Vodafone Group Plc
Annual Report 2023
Contents
Strategic report
1
S
A new roadmap for Vodafone
2
S
About Vodafone
3
S
Operating in a rapidly changing industry
4
S
Key performance indicators
6
Chair’s message
7
Chief Executive’s statement
and strategic roadmap
8
Mega trends
10
Stakeholder engagement
13
Our people strategy
16
Our financial performance
26
S
Purpose, sustainability and
responsible business
28
Our purpose
29
–
Digital Society
30
–
Inclusion for All
35
–
Planet
39
Contribution to Sustainable Development Goals
40
Responsible business
40
–
Protecting data
44
–
Protecting people
47
–
Business integrity
50
Non-financial information
51
Risk management
57
–
Long-term viability statement
58
–
TCFD disclosure
Governance
60
S
Governance at a glance
62
Chair’s governance statement
64
Our Company purpose, values and culture
65
Our Board
68
Our governance structure
69
Our Executive Committee
70
Division of responsibilities
71
Board activities and principal decisions
73
Board effectiveness
74
Nominations and Governance Committee
77
Audit and Risk Committee
83
ESG Committee
85
Remuneration Committee
87
Remuneration Policy
93
Annual Report on Remuneration
107
US listing requirements
108
Directors’ report
Financials
110
Reporting on our financial performance
111
Directors’ statement of responsibility
113
Auditor’s report
123
Consolidated financial statements and notes
211
Company financial statements and notes
Other information
219
Non-GAAP measures
230
Shareholder information
236
History and development
236
Regulation
242
Form 20-F cross reference guide
245
Forward-looking statements
246
Definition of terms
Welcome to our 2023 Annual Report
We have adopted a digital-first approach to our reporting reflecting how we operate as a business.
Whilst the Annual Report continues to be a core part of our reporting suite, we use a simplified
format and include links to interactive online content, such as videos. We also provide summaries
at the start of each key section (denoted by an
S
in the contents to the left).
We continue to publish 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.
This year, we have also published a separate cyber security factsheet which provides detail on our
approach to managing cyber risk, as well as how we help our customers protect themselves.
ESG reporting
We also report 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’) and Sustainability Accounting Standards Board (‘SASB’) guidance
can be found in our ESG Addendum and on investors.vodafone.com respectively.
Corporate website
vodafone.com
Investor Relations website
investors.vodafone.com
FY23 TCFD report
investors.vodafone.com/tcfd
ESG Addendum
investors.vodafone.com/esgaddendum
Cyber security factsheet
investors.vodafone.com/cyber
FY23 SASB disclosures
investors.vodafone.com/sasb
A-Z of ESG disclosures
investors.vodafone.com/esga-z
ESG ratings
investors.vodafone.com/esg-ratings
References
Our Annual Report has been designed to aid navigation. We have cross-referenced relevant
material and included navigation icons that are ‘clickable’ when using the digital version
of the Annual Report. Online content can be accessed by clicking links on the digital version,
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
Click or scan to watch related
video content online
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, our TCFD report,
and our cyber security factsheet, 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.
FY23 strategy
update:
Margherita
Della Valle,
Chief Executive
FY23 financial
results:
Margherita
Della Valle,
Chief Executive
Vodafone Business
Digital Services &
Experiences
Digital inclusion
Net zero
Data privacy
Cyber security
Watch our video content
Our performance
Our digital investor briefings
Purpose pillars
Responsible business
Our governance
Vodafone
Technology
Social Contract
Human rights
Responsible
taxation
Valerie Gooding, Senior Independent
Director, Workforce Engagement Lead
and Chair of the Remuneration Committee
Jean-François
van Boxmeer,
Chair, on cyber security
David Nish,
Chair of the Audit
and Risk Committee
Amparo Moraleda,
Chair of the
ESG Committee
Deborah Kerr,
Non-Executive Director
Stephen Carter,
Non-Executive Director
Delphine Ernotte Cunci,
Non-Executive Director
Simon Segars,
Non-Executive Director
A new roadmap for Vodafone
Full year dividend maintained at
9.0
eurocents per share
Organic service revenue growth
1
Our transformation
FY23 performance
Read more about our financial performance in FY23
on pages 16 to 25
–
Decline reflects weak Germany performance and higher energy costs
–
Absolute adjusted EBITDAaL impacted by foreign exchange
Q4 FY23
Q3 FY23
Q2 FY23
Q1 FY23
Q4 FY22
Q3 FY22
2.0%
2.0%
1.4%
1.4%
1.6%
1.6%
1.4%
1.4%
0.5%
0.5%
0.5%
0.5%
2.5%
2.5%
2.5%
2.5%
1.9%
1.9%
1.8%
1.8%
2.0%
2.0%
2.7%
2.7%
FY23 2.2%
FY23 2.2%
Group excluding Turkey
Group
€14.9bn
€14.9bn
€14.4bn
€14.4bn
€15.2bn
€15.2bn
-1.3%
1
-1.3%
1
33.1%
33.1%
32.8%
32.8%
33.4%
33.4%
€14.7bn
€14.7bn
32.1%
32.1%
FY23
FY22
2
FY21
FY20
–
Group service revenue growth maintained throughout the year
–
Growth slowdown due to commercial underperformance in Germany
–
ROCE maintained above pre-pandemic levels despite
macroeconomic challenges
Notes:
1.
Organic growth. See page 219 for more information.
2.
Includes benefit of a legal settlement in Italy of €105 million in FY22.
3.
FY23 excludes Vantage Towers.
FY23
FY22
FY21
FY20
7.2%
7.2%
6.8%
3
6.8%
3
5.5%
5.5%
6.3%
6.3%
Pre-tax ROCE
Click or scan to watch our Group Chief Executive,
Margherita Della Valle, summarise our financial
performance in FY23:
investors.vodafone.com/videos
Our financial performance was in line
with expectations for the year but below
our potential.
Our purpose is to connect for a better future.
We have a new roadmap for Vodafone based on
three priorities: customers, simplicity and growth.
We must make four key strategic shifts.
Adjusted EBITDAaL
Return on capital employed (‘ROCE’)
3
Read more
on page 7
Click or scan to watch our Group Chief Executive,
Margherita Della Valle, introduce a new roadmap
for Vodafone:
investors.vodafone.com/videos
Key strategic shifts
Customers
Simplicity
Growth
Action
plan
Best-in-class
telco in Europe
& Africa
Europe’s
leading platform
for Business
Balanced focus on
Business + Consumer
Consumer back-to-basics
to win in the market
Leaner organisation
focused on value
Portfolio right-sized
for growth
Ambition
1
Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
Our business model
About Vodafone
How we govern
We are a European and African telecommunications
company which transforms the way our customers
live and work through our innovation, technology,
connectivity, platforms, products and services.
Our business model is underpinned by our strong
governance and risk management framework.
Governance
The Board held six scheduled meetings this year to discuss key strategic
matters, our purpose and culture, our people and stakeholder interests.
The
Nominations and Governance Committee
evaluates the
composition and performance of the Board and ensures an appropriate
balance of independence, skills, knowledge, experience and diversity.
The
Audit and Risk Committee
provides effective governance
over the appropriateness of financial reporting of the Group, including
the adequacy of related disclosures, the performance of the internal audit
function and the external auditor and oversight of the Group’s systems of
internal control, risk management framework and compliance activities.
The
ESG Committee
oversees our Environmental, Social and
Governance (‘ESG’) programme, including our purpose pillars,
sustainability and responsible business practices, and our contribution
to the societies we operate in under our social contract.
The
Remuneration Committee
advises the Board on policies for
executive remuneration and reward packages for individual Executive
Directors. The Committee also oversees general pay practices
across the Group.
Read more on
pages 74 to 86
Click or scan to watch our Non-Executive Directors
speak about their roles in short video interviews:
investors.vodafone.com/videos
Click or scan to watch our privacy and
cyber experts explain how we protect
customer data and our networks:
investors.vodafone.com/videos
Risk management
Risks are not static and as the environment changes, so do risks – some
diminish or increase, while new risks appear. We continuously review and
improve our risk processes in order to ensure that the Company has the
appropriate level of support in meeting its strategic objectives.
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 this allows
us to take a holistic approach and to make meaningful comparisons.
Our approach is continuously enhanced, enabling more dynamic risk
detection, modelling of risk interconnectedness and the use of data,
all of which are improving our risk visibility and our responses.
Our Board oversees principal and emerging risks,
which are reported
to the various management committees and the Board throughout the
year. 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 51 to 59
How we are structured and what we sell
1
Our business is comprised of infrastructure assets, shared operations,
growth platforms and retail and service operations. Our retail and service
operations are split across three broad business lines: Europe Consumer,
Vodafone Business and Africa Consumer.
the majority of our revenue. However, our portfolio also includes high
return growth areas that leverage and complement our core connectivity
business, such as digital services, the Internet of Things (‘IoT’) and financial
Europe
Consumer
€19bn
service revenue
We provide a range of market leading mobile
and fixed line connectivity services in our
European markets. Our converged plans
combine these offerings, providing simplicity
and better value for our customers. Other value
added services include our Consumer IoT
propositions, as well as security and
insurance products.
Vodafone
Business
€10bn
service revenue
We serve private and 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 into growth areas such as unified
communications, cloud & security, and IoT.
Africa
Consumer
2
€6bn
service revenue
We provide a range of mobile services.
The demand for mobile data is growing rapidly
driven by the lack of fixed broadband access
and by increased smartphone penetration.
Together with Vodacom’s VodaPay super-app
and the M-Pesa payment platform, we are the
leading provider of financial services, as well as
business and merchant services in Africa.
Where we operate
We operate mobile and fixed networks in 17 countries and have stakes in
a further five countries through our joint ventures and associates. We also
partner with mobile networks in 46 countries outside our footprint. Our
portfolio of local markets is supported by corporate services and shared
operations, which deliver benefits through scale and standardisation.
Notes:
1.
Performance across our markets is summarised on pages 16 to 22.
2. Including Turkey.
2
Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
Operating in a rapidly changing industry
The long-term trends that are shaping our industry
and driving new growth opportunities.
Mega trends
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.
Our stakeholders
Our customers
323m
mobile customers
1
28m
broadband customers
1
21m
TV customers
1
€45.7bn
revenue across
19
operating markets
2
Our people
104,000
employees and contractors
€5.8bn
benefits of job creation
Our suppliers
9,000
suppliers
€25bn
spend, and
€8.4bn
capital additions
Our local communities and
non-governmental organisations (‘NGOs’)
98%
network coverage
recovered within days
of earthquakes in Turkey
€3m
donated in contributions and
in-kind services in response
to the earthquakes in Turkey
and surrounding areas
Government and regulators
€2.2bn
total direct contribution
across
62
markets in FY22
€9.9bn
total tax and economic
contribution in FY22
Our investors
1,000
interactions with
institutional investors
in FY23
€2.5bn
paid in dividends in FY23 and
€2.0bn
interest paid in FY23
Read more on
pages 10 to 12
Read more
on pages 8 to 9
Notes:
1.
Includes VodafoneZiggo and Safaricom.
2.
Including Vodafone Hungary and Vodafone Ghana which
were sold in January 2023 and February 2023 respectively.
Hybrid Working
Connected devices
Adoption of cloud technology
Digital and green transformation for the
private and public sector
Digital payments and financial services
–
Hybrid working is becoming a permanent
feature of the modern working environment.
–
This requires continued investment in reliable,
high-speed connections for both business and
consumers.
–
Demand for connected devices, beyond
smartphones, is growing rapidly.
–
The Internet of Things (‘IoT’) is expected to drive
huge operational efficiencies, deliver real-time
information, and can be employed in a broad
range of use cases.
–
Large technology companies have invested
heavily in advanced centralised data storage
and processing capabilities that consumers can
access remotely via cloud technology.
–
The cloud is increasingly utilised by businesses
and consumers as a more efficient way of
sharing capacity and services.
–
The European Union has launched a series
of funding programmes under the banner
‘NextGenerationEU’, including a Recovery
and Resilience facility which will also
support the European Commission’s
digital transformation agenda.
–
Companies are also increasingly looking to
digitalise their operations to become more
efficient and reduce their environmental impact.
–
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 access to digital financial
services for the first time.
Digital services
investor briefing
Vodafone Business
investor briefing
Vodafone Business
investor briefing
Social contract
investor briefing
Digital services
investor briefing
3
Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
Our progress
Key Performance Indicators
Financial and non-financial performance
We measure our success by tracking key performance indicators that reflect
our strategic, operational and financial progress and performance.
Financial results summary
2023
2022
2021
Group revenue
€m
45,706
45,580
43,809
Group service revenue
€m
37,969
38,203
37,141
Operating profit
1
€m
14,296
5,813
5,129
Adjusted EBITDAaL
2
€m
14,665
15,208
14,386
Profit for the financial year
1
€m
12,335
2,773
483
Basic earnings per share
1
€c
42.77
7.71
0.20
Adjusted basic earnings per share
1,2
€c
11.45
11.68
7.90
Cash inflow from operating activities
€m
18,054
18,081
17,215
Adjusted free cash flow
2
€m
4,842
5,437
5,019
Borrowings less cash & cash equivalents
€m
(54,685)
(62,596)
(61,939)
Net debt
2
€m
(33,375)
(41,578)
(40,543)
Total dividends per share
€c
9.00
9.00
9.00
Operational key performance indicators
2023
2022
2021
Europe mobile contract customers
3
million
64.8
66.4
65.4
Europe broadband customers
3
million
24.7
25.6
25.6
Europe Consumer converged customers
3
million
9.1
9.0
7.9
Europe mobile contract customer churn
%
13.5
13.6
13.7
Africa mobile customers
4
million
189.9
184.5
178.0
Africa data users
4
million
94.8
89.9
84.9
Business service revenue growth
2
%
2.6
0.8
(0.6)
Europe TV subscribers
3
million
20.7
21.9
22.2
IoT SIM connections
million
162.3
150.1
123.3
Africa M-Pesa customers
4
million
56.7
52.4
48.3
Africa M-Pesa transaction volume
4
billion
26.0
19.9
15.2
Digital channel sales mix
5
%
26
25
26
End-to-end TOBi completion rate
6
%
56.2
42.9
34.6
5G available in European cities
3
#
332
294
240
Europe on-net gigabit capable connections
3
million
50.0
48.5
43.7
Europe on-net NGN broadband penetration
3
%
29
30
30
Pre-tax return on capital employed
2, 7
%
6.8
7.2
5.5
Post-tax return on capital employed
1, 2, 7
%
5.1
5.2
4.0
Europe markets where 3G switched off
3
#
4
4
3
Notes:
1.
FY22 and FY21 have been re-presented for the reclassification of Indus Towers Limited which
is no longer reported as held for sale. See page 151 for more information.
2.
This is a non-GAAP measure. See page 219 for more information.
3.
Including 100% of VodafoneZiggo.
4.
Africa including 100% of Safaricom, excluding Ghana.
5.
Based on Germany, Italy, UK and Spain only.
6.
Defined as percentage of total customer contacts resolved without human interaction through
TOBi. Group excluding Egypt.
7.
The FY23 ROCE excludes Vantage Towers. FY22 excluding Vantage Towers pre-tax ROCE
is 7.0% and post-tax ROCE is 5.0%.
4
Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
Purpose, sustainability and responsible business
We want to enable a digital, inclusive and sustainable society. To underpin the delivery of our purpose,
we ensure that we operate in a responsible way. Acting lawfully and with integrity is critical to our
long-term success.
Digital Society
2023
2022
2021
Cumulative V-Hub unique visitors
million
5.2
3.6
1.1
Registered farmers on agricultural platforms
million
5.0
2.9
2.1
Inclusion for All
2023
2022
2021
4G population coverage (outdoor 1Mbps) – Europe
1
%
99
99
98
4G population coverage (outdoor 1Mbps) – Africa
2
%
70
65
62
4G population coverage (outdoor 1Mbps) – Group
%
85
82
75
Our people
Average number of employees and contractors
3
thousand
104
104
105
Employee engagement index
4
%
76
73
74
Employee turnover rate (voluntary)
%
12
14
8
Women on the Board
%
54
50
45
Women in management and senior leadership roles
%
34
32
32
Women as a percentage of employees
%
40
40
40
Planet
5
2023
2022
2021
Energy use
Total electricity cost
€bn
1.2
0.8
0.8
Total energy use
6
GWh
6,274
6,125
6,142
Mobile and fixed access network and technology centres energy use
%
93
93
94
Percentage of purchased electricity from renewable sources
%
81
77
55
Percentage of purchased electricity from renewable sources in Europe
%
100
96
79
Greenhouse gas emissions (‘GHGs’)
Total Scope 1 and Scope 2 GHG emissions (market-based method)
6
m tonnes CO
2
e
0.97
1.08
1.42
Total Scope 3 GHG emissions
6
m tonnes CO
2
e
10.1
9.6
9.4
Total customer emissions avoided due to our green digital solutions
6
m tonnes CO
2
e
24.9
15.6
6.2
Waste
Total network waste (including hazardous waste)
6
metric tonnes
12,407
8,381
7,173
Network waste reused or recycled
6
%
96
95
98
Responsible business
2023
2022
2021
Code of Conduct
Completed ‘Doing What’s Right’ employee training
%
92
89
84
Number of ‘Speak Up’ reports
#
505
642
623
Health & safety
Number of lost-time incidents – employees and contractors
#
19
12
7
Lost-time incident rate per 1,000 employees and contractors
#
0.2
0.11
0.06
Responsible supply chain
Total spend
€bn
25
24
24
Number of direct suppliers
#
9
9
11
Number of site assessments conducted collectively by JAC
7
initiative members
#
83
71
76
Tax and economic contribution
Total tax and economic contribution
8
€bn
–
9.9
9.6
Notes:
1.
Changes to FY22 figures relate to alignment of the Europe segment to exclude Turkey.
2.
Based on coverage in Africa, including Egypt. Ghana is included in 2021 and 2022 metrics.
3.
Calculation considers employee pro-rated headcount.
4.
The 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.
5.
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. For full methodology see our ESG Addendum 2023.
6.
Comparative metrics have been restated in lie with our updated methodology. See our ESG
Addendum 2023 for more detail.
7.
Joint Alliance for CSR.
8.
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,
excludes joint ventures and associates. The FY23 figure will be finalised during FY24. For more
information, refer to our Tax and Economic Contribution reports, available at: vodafone.com/tax.
5
Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
A new roadmap for Vodafone
Chair’s message
This year has been a challenging one for Vodafone
and for many of our customers, following the rise
in energy costs and broader inflation. We have taken
a number of steps to mitigate the impact of these
cost pressures.
However, as a Board, we recognise that the Company
has also underperformed, and that change is needed.
This will require a transformation of the Group,
so that Vodafone can realise its full potential.
Group Chief Executive succession
In December 2022, we announced that Nick Read would step down
as Group Chief Executive. The Board and I would like to thank Nick for
his commitment and significant contribution to Vodafone throughout his
career spanning more than two decades with the Company.
The Board has undertaken a rigorous internal and external search to find
the best possible candidate, and in April 2023 I was delighted to announce
the appointment of Margherita Della Valle as Group Chief Executive.
Margherita has a strong track record during her long career at Vodafone
in marketing, operational, commercial and financial positions. During her
time as interim Group Chief Executive, the Board and I have been impressed
with her pace and decisiveness to begin the necessary transformation
of the Company. Margherita has the full support of myself and the Board
for her plans for Vodafone to provide a better customer experience,
become a simpler business and accelerate growth – and deliver value
for our shareholders.
Board composition
As I wrote last year, my ambition for this year was to further enhance
the Board’s experience within the telecommunications and technology
sectors. I was therefore pleased to welcome four new Non-Executive
Directors to the Board this year: Stephen Carter, Delphine Ernotte Cunci,
Simon Segars and Christine Ramon. Their appointments bring extensive
experience and strong track records of value creation, which will be
of great support to the Group.
On 10 May 2023, the Board approved the creation of a Technology
Committee as a Committee of the Board. The Technology Committee,
once established in due course, will oversee the technology strategy
and how it supports the overall Company strategy. The creation of a
Technology Committee – run by the highly experienced team of Simon
Segars, Stephen Carter, Delphine Ernotte Cunci and Deborah Kerr
– will be a great additional benefit to the Board and to Vodafone. On the
same date, having completed either 9 years or almost 9 years, we also
announced that Valerie Gooding, Sir Crispin Davis and Dame Clara Furse
would not be seeking re-election at the 2023 Annual General Meeting
(‘AGM’). I would like to thank my colleagues for their outstanding service
to the Company and look forward to their continuing contribution
until the AGM. In light of these retirements and following a review of
committee membership, a number of Non-Executive Directors will take
on new roles, including David Nish, who will be appointed Senior
Independent Director.
On 11 May 2023, we announced that we had agreed a strategic
relationship with Emirates Telecommunications Group Company PJSC
(“e&”). This marks the next phase in a strategic relationship that began last
year, and I’m delighted we have strengthened our existing relationship
with e&, which will bring additional telecoms experience to our Board
in the future.
FY23 financial performance
Our financial results for FY23 have been in line with expectations for the
year. Total revenue increased by 0.3% to €45.7 billion, with Group organic
service revenue growing by 2.2% this year. This was driven by continued
good growth in the UK, Other Europe and Africa, partially offset by
declines in Germany, Italy and Spain.
Adjusted EBITDAaL declined by 1.3%
1
reflecting the impact of higher
energy costs and commercial underperformance in Germany. These
factors more than offset the benefits of service revenue growth and a
further €0.2 billion of savings from our ongoing European cost efficiency
programme. Our reported financials were also impacted by adverse
currency movements during the year. Overall Group returns were broadly
maintained, with a return on capital employed (‘ROCE’) of 6.8% on a
pre-tax basis (excluding Vantage Towers)
1
. Group operating profit
increased by 146% to €14.3 billion, largely reflecting a gain on disposal
from Vantage Towers, and as a result basic earnings per share increased
to 42.77 eurocents.
Following the successful disposal of Vodafone Hungary and partial sale
of Vantage Towers, our balance sheet position has also improved, with
Group leverage now at 2.5x.
2
The Board has declared a total dividend
per share of 9.0 eurocents, implying a final dividend per share of 4.5
eurocents, which will be paid on 4 August 2023 following shareholder
approval at our AGM.
Taking a leadership role in shaping the future
of digital connectivity
Over the last few years, we have seen significant shifts in society and the
direct role telecoms plays. Digital connectivity is an important priority for
governments as it increasingly impacts the relative competitiveness and
resilience of countries.
Vodafone is firmly committed to supporting Europe and Africa in realising
their digital ambitions. However, in order to do so, investment in digital
infrastructure is critical. While the European Union has set out a clear
vision and Digital Decade targets for a more sustainable and prosperous
future, there is currently an estimated €300 billion gap between their
ambitions and Europe’s current investment plans.
This investment gap is primarily due to the unintended consequences of
past policy and regulatory decisions, which have impacted returns for the
telecommunications industry. Returns have remained below the cost of
capital for over a decade, restricting the appetite for further investment.
Whilst we welcome a number of positive reforms towards pro-investment
policy, the current pace and magnitude of change is not enough. Further
pro-investment policy reform is required to drive growth and scale in the
sector. If delivered, it would enable operators to earn a sustainable return
and support the much-needed investment required to safeguard Europe
and Africa’s global competitiveness.
Going forward
On behalf of the Board, I would like to thank all of our colleagues across
the Group who have continued to work tirelessly to support our
customers – keeping them reliably connected.
As we enter FY24, the macroeconomic outlook still remains uncertain.
I am confident that under Margherita’s leadership we will improve the
Company’s performance and drive value for all of our stakeholders.
Jean-François van Boxmeer
Chair
Notes:
1.
This is a non-GAAP measure. See page 219 for more information.
2.
Proforma ratio after adjusting for foreign exchange and M&A.
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Chief Executive’s statement and strategic roadmap
Delivery through Customers, Simplicity & Growth
“Today I am announcing my plans for Vodafone.
Our performance has not been good enough.
To consistently deliver, Vodafone must change.
My priorities are customers, simplicity and growth.
We will simplify our organisation, cutting out
complexity to regain our competitiveness. We will
reallocate resources to deliver the quality service
our customers expect and drive further growth from
the unique position of Vodafone Business.”
Margherita Della Valle, Group Chief Executive
We set out below a new roadmap for Vodafone, following a strategic
review conducted over the last five months.
1. Vodafone must change
The circumstances of our industry and the position of Vodafone within it,
require us to change.
–
The European telecommunications sector has amongst the lowest
return on capital employed (‘ROCE’) of any sector in Europe, alongside
the highest capital investment demands. This has resulted in ROCE
being below the weighted average cost of capital (‘WACC’) for over
a decade, impacting total shareholder returns.
–
More importantly, the comparative performance of Vodafone has
worsened over time, which is connected to our customer experience.
–
Our market position and performance varies by geography and segment.
Where we have the right combination of strong local execution and a
rational market structure, we can grow and drive returns. There are also
material differences between our Consumer and Business segments,
with Business growing in nearly all of our European markets
–
Our turnaround must be built from our strengths, but we need to
overcome some clear challenges. We are more complex than we need
to be, which limits our local commercial agility.
2. Strategic shifts
Our target is to be a best-in-class telco in Europe and Africa, and become
Europe’s leading platform for Business. To achieve this, we must change
in four essential areas.
–
We will rebalance our organisation to maximise the potential of
Vodafone Business, which continues to accelerate growth, and
we believe has a unique set of capabilities and has a strong position
in a large and growing market as organisations digitalise.
–
In order to win in our consumer markets, we will refocus on the basics
and deliver the simple & predictable experience our customers expect.
–
We will be a leaner and simpler organisation, to increase our
commercial agility and free up resources.
We will focus our resources on a portfolio of products and geographies
that is right-sized for growth and returns over time.
3. Our action plan
To execute the change in these four areas, we have an action plan already
underway, focused around three priorities: Customers, Simplicity and
Growth. Early examples of this action plan include:
–
Customers:
Significant investment reallocated in FY24 towards
customer experience and brand;
–
Simplicity:
11,000 role reductions planned over three years, with both
headquarters and local markets simplification; and
–
Growth:
Germany turnaround plan, continued pricing action and
strategic review in Spain.
We will change the level of ambition, speed and decisiveness of execution.
We will have empowered markets focused on customers, scale up
Vodafone Business and take out complexity to simplify how we operate.
Our purpose is to connect for a better future.
We have a new roadmap for Vodafone based on
three priorities: customers, simplicity and growth.
We must make four key strategic shifts.
Customers
Simplicity
Growth
Our transformation
Best-in-class
telco in Europe
& Africa
Europe’s
leading platform
for Business
Action
plan
Key strategic shifts
Balanced focus on
Business + Consumer
Consumer back-to-basics
to win in the market
Leaner organisation
focused on value
Portfolio right-sized
for growth
Click or scan to watch a more detailed outline of the new
roadmap for the transformation of Vodafone:
investors.vodafone.com/videos
Ambition
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Mega trends
Long-term trends shaping our industry
Digital services and next-generation connectivity
are increasingly central to everything we do – and
will be the driving forces that redefine relationships
between sectors, employers, employees, customers,
and friends and family.
There are five ‘mega trends’ that we believe will
continue to shape our industry in the years ahead:
hybrid working, connected devices, adoption
of cloud technology, the digital and green
transformation of public and private sectors, and
digital payments.
Hybrid working
Over the past few years we have seen a dramatic shift in working
patterns, which are now being maintained following the end of the
COVID-19 pandemic. Companies have now moved from largely
office-based environments to more ‘hybrid’ working models, thereby
providing their employees with much greater flexibility as to how and
where they work, whilst still ensuring high or even increased levels
of productivity. This change in working patterns will continue to drive
increased demand for fast and reliable fixed and mobile networks, as well
as a range of supporting services such as cloud-based productivity and
communication platforms.
The majority of large multinationals already have remote working
capabilities; however they are now moving to more efficient technologies.
Smaller companies, ranging from corporates to small and medium-sized
offices, 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 with an opportunity to further deepen their
customer relationships by offering a broad 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. These
connected devices, known as the Internet of Things (‘IoT’), are expected
to increase by around 55% to over 23 billion devices by 2025
1
. This is
driven by continued reductions in the cost of computing components,
advances in cross-device operability and software, and the near-ubiquity
of 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.
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, in 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; 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.
As the number of IoT devices increases, physical assets are also
communicating with each other in real-time and new digital markets
are being established. This is leading to the Economy of Things, where
connected devices securely trade with each other on a user’s behalf,
without human intervention. This presents businesses across multiple
industries with exciting opportunities to transform goods into tradeable
digital assets which can compete in new disruptive online markets.
Adoption of cloud technology
Over the past 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 through the cloud. This is popular
as it allows upfront capital investment savings, the ability to efficiently
scale resources to meet demand, systems that can be easily updated and
increased resilience. 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, particularly those with strong existing
relationships, as they can effectively help customers navigate their move
to the cloud at scale.
Click or scan to watch our digital services and
experiences investor briefing:
investors.vodafone.com/digital-services
Note:
1. GSMA Mobile Eonomy Report 2022.
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Digital and green transformation of the
public and private sectors
As a part of the fiscal response to the COVID-19 pandemic, the European
Union has launched a series of funding programmes with €723.8 billion
available under the banner ‘NextGenerationEU’. This includes the
Recovery and Resilience facility, which combines €385.5 billion of loans
and €338 billion of grants available to European Union Member States.
Of these grants, approximately 70% are being allocated to European
Union Member States in which Vodafone has an operating presence.
The range of funding presents a direct and indirect opportunity given
that 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 school children.
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 their 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 move
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 our purpose to enable an inclusive
and sustainable digital society on pages 35 to 38
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 annual value of mobile money transactions has reached a key
milestone in 2021 with one trillion transactions globally
1
. Consumers
are also moving beyond peer-to-peer transactions as rising smartphone
penetration drives the adoption of mobile payment applications. Network
operators and a range of FinTech startups 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, loans and e-commerce marketplaces. 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.
Businesses are also increasingly reliant on operator-owned payment
infrastructure for consumer-to-business payments and 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.
Larger corporates, which 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
business-to-business cloud & security is expected to reach €82 billion
by 2025 compared to €65 billion today.
Consumers use cloud solutions for a variety of reasons, including
digital storage, online media consumption or interacting through the
metaverse. Consumer hardware can also in some cases be 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 how Vodafone’s leading gigabit connectivity
infrastructure supports the digital society on pages 29 to 30
Click or scan to learn more about our IoT leadership and
evolution in our Vodafone Business investor briefing:
investors.vodafone.com/vbbriefing
Click or scan to watch our digital services
and experiences investor briefing:
investors.vodafone.com/digital-services
Note:
1. GSMA State of the Industry Report on Mobile Money 2022
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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, in both 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.
Section 172 factor
Disclosure
Location
The likely consequences of any
decision in the long term
Key performance indicators
Pages 4 to 5
Business model
Page 2
Stakeholder engagement
Pages 10 to 12
Our purpose
Pages 28 to 39
Responsible business
Pages 40 to 49
Risk management
Pages 51 to 59
Governance
Pages 60 to 109
The interests of the Company’s employees
Stakeholder engagement
Pages 10 to 12
Our people strategy
Pages 13 to 15
Key performance indicators
Pages 4 to 5
Our purpose
Pages 28 to 39
Responsible business
Pages 40 to 49
Our Company purpose, values, and culture
Page 64
Remuneration Committee, Remuneration Policy
and Annual Report on Remuneration
Pages 85 to 106
The need to foster the Company’s
business relationships with suppliers,
customers and others
Business model
Page 2
Stakeholder engagement
Pages 10 to 12
Chief Executive’s statement and strategic roadmap
Page 7
Our purpose
Pages 28 to 39
Responsible business
Pages 40 to 49
Risk management
Pages 51 to 59
Board activities and principal decisions
Pages 71 to 72
Supplier financing arrangements
Pages 37 and 177
The impact of the Company’s
operations on the community
and the environment
Stakeholder engagement
Pages 10 to 12
Our purpose
Pages 28 to 39
TCFD disclosure
Pages 58 to 59
Responsible business
Pages 40 to 49
Contribution to Sustainable Development Goals
Page 39
ESG Committee
Pages 83 to 84
The desirability of the Company
maintaining a reputation for high
standards of business conduct
Stakeholder engagement
Pages 10 to 12
Responsible business
Pages 40 to 49
Governance
Pages 60 to 109
The need to act fairly as between
members of the Company
Stakeholder engagement
Pages 10 to 12
Governance
Pages 60 to 109
Shareholder information
Pages 230 to 235
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, and these matters are covered
throughout this Annual Report and summarised in the table below.
This includes how those matters and the interests of Vodafone’s key
stakeholders have been taken into account by the Directors.
We have also summarised our interactions with key stakeholders during
the year in this section. The engagement mechanisms directly involving
the Directors are indicated below with a
B
symbol.
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Our customers
We are focused on deepening our engagement with our customers
to develop long-term valuable and sustainable relationships. 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), and call centres and branded retail stores
What were the key topics raised?
–
Better value offerings and converged solutions for customers
–
Fast and reliable data networks and wider coverage
–
Making it simple and quick to deal with us, with prompt feedback and
resolution of service-related issues
–
Managing the challenge of data-usage transparency
How did we respond?
–
Improved efficiency and functionality of MyVodafone app
–
Expanded our 4G and 5G coverage
–
Stronger focus on Customer Experience (‘CX’) with new automated
satisfaction tracking tools, setting up CX boards in all markets and
increasing investments to reduce customer detraction
–
Continued to leverage our digital channels to support easy access for
all of our customers
–
Enabled free international calling and roaming for our customers
following the devastating earthquakes in Turkey and surrounding areas
–
Supported financially vulnerable customers in the cost of living crisis
–
Drove inclusion and affordability for smartphones and technology
hardware by introducing trade-in & Flex propositions in nine markets
–
Entered an exclusive three-year partnership with WWF to collect one
million phones for the planet to support the circular economy
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
everyone is highly motivated, and we remained focused on wellbeing.
How did we engage with them?
–
Regular meetings with managers
–
B
European Employee Consultative Committee
–
Inaugural Vodacom Group Employee Engagement Forum
–
B
National Consultative Committee (South Africa)
–
B
Executive Committee discussions
–
B
Internal website and live webinars, newsletters and other
digital communications
–
B
Employee Speak Up channel
–
Global employee surveys, including onboarding and exit surveys
What were the key topics raised?
–
Enhancing performance management and career development
–
A balanced hybrid working approach
–
Global and local market communication channels
–
Global Pulse and Spirit Beat survey actions
–
Increasing engagement amongst new hires
–
Importance of manager/employee relationships
–
Impacts of the macroeconomic environment
–
Supporting colleagues affected by the earthquakes in Turkey
How did we respond?
–
Launched a new performance management system
–
Embedded our integrated skills and learning platform
–
Strengthened our global senior leadership programme
–
Reviewed our global hybrid ways of working policy
–
Refreshed manager learning and support guides
–
Redesigned our global onboarding processes and new starter support
–
Regular business and trading updates communicated to staff
–
Provided support for colleagues and their relatives affected by the
earthquakes in Turkey; as well as free psychological and wellbeing
guidance and matched employee donations
Our suppliers
Our business is helped by 9,000 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?
–
Supplier audits and assessments
–
Safety forums, events, conferences and site visits
–
Purpose criteria in tenders relating to planet, diversity and safety
What were the key topics raised?
–
Improving health and safety standards
–
Driving towards net zero emissions in supply chains
–
Supplier and product innovation
How did we respond?
–
Held quarterly safety forums
–
Recognised suppliers through awards for health and safety, diversity
and inclusion and planet efforts at our Arch Summit
–
Collaborated with industry peers and suppliers through the Joint
Alliance for CSR (‘JAC’), formerly known as the Joint Audit Cooperation
–
Launched environmentally-linked supply chain finance programme
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 and NGO interaction on education, health, agriculture and
inclusive finance projects, and on our humanitarian response to global
issues including the war in Ukraine
–
Participation in multi-stakeholder working groups on policy issues
at the national and international level
What were the key topics raised?
–
Increasing access to connectivity and digital services, by closing
the digital divide, closing the rural gap and connecting SMEs
–
Human rights topics including digital child rights
–
Environmental topics including net zero and the circular economy
–
Delivery of global and national development goals including
UN Sustainable Development Goals
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How did we respond?
–
Our previous Group Chief Executive chaired a UN Broadband
Commission working group on increasing smartphone access and
co-chaired a pillar of the International Telecommunication Union’s
Partner2Connect initiative
–
Participated in partnerships and working groups on human rights
–
Participated and engaged with key environmental initiatives, including
the Science Based Targets initiative and CDP
–
Launched a response to the earthquakes in Turkey and surrounding
areas with NGOs and charities
Governments and regulators
Our relationship with governments and regulators is important and we
hope to work together on policies impacting our industry and customers,
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, EU institutions, public forums and
parliamentary processes
–
B
Meetings with commissioners, ministers, elected representatives,
policy officials and regulators
–
Hosting and participating in workshops and events to improve sector
understanding of connectivity and digitalisation
–
B
Our Chair chairs the European Round Table for Industrialists, which
promotes competitiveness and prosperity and engages with European
and global institutions, and governments
What were the key topics raised?
–
Regulatory and policy environment and compliance
–
Responses to COVID-19 and the war in Ukraine
–
Security and supply chain resilience, and data protection and privacy
–
Digital societies, digital inclusion, the climate transition and the
European Green Deal
How did we respond?
–
Engaged on the digital and green transformation of the EU, and the
Digital Decade targets such as the digitalisation of industries and SMEs
–
Communications on the impact of electromagnetic fields (‘EMF’)
–
Engaged on network investments, design and deployment, and issues
such as the allocation of spectrum and the protection of consumers
–
Discussed policy and regulatory environment that facilitates
investment in technology
–
Engaged with the EU with respect to the data economy, including data
protection, digital principles, and data sharing
–
Engaged with the UN on digital inclusion via the ITU and UN
Broadband Commission, and climate topics via COP27
Click to read more about our social contract in our latest
investor briefing. The materials set out why a reset of the
European regulatory framework is so important; how
through our social contract we have taken a leadership
role in improving our relationship with governments and
policymakers; and what is need in terms of policy reform:
investors.vodafone.com/social-contract
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, roadshows, conferences
–
B
Annual & interim reports and presentations
–
B
Investor relations website used as primary digital communications
tool and is available to all shareholders (institutional and retail),
including over 12 hours of dedicated video content covering investor
events and interviews with Non-Executive Directors
–
Stock Exchange News Service (‘SENS’) announcements
–
B
Annual General Meeting (‘AGM’)
–
B
Investor perception study and regular feedback survey
–
For FY24, further resources will be available to individual shareholders, such
as online presentations hosted by the UK Individual Shareholders Society
–
Our Registrar, Equiniti, operates a portfolio service which provides
shareholders with the ability to manage their holdings
What were the key topics raised?
–
Strategy to deliver sustained financial growth and operational priorities
–
Allocation of capital, deleveraging strategy and dividend policy
–
Portfolio optimisation
–
Corporate governance practices
–
ESG strategy, targets and reporting
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 conferences
–
Meetings were attended by Directors and senior management,
including our Chair, Group Chief Executive, Chief Financial Officer,
and Executive Committee members
Stakeholder engagement (continued)
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Our people strategy is to create an inclusive
environment for growth where everyone has the
opportunity to thrive. Our engaged and experienced
team are a key strength and will support us as we
begin the transformation of Vodafone.
The Spirit of Vodafone
Our culture – the ‘Spirit of Vodafone’ – outlines the beliefs we stand for
and the behaviours that enable our strategy and purpose.
We foster our culture by developing individual habits that reinforce our
Spirit, invest in leadership development to role model our beliefs, and
ensure systems, processes and milestone activities are aligned with the
Spirit of Vodafone. We measure our progress and identify where to take
action via a bi-annual employee survey called ‘Spirit Beat’. In our latest
Spirit Beat survey (September 2022), we had an 83% response rate and
sustained high scores in engagement, connection to purpose and Spirit.
Spirit Beat surveys
Measurement
Sept 2022
Apr 2022
Engagement
76
82
Purpose
88
93
Team Spirit Index
1
84
87
Response rates
83
84
Note:
This year we expanded our listening strategy and as part of this unified our scoring methodology
to a 5-point scale and favourable percentage (from a 7-point scale and weighted average). This new
scoring methodology provides less choice and greater distinction so any change between -3 to -5
points for Spirit Beat is likely due to the scale change, rather than a real decline.
1.
The Team Spirit Index represents an overall view of how people are doing on the Spirit
of Vodafone and takes into account each of our Spirit Behaviours.
The Spirit Beat survey informs our priorities which include a focus
on ensuring new starters and managers are engaged with our Spirit.
New starters who joined during the pandemic were scoring slightly
lower on Spirit and engagement compared to other colleagues (-1 point).
In response, we redesigned our onboarding processes and support
globally. In September 2022, new hires reported higher Spirit and
engagement scores compared to other colleagues (+9 points),
highlighting the impact that listening and focused action can have.
Managers that act on Spirit outperform those who do not take action
on average by 18 points on Spirit and 22 points on engagement. This has
informed our new approach to performance development and how we
support and hold managers accountable for their impact.
We continue to evolve our employee listening strategy and deepen the
connection between employee and customer experiences by opening
up more channels. During the year, this included a pulse survey sent in
June 2022, the results of which were used to inform our hybrid ways
of working. Our listening strategy also includes standardising our
onboarding and exit listening approach globally. Results show that 71%
of leavers would recommend Vodafone as a great place to work (based
on 2,066 responses). As part of our focus on one of our Spirit behaviours,
earning customer loyalty, our Spirit Beat survey was extended in
September to include contractors in customer-facing roles in five
markets (76% response rate). This has enabled markets to celebrate
high customer scores, while also identifying opportunities to be
more effective. Based on the success of the pilot, we extended
contractor measurement to further markets in April 2023.
Once a quarter, we have a ‘Spirit of Vodafone Day’ which is dedicated
time to focus on learning, connection and wellbeing. During our Spirit
of Vodafone Day in February 2023, 80% more online learning hours were
recorded compared to a typical day in the financial year up until that point.
Colleagues took the opportunity to focus on earning customer loyalty
and this was facilitated through new learning materials that include
Consumer and Vodafone Business customer feedback and net
promoter scores.
Leadership at Vodafone
Leadership is essential for enabling transformation, and we have
continually invested in developing inclusive leaders who drive growth
and innovation, act as role models, coach and empower teams, and
lead with Spirit.
In April 2022, we launched a Spirit Accelerator, which aims to increase
accountability and ownership of our strategic priorities by our senior
leaders. Further to this, we launched ‘CEO accelerator’, an exciting and
varied programme of support to accelerate the leadership transition and
develop new local market CEOs. We have introduced tools to support
the development of our leaders and our selection process includes
an independent assessment. Executive coaching is now available to all
leaders through a platform-based approach and we support the broader
leadership population through an internal network of accredited coaches.
Senior leadership is accountable for our culture transformation, whilst
the Board reviews progress on employee engagement and Spirit on a
regular basis, and the Executive Committee monitors key achievements
and considers further opportunities to embed Spirit. We continue to do this
through Company policies and improvements to employee experience
through our ‘moments that matter’ programme. We are supporting
leaders to demonstrate Spirit as they transition with their teams into hybrid
working and are using updated leadership assessment methodologies to
reflect Spirit behaviours. We also run a global recognition programme that
celebrates those who demonstrate our Spirit behaviours.
Innovation at Vodafone
We continue to develop ‘LaunchPad’, our global employee-led
innovation platform which helps ‘Create the Future’. In the three years
since it has been operational, our employees have submitted over
2,000 ideas, ranging from e-waste recycling, Internet of Things (‘IoT’)
marketplaces and cloud smartphones. We are seeing the value these
ideas have. For example, ‘Scam Signal’ is a Vodafone application that
helps businesses combat fraud and cyber crime by utilising our network
to identify bank transfer scams in real time. LaunchPad has delivered
€15 million annualised value from ideas executed since inception and
this year 360 colleagues provided ideas based on using Vodafone
technology to solve environmental challenges.
Simplified operating model
We recently simplified the Group’s operating model to execute our
strategy, accelerate and streamline performance, and improve customer
experience. Key commercial decisions have moved back to markets, and
this is supported by a new governance structure. Group functions will
remain committed to governance, performance management, shared
operations, and best practice programmes that uphold global standards.
Read more about our headcount
on page 33
Diverse talent and future ready skills
In April 2022, we launched a new operating model for learning, talent,
leadership, and skills – the global Vodafone Learning Organisation (‘VLO’)
– which has already started to drive simplification across our markets,
while enabling a high quality development experience for employees.
We have already begun to realise the benefits of this operating model
change with higher quality streamlined global learning offerings.
We are focused on developing diverse talent with the skills to transform
Vodafone and this is reflected by four strategic pillars which are
summarised on the following page.
Our people strategy
Our people strategy
13
Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
Our people strategy (continued)
1. Enable a high impact performance & learning culture
We continue to support the personal and professional growth of people
through online learning initiatives. During the year, our employees
accomplished two million hours of learning with an average of 1.7 hours
per month. The annual average number of hours per employee has
increased by 33% per employee since FY22, with each employee now
spending 20 hours on average per annum on their learning. We invested
an average of €301 for both mandatory and non-mandatory training for
each employee to build future capabilities.
To support customer experience, we have launched customer-centric
programmes for all employees including a Company-wide customer
experience curriculum.
In April 2023, we launched a new performance management system and
process to increase alignment and prioritisation of goals, enable greater
employee ownership, and create a shared understanding of the impact
an employee has on outcomes. Performance assessments consider
the impact an employee has had on team, business, and customer
outcomes and how the Spirit of Vodafone has been harnessed to deliver
those outcomes. Reward will be linked to the individual’s impact and
underpinned by minimum performance standards, including completion
of our Doing What’s Right training, that reinforce our commitment to
building an ethical culture.
2. Build the skills for the future
This year, we strategically reviewed the skills that we need to support our
business strategy. From April 2023 we started to deliver Skill Accelerators
across the organisation for critical skill areas such as agile project
management, software engineering, automation, and cyber security.
In Italy, more than 300 people have been reskilled from contact centres
to other internal functions. Large-scale programmes on digital skills have
impacted employees in Italy, reflected by more than one million learning
hours delivered. We are also introducing a global software engineering
reskilling programme. Successful applicants began training in May 2023.
As part of our ambition to hire 7,000 software engineers by 2025,
we enhanced our employer brand awareness by launching a global
recruiting playbook, investing in talent acquisition campaigns, running
events across markets, and redesigning the global careers site. So far,
we have hired 5,880 software engineers. This year, we also launched
a specific ‘Always-on Software Engineer’ attraction campaign in Egypt,
Germany, Spain, Turkey, Romania, Portugal and the UK. As a result,
we have had 42.8 million impressions. Moreover, last year we were a
platinum sponsor at the React Summit, an annual conference gathering
thousands of software engineers from around the world. This had a
positive impact as 77% of engineers we interacted with had an improved
perception of Vodafone as a technology employer following the event.
Our technical career path supports the attraction, retention and
development of our technical experts and sits alongside a managerial/
leadership career path. The technical career path is designed to provide
more formal ways to recognise and reward career progression for
technical experts, giving choice in career direction.
3. Drive an efficient engine with the scale and expertise to deliver
on our growth ambitions
We simplified the operations of the VLO by leveraging vendor partnerships,
and launching global product offerings on agile project management,
languages and executive coaching. We removed duplicated activities
across markets by continuing to expand our _VOIS shared services team.
We also conducted global demand planning for our learning, talent,
leadership and skills to align our investments with our strategic objectives.
4. Engage and retain diverse talent, and unlock potential through
focused succession and people development
We reviewed our talent and succession pools across senior roles.
These are ultimately discussed and approved at the annual Executive
Committee talent review and are also shared with the Board. Gender
diversity of the executive succession pools increased to 50% from 38%
in the prior year. This year, we also reviewed our commercial capabilities
by reviewing the skills we need for the future, assessing the capability
of current and future leaders, and developing learning journeys and
targeted development actions. We further embedded these assessment
tools and strategies into our overall processes for developing and
recruiting senior leaders across the business.
We continue to invest in youth hiring (5,731 hires, of which 942 were
graduates) whilst providing digital learning experiences to 66,036 young
people through local work experience programmes and training
initiatives. During the year, we also hired 236 apprentices with local
programmes that aim to grow future talent and skills in areas such as
cyber security, network engineering and software engineering through
work-based learning and qualifications.
Read more about workplace equality
on pages 33 to 34
Digital and personalised experience
Future ready ways of working
This year, we reviewed our Future Ready Vodafone global policy on
hybrid working, which includes the option to work from another country
during the year for a maximum of 20 days. To continue our commitment
to hybrid ways of working, we believe a minimum of two days in the office
is the right balance to achieve the benefits of in-person collaboration and
our leaders are expected to clearly role-model this. We are not mandating
a fixed day per week at a function or market level as this compromises
the principle of flexibility that hybrid working is built on. Underpinning all
our hybrid thinking is our continued commitment to the health, safety,
and wellbeing of our teams.
Office space
The shift to hybrid working has redefined the role of the office and
inspired us to create a new global office design primarily for collaboration
and connection. We experimented in different countries last year,
redesigned the Vodafone Turkey headquarters, and opened a new
office in Valencia, and a new Innovation Hub in Malaga. These are great
examples of the hybrid workplace improving the employees’ experience
and being a magnet to attract talent, collaborate, and innovate.
A new initiative called ‘Office in a Box’ was implemented to support
employees’ wellbeing while working from home, providing a virtual
office setup at home following a self-assessment. We are also improving
the digital workplace experience with new booking systems for desks
and collaboration spaces, access control, video conferencing, and
presentation facilities to enhance the employee experience at the office.
Click to read our technology employee articles:
careers.vodafone.com/life-at-vodafone/projects-stories
14
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Annual Report 2023
Strategic report
Governance
Financials
Other information
To standardise and improve the experience of new joiners, we deployed
a new digital onboarding tool in November 2022. It has received
an effectiveness score of 86% from new joiners and 83% from hiring
managers over a baseline of 80%.
We continued to invest in our AI chatbot called, ‘TOBi’, to provide
personalised instant responses and process administrative tasks.
New features have been piloted in Vodacom Group and _VOIS India,
with roll-out plans to UK employees in FY24. In FY23, TOBi resolved 53%
of queries that would have been actioned by other support channels.
We have also implemented a new quality tool to check and correct HR
data against pre-set rules to enable richer and more accurate insights
on employee experience. The tool has already fixed 98% of errors.
We continue to invest in our data strategy by bringing together and
visualising both HR and non-HR data through cloud-based data-lake
functionality, and this is reflected in pilots in Greece and _VOIS.
Workers’ councils and union engagement
We respect freedom of association and recognise the rights of
employees to join trade unions and engage in collective bargaining in
accordance with local law. We continue to maintain strong relationships
with workers’ councils and unions through their representatives and we
have almost 23,000 people covered by collective bargaining agreements
across our global footprint. As an example, unions in Spain are supported
through infrastructure and resources which employees have access to
through union halls, digital and physical forums, and regular newsletters.
This year, we reached agreements with unions in Spain and Italy on
items such as pay, hybrid working and training as we continued to
shape the future of work.
Employee forums
We have a number of employee forums where elected employee
representatives represent the views of their colleagues. During the year,
the Board’s Workforce Engagement Lead, Valerie Gooding, attended
employee forums to gather employee views, such as the European
Employee Consultative Committee. Key discussion topics from the
meetings included talent development, future ready ways of working,
cost of living support, and business performance.
Read more about the Board’s engagement with the
employee voice on pages 62, 64 and 85
Pay and benefits
As part of the people experience, we continue to ensure pay, benefits,
and wellbeing propositions are competitive and fair. Pay is typically
reviewed on an annual basis, with increases aligned to an individual’s level
of skills and experience, as well as external factors like market competition
and inflation. Our total reward approach also encourages collective
performance and ‘in-the-moment’ recognition. For example, 21,335
peer-to-peer ‘Thank You’s’ and 65,258 cash Vodafone Star awards were
issued through a digital recognition tool during the year. We continue to
apply Fair Pay principles across all markets, working with the Fair Wage
Network to ensure a good standard of living in each market. In the UK,
our commitment to these principles is reflected in being an Accredited
Living Wage employer.
Read more about our Fair Pay principles
on page 100
Click to read more about Fair Pay at Vodafone:
vodafone.com/fair-pay
Mental health and wellbeing
We remain focused on physical and mental wellbeing, with training
and services available in each market, including the provision of
employee assistance and psychological support services. Market
examples from the year include:
–
Vodafone Egypt became one of the first companies in the Middle East,
as well as in our Vodafone markets, to be verified against ISO
45003:2021 for psychological health and safety at work.
–
In Italy, we organised awareness and training sessions, including
mindfulness sessions, a webinar with a team of psychologists during
Mental Health Week, and a session on social welfare services.
–
In the UK we continued our third year of support for the 245 mental
health first aiders across the business. We facilitated six bi-monthly
learning sessions across a range of topics on mental health. In May
2022, we delivered a two-hour workshop to 400 employees during
UK Mental Health Awareness Week and introduced a new service
for people to access professional therapy.
–
In South Africa, we launched an onsite financial coach and counselling
clinic in February 2023 and established the Wellbeing Committee
on employee wellbeing needs. We also held 10 wellbeing café sessions
on a range of topics including mental health, finance, resilience,
anxiety, and trauma (2,235 participants).
–
Finally in Spain, we launched the rercárgate wellbeing programme,
engaging more than 1,260 colleagues in wellbeing programmes.
Click to read more about mental health and wellbeing:
vodafone.com/wellbeing
Digital experience
This year, we continued to focus on providing a digital and personalised
experience to employees, informed by internal insights, and underpinned
by our culture. This has included digitalising our core HR processes,
ensuring we have the right tools and data to deliver the people strategy.
In 2022, we launched ‘Grow with Vodafone’, an integrated talent
acquisition, skills and learning platform that enhances the employee
experience, whilst giving employees greater ownership of their learning
and career development. The tool is split into three main features:
–
Grow your skills:
Enables individuals to create their unique skills
profile enabling personalised learning and career recommendations,
as well as providing upskilling opportunities
.
–
Grow your learning:
Offers personalised learning recommendations
to help each employee achieve their career goals, whilst also driving
a culture where growing never stops.
–
Grow your career:
Provides role recommendations based on skills
and experience to candidates, and offers optimised recruiter and hiring
manager experience by prioritising the most suitable applications.
This has had the following impact:
–
Candidate experience:
Job recommendations based on an
individual’s skills and experience (driven by an AI role-matching
engine). This is facilitated by 66% of roles being auto-calibrated.
–
Gender diversity:
For management roles a higher proportion
of women shortlisted, supported by efforts to remove unconscious
bias during screening.
–
Recruiter capability:
Increased effectiveness of recruiters, as
reflected by a reduction in time-to-hire time by 49%, enabled through
AI-based sourcing capabilities.
15
Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
–
Group revenue increased by 0.3% to €45.7 billion driven by growth in Africa and higher equipment sales, offset
by lower European service revenue and adverse exchange rate movements.
–
Group service revenue trend was impacted by a decline in Germany, Italy, and Spain, offset by continued growth
in the UK, Other Europe, and Africa.
–
Service revenue growth in Turkey increased to 47.6%* driven by higher inflation. Group service revenue growth
excluding Turkey was 1.0%*.
–
Adjusted EBITDAaL
1
declined by 1.3%* to €14.7 billion due to higher energy costs, and commercial
underperformance in Germany.
–
Inflationary cost pressures in Europe were mitigated by our ongoing cost efficiency programme, with a further
€0.2 billion of savings in FY23.
–
Returns broadly maintained; pre-tax ROCE
1
(ex. Vantage) at 6.8%.
Note:
1.
Adjusted EBITDAaL and ROCE are non-GAAP measures. See page 219 for more information.
Financial performance in line with expectations
Our financial performance
Click or scan to watch our Group Chief Executive and Chief Financial Officer,
Margherita Della Valle, summarise our financial performance in FY23:
investors.vodafone.com/videos
Group financial performance
FY23
1
€m
Re-presented
2
FY22
€m
Reported
change %
Revenue
45,706
45,580
0.3
–
Service revenue
37,969
38,203
(0.6)
–
Other revenue
7,737
7,377
Adjusted EBITDAaL
3,4
14,665
15,208
(3.6)
Restructuring costs
(587)
(346)
Interest on lease liabilities
5
436
398
Loss on disposal of property, plant and equipment and intangible assets
(36)
(28)
Depreciation and amortisation of owned assets
(9,649)
(9,858)
Share of results of equity accounted associates and joint ventures
433
389
Impairment loss
(64)
–
Other income
9,098
50
Operating profit
14,296
5,813
145.9
Investment income
248
254
Financing costs
(1,728)
(1,964)
Profit before taxation
12,816
4,103
Income tax expense
(481)
(1,330)
Profit for the financial year
12,335
2,773
Attributable to:
–
Owners of the parent
11,838
2,237
–
Non-controlled interests
497
536
Profit for the financial year
12,335
2,773
Basic earnings per share
42.77c
7.71c
Adjusted basic earnings per share
3
11.45c
11.68c
Notes:
1.
The FY23 results reflect average foreign exchange rates of €1:£0.86, €1:INR 83.69, €1:ZAR 17.69, €1:TRY 18.53 and €1: EGP 23.72.
2.
The results for the year ended 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. There is no impact on previously reported revenue and
adjusted EBITDAaL. However, operating profit, profit before taxation and profit for the financial year have all increased by €149 million compared to amounts previously reported. Consequently, basic
earnings per share increased by 0.51c and adjusted basic earnings per share increased by 0.65c compared to amounts previously reported. See note 7 ‘Discontinued operations and assets held for sale’
in the consolidated financial statements for more information.
3.
Adjusted EBITDAaL and adjusted basic earnings per share are non-GAAP measures. See page 219 for more information.
4.
Includes depreciation on leased assets of €3,883 million (FY22: €3,908 million).
5.
Reversal of interest on lease liabilities included within adjusted EBITDAaL under the Group’s definition of that metric, for re-presentation in financing costs.
Organic growth
All amounts marked with an ‘*’ in the commentary represent organic growth which presents performance on a comparable basis, excluding the impact of foreign
exchange rates, mergers and acquisitions, the hyperinflation adjustments in Turkey and other adjustments to improve the comparability of results between periods.
Organic growth figures are non-GAAP measures.
Read more about non-GAAP measures
on page 219
16
Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
Geographic performance summary
FY23
Germany
€m
Italy
€m
UK
€m
Spain
€m
Other Europe
€m
Vodacom
€m
Other
Markets
€m
Vantage
Towers
€m
Common
Functions
€m
Eliminations
€m
Group
€m
Total revenue
13,113
4,809
6,824
3,907
5,744
6,314
3,834
1,338
1,387
(1,564)
45,706
Service revenue
11,433
4,251
5,358
3,514
5,005
4,849
3,300
–
530
(271)
37,969
Adjusted EBITDAaL
1
5,323
1,453
1,350
947
1,632
2,159
1,145
795
(139)
–
14,665
Adjusted EBITDAaL margin (%
)
1
40.6%
30.2%
19.8%
24.2%
28.4%
34.2%
29.9%
59.4%
32.1%
Service revenue growth %
Q1
Q2
H1
Q3
Q4
H2
Total
Germany
(0.5)
(1.1)
(0.8)
(1.8)
(2.8)
(2.3)
(1.6)
Italy
(2.2)
(3.4)
(2.8)
(3.3)
(2.8)
(3.0)
(2.9)
UK
8.3
6.9
7.6
2.7
(1.6)
0.5
4.0
Spain
(2.9)
(6.1)
(4.5)
(8.7)
(3.7)
(6.3)
(5.4)
Other Europe
2.1
1.9
2.0
1.4
(5.2)
(1.8)
0.1
Vodacom
7.8
9.9
8.9
5.3
(4.1)
0.5
4.6
Other Markets
(1.8)
(1.7)
(1.8)
(7.5)
(3.0)
(5.3)
(3.5)
Group
1.3
0.8
1.0
(1.3)
(3.2)
(2.2)
(0.6)
Organic service revenue growth %*
1
Q1
Q2
H1
Q3
Q4
H2
Total
Germany
(0.5)
(1.1)
(0.8)
(1.8)
(2.8)
(2.3)
(1.6)
Italy
(2.3)
(3.4)
(2.8)
(3.3)
(2.7)
(3.0)
(2.9)
UK
6.5
6.9
6.7
5.3
3.8
4.6
5.6
Spain
(3.0)
(6.0)
(4.5)
(8.7)
(3.7)
(6.2)
(5.4)
Other Europe
2.5
2.9
2.7
2.1
3.6
2.8
2.8
Vodacom
2.9
4.8
3.9
3.5
2.6
3.1
3.5
Other Markets
24.7
26.7
25.7
34.1
40.0
36.8
30.7
Group
2.5
2.5
2.5
1.8
1.9
1.8
2.2
Note:
1.
Organic service revenue growth, Group adjusted EBITDAaL and Group adjusted EBITDAaL margin are non-GAAP measures. See page 219 for more information.
17
Vodafone Group Plc
Annual Report 2023
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Governance
Financials
Other information
Germany: 30% of Group service revenue
FY23
€m
FY22
€m
Reported
change
%
Organic
change*
%
Total revenue
13,113
13,128
(0.1)
Service revenue
11,433
11,616
(1.6)
(1.6)
Other revenue
1,680
1,512
Adjusted EBITDAaL
5,323
5,669
(6.1)
(6.1)
Adjusted EBITDAaL
margin
40.6%
43.2%
Total revenue decreased by 0.1% to €13.1 billion, driven by lower service
revenue partially offset by higher equipment sales.
On an organic basis, service revenue declined by 1.6%* (Q3: -1.8%*, Q4:
-2.8%*) due to broadband customer losses and a lower mobile ARPU,
partially offset by higher roaming revenue and broadband ARPU growth.
The slowdown in quarterly trends was primarily driven by small
one-off benefits in Q4 last year and the impact of a multi-year IoT
contract renewal.
Fixed service revenue declined by 1.8%* (Q3: -2.0%*, Q4: -2.1%*), driven
by a lower broadband customer base, primarily as a result of specific
operational challenges related to the implementation of policies to
comply with the 2021 Telecommunications Act, which are now resolved.
This was partially offset by ARPU growth. In November 2022 we
increased prices for new broadband customers, and in March 2023,
we started to communicate price increases to some of our existing
customers, which will be implemented during H1 FY24. Our cable
broadband customer base declined by 119,000 and we lost 87,000 DSL
broadband customers during the year. As expected, our commercial
performance in Q4 was impacted by the decision to increase retail prices.
Our TV customer base declined by 412,000 and our converged customer
base decreased by 52,000 to 2.3 million Consumer converged accounts.
These declines primarily reflect higher disconnections of broadband
bundle customers, as well as fewer cross-selling opportunities.
Ahead of changes to German TV laws, which take effect from July 2024
and end the practise of bulk TV contracting in Multi Dwelling Units
(‘MDUs’), we are actively working with our Housing Association partners
to manage this transition, and sign customers up to individual contracts.
In total, we have 8.5 million MDU TV customers, and they generate
around €800 million in basic-TV revenue. We have commenced our first
trials to re-contract customers.
Mobile service revenue declined by 1.2%* (Q3: -1.7%*, Q4: -3.7%*)
primarily driven by lower contract ARPU reflecting mobile termination
rate cuts and a change in customer mix, as well as lower MVNO revenue,
partially offset by higher roaming revenue. The slowdown in quarterly
trends was due to small one-off benefits in the prior year, and the impact
of a major IoT automotive contract renewal in Q4 which will enable us
to capture additional future revenue opportunities. We added 68,000
contract customers in the year across both Business and Consumer.
We also added 8.2 million IoT connections, driven by continued strong
demand from the automotive sector.
Adjusted EBITDAaL declined by 6.1%*, of which 0.8 percentage points
was due to higher energy costs. Adjusted EBITDAaL growth was also
impacted by lower service revenue and one-off settlements in the prior
year. The adjusted EBITDAaL margin was 2.6* percentage points lower
year-on-year at 40.6%.
On 8 March 2023 we announced the completion of our fibre-to-the-
home (‘FTTH’) joint venture with Altice, which will deploy FTTH to
up to seven million homes over a six-year period. This partnership
is complementary to our upgrade plans for our existing hybrid fibre
cable network.
Italy: 11% of Group service revenue
FY23
€m
FY22
€m
Reported
change
%
Organic
change*
%
Total revenue
4,809
5,022
(4.2)
Service revenue
4,251
4,379
(2.9)
(2.9)
Other revenue
558
643
Adjusted EBITDAaL
1,453
1,699
(14.5)
(14.5)
Adjusted EBITDAaL
margin
30.2%
33.8%
Total revenue declined 4.2% to €4.8 billion due to lower service revenue
and equipment sales.
Service revenue declined by 2.9%* (Q3: -3.3%*, Q4: -2.7%*), as a result
of continued price pressure in the mobile value segment, partly offset
by strong Business demand in fixed line and digital services.
Mobile service revenue declined by 5.4%* (Q3: -5.7%*, Q4: -5.4%*).
Price competition in the mobile value segment has remained intense,
resulting in a lower active prepaid customer base and ARPU.
This was partially offset by targeted pricing actions taken during
the year. Our second brand ‘ho.’ continued to grow and now has
3.0 million customers.
Fixed service revenue increased by 3.3%* (Q3: 2.7%*, Q4: 3.6%*)
supported by strong Business demand for connectivity and digital
services, including a good take up of the Business voucher programme,
an initiative related to the EU Recovery and Resilience Facility that
subsidises high-speed broadband connectivity. This was partially
offset by a slightly lower customer base in Consumer broadband.
Our broadband customer base declined by 55,000 during the year,
however this was largely offset by 47,000 fixed-wireless additions
which are reported in mobile. Our Consumer converged customer
base now stands at 1.4 million, and in total 56% of our broadband
customers are converged.
Our next generation network (‘NGN’) broadband services are now
available to 23.5 million households, including 9.4 million through
our own network and our partnership with Open Fiber. In October 2022,
we launched 5G fixed-wireless services and now cover 3.4 million
households. This complements our 4G fixed-wireless access products,
which covers an additional 2.2 million households.
Adjusted EBITDAaL declined by 14.5%* including a 5.7 percentage point
impact relating to a €105 million legal settlement received in the prior
year, and 3.0 percentage points due to higher energy costs. Adjusted
EBITDAaL growth was also impacted by lower mobile service revenue,
partly offset by our continued strong focus on cost efficiency.
The adjusted EBITDAaL margin was 3.6* percentage points lower
year-on-year at 30.2%.
Our financial performance (continued)
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UK: 14% of Group service revenue
FY23
€m
FY22
€m
Reported
change
%
Organic
change*
%
Total revenue
6,824
6,589
3.6
Service revenue
5,358
5,154
4.0
5.6
Other revenue
1,466
1,435
Adjusted EBITDAaL
1,350
1,395
(3.2)
(1.4)
Adjusted EBITDAaL
margin
19.8%
21.2%
Total revenue increased by 3.6% to €6.8 billion driven by service
revenue growth, partly offset by the depreciation of the pound sterling
against the euro.
On an organic basis, service revenue increased by 5.6%* (Q3: 5.3%*,
Q4: 3.8%*). This was driven by continued strong growth in Consumer and
an acceleration in Business. The slowdown in quarterly trends was driven
by lower MVNO revenues.
Mobile service revenue grew by 8.0%* (Q3: 8.1%*, Q4: 2.8%*), driven
by our strong commercial momentum and annual price increases
in Consumer, good growth in Business, and higher roaming revenue.
The slowdown in quarterly trends reflected the complete migration
of the Virgin Media MVNO off our network. We continued to deliver good
customer base growth, supported by our flexible proposition Vodafone
‘Evo’, adding 230,000 contract customers. Our digital prepaid sub-brand
‘VOXI’ also continued to grow, with 134,000 customers added in FY23.
Our digital sales mix improved by 4 percentage points year-on-year
to 37% of total sales.
Fixed service revenue declined by 0.3%* (Q3: -1.6%*, Q4: 6.3%*)
with strong growth in Consumer offset by a decline in Business.
The improvement in quarterly trends was driven by Business, which
returned to growth in Q4, supported by several large corporate contract
wins and higher project work. Consumer growth was supported by our
price actions and good demand for our Vodafone ‘Pro Broadband’ and
fibre products. Our broadband customer base increased by 173,000
during the year and we now have over 1.2 million broadband customers.
Through our partnerships with CityFibre and Openreach we are able to
reach over 11 million households with full fibre broadband, more than
any other provider in the UK.
Adjusted EBITDAaL declined by 1.4%*, of which 5.4 percentage points
was due to higher energy costs. Adjusted EBITDAaL excluding energy
grew, driven by service revenue growth, partially offset by other
inflationary costs, a lower Virgin MVNO contribution and new annual
licence fees. The adjusted EBITDAaL margin declined 1.3* percentage
points year-on-year at 19.8%.
On 3 October 2022, we confirmed that we are in discussions with CK
Hutchison Holdings Limited (‘CK Hutchison’) in relation to a possible
combination of Vodafone UK and Three UK. The envisaged transaction
would entail us combining our UK business with Three UK, with Vodafone
owning 51% and CK Hutchison owning 49% of the combined business.
There can be no certainty that any transaction will ultimately be agreed.
Spain: 9% of Group service revenue
FY23
€m
FY22
€m
Reported
change
%
Organic
change*
%
Total revenue
3,907
4,180
(6.5)
Service revenue
3,514
3,714
(5.4)
(5.4)
Other revenue
393
466
Adjusted EBITDAaL
947
957
(1.0)
(1.1)
Adjusted EBITDAaL
margin
24.2%
22.9%
Total revenue declined by 6.5% to €3.9 billion due to lower service
revenue and equipment sales.
On an organic basis, service revenue declined by 5.4%* (Q3: -8.7%*,
Q4: -3.7%*) driven by continued price competition in the value segment
and a lower customer base. The improvement in quarterly trends was
driven by inflation-linked price increases, which took effect at the end
of January 2023, and increased Business demand for digital services.
In mobile, our contract customer base declined by 159,000 reflecting
one-off disconnections of 123,000 relating to temporary business SIMs
provided to schools and higher education providers during the pandemic,
as well as ongoing price competition in both the Consumer and SoHo
segments. Our Q4 commercial performance was impacted by our
price increases. Consumer contract churn improved by 2.7 percentage
points during the year, supported by our simplified and more transparent
range of tariff plans. Our second brand ‘Lowi’ continued to grow, adding
200,000 customers.
Our broadband customer base declined by 121,000 and our TV customer
base decreased by 56,000 due to price competition and the ongoing
shutdown of DSL. Our converged customer base remained broadly
stable at 2.2 million.
Adjusted EBITDAaL declined by 1.1%*, which included 6.7 percentage
points of one-off tax benefits and a 1.5 percentage point impact from
higher energy costs. Excluding these impacts, adjusted EBITDAaL
declined due to lower service revenue, partly offset by our ongoing
cost efficiency programme.
On 12 January 2023, we announced that Spain will become part of
the ‘Europe Cluster’, managed by Serpil Timuray, CEO Europe Cluster.
In March 2023, we announced that Mário Vaz, previously CEO of
Vodafone Portugal, had been appointed as new CEO of Spain, effective
from 1 April 2023.
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Vodacom: 13% of Group service revenue
FY23
€m
FY22
€m
Reported
change
%
Organic
change*
%
Total revenue
6,314
5,993
5.4
Service revenue
4,849
4,635
4.6
3.5
Other revenue
1,465
1,358
Adjusted EBITDAaL
2,159
2,125
1.6
1.4
Adjusted EBITDAaL
margin
34.2%
35.5%
Total revenue increased by 5.4% to €6.3 billion driven by service revenue
growth and higher equipment sales.
On an organic basis, Vodacom’s service revenue grew by 3.5%*
(Q3: 3.5%*, Q4: 2.6%*) with growth in both South Africa and Vodacom’s
international markets. The slowdown in quarterly trends was driven by
a tough prior year comparative in Vodacom Business within South Africa.
In South Africa, service revenue growth was supported by contract price
increases and prepaid ARPU growth, partially offset by repricing pressure
from a government mobile contract renewal. We added 192,000 mobile
contract customers in the year, and now have a total base of 6.7 million.
Across our active customer base, 74.9% of our mobile customers now
use data services, an increase of 2.0 million year-on-year. Financial
Services revenue grew by 10.6%* to €167 million, supported by good
demand for insurance services. Our VodaPay ‘super-app’ has continued
to gain traction with 3.3 million registered users.
In Vodacom’s international markets, service revenue growth was
supported by strong growth in data, a higher customer base and strong
M-Pesa growth. This was despite disruptions caused by heavy flooding
in both Mozambique and the DRC during the year. M-Pesa revenue grew
by 15.5% and now represents 25.0% of service revenue. Our mobile
customer base now stands at 50.2 million with 63.5% of active customers
using data services.
Vodacom’s adjusted EBITDAaL increased by 1.4%*, including a 1.7
percentage point impact from higher energy costs. Excluding this,
adjusted EBITDAaL was supported by service revenue growth and
accelerated cost initiatives, partially offset by an increase in technology
operating expenses as we continued to improve the resilience and
capacity of our network. The adjusted EBITDAaL margin decreased
by 1.2* percentage points to 34.2%.
On 13 December 2022, Vodafone completed the transfer of its 55%
shareholding in Vodafone Egypt to Vodacom. This transfer simplifies
the management of our African assets. Vodafone received cash proceeds
of €577 million and 242 million shares in Vodacom in exchange for
Vodafone’s shareholding in Vodafone Egypt. Following completion,
Vodafone’s shareholding in Vodacom has increased from 60.5% to 65.1%.
Vodafone Egypt will be included within the Vodacom reporting segment
from 1 April 2023.
Click to see further information on our operations in Africa:
vodacom.com
Other Europe: 13% of Group service revenue
FY23
€m
FY22
€m
Reported
change
%
Organic
change*
%
Total revenue
5,744
5,653
1.6
Service revenue
5,005
5,001
0.1
2.8
Other revenue
739
652
Adjusted EBITDAaL
1,632
1,606
1.6
4.7
Adjusted EBITDAaL
margin
28.4%
28.4%
Total revenue increased by 1.6% to €5.7 billion driven by service revenue
and equipment sales growth.
On an organic basis, service revenue increased by 2.8%* (Q3: 2.1%*, Q4:
3.6%*), with good growth in all markets other than Romania, which was
impacted by a mobile termination rate reduction. The improvement in
quarterly trends was driven by inflation-linked price increases in several
markets, as well as strong Business growth in Greece.
In Portugal, service revenue grew due to our strong commercial
momentum, with 183,000 mobile contract customers and 48,000 fixed
broadband customer additions during the year. In September 2022,
we announced that we had entered into an agreement to buy Portugal’s
fourth largest converged operator, Nowo Communications, from Llorca
JVCO Limited, the owner of Masmovil Ibercom S.A. The transaction
is conditional on regulatory approval, with completion expected in the
second half of the 2023 calendar year.
In Ireland, service revenue increased driven by customer base growth,
higher roaming revenue, and contractual price increases. Our mobile
contract customer base increased by 64,000 and our broadband
customer base grew by 14,000. In October 2022, we announced that
we had agreed a fixed wholesale network access agreement with Virgin
Media Ireland. Vodafone is already the largest fibre-to-the home provider
in Ireland, covering over 1 million households.
Service revenue in Greece grew, reflecting higher roaming revenue, good
growth in Business fixed supported by several public sector contract wins
relating to the EU Recovery Fund, and higher wholesale revenue. During
the year we added 138,000 mobile contract customers, and our
broadband customer base declined by 26,000.
Adjusted EBITDAaL increased by 4.7%*, including a 3.4 percentage point
impact from higher energy costs. Excluding this, adjusted EBITDAaL grew
driven by service revenue growth, ongoing cost efficiencies and a one-off
provision in Greece last year. The adjusted EBITDAaL margin remained
stable year-on-year at 28.4%.
On 31 January 2023, we announced that we had completed the sale
of Vodafone Hungary to 4iG Public Limited Company and Corvinus Zrt
for a cash consideration of HUF 660 billion (€1.6 billion), representing
a multiple of 8.4x Adjusted EBITDAaL for the year ended 31 March 2022.
Our financial performance (continued)
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Other Markets: 9% of Group service revenue
FY23
€m
FY22
€m
Reported
change
%
Organic
change*
%
Total revenue
3,834
3,830
0.1
Service revenue
3,300
3,420
(3.5)
30.7
Other revenue
534
410
Adjusted EBITDAaL
1,145
1,335
(14.2)
22.2
Adjusted EBITDAaL
margin
29.9%
34.9%
Total revenue remained broadly unchanged at €3.8 billion, with strong
service revenue growth offset by significant currency devaluations in both
Turkey and Egypt.
On an organic basis, service revenue grew by 30.7%* (Q3: 34.1%*,
Q4: 40.0%) reflecting a higher contribution from Turkey, impacted by
accelerating inflation, as well a strong customer base and ARPU growth.
Service revenue growth in Turkey was driven by continued customer
base growth and ongoing repricing actions to reflect the high inflationary
environment. We maintained our good commercial momentum, adding
1.6 million mobile contract customers during the year, including
migrations of prepaid customers. Customer loyalty rates continued to
improve, with mobile contract churn down by 1.5 percentage points
year-on-year to 13.9%. Our Q4 performance was impacted by the
earthquakes in Turkey.
Service revenue in Egypt continued to grow strongly, reflecting good
customer base growth and increased data usage. During the year,
we added 153,000 contract customers and 2.5 million prepaid
mobile customers.
Adjusted EBITDAaL increased by 22.2%* despite significant inflationary
pressure on our cost base. The adjusted EBITDAaL margin decreased
by 3.8* percentage points year-on-year to 29.9%.
On 21 February 2023, Vodafone completed the sale of our 70%
shareholding in Vodafone Ghana (‘GTCL’) to Telecel Group, further
simplifying our African portfolio.
Hyperinflationary accounting in Turkey
Turkey was designated as a hyperinflationary economy on 1 April 2022
in line with IAS 29 ‘Financial Reporting in Hyperinflationary Economies’.
See note 1 ‘Basis of preparation’ in the condensed consolidated financial
statements for further information.
During the year service revenue in Turkey increased by 47.6*% and
adjusted EBITDAaL grew by 49.8%* due to ongoing repricing actions
to reflect increasing inflation. Organic growth metrics exclude the impact
of the hyperinflation adjustment in the period in Turkey. Group service
revenue growth excluding Turkey was 1.0%* (Q3: 0.5%*, Q4: 0.5%*)
and adjusted EBITDAaL excluding Turkey declined 1.1%*
Vantage Towers
FY23
€m
FY22
€m
Reported
change
%
Organic
change*
%
Total revenue
1,338
1,252
6.9
Service revenue
–
–
–
–
Other revenue
1,338
1,252
Adjusted EBITDAaL
795
619
28.4
7.9
Adjusted EBITDAaL
margin
59.4%
49.4%
Total revenue increased 6.9% to €1.3 billion in FY23, driven by 1,750
new tenancies and new macro sites. As a result, the tenancy ratio
increased to 1.46x.
Adjusted EBITDAaL increased 7.9%* to €795 million, driven by revenue
growth, partly offset by increased costs relating to the ramp up of the
build to suit programme and 1&1 rollout.
On 23 March 2023, we announced the completion of our co-control
partnership for Vantage Towers with a consortium of long-term
infrastructure investors led by Global Infrastructure Partners and KKR.
Reflecting the final take-up in the connected voluntary takeover offer
and delisting offer, the co-control partnership, Oak Holdings GmbH.,
will own 89.3% of Vantage Towers. Vodafone has received initial net
cash proceeds of €4.9 billion and now hold a 64% shareholding in Oak
Holdings. The Consortium has the option to increase its ownership of
Oak Holdings up to a maximum of 50% by 30 June 2023, subject to the
outcome of its fundraising process.
Click to find further information on Vantage Towers:
vantagetowers.com
Associates and joint ventures
FY23
€m
Re-presented
1
FY22
€m
VodafoneZiggo Group Holding B.V.
137
(19)
Safaricom Limited
195
217
Indus Towers Limited
50
178
Other
51
13
Share of results of equity accounted
associates and joint ventures
433
389
Note:
1.
The results for the year ended 31 March 2022 have been re-presented to reflect that Indus
Towers Limited is no longer reported as held for sale. The share of results from Indus Towers
Limited has increased by €178 million compared to €nil as previously reported. See note 7
‘Discontinued operations and assets held for sale’ in the consolidated financial statements
for more information.
VodafoneZiggo Joint Venture (Netherlands)
The results of VodafoneZiggo, in which we own a 50% stake, are reported
here under US GAAP, which is broadly consistent with our IFRS basis
of reporting.
Total revenue remained stable at €4.1 billion, as mobile contract
customer base growth, higher roaming revenue and contractual price
increases were offset by a decline in the fixed Consumer customer base.
During the period, VodafoneZiggo added 181,000 mobile contract
customers, supported by its best-in-class net promoter score.
VodafoneZiggo’s broadband customer base declined by 13,000
customers to 3.3 million due to ongoing price competition. The number
of converged households increased by 21,000, with 46% of broadband
customers now converged. VodafoneZiggo now offers nationwide
1 gigabit speeds across its fixed network.
In FY23, we received €165 million in dividends from the joint venture,
as well as €51 million in interest payments.
Safaricom Associate (Kenya)
Safaricom service revenue grew to €2.3 billion due to a higher customer
base and continued data revenue and M-Pesa growth. In FY23, we
received €249 million in dividends from Safaricom.
Indus Towers Limited Associate (India)
Following the sale of shares in Indus Towers Limited (‘Indus Towers’) in
February and March 2022, the Group holds 567.2 million shares in Indus
Towers, equivalent to a 21.0% shareholding.
Vodafone Idea Limited Joint Venture (India)
See note 29 ‘Contingent liabilities and legal proceedings’ in the
consolidated financial statements for more information.
21
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TPG Telecom Limited Joint Venture (Australia)
We own an economic interest of 25.05% in TPG Telecom Limited, a
fully integrated telecommunications operator in Australia. Hutchison
Telecommunications (Australia) Limited owns an equivalent economic
interest of 25.05%, with the remaining 49.9% listed as free float on the
Australian stock exchange. We also hold a 50% share of a US$3.5 billion
loan facility held within the structure that holds the Group’s equity stake
in TPG Telecom.
Net financing costs
FY23
€m
FY22
€m
Reported
change %
Investment income
248
254
Financing costs
(1,728)
(1,964)
Net financing costs
(1,480)
(1,710)
(13.5)
Adjustments for:
Mark-to-market gains
(534)
(256)
Foreign exchange losses
135
284
Adjusted net financing costs
1
(1,879)
(1,682)
11.7
Note:
1.
Adjusted net financing costs is a non-GAAP measure. See page 219 for more information.
Net financing costs decreased by €230 million, primarily due to
mark-to-market gains recycled from reserves on derivatives that were
previously in cash flow hedge relationships and mark-to-market gains
on embedded derivatives. Adjusted net financing costs increased by
€197 million primarily due to interest movements on lease liabilities and
tax provisions and other individually immaterial movements. Excluding
items outside of net debt, net financing costs remained broadly stable.
Taxation
FY23
%
FY22
%
Change
pps
Effective tax rate
3.8%
33.6%
(29.8)
Adjusted effective tax rate
1
26.2%
27.9%
(1.7)
Note:
1.
Adjusted effective tax rate is a non-GAAP measure. See page 219 for more information.
The Group’s effective tax rate for the year ended 31 March 2023 was
3.8%, (2022: 33.6%). The rate is lower than the prior year’s due to gains
on the disposals of Vantage Towers and Vodafone Ghana. These gains
are largely exempt from tax, except for a €88 million charge relating to
the disposal of Vantage Towers.
The effective tax rate also includes a tax credit of €309m relating to the
impacts of hyperinflation accounting in Turkey and a €33 million tax
charge (2022: €327 million) relating to the use of losses in Luxembourg,
which is lower than the prior period because of an internal restructuring
which resulted in a loss in Luxembourg. As a result of the restructuring,
the amount of losses in Luxembourg are no longer subject to changes
in the value of investments.
The year ended 31 March 2022 includes the following items: i) a charge
of €1,468 million for the utilisation of losses against our profits in
Luxembourg. This arose from an increase in the valuation of investments
based upon local GAAP financial statements and tax returns; ii) a credit
of €699 million relating to the recognition of a deferred tax asset in
Luxembourg because of higher interest rates increasing our forecasts of
future profits; iii) an increase in our deferred tax assets in the UK of €593
million following the increase in the corporate tax rate to 25% and; iv)
€273 million following the revaluation of assets for tax purposes in Italy.
The Group’s adjusted effective tax rate for the year ended 31 March 2023
was 26.2% (2022: 27.9%). This is in line with our expectations for the year.
The adjusted effective tax rate excludes the amounts relating to
Luxembourg, the impact of hyperinflation accounting in Turkey and
the tax charge relating to the disposal of Vantage Towers which are
set out above.
Earnings per share
FY23
eurocents
Re-presented
1
FY22
eurocents
Reported
change
eurocents
Basic earnings per share
42.77c
7.71c
35.06c
Adjusted basic earnings
per share
2
11.45c
11.68c
(0.23)c
Notes:
1.
The results for the year ended 31 March 2022 have been re-presented to reflect that Indus
Towers Limited is no longer reported as held for sale. Consequently, basic earnings per share
increased by 0.51c, from 7.20c as previously reported, to 7.71c. Adjusted basic earnings
per share increased by 0.65c, from 11.03c as previously reported, to 11.68c. See note 7
’Discontinued operations and assets held for sale’ in the consolidated financial statements
for more information.
2.
Adjusted basic earnings per share is a non-GAAP measure. See page 219 for more information.
Basic earnings per share was 42.77 eurocents, compared to 7.71
eurocents for FY22. The increase is primarily attributable to the gains
on disposal of Vantage Towers A.G. and Vodafone Ghana, partially offset
by the loss on disposal of Vodafone Hungary.
Adjusted basic earnings per share was 11.45 eurocents, compared to
11.68 eurocents for FY22.
Consolidated statement of financial position
The consolidated statement of financial position is set out on page 124.
Details of the major movements of both our assets and liabilities in the
year are set out below.
Assets
Goodwill decreased by €4.3 billion between 31 March 2022 and 31
March 2023 to €27.6 billion. This was primarily attributable to a decrease
of €3.9 billion from the disposal of subsidiaries in the year (see note 27
‘Acquisitions and disposals’ in the consolidated financial statements) and
a net decrease of €0.4 billion from foreign exchange movements.
Other intangible assets, which primarily comprises licence and
spectrum, computer software and customer bases, decreased by
€1.8 billion between 31 March 2022 and 31 March 2023 to €19.6 billion.
This reflected an amortisation charge of €4.0 billion, a reduction from the
disposal of subsidiaries of €0.8 billion and a net decrease from exchange
movements of €0.6 billion, partly offset by additions of €3.3 billion in the
year and an increase of €0.5 billion following the adoption of IAS 29
‘Financial Reporting in Hyperinflationary Economies’ (see note 1 ‘Basis
of preparation’ in the consolidated financial statements’).
Property, plant and equipment decreased by €2.8 billion between
31 March 2022 and 31 March 2023 to €38.0 billion. This primarily
reflected additions in the year of €5.9 billion and an increase of €0.7
billion following the adoption of IAS 29 (see above), which was offset
by a depreciation charge of €5.6 billion, a reduction of €2.7 billion arising
from the disposal of subsidiaries in the year and a net decrease of €1.0
billion from foreign exchange movements. Right-of-use assets arising
from the Group’s lease arrangements remain broadly consistent with
the prior year with the recognition of lease arrangements on the
de-consolidation of Vantage Towers A.G. offsetting disposals.
Other non-current assets increased by €7.2 billion between 31 March
2022 and 31 March 2023 to €39.7 billion, primarily due to a €5.8 billion
increase in investments in associates and joint ventures which now
includes Oak Holdings 1 GmbH, the new co-control partnership of
Vodafone, GIP and KKR (see note 12 ‘Investments in associates and joint
arrangements’ in the consolidated financial statements). In addition,
trade and other receivables increased by €1.5 billion primarily due to
an increase in the carrying value of derivative financial instruments.
Current assets increased by €3.1 billion between 31 March 2022 and
31 March 2023 to €30.7 billion, primarily due to an increase of €4.2 billion
in cash and cash equivalents, partially offset by a €0.9 billion decrease
in other investments.
Our financial performance (continued)
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Total equity and liabilities
Total equity increased by €7.4 billion between 31 March 2022 and 31
March 2023 to €64.5 billion, primarily due to comprehensive income for
the year of €11.6 billion and an opening adjustment of €0.6 billion for the
adoption of IAS 29. This was partially offset by a decrease of €1.4 billion
arising from transactions with non-controlling interests in subsidiaries,
dividends paid to the Group’s shareholders of €2.9 billion and the
purchase of treasury shares of €0.6 billion.
Non-current liabilities decreased by €6.9 billion between 31 March 2022
and 31 March 2023 to €56.5 billion, primarily due to a €6.5 billion decrease
in borrowings and a €0.3 billion decrease in trade and other payables.
Current liabilities increased by €1.0 billion between 31 March 2022 and
31 March 2023 to €34.6 billion, primarily due to a €2.8 billion increase in
borrowings, offset by a €1.4 billion decrease in trade and other payables
as a result of settling the share buyback obligation from the prior year.
Inflation
The impact of inflation on the Group’s operations during the year is
outlined on pages 18 to 21. Furthermore, Turkey has met the requirements
to be designated as a hyperinflationary economy on 1 April 2022 in
line with IAS 29 ‘Financial Reporting in Hyperinflationary Economies’.
See note 1 ‘Basis of preparation’ in the consolidated financial statements
for more information.
Cash flow, capital allocation and funding
Analysis of cash flow
FY23
€m
FY22
€m
Reported
change %
Inflow from operating activities
18,054
18,081
(0.1)
Outflow from investing activities
(379)
(6,868)
94.5
Outflow from financing activities
(13,430)
(9,706)
(38.4)
Net cash inflow
4,245
1,507
181.7
Cash and cash equivalents at
beginning of the financial year
7,371
5,790
Exchange gain on cash and cash
equivalents
12
74
Cash and cash equivalents at end
of the financial year
11,628
7,371
Cash inflow from operating activities decreased to €18,054 million, as
favourable working capital movements were offset by lower operating
profit, excluding a net gain resulting from the sale of Vantage Towers,
Vodafone Ghana and Vodafone Hungary, and higher taxation payments.
Outflow from investing activities decreased to €379 million, primarily in
relation to proceeds resulting from the disposals of Vantage Towers and
Vodafone Hungary, which outweighed a lower net inflow in respect of
short-term investments. Short-term investments include highly liquid
government and government-backed securities and managed
investment funds that are in highly rated and liquid money market
investments with liquidity of up to 90 days.
Outflows from financing activities increased by 38.4% to €13,430 million,
as higher outflows arising from the repayment of borrowings, including
the repayment of debt in relation to licenses and spectrum, notably in Italy,
outweighed higher proceeds from the issue of long-term borrowings.
FY23
€m
FY22
€m
Reported
change %
Adjusted EBITDAaL
1
14,665
15,208
(3.6)
Capital additions
2
(8,378)
(8,306)
Working capital
256
(31)
Disposal of property, plant and
equipment and intangible assets
98
27
Integration capital additions
3
(287)
(314)
Restructuring costs including
working capital movements
4
(312)
(480)
Licences and spectrum
(2,467)
(896)
Interest received and paid
5
(1,164)
(1,254)
Taxation
(1,234)
(925)
Dividends received from associates
and joint ventures
617
638
Dividends paid to non-controlling
shareholders in subsidiaries
(400)
(539)
Other
48
181
Free cash flow
1
1,442
3,309
(56.4)
Acquisitions and disposals
8,727
138
Equity dividends paid
(2,484)
(2,474)
Share buybacks
5
(1,893)
(2,029)
Foreign exchange loss
141
(378)
Other movements in net debt
6
2,270
399
Net debt decrease/(increase)
1
8,203
(1,035)
Opening net debt
1
(41,578)
(40,543)
Closing net debt
1
(33,375)
(41,578)
19.7
Free cash flow
1
1,442
3,309
Adjustments:
–
Licences and spectrum
2,467
896
–
Restructuring costs including
working capital movements
4
312
480
–
Integration capital additions
3
287
314
–
Vantage Towers growth
capital expenditure
497
244
–
Other adjustments
7
(163)
194
Adjusted free cash flow
1
4,842
5,437
Notes:
1.
Adjusted EBITDAaL, Free cash flow, Adjusted free cash flow and Net debt are non-GAAP
measures. See page 219 for more information.
2.
See page 229 for an analysis of tangible and intangible additions in the year.
3.
Integration capital additions comprises amounts for the integration of acquired Liberty Global
assets and network integration.
4.
Includes working capital in respect of Integration capital additions.
5.
Interest received and paid excludes interest on lease liabilities of €372 million outflow (FY22:
€361 million) included within Adjusted EBITDAaL and €26 million of cash outflow (FY22: €58
million inflow) from the option structures relating to the issue of the mandatory convertible
bonds which is 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.
6.
Other movements on net debt for the year ended 31 March 2023 includes mark-to-market
gains recognised in the income statement of €534 million (FY22: €256 million gain), together
with €1,739 million (FY22: €55 million) for the repayment of debt in relation to licenses and
spectrum in Italy.
7.
Other adjustments in FY23 includes €120 million received in respect of the Group’s new fibre
joint venture in Germany and an allocation of €43 million from the Vodafone Hungary proceeds
for future services to be provided by the Group. The amount for FY22 includes a special
dividend of €194 million paid to the minority shareholders in Egypt.
Adjusted free cash flow decreased by €595 million to €4,842 million
in the year. This reflected a decrease in Adjusted EBITDAaL in the year,
together with higher payments on lease liabilities, which outweighed
favourable working capital movements and higher taxation payments.
23
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Financials
Other information
Other funding obligations to be considered alongside net debt include:
–
Lease liabilities of €13,364 million (€12,539 million as at
31 March 2022);
–
KDG put option liabilities of €485 million (€494 million as at
31 March 2022);
–
Guarantee over Australia joint venture loan of €1,611 million
(€1,573 million as at 31 March 2022); and
–
Pension liabilities of €258 million (€281 million as at 31 March 2022).
The Group’s gross and net debt includes €9,942 million (€9,942 million
as at 31 March 2022) of long-term borrowings (‘Hybrid bonds’) for which a
50% equity characteristic of €4,971 million (€4,971 million as at 31 March
2022) is attributed by credit rating agencies.
The Group’s gross and net debt includes certain bonds which have been
designated in hedge relationships, which are carried at €1,282 million
higher value (€1,316 million higher as at 31 March 2022) than their euro
equivalent redemption value. In addition, where bonds are issued in
currencies other than euro, the Group has entered into foreign currency
swaps to fix the euro cash outflows on redemption. The impact of these
swaps is not reflected in gross debt and if it were included would
decrease the euro equivalent value of the bonds by €1,440 million
(€1,456 million as at 31 March 2022).
Return on capital employed
Return on capital employed (‘ROCE’) reflects how efficiently we are
generating profit with the capital we deploy. We calculate two ROCE
measures: i) Pre-tax ROCE for controlled operations only and ii) Post-tax
ROCE including associates and joint ventures. ROCE calculated using
GAAP measures
3
for the year was 12.9% (FY22: 5.2%), impacted by the
disposal of Vantage Towers to the newly formed joint venture, resulting
in an increase in the average capital employed.
The table below presents adjusted ROCE metrics.
Excluding
Vantage
Towers
2
FY23
%
Re-presented
1
FY22
%
Change
pps
Pre-tax ROCE (controlled)
3
6.8%
7.2%
(0.4)
Post-tax ROCE (controlled and
associates/joint ventures)
3
5.1%
5.2%
(0.1)
Notes:
1.
The results for the year ended 31 March 2022 have been re-presented to reflect that Indus
Towers Limited is no longer reported as held for sale. Consequently, post-tax ROCE (controlled
and associates/joint ventures) has increased by 0.2pps, from 5.0% as previously reported, to
5.2%. Similarly, ROCE calculated using GAAP measures has increased by 0.2pps, from 5.0%
as previously reported, to 5.2%. See note 7 ’Discontinued operations and assets held for sale’
in the consolidated financial statements for more information.
2.
FY23 excludes the results of Vantage Towers following its disposal on 22 March 2023. FY22
excluding Vantage Towers pre-tax ROCE is 7.0% and post-tax ROCE is 5.0%.
3.
ROCE is calculated by dividing Operating profit by the average of capital employed as
reported in the consolidated statement of financial position. Pre-tax ROCE (controlled) and
Post-tax ROCE (controlled and associates/joint ventures) are non-GAAP measures. See page
219 for more information.
Borrowings and cash position
FY23
€m
FY22
€m
Reported
change %
Non-current borrowings
(51,669)
(58,131)
Current borrowings
(14,721)
(11,961)
Borrowings
(66,390)
(70,092)
Cash and cash equivalents
11,705
7,496
Borrowings less cash and
cash equivalents
(54,685)
(62,596)
12.6
Borrowings principally includes bonds of €44,116 million (FY22: €48,031
million), lease liabilities of €13,364 million (FY22: €12,539 million) and
cash collateral liabilities €4,886 million (FY22: €2,914 million).
The decrease in borrowings of €3,702 million was principally driven
by repayments of bonds of €5,742 million, Italy licences and spectrum
liabilities of €1,739 million and the disposal of our controlling interest
in Vantage Towers of €2,188 million, partially offset by bonds issued
of €3,577 million, an increase in collateral liabilities of €1,972 million
and lease liabilities of €825 million.
Funding position
FY23
€m
FY22
€m
Reported
change %
Bonds
(44,116)
(48,031)
Bank loans
(795)
(1,317)
Other borrowings including
spectrum
(1,744)
(3,909)
Gross debt
1
(46,655)
(53,257)
12.4
Cash and cash equivalents
11,705
7,496
Short-term investments
2
4,305
4,795
Derivative financial instruments
3
1,917
1,604
Net collateral liabilities
4
(4,647)
(2,216)
Net debt
1
(33,375)
(41,578)
19.7
Notes:
1.
Gross debt and Net debt are non-GAAP measures. See page 219 for more information.
2.
Short-term investments includes €1,338 million (FY22: €1,446 million) of highly liquid
government and government-backed securities and managed investment funds of €2,967
million (FY22: €3,349 million) that are in highly rated and liquid money market investments
with liquidity of up to 90 days.
3.
Derivative financial instruments excludes derivative movements in cash flow hedging reserves
of €2,785 million gain (FY22: €1,350 million gain).
4.
Collateral arrangements on derivative financial instruments result in cash being held as security.
This is repayable when derivatives are settled and is therefore deducted from liquidity.
Net debt decreased by €8,203 million to €33,375 million. This was driven
by the free cash inflow of €1,442 million and acquisitions and disposals
of €8,727 million, partially offset by equity dividends of €2,484 million,
share buybacks of €1,893 million (used to offset dilution linked to the
conversion of certain mandatory convertible bonds). Other movements
in net debt includes €1,730 million relating to the settlement of 5G
spectrum in Italy previously included in net debt. Settlement of the
liability during the period had no impact overall on net debt, with the
resulting cash payment included in free cash flow.
Our financial performance (continued)
24
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Financials
Other information
Share buybacks
In March 2022, Vodafone started the first of two irrevocable and
non-discretionary share buyback programmes, announced on 9 March
2022 and 16 November 2022 (the ‘programmes’), The sole purpose of
the programmes was to reduce the issued share capital of Vodafone to
offset the increase in the issued share capital as a result of the maturing
of the second tranche of the mandatory convertible bond (‘MCB’)
in March 2022.
In order to satisfy the second tranche of the MCB, a total of 1,518.6
million shares were reissued from treasury shares in March 2022 at
a conversion price of £1.326. 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, February
2021, August 2021 and February 2022.
The programmes completed on 15 March 2023. Details of the shares
purchased under the programmes, including those purchased under
irrevocable instructions, are shown below.
Date of share purchase
Number of shares
purchased
1
000s
Average price
paid per share
inclusive of
transaction costs
Pence
Total number of
shares purchased
under publicly
announced
share buyback
programmes
2
000s
Maximum number
of shares that may
yet be purchased
under the
programmes
3,4
000s
March 2022
(from 17 March)
66,820
126.91
66,820
953,699
April 2022
115,416
128.71
182,236
838,283
May 2022
127,565
123.84
309,801
710,718
June 2022
121,490
127.04
431,291
589,228
July 2022
127,565
127.99
558,856
461,663
August 2022
133,639
120.66
692,495
328,024
September 2022
127,565
109.16
820,060
200,459
October 2022
127,565
101.08
947,625
72,894
November 2022
133,639
99.57
1,081,264
437,366
December 2022
121,461
87.00
1,202,725
315,905
January 2023
127,594
91.23
1,330,319
188,311
February 2023
121,487
97.49
1,451,806
66,824
March 2023 (to
15 March)
66,824
99.13
1,518,630
–
Total
5
1,518,630
110.51
1,518,630
–
Notes:
1.
The nominal value of shares purchased is 20
21/22
US cents each.
2.
No shares were purchased outside the publicly announced share buyback programmes.
3.
In accordance with shareholder authority granted at the 2021 and 2022 Annual General Meetings.
4.
The total shares repurchased under each programme were 1,014,444,506 shares completed
on 15 November 2022 and 504,185,187 shares completed on 15 March 2023.
5.
The total number of shares purchased represented 5.6% of our issued share capital, excluding
treasury shares, at 12 May 2023.
This year’s report contains the Strategic Report on pages 1 to 59,
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 Group Chief Executive
and Chief Financial Officer.
Margherita Della Valle
Group Chief Executive and Chief Financial Officer
16 May 2023
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 which
compares to 4.5 eurocents in the prior year.
25
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Other information
Our purpose pillars
Below we have set out the main elements through which our approach to ESG is delivered. 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. Our social contract
represents the partnership we wish to develop with governments, policy makers and civil society. We are also committed to supporting the delivery
of the UN Sustainable Development Goals (‘SDGs’).
Essential to our approach is transparency and measurement
Social contract: Activation and acceleration of our purpose initiatives
Read more
on pages 29 to 30
Read more
on pages 40 to 43
Read more
on pages 47 to 49
Read more
on pages 30 to 34
Inclusion for All
Ensuring everyone has access to the benefits
of a digital society.
Access for all
Finding new ways to roll out our network to rural
locations in our markets.
Propositions for equality
Providing relevant products and services to address
societal challenges such as gender equality and
financial inclusion.
Workplace equality
Developing a diverse and inclusive global
workforce that reflects the customers and societies
we serve.
Planet
Reducing our environmental impact and helping
society decarbonise.
Climate change
Working to reduce our environmental impact to
reach net zero emissions across our full value chain
by 2040.
Carbon enablement
Helping our customers reduce their own carbon
emissions by 350 million tonnes by 2030.
E-waste
Driving action to reduce device waste and
progressing against our target to reuse, resell
or recycle 100% of our network waste.
Digital Society
Connecting people and things and digitalising
critical sectors.
Digitalising business
Providing products and services to support
business, particularly SMEs.
Digitalising agriculture
Supporting the digitalisation of agriculture with
specific products and services.
Digitalising healthcare
Using our products, services and technology to
support the digitalisation of healthcare.
Read more
on pages 35 to 38
Protecting data
Customers trust us with their data and maintaining
this trust is critical.
Data privacy
We respect the privacy preferences of our
customers and help improve society through the
responsible use of data.
Cyber security
As a provider of critical national infrastructure and
connectivity that is relied upon by millions of
customers, we prioritise cyber and information
security across everything that we do.
Protecting people
Health and safety
Creating a safe working environment for everyone
working for and on behalf of Vodafone.
Mobiles, masts and health
Operating our networks within national regulations.
Human rights
Contributing to the protection and promotion
of human rights and freedoms.
Responsible supply chain
Managing relationships with our direct suppliers,
and evaluating their commitments to diversity,
inclusion and the environment.
Business integrity
We are committed to ensuring that our business
operates ethically, lawfully and with integrity
wherever we operate.
Tax and economic contribution
As a major investor, taxpayer and employer, we
make a significant contribution to the economies
of the countries in which we operate.
Anti-bribery, corruption and fraud
We have a policy of zero tolerance towards bribery,
corruption and fraud. Our policy provides guidance
on what constitutes a bribe and prohibits giving
or receiving any excessive or improper gifts
and hospitality.
Click or scan to learn more about how
we help improve digital inclusion:
investors.vodafone.com/videos
Click or scan to learn more about
our approach to cyber security:
investors.vodafone.com/videos
Click or scan to learn more
about our net zero goal:
investors.vodafone.com/videos
Click or scan to learn more about
our human rights approach:
investors.vodafone.com/videos
Click or scan to learn more about
our approach to data privacy:
investors.vodafone.com/videos
Click or scan to learn more about
our approach to tax:
investors.vodafone.com/videos
Our approach is underpinned by responsible business practices
Read more
on pages 44 to 47
Our approach to ESG
We connect for a better future
Purpose, sustainability and responsible business
Our approach to ESG (Environmental, Social and Governance topics) is an integral part of our purpose
and strategy to enable an inclusive and sustainable digital society.
26
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Other information
External ESG assurance
KPMG LLP has provided independent limited assurance over selected data
within our ESG Addendum and this report, using the assurance standard ISAE
(UK) 3000 and ISAE (UK) 3410 for selected greenhouse gas data. KPMG has
issued an unqualified opinion over the selected data and their full assurance
statement, along with the reporting criteria, is available in our ESG Addendum.
ESG governance structure
The Executive Committee has overall accountability to the Board for our
sustainable business strategy and regularly reviews progress. Submissions
to the ESG Committee are reviewed by the Purpose and Reputation Steering
Committee that manages reputation risks and polices. We continue to include
ESG measures in the long-term incentive plan for our senior leaders and each
purpose pillar has an executive-level sponsor.
Read more about remuneration
on pages 85 to 106
The ESG Committee supports the Board in providing oversight of our ESG
programme, sustainability and responsible business practices, as well as our
contribution to the societies we operate in under our social contract.
60.7m
million customers
connected to our financial
inclusion services
We aim to connect 75
million customers to
mobile money and
financial inclusion services
by 31 March 2026.
5.2m
V-Hub unique visitors
We aim to support
seven million visitors
to digitalise using
V-Hub by 2025.
34%
women in
management and
senior leadership roles
We aim to have
40% women in
management roles
by 2030.
5.0m
registered farmers on our
agricultural platforms
We are supporting small
and large commercial
farms to digitalise.
100%
renewable
electricity in
European markets
Target achieved from July
2021, four years ahead of
our original 2025 target.
52%
reduction in
Scope 1 and 2 emissions
since 2020
By 2030 we aim to achieve
net zero emissions from
our operations (Scope 1
and 2) and halve our
Scope 3 emissions.
Materiality
We conducted a materiality assessment in 2021 to identify the material
and emerging ESG issues relevant to our business, our stakeholders and
the societies in which we operate. In FY23, we consider our material
issues to be unchanged from the 2021 materiality assessment. Our Task
Force on Climate-related Disclosures (‘TCFD’) report outlines an updated
list of climate-related risks (reflecting the potential impact of society and
environment on Vodafone).
Click to read our materiality matrix:
vodafone.com/sustainable-business
Reporting frameworks
Vodafone reports against a number of reporting frameworks to help
stakeholders understand our sustainable business performance.
Our Global Reporting Initiative (‘GRI’) 2023 disclosure is included
in our 2023 ESG Addendum.
Click to download our ESG Addendum:
investors.vodafone.com/esgaddendum
Disclosures prepared in accordance with the Task Force
on Climate-related Disclosures (‘TCFD’) framework.
Click to read our TCFD report:
investors.vodafone.com/tcfd
Disclosures prepared in accordance with the Sustainability
Accounting Standards Board’s (‘SASB’) Standards.
Click to read our SASB disclosures:
investors.vodafone.com/sasb
Vodafone supports the Ten Principles of the United Nations
Global Compact (‘UNGC’).
Click to read our 2023 UNGC Communication on Progress:
unglobalcompact.org
Vodafone participates in the CDP’s annual climate
change questionnaire.
Click to read our CDP response:
vodafone.com/sustainability-reports
GRI
TCFD
SASB
UNGC
CDP
Read more on
pages 35 to 36
Read more on
page 32
Read more on
page 33
Read more on
page 29
Read more on
page 29
Read more on
pages 35 to 36
Read more about the Board’s oversight of material
ESG topics on page 83 to 84
Read more about the governance underpinning our
responsible business practices on pages 40 to 49
ESG Committee
Executive Committee
Board
Digital Society
Executive-level
sponsor:
Vinod Kumar
1
Inclusion
for All
Executive-level
sponsor:
Serpil Timuray
Planet
Executive-level
sponsor:
Joakim Reiter
Our targets and achievements
Over the last year we have made progress against many of our key purpose targets. Our Board-level
ESG Committee provides oversight of our ESG programme and each of the purpose pillars has
an executive-level sponsor.
Purpose and Reputation Steering Committee
Audit and Risk Committee
1.
Vinod Kumar, CEO of Vodafone Business, will retire from Vodafone effective 31 December 2023.
27
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Our purpose
Purpose
Our purpose is to connect for a better future by using
technology to improve lives and enable inclusive
and sustainable digital societies. We achieve this
by focusing on three pillars: Digital Society, Inclusion
for All and Planet, which serve as the framework
for everything we do at Vodafone. Our purpose
is underpinned by our responsible business
practices: protecting data, protecting people,
and business integrity.
Our three purpose pillars are focused on integrating environmental and
social considerations into our business strategy and priorities. Our ESG
Committee embeds this approach as a formal committee of the Board.
This strives to provide strategic support for our ESG ambitions and
ensures effective oversight of our ESG strategy.
Read more on our ESG Committee
on pages 83 to 84
The role of business in society continues to evolve to address the
socioeconomic impacts triggered by the COVID-19 pandemic and
humanitarian and refugee crises caused by natural catastrophes and
conflicts, as well as the ongoing climate crisis. Recognising this, we
continue to evolve our social contract, which represents the partnership
we wish to develop with governments, policy makers and civil society.
We use the social contract to understand what matters the most to the
societies and economies we operate in, and activate our purpose around
these. This year we transitioned our social contract to address societal
challenges created by the significant rise in the costs of living affecting
many of our customers, as well as providing humanitarian support
relating to the ongoing war in Ukraine, and the earthquakes in Turkey
and surrounding areas in February 2023.
How we are keeping everyone connected through
the cost of living crisis
In today’s world, connectivity is an essential service; it underpins access to
information, provision of services, and the ability to connect personally and
professionally. However, as the cost of living increases, affording to stay
connected is increasingly difficult for both individuals and businesses.
To support our customers through this financially challenging time we offer
low cost and social tariffs in all our markets. Whenever we can, we use
government criteria for eligibility to ensure we implement social tariffs as
fairly as possible, and we do not apply price increases to social tariffs at any
point during the term of the contract. We also support customers who find
themselves in financial difficulties fairly and appropriately, ensuring they get
the right help, support, and services for their needs, including revised
payment plans or other options. We seek to monitor the impact of our help
for customers struggling to pay, listen to their feedback and improve our
services as a result. We continue to work with governments, consult with
consumer organisations and partner with providers to help raise awareness
of the support available.
Everyone connected
Since its launch in June 2021, our everyone.connected programme has
delivered £108 million in social value across the UK. Following the launch
of our social broadband tariff Vodafone Essential Broadband, we are the
first UK network operator to have both a social mobile and a fixed tariff
alongside a social virtual network offering (VOXI for Now). We also
reached the milestone of donating connectivity to one million people,
and we have since committed to helping a further three million people
cross the digital divide (the gap between those with access to the internet
and those without it) by the end of 2025.
For small and medium-sized enterprises (‘SMEs’) and small-office
home-office (‘SOHO’) customers, we provide our V-Hub service, a digital
advisory service offering free information, inspiration and insight to
increase understanding, and benefits of digital tools and technology.
V-Hub users also get access to an adviser who provides one-to-one
tailored support and guidance.
Read more about V-Hub
on page 29
As global energy costs rise, we are managing our energy as efficiently as
possible while providing solutions to help businesses and society save
energy too.
Read more about our approach to carbon enablement
on page 37
Vodafone’s humanitarian response in support
of Turkey and surrounding areas
The earthquakes in Turkey and surrounding areas created an
unprecedented humanitarian crisis impacting more than 13 million
people in the region across an area of 110,000 square kilometres.
Around 32,000 people lost their lives, including 27 Vodafone
employees. The Vodafone Turkey Search & Rescue Team, formed
voluntarily by Vodafone employees, worked tirelessly to assist the
emergency response in the disaster zone and support customers,
communities and society in the aftermath of the quakes.
Restoring connectivity
Vodafone has more than 3.7 million customers across 10 cities in the
affected area in Turkey connected through more than 3,000 mobile
base stations, most of which were destroyed or damaged during
the earthquakes.
We focused on restoring and keeping our networks operational,
ensuring that our customers and their communities could be
connected. Vodafone Turkey immediately mobilised engineering teams
and over 1,000 power generators to work 24 hours a day to restore
connectivity. As a result, Vodafone Turkey had restored almost 98%
of its network coverage in the affected areas just days after the disaster.
Supporting our employees
Vodafone offered financial support for our employees and agents
living in the affected areas. In some cases, our offices were repurposed
in order to provide shelter and accommodation for people and
their families.
Keeping our customers connected
In Turkey, Vodafone provided free calls, data, and texts to people in
the impacted areas of the country. Many of our markets also provided
their customers with free calls and texts into Turkey and Syria, or free
roaming services when visiting the region so that people could keep
connected with their families and friends.
Charitable and fundraising activities
The humanitarian part of our initial comprehensive response is
coordinated under Vodafone Foundation in line with our policy for
all charitable activities to be led and funnelled by our Foundations.
A donation fund was established across Vodafone and its Foundation
that has to date raised more than €3 million to be used for rescue and
recovery initiatives in Turkey.
Click to read more about our response to the
humanitarian crisis:
vodafone.com/news
28
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Other information
Digital Society
We believe in the power of connectivity and digital
services to strengthen the resilience of societies. Our
priority is to provide fixed networks to ensure that data
flows at speed to connect people and communities.
In doing so, we can contribute to societies becoming
more inclusive, under our Inclusion for All pillar, and to
decarbonising our economies, under our Planet pillar.
As recent years have demonstrated, connectivity and digital services can
be a lifeline, allowing people to work, learn, access healthcare, stay in touch
with friends and family and more. Currently, we have over 300 million
customers connected to our next-generation mobile and fixed networks.
Informed by our social contract, we continue to focus the Digital Society
pillar towards digitalising critical sectors. We have specifically focused on
small and medium-sized enterprises (‘SMEs’), agriculture and health. We
have also continued to invest in our network infrastructure and coverage.
Aligned with our Planet pillar, our products and services enable customers
to become more efficient and, in many cases, reduce their emissions,
through the use of such products and services.
Read more about our approach to carbon enablement
on page 37
Digitalising business
Goal:
Support seven million visitors to digitalise using V-Hub by 2025
SMEs are the lifeblood of our economy, providing opportunities for
socio-economic participation, as well as social mobility for women, young
people, and ethnic minorities.
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. We estimate that the
total addressable market for SME and SOHO customers in our markets
is €55 billion and we currently have almost seven million SME and
SOHO customers.
To better support SMEs across Europe and Africa, Vodafone Business
launched V-Hub, its digital advice service. This free service provides access
to online information and connects SMEs with experts who provide
one-to-one advice and support on digitally transforming businesses in
an ever-changing digital world.
As of March 2023, V-Hub has been used by over 5.2 million unique visitors
across 14 markets. Since its launch, the service has achieved a strong
return rate of 25% on average, increasing to almost 30% in Q3 and 35%
in Q4 of FY23.
We have set an ambition to reach seven million visitors and help them digitalise
their businesses through V-Hub by 2025. Over the next year, we plan to
enhance the V-Hub offering, creating a signed-in environment to provide a
more personal, secure, and efficient experience for SMEs. Once signed in,
users will receive tailored content and a bespoke action plan for their business’
digitalisation. In turn, we will start to build a V-Hub membership of engaged
SMEs on their digitalisation journey, creating reliable and relevant connections
for peer-to-peer advice, business networking and local-to-global community.
Beyond customers, we are working to support SMEs in our supply chain.
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
payment terms.
In South Africa, Vodacom Financial Services has built a supplier portal
called VodaTrade, where small suppliers can connect with bigger business
partners. Currently, there are 127 SMEs registered on the VodaTrade
portal, which provides them access to procurement opportunities with
seven large retailers.
Notes:
1.
Food and Agriculture Organisation, 2017.
2. Eurostat, 2021.
Digitalising agriculture
According to the UN’s Food and Agriculture Organisation, by 2050, the
world will need to produce 50% more food than current levels.
1
There is
also a growing need to address the environmental impact of agriculture.
In Europe, agriculture accounts for 10% of total greenhouse gas
emissions and over 40% of land use,
2
in many cases leading to habitat
loss and deforestation.
A total of five million farmers are registered on our various agriculture
platforms that manage and monitor resource consumption, which in turn
can reduce their carbon footprint, protect biodiversity, and increase yields.
Vodafone is working with partners across the value chain to introduce
new applications and Internet of Things (‘IoT’) platforms to provide
farmers with digital information and the opportunity to optimise resources.
Through Vodacom’s subsidiary, Mezzanine, we have developed
MyFarmWeb, an agricultural digital platform, to support commercial
farms. Last year we expanded into Italy, Germany, Spain, Ireland and
the UK and now almost 9,300 commercial farms use MyFarmWeb.
The cloud-based web platform allows producers to capture key
agriculture data (physical, chemical, microbial soil analysis, pest presence,
and satellite and sensor) into a system that aggregates and calibrates the
information to assist decision-making. This equips decision-makers with
information to increase yields whilst not damaging the environment
– all of which could enable carbon savings along the production process.
MyFarmWeb
also provides farmers with a platform that aims to allow
them to use more productive and sustainable farming practices, which is
becoming increasingly important to comply with the changing legislation
to qualify for subsidy funding in the future.
Mezzanine is also helping to digitalise agriculture in Sub-Saharan Africa
through its eVuna and dairy management platforms amongst others.
This enables smallholder farmers to access agricultural inputs, financial
products, logistics suppliers, markets, and knowledge.
Mezzanine’s eVoucher platform enables the distribution of digital
vouchers for farming subsidies with over 4.6 million registered farmers
and enables the distribution of disaster relief grants. We continue to
support the Department of Agriculture, Land Reform and Rural
Development and the Solidarity Fund in South Africa, as well as the
Kenyan Ministry of Agriculture, Land and Fisheries and the Kenyan
Ministry of Agriculture and Livestock. These programmes have issued
over two million vouchers to smallholder farmers.
Women and youth were focus demographics for some of the
programmes, with the Solidarity Fund reporting that more than 69%
of the beneficiaries were women. Over nine million vouchers have been
issued through various disaster relief programmes.
Click to read more about digitalising agriculture at
vodafone.com/agriculture-digitalisation
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Purpose (continued)
Inclusion for All
Our Inclusion for All strategy seeks to ensure no
one is left behind. It focuses on digital skills and
improving equitable access to connectivity, and
on offering products and services that facilitate
access to education, healthcare, and finance for
marginalised and vulnerable groups. At Vodafone,
we aim to develop a diverse and inclusive global
workforce that reflects the customers and
societies we serve.
In 2022, as the global population hit eight billion, 5.3 billion of us were
online, while 2.7 billion remained offline, representing a stubborn digital
divide. In Africa, 60% of the population is unconnected, and in the world’s
least developed countries the figure rises to 64%. Globally, the growth
rate for internet usage was 6.1%,
1
which is well below growth
requirements to achieve the UN’s target of universal and meaningful
connectivity by the end of 2023. This target is further threatened by high
inflation and the cost of living crisis, which has eroded real incomes and
pushed millions more into poverty in Europe and Africa.
The internet is a vital part of everyday life, enabling us to communicate,
and access vital services. There are strong economic gains from increased
usage of mobile broadband. Research from the World Bank shows that
mobile broadband can reduce the number of households in extreme
poverty by 4 percentage points, mainly due to increases in labour force
participation among women.
2
Furthermore, expanding broadband
penetration across Africa by 10% could boost GDP per capita by 2.5%.
2
Access for all and propositions for equality pillars within our overall
Inclusion for All strategy focus on overcoming the five key barriers that
create the digital divide; coverage, access to devices, affordability, digital
skills, and creating relevant products and services for those most at risk
of being unconnected, such as the elderly and women. In FY23, we made
significant progress across these areas and continued to build on the
partnerships that are crucial to achieving meaningful connectivity for all.
Access for all
Increasing coverage
Connecting everyone to digital services, particularly across Africa, is a
significant challenge. Fixed and mobile services are increasing globally,
with mobile broadband networks reaching 95% of the world’s population,
but coverage in Africa lags behind at 83%.
3
Expanding coverage to rural networks remains a focus for us, with 25% of
the EU population and 58% of the population in Sub-Saharan Africa living
in rural areas.
4
Expansion of rural networks can often be more challenging
and have a lower return on investment due to lower population densities.
New approaches, partnerships, and a blend of technologies help us to
overcome some of these barriers and deliver more universal coverage.
One example of such new approaches is our partnership with AST
& Science LLC, which seeks to develop the first space-based mobile
network designed to connect directly to consumers’ 4G and 5G devices
without the need for specialised hardware. This year, AST successfully
launched and deployed its first communications array and announced in
April 2023 the first connection from space to a mobile with no specialised
equipment. The space-based network has the potential to enable even
those in the hardest-to-reach areas to connect to the internet, ultimately
reaching an estimated 1.6 billion people across 49 countries. This will
include a number of least-developed countries where coverage
is currently the lowest.
Notes:
1. ITU, 2022.
2. World Bank, 2022.
3. GSMA, 2022.
4. World Bank 2021.
Notes:
1. Eurostat, 2021.
2.
Vodafone Institute for Society Communications, 2021.
Digitalising healthcare
Recent years have seen several global events impact the mental and
physical health of citizens, as well as causing major disruptions to health
systems around the world. Hospital waiting lists are extending, some
healthcare professionals are leaving the industry and delays in diagnoses
are resulting in patients presenting significantly advanced medical issues.
1
As part of the EU’s focus on building resilient health systems, over €40
billion has been set aside in EU Recovery and Resilience Plans to support
health investments and reforms.
1
A recent survey by the Vodafone
Institute revealed that 92% of European citizens think the health sector
needs urgent support.
2
We aim to use our technology to play an active role and make the
delivery of healthcare services more efficient and cost-effective for
providers, and more inclusive for patients. Examples of how we are
making a difference include:
–
Working together with University Clinic Düsseldorf, we have built
Europe’s first 5G medical campus using Vodafone’s RedBox, a 5G
network-in-a-box that provides multi-building low latency coverage.
The 5G network enables new ways of working for medical
professionals – for example, using 3D mixed reality to rehearse
neurology and cardiology procedures before operating.
–
Vodafone will implement optical fibre backbone and internet access
for thousands of hospitals and health centres across seven regions
in Italy. This is part of the Italian government’s National Recovery and
Resilience Plan as it looks to improve connectivity infrastructure across
the healthcare system.
–
In Spain, we have helped Cruz Roja Español (Red Cross) by building
a telecare solution that supports vulnerable people, including the
elderly, victims of gender violence and people with disabilities.
–
We are among the largest global IoT connectivity providers, enabling
over 25 million connected medical devices on our IoT network,
and have been recognised by Gartner as a leader in Managed IoT
Connectivity Services for nine consecutive years.
–
Health is the foundation upon which resilient, productive and fair
societies are built and, as we look to the future, we are investing in
our new Tech Innovation Centre in Dresden. Working with leading
universities, hospitals, and health tech companies, we’re advancing
the use of 5G, 6G and artificial intelligence (‘AI’) in digital healthcare.
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In line with the recommendation to increase device financing options,
Vodacom launched the Easy2Own payment plan during the year.
Through the initiative, customers in South Africa can purchase a
smartphone with a one-off deposit and complete the payment through
affordable monthly payments over the following 11 months. Customers
who settle their monthly instalment on time receive a 1GB data bundle,
valid for seven days each month.
Safaricom also runs a device-financing programme, Lipa Mdogo Mdogo
(Pay Little by Little). The partnership between Safaricom and Google
offers a flexible payment plan with an 95% reduction in the upfront cost
of 500Ksh and an affordable daily fee of 20Ksh. Since the launch in 2020,
over 935,000 4G devices have been connected through the Lipa Mdogo
Mdogo initiative.
Propositions for equality
Addressing the digital gender gap
The majority of those still unconnected are women. The digital gender
gap continues to grow in many LDCs, creating a specific need to support
digital gender equality. In 2022, 69% of men were using the internet,
compared with 63% of women globally. In the LDCs, just 30% of women
used the internet in 2022, compared to 92% in high-income countries.
2
Research indicates that women who have access to mobile internet via
a smartphone have 9% higher levels of wellbeing than women who
have access via a basic or feature phone. However, across low and
middle-income countries women are 18% less likely than men to own
a smartphone and 16% less likely to use mobile internet.
3
Focusing on creating relevant services for women is a key strategy to
bring more women online, as an example, in many African markets
gaining access to quality health information and antenatal care can be
very difficult. Information delivered by mobile can help to bridge some of
the gaps in crucial, basic information. Responding to this, our Mum & Baby
service continues to grow, giving customers free access to maternal,
neonatal and child health information in South Africa. The service has
over 2.3 million registered users in South Africa, helping parents and
caregivers to take positive actions to improve their children’s health.
In DRC, Vodacom’s Je Suis Cap, or I am Capable programme, aims to
empower women living with disabilities through digital inclusion. In phase
1 of this programme, 500 women received free financial education
training by M-Pesa and Visa to support their entrepreneurship projects
within their respective communities. Each participant received an M-Pesa
kit, a smartphone, an equipped point of sale and financing of $275 to get
their venture started.
Vodafone Egypt launched the Egyptian Gender Alliance in partnership
with the Ministry of Communications and Information Technology,
National Council for Women, UN Women, and other private sector
partners. The Alliance promotes the social and economic empowerment
of women in Egypt through digital inclusion and skills training to increase
their employability and economic participation.
In order to drive digital inclusion to the hardest-to-connect communities,
this year we made good progress on our goal to increase 4G population
coverage to an additional 80 million people in Sub-Saharan Africa
(as part of the UN Partner2Connect digital coalition since March 2022).
This targeted intervention includes four of the least-developed counties
(‘LDCs’): Mozambique, Tanzania, Lesotho and the Democratic Republic
of the Congo (‘DRC’), and will help to close a particular gap in internet
usage between urban communities and rural communities. This year
we have added 4G technology to an additional 1,429 sites across these
countries, giving access to millions more people in Sub-Saharan Africa.
In Europe, as well as in Africa, we are also increasing investment in rural
areas, helping farmers and other rural small businesses overcome barriers
to connectivity and digitisation.
FY23 network deployment
4G sites
deployed
(000s)
4G population
coverage
Europe
107.4
99%
Africa
31.1
70%
Group
164.3
85%
Access to devices and affordability
The digital divide goes beyond just coverage but also relates to usage
of networks already deployed.
We know that the vast majority of those offline live within mobile
broadband coverage. There are many barriers preventing the use
of mobile broadband, including lack of awareness, digital skills, and the
prohibitive upfront cost of smartphones. Given that smartphones are
increasingly the main gateway to digital services, lowering the cost
of devices is key to addressing the digital divide.
Smartphone ownership is lowest in emerging markets, with only 45% of
adults owning a smartphone compared to 76% in advanced economies.
Women are also less likely to own a smartphone than men. Affordability
is one of the key challenges to smartphone adoption as it can cost over
70% of the average monthly income in vulnerable countries.
1
We recognise that we cannot solve this issue by ourselves, and in 2022
we co-chaired the ITU/UNESCO Broadband Commission for Sustainable
Development working group on smartphone access. This group
represents the first multi-stakeholder group looking to address
smartphone access challenges. The working group drew upon the
expertise of a cross-sectoral body of commissioners and experts.
The outcome report, ‘Strategies towards universal smartphone access’
identified key interventions to make smartphones accessible to all,
including; increasing device financing options; introducing fair taxation
and lower import duties; and improving distribution to remote areas.
In addition, the working group recommended investigating further the
use of device subsidies and pre-owned smartphones which was endorsed
by the UN Broadband Commission at its annual meeting during the
UN General Assembly in September 2022.
Click to read the UN General Assembly Report:
broadbandcommission.org
Notes:
1.
Alliance for Affordable Internet (A4AI), 2021.
2. ITU, 2022.
3. GSMA, 2022.
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Purpose (continued)
Enabling quality education and digital skills
Even before the COVID-19 crisis, an estimated 258 million children
around the world were not in school, and more than half were not
meeting the minimum expected standards in reading and mathematics.
1
Within six months of the pandemic, at least a third of schoolchildren
began to drop behind due to lack of access to remote learning,
2
and we’re
still seeing the effects of this today.
The COVID-19 pandemic and its after-effects have highlighted the need
to adapt teaching to the new realities of increasingly digital societies. We
have continued to grow our Connected Education programme, providing
access to our ready-made classroom which includes connectivity,
devices, and collaboration software for students and teachers across the
world. To date, around 1.7 million students and teachers in 5,500
educational institutions across 13 countries have benefited from this
digital learning solution, helping to bridge the digital divide.
In South Africa, the Vodacom e-School solution allows learners to access
curriculm-aligned content and educators to access learning materials on
their smartphones with no data charges. We currently have 1.4 million
users on the platform.
Research published by Vodafone Foundation in October 2022 revealed
that while 92% of teachers surveyed believe that schools have a
responsibility to promote digital literacy, a fifth feel that they themselves
are not competent enough in the use of digital technologies.
3
Vodafone
Foundation is working to address this by equipping teachers with the
digital skills and confidence to apply innovative methodologies in the
classroom. Guided by the EU Digital Competence framework, our
‘SkillsUpload Jr’ solution provides digital skills training for teachers and
students, tools for use in schools and access to teaching materials and
lesson plans via online platforms. More than 2.3 million teachers and
students have received training to date through SkillsUpload Jr.
Vodafone Foundation also continues to scale Instant Network Schools, its
partnership with United Nations High Commissioner for Refugees
(‘UNHCR’), which provides education for refugee students and
communities in the DRC, Egypt, Kenya, Tanzania and Mozambique. Since
2013, this partnership has worked with communities and education
ministries to transform classrooms into multimedia learning hubs,
complete with internet connectivity, sustainable solar power, classroom
kits including tablets, laptops, projectors and speakers, localised digital
content, and teacher training. In 2023, 84 Instant Network Schools were
deployed, benefiting 247,000 students. By 2025, Vodafone Foundation
aims to deploy 300 Instant Network Schools to support 500,000 refugee
and host-community students and 10,000 teachers.
Evolving platforms for financial inclusion
Goal:
To connect 75 million people and their families to mobile money
services by 31 March 2026.
Two billion people remain unbanked globally.
1
Digital services are key to
helping people access safe, secure financial services and without the
ability to transfer money, people are limited in their ability to save, access
loans, start a business and even be paid. Together with Safaricom, we
developed the first mobile money platform, M-Pesa, which 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 addition to its core service, we have developed a number of additional
financial and business services to increase financial independence and
health. For example, M-Koba provides a platform for groups (such as
village savings groups) to safely store and manage funds. With security
features like multiple approvals and group notifications of any
transactions, the platform enables greater transparency and a more
efficient way to save as a community. Small enterprises can also increase
their efficiency by using Lipa Mdogo Mdogo and M-Pesa, allowing
business owners to pay wages and suppliers, as well as withdraw funds to
their M-Pesa mobile money wallet and other online bank accounts or to
an agent.
This year we published new research in partnership with the United
Nations Development Programme (‘UNDP’) that showed mobile financial
services can have a direct, positive impact on developing economies with
a one percentage point higher GDP than in markets with no mobile
money platforms. Based on previous World Bank research on the
relationship between economic growth and reductions in the number of
people living in poverty, this higher GDP per capita implies that countries
with successful mobile money adoption could reduce poverty by around
2.6% as a result of these services. Furthermore, the research indicated
that mobile money services resulted in 1.7 million fewer people living in
poverty.
Approximately 26 billion transactions were made in the year using
M-Pesa, the equivalent of almost three million per hour on average
through a network of more than 670,000 agents. As of the end of March
2023, 60.7 million customers were using Vodafone’s financial inclusion
services, which includes 2.2 million in South Africa.
Financial inclusion
Financial
inclusion
customers
(million)
% of service
revenue
% penetration
of base
South Africa
2.2
–
–
Tanzania
8.2
34%
58%
Mozambique
5.8
29%
73%
Egypt
5.4
4%
14%
Democratic Republic of the Congo
4.1
17%
34%
Lesotho
1.1
14%
97%
Vodacom Group
26.8
–
–
Ghana
1
1.8
7%
63%
Vodafone Group
28.6
–
–
Kenya (Safaricom)
32.1
40%
93%
Note:
1.
Ghana figures are detailed separately for the 11 months prior to its disposal on 28 February
2023.
Notes:
1. UNESCO, 2018
2. UNICEF, 2020
3.
21st Century Teachers, Global Report, 2022
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We continued to engage with colleagues and raise awareness of why
inclusion matters. During the year, we held global sessions focused
on gender and ethnic diversity, the LGBT+ community, disabilities, and
wellbeing. These received over 10,000 viewers across all webinars.
Gender diversity
Goal:
We aim to have 40% women in management roles by 2030
We have reached 34% which is on track towards our ambition. We continue
to drive progress through programmes, policies and leadership incentives.
2023
2022
Women on the Board
54%
50%
Women on the Executive Committee
33%
29%
Women in senior leadership positions
1
33%
31%
Women in management and senior
leadership roles
2
34%
32%
Women as a percentage of external hires
40%
42%
Women as a percentage of graduates
44%
53%
Women as a percentage of employees
3
40%
40%
Notes:
1.
Percentage of senior women in our top 162 positions includes the Executive Committee
and Senior Leadership Team (FY22: 191).
2.
Percentage of women in our 6,328 management and leadership roles (FY22: 6,727).
3.
Percentage of women based on 93,095 total employees (FY22: 94,789). The total number
of employees represents the position on 31 March 2023 and does not include pro-rated
headcount. The total excludes employees from Ghana, Hungary, Vantage Towers and those
that left the Company on 31 March 2023. Further information on how employees are defined
and calculated can be found in the ESG Addendum.
We work to ensure there is gender diversity when resourcing for senior
leadership roles and our leadership team is accountable for maintaining
diversity and inclusion in their teams. Women in management targets
are also embedded in our long-term incentive plans. Our progress and
achievements to increase diversity have been recognised externally
as Vodafone has been included in the Bloomberg Gender Equality Index
for the fifth consecutive year.
Across youth programmes, 50% of hires were women. We have also now
connected with over 11,000 girls via the digital skills programme ‘Code
Like a Girl’ since 2017. The introduction of digital sessions, and the
increase in demand from markets affected by the pandemic, has enabled
us to connect with more girls this year.
Domestic violence
Our global domestic violence policy sets out comprehensive workplace
resources, support, security and other measures for employees at risk
of experiencing, and recovering from, domestic violence and abuse.
We continue to provide support in this area through global training, ‘Apps
Against Abuse’, and a publicly available toolkit to support survivors. ‘Apps
Against Abuse’ includes the Bright Sky app, which is a safe, easy-to-use
app and website which provide support and information on how to
respond to domestic abuse. The Vodafone Foundation’s portfolio of ‘Apps
Against Abuse’ has connected 2.4 million people to information, advice
and support (FY22: 1.6 million people).
Menopause
Our external research identified that 62% of women with symptoms
of menopause found it impacted their work. We made a global ambition
to support women experiencing menopause, including the release
of a global toolkit which is freely available to download externally and
menopause e-learning on common symptoms and the impact on work.
Workplace equality
As part of our purpose, we aim to make the world more connected,
inclusive and sustainable, 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 developing a diverse and inclusive global workforce that reflects
the customers and societies we serve.
Key information
2023
2022
Average number of employees
1
96,117
95,008
Average number of contractors
1
8,227
8,784
Number of markets where we operate
17
19
Employee nationalities
146
134
Employees and contractors across the Group
2
Europe
3
45%
47%
Africa
3
18%
18%
_VOIS and shared operations
4
33%
32%
Other
5
3%
3%
Employee experience
Employee engagement index
6
76
73
Alignment to purpose
6
88%
93%
Voluntary turnover rate
7
12%
14%
Involuntary turnover rate
7
4%
3%
Notes:
1.
All headcount figures exclude non-controlled operations such as those in the Netherlands,
Kenya, Australia and India. Further information on how headcount is defined and calculated can
be found in the ESG Addendum. Calculation considers pro-rated headcount.
2.
May not cast due to rounding.
3.
Europe reflects employees based in: Germany, UK, Italy, Spain; Portugal, Ireland, Greece,
Romania, Czech Republic, Albania, and Hungary (until disposal in January 2023). Africa reflects
employees based in: Vodacom Group, including Egypt and Ghana (until disposal in February
2023).
4.
_VOIS and shared operations constitute a significant number of employees. The figures
presented above include _VOIS headcount across our footprint (Albania, Egypt, Hungary, India,
Portugal, Romania and Spain), as well as headcount in our global Group entities.
5.
Other includes employees based in Turkey and Vantage Towers.
6.
More detail on the employee survey is included on page 13. The 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. Employee engagement index and
purpose alignments scores reflect September 2022 data.
7.
The voluntary turnover rate includes retirements and death-in-service. Further information on
how this has been calculated is included in the ESG Addendum.
Diversity and inclusion
Our focus is on removing barriers to workplace equality. This year we have
accelerated momentum on gender equality, sustained focus on LGBT+, built
on our foundations on race and ethnicity, and taken actions to ensure the
accessibility of our physical and digital workplace. An expanded focus on
practising inclusion supports our ambition to create a global workforce that
reflects the customers, communities and colleagues we serve, and the wider
societies in which we operate. We believe that embedding inclusion to enable
diversity is critical to achieving these goals in a sustainable way.
Embedding inclusion
Multiple employee networks operate across Vodafone including Women,
VodAbility, LGBT+ Friends, Carers and Multicultural Inclusion. We actively
support them and provide network chairs and sponsors with specific
leadership development focused on effectively setting up and running
an employee network.
Global Withstander training has been rolled out in eleven languages
to upskill employees on how to become active allies by challenging
negative and inappropriate behaviours when they witness them.
Over 43,000 employees completed the Withstander training
during the year.
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Purpose (continued)
Maternity and parental leave
Our global maternity and parental leave policies are available across
markets, providing 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 days. This policy is open to all employees regardless
of gender, sexual orientation, length of service, and whether their partner
is having a baby, or they are welcoming a child through surrogacy or
adoption. This year, over 2,300 women have utilised our maternity leave.
Over 1,600 men have taken parental leave, with 72% of the latter taking
four or more weeks of leave. Of those who identify as LGBT+, 2% have
taken parental leave.
LGBT+
Alongside gender equality, we retained our focus on supporting the LGBT+
community with over 3,600 allies and active support from senior executive
sponsors. We continue to be recognised as a Top Global Employer by
Stonewall. The Vodafone Foundation launched the Zoteria app in the UK
to help the LGBT+ community and the wider public to come together
and tackle the issue of LGBT+ hate crime.
Race, ethnicity, and cultural heritage (‘REACH’)
We continue greater workplace inclusion through allyship and anti-racism.
REACH fluency training was first completed by all members of the Executive
Committee, as well as their direct reports, to increase confidence and
capability to talk about race. Since then, the training has been adapted to local
context and been rolled out in our European markets. The plan also includes
reciprocal mentoring, external cross-company mentoring and McKinsey Black
Leadership Academy participation. In 2020, we set ethnic diversity targets at
leadership level, which are summarised below.
Ethnic
category
31 March
2023
Long-term
ambition
Population
Global
Ethnically
diverse
background
18%
2030:
25%
Global Senior
Leadership Team
(140 positions)
UK
Black, Asian,
other diverse
ethnicities
16%
2025:
20%
UK-based senior
leadership and
management
(1,323 positions)
UK
Black
2%
2025:
4%
South Africa
Ethnically
diverse
background
67%
2030:
75%
South African- based
senior leadership and
management
(411 positions)
Read more about Board and executive management diversity
on pages 75 to 76
Physical and digital accessibility in the workplace
We have joined the ‘Valuable 500’ – a group of 500 companies committed
to disability inclusion in business. The commitments are focused
on creating a physically and digitally accessible work environment.
During the year, we upskilled our people through continued promotion
and education accessibility features available within Microsoft 365. We
also have accessibility guidelines and these are reinforced by workshops
and training for developers. Assessments were also conducted to improve
the accessibility of our own products.
We also partnered with Coventry University to understand the skills
needed for effective remote working, with research taking place in the
UK, Ireland, Czech Republic, and Turkey. Colleagues from Vodafone took
part in a new ‘Remote4All’ research project that shed light on the remote
working experiences of people with disabilities and neurodivergent
people, including communications, accessibility and technology use,
work-life balance, social isolation, and manager support.
Leadership diversity
To better understand representation across the organisation and inform
our diversity and inclusion programmes, we launched ‘#CountMeIn’, an
initiative 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
1
. Our senior leadership positions have the
highest self-declaration rate at 85% and this enables transparency of our
diversity at senior leadership.
Gender
identity
1
Sexual
orientation
2
Ethnic
diversity
3
Disability
4
Representation in senior
leadership positions
1%
4%
18%
5%
Notes:
1.
Self-identification of gender identity, including trans and non-binary identities,
excluding cisgender.
2.
Lesbian, gay, bisexual, and other sexual orientations, excluding heterosexual.
3.
Asian, Arab, Black/African/Caribbean, Latinx, mixed ethnic groups, and ‘other’ identities.
4.
Self-identification of disability, including long-term conditions, visible and non-visible disabilities.
Policies, initiatives and targets
Our commitment to diversity and inclusion is reflected across our
global policies and principles, such as the Code of Conduct and our
Fair Pay principles.
Read more about these Fair Pay principles
on page 100
Click to read more about Fair Pay at Vodafone:
vodafone.com/fair-pay
The achievement of our diversity targets is dependent on the attraction,
engagement and retention of diverse talent and skills. To support this,
we have inclusive initiatives such as: hybrid and flexible working, parental
leave, a mental health toolkit, learning and development programmes,
allyship training and menopause support, reinforced by the work of
employee networks and executive sponsors. During the year, we
refreshed our training for hiring managers and recruiters to support
an inclusive candidate experience from application to offer stage.
Programmes are designed to help employees through all life stages and
challenge societal norms to create an environment where everyone can
contribute at their best and thrive.
Read more about diverse talent, future ready skills and
personalised employee experience on pages 13 to 15
Note:
1.
Markets not asking LGBT+ questions include: DRC, Tanzania, Turkey, and Egypt; the latter also
does not ask ethnicity questions. #CountMeIn is not live in Mozambique.
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Other information
Planet
Reducing our environmental impact and helping to
decarbonise society is a part of Vodafone’s purpose.
Digital technology is key to saving energy, using natural
resources more efficiently and creating a more circular
economy to reduce e-waste. This year, the need for
a green digital transition became ever more urgent,
as the global climate crisis continued unabated while
the energy crisis deepened.
Our Planet strategy centres around three key areas: net zero, enablement
and circularity. We have set ourselves near- and long-term goals across
these strategic topics to focus our efforts where we believe we can have
the greatest impact. This year, we continued to progress towards our
Planet goals. We also continued to integrate environmental considerations
into the way we operate as a business by strengthening governance,
data and systems, risk management, and engagement with our people
– all important foundations for accelerating future action.
Our Planet goals
2025
–
Purchase 100% of the electricity we use globally from
renewable sources
1
–
Reuse, resell or recycle 100% of our network waste
2030
–
Net zero emissions from our operations and from energy
we purchase and use (Scope 1 & 2)
1,2, 3
–
Halve emissions from our value chain (Scope 3)
1,2
–
Enable 350 million tonnes of carbon emissions to be avoided
through green digital solutions
4
2040
–
Net zero emissions across our full value chain (Scope 1, 2 & 3)
2,3
Notes:
1.
Near-term targets are SBTi approved (since 2020) and are subject to re-validation as part of the
current process to seek SBTi approval of our long-term (2040) net zero target. Our current SBTi
approved near-term target includes reducing Scope 1 and 2 emissions by 95% by 2030.
2.
Against a baseline of financial year ending 31 March 2020.
3.
This year we amended our terminology from ‘fully abate’ to ‘net zero’, to align with definitions in
the SBTi’s Corporate Net Zero Standard. Going forward, we will seek to align our 2030 and 2040
net zero targets with the SBTi definition of net zero, which means that we will reduce our carbon
emissions in absolute terms by 90-95% by our target year (in line with a science-based 1.5
degree pathway), and neutralise any residual emissions through high quality carbon offsetting.
4.
Cumulatively from 2020 to 2030, based on carbon emissions avoided by our business
customers through the use of our green digital solutions, products and services.
Our performance
1
Unit
2023
2022
Total Scope 1 and Scope 2 emissions (market-based)
Million tonnes of CO
2
e
0.97
1.08
Scope 1 emissions
Million tonnes of CO
2
e
0.28
0.28
Scope 2 emissions (market-based)
2
Million tonnes of CO
2
e
0.69
0.80
Scope 2 emissions (location-based)
Million tonnes of CO
2
e
2.08
1.99
Scope 3 emissions
Million tonnes of CO
2
e
10.1
9.60
Investments
Million tonnes of CO
2
e
3.03
3.04
Purchased goods and services and capital goods
Million tonnes of CO
2
e
2.73
3.90
Use of sold products
Million tonnes of CO
2
e
1.10
1.73
Fuel and energy-related activities
Million tonnes of CO
2
e
0.78
0.81
All other scope 3 categories
Million tonnes of CO
2
e
2.46
0.12
Renewable electricity
Percentage of purchased electricity from renewable sources
%
81
77
Percentage of purchased electricity from renewable sources in Europe
%
100
96
GHG emissions intensity
Scope 1 and 2 (market-based) GHG emissions per EURm revenue
Tonnes of CO
2
e
21.2
23.6
Vodafone energy use
Gigawatt hours
6,274
6,125
Mobile and fixed access network and technology centres
Gigawatt hours/%
5,847/93
5,694/93
Offices and retail stores
Gigawatt hours/%
241/4
249/4
Transport
Gigawatt hours/%
185/3
181/3
Notes:
1.
Data is 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 market-based emissions are reported using the market-based methodology as in effect as at the date of this report. For full methodology see our ESG Addendum 2023.
2.
Scope 2 emissions for FY22 have been restated following the correction or inclusion of data points in line with our reporting methodology. In addition, emissions for the UK have been restated to apply
the correct emissions factor.
Click to download our ESG Addendum which includes detailed
methodologies for ESG data, including GHG emissions and
energy data:
investors.vodafone.com/esgaddendum
Read more about our TCFD disclosures
on pages 58 to 59
Net Zero
Goal:
To reduce our own carbon emissions to net zero (Scope 1 & 2) by
2030 and across the full value chain (Scope 3) by 2040.
We recognise the urgent need to address the global climate crisis. The
information and communication sector (‘ICT’) is responsible for an estimated
1.8% to 2.8% of global greenhouse gas emissions.
1
As we move towards an
ever more digital society, with increasing volumes of internet use and mobile
data traffic, we are committed to driving down our emissions in absolute
terms as well as shifting our energy mix to renewable sources, in line with
what is required by science to avoid negative impacts of climate change.
In 2020 we set a SBTi 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
by SBTi for the ICT sector (setting out specific emissions reduction
trajectories for mobile, fixed and data centres).
This year, we progressed on our journey to net zero and developed
business plans to implement the actions required to reduce our carbon
emissions in line with this pathway. As a next step, we are developing our
first climate transition plan outlining our key areas for action, collaboration,
and advocacy to achieve our goal of net zero emissions across our full value
chain by 2040. We are in the process of having our long-term (2040) net
zero targets approved under the SBTi Corporate Net Zero Standard.
2
Our FY23 performance:
Our total Scope 1 and market-based method
Scope 2 GHG emissions decreased by 10% to 0.97 million tonnes of CO
2
e
(carbon dioxide equivalent), equivalent to a 52% reduction from our FY20
baseline. Our Scope 3 emissions increased by 5% to 10.1 million tonnes
of CO
2
e, representing a 7% increase from our FY20 baseline, mainly due
to improvements in our Scope 3 data and calculation methodology.
Notes:
1.
Freitag, C. et al. (2021),
The real climate and transformative impact of ICT: A critique of estimates,
trends, and regulations.
2.
Continued validation of our long-term net zero target from SBTi, has faced delays due to a high volume
of companies currently seeking target validation. Subject to the validation process by the SBTi, our long
term net zero target may change as part of the validation process.
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Other information
Purpose (continued)
Net zero operations (Scope 1 & 2 emissions)
Our plans to reduce emissions from our operations (Scope 1 & 2
emissions) focus on driving energy efficiency across our mobile and fixed
line networks, phasing out the use of fossil fuels and increasing renewable
sources of energy for both our stationary equipment and vehicle fleet.
Driving energy efficiency
Despite the ever-growing use of data and expansion of our networks, this
year our total Scope 1 and 2 GHG emissions decreased by 10% to 0.97
million tonnes of CO
2
e (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
mobile access network, fixed access networks and technology centres,
which together account for 93% of our total global energy consumption.
We are rolling out new generation network technology, software solutions
to optimise energy use, and rationalising our property portfolio. During
FY23, we invested €57 million of capital expenditure in energy efficiency
and on-site renewable projects which has led to annual savings of 50 GWh.
We continue to implement the ISO 50001 Energy Management Standard
globally across our operations. To date, 12 operating companies and
Safaricom have been awarded certification. This is underpinned by our
energy data management and analytics system which collects and stores
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 over 47,000 sites.
Click to read more about our energy efficiency initiatives:
vodafone.com
Switching to renewables
To achieve our goal of net zero carbon emissions from our operations by
2030, we are phasing out the use of fossil fuels such as diesel for stationary
generators, and petrol or diesel for vehicle fuel. Our goal is to purchase
100% of the grid electricity we use globally from renewable sources by
2025. Since July 2021, 100% of the grid electricity used in our European
network (FY22: 96%), and 81% globally (FY22: 77%), has been purchased
from renewable sources.
Click to read more about our self-powered mobile masts:
vodafone.com/self-powered-mobile-masts
On-site renewable generation
This year, we continued to install and deploy new solar photovoltaic (‘PV’)
systems at sites in the UK, Egypt and South Africa. This increased our
annual on-site generation of renewable electricity to 14 GWh p.a.
We are also collaborating with partners to develop new innovative
solutions for renewable energy generation, with ongoing projects to
install 750 micro wind turbines in Germany, trialling self-powered masts
in the UK, and developing proof-of-concept mini-grid solutions in
Mozambique and the DRC.
Purchasing renewable electricity
This was the first full year in which we matched all of the grid electricity
we used in Europe with renewable sources
1
(having been 100%
renewable in Europe from July 2021). This is significantly ahead of our
target to power 100% of our global operations with renewable energy by
2025 and a major milestone towards our net zero goal. We currently have
purchase power agreements (‘PPAs’) in six countries having signed new
PPAs in Germany, Greece, Italy, Portugal, Spain and the UK this year,
through which we purchased 6% of our renewable grid electricity
globally. When fully operational, these will generate approximately 40%
or our grid electricity demand in Europe by 2025. PPAs provide us with
more economic certainty against current volatile wholesale electricity
prices. The remainder of our electricity consumption is matched with
renewable energy certificates (‘RECs’).
We are committed to making the same change to 100% renewable in
Africa and 20% of our electricity supply in South Africa was matched with
renewable energy certificates during FY23.
We are also helping to build a more accessible market for renewables
across some of our African markets. This year, we established a new
agreement with the Egyptian government and embarked on discussions
with the national energy provider in South Africa, Eskom, which aim to
help us source more renewable power from the electricity grid.
This year, we spent €1.2 billion on purchasing electricity. This is a
year-on-year increase of approximately 40%, largely driven by exceptional
and extreme wholesale market conditions.
Click to read more about our renewable electricity
purchasing strategy:
vodafone.com/renewables
Reducing diesel use
We used 72.5 million litres of diesel in FY23 (a 3% increase from FY22:
70.3 million litres) mainly to fuel generators at sites that are off-grid
or have unreliable grid electricity supply. We are seeking alternatives to
diesel, including connecting off-grid sites to the grid where possible, fuel
cell technology trials (including our successful ammonia fuel cell trial
in Romania, launched in 2022) and small-scale on-site renewables.
Electrification of our fleet
This year, we progressed with increasing the proportion of electric
vehicles (‘EVs’) in our company fleet (with EVs making up 49% of the fleet
compared to 39% in FY22). We launched a global fleet dashboard to
monitor carbon emissions from company vehicles, and progressed plans
to phase out purchasing of new vehicles with internal combustion
engines in our European operations.
Net zero value chain (Scope 3 emissions)
As part of our Science-Based Target, our goal is to halve the carbon
emissions from our full value chain by 2030 and bring them to net zero
by 2040 (against a 2020 baseline). This includes our indirect (Scope 3)
emissions, which we estimate to be 10.1 million tonnes CO
2
e in FY23 (5%
higher than the previous year), forming 91% of our total carbon emissions.
Reliable and standardised data from across an entire value chain is
fundamental to driving down Scope 3 emissions. Today, however, most
companies are relying heavily on estimates and assumptions for their
Scope 3 emissions. This year we have invested in enhanced ESG data
capabilities to improve the quality of our data, including Scope 3 emissions.
The increase in Scope 3 emissions this year is primarily due to
improvements in the completeness and accuracy of data, and mapping
to corresponding factors used for calculating emissions from our
upstream supply chain (mainly purchased goods and services, and capital
goods). In part, these calculations use a spend-based methodology,
so this trend was also driven by an increase in procurement spend
(of approximately €1 billion), which was further amplified by currency
exchange rate fluctuations over the last year. To help us move away
from a spend-based methodology in the future, in FY23 we completed
a project to engage our top four suppliers of network equipment
(representing 38% of Vodafone’s total network category spend),
to improve sharing of product carbon footprint data and identify
opportunities to reduce embedded carbon. We are committed to
improving Scope 3 data quality to enable us to better understand the
emissions from our value chain, and ultimately to manage them
more effectively.
Click or scan to watch a video summarising
how we plan to reach net zero by 2040:
investors.vodafone.com/videos
Note:
1.
We purchase renewable electricity in accordance with RE100’s Technical Criteria.
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Other information
FY23 carbon enablement overview
GHG estimated emission saving (million tonnes CO
2
e)
1
2023
2022
Smart meters
3.7
1.6
Fleet management
2
3.3
10.7
EV charging
0.9
–
Healthcare
3.1
2.6
Other (e.g. cloud/remote working/connected solar)
0.5
0.6
Other transport solutions and logistics solutions
13.4
–
Total
24.9
15.6
Cumulative total (FY20 to FY23)
46.7
–
2023
2022
Total GHG enablement saving (million tonnes of CO
2
e)
24.9
15.6
Scope 1 and Scope 2 emissions (million tonnes of CO
2
e)
0.97
1.08
Enablement ratio
25.7
14.5
Notes:
1.
Enablement figures are estimates. The detailed methodology is available in our ESG Addendum.
2.
Significant year-on-year reduction due to recategorisation of connected car into other transport
solutions for FY23.
In FY23, we rolled out a carbon enablement toolkit to support product
teams to understand how the solutions they develop result in carbon
emission reductions. The toolkit helps them to identify solutions in our
existing product portfolio that have carbon enablement potential.
As a result, we have been able to measure and report the carbon
enablement impact of an expanded number of Vodafone Business
products and services this year, such as remote working solutions, and
IoT-enabled solutions for mobility and remote monitoring.
In addition, we hosted a customer summit at this year’s London Green
Tech Festival, and published our ‘Fit for the Future’ insights report, to
actively engage our Vodafone Business customers to think about our
collective role in the green digital transition.
We continue to advocate for the green digital transition at forums such
as the European Green Digital Coalition (‘EGDC’), GSMA and the European
Roundtable of Industrialists, and by speaking at conferences and events,
including at COP27.
Circularity
Goal:
To reuse, resell or recycle 100% of our network waste by 2025
The UN estimates that as much as 50 million tonnes of electronic and
electrical waste (e-waste) are produced globally each year, with only 20%
formally recycled. As the use of technology expands and develops, we
are playing our part to address the growing global e-waste problem.
Our circular economy (or ‘circularity’) initiatives look at two main types of
e-waste: network equipment (such as radio equipment used to run our fixed
and mobile access networks) and the electronic devices that we sell to
customers (such as smartphones).
We reused, resold or recycled 96% of network waste in FY23, in comparison
from our FY22 performance of 95% (which has been restated from 99%
to include parts of our network operations and data centres that were
previously omitted). Our asset marketplace contributed to this and we also
launched and began to scale up a number of new circular devices initiatives.
Our initiatives aim to raise consumer awareness of sustainable purchasing,
extend the lifetime of devices, and improve collection rates for used devices
so that they stay within a circular system.
We continued to embed climate-related topics, among other ESG topics
into our procurement process. In March 2023, we launched a new
environmentally-linked supply chain financing programme, to provide
financial incentives for our suppliers to disclose carbon data to the CDP
and take action to improve their score over time. In partnership with CDP,
we developed a framework consisting of 12 criteria from the CDP survey
and sharing their performance score with their supply chain financing
provider, our suppliers have the opportunity to receive preferential
financing rates based on their ranking. The programme has initially been
launched for suppliers using Citibank’s scheme, with a view to expanding
to other supply chain financing providers over the next year. CDP plans to
make a template of the framework available to other telecommunication
industry players, to drive industry-wide adoption of the model. This work
is a contributing factor in our being recognised by the CDP as a Supplier
Engagement Leader in 2022.
Activities to influence our downstream emissions include improving
consumer awareness of the climate impact of smartphones, through
marketing of Eco Rating scores that aim to provide consistent and
accurate information on the environmental impact of products.
Read more about
Eco Rating on page 38
We are also engaging with our partners and supporting them on their
decarbonisation journey. In June 2022, we held a summit for our global
Vodafone sustainable business teams to share knowledge in which
several of our joint venture partners participated.
A review of emissions from our investments identified the need to update
the calculation methodology and correct the underlying energy data for
our joint ventures and associates, Vodafone Idea (which was determined
to be incomplete in prior year emissions calculations). We have restated
the Scope 3 category 15 data for all previous years to reflect these
improvements to data and methodology.
Industry collaboration and standardised reporting will be crucial to driving
down Scope 3 emissions, and we will continue to work with partners and
suppliers to increase the reliability of data.
Click to read more about Scope 3 emissions in our ESG
Addendum:
investors.vodafone.com/esgaddendum
Enablement
Goal:
To enable our business customers reduce their own carbon
emissions by 350 million tonnes between 2020 and 2030
One of our most important contributions to protecting our planet is
enabling our customers (which include consumers, businesses, and
governments) to reduce their environmental footprint using our digital
technologies and services. We have begun this journey with a focus
on using green digital solutions to tackle climate change and help
decarbonise society.
This year, we estimate we have enabled an avoidance of 24.9 million
tonnes CO
2
e, which is almost 26 times the emissions generated from our
own operations (Scope 1 and 2). Since setting our carbon enablement
target in 2020, we estimate we have enabled our customers to save a
cumulative 47.6 million tonnes of carbon emissions. Our IoT service offer,
including logistics, fleet management and smart metering, has been
pivotal in delivering these savings so far. We estimate that 52% of our
162.3 million IoT connections directly enabled customers to reduce
their emissions in the past year.
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Other information
Purpose (continued)
We are also encouraging our customers to consider purchasing
second-life devices. Purchasing a refurbished smartphone saves around
50kg of CO
2
e – making its contribution to climate change 87% lower than
that of the equivalent, newly manufactured smartphone – and removes
the need to extract 76.9 kg of raw materials.
2
We are offering customers
high quality and competitively priced refurbished smartphone ranges
in UK, Turkey, and Vodacom.
We also continue to collect, refurbish and reuse fixed line equipment
(such as broadband routers) multiple times, to drive significant associated
environmental and cost savings.
Improving consumer awareness of product sustainability
We are continuing our engagement in the Eco Rating labelling scheme
jointly with other major European operators. Eco Rating is a pan-industry
initiative to help consumers identify and compare the sustainability of
mobile phones on the market, whilst also encouraging suppliers to
reduce the environmental impact of devices.
In November 2022, Eco Rating expanded to reach 35 countries,
supported by 22 manufacturers and a total of eight operators. Since its
introduction, the rating has contributed to improving the environmental
performance of mobile phones on the market, illustrated by the increase
of the average Eco Rating score from 74 to 76 out of a maximum 100
since it was launched 18 months ago. We now operate this initiative in 12
markets with over 200 handsets assessed and available to our customers.
Reducing virgin plastic use
We continue to reduce use of single-use plastics, replacing them with
lower-impact alternatives across all our retail stores, offices and logistics
operations in collaboration with our logistics providers. To reduce virgin
plastic use in our SIM cards, we have continued to roll out half-size SIMs
made from recycled plastics.
Where plastic must be used, we aim to use recycled plastic. For example,
our new Ultrahub broadband router uses 95% recycled plastic in the
product housing and the packaging is made using 85% recycled
materials, both of which are 100% recyclable at the end of life.
Partnerships and collaboration
Reducing our environmental impact is a challenge that we know we
cannot achieve alone. Partnerships are essential to addressing the climate
and nature crises. We work with a number of valued partners at a global
and local level to deliver initiatives across our Planet strategy.
Together with Vodafone Egypt and Vodacom, we re-affirmed our
commitment to climate leadership through our headline sponsorship
of the COP27 UN Climate Change Conference in Sharm El-Sheikh in
November 2022. Our presence demonstrated our resolve for businesses
to take an active role in bringing about the green digital transition.
In addition to providing essential digital connectivity services for the
conference and its delegates, we showcased examples of innovative
green digital solutions that can help reduce global carbon emissions and
optimise resource efficiency – including our agricultural platforms such
as MyFarmWeb and Connected Farmer solutions, which are supporting
over five million farmers across Africa to minimise agricultural inputs like
vehicle fuel, water and chemicals, whilst maintaining crop yields.
Read more about our agricultural programmes
on page 29
Engaging our people on Planet
We are engaging people across Vodafone to think about environmental
impacts and risks as part of their own business decision-making.
Our ‘#RedLovesGreen’ community is the largest employee group outside
of core business topics on Workplace (Vodafone’s internal collaborative
communication platform) with more than 12,000 colleagues who are
engaged on environmental subjects. In FY23 we launched a series of
webinars called ‘Green Talks’, covering topics including climate change
science and net zero.
FY23 network waste management (excluding hazardous waste)
2023
2022
Reused
2%
3%
Recycled
94%
92%
Disposed
1
4%
5%
Total network waste (metric tonnes)
8,920
5,979
Note:
1.
Disposed network waste includes used network equipment that is disposed to landfill or incineration.
Circularity of network waste
Our global policy on waste management prioritises the reuse, resale
or recycling of surplus or obsolete network equipment. We aim to keep
resources in use for as long as possible, maximising the value employed,
and then recover and reuse materials responsibly.
We implement resource efficiency and waste disposal management
programmes in all our markets to minimise environmental impacts
from network waste and IT equipment waste. This year, we generated
an estimated 12,400 tonnes of network waste equipment (including
hazardous waste). We reused and recycled 96% of the non-hazardous
waste; partly via our asset marketplace, which was established in 2020 to
resell and repurpose excess or decommissioned network equipment, thus
extending its useful life. This year, we estimate that we have saved €14.7
million of spend and avoided over 1,143 tonnes of CO
2
e through our asset
marketplace platform. This is in addition to the reuse of equipment within
individual operating companies. For example, Vodafone UK avoided
an estimated 1,466 tonnes of CO
2
e in FY23 by reusing equipment.
Circularity of devices
Across our industry small IT equipment and electronics, such as devices,
constitute around 9% of total e-waste generated.
1
We aim to reduce our
impact in this area by implementing circular devices initiatives in
conjunction with our partners and other operators.
Improving collection rates for used devices
Our previous metric that measured weight of products collected via
product take-back schemes is not reported in FY23 as we have retired it
in place of our newly formed partnership with WWF. In November 2022
we launched our ‘1 million phones for the planet’ campaign, to raise
consumer awareness of e-waste and incentivise our customers to bring
back their used devices for trade-in, donation or recycling. WWF’s ability
to deliver impactful environment projects, combined with Vodafone’s
digital technology capabilities and our reach across a global consumer
audience, will enable us to show how technology can help overcome
sustainability and conservation challenges.
This year we also we launched a new e-waste compensation partnership
in Germany. Our ‘One for One’ campaign promises that for every phone
purchased directly from us, our partners at Closing the Loop will collect
one for recycling from an African country that does not have safe
recycling infrastructure or systems. This diverts e-waste from landfill
or incineration, whilst also enabling valuable materials such as gold
and palladium to be recovered from otherwise hazardous waste.
Our partnership with Closing the Loop aims to enable the safe collection
and recycling of over one million scrap devices per year.
Extending the lifetime of devices
In partnership with Recommerce, our ‘Trade in’ campaign encourages
customers to extend the lifetime of their device by trading it in to be
refurbished and resold. Our digital trade-in platform, now live in four
European markets, offers customers a guaranteed price to make the
trade-in customer journey convenient, cost-effective and attractive.
Notes:
1.
GSMA, Strategy paper for circular economy: Mobile Devices, 2022
2.
ADEME (2022) Assessment of the environmental impact of a set of refurbished products
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We contribute to the Sustainable Development Goals
The UN Sustainable Development Goals (‘SDGs’)
provide a blueprint for human progress and a clear call
to action for businesses to contribute to a better future.
The confluence of the climate crisis and the macro economic downturn
as a result of the COVID-19 pandemic has exacerbated existing challenges
for society, particularly in less developed countries, and led to a reversal
of progress on a number of SDGs. For example, we have seen the first rise
in extreme poverty in a generation, with around 120 million people pushed
back into extreme poverty
1
. Furthermore, the UN estimates that COVID-19
has wiped out 20 years of educational gains, with secondary school
completion rates at just 53%, and this is predicted to decline.
1
Digital technology will be essential in reducing these impacts and helping
progress towards delivering the SDGs. We are committed to playing our role
and 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. Simultaneously, we can drive significant
growth. For example, our M-Pesa mobile money platform, designed to
enable financial inclusion, has 58.5 million active customers (including
Ghana). Excluding Safaricom, M-Pesa revenue in FY23 was €444 million.
Note:
1. UN, 2022.
We enable inclusive and sustainable digital societies
At Vodafone we are accelerating connectivity and digitalisation in
order to meet the SDGs by 2030. We have identified two priority
SDGs (SDG 9 build resilient infrastructure and innovation, and SDG 17
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 other SDGs.
Read more about our partnerships
on page 30 to 32 and 37 to 38
The SDGs will only be achieved in partnership, and we continue to
pioneer new models of cooperation between business, governments,
international organisations, and civil society to deliver process and scale.
For example, we were a founding member of the International
Telecommunication Union’s Partner2Connect coalition to
connect the unconnected. We also initiated and co-led the first
multi-stakeholder working group on smartphone access and
affordability under the auspices of the Broadband Commission for
Sustainable Development.
This year, our partnership in Ethiopia with Safaricom, Sumitomo
Corporation and CDC Group launched a new network in Ethiopia
combining our innovation and technology to help solve customer
and societal challenges in the region.
We have also increased our partnerships to address the climate crisis.
This includes our partnership with the Egyptian government and
United Nations Framework Convention on Climate Change in COP27
in Egypt in November 2022, and our global partnership with WWF that
will support our goals to reduce carbon emissions to net zero by 2040
and encourage a more circular economy for mobile phones.
Through connectivity infrastructure, digital innovations and
partnerships, we deliver impact across many of the SDGs.
Examples of our projects and initiatives supporting
the SDGs over the last year
Read more about our contribution to the SDGs:
vodafone.com/sdgs
No poverty
Our everyone.connected campaign in the UK has delivered
£108 million in social value helping customers deal with the
increased level of poverty due to cost of living increases.
Read more about our approach to the cost of living:
vodafone.com
Sustainable cities and communities
Our IoT solutions help local governments take control of
their energy usage across multiple sites, improve air quality
via monitors and optimise waste collection.
Read more about our digital solutions to build
sustainable cities:
vodafone.com
12 of our European markets have launched Eco Rating
schemes to provide consistent, accurate information on the
environmental impact of products, including smartphones.
Read more about Eco Rating for mobile phones:
vodafone.com/eco-rating
Responsible consumption
Good health and wellbeing
Our partnership with Deloitte will provide new and effective
ways for medical professionals to diagnose, treat, and
support patients.
Read more about our partnership:
vodafone.com/business/industry/health
Quality education
Our Connected Education programme has
benefited over 1.7 million students and
teachers in 5,500 education institutions
across 13 countries.
Click or scan to watch how Vodafone is providing
digital learning through connected education.
Gender equality
We continue to design digital solutions to empower women
such as Mum & Baby with over 2.3 million customers
subscribing to our free maternal health programme.
Read more about our Mum & Baby programme on page 31.
Affordable and clean energy
Since July 2021 our European network is powered 100%
by electricity purchased from renewable sources and
are forming new agreements to enable us to purchase
renewable power in Africa.
We are also partnering with others to innovate in renewable
technologies for remote mobile sites.
Read more about our Planet purpose pillar on pages 35-38.
Read more about self-powered mobile masts providing
sustainable solutions for rural communities:
vodafone.com/self-powered-mobile-masts
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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.
This section of the Strategic Report covers the elements underpinning
our responsible business strategy. On this page, we explain how we
embed an understanding of our Code of Conduct throughout the Group
and provide our people and suppliers with access to a whistleblowing
hotline (‘Speak Up’). This section also summarises our approach to
protecting data and people, as well as how we ensure we behave
ethically, lawfully and with integrity wherever we operate.
Code of Conduct
Our Code of Conduct sets out what we expect from every single person
working for Vodafone, regardless of location. We also expect our suppliers
and business partners to uphold the same standards as set out in our
Code of Ethical Purchasing.
Click here to read our Code of Conduct:
vodafone.com/code-of-conduct
Our Doing What’s Right (‘DWR’) training and communication programme is
key to embedding a shared understanding of the Code of Conduct across
Vodafone. Throughout the year, the Doing What’s Right communication
programme promoted different areas of our Code of Conduct, including
Speak Up, anti-bribery, privacy, competition law, security, and health and
safety. In FY23, we launched a campaign to reinforce how line managers have
a critical responsibility to be a role model for ethics and integrity at Vodafone
and create a culture where we take decisions that foster trust and admiration.
Training in our Code of Conduct is mandatory for all employees and is
included in our standard induction process for new employees. This year
we have upgraded our DWR learning strategy moving from training every
two years to a learning intervention every year. Of those employees
assigned Doing What’s Right training, 93% had completed the training as
at 31 March 2023. From FY24 onwards, end-of-year reward linked to an
individual’s impact will be underpinned by minimum standards, including
completion of our Doing What’s Right training, that reinforce our
commitment to building an ethical culture.
We also strive to make compliance easy for our employees and continue to
improve our digital Code of Conduct and Global Policy Portal, the internal
platform where employees can find information about our policies and
procedures. During FY23, 220,000 visits to these portals were logged which
is an indicator that our employees are engaging with our policies.
Our Code of Conduct is well understood throughout Vodafone. In our
latest Spirit Beat employee survey, 95% 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
be 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 anonymous confidential third-party hotline, Speak Up, which
is accessible in local languages online or by telephone.
We have a non-retaliation policy when a genuine concern has been
reported. 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.
Speak Up reports are confidentially investigated by local specialist teams,
with a senior team in place to triage reports. Each grievance 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 trends twice a year, and the
Audit and Risk Committee receives an annual update, with additional
ad hoc reviews also carried out where appropriate.
Our employees trust our Speak Up process, as evidenced by our
September 2022 Spirit Beat survey, with 85% of respondents agreeing
that they believe appropriate action would be taken as a result of using
the 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, 57% (FY22: 64%)
of reports were ‘named’ and this was higher than available
industry benchmarks.
This year, 505 (FY22: 642) 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 is owned by the Chief Human Resources Officer and overseen
by the Group Risk and Compliance Committee. In 2022, we undertook
a review of the Speak Up process to check it against the UN Guiding
Principles on Business and Human Rights requirements.
Speak Up topics raised during the year
Topic
1
Speak Up
reports
Requiring
remedial action
People issues
2
70%
35%
Integrity
24%
51%
Other
5%
41%
Health and safety
1%
50%
Notes:
1.
There were no reports relating to modern slavery concerns reported during the period
(FY22: zero reports).
2.
Diversity & Inclusion topics accounted for 2% of the People issues reported during the year.
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 critical.
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.
Responsible business
Responsible business
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Privacy risks
As data volumes continue to grow and regulatory and customer scrutiny
increases, it is important to be clear on the privacy risks we face, as well as
how our policies and programmes can mitigate these risks. We categorise
data privacy risk into three main areas:
–
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 with the law or our own
policies.
To help us identify and manage evolving 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; fairness and lawfulness; choice and access; security
safeguards; privacy by design; openness and honesty; responsible data
management; and balance.
Click to read more about our privacy principles and how
they guide the way our products are designed and built:
vodafone.com/privacy
Using customer data
We want to enable our customers to get the most out of our products
and services. To provide these services, we need to use our customers’
personal information. We aim to protect our customers’ data, use it for
a stated and specific purpose, and we are always open about what
customer data we collect, and why we collect it.
Click to read more about uses of customer data:
investors.vodafone.com/sasb
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. Our product-specific privacy notices include details
relating to a particular product. These statements and notices are available
to customers online, in the MyVodafone app and in our retail stores.
We provide our customers with access to their data through online and
physical channels. These channels can be used also to request deletion
of data that is no longer necessary, or for correction of outdated or incorrect
data, or for data portability. Our customer privacy statements and other
customer facing documents provide comprehensive information on how
these rights can be exercised and how to raise complaints or contact the
relevant data protection authority. Our frontline retail and customer support
staff are trained to respond to customers’ requests.
Our state-of-the-art, multi-channel permission management approach
was deployed across our channels (MyVodafone app, website, call
centres and retail stores) in 2018. This approach allows our customers
to control how we use their data for marketing and other purposes at
any time and the permissions are synchronised across our channels.
For example, customers can:
–
Opt-in for processing of special categories of data;
–
Choose what data we collect through the MyVodafone app and how
it is used;
–
Opt-out from marketing across different channels (call, SMS,
notifications), or opt-in to the use of their communications metadata
for marketing purposes or for receiving third-party marketing
messages; and
–
Opt-out from the use of anonymised network and location data
(‘Vodafone Analytics’).
Click to read more about our privacy policies:
vodafone.com/privacy
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.
Click or scan to watch our privacy experts
summarise our approach to data privacy:
investors.vodafone.com/videos
Case study: Privacy-first digital advertising
Following a trial of a new ‘TrustPid’ solution, we have formed a new
joint venture with three other major European telecommunications
operators. TrustPid is a technology for data protection-compliant
digital marketing, allowing consumers to enjoy free content and the
benefits of the open internet whilst maintaining control over their
privacy. TrustPid requires express consent of the user to be activated
and offers a centralised self-serve privacy portal enabling users to
review and manage their consents across websites participating in
the service at any time. Users can revoke their consents all at once
or individually per website, as well as block the service.
TrustPid works with secure, unique network-based digital
tokens generated using the IP address of the user and multiple
de-identification steps to break the ‘link-ability’ back to the users.
The telecommunications providers are responsible for creating a
pseudonymised network ID which is used by the TrustPid platform
to generate the additional digital tokens. The telecommunications
providers do not enhance the tokens with any customer or traffic
data, nor is any other directly identifiable data, such as name or email
address, shared or processed by the service in any other way. The
digital tokens shared with advertisers and publishers are randomised,
specific for each domain and have a limited lifespan of up to 90 days.
These allow advertisers and publishers to provide users with a
personalised experience on their websites, apps and services, without
being able to trace them back to reveal the personal identity of the
individuals, and always with the requirement that the user must have
provided express prior consent for each individual site. These
measures reduce the risk of uncontrolled cross-site tracking, data
sharing and profiling across different partners – one of the big
drawbacks for consumers in the way digital advertising works today.
Transparency, control and data minimisation are key principles for
TrustPid which seeks to provide a privacy first solution whereby
only the minimum personal data for the service to work is processed
and shared on a need-to-know basis.
The European Commission has provided unconditional approval for
the creation of the joint venture and the joint venture partners have
now tested the platform with advertisers and publishers in Germany
and Spain. All local data protection authorities were consulted before
the trial was initiated. Following completion of the trial at the end
of May 2023, the joint venture will outline its vision and strategy,
including information about next steps and a commercial launch,
which will be announced in due course by a new company called Utiq.
Click to read more about Utiq:
utiq.com
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Operating model
We have 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
lifecycle 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 pages 42 to 43 and 53
All products, services and processes are subject to privacy impact
assessments as part of their development and throughout their lifecycle.
We maintain personal data processing records, supplier privacy
compliance, data breach management and individual rights processes,
as well as internal and international data transfer compliance frameworks,
and training and awareness programmes.
In our supply chain, privacy and security requirements form a key part of
our supplier management processes. All suppliers go through a thorough
onboarding process to verify their adherence with these requirements,
appropriate data protection agreements are agreed, and suppliers are
subject to continuous monitoring.
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 Doing What’s Right privacy training within six weeks of joining
and then in line with our annual learning intervention cycle. We also have
targeted training for high-risk roles which is 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. In FY23, 95% of assigned employees
completed Doing What’s Right or more specific privacy training.
The effectiveness of control implementation is subject to quarterly
reporting, and annual evidence-based testing by the privacy teams, as
well as internal audit. Control implementation is also reviewed by local
market CEOs, the Group Risk and Compliance Committee and the Audit
and Risk Committee. Any findings are subject to remedial actions by the
responsible control operator, and completion is monitored.
Governance
The General Counsel and Company Secretary, a member of the Executive
Committee, oversees the global privacy programme. The Group Privacy
Officer, reporting to the 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 the General Counsel and
Company Secretary and an annual update to the Audit and Risk
Committee. During the year, the Group Chief Executive also introduced
regular compliance reviews to ensure operating companies were
adhering to the Group’s policies and procedures. This included oversight
of our privacy programme.
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 report to the Group Privacy Officer
throughout the year.
The Privacy Leadership team 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 designed to identify potential issues before they
materialise. However, during the financial year, Vodafone was fined
€1 million (FY22: €2 million) for separate data privacy issues, primarily
relating to fraudulent SIM swaps, telesales and marketing without
consent, human and system errors in data processing, and delayed
execution of data subject rights. In response, we have introduced new
standards and increased monitoring.
Read more about how we respond to a data breach in the
cyber security section on page 43
Cyber security
Our role is to enable connectivity in society. As a provider of critical
national infrastructure and connectivity that is relied upon by millions of
customers, we prioritise cyber and information security across everything
we do. Our customers use Vodafone products and services because of
our next-generation connectivity, but also because they trust that their
information is secure.
Cyber attacks are part of the technology landscape today and will be
in the future. All organisations, governments and people will be subject
to cyber attacks and some will be successful. The telecommunications
industry is faced with a unique set of risks as we provide connectivity
services and handle private communication data. Our operating model is
designed based on this knowledge and focused on how we prevent,
detect and respond to attacks to minimise the impact.
We have published a separate factsheet which provides more detail
on our approach to managing cyber risk at Vodafone, as well as how
we protect our customers from cyber threats. The following section
is a summary of our approach.
Click to read our cyber security factsheet:
investors.vodafone.com/cyber
Responsible business (continued)
Our cyber security strategy
Our vision is a secure connected future for our customers and society.
We are motivated by a clear purpose to inspire customer trust and loyalty
by providing sustained cyber security, ultimately contributing to a secure
society and an inclusive future for all.
Our cyber security strategy sets out how we plan to achieve these goals.
It is aligned to, and forms part of, Vodafone’s 2025 technology strategy.
Our cyber security strategy has six pillars: control evolution, secure
by design, dynamic trust, real-time data & real-time response, Spirit
of Vodafone and culture, and security for society.
Identification of vulnerabilities and risks
Cyber security is one of Vodafone’s principal risks. We understand that
if not managed effectively, there could be major customer, financial,
reputation, stakeholder or regulatory impacts. Risk and threat
management are fundamental to maintaining the security of our services
across every aspect of our business.
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 and policies to detect, prevent
and respond to them. Our cyber security strategy focuses on minimising
the risk of cyber incidents that affect our networks and services.
When incidents do occur, we identify the root causes and use them to
improve our controls.
Click or scan to watch our cyber security experts
summarise our approach to cyber security:
investors.vodafone.com/videos
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Other information
Risk and control framework
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 is based on an
international standard and includes key security controls which
significantly reduce cyber security risk by preventing, detecting or
responding to events and attacks. We have effectiveness targets for the
key controls that are monitored and reported to senior management for
each market every month. The framework is regularly reviewed and new
controls or new targets identified each year.
As well as monitoring control effectiveness within Vodafone, we oversee
the cyber security of our suppliers and third parties with a dedicated team.
At supplier onboarding, security requirements are written into contracts,
and we determine the inherent risk of the supplier based on the service
they are providing. We then assess their controls to understand the
residual risk, which informs the frequency of review. We follow up on
open actions and ensure security incidents are tracked and managed.
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 mobile networks is also independently
tested and benchmarked versus other telecommunications operators
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. In addition, our markets
comply with national information security requirements where applicable.
Read more about our identification of cyber threat
as a principal risk on page 53
New technologies, industry practice and regulations
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, implementing and testing the necessary security controls.
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 artificial intelligence (‘AI’) and machine learning.
More broadly, we actively engage with stakeholders, including 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.
We expect a significant increase in security regulation over the next few
years as governments respond to the heightened cyber threat landscape,
recognising that telecommunications operators provide critical national
infrastructure. We engage directly with governments and industry
partners to promote proportionate, risk-based and cost-effective solutions
to security threats. We look to establish shared approaches to reinforce
standardisation and regulatory frameworks that apply equally to all
market participants.
Operating model
We have implemented an operating model based on the leading industry
security standards published by the US National Institute of Standards
and Technology (‘NIST’). The model is designed to reduce risk through
constantly protecting, defending and improving our security. We have an
in-house international team of almost 1,000 employees and we also work
with third-party experts in specialist areas. Our scale means we benefit
from global collaboration, technology sharing and 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 our
technology and throughout the entire business. 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.
Click to read more about Vodafone’s
Cyber Code in our Code of Conduct:
vodafone.com/code-of-conduct
Cyber security is included within our Doing What’s Right training
programme and our latest module was translated for non-English-
speaking markets during the year, having been launched in English last
year. We are also about to launch a training manual for contractors.
Training on our Code of Conduct and cyber security is included in our
standard induction process for new employees, and we expect every
employee to complete annual learning interventions when assigned.
Governance
The Chief Technology Officer and Chief Network Officer are the Executive
Committee members responsible for managing the risks associated with
cyber threats and information security. The Cyber Security, Technology
Assurance and Strategy (‘CTAS’) Director is responsible for managing and
overseeing the cyber security programme on a day-to-day basis and
reports to the Chief Technology Officer. Reporting to the CTAS Director
are the heads of the global cyber security functions and markets or
regions. The local cyber security leads are part of their local management
teams and responsible for the cyber agenda in their market or region.
Key risk indicators for our most important controls and our security
baseline are reported to senior management and the Executive
Committee every month. Cyber threats and information security are a
major area of focus for the Board’s Audit and Risk Committee and detailed
updates including threat landscape, incidents, security position, residual
risk and security strategy and programme progress were provided by the
CTAS Director twice during the year, most recently in March 2023.
Read more about the Audit and Risk Committee’s oversight
of cyber security on pages 77 to 82
Cyber incidents
As a global connectivity provider, we are subject to a range of cyber
threats. We use our layers of controls to identify, block and mitigate
threats and reduce any business or customer 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.
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 and relevant authorities. The European
Union’s GDPR provides a framework for notifying customers in the event
there is a loss of customer data because of a data breach, and this
framework is a baseline across all our markets.
Vodafone classifies security incidents on a scale (S0-S4) according to
severity, measured by business and customer impact. We attribute root
causes to incidents and use the information to improve our control
effectiveness. The highest severity category (S0) corresponds to a
significant data breach or loss of service caused by the incident. There
have been no cyber incidents classified at this level in the past financial
year. Even with an increased threat landscape, we have seen a gradual
decline in the numbers of more severe incidents.
Click to read more about how we manage risks from
technology disruptions in our SASB disclosure:
investors.vodafone.com/sasb
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Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
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 people safe is one of the most important responsibilities we
hold as an employer. Our ongoing focus is to provide a safe working
environment for everyone working for and on behalf of Vodafone and the
communities in which we operate. We want to ensure that everyone is
safe when working with and for Vodafone.
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 continue to focus on our key health and safety risks, which account
for the majority of reported incidents and remain a focus area globally:
occupational road risk, falls from height, and working with electricity
and fibre.
Road traffic incidents continue to be the primary cause of major injuries
and fatalities reported globally, accounting for 58% of incidents classified
as ‘high potential’ during the year. We continue to focus on road safety
and driver behaviour within our global health and safety strategy and
operating company plans. In addition, local market road risk controls are
reviewed as part of our internal assurance plans.
In recognition of our key health and safety risks, we 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 apply everywhere we work and provide
clear expectations for safe behaviour for everyone to follow. The Absolute
Rules must be followed by all Vodafone employees and contractors, as
well as our suppliers’ employees and contractors. Where this requirement
is not met, we take appropriate management actions. In the September
2022 Spirit Beat survey, 94% of employees agreed that the Absolute
Rules are taken seriously at Vodafone.
Leadership engagement
Our Executive Committee and operating company executive committees
provide visible and clear leadership in health and safety. These senior
leaders are actively engaged and carry out regular face-to-face site tours
throughout the year as they recognise the importance of connecting with
teams and critical workers as they continue to maintain our networks,
work in our retail stores and on customer sites. We ensure everyone has
access to senior leadership support in health and safety matters, as this
is critical to encouraging people to voice any concerns.
We also launched our mandatory ‘Leading for Health & Safety at Work’
e-learning module. This module sets out the specific impact we expect
our leaders to have, such as:
–
Set high and visible standards for health and safety, and continuously
challenge others to do the same;
–
Build and sustain an authentic, preventative, and caring safety culture;
–
Empower and encourage their teams to take ownership; and
–
Be well informed about safety risks and controls and ensure open
communication with their teams around best practice.
The training module provides personal experiences, views, and advice
from some of our global senior leaders. By 31 March 2023, 3,910
assigned leaders had completed the module.
Health and safety governance
Health and safety is managed through a global health and safety
framework, which includes the monitoring and assessing of risks, setting
targets, reviewing progress and reporting performance. Our global safety
framework is based on international standards for occupational health
and safety. It is aligned to internationally recognised best practice, and
always meets or exceeds local requirements. In addition, some of our
local markets have chosen to undergo independent external certification
to ISO 45001, the international standard for occupational health and
safety; 57% of our group’s workforce is externally certified to ISO 45001.
All incidents relating to key risks and breaches of the Vodafone Absolute
Rules are reported and investigated in adherence with timescales
contained within our Incident Reporting Standard. We ensure that
incidents are investigated in accordance with their severity, and
appropriate remedial actions and improvements are identified and
implemented. We strongly believe in the importance of prevention;
however, we also believe that every incident should be treated as an
opportunity for learning and improvement.
Health and safety is a global policy and is included within our global
risk and compliance governance programme. This year we resumed
in-country audits, although remote validation continued as a
complementary process. Our audits focused on fixed networks in
Germany, Czech Republic, Romania and Albania in response to our key
risks of working at height and working with electricity and fibre operations.
Our audits in our _VOIS shared service centres in Egypt focused on
occupational road risk. Visits were also made to South Africa, Turkey,
Mozambique, Tanzania, and Ethiopia. These were focused on
engagement and communication and included a combination of team
meetings, site visits with contractors and suppliers, meetings with local
community stakeholders and, where applicable, verification checks
following any serious incidents.
Employee engagement and consultation in our arrangements for health
and safety are the foundations of our approach and all markets have
Health and Safety consultative committees that meet on a regular basis.
They include elected employee safety representatives, as well as
representatives from unions and works councils, as appropriate to
each market.
Training
We continue to include a health and safety module as part of our
mandatory ‘Doing What’s Right’ training. The training module includes
a video from our Chief Human Resources Officer demonstrating
senior-level support for the Vodafone Absolute Rules. Every employee
must complete the training within six weeks of joining and then follow
our annual learning intervention cycle. During FY23, 93% of assigned
Vodafone employees completed the health and safety module.
Contractors are required to complete separate training relevant to their
role and position.
Each local market is also 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 the Executive Committee,
and bi-annually to the Board:
–
Number of fatalities;
–
Number of employee lost time incidents (‘LTI’); and
–
Number of top safety risks, including breaches of our Absolute Rules.
Responsible business (continued)
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Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
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All fatalities that may be connected with our activities in any way,
including those affecting employees, suppliers and members of the
public are formally reported to the Group’s Executive Committee and to
the Board by the Head of Health, Safety and Wellbeing (‘HSW’). Each
incident is investigated by an investigation team to determine the facts
and any actions required to prevent recurrence. The investigation’s
findings are reviewed by the Chief Human Resources Officer at a formal
review meeting to ensure the thoroughness of the investigation,
suitability of corrective and preventive actions and to determine whether
the fatal accident was within Vodafone’s control or not. All fatalities
determined to be within Vodafone’s control are considered ‘recordable’
and are publicly reported.
Our aim is to ensure no one gets hurt. Any injury is one too many and any
loss of life related to our operations is unacceptable. It is therefore with
great regret that we record a fatality additional to the one reported in the
prior financial year (FY22), that has since been determined to be within
Vodafone’s control. In Vodacom South Africa, a supplier’s employee fell
from height whilst working on a telecoms tower. In response to the
incident the following actions have been taken:
–
Held forums with employees and suppliers to share experiences and
improve health and safety awareness;
–
Updated our policies to ensure only specialised suppliers are engaged
to provide specific tasks, and those suppliers have received relevant
training and use appropriate equipment; and
–
Updated our working at height training materials and procedures and
shared these throughout Vodacom South Africa and its suppliers.
There have been no recorded fatalities during FY23.
We track and investigate incidents relating to our top health and safety
risks and breaches of the Vodafone Absolute Rules. During the year,
2,059 breaches of Vodafone Absolute Rules and 484 incidents relating
to our key 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. By reporting,
investigating and taking preventive action as a result of these events we
believe we can continuously reduce the risk of future injury.
Lost-time incident (‘LTI’) is the term we use when an employee is injured
while carrying out a work-related task and is consequently unable to
perform their regular duties for a complete shift or period of time after the
incident. During the year, 19 employee LTIs were reported; three of these
occurred whilst travelling for work, one occurred in a Vodafone office,
three occurred in retail, four occurred in a public space, and eight occurred
on work sites. In total these incidents account for 237 lost workdays.
Key performance indicators
2023
2022
Work-related injuries or ill health
(excluding fatalities)
Employees and contractors
19
12
Suppliers’ employees and contractors
21
30
Lost-time incidents (‘LTI’)
Number of lost-time employee and
contractor incidents
1
19
12
Lost-time incident rate per 1,000 employees
and contractors
0.20
0.11
Total recordable fatalities
Employees and contractors
0
0
Suppliers’ employees/contractors
0
2
2
Members of the public
0
2
Notes:
1.
Lost-time incident means the loss of one or more work day as a result of injury.
2.
Includes one additional incident reported to be within Vodafone’s control.
Mobiles, masts and health
The health and safety of our customers and the wider public has always
been, and continues to be, a priority for us. Our masts fully comply
with 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’).
There has been scientific research on mobile frequencies for decades,
including those used by 5G. If exposure is within national regulations,
the scientific consensus is that there is no adverse impact on health.
We continually monitor and evaluate our mobile networks to make sure
we meet all regulations. In addition, all the products we sell are rigorously
evaluated to ensure they comply with international safety guidelines.
As well as complying with national regulations, markets that have rolled
out 5G apply the ‘Smart PowerLock’ (‘SPL’) feature. This innovative
technology, designed for use with the adaptive antennas used for 5G,
continuously monitors the transmitted radio frequency power of the
antenna to ensure it 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. This is now one of many software features that are
routinely activated when a new 5G site is commissioned. SPL also
includes statistics, that can be used to build evidence of compliance over
several weeks for a given site if needed by regulators. National regulators
have accepted the feature as effective.
Science monitoring
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.
In February 2022, an EU-funded scientific study into the effect of mobile
phone use by children and young people was published. The case study
was conducted between 2010 and 2015 across 14 countries with more
than 2,000 participants aged 10-24 years. The study found no evidence
of a causal association between wireless phone use and brain tumours.
We fund research into mobile devices, base stations, and health through
funding bodies such as national governments to ensure that the research
remains independent of industry influence, including our own. We also
respond to requests from bodies conducting research by providing
technical advice and information on the use of mobile devices. This helps
to ensure scientists have access to the best-quality information available.
Harmonisation with international science-based guidelines
Following the opening in 2020 of updated international guidelines on
electromagnetic frequencies, we have supported and promoted the
transition from the previous guidelines from 1998 to this more up-to-date
and appropriate set of guidelines. In EU Member States the EMF regulations
are set nationally. With the exception of Italy and Greece, which have
updated their national regulations, our other European markets continue
to align with the EU Council Recommendation of 1999. We expect that
this will be updated to reflect the ICNIRP 2020 guidelines.
Click to read more about the ICNIRP 2020 guidelines:
icnirp.org
Operating model
We have robust governance mechanisms in place and conduct regular
compliance assessments to ensure that our products meet the standards
set by the Group policy and national regulations. The Group EMF leadership
team met four times during the year and submitted written reports to the
Executive Committee and the Board.
We conduct network measurements and calculations of EMF exposure
from the network masts and review the test reports we receive on EMF
testing on devices.
During the year, end-to-end compliance reviews in two of our markets
verified robust and optimised EMF risk management, and examples
of best practice are shared across our footprint. All Vodafone markets
participated in a compliance self-assessment programme with assurance
provided through our compliance team.
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Vodafone Group Plc
Annual Report 2023
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Human rights
We want to make sure that we have a positive impact on people and
society, which includes respecting human rights in all our operations.
We are a long-standing member of the UN Global Compact (‘UNGC’) and
follow the United Nations Guiding Principles on Business and Human
Rights (‘UNGP’), which guide our approach.
Click to read more about our human rights approach:
vodafone.com/human-rights
Our Human Rights Policy Statement details how we do this and is backed
up by our internal Human Rights Policy which sets out how our people
must ensure we respect human rights, including steps to take through
our other aligned policies, such as those covering artificial intelligence,
responsible minerals, health, safety and wellbeing, human resources,
privacy management, marketing, business resilience and law
enforcement assistance.
Click to read our Human Rights Policy Statement:
vodafone.com/human-rights-policy-statement
Human rights risks
As a global telecommunications operator, we connect people.
This means that our most significant human rights risks relate to our
customers’ rights to privacy (concerning their data that we safeguard)
and freedom of expression (in terms of their access to information,
through the connections we provide). Local laws and regulations can
mandate that telecommunications operators must provide assistance
to governments, and we must comply with lawful government requests
as part of our operating licences. This might include the disclosure of
customer information or limiting access to digital networks and services.
However, our internal law enforcement assistance policy guides us in how
to do this in a rights-respecting way and our transparency reporting
provides data on certain requests we receive.
Click to read more about how we
handle law enforcement demands:
vodafone.com/handling-law-enforcement-demands
The risks to people working in our supply chain are another area of focus
for us. We manage these risks through our supply chain management
programme which assesses our suppliers for indicators such as forced
labour and other risks to human rights, such as health and safety. We
also believe in supporting the responsible sourcing of minerals globally.
Although we do not source minerals ourselves, we follow the best
practice of the OECD Due Diligence Guidance to understand whether
our manufactured products include minerals which have been sourced
from smelters taking a responsible approach to sourcing.
Click to read more about our
Conflict Minerals Reports and Statement:
vodafone.com/responsibleminerals
Our human rights programme also addresses a broader range of
human rights risks, such as those relating to the design and deployment
of artificial intelligence, children’s rights, data ethics and risks we may
become connected with through our broader value chain, such as
enterprise customers or partner markets.
Responsible business (continued)
Click or scan to watch a video summarising
our human rights approach:
investors.vodafone.com/videos
Our approach
We conduct due diligence to help make sure that we respect human
rights. Due diligence comes in various forms and at different moments in
our operations: it may be an independent human rights risk assessment
for a new market entry, a thematic impact assessment such as the child
rights assessment completed in FY21, or it may be the ongoing
assessments we do when considering new partner markets.
The nature of our business also means that we need to keep ahead on
issues concerning data ethics. For example, this year our Group Data
Governance Committee approved a new artificial intelligence policy
to underpin our Artificial Intelligence Framework.
Click to read more about our Artificial Intelligence
Framework:
vodafone.com/ai-framework
We follow up assessments with mitigating actions, such as contractual
commitments to respect human rights in our partner market agreements,
and in our enterprise customer contracts. For example, Safaricom Ethiopia
followed up the human rights impact assessment conducted in February
2021 with an updated independent assessment and implementation
programme in FY23. In previous years, we reported that we had
conducted a child rights assessment, and this year we have continued
to implement its recommendations. This year, we updated our child
protection policy by integrating it and including other child rights
considerations into our internal human rights policy.
We continue to review our processes. For example, this year we have
reviewed and updated our Code of Ethical Purchasing and we have
commissioned an independent review of our human rights risks,
governance and controls. Next year we will report on the outcome
of the review which we expect to conclude later in 2023.
Anyone who works for us can use Speak Up to raise concerns about
human rights issues. This year we reviewed Speak Up against the UNGP
expectations for non-state grievance mechanisms. As a result, we have
sought to improve the user experience for reporting any human
rights concerns.
Governance
The Chief External and Corporate Affairs Officer oversees our human
rights programme and is a member of the Executive Committee.
The 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. This year we have
set up a community of human rights champions in each of our
operating companies.
We report regularly on our progress to the Purpose and Reputation
Steering Committee, which assists the Executive Committee in fulfilling
duties with regards to our purpose, reputation management and policy.
This year our ESG Committee reviewed our approach to managing risks
to freedom of expression and privacy in the context of government
assistance requests.
Read more about our ESG Committee
on pages 83 to 84
Collaboration
We play our part in developing the global understanding of what
businesses should do to respect human rights. We are a member of
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 technology sector. We were a member
of the Global Network Initiative ‘GNI’ from 2017. Membership includes a
requirement to undergo an independent assessment to assess progress
in implementing the GNI Principles. We successfully completed our first
GNI independent assessment in 2019, and in 2022 we completed our
second independent assessment. The multi-stakeholder GNI Board
considered the independent assessment in detail and determined that
Vodafone is making good faith efforts to implement the GNI Principles
on freedom of expression and privacy with improvement over time.
Following the completion of our 2022 assessment, we chose to leave
GNI, in order to focus our attention on our broader human rights risks and
governance and controls at Group level. Simultaneously, Vodacom has
applied for observer status at GNI to take increased ownership of human
rights risk management across our Africa footprint.
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Annual Report 2023
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Responsible supply chain
We spend approximately €25 billion a year with 9,000 direct suppliers
around the world to meet our business’ and customers’ needs across
network infrastructure, IT and services related to fixed lines, mobile masts
and data centres that run our networks.
The majority of our external spend is managed by our Vodafone
Procurement Company (‘VPC’), based in Luxembourg, and our shared
services (‘_VOIS’), based in India. Another large area of spend is on the
products we sell to our customers, including mobile phones, tablets, SIM
cards, broadband routers, TV set-top boxes and IoT devices. This centralised
approach helps to ensure that we maintain a consistent approach to
supplier management across Vodafone, from onboarding and vetting
a supplier, to raising orders and paying for delivered goods and services.
Supply chain risks
The main risks in our supply chain relate to three key areas; health and
safety matters related to non-compliant fire safety measures, excessive
working hours and environmental matters related to non-compliant
chemical storage and lack of carbon reduction programmes. This year,
these three risks made up 73% of all non-compliance issues 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.
Industry collaboration
We work with other operators collaboratively on supply chain risks
within the Joint Alliance for CSR (‘JAC’) formerly known as the Joint Audit
Cooperation. We currently chair the JAC working group established to
improve ethical, labour and environmental standards in the technology
supply chain. We are engaged in workstreams to make progress on key
risks in our supply chain, namely human rights, reducing Scope 3
emissions and driving a circular economy to reduce e-waste.
JAC reports on progress with respect to third-party factory audits
of common suppliers carried out on behalf of all its members in its
own reporting.
Click to read more about the Joint Alliance for CSR:
jac-initiative.com
Policy
This year we updated our Code of Ethical Purchasing to reinforce the
specific requirements that every supplier that works for Vodafone must
comply with. 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 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. Commitments made by our
suppliers are assessed against our own purpose strategy with respect
to diversity & inclusion (5%), the environment (5%) and health & safety
(10%) in categories where there is a safety risk. We have included purpose
criteria in all FY23 tenders.
We continue to assess risk during our on boarding process by using a
Supplier Assurance Risk Management (‘SARM’) system to assess key risks
associated with new suppliers. The system uses logic to identify suppliers
with risks that are material to our business, related to money laundering,
bribery, conflict minerals, conflict of interest, corporate security, cyber
security, environment, health & safety, payment card industry, privacy,
product safety, responsible sourcing and sanctions & trade control.
Any identified risks require an independent policy expert to approve
suppliers before they are on-boarded, and if necessary, to establish
a mitigation plan. Our requirements are backed up by risk assessments,
audits and operational improvement processes, which are included
in suppliers’ contractual commitments.
This year, we launched an improved supplier qualification process which
uses a risk-based assessment to review compliance for any new suppliers
across 16 countries. The rollout to remaining operations is subject to
consultation with the respective workers’ councils.
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 to read our Modern Slavery Statement:
vodafone.com/modern-slavery-statement
Governance
The 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 VPC is responsible for the
implementation of our Code of Ethical Purchasing. Progress is reported
regularly to the Vodafone Procurement Company Board. Procurement is
a highly centralised function within the business, with the majority of our
external spend 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 the countries where we operate.
In addition to direct and indirect taxation, our financial contributions to
governments also include other areas such as radio spectrum fees and
spectrum auction proceeds.
Click or scan to watch our Group Head of Tax
summarise our approach to taxation:
investors.vodafone.com/videos
Tax transparency
Our most recent tax report sets out our total contribution to public
finances on a cash-paid basis for both 2021 and 2022. In 2022, we
contributed, directly and indirectly, nearly €9.9 billion to public finances
worldwide, compared with almost €9.6 billion in 2021. The year-on-year
increase was due to higher spectrum payments, principally in Spain
during 2022. In 2022, we paid over €2.2 billion in direct taxes, including
more than €1.0 billion in corporate income taxes, nearly €1.7 billion via
non-taxation based revenue mechanisms, such as payments for the right
to use spectrum, and collected nearly €6.0 billion of indirect taxes for
governments around the world.
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We regularly monitor our anti-bribery programme to ensure it is
implemented through conducting risk assessment, policy compliance
reviews and internal audits.
To support our approach, Vodafone is also a member of Transparency
International UK’s Business Integrity Forum.
Governance and risk assessment
Our Group Chief Executive and Executive Committee oversee our efforts
to prevent bribery. They are supported by local market Chief Executive
Officers, 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.
The risks we face evolve constantly but broadly fall into the areas
summarised in the table below, which outlines the principal risk
categories and the mitigation measures adopted.
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
features e-learning training, including a specific anti-bribery module.
Of those employees (including management) assigned training during
the period, 93% had completed the training as at 31 March 2023.
For higher-risk employees, additional tailored training programmes are
used to cover relevant scenarios for those employees. We also conduct
internal communication campaigns using a range of materials to
highlight some of the key messages around zero tolerance of bribery
and corruption.
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), as well as how our disclosures compare to the B Team tax
principles and the requirements of the Global Reporting Initiative.
Our tax report for 2023 will be published by the end of the year, following
the submission of our tax returns and payment of all applicable taxes.
Click to read more about our tax and economic contribution
to public finances:
vodafone.com/tax
Anti-bribery, corruption and fraud
At Vodafone, we support and foster a culture of zero tolerance towards
bribery, corruption or fraud in all our activities.
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.
Click to read our Code of Conduct:
vodafone.com/code-of-conduct
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.
Responsible business (continued)
Risk
Response
Operating in
high-risk markets
We undertake biennial risk assessments in each of our local operating companies and at Group, so we can understand and
limit our exposure to risk.
Business acquisition
and integration
Anti-bribery pre and post acquisition due diligence are 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
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.
Building and
upgrading networks
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.
Working with
third parties
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.
Winning and
retaining business
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.
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Other information
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. This year we completed our end-to-end
testing with respect to our businesses in Spain and Mozambique. Further
to this, self-assessments and quality reviews were completed in Albania,
Italy, Portugal, DRC, Germany, Ireland and South Africa. We tested key
high-risk areas of the policy to ensure the markets are implementing the
controls effectively. The key outcomes from the assurance activities and
actions for the programme for the coming year are documented in
the annual assurance paper, which is issued to the Group Risk and
Compliance Committee.
The results demonstrate good implementation of the Anti-bribery
programme. The markets demonstrated that they have strong robust
controls in place to manage bribery risks. A recurring focus area across a
few markets is third-party risk management; necessary action plans have
been put in place to improve this area.
Fraud
Fraud is a growing threat globally, impacting customers, reputation, and
financial performance. The Executive Committee and the Audit and Risk
Committee have recognised this through significant investment and
focus on developing a future-ready fraud management capability
to mitigate the risk of fraud to continue to provide a safe and secure
environment for our customers.
We successfully implemented a global organisation and operating model,
including a fraud centre of excellence and shared services infrastructure,
to manage fraud across local markets, share intelligence, and leverage
best practices, to ensure quick and effective responses to any incidences
of fraud that may occur and achieve real-time and proactive fraud
risk management.
We have invested in advanced fraud detection technologies that leverage
artificial intelligence capabilities, which have delivered proven benefits
across Vodafone by helping us detect and manage fraud’s impact
more effectively.
External ESG assurance
KPMG LLP has provided independent limited assurance over selected data within our ESG Addendum and this report, using the assurance standard
ISAE (UK) 3000 and ISAE (UK) 3410 for selected greenhouse gas data. KPMG has issued an unqualified opinion over the selected data and their full
assurance statement, along with the reporting criteria, is available on our website at investors.vodafone.com/esgaddendum.
The data subject to KPMG LLP’s assurance is detailed below;
Pillar
Metric
Unit
2023
Page
Digital Society
Cumulative V-Hub unique users
million
5.2
29
Inclusion for All
Percentage of women in management and senior leadership roles
%
34
35
Number of financial inclusion customers
million
60.7
32
4G population coverage (outdoor 1Mbps) – Group
%
85
31
Planet
Total Scope 1 emissions
million tonnes CO
2
e
0.28
35
Total Scope 2 emissions (location-based)
million tonnes CO
2
e
2.08
35
Total Scope 2 emissions (market-based)
million tonnes CO
2
e
0.69
35
Total GHG emissions: Scope 1 and Scope 2 (location-based)
million tonnes CO
2
e
2.37
35
Total GHG emissions: Scope 1 and Scope 2 (market-based)
million tonnes CO
2
e
0.97
35
Grid renewable electricity purchased (% of purchased electricity)
%
81
35
Scope 3 emissions (air travel)
million tonnes CO
2
e
0.01
–
Total emissions avoided as a consequence of green digital solutions
million tonnes CO
2
e
24.9
37
With the exception of the metrics outlined in the Assurance sheet above, the information contained within the purpose and responsible business
sections (pages 26 to 49) has not been independently verified or assured. All the information included within these pages has been taken from
sources which we deem reliable. While all reasonable care has been taken to ensure the accuracy of the data, Vodafone has not arranged for
independent verification of the data with respect to its accuracy or completeness. Our ESG Addendum includes further information with regard
to reporting methodologies for certain metrics.
ESG cautionary statement
In preparing the ESG-related information contained in this document, we have made a number of key judgements, estimations and assumptions.
The processes, methodologies and issues involved in preparing this information are complex. The ESG data, models and methodologies used are often
relatively new, are rapidly evolving and are not necessarily of the same standard as those available in the context of financial and other information,
nor are they subject to the same or equivalent disclosure standards, historical reference points, benchmarks or globally accepted accounting principles.
It is not possible to rely on historical data as a strong indicator of future trajectories, in the case of climate change and its evolution. Outputs of models,
processed data and methodologies may be affected by underlying data quality, which can be hard to assess and we expect industry guidance, standards,
market practice and regulations in this field to continue to evolve. There are also challenges faced in relation to the ability to access certain data on
a timely basis and the lack of consistency and comparability between data that is available. This means the ESG-related forward-looking statements,
information and targets discussed in this document carry an additional degree of inherent risk and uncertainty.
49
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Other information
Responsible business (continued)
Reporting requirement
Vodafone policies and approach
Section within Annual Report
Page(s)
Environmental matters
Planet performance
Planet
35 to 38
Climate change risk
Risk management
51 to 59
Employees
Code of Conduct
Responsible business and
anti-bribery, corruption and fraud
40 and
48 to 49
Occupational health and safety
Health and safety
44 to 45
Diversity and inclusion
Workplace equality
33 to 34
Social and community matters
Driving positive societal
transformation performance
Inclusion for All
30 to 34
Digital Society
29 to 30
Stakeholder engagement
Stakeholder engagement
10 to 12
Mobiles, masts and health
Mobiles, masts and health
45
Human rights
Human rights approach
Human rights
46
Code of Ethical Purchasing
Responsible supply chain
47
Modern Slavery Statement
Responsible supply chain
47
Anti-bribery and corruption
Code of Conduct
Responsible business
40 to 49
Anti-bribery policy
Anti-bribery, corruption and fraud
48
Speak Up process
Responsible business
40 to 49
Policy embedding, due diligence and outcomes
Purpose, sustainability and
responsible business
26 to 49
Risk management
51 to 59
Description of principal risks and impact
of business activity
Risk management
51 to 59
Description of business model and strategy
Business model
Chief Executive’s statement
and strategic roadmap
2
7
Non-financial key performance indicators
Key performance indicators
Purpose, sustainability and
responsible business
4 to 5
26 to 49
UK Streamlined Energy and Carbon Reporting (‘SECR’)
In accordance with SECR requirements, this provides a summary of GHG emissions and energy data
1
for Vodafone UK, in comparison with
global performance.
Year ended 31 March 2023
Year ended 31 March 2022
Group
(excluding
Vodafone UK)
Vodafone UK
Vodafone UK as
a proportion of
Group data
Group
(excluding
Vodafone UK)
Vodafone UK
Vodafone UK as
a proportion of
Group data
Scope 1 GHG emissions (million tonnes CO
2
e)
0.27
0.01
4%
0.27
0.01
4%
Scope 2 market-based GHG emissions (million tonnes CO
2
e)
2
0.69
0.00
0%
0.79
0.01
1%
Scope 2 location-based GHG emissions (million tonnes CO
2
e)
1.94
0.14
7%
1.86
0.13
7%
GHG emissions per EUR million of revenue (tonnes of CO
2
e)
19.76
1.47
7%
20.66
3.04
13%
Total energy consumption (GWh)
3
5,618
656
10%
5,449
676
13%
Notes:
1.
Data is 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 market-based emissions are reported using the market-based methodology as in effect as at the date of this report. For full methodology see our ESG Addendum 2023.
2.
Scope 2 emissions for FY22 have been restated following the correction or inclusion of data points in line with our reporting methodology. In addition, emissions for the UK have been restated
to apply the correct emissions factor.
3.
More information on energy efficiency initiatives implemented during the year can be found on page 36 and in our disclosures prepared in accordance with the SASB Standards.
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 considers other international reporting frameworks, including the Global Reporting Initiative,
the SASB Standards, CDP and the GHG Reporting Protocol.
Click to download our ESG Addendum:
investors.vodafone.com/esgaddendum
Click to read our SASB disclosures:
investors.vodafone.com/sasb
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Financials
Other information
Risk management
Managing uncertainty
in our business
Overview of risk governance structure
Board/Audit and Risk Committee
–
Provide oversight for Vodafone Group
–
Discuss, challenge and make a robust assessment of principal and emerging risks
–
Ensure appropriate risk culture is embedded throughout the organisation
Local oversight committees
Provide oversight for the local risk management programme
Local market CEOs
Set local objectives, identify priority risks and align tolerance levels with the
Vodafone Group guidance
Local risk owners
Senior managers in local management teams are responsible for local risks and the
local risk programme to manage, measure, monitor and report on the risks
Risk and Compliance
Committee
–
Reviews principal,
watchlist 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
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
Assurance
Assurance functions
Review and provide
assurance over selected
controls for the Group
and local markets
Internal Audit
Supports the Audit
and Risk Committee
in reviewing the
effectiveness of the
global risk management
framework and
management of
individual risks
Vodafone Group
Local markets or
Group entities
We face a range of risks and uncertainties that could
impact the delivery of our strategic initiatives.
Therefore, our culture and day-to-day management
of risk is an integral part of the way we do business.
Governance and identifying our risks
On behalf of the Board, the Audit and Risk Committee provides oversight
for the principal, emerging and watchlist risks, as well as direction on
risks that the Company is willing to take to achieve its strategic goals.
The Board approves Vodafone’s strategy and has overall accountability
that the risk management approach supports this strategy. The aim of the
risk function is to make risk meaningful and relevant in the context of the
delivery of our strategy. The risk function acts as an enabler for informed
decision-making across our markets.
We adopt an end-to-end approach to risk management. The process
starts with local markets and Group entities identifying and evaluating
risks which could affect their local strategy. These risks are then assessed
and challenged centrally by the Group risk team. Next, a comprehensive
list of these risks is compiled and presented to a selected group of senior
leaders and executives within the Group, along with the findings from our
external risk scanning exercise. With a Group-wide perspective in mind,
these executives analyse and identify the most significant risks that
require further exploration. The proposed principal risks (pages 52 to 55),
emerging risks and risk watchlist (page 56) are agreed by our Executive
Committee (‘ExCo’) before being submitted to the Audit and Risk
Committee and the Board for scrutiny and approval.
Managing our risks
Establishing the context and having a clear understanding of the
environment in which we operate is important. Therefore, we assign
each of our risks to a specific category (strategic, operational or financial)
and identify whether the source of the threat is internal or external.
This approach helps us to better understand how we should treat the risk
most effectively and to provide the right level of oversight and assurance.
Executive risk owners are accountable for confirming adequate controls
are in place, and that the necessary treatment plans are used to bring
the risk within an acceptable tolerance level. We continue to monitor
the status of our risk treatment plans across the year, and we perform
in-depth reviews of our risks which are presented to the relevant oversight
committees.
Read more about the Audit and Risk Committee
on pages 77 to 82
We also develop severe but plausible scenarios for each principal risk.
These provide additional insights into possible threats and improve
the treatment strategy. Scenarios are also used for the purpose
of assessing our viability.
Read more about our long-term viability statement
on page 57
The diagram below shows a simplified, high-level governance structure
for risk management.
Local risk managers
Are the contact point for each market/entity on risk, and facilitate all activities as defined by
the global risk management framework
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Other information
Principal risks
Adverse changes in
macroeconomic conditions
Financial
Risk related to our financial status, standing and continued growth
A
Adverse changes in macroeconomic conditions
Strategic
Risks affecting the execution of our strategy
B
Disintermediation
C
Adverse political and policy environment
D
Strategic transformation
E
Adverse market competition
Operational
Risks impacting our operations
F
Cyber threat
G
Supply chain disruption
H
Technology resilience and future readiness
I
Data management and privacy
J
Organisational simplification
Risks are ordered by category and not risk ranking
Year-on-year risk ranking movement
Increasing
Decreasing
No change
New/change in scope
Risk categorisation and interdependencies
By analysing the correlation between risks we can identify those that have the potential to impact
or increase other risks, to ensure they are weighted appropriately.
This exercise also informs our scenario analysis, particularly the combined scenario used in the
long-term viability statement.
Read more about our long-term viability statement
on page 57
Key:
External
Internal
Bidirectional
Unidirectional
Risk management (continued)
Description
Adverse changes to economic conditions
could result in reduced customer spending,
higher interest rates, adverse inflation,
currency devaluations or movements in
foreign exchange rates. Adverse conditions
could also lead to limited debt refinancing
options and/or an increase in costs.
Risk ranking
movement
Risk owner
Group Chief Financial Officer
Scenario
A severe contraction in economic activity leads
to lower cash flow generation for the Group
and disruption in global financial markets,
which impacts our ability to refinance debt
obligations as they fall due in a cost
effective manner.
Emerging factors
Because this is an externally driven risk, the
threat environment is continually changing.
External factors such as the ongoing war in
Ukraine and uncertainty in the banking sector
could have future impacts on economic
activity across our markets. The financial
markets are experiencing high levels of
volatility, and both sovereign debt levels
and inflation have reached record levels.
These factors could lead to a significant
change in the availability and cost of capital.
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 reduces refinancing
requirements, and all of our bond debt
is effectively held at fixed interest rates.
O
p
e
r
a
t
i
o
n
a
l
S
t
r
a
t
e
g
i
c
F
i
n
a
n
c
i
a
l
E
C
B
A
D
J
H
I
F
G
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Year-on-year risk ranking movement
Increasing
Decreasing
No change
New/change in scope
Disintermediation
Cyber threat
Adverse political and policy
environment
Description
Failure to effectively respond 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
An external attack, insider threat or supplier
breach could cause service interruption or
confidential data breaches.
Description
An adverse political and policy environment
could impact our strategy and result in
increased costs, create competitive
disadvantage or have negative impact on our
return on capital employed.
Scenario
Further developments in mobile handset
technologies, such as eSIM, could lead to
an increase in higher customer churn, higher
costs, and lower revenue.
Emerging factors
In our Consumer segment, the widespread
introduction of alternative technology
solutions driving disintermediation could put
pressure on our core business, while content
producers seeking to engage directly with
consumers could increase pressure on our
TV propositions. In the Business segment,
technology players could move deeper into
the telecommunications value chain and look
to control end-to-end service orchestration.
Alternative connectivity networks with
‘free-to-use’ business models may begin to
appeal to customers across both Consumer
and Business segments.
Mitigation activities
We are focused on strenghtening relationships
with our customers through innovative and
transformative products and services that go
beyond our leading connectivity propositions.
We aim to be less complex as an organisation,
by simplifying our product portfolio, improving
our operating model, and progressing with our
digital transformation.
Scenario
We have modelled scenarios including attacks
on core infrastructure, a bulk data breach
and loss of major customer-facing systems.
An example includes threat actors using
destructive malware to disable our ability
to service new and existing customers.
Emerging factors
Cyber risk is constantly evolving in line with
technological and geopolitical developments.
We anticipate threats will continue from
existing sources, and also evolve in areas
such as 5G, IoT, vendor software integrity,
quantum computing and the use of AI and
machine learning.
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 the Group.
We implement controls that prevent the
majority of attacks, in addition to controls to
detect events and respond quickly to
reduce harm. We perform regular cyber crisis
simulations with senior management in our
markets and Group functions using a tailored
set of scenarios.
Click to read more about our
approach to cyber security
in our cyber security factsheet:
investors.vodafone.com/cyber
Scenario
Exposure to additional liabilities and
reputational damage, triggered by policy
maker and/or regulatory authority interventions
were to adversely change in the markets in
which we operate.
Emerging factors
The war in Ukraine has generated ripple effects
across the political and macroeconomic
environment, in particular in Europe but also
in some of our other markets. This has resulted
in energy price fluctuations, accentuated
inflation and worsened a cost of living crisis,
requiring us to adapt accordingly. Goverments’
responses to these challenges may also
impact on our business. Also, geopolitical
tensions are increasing which amplifies the
risk of protectionist responses, or other forms
of state interventions and security-related
requirements that could affect our operations,
supply chains and conditions for competition
in various ways.
Mitigation activities
We actively scan the external horizon, gather
intelligence to inform decision-making and
address issues openly with policymakers,
regulatory authorities, customers and
impacted stakeholders to find mutually
acceptable ways forward. As a last resort,
we uphold our rights through legal means.
Risk ranking
movement
Risk owner
Chief Commercial Officer / CEO
Vodafone Business
Risk ranking
movement
Risk owner
Group Chief Technology Officer
Risk ranking
movement
Risk owner
Chief External and Corporate
Affairs Officer
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Other information
Risk management (continued)
Strategic transformation
Technology resilience and
future readiness
Supply chain disruption
Description
Network, system, or platform outages, or
ineffective execution of the technology
strategy could lead to dissatisfied customers
and/or impact revenue.
Description
Failure to effectively execute our
transformational activities, including shaping
our portfolio and delivering on product
innovation, could result in loss of business
value and/or additional cost.
Description
Disruption in our supply chain could mean that
we are unable to execute our strategic plans,
resulting in increased cost, reduced choice and
lower network quality.
Risk ranking
movement
Risk owner
Group Chief Technology
Officer / Group Chief Network
Officer
Risk ranking
movement
Risk owner
Group Chief Executive /
Chief Commercial Officer
Risk ranking
movement
Risk owner
Chief Financial Officer
Scenario
We are not an active participant in in-market
consolidation in key markets and do not
benefit from the resulting synergies, or we
are adversely impacted by market remedies
imposed by regulators following in-market
consolidation.
Emerging factors
Macroeconomic conditions, such as the
current inflationary environment, may impact
our transformational efforts. In addition, no
change in the regulators’ approach to
in-market consolidation may limit opportunities
for value accretive in-market consolidation.
Mitigation activities
In relation to shaping our portfolio, we actively
monitor and pursue opportunities to optimise
our portfolio to deliver value for our
shareholders and improve returns. We actively
assess opportunities to i) generate and realise
value from our assets; ii) deliver value accretive
in-market consolidation to deliver sustainable
market structures; and iii) streamline and
simplify our portfolio.
We are prioritising our efforts on three key
areas: customers, simplicity and growth.
To enable that, we have robust policies and
governance structures in place, such as our
Global Product Board, dedicated to steering
our transformation efforts and ensuring
we execute at scale. Lastly, we have been
transforming our approach to product
management to become more agile.
Scenario
Political decisions affecting our ability to use
equipment from specific vendors could cause
trade and supply chain disruptions.
Emerging factors
Changes in the political landscape outside
Vodafone’s control (for example, US and China
tensions or long-term impacts from the war in
Ukraine) may significantly impact the upgrade
and maintenance of our network, or impact
product availability. Disruption may lead to an
increase in our costs from areas such as raw
material prices, energy costs, and shipping
costs, while at the same time, triggering
shortages or extended lead times for critical
components. Additionally, economic instability
might impact our suppliers’ ability to deliver.
Mitigation activities
We are closely monitoring the evolution of
the geopolitical environment. This enables us
to respond to emerging challenges and to
comply with regulations, economic sanctions
and trade rulings. We also mitigate our
exposure through having multi-year contracts
with key suppliers, forecasting and forward
ordering our inventory requirements in
anticipation of extended lead-times as well
as continuing to execute our logistics
optimisation strategy for networks
infrastructure logistics.
Scenario
A major outage in a critical data centre or a
failed IT transformation activity could reduce
service to customers, affecting revenue
and reputation.
Emerging factors
Due to the time frame to implement large IT
transformation programmes, macroeconomic
conditions and customer expectations
might change for in-progress programmes.
Extreme weather events may increase the
likelihood or frequency of technology failure.
Additionally, deliberate attacks on national
critical infrastructure could increase during
war or volatile periods.
Mitigation activities
Recovery targets for critical assets are
established to limit the impact of service
outages. A global policy outlines the controls
required to ensure that technology services
are resilient and in alignment with these
targets. We prioritise IT transformation and
modernisation programmes to address specific
technology resilience risks, while also
supporting business process and portfolio
simplification. IT transformation programmes
carry risks of scope creep and cost overruns,
therefore we are increasingly using an
incremental delivery approach to be able to
realise benefits and adapt faster while applying
tight governance.
Year-on-year risk ranking movement
Increasing
Decreasing
No change
New/change in scope
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Other information
Data management and privacy
Adverse market competition
Organisational simplification
Description
Data breaches, misuse of data, data
manipulation, inappropriate data sharing, or
data unavailability could lead to fines,
reputational damage, loss of value, loss of
business opportunity, and failure to meet our
customers’ expectations.
Description
Significant activity by competition, such as
price wars, new market entrants or business
practices, may lead to reduced margins and
market share, and increased customer churn.
Description
Failure to effectively execute on our goal to
simplify our organisation and operating model
could result in reduced speed of decision-
making and delivery, reduced clarity on
accountabilities, and higher cost.
Risk ranking
movement
Risk owner
Group General Counsel and
Company Secretary / Group
Financial Controller
Risk ranking
movement
Risk owner
Chief Commercial Officer
Scenario
Failure to manage the privacy of our
stakeholders’ data effectively and compliantly
could result in regulatory fines, paying
significant reparation of damages to impacted
individuals, and also reputational damage that
could result in higher churn rates.
Emerging factors
Proliferation of Artificial Intelligence and
related regulator and legislative action across
our footprint requires a robust ethics and
compliance approach. Geopolitisation of data
will continue to negatively impact cross border
data transfers. New European data regulations,
such as the Artificial Intelligence Act or the
Cyber Act, will introduce significant new legal
requirements around data management of our
business activities.
Mitigation activities
We process data ethically, with integrity,
securely, and always consistently with
applicable laws and our values. We are known
for our robust approach to privacy and strike
the right balance between business objectives
and customer and regulatory expectations.
We manage this through various privacy and
data management specific policies and related
controls, measured by a global control
effectiveness target for each related control
and underpinned with mandatory
training programmes.
Read more about our approach
to data management and privacy
on pages 40 to 42
Scenario
Aggressive pricing, accelerated customer
losses to low value players on mobile and
fixed, and disruptive new market entrants in
key European markets could result in greater
customer churn and pricing pressures,
impacting our financial position. In addition,
high inflation levels and low confidence in
economic outlook could have further impact.
Emerging factors
While emerging factors often depend on
individual market structures and the
competitive landscape, external factors such
as the confidence in global economic systems,
record high inflation, the ongoing war in
Ukraine and slow post-pandemic economic
recovery in many markets may impact
household and individual connectivity spend.
Mitigation activities
We closely monitor the competitive
environment in all markets and react
accordingly to both consumer and business
needs. We continue to evolve our tariffs and
offers to provide a differentiated customer
experience through benefits, such as flexible
contract terms, refurbished devices and social
tariffs. In addition, in many markets we utilise
‘second’ brands to compete more effectively
and efficiently in the value segment.
Scenario
Unsuccessful attempts to drive organisational
simplicity could result in lower employee
engagement, higher talent attrition and failure
to become a more efficient organisation.
Emerging factors
The increase in changes within the internal
organisation and external macroeconomic
environment requires all employees to show
Spirit behaviours. As our customers’ needs and
expectations change, we might have to adapt
or change our simplification agenda to meet
and exceed their requirements.
Mitigation activities
We have a clear organisational strategy
of simplification, which underpins the delivery
of operational excellence and employee
engagement, measured in our Spirit Beat
survey annually. Robust communication plans
and employee engagement activities
throughout periods of change are further
mitigation activities to encourage talent
retention and engagement. We have specialist
teams managing our organisation
simplification agenda, working with leaders
to design and embed changes. We also have
governance structures, sponsored by the
Executive Committee in place to align on
potential changes while considering their
implications, risks and mitigating actions
across all relevant dimensions.
Risk ranking
movement
Risk owner
Group Human Resources
Officer
Year-on-year risk ranking movement
Increasing
Decreasing
No change
New/change in scope
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Other information
Risk management (continued)
Watchlist risks
Our watchlist risk process enables us to monitor material risks to
Vodafone Group which fall outside our principal risks. These include,
but are not limited to:
Legal compliance
The legal compliance risk is made up of multiple sub-risks (sanctions and
trade controls, competition law, anti-bribery, and anti-money laundering).
Controls are in place to monitor and manage these risks and ensure
compliance with the relevant regulations and legislation.
Read more about ‘Doing What’s Right’ training
on page 40
Electromagnetic field (‘EMF’)
The health and safety of our customers and the wider public has always
been, and continues to be, a priority for us. We refer to the current body
of scientific evidence so that the services and products we provide are
within prescribed safety limits and adhere to all relevant standards and
national laws.
Read more about EMF
on page 45
Climate change
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 business strategy and operations.
Read more about the Task Force on Climate-related
Financial Disclosures (‘TCFD’) on pages 58 to 59
Infrastructure competitiveness
We continue to provide the appropriate broadband technology in our
fixed and mobile networks. Our Technology 2025 Strategy incorporates
our fixed and mobile network evolution steps to enhance our coverage
and network performance.
Click to read more about our Technology 2025 Strategy
in an investor briefing:
investors.vodafone.com/vtbriefing
Tax
Tax risk covers our management of tax across the markets in which we
operate and how we respond to changes in tax law, which may have an
impact on the Group. We have controls in place to govern each of these
areas in line with our tax principles.
Read more about our tax risk and our approach to tax and our
economic contribution on pages 47 to 48
Emerging risks
We face a number of uncertainties where an emerging risk may
potentially impact us. In some cases, there may be insufficient information
to understand the likelihood, impact, or velocity of the risk. Also, we 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 inputs from
analysis of the external environment and internal sources. We evaluate
our risks across different time periods, allowing us to provide the
appropriate level of focus on these emerging risks.
We work with the relevant experts across the business to assess the
potential impacts and time horizon of these risks. Our emerging risks,
within predefined risk categories, are provided to the Executive
Committee and the Audit and Risk Committee for further scrutiny.
Strengthening our framework
We continue to enhance and embed the global risk management
framework with the objective of maturing our approach. This promotes
consistency across all the markets in which we operate.
Over the course of the year, we have:
–
Developed a
risk knowledge
and
skills matrix
for our risk
management community;
–
Enhanced
reporting
to our governance committees, which allows for
better decision-making;
–
Performed a Group-wide risk awareness campaign in an effort to
enhance our
risk culture
; and
–
Completed a cross-functional analysis of our
operational resilience
capabilities
to identify gaps and areas for enhancements.
Key changes to our principal risks:
–
The
Adverse changes in macroeconomic conditions
principal
risk has increased. We constantly monitor the economic
repercussions of the war in Ukraine and the effects of sovereign
debt build-up during the COVID-19 pandemic. These factors
contribute to an uncertain outlook.
–
The
Disintermediation
principal risk has increased as we consider
the impacts of alternative technologies being developed/deployed
in the near future.
–
The
Data management and privacy
risk was added to the
principal risks from watchlist risk, as we continue to face increasing
scrutiny from regulators, investors and customers.
–
As Vodafone continues to transform and simplify, we have included
Organisational simplification
as a new principal risk.
–
The
Strategic transformation
principal risk scope was redefined.
The new scope includes the portfolio transformation risk (a
previous principal risk), the management of joint ventures, as well
as product innovation. The digital transformation sub-risk was
removed from this risk.
–
The
Infrastructure competitiveness
risk was moved to our
watchlist risks (see section below).
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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
The Board has chosen a three-year period to assess Vodafone
Group’s viability. This is the 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. We continue to conduct financial stress testing
and sensitivity analysis, considering revenue at risk.
The viability assessment started with the available headroom as of 31
March 2023 and considered the plans and projections assembled 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 refinancing will remain available in all plausible
market conditions.
Finally, we estimated the impact of severe but plausible scenarios for
all our principal risks on the three-year plan. We also stress tested a
combined scenario taking into account the risk interdependencies as
defined in the diagram on page 52, where the following risks were
modelled as materialising in parallel over the three-year period:
Cyber threat:
A cyber-attack exploits vulnerabilities allowing
unauthorised access to our systems, or a ransomware attack, impacting
our ability to service customers for an extended period of time.
Data management and privacy:
A data breach, through malicious
activities (e.g. cyber-attack), leading to an investigation and a
subsequent GDPR fine.
Adverse changes in macroeconomic conditions:
Adverse changes in
the macroeconomic environment could result in restricted ability to
refinance, while prolonged high inflation rates, may lead to increased
interest rates.
Adverse political and policy measures:
Adverse political and policy
interventions could lead to increased cost of operations, and directly
or indirectly reduce profitability.
Long-term viability statement (‘LTVS’)
Assessment of long-term prospects
The Board undertakes a robust review and challenge of the strategy and
assumptions. 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 on pages 52 to 55).
As an input to the strategy discussion, the Board considers the principal
risks (including Cyber threat, Data management and privacy, Adverse
changes in macroeconomic conditions, and Adverse political and policy
measures) 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 (page 7), 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 to materialise.
Cash and cash equivalents available of €11.6 billion (page 170) as of
31 March 2023, 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
adjusted EBITDAaL 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 confirmed that
it has 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 2026.
Assessment of prospects
Assessment of viability
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
Headroom
is calculated using cash, cash equivalents and other available facilities, at year end
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
Sensitivity analysis
Principal risks
Combined scenario
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TCFD disclosure
Task Force on Climate-related Financial Disclosures
We recognise that climate change poses a
number of physical (i.e. extreme weather events)
and transition-related (i.e. related to moving to a
greener economy) risks and opportunities for our
business. As part of our commitment to operate
ethically and sustainably, we strive to understand
climate-related risks and opportunities and embed
responses to these into our business strategy and
operations. We have been aligning our internal
processes with the recommendations of the
Task Force on Climate-related Financial Disclosures
(‘TCFD’) and will continue to enhance our
policies, processes and reporting with respect
to the TCFD recommendations. Our progress
is summarised in this section.
TCFD recommendations
For the year ending 31 March 2023, we are consistent with 10 out of 11
TCFD recommendations. There is one recommendation with which we
are currently partially consistent:
Metrics and targets (physical risks):
We measure and have set
ambitious targets for reducing our carbon emissions. We also have
metrics in place to measure our energy use, which is one underlying
factor in our exposure to transition risk. As a measure of the climate
opportunity associated with developing and deploying products to help
society decarbonise, we also report annually on the carbon emissions
avoided through the use of green digital solutions. This year, we also
began measuring our physical risk exposure and management based
on the number of infrastructure assets that are at high or very high risk
of climate impacts such as extreme weather events. Whilst these are
important steps forward on our climate-related risk disclosure journey,
we recognise that we do not yet have metrics and targets in place to
measure our full suite of climate risks.
Our disclosure this year improves upon our position in 2022, when we
were only consistent with eight out of 11 recommendations. In this
year’s report, we are pleased to include further detail on the impact
of climate-related risks and opportunities on our business strategy and
financial planning, and a quantitative measure of the number of assets
at high or very high risk of physical climate change. As industry practices
evolve and our internal programme matures, we aim to address the
remaining gaps in our climate-related risk management and reporting
approach over the next three years.
TCFD reporting
As with last year’s disclosure, we have once again published our
comprehensive TCFD overview in a standalone report. This enables us
to provide more detailed information for investors and other interested
stakeholders in a more accessible format.
Click to read our TCFD report:
investors.vodafone.com/tcfd
Governance
Our strategy is approved by the Board which has reviewed Vodafone’s
purpose and Planet commitments to reduce our environmental impact,
such as reaching ‘net zero’ emissions across our full value chain (Scope 1,
2 and 3) by 2040. The Board’s Audit and Risk Committee has oversight
of our climate-related risks and opportunities. In addition, the ESG
Committee provides oversight of the broader ESG strategy.
Read more about the ESG Committee
on pages 83 to 84
The Chief External and Corporate Affairs Officer, a member of the
Executive Committee, is the sponsor for the Planet agenda as part of our
purpose-led strategy and has overall accountability for climate change
action within the Group. This includes providing updates to the Board on
the progress towards our climate-related goals. The Chief Network Officer
is responsible for the overall management of the physical risks to Vodafone
due to the nature of our business.
In addition, our Remuneration Policy incorporates our ESG priorities in
the long-term incentive plan. For the 2023 award, the ESG measure under
the long-term incentive plan includes an ambition on planet linked to
our aim of reaching net zero for our own operations under Scope 1
and 2 by 2030.
Read more about ESG measures in our long-term incentive
plan on pages 93 to 106
TCFD recommendations
We have considered our ‘comply or explain’ obligation under the UK’s
Financial Conduct Authority Listing Rules and have detailed in the
table below the 11 TCFD recommendations with which we are fully
or partially consistent.
Governance
Progress
a.
Describe the Board’s oversight of climate-related risks
and opportunities
C
b.
Describe management’s role in assessing and
managing climate-related risks and opportunities
C
Strategy
Progress
c.
Describe the climate-related risks and opportunities
the organisation has identified over the short, medium
and long term
C
d.
Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy and financial planning
C
e.
Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario
C
Risk Management
Progress
f.
Describe the organisation’s processes for identifying
and assessing climate-related risks
C
g.
Describe the organisation’s processes for managing
climate-related risks
C
h.
Describe how processes for identifying, assessing and
managing climate-related risks are integrated into the
organisation’s overall risk management
C
Metrics and Targets
Progress
i.
Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with its
strategy and risk management process
C
j.
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3
greenhouse gas (GHG) emissions, and the related risks
C
k.
Describe the targets used by the organisation to
manage climate-related risks and opportunities and
performance against targets
PC
Key
Consistent with the TCFD recommendations
Partially consistent with the TCFD recommendations
C
PC
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Strategy
This year, we once again conducted our annual exercise to refresh the
assessment of the top climate-related risks and opportunities to ensure
we are incorporating any change in climate trends or science, as well as
new risks and opportunities. The exercise confirmed that the identified
risks and opportunities remain largely unchanged from the previous
assessment, although some require more attention in the short term due
to the macroeconomic environment and volatility in the energy market.
Last year, we built on our previous climate scenario work and considered
our resilience against key climate-related risks and opportunities.
That work included mapping the current controls in place and the
strength of those controls for each material risk and opportunity.
Overall, we have controls in place for all identified key risks and this
helps us build resilience against the potential impacts on the business.
Physical risks are assessed and considered throughout the critical
stages of the asset lifecycle. Environmental risks are assessed ahead
of the acquisition of buildings and network equipment. We have teams
and processes dedicated to disaster recovery and business continuity.
In addition, we mitigate the financial impact of physical risks through
insurance and damage response.
Our broader Planet strategy, targets and external communications are
designed to manage and mitigate the potential impacts of transition risks
on the Group. We have specialist teams that monitor and drive progress
to maintain and meet expectations from key stakeholders. This year,
we took further steps to improve energy efficiency and limit exposure to
energy market volatility as it is a key short-term risk. Similarly, harnessing
our current climate and ESG strategy and monitoring market trends
will enable us to also capture opportunities arising from the
low-carbon transition.
Read more about how our products and services help
our customers reduce their emissions on page 37
This year, we also conducted a scenario analysis focusing on the potential
impact of physical climate-related risks on specific types of our
infrastructure assets, with the aim of understanding how our infrastructure
asset portfolio is expected to evolve in the long term under different
climate change scenarios. This exercise will inform our longer-term
resilience plans related to physical climate-related risks, such as damage
to our infrastructure.
Risk management
We have aligned our climate-related risk management process with our
overall risk management framework. Climate change was discussed and
considered during the principal risk assessment process and it was once
again placed on our risk watchlist.
Read more about our risk management framework
on pages 51 to 52 and 56
To ensure a robust identification and assessment of climate-related risks
and opportunities we use the following data sources:
–
Climate-change publications and data;
–
Guidance from the TCFD on potential risks and opportunities;
–
Previous year’s assessments; and
–
Key stakeholders’ inputs via a survey and targeted discussions.
We evaluate the materiality of the identified risks and opportunities by
assessing their likelihood and impact using our global risk management
framework. This process helps us determine the relative significance
of the climate-related risks in relation to other risks.
Due to the nature of the topic, there are many teams across Vodafone
that are responsible for managing climate-related risks and we have
multiple processes and policies in place to ensure we are managing
them effectively.
Metrics and targets
We use a wide variety of metrics to measure the current and potential
impacts of climate-related risks. We have been measuring and reporting
on energy and carbon emissions since 2001 and have been responding
to CDP’s climate change questionnaire since 2010. Our main carbon
emissions metrics are also subject to independent limited assurance.
In addition, we have set a number of targets to manage climate-related
risks and reduce our impact on the environment, such as reaching ‘net
zero’ emissions across our full value chain (Scope 1, 2 and 3) by 2040 and
purchasing 100% renewable electricity in all markets by 2025. Since July
2021, our European network has been 100% powered by electricity from
renewable sources.
Click to download our ESG Addendum:
investors.vodafone.com/esgaddendum
We constantly seek to refresh and improve our metrics and key risk
indicators to better measure and manage climate-related risks and
opportunities. We recognise that we need to mature further in this
area as industry practices and better-quality data become available.
Read more about our existing environmental KPIs
on pages 35 to 38
Material climate-related risks and opportunities
Physical risks:
–
Damage to infrastructure caused by increasing frequency and
severity of extreme weather events, including wildfires, flooding,
and storms
–
Interruption or reduction in the quality of services due to increased
precipitation and extreme weather events
–
Supply chain disruption due to climate impacts on key suppliers
–
Increases in global temperatures leading to an increase in the
consumption of energy for cooling
Transition risks:
–
Increasing stakeholder scrutiny over our environmental
performance impacting revenue, market share and reputation
–
Rising price of energy (renewable and non-renewable)
–
Emerging carbon regulations and carbon taxation
–
Changing mandates and regulations over infrastructure
energy efficiency
–
Third-party dependency impacting our ability to meet carbon
targets and improve efficiencies
Opportunities:
–
Development of new product lines enabling customers to better
manage climate-related impacts
–
Reduced costs through sustainable procurement
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3
5
4
2
8
5
2
Environmental,
Social and
Governance
Political/
Regulatory
Technology/
Telecom
Media
Emerging
markets
Finance
Consumer
goods and
services/
Marketing
Skills and expertise of Non-Executive Directors
Our Board
Leadership, governance and engagement
Governance at a glance
Membership and attendance
The table below details the Board and Committee meeting attendance
during the year to 31 March 2023. The number of attendances is shown
next to the maximum number of meetings the Director was entitled to
attend. Ad hoc meetings of the Board and its Committees were also held
as required during the year.
Name
Board
Nominations
and Governance
Committee
Audit and Risk
Committee
Remuneration
Committee
ESG
Committee
Stephen Carter
1
4/4
2/2
–
–
–
Delphine
Ernotte Cunci
1
4/4
–
–
2/2
–
Sir Crispin Davis
6/6
3/4
6
–
–
–
Margherita Della Valle
6/6
–
–
–
–
Michel Demaré
6/6
4/4
4/5
7
4/5
7
–
Dame Clara Furse
6/6
–
–
5/5
2/2
Valerie Gooding
6/6
4/4
–
5/5
2/2
Deborah Kerr
5/6
4
–
4/5
4
–
–
Amparo Moraleda
6/6
–
5/5
–
2/2
David Nish
5/6
5
–
5/5
–
–
Christine Ramon
2
2/2
–
–
–
–
Nick Read
3
4/4
–
–
–
–
Simon Segars
1
4/4
–
–
–
1/1
Jean-François
van Boxmeer
6/6
4/4
–
–
–
Notes:
1.
Stephen Carter, Delphine Ernotte Cunci and Simon Segars joined the Board on 26 July 2022.
2.
Christine Ramon joined the Board on 14 November 2022.
3.
Nick Read stepped down from the Board on 31 December 2022.
4.
Deborah Kerr was unable to attend one scheduled meeting of the Board due to ill health and
one scheduled meeting of the Audit and Risk Committee due to personal reasons.
5.
David Nish was unable to attend one scheduled meeting of the Board due to a scheduling
conflict.
6.
Sir Crispin Davis was unable to attend one scheduled meeting of the Nominations and
Governance Committee due to time zone differences.
7.
Michel Demaré was unable to attend one scheduled meeting of the Audit and Risk Committee
and one scheduled meeting of the Remuneration Committee due to a family emergency.
Board evaluation
Progress in the year
The 2023 Board evaluation reported
improvements had been achieved in:
–
Appointing four new Non-Executive Directors,
each bringing extensive technology and
telecommunications experience;
–
devoting more time to strategy by holding
several strategic deep-dive sessions during the
year to enhance free-flowing discussions; and
–
establishing a Board sub-committee to
consider mergers and acquisitions (‘M&A’)
transactions.
Read more
on page 73
Tenure
4
6
3
7-10 years
4
7-10 years
4
0-3 years
6
4-6 years
3
0-3 years
6
4-6 years
3
Gender diversity
53.8%
Female
7
Female
7
Male
6
Male
6
Independence
1
11
1
Independent
1
NED Chair
Independent
1
NED Chair
Independent
11
Executive
1
Independent
11
Executive
1
2022
2021
2020
2019
2018
2017
2016
2015
2014
2023
Ethnically diverse
Ethnically diverse
White
White
Ethnicity
10
11
10
10
13
12
11
11
11
12
1
1
1
1
1
2
1
1
1
Senior Board positions
Chair
Chief
Executive
1
Senior
Independent
Director
Chief Financial
Officer
1
Female
Female
Male
Male
Note:
1.
The roles of Chief Executive and Chief Financial
Officer are held by Margherita Della Valle.
The Nominations and Governance Committee regularly reviews the Board’s composition with a view
to ensuring 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.
Note:
As at 31 March 2023
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Committee activities
Nominations and Governance Committee
In addition to keeping under review developments in corporate
governance and the Company’s responses to them, the Nominations and
Governance Committee makes recommendations to the Board about
Board composition and ensures Board diversity and the necessary
balance of skills. The Committee recognises the need to anticipate the
skills and attributes that will be needed on the Board as the Company
develops. A key focus for the Committee this year has been Board and
Executive Committee composition. For the latter half of the year, the main
activity has concerned succession planning for the Group Chief Executive.
Read more
on pages 74-76
Board changes
Following shareholder approval at the Company’s Annual General Meeting
on 26 July 2022, Stephen Carter, Delphine Ernotte Cunci and Simon Segars
joined the Board as Non-Executive Directors. In addition, on 14 November
2022, Christine Ramon joined the Board as a Non-Executive Director.
Christine brings extensive financial and strategic experience, along with
telecommunications expertise. She also has comprehensive African market
experience that will support the strategic aims of the Group.
ESG Committee
The Committee provides oversight of Vodafone’s ESG programme:
purpose pillars (Digital Society, Inclusion for All and Planet), 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. Focus for this year centred on enhancing the approach to
ESG disclosure and assurance and expanding agenda items to reflect the
Committee’s purpose. Key discussion topics included ESG indices and
rankings, digital inclusion, human rights and our Digital Society
purpose pillar.
Read more
on pages 83-84
Remuneration Committee
The Remuneration Committee sets, assesses and recommends for
shareholder approval the Remuneration Policy for Executive Directors,
sets the remuneration of the Executive Directors and approves the
remuneration of the Chair of the Board and members of the Executive
Committee. It also reviews remuneration arrangements across the Group
to ensure they are aligned with our strategy, support our purpose and
celebrate the ‘Spirit of Vodafone’.
Fair pay principles:
1. Market competitive
4. Share in our successes
2. Free from discrimination
5. Provide benefits for all
3. Provide a good standard of living
6. Open and transparent
During the year the Committee reviewed the Remuneration Policy ahead
of it being put to shareholders’ vote at the 2023 Annual General Meeting.
Details of this and the associated shareholder engagement can be found
on pages 85 and 87.
Read more
on pages 85-106
To operate efficiently and to ensure matters are given the right level of focus, the Board delegates
some of its responsibilities to its Committees. These provide focused oversight on: Board composition,
performance, and succession planning; financial reporting, risk, internal processes and controls;
remuneration practices; and environmental, sustainability and governance topics.
Click or scan to watch the Chair of the
Audit Committee, David Nish, explain his role:
investors.vodafone.com/videos
Click or scan to watch conversations with our new
Non-Executive Directors:
investors.vodafone.com/videos
Click or scan to watch the Chair of the ESG Committee,
Amparo Moraleda, explain her role:
investors.vodafone.com/videos
Click or scan to watch the Senior Independent
Director and Chair of the Remuneration Committee,
Valerie Gooding, explain her role:
investors.vodafone.com/videos
On 31 December 2022, Nick Read stood down as Group Chief Executive.
Margherita Della Valle was appointed Group Chief Executive for an interim
period with effect from 1 January 2023, in addition to her continuing role
as Group Chief Financial Officer, whilst the Board undertook a rigorous
internal and external search to find a permanent Group Chief Executive.
On 27 April 2023, the Company announced the appointment of
Margherita Della Valle as Group Chief Executive, Margherita will also
continue as Group Chief Financial Officer until an external search for
a new successor is completed.
Audit and Risk Committee
The Committee oversees the Group’s financial reporting, risk management,
internal control and assurance processes and the external audit. This
includes in-depth reviews of our principal risks, the review of our Annual
Report and a programme of deep-dives across multiple business units with
a focus on the risk and control environment. The Committee also monitors
the activities and effectiveness of the Internal Audit function and has
primary responsibility for overseeing the relationship with the external
auditor. Deep-dive topics this year included reviews of adverse regulatory
measures, technology resilience and readiness, cyber threats, infrastructure
competitiveness and disintermediation risk. Entity deep-dives included
Vodacom, the cluster of markets within the Other Europe segment,
Vodafone Spain, Vodafone Germany, Vodafone Roaming Services and
Vantage Towers. The Committee also has joint responsibility, with the ESG
Committee, for reviewing the appropriateness and adequacy of ESG
disclosures provided within the Annual Report and the ESG Addendum,
including approving its content.
Read more
on pages 77-82
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Dear shareholders,
I am pleased to present the Corporate Governance Report for the year
ended 31 March 2023 on behalf of the Board.
The year in review
This year, has again, been one of change and I am grateful to my fellow
Directors, the executive team, and the people of Vodafone for their
support, flexibility, and strong spirit throughout.
In spite of the challenges faced we have functioned well and have
continued to take seriously our commitment to strong and robust
corporate governance to support the creation of long-term sustainable
value for the benefit of all our stakeholders.
This report provides details about the Board and an explanation of our
individual roles and responsibilities as well as providing an insight into the
activities of the Board and Committees over the year and how we seek to
ensure the highest standards of corporate governance remain embedded
throughout the Company, underpinning and supporting our business and
the decisions we make.
Board succession
Executive Directors
During the year, the Board and Nominations and Governance Committee
reviewed the future leadership of the Company and, as announced on 5
December 2022, the Board agreed with Nick Read that he would step down
as Group Chief Executive and as a Director of the Company on 31
December 2022. I would like to thank Nick for his commitment and
significant contribution to Vodafone as Group Chief Executive and
throughout his career spanning more than two decades with the Company.
In addition to her role as Group Chief Financial Officer, Margherita Della
Valle was appointed Group Chief Executive with effect from 1 January 2023
on an interim basis. The Board initiated a process with the support of Egon
Zehnder, an independent external search firm, to find a permanent Group
Chief Executive and on 27 April 2023, we announced the permanent
appointment of Margherita Della Valle. The Board and I have been
impressed with her pace and decisiveness to begin the necessary
transformation of Vodafone. Tasked with accelerating the execution of
the Company’s strategy to improve operational performance and deliver
shareholder value the Board fully supports her. Margherita will also
continue as Group Chief Financial Officer until an external search for
a new Group Chief Financial Officer is complete.
Non-Executive Directors
The Board, together with the Nominations and Governance Committee,
has continued to monitor the composition and skills matrix of the Board
with a focus on succession planning for our Non-Executive Directors.
Last year we indicated several upcoming scheduled retirements from
the Board and on 10 May 2023 we announced that Valerie Gooding,
Sir Crispin Davis and Dame Clara Furse would not be seeking re-election
at the 2023 Annual General Meeting (‘AGM’). At the date of publication,
Valerie Gooding has served more than nine years as a Director; however,
she will remain on the Board until the conclusion of the 2023 AGM in
order to allow for a gradual and smooth transition period of the Senior
Independent Director role to David Nish, Remuneration Committee Chair
role to Amparo Moraleda and Workforce Engagement Lead roles to
Delphine Ernotte Cunci and Christine Ramon. Following evaluation,
Valerie is still considered independent.
In anticipation of these retirements, there have been a number of Board
changes during the year, with the appointment of four new Non-Executive
Directors, Stephen Carter, Delphine Ernotte Cunci, Simon Segars and
Christine Ramon. I am delighted to welcome them to Vodafone’s Board.
Their appointments bring extensive experience and track records of
value creation across a variety of sectors which will be of great support
to the Group.
A full induction programme is underway for the new Non-Executive Directors,
including meetings with executives leading our businesses and functions.
Read more about the appointment process
on page 74
Board diversity
We remain firmly committed to having a Board that is diverse in all
respects. With support from the Nominations and Governance
Committee, we continue to monitor requirements and are proud to meet
these including the target that at least 40% of the Board is composed
of women. This includes our Group Chief Executive and Group Chief
Financial Officer, Margherita Della Valle and our Senior Independent
Director, Valerie Gooding. We have also met the Parker Review target to
have at least one Director from a non-white ethnic minority.
Read more about our Board Diversity Policy
on page 75
Beyond the Board, we announced last year the introduction of a new
ethnic diversity target that 25% of global senior leadership will come from
ethnically diverse backgrounds by 2030.
Read more
on page 34
Board evaluation
This year the Board undertook an internal evaluation led by myself
with support from the Group General Counsel and Company Secretary.
I am pleased to report the findings show there is clear consensus that
the Board is operating well with effective leadership and where open
discussion and input from all members is encouraged. Positive feedback
was also received on the composition of the Board and the conduct
of meetings and materials provided. Some areas for improvement were
identified and we will look to progress these during the year ahead.
Read more
on page 73
Continued stakeholder engagement
We recognise that Vodafone’s success is dependent on the Board taking
decisions for the benefit of our shareholders and in doing so having
regard to all our stakeholders.
Throughout the year, I have interacted with institutional shareholders and
engaged on topics such as the Company’s strategy, Board and Executive
changes, and succession plans. I was delighted that as well as virtual
meetings, we were able to host some meetings in person for the first time
since the COVID-19 pandemic. The Board has also received updates on
the investor perception study completed during the year.
In her role as Chair of the Remuneration Committee, Valerie Gooding
engaged with shareholders on the proposed updates to the Remuneration
Policy and remuneration arrangements in respect of the forthcoming year.
Read more
on page 85
Valerie Gooding also continued 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. Key discussion topics from this year’s meetings included
‘Future Ready Vodafone’ ways of working, the ‘Grow with Vodafone’
personal development platform, economic uncertainty and the Race,
Ethnicity and Cultural Heritage (‘REACH’) targets.
We take seriously our commitment to strong and
robust corporate governance
Chair’s governance statement
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Compliance with the 2018 UK Corporate
Governance Code (the ‘Code’)
In respect of the year ended 31 March 2023 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 the provisions of the Code throughout the year. Further
information on compliance with the Code can be found as follows:
This year, we have continued to publish ‘Board conversations’ with our
recently appointed Non-Executive Directors, to give all shareholders the
opportunity to hear directly from them.
The Board is committed to understanding the views of all of Vodafone’s
stakeholders to inform the decisions that we make.
Read more
on pages 10-12
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 230 to 235.
Board leadership and Company purpose
Read more
Long-term value and sustainability
57
26-50
Culture
13-15
40
Shareholder engagement
10-12
62-63
Other stakeholder engagement
10-12
85
Conflicts of interest
75
Role of the Chair
70
Division of responsibilities
Read more
Non-Executive Directors
70
65-67
Independence
60
75
Composition, succession and evaluation
Read more
Appointments and succession planning
61-62
74-75
Skills, experience and knowledge
60
65-67
Length of service
60
65-67
Evaluation
73
60
Diversity
62
60
75-76
14
Audit, risk and internal control
Read more
Committee
77-82
Integrity of financial statements
112
78-82
57
Fair, balanced and understandable
79
111-112
Internal controls and risk management
81
External auditor
82
Principal and emerging risks
81
51-59
Remuneration
Read more
Policies and practices
85-106
Alignment with purpose, values and long-term strategy
85-89
Independent judgement and discretion
94
86
The 2022 AGM was held at Vodafone UK’s headquarters in Newbury,
Berkshire and was available to watch live via a webcast for those
shareholders who were unable to attend in person. Shareholders were
able to pre-submit questions or, if attending in person, ask questions
on the day, for consideration by the Directors at the meeting. We intend
to hold the 2023 AGM in the same format.
Click to read more about the AGM:
vodafone.com/agm
Purpose and the ‘Spirit of Vodafone’
Our purpose ‘We connect for a better future’ is at the core of our strategy,
enabling inclusive and sustainable digital society. It has guided actions
at every level throughout the year.
Read more
on pages 28-39
The Board understands the importance of culture and setting the tone
of the organisation from the top and embedding it throughout the Group.
We refer to our culture as the ‘Spirit of Vodafone’. It is a key component
for our strategic, organisational and digital transformation. The aim of our
people strategy is to create an environment where growing never stops
and everyone can truly belong, innovate, and fulfil their potential. We
continue to hold quarterly ‘Spirit of Vodafone’ days for our employees,
designed to provide dedicated space for personal growth, wellbeing and
connection. The Board receives regular updates on employee engagement
and the ‘Spirit of Vodafone’, which enables it to make informed
decisions where appropriate.
Read more about our culture and people strategy
on pages 13-15
The year ahead
On 10 May 2023, the Board approved the creation of a Technology
Committee as a new Board Committee. Once established, during the
course of this year, the Committee will oversee the technology strategy
and how it supports the overall Company strategy. Further information
on this Committee will be shared in next year’s report.
A key focus for myself and the Board will be completing the appointment
process for a new Group Chief Financial Officer and supporting that
individual as they step into the role alongside Margherita Della Valle.
In addition, the Board will continue to drive for better returns for
shareholders and will monitor the Company’s progress on the execution
of Vodafone’s strategy focusing on Customers, Simplicity and Growth. The
Board will keep the Group’s strategy under review, adapting it to anticipate
or respond to opportunities and risks in the markets in which we operate.
Jean-François van Boxmeer
Chair of the Board
Click or scan to watch conversations with
our Non-Executive Directors:
investors.vodafone.com/videos
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Our Company purpose, values and culture
Purpose
At Vodafone, our purpose is to connect for a better future by enabling
inclusive and sustainable digital societies and it is supported by our three
purpose pillars: Digital Society, Inclusion for All and Planet. Our purpose
is championed by our Board, which is collectively responsible for the
oversight and long-term success of the Company. It 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. Board oversight ensures that continued product development
realises our ambition to connect for a better future.
Read more about our purpose
on pages 28-39
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 enable the Board to
effectively review and challenge.
Read more about the new roadmap for Vodafone
on page 7
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 and
ensuring the Board has access to the necessary policies, processes and
resources required to operate efficiently and effectively.
Read more about our governance structure and roles
and responsibilities on pages 68-70
Values and culture
The Board has a critical role in setting the tone of our organisation and
championing the behaviours we expect to see throughout the Group.
The ‘Spirit of Vodafone’ aligns with our purpose and strategy, which
ultimately leads to a more motivated and productive workforce.
The Board has continued to influence and monitor culture throughout
the year and receives regular updates on the ‘Spirit of Vodafone’
initiatives, including ‘Spirit of Vodafone’ Days, the two Spirit Beat surveys
and the additional global pulse survey.
The cultural climate in Vodafone is measured through a number of
mechanisms including policy and compliance processes, internal audit,
and formal and informal channels for employees to raise concerns.
The latter includes our bi-annual people survey and our whistleblowing
programme, Speak Up, which is also available to the contractors and
suppliers working with us. A series of communication materials were
shared in April through ‘Workplace’, our internal digital platform, and
other channels to address common misconceptions and encourage
more employees to come forward with experiences and/or observations
of those breaching the code of conduct. The Board is apprised of any
material whistleblowing incidents.
Alongside these mechanisms, the Board remains committed to
engagement with the workforce and these opportunities continue to
shape how the Board influences and understands the Company’s culture.
Read more about Speak Up
on page 40
Governance
Employee engagement
Given the geographical size and complexity of our business, we utilise
several employee engagement methods and communication channels
between the Board, the Executive Committee, and our workforce to
enable meaningful engagement.
The Board receives regular updates including an annual written report
from Valerie Gooding, the designated Workforce Engagement Lead,
detailing activities undertaken during the year to engage with employees.
Examples of these initiatives include:
Workforce Engagement Lead attendance at Employee Forums
The Board was apprised of feedback from Valerie Gooding’s attendance
at Employee Forums, namely the European Employee Consultative
Committee. It is evident from these meetings that employee delegates
continue to appreciate the opportunity to speak directly to a Board
member. Through these means we understand that our people are
engaged and interested in business strategy, mergers & acquisitions
(‘M&A’) activity and opportunities for personal development.
Workplace communications
‘Workplace’ is our internal digital platform that allows employees to start
conversations and themed groups on topics of their choice. The Executive
Committee and Internal Communications team regularly post relevant
business updates on the platform, with employees able to directly
respond with views and questions. Key highlights in the year include:
Session
Topic
Grow with Vodafone
People development
Discussion focus:
The Chief Human Resources Officer announced our new digital
and intuitive career, skills and learning experience – Grow with Vodafone. The tool
is designed to deliver learning and career recommendations based on individuals’
unique skills profiles in a connected and personal way.
Global pride webinar
D&I
Discussion focus:
The Group Chief Executive, Chief Human Resources Officer,
expert guest speakers and colleagues from around the world joined our global
pride webinar to help our employees understand the current challenges that
LGBT+ people are facing, what we can do about them as individuals and what
Vodafone is doing.
2022 highlights
Our business
Discussion focus:
A highlight reel was published showcasing what employees
across the business have accomplished together over the last year and provided
inspiration to achieve even more next year by raising our ambition, being
customer focused, and delivering growth.
Board and Executive communications
Sessions have been held and videos published to provide updates that
matter most to our people, with key highlights in the year including:
Session
Topic
#StayConnected
Our business
Discussion focus:
Video updates where the Group Chief Executive speaks with
various leaders both inside and outside our business about key topics of interest.
There have been many communications this year, including a video address from
the Chair following the change in Group Chief Executive to ensure employees are
kept informed and reassured regarding developments across the business.
Financial results and
Group performance
Our business strategy
and performance
Discussion focus:
Quarterly trading update videos on financial results and Group
performance were published as was a ‘WeConnect’ webinar, where the Group
Chief Executive and Executive Committee members discussed key priorities.
Employee listening
We have extended the opportunities for employees to share their experiences
throughout their time at Vodafone. For example, we proactively gather
employee perspectives through the typical new joiner lifecycle by measuring
sentiment in the first week, month, and 90 days. Exiting employees are also
requested to submit feedback 48 hours after logging their notice.
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Our Board
Our business is led by our Board of Directors.
Biographical details of the Directors as at 16 May
2023 are provided below.
Click to find full biographical information for the Directors:
vodafone.com/board
External appointments listed are only those required to be disclosed
pursuant to Listing Rule 9.6.
Jean-François van Boxmeer
N
Chair – Independent on appointment
Tenure:
2 years
Career and experience:
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.
Skills and attributes which support strategy and long-term success:
–
Extensive international experience in driving growth through both
business-to-business and business-to-consumer business models,
both of which are integral components of the Company’s strategy and
long-term success.
–
Exposure to overseeing the management of complex and far-reaching
transformational projects, including specific hands-on experience
of the countries in which the Company operates.
–
Skilled communicator with a strong track record of developing
stakeholder relations and overseeing governance in the context of a
large global firm, which, in his capacity as Chair of the Board, continues
to be of great value to the Company.
External appointments:
–
Heineken Holding N.V., non-executive director
Margherita Della Valle
Group Chief Executive and Chief Financial Officer – Executive Director
Tenure:
4 years
Career and experience:
Margherita was appointed Group Chief Financial Officer in 2018, and
Group Chief Executive on 1 January 2023. Margherita’s previous roles
within Vodafone were Deputy Chief Financial Officer from 2015 to 2018,
Group Financial Controller, Chief Financial Officer for Vodafone’s
European region and Chief Financial Officer for Vodafone Italy. She joined
Omnitel Pronto Italia – which later became Vodafone Italy – in 1994 and
held key senior positions in consumer, marketing, business analytics and
customer base management before moving to finance. After moving
to a Group finance position in 2007, Margherita established a number of
shared operations functions, which now employ over 30,000 people and
provides a portfolio of services spanning IT operations, customer care,
supply chain management, human resources and finance operations
to 27 partners in other markets.
Skills and attributes which support strategy and long-term success:
–
Strong commercial and operational leadership with expert knowledge
of the global telecommunications landscape after close to three
decades of direct industry experience.
–
Considerable corporate finance and accounting experience, translating
into an expert understanding of capital allocation, operational efficiency
and investment appraisal.
–
After almost 30 years at Vodafone, Margherita has a strong personal
affiliation and understanding of the Company’s culture and values, which
help her represent the Company to all stakeholders and develop and
implement the strategy.
–
Proven record of developing the next generation of talent, including senior
leadership within Vodafone and more broadly through her founding of NXT
GEN Women in Finance, an initiative where European Chief Financial Officers
identify, mentor and promote rising female stars in finance.
External appointments:
–
Reckitt Benckiser Group plc, non-executive director and member of the
audit committee
Stephen A. Carter CBE
N
Non-Executive Director
Tenure:
<1 year
Career and experience:
Since becoming Group CEO of Informa plc in 2013, Stephen has led Informa plc
through a transformation into an international leader in B2B events, digital
services and academic markets and is now a FTSE 50 Company. Prior to
Informa, Stephen was President and Managing Director at Alcatel-Lucent,
where he played a key role in restructuring the business, and investing in
next-generation mobile network equipment product development delivery.
Stephen also served a term as the founding CEO of Ofcom, where he brought
together five different regulatory authorities. After Ofcom, the UK’s
telecommunication regulator, Stephen served as Chief of Strategy for the UK’s
Prime Minister, and then as a Minister of State for Communications, Technology
& Broadcasting. Stephen later served as a non-executive director for the
Department for Business, Energy and Industrial Strategy from 2016-2020.
Skills and attributes which support strategy and long-term success:
–
Track record of value creation, with specific experience in the telecoms
and media sectors.
–
Experience in public policy, government affairs and regulatory
engagement, which is welcomed in relation to the highly regulated
environment within which the Company operates.
External appointments:
–
Informa plc, group chief executive
Michel Demaré
A
N
R
Non-Executive Director
Tenure:
5 years
Career and experience::
Michel began his career at Continental Bank SA, Belgium, before spending
18 years with The Dow Chemical Company in several finance and strategy
responsibilities in Benelux, France, the US and Switzerland. He was Chief
Financial Officer Europe for Baxter International from 2002 to 2005, and
Chief Financial Officer at ABB Group from 2005 to 2013. He also served
as Interim CEO of ABB during 2008. He was independent vice-chairman at
UBS Group from 2009 to 2019, and vice-chairman/chairman of Syngenta
AG from 2013 to 2017.
Skills and attributes which support strategy and long-term success:
–
Proven multinational business leader with substantial international
finance, strategy and M&A experience.
–
Highly skilled in governance and corporate stewardship, which Michel
brings both to the Board and to each of the Committees of the Company
on which he sits.
External appointments:
–
AstraZeneca plc, non-executive chair, chair of the nomination and
governance committee and member of the remuneration committee.
Committee key
Audit and
Risk Committee
ESG Committee
Nominations and
Governance Committee
Remuneration
Committee
Solid background signifies
Committee Chair
A
E
N
R
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Governance (continued)
Delphine Ernotte Cunci
Non-Executive Director
Tenure:
<1 year
Career and experience:
Since 2015, Delphine has been President of France Télévisions, the
French national public television broadcaster. Her mandate was extended
in 2020, the first time this has happened to an incumbent President. Prior
to that, Delphine spent 26 years at Orange S.A., where she became
Deputy CEO in 2010 and led the successful turnaround of Orange France.
Skills and attributes which support strategy and long-term success:
–
Considerable experience in the telecoms sector and, more recently, in
media and technology, which enhances Board understanding of trends
relevant to the Company’s operations and the wider European
regulatory environment.
–
Delphine’s engineering background and distinguished career at
Orange provide a firm grounding to the Board’s evaluation of specific
opportunities within the telecoms and connectivity space.
Deborah Kerr
A
Non-Executive Director
Tenure:
1 year
Career and experience:
Deborah is Managing Director at Warburg Pincus, where she serves as
co-head of Value Creation. Deborah has previously held senior executive
roles and non-executive appointments across a range of sectors,
including senior executive roles at Sabre, the travel technology company,
Fair Isaac Corp, the data analytics business, and Hewlett-Packard
Company, where she was Chief Technology Officer for HP’s Enterprise
Services operations. Until recently, Deborah was also a non-executive
director of EXLservice Holdings Inc, the business process solutions
company. Deborah has also held non-executive roles at International
Airline Group, the airline conglomerate, DH Corporation, a global FinTech
solutions and service provider, and Mitchell International Inc, a privately
owned global technology business.
Skills and attributes which support strategy and long-term success:
–
A wealth of technological expertise, including an understanding of
complex digital transformations, which continues to be central to the
next phase of the Company’s growth.
–
Detailed knowledge of the technology market, which, in the context of
her role as a member of the Audit and Risk Committee, affords insights
into the risk profile of the Company as well as the sectors and markets
within which it operates.
External appointments:
–
NetApp, INC, non-executive director and member of the audit committee
–
Chico’s FAS, Inc., non-executive director and member of the human
resources, compensation and benefits committee, the corporate
governance and nominating committee and the environmental, social
and governance committee
Amparo Moraleda
A
E
Non-Executive Director
Tenure:
5 years
Career and experience:
Amparo received a degree in Industrial Engineering from Comillas
Pontifical University in Madrid and is also an IESE AMP graduate. She
joined IBM in 1988 and spent more than 20 years with the company,
becoming President of IBM Southern Europe in 2005. In 2009, Amparo
joined Iberdrola S.A. where she was Chief Operating Officer of the
International Division until 2012. Amparo is a member of the Royal
Academy of Economic and Financial Sciences and was inducted into
the Women in Technology International Hall of Fame in 2005.
Skills and attributes which support strategy and long-term success:
–
A background in engineering, IT and technology allows Amparo to act
as a balanced and highly knowledgeable sounding board in technical
Board discussions and is of great utility to her role as a member of the
Audit and Risk Committee.
–
Corporate social responsibility experience and her experience as a
champion of inclusion and diversity are significant assets in the context
of her role as Chair of the Company’s ESG Committee.
External appointments:
–
Airbus Group, senior independent director, chair of nominations and
governance committee and remuneration committee and member
of ethics & compliance committee
–
CaixaBank S.A., non-executive director and chair of remuneration
committee
–
A.P. Moller-Maersk A/S, non-executive director and member of the
audit committee, remuneration committee and transformation and
innovation committee
David Nish
A
Tenure:
7 years
Career and experience:
David was Group Finance Director of Scottish Power Plc from 1999 to
2005 having joined the company as Deputy Finance Director in 1997.
Additionally, he was the Chief Executive Officer of Standard Life Plc from
January 2010 to September 2015 having joined the company as Group
Finance Director in November 2006. David was also a former Partner at
Price Waterhouse, where he began his career as a trainee. Previous
non-executive positions held by David include boards of London Stock
Exchange Group Plc, Zurich Insurance Group Ltd, UK Green Investment
Bank plc, Northern Foods Plc, Thus Plc, HDFC Life (India) and Royal
Scottish National Orchestra. He was Deputy Chairman of the Association
of British Insurers. He was also formerly a member of the City UK Board
Advisory Committee and the Financial Services Advisory Board of the
Scottish Government.
Skills and attributes which support strategy and long-term success:
–
Wide-ranging operational and strategic experience as a senior leader
and a deep understanding of financial and capital markets.
–
Significant finance experience, bringing strong direction as the Chair of
the Audit and Risk Committee through a focus on the risk and control
environment and Group resilience.
External appointments:
–
HSBC Holdings plc, senior independent director, chair of the audit
committee and member of the risk committee and the nomination
and corporate governance committee
Christine Ramon
A
Non-Executive Director
Tenure:
<1 year
Career and experience:
Until recently Christine was Chief Financial Officer and executive director
of AngloGold Ashanti Ltd, a global gold mining company. Prior to
AngloGold Ashanti, she was Chief Financial Officer of Sasol Ltd, a South
African energy and chemicals company. Christine was also a former
Chief Executive Officer at Johnnic Holdings Ltd, an investment holding
company with interests in media, entertainment and telecommunications
prior to joining Sasol. Additionally, she has worked at Pepsi as a Financial
Controller. Christine has held non-executive director roles at the
International Federation of Accountants, the global organisation
for the accountancy profession, MTN Group Ltd, a South African
telecommunications company, Lafarge S.A., a cement company, and
Transnet SOC Ltd, a South African rail, port and pipeline company.
R
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Skills and attributes which support strategy and long-term success:
–
Considerable experience of African markets, which aid the Company
with its ambition to be a best-in-class telco in Europe and Africa.
–
Up-to-date investor relations experience and strong ambassadorial
skills developed through a distinguished executive career to date.
–
Highly experienced corporate financial executive with extensive board
expertise. This will supplement the Board’s financial, commercial and
strategic expertise.
External appointments:
–
Clicks Group Limited, non-executive director
Simon Segars
E
Non-Executive Director
Tenure:
<1 year
Career and experience:
Simon was previously the CEO of Arm Ltd., the global leader in the
development of semiconductor intellectual property. He successfully led
the business from 2013 to 2022 and generated significant value for
investors during his tenure. During 2017-2021, Simon was also a Board
member of the SoftBank Group. Prior to joining Arm in 1991, he was an
engineer at Standard Telephones and Cables.
Skills and attributes which support strategy and long-term success:
–
Possesses significant understanding of technology trends and how
these are reshaping industry landscapes, which are important in
charting the Company’s long-term strategic direction.
–
Proven history of business transformation and corporate strategy
in dynamic and swiftly evolving commercial environments.
External appointments:
–
Dolby Laboratories, Inc., non-executive director
Committee key
Audit and
Risk Committee
ESG Committee
Nominations and
Governance Committee
Remuneration
Committee
Solid background signifies
Committee Chair
Retiring Directors
Sir Crispin Davis, Dame Clara Furse and Valerie Gooding will not be seeking re-election at the 2023 Annual General Meeting and will therefore retire from
the Board at the conclusion of the Meeting on 25 July 2023. The Company announced on 10 May 2023 that with effect from the conclusion of the 2023
AGM, David Nish shall be appointed the Senior Independent Director, Amparo Moraleda shall be appointed Chair of the Remuneration Committee and
both Delphine Ernotte Cunci and Christine Ramon shall be appointed Workforce Engagement Leads.
Sir Crispin Davis
N
Non-Executive Director
Tenure:
Almost 9 years
Career and experience:
Sir Crispin was formerly the Chief Executive of RELX Group plc (formerly
Reed Elsevier) and the digital agency Aegis Group plc, and group
managing director of Guinness plc (now Diageo plc). Sir Crispin began
his executive career with Procter & Gamble, where he held a variety
of senior management roles including as president of the company’s
North American Food Business. In his non-executive career, Sir Crispin
was the chairman of StarBev Consumer Industries B.V. from 2009 to
2012 and was a non-executive director on the board of GlaxoSmithKline
plc from 2003 to 2013, where he chaired the remuneration committee.
He was knighted in 2004 for services to publishing and information.
Skills and attributes which support strategy and long-term success:
–
Sir Crispin’s wide-ranging experience as a business leader within the
international technology market, which is key to the Company’s
operational practice.
–
Strong commercial background, which has been leant on during his
tenure in the Board’s evaluation of strategic investment decisions.
Dame Clara Furse DBE
E
R
Non-Executive Director
Tenure:
Almost 9 years
Career and experience:
Dame Clara was the Chief Executive of the London Stock Exchange
Group plc from 2001 to 2009. She was also previously Group Chief
Executive of Credit Lyonnais Rouse Ltd and Managing Director, Global
Futures and Options at UBS AG. Dame Clara is also Chair of the UK
Voluntary Carbon Markets Forum, which aims to operationalise
London’s market for global voluntary carbon credits to accelerate the
transition to net zero. Her previous non-executive career includes board
appointments at Amadeus IT Group S.A. (2010-2022), Nomura Holdings
Inc (2010 to 2017), Legal & General Group plc (2009 to 2013),
Euroclear plc (2002 to 2009), Fortis (2006 to 2008) and LIFFE Holdings
plc (1991 to 1999). In 2008 she was appointed Dame Commander
of the Order of the British Empire.
Skills and attributes which support strategy and long-term success:
–
Over her tenure, Dame Clara has brought a deep understanding
of international capital markets, regulation, service industries and
business transformation to Board discussions.
–
Direct and contemporaneous involvement in innovative initiatives to
drive the transition to net zero has allowed Dame Clara to contribute
significantly to the refinement of the Company’s ESG strategy as
a member of its ESG Committee.
External appointments:
–
Assicurazioni Generali S.p.A, non-executive director
Valerie Gooding CBE
E
N
R
Senior Independent Director and Workforce Engagement Lead
Tenure:
9 years
Career and experience:
Valerie held the position of Chief Executive of British United Provident
Association (‘Bupa’) for 10 years between 1998 and 2008, following a
successful tenure as Managing Director. Prior to joining Bupa, Valerie spent
23 years working with British Airways plc, where she held a number of
positions, including head of Cabin Services, head of Marketing, director of
Business Units and director for Asia Pacific. Valerie has also held a variety of
non-executive positions in the past, including as non-executive chairman of
Premier Farnell plc and Aviva UK, lead non-executive director at the Home
Office and a non-executive director of Standard Chartered Bank plc, the BBC,
J. Sainsbury plc, Compass Group plc, BAA plc and CWC Communications
plc. Valerie was awarded a CBE in 2002 for services to business.
Skills and attributes which support strategy and long-term success:
–
Valerie brought a wealth of international business experience
obtained at companies with high levels of customer service, which
is of critical importance to the Company’s future success.
–
Valerie’s varied experience of other organisations, industries and
contexts through a large number of prior non-executive positions
added a depth of perspective to Board discussions.
–
People-centric and highly personable leadership style which,
together with her focus on leadership and talent, has been essential
to roles as the Company’s Senior Independent Director,
Remuneration Committee Chair and Workforce Engagement Lead.
A
E
N
R
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Other information
Our governance structure
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 Chair, executives and senior
management team.
Monitors the implementation
of the Remuneration Policy.
Oversees general pay practices
across the Group.
The Board
Responsible for the overall conduct of the Group’s business including our long-term success; setting our purpose;
monitoring culture, values, standards and strategic objectives; reviewing our performance; and maintaining positive dialogue with our stakeholders.
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.
Group Chief Executive
Purpose and Reputation
Steering Committee
Assists the Executive Committee with the effective
coordination of purpose activities and advises on
reputational risks and policy matters.
Global Products Board
Supports the Executive Committee by providing
visibility of global product strategy and lifecycle
and identifies capital allocation opportunities.
Executive Committee
Focuses on strategy implementation, financial and competitive
performance, commercial and technological developments,
succession planning and organisational development.
Group Chief Financial Officer
The Board
The Board is comprised of the Chair, Senior Independent Director,
Non-Executive Directors, the Group Chief Executive, and the Group Chief
Financial Officer. 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
on page 70
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.
Read more about the Board’s activities during the year
on pages 71-72
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 ethics programmes.
The Board also oversees the implementation of 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,
remuneration and effective succession planning, much of which is
overseen through its principal Committees.
The Executive Committee
The Executive Committee is comprised of Margherita Della Valle, the
Group Chief Executive and Group 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, Europe Cluster and Vodacom Group.
Led by the Group Chief Executive, the Executive Committee and other
management committees are responsible for making day-to-day
management and operational decisions, including implementing
strategic objectives and empowering competitive business performance
in line with established risk management frameworks, compliance
policies, internal control systems and reporting requirements.
The details of the Executive Committee members, range of experience,
skills, and expertise can be found below. Some members also hold external
non-executive directorships, giving them valuable board experience.
Click to read more about the Executive Committee:
vodafone.com/exco
Click to read more about the responsibilities of each Board Committee:
vodafone.com/board-committees
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.
Governance (continued)
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.
The Committee also has joint responsibility,
with the ESG Committee, to review the
appropriateness and adequacy of ESG
disclosures provided within the Annual
Report and the ESG Addendum, including
the approval of its content.
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Our Executive Committee
Biographical details of the Executive Committee,
as at 16 May 2023 are provided below.
Margherita Della Valle
Group Chief Executive and Chief Financial Officer
Read more about the Group Chief Executive and
Chief Financial Officer on page 65
Scott Petty
Vodafone Group Chief Technology Officer (CTO)
Scott joined Vodafone in 2009 and has held positions in Vodafone
Business Product Management and Technology before becoming UK
CTO in 2017. He has been the Chief Digital & Information Officer since
April 2021 as part of a newly created integrated European-wide
Technology team to drive the transformation to achieve Vodafone’s
ambition to become a Next Generation Telco. Previously, Scott held
a number of Executive roles at Dimension Data, as Group Executive –
Services, Chief Operating Office – Australia and as Chief Information
Officer – Australia. Scott joined the Executive Committee in January 2023.
Alberto Ripepi
Group Chief Network Officer (CNO)
Since joining Vodafone in 2001, Alberto has held various roles in
technology including CTO of Italy, CTO of Europe and Operational
director for Group Technology. Alberto joined the Executive Committee
in January 2023 and is responsible for strategy, architecture, design and
operating the Vodafone network in Europe.
Vinod Kumar
CEO Vodafone Business
Vinod Kumar joined Vodafone and the Executive Committee as CEO
Vodafone Business in September 2019. He is responsible for Vodafone’s
enterprise business globally. Prior to joining Vodafone, Vinod was the
Managing Director and CEO of Tata Communications Ltd from 2011,
after joining the company as Chief Operating Officer in 2004. He was also
a member of the company’s board from 2007 to 2019.
Leanne Wood
Chief Human Resources Officer
Leanne joined Vodafone as Chief Human Resources Officer and a
member of the Executive Committee on 1 April 2019. She is responsible
for leading Vodafone’s people and organisation strategy which includes
developing strong talent and leadership, effective organisations, strategic
capabilities and an engaging culture and work environment. Previously
Leanne was the Chief People, Strategy and Corporate Affairs Officer for
Burberry plc from 2015. Leanne was appointed to the Vodacom Group
Board in July 2019 and is a current Non-Executive Director and member
of the Audit, Corporate Responsibility and Nomination and Remuneration
Committees at Compass Group plc.
Joakim Reiter
Chief External and Corporate Affairs Officer
Joakim, an Executive Committee member since August 2017, is Vodafone’s
Chief External and Corporate Affairs Officer, responsible for public relations
and corporate affairs, including policy and regulation, communications,
security, sustainability and charitable activities. He currently sits on the
Board of the Swedish Space Corporation. Before joining Vodafone, Joakim
served as Assistant Secretary-General of the United Nations and has also
been Ambassador to the World Trade Organisation, served as a Swedish
senior diplomat to the EU, a trade negotiator in the European Commission,
and has had a longstanding career in the Swedish Foreign Service.
Maaike de Bie
Group General Counsel and Company Secretary
Maaike de Bie was appointed Group General Counsel and Company Secretary
on 1 March 2023 and has responsibility for the Group legal, compliance,
risk and company secretariat functions as well as advising the Board on all
aspects relating to corporate governance. She previously served as General
Counsel and Company Secretary of easyJet plc and before that as General
Counsel of Royal Mail plc. An experienced international lawyer, Maaike is dual
qualified in both the US and UK, with almost 30 years of experience. Maaike is
currently a Board Member of General Counsel for Diversity & Inclusion (GCD&I),
an organisation which promotes greater diversity, equity and inclusion in the
legal sector. She is also a Trustee of the charity, Blueprint for Better Business.
Serpil Timuray
CEO Europe Cluster
Serpil is an Executive Committee member since January 2014 and was
appointed as the CEO of the Europe Cluster in October 2018. She also oversees
Vodafone’s interest in the joint venture companies in Netherlands, Australia and
India as well as Vodafone Partner Markets in 48 countries. She is the Chairperson
of Vodafone Turkey, the Vice-Chairperson of VodafoneZiggo in Netherlands and
a Non-Executive Director of TPG Telecom plc in Australia. Prior to her current
role, she was the Group Chief Commercial Operations and Strategy Officer.
Philippe Rogge
CEO Vodafone Germany
Philippe joined the Executive Committee on 1 July 2022 and as CEO is
responsible for Vodafone Germany business. Philippe joined Vodafone
after more than a decade with Microsoft including his most recent role as
President, Central and Eastern Europe, based in Germany. Amongst other
responsibilities, he led sales, channels and marketing and accelerated
annual growth to double digits. His global career at Microsoft included
senior roles such as Chief Operating Officer China, General Manager Belgium
and Luxembourg, and General Manager Portugal.
Ahmed Essam
CEO Vodafone UK
With 20 years of experience in the fields of Telecommunications, Strategy,
Financial Planning, Commercial Management and General Management,
Ahmed joined the Executive Committee in 2016 and was appointed CEO of
Vodafone UK effective 1 February 2021, where he is responsible for all Vodafone
resources in country. Ahmed has been Group Chief Commercial Operations and
Strategy Officer since 2018 and prior to this he was CEO of the Europe Cluster.
Ahmed joined Vodafone in 1999 and has held a variety of roles including
Customer Care Director and Consumer Business Unit Director and has also
previously been the Group Management Director for Vodafone’s Africa, Middle
East and Asia-Pacific region and has held a number of senior roles within
Vodafone’s Group Commercial functions.
Aldo Bisio
Chief Commercial Officer and CEO Vodafone Italy
Aldo was appointed Group Chief Commercial Officer in January 2023. He was
appointed Chief Executive Officer of Vodafone Italia in January 2014 and joined
the Executive Committee in October 2015. Aldo is responsible to drive Group’s
commercial and brand strategy through CX Excellence and the delivery of new
digital services for the consumer segment. As CEO of Italy he is fully accountable
to steer local commercial strategy and drive operational excellence. Prior to
joining Vodafone, Aldo held the position of Group Managing Director of Ariston
Thermo Group from 2008 and he was then named Group Chief Executive Officer
in 2010. Being part of McKinsey & Co previously, he held different positions in
strategic consultancy focusing on the telecommunications and media industries.
Shameel Joosub
CEO Vodacom Group
Shameel joined Vodafone in 1994 and currently serves as Chief Executive
Officer at Vodacom Group Limited, a position he has held since 2012. He has
extensive telco experience having operated at a senior level in various
companies across the group for the last 22 years, including Managing Director
at Vodacom South Africa and Chief Executive Officer at Vodafone Spain.
Shameel holds board positions at Vodacom Group Ltd, Safaricom Plc and
Vodafone Egypt Telecommunications S.A.E. He also sits on the board of
Business Leadership South Africa. He was appointed to the Executive
Committee in April 2020, and is responsible for the overall strategic direction
and performance of all its African operations, comprising eight markets.
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Division of responsibilities
Chair
Jean-François van Boxmeer
–
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 Group 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 and Workforce
Engagement Lead
Valerie Gooding, CBE
–
Provides a sounding board for the Chair and acts as a trusted
intermediary for the Directors as required;
–
Meets with the Non-Executive Directors (without the Chair present)
when necessary and at least once a year to appraise the Chair’s
performance and communicates the results to the Chair;
–
Together with the Nominations and Governance Committee, leads
an orderly succession process for the Chair; and
–
Engages with the workforce in key regions where the Group operates,
answers direct questions from workforce-elected representatives,
and provides the Board with feedback on the content and outcome
of those discussions.
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.
Company Secretary
Maaike de Bie
–
Ensures the necessary information flows between the Board,
Committees and between senior management and Non-Executive
Directors in a timely manner;
–
Supports the Chair in ensuring the Board functions efficiently and
effectively, and assists the Chair with organising Director induction
and training programmes;
–
Provides advice and keeps the Board updated on all corporate
governance developments; and
–
Is a member of the Executive Committee.
Group Chief Executive
Margherita Della Valle
–
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
Margherita Della Valle
–
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;
–
Oversees Vodafone’s relationships with the investment community;
–
Oversees shared services organisation (_VOIS); and
–
Leads on supply chain management, including the Vodafone
Procurement Company.
Click to read more about the Board’s role and
responsibilities, matters reserved and the terms
of reference for each Board Committee:
vodafone.com/board
Read more about our Board Committees, together with details
of their activities, on pages 74-109
Governance (continued)
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Other information
Board activities and principal decisions
Our Board is responsible for the overall leadership of
the Group and throughout the year, Board activities and
discussion have continued to focus on the Company’s
strategic priorities. The Board oversees the Company’s
strategic direction and supports the executive
management with its delivery of the strategy within a
transparent governance framework. Alongside the
strategic priorities, the Board has considered topics
including executive succession, the business plan,
financial performance, digital and technology, and
governance. Further detail on these topics is set
out below.
Key stakeholders are considered in the decision-
making process in accordance with section 172
of the Companies Act 2006.
Read more about Vodafone’s key stakeholders and how the
Board has engaged with them during the year on pages 10-12
Customers
Information in relation to the evolving needs of customers is regularly
provided to the Board by the Executive Committee members and
senior managers.
Cost of living crisis
The Board discussed pricing trends in Europe and considered the
Company’s cost of living initiative. The initiative consisted of three elements:
social or low cost tariffs in all markets; extra measures to ensure consumers
and small businesses were supported; and leveraging technology and
digital services to help customers reduce their energy usage.
Customer experience
In March 2023, the Board received a detailed analysis of customer satisfaction
and experience in markets across the Group. Updates were provided on new
tools to generate more actionable insights and the implementation of more
impactful processes to improve customer experience. Noting the current pain
points, the Board considered the planned actions for each market during the
course of the next financial year.
Vodafone Germany
The Board received regular updates on customer trends in Germany
throughout the year. The Board considered the performance of the
network, the impact of shop closures, changes in regulation and the
difficulties experienced with the rollout of a new IT system. Focus was
also given to improving customer service.
Digital and technology
New technology operating model
The Board received an update following the transition to a new technology
operating model. The technology organisation changed from one per
country to a common European organisation based on scaled domains and
sub domains. The main aim of the model was to enable faster decision-
making. Not only have significant cost savings been achieved, but
operational performance has improved following the implementation.
The employee Technology Spirit survey results had also improved during
the transition following improvements to career development and the
reputation of Vodafone as an employer of technologists.
The Board considered the positive impact, along with improvements to
innovation and customer experience.
Digital and IT strategy
The Board was kept updated on the progress of One Technology
following its formation 18 months ago. As at September 2022, Vodafone
led in 13 out of 15 categories of Gartner’s IT functionality index and a key
aim of the project was to move away from big IT transformation projects
and focus on investing in engineering, insourcing and modernisation.
The Chief Information Officers and Chief Technology Officers in each
local market were made members of their company’s executive team
and many were given additional domain roles across the Group.
Business plan and financial performance
Business plan
In the year, the Board discussed and approved the business plan.
Financial performance
The Board received regular updates on the financial performance of the
Group. This year the Board reviewed the Group trading performance and
financial forecast against the backdrop of rising energy prices, increased
wage costs due to inflation, and the effect of the war in Ukraine.
The Board also considered the Group’s debt position and agreed to
reduce its debt in the long term. In March 2023, the Board received and
approved the budget and long range plan.
Dividend
The decision to approve the dividend 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 payment of the dividend.
On 15 November 2022, we announced an interim dividend of 4.50
eurocents per share which was paid on 3 February 2023. We have
recommended a final dividend of 4.50 eurocents per share to be paid
on 4 August 2023. This was consistent with dividends declared during
FY22 and the expectations of our shareholders.
Investor relations
The Board received regular updates on market share information and
was kept updated on the results of an investor perception study.
Annual roadshow feedback was also provided during the year.
Read more about how the Board engaged with investors
during the year on page 12
Strategy and business developments
Strategy remained a key focus throughout the year. In addition to the
usual meetings, the Board attended a strategy offsite session in South
Africa. The deep-dive session focused on reviewing the Company’s
portfolio and agreeing key priorities for the Company.
UK
On 3 October 2022, we confirmed that discussions were taking place
with CK Hutchinson Holdings in relation to a possible combination of
Vodafone UK and Three UK. The potential transaction is expected to bring
benefits to customers through competitively priced access to a reliable,
high-quality and secure 5G network throughout the UK.
Vodafone Hungary
This year the Board discussed the proposed sale of Vodafone Hungary
and on 31 January 2023, we announced that Vodafone Group Plc had
completed the sale of Vodafone Hungary to 4iG Public Limited Company
and Corvinus Zrt. Proceeds from the sale were used for deleveraging.
Vodafone Egypt
The Board considered the growth plans for the Group and on 13
December 2022 we announced that Vodafone Group Plc had completed
the transfer of its 55% shareholding in Vodafone Egypt to Vodacom (its
African subsidiary). This transfer simplifies the management of Vodafone’s
African assets, along with the Group’s structure, and supports Vodacom
and Vodafone Egypt for future growth.
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Governance (continued)
Vodafone Ghana
The sale of Vodafone Group Plc’s 70% shareholding in Ghana
Telecommunications Company Limited (GTCL) to Telecel Group was
announced on 21 February 2023. Throughout the year, the Board was
kept informed on regulatory discussions. The sale is a further step in
simplifying the Group’s African portfolio. The transaction received
regulatory approval and agreement from the Government of Ghana in
February 2023, which will retain its 30% minority shareholding in GTCL.
Modern slavery
The Board monitors our compliance with the requirements of the UK
Modern Slavery Act 2015 and approved our Modern Slavery Statement
in May 2023.
Inclusion and diversity
The Board received an update on the programme to embed inclusion
to support the expansion of key diversity areas, including gender, LGBT+,
race, ethnicity, and cultural heritage (‘REACH’) and disability.
Read more about inclusion
on pages 30-34
The Board Diversity Policy is reviewed on an annual basis. The Board
received an update on the diversity disclosure requirements from the
Financial Conduct Authority and NASDAQ.
Read more about our Board Diversity Policy
on page 75
Other
The Board has also spent time this year considering the following matters:
–
Health and safety:
the Board received an update on upholding
a culture of prevention and the steps being taken to refresh health
and safety awareness following COVID-19.
–
Earthquakes in Turkey and the surrounding region:
the response
from Vodafone Turkey was commended. Focus was on ensuring
network continuity, including providing generators to the region to
help with power cuts, mobilising network engineers and provisioning
mobile base stations to restore connectivity. Free minutes, data and
texts/SMS to people in the impacted areas were also rolled out.
Vodafone Turkey’s search and rescue team also supported the
emergency response efforts. Vodafone continues to support our
colleagues and their families who have been affected by the disaster.
Read more about our response to the earthquakes in Turkey
and the surrounding region on page 28
–
Brand and reputation of the Group:
the Board received updates
on Vodafone’s reputation as measured by RepTrak. The Company’s
reputation has continued to improve across multiple markets and
stakeholders and is now ahead of the sector average. Stakeholder
awareness of the Company’s ESG commitments and initiatives was
also considered.
–
Internal controls and assessment of the viability statement:
the Board receives at least an annual update from the Audit and Risk
Committee following its review of the effectiveness of the Group’s
system of internal controls, including risk management. Following
recommendation from the Audit and Risk Committee, the Board
approved the internal controls and viability statement disclosures for
the Annual Report.
The Board will continue to focus on the strategic priorities for
the year and the appointment and onboarding of a permanent
Chief Financial Officer.
Vantage Towers
Throughout the year, the Board received regular updates on the proposal
to sell a stake in Vantage Towers in order to optimise capital and structure
and generate upfront cash proceeds to support the Group’s deleveraging
strategic priority. In November 2022, we announced that the Board had
taken the decision to enter a co-control partnership with Global
Infrastructure Partners and KKR for Vantage Towers. The partnership is
with long-term investors with significant expertise in digital infrastructure
and is expected to accelerate Vantage Tower’s growth and value creation,
whilst retaining co-control over a strategically important asset.
Key steps to date
–
May 2022: the Board discussed options for the proposed Vantage
Towers transaction;
–
July 2022: the Board considered the benefits and challenges of
co-control and the benefits of having an investor in Vantage Towers
that had expertise in tower management;
–
September 2022: the Board received an update on potential
investors; and
–
November 2022: the Board received an update on the proposed
transaction and the respective bids. The Board provided constructive
feedback and questioned the advisers on detailed aspects of the bids.
Section 172 considerations
In accordance with section 172 of the Companies Act, the Board,
with the support of an external legal adviser, conducted a deep-dive
analysis to consider stakeholder interests and whether the Vantage
Towers transaction (and which of the proposed counterparts) was
in the best interests of the Company’s members as a whole.
The following factors were taken into consideration by the Board in its
analysis and decision-making:
–
the respective valuations;
–
the terms proposed by each bid;
–
agreement changes;
–
funding and structure;
–
protection for risks in relation to minority shareholders;
–
regulatory, legal and governance considerations; and
–
the proceeds to the Company.
The Board also discussed market perception and the need for
effective communication with investors.
Following deliberation, the Board concluded that the proposed
transaction was in the best interests of the Company.
CEO Succession
On 27 April 2023, the Company announced the appointment of
Margherita Della Valle as Group Chief Executive, following a rigorous
internal and external search. In accordance with its Terms of
Reference, the Nominations and Governance Committee led on the
succession process and received regular updates.
Read more about CEO succession in the Nominations
and Governance Committee report on page 74
Risk
During the year, the Board completed a review of the Company’s risk
appetite, principal and emerging risks and how they are managed.
Read more about our system of internal controls and risk
management on page 81
Our people
The Board considered the results of the employee ‘Spirit Beat’ survey in
November 2022. Feedback was positive, however the cost of living crisis
was highlighted as an ongoing concern.
Read more about Spirit Beat
on page 13
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Other information
Board effectiveness and improving our performance
The Board recognises that it needs to continually
monitor and improve its performance. Our annual
performance evaluation provides the opportunity
for the Board and its Committees to consider and
reflect on the effectiveness of its activities, the
quality of its decision-making, and the collective
contribution made by each Board member.
Process undertaken for our Board evaluation
In accordance with the 2018 UK Corporate Governance Code
recommendations and following two consecutive years of externally
facilitated Board evaluations, the 2023 Board evaluation was
conducted internally.
Evaluation process
The internal evaluation was led by the Chair and supported by the Group
General Counsel and Company Secretary. The structure of the evaluation
was agreed and the objectives of the review were to provide an
assessment of Vodafone Group’s Board effectiveness and governance,
including the effectiveness of its Committees.
A tailored Board questionnaire was compiled to gather and distil feedback
on topics including composition, diversity and how effectively members
worked together to achieve objectives. The Directors’ responses were
collated and a paper summarising the findings was presented to the
Nominations and Governance Committee and the Board at the March
2023 meetings.
Evaluation findings
The Board discussed the findings from the evaluation and was
encouraged by the strengths identified. In particular, the Board
agreed that:
–
there has been effective leadership throughout the year and the Chair
continued to actively encourage input from all Board members,
facilitating open discussion and constructive challenge;
–
the conduct of the meetings and the materials provided supported the
Board in discharging its responsibilities and ensuring that meetings ran
effectively and efficiently; and
–
following the appointment of new Non-Executive Directors, good
progress has been made in increasing sector experience and skills on
the Board, which in turn has supported strategic discussion and
decision-making.
The Board also identified areas in which it could improve. Particular areas
of focus for the coming year include:
–
Leadership: succession planning, including securing and on-boarding
an outstanding Chief Financial Officer;
–
Operational Performance: prioritising time spent on the key strategic
pillars of customer satisfaction, simplification and growth; and
–
Technology: increasing the Board’s focus on technology strategy and
capital allocation.
The composition, performance and effectiveness of each of the Board
Committees was also evaluated and the Committee members agreed
that each Committee was functioning effectively.
Progress against actions identified following the 2022 external
evaluation
Action
Progress made
Refresh the composition of the
Board to bring on more Directors
with technology and/or
telecommunications sector
experience.
Four new Non-Executive
Directors have been appointed
to the Board in FY23, each
bringing extensive technology
and telecommunications
experience.
Devote more time to strategy
sessions to enhance free-flowing
discussions and allow for
additional topics to be discussed
where required.
The Board held several strategic
deep-dive sessions during the
year to enhance discussions.
Topics requiring additional
deep-dives could be bolstered by
using smaller groups of the Board
with specific expertise in the
matter.
A Board sub-committee has
been set up to consider merger
and acquisition transactions.
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Other information
The Nominations and Governance Committee (the
‘Committee’) continues to monitor the composition,
structure and size of the Board and its Committees
to ensure that there is an appropriate balance
of skills, knowledge, experience, and diversity so
that responsibilities can be discharged effectively.
The Committee oversees all matters relating to
corporate governance and succession planning and
makes recommendations to the Board as appropriate.
Chair
Jean-François van Boxmeer
Members
Sir Crispin Davis
Valerie Gooding
Michel Demaré
Stephen A. Carter CBE (appointed as a member on 8 November 2022)
Following the announcement on 10 May 2023, Sir Crispin Davis and
Valerie Gooding will be stepping down as members of the Committee
with effect from the conclusion of the 2023 AGM. David Nish will join
the Committee with effect from the same date.
The Committee is comprised solely of independent Non-Executive
Directors. The Committee had four scheduled meetings during the year
and additional ad hoc meetings as required. The attendance at Committee
meetings can be found on page 60.
Letter from Committee Chair
On behalf of the Board, I am pleased to present the Nominations and
Governance Committee Report for the year ended 31 March 2023.
Board composition and succession planning
The main areas of focus for the Committee this year have been Board
and Executive Committee composition and succession planning, with
a continued focus on the appointment of Non-Executive Directors with
telecommunications, technology, and e-commerce expertise, as well as
the process to identify a permanent Group Chief Executive.
The Committee monitors the length of tenure and the skills of the
Non-Executive Directors to assist with succession planning. We reported
last year that there were several upcoming scheduled retirements from
the Board and on 10 May 2023 we announced that Sir Crispin Davis,
Dame Clara Furse and Valerie Gooding would not be seeking re-election
at the 2023 AGM.
In anticipation of these scheduled departures, the Committee focused
on finding suitable Non-Executive Director successors to further enhance
the Board’s experience and capabilities in the telecommunications and
technology sectors. MWM Consulting, an independent external search firm,
was appointed to support this process. Following shareholder approval at
the Annual General Meeting on 26 July 2022, Stephen Carter, Delphine
Ernotte Cunci and Simon Segars were appointed as Non-Executive
Directors, each bringing a broad range of experience and expertise to the
Board. In November 2022, we also announced the appointment of Christine
Ramon who joined the Board as a Non-Executive Director on 14 November
2022. Christine brings extensive financial and strategic experience, along
with telecommunications expertise. She also has comprehensive African
market experience that will support the strategic aims of the Group and
I am delighted to welcome her to Vodafone’s Board.
In light of these Board changes and having reviewed the composition
of the Board Committees, we announced that with effect from 8
November 2022, Stephen Carter became a member of the Nominations
and Governance Committee, Delphine Ernotte Cunci a member of
the Remuneration Committee and Simon Segars a member of the ESG
Committee. Christine Ramon was appointed a member of the Audit
and Risk Committee with effect from 28 March 2023.
Nominations and Governance Committee
Click or scan to watch our new
Non-Executive Directors explain their role:
investors.vodafone.com/videos
The Committee has also considered the succession plans for the roles
of Senior Independent Director, Workforce Engagement Lead and Chair
of the Remuneration Committee in line with the expected retirement of
Valerie Gooding this year, following nine years’ service to the Board. With
effect from the conclusion of the 2023 AGM, David Nish will be appointed
as Senior Independent Director, Delphine Ernotte Cunci and Christine
Ramon will be appointed Workforce Engagement Leads, and Amparo
Moraleda will be appointed Chair of the Remuneration Committee.
The Committee is confident that the Board currently has the
necessary mix of skills and experience to contribute to the Company’s
strategic objectives.
Read more about the details of the length of tenure of each
Director and a summary of the skills and experience of the
Non-Executive Directors on pages 60 and 65-67
Appointment process for Non-Executive Directors
To begin the appointment process, the Company engages with an
external search consultancy which it provides with a search specification.
The consultancy then proposes a list of individuals with a diverse range
of backgrounds and characteristics. Capturing the clear benefits of
diversity of background and opinion, and identifying candidates with the
requisite experience and capabilities, is at the forefront of this search.
The shortlisted candidates are interviewed by the Committee members
and they meet with the Group Chief Executive. A recommendation is
made to the Board on the chosen candidate. Once a candidate is selected,
appointment terms are drafted and agreed with the selected candidate.
Executive Committee changes, succession planning and talent
pipeline
The Committee receives regular updates on succession planning and
changes to the membership of the Executive Committee. This year,
the Committee has discussed succession plans for executives below
Board level.
Following Nick Read stepping down from his role as Group Chief
Executive in December 2022, Margherita Della Valle was appointed as
Group Chief Executive on an interim basis with effect from 1 January
2023, whilst continuing her role as Group Chief Financial Officer. We are
grateful to Nick Read for his significant commitment and contribution to
Vodafone during his career. The Board announced on 27 April 2023,
following a rigorous internal and external search, that Margherita was
appointed as the permanent Group Chief Executive. She will also continue
as Group Chief Financial Officer until an external search for a new Group
Chief Financial Officer is complete.
During the year the Committee discussed succession planning for a
new Group Chief Technology Officer and Group General Counsel and
Company Secretary following the respective retirements of Johan
Wibergh on 31 December 2022 and Rosemary Martin on 1 March 2023.
Both individuals also stepped down from the Executive Committee on
their respective retirement dates.
Following the recruitment process, we were pleased to announce the
appointment of Maaike de Bie as Group General Counsel and Company
Secretary with effect from 1 March 2023. Maaike also joined the
Executive Committee with effect from the same date. With almost 30
years of experience, Maaike is an experienced international lawyer and
is dual qualified in both the US and UK. She has held numerous senior
roles in a variety of sectors, including at EY LLP, General Electric and the
European Bank for Reconstruction and Development LLP. Maaike has
also previously served as General Counsel and Company Secretary
of easyJet plc and Royal Mail plc.
Governance (continued)
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Other information
The Committee continues to develop a deeper understanding of
executive talent requirements and the capabilities required for the future.
We were delighted to announce the appointment of Scott Petty as Group
Chief Technology Officer on 1 January 2023, who joined Vodafone in
2009. Alberto Ripepi was appointed as Group Chief Network Officer on
1 January 2023 having joined in 2001 and both Scott and Alberto co-lead
Vodafone Technology and joined the Group Executive Committee with
effect from the same date.
We also announced that Alex Froment-Curtil stepped down as Group
Chief Commercial Officer and Executive Committee member with effect
from 31 December 2022. Aldo Bisio was appointed as Chief Commercial
Officer on 12 January 2023 in addition to his role as CEO Vodafone Italy.
Vodafone Spain joined the Europe Cluster with effect from 12 January
2023 reporting to Europe Cluster CEO, Serpil Timuray. Colman Deegan
stepped down as CEO of Vodafone Spain with effect from 31 March 2023.
Governance
The Committee continues to review action taken to comply with
the Code and other legal and regulatory obligations during the year.
The Committee receives regular governance updates and is satisfied that
Vodafone has complied with the Code in full during the year.
Independence
In accordance with the Code, the independence of all the Non-Executive
Directors was considered by the Committee. At the date of publication,
Valerie Gooding has served more than nine years as a director; however,
she will remain on the Board until the conclusion of the 2023 AGM in
order to allow for a gradual and smooth transition period of the Senior
Independent Director, Workforce Engagement Leads and Remuneration
Committee Chair roles. Following evaluation, all Non-Executive Directors
are considered independent, and they continue to make independent
contributions and effectively challenge management.
All Non-Executive Directors have submitted themselves for election or
re-election, as applicable, at the 2023 AGM, other than Sir Crispin Davis,
Dame Clara Furse and Valerie Gooding who will retire from the Board at
the conclusion of the 2023 AGM as announced on 10 May 2023.
The Executive Directors’ service contracts and Non-Executive Directors’
appointment letters are available for inspection at our registered office
and at the 2023 Annual General Meeting.
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, where 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 Directors do not conflict with their duties and
commitments as Directors of the Company. 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.
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 management to account.
Board evaluation
In accordance with the Code, Vodafone conducts an annual evaluation of
Board and Board Committee performance, which every Director engages
in, and which is facilitated by an independent third party at least once
every three years. This year, an internal evaluation of the performance
of the Board and Committees took place led by the Chair, with support
from the Group General Counsel and Company Secretary.
Read more about the outcome of this
review on page 73
Roles and responsibilities
The terms of reference for the Nominations and Governance Committee
set out the role and responsibilities of the Committee in further detail
and were reviewed in March 2023.
Click to read the Committee’s terms of reference:
vodafone.com/board-committees
Diversity
The Board Diversity Policy reinforces the ongoing commitment of the
Board to supporting diversity and inclusion in the boardroom in all its
forms including age, gender ethnicity, sexual orientation, disability and
socio-economic background. The Committee acknowledges the
significant role diversity and inclusion has on the effective functioning
of the Board and its Committees and believes a diverse board brings
a broader perspective, which enables it to be better equipped to
understand the views of our stakeholders as well as our shareholders
in the decision-making process.
The Committee reviews the Board Diversity Policy annually to ensure
the objectives remain appropriate and sufficiently stretching. We also
continue to monitor requirements as set by the Financial Conduct
Authority, FTSE Women Leaders Review, NASDAQ listing rules and the
Parker Review in terms of gender and ethnic diversity. Vodafone
acknowledges that these targets are not just an end goal, but rather steps
towards a drive for further progress.
Whilst the Board Diversity Policy specifically focuses on diversity at Board
and Committee level, commitment to diversity at Vodafone extends
beyond the Board to the Executive Committee, talent pipeline and global
workforce. The Board supports management in their efforts to build a
diverse organisation throughout the Group. As at 31 March 2023, our
Executive Committee has four positions held by women (33%) and 25%
of the Executive Committee identifies as ethnically diverse. In the Senior
Leadership Team, 49 roles are held by women (33%) and 18% of the
Senior Leadership Team identify as ethnically diverse.
Read more on Senior Leadership Team diversity
on page 34
Read more about our workforce inclusion programmes
on pages 30-34
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Other information
Governance (continued)
Board diversity matrix
This has been prepared in accordance with the guidance issued by
NASDAQ. More information can be found here: listingcenter.nasdaq.com
As of 31 March 2023
Country of Principal Executive Offices
United Kingdom
Foreign Private Issuer
Yes
Disclosure Prohibited under Home Country Law
No
Total Number of Directors
13
Part I: Gender Identity
Female
Male
Non-Binary
Did Not
Disclose Gender
Directors
7
6
0
0
Part II: Demographic Background
Under-represented individual in Home Country Jurisdiction
1
LGBTQ+
0
Did Not Disclose Demographic Background
1
The data contained in the tables on this page was collected as part
of the annual declaration process, whereby the Board and the
Executive Committee received declaration forms for self-completion.
The declaration forms included, for all individuals whose data is being
reported, the same questions relating to ethnicity, gender, sexual
orientation and disabilities. The data is used for statistical reporting
purposes and is provided with consent. The data in the above tables is as
at 31 March 2023 and there have been no changes in the period between
then and the date of this report.
Whilst we commit to diversity and inclusion in all its forms, all
appointments are made on merit and objective criteria to ensure the
appropriate mix of skills and experience on the Board, valuing the unique
contribution that an individual will bring.
Key areas of focus for 2023/24
–
Board and Committee composition, tenure and succession;
–
Senior leadership succession and onboarding; and
–
Continued onboarding of our recent Non-Executive Directors.
Jean-François van Boxmeer
On behalf of the Nominations and Governance Committee
16 May 2023
Diversity targets – progress update
Target
Progress
The Board aspires to meet and ultimately exceed the target
for at least 40% of Board positions to be held by women.
We are pleased to report that as at 31 March 2023, 54% of our Board identified
as women.
That at least one of the positions of Chair, CEO, CFO or Senior
Independent Director is held by a woman.
As at 31 March 2023 our Senior Independent Director, Chief Executive and
Chief Financial Officer positions are held by women.
1
That at least one member of the Board is from a minority
ethnic background.
As at 31 March 2023, we currently have one Board member from a minority
background, and we continually aspire to increase diverse representation on our Board.
Note:
1.
The positions of Chief Executive and Chief Financial Officer are held by Margherita Della Valle.
Board and executive management diversity
Prepared in accordance with UK Listing Rule 9.8.6R(10) as at 31 March 2023
Gender identity or sex
1
Number of
Board members
Percentage of the Board
Number of senior positions
on the Board (CEO, CFO,
SID and Chair)
2
Number in executive
management
Percentage of executive
management
Men
6
46%
1
8
67%
Women
7
54%
3
4
33%
Other categories
0
0%
0
0
0%
Not specified/prefer not to say
0
0%
0
0
0%
Ethnic background
Number of
Board members
Percentage of the Board
Number of senior positions
on the Board (CEO, CFO,
SID and Chair)
2
Number in executive
management
Percentage of executive
management
White British or other White
(including minority-white groups)
12
92%
4
9
75%
Mixed/Multiple Ethnic Groups
0
0%
0
0
0%
Asian/Asian British
1
8%
0
2
17%
Black/African/Caribbean/Black British
0
0%
0
0
0%
Other ethnic group, including Arab
0
0%
0
1
8%
Not specific/prefer not to say
0
0%
0
0
0%
Notes:
1.
The data reported is on the basis of gender identity.
2.
The positions of Chief Executive and Chief Financial Officer are held by Margherita Della Valle.
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The Committee oversees the governance
of the Group’s financial reporting, the external audit
process, risk management, internal control and
related assurance processes. During the year, the
Committee completed a series of deep dive reviews
of principal key risks and additional reviews, with an
ongoing focus on technology matters, particularly
cyber threats and resilience.
Chair and financial expert
David Nish
Members
Michel Demaré
Deborah Kerr
Amparo Moraleda
Christine Ramon (appointed as a member on 28 March 2023)
Key responsibilities
The responsibilities of the Committee are to:
–
Monitor the integrity of the financial statements, including the review
of significant financial reporting judgements;
–
Monitor the Group’s risk management system, review of the principal
risks and the management of those risks;
–
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; and
–
Monitor the activities and review the effectiveness of the Internal
Audit function.
Click to read the Committee’s terms of reference:
vodafone.com/board-committees
Letter from the Committee Chair
I am pleased to present our report 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 during the year
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 Committee met five times during the year, which included a joint
meeting with the ESG Committee. Amparo Moraleda will step-down
from the Committee with effect from the conclusion of the 2023 AGM.
The attendance by members at Committee meetings can be seen on
page 60. Each meeting agenda included a range of topics across the
Committee’s areas of responsibility.
–
External cyber threats continue to be a Group principal risk and the
Group invests considerable resources in the technology teams working
to prevent, identify and manage attempted cyber attacks. During the
year, the Committee regularly met with the Chief Technology Officer
and Cyber Security, Technology Assurance and Strategy Director to
review and challenge the cyber security strategy and also undertook
a deep dive review of this principal risk.
Read more about cyber security
on pages 42 to 43
–
We performed deep dive reviews on several other principal risks, including
technology resilience and future readiness with the Chief Technology Officer
and Chief Network Officer, as well as threats from emerging technology
and disruptive business models with the CEO of Vodafone Business and the
Group Strategy Director. In addition, the Committee undertook a number
of reviews of M-Pesa with a focus on risk management, the control
environment, regulatory compliance and assurance activities;
–
We completed a series of reviews across multiple business units, typically
with a focus on the risk and control environment. This was performed
with the CEO and CFO of the Other Europe markets cluster, the CEO of
Vantage Towers, the CEOs of Vodafone Germany, Vodafone Spain and
Vodacom Group; and
–
At the September 2022 and March 2023 meetings, we considered
the anticipated financial reporting matters impacting the half-year
and year-end reporting. We also reviewed the half-year results
announcement at our November meeting and the Annual Report and
accompanying materials at our May meeting, prior to the Group’s results
release. Our work included reviews of goodwill impairment testing,
taxation judgements, legal contingencies and the Company’s work
on going concern and the long-term viability statement.
The Committee recognises the importance of Environmental, Social and
Governance (‘ESG’) topics and the requirement for disclosures in
accordance with the Task Force on Climate-Related Financial Disclosures
(‘TCFD’) framework. We modified our terms of reference during the year
to enhance the Committee’s oversight in these areas by having a joint
meeting with the ESG Committee. During our joint meeting in May 2023,
we challenged the disclosures included in this Annual Report and also
the Group’s ESG Addendum which is available on our website.
Our external auditor, Ernst & Young (‘EY’), provides robust challenge to
management and its independent view to the Committee on specific
financial reporting judgements and the control environment.
David Nish
On behalf of the Audit and Risk Committee
16 May 2023
Objective
The objective of the Committee 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.
Audit and Risk Committee
Click or scan to watch the Chair of the
Audit and Risk Committee explain his role:
investors.vodafone.com/videos
Committee governance
Committee meetings normally take place the day before Board meetings.
The Committee 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 Group Chief Executive and Group Chief Financial
Officer, the Group Audit Director and the Group Head of Risk without others
being present. The Chair also meets regularly with the external lead audit
partner during the year, outside of the formal Committee process.
The Chair is designated as the financial expert on the Committee
for the purposes of the US Sarbanes-Oxley Act and the 2018 UK
Corporate Governance Code (‘Code’). The Committee continues to
have competence relevant to the sector in which the Group operates.
Read more about the skills and experience of Committee
members on pages 65 to 67
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Governance (continued)
Financial reporting
The Committee’s primary responsibility in relation to the Group’s
financial reporting is to review, with management and the external
auditor, the appropriateness of the half-year and annual consolidated
financial statements. The Committee focuses on:
–
The quality and acceptability of accounting policies and practices;
–
Providing advice to the Board on the form and basis underlying
the long-term viability statement;
–
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; 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, including the impact of climate change on
the consolidated financial statements;
–
Significant accounting policies; and
–
Proposed disclosures of these in this 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.
Risk deep dive reviews
The Committee performed a series of deep dives with management as part of the meeting agendas. These reviews are summarised below, together with
the Group’s principal risk to which the review relates.
Principal risk
Area of focus
Adverse changes
in macroeconomic
conditions
Business resilience and crisis management
The Committee met with the Chief External and Corporate Affairs Officer and the Global Corporate Security and Resilience Director
to perform a deep dive on business resilience and crisis management planning. The Committee reviewed the Group’s crisis
management plans and preparedness for responding to multiple concurrent crises.
Adverse changes
in macroeconomic
conditions
Financing
The Committee met with the Group Treasury Director to perform an in-depth review of funding needs and related financing
activities. This included the potential impact of adverse changes in the macro-economic and market conditions on financing plans
over the short to medium term and, more broadly, how funding and financing risk is being managed.
Disintermediation
New technologies
The Committee met with the CEO of Vodafone Business and the Group Strategy Director to review and challenge the Group’s
activities and strategies to mitigate the potential risks from new industry challengers and technologies.
Cyber threat
Cyber security strategy
The Committee met twice with the Chief Technology Officer and the Cyber Security, Technology Assurance and Strategy Director
to review the Group’s cyber security strategy, the cyber control framework and related compliance and assurance activities.
The deep dives included consideration of the threat landscape and the performance of the Group’s businesses in meeting the
required compliance standards.
Adverse political
and policy
environment
Regulatory affairs
The Committee met with the Chief External and Corporate Affairs Officer to deep dive on the political and regulatory developments
impacting the industry. This included geo-political risks and the actions underway to respond to these risks.
Strategic
transformation
Business reviews
The Committee met with a range of markets and business units, with a focus on the operational landscape, local risk assessments
and related activity, the control environment and progress against any findings from Internal Audit activities. This included:
–
Germany market review with the market CEO and CFO;
–
Spain market review with the market CEO and CFO;
–
Review of the Europe Cluster markets with the Europe Cluster CEO and CFO;
–
Business review of Vodacom with the Vodacom Group CEO and CFO;
–
Business review of Vantage Towers with the Vantage Towers CEO and CFO; and
–
Entity review of Vodafone Roaming Services with the Director of Roaming Services.
Technology
resilience and
future readiness
Technology risk
The Committee met with the Chief Technology Officer and the Chief Network Officer to consider potential points of technology
failure and the impact this could have on operational activities. Related business continuity plans were assessed and challenged.
Technology
resilience and
future readiness
Resilience and readiness
The Committee met with the Chief Technology Officer and the Chief Network Officer to deep dive on the activities to maintain
a robust, stable and resilient technology estate and on the transformation programmes in place to modernise aspects of our
technology estate to ensure future readiness.
Technology
resilience and
future readiness
IT control assurance
The Committee met with the Chief Technology Officer and IT Director to review and challenge the opportunities to increase
the standardisation of IT controls and leverage automation across the Vodafone footprint.
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Governance
Financials
Other information
Area of focus
Actions taken
Portfolio changes
The Group concluded several transactions during the second half of the
financial year of which the most notable was the disposal of a controlling
stake in Vantage Towers into a joint venture, the disposals of Vodafone
Hungary and Vodafone Ghana and the transfer of the Group’s
shareholding in Vodafone Egypt to its subsidiary, Vodacom Group
Limited. The most significant disclosure and accounting judgements
considered include:
–
The recognition and measurement of gains on the business disposals,
including a partial deferral of the gain recognised from the sale of
Vantage Towers due to the leaseback of tower space by the Group
from Vantage Towers. See note 12 ‘Investments in associates and
joint arrangements’ and note 27 ‘Acquisitions and disposals’ in the
consolidated financial statements.
The Committee met with the Group Financial Controlling and Operations
Director in March 2023 to review and challenge the accounting
treatment and disclosures in the 2023 consolidated financial statements,
including the sale and leaseback accounting resulting from the disposal
of Vantage Towers.
India accounting matters
The disclosure and accounting judgements in relation to:
–
The Group’s conditional and capped obligations to make certain
payments to Vodafone Idea Limited (‘VIL’) under a payment
mechanism agreed at the time of the merger between Vodafone India
and Idea Cellular in 2017;
–
The valuation of the security package provided by the Group to Indus
Towers (‘Indus’) in respect of commitments of VIL to Indus and the
Group’s obligation to the Total Return Swap (‘TRS’) lenders;
–
The valuation of a mark-to-market derivative asset in relation to the TRS;
–
The decision to cease reporting the Group’s investment in Indus as
held for sale in the consolidated financial statements; and
–
The impairment of the Group’s investment in Indus.
See note 7 ‘Discontinued operations and assets held for sale’ and note
29 ‘Contingent liabilities and legal proceedings’ in the consolidated
financial statements.
The Committee reviewed the appropriateness of the Group’s accounting
judgements in relation to potential liabilities under the payment
mechanism agreed with VIL, considering VIL’s ability to make any further
material payments.
The Committee also reviewed accounting judgements relating to Indus
Towers, notably the terms of the remaining pledge contained in the
security package, the reversal of the held for sale classification in the
consolidated financial statements and the valuation of the TRS related
derivative asset.
These reviews occurred at the September 2022, November 2022, March
2023 and May 2023 Committee meetings.
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 valuation model assumptions.
See note 4 ‘Impairment losses’ in the consolidated financial statements.
The Committee met with the Group Head of Financial Planning &
Analysis in November 2022 and May 2023 to discuss the impairment
exercise undertaken and to challenge the appropriateness of
assumptions made, including:
–
The consistent application of management’s valuation methodology;
–
The achievability of the Group’s five-year business plans;
–
The potential impacts of (i) rising energy costs, (ii) inflation and (iii)
climate change on the Group’s businesses and valuation assumptions;
–
The long-term growth assumed for the Group’s businesses at the end
of the plan period; and
–
The discount rates assumed in the valuation of the Group’s businesses.
During the year, the Group recorded no material impairments of asset
carrying values.
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. This
assessment is supported by the Group’s Disclosure Committee which
is chaired by the Group General Counsel and Company Secretary who
briefs the Committee on the Disclosure Committee’s work and findings.
The Committee reviewed the processes and controls that underpin
the Annual Report’s preparation, ensuring that all contributors 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.
The Committee reviewed an early draft of the Annual Report to
enable input and comment. The review is performed in conjunction
with the ESG Committee which also reviews the TCFD and ESG-related
disclosures. The Committee also reviewed the results announcement,
supported by the work of the Group’s Disclosure Committee, which
reviews and assesses the appropriateness of investor communications.
This work enabled the Committee to provide positive assurance to the
Board to assist it in making the statement required by the Code.
Significant financial reporting judgements
The areas considered and actions taken by the Committee in relation
to the 2023 consolidated financial statements are outlined below and
overleaf. For each area, the Committee was satisfied with the accounting
and disclosures in the consolidated financial statements.
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Governance (continued)
Regulators and our financial reporting
The Financial Reporting Council (‘FRC’) publishes thematic reviews and
other guidance to help companies improve the quality of corporate
reporting through the provision of guidance and reviews of the quality
of reporting across public companies. The Group routinely reviews FRC
publications, the most relevant publications for the 2023 Annual
Report being:
–
Key matters for 2022/23 reports and accounts;
–
Annual review of corporate reporting 2021/22;
–
Thematic review of existing disclosure requirements for (i) discount
rates, (ii) judgements and estimates, (iii) earnings per share, (iv) deferred
tax assets, (v) accounting and reporting for business combinations and
(vi) TCFD and climate-related disclosures;
–
‘What makes a good Annual Report and Accounts’ guidance;
–
Updated guidance on Strategic Reports; and
–
FRC Lab report on digital security risk disclosure.
The Group already complied with the majority of the recommendations
and the 2023 Annual Report has been updated to adopt best practice
where appropriate.
We also reviewed the draft standard for Audit Committees that was
published by the FRC in the year. The final requirements will be reviewed
once available although no significant impact is expected as we have
assessed that the Committee follows the working practices outlined
in the draft standard.
During the year, the Financial Conduct Authority (‘FCA’) finalised
new mandatory disclosure requirements on diversity and inclusion.
The Committee welcomes these new disclosure requirements which
are included in this Annual Report.
We continue to track developments for the proposals in the ‘Restoring
Trust in Audit and Corporate Governance’ paper issued by the Department
for Business, Energy and Industrial Strategy (‘BEIS’). This will ensure we are
well placed to implement the changes, as required, in the years ahead.
During the year, the Group received a notification letter from the FRC that
the Annual Report for the year ended 31 March 2022 had been included
in their thematic review of company disclosures relating to deferred tax
assets. In October 2022, we received confirmation that the FRC had no
questions for the Group arising from the review.
In December 2021, Vantage Towers A.G. (‘Vantage Towers’) received
an enquiry letter from BaFin, the German Federal Financial Supervisory
Authority, containing questions and requests for further information
in relation to the Vantage Towers Annual Report for the year ended
31 March 2022. To date, two written responses in January and March
2023 have been submitted to BaFin as part of the ongoing enquiry.
Area of focus
Actions taken
Liability provisioning
The Group is subject to a range of claims and legal actions from a
number of sources, including, but not limited to, competitors, regulators,
customers, suppliers and, on occasion, fellow shareholders in
Group subsidiaries.
See note 16 ‘Provisions’ and note 29 ‘Contingent liabilities and legal
proceedings’ in the consolidated financial statements.
The Committee met with the Director of Litigation in November 2022
and May 2023 in advance of the half-year and year-end reporting,
respectively. The Committee reviewed and challenged management’s
assessment of the 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 appropriateness of disclosures in the consolidated
financial statements.
Taxation
The Group is subject to a range of tax claims and related legal actions
in several jurisdictions where it operates. Furthermore, 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’ in the consolidated financial statements.
The Committee met with the Group Tax Director in November 2022
and May 2023 in advance of the half-year and year-end financial
reporting, respectively. The Committee challenged the judgements
underpinning tax provisioning, deferred tax assets and related
disclosures.
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’ in the consolidated financial statements.
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 2023.
The Committee considered the scope of EY’s planned revenue audit
procedures, and their related audit findings and observations at its
meetings in November 2022 and May 2023.
Hyperinflation accounting in Turkey
Turkey has met the requirements to be designated as a hyperinflationary
economy under IAS 29 ‘Financial Reporting in Hyperinflationary
Economies’. The Group has therefore applied the requirements of IAS 29
for its Turkish operations with a Turkish lira functional currency.
See note 1 ‘Basis of preparation’ in the consolidated financial statements.
The Committee met with the Group Financial Controlling and Operations
Director in November 2022, March 2023 and May 2023 to review and
challenge the accounting treatment and disclosures in the half-year and
year-end financial reporting, respectively.
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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 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 conformity
with the International Professional Practices framework, which includes
the IIA standards and code of ethics, and the continuous development
of the audit methodology applied. The conformity is reviewed and verified
through an external quality assessment by an independent consultancy
firm every three years.
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
is determined by taking into account Internal Audit’s rolling review
framework and the outputs of a data-driven risk assessment.
The Committee reviews progress against the approved audit plan and the
results of Internal Audit activities, with a stronger 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 entity to highlight both changes in the control
environment and areas that require attention.
During the year, Internal Audit coverage focused on principal risks,
including cyber threat and strategic transformation. Relevant audit results
are reported before 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 broad range of areas, including:
product development, customer base management, Vodafone Business
sales opportunity governance, billing of Internet of Things services,
compliance with the EU Electronic Communications Code, data
management, data protection at third parties, asset verification and
reconciliation, revenue and cost assurance controls, revenue accrual
processes, lease accounting, active directory infrastructure security,
Application Programming Interface security and M-Pesa operations.
The activities performed by the shared service organisation also received
ongoing focus due to their significance across many 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.
The last independent review of the effectiveness of the Group’s Internal
Audit function was performed by Deloitte LLP in January 2022 and the
results have been presented to the Committee. The review concluded
that the Internal Audit function operated in accordance with the Global
Institute of Internal Auditors’ International Professional Practices
Framework, is at the top of its peer group range and demonstrates areas
of innovative practice.
The Internal Audit function continues to invest in several initiatives to
improve its effectiveness, particularly in the adoption of new technologies.
The innovative use of data analytics has provided broader and deeper
audit testing and driven increased insights.
Assessment of the 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.
Cyber threats remain a major focus for the Committee given the
continual threats 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. This activity
was supported by reports from the Group Audit Director and the Group
Head of Risk and a range of functional specialists.
As part of the Committee’s recurring agenda items, the Group Security
Director provided a fraud update, the scope of which would include
incidents of fraud involving management or employees with a significant
role in internal controls.
The Group operates a ‘Speak Up’ channel that enables employees to
anonymously raise concerns about possible irregularities. The Committee
received an update on the operation of the channel together with the
output of any resulting investigations.
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 2023 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 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 fall
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. We
continue to challenge management on ensuring the nature and scope
of control activities evolve to ensure key risks continue to be adequately
mitigated. For example, robust controls over our IT systems are critical
and were discussed with the Chief Technology Officer and IT Director
at the November 2022 meeting.
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 strategy, 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.
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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 and the going
concern assessment.
Read more about the long-term viability statement
on page 57
Read more about the going concern assessment
on page 112
At our meeting in May 2023, 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. This comprehensive assessment of the Group’s
prospects made by management included consideration of:
–
The review period and alignment with the Group’s internal
long-term forecasts;
–
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;
–
The modelling of the financial impact of severe but plausible risk
scenarios materialising, including the impact of energy price inflation;
–
The inclusion of 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’ in the consolidated financial statements.
External audit
The Committee has primary responsibility for overseeing the relationship
with the external auditor, EY. This includes making the recommendation
on the appointment, reappointment, and removal of the external auditor,
assessing its 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
for four years since the appointment of EY as external auditor for the year
ended 31 March 2020.
EY presented to the Committee its detailed audit plan for the 2023
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 Auditor’s report.
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.
Read the Auditor’s report
on pages 113 to 122
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 its 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 process
throughout the year and considered the performance of EY.
This comprised the Committee’s own assessment and the results of a
detailed feedback survey of senior 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.
EY audit and non-audit fees
Total fees payable to EY for audit and non-audit services in the year
ended 31 March 2023 amounted to €30 million (FY22: €25 million).
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 its fees were appropriate for the scope of the work
required, agreed an audit fee of €27 million for statutory audit services
in the year (FY22: €23 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 €3 million (FY22: €2 million). See note 3 ‘Operating
profit’ in the consolidated financial statements.
Governance (continued)
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The role of the ESG Committee is to provide
oversight of Vodafone’s Environmental, Social and
Governance (‘ESG’) programme, of sustainability and
responsible business practices, as well as Vodafone’s
contribution to the societies that we operate in
under the social contract.
Chair
Amparo Moraleda
Members
Valerie Gooding
Dame Clara Furse DBE
Simon Segars (appointed as member in November 2022)
On 10 May 2023, we announced that Valerie Gooding and Dame Clara
Furse will be stepping down as members of the Committee with effect
from the conclusion of the 2023 AGM. Jean-François van Boxmeer and
Christine Ramon will join the Committee from the same date.
Key responsibilities
The responsibilities of the Committee are to:
–
Provide oversight of the Vodafone Group ESG strategy, the Purpose
programme (Digital Society, Inclusion for All and Planet), sustainability
and responsible business practices, as well as the contribution to the
societies they operate in under their the social contract;
–
Monitor progress against key performance indicators and external ESG
indices; and
–
Provide joint oversight and effective governance with the Audit and
Risk Committee over the ESG content within the Annual Report, the
TCFD report and the ESG Addendum.
Click to read the Committee’s terms of reference:
vodafone.com/board-committees
Letter from Committee Chair
On behalf of the Board, I am pleased to present Vodafone’s ESG
Committee Report for the year ended 31 March 2023.
The Committee was established in 2021 with the founding members
selected to ensure a range of experience across the range of topics that
fall within ESG. In November 2022, we welcomed our fourth Committee
member, Simon Segars. Simon brings significant experience and insights
to the ESG Committee, including how technology and connectivity are
reshaping our digital societies.
On 10 May 2023, it was announced that Valerie Gooding and Dame Clara
Furse would be retiring following the conclusion of the 2023 AGM.
I would like to thank them both for their contribution since this Committee
was established two years ago. Jean-François van Boxmeer and Christine
Ramon will be joining this Committee on the same date and their insights
will be an excellent addition to the Committee.
This year, the Committee met twice, in November 2022 and March 2023.
Each meeting agenda included a range of topics across the Committee’s
areas of responsibility. During FY23, the Committee undertook deep dives
on each of Vodafone’s three purpose pillars, as well as Vodafone’s
approach to responsible business. These deep dives were supplemented
by committee training on key Planet-related topics by the Group
Sustainability team, and other experts across the business.
Now that the Committee has explored each of the key purpose themes
in detail, we will move into receiving regular updates on progress against
our key ESG strategy.
In addition to these thematic deep dives, a key focus of the ESG
Committee this year was oversight of Vodafone’s ESG data transformation
and disclosure programme. High quality and timely data is a core
component of a successful ESG strategy, both to ensure that we can
track progress against targets, and to enable decision-making by
investors, consumers, suppliers, governments and other stakeholders.
Recognising this, the Board was pleased to see that management updated
their approach to ESG reporting this year, by giving joint responsibility
for ESG reporting to the Group Financial Reporting team and the Group
Sustainable Business team. This allowed the teams to apply financial
reporting principles to non-financial ESG data, including establishing a
control framework and securing external assurance on key data points.
These changes have already yielded positive changes and set a firm basis
from which to grow. However we acknowledge that there is a long road
ahead before ESG disclosures will match similar levels of data quality to
financial disclosures, not only for Vodafone, but for other corporates too.
The absence of a clear framework for the calculation and reporting of
ESG data exacerbates the challenge for all reporters. For example, we
expect these challenges will come into sharper focus as Scope 3 emission
reductions become a priority for corporates.
In November 2022 the Committee reviewed its terms of reference and
agreed to introduce new joint oversight of selected ESG matters between
the ESG Committee and the Audit and Risk Committee. This will be
executed through increased sharing of papers between the committees,
and a new joint meeting each May to review ESG disclosures.
On behalf of the Committee, I have reported this year’s work to the Board
and I am looking forward to the next year chairing the Committee, starting
with the joint ESG Committee and Audit and Risk Committee meeting
in May 2023.
The Committee will continue oversight and scrutiny of Vodafone’s ESG
agenda, including further presentations from senior management and
experts across the Group. We will review against Vodafone’s strategy
and the pathways in place to achieve Vodafone’s targets across its three
purpose pillars. Consideration of the following stakeholder interests will
remain part of the Committee’s responsibility. We set out below some
of our key stakeholders and examples of their ESG-related interests:
–
Investors:
Board-level oversight of Vodafone’s ESG strategy and
performance is a key part of an effective ESG programme;
–
Governments and regulators:
Local and international legal and
regulatory obligations on ESG topics to increase;
–
Local communities and NGOs:
ESG topics affect the day-to-day lives
of the people in the communities that we serve;
–
Suppliers and customers
: Upholding high ethical standards
throughout our value chain is critical for stakeholders when deciding
whether they should do business with Vodafone; and
–
Employees:
Employees take pride in working for a purpose-driven
organisation that is enabling an inclusive and sustainable digital society.
We believe the ESG Committee will continue to add value to the
long-term success of Vodafone, for the benefit of our customers, key
stakeholders, and the societies in which we operate. I will be available to
engage with shareholders who have questions or comments about the
work of the Committee at our 2023 AGM.
Amparo Moraleda
On behalf of the ESG Committee
16 May 2023
ESG Committee
Click or scan to watch the Chair of the
ESG Committee explain her role:
investors.vodafone.com/videos
Click to read more about Vodafone’s
approach to ESG reporting:
vodafone.com/about-vodafone/reporting-centre
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Environment
Read more
Energy consumption and GHG emissions
E
Including energy sources, uses and targets
35-37
Circularity and other environmental topics
E
Including device and network waste, water and plastics
37-38
Environmental benefits from
products & services
E
Including carbon & resource efficiency enablement
37
Climate change risk management
A
E
Including alignment with TCFD recommendations
58-59
Social
Read more
Health and safety
B
44-45
Diversity & inclusion and
employee experience
B
33-34
Employee rights
A
B
Including collective bargaining, grievance mechanisms,
Speak Up, Fair Pay, and labour standards
15
40
44
100
Responsible supply chain
B
E
Including labour standards and sourcing of minerals
47
Human and digital rights
A
E
Including privacy regulations, right to privacy and
freedom of expression, and other human rights
46
40-43
Socio-economic benefits from
products & services
E
Including digital inclusion
29-32
Governance
Read more
Mobile, masts and health
B
45
Security
A
B
Including cyber and other security topics
42-43
Anti-bribery and corruption
A
48-49
Business conduct & ethics
A
Including taxation, business conduct and compliance
47-49
Corporate governance
N
60-73
Reporting
B
E
A
Including Annual Report and Accounts, TCFD report,
Modern Slavery Statement and voluntary ESG disclosures
27
47
58-59
Focus during the year
The ESG Committee met twice during the year ended 31 March 2023.
The following provides a summary of the topics covered.
November 2022
–
Review of the ESG reporting processes and disclosure accountabilities.
Following ExCo alignment, the discussion clarified and adjusted the
oversight for ESG disclosures between the ESG Committee, the Audit
and Risk Committee, and the Disclosure Committee.
–
Review and approval of updates to the “Committee terms of reference”
to introduce new joint oversight of selected ESG matters between the
ESG Committee and the Audit and Risk Committee.
–
Review of Vodafone’s approach to managing human rights, including
how Vodafone respects the rights to freedom of expression and privacy
in the context of government law enforcement assistance requests.
–
Deep dive session on Vodafone’s Inclusion for All (I4A) purpose pillar,
delivered by the ExCo sponsor Serpil Timuray. During this session,
progress reports were delivered on the Inclusion for All metrics.
–
The Committee also considered Vodafone’s Conflict Minerals Report.
March 2023
–
Review of Vodafone’s approach to ESG disclosures in FY23 and update
on assurance of ESG metrics, provided by Joakim Reiter, Chief External
and Corporate Affairs Officer, and the Head of Group Financial Reporting.
–
Deep dive on the Digital Society purpose pillar, including a report on
progress against the KPI to support seven million SMEs to digitalise
using V-Hub.
–
An update for noting on Vodafone’s performance against Planet
targets, as well as an update on Planet initiatives and increasing
external requirements in this area. This followed the Planet deep dive
the previous financial year.
Key focus for the next year
The key areas of focus for the next year:
–
Continuing to review progress of ESG strategy, including performance
against targets and performance in ESG indices and rankings;
–
Reviewing progress in embedding key purpose targets and practices
into Vodafone’s operations and commercial strategy;
–
Reviewing Vodafone’s alignment to external ESG disclosure standards;
–
Continued oversight of the ESG data management programme; and
–
Deep dive into renewable energy.
Mapping of ESG topics
When establishing the ESG Committee and setting its remit, we
completed a mapping of all key ESG topics for Vodafone, to ensure
clarity on the role of the ESG Committee alongside the Board and other
relevant Committees. This is presented to the right, alongside further
details of each ESG topic.
Key
Audit and Risk Committee
ESG Committee
Nominations and
Governance Committee
Full Board
A
E
N
B
Governance (continued)
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Letter from the Remuneration
Committee Chair
On behalf of the Board, I present our 2023
Directors’ Remuneration Report.
This report includes both our proposed Policy Report (which will be
submitted for shareholder approval at the 2023 AGM), and our 2023
Annual Report on Remuneration, which sets out how our current policy
was implemented during the year under review, and how, subject to its
approval, our revised policy will be applied for the year ahead.
Remuneration Policy review
Our current Policy Report was approved at the July 2020 AGM, with a
vote in favour of over 96%. Following the policy entering its third year of
operation without amendment, the Committee has been reviewing our
remuneration structures ahead of the regulatory requirement for a new
policy to be submitted to shareholders at the 2023 AGM.
The Committee is clear that consistency and flexibility should be
maintained within the new policy and in the event material revisions are
required before the end of its three-year regulatory lifecycle then the
Committee will re-engage with shareholders.
Following its review of the current arrangements, which the Committee is
satisfied remain appropriate and operating as intended, and having made
a significant number of best practice changes when the policy was last
renewed, the Committee is not proposing to make any material changes
at this time.
Instead, some refinements to our framework and the implementation
of our structures are proposed. These include the review of our
short-term incentive to more fully support our priorities of Growth and
Customers (further details of which are provided later in this letter under
‘Arrangements for 2024’). The Committee is also strengthening our
clawback policy with the current list of trigger events expanded to
include a breach of an executive’s restrictive or confidentiality covenants,
reflecting the importance in our industry of retaining and protecting key
talent and intellectual property. Clawback time frames are also being
revised to ensure compliance with the recently announced SEC
requirements, the vast majority of which our current arrangements
already complied with.
The implementation of our long-term incentive plan is subject to the
Global Incentive Plan Rules which were last approved by shareholders at
the 2014 AGM. In line with UK regulations, the Rules need to be approved
by shareholders at least every 10 years and will be submitted for approval
at the 2023 AGM. The Committee, with its external legal advisers, has
reviewed the Rules to ensure they reflect latest market practice.
Engagement during the year
Shareholder feedback has always played a vital role in the development
of our executive remuneration policy and this is reflected in this year’s
shareholder consultation. As part of this engagement the Committee
contacted shareholders with a combined holding of c.50% in Vodafone
Group Plc. We also actively engaged with a variety of investor bodies and
proxy agencies before finalising the Policy Report which will be submitted
for approval at the 2023 AGM. I would like to thank all stakeholders that
engaged in this year’s review.
In terms of engaging the employee voice, as Workforce Engagement
Lead, I attended meetings with both our European and African forums,
with feedback and comments from the meetings subsequently
presented back directly to the Board. The key topics raised by employee
representatives this year focused on the cost of living support being
provided, progress against our Race, Ethnicity and Cultural Heritage
targets, internal talent development, and our wider business performance.
I would like to thank the representatives from both forums for inviting
me and for contributing to the discussions.
When looking at the feedback from these forums and our other
channels of engagement it is evident that our colleagues value the
open and regular updates the business has given throughout the year,
and the Board will ensure these continue in the year ahead.
Read more about our stakeholder engagement activities
on pages 10 to 12 of this Annual Report
Fair pay
It is recognised that rising inflation levels and the subsequent cost of
living crisis have impacted colleagues across a number of our markets
this year. To help alleviate the impact of these pressures, targeted support
was provided in locations including the UK, Turkey and Egypt. Such
measures included additional or accelerated salary reviews, the provision
of extra cash allowances, and the careful consideration of wider market
conditions when setting salary budgets for the 2023 review.
When making decisions on executive remuneration the Committee
considers pay in the wider context including arrangements elsewhere
in the business, our fair pay principles and stakeholder considerations.
Read more
on page 100
Arrangements for 2024
Base salary and pension arrangements
Following her appointment to the position of Group Chief Executive,
Margherita Della Valle’s salary was set at £1,250,000. The Committee
decided the new salary was appropriate when compared against the
external market, was fair from a gender pay perspective given its long
standing work on fair pay, as referenced above, and reflected both the
responsibilities and demands of the role.
During the year no additional salary payment or allowance has been
made to Margherita Della Valle in respect of her carrying out the dual
roles of Group Chief Executive and Group Chief Financial Officer. This will
remain the approach going forward, and it is intended that Margherita will
continue with her dual responsibilities until the search for a new Group
Chief Financial Officer is complete.
Pension arrangements for Executive Directors will continue to remain
aligned with the wider UK workforce at 10% of base salary.
Annual bonus (‘GSTIP’)
In recent years the performance measures have normally been equally
weighted across service revenue, adjusted free cash flow, adjusted EBIT,
and customer appreciation. The Committee adjusted these weightings
ahead of the start of the FY24 plan to ensure performance against the
strategic priorities of Growth and Customers is fully incentivised.
For the 2024 plan, measures under the annual bonus will be:
–
Growth (70%)
: service revenue (20%), adjusted EBIT (20%), adjusted
free cash flow (20%) and revenue market share (10%).
–
Customers (30%)
: Net Promoter Score (20%), and churn (10%).
Global long-term incentive (‘GLTI’)
Following a comprehensive review of the GLTI structure the Committee
determined that this will remain unchanged for 2024. The measures
under the long-term incentive will continue to be weighted at 60%
adjusted free cash flow, 30% relative TSR and 10% ESG.
Read more
on pages 104 and 105
Remuneration Committee
Click or scan to watch the Senior Independent Director
and Chair of the Remuneration Committee explain her
role:
investors.vodafone.com/videos
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Remuneration Committee (continued)
Performance outcomes during 2023
GSTIP performance (1 April 2022 – 31 March 2023)
Annual bonus performance during the year was measured against
both financial and strategic measures. The four measures were equally
weighted at 25% each, with financial metrics constituting service revenue,
adjusted EBIT and adjusted free cash flow whilst the strategic measure
was linked to customer appreciation KPIs. These KPIs covered metrics
including churn, revenue market share, and Net Promoter Score.
Performance under the service revenue, free cash flow and customer
appreciation measures was above the mid-point of the target range whilst
performance against EBIT was below the mid-point. The combined
performance resulted in an overall bonus payout of 55.8% of maximum.
Read more
on pages 94 and 95
GLTI performance (1 April 2020 – 31 March 2023)
The 2021 GLTI award (granted November 2020) was subject to adjusted
free cash flow (60% of total award), relative TSR (30% of total award),
and ESG (10% of total award) performance. All performance conditions
were measured over the three-year period ending 31 March 2023.
Final adjusted FCF performance finished above the mid-point of the range
resulting in 72.7% of the adjusted FCF element vesting. Relative TSR
performance was below the median of the peer group resulting in no
vesting under this measure. ESG performance was assessed against three
metrics and vested at 95.3%. This resulted in an overall vesting percentage
for the 2021 GLTI of 53.2% of maximum.
Read more
on pages 95 and 96
Consideration of discretion
The Committee reviewed the appropriateness of the outcomes of
both the annual bonus and long-term incentive plan in light of both
the relevant performance targets and wider internal and external
considerations across the respective measurement periods. Outcomes
were reviewed against the wider employee experience during the
periods under review with the Committee noting the steps taken in
markets to help employees with the cost of living. The Committee also
acknowledged that no windfall gains had occurred under the long-term
incentive plan. It was agreed that the outcomes were appropriate and that
no adjustments were required.
Looking forward
Following the conclusion of the 2023 AGM I will be stepping down as Chair
of the Remuneration Committee. Amparo Moraleda will be appointed
as Chair of the Committee and Dame Clara Furse will be stepping down
as a member of the Committee with effect from the same date.
The rest of this report sets out both our proposed Policy Report, as will
be submitted at the 2023 AGM, and our Annual Report on Remuneration,
which sets out the decisions and outcomes summarised in this letter
in further detail.
Valerie Gooding
Chair of the Remuneration Committee
16 May 2023
Remuneration at a glance
Component
2023 (year ending 31 March 2023)
2024 (year ending 31 March 2024)
Fixed pay
Base salary
Effective 1 July 2022:
Chief Executive: £1,081,500.
Chief Financial Officer: £721,000.
Effective 1 January 2023:
Group Chief Executive on an interim basis and Chief Financial
Officer: £1,081,500.
Effective 27 April 2023:
Group Chief Executive and Chief Financial Officer:
£1,250,000.
Benefits
Travel related benefits and private medical cover.
Travel related benefits and private medical cover.
Pension
Pension contribution of 10% of salary.
Pension contribution of 10% of salary.
Annual bonus
GSTIP
Opportunity (% of salary):
Target: 100%/Maximum: 200%
Measures:
Service revenue (25%), adjusted EBIT (25%), adjusted FCF
(25%), and customer appreciation KPIs (25%).
Opportunity (% of salary):
Target: 100%/Maximum: 200%
Measures:
Service revenue (20%), adjusted EBIT (20%), adjusted FCF
(20%), revenue market share (10%), Net Promoter Score
(20%), and churn (10%).
Long-term incentive
GLTI
Opportunity (% of salary – maximum):
Chief Executive: 500%/Other Executive Directors: 450%
Measures:
Adjusted free cash flow (60%), relative TSR (30%),
and ESG (10%).
Performance/holding periods:
Three-year performance + two-year holding period.
Opportunity (% of salary – maximum):
Chief Executive: 500%/Other Executive Directors: 450%
Measures:
Adjusted free cash flow (60%), relative TSR (30%),
and ESG (10%).
Performance/holding periods:
Three-year performance + two-year holding period.
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Remuneration Policy
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 the Executive Directors,
and the policy applied to the Chair and Non-Executive Directors.
We will be seeking shareholder approval for our Remuneration Policy at the 2023 Annual General Meeting (‘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 85. The proposed Remuneration
Policy submitted for shareholders’ approval at the 2023 AGM does not differ substantively from the Remuneration Policy approved by shareholders in
2020 except for changes made to align the terms of the Remuneration Policy with the drafting of the rules of the new Global Incentive Plan 2023, which
is also being submitted for shareholders’ approval at the 2023 AGM. Subject to approval, we will review our Remuneration Policy each year to ensure that
it continues to support our Company strategy and, if it is necessary to make a change to our Remuneration Policy within the next three years, we will seek
prior shareholder approval for the change.
Considerations when determining our Remuneration Policy
To avoid conflicts of interest, the Remuneration Committee is entirely comprised of Non-Executive Directors (who are not eligible to participate in the
Company’s annual bonus or long-term incentive arrangements) and the Remuneration Committee ensures that individuals are not present when the
Remuneration Committee discusses their own remuneration. 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 of how we engage with, and consider the views of, each of these stakeholders are set out on page 100.
In advance of submitting our Remuneration Policy for shareholder approval we ran a thorough consultation exercise with our major shareholders.
We invited our top 25 shareholders (constituting a combined holding of c.50% of our issued share capital at the time of engagement) and a number of
key governance stakeholders to comment on remuneration at Vodafone and to provide feedback on the proposed changes to the current Remuneration
Policy which was approved at the 2020 AGM. A number of meetings between shareholders and the Remuneration Committee Chair took place during
this consultation period.
Listening to and consulting with our employees is very important and the Remuneration Committee is supportive of the activities undertaken to engage
the employee voice. Our engagement with employees 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 Workforce Engagement Lead also undertakes an annual attendance at our European employee forum, and a similar body which covers our African
markets, with any questions or concerns raised by the employee representatives presented directly to the Board for consideration and discussion.
Any actions taken by the Board are then fed back to these forums to ensure a two-way dialogue.
Whilst we do not formally consult directly with employees on the Remuneration Policy nor is any fixed remuneration comparison measurement used
when determining the Remuneration Policy for Executive Directors, the Remuneration Committee is briefed on pay and employment conditions of
employees in the Vodafone Group, with particular reference to the market in which the executive is based. The Company operates Sharesave, a UK
all-employee share plan, as well as other discretionary share-based incentive arrangements, which means that the wider workforce have the opportunity
to become shareholders in the Company and be able to vote on the Remuneration Policy in the same way as other shareholders. Further information
on our approach to remuneration for other employees is given on page 90.
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-focused metrics, 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 metrics 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.
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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Remuneration Policy (continued)
Malus and clawback
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 if they believe circumstances warrant it. In particular, the Remuneration 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 Remuneration 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. In line with best practice guidance, the key trigger events
for the use of the clawback arrangements include material misstatement of results, material miscalculation of performance condition outcomes, the
Executive Director’s gross misconduct, or breach of their restrictive covenants, the Executive Director causing a material financial loss to the Group as
a result of reckless or negligent conduct or inappropriate values or behaviour, corporate failure or serious 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
2023 AGM. The current clawback arrangements, which are set out in the Remuneration Policy approved by shareholders at the 2020 AGM, have been
applicable to all bonus amounts paid, or share awards granted, since the 2020 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. Decisions are influenced by:
–
the level of skill, experience and scope of responsibilities;
–
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.
Opportunity
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.
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. These may include (but are not limited to) a company car or cash allowance, fuel and access to
a driver where appropriate.
–
Private medical, death and disability insurance and annual health checks for the Executive Directors and their families.
–
In the event that we ask an individual to relocate we would offer them support in line with Vodafone’s relocation and
international assignment policies. This may cover (but is not limited to) relocation, cost of living allowance, housing,
home leave, education support, and tax equalisation and advice.
–
Legal and tax support 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,
though no monetary maximum has been set.
–
We expect to maintain benefits at the current level but the value of any benefit may fluctuate depending on, amongst other
things, personal situation, insurance premiums and other external factors.
Performance metrics
None.
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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 Director has met
or exceeded their share ownership requirement. The Remuneration Committee retains the discretion to adjust the size of
the bonus based on the achievement of the relevant performance conditions to reflect the Company’s and the Executive
Director’s underlying performance and any other factors the Remuneration Committee considers appropriate.
Opportunity
–
Bonuses can range from 0 to 200% of base salary, with 100% paid for on-target 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.
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.
The use of ESG metrics reflects the importance of our performance and progress against our long-term ambitions
in this area.
Operation
–
Award levels and the framework for determining vesting are reviewed annually.
–
Long-term incentive awards consist of awards of shares subject to performance conditions which are granted in respect
of any financial year.
–
Awards will vest based on Group performance against the performance metrics set out below, measured over a period of
normally not less than three years. In exceptional circumstances, such as but not limited to where a delay to the grant date
is required, the Remuneration 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.
–
Awards may be subject to a mandatory two-year post-vesting holding period before the underlying shares can be sold.
–
Dividend equivalents are paid in cash and/or shares by reference to the vesting period (and holding period, if applicable) in
respect of shares that vest.
Opportunity
–
Maximum long-term incentive face value at award of 500% of base salary for the Chief Executive and 450% for other
Executive Directors in respect of any financial year.
–
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 Remuneration Committee retains the discretion to adjust the extent to which an award vests based on the
achievement of the relevant performance conditions and to reflect the Company’s and Executive Director’s underlying
performance and any other factors the Remuneration Committee considers appropriate. In addition, the Remuneration
Committee has the discretion to reduce long-term incentive grant levels for Executive Directors who have neither met their
shareholding guideline nor increased their shareholding by 100% of salary during the year.
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, and 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 Remuneration 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)
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 Remuneration 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 “2023 award” was made
in the financial year ending 31 March 2023. 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.
Further details of these performance conditions are set out below. The Remuneration Committee reserves the right during the lifetime of the
Remuneration Policy to change the performance conditions applicable to GLTI awards to other financial, shareholder return and strategic metrics, if the
Remuneration Committee determines that to do so would be in the best interests of the Company. However, in such circumstances, the majority of the
GLTI awards would continue to remain subject to financial performance targets. The Remuneration Committee would engage with major shareholders
prior to changing the performance conditions applicable to GLTI awards in this way.
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. The Remuneration Committee sets these targets to be sufficiently demanding and with significant stretch.
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
Vesting percentage
(% of FCF element)
Below threshold
0%
Threshold
20%
Maximum
100%
Relative TSR
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 and outperformance range for the performance condition are
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):
Performance
Vesting percentage
(% of TSR element)
Below threshold
0%
Threshold (median)
20%
Maximum (outperformance of median as determined per award)
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 are set on an annual basis (in accordance with our approach for our other performance measures) and are aligned to our externally
communicated ambitions in this area. Where performance is below the agreed ambition, the Remuneration 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/or individual performance aspects in the annual bonus targets and GLTI awards.
They also receive lower levels of share awards which are partly delivered in conditional share awards without performance conditions.
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Estimates of total future potential remuneration from 2024 pay packages
The tables below provide estimates of the potential future remuneration for Executive Directors based on the remuneration opportunity to be granted in
the 2024 financial year. Potential outcomes based on different performance scenarios are provided in accordance with the relevant regulatory requirements.
The assumptions underlying each scenario are described below.
Fixed
Consists of base salary, benefits and pension.
Base salary is at 1 July 2023.
Benefits are valued using the figures in the total remuneration for the 2023 financial year table on page 94 (of the 2023 annual report).
Pensions are valued by applying cash allowance rate of 10% of base salary at 1 July 2023.
Base
(£’000)
Benefits
(£’000)
Pension
(£’000)
Total fixed
(£’000)
Group Chief Executive
and Chief Financial Officer
1,250
26
125
1,401
Mid-point
Based on what a Director would receive if performance was in line with the Company’s business 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).
Maximum
+50%
The same assumptions apply as for ‘Maximum’ but with a 50% uplift in the value of the GLTI award.
All scenarios
Long-term incentives consist of share awards only which are measured at face value, i.e. no assumption is made for dividend
equivalents which may be payable.
22%
22%
14%
14%
10%
10%
13,276
13,276
71%
71%
10,151
10,151
61%
61%
6,401
6,401
59%
59%
1,401
1,401
Mid-point
Maximum
Maximum
(assuming 50%
share price growth)
Fixed
Salary, Benefits, and Pension
Annual Bonus
Long-Term Incentive
19%
19%
25%
25%
19%
19%
Margherita Della Valle
Group Chief Executive and Chief Financial Officer
£’000
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 88 and 89) 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 will take into account the elements and constraints of those of
the existing Directors performing similar roles and the individual circumstances of the new Director. 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 forgone. 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. Where it is not practicable to grant these
‘buy-out’ awards using the GLTI rules submitted to shareholders at the 2023 AGM, the Company may grant these awards using bespoke arrangements.
Service contracts of Executive Directors
Executive Directors’ contracts have rolling terms and can be terminated with no more than 12 months’ notice.
The key elements of the service contract for Executive Directors relate to remuneration, payments on loss of office (see next page), and restrictions during
active employment (and for 12 months thereafter). These restrictions include non-competition and non-solicitation of customers and employees.
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Other information
Remuneration Policy (continued)
Treatment of corporate events
All of the Company’s share plans contain provisions relating to a change of control of the Company. Outstanding awards and options would normally vest
and become exercisable on a change of control taking into account, in respect of GLTI awards, the extent to which, in the Remuneration Committee’s
opinion, any relevant performance conditions are satisfied, the Company’s and the Executive Director’s performance, any other relevant factors and,
unless the Remuneration Committee determines otherwise, the proportion of the vesting period that has elapsed.
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 Remuneration 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 Remuneration Policy on payments for loss of office. We will always comply both with the relevant plan
rules and local employment legislation. The Remuneration Committee may make any statutory payment that is required in any relevant jurisdiction.
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 and contractual benefits (in line with the notice period). Notice period payments will either be made
as normal (if the Executive Director 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
–
The annual bonus may 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 annual bonus may be paid in such proportions of cash and shares, and subject to such
deferral arrangements, as the Remuneration Committee may determine.
–
The Remuneration Committee has discretion to adjust the entitlement to an annual bonus to reflect the individual’s performance
and the circumstances of the termination.
Treatment of
unvested
long-term
incentive awards
(‘GLTI’) on
termination
under plan rules
–
Normally, unvested GLTI awards will lapse when an Executive Director leaves the Group. However, an Executive Director’s award will
vest in accordance with the terms of the plan to the extent determined by the Remuneration Committee taking into account
applicable performance conditions, the underlying performance of the Company and of the Executive Director and any other relevant
factors, if the Executive Director dies in service or leaves because of their ill health, injury, disability, redundancy or retirement, or the
sale of their employing company or business out of the Group or for any other reason determined by the Remuneration Committee,
more than five months after the month in which the award is granted. The Remuneration Committee has discretion to determine
whether the award will vest at the normal vesting date or earlier. The Remuneration Committee will determine the satisfaction of
performance conditions applicable to the award. Awards will, unless the Remuneration Committee determines otherwise, be pro-rated
for the proportion of the vesting period that had elapsed at the date the Executive Director leaves the Group.
–
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, legal fees,
tax advice costs in relation to the termination and outplacement support.
–
Benefits of relatively 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.
Chair and Non-Executive Directors’ remuneration
Our policy is for the Chair to review the remuneration of Non-Executive Directors annually following consultation with the Remuneration Committee
Chair. Fees for the Chair 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 Chair which includes fees for chair of any committees. We pay a fee to each of our
other Non-Executive Directors and they may receive an additional fee if they chair or are a member of a committee and/or hold the position of
Senior Independent Director (although the Remuneration Committee does not currently intend to award additional fees for serving on a Board
committee, other than for chairing that committee). Non-Executive Directors’ 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 Chair is entitled to the use of a car and a driver whenever and wherever they are providing their 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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Remuneration Committee
In this section we give details of the composition of the Remuneration Committee (the ‘Committee’) and activities undertaken during the 2023 financial
year. The Committee’s function is to exercise independent judgement and consists only of the following independent Non-Executive Directors:
Chair:
Valerie Gooding
Committee members:
Delphine Ernotte Cunci (appointed 8 November 2022), Michel Demaré and Dame Clara Furse
Following the announcement on 10 May 2023, Valerie Gooding and Dame Clara Furse will be stepping down from the Committee with effect from the
conclusion of the 2023 AGM. Amparo Moraleda will join as Committee Chair with effect from the same date.
The Committee regularly consults with Margherita Della Valle, who was appointed as the Group Chief Executive effective 27 April 2023 (and also held
the position on an interim basis effective 1 January 2023) 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, James Ludlow, 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. Maaike de Bie, the Group General Counsel and Company Secretary, advises the Committee
on corporate governance guidelines and is Secretary to the Committee.
External advisers
The Committee seeks and considers advice from independent remuneration advisers where appropriate. The appointed advisers, WTW, were appointed
by the Committee in 2007. The Chair of the Committee has direct access to these advisers as and when required, and the Committee determines the
protocols by which these 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.
WTW 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. WTW 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
Fees for services provided
to the Committee
£’000
1
Other services provided to the Company
WTW
Remuneration
Committee
in 2007
Advice on market practice; governance;
provision of market data on executive
reward; reward consultancy; and
performance analysis.
£179
Reward and benefits consultancy;
provision of benchmark data; outsourced
pension administration; and insurance
consultancy services.
Note:
1.
Fees are determined on a time spent basis.
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.
Votes for
%
Votes against
%
Total votes
Withheld
Remuneration Policy
17,195,227,349
96.41
639,935,461
3.59
17,835,162,810
185,334,870
2022 Annual General Meeting – Remuneration Report voting results
At the 2022 Annual General Meeting there was an advisory vote on our Remuneration Report. Details of the voting outcomes are provided in the table below.
Votes for
%
Votes against
%
Total votes
Withheld
Remuneration Report
19,086,924,682
97.90
409,978,557
2.10
19,496,903,239
47,875,529
Meetings
The Remuneration Committee normally has five scheduled meetings per year, held either in person or via conference call. Details of the principal agenda
items for these meetings for the year under review are set out below. In addition to these scheduled meetings, ad hoc meetings or conference calls can
also take place when required. Meeting attendance can be found on page 60.
Meeting
Agenda items
May 2022
–
2022 annual bonus achievement and 2023 targets/ranges
–
2020 long-term incentive award vesting and 2023 targets/ranges
–
External market update
–
2022 Directors’ Remuneration Report
–
2022 shareholder update
July 2022
–
2022 AGM update
–
Remuneration Policy review
–
Share plan update
November 2022
–
2023 shareholder engagement
–
Remuneration Policy review
–
2024 short-term incentive structure
–
Share plan update
January 2023
–
2023 shareholder engagement
–
Share plan update
–
External market update
–
Gender Pay Gap reporting
March 2023
–
Risk assessment of incentive plans
–
Remuneration arrangements across Vodafone
–
Committee’s terms of reference
–
Chair and Non-Executive Director fee levels
–
2024 reward packages for the Executive Committee
–
2023 Directors’ Remuneration Report
Annual Report on Remuneration
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Other information
Annual Report on Remuneration (continued)
2023 remuneration
In this section we summarise the pay packages awarded to our Executive Directors for performance in the 2023 financial year versus 2022. 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 August 2023 as a result of the performance through the
three-year period ended at the completion of our financial year on 31 March 2023.
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.
The Committee reviewed incentive outcomes at the May 2023 meeting and considered the appropriateness of outcomes in light of wider financial and
business performance and the wider employee experience across the relevant measurement periods for both the short-term and long-term incentive
plans. The Committee agreed the outcomes were appropriate and that no adjustments were required to either the short-term or long-term incentive
outcomes this year,
Board changes
Throughout the year under review Margherita Della Valle held the position of Chief Financial Officer and, prior to her permanent appointment as Group
Chief Executive on 27 April 2023, was also appointed Group Chief Executive on an interim basis effective 1 January 2023. Margherita’s 2023 single figure
therefore reflects remuneration received in respect of her time in both of these executive positions, whereas her 2022 single figure reflects remuneration
received solely in respect of her role as Chief Financial Officer.
In line with the reporting regulations, the single figure for Nick Read reflects remuneration received in respect of services rendered as a Board Director
(i.e. from 1 April 2022 to 31 December 2022). The single figure table and supporting notes do not include values in respect of Nick’s employment
between 1 January 2023 to 31 March 2023 nor contractual loss of office payments which can instead be found on page 99.
Total remuneration for the 2023 financial year (audited)
Margherita Della Valle
Nick Read
2023
£’000
2022
£’000
2023
£’000
2022
£’000
Salary/fees
806
700
803
1,050
Taxable benefits
1
26
22
42
42
Annual bonus: GSTIP (see below for further detail)
1,206
968
904
1,452
Total long-term incentive:
1,570
927
2,045
1,523
GLTI awards
2,3
1,258
783
1,639
1,287
GLTI dividends
4
312
144
406
236
Pension/cash in lieu of pension
81
70
80
105
Other
5
–
–
1
1
Total
3,689
2,687
3,875
4,173
Total Fixed Remuneration
913
792
926
1,198
Total Variable Remuneration
2,776
1,895
2,949
2,975
Notes:
1.
Taxable benefits include amounts in respect of:
– Private healthcare (2023: Margherita Della Valle £2,575, Nick Read £1,931; 2022: Margherita Della Valle £2,153, 2022: Nick Read £2,189);
– Cash car allowance £19,200 p.a.; and
– Travel (2023: Margherita Della Valle £4,235, Nick Read £22,127; 2022: Margherita Della Valle £1,141, Nick Read £20,626).
2.
The share prices used for the 2022 and 2023 values, as set out in note 3 below, are lower than the grant prices for the respective awards. As such, no amount of the value shown in the 2022 or 2023
column is attributable to share price appreciation during the performance or vesting periods.
3.
The value shown in the 2022 column is the award which vested on 26 June 2022 in respect of Nick Read and Margherita Della Valle, and is valued using the execution share price on 26 June 2022 of 126.82
pence. The value shown in the 2023 column is the award which vests on 3 August 2023 and is valued using an average closing share price over the last quarter of the 2023 financial year of 93.85 pence.
4.
Margherita Della Valle and Nick Read 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
2023 relates to awards vesting on 3 August 2023.
5.
Reflects the value of the SAYE benefit which is calculated as £375 x 20% per monthly contribution to reflect the discount applied based on savings made during the year.
2023 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 2023 of 55.8% of maximum. This is applied to the maximum bonus level of 200% of base
salary for each Executive Director. Commentary on our performance against each measure is provided on the next page.
Performance measure
Payout at
maximum
performance
(% of salary)
Actual payout
(% of salary)
Actual payout
(% of overall
bonus
maximum)
Threshold
performance
level
€bn
Target
performance
level
€bn
Maximum
performance
level
€bn
Actual
performance
level
1
€bn
Service revenue
50.0%
31.0%
15.5%
37.3
38.4
39.5
38.7
Adjusted EBIT
50.0%
16.6%
8.3%
5.2
6.0
6.7
5.7
Adjusted free cash flow
50.0%
36.4%
18.2%
4.5
5.0
5.5
5.2
Customer appreciation KPIs
50.0%
27.5%
13.8%
See overleaf for further details
Total annual bonus payout level
200.0%
111.5%
55.8%
Note:
1.
These figures are adjusted for the impact of M&A, foreign exchange movements and any changes in accounting treatment.
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Financial metrics
As set out in the table above, service revenue and free cash flow finished above the mid-points of the respective target ranges whilst EBIT finished below
the mid-point of the respective target range.
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 – defined as total gross customer disconnections in the period divided by the average total customers in the period.
–
Revenue market share – 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. Further details on our performance against each key metric is set out below.
The business recorded positive churn results despite difficult and volatile market conditions linked to increasing price pressures. We experienced positive
results across both mobile and fixed services in Portugal, and it was a particularly strong year for mobile churn in Italy, Turkey and South Africa. Network
challenges in markets including Albania meant fixed service performance was more mixed although customer loyalty remained strong in a number of
markets including the UK.
We continued to perform against revenue market share despite fierce competition across our markets. Strong performance was recorded in the UK,
Egypt, Romania, and Ireland all of which demonstrated competitive resilience against this backdrop. Intense competition and increasing price pressures,
particularly in some of our larger European markets, was also reflected in our overall position against this metric.
Consumer NPS performance during the year saw us retain market leader or co-leader positions in several markets including Italy and Egypt, with Portugal,
Albania and Tanzania all retaining a significant lead. We also improved or defended our position to ‘next-best’ competitor in the UK, Spain and South Africa,
although faced challenges in Greece and Turkey.
Stable Business NPS performance was recorded in the year, reflected in leading positions retained or strengthened in several markets, including South
Africa, Portugal and Albania. While there remains some market difficulties in Egypt and Spain, we have seen advancements in markets like Italy where we
have attained a market leader position.
It is within this context that overall performance against our customer appreciation KPI 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 55.0% of maximum.
Overall outcome
2023 annual bonus (‘GSTIP’) amounts
Base salary
£’000
Maximum bonus
% of base salary
2023 payout
% of maximum
Actual payment
£’000
Margherita Della Valle
1,082
200%
55.8%
1,206
1
Nick Read
1,082
200%
55.8%
904
2
Notes:
1.
25% of Margherita Della Valle’s post-tax bonus will be deferred into shares for two years.
2.
Reflects bonus paid in respect of services rendered as a Board Director for the period 1 April 2022 to 31 December 2022. Further details are provided on page 99.
Long-term incentive (‘GLTI’) award vesting in August 2023 (audited)
Vesting outcome
The 2021 long-term incentive (‘GLTI’) awards which were made to executives in November 2020 will vest at 53.2% of maximum in August 2023.
The performance conditions for the three-year period ending in the 2023 financial year are as follows:
Adjusted FCF performance – 60% of total award (€bn)
TSR outperformance – 30% of total award
TSR peer group
Below threshold
<14.70
Below threshold
Below median
BT Group
Orange
Threshold
14.70
Threshold
Median
Deutsche Telekom
Royal KPN
Maximum
16.70
Maximum
8.50% p.a.
Liberty Global
Telecom Italia
MTN
Telefónica
Telefónica Deutschland
ESG performance – 10% of total award
Purpose pillar
ESG metric for 2021 GLTI
Overall ambition at time of 2021 GLTI
Baseline position for 2021 GLTI
Ambition for 2021 GLTI (10% of total award)
Planet
Greenhouse gas reduction
50% reduction from FY17
baseline by 2025
11% reduction from FY17
baseline at 31 March 2020
40% reduction from FY17
baseline by 31 March 2023
Inclusion for All
Women in management
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
Digital Society
M-Pesa connections
Connect >50m people and
their families to mobile money
by 2025
40.5m connections at
31 March 2020
56m connections by
31 March 2023
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Annual Report on Remuneration (continued)
100
82
88
93
95
87
111
100
124
111
95
129
100
91
123
72
89
115
83
03/20
09/22
03/22
09/21
03/21
09/20
03/23
Vodafone Group
Median of peer group
Outperformance of
median 8.5% p.a.
70
80
90
100
110
120
130
140
2021 GLTI award: TSR performance
Growth in the value of a hypothetical US$100 holding
over the performance period, six month averaging
The vesting outcome when applied to the number of shares granted is set out in the table below.
2021 GLTI share awards subject to performance conditions
vesting in August 2023
Maximum
number
of shares
Adjusted free cash
flow performance
payout
% of maximum
Relative TSR
performance payout
% of maximum
ESG
performance payout
% of maximum
Weighted
performance payout
% of maximum
Number of
shares vesting
Value of
shares vesting
(’000)
Margherita Della Valle
2,522,017
72.7%
0%
95.3%
53.2%
1,340,956
£1,258
Nick Read
3,283,876
1
72.7%
0%
95.3%
53.2%
1,746,036
£1,639
Note:
1.
Reflects time pro-rated award in respect of services rendered as a Board Director to 31 December 2022.
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 WTW. ESG performance is reviewed by the ESG Committee
and the Audit and Risk Committee prior to being presented to the Remuneration Committee for consideration. Details of how the plan works can be
found in the Remuneration Policy.
Long-term incentive (‘GLTI’) awarded during the year (audited)
The independent performance conditions for the 2023 long-term incentive awards made in July 2022, and subject to a three-year performance
period ending 31 March 2025, 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)
Adjusted FCF performance
(€bn)
Vesting percentage
(% of FCF element)
Below threshold
<14.0
0%
Threshold
14.0
20%
Maximum
16.6
100%
TSR performance
(30% of total award)
TSR outperformance
Vesting percentage
(% of TSR element)
Below threshold
Below median
0%
Threshold
Median
20%
Maximum
8.50% p.a.
100%
TSR peer group
BT Group
Deutsche Telekom
Liberty Global
MTN
Orange
Royal KPN
Telecom Italia
Telefónica
Telefónica Deutschland
The adjusted free cash flow for the three-year period ended on 31 March
2023 was €16.0 billion and equates to vesting under the FCF element
of 72.7% of maximum.
The chart to the right shows that our TSR performance over the
three-year period ended on 31 March 2023 was below the median
of the peer group resulting in no vesting under this measure.
ESG performance across our three metrics was as follows:
–
GHG reduction – GHG reduction of 65% as at 31 March 2023
from the FY17 baseline.
–
Women In Management – 34% representation of women
in management at 31 March 2023.
–
M-Pesa – 53.2m connections at 31 March 2023.
The Committee reviewed the above performance and determined vesting
under the ESG element of 95.3% of maximum. This reflected full
achievement under the GHG reduction metric where the ambition was
exceeded and the Women in Management metric where the ambition
was achieved, and partial vesting under the M-Pesa metric where strong
progress against the stretching ambition was made.
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ESG performance – 10% of total award
Purpose pillar
ESG metric for 2023 GLTI
Overall ambition
Baseline position for 2023 GLTI
Ambition for 2023 GLTI
Planet
Net zero
Net zero under Scope 1 & 2
by 2030
1
46% reduction in Scope 1 &
2 emissions versus a FY20
baseline at 31 March 2022
80% reduction in Scope 1 &
2 emissions versus a FY20
baseline by 31 March 2025
Inclusion for All
Female representation in
management
40% representation of
women in management by
2030
32% representation of
women in management at
31 March 2022
35% representation of
women in management by
31 March 2025
Digital Society/
Inclusion for All
Financial inclusion
customers
>75m financial inclusion
customers by 2026
54.5m financial inclusion
customers at 31 March 2022
70.0m financial inclusion
customers by 31 March 2025
Note:
1.
This carbon reduction ambition has been approved by the Science Based Targets initiative.
The table below sets out the conditional awards of shares made to the Executive Directors in July 2022.
2023 GLTI performance share awards made in July 2022
1
Maximum
vesting level
(number of shares)
Maximum
vesting level
(face value
2
)
Proportion of
maximum award vesting at
minimum performance
Performance
period end
Margherita Della Valle
4,419,335
£5,407,498
1/5th
31 Mar 2025
Nick Read
4,290,617
£5,249,999
1/5th
31 Mar 2025
Notes:
1.
GLTI awards were granted as conditional share awards over shares with a value equal to the percentages of salary referred to on page 86. Margherita’s maximum vesting reflects the 2023 GLTI award made
in July 2022 and the subsequent top-up GLTI award made in February 2023 following her change in role. Nick’s maximum vesting reflects the number of shares granted at maximum in July 2022 and
which will be pro-rated for time worked (see page 99 for further details). Dividend equivalents on the shares that vest are paid in cash after the vesting date.
2.
Face value calculated based on the closing share price on 26 July 2022 (day immediately preceding the date of the July grant) of 122.4 pence. This share price was also used when calculating Margherita’s
February 2023 grant.
Outstanding awards
The structure for awards made in August 2021 (vesting August 2024) and July 2022 (vesting July 2025) is set out on the previous page. Further details of
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 a HM Revenue & Customs (‘HMRC’)
approved scheme. Options under the plan are granted at up to a 20% discount to market value and Executive Directors’ participation is included in the
option table on page 99.
Pensions (audited)
During the 2023 financial year, 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 received a pro-rated cash allowance of 10% of base salary.
Margherita Della Valle has not participated in a Vodafone sponsored defined benefit scheme during her employment. 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.
The Executive Directors are provided benefits in the event of death in service. In the event of ill health, an entitlement to benefit of two-thirds 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 £147,507 (2022: £143,175) into defined contribution pension schemes.
Alignment to shareholder interests (audited)
Share ownership levels and requirements for individuals who held the position of Executive Director are set out in the table below. The values in respect of
Margherita Della Valle reflect her ownership requirement as at 31 March 2023. Following her permanent appointment as Group Chief Executive on 27
April 2023, Margherita’s ownership requirement was increased to 500% of salary.
As shown in the chart below, Margherita increased her shareholding level during the year but due to share price movement (93.85 pence for the 31
March 2023 measurement compared to 126.61 pence used for the 2022 measurement), saw her ownership, as a percentage of salary and as calculated
for these reporting purposes, decrease.
At 31 March 2023
Requirement
as a % of salary
Current %
of salary held
% of requirement
achieved
Number of
shares owned
Value of
shareholding
Date for requirement
to be achieved
Margherita Della Valle
400%
292%
73%
2,241,263
£2.1m
July 2023
Nick Read (as at 31 December 2022)
500%
445%
89%
5,127,436
£4.8m
July 2023
24%
increase
Margherita Della Valle (as at 31 March 2023)
Actual holding
(number of shares)
Goal deadline:
July 2023
Holding scenario
(% of salary)
31/03
2023
31/03
2022
Goal
Actual
31/03
2023
Illustrative
20% SP
increase
Illustrative
20% SP
decrease
Actual
31/03
2022
2.2m
1.8m
400%
292%
328%
234%
234%
350%
350%
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Annual Report on Remuneration (continued)
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 Company accessible 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 Director, owned 23,565,656 Vodafone shares at 31 March 2023, with a value of over
£22.1 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 99.
Share options
At 31 March 2023
Total number
of interests in shares
(at maximum)
1
Unvested with
performance conditions
(at target)
Unvested with
performance conditions
(at maximum)
SAYE
(unvested without
performance conditions)
Executive Directors
Margherita Della Valle
11,879,532
5,782,961
9,638,269
–
Nick Read (as at 31 December 2022)
18,147,068
7,793,305
12,988,842
30,790
Total
30,026,600
13,576,266
22,627,111
30,790
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.
At 31 March 2023
Total number of interests in shares
Non-Executive Directors
Stephen A. Carter CBE (appointed 26 July 2022)
96,805
Delphine Ernotte Cunci (appointed 26 July 2022)
30,000
Sir Crispin Davis
34,500
Michel Demaré
100,000
Dame Clara Furse
150,000
Valerie Gooding
28,970
Deborah Kerr
(ADRs) 12,000
1
Maria Amparo Moraleda Martinez
30,000
David Nish
107,018
Christine Ramon (appointed 14 November 2022)
–
Simon Segars (appointed 26 July 2022)
40,000
Jean-François van Boxmeer
347,374
Note:
1.
One ADR is equivalent to 10 ordinary shares.
At 16 May 2023, and during the period from 1 April 2023 to 16 May 2023, 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 2023, members of the Group’s Executive Committee at 31 March 2023
had an aggregate beneficial interest in 21,324,393 ordinary shares of the Company. At 16 May 2023, the Directors had an aggregate beneficial interest
in 3,325,930 ordinary shares of the Company and the Executive Committee members had an aggregate beneficial interest in 18,116,851 ordinary shares
of the Company. The change in the number of shares held by the Executive Committee reflects a change in membership following the year-end, 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.
Performance share awards
The maximum numbers 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
2021 award
Awarded: November 2020
Performance period ending: March 2023
Vesting date: August 2023
Share price at grant: 124.9 pence
2022 award
Awarded: August 2021
Performance period ending: March 2024
Vesting date: August 2024
Share price at grant: 116.8 pence
2023 award
Awarded: July 2022/February 2023
Performance period ending: March 2025
Vesting date: July 2025
Share price at grant: 122.4 pence
Margherita Della Valle
2,522,017
2,696,917
4,419,335
Nick Read (as at 31 December 2022)
1
4,203,362
4,494,863
4,290,617
Note:
1.
These figures reflect the maximum number of shares subject to award as at 31 December 2022 and therefore do not reflect the impact of pro-ration for time worked which was applied following the end
of Nick’s employment. Further details can be found on page 99.
Details of the performance conditions for the awards can be found on pages 95 to 97 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.
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Grant date
At 1 April 2022 or
date of appointment
Options granted during
the 2023 financial year
Options exercised during
the 2023 financial year
Options lapsed during
the 2023 financial year
Options held at
31 March 2023
Option
price
Date from
which
exercisable
Expiry date
Market price
on exercise
Gain on
exercise
Number of shares
Number of shares
Number of shares
Number of shares
Number of shares
Pence
1
Pence
Nick Read (position at 31 December 2022)
SAYE
2 Mar 17
4,854
–
–
4,854
–
154.51
1 Apr 22
1 Oct 22
–
–
SAYE
14 Jul 17
8,438
–
–
–
8,438
177.75
1 Sep 22
1 Mar 23
–
–
SAYE
11 Jul 22
–
22,352
–
–
22,352
100.66
1 Sep 27
1 Mar 28
–
–
Total
13,292
–
–
4,854
30,790
–
–
Note:
1.
The closing trade share price on 31 March 2023 was 89.30 pence. The highest trade share price during the year was 132.14 pence and the lowest price was 83.73 pence.
At 16 May 2023 there had been no change to the Directors’ interests in share options from 31 March 2023. At 16 May 2023 members of the Group’s Executive
Committee held options for 39,969 ordinary shares at prices ranging from 77.6 pence to 111.7 pence per ordinary share, with a weighted average exercise price
of 94.6 pence per ordinary share exercisable at dates ranging from 1 September 2023 to 1 March 2026.
Margherita Della Valle, Aldo Bisio, Maaike de Bie, Ahmed Essam, Shameel Joosub, Vinod Kumar, Alberto Ripepi, Philippe Rogge and Serpil Timuray held no
options at 16 May 2023.
Loss of office payments (audited)
Nick Read stepped down as Group Chief Executive and as a Director of the Company on 31 December 2022. During the period 1 January 2023 to 31 March 2023.
Nick remained available to the Board as an adviser and, for the remainder of his employment (to 31 March 2023), received his salary (£270,375), car allowance
(£4,800), private medical cover (£608), and pension allowance (£27,038). Nick remained eligible for a 2023 GSTIP, subject to performance conditions, until the
end of his employment on 31 March 2023. In line with the relevant reporting regulations, the proportion of Nick’s 2023 GSTIP payment in respect of his period
of employment between 1 January 2023 and 31 March is £301,468, with the payment in respect of his time worked as a Director (1 April 2022 to 31 December
2022) set out on page 95.
At 1 April 2023, Nick had worked 3 months and 27 days of his notice period. Nick is entitled to receive payments in lieu of his salary (£732,629), and continued
participation in the Vodafone Group Private Medical Plan (£1,898), for the remainder of his 12-month notice period. Payments will be made in monthly
instalments, subject to mitigation in accordance with his service contract, until 5 December 2023, when his notice period would otherwise have ended.
Nick’s 2021, 2022, and 2023 GLTI awards will be pro-rated on a time worked basis and will vest, subject to performance, at the normal vesting dates in
accordance with the share plan rules. Nick will receive a cash payment equivalent in value to the dividends that would have been paid during the vesting
period on any shares that vest.
Nick will receive a contribution of up to £7,000 (excluding VAT) towards legal fees incurred in connection with his departure and be entitled to
outplacement support of up to £50,000 (excluding VAT) paid directly to the supplier.
Nick received no further payments other than those stated above, and, other than the pro-rated GLTI awards and associated dividend equivalent cash
payments detailed above, will receive no further payments or benefits aside from the provision of a SIM card for his personal use at the Company’s
expense for a period of three years commencing 1 April 2023.
Payments to past Directors (audited)
During the 2023 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 £24,657 (2022: £23,679).
Fees retained for external non-executive directorships
Executive Directors may hold positions in other companies as non-executive directors and retain the fees paid to them in respect of these services.
During the year ended 31 March 2023, Margherita Della Valle served as a non-executive director on the board of Reckitt Benckiser Group plc where she
retained fees of £118,000 (2022: £115,563). Nick Read served as a non-executive director on the board of Booking Holdings Inc. where he retained fees
of US$250,343 in respect of the period to 31 December 2022 (2022: US$462,571).
2023 remuneration for the Chair and Non-Executive Directors (audited)
Salary/fees
Benefits
1
Total
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
Chair
Jean-François van Boxmeer
650
650
29
18
679
668
Senior Independent Director
Valerie Gooding
165
165
10
9
175
174
Non-Executive Directors
Stephen A. Carter CBE (appointed 26 July 2022)
79
–
2
–
81
–
Delphine Ernotte Cunci (appointed 26 July 2022)
79
–
5
–
84
–
Sir Crispin Davis
115
115
12
9
127
124
Michel Demaré
115
115
11
1
126
116
Dame Clara Furse
115
115
9
3
124
118
Deborah Kerr
115
10
14
1
129
11
Maria Amparo Moraleda Martinez
140
137
10
1
150
138
David Nish
140
140
19
10
159
150
Christine Ramon (appointed 14 November 2022)
44
–
1
–
45
–
Simon Segars (appointed 26 July 2022)
79
–
12
–
91
–
Total
1,836
1,447
134
52
1,970
1,499
Note:
1.
This includes certain travel and accommodation expenses in relation to attending Board meetings which are treated as a taxable benefit. Values include these travel expenses and the corresponding tax
contribution.
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Annual Report on Remuneration (continued)
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 reviewed the remuneration structure across the business, which included how our arrangements aligned with our
strategy, supported our purpose, and celebrated the Spirit of Vodafone. The update also set out 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 our
people. Our approach across our business is guided by the six principles set out below. Our commitment to these principles is reflected in how the
UK-based Living Wage Foundation has certified us as an Accredited Living Wage employer.
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 person 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 an 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 families.
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 people’s pay and outline the value of their core reward package.
In addition, our people also receive monthly or weekly payslips and a payment schedule.
Cost of living actions
It is recognised that rising inflation levels and the subsequent cost of living crisis have impacted employees across a number of our markets this year.
We have provided targeted support in a number of these locations, including the UK, Turkey and Egypt, to help alleviate the impact of these pressures
and continue to monitor the market conditions across all of our locations’ entities. Such measures included additional or accelerated salary reviews, the
provision of extra cash allowances, and the careful consideration of wider market conditions when setting salary budgets for the 2023 review. In the UK
specifically, additional support has been provided to lower-paid employees who have been particularly impacted by increases to the consumer price
index. This included a 10% base salary increase to employees with salaries of less than £25,000, whilst employees with a base salary of between £25,000
and £35,000 received a £1,000 cash payment.
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:
Employees
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 and take into account wider employee pay conditions. We engage with our employees through a variety of means including employee forums,
interactive webinars (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 all-employee and 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.
Government
The Committee actively engages with external professional bodies and government departments when they issue consultations on proposed changes to
legislation or reporting guidelines.
Wider society
The Committee is fully aware that society remains concerned about the risk of excessive executive pay practices in the wider market. The Committee
believes that transparent reporting and active engagement in explaining both the operation of, and rationale for, executive pay decisions is key for
businesses to retain trust in this area.
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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
our first report in 2017. Our global programmes aim to support 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 10.4% – a slight increase from our 2021 figure of 9.6%.
We have been recognised by the Bloomberg Gender-Equality Index as a leader in creating equity for women. We are proud of the policies that we have
put in place to support our employees and we remain committed to addressing female representation at senior levels and the gender pay gap.
Click to learn more about our initiatives, case studies, and key statistics on our dedicated UK gender pay gap webpage:
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.
5,334
5,334
5,842
5,842
2,483
2,483
2,502
2,502
Distributed by way
of dividends
Overall expenditure on
remuneration for all employees
2022
2023
2022
2023
€m
Read more details on dividends and expenditure on remuneration for all employees,
on pages 152 and 187 respectively
CEO pay ratio
The following table sets out our CEO pay ratio figures:
Year
CEO single figure (£’000)
Method
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
2023
1
4,823
Option B
139:1
68:1
52:1
2022
4,173
Option B
113:1
73:1
48:1
2021
3,551
Option B
106:1
87:1
42:1
2020
3,529
Option B
113.1
69.1
45.1
2019
4,359
Option B
154:1
107:1
56:1
Note:
1.
The CEO single figure used in the calculation of the 2023 ratios reflects a blended figure for Nick Read and Margherita Della Valle, recognising the change in incumbency for the role during this year.
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.
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Annual Report on Remuneration (continued)
The pay ratio figures in the above table are calculated using the following total pay and benefits information:
Year
Supporting information
25th percentile pay ratio (£’000)
Median pay ratio (£’000)
75th percentile pay ratio (£’000)
2023
Salary
26.5
56.1
75.6
Total pay and benefits
34.6
70.5
92.8
2022
Salary
31.7
47.1
71.5
Total pay and benefits
36.9
57.5
87.2
2021
Salary
30.0
37.1
71.2
Total pay and benefits
33.5
41.0
85.3
2020
Salary
28.0
42.8
65.0
Total pay and benefits
31.3
51.1
78.6
2019
Salary
23.1
36.4
65.0
Total pay and benefits
28.3
40.8
78.2
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.
In recent years our ratios have remained relatively consistent, reflecting how the single figures for both the Chief Executive and employees at the quartile
positions have remained stable when viewed over the period set out in the table above. In general 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.
Change in remuneration for Directors and all employees
In line with regulatory requirements, the table below calculates the percentage change in Directors’ remuneration (salary, taxable benefits and annual
bonus payment) 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 (2021 to 2022) and 2022 (2022 to 2023) (per capita). Vodafone has employees based all around the
world and some of these individuals work in countries with very high salary inflation; therefore Vodafone’s UK-based Group employees are deemed the
most appropriate employee group for this comparison.
Percentage change from 2022 to 2023
Percentage change from 2021 to 2022
Base salary/fees
Taxable benefits
Annual bonus
Base salary/fees
Taxable benefits
Annual bonus
Executive Directors
Margherita Della Valle
15.1%
18.2%
24.6%
0.0%
4.8%
11.6%
Nick Read (until 31 December 2022)
-23.5%
0.0%
-37.7%
0.0%
31.3%
11.6%
Non-Executive Directors
Jean-François van Boxmeer
0.0%
61.1%
–
118.9%
–
–
Valerie Gooding
0.0%
11.1%
–
0.0%
–
–
Stephen A. Carter CBE (appointed 26 July 2022)
–
–
–
–
–
–
Delphine Ernotte Cunci (appointed 26 July 2022)
–
–
–
–
–
–
Sir Crispin Davis
0.0%
33.3%
–
0.0%
800.0%
–
Michel Demaré
0.0%
1,000.0%
–
0.0%
–
–
Dame Clara Furse
0.0%
200.0%
–
0.0%
–
–
Deborah Kerr (appointed 1 March 2022)
1,050.0%
1,300.0%
–
–
–
–
Maria Amparo Moraleda Martinez
2.2%
900.0%
–
19.1%
–
–
David Nish
0.0%
90.0%
–
0.0%
900.0%
–
Christine Ramon (appointed 14 November 2022)
–
–
–
–
–
–
Simon Segars (appointed 26 July 2022)
–
–
–
–
–
–
Other Vodafone Group employees employed in the UK
5.8%
5.2%
-9.6%
2.5%
0.3%
80.0%
The year-on-year increase in Margherita Della Valle’s pay reflects Margherita’s appointment as Group Chief Executive on an interim basis, in addition to her
existing role as Chief Financial Officer, effective 1 January 2023. This change in role during the year under review is therefore reflected in Margherita’s
2023 figures compared to the 2022 figures which reflect Margherita’s role as Chief Financial Officer. The percentage increase in the table above does not
reflect the actual increase during the year under review in respect of the salary payable for the role of Chief Executive which was increased by 3% effective
1 July 2022.
The significant year-on-year increase in Deborah Kerr’s fees and taxable benefits reflect how the 2022 values reflect one month of service which covers
the period between Deborah joining on 1 March 2022 and the year-end on 31 March 2022. By comparison, the 2023 figures reflect a full 12 months
of time worked therefore resulting in a high year-on-year percentage increase despite there being no actual increase in the fees payable to the
Non-Executive Directors during this period.
Whilst some of the percentages within the ‘Taxable benefits’ column look significant, these actually reflect relatively small increases in value when viewed
on an absolute basis. Where an individual had no taxable benefit values in 2022 it has not been possible to calculate a percentage for the table above.
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Other information
Assessing pay and performance
In the table below we summarise the Chief Executive’s single figure remuneration over the past 10 years and 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 2021 GLTI is based on the TSR
performance shown in the chart on page 96 and not this chart.
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
10-year historical TSR performance
Growth in the value of a hypothetical
€100 holding over 10 years
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Financial year remuneration
for Chief Executive
2,740
1
3,875
3
Single figure of total remuneration £’000
8,014
2,810
5,224
6,332
7,389
/1,619
2
3,529
3,551
4,173
/948
4
Annual bonus
(actual award versus max opportunity)
44%
56%
58%
47%
64%
44%
52%
62%
69%
56%
Long-term incentive
(vesting versus max opportunity)
37%
0%
23%
44%
67%
40%
50%
22%
26%
53%
Notes:
1.
Reflects the single figure in respect of Vittorio Colao for the period of 1 April 2018 to 30 September 2018.
2.
Reflects the single figure in respect of Nick Read for the period of 1 October 2018 to 31 March 2019.
3.
Reflects the single figure in respect of Nick Read for the period of 1 April 2022 to 31 December 2022.
4.
Reflects the single figure in respect of Margherita Della Valle for the period of 1 January 2023 to 31 March 2023.
0
10
20
30
40
50
60
70
80
90
100
LTI
average 36%
Annual bonus
average 55%
148
149
158
138
190
100
124
149
143
118
145
127
132
128
101
84
108
207
110
215
81
Vodafone Group
STOXX Europe
600 Index
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Annual Report on Remuneration (continued)
2024 remuneration
Details of how the Remuneration Policy will be implemented for the 2024 financial year are set out below.
Prior to reviewing executive remuneration arrangements, including those of the Executive Committee, the Committee was fully briefed on remuneration
arrangements elsewhere in the business. This included a detailed discussion of the structure of remuneration offerings at each level of the business, how
pay at these levels is determined, and the findings of the latest annual fair pay review. The Committee also considered the external context and decisions
made in relation 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 in the context of the
wider employee pay landscape within the business.
1
2024 base salaries
Following her appointment to the position of Group Chief Executive, Margherita Della Valle’s salary was set at £1,250,000. The Committee decided the
new salary was appropriate when compared against the external market using the Committee’s normal comparator groups of the EuroTop 25-75 and
FTSE 30 (both excluding financial services companies), was fair from a gender pay perspective given its long standing work on fair pay and reflected both
the responsibilities and demands of the role.
During the year no additional salary payment or allowance has been made to Margherita in respect of her carrying out the dual roles of Group Chief
Executive and Group Chief Financial Officer. This will remain the approach going forward, and it is intended that Margherita will continue with her dual
responsibilities until a new Group Chief Financial Officer is appointed.
Pension
Pension arrangements for Executive Directors will remain unchanged at 10% of salary, in line with the maximum employer contribution level for the wider
UK population.
2024 annual bonus (‘GSTIP’)
Following its annual review of the GSTIP structure, the Committee agreed that the 2024 plan should support the strategic priorities of Growth and
Customers. The constituent performance measures remain unchanged with the key change from the 2023 plan being separation of Net Promoter Score,
revenue market share, and churn into standalone measures. The performance measures and weightings for 2024 are outlined below:
Growth (70% of total)
Service revenue (20%); adjusted EBIT (20%); adjusted free cash flow (20%); and revenue market share (10%)
Customers (30% of total)
Net Promoter Score
1
(20%); and churn (10%).
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 2024 Remuneration Report following the completion of the financial year.
Long-term incentive (‘GLTI’) awards for 2024
Awards for 2024 will be made in line with the arrangements described in our policy on pages 89 and 90. Vesting of the 2024 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 2026, and any net vested shares will be subject to an additional two-year holding period. It is anticipated
that the final awards will be reviewed by the Committee at the July 2023 meeting and, subject to the Committee’s approval, will be granted shortly
afterwards.
Further details of the 2024 award targets are provided are on the following page.
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Adjusted free cash flow (60% of total award)
Details of the final three-year adjusted free cash flow target range will be disclosed in the relevant market announcement at the time of grant and
published in the 2024 Directors’ Remuneration Report.
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 2024 award should be set at 7.0% p.a. at maximum.
The Committee further determined that the TSR peer group should remain unchanged for the 2024. Further details are set out in the tables below.
Relative TSR (30% of total award)
TSR outperformance
Vesting (% of relative TSR element)
Below threshold
Below median
0.0%
Threshold
Median
20.0%
Maximum
7.0% p.a.
100.0%
TSR peer group
BT Group
Deutsche Telekom
Liberty Global
MTN
Orange
Royal KPN
Telecom Italia
Telefónica
Telefónica Deutschland
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 2024 award will be assessed against three quantitative ambitions:
Purpose pillar
Metric for 2024 GLTI
Overall ambition
Baseline position for 2024 GLTI
Ambition for 2024 GLTI
Planet
Net zero
Net zero under Scope 1 & 2
by 2030
1
52% reduction in Scope 1 & 2
emissions versus a FY20 baseline
at 31 March 2023
84% reduction in Scope 1 & 2
emissions versus a FY20 baseline
by 31 March 2026
Inclusion for All
Female representation in
management
40% representation of women
in management by 2030
34% representation of women in
management at 31 March 2023
36% representation of women in
management by 31 March 2026
Digital Society/
Inclusion for All
Financial inclusion
customers
>75m financial inclusion
customers by 2026
60.7m financial inclusion customers
at 31 March 2023
70.0m financial inclusion
customers by 31 March 2026
Note:
1.
This carbon reduction ambition has been approved by the Science Based Targets initiative.
Each ambition for the 2024 award has been set by considering both our externally communicated targets and our internal progress as at 31 March 2023.
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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2024 remuneration for the Chair and Non-Executive Directors
Fees for our Chair and Non-Executive Directors have been benchmarked against the FTSE 30 (excluding financial services companies). Following this
year’s review it was agreed that the current fee levels, which are set out in the table below, would remain unchanged.
Position/role
Fee payable
£’000
Chair
1
650
Non-Executive Director
115
Additional fee for the Senior Independent Director
25
Additional fee for Chair of the Audit and Risk Committee
25
Additional fee for Chair of the ESG Committee
25
Additional fee for Chair of the Remuneration Committee
25
Note:
1.
The Chair’s fee also includes the fee for the chairing of the Nominations and Governance Committee.
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 2.4% of the Company’s share capital at 31 March 2023
(2.7% at 31 March 2022), whilst from all-employee share awards it is approximately 0.3% (0.3% at 31 March 2022). This gives a total dilution of 2.7%
(3.0% at 31 March 2022).
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
Chair of the Remuneration Committee
16 May 2023
Annual Report on Remuneration (continued)
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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:
Our US listing requirements
Board member independence
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.
Committees
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 Chair 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, all 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.
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
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.
Click to read our Code of Ethics:
vodafone.com/governance
–
We have also adopted a separate Code of Conduct which applies to all employees.
Quorum
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
holders of ordinary shares for shareholder meetings.
Related party transactions
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 Financial Conduct Authority (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.
Shareholder approval
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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The Directors of the Company present their report
together with the audited consolidated financial
statements for the year ended 31 March 2023.
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.
Vodafone Group Plc is incorporated and domiciled in England and
Wales (registration number 1833679). The registered address and
contact number of the Company is Vodafone House, The Connection,
Newbury, Berkshire, RG14 2FN, England, telephone +44 (0)1635 33251.
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 111-112
which also provides details regarding the disclosure of information to the
Company’s auditor and management’s report on internal control over
financial information.
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 112.
System of risk management and internal control
The Board is responsible for maintaining a risk management and internal
control system and for managing the 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 77-82.
The Board has implemented in full the Financial Reporting Council’s
(‘FRC’) ‘Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting’ for the year end 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 51-57).
Corporate Governance Statement
The Corporate Governance Statement setting out how the Company
complies with the Code is set out on page 63. This includes a description
of the main features of our internal control and risk management
arrangements in relation to the financial reporting process. The information
required by DTR 7.2.6R can be found in the ‘Shareholder information’
section on pages 230-235. A description of the composition and operation
of the Board and its Committees including the Board Diversity Policy
is set out on page 68, pages 74-84 and page 93. The Code can be viewed
in full at frc.org.uk.
Strategic report
The Strategic report is set out on pages 1-59 and is incorporated into this
Directors’ report by reference.
Directors and their interests
The Directors of the Company who served during the financial year
ended 31 March 2023 and up to the date of signing the financial
statements are as follows: Jean-François van Boxmeer, Margherita Della
Valle, Stephen A. Carter CBE (appointed 26 July 2022), Delphine Ernotte
Cunci (appointed 26 July 2022), Sir Crispin Davis, Michel Demaré, Dame
Clara Furse, Valerie Gooding, Deborah Kerr, Maria Amparo Moraleda
Martinez, David Nish, Christine Ramon (appointed 14 November 2022)
and Simon Segars (appointed 26 July 2022). Nick Read stepped down on
31 December 2022. A summary of the rules related to the appointment
and replacement of Directors and Directors’ powers can be found on
pages 231-232. Details of the 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 86-106.
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.
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.
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.
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 American Depositary Shares (‘ADS’)
on NASDAQ.
ADSs, each representing 10 ordinary shares, are traded on NASDAQ
under the symbol ‘VOD’. The ADSs are evidenced by American
Depositary Receipts (‘ADR’) issued by J.P. Morgan, as depositary, under a
deposit agreement, dated 15 February 2022 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
J.P. Morgan 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 pages 231-232.
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 pages 24-25 and pages 230-235.
Directors’ report
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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 91-92. Other than these, 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 2023 are set out on page 25 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 26-49 and on pages 51-59. Details
of our greenhouse gas emissions are also included on these pages.
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
On 17 April 2023, the Group entered into an agreement to sell M-Pesa
Holding Company Limited to Safaricom Plc, an associate entity of the
Group. Further details can be found in note 33 to the consolidated
financial statements.
On 11 May 2023, the Company announced that it had agreed a strategic
relationship with Emirates Telecommunications Group Company PJSC
(“e&”). Further details can be found under ‘Material contracts’ on page 233.
There were no other 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 whistleblowing process
(known internally as ‘Speak Up’).
Read more on
page 40
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 page 11, pages 33 and 34, page 64, page 72,
page 75 and page 76.
The Directors’ Report was approved by the Board and signed on
its behalf by the Group General Counsel and Company Secretary.
Maaike de Bie
Group General Counsel and Company Secretary
16 May 2023
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Other information
111
Directors’ statement of responsibility
113
Independent auditor’s report to the members of Vodafone Group Plc
123
Consolidated financial statements
123
Consolidated income statement
123
Consolidated statement of comprehensive income
124
Consolidated statement of financial position
125
Consolidated statement of changes in equity
126
Consolidated statement of cash flows
127
Notes to the consolidated financial statements
127
1.
Basis of preparation
Income statement
134
2.
Revenue disaggregation and segmental analysis
138
3.
Operating profit
139
4.
Impairment losses
145
5.
Investment income and financing costs
146
6.
Taxation
151
7.
Discontinued operations and assets 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
165
13.
Other investments
166
14.
Trade and other receivables
167
15.
Trade and other payables
168
16.
Provisions
169
17.
Called up share capital
Cash flows
170
18.
Reconciliation of net cash flow from operating activities
170
19.
Cash and cash equivalents
171
20.
Leases
174
21.
Borrowings
176
22.
Capital and financial risk management
Employee remuneration
186
23.
Directors’ and key management compensation
187
24.
Employees
188
25.
Post employment benefits
192
26.
Share-based payments
Additional disclosures
194
27.
Acquisitions and disposals
196
28.
Commitments
196
29.
Contingent liabilities and legal proceedings
200
30.
Related party transactions
201
31.
Related undertakings
210
32.
Subsidiaries exempt from audit
210
33.
Subsequent events
211
Company financial statements of Vodafone Group Plc
211
Company statement of financial position of Vodafone Group Plc
212
Company statement of changes in equity of Vodafone Group Plc
213
Notes to the Company financial statements
213
1.
Basis of preparation
215
2.
Fixed assets
216
3.
Debtors
216
4.
Other investments
216
5.
Creditors
217
6.
Called up share capital
217
7.
Share-based payments
217
8.
Reserves
218
9.
Equity dividends
218
10.
Contingent liabilities and legal proceedings
218
11.
Other matters
219
Non-GAAP measures (unaudited information)
229
Additional information (unaudited information)
Reporting on our financial performance
Index
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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 UK-adopted International Accounting
Standards (‘IAS’), with International Financial Reporting Standards
(‘IFRS’) as issued by the International Accounting Standards Board
(‘IASB’) and with the requirements of the UK Companies Act
2006 (the ‘Act’);
–
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 UK-adopted IAS, with IFRS as issued by the IASB and with the
requirements of the Act. They are also responsible for the system
of internal control, for safeguarding the assets of the Company and the
Group, and 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
65 to 67, confirms that, to the best of their knowledge:
–
The consolidated financial statements, prepared in accordance
with UK-adopted IAS, with IFRS as issued by the IASB and with the
requirements of the Act, 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.
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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 57.
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 pages 177 to 178, 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 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 to identify variances and understand the drivers of the changes
and their future impact so management can 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 the 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 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 2024 from the date of approving
the consolidated financial statements. Those sensitivities include the
non-refinancing, with the exception of hybrid bonds, of debt maturities
in the assessment period. A reverse stress test was also reviewed to
understand how severe conditions would have to be to breach liquidity
including the required reduction in Adjusted EBITDAaL. The Directors also
considered the availability of the Group’s €7.7 billion undrawn revolving
credit facilities as at 31 March 2023.
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 57, this included key changes to relevant principal
risks in light of global economic and political uncertainty, sensitivity
analysis, scenario assessments, and combinations of these, 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 accordance with UK-adopted IAS, with IFRS as issued
by the IASB and with the requirements of the Act, 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.
During the year covered by this report, there were no changes in the
Group’s internal control over financial reporting that have materially
affected or are reasonably likely to materially affect the effectiveness
of the internal controls over financial reporting.
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
Maaike de Bie
Group General Counsel and Company Secretary
16 May 2023
Directors’ statement of responsibility (continued)
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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 2023 and of the Group’s profit for the year then ended;
–
the consolidated financial statements have been properly prepared
in accordance with UK adopted international accounting standards
and International Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board (IASB);
–
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
(the ‘Parent company’) and its subsidiaries (the ‘Group’) for the year ended
31 March 2023 which comprise:
Group
Parent company
Consolidated statement of financial
position as at 31 March 2023
Company statement of financial
position as at 31 March 2023
Consolidated income statement
for the year then ended
Company statement of changes
in equity for the year then ended
Consolidated statement of
comprehensive income for the
year then ended
Related notes 1 to 11 to the
financial statements including
a summary of significant
accounting policies
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 33 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 and UK
adopted international accounting standards and International Financial
Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB). The financial reporting framework that has been
applied in the preparation of the Parent 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 believe
that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Independence
We are independent of the Group and Parent 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.
The non-audit services prohibited by the FRC’s Ethical Standard were not
provided to the Group or the Parent company and we remain independent
of the Group and the Parent company in conducting the audit.
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 Parent 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 2024 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 knowledge arising
from other areas of the audit;
–
verifying inputs against board-approved forecasts and debt facility
terms and reconciling the opening liquidity position to the balance
sheet at 31 March 2023;
–
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 no financial covenant
in relation to any of the loan arrangements;
–
testing the assessment, including forecast liquidity, for clerical accuracy;
–
assessing whether assumptions made were reasonable and
appropriately severe, in light of the Group’s relevant principal risks and
uncertainties and our own independent assessment of those risks;
–
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;
–
evaluating the identified mitigating actions available to respond to
a severe downside scenario, and whether those actions are feasible
and within the Group’s control;
–
challenging 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 EBITDAaL
required has no more than a remote possibility of occurring when
compared to historical financial performance;
–
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 period; and
–
assessing the appropriateness of the going concern disclosure
on page 112.
Independent auditor’s report to the members of Vodafone Group Plc
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Independent auditor’s report to the members of Vodafone Group Plc (continued)
Our key observations
–
The directors’ assessment forecasts that the Group will maintain
sufficient liquidity throughout the going concern assessment period.
This included the scenario of non-refinancing of certain debt maturities
in the assessment period and also the availability of the Group’s €7.7
billion revolving credit facilities, undrawn as at 31 March 2023.
Furthermore, management’s reverse stress test to model the extent
of the EBITDAaL reduction compared to forecasts required to breach
liquidity during the going concern assessment period is considered
by management to have only a remote possibility of occurring when
compared to historical financial performance.
–
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 the directors’ assessment forecasts 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 Parent
company’s ability to continue as a going concern for a period from when
the financial statements are authorised for issue to 30 June 2024.
In relation to the Group and Parent 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 financial statements 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’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, full audit
procedures on specific balances for 4
components, specified audit procedures on
specific balances for a further 6 components
and other procedures on the remaining 295
components.
–
The components where we performed full audit
procedures accounted for 74% of Adjusted
EBITDAaL and where we performed full or
specified audit procedures in respect of revenue
accounted for 80% of Revenue.
Key audit matters
–
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 €300m (FY22:
€290m) has been calculated based on Adjusted
EBITDAaL as defined in the ‘Our application of
materiality’ section of this report. This materiality
represents approximately 2% of the Group’s
Adjusted EBITDAaL as reported in Note 2 in the
consolidated financial statements.
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
component 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 314 reporting components of the Group, we selected 19
components covering entities within Germany, South Africa, Italy, United
Kingdom, Spain, Turkey, Portugal, Egypt, Luxembourg and corporate
entities, which represent the principal business units within the Group.
Of the 19 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.
For 4 components (“specific scope components”), we performed full
audit procedures on specific accounts within that component that we
considered had the potential for the greatest impact on the significant
accounts in the consolidated financial statements either because of the
size of these accounts or their risk profile. For the remaining 6
components (“specified procedures components”), we performed certain
audit procedures on specific accounts within that component that we
considered had the potential for the greatest impact on the significant
accounts in the financial statements, either because of the size of these
accounts or their risk profile. Depending on the component or type of
procedures, these procedures were undertaken by the primary audit
team or separate component audit team under the primary audit team’s
direction. The audit scope of these components may not have included
testing of all significant accounts of the component, but will have
contributed to the coverage of significant accounts tested for the Group.
For the 305 components where we did not perform full audit procedures,
together these represent 26% of the Group’s Adjusted EBITDAaL, and
none are individually greater than 5% of the Group’s Adjusted EBITDAaL.
For the remaining 295 components which are not full scope, specific
scope or specified procedures scope, we performed other procedures,
which may include analytical review at both the Group or individual
component levels and the use of customised data analytics tools over
the purchase to pay process, fixed assets balances and leases, to profile
trends and identify items for further investigation, inquiry of management,
testing entity level controls, testing group-wide controls and testing
of journals across the Group, including these remaining components,
in order to respond to any potential risks of material misstatement to
the consolidated financial statements.
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The table below illustrates the coverage obtained from the work performed by our audit teams.
Reporting components
2023
Note
2022
Number
% of Group
Adjusted EBITDAaL*
% of
Group Revenue
Number
% of Group
Adjusted EBITDAaL*
% of
Group Revenue
Full scope
9
74%
69%
1,2,5
9
75%
71%
Specific scope
4
–
–
3
4
–
–
Specified procedures
6
–
11%
2,4,5,6
6
–
7%
Full and specified procedures coverage
19
74%
80%
19
75%
78%
Remaining components
295
26%
20%
6,7,8
292
25%
22%
Total reporting components
314
100%
100%
311
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 specified procedures components).
3.
The primary audit team performed full audit procedures on specific accounts in respect of 4 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.
4.
Specified procedures were performed over 6 entities across a range of significant accounts with three of these performed by component teams in Turkey, Egypt and Portugal and the rest by the primary
audit team. 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.
5.
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.
6.
The contribution of specified procedures components to Group Adjusted EBITDAaL is included within ‘remaining components’ as audit procedures were performed on certain, but not all, significant
accounts of the specified procedures components contributing to Group Adjusted EBITDAaL.
7.
Included within the 314 reporting components are the Group’s joint venture investments in Vodafone Ziggo and INWIT, and Safaricom, an associate, which were subject to other procedures.
8.
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 EBITDAaL as defined in ‘Our application of materiality’ section of this report. This metric has the same definition as the Group’s Adjusted EBITDAaL. Non-GAAP measures are defined on page 220
of the Annual 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 as 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:
–
specified procedures scope being assigned to components in Portugal
and Vodafone Insurance Company which were not subject to direct
audit procedures in the prior year; and
–
Czech Republic and Hungary being reassessed as remaining
components in the current year.
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 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 the 4 specific scope
components, the procedures were performed directly by the primary
audit team. For the 6 specified procedures scope components, work was
performed directly by the primary audit team for 3 of these, with the
remaining 3 being performed by component audit teams. Where the
work was performed by component auditors, 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
consolidated 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 performs direct oversight, review,
and coordination of the EY audit teams at VOIS, whose work includes
centralised testing for certain controls and accounts, including specified
procedures on leases, fixed assets, intangible assets, cash and centralised
purchase to pay processes.
The primary audit team continued to follow a programme of planned
visits that has been designed to ensure that the Senior Statutory Auditor
visits key locations on a rotational basis. In the current year the Senior
Statutory Auditor and other team members visited component teams
in Germany, UK and South Africa. The Senior Statutory Auditor, also
remotely attended audit closing meetings with component teams and
management of all full scope locations. In addition, visits were undertaken
by members of the primary audit team to the component teams in Spain,
Italy, Portugal, Turkey, Egypt and VOIS India. These visits involved
meetings with local management, understanding the overall audit
approach, including key issues and response as well as reviewing key
work papers on risk areas.
The primary audit team interacted regularly with the local EY full
scope and specified procedures component teams where appropriate
during various stages of the audit, reviewed relevant working papers
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, specific, and specified audit procedures components
(excluding those performed by the primary audit team) were held via
video conference in April 2023 and were attended by the Senior
Statutory Auditor and/or other members of the primary audit team.
This, together with the additional procedures performed at Group level,
gave us appropriate evidence for our opinion on the consolidated
financial statements.
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Independent auditor’s report to the members of Vodafone Group Plc (continued)
Climate change
There has been increasing interest from stakeholders as to how climate
change will impact Vodafone Group Plc. The Group has determined that
the most significant future impacts from climate change on its operations
will be from its Planet activities and commitments set out on pages
35 to 39 and the material climate-related physical and transitional risks
explained on pages 58 to 59 in the required Task Force for Climate
related Financial Disclosures, both of which form part of the “Other
information,” rather than the audited financial statements. Our procedures
on these unaudited disclosures therefore consisted solely of considering
whether they are materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit or otherwise
appear to be materially misstated, in line with our responsibilities
on other information.
In planning and performing our audit we assessed the potential impacts
of climate change on the Group’s business and any consequential
material impact on its financial statements.
As explained in Note 1 Basis of Preparation to the consolidated financial
statements, environmental, regulatory and other factors responsive to
climate change risks are still developing, and are outside of the Group’s
control, and consequently financial statements cannot capture all
possible future outcomes as these are not yet known. The degree of
certainty of these changes may also mean that they cannot be taken into
account when determining asset and liability valuations and the timing
of future cash flows under the requirements of UK adopted International
Accounting Standards and International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
The significant accounting estimates and judgements assessed by
management to be potentially impacted by climate risks have been
described in Note 1 and with further disclosure in respect of the impact
on the Group’s long-range plans and deferred tax asset recognition
provided in Note 4 and Note 6 respectively.
Our audit effort in considering climate change was focused on ensuring
that the effects of material climate risks disclosed on page 59 have been
appropriately reflected in asset values and associated disclosures where
values are determined through modelling future cash flows, being
‘Goodwill’, ‘Other intangible assets’ and ‘Deferred tax assets’, and in
the timing and nature of liabilities recognised, being ‘Asset Retirement
Obligations’. The findings from our procedures supported our evaluation
of the adequacy of climate change considerations in the Directors’
assessment of going concern and viability and associated disclosures.
Based on our work we have not identified the impact of climate change
on the financial statements to be a key audit matter or to materially
impact a key audit matter.
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Key audit matters
Key audit matters are those matters that, in our professional judgement, 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.
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 €45,706 million (FY22:
€45,580 million), contract assets of €3,557 million (FY22: €3,551 million) and contract liabilities of €2,543 million (FY22: €2,521million) for the year
ended and as at 31 March 2023. Management records revenue according to the principles of IFRS 15, Revenue from Contracts with Customers,
including following the 5-step model therein.
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 and the involvement of IT
professionals was required to determine the audit approach to test and evaluate the relevant data that was captured and aggregated, and to assess the
sufficiency of the audit evidence obtained.
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.
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 80% 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. With the support of our IT professionals, we also evaluated the design and tested the operating effectiveness of controls over the
appropriate flow of transactional data through the IT systems and tools and the reconciliation of the transactional data to the accounting records.
For specified procedures components, we obtained an understanding of the design of controls over the revenue recognition process.
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:
–
Where new material customer propositions were introduced during the period, we evaluated management’s assessment of the accounting
treatment for the new propositions for compliance with IFRS 15.
–
Where practicable, at certain components we extended the use of data analytics in the current year. Our procedures involved testing full populations
of transactions, including performing a correlation analysis between invoiced revenue, receivables and cash. We performed targeted audit
procedures over all material items that did not correlate as expected.
–
At components where data analytics was not practicable, for each significant revenue IT 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 assessing 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.
–
We recalculated the revenue recognised to evaluate whether the processing of the revenue recognition by the Group’s IT systems was
materially correct.
–
We assessed the standalone selling price (‘SSP’) allocated to individual elements of bundled contracts by, where applicable and among other
procedures, comparing to observable market pricing, recalculating the estimated SSP and testing its application to performance obligations.
–
We used data analytic tools to identify revenue related manual journals posted to the general ledger and traced these back to source systems or
other corroborative evidence. 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.
We also assessed the adequacy of the Group’s disclosures in respect to the accounting policies on revenue recognition.
Key observations communicated to the Audit and Risk Committee
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 ended 31 March 2023.
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Independent auditor’s report to the members of Vodafone Group Plc (continued)
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 (‘CGUs’) to determine whether an adjustment to the carrying value of the CGU, and therefore, goodwill,
is required. As at 31 March 2023, the Group has recorded €27,615 million (FY22: €31,884 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 for Germany, UK, Italy and Spain was sensitive to the significant assumptions of projected adjusted EBITDAaL growth,
long-term growth rates, and discount rates.
Auditing the Group’s annual impairment test for these selected CGUs was complex and involved significant auditor judgement, given the estimation
uncertainty related to the significant assumptions described above, used in the VIU models and the sensitivity of certain VIU models to fluctuations
in those assumptions, including where those CGUs had historical impairments, market specific events or other factors which resulted in low headroom.
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 for certain local market businesses.
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Group’s goodwill impairment review
process, including management’s controls over the significant assumptions described above.
For the annual impairment assessment as at 31 March 2023, we also assessed, with the help of a valuation specialist, 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 procedures to
assess the significant assumptions used in the VIU models, including:
–
evaluating projected adjusted EBITDAaL growth, for example by comparing underlying assumptions to external data, such as economic and industry
forecasts for the relevant markets and for consistency with evidence obtained from other areas of our audit;
–
comparing 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, by comparing prior year forecasts to actual results in the
current period;
–
comparing long-term growth rates and discount rates to EY independently determined acceptable ranges;
–
performing sensitivity analyses on the above described assumptions in the VIU models to evaluate the parameters that, should they arise, would
cause an impairment of the CGU or indicate additional disclosures were appropriate; and
–
in considering the existence of contrary evidence, for management’s assessment of implied recoverable value, we compared CGU EBITDAaL
multiples to market listed peers and considered independent analyst valuations for individual CGUs, where available.
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
We agree with management’s conclusion that no impairment charge is required to be recognised in the year in respect of its operating company CGUs.
The sensitivity disclosures included in Note 4 of the consolidated financial statements reflect those changes in certain key assumptions that would
eliminate the headroom of those CGUs. The additional sensitivity disclosures for both the Spain and Italy GCUs, of reasonable possible changes in the
key assumptions of discount rate and Adjusted EBITDAaL growth, and which could lead to a different conclusion in respect of the recoverability
of carrying value of these CGUs, reflect the limited headroom in those CGUs.
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Financials
Other information
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 judges 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.
A deferred tax asset in Luxembourg of €16,269 million (FY22: €16,298 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 35 to 39 years (FY22: 45 to 48 years).
The Luxembourg companies’ income is derived from the Group’s internal financing, 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.
Furthermore, during the course of the year Luxembourg owned direct and indirect interests in the Group’s operating activities. The value of these
investments were primarily based on the Group’s most recent value in use calculations. Changes in the value for the purposes of local Luxembourg
statutory financial statements can result in impairment reversals or impairments which are taxable / tax deductible under local law. In December 2022,
the Group completed an internal restructure to simplify the ownership structure of various operating companies and the operations of certain legal
entities. The restructure has no impact on the Group’s internal financing, procurement and roaming activities but the losses in Luxembourg, and their
recovery timeframe, will no longer be impacted by the changes in the valuation of the Group’s operating companies.
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.
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 Luxembourg entities’ future taxable income, 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 professionals and tax specialists, our audit procedures included,
among others;
–
assessing the existence of available losses and evaluating management’s position on the recoverability of the losses with respect to local tax law
and tax planning strategies adopted:
–
testing the calculation and assessing the reasonableness of the valuation of entities within the Luxembourg structure to recent financial information
including where appropriate, cashflow projections applied in the most recent value in use calculations, net asset valuations and share price data, and
corroborating the Luxembourg ownership structure both at the date of the internal restructure in December 2022 and at the balance sheet date;
–
assessing the forecasted procurement and roaming taxable profits utilised in management’s realisability assessment, by comparing them to
historical actual profits and with evidence obtained from other areas of our audit;
–
evaluating the forecast finance income by, on a sample basis, recalculating income with reference to underlying agreements, 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
–
evaluating the adequacy of the disclosures in respect of the recognition of the deferred tax asset, including as it relates to 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.
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.
The reduction in the period of utilisation in FY23 is consistent with market condition of higher interest rates, driving increased forecast taxable profits
on existing financing activities.
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Financials
Other information
Independent auditor’s report to the members of Vodafone Group Plc (continued)
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 €300 million (2022: €290
million), which is approximately 2% (2022: approximately 2%) of Adjusted
EBITDAaL. We believe that Adjusted EBITDAaL 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. Consistent with the prior year,
at the planning stage of the audit, the materiality basis included the add
back of budgeted restructuring costs which were considered to be
recurring in both nature and value for the Group’s operations.
In November 2022 the Group announced a new costs savings target of
in excess of €1 billion focused on streamlining and further simplifying the
Group. In response a number of restructuring programmes were initiated
across certain of the Group’s markets and functions, resulting in greater
restructuring activity and expense in the year. On the basis that the most
significant expense relate to these discrete restructuring plans, we
excluded these from the final materiality basis, which aligns with the
Group’s definitions of Adjusted EBITDAaL as defined on page 220
of the Annual Report.
We determined materiality for the Company to be €502 million (2022:
€467 million), which is 1% (2022: 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
€45 million was applied.
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
effectiveness of the Group’s overall control environment to prevent or
detect and correct material errors, our judgement was that performance
materiality was 75% (2022: 75%) of our planning materiality, namely
€225m (2022: €218m).
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 €45m to €225m
(2022: €42m to €218m).
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 €15m (2022: €15m),
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.
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 this gives rise to 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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Governance
Financials
Other information
Corporate Governance Statement
We have reviewed 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
by the Listing Rules.
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 112;
–
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 57;
–
Director’s statement on whether it has a reasonable expectation that
the Group will be able to continue in operation and meets its liabilities
set out on page 112;
–
Directors’ statement on fair, balanced and understandable set out
on page 111;
–
Board’s confirmation that it has carried out a robust assessment of the
emerging and principal risks set out on page 111;
–
The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set out
on pages 81 and 108; and;
–
The section describing the work of the Audit and Risk Committee set
out on pages 77 to 82.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out
on pages 111 and 112, 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 supplemented 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.
–
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, specific and specified procedures scope locations, Head Office,
the Audit and Risk Committee, the Group 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 logs and associated 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.
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Financials
Other information
–
Based on this understanding we designed our audit procedures to
identify non-compliance with such laws and regulations, including
where necessary using our forensic specialists. Our procedures
involved enquiries of management at Head Office, the Audit and Risk
Committee, the Group Internal Audit function, the Group Legal
function, the Group Corporate Security team, individuals in the fraud
and compliance department (including those responsible for fraud
investigation and whistleblowing). We also perform journal entry
testing, with a focus on manual consolidation journals, journals
indicating large or unusual transactions and journals with key words
that could indicate management override, 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 focussed 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 fixed asset
balances and leases, 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
material 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.
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 four years, covering the years ending
31 March 2020 to 31 March 2023.
–
The audit opinion is consistent with the additional report to the Audit
and Risk 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
16 May 2023
Independent auditor’s report to the members of Vodafone Group Plc (continued)
122
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Strategic report
Governance
Financials
Other information
Consolidated income statement
for the years ended 31 March
Re-presented
1
Re-presented
1
2023
2022
2021
Note
€m
€m
€m
Revenue
2
Cost of sales
(30,850 )
(30,574 )
(30,086 )
Gross profit
Selling and distribution expenses
(3,329 )
(3,358 )
(3,522 )
Administrative expenses
(6,092 )
(5,713 )
(5,350 )
Net credit losses on financial assets
22
(606 )
(561 )
(664 )
Share of results of equity accounted associates and joint ventures
12
Impairment loss
4
(64 )
Other income
3
Operating profit
3
Investment income
5
Financing costs
5
(1,728 )
(1,964 )
(1,027 )
Profit before taxation
Income tax expense
6
(481 )
(1,330 )
(3,864 )
Profit for the financial year
Attributable to:
– Owners of the parent
– Non-controlling interests
Profit for the financial year
Group earnings per share (all from continuing operations)
1
– Basic
8
– Diluted
8
Consolidated statement of comprehensive income
for the years ended 31 March
Re-presented
1
Re-presented
1
2023
2022
2021
Note
€m
€m
€m
Profit 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
(1,236 )
(30 )
Foreign exchange translation differences transferred to the income statement
(334 )
(17 )
Other, net of tax
2
(3,743 )
Total items that may be reclassified to the income statement in subsequent years
(607 )
(3,622 )
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
25
(160 )
(555 )
Total items that will not be reclassified to the income statement in subsequent
years
(160 )
(555 )
Other comprehensive (expense)/income
(767 )
(4,177 )
Total comprehensive income/(expense) for the financial year
(3,694 )
Attributable to:
– Owners of the parent
(4,117 )
– Non-controlling interests
Total comprehensive income/(expense) for the financial year
(3,694 )
Notes:
1
The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. See note 7 ‘Discontinued operations and assets held for
sale’ and note 8 ‘Earnings per share’ for more information.
2
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 125.
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Governance
Financials
Other information
Consolidated statement of financial position
at 31 March
Re-presented
1
31 March 2023
31 March 2022
Note
€m
€m
Non-current assets
Goodwill
10
Other intangible assets
10
Property, plant and equipment
11
Investments in associates and joint ventures
12
Other investments
13
Deferred tax assets
6
Post employment benefits
25
Trade and other receivables
14
Current assets
Inventory
Taxation recoverable
Trade and other receivables
14
Other investments
13
Cash and cash equivalents
19
Total assets
Equity
Called up share capital
17
Additional paid-in capital
Treasury shares
(7,719 )
(7,278 )
Accumulated losses
(113,086 )
(122,022 )
Accumulated other comprehensive income
Total attributable to owners of the parent
Non-controlling interests
Total equity
Non-current liabilities
Borrowings
21
Deferred tax liabilities
6
Post employment benefits
25
Provisions
16
Trade and other payables
15
Current liabilities
Borrowings
21
Financial liabilities under put option arrangements
22
Taxation liabilities
Provisions
16
Trade and other payables
15
Total equity and liabilities
Note:
1
Balances as at 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. See note 7 ‘Discontinued operations and assets held for sale’ for more information.
were signed on its behalf by:
Margherita Della Valle
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Financials
Other information
Consolidated statement of changes in equity
for the years ended 31 March
Additional
Accumulated other comprehensive income
Equity
Non-
Share
paid-in
Treasury
Accumulated
Currency
Pensions
Revaluation
attributable
controlling
Total
capital
1
capital
2
shares
losses
reserve
3
reserve
surplus
4
Other
5
to owners
interests
equity
€m
€m
€m
€m
€m
€m
€m
€m
€m
€m
€m
1 April 2020
(7,802 )
(120,349 )
(679 )
Issue or reissue of shares
7
(1,943 )
(87 )
Share-based payments
Transactions with NCI in
subsidiaries
8
Dividends
(2,412 )
(2,412 )
(384 )
(2,796 )
Comprehensive
(expense)/income
(555 )
(3,743 )
(4,117 )
(3,694 )
Profit
OCI - before tax
(686 )
(4,630 )
(5,187 )
(5,187 )
OCI - taxes
Transfer to the income
statement ('IS')
(13 )
(13 )
(4 )
(17 )
Purchase of treasury
shares ('TS')
9
(403 )
(403 )
(403 )
31 March 2021
Re-presented
6
(6,172 )
(121,640 )
(1,234 )
(464 )
Issue or reissue of shares
7
(1,902 )
(98 )
Share-based payments
Transactions with NCI in
subsidiaries
8
(38 )
(38 )
Dividends
(2,483 )
(2,483 )
(532 )
(3,015 )
Comprehensive
income/(expense)
(37 )
Profit
OCI - before tax
(56 )
OCI - taxes
(144 )
(505 )
(649 )
(649 )
Transfer to the IS
Purchase of TS
9
(3,106 )
(3,106 )
(3,106 )
31 March 2022
Re-presented
6
(7,278 )
(122,022 )
(751 )
Adoption of IAS 29
1 April 2022 - b/forward
(7,278 )
(122,022 )
(751 )
Issue or reissue of shares
(113 )
Share-based payments
Transactions with NCI in
subsidiaries
(287 )
(287 )
(1,118 )
(1,405 )
Dividends
(2,502 )
(2,502 )
(398 )
(2,900 )
Comprehensive
income/(expense)
(1,374 )
(160 )
Profit
10
OCI - before tax
(1,469 )
(213 )
(368 )
(230 )
(598 )
OCI - taxes
(3 )
(351 )
(301 )
(3 )
(304 )
Transfer to the IS
(334 )
(334 )
(334 )
Translation of
hyperinflationary results
Purchase of TS
9
(563 )
(563 )
(563 )
31 March 2023
(7,719 )
(113,086 )
(911 )
Notes:
1
See note 17 ‘Called up share capital’.
2
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 €2,322 million net gain deferred to other comprehensive income during the year (2022: €3,704 million net gain; 2021: €5,892 million net loss) and €896
million net gain (2022: €1,422 million net gain; 2021: €1,226 million net loss) 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 2063). See note 22 ‘Capital and financial risk
management’ for further details.
6
The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer presented as held for sale. As at 31 March 2022, accumulated losses decreased by
€96 million, resulting in an increase of €96 million in total equity compared to amounts previously reported. As at 31 March 2021, accumulated losses decreased by €53 million, offset by an increase of €5 million in
accumulated other comprehensive income, resulting in a net decrease of €48 million in total equity compared to amounts previously reported. See note 7 ‘Discontinued operations and assets held for sale’.
7
Movements include the re-issue of 1,427 million shares (€1,944 million) in March 2021 to satisfy the first tranche and the re-issue of 1,519 million shares (€1,903 million) in March 2022 to satisfy the second tranche of the
Mandatory Convertible Bond issued in March 2019.
8
Principally relates to transactions in relation to Vantage Towers A.G. See note 27 ‘Acquisitions and disposals’ for details.
9
Represents the irrevocable and non-discretionary share buyback programmes announced on 19 March 2021, 19 May 2021, 23 July 2021, 17 November 2021, 9 March 2022 and 16 November 2022.
10
Includes a gain on disposal of Vantage Towers A.G. of €8,607 million and a gain on disposal of Vodafone Ghana of €689 million, offset by a loss on disposal of Vodafone Hungary of €69 million.
125
Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
Consolidated statement of cash flows
for the years ended 31 March
2023
2022
2021
Note
€m
€m
€m
Inflow from operating activities
18
Cash flows from investing activities
Purchase of interests in subsidiaries, net of cash acquired
27
(136 )
Purchase of interests in associates and joint ventures
12
(78 )
(445 )
(13 )
Purchase of intangible assets
(2,963 )
(3,262 )
(3,227 )
Purchase of property, plant and equipment
(6,250 )
(5,798 )
(5,413 )
Purchase of investments
(767 )
(2,009 )
(3,726 )
Disposal of interests in subsidiaries, net of cash disposed
27
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
Outflow from investing activities
(379 )
(6,868 )
(9,262 )
Cash flows from financing activities
Proceeds from issue of long-term borrowings
Repayment of borrowings
(13,538 )
(8,248 )
(12,237 )
Net movement in short-term borrowings
(2,791 )
Net movement in derivatives
(293 )
Interest paid
1
(1,951 )
(1,804 )
(2,152 )
Payments for settlement of written put options
2
(12 )
(1,482 )
Purchase of treasury shares
(1,867 )
(2,087 )
(62 )
Issue of ordinary share capital and reissue of treasury shares
17
Equity dividends paid
9
(2,484 )
(2,474 )
(2,427 )
Dividends paid to non-controlling shareholders in subsidiaries
(400 )
(539 )
(391 )
Other transactions with non-controlling shareholders in subsidiaries
27
(692 )
Other movements with associates and joint ventures
Outflow from financing activities
(13,430 )
(9,706 )
(15,196 )
Net cash inflow/(outflow)
(7,243 )
Cash and cash equivalents at beginning of the financial year
19
Exchange gain/(loss) on cash and cash equivalents
(255 )
Cash and cash equivalents at end of the financial year
19
Notes:
1
Amount for 2023 includes €26 million of cash outflow (2022: €58 million inflow; 2021: €9 million inflow) on derivative financial instruments for the share buyback related to maturing tranches of mandatory convertible
bonds.
2
Amount for 2021 reflects the settlement of a tender offer made to other shareholders of Kabel Deutschland Holding A.G.
126
Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
Notes to the consolidated financial statements
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.
Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’) and with the requirements of the
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 2024. As at 31 March 2023 , 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, the
classification of joint arrangements, whether to recognise provisions or to disclose contingent liabilities, held for sale accounting and the impacts of
climate change. In addition, management has identified critical accounting estimates in relation to the recovery of deferred tax assets, post
employment benefits and impairment reviews; 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 intangible assets 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 include cases in India and a tax dispute related to financing costs in the Netherlands.
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 software or services (such as premium music, TV content or cloud-based services) to customers and
goods or those where services delivered to customers in partnership with a third-party.
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
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.
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, Italy 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’). In the case of Luxembourg, this includes forecasts of future income from the Group’s internal financing, centralised
procurement and roaming activities.
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.
See additional commentary relating to climate change below.
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 judgements in this area relate to the Group’s tax disputes in India and a tax dispute related to financing costs in the Netherlands.
Further details of tax disputes are included in note 29 ‘Contingent liabilities and legal proceedings’ to the consolidated financial statements.
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.
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 2024 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 24.4% of the Group’s total assets (2022: 26.5%). 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 2024 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.
See additional commentary relating to climate change, below.
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.
Impairment reviews
IFRS requires management to perform impairment tests annually for indefinite lived assets, and for finite lived assets and for equity accounted
investments if events or changes in circumstances indicate that their carrying amounts may not be recoverable.
Management is required to make significant judgments concerning the identification of impairment indicators, the determination of fair values for assets
and whether the carrying value of assets can be supported by the net present value of future cash flows that they are expected to generate.
The Group performs an annual impairment test which focuses on determining a recoverable amount for its assets based on value in use, rather than
fair value less costs of disposal due to a lack of observable market data on fair values for equivalent assets.
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 EBITDAaL, (see note 2 ‘Revenue disaggregation and segmental analysis’ for a reconciliation to the consolidated income
statement);
−
Timing and amount of future capital expenditure, licence and spectrum payments;
−
Long-term growth rates; and
−
Appropriate discount rates to reflect the risks involved.
Changing the assumptions selected by management, in particular projected adjusted EBITDAaL, long-term growth rate and discount rate
assumptions, 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.
Where the Group has interests in listed entities, market data, such as share price, is used to assess the fair value of those interests. If the market
capitalisation indicates that their carrying amounts may not be recoverable, possible adjustments to the share price are reviewed and, where
information is available, a value in use calculation is performed to support a conclusion on impairment.
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 of disposal. 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.
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.
See additional commentary relating to climate change, below.
Held for sale accounting
When the value of a non-current asset or a group of assets in a disposal group will be primarily recovered through a sale transaction and there is an
active plan for the disposal such that it is highly probable that the disposal will be completed within 12 months (subject to certain matters outside of
the Group’s control) then the related assets will be classified as held for sale or as a discontinued operation.
Judgement is applied by management in determining if assets meet the requirements to be classified as held for sale or as discontinued operations.
Further detail is provided in note 7 ‘Discontinued operations and assets held for sale’.
The potential climate change-related risks and opportunities to which the Group is exposed, as identified by management, are disclosed in the
Group’s TCFD disclosures on pages 58 and 59. Management has assessed the potential financial impacts relating to the identified risks, primarily
considering the useful lives of, and retirement obligations for, property, plant and equipment, the possibility of impairment of goodwill and other
long-lived assets and the recoverability of the Group’s deferred tax assets. Management has exercised judgement in concluding that there are no
further material financial impacts of the Group’s climate-related risks and opportunities on the consolidated financial statements. These
judgements will be kept under review by management as the future impacts of climate change depend on environmental, regulatory and other
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 and for the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ for the Group’s entities reporting in
Turkish lira (see below).
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
As anticipated in the Annual Report for the year ended 31 March 2022, Turkey met the requirements to be designated as a hyperinflationary
economy under IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ in the quarter ended 30 June 2022. In addition, Ethiopia where the
Group’s associate, Safaricom, has operations has also become a hyperinflationary economy in the year. The Group has therefore applied
hyperinflationary accounting, as specified in IAS 29, at its Turkish operations whose functional currency is the Turkish lira and to Safaricom’s
operations in Ethiopia where the Ethiopian birr is the functional currency for the reporting period commencing 1 April 2022. This resulted in an
opening balance adjustment of €565 million to consolidated equity.
In accordance with IAS 21 ‘The Effects of Changes in Foreign Exchange Rates’, comparative amounts have not been restated.
Turkish lira and Ethiopian birr results and non-monetary asset and liability balances for the current financial year ended 31 March 2023 have been
revalued to their present value equivalent local currency amount as at 31 March 2023, based on an inflation index, before translation to euros at the
reporting date exchange rate of €1: 20.85 TRL and €1:58.59 ETB, respectively.
For the Group’s operations in Turkey:
−
The gain or loss on net monetary assets resulting from IAS 29 application is recognised in the consolidated income statement within Other
income.
−
The Group also presents the gain or loss on cash and cash equivalents as monetary items together with the effect of inflation on operating,
investing and financing cash flows as one number in the consolidated statement of cash flows.
−
The Group has presented the IAS 29 opening balance adjustment to net assets within currency reserves in equity. Subsequent IAS 29 equity
restatement effects and the impact of currency movements are presented within other comprehensive income because such amounts are
judged to meet the definition of ‘exchange differences’.
For Safaricom’s operations in Ethiopia, the impacts of IAS 29 accounting are reflected as an increase to Investments in associates and joint ventures
and an increase to Equity.
The inflation index in Turkey selected to reflect the change in purchasing power was the consumer price index (CPI) issued by the Turkish Statistical
Institute which has risen by 50.5% during the current financial year ended 31 March 2023.The inflation index selected in Ethiopia is the CPI issued by
the Ethiopian Statistics Service which rose 31.3% in the year ended 31 March 2023.
The main impacts of the aforementioned adjustments on the consolidated financial statements are shown below.
Year ended 31 March
Increase/(decrease)
€m
Revenue
85
Operating profit
(87)
Profit for the financial year
(123)
Non-current assets
814
Equity attributable to owners of the parent
777
Non-controlling interests
its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
With the exception of the Group’s Turkish lira operations, which are subject to hyperinflation accounting (see above), 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.
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
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 gain recognised in the consolidated income statement for the year ended 31 March 2023 is €111 million (31 March 2022:
€309 million loss; 2021: €13 million loss). The net gains and net losses are recorded within operating profit (2023: €247 million credit; 2022: €24
million charge; 2021: €3 million credit), financing costs (2023: €135 million charge; 2022: €284 million charge; 2021 €23 million charge) and
income tax expense (2023: €1 million charge; 2022: €1 million charge; 2021: €7 million credit). The foreign exchange gains and losses included
within other income arise on the disposal of subsidiaries, interests in joint ventures, associates and investments from the recycling of foreign
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 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
The Group adopted the following new accounting policies on 1 April 2022 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:
−
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
−
Amendments to IFRS 3 ‘Reference to the Conceptual Framework’.
New accounting pronouncements to be adopted on or after 1 April 2023
The following new standards and narrow-scope amendments have been issued by the IASB and are effective for annual reporting periods beginning
on or after 1 January 2023:
−
IFRS 17 ‘Insurance Contracts’;
−
Amendments to IAS 1 ‘Disclosure of Accounting Policies’;
−
Amendment to IAS 8 ‘Definition of Accounting Estimates’; and
−
Amendment to IAS 12 ‘Deferred Tax related to Assets and Liabilities arising from a Single Transaction’.
These amendments have been endorsed by the UK Endorsement Board. The Group’s financial reporting will be presented in accordance with the
above new standards from 1 April 2023. The amendments to IAS 1, IAS 8 and IAS 12 are not expected to have a material impact on the consolidated
income statement, consolidated statement of financial position or consolidated statement of cash flows. The impact of the adoption of IFRS 17 is
addressed below.
IFRS 17 ‘Insurance Contracts’
IFRS 17 sets out revised principles for the recognition, measurement, presentation and disclosure of insurance contracts.
The Group issues certain
short and long-term insurance contracts including device insurance and the reinsurance of a third-party annuity policy issued to the Vodafone and
CWW Sections of the Vodafone UK Group Pension Scheme.
The adoption of IFRS 17 will result in insurance and reinsurance liabilities being reclassified into a separate line item from Trade and other payables
and Provisions.
The total reclassifications as at 1 April 2023 and for comparative periods are estimated to range from €400 million to €650 million,
the largest element relating to the reinsurance of the third-party annuity policy (see Note 15 ‘Trade and other payables’ and Note 25 ‘Post
employment benefits’). Prior periods will be re-presented on adoption of IFRS 17; no material adjustments are expected to equity or to the Group’s
Consolidated Income Statement on adoption.
The Group will issue further details on the impact of adopting IFRS 17 as part of the Interim Financial Statements for the six months ending 30
September 2023.
New accounting pronouncements to be adopted on or after 1 April 2024
The following amendments have been issued by the IASB and are effective for annual periods beginning on or after 1 January 2024; they have not
yet been endorsed by the UK Endorsement Board.
−
Amendments to IAS 1 ‘Classification of Liabilities as Current or Non-Current’; Amendments to IAS 1 ‘Non-current Liabilities and Covenants’; and
−
Amendments to IFRS 16 ‘Lease Liability in a Sale and Leaseback’.
The Group is assessing the impact of these new standards and the Group’s financial reporting will be presented in accordance with these standards
The Group’s businesses are managed on a geographical basis. Selected financial data is presented on this basis below.
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
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 consolidated 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 consolidated 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
Revenue disaggregation and segmental income statement analysis
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 tables below present Revenue and Adjusted EBITDAaL for the year ended 31 March 2023 and for the comparative years ended 31 March 2022
and 31 March 2021. The comparative information for the year ended 31 March 2021 is presented under the previous segmental reporting structure.
Revenue from
Total
Service
Equipment
contracts with
Other
Interest
segment
Adjusted
31 March 2023
revenue
revenue
customers
revenue
1
revenue
revenue
EBITDAaL
€m
€m
€m
€m
€m
€m
€m
Germany
11,433
1,313
12,746
350
17
13,113
5,323
Italy
4,251
426
4,677
122
10
4,809
1,453
UK
5,358
1,375
6,733
58
33
6,824
1,350
Spain
3,514
307
3,821
60
26
3,907
947
Other Europe
5,005
602
5,607
117
20
5,744
1,632
Vodacom
4,849
1,034
5,883
403
28
6,314
2,159
Other Markets
3,300
530
3,830
4
–
3,834
1,145
Vantage Towers
–
–
–
1,338
–
1,338
795
Common Functions
2
530
47
577
810
–
1,387
(139)
Eliminations
(271)
(1)
(272)
(1,292)
–
(1,564)
–
Group
37,969
5,633
43,602
1,970
134
45,706
14,665
Revenue from
Total
Service
Equipment
contracts with
Other
Interest
segment
Adjusted
31 March 2022
revenue
revenue
customers
revenue
1
revenue
revenue
EBITDAaL
€m
€m
€m
€m
€m
€m
€m
Germany
11,616
1,126
12,742
365
21
13,128
5,669
Italy
4,379
525
4,904
108
10
5,022
1,699
UK
5,154
1,333
6,487
69
33
6,589
1,395
Spain
3,714
369
4,083
73
24
4,180
957
Other Europe
5,001
528
5,529
105
19
5,653
1,606
Vodacom
4,635
950
5,585
384
24
5,993
2,125
Other Markets
3,420
404
3,824
6
–
3,830
1,335
Vantage Towers
–
–
–
1,252
–
1,252
619
Common Functions
2
522
53
575
838
1
1,414
(197)
Eliminations
(238)
(1)
(239)
(1,242)
–
(1,481)
–
Group
38,203
5,287
43,490
1,958
132
45,580
15,208
Revenue from
Total
Service
Equipment
contracts with
Other
Interest
segment
Adjusted
31 March 2021
revenue
revenue
customers
revenue
1
revenue
revenue
EBITDAaL
€m
€m
€m
€m
€m
€m
€m
Germany
11,520
1,055
12,575
380
29
12,984
5,634
Italy
4,458
446
4,904
97
13
5,014
1,597
UK
4,848
1,206
6,054
44
53
6,151
1,367
Spain
3,788
292
4,080
64
22
4,166
1,044
Other Europe
4,859
549
5,408
124
17
5,549
1,760
Vodacom
4,083
800
4,883
282
16
5,181
1,873
Other Markets
3,312
441
3,753
12
–
3,765
1,228
Common Functions
2
470
36
506
862
–
1,368
(117)
Eliminations
(197)
(1)
(198)
(171)
–
(369)
–
Group
37,141
4,824
41,965
1,694
150
43,809
14,386
Notes:
1
Other revenue includes lease revenue recognised under IFRS 16 ‘Leases’ (see note 20 ‘Leases’).
2
Comprises central teams and business functions.
The total future revenue from the remaining term of Group’s contracts with customers for performance obligations not yet delivered to those
customers at 31 March 2023 is €18,521 million (2022: €20,013 million; 2021: €21,038 million); of which €11,941 million (2022: €12,913 million;
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. The Group has a single group of similar services and products, being the supply of communications services and related
products.
Vantage Towers A.G. (‘Vantage Towers’) has been presented as a separate segment of the Group since 1 April 2021, following its IPO in March 2021;
the segmental presentation for the year ended 31 March 2021 was not revised.
Vantage Towers continued to be reported as a separate segment
until the time of its disposal.
From 1 April 2023, the Group will revise its segments by moving Vodafone Egypt from the Other Markets segment to the Vodacom segment to
reflect the effective date of changes made to the Group’s internal reporting structure, following the transfer of Vodafone Egypt to the Vodacom
group in December 2022.
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, and Vantage Towers,
which comprises companies providing mobile tower infrastructure in a number of European 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. In addition, the Vantage Towers operating segment was a separately listed part of the Group until its
disposal into a joint venture on 22 March 2023 (see note 27 ‘Acquisitions and disposals’) and is presented as a reporting segment as it is considered
to provide useful information to users of the financial statements. 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 (comprising Albania, Czech Republic, Greece, Hungary (to the date of its disposal), Ireland, Portugal and Romania), this largely
reflects membership or a close association with the European Union, while the Other Markets segment (comprising Egypt, Ghana (to the date of its
disposal) and Turkey) 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 EBITDAaL, the Group’s measure of segment profit, to the Group’s profit or loss before taxation for the financial year is
shown below.
Re-presented
1
Re-presented
1
2023
2022
2021
€m
€m
€m
Adjusted EBITDAaL
14,665
15,208
14,386
Restructuring costs
(587)
(346)
(356)
Interest on lease liabilities
436
398
374
Loss on disposal of owned assets
(36)
(28)
(30)
Depreciation and amortisation on owned assets
(9,649)
(9,858)
(10,187)
Share of results of equity accounted associates and joint ventures
433
389
374
Impairment loss
2
(64)
–
–
Other income
9,098
50
568
Operating profit
14,296
5,813
5,129
Investment income
248
254
245
Finance costs
(1,728)
(1,964)
(1,027)
Profit before taxation
12,816
4,103
4,347
Notes:
1
The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31
March 2022, the share of result of equity accounted associates and joint ventures has increased by €178 million, other income has decreased by €29 million and operating profit has
increased by €149 million compared to amounts previously reported. In the year ended 31 March 2021, the share of result of equity accounted associates and joint ventures has increased by
€32 million, operating profit has increased by €32 million and investment income has decreased by €85 million compared to amounts previously reported. See note 7 ‘Discontinued
operations and assets held for sale’ for more information.
2
The FY23 impairment loss relates to Indus Towers and is included in the Other Markets segment. See overleaf and Note 4 ‘Impairment losses’.
Segmental assets
The tables below present the segmental assets for the year ended 31 March 2023 and for the comparative years ended 31 March 2022 and 31
March 2021. The comparative information for the year ended 31 March 2021 is presented under the previous segmental reporting structure.
Non-current
Capital
Right-of-use
Other additions to
Depreciation
and
31 March 2023
assets
1
additions
2
asset additions
intangible assets
3
amortisation
Impairment loss
€m
€m
€m
€m
€m
€m
Germany
43,878
2,701
2,145
2
4,154
–
Italy
10,235
833
916
5
1,970
–
UK
6,629
892
1,639
–
1,562
–
Spain
6,331
565
742
8
1,393
–
Other Europe
7,815
927
1,104
151
1,363
–
Vodacom
5,810
862
219
260
1,027
–
Other Markets
2,488
495
177
13
830
64
Vantage Towers
–
551
318
–
326
–
Common Functions
2,013
839
127
–
993
–
Group
85,199
8,665
7,387
439
13,618
64
Non-current
Capital
Right-of-use
Other additions to
Depreciation
and
31 March 2022
assets
1
additions
2
asset additions
intangible assets
3
amortisation
Impairment loss
€m
€m
€m
€m
€m
€m
Germany
43,190
2,670
795
–
3,981
–
Italy
10,519
840
670
255
1,929
–
UK
6,226
832
580
229
1,905
–
Spain
6,433
676
422
291
1,499
–
Other Europe
8,548
1,009
502
126
1,511
–
Vodacom
6,383
853
187
–
920
–
Other Markets
2,467
530
229
–
598
–
Vantage Towers
8,179
366
320
–
523
–
Common Functions
2,103
844
123
–
979
–
Group
94,048
8,620
3,828
901
13,845
–
Non-current
Capital
Right-of-use
Other additions to
Depreciation
and
31 March 2021
assets
1
additions
2
asset additions
intangible assets
3
amortisation
Impairment loss
€m
€m
€m
€m
€m
€m
Germany
47,563
2,772
1,133
1
4,836
–
Italy
10,707
805
758
17
2,025
–
UK
7,968
822
1,138
–
2,202
–
Spain
7,213
772
700
9
1,579
–
Other Europe
10,369
968
1,016
431
1,727
–
Vodacom
5,839
703
174
–
872
–
Other Markets
2,988
512
247
439
666
–
Common Functions
2,145
829
140
–
194
–
Group
94,792
8,183
5,306
897
14,101
–
Notes:
1
Comprises goodwill, other intangible assets and property, plant and equipment.
2
Includes additions to property, plant and equipment (excluding right-of-use assets), computer software and development costs, reported within Intangible assets.
3
Detailed below are the key amounts recognised in arriving at our operating profit
1
Re-presented
1
2023
2022
2021
€m
€m
€m
Amortisation of intangible assets (Note 10)
4,031
4,044
4,421
Depreciation of property, plant and equipment (Note 11):
Owned assets
5,627
5,857
5,766
Leased assets
3,960
3,944
3,914
Impairment loss (Note 4)
64
–
–
Staff costs (Note 24)
5,842
5,334
5,157
Amounts related to inventory included in cost of sales
5,950
5,671
5,160
Own costs capitalised attributable to the construction or acquisition of property, plant and
equipment
(1,267)
(1,092)
(995)
Loss on disposal of Vodafone Hungary
2
(Note 27)
69
–
–
Gain on disposal of Vodafone Ghana
2
(Note 27)
(689)
–
–
Gain on disposal of Vantage Towers
2
(Note 27)
(8,607)
–
–
Gain on disposal of Indus Towers Limited
1,2
–
81
–
Pledge arrangements in respect of Indus Towers Limited
2
(Note 29)
–
(15)
(429)
Net gain on formation of TPG Telecom
2
(Note 12)
–
–
1,043
Net gain on formation of Indus Towers Limited
2
(Note 12)
–
–
292
Settlement of tender offer to KDG shareholders
2
–
–
Notes:
1
The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31
March 2022, the gain on disposal of Indus Towers Limited has decreased by €29 million compared to the amount previously reported. There is no impact on the amount previously reported
for the year ended 31 March 2021. See note 7 ‘Discontinued operations and assets held for sale’ for more information.
2
Included in other income in the consolidated income statement.
the Group during the year ended 31 March 2023 is analysed below.
2023
2022
2021
€m
€m
€m
Parent company
5
4
3
Subsidiaries
22
19
18
Audit fees
1
27
23
21
Audit-related
2
3
2
–
Vantage Towers IPO
3
–
–
11
Non-audit fees
3
2
11
Total fees
30
25
32
Notes:
1
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 of the years presented.
2
Fees for (i) special purpose audits and (ii) statutory and regulatory filings during the year.
3
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.
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
Impairment loss
Following our annual impairment review, the Group recognised an impairment loss in the consolidated income statement within operating profit
relating to our investment in Indus Towers of €64 million in the current year.
Further detail on events that led to the recognition of this loss is
included on page 141. No impairments were recognised for any other cash-generating units in the three years ended 31 March 2023.
Goodwill
The remaining carrying value of goodwill at 31 March was as follows:
2023
2022
€m
€m
Germany
20,335
20,335
Italy
2,481
2,481
Vantage Towers Germany
–
2,565
Other
4,799
6,503
27,615
31,884
Key assumptions used in the value in use calculations
The key assumptions used in determining the value in use are:
Assumption
How determined
Projected adjusted
EBITDAaL
Projected adjusted EBITDAaL 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; 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.
Projected capital
expenditure
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 owned property, plant and equipment and computer software.
Projected licence and
spectrum payments
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
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 EBITDAaL 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.
Pre-tax discount rate
The pre-tax discount rate for each cash-generating unit is derived such that when applied to pre-tax cash flows it
gives the same result as when the observable post-tax weighted average cost of capital is applied to post-tax cash
flows.
The assumptions used to develop discount rates for each cash-generating unit are benchmarked to externally
available data.
-
The risk free rate is derived from an average yield of a ten year bond issued by the government in each cash-
generating unit’s respective country of operations.
-
The forward-looking equity market risk premium (an investor’s required rate return over and above a risk free
rate) is based on studies by independent economists, the long-term average equity market risk premium and
the market risk premiums typically used by valuation practitioners.
-
The asset beta reflecting the systematic risk of the telecommunications segment relative to the market as a
whole is determined from betas observed for comparable listed telecommunications companies.
-
The region-specific leverage ratios are estimated from ratios observed for comparable listed
telecommunications companies.
Each cash-generating unit’s discount rate is determined in nominal terms in order to match their nominal
estimates of future cash flows.
Rising risk free interest rates and lower asset betas have, respectively, increased and decreased the cash-
generating unit discount rates in the current year.
Year ended 31 March 2023
The Group performs its annual impairment test for goodwill and indefinite lived intangible assets at 31 March and when there is an indicator of
impairment of an asset. At each reporting period date judgement is exercised by management in determining whether any internal or external
sources of information observed are indicative that the carrying amount of any of the Group’s cash generating units is not recoverable. For changes
to the Group's cash-generating units in the current year see note 27 'Acquisitions and disposals'.
Climate change
As a large owner of infrastructure and consumer of energy, the Group has exposure to climate change related risks such as energy cost increases,
asset damage and service disruption. The long range plans used in the Group’s impairment testing include forecast energy costs and other costs
that are embedded in the planning process to deliver the Group’s zero carbon targets. The long range plans also include capital expenditure in
relation to the Group’s use of durable and energy efficient infrastructure and the costs of the Group’s extensive and ongoing network maintenance
programme. Climate change has not had a material impact on the outcome of the Group’s impairment testing.
Indus Towers Limited
The Group’s investment in Indus Towers was tested for impairment at 31 March 2023 following a decline in Indus Towers’ quoted share price in the
current year. Management concluded that fair value less costs of disposal is the appropriate basis to determine the recoverable amount of the
Group’s investment. Indus Towers’ share price is observable in a quoted market and is considered a level 1 input under the IFRS 13 fair value
hierarchy. The share price of INR143.00 per share implied a recoverable amount of INR 81 billion (€0.9 billion) which was lower than the carrying
value of the investment at the same date. An impairment charge of €64 million was recognised to reduce the carrying value of the Group’s
investment to the recoverable amount in the Group’s consolidated statement of financial position.
Value in use assumptions
The table below shows key assumptions used in the value in use calculations, and separately presented cash-generating units for which the carrying
amount of goodwill is significant in comparison with the Group’s total carrying amount of goodwill:
Assumptions used in value in use
calculations
Germany
Italy
%
%
Pre-tax discount rate
7.8
8.9
Long-term growth rate
0.6
1.5
Projected adjusted EBITDAaL CAGR
1
1.8
1.0
Projected capital expenditure
2
19.4-19.8
16.5-17.9
Sensitivity analysis
The estimated recoverable amounts of the Group’s operations in Germany, Italy, the UK, and Spain exceed their carrying values by €3.2 billion, €0.2
billion, €1.3 billion, and €0.4 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 2023.
Change required for carrying value to equal recoverable amount
Germany
Italy
UK
Spain
pps
pps
pps
pps
Pre-tax discount rate
0.6
0.2
1.6
0.5
Long-term growth rate
(0.6)
(0.2)
(1.9)
(0.6)
Projected adjusted EBITDAaL CAGR
1
(1.8)
(0.5)
(4.1)
(1.5)
Projected capital expenditure
2
5.5
0.9
4.2
2.2
Notes:
1
Projected adjusted EBITDAaL CAGR 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.
For the Group’s operations in Italy and Spain management has prepared the following sensitivity analysis for changes in pre-tax discount rate and
projected adjusted EBITDAaL CAGR
1
assumptions. The associated impact of the change in each key assumption does not consider any
consequential impact on other assumptions used in the impairment review.
Recoverable amount less carrying value
Italy
Spain
€bn
€bn
Base case as at 31 March 2023
0.2
0.4
Change in pre-tax discount rate
Decrease by 1pps
1.4
1.3
Increase by 1pps
(0.8)
(0.3)
Change in projected adjusted EBITDAaL CAGR
1
Decrease by 5pps
(1.6)
(0.8)
Increase by 5pps
2.3
1.8
Note:
1
Projected adjusted EBITDAaL CAGR 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.
Year ended 31 March 2022
The disclosures below for the year ended 31 March 2022 are as previously disclosed in the 31 March 2022 Annual Report.
The Group performs its annual impairment test for goodwill and indefinite lived intangible assets at 31 March and when there is an indicator of
impairment of an asset. At each reporting period date judgement is exercised by management in determining whether any internal or external
sources of information observed are indicative that the carrying amount of any of the Group’s cash-generating units is not recoverable.
As a large owner of infrastructure and consumer of energy, the Group has exposure to climate change related risks such as energy cost increases,
asset damage and service disruption. The long range plans used in the Group’s impairment testing include forecast energy costs and other costs
that are embedded in the planning process to deliver the Group’s zero carbon targets. The long range plans also include capital expenditure in
relation to the Group’s use of durable and energy efficient infrastructure and the costs of the Group’s extensive and ongoing network maintenance
programme. Furthermore, the Group will continue to develop strong reactive initiatives to manage the unpredictable impacts of future climate-
related risks. Climate change, therefore, has not had a material impact on the outcome of the Group’s impairment testing and the Group will
continue to refine its approach to modelling climate-related risks and opportunities in the value in use calculations.
As the war in Ukraine continues, it is challenging to predict the full extent and duration of its impact on the economy and the Group’s businesses.
However, to assess a potential impact of this on the Group’s impairment testing, management prepared scenario analysis based on adjustments to
the long range plans for high level estimates of market risks impacted by the war. This analysis did not indicate a risk of impairment at 31 March
2022. Management will update the cash flows and assumptions used in the Group’s impairment testing at future reporting dates with latest best
estimates.
No impairments were recognised for the Group’s cash-generating units during the year to 31 March 2022.
Value in use assumptions
The table below shows key assumptions used in the value in use calculations, and separately presented cash-generating units for which the carrying
amount of goodwill is significant in comparison with the Group’s total carrying amount of goodwill:
Assumptions used in value in use calculations
Germany
Italy
Vantage Towers
Germany
Other
%
%
%
%
Pre-tax discount rate
7.4
9.3
6.1
6.2-22.5
Long-term growth rate
0.5
1.5
1.5
1.0-8.9
Projected adjusted EBITDAaL CAGR
1
(0.1)
(0.2)
11.0
(5.4)-13.0
Projected capital expenditure
2
19.6-21.8
15.0-16.3
32.0-62.1
10.0-51.4
Notes:
1
Projected adjusted EBITDAaL CAGR 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. For the
purposes of this disclosure, Italy’s adjusted EBITDAaL for the year ended 31 March 2022 excludes the TIM settlement.
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.
Sensitivity analysis
The estimated recoverable amounts of the Group’s operations in Germany, Italy, the UK and Spain exceed their carrying values by €7.3 billion, €0.4
billion, €1.3 billion and €0.1 billion respectively. However, 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 2022.
Change required for carrying value to equal recoverable amount
Germany
Italy
UK
Spain
pps
pps
pps
pps
Pre-tax discount rate
1.4
0.3
1.3
0.1
Long-term growth rate
(1.4)
(0.3)
(1.5)
(0.1)
Projected adjusted EBITDAaL CAGR
1
(4.1)
(0.9)
(3.1)
(0.4)
Projected capital expenditure
2
12.6
1.8
4.3
0.5
For the Group’s operations in Germany, Italy, the UK and Spain management has considered the following reasonably possible changes in pre-tax
discount rate, long-term growth rate and projected adjusted EBITDAaL CAGR
1
assumptions, leaving all other assumptions unchanged. 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 has concluded that no reasonably possible or foreseeable change in projected capital expenditure
2
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.
Recoverable amount less carrying value
Germany
Italy
UK
Spain
€bn
€bn
€bn
€bn
Base case as at 31 March 2022
7.3
0.4
1.3
0.1
Change in pre-tax discount rate
Decrease by 1pps
14.9
1.7
2.8
1.0
Increase by 1pps
1.7
(0.7)
0.3
(0.6)
Change in long-term growth rate
Decrease by 1pps
1.6
(0.6)
0.4
(0.5)
Increase by 1pps
15.6
1.7
2.8
0.9
Change in projected adjusted EBITDAaL CAGR
1
Decrease by 5pps
(1.4)
(1.6)
(0.7)
(1.1)
Increase by 5pps
17.9
2.8
3.8
1.5
Note:
1
Projected adjusted EBITDAaL CAGR 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. For the
purposes of this disclosure, Italy’s adjusted EBITDAaL for the year ended 31 March 2022 excludes the TIM settlement.
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.
Year ended 31 March 2021
The disclosures below for the year ended 31 March 2021 are as previously disclosed in the 31 March 2021 Annual Report.
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 Infrastrutture 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.
Assumptions used in value in use calculation
Germany
Italy
Spain
Ireland
Romania
Vantage Towers
Germany
%
%
%
%
%
%
Pre-tax discount rate
7.4
10.5
9.2
7.7
9.9
6.0
Long-term growth rate
0.5
0.5
0.5
0.5
1.0
1.5
Projected adjusted EBITDAaL CAGR
1
1.2
2.1
4.9
0.5
0.9
8.4
Projected capital expenditure
2
19.7-21.5
14.4-15.9
15.7-17.6
12.6-15.1
12.3-15.2
39.1-56.2
Notes:
1
Projected adjusted EBITDAaL CAGR 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 EBITDAaL 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.
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.
Change required for carrying value to equal recoverable amount
Germany
Italy
Spain
Ireland
Romania
Vantage Towers
Germany
pps
pps
pps
pps
pps
pps
Pre-tax discount rate
1.3
0.7
0.4
0.7
0.7
5.2
Long-term growth rate
(1.3)
(0.8)
(0.5)
(0.7)
(0.9)
(4.9)
Projected adjusted EBITDAaL CAGR
1
(4.0)
(1.5)
(1.5)
(1.6)
(1.9)
(19.3)
Projected capital expenditure
2
12.7
3.0
1.6
2.8
1.9
162.6
Management considered the following reasonably possible changes in key assumptions for projected adjusted EBITDAaL CAGR
1
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 EBITDAaL CAGR
1
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 discount rate or projected capital expenditure
2
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
Germany
Italy
Spain
Ireland
Romania
Vantage Towers
Germany
€bn
€bn
€bn
€bn
€bn
€bn
Base case as at 31 March 2021
7.4
0.6
0.3
0.1
0.1
3.5
Change in projected adjusted EBITDAaL CAGR
1
Decrease by 5pps
(1.6)
(1.3)
(0.6)
(0.2)
(0.1)
2.4
Increase by 5pps
18.2
2.9
1.4
0.5
0.3
5.0
Change in long-term growth rate
Decrease by 1pps
1.5
(0.1)
(0.3)
–
–
2.2
Increase by 1pps
16.0
1.6
1.0
0.3
0.2
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
UK
Portugal
Czech Republic
Hungary
pps
pps
pps
pps
Pre-tax discount rate
0.8
0.9
1.2
0.3
Long-term growth rate
(0.8)
(1.0)
(1.3)
(0.4)
Projected adjusted EBITDAaL CAGR
1
(1.7)
(2.2)
(3.0)
(0.7)
Projected capital expenditure
2
2.5
3.7
7.5
1.5
Notes:
1
Projected adjusted EBITDAaL CAGR 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 EBITDAaL 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
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.
1
Re-presented
1
2023
2022
2021
€m
€m
€m
Investment income
Financial assets measured at amortised cost
212
249
221
Financial assets measured at fair value through profit and loss
36
5
24
248
254
245
Financing costs
Financial liabilities measured at amortised cost
Bonds
1,711
1,546
1,722
Lease liabilities
436
398
374
Bank loans and other liabilities
2
430
469
463
Interest on derivatives
(561)
(428)
(485)
Mark-to-market on derivatives
(423)
(341)
(1,070)
Financial assets measured at fair value through profit and loss
–
36
–
Foreign exchange
135
284
23
1,728
1,964
1,027
Net financing costs
1,480
1,710
Notes:
1
The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31
March 2021, investment income has decreased by €85 million compared to the amount previously reported. There is no impact on the amount previously reported for the year ended 31
March 2022. See note 7 ‘Discontinued operations and assets held for sale’ for more information.
2
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.
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.
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
Income tax expense
2023
2022
2021
€m
€m
€m
United Kingdom corporation tax expense:
Current year
4
22
24
Adjustments in respect of prior years
4
17
3
8
39
27
Overseas current tax expense/(credit):
Current year
924
993
872
Adjustments in respect of prior years
(26)
81
(30)
898
1,074
842
Total current tax expense
906
1,113
869
Deferred tax on origination and reversal of temporary differences:
United Kingdom deferred tax
(71)
(791)
(94)
Overseas deferred tax
(354)
1,008
3,089
Total deferred tax (credit)/expense
(425)
217
2,995
Total income tax expense
481
1,330
3,864
Tax charged/(credited) directly to other comprehensive income
2023
2022
2021
€m
€m
€m
Current tax
3
–
(17)
Deferred tax
304
648
(1,009)
Total tax charged/(credited) directly to other comprehensive income
307
648
(1,026)
Tax charged/(credited) directly to equity
2023
2022
2021
€m
€m
€m
Deferred tax
6
–
(2)
Total tax charged/(credited) directly to equity
6
–
(2)
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.
Re-presented
1
Re-presented
1
2023
2022
2021
€m
€m
€m
Continuing profit before tax as shown in the consolidated income statement
12,816
4,103
4,347
Aggregated expected income tax expense
3,848
1,231
1,111
Impairment loss with no tax effect
18
–
–
Disposal of Group investments
2
(2,918)
(8)
(332)
Effect of taxation of associates and joint ventures, reported within profit before tax
(125)
(111)
69
Deferred tax (credit)/charge following revaluation of investments in Luxembourg
(393)
1,455
2,120
Previously unrecognised temporary differences we expect to use in the future, including in
Luxembourg
(16)
(708)
(45)
Previously recognised temporary differences and losses we no longer expect to use in the
future
–
74
699
Current year temporary differences (including losses) that we currently do not expect to use
207
116
170
Adjustments in respect of prior year tax liabilities
(35)
13
(10)
Impact of tax credits and irrecoverable taxes
80
74
90
Deferred tax on overseas earnings
(6)
2
–
Effect of current year changes in statutory tax rates on deferred tax balances
3
35
(667)
(45)
Financing costs not (taxable)/deductible for tax purposes
(27)
46
(62)
Revaluation of assets for tax purposes in Turkey and Italy
4
(338)
(357)
–
Expenses not deductible for tax purposes
151
170
99
Income tax expense
481
1,330
3,864
Notes:
1
Amounts for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. See note 7 ‘Discontinued
operations and assets held for sale’ for more information.
2
2023 relates to the change in consolidation status of Vantage Towers and the tax exempt disposals of Vodafone Hungary and Vodafone Ghana. 2021 includes the tax exempt gains relating
to the TPG Telecom Limited merger in Australia and Indus Towers Limited in India..
3
2022 includes the increase in future UK tax rate to 25%.
4
2023 relates to a step of assets for tax purposes in Turkey. 2022 relates to step up of assets for tax purposes in Italy and Turkey
Analysis of movements in the net deferred tax asset balance during the year:
€m
1 April 2022
18,569
Foreign exchange movements
(59)
Credited the income statement
425
Charged directly to OCI
(304)
Charged directly to equity
(6)
Impact of hyperinflation accounting
(191)
Arising on acquisitions and disposals
111
31 March 2023
1
18,545
Deferred tax assets and liabilities, before offset of balances within countries, are as follows:
Amount
Net
credited/
recognised
(expensed)
Gross
Gross
Less
deferred tax
in income
deferred
deferred tax
amounts
asset/
statement
tax asset
liability
unrecognised
(liability)
€m
€m
€m
€m
€m
Accelerated tax depreciation
136
2,761
(1,426)
(47)
1,288
Intangible assets
324
630
(1,495)
15
(850)
Tax losses
(78)
28,035
–
(9,540)
18,495
Treasury related items
2
623
(717)
(588)
(682)
Temporary differences relating to revenue recognition
(40)
19
(705)
–
(686)
Temporary differences relating to leases
216
1,482
(1,054)
(30)
398
Other temporary differences
(135)
938
(296)
(60)
582
31 March 2023
1
425
34,488
(5,693)
(10,250)
18,545
Analysed in the balance sheet, after offset of balances within countries, as:
€m
Deferred tax asset
19,316
Deferred tax liability
(771)
31 March 2023
1
18,545
At 31 March 2022, deferred tax assets and liabilities, before offset of balances within countries, were as follows:
Amount
Net
credited/
recognised
(expensed)
Gross
Gross
Less
deferred tax
in income
deferred
deferred tax
amounts
asset/
statement
tax asset
liability
unrecognised
(liability)
€m
€m
€m
€m
€m
Accelerated tax depreciation
672
2,589
(1,361)
(58)
1,170
Intangible assets
643
666
(1,801)
11
(1,124)
Tax losses
(1,450)
28,977
–
(10,341)
18,636
Treasury related items
(90)
616
(372)
(562)
(318)
Temporary differences relating to revenue recognition
(9)
3
(666)
–
(663)
Temporary differences relating to leases
(3)
1,754
(1,577)
–
177
Other temporary differences
20
1,148
(379)
(78)
691
31 March 2022
1
(217)
35,753
(6,156)
(11,028)
18,569
At 31 March 2022, analysed in the balance sheet, after offset of balances within countries, as:
€m
Deferred tax asset
19,089
Deferred tax liability
(520)
31 March 2022
1
18,569
Note:
1
The Group does not discount deferred tax assets. This is in accordance with IAS 12.
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 Minimum Tax 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).
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 2023, the Group holds provisions for such
potential liabilities of €412 million (2022: €463 million). These provisions relate to multiple issues, across the jurisdictions in which the Group
operates. The reduction follows the resolution of a number of disputes during the year.
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.
The tables below present the gross amount and expiry dates of losses available for carry forward for the year ended 31 March 2023 and the
comparative year ended 31 March 2022.
Expiring
Expiring
within
beyond
31 March 2023
5 years
6 years
Unlimited
Total
€m
€m
€m
€m
Losses for which a deferred tax asset is recognised
15
59
78,967
79,041
Losses for which no deferred tax is recognised
306
15,649
18,321
34,276
321
15,708
97,288
113,317
Expiring
Expiring
within
beyond
31 March 2022
5 years
6 years
Unlimited
Total
€m
€m
€m
€m
Losses for which a deferred tax asset is recognised
19
259
79,848
80,126
Losses for which no deferred tax is recognised
334
13,162
23,928
37,424
353
13,421
103,776
117,550
Deferred tax assets on losses in Luxembourg
Included in the table above are losses of €65,232 million (2022: €65,348 million) that have arisen in Luxembourg companies. A deferred tax asset of
€16,269 million (2022: €16,298 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 also arose prior to the 2017 tax reform in
Luxembourg and are available to carry forward indefinitely.
In December 2022, the Group undertook an internal restructuring which saw the Luxembourg companies dispose of their investments in the
Group’s operating companies. This resulted in the Luxembourg holding companies recording a tax deductible loss on the disposal in the local GAAP
financial statements. The investments are valued for the local GAAP financial statements using the Group’s recoverable value calculations (see
Note 4 – 'Impairment losses') and the carrying values and valuation methodology differs from the goodwill assessment for the Group’s consolidated
financial statements.
Losses incurred after the 2017 tax reform in Luxembourg expire after 17 years and are only used after any pre-existing losses. In the year ended 31
March 2023 the Luxembourg companies incurred additional tax losses of €2,608 million following the disposals of their investments in the Group’s
operating companies. 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, the forecast utilisation timeframe extends by one year.
Following the restructuring, the losses in Luxembourg are no longer impacted by changes in the value of the Group’s operating companies and the
recovery of the deferred tax asset will be driven by the recurring profits of the Luxembourg companies.
These 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 €1 billion 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.
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, €4,518 million (2022: €3,546 million) of the deferred tax asset is forecast to be used within the next 10 years, and
€8,742 million (2022: €6,953 million) used within 20 years. The losses are projected to be fully utilised over the next 35 to 39 years. The decrease in
the recovery period over the prior year is principally a result of higher interest rates, driving margins up on existing financing activities. In the year
ended 31 March 2022 these same factors also meant the Group recognised €699 million of previously unrecognised deferred tax asset as the
forecasts produced at that time, which reflected the same factors discussed above, showed these losses will be used within 60 years. The Group did
not previously recognise the asset as the losses were forecast to be used beyond 60 years.
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 4 years. The Group uses these different scenarios of 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. The Group has continued to monitor
developments relating to OECD’s Pillar 2 rules, including reviewing the administrative guidance published in December 2022 and does not
anticipate a significant impact on its ability to continue to use our losses in Luxembourg. 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, €15,925 million (2022; €13,298 million) of the Group’s Luxembourg losses expire after 11-17 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 (2022:
€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 €12,932 million (2022: €13,955 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 €2,021 million (2022:
€2,170 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 (see Note 4 ‘Impairment losses’).
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 4 to 9 years.
A 5%-10% change in the forecast profits of the German business would alter the utilisation period by 1 year.
Deferred tax assets in Italy
The Group has a recognised deferred tax asset of €425 million (2022: €411 million), including €152 million (2022: €71 million) relating to tax losses
in Italy. The Italian business has historically been profitable and is forecasted to return to profitability, absent the tax deductions arising from the
revaluation of assets undertaken in the year ended 31 March 2022, in the short term. The Group has reviewed the latest forecasts for the Italian
business which incorporate the unsystematic risks of operating in the telecommunications business (see Note 4 ‘Impairment losses’).
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 Italian
business we believe it is probable the Italian losses will be fully utilised.
Deferred tax assets on losses in Spain
The Group has tax losses of €5,130 million (2022: €4,627 million) 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 €2,377 million (2022: €8,444 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, as in the prior year. The
losses reduced following the dissolution of a UK holding company which held capital losses. The remaining losses relate to a number of other
jurisdictions across the Group. There are also €2,443 million (2022: €2,365 million) of unrecognised temporary differences relating to treasury items
and other items.
Impact of climate risks
The recovery of the Group’s deferred tax assets is dependent on its forecasts of future profitability and the climate related risks have been
considered in the Group’s assessment of the recovery of those assets (see Note 4 ‘Impairment losses’). The Group does not expect the climate
related risks to have an impact on the ability of Luxembourg to continue to provide the internal financing, procurement, and roaming activities to
other members of the Group.
Unremitted earnings
No deferred tax liability has been recognised in respect of a further €26,371 million (2022: €8,599 million) of unremitted earnings of subsidiaries
because the Group is able 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.
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. Similarly, equity accounting ceases for associates and joint ventures held for sale.
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
Discontinued operations
The Group did not have any discontinued operations in the year ended 31 March 2023 or the comparative years ended 31 March 2022 and 31
March 2021.
Reclassification of Indus Towers Limited
In the consolidated financial statements for the prior year ended 31 March 2022, the Group’s 21.0% interest in Indus Towers Limited was reported
within assets held for sale. Whilst the Group remains focused on achieving a sale, the investment is not assessed as meeting the requirements of
held for sale at 31 March 2023. Consequently, comparative balances as at 31 March 2022 have been re-presented in these consolidated financial
statements to reflect that Indus Towers Limited is no longer reported as held for sale.
Impact on the consolidated income statement
The reclassification has no impact on previously reported revenue and gross profit, as reported in the consolidated income statement.
In the year ended 31 March 2022, the share of results of equity accounted associates and joint ventures increased by €178 million, offset by a
decrease of €29 million in other income. Consequently, operating profit, profit before taxation and profit for the financial year all increased by €149
million compared to amounts previously reported. Total comprehensive income for the financial year increased by €144 million, reflecting the
increase in profit for the financial year of €149 million, offset by a charge of €5 million included in other comprehensive income.
In the year ended 31 March 2021, the share of results of equity accounted associates and joint ventures increased by €32 million and therefore
operating profit increased by €32 million compared to the amount previously reported. Investment income decreased by €85 million and therefore
profit before taxation and profit for the financial year both decreased by €53 million compared to amounts previously reported. Total
comprehensive expense for the financial year increased by €48 million, reflecting the decrease in profit for the financial year of €53 million, offset
by a credit of €5 million included in other comprehensive income
Impact on the consolidated statement of financial position
The consolidated statement of financial position is on page 124 and has not been reproduced below in its entirety. The table below only discloses
the impacted lines.
As previously
presented
Impact of
reclassification
Re-presented
2022
2022
2022
€m
€m
€m
Non-current assets
Investments in associates and joint ventures
4,268
1,055
5,323
Assets held for sale
959
(959)
–
Total assets
153,953
96
154,049
Equity
Accumulated losses
(122,118)
96
(122,022)
Total equity and liabilities
153,953
96
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.
2023
2022
2021
Millions
Millions
Millions
Weighted average number of shares for basic earnings per share
27,680
29,012
29,592
Effect of dilutive potential shares: restricted shares and share options
95
97
91
Weighted average number of shares for diluted earnings per share
27,775
29,109
29,683
Re-presented
1
Re-presented
1
2023
2022
2021
€m
€m
€m
Profit for earnings per share from continuing operations attributable to owners
11,838
2,237
59
Profit for basic and diluted earnings per share
11,838
2,237
59
Re-presented
1
Re-presented
1
2023
2022
2021
eurocents
eurocents
eurocents
Basic earnings per share from continuing operations
42.77c
7.71c
0.20c
Basic earnings per share
42.77c
7.71c
0.20c
Re-presented
1
Re-presented
1
2023
2022
2021
eurocents
eurocents
eurocents
Diluted earnings per share from continuing operations
42.62c
7.68c
0.20c
Diluted earnings per share
42.62c
7.68c
0.20c
Note:
1
The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31
March 2022, profit for basic and diluted earnings per share has increased by €149 million (2021: €53 million decrease) compared to the amount previously reported. Consequently, basic
earnings per share increased by 0.51 eurocents (2021: 0.18 eurocents decrease) and diluted earnings per share increased by 0.51 eurocents (2021: 0.18 eurocents decrease) compared to
Dividends are one type of shareholder return, historically paid to our shareholders in February and August.
2023
2022
2021
€m
€m
€m
Declared during the financial year
Final dividend for the year ended 31 March 2022: 4.50 eurocents per share
1,265
1,254
1,205
(2021: 4.50 eurocents per share, 2020: 4.50 eurocents per share)
Interim dividend for the year ended 31 March 2023: 4.50 eurocents per share
1,237
1,229
1,207
(2022: 4.50 eurocents per share, 2021: 4.50 eurocents per share)
2,502
2,483
2,412
Proposed after the end of the year and not recognised as a liability
Final dividend for the year ended 31 March 2023: 4.50 eurocents per share
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 ‘Basis of preparation ‘ to the consolidated financial statements.
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.
Estimated useful lives
The estimated useful lives of finite lived intangible assets are as follows:
Licence and spectrum fees
3 - 40 years
Computer software
3 - 5 years
Brands
1 - 30 years
Customer bases
Licence and
Computer
Customer
Goodwill
spectrum fees
software
bases
Other
Total
€m
€m
€m
€m
€m
€m
Cost
1 April 2021
99,364
33,528
17,833
12,308
466
163,499
Exchange movements
(21)
(148)
(60)
80
1
(148)
Arising on acquisition
(10)
–
–
54
–
44
Additions
–
901
2,727
–
7
3,635
Disposals
–
(356)
(2,823)
–
(1)
(3,180)
Other
–
1
36
–
(10)
27
31 March 2022
99,333
33,926
17,713
12,442
463
163,877
Adoption of IAS 29
1,564
1,099
408
110
87
3,268
1 April 2022 brought forward
100,897
35,025
18,121
12,552
550
167,145
Exchange movements
(783)
(1,270)
(504)
(240)
(53)
(2,850)
Disposal of subsidiaries
(3,939)
(443)
(348)
(458)
(4)
(5,192)
Additions
–
439
2,804
–
7
3,250
Disposals
–
(2)
(1,831)
–
(1)
(1,834)
Hyperinflation impacts
729
557
232
51
40
1,609
31 March 2023
96,904
34,306
18,474
11,905
539
162,128
Accumulated impairment losses and amortisation
1 April 2021
67,633
22,043
12,496
7,324
454
109,950
Exchange movements
(184)
(35)
(72)
70
1
(220)
Amortisation charge for the year
–
1,306
2,225
509
4
4,044
Disposals
–
(351)
(2,821)
–
(1)
(3,173)
Other
–
–
39
–
(7)
32
31 March 2022
67,449
22,963
11,867
7,903
451
110,633
Adoption of IAS 29
1,564
829
390
110
87
2,980
1 April 2022 brought forward
69,013
23,792
12,257
8,013
538
113,613
Exchange movements
(414)
(846)
(351)
(231)
(50)
(1,892)
Disposal of subsidiaries
(39)
(147)
(180)
(80)
(2)
(448)
Amortisation charge for the year
–
1,133
2,343
554
1
4,031
Disposals
–
(2)
(1,814)
–
(1)
(1,817)
Hyperinflation impacts
729
407
207
51
40
1,434
31 March 2023
69,289
24,337
12,462
8,307
526
114,921
Net book value
31 March 2022
31,884
10,963
5,846
4,539
12
53,244
31 March 2023
27,615
9,969
6,012
3,598
13
47,207
For licences and spectrum fees and other intangible assets, amortisation is included within the cost of sales line within the consolidated income
statement. Included in the net book value of computer software are assets in the course of construction, which are not depreciated, with a cost of
€1,451 million (2022: €1,955 million).
The net book value and expiry dates of the most significant licences are as follows:
2023
2022
Expiry dates
€m
€m
Germany
2025/2033/2040
2,979
3,270
Italy
2029/2037
3,123
3,415
UK
2023/2033/2038/2041
1,055
1,209
Spain
2028/2030/2031/2038/2041
758
809
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 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 ‘Basis of preparation ‘to the consolidated financial
statements.
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.
follows:
Land and buildings
Freehold buildings
25 - 50 years
Leasehold premises
the term of the lease
Equipment, fixtures and fittings
Network infrastructure and other
1 - 35 years
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
Equipment,
Land and
fixtures
buildings
and fittings
Total
€m
€m
€m
Cost
1 April 2021
2,315
75,974
78,289
Exchange movements
1
(265)
(264)
Arising on acquisition
(74)
44
(30)
Additions
41
5,845
5,886
Disposals
(200)
(2,280)
(2,480)
Other
263
2
265
31 March 2022 as reported
2,346
79,320
81,666
Adoption of IAS 29
15
1,776
1,791
1 April 2022 brought forward
2,361
81,096
83,457
Exchange movements
(81)
(2,648)
(2,729)
Disposal of subsidiaries
(69)
(7,210)
(7,279)
Additions
49
5,805
5,854
Disposals
(253)
(3,724)
(3,977)
Hyperinflation impacts
7
1,040
1,047
Other
(17)
101
84
31 March 2023
1,997
74,460
76,457
Accumulated depreciation and impairment
1 April 2021
1,216
48,403
49,619
Exchange movements
3
(171)
(168)
Charge for the year
117
5,740
5,857
Disposals
(191)
(2,240)
(2,431)
Other
224
(223)
1
31 March 2022 as reported
1,369
51,509
52,878
Adoption of IAS 29
3
1,432
1,435
1 April 2022 brought forward
1,372
52,941
54,313
Exchange movements
(28)
(1,694)
(1,722)
Disposal of subsidiaries
(18)
(4,543)
(4,561)
Charge for the year
83
5,544
5,627
Disposals
(170)
(3,672)
(3,842)
Hyperinflation impacts
1
747
748
31 March 2023
1,240
49,323
50,563
Net book value
31 March 2022
977
27,811
28,788
31 March 2023
757
25,137
25,894
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 €10 million (2022: €12 million) and €1,988 million (2022: €2,353 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 €2,170 million (2022: €2,998 million),
accumulated depreciation of €1,393 million (2022: €2,050 million) and net book value of €777 million (2022: €948 million).
Right-of-use assets arising from the Group’s lease arrangements are recorded within property, plant and equipment:
2023
2022
€m
€m
Property, plant and equipment (owned assets)
25,894
28,788
Right-of-use assets
1
12,098
12,016
31 March
37,992
40,804
Note:
1
Additions of €7,387 million (2022: €3,828 million) and a depreciation charge of €3,960 million (2022: €3,944 million) were recorded in respect of right-of-use assets during the year to 31
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, notably in the Netherlands, India, Australia and now Oak Holdings 1 GmbH and its
markets, 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 ‘Basis of preparation ‘to the consolidated financial statements.
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 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
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
Joint operations
On 22 March 2023, the Group completed the disposal of its principal joint operation as part of the transaction with Oak Holdings 1 GmbH. The
financial and operating activities of the operation were jointly controlled by the participating shareholders and were primarily designed for all but an
insignificant amount of the output to be consumed by the shareholders.
Country of
incorporation or
registration
Percentage
shareholdings
1
Percentage
shareholdings
1
Name of joint operation
Principal activity
2023
2022
Cornerstone Telecommunications Infrastructure Limited
Network infrastructure
UK
–
50.0
Note:
1
Effective ownership percentages of Vodafone Group Plc are rounded to the nearest tenth of one percent.
Joint ventures and associates
2023
2022
Re-presented
1
€m
€m
Investments in joint ventures
9,578
3,781
Investments in associates
1,501
1,542
31 March
11,079
5,323
Note:
1
The results for the year ended 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31 March 2022,
investments in associates have increased by €1,055 million compared to the amount previously reported. See note 7 ‘Discontinued operations and assets held for sale’ for more information.
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.
Country of
incorporation or
registration
Percentage
shareholdings
1
Percentage
shareholdings
1
Name of joint venture
Principal activity
2023
2022
Oak Holdings 1 GmbH
Network infrastructure
Germany
64.2
–
VodafoneZiggo Group Holding B.V.
Network operator
Netherlands
50.0
50.0
OXG Glasfaser GmbH
Fibre infrastructure
Germany
50.0
–
Vodafone Idea Limited
2
Network operator
India
32.3
47.6
TPG Telecom Limited
3
Network operator
Australia
25.1
25.1
INWIT S.p.A.
Network infrastructure
Italy
–
33.2
Notes:
1
Effective ownership percentages of Vodafone Group Plc rounded to the nearest tenth of one percent.
2
At 31 March 2023 the fair value of the Group’s interest in Vodafone Idea Limited was INR 91 billion (€1,021 million) (2022: INR 148 billion (€1,750 million)) based on the quoted share price
on the National Stock Exchange of India.
3
At 31 March 2023 the fair value of the Group’s interest in TPG Telecom Limited was AUD 2,273 million (€1,401 million) (2022: AUD 2,818 million (€1,902 million)) based on the quoted share
price on ASX.
Oak Holdings 1 GmbH
On 22 March 2023, the Group completed the disposal of its interest in Vantage Towers A.G. to Oak Holdings 1 GmbH, the co-control partnership of
Vodafone, GIP and KKR. Vodafone retained an interest of 64.2% in Oak Holdings 1 GmbH, which owns 89.3% of Vantage Towers A.G. On 18 April
2023, the Management Board and the Supervisory Board of Vantage Towers A.G. published their joint reasoned statement on the public delisting
tender offer of Oak Holdings 1 GmbH to the shareholders of Vantage Towers A.G. Both recommended that all remaining shareholders accept the
delisting tender offer.
OXG Glasfaser GmbH
In March 2023, the Group entered into an agreement with Altice Luxembourg S.A. to create a joint venture, OXG Glasfaser GmbH (‘OXG’), with 50.0%
shareholding held by each shareholder. Each shareholder is committed to contribute funding of up to €950 million to OXG for the deployment of
fibre-to-the-home in Germany. The funding is expected to be contributed between 2023 and 2029. The amount and timing of the funding depends
on the speed and size of the fibre deployment so the funding may be for a lower value or contributed over a longer period of time. The contribution
can be in the form of free capital reserves, shareholder loan, loan notes or similar instruments as agreed by the shareholders.
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 2023 is €3,759 million (31 March 2022: €5,120 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 (see note 29 ‘Contingent liabilities and legal
proceedings’).
The value of the Group’s 21.0% 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 impact the carrying
value (31 March 2023: €908 million) of the Group’s investment in Indus Towers Limited.
TPG Telecom Limited
TPG Telecom Limited is listed on the Australian Securities Exchange (‘ASX’). Vodafone and Hutchison Telecommunications (Australia) Limited each
own an economic interest of 25.05%, with the remaining 49.9% listed as free float on the ASX. The financial information presented in the tables
below includes debt held within the structure that holds the Group’s interest in TPG.
INWIT S.p.A.
On 22 March 2023, the Group completed the disposal of its 33.2% interest in INWIT S.p.A. as part of the transaction with Oak Holdings 1 GmbH.
Dividends received from joint ventures
During the year ended 31 March 2023, the Group received dividends included in the consolidated statement of cash flows from VodafoneZiggo
Group Holding B.V. of €165 million (2022: €350 million, 2021: €209 million), TPG Telecom Limited of €24 million (2022: €22 million, 2021: €nil)
and INWIT S.p.A. of €103 million (2022: €96 million, 2021: €42 million).
Aggregated financial information
The table below provides aggregated financial information for the Group’s joint ventures as it relates to the amounts recognised in the income
statement and consolidated statement of financial position.
Investment in joint ventures
Profit/(loss) from
continuing operations
1
2023
2022
2023
2022
2021
€m
€m
€m
€m
€m
Oak Holdings 1 GmbH
8,634
–
–
–
–
VodafoneZiggo Group Holding B.V.
793
822
137
(19)
(232)
TPG Telecom Limited
108
84
48
(5)
98
INWIT S.p.A.
–
2,851
30
27
3
Other
43
24
(15)
(14)
(15)
Total
9,578
3,781
200
(11)
(146)
Notes:
1
Total Other comprehensive income/(expense) is not materially different to profit/(loss) from continuing operations.
Summarised financial information
Summarised financial information for each of the Group’s material joint ventures on a 100% ownership basis is set out below and overleaf.
Financial information is presented for Vodafone Idea Limited (‘VIL’) for the six month period to, and as at 30 September 2022 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.
As disclosed above, the Group’s investment in VIL was reduced to €nil in the year ended 31 March 2020 and the Group has not recorded any profit
or loss in respect of its share of VIL’s results since that date.
Financial information is presented for TPG Telecom Limited (‘TPG’) for the nine month period to, and as at 31 December 2022 on the basis that full-
year information in relation to TPG has not been released at the date of approval of these financial statements and as such is market sensitive for
TPG.
Financial information presented for INWIT S.p.A. for the years to 31 March 2023, 31 March 2022 and 31 March 2021 is based on the financial results
and financial position as at 31 December 2022, 31 December 2021 and 31 December 2020, respectively, being the latest financial information
available to the Group when completing the financial statements for each year.
VodafoneZiggo Group Holding B.V.
Vodafone Idea Limited
2023
2022
2021
2023
2022
2021
€m
€m
€m
€m
€m
€m
Income statement
Revenue
4,063
4,056
4,010
2,586
4,450
4,847
Operating expenses
(2,124)
(2,104)
(2,058)
(1,681)
(2,802)
(3,133)
Depreciation and amortisation
(1,527)
(1,592)
(1,658)
(1,220)
(2,390)
(2,442)
Other income
–
–
25
–
(34)
(2,135)
Operating profit/(loss)
412
360
319
(315)
(776)
(2,863)
Interest income
–
–
–
2
14
32
Interest expense
11
(276)
(658)
(1,392)
(2,297)
(2,035)
Profit/(loss) before tax
423
84
(339)
(1,705)
(3,059)
(4,866)
Income tax (expense)/credit
(150)
(121)
(125)
(1)
2
–
Profit/(loss) from continuing operations
1
273
(37)
(464)
(1,706)
(3,057)
(4,866)
TPG Telecom Limited
INWIT S.p.A.
2023
2022
2021
2023
2022
2021
€m
€m
€m
€m
€m
€m
Income statement
Revenue
3,027
3,375
3,010
853
785
562
Operating expenses
(1,870)
(2,292)
(2,096)
(73)
(70)
(46)
Depreciation and amortisation
(700)
(914)
(769)
(508)
(513)
(398)
Operating profit
457
169
145
272
202
118
Interest income
–
–
1
–
–
–
Interest expense
(172)
(122)
(201)
(81)
(90)
(101)
Profit/(loss) before tax
285
47
(55)
191
112
17
Income tax (expense)/credit
(25)
(27)
495
(1)
(30)
(7)
Profit from continuing operations
1
260
20
440
190
82
10
Note:
1
Total Other comprehensive income/(expense) is not materially different to profit/(loss) from continuing operations.
Oak Holdings 1
GmbH
1
VodafoneZiggo Group Holding B.V.
2023
2023
2022
€m
€m
€m
Statement of financial position
Non-current assets
23,878
16,570
16,521
Current assets
749
719
739
Total assets
24,627
17,289
17,260
Equity shareholders’ funds
13,450
1,586
1,643
Non-controlling interests
1,262
–
–
Non-current liabilities
6,709
13,299
13,187
Current liabilities
3,206
2,404
2,430
Cash and cash equivalents within current assets
224
20
190
Non-current liabilities excluding trade and other payables and provisions
6,215
13,138
13,007
Current liabilities excluding trade and other payables and provisions
2,409
1,247
1,282
Vodafone Idea Limited
2
TPG Telecom Limited
2023
2022
2023
2022
€m
€m
€m
€m
Statement of financial position
Non-current assets
21,316
17,267
9,823
10,638
Current assets
2,580
2,693
1,009
898
Total assets
23,896
19,960
10,832
11,536
Equity shareholders’ (deficit)/funds
(12,486)
(10,214)
3,019
3,129
Non-current liabilities
28,902
23,266
6,702
7,227
Current liabilities
7,480
6,908
1,111
1,180
Cash and cash equivalents within current assets
109
365
290
435
Non-current liabilities excluding trade and other payables and provisions
28,879
23,241
6,595
7,173
Current liabilities excluding trade and other payables and provisions
3,404
3,334
86
121
INWIT S.p.A.
2022
€m
Statement of financial position
Non-current assets
14,532
Current assets
270
Total assets
14,802
Equity shareholders’ funds
8,595
Non-current liabilities
5,672
Current liabilities
535
Cash and cash equivalents within current assets
96
Non-current liabilities excluding trade and other payables and provisions
5,420
Current liabilities excluding trade and other payables and provisions
319
Note:
1
Includes balances which are provisional based on finalisation of the purchase price allocation.
2
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’.
The reconciliation of summarised financial information presented to the carrying amount of our interest in joint ventures is set out below.
Oak Holdings 1
GmbH
VodafoneZiggo Group Holding B.V.
2023
2023
2022
2021
€m
€m
€m
€m
Equity shareholders’ funds
13,450
1,586
1,643
Interest in joint ventures
1
8,634
793
822
Carrying value
8,634
793
822
Profit/(loss) from continuing operations
–
273
(37)
(464)
Share of profit/(loss)
1
–
137
(19)
(232)
Vodafone Idea Limited
TPG Telecom Limited
2023
2022
2021
2023
2022
2021
€m
€m
€m
€m
€m
€m
Equity shareholders’ (deficit)/funds
(12,486)
(10,214)
3,019
3,129
Interest in joint ventures
1
(5,943)
(4,863)
56
27
Impairment
(272)
(257)
–
–
Goodwill
–
–
52
57
Investment proportion not recognised
6,215
5,120
–
–
Carrying value
–
–
108
84
(Loss)/profit from continuing operations
(1,706)
(3,057)
(4,866)
260
20
440
Share of (loss)/profit
1
(812)
(1,357)
(2,160)
48
(5)
98
Share of loss not recognised
812
1,357
2,160
–
–
–
Share of profit/(loss)
1
–
–
–
48
(5)
98
INWIT S.p.A.
2023
2022
2021
€m
€m
€m
Equity shareholders’ funds
–
8,595
8,801
Interest in joint ventures
–
2,851
2,920
Carrying value
–
2,851
2,920
Profit from continuing operations
190
82
10
Share of profit
63
27
3
Share of profit not recognised as held for sale
(33)
–
–
Share of profit
30
27
3
Note:
1
The Group’s effective ownership percentages of Oak Holdings 1 GmbH, VodafoneZiggo Group Holding B.V., Vodafone Idea Limited and TPG Telecom Limited are 64.2%, 50.0%, 47.6% 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.
Country of
Percentage
Percentage
incorporation or
shareholding
1
shareholding
1
Name of associate
Principal activity
registration
2023
2022
Safaricom PLC
2
Network operator
Kenya
39.9
40.0
Indus Towers Limited
3
Network infrastructure
India
21.0
21.0
Notes:
1
Effective ownership percentages of Vodafone Group Plc rounded to the nearest tenth of one percent.
2
At 31 March 2023, the fair value of the Group’s interest in Safaricom PLC was KES 290 billion (€2,012 million) (2022: KES 546 billion (€4,270 million)) based on the closing quoted share price
on the Nairobi Stock Exchange. The Group also holds two non-voting shares.
3
At 31 March 2023, the fair value of the Group’s interest in Indus Towers Limited was INR 81 billion (€908 million) (2022: INR 126 billion (€1,494 million)) based on the closing quoted share
price on the National Stock Exchange of India.
Aggregated financial information
The table below provides aggregated financial information for the Group’s associates as it relates to the amounts recognised in the income
statement and consolidated statement of financial position.
Investment in associates
Profit/(loss) from continuing operations
Re-presented
1
Re-presented
1
Re-presented
1
2023
2022
2023
2022
2021
€m
€m
€m
€m
€m
Safaricom PLC
2
509
428
195
217
217
Indus Towers Limited
908
1,055
50
178
306
Other
2
84
59
(12)
5
(3)
Total
1,501
1,542
233
400
520
Note:
1
The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31
March 2022, investments in associates has increased by €1,055 million and profit from continuing operations has increased by €178 million (2021: €32 million) compared to the amounts
previously reported. See note 7 ‘Discontinued operations and assets held for sale’ for more information.
2
Other comprehensive income includes profit from continuing operations, together with €127 million in respect of the application of IAS 29 to Safaricom’s operations in Ethiopia.
Dividends from associates
During the year ended 31 March 2023, the Group received dividends included in the consolidated statement of cash flows from Indus Towers
Limited of €75 million (2022: €nil, 2021: €201 million) and from Safaricom PLC of €250 million (2022: €170 million, 2021: €171 million).
Summarised financial information
Summarised financial information for each of the Group’s material associates on a 100% ownership basis is set out below.
Safaricom PLC
Indus Towers Limited
2023
2022
2021
2023
2022
2021
€m
€m
€m
€m
€m
€m
Income statement
Revenue
2,468
2,318
2,083
3,343
3,122
2,421
Operating expenses
(1,353)
(1,164)
(1,030)
(2,240)
(1,480)
(1,247)
Depreciation and amortisation
(432)
(309)
(299)
(588)
(598)
(477)
Other income
68
–
–
–
–
412
Operating profit
751
845
754
515
1,044
1,109
Interest income
13
9
12
26
–
61
Interest expense
(69)
(59)
(27)
(200)
(140)
(194)
Profit before tax
695
795
739
341
904
976
Income tax expense
(285)
(270)
(197)
(102)
(272)
(168)
Profit from continuing operations and total
comprehensive income
410
525
542
239
632
808
Attributable to:
- Owners of the parent
489
542
542
239
632
808
- Non-controlling interests
(79)
(17)
–
–
–
–
Statement of financial position
Non-current assets
3,007
2,173
5,243
5,359
Current assets
436
510
1,081
1,685
Total assets
3,443
2,683
6,324
7,044
Equity shareholders' funds
1,269
1,066
3,453
3,774
Non-controlling interests
532
312
–
–
Non-current liabilities
753
558
1,954
2,101
Current liabilities
889
747
917
1,169
Cash and cash equivalents within current assets
127
241
3
278
Non-current liabilities excluding trade and other
payables and provisions
500
465
1,665
1,795
Current liabilities excluding trade and other
payables and provisions
322
241
491
638
The reconciliation of summarised financial information presented to the carrying amount of our interest in the associate is set out below.
Safaricom PLC
Indus Towers Limited
Re-presented
1
Re-presented
1
2023
2022
2021
2023
2022
2021
€m
€m
€m
€m
€m
€m
Equity shareholders' funds
1,269
1,066
3,453
3,774
Interest in associates
2
507
425
727
794
Goodwill
2
3
181
261
Carrying value
509
428
908
1,055
Profit from continuing operations
489
542
542
239
632
808
Share of profit
195
217
217
50
178
306
Notes:
1
The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31
March 2022, the carrying value of the Group’s interest in the associate has increased by €1,055 million and the Group’s share of profit has increased by €178 million (2021: €32 million)
compared to the amounts previously reported. See note 7 ‘Discontinued operations and assets held for sale’ for more information.
2
The Group holds a number of other listed and unlisted investments, mainly comprising managed funds,
deposits and government bonds.
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
2023
2022
€m
€m
Included within non-current assets
Equity securities
1
94
143
Debt securities
2
999
930
1,093
1,073
Included within current assets
Short-term investments:
Bonds and debt securities
3
1,338
1,446
Managed investment funds
1
2,967
3,349
4,305
4,795
Collateral assets
4
239
698
Other investments
5
2,473
2,438
7,017
7,931
Notes:
1
Items measured at a fair value, €47 million (2022: €91 million) of equity securities have a valuation basis of level 1 classification, which comprises financial instruments where fair value is
determined by unadjusted quoted prices in active markets for identical assets and liabilities. The remaining items are measured at fair value and the 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.
2
Items are measured at amortised cost and have a fair value of €803 million (2022: €830 million) with a valuation basis of level 1 classification.
3
Items are measured at fair value and the valuation basis is level 1 classification.
4
Items are measured at amortised cost and the carrying amount approximates fair value.
5
Includes investments measured at a fair value of €1,409 million (2022: €1,460 million). The valuation basis is level 1. The remaining items are measured at amortised cost and the carrying
amount approximates fair value.
Non-current debt securities within non-current assets include €885 million (2022: €885 million) of loan notes issued by VodafoneZiggo
Holding B.V.
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 €899 million (2022: €681 million) of highly liquid Japanese; €290 million (2022: €nil) Dutch; €150
million (2022: €nil) German; €nil (2022: €501 million) Belgian; €nil (2022: €200 million) French government securities and €nil (2022: €64
million) of UK government bonds.
Managed investment funds of €2,967 million (2022: €3,349 million) are in funds with liquidity of up to 90 days.
Collateral assets of €239 million (2022: €698 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
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.
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
2022
€m
€m
Included within non-current assets
Trade receivables
51
34
Trade receivables held at fair value through other comprehensive income
337
606
Net investment in leases
267
134
Contract assets
494
495
Contract-related costs
690
630
Other receivables
66
37
Prepayments
296
231
Derivative financial instruments
1
5,642
4,216
7,843
6,383
Included within current assets
Trade receivables
3,277
3,300
Trade receivables held at fair value through other comprehensive income
566
802
Net investment in leases
106
66
Contract assets
3,063
3,056
Contract-related costs
1,471
1,403
Amounts owed by associates and joint ventures
175
241
Other receivables
730
869
Prepayments
835
872
Derivative financial instruments
1
482
410
10,705
Note:
1
Includes €198 million (2022: €3 million) of embedded derivative option for which fair value is based on level 3 of the fair value hierarchy (see section on fair value carrying value information
within note 22 ‘Capital and Risk Management’). All other 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 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 €2,078 million (2022: €1,967 million) relating to costs incurred to obtain customer contracts and €83
million (2022: €66 million) relating to costs incurred to fulfil customer contracts; an amortisation and impairment expense of €1,541 million (2022:
€1,517 million) was recognised in operating profit during the year.
Other than for the embedded derivative option described above, the fair values of the derivative financial instruments are calculated by discounting
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.
2022
€m
€m
Included within non-current liabilities
Other payables
520
452
Accruals
48
28
Contract liabilities
500
530
Derivative financial instruments
1
1,116
1,506
2,184
2,516
Included within current liabilities
Trade payables
7,662
7,327
Amounts owed to associates and joint ventures
329
40
Other taxes and social security payable
1,013
1,114
Other payables
2,080
2,032
Accruals
2
4,814
6,991
Contract liabilities
2,043
1,991
Derivative financial instruments
1
306
166
18,247
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.
2
Includes €nil (2022: €1,434 million) payable in relation to the irrevocable and non-discretionary share buyback programmes.
The carrying amounts of trade and other payables approximate their fair value.
Materially all of the €1,991 million recorded as current contract liabilities at 1 April 2022 was recognised as revenue during the year.
Other payables included within non-current liabilities include €257 million (2022: €351 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
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.
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.
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
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.
Restructuring
The Group undertakes periodic reviews of its operations and recognises provisions as required based on the outcomes of these
reviews. The associated cash outflows for restructuring costs are primarily less than one year.
Other provisions
Asset
retirement
Legal and
obligations
regulatory
Restructuring
Other
Total
€m
€m
€m
€m
€m
1 April 2021
1,222
528
426
463
2,639
Exchange movements
3
(25)
(4)
5
(21)
Amounts capitalised in the year
297
–
–
–
297
Amounts charged to the income statement
–
216
216
139
571
Utilised in the year - payments
(51)
(128)
(295)
(197)
(671)
Amounts released to the income statement
(1)
(142)
(41)
(83)
(267)
31 March 2022
1,470
449
302
327
2,548
Exchange movements
(22)
(28)
–
(2)
(52)
Disposal of subsidiaries
(578)
(8)
(2)
(2)
(590)
Amounts capitalised in the year
185
–
–
–
185
Amounts charged to the income statement
–
138
425
126
689
Utilised in the year - payments
(59)
(44)
(181)
(123)
(407)
Amounts released to the income statement
(1)
(77)
(36)
(48)
(162)
Other
35
–
–
–
35
31 March 2023
1,030
430
508
278
2,246
Provisions have been analysed between current and non-current as follows:
Asset
retirement
Legal and
obligations
regulatory
Restructuring
Other
Total
€m
€m
€m
€m
€m
Current liabilities
61
193
298
122
674
Non-current liabilities
969
237
210
156
1,572
31 March 2023
1,030
430
508
278
2,246
Asset
retirement
Legal and
obligations
regulatory
Restructuring
Other
Total
€m
€m
€m
€m
€m
Current liabilities
43
235
241
148
667
Non-current liabilities
1,427
214
61
179
1,881
31 March 2022
1,470
449
302
327
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.
2023
2022
Number
€m
Number
€m
Ordinary shares of 20
20
⁄
21
US cents each allotted,
issued and fully paid:
1, 2, 3
1 April
28,817,627,868
4,797
28,816,835,778
4,797
Allotted during the year
628,190
–
792,090
–
31 March
28,818,256,058
4,797
28,817,627,868
4,797
Notes:
1
At 31 March 2023, there were 50,000 (2022: 50,000) 7% cumulative fixed rate shares of £1 each in issue.
2
At 31 March 2023, the Group held 1,825,691,429 (2022: 447,576,522) treasury shares with a nominal value of €304 million (2022: €75 million). The market value of shares held was €1,855
million (2022: €661 million). During the year, 85,844,124 (2022: 68,306,442) treasury shares were reissued under Group share schemes and 1,463,959,031 (2022: 1,441,870,348) shares
were repurchased under share buy-back arrangements.
3
The table below shows how our profit for the year from continuing operations translates into cash flows generated
from our operating activities.
Re-presented
1
Re-presented
1
2023
2022
2021
Notes
€m
€m
€m
Profit for the financial year
12,335
2,773
483
Investment income
5
(248)
(254)
(245)
Financing costs
5
1,728
1,964
1,027
Income tax expense
6
481
1,330
3,864
Operating profit
14,296
5,813
5,129
Adjustments for:
Share-based payments and other non-cash charges
73
173
146
Depreciation and amortisation
10, 11
13,618
13,845
14,101
Loss on disposal of property, plant and equipment and intangible assets
27
30
17
Share of result of equity accounted associates and joint ventures
12
(433)
(389)
(374)
Impairment loss
4
64
–
–
Other income
3
(9,098)
(50)
(568)
Increase in inventory
(180)
(162)
(68)
(Increase)/decrease in trade and other receivables
14
(458)
(638)
582
Increase/(decrease) in trade and other payables
15
1,379
384
(730)
Cash generated by operations
19,288
19,006
18,235
Net tax paid
(1,234)
(925)
(1,020)
Net cash flow from operating activities
18,054
18,081
17,215
Note:
1
The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31
March 2022, profit for the financial year and operating profit have both increased by €149 million, other income has decreased by €29 million and the share of result of equity accounted
associates and joint ventures has increased by €178 million compared to the amounts previously reported. In the year ended 31 March 2021, profit for the financial year has decreased by
€53 million, investment income has decreased by €85 million, operating profit has increased by €32 million and the share of result of equity accounted associates and joint ventures has
increased by €32 million compared to the amounts previously reported. There is no impact on cash generated by operations and net cash flow from operating activities. See note 7
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.
Cash and cash equivalents comprise cash and bank 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
2023
2022
€m
€m
Cash and bank deposits
1
3,924
2,220
Money market funds
2
7,781
5,276
Cash and cash equivalents as presented in the consolidated statement of financial position
11,705
7,496
Bank overdrafts
(77)
(125)
Cash and cash equivalents as presented in the consolidated statement of cash flows
11,628
7,371
Note:
1
Includes bank deposits under repurchase agreements of €1,750 million (2022: €nil).
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.
The carrying amount of balances at amortised cost approximates their fair value.
could be used to repay subsidiaries’ third party liabilities. In addition, those balances could also be used to repay €722 million (2022: €932 million)
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.
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 ‘Property, plant and equipment’). 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 (i.e. primarily leases of handsets or other
equipment to customers, leases of wholesale access to the Group’s fibre and cable networks and leases of tower infrastructure assets). The Group
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 ‘Basis of preparation’ 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.
Optional 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 ‘Basis of preparation’ 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 2023 was €4,479 million (2022: €4,338 million). Following changes to the Group’s
structure during the year, it is expected that future annual cash outflows will increase by circa €300 million absent significant future changes in the
volume of the Group’s activities or strategic changes to use more or fewer owned assets, subject to contractual price increases. The future cash
outflows included within lease liabilities are shown in the maturity analysis below. 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 March 2023, the Group disposed of its interest in Vantage Towers A.G. (‘Vantage Towers’) into a new joint venture, Oak Holdings 1 GmbH (‘Oak’);
Vodafone retains an interest of 64.2% in Oak, which owns 89.3% of Vantage Towers (see note 27 ‘Acquisitions and disposals’ for additional details).
The Group has agreements with Vantage Towers to lease back spaces on its towers (see note 30 ‘Related party transactions’). The Group de-
recognised assets related to the mobile base stations with a net book value of €4,793 million. A total net gain on disposal of €9,287 million was
realised as a result of the disposal of Vantage Towers; €680 million of this gain, reflecting the gain on the proportion of sold towers that has been
retained through the leaseback, has been recorded 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 term of the leaseback until November 2028. 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
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
‘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:
2023
2022
€m
€m
Within one year
3,452
3,130
In more than one year but less than two years
2,574
2,189
In more than two years but less than three years
2,200
1,759
In more than three years but less than four years
1,981
1,579
In more than four years but less than five years
1,810
1,387
In more than five years
3,240
4,242
15,257
14,286
Effect of discounting
(1,893)
(1,747)
Lease liability - as disclosed in note 21 ‘Borrowings’
13,364
12,539
At 31 March 2023 the Group has entered into lease contracts with payment obligations with an undiscounted value of €320 million (2022: €51
million) that had not commenced at 31 March 2023.
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 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 Group’s leasing activities 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, leases out space on the Group’s owned
mobile base stations to other telecommunication companies and sub-leases certain retained mobile base station sites to telecommunication tower
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 in the year are classified as:
-
Operating leases where the Group provides wholesale access to its fibre and cable networks, provides routers or similar equipment to fixed
customers or is lessor of space on owned mobile base stations; and
-
Finance leases where the Group is sub-lessor of handsets or similar items in back-to-back arrangements or where surplus assets or certain
retained mobile base stations sites 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:
2023
2022
€m
€m
Operating leases
Lease revenue (note 2 ‘Revenue disaggregation and segmental analysis’)
751
758
Income from leases not recognised as revenue
47
45
Substantially all of the Group’s income as a lessor is operating lease income.
The committed amounts to be received from the Group’s operating leases are as follows:
Maturity
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
Total
€m
€m
€m
€m
€m
€m
€m
Committed operating lease payments due to the Group as
a lessor
31 March 2023
304
128
36
16
7
4
495
31 March 2022
513
250
161
128
114
343
1,509
The Group’s net investment in leases are disclosed in note 14 ‘Trade and other receivables’. The maturity profile of the Group’s net investment in
leases is as follows:
2023
2022
€m
€m
Within one year
111
72
In more than one year but less than two years
88
55
In more than two years but less than three years
67
36
In more than three years but less than four years
54
25
In more than four years but less than five years
47
11
In more than five years
39
9
406
208
Unearned finance income
(33)
(8)
Net investment in leases - as disclosed in note 14 ‘Trade and other receivables’
373
200
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.
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
Borrowings
2023
2022
€m
€m
Non-current borrowings
Bonds
39,512
46,156
Bank loans
487
629
Lease liabilities (note 20)
10,318
9,810
Other borrowings
1
1,352
1,536
51,669
58,131
Current borrowings
Bonds
4,604
1,875
Bank loans
308
688
Lease liabilities (note 20)
3,046
2,729
Collateral liabilities
4,886
2,914
Bank borrowings secured against Indian assets
1,485
1,382
Other borrowings
1
392
2,373
14,721
11,961
Borrowings
66,390
70,092
Note:
1
Includes €1,140 million (2022: €1,273 million) and €196 million (2022: €2,165 million) of licence and spectrum fees payable in non-current and current borrowings respectively.
The fair value of the Group’s financial liabilities held at amortised cost approximate to fair value with the exception of long-term bonds with a
carrying value of €39,512 million (2022: €46,156 million) which have a fair value of €35,044 million (2022: €46,348 million). Fair value is based on
level 1 of the fair value hierarchy using quoted market prices.
The Group’s current borrowings also include €1,485 million (2022: €1,382 million) of bank borrowings that are secured against the Group’s
shareholdings in Indus Towers and Vodafone Idea (see note 12 ‘Investments in Associates and Joint Ventures’ for further details of these assets) and
will be repaid through the realisation of proceeds from those assets. This arrangement contains an embedded derivative option which has been
separately fair valued and is presented within derivative assets in current assets (see note 14 ‘Trade and other receivables’).
The Group’s borrowings, which include certain bonds that have been designated in hedge relationships, are carried at €1,282 million higher (2022:
€1,316 million 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 is not reflected in borrowings and
would decrease the euro equivalent redemption value of the bonds by €1,440 million (2022: €1,456 million).
Commercial paper programmes
We currently have US and euro commercial paper programmes of US$15 billion (€13.8 billion) and €10 billion respectively which are available to be
used to meet short-term liquidity requirements. At 31 March 2023 both programmes remained undrawn.
The commercial paper facilities were supported by US$4.0 billion (€3.7 billion) and €4.0 billion of syndicated committed bank facilities. No amounts
had been drawn under these facilities.
Bonds
We have two €30 billion euro medium-term note programmes and a US shelf programme which are used to meet medium to long-term funding
requirements. At 31 March 2023 the total amounts in issue under these programmes split by currency were US$21.3 billion, €17.6 billion, £3.6
billion, AUD$0.5 billion, HKD$2.1 billion, NOK2.2 billion, CHF0.7 billion and JPY10 billion.
At 31 March 2023 the Group had bonds outstanding with a nominal value equivalent to €42.8 billion. During the year ended 31 March 2023, bonds
with a nominal value of €1.8 billion and £0.6 billion were issued utilising the euro medium-term note programme and US$1.2 billion were issued
utilising the US Shelf programme. During the year bonds with euro equivalent nominal values of €1.9 billion and €3.8 billion matured and were re-
purchased respectively.
Bonds mature between 2023 and 2063 (2022: 2022 and 2059) and have interest rates between 0.375% and 7.875% (2022: 0% and 7.875%).
Mandatory convertible bonds
In March 2023 the Group concluded the last remaining share buybacks related to the mandatory convertible bonds (‘MCBs’) and no further
instruments remain outstanding. 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 with coupons of 1.2% and 1.5% respectively. The first tranche matured on 12 March 2021 at a conversion price of
£1.2055 per share and the second tranche matured on 12 March 2022 at a conversion price of £1.1326 per share. 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 (€0.1 billion) recognised as a financial liability in borrowings. The Group’s strategy was 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. The Group decided to buy back ordinary shares to mitigate dilution resulting from the conversion and the hedging
strategy provided a hedge for the repurchase price.
The Group held a maximum of 1,825,691,429 (2022: 1,911,661,729) of its own shares during the year which represented 6.3% (2022: 6.6%) of
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.
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
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.
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.
For net investment hedges, gains and losses accumulated in other comprehensive income are included in the income statement when the foreign
The following table summarises the capital of the Group at 31 March:
Re-presented
1
2023
2022
€m
€m
Borrowings (note 21)
66,390
70,092
Cash and cash equivalents (note 19)
(11,705)
(7,496)
Derivative financial instruments included in trade and other receivables (note 14)
(6,124)
(4,626)
Derivative financial instruments included in trade and other payables (note 15)
1,422
1,672
Short-term investments (note 13)
(4,305)
(4,795)
Collateral assets (note 13)
(239)
(698)
Financial liabilities under put option arrangements
485
494
Equity
64,483
57,073
Capital
110,407
111,716
Note:
1
The results for the year ended 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. Capital has increased by €96 million
compared to the amount previously reported. See note 7 ‘Discontinued operations and assets held for sale’ for more information.
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 joint ventures and associates and to non-controlling shareholders
Dividend policies within shareholder agreements for certain of the Group’s associates and joint ventures give the Group certain rights to receive
dividends but are generally paid at the discretion of the Board of Directors or shareholders. We do not have existing obligations to pay dividends to
non-controlling interest partners of our subsidiaries other than ongoing dividend obligations to the Kabel Deutschland A.G. minority shareholders.
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
All remaining put options issued as part of the hedging strategy for the mandatory convertible bonds (‘MCBs’) matured during the financial year
(1,452 million share options outstanding as at 31 March 2022). These permitted the holders to exercise against the Group at maturity of the option
if there was a decrease in our share price. Under the terms of the options, settlement was made in cash which equated to the reduced value of
shares from the initial conversion price, adjusted for dividends declared.
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 2023 was
€1,927 million (2022: €1,341 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 2023, the financial institutions that run the SCF programmes had purchased €2.4 billion (2022: €2.4 billion)
of outstanding 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 2023, none of the payables subject to supplier financing arrangements met the criteria to be reclassified as
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 March 2023. 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 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 (2022: €38 billion)
of issued bonds have a change of control clause. The Group uses derivative instruments for currency and interest rate risk management purposes that
are transacted by specialist treasury personnel. The Group mitigates banking sector credit risk by the use of collateral support agreements.
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 global economic and political uncertainty and other macro economic events.
The Group has combined cash and cash equivalent and short-term investments of €16.0 billion, providing significant headroom over short-term
liquidity requirements. Additionally the Group maintains undrawn revolving credit facilities of €7.7 billion euro equivalent. As at 31 March 2023 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.
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:
2023
2022
€m
€m
Cash and bank deposits (note 19)
3,924
2,220
Money market funds (note 19)
7,781
5,276
Managed investment funds (note 13)
2,967
3,349
Bonds and debt securities (note 13)
2,337
2,376
Collateral assets (note 13)
239
698
Other investments (note 13)
2,473
2,438
Derivative financial instruments (note 14)
6,124
4,626
Trade receivables (note 14)
1
6,158
6,083
Contract assets and other receivables (note 14)
4,353
4,457
Performance bonds and other guarantees (note 29)
3,381
2,866
39,737
34,389
Note:
1
Includes amounts guaranteed under sales of trade receivables €1,927 million (2022: €1,341 million)
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 and bank deposits and certain other investments are both classified and measured at
amortised cost and subject to 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 179.
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.
Investments are made in accordance with established internal treasury policies which dictate the scaled maximum exposure permissible in relation
to an investment’s long-term credit rating. The Group invests in AAA unsecured money market mutual funds, where the investment is limited to
10% of each fund; A to AAA government securities, both directly and through money market mutual funds; and has two managed investment funds
that hold 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 reference to the long-term credit ratings assigned for that counterparty by Moody’s, Fitch Ratings and Standard & Poor’s. Furthermore,
collateral support agreements reduce the Group’s exposure to counterparties who must post 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.
In the event of any default, ownership of the 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:
2023
2022
€m
€m
Collateral liabilities
4,886
2,914
In addition, 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:
Trade receivables held
Trade receivables held
at fair value through
Contract assets
at amortised cost
other comprehensive income
2023
2022
2023
2022
2023
2022
€m
€m
€m
€m
€m
€m
1 April
83
101
1,342
1,480
108
57
Exchange movements
(3)
1
(72)
(70)
1
–
Amounts charged to credit losses on financial assets
138
114
449
394
19
53
Other
1
(140)
(133)
(570)
(462)
(57)
(2)
31 March
78
83
1,149
1,342
71
108
Note:
1
Primarily utilisation of the provision by way of write-off.
Expected credit losses are presented as net credit losses on financial assets within operating profit and subsequent recoveries of amounts
previously written off are credited against the same line item.
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 table below presents information on trade receivables past due¹ and their associated expected credit losses:
31 March 2023
Trade receivables at amortised cost past due
30 days
31–60
61–180
180
Total
Due
or less
days
days
days+
€m
€m
€m
€m
€m
€m
Gross carrying amount
2,465
599
163
329
957
4,513
Expected credit loss allowance
(67)
(64)
(50)
(173)
(831)
(1,185)
Net carrying amount
2,398
535
113
156
126
3,328
31 March 2022
Trade receivables at amortised cost past due
30 days
31–60
61–180
180
Total
Due
or less
days
days
days+
€m
€m
€m
€m
€m
€m
Gross carrying amount
2,411
650
182
390
1,043
4,676
Expected credit loss allowance
(123)
(83)
(53)
(190)
(893)
(1,342)
Net carrying amount
2,288
567
129
200
150
3,334
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
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 2023 amounted to cash €11.7
billion (2022: €7.5
billion) and undrawn committed facilities of €8.0 billion (2022: €8.2 billion), principally euro and US dollar revolving credit facilities of €4.0 billion
and US$4.0 billion (€3.7 billion) which mature in 2025 and 2028 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 40 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 profile
1
Trade payables and
other financial
Bank loans
Bonds
Lease liabilities
Other
2
Total borrowings
liabilities
3
Total
€m
€m
€m
€m
€m
€m
€m
Within one year
308
6,234
3,452
6,764
16,758
15,370
32,128
In one to two years
235
3,070
2,574
423
6,302
51
6,353
In two to three years
110
5,725
2,200
259
8,294
–
8,294
In three to four years
18
5,500
1,981
258
7,757
–
7,757
In four to five years
70
2,212
1,810
233
4,325
–
4,325
In more than five years
128
42,325
3,240
599
46,292
–
46,292
869
65,066
15,257
8,536
89,728
15,421
105,149
Effect of discount/financing rates
(74)
(20,950)
(1,893)
(421)
(23,338)
(3)
(23,341)
31 March 2023
795
44,116
13,364
8,115
66,390
15,418
81,808
Within one year
700
3,569
3,130
6,823
14,222
16,884
31,106
In one to two years
33
6,190
2,189
417
8,829
29
8,858
In two to three years
411
3,786
1,759
207
6,163
–
6,163
In three to four years
2
5,746
1,579
199
7,526
–
7,526
In four to five years
205
6,253
1,387
678
8,523
–
8,523
In more than five years
21
43,514
4,242
136
47,913
–
47,913
1,372
69,058
14,286
8,460
93,176
16,913
110,089
Effect of discount/financing rates
(55)
(21,027)
(1,747)
(255)
(23,084)
(1)
(23,085)
31 March 2022
1,317
48,031
12,539
8,205
70,092
16,912
87,004
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. There is no debt that is subject to a material adverse change clause.
2
Includes spectrum licence payables with maturity profile €196 million (2022: €2,319 million) within one year, €170 million (2022: €165 million) in one to two years, €199 million (2022:
€199 million) in two to three years, €199 million (2022: €199 million) in three to four years, €199 million (2022: €662 million) in four to five years and €587million (2022: €136 million) in
more than five years. Also includes €4,886 million (2022: €2,914 million) in relation to cash received under collateral support agreements shown within 1 year.
3
Includes financial liabilities under put option arrangements and non-derivative financial liabilities presented within trade and other payables.
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:
2023
2022
Payable
1
Receivable
1
Total
Payable
1
Receivable
1
Total
€m
€m
€m
€m
€m
€m
Within one year
(17,845)
18,527
682
(12,671)
13,470
799
In one to two years
(3,534)
4,055
521
(5,897)
6,399
502
In two to three years
(4,028)
4,441
413
(2,584)
3,158
574
In three to four years
(2,186)
2,567
381
(3,373)
3,864
491
In four to five years
(2,265)
2,681
416
(1,699)
2,139
440
In more than five years
(38,494)
44,586
6,092
(34,097)
40,129
6,032
(68,352)
76,857
8,505
(60,321)
69,159
8,838
Effect of discount/financing rates
(3,803)
(5,884)
Financial derivative net receivable/(payable)
4,702
2,954
Note:
1
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 2023 and after hedging, substantially all of our outstanding liabilities are held on a fixed interest rate basis in accordance with treasury
policy. At 31 March 2022 the Group held economic interest rate hedges at fair value through profit and loss.
For each one hundred basis point rise in market interest rates for all currencies in which the Group had borrowings at 31 March 2023 there would be
an increase in profit before tax by €27 million (2022: €420 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 2023, the Group had limited exposure through interest rate derivatives and floating rate bonds referencing LIBOR and other interbank
offered rates (IBORs).
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 2023 11% of net debt was denominated in currencies other than euro (3% sterling, 6% South African rand and 2% 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 2023 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 12% (2022: 13%) would result in a decrease in equity of €267 million (2022:
€221million) 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 €204 million (2022: €371 million) against a strengthening of US dollar by 5% (2022: 5%).
The Group profit and loss account is exposed to foreign exchange risk within both operating profit and financing income and expense. The principal
operations not generating income in euro are Vodacom South Africa (South African rand), and Egypt (Egyptian pound). 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 Turkish lira.
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.
2023
2022
€m
€m
Increase/ (decrease) in Profit before taxation
ZAR 12% change (2022: 13%)
87
134
EGP 27% change (2022: 9%)
116
41
TRY 43% change (2022: 39%)
33
83
GBP 3% change (2022: 2%)
(46)
Equity risk
There is no material equity risk relating to the Group’s equity investments which are detailed in note 13 ‘Other investments’.
In the prior financial year, the Group had 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. This option strategy ended during the current
financial year.
As at 31 March 2023, the Group is no longer sensitive (2022: 7% sensitivity) to a movement in its share price that would result in an
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 US dollar floating rate borrowings into euro fixed rate
borrowings and hedge the foreign exchange spot rate and interest rate risk. There are also cash flow hedges of certain subsidiary expenditure not
denominated in functional currency of the entity, to hedge foreign exchange spot risk. Derivative financial instruments designated in cash flow
hedges are cross-currency interest rate swaps and foreign exchange swaps and forwards. The swap maturity dates and liquidity profiles of the
nominal cash flows match those of the underlying borrowings and exposures.
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 of the fair value hierarchy. 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.
The following table represents the carrying values and nominal amounts of derivatives in a continued hedge relationship as at 31 March.
At 31 March 2023
Other comprehensive income
Weighted average
Opening
(Gain)/
Gain/(Loss)
Closing
Carrying
Carrying
balance
Loss
recycled to
balance
Euro
Nominal
value
value
1 April
deferred to
financing
31 March
Maturity
interest
amounts
assets
liabilities
2022
OCI
costs
2023
1
year
FX rate
rate
€m
€m
€m
€m
€m
€m
€m
%
Cash flow hedges - foreign currency risk
3
Cross-currency and foreign exchange
swaps
US dollar bonds
17,690
4,456
–
(1,484)
(2,321)
1,096
(2,709)
2038
1.18
3.14
Australian dollar bonds
288
13
–
(5)
31
(47)
(21)
2027
1.56
1.57
Swiss franc bonds
624
58
–
20
(43)
20
(3)
2026
1.08
1.26
Pound sterling bonds
4,195
61
152
109
6
(152)
(37)
2044
0.86
3.15
Hong Kong dollar bonds
233
22
–
7
(17)
5
(5)
2028
9.08
1.48
Japanese yen bonds
78
3
–
2
(9)
(5)
(12)
2037
128.53
2.47
Norwegian krona bonds
241
–
34
3
17
(32)
(12)
2026
9.15
1.12
Foreign exchange forwards
2
383
–
34
(69)
34
1
(34)
2023
18.92
–
Cash flow hedges - foreign currency and
interest rate risk
3
Cross currency swaps - US dollar bonds
417
49
–
(1)
(20)
10
(11)
2023
1.17
1.07
Net investment hedge - foreign
exchange risk
5
Cross-currency and foreign exchange
swaps - South African rand investment
2,004
96
–
1,133
(181)
–
952
2025
18.23
1.83
26,153
4,758
220
(285)
(2,503)
896
(1,892)
At 31 March 2022
Other comprehensive income
Weighted average
Opening
(Gain)/
Gain/(Loss)
Closing
Carrying
Carrying
balance
Loss
recycled to
balance
Euro
Nominal
value
value
1 April
deferred to
financing
31 March
Maturity
interest
amounts
assets
liabilities
2021
OCI
costs
2022
1
year
FX rate
rate
€m
€m
€m
€m
€m
€m
€m
%
Cash flow hedges - foreign currency risk
3
Cross-currency and foreign exchange
swaps
US dollar bonds
20,995
2,745
10
501
(3,257)
1,272
(1,484)
2036
1.18
2.76
Australian dollar bonds
736
50
–
(24)
(12)
31
(5)
2024
1.56
0.92
Swiss franc bonds
624
16
1
30
(59)
49
20
2026
1.08
1.26
Pound sterling bonds
3,498
61
145
323
(239)
25
109
2043
0.86
2.97
Hong Kong dollar bonds
233
8
3
13
(18)
12
7
2028
9.08
1.48
Japanese yen bonds
78
–
6
11
(7)
(2)
2
2037
128.53
2.47
Norwegian krona bonds
241
–
16
3
(7)
7
3
2026
9.15
1.12
Foreign exchange forwards
2
244
–
69
–
(72)
3
(69)
2022
12.34
–
Cash flow hedges - foreign currency and
interest rate risk
3
Cross currency swaps - US dollar bonds
417
24
–
8
(33)
24
(1)
2023
1.17
1.07
Cash flow hedges - interest rate risk
3
Interest rate swaps - Euro loans
–
–
–
(1)
–
1
–
–
–
–
Net investment hedge - foreign
exchange risk
5
Cross-currency and foreign exchange
swaps - South African rand investment
1,555
–
113
959
174
–
1,133
2022
17.29
0.31
28,621
2,904
363
1,823
(3,530)
1,422
(285)
Notes:
1
Fair value movement deferred into other comprehensive income includes €383 million loss (2022: €1,318 million loss) and €17 million gain (2022: €1 million gain) of foreign currency basis outside the
cash flow and net investment hedge relationships respectively.
2
Includes euro and US dollar forward contracts against Turkish lira to hedge foreign currency forecast expenditures in local markets. Notional amounts of €259 million (2022: €146 million) and $134 million
or €124 million equivalent (2022: $109 million or €98 million equivalent) with weighted average exchange rates of 18.36 (2022: 12.45) and 20.07 (2022: 10.95) respectively to Turkish lira.
3
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 (2022: €nil).
4
The carrying value of bonds includes an additional €776 million loss (2022: €760 million loss) in relation to fair value of other bonds previously designated in fair value hedge relationships.
5
Hedge ineffectiveness of swaps designated in a net investment hedge during the period was €nil (2022: €nil).
Borrowings
Derivative assets and
liabilities
Financial liabilities
under put options
Other liabilities
Assets and liabilities
arising from financing
activities
€m
€m
€m
€m
€m
1 April 2022
70,092
(2,954)
494
1,498
69,130
Cash movements
Proceeds from issuance of long-term borrowings
4,071
–
–
–
4,071
Repayment of borrowings
(13,538)
–
–
–
(13,538)
Net movement in short-term borrowings
3,172
–
–
–
3,172
Net movement in derivatives
–
261
–
–
261
Interest paid
(2,444)
590
(18)
(79)
(1,951)
Purchase of treasury shares
–
–
–
(1,867)
(1,867)
Other
–
–
(12)
–
(12)
Non-cash movements
Fair value movements
–
(1,688)
–
–
(1,688)
Foreign exchange
(44)
(350)
–
(20)
(414)
Interest costs
2,657
(561)
21
(113)
2,004
Lease additions
7,652
–
–
–
7,652
Acquisition and disposal of subsidiaries
(5,243)
–
–
–
(5,243)
Other
1
15
–
–
684
699
31 March 2023
66,390
(4,702)
485
103
62,276
Borrowings
Derivative assets and
liabilities
Financial liabilities
under put options
Other liabilities
Assets and liabilities
arising from financing
activities
€m
€m
€m
€m
€m
1 April 2021
67,760
859
492
491
69,602
Cash movements
Proceeds from issuance of long-term borrowings
2,548
–
–
–
2,548
Repayment of borrowings
(8,248)
–
–
–
(8,248)
Net movement in short-term borrowings
3,002
–
–
–
3,002
Net movement in derivatives
–
(293)
–
–
(293)
Interest paid
(2,246)
469
(17)
(10)
(1,804)
Purchase of treasury shares
–
–
–
(2,087)
(2,087)
Non-cash movements
Fair value movements
–
(2,631)
–
–
(2,631)
Foreign exchange
1,386
(930)
–
(15)
441
Interest costs
2,356
(428)
19
13
1,960
Lease additions
3,410
–
–
–
3,410
Other
1
124
–
–
3,106
3,230
31 March 2022
70,092
(2,954)
494
1,498
69,130
Note:
1
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 except as disclosed in
note 13 ‘Other investments’.
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’.
Level 3 financial instruments
The Group’s borrowings include €1,485 million (2022: €1,382 million) of bank borrowings that are secured against the Group’s shareholdings in
Indus Towers and Vodafone Idea (see note 12 ‘Investments in Associates and Joint Ventures’ for further details of these assets) and will be repaid
through the realisation of proceeds from those assets. This arrangement contains an embedded derivative option which has been separately fair
valued. The 31 March 2023 valuation of the embedded derivative asset of €198 million (2022: €3 million) is presented within derivative assets in
current assets (see note 14 ‘Trade and other receivables’).
A Black Scholes model for European put options has been used as a valuation model and primarily uses market inputs (quoted share prices and
volatilities for Indus Towers and Vodafone Idea) along with a strike price equal to the amount payable under the loan. The valuation includes an
unobservable adjustment to reflect the potential timeframe to settle the loan and has been modelled using a range of potential durations up to 30
September 2024. As a result of this unobservable adjustment, the option is classified as a level 3 instrument under the fair value hierarchy. An
increase/(decrease) in durations applied of 6 months would increase/(decrease) the derivative asset by €141 million/(€115 million).
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 2023
Related amounts not set off in the balance sheet
Gross amount
Amount set off
Amounts
presented in
balance sheet
Right of set off
with derivative
counterparties
Collateral
(liabilities)/assets
1
Net amount
€m
€m
€m
€m
€m
€m
Derivative financial assets
6,124
–
6,124
(910)
(4,886)
328
Derivative financial liabilities
(1,422)
–
(1,422)
910
239
(273)
Total
4,702
–
4,702
–
(4,647)
55
At 31 March 2022
Related amounts not set off in the balance sheet
Gross amount
Amount set off
Amounts
presented in
balance sheet
Right of set off
with derivative
counterparties
Collateral
(liabilities)/assets
1
Net amount
€m
€m
€m
€m
€m
€m
Derivative financial assets
4,626
–
4,626
(1,365)
(2,914)
347
Derivative financial liabilities
(1,672)
–
(1,672)
1,365
368
61
Total
2,954
–
2,954
–
(2,546)
408
Note:
1
Excludes collateral of €nil (2022: €330 million) pledged as initial margin, as security against future mark to market movements on certain derivative options, that therefore does not offset
against existing mark to market balances as at 31 March.
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
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:
Re-presented
1
Re-presented
1
2023
2022
2021
€m
€m
€m
Short-term remuneration
6
7
7
Long-term incentive schemes
2
3
2
1
9
9
8
Notes:
1
The prior year comparatives have been re-presented to aggregate previously disclosed salaries and fees and incentive schemes into Short-term remuneration. Additional disclosure is now
provided for long-term incentive schemes, increasing total emoluments by €2 million and €1 million for the years ended 31 March 2022 and 31 March 2021, respectively.
2
Relates to share-based payments.
No Directors serving during the year exercised share options in the year ended 31 March 2023 (2022: None; 2021: None).
Key management compensation
Aggregate compensation for key management, being the Directors and members of the Executive Committee, was as follows:
2023
2022
2021
€m
€m
€m
Short-term employee benefits
25
28
28
Share-based payments
12
8
11
37
36
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.
2023
2022
2021
Employees
Employees
Employees
By activity
Operations
15,808
15,404
14,893
Selling and distribution
24,676
25,499
26,874
Customer care and administration
57,619
56,038
54,739
98,103
96,941
96,506
By segment
Germany
15,242
15,256
15,798
Italy
5,733
5,765
5,818
Spain
3,992
4,194
4,257
UK
9,312
9,198
9,584
Other Europe
14,189
15,106
15,460
Vodacom
7,990
7,973
7,810
Other Markets
9,331
9,336
9,498
Vantage Towers
1
753
502
–
Common Functions
31,561
29,611
28,281
Total
98,103
96,941
96,506
Note:
1
Vantage Towers was a new reporting segment in the comparative year ended 31 March 2022.
The cost incurred in respect of these employees (including Directors) was:
2023
2022
2021
€m
€m
€m
Wages and salaries
4,853
4,469
4,238
Social security costs
604
578
549
Other pension costs (note 25 'Post employment benefits')
244
168
235
Share-based payments (note 26 'Shared-based payments')
141
119
135
Total
5,842
5,334
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’.
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 a liability on the consolidated 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 consolidated statement of comprehensive income for defined benefit plans or consolidated income
statement for cash leaver plans 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 consolidated 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 consolidated
income statement. The amount charged to the consolidated 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.
Background
At 31 March 2023 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; defined benefit indemnity plans in Greece and
Turkey; and a cash leaver plan in India. Defined contribution plans are currently provided in Egypt, Germany, Greece, India, Ireland, Italy, Portugal,
South Africa, Spain and the UK.
Income statement expense/(income)
2023
2022
2021
€m
€m
€m
Defined contribution plans
207
197
204
Defined benefit plans
37
(29)
31
Total amount charged to income statement (note 24)
244
168
235
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 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 a funded plan 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 2022 triennial actuarial valuation for the Vodafone Section and CWW
Section of the Vodafone UK plan showed a net surplus of £248 million (€282 million) on the funding basis, comprising of a £97 million (€110
million) surplus for the Vodafone Section and a £151 million (€172 million) surplus for the CWW Section. No further contributions are due in respect
of the Vodafone UK plan at this time.
The next actuarial valuation has an effective date of 31 March 2025.
These plan-specific actuarial valuations 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.
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 €71 million will be paid into the Group’s defined benefit plans
during the year ending 31 March 2024. 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 and an insured pensioner annuity policy in the Vodafone Ireland Pension 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.
During the reporting period, there were significant movements in UK gilt markets – in particular the ‘mini budget’ announced by the UK
government on 23 September 2022 caused rapid sales of government bonds which further depressed gilt markets. Although a temporary
intervention by the Bank of England and subsequent policy changes stabilised the market, gilt yields increased significantly in a short period
of time.
This triggered an increase in collateral calls for pension schemes that, like the Vodafone UK plan, used liability driven investment
(LDI) strategies to hedge their interest rate risks.
In response to the risk of potential future collateral calls, on 18 October 2022, the Group entered into short term liquidity facilities with both
sections of the Vodafone UK plan for an aggregate amount of £450 million (€512 million). These facilities were put in place for short-term
liquidity purposes, with the intention of reducing the risk should the UK plan be required to dispose of assets at short notice in the event of
significant increases in gilt yields. Drawings could be made from the facility until 27 January 2023, with all amounts borrowed required to be
repaid by 28 February 2023. No amounts were drawn under these facilities.
There has been reduced volatility in gilt yields since the end of 2022, although, the level of yields are significantly higher than they were at 31
March 2022. This has resulted in a decrease in the value of the assets, and also liabilities in respect of the Vodafone UK plan as at 31 March
2023.
Actuarial assumptions
The Group’s plan liabilities are measured using the projected unit credit method using the principal actuarial assumptions set out below:
2023
2022
2021
%
%
%
Weighted average actuarial assumptions used at 31 March
1
Rate of inflation
2
3.0
3.3
2.9
Rate of increase in salaries
3
3.0
3.1
2.7
Discount rate
4.5
2.5
1.8
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.
3
Relates only to schemes open to future accrual primarily in Germany, Ireland and India.
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 22.8/24.7 years
(2022: 23.4/25.4 years) for a male/female pensioner currently aged 65 years and 23.7/25.5 years (2022: 25.4/27.5 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:
2023
2022
2021
€m
€m
€m
Current service cost
44
38
37
Net past service (credit)/costs
1
–
(71)
2
Net interest (income)/charge
(7)
4
(8)
Total net cost/(credit) included within staff costs
37
(29)
31
Actuarial losses/(gains) recognised in the SOCI
213
(627)
686
Note:
1
No past service credits were recorded in the current financial year.
In the prior year, a change in Germany relating to the provision of death and disability benefits effective from 1 April 2021
resulted in a past service credit of €49 million; further net past service credits were recognised in the year ended 31 March 2022 for the Vodafone UK plan relating to the offer of a pension
increase exchange to all members at retirement and benefit clarifications.
Duration of the benefit obligations
The weighted average duration of the defined benefit obligation at 31 March 2023 is 16 years (2022: 21 years).
Fair value of the assets and present value of the liabilities of the plans
The amount included in the consolidated statement of financial position arising from the Group’s obligations in respect of its defined benefit plans is
as follows:
Assets
Liabilities
Net surplus/
(deficit)
€m
€m
€m
1 April 2021
7,632
(8,085)
(453)
Service cost
–
(38)
(38)
Past service credit
–
71
71
Interest income/(cost)
140
(144)
(4)
Return on plan assets excluding interest income
58
–
58
Actuarial gains arising from changes in demographic assumptions
–
7
7
Actuarial gains arising from changes in financial assumptions
–
483
483
Actuarial gains arising from experience adjustments
–
79
79
Employer cash contributions
60
–
60
Member cash contributions
17
(17)
–
Benefits paid
(241)
241
–
Exchange rate movements
52
(45)
7
Other movements
(3)
7
4
31 March 2022
7,715
(7,441)
274
Service cost
–
(44)
(44)
Interest income/(cost)
185
(178)
7
Return on plan assets excluding interest income
(2,475)
–
(2,475)
Actuarial gains arising from changes in demographic assumptions
–
186
186
Actuarial gains arising from changes in financial assumptions
–
2,293
2,293
Actuarial losses arising from experience adjustments
–
(217)
(217)
Employer cash contributions
42
–
42
Member cash contributions
15
(15)
–
Benefits paid
(216)
216
–
Exchange rate movements
(211)
224
13
Other movements
(8)
–
(8)
31 March 2023
5,047
(4,976)
71
The table below provides an analysis of the net surplus for the Group as a whole.
2023
2022
€m
€m
Analysis of net surplus:
Total fair value of plan assets
5,047
7,715
Present value of funded plan liabilities
(4,875)
(7,337)
Net surplus for funded plans
172
378
Present value of unfunded plan liabilities
(101)
(104)
Net surplus
71
274
Net surplus is analysed as:
Assets
1
329
555
Liabilities
(258)
(281)
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.
An analysis of net surplus 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.
CWW Section
Vodafone Section
2023
2022
2023
2022
€m
€m
€m
€m
Analysis of net surplus:
Total fair value of plan assets
1,845
2,850
1,958
3,399
Present value of plan liabilities
(1,657)
(2,565)
(1,900)
(3,166)
Net surplus
188
285
58
233
Net surpluses are analysed as:
Assets
188
285
58
233
Liabilities
–
–
–
–
Fair value of plan assets
2023
2022
€m
€m
Cash and cash equivalents
27
55
Equity investments:
With quoted prices in an active market
140
849
Without quoted prices in an active market
322
359
Debt instruments:
With quoted prices in an active market
588
1,334
Without quoted prices in an active market
288
317
Property:
With quoted prices in an active market
17
29
Without quoted prices in an active market
438
460
Derivatives:
1
Without quoted prices in an active market
1,791
2,195
Investment fund
782
1,161
Annuity policies
With quoted prices in an active market
25
34
Without quoted prices
629
922
Total
5,047
7,715
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 €782 million at 31 March 2023
(2022: €1,161 million) 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 2023 was a loss of €2,290 million (2022: €198 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 2023.
Rate of inflation
Rate of increase in salaries
Discount rate
Life expectancy
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 1 year
€m
€m
€m
€m
€m
€m
€m
€m
(Decrease)/increase in present
(222)
260
(1)
1
385
(341)
(129)
128
value of defined benefit obligation
1
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
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
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.
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 a calculation of the closing price of the Company’s shares on the day 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
Share options
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. The savings 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 continue to hold shares in the plan will receive
dividends paid out in cash.
Movements in outstanding ordinary share options
Ordinary share options
2023
2022
2021
Millions
Millions
Millions
1 April
61
62
53
Granted during the year
50
20
35
Forfeited during the year
(2)
(2)
(1)
Exercised during the year
(8)
(1)
–
Expired during the year
(39)
(18)
(25)
31 March
62
61
62
Weighted average exercise price:
1 April
£1.02
£1.07
£1.19
Granted during the year
£0.83
£0.95
£1.03
Forfeited during the year
£1.02
£1.06
£1.16
Exercised during the year
£1.05
£1.17
£1.23
Expired during the year
£1.01
£1.10
£1.27
31 March
£0.87
£1.02
£1.07
Summary of options outstanding
31 March 2023
31 March 2022
Outstanding
shares
Weighted
average
exercise
Weighted
remaining
average
contractual
life
Outstanding
shares
Weighted
average
exercise
Weighted
remaining
average
contractual
life
Millions
price
Months
Millions
price
Months
Vodafone Group Sharesave Plan:
£0.78 - £1.78
62
£0.87
33
61
£1.02
24
Share awards
Movements in non-vested shares are as follows:
2023
2022
2021
Weighted
Weighted
Weighted
average fair
average fair
average fair
value at
value at
value at
Millions
grant date
Millions
grant date
Millions
grant date
1 April
270
£1.07
267
£1.20
245
£1.41
Granted
120
£1.17
113
£1.17
108
£0.99
Vested
(70)
£1.15
(68)
£1.44
(56)
£1.56
Forfeited
(59)
£0.89
(42)
£1.52
(30)
£1.10
31 March
261
£1.14
270
£1.07
267
£1.20
Other information
The total fair value of shares vested during the year ended 31 March 2023 was £81 million (2022: £98 million; 2021: £108 million).
The compensation cost included in the consolidated income statement in respect of share options and share plans was €141 million (2022: €119
million; 2021: €135 million) which is comprised principally of equity-settled transactions.
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.
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 consolidated 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
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
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.
Other transactions with non-controlling shareholders in subsidiaries
The aggregate cash consideration in respect of other transactions with non-controlling shareholders in subsidiaries, net of cash acquired, is as follows:
2023
2022
€m
€m
Cash consideration (paid)/received
Vantage Towers
(667)
217
Other
(25)
(28)
(692)
189
Vantage Towers
On 13 November 2022, the Group completed the purchase of 4.2% of Vantage Towers A.G. for cash consideration of €667 million, taking its
shareholding to 85.8%. In the comparative period, the Group received €217 million following completion of the market stabilisation period resulting
from the IPO of Vantage Towers in March 2020 and as described in the Vantage Towers prospectus.
Disposals
The aggregate cash consideration in respect of the disposal of subsidiaries, net of cash disposed, is as follows:
2023
2022
€m
€m
Cash consideration received
Vodafone Hungary
1,606
–
Vantage Towers
5,592
–
Other disposals during the period
2
–
Net cash disposed
(224)
–
6,976
–
Vodafone Hungary
On 31 January 2023, the Group completed the sale of Vodafone Magyarország Zrt (‘Vodafone Hungary’) to 4iG Public Limited Company and Corvinus
Zrt. The table below summarises the net assets disposed and the resulting loss on disposal of
€
69 million.
€m
Goodwill
(441)
Other intangible assets
(521)
Property, plant and equipment
(516)
Inventory
(17)
Trade and other receivables
(206)
Cash and cash equivalents
(3)
Current and deferred taxation
13
Borrowings
106
Trade and other payables
163
Provisions
31
Net assets disposed
(1,391)
Cash proceeds
1,606
Foreign exchange recycled from Currency reserve on disposal
(284)
Net loss on disposal
1
(69)
Notes:
1
Included in other income in the consolidated income statement.
Vantage Towers
On 22 March 2023, the Group completed the disposal of its interest in Vantage Towers A.G. to Oak Holdings 1 GmbH, the co-control partnership of
Vodafone, GIP and KKR. Vodafone retains an interest of 64.2% in Oak Holdings 1 GmbH, which owns 89.3% of Vantage Towers A.G. The table below
summarises the net assets disposed and the net gain on disposal as
€
8,607 million.
€m
Goodwill
(3,448)
Other intangible assets
(294)
Property, plant and equipment
(4,882)
Investments in associates and joint ventures
(2,778)
Trade and other receivables
(292)
Cash and cash equivalants
(207)
Current and deferred taxation
61
Borrowings
4,916
Trade and other payables
658
Provisions
556
Net assets disposed
(5,710)
Non-controlling interests derecognised
807
Cash proceeds
5,592
Fair value of Investment in Oak Holdings 1 GmbH
8,634
Restriction of gain (note 20)
1
(680)
Foreign exchange recycled from Currency reserve on disposal
(36)
Net gain on disposal
2
8,607
Notes:
1
Related tax of €154 million is included in Income tax expense in the consolidated income statement.
2
Included in other income in the consolidated income statement.
Vodafone Ghana
On 21 February 2023, the Group completed the sale of its 70% shareholding in Vodafone Telecommunications Company Limited (‘Vodafone Ghana’) to
Telecel Group for consideration of €Nil. A net gain on disposal of €689 million has been recorded within other income and expense in the consolidated
income statement.
Other matters
Vodafone Egypt
In the comparative period on 10 November 2021, the Group announced that it had agreed to transfer its 55% shareholding in Vodafone Egypt to its
subsidiary, Vodacom Group Limited (‘Vodacom’).
On 13 December 2022, the Group announced the completion of the transaction. Vodafone was issued with 242 million shares in Vodacom and received
cash proceeds of €577 million in exchange for its 55% shareholding in Vodafone Egypt. Following completion, Vodafone’s shareholding in Vodacom has
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.
Capital commitments
The amounts below are the minimum amounts that we are committed to pay.
Company and subsidiaries
Share of joint operations
Group
2023
2022
2023
2022
2023
2022
€m
€m
€m
€m
€m
€m
Contracts placed for future capital
expenditure not provided in the financial
statements
1
3,507
4,388
–
140
3,507
4,527
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 2023 are disclosed in note 20 ‘Leases’. Included in capital commitments is an
amount of €114 million (2022: €331 million) relating to spectrum acquisition commitments in Vodacom.
In March 2023, the Group entered into an agreement with Altice Luxembourg S.A. to create a joint venture, OXG Glasfaser GmbH ‘OXG’, with 50.0%
shareholding held by each shareholder. Each shareholder is committed to contribute funding of up to €950 million to OXG for the deployment of
fibre-to-the-home in Germany. The funding is expected to be contributed between 2023 and 2029. The amount and timing of the funding depends
on the speed and size of the fibre deployment so the funding may be for a lower value or contributed over a longer period of time. The contribution
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.
2023
2022
€m
€m
Performance bonds
1
504
430
Other guarantees
2
2,877
2,436
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 (2022: US$3.5 billion loan facility), which forms part of the Group’s
overall joint venture investment in TPG Telecom Ltd. 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 include a secondary pledge of INR42.5 billion (2022: INR42.5 billion) over shares owned by Vodafone Group in Indus Towers to the value of €476 million
(2022: €504 million). See page 197. Certain ongoing tax litigations include guarantee arrangements, principally €267 million in relation to the Netherlands tax case (refer to legal proceedings
section below).
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 when they are in a deficit position. The deficit is
measured on a prescribed basis agreed between the Group and trustee, which differs from the accounting basis reported in note 25 ‘Post employment
benefits’. 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. Due to the improved funding position of
the Plan the level of security has reduced over the year. As at 31 March 2023 the Vodafone UK plan retains security over €114 million (notional value) for
the Vodafone Section and no security is currently required 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 €1.42 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 €1.42 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 €114 million.
Vodafone Idea
As part of the agreement to merge Vodafone India and Idea Cellular in 201 7, 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 capped at INR 64 billion (€719 million) following payments made under this mechanism from
Vodafone to VIL, in the year ended 31 March 2021, totalling INR 19 billion (€235 million).
On 7 February 2023, VIL issued equity to the Government of India equivalent to INR 161 billion (€1.8 billion), representing the net present value of
interest accrued on both deferred spectrum auction instalments and AGR dues pursuant to a relief package announced in September 2021 which is
designed to improve the liquidity and financial health of the telecom sector.
Wider reforms announced as part of the relief package include a four-year
moratorium on spectrum and AGR payments and the option to convert payments due on spectrum and AGR payments to equity at the end of the
moratorium period which VIL elected to accept in October 2021.
VIL remains in need of additional liquidity support from its lenders and intends to raise additional funding. There are significant uncertainties in relation to
VIL’s ability to make payments in relation to any remaining liabilities covered by the mechanism and no further cash payments are considered probable
from the Group as at 31 March 2023.
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. The Group’s potential exposure to liabilities within VIL is capped by the mechanism described above; consequently, contingent liabilities
arising from litigation in India concerning operations of Vodafone India are not reported.
Indus Towers
VIL’s ability to satisfy certain payment obligations under its Master Services Agreements with Indus Towers (the ‘MSAs’) is uncertain and depends on a
number of factors including its ability to raise additional funding.
Under the terms of the Indus and Bharti Infratel merger in November 2020, a security
package was agreed for the benefit of the newly created merged entity, Indus Towers, which could be invoked in the event that VIL was unable to make
MSA payments. The security package included the following elements:
-
A cash prepayment of INR 24 billion (€279 million) by VIL to Indus Towers in respect of its undisputed payment obligations, due under the MSAs
after the merger closing. The prepayment was fully utilised during the year to 31 March 2022;
-
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.
These pledged shares were sold by the Group in the year ended 31 March 2022; the Group invested INR 33.7 billion (€393 million) of the
proceeds by subscribing to newly issued VIL equity, which VIL immediately used to partially settle outstanding MSA obligations to Indus Towers
resulting in an equivalent partial release of the primary pledge.
On 14 February 2023, a similar transaction was undertaken with INR 4.4 billion (€49
million) remaining from the sale of the primary pledge shares, fully releasing the pledge.
-
A secondary pledge over shares owned by Vodafone Group in Indus Towers, ranking behind Vodafone’s existing lenders for the outstanding bank
borrowings of €1.5 billion as at 31 March 2023 secured against Indian assets (‘the bank borrowings’), with a maximum liability cap of INR 42.5 billion
(€476 million).
In the event of non-payment of relevant MSA obligations by VIL, Indus Towers would have recourse to any secondary pledged
shares, after repayment of the bank borrowings in full, up to the value of the liability cap.
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 its 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
The Group has been challenging retrospective tax demands raised by the Indian tax authority under the Finance Act 2012 against Vodafone
International Holdings BV (‘VIHBV’) relating to a transaction in 2007 whereby VIHBV acquired assets in India from Hutchison Telecommunications
International Limited.
Pursuant to a new scheme for resolving tax disputes introduced by legislation in August 2021, Vodafone and the Indian
Government have reached a final agreement and the demands for outstanding tax (including interest and penalties) have been withdrawn in full.
Further background relating to this matter is provided in the Group’s Annual Report for the financial year ended 31 March 2022.
VISPL tax claims
Vodafone India Services Private Ltd (‘VISPL’) is involved in a number of tax cases. The total value of the claims is approximately €471 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 €239 million (plus interest of €628 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.
Netherlands tax case
Vodafone Europe BV (‘VEBV’) has received assessments totalling €267 million of tax and interest from the Dutch tax authorities, who are challenging
the application of the arm’s length principle in relation to various intra-group financing transactions. VEBV has appealed against these assessments
to the District Court of the Hague where a hearing was held in March 2023 and we are awaiting the decision which is currently expected in summer
2023. The Group has entered into a guarantee for the full value of the assessments issued.
The Group believes it has robust defences and does not consider it probable that there will be a financial outflow required to resolve the case.
Other cases in the Group
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 in 2013. 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 which was rejected by the court in December 2021. Several minority
shareholders have filed a further appeal before the Federal Court of Justice. 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. The main hearing on the merits of the claim took place on 8 June 2021.
On 17 April 2023, the Civil Court issued a judgement in Vodafone Italy’s favour and rejected Iliad’s claim for damages in full. Whether Iliad will appeal
the judgement is unknown as of the date of this report.
The Group is currently unable to estimate any possible loss in this claim in the event of an adverse judgement on appeal 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 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 Athens Court of First Instance 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. The appeal hearings took place on 23 February and 11 May 2023 and we are waiting to receive the judgements.
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 in the English High Court. The administrators allege collusion 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 were filed in December 2021. The judge has also ordered that
there should be a split trial between liability and damages. The first trial on liability took place from May to July 2022. We are waiting to receive the
judgement.
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, allegedly equivalent to approximately £1 billion with the addition of alleged exemplary damages.
Vodafone’s alleged share of the liability is also not pleaded.
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.
2023
2022
2021
€m
€m
€m
Sales of goods and services to associates
20
20
14
Purchase of goods and services from associates
8
10
5
Sales of goods and services to joint arrangements
220
221
203
Purchase of goods and services from joint arrangements
263
298
109
Interest income receivable from joint arrangements
1
52
48
65
Interest expense payable to joint arrangements
1
33
52
56
Trade balances owed:
by associates
7
8
to associates
1
6
by joint arrangements
170
139
to joint arrangements
329
34
Other balances owed by associates
–
80
Other balances owed by joint arrangements
1
980
1,080
Other balances owed to joint arrangements
2
5,628
1,561
Notes:
1
Amounts arise primarily through VodafoneZiggo and Oak Holdings 1 GmbH. Interest is paid/received in line with market rates.
2
Amounts are primarily in relation to leases of tower space from Oak Holdings 1 GmbH (2022: INWIT S.p.A.).
On 22 March 2023, the Group completed the disposal of its interest in Vantage Towers A.G. to Oak Holdings 1 GmbH, the co-control partnership of
Vodafone, GIP and KKR. Vodafone retained a non-controlling interest of 64.2% in Oak Holdings 1 GmbH, which owns 89.3% of Vantage Towers A.G. Oak
Holdings 1 GmbH is a joint venture of the Group.
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 2023 and as of 16 May 2023, no Director nor any other executive officer, nor any associate of any Director or any
other executive officer, was indebted to the Group. During the three years ended 31 March 2023 and as of 16 May 2023, the Group 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
31. Related undertakings
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 2023 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. Summarised financial
information is provided in respect of the Group’s most significant joint arrangements and associates in note 12 ‘Investments in associates and joint
arrangements’.
Subsidiaries
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
Company name
% of share
class held
by Group
Companies
Share Class
Albania
Autostrada Tirane-Durres, Rruga: “Pavaresia”, Nr 61, Kashar,
Tirana,Albania
Vodafone Albania Sh.A
99.94
Ordinary shares
Rruga “Ibrahim Rugova”, Sky Tower, Kati i 5, Hyrja 2, Tiranë,
1000, Albania
_VOIS Albania Shpk.
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
Austria
c/o Stolitzka & Partner Rechtsanwälte OG, Kärntner Ring 12, 3.
Stock, 1010, Wien, Austria
Vodafone Enterprise Austria GmbH
100.00
Ordinary shares
Bahrain
RSM Bahrain, 3rd floor Falcon Tower, Diplomatic Area, Manama,
PO BOX 11816, Bahrain
Vodafone Enterprise Bahrain W.L.L.
100.00
Ordinary shares
Belgium
Malta House, rue Archimède 25, 1000 Bruxelles, Belgium
Vodafone Belgium SA/NV
100.00
Ordinary shares
Brazil
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, 37 – 4º andar, Sala 427, Bela Vista, CEP, 01311-902,
São Paulo, Brazil
Vodafone Empresa Brasil
Telecomunicações Ltda
100.00
Ordinary shares
Rua Boa Vista, No. 254, room 1304 (parte), Centro, São Paulo,
01014907, Brazil
Vodafone Serviços Empresariais
Brasil Ltda.
100.00
Ordinary shares
Company name
% of share
class held
by Group
Companies
Share Class
Bulgaria
10 Tsar Osvoboditel Blvd., 3rd Floor, Spredets Region, Sofia,
1000, Bulgaria
Vodafone Enterprise Bulgaria EOOD
100.00
Ordinary shares
Canada
c/o ARC Information Services Inc., 3-84 Castlebury Crescent,
Toronto ON M2H 1W8, Canada
Vodafone Canada Inc.
100.00
Common shares
Cayman Islands
One Nexus Way, Camana Bay, Grand Cayman, KY1-9005,
Cayman Islands
CGP Investments (Holdings) Limited
100.00
Ordinary shares
China
Building 21, 11, Kangdin5g St., BDA, Beijing, 100176 – China
Vodafone Automotive Technologies
(Beijing) Co, Ltd
100.00
Ordinary 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 Branch
2
100.00
Branch
Room 1603, 16th Floor, 1200 Pudong Avenue, Free Trade Zone,
Shanghai, China
Vodafone Enterprise Communications
Technical Service (Shanghai) Co., Ltd.
100.00
Ordinary shares
Congo, The Democratic Republic of the
292 Avenue de La Justice, Commune de la Gombe, Kinshasa,
The Democratic Republic of the Congo
Vodacom Congo (RDC) SA
5
33.20
Ordinary shares
Building Commimo II Ground Floor Right, 3157 Boulevard
du 30 Juin, Commune de la Gombe, Kinshasa, DRC Congo,
The Democratic Republic of the Congo
Vodacash S.A
5
33.20
Ordinary shares
Company name
% of share
class held
by Group
Companies
Share Class
Cyprus
Ali Rıza Efendi Caddesi No:33/A Ortaköy, Lefkoşa, Cyprus
Vodafone Evde Operations Ltd
100.00
Ordinary shares
Vodafone Mobile Operations Limited
100.00
Ordinary shares
Czech Republic
náměstí Junkových 2, Prague 5, 15500, Czech Republic
Nadace Vodafone Česká Republika
100.00
Trustee
Oskar Mobil s.r.o.
100.00
Ordinary shares
Vodafone Czech Republic A.S.
100.00
Ordinary shares
Vodafone Enterprise Europe (UK)
Limited – Czech Branch
2
100.00
Branch
Praha 4, Závišova 502/5, 14000, Nusle, Czech Republic
Vantage Towers 2 s.r.o
100.00
Ordinary shares
Závišova Real Estate, s.r.o.
100.00
Ordinary shares
Denmark
Tuborg Boulevard 12, 2900, Hellerup, Denmark
Vodafone Enterprise Denmark A/S
100.00
Ordinary shares
Egypt
37 Kasr El Nil St, 4th. Floor, Cairo, Egypt
Starnet
5
35.81
Ordinary shares
54 El Batal Ahmed Abed El Aziz, Mohandseen, Giza, Egypt
Sarmady Communications
5
35.82
Ordinary shares
Building no. 2109 “VHUB1”, Smart Village, Cairo Alexandria, Egypt
Vodafone International Services LLC
5
100.00
Ordinary shares
Site No 15/3C, Central Axis, 6th October City, Egypt
Vodafone Egypt Telecommunications
S.A.E.
5
35.82
Ordinary shares
Smart Village C3 Vodafo5ne Building, Egypt
Vodafone Data
5
35.81
Ordinary shares
Vodafone Building Zahraa EL Maadi, Building A, Service Area D,
Maadi, Cairo, Egypt
Vodafone For Trading
5
35.78
Ordinary shares
Finland
c/o Eversheds Asianajotoimisto Oy, Fabianinkatu 29 B, Helsinki,
00100, Finland
Vodafone Enterprise Finland Oy
100.00
Ordinary shares
France
1300 route de Cretes, Le WTC, Bat I1, 06560, Valbonne Soph,
France
Vodafone Automotive Telematics
Development S.A.S
100.00
Ordinary shares
EuroPlaza Tour, 20, Avenue Andre Prothin, La Défense Cedex
– France (149153), 92400, Courbevoie, France
Vodafone Automotive France S.A.S
100.00
Ordinary shares
Vodafone Enterprise France SAS
100.00
New euro
shares
Rue Champollion, 22300, Lannion, France
Apollo Submarine Cable System Ltd
– French Branch
2
100.00
Branch
Germany
Altes Forsthaus 2, 67661, Kaiserslautern, Germany
TKS Telepost Kabel-Service
Kaiserslautern GmbH
3
94.01
Ordinary shares
Betastraße 6-8, 85774 Unterföhring, Germany
Kabel Deutschland Holding AG
94.01
Ordinary shares
Vodafone Customer Care GmbH
3
94.01
Ordinary shares
Vodafone Deutschland GmbH
94.01
Ordinary shares
Buschurweg 4, 76870 Kandel, Germany
Vodafone Automotive Deutschland
GmbH
100.00
Ordinary shares
Ferdinand-Braun-Platz 1, 40549, Düsseldorf, Germany
Vodafone Enterprise Germany GmbH
100.00
Ordinary shares
Vodafone GmbH
100.00
Ordinary A
shares, Ordinary
B shares
Vodafone Group Services GmbH
100.00
Ordinary shares
Vodafone Institut für Gesellschaft und
Kommunikation GmbH
100.00
Ordinary shares
Vodafone Stiftung Deutschland
Gemeinnützige GmbH
100.00
Ordinary shares
Vodafone Vierte Verwaltungs AG
100.00
Ordinary shares
Vodafone West GmbH
100.00
Ordinary shares
Friedrich-Wilhelm-Strasse 2, 38100, Braunschweig, Germany
KABELCOM Braunschweig Gesellschaft
Für Breitbandkabel-Kommunikation
Mit Beschränkter Haftung
3
94.01
Ordinary shares
Holzmarkt 1, 50676, Köln, North Rhine-Westphalia, Germany
Grandcentrix GmbH
100.00
Ordinary shares
Nobelstrasse 55, 18059, Rostock, Germany
“Urbana Teleunion” Rostock GmbH &
Co.KG
3
65.80
Ordinary shares
Seilerstrasse 18, 38440, Wolfsburg, Germany
KABELCOM Wolfsburg Gesellschaft für
Breitbandkabel-Kommunikation mit
beschränkter Haftung
3
94.01
Ordinary shares
Greece
12,5 km National Road Athens – Lamia, Metamorfosi / Athens,
14452, Greece
Vodafone Innovus S.A
99.87
Ordinary shares
1-3 Tzavella str, 152 31 Halandri, Athens, Greece
Vodafone-Panafon Hellenic
Teleco5mmunications Company S.A.
99.87
Ordinary shares
Pireos 163 & Ehelidon, Athens, 11854, Greece
360 Connect S.A.
99.87
Ordinary shares
Guernsey
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
Silver Stream Investments Limited
100.00
Ordinary shares
Roseneath, The Grange, St Peter Port, GY1 2QJ, Guernsey
VBA Holdings Limited
5
65.10
Ordinary shares,
Non-voting
irredeemable
non-cumulative
preference
shares
VBA International Limited
5
65.10
Ordinary shares,
Non-voting
irredeemable
non-cumulative
preference
shares
Hong Kong
Level 24, Dorset House, Taikoo Place, 979 King’s Road, Quarry Bay,
Hong Kong
Vodafone Enterprise Hong Kong Ltd
100.00
Ordinary shares
Hungary
40-44 Hungaria Krt., Budapest, H-1087, Hungary
VSSB Vodafone Szolgáltató Központ
Budapest Zártkörűen Működő
Részvénytársaság
100.00
Registered
ordinary 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 & Wireless Networks India Private
Limited
100.00
Equity shares
Cable and Wireless (India) Limited –
Branch
2
100.00
Branch
Cable and Wireless Global (India)
Private Limited
100.00
Equity shares
201-206, Shiv Smriti Chambers, 49/A, Dr. Annie Besant Road,
Mumbai, Maharashtra, Worli, 400018, India
Omega Telecom Holdings Private
Limited
100.00
Equity shares
Vodafone India Services Private Limited
100.00
Equity shares
Business@Mantri, Tower B, Wing no – B1 & B2, 3rd Floor, S. No.
– 197, Near Hotel Four Points, Lohegaon, Pune, Maharashtra,
411014, India
Vodafone Global Services Private
Limited
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
38/39 Fitzwilliam Square West, Dublin 2, D02 NX53, Ireland
Vodafone Enterprise Global Limited
100.00
Ordinary shares
Vodafone Global Network Limited
100.00
Ordinary shares
Mountainview, Leopardstown, Dublin 18, Ireland
VF Ireland Property Holdings Limited
100.00
Ordinary euro
shares
Vodafone Group Services Ireland
Limited
100.00
Ordinary shares
Vodafone Ireland Limited
100.00
Ordinary shares
Vodafone Ireland Marketing Limited
100.00
Ordinary shares
Vodafone Ireland Retail Limited
100.00
Ordinary shares
Italy
Piazzale Luigi Cadorna, 4, 20123, Milano, Italy
Vodafone Global Enterprise (Italy) S.R.L.
100.00
Ordinary shares
SS 33 del Sempione KM 35, 212, 21052 Busto Arsizio (VA), Italy
Vodafone Automotive Italia S.p.A
100.00
Ordinary shares
Via Astico 41, 21100 Varese, Italy
Vodafone Automotive Electronic
Systems S.r.L
100.00
Ordinary shares
Vodafone Automotive SpA
100.00
Ordinary shares
Vodafone Automotive Telematics Srl
100.00
Ordinary shares
Via Jervis 13, 10015, Ivrea (TO), 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
Vodafone Enterprise Italy S.r.L
100.00
Euro shares
Vodafone Gestioni S.p.A.
100.00
Ordinary shares
Vodafone Servizi E Tecnologie S.R.L.
100.00
Equity shares
IVia per Carpi 26/B, 42015, Correggio (RE), Italy
VND S.p.A.
100.00
Ordinary shares
Japan
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
Branch
2
100.00
Branch
Vodafone Global Enterprise (Japan) K.K.
100.00
Ordinary shares
Jersey
44 Esplanade, St Helier, JE4 9WG, Jersey
Vodafone International 2 Limited
100.00
Ordinary shares
Kenya
6th Floor, ABC Towers, ABC Place, Waiyaki Way, Nairobi,
00100, Kenya
M-PESA Holding Co. Limited
100.00
Equity shares
Vodafone Kenya Limited
5
69.46
Ordinary voting
shares
The Riverfront, 4th floor, Prof. David Wasawo Drive, Off Riverside
Drive, Nairobi, Kenya
Vodacom Business (Kenya) Limited
5
52.08
Ordinary shares
Korea, Republic of
ASEM Tower level 37, 517 Yeongdong-daero, Gangnam-gu, Seoul,
135-798, Korea, Republic of
Vodafone Enterprise Korea Limited
100.00
Ordinary shares
Lesotho
585 Mabile Road, Vodacom Park, Maseru, Lesotho, Lesotho
Vodacom Lesotho (Pty) Limited
5
52.08
Ordinary shares
VCL Financial Services (Pty) Ltd
5
52.08
Ordinary shares
Luxembourg
15 rue Edward Steichen, Luxembourg, 2540, Luxembourg
Tomorrow Street GP S.à r.l.
100.00
Ordinary shares
Vodafone Enterprise Global Businesses
S.à r.l.
100.00
Ordinary shares
Vodafone Enterprise Luxembourg S.A.
100.00
Ordinary euro
shares
Vodafone International 1 S.à r.l.
100.00
Ordinary shares
Vodafone International M S.à r.l.
100.00
Ordinary shares
Vodafone Investments Luxembourg
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
Malaysia
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
Malta
Portomaso Business Tower, Level 15B, St Julians, STJ 4011, Malta
Vodafone Holdings Limited
100.00
‘A’ Ordinary
shares, ‘B’
Ordinary shares
Vodafone Insurance Limited
100.00
‘A’ Ordinary
shares, ‘B’
Ordinary shares
Mauritius
10th Floor, Standard Chartered Towers, 19 Cybercity, Ebene,
Mauritius, Mauritius
Mobile Wallet VM1
5
65.10
Ordinary shares
Mobile Wallet VM2
5
65.10
Ordinary shares
VBA (Mauritius) Limited
5
65.10
Ordinary shares,
Redeemable
preference
shares
Vodacom International Limited
5
65.10
Ordinary shares,
Non-Cumulative
preference
shares
Fifth Floor, Ebene Esplanade, 24 Bank Street, 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
Euro Pacific Securities Ltd.
100.00
Ordinary shares
Mobilvest
100.00
Ordinary shares
Prime Metals Ltd.
100.00
Ordinary shares
Trans Crystal Ltd.
100.00
Ordinary shares
Vodafone Mauritius Ltd.
100.00
Ordinary shares
Vodafone Telecommunications (India)
Limited
100.00
Ordinary shares
Vodafone Tele-Services (India)
Holdings Limited
100.00
Ordinary shares
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
Vodacom Moçambique, SA
5
55.33
Ordinary shares
Vodafone M-Pesa, S.A
5
55.33
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
Vodafone Panafon International
Holdings B.V.
99.87
Ordinary shares
Zuid-hollanden 7, Rode Olifant, Spaces, 2596AL, den Haag,
Netherlands
IoT. nxt USA BV
5
42.31
Ordinary shares
IOT.NXT B.V.
5
42.31
Ordinary shares
IoT.nxt Europe BV
5
42.31
Ordinary shares
New Zealand
74 Taharoto Road, Takapuna, Auckland, 0622, New Zealand
Vodafone Enterprise Hong Kong
Limited – New Zealand Branch
2
100.00
Branch
Norway
c/o EconPartner AS, Dronning Mauds gate 15, Oslo, 0250, Norway
Vodafone Enterprise Norway AS
100.00
Ordinary shares
Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN,
United Kingdom
Vodafone Limited – Norway Branch
2
100.00
Branch
Oman
Knowledge Oasis Muscat, Al-seeb, Muscat, Governorate P.O Box
104 135, Oman
Vodafone Services LLC
100.00
Shares
Poland
ul. Towarowa 28, 00-839, Warsaw, Poland
Vodafone Business Poland sp. z o.o.
100.00
Ordinary shares
Portugal
Av. D. João II, nº 36 – 8º Piso, 1998 – 017, Parque das Nações,
Lisboa, Portugal
Oni Way – Infocomunicacoes, S.A
100.00
Ordinary shares
Vodafone Enterprise Spain, S.L.U. –
Portugal Branch
2
100.00
Branch
Vodafone Portugal – Comunicacoes
Pessoais, S.A.
100.00
Ordinary shares
Vodafone Solutions, Unipessoal LDA
100.00
Ordinary shares
Romania
1 A Constantin Ghercu Street, 10th Floor, 6th District, Bucharest,
Romania
UPC Services S.R.L. (in liquidation)
100.00
Ordinary shares
18 Diligenței Steet, 1st floor, Building C1, Ploiesti, Prahova County,
Romania
Evotracking SRL
100.00
Ordinary shares
201 Barbu Vacarescu Street, 5th floor, 2nd District, Bucharest,
Romania
Vodafone External Services SRL
100.00
Ordinary shares
Vodafone Foundation
100.00
Sole member
201 Barbu Vacarescu, 4th floor, 2nd District, Bucharest, Romania
Vodafone Romania S.A
100.00
Ordinary shares
62 D Nordului Street, District 1, Bucharest, Romania
UPC Foundation
100.00
Sole member
Oltenitei Street no. 2, City Offices Building, 3rd Floor, Bucharest
4th District, Romania
Vodafone România Technologies SRL
100.00
Ordinary shares
Sectorul 2, Strada Barbu Văcărescu, Nr. 201, Etaj 1, Bucharest,
Romania
Vodafone România M – Payments SRL
100.00
Ordinary shares
Russian Federation
Build. 2, 14/10, Chayanova str., 125047, Moscow, Russian
Federation
Cable & Wireless CIS Svyaz LLC
100.00
Charter capital
shares
Serbia
Vladimira Popovića 38-40, New Belgrade, 11070, Serbia
Vodafone Enterprise Equipment
Limited Ogranak u Beogradu – Serbia
Branch
2
100.00
Branch
Singapore
Asia Square Tower 2, 12 Marina View, #17-01, 018961, Singapore
Vodafone Enterprise Singapore Pte.Ltd
100.00
Ordinary shares
Slovakia
Karadžičova 2, mestská časť Staré mesto, Bratislava, 811 09,
Slovakia
Vodafone Global Network Limited –
Slovakia Branch
2
100.00
Branch
Prievozská 6, Bratislava, 821 09, Slovakia
Vodafone Czech Republic A.S. –
Slovakia Branch
2
100.00
Branch
South Africa
9 Kinross Street, Germiston South, 1401, South Africa
Vodafone Holdings (SA) Proprietary
Limited
100.00
Ordinary shares
Vodafone Investments (SA) Proprietary
Limited
100.00
Ordinary A
shares, “B”
Ordinary no par
value shares
Bylsbridge Office Park, Building 14m Block C, 1st Floor, Alexandra
Road, Centurion, Highveld Ext 73, 0046, South Africa
IoT.nxt (Pty) Limited
5
42.31
Ordinary shares
IoT.nxt Development (Pty) Limited
5
42.31
Ordinary shares
10T Holdings Proprietary Limited
5
42.31
Ordinary shares
Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand,
1685, South Africa
Jupicol (Proprietary) Limited
5
45.57
Ordinary shares
Storage Technology Services (Pty)
Limited
5
33.20
Ordinary shares
Infinity Services Partner Company
5
65.10
Ordinary shares
Mezzanine Ware (RF) Proprietary
Limited
5
58.59
Ordinary shares
Motifprops 1 (Proprietary) Limited
5
65.10
Ordinary shares
Vodacom (Pty) Limited
5
65.10
Ordinary shares,
Ordinary A
shares
Vodacom Business Africa Group (Pty)
Limited
5
65.10
Ordinary shares
Vodacom Business Africa SA (Pty)
Limited
5
65.10
Ordinary shares
Vodacom Financial Services
(Proprietary) Limited
5
65.10
Ordinary shares
Vodacom Group Limited
65.10
Ordinary shares
Vodacom Insurance Administration
Company (Proprietary) Limited
5
65.10
Ordinary shares
Vodacom Insurance Company (RF)
Limited
5
65.10
Ordinary shares
Vodacom International Holdings (Pty)
Limited
5
65.10
Ordinary shares
Vodacom Life Assurance Company
(RF) Limited
5
65.10
Ordinary shares
Vodacom Payment Services
(Proprietary) Limited
5
65.10
Ordinary shares
Vodacom Properties No 1 (Proprietary)
Limited
5
65.10
Ordinary shares
Vodacom Properties No.2 (Pty)
Limited
5
65.10
Ordinary shares
Vodacom Tower Company Proprietary
Limited
5
65.10
Ordinary shares
Wheatfields Investments 276
(Proprietary) Limited
5
65.10
Ordinary shares
XLink Communications (Proprietary)
Limited
5
65.10
Ordinary A
shares
Spain
Antracita, 7 – 28045, Madrid, Spain
Vodafone Automotive Iberia S.L.
100.00
Ordinary shares
Avenida de América 115, 28042, Madrid, Spain
Vodafone Energía, S.L.
100.00
Ordinary shares
Vodafone Enterprise Spain SLU
100.00
Ordinary euro
shares
Vodafone España, 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
Torre Norte Adif, Explanada de la Estación no 7, 29002, Málaga,
Spain
Vodafone Intelligent Solutions España,
S.L.U.
100.00
Ordinary shares
Sweden
c/o Hellström advokatbyrå, Box 7305, 103 90, Stockholm, Sweden
Vodafone Enterprise Sweden AB
100.00
Ordinary shares,
Shareholder’s
contribution
shares
Switzerland
Schiffbaustrasse 2, 8005, Zurich, Switzerland
Vodafone Enterprise Switzerland AG
100.00
Ordinary shares
Taiwan
22F., No.100, Songren Road., Xinyi District, Taipei City, 11070,
Taiwan
Vodafone Global Enterprise Taiwan
Limited
100.00
Ordinary shares
Tanzania, United Republic of
15 Floor, Vodacom Tower, Ursino Estate, Plot No. 23, Bagamoyo
Road, Dar es Salaam, Tanzania, United Republic of
M-Pesa Limited
5
48.82
Ordinary A
shares, Ordinary
B shares
Shared Networks Tanzania Limited
5
48.82
Ordinary shares
Vodacom Tanzania Public Limited
Company
5
48.82
Ordinary shares
3rd Floor, Maktaba (Library), ComplexBibi, Titi Mohaned Road,
Dar es Salaam, Tanzania, United Republic of
Gateway Communications Tanzania
Limited
5
64.45
Ordinary shares
Thailand
725 Metropolis Building, 20th floor, Unit 100, Sukhumvit Road,
Klongton Nua Sub-district, Watthana District, Bangkok, 10110,
Thailand
Vodafone Business Siam Co., Ltd.
100.00
Ordinary shares
Turkey
Büyükdere Caddesi, No:251, Maslak, Şişli / İstanbul, 34398, Turkey
Vodafone Bilgi Ve Iletisim Hizmetleri
AS
100.00
Registered
shares
Vodafone Dagitim, Servis ve Icerik
Hizmetleri A.S.
100.00
Ordinary shares
Vodafone Dijital Yayincilik Hizmetleri
A.S.
100.00
Ordinary shares
Vodafone Holding A.S.
100.00
Registered
shares
Vodafone Kule ve Altyapi Hizmetleri
A.S.
100.00
Ordinary shares
Vodafone Mall Ve Elektronik Hizmetler
Ticaret AS
100.00
Ordinary shares
Vodafone Medya Icerik Hizmetleri A.S.
100.00
Ordinary shares
Vodafone Net İletişim Hizmetleri A.S.
100.00
Ordinary shares
Vodafone Telekomunikasyon A.S
100.00
Registered
shares
İTÜ Ayazağa Kampüsü, Koru Yolu, Arı Teknokent Arı 3 Binası,
Maslak, İstanbul, 586553, Turkey
Vodafone Teknoloji Hizmetleri A.S.
100.00
Registered
shares
Maslak Mah. AOS 55 Sk. 42 Maslak Sit. B Blok Apt. No: 4/663,
Sarıyer Istanbul, Turkey
Vodafone Sigorta Aracilik Hizmetleri
A.S.
100.00
Ordinary shares
Vodafone Elektronik Para Ve Ödeme
Hizmetleri A.S.
100.00
Registered
shares
Vodafone Finansman A.S.
100.00
Ordinary shares
Maslak Mah. Büyükdere Cad. Büyükdere No: 251, Sarıyer, Istanbul,
34453, Turkey
VOIS Turkey Akilli Çözümler Limited
Şirket
100.00
Ordinary shares
Ukraine
Bohdana Khmelnytskogo Str. 19-21, Kyiv, Ukraine
LLC Vodafone Enterprise Ukraine
100.00
Ordinary shares
United Arab Emirates
16-SD 129, Ground Floor, Building 16-Co Work, Dubai Internet City,
United Arab Emirates
Vodacom Fintech Services FZ-LLC
5
65.10
Ordinary shares
Office 101, 1st Floor, DIC Building 1, Dubai Internet City, Dubai,
United Arab Emirates
Vodafone Enterprise Europe (UK)
Limited – Dubai Branch
2
100.00
Branch
United Kingdom
11 Staple Inn Building, London, WC1V 7QH, United Kingdom
Vodacom Business Africa Group
Services Limited
5
65.10
Ordinary shares,
Preference
shares
Vodacom Investments Company
Proprietary Limited
5
65.10
Ordinary shares
Vodacom UK Limited
5
65.10
Ordinary shares,
Ordinary B
shares,
Non-
redeemable
ordinary A
shares,
Non-
redeemable
preference
shares
1-2 Berkeley Square, 99 Berkeley Street, Glasgow, G3 7HR,
Scotland
Thus Group Holdings Limited
100.00
Ordinary shares
Thus Group Limited
100.00
Ordinary shares
Thus Profit Sharing Trustees Limited
100.00
Ordinary shares
3 More London, Riverside, London, SE1 2AQ, United Kingdom
IoT Nxt UK Limited
42.31
Ordinary shares
784 Upper Newtownards Road, Belfast, BT16 1UD, United Kingdom
Vodafone (NI) Limited
100.00
Ordinary shares
Edinburgh House, 4 North St. Andrew Street, Edinburgh, EH2 1HJ,
United Kingdom
Pinnacle Cellular Group Limited
100.00
Ordinary shares
Pinnacle Cellular Limited
100.00
Ordinary shares
Vodafone (Scotland) Limited
100.00
Ordinary shares
One Kingdom Street, London, W2 6BY, United Kingdom
DABCo Limited
100.00
Ordinary shares
Quarry Corner, Dundonald, Belfast, BT16 1UD, Northern Ireland
Energis (Ireland) Limited
100.00
A Ordinary
shares, B
Ordinary shares,
C Ordinary
shares, D
Ordinary shares
Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN,
United Kingdom
Apollo Submarine Cable System
Limited
100.00
Ordinary shares
Bluefish Communications Limited
100.00
Ordinary A
shares, Ordinary
B shares,
Ordinary C
shares, Ordinary
D shares
Cable & Wireless Aspac Holdings
Limited
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
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
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
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
London Hydraulic Power Company
(The)
100.00
Ordinary shares,
5%
Non-Cumulative
preference
shares
MetroHoldings Limited
100.00
Ordinary shares
Navtrak Ltd
100.00
Ordinary shares
Project Telecom Holdings Limited
100.00
Ordinary shares
Rian Mobile Limited
100.00
Ordinary shares
Talkmobile Limited
100.00
Ordinary shares
The Eastern Leasing Company Limited
100.00
Ordinary shares
Thus Limited
100.00
Ordinary shares
Vizzavi Limited
100.00
Ordinary shares
Voda 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
Vodafone 5 Limited
100.00
Ordinary shares
Vodafone 5 UK
100.00
Ordinary shares
Vodafone 6 UK
100.00
Ordinary shares
Vodafone Americas 4
100.00
Ordinary shares
Vodafone Automotive UK Limited
100.00
Ordinary shares
Vodafone Benelux Limited
100.00
Ordinary shares
Vodafone Cellular Limited
1
100.00
Ordinary shares
Vodafone Consolidated Holdings
Limited
100.00
Ordinary shares
Vodafone Corporate Limited
100.00
Ordinary shares
Vodafone Corporate Secretaries
Limited
100.00
Ordinary shares
Vodafone DC Pension Trustee
Company Limited
100.00
Ordinary shares
Vodafone Distribution Holdings Limited
100.00
Ordinary shares
Vodafone Enterprise Corporate
Secretaries Limited
100.00
Ordinary shares
Vodafone Enterprise Equipment
Limited
100.00
Ordinary shares
Vodafone Enterprise Europe (UK)
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 Limited
100.00
Ordinary shares
Vodafone Europe UK
100.00
Ordinary shares
Vodafone European Investments
1
100.00
Ordinary shares
Vodafone European Portal Limited
1
100.00
Ordinary shares
Vodafone Finance Limited
1
100.00
Ordinary shares
Vodafone Finance Luxembourg
Limited
100.00
Ordinary shares
Vodafone Finance Management
100.00
Ordinary shares
Vodafone Finance UK Limited
100.00
Ordinary shares
Vodafone Financial Operations
100.00
Ordinary shares
Vodafone Global Content Services
Limited
100.00
Ordinary shares,
5% Fixed rate
non-voting
preference
shares
Vodafone Global Enterprise Limited
100.00
Ordinary shares,
Deferred shares,
B deferred
shares
Vodafone Group (Directors) Trustee
Limited
1
100.00
Ordinary shares
Vodafone Group Pension Trustee
Limited
1
100.00
Ordinary shares
Vodafone Group Services Limited
100.00
Ordinary shares,
deferred shares
Vodafone Group Services No.2 Limited
1
100.00
Ordinary shares
Vodafone Group Share Trustee
Limited
1
100.00
Ordinary shares
Vodafone Holdings Luxembourg
Limited
100.00
Ordinary shares
Vodafone Intermediate Enterprises
Limited
100.00
Ordinary shares
Vodafone International 2 Limited – UK
Branch
2
100.00
Branch
Vodafone International Holdings
Limited
100.00
Ordinary shares
Vodafone International Operations
Limited
100.00
Ordinary shares
Vodafone Investment UK
100.00
Ordinary shares
Vodafone Investments Australia
Limited
100.00
Ordinary shares
Vodafone Investments Limited
1
100.00
Ordinary shares,
Zero coupon
redeemable
preference
shares
Vodafone IP Licensing Limited
1
100.00
Ordinary shares
Vodafone Limited
100.00
Ordinary shares
Vodafone Marketing UK
100.00
Ordinary shares
Vodafone Mobile Communications
Limited
100.00
Ordinary shares
Vodafone Mobile Enterprises Limited
100.00
Ordinary shares
Vodafone Mobile Network Limited
100.00
Ordinary shares
Vodafone Nominees Limited
1
100.00
Ordinary shares
Vodafone Oceania Limited
100.00
Ordinary shares
Vodafone Overseas Finance Limited
100.00
Ordinary shares
Vodafone Overseas Holdings Limited
100.00
Ordinary shares
Vodafone Panafon UK
99.87
Ordinary shares
Vodafone Partner Services Limited
100.00
Ordinary shares,
Redeemable
preference
shares
Vodafone Retail (Holdings) Limited
100.00
Ordinary shares
Vodafone Sales & Services Limited
100.00
Ordinary shares
Vodafone UK Foundation
100.00
Sole member
Vodafone UK Limited
1
100.00
Ordinary shares
Vodafone Ventures Limited
1
100.00
Ordinary shares
Vodafone Worldwide Holdings Limited
100.00
Ordinary shares,
Cumulative
preference
shares
Vodafone Yen Finance Limited
100.00
Ordinary shares
Vodafone-Central Limited
100.00
Ordinary shares
Vodaphone Limited
100.00
Ordinary shares
Vodata Limited
100.00
Ordinary shares
Your Communications Group Limited
100.00
B Ordinary
shares,
Redeemable
preference
shares
United States
1209 Orange Street, Wilmington DE 19801, United States
IoT nxt USA Inc
5
42.31
Common stock
1450 Broadway, Fl 11, Suite 104, New York NY 10018, United States
Cable & Wireless Americas Systems,
Inc.
100.00
Common stock
shares
Vodafone Americas Virginia Inc.
100.00
Common stock
shares
Vodafone US Inc.
100.00
Common stock
shares, Ordinary
shares
1615 Platte Street, Suite 02-115, Denver CO 80202, United States
Vodafone Americas Foundation
100.00
Trustee
Associated undertakings and joint
arrangements
Australia
Level 1, 177 Pacific Highway, North Sydney NSW 2060, Australia
3.6 GHz Spectrum Pty Ltd
25.05
Ordinary shares
AAPT Limited
25.05
Ordinary shares
ACN 088 889 230 Pty Ltd
25.05
Ordinary shares
ACN 139 798 404 Pty Ltd
25.05
Ordinary shares
Adam Internet Holdings Pty Ltd
25.05
Ordinary shares
Adam Internet Pty Ltd
25.05
A shares, B
shares, Ordinary
shares
Agile Pty Ltd
25.05
Ordinary shares
AlchemyIT Pty Ltd
25.05
Ordinary shares
Chariot Pty Ltd
25.05
Ordinary shares
Chime Communications Pty Ltd
25.05
Ordinary shares
Connect West Pty Ltd
25.05
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
H3GA Properties (No.3) Pty Limited
25.05
Ordinary shares
iiNet Labs Pty Ltd
25.05
Ordinary shares
iiNet Limited
25.05
Ordinary shares
Internode Pty Ltd
25.05
Ordinary shares,
Class B shares
IntraPower Pty Limited
25.05
Ordinary shares
Intrapower Terrestrial Pty Ltd
25.05
Ordinary shares
IP Group Pty Ltd
25.05
Ordinary shares
IP Services Xchange Pty Ltd
25.05
A shares, B
shares
Kooee Communications Pty Ltd
25.05
Ordinary shares
Kooee Mobile Pty Ltd
25.05
Ordinary shares
Mercury Connect Pty Ltd
25.05
Ordinary shares,
E class shares
Mobile JV Pty Limited
25.05
Ordinary shares
Mobileworld Communications Pty Limited
25.05
Ordinary shares
Mobileworld Operating Pty Ltd
25.05
Ordinary shares
Netspace Online Systems Pty Ltd
25.05
Ordinary shares
Numillar IPS Pty Ltd
25.05
Ordinary shares
PIPE International (Australia) Pty Ltd
25.05
Ordinary shares
PIPE Networks Pty Limited
25.05
Ordinary shares
PIPE Transmission Pty Limited
25.05
Ordinary shares
PowerTel Limited
25.05
Ordinary shares
Request Broadband Pty Ltd
25.05
Ordinary shares
Soul Communications Pty Ltd
25.05
Ordinary shares
Soul Contracts Pty Ltd
25.05
Ordinary shares
Soul Pattinson Telecommunications
Pty Ltd
25.05
Ordinary shares
SPT Telecommunications Pty Ltd
25.05
Ordinary shares
SPTCom Pty Ltd
25.05
Ordinary shares
Telecom Enterprises Australia Pty Limited
25.05
Ordinary shares
Telecom New Zealand Australia Pty Ltd
25.05
Ordinary shares,
Redeemable
preference
shares
TPG Corporation Limited
25.05
Ordinary shares
TPG Energy Pty Ltd
25.05
Ordinary shares
TPG Finance Pty Limited
25.05
Ordinary shares
TPG Holdings Pty Ltd
25.05
Ordinary shares
TPG Internet Pty Ltd
25.05
Ordinary shares
TPG JV Company Pty Ltd
25.05
Ordinary shares
TPG Network Pty Ltd
25.05
Ordinary shares
TPG Telecom Limited
25.05
Ordinary shares
TransACT Capital Communications Pty Ltd
25.05
Ordinary shares
TransACT Communications Pty Ltd
25.05
Ordinary shares
TransACT Victoria Communications
Pty Ltd
25.05
Ordinary shares
TransACT Victoria Holdings Pty Ltd
25.05
Ordinary shares
Trusted Cloud Pty Ltd
25.05
Ordinary shares
Trusted Cloud Solutions Pty Ltd
25.05
Ordinary shares
Value Added Network Pty Ltd
25.05
Ordinary shares
Vision Network Pty Limited
25.05
Ordinary shares
Vodafone Australia Pty Limited
25.05
Ordinary shares,
Class B shares,
Redeemable
preference
shares
Vodafone Foundation Australia Pty Limited
25.05
Ordinary shares
Vodafone Hutchison Receivables Pty
Limited
25.05
Ordinary shares
Vodafone Hutchison Spectrum Pty
Limited
25.05
Ordinary shares
Vodafone Network Pty Limited
25.05
Ordinary shares
Vodafone Pty Limited
25.05
Ordinary shares
VtalkVoip Pty Ltd
25.05
Ordinary shares
Westnet Pty Ltd
25.05
Ordinary shares
Belgium
Space Court of Justice, Rue aux Laines 70, 1000 Brussels, Belgium
Utiq S.A
25.00
Ordinary shares
Bermuda
Clarendon House, 2 Church St, Hamilton, HM11, Bermuda
PPC 1 Limited
25.05
Ordinary shares
Czech Republic
Praha 4, Závišova 502/5, 14000, Nusle, Czech Republic
Vantage Towers s.r.o.
4
57.30
Ordinary shares
U Rajské zahrady 1912/3, Praha 3, 130 00, Czech Republic
COOP Mobil s.r.o.
33.33
Ordinary shares
Egypt
23 Kasr El Nil St, Cairo, 11211, Egypt
Wataneya Telecommunications S.A.E
50.00
Ordinary shares
Ethiopia
Addis Ababa, Kirkos Sub City, Woreda 01, Addis Ababa, Ethiopia
Safaricom Telecommunications Ethiopia
Private Limited Company
5
19.48
Ordinary shares
Germany
38 Berliner Allee, 40212, Düsseldorf, Germany
MNP Deutschland Gesellschaft
bürgerlichen Rechts
33.33
Partnership
share
Ferdinand-Braun-Platz 1, 40549, Düsseldorf, Germany
Oak Holdings 1 GmbH
64.20
Ordinary shares
Oak Holdings 2 GmbH
64.20
Ordinary shares
Oak Holdings GmbH
64.20
Ordinary shares
OXG Glasfaser Beteiligungs-GmbH
50.00
Ordinary shares
OXG Glasfaser GmbH
50.00
Ordinary shares
Nobelstrasse 55, 18059, Rostock, Germany
Verwaltung “Urbana Teleunion” Rostock
GmbH
3
47.00
Ordinary shares
Prinzenallee 11-13, 40549, Düsseldorf, Germany
Vantage Towers AG
57.30
Ordinary shares
Vantage Towers Erste
Verwaltungsgesellschaft mbH
4
57.30
Ordinary shares
Vantage Towers Zweite
Verwaltungsgesellschaft mbH
4
57.30
Ordinary shares
Greece
2 Adrianeiou str, Athens, 11525, Greece
Vantage Towers Single Member Societe
Anonyme
4
57.30
Ordinary shares
43-45 Valtetsiou Str., Athens, Greece
Safenet N.P,A.
24.97
Ordinary shares
56 Kifisias Avenue & Delfwn, Marousi, 151 25, Greece
Tilegnous IKE
33.29
Ordinary shares
Marathonos Ave 18 km & Pylou, Pallini, Attica, Pallini, Attica,
15351, Greece
Victus Networks S.A.
49.94
Ordinary shares
Hungary
Boldizsár utca 2, Budapest, 1112, Hungary
Vantage Towers Zártkörűen Működő
Részvénytársaság
4
57.30
Ordinary shares
India
10th Floor, Birla Centurion, Century Mills Compound, Pandurang
Budhkar Marg, Worli, Mumbai, Maharashtra, 400030, India
Vodafone Foundation
6
31.81
Ordinary shares
Vodafone Idea Shared Services Limited
6
32.29
Ordinary shares
Vodafone Idea Technology Solutions
Limited
6
32.29
Ordinary shares
Vodafone m-pesa Limited
6
32.29
Ordinary shares
You Broadband India Limited
6
32.29
Equity shares
A-19, Mohan Co-operative Industrial Estate, Mathura Road, New
Delhi, Delhi, 110044, India
FireFly Networks Limited
6
24.16
Ordinary shares
Building No.10, Tower-A, 4th Floor, DLF Cyber City, Gurugram,
Haryana, 122002, India
Indus Towers Limited
21.05
Ordinary shares
Suman Tower, Plot No. 18, Sector No. 11, Gandhinagar, 382011,
Gujarat, India
Vodafone Idea Limited
32.29
Equity shares
Vodafone Idea Manpower Services
Limited
6
31.91
Ordinary shares
Vodafone House, Corporate Road, Prahladnagar, Off S. G. Highway,
Ahmedabad, Gujarat, 380051, India
Vodafone Idea Business Services Limited
6
32.29
Ordinary shares
Vodafone Idea Communication Systems
Limited
6
32.29
Ordinary shares
Vodafone Idea Telecom Infrastructure
Limited
6
32.29
Ordinary shares
Ireland
Mountainview, Leopardstown, Dublin 18, Ireland
Vantage Towers Limited
4
57.30
Ordinary shares
The Herbert Building, The Park, Carrickmines, Dublin, Ireland
Siro DAC
50.00
Ordinary shares
Siro JV Holdco Limited
50.00
Ordinary B
shares
Italy
Via Gaetana Negri 1, 20123, Milano, Italy
Infrastrutture Wireless Italiana S.p.A.
19.01
Ordinary shares
Kenya
LR No. 13263 Safaricom House, PO Box 66827, 00800,
Nairobi, Kenya
Safaricom PLC
27.74
Ordinary shares
Safaricom House, Waiyaki Way Westlands, Nairobi, Kenya
M-PESA Africa Limited
5
46.42
Ordinary shares
Luxembourg
15 rue Edward Steichen, Luxembourg, 2540, Luxembourg
Tomorrow Street SCA
50.00
Ordinary B
shares, Ordinary
C shares
Netherlands
Avenue Ceramique 300, 6221 Kx, Maastricht, Netherlands
Vodafone Libertel B.V.
50.00
Ordinary shares
Boven Vredenburgpassage 128, 3511 WR, Utrecht, Netherlands
Amsterdamse Beheer- en
Consultingmaatschappij B.V.
50.00
Ordinary shares
Esprit Telecom B.V.
50.00
Ordinary shares
FinCo Partner 1 B.V.
50.00
Ordinary shares
LGE HoldCo V B.V.
50.00
Ordinary shares
LGE HoldCo VI B.V.
50.00
Ordinary shares
LGE Holdco VII B.V.
50.00
Ordinary shares
LGE HoldCo VIII B.V.
50.00
Ordinary shares
Vodafone Financial Services B.V.
50.00
Ordinary shares
Vodafone Nederland Holding I B.V.
50.00
Ordinary shares
Vodafone Nederland Holding II B.V.
50.00
Ordinary shares
VodafoneZiggo Employment B.V.
50.00
Ordinary shares
VodafoneZiggo Group B.V.
50.00
Ordinary shares
VodafoneZiggo Group Holding B.V.
50.00
Ordinary shares
VZ Financing I B.V.
50.00
Ordinary shares
VZ Financing II B.V.
50.00
Ordinary shares
VZ FinCo B.V.
50.00
Ordinary shares
VZ PropCo B.V.
50.00
Ordinary shares
VZ Secured Financing B.V.
50.00
Ordinary shares
XB Facilities B.V.
50.00
Ordinary shares
Ziggo B.V.
50.00
Ordinary shares
Ziggo Deelnemingen B.V.
50.00
Ordinary shares
Ziggo Finance 2 B.V.
50.00
Ordinary shares
Ziggo Netwerk II B.V.
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
Zoranet Connectivity 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
Rivium Quadrant 175, 2909 LC, Capelle aan den IJssel, Netherlands
Central Tower Holding Company B.V.
4
57.30
Ordinary shares
Winschoterdiep 60, 9723 AB Groningen, Netherlands
Zesko B.V.
50.00
Ordinary shares
Ziggo Bond Company B.V.
50.00
Ordinary shares
Ziggo Netwerk B.V.
50.00
Ordinary shares
New Zealand
Tompkins Wake, Level 11, 41 Shortland Street, Auckland, 1010,
New Zealand
iiNet (New Zealand) AKL Limited
25.05
Ordinary shares
Philippines
22F Robinson Equitable Tower, ADB Ave, Corner Povega St, Ortigas
Center, Pasig City, Philippines
Orchid Cybertech Services Inc
25.05
Ordinary shares
Portugal
Edif. Arquiparque VII, R Dr António Loureiro Borges, 7, 3.º, 1495-131
ALGÉS, Algés, Oeiras, Portugal
Vantage Towers, S.A.
4
57.30
Ordinary shares
Espaço Sete Rios, LEAP Rua de Campolide, 351, 0.05, 1070-034,
Lisboa, Portugal
Dual Grid – Gestão de Redes Partilhadas,
S.A.
50.00
Ordinary shares
Rua Pedro e Inês, Lote 2.08.01, 1990-075, Parque das Nações,
Lisboa, Portugal
Sport TV Portgugal, S.A.
25.00
Nominative
shares
Romania
Calea Floreasca no. 169A, 3rd floor, District 1, Bucharest, România,
Romania
Vantage Towers S.R.L.
4
57.30
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
Russian Federation
Building 3, 11, Promyshlennaya Street, Moscow, 115 516, Russian
Federation
Autoconnex Limited
35.00
Ordinary shares
South Africa
76 Maude Street, Sandton, Johannesberg, 2196, South Africa
Waterberg Lodge (Proprietary) Limited
5
32.55
Ordinary shares
Building 13, Ground Floor, East Thornhill Office Park, 94 Bekker
Road, Vorna Valley X67 1685, South Africa
Number Portability Company (Pty) Ltd
5
12.10
Ordinary shares
Celtis Plaza North, 1085 Schoeman Street, Hatfield, Pretoria,
0028, South Africa
Afri G I S (Pty) Ltd
5
21.16
Ordinary shares
Rigel Office Park Block A, No 446 Rigel Avenue South,
Erasmu, South Africa
Canard Spatial Technologies Proprietary
Limited
5
21.16
Ordinary shares
Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand,
1685, South Africa
M-Pesa S.A (Proprietary) Limited
5
46.42
Ordinary shares
Spain
Calle San Severo 22, 28042, Madrid, Spain, Spain
Vantage Towers, S.L.U.
4
57.30
Ordinary shares
Tanzania, United Republic of
Plot No. 23, Ursino Estate, Bagamoyo Road, Dar es Salaam,
Tanzania, United Republic of
Vodacom Trust Limited
5
48.82
Ordinary A
shares, Ordinary
B shares
Turkey
Çifte Havuzlar Mah Eski Londra Asfaltı Cad No: 151/1E/301,
Esenler, Istanbul, Turkey
FGS Bilgi Islem Urunler Sanayi ve Ticaret
AS
50.00
Ordinary shares
United Kingdom
24/25 The Shard, 32 London Bridge Street, London, SE1 9SG,
United Kingdom
Digital Mobile Spectrum Limited
25.00
Ordinary shares
3 More London Riverside, London, SE1 2AQ, United Kingdom
VodaFamily Ethiopia Holding Company
Limited
5
31.47
Ordinary shares
Griffin House, 161 Hammersmith Road, London, W6 8BS,
United Kingdom
Cable & Wireless Trade Mark Management
Limited
50.00
Ordinary B
shares
Hive 2, 1530 Arlington Business Park, Theale, Reading, Berkshire,
RG7 4SA, United Kingdom
Cornerstone Telecommunications
Infrastructure Limited
5
28.65
Ordinary shares
Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN,
United Kingdom
Vodafone Hutchison (Australia) Holdings
Limited
50.00
Ordinary shares
United States
251 Little Falls Drive, Wilmington DE 19808, United States
LG Financing Partnership
50.00
Partnership
interest
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 A.G.
5.
Shareholding is indirect through Vodacom Group Limited. The
indirect shareholding is calculated using the 65.10% ownership
interest in Vodacom Group Limited.
6.
Includes the indirect interest held through Vodafone Idea
Limited.
Selected financial information
The table below shows selected financial information in respect of subsidiaries that have non-controlling interests that are material to the Group.
Vodacom Group Limited
Vodafone Egypt
Telecommunications S.A.E
1
2023
2022
2023
2022
€m
€m
€m
€m
Summary comprehensive income information
Revenue
6,314
5,993
1,762
1,814
Profit for the financial year
943
1,002
302
314
Other comprehensive expense
193
(2)
–
–
Total comprehensive income
1,136
1,000
302
314
Other financial information
Profit for the financial year allocated to non-controlling interests
348
353
126
141
Dividends paid to non-controlling interests
274
294
68
194
Summary financial position information
Non-current assets
6,761
7,253
1,005
1,630
Current assets
3,033
3,123
396
440
Total assets
9,794
10,376
1,401
2,070
Non-current liabilities
(2,830)
(2,191)
(50)
(83)
Current liabilities
(3,153)
(3,539)
(752)
(1,197)
Total assets less total liabilities
3,811
4,646
599
790
Equity shareholders’ funds
2,907
3,624
420
474
Non-controlling interests
904
1,022
179
316
Total equity
3,811
4,646
599
790
Statement of cash flows
Net cash inflow from operating activities
1,908
1,946
657
755
Net cash outflow from investing activities
(840)
(666)
(173)
(284)
Net cash outflow from financing activities
(1,124)
(1,177)
(434)
(749)
Net cash inflow/(outflow)
(56)
103
50
(278)
Cash and cash equivalents brought forward
1,025
876
72
348
Exchange gain/(loss) on cash and cash equivalents
(13)
46
(3)
2
Cash and cash equivalents
956
1,025
119
72
Note:
1
From 1 April 2023, the Group will revise its segments by moving Vodafone Egypt from the Other Markets segment to the Vodacom segment to reflect the effective date of changes made to the
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 2023.
Name
Registration
number
Name
Registration
number
Bluefish Communications Limited
5142610
Vodafone Enterprise Europe (UK) Limited
3137479
Cable & Wireless Aspac Holdings Limited
4705342
Vodafone Europe UK
5798451
Cable & Wireless CIS Services Limited
2964774
Vodafone European Investments
3961908
Cable & Wireless Europe Holdings Limited
4659719
Vodafone European Portal Limited
3973442
Cable & Wireless UK Holdings Limited
3840888
Vodafone Finance Management
2139168
Cable & Wireless Worldwide Limited
7029206
Vodafone Finance UK Limited
3922620
Cable & Wireless Worldwide Voice Messaging Limited
1981417
Vodafone Global Content Services Limited
4064873
Cable & Wireless Nominee Limited
3249884
Vodafone Holdings Luxembourg Limited
4200970
Energis (Ireland) Limited
NI035793
Vodafone Intermediate Enterprises Limited
3869137
Energis Communications Limited
2630471
Vodafone International Holdings Limited
2797426
Energis Squared Limited
3037442
Vodafone International Operations Limited
2797438
London Hydraulic Power Company (The)
ZC000055
Vodafone Investment UK
5798385
MetroHoldings Limited
3511122
Vodafone Investments Limited
1530514
The Eastern Leasing Company Limited
1672832
Vodafone IP Licensing Limited
6846238
Thus Group Holdings Limited
SC192666
Vodafone Marketing UK
6858585
Thus Group Limited
SC226738
Vodafone Mobile Communications Limited
3942221
Voda Limited
1847509
Vodafone Mobile Enterprises Limited
2373469
Vodafone 2.
4083193
Vodafone Mobile Network Limited
3961482
Vodafone 5 Limited
6688527
Vodafone Nominees Limited
1172051
Vodafone 5 UK
2960479
Vodafone Oceania Limited
3973427
Vodafone 6 UK
8809444
Vodafone Overseas Finance Limited
4171115
Vodafone Americas 4
6389457
Vodafone Panafon UK
6326918
Vodafone Benelux Limited
4200960
Vodafone UK Limited
2227940
Vodafone Consolidated Holdings Limited
5754561
Vodafone Worldwide Holdings Limited
3294074
Vodafone Corporate Secretaries Limited
2357692
Vodafone Yen Finance Limited
4373166
Vodafone Enterprise Corporate Secretaries Limited
2303594
Vodaphone Limited
3961390
Vodafone Enterprise Equipment Limited
1648524
Your Communications Group Limited
4171876
M-Pesa Holding Company Limited
On 17 April 2023, the Group entered into an agreement to sell M-Pesa Holding Company Limited (‘MPHCL’) to Safaricom Plc, an associate entity of the Group,
for USD 1. MPHCL holds M-Pesa customer funds on trust for the benefit of M-Pesa customers in Kenya. Balances included in the Group’s consolidated
financial statements for MPHCL at 31 March 2023 include short term investments of €1,247 million and €1,226 million due to M-Pesa customers, recorded
within Other investments and Other creditors, respectively. These sums are shown in the Group’s consolidated financial statements in accordance with IFRS,
but MPHCL acts as the independent trustee for M-Pesa customers, independently administering the trust and holding all funds from the M-Pesa customers
on trust for the benefit of M-Pesa customers. Any profit generated by MPHCL, after defraying direct costs, is donated for use for public charitable purposes
only. See note 13 ‘Other investments’ and note 15 ‘Trade and other payables’. No material gain or loss is expected to arise on disposal. Completion of this
210
Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
at 31 March
2023
2022
Note
€m
€m
Fixed assets
Shares in Group undertakings
2
83,427
83,406
Current assets
Debtors: amounts falling due after more than one year
3
5,651
4,288
Debtors: amounts falling due within one year
3
227,993
172,684
Other investments
4
260
698
Cash at bank and in hand
265
362
234,169
178,032
Creditors: amounts falling due within one year
5
(226,034)
(168,913)
Net current assets
8,135
9,119
Total assets less current liabilities
91,562
92,525
Creditors: amounts falling due after more than one year
5
(41,408)
(45,818)
50,154
46,707
Capital and reserves
Called up share capital
6
4,797
4,797
Share premium account
20,385
20,384
Capital redemption reserve
111
111
Other reserves
1,110
1,088
Own shares held
(7,854)
(7,413)
Profit and loss account
1
31,605
27,740
Total equity shareholders’ funds
50,154
46,707
Note:
1
The profit for the financial year dealt with in the financial statements of the Company is €5,271 million (2022: €5,995 million).
The Company financial statements on pages 211 to 218 were approved by the Board of Directors and authorised for issue on 16 May 2023 and were
signed on its behalf by:
Margherita Della Valle
Group Chief Executive and Chief Financial Officer
The accompanying notes are an integral part of these financial statements.
Company statement of changes in equity of Vodafone Group Plc
for the years ended 31 March
Called up share
capital
Share
premium
account
1
Capital
redemption
reserve
1
Other reserves
1
Treasury
shares
2
Profit and loss
account
3
Total equity
shareholders’
funds
€m
€m
€m
€m
€m
€m
€m
1 April 2021
4,797
20,383
111
2,970
(6,307)
22,518
44,472
Issue or re-issue of shares
4
–
1
–
(1,903)
2,000
–
98
Profit for the financial year
–
–
–
–
–
5,995
5,995
Dividends
–
–
–
–
–
(2,483)
(2,483)
Capital contribution given relating to share-based payments
–
–
–
119
–
–
119
Contribution received relating to share-based payments
–
–
–
(98)
–
–
(98)
Repurchase of treasury shares
5
–
–
–
–
(3,106)
–
(3,106)
Other movements
6
–
–
–
–
–
1,710
1,710
31 March 2022
4,797
20,384
111
1,088
(7,413)
27,740
46,707
Issue or re-issue of shares
–
1
–
122
–
123
Profit for the financial year
–
–
–
–
–
5,271
5,271
Dividends
–
–
–
–
–
(2,502)
(2,502)
Capital contribution given relating to share-based payments
–
–
–
135
–
–
135
Contribution received relating to share-based payments
–
–
–
(113)
–
–
(113)
Repurchase of treasury shares
5
–
–
–
–
(563)
–
(563)
Other movements
6
–
–
–
–
–
1,096
1,096
31 March 2023
4,797
20,385
111
1,110
(7,854)
31,605
50,154
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
Movements include the re-issue of 1,519 million shares (€1,903 million) in March 2022 to satisfy the second tranche of the Mandatory Convertible Bond issued in March 2019.
5
Represents the irrevocable and non-discretionary share buyback programmes announced on 16 November 2022 (2022: Announced on 19 May 2021, 23 July 2021, 17 November 2021 and 9
March 2022).
6
Includes the impact of the Company’s cash flow hedges with €2,356 million net gain deferred to other comprehensive income during the year (2022: €3,632 million net gain), €895 million net gain
(2022: €1,419 million net gain) recycled to the income statement, and a tax charge of €365 million (2022: €501 million). 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
212
Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
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’;
−
Paragraph 91 to 99 of IFRS 13, ‘Fair value measurement’ (disclosure of valuation techniques and inputs used for fair value measurement of 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;
−
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 ‘Impairment of asset’ 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 and critical estimates that could potentially significantly impact the amounts
recognised in the financial statements and give rise to material adjustments in the Company’s financial statements.
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 ‘Fixed assets’).
213
Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
Notes to the Company financial statements (continued)
1. Basis of preparation (continued)
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.
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.
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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.
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.
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.
Shares in Group undertakings
2023
2022
€m
€m
Cost
1 April
84,334
84,313
Additions
782
–
Disposals
(667)
–
Capital contributions arising from share-based payments
135
119
Contributions received in relation to share-based payments
(113)
(98)
31 March
84,471
84,334
Accumulated impairment losses
1 April
928
928
Impairment loss recognised
1
116
–
31 March
1,044
928
Net book value
31 March
83,427
83,406
Note:
1.
€
116 million of capital contribution and resulting impairment relate to an intercompany reorganisation exercise completed during the period.
At 31 March 2023 the Company had the following principal subsidiary:
Name
Principal activity
Country of incorporation
Percentage shareholding
Vodafone European Investments
Holding Company
England
100
Details of direct and indirect related undertakings are set out in note 31 ‘Related undertakings’ to the consolidated financial statements.
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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.
2023
2022
€m
€m
Amounts falling due within one year
Amounts owed by subsidiaries
1
227,347
172,039
Taxation recoverable
2
111
219
Other debtors
4
10
Derivative financial instruments
531
416
227,993
172,684
Amounts falling due after more than one year
Other debtors
4
–
Derivative financial instruments
5,647
4,288
5,651
4,288
Notes:
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.
2
Primarily relates to amounts owed by group companies due to group relief.
4. Other Investments
Accounting policies
Investments are classified and measured at amortised cost using the effective interest rate method, less any impairment.
2023
2022
€m
€m
Collateral
260
698
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.
2023
2022
€m
€m
Amounts falling due within one year
Bonds
4,604
1,875
Bank loans
–
3
Collateral liabilities
4,886
2,914
Other borrowings
6
6
Bank borrowings secured against Indian assets
1,485
1,382
Amounts owed to subsidiaries
1
214,893
161,114
Derivative financial instruments
155
141
Other creditors
–
20
Accruals and deferred income
2
5
1,458
226,034
168,913
Amounts falling due after more than one year
Deferred tax
703
338
Bonds
37,719
43,967
Bank loans
2
2
Amounts owed to subsidiaries
3
1,793
–
Derivative financial instruments
1,191
1,511
41,408
45,818
Notes:
1
Amounts owed to subsidiaries are unsecured, have no fixed date of repayment are repayable on demand.
2
March 2022 includes €1,434 million payable in relation to the irrevocable and non-discretionary share buyback programmes announced in March 2022.
3
Amounts payable with a fixed interest rate range of 3.25% and 4% and maturity ranging from 2029 to 2043.
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Other information
Included in amounts falling due after more than one year are bonds of €37,719 million (2022: €29,206 million) which are due in more than five
years from 1 April 2023 and are payable otherwise than by instalments. Interest payable on these bonds ranges from 0.375% to 7.875% (2022: 0.5%
to 7.875%).
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.
2023
2022
Number
€m
Number
€m
Ordinary shares of 20
20
⁄
21
US cents each allotted,
issued and fully paid:
1,2,3
1 April
28,817,627,868
4,797
28,816,835,778
4,797
Allotted during the year
628,190
–
792,090
–
31 March
28,818,256,058
4,797
28,817,627,868
4,797
Notes:
1
At 31 March 2023 there were 50,000 (2022: 50,000) 7% cumulative fixed rate shares of £1 each in issue.
2
At 31 March 2023 the Group held 1,825,691,429 (2022: 447,576,522) treasury shares with a nominal value of €304 million (2022: €75 million). The market value of shares held was €1,855
million (2022: €661 million). During the year, 85,844,124 (2022: 68,306,442) treasury shares were reissued under Group share schemes and 1,463,959,031 (2022: 1,441,870,348) shares
were repurchased under share buy-back arrangements.
3
During the year ended 31 March 2022, 1,518,629,693 treasury shares were issued in settlement of the maturing £1.72 billion subordinated mandatory convertible bond.
7. Share-based payments
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 2023, the Company had 62 million ordinary share options outstanding (2022: 61 million).
The Company has made capital contributions to its subsidiaries in relation to share-based payments. At 31 March 2023, the cumulative capital
contribution net of payments received from subsidiaries was €261 million (2022: €239 million). During the year ended 31 March 2023, the total
capital contribution arising from share-based payments was €135 million (2022: €119 million), with payments of €113 million (2022: €98 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 125 do not reflect the profits available for distribution in the Group.
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Financials
Other information
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.
2023
2022
€m
€m
Declared during the financial year
Final dividend for the year ended 31 March 2022: 4.50 eurocents per share
(2021: 4.50 eurocents per share)
1,265
1,254
Interim dividend for the year ended 31 March 2023: 4.50 eurocents per share
(2022: 4.50 eurocents per share)
1,237
1,229
2,502
2,483
Proposed after the balance sheet date and not recognised as a liability
Final dividend for the year ended 31 March 2023: 4.50 eurocents per share
(2022: 4.50 eurocents per share)
1,215
1,265
10. Contingent liabilities and legal proceedings
2023
2022
€m
€m
Other guarantees
1,642
3,427
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 (2022: US$3.5 billion loan
facility), which forms part of the Group’s overall joint venture investment in TPG Telecom Limited. The prior year included a guarantee of €1.8 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 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 €5 million (2022: €4 million) and for non-audit
services was €1 million (2022: €nil).
The Company had two (2022: two) employees throughout the year, being the executive directors, Nick Read and Margherita Della Valle. Whilst Nick
Read stepped down from the Board on 31 December 2022 he continued to be employed by the Company as an adviser to the Board until 31 March
2023. These employees were 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 92 to 106 and in Note 23 ‘Directors and key management compensation’.
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.
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Non-GAAP measures
Unaudited information
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. 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.
Non-GAAP measure
Defined on page
Closest equivalent GAAP measure
Reconciled on page
Performance metrics
Adjusted EBITDAaL
Page 220
Operating profit
Page 136
Organic Adjusted EBITDAaL growth
Page 220
Not applicable
−
Organic revenue growth
Page 220
Revenue
Pages 221 and 222
Organic Group service revenue growth
excluding Turkey
Page 220
Service revenue
Pages 221 and 222
Organic Group Adjusted EBITDAaL growth
excluding Turkey
Page 220
Not applicable
−
Organic service revenue growth
Page 220
Service revenue
Pages 221 and 222
Organic mobile service revenue growth
Page 220
Service revenue
Pages 221 and 222
Organic fixed service revenue growth
Page 220
Service revenue
Pages 221 and 222
Organic Vodafone Business service revenue
growth
Page 220
Service revenue
Pages 221 and 222
Organic financial services revenue growth in
South Africa
Page 220
Service revenue
Pages 221 and 222
Other metrics
Adjusted profit attributable to owners of the
parent
Page 223
Profit attributable to owners of the parent
Page 223
Adjusted basic earnings per share
Page 223
Basic earnings per share
Page 224
Cash flow, funding and capital allocation
metrics
Free cash flow
Page 224
Inflow from operating activities
Page 225
Adjusted free cash flow
Page 224
Inflow from operating activities
Pages 23 and 225
Gross debt
Page 224
Borrowings
Page 225
Net debt
Page 224
Borrowings less cash and cash equivalents
Page 225
Pre-tax ROCE (controlled)
Page 226
ROCE calculated using GAAP measures
Pages 226 and 227
Post-tax ROCE (controlled and
associates/joint ventures)
Page 226
ROCE calculated using GAAP measures
Pages 226 and 227
Financing and Taxation metrics
Adjusted net financing costs
Page 228
Net financing costs
Page 22
Adjusted profit before taxation
Page 228
Profit before taxation
Page 228
Adjusted income tax expense
Page 228
Income tax expense
Page 228
Adjusted effective tax rate
Page 228
Income tax expense
Page 228
Adjusted share of results of equity accounted
associates and joint ventures
Page 228
Share of results of equity accounted
associates and joint ventures
Page 229
Adjusted share of results of equity accounted
associates and joint ventures used in post
-tax
ROCE
Page 228
Share of results of equity accounted
associates and joint ventures
Page 229
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Other information
Non-GAAP measures (continued)
Unaudited information
Performance metrics
Non-GAAP measure
Purpose
Definition
Adjusted EBITDAaL
Adjusted EBITDAaL is used in conjunction with
financial measures such as operating profit to assess
our operating performance and profitability.
Adjusted EBITDAaL is operating profit after
depreciation on lease
-related right of use assets and
interest on
lease liabilities but excluding depreciation,
amortisation and gains/losses on disposal of owned
assets and excluding share of results of equity
accounted associates and joint ventures, impairment
losses, restructuring costs arising from discrete
restruct
uring plans, other income and expense and
significant items that are not considered by
management to be reflective of the underlying
performance of the Group.
It is a key external metric used by the investor
community to assess performance of our operations.
It is our segment performance measure in accordance
with IFRS 8 (Operating Segments).
Adjusted EBITDAaL margin is Adjusted EBITDAaL divided by Revenue.
Organic growth
All amounts marked with an ‘*’ in this document represent organic growth which presents performance on a comparable basis, excluding the
impact of foreign exchange rates, mergers and acquisitions, the hyperinflation adjustments in Turkey and other adjustments to improve the
comparability of results between periods.
Organic growth is calculated for revenue and profitability metrics, as follows
1
:
−
Adjusted EBITDAaL;
−
Revenue;
−
Group service revenue excluding Turkey
2
;
−
Group Adjusted EBITDAaL excluding Turkey
2
;
−
Service revenue;
−
Mobile service revenue;
−
Fixed service revenue;
−
Vodafone Business service revenue; and
−
Financial services revenue in South Africa.
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.
Notes:
1
Organic growth in retail service revenue in Germany, a non-GAAP metric, is no longer reported. Other performance metrics are considered more relevant for performance commentary.
2
This is a new non-GAAP measure for FY23 and has been included because of the hyperinflationary environment in Turkey.
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Other information
Reported
M&A and
Foreign
Organic
FY23
FY22
growth
Other
exchange
growth*
€m
€m
%
pps
pps
%
Year ended 31 March 2023
Service revenue
1
Germany
11,433
11,616
(1.6)
–
–
(1.6)
Mobile service revenue
5,060
5,124
(1.2)
–
–
(1.2)
Fixed service revenue
6,373
6,492
(1.8)
–
–
(1.8)
Italy
4,251
4,379
(2.9)
–
–
(2.9)
Mobile service revenue
2,972
3,141
(5.4)
–
–
(5.4)
Fixed service revenue
1,279
1,238
3.3
–
–
3.3
UK
5,358
5,154
4.0
–
1.6
5.6
Mobile service revenue
3,928
3,697
6.2
–
1.8
8.0
Fixed service revenue
1,430
1,457
(1.9)
–
1.6
(0.3)
Spain
3,514
3,714
(5.4)
–
–
(5.4)
Other Europe
5,005
5,001
0.1
2.1
0.6
2.8
Vodacom
4,849
4,635
4.6
–
(1.1)
3.5
Other Markets
3,300
3,420
(3.5)
(2.2)
36.4
30.7
Common Functions
530
522
Eliminations
(271)
(238)
Total service revenue
37,969
38,203
(0.6)
0.2
2.6
2.2
Other revenue
7,737
7,377
Revenue
45,706
45,580
0.3
-
2.7
3.0
Other growth metrics
Group service revenue excluding Turkey
36,563
36,773
(0.6)
0.3
1.3
1.0
Group adjusted EBITDAaL excluding Turkey
14,264
14,717
(3.1)
0.7
1.3
(1.1)
Vodafone Turkey - Service revenue
1,440
1,460
(1.4)
(7.2)
56.2
47.6
Vodafone Business - Service revenue
10,332
10,316
0.2
0.7
1.7
2.6
South Africa - Financial services revenue
167
155
7.7
–
2.9
10.6
Adjusted EBITDAaL
Germany
5,323
5,669
(6.1)
–
–
(6.1)
Italy
1,453
1,699
(14.5)
–
–
(14.5)
UK
1,350
1,395
(3.2)
–
1.8
(1.4)
Spain
947
957
(1.0)
(0.1)
–
(1.1)
Other Europe
1,632
1,606
1.6
2.5
0.6
4.7
Vodacom
2,159
2,125
1.6
–
(0.2)
1.4
Other Markets
1,145
1,335
(14.2)
6.7
29.7
22.2
Vantage Towers
795
619
28.4
(21.0)
0.5
7.9
Common Functions
(139)
(197)
Eliminations
–
–
Group
14,665
15,208
(3.6)
(0.1)
2.4
(1.3)
Percentage point change in Adjusted EBITDAaL margin
Germany
40.6%
43.2%
(2.6)
–
–
(2.6)
Italy
30.2%
33.8%
(3.6)
–
–
(3.6)
UK
19.8%
21.2%
(1.4)
–
0.1
(1.3)
Spain
24.2%
22.9%
1.3
–
–
1.3
Other Europe
28.4%
28.4%
-
–
–
-
Vodacom
34.2%
35.5%
(1.3)
–
0.1
(1.2)
Other Markets
29.9%
34.9%
(5.0)
2.3
(1.1)
(3.8)
Vantage Towers
59.4%
49.4%
10.0
(9.7)
(0.1)
0.2
Group
32.1%
33.4%
(1.3)
(0.1)
–
(1.4)
Note:
1
Prior to disposal, Vantage Towers revenue was reported by the Group as other revenue, not service revenue.
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Strategic report
Governance
Financials
Other information
Non-GAAP measures (continued)
Unaudited information
Reported
M&A and
Foreign
Organic
Q4 FY23
Q4 FY22
growth
Other
exchange
growth*
€m
€m
%
pps
pps
%
Quarter ended 31 March 2023
Service revenue
1
Germany
2,821
2,903
(2.8)
(0.0)
–
(2.8)
Mobile service revenue
1,235
1,282
(3.7)
0.0
–
(3.7)
Fixed service revenue
1,586
1,621
(2.2)
0.1
–
(2.1)
Italy
1,055
1,085
(2.8)
0.1
–
(2.7)
Mobile service revenue
715
758
(5.7)
0.3
–
(5.4)
Fixed service revenue
340
327
4.0
(0.4)
–
3.6
UK
1,319
1,341
(1.6)
–
5.4
3.8
Mobile service revenue
948
972
(2.5)
–
5.3
2.8
Fixed service revenue
371
369
0.5
–
5.8
6.3
Spain
874
908
(3.7)
0.0
-
(3.7)
Other Europe
1,178
1,242
(5.2)
8.6
0.2
3.6
Vodacom
1,143
1,192
(4.1)
-
6.7
2.6
Other Markets
777
801
(3.0)
(12.0)
55.0
40.0
Common Functions
128
134
Eliminations
(53)
(60)
Total service revenue
9,242
9,546
(3.2)
0.4
4.7
1.9
Other revenue
1,896
1,861
Revenue
11,138
11,407
(2.4)
0.3
4.7
2.6
Other growth metrics
Group service revenue excluding Turkey
8,821
9,262
(4.8)
1.2
4.1
0.5
Vodafone Turkey - Service revenue
430
290
48.3
(33.5)
43.5
58.3
Vodafone Business - Service revenue
2,582
2,626
(1.7)
1.0
3.6
2.9
South Africa - Financial services revenue
40
40
–
–
14.2
14.2
Reported
M&A and
Foreign
Organic
Q3 FY23
Q3 FY22
growth
Other
exchange
growth*
€m
€m
%
pps
pps
%
Quarter ended 31 December 2022
Service revenue
1
Germany
2,882
2,936
(1.8)
–
–
(1.8)
Mobile service revenue
1,279
1,301
(1.7)
–
–
(1.7)
Fixed service revenue
1,603
1,635
(2.0)
–
–
(2.0)
Italy
1,071
1,107
(3.3)
–
–
(3.3)
Mobile service revenue
750
794
(5.5)
(0.2)
–
(5.7)
Fixed service revenue
321
313
2.6
0.1
–
2.7
UK
1,327
1,292
2.7
–
2.6
5.3
Mobile service revenue
977
928
5.3
–
2.8
8.1
Fixed service revenue
350
364
(3.8)
–
2.2
(1.6)
Spain
858
940
(8.7)
–
–
(8.7)
Other Europe
1,275
1,257
1.4
–
0.7
2.1
Vodacom
1,234
1,172
5.3
–
(1.8)
3.5
Other Markets
802
867
(7.5)
4.0
37.6
34.1
Common Functions
134
136
Eliminations
(63)
(60)
Total service revenue
9,520
9,647
(1.3)
0.3
2.8
1.8
Other revenue
2,118
2,037
Revenue
11,638
11,684
(0.4)
0.3
2.8
2.7
Other growth metrics
Group service revenue excluding Turkey
9,193
9,299
(1.1)
–
1.6
0.5
Vodafone Turkey - Service revenue
334
355
(5.9)
10.6
48.2
52.9
Vodafone Business - Service revenue
2,602
2,604
(0.1)
0.5
2.0
2.4
South Africa - Financial services revenue
45
39
15.4
(3.3)
0.4
12.5
Note:
1
Prior to disposal, Vantage Towers revenue was reported by the Group as other revenue, not service revenue.
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Other metrics
Non-GAAP measure
Purpose
Definition
Adjusted profit attributable
to owners of the parent
This metric is used in the calculation of adjusted basic
earnings per share.
Adjusted profit attributable to owners of the parent
excludes restructuring costs arising from discrete
restructuring plans, amortisation of customer bases
and brand intangible a
ssets, impairment losses, other
income and expense and mark
-to-market and foreign
exchange movements, together with related tax
effects.
Adjusted basic earnings per
share
This performance measure is used in discussions with
the investor
community.
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 per share.
Adjusted EBITDAaL and Adjusted profit attributable to owners of the parent
The table below reconciles Adjusted EBITDAaL and Adjusted profit attributable to owners of the parent to their closest equivalent GAAP measures,
being Operating profit and Profit attributable to owners of the parent, respectively.
Re-presented
1
FY23
FY22
Reported
Adjustments
Adjusted
Reported
Adjustments
Adjusted
€m
€m
€m
€m
€m
€m
Adjusted EBITDAaL
14,665
–
14,665
15,208
–
15,208
Restructuring costs
(587)
587
–
(346)
346
–
Interest on lease liabilities
436
–
436
398
–
398
Loss on disposal of property, plant & equipment and
intangible assets
(36)
–
(36)
(28)
–
(28)
Depreciation and amortisation on owned assets
2
(9,649)
555
(9,094)
(9,858)
509
(9,349)
Share of results of equity accounted associates and
joint ventures
3
433
220
653
389
263
652
Impairment loss
(64)
64
–
–
–
–
Other income
9,098
(9,098)
–
50
(50)
–
Operating profit
14,296
(7,672)
6,624
5,813
1,068
6,881
Investment income
248
–
248
254
–
254
Financing costs
4
(1,728)
(399)
(2,127)
(1,964)
28
(1,936)
Profit before taxation
12,816
(8,071)
4,745
4,103
1,096
5,199
Income tax expense
5
(481)
(591)
(1,072)
(1,330)
61
(1,269)
Profit for the financial year
12,335
(8,662)
3,673
2,773
1,157
3,930
Profit attributable to:
- Owners of the parent
11,838
(8,668)
3,170
2,237
1,153
3,390
- Non-controlled interests
497
6
503
536
4
540
Profit for the financial year
12,335
(8,662)
3,673
2,773
1,157
3,930
Notes:
1
The results for the year ended 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. Operating profit and profit for the financial
year have both increased by €149 million and adjusted operating profit and adjusted profit for the financial year have both increased by €191 million compared to amounts previously
reported. See note 7 ‘Discontinued operations and assets held for sale’ in the consolidated financial statements for more information.
2
Depreciation and amortisation excludes depreciation on leased assets and loss on disposal of leased assets included within adjusted EBITDAaL. Refer to Additional Information on page 229
for an analysis of depreciation and amortisation. The adjustments of €555 million (FY22: €509 million) relate to amortisation of customer bases and brand intangible assets.
3
See page 229 for a breakdown of the adjustments to share of results of equity accounted associates and joint ventures to derive adjusted share of results of equity accounted associates and
joint ventures.
4
See ‘Net financing costs’ on page 22 for further analysis.
5
See ‘Adjusted tax metrics’ on page 228 for further analysis.
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Other information
Non-GAAP measures (continued)
Unaudited information
Adjusted basic earnings per share
The reconciliation of adjusted basic earnings per share to the closest equivalent GAAP measure, basic earnings per share, is provided below.
Re-presented
1
FY23
FY22
€m
€m
Profit attributable to owners of the parent
11,838
2,237
Adjusted profit attributable to owners of the parent
3,170
3,390
Million
Million
Weighted average number of shares outstanding - Basic
27,680
29,012
eurocents
eurocents
Basic earnings per share
42.77c
7.71c
Adjusted basic earnings per share
11.45c
11.68c
Note:
1
The results for the year ended 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. This has resulted in an increase in profit
attributable to owners of the parent and adjusted profit attributable to owners of the parent of €149 million and €191 million, respectively. As a consequence, basic earnings per share has
increased by 0.51c from 7.20c to 7.71c and adjusted basic earnings per share has increased by 0.65c from 11.03c to 11.68c. See note 7 ‘Discontinued operations and assets held for sale’ in
the consolidated financial statements for more information.
Cash flow, funding and capital allocation metrics
Cash flow and funding
Non-GAAP measure
Purpose
Definition
Free cash flow
Internal performance reporting.
Free cash flow is Adjusted EBITDAaL after cash flows in
relation to capital additions, working capital
movements in respect of capital additions, disposal of
property, plant and equipment and intangible assets,
integration
capital additions and working capital
related items, licences and spectrum, interest received
and paid, taxation, dividends received from associates
and joint ventures, dividends paid to non
-controlling
shareholders in subsidiaries and payments in respect
of lease liabilities.
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.
Adjusted free cash flow
Internal performance reporting.
Adjusted free cash flow is Free cash flow before
licences and spectrum, restructuring costs arising from
discrete restructuring plans, integration capital
additions and working capital related items, M&A and
Vantage Towers growth capital expenditure and other.
Growth capital expenditure is total capital expenditure
excluding maintenance-type expenditure.
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.
Gross debt
Prominent metric used by debt rating agencies and
the investor community.
Non-current borrowings and current borrowings,
excluding lease liabilities, collateral liabilities and
borrowings specifically secured against Indian assets.
Net debt
Prominent metric used by debt rating agencies and
the investor community.
Gross debt less cash and cash equivalents, short-term
investments, derivative financial instruments
excluding mark
-to-market adjustments and net
collateral assets.
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Cash flow and funding (continued)
The table below presents the reconciliation between Inflow from operating activities and Free cash flow.
FY23
FY22
€m
€m
Inflow from operating activities
18,054
18,081
Net tax paid
1,234
925
Cash generated by operations
19,288
19,006
Capital additions
(8,378)
(8,306)
Working capital movement in respect of capital additions
(215)
157
Disposal of property, plant and equipment and intangible assets
98
27
Integration capital additions
(287)
(314)
Working capital movement in respect of integration capital additions
(23)
(34)
Licences and spectrum
(2,467)
(896)
Interest received and paid
1
(1,536)
(1,615)
Taxation
(1,234)
(925)
Dividends received from associates and joint ventures
617
638
Dividends paid to non-controlling shareholders in subsidiaries
(400)
(539)
Payments in respect of lease liabilities
(4,087)
(3,943)
Other
66
53
Free cash flow
1,442
3,309
Note:
1.
Includes interest on lease liabilities of €372 million (FY22: €361 million).
The table below presents the reconciliation between Borrowings, Gross debt and Net debt.
Year-end FY23
Year-end FY22
€m
€m
Borrowings
(66,390)
(70,092)
Lease liabilities
13,364
12,539
Bank borrowings secured against Indian assets
1,485
1,382
Collateral liabilities
4,886
2,914
Gross debt
(46,655)
(53,257)
Collateral liabilities
(4,886)
(2,914)
Cash and cash equivalents
11,705
7,496
Short-term investments
4,305
4,795
Collateral assets
239
698
Derivative financial instruments
4,702
2,954
Less mark-to-market gains deferred in hedge reserves
(2,785)
(1,350)
Net debt
(33,375)
(41,578)
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Non-GAAP measures (continued)
Unaudited information
Return on Capital Employed
Non-GAAP measure
Purpose
Definition
Return on Capital
Employed ('ROCE')
ROCE is a metric used by the investor community and
reflects how efficiently we are generating profit with
the capital we deploy.
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 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.
Pre-tax ROCE (controlled)
Post
-
tax ROCE (controlled
and associates/joint
ventures)
As above.
We calculate pre-tax ROCE (controlled) by dividing
Operating profit excluding interest on lease liabilities,
restructuring costs arising from discrete restructuring
plans, impairment losses, other income and expense,
the impact of hyperinflationary adjustm
ents in Turkey
and the share of results of equity accounted associates
and joint ventures. On a post
-tax basis, the measure
includes our adjusted share of results from associates
and joint ventures and a notional tax charge. Capital is
equivalent to net op
erating assets and is calculated as
the average of opening and closing balances of:
property, plant and equipment (including leased assets
and lease liabilities), intangible assets (including
goodwill), operating working capital (including held for
sale as
sets and excluding derivative balances) and
provisions, excluding the impact of hyper
-inflationary
adjustments in Turkey and significant impacts
resulting from business combinations and disposals.
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.
ROCE using GAAP measures
The table below presents the calculation of ROCE using GAAP measures as reported in the consolidated income statement and consolidated
statement of financial position.
Re-presented
1
FY23
FY22
€m
€m
Operating profit
2
14,296
5,813
Borrowings
3
66,390
70,092
Cash and cash equivalents
(11,705)
(7,496)
Derivative financial instruments included in trade and other receivables
(6,124)
(4,626)
Derivative financial instruments included in trade and other payables
1,422
1,672
Short-term investments
(4,305)
(4,795)
Collateral assets
(239)
(698)
Financial liabilities under put option arrangements
485
494
Equity
64,483
57,073
Capital employed at end of the year
110,407
111,716
Average capital employed for the year
111,062
112,830
ROCE using GAAP measures
12.9%
5.2%
Notes:
1
The results for the year ended 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. This has resulted in an increase of €149
million in operating profit and an increase of €96 million in capital employed at the end of the year. Consequently, ROCE using GAAP measures has increased by 0.2pps from 5.0% to 5.2%
compared to amounts previously reported. See note 7 ‘Discontinued operations and assets held for sale’ in the consolidated financial statements for more information.
2
Operating profit includes Other income, which includes merger and acquisition activity that is non-recurring in nature. The results for the year ended 31 March 2023 include a gain on disposal
of Vantage Towers A.G. of €8,607 million, a gain on disposal of Vodafone Ghana of €689 million and a loss on disposal of Vodafone Hungary of €69 million.
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Other information
Return on Capital Employed (‘ROCE’): Non-GAAP basis
The table below presents the calculation of ROCE using non-GAAP measures and reconciliations to the closest equivalent GAAP measure.
Excluding Vantage
Towers
2
Re-presented
1
FY23
FY22
€m
€m
Operating profit
14,296
5,813
Interest on lease liabilities
(436)
(398)
Restructuring costs
587
346
Other income
(9,098)
(50)
Share of results of equity accounted associates and joint ventures
(433)
(389)
Impairment loss
64
–
Other adjustments
2
(413)
–
Adjusted operating profit for calculating pre-tax ROCE (controlled)
4,567
5,322
Adjusted share of results of equity accounted associates and joint ventures
3
430
401
Notional tax at adjusted effective tax rate
4
(1,309)
(1,597)
Adjusted operating profit for calculating post-tax ROCE (controlled and associates/joint
ventures)
3,688
4,126
Capital employed for calculating ROCE on a GAAP basis
110,407
111,716
Adjustments to exclude:
- Leases
(13,364)
(12,539)
- Deferred tax assets
(19,316)
(19,089)
- Deferred tax liabilities
771
520
- Taxation recoverable
(279)
(296)
- Taxation liabilities
457
864
- Other investments
(1,781)
(1,855)
- Investments in associates and joint ventures
(11,079)
(5,323)
- Pension assets and liabilities
(71)
(274)
- Other adjustments
2
(877)
–
Adjusted capital employed for calculating pre-tax ROCE (controlled)
64,868
73,724
Investments in associates and joint ventures
2
5,223
5,323
Adjusted capital employed for calculating post-tax ROCE (controlled and associates/joint
ventures)
70,091
79,047
Average capital employed for calculating pre-tax ROCE (controlled)
66,959
74,279
Average capital employed for calculating post-tax ROCE (controlled and associates/joint
ventures)
72,232
79,880
Pre-tax ROCE (controlled)
6.8%
7.2%
Post-tax ROCE (controlled and associates/joint ventures)
5.1%
5.2%
Notes:
1
The results for the year ended 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. This has resulted in an increase of €128
million in adjusted operating profit for calculating post-tax ROCE (controlled and associates/joint ventures) and an increase of €96 million in adjusted capital employed for calculating post-
tax ROCE (controlled and associate/joint ventures). Consequently, post-tax ROCE (controlled and associates/joint ventures) has increased by 0.2pps from 5.0% to 5.2% compared to
amounts previously reported. There is no impact on pre-tax ROCE (controlled). See note 7 ‘Discontinued operations and assets held for sale’ in the consolidated financial statements for more
information.
2
Comprises adjustments to exclude the results of Vantage Towers following its disposal on 22 March 2023 and hyperinflationary accounting in Turkey. Consequently, FY22 capital employed
for calculating pre-tax ROCE (controlled) and capital employed for calculating post-tax ROCE (controlled and associates/joint ventures) have been adjusted to €69,050 million and €74,373
million, respectively, for the purposes of calculating relevant FY23 averages.
3
Adjusted share of results of equity accounted associates and joint ventures used in post-tax ROCE is a non-GAAP measure and excludes restructuring costs and other income.
4
Includes tax at the Adjusted effective tax rate of 26.2% (FY22: 27.9%).
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Non-GAAP measures (continued)
Unaudited information
Financing and Taxation metrics
Non-GAAP measure
Purpose
Definition
Adjusted net financing
costs
This metric is used by both management and the
investor community.
Adjusted net financing costs exclude mark-to-market
and foreign exchange gains/losses.
This metric is used in the calculation of adjusted basic
earnings per share.
Adjusted profit before
taxation
This metric is used in the calculation of the adjusted
effective tax rate (see below).
Adjusted profit before taxation excludes the tax effects
of items excluded from adjusted basic earnings per
share, including: impairment losses, amortisation of
custom
er 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
This metric is used in the calculation of the adjusted
effective tax rate (see below).
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 c
osts 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 effective tax rate
This metric is used by both management and the
investor community.
Adjusted income tax expense (see above) divided by
Adjusted profit before taxation (see above).
Adjusted share of results
of equity accounted
associates and joint
ventures
This metric is used in the calculation of adjusted
effective tax rate.
Share of results of equity accounted associates and
joint ventures excluding restructuring costs,
amortisat
ion of acquired customer base and brand
intangible assets and other income and expense.
Adjusted share of results
of equity accounted
associates and joint
ventures used in post
-tax
ROCE
This metric is used in the calculation of post-tax ROCE
(controlled and associates/joint ventures).
Share of results of equity accounted associates and
joint ventures excluding restructuring costs 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.
Re-presented
1
FY23
FY22
€m
€m
Profit before taxation
12,816
4,103
Adjustments to derive adjusted profit before tax
(8,071)
1,096
Adjusted profit before taxation
4,745
5,199
Adjusted share of results of equity accounted associates and joint ventures
(653)
(652)
Adjusted profit before tax for calculating adjusted effective tax rate
4,092
4,547
Income tax expense
(481)
(1,330)
Tax on adjustments to derive adjusted profit before tax
(264)
(157)
Adjustments:
- UK corporate interest restriction
15
(12)
- Tax relating to hyperinflation accounting
(309)
–
- Tax relating to Vantage Towers disposal
(66)
–
- Deferred tax following revaluation of investments in Luxembourg
–
1,468
- Deferred tax on use of Luxembourg losses in the year
33
327
- Recognition of a deferred tax asset in Luxembourg
–
(699)
- Increase in deferred tax assets in the UK as a result of a change in the corporate tax rate
–
(593)
- Revaluation of assets for tax purposes in Italy
–
(273)
Adjusted income tax expense for calculating adjusted tax rate
(1,072)
(1,269)
Adjusted effective tax rate
26.2%
27.9%
Note:
1
The results for the year ended 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. This has resulted in an increase in profit
before taxation and adjusted profit before taxation of €149 million and €191 million, respectively. This has been offset by an equivalent decrease of €191 million in the adjusted share of
results of equity accounted associates and joint ventures. Consequently, there is no net impact on the adjusted profit before tax for calculating adjusted effective tax rate and therefore there
is no change to the adjusted effective tax rate. See note 7 ‘Discontinued operations and assets held for sale’ in the consolidated financial statements for more information.
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Other information
Adjusted share of results of equity accounted associates and joint ventures
The table below reconciles adjusted share of results of equity accounted associates and joint ventures to the closest GAAP equivalent, share of
results of equity accounted associates and joint ventures.
Re-presented
1
FY23
FY22
€m
€m
Share of results of equity accounted associates and joint ventures
433
389
Restructuring costs
6
12
Other income
(9)
–
Adjusted share of results of equity accounted associates and joint ventures used in post-tax ROCE
430
401
Amortisation of acquired customer base and brand intangible assets
223
251
Adjusted share of results of equity accounted associates and joint ventures
653
652
Note:
1
The results for the year ended 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. This has resulted in an increase of €178
million in adjusted share of results of equity accounted associates and joint ventures used in post-tax ROCE and an increase of €191 million in adjusted share of results of equity accounted
associates and joint ventures. See note 7 ‘Discontinued operations and assets held for sale’ in the consolidated financial statements for more information.
Additional information
Analysis of depreciation and amortisation
The table below presents an analysis of the different components of depreciation and amortisation discussed in the document, reconciled to the
GAAP amounts in the consolidated income statement.
FY23
FY22
€m
€m
Depreciation on leased assets - included in Adjusted EBITDAaL
3,883
3,908
Depreciation on leased assets - included in Restructuring costs
77
36
Depreciation on leased assets
3,960
3,944
Depreciation on owned assets
5,618
5,814
Amortisation of owned intangible assets
4,031
4,044
Depreciation and amortisation on owned assets included in Restructuring costs
9
43
Depreciation and amortisation on owned assets
9,658
9,901
Total depreciation and amortisation on owned and leased assets
13,618
13,845
Loss on disposal of owned fixed assets
36
28
Loss on disposal of leased assets
(9)
2
Depreciation and amortisation - as recognised in the consolidated income statement
13,645
13,875
Analysis of tangible and intangible additions
The table below presents an analysis of the different components of tangible and intangible additions discussed in the document.
FY23
FY22
€m
€m
Capital additions
8,378
8,306
Integration related capital additions
287
314
Licence and spectrum additions
439
901
Additions
9,104
9,521
Intangible asset additions
3,250
3,635
Property, plant and equipment owned additions
5,854
5,886
Total additions
9,104
9,521
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Shareholder information
2022/23 financial calendar key dates
Ex-dividend date for final dividend
8 June 2023
Record date for final dividend
9 June 2023
AGM
25 July 2023
Final dividend payment
4 August 2023
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
EQ Shareowner Services
P.O. Box 64504
St. Paul, MN 55164-0504
United States of America
Telephone: +1 800 990 1135 (toll free) or, for calls from outside the
United States: +1 651 453 2128
See shareowneronline.com for more information
about this service
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:
–
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.
See shareview.co.uk for more information
about this service
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
useful for general queries and information about the Company.
See vodafone.com/investor
for further details
AGM
Our thirty-ninth AGM will be held at The Pavilion, Vodafone House,
Newbury RG14 2FN on Tuesday, 25 July 2023 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
on the telephone number provided on the left of this page.
See vodafone.com/investor
for further information about this service
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.
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
Read more on the dividend amount per share
on pages 25 and 218.
Euro dividends
Dividends are declared in euros to align with the functional currency of
the Company, 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. 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 depositary
bank, J.P. Morgan.
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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, J.P. Morgan, through its transfer agent, EQ Shareowner
Services, maintains the Global Invest Direct 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
Contact information for Equiniti and EQ Shareowner Services
can be found on page 230
Taxation of dividends
See page 234 for details on dividend taxation.
Shareholders as at 31 March 2023
Number of ordinary shares
Number of accounts
% of total of issued shares
1-1,000
19,852
0.02
1,001-5,000
9,555
0.08
5,001-50,000
4,262
0.19
50,001-100,000
291
0.07
100,001-500,000
478
0.39
More than 500,000
984
99.25
Major shareholders
As at 12 May 2023, J.P. Morgan, as custodian of our ADR programme,
held approximately 14.4% of our ordinary shares of 20
20/21
US cents each
as nominee. At this date, the total number of ADRs outstanding
was 389,214,165.
As at 12 May 2023, 1,137 holders of ordinary shares had registered
addresses in the United States and held a total of approximately 0.01% of
the ordinary shares of the Company.
As at 31 March 2023, the following voting rights and percentage interests
in the ordinary share capital of the Company, disclosable under the
Disclosure Guidance and Transparency Rule (‘DTR’) 5, had been notified
to the Directors.
Shareholder
Voting rights
Shareholding
1
Emirates Telecommunications
Group Company PJSC (‘e&’)
3,790,743,685
14.006097%
BlackRock, Inc.
1,991,684,369
7.06%
Liberty Global plc
1,335,000,000
4.92%
Norges Bank
803,179,853
3.0004%
1.
The percentage of voting rights detailed above was calculated at the time of the
relevant disclosures made in accordance with DTR 5.
On 24 April 2023, e& and two of its affiliates reported a total shareholding
in Vodafone of 14.61% as of 12 April 2023 in a Schedule 13D filing with
the SEC. Except as disclosed in e&’s Schedule 13D filing, the Company is
not aware of any other changes in the interests disclosed under DTR 5
between 31 March 2023 and 15 May 2023.
As far as the Company is aware, between 1 April 2016 and 15 May 2023,
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) J.P. Morgan, as custodian of our ADR program, (ii) e&,
BlackRock, Inc., Liberty Global plc 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 15 May 2023, 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 of where copies of the Articles of Association
can be obtained are detailed on page 233 under
‘Documents on display’
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.
Purchase of own shares
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 2022 AGM.
On 9 March 2022, the Company announced the first tranche of the
irrevocable and non-discretionary share buy-back programme as a result
of the maturing of the first tranche of the mandatory convertible bond
(‘MCB’), as announced on 19 March 2021, had concluded. Following the
maturing of the second tranche of the MCB, the Company announced
that a new irrevocable and non-discretionary share buy-back programme
would commence on 17 March 2022. In order to satisfy the conversion
of the second tranche of the MCB, 1,518,629,693 shares were issued
from existing shares held in treasury. Between 17 March 2022 and 15
November 2022, Vodafone undertook an irrevocable and non-
discretionary share buy-back programme 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 second tranche of the MCB. On
16 November 2022, the Company announced that a new irrevocable and
non-discretionary share buy-back programme (the ‘New Programme’)
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would commence. The sole purpose of the New Programme was to
further reduce the issued share capital of the Company to offset the
increase in the issued share capital as a result of the maturing of the
second tranche of the MCB. Following the completion of the New
Programme on 15 March 2023, the increase in the issued share capital as
a result of the maturing of the second tranche of the MCB has been fully
offset. The total number of shares purchased to offset the maturing of
the second tranche of the MCB was below the number permitted to be
purchased by the Company pursuant to the authority granted by the
shareholders at the 2022 AGM.
Read more about the programme
on page 25
At each AGM all Directors, who are to remain on the Board, shall offer
themselves for election or re-election, as applicable, 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.
Read more on the Remuneration Policy
on pages 87-91
Rights attaching to the Company’s shares
At 31 March 2023, the issued share capital and percentage of total share
capital represented by each share class of the Company was as follows.
Number
Percentage
Preference shares
50,000
0.0002%
Ordinary shares (excluding
treasury shares)
26,992,564,629
93.6646%
Treasury shares
1,825,691,429
6.3352%
Ordinary shares (total)
28,818,256,058
99.9998%
Total shares (preference
and ordinary)
28,818,306,058
100.0000%
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 Chair 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 vested shares on EquatePlus account are able to
vote by submitting instructions online through the EquatePlus platform.
Note there are two vested share accounts with Computershare (SPA, in
respect of shares arising from a SAYE exercise, and MyShareBank, in
respect of vested shares from the Global Incentive Plan).
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.
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 and 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 2022 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 2023 Notice of AGM.
Shareholder information (continued)
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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 DTRs.
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
at 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.
Click to download a copy of the Company’s Articles
of Association. Copies can also be obtained 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 EUR 3,840,000,000 (as increased to EUR 3,990,000,000) and
USD 3,935,000,000 (as increased to USD 4,004,000,000) revolving
credit facilities which are discussed in note 21 ‘Borrowings’ to the
consolidated statements;
–
the 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 Deed of Merger dated 31 March 2020 relating to the combination
of Vodafone Italy’s towers with INWIT’s passive network infrastructure;
–
the Investment Agreement dated 9 November 2022, as amended, and
Shareholders’ Agreement dated 22 March 2023, by which Vodafone
established a co-control partnership for Vantage Towers AG with a
consortium of long-term infrastructure investors led by Global
Infrastructure Partners and KKR; and
–
the Relationship Agreement entered into with Emirates
Telecommunications Group Company PJSC (“e&”) on 11 May 2023,
relating to (i) the proposed appointment of up to two individuals
nominated by e& as non-executive directors to the Board of Vodafone
Group Plc and (ii) the ongoing relationship between e& and the
Company.
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.
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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;
–
a 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 in such partnership 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’)
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.
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 (£1,000 in this tax year, falling to
£500 from 6 April 2024) 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
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.
Shareholder information (continued)
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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. The effect of this EU case
law will continue to be recognised and followed in the United Kingdom
pursuant to the provisions of the European Union (Withdrawal) Act 2018,
even though the United Kingdom is no longer part of the EU, and HMRC’s
published practice remains that the 1.5% charge will remain disapplied in
such cases. However, this treatment may be modified as a result of the
Retained EU Law (Revocation and Reform) Bill 2022 (if enacted
without amendment).
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.
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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 the development of the Group. The most significant in the year
ended 31 March 2023 are summarised below.
–
On 9 November 2022, the Vodafone Group announced a strategic
co-control partnership with GIP and KKR for its 81.7% stake in Vantage
Towers AG (‘Vantage Towers’). On 13 December 2022, the new joint
venture, Oak Holdings GmbH (‘Oak Holdings’), launched a voluntary
takeover offer to minority shareholders of Vantage Towers and this
completed in January 2023. Following completion of the voluntary
takeover offer, Oak Holdings holds a 89.3% stake in Vantage Towers.
On 23 March 2023, Vodafone announced the completion of the
co-control partnership and received initial net cash proceeds of €4.9
billion. Following completion Vodafone now holds a 64.2%
shareholding in Oak Holdings. Oak Holdings and Vantage Towers have
separately reached an agreement on a domination and profit and loss
transfer agreement which was approved by Vantage Towers
shareholders at an extraordinary general meeting on 5 May 2023. Oak
Holdings also announced on 20 March 2023 an agreement to de-list
the shares of Vantage Towers.
–
On 13 December 2022, the Vodafone Group completed the transfer
of its 55% shareholding in Vodafone Egypt to its subsidiary, Vodacom
Group Limited (‘Vodacom’). The Vodafone Group was issued 242
million shares in Vodacom and received cash proceeds of €577 million
in exchange for its shareholding in Vodafone Egypt. As a result,
Vodafone’s shareholding in Vodacom increased from 60.5% to 65.1%.
–
On 31 January 2023, the Vodafone Group completed the sale of 100%
of Vodafone Hungary (Vodafone Magyarország Zrt) to 4iG Public
Limited Company and Corvinus Zrt for a cash consideration of HUF
660 billion (€1.6 billion).
–
On 7 February 2023, Vodafone Idea Limited (‘Vi’) converted liabilities
owed to the Government of India into equity shares. Following the
transaction, the Government of India’s shareholding in Vi was 33.4%,
and Vodafone Group’s shareholding was 31.7%.
–
On 14 February 2023, the Vodafone Group exercised warrants issued
by Vi in July 2022. The total consideration of INR 4.4 billion (€49
million) was settled on issuance of the warrants in July 2022 and
Vodafone Group received an additional 428 million shares in February
2023. Following the issuance of shares, Vodafone’s holding in Vi was
equivalent to a 32.3% shareholding, with the Government of India’s
shareholding being diluted to 33.1%.
–
On 21 February 2023, the Vodafone Group completed the sale of its
70% shareholding in Vodafone Ghana (Ghana Telecommunications
Company Limited) to Telecel Group.
–
On 7 March 2023, the Vodafone Group completed the sale of 50%
of its German fibre-to-the-home (‘FTTH’) company to Altice. The joint
venture will deploy FTTH to up to seven million homes in Germany
over six years and will offer wholesale access to all
telecommunications service providers, with Vodafone Germany
as the anchor tenant.
–
On 29 March 2023, the Vodafone Group announced the initiation
of procedures for a statutory merger and squeeze-out of minority
shareholders in Kabel Deutschland Holding AG (’KDG’). As of 31 March
2023, Vodafone owned 94.0% of KDG’s share capital. Vodafone KDG
will acquire the shares of all KDG minority shareholders, and KDG will
be merged into Vodafone KDG.
Read more in our financial statements, note 12
‘Investments in associate and joint arrangements’
Click here to view a simplified holding structure for
the Vodafone Group:
investors.vodafone.com/
VodafoneGroupHoldingStructure
Introduction
Our operating companies are generally subject to regulation governing
their business activities. Such regulation typically takes the form of
industry-specific law and regulation covering telecommunications
services and general competition (anti-trust) 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
period ended 31 March 2023. 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 European Electronic Communications Code (‘Code’) has updated the
telecoms regulatory framework in Europe. The transposition process was
due in December 2020 across all the Member States, but it has
experienced delays in several countries. As a consequence, the European
Commission (‘EC’) started infringement procedures against the remaining
Member States at the same time, and afterwards referred the breach to
the Court of Justice of the European Union (‘CJEU’). As of 31 March 2023,
all markets (within our footprint) have transposed the Code into national
legislation. Additionally, outside the EU, Albania is consulting on the
transposition of the Code into Albanian legislation, with aim of fully
aligning Albanian telecommunications legislation with the EU, as part of
the integration package for the accession of Albania to the EU.
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 are funded by a new temporary recovery instrument, the EU
Recovery and Resilience Facility (‘RRF’), worth nearly €750 billion, which
was adopted in December 2020. A significant amount is allocated
towards digital and green initiatives, with a minimum threshold of 20% of
the RRF to be allocated to digital and 37% to green initiatives. As of 31
March 2023, the EC had approved the national plans under the RRF for all
27 EU Member States, of which Czech Republic, Germany, Greece,
Ireland, Italy, Portugal, Romania and Spain are within Vodafone’s footprint.
In February 2022, the EC published its proposal for a regulation laying
down harmonised rules on fair access to and fair use of data (the ‘Data
Act’). The Regulation applies to manufacturers of connected devices, data
holders, recipients, and providers of data processing services (cloud
service providers) who will be subject to new requirements to support
switching and interoperability. Negotiations are ongoing.
The Digital Markets Act (‘DMA’) was agreed in March 2022 and published
in the official EU Journal in November 2022. The Commission is preparing
for implementation. Providers of online platforms who pass the
quantitative thresholds to be designated as ’gatekeepers’ (annual
turnover of €7.5 billion within the EU or a worldwide market valuation of
€75 billion, plus 45 million monthly active end-users and 10,000 business
users) will be subject new ex-ante regulatory obligations under the DMA.
This designation will take place between May and September 2023, with
a grace period of six months thereafter before enforcement proceedings
will begin in early 2024.
The Digital Services Act (‘DSA’) was also agreed in 2022 and published in
the official EU Journal in November 2022. Online platforms, who have
new obligations under the DSA, will be required to report their numbers
of active users to the Commission, to inform the designation of Very
Large Online Platforms (‘VLOPs’) who will be subject to additional risk
assessment and platform design obligations. For the VLOPs, enforcement
will begin in mid-2023, however, obligations for online platforms below
this threshold will not take effect until early 2024.
History and development
Regulation
Unaudited information
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On 1 July 2022, the EU-Roaming Recast Regulation entered into force,
prolonging the existing Regulation to ensure the continuation of
Roam-Like-at-Home (‘RLAH’) for 10 years. The new regulation reduces
the wholesale price caps for all services (data, voice and SMS) and brings
new measures on transparency (including on the use of non-terrestrial
networks), quality of service (‘QoS’) and access to emergency
communications. In October and December 2022, respectively, the
European Body of Regulators (‘BEREC’) published its final wholesale and
retail guidelines providing interpretation guidance to the Regulation.
On 15 September 2022, the European Commission adopted its draft
Cyber Resilience Act (‘CRA’), introducing horizontal cybersecurity
requirements for products with digital elements and associated services
that are placed on the European single market. Products in scope will be
subject to conformity assessment. Highly critical products will be subject
to European cybersecurity certification schemes. The EC’s draft CRA has
entered the co-legislative process which will be completed at the end of
2023 at the earliest, with new legislation coming into force during the
course of 2024 and applicable two years thereafter.
Negotiations on the Artificial Intelligence Act (‘AI Act’) are progressing,
with the Council agreeing a General Approach on the file in December
2022. Annex III of the draft AI Act describes a number of AI systems that
pose a ‘high risk’ and will therefore be subject to additional ex-ante
regulatory obligations and conformity assessment process before being
placed on the market. Amendments in the Parliament and Council
include ‘management of the Internet’ and ‘safety components of critical
digital infrastructure’ within Annex III.
On 15 December 2022, the European institutions jointly signed the
European Declaration on Digital Rights and Principles for the Digital
Decade (‘Declaration’), covering issues including inclusion, freedom of
choice online, online safety and security, and sustainable digitalisation.
The Declaration puts forward, inter alia, the commitment to “developing
adequate frameworks so that all market actors benefiting from the digital
transformation assume their social responsibilities and make a fair and
proportionate contribution to the costs of public goods, services and
infrastructures, for the benefit of all people living in the EU”.
In January 2023, the EU Digital Decade Policy Programme 2030 came
into force. The initiative, a decision of the European Parliament
(‘Parliament’) and the Council of the European Union (‘Council’), sets
targets to be met by Member States by 2030 on the following four key
pillars: a digitally skilled population and highly skilled digital professionals;
secure and sustainable digital infrastructures (target is to have all
European households connected to gigabit speeds and all populated
areas covered by 5G); digital transformation of businesses; and
digitalisation of public services. Member States should submit to the
Commission national digital decade strategic roadmaps showing how
they intend to meet these targets up to 2030. The EC is accountable for
continually monitoring progress towards these targets by means of key
performance indicators, which it is currently consulting on. The first report
towards progress is expected by September 2023.
In February 2023, the EC published the draft Gigabit Infrastructure Act
(‘GIA’) (revising the 2014 Broadband Cost Reduction Directive). The GIA
aims to reduce the cost of deploying gigabit electronic communication
networks by improving the permit granting process and specifying that
fees cannot exceed administrative costs. All permit-granting submissions
will need to go through a single information point in each Member State,
and timely approval of permits has been strengthened by cutting wait
times to four months and including the right to compensation for
damage caused by non-compliance with deadlines. The EC will publish an
implementing act specifying permit exemption categories, which are
currently not included in the proposal. This is set to be completed 18
months following GIA adoption. The GIA is expected to be passed by the
end of March 2024.
In addition to the GIA proposals, the Commission has published a
far-reaching consultation on the future of the electronic communications
sector and its infrastructure. The consultation contains over 60 questions
over four chapters, covering: (i) technological and market developments;
(ii) fairness for consumers; (iii) barriers to the single market; and (iv)
achieving a fair contribution from all digital players to connectivity
infrastructure. The deadline for response is 19 May 2023.
Country specific
Germany
In July 2022, the national regulatory authority (‘NRA’) (‘BNetzA’) published
its final regulation regarding the wholesale access markets (so-called
Market 3a). There have been no significant changes to the regulation of
copper network access; however the decision does implement a light
touch regulation of fibre access (‘FTTH’). For the first time in Germany, an
access regime for FTTH based on full equivalence of input will enforce the
equal treatment of wholesale demand and Deutsche Telekom’s (‘DT’)
retail arm. In addition, BNetzA will improve access to DT’s passive
infrastructure (ducts, masts) due to its significant market power on
broadband wholesale markets, including introducing regulated prices for
the first time. In addition, the new regulation prolongs current unbundled
local loop and bitstream access to DT’s copper network. Additionally,
BNetzA have published a new draft regulation for wholesale central access
(so-called Market 3b) for consultation. The final regulation is pending.
Licences for frequency allocations at 800MHz, parts of 1800MHz, and
2600MHz will expire at the end of 2025. Vodafone Germany currently
holds allocations at 800MHz and 2600MHz. BNetzA is therefore assessing
its options on how to proceed on the reallocation of this spectrum. It may
either re-auction the spectrum, or prolong the existing licences, or a
combination of these. BNetzA furthermore considers swapping the licence
terms for the 800MHz and 900MHz allocations. Thus, 900MHz instead of
800MHz spectrum would now be auctioned, and the 800MHz allocations
would be prolonged till 2033. BNetzA is expected to make a final decision
on next steps by the end of 2023.
In 2019, Vodafone acquired spectrum at 2.1GHz and 3.6GHz. The spectrum
allocation includes coverage obligations which, depending on the specifics
of the obligation, to be fulfilled by end of either 2022 or 2024. All mobile
network operators have reported on time on the status of obligation
fulfilment for the 2022 obligations, including given judicial or factual
circumstances hindering fulfilment. BNetzA is assessing the reports,
including Vodafone’s. Results are expected in June 2023, and it is possible
that BNetzA will decide to impose fines in event of non-fulfilment.
Italy
In March 2017, the NRA (‘AGCOM’) imposed a minimum billing period of
one month for fixed and converged 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 CJEU in order to assess if AGCOM has the power to impose
minimum and binding billing periods under EU law. The proceeding before
the CJEU is still pending, with a decision expected by the end of June 2023.
In January 2020, the national competition authority (‘AGCM’) ruled that
Vodafone Italy, Telecom Italia (‘TIM’), Fastweb and WindTre had
coordinated their commercial strategies relating to the transition from
four-week billing (28 days) to monthly billing, with the maintenance of an
8.6% price increase, in violation of Art.101 of Treaty on the Functioning of
the EU (‘TFEU’). In July 2021, the Administrative Tribunal published its
judgment annulling the AGCM’s decision and fine against Vodafone Italy
for lack of evidence, accepting all of Vodafone Italy’s defensive arguments.
According to the Tribunal, the alleged infringement was in fact the
outcome of the companies’ independent choices to comply with
legislation imposing an obligation to issue customer bills on a monthly
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Regulation (continued)
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basis. Prior to the Tribunal decision, Vodafone Italy had agreed to pay the
€60 million fine in 15 monthly instalments of €4 million each. Following
the Tribunal decision, Vodafone Italy started the process to be reimbursed
for the two instalments, totalling €8 million, paid so far. The AGCM has
submitted an appeal against the Tribunal decision to the Council of State.
The public hearing was held on 26 January 2023 and Vodafone Italy is
now waiting for the final decision of the Council of State, which is
expected before the end of May 2023.
In January 2021, TIM proposed a final fibre network co-investment to
AGCOM, which was approved in December 2021. However, TIM has
subsequently sought to amend the co-investment offer, to include the
ability for it to increase wholesale prices to account for inflation.
Therefore, in November 2022, AGCOM started a new market consultation
on the amended co-investment offer, including the new price indexing
mechanism. The proceedings are not yet concluded, and the final
decision is expected by June 2023.
United Kingdom
In November 2021, the Telecommunications Security Act (‘TSA’) was
passed into legislation. This modified the Communications Act to allow
the Secretary of State to issue High Risk Vendor (‘HRV’) designations that
restrict the usage of named equipment suppliers. In October 2022, a HRV
designation was issued mandating the removal of Huawei from 5G
networks by the end of 2027 and restricting the use of Huawei
equipment in UK telecoms networks in the meantime. The TSA also
allows the Secretary of State to issue security regulations requiring
providers of electronic communications networks and services to comply
with a specified Code of Practice. After consultation, in September 2022,
the Department for Digital, Culture, Media and Sport issued such security
regulations, and the associated Code of Practice clarified the
requirements and permitted longer implementation timescales for
Vodafone UK than had originally been proposed in the TSA. Similarly,
after consultation Ofcom has established the compliance regime
associated with the Code of Practice.
The NRA (‘Ofcom’) concluded a review of UK mobile market in December
2022. In its conclusions, Ofcom outlined its intention to make decisions
that will encourage investment in mobile networks. Ofcom also
confirmed it remained open-minded on the matter of mobile
consolidation. In parallel, the government’s Wireless Infrastructure
Strategy review, which is focused on future technologies and
infrastructure evolution in the sector, is expected to conclude by
September 2023.
Ofcom’s review of Net Neutrality rules is underway. While the UK is still
committed to high-level open internet alignment under the terms of the
UK/EU trade deal, Ofcom has proposed a set of measures designed to aid
clarity around the interpretation of the existing rules and outlined a more
permissive approach to matters such as tariff differentiation, network
slicing and zero rating. Ofcom is expected to conclude its review by
end of 2023.
In April 2023, the Government launched its Wireless Infrastructure
Strategy, which sets out its ambition for 5G between now and 2030.
The strategy recognises many of the commercial challenges facing the
sector, setting out a number of initiatives aimed at remedying them.
These include a plan to set out a clear evidence-based and forward-
looking rationale for setting spectrum fees by the end of 2023; an
open-minded approach to market consolidation and changes to planning
rules to make it easier to alter masts. The strategy also signals the
Government’s desire to incentivise take-up of new technology, including
releasing funding for local governments and ensuring digital connectivity
requirements are at the heart of all future major infrastructure projects.
Vodacom: South Africa (‘SA’)
The NRA (‘ICASA’) has concluded a Review of the Pro-competitive
Conditions imposed on relevant licensees in terms of the Call Termination
Regulations and published its draft findings document in March 2022.
However, Telkom (a licensed network operator) has initiated a High Court
review of the report. ICASA has been unable to conduct the cost
modelling or publish the final report. There is no information on expected
timelines for this challenge.
On 3 April 2022, ICASA published a set of amendments to the End-User
and Subscriber Service Charter Regulations 2016 for public comment.
The proposed amendments facilitate the easier transfer of unused voice,
SMS and data credit that is unused at the expiry of a billing period, which
under the rules shall not expire before a period of six months. Vodacom
SA submitted a written response to the proposed changes in June 2022
and participated in a public hearing held by ICASA in October 2022.
Other Europe: Spain; Ireland; Portugal; Romania;
Greece; Czech Republic; Albania
Spectrum
In Spain, spectrum auctions were held on 21 September 2022. Vodafone
Spain acquired two national concessions of 200MHz each, i.e. a total of
400MHz, for €8 million. Additionally, in December 2022 the National
State Budget was approved. The law sets a reduction of spectrum fees
(for 5G bands 700MHz and 3.5 GHz) for a temporary period of two years
(2022 – 2023). This has resulted in €11.2 million savings per year for
Vodafone Spain.
In Portugal, in July 2021 the NRA (‘ANACOM’) approved the renewal of
Vodafone Portugal’s rights of use for 900MHz and 1800MHz until 2033.
The spectrum renewal came with coverage obligations, which MNOs
reached an agreement for in June 2022, which was then approved by
ANACOM in July 2022. Vodafone Portugal has until 13 July 2023 to
comply with these additional obligations.
Additionally, Vodafone Portugal continues to appeal against certain
aspects of the auction conditions for the 5G auction, which concluded
in November 2021, claiming the conditions between new entrants and
mobile network operators were discriminatory. Legal proceedings are
still ongoing, with no expected date of conclusion, and the rights of
use remain in place.
In Ireland, the NRA (‘ComReg’) progressed with and concluded the main
stage of the multi-band spectrum auction in December 2022. Vodafone
Ireland acquired spectrum in the following bands: 2x10MHz in the
700MHz band, 2x20MHz in the 2.1GHz band, 2x35MHz and 30MHz in
the 2.6GHz band.
In Romania, in November 2022, the 5G auction ended with Vodafone
Romania acquiring 2x5MHz in the 700MHz band and 100MHz in the
3.5GHz band, rights of use starting in January 2023 and January
2026, respectively.
In Czech Republic, in November 2022, the NRA (‘CTU’) renewed
Vodafone Czech Republic’s 2100MHz licence until the end of 2041.
Renewal includes an obligation to keep Global System for Mobile
communication (‘GSM’) until June 2028 and to improve the quality of
mobile data service on motorways.
In Albania, there were delays to the planned auction of 5G spectrum in
all bands. This was due to the new entrant, 4iG, acquiring ONE
Telecommunications, which resulted in the NRA (‘AKEP’) supporting
the re-balancing of spectrum between the remaining Albanian MNOs,
including Vodafone Albania. However, the spectrum re-balancing process
was successfully closed on 1 January 2023, and the technical transfer
of the spectrum is expected to be finalised by 30 April 2023.
As a result, AKEP has announced that the 5G auction for all bands
(3.5MHz, 26GHz and 700MHz) will start after the technical transfer of the
spectrum. AKEP has started preliminary discussions with the operators on
their interest in the bands up for auction, which is expected to happen by
July 2023. There is no official document yet on the auction model, prices
and other terms.
Concerns over electromagnetic field (‘EMF’) triggered a residents’ petition
in Greece for the annulment of the 5G Auction Tender document. Despite
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Financials
Other information
the auction process completing in December 2020 and the assigned
spectrum already being in use by Vodafone Greece, the petition against
the Tender document was heard in January 2022, and a decision by the
Council of State is pending, estimated to conclude by mid-2023. In the
case that the petition is accepted, the assignment of 5G spectrum rights
will be declared invalid.
Universal Service Obligations (‘USO’) and Consumer Support
Measures
Vodafone Greece has three active appeals against the NRA (‘EETT’). These
are in relation to charges amounting to around €16.75 million. €9 million
of this is imposed in relation to the provision of universal services by
operator OTE for the period of 2010 through to 2011. Vodafone Greece
has appealed these costs, with the hearing due in November 2023.
The remaining €7.75 million has been imposed on Vodafone Greece due
to a decision of EETT on the USO net costs for the period of 2012-2016.
Vodafone Greece also appealed these costs, and a final decision is
expected by the end of 2023.
Similarly, Vodafone Portugal continues to challenge payment notices
totalling €34.8 million issued by ANACOM regarding 2012 to 2014
extraordinary compensation of USO costs.
In Czech Republic, based on the results of a public tender announced
by CTU in December 2022, Vodafone Czech Republic became one of
the universal service providers of subsidy (up to CZK 200 per month) to
people with certain social needs. The subsidy will be provided by the state
through designated service providers. The obligation to provide the
subsidy is valid from 1 January 2023 until 31 December 2025.
In relation to consumer customer relations, in Spain, there is a Bill pending
that will introduce new requirements around the provision of customer
care and managing customer complaints, and compensation. The text
of the Bill was approved by the Government on 31 May 2022, and it is
expected to be fully approved by end of 2023.
Networks
In Czech Republic, in March 2022, Vodafone Czech Republic and
T-Mobile Czech Republic announced a project for joint deployment of
fibre infrastructure, with the details of the process now being finalised.
Additionally, in Greece, approval for the 5G extension of the existing 4G
network sharing agreement between Vodafone Greece and Nova/Wind
Hellas is pending with EETT since August 2021. EETT requested both
MNOs for additional data, which was submitted by Vodafone in February
2023. A final decision is expected by July 2023.
In relation to network security, in Spain, the Government adopted their
Cybersecurity Law in March 2022. The law introduces the concept of
high-risk suppliers (‘HRS’) and creates a new framework: (i) for identifying
HRS; (ii) limiting the use of HRS in both the Core and the Access networks;
and (iii) for 5G operators to develop a risk assessment on their networks,
and a vendor diversification strategy. No supplier has been identified
as ‘high risk’ so far.
Roaming
Following the successful implementation of the RLAH regime between
the ‘West Balkans 6’ (‘WB6’) countries (Albania, Kosovo, Montenegro,
Macedonia, Serbia, Bosnia) which from July 2021 has removed roaming
surcharge rates between these countries, the Regional Cooperation
Council has started the discussions to extend roaming reduction tariffs
between the EU and WB6.
Access
In Portugal, in June 2022, ANACOM published its final decision regarding
the review of pricing of the Reference Duct Access Offer (‘RDAO’) and
Reference Poles Access Offer (‘RPAO’) provided by the incumbent, MEO.
ANACOM’s decision is based on evidence that action was needed in order
to ensure cost orientation of prices applicable to said infrastructure. The
decision was retrospectively applicable as of 15 February 2022 and
reduced RDAO’s monthly fees by 35% and RPAO’s monthly fees by 20%.
Additionally, in Greece, the EETT issued its final decision on wholesale
access markets in February 2023. In general, the EETT has maintained the
majority of the remedies, given the incumbent (‘OTE’) still has significant
market power (‘SMP’) in these markets. However, it has enhanced access
to passive infrastructure. In addition, for FTTH services, whilst it will retain
cost orientation obligations, it will lift the margin squeeze obligations on
OTE and allow OTE to provide volume discounts.
In Czech Republic, in September 2021, the CTU published a draft market
analysis of the mobile wholesale access market, proposing to impose
regulation on the wholesale price for mobile voice, SMS and data. The
CTU notified these draft measures to the EC, but the EC issued its decision
in February 2022, stating that the three criteria test was not met, and
ex-ante regulation based on a joint SMP finding was unjustified, and
therefore requested the CTU to withdraw the proposals. On 17 August
2022, the CTU published an amended draft market analysis for public
consultation. After the consultation process, the CTU notified draft
measures to the EC in December 2022. In January 2023, the EC opened
an in-depth investigation into the notified measures, which concluded on
24 March 2023, with the EC adopting a decision requiring the CTU to
withdraw its proposed draft measure. The Commission’s decision means
that CTU cannot adopt its draft measure as notified.
Other Africa and Middle East: Democratic Republic
of the Congo (DRC); Tanzania; Mozambique; Lesotho;
Turkey; Egypt.
Devices and registration
In Tanzania, the NRA (‘TCRA’) issued regulations that introduce a
biometric registration requirement for SIMs, and restrict the number of
SIMs a customer may own. The TCRA has directed disconnection of
unverified SIMs in this category by 13 February 2023. Vodacom Tanzania
consequently disconnected unverified customers as directed, and is now
engaging with TCRA and customers to facilitate verification and
re-activation, including through a self-verification process that has been
approved by TCRA.
Similarly, in Lesotho, the Minister of Communication introduced new SIM
Registration regulations, which must be complied with by 24 June 2023.
The regulations require the operator to enact biometric registration,
establish a central database with the Communications Authority,
re-register SIMs with a six-month timeline and enforce penalties of Maloti
5k per non-compliant SIM card.
Spectrum
In Lesotho, Vodacom Lesotho had extended its right to use 3500MHz trial
5G spectrum up to 31 March 2022 when it vacated the spectrum bands
upon expiry of these rights of use. Vodacom Lesotho is still engaging with
the authorities to convert the trial licence to a permanent licence, which
is under consideration by the NRA (‘LCA’).
In Mozambique, Vodacom Mozambique is seeking to extend the rights
to use spectrum that was temporarily assigned to it during COVID-19.
Vodacom Mozambique entered discussions with the NRA (‘ARECOM’)
to acquire this spectrum as a permanent licence. The negotiations
concluded in January 2023, whereby ARECOM has accepted Vodacom
Mozambique’s offer of US$12.5 million for three bands, namely: acquire
the 1800MHz and 2100MHz, coupled with 900MHz based on a
staggered payment plan over five years, and subject to a down payment
of US$40 million.
In Turkey, in April 2023, the NRA (BTK) issued a decision providing a
six-year extension to the GSM Concession Agreement (2G/900MHz
licence) which was due to expire in April 2023. The extension fee for
Vodafone Turkey is €120m (+18% VAT).
In Tanzania, the TCRA convened a spectrum auction on 11 October 2022.
Vodacom Tanzania participated in the auction and successfully acquired
licences for spectrum in the 700MHz, 2300MHz and 2600MHz bands.
Additionally in Tanzania, on 1 September 2022, Vodacom Tanzania
successfully launched its 5G network using the new 3.5GHz frequencies.
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Regulation (continued)
Unaudited information
Regulatory and legal disputes and fines
In the Democratic Republic of the Congo (‘DRC’), Vodacom DRC are in
ongoing negotiations with the NRA (‘ARPTC’) in relation to new regulatory
fees that were first introduced in in March 2022. On 22 October 2022, the
MNOs (including Vodacom DRC), Minister of Communications and ARPTC
reached an agreement and signed a Memorandum of Understanding
(‘MoU’) on the new regulatory fees, setting out revised fees and modality
of payment. The MoU also provides for resolution of any pending fines
and legal actions in this regard. Execution of each party’s obligations
under the MoU is ongoing.
In Tanzania, the TCRA found that Vodacom Tanzania had failed to comply
with regulatory QoS targets, mostly in the Zanzibar region, and has
ordered Vodacom Tanzania to execute network improvement, with threat
of fines if it fails to comply.
In Tanzania, the Finance Act 2021 introduced a mobile money levy which
charged a rate of TZ10 to TZ10,000 for the use of mobile money services.
However, the Minister of Finance has since reduced the original levy by
60% and carved out transfers from a bank account to a mobile money
account, and transfers between users’ own bank or mobile accounts.
There is further ongoing dialogue between the mobile operators’ industry
association and the Ministry of Finance on the possibility of eliminating
the levy completely.
In Lesotho, the LCA issued a penalty of M134 million to Vodacom
Lesotho on grounds that its statutory auditor was not independent.
Vodacom Lesotho has appealed the fine to the Court and has ultimately
agreed to settle with the LCA. The Court issued an order of settlement of
the matter, in terms of which the Court inter alia ordered Vodacom
Lesotho to pay a total of M4 million to LCA (with M2 million payable by
the end of November 2022, and the remaining M2 million payable within
two years). This matter is now closed.
Networks and access
In Turkey, in October 2021, the ICTA introduced a margin squeeze test
on wholesale reference offers. Subsequently on 1 June 2022, ICTA
permitted a price increase of 67% for Bitstream Wholesale Access Costs,
to account for the high inflationary environment. Vodafone Turkey then
requested a margin squeeze test from ICTA against the incumbent
(Türk Telekom), which then increased its fixed broadband retail tariffs.
Additionally, the ICTA has not finalised Türk Telekom’s Reference
Offer revision process for two years; therefore, regulated fibre access
model and revisions for wholesale service level agreements (‘SLAs’)
are still expected.
In Tanzania, the TCRA launched a study to update the Interconnection
Rates Determination No.5/2017 to determine rates for termination of
domestic traffic on mobile networks. The final rate derived from the study,
once completed, shall apply retrospectively from 1 January 2023, up to
31 December 2028.
In Egypt, Vodafone Egypt is in the process of shutting down 3G
technology by end of 2026. The NRA (‘NTRA’) will define an industry
3G shutdown roadmap in line with Vodafone Egypt’s own roadmap.
Mobile termination rates (‘MTRs’)
Country by region
2020
1
2021
1
2022
1
2023
1
Europe
Germany (€ cents)
0.90
0.78
0.55
0.40
Italy (€ cents)
0.76
0.67
0.55
0.40
UK (GB£ pence)
0.479
0.468
0.379
0.391
Spain (€ cents)
0.64
0.64
0.55
0.40
Ireland (€ cents)
0.55
0.43
0.43
0.40
Portugal (€ cents)
0.39
0.36
0.36
0.36
Romania (€ cents)
0.76
0.76
0.55
0.40
Greece (€ cents)
0.622
0.622
0.55
0.40
Czech Republic (CZK)
0.248
0.248
0.1406
0.0981
Albania (ALL)
2
1.11
1.11
1.11
1.11
Africa and Middle East
South Africa (ZAR)
0.10
0.09
0.09
0.09
Democratic Republic of Congo (USD cents)
2.00
2.00
2.00
1.50
Lesotho (LSL/ZAR)
0.12
0.09
0.09
0.09
Mozambique (meticash) (Dollar cents)
3
0.37
0.31
0.25
0.18
Tanzania (Tanzanian shillings)
5.20
2.60
2.00
2.00
Turkey (lira)
0.03
0.03
0.03
0.02
Egypt (PTS/Piastres)
11.00
11.00
11.00
11.00
Notes:
1.
All MTRs are based on end of financial year values.
2.
Albania:
There is no official decision so far regarding the reduction of the national MTRs below 1.11 ALL/min. In May 2021 the NRA approved the draft “Results of the cost model of wholesale mobile
network services” based on a study by an external consultant. A glidepath was proposed aiming at a maximum MTR of 1.02 ALL/min in 2022 but the NRA never issued a decision imposing the
mentioned reduction.
3.
Mozambique:
New cost model completed and glidepath introduced from January 2021.
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Overview of spectrum licences at 31 March 2023
700 MHz
800 MHz
900 MHz
1400 / 1500
MHz
1800 MHz
2.1 GHz
2.3 GHz
2.6 GHz
3.5 GHz
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Quantity
1
(Expiry Date)
Germany
2x10 (2033)
2x10 (2025)
2x10 (2033)
20 (2033)
2x25 (2033)
2x15
2
(2040)
n/a
2x20+25
(2025)
90 (2040)
2x5
2, 3
(2025)
Italy
18
2x10 (2037)
2x10 (2029)
2x10 (2029)
20 (2029)
2x15 (2029)
2x15 (2029)
n/a
2x15 (2029)
80 (2037)
2x5
3
(2029)
UK
4
n/a
2x10 (2033)
2x17.4
20 (2023)
2x5.8
2x14.8
n/a
2x20+25
(2033)
50 (2038)
40 (2041)
3, 5
Spain
18
2x10 (2041)
6
2x10 (2031)
2x10 (2028)
n/a
2x20 (2030)
2x15+5
(2030)
n/a
2x20+20
(2030)
90 (2038)
Ireland
2x10 (2042)
2x10 (2030)
2x10 (2030)
n/a
2x25 (2030)
2x20 (2042)
n/a
2x35 + 30
(2042)
105
7
(2032)
Portugal
2x10 (2041)
2x10 (2027)
2x5 (2033)
n/a
2x6 (2033)
2x20 (2033)
n/a
2x20+25
(2027)
90 (2041)
2x5
3
(2027)
2x14
3
(2027)
Romania
40 (2025)
2x5 (2047)
2x10 (2029)
2x10 (2029)
n/a
2x30 (2029)
2x14.8 (2031)
n/a
n/a
100 (2047)
8
Greece
18
2x10 (2036)
2x10 (2030)
2x15 (2027)
n/a
2x10 (2027)
2x20 (2036)
n/a
2x20+20
(2030)
140 (2035)
2x15
3
(2035)
Czech Republic
2x10 (2036)
2x10 (2029)
2x10 (2029)
n/a
2x27 (2029)
2x20 (2041)
9
n/a
2x20 (2029)
100 (2032)
10
Albania
11
n/a
2x10 (2034)
2x8 (2031)
n/a
2x9 (2031)
2x15+5
(2025)
n/a
2x20+20
(2030)
n/a
2x1.8
3
(2030)
2x14
3
(2030)
2x5
3
(2029)
2x4
3
(2024)
2x5
3
(2024)
2x5
3
(2031)
South Africa
12
2x10
n/a
2x11
13
n/a
2x12
2x15
13
n/a
80
10
Democratic Republic
of Congo
n/a
2x10 (2038)
2x6 (2038)
n/a
2x18 (2038)
2x10+15
(2032)
n/a
n/a
2x15 (2026)
Lesotho
n/a
2x20
14
2x22
14
n/a
2x30
14
2x20
14
n/a
n/a
2x21
14
(2036)
79 (Trial)
Mozambique
n/a
2x10 (2039)
2x10 (2039)
n/a
2x20 (2039)
2x15+5
(2039)
n/a
n/a
100
15
(2024)
2x5
3, 15
(2028)
2x5
3, 15
(2028)
Tanzania
2x10 (2033)
2x10 (2037)
n/a
2x12.5 (2031)
n/a
2x10 (2031)
2x15 (2031)
70 (2037)
20 (2037)
2x7+2x14
(2031)
Turkey
n/a
2x10 (2029)
2x11 (2023)
16
n/a
2x10 (2029)
2x15+5
(2029)
n/a
2x15+10
(2029)
n/a
2x1.4
3
(2029)
Egypt
n/a
n/a
2x12.5 (2031)
n/a
2x10 (2031)
2x20 (2031)
n/a
40 (2031)
17
n/a
Notes:
1.
All:
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: At present we have 2x15 MHz (2040) and 2x5 (2025); in January 2026 will have 2x20 MHz (2040).
3.
Multiple:
Blocks within the same spectrum band but with different licence expiry dates are separately identified.
4.
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.
5.
UK:
Currently in the transition period of the 3.4-3.8 GHz defragmentation deal with Virgin Media O2. Once the transition is completed in 2025, Vodafone will have 90 MHz with an expiry date of 2038.
6.
Spain:
The initial term of the licence is 20 years, with the option to renew the licence for an additional 20 years as long as the licence conditions have been met.
7.
Ireland:
105 MHz in cities, 85 MHz in regions.
8.
Romania:
100 MHz 3.5 GHz licence to start upon expiry of the original 40 MHz licence.
9.
Czech Republic:
Early extension to the 2.1 GHz licence achieved in 2022, extending the term of the original licence from 2025 to 2041.
10.
Czech Republic:
Includes 40 MHz acquired from PODA, with same licence duration as the other 60 MHz.
11.
Albania:
As part of the merger remedies from the ONE-ALBtelecom merger, Vodafone has agreed to acquire the following spectrum from the merged entity effective 1 May 2023: 2x4.5 MHz of 1800 MHz
expiring June 2024; 2x7.2 MHz of 1800 MHz expiring March 2034; 2x5 MHz of 2.1 GHz expiring June 2026; and 2x20 MHz of 2.6 GHz expiring May 2031.
12.
South Africa:
Under South Africa’s licensing regime, Vodacom has been assigned a network and service operating licence. This operating licence permits Vodacom South Africa to be assigned spectrum
licences which are valid for the duration of the operating licence, subject to annual renewal through the payment of annual spectrum usage regulatory fees. Vodacom’s operating licence will expire in 2029.
13.
South Africa:
The South African Regulator has indicated that it has approved Vodacom’s 2100 MHz licence amendment which effectively returns the 2100TDD spectrum. Surrender of 2x1 MHz in 900
MHz due to band harmonisation imminent.
14.
Lesotho:
Vodacom’s Lesotho spectrum licences are attached to a unified services licence and renewed annually. 1x79 MHz of 3.5GHz has been licensed on a temporary basis and is pending renewal.
15.
Mozambique:
3.5GHz spectrum for 5G trial which was extended to 2024. 2x5 of 2.1GHz and 2x5 of 1800 MHz have been acquired for 5 years expirying in 2028. A further 2x2 MHz of 900 MHz was also
acquired expiring in line with the overall unified licence.
16.
Turkey:
Extension of 2x11 MHz licence up to 30 April 2029 was completed on 18 April 2023. Licence extension Protocol is subject to Council of State’s opinion which is pending.
17.
Egypt:
The first tranche of 20 MHz of 2.6 GHz was made available In November 2021 and the second tranche of 20 MHz was received in January 2022.
18.
Multiple:
We currently hold mmWave 26 GHz licences in Italy, Spain and Greece.
241
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Annual Report 2023
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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 2023 filed with
the SEC (the ‘2023 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 2023 Form 20-F or incorporated by reference into any filings by us under
the Securities Act. Please see ‘Documents on display’ on page 233 for information on how to access the 2023 Form 20-F as filed with the SEC. The 2023
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 2023 Form 20-F.
Item
Form 20-F caption
Location in this document
Page
1
Identity of Directors, senior management and advisers
Not applicable
–
2
Offer statistics and expected timetable
Not applicable
–
3
Key information
3B Capitalisation and indebtedness
Not applicable
–
3C Reasons for the offer and use of proceeds
Not applicable
–
3D Risk factors
Principal risk factors and uncertainties
51 to 56
4
Information on the Company
4A History and development of the Company
History and development
236
Contact details
Back cover
Shareholder information: Contact details for Equiniti and EQ Shareholder Services
230
Shareholder information: Articles of Association and applicable English law
231
Note 1 ‘Basis of preparation’
127 to 133
Note 2 ‘Revenue disaggregation and segmental analysis’
134 to 137
Note 7 ‘Discontinued operations and assets held for sale’
151
Note 11 ‘Property, plant and equipment’
155 to 156
Note 27 ‘Acquisitions and disposals’
194 to 195
Note 28 ‘Commitments’
196
Documents on display
233
4B Business overview
About Vodafone
2
Operating in a rapidly changing industry
3
Key performance indicators
4 to 5
Chair’s message
6
Chief Executive’s statement and strategic roadmap
7
Mega trends
8
Our financial performance
16 to 25
Purpose, sustainability and responsible business
26 to 50
Note 2 ‘Revenue disaggregation and segmental analysis’
134 to 137
Regulation
236 to 240
4C Organisation structure
Note 31 ‘Related undertakings’
201 to 209
Note 12 ‘Investments in associates and joint arrangements’
157 to 164
Note 13 ‘Other investments’
165
4D Property, plant and equipment
Note 11 ‘Property, plant and equipment’
155 to 156
4A
Unresolved staff comments
None
–
5
Operating and financial review and prospects
5A Operating results
Our financial performance
16 to 25
Cyber security
42 to 43
Note 21 ‘Borrowings’
174 to 175
Regulation
236 to 240
5B Liquidity and capital resources
Our financial performance: Cash flow, capital allocation and funding
23 to 25
Long-term viability statement
57
Directors’ statement of responsibility: Going concern
112
Note 19 ‘Cash and cash equivalents’
170
Note 21 ‘Borrowings’
174 to 175
Note 22 ‘Capital and financial risk management’
176 to 185
Note 28 ‘Commitments’
196
5C Research and development,
patents and licences etc.
Note 10 ‘Intangible assets’
153 to 154
Regulation: Overview of spectrum licences
241
5D Trend information
Key performance indicators
4 to 5
Mega trends
8
Long-term viability statement
57
5E Critical accounting estimates
Note 1 ‘Basis of preparation’
127 to 133
242
Vodafone Group Plc
Annual Report 2023
Strategic report
Governance
Financials
Other information
Item
Form 20-F caption
Location in this document
Page
6
Directors, senior management and employees
6A Directors and senior management
Our Board
65 to 67
Our governance structure
68
Our Executive Committee
69
Division of responsibilities
70
6B Compensation
Annual Report on Remuneration: 2023 Remuneration
92 to 106
Remuneration Policy
86 to 91
Note 23 ‘Directors and key management compensation’
186
6C Board practices
Our Board
65 to 67
Our governance structure
68
Division of responsibilities
70
Board activities and principal decisions
71 to 72
Nominations and Governance Committee
74 to 76
Audit and Risk Committee
77 to 82
ESG Committee
83 to 84
Remuneration Committee
85 to 86
Remuneration policy
86 to 91
Shareholder information: Articles of Association and applicable English law
231
6D Employees
Our people strategy
13 to 15
Note 24 ‘Employees’
187
6E Share ownership
Annual Report on Remuneration: 2023 Remuneration
92 to 106
Remuneration Policy
86 to 91
All-employee share plans
97
Note 26 ‘Share-based payments’
192 to 193
7
Major shareholders and related party transactions
7A Major shareholders
Shareholder information: Major shareholders
231
7B Related party transactions
Annual Report on Remuneration: 2023 Remuneration
92 to 106
Note 13 ‘Other investments’
165
Note 23 ‘Directors and key management compensation’
186
Note 29 ‘Contingent liabilities and legal proceedings’
196 to 199
Note 30 ‘Related party transactions’
200
7C Interests of experts and counsel
Not applicable
–
8
Financial information
8A Consolidated statements and other
financial information
Consolidated financial statements
123 to 210
Report of independent registered public accounting firm
–
Note 29 ‘Contingent liabilities and legal proceedings’
196 to 199
Dividend rights
232
8B Significant changes
Not applicable
–
9
The offer and listing
9A Offer and listing details
Shareholder information
230 to 235
9B Plan of distribution
Not applicable
–
9C Markets
Shareholder information: Rights attaching to the Company’s shares
232
9D Selling shareholders
Not applicable
–
9E Dilution
Not applicable
–
9F Expenses of the issue
Not applicable
–
10
Additional information
10A Share capital
Note 17 ‘Called up share capital’
169
10B Memorandum and Articles of Association
Shareholder information
230 to 235
Description of securities registered
–
10C Material contracts
Shareholder information: Material contracts
233
10D Exchange controls
Shareholder information: Exchange controls
233
10E Taxation
Shareholder information: Taxation
233 to 235
10F Dividends and paying agents
Note 9 ‘Equity dividends’
152
Shareholder information
230 to 235
10G Statements by experts
Not applicable
–
10H Documents on display
Shareholder information: Documents on display
233
10I Subsidiary information
Note 31 ’Related undertakings’
201 to 209
243
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Other information
Item
Form 20-F caption
Location in this document
Page
11
Quantitative and qualitative disclosures about
market risk
Note 22 ‘Capital and financial risk management’
176 to 185
12
Description of securities other than equity securities
12A Debt securities
Not applicable
–
12B Warrants and rights
Not applicable
–
12C Other securities
Not applicable
–
12D American depositary shares
Fees payable by ADR holders
–
13
Defaults, dividend arrearages and delinquencies
Not applicable
–
14
Material modifications to the rights of security holders
and use of proceeds
Not applicable
–
15
Controls and procedures
Governance
60 to 109
Directors’ statement of responsibility: Controls over financial reporting
112
Report of independent registered public accounting firm
–
16
Reserved
16A Audit Committee financial expert
Board Committees
74 to 86
16B Code of ethics
Our US listing requirements
107
16C Principal accountant fees and services
Note 3 ‘Operating profit’
138
Board Committees: Audit and Risk Committee: External audit
82
16D Exemptions from the listing standards
for audit committees
Not applicable
–
16E Purchase of equity securities by the issuer
and affiliated purchasers
Share buybacks
25
16F Change in registrant’s certifying accountant
Not applicable
–
16G Corporate governance
Our US listing requirements
107
16H Mine safety disclosure
Not applicable
–
17
Financial statements
Consolidated financial statements
123 to 210
18
Financial statements
Consolidated financial statements
123 to 210
Report of independent registered public accounting firm
–
19
Exhibits
Index to Exhibits
–
Form 20-F cross reference guide (continued)
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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, including the Group’s strategy, 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, 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;
–
the impact of regulatory and legal proceedings involving the Group
and of scheduled or potential regulatory changes; and
–
climate change, including emissions targets and other ESG goals,
commitments, targets and ambitions, climate-related scenarios
or pathways and methodologies we use to assess our progress
in relation to these.
Forward-looking statements are sometimes but not always identified
by their use of a date in the future or such words as ‘anticipates’, ‘aims’,
‘could’, ‘may’, ‘should’, ‘expects’, ‘believes’, ‘intends’, ‘plans’, ‘goals’,
‘estimates’, 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 view technologies, products and services;
–
evolving cyber threats to the Group’s services and confidential data;
–
the Group’s ability to embed responses to climate-related risks into
business strategy and operations;
–
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;
–
slower 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, pint 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;
–
climate change projection risk including, for example, the evolution
of climate change and its impacts, changes in the scientific assessment
of climate change impacts, transition pathways and future risk
exposure and limitations of climate scenario forecasts;
–
amendments to or new ESG reporting standards, models
or methodologies;
–
changes in ESG data availability and quality which could result in
revisions to reported data going forward; and
–
climate scenarios and the models that analyse them have limitations
that are sensitive to key assumptions and parameters, which are
themselves subject to some uncertainty.
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 ‘Principal risk factors and
uncertainties on pages 51 to 56 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, including other
supporting disclosures located thereon such as videos, our ESG
Addendum and our TCFD report, 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 2023 Annual Report on Form 20-F.
Ernst & Young LLP has neither examined, compiled, nor performed any
procedures with respect to the forward-looking statements. Accordingly,
Ernst & Young LLP does not express an opinion or provide any other form
of assurance on such information.
245
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Other information
The definitions of non-GAAP measures are included in the ‘Non-GAAP measures’ section on pages 219 to 229.
3G
A cellular technology based on wide band code division multiple access delivering voice and faster data services.
4G
4G or long-term evolution (‘LTE’) technology offers even faster data transfer speeds than 3G/HSPA.
5G
5G is the fifth-generation wireless broadband technology which provides better speeds and coverage than the current 4G.
ADR
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.
ADS
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.
Africa
Comprises the Vodacom Group and business in Egypt.
AGM
Annual General Meeting.
Applications (‘apps’)
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.
ARPU
Average revenue per user, defined as customer revenue and incoming revenue divided by average customers.
B2C
Business-to-Consumer refers to the process of selling products and services directly between a business and consumers who
are the end-users.
Capital additions
Comprises the purchase of owned property, plant and equipment and other intangible assets, other than licence and
spectrum payments and integration capital additions.
Churn
Total gross customer disconnections in the period divided by the average total customers in the period.
Cloud services
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.
CO
2
e
CO
2
e, or Carbon dioxide equivalent, is a term for describing different greenhouse gases in a common unit. For any quantity
and type of greenhouse gas, CO
2
e signifies the amount of CO
2
which would have the equivalent global warming impact.
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.
Depreciation and amortisation
The accounting charge that allocates the cost of tangible or intangible assets, whether owned or leased, to the income
statement over its useful life. The measure includes the profit or loss on disposal of property, plant and equipment, software
and leased assets.
Eliminations
Refers to the removal of intercompany transactions to derive the consolidated financial statements.
Europe
Comprises the Group’s European businesses and the UK.
FCA
Financial Conduct Authority.
Financial services revenue
Financial services revenue includes fees generated from the provision of advanced airtime, overdraft, financing and
lending facilities, as well as merchant payments and the sale of insurance products (e.g. device insurance, life insurance
and funeral cover).
Fixed service revenue
Service revenue (see overleaf) relating to the provision of fixed line and carrier services.
Fibre to the cabinet (‘FTTC’)
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 (‘FTTH’)
Provides an end-to-end fibre optic connection the full distance from the exchange to the customer’s premises.
GAAP
Generally Accepted Accounting Principles.
GSMA
Global System for Mobile Communications Association.
ICT
Information and communications technology.
IFRS
International Financial Reporting Standards.
Incoming revenue
Comprises revenue from termination rates for voice and messaging to Vodafone customers.
Integration capital additions
Capital additions 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.
LTM
Last twelve months.
Definition of terms
Unaudited information
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Other information
Mark-to-market
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.
Mbps
Megabits (millions) of bits per second.
Mobile broadband
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 (see below) 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.
Mobile virtual network operator
(‘MVNO’)
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.
Net Promoter Score (‘NPS’)
Net Promoter Score is a customer loyalty metric used to monitor customer satisfaction.
Operating expenses
Comprise primarily sales and distribution costs, network and IT-related expenditure and business support costs.
Other Europe
Other Europe markets include Portugal, Ireland, Greece, Romania, Czech Republic and Albania.
Other Markets
Other Markets comprise Turkey and Egypt.
From 1 April 2023, the Group will revise its segments by moving Vodafone Egypt from the Other Markets segment to reflect
the effective date of changes made to the Group’s internal reporting structure following the transfer of Vodafone Egypt to the
Vodacom Group in December 2022.
Other revenue
Other revenue principally includes equipment revenue, interest income, income from partner market arrangements and lease
revenue, including in respect of the lease out of passive tower infrastructure.
Partner markets
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.
Penetration
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.
Petabyte
A petabyte is a measure of data usage. One petabyte is a million gigabytes.
Pps
Percentage points.
RAN
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.
Reported growth
Reported growth is based on amounts reported in euros and determined under IFRS.
Restructuring costs
Costs incurred by the Group following the implementation of discrete restructuring plans to improve overall efficiency.
Retail service revenue
Retail service revenue comprises Service revenue excluding Mobile Virtual Network Operator (‘MVNO’) and Fixed Virtual
Network Operator (‘FVNO’) wholesale revenue.
Return on capital employed (‘ROCE’)
Return on capital employed reflects how efficiently we are generating profit with the capital we deploy.
Revenue
The total of Service revenue (see below) and Other revenue (see above).
Roaming and Visitor
Roaming: allows customers to make calls, send and receive texts and data on other operators’ mobile networks, usually
while travelling abroad. Visitor: revenue received from other operators or markets when their customers roam on one of
our markets’ networks.
Smartphone penetration
The number of smartphone devices divided by the number of registered SIMs (excluding data only SIMs) and
telemetric applications.
Service revenue
Service revenue is all revenue related to the provision of ongoing services to the Group’s consumer and enterprise customers,
together with roaming revenue, revenue from incoming and outgoing network usage by non-Vodafone customers and
interconnect charges for incoming calls.
SME
Small and medium-sized enterprises.
SOHO
Small-Office-Home-Office customers.
Spectrum
The radio frequency bands and channels assigned for telecommunication services.
Task Force on Climate-related
Financial Disclosures (‘TCFD’)
TCFD is a global framework for companies and other organisations to develop more effective climate-related financial
disclosures through their existing reporting processes.
Vodafone Business
Vodafone Business is part of the Group and partners with businesses of every size to provide a range of business-
related services.
Vodafone Procurement Company
(‘VPC’)
VPC is Vodafone’s procurement company, leading purchasing and supplier management for Vodafone as a whole. Based
in Luxembourg, VPC manages most of Vodafone’s spending with suppliers worldwide. VPC supports the needs of Vodafone’s
operating companies and group functions, and sells procurement services to third parties.
_VOIS
_VOIS (Vodafone Intelligent Solutions) has grown from a single entity service provider to a global purpose-driven
company that provides a comprehensive portfolio of services to Vodafone and other telecommunications operators
throughout the world.
WACC
Weighted average cost of capital.
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Notes
248
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Other information
References to Vodafone are to Vodafone Group Plc and references to Vodafone Group are to Vodafone Group Plc and its subsidiaries
unless otherwise stated. Vodafone, the Vodafone Speech Mark Devices, Vodacom and Together We Can are trade marks owned by Vodafone.
The Vantage Towers Logo and the VT Monogram Logo are trade marks owned by Vantage Towers AG. Other product and company names
mentioned herein may be the trade marks of their respective owners.
This report contains references to Vodafone’s website, and other supporting disclosures located thereon such as videos, our ESG Addendum,
our TCFD report, and our cyber security factsheet, 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 or our Annual Report on Form 20-F.
© Vodafone Group 2023
Consultancy and design by Black Sun Global
www.blacksun-global.com
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