Exhibit 99.1
Table of contents
| ||
Reports of independent registered public accounting firm (PCAOB ID 01438) |
| |
| | |
| | |
| | |
| | |
| | |
| |
The reports of the independent registered public accounting firm and the consolidated financial statements have been extracted, without adjustment, from pages 123 to 211 of the Annual Report on Form 20-F.
F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Vodafone Group Plc
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Vodafone Group Plc (the Group) as of 31 March 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended 31 March2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group at 31 March 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended 31 March 2023, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Group’s internal control over financial reporting as of 31 March 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organisations of the Treadway Commission (2013 framework) and our report dated 21 June 2023 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Carrying value of cash generating units, including goodwill
| |
Description of the matter | 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 of 31 March 2023, the Group has recorded €27,615 million of goodwill. The Group’s assessment of the VIU of its CGUs involves estimation and judgement about the future performance of the local market businesses. In particular, the determination of the VIUs for the Germany, UK, Italy and Spain CGUs was sensitive to the significant assumptions of projected adjusted EBITDAaL growth, long-term growth rates and discount rates. |
F-2
Auditing the Group’s annual impairment test for the Germany, UK, Italy and Spain CGUs was complex and involved significant auditor judgement, given the estimation uncertainty related to the significant assumptions described above, as applied in the VIU models and the sensitivity of these VIU models to fluctuations in those assumptions. | |
How we addressed the matter in our audit | 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 assessed, with the help of a valuation specialist, the methodology applied in the VIU models, as compared to the requirements of IAS 36 and tested the mathematical accuracy of the VIU models. For those CGUs mentioned above, we performed procedures to test and assess the significant assumptions used in the VIU models, which included 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. We also compared CGU EBITDAaL multiples to market listed peers and considered independent analyst valuations for individual CGUs, where available. For each CGU mentioned above, we compared the cash flow projections used in the VIU models to the information approved by the Group’s Board of Directors and evaluated the historical accuracy of management’s business plans, which underpin the VIU models, by comparing prior year forecasts to actual results in the current period. With the assistance of a valuation specialist, for the CGUs mentioned above, we compared long-term growth rates and discount rates against EY independently determined ranges and performed 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 would indicate additional disclosures were appropriate. 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. |
Revenue Recognition
| |
Description of the matter | 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, contract assets of €3,557 million and contract liabilities of €2,543 million for the year ended and 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, as described in the accounting policy in Note 2 to the consolidated financial statements. 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, as well as the potential for significant postings outside of the aforementioned IT systems. 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. |
How we addressed the matter in our audit | We, together with our IT professionals, obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Group’s revenue recognition process, including 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 significant revenue streams in certain components, our audit procedures included performing a correlation analysis between invoiced revenue, receivables and cash receipts and performing incremental audit procedures, such as agreeing items to source documents, where the results of the correlation analysis was not as expected; For other components where correlation analysis was not performed, our audit procedures included, reperforming billing data to general ledger end-to-end reconciliations, which included assessing the accuracy of the data inputs to underlying source documentation, including contractual agreements, where relevant; testing the mathematical accuracy and completeness of the reconciliations and any material reconciling items, including testing significant revenue postings outside of the billing systems by reference to underlying source documentation; and |
F-3
We recalculated the revenue recognised to evaluate whether the processing of the revenue recognition by the Group’s IT systems and automated processes was in accordance with IFRS 15. |
Recoverability of deferred tax assets in Luxembourg
| |
Description of the matter | 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 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 35-39 years. The Luxembourg companies’ income and therefore future taxable profits is derived from the Group’s internal financing and procurement and roaming activities. The forecast future finance income can vary based on forecast interest rates and intercompany debt levels, which in turn impacts the timeframe over which the deferred tax asset is forecast to be recovered. Furthermore, during the course of the year Luxembourg owned direct and indirect interests in the Group’s operating activities. The value of these investments is primarily based on the Group’s value in use calculations. Changes in the value of the interests in these operating activities, for the purposes of local Luxembourg statutory financial statements, can result in impairment reversals or charges, which are taxable or tax deductible, respectively, under local law. Auditing the Group’s recognition and recoverability of deferred tax assets in Luxembourg involves judgements and estimation uncertainty in relation to the availability of future taxable profits and the period of time over which it is expected to utilise these assets, results in increased estimation uncertainty. |
How we addressed the matter in our audit | 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 profits, 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, our audit procedures included, among others, assessing the existence of available losses, including the impact of current year taxable profits resulting from procurement, roaming and finance income. Our procedures also included evaluating management’s position on the recoverability of the losses with respect to local tax law and tax planning strategies adopted, testing the calculation of the valuation of entities within the Luxembourg structure during the year by, among other procedures, to cashflow projections applied in the most recent value in use calculations, net asset valuations and share price data and assessing the Luxembourg ownership structure. We assessed the reasonableness of the forecasted procurement and roaming taxable profits utilised in management’s realisability assessment, by comparing to historical actual profits and with evidence obtained from other areas of our audit. To evaluate the forecast finance income, our procedures included, on a sample basis, recalculating finance 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. We assessed whether evidence exists that is contrary to management’s stated intention that the financing structures will remain in place or that indicates it is not probable that sufficient future taxable profits will exist. We also assessed the adequacy of the disclosures in Note 6 of the consolidated financial statements, in respect of the Luxembourg deferred tax assets, against the requirements of IAS 12. |
F-4
/s/ Ernst & Young LLP
We have served as the Group’s auditor since 2019.
London, United Kingdom
21 June 2023
F-5
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Vodafone Group Plc
Opinion on Internal Control Over Financial Reporting
We have audited Vodafone Group Plc’s (the Group) internal control over financial reporting as of 31 March 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Vodafone Group Plc maintained, in all material respects, effective internal control over financial reporting as of 31 March 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Group as of 31 March 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended 31 March 2023, and the related notes and our report dated 21 June 2023 expressed an unqualified opinion thereon.
Basis for Opinion
The Group’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s report on Internal control over financial reporting on page 112. Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting 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 that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
London, United Kingdom
21 June 2023
F-6
| |
| |
| | | |
| | | |
| | | |
| | | |
Consolidated income statement
for the years ended 31 March
| | | | | | | | | | |
|
|
|
|
| |
| Re-presented1 |
| Re-presented1 |
|
| | | | 2023 | | | 2022 | | 2021 | |
| | Note | | €m | | | €m | | €m | |
Revenue |
| 2 |
| 45,706 | |
| 45,580 | | 43,809 | |
Cost of sales |
|
|
| (30,850) | |
| (30,574) | | (30,086) | |
Gross profit |
|
|
| 14,856 | |
| 15,006 | | 13,723 | |
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 |
| 433 | |
| 389 | | 374 | |
Impairment loss |
| 4 |
| (64) | |
| – | | – | |
Other income |
| 3 |
| 9,098 | |
| 50 | | 568 | |
Operating profit |
| 3 |
| 14,296 | |
| 5,813 | | 5,129 | |
Investment income |
| 5 |
| 248 | |
| 254 | | 245 | |
Financing costs |
| 5 |
| (1,728) | |
| (1,964) | | (1,027) | |
Profit before taxation |
|
|
| 12,816 | |
| 4,103 | | 4,347 | |
Income tax expense |
| 6 |
| (481) | |
| (1,330) | | (3,864) | |
Profit for the financial year |
|
|
| 12,335 | |
| 2,773 | | 483 | |
Attributable to: |
|
|
| | |
| | | | |
– Owners of the parent |
|
|
| 11,838 | |
| 2,237 | | 59 | |
– Non-controlling interests |
|
|
| 497 | |
| 536 | | 424 | |
Profit for the financial year |
|
|
| 12,335 | |
| 2,773 | | 483 | |
|
|
|
| | |
| | | | |
Group earnings per share (all from continuing operations)1 |
|
|
| | |
| | | | |
– Basic |
| 8 |
| 42.77 | c |
| 7.71 | c | 0.20 | c |
– Diluted |
| 8 |
| 42.62 | c |
| 7.68 | c | 0.20 | c |
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. See note 7 ‘Discontinued operations and assets held for sale’ and note 8 ‘Earnings per share’ for more information. |
| |
| |
| |
| |
| |
Consolidated statement of comprehensive income
for the years ended 31 March
| | | | | | | | |
|
| |
|
|
| Re-presented1 |
| Re-presented1 |
| | | | 2023 | | 2022 | | 2021 |
| | Note | | €m | | €m | | €m |
Profit for the financial year |
|
|
| 12,335 |
| 2,773 |
| 483 |
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) |
| 138 |
Foreign exchange translation differences transferred to the income statement |
|
|
| (334) |
| 19 |
| (17) |
Other, net of tax2 |
|
|
| 963 |
| 1,863 |
| (3,743) |
Total items that may be reclassified to the income statement in subsequent years |
|
|
| (607) |
| 1,852 |
| (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) |
| 483 |
| (555) |
Total items that will not be reclassified to the income statement in subsequent years |
|
|
| (160) |
| 483 |
| (555) |
Other comprehensive (expense)/income |
|
|
| (767) |
| 2,335 |
| (4,177) |
Total comprehensive income/(expense) for the financial year |
|
|
| 11,568 |
| 5,108 |
| (3,694) |
Attributable to: |
|
|
| |
| |
| |
– Owners of the parent |
|
|
| 11,267 |
| 4,546 |
| (4,117) |
– Non-controlling interests |
|
|
| 301 |
| 562 |
| 423 |
Total comprehensive income/(expense) for the financial year |
|
|
| 11,568 |
| 5,108 |
| (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.
| | | |
| | | |
| | | |
| | | |
| | | |
Consolidated statement of financial position
at 31 March
| | | | | | |
| | | | | | Re-presented1 |
| | | | 31 March 2023 | | 31 March 2022 |
|
| Note |
| €m |
| €m |
Non-current assets |
|
|
|
|
|
|
Goodwill |
| 10 |
| 27,615 |
| 31,884 |
Other intangible assets |
| 10 |
| 19,592 |
| 21,360 |
Property, plant and equipment |
| 11 |
| 37,992 |
| 40,804 |
Investments in associates and joint ventures |
| 12 |
| 11,079 |
| 5,323 |
Other investments |
| 13 |
| 1,093 |
| 1,073 |
Deferred tax assets |
| 6 |
| 19,316 |
| 19,089 |
Post employment benefits |
| 25 |
| 329 |
| 555 |
Trade and other receivables |
| 14 |
| 7,843 |
| 6,383 |
|
|
|
| 124,859 |
| 126,471 |
Current assets |
|
|
| |
| |
Inventory |
| |
| 956 |
| 836 |
Taxation recoverable |
|
|
| 279 |
| 296 |
Trade and other receivables |
| 14 |
| 10,705 |
| 11,019 |
Other investments |
| 13 |
| 7,017 |
| 7,931 |
Cash and cash equivalents |
| 19 |
| 11,705 |
| 7,496 |
|
|
|
| 30,662 |
| 27,578 |
Total assets |
|
|
| 155,521 |
| 154,049 |
| | | | | | |
Equity |
|
|
| |
| |
Called up share capital |
| 17 |
| 4,797 |
| 4,797 |
Additional paid-in capital |
|
|
| 149,145 |
| 149,018 |
Treasury shares |
|
|
| (7,719) |
| (7,278) |
Accumulated losses |
|
|
| (113,086) |
| (122,022) |
Accumulated other comprehensive income |
|
|
| 30,262 |
| 30,268 |
Total attributable to owners of the parent |
|
|
| 63,399 |
| 54,783 |
Non-controlling interests |
|
|
| 1,084 |
| 2,290 |
Total equity |
|
|
| 64,483 |
| 57,073 |
| | |
| | | |
Non-current liabilities |
|
|
| |
| |
Borrowings |
| 21 |
| 51,669 |
| 58,131 |
Deferred tax liabilities |
| 6 |
| 771 |
| 520 |
Post employment benefits |
| 25 |
| 258 |
| 281 |
Provisions |
| 16 |
| 1,572 |
| 1,881 |
Trade and other payables |
| 15 |
| 2,184 |
| 2,516 |
|
|
|
| 56,454 |
| 63,329 |
Current liabilities |
|
|
| |
| |
Borrowings |
| 21 |
| 14,721 |
| 11,961 |
Financial liabilities under put option arrangements | | 22 | | 485 | | 494 |
Taxation liabilities |
|
|
| 457 |
| 864 |
Provisions |
| 16 |
| 674 |
| 667 |
Trade and other payables |
| 15 |
| 18,247 |
| 19,661 |
|
|
|
| 34,584 |
| 33,647 |
Total equity and liabilities |
|
|
| 155,521 |
| 154,049 |
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. |
The consolidated financial statements on pages 123 to 211 were approved by the Board of Directors and authorised for issue on 21 June 2023 and were signed on its behalf by:
| |
/s/ Margherita Della Valle | |
| |
Margherita Della Valle | |
Group Chief Executive and Chief Financial Officer | |
| |
| |
| |
| |
| |
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 |
| | capital1 | | capital2 | | shares | | losses | | reserve3 | | reserve | | surplus4 | | Other5 | | to owners | | interests | | equity |
| | €m | | €m | | €m | | €m | | €m | | €m | | €m | | €m | | €m | | €m | | €m |
1 April 2020 |
| 4,797 |
| 152,629 |
| (7,802) |
| (120,349) |
| 28,308 |
| (679) |
| 1,227 |
| 3,279 |
| 61,410 |
| 1,215 |
| 62,625 |
Issue or reissue of shares7 |
| – |
| (1,943) |
| 2,033 |
| (87) |
| – |
| – |
| – |
| – |
| 3 |
| – |
| 3 |
Share-based payments |
| – |
| 126 |
| – |
| – |
| – |
| – |
| – |
| – |
| 126 |
| 10 |
| 136 |
Transactions with NCI in subsidiaries8 |
| – |
| – |
| – |
| 1,149 |
| – |
| – |
| – |
| – |
| 1,149 |
| 748 |
| 1,897 |
Dividends |
| – |
| – |
| – |
| (2,412) |
| – |
| – |
| – |
| – |
| (2,412) |
| (384) |
| (2,796) |
Comprehensive (expense)/income |
| – |
| – |
| – |
| 59 |
| 122 | | (555) |
| – |
| (3,743) |
| (4,117) |
| 423 |
| (3,694) |
Profit |
| – |
| – |
| – |
| 59 |
| – |
| – |
| – |
| – |
| 59 |
| 424 |
| 483 |
OCI - before tax | | – | | – | | – | | – | | 129 | | (686) | | – | | (4,630) | | (5,187) | | – | | (5,187) |
OCI – taxes |
| – |
| – |
| – |
| – |
| 6 |
| 131 |
| – |
| 887 |
| 1,024 |
| 3 |
| 1,027 |
Transfer to the income statement ('IS') |
| – |
| – |
| – |
| – |
| (13) |
| – |
| – |
| – |
| (13) |
| (4) |
| (17) |
Purchase of treasury shares('TS')9 |
| – |
| – |
| (403) |
| – |
| – |
| – |
| – |
| – |
| (403) |
| – |
| (403) |
31 March 2021 Re-presented6 |
| 4,797 |
| 150,812 |
| (6,172) |
| (121,640) |
| 28,430 |
| (1,234) |
| 1,227 |
| (464) | | 55,756 |
| 2,012 |
| 57,768 |
Issue or reissue of shares7 |
| – |
| (1,902) |
| 2,000 |
| (98) |
| – |
| – |
| – |
| – |
| – |
| – |
| – |
Share-based payments |
| – |
| 108 |
| – |
| – |
| – |
| – |
| – |
| – |
| 108 |
| 11 |
| 119 |
Transactions with NCI in subsidiaries8 |
| – |
| – |
| – |
| (38) |
| – |
| – |
| – |
| – |
| (38) |
| 237 |
| 199 |
Dividends |
| – |
| – |
| – |
| (2,483) |
| – |
| – |
| – |
| – |
| (2,483) |
| (532) |
| (3,015) |
Comprehensive income/(expense) |
| – |
| – |
| – |
| 2,237 |
| (37) |
| 483 |
| – |
| 1,863 |
| 4,546 |
| 562 |
| 5,108 |
Profit |
| – |
| – |
| – |
| 2,237 |
| – |
| – |
| – |
| – |
| 2,237 |
| 536 |
| 2,773 |
OCI – before tax |
| – |
| – |
| – |
| – |
| (56) |
| 627 |
| – |
| 2,368 |
| 2,939 |
| 26 |
| 2,965 |
OCI – taxes |
| – |
| – |
| – |
| – |
| – |
| (144) |
| – |
| (505) |
| (649) |
| – |
| (649) |
Transfer to the IS |
| – |
| – |
| – |
| – |
| 19 |
| – |
| – |
| – |
| 19 |
| – |
| 19 |
Purchase of TS9 |
| – |
| – |
| (3,106) | | – | | – | | – | | – | | – | | (3,106) | | – | | (3,106) |
31 March 2022 Re-presented6 |
| 4,797 |
| 149,018 |
| (7,278) |
| (122,022) |
| 28,393 |
| (751) |
| 1,227 |
| 1,399 |
| 54,783 |
| 2,290 |
| 57,073 |
Adoption of IAS 29 |
| – |
| – | | – | | – | | 565 | | – | | – | | – | | 565 | | – | | 565 |
1 April 2022 - b/forward |
| 4,797 |
| 149,018 | | (7,278) | | (122,022) | | 28,958 | | (751) | | 1,227 | | 1,399 | | 55,348 | | 2,290 | | 57,638 |
Issue or reissue of shares |
| – |
| 1 |
| 122 |
| (113) |
| – |
| – |
| – |
| – |
| 10 |
| – |
| 10 |
Share-based payments |
| – |
| 126 |
| – |
| – |
| – |
| – |
| – |
| – |
| 126 |
| 9 |
| 135 |
Transactions with NCI in subsidiaries |
| – |
| – |
| – |
| (287) |
| – |
| – |
| – |
| – |
| (287) |
| (1,118) |
| (1,405) |
Dividends | | – | | – | | – | | (2,502) | | – | | – | | – | | – | | (2,502) | | (398) | | (2,900) |
Comprehensive income/(expense) |
| – |
| – |
| – |
| 11,838 |
| (1,374) |
| (160) |
| – |
| 963 |
| 11,267 |
| 301 |
| 11,568 |
Profit10 | | – | | – | | – | | 11,838 | | – |
| – |
| – |
| – |
| 11,838 | | 497 | | 12,335 |
OCI - before tax |
| – |
| – |
| – |
| – |
| (1,469) |
| (213) |
| – |
| 1,314 |
| (368) |
| (230) |
| (598) |
OCI - taxes |
| – |
| – |
| – |
| – |
| (3) |
| 53 |
| – |
| (351) |
| (301) |
| (3) |
| (304) |
Transfer to the IS |
| – |
| – |
| – |
| – |
| (334) |
| – |
| – |
| – |
| (334) |
| – |
| (334) |
Translation of hyperinflationary results |
| – |
| – | | – | | – | | 432 | | – | | – | | – | | 432 | | 37 | | 469 |
Purchase of TS9 |
| – |
| – |
| (563) |
| – |
| – |
| – |
| – |
| – |
| (563) |
| – |
| (563) |
31 March 2023 |
| 4,797 |
| 149,145 |
| (7,719) |
| (113,086) |
| 27,584 |
| (911) |
| 1,227 |
| 2,362 |
| 63,399 |
| 1,084 |
| 64,483 |
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. |
| | | |
| | | |
| | | |
| | | |
| | | |
Consolidated statement of cash flows
for the years ended 31 March
| | | | | | | | |
| | | | 2023 | | 2022 | | 2021 |
|
| Note |
| €m |
| €m |
| €m |
Inflow from operating activities |
| 18 |
| 18,054 |
| 18,081 |
| 17,215 |
| | | | | | | | |
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 |
| 6,976 |
| – |
| 157 |
Disposal of interests in associates and joint ventures |
|
|
| – |
| 446 |
| 420 |
Disposal of property, plant and equipment and intangible assets |
| |
| 98 |
| 33 |
| 43 |
Disposal of investments |
|
|
| 1,650 |
| 3,282 |
| 1,704 |
Dividends received from associates and joint ventures |
|
|
| 617 |
| 638 |
| 628 |
Interest received |
|
|
| 338 |
| 247 |
| 301 |
Outflow from investing activities |
|
|
| (379) |
| (6,868) |
| (9,262) |
Cash flows from financing activities |
|
|
| |
| |
| |
Proceeds from issue of long-term borrowings |
|
|
| 4,071 |
| 2,548 |
| 4,359 |
Repayment of borrowings |
|
|
| (13,538) |
| (8,248) |
| (12,237) |
Net movement in short-term borrowings |
|
|
| 3,172 |
| 3,002 |
| (2,791) |
Net movement in derivatives | | | | 261 | | (293) | | 279 |
Interest paid1 | | | | (1,951) | | (1,804) | | (2,152) |
Payments for settlement of written put options2 | | | | (12) | | – | | (1,482) |
Purchase of treasury shares | | | | (1,867) | | (2,087) | | (62) |
Issue of ordinary share capital and reissue of treasury shares |
| 17 |
| 10 |
| – |
| 5 |
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) |
| 189 |
| 1,663 |
Other movements with associates and joint ventures |
|
|
| – |
| – |
| 40 |
Outflow from financing activities |
|
|
| (13,430) |
| (9,706) |
| (15,196) |
Net cash inflow/(outflow) |
|
|
| 4,245 |
| 1,507 |
| (7,243) |
Cash and cash equivalents at beginning of the financial year |
| 19 |
| 7,371 |
| 5,790 |
| 13,288 |
Exchange gain/(loss) on cash and cash equivalents |
|
|
| 12 |
| 74 |
| (255) |
Cash and cash equivalents at end of the financial year |
| 19 |
| 11,628 |
| 7,371 |
| 5,790 |
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. |
| |
| |
| |
Notes to the consolidated financial statements |
1. Basis of preparation
This section describes the critical accounting judgements and estimates that management has identified as having a potentially material impact on the Group’s consolidated financial statements and sets out our significant accounting policies that relate to the financial statements as a whole. Where an accounting policy is generally applicable to a specific note to the financial statements, the policy is described within that note. We have also detailed below the new accounting pronouncements that we will adopt in future years and our current view of the impact they will have on our financial reporting.
The consolidated financial statements are prepared in accordance with 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 Companies Act 2006 (the ‘Act’). The consolidated financial statements are prepared on a going concern basis (see page 112).
Vodafone Group Plc is incorporated and domiciled in England and Wales (registration number 1833679). The registered address of the Company is Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, England.
IFRS requires the Directors to adopt accounting policies that are the most appropriate to the Group’s circumstances. These have been applied consistently to all the years presented, unless otherwise stated. In determining and applying accounting policies, Directors and management are required to make judgements and estimates in respect of items where the choice of specific policy, accounting judgement, estimate or assumption to be followed could materially affect the Group’s reported financial position, results or cash flows and disclosure of contingent assets or liabilities during the reporting period; it may later be determined that a different choice may have been more appropriate.
The Group’s critical accounting judgements and key sources of estimation uncertainty are detailed below. Actual outcomes could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period; they are recognised in the period of the revision and future periods if the revision affects both current and future periods.
Management regularly reviews, and revises as necessary, the accounting judgements that significantly impact the amounts recognised in the financial statements and the estimates that are considered to be ‘critical estimates’ due to their potential to give rise to material adjustments in the Group’s financial statements in the year to 31 March 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.
These critical accounting judgements, estimates and related disclosures have been discussed with the Group’s Audit and Risk Committee.
Critical accounting judgements and key sources of estimation uncertainty
Revenue recognition
Revenue recognition under IFRS 15 necessitates the collation and processing of very large amounts of data and the use of management judgements and estimates to produce financial information. The most significant accounting judgements and source of estimation uncertainty are disclosed below.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
1. Basis of preparation (continued)
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.
Allocation of revenue to goods and services provided to customers
Revenue is recognised when goods and services are delivered to customers (see note 2 ‘Revenue disaggregation and segmental analysis’). Goods and services may be delivered to a customer at different times under the same contract, hence it is necessary to allocate the amount payable by the customer between goods and services on a ‘relative standalone selling price basis’; this requires the identification of performance obligations (‘obligations’) and the determination of standalone selling prices for the identified obligations. The determination of obligations is, for the primary goods and services sold by the Group, not considered to be a critical accounting judgement; the Group’s policy on identifying obligations is disclosed in note 2 ‘Revenue disaggregation and segmental analysis’. The determination of standalone selling prices for identified obligations is discussed below.
It is necessary to estimate the standalone price when the Group does not sell equivalent goods or services in similar circumstances on a standalone basis. When estimating the standalone price the Group maximises the use of external inputs; methods for estimating standalone prices include determining the standalone price of similar goods and services sold by the Group, observing the standalone prices for similar goods and services when sold by third parties or using a cost-plus reasonable margin approach (which is sometimes the case for devices and other equipment). Where it is not possible to reliably estimate standalone prices due to a lack of observable standalone sales or highly variable pricing, which is sometimes the case for services, the standalone price of an obligation may be determined as the transaction price less the standalone prices of other obligations in the contract. The standalone price determined for obligations materially impacts the allocation of revenue between obligations and impacts the timing of revenue when obligations are provided to customers at different times – for example, the allocation of revenue between devices, which are usually delivered up-front, and services which are typically delivered over the contract period. However, there is not considered to be a significant risk of material adjustment to the carrying value of contract-related assets or liabilities in the 12 months after the balance sheet date if these estimates were revised.
Lease accounting
Lease accounting under IFRS 16 is complex and necessitates the collation and processing of very large amounts of data and the increased use of management judgements and estimates to produce financial information. The most significant accounting judgements are disclosed below.
Lease identification
Whether the arrangement is considered a lease or a service contract depends on the analysis by management of both the legal form and substance of the arrangement between the Group and the counter-party to determine if control of an identified asset has been passed between the parties; if not, the arrangement is a service arrangement. Control exists if the Group obtains substantially all of the economic benefit from the use of the asset, and has the ability to direct its use, for a period of time. An identified asset exists where an agreement explicitly or implicitly identifies an asset or a physically distinct portion of an asset which the lessor has no substantive right to substitute.
The scenarios requiring the greatest judgement include those where the arrangement is for the use of fibre or other fixed telecommunication lines. Generally, where the Group has exclusive use of a physical line it is determined that the Group can also direct the use of the line and therefore leases will be recognised. Where the Group provides access to fibre or other fixed telecommunication lines to another operator on a wholesale basis the arrangement will generally be identified as a lease, whereas when the Group provides fixed line services to an end-user, generally control over such lines is not passed to the end-user and a lease is not identified.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
1. Basis of preparation (continued)
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:
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
1. Basis of preparation (continued)
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.
Business combinations and goodwill
When the Group completes a business combination, the fair values of the identifiable assets and liabilities acquired, including intangible assets, are recognised. The determination of the fair values of acquired assets and liabilities is based, to a considerable extent, on management’s judgement. If the purchase consideration exceeds the fair value of the net assets acquired then the incremental amount paid is recognised as goodwill. If the purchase price consideration is lower than the fair value of the assets acquired then the difference is recorded as a gain in the income statement.
Allocation of the purchase price between finite lived assets (discussed below) and indefinite lived assets such as goodwill affects the subsequent results of the Group as finite lived intangible assets are amortised, whereas indefinite lived intangible assets, including goodwill, are not amortised.
See note 27 ‘Acquisitions and disposals’ to the consolidated financial statements for further details.
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.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
1. Basis of preparation (continued)
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.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
1. Basis of preparation (continued)
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’.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
1. Basis of preparation (continued)
Climate change
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 factors outside of the Group’s control which are not all currently known.
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).
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company, subsidiaries controlled by the Company (see note 31 ‘Related undertakings’ to the consolidated financial statements), joint operations that are subject to joint control and the results of joint ventures and associates (see note 12 ‘Investments in associates and joint arrangements’ to the consolidated financial statements).
Basis of preparation changes adopted on 1 April 2022 - Hyperinflation
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.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
1. Basis of preparation (continued)
The main impacts of the aforementioned adjustments on the consolidated financial statements are shown below.
| | |
| | Year ended 31 March 2023 |
| | 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 |
| 37 |
Foreign currencies
The consolidated financial statements are presented in euro, which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
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 expressed in euro using exchange rates prevailing at the reporting period date.
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 exchange gains and losses previously recognised in the consolidated statement of comprehensive income.
Current or non-current classification
Assets are classified as current in the consolidated statement of financial position where recovery is expected within 12 months of the reporting date. All assets where recovery is expected more than 12 months from the reporting date and all deferred tax assets, goodwill and intangible assets, property, plant and equipment and investments in associates and joint ventures are reported as non-current.
Liabilities are classified as current unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. For provisions, where the timing of settlement is uncertain, amounts are classified as non-current where settlement is expected more than 12 months from the reporting date. In addition, deferred tax liabilities and post-employment benefits are reported as non-current.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
1. Basis of preparation (continued)
Inventory
Inventory is stated at the lower of cost and net realisable value. Cost is determined on the basis of weighted average costs and comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition.
New accounting pronouncements adopted on or after 1 April 2022
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 from 1 April 2024 as applicable.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
2. Revenue disaggregation and segmental analysis
The Group’s businesses are managed on a geographical basis. Selected financial data is presented on this basis below.
Accounting policies
Revenue
When the Group enters into an agreement with a customer, goods and services deliverable under the contract are identified as separate performance obligations (‘obligations’) to the extent that the customer can benefit from the goods or services on their own and that the separate goods and services are considered distinct from other goods and services in the agreement. Where individual goods and services do not meet the criteria to be identified as separate obligations they are aggregated with other goods and/or services in the agreement until a separate obligation is identified. The obligations identified will depend on the nature of individual customer contracts, but might typically be separately identified for mobile handsets, other equipment such as set-top boxes and routers provided to customers and services provided to customers such as mobile and fixed line communication services. Where goods and services have a functional dependency (for example, a fixed line router can only be used with the Group’s services) this does not, in isolation, prevent those goods or services from being assessed as separate obligations. Activities relating to connecting customers to the Group’s network for the future provision of services are not considered to meet the criteria to be recognised as 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.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
2. Revenue disaggregation and segmental analysis (continued)
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 payable to agents are deducted from revenue recognised (see above).
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 |
| | revenue | | revenue | | customers | | revenue1 | | revenue | | revenue |
| EBITDAaL |
31 March 2023 | | €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 Functions2 |
| 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 |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
2. Revenue disaggregation and segmental analysis (continued)
| | | | | | | | | | | | | | |
|
|
|
|
|
| Revenue from |
|
|
|
|
| Total |
| |
| | Service | | Equipment | | contracts with | | Other | | Interest | | segment | | Adjusted |
| | revenue | | revenue | | customers | | revenue1 | | revenue | | revenue | | EBITDAaL |
31 March 2022 | | €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 Functions2 |
| 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 |
| | revenue | | revenue | | customers | | revenue1 | | revenue | | revenue |
| EBITDAaL |
31 March 2021 | | €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 Functions2 |
| 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; 2021: €14,110 million) is expected to be recognised within the next year and the majority of the remaining amount in the following 12 months.
Segmental analysis
The Group’s operating segments are established on the basis of those components of the Group that are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Group has determined the chief operating decision maker to be its Chief Executive. 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.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
2. Revenue disaggregation and segmental analysis (continued)
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-presented1 | | Re-presented1 |
| | 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 loss2 |
| (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’. |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
2. Revenue disaggregation and segmental analysis (continued)
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.
| | | | | | | | | | | | |
|
|
|
|
|
| |
| Other |
| Depreciation |
|
|
| | Non-current | | Capital | | Right-of-use | | additions to | | and | | |
| | assets1 | | additions2 | | asset additions | | intangible assets3 | | amortisation | | Impairment loss |
31 March 2023 | | €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 |
| | | | | | | | | | | | |
| | | | | | | | Other | | Depreciation | | |
|
| Non-current |
| Capital |
| Right-of-use |
| additions to |
| and |
|
|
| | assets1 | | additions2 | | asset additions | | intangible assets3 | | amortisation | | Impairment loss |
31 March 2022 | | €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 |
| – |
| | | | | | | | | | | | |
|
| |
| |
| |
| |
| Depreciation |
|
|
|
| Non-current |
| Capital |
| Right-of-use |
| Other additions to |
| and |
|
|
| | assets1 | | additions2 | | asset additions | | intangible assets3 | | amortisation | | Impairment loss |
31 March 2021 |
| €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 | Includes additions to licences and spectrum and customer base acquisitions. |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
3. Operating profit
Detailed below are the key amounts recognised in arriving at our operating profit
| | | | | | |
|
|
|
| Re-presented1 |
| Re-presented1 |
| | 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 Hungary2 (Note 27) | | 69 | | – | | – |
Gain on disposal of Vodafone Ghana2 (Note 27) | | (689) | | – | | – |
Gain on disposal of Vantage Towers2 (Note 27) | | (8,607) | | – | | – |
Gain on disposal of Indus Towers Limited1,2 | | – | | 81 | | – |
Pledge arrangements in respect of Indus Towers Limited2 (Note 29) | | – | | (15) | | (429) |
Net gain on formation of TPG Telecom2 (Note 12) | | – | | – | | 1,043 |
Net gain on formation of Indus Towers Limited2 (Note 12) | | – | | – | | 292 |
Settlement of tender offer to KDG shareholders2 | | – | | – | | (204) |
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 total remuneration of the Group’s auditor, Ernst & Young LLP and other member firms of Ernst & Young Global Limited, for services provided to the Group during the year ended 31 March 2023 is analysed below.
| | | | | | |
| | | | | | |
| | 2023 | | 2022 | | 2021 |
| | €m | | €m | | €m |
Parent company |
| 5 |
| 4 |
| 3 |
Subsidiaries |
| 22 |
| 19 |
| 18 |
Audit fees1 |
| 27 |
| 23 |
| 21 |
| | | | | | |
Audit-related2 | | 3 | | 2 | | – |
Vantage Towers IPO3 | | – | | – | | 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 | Fees incurred for IPO services relating to the IPO of Vantage Towers A.G. on 18 March 2021. |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
4. Impairment losses
Impairment occurs when the carrying value of assets is greater than the present value of the net cash flows they are expected to generate. We review the carrying value of assets for each country in which we operate at least annually. For further details of our impairment review process see ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation’ to the consolidated financial statements.
Accounting policies
Goodwill
Goodwill is not subject to amortisation but is tested for impairment annually or whenever there is an indication that the asset may be impaired.
For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash flows, known as cash-generating units. The determination of the Group’s cash-generating units is primarily based on the geographic area where the Group supplies communications services and products. If cash flows from assets within one jurisdiction are largely independent of the cash flows from other assets in that same jurisdiction and management monitors performance separately, multiple cash-generating units are identified within that geographic area.
If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Impairment losses recognised for goodwill are not reversible in subsequent periods.
The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Management prepares formal five year plans for the Group’s cash-generating units, which are the basis for the value in use calculations.
Property, plant and equipment, finite lived intangible assets and equity accounted investments
At each reporting period date, the Group reviews the carrying amounts of its property, plant and equipment, finite lived intangible assets and equity- accounted investments to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount and an impairment loss is recognised immediately in the income statement.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
4. Impairment losses (continued)
Where there has been a change in the estimates used to determine recoverable amount and an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, not to exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior years and an impairment loss reversal is recognised immediately in the consolidated income statement.
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 |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
4. Impairment losses (continued)
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. |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
4. Impairment losses (continued)
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 CAGR1 | | 1.8 |
| 1.0 |
Projected capital expenditure2 | | 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 CAGR1 | | (1.8) |
| (0.5) |
| (4.1) |
| (1.5) |
Projected capital expenditure2 | | 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. |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
4. Impairment losses (continued)
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 CAGR1 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 CAGR1 | | | | |
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 | ||||||
| | | | | | Vantage Towers | | ��� |
| | Germany | | Italy | | 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 CAGR1 |
| (0.1) |
| (0.2) |
| 11.0 |
| (5.4)-13.0 |
Projected capital expenditure2 |
| 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. |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
4. Impairment losses (continued)
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 CAGR1 | | (4.1) |
| (0.9) | | (3.1) | | (0.4) |
Projected capital expenditure2 | | 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 CAGR1 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 expenditure2 would cause the difference between the carrying value and recoverable amount for any cash generating unit to be materially different to the base case disclosed below.
| | | | | | | | |
| | 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 CAGR1 |
|
|
|
|
|
|
|
|
Decrease by 5pps |
| (1.4) |
| (1.6) |
| (0.7) |
| (1.1) |
Increase by 5pps |
| 17.9 |
| 2.8 |
| 3.8 |
| 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. 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.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
4. Impairment losses (continued)
Value in use assumptions
The table below shows key assumptions used in the value in use calculations.
| | | | | | | | | | | | |
| | Assumptions used in value in use calculation | ||||||||||
|
| |
| |
| |
| |
| |
| Vantage Towers |
| | Germany | | Italy | | Spain | | Ireland | | Romania | | 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 CAGR1 |
| 1.2 | | 2.1 | | 4.9 | | 0.5 | | 0.9 | | 8.4 |
Projected capital expenditure2 |
| 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 | ||||||||||
|
| | | | | | | | | | | Vantage Towers |
| | Germany | | Italy | | Spain | | Ireland | | Romania | | 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 CAGR1 |
| (4.0) |
| (1.5) | | (1.5) | | (1.6) | | (1.9) | | (19.3) |
Projected capital expenditure2 |
| 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 CAGR1 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 CAGR1 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 expenditure2 would cause the difference between the carrying value and recoverable amount for any cash-generating unit to be materially different from the base case disclosed below.
| | | | | | | | | | | | |
| | Recoverable amount less carrying value | ||||||||||
| | | | | | | | | | | | Vantage Towers |
| | Germany | | Italy | | Spain | | Ireland | | Romania | | 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 CAGR1 |
|
|
|
|
|
|
|
|
|
| | |
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.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
4. Impairment losses (continued)
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 CAGR1 |
| (1.7) |
| (2.2) |
| (3.0) |
| (0.7) |
Projected capital expenditure2 |
| 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 plans used for impairment testing. |
5. Investment income and financing costs
Investment income comprises interest received from short-term investments and other receivables. Financing costs mainly arise from interest due on bonds and commercial paper issued, bank loans and the results of hedging transactions used to manage foreign exchange and interest rate movements.
| | | | | | |
| | | | Re-presented1 | | Re-presented1 |
| | 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 liabilities2 |
| 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 |
| 782 |
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 | Interest capitalised for the year ended 31 March 2023 was €5 million (2022: €17 million, 2021: €17 million). |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
6. Taxation
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.
Accounting policies
Income tax expense represents the sum of the current and deferred taxes.
Current tax payable or recoverable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because some items of income or expense are taxable or deductible in different years or may never be taxable or deductible. The Group’s liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the reporting period date.
The Group recognises provisions for uncertain tax positions when the Group has a present obligation as a result of a past event and management judge that it is probable that there will be a future outflow of economic benefits from the Group to settle the obligation. Uncertain tax positions are assessed and measured on an issue by issue basis within the jurisdictions that we operate either using management’s estimate of the most likely outcome where the issues are binary, or the expected value approach where the issues have a range of possible outcomes. The Group recognises interest on late paid taxes as part of financing costs, and any penalties, if applicable, as part of the income tax expense.
Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. It is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that temporary differences or taxable profits will be available against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are not recognised to the extent they arise from the initial recognition of non-tax deductible goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint arrangements, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting period date and adjusted to reflect changes in the Group’s assessment that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on tax rates that have been enacted or substantively enacted by the reporting period date.
Tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they either relate to income taxes levied by the same taxation authority on either the same taxable entity or on different taxable entities which intend to settle the current tax assets and liabilities on a net basis.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
6. Taxation (continued)
Tax is charged or credited to the income statement, except when it relates to items charged or credited to other comprehensive income or directly to equity, in which case the tax is recognised in other comprehensive income or in equity.
| | | | | | |
| | 2023 | | 2022 | | 2021 |
Income tax expense | | €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) |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
6. Taxation (continued)
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-presented1 | | Re-presented1 |
| | 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 investments2 |
| (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 balances3 |
| 35 |
| (667) |
| (45) |
Financing costs not (taxable)/deductible for tax purposes | | (27) | | 46 | | (62) |
Revaluation of assets for tax purposes in Turkey and Italy4 | | (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. |
Deferred tax
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 20231 |
| 18,545 |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
6. Taxation (continued)
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 20231 |
| 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 20231 |
| 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 20221 |
| (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 20221 |
| 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).
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
6. Taxation (continued)
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 | | | | |
| | 5 years | | 6 years | | Unlimited | | Total |
31 March 2023 | | €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 | | | | |
| | 5 years | | 6 years | | Unlimited | | Total |
31 March 2022 | | €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.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
6. Taxation (continued)
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.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
6. Taxation (continued)
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. It is not practicable to estimate the amount of unrecognised deferred tax liabilities in respect of these unremitted earnings.
7. Discontinued operations and assets held for sale
The Group classifies certain of its assets that it expects to dispose as either discontinued operations or as held for sale.
The Group classifies non-current assets and assets and liabilities within disposal groups (‘assets’) as held for sale if the assets are available immediately for sale in their present condition, management is committed to a plan to sell the assets under usual terms, it is highly probable that their carrying amounts will be recovered principally through a sale transaction rather than through continuing use and the sale is expected to be completed within one year from the date of the initial classification.
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated statement of financial position and are measured at the lower of their carrying amount and fair value less costs to sell. Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale. 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 notes to the financial statements include amounts for continuing operations, unless indicated otherwise.
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.
Assets held for sale
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.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
7. Discontinued operations and assets held for sale (continued)
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 | | Impact of | | |
| | presented | | 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 |
| 154,049 |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
8. Earnings per share
Basic earnings per share is the amount of profit generated for the financial year attributable to equity shareholders divided by the weighted average number of shares in issue during the year.
| | | | | | |
Weighted average number of shares for basic earnings per share |
| 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-presented1 | | Re-presented1 |
|
| | 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-presented1 | | Re-presented1 | |
| | 2023 | | | 2022 | | 2021 | |
|
| eurocents | |
| eurocents |
| eurocents |
|
Basic earnings per share from continuing operations |
| 42.77 | c | | 7.71 | c | 0.20 | c |
Basic earnings per share | | 42.77 | c | | 7.71 | c | 0.20 | c |
| | | | | | | | |
| | | | | Re-presented1 | | Re-presented1 | |
| | 2023 | | | 2022 | | 2021 | |
| | eurocents | | | eurocents | | eurocents | |
Diluted earnings per share from continuing operations | | 42.62 | c | | 7.68 | c | 0.20 | c |
Diluted earnings per share | | 42.62 | c | | 7.68 | c | 0.20 | c |
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 amounts previously reported. See note 7 ‘Discontinued operations and assets held for sale’ for more information. |
9. Equity dividends
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 (2021: 4.50 eurocents per share, 2020: 4.50 eurocents per share) |
| 1,265 |
| 1,254 |
| 1,205 |
Interim dividend for the year ended 31 March 2023: 4.50 eurocents per share (2022: 4.50 eurocents per share, 2021: 4.50 eurocents per share) | | 1,237 | | 1,229 | | 1,207 |
| | 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 (2022: 4.50 eurocents per share, 2021: 4.50 eurocents per share) | | 1,215 | | 1,265 | | 1,260 |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
10. Intangible assets
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.
Accounting policies
Identifiable intangible assets are recognised when the Group controls the asset, it is probable that future economic benefits attributed to the asset will flow to the Group and the cost of the asset can be reliably measured. Identifiable intangible assets are recognised at fair value when the Group completes a business combination. The determination of the fair values of the separately identified intangibles, is based, to a considerable extent, on management’s judgement.
Goodwill
Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition.
Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is not subject to amortisation but is tested for impairment annually or whenever there is evidence that it may be impaired. Goodwill is denominated in the currency of the acquired entity and revalued to the closing exchange rate at each reporting period date.
Negative goodwill arising on an acquisition is recognised directly in the income statement.
On disposal of a subsidiary or a joint arrangement, the attributable amount of goodwill is included in the determination of the profit or loss recognised in the income statement on disposal.
Finite lived intangible assets
Intangible assets with finite lives are stated at acquisition or development cost, less accumulated amortisation. The amortisation period and method is reviewed at least annually. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.
Licence and spectrum fees
Amortisation periods for licence and spectrum fees are determined primarily by reference to the unexpired licence period, the conditions for licence renewal and whether licences are dependent on specific technologies. Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives from the commencement of related network services.
Computer software
Computer software comprises software purchased from third parties as well as the cost of internally developed software. Computer software licences are capitalised on the basis of the costs incurred to acquire and bring into use the specific software. Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and are probable of producing future economic benefits, are recognised as intangible assets. Direct costs of software development include employee costs and directly attributable overheads.
Software integral to an item of hardware equipment is classified as property, plant and equipment.
Costs associated with maintaining software programs are recognised as an expense when they are incurred.
Amortisation is charged to the income statement on a straight-line basis over the estimated useful life from the date the software is available for use.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
10. Intangible assets (continued)
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 | | 2 – 37 years |
| | | | | | | | | | | | |
|
| |
| 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).
| |
| |
| |
Notes to the consolidated financial statements (continued) |
10. Intangible assets (continued)
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’s most significant spectrum licences can be found on page 241.
11. Property, plant and equipment
The Group makes significant investments in network equipment and infrastructure – the base stations and technology required to operate our networks – that form the majority of our tangible assets. All assets are depreciated over their useful economic lives. For further details on the estimation of useful economic lives, see ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation ‘to the consolidated financial statements.
Accounting policies
Land and buildings held for use are stated in the statement of financial position at their cost, less any accumulated depreciation and any accumulated impairment losses.
Amounts for equipment, fixtures and fittings, which includes network infrastructure assets are stated at cost less accumulated depreciation and any accumulated impairment losses.
Assets in the course of construction are carried at cost, less any recognised impairment losses. Depreciation of these assets commences when the assets are ready for their intended use.
The cost of property, plant and equipment includes directly attributable incremental costs incurred in their acquisition and installation. Depreciation is charged so as to write off the cost of assets, other than land, using the straight-line method, over their estimated useful lives, as follows:
Land and buildings
| | |
Freehold buildings |
| 25 - 50 years |
Leasehold premises | | the term of the lease |
Equipment, fixtures and fittings
| | |
Network infrastructure and other |
| 1 - 35 years |
Depreciation is not provided on freehold land.
Right-of-use assets arising from the Group’s lease arrangements are depreciated over their reasonably certain lease term, as determined under the Group’s leases policy (see note 20 ‘Leases’ and ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 for details).
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
11. Property, plant and equipment (continued)
The gain or loss arising on the disposal, retirement or granting of a finance lease on an item of property, plant and equipment is determined as the difference between any proceeds from sale or receivables arising on a lease and the carrying amount of the asset and is recognised in the income statement.
| | | | | | |
|
| |
| 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).
| |
| |
| |
Notes to the consolidated financial statements (continued) |
11. Property, plant and equipment (continued)
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 assets1 |
| 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 March 2023. |
12. Investments in associates and joint arrangements
The Group holds interests in associates in Kenya and in India, where we have significant influence, as well as in a number of joint arrangements, 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.
Accounting policies
Interests in joint arrangements
A joint arrangement is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control; that is, when the relevant activities that significantly affect the investee’s returns require the unanimous consent of the parties sharing control. Joint arrangements are either joint operations or joint ventures.
Gains or losses resulting from the contribution or sale of a subsidiary as part of the formation of a joint arrangement are recognised in respect of the Group’s entire equity holding in the subsidiary.
Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control have the rights to the assets, and obligations for the liabilities, relating to the arrangement or that other facts and circumstances indicate that this is the case. The Group’s share of assets, liabilities, revenue, expenses and cash flows are combined with the equivalent items in the financial statements on a line-by-line basis.
Any goodwill arising on the acquisition of the Group’s interest in a joint operation is accounted for in accordance with the Group’s accounting policy for goodwill arising on the acquisition of a subsidiary.
Joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control have the rights to the net assets of the arrangement.
At the date of acquisition, any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the joint venture is recognised as goodwill. The goodwill is included within the carrying amount of the investment.
The results and assets and liabilities of joint ventures, other than those joint ventures or part thereof that are held for sale (see note 7 ‘Discontinued operations and assets held for sale’), are incorporated in the consolidated financial statements using the equity method of accounting. Under the equity method, investments in joint ventures are carried in the consolidated statement of financial position at cost adjusted for post-acquisition changes in the Group’s share of the net assets of the joint venture, less any impairment in the value of the investment. The Group’s share of post-tax profits or losses are recognised in the consolidated income statement. Losses of a joint venture in excess of the Group’s interest in that joint venture are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture.
Associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint arrangement.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
12. Investments in associates and joint arrangements (continued)
Significant influence is the power to participate in the financial and operating policy decisions of the investee but where the Group does not have control or joint control over those policies.
At the date of acquisition, any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate is recognised as goodwill. The goodwill is included within the carrying amount of the investment.
The results and assets and liabilities of associates are incorporated in the consolidated financial statements using the same equity method of accounting used for joint ventures, described above.
Joint operations
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 | | Percentage |
| Percentage |
| | | | incorporation or | | shareholdings1 | | shareholdings1 |
Name of joint operation | | Principal activity | | registration | | 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-presented1 |
| | €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 |
| Percentage |
| Percentage |
| | | | incorporation or | | shareholdings1 | | shareholdings1 |
Name of joint venture | | Principal activity | | registration | | 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 Limited2 | | Network operator | | India | | 32.3 | | 47.6 |
TPG Telecom Limited3 | | 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. |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
12. Investments in associates and joint arrangements (continued)
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 €3,717 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.
| | | | | | | | | | |
| | | | | | Profit/(loss) from | ||||
| | Investment in joint ventures | continuing operations1 | |||||||
| | 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) |
Note:
1 | Total Other comprehensive income/(expense) is not materially different to profit/(loss) from continuing operations. |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
12. Investments in associates and joint arrangements (continued)
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.
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 |
| 5,046 |
| 4,450 |
| 4,847 |
Operating expenses | | (2,124) | | (2,104) | | (2,058) | | (3,280) | | (2,802) | | (3,133) |
Depreciation and amortisation |
| (1,527) | | (1,592) | | (1,658) |
| (2,396) |
| (2,390) |
| (2,442) |
Other income | | – | | – | | 25 | | – | | (34) | | (2,135) |
Operating profit/(loss) | | 412 | | 360 | | 319 | | (630) | | (776) | | (2,863) |
Interest income |
| – | | – | | – |
| 9 |
| 14 |
| 32 |
Interest expense |
| 11 | | (276) | | (658) |
| (2,567) |
| (2,297) |
| (2,035) |
Profit/(loss) before tax | | 423 | | 84 | | (339) | | (3,188) | | (3,059) | | (4,866) |
Income tax (expense)/credit |
| (150) | | (121) | | (125) |
| – |
| 2 |
| – |
Profit/(loss) from continuing operations1 |
| 273 | | (37) | | (464) |
| (3,188) |
| (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 operations1 |
| 260 | | 20 | | 440 |
| 190 |
| 82 | | 10 |
Note:
1 | Total Other comprehensive income/(expense) is not materially different to profit/(loss) from continuing operations. |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
12. Investments in associates and joint arrangements (continued)
| | | | | | |
|
| Oak Holdings 1 | | |||
| | GmbH1 | | 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 Limited2 |
| TPG Telecom Limited | ||||
| | 2023 | | 2022 | | 2023 | | 2022 |
| | €m | | €m | | €m | | €m |
Statement of financial position |
|
|
|
|
|
|
|
|
Non-current assets |
| 18,162 |
| 17,267 |
| 9,823 |
| 10,638 |
Current assets |
| 2,174 |
| 2,693 |
| 1,009 |
| 898 |
Total assets |
| 20,336 |
| 19,960 |
| 10,832 |
| 11,536 |
Equity shareholders’ (deficit)/funds |
| (10,760) |
| (10,214) |
| 3,019 |
| 3,129 |
Non-current liabilities |
| 24,730 |
| 23,266 |
| 6,702 |
| 7,227 |
Current liabilities |
| 6,366 |
| 6,908 |
| 1,111 |
| 1,180 |
Cash and cash equivalents within current assets |
| 96 |
| 365 |
| 290 |
| 435 |
Non-current liabilities excluding trade and other payables and provisions |
| 24,707 |
| 23,241 |
| 6,595 |
| 7,173 |
Current liabilities excluding trade and other payables and provisions |
| 2,699 |
| 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 |
Notes:
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’. |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
12. Investments in associates and joint arrangements (continued)
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 ventures1 |
| 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 |
| (10,760) |
| (10,214) |
| |
| 3,019 |
| 3,129 |
| |
Interest in joint ventures1 |
| (3,475) | | (4,863) | | |
| 56 | | 27 | | |
Impairment |
| (242) | | (257) | | |
| – | | – | | |
Goodwill |
| – | | – | | |
| 52 | | 57 | | |
Investment proportion not recognised |
| 3,717 | | 5,120 | | |
| – | | – | | |
Carrying value |
| – |
| – |
| |
| 108 |
| 84 |
| |
| | | | | | | | | | | | |
(Loss)/profit from continuing operations |
| (3,188) | | (3,057) | | (4,866) |
| 260 | | 20 | | 440 |
Share of (loss)/profit1 | | (1,030) | | (1,357) | | (2,160) | | 48 | | (5) | | 98 |
Share of loss not recognised |
| 1,030 | | 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%, 32.3% and 25.1%, respectively, rounded to the nearest tenth of one percent. |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
12. Investments in associates and joint arrangements (continued)
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 | | shareholding1 |
| shareholding1 |
Name of associate | | Principal activity | | registration | | 2023 |
| 2022 |
Safaricom PLC2 | | Network operator | | Kenya | | 39.9 | | 40.0 |
Indus Towers Limited3 |
| 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-presented1 | | | | Re-presented1 | | Re-presented1 |
| | 2023 | | 2022 | | 2023 | | 2022 | | 2021 |
| | €m | | €m | | €m | | €m | | €m |
Safaricom PLC2 | | 509 | | 428 | | 195 | | 217 | | 217 |
Indus Towers Limited | | 908 | | 1,055 | | 50 | | 178 | | 306 |
Other2 | | 84 | | 59 | | (12) | | 5 | | (3) |
Total |
| 1,501 |
| 1,542 |
| 233 | | 400 |
| 520 |
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, 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).
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
12. Investments in associates and joint arrangements (continued)
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-presented1 | | Re-presented1 |
| | 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 associates2 |
| 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’s effective ownership percentages of Safaricom PLC and Indus Towers Limited are 39.9% and 21.0%, respectively, rounded to the nearest tenth of one percent. |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
13. Other investments
The Group holds a number of other listed and unlisted investments, mainly comprising managed funds, deposits and government bonds.
Accounting policies
Other investments comprising debt and equity instruments are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, including transaction costs.
Debt securities that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost using the effective interest method, less any impairment. Debt securities that do not meet the criteria for amortised cost are measured at fair value through profit and loss.
Equity securities are classified and measured at fair value through other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following derecognition of the investment.
| | | | |
| | 2023 | | 2022 |
| | €m | | €m |
Included within non-current assets |
|
|
|
|
Equity securities1 |
| 94 |
| 143 |
Debt securities2 |
| 999 |
| 930 |
|
| 1,093 |
| 1,073 |
| | | | |
Included within current assets |
|
|
|
|
Short-term investments: |
|
|
|
|
Bonds and debt securities3 |
| 1,338 |
| 1,446 |
Managed investment funds1 |
| 2,967 |
| 3,349 |
| | 4,305 | | 4,795 |
Collateral assets4 | | 239 | | 698 |
Other investments5 |
| 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 held in qualifying assets by Group insurance companies to meet regulatory requirements.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
14. Trade and other receivables
Trade and other receivables mainly consist of amounts owed to us by customers and amounts that we pay to our suppliers in advance. Derivative financial instruments with a positive market value are reported within this note as are contract assets, which represent an asset for accrued revenue in respect of goods or services delivered to customers for which a trade receivable does not yet exist, and finance lease receivables recognised where the Group acts as a lessor. See note 20 ‘Leases’ for more information on the Group’s leasing activities.
Accounting policies
Trade receivables represent amounts owed by customers where the right to receive payment is conditional only on the passage of time. Trade receivables that are recovered in instalments from customers over an extended period are discounted at market rates and interest revenue is accreted over the expected repayment period. Other trade receivables do not carry any interest and are stated at their nominal value. When the Group establishes a practice of selling portfolios of receivables from time to time these portfolios are recorded at fair value through other comprehensive income; all other trade receivables are recorded at amortised cost.
The carrying value of all trade receivables, contract assets and finance lease receivables recorded at amortised cost is reduced by allowances for lifetime estimated credit losses. Estimated future credit losses are first recorded on the initial recognition of a receivable and are based on the ageing of the receivable balances, historical experience and forward looking considerations. Individual balances are written off when management deems them not to be collectible.
| | | | |
| | 2023 | | 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 instruments1 |
| 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 instruments1 |
| 482 |
| 410 |
|
| 10,705 |
| 11,019 |
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 Group’s trade receivables and contract assets are classified at amortised cost unless stated otherwise and are measured after allowances for future expected credit losses, see note 22 ‘Capital and financial risk management’ for more information on credit risk.
The carrying amounts of trade and other receivables, which are measured at amortised cost, approximate their fair value and are predominantly non-interest bearing.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
14. Trade and other receivables (continued)
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 the future cash flows to net present values using appropriate market interest rates and foreign currency rates prevailing at 31 March.
15. Trade and other payables
Trade and other payables mainly consist of amounts owed to suppliers that have been invoiced or are accrued and contract liabilities relating to consideration received from customers in advance. They also include taxes and social security amounts due in relation to the Group’s role as an employer. Derivative financial instruments with a negative market value are reported within this note.
Accounting policies
Trade payables are not interest-bearing and are stated at their nominal value.
| | | | |
| | 2023 | | 2022 |
| | €m | | €m |
Included within non-current liabilities |
|
|
|
|
Other payables |
| 520 |
| 452 |
Accruals |
| 48 |
| 28 |
Contract liabilities |
| 500 |
| 530 |
Derivative financial instruments1 |
| 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 |
Accruals2 |
| 4,814 |
| 6,991 |
Contract liabilities |
| 2,043 |
| 1,991 |
Derivative financial instruments1 |
| 306 |
| 166 |
|
| 18,247 |
| 19,661 |
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 market interest rates and foreign currency rates prevailing at 31 March.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
16. Provisions
A provision is a liability recorded in the statement of financial position, where there is uncertainty over the timing or amount that will be paid, and is therefore often estimated. The main provisions we hold are in relation to asset retirement obligations, which include the cost of returning network infrastructure sites to their original condition at the end of the lease and claims for legal and regulatory matters.
Accounting policies
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material. Where the timing of settlement is uncertain amounts are classified as non-current where settlement is expected more than 12 months from the reporting date.
Asset retirement obligations
In the course of the Group’s activities, a number of sites and other assets are utilised which are expected to have costs associated with decommissioning. The associated cash outflows are substantially expected to occur at the dates of decommissioning of the assets to which they relate, and are long term in nature.
Legal and regulatory
The Group is involved in a number of legal and other disputes, including where the Group has received notifications of possible claims. The Directors of the Company, after taking legal advice, have established provisions considering the facts of each case. For a discussion of certain legal issues potentially affecting the Group see note 29 ‘Contingent liabilities and legal proceedings’ to the consolidated financial statements.
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
Other provisions comprise various items that do not fall within the Group’s other categories of 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 |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
16. Provisions (continued)
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 |
| 2,548 |
17. Called up share capital
Called up share capital is the number of shares in issue at their par value. A number of shares were allotted during the year in relation to employee share schemes.
Accounting policies
Equity instruments issued by the Group are recorded at the amount of the proceeds received, net of direct issuance costs.
| | | | | | | | |
| | | | | | | | |
| | 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 a maturing £1.72 billion subordinated mandatory convertible bond. |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
18. Reconciliation of net cash flow from operating activities
The table below shows how our profit for the year from continuing operations translates into cash flows generated from our operating activities.
| | | | | | | | |
| | | | | | Re-presented1 | | Re-presented1 |
| | | | 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 ‘Discontinued operations and assets held for sale’ for more information. |
19. Cash and cash equivalents
The majority of the Group’s cash is held in bank deposits or money market funds which have a maturity of three months or less from acquisition to enable us to meet our short-term liquidity requirements.
Accounting policies
Cash and cash equivalents comprise cash 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 profit or loss for the period. All other cash and cash equivalents are measured at amortised cost.
| | | | |
| | | | |
| | 2023 | | 2022 |
| | €m | | €m |
Cash and bank deposits1 |
| 3,924 |
| 2,220 |
Money market funds2 |
| 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). |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
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. |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
19. Cash and cash equivalents (continued)
The carrying amount of balances at amortised cost approximates their fair value.
Cash and cash equivalents of €1,572 million (2022: €1,554 million) are held in countries with restrictions on remittances but where the balances could be used to repay subsidiaries’ third party liabilities. In addition, those balances could also be used to repay €722 million (2022: €932 million) of intercompany liabilities as at 31 March 2023.
20. Leases
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.
Accounting policies
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 uses IFRS 15 principles to allocate the consideration in contracts between any lease and non-lease components.
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.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
20. Leases (continued)
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’.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
20. Leases (continued)
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.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
20. Leases (continued)
The committed amounts to be received from the Group’s operating leases are as follows:
| | | | | | | | | | | | | | |
| | Maturity | ||||||||||||
|
| Within one |
| In one to two |
| In two to |
| In three to four |
| In four to five |
| In more than |
|
|
| | year | | years | | three years | | years | | years | | 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 has no material lease income arising from variable lease payments.
21. Borrowings
The Group’s sources of borrowing for funding and liquidity purposes come from a range of committed bank facilities and through short-term and long-term issuances in the capital markets including bond and commercial paper issues and bank loans. Liabilities arising from the Group’s lease arrangements are also reported in borrowings; see note 20 ‘Leases’. We manage the basis on which we incur interest on debt between fixed interest rates and floating interest rates depending on market conditions using interest rate derivatives. The Group enters into foreign exchange contracts to mitigate the impact of exchange rate movements on certain monetary items.
Accounting policies
Interest-bearing loans and overdrafts are initially measured at fair value (which is equal to cost at inception), and are subsequently measured at amortised cost, using the effective interest rate method. Where they are identified as a hedged item in a designated fair value hedge relationship, fair value adjustments are recognised in accordance with our policy (see note 22 ‘Capital and financial risk management’). Any difference between the proceeds net of transaction costs and the amount due on settlement or redemption of borrowings is recognised over the term of the borrowing. Where bonds issued with certain conversion rights are identified as compound instruments they are initially measured at fair value with the nominal amounts recognised as a component in equity and the fair value of future coupons included in borrowings. These are subsequently measured at amortised cost using the effective interest rate method.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
21. Borrowings (continued)
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 borrowings1 | | 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 borrowings1 |
| 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%).
| |
| |
| |
Notes to the consolidated financial statements (continued) |
21. Borrowings (continued)
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.
Treasury shares
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 issued share capital at that time.
22. Capital and financial risk management
This note details the treasury management and financial risk management objectives and policies, as well as the exposure and sensitivity of the Group to credit, liquidity, interest and foreign exchange risk, and the policies in place to monitor and manage these risks.
Accounting policies
Financial instruments
Financial assets and financial liabilities, in respect of financial instruments, are recognised on the Group’s consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.
Financial liabilities and equity instruments
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that provides a residual interest in the assets of the Group after deducting all of its liabilities and includes no obligation to deliver cash or other financial assets. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.
Financial liabilities under put option arrangements
The Group has an obligation to pay a fixed rate of return to minority equity shareholders in the Group’s subsidiary Kabel Deutschland AG, under the terms of a court-imposed domination and profit and loss transfer agreement. This agreement also provides the minority shareholders the option to put their shareholding to Vodafone at a fixed price per share. The obligation to purchase the shares has been recognised as a financial liability and no non-controlling interests are recognised in respect of minority shareholders. Interest costs are accrued at the agreed rate of return and recognised in financing costs.
Derivative financial instruments and hedge accounting
The Group’s activities expose it to the financial risks of changes in foreign exchange rates and interest rates which it manages using derivative financial instruments. The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which provide written principles on the use of financial derivatives consistent with the Group’s risk management strategy. The Group does not use derivative financial instruments for speculative purposes.
The Group designates certain derivatives as:
– | hedges of the change in fair value of recognised assets and liabilities (‘fair value hedges’); |
– | hedges of highly probable forecast transactions or hedges of foreign currency or interest rate risks of firm commitments (‘cash flow hedges’); or |
– | hedges of net investments in foreign operations. |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
22. Capital and financial risk management (continued)
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 operation is disposed of.
Capital management
The following table summarises the capital of the Group at 31 March:
| | | | |
| | | | Re-presented1 |
| | 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.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
22. Capital and financial risk management (continued)
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 borrowings.
Financial risk management
The Group’s treasury function centrally manages the Group’s funding requirement, net foreign exchange exposure, interest rate management exposures and counterparty risk arising from investments and derivatives. Treasury operations are conducted within a framework of policies and guidelines authorised and reviewed by the Board, most recently in 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.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
22. Capital and financial risk management (continued)
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial asset leading to a financial loss for the Group. The Group is exposed to credit risk from its operating activities and from its financing activities, the Group considers its maximum exposure to credit risk at 31 March to be:
| | | | |
| | 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’.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
22. Capital and financial risk management (continued)
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 |
Other1 |
| (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:
| | | | | | | | | | | | |
| | | | Trade receivables at amortised cost past due | ||||||||
| | | | 30 days | | 31-60 | | 61-180 | | 180 | | |
| | Due | | or less | | days | | days | | days+ | | Total |
31 March 2023 |
| €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 |
| | | | | | | | | | | | |
| | | | Trade receivables at amortised cost past due | ||||||||
| | | | 30 days | | 31–60 | | 61–180 | | 180 | | |
| | Due | | or less | | days | | days | | days+ | | Total |
31 March 2022 |
| €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 comprehensive income are not materially past due. |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
22. Capital and financial risk management (continued)
Liquidity risk
Liquidity is reviewed daily on at least a 12 month rolling basis and stress tested on the assumption that any commercial paper outstanding matures and is not reissued. The Group maintains substantial cash and cash equivalents which at 31 March 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:
| | | | | | | | | | | | | | |
| | | | | | | | | | | | Trade payables and | | |
| | Bank loans | | Bonds | | Lease liabilities | | Other2 | | Total borrowings | | other financial liabilities3 | | Total |
Maturity profile1 | | €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. |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
22. Capital and financial risk management (continued)
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 | ||||||||
| | Payable1 | | Receivable1 | | Total | | Payable1 | | Receivable1 | | 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 | Payables and receivables are stated separately in the table above as cash settlement is on a gross basis. |
Market risk
Interest rate management
Under the Group’s interest rate management policy, interest rates on long-term monetary assets and liabilities are principally maintained on a fixed rate basis.
At 31 March 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).
Foreign exchange management
As Vodafone’s primary listing is on the London Stock Exchange its share price is quoted in sterling. Since the sterling share price represents the value of its future multi-currency cash flows, principally in euro, South African rand and sterling, the Group maintains the currency of debt and interest charges in proportion to its expected future principal cash flows and has a policy to hedge external foreign exchange risks on transactions denominated in other currencies above a certain de minimis level.
At 31 March 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%).
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
22. Capital and financial risk management (continued)
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) |
| (67) |
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 increase or decrease in profit before tax (2022: €36 million).
Risk management strategy of hedge relationships
The risk strategies of the designated cash flow, fair value, and net investment hedges reflect the above market risk strategies.
The objective of the cash flow hedges is principally to convert foreign currency denominated fixed rate borrowings in US dollar, pound sterling, Australian dollar, Swiss franc, Hong Kong dollar, Japanese yen, Norwegian krona and 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.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
22. Capital and financial risk management (continued)
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.
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | 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 | | 20231 | | year | | FX rate | | rate |
At 31 March 2023 |
| €m |
| €m |
| €m |
| €m |
| €m |
| €m |
| €m |
| |
| |
| % |
Cash flow hedges - foreign currency risk3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 forwards2 | | 383 | | – | | 34 | | (69) | | 34 | | 1 | | (34) | | 2023 | | 18.92 | | – |
Cash flow hedges - foreign currency and interest rate risk3 |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Cross currency swaps - US dollar bonds |
| 417 |
| 49 |
| – |
| (1) |
| (20) |
| 10 |
| (11) |
| 2023 |
| 1.17 |
| 1.07 |
Net investment hedge - foreign exchange risk5 |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
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) | | | | | | |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
22. Capital and financial risk management (continued)
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Other comprehensive income | | Weighted average | ||||||||||
| | | | | | | | Opening | | | | Gain/(Loss) | | Closing | | | | | | |
| | | | Carrying | | Carrying | | balance | | (Gain)/Loss | | recycled to | | balance | | | | | | Euro |
| | Nominal | | value | | value | | 1 April | | deferred to | | financing | | 31 March | | Maturity | | | | interest |
| | amounts | | assets | | liabilities | | 2021 | | OCI | | costs | | 20221 | | year | | FX rate | | rate |
At 31 March 2022 |
| €m |
| €m |
| €m |
| €m |
| €m |
| €m |
| €m |
| |
| |
| % |
Cash flow hedges – foreign currency risk3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 forwards2 | | 244 | | – | | 69 | | – | | (72) | | 3 | | (69) | | 2022 | | 12.34 | | – |
Cash flow hedges – foreign currency and interest rate risk3 |
| |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross currency swaps - US dollar bonds |
| 417 |
| 24 |
| – |
| 8 |
| (33) |
| 24 |
| (1) |
| 2023 |
| 1.17 |
| 1.07 |
Cash flow hedges – interest rate risk3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps – Euro loans |
| – |
| – |
| – |
| (1) |
| – |
| 1 |
| – |
| – |
| – |
| – |
Net investment hedge – foreign exchange risk5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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). |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
22. Capital and financial risk management (continued)
Changes in assets and liabilities arising from financing activities
| | | | | | | | | | |
| | | | | | | | | | Assets and liabilities |
| | | | Derivative assets | | Financial liabilities | | | | arising from |
| | Borrowings | | and liabilities | | under put options | | Other liabilities | | 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) |
Other1 | | 15 | | – | | – | | 684 | | 699 |
31 March 2023 | | 66,390 | | (4,702) | | 485 | | 103 | | 62,276 |
| | | | | | | | | | |
| | | | | | | | | | Assets and liabilities |
| | | | Derivative assets | | Financial liabilities | | | | arising from |
| | Borrowings | | and liabilities | | under put options | | Other liabilities | | 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 |
Other1 | | 124 | | – | | – | | 3,106 | | 3,230 |
31 March 2022 | | 70,092 | | (2,954) | | 494 | | 1,498 | | 69,130 |
Note:
1 | Movement in Other liabilities primarily relate to share buyback programmes. |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
22. Capital and financial risk management (continued)
Fair value and carrying value information
The carrying value and valuation basis of the Group’s financial assets are set out in notes 13 ‘Other investments’, 14 ‘Trade and other receivables’ and 19 ‘Cash and cash equivalents’. For all financial assets held at amortised cost the carrying values approximate fair value 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.
| | | | | | | | | | | | |
| | | | | | | | Related amounts not set off in the balance sheet | ||||
| | | | | | Amounts | | Right of set off | | | | |
| | | | | | presented in | | with derivative | | Collateral | | |
| | Gross amount | | Amount set off | | balance sheet | | counterparties | | (liabilities)/assets1 | | Net amount |
At 31 March 2023 |
| €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 |
| | | | | | | | | | | | |
| | | | | | | | Related amounts not set off in the balance sheet | ||||
| | | | | | Amounts | | Right of set off | | | | |
| | | | | | presented in | | with derivative | | Collateral | | |
| | Gross amount | | Amount set off | | balance sheet | | counterparties | | (liabilities)/assets1 | | Net amount |
At 31 March 2022 |
| €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. |
Financial assets and liabilities are offset and the net amount reported in the consolidated balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Derivative financial instruments that do not meet the criteria for offset could be settled net in certain circumstances under ISDA (‘International Swaps and Derivatives Association’) agreements where each party has the option to settle amounts on a net basis in the event of default from the other. Collateral may be offset and net settled against derivative financial instruments in the event of default by either party. The aforementioned collateral balances are recorded in Notes 13 ‘Other investments’ or 21 ‘Borrowings’ respectively.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
23. Directors and key management compensation
This note details the total amounts earned by the Company’s Directors and members of the Executive Committee.
Directors
Aggregate emoluments of the Directors of the Company were as follows:
| | | | | | |
|
| |
| Re-presented1 |
| Re-presented1 |
| | 2023 | | 2022 | | 2021 |
| | €m | | €m | | €m |
Short-term remuneration |
| 6 |
| 7 |
| 7 |
Long-term incentive schemes2 |
| 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 |
| 39 |
24. Employees
This note shows the average number of people employed by the Group during the year, in which areas of our business our employees work and where they are based. It also shows total employment costs.
| | | | | | |
|
| 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 Towers1 | | 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. |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
24. Employees (continued)
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 |
| 5,157 |
25. Post employment benefits
The Group operates a number of Defined Benefit and Defined Contribution retirement plans for our employees. The Group’s largest defined benefit plan is in the UK. For further details see ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation’.
Accounting policies
For defined benefit retirement plans, the difference between the fair value of the plan assets and the present value of the plan liabilities is recognised as an asset or 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.
The Group’s contributions to defined contribution pension plans are charged to the consolidated income statement as they fall due.
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.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
25. Post employment benefits (continued)
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.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
25. Post employment benefits (continued)
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 March1 |
|
|
|
|
|
|
Rate of inflation2 |
| 3.0 |
| 3.3 |
| 2.9 |
Rate of increase in salaries3 |
| 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)/costs1 |
| – |
| (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).
| |
| |
| |
Notes to the consolidated financial statements (continued) |
25. Post employment benefits (continued)
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:
| | | | | | |
|
| |
| |
| Net surplus/ |
| | Assets | | Liabilities | | (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: |
| |
| |
Assets1 |
| 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. |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
25. Post employment benefits (continued)
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).
| |
| |
| |
Notes to the consolidated financial statements (continued) |
25. Post employment benefits (continued)
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 value of defined benefit obligation1 |
| (222) |
| 260 |
| (1) |
| 1 |
| 385 |
| (341) |
| (129) |
| 128 |
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 assumption sensitivity factors in the impact of changes to all assumptions relating to inflation including the rate of increase in salaries, pension increases and deferred revaluations. |
26. Share-based payments
The Group has a number of share plans used to award shares to Executive Directors and employees as part of their remuneration package. A charge is recognised over the vesting period in the consolidated income statement to record the cost of these, based on the fair value of the award on the grant date.
Accounting policies
The Group issues equity-settled share-based awards to certain employees. Equity-settled share-based awards are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based award is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions. A corresponding increase in additional paid-in capital is also recognised.
Some share awards have an attached market condition, based on total shareholder return (‘TSR’), which is taken into account when calculating the fair value of the share awards. The valuation for the TSR is based on Vodafone’s ranking within the same group of companies, where possible, over the past five years.
The fair value of awards of non-vested shares is 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 on an all-employee basis. |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
26. Share-based payments (continued)
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 | |||||||||
| | | | | | | Weighted | | | | | | Weighted |
| | | | | | | remaining | | | | | | remaining |
| | | | Weighted | | average | | | | Weighted | | average | |
| | Outstanding | | average | | contractual | | Outstanding | | average | | contractual | |
| | shares | | exercise | | life | | shares | | exercise | | life | |
| | Millions | | price | | Months | | Millions | | price | | Months | |
Vodafone Group Sharesave Plan: | |
|
| |
|
|
|
|
|
|
|
|
|
£0.78 – £1.78 | | 62 | | | £0.87 |
| 33 |
| 61 |
| £1.02 |
| 24 |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
26. Share-based payments (continued)
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 average share price for the year ended 31 March 2023 was 108.2 pence (2022: 122.1 pence; 2021: 120.8 pence).
27. Acquisitions and disposals
The note below provides details of acquisition and disposal transactions for the current year as well as those completed in the prior year. For further details see ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation’ to the consolidated financial statements.
Accounting policies
Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed and equity instruments issued by the Group. Acquisition-related costs are recognised in the 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 acquired, liabilities and contingent liabilities assumed. The choice of measurement basis is made on an acquisition-by-acquisition basis.
Acquisition of interests from non-controlling shareholders
In transactions with non-controlling parties that do not result in a change in control, the difference between the fair value of the consideration paid or received and the amount by which the non-controlling interest is adjusted is recognised in equity.
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.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
27. Acquisitions and disposals (continued)
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 disposal1 | | (69) |
Note:
1 | Included in other income in the consolidated income statement. |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
27. Acquisitions and disposals (continued)
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 disposal2 |
| 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 increased from 60.5% to 65.1%. .
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
28. Commitments
A commitment is a contractual obligation to make a payment in the future, mainly in relation to agreements to buy assets such as mobile devices, network infrastructure and IT systems and leases that have not commenced. These amounts are not recorded in the consolidated statement of financial position since we have not yet received the goods or services from the supplier.
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 statements1 |
| 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 can be in the form of free capital reserves, shareholder loan, loan notes or similar instruments as agreed by the shareholders.
29. Contingent liabilities and legal proceedings
Contingent liabilities are potential future cash outflows, where the likelihood of payment is considered more than remote, but is not considered probable or cannot be measured reliably.
| | | | |
| | 2023 | | 2022 |
|
| €m |
| €m |
Performance bonds1 |
| 504 |
| 430 |
Other guarantees2 |
| 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.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
29. Contingent liabilities and legal proceedings (continued)
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 2017, the parties agreed a mechanism for payments between the Group and Vodafone Idea Limited (‘VIL’) pursuant to the difference between the crystallisation of certain identified contingent liabilities in relation to legal, regulatory, tax and other matters, and refunds relating to Vodafone India and Idea Cellular. Cash payments or cash receipts relating to these matters must have been made or received by VIL before any amount becomes due from or owed to the Group. Any future payments by the Group to VIL as a result of this agreement would only be made after satisfaction of this and other contractual conditions.
The Group’s potential exposure under this mechanism is 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.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
29. Contingent liabilities and legal proceedings (continued)
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.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
29. Contingent liabilities and legal proceedings (continued)
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. lliad has filed an appeal before the court of Appeal of Milan.
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 is not able to estimate any possible loss in the event of an adverse judgment.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
30. Related party transactions
The Group has a number of related parties including joint arrangements and associates, pension schemes and Directors and Executive Committee members (see note 12 ‘Investments in associates and joint arrangements’, note 25 ‘Post employment benefits’ and note 23 ‘Directors and key management compensation’).
Transactions with joint arrangements and associates
Related party transactions with the Group’s joint arrangements and associates primarily comprise fees for the use of products and services including network airtime and access charges, fees for the provision of network infrastructure and cash pooling arrangements. No related party transactions have been entered into during the year which might reasonably affect any decisions made by the users of these consolidated financial statements except as disclosed below.
| | | | | | |
| | 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 arrangements1 | | 52 | | 48 | | 65 |
Interest expense payable to joint arrangements1 |
| 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 arrangements1 |
| 980 |
| 1,080 |
| – |
Other balances owed to joint arrangements2 |
| 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 21 June 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 21 June 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 material interest.
| |
| |
| |
Notes to the consolidated financial statements (continued) |
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
A subsidiary is an entity directly or indirectly controlled by the Company. Control is achieved where the Company has existing rights that give it the current ability to direct the activities that affect the Company’s returns and exposure or rights to variable returns from the entity. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder’s share of changes in equity since the date of the combination. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
31. Related undertakings (continued)
| | |
Company name | % of share class held | 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 |
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 Branch2 | 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) SA5 | 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.A5 | 33.20 | Ordinary shares |
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 Branch2 | 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 | | |
Starnet5 | 35.81 | Ordinary shares |
54 El Batal Ahmed Abed El Aziz, Mohandseen, Giza, Egypt | | |
Sarmady Communications5 | 35.82 | Ordinary shares |
Building no. 2109 “VHUB1”, Smart Village, Cairo Alexandria, Egypt | | |
Vodafone International Services LLC5 | 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 Vodafone Building, Egypt | | |
Vodafone Data5 | 35.81 | Ordinary shares |
Vodafone Building Zahraa EL Maadi, Building A, Service Area D, Maadi, Cairo, Egypt | | |
Vodafone For Trading5 | 35.78 | Ordinary shares |
Finland | | |
c/o Eversheds Asianajotoimisto Oy, Fabianinkatu 29 B, Helsinki, 00100, Finland | | |
Vodafone Enterprise Finland Oy | 100.00 | Ordinary shares |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
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 Branch2 | 100.00 | Branch |
Germany | | |
Altes Forsthaus 2, 67661, Kaiserslautern, Germany | | |
TKS Telepost Kabel-Service Kaiserslautern GmbH3 | 94.01 | Ordinary shares |
Betastraße 6-8, 85774 Unterföhring, Germany | | |
Kabel Deutschland Holding AG | 94.01 | Ordinary shares |
Vodafone Customer Care GmbH3 | 94.01 | Ordinary shares |
Vodafone Deutschland GmbH | 94.01 | Ordinary shares |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
31. Related undertakings (continued)
| | |
Company name | % of share class held | Share class |
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 Haftung3 | 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.KG3 | 65.80 | Ordinary shares |
Seilerstrasse 18, 38440, Wolfsburg, Germany | | |
KABELCOM Wolfsburg Gesellschaft für Breitbandkabel-Kommunikation mit beschränkter Haftung3 | 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 Telecommunications 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 Limited5 | 65.10 | Ordinary shares, Non-voting irredeemable non-cumulative preference shares |
VBA International Limited5 | 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 - Branch2 | 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 |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
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 |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
31. Related undertakings (continued)
| | |
Company name | % of share class held | Share Class |
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 Branch2 | 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 Limited5 | 69.46 | Ordinary voting shares |
The Riverfront, 4th floor, Prof. David Wasawo Drive, Off Riverside Drive, Nairobi, Kenya | | |
Vodacom Business (Kenya) Limited5 | 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) Limited5 | 52.08 | Ordinary shares |
VCL Financial Services (Pty) Ltd5 | 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 VM15 | 65.10 | Ordinary shares |
Mobile Wallet VM25 | 65.10 | Ordinary shares |
VBA (Mauritius) Limited5 | 65.10 | Ordinary shares, Redeemable preference shares |
Vodacom International Limited5 | 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, SA5 | 55.33 | Ordinary shares |
Vodafone M-Pesa, S.A5 | 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 |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
Zuid-hollanden 7, Rode Olifant, Spaces, 2596AL, den Haag, Netherlands | | |
IoT.nxt USA BV5 | 42.31 | Ordinary shares |
IOT.NXT B.V.5 | 42.31 | Ordinary shares |
IoT.nxt Europe BV5 | 42.31 | Ordinary shares |
New Zealand | | |
74 Taharoto Road, Takapuna, Auckland, 0622, New Zealand | | |
Vodafone Enterprise Hong Kong Limited - New Zealand Branch2 | 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 Branch2 | 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 |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
31. Related undertakings (continued)
| | |
| % of share class | |
| held by Group | |
Company name | Companies | Share class |
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 Branch2 | 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 Branch2 | 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 Branch2 | 100.00 | Branch |
Prievozská 6, Bratislava, 821 09, Slovakia | | |
Vodafone Czech Republic A.S. – Slovakia Branch2 | 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) Limited5 | 42.31 | Ordinary shares |
IoT.nxt Development (Pty) Limited5 | 42.31 | Ordinary shares |
10T Holdings Proprietary Limited5 | 42.31 | Ordinary shares |
Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand, 1685, South Africa | | |
Jupicol (Proprietary) Limited5 | 45.57 | Ordinary shares |
Storage Technology Services (Pty) Limited5 | 33.20 | Ordinary shares |
Infinity Services Partner Company5 | 65.10 | Ordinary shares |
Mezzanine Ware (RF) Proprietary Limited5 | 58.59 | Ordinary shares |
Motifprops 1 (Proprietary) Limited5 | 65.10 | Ordinary shares |
Vodacom (Pty) Limited5 | 65.10 | Ordinary shares, Ordinary A shares |
Vodacom Business Africa Group (Pty) Limited5 | 65.10 | Ordinary shares |
Vodacom Business Africa SA (Pty) Limited5 | 65.10 | Ordinary shares |
Vodacom Financial Services (Proprietary) Limited5 | 65.10 | Ordinary shares |
Vodacom Group Limited | 65.10 | Ordinary shares |
Vodacom Insurance Administration Company (Proprietary) Limited5 | 65.10 | Ordinary shares |
Vodacom Insurance Company (RF) Limited5 | 65.10 | Ordinary shares |
Vodacom International Holdings (Pty) Limited5 | 65.10 | Ordinary shares |
Vodacom Life Assurance Company (RF) Limited5 | 65.10 | Ordinary shares |
Vodacom Payment Services (Proprietary) Limited5 | 65.10 | Ordinary shares |
Vodacom Properties No 1 (Proprietary) Limited5 | 65.10 | Ordinary shares |
Vodacom Properties No.2 (Pty) Limited5 | 65.10 | Ordinary shares |
Vodacom Tower Company Proprietary Limited5 | 65.10 | Ordinary shares |
Wheatfields Investments 276 (Proprietary) Limited5 | 65.10 | Ordinary shares |
XLink Communications (Proprietary) Limited5 | 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 | | |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
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 Limited5 | 48.82 | Ordinary A shares, Ordinary B shares |
Shared Networks Tanzania Limited5 | 48.82 | Ordinary shares |
Vodacom Tanzania Public Limited Company5 | 48.82 | Ordinary shares |
3rd Floor, Maktaba (Library), ComplexBibi, Titi Mohaned Road, Dar es Salaam, Tanzania, United Republic of | | |
Gateway Communications Tanzania Limited5 | 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 |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
31. Related undertakings (continued)
| | |
| % of share class | |
| held by Group | |
Company name | Companies | Share Class |
United Arab Emirates | | |
16-SD 129, Ground Floor, Building 16-Co Work, Dubai Internet City, United Arab Emirates | | |
Vodacom Fintech Services FZ-LLC5 | 65.10 | Ordinary shares |
Office 101, 1st Floor, DIC Building 1, Dubai Internet City, Dubai, United Arab Emirates | | |
Vodafone Enterprise Europe (UK) Limited – Dubai Branch2 | 100.00 | Branch |
United Kingdom | | |
11 Staple Inn Building, London, WC1V 7QH, United Kingdom | | |
Vodacom Business Africa Group Services Limited5 | 65.10 | Ordinary shares, Preference shares |
Vodacom Investments Company Proprietary Limited5 | 65.10 | Ordinary shares |
Vodacom UK Limited5 | 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 | 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, |
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 |
Vodafone2 | 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 Americas4 | 100.00 | Ordinary shares |
Vodafone Automotive UK Limited | 100.00 | Ordinary shares |
Vodafone Benelux Limited | 100.00 | Ordinary shares |
Vodafone Cellular Limited1 | 100.00 | Ordinary shares |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
31. Related undertakings (continued)
| | |
| % of share class | |
| held by Group | |
Company name | Companies | Share Class |
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 Investments1 | 100.00 | Ordinary shares |
Vodafone European Portal Limited1 | 100.00 | Ordinary shares |
Vodafone Finance Limited1 | 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 Limited1 | 100.00 | Ordinary shares |
Vodafone Group Pension Trustee Limited1 | 100.00 | Ordinary shares |
Vodafone Group Services Limited | 100.00 | Ordinary shares, deferred shares |
Vodafone Group Services No.2 Limited1 | 100.00 | Ordinary shares |
Vodafone Group Share Trustee Limited1 | 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 Branch2 | 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 Limited1 | 100.00 | Ordinary shares, Zero coupon redeemable preference shares |
Vodafone IP Licensing Limited1 | 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 Limited1 | 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 Limited1 | 100.00 | Ordinary shares |
Vodafone Ventures Limited1 | 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 Inc5 | 42.31 | Common stock |
1450 Broadway, Fl 11, Suite 104, New York NY 10018, United States | | |
Cable & Wireless Americas | 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 |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
31. Related undertakings (continued)
Associated undertakings and joint arrangements
| | |
Company Name | % of share | Share Class |
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 | | |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
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 Company5 | 19.48 | Ordinary shares |
Germany | | |
38 Berliner Allee, 40212, Düsseldorf, Germany | | |
MNP Deutschland Gesellschaft | 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 GmbH3 | 47.00 | Ordinary shares |
Prinzenallee 11-13, 40549, Düsseldorf, Germany | | |
Vantage Towers AG | 57.30 | Ordinary shares |
Vantage Towers Erste Verwaltungsgesellschaft mbH4 | 57.30 | Ordinary shares |
Vantage Towers Zweite Verwaltungsgesellschaft mbH4 | 57.30 | Ordinary shares |
Greece | | |
2 Adrianeiou str, Athens, 11525, Greece | | |
Vantage Towers Single Member Societe Anonyme4 | 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 Részvénytársaság4 | 57.30 | Ordinary shares |
India | | |
10th Floor, Birla Centurion, Century Mills Compound, Pandurang Budhkar Marg, Worli, Mumbai, Maharashtra, 400030, India | | |
Vodafone Foundation6 | 31.81 | Ordinary shares |
Vodafone Idea Shared Services Limited6 | 32.29 | Ordinary shares |
Vodafone Idea Technology Solutions Limited6 | 32.29 | Ordinary shares |
Vodafone m-pesa Limited6 | 32.29 | Ordinary shares |
You Broadband India Limited6 | 32.29 | Equity shares |
A-19, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi, Delhi, 110044, India | | |
FireFly Networks Limited6 | 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 Limited6 | 31.91 | Ordinary shares |
Vodafone House, Corporate Road, Prahladnagar, Off S. G. Highway, Ahmedabad, Gujarat, 380051, India | | |
Vodafone Idea Business Services Limited6 | 32.29 | Ordinary shares |
Vodafone Idea Communication Systems Limited6 | 32.29 | Ordinary shares |
Vodafone Idea Telecom Infrastructure Limited6 | 32.29 | Ordinary shares |
Ireland | | |
Mountainview, Leopardstown, Dublin 18, Ireland | | |
Vantage Towers Limited4 | 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 Limited5 | 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 |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
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) Limited5 | 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) Ltd5 | 12.10 | Ordinary shares |
Celtis Plaza North, 1085 Schoeman Street, Hatfield, Pretoria, 0028, South Africa | | |
Afri G I S (Pty) Ltd5 | 21.16 | Ordinary shares |
Rigel Office Park Block A, No 446 Rigel Avenue South, Erasmu, South Africa | | |
Canard Spatial Technologies Proprietary Limited5 | 21.16 | Ordinary shares |
Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand, 1685, South Africa | | |
M-Pesa S.A (Proprietary) Limited5 | 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 Limited5 | 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 Limited5 | 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 Limited5 | 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 | | |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
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. |
| | | |
| | | |
| | | |
Notes to the consolidated financial statements (continued) | | | |
| | |
31. Related undertakings (continued)
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.
| | | | | | | | |
| | | | | | Vodafone Egypt | ||
| | Vodacom Group Limited | | Telecommunications S.A.E1 | ||||
| | 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 Group’s internal reporting structure, following the transfer of Vodafone Egypt to the Vodacom Group in December 2022. |
| |
| |
| |
Notes to the consolidated financial statements (continued) |
32. Subsidiaries exempt from audit
The following UK subsidiaries will take advantage of the audit exemption set out within section 479A of the Companies Act 2006 for the year ended 31 March 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 | |
| |
| |
| |
Notes to the consolidated financial statements |
33.Subsequent events
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 transaction is subject to various approvals which are expected to be obtained before or during July 2023.
Vodafone UK and Three UK merger
On 14 June 2023, the Group and CK Hutchison Group Telecom Holdings Limited (‘CKHGT’), a subsidiary of CK Hutchison Holdings Limited (‘CK Hutchison’) entered into binding agreements to combine their UK telecommunication businesses, respectively Vodafone UK and Three UK. Vodafone UK and Three UK will be contributed to ‘MergeCo’ with differential debt amounts at completion of the transaction to achieve MergeCo ownership of 51:49. Vodafone UK will be contributed with debt of £4.3 billion and Three UK with £1.7 billion, subject to customary completion adjustments. No cash consideration will be paid.
The Group and CKHGT have entered into a comprehensive governance framework which will result in the Group fully consolidating MergeCo. A put/call framework will enable the Group to acquire 100% of MergeCo. Under the put/call framework, after three financial years following completion of the transaction the Group may acquire CKHGT’s 49.0% stake in MergeCo (the ‘Call Option’), and CKHGT may sell its 49.0% stake in MergeCo to the Group (the ‘Put Option’). The consideration for CKHGT’s 49.0% stake in MergeCo will be based on fair market value, determined by an independent third-party valuation process. Exercise of the Call Option and Put Option will be subject to fair market value reaching a minimum enterprise value of £16.5 billion for MergeCo (the ‘Exercise Threshold’). After the seventh financial year following completion of the transaction, the Exercise Threshold shall not apply to the exercise of the Put Option. Completion under the Call Option and the Put Option will be subject to customary third-party approvals and consents.
In respect of both the Call Option and the Put Option, the Group can elect to pay CKHGT in cash and/or non-cash consideration (being new shares and convertible loan notes issued by the Group), subject to certain conditions and protections for CKHGT as a result of holding any such non-cash consideration. For any non-cash consideration, one third shall be settled by the issuance of new Vodafone shares subject to a cap of 5% (in the case of the Call Option only) of the enlarged issued share capital of the Group. The remainder of the non-cash consideration shall be settled by loan notes. 50% will mature on the second anniversary of completion of the Call Option or the Put Option and the residual 50% of which will mature on the fourth anniversary of the completion of the Call Option or Put Option. On the maturity dates, the Group shall redeem the loan notes, based on a mix of cash and/or new Vodafone shares at its election.
The transaction is subject to certain regulatory conditions, including clearance from the UK’s Competition and Markets Authority and approval under the UK National Security and Investment Act. Approvals will also be required from both the Group’s and CK Hutchison’s shareholders.
Bond issuances and repurchases
On 25 May 2023, the Group issued subordinated debt securities, under its euro medium-term note programme, with nominal amounts of €750 million and £500 million (maturing on 30 August 2084 and 30 August 2086 respectively) and repurchased €1,561 million and $324 million of outstanding subordinated debt securities on 6 June 2023 (maturing on 3 January 2079 and 3 October 2078 respectively) as part of a liability management exercise.