the number of registered SIMs (excluding data only SIMs) and telemetric applications.
Service revenue is all revenue related to the provision of ongoing services including, but not limited to,: monthly access charges,
airtime usage, roaming, incoming and outgoing network usage by non-Vodafone customers and interconnect charges for
incoming calls.
Small and medium-sized enterprises.
Small-Office-Home-Office customers.
The radio frequency bands and channels assigned for telecommunication services.
Vodafone Business is part of the Group and partners with businesses of every size to provide a range of business-related services.
Verizon Wireless, the Group’s former associate in the United States.
246 Vodafone Group Plc
Annual Report 2021
Definitions of terms (continued)
Strategic report
Governance
Financials
Other information
247 Vodafone Group Plc
Annual Report 2021
Notes
Strategic report
Governance
Financials
Other information
Mark-to-market or fair value accounting refers to accounting for the value of an asset or liability based on the current market price
Mark-to-market
Mbps
Mobile broadband
of the asset or liability.
Megabits (millions) of bits per second.
Mobile broadband allows internet access through a browser or a native application using any portable or mobile device such as
smartphone, tablet or laptop connected to a cellular network.
Mobile service revenue
Service revenue relating to the provision of mobile services.
Mobile termination rate (‘MTR’)
A per minute charge paid by a telecommunications network operator when a customer makes a call to another mobile or fixed
network operator.
MVNO
Mobile virtual network operators, companies that provide mobile phone services under wholesale contracts with a mobile network
operator, but do not have their own licence or spectrum or the infrastructure required to operate a network.
Next-generation networks (‘NGN’) Fibre or cable networks typically providing high-speed broadband over 30Mbps.
Net Promoter Score (‘NPS’)
Operating expenses (‘Opex’)
Net Promoter Score is a customer loyalty metric used to monitor customer satisfaction.
Comprise primarily sales and distribution costs, network and IT related expenditure and business support costs.
Other Europe markets include Portugal, Ireland, Greece, Romania, Czech Republic, Hungary and Albania.
Other Europe
Other Markets
Other revenue
Partner markets
Penetration
Petabyte
Pps
RAN
Regulation
Reported growth
Restructuring costs
Retail revenue
Roaming
Smartphone penetration
Service revenue
SME
SOHO
Spectrum
Vodafone Business
VZW
Other Markets comprise Turkey, Egypt and Ghana.
Other revenue includes connection fees, equipment revenue, interest income and lease revenue.
Markets in which the Group has entered into a partner agreement with a local mobile operator enabling a range of Vodafone’s
global products and services to be marketed in that operator’s territory and extending Vodafone’s reach into such markets.
Number of SIMs in a country as a percentage of the country’s population. Penetration can be in excess of 100% due to customers
A petabyte is a measure of data usage. One petabyte is a million gigabytes.
owning more than one SIM.
Percentage points.
Radio access network is the part of a mobile telecommunications system which provides cellular coverage to mobile phones via
a radio interface, managed by thousands of base stations installed on towers and rooftops across the coverage area, and linked to
the core nodes through a backhaul infrastructure which can be owned, leased or a mix of both.
Impact of industry specific law and regulations covering telecommunication services. The impact of regulation on service revenue
in European markets comprises the effect of changes in European mobile termination rates and changes in out-of-bundle
roaming revenue less the increase in visitor revenue.
Reported growth is based on amounts reported in euros and determined under IFRS.
Costs incurred by the Group following the implementation of discrete restructuring plans to improve overall efficiency.
Retail revenue comprises Service revenue excluding Mobile Virtual Network Operator (‘MVNO’) and Fixed Virtual Network Operator
(‘FVNO’) wholesale revenue.
Allows customers to make calls, send and receive texts and data on other operators’ mobile networks, usually while travelling abroad.
The number of smartphone devices divided by the number of registered SIMs (excluding data only SIMs) and telemetric applications.
Service revenue is all revenue related to the provision of ongoing services including, but not limited to,: monthly access charges,
airtime usage, roaming, incoming and outgoing network usage by non-Vodafone customers and interconnect charges for
incoming calls.
Small and medium-sized enterprises.
Small-Office-Home-Office customers.
The radio frequency bands and channels assigned for telecommunication services.
Vodafone Business is part of the Group and partners with businesses of every size to provide a range of business-related services.
Verizon Wireless, the Group’s former associate in the United States.
248 Vodafone Group Plc
Annual Report 2021
Notes (continued)
Strategic report
Governance
Financials
Other information
248 Vodafone Group Plc
Annual Report 2021
Notes (continued)
Strategic report
Governance
Financials
Other information
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network of reforestation projects.
Text pages are printed on Revive 50 uncoated
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The manufacturing mill also holds ISO 14001
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References to Vodafone are to Vodafone Group Plc and references to Vodafone Group are to Vodafone Group Plc and its subsidiaries unless
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Vodafone. Other product and company names mentioned herein may be the trade marks of their respective owners.
The content of our website (vodafone.com) should not be considered to form part of this Annual Report or our Annual Report on Form 20-F.
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