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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F







| ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------------

OR



|þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended: March 31, 2014

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

OR



| ̈ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------

Date of event requiring this shell company report:

For the transition period from:  to

Commission file number: 001-10086

VODAFONE GROUP PUBLIC LIMITED
COMPANY

(Exact name of Registrant as specified in its charter)

England

(Jurisdiction of incorporation or organization)

Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, England

(Address of principal executive offices)

Rosemary Martin (Group General Counsel and Company Secretary)

tel +44
(0) 1635 33251, fax +44 (0) 1635 580 857

Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, England

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange
on which registered
|See Schedule A      |  | See Schedule A                           

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number
of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report.



|                                           |  |  |                | 
|------------------------------------------ |  |  | -------------- | 
|Ordinary Shares of 2020/21US cents each    |  |  | 26,439,960,221 | 
|7% Cumulative Fixed Rate Shares of £1 each |  |  | 50,000         | 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act

Yes  þ    No   ̈

If this report is an annual or transition report, indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes   ̈    No  þ

Indicate by
check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes  þ    No   ̈

Indicate by
check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):



|                           |  |                      |  |                         
|-------------------------- |  | -------------------- |  | ------------------------
|Large accelerated filer  þ |  | Accelerated filer   ̈ |  | Non-accelerated filer   ̈

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in
this filing:



|           |  |                                      |  |         
|---------- |  | ------------------------------------ |  | --------
|US GAAP   ̈ |  | International Financial Reporting  þ |  | Other   ̈
|           |  | Standards as issued by the           |  |         
|           |  | International Accounting             |  |         
|           |  | Standards Board                      |  |         

If Other has been checked in response to the previous question, indicate by check mark which financial
statement item the registrant has elected to follow

Item 17   ̈    Item 18   ̈

If this is an annual report, indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).

Yes   ̈    No  
þ





SCHEDULE A



|                                                                                                             |  |                                         
|------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------
|Title of each class                                                                                          |  | Name of each exchangeon which
registered
|Ordinary shares of 2020/21US cents each                                                                      |  | NASDAQ Global Select
Market*            
|American Depositary Shares (evidenced by American Depositary Receipts) each representing ten ordinary shares |  | NASDAQ Global Select Market             
|Floating rate Notes due February 2016                                                                        |  | New York Stock Exchange                 
|5.625% Notes due February 2017                                                                               |  | New York Stock Exchange                 
|1.625% Notes due March 2017                                                                                  |  | New York Stock Exchange                 
|1.25% Notes due September 2017                                                                               |  | New York Stock Exchange                 
|1.5% Notes due February 2018                                                                                 |  | New York Stock Exchange                 
|4.625% Notes due July 2018                                                                                   |  | New York Stock Exchange                 
|5.450% Notes due June 2019                                                                                   |  | New York Stock Exchange                 
|4.375% Notes due March 2021                                                                                  |  | New York Stock Exchange                 
|2.5% Notes due September 2022                                                                                |  | New York Stock Exchange                 
|2.95% Notes due February 2023                                                                                |  | New York Stock Exchange                 
|2.95% Notes due February 2023                                                                                |  | New York Stock Exchange                 
|7.875% Notes due February 2030                                                                               |  | New York Stock Exchange                 
|6.25% Notes due November 2032                                                                                |  | New York Stock Exchange                 
|6.15% Notes due February 2037                                                                                |  | New York Stock Exchange                 
|4.375% Notes due February 2043                                                                               |  | New York Stock Exchange                 



|* | Listed, not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange
Commission.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------









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LOGO

Empowering everybody to be confidently connected Vodafone group plc annual report on form 20-f 2014



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Vodafone Group Plc

Annual Report on Form 20-F 2014

Inside this years report







|                                                       
|-------------------------------------------------------
|The following sections constitute the strategic report:



|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  |  | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | --- | ----------------------------------------- | -------------------------------- | ------------ | --- | ------------------------------------- | --------------------------------------- | ------------------------- |  |  | 
|Overview In this section: An introduction to the report covering who we are, the Chairmans reflections on the year,
notable events, and a snapshot of where and how we do business.                                                                |     | 1   |                                           | About us                         |              |     |                                       |                                         |                           |  |  | 
|                                                                                                                                                                                                                                                    | 2   |     | Chairmans statement                      |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    | 3   |     | Financial highlights                      |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    | 4   |     | Our year                                  |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    | 8   |     | Where we do business                      |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    | 10  |     | How we do business                        |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  |  | 
|Strategy review In this section: A summary of the changing landscape we operate in, and how that has shaped our strategy and
financial position. Plus a review of performance against our goals and our approach to running a sustainable business. |     | 12  |                                           | Chief Executives review         |              | 21  |                                       | Our strategy                           
|                                                                                                                                                                                                                                                    | 14  |     | Crystallising value from Verizon Wireless |                                  |              |     | 22                                    |                                         | Consumer Europe          
|                                                                                                                                                                                                                                                    | 16  |     | Key performance indicators                |                                  |              |     | 24                                    |                                         | Unified Communications   
|                                                                                                                                                                                                                                                    | 18  |     | Market overview                           |                                  |              |     | 26                                    |                                         | Consumer Emerging Markets
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     | 28                                    |                                         | Enterprise                |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     | 30                                    |                                         | Network                   |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     | 32                                    |                                         | Operations                |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  | 34           |     | Sustainable business                 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  | 36           |     | Our people                           
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  |  | 
|Performance In this section: Commentary on operating performance for the Group, the key operating segments  Europe and
AMAP (Africa, Middle East and Asia Pacific), and a summary of key risks.                                                    |     | 38  |                                           | Chief Financial Officers review |              |     |                                       |                                         |                           |  |  | 
|                                                                                                                                                                                                                                                    | 40  |     | Operating results                         |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    | 46  |     | Risk summary                              |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  |  | 
|Governance In this section: The governance framework, including the role and effectiveness of the Board and the alignment of
the interests of management with long-term value creation.                                                             |     | 49  |                                           | Chairmans overview              |              |     |                                       |                                         |                           |  |  | 
|                                                                                                                                                                                                                                                    | 50  |     | Board of directors and Group management   |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    | 54  |     | Corporate governance                      |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    | 69  |     | Directors remuneration                   |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    | 86  |     | Directors report                         |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                      
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  |  | 
|Financials In this section: The statutory financial statements of both the Group and the Company and associated audit
report.                                                                                                                       |     | 87  |                                           | Contents                         |              | 92  |                                       | Report of Independent Registered Public
|                                                                                                                                                                                                                                                    | 88  |     | Directors statement of responsibility    |                                  |              |     | Accounting Firm on the consolidated  
|                                                                                                                                                                                                                                                    | 90  |     | Risk mitigation                           |                                  |              |     | financial statements                 
|                                                                                                                                                                                                                                                    | 91  |     | Report of Independent Registered Public   |                                  | 96           |     | Consolidated financial statements and
|                                                                                                                                                                                                                                                    |     |     | Accounting Firm on internal control over  |                                  |              |     | financial commentary                 
|                                                                                                                                                                                                                                                    |     |     | financial reporting                       |                                  | 176          |     | This page is intentionally left blank
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  | 
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  |  | 
|Additional information
In this section: Find out
about our shares, history and development, regulatory matters impacting our business, an assessment of potential risks to the Company, and other statutory financial information.                  |     | 182 |                                           | Shareholder information          |              | 211 |                                       | Definition of terms                    
|                                                                                                                                                                                                                                                    | 190 |     | History and development                   |                                  | 213          |     | Selected financial data              
|                                                                                                                                                                                                                                                    | 191 |     | Regulation                                |                                  | Exhibit 1.1  |     | Exhibit 4.31                          |                                         | Exhibit 7                
|                                                                                                                                                                                                                                                    | 196 |     | Principal risk factors and uncertainties  |                                  | Exhibit 2.3  |     | Exhibit 4.32                          |                                         | Exhibit 12               
|                                                                                                                                                                                                                                                    | 201 |     | Non-GAAP information                      |                                  | Exhibit 4.5  |     | Exhibit 4.33                          |                                         | Exhibit 13               
|                                                                                                                                                                                                                                                    | 206 |     | Form 20-F cross reference guide           |                                  | Exhibit 4.6  |     | Exhibit 4.34                          |                                         | Exhibit 15.1             
|                                                                                                                                                                                                                                                    | 209 |     | Forward-looking statements                |                                  | Exhibit 4.30 |     | Exhibit 4.35                          |                                         | Exhibit 15.2             
|                                                                                                                                                                                                                                                    |     |     |                                           |                                  |              |     |                                       |                                         |                           |  | 

This constitutes the annual report on Form 20-F of Vodafone Group Plc (the Company) in accordance with the requirements of
the US Securities and Exchange Commission (the SEC) for the year ended 31 March 2014 and is dated 10 June 2014. This document contains certain information set out within the Companys annual report in accordance with
International Financial Reporting Standards (IFRS) and with those parts of the UK Companies Act 2006 applicable to companies reporting under IFRS, dated 20 May 2014, as updated or supplemented if necessary. The content of the
Groups website (www.vodafone.com) should not be considered to form part of this annual report on Form 20-F.

Unless otherwise stated references to
year or 2014 mean the financial year ended 31 March 2014, to 2013 or previous year mean the financial year ended 31 March 2013, and to the fourth quarter or Q4 are to
the quarter ended 31 March 2014. For other references please refer to page 45.

All amounts marked with an * represent organic growth, which
excludes the impact of foreign currency movements, acquisitions and disposals and certain other items, see definition on page 212. Definitions of terms used throughout the report can be found on pages 211 and 212.

The terms Vodafone, the Group, we, our and us refer to the Company and, as applicable,
its subsidiaries and/or interests in joint ventures and associates.

Website references are for information only and are not incorporated
by reference into our Annual Report on Form 20-F.



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About usWeve come a long
way since making the first ever While we expect these actions to improve our mobile call in the UK on 1 January 1985. In 30 years, business performance over time, we recognise that a small mobile operator in Newbury has grown financial results
alone are not enough. A commitment into a global business and one of the most valuable to improve our social impact and behave ethically telecoms brands in the world. We now have mobile and responsibly at all times is integral to ensuring the
operations in 27 countries and partner with mobile long-term sustainability of our businesses. networks in 48 more. Today, we have 434 million mobile customers around the world. And because Our business is constantly evolving to adapt to
changes we now do more than just mobile, were able to provide in customer behaviour, technology, regulation and fixed broadband services in 17 markets, and 9 million the competitive landscape. Our strategy is our customers use us for
their fixed broadband needs. response to these changes, while ensuring we operate in a responsible way.Our core purpose is to empower our customers to be confidently
connected  whether at home, As youll see in this years report, during the daily commute, in the office, or abroad  we are making great strides wherever and however they choose. We want everyone towards our strategic goals, to
be confidently connected to their friends, families, as we begin to realise our vision and customers, and to always have access to the of empowering everybody content and information they choose.to be confidently connectedWere aiming to differentiate ourselves from our competitors, by having the
best network, providing

LOGO

the best customer experience and having the best This years report contains a new strategic report on pages integrated worry-free solutions.
1 to 47, which includes an analysis of our performance and position, a review of the business during the year, and outlines the principal risks and uncertainties we face. The strategic report was approved by the Board and signed on its behalf
by the Chief Executive and Chief Financial Officer.Vittorio Colao Nick ReadChief Executive
Chief Financial Officer



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LOGO

Chairmans statementReflections on the yearIt has been a momentous year for Vodafone and our shareholders. We have completed the second biggest transaction in corporate history, with the sale of our interest in Verizon Wireless;
progressed our unified communications strategy with the acquisition of leading cable companies; and delivered the biggest ever return to shareholders, of US$85 billion (Ł51 billion).Three pillars of successThree distinct elements sum up why Vodafone has had such a strong track record of
shareholder value creation over recent years. First, in response to the increasing demand for data we have formulated a clear strategy of becoming a leading unified communications provider and to strengthen further our network and service
differentiation, through investments in mobile and fixed capabilities. Second, we have made significant progress in executing our strategy. We have actively managed our portfolio, particularly disposing of our non-controlling interests, and used
part of the proceeds to accelerate the roll-out of 3G and 4G mobile capability and the deployment of next-generation fixed line operations in a number of key markets. To accelerate our strategy further we acquired Kabel Deutschland in Germany and
agreed the purchase of Ono in Spain  two leading cable companies in their respective markets. Finally, we have extended our very strong track record of balancing the long-term needs of the business with significant returns to shareholders. We
ended the year in a strong financial position and with a clear strategy for long-term growth.Our role in society and protection of customer dataTelecommunications technology has a significant positive impact on economic development and individual wellbeing. We remain committed to enhancing the positive social impact of mobile 
our networks and services are used to address everything from illiteracy to supporting the local healthcare infrastructure and realising the potential of budding entrepreneurs.Our technology helps people to connect and share information. In this context data protection is critical. However, this year there have been a number of troubling allegations about the
activities of security agencies in accessing customer data. As a trusted communications service provider, we view our customers privacy as absolutely key.As a
demonstration of our commitment to transparency in this regard, our latest sustainability report includes a section on law enforcement disclosure. This explains the nature and extent of government powers to order our assistance, together with
information about agency and authority demands in countries where statistical data can lawfully be disclosed.We are dependent on government policies and regulatory
frameworks.While this applies to all our operations, it is critical for the development of a globally competitive and healthy telecom industry in Europe. Europe needs to
find the right balance between protecting consumer interests and the consumers long-term interest in investment in next-generation telecom infrastructure and innovation, that will enable future growth and prosperity for its citizens. So far
that balance in our opinion has not been found in the proposals for reform of the digital single market currently under consideration in Brussels.Alignment with
shareholdersOur remuneration policies continue to ensure that management is strongly aligned with shareholders, with a focus on rewarding long-term value creation. After
the return of value arising from the sale of our Verizon Wireless stake, Vittorio, and other members of the Executive Committee reinvested a significant proportion of their net proceeds back into Vodafone shares to demonstrate their commitment to
the business and the strength of that alignment. The Board continues to consider the ordinary dividend to be the core element of shareholder returns, and believes in a consistent dividend policy. This year we raised the dividend per share by 8%, and
as a reflection of our confidence in our future performance, we intend to raise it annually hereafter.Changes to the BoardDuring the year, Andy Halford informed the Board of his intention to step down as Group CFO. I would like to thank him for his outstanding contribution to Vodafone during his eight year
tenure as CFO and in his previous roles. He has brought an invaluable rigour and clarity to our financial reporting and investor communication, while consistently driving significant improvements to our organisational efficiency. I am confident that
Nick Read, who joined the Board as CFO on 1 April 2014, will be a worthy successor. During the year there were a number of changes to the non-executive team and these are set out in my Governance statement on page 49. My medium-term ambitions
for the composition of the Board are to bring in further marketing expertise, and achieve a greater gender balance. By September we will have three female directors and we will be well on our way to our goal of 25% of Board members being women by
2015.



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LOGO

Mixed performance financialOur financial performance this year
reflects the combination of good performance in emerging markets and challenging conditions in Europe.38,Read more 40Ł38.3bn +0.8% Ł59.4bn N/A Ł12.1bn +5.7%Revenue Profit for the financial year Cash generated by operationsRevenues increased by 0.8% as growth in our
AMAP Profit for the financial year increased by Ł58.8 billion Cash generated by operations increased by 5.7%, region and from business acquisitions offset revenue primarily due to a pre-tax gain on disposal of our interest primarily as a result
of higher working capital related declines in Europe. in Verizon Wireless of Ł45.0 billion and recognition cash flows. of deferred tax assets of Ł19.3 billion.17.54p -12.8% Ł6.3bn +19.3% Ł4.2bn -24.0%Adjusted earnings per share Capital
expenditure1 Free cash flow1Adjusted earnings per share was down 12.8% mainly Cash capital expenditure increased by Ł1.0 billion driven Free cash flow declined by
24.0%, reflecting the fall reflecting both lower adjusted EBITDA and higher by the acquisition of Kabel Deutschland, the fibre roll-out in adjusted EBITDA, increased capital expenditure depreciation and amortisation. in Spain, and initial Project
Spring investment in India and the impact of weaker exchange rates in our and Germany. emerging markets.



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LOGO

Our yearA with year activity burstingAprilExpanding Vodafone RedWe
expanded Vodafone Red  our customer proposition offering unlimited calls and texts with generous data allowances  to 14 markets.By March 2014 we reached 20
markets.AprilM-Pesa in IndiaWe launched M-Pesa, our money-transfer service in India. The initial launch included over 8,000 agents in the eastern areas of India, covering around 220 million people, and we have
expanded the service nationwide throughout the year.JuneKabel DeutschlandWe announced plans to acquire Kabel Deutschland, Germanys largest cable operator, for €10.7 billion (Ł9.1 billion). This helps us create a leading unified communications
operator in Germany offering combined fixed and mobile services. The transaction closed in October 2013.



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LOGO

August4GWe launched 4G in two more markets  the UK and the Netherlands. In the UK the service includes Sky Sports or Spotify. We also launched 4G in Australia, the Czech Republic, Ireland,
Malta and Spain during the year.Septemberin Sale Verizon of our Wireless interestWe announced an agreement to sell our45% interest in Verizon Wireless to Verizon for US$130
billion (Ł79 billion). This was the second largest corporate deal in history when it completed on 21 February 2014.As part of this transaction we increased our
ownership of Vodafone Italy from 77% to 100%. See page 14 for more information.NovemberProject
SpringWe announced details of our Project Spring strategy to increase our organic investment over two years to deliver network and service differentiation compared to our
competitors. See page 13 for more information on Project Spring.



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LOGO

NovemberVodafone FoundationInstant NetworkTwo Instant Networks, which each pack into four cases, were deployed 24 hours after Typhoon
Haiyan, to establish a temporary replacement mobile network where permanent infrastructure was destroyed. In just 29 days, it enabled people to send over 1.4 million texts and make over 443,200 calls.DecemberM-Pesa Text to Treatment programmeThe Vodafone Foundation announced a partnership with Kick4Life in Lesotho, a country where almost 1 in 4 live with HIV/AIDS, to accelerate the number of children being tested and treated for
the virus. The initiative aims to get a generation of young people on antiretrovirals via our M-Pesa Text to Treatment programme.JanuaryNew brand strategy  Vodafone FirstsWe launched our Firsts programme, inspiring people to do something
remarkable for the first time using mobile technology. This new global brand engagement strategy will be launching across all our markets in 2014.



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LOGO

FebruaryNew spectrum in IndiaWe acquired and renewed spectrum in auctions held in India for Ł1.9 billion to provide customers with enhanced mobile voice and data services.MarchThe single largest return of value to shareholdersFollowing the sale of our interest inVerizon Wireless, we completed the return of US$85 billion (Ł51
billion) to shareholders  the single largest in history.MarchOnoWe announced plans to acquire Ono,Spains largest cable operator, for €7.2 billion (Ł6.0 billion).
This, combined with our fibre deployment, will create a leading unified communications provider in Spain.



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LOGO

Breadth of services scale and globle reachover 1 trillion 337 billion
9.3 million 544 petabytes



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LOGO





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LOGO

AssetsNetworksWe aim to have the best mobile network in each of our markets, combined with competitive fixed networks in our main markets. This means giving our customers far-reaching coverage, a very
reliable connection, and increasing speeds and data capacity. We believe that over time, offering a superior network experience will enable us to secure a premium positioning in most of our markets. We combine our ongoing high level of network
investment with a commitment to securing the best possible portfolio of spectrum. For more information on our network strategy see page 30.Distribution and customer serviceWe reach our customers through around 14,500 exclusive branded stores including franchises, a broad network of distribution partners and third party retailers. The Internet,
whether accessed through a mobile device or PC, is becoming an increasingly important channel for both sales and after sales service. Our call centres are available 24 hours a day, seven days a week in all our European markets.Supplier relationshipsIn the last financial year we spent around Ł16 billion buying equipment, devices and
services. Given our large scale and global reach, we tend to be a key strategic partner for many of our suppliers. We work closely with them to build robust networks, develop innovative services and offer the widest range of the latest devices.PeopleDuring the year we employed an average of nearly 93,000 people. We support, train and
encourage our employees, ensuring they have the right capabilities, commitment and enthusiasm to achieve our targets and build on our success in delivering an outstanding experience to all our customers. We are working hard to build a more diverse
workforce that is more representative of our customer base. For more information on our people see page 36.BrandToday, Vodafone is the UKs most valuable brand with an attributed worth of US$30 billion (Source: 2014 Brand Finance Global 500). The strength of our brand raises the profile of our
distribution channels and is a major driver of purchasing decisions for consumers and enterprise customers alike.CustomersWith 434 million customers globally, we are one of the biggest mobile operators in the world. Over 90% of our mobile customers are individuals and the rest are enterprise customers
ranging from large multinationals, to small and medium sized businesses, down to the owner of the local corner shop. The majority and the growing share of our mobile customers are in emerging markets. We also have over nine million fixed broadband
customers, and most of these are in Europe  in fact we are the fourth largest provider of fixed broadband services in Western Europe and will become the third following the pending acquisition of Ono in Spain.RevenueMobile consumers pay for our services either via contracts (typically up to two years in length) or
through buying their airtime in advance (prepaid). Enterprise customers often have longer contracts. Fixed customers typically pay via one to two year contracts. On a management basis we have a diverse service revenue stream with 51% from mobile
services in Europe, 30% from mobile operations in AMAP, 15% from fixed services and the remainder from other items such as MVNO agreements. On a management basis within our mobile business, 51% of annual service revenue arises from consumers
monthly price plans, which we call in-bundled revenue. In-bundled revenue is an increasing proportion of our business and is relatively stable compared to out-of-bundle revenue, which is much more vulnerable to competitive and economic pressure.Cash flowOur track record of converting revenue into cash flow is strong  with some
Ł16 billion generated on a management basis over the last three years. We achieve this by operating efficient networks where we seek to minimise costs, thus supporting our gross margin. We also have strong market share positions  as we
are typically the first or second largest mobile operator out of three or four in each market. This provides economies of scale and is a key driver of cost efficiencies and adjusted EBITDA margin, which in turn provides healthy cash flow. See page
32 for more details of our plans to improve our operating efficiency.Shareholder returnsThe
cash generated from operations allows us to sustain a generous shareholder returns programme while also investing in the future prosperity of the business  with almost Ł23 billion returned to shareholders over the last three years,
excluding the Verizon Wireless return of value. With our strong financial foundation, and as a sign of our confidence in our future performance, we intend to grow the annual dividend per share each year going forward.ReinvestmentWe have maintained a high and consistent level of capex in recent years, to support wider coverage,
higher speeds and greater capacity in our networks. Through our IT investment we are enhancing our customer relationship capability and providing new customer billing services.In addition, we have continued to invest in our stores, our internet and social media presence and spectrum licences to support future services and growth.To boost our investment even more we started Project Spring, our organic investment programme, which aims to accelerate and extend our current strategy, and thereby strengthen further our
network and service differentiation. We expect total investments, including Project Spring, to be around Ł19 billion over the next two years. See page 13 for more details.



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A for defining the Group yearOur
emerging markets are performing well, although our mature European markets continue to face challenging conditions. However, we have continued to make good progress in delivering our long-term strategy, by building firm foundations for the
future with our substantial investments in Vodafone Red, Project Spring and unified communications.Review of the yearIt has been a year of substantial strategic progress. The sale of our Verizon Wireless stake has rewarded shareholders for their support, and enabled the acceleration of our strategy through
the acquisition of Kabel Deutschland, the pending acquisition of Ono and our Project Spring investment programme.Our operational performance has been mixed. The
Groups emerging markets businesses have performed strongly throughout the year: we have executed our strategy well and have successfully positioned ourselves for the rapid growth in data we are now witnessing. In Europe, where we continue to
face competitive, regulatory and macroeconomic pressures, we have taken steps to improve our commercial performance, particularly in Germany and Italy, and are beginning to see encouraging early signs.Verizon Wireless transactionThe sale of our 45% interest in Verizon Wireless, the leading mobile operator in the
United States, was the culmination of a highly successful 14 year investment which began when Verizon and Vodafone entered into a partnership to create Verizon Wireless in 2000.We had been very happy to stay invested in the business over the years, despite our minority position, because of the strong growth and returns generated, and the attractiveness of the US
market. However, the Board viewed the offer of US$130 billion as a very attractive price at which to exit. The completion of the transaction enabled us to return a recordUS$85 billion to our shareholders, while retaining ample financial flexibility to pursue our own strategy both organically and through targeted acquisitions. See page 14 for
more information.Strategic progressWe have made very substantial progress on our strategy in
the past year, despite the significant challenges faced in Europe. With the acquisition of Kabel Deutschland in Germany and the planned purchase of Ono in Spain, our continued fibre build in Portugal and Spain, and our fibre plans in Italy, allied
to last years acquisition of Cable & Wireless Worldwide in the UK, we are becoming a leader in unified communications across Europe. This enables us to access a large and growing fixed revenue pool where our market share is currently
much lower than in mobile, while also helping us defend our mobile business from converged offers.We continue to provide a market-leading network experience in most of our
markets, and now have 4.7 million 4G customers across14 countries  all our major European markets, as well as South Africa, Australia and New Zealand. Early
experience from 4G shows us that customers use roughly twice as much data compared to 3G data usage, driven principally by video streaming.Smartphone adoption continues to
grow strongly in all markets and the increased availability of mobile applications and low cost devices is driving significant growth in data usage. Data traffic in India increased by 125% year-on-year, and at the end of the year we had
52 million data customers in India alone, with seven million of these being 3G data customers. Data adoption is becoming truly mass market.Our Vodafone Red plans are
now available in 20 markets, with 12 million customers at the year end. The footprint of our money transfer service, M-Pesa, continues to grow and we expanded the service with launches in the year in India, Egypt, Mozambique, Lesotho, and our
first European market  Romania. In India the service is now nationwide.Enterprise now represents 27% of Group service revenue on a management basis. The creation of a
discrete Enterprise unit is also beginning to bear fruit, as we focus on a smaller number of products with the potential for global application. Our strategic focus areas Vodafone Global Enterprise, serving our biggest multi-national accounts and our machine-to-machine unit, where we are a global leader, delivered further growth. We continue to develop
Vodafone One Net to provide converged services for small- and medium-sized companies.



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Where we aim to be five years from nowConsumer Europe Communications
Unified Emerging Consumer Markets EnterpriseA leading mobile data provider Converged services in all A strong leader and first Major enterprise provider key European
markets choice for data with full service offeringSupported by:An excellent network experience
A simplified and cost-efficient business model and operationsProject Spring accelerates and extends our strategic priorities through investment in mobile and fixed
networks, products and services and our retail platform, to strengthen further our network and service differentiation.Read more about our strategy21Project SpringProject Spring is
our organic investment programme which will allow us to accelerate and extend our strategic priorities through investment in mobile and fixed networks, products and services, and our retail platform. Announced alongside the Verizon transaction in
September2013, Project Spring will strengthen further our network and service differentiation. The transition to 4G and unified communications, coupled with an improved
economic outlook for Europe, lead us to believe Vodafone has a unique opportunity to invest now. We expect total investments, including Project Spring, to be around Ł19 billion over the next two years. The main elements of our investment are:4G in Europe: we aim to reach 91% population coverage by March 2016; 3G in emerging markets: with 95% population coverage in targeted urban areas in India by March 2016;
next-generation fixed line infrastructure: laying fibre to more base stations and deep into residential areas across Europe and in selected emerging market urban areas; development of enterprise products and services: extending our M2M reach to 75
countries and rolling out hosting and IP-VPN services internationally; and investment in our retail estate: modernising 8,000 of our stores to improve the customer experience.OutlookIn the short term, we continue to face competitive, macroeconomic and regulatory
pressures, particularly in Europe, and still need to secure our recovery in some key markets. While we are therefore heavily focused on the successful execution of our significant capital investment programme, we are also absolutely committed to
operational efficiency and standard operating models across all markets. We anticipate that our investments will begin to translate into clearly improved network performance and customer satisfaction in the coming year. In the medium term, this will
become more evident in key operational metrics such as churn and average revenue per user (ARPU); and subsequently into revenue, profitability and cash flow.I
am confident about the future of the business given the growth prospects in data, emerging markets, enterprise and unified communications. We have commenced our Project Spring two-year investment programme which will accelerate our plans to
establish stronger network and service differentiation for our customers. I expect the first signs of this to become evident later this year, with wider 4G coverage in Europe and 3G coverage in emerging markets, improved network performance and
increased customer advocacy. While cash flow will be depressed during this investment phase, our intention to continue to grow dividends per share annually demonstrates our confidence in strong future cash flow generation.



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Crystallising value from Verizon WirelessOpening chapter in the the
next history of VodafoneOn 2 September 2013, we announced our agreement with Verizon to sell our US group, whose principal asset was its 45% interest in Verizon
Wireless, for US$130 billion, mainly in cash and Verizon shares. We chose to return around 71% of the net proceeds to shareholders amounting to around US$85 billion. This is the largest ever single return to shareholders in history and rewards our
shareholders for their long-term support of our US strategy. This also represents the opening of an important new chapter in our history by leaving us in a strong financial position and well positioned to execute our strategy.A big deal! Vodafone ItalyThis was the second biggest transaction ever As part of the transaction we also agreed
and the return of US$85 billion (£51 billion) to acquire Verizons 23% stake in Vodafone is the equivalent of around 90% of the total Italy, in which we owned 77%, thereby dividends paid by all the other FTSE 100 securing full ownership.
companies in the whole of 2013.



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Why sell our stake? This will amount to the largest and fastest period of investment in our history. We have used the retained proceeds to reduce
our net debt We have had a very successful 14 year investment in Verizon significantly and as a result the Company is much more resilientWireless. During this time its
service revenue has quadrupled going forwards. to US$69 billion, its adjusted EBITDA has grown from US$6 billion in 2001 to US$34 billion in 2013, and we received nearly US$16 billion of income dividends. This investment has clearly created a great
deal Whats the shareholder return? of value for Vodafone shareholders. The sale not only crystallised We have a track record of making significant returns to shareholders  the value of this significant asset, it has also enabled us
to realise that with almost Ł23 billion returned in the last three years alone in the form value at a very attractive price, representing around nine times Verizon of dividends and share buybacks. Consistent with that track record,
Wireless adjusted EBITDA and 13 times operational cash flow. we also returned a large proportion of the net proceeds from the sale of our interest in Verizon Wireless  71% or US$85 billion (Ł51 billion)What will the sale enable us to do? comprising Ł37 billion worth of Verizon shares and Ł14 billion of cash, during the year. As part of the transaction, we also consolidated ourWe carefully considered how to make best use of the sale proceeds shares  exchanging every eleven old Vodafone shares for six new and we decided to retain a proportion
of the cash received to allow Vodafone shares. us to invest in the business and to reduce net debt, and we returned US$85 billion to shareholders. Overall, we believe we have struck the right balance between investing in the future of the Company
and rewarding our shareholders for theirProject Spring, our new investment programme, will improve the quality long-term support of our US strategy. Following the sale we
have of our networks, products and services in our major markets, relative reduced debt and established a bigger gap between our cash flow and to our competitors. Project Spring is in addition to our existing capital ordinary dividends paid. As a
result, and as a sign of confidence in the expenditure programme and will bring total investment over the next future, we intend to continue to grow the dividend per share annually two years to around Ł19 billion. going forward.



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Monitoring and performance our progressWe track our performance
against 12 key financial, operational and commercial metrics which we judge to be the best indicators of how we are doing. The pressures we have faced in Europe are reflected in the decline in service revenue on a management basis and adjusted
EBITDA margin and the loss of market position. Despite this we met our financial guidance and increased our dividend per share and we have made clear progress in our operational and commercial KPIs.Organic service revenue growth on a management basis More work to doGrowth in the top line demonstrates our 2012
+1.5%* We were unable to grow our service revenue ability to grow our customer base and this year, as the competitive, regulatory and stabilise or increase ARPU. It also helps 2013 -1.9%* macroeconomic pressures in Europe seen last to maintain
margins. We aim to return year continued. to service revenue growth. 2014 -4.3%*Adjusted EBITDA margin1 on a management basisMore work to doGrowth in our adjusted EBITDA margin 2012 31.2% As expected, competitive, regulatory and magnifies
the impact of revenue growth macroeconomic pressures in Europe on the profitability of our business. 2013 30.5% offset improvements in AMAP and our We expected this years margin to be lower margin declined. than last years. 2014
29.4%Adjusted operating profit (AOP)1 on a management basisAchievedAOP includes the impact of depreciation 2012 Ł11.9bn The fall in AOP reflects the disposal of Verizon and amortisation and includes the results Wireless during the year, the decline in
adjusted of our non-controlling interests. 2013 Ł12.6bn EBITDA and higher depreciation and amortisation.We gave guidance of around Ł5 billion for On a guidance
basis, AOP was Ł4.9 billion the year on a pro forma basis, see page 39. 2014 Ł7.9bn (see page 39 for details).Free cash flow on a management basis AchievedMaintaining a high level of cash 2012 Ł6.1bn Free cash flow fell in the year as a result generation is key to delivering strong of exchange rate movements in some of
our shareholder returns. 2013 Ł5.6bn emerging markets and lower adjusted EBITDA.We gave guidance of Ł4.5Ł5 billion for On a guidance basis, free cash
flow was the year on a pro forma basis, see page 39. 2014 Ł4.4bn Ł4.8 billion (see page 39 for details).% of European mobile service revenue in-bundle2 on a
management basisAchievedOur strategic push towards bundling 2012 Data not available We continue
to make great progress in this voice, text and data allows us to defend area, helped by the rapid adoption of our our revenue base from substitution, 2013 51% Vodafone Red plans (see page 22). and to monetise future data demand growth. We aim to
increase this proportion 2014 58% each year.Smartphone penetration (March 2014, Europe2) on a management basisAchievedSmartphones are key to giving our 2012 28% Our customers increasingly want customers access to data; the
more our smartphones as data becomes more and customers have them, the bigger our data 2013 38% more crucial to everyday life. We are on course opportunity becomes. We aim to increase to meet our target of half of our European penetration to over
50% by 2015. 2014 45% customers using smartphones by next year.See pages 22 and 23 for more information.



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KPIs achieved Want to find out more?All KPIs are shown on a
management See how these targets are used with the basis incentive plans for senior management03 69Mobile network performance floor (Europe2)AchievedWe continuously improve the speed 2012 75% at least 400Kbps We achieved our 2015 target this year. of our European network to create the Our new target is for 90% of data sessions
best data experience for our customers 2013 75% at least 1Mbps in Europe to be at least 3Mbps by March and had a target of 75% of smartphone 2016. See page 30 for more detail on our data sessions to be at least 3Mbps by 2015. 2014 75% at
least 3Mbps Network strategy.Relative mobile market share performance More work to doWe track
our relative performance 2012 11 out of 17 markets We lost share in the majority of our European by measuring the change in our revenue markets over the year but gained share market share against our key competitors. 2013 9 out of 17 markets in some
of our key emerging markets,We aim to gain or hold revenue market including India, South Africa and Turkey. share in most of our markets. 2014 7 out of 17 marketsOrdinary dividend per share AchievedThe ordinary dividend remains the primary 2012 9.52p The
Verizon Wireless transaction enabled method of shareholder return and we have us to increase the dividend per share an outstanding record of growth here. 2013 10.19p by 8% to 11.00 pence and we now expect to increase it annually.Our target was to maintain the dividend per share at its 2013 level. 2014 11.00pConsumer net promoter score
(NPS) AchievedWe use NPS to measure the extent 2012 11 out of 21 markets This year we increased the number of markets to which our customers would where we are
ranked number one but the recommend us to friends and family. 2013 8 out of 21 markets total of nine markets remains too low. We aim We aim to increase or maintain the number to improve our position over the coming year. of markets where we are
ranked number 2014 9 out of 21 markets one by NPS.Employee engagement AchievedThe employee
engagement score 2012 77 Our employee engagement score remains measures employees level of broadly stable and we retained a top quartile engagement  a combination of pride, 2013 78 position. More information can be found loyalty and
motivation. Our goal here on page 36. is to retain our top quartile position. 2014 77% of women in the senior leadership team AchievedDiversity increases the range of skills 2012 19% Gender diversity is a key area of our global and styles in our senior leadership diversity strategy and we have continued team, our 223 most
senior managers. 2013 20% to make progress in this area. We also Increased female representation is one increased the number of women on both measure of diversity. Our goal is simple, 2014 22% the Executive Committee and the Board. to increase the
proportion each year. See page 36 for more details.Notes: 1 Adjusted EBITDA and AOP have been redefined to exclude restructuring costs. AOP has also be redefined to
exclude amortisation of customer bases and brand intangible assets. Comparatives have been restated.

|2 | Europe now excludes Turkey.
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Market overviewindustry The
telecommunications todayThe fixed and mobile telecommunications industry is a large and important sector, generating around US$1.5 trillion of revenue. Today there are
seven billion mobile users and over 650 million fixed customers.The global mobile market The global fixed marketScale and structure The fixed communications market is valued at around US$500 billion.The mobile industry alone
has seven billion users, generating over Over the last three years, revenue from voice services has declinedUS$960 billion of annual service revenue every year. The
majority as the demand for traditional fixed line calls has remained static of revenue comes from traditional calls and texts (for example, last at around one billion users. In contrast, revenue from fixed broadband year 7,800 billion texts were
sent around the world last year). However, or internet usage on the PC is growing with an estimated 650 million over the last few years the demand for data services, such as internet customers worldwide  an increase of nearly 30% over the
last three browsing on a smartphone, has accelerated, and today around 28% years. This growth has been spread across all forms of broadband  of mobile revenue is from data, up from 13% in 2009. DSL (copper), cable and fibre, and within
this, there is a growing preference for the high speed capability provided by cable and fibre. Around 74% of mobile users are in emerging markets, such as India andAfrica,
reflecting the typical combination of large populations and the lack of fixed line infrastructure. The remaining users are from wealthier mature markets, such as Europe. However, the proportion of the population with a phone  or mobile
penetration  tends to be higher in mature markets (usually over 100%) and lower in emerging markets, particularly in rural areas, due mainly to lower incomes and less Telecommunications revenue US$ billion network coverage.1,500 209 217Growth 184 197170 298
277The demand for mobile services continues to grow strongly. In the last 362 340 319 three years the number of users increased by an average of 9% each 1,000940 963year. In 2009 global mobile penetration was only 69%, and by 2013 862 902822it had risen to 98%. Most of the increase in users has been from emerging markets due to favourable growth
drivers  young and 500 expanding populations, faster economic growth, low but rising mobile penetration, and less fixed line infrastructure. The other key area 0 2009 2010 2011 2012 2013 of growth is data, which is being driven by
increasing smartphone andn Mobile n Fixed voice n Fixed broadbandtablet penetration, better
mobile networks, and an increased choice of internet content and applications (apps). Mobile users by market 2013: 7.0 billion (2012: 6.4 billion)CompetitionNorth America: 6%The mobile industry is highly competitive, with many alternative China: 18%
providers, giving customers a wide choice of supplier. In each country Europe: 17% there are typically at least three to four mobile network operators(MNOs),
such as Vodafone. In addition, there can be numerous mobile virtual network operators (MVNOs)  suppliers that rent capacity India: 14% Mature Asia: 4% from mobile operators to sell on to their customers. There can also be
competition from internet-based companies and software providersSouth America: 10%that offer
alternative communication services such as voice over internet protocol (VoIP) or instant messaging services. Emerging Asia: 15%Africa: 11%Regulation Middle East: 5%The mobile industry is very heavily regulated by national and n Mature markets n
Emerging markets supranational authorities. Regulators continue to lower mobileMobile phone penetration by market % termination rates (MTRs) which are the fees
mobile companies charge for calls received from other companies networks, and to limit 150 141 the amount that operators can charge for mobile roaming services. 138 These two areas represent around 12% of service revenue for Vodafone. 112100Revenue trends 93In an environment of intense competition and significant 78 74 regulatory pressures, the price of mobile services has tended 50 to reduce over time. However, with
both more mobile phone users, mainly in emerging markets, and more data usage, global mobile revenue remains on a positive trend and expanded by 2% in 2013. 0 Germany UK US Turkey India Kenyan Mature markets n Emerging marketsNote: The industry data on this page is sourced from Strategy Analytics,
Analysys Mason and Ovum.



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Supporting access to mobileto Overcoming mobile ownership barriers
for emerging women markets inOur Connected Women report looked at the gender gap in mobile phone ownership in emerging economies and the social and economic impact of
extending womens access to mobile phones.Vodafone Turkey launched the Vodafone Women First programme in 2013, which combines promotional offers with services that
help women to increase their income, use mobile technology and acquire new skills.Launched in 2013, it attracted 75,000 women customers in its first nine months, of which
15% were new customers for Vodafone.Want to find out more?See sustainable business See the full
Connected Women report34 vodafone.com/connectedwomen



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Where is heading the industryThe pace of change in the industry over
the last few years has been significant and is expected to continue  with new revenue streams, new users, new services, major improvements to networks, and the convergence of fixed and mobile services.Growing importance of data and other new revenue areas Regulation will continue to have a significant impactMobile voice and texts, our traditional revenue sources, have reached The industry is expected to see continued downward revenue pressure maturity in a number of markets. To
deliver future growth opportunities, from regulation. For example the Europe Commission is seeking the we are investing in newer revenue areas such as data. It is estimated removal of all roaming surcharges after 2016 (for Vodafone roaming that
between 2013 and 2017 data revenue for the telecommunications accounts for around 6% of European service revenue). In contrast, sector is set to grow by US$128 billion, compared to a US$38 billion Commission proposals to harmonise the speed at which
Member States decline in voice revenue over the same period. The demand for data will roll out spectrum and the duration of contracts, should encourage continue to be driven by rising smartphone and tablet penetration and investment. In our largest
emerging market, India, the regulatory usage, and improvements in mobile network capability. As the demand framework is becoming clearer. for data grows, mobile networks have to be reconfigured to data, whileImproving economic environment in Europe still meeting the need for traditional texts and calls. Already 91% of theThe economic recession in Europe over the last two years has been worlds total traffic on mobile networks is data. The data services most a key driver of the declining
revenue trends in Europe for many used are video streaming and internet browsing which require high operators. However, we have started to see early signs of economic speed networks. Therefore, we are investing in ultrafast 4G with average recovery
in Europe, with a return to GDP growth in 2013 in Northern download speeds of over 75Mbps today, and the expectation of faster Europe and an expected recovery in 2014 in Southern Europe. speeds, of up to 300Mbps, by the end of calendar 2014.New applications for mobile services are being developed by the industry to extend the use of mobile beyond everyday communication and deliver new revenue streams, such as
mobile payments via a handset or machine-to-machine services, including the location Industry mobile service revenue by type % monitoring of vehicles, through a SIM card embedded in the vehicle.100 28 31 34 36 39Convergence of fixed and mobile into unified communicationsWe expect a continued trend towards unified communications such 8072 69as bundled mobile, fixed and TV services. These provide a range 66 6460 61of benefits for the user, including simplicity, flexibility and cost savings.The demand for these services is
already established among enterprise 40 customers and it is now becoming more visible in the consumer market, particularly in southern European markets, such as Spain. We believe 20 that this demand, combined with technological advances delivering0 2013 2014e 2015e 2016e 2017eeasier connection of multiple data devices, will support strong
data Datan Voice and texts ngrowth in future, and that this will need to be managed by access
to next-generation fixed networks, principally cable or fibre, to support Industry mobile phone users by market % increased speed and capacity demands.100 74 75 76 77 77Strong demand from emerging marketsEmerging markets have the most potential for future mobile
customer 80 and revenue growth driven by rising populations, strong economic growth, lower mobile penetration and a lack of alternative fixed line 60 infrastructure. According to industry analysts, by 2017 there will be 1.7 billion new mobile
users across the globe, and most will be from 40 emerging markets. As a result by 2017, 77% of the worlds mobile users 26 25 24 23 23 will be from these markets. 20Increasing range of competitors 0 2013 2014e 2015e 2016e 2017eThe high level of competition
among established MNOs is expected n Mature markets n Emerging markets to continue. However, there is also a wider pool of new competitors. % of new mobile customers taking converged services in SpainAlternative communication technologies, such as instant messaging services which use data, rather than traditional voice and text, 60 51% 51%49% 49% 57%are increasingly used by mobile consumers. In response, operators 44%50have begun to replace per unit charges for voice and text services with unlimited bundles, and combine this
with a fixed fee for data 40 usage. Meanwhile MVNOs which offer low prices, but have little 30 capital invested, have in recent periods taken share from established 20 24% capital intensive operators. However, the move to 4G and unified
communications presents an opportunity for the major operators 10 to differentiate the quality of their networks and services.0 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 13
Feb 13Note: The industry data on this page is sourced from Strategy Analytics, Analysys Mason and Ovum.



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Accelerating our strategyAs the demand for
ubiquitous data grows rapidly, we are transformingour business to become a leading unified communications company,and to strengthen further our network and service differentiation againstour peers.Our strategy is shaped by the following industry trends:Growing importance Increasing demand Strong demand from
Increasing range Improving economicof data and other for unified emerging markets of competitors environment in Europenew revenue areas communicationsfor both enterprisesand consumersIn light of these expected industry trends our strategic goalsare focused on four key growth areas and targets:Consumer Europe Unified Communications Consumer Emerging Markets
EnterpriseA leading mobile data provider Converged services in all A strong leader and first Major enterprise providerkey European markets choice for data with full service offeringSupported by:An excellent network experience A simplified and cost-efficientbusiness model and operationsProject Spring accelerates and extends our strategic prioritiesthrough investment in mobile and fixed networks,
productsand services, and our retail platform, to strengthen further ournetwork and service
differentiation.What we want to achieve for our customers:Always best connected Unmatched
customer experience Integrated worry-free solutionsBest mobile voice and data Number one in customer experience  Simplest connectivity and price plans(coverage and quality)  4G/3G in store, online, on the phoneConverged enterprise product suiteCompetitive in fixed and best Consistent execution across marketsInnovator in new services, suchconverged experienceas mobile paymentsRead more: Consumer Europe Unified Consumer Enterprise Network OperationsCommunications Emerging
Markets22 24 26 28 30 32



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Consumer EuropeWhile voice and messaging
remain important for European consumers, demand for data is rapidly accelerating. We are focused on providing the best data experience  both in mobile and fixed  matched by outstanding customer service combined with a range of worry-free
price plans and additional services.Context Where we are goinga Nearly half our European
customers now use a smartphone, a We are enabling worry-free usage through our Red and with more and more also using tablets. roaming plans. a The average data usage per customer is also increasing rapidly. a We are improving our customer
experience across all Customers want simplicity and worry-free contact points. a bills and they demand the best in customer service. a We are pushing the adoption of smartphones and are encouraging bundling of fixed and mobile for residential our
customers to use more and more data. a The products customers is becoming increasingly common across Europe and a We are becoming a leading unified communications provider we expect this trend to continue. across Europe. a Aggressive price
competition continues in many of our markets. a We are innovating in mobile payments.Vodafone Red enabling worry-free usage 4G driving increased data usage and engagementVodafone Red offers unlimited calls and texts with generous data Although most of our customers are using 2G and 3G services, we are allowances  enabling our customers
to use their smartphones seeing increased demand for 4G services, with 4.7 million customers worry-free. We already have 12 million users across 20 markets and across 14 markets. 4G is attractive because it offers much faster speeds 37% of
new contract customers join on Red plans. Our research shows and a better user experience and as a result our 4G customers use that Red customers are more likely to recommend us to their friends on average twice as much data as our 3G users. and
family and we are seeing early signs that they are less likely to leave By adding attractive content such as music and sport packages with 4G us for another operator. Red also helps us protect our revenue, with 58% plans we believe we can drive
growth in both data usage and revenue. of our European mobile service revenue on a management basis nowIn the UK for example, 4G plans are generating 18% more
ARPU versus in-bundle compared to 51% a year ago, and it reduces the risk to our comparable 3G plans and customers are using 2.3 times more data. business from over?the?top services.We have launched Red family plans, with 0.8 million customers, Mobile devices driving data adoption and have combined Red plans with fixed broadband in some markets. The growing
popularity of smartphones is supporting data adoption, accounting for 78% of the handsets we sold in Europe last year.Simple, worry-free roaming offer
This has helped European smartphone penetration grow to 45%.As people travel they want to use their phones and roam abroad,We sold 2.2 million Vodafone branded smartphones in Europe and therefore we developed an offer that lets customers use their home beyond during the year, instrumental in stimulating
data adoption allowance for a small daily fee, removing any worries about their bills. in low-end contract and prepaid segments.These plans are now available in 15 markets
and 14 million customers have registered to use these services, accounting for 26% of consumer Fixed and unified communications contract roamers. Customers on these offers use their phone more and Consumers increasingly want unified
communications as they benefit generate higher roaming ARPUs than those on standard tariffs. from one plan that includes their fixed and mobile connections and in some cases TV package as well. We already have over 8.5 millionDelivering an unmatched customer experience fixed broadband customers in Europe and we are increasingly offering We are modernising around 8,000 of our stores to a new format that mobile and
fixed services together. We expect unified communications enables customers to interact with us in a more engaging way and to become more and more important over time  see page 24 for details these stores have been seen to increase
transactions by more than 5%. on our strategy.We have already upgraded over 1,100 stores and Project Spring will accelerate our plans to modernise the remaining stores by
March 2016. Innovating in mobile paymentsWe are also upgrading our customer service, with all of our call centres As part of our drive for innovation we are developing
services which across Europe now offering 24/7 service and we have expanded our allow our customers to use their smartphones to pay for goods and self-care solutions online and on mobile. services, using our secure network.
During the year we launched Vodafone Wallet in Germany and Spain.



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European smartphone penetration % % of European mobile service revenue in-bundle %45 45 60 5838 5130 40 2815 20 data not available0 2012 2013 2014 0 2012 2013 2014500MB per month compared to around 350MB a year ago1Transforming the retail experienceWe are updating our stores into a common and consistent store concept. Each of our transformed stores now have a simple design allowing each store to run different promotions and host a
top 10 table with live devices, on-site Tech Expert support who can transfer customers data from their old phones to their new ones. At the same time we are retraining our staff to better serve customers.An easier way to payContactless payments are becoming an increasingly popular way to pay for small
value transactions. We have created the Vodafone Wallet to leverage this opportunity, which allows you to pay for anything with your phone. It digitises everything in your wallet: payment cards, loyalty cards, tickets or coupons. We launched the
first commercial wallet in Spain, ahead of our competitors and built the first mobile wallet in Europe, based entirely on industry standards.Extending our reach through
partner marketsThrough relationships with other mobile operators around the world we have extended our reach to a further 48 countries stretching from Chile to Russia,
Iceland to Brazil. These markets extend our mobile reach beyond our own mobile operations and support the global access to our services which our customers have come to expect from us.Note:

|1 | Android and iOS devices.
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Unified CommunicationsOur roots are in
mobile services, and these still represent the majority of our revenues. However, more and more businesses and individual consumers are seeking unified communications, or converged fixed and mobile services, and we are changing the shape of our
Company to meet this demand. What is unified communications? However, unified communications is also a threat, particularly in the residential market, as historically we have not owned or had accessAs customer demand for ubiquitous data and content grows rapidlyto next?generation fixed line infrastructure such
as fibre or cable.over the coming years, the most successful communications providersThis could
allow cable operators with MVNO platforms, or integratedwill be the ones who can provide seamless high speed connectivityfixed and mobile incumbents, to take share in the market withat home, at work, at play and anywhere in between.
This will require theaggressively discounted offers.integration of multiple technologies 
3G, 4G, WiFi, cable and fibre  intoa single meshed network offering the best, uninterrupted experience what we call unified communications. Progressing our strategyOur goal is to secure access to
next?generation fixed line infrastructureUnified communications for enterprise in all our major European markets. Our approach is market-by-market,based on the cost of building our own fibre, the openness of theCombined fixed and mobile services have been a
feature of theincumbent provider to reasonable wholesale terms, the speed of marketenterprise
market, particularly for small- and medium-sized companies,development, and the availability of good quality businesses to acquire.for several years. We have been a market leader with products suchThe table below shows the progress we have made
this year. We haveas Vodafone One Net, which provides integrated fixed and mobilemade
significant strides in most of our major markets, through threeservices which create significant business efficiencies for customers.routes to market  wholesaling (or renting), our own fibre deployment,This year we have evolved One Net as
an application that can also serveor acquisitions. In particular, the acquisition of Kabel Deutschland andthe needs of larger national corporates as well.the proposed purchase of Ono will significantly strengthen our
positionWith the acquisition of Cable & Wireless Worldwide in 2012, we have in Germany and Spain respectively. At the year end, we had nine millionmade a step change in our ability to offer unified communications fixed broadband customers, and the proposed acquisition of Ono willservices to customers in the UK and gained an extensive international increase this to 11 million.footprint.
After successfully integrating sales forces this year, we are nowOutside Europe, we acquired TelstraClear in New Zealand, the secondbeginning to build a strong pipeline of new business.largest fixed operator, in 2012 to strengthen our portfolio
of fixedUnified communications for consumers products and services and create a leading total communicationsOver the last few years, we have seen a significant move towards company. We also intend to expand selectively high speed fibre servicesbundling of fixed and mobile products for residential customers, often to urban areas in emerging markets to enable converged servicesincluding television in the package as well. Of our markets, Spain in key business areas. And our subsidiary, Vodacom, proposes to acquireand Portugal are the most advanced in this regard, but we expect Neotel, the second largest provider of fixed telecommunicationsit to become prevalent in all our major European markets. This presents services in South Africa, for a total cash consideration of ZAR 7.0 billionus with a clear opportunity, as our share of fixed services in our (Ł0.4 billion) to accelerate its growth in unified communicationsEuropean markets is under 10%, whereas our share of the mobile products and services.market is well over 25%. In
addition, mobile customer churn is typicallythree times higher than that of customers taking combined fixed andmobile services.Making good progress on unified communications strategyOur strategic approach to next-generation fixed access Our recent acquisitionsWholesale Fibre deployment
Acquisitions Data to March 2014 Kabel Ono (proposed)DeutschlandItaly Italy Spain Market
position Largest cable Largest cable(2013) (planned for 2014) Ono (proposed 2014) operator in Germany operator in SpainGermany Spain Germany Purchase price €10.7bn €7.2bn(2013) (2014) Kabel Deutschland
(2013) Annual revenue €1.9bn €1.6bnNetherlands Portugal UK Homes passed 15.2m 7.2m(2013) (2010) Cable & Wireless Total customers 8.3m 1.9mWorldwide (2012)New Zealand Fixed broadband 2.3m 1.6mTelstraClear (2012) customers



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LOGO

UnifiedCommunicationsOur unified market-leading communications
solution in PortugalIn Portugal we have developed a market?leading unified communications solution by combining our fibre?based fixed broadband, advanced internetTV (with full cloud catch-up TV and multi-screen option  tablet, PC, smartphone) and our mobile offers. As a result we are the operator with the highest mobile net
promoter score.As part of our Project Spring programme we are accelerating the deployment of high speed fibre, which offers up to 300Mbps, to reach 1.5 million homes
by mid?2015.



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Consumer Emerging MarketsIts easy to
think of Vodafone as simply a European company, with its headquarters in the UK, but the reality is that one third of our revenue comes from countries outside Europe and most of this is in fast-growing emerging markets where data demand is taking
off.Context Where we are goinga Our main emerging markets are India, South Africa, Turkey, We
are aiming to drive continued growth in emerging markets Egypt, Ghana, Kenya, Qatar, Tanzania and several other southern through a differentiation-based strategy of being the best, by: African countries. a increasing and enhancing our
base stations sites to improve voice a They provide strong growth opportunities due to fast economic and data quality and coverage; growth, young and rising populations, and low and increasing a extending fibre to enterprise customers to meet the
expected mobile penetration. demand for unified communications services; a The demand for mobile data in emerging markets is beginning a expanding the branded store footprint to enhance customer to take off, in part due to the lack of alternative
fixed service; and broadband infrastructure. a expanding our leading money transfer service, M-Pesa. The goal a There is significant scope for newer revenue streams, such is for it to deliver a growing proportion of our emerging market as mobile
money transfer as many people in these markets have service revenue. little or no access to banking services.Driving the mobile penetration opportunity Enhancing
distributionThe number of customers in our emerging markets has grown steadily Our distribution footprint in emerging markets consists of a range and rapidly from
185 million, 57% of the Group total three years ago, of branded stores, franchised shops and small independent retail to around 302 million, representing 70% of the total today. This has been recharging units. We have modernised over 250
stores in these markets driven by fast economic growth and rising populations. In our largest and we are targeting to reach over 2,300 by 2016. Our branded stores emerging market, India, the proportion of the 1.2 billion population with are very
attractive to customers wanting higher end smartphones a mobile, commonly known as mobile penetration, is still only 78%, or monthly contract plans. In Egypt 95% of new contract customers so we expect to see a lot more growth going forward. come to
us through branded stores. In India we have the largest footprint of 1.7 million point of sale sites for top?ups, significantly more We have invested significantly in our emerging markets to support and than our nearest competitor, and to cater
for our female customers drive this growth opportunity. We have expanded network coverage we are opening a number of new Angel stores, which are run and by 8% to 161,500 base station sites, providing us with significant scale managed
exclusively by women. and broad coverage. We have increased the range of low cost Vodafone branded devices, enabling more people on low incomes to access Increasing access to mobile financial services mobile services. We have also lowered the cost
of calls, with prices as low as one US cent per minute in India, which, along with greater Our Vodafone money transfer service, or M-Pesa as it is more network coverage, has helped drive growth in both the number users commonly known, enables people
who have a standard mobile and mobile usage. phone, but with limited or no access to a bank account, to send and receive money person to person, top-up airtime, make bill payments, The data opportunity and in conjunction with the Commercial Bank of
Africa to save and also receive short-term loans.While mobile data usage to browse the internet or watch videos is increasingly common in Europe, it is still at an early
stage in emerging We now have over 17 million active M-Pesa customers, an increase markets. However, it is expanding quickly due to the growth of 18% over last year. During the year we launched in several new in customers and also the greater
range and affordability of handsets. emerging markets  India, Egypt, Lesotho and Mozambique. In India In India, for example, the number of data users increased by 13 million the service has now launched nationwide. Across the M-Pesa
footprint, to 52 million over the course of last year. In Turkey, we now have we have over 200,000 active agents and M-Pesa processed 2.8 billion 6.5 million smartphone users, up from 3.1 million only two years transactions (up 27%
year-on-year). The service is expected to deliver ago. Outside South Africa, in our smaller southern African markets a growing proportion of our emerging market revenue over the next few of Tanzania, Lesotho, Mozambique and the DRC, the number of
data years. Besides providing additional revenue streams, M-Pesa also keeps customers increased 86% to 7.7 million taking the total active data customers on our networks, which reduces the proportion of customers customer base to 30% of total
customers. that leave, commonly known as churn.We continue to innovate M-Pesa, with the introduction of services such as Lipa Na M-Pesa, a retail payment proposition for
consumers, and the expansion of international money transfer propositions. In March 2014 we launched the service in our first European market, Romania.



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Mobile customers % Data users in emerging markets million10092Europe: 29% 756850AMAP  Australia and AMAP  emerging 26 New Zealand: 1% markets: 70% 250 2012 2013 2014m 14 million in 2013M-Pesa in TanzaniaThe cost of travel prevents many people seeking the medical care they need. A local NGO, the
Comprehensive Community Based Rehabilitation in Tanzania (CCBRT), is working with the Vodafone Foundation to address this by integrating M-Pesa into its referral process, to ensure patients suffering from obstetric fistula get to
hospital.In 2013, 70% of CCBRTs fistula patients came via the M-Pesa Text to Treatment initiative. This project is one of the worlds largest
fistula repair programmes.Data usage in South AfricaIn South Africa were investing in
newer revenue streams such as data by driving smartphone adoption and enhancing the network. During the year we supported a 24% increase in the number of active smartphones and tablets, taking the total to eight million devices. Average monthly
smartphone usage increased 82% to 253MB per device and grew 25% to 743MB on tablets. We supported this growth by investing in our market-leading data network. 74% of our base stations are fitted with high capacity fibre transmission, and we can
now provide 3G services to 92% of the population. Were also ready for the future, with 4G coverage of 20% of the population today.Egypts literacy programmeVodafone Egypt Foundation launched an accredited mobile literacy app in 2013, which forms part of its Knowledge is Power initiative, supporting national efforts to tackle
adult illiteracy. The app uses pictures and a talkback function to make learning easier and more flexible. The Knowledge is Power programme uses classroom and mobile learning to improve literacy skills  to date 187,000 people
have enrolled.



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LOGO

EnterpriseWe want to build on our core strength in mobile to become
the leading communications provider for businesses across the world, whether large or small. We are focused on providing a range of mobile, fixed, hosting, cloud and other business services that are simple to use, worry-free and
cost-effective.Context Where we are goinga Mobility increasingly sits at the heart of how
organisations function, a We are building on our core strength in mobile and increasing how they maximise their employee productivity and how they capability in fixed to develop a portfolio of products and interact with their customers, suppliers
and partners. services, based on converged fixed and mobile solutions,Customers increasingly want more than just mobile solutions. to sell to businesses across the
globe. aDemand for unified communications and full service offerings, a Our strategy and investment is focused on: three high-growth machine-to-machine and cloud and
hosting is increasing, providing product areas  unified communications, cloud and hosting exciting new growth opportunities. and machine-to-machine; and three market segments  small- and medium-sized enterprises (SMEs), large
and multinational corporates and carriers.Mobile and unified communications Machine-to-Machine (M2M)While the majority of our revenue still comes from mobile, we are M2M technology connects things to the internet, transforming them increasingly providing unified communications
services. The recent into intelligent devices that exchange real time information  in effect acquisitions of Cable & Wireless Worldwide (CWW) and TelstraClear, enabling machines to talk. combined with our existing fixed
assets, enabled us to accelerate growthOur M2M business serves customers across all market sectors, with of our fixed and converged services, with 23% of our Enterprise
revenue specific focus on the key growth sectors of automotive, smart metering on a management basis coming from fixed services, an increase and consumer electronic products. M2M is growing rapidly and we have of 12 percentage points over the
year. increased M2M connections from 12.0 million to 16.2 million in the year.Vodafone One Net, our flagship converged offer which combines fixedConnections in the global M2M market are expected to grow and mobile services, is available to businesses of all sizes, from both 1 at an average of 24% per year between 2013 and 2018 .
We continue small and medium up to global multinational companies and is live to be ranked as the market leader by a number of market analysts, in ten markets. including Analysys Mason and Machina Research.Vodafone Global Enterprise (VGE) Cloud and HostingVGE delivers total communications services to some
of theBringing together mobile, fixed, cloud and hosting services, worlds largest multinational companies. We currently serve around we help organisations move their
data and applications to the cloud, 1,700 companies and provide services in over 100 countries. transforming the way they do business. Our capabilities mean we are VGE simplifies operations for our customers by providing them with well placed to
capitalise on the global growth of cloud computing and a single account and service team, a single multi-country contract, the increasing technology and procurement link between hosting, single pricing structures and a single portfolio of products
and services. cloud and connectivity.These are underpinned by our fully integrated fixed and mobile network,With the successful integration of our CWW operations, our Cloud and cloud-based hosting platforms, machine-to-machine capability and Hosting Services business now serves more than 1,200
public sector other business services. and enterprise customers in multiple regions. Our 14 data centres in the Carrier Services UK, Ireland and South Africa are complemented by a partner network of data centre facilities that allow us to serve
multinational customers Our Carrier Services division manages the commercial relationships globally. Our services include co-location, managed hosting, private and with other operators to support, in particular, international voice and public cloud
services, messaging and software-as-a-service applications. data services. We are the second largest international voice carrier in the world, carrying 50 billion international voice minutes annually. We are one of the worlds largest investors
in submarine cables that reach more than 100 countries. We offer a broad portfolio of carrier voice and data products and work with over 1,000 communication service providers globally.



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Vodafone enterprise service revenue on Share of Group service revenue on a management basis % a management basis 2014 %3027 27 Fixed: 23% 23 2010 Mobile:
77%0 2012 2013 2014t basis in the UK and New Zealand now from enterprise customersM2M services for automotive customersWe will provide automotive connectivity in new Volkswagen and Audi vehicles
in Europe from next year, using an embedded SIM to provide customers with high-speed internet access on the road. We worked closely with Volkswagen to design the activation and service processes to their specific requirements.Vodafone One Net BusinessVodafone One Net Business has helped ICT Networks in the UK reduce costs and free up its
technicians time by providing a simple and reliable virtual desk phone via their mobile  allowing technicians who are travelling and working remotely to be more accessible and responsive to customers and colleagues.Cloud and hostingWe will provide cloud and hosting services to global software provider Synchronoss across
Europe, with the ability to expand into theMiddle East and the Asia Pacific region. Our solution leverages assets and knowledge acquired from CWW to help them deploy secure
applications on a global scale.



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NetworkWe aim to have the best mobile
network in all our markets, be competitive in fixed services and provide the best converged fixed and mobile services to support the growing demand for unified communications. We are aiming to provide our customers with a perfect voice
call experience, and provide both high quality and broad data coverage.Context Where we are goinga The telecoms industry continues to experience a rapid increase Our strategy is focused upon delivering a clearly differentiated, in the demand for data services, such as video streaming
and market-leading network position. We will do this through: internet browsing on smartphones and tablets. a the provision of the best mobile voice and data service, by the a Across the Group data traffic increased by 64% over the last year rapid
and widespread deployment of 3G and 4G, and upgrades and data now accounts for 81% of our total traffic including voice. to network backhaul infrastructure; and a Mobile and fixed network technology is continuing to evolve being competitive in the
fixed market and delivering leading a providing faster data speeds and the capability to carry more data. unified communication solutions, by acquiring access a Customers are also increasingly seeking fixed and mobile to an effective mix of
high speed next?generation fixed converged or unified communications propositions. network cable and fibre infrastructure.Mobile network Europe During the year we
acquired Kabel Deutschland in Germany and announced the acquisition of Ono in Spain, both of which provide Across Europe data has become an increasingly important driver of total us with high quality cable network infrastructure. The integration of
traffic on our network. In the last year European data traffic increased Cable & Wireless Worldwide in the UK and TelstraClear in New Zealand by 44%, compared to 4% for voice. Video streaming and web browsing remains on track and we
have made good progress on our fibre build are the most popular data applications  accounting for nearly 75% programmes in Spain and Portugal with a target to reach three million of data usage. 3G accounts for most of our data traffic, so
its a key area and 1.5 million homes passed respectively by 2015. for investment. This is why today around two thirds of our European 3G network can now deliver peak downlink speeds of 43.2Mbps and the latest smartphone drive trials
showed that we had the best or co-best Spectrum 3G data network in 15 out of 20 markets. The faster speeds offered Radio spectrum is the key raw material for our mobile business. by 4G make this increasingly attractive to our customers, shown During
the year we acquired and renewed spectrum for Ł2.2 billion by a significant rise in the number of users last year to 4.7 million. in India, Romania, New Zealand and the Czech Republic, with a cashThe increasing take-up of 4G means that this now represents 18% cost of Ł0.9 billion during the year. The purchases in India will enable of total European data traffic. the provision of
enhanced voice and data services including 2G, 3G and 4G across the country. We have a strong portfolio of spectrum assets Mobile network emerging markets to support the rapid deployment of 4G, with 800/900MHz frequency spectrum for deep indoor
coverage and 1800/2600MHz for capacity Nearly 40% of Group mobile data is now carried across our AMAP and performance. See page 194 for more details. network, which includes our emerging markets, and by the end of the year India became the greatest
data user by volume of any country within Vodafone. The scope for further data growth remains significant Project Spring with only 52 million of our 167 million customers in India having The largest part of Project Spring will be
significant additional access to data, of which only seven million are 3G users. 3G usage investment in our mobile and fixed networks over the next two years is already averaging in excess of nearly 750MB per month  compared to both
accelerate and clearly differentiate our network position in all to around 500MB in Europe. To meet this rapid growth in data traffic, of our markets. This is the largest network investment programme we have rolled out more than 10,500 3G and over
9,700 2G sites in India in our history. supported by more than 13,000 kilometres of fibre in the last two years.In our European mobile networks, this will enable us to
deliver Investing in fixed networks for unified communications perfect voice which means a call success rate of over 99%. We will As demand for unified communications and data grows we are also deliver the best 4G data experience with
over 90% outdoor increasing our access to next?generation fixed line infrastructure population coverage and 90% of customer data sessions on high to support this. Through a combination of wholesale agreements, speed smartphones will be above 3Mbps.
This will be supported self-build programmes and targeted acquisitions we now have by a future proofed network with over 98% of sites covered with high access to fixed line infrastructure in 17 markets (with data speeds capacity backhaul. In
emerging markets, we will also deliver perfect of up to 300Mbps in some) and we offer combined fixed and mobile voice and will grow our 3G coverage to 95% in targeted urban areas propositions in 12 countries. in India. For our fixed
customers, we will deploy fibre in Italy passing 6.4 million households, extend our fibre roll?out in Portugal to more households and build fibre coverage to support 15,000 enterprises in South Africa.



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obile operators in the worldExpanding our 4G networkOur 4G journey continues to go from strength to strength. In the last year, we launched 4G services in a further seven markets, including the UK, bringing the total to 14. 17% of the
smartphones on our European network are 4G capable, and our 4G network enables customers to upload and download content two to three times faster than over 3G. This allows users to stream video content and browse the internet with less delay. By
2016 we expect to expand our 4G network to cover over90% of the European population.Portable network supports victims of typhoonIn November 2013, the Vodafone Foundation deployed
two Instant Network to support relief efforts following Typhoon Haiyan, in the Philippines. These portable networks pack into four cases, each weighing less than 100kg. Over 29 days the networks enabled 1.4 million SMS and 443,200 calls to be
made.In February 2014, the Vodafone Foundation launched the Instant Network Mini  a network in a backpack weighing just 11kg, which can be deployed
in ten minutes.Network innovationWe work very closely with our network suppliers to continually
develop innovative new solutions to help improve our customers network experience, deliver efficiencies and enable us to differentiate. During this year, we began testing and deploying several solutions, which will be available in the near
future. For example, 4G carrier aggregation, bonds together multiple spectrum blocks to increase peak data downloads speeds up to 300Mbps; and 4G Broadcast enables an unlimited number of smartphone users, with compatible
devices, to watch TV channels without putting additional load on the4G network. We were the first operator to trial this service in Europe in February 2014.



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OperationsWe are using the benefits of our
global reach and scale to standardise and simplify the way we do business across the Group. This will both improve cost efficiency and reduce the time to launch new services and products to our customers.Context Where we are goinga The challenging economic, regulatory and competitive We aim to improve operational
efficiency, and to speed up and environment we face in Europe has led to declining revenues in our co-ordinate our time to market for new propositions and services, by: European businesses. a using our centralised functions more; a Inflationary
pressure in emerging markets is putting upward pressure on our cost base. a driving standardisation and simplification of our business to maximise the benefits of our scale; a The trend towards greater data usage significantly increases the traffic
on our network. a offshoring more business functions to shared service centres; a applying new technology to improve efficiency; and a Against this background, to protect our level of profitability, we must continue to find ways to improve operating
efficiency and a reducing non-customer facing cost. simplify and standardise processes for customers.Using our centralised functions more Offshoring functions to sharedThe Vodafone Procurement Company (VPC) in Luxembourg centrally service centres of expertise manages the strategic procurement of the majority of our overall
spend. Our business depends on having simple and effective operations This allows us to leverage scale and achieve better prices and terms that leverage the benefits of shared service centres to support our and conditions. During the year the spend
managed through the VPC operations across the globe. increased to €10.2 billion which represents around 50% of our spend, Over the past three years we have expanded the scope of shared service up from €6.9 billion in the prior year.
centres in Egypt, India and Europe to provide financial, administrative,By utilising the VPC we also learn how to apply best practice across IT, customer operations and
human resource services for all of our different spend categories. For example, by applying techniques from markets. In 2012, we had just 9,5001 shared centre employees and this how we manage the software licences for our data centres under has now
risen to over 13,300, and has expanded to cover commercial a single contract to how we buy software for our network operations, activities for our Enterprise business and customers. Our shared services we have achieved a 30% reduction in prices
compared to what our are delivering cash cost savings at an annualised run-rate of about markets were achieving in isolation. Ł180 million. We expect to have around 16,000 employees in sharedStandardisation and simplification services by 2016.In the UK, we completed the first phase of a programme to
simplify Applying new technology to improve efficiency our organisation and improve all of our IT systems for billing, customer We have been at the forefront of Single RAN (Radio Access relationship management, and online and retail services. All
prepaid Network) technology that enables the combination of 2G, 3G and customers services have migrated from legacy IT systems to one new 4G technologies into the same radio equipment. This has a number integrated platform. This has resulted in
simplification of our tariffs and of cost benefits including reduced floor space requirements on?site improved end-to-end order processing times. We have also upgraded which reduces our site rentals, and efficient power technology provides all
our retail points of sale to make the sales and logistics processes savings our energy bill. Single RAN units are now present in 45% of our simpler for our staff. All of this means a better experience for customers. sites and we plan to expand this
to 69% by 2016.We have reduced the number of ways of returning a handset to eight, and through our rationalisation programme we are reducing our Reducing non-customer
facing costs consumer price plans from nearly 5,000 to under 500.While we continue to expand our employee base in customer facing positions, we have been able to make
savings across administrative support positions in Europe. On balance this has led to a decrease in the number of employees in Europe (excluding our acquisitions of Kabel Deutschland and the minority stake in Vodafone Italy) and an increase in the
number of employees in AMAP.



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Deploying Single Radio Access Network sites % of total Moving employees to shared services helps reduce costs to reduce costs60 15,00013,30010,70040 45 10,000 9,500 3420 24 5,0000
2012 2013 2014 0 2012 2013 2014ons operating exSharing network sites to reduce costsNearly three quarters of the new radio sites deployed across the Group during the year were shared with other mobile operators, which reduces the cost of renting or building
new sites by about 20% compared to non-shared units. During the year we entered into new sharing arrangements in three markets  Greece, Romania and Italy.Virtualising our networkWe are increasingly looking at ways to virtualise our network through
cloud computing. This requires us to move our existing network capabilities from dedicated hardware onto virtualised applications running over the cloud. As a result we are able to simplify our network architecture and reduce costs. Virtualised
networks are more scalable and resilient, and enable the faster deployment of new services. With this capability, we have started rolling out new features such as a messaging platform for our M2M products, and many more are planned.Helping our customers cut costsWe estimated that our products and services in smart metering and logistics, fleet
management, call conferencing, and cloud and hosting services, could save our customers 2.29 million tonnes of carbon dioxide equivalent (CO2e)  almost equal to our total emissions last year.



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Contributing economic improvement to social andTelecommunications technology has the power to transform peoples lives. Ensuring that we continue to connect more people to essential services, while expanding the reach of our
network, is the best way we can support that improvement.Telecommunications technology can be used to tackle some of the The issue of government surveillance has come under
increased most pressing challenges faced by society today. Our products and scrutiny. For the first time we have published a Law Enforcement services provide access to a range of solutions to these challenges Disclosure report, which sets out our
approach to responding to law in areas including financial services, healthcare and education. enforcement demands for access to customer information, togetherWe remain
determined to continue to contribute to the social and with information about intelligence agency and authority demands economic development of all our customers and particularly our on a country-by-country basis, where statistical data can lawfully
302 million customers who live in emerging markets, while ensuring be disclosed. we continue to fulfil our strategic business goals.Vodafone is a member of the
Telecommunications Industry Dialogue How we achieve our goals is integral to the long-term success of the on Freedom and Privacy of Expression, which in March 2013 launched business. We remain fully committed to operating ethically and a two-year
collaboration with the Global Network Initiative (GNI) responsibly in everything we do. This includes ensuring we respect and a set of Guiding Principles, which address the issues of privacy and our customers human rights,
improving ethical and environmental freedom of expression as they relate to the telecommunications sector. standards in our supply chain and managing our energy use, while remaining proactive in our response to emerging sustainability risks.
Supporting ethical practices in the supply chain This report highlights our progress in four critical areas. We continue to work with our suppliers and others in our industry to raise ethical, labour and environmental standards in our supply
Connecting people to vital services chain, through an enhanced code of ethical purchasing. In 2014, we conducted 30 rigorous audits of both new and existing suppliers andMobile money continues to be a driver of financial inclusion, offering38 through the Joint Audit
Co-operation (JAC), in collaboration with people access to payments and financial services beyond the nine other telecommunications operators. reach of traditional institutions. Our platform, M-Pesa, expanded its geographical reach
in 2014, launching recently in Mozambique, This year, we published our first Conflict Minerals report in responseLesotho, Egypt, Romania and India. to US Securities and
Exchange Commission requirements. Our policy requires our suppliers to take steps to ensure that minerals used M-Pesa now has 17 million active users who can access a wide range to finance conflict in the Democratic Republic of Congo
(DRC) of services that enhance their ability to improve their livelihoods, or neighbouring countries do not end up in our products and we are including the ability to pay bills and even be paid their salary via M-Pesa. working through
industry initiatives to continue to tackle this issue. A new savings and loan product, launched in conjunction with the Commercial Bank of Africa, enables M-Pesa users to save and access Saving energy and cutting carbon loans, often for the very
first time.We are a top-rated global communications service provider for the The M-Pesa platform supports our efforts in many other areas, including machine-to-machine
(M2M) industry. Using our M2M solutions helps our aim to increase productivity and improve the lives of 500,000 our enterprise customers to cut carbon emissions and generate cost smallholder farmers in Africa, through the Connected
Farmer Alliance savings. We estimated the carbon savings we deliver for customers from initiative. Our first formal partnership with Kilombero Plantations our M2M products and services, call conferencing and cloud and hosting, Limited, in Tanzania,
tested how mobile technology could support the to be a total of 2.29 million tonnes of carbon dioxide equivalent (CO2e) Companys engagement with smallholder rice farmers. We are also in 2013  almost equal to our total
emissions. By March 2014, we had piloting our solution with a dairy cooperative in Kenya, to help them run contracts to provide nearly 14 million M2M connections with carbon-more efficiently, increasing productivity and incomes for the members
reducing potential in smart metering, fleet management and logistics. who supply the cooperative with milk.Though we continue to extend the reach of our network to more
Protecting our customers information customers, who are using increasing amounts of data, our own carbon and respecting their privacy footprint has remained almost stable and we remain committed to reduce it as far as possible through energy
efficiency measures.The amount of data and personal information transmitted over ourThe
efficiency of our operations has greatly improved with emissions per networks is increasing, as our customers use their mobile and other base station now at ten tonnes CO2e, almost 40% lower than in 2007. connected devices more and more. Our
commitment to protect that Our total carbon emissions in 2014 were 2.55 million tonnes of CO2e, information and respect their right to privacy and freedom of expression a slight increase on 2013 due to newly acquired operations. remains
critical in retaining their trust.We can only ensure our customers privacy if we first ensure the security of their information and communications. Cyber security
threats Want to find out more? continue to proliferate, so Vodafones Global Security Operations Centre Read our sustainability report 201314, for more information monitors our IT systems 24 hours a day, seven days a week, to anticipate
on Vodafones contribution to social and economic development. or detect attacks and minimise their impact. vodafone.com/sustainability/report2014



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Energy use 20141,2 GWh Carbon emissions2 Millions of tonnes CO2e



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2.552.36 2.23



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Network: 4,690

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|- | 

0 2012 2013 2014
n Scope 1 (direct greenhouse gas (GHG) emissions) n Scope 2 (indirect GHG emissions)Notes:

|1 | Energy use does not include fuel use for transport.
|- | ---------------------------------------------------

|2 | Calculated using local market actual or estimated data sourced from invoices,
purchasing requisitions, direct data measurement and estimations. Carbon emissions calculated in line with DEFRA guidance and Greenhouse Gas Protocol. For full methodology see our sustainability report 2014. CWW and TelstraClear data included for
2014 only and data for 2014 acquisitions excluded.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

e Foundations in 2013  including Ł5.9 million towards its operating costs. Since its
inception, Vodafone has donated over Ł475 million to the charitable programmes led by our Foundations.Connected WomenVodafones Connected Women Summit focused on the impact of mobile technology on the lives of women around the world. New research, commissioned by the Vodafone Foundation, looked at the
social and economic impact of extending womens access to mobile phones. The Connected Women report found that stabilising the gender gap in our markets could have an economic benefit for women and society of more than US$22.3 billion annually
from 2020.Supporting victims of domestic violenceTecSOS, from the Vodafone Foundation, rapidly
connects victims of domestic violence to emergency services. Now available in six European markets, it has helped more than 31,900 victims. In the UK, TecSOS is used by over 50% of police forces  it won theMetropolitan Police Commissioners Award for Best Use of Technology and was granted a Secured by Design licence, which recognises TecSOS as a high quality service to be used
by the police.Instant EducationThe Vodafone Foundation opened the first Instant Network
School in the DRC in 2013, in partnership with Italian NGO, Don Bosco. The Vodafone Foundations Instant Network Schools programme is supported by the Qatar Foundations Educate a Child initiative. The school, in Goma, is
enabling 400500 children aged 717 to access online educational content via tablets provided through the Instant Network mobile education programme.



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##### Table of Contents



LOGO

One company, local rootsWe believe our
people are fundamental to our success  thats why we want to attract and retain exceptional employees. Were committed to providing an inclusive workplace where we offer great opportunities for our people to build their skills and
careers.We continue to develop our people to ensure that they have the right skills and experience to deliver an outstanding experience to our customers.During the year we employed an average of 92,812 people Creating a lean and effective organisation and had 97,721 employees as of March 2014. The numberWe continue to make our business more efficient, simplifying processes of our people increased during the year following our acquisition across our markets and sharing best practice. We
continue to move of Kabel Deutschland in Germany and the move to full ownership transactional and back office activities to our shared service centres of Vodafone Italy. in Egypt, India and Europe. In the last year we undertook an exercise The
following sections highlight our progress in the key areas behind to reduce our non-customer facing support functions, as discussed our people strategy. on page 32.We aim
to treat all employees fairly, consulting with those affected Increasing employee engagement by change and clearly communicating developments. We support Every year all our employees participate in our global People Survey employees through
organisational changes, finding people new jobs which allows us to measure engagement levels, compare ourselves in the company or arranging for them to work for a partner company to other large companies and helps us identify ways to improve how
where possible. We also help those whose roles are made redundant we do things. search for new jobs, offering them training on job applications and interview skills, and advice on how to start their own business. Our employee engagement index
measures how committed our employees are, their desire to continue working for us and their During the year we completed the integration of employees from Cable willingness to recommend Vodafone as an employer. The index & Wireless
Worldwide and we established single product management remained broadly stable at 77 points this year compared to 78 last year. teams for consumer and enterprise.Crucially
we retained our top quartile position. Our employee turnover rate also remained broadly stable at 15%. Strengthening capabilitiesWe want people to grow their careers at
Vodafone and develop the skills Embedding The Vodafone Way and talent needed to grow our business. We do this through formal The Vodafone Way is about ensuring our employees work with speed, training, on the job experience and regular coaching from
managers. simplicity and trust so that we can be customer-obsessed, ambitious We conduct an annual analysis of learning needs to identify priorities and competitive, innovation-hungry and work as one company with and ensure that learning plans
support our business strategy. Every local roots. employee also has a formal review once a year with their manager For the third consecutive year we have run development workshops to review their performance and set clear goals and development plans
for all senior employees with a particular focus on ensuring we provide for the year ahead. a superior experience to all our customers.Our global learning academies in
marketing, technology, sales, retail,Building a diverse and inclusive culture finance and supply chain enable people to develop the critical skillsWe believe that a diverse team is crucial to our success, helping us better they need to excel in their functions. We work with leading business understand and meet the needs of our
customers. Our Group-wide schools and accredited external providers to develop and deliver the diversity and inclusion strategy aims to create a working environment training. Last year, around 180,000 online courses were completed and which values,
celebrates and makes the most of individual differences. we trained around 18,000 people in our Technology Academy and over 10,000 people in our Retail and Sales academies.We do not condone unfair treatment of any kind and offer equal We conduct regular talent reviews to identify high-potential future opportunities in all aspects of employment
and advancement leaders and accelerate the progress of high-potential managers through regardless of race, nationality, gender, age, marital status, sexual our Inspire programme, which offers development and executive orientation,
disability, and religious or political beliefs. This also applies coaching over an 18 month period and may include an assignment to agency workers, the self-employed and contract workers who work to another Vodafone market or function. for us. We
promote an open culture that encourages people to raise Our Discover programme for graduates accelerates the careers of high issues to ensure that any behaviour which excludes or discriminates performing graduates and we recruited 596
people from 20 countries against individuals does not go unchallenged. This years People Survey onto this programme during the year. We also have an international showed that 89% of employees believe that Vodafone treats people assignment
programme, Columbus, with 35 graduates from fairly, regardless of their gender, background, age or beliefs. 16 different markets taking part this year.



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##### Table of Contents



LOGO

Valuing diversityAt the end of the year we had 61,848 (63%) male
and 35,873 (37%) female employees and we have increased female representation at all levels of the business, particularly within more senior roles. Women now make up 22% of our senior leadership team (our 223 most senior managers)  an
improvement on last year but we still have work to do. We also increased the number of women on our Executive Committee to two.Recognising performance Creating a safe place
to workWe maintained our approach of rewarding people based on their Driving a culture where safety is an integral part of every business performance, potential and
contribution to our success. We benchmark decision is critical to our vision of preventing any incidents that could roles regularly to ensure competitive, fair remuneration in every country affect the health and safety of our people. We continue to
work hard in which we operate. We also offer competitive retirement and other to ensure employees and contractors know how to identify and manage benefit provisions which vary depending on conditions and practices risks and take personal
responsibility for their own safety and the safety in local markets. of those around them.Global short-term incentive plans are offered to a large percentage We have a wide
range of programmes and systems to tackle our key of employees and global long-term incentive plans are offered to our risks, often tailored to the particular needs of each market. Despite this, senior managers. Individual and company performance
measures we greatly regret to report that 12 people died while undertaking work are attached to these plans which give employees the opportunity on behalf of Vodafone last year. Strengthening programmes to target to be rewarded for exceptional
performance as well as ensuring that occupational road risk  one of our biggest risks and the main cause we do not reward poor performance. of these fatalities  remains a major focus for all local markets.Doing whats right Through increased awareness and a strong focus on managing our top five safety risks, our injury rates have continued to decline in 2014.We have a Code of Conduct that sets out our business principles and The safety culture in Vodafone continues to mature  our latest what we expect from employees to ensure
they protect themselves People Survey showed that 89% of employees believe that our as well as the Companys reputation and assets. We actively promoted Absolute Rules, which help employees follow best practice for safety, our Code
of Conduct throughout the year via our global Doing are taken seriously.Whats Right campaign. The aim was to improve understanding of and engagement with
key topics including health and safety, anti-bribery, privacy, security and competition law to ensure that people know whats expected of them and managers know what is expected of their teams.



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##### Table of Contents

|   |  |                                                   
|-- |  | --------------------------------------------------
|   |  |                                                   
|38 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Chief Financial Officers review                  






Our financial performance was mixed Our financial performance reflects continued strong growth in our emerging markets, partly offsetting competitive, regulatory and macroeconomic pressures in Europe. While we have seen declines in our revenue and adjusted EBITDA, we
have met our financial guidance and increased the dividend per share.  Overall performance The Groups emerging markets businesses have delivered strong organic growth this year, combining good local execution on marketing and
distribution with leading network quality. In particular, data usage in emerging markets is really taking off, providing further growth potential for the Group. This has however been offset by significant ongoing pressures in our European
operations, from a combination of a weak macroeconomic environment, regulatory headwinds, and stiff competition. We experienced revenue declines in all of our major European markets, and related pressure on margins, despite continuing measures to
control costs. Group revenue increased by 0.8% to £38.3 billion, with service revenue of £35.2 billion, an increase of
0.5%. Group adjusted EBITDA decreased by 3.3% to £11.1 billion as the impact of steep revenue declines in Europe offset
improving margins in AMAP, notably in India and Australia. Group adjusted operating profit fell 22.9% year-on-year to £4.3
billion due to lower adjusted EBITDA and higher amortisation and depreciation due principally to the acquisition of KDG in October 2013. Verizon Wireless The profit contribution of Verizon Wireless is reported in our 2014 financial year results for five
months to 2 September 2013, the date we announced its sale. Our share of Verizon Wireless profits for this five month period amounted to £3.2 billion. The sale of the US group, whose principal asset was Verizon Wireless, led to a
pre-tax gain on disposal of £45.0 billion.  LOGO
 Impairment losses We recorded impairment charges of £6.6 billion relating to our businesses in Germany, Spain, Portugal, Czech Republic and Romania. These
were driven by lower projected cash flows within business plans, resulting from the tougher macroeconomic environment and heavy price competition. Financing costs and taxation Net financing costs have decreased 6.4% primarily due to the recognition of
mark-to-market gains, offset by a £99 million loss (2013: £nil) on the redemption of US$5.65 billion bonds as part of the restructuring of the Groups financing arrangements following the disposal of Verizon Wireless and lower
interest income on settlement of tax issues. The statutory effective tax rate for the year ended 31 March 2014 was -33.4%
compared to 77.2% in the prior year. The difference is primarily due to the gain on disposal of our interest in Verizon Wireless which did not result in any tax consequences and the recognition of significant deferred tax assets in Luxembourg and
Germany. Adjusted earnings per share Adjusted earnings per share1 fell 12.8% to 17.54 pence, driven by lower adjusted operating profit, offset by a lower share count arising from the Groups share buyback
programme. The Board is recommending a final dividend per share of 7.47 pence, to give total ordinary dividends per share for the year of 11.0 pence, up 8% year-on-year. Free cash flow Free cash flow
was £4.2 billion, down 24.0% from the prior year. The year-on-year decline reflects the relative strength of sterling against the South African rand and Indian rupee over the course of the year, partly offset by movements in the euro, as well
as tough trading conditions. In addition to the free cash flow reported above, we received an income dividend of £2.1 billion from Verizon Wireless. Capital expenditure Capital
expenditure increased 19.3% to £6.3 billion, with the growth driven by the inclusion of CWW for 12 months, the inclusion of KDG from October 2013, the commencement of our fibre roll-out in Spain, and initial Project Spring investments in
Germany and India. In addition, we acquired and renewed spectrum for £2.2 billion in India, Romania, New Zealand and the Czech Republic, with a cash cost of £0.9 billion during the year.






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##### Table of Contents

|     |  |   
|---- |  | --
|LOGO |  | 39
|     |  |   






Group1 2014£m



Restated2013
£m
1Revenue


38,346



38,041Service revenue


35,190



34,999Other revenue


3,156



3,042Adjusted EBITDA2


11,084



11,466Adjusted operating profit2


4,310



5,590Impairment loss


(6,600
)


(7,700
)Restructuring costs and other


(355
)


(311
)Amortisation of acquired customer bases and brand intangible assets


(551
)


(249
)Other income/(expense)


(717
)


468Operating loss


(3,913
)


(2,202
)Non-operating income and expense


(149
)


10Net financing costs


(1,208
)


(1,291
)Income tax credit/(expense)


16,582



(476
)Profit/(loss) for the financial year from continuing operations


11,312



(3,959
)Profit for the financial year from discontinued operations


48,108



4,616Profit for the financial year


59,420



657 Notes: 1
2014 results reflect average foreign exchange rates of £1:1.19 and £1:US$1.59 (2013: £1:1.23 and £1:US$1.58). 2
Adjusted EBITDA and adjusted operating profit have been restated to exclude restructuring costs . Adjusted operating profit has also been redefined to exclude amortisation of customer base and
brand intangible assets. See page 201 for Non-GAAP financial information.   Net debt Net debt decreased £11.7 billion to £13.7 billion as proceeds from the disposal of our US group, whose principal asset was its 45%
stake in Verizon Wireless, positive free cash flow and favourable foreign exchange movements more than offset the acquisition of Kabel Deutschland, licences and spectrum payments and equity shareholder returns including equity dividends, the special
distribution and share buybacks. In Q4, we paid £2.4 billion in relation to the expected tax liability for the Verizon Wireless transaction, of which US$3.3 billion (£2.0 billion) was paid to Verizon. We now expect this liability to
total US$3.6 billion (£2.2 billion). Performance against 2014 financial year guidance2 On 2 September 2013 we issued pro forma guidance for the 2014 financial year,
which excluded VZW and included 100% of Vodafone Italy, both for the whole year. This pro forma guidance included Vodafones remaining joint ventures (Australia, Fiji and Indus Towers), on an equity accounting basis, consistent with IFRS
requirements. Based on guidance foreign exchange rates, our pro forma adjusted operating profit for the 2014 financial year was
£4.9 billion2, in line with the around £5.0 billion range set in September 2013. On the same basis our pro forma free cash flow was £4.8 billion2, in line with our guidance range of £4.5£5.0 billion.
 2015 financial year guidance3 Adjusted EBITDA £bn


Free cash flow £bn2015 financial year guidance


11.411.9



Positive We expect adjusted EBITDA to be in the range of £11.4 billion to £11.9 billion. We expect free cash flow to be positive after all capex, before the impact of M&A, spectrum purchases and restructuring costs. Total capex
over the next two years is expected to be around £19 billion, after which we anticipate capital intensity normalising to a level of 1314% of annual revenue. /s/ Nick Read Nick Read Chief Financial Officer
   Notes: *
All amounts in this document marked with an * represent organic growth which presents performance on a comparable basis, both in terms of merger and acquisition activity and movements
in foreign exchange rates. See page 202 Non-GAAP financial information for further details. 1
Please see page 201 for Non-GAAP financial information. 2
Guidance foreign exchange rates for the year ended 31 March 2014 were £1:1.17, £1=US$1.52, £1:INR 84.9
and £1:ZAR 14.3. 3
We have based guidance for the 2015 financial year on our current assessment of the global macroeconomic outlook and assume foreign exchange rates of £1:1.21, £1:INR 105.8 and £1:ZAR 18.4. It excludes the impact of licences and spectrum purchases, material one-off tax-related payments, restructuring costs and any
fundamental structural change to the Eurozone. It also assumes no material change to the current structure of the Group. Actual foreign exchange rates may vary from the foreign exchange rate assumptions used. A 1% change in the euro to sterling
exchange rate would impact adjusted EBITDA by £60 million and have no material impact on free cash flow. A 1% change in the Indian rupee to sterling exchange rate would impact adjusted EBITDA by £10 million and free cash flow
by £5 million. A 1% change in the South African Rand to sterling exchange rate would impact adjusted EBITDA by £15 million and free cash flow by £5 million. Guidance for the year ending 31 March 2015 includes the results
of Vodafones remaining joint ventures (Australia, Fiji and Indus Towers) on an equity basis, consistent with IFRS requirements.






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|   |  |                                                   
|40 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Operating results                                 






This section presents our operating performance, providing commentary on how revenue and adjusted
EBITDA performance of the Group and its operating segments within the Europe and AMAP regions, together with Common Functions, have developed over the last year. These revenue and adjusted EBITDA amounts are extracted from note 2 to the Consolidated
Financial Statements. See pages 171 to 175 for commentary on the 2013 financial year. The presentation of segmental revenues and adjusted EBITDA within note 2 to the Consolidated Financial Statements segment is under the management basis as this is
assessed as being the most insightful presentation and is how the Groups operating performance is reviewed internally by management. See Non-GAAP information on page 201 for further information on the use of management basis
measures and reconciliations between the management basis measures and the statutory (IFRS) basis. Group level operating performance
is discussed on pages 38, 39 and 97. Europe on a management basis  Germany
£m


Italy
£m


UK
£m


Spain £m


Other Europe
£m


Eliminations
£m


Europe
£m


Restated
2013
£m





% change£


OrganicYear ended 31 March 2014Revenue


8,272



4,312



6,427



3,518



5,525



(57
)


27,997



28,602



(2.1
)


(9.3
)Service revenue


7,739



3,863



6,095



3,230



5,104



(54
)


25,977



26,501



(2.0
)


(9.1
)Other revenue


533



449



332



288



421



(3
)


2,020



2,101



(3.9
)


(10.8
)Adjusted EBITDA


2,698



1,536



1,418



787



1,736







8,175



9,099



(10.2
)


(18.3
)Adjusted EBITDA margin


32.6%



35.6%



22.1%



22.4%



31.4%







29.2%



31.8%  Organicchange%



Otheractivity
pps
1


Foreignexchangepps



Reportedchange%Revenue  Europe


(9.3
)


4.7



2.5



(2.1
)Service revenueGermany


(6.2
)


9.0



3.6



6.4Italy


(17.1
)


2.2



3.1



(11.8
)UK


(4.4
)


31.9







27.5Spain


(13.4
)


(0.7
)


3.1



(11.0
)Other Europe


(7.1
)


(17.5
)


1.8



(22.8
)Europe


(9.1
)


4.6



2.5



(2.0
)Adjusted EBITDAGermany


(18.2
)


10.2



3.3



(4.7
)Italy


(24.9
)


2.2



2.8



(19.9
)UK


(9.8
)


26.9



0.1



17.2Spain


(23.9
)


(1.8
)


2.8



(22.9
)Other Europe


(14.0
)


(6.2
)


2.1



(18.1
)Europe


(18.3
)


5.6



2.5



(10.2
)Note:1     Other activity includes the impact of M&A activity and the
revision to intra-group roaming charges from 1 April 2013. Refer to Organic growth on page 202 for further detail.






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|     |  |   
|---- |  | --
|LOGO |  | 41
|     |  |   






Germany Service revenue decreased 6.2%*, with a slightly improving trend in Q4 compared to Q3. Performance for the year was driven by intense price
competition in both the consumer and enterprise segments and an MTR cut effective from December 2012, with Vodafone particularly impacted due to our traditionally high ARPU. In a more competitive environment we launched both a more aggressive 3G
price plan (Smart) and pushed otelo in the entry-level contract segment. Mobile in-bundle revenue increased 2.7%* as a result of growth in integrated Vodafone Red offers, which was more than offset by a decline in mobile out-of-bundle
revenue of 22.6%*. We continue to focus on Vodafone Red and 4G where we had nearly 3.0 million customers and 891,000 consumer contract customers respectively at 31 March 2014. Adjusted EBITDA declined 18.2%*, with a 4.3* percentage point decline in adjusted EBITDA margin, driven by lower service revenue and increased
customer investment. The roll-out of 4G services continued with a focus on urban areas, with overall outdoor population coverage of
70% at 31 March 2014, which combined with our ongoing network enhancement plan has resulted in a significant improvement in voice and data performance in the second half of the year. Following its acquisition on 14 October 2013, KDG contributed £702 million to service revenue and £297 million to adjusted EBITDA in
Germany. The domination and profit and loss transfer agreement was registered on 14 March 2014 and the integration of Vodafone Germany and KDG began on 1 April 2014. Italy Service revenue
declined 17.1%* driven by the effect of the summer prepaid price war penetrating the customer base and the negative impact of MTR cuts effective from January and July 2013. Mobile in-bundle revenue grew 15.2%* driven by the take-up of integrated prepaid plans. Vodafone Red, which had nearly 1.5 million customers at 31 March 2014, continues to
penetrate further into the base leading to improving churn in the contract segment. Enterprise revenue growth, while still negative,
showed signs of improvement during the year thanks to the success of Zero. Prepaid experienced a steep ARPU decline as a result of the market move to aggressive bundled offers. 4G services are now available in 202 municipalities and
outdoor coverage has reached 35%. Fixed line revenue declined 3.2%* as a result of declining fixed voice usage, partly offset by
continued broadband revenue growth supported by 77,000 net broadband customer additions during the year. Vodafone Italy now offers fibre services in 37 cities and is progressing well on its own fibre build plans. Adjusted EBITDA declined 24.9%*, with a 4.8* percentage point decline in adjusted EBITDA margin, primarily driven by the lower revenue, partially
offset by strong efficiency improvements delivered on operating costs which fell 7.1%*. UK Service revenue decreased 4.4%*, principally driven by declines in enterprise and prepaid and a 1.9 percentage point impact from MTR cuts,
partially offset by consumer contract service revenue growth. Mobile in-bundle revenue increased 0.6%* as the positive impact of contract customer growth and greater penetration of Vodafone Red plans into the customer base, with nearly 2.7 million
customers at 31 March 2014, offset pricing pressures. Mobile out-of-bundle revenue declined 7.2%*, primarily driven by lower prepaid revenue. The activity to integrate the UK operations of CWW was accelerated successfully and we continue to deliver cash and capex synergies as planned. The sales pipeline is now growing, which we expect to materialise into revenue increases
in the 2015 financial year.
 The roll-out of 4G services continued following the launch in August 2013, with services now
available in 14 cities and over 200 towns, with over 637,000 4G enabled plans (including Mobile Broadband) at 31 March 2014. We are making significant progress in network performance, particularly in the London area. Adjusted EBITDA declined 9.8%*, driven by lower revenue and a 1.0* percentage point decline in the adjusted EBITDA margin as a result of higher
customer investment. Spain Service revenue declined 13.4%*, as a result of intense convergence price competition, macroeconomic price pressure in enterprise and a MTR cut in July 2013. Service revenue trends began to improve towards the end of the year. As a
result of a stronger commercial performance and lower customer churn from an improved customer experience, the contract customer base decline slowed during the year and the enterprise customer base remained broadly stable. Mobile in-bundle revenue
declined 0.4%* driven by the higher take-up of Vodafone Red plans, which continue to perform well, with over 1.2 million customers at 31 March 2014. We had 797,000 4G customers at 31 March 2014 and services are now available in all Spanish
provinces, 227 municipalities and 80 cities. Fixed line revenue declined 0.2%* as we added 216,000 new customers during the year and
added 276,000 homes to our joint fibre network with Orange. On 17 March 2014 we agreed to acquire Grupo Corporativo Ono, S.A. (Ono), the leading cable operator in Spain and the transaction is, subject to customary terms and conditions
including anti-trust clearances by the relevant authorities, expected to complete in calendar Q3 2014. Adjusted EBITDA declined
23.9%*, with a 3.4* percentage point decline in adjusted EBITDA margin, primarily driven by the lower revenue, partly offset by lower commercial costs and operating cost reductions of 9.4%*. Other Europe Service
revenue declined 7.1%* as price competition and MTR cuts resulted in service revenue declines of 5.6%*, 8.4%* and 14.1%* in the Netherlands, Portugal and Greece respectively. However, Hungary and Romania returned to growth in H2, and all other
markets apart from Portugal showed an improvement in revenue declines in Q4. In the Netherlands mobile in-bundle revenue increased by
3.4%*, driven by the success of Vodafone Red plans. In Portugal, the broadband customer base and fixed line revenues continued to grow as the fibre roll-out gained momentum in a market moving strongly towards converged offers, whilst in Greece the
customer base grew due to the focus on data. In Ireland, contract growth remained good in a declining market. Adjusted EBITDA declined
14.0%*, with a 2.1* percentage point reduction in the adjusted EBITDA margin, driven by lower service revenue, partly offset by operating cost efficiencies.






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|   |  |                                                   
|42 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Operating results
(continued)                     






Africa, Middle East and Asia Pacific on a management basis RestatedIndia
£m


Vodacom


Other AMAP


Eliminations


AMAP


2013





% change£m


£m


£m


£m


£m


£


OrganicYear ended 31 March 2014Revenue


4,394



4,718



5,860



(1
)


14,971



15,413



(2.9
)


8.4Service revenue


3,927



3,866



5,295



(1
)


13,087



13,729



(4.7
)


6.1Other revenue


467



852



565







1,884



1,684



11.9



27.4Adjusted EBITDA


1,397



1,716



1,567







4,680



4,532



3.3



16.2Adjusted EBITDA margin


31.8%



36.4%



26.7%







31.3%



29.4%  Organicchange %



Otheractivity
pps
1


Foreignexchangepps



Reportedchange%Revenue  AMAP


8.4



0.7



(12.0
)


(2.9
)Service revenueIndia


13.0







(11.7
)


1.3Vodacom


4.1



(2.8
)


(13.7
)


(12.4
)Other AMAP


2.8



4.0



(9.4
)


(2.6
)AMAP


6.1



0.7



(11.5
)


(4.7
)Adjusted EBITDAIndia


26.4







(13.7
)


12.7Vodacom


6.6



0.2



(16.1
)


(9.3
)Other AMAP


19.3



3.2



(10.7
)


11.8AMAP


16.2



1.0



(13.9
)


3.3 Notes: 1
Other activity includes the impact of M&A activity and the revision to intra-group roaming charges from 1 April 2013. Refer to Organic growth on page 202 for
further detail.
 India Service revenue increased 13.0%*, driven by continued customer growth and data usage as well as improved voice pricing. Mobile customers increased
by 14.2 million during the year, yielding a closing customer base of 166.6 million at 31 March 2014. Data usage grew 125% during the
year, primarily resulting from a 39% increase in mobile internet users and a 67% increase in usage per customer. At 31 March 2014 active data customers totalled 52 million including seven million 3G customers. We progressively rolled out M-Pesa across India over the year, reaching nationwide coverage by March 2014. Adjusted EBITDA grew 26.4%*, with a 3.3* percentage point increase in adjusted EBITDA margin, driven by the higher revenue and the resulting
economies of scale on costs. In February, Vodafone India successfully bid for additional spectrum in 11 telecom circles in the Indian
Governments 900MHz and 1800MHz spectrum auction, enabling the company to provide customers with enhanced mobile voice and data services across the country. Of the total £1.9 billion cost of these spectrum licences, £0.5 billion was
paid during the financial year with the remainder payable in instalments starting in 2017. Vodacom Service revenue grew 4.1%*, driven by strong growth in Vodacoms mobile operations outside South Africa. In South Africa, organic service
revenue increased 0.3%*, despite the adverse impact of an MTR cut, due to the strong growth in data revenues of 23.5%*, driven by higher smartphone penetration and the strong demand for prepaid bundles. Vodacoms mobile operations outside South Africa delivered service revenue growth of 18.9%* mainly from continued customer base growth. M-Pesa continued to perform well and is now operational in all of the Vodacom mobile operations
outside of South Africa, with over 4.4 million customers actively using the service. Adjusted EBITDA increased 6.6%*, driven by
revenue growth, optimisation in customer investment and efficiencies in South Africa operating costs. The adjusted EBITDA margin decline of 0.3* percentage points is the result of higher sales of lower margin handsets. On 14 April 2014, Vodacom announced the acquisition of the Vodacom customer base from Nashua, a mobile cellular provider for South African mobile
network operators, subject to the approval of the Competition Authority. On 19 May 2014 Vodacom announced that it had reached an
agreement with the shareholders of Neotel Proprietary Limited (Neotel), the second largest provider of fixed telecommunications services for both enterprise and consumers in South Africa, to acquire 100% of the issued share capital in,
and shareholder loans against, Neotel for a total cash consideration of ZAR 7.0 billion (£0.4 billion). The transaction remains subject to the fulfilment of a number of conditions precedent including applicable regulatory approvals and is
expected to close before the end of the financial year.






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Other AMAP Service revenue increased 2.8%*, with growth in Turkey, Egypt, Qatar and Ghana being partially offset by declines in Australia and New Zealand. Service revenue growth in Turkey was 7.9%* after a 5.4 percentage point negative impact from voice and SMS MTR cuts effective from 1
July 2013. Mobile in-bundle revenue in Turkey grew 25.0%* driven by higher smartphone penetration, the success of Vodafone Red plans and continued growth in enterprise. In Egypt service revenue increased 2.6%*, driven by the growth in the customer base, higher data usage and a successful pricing strategy. Service
revenue growth in Qatar came as a result of strong net customer additions and the success of segmented commercial offers. In Ghana, service revenue grew 19.3%*, driven by an increase in customers and higher data usage in both consumer and
enterprise. Adjusted EBITDA grew 19.3%* with a 3.1* percentage point improvement in adjusted EBITDA margin, with improvements in
Turkey, Australia, Qatar and Ghana driven by the increase in scale and operating cost efficiencies, and with robust contribution from Egypt, partially offset by a decline in New Zealand. Our joint venture in Australia experienced a service revenue decline of 9.0%*. The turnaround plan remains on track, yielding improved levels of
network performance, net promoter score and customer base management. The adjusted EBITDA margin was improved by 14.8* percentage points, as a result of restructuring and stronger cost discipline. Our associate in Kenya, Safaricom, increased service revenue by 17.2% driven by a higher customer base and continued growth in M-Pesa. Non-Controlled Interests on a management basis Verizon Wireless1,2 2014
£m


2013
£mRevenue


9,955



21,972Service revenue


9,000



19,697Other revenue


955



2,275Adjusted EBITDA


4,274



8,831Interest


(20
)


(25
)Tax2


(50
)


13Groups share of result in VZW


3,169



6,500 Notes: 1
All amounts represent the Groups share based on its 45% partnership interest, unless otherwise stated. Results for the year ended 31 March 2014 only include results to 2 September 2013, the
date the Group announced its intention to dispose of its 45% interest. 2
The Groups share of the tax attributable to VZW relates only to the corporate entities held by the VZW partnership and certain US state taxes which are levied on the partnership. The tax
attributable to the Groups share of the partnerships pre-tax profit is included within the Group tax charge. On 2 September 2013 Vodafone announced it had reached an agreement with Verizon Communications Inc. to dispose of its US group whose principal
asset was its 45% interest in Verizon Wireless. The Group ceased recognising its share of results in Verizon Wireless on 2 September 2013, and classified its investment as a held for sale asset and the results as a discontinued operation. The
transaction completed on 21 February 2014.
 Operating loss Adjusted operating profit excludes certain income and expenses that we have identified separately to allow their effect on the present results of
the Group to be assessed (see page 201). The items that are included in operating loss but are excluded from adjusted operating profit are discussed below. Impairment losses of £6,600 million (2013: £7,700 million) recognised in respect of Germany, Spain, Portugal, Czech Republic and Romania. Further detail is provided in note 4 to the Groups consolidated financial
statements. Restructuring costs of £355 million (2013: £311 million) have been incurred to improve future business
performance and reduce costs. Amortisation of intangible assets in relation to customer bases and brands are recognised under
accounting rules after we acquire businesses and amounted to £551 million (2013: £249 million). Amortisation charges increased in the year as a result of the acquisition of KDG and Vodafone Italy in the year. Other income and expense comprises a loss of £0.7 billion arising largely from our acquisition of a controlling interest in Vodafone
Italy. The year ended 31 March 2013 includes a £0.5 billion gain on the acquisition of CWW. Including the above items, operating
loss increased to £3.9 billion from £2.2 billion as lower impairment charges were offset by lower revenue, higher customer costs and higher amortisation. Net financing costs 2014
£m


2013
£mInvestment income


346



305Financing costs


(1,554
)


(1,596
)Net financing costs


(1,208
)


(1,291
) Net financing costs have decreased 6.4% primarily due to the recognition of mark-to-market gains, offset by a
£99 million loss (2013: £nil) on the redemption of US$5.65 billion bonds as part of the restructuring of the Groups financing arrangements following the disposal of Verizon Wireless and lower interest income on settlement of tax
issues.






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|44 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Operating results
(continued)                     






Taxation 2014 £m


2013
£mIncome tax expense:Continuing operations before recognition of deferred tax


2,736



476Discontinued operations


1,709



1,750Total income tax expense


4,445



2,226Recognition of additional deferred tax  continuing operations


(19,318
)


Total tax (credit)/expense


(14,873
)


2,226 The recognition of the additional deferred tax assets, which arose from losses in earlier years, was triggered by
the agreement to dispose of the US group whose principal asset was its 45% interest in VZW, which removes significant uncertainty around both the availability of the losses in Germany and the future income streams in Luxembourg. The Group expects to
use these losses over a significant number of years; the actual use of these losses is dependent on many factors which may change, including the level of profitability in both Germany and Luxembourg, changes in tax law and changes to the structure
of the Group.  2014
£m


2013
£mTotal tax (credit)/expense


(14,873
)


2,226Profit before tax Continuing operations


(5,270
)


(3,483
) Discontinued operations


49,817



6,366Total profit before tax


44,547



2,883Effective tax rate


-33.4%



77.2% The statutory effective tax rate for the year ended 31 March 2014 was -33.4% compared to 77.2% in the prior
year. The difference is primarily due to the gain on disposal of our interest in Verizon Wireless which did not result in any tax consequences and the recognition of significant deferred tax assets in Luxembourg and Germany.
 Discontinued operations On 2 September 2013 the Group announced it had reached an agreement with Verizon Communications Inc. to dispose of its US group whose
principal asset was its 45% interest in VZW. The Group ceased recognising its share of results in VZW on 2 September 2013, and classified its investment as a held for sale asset and the results as a discontinued operation. The transaction
completed on 21 February 2014. The table below sets out all of the elements relating to this discontinued operation within the
consolidated income statement.  2014
£m


2013£mShare of result in associate


3,191



6,422Net financing income/(costs)


27



(56
)Profit before taxation


3,218



6,366Taxation relating to performance of discontinued operations


(1,709
)


(1,750
)Post-tax profit from discontinued operations


1,509



4,616 The table below sets the gain on disposal of discontinued operations.  2014
£m


2013
£mGain on disposal of discontinued operations before tax


44,996



Other items arising from the disposal


1,603



Net gain on disposal of discontinued operations


46,599



Profit for the financial year from discontinued operations


48,108



4,616






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Earnings/(loss) per share We have redefined adjusted earnings per share to exclude amortisation of acquired customer base and brand-related intangible assets, restructuring
costs and one-off items in relation to both the disposal of our interest in Verizon Wireless and the acquisition of the remaining 23% of Vodafone Italy. Comparatives have been restated consistently. Adjusted earnings per share was 17.54 pence, a decrease of 12.8% year-on-year, reflecting lower adjusted operating profit primarily due to the
cessation of equity accounting for VZW from 2 September 2013, partially offset by a reduction in shares in issue arising from the Groups share buyback programme. Basic earnings per share from continuing operations increased to 42.10 pence (2013: loss of 15.66 pence) primarily due to the recognition of
the additional deferred tax assets in the current year.  Statutory basis2014
£m


2013
£mProfit attributable to equity shareholders


59,254



413Adjustments:Impairment loss


6,600



7,700Amortisation of acquired customer base and brand intangible assets


551



249Restructuring costs


355



311Other income and expense


717



(468
)Discontinued and other items


(46,520
)


Non-operating income and expense


149



(10
)Investment income and financing costs


78



51(38,070
)


7,833Taxation


(17,511
)


(150
)Removal of VZW trading results and tax after 2 September1


1,019



(2,669
)Non-controlling interests


(50
)


(28
)Adjusted profit attributable to equity shareholders


4,642



5,399  Million


MillionWeighted average number of shares outstanding  basic


26,472



26,831Weighted average number of shares outstanding  diluted


26,682



26,831 Note: 1
The adjustment for the year ended 31 March 2014 primarily relates to the removal of tax in respect of our US group after 2 September 2013, whereas the adjustment for the year ended
31 March 2013 includes the removal of both profit contributions and tax for the period from 2 September 2012 to 31 March 2013.
 Section 219 SEC filings of interest Vodafone Group Plc (Vodafone) does not have any subsidiaries, other equity investments, assets, facilities or employees located in
Iran, and Vodafone has made no capital investment in Iran. To the best of its knowledge, no US persons, including any US affiliates of Vodafone, are involved in the activities described below. Except as specified below, Vodafone does not
believe that it has provided any products, equipment, software, technology, information, support or services into Iran, directly or indirectly, or had any agreements, arrangements or other contacts with the government of Iran or entities controlled
by the government of Iran. Roaming and interconnect Vodafone has wholesale roaming and interconnect arrangements with mobile and fixed line operators in Iran. Vodafone has, or has had, relationships
with telecommunications operators in Iran in connection with such roaming and interconnect arrangements, some of which it believes are or may be government controlled entities. The approximate total gross revenues attributable to the arrangements
mentioned above for the financial year ended 31 March 2014 were £992,000. Contract between Vodafone Global Enterprise
(VGE) and Deutsche Post DHL (DHL) VGE, a Vodafone division which serves multi-national corporate
customers, had a contract with DHL to provide DHL with a managed Multi-Protocol Label Switching data network in a total of 67 countries across Eastern Europe, Africa and the Middle East. On 31 January 2013, Vodafone terminated all
telecommunications commitments towards DHL in respect of Iran under this contract and there were no further revenues or profits attributable to this contract for the financial year ended 31 March 2014. EPEG Project On
27 July 2012, Vodafone acquired Cable & Wireless Worldwide Plc (CWW), which (through a subsidiary) is member of a consortium made up of Telecommunication Infrastructure Company of Iran (TIC) (an entity
controlled by the government of Iran), Rostelecom and Omantel that is building a high speed cable network from a landing point in Oman, to Germany. Each member of the consortium is responsible for funding, building and maintaining its section of the
cable, with CWW owning and being responsible for the segment from the Ukrainian border with Russia to Frankfurt, Germany. No capacity sales have been made on this high speed cable network yet; consequently there are no revenues or profits associated
with the project. Intellectual Property Vodafone, through one of its subsidiaries, also makes some insignificant payments to Iran in order to register certain domain names, register and
renew certain trademarks, and protect its brand globally. Vodafone paid annual registration fees of £48 to IRNIC for the registration of three domain names. Vodafone did not make any payments to Iran in order to register or renew any of its
trade marks during the fiscal year ended 31 March 2014.
   References to Q4 are to the quarter ended 31 March 2014 unless otherwise stated. References to the second half of the year are to the six months ended
31 March 2014 unless otherwise stated. References to the year or financial year are to the financial year ended 31 March 2014 and references to the prior financial year are to the financial year ended
31 March 2013 unless otherwise stated. References to the 2014 financial year, 2015 financial year, 2016 financial year, 2017 financial year and the 2019 financial year are to the
financial years ending 31 March 2014, 2015, 2016, 2017 and 2019, respectively. References to calendar Q3 2014 are to the quarter ended 30 September 2014, unless otherwise stated.






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Identifying and managing our risks We have a clear framework for identifying and managing risk, both at an operational and strategic
level. Our risk identification and mitigation processes have been designed to be responsive to the ever-changing environments in which we operate.



LOGO



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Key risks  Network or IT systems failure Major failure or malicious attack on our network or IT systems may result in service interruption and consequential customer and revenue loss.  Failure to protect customer
information We host increasing quantities and types of customer data in both enterprise and consumer segments and any failure to
protect data adequately could affect our reputation and lead to legal action.  Competition We face
intensifying competition where all operators are looking to secure a share of the potential customer base, leading to lower future revenues and profitability.  Regulation We need to comply with an extensive range of regulatory requirements including the licensing, construction and operation of our networks and
services that can lead to adverse impacts on our business.  Converged and over-the-top OTT services Some competitors offer converged services which we cannot either replicate or provide at a similar price point. Furthermore, advances in
smartphone technology place more focus on applications, operating systems and devices rather than the services provided by operators, which could erode revenues.  Weak economic conditions Economic conditions in many markets, especially in Europe, continue to stagnate or show nominal levels of growth and remain
impacted by austerity measures which could affect disposable incomes. This may result in customers moving to lower price plans or giving up their phones.  Health risks Concerns have been expressed that the electromagnetic signals emitted by mobile handsets and base stations may pose health risks. Authorities
including the World Health Organization (WHO) agree there is no evidence that convinces experts that exposure to radiofrequency fields from mobile devices and base stations operated within guideline limits has any adverse health effects.  Integration of acquired
businesses The price paid for acquired businesses is based upon current and future expected cash flows that are expected to be
generated from benefits and synergies that being part of the Vodafone Group will generate.  Key suppliers We depend
on a limited number of suppliers for strategically important network and IT infrastructure and associated support services to operate and upgrade our networks and provide key services to our customers.  Tax disputes We operate in many jurisdictions around the world and from time to time have disputes on the amount of tax due, including an ongoing tax case in
India where the Indian Government has introduced retrospective legislation that overturns a positive India Supreme Court decision.  Impairment assumptions Revisions to the assumptions used in assessing the recoverability of goodwill, including discount rates, estimated future cash
flows or anticipated changes in operations, could lead to the impairment of certain Group assets.






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LOGO

Governance49 Chairmans overview50 Board of directors and Group management54 Corporate governance69 Directors remuneration



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|LOGO                |  | 49
|Chairmans overview |  |   






Businesses must ensure
absolute integrity in their business activities and decision-making processes if they are to earn and
retain public trust. 
LOGO

Dear shareholder
 Effective corporate governance is integral to the successful delivery of
business goals: for our many and diverse stakeholders, how we work is as important as what we do. Vodafone operates under a well-developed governance framework designed to foster transparency, honesty and an informed approach to risk management
across our worldwide business. We have clear standards of behaviour we expect from everyone who works for Vodafone: further details of our mandatory Code of Conduct are set out on page 67.
 The Boards role is to set the strategy for the Group, appoint the right
leadership and ensure consistent implementation whilst monitoring business performance and ensuring the timely and effective assessment and management of business risk. Our goal is to build an enduring and profitable Vodafone business admired by
customers and other stakeholders, whilst achieving strong returns for our shareholders. As I explain in my statement on page 2, this was a significant year for Vodafone, and your Board played a leading role in the conduct of the major transactions
described in the Chief Executives review on page 12. As the Groups strategy continues to evolve, the Board is focused on maintaining a strong alignment of the interests of management with long-term value creation. Central to this is our
remuneration policy (explained on page 71) which for the first time will be put to a shareholder vote at our annual general meeting this year, in line with new regulations.
 There were a number of changes to the Board during the year. Andy Halford has
retired from the role of Group Chief Financial Officer after eight years, during which period he developed a track record of value creation for shareholders which few, if any, CFOs could hope to match. Andy has been succeeded by the Chief Executive
of the AMAP region, Nick Read, under whose leadership our emerging markets businesses have achieved strong rates of growth. In March 2014, it was announced that Anne Lauvergeon intended to stand down from the Board; Alan Jebson and Anthony Watson
have also informed the Board they will not seek re-election at the annual general meeting. On behalf of the Board, I would like to express our gratitude to Andy, Anne, Alan and Tony for their contribution to Vodafone and wish them well for the
future. Valerie Gooding joined the Board as a non-executive director in February 2014, and in May 2014 we announced that Sir Crispin Davis will join the Board on 28 July and Dame Clara Furse on 1 September, both as non-executive directors.
I am delighted to welcome Valerie, Sir Crispin and Dame Clara to the Board.  I am fortunate as Chairman to be able to call on a broad and diverse range of skills and perspectives around the boardroom table. In their new composition, our Board consists of 13 Directors, drawn from six different
nationalities with international leadership experience across more than ten different industrial sectors. With three female directors, I am pleased to say that from September we will be well on our way to achieving our intention that women will hold
25% of Board roles by the end of 2015. The recruitment of further female directors will continue to be a priority in future. 
Whilst your Board is confident that Vodafone is well-placed to continue to reward shareholders for their support for our strategy, we expect
operating conditions to remain challenging in a number of our key markets over the year ahead. We will remain focused on ensuring the Group maintains a rigorous and analytical approach to the management of risk whilst seeking to encourage the
innovation and entrepreneurship necessary to drive growth across the portfolio.  /s/ Gerard Kleisterlee Gerard Kleisterlee
Chairman 
20 May 2014 How have we complied with the UK Corporate Governance Code? Throughout the year ended 31 March 2014 and to the date of this document, we complied with the provisions and applied the Main Principles of
the UK Corporate Governance Code (the Code), published in September 2012. The Code can be found on the FRC website (frc.org.uk). We describe how we have applied those Main Principles in this section of the annual report which includes
our statement of internal control and risk management, together with the Directors remuneration section on pages 69 to 85. How have we complied with the corporate governance statement requirements? We comply with the corporate governance
statement requirements pursuant to the FCAs Disclosure and Transparency Rules by virtue of the information included in this Governance section of the annual report together with information contained in the Shareholder
information section on pages 182 to 189.






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Board composition Our Board consists of 14 directors, 13 of whom served throughout the year. Valerie Gooding was appointed as a non-executive director with effect
from 1 February 2014. At 31 March 2014, in addition to the Chairman, Gerard Kleisterlee, there were three executive
directors and ten non-executive directors. Andy Halford, the Chief Financial Officer, retired on 31 March 2014 and Nick Read was appointed to this role and as an executive director with effect from 1 April 2014. The executive and
non-executive directors are equal members of the Board and have collective responsibility for the Companys direction. In particular, non-executive directors are responsible for:  g

bringing a wide range of skills and experience, including independent judgement on issues of strategy, performance and risk management;  g

constructively challenging the strategy proposed by the Chief Executive and executive directors;  g

scrutinising and challenging performance across the Groups business;  g

assessing risk and the integrity of the financial information and controls; and  g

determining the Companys broad policy for executive remuneration, and the remuneration packages for the executive directors and the Chairman.
 The balance and independence of our Board is kept under review by our Nominations and Governance
Committee, details of which can be found on pages 58 and 59. Tenure of non-executive directors The Code suggests that length of tenure is a factor to consider when determining the independence of non-executive directors. The table below
shows the tenure and independence of each of our non-executive directors. We consider all of our non-executive directors to be independent.  Date
first elected by shareholders


Years fromfirst election to2014 AGM


Considered to be independent by the BoardGerard Kleisterlee


July 2011



3



See note
1To be put up forValerie Gooding


election July 2014



n/a



YesRenee James


July 2011



3



YesAlan Jebson


July 2007



7



YesSamuel Jonah


July 2009



5



YesOmid Kordestani


July 2013



1



YesNick Land


July 2007



7



YesAnne Lauvergeon


July 2006



8



YesLuc Vandevelde


July 2004



10



Yes
2Anthony Watson


July 2006



8



YesPhilip Yea


July 2006



8



Yes Notes: 1
Considered to be independent on appointment. 2
Considered to be independent for the reasons given on page 59.
   Key roles and
responsibilities  The
Chairman Gerard KleisterleeThe role of the
Chairman is set out in writing and agreed by the Board. He is responsible for:g  the effective leadership, operation and governance of the Board;g  ensuring the effectiveness of the Board;g  setting the agenda, style and tone of Board discussions; andg  ensuring the directors receive accurate, timely and clear information.  The Senior
Independent Director Luc VandeveldeThe Senior
Independent Director is responsible for:g  acting as a sounding board for the Chairman;g  serving as an intermediary for the other directors;g  being available to shareholders if they have concerns which they have not been able to resolve
through the normal channels of the Chairman, Chief Executive or other executive directors or for which such contact is inappropriate; andg  conducting an annual review of the
performance of the Chairman and, in the event it should be necessary, convening a meeting of the non-executive
directors.
 The Chief
Executive Vittorio ColaoThe role of the Chief
Executive is set out in writing and agreed by the Board. He is responsible for:g  management of the Groups business;g  implementation of the Companys strategy and policies;g  maintaining a close working relationship with the Chairman; andg  chairing the Executive Committee.   The Company
Secretary Rosemary MartinThe Company Secretary
acts as Secretary to the Board. In doing so she:g  assists the Chairman in ensuring that all directors have full and timely access to all relevant
information;g  assists the Chairman by organising induction and training programmes;g  is responsible for ensuring that the correct Board procedures are followed and advises the Board
on corporate governance matters; andg  administers the procedure under which directors can, where appropriate, obtain independent
professional advice at the Companys expense.
   Biographical details of the
Chairman, Chief Executive and Senior Independent Director can be found on pages 50 and 51 or at vodafone.com/board. Biographical details of the Company Secretary can be found on page 53 or at vodafone.com/exco. The appointment or removal of the
Company Secretary is a matter for the Board as a whole.






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|   |  |                                                   
|56 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Corporate governance
(continued)                  






Board activities in the 2014 financial year Board activities are structured to assist the Board in achieving its goal to support and advise executive management on the delivery of the
Groups strategy within a transparent governance framework. The diagram below shows the key areas of focus for the Board which
appear as items on the Boards agenda at relevant times throughout the year. Concentrated discussion of these items assists the Board in making the right decisions based on the long-term opportunities for the business and its stakeholders.  LOGO
 Conflicts of interest The Board is aware of the other commitments of its directors and is satisfied that these do not conflict with their duties as directors of the
Company. The process for monitoring conflicts is as follows:  g

changes to the commitments of all directors are reported to the Board;  g

the directors are required to complete a conflicts questionnaire initially on appointment and annually thereafter;  g

any conflicts identified would be submitted to the Board (excluding the director to whom the potential conflict related) for consideration and, as appropriate, authorisation in accordance with the
Companies Act 2006 and the articles of association;  g

where authorisation is granted, it would be recorded in a register of potential conflicts and reviewed periodically; and  g

directors are responsible for notifying the Company Secretary if they become aware of actual or potential conflict situations or a change in circumstances relating to an existing authorisation.  No conflicts
of interest have been identified during the year. Board meetings Matters considered at all Board meetings include:  g

the Chief Executives report on strategic and business developments;  g

the Chief Financial Officers report which includes the latest available management accounts;  g

an operations update (covering commercial, technology and operational matters);  g

a report on potential changes to the Groups portfolio of corporate assets; and  g

where applicable, reports from the Nominations and Governance Committee, Audit and Risk Committee and Remuneration Committee.  In addition to the standing agenda
items, topics covered by the Board during the year included the disposal of the Companys interest in Verizon Wireless, the acquisition of the remaining interest in Vodafone Italy, the acquisition of Kabel Deutschland and the audit tender. Board effectiveness Board effectiveness is reviewed every year. After last years external performance evaluation the Board agreed:  g

to develop further its approach to strategic planning and involve the directors earlier in the process of strategy development;  g

to provide more opportunities for the directors to meet with executives to assist in succession planning; and  g

to ensure the induction of new directors enables them rapidly to contribute fully to the Board.  Since then, the Chairman has
introduced a number of improvements including: informing the Board regularly about possible Board appointments, trying to speed up the director appointment process, organising for senior executives to brief directors on various aspects of our
business and increasing the number of opportunities available for senior executives to meet with the Board, e.g. through informal meetings or mentoring, and improving the induction programme for new directors. Performance evaluation Board effectiveness is reviewed by an external performance evaluation every three years. As an external evaluation was conducted last year, this
year the Board performed an internal performance evaluation.






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What is the performance evaluation process?  g

This year the Chairman met with each director and with executives and advisors who interact with the Board. Interviewees were asked to consider and comment on the performance of the Board as a
whole.  g

The directors were also asked for their views on, amongst other things: Company strategy, key challenges for the business, the mix of skills, experience, independence, knowledge and diversity on
the Board (including gender), effectiveness of the Boards engagement with shareholders and how well the Board operates.  g

The Chairman reviewed the directors contributions and the Senior Independent Director led the review of the performance of the Chairman.  g

Each Board committee undertook a detailed self-assessment questionnaire.  Output of the performance evaluation  g

The Chairman of each Board committee gave feedback on the evaluation of their committee to the Board at its March meeting.  g

The Chairman prepared a report on the performance evaluation which was distributed to the directors, reviewed by the Nominations and Governance Committee, and discussed with the Board at the March
Board meeting.  g

This years findings were that the Board was reasonably well balanced. Diversity had improved and it should continue on that path. The process for appointing directors needed to be speeded up.
Board arrangements and information flows were generally satisfactory, but more focus could be given on market information and the changing regulatory and competitive environment. Some further refinement of the presentation of performance metrics was
agreed. The Board was comfortable with the strong value system and control framework in the Company. Directors observed that executive succession planning had improved. Overall, the directors considered the right balance is struck between
operational, strategic and governance matters and directors were positive about the open atmosphere around the boardroom table allowing for a robust and constructive dialogue.  The Board will continue to review its
procedures, its effectiveness and development in the financial year ahead. Board induction The Chairman is responsible for ensuring that each director receives an induction on joining the Board and receives the training he or she
requires. The Company Secretary organises the induction.  Director induction On appointment, directors receive a personalised induction programme covering amongst other things:  g

the business of the Group;  g

their legal and regulatory responsibilities as directors;  g

briefings and presentations from relevant executives; and  g

opportunities to visit business operations.
 The induction
programme is tailored to each new director, depending on his or her experience and background, and reviewed by the Nominations and Governance Committee.
 Information and professional development Keeping up-to-date with key business developments is essential for the directors to maintain and enhance their effectiveness. This is achieved as
follows:  g

from time to time the Board receives presentations from executives in our business on matters of significance. This year there were presentations on our Enterprise business, retail distribution,
new products and the regional chief executives delivered presentations on their regions businesses, the Chief Commercial Officer and Chief Brand Director presented on brand status and evolution and the Group HR Director delivered a
presentation on planned actions for improving talent, capability and effectiveness within the Company;  g

financial plans, including budgets and forecasts, are regularly discussed at Board meetings;  g

the directors have the opportunity to learn the views of major investors at planned events throughout the year (see How do we engage with our shareholders? on page 66);  g

our directors periodically visit different parts of the Group. In September 2013 the Board met with senior management in the Netherlands and in March 2014 the Board met with senior management in
Portugal;  g

the non-executive directors are provided with briefings and information to assist them in performing their duties; and  g

the directors are regularly updated on the Groups businesses and the regulatory and industry specific environments in which we operate. Updates are by way of written briefings and meetings
with senior executives and, where appropriate, external sources.  As part of their annual performance evaluation, directors are given the opportunity to discuss training and development needs. Directors are
expected to take responsibility for identifying their training needs and to take steps to ensure that they are adequately informed about the Company and their responsibilities as a director. The Board is confident that all its members have the
knowledge, ability and experience to perform the functions required of a director of a listed company. The Board recognises that there may be occasions when one or more of the directors feels it is necessary to take independent legal and/or
financial advice at the Companys expense. There is an agreed procedure to enable them to do so which is managed by the Company Secretary. No such independent advice was sought in the 2014 financial year. Re-election of directors All the directors submit themselves for re-election at the AGM to be held on 29 July 2014 with the exception of Valerie Gooding, Dame Clara
Furse, Nick Read and Sir Crispin Davis who will seek election for the first time in accordance with our articles of association and Anne Lauvergeon, Alan Jebson and Anthony Watson who will resign from the Board at the AGM. The Nominations and
Governance Committee confirmed to the Board that the contributions made by the directors offering themselves for re-election at the AGM in July 2014 continue to be effective and that the Company should support their re-election. Indemnification of directors In accordance with our articles of association and to the extent permitted by the laws of England and Wales, directors are granted an indemnity from the Company in respect of liabilities incurred as a result of their office. In
addition, we maintained a directors and officers liability insurance policy throughout the year. Neither our indemnity nor the insurance provides cover in the event that a director is proven to have acted dishonestly or fraudulently.






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Annual Report on Form 20-F 2014
|   |  | Corporate governance (continued)                  






Board committees The Board has a Nominations and Governance Committee, an Audit and Risk Committee and a Remuneration Committee. Further details of these
committees can be found in their reports on pages 58 to 65. The terms of reference of each of these committees can be found on our website at vodafone.com/governance. The committees are provided with all necessary resources to enable them to undertake their duties in an effective manner. The Company Secretary or
her delegate acts as secretary to the committees. The minutes of committee meetings are circulated to all directors. The calendar for
meetings of the Board and its committees is shown below.  Apr 13

May13


Jun13

Jul13


Aug13

Sep13


Oct13

Nov13


Dec13


Jan14


Feb14

Mar14Board
(scheduled meetings)




































Nominations and
Governance Committee




































Audit and RiskCommittee




































Remuneration
Committee




































 Directors unable to attend a Board meeting because of another engagement are provided with the briefing materials
and can discuss issues arising in the meeting with the Chairman or the Chief Executive. In addition to scheduled Board meetings, there may be a number of other meetings to deal with specific matters. Each scheduled Board meeting is preceded by a
meeting of the Chairman and non-executive directors. Attendance at scheduled meetings of the Board and its committees in the 2014
financial year  Director

Board


NominationsandGovernanceCommittee


Audit and RiskCommittee


RemunerationCommitteeChairmanGerard Kleisterlee1


7/7



3/3Senior Independent DirectorLuc Vandevelde2


7/7



3/3







5/5Chief ExecutiveVittorio Colao


7/7Executive directorsAndy Halford


7/7Stephen Pusey


7/7Non-executive directorsValerie Gooding3


1/1Renee James


7/7











4/5Alan Jebson


7/7







4/4Samuel Jonah


7/7











4/5Omid Kordestani


7/7Nick Land4


7/7







4/4Anne Lauvergeon


7/7







4/4Anthony Watson


7/7



3/3



4/4Philip Yea


7/7



3/3







5/5 Notes: 1
Chairman of the Nominations and Governance Committee. 2
Senior Independent Director and Chairman of the Remuneration Committee. 3
Appointed to the Board with effect from 1 February 2014. 4
Chairman and Financial Expert of the Audit and Risk Committee.
 LOGO  Key
objective: to make sure the Board comprises individuals with the necessary skills, knowledge and experience to ensure that it is
effective in discharging its responsibilities and to have oversight of all matters relating to corporate governance. Responsibilities:  g

leads the process for identifying and making recommendations to the Board regarding candidates for appointment as directors, giving full consideration to succession planning and the leadership
needs of the Group;  g

makes recommendations to the Board on the composition of the Boards committees;  g

regularly reviews and makes recommendations in relation to the structure, size and composition of the Board including the diversity and balance of skills, knowledge and experience, and the
independence of the non-executive directors;  g

oversees the performance evaluation of the Board, its committees and individual directors (see pages 56 and 57);  g

reviews the tenure of each of the non-executive directors; and  g

is responsible for the oversight of all matters relating to corporate governance, bringing any issues to the attention of the Board.






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Committee meetings No one other than a member of the Committee is entitled to be present at its meetings; however, other non-executive directors, the Chief Executive
and external advisors may be invited to attend. In the event of matters arising concerning my membership of the Board, I would absent myself from the meeting as required and the Boards Senior Independent Director would take the chair. Main activities of the Committee during the year The Committee met four times during the year and considered executive and non-executive succession planning, refreshment of skills of the Board
and the Board effectiveness review. The Committee leads the process for appointments to the Board. There is a formal, rigorous and
transparent procedure for the appointment of new directors. Candidates are identified and selected on merit against objective criteria and with due regard to the benefits of diversity on the Board, including gender. Four external searches were commissioned during the year, using independent executive search firms, Korn Ferry and Egon Zehnder, neither of which
has any other connection to the Company. The first search related to identification of non-executive director candidates with relevant City and/or marketing experience and was undertaken by Korn Ferry. Valerie Gooding was identified as a potential
candidate and subsequently recommended to the Board by the Committee on the basis that she met the desired criteria having previously been leader of a branded consumer business. Korn Ferry also undertook a search to identify a non-executive director with international business experience and chief executive officer
experience. The search identified Sir Crispin Davis as a potential candidate and he was subsequently recommended to the Board by the Committee based on his international business experience as a former CEO of a global publishing company. A search
was also conducted, again by Korn Ferry, to identify a non-executive director with international banking and finance experience as well as chief executive officer experience. This search identified Dame Clara Furse who was recommended by the
Committee for appointment by the Board based on her significant banking and finance experience as former CEO of a number of financial institutions. Egon Zehnder undertook an external search in respect of the role of Group Chief Financial Officer. Concurrent to this external search, an internal search was undertaken for this role and, following an extensive review of candidates,
a preferred internal candidate was chosen with Nick Read being recommended for appointment by the Committee. The Committee recognises
that with the changes in Board composition, changes will be required on the Boards committees. The first of these changes will be to invite Omid Kordestani to join the Committee with effect from 28 July 2014. Changes will also take place
to the Remuneration Committee and Audit and Risk Committee. With effect from 28 July 2014, Philip Yea will resign from the Remuneration Committee and Valerie Gooding will join the Remuneration Committee. Also on 28 July 2014, Sir Crispin
Davis, who will be appointed to the Board on this date, and Philip Yea will join the Audit and Risk Committee. Dame Clara Furse will also join the Audit and Risk Committee on her appointment to the Board on 1 September 2014.
 The Board acknowledges that diversity extends beyond the boardroom and supports management in their
efforts to build a diverse organisation. It endorses the Companys policy to attract and develop a highly qualified and diverse workforce; to ensure that all selection decisions are based on merit and that all recruitment activities are fair
and non-discriminatory. The boardroom diversity policy was introduced in February 2012 and reviewed by the Committee in March 2013 and March 2014. It acknowledges the importance of diversity, including gender, to the effective functioning of the
Board and focuses on our aspiration to have a minimum of 25% female representation on the Board by 2015. With the appointment of Valerie Gooding on 1 February 2014 the Board has 21% female representation which will increase to 23% on the
appointment of Dame Clara Furse on 1 September 2014. Subject to securing suitable candidates, when making appointments we will seek directors who fit the skills criteria and gender balance that is in line with the Boards aspiration. We
continue to focus on encouraging diversity of business skills and experience, recognising that directors with diverse skills sets, capabilities and experience gained from different geographic and cultural backgrounds enhance the Board. Further
information, including the proportions of women in senior management, is shown in Our people on page 36 and within the organisation overall, is contained in our 2013-14 sustainability report, available at
vodafone.com/sustainability/report2014. This year, when reviewing the re-election of directors at the AGM in July, the Committee took
account of the fact that Luc Vandevelde will have served 11 years as of 31 August 2014 and Philip Yea will have served nine years as of 1 September 2014. The Board has considered the matter carefully and believes that both these
non-executive directors continue to demonstrate the qualities of independence and judgement in carrying out their roles, supporting the executive directors and senior management in an objective manner. Their length of service and resulting
experience and knowledge of the Company is of great benefit to the Board and both directors will stand for re-election at the AGM. The subject of their independence will be kept under review. In the year ahead the Committee will continue to assess what enhancements should be made to the Boards and committees composition and
will continue to monitor developments in corporate governance to ensure the Company remains at the forefront of good governance practices. /s/ Gerard Kleisterlee Gerard Kleisterlee On behalf of the Nominations and Governance Committee 20 May 2014






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|60 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Corporate governance
(continued)                  






LOGO  Key
objective: the provision of effective governance over the appropriateness of the Groups financial reporting including the
adequacy of related disclosures, the performance of both the internal audit function and the external auditor and oversight over the Groups systems of internal control, business risks and related compliance activities. Responsibilities:  g

reviewing our financial results announcements and financial statements and monitoring compliance with relevant statutory and listing requirements;  g

reporting to the Board on the appropriateness of our accounting policies and practices including those identified as critical and requiring further disclosure;  g

advising the Board on whether the annual report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Companys
performance, business model and strategy;  g

overseeing the relationship with the external auditor;  g

reviewing the scope, resources, results and effectiveness of the activity of the Group internal audit department;  g

monitoring our compliance efforts in respect of section 404 and section 302 of the US Sarbanes-Oxley Act;  g

considering and making recommendations to the Board on the nature and extent of the significant risks the Group is willing to take in achieving its strategic objectives;  g

overseeing the Groups compliance processes; and  g

performing in-depth reviews of specific areas of financial reporting, risk and internal controls.
 The Committee and its work The membership of the Committee has been selected with the aim of providing the wide range of financial and commercial expertise necessary to meet
its responsibilities. Given my recent and relevant financial experience, the Board has designated me as its financial expert on the Committee for the purposes of the US Sarbanes-Oxley Act and the UK Corporate Governance Code. There were no changes
to the membership of the Committee during the year, all of whom are non-executive directors of the Company. The Committee meets at
least four times during the year as part of its standard processes, supplemented by additional meetings as necessary. The external auditor, Deloitte LLP, is also invited to each meeting together with the Chief Executive, the Chief Financial Officer,
the Group Financial Controller, the Group Financial Reporting Director and the Group Audit Director. The work of the Committee is structured around its responsibilities set out above and its detailed terms of reference which are available at
vodafone.com/governance. In addition to these activities the Committee conducts a rolling programme of in-depth review sessions where the Groups senior management provide briefings on key issues and developments particularly in
relation to aspects of risk management. A summary of the reviews undertaken during the year are set out within Risk management below. The Committee also regularly meets separately with Deloitte LLP, the Chief Financial Officer and the Group Audit Director without others being present. Meetings of the Committee generally take place just prior to a Board meeting to maximise the efficiency of interaction with the Board and I report
to the Board, as part of a separate agenda item, on the activity of the Committee and matters of particular relevance to the Board in the conduct of its work. Following the external review of the Committees effectiveness in the previous year, I, together with the Committees secretary,
conducted an internal review of effectiveness involving the members of the Committee, Company management and the external auditor. This confirmed the Committee remained effective at meeting its objectives.






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Main activities of the Committee during the year I have set out below a summary of the major activities of the Committee in the year categorised between; financial reporting and the related
statutory audit; risk management; and the assessment of internal controls. In addition, the Committee conducted a tender for the statutory audit through the process summarised on page 63. Financial reporting and the related statutory audit The Committees primary responsibility in relation to the Groups financial reporting is to review with both management and the external auditor the appropriateness of the half-year and annual financial statements
concentrating on, amongst other matters:  g

the quality and acceptability of accounting policies and practices;  g

the clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting requirements;  g

any correspondence from regulators in relation to our financial reporting;  g

material areas in which significant judgements have been applied or there has been discussion with the external auditor; and  g

whether the annual report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Companys performance, business model
and strategy. As part of the Committees assessment of the annual report, it draws on the work of the Groups disclosure committee and also has discussions with senior management. The Committees overall assessment forms the basis of
the advice given to the Board to assist them in making the statement required by the UK Corporate Governance Code.  The Committee is committed to the continuous improvement in the effectiveness and clarity of the Groups corporate reporting and has
encouraged management to support and adopt initiatives by regulatory bodies which would enhance our reporting. External audit At the start of the audit cycle for the new financial year we received from Deloitte LLP a detailed audit plan identifying their audit
scope, planning materiality and their assessment of key risks, which were discussed and agreed with the Committee. Planning materiality was lower this year, primarily driven by the disposal of our interest in Verizon Wireless. The audit risk
identification process is considered a key factor in the overall effectiveness of the external audit process. For the 2014 financial year, the key risks identified were a combination of those identified in the 2013 financial year, being those in
relation to goodwill impairment, provisioning for current tax liabilities and deferred tax asset recognition, and revenue recognition as these areas continue to require inherent management judgement, and three new specific risks identified in
relation to (i) the accounting for the disposal of our interest in Verizon Wireless and the related acquisition of the remaining 23% interest in Vodafone Italy, (ii) the accounting for our acquisition of Kabel Deutschland and
(iii) provisioning for legal and regulatory claims. The latter risk factor was added specifically in response to the reduction in audit materiality. At each meeting of the Committee, these risks are reviewed and both managements primary areas of judgement and the external auditors key areas of audit focus, are challenged. As a Committee, we support the professional
scepticism, particularly in the areas of key judgement and accounting disclosure, displayed by Deloitte LLP.
 We hold private meetings with the external auditor at each Committee meeting to provide additional
opportunity for open dialogue and feedback from the Committee and the auditor without management being present. Matters typically discussed include the external auditors assessment of business risks and management activity thereon, the
transparency and openness of interactions with management, confirmation that there has been no restriction in scope placed on them by management, independence of their audit and how they have exercised professional scepticism. I also meet with the
external lead audit partner outside the formal Committee process throughout the year. External audit process effectiveness We use an audit quality framework to assess the effectiveness of the external audit process. This involves detailed questioning of
management at an operating company and Group level and also the members of the Committee. We also considered the firm-wide audit quality inspection report issued by the FRC in May 2013 and Deloitte LLPs response to the findings. The
observations from this assessment for the 2014 financial year were presented and discussed at the May 2014 meeting. Management concluded that there had been appropriate focus and challenge on the primary areas of audit risk and assessed the quality
of the audit process to be satisfactory. The Committee concurred with this view. The Committee has identified the 2015 financial year as a potential period of increased risk given the transition of the statutory auditor and will focus closely on
this matter throughout the year. Risk management The Groups risk assessment process and the way in which significant business risks are managed is a key area of focus for the Committee. Our
work here was driven primarily by the Groups assessment of its principal risks and uncertainties, as set out on pages 196 to 200. We receive reports from the Group Audit Director on the Groups risk evaluation process and review changes
to significant risks identified at both operating entity and Group levels. In addition, the Committee also conducts a rolling
programme of in-depth reviews into specific financial, operational and regulatory areas of the business. During the 2014 financial year, in-depth reviews were undertaken in the areas of:  g

corporate treasury management;  g

legal intercept and related data management;  g

competition law and anti-bribery law compliance;  g

the management of risk within the supply chain;  g

information security;  g

risk management within the IT platform standardisation programme in Vodafone UK; and  g

the control environment in Vodafone Ghana.  In addition, the Committee received an update on Group legal compliance matters. These reviews are critical to the role of the Committee, as they allow us to meet key business leaders responsible for these areas and provide
independent challenge to their activities.






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|62 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Corporate governance
(continued)                  






Significant issues The Committee discussed with management the critical accounting judgements and key sources of estimation uncertainty outlined in note 1
Basis of preparation. The significant areas of focus considered by the Committee in relation to the 2014 accounts, and how these were addressed, are outlined below:  Matter considered

ActionGoodwill impairment testingThis continued to represent a significant area of focus for the Committee given the materiality of the Groups goodwill balances (£23.3 billion at 31 March 2014) and the inherent subjectivity in
impairment testing. The judgements in relation to goodwill impairment continue to relate primarily to the assumptions underlying the calculation of the value in use of the business, being the achievability of the long-term business plan and the
macroeconomic and related modelling assumptions underlying the valuation process.

The Committee received detailed reporting from management and challenged the appropriateness of the assumptions made. Areas of
focus were the achievability of the business plans, assumptions in relation to terminal growth in the businesses at the end of the plan period, particularly in Europe where adverse trends in financial performance have been experienced, and discount
rates, which have been subject to volatility given the current macroeconomic conditions. 
This remains a prime area of audit focus and Deloitte LLP provided detailed reporting on these matters to the Committee including sensitivity
testing.TaxationThe Group is subject to a range of tax claims and related legal actions across a number of jurisdictions where it operates. The
most material claim is from the Indian tax authorities in relation to our acquisition of Vodafone India Limited from Hutchison Telecommunications International Limited group in 2007, for the amount of INR 142 billion (£1.4 billion)
including interest. Further details of this claim are described in note 30 Contingent liabilities. 
Further, the Group has extensive accumulated tax losses as outlined in note 6 Taxation, and a key management judgement is whether a
deferred tax asset should be recognised in respect of these losses. As at 31 March 2014 the Group had recognised a £21.2 billion deferred tax asset in respect of these tax losses.

The Group Tax Director presented managements view of both the provisioning and disclosure of tax contingencies and
deferred tax asset recognition at the May 2014 meeting of the Committee. In respect of tax contingencies, including the India case noted opposite, this involved a discussion of the extent and strength of professional advice received from external
legal and advisory firms. In relation to the recognition of the deferred tax assets, managements plans and expectations for future taxable profits were critically reviewed.
 This is also an area of higher audit risk and accordingly, the Committee
receives detailed oral and written reporting from Deloitte LLP on these matters.Liability provisioningThe Group is subject to a range of claims and legal actions from a number of sources including competitors, regulators,
customers, suppliers, and on occasion fellow shareholders in Group subsidiaries. The level of provisioning for contingent and other liabilities is an issue where management and legal judgements are important and accordingly an area of Committee
focus. The most material claim is from Telecom Egypt in relation to allegations of breach of non-discrimination provisions within an interconnect agreement. Details of the claim are outlined in note 30 Contingent liabilities.

The Committee received a presentation from the Groups General Counsel and Company Secretary in May 2014 on managements assessment of the most material claims, including relevant legal advice
received and the level of provision held against each. Deloitte LLP also reviews these matters, forming an independent view that is discussed with the Committee.Revenue recognitionThe timing of revenue recognition, the recognition of revenue on a gross or net basis, the treatment of discounts, incentives
and commissions and the accounting for multi-element arrangements are complex areas of accounting.

Deloitte LLP outlined to the Committee their approach to the audit of revenue, as part of their presentation of the detailed
audit plan. The Committee also considered any observations made by the auditors as part of their reporting to the Committee.Acquisitions and disposalsThe Group made a number of highly material business acquisitions and disposals during the year including the disposal of Verizon
Wireless, and the acquisition of interests in Kabel Deutschland and Vodafone Italy. This gave rise to a number of complex accounting and disclosure requirements in the financial statements.

Management outlined the key accounting and disclosure impacts in relation to these transactions. The Committee requested and
received detailed reporting from Deloitte LLP on their assessment of the accounting and disclosures made by management in both the half-year and annual financial statements.IT controls in relation to privileged user accessThe Groups IT infrastructure platform hosts a number of financial reporting related applications. An issue was identified in respect of privileged user access controls within part of the IT infrastructure
platform which could have had an adverse impact on certain of the Groups controls and financial systems.

Management outlined tested alternative controls in place which provided assurance over the completeness and accuracy of the
information derived from the impacted financial reporting related applications.  Deloitte LLP extended their controls and substantive testing to obtain assurance over both the compensating controls and the completeness and accuracy of the management information derived from these applications.






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Assessment of internal control We reviewed the process by which the Group evaluated its control environment. Our work here was driven primarily by the Group Audit
Directors reports on the effectiveness of internal controls, significant identified frauds and any identified fraud that involved management or employees with a significant role in internal controls. I meet privately with the Groups
Audit and Compliance Directors outside the formal committee process as necessary. Oversight of the Groups compliance activities
in relation to section 404 of the Sarbanes-Oxley Act also falls within the Committees remit. Internal audit Monitoring and review of the scope, extent and effectiveness of the activity of the Group Internal Audit department is an agenda
item at each Committee meeting. Reports from the Group Audit Director usually include updates on audit activities, progress of the Group audit plan, the results of any unsatisfactory audits and the action plans to address these areas, and resource
requirements of the Internal Audit department. I play a major role in setting the Group Audit Directors annual objectives.
 Fraud and whistle-blowing We review the channels in place to enable employees to raise concerns about possible irregularities in financial reporting or other issues such as
breaches of the Code of Conduct and for those matters to be investigated. Further, we receive summaries of investigations into known or suspected fraudulent activities by both third parties and employees.
   LOGO






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|64 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Corporate governance
(continued)                  






Governance of the External Audit relationship The Committee considers the reappointment of the external auditor and also assesses their independence on an ongoing basis. The external auditor
is required to rotate the audit partner responsible for the Group audit every five years and the year ended 31 March 2014 will be the current lead audit partners fifth year. Accordingly, and in compliance with the provisions outlined in
the UK Corporate Governance Code and the notes on best practice issued by the Financial Reporting Council in July 2013, the Committee decided to put the audit for the 2015 financial year out to tender in November 2013. The tender process and the Committees involvement in that process is outlined in the diagram on page 63. All of the big 4 audit
firms were invited to participate in the tender. Deloitte LLP withdrew at a preliminary stage noting the longevity of their appointment, having been the Groups auditors since its stock market listing in 1988. Having concluded the process in February 2014, the Committee recommended to the Board that PricewaterhouseCoopers LLP be appointed as the
Groups statutory auditor for the 2015 financial year. Accordingly, a resolution proposing the appointment of PricewaterhouseCoopers LLP as our auditor will be put to the shareholders at the 2014 AGM. There are no contractual obligations
restricting the Committees choice of external auditor and we do not indemnify our external auditor. The Committee will continue
to review the auditor appointment and the need to tender the audit, ensuring the Groups compliance with the UK Corporate Governance Code and any reforms of the audit market by the UK Competition Commission and the European Union. In its assessment of the independence of the auditor and in accordance with the US Public Company Accounting Oversight Boards standard on
independence, the Committee receives details of any relationships between the Company and Deloitte LLP that may have a bearing on their independence and receives confirmation that they are independent of the Company within the meaning of the
securities laws administered by the US Securities & Exchange Commission (SEC). During the year, Deloitte LLP and
related member firms charged the Group £9 million (2013: £8 million, 2012: £7 million) for statutory audit services. The Committee approved these fees following review of audit scope changes for the 2014 financial year,
including the impact of business acquisitions and disposals which were primarily in relation to Kabel Deutschland, the disposal of Verizon Wireless and the acquisition of the remaining 23% interest in Vodafone Italy. The Committee also received
assurance from Deloitte LLP that the fees were appropriate for the scope of the work required.
 Non-audit services As a further measure to protect the objectivity and independence of the external auditor, the Committee has a policy governing the engagement of
the external auditor to provide non-audit services. This precludes Deloitte LLP from providing certain services such as valuation work or the provision of accounting services and also sets a presumption that Deloitte should only be engaged for
non-audit services where there is no legal or practical alternative supplier. No material changes have been made to this policy during the financial year. For certain specific permitted services, the Committee has pre-approved that Deloitte LLP can be engaged by management, subject to the policies set out above, and subject to specified fee limits for individual engagements and fee
limits, for each type of specific service. For all other services or those permitted services that exceed the specified fee limits, I, as Chairman, or in my absence another member, can pre-approve permitted services. In addition to the statutory audit fee, Deloitte LLP and related member firms charged the Group £4 million (2013: £1 million) for
audit-related and other assurance services. These fees were materially higher than in prior years as Deloitte acted as the Reporting Accountant in relation to a number of shareholder and regulatory filings in connection with the disposal of our
interest in Verizon Wireless and the related acquisition of the remaining 23% interest in Vodafone Italy. Further details of the fees paid, for both audit and non-audit services, can be found in note 3 to the consolidated financial statements. For a number of years, PricewaterhouseCoopers LLP has provided the Group with a wide range of consulting and assurance services.
Following the decision to appoint them as auditors for the 2015 financial year, it was agreed by the Committee that any existing permitted non-audit service engagements which were not in line with the Groups non-audit services policy should
cease by 30 June 2014. This decision was made to allow a timely transition of these services and minimise the impact on the business. From 1 April 2014, PricewaterhouseCoopers LLP will only be engaged for non-audit services which are in
line with the Groups non-audit services policy. /s/ Nick Land Nick Land On behalf of the
Audit and Risk Committee 20 May 2014






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LOGO

With effect from 28 July 2014, Philip Yea will step down from the Remuneration Committee and Valerie Gooding will be appointed to the
Committee.Key objective:to assess and make recommendations to the Board on the policies for
executive remuneration and packages for the individual executive directors.Responsibilities:determining, on behalf of the Board, the policy on the remuneration of the Chairman of the Board, the executive directors and the senior management team;determining the total remuneration packages for these individuals including any compensation on termination of office;operating within recognised principles of good governance; andpreparing an annual report on directors
remuneration.Committee meetingsNo one other than a member of the Committee is entitled to be
present at its meetings. The Chairman of the Board and Chief Executive may attend the Committees meetings by invitation but they do not attend when their individual remuneration is discussed. No director is involved in deciding his or her own
remuneration. The Committee met five times during the year.Main activities of the Committee during the yearA detailed report to shareholders from the Committee on behalf of the Board in which, amongst other things, I have included a description of the Committees activities during the year,
is contained in Directors remuneration on pages 69 to 85.Executive CommitteeThe Committee meets 11 times a year under the chairmanship of the Chief Executive. Topics covered by the Committee include:Chief Executive update on the business and business environment;regional chief executives updates;Group function heads updates;substantial business developments and projects;talent;presentations from various function heads, for example, the Group Financial Controller, the Group Audit
Director and the Group Compliance Director;competitor analysis; andstrategy.Annually, the Executive Committee, together with the chief executives of the major operating companies, conduct a strategy review to identify key strategic issues to be presented to the
Board. The agreed strategy is then used as a basis for developing the upcoming budget and three year operating plans.The Committee members biographical details are
set out on pages 52 and 53 and at vodafone.com/exco.Policy and Compliance CommitteeThis is a
sub-committee of the Executive Committee comprising three Executive Committee members. It is appointed to assist the Executive Committee to fulfil its accountabilities with regard to policy compliance. In particular, the Committee approves changes
to policies, does deep dives into particular policies to assess whether they are effective and maintains an overview of the status of compliance throughout Vodafone so clear and accurate reports can be made to the Audit and Risk Committee twice a
year. Deep dives this year covered the policies relating to radio frequency electromagnetic fields (EMF), competition law, protecting customer information, anti-money laundering and fraud.Disclosure CommitteeThe Disclosure Committee, appointed by the Chief Executive and Chief Financial Officer to
ensure the accuracy and timeliness of Company disclosures, oversees and approves controls and procedures in relation to the public disclosure of financial information and other information material to shareholders. It is composed of the Group
General Counsel and Company Secretary (the Chair), Regional Chief Financial Officers, the Group Financial Controller, the Group Investor Relations Director, the Group Strategy and Business Development Director, and the Group External Affairs
Director.



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|66 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Corporate governance
(continued)                  






How do we engage with our shareholders? We are committed to communicating our strategy and activities clearly to our shareholders and, to that end, we maintain an active dialogue with
investors through a planned programme of investor relations activities.  Investor relations programmeThe programme includes:g  formal presentations of full-year and
half-year results, and interim management statements (see vodafone.com/investor for more information);g  briefing meetings with major institutional
shareholders in the UK, the United States and Europe after the full-year and half-year results; (a graph showing the
geographical analysis of investors is shown on this page);g  regular investor relations meetings with
investors in other geographies;g  formal presentations around significant
acquisitions and disposals, e.g. the acquisition of Kabel Deutschland and the Verizon Wireless
transaction;g  regular meetings between institutional
investors and analysts, and the Chief Executive and Chief Financial Officer, to discuss business performance, growth strategy
and address any issues of concern;g  meetings between major shareholders
and the Chairman on an ongoing basis including roadshows in London and Edinburgh to obtain feedback and consider corporate
governance issues;g  analysing and approaching new
geographies to actively market the business to new investors;g  dialogue between the Remuneration
Committee and shareholders. Go to pages 70 and 71 for more information;g  hosting investors and analysts sessions
at which senior management from relevant operating companies are present;g  attendance by senior executives across
the business at relevant meetings and conferences throughout the year;g  responding daily to enquiries from
shareholders and analysts through our Investor Relations team;g  hosting webinars to highlight key areas of
the business such as M-Pesa and money payment services, Vodafone Turkey, Vodafone Netherlands and 4G; andg  a section dedicated to shareholders and analysts
on our website at vodafone.com/investor, including specific sections for any material transactions or shareholder events, e.g. the Verizon Wireless transaction.
 The Chairman has overall responsibility for ensuring that there is effective communication with
investors, and that the Board understands the views of major shareholders on matters such as governance and strategy. The Chairman makes himself available to meet shareholders for this purpose. The Senior Independent Director and other members of
the Board are also available to meet major investors on request. The Board receives a regular report from the Investor Relations team and feedback from meetings held between executive management, or the Investor Relations team and institutional
shareholders, is also communicated to the Board.  LOGO What happens at our AGM? Who attends?  g

All of our directors.  g

Executive Committee members.  g

Our shareholders.  What is the format?  g

A summary presentation of results is given before the Chairman deals with the formal business.  g

All shareholders present can question the Chairman, the Chairmen of the Committees and the rest of the Board both during the meeting and informally afterwards.  g

The Board encourages participation of investors, including individual investors, at the AGM.  AGM broadcast  g

The AGM is broadcast live on our website at vodafone.com/agm.  g

A recording can subsequently be viewed on our website.
   LOGO






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Resolutions  g

Voting on all resolutions at the AGM is on a poll. The proxy votes cast, including details of votes withheld, are disclosed to those in attendance at the meeting and the results are published on
our website and announced via the Regulatory News Service.  A summary of our share and control structures is set out in Shareholder information on pages 182 to 189. How do we deal with internal control and risk management? The Board has overall responsibility for the system of internal control. A sound system of
internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Board has established procedures that implement in full the Turnbull Guidance Internal Control: Revised Guidance for Directors on the
Combined Code for the year under review and to the date of this annual report. These procedures, which are subject to regular review, provide an ongoing process for identifying, evaluating and managing the significant risks we face. See page
89 for managements report on internal control over financial reporting. Monitoring and review activities There are clear processes for monitoring the system of internal control and reporting any significant control failings or weaknesses together with
details of corrective action. These include:  g

the local Chief Executive and Chief Financial Officer of each operating business formally certifying the operation of their control systems each year and highlighting any weaknesses. These results
are reviewed by regional management, the Audit and Risk Committee, and the Board;  g

local Chief Executives certifying compliance with high risk policies in their companies, with Group Compliance reviewing evidence of compliance;  g

the Groups Disclosure Committee reviewing the appropriateness of disclosures and providing an annual report to the Groups Chief Executive and the Chief Financial Officer on the
effectiveness of the Groups disclosure controls and procedures;  g

maintaining disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Exchange Act, that are designed to ensure that information required to be disclosed in
reports that we file or submit under the Exchange Act is recorded, processed, summarised and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to management,
including our Chief Executive and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure; and  g

the Group Internal Audit department periodically examining business processes on a risk basis throughout the Group and reporting to the Audit and Risk Committee.
 In addition, the Board reviews any reports from the external auditor presented to the Audit and
Risk Committee and management in relation to internal financial controls.  g

evaluating the risks we face in achieving our objectives;  g

determining the risks that are considered acceptable to bear;  g

assessing the likelihood of the risks concerned materialising;  g

identifying our ability to reduce the incidence and impact on the business of risks that do materialise; and  g

ensuring that the costs of operating particular controls are proportionate to the benefit.  Risk management Although many risks remain outside of our direct control, a range of activities are in place to mitigate the primary risks identified including
those set out on pages 196 to 200. The framework for identifying and managing our risks is set out on page 46. A range of mitigations for risks faced by the Group are included on page 90. Review of effectiveness The Board and the Audit and Risk Committee have reviewed the effectiveness of the internal control system including financial, operational and
compliance controls, and risk management in accordance with the Code for the period from 1 April 2013 to 20 May 2014 (the date of this annual report). No significant failings or weaknesses were identified during this review. However, had
there been any such failings or weaknesses, the Board confirms that necessary actions would have been taken to remedy them. The
directors, the Chief Executive and the Chief Financial Officer have evaluated the effectiveness of the disclosure controls and procedures and, based on that evaluation, have concluded that the disclosure controls and procedures were effective at the
end of the period covered by this report. What is our approach to other governance matters? Group policy compliance Each Group policy is owned by a member of the Executive Committee so that there is clear accountability and authority for ensuring the associated
business risk is adequately managed. Regional chief executives and the senior leadership team member responsible for each Group function have primary accountability for ensuring compliance with all Group policies by all our markets and entities. Our
Group Compliance team and policy champions support the policy owners and local markets in implementing policies and monitoring compliance. Code of Conduct All of the key Group policies have been consolidated into the Vodafone Code of Conduct. This
is a central ethical and policy document applicable to all employees and those who work for or on behalf of Vodafone. It sets out the standards of behaviour expected in relation to areas such as insider dealing, bribery and raising concerns through
the whistle-blowing process (known internally as Speak Up).






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|68 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Corporate governance
(continued)                  






What are our US listing requirements? As Vodafones American depositary shares are listed on the NASDAQ Stock Market LLC (NASDAQ), we are required to disclose a
summary of any material differences between the corporate governance practices we follow and those of US companies listed on NASDAQ. Vodafones corporate governance practices are primarily based on UK requirements but substantially conform to
those required of US companies listed on NASDAQ. The material differences are as follows: Independence Different tests of independence for Board members are applied under the Code and the NASDAQ listing rules. The Board is not required to take into
consideration NASDAQs detailed definitions of independence as set out in the NASDAQ listing rules. In accordance with the Code,
the Board has carried out an assessment based on the independence requirements of the Code and has determined that, in its judgement, all of Vodafones non-executive directors (who make up the majority of the Board) are independent within the
meaning of those requirements. Committees The NASDAQ listing rules require US companies to have a nominations committee, an audit committee and a compensation committee, each composed
entirely of independent directors, with the nominations committee and the audit committee each required to have a written charter which addresses the committees purpose and responsibilities, and the compensation committee having sole authority
and adequate funding to engage compensation consultants, independent legal counsel and other compensation advisors. Our Nominations
and Governance Committee is chaired by the Chairman of the Board and its other members are independent non-executive directors. Our Remuneration Committee is composed entirely of independent non-executive directors. The Audit and Risk Committee is composed entirely of non-executive directors, each of whom (i) the Board has determined to be independent
based on the independence requirements of the Code and (ii) meets the independence requirements of the Exchange Act. We have terms of reference for our Nominations and Governance Committee, Audit and Risk Committee and Remuneration Committee,
each of which complies with the requirements of the Code and is available for inspection on our website (vodafone.com/governance). These terms of reference are generally responsive to the relevant NASDAQ listing rules but may not address all aspects
of these rules. Code of Conduct Under the NASDAQ listing rules, US companies must adopt a code of conduct applicable to all directors, officers and employees that complies with the definition of a code of ethics set out in section 406 of the
Sarbanes-Oxley Act. We have adopted a Code of Ethics that complies with section 406 which is applicable only to the senior financial and principal executive officers, and which is available on our website (vodafone.com/governance). We have also
adopted a separate Code of Conduct which applies to all employees.
 Quorum The quorum required for shareholder meetings, in accordance with our articles of association, is two shareholders, regardless of the level of
their aggregate share ownership, while US companies listed on NASDAQ are required by the NASDAQ listing rules to have a minimum quorum of 33.33% of the shareholders of ordinary shares for shareholder meetings. Related party transactions In
lieu of obtaining an independent review of related party transactions for conflicts of interests in accordance with the NASDAQ listing rules, we seek shareholder approval for related party transactions that (i) meet certain financial thresholds
or (ii) have unusual features in accordance with the Listing Rules issued by the FCA in the United Kingdom (the Listing Rules), the Companies Act 2006 and our articles of association. Further, we use the definition of a transaction with a related party as set out in the Listing Rules, which differs in certain
respects from the definition of related party transaction in the NASDAQ listing rules. Shareholder approval We comply with the NASDAQ listing rules and the Listing Rules, when determining whether shareholder approval is required for a proposed
transaction. Under the NASDAQ listing rules, whether shareholder approval is required for a transaction depends on, among other
things, the percentage of shares to be issued or sold in connection with the transaction. Under the Listing Rules, whether shareholder approval is required for a transaction depends on, among other things, whether the size of a transaction exceeds a
certain percentage of the size of the listed company undertaking the transaction.






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|LOGO                    |  | 69
|Directors remuneration |  |   






Letter from the Remuneration Committee Chairman  LOGO

Luc Vandevelde
Chairman of the Remuneration Committee Dear fellow shareholder I am pleased to present you with Vodafones remuneration report for 2014. This year will be the first time we will ask shareholders to vote on our remuneration policy in addition to the rest of the remuneration report.
With the new remuneration disclosure regulations in mind we have changed the structure of our report to present first our policy and then detail its implementation. Apart from some changes which I outline below, our policy and practice remain
essentially unchanged. As always we have tried to ensure that the remuneration policy and practice at Vodafone drive behaviours
that are in the long-term interests of the Company and its shareholders. The Remuneration Committee continues to be mindful of the considerable interest that exists in executive compensation and we are very conscious of the many and varied concerns. Our remuneration principles Our remuneration principles, which our detailed policy supports, are as follows:  g

we offer competitive and fair rates of pay and benefits to attract and retain the best people;  g

our policy and practices aim to drive behaviours that support our Company strategy and business objectives;  g

our pay for performance approach means that our incentive plans only deliver significant rewards if and when they are justified by performance; and  g

our approach to share ownership is designed to help maintain commitment over the long-term, and to ensure that the interests of our senior management team are aligned with those of shareholders.  Pay for
performance Pay for performance continues to be an important principle for Vodafone when setting remuneration policy. A high proportion of total reward is awarded through short-term and long-term performance related remuneration. At target around 70% of the
package is delivered in the form of variable pay, which rises to around 85% if maximum payout is achieved. We ensure our incentive
plans only deliver significant rewards if and when they are justified by performance. For the Remuneration Committee this means two things:  g

ensuring the targets we set for incentive plans are suitably challenging (as can be seen by the historic levels of achievement for both short-and long-term incentive plans shown on page 82); and  g

if needed, exercising discretion. The Committee reviews all incentive plans before any payments are made to executives and has full discretion to adjust payments downwards if it believes
circumstances warrant it.  Company performance and the link to incentives During the 2014 year our emerging markets businesses have
delivered strong organic revenue growth along with good cash flow and adjusted EBITDA performance. However, this has been offset by significant ongoing competitive, regulatory and macroeconomic pressures in our European operations where revenue has
declined. Taken in the round this led to slightly below target performance which is reflected in our annual bonus payout of 88.5% of target. More details can be found on page 78. Over the last three years our adjusted free cash flow performance, although strong in our emerging markets, has been below our target levels in
Europe for similar reasons to those described above. However, we have taken significant strategic steps which have led to strong growth in the share price and Total Shareholder Return (TSR) which, when combined with adjusted free cash
flow, result in a payout for the executive directors long-term incentive awards of 37.2% of maximum. More details can be found on page 79. Strategic initiatives include:  g

the sale of our 45% stake in Verizon Wireless;  g

the record US$85 billion return to shareholders;  g

the announcement of Project Spring  the acceleration of our capital investment to strengthen further our network and customer experience;  g

the acquisition of a leading cable operator in Germany as well as fixed line businesses such as CWW and TelstraClear;  g

launching Vodafone Red which is now available in 20 markets; and  g

developing our M-Pesa footprint.






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|70 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Directors
remuneration (continued)               






Letter from the Remuneration Committee Chairman (continued) Key decisions on executive remuneration The Remuneration Committee considers every decision around executive director remuneration very carefully. Some of the major decisions made this
year were as follows:  g

Nick Read was promoted to Chief Financial Officer during the year and we determined his new remuneration package. Our decision to give Nick a base salary of £675,000 was made in the context
of the existing executive directors remuneration levels and reviewed against the external market;  g

the Remuneration Committee considered the impact of the Verizon Wireless transaction and Project Spring on executive remuneration and decided to remove the impact of Project Spring on pre-existing
long-term incentive awards to ensure an appropriate comparison to the original targets that were set. Please see page 84 for more details;  g

we decided to reduce the maximum vesting level of our long-term incentive opportunity for our Executive Committee. For the 2015 long-term incentive awards, the maximum vesting level will reduce
from three times to two and a half times the target vesting level. We have also introduced a mandatory holding period where 50% of the post-tax shares are released after vesting, a further 25% after the first anniversary of vesting, and the
remaining 25% will be released after the second anniversary;  g

following a review of the pension levels in the context of pension provision for our broader employee population, from November 2015 pension levels for our Executive Committee will reduce from 30%
of salary to 24% of salary. This brings our Executive Committee pension level in line with our UK senior management; and  g

the Remuneration Committee took account of business performance, salary increases for other UK employees and external market information when deciding to increase the annual base salaries of the
Chief Executive (Vittorio Colao) and the Chief Technology Officer (Stephen Pusey) by 3.6% and 4.3% respectively from 1 July 2014. This is the first salary increase that either individual has received for three years.  Assessment of risk One of the activities of the Remuneration Committee is to continually be aware and mindful of any potential risk associated with our reward
programmes. Vodafone seeks to provide a structure of rewards that encourages acceptable risk taking and high performance through optimal pay mix, performance metrics and calibration, and timing. With that said, it is prudent practice
to ensure that our reward programmes achieve this and do not encourage excessive or inappropriate risk taking. The Committee has considered the risk involved in the incentive schemes and is satisfied that the design elements and governance
procedures mitigate the principal risks. Share ownership For many years Vodafone has had demanding share ownership goals for our executive directors. These goals, and our achievement against the goals,
are set out on page 80. We are delighted that, collectively, our Executive Committee own shares with a value of over £50 million. We are proud that the high level of shareholding by our Executive Committee has been maintained despite the
Verizon Wireless transaction and the associated share consolidation. After the transaction our Executive Committee members individually elected to reinvest the vast majority of their post-tax proceeds from the transaction back into Vodafone shares.
Owning shares is part of our culture and each year we expect the number of shares owned by our Executive Committee members to grow. This level of ownership by management clearly shows their alignment with shareholders but also indicates their
belief in the long-term value creation opportunities of our shares. Consultation with shareholders The Remuneration Committee continues to have dialogue with our shareholders. The views of all shareholders are taken seriously, and letters
and emails are replied to promptly. In addition, during the year we invited our largest shareholders to meet with me in person and the resulting meetings were very helpful for us to better understand our shareholders viewpoint. We were
delighted that last year the remuneration report received a 96.36% vote in favour. This compares with 96.44% support in the prior year. We sincerely hope to receive your continued support at the AGM on 29 July 2014. /s/ Luc Vandevelde Luc
Vandevelde Chairman of the Remuneration Committee 20 May 2014  Contents of the remuneration reportRemuneration policy

Page 71

Annual report on remuneration

Page 77The remuneration policy table

Page 72

Remuneration Committee

Page 77Chairman and non-executive directors remuneration

Page 76

2014 remuneration

Page 782015 remuneration

Page 84Further remuneration information

Page 85






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Remuneration policy In this forward-looking section we describe our remuneration policy for the Board. This includes our
considerations when determining policy, a description of the elements of the reward package and an indication of the potential future value of this package for each of the executive directors. In addition we describe our policy applied to the
Chairman and non-executive directors. We will be seeking shareholder approval for our remuneration policy at the 2014 AGM and we
intend to implement at that point. We do not envisage making any changes to our policy over the next three years, however, we will review it each year to ensure that it continues to support our Company strategy. If we feel it is necessary to make a
change to our policy within the next three years, we will seek shareholder approval. Considerations when determining remuneration
policy Our remuneration principles which are outlined on page 69 are the context for our policy. Our principal consideration when
determining remuneration policy is to ensure that it supports our Company strategy and business objectives. The views of our
shareholders are also taken into account when determining executive pay. In advance of asking for approval for the remuneration policy we have consulted with our major shareholders. We invited our top 20 shareholders to comment on remuneration at
Vodafone and several meetings between shareholders and the Remuneration Committee Chairman took place. The main topics of consultation were as follows:  g

new share plan rules for which we will seek shareholder approval at the 2014 AGM;  g

changes to executive remuneration arrangements (reduction of maximum long-term incentive vesting levels and pension provision); and  g

impact of Project Spring on Free Cash Flow performance under the global long-term incentive plan (GLTI).  We have not consulted with employees
on the executive remuneration policy nor is any fixed remuneration comparison measurement used. However, when determining the policy for executive directors, we have been mindful of the pay and employment conditions of employees in Vodafone Group as
a whole, with particular reference to the market in which the executive is based. Further information on our remuneration policy for other employees is given on page 74. Performance measures and targets Our Company strategy and business objectives are the primary consideration when we are selecting performance measures for our incentive plans. The targets within our incentive plans that are related to internal financial measures
(such as revenue, profit and cash flow) are typically determined based on our budgets. Targets for strategic and external measures (such as competitive performance and Total Shareholder Return (TSR)) are set based on Company objectives
and in light of the competitive marketplace. The threshold and maximum levels of performance are set to reflect minimum acceptable levels at threshold and very stretching but achievable levels at maximum. As in previous remuneration reports we will disclose the details of our performance targets for our short and long-term incentive plans. However,
our annual bonus targets are commercially sensitive and therefore we will only disclose our targets in the remuneration report following the completion of the financial year. We will disclose the targets for each long-term award in the remuneration
report for the financial year preceding the start of the performance period. At the end of each performance period we review
performance against the targets, using judgement to account for items such as (but not limited to) mergers, acquisitions, disposals, foreign exchange rate movements, changes in accounting treatment, material one-off tax settlements etc. The
application of judgement is important to ensure that the final assessments of performance are fair and appropriate. In addition, the
Remuneration Committee reviews the incentive plan results before any payments are made to executives or any shares vest and has full discretion to adjust the final payment or vesting downwards if they believe circumstances warrant it. In particular,
the Committee may use discretion to clawback any unvested share award (or vested but unexercised options) as it sees appropriate, in which case the award may lapse wholly or in part, may vest to a lesser extent than it would otherwise have vested or
vesting may be delayed.






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|72 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Directors
remuneration (continued)               






Remuneration policy (continued) The remuneration policy table The table below summarises the main components of the reward package for executive directors.  Purpose and link to strategy



OperationBase salary

g  To attract and retain the best talent.



g  Salaries are usually reviewed annually and fixed
for 12 months commencing 1 July. Decision is influenced by:g   level of skill, experience and scope of
responsibilities of individual;g   business performance, scarcity of talent,
economic climate and market conditions;g   increases elsewhere within the Group;
andg   external comparator groups (which are
used for reference purposes only) made up of companies of similar size and complexity to Vodafone.Pension

g  To remain competitive within the
marketplace.



g  Executive directors may choose to
participate in the defined contribution pension scheme or to receive a cash allowance in lieu of pension.Benefits

g  To aid retention and remain competitive  within the marketplace.



g  Travel related benefits. This may include
(but is not limited to) company car or cash allowance, fuel and access to a driver where appropriate.
 
g  Private medical, death and disability insurance and annual health checks.
 
g  In the event that we ask an individual to relocate we would offer them support in line with
Vodafones relocation or international assignment policies. This may cover (but is not limited to) relocation, cost of living allowance, housing, home leave, education support, tax equalisation and advice.
 
g  Legal fees if appropriate.  
g  Other benefits are also offered in line with the benefits offered to other employees for example,
all-employee share plans, mobile phone discounts, maternity/paternity benefits, sick leave, paid holiday, etc.Annual Bonus 
Global Short- Term
Incentive Plan (GSTIP)

g  To drive behaviour and communicate
the key priorities for the year.
 
g  To motivate employees and incentivise delivery of performance over the one year operating
cycle.  
g  The financial metrics are designed to both drive our growth strategies whilst also focusing on
improving operating efficiencies. Measuring competitive performance with its heavy reliance on net promoter score (NPS) means providing a great customer experience remains at the heart of what we do.



g  Bonus levels and the appropriateness of
measures and weightings are reviewed annually to ensure they continue to support our strategy.
 
g  Performance over the financial year is measured against stretching financial and non-financial
performance targets set at the start of the financial year.  
g  The annual bonus is usually paid in cash in June each year for performance over the previous
financial year.Long-Term Incentive  Global Long-Term Incentive Plan (GLTI) base awards and co-investment awards
(further details can be found in the notes that follow this table)

g  To motivate and incentivise delivery
of sustained performance over the long term.
 
g  To support and encourage greater shareholder alignment through a high level of personal
financial commitment.  
g  The use of free cash flow as the principal performance measure ensures we apply prudent cash
management and rigorous capital discipline to our investment decisions, whilst the use of TSR along with a performance period of not less than three years means that we are focused on the long-term interests of our shareholders.



g  Award levels and the framework for
determining vesting are reviewed annually to ensure they continue to support our strategy.
 
g  Long-term incentive base awards consist of performance shares which are granted each
year.  
g  Individuals must co-invest in Vodafone shares and hold them in trust for at least three years in
order to receive the full target award.  
g  All awards vest not less than three years after the award based on Group operational and external
performance.  
g  Dividend equivalents are paid in cash after the vesting date.






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Opportunity



Performance metricsg  Average salary increases for existing Executive Committee members (including
executive directors) will not normally exceed average increases for employees in other appropriate parts of the Group. Increases
above this level may be made in specific situations. These situations could include (but are not limited to) internal promotions, changes to role, material changes to the business and exceptional company performance.



None.g  The pension contribution or cash payment is equal to 30% of annual gross salary.
In light of pension levels elsewhere in the Group we have decided to reduce the pension benefits level from 30% to no more than
24% from November 2015.



None.g  Benefits will be provided in line with appropriate levels indicated by local market
practice in the country of employment.
 
g  We expect to maintain benefits at the current level but the value of benefit may fluctuate
depending on, amongst other things, personal situation, insurance premiums and other external factors.



None.g  Bonuses can range from 0200% of base salary, with 100% paid for on-target
performance. Maximum is only paid out for exceptional performance.



g  Performance over each financial year
is measured against stretching targets set at the beginning of the year.
 
g  The performance measures normally comprise of a mix of financial and strategic measures. Financial
measures may include (but are not limited to) profit, revenue and cash flow with a weighting of no less than 50%. Strategic measures may include (but are not limited to) competitive performance metrics such as net promoter score and market
share.g  The basic target award level is 137.5% of base salary for the Chief Executive
(110% for other executive directors).
 
g  The target award level may increase up to 237.5% of base salary for the Chief Executive (or 210%
for others) if the individual commits to a co-investment in shares equal in value to their base salary. 
 g  Minimum vesting is 0% of target award level, threshold vesting is 50% and
maximum vesting is 250% of the target award level.
 
g  Maximum long-term incentive face value at award of 594% of base salary for the Chief Executive
(237.5% x 250%) and 525% for others.  
g  The awards that vest accrue cash dividend equivalents over the three year vesting
period.  
g  Awards vest to the extent performance conditions are satisfied. There is a mandatory holding
period where 50% of the post-tax shares are released after vesting, a further 25% after the first anniversary of vesting, and the remaining 25% will be released after the second anniversary.



g  Performance is measured against
stretching targets set at the beginning of the performance period.
 
g  Vesting is determined based on a matrix of two measures:
 
g  adjusted free cash flow as our operational performance measure; and
 
g  relative TSR against a peer group of companies as our external performance
measure.






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|74 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Directors
remuneration (continued)               






Remuneration policy (continued) Notes to the remuneration policy table Existing arrangements We will
honour existing awards to executive directors, and incentives, benefits and contractual arrangements made to individuals prior to their promotion to the Board. This will last until the existing incentives vest (or lapse) or the benefits or
contractual arrangements no longer apply. Long-Term Incentive (GLTI) When referring to our long-term incentive awards we use the financial year end in which the award was made. For example, the 2013
award was made in the financial year ending 31 March 2013. The awards are usually made in the first half of the financial year (the 2013 award was made in July 2012). The extent to which awards vest depends on two performance conditions:   g

underlying operational performance as measured by adjusted free cash flow; and  g

relative Total Shareholder Return (TSR) against a peer group median.  Adjusted free cash flow The free cash flow performance is based on the cumulative adjusted free cash flow figure over the performance period. The detailed
targets and the definition of adjusted free cash flow are determined each year as appropriate. The target adjusted free cash flow level is set by reference to our long-range plan and market expectations. We consider the targets to be critical
to the Companys long-term success and its ability to maximise shareholder value, and to be in line with the strategic goals of the Company. The Remuneration Committee sets these targets to be sufficiently demanding with significant stretch
where only outstanding performance will be rewarded with a maximum payout. The cumulative adjusted free cash flow vesting levels as a
percentage of target are shown in the table below (with linear interpolation between points):  Performance

Vesting percentageBelow threshold


0%Threshold


50%Target


100%Maximum


125% TSR outperformance of a peer group median We have a limited number of appropriate peers and this makes the measurement of a relative ranking system volatile. As such, the outperformance of
the median of a peer group is felt to be the most appropriate TSR measure. The peer group for the performance condition is reviewed each year and amended as appropriate. The relative TSR position determines the performance multiplier. This will be applied to the adjusted free cash flow vesting percentage. There
will be no multiplier until TSR performance exceeds median. Above median, the following table will apply (with linear interpolation between points):  MultiplierMedian


No increasePercentage outperformance of the peer group median equivalent to 65th percentile


1.5 timesPercentage outperformance of the peer group median equivalent to 80th percentile


2.0 times In order to determine the percentages for the equivalent outperformance levels above median, the Remuneration
Committee seeks independent external advice. Combined vesting matrix The combination of the two performance measures gives a combined vesting matrix as follows (with linear interpolation between points):  TSR
outperformanceAdjusted free cash flow measure

Up to
Median


65th percentile
equivalent


80th percentile
equivalentBelow threshold


0%



0%



0%Threshold


50%



75%



100%Target


100%



150%



200%Maximum


125%



187.5%



250% The combined vesting percentages are applied to the target number of shares granted. Outstanding awards For
the awards made in the 2013 and 2014 financial years (vesting in July 2015 and June 2016 respectively) the award structure is as set out above, except that the maximum vesting percentage for cumulative adjusted free cash flow was 150% leading to an
overall maximum of 300% of target award. Remuneration policy for other employees While our remuneration policy follows the same fundamental principles across the Group, packages offered to employees reflect differences in
market practice in the different countries, role and seniority. For example, the remuneration package elements for our executive
directors are essentially the same as for the other Executive Committee members, with some small differences, for example higher levels of share awards. The remuneration for the next level of management, our senior leadership team, again follows the
same principles but with differences such as local and individual performance aspects in the annual bonus targets and performance share awards. They also receive lower levels of share awards which are partly delivered in restricted shares.






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Estimates of total future potential remuneration from 2015 pay packages The tables below provide estimates of the potential future remuneration for each of the executive directors based on the remuneration opportunity
granted in the 2015 financial year. Potential outcomes based on different performance scenarios are provided for each executive director. The assumptions underlying each scenario are described below.  Fixed

Consists of base salary, benefits and pension.Base salary is at 1 July 2014.Benefits are valued using the figures in the total remuneration for the 2014 financial year table on page 78 (of the 2014 report) and on a similar basis for
Nick Read (promoted to the Board on 1 April 2014).Pensions are valued by applying cash allowance rate of 30% of base salary at 1 July 2014.Base
(£000)

Benefits
(£000)

Pension
(£000)

Total fixed
(£000)Chief Executive

1,150

38

345

1,533Chief Financial Officer

675

23

203

901Chief Technology Officer

600

21

180

801On target

Based on what a director would receive if performance was in line with plan.The target award opportunity for the annual bonus (GSTIP) is 100% of base salary.The target award opportunity for the long-term incentive (GLTI) is 237.5% of base salary for the Chief Executive and 210% for others.
We assumed that TSR performance was at median.Maximum

Two times the target award opportunity is payable under the annual bonus (GSTIP).The maximum levels of performance for the long-term incentive (GLTI) are 250% of target award opportunity. We assumed that TSR performance was at
or above the 80th percentile equivalent.All scenarios

Each executive is assumed to co-invest the maximum allowed under the long-term incentive (GLTI), 100% of salary,
and the long-term incentive (GLTI) award reflects this.Long-term incentives consist of share awards only which are measured at face value i.e. no assumption for increase in share price or cash dividend
equivalents payable.  LOGO Recruitment remuneration Our approach to recruitment remuneration is to pay no more than is necessary and appropriate to attract the right talent to the role. The remuneration policy table (pages 72 and 73) sets out the various components which would be considered for inclusion in the remuneration
package for the appointment of an executive director. Any new directors remuneration package would include the same elements, and be subject to the same constraints, as those of the existing directors performing similar roles. This means a
potential maximum bonus opportunity of 200% of base salary and long-term incentive maximum face value of opportunity at award of 594% of base salary. When considering the remuneration arrangements of individuals recruited from external roles to the Board, we will take into account the remuneration package of that individual in their prior role. We only provide additional
compensation to individuals for awards foregone. If necessary we will seek to replicate, as far as practicable, the level and timing of such remuneration, taking into account also any remaining performance requirements applying to it. This will be
achieved by granting awards of cash or shares that vest over a timeframe similar to those forfeited and if appropriate based on performance conditions. A commensurate reduction in quantum will be applied where it is determined that the new awards
are either not subject to performance conditions or subject to performance conditions that are not as stretching as those of the awards forfeited.






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|76 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Directors
remuneration (continued)               






Remuneration policy (continued) Service contracts of executive directors After an initial term of up to two years executive directors contracts have rolling terms and are terminable on no more than
12 months notice. The key elements of the service contract for executives relate to remuneration, payments on loss of
office (see below), and restrictions during active employment (and for 12 months thereafter). These restrictions include non-competition, non-solicitation of customers and employees etc. Additionally, all of the Companys share plans contain provisions relating to a change of control. Outstanding awards and options would
normally vest and become exercisable on a change of control to the extent that any performance condition has been satisfied and pro-rated to reflect the acceleration of vesting. Payments for departing executives In the table below we summarise the key elements of our policy on payment for loss of office. We will of course, always comply both with the relevant plan rules and local employment legislation.  Provision



PolicyNotice period and compensation for loss of office in service contracts



g

12 months notice from the Company to the executive director.g

Up to 12 months base salary (in line with the notice period). Notice period
payments will either be made as normal (if the executive continues to work during the notice period or is on gardening leave) or they will be made as monthly payments in lieu of notice (subject to mitigation if alternative employment is
obtained).Treatment of annual bonus (GSTIP) on termination under plan rules



g

The annual bonus will be pro-rated for the period of service during the financial year
and will reflect the extent to which Company performance has been achieved.g

The Remuneration Committee has discretion to reduce the entitlement to an annual bonus
to reflect the individuals performance and the circumstances of the termination.Treatment of unvested long-term incentive awards (GLTI) and co-investment awards on termination under plan rules



g

An executive directors award will vest in accordance with the terms of the plan
and satisfaction of performance conditions measured at the normal completion of the performance period, with the award pro-rated for the proportion of the vesting period that had elapsed at the date of cessation of employment.g

The Remuneration Committee has discretion to vary the level of vesting as deemed
appropriate, and in particular to determine that awards should not vest in the case of a bad leaver which may include, at their absolute discretion, departure in case of poor performance, departure without the agreement of the Board, or
detrimental competitive activity.Pension and benefits



g

Generally pension and benefit provisions will continue to apply until the termination
date.g

Where appropriate other benefits may be receivable, such as (but not limited to)
payments in lieu of accrued holiday and legal fees or tax advice costs in relation to the termination.g

Benefits of relative small value may continue after termination where appropriate, such
as (but not limited to) mobile phone provision. In exceptional circumstances, an arrangement may be established specifically to facilitate the exit of a
particular individual albeit that any such arrangement would be made within the context of minimising the cost to the Group. We will only take such a course of action in exceptional circumstances and where it is considered to be in the best
interests of shareholders. Chairman and non-executive directors remuneration Our policy is for the Chairman to review the remuneration of non-executive directors annually following consultation with the Remuneration
Committee Chairman. Fees for the Chairman are set by the Remuneration Committee.  Element



PolicyFees



g

We aim to pay competitively for the role including consideration of the time commitment
required. We benchmark the fees against an appropriate external comparator group. We pay fees to our Chairman and Senior Independent Director that include fees for chairmanship of any committees. We pay a fee to each of our other non-executive
directors and they receive an additional fee if they chair a committee. Non-executive fee levels are set within the maximum level as approved by shareholders as part of our articles of association.Allowances



g

An allowance is payable each time a non-Europe-based non-executive director is required
to travel to attend Board and committee meetings to reflect the additional time commitment involved.Incentives



g

Non-executive directors do not participate in any incentive plans.Benefits



g

Non-executive directors do not participate in any benefit plans. The Company does not
provide any contribution to their pension arrangements. The Chairman is entitled to the use of a car and a driver whenever and wherever he is providing his services to or representing the Company. We have been advised that for non-executive
directors, certain travel and accommodation expenses in relation to attending Board meetings should be treated as a taxable benefit therefore we also cover the tax liability for these expenses. Non-executive director service contracts Non-executive directors are engaged on letters of appointment that set out their duties and responsibilities. The appointment of
non-executive directors may be terminated without compensation. Non-executive directors are generally not expected to serve for a period exceeding nine years. For further information refer to the Nomination and Governance Committee
section of the annual report (page 59).






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Annual report on remuneration Remuneration Committee In this section we give details of the composition of the Remuneration Committee and activities undertaken over the 2014 financial year. The
Committee is comprised to exercise independent judgement and consists only of the following independent non-executive directors: Chairman: Luc Vandevelde Committee members: Renee James; Samuel Jonah; Philip Yea The Committee regularly consults with Vittorio Colao, the Chief Executive, and Ronald Schellekens, the Group HR Director, on various matters
relating to the appropriateness of awards for executive directors and senior executives, though they are not present when their own compensation is discussed. In addition, Adrian Jackson, the Group Reward and Policy Director, provides a
perspective on information provided to the Committee, and requests information and analyses from external advisors as required. Rosemary Martin, the Group General Counsel and Company Secretary, advises the Committee on corporate governance
guidelines and acts as secretary to the Committee. External advisors The Remuneration Committee seeks and considers advice from independent remuneration advisors where appropriate. The two appointed advisors were
selected through a thorough process led by the Chairman of the Remuneration Committee and were appointed by the Committee. The Chairman of the Remuneration Committee has direct access to the advisors as and when required, and the Committee
determines the protocols by which the advisors interact with management in support of the Committee. The advice and recommendations of the external advisors are used as a guide, but do not serve as a substitute for thorough consideration of the
issues by each Committee member. Advisors attend Committee meetings occasionally, as and when required by the Committee. Pricewaterhouse Coopers LLP (PwC) and Towers Watson are both members of the Remuneration Consultants Group and, as such,
voluntarily operate under the Remuneration Consultants Group Code of Conduct in relation to executive remuneration consulting in the UK. This is based upon principles of transparency, integrity, objectivity, competence, due care and
confidentiality by executive remuneration consultants. PwC and Towers Watson have confirmed that they adhered to that Code of Conduct throughout the year for all remuneration services provided to Vodafone and therefore the Committee are satisfied
that they are independent and objective. The Remuneration Consultants Group Code of Conduct is available at remunerationconsultantsgroup.com.  Advisor

Appointed by

Services provided to the Committee

Fees for services
provided to the
Committee (000)1

Other services provided to the CompanyPricewaterhouse

Remuneration

Advice on market practice; Governance;

£63

International mobility; Finance;Coopers LLP (PwC)

Committee in 2007

Performance analysis; Plan design



Technology; Tax; Operations; ComplianceTowers Watson

Remuneration Committee in 2007

Advice on market practice; Governance; Provide market data on executive and non-executive reward; Reward consultancy; Performance analysis

£25

Pension and benefit administration; Reward consultancy Note: 1
Fees are determined on a time spent basis PwC have been appointed as
our auditors from April 2014 and therefore no longer advise the Remuneration Committee. Towers Watson continue to act as independent remuneration advisors. Philip Yea sat on an advisory board for PwC until 14th January 2014. In light of PwCs role as advisor to the Remuneration Committee on remuneration matters up until April 2014, the Remuneration Committee considered his
position and determined that there was no conflict or potential conflict arising. 2013 AGM The 2013 remuneration report received a 96.36% vote in favour of a total of 31,950,649,494 votes cast (3.64% votes against and 436,513,724 votes
were withheld). Meetings The Remuneration Committee had six formal meetings during the year. Outside these meetings there are frequent discussions usually by conference call. The principal agenda items at the formal meetings were as follows:  Meeting

Agenda itemsMay 2013

g

2013 annual bonus achievement and 2014 targets and ranges.

g

2013 directors remuneration report.g

2011 long-term incentive award vesting and 2014 targets and ranges.

g

Review of the effectiveness of the Committee.July 2013

g

2014 long-term incentive awards.

g

Large local market CEO remuneration.September 2013

g

Impact of the Verizon Wireless transaction on reward arrangements.November 2013

g

2015 reward strategy.

g

Impact of the Verizon transaction andg

2014 long-term incentive awards, share ownership levels,



Project Spring on incentives.accounting costs and dilution levels.

g

New share plan rules.g

Reduction of maximum leverage on future long-term incentive

g

New remuneration reporting regulations.awards from 300% to 250% of target.

g

Remuneration package for Nick Readg

Reduction of pension levels from November 2015 from 30%



and departure arrangements for Andyto 24% of base salary.



Halford.January 2014

g

2015 annual bonus framework.

g

Feedback from shareholder consultation.g

Non-executive director fee levels.

g

Committee advisors for 2015.March 2014

g

2015 reward packages for the Executive Committee and

g

2014 directors remuneration report.Chairmans fees.

g

2015 long-term incentive awards.g

Risk assessment.

g

Committees effectiveness and terms of reference.






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|78 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Directors
remuneration (continued)               






Annual report on remuneration (continued) 2014 remuneration In this section we summarise the pay packages awarded to our executive directors for performance in the 2014 financial year versus 2013. Specifically we have provided a table that shows all remuneration that was earned by each
individual during the year and computed a single total remuneration figure for the year. The value of the annual bonus (GSTIP) was earned during the year but will be paid out in cash in the following year and the value of the long-term
incentive (GLTI) shows the share awards which will vest in June 2014 as a result of the performance through the three year period ended at the completion of our financial year on 31 March 2014. The Remuneration Committee reviews all incentive awards prior to payment and has full discretion to reduce awards if it believes this is
appropriate. The decision need not be on objective grounds. It should be noted that the Remuneration Committee did not exercise discretion in determining the annual bonus (GSTIP) payout for this year or in deciding the final vesting
level of the long-term incentive awards (GLTI).  Total remuneration for the 2014 financial year  Vittorio Colao


Andy Halford1


Stephen Pusey2014£000


2013
£000


2014£000


2013£000


2014£000


2013£000Salary/fees


1,110



1,110



700



700



575



575Taxable benefits2


38



39



47



45



21



21Annual bonus: GSTIP (see below for further detail)


982



731



620



461



509



379Total long-term incentive3:


6,464



8,886



2,424



5,164



2,164



2,842GLTI vesting during the year4


5,630



7,573



2,111



4,401



1,885



2,422Cash in lieu of GLTI dividends5


834



1,313



313



763



279



420Cash in lieu of pension


333



333



210



210



173



173Total


8,927



11,099



4,001



6,580



3,442



3,990 Notes: 1
Andy Halford retired on 31 March 2014. 2
Taxable benefits include amounts in respect of:   Private healthcare (2014: £1,734; 2013: £1,500);  Cash car allowance £19,200 p.a.;  Travel (2014: Vittorio Colao £17,155; Andy Halford £13,848; 2013 (restated): Vittorio Colao £17,921; Andy Halford £24,626; and Stephen Pusey £408); and  Payment in lieu of holiday at retirement (2014: Andy Halford £11,936). 3
Excludes shares acquired under Vodafones Share Incentive Plan (SIP). Andy Halford is the only director who participated and the annual value of the matching shares is
£1,500. 4
The value shown in the 2013 column is the award which vested on 28 June 2013 and is valued using the execution share price on 28 June 2013 of 188.03 pence. Please note that the values
disclosed in this table in 2013 are slightly different as the value was based on a share price at 31 March 2013 of 186.60 pence. The value shown in the 2014 column is the award which vests on 28 June 2014 and is valued using an average of
the closing share price over the last quarter of the 2014 financial year of 234.23 pence. More details are included below. 5
Participants also receive a cash award, equivalent in value to the dividends that would have been paid during the vesting period on any shares that vest. The cash in lieu of dividend value shown in
2013 relates to the award which vested on 28 June 2013, and the value for 2014 relates to the award which vests on 28 June 2014.
 2014 annual bonus (GSTIP) payout In the table below we disclose our achievement against each of the performance measures and targets in our annual bonus (GSTIP) and the resulting total annual bonus payout level for the year ended 31 March 2014 of
88.5%. This is applied to the target bonus level of 100% of base salary for each executive.  Performance measure

Payout attargetperformance100%


Payout atmaximumperformance200%


Actualpayout%


Targetperformancelevel
£bn


Actualperformancelevel1
£bn


CommentaryService revenue on a management basis


25%



50%



15.6%



39.4



38.7



Below target performance in EuropeAdjusted EBITDA


25%



50%



12.4%



12.7



12.3



Below target performance in Europe partiallyoffset by AMAPAdjusted free cash flow


25%



50%



45.1%



4.2



4.7



Strong performance in AMAPCompetitive performance assessment


25%



50%



15.4%



Compilation of



Consolidated performance below targetmarket-by-market



although the number of markets where netassessment



promoter score (NPS) ranks #1 increasedTotal annual bonus payout level


100%



200%



88.5% Note: 1
These figures are adjusted to include the removal of the impact of M&A, foreign exchange movements and any changes in accounting treatment.  2015 annual bonus (GSTIP) amounts

Base salary


Target bonus% of base salary


2014 payout% of target


Actual payment(000)Vittorio Colao


1,110,000



100%



88.5%



£982Andy Halford


700,000



100%



88.5%



£620Stephen Pusey


575,000



100%



88.5%



£509






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|LOGO |  | 79
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Long-term incentive (GLTI) award vesting in June 2014 The 2012 long-term incentive (GLTI) awards which were made in June 2011 will partially vest in June 2014. The performance conditions
for the three year period ending in the 2014 financial year are as follows:  TSR outperformanceAdjusted free cash flow measure


£bn



0%(Up tomedian)



4.5%(65th percentileequivalent)



9%(80th percentileequivalent)Below threshold


<16.7



0%



0%



0%Threshold


16.7



50%



75%



100%Target


19.2



100%



150%



200%Maximum


21.7



200%



300%



400%
 TSR peer groupBT Group

Telecom ItaliaDeutsche Telekom

TelefónicaOrangeEmerging market composite (consists of the averageTSR performance of Bharti, MTN and Turkcell)
  Adjusted free cash flow for the three-year period ended on 31 March 2014 was £17.9
billion which compares with a threshold of £16.7 billion and a target of £19.2 billion. The chart to the right shows
that our TSR performance against our peer group for the same period resulted in an outperformance of the median by 22.3% a year. Using
the combined payout matrix above, this performance resulted in a payout of 148.8% of target (37.2% of the maximum). The combined
vesting percentages are applied to the target number of shares granted as shown below.
 LOGO
   2012 GLTI performance share awards vesting in June 2014

Maximumnumber ofshares


Targetnumberof shares


Adjusted free cashflow performancepayout
% of target


TSRmultiplier


Overall vesting% of target1


Number ofshares vesting


Value
ofshares vesting(000)2Vittorio Colao


6,461,396



1,615,349



74.4%



2 times



148.8%



2,403,638



£5,630Andy Halford


2,643,290



660,822



74.4%



2 times



136.4%



901,361



£2,111Stephen Pusey


2,162,990



540,747



74.4%



2 times



148.8%



804,632



£1,885 Notes: 1
Andy Halford retired on 31 March 2014. His award has been prorated for the 33 months he served during the 36 month vesting period. 2
Valued using an average of the closing share prices over the last quarter of the 2014 financial year of 234.23 pence. These shares will vest on 28 June 2014. The adjusted free cash flow performance is audited by Deloitte LLP and approved by the Remuneration
Committee. The performance assessment in respect of the TSR outperformance of the peer group median is undertaken by Towers Watson. Dividend equivalents will also be paid in cash after the vesting date as shown on page 78. Details of how the plan
works can be found on pages 72 to 74. Long-term incentive (GLTI) awarded during the year The 2014 long-term incentive awards made in July 2013 under the Global Long-Term Incentive Plan (GLTI) were made in line with the 2014
policy as disclosed in our 2013 remuneration report. The performance conditions are a combination of adjusted free cash flow and TSR performance as follows:  TSR outperformanceAdjusted free cash flow measure


£bn



0%(Up tomedian)



4.5%(65th percentileequivalent)



9%(80th percentileequivalent)Below threshold


<12.4



0%



0%



0%Threshold


12.4



50%



75%



100%Target


14.4



100%



150%



200%Maximum


16.4



150%



225%



300%
 TSR peer groupAT&T

OrangeBT Group

Telecom ItaliaDeutsche Telekom

TelefónicaEmerging market composite (consists of the averageTSR performance of Bharti, MTN and Turkcell)
  The combined vesting percentages are applied to the target number of shares granted. In order to participate fully in this award, executives had to co-invest personal shares worth 100% of salary. The resulting awards to executive
directors were as follows:  Number of shares awarded


Face value of shares awarded1


Proportion of maximum awardvesting at minimumperformance2014 GLTI performance share awards made in July 2013

Targetvesting level(1/3rd of max)


Maximumvesting level


Targetvesting level


Maximumvesting level



Performanceperiod endVittorio Colao


1,395,123



4,185,370


£
2,636,249


£
7,908,748



1/6th



31 Mar 2016Andy Halford


772,981



2,318,945


£
1,469,998


£
4,409,998



1/6th



31 Mar 2016Stephen Pusey


634,948



1,904,846


£
1,207,497


£
3,622,495



1/6th



31 Mar 2016 Note: 1
Face value calculated based on the share prices at the dates of grant of 180.2 pence and 202.5 pence Dividend equivalents on the shares that vest are paid in cash after the vesting date.






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|80 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Directors
remuneration (continued)               






Annual report on remuneration (continued) All-employee share plans The executive directors are also eligible to participate in the UK all-employee plans.   Summary of plans  Sharesave  The Vodafone Group 2008 Sharesave Plan is an HM Revenue & Customs (HMRC) approved scheme open to all staff permanently
employed by a Vodafone Company in the UK as of the eligibility date. Options under the plan are granted at up to a 20% discount to market value. Executive directors participation is included in the option table on page 81.  Share Incentive Plan  The Vodafone Share Incentive Plan
(SIP) is an HMRC approved plan open to all staff permanently employed by a Vodafone Company in the UK. Participants may contribute up to a maximum of £125 per month (or 5% of salary if less) which the trustee of
the plan uses to buy shares on their behalf. An equivalent number of shares are purchased with contributions from the employing company. UK-based executive directors are eligible to participate.  Pensions Vittorio Colao, Andy Halford and Stephen Pusey received a cash allowance of 30% of base salary in lieu of pension contributions during the 2014
financial year. No executive directors accrued benefits under any defined contribution pension plans during the year. The executive
directors are provided benefits in the event of death in service. They also have an entitlement under a long-term disability plan from which two-thirds of base salary, up to a maximum benefit determined by the insurer, would be provided until normal
retirement date (aged 60). Andy Halford retired on 31 March 2014 aged 55. Until 2010, he participated in a legacy defined benefit
pension plan into which no additional contributions were payable in 2014. On 31 March 2010 he took the opportunity to take early retirement from this pension scheme due to the closure of the scheme (aged 51 years). In accordance with the scheme
rules, his accrued pension at this date was reduced with an early retirement factor for four years to reflect the fact that his pension is being paid before age 55 and is therefore expected to be paid out for a longer period of time. In addition, he
exchanged part of his early retirement pension at 31 March 2010 for a tax-free cash lump sum of £118,660. The pension in payment at 31 March 2010 was £17,800 per year. The pension increased on 1 April 2011,
1 April 2012 and 1 April 2013 by 5%, in line with the scheme rules, to £20,605 per year from 1 April 2013. Alignment to shareholder interests All of our executive directors have shareholdings in excess of their goals. Current levels of ownership by the executive directors, and the date by which the goal should be or should have been achieved, are shown below. The values
are calculated using an average share price over the six months to 31 March 2014 of 229.32 pence. These values do not include the value of the shares that will vest in June 2014.  At 31 March 2014

Goal as a %of salary


Current %of salary held


% of goal achieved


Number
of shares1


Value
of shareholding (£m)


Date for goalto be achievedVittorio Colao


400%



1,875%



469%



9,077,302



20.8



July 2012Andy Halford (ownership position at retirement on 31 March 2014)


300%



755%



252%



2,305,059



5.3



July 2010Stephen Pusey


300%



630%



210%



1,579,543



3.6



June 2014 Note: 1
During the year the Verizon transaction and a share consolidation took place. Collectively the Executive Committee including the executive directors own more than 22 million Vodafone shares, with a value of over £50 million. Directors interests in the shares of the Company A summary of interests in shares and scheme interests of the directors who served during the year is given below. More details of the performance
shares and options follows.  Share plans


Shares optionsAt 31 March 2014

Total numberof interestsin shares1


Unvested GLTI Shares(with
performanceconditions)


Share Incentive Plan(withoutperformanceconditions)


SAYE    (unvested withoutperformanceconditions)Executive directorsVittorio Colao


24,251,716



15,157,846







16,568Andy Halford (position at retirement on 31 March 2014)


8,561,152



6,249,860



17,014



6,233Stephen Pusey


7,719,776



6,140,233







Total


40,532,644



27,547,939



17,014



22,801 Note: 1
Includes shares in the share incentive plan (SIP), interests of connected persons, unvested share awards and share options. During the year the Verizon transaction and a share consolidation took
place.






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|     |  |   






At 31 March 2014

Total numberof interestsin
shares1Non-executive directorsValerie Gooding


4,038Renee James


27,272Alan Jebson


44,912Samuel Jonah


30,190Gerard Kleisterlee


59,755Omid Kordestani


Nick Land


32,090Anne Lauvergeon


17,151Luc Vandevelde


54,880Anthony Watson


62,727Philip Yea


33,408 Note: 1
During the year the Verizon transaction and a share consolidation took place. During the period from 1 April 2014 to 20 May 2014, the directors total number of interests in shares did not change. Performance shares The maximum number of outstanding shares that have been awarded to directors under the long-term
incentive (GLTI) plan are currently as follows:  GLTI performance share awards

2012
award Awarded: June 2011
Performance period ending: March 2014
Vesting date: June 2014 Share price at grant: 163.2 pence


2013
award Awarded: July 2012Performance period ending: March 2015Vesting date: July 2015
Share price at grant: 179.4 pence


2014
award Awarded: June 2013 and September 20131
Performance period ending: March 2016
Vesting date: June 2016 Share price at grant: 180.2 pence and 202.5 penceVittorio Colao


6,461,396



4,511,080



4,185,370Andy Halford


2,643,290



1,287,625



2,318,945Stephen Pusey


2,162,990



2,072,397



1,904,846 Note: 1
Due to a close period, executive directors were not able to make co-investment commitments at the time of the main award in June 2013 and therefore part of the award was made in September 2013. For details of the performance conditions please see page 74. Share options No share options
have been granted to directors during the year. The following information summarises the executive directors options under the Vodafone Group 2008 Sharesave Plan (SAYE) and the Vodafone Group Incentive Plan (GIP). HMRC
approved awards may be made under both of the schemes mentioned. No other directors have options under any schemes. Options under the
Vodafone Group 2008 Sharesave Plan were granted at a discount of 20% to the market value of the shares at the time of the grant. No other options may be granted at a discount.  At1 April 2013or date
ofappointment


Optionsgrantedduringthe2014financialyear


Optionsexercisedduring
the2014financialyear


Optionslapsedduring 
the2014financialyear


Optionsheld at31 March 2014


Optionprice


Date fromwhich
exercisable





Marketprice onexerciseGrant date


Numberof shares


Numberof shares


Numberof shares


Numberof shares


Numberof shares


Pence1



Expiry date


Pence


Gain onexerciseVittorio ColaoGIP2


Jul 2007



3,003,575







(3,003,575
)










167.80



Jul 2010



Jul 2017



213.16


£
1,362,503SAYE


Jul 2009



16,568















16,568



93.85



Sep 2014



Feb 2015



Total






3,020,143







(3,003,575
)






16,568Andy HalfordGIP2


Jul 2007



2,295,589







(2,295,589
)










167.80



Jul 2010



Jul 2017



213.16


£
1,041,392SAYE


Jul 2012



6,233















6,233



144.37



Sep 2015



Feb 2016



Total






2,301,822







(2,295,589
)






6,233Stephen PuseyGIP3


Sep 2006



1,034,259







(1,034,259
)










113.75



Sep 2009



Aug 2016



212.80


£
1,024,417GIP2


Jul 2007



947,556







(947,556
)










167.80



Jul 2010



Jul 2017



231.64


£
604,888Total






1,981,815







(1,981,815
)






 Notes: 1
The closing trade share price on 31 March 2014 was 220.25 pence. The highest trade share price during the year was 252.3 pence and the lowest price was 180.23 pence. 2
The performance condition on the options granted in July 2007 was a three year cumulative growth in adjusted earnings per share. The options vested at 100% in July 2010. 3
The performance condition on the options granted in September 2006 was a three year cumulative growth in adjusted earnings per share. The options vested at 100% in September 2009.






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|82 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Directors
remuneration (continued)               






Annual report on remuneration (continued) Loss of office payments Andy Halford retired on 31 March 2014. As per his contract Andy had a 12 month notice period which commenced on 1 October 2013. He
worked six months of his notice period  until the end of the financial year. We will be making payments in lieu of notice each month for the remainder of Andys notice period (1 April 201430 September 2014). The total of these
payments will be a maximum of £350,000 (six months salary) subject to mitigation if Andy were to start a new executive role at another organisation. Andy has worked for the full 2014 financial year and so he will receive his annual bonus payment in June 2014 (as detailed on page 78). The 2012, 2013 and 2014 GLTI awards (made in June 2011, July 2012, June 2013 and September 2013) will be pro-rated on a time
worked basis. These awards will vest, subject to performance, at their normal vesting date, in accordance with the good leaver provisions in our share plan rules. The 2013 and 2014 GLTI awards will lapse if Andy starts a new executive role at
another organisation. Andy will receive no further benefits aside from the provision of a SIM card for his personal use at the
Companys expense for a period of three years commencing 1 April 2014. Payments to past directors During the 2014 financial year, no payments were made, or benefits given, to past directors with value of greater than our de minimis threshold
(£5,000 p.a.). Fees retained for external non-executive directorships Executive directors may hold positions in other companies as non-executive directors and retain the fees. Andy Halford is a non-executive director
of Marks and Spencer Group plc and in accordance with Group policy he retained fees for the year of £81,250. Assessing pay
and performance In the table below we summarise the Chief Executives single figure remuneration over the past five years, as
well as how our variable pay plans have paid out in relation to the maximum opportunity. This can be compared with the historic TSR performance over the same period. The chart below shows the performance of the Company relative to the STOXX Europe
600 Index over a five year period. The STOXX Europe 600 Index was selected as this is a broad-based index that includes many of our closest competitors. It should be noted that the payout from the long-term incentive plan is based on the
TSR performance shown in the chart on page 79 and not this chart.   LOGO  Financial year remuneration for Chief Executive (Vittorio Colao)

20101


2011


2012


2013


2014Single figure of total remuneration £000


3,350



7,022



15,767



11,099



8,927Annual variable element (actual award versus maximum opportunity)


64%



62%



47%



33%



44%Long-term incentive (vesting versus maximum opportunity)


25%



31%



100%



57%



37% Note: 1
The single figure reflects share awards which were granted in 2006 and 2007, prior to his appointment to Chief Executive in 2008. Change in the Chief Executives remuneration In the table below we show the percentage change in the Chief Executives remuneration (salary, taxable benefits and annual bonus payment)
between the 2013 and 2014 financial years compared to the average for other Vodafone Group employees who are measured on comparable business objectives and who have been employed in the UK since 2013 (per capita). Vodafone has employees based all
around the world and some of these individuals work in countries with very high inflation therefore a comparison to Vodafones UK based Group employees is more appropriate than to all employees.  Percentage change from 2013 to 2014Item

Chief Executive: Vittorio Colao


Other Vodafone Group employees
employed in the UKBase salary


0%



3.7%Taxable benefits


-2.6%



1.5%Annual bonus


34.3%



53.3%






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|     |  |   






Relative spend on pay The chart below shows both the dividends distributed in the year and the total cost of remuneration in the Group.  LOGO For more details on dividends and expenditure on remuneration for all employees, please see pages 124 and 152
respectively. 2014 remuneration for the Chairman and non-executive directors  Salary/fees




Benefits1




Total2014
£000


2013
£000




2014
£000


2013
£000




2014
£000


2013
£000ChairmanGerard Kleisterlee


600



600





58



106





658



706Senior Independent DirectorLuc Vandevelde


160



154





11



22





171



176Non-executive directorsValerie Gooding (appointed 1 February 2014)


19



















19



Renee James2


139



151





5



12





144



163Alan Jebson2


151



151





40



106





191



257Samuel Jonah2


151



157





9



101





160



258Omid Kordestani2


151



10





33









184



10Nick Land


140



140





1









141



140Anne Lauvergeon


115



115





5



9





120



124Anthony Watson


115



115





1









116



115Philip Yea


115



115















115



115Former non-executive directorsSir John Buchanan (retired 24 July 2012)






58



















58Total


1,856



1,766





163



356





2,019



2,122 Notes: 1
We have been advised that for non-executive directors, certain travel and accommodation expenses in relation to attending Board meetings should be treated as a taxable benefit. The table above
includes these travel expenses and the corresponding tax contribution (restated for 2013). 2
Salary/fees include an additional allowance of £6,000 per meeting for directors based outside of Europe.






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|84 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Directors
remuneration (continued)               






Annual report on remuneration (continued) 2015 remuneration Subject to shareholder approval at the 2014 AGM, we intend to implement the remuneration policy as set out on pages 71 to 76. For the 2015 financial year the details are as follows: 2015 base salaries The Remuneration Committee considered business performance, salary increases for other UK employees and external market information and decided to
increase the annual base salaries of the Chief Executive (Vittorio Colao) and the Chief Technology Officer (Stephen Pusey) by 3.6% and 4.3% respectively from 1 July 2014. The last salary increase that was received by these individuals was three
years ago in July 2011. The average salary increase for Executive Committee members will be 1.7%; this compares to the salary increase budget in the UK of 2%. The annual salaries for 2015 (effective 1 July 2014) are as follows:  g

Chief Executive: Vittorio Colao £1,150,000;  g

Chief Financial Officer: Nick Read (from 1 April 2014) £675,000; and  g

Chief Technology Officer: Stephen Pusey £600,000.  2015 annual bonus (GSTIP) The performance measures and weightings for 2015 are as follows:  g

Service revenue (25%);  g

adjusted EBITDA (25%);  g

adjusted free cash flow (25%); and  g

competitive performance assessment (25%). This is an assessment encompassing both net promoter score (NPS) and market share against the competitors in each of our markets.  Annual bonus
targets are commercially sensitive and therefore will be disclosed in the 2015 remuneration report following the completion of the financial year. Long-term incentive (GLTI) awards for 2015 As described in our policy on pages 72 to 74 the
performance conditions are a combination of adjusted free cash flow and TSR performance. The details for the 2015 award will be as follows (with linear interpolation between points):  TSR out performance




TSR peer group0%


5%


10%




Bharti

OrangeAdjusted free cash flow measure

£bn1


(Up to median)


(65th percentile equivalent)


(80th percentile equivalent)




BT Group

Telecom ItaliaBelow threshold


<3.4



0%



0%



0%




Deutsche Telekom

TelefónicaThreshold


3.4



50%



75%



100%




MTNTarget


5.1



100%



150%



200%Maximum


6.8



125%



187.5%



250% Note: 1
When considered on a like-for-like basis with targets for previous years (e.g. excluding the impact of Project Spring) the adjusted cash flow target is £12.3 billion. The combined vesting percentages are applied to the target number of shares granted. We have made the following changes to the long-term incentive since the last award:  g

the maximum vesting level has reduced from three times to two and a half times the target vesting level;  g

a mandatory holding period has been introduced where 50% of the post-tax shares are released after vesting, a further 25% after the first anniversary of vesting, and the remaining 25% will
be released after the second anniversary; and  g

AT&T has been removed from the peer group, Bharti and MTN have been added as stand alone comparators and the remaining emerging market proxy company (Turkcell) has also been removed.  Long-term incentive (GLTI) awards vesting As discussed elsewhere in the annual report, Project Spring involves significant organic investment over the next two years to enhance network and
service leadership further. This investment will have a significant impact on adjusted Free Cash Flow (FCF), which is the primary performance condition for the GLTI and we expect an initial drop in FCF that will then build again as
the investment pays off over the longer term. The impact is predicted as follows:  Financial year of award

Performance period end



Impact2013

March 2015



Targets for the 2013 and 2014 awards were set prior to the announcement of Project2014

March 2016



Spring therefore we will remove the impact on FCF when calculating the vesting results following the end of each performance period.2015 onwards

March 2017 onwards



The 2015 awards (and all future years) will have the full impact of Project Spring included in the targets and no further adjustments will be
necessary.






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|     |  |   






2015 remuneration for the Chairman and non-executive directors For the 2015 review, the fees for our Chairman and non-executives have been benchmarked against a comparator group of the FTSE 30 companies.
Following the review there will be no increases to the fees of non-executive directors. The Chairmans fees will be increased by 4.2% to £625,000 from 1 July 2014.  Position/role

Fee payable (£000)From 1 April 2014Chairman1


625Senior Independent Director2


160Non-executive director


115Chairmanship of Audit and Risk Committee


25 Note: 1
The Chairmans fee also includes the fee for the Chairmanship of the Nominations and Governance Committee. 2
The Senior Independent Directors fees also include the fee for the Chairmanship of the Remuneration Committee. For 2015, the allowance payable each time a non-Europe-based non-executive director is required to travel to attend Board and committee meetings
to reflect the additional time commitment involved is £6,000. Further remuneration information Dilution All awards are
made under plans that incorporate dilution limits as set out in the guidelines for share incentive schemes published by the Association of British Insurers. The current estimated dilution from subsisting executive awards is approximately 3.2% of the
Companys share capital at 31 March 2014 (2.0% at 31 March 2013), whilst from all-employee share awards it is approximately 0.6% (0.3% at 31 March 2013). This gives a total dilution of 3.8% (2.3% at 31 March 2013). Service contracts The terms and conditions of appointment of our directors are available for inspection at the Companys registered office during normal business hours and at the AGM (for 15 minutes prior to the meeting and during the meeting).
The executive directors have notice periods in their service contracts of 12 months. The non-executive directors letters of appointment do not contain provision for notice periods or for compensation if their appointments are terminated. The executive directors will be proposed for election or re-election at the 2014 AGM. /s/ Luc Vandevelde Luc
Vandevelde On behalf of the Board 20 May 2014






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|86 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Directors report                                 






Directors report The Directors of your Company present their report together with the consolidated financial statements for the year ended 31 March 2014. This report has been prepared in accordance with requirements outlined within The Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 and forms part of the management report as required under DTR4. Certain information that fulfils the requirements of the directors report can be found elsewhere in this document and is referred to below.
This information is incorporated into this directors report by reference. Responsibility statement As required under the Disclosure and Transparency Rules a statement made by the Board regarding the preparation of the financial statements is set
out on page 88. This statement also provides details regarding the disclosure of information to the Companys auditors and managements report on internal control over financial information. Going concern The going
concern statement required by the Listing Rules and the Code is set out in the Directors statement of responsibility on page 89. Strategic report The strategic report is set out in pages 1 to 47 and is incorporated into this directors
report by reference. Directors and their interests A full list of the individuals who were directors of the Company during the financial year ended 31 March 2014 is set out below. Gerard Kleisterlee, Vittorio Colao, Andy Halford, Stephen Pusey, Valerie Gooding, Renee James, Alan Jebson, Samuel Jonah, Omid Kordestani,
Nick Land, Anne Lauvergeon, Luc Vandevelde, Anthony Watson and Philip Yea. Details of each directors interests in the
Companys ordinary shares, options held over ordinary shares, interests in share options and long term incentive plans are set out in full on pages 69 to 85. Directors conflicts of interest Established within the Company is a procedure for managing and monitoring conflicts of interest for directors. Full details of this procedure is set out on page 56. Directors indemnities Details of qualifying third party indemnity provisions for the benefit of the Companys directors can be found on page 57.
 Corporate governance statement Under Disclosure and Transparency Rule 7, a requirement exists for certain parts of the corporate governance statement to be outlined in the
directors report. This information is laid out in the corporate governance statement, on pages 48 to 85. Capital structure and
rights attaching to shares All information relating to the Companys capital structure, rights attaching to shares, dividends,
the policy to repurchase the Companys own shares and other shareholder information is contained on pages 182 to 189 and incorporated into this directors report by reference. Dividends Full details of the
Companys dividend policy and proposed final dividend payment for the year ended 31 March 2014, are set out on page 124. Sustainability Information
about the Companys approach to sustainability risks and opportunities is set out on pages 34 and 35. Also included on these pages are details of our greenhouse gas emissions. Political donations No
political donations under the Companies Act 2006 have been made during the financial year. The Group policy is that no political donations be made or political expenditure incurred. Financial risk management objectives and policies Disclosures relating to financial risk management objectives and policies, including our policy for hedging are set out in note 23 to the consolidated financial statements. Exposure to price, credit, liquidity and cash flow risks Our disclosures relating to exposure to price risk, credit risk, liquidity risk and cash flow risk are outlined in note 23 to the consolidated
financial statements. Important events since the end of the financial year Details of those important events affecting the Group which have occurred since the end of the financial year are set out in the strategic report
and note 34 to the consolidated financial statements. Future developments within the Group The strategic report contains details of likely future developments within the Group. Research and development Details of the Groups activities relating to research and development are contained in note 3 to the consolidated financial statements. Branches As the
Group is a global business there are activities operated through many jurisdictions. Employee disclosures Our disclosures relating to the employment of disabled persons, the number of women in senior management roles, employee engagement and policies
are included in Our people on pages 36 and 37. By Order of the Board /s/ Rosemary Martin Rosemary
Martin Company Secretary 20 May 2014






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|Contents |  |   






The Consolidated financial statements are presented on a statutory basis which, under
IFRS accounting principles, includes the financial results of the Groups joint ventures using the equity accounting basis.  Page88

Directors statement of responsibility90

Risk mitigation91

Report of Independent Registered Public Accounting Firm on internal control over financial reporting92

Report of Independent Registered Public Accounting Firm on the consolidated financial statements93

This page is intentionally left blank94

This page is intentionally left blank95

This page is intentionally left blank96

Consolidated financial statements and financial commentary96

Consolidated income statement96

Consolidated statement of comprehensive income98

Consolidated statement of financial position100

Consolidated statement of changes in equity102

Consolidated statement of cash flows
 Page104

Notes to the consolidated financial statements:104

1.   Basis of preparationIncome statement109

2.   Segmental analysis113

3.   Operating (loss)/profit114

4.   Impairment losses118

5.   Investment income and financing costs119

6.   Taxation123

7.   Discontinued operations124

8.   Earnings per share124

9.   Equity dividendsFinancial position125

10. Intangible assets127

11. Property, plant and equipment129

12. Investments in associates and joint ventures132

13. Other investments133

14. Inventory134

15. Trade and other receivables135

16. Trade and other payables136

17. Provisions137

18. Called up share capitalCash flows138

19. Reconciliation of net cash flow from operating activities138

20. Cash and cash equivalents139

21. Borrowings143

22. Liquidity and capital resources146

23. Capital and financial risk managementEmployee remuneration151

24. Directors and key management compensation152

25. Employees153

26. Post employment benefits157

27. Share-based paymentsAdditional disclosures159

28. Acquisitions and disposals163

29. Commitments164

30. Contingent liabilities167

31. Related party transactions167

32. Principal subsidiaries170

33. Subsidiaries exempt from audit170

34. Subsequent events
 Page171

Other unaudited financial information:171

Prior year operating results176

This page is intentionally left blank177

This page is intentionally left blank178

This page is intentionally left blank179

This page is intentionally left blank180

This page is intentionally left blank181

This page is intentionally left blankB-1

Separate financial statements required by Rule 3-09 of Regulation S-XB-3

Report of Independent Registered Public Accounting Firm
   Reporting our financial
performance We continue to review the format of our consolidated financial statements with the aim of making them clear and easier
to follow. This year, in addition to continuing with the integrated financial review which combines commentary on certain items within the primary financial statements, we have changed the order and grouping of the notes to the financial statements
to help with the flow of information and focus on areas that we feel are key to understanding our business. We have also placed accounting policies within the notes to the accounts to which they best relate. We hope this format makes it easier for
you to navigate to the information that is important to you.






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|88 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Directors statement of responsibility            






The directors are responsible for preparing the financial statements in accordance with applicable
law and regulations and keeping proper accounting records. Detailed below are statements made by the directors in relation to their responsibilities, disclosure of information to the Companys auditors, going concern and managements
report on internal control over financial reporting.  Financial statements and accounting records Company law of England and Wales requires the directors to prepare financial statements for each financial year which give a true and fair view of
the state of affairs of the Company and of the Group at the end of the financial year and of the profit or loss of the Group for that period. In preparing those financial statements the directors are required to:  g

select suitable accounting policies and apply them consistently;  g

make judgements and estimates that are reasonable and prudent;  g

present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;  g

state whether the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the EU and Article 4
of the EU IAS Regulations. The directors also ensure that the consolidated financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB);  g

state for the Company financial statements whether applicable UK accounting standards have been followed; and  g

prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business.  The directors are responsible for
keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and of the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006 and for
the consolidated financial statements, Article 4 of the EU IAS Regulation. They are also responsible for the system of internal control, for safeguarding the assets of the Company and the Group and, hence, for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
 Directors responsibility statement The Board confirms to the best of its knowledge:  g

the consolidated financial statements, prepared in accordance with IFRS as issued by the IASB and IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position
and profit of the Group;  g

the parent company financial statements, prepared in accordance with United Kingdom generally accepted accounting practice, give a true and fair view of the assets, liabilities, financial position
and profit of the Company; and  g

the directors report includes a fair review of the development and performance of the business and the position of the Group together with a description of the principal risks and
uncertainties that it faces.  The directors are responsible for preparing the annual report in accordance with applicable law and regulations. Having taken advice from the Audit and Risk Committee, the Board considers the report and accounts, taken as a whole,
as fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Companys performance, business model and strategy. Neither the Company nor the directors accept any liability to any person in relation to the annual report except to the extent that such liability
could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A and schedule 10A of the Financial Services and
Markets Act 2000. Disclosure of information to the auditor Having made the requisite enquiries, so far as the directors are aware, there is no relevant audit information (as defined by section 418(3) of
the Companies Act 2006) of which the Companys auditor is unaware and the directors have taken all the steps they ought to have taken to make themselves aware of any relevant audit information and to establish that the Companys auditor is
aware of that information.






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|     |  |   






Going concern The Groups business activities, performance, position and principal risks and uncertainties and how these are managed are set out in the
strategic report on pages 1 to 47. A range of mitigations for risks faced by the Group are included on page 90. In addition, the
financial position of the Group is included within Commentary on the consolidated statement of cash flows on page 103, Borrowings, Liquidity and capital resources and Capital and financial risk
management in notes 21, 22 and 23 respectively to the consolidated financial statements, which include disclosure in relation to the Groups objectives, policies and processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk. The
Group has considerable financial resources, and the directors believe that the Group is well placed to manage its business risks successfully. After making enquiries, the directors have a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing the annual report and accounts. Further discussion on the basis of the going concern assessment by the directors is set out on page 200. Managements report on internal control over financial reporting As required by section 404 of the Sarbanes-Oxley Act, management is responsible for establishing and maintaining adequate internal control over
financial reporting for the Group. The Groups internal control over financial reporting includes policies and procedures that:  g

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets;  g

are designed to provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with IFRS, as adopted by the EU and
IFRS as issued by the IASB, and that receipts and expenditures are being made only in accordance with authorisation of management and the directors of the Company; and  g

provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the Groups assets that could have a material effect on the financial
statements.
 Any internal control framework, no matter how well designed, has inherent limitations including the
possibility of human error and the circumvention or overriding of the controls and procedures, and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions or because the degree of compliance with the policies or procedures may deteriorate. Management has assessed the effectiveness of the internal control over financial reporting at 31 March 2014 based on the original Internal
Control  Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 1992. Based on managements assessment, management has concluded that internal control over financial
reporting was effective at 31 March 2014. In 2013, COSO published an updated Internal Control  Integrated Framework which
will supersede the original framework from 15 December 2014. Accordingly, the new framework will be implemented during the year ending 31 March 2015. The Groups existing controls will be mapped to the five components and
17 principles in the updated Internal Control  Integrated Framework. Any gaps will be evaluated and, where required, additional controls identified, or existing controls enhanced. The assessment excluded the internal controls over financial reporting relating to Kabel Deutschland Holding AG (KDG) because it
became a subsidiary during the year, as described in note 28 Acquisitions and disposals. KDG will be included in the Groups assessment at 31 March 2015. Key amounts consolidated for KDG at 31 March 2014 are total assets
of £9,741 million, net assets of £4,709 million and revenue and loss for the financial year of £735 million and £242 million, respectively. During the period covered by this document, there were no changes in the Groups internal control over financial reporting that have
materially affected or are reasonably likely to materially affect the effectiveness of the internal controls over financial reporting. The Groups internal control over financial reporting at 31 March 2014 has been audited by Deloitte LLP, an independent registered
public accounting firm who also audit the Groups consolidated financial statements. Their audit report on internal control over financial reporting is on page 91. By Order of the Board /s/
Rosemary Martin Rosemary Martin Company Secretary 20 May 2014






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|   |  |                                                   
|-- |  | --------------------------------------------------
|   |  |                                                   
|90 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  | Risk mitigation                                   






g

Specific back-up and resilience requirements are built into our networks. We monitor our ability to replace strategic equipment quickly in event of failure, and for high risk components, we
maintain dedicated back-up equipment ready for use. Dedicated access network equipment is installed on trucks ready to be moved on site if required. Our critical infrastructure has been enhanced to prevent unauthorised access and reduce the likelihood and impact of a
successful attack. Network contingency plans are linked with our business continuity and disaster recovery plans which are in place to cover the residual risks that cannot be mitigated. A crisis management team and escalation processes are in place
both nationally and internationally, and crisis simulations are conducted annually. We also manage the risk of
malicious attacks on our infrastructure using our global security operations centre that provides 24/7 monitoring of our network in many countries.  g

Both the hardware and software applications which hold or transmit confidential personal and business voice and data traffic include security features. Security related reviews are conducted
according to our policies and security standards. Security governance and compliance is managed and monitored through software tools that are deployed to all local markets and selected partner markets. Our data centres are managed to international
information security standards. Third party data security reviews are conducted jointly with our technology security and corporate security functions.  g

We will continue to promote our differentiated propositions by focusing on our points of strength such as network quality, capacity and coverage, quality of customer service and the value of our
products and services. We are enhancing distribution channels to get closer to customers and using targeted promotions where appropriate to attract and retain specific customers. We closely monitor and model competitor behaviour, network builds and
product offerings to understand future intentions so that we are able to react in a timely manner.  g

We monitor political developments in our existing and potential markets closely, identifying risks in our current and proposed commercial propositions. Regular reports are made to our Executive
Committee on current political and regulatory risks. These risks are considered in our business planning process, including the importance of competitive commercial pricing and appropriate product strategies. Authoritative and timely intervention is
made at both national and international level in respect of legislative, fiscal and regulatory proposals which we feel are not in the interests of the Group. We have regular dialogue with trade groups that represent network operators and other
industry bodies to understand underlying political pressures.  g

In some markets we are already providing fixed line telecommunication services (voice and broadband). In other existing markets we actively look for opportunities to provide services beyond mobile
through acquisition, partnerships, or joint ventures. We have also developed strategies which
strengthen our relationships with customers by accelerating the introduction of integrated voice, messaging and data price plans to avoid customers reducing their out of bundle usage through internet/ Wi-Fi based substitution.
 g

We are closely monitoring international economic and currency situations. Executive Committee briefings have been provided with specific actions identified to reduce the impact of the risk. We have
developed a detailed business continuity plan in the event of a country economic crisis leading to a banking system freeze and a need to transition to a cash based operating system for a number of months.  g

We have a global health and safety policy that includes standards for electromagnetic fields (EMF) that are mandated in all our operating companies. We have a Group EMF Board that
manages potential risks through cross sector initiatives and which oversees a coordinated global programme to respond to public concern, and develop appropriate advocacy related to possible precautionary legislation. We monitor scientific
developments and engage with relevant bodies to support the delivery and transparent communication of the scientific research agenda set by the WHO.  g

We have experience of acquiring and integrating businesses into the Group and for all significant transactions we develop and implement a structured integration plan, led by a senior business
leader. Integration plans are systematically implemented and executed to ensure that revenue benefits and cost synergies are delivered and that the acquired businesses are successfully integrated through the alignment of policies, processes and
systems. The progress against acquisition business cases and the status of integration plans is monitored and reviewed as part of the Groups governance and performance management procedures.  g

We regularly review the performance of key suppliers, both operationally and financially, across individual markets and from the Group perspective. Other processes are in place to regularly
identify and manage suppliers at risk. Most supplier categories have business continuity plans in place in the event of single supplier failure.  g

We maintain constructive but robust engagement with the tax authorities and relevant government representatives, as well as active engagement with a wide range of international companies and
business organisations with similar issues. Where appropriate we engage advisors and legal counsel to obtain opinions on tax legislation and principles.  g

We review the carrying value of the Groups property, plant and equipment, goodwill and other intangible assets at least annually, or more frequently where the circumstances require, to assess
whether carrying values can be supported by the net present value of future cash flows derived from such assets. This review considers the continued appropriateness of the assumptions used in assessing for impairment, including an assessment of
discount rates and long-term growth rates, future technological developments, and the timing and amount of future capital expenditure. Other factors which may affect revenue and profitability (for example intensifying competition, pricing pressures,
regulatory changes and the timing for introducing new products or services) are also considered. Discount rates are in part derived from yields on government bonds, the level of which may change substantially period to period and which may be
affected by political, economic and legal developments which are beyond our control. For further details see Critical accounting judgements and key sources of estimation uncertainty in note 1 Basis of preparation to the
consolidated financial statements.






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|                                                                                                     |  |   
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|LOGO                                                                                                 |  | 91
|Report of
Independent Registered Public Accounting Firm on internal control over financial
reporting |  |   






We have audited the internal control over financial reporting of Vodafone Group Plc and
subsidiaries and applicable joint ventures (the Group) as of 31 March 2014, based on criteria established in Internal Control  Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. As described in managements report on internal control over financial reporting, management excluded from its assessment the internal control over financial reporting at Kabel Deutschland Holding AG, which became a
subsidiary during the year and which accounted for £9,741 million of total assets, £4,709 million of net assets, £735 million of revenue and £242 million of loss for the financial year of the consolidated
financial statement amounts as of and for the year ended 31 March 2014. Accordingly our audit did not include the internal control over financial reporting at Kabel Deutschland Holding AG. 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. Our responsibility is to express an opinion on the Groups internal control over
financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). 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. A companys internal control over financial reporting is a process designed by, or under the supervision of, the companys principal executive and principal financial officers, or persons performing similar functions, and
effected by the companys board of directors, management, and other personnel 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 the inherent limitations of internal control over financial reporting, including the
possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control
over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the Group maintained, in all material respects, effective internal control over financial reporting as of 31 March 2014,
based on the criteria established in Internal Control  Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated
financial statements of the Group as of and for the year ended 31 March 2014 prepared in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. Our report dated
20 May 2014 expressed an unqualified opinion on those financial statements. /s/ Deloitte LLP Deloitte LLP London United Kingdom 20 May 2014






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|   |  |                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------
|   |  |                                                                                                 
|92 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014                                              
|   |  | Report of Independent Registered Public Accounting Firm
on the consolidated financial statements






Report of Independent Registered Public Accounting Firm to the members of Vodafone Group Plc We have audited the accompanying consolidated statements of financial position of Vodafone Group Plc and subsidiaries (the
Group) as of 31 March 2014 and 2013, and the related consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for each of
the three years in the period ended 31 March 2014. 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 conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial
position of the Group as of 31 March 2014 and 2013, and the results of its operations and cash flows for each of the three years in the period ended 31 March 2014, in conformity with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board. As discussed in note 1, the 2013 and 2012 financial
statements have been restated for the adoption of IFRS 11, Joint Arrangements and amendments to IAS 19, Employee Benefits. Our opinion is not modified with respect to this matter. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Groups internal
control over financial reporting as of 31 March 2014, based on the criteria established in Internal Control  Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report
dated 20 May 2014 expressed an unqualified opinion on the Groups internal control over financial reporting. /S/ DELOITTE LLP Deloitte LLP London United Kingdom 20 May 2014






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|94 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|   |  |                                                   






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|   |  |                                                           
|96 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|   |  | Consolidated income statement
for the years ended 31 March






Note



2014£m



Restated2013
£m
1


Restated2012
£m
1Revenue


2



38,346



38,041



38,821Cost of sales






(27,942
)


(26,567
)


(27,201
)Gross profit






10,404



11,474



11,620Selling and distribution expenses






(3,033
)


(2,860
)


(2,755
)Administrative expenses






(4,245
)


(4,159
)


(4,031
)Share of results of equity accounted associates and joint ventures






278



575



1,129Impairment losses


4



(6,600
)


(7,700
)


(4,050
)Other income and expense






(717
)


468



3,705Operating (loss)/profit


3



(3,913
)


(2,202
)


5,618Non-operating income and expense






(149
)


10



(162
)Investment income


5



346



305



456Financing costs


5



(1,554
)


(1,596
)


(1,768
)(Loss)/profit before taxation






(5,270
)


(3,483
)


4,144Income tax credit/(expense)


6



16,582



(476
)


(705
)Profit/(loss) for the financial year from continuing operations






11,312



(3,959
)


3,439Profit for the financial year from discontinued operations


7



48,108



4,616



3,555Profit for the financial year






59,420



657



6,994Attributable to: Equity shareholders






59,254



413



6,948 Non-controlling interests2






166



244



46Profit for the financial year






59,420



657



6,994Earnings/(loss) per shareFrom continuing operations: Basic






42.10p



(15.66p
)


12.28p Diluted






41.77p



(15.66p
)


12.14pTotal Group: Basic


8



223.84p



1.54p



25.15p Diluted


8



222.07p



1.54p



24.87p Notes: 1
Restated to show the results of our US Group in discontinued operations, adoption of IFRS 11 and amendments to IAS 19. See note 1 Basis of preparation for further details. 2
Profit attributable to non-controlling interests solely derives from continuing operations. Consolidated statement of comprehensive income for the years ended 31 March  2014£m



Restated2013
£m
1


Restated2012
£m
1Profit for the financial year






59,420



657



6,994Other comprehensive income:Items that may be reclassified to profit or loss in subsequent periods:Losses on revaluation of available-for-sale investments, net of tax






(119
)


(73
)


(17
)Foreign exchange translation differences, net of tax






(4,104
)


362



(3,673
)Foreign exchange losses/(gains) transferred to the income statement






1,493



1



(681
)Fair value gains transferred to the income statement






(25
)


(12
)


Other, net of tax










(4
)


(10
)Total items that may be reclassified to profit or loss in subsequent years






(2,755
)


274



(4,381
)Items that will not be reclassified to profit or loss in subsequent years:Net actuarial gains/(losses) on defined benefit pension schemes, net of tax






37



(182
)


(263
)Total items that will not be reclassified to profit or loss in subsequent years






37



(182
)


(263
)Other comprehensive (expense)/income






(2,718
)


92



(4,644
)Total comprehensive income for the year






56,702



749



2,350Attributable to: Equity shareholders






56,711



604



2,383 Non-controlling interests






(9
)


145



(33
)56,702



749



2,350 Note: 1
Restated to show the results of our US Group in discontinued operations, adoption of IFRS 11 and amendments to IAS 19. See note 1 Basis of preparation for further details.






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|                                                                                        |  |   
|--------------------------------------------------------------------------------------- |  | --
|LOGO                                                                                    |  | 97
|Commentary on the 
consolidated income statement
and statement of 
comprehensive income |  |   






The consolidated income statement includes the majority of our income and expenses for the year
with the remainder recorded in the consolidated statement of comprehensive income. Further details on the major movements in the year
are set out below: Revenue Revenue increased by 0.8% to £38.3 billion. The increase is driven by revenue growth in our AMAP region and business acquisitions, partially offset by revenue declines in Europe due to challenging trading conditions and by
unfavourable exchange rate movements. Our operating results discussion on pages 40 to 45 provides further detail on our revenue performance. Operating loss Our operating loss increased to £3.9 billion from £2.2 billion as lower impairment
charges were offset by lower revenue, higher customer costs and higher amortisation. During the year we recorded goodwill impairment charges of £6.6 billion relating to our businesses in Germany, Spain, Portugal, Czech Republic and Romania
(see note 4 Impairment losses). Income tax expense We recorded an income tax credit on continuing operations of £16.6 billion compared with a £0.5 billion charge in 2013. The credit
primarily arises from the recognition of £19.3 billion of deferred tax assets for tax losses in Germany and Luxembourg partly offset by taxes arising from the disposal of the Groups investment in Verizon Wireless (see note 6
Taxation). Our effective tax rate decreased to -33.4% from 77.2%. Further information on how our effective tax rate is determined is provided within the operating results discussion on page 44. Profit for the year from discontinued operations Discontinued operations includes the £45.0 billion profit arising on the disposal of the Groups investment in Verizon Wireless,
£1.7 billion of dividends receivable since the disposal and the post-tax profits of the Groups share of Verizon Wireless and entities in the US Group sold to Verizon Communications as part of the overall disposal transaction up until
2 September 2013 when the proposed disposal was announced. The profit from discontinued operations for the year ended 31 March 2014 has increased to £48.1 billion from £4.6 billion, primarily due to the profit arising from the
disposal of the Groups investment in Verizon Wireless. Further information is provided in note 7 Discontinued operations and note 28 Acquisitions and disposals. Earnings per share Basic
earnings per share from continuing operations was 42.10 pence, an increase of 57.76 pence, driven by the recognition of £19.3 billion of deferred tax assets for losses in Germany and Luxembourg. Total Group basic earnings per share, which
includes profits from discontinued operations, increased by 222.30 pence to 223.84 pence primarily as a result of the £45.0 billion gain recognised on the disposal of the US Group. Adjusted earnings per share, which is a non-GAAP measure used by management and which excludes items that we do not view as being reflective of
our performance, was 17.54 pence, a decrease of 12.8% compared to the prior year. The reduction was primarily due to lower adjusted operating profits, partially offset by a reduction in the number of the Groups shares due to the Groups
share buyback programme. Our calculation of the adjusted earnings on which we base our adjusted earnings per share calculation is set
out within the operating results on page 45. Note 8 Earnings per share provides information on the number of shares used for determining earnings per share.
 The consolidated statement of comprehensive income records all of the income and losses generated
for the year. Further details on the major movements in the year are set out below: Profit for the financial year Profit for the financial year of £59.4 billion is recognised in the consolidated income statement and the reasons underlying the £58.8 billion increase are provided above. Foreign exchange differences, net of tax Foreign exchange translation differences arise when we translate the results and net assets of our operating companies, joint arrangements and associates, which transact their operations in foreign currencies including the euro,
South African rand and Indian rupee, into our presentation currency of sterling. The net movements in foreign exchange rates resulted in a loss of £4.1 billion for the year compared with a gain in the previous year of £0.4 billion. Foreign exchange losses/(gains) transferred to the income statement The foreign exchange losses transferred to the income statement in the year ended 31 March 2014 relate to the recycling of amounts in
relation to our investment in Verizon Wireless and Vodafone Italy which were triggered, respectively, by the disposal and the acquisition of a controlling stake. Net actuarial gains/(losses) on defined benefit schemes, net of tax We realised a £37 million post-tax gain from the revaluation of the Groups defined benefit pension schemes after updating
actuarial assumptions and revaluing scheme assets.
   The financial commentary on this page is unaudited.




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|   |  |                                                         
|-- |  | --------------------------------------------------------
|   |  |                                                         
|98 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014      
|   |  | Consolidated statement of financial position
at 31 March






Note



31 March2014 £m



Restated31 March 2013 £m
1


Restated1 April 2012 £m
1Non-current assetsGoodwill


10



23,315



24,390



27,816Other intangible assets


10



23,373



19,749



18,762Property, plant and equipment


11



22,851



17,584



16,008Investments in associates and joint ventures


12



114



46,447



47,682Other investments


13



3,553



773



790Deferred tax assets


6



20,607



2,848



1,894Post employment benefits


26



35



52



31Trade and other receivables


15



3,270



4,832



3,43697,118



116,675



116,419Current assetsInventory


14



441



353



375Taxation recoverable






808



397



275Trade and other receivables


15



8,886



8,018



10,007Other investments


13



4,419



5,350



1,323Cash and cash equivalents


20



10,134



7,531



7,051Assets held for sale






34







24,722



21,649



19,031Total assets






121,840



138,324



135,450EquityCalled up share capital


18



3,792



3,866



3,866Additional paid-in capital






116,973



154,279



154,123Treasury shares






(7,187
)


(9,029
)


(7,841
)Accumulated losses






(51,428
)


(88,834
)


(84,217
)Accumulated other comprehensive income






8,652



11,195



11,004Total equity shareholders funds






70,802



71,477



76,935Non-controlling interests






1,733



1,890



2,090Put options over non-controlling interests






(754
)


(879
)


(823
)Total non-controlling interests






979



1,011



1,267Total equity






71,781



72,488



78,202Non-current liabilitiesLong-term borrowings


21



21,454



27,904



26,882Taxation liabilities






50



150



250Deferred tax liabilities


6



747



6,671



6,572Post employment benefits


26



584



580



292Provisions


17



846



855



448Trade and other payables


16



1,339



1,307



1,18125,020



37,467



35,625Current liabilitiesShort-term borrowings


21



7,747



11,800



6,232Taxation liabilities






873



1,922



1,888Provisions


17



963



715



571Trade and other payables


16



15,456



13,932



12,93225,039



28,369



21,623Total equity and liabilities






121,840



138,324



135,450 Note: 1
Restated for the adoption of IFRS 11 and amendments to IAS 19. See note 1 Basis of preparation for further details. The consolidated financial statements were approved by the Board of directors and authorised for issue on 20 May 2014 and were signed on its
behalf by:  /s/ Vittorio Colao

/s/ Nick ReadVittorio Colao

Nick ReadChief Executive

Chief Financial Officer






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|                                                               |  |   
|-------------------------------------------------------------- |  | --
|LOGO                                                           |  | 99
|Commentary on the consolidated statement of financial
position |  |   






The consolidated statement of financial position shows all of our assets and liabilities at 31
March. Further details on the major movements of both our assets and liabilities in the year are set out below. Our statement of
financial position has been materially impacted in the year by the sale of our interest in Verizon Wireless, the acquisition of Kabel Deutschland and the assumption of control over Vodafone Italy (jointly the Groups acquisitions): Assets Goodwill and other intangible assets Our total intangible assets increased to £46.7 billion from £44.1 billion. The increase primarily arose as a result of £11.5 billion additions as a result of the Groups acquisitions and other additions of
£3.7 billion, including £1.9 billion of spectrum acquired in India, partially offset by £6.6 billion of goodwill impairments, reductions of £2.6 billion as a result of unfavourable movements in foreign exchange rates and
£3.5 billion of amortisation. Property, plant and equipment Property, plant and equipment increased to £22.9 billion from £17.6 billion, principally as a result of £6.4 billion additions
in the year arising from Group acquisitions and a further £4.9 billion of purchases, partially offset by £4.0 billion of depreciation charges and £1.5 billion of adverse foreign exchange movements. Investments in associates and joint ventures Investments in associates and joint ventures decreased to £0.1 billion (2013: £46.4 billion), primarily reflecting a reduction of £43.2 billion on the disposal of the Groups investment in Verizon Wireless and
the transition of Vodafone Italy from a joint venture to a fully consolidated subsidiary. Our share of the trading results of associates and joint ventures was £3.5 billion, including £3.2 billion from Verizon Wireless classified within
discontinued operations. Other non-current assets Other non-current assets increased by £19.0 billion to £27.5 billion, mainly due to a £17.8 billion increase in recognised
deferred tax assets, primarily in respect of additional tax losses in Germany and Luxembourg (see note 6 Taxation for further details), and an increase of £2.8 billion in other investments as a result of loan notes received in
respect of the disposal of the Groups investment in Verizon Wireless, partly offset by a £1.6 billion reduction in receivables, which was primarily due to a reduction in amounts due from associates. Total equity and liabilities Total equity Total equity decreased by £0.7 billion to £71.8 billion. Total comprehensive income for the
year of £56.7 billion was offset by the return of value to shareholders of £51.0 billion and other dividends paid to equity shareholders and non-controlling interests of £5.1 billion. Borrowings Total borrowings
decreased to £29.2 billion from £39.7 billion, primarily as the result of the redemption of US$5.65 billion of bonds following the sale of our interest in Verizon Wireless and also due to £2.7 billion favourable foreign exchange
movements. A net debt reconciliation is provided on page 103. Deferred taxation liabilities Deferred tax liabilities reduced to £0.7 billion from £6.7 billion mainly due to the disposal of the US Group that held substantial
deferred tax liabilities to Verizon Communications.
 Other current liabilities Other current liabilities increased to £16.4 billion (2013: £14.6 billion). Trade payables at 31 March 2014 were equivalent to 40
days (2013:37 days) outstanding, calculated by reference to the amount owed to suppliers as a proportion of the amounts invoiced by suppliers during the year. It is our policy to agree terms of transactions, including payment terms, with
suppliers and it is our normal practice that payment is made accordingly. Contractual obligations and contingencies A summary of our principal contractual financial obligations is shown below and details of the Groups contingent liabilities are included in
note 30 Contingent liabilities.  Payments due by period
£mContractual obligations1

Total


<1 year


13 years


35 years


>5 yearsBorrowings2


35,721



8,642



5,506



9,825



11,748Operating lease commitments3


5,732



1,128



1,519



1,034



2,051Capital commitments3,4


2,335



2,093



215



20



7Purchase commitments


4,420



3,426



578



191



225Total


48,208



15,289



7,818



11,070



14,031 Notes: 1
This table includes commitments in respect of options over interests in Group businesses held by non-controlling shareholders (see Potential cash outflows from option agreements and similar
arrangements on page 146) and obligations to pay dividends to non-controlling shareholders (see Dividends from associates and to non-controlling shareholders on page 146). The table excludes current and deferred tax liabilities and
obligations under post employment benefit schemes, details of which are provided in notes 6 Taxation and 26 Post employment benefits respectively. The table also excludes the contractual obligations of associates and joint
ventures. 2
See note 21 Borrowings. 3
See note 29 Commitments. 4
Primarily related to network infrastructure.
   The financial commentary on this page is unaudited.




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|    |  |                                                                         
|100 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014                      
|    |  | Consolidated statement of changes in equity
for the years ended 31 March






EquityAdditional








Other comprehensive income


share-


Non-Sharecapital
£m



paid-incapital£m
2


Treasuryshares£m



Retainedlosses£m



Currencyreserve£m



Pensionsreserve£m



Investmentreserve
£m



Revaluationsurplus£m



Other£m



holdersfunds
£m



controllinginterests
£m



Total£m1 April 2011 restated1


4,082



153,760



(8,171
)


(77,685
)


14,417



(203
)


237



1,040



78



87,555



6



87,561Issue or reissue of shares






2



277



(208
)






















71







71Redemption or cancellation of shares


(216
)


216



4,724



(4,724
)






























Purchase of own shares










(4,671
)4


























(4,671
)






(4,671
)Share-based payment






145
3






























145







145Transactions with non-controlling interests in subsidiaries














(1,908
)






















(1,908
)


1,599



(309
)Comprehensive income














6,948



(4,279
)


(263
)


(17
)






(6
)


2,383



(33
)


2,350Profit














6,948























6,948



46



6,994OCI  before tax


















(3,629
)


(352
)


(17
)






(14
)


(4,012
)


(71
)


(4,083
)OCI  taxes


















31



89











8



128



(8
)


120Transfer to the income statement


















(681
)


















(681
)






(681
)Dividends














(6,654
)






















(6,654
)


(305
)


(6,959
)Other














14























14







1431 March 2012 restated1


3,866



154,123



(7,841
)


(84,217
)


10,138



(466
)


220



1,040



72



76,935



1,267



78,202Issue or reissue of shares






2



287



(237
)






















52







52Purchase of own shares










(1,475
)4


























(1,475
)






(1,475
)Share-based payment






152
3






























152







152Transactions with non-controlling interests in subsidiaries














(7
)






















(7
)


(17
)


(24
)Comprehensive income














413



462



(182
)


(85
)






(4
)


604



145



749Profit














413























413



244



657OCI  before tax


















482



(238
)


(73
)






(6
)


165



(95
)


70OCI  taxes


















(21
)


56











2



37



(4
)


33Transfer to the income statement


















1







(12
)










(11
)






(11
)Dividends














(4,801
)






















(4,801
)


(384
)


(5,185
)Other






2







15























17







1731 March 2013 restated1


3,866



154,279



(9,029
)


(88,834
)


10,600



(648
)


135



1,040



68



71,477



1,011



72,488Issue or reissue of shares






2



194



(173
)






















23







23Redemption or cancellation of shares


(74
)


74



1,648



(1,648
)






























Capital reduction and creation of B and C shares


16,613



(37,470
)






20,857































Cancellation of B shares


(16,613
)










1,115























(15,498
)






(15,498
)Share-based payment






88
3






























88







88Transactions with non-controlling interests in subsidiaries














(1,451
)






















(1,451
)


260



(1,191
)Comprehensive income














59,254



(2,436
)


37



(119
)






(25
)


56,711



(9
)


56,702Profit














59,254























59,254



166



59,420OCI  before tax


















(3,932
)


57



(119
)






3



(3,991
)


(172
)


(4,163
)OCI  taxes


















3



(20
)










(3
)


(20
)


(3
)


(23
)Transfer to the income statement


















1,493















(25
)


1,468







1,468Dividends














(40,566
)






















(40,566
)


(284
)


(40,850
)Other














18























18



1



1931 March 2014


3,792



116,973



(7,187
)


(51,428
)


8,164



(611
)


16



1,040



43



70,802



979



71,781 Notes: 1
Restated for the adoption of IFRS 11 and amendments to IAS 19. Retained losses have increased and the pensions reserve losses have reduced by £49 million for the year ended 31 March
2013 and by £33 million for the year ended 31 March 2012. See note 1 Basis of preparation for further details. 2
Includes share premium, capital redemption reserve and merger 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
Includes £12 million tax charge (2013: £18 million credit; 2012: £2 million credit). 4
Amount for 2013 includes a commitment for the purchase of own shares of £1,026 million; 2012: £1,091 million).






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##### Table of Contents

|                                                                |  |    
|--------------------------------------------------------------- |  | ---
|LOGO                                                            |  | 101
|Commentary on the 
consolidated statement
of changes in 
equity |  |    






The consolidated statement of changes in equity shows the movements in equity shareholders
funds and non-controlling interests. Equity shareholders funds decreased by £0.7 billion as the profits on the sale of our investment in Verizon Wireless (VZW) and from the recognition of a large deferred tax asset were
offset by the return of value to shareholders, regular ordinary dividends and goodwill impairment charges. The major movements in the
year are described below: Redemption and cancellation of shares We cancelled 1 billion ordinary shares that had been repurchased by the Company and held as treasury shares. Purchase of own shares We initiated a £1.5 billion share buyback programme following the receipt of a US$3.8 billion (£2.4 billion) income dividend from VZW
in December 2012. Under this programme, which was completed in June 2013, the Group placed irrevocable purchase instructions with a third party in the prior year to enable shares to be repurchased on our behalf when we may otherwise have been
prohibited from buying in the market. This led to a total of 552,050 purchased shares being settled in the current year at an average price per share, including transaction costs, of 189 pence. The movement in treasury shares during the year is shown below:  Number
Million


£m1 April 2013


4,902



9,029Reissue of shares


(104
)


(194
)Receipt of shares re-purchased in prior year


552



Cancellation of shares


(1,000
)


(1,648
)Share consolidation


(1,978
)


31 March 2014


2,372



7,187 The reissue of shares in the year was to satisfy obligations under employee share schemes. Issue of B and C shares On 2 September 2013 Vodafone announced that it had reached agreement to dispose of its US Group whose principal asset was its 45% interest in
Verizon Wireless for a total consideration of US$130 billion (£79 billion). Following completion on 21 February 2014,
Vodafone shareholders received all of the Verizon shares and US$23.9 billion (£14.3 billion) of cash (the Return of Value) totalling US$85.2 billion (£51.0 billion). The Return of Value was carried out through a B share and C share scheme. Eligible shareholders were able to elect between receiving one B share
or one C share for each ordinary share that they held. The B shares were cancelled by Vodafone in return for cash and Verizon shares
with a value no greater than the aggregate nominal value of the B shares. Holders of the C shares received a special dividend on their
C shares, consisting of cash and Verizon shares with an aggregate value, for each C share, equal to the aggregate value of cash payable and Verizon shares receivable on the cancellation of each B share. The special B share distribution and C share
dividend of £35.5 billion is included within the £40.6 billion of dividends described paid to equity shareholders in the year.
 Transactions with non-controlling stakeholders in subsidiaries During the year we acquired further non-controlling interests in Vodafone India Limited and commenced the legal process of acquiring the remaining
shares in Kabel Deutschland. Comprehensive income The Group generated £56.7 billion of total comprehensive income in the year, primarily a result of the profit for the year attributable to
equity shareholders of £59.3 billion. Total comprehensive income increased by £56.0 billion compared to the previous year; the primary reason underlying the increase being the profit realised on the disposal of our investment in VZW of
£45.0 billion and the profit arising from the recognition of significant deferred tax assets of £19.3 billion in relation to losses incurred in Germany and Luxembourg (further details are provided in note 6 Taxation to the
consolidated financial statements). Dividends Dividends of £40.6 billion include the special £35.5 billion B share distribution and C share dividends distributed as part of the
Return of Value to shareholders and £5.1 billion of equity dividends. We provide returns to shareholders through equity
dividends and historically have generally paid dividends in February and August in each year. The directors expect that we will continue to pay dividends semi-annually. The £5.1 billion equity dividend in the current year comprises £3.4 billion in relation to the final dividend for the year ended 31
March 2013 and £1.7 billion for the interim dividend for the year ended 31 March 2014. This has increased from total dividends of £4.8 billion in the prior year, with increases in the dividend per share more than offsetting
reductions in the number of shares in issue. The interim dividend of 3.53 pence per share announced by the directors in November 2013
represented an 8% increase over last years interim dividend. The directors are proposing a final dividend of 7.47 pence per share. Total dividends for the year, excluding the Return of Value in relation to the VZW disposal increased by 8% to
11.00 pence per share.
   The financial commentary on this page is unaudited.






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##### Table of Contents

|    |  |                                                                  
|--- |  | -----------------------------------------------------------------
|    |  |                                                                  
|102 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014               
|    |  | Consolidated statement of cash flows
for the years ended 31 March






Note


2014 £m


Restated1 2013
£m


Restated1 2012
£mNet cash flow from operating activities


19



6,227



8,824



10,297Cash flows from investing activitiesPurchase of interests in subsidiaries, net of cash acquired


28



(4,279
)


(1,432
)


(149
)Other investing activities in relation to purchase of subsidiaries














310Purchase of interests in associates and joint ventures






(11
)


(6
)


(5
)Purchase of intangible assets






(2,327
)


(3,758
)


(1,876
)Purchase of property, plant and equipment






(4,396
)


(3,958
)


(4,071
)Purchase of investments






(214
)


(4,249
)


(417
)Disposal of interests in subsidiaries, net of cash disposed










27



784Disposal of interests in associates and joint ventures






34,919







6,799Disposal of property, plant and equipment






79



105



91Disposal of investments






1,483



1,523



66Dividends received from associates and joint ventures






4,897



5,539



4,916Dividends received from investments






10



2



3Interest received






582



461



336Taxation on investing activities














(206
)Net cash flow from investing activities






30,743



(5,746
)


6,581Cash flows from financing activitiesIssue of ordinary share capital and reissue of treasury shares






38



69



91Net movement in short-term borrowings






(2,887
)


1,581



1,517Proceeds from issue of long-term borrowings






1,060



5,422



1,578Repayment of borrowing






(9,788
)


(1,720
)


(3,424
)Purchase of treasury shares






(1,033
)


(1,568
)


(3,583
)B and C share payments






(14,291
)






Equity dividends paid






(5,076
)


(4,806
)


(6,643
)Dividends paid to non-controlling shareholders in subsidiaries






(264
)


(379
)


(304
)Other transactions with non-controlling shareholders in subsidiaries






(111
)


15



(2,605
)Other movements in loans with associates and joint ventures










168



(792
)Interest paid






(1,897
)


(1,525
)


(1,504
)Net cash flow from financing activities






(34,249
)


(2,743
)


(15,669
)Net cash flow






2,721



335



1,209Cash and cash equivalents at beginning of the financial year


20



7,506



7,001



6,138Exchange (loss)/gain on cash and cash equivalents






(115
)


170



(346
)Cash and cash equivalents at end of the financial year


20



10,112



7,506



7,001 During the year ended 31 March 2014 there were a number of material non-cash investing and financing activities
that arose in relation to both the disposal of our interest in Verizon Wireless, the acquisition of the remaining 23% of Vodafone Italy and the return of value to shareholders. Full details of these material non-cash transactions are included in
note 28 to the consolidated financial statements. Note: 1
Restated for the adoption of IFRS 11 and amendments to IAS 19. See note 1 Basis of preparation for further details.






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##### Table of Contents

|                                                       |  |    
|------------------------------------------------------ |  | ---
|LOGO                                                   |  | 103
|Commentary on the consolidated
statement of cash flows |  |    






The consolidated statement of cash flows shows the cash flows from operating, investing and
financing activities for the year. Closing net debt has reduced to £13.7 billion from £25.4 billion. The reduction has primarily been achieved as the result of cash retained from the sale of our interest in Verizon Wireless after the
return of value to shareholders. Our liquidity and working capital may be affected by a material decrease in cash flow due to a number
of factors as outlined in Principal risk factors and uncertainties on pages 196 to 200. We do not use non-consolidated special purpose entities as a source of liquidity or for other financing purposes. Purchase of interests in subsidiaries, net of cash acquired During the year we acquired Kabel Deutschland for net cash consideration of £4.3 billion. Further details on the assets and liabilities
acquired are outlined in note 28 Acquisitions and disposals. Purchase of intangible assets Cash payments for the purchase of intangible assets comprise £1.4 billion for purchases of computer software and £0.9 billion for
acquired spectrum. Purchase of investments The Group purchases short-term investments as part of its treasury strategy. See note 13 Other investments. Disposal of interests in associates and joint ventures During the year, we disposed of our US Group whose principal asset was its 45% interest in Verizon Wireless for consideration which included net
cash proceeds of £34.9 billion. There were no significant disposals in the prior year. Disposal of investments In the prior year we received the remaining consideration of £1.5 billion from the disposal of our interests in SoftBank
Mobile Corp. Dividends received from joint ventures and associates Dividends received from associates reduced by 11.6% to £4.9 billion. Dividends received primarily comprise tax dividends and income
dividends from Verizon Wireless of £4.8 billion in both the current and prior financial years. Movements in borrowings Funds retained from the sale of our interest in Verizon Wireless, after the return of value to shareholders, has enabled us to
reduce the overall amount of the Groups borrowings. Purchase of treasury shares Cash payments of £1.0 billion relate to the completion of a £1.5 billion share buyback programme that commenced following the receipt
of a US$3.8 billion (£2.4 billion) income dividend from VZW in December 2012. Further details are provided on page 101. B and
C share payments B share payments formed part of the return of value to shareholders following the disposal of the Groups
interest in Verizon Wireless. Further details are provided on page 101.
 Equity dividends paid Equity dividends paid during the year increased by 5.6%. A special dividend was paid during the year to 31 March 2012 following the receipt
of an income dividend from VZW. Further details on the Groups dividends are provided on page 101. Other transactions with
non-controlling shareholders in subsidiaries During the year we acquired the non-controlling interests in Vodafone India Limited
and commenced the legal process of acquiring the remaining shares in Kabel Deutschland.
   The financial
commentary on this page is unaudited.






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##### Table of Contents

|    |  |                                                   
|--- |  | --------------------------------------------------
|    |  |                                                   
|104 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|    |  | Notes to the consolidated financial statements    






1. Basis of preparation This section describes the critical accounting judgements 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
accounts, 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 IFRS as issued by the International Accounting Standards Board and are also
prepared in accordance with IFRS adopted by the European Union (EU), the Companies Act 2006 and Article 4 of the EU IAS Regulations. The consolidated financial statements are prepared on a going concern basis. The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. A discussion on the Groups critical
accounting judgements and key sources of estimation uncertainty is detailed below. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Amounts in the consolidated financial statements are stated in pounds sterling. Vodafone Group Plc is registered in England and Wales (No. 1833679). IFRS requires the directors to adopt accounting policies that are the most appropriate to the Groups circumstances. In determining and
applying accounting policies, directors and management are required to make judgements in respect of items where the choice of specific policy, accounting estimate or assumption to be followed could materially affect the Groups reported
financial position, results or cash flows; it may later be determined that a different choice may have been more appropriate. Management has identified accounting estimates and assumptions relating to revenue, taxation, business combinations and goodwill, joint
arrangements, finite lived intangible assets, property, plant and equipment, post employment benefits, provisions and contingent liabilities and impairment that it considers to be critical due to their impact on the Groups financial
statements. These critical accounting judgements, assumptions and related disclosures have been discussed with the Companys Audit and Risk Committee (see page 62). Critical accounting judgements and key sources of estimation uncertainty Revenue recognition Arrangements with multiple deliverables In revenue arrangements where more than one good or service is provided to the customer, customer consideration is allocated between the goods and services using relative fair value principles. The fair values determined for
deliverables may impact the timing of the recognition of revenue. Determining the fair value of each deliverable can require complex estimates. The Group generally determines the fair value of individual elements based on prices at which the
deliverable is regularly sold on a standalone basis after considering volume discounts where appropriate. Gross versus net
presentation When the Group sells goods or services as a principal, income and payments to suppliers are reported on a gross basis in
revenue and operating costs. If the Group sells goods or services as an agent, revenue and payments to suppliers are recorded in revenue on a net basis, representing the margin earned. 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 but do not impact reported assets, liabilities or cash flows. 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 where the tax impact is
uncertain until a conclusion is reached with the relevant tax authority or through a legal process. The final resolution of some of these items may give rise to material profits, losses and/or cash flows. Resolving tax issues can take many years as it is not always within the control of the Group and often depends on the efficiency of legal
processes in the relevant tax jurisdiction. Recognition of deferred tax assets The recognition of deferred tax assets is based upon whether it is more likely than not 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. Judgement is required when determining probable future taxable profits, which are estimated using the latest available profit forecasts. Prior to recording
deferred tax assets for tax losses, relevant tax law is considered to determine the availability of the losses to offset against the future taxable profits. 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, India, and Turkey, capital allowances in the United Kingdom and the tax liability on the rationalisation and re-organisation of the Group prior to the disposal of our US group, whose principal asset was its 45%
interest in Verizon Wireless (VZW). See note 6 Taxation to the consolidated financial statements.






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##### Table of Contents

|     |  |    
|---- |  | ---
|LOGO |  | 105
|     |  |    






Business combinations and goodwill When a business combination occurs, the fair values of the identifiable assets and liabilities assumed, 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
difference is recognised as goodwill. If the purchase price consideration is lower than the fair value of the assets acquired then a gain is recognised in the income statement. Allocation of the purchase price between finite lived assets (discussed below) and indefinite lived assets such as goodwill affects the results of
the Group as finite lived intangible assets are amortised, whereas indefinite lived intangible assets, including goodwill, are not amortised. On transition to IFRS the Group elected not to apply IFRS 3, Business combinations, retrospectively as the difficulty in applying these requirements to business combinations completed by the Group from incorporation
through to 1 April 2004 exceeded any potential benefits. Goodwill arising before the date of transition to IFRS amounted to £78,753 million. If the Group had elected to apply the accounting for business combinations retrospectively it may have led to an increase or decrease in goodwill, licences, customer bases, brands and related deferred tax liabilities recognised on
acquisition. Joint arrangements The Group participates in a number of joint arrangements where control of the arrangement is shared with one or more other parties. A joint arrangement is classified as a joint operation or as a joint venture, depending on
managements assessment of the legal form and substance of the arrangement. 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 ventures to the
consolidated financial statements. Finite lived intangible assets Other intangible assets include amounts spent by the Group acquiring licences and spectrum, customer bases and brands 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. Reducing the useful life will increase the amortisation charge in the consolidated income statement. Useful lives are periodically reviewed to ensure that they remain appropriate. The basis for determining the useful life for
the most significant categories of intangible assets is discussed below. Licences and spectrum fees The estimated useful life is generally the term of the licence unless there is a presumption of renewal at negligible cost; this is adjusted if
necessary, for example taking into account the impact of any expected changes in technology. 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 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 18.8% (2013: 12.7%) of the Groups total assets; estimates and assumptions made may have a material
impact on their carrying value and related depreciation charge. See note 11 Property, plant and equipment 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. Increasing an assets expected life or residual value would result in a reduced depreciation charge in the consolidated income statement. 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. The useful life of network infrastructure is assumed not to exceed the duration of related operating licences unless there is a reasonable expectation of renewal or an
alternative future use for the asset. Post employment benefits Management judgement is exercised when determining the Groups liabilities and expenses arising for defined benefit pension schemes.
Management is required to make assumptions regarding 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. Sensitivity
analysis is provided for these assumptions in note 26 Post employment benefits to the consolidated financial statements.






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##### Table of Contents

|    |  |                                                           
|--- |  | ----------------------------------------------------------
|    |  |                                                           
|106 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






1. Basis of preparation (continued) Provisions and contingent liabilities The Group exercises judgement in measuring and recognising provisions and the exposures to contingent liabilities related to pending litigation or
other outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation, as well as other contingent liabilities (see note 30 Contingent liabilities to the consolidated financial statements). Judgement
is necessary to assess the likelihood that a pending claim will succeed, or a liability will arise, and to quantify the possible range of any financial settlement. The inherent uncertainty of such matters means that actual losses may materially
differ from estimates. Impairment reviews IFRS requires management to perform impairment tests annually for indefinite lived assets and, for finite lived assets, if events or changes in
circumstances indicate that their carrying amounts may not be recoverable. Impairment testing requires management to judge whether the
carrying value of assets can be supported by the net present value of future cash flows that they generate. Calculating the net present value of the future cash flows requires assumptions to be made in respect of highly uncertain matters including
managements expectations of:  g

growth in adjusted EBITDA, calculated as adjusted operating profit before depreciation and amortisation;  g

timing and amount of future capital expenditure;  g

long-term growth rates; and  g

appropriate discount rates to reflect the risks involved.  Management prepares formal five year forecasts for the Groups operations, which are used to estimate their value in use. In certain
developing markets ten year forecasts are used if it is considered that the fifth year of a forecast is not indicative of expected long-term future performance as operations may not have reached maturity. For operations where five year forecasts are used for the Groups value in use calculations, a long-term growth rate into perpetuity has been
determined as the lower of:  g

the nominal GDP growth rates for the country of operation; and  g

the long-term compound annual growth rate in adjusted EBITDA in years six to ten estimated by management.  For operations where ten year
forecasts are used for the Groups value in use calculations, a long-term growth rate into perpetuity has been determined as the lower of:  g

the nominal GDP growth rates for the country of operation; and  g

the compound annual growth rate in adjusted EBITDA in years nine to ten of the management plan.  Changing the assumptions selected by
management, in particular the discount rate and growth rate assumptions used in the cash flow projections, could significantly affect the Groups impairment evaluation and hence reported assets and profits or losses. Further details, including
a sensitivity analysis is included in note 4 Impairment losses to the consolidated financial statements. Significant
accounting policies applied in the current reporting period that relate to the financial statements as a whole Accounting convention The consolidated financial statements are prepared on a historical cost basis except for certain financial and equity instruments that have been
measured at fair value. Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company, subsidiaries controlled by the Company (see note 32
Principal subsidiaries) and joint operations that are subject to joint control (see note 12 Investments in associates and joint ventures). Foreign currencies The
consolidated financial statements are presented in sterling, which is the parent companys functional currency and the presentation currency of the Group. Each entity in the Group determines its own functional currency and items included in the
financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially
recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on
the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the initial transaction dates. Non-monetary items measured in terms of historical cost in a
foreign currency are not retranslated. Changes in the fair value of monetary securities denominated in foreign currency classified as
available-for-sale are analysed between translation differences and other changes in the carrying amount of the security. Translation differences are recognised in the income statement and other changes in carrying amount are recognised
in equity. Translation differences on non-monetary financial assets, such as investments in equity securities classified as
available-for-sale, are reported as part of the fair value gain or loss and are included in equity.






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For the purpose of presenting consolidated financial statements, the assets and liabilities of
entities with a functional currency other than sterling are expressed in sterling using exchange rates prevailing at the reporting period date. Income and expense items and cash flows are translated at the average exchange rates for the period and
exchange differences arising are recognised directly in equity. On disposal of a foreign entity, the cumulative amount previously recognised in equity relating to that particular foreign operation is recognised in profit or loss. 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. In respect of all foreign operations, any exchange differences that have arisen before
1 April 2004, the date of transition to IFRS, are deemed to be nil and will be excluded from the determination of any subsequent profit or loss on disposal. The net foreign exchange loss recognised in the consolidated income statement for the year ended 31 March 2014 is £1,688 million
(31 March 2013: £117 million loss; 2012: £703 million gain). The net losses and net gains are recorded within operating profit (2014: £16 million charge; 2013: £21 million charge; 2012:
£33 million charge), other income and expense and non-operating income and expense (2014: £1,493 million charge; 2013: £1 million charge; 2012: £681 million credit), investment and financing income (2014:
£180 million charge; 2013: £91 million charge; 2012: £55 million credit) and income tax expense (2014: £1 million credit; 2013: £4 million charge; 2012: £nil). The foreign exchange gains
and losses included within other income and expense and non-operating income and expense arise on the disposal of interests in joint ventures, associates and investments from the recycling of foreign exchange gains previously recorded in the
consolidated statement of comprehensive income. New accounting pronouncements adopted On 1 April 2013 the Group adopted new accounting policies where necessary to comply with amendments to IFRS. Accounting pronouncements
considered by the Group as significant on adoption are:  g

Amendments to IAS 19, Employee benefits, which requires revised accounting and disclosures for defined benefit pension schemes, including a different measurement basis for asset
returns, replacing the expected return on plan assets and interest cost currently recorded in the consolidated income statement with net interest. This results in a revised allocation of costs between the income statement and other comprehensive
income. The amendments also include a revised definition of short- and long-term benefits to employees and revised criteria for the recognition of termination benefits. The consolidated financial statements have been restated on the adoption of the
amendments to IAS 19 (2013: reduced profit for the year by £16 million, 2012: £9 million).  g

Changes to the standards governing the accounting for subsidiaries, joint arrangements and associates, including the introduction of IFRS 10, Consolidated Financial Statements, IFRS 11,
Joint Arrangements and IFRS 12, Disclosure of Interests in Other Entities and amendments to IAS 28, Investments in Associates and Joint Ventures. IFRS 11 generally requires interests in jointly controlled entities
to be recorded using the equity method, which is consistent with the accounting treatment applied to investments in associates. Under IFRS 11, the Groups principal joint arrangements, excluding Cornerstone Telecommunications Infrastructure
Limited (see note 12 Investments in associates and joint ventures, are incorporated into the consolidated financial statements using the equity method of accounting rather than proportionate consolidation. The consolidated financial
statements have been restated on the adoption of IFRS 11; the other changes to the standards governing the accounting for subsidiaries, joint arrangements and associates do not have a material impact on the Group. Adoption on 1 April 2013 is
considered to be early adoption for the purposes of complying with IFRS as endorsed by the European Union.  In addition, during the year the Group has early-adopted amendments to IAS 36, Impairment of Assets, relating to recoverable amounts
disclosures, which corrects a previous amendment. Other IFRS changes adopted on 1 April 2013, including the adoption of IFRS 13,
Fair Value Measurement, have no material impact on the consolidated results, financial position or cash flows of the Group. The previously reported comparative periods have been restated in the consolidated financial statements for the amendments to IAS 19 and IFRS 11.
The impact on key financial information is detailed in the following tables; the impact on earnings per share is immaterial.  2013













2012As reported
£m


Adjustments
£m


Discontinued
operations1
£m


Restated
£m




As reported
£m


Adjustments
£m


Discontinued
operations1
£m


Restated
£mConsolidated income statement and statement of comprehensive incomeRevenue


44,445



(6,404
)






38,041





46,417



(7,596
)






38,821Gross profit


13,940



(2,466
)






11,474





14,871



(3,251
)






11,620Share of results of equity accounted associates and joint ventures


6,477



520



(6,422
)


575





4,963



1,033



(4,867
)


1,129Operating profit/(loss)


4,728



(508
)


(6,422
)


(2,202
)




11,187



(702
)


(4,867
)


5,618Profit/(loss) before tax


3,255



(372
)


(6,366
)


(3,483
)




9,549



(561
)


(4,844
)


4,144Profit/(loss) for the financial year from continuing operations


673



(16
)


(4,616
)


(3,959
)




7,003



(9
)


(3,555
)


3,439Profit for the financial year from discontinued operations










4,616



4,616













3,555



3,555Other comprehensive income/(expense)


76



16







92





(4,653
)


9







(4,644
)Total comprehensive income


749











749





2,350











2,350 Note: 1
Adjustments to disclose discontinued operations as a result of the disposal of the US Group, whose principal asset was its 45% interest in Verizon Wireless. See note 7 Discontinued
operations for further details.






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|108 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






1. Basis of preparation (continued)  2013










2012As reported
£m


Adjustments
£m


Restated
£m




As reported
£m


Adjustments
£m


Restated
£mConsolidated statement of financial positionNon-current assets


119,411



(2,736
)


116,675





119,551



(3,132
)


116,419Current assets


23,287



(1,638
)


21,649





20,025



(994
)


19,031Total assets


142,698



(4,374
)


138,324





139,576



(4,126
)


135,450Total equity


72,488







72,488





78,202







78,202Non-current liabilities


38,986



(1,519
)


37,467





37,349



(1,724
)


35,625Current liabilities


31,224



(2,855
)


28,369





24,025



(2,402
)


21,623Total equity and liabilities


142,698



(4,374
)


138,324





139,576



(4,126
)


135,450Consolidated
statement of cash flowsNet cash flow from operating activities


10,694



(1,870
)


8,824





12,755



(2,458
)


10,297Net cash flow from investing activities


(7,398
)


1,652



(5,746
)




3,843



2,738



6,581Net cash flow from financing activities


(2,956
)


213



(2,743
)




(15,369
)


(300
)


(15,669
)Net cash flow


340



(5
)


335





1,229



(20
)


1,209 New accounting pronouncements to be adopted on 1 April 2014 The following pronouncements which are potentially relevant to the Group have been issued by the IASB or the IFRIC, are effective for annual
periods beginning on or after 1 January 2014 and have been endorsed for use in the EU unless otherwise stated:  g

Amendment to IAS 32, Offsetting financial assets and financial liabilities.  g

Amendments to IAS 39, Novation of derivatives and continuation of hedge accounting.  g

Improvements to IFRS 2010 to 2012 cycle, elements are effective variously from 1 July 2014 and for annual periods beginning on or after 1 July 2014. All the amendments will be
adopted by the Group from 1 April 2014, except an amendment to IFRS 8, Operating Segments, which will be adopted on 1 April 2014. These amendments have not yet been endorsed by the EU.  g

IFRIC 21, Levies, which has not yet been endorsed by the EU.  For periods commencing on or after
1 April 2014, the Groups financial reporting will be presented in accordance with the new standards above which are not expected to have a material impact on the consolidated results, financial position or cash flows of the Group. New accounting pronouncements to be adopted on or after 1 April 2015 On 1 April 2015 the Group will adopt Amendments to IAS 19 Defined Benefit Plans: Employee Contributions and Improvements to
IFRS 20112013 Cycle, which are both effective for annual periods beginning on or after 1 July 2014. Accounting for Acquisitions of Interests in Joint Operations, Amendments to IFRS 11 and Clarification of
Acceptable Methods of Depreciation and Amortisation, Amendment to IAS 16 and IAS 38, which are effective for accounting periods on or after 1 January 2016, will be adopted by the Group on 1 April 2016. Phase I of IFRS 9 Financial Instruments was issued in November 2009 and has subsequently been updated and amended. The effective date
of the standard is to be confirmed and has not yet been endorsed for use in the EU. The standard introduces changes to the classification and measurement of financial assets, removes the restriction on electing to measure certain financial
liabilities at fair value through the income statement from initial recognition and requires changes to the presentation of gains and losses relating to fair value changes. The Group is currently assessing the impact of the above new pronouncements on its results, financial position and cash flows. None of the new
pronouncements discussed above have been endorsed for use in the EU.






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2. Segmental analysis The Groups businesses are managed on a geographical basis. Selected financial data is presented on this
basis below. 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 a single group of related services and products being the supply of communications services and products. Revenue is
attributed to a country or region based on the location of the Group company reporting the revenue. Transactions between operating segments are charged at arms length prices. Segment information is provided on the basis of geographic areas, being the basis on which the Group manages its worldwide interests, with each
country in which the Group operates treated as an operating segment. The aggregation of operating segments into the Europe and AMAP regions reflects, in the opinion of management, the similar economic characteristics within each of those regions as
well the similar products and services offered and supplied, classes of customers and the regulatory environment. In the case of the Europe region this largely reflects membership of the European Union, whilst for the AMAP region this largely
includes emerging and developing economies that are in the process of rapid growth and industrialisation. This note contains
information on a management basis which includes the results of the Groups joint ventures, Vodafone Italy, Vodafone Hutchison Australia, Vodafone Fiji and Indus Towers, on a proportionate basis, including a five month contribution from Verizon
Wireless. The statutory basis includes the results of these joint ventures, using the equity accounting basis rather than on a proportionate consolidation basis, and includes a five month contribution from Verizon Wireless which is treated as
discontinued operations. Certain financial information is provided separately within the Europe region for Germany, Italy, the UK and
Spain and within the AMAP region for India and Vodacom, as these operating segments are individually material for the Group. During
the year ended 31 March 2014 the Group changed its organisational structure, merging its Northern and Central Europe and Southern Europe regions into one Europe region and moved its Turkish operating company into the AMAP region given its
emerging market characteristics. The tables below present segmental information on the revised basis with prior years restated accordingly. Accounting policies Revenue Revenue is recognised to the extent the Group has delivered goods or rendered services under an agreement, the amount of revenue can be measured
reliably and it is probable that the economic benefits associated with the transaction will flow to the Group. Revenue is measured at the fair value of the consideration receivable, exclusive of sales taxes and discounts. The Group principally obtains revenue from providing the following telecommunication services: access charges, airtime usage, messaging,
interconnect fees, data services and information provision, connection fees and equipment sales. Products and services may be sold separately or in bundled packages. Revenue for access charges, airtime usage and messaging by contract customers is recognised as services are performed, with unbilled revenue
resulting from services already provided accrued at the end of each period and unearned revenue from services to be provided in future periods deferred. Revenue from the sale of prepaid credit is deferred until such time as the customer uses the
airtime, or the credit expires. Revenue from interconnect fees is recognised at the time the services are performed. Revenue from data services and information provision is recognised when the Group has performed the related service and, depending on the nature
of the service, is recognised either at the gross amount billed to the customer or the amount receivable by the Group as commission for facilitating the service. Customer connection revenue is recognised together with the related equipment revenue to the extent that the aggregate equipment and connection
revenue does not exceed the fair value of the equipment delivered to the customer. Any customer connection revenue not recognised together with related equipment revenue is deferred and recognised over the period in which services are expected to be
provided to the customer. Revenue for device sales is recognised when the device is delivered to the end customer and the sale is
considered complete. For device sales made to intermediaries, revenue is recognised if the significant risks associated with the device are transferred to the intermediary and the intermediary has no general right of return. If the significant risks
are not transferred, revenue recognition is deferred until sale of the device to an end customer by the intermediary or the expiry of the right of return. In revenue arrangements including more than one deliverable, the arrangements are divided into separate units of accounting. Deliverables are considered separate units of accounting if the following two conditions are met:
(1) the deliverable has value to the customer on a stand-alone basis and (2) there is evidence of the fair value of the item. The arrangement consideration is allocated to each separate unit of accounting based on its relative fair value. Commissions Intermediaries are given cash incentives by the Group to connect new customers and upgrade existing customers. For intermediaries who do not purchase products and services from the Group, such cash incentives are accounted for as an expense. Such cash
incentives to other intermediaries are also accounted for as an expense if:  g

the Group receives an identifiable benefit in exchange for the cash incentive that is separable from sales transactions to that intermediary; and  g

the Group can reliably estimate the fair value of that benefit.  Cash incentives that do not meet these criteria are recognised as a reduction of the related revenue.






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|110 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






2. Segmental analysis (continued) Segmental revenue  Management basis1










Statutory basis1Segment


Intra-region


Regional


Inter-region


Group




Presentation


Discontinuedrevenue


revenue


revenue


revenue


Revenue




adjustments2


operations2


Revenue£m


£m


£m


£m


£m




£m


£m


£m31 March 2014Germany


8,272



(9
)


8,263



(11
)


8,252













8,252Italy


4,312



(8
)


4,304



(1
)


4,303





(3,782
)






521UK


6,427



(10
)


6,417



(3
)


6,414





(131
)






6,283Spain


3,518



(17
)


3,501



(2
)


3,499





3







3,502Other Europe


5,525



(13
)


5,512



(4
)


5,508





136







5,644Europe


28,054



(57
)


27,997



(21
)


27,976





(3,774
)






24,202India


4,394







4,394



(3
)


4,391





(449
)






3,942Vodacom


4,718







4,718







4,718













4,718Other AMAP


5,860



(1
)


5,859



(12
)


5,847





(1,047
)






4,800AMAP


14,972



(1
)


14,971



(15
)


14,956





(1,496
)






13,460Non-Controlled Interests and Common Functions


686







686



(2
)


684













684Group


43,712



(58
)


43,654



(38
)


43,616





(5,270
)






38,346Discontinued operationsVerizon Wireless3


9,95531 March 2013 restatedGermany


7,857



(27
)


7,830



(6
)


7,824





2







7,826Italy


4,755



(21
)


4,734



(1
)


4,733





(4,733
)






UK


5,150



(30
)


5,120



(4
)


5,116





(23
)






5,093Spain


3,904



(40
)


3,864



(2
)


3,862





5







3,867Other Europe


7,115



(61
)


7,054



(6
)


7,048





32







7,080Europe


28,781



(179
)


28,602



(19
)


28,583





(4,717
)






23,866India


4,324







4,324



(4
)


4,320





(417
)






3,903Vodacom


5,206







5,206







5,206













5,206Other AMAP


5,884



(1
)


5,883



(28
)


5,855





(1,270
)






4,585AMAP


15,414



(1
)


15,413



(32
)


15,381





(1,687
)






13,694Non-Controlled Interests and Common Functions


481







481







481













481Group


44,676



(180
)


44,496



(51
)


44,445





(6,404
)






38,041Discontinued operationsVerizon Wireless3


21,97231 March 2012 restatedGermany


8,233



(43
)


8,190



(2
)


8,188





5







8,193Italy


5,658



(27
)


5,631



(2
)


5,629





(5,629
)






UK


5,397



(36
)


5,361



(7
)


5,354





5







5,359Spain


4,763



(52
)


4,711



(4
)


4,707





7







4,714Other Europe


6,469



(40
)


6,429



(5
)


6,424





8







6,432Europe


30,520



(198
)


30,322



(20
)


30,302





(5,604
)






24,698India


4,265







4,265



(6
)


4,259





(295
)






3,964Vodacom


5,638







5,638



(8
)


5,630





1







5,631Other AMAP


5,669



(1
)


5,668



(54
)


5,614





(1,456
)






4,158AMAP


15,572



(1
)


15,571



(68
)


15,503





(1,750
)






13,753Non-Controlled Interests and Common Functions


614







614



(2
)


612





(242
)






370Group


46,706



(199
)


46,507



(90
)


46,417





(7,596
)






38,821Discontinued operationsVerizon Wireless3


20,187 Notes: 1
Management basis includes the results of the Groups joint ventures, Vodafone Italy, Vodafone Hutchison Australia, Vodafone Fiji and Indus Towers, on a proportionate basis. The statutory basis
includes the results of these joint ventures, using the equity accounting basis rather than on a proportionate consolidation basis. 2
Presentation adjustments relate to the restatement of the Groups joint ventures from a proportionate consolidation basis to an equity accounted basis. Discontinued items relate to the results
of Verizon Wireless. 3
Values shown for Verizon Wireless, which was an associate, are not included in the calculation of Group revenue.






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Segmental profit The reconciliation of management basis adjusted EBITDA to statutory adjusted operating profit is shown below.  Management basis1











Statutory basis
1Adjusted EBITDA£m
2


Depreciation,amortisation and loss on disposal of fixed assets
£m



Share of results inassociates and joint
ventures
£m







Presentationadjustments £m
4


Discontinuedoperations £m
4


Adjusted operatingprofit£m31 March 2014Germany


2,698Italy


1,536UK


1,418Spain


787Other Europe


1,736Europe


8,175India


1,397Vodacom


1,716Other AMAP


1,567AMAP


4,680Non-Controlled Interests and Common Functions


(24
)Group


12,831



(8,181
)


3,224







(395
)


(3,169
)


4,310Discontinued operationsVerizon Wireless3


4,27431 March 2013 restatedGermany


2,831Italy


1,917UK


1,210Spain


1,021Other Europe


2,120Europe


9,099India


1,240Vodacom


1,891Other AMAP


1,401AMAP


4,532Non-Controlled Interests and Common Functions


(65
)Group


13,566



(7,543
)


6,554







(487
)


(6,500
)


5,590Discontinued operationsVerizon Wireless3


8,83131 March 2012 restatedGermany


3,034Italy


2,521UK


1,294Spain


1,210Other Europe


2,160Europe


10,219India


1,122Vodacom


1,933Other AMAP


1,338AMAP


4,393Non-Controlled Interests and Common Functions


(6
)Group


14,606



(7,625
)


5,049







(690
)


(4,953
)


6,387Discontinued operationsVerizon Wireless3


7,689 Notes: 1
Management basis includes the results of the Groups joint ventures, Vodafone Italy, Vodafone Hutchison Australia, Vodafone Fiji and Indus Towers, on a proportionate basis, including a five
month contribution from Verizon Wireless. The statutory basis includes the results of these joint ventures, using the equity accounting basis rather than on a proportionate consolidation basis, and includes a five month contribution from Verizon
Wireless which is treated as discontinued operations. 2
The Groups measure of segment profit, adjusted EBITDA, excludes depreciation, amortisation and loss on disposal of fixed assets and the Groups share of results in associates and joint
ventures. Adjusted EBITDA and adjusted operating profit have been restated to exclude restructuring costs. 3
Discontinued operations comprise our US Group whose principal asset was a 45% interest in Verizon Wireless. We sold our US Group on 21 February 2014. Refer to note 7 Discontinued
operations for further details. 4
Presentation adjustments relate to the restatement of the Groups joint ventures from a proportionate consolidation basis to an equity accounted basis. Discontinued items relate to the results
of Verizon Wireless.






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|    |  |                                                           
|112 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






2. Segmental analysis (continued) A reconciliation of adjusted operating profit to operating (loss)/profit is shown below. For a reconciliation of
operating (loss)/profit to profit for the financial year, see the consolidated income statement on page 96.  2014 £m


Restated
2013
£m


Restated
2012
£mAdjusted operating profit










4,310



5,590



6,387Impairment loss










(6,600
)


(7,700
)


(4,050
)Restructuring costs










(355
)


(311
)


(144
)Amortisation of acquired customer base and brand intangible assets







(551
)


(249
)


(280
)Other income and expense










(717
)


468



3,705Operating (loss)/profit










(3,913
)


(2,202
)


5,618Segmental assetsNon-currentassets £m
1


Capitalexpenditure £m
2


Otherexpenditure on intangible
assets
£m



Depreciationand amortisation
£m



Impairment loss£m31 March 2014Germany


22,780



1,312



3



2,036



4,900Italy


7,984



180







164



UK


8,031



932







1,290



Spain


3,653



511







587



800Other Europe


8,736



800



273



1,047



900Europe


51,184



3,735



276



5,124



6,600India


7,824



633



1,938



828



Vodacom


4,560



663



3



593



Other AMAP


4,850



711



11



932



AMAP


17,234



2,007



1,952



2,353



Non-Controlled Interests and Common Functions


1,121



571







83



Group


69,539



6,313



2,228



7,560



6,60031 March 2013 restatedGermany


19,109



1,073



2



1,423



Italy


















4,500UK


8,365



601



863



888



Spain


4,599



377







590



3,200Other Europe


9,786



993



1,335



1,291



Europe


41,859



3,044



2,200



4,192



7,700India


7,388



462



130



914



Vodacom


5,668



703



10



696



Other AMAP


5,826



678



90



894



AMAP


18,882



1,843



230



2,504



Non-Controlled Interests and Common Functions


982



405







(35
)


Group


61,723



5,292



2,430



6,661



7,70031 March 2012 restatedGermany


19,151



880



4



1,469



Italy


















2,450UK


6,430



575







880



Spain


8,069



429



71



626



900Other Europe


8,543



823



313



1,122



700Europe


42,193



2,707



388



4,097



4,050India


7,847



710







967



Vodacom


6,469



723







840



Other AMAP


5,362



709







782



AMAP


19,678



2,142







2,589



Non-Controlled Interests and Common Functions


715



395







35



Group


62,586



5,244



388



6,721



4,050 Notes: 1
Comprises goodwill, other intangible assets and property, plant and equipment. 2
Includes additions to property, plant and equipment and computer software, reported within intangibles. Excludes licences and spectrum additions.






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3. Operating (loss)/profit Detailed below are the key amounts recognised in arriving at our operating (loss)/profit. 2014 £m


Restated
2013
£m


Restated
2012
£mNet foreign exchange losses


16



21



33Depreciation of property, plant and equipment (note 11):Owned assets


3,990



3,600



3,583Leased assets


48



37



74Amortisation of intangible assets (note 10)


3,522



3,024



3,064Impairment of goodwill in subsidiaries, associates and joint arrangements (note 4)


6,600



7,700



3,848Impairment of licences and spectrum (note 4)










121Impairment of property, plant and equipment (note 4)










81Negative goodwill (note 28)






(473
)


Research and development expenditure


214



307



304Staff costs (note 25)


3,875



3,620



3,352Operating lease rentals payable:Plant and machinery


651



506



500Other assets including fixed line rentals


1,502



1,297



1,255Loss on disposal of property, plant and equipment


85



77



51Own costs capitalised attributable to the construction or acquisition of property, plant and equipment


(455
)


(356
)


(312
)The total remuneration of the Groups auditor, Deloitte LLP and other member firms of Deloitte
Touche Tohmatsu Limited for services provided to the Group is analysed below:2014 £m


2013
£m


2012
£mParent company


1



1



1Subsidiaries


8



7



6Audit fees:


9



8



7Audit-related assurance services1


1



1



1Other assurance services2


3







Taxation advisory services3










Other non-audit services3










1Non-audit fees:


4



1



2Total fees


13



9



9 Notes: 1
Relates to fees for statutory and regulatory filings. 2
Primarily arising from regulatory filings and shareholder documentation requirements in respect of the disposal of Verizon Wireless and the acquisition of the outstanding minority stake in Vodafone
Italy. 3
Deloitte LLP and other member firms of Deloitte Touche Tohmatsu Limited were engaged during the year to provide a number of taxation advisory and other non-audit services. In aggregate, fees for
these services amounted to £0.3 million Deloitte LLP and other member firms of Deloitte Touche Tohmatsu
Limited have also received fees in each of the last three years in respect of audits of charitable foundations associated to the Group. A description of the work performed by the Audit and Risk Committee in order to safeguard auditor independence when non-audit services are
provided is set out in Corporate governance on page 64.






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|    |  |                                                           
|114 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | 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 on our impairment review process see Critical accounting judgements 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. 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
to sell 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. The Group prepares and approves formal five year
management plans for its operations, which are used in the value in use calculations. In certain developing markets the fifth year of the management plan is not indicative of the long-term future performance as operations may not have reached
maturity. For these operations, the Group extends the plan data for an additional five year period. Property, plant and equipment and
finite lived intangible assets At each reporting period date, the Group reviews the carrying amounts of its property, plant and
equipment and finite lived intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the
extent, if any, of the impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset
or cash-generating unit is reduced to its recoverable amount and an impairment loss is recognised immediately in the income statement. Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of
its recoverable amount, not to exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior years and an impairment loss reversal is recognised immediately in the
income statement. Impairment losses Following our annual impairment review, the net impairment losses recognised in the consolidated income statement within operating profit, in respect of goodwill, licences and spectrum fees, and property, plant and equipment are
stated below. The impairment losses were based on value in use calculations.  Cash generating unit

Reportable segment

2014 £m


2013
£m


2012
£mGermany

Germany


4,900







Italy

Italy






4,500



2,450Spain

Spain


800



3,200



900Portugal

Other Europe


500







250Czech Republic

Other Europe


200







Romania

Other Europe


200







Greece

Other Europe










4506,600



7,700



4,050 Goodwill The remaining carrying value of goodwill at 31 March was as follows:  2014 £m


Restated
2013
£mGermany


10,306



11,703Italy


3,017



Spain


1,662



2,51514,985



14,218Other


8,330



10,17223,315



24,390






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Key assumptions used in the value in use calculations The key assumptions used in determining the value in use are:  Assumption

How determinedBudgeted, adjusted EBITDA

Budgeted, adjusted EBITDA has been based on past experience adjusted for the following:  g

voice and messaging revenue is expected to benefit from increased usage from new customers, especially in emerging markets, the introduction of new services and traffic moving from fixed networks
to mobile networks, though these factors will be offset by increased competitor activity, which may result in price declines, and the trend of falling termination and other regulated rates;  g

non-messaging data revenue is expected to continue to grow as the penetration of 3G (plus 4G where available) enabled devices and smartphones rise along with higher data bundle attachment rates,
and new products and services are introduced; and  g

margins are expected to be impacted by negative factors such as the cost of acquiring and retaining customers in increasingly competitive markets and the expectation of further termination rate
cuts by regulators and by positive factors such as the efficiencies expected from the implementation of Group initiatives. Budgeted capital expenditure

The cash flow forecasts for capital expenditure are based on past experience and include the ongoing capital expenditure required to roll
out networks in emerging markets, to provide enhanced voice and data products and services and to meet the population coverage requirements of certain of the Groups licences. Capital expenditure includes cash outflows for the purchase of
property, plant and equipment and computer software.Long-term growth rate

For businesses where the five year management plans are used for the Groups value in use calculations, a long-term growth rate into perpetuity has been determined as the lower of:  g

the nominal GDP rates for the country of operation; and  g

the long-term compound annual growth rate in adjusted EBITDA in years six to ten estimated by management. Pre-tax risk adjusted discount
rate

The discount rate applied to the cash flows of each of the Groups operations is generally based on the risk free rate for ten year bonds issued by the government in the respective market. Where government
bond rates contain a material component of credit risk, high quality local corporate bond rates may be used.  These rates are adjusted for a risk premium to reflect both the increased risk of investing in equities and the systematic risk of the specific Group operating company. In making this adjustment, inputs
required are the equity market risk premium (that is the required increased return required over and above a risk free rate by an investor who is investing in the market as a whole) and the risk adjustment, beta, applied to reflect the risk of the
specific Group operating company relative to the market as a whole.  In determining the risk adjusted discount rate, management has applied an adjustment for the systematic risk to each of the Groups operations determined using an
average of the betas of comparable listed mobile telecommunications companies and, where available and appropriate, across a specific territory. Management has used a forward-looking equity market risk premium that takes into consideration both
studies by independent economists, the average equity market risk premium over the past ten years and the market risk premiums typically used by investment banks in evaluating acquisition proposals. Year ended 31 March 2014 During the year ended 31 March 2014 impairment charges of £4,900 million, £800 million, £500 million,
£200 million and £200 million were recorded in respect of the Groups investments in Germany, Spain, Portugal, Czech Republic and Romania respectively. The impairment charges relate solely to goodwill. The recoverable
amount of Germany, Spain, Portugal, Czech Republic and Romania were £23.0 billion, £3.3 billion, £1.3 billion, £0.6 billion and £1.2 billion respectively. The impairment charges are driven by lower projected cash flows within the business plans resulting in our reassessment of expected future
business performance in the light of current trading and economic conditions. The table below shows the key assumptions used in the
value in use calculations.  Assumptions used in value in use calculationGermany


Italy


Spain


Portugal


Czech Republic


Romania


Greece%


%


%


%


%


%


%Pre-tax risk adjusted discount rate


7.7



10.5



9.9



11.1



8.0



11.0



24.3Long-term growth rate


0.5



1.0



1.9



1.5



0.8



1.0



1.0Budgeted, adjusted EBITDA1


2.8



(2.2
)


(0.7
)


(0.8
)


(0.6
)


1.7



4.7Budgeted capital expenditure2


12.521.7



11.125.5



9.023.5



11.028.3



15.921.2



10.517.3



7.612.2 Notes: 1
Budgeted, adjusted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing. 2
Budgeted capital expenditure is expressed as the range of capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans used for impairment
testing.






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|116 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






4. Impairment losses (continued) Sensitivity analysis Other than as disclosed below, management believes that no reasonably possible change in any of the above key assumptions would cause the carrying
value of any cash-generating unit to exceed its recoverable amount. The estimated recoverable amounts of the Groups operations
in Germany, Italy, Spain, Portugal, Czech Republic, Romania and Greece are equal to, or not materially greater than, their carrying values; consequently, any adverse change in key assumptions would, in isolation, cause a further impairment loss to
be recognised. The changes in the following table to assumptions used in the impairment review would, in isolation, lead to an
(increase)/decrease to the aggregate impairment loss recognised in the year ended 31 March 2014.  Germany




Spain




PortugalIncrease
by 2pps
£bn


Decrease
by 2pps
£bn




Increase
by 2pps
£bn


Decrease
by 2pps
£bn




Increase
by 2pps
£bn


Decrease
by 2pps
£bnPre-tax risk adjusted discount rate


(7.1
)


4.9





(0.9
)


0.8





(0.3
)


0.4Long-term growth rate


4.9



(5.2
)




0.8



(0.8
)




0.4



(0.2
)Budgeted, adjusted EBITDA1


0.8



(0.8
)




0.2



(0.2
)




0.1



(0.1
)Budgeted capital expenditure2


(2.4
)


2.4





(0.8
)


0.8





(0.2
)


0.2Czech Republic




RomaniaIncrease
by 2pps
£bn


Decrease
by 2pps
£bn




Increase
by 2pps
£bn


Decrease
by 2pps
£bnPre-tax risk adjusted discount rate












(0.2
)


0.2





(0.2
)


0.2Long-term growth rate












0.2



(0.2
)




0.2



(0.2
)Budgeted, adjusted EBITDA1






















0.1



(0.1
)Budgeted capital expenditure2


























 Notes: 1
Budgeted, adjusted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing. 2
Budgeted capital expenditure is expressed 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 2013 During the year ended 31 March 2013 impairment charges of £4,500 million and £3,200 million were recorded in respect of
the Groups investments in Italy and Spain respectively. The impairment charges relate solely to goodwill. The recoverable amounts of Italy and Spain were £8.9 billion and £4.2 billion respectively. The impairment charges were
driven by a combination of lower projected cash flows within business plans, resulting from our reassessment of expected future business performance in light of current trading and economic conditions and adverse movements in discount rates driven
by the credit rating and yields on ten year government bonds. The table below shows the key assumptions used in the value in use
calculations.  Assumptions used in value in use calculationItaly


Spain


Germany


Greece


Portugal


Romania%


%


%


%


%


%Pre-tax risk adjusted discount rate


11.3



12.2



9.6



23.9



11.2



11.2Long-term growth rate


0.5



1.9



1.4



1.0



0.4



3.0Budgeted, adjusted EBITDA1


(0.2
)


1.7



2.5



0.4



(1.5
)


0.8Budgeted capital expenditure2


9.915.2



11.215.2



11.312.6



7.811.0



10.018.9



10.115.5 Notes: 1
Budgeted, adjusted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing. 2
Budgeted capital expenditure is expressed as the range of capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans used for impairment
testing. The pre-tax adjusted discount rate used for Czech Republic was 5.6%.






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Sensitivity analysis Other than as disclosed below, management believes that no reasonably possible change in any of the above key assumptions would cause the carrying
value of any cash-generating unit to exceed its recoverable amount. The estimated recoverable amounts of the Groups operations
in Italy, Spain, Portugal and Greece are equal to, or not materially greater than, their carrying values; consequently, any adverse change in key assumptions would, in isolation, cause a further impairment loss to be recognised. The estimated
recoverable amounts of the Groups operations in Germany and Romania exceeded their carrying values by approximately £1,034 million and £184 million respectively.  Change required for carrying valueto equal the recoverable 
amountGermany
pps


Romania
ppsPre-tax risk adjusted discount rate


0.4



1.0Long-term growth rate


(0.5
)


(1.2
)Budgeted, adjusted EBITDA1


(0.7
)


(1.7
)Budgeted capital expenditure2


1.1



2.8 Notes: 1
Budgeted, adjusted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing. 2
Budgeted capital expenditure is expressed as the range of capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans used for impairment
testing. The changes in the following table to assumptions used in the impairment review would, in isolation, lead to an
(increase)/decrease to the aggregate impairment loss recognised in the year ended 31 March 2013:  Italy




Spain




PortugalIncreaseby 2pps£bn


Decreaseby 2pps£bn




Increaseby 2pps£bn


Decreaseby 2pps£bn




Increaseby 2pps£bn


Decreaseby 2pps£bnPre-tax risk adjusted discount rate


(1.4
)


1.8





(0.7
)








(0.3
)


Long-term growth rate


1.8



(1.3
)








(0.7
)








(0.3
)Budgeted, adjusted EBITDA1


0.5



(0.5
)








(0.1
)








(0.1
)Budgeted capital expenditure2


(0.9
)


0.9





(0.6
)








(0.2
)


 Notes: 1
Budgeted, adjusted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing. 2
Budgeted capital expenditure is expressed 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 2012 During the year ended 31 March 2012 impairment charges of £2,450 million, £900 million, £450 million and
£250 million were recorded in respect of the Groups investments in Italy, Spain, Greece and Portugal, respectively. Of the total charge, £3,848 million related to goodwill, and £202 million was allocated in
Greece to licence intangible assets (£121 million) and property, plant and equipment (£81 million). The recoverable amounts of Italy, Spain, Greece and Portugal were £13.5 billion, £7.4 billion, £0.4 billion and
£1.8 billion respectively. The impairment charges were primarily driven by increased discount rates as a result of increases in
bond rates, with the exception of Spain where rates reduced marginally compared to 31 March 2011. In addition, business valuations were negatively impacted by lower cash flows within business plans reflecting challenging economic and
competitive conditions, and faster than expected regulatory rate cuts, particularly in Italy. The table below shows the key
assumptions used in the value in use calculations.  Assumptions used in value in use calculationGermany%


Italy
%


Spain
%


Greece
%


Portugal
%


India
%


Romania
%Pre-tax risk adjusted discount rate


8.5



12.1



10.6



22.8



16.9



15.1



11.5Long-term growth rate


1.5



1.2



1.6



1.0



2.3



6.8



3.0Budgeted, adjusted EBITDA1


2.3



(1.2
)


3.9



(6.1
)


0.2



15.0



0.8Budgeted capital expenditure2


8.511.8



10.112.3



10.311.7



9.312.7



12.514.0



11.414.4



12.014.3 Notes: 1
Budgeted, adjusted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing. 2
Budgeted capital expenditure is expressed as the range of capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans used for impairment
testing.






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|    |  |                                                           
|118 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






5. Investment income and financing costs Investment income comprises interest received from short-term investments, bank deposits, government bonds and
gains from foreign exchange contracts which are used to hedge net debt. 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.  2014£m


Restated2013£m


Restated
2012
£mInvestment income:Available-for-sale investments:Dividends received


10



2



2Loans and receivables at amortised cost


184



124



168Fair value through the income statement (held for trading):Derivatives  foreign exchange contracts


82



115



121Other1


70



64



165346



305



456Financing costs:Items in hedge relationships:Other loans


265



228



210Interest rate swaps


(196
)


(184
)


(178
)Fair value hedging instrument


386



(81
)


(539
)Fair value of hedged item


(363
)


112



511Other financial liabilities held at amortised cost:Bank loans and overdrafts2


557



584



628Other loans3


770



736



785Interest credit on settlement of tax
issues4


(15
)


(91
)


23Equity put rights and similar
arrangements5


143



136



81Fair value through the income statement (held for trading):Derivatives  forward starting swaps and futures


1



105



244Other1


6



51



31,554



1,596



1,768Net financing costs


1,208



1,291



1,312 Notes: 1
Amounts for 2014 include net foreign exchange gains of £21 million (2013 £91 million loss; 2012 £55 million gain) arising from net foreign exchange movements on
certain intercompany balances. Amounts for 2012 include foreign exchange gains arising on investments held following the disposal of Vodafone Japan to SoftBank Corp. 2
The Group capitalised £3 million of interest expense in the year (2013: £8 million; 2012: £25 million). The interest rate used to determine the amount of borrowing costs
eligible for capitalisation was 5.4%. 3
Amounts for 2014 include foreign exchange losses of £201 million. 4
Amounts for 2014 and 2013 include a reduction of the provision for potential interest on tax issues. 5
Includes amounts in relation to the Groups arrangements with its non-controlling interest partners in India.






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|     |  |    






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 tax payable and deferred tax. 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 UK and foreign tax rates and laws that have been enacted or
substantively enacted by the reporting period date. Deferred tax is the tax expected to be payable or recoverable in the future
arising from temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. It is accounted for using the statement of financial
position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that temporary differences or taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are not recognised
to the extent they arise from the initial recognition of non-tax deductible goodwill. Deferred tax liabilities are recognised for
taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint arrangements, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each reporting period
date and adjusted to reflect changes in the Groups assessment that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on
tax rates that have been enacted or substantively enacted by the reporting period date. Tax assets and liabilities are offset when
there is a legally enforceable right to set off current tax assets against current tax liabilities and when they either relate to income taxes levied by the same taxation authority on either the same taxable entity or on different taxable entities
which intend to settle the current tax assets and liabilities on a net basis. Tax is charged or credited to the income statement,
except when it relates to items charged or credited to other comprehensive income or directly to equity, in which case the tax is recognised in other comprehensive income or in equity. Income tax expense  2014£m


Restated2013£m


Restated2012£mUnited Kingdom corporation tax expense/(income):Current year










Adjustments in respect of prior years


17



24



(4
)17



24



(4
)Overseas current tax expense/(income):Current year


3,114



1,062



1,118Adjustments in respect of prior years


(25
)


(249
)


(42
)3,089



813



1,076Total current tax expense


3,106



837



1,072Deferred tax on origination and reversal of temporary differences:United Kingdom deferred tax


57



(52
)


(8
)Overseas deferred tax


(19,745
)


(309
)


(359
)Total deferred tax income


(19,688
)


(361
)


(367
)Total income tax (income)/expense


(16,582
)


476



705 UK operating profits are more than offset by statutory allowances for capital investment in the UK network and
systems plus ongoing interest costs including those arising from the £6.8 billion of spectrum payments to the UK government in 2000 and 2013.






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|120 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






6. Taxation (continued) Tax on discontinued operations  2014 £m


2013
£m


2012
£mTax charge on profit from ordinary activities of discontinued operations


1,709



1,750



1,289Tax charge relating to the gain or loss of discontinuance










Total tax charge on discontinued operations


1,709



1,750



1,289 Tax charged/(credited) directly to other comprehensive income  2014 £m


Restated2013 £m


Restated2012 £mCurrent tax charge/(credit)






4



(4
)Deferred tax charge/(credit)


23



(37
)


(116
)Total tax charged/(credited) directly to other comprehensive income


23



(33
)


(120
) Tax charged/(credited) directly to equity  2014£m


Restated2013 £m


Restated
2012
£mCurrent tax charge/(credit)


12



(17
)


(1
)Deferred tax credit






(1
)


(1
)Total tax charged/(credited) directly to equity


12



(18
)


(2
) Factors affecting the tax expense for the year The table below explains the differences between the expected tax expense at the UK statutory tax rate of 23% (2013: 24% and 2012: 26%), and the
Groups total tax expense for each year.  2014 £m


Restated2013
£m


Restated2012
£mContinuing (loss)/profit before tax as shown in the consolidated income statement


(5,270
)


(3,483
)


4,144Expected income tax (income)/expense at UK statutory tax rate


(1,212
)


(836
)


1,077Effect of different statutory tax rates of overseas jurisdictions


(328
)


(9
)


456Impairment losses with no tax effect


1,958



2,664



1,053Disposal of Group investments1


211



(10
)


(718
)Effect of taxation of associates and joint ventures, reported within operating profit


61



129



78Recognition of deferred tax assets in Luxembourg and Germany2


(19,318
)






Tax charge on rationalisation and re-organisation of non-US assets prior to VZW disposal3


1,365







Deferred tax impact of previously unrecognised temporary differences including losses


(164
)


(625
)


(634
)Current tax impact of previously unrecognised temporary differences including losses






(74
)


Effect of unrecognised temporary differences


215



(184
)


(285
)Adjustments in respect of prior years


(43
)


(234
)


(110
)Gain on acquisition of CWW with no tax effect






(164
)


Effect of secondary and irrecoverable taxes


37



94



159Deferred tax on overseas earnings


4



(4
)


Effect of current year changes in statutory tax rates


158



(2
)


(3
)Expenses not deductible for tax purposes and other items


210



104



199Tax on income derived from discontinued operations


418







Exclude taxation of associates


(154
)


(373
)


(567
)Income tax (income)/expense


(16,582
)


476



705 Notes: 1
2014 relates to deemed disposal of Italy. 2012 relates to the disposal of SFR and Polkomtel. 2
See commentary regarding deferred tax asset recognition on page 122. 3
Includes the US tax charge of £2,210 million on the rationalisation and reorganisation of non-US assets prior to the disposal of our interest in Verizon Wireless.






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Deferred tax Analysis of movements in the net deferred tax balance during the year:  £m1 April 2013 restated


(3,823
)Exchange movements


151Credited to the income statement (continuing operations)


19,688Charged to the income statement (discontinued operations)


(567
)Charged directly to other comprehensive income


(23
)Arising on acquisition and disposals


4,43431 March 2014


19,860 Deferred tax assets and liabilities, before offset of balances within countries, are as follows:  Amount(charged)/creditedin incomestatement£m


Grossdeferredtax asset£m


Grossdeferred taxliability
£m


Lessamountsunrecognised£m


Netrecogniseddeferred tax(liability)/asset
£mAccelerated tax depreciation


(123
)


993



(1,597
)


(40
)


(644
)Intangible assets


255



72



(1,409
)


1



(1,336
)Tax losses


19,433



28,569







(7,418
)


21,151Deferred tax on overseas earnings


(2
)














Other temporary differences


125



1,186



(343
)


(154
)


68931 March 2014


19,688



30,820



(3,349
)


(7,611
)


19,860 Deferred tax assets and liabilities are analysed in the statement of financial position, after offset of balances
within countries, as follows:  £mDeferred tax asset


20,607Deferred tax liability


(747
)31 March 2014


19,860 At 31 March 2013, deferred tax assets and liabilities, before offset of balances within countries, were as
follows:  Amount(charged)/creditedin incomestatement£m


Grossdeferred    tax asset£m


Gross  deferred taxliability
£m


Lessamountsunrecognised£m


Netrecognised    deferred tax(liability)/asset
£mAccelerated tax depreciation


58



1,071



(4,962
)






(3,891
)Intangible assets


85



126



(1,403
)






(1,277
)Tax losses


164



28,077







(25,977
)


2,100Deferred tax on overseas earnings


(5
)






(1,812
)






(1,812
)Other temporary differences


59



2,848



(193
)


(1,598
)


1,05731 March 2013


361



32,122



(8,370
)


(27,575
)


(3,823
) At 31 March 2013 deferred tax assets and liabilities were analysed in the statement of financial position,
after offset of balances within countries, as follows:  £mDeferred tax asset


2,848Deferred tax liability


(6,671
)31 March 2013


(3,823
)






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|    |  |                                                           
|122 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






6. Taxation (continued) Factors affecting the tax charge in future years Factors that may affect the Groups future tax charge include the impact of corporate restructurings, the resolution of open issues, future
planning, corporate acquisitions and disposals, the use of brought forward tax losses and changes in tax legislation and tax rates. The Group is routinely subject to audit by tax authorities in the territories in which it operates and, specifically, in India these are usually
resolved through the Indian legal system. The Group considers each issue on its merits and, where appropriate, holds provisions in respect of the potential tax liability that may arise. However, 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 30 Contingent liabilities to the consolidated financial statements. At 31 March 2014, the gross amount and expiry dates of losses available for carry forward are as follows:  Expiringwithin5 years
£m


Expiring
within
610 years £m


Unlimited£m


Total
£mLosses for which a deferred tax asset is recognised


274



461



79,115



79,850Losses for which no deferred tax is recognised


1,281



519



26,318



28,1181,555



980



105,433



107,968At 31 March 2013, the gross amount and
expiry dates of losses available for carry forward are as follows:Expiringwithin5 years£m


Expiring
within
610 years £m


Unlimited£m


Total
£mLosses for which a deferred tax asset is recognised


343







8,423



8,766Losses for which no deferred tax is recognised


1,845



691



94,135



96,6712,188



691



102,558



105,437 The losses arising on the write down of investments in Germany are available to use against both German federal
and trade tax liabilities. Losses of £15,290 million (2013: £3,236 million) are included in the above table on which we have recognised a deferred tax asset as we expect the German business to continue to generate future taxable
profits against which we can utilise these losses. In 2013 the Group did not recognise a deferred tax asset on £12,346 million of the losses as it was uncertain that these losses would be utilised. Included above are losses amounting to £6,651 million (2013: £7,104 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. We have recognised a deferred tax asset against £442 million of these losses in
the current year. The losses above also include £73,734 million (2013: £70,644 million) that have arisen in overseas
holding companies as a result of revaluations of those companies investments for local GAAP purposes. A deferred tax asset of £18,150 million (2013: £1,325 million) has been recognised in respect of £62,980 million
(2013: £4,535 million) of these losses which relate to tax groups in Luxembourg where we expect the members of these tax groups to generate future taxable profits against which these losses will be used. No deferred tax asset is recognised in
respect of the remaining £10,754 million of these losses as it is uncertain whether these losses will be utilised. In
addition to the above, we hold £7,642 million of losses in overseas holding companies from 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. The recognition of the additional deferred tax assets, which arose from losses in earlier years, was
triggered by the agreement to dispose of the US Group whose principal asset was its 45% interest in Verizon Wireless, which removes significant uncertainty around both the availability of the losses in Germany and the future income streams in
Luxembourg. The Group expects to use the losses over a significant number of years; the actual use of the losses is dependent on many factors which may change, including the level of profitability in both Germany and Luxembourg, changes in tax law
and changes to the structure of the Group. The remaining losses relate to a number of other jurisdictions across the Group. There are
also £339 million (2013: £5,918 million) of unrecognised other temporary differences. The Group holds no deferred tax
liability (2013: £1,812 million) in respect of deferred taxation that would arise if temporary differences on investments in subsidiaries, associates and interests in joint arrangements were to be realised after the balance sheet date (see
table above) following the Groups disposal of its 45% stake in Verizon Wireless. No deferred tax liability has been recognised in respect of a further £22,985 million (2013: £47,978 million) of unremitted earnings of
subsidiaries, associates and joint arrangements because the Group is in a position to control the timing of the reversal of the temporary difference and it is probable that such differences will not reverse in the foreseeable future. It is not practicable to estimate the amount of unrecognised deferred tax liabilities in respect of these unremitted earnings.






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7. Discontinued operations On 21 February 2014, we completed the sale of our US Group whose principal asset was its 45% interest in
Verizon Wireless. The results of these discontinued operations are detailed below. Income statement and segment analysis of
discontinued operations 2014 £m


2013
£m


2012
£mShare of result in associates


3,191



6,422



4,867Net financing income/(costs)


27



(56
)


(23
)Profit before taxation


3,218



6,366



4,844Taxation relating to performance of discontinued operations


(1,709
)


(1,750
)


(1,289
)Post-tax profit from discontinued operations


1,509



4,616



3,555Gain on disposal of discontinued operations2014 £m


2013
£m


2012
£mGain on disposal of discontinued operations before taxation (see note 28)


44,996







Other items arising from the disposal1


1,603







Net gain on disposal of discontinued operations


46,599







Note:
1    Includes dividends received from Verizon Wireless after the date of the
announcement of the disposalProfit for the financial year from discontinued operations2014 £m


2013
£m


2012
£mProfit for the financial year from discontinued operations


1,509



4,616



3,555Net gain on disposal of discontinued operations


46,599







Profit for the financial year from discontinued operations


48,108



4,616



3,555Earnings per share from discontinued operations2014 Pence per share


2013
Pence per share


2012
Pence per share Basic


181.74p



17.20p



12.87p Diluted


180.30p



17.20p



12.73pTotal comprehensive income for the financial year from discontinued operations2014 £m


2013
£m


2012
£mEquity shareholders funds


48,108



4,616



3,555Cash flows from discontinued operations2014 £m


2013
£m


2012
£mNet cash flows from operating activities


(2,617
)


(1,464
)


(175
)Net cash flows from investing activities


4,830



4,798



4,318Net cash flows from financing activities


(2,225
)


(5,164
)


(2,364
)Net (decrease)/increase in cash and cash equivalents


(12
)


(1,830
)


1,779Cash and cash equivalents at the beginning of the financial year






1,721



Exchange gain/(loss) on cash and cash equivalents


12



109



(58
)Cash and cash equivalents at the end of the financial year










1,721






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|    |  |                                                           
|124 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | 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.  2014Millions


Restated2013Millions


Restated2012MillionsWeighted average number of shares for basic earnings per share


26,472



26,831



27,624Effect of dilutive potential shares: restricted shares and share options


210







314Weighted average number of shares for diluted earnings per share


26,682



26,831



27,9382014 £m


Restated2013 £m


Restated2012 £mEarnings for basic and diluted earnings per share


59,254



413



6,948Basic earnings per share


223.84p



1.54p



25.15pDiluted earnings per share


222.07p



1.54p



24.87p On 19 February 2014, we announced a 6 for 11 share consolidation effective 24 February 2014.
This had the effect of reducing the number of shares in issue from 52,821,751,216 ordinary shares (including 4,351,833,492 ordinary shares held in Treasury) as at the close of business on 18 February 2014 to 28,811,864,298 new ordinary shares
in issue immediately after the share consolidation on 24 February 2014. Prior year comparatives have been restated.  9. Equity dividends Dividends are one type of shareholder return, historically paid to our shareholders in February and August.
For information on shareholder returns in the form of share buybacks, see the Commentary on the consolidated statement of changes in equity on page 101.  2014 £m


2013
£m


2012£mDeclared during the financial year:Final dividend for the year ended 31 March 2013: 6.92 pence per share(2012: 6.47 pence per share, 2011: 6.05 pence per share)


3,365



3,193



3,102Interim dividend for the year ended 31 March 2014: 3.53 pence per share(2013: 3.27 pence per share, 2012: 3.05 pence per share)


1,711



1,608



1,536Second interim dividend share for the year ended 31 March 2014: nil(2013: nil pence per share, 2012: 4.00 pence per share)










2,016Special dividend for the year ended 31 March 2014: 172.94 US cents per share (see below)(2013: nil, 2012: nil)


35,490







40,566



4,801



6,654Proposed after the end of the reporting period and not recognised as a liability:Final dividend for the year ended 31 March 2014: 7.47 pence per share(2013: 6.92 pence per share, 2012: 6.47 pence per share)


1,975



3,377



3,195 On 2 September 2013 Vodafone announced that it had reached agreement to dispose of its US Group whose
principal asset was its 45% interest in Verizon Wireless (VZW) to Verizon Communications Inc. (Verizon), for a total consideration of US$130 billion (£79 billion). At a General Meeting of the Company on 28 January 2014, shareholders approved the transactions and following completion on 21 February
2014, Vodafone shareholders received all of the Verizon shares and US$23.9 billion (£14.3 billion) of cash (the Return of Value) totalling US$85.2 billion (£51.0 billion). The Return of Value was carried out in the form of a B share scheme pursuant to a Court-approved scheme of arrangement and associated reduction of
capital (the Scheme). The Scheme provided shareholders (other than shareholders in the United States and certain other jurisdictions) with the flexibility to receive their proceeds as either an income or capital return. Under the Scheme,
Vodafone shareholders were issued unlisted, non-voting bonus shares, which were shortly thereafter either cancelled in consideration of the relevant amount of Verizon shares and cash or the holders received the relevant amount of Verizon shares and
cash in satisfaction of a special distribution on the bonus shares, depending on shareholder elections and subject to applicable securities laws.






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10. Intangible assets Our 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 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. 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 or whenever there is evidence that it may be required.
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 jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or
loss recognised in the income statement on disposal. Goodwill arising before the date of transition to IFRS, on 1 April 2004, has
been retained at the previous UK GAAP amounts, subject to being tested for impairment at that date. Goodwill written off to reserves under UK GAAP prior to 1998 has not been reinstated and is not included in determining any subsequent
profit or loss 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 computer 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 include software development 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 computer software programs are recognised as an expense when they are incurred. Internally developed software is recognised only if all of the following conditions are met:  g

an asset is created that can be separately identified;  g

it is probable that the asset created will generate future economic benefits; and  g

the development cost of the asset can be measured reliably.  Amortisation is charged to the income statement on a straight-line basis over the estimated useful life from the date the software is available
for use. Other intangible assets Other intangible assets, including brands and customer bases, are recorded at fair value at the date of acquisition. Amortisation is charged to the income statement, over the estimated useful lives of intangible assets from the date
they are available for use, on a straight-line basis, with the exception of customer relationships which are amortised on a sum of digits 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:  g Licence and spectrum fees

325 yearsg Computer software

35 yearsg Brands

110 yearsg Customer bases

27 years






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|126 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






10. Intangible assets (continued)  Goodwill
£m


Licences and spectrum £m


Computer
software
£m


Other
£m


Total
£mCost:1 April 2012 restated


72,840



26,480



8,018



2,783



110,121Exchange movements


417



(62
)


49



(213
)


191Arising on acquisition


59



28



63



335



485Additions






2,430



1,307







3,737Disposals of subsidiaries






(9
)


(554
)






(563
)Disposals










(4
)






(4
)Other






4











431 March 2013 restated


73,316



28,871



8,879



2,905



113,971Exchange movements


(3,054
)


(1,757
)


(375
)


(434
)


(5,620
)Arising on acquisition


6,859



1,319



464



2,861



11,503Additions






2,228



1,437







3,665Disposals






(74
)


(296
)






(370
)Other






5



103







10831 March 2014


77,121



30,592



10,212



5,332



123,257Accumulated impairment losses and amortisation:1 April 2012 restated


45,024



10,886



5,471



2,162



63,543Exchange movements


702



30



38



(153
)


617Amortisation charge for the year






1,623



1,150



251



3,024Impairment losses


3,200















3,200Disposals of subsidiaries






(5
)


(545
)






(550
)Disposals










(3
)






(3
)Other










1







131 March 2013 restated


48,926



12,534



6,112



2,260



69,832Exchange movements


(1,720
)


(732
)


(261
)


(338
)


(3,051
)Amortisation charge for the year






1,683



1,282



557



3,522Impairment losses


6,600















6,600Disposals






(65
)


(278
)






(343
)Other










9







931 March 2014


53,806



13,420



6,864



2,479



76,569Net book value:31 March 2013 restated


24,390



16,337



2,767



645



44,13931 March 2014


23,315



17,172



3,348



2,853



46,688 For licences and spectrum and other intangible assets, amortisation is included within the cost of sales line
within the consolidated income statement. Licences and spectrum with a net book value of £3,885 million (2013: £2,707 million) have been pledged as security against borrowings. The net book value and expiry dates of the most significant licences are as follows:  Expiry date


2014£m


Restated
2013
£mGermany


2016/2020/2025



3,743



4,329Italy


2015/2021/2029



1,301



UK


2021/2033



3,425



3,782India


20142030



3,885



2,702Qatar


2028



945



1,111Netherlands


2016/2029/2030



1,188



1,329 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 194.






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11. Property, plant and equipment We make 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 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 subsequent
accumulated depreciation and subsequent accumulated impairment losses. Amounts for equipment, fixtures and fittings, which includes
network infrastructure assets and which together comprise an all but insignificant amount of the Groups property, plant and equipment, 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 loss. 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  g Freehold buildings

2550 yearsg Leasehold premises

the term of the leaseEquipment, fixtures and fittingsg Network infrastructure

325 yearsg Other

310 years Depreciation is not provided on freehold land. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of
the relevant lease. The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined
as the difference between any sale proceeds and the carrying amount of the asset and is recognised in the income statement.






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|128 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






11. Property, plant and equipment (continued)  Land and buildings £m


Equipment, fixtures and fittings
£m


Total
£mCost:1 April 2012 restated


1,426



38,776



40,202Exchange movements


(20
)


(41
)


(61
)Arising on acquisition


52



1,503



1,555Additions


122



3,862



3,984Disposals of subsidiaries


(1
)


(28
)


(29
)Disposals


(18
)


(1,481
)


(1,499
)Other


37



(143
)


(106
)31 March 2013 restated


1,598



42,448



44,046Exchange movements


(99
)


(2,900
)


(2,999
)Arising on acquisition


113



6,286



6,399Additions


127



4,743



4,870Disposals of subsidiaries






(15
)


(15
)Disposals


(93
)


(1,224
)


(1,317
)Transfer of assets to joint operations






(672
)


(672
)Other






(103
)


(103
)31 March 2014


1,646



48,563



50,209Accumulated depreciation and impairment:1 April 2012 restated


584



23,610



24,194Exchange movements


1



106



107Charge for the year


97



3,540



3,637Disposals of subsidiaries


(1
)


(14
)


(15
)Disposals


(13
)


(1,329
)


(1,342
)Other


31



(150
)


(119
)31 March 2013 restated


699



25,763



26,462Exchange movements


(20
)


(1,477
)


(1,497
)Charge for the year


99



3,939



4,038Disposals of subsidiaries






(15
)


(15
)Disposals


(46
)


(1,099
)


(1,145
)Transfer of assets to joint operations






(476
)


(476
)Other






(9
)


(9
)31 March 2014


732



26,626



27,358Net book value:31 March 2013 restated


899



16,685



17,58431 March 2014


914



21,937



22,851 The net book value of land and buildings and equipment, fixtures and fittings includes £48 million and
£413 million respectively (2013: £62 million and £281 million) in relation to assets held under finance leases. 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 £70 million and £1,617 million respectively (2013: £19 million and £1,399 million). Property, plant and equipment with a net book value of
£1 million (2013: £357 million) has been pledged as security against borrowings.






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12. Investments in associates and joint ventures We hold interests in several associates where we have significant influence, including Verizon Wireless which
was disposed of on 21 February 2014, as well as interests in a number of joint arrangements where we share control with one or more third parties, with our business in Italy being the most significant prior to the acquisition of the remaining
interests as part of the Verizon Wireless disposal. For further details see Critical accounting judgements 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. 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 jointly controlled entity 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 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 as 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 venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but do 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 equity method of accounting. Under the equity method, investments in associates are carried in the consolidated
statement of financial position at cost as adjusted for post-acquisition changes in the Groups share of the net assets of the associate, 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 an associate in excess of the Groups interest in that associate are recognised only to the extent that the Group has incurred legal or constructive obligations or made
payments on behalf of the associate. Joint operations The Companys principal joint operation has share capital consisting solely of ordinary shares and is indirectly held, and principally
operates in the UK. The financial and operating activities of the operation are jointly controlled by the participating shareholders and are primarily designed for the provision of output to the shareholders.  Name of joint operation


Principal activity



Country ofincorporation orregistration



Percentageshareholdings
1Cornerstone Telecommunications Infrastructure Limited


Network infrastructure



UK



50.0 Note: 1
Effective ownership percentages of Vodafone Group Plc at 31 March 2014, rounded to the nearest tenth of one percent.






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|130 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






12. Investments in associates and joint ventures (continued)  2014 £m


Restated
2013
£mInvestment in joint ventures


(158
)


7,812Investment in associates


272



38,63531 March


114



46,447 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 though 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.  Name of joint venture


Principal activity



Country ofincorporation orregistration



Percentageshareholdings
1Indus Towers Limited


Network infrastructure



India



37.4
2Vodafone Hutchison Australia Pty Limited3


Network operator



Australia



50.0Vodafone Fiji Limited


Network operator



Fiji



49.0
4 Notes: 1
Effective ownership percentages of Vodafone Group Plc at 31 March 2014, rounded to the nearest tenth of one percent. 2
42% of Indus Towers Limited is held by Vodafone India Limited (VIL) in which the Group had a 89% interest. 3
Vodafone Hutchison Australia Pty Limited has a year end of 31 December. 4
The Group holds substantive participating rights which provide it with a veto over the significant financial and operating policies of Vodafone Fiji Limited and which ensure it is able to exercise
joint control over Vodafone Fiji Limited with the majority shareholder. The summarised financial information for equity
accounted joint ventures on a 100% ownership basis is set out below including the Groups 76.9% ownership interest in Vodafone Omnitel B.V. until 21 February 2014. On 21 February 2014, the Group acquired the remaining 23.1% interest
upon which date, the results of the wholly acquired entity have been consolidated in the Groups financial statements. Refer to note 28 Acquisitions and disposals for further information.  Vodafone HutchisonVodafone Omnitel B.V1.


Indus Towers Limited


Australia Pty Limited


Other joint ventures


Total2014
£m


2013
£m


2014
£m


2013
£m


2014
£m


2013
£m


2014
£m


2013
£m


2014
£m


2013
£mIncome statement and statement of comprehensive incomeRevenue


4,931



6,186



1,547



1,489



2,032



2,497Depreciation and amortisation


(937
)


(999
)


(507
)


(256
)


(423
)


(454
)Interest income


1



2



20



8



10



6Interest expense


(15
)


(6
)


(124
)


(103
)


(212
)


(191
)Income tax (expense)/income


(174
)


(430
)


39



(53
)


1



3Profit or loss from continuing operations


339



951



51



34



(132
)


(446
)Other comprehensive (expense)/income






(6
)














6Total comprehensive income/(expense)


339



945



51



34



(132
)


(440
)Statement of financial positionNon-current assets






4,870



1,798



1,542



1,916



1,865Current assets






1,722



423



417



590



528Non-current liabilities






(176
)


(801
)


(1,297
)


(3,150
)


(1,688
)Current liabilities






(3,067
)


(532
)


(724
)


(661
)


(2,154
)Equity shareholders funds






(3,349
)


(888
)


62



1,305



1,449Statement of financial positionCash and cash equivalents within current assets






20



143



65



60



96Non-current liabilities excluding trade and other payables and provisions






(97
)


(701
)


(1,147
)


(3,060
)


(1,560
)Current liabilities excluding trade and other payables and provisions






(772
)


(258
)


(34
)


(97
)


(1,412
)SummaryInvestment in joint ventures






8,441



373



(26
)


(559
)


(609
)


28



6



(158
)


7,812Profit/(loss) from continuing operations


261



731



21



15



(66
)


(223
)


5



(3
)


221



520Other comprehensive (expense)/income






(5
)














3







2







Total comprehensive income/(expense)


261



726



21



15



(66
)


(220
)


5



(1
)


221



520 Note: 1
Prior to 21 February 2013, the other participating shareholder held substantive veto rights such that the Group did not unilaterally control the financial and operating policies of Vodafone
Omnitel B.V. The Group received a dividend of £26 million in the year to 31 March 2014 (2013: £46
million; 2012: £nil) from Indus Towers.






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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.  Name of associate


Principal activity



Country ofincorporation or registration



Percentageshareholdings
1Safaricom Limited2,3


Network operator



Kenya



40.0 Notes: 1
Effective ownership percentages of Vodafone Group Plc at 31 March 2014, rounded to the nearest tenth of one percent. 2
The Group also holds two non-voting shares. 3
At 31 March 2014 the fair value of Safaricom Limited was KES 198 billion (£1,371 million) based on the closing quoted share price on the Nairobi Stock Exchange. On 21 February 2014, the Group disposed of its 45% interest in Cellco Partnership which traded under the name Verizon Wireless. Consequently,
comparative information has been restated to reflect the continuing operations of the business. Results from discontinued operations are disclosed in note 7 Discontinued operations to the consolidated financial statements. The summarised
financial information showing the Groups share of equity accounted associates is set out below.  Cellco Partnership


Other associates


Total2014
£m


2013
£m


2014
£m


2013
£m


2014
£m


2013
£mIncome statement and statement of comprehensive incomeRevenue


22,122



48,827Depreciation and amortisation


(2,186
)


(5,145
)Interest income


1



3Interest expense


(38
)


(60
)Income tax (expense)/income


(111
)


29Post-tax profit of loss from discontinued operations


7,092



14,272Other comprehensive expense


(2
)


Total comprehensive income


7,090



14,272Statement of financial positionNon-current assets






72,755Current assets






9,764Non-current liabilities






(6,328
)Current liabilities






(9,267
)Non-controlling interests






(1,366
)Equity shareholders funds






(65,558
)Statement of financial positionCash and cash equivalents within current assets






2,894Non-current liabilities excluding trade and other payables and provisions






(5,034
)Current liabilities excluding trade and other payables and provisions






(3,208
)SummaryInvestment in associates






38,373



272



262



272



38,635Profit or loss from continuing operations










57



55



57



55Post-tax profit from discontinued operations


3,191



6,422











3,191



6,422Other comprehensive expense


(1
)














(1
)


Total comprehensive income


3,190



6,422



57



55



3,247



6,477 The Group received £4,828 million of dividends in the year to 31 March 2014 (2013:
£4,798 million, 2012: £3,820 million) from Cellco Partnership.






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|132 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






13. Other investments We hold a number of other listed and unlisted investments, mainly comprising US$5.25 billion of loan notes from
Verizon Communications. Accounting policies Other investments 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. Other investments classified as held for trading and available-for-sale are stated at fair value. Where securities are held for trading purposes,
gains and losses arising from changes in fair value are included in net profit or loss for the period. For available-for-sale investments, gains and losses arising from changes in fair value are recognised directly in equity, until the security is
disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity, determined using the weighted average cost method, is included in the net profit or loss for the period. Other investments classified as loans and receivables are stated at amortised cost using the effective interest method, less any impairment.  2014£m


Restated
2013
£mIncluded within non-current assets:Listed securities:Equity securities


13



3Unlisted securities:Equity securities


228



570Public debt and bonds


141



134Other debt and bonds


3,171



663,553



773 The listed and unlisted securities are classified as available-for-sale. Public debt and bonds are classified as
held for trading, and other debt and bonds which are not quoted in an active market, are classified as loans and receivables. Unlisted
equity investments are recorded at fair value where appropriate. Other debt and bonds includes loan notes of US$5.25 billion
(£3,151 million) issued by Verizon Communications Inc. as part of the Groups disposal of its interest in Verizon Wireless. Current other investments comprise the following, of which public debt and bonds are classified as held for trading.  2014£m


Restated2013£mIncluded within current assets:Public debt and bonds


938



1,130Other debt and bonds


2,957



3,816Cash held in restricted deposits


524



4044,419



5,350 Other debt and bonds includes £2,953 million of assets held for trading which include
£1,979 million (2013: £3,000 million) of assets held in managed investment funds with liquidity of up to 90 days, £830 million (2013: £643 million) of short-term securitised investments with original maturities of
up to six months, and collateral paid on derivative financial instruments of £144 million (2013: £169 million). Current public debt and bonds include government bonds of £852 million (2013: £1,076 million) which consist of highly liquid
index linked gilts with less than four years to maturity held on an effective floating rate basis. For public debt and bonds, other
debt and bonds and cash held in restricted deposits, the carrying amount approximates fair value.






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14. Inventory Our inventory primarily consists of mobile handsets and is presented net of an allowance for obsolete products. Accounting policies 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.  2014£m


Restated2013£mGoods held for resale






441



353Inventory is reported net of allowances for obsolescence, an analysis of
which is as follows:2014£m


Restated2013£m


Restated2012£m1 April


(89
)


(92
)


(99
)Exchange movements


6



(6
)


7Amounts credited to the income statement


(5
)


9



31 March


(88
)


(89
)


(92
) Cost of sales includes amounts related to inventory amounting to £5,340 million (2013: £5,107
million; 2012: £5,409 million).






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|134 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






15. Trade and other receivables Our trade and other receivables mainly consist of amounts owed to us by customers and amounts that we pay to our
suppliers in advance. Trade receivables are shown net of an allowance for bad or doubtful debts. Derivative financial instruments with a positive market value are reported within this note. Accounting policies Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable
amounts. Estimated irrecoverable amounts are based on the ageing of the receivable balances and historical experience. Individual trade receivables are written off when management deems them not to be collectible.  2014£m


Restated2013 £mIncluded within non-current assets:Trade receivables


232



40Amounts owed by associates and joint ventures


51



1,065Other receivables


150



284Prepayments and accrued income


592



499Derivative financial instruments


2,245



2,9443,270



4,832Included within current assets:Trade receivables


3,627



3,277Amounts owed by associates and joint ventures


68



281Other receivables


1,233



908Prepayments and accrued income


3,760



3,464Derivative financial instruments


198



888,886



8,018 The Groups trade receivables are stated after allowances for bad and doubtful debts based on
managements assessment of creditworthiness, an analysis of which is as follows:  2014£m


Restated2013£m


Restated2012 £m1 April


770



799



826Exchange movements


(67
)


(10
)


(54
)Amounts charged to administrative expenses


347



360



357Trade receivables written off


(461
)


(379
)


(330
)31 March


589



770



799 The carrying amounts of trade and other receivables approximate their fair value. Trade and other receivables are
predominantly non-interest bearing.  2014 £m


Restated
2013
£mIncluded within Derivative financial instruments:Fair value through the income statement (held for trading):Interest rate swaps


1,262



1,508Cross currency interest rate swaps


158



319Foreign exchange contracts


68



881,488



1,915Designated hedge relationships:Interest rate swaps


609



1,117Cross currency interest rate swaps


346



2,443



3,032 In the absence of a quoted price in an active market for the same derivatives, the fair values of these financial
instruments are calculated by discounting the future cash flows to net present values using appropriate market interest and foreign currency rates prevailing at 31 March derived from similar transactions.






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16. Trade and other payables Our trade and other payables mainly consist of amounts we owe to our suppliers that have been invoiced or are
accrued. They also include taxes and social security amounts due in relation to our 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.  2014£m


Restated2013 £mIncluded within non-current liabilities:Derivative financial instruments


811



982Other payables


72



105Accruals and deferred income


456



2201,339



1,307Included within current liabilities:Trade payables


4,710



3,781Amounts owed to associates and joint ventures


51



54Other taxes and social security payable


1,047



1,059Derivative financial instruments


70



119Other payables


678



447Accruals and deferred income


8,900



8,47215,456



13,932 The carrying amounts of trade and other payables approximate their fair value. The fair values of the derivative
financial instruments are calculated by discounting the future cash flows to net present values using appropriate market interest and foreign currency rates prevailing at 31 March.  2014£m


Restated2013 £mIncluded within Derivative financial instruments:Fair value through the income statement (held for trading):Interest rate swaps


430



1,013Cross currency interest rate swaps


12



Foreign exchange contracts


29



44471



1,057Designated hedge relationshipsInterest rate swaps


205



44Cross currency interest rate swaps


205



881



1,101






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|136 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






17. 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. For further details see Critical accounting judgements in note 1 Basis of preparation to the consolidated financial statements. 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. 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
de-commissioning. The associated cash outflows are substantially expected to occur at the dates of exit of the assets to which they relate, which are long-term in nature, primarily in periods up to 25 years from when the asset is brought into
use. Legal and regulatory The Group is involved in a number of legal and other disputes, including notifications of possible claims. The directors of the Company, after taking legal advice, have established provisions after taking into account the facts of
each case. The timing of cash outflows associated with the majority of legal claims are typically less than one year, however, for some legal claims the timing of cash flows may be long-term in nature. For a discussion of certain legal issues
potentially affecting the Group see note 30 Contingent liabilities to the consolidated financial statements. Other
provisions Other provisions comprises various provisions including those for restructuring costs and property. The associated cash
outflows for restructuring costs are primarily less than one year. The timing of the cash flows associated with property is dependent upon the remaining term of the associated lease.  Asset
retirement obligations £m


Legal and regulatory £m


Other
£m


Total
£m1 April 2012 restated


288



265



466



1,019Exchange movements


(3
)


6



(6
)


(3
)Arising on acquisition


147



8



109



264Amounts capitalised in the year


41











41Amounts charged to the income statement






42



272



314Utilised in the year  payments


(3
)


(34
)


(167
)


(204
)Amounts released to the income statement






(17
)


(23
)


(40
)Other


(3
)


180



2



17931 March 2013 restated


467



450



653



1,570Exchange movements


(14
)


(33
)


(27
)


(74
)Arising on acquisition


62



92



5



159Amounts capitalised in the year


14











14Amounts charged to the income statement






140



374



514Utilised in the year  payments


(26
)


(35
)


(186
)


(247
)Amounts released to the income statement






(32
)


(61
)


(93
)Other


(18
)


(25
)


9



(34
)31 March 2014


485



557



767



1,809






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Provisions have been analysed between current and non-current as follows: 31 March 2014  Asset
retirement obligations £m


Legal and regulatory £m


Other
£m


Total
£mCurrent liabilities


14



271



678



963Non-current liabilities


471



286



89



846485



557



767



1,809 31 March 2013  Asset
retirement obligations £m


Legal
and regulatory £m


Other
£m


Total£mCurrent liabilities


11



209



495



715Non-current liabilities


456



241



158



855467



450



653



1,570  18. 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 proceeds received, net of direct issuance costs  2014




2013Number


£m




Number


£mOrdinary shares of 2020⁄21 US cents each allotted, issued and fully paid:11 April


53,820,386,309



3,866





53,815,007,289



3,866Allotted during the year


1,423,737









5,379,020



Consolidated during the year2


(24,009,886,918
)












Cancelled during the year


(1,000,000,000
)


(74
)








31 March


28,811,923,128



3,792





53,820,386,309



3,866 Note: 1
At 31 March 2014, the Group held 2,371,962,907 (2013: 4,901,767,844) treasury shares with a nominal value of £312 million (2013: £352 million). The market value of shares held
was £5,225 million (2013: £9,147 million). During the year 103,748,921 (2013: 161,289,620) treasury shares were reissued under Group share option schemes. 2
On 19 February 2014, we announced a 6 for 11 share consolidation effective 24 February 2014. This had the effect of reducing the number of shares in issue from 52,821,751,216
ordinary shares (including 4,351,833,492 ordinary shares held in Treasury) as at the close of business on 18 February 2014 to 28,811,864,298 new ordinary shares in issue immediately after the share consolidation on 24 February 2014. During the year, we issued 14,732,741,283 B shares of US$1.88477 per share and 33,737,176,433 C shares of US$0.00001 per
share as part of the Return of Value following the disposal of our US Group, whose principal asset was its 45% stake in Verizon Wireless. The B shares were cancelled as part of the Return of Value. The C shares were reclassified as deferred shares
with no substantive rights as part of the Return of Value and transferred to LDC (Shares) Limited (LDC). After 22 February 2015 and without prior notice we may repurchase, or be required by LDC to repurchase, and then subsequently
cancel all deferred shares for a total price of not more than one cent for all deferred shares repurchased. Allotted during the year  Number


Nominal
value
£m


Net
proceeds
£mUK share awards










US share awards


1,423,737







Total share awards


1,423,737














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|138 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






19. Reconciliation of net cash flow from operating activities The table below shows how our profit for the year translates into cash flows generated from our operating
activities.  2014 £m


Restated2013 £m


Restated
2012
£mProfit for the financial year


59,420



657



6,994Adjustments for:Share-based payments


92



124



133Depreciation and amortisation


7,560



6,661



6,721Loss on disposal of property, plant and equipment


85



77



51Share of result of equity accounted associates and joint ventures


(3,469
)


(6,997
)


(5,996
)Impairment losses


6,600



7,700



4,050Other income and expense1


(45,979
)


(468
)


(3,705
)Non-operating income and expense


149



(10
)


162Investment income


(346
)


(305
)


(456
)Financing costs


1,527



1,652



1,791Income tax (income)/expense


(14,873
)


2,226



1,994Decrease/(increase) in inventory


4



56



(8
)Decrease/(increase) in trade and other receivables


526



(199
)


(664
)Increase in trade and other payables


851



320



849Cash generated by operations


12,147



11,494



11,916Tax paid


(5,920
)


(2,670
)


(1,619
)Net cash flow from operating activities


6,227



8,824



10,297 Note: 1
Includes a net gain on disposal of Verizon Wireless of £44,996 million.  20. Cash and cash equivalents The majority of the Groups cash is held in bank deposits, money market funds or in repurchase agreements
which have a maturity of three months or less to enable us to meet our short-term liquidity requirements. Accounting policies Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in value.  2014 £m


Restated
2013
£mCash at bank and in hand


1,498



1,304Money market funds


3,648



3,494Repurchase agreements


4,799



2,550Short-term securitised investments


189



183Cash and cash equivalents as presented in the statement of financial position


10,134



7,531Bank overdrafts


(22
)


(25
)Cash and cash equivalents as presented in the statement of cash flows


10,112



7,506 Cash and cash equivalents are held by the Group on a short-term basis with all having an original maturity of
three months or less. The carrying amount approximates their fair value.






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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. 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 Capital market and bank borrowings Interest bearing loans and overdrafts are initially measured at fair value (which is equal to cost at inception), and are subsequently measured at amortised cost, using the effective interest rate method, except where they are
identified as a hedged item in a designated hedge relationship. Any difference between the proceeds net of transaction costs and the amount due on settlement or redemption of borrowings is recognised over the term of the borrowing. Carrying value and fair value information  2014




Restated
2013Short-term
borrowings £m


Long-term
borrowings £m


Total
£m




Short-term
borrowings £m


Long-term
borrowings £m


Total
£mFinancial liabilities measured at amortised cost:Bank loans


1,263



4,647



5,910





2,440



3,077



5,517Bank overdrafts


22







22





25







25Redeemable preference shares




















1,355



1,355Commercial paper


950







950





4,054







4,054Bonds


1,783



4,465



6,248





2,133



15,698



17,831Other liabilities1,2


3,729



110



3,839





3,148



753



3,901Bonds in designated hedge relationships






12,232



12,232









7,021



7,0217,747



21,454



29,201





11,800



27,904



39,704 Notes: 1
At 31 March 2014, amount includes £1,185 million (2013: £1,151 million) in relation to collateral support agreements. 2
At 31 March 2014, amount includes £882 million (2013: £899 million) in relation to the Piramal Healthcare option disclosed in note 22 Liquidity and capital
resources. Bank loans include INR 425 billion of loans held by Vodafone India Limited (VIL) and its
subsidiaries (the VIL Group). The VIL Group has a number of security arrangements supporting certain licences secured under the terms of agreements between the Group, the Department of Telecommunications, and the Government of India
including certain share pledges of the shares within the VIL Group. The terms and conditions of the security arrangements mean that should members of the VIL Group not meet all of their loan payment and performance obligations, the lenders may sell
the pledged shares and enforce rights over the certain licences under the terms of the tri-party agreements to recover their losses, with any remaining sales proceeds being returned to the VIL Group. Each of the eight legal entities within the VIL
Group provide cross-guarantees to the lenders in respect of debt contracted by the other entities. The fair value and carrying value
of the Groups short-term borrowings is as follows:  Sterling equivalent nominal value


Fair value


Carrying value2014
£m


Restated
2013
£m


2014
£m


Restated
2013
£m


2014
£m


Restated
2013
£mFinancial liabilities measured at amortised cost


5,655



9,385



5,964



9,790



5,964



9,667Bonds:


1,756



2,094



1,771



2,150



1,783



2,133Czech koruna floating rate note due June 2013






18







18







18Euro floating rate note due September 2013






646







647







6455.0% US dollar 1,000 million bond due December 2013






658







679







6786.875% euro 1,000 million bond due December 2013






772







806







792Euro floating rate note due June 2014


929







930







930



4.625% sterling 350 million bond dueSeptember 2014


302







307







315



4.625% sterling 525 million bond dueSeptember 2014


525







534







538



Short-term borrowings


7,411



11,479



7,735



11,940



7,747



11,800






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|140 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






21. Borrowings (continued) The fair value and carrying value of the Groups long-term borrowings is as follows:  Sterling equivalent nominal value




Fair value




Carrying value2014
£m


Restated
2013
£m




2014
£m


Restated
2013
£m




2014
£m


Restated
2013
£mFinancial liabilities measured at amortised cost:Bank loans


4,788



3,017





4,707



3,122





4,647



3,077Redeemable preference shares






1,086









1,020









1,355Other liabilities


110



731





110



821





110



753Bonds:


4,272



14,456





4,620



15,986





4,465



15,698Euro floating rate note due June 2014






949









952









9514.15% US dollar 1,250 million bond due June 2014






795









828









8104.625% sterling 350 million bond due September 2014






304









319









3204.625% sterling 525 million bond due September 2014






525









552









5415.125% euro 500 million bond due April 2015


413



422





432



461





435



4465.0% US dollar 750 million bond due September 2015






494









543









5213.375% US dollar 500 million bond due November 2015






329









349









3316.25% euro 1,250 million bond due January 2016


1,032



949





1,020



1,091





943



9640.9% US dollar 900 million bond due February 2016






592









592









592US dollar floating rate note due February 2016






461









460









4612.875% US dollar 600 million bond due March 2016






395









416









3945.75% US dollar 750 million bond due March 2016






494









561









5364.75% euro 500 million bond due June 2016


302



422





328



474





441



4555.625% US dollar 1,300 million bond due February 2017






856









995









9371.625% US dollar 1,000 million bond due March 2017






658









665









6556.5% euro 400 million bond due July 2017


330









351









347



1.25% US dollar 1,000 million bond due September 2017






658









654









6555.375% sterling 600 million bond due December 2017


548



552





611



646





569



5711.5% US dollar 1,400 million bond due February 2018






921









922









9175% euro 750 million bond due June 2018


619



633





716



750





644



6586.5% euro 700 million bond due June 2018


578









604









606



4.625% US dollar 500 million bond due July 2018






329









376









3878.125% sterling 450 million bond due November 2018


450



450





558



598





480



4834.375% US dollar 500 million bond due March 2021






329









371









3277.875% US dollar 750 million bond due February 2030






494









699









7786.25% US dollar 495 million bond due November 2032






326









399









4426.15% US dollar 1,700 million bond due February 2037






1,119









1,313









1,566Bonds in designated hedge relationships:


10,951



6,287





11,797



6,969





12,232



7,0212.15% Japanese yen 3,000 million bond due April 2015


17



21





18



22





18



215.375% US dollar 900 million bond due January 2015






592









641









633US dollar floating rate note due February 2016


420









420









420



5.625% US dollar 1,300 million bond due February 2017


779









874









836



1.625% US dollar 1,000 million bond due March 2017


599









607









597



1.25% US dollar 1,000 million bond due September 2017


599









594









597



1.5% US dollar 1,400 million bond due February 2018


839









827









837



4.625% US dollar 500 million bond due July 2018


300









332









343



5.45% US dollar 1,250 million bond due June 2019


749



823





859



980





833



9574.375% US dollar 500 million bond due March 2021


300









322









296



4.65% euro 1,250 million bond due January 2022


1,032



1,055





1,213



1,270





1,194



1,2365.375% euro 500 million bond due June 2022


413



422





509



530





536



5582.5% US dollar 1,000 million bond due September 2022


599



658





551



633





557



6432.95% US dollar 1,600 million bond due February 2023


959



1,053





903



1,050





939



1,0545.625% sterling 250 million bond due December 2025


250



250





284



308





313



3386.6324% euro 50 million bond due December 2028


41



42





93



94





81



777.875% US dollar 750 million bond due February 2030


450









603









698



5.9% sterling 450 million bond due November 2032


450



450





519



560





561



5986.25% US dollar 495 million bond due November 2032


297









341









399



6.15% US dollar 1,700 million bond due February 2037


1,019









1,166









1,416



4.375% US dollar 1,400 million bond due February 2043


839



921





762



881





761



906Long-term borrowings


20,121



25,577





21,234



27,918





21,454



27,904






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|     |  |    






Fair values are calculated using quoted market prices or discounted cash flows with a discount rate
based upon forward interest rates available to the Group at the reporting date. Maturity of borrowings 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: Bankloans£m


Redeemablepreferenceshares£m


Commercialpaper£m


Bonds£m


Otherliabilities£m


Loans indesignated hedgerelationships£m


Total£mWithin one year


1,286







954



2,191



3,758



453



8,642In one to two years


695











1,709



11



890



3,305In two to three years


375











591



7



1,228



2,201In three to four years


1,164











1,075



8



2,468



4,715In four to five years


2,710











1,724



8



668



5,110In more than five years


592















69



11,087



11,7486,822







954



7,290



3,861



16,794



35,721Effect of discount/financing rates


(912
)






(4
)


(1,042
)






(4,562
)


(6,520
)31 March 2014


5,910







950



6,248



3,861



12,232



29,201Within one year


2,269



56



4,070



2,946



2,263



277



11,881In one to two years


402



56







3,313



138



870



4,779In two to three years


305



56







4,753



1,101



266



6,481In three to four years


230



56







1,636



599



245



2,766In four to five years


1,007



56







3,156



72



245



4,536In more than five years


1,835



1,212







5,877



52



7,913



16,8896,048



1,492



4,070



21,681



4,225



9,816



47,332Effect of discount/financing rates


(531
)


(137
)


(16
)


(3,850
)


(299
)


(2,795
)


(7,628
)31 March 2013 restated


5,517



1,355



4,054



17,831



3,926



7,021



39,704 The maturity profile of the Groups financial derivatives (which include interest rate and foreign exchange
swaps), using undiscounted cash flows, is as follows: 2014




2013Payable£m


Receivable£m




Payable£m


Receivable£mWithin one year


1,284



1,442





10,671



11,020In one to two years


2,454



3,656





1,014



1,214In two to three years


4,489



3,920





1,308



1,495In three to four years


5,040



3,138





2,803



3,087In four to five years


1,729



2,137





581



780In more than five years


14,799



12,737





3,579



4,45429,795



27,030





19,956



22,050 The currency split of the Groups foreign exchange derivatives is as follows: 2014




2013Payable
£m


Receivable
£m




Payable
£m


Receivable
£mSterling


8,955



9,222





2,365



4,477Euro


5,342



11,364





6,583



602US dollar


10,613



4,330





348



6,130Japanese yen


589



17





669



1,296Other


1,880



2,765





3,945



1,76827,379



27,698





13,910



14,273 Payables and receivables are stated separately in the table above as settlement is on a gross basis. The
£319 million (2013: £363 million) net receivable in relation to foreign exchange financial instruments in the table above is split £246 million (2013: £44 million) within trade and other payables and
£565 million (2013: £407 million) within trade and other receivables. The present value of minimum lease payments
under finance lease arrangements under which the Group has leased certain of its equipment is analysed as follows: 2014£m


2013£mWithin one year


21



37In two to five years


34



42In more than five years


69



53






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|142 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






21. Borrowings (continued) Interest rate and currency of borrowings  Currency

Totalborrowings£m


Floating rateborrowings£m


Fixed rateborrowings1£m


Otherborrowings2£mSterling


2,801



885



1,910



6Euro


16,225



4,557



10,220



1,448US dollar


4,537



4,330



207



Other


5,638



2,768



1,988



88231 March 2014


29,201



12,540



14,325



2,336Sterling


2,915



955



1,951



9Euro


10,810



5,271



5,539



US dollar


20,991



8,019



12,866



106Other


4,988



2,198



1,891



89931 March 2013 restated


39,704



16,443



22,247



1,014 Notes: 1
The weighted average interest rate for the Groups sterling denominated fixed rate borrowings is 5.7% (2013: 5.7%). The weighted average time for which these rates are fixed is 2.5 years
(2013: 3.5 years). The weighted average interest rate for the Groups euro denominated fixed rate borrowings is 4.4% (2013: 4.3%). The weighted average time for which the rates are fixed is 2.6 years (2013: 2.4 years). The weighted average
interest rate for the Groups US dollar denominated fixed rate borrowings is 2.9% (2013: 4.3%). The weighted average time for which the rates are fixed is 5.7 years (2013: 6.3 years). The weighted average interest rate for the Groups
other currency fixed rate borrowings is 10.2% (2013: 9.6%). The weighted average time for which the rates are fixed is 1.4 years (2013: 1.5 years). 2
At 31 March 2014 other borrowings of £2,336 million include liabilities for amounts payable under the domination agreement in relation to Kabel Deutschland. At 31 March 2013
other borrowings of £1,014 million include liabilities arising under options over direct and indirect interests in Vodafone India. The figures shown in the tables above take into account interest rate swaps used to manage the interest rate profile of financial liabilities. Interest on floating rate borrowings is generally based on national LIBOR
equivalents or government bond rates in the relevant currencies. Additional protection from euro and US dollar interest rate movements
is provided by fixing interest rates or reduced by floating interest rates using interest rate swaps or interest rate futures. Cross currency interest rate swaps are used to change the currency of certain fixed interest rate cash flows. 2014




2013




2014




2013US$1




US$1




EUR1




EUR1Interest ratefutures£m


Interest rateswaps2£m




Interest ratefutures£m


Interest rateswaps£m




Interest ratefutures£m


Interest 
rateswaps2£m




Interest ratefutures£m


Interest rateswaps£mWithin one year






(5,722
)




(4,722
)


2,073





(3,716
)


5,814





1,677



696In one to two years






(5,722
)




(823
)


1,703





(619
)


5,814





3,164



696In two to three years






(5,722
)




(1,940
)


1,621





1,726



5,814





5,525



696In three to four years






(3,744
)




2,222



148





4,979



3,806





4,254



422In four to five years






(2,755
)




2,632



(247
)




103



2,802





6,123



105In more than five years3






(2,605
)








(329
)








2,207









 Notes: 1
In the table above, figures shown as positive indicate an increase in fixed interest debt and figures shown in brackets indicate a reduction in fixed interest debt. 2
Includes cross currency interest rate swaps. 3
Figures shown as in more than five years relate to the periods from March 2019 to December 2043 and March 2018 to December 2021, at March 2014 and March 2013 respectively.






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Borrowing facilities Committed facilities expiry 2014




Restated2013Drawn£m


Undrawn£m




Drawn£m


Undrawn£mWithin one year


590



70





1,994



298In one to two years


451



13





1,306



50In two to three years


171



2,643





1,288



3,569In three to four years


565



35





559



2,794In four to five years






3,188









In more than five years


1,728



582





1,037



42231 March


3,505



6,531





6,184



7,133 At 31 March the Groups most significant committed facilities comprised two revolving credit facilities
which remain undrawn throughout the period of US$4,245 million (£2,545 million) and 3,860 million (£3,188 million) maturing in three and five years respectively.
Under the terms of these bank facilities, lenders have the right, but not the obligation, to cancel their commitment 30 days from the date of notification of a change of control of the Company and have outstanding advances repaid on the last day of
the current interest period. The facility agreements provide for certain structural changes that do not affect the obligations of the Company to be specifically excluded from the definition of a change of control. This is in addition to the rights
of lenders to cancel their commitment if the Company has committed an event of default. The terms and conditions of the drawn
facilities in the Groups Italian, German, Turkish and Romanian operations (1,560 million in aggregate) and the undrawn facilities in the Groups UK and Irish
operations (totalling £450 million) are similar to those of the US dollar and euro revolving credit facilities. Further information on these facilities can be found in note 22 Liquidity and capital resources.  22. Liquidity and capital resources This section includes an analysis of net debt, which we use to manage capital, and committed borrowing
facilities. Net debt Net debt was £13.7 billion at 31 March 2014 and includes liabilities for amounts payable under the domination agreement in relation to Kabel Deutschland (£1.4 billion) and deferred spectrum licence costs in India
(£1.5 billion). This decreased by £11.7 billion in the year as the proceeds from the disposal of the US sub-group including our interest in Verizon Wireless, positive free cash flow and favourable foreign exchange movements more than
offset the impact of the acquisition of Kabel Deutschland, payments for licences and spectrum, equity shareholder dividends, the return of value and share buybacks. Net debt represented 23.5% of our market capitalisation at 31 March 2014 compared to 27.8% at 31 March 2013. Average net debt at month
end accounting dates over the 12 month period ended 31 March 2014 was £22.9 billion and ranged between net debt of £30.4 billion and a net surplus of funds of £2.7 billion. Our consolidated net debt position at 31 March was as follows:  2014£m


Restated2013£mCash and cash equivalents


10,134



7,531Short-term borrowingsBonds


(1,783
)


(2,133
)Commercial paper1


(950
)


(4,054
)Put options over non-controlling interests


(2,330
)


(938
)Bank loans


(1,263
)


(2,438
)Other short-term borrowings2


(1,421
)


(2,237
)(7,747
)


(11,800
)Long-term borrowingsPut options over non-controlling interests


(6
)


(77
)Bonds, loans and other long-term borrowings


(21,448
)


(27,827
)(21,454
)


(27,904
)Other financial instruments3


5,367



6,819Net debt


(13,700
)


(25,354
) Notes: 1
At 31 March 2014 US$578 million was drawn under the US commercial paper programme and 731 million was drawn under
the euro commercial paper programme. 2
At 31 March 2014 the amount includes £1,185 million (2013: £1,151 million) in relation to cash received under collateral support agreements. 3
Comprises mark-to-market adjustments on derivative financial instruments which are included as a component of trade and other receivables (2014: £2,443 million; 2013: £3,032 million)
and trade and other payables (2014: £881 million; 2013: £1,101 million) and short-term investments primarily in index linked government bonds and managed investment funds included as a component of other investments (2014: £3,805
million; 2013: £4,888 million).






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##### Table of Contents

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|144 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






22. Liquidity and capital resources (continued) At 31 March 2014 we had £10,134 million of cash and cash equivalents which are held in accordance
with the counterparty and settlement risk limits of the Board approved treasury policy. The main forms of liquid investment at 31 March 2014 were managed investment funds, money market funds, UK index linked government bonds, tri-party
repurchase agreements and bank deposits. The cash received from collateral support agreements mainly reflects the value of our
interest rate swap portfolio which is substantially net present value positive. See note 23 for further details on these agreements. Commercial paper programmes We currently have US and euro commercial paper programmes of US$15 billion and £5
billion respectively which are available to be used to meet short-term liquidity requirements. At 31 March 2014 amounts external to the Group of 731 million (£604
million) were drawn under the euro commercial paper programme and US$578 million (£346 million) were drawn down under the US commercial paper programme, with such funds being provided by counterparties external to the Group. At 31 March
2013 amounts external to the Group of 2,006 million (£1,693 million), US$35 million (£23 million), £10 million and JPY 5 billion (£35 million)
were drawn under the euro commercial paper programme and US$3,484 million (£2,293 million) was drawn down under the US commercial paper programme. The commercial paper facilities were supported by US$4.2 billion (£2.5 billion) and 3.9 billion (£3.2 billion) of syndicated committed bank facilities (see Committed facilities opposite). No amounts had been drawn under either bank facility. Bonds We have a 30 billion euro medium-term note programme and a US shelf programme which are used to meet medium to long-term funding requirements. At 31 March 2014 the total amounts in issue
under these programmes split by currency were US$14.6 billion, £2.6 billion and 6.2 billion. At 31 March 2014 we had bonds outstanding with a nominal value of £16,979 million (2013: £22,837 million). No bonds were
issued in the year ended 31 March 2014. Share buyback programmes Following the receipt of a US$3.8 billion (£2.4 billion) dividend from Verizon Wireless in December 2012, we initiated a £1.5 billion
share buyback programme under the authority granted by our shareholders at the 2012 annual general meeting. The Group placed irrevocable purchase instructions to enable shares to be repurchased on our behalf when we may otherwise have been
prohibited from buying in the market. The share buyback programme concluded at the end of June 2013. Details of the shares purchased
under the programme, including those purchased under irrevocable instructions, are shown below: Date of share purchase


Numberof shares purchased1,
000
4


Average price paidper share inclusive oftransaction costsPence



Total number ofshares purchased underpublicly announced sharebuyback 
programme 000
2


Maximum valueof shares that mayyet be purchasedunder the programme £m
3April 2013


43,000



192.54



314,651



968May 2013


204,750



196.09



519,401



567June 2013


304,300



180.52



823,701



Total


552,050



187.23



823,701



 Notes: 1
The nominal value of shares purchased is 113/7 US cents each. 2
No shares were purchased outside the publicly announced share buyback programme. 3
In accordance with authorities granted by shareholders in general meeting. 4
The total number of shares purchased represents 1.1% of our issued share capital, excluding treasury shares, at the end of June 2013. The Group held a maximum of 5,099 million shares during the year which represents 9.5% of issued share capital at that time.






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Committed facilities In aggregate we have committed facilities of approximately £10,033 million, of which £6,530 million was undrawn and
£3,503 million was drawn at 31 March 2014. The following table summarises the committed bank facilities available to us at 31 March 2014.  Committed bank facilities

Amounts drawn

Terms and conditions28 March 20143.9 billion syndicated revolving credit facility, maturing 28 March 2019.

No drawings have been made against this facility. The facility supports our commercial paper programmes and may be used for general corporate purposes including
acquisitions.

Lenders have the right, but not the obligation, to cancel their commitments
and have outstanding advances repaid no sooner than 30 days after notification of a change of control. This is in addition to the rights of lenders to cancel their commitment if we commit an event of default; however, it should be noted that a
material adverse change clause does not apply. The euro facility agreements provide for certain structural changes that do not affect the
obligations to be specifically excluded from the definition of a change of control. The facility matures on 28 March 2019, with each
lender having the option to (i) extend the Facility for a further year prior to the first anniversary of the Facility and should such extension be exercised, to (ii) extend the Facility for a further year prior to the second anniversary
of the Facility, in both cases if requested by the Company.9 March 2011US$4.2 billion syndicated revolving credit facility, with US$0.1 billion maturing
9 March 2016 and US$4.1 billion maturing 9 March 2017.

No drawings have been made against this facility. The facility supports our commercial paper programmes and may be used for general corporate purposes including
acquisitions.27 November 2013£0.5 billion loan facility, maturing on the seven year anniversary of the first drawing.

This facility is undrawn and has an availability period of eighteen months. The facility is available to finance a project to upgrade and expand the network in the UK and
Ireland.

As the syndicated revolving credit facilities with the addition that, should our UK and Irish operating companies spend less than the equivalent of £0.9 billion on
capital expenditure, we will be required to repay the drawn amount of the facility that exceeds 50% of the capital expenditure.28 July 20080.4 billion loan facility, maturing 12 August 2015.

This facility was drawn down in full on 12 August 2008.

As the syndicated revolving credit facilities with the addition that, should our Italian operating company spend less than the equivalent of 1.5 billion on capital expenditure, we will be required to repay the drawn amount of the facility that exceeds 18% of the capital expenditure.15 September 20090.4 billion loan facility, maturing 30 July 2017, for the German virtual digital subscriber
line (VDSL) project.

This facility was drawn down in full on 30 July 2010.

As the syndicated revolving credit facilities with the addition that, should our German operating company spend less than the equivalent of 0.8 billion on VDSL related capital expenditure, we will be required to repay the drawn amount of the facility that exceeds 50% of the VDSL capital expenditure.29 September 2009US$0.7 billion export credit agency loan facility, final maturity date 19 September 2018.

This facility is fully drawn down and is amortising.

As the syndicated revolving credit facilities with the addition that the Company was permitted to draw down under the facility based upon the eligible spend with Ericsson
up until the final draw down date of 30 June 2011. Quarterly repayments of the drawn balance commenced on 30 June 2012 with a final maturity date of 19 September 2018.8 December 20110.4 billion loan facility, maturing on the seven year anniversary of the first drawing.


This facility was drawn down in full on 5 June 2013.

As the syndicated revolving credit facilities with the addition that, should our Italian operating company spend less than the equivalent of 1.3 billion on capital expenditure, we will be required to repay the drawn amount of the facility that exceeds 50% of the capital expenditure.20 December 20110.3 billion loan
facility, maturing 18 September 2019.

This facility was drawn down in full on 18 September 2012.

As the syndicated revolving credit facilities with the addition that, should our Turkish and Romanian operating companies spend less than the equivalent of 1.3 billion on capital expenditure, we will be required to repay the drawn amount of the facility that exceeds 50% of the capital expenditure.4 March 20130.1 billion loan facility, maturing 4 December 2020.

This facility was drawn down in full on 4 December 2013.






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|146 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






22. Liquidity and capital resources (continued) Furthermore, certain of our subsidiaries are funded by external facilities which are non-recourse to any member of
the Group other than the borrower. These facilities may only be used to fund their operations. At 31 March 2014 Vodafone India had facilities of INR 207 billion (£2.1 billion) of which INR 179 billion (£1.8 billion) was drawn.
Vodafone Egypt had an undrawn revolving credit facility of US$120 million (£71 million) . Vodacom had fully drawn facilities of ZAR 1.0 billion (£57 million) and US$37 million (£22 million). Ghana had a facility of US$217 million
(£130 million) which was fully drawn. We believe that we have sufficient funding for our expected working capital requirements
for at least the next 12 months. Further details regarding the maturity, currency and interest rates of the Groups gross borrowings at 31 March 2014 are included in note 21 Borrowings. Dividends from associates and to non-controlling shareholders Dividends from our associates are generally paid at the discretion of the Board of directors or shareholders of the individual operating and
holding companies and we have no rights to receive dividends except where specified within certain of the Groups shareholders agreements. Similarly, other than ongoing dividend obligations to the KDG minority shareholders should they
continue to hold their minority stake, we do not have existing obligations under shareholders agreements to pay dividends to non-controlling interest partners of our subsidiaries or joint ventures. The amount of dividends received and paid in the year are disclosed in the consolidated statement of cash flows. Potential cash outflows from option agreements and similar arrangements In respect of our interest in Vodafone India Limited (VIL), Piramal Healthcare (Piramal) acquired approximately 11%
shareholding in VIL from Essar during the 2012 financial year. In April 2014 Piramal sold its total shareholding in VIL to Vodafone Group. The combined consideration for these shares and the indirect equity interest held by Analjit Singh and Neelu
Analjit Singh (completed in March 2014) was £1.0 billion. Under the terms of the sale and purchase agreement governing the
disposal of the US Group, including the 45% interest in Verizon Wireless, the Group retains the responsibility for any tax liabilities of the US Group, excluding those relating to the Verizon Wireless partnership, for periods up to the completion of
the transaction on 21 February 2014. Off-balance sheet arrangements We do not have any material off-balance sheet arrangements as defined in item 5.E.2. of the SECs Form 20-F. Please refer to notes 29 and 30
for a discussion of our commitments and contingent liabilities.  23. Capital and financial risk management This note details our 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 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 evidences 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. Put option arrangements The potential cash payments related to put options issued by the Group over the equity of subsidiary companies are accounted for as financial
liabilities when such options may only be settled by exchange of a fixed amount of cash or another financial asset for a fixed number of shares in the subsidiary. The amount that may become payable under the option on exercise is initially recognised at present value within borrowings with a corresponding
charge directly to equity. The charge to equity is recognised separately as written put options over non-controlling interests, adjacent to non-controlling interests in the net assets of consolidated subsidiaries. The Group recognises the cost of
writing such put options, determined as the excess of the present value of the option over any consideration received, as a financing cost. Such options are subsequently measured at amortised cost, using the effective interest rate method, in order to accrete the liability up to the amount payable under the option at the date at which it first becomes exercisable; the
charge arising is recorded as a financing cost. In the event that the option expires unexercised, the liability is derecognised with a corresponding adjustment to equity. 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. Changes in values of all derivatives of a financing nature are included within investment income and financing
costs in the income statement. The Group does not use derivative financial instruments for speculative purposes.






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Derivative financial instruments are initially measured at fair value on the contract date and are
subsequently remeasured to fair value at each reporting date. The Group designates certain derivatives as:  g

hedges of the change of fair value of recognised assets and liabilities (fair value hedges); or  g

hedges of highly probable forecast transactions or hedges of foreign currency or interest rate risks of firm commitments (cash flow hedges); or  g

hedges of net investments in foreign operations.  Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge
accounting, or if the Company chooses to end the hedging relationship. Fair value hedges The Groups policy is to use derivative instruments (primarily interest rate swaps) to convert a proportion of its fixed rate debt to
floating rates in order to hedge the interest rate risk arising, principally, from capital market borrowings. The Group designates these as fair value hedges of interest rate risk with changes in fair value of the hedging instrument recognised in
the income statement for the period together with the changes in the fair value of the hedged item due to the hedged risk, to the extent the hedge is effective. Gains or losses relating to any ineffective portion are recognised immediately in the
income statement. Cash flow hedges Cash flow hedging is used by the Group to hedge certain exposures to variability in future cash flows. The portion of gains or losses relating to changes in the fair value of derivatives that are designated and qualify as effective
cash flow hedges is recognised in other comprehensive income; gains or losses relating to any ineffective portion are recognised immediately in the income statement. 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. When hedge accounting is discontinued, any gain or loss recognised in other comprehensive income at that time remains in equity and is recognised
in the income statement when the hedged transaction is ultimately recognised in the income statement. If a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in the income statement. Net investment hedges Exchange differences arising from the translation of the net investment in foreign operations are recognised directly in equity. Gains and losses on those hedging instruments (which include bonds, commercial paper, cross currency
swaps and foreign exchange contracts) designated as hedges of the net investments in foreign operations are recognised in equity to the extent that the hedging relationship is effective; these amounts are included in exchange differences on
translation of foreign operations as stated in the statement of comprehensive income. Gains and losses relating to hedge ineffectiveness are recognised immediately in the income statement for the period. Gains and losses accumulated in the
translation reserve are included in the income statement when the foreign operation is disposed of. Capital management The following table summarises the capital of the Group:  2014 £m


Restated
2013
£mFinancial assets:Cash and cash equivalents


(10,134
)


(7,531
)Fair value through the income statement (held for trading)


(5,293
)


(6,803
)Derivative instruments in designated hedge relationships


(955
)


(1,117
)Financial liabilities:Fair value through the income statements (held for trading)


471



1,057Derivative instruments in designated hedge relationships


410



44Financial liabilities held at amortised cost


29,201



39,704Net debt


13,700



25,354Equity


71,781



72,488Capital


85,481



97,842 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. The Board has approved three internal debt
protection ratios being: net interest to operating cash flow (plus dividends from associates); retained cash flow (operating cash flow plus dividends from associates less interest, tax, dividends to non-controlling shareholders and equity dividends)
to net debt; and operating cash flow (plus dividends from associates) to net debt. These internal ratios establish levels of debt that the Group should not exceed other than for relatively short periods of time and are shared with the Groups
debt rating agencies being Moodys, Fitch Ratings and Standard & Poors. The Group complied with these ratios throughout the financial year and we expect these ratios to be complied with in the next 12 months.






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|148 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






23. Capital and financial risk management (continued) Financial risk management The Groups treasury function provides a centralised service to the Group for funding, foreign exchange, interest rate management and
counterparty risk management. Treasury operations are conducted within a framework of policies and guidelines authorised and reviewed
by the Board, most recently on 27 March 2012. A treasury risk committee comprising of the Groups Chief Financial Officer, Group General Counsel and Company Secretary, Group Financial Controller, Group Treasury Director and Director of
Financial Reporting meets three times a year to review treasury activities and its members receive management information relating to treasury activities on a quarterly basis. The Groups accounting function, which does not report to the Group
Treasury Director, provides regular update reports of treasury activity to the Board. The Groups internal auditor reviews the internal control environment regularly. The Group uses a number of derivative instruments for currency and interest rate risk management purposes only that are transacted by specialist
treasury personnel. The Group mitigates banking sector credit risk by the use of collateral support agreements. Credit risk The Group considers its exposure to credit risk at 31 March to be as follows: 2014 £m


Restated
2013
£mBank deposits


1,498



1,304Repurchase agreements


4,799



2,550Cash held in restricted deposits


524



404UK government bonds


852



1,076Money market fund investments


3,648



3,494Derivative financial instruments


2,443



3,032Other investments  debt and bonds


5,525



3,427Trade receivables


3,859



3,317Other receivables


1,546



1,765Short-term securitised investments


1,019



82625,713



21,195 The Group invested in UK index linked government bonds on the basis that they generated a floating rate return in
excess of £ LIBOR and are amongst the most creditworthy of investments available. The Group has a managed investment fund. This
fund holds fixed income sterling securities and the average credit quality is high double A. Money market investments are in
accordance with established internal treasury policies which dictate that an investments long-term credit rating is no lower than mid BBB. Additionally, the Group invests in AAA unsecured money market mutual funds where the investment is
limited to 7.5% of each fund. The Group has investments in repurchase agreements which are fully collateralised investments. The
collateral is sovereign and supranational debt of major EU countries with at least one AAA rating denominated in euros, sterling and US dollars and can be readily converted to cash. In the event of any default, ownership of the collateral would
revert to the Group. Detailed below is the value of the collateral held by the Group at 31 March 2014.  2014 £m


Restated
2013
£mSovereign


4,464



2,081Supranational


335



4694,799



2,550 In respect of financial instruments used by the Groups treasury function, the aggregate credit risk the
Group may have with one counterparty is limited by (i) reference to the long-term credit ratings assigned for that counterparty by Moodys, Fitch Ratings and Standard & Poors, (ii) that counterpartys five year
credit default swap (CDS) spread, and (iii) the sovereign credit rating of that counterpartys principal operating jurisdiction. Furthermore, collateral support agreements were introduced from the fourth quarter of 2008. Under
collateral support agreements the Groups exposure to a counterparty with whom a collateral support agreement is in place is reduced to the extent that the counterparty must post cash collateral when there is value due to the Group under
outstanding derivative contracts that exceeds a contractually agreed threshold amount. When value is due to the counterparty the Group is required to post collateral on identical terms. Such cash collateral is adjusted daily as necessary.






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In the event of any default ownership of the cash collateral would revert to the respective holder
at that point. Detailed below is the value of the cash collateral, which is reported within short-term borrowings, held by the Group at 31 March 2014:  2014 £m


2013
£mCash collateral


1,185



1,151 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. At 31 March 2014 £2,360 million (2013: £1,733 million) of trade receivables were not yet due for payment. Total trade receivables consisted of
£1,219 million (2013: £1,265 million) relating to the Europe region, and £280 million (2013: £319 million) relating to the AMAP region. Accounts are monitored by management and provisions for bad and doubtful debts
raised where it is deemed appropriate. The following table presents ageing of receivables that are past due and provisions for
doubtful receivables that have been established. 2014










Restated2013Gross
receivables £m


Less
provisions £m


Net
receivables £m




Gross
receivables £m


Less
provisions £m


Net
receivables £m30 days or less


1,327



(356
)


971





1,460



(390
)


1,070Between 3160 days


218



(27
)


191





166



(14
)


152Between 61180 days


187



(53
)


134





222



(44
)


178Greater than 180 days


516



(313
)


203





609



(424
)


1852,248



(749
)


1,499





2,457



(872
)


1,585 Concentrations of credit risk with respect to trade receivables are limited given that the Groups customer
base is large and unrelated. Due to this management believes there is no further credit risk provision required in excess of the normal provision for bad and doubtful receivables. Amounts charged to administrative expenses during the year ended
31 March 2014 were £347 million (2013: £360 million; 2012: £357 million) (see note 15 Trade and other receivables). As discussed in note 30 Contingent liabilities, 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. The security takes the form of an English law pledge over UK index linked government bonds. Liquidity risk At
31 March 2014 the Group had 3.9 billion and US$4.2 billion syndicated committed undrawn bank facilities and US$15 billion and £5 billion commercial paper programmes,
supported by the 3.9 billion and US$4.2 billion syndicated committed bank facilities, available to manage its liquidity. The Group uses commercial paper and bank facilities to
manage short-term liquidity and manages long-term liquidity by raising funds in the capital markets. The 3.9 billion syndicated committed facility has a maturity date of 28 March 2019 with the option to (i) extend the facility for a further year prior to the first anniversary of
the facility and should such extension be exercised, to (ii) extend the Facility for a further year prior to the second anniversary of the Facility, in both cases if requested by the Company. The US$4.1 billion syndicated committed facility has
a maturity of 9 March 2017; the remaining US$0.1 billion has a maturity of 9 March 2016. Both facilities have remained undrawn throughout the financial year and since year end and provide liquidity support. The Group manages liquidity risk on long-term borrowings by maintaining a varied maturity profile with a cap on the level of debt maturing in any
one calendar year, therefore minimising refinancing risk. Long-term borrowings mature between one and 29 years. Liquidity is reviewed
daily on at least a 12 month rolling basis and stress tested on the assumption that all commercial paper outstanding matures and is not reissued. The Group maintains substantial cash and cash equivalents which at 31 March 2014, amounted to
£10,134 million (2013: £7,531 million).






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|150 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






23. Capital and financial risk management (continued) Market risk Interest rate management Under the Groups interest rate management policy, interest rates on monetary assets
and liabilities denominated in euros, US dollars and sterling are maintained on a floating rate basis except for periods up to six years where interest rate fixing has to be undertaken in accordance with treasury policy. Where assets and liabilities
are denominated in other currencies interest rates may also be fixed. In addition, fixing is undertaken for longer periods when interest rates are statistically low. For each one hundred basis point fall or rise in market interest rates for all currencies in which the Group had borrowings at 31 March 2014
there would be a reduction or increase in profit before tax by approximately £42 million (2013: increase or reduce by £144 million) including mark-to-market revaluations of interest rate and other derivatives and the potential
interest on outstanding tax issues. There would be no material impact on equity. 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, Indian rupee and sterling, the Group maintains the currency of debt and interest charges in proportion to its expected future principal
multi-currency cash flows and has a policy to hedge external foreign exchange risks on transactions denominated in other currencies above certain de minimis levels. As the Groups future cash flows are increasingly likely to be derived from
emerging markets it is likely that a greater proportion of debt in emerging market currencies will be drawn. The disposal of our US
Group in February 2014 necessitated a restructuring of the Groups outstanding US dollar debt, which was achieved via i) the repayment of certain US dollar debt obligations and ii) the use of cross currency swaps to eliminate the US dollar
currency risk on certain remaining US dollar debt items. Prior to the disposal date a significant proportion of the Groups future value was derived from its US assets. Going forward the Group will only hold US dollar debt to hedge future US
dollar receipts, which primarily consist of floating rate notes as issued by Verizon Communications, received as part of the disposal consideration. At 31 March 2014, 164% of net debt was denominated in currencies other than sterling (96% euro, 37% India rupee 19% US dollar and 12% other) while 64% of net debt had been purchased forward in sterling in anticipation of
sterling denominated shareholder returns via dividends. This allows euro, US dollar and other debt to be serviced in proportion to expected future cash flows and therefore provides a partial 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. The following table
details the Groups sensitivity of the Groups adjusted operating profit to a strengthening of the Groups major currency in which it transacts. The percentage movement applied to the currency is based on the average movements in the
previous three annual reporting periods. Amounts are calculated by retranslating the operating profit of each entity whose functional currency is euro.  2014 £mEuro 3% change Adjusted operating profit


60 At 31 March 2013, sensitivity of the Groups adjusted operating profit was analysed for a strengthening
of the euro by 3% and the US dollar by 4%, which represented movements of £106 million and £257 million respectively. Equity risk The Group has equity investments, which are subject to equity risk. See note 13 Other
investments for further details.






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Fair value of financial instruments The table below sets out the valuation basis1 of financial instruments held at fair value by
the Group at 31 March 2014.  Level 12




Level 23




Total2014
£m


Restated
2013
£m




2014
£m


Restated2013
£m




2014
£m


Restated
2013
£mFinancial assets:Fair value through the income statement
(held for trading)












3,792



4,836





3,792



4,836Derivative financial instruments:Interest rate swaps












1,871



2,625





1,871



2,625Cross currency interest rate swaps












504



319





504



319Foreign exchange contracts












68



88





68



88Interest rate futures












13



52





13



52









6,248



7,920





6,248



7,920Financial investments available-for-sale:Listed equity securities4


6



3















6



3Unlisted equity securities4












154



498





154



4986



3





154



498





160



5016



3





6,402



8,418





6,408



8,421Financial liabilities:Derivative financial instruments:Interest rate swaps












635



1,060





635



1,057Cross currency interest rate swaps












217









217



Foreign exchange contracts












29



44





29



44









881



1,104





881



1,101 Notes: 1
There were no changes made during the year to valuation methods or the processes to determine classification and no transfers were made between the levels in the fair value hierarchy. 2
Level 1 classification comprises financial instruments where fair value is determined by unadjusted quoted prices in active markets for identical assets or liabilities. 3
Level 2 classification comprises where fair value is determined from inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Fair values for
unlisted equity securities are derived from observable quoted market prices for similar items. Derivative financial instrument fair values are present values determined from future cash flows discounted at rates derived from market sourced data. 4
Details of listed and unlisted equity securities are included in note 13 Other Investments. Offsetting of financial assets and financial liabilities Financial assets and liabilities included in the table above do not meet the required criteria to offset in the balance sheet but derivative
financial assets at 31 March of up to £678 million (2013: £857 million) would 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. Under the Groups collateral support agreements described above, under credit risk collateral has been posted of £130 million (2013: £117
million) and received of £1,185 million (2013: £1,151 million). Collateral may be offset and net settled against derivative financial instruments in the event of default by either party. The aforementioned collateral balances are
recorded in other short-term investments or short-term debt respectively.  24. 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:  2014 £m


Restated
2013
£m


Restated
2012
£mSalaries and fees


4



5



5Incentive schemes1


2



2



3Other benefits2


1



1



17



8



9 Notes: 1
Amounts payable under incentive schemes have been restated to exclude £5 million and £1 million of cash in lieu of long-term incentive scheme dividends for the years ended
31 March 2013 and 31 March 2012, respectively. 2
Includes the value of the cash allowance taken by some individuals in lieu of pension contributions. The aggregate gross pre-tax gain made on the exercise of share options in the year ended 31 March 2014 by directors who served during the
year was £4 million (2013: £2 million; 2012: £nil).






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|152 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






24. Directors and key management compensation (continued) Key management compensation Aggregate compensation for key management, being the directors and members of the Executive Committee, was as follows:  2014 £m


Restated
2013
£m


Restated
2012
£mShort-term employee benefits1


17



17



16Share-based payments


21



23



2638



40



42 Notes: 1
Amounts payable under short-term employee benefits have been restated to exclude £8 million and £2 million of cash in lieu of long-term incentive scheme dividends for the
years ended 31 March 2013 and 31 March 2012, respectively.  25. 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.  2014 Employees


Restated
2013
Employees


Restated
2012
EmployeesBy activity:Operations


14,947



13,736



12,952Selling and distribution


31,342



29,658



27,190Customer care and administration


42,857



39,198



37,00389,146



82,592



77,145By segment:Germany


10,623



11,088



12,115Italy


1,123







Spain


3,552



4,223



4,379UK


12,979



8,319



8,151Other Europe


15,392



19,995



16,668Europe


43,669



43,625



41,313India


11,925



11,339



10,704Vodacom


7,176



7,311



7,437Other Africa, Middle East and Asia Pacific


16,002



12,659



11,431Africa, Middle East and Asia Pacific


35,103



31,309



29,572Non-Controlled Interests and Common Functions


10,374



7,658



6,260Total


89,146



82,592



77,145The cost incurred in respect of these employees (including directors) was:2014 £m


Restated
2013
£m


Restated
2012
£mWages and salaries


3,261



2,989



2,774Social security costs


364



350



323Other pension costs (note 26)


158



157



122Share-based payments (note 27)


92



124



1333,875



3,620



3,352 The Group has dialogue with recognised labour unions if required. In particular there are regular meetings with
the Vodafone Employee Consultative Council (the EECC). The delegates of this body are locally elected Vodafone employee representatives, most of them union and works council members. There has been no material disruption to operations as a result of union activity during the financial year.






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26. Post employment benefits We operate a number of defined benefit and defined contribution pension plans for our employees. The Groups
largest defined benefit schemes are in the UK. For further details see Critical accounting judgements in note 1 Basis of preparation to the consolidated financial statements. Accounting policies For
defined benefit retirement plans, the difference between the fair value of the plan assets and the present value of the plan liabilities is recognised as an asset or liability on the statement of financial position. Scheme liabilities are assessed
using the projected unit funding method and applying the principal actuarial assumptions at the reporting period date. Assets are valued at market value. Actuarial gains and losses are taken to the statement of comprehensive income as incurred. For this purpose, actuarial gains and losses comprise both the effects of changes in actuarial assumptions and experience adjustments arising
because of differences between the previous actuarial assumptions and what has actually occurred. Other movements in the net surplus
or deficit are recognised in the income statement, including the current service cost, any past service cost and the effect of any curtailment or settlements. The interest cost less the expected return on assets is also charged to the income
statement. The amount charged to the income statement in respect of these plans is included within operating costs or in the Groups share of the results of equity accounted operations, as appropriate. The Groups contributions to defined contribution pension plans are charged to the income statement as they fall due. Cumulative actuarial gains and losses at 1 April 2004, the date of transition to IFRS, were recognised in the statement of financial
position. Background At 31 March 2014 the Group operated a number of pension 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 pension plans are provided through both defined benefit and defined contribution arrangements. Defined benefit schemes provide benefits based on the employees length of pensionable service and their final pensionable salary or
other criteria. Defined contribution schemes offer employees individual funds that are converted into benefits at the time of retirement. The Group operates defined benefit schemes in Germany, Ghana, India, Ireland, Italy, the UK and the United States. Defined contribution pension schemes are currently provided in Australia, Egypt, Germany, Greece, Hungary, India,
Ireland, Italy, the Netherlands, New Zealand, Portugal, South Africa, Spain and the UK. Income statement expense  2014 £m


Restated
2013
£m


Restated
2012
£mDefined contribution schemes


124



118



113Defined benefit schemes


34



39



9Total amount charged to income statement (note 25)


158



157



122 Defined benefit schemes The Groups principal defined benefit pension schemes are in the UK (the UK Schemes), being the Vodafone Group Pension Scheme
(Vodafone UK plan) and the Cable & Wireless Worldwide Retirement Plan (CWWRP). The Vodafone UK plan and the CWWRP plan closed to future accrual on 31 March 2010 and 30 November 2013, respectively. Until
30 November 2013 the CWWRP allowed employees to accrue a pension at a rate of 1/85th of their final salary for each year of service until the retirement age of 60 with a maximum pension of two thirds of final salary. Employees contributed 5% of
their salary into the scheme. The CWWRP is expected to merge with the Vodafone UK plan during the second quarter of 2014. The defined
benefit plans are administered by Trustee Boards that are legally separated from the Group. The Trustee Board of each pension fund consists of representatives who are employees, former employees or are independent from the Company. The Board of the
pension funds are required by law to act in the best interest of the plan participants and are responsible for setting certain policies, such as investment and contribution policies and the governance of the fund. The defined benefit pension schemes expose the Group to actuarial risks such as longer than expected longevity of members, 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.






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|154 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






26. Post employment benefits (continued) Actuarial assumptions The Groups scheme liabilities are measured using the projected unit credit method using the principal actuarial assumptions set out below:  2014%


2013%


2012%Weighted average actuarial assumptions used at 31 March1:Rate of inflation2


3.2



3.3



3.0Rate of increase in salaries


3.1



3.8



2.9Discount rate


4.2



4.3



4.7 Notes: 1
Figures shown represent a weighted average assumption of the individual schemes. 2
The rate of increase in pensions in payment and deferred payment is the rate of inflation. Mortality assumptions used are based on recommendations from the individual scheme actuaries which include adjustments for the experience of the
Group where appropriate. The largest schemes in the Group are the UK schemes. Further life expectancies assumed for the UK schemes (Vodafone UK plan only in 2012) are 23.3 /24.7 years (2013: 23.6/25.3 years; 2012: 23.6/24.4 years) for a male/female
pensioner currently aged 65 and 25.9/27.5 years (2013: 26.8/27.9 years; 2012: 27.2/26.7 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:  2014 £m


Restated
2013
£m


Restated
2012
£mCurrent service cost


14



27



12Net interest charge/(credit)


20



12



(3
)Total included within staff costs


34



39



9Actuarial (gains)/losses recognised in the SOCI


(57
)


238



352






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Fair value of the assets and present value of the liabilities of the schemes The amount included in the statement of financial position arising from the Groups obligations in respect of its defined benefit schemes is
as follows:  2014 £m


Restated
2013
£m


Restated
2012
£mMovement in pension assets:1 April


3,723



1,604



1,558Exchange rate movements


(13
)


6



(22
)Interest income


162



125



86Return on plan assets excluding interest income


(114
)


210



(17
)Employer cash contributions


51



100



31Member cash contributions


7



8



6Benefits paid


(81
)


(60
)


(39
)Assets assumed in business combinations






1,730



Other movements


107







131 March


3,842



3,723



1,604Movement in pension liabilities:1 April


4,251



1,865



1,501Exchange rate movements


(17
)


9



(30
)Service cost


14



27



12Interest cost


182



137



83Member cash contributions


7



8



6Remeasurements:Actuarial losses/(gains) arising from changes in demographic assumptions


(35
)






Actuarial losses/(gains) arising from changes in financial assumptions


(44
)


441



314Actuarial losses/(gains) arising from experience adjustments


(92
)


7



21Benefits paid


(81
)


(60
)


(39
)Liabilities assumed in business combinations


121



1,772



2Other movements


85



45



(5
)31 March


4,391



4,251



1,865 An analysis of net (deficit)/assets is provided below for the Groups two largest defined benefit pension
schemes in the UK and for the Group as a whole.  CWWRP




Vodafone UK plan




Group2014
£m


2013
£m




2014
£m


2013
£m


2012
£m


2011
£m


2010
£m




2014£m


Restated
2013
£m


Restated
2012
£m


Restated
2011
£m


Restated
2010
£mAnalysis of net (deficit)/assets:Total fair value of scheme assets


1,780



1,827





1,343



1,328



1,218



1,180



1,131





3,842



3,723



1,604



1,558



1,487Present value of funded scheme liabilities


(1,732
)


(1,874
)




(1,677
)


(1,647
)


(1,444
)


(1,127
)


(1,276
)




(4,325
)


(4,239
)


(1,853
)


(1,488
)


(1,625
)Net (deficit)/assets for funded schemes


48



(47
)




(334
)


(319
)


(226
)


53



(145
)




(483
)


(516
)


(249
)


70



(138
)Present value of unfunded scheme liabilities


































(66
)


(12
)


(12
)


(13
)


(15
)Net (deficit)/assets


48



(47
)




(334
)


(319
)


(226
)


53



(145
)




(549
)


(528
)


(261
)


57



(153
)Net (deficit)/assets are analysed as:Assets


48





















53









35



52



31



97



34Liabilities






(47
)




(334
)


(319
)


(226
)






(145
)




(584
)


(580
)


(292
)


(40
)


(187
)






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|156 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






26. Post employment benefits (continued) Funding plans are individually agreed for each of the Groups defined benefit pension schemes with the
respective trustees, taking into account local regulatory requirements. It is expected that contributions of £400 million will be paid into the Groups defined benefit pension schemes during the year ending 31 March 2015,
including a special one-off contribution of £325 million payable into the Vodafone UK plan and £40 million into the CWWRP in April 2014. These one-off contributions represent accelerated funding amounts that would have been due
for each scheme over the period to 31 March 2020. The Group has also provided certain guarantees in respect of the UK schemes; further details are provided in note 30, Contingent liabilities. Duration of the benefit obligations The weighted average duration of the defined benefit obligation at 31 March 2014 is 21.7 years (2013: 21.4 years, 2012: 23.6 years). Fair value of pension assets  2014 £m


2013£mCash and cash equivalents


65



117Equity investments:With quoted prices in an active market


1,318



1,310Without quoted prices in an active market


102



129Debt instruments:With quoted prices in an active market


1,320



1,129Without quoted prices in an active market






Property


20



36Derivatives1


541



485Annuity policies


476



517Total


3,842



3,723 Note: 1
Derivatives include collateral held in the form of cash. The schemes
have no direct investments in the Groups equity securities or in property currently used by the Group. Each of the plans manage
risks through a variety of methods and strategies including equity protection, to limit downside risk in falls in equity markets, inflation and interest rate hedging and, in the CWWRP, a substantial insured pensioner buy-in policy. The actual return on plan assets over the year to 31 March 2014 was £48 million (2013: £335 million). 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 2014.  Rate of inflation




Rate of increase in salaries




Discount rate




Life expectancyDecreaseby 0.5%
£m


Increaseby 0.5%
£m




Decreaseby 0.5%
£m


Increaseby 0.5%
£m




Decreaseby 0.5%
£m


Increaseby 0.5%
£m




Increaseby 1 year
£m


Decreaseby 1 year
£m(Decrease)/increase in present value of defined obligation


(349
)


382





(18
)


20





512



(439
)




103



(103
) 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 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 reporting period, which is the same as that applied in calculating the defined benefit obligation
liability recognised in the statement of financial position.






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27. Share-based payments We have a number of share plans used to award shares to 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 payments to certain employees. Equity-settled share-based payments 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 payments 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 retained earnings is also recognised. Fair value is measured by deducting the present
value of expected dividend cash flows over the life of the awards from the share price as at the grant date. 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 equal to the closing price of
the Groups shares on the date of grant, adjusted for the present value of future dividend entitlements 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:  g

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  g

5% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of ordinary shares which have been allocated in the preceding
ten year period under all plans, other than any plans which are operated on an all-employee basis.  Share options Vodafone
Group executive plans No share options have been granted to any directors or employees under the Companys discretionary
share option plans in the year ended 31 March 2014. There are options outstanding under the Vodafone Group 1999 Long-Term Stock
Incentive Plan and the Vodafone Global Incentive Plan. These options are normally exercisable between three and ten years from the date of grant. The vesting of some of these options was subject to satisfaction of performance conditions. Grants made
to US employees are made in respect of ADSs. Vodafone Group Sharesave Plan The Vodafone Group 2008 Sharesave Plan enables UK staff to acquire shares in the Company through monthly savings of up to £250 over a three
and/or five year period, at the end of which they may also receive a tax free bonus. The savings and bonus may then be used to purchase shares at the option price, which is set at the beginning of the invitation period and usually at a discount of
20% to the then prevailing market price of the Companys shares. Share plans Vodafone Group executive plans Under the Vodafone Global Incentive Plan awards of shares are granted to directors and certain employees. The release of these shares is conditional upon continued employment and for some awards achievement of certain performance
targets measured over a three year period. Vodafone Share Incentive Plan The Vodafone Share Incentive Plan enables UK staff to acquire shares in the Company through monthly purchases of up to £125 per month
or 5% of salary, whichever is lower. For each share purchased by the employee, the Company provides a free matching share.






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|158 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






27. Share-based payments (continued) Movements in outstanding ordinary share and ADS options ADS options









Ordinary share options2014
Millions


2013
Millions




2012
Millions




2014
Millions




2013
Millions


2012Millions1 April






1





1





40





84



171Granted during the year


















12





7



5Forfeited during the year


















(1
)




(1
)


(1
)Exercised during the year






(1
)










(22
)




(41
)


(55
)Expired during the year


















(2
)




(9
)


(36
)31 March












1





27





40



84Weighted average exercise price:1 April


US$22.16



US$15.20





US$14.82





£1.41





£1.18



£1.32Granted during the year


















£1.49





£1.45



£1.31Forfeited during the year


















£1.34





£1.64



£1.07Exercised during the year


US$29.31



US$13.88











£1.43





£1.05



£1.37Expired during the year


















£1.37





£0.98



£1.5631 March






US$22.16





US$15.20





£1.42





£1.41



£1.18Summary of options outstanding and exercisable at 31 March 2014Outstanding









ExercisableOutstanding
shares
Millions


Weighted
average
exercise
price




Weighted
average
remaining
contractual life Months




Exercisable
shares
Millions




Weighted
average
exercise
price


Weightedaverageremainingcontractuallife
MonthsVodafone Group savings related and Sharesave Plan:£0.01£1.00


2



£0.94





11















£1.01£2.00


21



£1.43





37















23



£1.38





34















Vodafone Group 1999 Long-Term Stock Incentive Plan:£1.01£2.00


4



£1.60





34





4





£1.60



34Share awardsMovements in non-vested shares are as follows:2014









2013







2012Millions


Weighted
average fair value at grant date




Millions




Weighted
average fair value at grant date




Millions


Weightedaverage fairvalue atgrant date1 April


294



£1.27





352





£1.08





387



£1.00Granted


84



£1.58





91





£1.49





120



£1.29Vested


(81
)


£1.11





(118
)




£0.91





(116
)


£1.12Forfeited


(54
)


£1.19





(31
)




£1.19





(39
)


£0.8131 March


243



£1.44





294





£1.27





352



£1.08 Other information The total fair value of shares vested during the year ended 31 March 2014 was £90 million (2013: £107 million; 2012: £130 million). The compensation cost included in the consolidated income statement in respect of share options and share plans was £92 million
(2013: £124 million; 2012: £133 million) which is comprised entirely of equity-settled transactions. The average
share price for the year ended 31 March 2014 was 212.2 pence (2013: 173.0 pence; 2012: 169.9 pence).






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28. Acquisitions and disposals We made a number of acquisitions during the year including the acquisition of a controlling interest in
Kabel Deutschland Holding AG and the remaining interest in our business in Italy, Vodafone Omnitel B.V. thus obtaining control. The note below provides details of these transactions as well as those in the prior year. For further details see
Critical accounting judgements in note 1 Basis of preparation to the consolidated financial statements. Accounting policies Business combinations Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair
values at the date of exchange of assets given, liabilities incurred or assumed and equity instruments issued by the Group. Acquisition-related costs are recognised in the income statement as incurred. The acquirees identifiable assets and
liabilities are recognised at their fair values at the acquisition date. 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. Acquisitions The aggregate cash consideration in respect of purchases of interests in subsidiaries, net of cash acquired, is as follows: £mCash consideration paid:Kabel Deutschland Holding AG (including fees of £17 million)


4,872Other acquisitions completed during the year


64,878Net cash acquired


(599
)4,279 In addition, the Group acquired a 100% interest in Vodafone Omnitel B.V. as part of the disposal of the
Groups interest in Verizon Wireless for consideration of £7,121 million. The purchase consideration has been determined based on the acquisition-date fair value of the equity in Vodafone Omnitel B.V., being considered to be a more
reliable method of determining fair value than estimating the attributable proportion of the fair value of the investment in Verizon Wireless. The equity value has been determined on a value in use basis using discounted estimated cash flows using
the methodology and assumptions detailed in note 4 Impairment losses. Total goodwill acquired was
£6,859 million and included £3,848 million in relation to Kabel Deutschland Holding AG, £3,007 million in relation to Vodafone Omnitel B.V. and £4 million in relation to other acquisitions completed during
the year. Acquisitions and disposals (continued)






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|160 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






28. Acquisitions and disposals (continued) Kabel Deutschland Holding AG (KDG) On 30 July 2013 the Group launched a voluntary public takeover offer for the entire share capital of KDG and on 13 September 2013
announced that the 75% minimum acceptance condition had been met. The transaction completed on 14 October 2013 with the Group acquiring 76.57% of the share capital of KDG for cash consideration of £4,855 million. The primary reason for
acquiring the business was to create a leading integrated communications operator in Germany, offering consumer and enterprise customers unified communications services. The results of the acquired entity have been consolidated in the Groups income statement from 14 October 2013 and contributed
£735 million of revenue and a loss of £210 million to the profit attributable to equity shareholders of the Group during the year. The provisional purchase price allocation is set out in the table below: Fair value£mNet assets acquired:Identifiable intangible assets1


1,641Property, plant and equipment


4,381Investment in associated undertakings


8Inventory


34Trade and other receivables


154Cash and cash equivalents


619Current and deferred taxation


(1,423
)Short and long-term borrowings


(2,784
)Trade and other payables


(1,190
)Provisions


(63
)Post employment benefits


(62
)Net identifiable assets acquired


1,315Non-controlling interests2


(308
)Goodwill3


3,848Total consideration4


4,855 Notes: 1
Identifiable intangible assets of £1,641 million consisted of customer relationships of £1,522 million, brand of £18 million and software of
£101 million. 2
Non-controlling interests have been measured using the net fair value of the identifiable assets acquired, liabilities and contingent liabilities assumed. 3
The goodwill is attributable to the expected profitability of the acquired business and the synergies expected to arise after the Groups acquisition of KDG. 4
Transaction costs of £17 million were charged in the Groups consolidated income statement in the year ended 31 March 2014 Vodafone Omnitel B.V. (Vodafone Italy) On 21 February 2014, the Group acquired a 100% interest in Vodafone Italy as part of the disposal of the Groups interests in Verizon
Wireless for consideration of £7,121 million, having previously held a 76.9% stake in Vodafone Italy which was accounted for as a joint venture. The results of the acquired entity have been consolidated in the Groups income statement from 21 February 2014 and contributed £522 million of revenue and £5 million of profit attributable to equity
shareholders of the Group during the year. The provisional purchase price allocation is set out in the table below: Fair value£mNet assets acquired:Identifiable intangible assets1


3,000Property, plant and equipment


2,017Inventory


89Trade and other receivables (net of provisions of £285 million)


1,745Current and deferred taxation


(155
)Short and long-term borrowings


(19
)Trade and other payables


(2,415
)Provisions


(96
)Post employment benefits


(52
)Net identifiable assets acquired


4,114Goodwill2


3,007Total consideration


7,121 Notes: 1
Identifiable intangible assets of £3,000 million consisted of customer relationships of £1,319 million, licences and spectrum of £1,319 million and software of
£362 million. 2
The goodwill is attributable to the expected profitability of the acquired business and the synergies expected to arise after the Groups acquisition of Vodafone Italy.






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Pro-forma full year information The following unaudited pro-forma summary presents the Group as if the acquisitions of KDG and the remaining interests in Vodafone Italy had been
completed on 1 April 2013. The pro-forma amounts include the results of these acquisitions, amortisation of the acquired intangible assets recognised on acquisition and interest expense on the increase in net debt as a result of the
acquisitions. The pro-forma information is provided for comparative purposes only and does not necessarily reflect the actual results that would have occurred, nor is it necessarily indicative of future results of operations of the combined
companies. 2014
£mRevenue


44,127Profit for the financial year


59,024Profit attributable to equity shareholders


58,959PenceBasic earnings per share


222.72Diluted earnings per share


220.97 Other acquisitions During the 2014 financial year the Group completed a number of other acquisitions for an aggregate net cash consideration of
£6 million, all of which was paid during the year. The aggregate fair values of goodwill, identifiable assets, and liabilities of the acquired operations were £4 million, £3 million and £1 million,
respectively. In addition, the Group completed the acquisition of certain non-controlling interests for a net cash consideration of £111 million. Cable & Wireless Worldwide plc (CWW) On 27 July 2012 the Group acquired the entire
share capital of CWW for cash consideration of approximately £1,050 million before tax and transaction costs. CWW de-listed from the London Stock Exchange on 30 July 2012. CWW provides a wide range of managed voice, data, hosting and
IP-based services and applications. The primary reasons for acquiring the business were to strengthen the enterprise business of Vodafone Group in the UK and internationally, and the attractive network and other cost saving opportunities for the
Vodafone Group. The results of the acquired entity have been consolidated in the Groups income statement from 27 July 2012
and contributed £1,234 million of revenue and a loss of £151 million to the profit attributable to equity shareholders of the Group during the year ended 31 March 2013. The purchase price allocation is set out in the table below:  Fair value£mNet assets acquired:Identifiable intangible assets1


325Property, plant and equipment


1,207Inventory


34Trade and other receivables


452Cash and cash equivalents


78Current and deferred taxation


788Short and long-term borrowings


(306
)Trade and other payables


(754
)Provisions


(249
)Post employment benefits


(47
)Net identifiable assets acquired


1,528Non-controlling interests


(5
)Negative goodwill2


(473
)Total consideration


1,050 Notes: 1
Identifiable intangible assets of £325 million consisted of customer relationships of £225 million, CWW brand of £54 million and software of £46 million
and are amortised in line with Group accounting policies. 2
Transaction costs of £11 million were charged in the Groups consolidated income statement in the year ended 31 March 2013. The negative goodwill primarily arose from an upward fair value adjustment in relation to acquired property, plant and equipment, the recognition
of acquired identifiable intangible assets not previously recognised by CWW together with the recognition of a deferred tax asset resulting from previously unclaimed UK capital allowances. The change in the purchase price allocation from that
previously disclosed relates to further deferred tax asset recognition following the completion of new long-term business plans. No deferred tax assets have been recognised in respect of the losses of CWW (see Factors affecting the tax charge
in future years on page 122). The income statement credit in respect of the negative goodwill is reported within Other income and expense on the face of the consolidated income statement in the year ended 31 March 2013. On 27 July 2012 the Group acquired convertible bonds issued by CWW amounting to £245 million which resulted in
£6 million of interest being charged to the Groups consolidated income statement in the year ended 31 March 2013.






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|162 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






28. Acquisitions and disposals (continued) TelstraClear Limited (TelstraClear) On 31 October 2012 the Group acquired the entire share capital of TelstraClear for cash consideration of NZ$863 million (£440 million).
The primary reasons for acquiring the business were to strengthen Vodafone New Zealands portfolio of fixed communications solutions and to create a leading total communications company in New Zealand. The results of the acquired entity which have been consolidated in the income statement from 31 October 2012 contributed
£136 million of revenues and a loss of £23 million to the profit attributable to equity shareholders of the Group during the year ended 31 March 2013. The purchase price allocation is set out in the table below:  Fair value£mNet assets acquired:Identifiable intangible assets1


84Property, plant and equipment


345Trade and other receivables


55Cash and cash equivalents


5Current and deferred taxation liabilities


(19
)Trade and other payables


(59
)Provisions


(15
)Net identifiable assets acquired


396Goodwill2


44Total consideration


440 Notes: 1
Identifiable intangible assets of £84 million consist of licences and spectrum fees of £27 million, TelstraClear brand of £3 million and customer relationships of
£54 million. 2
The goodwill is attributable to the expected profitability of the acquired business and the synergies expected to arise after the Groups acquisition of TelstraClear. None of the goodwill is
expected to be deductible for tax purposes. Disposals Verizon Wireless (VZW) On 21 February 2014 the Group sold its US sub-group which included its entire 45% shareholding in VZW to Verizon Communications Inc. for a total consideration of £76.7 billion before tax and transaction costs. The Group
recognised a net gain on disposal of £44,996 million, reported in profit for the financial year from discontinued operations.  £mNet assets disposed


(27,957
)Total consideration1


76,716Other effects2


(3,763
)Net gain on disposal3,4


44,996 Notes: 1
Consideration of £76.7 billion comprises cash of £35.2 billion, shares in Verizon Communications Inc. of £36.7 billion, loan notes issued by Verizon communications Inc. of
£3.1 billion and a 21.3% interest in Vodafone Italy valued at £1.7 billion. 2
Other effects include foreign exchange losses transferred to the consolidated income statement. 3
Reported in profit for the financial year from discontinued operations in the consolidated income statement. 4
Transaction costs of £100 million were charged in the Groups consolidated income statement in the year ended 31 March 2014. The Group did not separately value the embedded derivatives arising from the agreement to sell the US sub-group for a fixed consideration on
2 September 2013 because it was not able to make a reliable estimate of the valuation of this derivative due to the difficulty in estimating the fair value of the shares in an unlisted entity in the period between 2 September 2013 and
transaction completion on 21 February 2014. Vodafone Omnitel B.V. (Vodafone Italy) On 21 February 2014 the Group completed a deemed disposal of its entire 76.9% shareholding in Vodafone Italy as part of the VZW disposal deal
for a total consideration £5.5 billion before tax and transaction costs. The Group recognised a net loss on disposal of £712 million, reported in other income and expense.  £mNet assets disposed


(8,480
)Total consideration


5,473Other effects1


2,295Net loss on disposal2


(712
) Notes: 1
Other effects include foreign exchange gains transferred to the consolidated income statement. 2
Reported in other income and expense in the consolidated income statement.






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29. Commitments A commitment is a contractual obligation to make a payment in the future, mainly in relation to leases and
agreements to buy assets such as network infrastructure and IT systems. These amounts are not recorded in the consolidated statement of financial position since we have not yet received the goods or services from the supplier. The amounts below are
the minimum amounts that we are committed to pay. Accounting policies Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the asset
to the lessee. All other leases are classified as operating leases. Assets held under finance leases are recognised as assets of the
Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments as determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial
position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
recognised in the income statement. Rentals payable under operating leases are charged to the income statement on a straight-line
basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term. Operating lease commitments The Group has entered into commercial leases on certain properties, network infrastructure, motor vehicles and items of equipment. The
leases have various terms, escalation clauses, purchase options and renewal rights, none of which are individually significant to the Group. Future minimum lease payments under non-cancellable operating leases comprise:  2014£m


Restated2013 £mWithin one year


1,128



1,094In more than one year but less than two years


841



914In more than two years but less than three years


678



721In more than three years but less than four years


557



612In more than four years but less than five years


477



519In more than five years


2,051



2,2435,732



6,103 The total of future minimum sublease payments expected to be received under non-cancellable subleases is
£313 million (2013: £314 million). Capital commitments Company and subsidiaries


Share of joint operations


Group2014 £m


Restated2013 £m


2014£m


Restated2013 £m


2014£m


Restated2013 £mContracts placed for future capital expenditure notprovided in the financial statements1


2,307



1,715



28



18



2,335



1,733 Note: 1
Commitment includes contracts placed for property, plant and equipment and intangible assets. Grupo Corporativo Ono, S.A. (Ono) On 17 March 2014, Vodafone agreed to acquire Ono for a total consideration equivalent to 7.2 billion (£6.0 billion) on a debt and cash free basis. Ono
has the largest next-generation network in Spain and the acquisition enables Vodafone to take advantage of the rapid increase in the adoption of unified communications products and services in the Spanish market. The acquisition, which is subject to
customary terms and conditions including anti-trust clearances by the relevant authorities, is expected to complete in calendar Q3 2014.






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|164 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






30. Contingent liabilities 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.  2014£m


Restated2013 £mPerformance bonds1


442



266Other guarantees and contingent liabilities2


2,500



1,257 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 an AUD 1.7 billion loan facility and a US$3.5 billion loan facility of its joint venture,
Vodafone Hutchison Australia Pty Limited. UK pension schemes The Group has covenanted to provide security in favour of the Trustee of the Vodafone Group Pension Scheme whilst there is a deficit in the
scheme. The deficit is measured on a prescribed basis agreed between the Group and Trustee. In 2010 the Group and Trustee agreed security of a charge over UK index linked gilts (ILG) held by the Group. In December 2011, the security was
increased by an additional charge over further ILG due to a significant increase in the deficit at that time. In April 2014, the
security was reduced following a reduction in the deficit following the results of the 2013 valuation and a £325 million company contribution to the Scheme (see note 26 Post employment benefits). The scheme retains security
over £186.5 million (notional value) 2017 ILGs. The security may be substituted either on a voluntary or mandatory basis. As and when alternative security is provided, the Group has agreed that the security cover should include additional
headroom of 33%, although if cash is used as the security asset the ratio will revert to 100% of the relevant liabilities or where the proposed replacement security asset is listed on an internationally recognised stock exchange in certain core
jurisdictions, the Trustee may decide to agree a lower ratio than 133%. The Company has also provided two guarantees to the scheme for a combined value up to 1.5 billion to
provide security over the deficit under certain defined circumstances, including insolvency of the employers. The Company has also
agreed similar guarantees for the Trustees of the Cable & Wireless Worldwide Retirement Plan and THUS Plc Group Scheme up to £1.25 billion and £110 million respectively, following the acquisition of Cable &
Wireless Worldwide plc. Legal proceedings The Company and its subsidiaries are currently, and may be from time to time, involved in a number of legal proceedings including inquiries from,
or discussions with, governmental authorities that are incidental to their operations. However, save as disclosed below, the Company and its subsidiaries are not currently involved in any legal or arbitration proceedings (including any governmental
proceedings which are pending or known to be contemplated) which may have, or have had in the 12 months preceding the date of this report, a significant effect on the financial position or profitability of the Company and its subsidiaries. Due to
inherent uncertainties, no accurate quantification of any cost, or timing of such cost, which may arise from any of the legal proceedings outlined below can be made. Materiality is lower than for the year ended 31 March 2013 as a result of the disposal of the Groups interest in Verizon Wireless and
accordingly, certain matters discussed below were not disclosed in prior years. Telecom Egypt arbitration In October 2009 Telecom Egypt commenced arbitration against Vodafone Egypt in Cairo alleging breach of non-discrimination provisions in an
interconnection agreement as a result of lower interconnection rates paid to Vodafone Egypt by Mobinil. Telecom Egypt has also sought to join Vodafone International Holdings BV (VIHBV), Vodafone Europe BV (VEBV) and Vodafone
Group Plc (which Telecom Egypt alleges should be held jointly liable with Vodafone Egypt) to the arbitration. VIHBV, VEBV and Vodafone Group Plc deny that they were subject to the interconnection agreement or any arbitration agreement with Telecom
Egypt. Telecom Egypt initially quantified its claim at approximately 190 million in 2009. This was subsequently amended and increased to 551 million in January 2011 and further increased to its current value of just over 1.2 billion in November
2011. The Company disputes Telecom Egypts claim (and assertion of jurisdiction over VIHBV, VEBV and Vodafone Group Plc) and will continue to defend the Vodafone companies position vigorously. The arbitration hearing concluded in November
2013. The parties completed final written submissions in March 2014. A decision is now awaited from the tribunal during 2014. Indian tax case In
August 2007 and September 2007, Vodafone India Limited (VIL) and VIHBV respectively received notices from the Indian tax authority alleging potential liability in connection with an alleged failure by VIHBV to deduct withholding tax from
consideration paid to the Hutchison Telecommunications International Limited group (HTIL) in respect of HTILs gain on its disposal to VIHBV of its interests in a wholly-owned subsidiary that indirectly holds interests in VIL. In
January 2012 the Indian Supreme Court handed down its judgement, holding that VIHBVs interpretation of the Income Tax Act 1961 was correct, that the HTIL transaction in 2007 was not taxable in India, and that consequently, VIHBV had no
obligation to withhold tax from consideration paid to HTIL in respect of the transaction. The Indian Supreme Court quashed the relevant notices and demands issued to VIHBV in respect of withholding tax and interest. On 20 March 2012 the Indian
Government returned VIHBVs deposit of INR 25 billion and released the guarantee for INR 85 billion, which was based on the demand for payment issued by the Indian tax authority in October 2010, for tax of INR 79 billion plus interest. On 16 March 2012, the Indian Government introduced proposed legislation (the Finance Bill 2012) purporting to
overturn the Indian Supreme Courts judgement with retrospective effect back to 1962. On 17 April 2012, Vodafone International Holdings BV (VIHBV) filed a trigger notice under the Dutch-India Bilateral Investment Treaty
(BIT) signalling its intent to invoke arbitration under the BIT should the new laws be enacted. The Finance Bill 2012 received Presidential assent and became law on 28 May 2012 (the Finance Act 2012). The Finance Act
2012 is intended to tax any gain on transfer of shares in a non-Indian company, which derives substantial value from underlying Indian assets, such as VIHBVs transaction with HTIL in 2007. Further it seeks to subject a purchaser, such as
VIHBV, to a retrospective obligation to withhold tax.






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The Indian Government commissioned a committee of experts (the Shome committee)
consisting of academics, and current and former Indian government officials, to examine, and make recommendations in respect of, aspects of the Finance Act 2012 including the retrospective taxation of transactions such as VIHBVs transaction
with HTIL referred to above. On 10 October 2012, the Shome committee published its draft report for comment. The draft report concluded that tax legislation in the Finance Act 2012 should only be applied prospectively or, if applied
retrospectively, that only a seller who made a gain should be liable and, in that case, without any liability for interest or penalties. The Shome committees final report was submitted to the Indian Government on 31 October 2012, but no
final report has been published, and it remains unclear what the Indian Government intends to do with the Shome committees final report or its recommendations. VIHBV has not received any formal demand for taxation following the Finance Act 2012, but it did receive a letter on 3 January 2013 reminding
it of the tax demand raised prior to the Indian Supreme Courts judgement and purporting to update the interest element of that demand to a total amount of INR 142 billion. The separate proceedings taken against VIHBV to seek to treat it as an
agent of HTIL in respect of its alleged tax on the same transaction, as well as penalties of up to 100% of the assessed withholding tax for the alleged failure to have withheld such taxes, remain pending despite the issue having been ruled upon by
the Indian Supreme Court. Should a further demand for taxation be received by VIHBV or any member of the Group as a result of the new retrospective legislation, we believe it is probable that we will be able to make a successful claim under the BIT.
Although this would not result in any outflow of economic benefit from the Group, it could take several years for VIHBV to recover any deposit required by an Indian Court as a condition for any stay of enforcement of a tax demand pending the outcome
of VIHBVs BIT claim. However, VIHBV expects that it would be able to recover any such deposit. On 17 January 2014, VIHBV served on the Indian Government an amended trigger notice under the BIT, supplementing the trigger notice filed on
17 April 2012, to add claims relating to an attempt by the Indian Government to tax aspects of the transaction with Hutchison under transfer pricing rules. On 17 April 2014, VIHBV served its notice of arbitration under the BIT, formally
commencing the BIT arbitration proceedings. We did not carry a provision for this litigation or in respect of the retrospective
legislation at 31 March 2014, or at previous reporting dates. Other Indian tax cases VIL and Vodafone India Services Private Limited (VISPL) (formerly 3GSPL) are involved in a number of tax cases with total claims
exceeding £1 billion plus interest, and penalties of up to 300% of the principal. VIL tax claims The claims against VIL range from disputes concerning transfer pricing and the applicability of value-added tax to SIM cards, to the disallowance
of income tax holidays. The quantum of the tax claims against VIL is in the region of £0.9 billion. VIL is of the opinion that any finding of material liability to tax, is not probable. VISPL tax claims VISPL has been
assessed to owe tax of approximately £240 million (plus interest of £190 million) in respect of (i) a transfer pricing margin charged for the international call centre of Hutchison prior to the transaction with Vodafone;
(ii) the sale of the international call centre by VISPL to Hutchison and (iii) the alleged transfer of options held by VISPL for VIL equity shares. The first two of the three heads of tax are subject to an indemnity by Hutchison under the
VIHBV Tax Deed of Indemnity. The larger part of the potential claim is not subject to any indemnity. VISPL unsuccessfully challenged the merits of the tax demand in the statutory tax tribunal and the jurisdiction of the tax office to make the demand
in the High Court. The case is now in the Tax Appeal Tribunal after VISPL obtained a stay of the tax demand on a deposit of £20 million and a corporate guarantee by VIHBV for the balance. If VISPL loses the appeal, its terms of the stay
of demand may be revisited (and could be increased) while VISPL pursues further appeals in the High Court and the Supreme Court. Indian regulatory cases Litigation remains pending in the Telecommunications Dispute Settlement Appellate Tribunal (TDSAT), High Courts and the Supreme Court
in relation to a number of significant regulatory issues including mobile termination rates (MTRs), spectrum and licence fees, licence extension and 3G intra-circle roaming (ICR). Public interest litigation: Yakesh Anand v Union of India, Vodafone and others The Petitioner has brought a special leave petition in the Indian Supreme Court on 30 January 2012 against the Government of India and mobile
network operators, including VIL, seeking recovery of the alleged excess spectrum allocated to the operators, compensation for the alleged excess spectrum held in the amount of approximately
4.7 billion and a criminal investigation of an alleged conspiracy between government officials and the network operators. A claim with similar allegations was dismissed by the
Supreme Court in March 2012, with an order that the Petitioner should pay a fine for abuse of process. The case is pending before the Supreme Court and is expected to be called for hearing at some uncertain future date. One time spectrum charges: Vodafone India v Union of India The Government of India has sought to impose one time spectrum charges of approximately
525 million on certain operating subsidiaries of VIL. We filed a petition before the TDSAT challenging the one time spectrum charges on the basis that they are illegal,
violate Vodafones licence terms and are arbitrary, unreasonable and discriminatory. The tribunal stayed enforcement of the Governments spectrum demand pending resolution of the dispute. The case is now ready for trial. 3G inter-circle roaming: Vodafone India and others v Union of India In April 2013, the Indian Department of Telecommunications issued a stoppage notice to VILs operating subsidiaries and other mobile
operators requiring the immediate stoppage of the provision of 3G services on other operators mobile networks in an alleged breach of licences. The regulator also imposed a fine of approximately 5.5 million. We applied to the Delhi High Court for an order quashing the regulators notice. Interim relief from the notice has been granted (but limited to existing customers at
the time with the effect that VIL was not able to provide 3G services to new customers on other operators 3G networks pending a decision on the issue). The dispute was referred to the TDSAT for decision, which ruled on 28 April 2014 that
VIL and the other operators were permitted to provide 3G services to their customers (current and future) on other operators networks. An appeal by the Department of Telecommunications is possible.






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|166 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






30. Contingent liabilities (continued) Extension of licences in Delhi, Mumbai and Kolkata: VIL and others v Union of India We sought an extension of our existing licences in Delhi, Mumbai and Kolkata along with existing licensed spectrum. That extension was denied by
the Department of Telecommunications by order dated 21 March 2013. We appealed that decision to the TDSAT and by its order dated 31 January 2014, the TDSAT denied the extension. The Supreme Court has agreed to hear our appeal on an
expedited basis. Other cases in the Group Italy British Telecom
(Italy) v Vodafone Italy The Italian Competition Authority concluded an investigation in 2007 when Vodafone Italy gave certain
undertakings in relation to concerns it had abused its dominant position in the wholesale market for mobile termination. In 2010, British Telecom (Italy) brought a civil damages claim against Vodafone Italy on the basis of the Competition
Authoritys investigation and Vodafone Italys undertakings. British Telecom (Italy) seeks damages in the amount of 280 million for abuse of dominant position by
Vodafone Italy in the wholesale fixed to mobile termination market for the period 1999 to 2007. A court appointed expert has delivered an opinion to the Court that the range of damages in the case are in the region of 10 million to 25 million. FASTWEB v Vodafone Italy The Italian Competition Authority concluded an investigation in 2007 when Vodafone Italy gave certain undertakings in relation to concerns it had
abused its dominant position in the wholesale market for mobile termination. In 2010, FASTWEB brought a civil damages claim against Vodafone Italy on the basis of the Competition Authoritys investigation and Vodafone Italys undertakings.
FASTWEB seeks damages in the amount of 360 million for abuse of dominant position by Vodafone Italy in the wholesale fixed to mobile termination market. A court appointed
expert has delivered an opinion to the Court that the range of damages in the case are in the region of 0.5 million to 2.3 million. Greece Papistas Holdings SA, Mobile Trade Stores (formerly Papistas SA) and Athanasios and Loukia Papistas v Vodafone Greece, Vodafone Group Plc and
certain Directors and Officers of Vodafone In December 2013, Mr and Mrs Papistas, and companies owned or controlled by them,
brought three claims in the Greek court in Athens against Vodafone Greece, Vodafone Group Plc and certain directors and officers of Vodafone Greece and Vodafone Group Plc for purported damage caused by the alleged abuse of dominance and wrongful
termination of a franchise arrangement with a Papistas company. Approximately 1.0 billion of the claim is directed exclusively at one former and one current director of Vodafone
Greece. The balance of the claim (approximately 285.5 million) is sought from Vodafone Greece and Vodafone Group Plc on a joint and several basis. The cases are scheduled to come
to trial in November 2015 and April 2016. Tanzania Cats-Net Limited v Vodacom Tanzania Limited In 2012, Cats-Net Limited brought a claim for US$500 million (US$200 million compensatory and US$300 million punitive) in damages against Vodacom Tanzania Limited in the Tanzanian High Court. Cats-Net is also seeking an order
cancelling Vodacom Tanzanias mobile telecommunications licence. The claim is based on the actions of the Tanzanian Telecommunications Regulatory Authority (TTRA) who, following complaints by Vodacom Tanzania of interference caused
by transmissions of Cats-Net, allegedly shut down the operations of Cats-Net after conducting its own investigation. Cats-Net alleges collusion between the TTRA and Vodacom Tanzania. Vodacom Tanzania filed an application to strike out the claim.
That application has been argued and the parties await a decision of the Court.






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31. Related party transactions The Group has a number of related parties including joint ventures and associates (see note 12 Investments
in associates and joint ventures to the consolidated financial statements), pension schemes (see note 26 Post employment benefits to the consolidated financial statements) and directors and Executive Committee members (see note 24
Directors and key management compensation to the consolidated financial statements). Transactions with joint ventures
and associates Related party transactions with the Groups joint ventures and associates primarily comprise fees for the use of
products and services including network airtime and access charges, 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.  2014£m


Restated
2013
£m


Restated
2012
£mSales of goods and services to associates


231



238



194Purchase of goods and services from associates


109



97



103Sales of goods and services to joint ventures


12



27



43Purchase of goods and services from joint ventures


570



568



381Net interest expense payable to joint ventures1


75



33



20Trade balances owed:by associates


3



21



15to associates


3



20



17by joint ventures


82



260



220to joint ventures


170



48



16Other balances owed by joint ventures1


57



1,065



1,213Other balances owed to joint ventures1


63







 Note: 1
Amounts arise primarily through Vodafone Italy, Vodafone Hutchison Australia, Indus Towers and Cornerstone. Interest is paid in line with market rates. 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 2014, and as of 19 May 2014, neither any director nor any other executive officer, nor any
associate of any director or any other executive officer, was indebted to the Company. During the three years ended 31 March
2014, and as of 19 May 2014, the Company has not been a party to any other material transaction, or proposed transactions, in which any member of the key management personnel (including directors, any other executive officer, senior manager,
any spouse or relative of any of the foregoing or any relative of such spouse) had or was to have a direct or indirect material interest.  32. Principal subsidiaries Our subsidiaries are located around the world and each contributes to the profits, assets and cash flow of the
Group. We have a large number of subsidiaries and so, for practical reasons, only the principal subsidiaries at 31 March 2014 are detailed below. Accounting policies A subsidiary is an entity 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.






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|168 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






32. Principal subsidiaries (continued) Principal subsidiaries A full list of subsidiaries, joint arrangements, associated undertakings and any significant holdings (as defined in the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008) as at 15 August 2014 will be annexed to the Companys next annual return filed with the Registrar of Companies. No subsidiaries are excluded from the Group consolidation. Unless
otherwise stated the Companys principal subsidiaries all have share capital consisting solely of ordinary shares and are indirectly held. The country of incorporation or registration of all subsidiaries is also their principal place of
operation unless otherwise stated.  Name

Principal activity


Country of incorporation orregistration


Percentage shareholdings1Vodafone GmbH


Network operator



Germany



100.0Kabel Deutschland Holding AG2


Network operator



Germany



76.6Vodafone Limited


Network operator



England



100.0Vodafone Omnitel B.V.3,4,5


Network operator



Netherlands



100.0Vodafone España S.A.U.


Network operator



Spain



100.0Vodafone Albania Sh.A.


Network operator



Albania



99.9Vodafone Czech Republic a.s.


Network operator



Czech Republic



100.0Vodafone-Panafon Hellenic Telecommunications Company S.A.


Network operator



Greece



99.9Vodafone Magyarorszag Mobile Tavkozlesi Zartkoruen Mukodo Reszvenytarsasag6


Network operator



Hungary



100.0Vodafone Ireland Limited


Network operator



Ireland



100.0Vodafone Malta Limited


Network operator



Malta



100.0Vodafone Libertel B.V.


Network operator



Netherlands



100.0Vodafone Portugal-Comunicações Pessoais, S.A.7


Network operator



Portugal



100.0Vodafone Romania S.A.


Network operator



Romania



100.0Vodafone India Limited


Network operator



India



89.0Vodacom Group Limited


Holding company



South Africa



65.0Vodacom (Pty) Limited8


Network operator



South Africa



60.9Vodacom Congo (RDC) s.p.r.l.8,9,10


Network operator



The DemocraticRepublic of Congo



33.2Vodacom Tanzania Limited8,10


Network operator



Tanzania



42.3VM, S.A.8,11


Network operator



Mozambique



55.3Vodacom Lesotho (Pty) Limited8


Network operator



Lesotho



52.0Vodacom Business Africa Group (PTY) Limited8


Holding company



South Africa



65.0Vodafone Egypt Telecommunications S.A.E.


Network operator



Egypt



54.9Ghana Telecommunications Company Limited


Network operator



Ghana



70.0Vodafone New Zealand Limited


Network operator



New Zealand



100.0Vodafone Qatar Q.S.C.10


Network operator



Qatar



23.0Vodafone Telekomunikasyon A.S.


Network operator



Turkey



100.0Vodafone Group Services Limited12


Global products and services provider



England



100.0Vodafone Sales & Services Limited13


Group services provider



England



100.0Vodafone 6 UK


Holding company



England



100.0Vodafone Holding GmbH


Holding company



Germany



100.0Vodafone Holdings Europe S.L.U.


Holding company



Spain



100.0Vodafone Europe B.V.


Holding company



Netherlands



100.0Vodafone International Holdings B.V.


Holding company



Netherlands



100.0Vodafone Investments Luxembourg S.a.r.l.


Holding company



Luxembourg



100.0Vodafone Procurement Company S.a.r.l.


Group services provider



Luxembourg



100.0Vodafone Roaming Services S.a.r.l.


Group services provider



Luxembourg



100.0 Notes: 1
Effective ownership percentages of Vodafone Group Plc at 31 March 2014, rounded to nearest tenth of one percent. 2
Kabel Deutschland Holding AG was acquired on 14 October 2013. 3
Vodafone Omnitel B.V. changed its name on 16 December 2013 (previously Vodafone Omnitel N.V.). 4
The principal place of operation of Vodafone Omnitel B.V. is Italy. 5
Vodafone Omnitel B.V. became a 100% owned subsidiary on 21 February 2014. 6
Trades as Vodafone Hungary Mobile Telecommunications Company Limited. 7
38.6% of the issued share capital of Vodafone Portugal-Comunicações Pessoais, S.A. is directly held by Vodafone Group Plc. 8
Shareholding is indirect through Vodacom Group Limited. The indirect shareholding is calculated using the 65.0% ownership interest in Vodacom. 9
The share capital of Vodacom Congo (RDC) s.p.r.l. consists of 1,000,000 ordinary shares and 75,470,588 preference shares. 10
The Group has rights that enable it to control the strategic and operating decisions of Vodafone Qatar Q.S.C., Vodacom Congo (RDC) s.p.r.l. and Vodacom Tanzania Limited. 11
The share capital of VM, S.A. consists of 60,000,000 ordinary shares and 548,350,646 preference shares. 12
Share capital consists of 1,190 ordinary shares and one deferred share, of which 100% of the shares are indirectly held by Vodafone Group Plc. 13
Vodafone Sales & Services Limited is directly held by Vodafone Group Plc.






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The tables below show selected financial data in respect of subsidiaries that have non-controlling
interests that are material to the Group.  Vodacom Group Limited




Vodafone
Egypt Telecommunications S.A.E.




Vodafone Qatar Q.S.C.2014
£m


2013
£m




2014
£m


2013
£m




2014£m


2013£mSummary comprehensive income informationRevenue


4,718



5,206





1,163



1,259





342



266Profit/(loss) for the financial year


730



819





165



183





(43
)


(70
)Other comprehensive expense


(9
)


(12
)


















Total comprehensive income/(expense)


721



807





165



183





(43
)


(70
)Other financial informationProfit/(loss) for the financial year allocated to non-controlling interests


273



298





75



83





(33
)


(54
)Dividends paid to non-controlling interests


261



301





3



3









Summary financial position informationNon-current assets


4,681



5,766





1,259



1,412





1,197



1,382Current assets


1,275



1,503





405



298





52



73Total assets


5,956



7,269





1,664



1,710





1,249



1,455Non-current liabilities


(360
)


(649
)




(33
)


(52
)




(6
)


(2
)Current liabilities


(2,005
)


(2,171
)




(721
)


(805
)




(267
)


(338
)Total assets less total liabilities


3,591



4,449





910



853





976



1,115Equity shareholders funds


2,899



3,609





575



554





224



256Non-controlling interests


692



840





335



299





752



859Total equity


3,591



4,449





910



853





976



1,115 The voting rights held by the Group equal the Groups percentage shareholding as shown on page 168.






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|170 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014        
|    |  | Notes to the
consolidated financial statements (continued)






33. 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 2014.  Name

Registration numberVodafone 2.


4083193Vodafone 4 UK


6357658Vodafone 5 Limited


6688527Vodafone 5 UK


2960479Vodafone Americas 4


6389457Vodafone Benelux Limited


4200960Vodafone Cellular Limited


896318Vodafone Consolidated Holdings Limited


5754561Vodafone Euro Hedging Limited


3954207Vodafone Euro Hedging Two


4055111Vodafone European Investments


3961908Vodafone European Portal Limited


3973442Vodafone Europe UK


5798451Vodafone Finance Luxembourg Limited


5754479Vodafone Finance Sweden


2139168Vodafone Finance UK Limited


3922620Vodafone Financial Operations


4016558Vodafone Global Content Services Limited


4064873Vodafone Holdings Luxembourg Limited


4200970Vodafone Intermediate Enterprises Limited


3869137Vodafone International Holdings Limited


2797426Vodafone International Operations Limited


2797438Vodafone Investments Australia Limited


2011978Vodafone Investments Limited


1530514Vodafone Investment UK


5798385Vodafone Leasing Limited


4201716Vodafone Marketing UK


6858585Vodafone Mobile Communications Limited


3942221Vodafone Mobile Enterprises Limited


3961390Vodafone Mobile Network Limited


3961482Vodafone (New Zealand) Hedging Limited


4158469Vodafone Nominees Limited


1172051Vodafone Oceania Limited


3973427Vodafone Overseas Finance Limited


4171115Vodafone Overseas Holdings Limited


2809758Vodafone Panafon UK


6326918Vodafone Property Investments Limited


3903420Vodafone UK Investments Limited


874784Vodafone UK Limited


2227940Vodafone Worldwide Holdings Limited


3294074Vodafone Yen Finance Limited


4373166Voda Limited


1847509Vodaphone Limited


2373469Vodata Limited


2502373  34. Subsequent events Detailed below are the significant events that happened after our year end date of 31 March 2014 and before
the signing of this annual report on 20 May 2014. On 11 April 2014, the Group acquired the remaining 10.97% of its Indian
subsidiary, Vodafone India Limited, from Piramal Enterprises Limited for cash consideration of INR 89.0 billion (£0.9 billion), taking its ownership interest to 100%. On 19 May 2014 Vodacom announced that it had reached an agreement with the shareholders of Neotel, the second largest provider of fixed
telecommunications services in South Africa, to acquire 100% of the issued share capital in, and shareholder loans against, Neotel for a total cash consideration of ZAR 7.0 billion (£0.4 billion). The transaction remains subject to the
fulfilment of a number of conditions precedent including applicable regulatory approvals and is expected to close before the end of the financial year.






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|Other unaudited financial information |  |    






Prior year operating results This section presents our operating performance for the 2013 financial year compared to the 2012 financial year,
providing commentary on how revenue and adjusted EBITDA performance of the Group and its operating segments within the Europe and AMAP regions, together with Common Functions, have developed over the last year. These revenue and adjusted EBITDA
amounts are extracted from note 2 to the Consolidated Financial Statements. The presentation of segmental revenues and adjusted EBITDA within note 2 to the Consolidated Financial Statements segment is under the management basis as this is assessed
as being the most insightful presentation and is how the Groups operating performance is reviewed internally by management. See Non-GAAP information on page 201 for further information and reconciliations between the management and
statutory basis. Group1  Restated1 2013
£m


Restated1 2012
£mRevenue


38,041



38,821Service revenue


34,999



35,746Other revenue


3,042



3,075Adjusted EBITDA2


11,466



11,737Adjusted operating profit2


5,590



6,387Impairment loss


(7,700
)


(4,050
)Restructuring costs and other


(311
)


(144
)Amortisation of acquired customer bases and brand intangible assets


(249
)


(280
)Other income/(expense)


468



3,705Operating (loss)/profit


(2,202
)


5,618Non-operating income and expense


10



(162
)Net financing costs


(1,291
)


(1,312
)Income tax credit/(expense)


(476
)


(705
)(Loss)/profit for the financial year from continuing operations


(3,959
)


3,439Profit for the financial year from discontinued operations


4,616



3,555Profit for the financial year


657



6,994 Notes: 1
2013 results reflect average foreign exchange rates of £1:1.23 and £1:US$1.58 (2012: £1:1.16 and £1:US$1.60). 2
Adjusted EBITDA and adjusted operating profit have been restated to exclude restructuring costs. Adjusted operating profit has also been redefined to exclude amortisation of customer base and brand
intangible assets. See page 201 for Non-GAAP financial information.  Revenue Group revenue fell by 2.0% to £38.0 billion, with service revenue of £35.0 billion, a decline of 2.1%. Our performance reflected continued strong demand for data services and good growth in our major emerging markets, offset by adverse foreign
exchange movements, regulatory changes, challenging macroeconomic conditions, particularly in Europe, and continued competitive pressures.
 Adjusted EBITDA and profit Group adjusted EBITDA decreased by 2.3% to £11.5 billion, primarily driven by lower revenue, partially offset by operating cost
efficiencies. Adjusted operating profit declined by 12.5%, driven by lower adjusted EBITDA. The operating (loss)/profit decreased from a profit £5.6 billion in the prior year to a loss of £2.2 billion primarily due to the
gains on the disposal of the Groups interests in SFR and Polkomtel in the prior year and the higher impairment charges in the current year, partially offset by the gain on acquisition of CWW of £0.5 billion. An impairment loss of £7.7 billion was recorded in relation to Italy and Spain, primarily driven by adverse performance against previous
plans and adverse movements in discount rates.






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|172 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|    |  | Other unaudited
financial information (continued) 






Prior year operating results (continued) Europe on a management basis  % changeGermany
£m


Italy
£m


UK
£m


Spain
£m


Other Europe
£m


Eliminations
£m


Europe
£m


£


OrganicYear ended 31 March 2013Revenue


7,857



4,755



5,150



3,904



7,115



(179
)


28,602



(5.7
)


(5.5
)Service revenue


7,275



4,380



4,782



3,629



6,610



(175
)


26,501



(5.9
)


(5.8
)Other revenue


582



375



368



275



505



(4
)


2,101



(3.2
)


(1.3
)Adjusted EBITDA


2,831



1,917



1,210



1,021



2,120







9,099



(11.0
)


(8.1
)Adjusted EBITDA margin


36.0%



40.3%



23.5%



26.2%



29.8%







31.8%Year ended 31 March 2012Revenue


8,233



5,658



5,397



4,763



6,469



(198
)


30,322



0.2



(1.2
)Service revenue


7,669



5,329



4,996



4,357



5,994



(193
)


28,152



(0.9
)


(2.1
)Other revenue


564



329



401



406



475



(5
)


2,170



16.4



13.6Adjusted EBITDA


3,034



2,521



1,294



1,210



2,160







10,219



(3.4
)


(4.8
)Adjusted EBITDA margin


36.9%



44.6%



24.0%



25.4%



33.4%







33.7%  Organicchange %



Otheractivity pps
1


Foreignexchange pps



Reportedchange %Revenue  Europe


(5.5
)


4.4



(4.6
)


(5.7
)Service revenueGermany


0.5



(0.1
)


(5.5
)


(5.1
)Italy


(12.8
)


(0.1
)


(4.9
)


(17.8
)UK


(4.0
)


(0.3
)






(4.3
)Spain


(11.5
)


(0.2
)


(5.0
)


(16.7
)Other Europe


(5.2
)


22.4



(6.9
)


10.3Europe


(5.8
)


4.5



(4.6
)


(5.9
)Adjusted EBITDAGermany


(1.7
)


0.2



(5.2
)


(6.7
)Italy


(19.3
)






(4.7
)


(24.0
)UK


(6.8
)


0.4



(0.1
)


(6.5
)Spain


(9.8
)


(0.5
)


(5.3
)


(15.6
)Other Europe


(3.7
)


8.1



(6.3
)


(1.9
)Europe


(8.1
)


1.8



(4.7
)


(11.0
) Note: 1
Other activity includes the impact of M&A activity and the revision to intra-group roaming charges from 1 October 2011. Refer to Organic growth on page 202 for
further detail.
 Germany Service revenue increased by 0.5%*, driven by a 1.3%* increase in mobile revenue. Growth in enterprise and wholesale revenue, despite intense
price competition, was offset by lower prepaid revenue. Data revenue increased by 13.6%* driven by higher penetration of smartphones and an increase in those sold with a data bundle. Vodafone Red, introduced in October 2012, performed in line with
expectations and had a positive impact on customer perception. Enterprise revenue grew by 3.0%*, despite the competitive environment. The roll-out of 4G services continued and was available in 81 cities, with population coverage of 61% at 31 March 2013. Adjusted EBITDA declined by 1.7%*, with a 1.0* percentage point reduction in adjusted EBITDA margin, driven by higher customer costs, partially
offset by operating cost efficiencies and a one-off benefit from a legal settlement during Q2. Italy Service revenue declined by 12.8%* driven by the severe macroeconomic weakness and intense competition, as well as the impact of MTR cuts starting
from 1 July 2012. Data revenue increased by 4.4%* driven by mobile internet growth and the higher penetration of smartphones, which more than offset the decline in mobile broadband revenue. Vodafone Red plans, branded as Vodafone Relax
in Italy, continued to perform well and now account for approximately 30% of the contract customer base at 31 March 2013. The majority of contract additions are Vodafone Relax tariffs. Fixed revenue declined by 6.8%* driven by intense competition
and a reduction in the customer base due to the decision to stop consumer acquisitions in areas where margins are impacted by unfavourable regulated wholesale prices. 4G commercial services were launched in October 2012 and were available in 21 cities at 31 March 2013. Adjusted EBITDA declined by 19.3%*, with a 4.3* percentage point fall in the adjusted EBITDA margin, driven by the decline in service revenue and
an increase in commercial costs, partially offset by operating cost efficiencies such as site sharing agreements and the outsourcing of network maintenance.






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UK Service revenue declined by 4.0%* driven by the impact of MTR cuts effective from April 2012, intense price competition and macroeconomic
weakness, which led to lower out-of-bundle usage. Data revenue grew by 4.2%* driven by higher penetration of smartphones. Vodafone Red plans, launched in September 2012, performed well, with over one million customers at 31 March 2013. Following the purchase of additional spectrum in February 2013, preparation for LTE roll-out is underway. The network sharing joint arrangements between Telefónica UK and Vodafone UK, announced in June 2012, is now operational and the
integration of the CWW enterprise businesses into Vodafone UK is proceeding successfully. Adjusted EBITDA declined by 6.8%*, with a
0.5* percentage point reduction in adjusted EBITDA margin, driven by higher retention activity. Spain Service revenue declined by 11.5%* driven by continued macroeconomic weakness, high unemployment leading to customers optimising their spend, and
a lower customer base following our decision to remove handset subsidies for a period earlier in the year. Competition remains intense with the increased popularity of converged consumer offers in the market. Data revenue grew by 16.5%* driven by
the higher penetration of smartphones and an increase in those sold with a data bundle. Vodafone Red, which was launched in Q3, continues to perform well. Fixed revenue declined by 2.9%*, primarily due to intense competition, although new converged
fixed/mobile tariffs had a positive impact on fixed broadband customer additions during Q4. In March 2013 Vodafone Spain signed an
agreement with Orange to co-invest in a fibre network in Spain, with the intention to reach six million households and workplaces across 50 cities by September 2017. The combined capital expenditure is expected to reach 1 billion. Adjusted EBITDA declined by 9.8%*, with a 0.9* percentage
point increase in adjusted EBITDA margin, as lower revenues were offset by commercial and operating cost efficiencies. The adjusted EBITDA margin stabilised in H2, benefiting from lower operating and commercial costs. Other Europe Service
revenue decreased by 5.2%*, driven by declines in the Netherlands, Greece and Portugal, which more than offset growth in Albania and Malta. In the Netherlands service revenue declined by 2.7%* due to more challenging macroeconomic conditions and
lower out-of-bundle usage. Macroeconomic weakness, intense price competition and an MTR cut resulted in service revenue declines of 13.4%* and 8.2%* in Greece and Portugal respectively. Adjusted EBITDA declined by 3.7%*, with a 0.1* percentage point increase in adjusted EBITDA margin as the impact of service revenue declines was
largely offset by cost efficiencies.






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|174 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|    |  | Other unaudited
financial information (continued) 






Prior year operating results (continued) Africa, Middle East and Asia Pacific on a management basis  India


Vodacom


Other AMAP


Eliminations


AMAP





% change£m


£m


£m


£m


£m


£


OrganicYear ended 31 March 2013Revenue


4,324



5,206



5,884



(1
)


15,413



(1.0
)


6.0Service revenue


3,878



4,415



5,437



(1
)


13,729



(2.3
)


5.5Other revenue


446



791



447







1,684



10.9



10.3Adjusted EBITDA


1,240



1,891



1,401







4,532



3.2



12.3Adjusted EBITDA margin


28.7%



36.3%



23.8%







29.4%Year ended 31 March 2012Revenue


4,265



5,638



5,669



(1
)


15,571



4.7



10.3Service revenue


3,922



4,898



5,234



(1
)


14,053



3.9



9.6Other revenue


343



740



435







1,518



12.7



17.5Adjusted EBITDA


1,122



1,933



1,338







4,393



4.9



10.7Adjusted EBITDA margin


26.3%



34.3%



23.6%







28.2%  Organicchange%


Otheractivity1pps


Foreignexchangepps


Reportedchange%Revenue  AMAP


6.0



0.7



(7.7
)


(1.0
)Service revenueIndia


11.2



(0.1
)


(12.2
)


(1.1
)Vodacom


3.1



(3.2
)


(9.8
)


(9.9
)Other AMAP


3.8



2.1



(2.0
)


3.9AMAP


5.5



(0.3
)


(7.5
)


(2.3
)Adjusted EBITDAIndia


24.0



(0.1
)


(13.4
)


10.5Vodacom


10.1



(0.1
)


(12.2
)


(2.2
)Other AMAP


6.2



(0.1
)


(1.4
)


4.7AMAP


12.3



(0.1
)


(9.0
)


3.2 Note: 1
Other activity includes the impact of M&A activity and the revision to intra-group roaming charges from 1 October 2011. Refer to Organic growth on page 202 for
further detail.
 India Service revenue grew by 11.2%* driven by strong growth in mobile voice minutes and data revenue, partially offset by the impact of regulatory
changes. Average customer growth slowed in Q4, as Q3 regulatory changes affecting subscriber verification continued to impact gross additions, however customer acquisition costs remained low. For the year as a whole, growth was negatively impacted by the introduction of new consumer protection regulations on the charging of access fees
and the marketing of integrated tariffs and value-added services. However, in Q4 the customer base returned to growth and usage increased. Data revenue grew by 19.8%* driven by increased data customers and higher smartphone penetration. At 31 March
2013 active data customers totalled 37.3 million including approximately 3.3 million 3G data customers. There was a lower rate of
growth at Indus Towers, our network infrastructure joint venture, with a slow down in tenancies from smaller entrants, some operators exiting sites following licence cancellations and a change in the pricing structure for some existing customers in
the first half of the year. Adjusted EBITDA grew by 24.0%*, with a 3.3* percentage point increase in adjusted EBITDA margin, driven by
the higher revenue, operating cost efficiencies and the impact of lower customer acquisition costs, partially offset by inflationary pressure. Vodacom Service revenue grew by 3.1%* mainly driven by growth in Tanzania, the Democratic Republic of Congo
(DRC) and Mozambique. In South Africa, service revenue decreased by 0.3%*, with the growth in data revenue and the success of new prepaid offers being more than offset by MTR reductions, macroeconomic weakness leading to customer spend
optimisation with lower out-of-bundle usage, and a weaker performance from independent service providers. Data revenue in South Africa grew by 16.1%*, with higher smartphone penetration and data bundles offsetting continued pricing pressure.
Vodafone Smart and Vodafone Red, our new range of integrated contract price plans, were introduced in South Africa during March 2013. On 10 October 2012, Vodacom announced the commercial launch of South Africas first LTE network, with 601 LTE sites operational at 31 March
2013.






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Vodacoms mobile operations outside South Africa delivered strong service revenue growth of
23.4%*, excluding Vodacom Business Africa, driven by a larger customer base and increasing data take-up. M-Pesa continues to perform well in Tanzania, with approximately 4.9 million active users, and was launched in DRC in November 2012. During the
year Vodacom DRC became the first operator to launch 3G services in the DRC. Adjusted EBITDA grew by 10.1%*, with a 1.5* percentage
point increase in adjusted EBITDA margin, primarily driven by revenue growth in Vodacoms mobile operations outside South Africa and savings in network costs in South Africa following investment in single RAN and transmission equipment. Other AMAP Organic service revenue grew by 3.8%* with growth in Turkey, Egypt, Ghana and Qatar more than offset by revenue declines in Australia and New
Zealand. Service revenue in Turkey grew by 17.3%*, primarily driven by growth in the contract customer base and an increase in data revenue due to mobile internet and higher smartphone penetration. Australia continued to experience steep revenue
declines on the back of ongoing service perception issues and a declining customer base. There has been a strong focus on network improvement and arresting the weakness in brand perception. In Egypt the launch of value management initiatives,
take-up of data services and the increase in international incoming call volumes and rates drove service revenue growth of 3.7%*, despite competitive pressures and the uncertain political environment. Data revenue continued to show strong growth of
29.6%* and fixed line revenue grew by 29.0%*. In Qatar service revenue grew by 29.8%*, driven by the growth in the customer base, which is now over one million, supported by successful new propositions. In Ghana, continued strong growth in the
customer base and the success of integrated tariffs led to service revenue growth of 24.5%*. Adjusted EBITDA increased by 6.2%*, with
adjusted EBITDA margin increasing by 0.5* percentage points with the impact of service revenue growth in Turkey, Egypt, Qatar and Ghana offsetting declines in Australia and New Zealand.
 Non-Controlled Interests on a management basis Verizon Wireless1 2013


2012


% change£m


£m


£


OrganicRevenue


21,972



20,187



8.8



7.8Service revenue


19,697



18,039



9.2



8.1Other revenue


2,275



2,148



5.9



5.2Adjusted EBITDA


8,831



7,689



14.9



13.6Interest


(25
)


(212
)


(88.2
)Tax2


13



(287
)


(104.5
)Groups share of result in VZW


6,500



4,953



31.2



29.8 In the United States VZW reported 5.9 million net mobile retail connection3 additions in the year, bringing its closing mobile retail connection base to 98.9 million, up 6.4%. Service revenue growth of 8.1%* continued to be driven by the expanding number of accounts and ARPA4 growth from increased smartphone penetration and a higher number of
connections per account. Adjusted EBITDA margin improved, with efficiencies in operating expenses and direct costs partially offset by
higher acquisition and retention costs reflecting the increased new connections and demand for smartphones. VZWs net debt at 31
March 2013 totalled US$6.2 billion5 (2012: US$6.4 billion5). During the year VZW paid a US$8.5 billion income dividend to its shareholders and
completed the acquisition of spectrum licences for US$3.7 billion (net). Notes: 1
All amounts represent the Groups share based on its 45% equity interest, unless otherwise stated. 2
The Groups share of the tax attributable to VZW relates only to the corporate entities held by the VZW partnership and certain state taxes which are levied on the partnership. The tax
attributable to the Groups share of the partnerships pre-tax profit is included within the Group tax charge. 3
The definition of connections reported by VZW is the same as customers as reported by Vodafone. 4
Average monthly revenue per account. 5
Net debt excludes pending credit card receipts.






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|182 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
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Investor calendar  Ex-dividend date for final dividend

11 June 2014Record date for final dividend

13 June 2014Interim management statement

25 July 2014Annual general meeting

29 July 2014Final dividend payment

6 August 2014Half-year financial results

11 November 2014Ex-dividend date for interim dividend

26 November 20141Record date for interim dividend

28 November 20141Interim dividend payment

4 February 20151 Note: 1
Provisional dates.  Dividends See pages 101 and 124 for details on dividend amount per share. Payment of dividends by direct credit We pay cash dividends directly to shareholders bank or building society accounts. This ensures secure delivery and means dividend payments are credited to shareholders bank or building society accounts on the same
day as payment. A consolidated tax voucher covering both the interim and final dividends paid during the financial year is sent to shareholders at the time of the interim dividend in February. ADS holders may alternatively have their cash dividends paid by cheque. Overseas dividend payments Holders of ordinary shares resident in the Eurozone (defined for this purpose as a country that has adopted the euro as its national currency) automatically receive their dividends in euros. The sterling/euro exchange rate is
determined by us in accordance with our articles of association up to 13 business days before the payment date. Holders resident
outside the UK and Eurozone automatically receive dividends in pounds sterling but may elect to receive dividends in local currency directly into their bank account by registering for our Registrars (Computershare) Global Payments
Service. Visit investorcentre.co.uk for details and terms and conditions. Cash dividends to ADS holders will be paid by the ADS
depositary in US dollars. The sterling/US dollar exchange rate for this purpose is determined by us up to ten New York and London business days before the payment date. See vodafone.com/dividends for further information about dividend payments or, alternatively, please contact our Registrar or the ADS depositary,
as applicable. See page 183 for their contact information. Dividend reinvestment plan We offer a dividend reinvestment plan which allows holders of ordinary shares, who choose to participate, to use their cash dividends to acquire
additional shares in the Company. These are purchased on their behalf by the plan administrator through a low cost dealing arrangement. For ADS holders BNY Mellon maintains a Global BuyDIRECT Plan which is a direct purchase and sale plan for depositary receipts with a dividend
reinvestment facility.
 Managing your shares via Investor Centre Computershare operates a portfolio service for investors in ordinary shares, called Investor Centre. This provides our shareholders with online
access to information about their investments as well as a facility to help manage their holdings online, such as being able to:    g

update dividend mandate bank instructions and review dividend payment history;    g

update member details and address changes; and    g

register to receive Company communications electronically.   Computershare also offers an internet
and telephone share dealing service to existing shareholders. The service can be obtained at investorcentre.co.uk. Shareholders with
any queries regarding their holding should contact Computershare. See page 183 for their contact details. Shareholders may also find
the investors section of our corporate website, vodafone.com/investor, useful for general queries and information about the Company. Shareholder communications A growing number of our shareholders have opted to receive their communications from us
electronically using email and web-based communications. The use of electronic communications, rather than printed paper documents, means information about the Company can be received as soon as it is available and has the added benefit of reducing
costs and our impact on the environment. Each time we issue a shareholder communication, shareholders registered for electronic communications will be sent an email alert containing a link to the relevant documents. We encourage all our shareholders to sign up for this service by providing us with an email address. You can register your email address via our
registrar at investorcentre.co.uk or contact them via the telephone number provided on page 183. See vodafone.com/investor for further information about this service. Annual general meeting Our
thirtieth AGM will be held at the Hilton Metropole Hotel, 225 Edgware Road, London W2 1JU on Tuesday 29 July 2014 at 11.00 a.m. The AGM will be transmitted via a live webcast which can be viewed on our website at vodafone.com/agm on the day of the meeting. A recording will be available to view after that date.






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ShareGift We support ShareGift, the charity share donation scheme (registered charity number 1052686). Through ShareGift, shareholders who have only a
very small number of shares, which might be considered uneconomic to sell, are able to donate them to charity. Donated shares are aggregated and sold by ShareGift, the proceeds being passed on to a wide range of UK charities. See sharegift.org or call +44 (0)20 7930 3737 for further details. Landmark Asset Search We
participate in an online service which provides a search facility for solicitors and probate professionals to quickly and easily trace UK shareholdings relating to deceased estates. Visit www.landmarkfas.co.uk or call +44 (0)844 844 9967 for
further information.
 Warning to shareholders (boiler room scams) Over recent years we have become aware of investors who have received unsolicited calls or correspondence, in some cases purporting to have been
issued by us, concerning investment matters. These callers typically make claims of highly profitable opportunities in UK or US investments which turn out to be worthless or simply do not exist. These approaches are usually made by
unauthorised companies and individuals and are commonly known as boiler room scams. Investors are advised to be wary of any unsolicited advice or offers to buy shares. If it sounds too good to be true, it often is. See the FCA website fca.org.uk/consumers/scams for more detailed information about this or similar activity.
  Registrar and transfer
officeThe Registrar

Holders of ordinary shares resident in Ireland:Computershare Investor Services PLC

Computershare Investor Services (Ireland) LtdThe Pavilions

PO Box 9742Bridgwater Road, Bristol BS99 6ZZ, England

Dublin 18, IrelandTelephone: +44 (0)870 702 0198

Telephone: +353 (0)818 300 999investorcentre.co.uk/contactus

investorcentre.co.uk/contactusADS depositaryBNY Mellon Shareowner ServicesPO Box 30170College Station, TX 77842-3170Telephone: +1 800 233 5601 (toll free) or, for
calls outside the United States,+1 201 680 6837 (not toll free) and enter company number 2160Email: shrrelations@cpushareownerservices.com  Share price history On flotation of the Company on 11 October 1988 the ordinary shares were valued at 170 pence each. When the Company was finally demerged
on 16 September 1991 the base cost of Racal Electronics Plc shares for UK taxpayers was apportioned between the Company and Racal Electronics Plc for capital gains tax purposes in the ratio of 80.036% and 19.964% respectively. Opening
share prices on 16 September 1991 were 332 pence for each Vodafone share and 223 pence for each Racal share. On 21 July
1994 the Company effected a bonus issue of two new shares for every one then held and on 30 September 1999 it effected a bonus issue of four new shares for every one held at that date. The flotation and demerger share prices therefore may be
restated as 11.333 pence and 22.133 pence respectively. On 31 July 2006 the Group returned approximately £9 billion to
shareholders in the form of a B share arrangement. As part of this arrangement, and in order to facilitate historical share price comparisons, the Groups share capital was consolidated on the basis of seven new ordinary shares for
every eight ordinary shares held at this date. On 21 February 2014 the Group disposed of its interest in Verizon Wireless
(VZW) to Verizon Communications Inc. As part of this transaction the Group returned US$85 billion to shareholders in cash and Verizon shares. On 24 February 2014 the Groups share capital was consolidated on the basis of six
new ordinary shares for every eleven existing ordinary shares. The closing share price at 31 March 2014 was 220.25 pence
(31 March 2013: 186.60 pence). The closing share price on 19 May 2014 was 217.95 pence. The following tables set out,
for the periods indicated, (i) the reported high and low middle market quotations of ordinary shares on the
 London Stock Exchange, and (ii) the reported high and low sales prices of ADSs on the New York Stock Exchange (NYSE)/NASDAQ. The Company transferred its ADS
listing from the NYSE to NASDAQ on 29 October 2009.  London StockExchangePounds perordinary share







NYSE/NASDAQDollars per ADSYear ended 31 March

High


Low




High


Low2010


1.54



1.11





24.04



17.682011


1.85



1.27





32.70



18.212012


1.84



1.54





29.46



24.312013


1.92



1.54





30.07



24.422014


2.52



1.80





41.57



27.74London StockExchangePounds perordinary share







NYSE/NASDAQDollars per ADSQuarter

High


Low




High


Low2012/2013First quarter


1.82



1.64





28.39



26.00Second quarter


1.92



1.73





30.07



27.47Third quarter


1.82



1.54





29.46



24.95Fourth quarter


1.90



1.56





28.73



24.422013/2014First quarter


1.99



1.80





30.80



27.81Second quarter


2.24



1.92





35.79



29.15Third quarter


2.44



2.20





39.99



35.03Fourth quarter


2.52



2.18





36.01



41.572014/2015First quarter1


2.27



2.11





38.26



35.37 Note: 1
Covering period up to 19 May 2014.






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Annual Report on Form 20-F 2014
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London StockExchangePounds perordinary share







NASDAQDollars per ADSMonth

High


Low




High


LowNovember 2013


2.40



2.32





38.06



36.91December 2013


2.43



2.30





39.99



37.39January 2014


2.46



2.28





39.90



37.44February 2014


2.52



2.21





41.57



36.01March 2014


2.49



2.18





41.50



36.05April 2014


2.24



2.11





37.96



35.37May 20141


2.27



2.17





38.26



36.28 Note: 1
Covering period up to 19 May 2014. Inflation and foreign
currency translation Inflation Inflation has not had a significant effect on the Groups results of operations and financial condition during the three years ended 31 March 2014. Foreign currency translation The following table sets out the pound sterling exchange rates of the other principal currencies of the Group, being: euros,  or
eurocents, the currency of the European Union (EU) member states which have adopted the euro as their currency, and US dollars, US$, cents or ¢, the currency of the US.  31 March




%Currency (=£1)

2014


2013




ChangeAverage:Euro


1.19



1.23





(3.3
)US dollar


1.59



1.58





0.6At 31 March:Euro


1.21



1.19





1.7US dollar


1.67



1.52





9.9 The following table sets out, for the periods and dates indicated, the period end, average, high and low
exchanges rates for pound sterling expressed in US dollars per £1.00.  Year ended 31 March

31 March


Average


High


Low2010


1.52



1.60



1.70



1.442011


1.61



1.56



1.64



1.432012


1.60



1.60



1.67



1.532013


1.52



1.58



1.63



1.492014


1.67



1.59



1.67



1.49 The following table sets out, for the periods indicated, the high and low exchange rates for pounds sterling
expressed in US dollars per £1.00.  Month

High


LowNovember 2013


1.64



1.59December 2013


1.66



1.63January 2014


1.66



1.63February 2014


1.67



1.63March 2014


1.67



1.65April 2014


1.69



1.66 Markets Ordinary shares of Vodafone Group Plc are traded on the London Stock Exchange and in the form of ADSs on NASDAQ. We had a total market capitalisation of approximately £57 billion at 19 May 2014 making us the sixth
largest listing in The Financial Times Stock Exchange 100 index and the 76th largest company in the world based on market capitalisation at that date. ADSs, each representing ten ordinary shares, are traded on NASDAQ under the symbol VOD. The ADSs are evidenced by ADRs issued
 by BNY Mellon, as depositary, under a deposit agreement, dated as of 12 October 1988, as amended and restated on 26 December 1989, 16 September 1991, 30 June 1999 and
31 July 2006 between the Company, the depositary and the holders from time to time of ADRs issued thereunder. ADS
holders are not members of the Company but may instruct BNY Mellon on the exercise of voting rights relative to the number of ordinary shares represented by their ADSs. See Articles of association and applicable English law  Rights
attaching to the Companys shares  Voting rights on page 185. Shareholders at 31 March 2014  Number of ordinary shares held

Number ofaccounts


% of totalissued shares11,000


444,094



0.311,0015,000


52,522



0.395,00150,000


14,687



0.6050,001100,000


513



0.12100,001500,000


721



0.58More than 500,000


1,135



98.00513,672



100.00 Major shareholders BNY Mellon, as custodian of our ADR programme, held approximately 17.95% of our ordinary shares of 2020/21 US
cents each at 19 May 2014 as nominee. The total number of ADRs outstanding at 19 May 2014 was 517,135,941. At this date 1,473 holders of record of ordinary shares had registered addresses in the United States and in total held
approximately 0.007% of the ordinary shares of the Company. At 31 March 2014 the following percentage interests in the ordinary
share capital of the Company, disclosable under the Disclosure and Transparency Rules, (DTR 5), have been notified to the directors. No changes in the interests disclosed to the Company have been notified between 31 March 2014 and 19 May
2014.  Shareholder

ShareholdingBlack Rock, Inc.


6.90% The rights attaching to the ordinary shares of the Company held by this shareholder are identical in all respects
to the rights attaching to all the ordinary shares of the Company. The directors are not aware, at 19 May 2014, of any other interest of 3% or more in the ordinary share capital of the Company. The Company is not directly or indirectly owned or
controlled by any foreign government or any other legal entity. There are no arrangements known to the Company that could result in a change of control of the Company. Articles of association and applicable English law The following description summarises certain provisions of the Companys articles of association and applicable English law. This summary is qualified in its entirety by reference to the Companies Act 2006 of England and Wales
and the Companys articles of association. See Documents on display on page 187 for information on where copies of the articles of association can be obtained. The Company is a public limited company under the laws of England and Wales. The Company is registered in England and Wales under the name
Vodafone Group Public Limited Company with the registration number 1833679. All of the Companys ordinary shares are fully paid.
Accordingly, no further contribution of capital may be required by the Company from the holders of such shares. English law specifies
that any alteration to the articles of association must be approved by a special resolution of the shareholders.






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Articles of association By a special resolution passed at the 2010 AGM the Company removed its object clause together with all other provisions of its memorandum of
association which, by virtue of the Companies Act 2006, are treated as forming part of the Companys articles of association. Accordingly, the Companys articles of association do not specifically restrict the objects of the Company. Directors The Companys articles of association provide for a Board of directors, consisting of not fewer than three directors, who shall manage the
business and affairs of the Company. The directors are empowered to exercise all the powers of the Company subject to any restrictions
in the articles of association, the Companies Act (as defined in the articles of association) and any special resolution. Under the
Companys articles of association a director cannot vote in respect of any proposal in which the director, or any person connected with the director, has a material interest other than by virtue of the directors interest in the
Companys shares or other securities. However, this restriction on voting does not apply to resolutions (i) giving the director or a third party any guarantee, security or indemnity in respect of obligations or liabilities incurred at the
request of or for the benefit of the Company, (ii) giving any guarantee, security or indemnity to the director or a third party in respect of obligations of the Company for which the director has assumed responsibility under an indemnity
or guarantee, (iii) relating to an offer of securities of the Company in which the director is entitled to participate as a holder of shares or other securities or in the underwriting of such shares or securities,
(iv) concerning any other company in which the director (together with any connected person) is a shareholder or an officer or is otherwise interested, provided that the director (together with any connected person) is not interested in 1% or
more of any class of the Companys equity share capital or the voting rights available to its shareholders, (v) relating to the arrangement of any employee benefit in which the director will share equally with other employees and
(vi) relating to any insurance that the Company purchases or renews for its directors or any group of people including directors. The directors are empowered to exercise all the powers of the Company to borrow money, subject to the limitation that the aggregate amount of all
liabilities and obligations of the Group outstanding at any time shall not exceed an amount equal to 1.5 times the aggregate of the Groups share capital and reserves calculated in the manner prescribed in the articles of association unless
sanctioned by an ordinary resolution of the Companys shareholders. The Company can make market purchases of its own shares or
agree to do so in the future provided it is duly authorised by its members in a general meeting and subject to and in accordance with section 701 of the Companies Act 2006. At each AGM all directors who were elected or last re-elected at or before the AGM held in the third calendar year before the current year shall
automatically retire. In 2005 the Company reviewed its policy regarding the retirement and re-election of directors and, although it is not intended to amend the Companys articles of association in this regard, the Board has
decided in the interests of good corporate governance that all of the directors wishing to continue in office should offer themselves for re-election annually. Directors are not required under the Companys articles of association to hold any shares of the Company as a qualification to act as a
director, although executive directors participating in long-term incentive plans must comply with the Companys share ownership guidelines. In accordance with best practice in the UK for corporate governance, compensation awarded to
executive directors is decided by a Remuneration Committee consisting exclusively of non-executive directors.
 In addition, as required by The Directors Remuneration Report Regulations, the Board has,
since 2003, prepared a report to shareholders on the directors remuneration which complies with the regulations (see pages 69 to 85). The report is also subject to a shareholder vote. Rights attaching to the Companys shares At 31 March 2014 the issued share capital of the Company was comprised of 50,000 7% cumulative fixed rate shares of £1.00 each, 26,439,960,221 ordinary shares (excluding treasury shares) of 2020/21 US cents each and 33,737,176,433 deferred shares of US$0.00001 each. Dividend rights Holders of 7%
cumulative fixed rate shares are entitled to be paid in respect of each financial year, or other accounting period of the Company, a fixed cumulative preferential dividend of 7% per annum on the nominal value of the fixed rate shares. A
fixed cumulative preferential dividend may only be paid out of available distributable profits which the directors have resolved should be distributed. The fixed rate shares do not have any other right to share in the Companys profits. Holders of the Companys ordinary shares may, by ordinary resolution, declare dividends but may not declare dividends in excess
of the amount recommended by the directors. The Board of directors may also pay interim dividends. No dividend may be paid other than out of profits available for distribution. Dividends on ordinary shares can be paid to shareholders in whatever
currency the directors decide, using an appropriate exchange rate for any currency conversions which are required. Holders of the Companys deferred shares have no right to dividends. If a dividend has not been claimed for one year after the date of the resolution passed at a general meeting declaring that dividend or the
resolution of the directors providing for payment of that dividend, the directors may invest the dividend or use it in some other way for the benefit of the Company until the dividend is claimed. If the dividend remains unclaimed for 12 years after
the relevant resolution either declaring that dividend or providing for payment of that dividend, it will be forfeited and belong to the Company. Voting rights The Companys articles of association provide that voting on substantive resolutions (i.e. any
resolution which is not a procedural resolution) at a general meeting shall be decided on a poll. On a poll, each shareholder who is entitled to vote and is present in person or by proxy has one vote for every share held. Procedural resolutions
(such as a resolution to adjourn a general meeting or a resolution on the choice of Chairman of a general meeting) shall be decided on a show of hands, where each shareholder who is present at the meeting has one vote regardless of the number
of shares held, unless a poll is demanded. In addition, the articles of association allow persons appointed as proxies of shareholders entitled to vote at general meetings to vote on a show of hands, as well as to vote on a poll and attend
and speak at general meetings. The articles of association also allow persons appointed as proxies by two or more shareholders entitled to vote at general meetings to vote for and against a resolution on a show of hands. Under English law two shareholders present in person constitute a quorum for purposes of a general meeting unless a companys articles of
association specify otherwise. The Companys articles of association do not specify otherwise, except that the shareholders do not need to be present in person and may instead be present by proxy to constitute a quorum. Under English law shareholders of a public company such as the Company are not permitted to pass resolutions by written consent.






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Annual Report on Form 20-F 2014
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information (continued)               






Record holders of the Companys ADSs are entitled to attend, speak and vote on a poll or
a show of hands at any general meeting of the Companys shareholders by the depositarys appointment of them as corporate representatives with respect to the underlying ordinary shares represented by their ADSs. Alternatively holders
of ADSs are entitled to vote by supplying their voting instructions to the depositary or its nominee who will vote the ordinary shares underlying their ADSs in accordance with their instructions. Employees are able to vote any shares held under the Vodafone Group Share Incentive Plan and My ShareBank (a vested nominee share
account) through the respective plans trustees. Holders of the Companys 7% cumulative fixed rate shares are only entitled
to vote on any resolution to vary or abrogate the rights attached to the fixed rate shares. Holders have one vote for every fully paid 7% cumulative fixed rate share. Holders of the Companys deferred shares are not entitled to attend or vote at general meetings of the Company. Liquidation rights In the event
of the liquidation of the Company, after payment of all liabilities and deductions in accordance with English law, the holders of the Companys 7% cumulative fixed rate shares would be entitled to a sum equal to the capital paid up on such
shares, together with certain dividend payments, in priority to holders of the Companys ordinary shares. The holders of the fixed rate shares do not have any other right to share in the Companys surplus assets. The holders of ordinary
shares have priority over holders of deferred shares. Pre-emptive rights and new issues of shares Under section 549 of the Companies Act 2006 directors are, with certain exceptions, unable to allot the Companys ordinary shares or
securities convertible into the Companys ordinary shares without the authority of the shareholders in a general meeting. In addition, section 561 of the Companies Act 2006 imposes further restrictions on the issue of equity securities (as
defined in the Companies Act 2006 which include the Companys ordinary shares and securities convertible into ordinary shares) which are, or are to be, paid up wholly in cash and not first offered to existing shareholders. The
Companys articles of association allow shareholders to authorise directors for a period specified in the relevant resolution to allot (i) relevant securities generally up to an amount fixed by the shareholders and (ii) equity
securities for cash other than in connection with a pre-emptive offer up to an amount specified by the shareholders and free of the pre-emption restriction in section 561. At the 2013 AGM the amount of relevant securities fixed by shareholders under
(i) above and the amount of equity securities specified by shareholders under (ii) above were both in line with corporate governance guidelines. The directors consider it desirable to have the maximum flexibility permitted by
corporate governance guidelines to respond to market developments and to enable allotments to take place to finance business opportunities as they arise. In order to retain such maximum flexibility, the directors propose to renew the authorities
granted by shareholders in 2013 at this years AGM. Further details of such proposals are provided in the 2014 notice of AGM.
 Disclosure of interests in the Companys shares There are no provisions in the articles of association whereby persons acquiring, holding or disposing of a certain percentage of the
Companys shares are required to make disclosure of their ownership percentage although such requirements exist under rules derived from the Disclosure and Transparency Rules (DTRs). The basic disclosure requirement upon a person acquiring or disposing of shares that are admitted to trading on a regulated market and carrying
voting rights is an obligation to provide written notification to the Company, including certain details as set out in DTR 5, where the percentage of the persons voting rights which he holds as shareholder or through his direct or indirect
holding of financial instruments (falling within DTR 5.3.1R) reaches or exceeds 3% and reaches, exceeds or falls below each 1% threshold thereafter. Under section 793 of the Companies Act 2006 the Company may, by notice in writing, require a person that the Company knows or has reasonable cause to believe is, or was during the preceding three years, interested in the
Companys shares to indicate whether or not that is correct and, if that person does or did hold an interest in the Companys shares, to provide certain information as set out in the Companies Act 2006. DTR 3 deals with the disclosure
by persons discharging managerial responsibility and their connected persons of the occurrence of all transactions conducted on their account in the shares of the Company. Part 28 of The Companies Act 2006 sets out the statutory
functions of the Panel on Takeovers & Mergers (the Panel). The Panel is responsible for issuing and administering the Code on Takeovers & Mergers which includes disclosure requirements on all parties to a takeover with
regard to dealings in the securities of an offeror or offeree company and also on their respective associates during the course of an offer period. General meetings and notices Subject to the articles of association, annual general meetings are held at such
times and place as determined by the directors of the Company. The directors may also, when they think fit, convene other general meetings of the Company. General meetings may also be convened on requisition as provided by the Companies Act 2006. An annual general meeting needs to be called by not less than 21 days notice in writing. Subject to obtaining shareholder
approval on an annual basis, the Company may call other general meetings on 14 days notice. The directors may determine that persons entitled to receive notices of meetings are those persons entered on the register at the close of
business on a day determined by the directors but not later than 21 days before the date the relevant notice is sent. The notice may also specify the record date, the time of which shall be determined in accordance with the articles of association
and the Companies Act 2006. Shareholders must provide the Company with an address or (so far as the Companies Act 2006 allows) an
electronic address or fax number in the UK in order to be entitled to receive notices of shareholders meetings and other notices and documents. In certain circumstances the Company may give notices to shareholders by publication on
the Companys website and advertisement in newspapers in the UK. Holders of the Companys ADSs are entitled to receive notices under the terms of the deposit agreement relating to the ADSs. Under section 336 of the Companies Act 2006 the annual general meeting of shareholders must be held each calendar year and within six months
of the Companys year end.






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Electronic communications The Company has previously passed a resolution allowing it to communicate all shareholder information by electronic means, including making such
information available on the Companys website. Those shareholders who have positively elected for website communication (or are deemed to have consented to receive electronic communication in accordance with the Companies Act 2006) will
receive written notification whenever shareholder documentation is made available on the website. Variation of rights If at any time the Companys share capital is divided into different classes of shares, the rights attached to any class may
be varied, subject to the provisions of the Companies Act 2006, either with the consent in writing of the holders of three quarters in nominal value of the shares of that class or at a separate meeting of the holders of the shares of that class. At every such separate meeting all of the provisions of the articles of association relating to proceedings at a general meeting
apply, except that (i) the quorum is to be the number of persons (which must be at least two) who hold or represent by proxy not less than one-third in nominal value of the issued shares of the class or, if such quorum is not present on an
adjourned meeting, one person who holds shares of the class regardless of the number of shares he holds, (ii) any person present in person or by proxy may demand a poll and (iii) each shareholder will have one vote per share held in that
particular class in the event a poll is taken. Class rights are deemed not to have been varied by the creation or issue of new shares ranking equally with or subsequent to that class of shares in sharing in profits or assets of the Company or
by a redemption or repurchase of the shares by the Company. Limitations on voting and shareholding As far as the Company is aware there are no limitations imposed on the transfer, holding or voting of the Companys ordinary shares other
than those limitations that would generally apply to all of the shareholders. No shareholder has any securities carrying special rights with regard to control of the Company. Documents on display The
Company is subject to the information requirements of the Exchange Act applicable to foreign private issuers. In accordance with these requirements the Company files its annual report on Form 20-F and other related documents with the SEC. These
documents may be inspected at the SECs public reference rooms located at 100 F Street, NE Washington, DC 20549. Information on the operation of the public reference room can be obtained in the United States by calling the SEC on
+1-800-SEC-0330. In addition, some of the Companys SEC filings, including all those filed on or after 4 November 2002, are available on the SECs website (sec.gov). Shareholders can also obtain copies of the Companys
articles of association from our website at vodafone.com/governance or from the Companys registered office. Material
contracts At the date of this annual report the Group is not party to any contracts that are considered material to the Groups
results or operations except for its US$4.2 billion and 3.9 billion revolving credit facilities which are discussed in note 22 Liquidity and capital resources to the
consolidated financial statements and the stock purchase agreement for the sale of the Groups entire 45% shareholding in VZW to Verizon Communications Inc. Exchange controls There are no
UK government laws, decrees or regulations that restrict or affect the export or import of capital, including but not limited to, foreign exchange controls on remittance of dividends on the ordinary shares or on the conduct of the Groups
operations.
 Taxation As this is a complex area investors should consult their own tax advisor regarding the US federal, state and local, the UK and other tax
consequences of owning and disposing of shares and ADSs in their particular circumstances. This section describes, primarily for a US
holder (as defined below), in general terms, the principal US federal income tax and UK tax consequences of owning or disposing of shares or ADSs in the Company held as capital assets (for US and UK tax purposes). This section does not, however,
cover the tax consequences for members of certain classes of holders subject to special rules including, for example, US expatriates and former long-term residents of the US and officers of the Company, employees and holders that, directly or
indirectly, hold 10% or more of the Companys voting stock. A US holder is a beneficial owner of shares or ADSs that is for US
federal income tax purposes:    g

a citizen or resident of the US;    g

a US domestic corporation;    g

an estate, the income of which is subject to US federal income tax regardless of its source; or  g

a trust, if a US court can exercise primary supervision over the trusts administration and one or more US persons are authorised to control all substantial decisions of the trust, or the
trust has validly elected to be treated as a domestic trust for US federal income tax purposes.   If an entity treated as a partnership
for US federal income tax purposes holds the shares or ADSs, the US federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in an entity treated as a
partnership for US federal income tax purposes holding the shares or ADSs should consult its tax advisor with regard to the US federal income tax treatment of an investment in the shares or ADSs. This section is based on the US Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations thereunder,
published rulings and court decisions, and on the tax laws of the UK and the Double Taxation Convention between the US and the UK (the treaty), all as currently in effect. These laws are subject to change, possibly on a retroactive
basis. This section is further based in part upon the representations of the depositary and assumes that each obligation in the
deposit agreement and any related agreement will be performed in accordance with its terms. For purposes of the treaty and the US-UK
double taxation convention relating to estate and gift taxes (the Estate Tax Convention), and for US federal income tax and UK tax purposes, this section is based on the assumption that a holder of ADRs evidencing ADSs will be treated as
the owner of the shares in the Company represented by those ADSs. Investors should note that a ruling by the first-tier tax tribunal in the UK has cast doubt on this view, but HMRC have stated that they will continue to apply their long-standing
practice of regarding the holder of such ADRs as holding the beneficial interest in the underlying shares. Investors should note, however, that this is an area of some uncertainty that may be subject to further developments in the future. Generally
exchanges of shares for ADRs and ADRs for shares will not be subject to US federal income tax or to UK tax other than stamp duty or stamp duty reserve tax (see the section on these taxes on page 189).






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|188 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|    |  | Shareholder
information (continued)               






Taxation of dividends UK taxation Under current UK
tax law no withholding tax will be deducted from the dividends we pay. Shareholders who are within the charge to UK corporation tax will be subject to corporation tax on the dividends we pay unless the dividends fall within an exempt class and
certain other conditions are met. It is expected that the dividends we pay would generally be exempt. A shareholder in the Company who
is an individual resident for UK tax purposes in the UK, is entitled in calculating their liability to UK income tax, to a tax credit on cash dividends we pay on our shares or ADSs and the tax credit is equal to one-ninth of the cash dividend. US federal income taxation Subject to the passive foreign investment corporation (PFIC) rules described below, a US holder is subject to US federal income taxation on the gross amount of any dividend we pay out of our current or accumulated
earnings and profits (as determined for US federal income tax purposes). Dividends paid to a non-corporate US holder that constitute qualified dividend income will be taxable to the holder at the special reduced rate normally applicable to long-term
capital gains provided that the ordinary shares or ADSs are held for more than 60 days during the 121 day period beginning 60 days before the ex-dividend date and the holder meets other holding period requirements. Dividends paid by us with respect
to the shares or ADSs will generally be qualified dividend income. A US holder is not subject to a UK withholding tax. The US holder includes in gross income for US federal income tax purposes only the amount of the dividend actually received from
us and the receipt of a dividend does not entitle the US holder to a foreign tax credit. Dividends must be included in income when the
US holder, in the case of shares, or the depositary, in the case of ADSs, actually or constructively receives the dividend and will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends
received from other US corporations. Dividends will be income from sources outside the US. For the purpose of the foreign tax credit limitation, foreign source income is classified in one of two baskets and the credit for foreign taxes on income in
any basket is limited to US federal income tax allocable to that income. Generally the dividends we pay will constitute foreign source income in the passive income basket. In the case of shares, the amount of the dividend distribution to be included in income will be the US dollar value of the pound sterling payments
made determined at the spot pound sterling/US dollar rate on the date of the dividend distribution regardless of whether the payment is in fact converted into US dollars. Generally any gain or loss resulting from currency exchange fluctuations
during the period from the date the dividend payment is to be included in income to the date the payment is converted into US dollars will be treated as ordinary income or loss. Generally the gain or loss will be income or loss from sources within
the US for foreign tax credit limitation purposes.
 Taxation of capital gains UK taxation A US holder may be
liable for both UK and US tax in respect of a gain on the disposal of our shares or ADSs if the US holder is:    g

a citizen of the US resident for UK tax purposes in the UK;    g

a citizen of the US who has been resident for UK tax purposes in the UK, ceased to be so resident for a period of five years or less and who disposed of the shares or ADSs during that period (a
temporary nonresident), unless the shares or ADSs were also acquired during that period, such liability arising on that individuals return to the UK;    g

a US domestic corporation resident in the UK by reason of being centrally managed and controlled in the UK; or    g

a citizen of the US or a US domestic corporation that carries on a trade, profession or vocation in the UK through a branch or agency or, in the case of US domestic companies, through a permanent
establishment and that has used the shares or ADSs for the purposes of such trade, profession or vocation or has used, held or acquired the shares or ADSs for the purposes of such branch or agency or permanent establishment.   Under the treaty capital gains on dispositions of the shares or ADSs are generally subject to tax only in the country of residence of the relevant
holder as determined under both the laws of the UK and the US and as required by the terms of the treaty. However, the treaty provides that individuals who are residents of either the UK or the US and who have been residents of the other
jurisdiction (the US or the UK, as the case may be) at any time during the six years immediately preceding the relevant disposal of shares or ADSs may be subject to tax with respect to capital gains arising from the dispositions of the shares or
ADSs not only in the country of which the holder is resident at the time of the disposition but also in that other country (although, in respect of UK taxation, generally only to the extent that such an individual comprises a temporary
non-resident). We published tax information relating to the return of value here: vodafone.com/investor. US federal income taxation Subject to the passive foreign investment company rules described below, a US holder that sells or otherwise disposes of our shares or ADSs will
recognise a capital gain or loss for US federal income tax purposes equal to the difference between the US dollar value of the amount realised and the holders tax basis, determined in US dollars, in the shares or ADSs. Generally a capital gain
of a non-corporate US holder is taxed at a maximum US federal income tax rate of 20% provided the holder has a holding period of more than one year and does not have taxable income in excess of certain thresholds. The gain or loss will generally be
income or loss from sources within the US for foreign tax credit limitation purposes. The deductibility of losses is subject to limitations.






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Additional tax considerations UK inheritance tax An
individual who is domiciled in the US (for the purposes of the Estate Tax Convention) and is not a UK national will not be subject to UK inheritance tax in respect of our shares or ADSs on the individuals death or on a transfer of the shares
or ADSs during the individuals lifetime, provided that any applicable US federal gift or estate tax is paid, unless the shares or ADSs are part of the business property of a UK permanent establishment or pertain to a UK fixed base used for the
performance of independent personal services. Where the shares or ADSs have been placed in trust by a settlor they may be subject to UK inheritance tax unless, when the trust was created, the settlor was domiciled in the US and was not a UK
national. Where the shares or ADSs are subject to both UK inheritance tax and to US federal gift or estate tax, the estate tax convention generally provides a credit against US federal tax liabilities for UK inheritance tax paid. UK stamp duty and stamp duty reserve tax Stamp duty will, subject to certain exceptions, be payable on any instrument transferring our shares to the custodian of the depositary at the rate of 1.5% on the amount or value of the consideration if on sale or on the value of
such shares if not on sale. Stamp duty reserve tax (SDRT), at the rate of 1.5% of the price or value of the shares, could also be payable in these circumstances and on issue to such a person but no SDRT will be payable if stamp duty
equal to such SDRT liability is paid. A ruling by the European Court of Justice has determined that the 1.5% SDRT charges on issue of
shares to a clearance service is contrary to EU law. As a result of that ruling, HMRC indicated that where new shares are first issued to a clearance service or to a depositary within the EU, the 1.5% SDRT charge will not be levied. Subsequently, a
decision by the first-tier tax tribunal in the UK extended this ruling to the issue of shares (or, where it is integral to the raising of new capital, the transfer of shares) to depositary receipts systems wherever located. HMRC have stated that
they will not seek to appeal this decision and, as such, will no longer seek to impose 1.5% SDRT on the issue of shares (or, where it is integral to the raising of new capital, the transfer of shares) to a clearance service or to a depositary,
wherever located. Investors should, however, be aware that this area may be subject to further developments in the future. No stamp
duty will be payable on any transfer of our ADSs provided that the ADSs and any separate instrument of transfer are executed and retained at all times outside the UK. A transfer of our shares in registered form will attract ad valorem stamp duty
generally at the rate of 0.5% of the purchase price of the shares. There is no charge to ad valorem stamp duty on gifts. SDRT is
generally payable on an unconditional agreement to transfer our shares in registered form at 0.5% of the amount or value of the consideration for the transfer, but is repayable if, within six years of the date of the agreement, an instrument
transferring the shares is executed or, if the SDRT has not been paid, the liability to pay the tax (but not necessarily interest and penalties) would be cancelled. However, an agreement to transfer our ADSs will not give rise to SDRT.
 PFIC rules We do not believe that our shares or ADSs will be treated as stock of a PFIC for US federal income tax purposes. This conclusion is a factual
determination that is made annually and thus is subject to change. If we are treated as a PFIC, any gain realised on the sale or other disposition of the shares or ADSs would in general not be treated as capital gain unless a US holder elects to be
taxed annually on a mark-to-market basis with respect to the shares or ADSs. Otherwise a US holder would be treated as if he or she has realised such gain and certain excess distributions rateably over the holding period for the
shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated. An interest charge in respect of the tax attributable to each such year would also apply. Dividends received from us would
not be eligible for the preferential tax rate applicable to qualified dividend income for certain noncorporate holders. Backup
withholding and information reporting Payments of dividends and other proceeds to a US holder with respect to shares or ADSs, by a US
paying agent or other US intermediary will be reported to the Internal Revenue Service (IRS) and to the US holder as may be required under applicable regulations. Backup withholding may apply to these payments if the US holder fails to
provide an accurate taxpayer identification number or certification of exempt status or fails to report all interest and dividends required to be shown on its US federal income tax returns. Certain US holders are not subject to backup withholding.
US holders should consult their tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining an exemption. Foreign financial asset reporting US taxpayers that own certain foreign financial assets, including debt and equity
of foreign entities, with an aggregate value in excess of US$50,000 at the end of the taxable year or US$75,000 at any time during the taxable year (or, for certain individuals living outside the United States and married individuals filing joint
returns, certain higher thresholds) may be required to file an information report with respect to such assets with their tax returns. The shares constitute foreign financial assets subject to these requirements unless the shares are held in an
account at a financial institution (in which case the account may be reportable if maintained by a foreign financial institution). US holders should consult their tax advisors regarding the application of the rules relating to foreign financial
asset reporting.






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|190 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|    |  | History and development                           






The Company was incorporated under English law in 1984 as Racal Strategic Radio Limited (registered
number 1833679). After various name changes, 20% of Racal Telecom Plc share capital was offered to the public in October 1988. The Company was fully demerged from Racal Electronics Plc and became an independent company in September 1991,
at which time it changed its name to Vodafone Group Plc. Since then we have entered into various transactions which enhanced our
international presence. The most significant of these transactions were as follows:    g

the merger with AirTouch Communications, Inc. which completed on 30 June 1999. The Company changed its name to Vodafone AirTouch Plc in June 1999 but then reverted to its former name, Vodafone
Group Plc, on 28 July 2000;    g

the completion on 10 July 2000 of the agreement with Bell Atlantic and GTE to combine their US cellular operations to create the largest mobile operator in the United States, Verizon Wireless,
resulting in the Group having a 45% interest in the combined entity;    g

the acquisition of Mannesmann AG which completed on 12 April 2000. Through this transaction we acquired businesses in Germany and Italy and increased our indirect holding in
Société Française du Radiotéléphone S.A. (SFR);    g

through a series of business transactions between 1999 and 2004 we acquired a 97.7% stake in Vodafone Japan. This was then disposed of on 27 April 2006;    g

on 8 May 2007 we acquired companies with controlling interests in Vodafone India Limited (VIL), formerly Vodafone Essar Limited, for US$10.9 billion (£5.5 billion); and    g

on 20 April 2009 we acquired an additional 15.0% stake in Vodacom for cash consideration of ZAR 20.6 billion (£1.6 billion). On 18 May 2009 Vodacom became a subsidiary.
 Other transactions that have occurred since 31 March 2010 are as follows: 10 September 2010 China Mobile Limited: We
sold our entire 3.2% interest in China Mobile Limited for cash consideration of £4.3 billion. 30/31 March 2011 India: The Essar Group
exercised its underwritten put option over 22.0% of VIL, following which we exercised our call option over the remaining 11.0% of VIL owned by the Essar Group. The total consideration due under these two options was US$5 billion (£3.1
billion). 16 June 2011 SFR: We
sold our entire 44% interest in SFR to Vivendi for a cash consideration of 7.75 billion (£6.8 billion) and received a final dividend from SFR of 200 million (£176 million). 1
June/1 July 2011 India: We acquired an additional 22% stake in VIL from the Essar Group for a cash consideration of US$4.2 billion (£2.6 billion) including
withholding tax. 18 August 2011/8 February 2012 Vodafone assigned its rights to purchase 11% of VIL to Piramal Healthcare Limited (Piramal). On 18 August 2011 Piramal purchased 5.5% of VIL from the Essar Group for a cash
consideration of INR 28.6 billion (£368 million). On 8 February 2012, they purchased a further 5.5% of VIL from the Essar Group for a cash consideration of approximately INR 30.1 billion (£399 million)
taking Piramals total shareholding in VIL to approximately 11%. 9 November 2011  Poland: We sold our entire 24.4% interest in Polkomtel
in Poland for cash consideration of approximately 920 million (£784 million) before tax and transaction costs. 27 July 2012  UK: We acquired the entire share capital of
Cable & Wireless Worldwide plc for a cash consideration of approximately £1,050 million. 31 October 2012  New Zealand: We acquired TelstraClear Limited, for a cash consideration of NZ$840 million (£440 million). 13 September 2013  Germany: We acquired a 76.57% interest in Kabel
Deutschland Holding AG for a cash consideration of 5.8 billion (£4.9 billion). 21 February 2014  On 2 September 2013 Vodafone announced that it had reached agreement to dispose of its US Group whose principal asset was its 45%
interest in Verizon Wireless (VZW) to Verizon Communications Inc. (Verizon), Vodafones joint venture partner, for a total consideration of US$130 billion (£79 billion) including the remaining 23.1% minority
interest in Vodafone Italy. Following completion on 21 February 2014, Vodafone shareholders received Verizon shares and cash totalling US$85 billion (£51 billion). 17 March 2014  Spain: We agreed to acquire Group Corporativo Ono, S.A.
(Ono) for a total consideration equivalent to 7.2 billion (£6.0 billion) on a debt and cash free basis. The acquisition, which is subject to customary terms and
conditions including anti-trust clearances by the relevant authorities, is expected to complete in calendar Q3 2014.






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|Regulation |  |    






Our operating companies are generally subject to regulation governing the operation of their
business activities. Such regulation typically takes the form of industry specific law and regulation covering telecommunications services and general competition (antitrust) law applicable to all activities. The following section describes the regulatory frameworks and the key regulatory developments at the global and supranational level and in
selected countries in which we have significant interests during the year ended 31 March 2014. Many of the regulatory developments reported in the following section involve ongoing proceedings or consideration of potential proceedings that have
not reached a conclusion. Accordingly, we are unable to attach a specific level of financial risk to our performance from such matters. European Union (EU) In September 2013, the European Commission (the Commission) delivered
major regulatory proposals aimed at building a telecoms single market and delivering a Connected Continent. These proposals have been amended by the European Parliament and will now be reviewed by the European Council. The
Commissions proposals include the following:    g

a simplified notification process for telecommunications operators across the EU;    g

removal of all roaming surcharges after June 2016;    g

increased transparency requirements for consumers;    g

harmonisation of Spectrum allocation rules; and    g

net neutrality requirements, which include restrictions on blocking, slowing down or discriminating against any internet content.    Roaming The current
roaming regulation came into force in July 2012 and requires mobile operators to supply voice, text and data roaming services under retail price caps. Wholesale price caps also apply to voice, text and data roaming services. The roaming regulation also requires a number of additional measures which are intended to increase competition in the retail market for roaming
and thereby facilitate the withdrawal of price caps. These include a requirement that users be able, from July 2014, to purchase roaming services from a provider other than their current domestic provider and to retain the same phone number when
roaming. Fixed network regulation In September 2013, the Commission published its recommendation on costing methodologies and non-discrimination which aims to encourage Next Generation Access (NGA) investment. NGA networks of operators with Significant
Market Power (SMP) may be exempt from cost-oriented wholesale prices if access is provided on the basis of equivalence of inputs (i.e. exactly the same products, prices and processes are offered to competitors) with effective margin
squeeze tests to ensure technical and economic replicability. Copper wholesale network prices are expected to remain within a guide price band of 8 to 10 per month. Europe region Germany The Federal
Network Agency (BNetzA) has indicated that the envisaged merger of Telefónica Deutschland and E-plus will have implications for spectrum allocation, and this is expected to impact the current proceedings on 700MHz, 900MHz, 1500MHz
and 1800MHz licensing (Project 2016). BNetzA is unlikely to decide on the further procedure until the envisaged Telefónica Deutschland/E-plus merger is finally decided in mid-2014.
 The national regulator is currently consulting on new mobile termination rates (MTRs),
with a decision due to be announced in December 2014. Italy Vodafone Italy, along with other Italian mobile operators, is the subject of an investigation by the Italian Antitrust Authority following a dawn
raid in November 2012. This followed a complaint from an MVNO that it had been excluded from the market. The investigation is ongoing and Vodafone Italy is cooperating with the Antitrust Authority. Vodafone Italy has appealed against the injunction of the national regulator (AGCOM) ordering them to adopt all measures required
under the Roaming Regulation in relation to roaming charges within a tariff. For information on litigation in Italy, see note 30
Contingent liabilities. United Kingdom In October 2013, the national regulator (Ofcom) began a consultation on revising the annual licence fees payable on licences for the
use of spectrum in the 900MHz and 1800MHz bands, to reflect market value and with regard to the sums bid in the 4G auction. The 900MHz, 1800MHz and 2.1GHz licences have been made technology-neutral, allowing them to be used for 4G. Spain In June 2013, the
Spanish Parliament adopted Act 3/2013 creating the National Markets and Competition Commission (CNMC) as the new national regulator, responsible for both competition and regulatory matters. In August 2013, Vodafone Spain filed a competition complaint with the competition authority against Telefónica and Yoigo for an alleged
unauthorised transfer of the use of Yoigos spectrum to Telefónica with a parallel complaint filed to the Ministry in September 2013. The Ministry rejected that complaint in November 2013 and Vodafone Spain has submitted an
administrative appeal against this decision in December 2013, stating that Yoigo and Telefónica are undertaking an unauthorised spectrum sharing arrangement. The Ministry has not yet announced its decision. In February 2014, Vodafone Spain lodged a competition claim before the national regulator against Telefónica citing abuse of its dominant
position in both its fibre roll-out and fibre retail offers as well as subscribing to anticompetitive agreements with Jazztel. In
March 2014, the national regulator concluded there were no sanctions to apply against Telefónica, Orange and Vodafone in the margin squeeze case that was originally brought to them by a MVNO in January 2012. The fines applied to Telefónica, Orange and Vodafone Spain in December 2012 for abuse of dominant position by imposing excessive pricing of
wholesale SMS/MMS services on MVNOs, remain suspended until the judicial review is concluded. Netherlands In November 2013, the investigation of the Dutch competition authority (ACM) into the three mobile operators (KPN, T-Mobile and
Vodafone Netherlands) concluded without any fine being imposed. ACM determined that there were no price-fixing agreements in the mobile-telecommunications market. However, ACM did establish that public statements about future market behaviour could
carry antitrust risks. The three operators have therefore made a commitment to ACM that they will refrain from making certain statements about future market behaviour in public to avoid any risk of illegal collusive behaviour in the future.






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|192 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|    |  | Regulation
(continued)                            






Ireland In December 2012, Vodafone Ireland judicially challenged the decision of the Commission for Communications Regulation (ComReg), to
impose an interim MTR based on a BEREC benchmark rather than a MTR based on a full cost model. In August 2013, the Irish High Court found the decision to be unlawful and by Court order, set a maximum MTR rate for the Irish market of 2.60 eurocents
per minute, to apply from 1 July 2013. This rate will apply until a MTR based on a fully modelled price is available which is expected in September 2014. ComReg has appealed the Irish High Courts decision, to the Irish Supreme Court. Portugal In
July 2013, following a complaint from Optimus, the Portuguese Competition Authority (PCA) opened an administrative inquiry into TMN, Vodafone Portugal and Optimus to assess the existence of a potential abuse of individual dominant
position by TMN and Vodafone Portugal or a potential abuse of collective dominant position by these companies on the mobile communications services retail markets, consisting of a rate discrimination (i.e. the application of dissimilar conditions to
equivalent services) between the on-net prices of voice calls and SMS and the off-net prices of voice calls and SMS. The inquiry also covers the potential abuse of individual dominant position by TMN and Vodafone Portugal in their respective
wholesale SMS termination markets. We submitted preliminary remarks in September 2013. Romania An investigation by the Romanian Competition Council (RCA) commenced in April 2011 for alleged margin squeeze by all MNOs between 2006
and 2011 on wholesale termination tariffs. In May 2012, at the request of the MNOs, the RCA accepted to enter into a commitment procedure in order to close the investigation. Their concerns on MTRs have been resolved by the national regulators
decision on a new long-run incremental cost model that means from 1 April 2014, the maximum termination rates in Romania will decrease from 0.67 eurocents per minute to 0.14 eurocents per minute for fixed call termination and, respectively,
from 3.07 eurocents per minute to 0.96 eurocents per minute for mobile call termination. A cross-border spectrum coordination
agreement with Ukraine was signed in June 2013, ensuring interference free use of the E-GSM 900MHz band at the border. Although the agreement entered into force on 1 January 2014, the Ukrainian operators are not currently fulfilling their
obligations under the agreement, resulting in the Vodafone Romania E-GSM spectrum facing heavy interference in some areas, especially on the south-east side of the country. Vodafone Romania, with the help of the national regulator, is working to
find a timely and efficient solution with the Ukrainian operators, before the entry into force of the new GSM licences. New spectrum
licenses comprising 2x10MHz in 800MHz, 2x10MHz in 900MHz, 2x30MHz in 1800MHz and 1x15MHz in 2.6GHz, came into force on 5 April 2014. Greece Offers for tender for the National Rural Broadband Network construction opened in February 2014. The
fixed incumbent (OTE) and the consortium of Intrakat, Intracom Holdings and Hellas Online (Vodafone Greece has an 18.5% interest in Hellas Online) are the only two parties in the tender process. In March 2014, the Hellenic Telecommunications & Post Commission (EETT) announced that spectrum in the 800MHz and 2.6 GHz bands is
expected to be auctioned after July 2014. Czech Republic The Czech Telecommunications Office (CTU), the national regulator, has not resolved the issues with their draft analysis on access and
call origination published in 2012.
 Vodafone Czech Republic acquired 2x10MHz of 800MHz spectrum, 2x4MHz of 1800MHz spectrum and 2x20MHz
of 2.6GHz spectrum for CZK 3.1 billion in a spectrum auction in November 2013. The Czech Telecommunication Office plans to sell the remaining spectrum in the 1800MHz and 2.6GHz bands later in 2014. The 800MHz and 1800MHz frequencies reserved for a
new entrant remain unsold. Using our technology neutral licence, we launched a 4G network on 2x3MHz in the 900MHz band, in November 2013. Hungary Further to the Commission withdrawing its initiative to prepare an infringement procedure against the
Hungarian governments telecommunications tax, in August 2013 the telecommunications tax was raised from HUF 2 to HUF 3 per voice minute and SMS and the cap on business subscriptions has been doubled from HUF 2,500 to HUF 5,000 per
month. In the year ended 31 March 2014, Vodafone Hungarys telecommunications tax liability is HUF 10 billion. Vodafone
Hungarys original 900MHz and 1800MHz licences which were due to expire in July 2014, have been extended to 2022 following negotiations with the National Media and Infocommunications Authority Hungary (NMIAH) in September 2013. The
NMIAH is preparing to offer the 4G bands (800MHz and 2.6GHz) together with some remaining frequencies in the 900MHz and 1800MHz bands. Albania In January 2014,
the Albanian Competition Authority (ACA) issued recommendations to the Electronic and Postal Communications Authority (AKEP) for measures to reduce the differentiation between on-net and off-net calls. The AKEP has imposed
new account separation rules, which apply to the mobile operators and fixed incumbent from 2014. AKEP is also reviewing MTR rates,
targeting pure long run incremental cost (LRIC) benchmarking levels with glide-path reducing current MTRs to 1.0 eurocents per minute in 2015. Vodafone Albania is opposing the proposal to apply asymmetric rates for the two smaller
players. In February 2014, following an investigation into the potential abuse of dominance by Vodafone Albania in the telephony
market, the ACA found that Vodafone was dominant in the retail market for the period from January 2011 to December 2012. No abuse of this status has been found and no charges were imposed. Malta In March 2014, the
MCA set the MTR at 0.40 eurocents per minute to which Vodafone has submitted an appeal to the Administrative Review Tribunal on the basis that there was a lack of transparency in the consultation process. Africa, Middle East and Asia Pacific region India In January 2013, Vodafone Indias application for a ten year extension to their existing 900MHz
licences in Delhi, Mumbai and Kolkata was unsuccessful and the Department of Telecommunications (DoT) included that spectrum in their 2013 auction plan. Vodafone India challenged this decision in the courts and in February 2014, the
Supreme Court found in favour of the DoT. The 900MHz spectrum along with the 1800MHz spectrum was auctioned in February 2014 and Vodafone India acquired an aggregate of 2x23MHz of spectrum in the 900MHz band and 2x49MHz of spectrum in the 1800MHz
band at a cost of INR 19.6 billion, which will be paid as an initial up-front payment followed by 10 annual instalments (following a two year moratorium).






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As a mandatory condition of acquiring the 900MHz spectrum in Delhi, Mumbai and Kolkata, Vodafone
India has applied for the new Unified Licence and is negotiating the agreement of specific terms prior to the commencement of the new spectrum in November 2014. Further spectrum licences expire in December 2016 and new licences are expected to be
auctioned later in the current financial year. For information on litigation in India, see note 30 Contingent liabilities. Vodacom: South Africa The Ministry of Trade and Industry (DTI) published revised generic Codes of Good Practice on Broad-based Black Economic Empowerment (BEE) during October 2013, following an intensive consultation process.
These revised codes will come into effect in April 2015. In addition, the Broad-based Black Economic Empowerment Amendment Act No. 46 of 2013 was promulgated in January 2014. This Act will come into force on a date still to be proclaimed by the
President. A provision for BEE legislation to take precedence over sectoral legislation contained in the Act will only be effective 12 months after the proclamation date. In October 2013, Cell C lodged a complaint with the Competition Commission of South Africa (CompCom) against Vodacom (and MTN), in
relation to alleged discriminatory pricing of on-net and off-net calls. Vodacom submitted its response in January 2014 however CompCom has decided to proceed with the formal investigation of Cell Cs complaint. In December 2013, the Ministry of Communications published the final National Broadband Policy which sets out the Governments national
broadband policy objective of 100% broadband penetration by 2030. Amongst the measures being considered to achieve this objective is the establishment of a single national wholesale network. The Ministry of Communications has appointed a National
Broadband Council (comprising of experts in the field) to advise on the implementation of the National Broadband Policy, including the desirability and business case of a single national wholesale network. In January 2014, the Ministry of Communications commenced the consultation process on the National Integrated ICT Policy Green Paper (the
Green Paper) to, amongst other things, define the allocation of 4G spectrum, the rural broadband coverage plans and the future organisational structure of the national regulatory authority (the NRA). After the consultation
process on the Green Paper, the paper will mutate into a National Integrated Information Communications Technology Policy White Paper (the White Paper). The tentative timeline for the publication of the White Paper is August 2014. In February 2014, the NRA published Call Termination Regulations (CTR) determining the cost of terminating a call on a
Mobile Network Operator (MNO) to be ZAR 0.10. The target rate of ZAR 0.10, so the NRA decreed, would be reached over three years after a decline to ZAR 0.20 in year one followed by another decline to ZAR 0.15 in year two. Asymmetrical
rates, as an additional regulatory remedy ranging between 120% and 300%, were also imposed in the same CTRs for the benefit of Cell C and Telkom Mobile (the two smallest MNOs). Vodacom and MTN (the two largest mobile MNOs)
challenged the validity and legality of the NRA 2014 CTRs in the Johannesburg High Court, South Africa (the High Court) on the grounds that in setting the new MTRs, the NRA had acted arbitrarily and irrationally without any regard to the
requirements of the Promotion of Administrative Justice Act (PAJA) and the Electronic Communications Act (the ECA). On 31 March 2014, the High Court upheld Vodacom and MTNs challenge and ruled that the NRA 2014 CTRs were invalid and unlawful. However, the High Court invoked its judicial discretion to suspend this order  in the
public interest  for a period of six months. During this period, MTRs will decline from ZAR 0.40 to ZAR 0.20. Vodacom and MTN will pay an asymmetrical rate of ZAR 0.44 for their calls terminating on Cell C and Telkom Mobiles networks.
ICASA is required during this window period of six months to develop legally tenable CTRs.
 Turkey From January 2014, the price cap for national SMS was reduced by 20% from 41.54 Kr to 33.25 Kr. In addition, the requirement for the on net price
to be higher than 1.7 times MTR has been extended to tariff campaigns for operators who have significant market power. In February
2014, the new Basket Law amending Law No. 5651 (Internet Cyber Crimes) provides that an Access Providers Union shall be established to require telecommunications operators to monitor and intercept internet services, where required by the law. Australia In
September 2013, a range of fixed services reviews were initiated by the Australian Communications and Media Authority (ACMA) including for unbundled local loop and regional transmission services. In addition, the change of Government has
resulted in a range of reviews to reduce the cost of the roll-out of the National Broadband Network. This will reduce the amount of fibre to the premises (FTTP) to be deployed and increase more fibre to the node (FTTN)
technology. Egypt In October 2013, the Administrative Court issued a ruling in the lawsuit for the case filed by Vodafone Egypt against Telecom Egypt and the national regulator (NTRA) regarding the authority to set MTRs between mobile and
fixed operators and we expect to receive the formal Court ruling later this year. In April 2014, the Minister of Communications and
Information Technology announced the proposed framework of the unified telecoms licence, with the expectation that all matters would be finalised in June 2014. The Ministers proposal, which is subject to negotiation, provides the opportunity
for Telecom Egypt to purchase their own mobile licence whilst providing Vodafone Egypt with a number of options on purchasing virtual local loop unbundling (VLLU), part ownership of an infrastructure licence and its own international
gateway licence. A requirement of the current proposal is for Telecom Egypt to sell its 45% share in Vodafone Egypt within 12 months of 30 June 2014. New Zealand In January 2014, Vodafone New Zealand secured 2x15MHz of 700MHz spectrum for the reserve price of
NZ$66 million. A second phase of the auction to determine the allocation of specific sub-bands to licensees is ongoing. Safaricom:
Kenya Safaricom Limited is in the process of renewing its operating licence for ten years with effect from 1 July 2014. The
renewed licence will include Safaricom Limiteds spectrum resources in 900MHz and 1800MHz. Safaricom also holds spectrum resources in the 2.1GHz band, under its 3G licence. Qatar In December 2013,
the Ministry of Information and Communications Technology (MICT) released a national broadband plan to guide policy on the development of broadband. One objective of the plan, is for 98% of households to have access to 100 Mbps download
and 50 Mbps upload speeds and a choice of at least two service providers. This includes an intention to consolidate the access network infrastructure of the incumbent Ooredoo and the Qatar National Broadband Network, both of which are deploying FTTP
networks. An Emiri Decree was issued in February 2014, establishing the MICT and the national regulator, the Communications Regulatory
Authority (CRA), as separate bodies. Formerly, the two entities were part of the secretariat of the Supreme Council of Information and Communication Technology (ictQATAR). During 2014, the Communications Regulatory Authority intends to grant Vodafone Qatar additional spectrum of 2x5MHz in the 1800MHz band and 2x10MHz
in the 800MHz band, to support 4G deployment subject to speed and coverage obligations.






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|194 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|    |  | Regulation
(continued)                            






Overview of spectrum licences  800MHz




900MHz




1800MHz




2.1GHz




2.6GHzCountry by region

Quantity1


Expiry date




Quantity1


Expiry date




Quantity1


Expiry date




Quantity1


Expiry date




Quantity1


Expiry dateEurope regionGermany


2x10



2025





2x12.4



2016





2x5.4



2016





2x10+ 5



2020
2




2x20 + 25



20252x5



2025Italy


2x10



2029





2x10



2015





2x15



2015
3




2x15 + 5



2021





2x15



20292x5



2029UK


2x10



2033





2x17.4



See note
4




2x5.8



See note
4




2x15



See note
4




2x20 + 25



2033Spain


2x10



2030





2x11



2028





2x20



2030





2x15 + 5



2030





2x20 + 20



2030Netherlands


2x10



2029





2x10



2030





2x20



2030





2x20 + 5



2030





2x10



2030Ireland


2x10



2030





2x10



2030





2x25



2015





2X15 + 5



2022









n/a2x15



2030
5Portugal


2x10



2027





2x10



2021
6




2x6



2021
6




2x20



2016





2x20 + 25



20272x3



2015





2x14



2027Romania


2x10



2029





2x10



2029





2x30



2029





2x15 + 5



2020





1x15



2029Greece






n/a





2x15



2027





2x10



2026
7




2x20 + 5



2021









n/a2x15



2016Czech Republic


2x10



2029





2x10



2021





2x18



2021





2x20



2025





2x20



20292x4



2029
8Hungary






n/a





2x10



2022
9




2x15



2022
9




2x15 + 5



2019









n/aAlbania






n/a





8.2



2016





2x9



2016





2x15 + 5



2025









n/aMalta






n/a





2x15



2026





2x25



2026





2x20 + 5



2020









n/aAfrica, Middle East and Asia PacificIndia10






n/a





20142024





20142027









2030









n/aVodacom: South Africa






n/a





2x11



See note
11




2x24



See note
11




2x15 + 5



See note
11








n/aTurkey






n/a





2x11



2023









n/a





2x15 + 5



2029









n/aAustralia12


2x10



2028





2x8



2028





2x30



annual





2x25 + 5



2016









n/a(850MHzband)Egypt






n/a





2x12.5



2020





2x10



2020





2x15



2020









n/aNew Zealand


2x15



TBD





2x15.2



2031





2x25



2021





2x25 + 10



2021





2x15 + 5



2028(700MHzband)Safaricom: Kenya






n/a





2x10



2024





2x10



2024





2x10



2022









n/aGhana






n/a





2x8



2019





2x10



2019





2x15



2023
13








n/aQatar






n/a





2x11



2028





2x20



2028





2x15



2028









n/a Notes: 1
Single (or unpaired) blocks of spectrum are used for asymmetric data (non-voice) use. 2
Germany  2x5MHz (out of 2x15MHz) of 2.1GHz spectrum will expire in December 2025. 3
Italy  2x5MHz (out of 2x20MHz) of 1800MHz spectrum will expire in 2029. 4
UK  900MHz, 1800MHz and 2.1GHz  indefinite licence with a five year notice of revocation. 5
Ireland  The licence for 2x25MHz spectrum commences in 2015. 6
Portugal  2x3MHz (out of 2x13MHz) of 900MHz must be released by December 2015 and 2x14MHz (out of 2x20MHz) of 1800MHz spectrum does not expire until March 2027. 7
Greece  2x15MHz (out of 2x25MHz) of the 1800MHz spectrum will expire in August 2016. 8
Czech Republic  The licence for 2x4MHz commences in 2014. 9
Hungary  900MHz and 1800MHz  options to extend these licences. 10
India comprises 22 separate service area licences with a variety of expiry dates. 11
Vodacoms South African spectrum licences are renewed annually. As part of the migration to a new licensing regime the national regulator has issued Vodacom a service licence and a network
licence which will permit Vodacom to offer mobile and fixed services. The service and network licences have a 20 year duration and will expire in 2028. Vodacom also holds licences to provide 2G and/or 3G services in the Democratic Republic of Congo,
Lesotho, Mozambique and Tanzania. 12
Australia  VHA has 2x5MHz in 850MHz rural; 2x25MHz in 1800MHz and 2x20MHz in 2.1GHz in Brisbane/Adelaide/Perth; 2x5MHz in 1800MHz and 2.1GHz in Canberra/Darwin/Hobart; 2x5MHz in 2.1GHz in
rural. 13
Ghana  The national regulator has issued provisional licences with the intention of converting these to full licences once the national regulator board has been reconvened.






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Mobile Termination Rates (MTRs) National regulators are required to take utmost account of the Commissions existing recommendation on the regulation of fixed and mobile
termination rates. This recommendation requires MTRs to be set using a long run incremental cost methodology. At March 2014, the MTRs effective for our subsidiaries within the EU, were as follows:  Country by region


2012
1


2013
1


2014
1


1 April 2014
2EuropeGermany ( cents)


3.33



1.84



1.79Italy ( cents)


5.30



1.50



0.98UK (GB £ pence)


3.02



1.50



0.85Spain ( cents)


3.16



2.89



1.09Netherlands ( cents)


2.70



2.40



1.86Ireland ( cents)


4.04



2.60



2.60Portugal ( cents)


2.77



1.27



1.27Romania ( cents)


4.05



3.07



0.96Greece ( cents)


4.95



1.27



1.19Czech Republic (CZK)


1.08



0.41



0.27Hungary (HUF)


9.46



7.06



7.06Albania (ALL)


7.57



6.10



4.57



2.66Malta ( cents)


4.18



2.07



2.07



0.40Africa, Middle East and Asia PacificIndia (rupees)


0.20



0.20



0.20Vodacom: South Africa (ZAR)


0.64



0.49



0.40



0.20
3Turkey (lira)


0.032



0.0258



0.0258Australia (AUD cents)


6.00



4.80



3.60Egypt (PTS/piastres)


10.00



10.00



10.00New Zealand (NZD cents)


5.88



3.97



3.72



3.56Safaricom: Kenya (shilling)


1.44



1.44



1.15Ghana (peswas)


5.00



4.50



4.00Qatar (dirhams)


16.60



16.60



16.60 Notes: 1
All MTRs are based on end of financial year values. 2
MTRs established from 1 April 2014 are included where a glide path or a final decision has been determined by the regulatory authority. 3
Please see Vodacom on page 193.






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|196 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|    |  | Principal risk factors and uncertainties          






Identification and assessment of the Groups key risks The Board acknowledges it is responsible for determining the nature and extent of the significant risks it is willing to take in achieving its
strategic objectives. A Group wide risk assessment exercise is formally conducted annually to help fulfil this responsibility. Local market risk assessment Risk coordinators in each local market facilitate the identification of the top 10 risks and associated mitigating actions for their entity. With the oversight and approval of local executive teams and Audit Committees,
these risks are assessed for their likelihood and impact after consideration is given to existing mitigating controls. An overall
market view of the major risks is obtained by identifying similar risks that are then aggregated and categorised into the following risk categories:    g

strategy;    g

reputational damage;    g

legal and regulatory compliance;    g

financial;    g

operational; and    g

malicious events.   Assess the current risk exposure
for the Group Using the market view of the major risks, an exercise is conducted with Group executives and functional leaders to
determine the top Group risks and identify the current net risk exposure level for each risk. Compare the current risk exposure to
the acceptable level of risk The exposure from each of the Groups top risks is then compared with the desired level of
acceptable risk. The result of this assessment highlights the perceived tolerance for the exposure associated with a particular risk and indicates whether specific, additional action is required. Three tolerance categories are used:    1.
We dont believe that Vodafone should do more;    2.
We believe that Vodafone should do more and has plans in place to reduce the net risk to an acceptable level; and    3.
We are not sufficiently prepared and immediate action is necessary.    Confirmation of key risks and mitigations commensurate with Vodafones risk tolerances The risk exposure assessment and comparison to the acceptable level of risk identifies the key risks and associated mitigations that are reviewed
and approved by the Group Executive Committee, the Audit and Risk Committee and the Board. Changes from prior year risk assessment One new risk for 2014 has been added:    g

The integration of newly acquired businesses does not provide the benefits anticipated at the time of acquisition. The risk is that we do not deliver the revenue benefits and/or the
cost synergies expected from recently acquired businesses and that, as a consequence of this, we subsequently need to write down the carrying value of the assets.
 Revised existing risks Two existing risks from prior year have been revised into a single combined risk:    g

Our business could be adversely affected by a failure or significant interruption to our telecommunications networks or IT systems and Failure to deliver enterprise service
offerings may adversely affect our business have been combined into the former risk: Our business could be adversely affected by a failure or significant interruption to our telecommunications networks or IT systems.   The description of the risk has been revised to more specifically reflect the level of dependence enterprise customers have on our
telecommunications infrastructure to provide their services and the resilience needed in our infrastructure to meet our committed service level agreements. The Groups key risks are outlined below: 1. Our business could be adversely affected by a failure or significant interruption to our telecommunications networks or IT systems. Risk:We are dependent on the continued operation of our
telecommunications networks. The importance of mobile and fixed communication in everyday life is increasing, especially during times of crisis. Individuals and organisations who rely on our networks and systems 24 hours per day, 365 days per year
to provide their products and services, look to us to maintain service. Major failures in the network, our IT systems or a failure to maintain our infrastructure to the required levels of resilience (and associated service level agreement) may
result in our services being interrupted, resulting in serious damage to our reputation, a consequential customer and revenue loss and the risk of financial penalties. There is a risk that an attack by a malicious individual or group could be successful on our networks and impact the availability of critical
systems. Our network is also susceptible to interruption due to a physical attack and theft of our network components as the value and market for network components increases (for example copper, batteries, generators and fuel).






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2. We could suffer loss of consumer confidence and/or legal action due to a failure to protect
our customer information. Risk:Our networks
carry and store large volumes of confidential personal and business voice traffic and data. We host increasing quantities and types of customer data in both enterprise and consumer segments. We need to ensure our service environments are
sufficiently secure to protect us from loss or corruption of customer information. Failure to adequately protect customer information could have a material adverse effect on our reputation and may lead to legal action against the Group.  3. Increased competition may reduce our market share and profitability. Risk:We face intensifying competition; in
particular competing with established competitors in mature markets and competing with new entrants in emerging markets, where all operators are looking to secure a share of the potential customer base. Competition could lead to a reduction in the
rate at which we add new customers, a decrease in the size of our market share and a decline in our average revenue per customer, if customers choose to receive telecommunications services or other competing services from alternate providers.
Competition can also lead to an increase in customer acquisitions and retention costs. The focus of competition in many of our markets has shifted from acquiring new customers to retaining existing customers, as the market for mobile
telecommunications has become increasingly mature.
 4. Regulatory decisions and changes in the regulatory environment could adversely affect our
business. Risk:We have ventures in both emerging
and mature markets, spanning a broad geographical area including Europe, Africa, Middle East, and Asia Pacific. We need to comply with an extensive range of requirements that regulate and supervise the licensing, construction and operation of our
telecommunications networks and services. Pressure on political and regulatory institutions both to deliver direct consumer benefit and protect consumers interests, particularly in recessionary periods, can lead to adverse impacts on our
business. Financial pressures on smaller competitors can drive them to call for regulators to protect them. Increased financial pressures on governments may lead them to target foreign investors for further taxes or licence fees.  5. Our existing service offerings could become disadvantaged as compared
to those offered by converged competitors or other technology providers (over the top  OTT competitors). Risk:In a number of markets, we face competition from providers who have the ability to sell converged services (combinations of fixed line, broadband,
public Wi-Fi, TV and mobile) on their existing infrastructure which we cannot either replicate or cannot provide at a similar price point. Additionally, the combination of services may allow competitors to subsidise the mobile component of their
offering. This could lead to an erosion of our customer base and reduce the demand for our core mobile services and impact our future profitability. Advances in smartphone technology places more focus on applications, operating systems, and devices, rather than the underlying services provided by mobile operators. The development of applications which make use of the internet as
a substitute for some of our more traditional services, such as messaging and voice, could erode revenue. Reduced demand for our core services of voice, messaging and data and the development of services by application developers, operating system
providers, and handset suppliers (commonly referred to as over the top or OTT competition) could significantly impact our future profitability.






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|198 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014  
|    |  | Principal risk
factors and uncertainties (continued)






6. Continuing weak economic conditions could impact one or more of our markets. Risk:Economic conditions in many of the markets we operate,
especially in Europe, continue to stagnate or show nominal levels of growth. These conditions combined with the impact of continuing austerity measures results in lower levels of disposable income and may result in significantly lower revenues as
customers give up their mobile phones or move to cheaper tariffs. There is also a possibility of adverse economic conditions impacting
currency exchange rates in countries where the Group has operations, leading to a reduction in our revenue and impairment of our financial and non-financial assets.  7. Our business may be impacted by actual or perceived health risks associated with the transmission of radio waves from mobile telephones,
transmitters and associated equipment. Risk:Concerns have been expressed that electromagnetic signals emitted by mobile telephone handsets and base stations may pose health risks. Authorities including the World Health Organization (WHO) agree there is no evidence that convinces
experts that exposure to radio frequency fields from mobile devices and base stations operated within guideline limits has any adverse health effects. A change to this view could result in a range of impacts from a change to national legislation, to
a major reduction in mobile phone usage or to major litigation.
 8. The integration of newly acquired businesses do not provide the benefits anticipated at the
time of acquisition. Risk:In line with its
strategy to be a scale data player, a strong player in Enterprise, a leader in emerging markets and a selective innovator in services; we have acquired, and will continue to acquire, new businesses. The price paid for these businesses is based upon
their current cash flows, as well as the expected incremental cash flows that will be generated from increased revenues and lower costs that being part of the Vodafone Group will generate. There is a risk that we fail to deliver these expected
benefits and synergies which could result in an impairment of the carrying value of the acquired business.   9. We depend on a number of key suppliers to operate our business. Risk:We depend on a limited number of suppliers
for strategically important network and IT infrastructure and associated support services to operate and upgrade our networks and provide key services to our customers. Our operations could be adversely impacted by the failure of a key supplier who
could no longer support our existing infrastructure; from a key supplier commercially exploiting their monopolistic/oligopolistic position in a product area following the corporate failures of, or the withdrawal from, a specific market by
competitors; or from major suppliers significantly increasing prices on long term programmes where the cost or technical feasibility of switching supplier becomes a significant barrier.






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10. We may not satisfactorily resolve major tax disputes. Risk:We operate in many jurisdictions around the world and from
time to time have disputes on the amount of tax due. In particular, in spite of the positive India Supreme Court decision relating to an on-going tax case in India, the Indian Government has introduced retroactive tax legislation which would in
effect overturn the Courts decision and has raised challenges around the pricing of capital transactions. Such or similar types of action in other jurisdictions, including changes in local or international tax rules or new challenges by tax
authorities, may expose us to significant additional tax liabilities which would affect the results of the business.  11. Changes in assumptions underlying the carrying value of certain Group assets could result in impairment. Risk:Due to the substantial carrying value of goodwill,
revisions to the assumptions used in assessing its recoverability, including discount rates, estimated future cash flows or anticipated changes in operations, could lead to the impairment of certain Group assets. While impairment does not impact
reported cash flows, it does result in a non-cash charge in the consolidated income statement and thus no assurance can be given that any future impairment would not affect our reported distributable reserves and therefore, our ability to make
dividend distributions to our shareholders or repurchase our shares.
 Currency related risks The Group continues to face currency, operational and financial risks resulting from the challenging economic conditions particularly in the
Eurozone. We continue to keep our policies and procedures under review to endeavour to minimise the Groups economic exposure and to preserve our ability to operate in a range of potential conditions that may exist in the future. Our ability to manage these risks needs to take appropriate account of our needs to deliver a high quality service to our customers, meet licence
obligations and the significant capital investments we may have made and may need to continue to make in the markets most impacted. While our share price is denominated in sterling, the majority of our financial results are generated in other currencies. As a result the
Groups operating profit is sensitive to either a relative strengthening or weakening of the major currencies in which we transact. The Operating results section of the annual report on pages 40 to 45 sets out a discussion and analysis of the relative contributions from each of our regions and the major geographical markets within each, to the
Groups service revenue on a management basis and adjusted EBITDA performance. On a management basis our markets in Greece, Ireland, Italy, Portugal and Spain continue to be the most directly impacted by the current market conditions and in
order of contribution represent 12% (Italy), 6% (Spain), 3% (Ireland and Greece combined) and 2% (Portugal) of the Groups adjusted EBITDA for the year ended 31 March 2014. An average 3% decline in the sterling equivalent of these combined
geographical markets due to currency revaluation would reduce the Groups adjusted EBITDA by approximately £0.1 billion. Our foreign currency earnings were for the year ended 31 March 2014, diversified through our 45% equity interest
in Verizon Wireless (VZW), which operates in the United States and generates its earnings in US dollars. Our interest in VZW, which was equity accounted to 2 September 2013, contributed 40% of the Groups adjusted operating
profit for the year ended 31 March 2014. Our interest in VZW was disposed of on 21 February 2014. We employ a number of
mechanisms to manage elements of exchange rate risk at a transaction, translation and economic level. At the transaction level our policies require foreign exchange risks on transactions denominated in other currencies above certain de minimis
levels to be hedged. Further, since the Companys sterling share price represents the value of its future multi-currency cash flows, principally in euro and to a lesser extent sterling, the Indian rupee and South African rand following the
disposal of our interest in VZW, we aim to align the currency of our debt and interest charges in proportion to our expected future principal multi-currency cash flows, thereby providing an economic hedge in terms of reduced volatility in the
sterling equivalent value of the Group and a partial hedge against income statement translation exposure, as interest costs will be denominated in foreign currencies. In the event of a countrys exit from the Eurozone, this may necessitate changes in one or more of our entities functional currency and
potentially higher volatility of those entities trading results when translated into sterling, potentially adding further currency risk. A summary of this sensitivity of our operating results and our foreign exchange risk management policies is set out within note 23 Capital and financial risk management to the consolidated financial statements.






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|200 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014  
|    |  | Principal risk
factors and uncertainties (continued)






Risk of change in carrying amount of assets and liabilities The main potential short-term financial statement impact of the current economic uncertainties is the potential impairment of non-financial and
financial assets. We have significant amounts of goodwill, other intangible assets and plant, property and equipment allocated to, or
held by, companies operating in the Eurozone. We have performed impairment testing for each country in Europe as at 31 March 2014
and identified aggregate impairment charges of £6.6 billion in relation to Vodafone Germany, Spain, Portugal, Czech Republic and Romania. See note 4 Impairment losses to the consolidated financial statements for further detail on
this exercise, together with the sensitivity of the results to reasonably possible adverse assumptions. Our operating companies in
Italy, Ireland, Greece, Portugal and Spain have billed and unbilled trade receivables totalling £2.1 billion. IFRS contains specific requirements for impairment assessments of financial assets. We have a range of credit exposures and
provisions for doubtful debts that are generally made by reference to consistently applied methodologies overlaid with judgements determined on a case-by-case basis reflecting the specific facts and circumstances of the receivable. See note 23
Capital and financial risk management to the consolidated financial statements for detailed disclosures on provisions against loans and receivables as well as disclosures about any loans and receivables that are past due at the end of
the period, concentrations of risk and credit risk more generally. Additional risk The significant areas of additional risk for the Group are investment risk, particularly in relation to the management of the counterparties
holding our cash and liquid investments; trading risks primarily in relation to procurement and related contractual matters; and business continuity risks focused on cash management in the event of disruption to banking systems. Financial/investment risk:We remain focused on counterparty risk
management and in particular the protection and availability of cash deposits and investments. We carefully manage counterparty limits with financial institutions holding the Groups liquid investments and maintain a significant proportion of
liquid investments in sterling and US dollar denominated holdings. Our policies require cash sweep arrangements, to ensure no operating company has more than 5 million on
deposit on any one day. Further, we have had collateral support agreements in place for a number of years, with a significant number of counterparties, to pass collateral to the Group under certain circumstances. We have a net
£1,055 million of collateral assets in our statement of financial position at 31 March 2014. For further details see note 13 Other investments and note 23 Capital and financial risk management to the
consolidated financial statements. Trading risks:We
continue to monitor and assess the structure of certain procurement contracts to place the Group in a better position in the event of the exit of a country from the Eurozone. Business continuity risks:Key business continuity priorities are
focused on planning to facilitate migration to a more cash-based business model in the event banking systems are frozen, developing dual currency capability in contract customer billing systems or ensuring the ability to move these contract
customers to prepaid methods of billing, and the consequential impacts to tariff structures. We also have in place contingency plans with key suppliers that would assist us to continue to support our network infrastructure, retail operations and
employees. We continue to maintain appropriate levels of cash and short-term investments in many currencies, with a carefully
controlled group of counterparties, to minimise the risks to the ongoing access to that liquidity and therefore our ability to settle debts as they become due. For further details see Capital and financial risk management in note 23 to
the consolidated financial statements.
 Going concern The Group believes it adequately manages or mitigates its solvency and liquidity risks through two primary processes, described below. Business planning process and performance management The Groups forecasting and planning cycle consists of three in year forecasts, a budget and a long range plan. These cycles all consist of a
bottom up process whereby the Groups operating companies submit income statement, cash flow and net debt projections. These are then consolidated and the results assessed by Group management and the Board. Each forecast is compared with prior forecasts and actual results so as to identify variances and understand the drivers of the changes and their
future impact so as to allow management to take action where appropriate. Additional analysis is undertaken to review and sense check the key assumptions underpinning the forecasts as well as stress-testing the results through sensitivity analysis. Cash flow and liquidity reviews The business planning process provides outputs for detailed cash flow and liquidity reviews, to ensure that the Group maintains adequate liquidity throughout the forecast periods. The prime output is a two year liquidity forecast
which is prepared and updated on a daily basis which highlights the extent of the Groups liquidity based on controlled cash flows and the headroom under the Groups undrawn revolving credit facility (RCF). The key inputs into this forecast are:    g

free cash flow forecasts, with the first three months inputs being sourced directly from the operating companies (analysed on a daily basis), with information beyond this taken from the latest
forecast/budget cycle;    g

bond and other debt maturities; and    g

expectations for shareholder returns, spectrum auctions and M&A activity.   The liquidity forecast shows two
scenarios assuming either maturing commercial paper is refinanced or no new commercial paper issuance. The liquidity forecast is reviewed by the Group CFO and included in each of his reports to the Board. In addition, the Group continues to manage its foreign exchange and interest rate risks within the framework of policies and guidelines authorised
and reviewed by the Board, with oversight provided by the Treasury Risk Committee.






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|Non-GAAP information |  |    






In the discussion of our reported financial position, operating results and cash flows, information
is presented to provide readers with additional financial information that is regularly reviewed by management. However, this additional information presented is not uniformly defined by all companies including those in the Groups industry.
Accordingly, it may not be comparable with similarly titled measures and disclosures by other companies. Additionally, certain information presented is derived from amounts calculated in accordance with IFRS but is not itself an expressly permitted
GAAP measure. Such non-GAAP measures should not be viewed in isolation or as an alternative to the equivalent GAAP measure. Management basis The
discussion of our operating results and cash flows in the strategic report on pages 1 to 47 is shown on a management basis, consistent with how the business is managed, operated and reviewed by management, and includes the results of the
Groups joint ventures, Vodafone Italy, Vodafone Hutchison Australia, Vodafone Fiji and Indus Towers, on a proportionate basis. This differs to the Consolidated financial statements which are presented on an IFRS basis, and includes
the results of the Groups joint ventures using the equity accounting basis. Pursuant to IFRS 8 our segmental results are presented within note 2 Segmental analysis to the Consolidated Financial Statements on a management basis
because that is the basis on which performance of the operating segments is assessed by management. Therefore when presented on a country basis these management basis figures represent a GAAP measure. However, when presented on a consolidated basis
management basis amounts are considered to be non-GAAP performance measures. A reconciliation of country revenue on a management basis to consolidated revenue on an IFRS basis is presented in note 2 Segmental analysis to the Consolidated
Financial Statements. We present certain consolidated performance measures on a management basis because we believe that the
management basis metrics, which are not intended to be a substitute for, or superior to, our reported metrics, provide useful and necessary information to investors and other interested parties as they are used internally for performance analysis
and resource allocation purposes of the operations where we have control or joint control. A reconciliation of management basis adjusted EBITDA to IFRS adjusted operating profit is summarised below. A reconciliation of adjusted operating profit
(IFRS basis) to IFRS operating profit is presented in note 2 Segmental analysis to the Consolidated Financial Statements and a reconciliation from operating profit to net profit is presented on the face of the consolidated income
statement.  2014 £m


Restated
2013
£m


Restated
2012
£mAdjusted EBITDA (management basis)


12,831



13,566



14,606Depreciation and amortisation


(8,181
)


(7,543
)


(7,625
)Share of results in associates and joint ventures


3,224



6,554



5,049Adjusted operating profit (management basis)


7,874



12,577



12,030Presentation adjustments


(395
)


(487
)


(690
)Discontinued operations


(3,169
)


(6,500
)


(4,953
)Adjusted operating profit (IFRS basis)


4,310



5,590



6,387 Presentation adjustments relate to the restatement of the Groups joint ventures from a proportionate
consolidation basis to an equity accounted basis. Discontinued items relate to the results of Verizon Wireless. Adjusted EBITDA Adjusted EBITDA is operating profit excluding share in results of associates, depreciation and amortisation, gains/losses on the
disposal of fixed assets, impairment losses, restructuring costs, other operating income and expense and significant items that are not considered by management to be reflective of the underlying performance of the Group. We use adjusted EBITDA, in
conjunction with other GAAP and non-GAAP financial measures such as adjusted operating profit, operating profit and net profit, to assess our operating performance. We believe that adjusted EBITDA is an operating performance measure, not a liquidity
measure, as it includes non-cash changes in working capital and is reviewed by the Chief Executive on a management basis (see above) to assess internal performance in conjunction with adjusted EBITDA margin, which is an alternative sales margin
figure. We believe it is both useful and necessary to report adjusted EBITDA as a performance measure as it enhances the comparability of profit across segments. Because adjusted EBITDA does not take into account certain items that affect operations and performance, adjusted EBITDA has inherent limitations
as a performance measure. To compensate for these limitations, we analyse adjusted EBITDA in conjunction with other GAAP and non-GAAP operating performance measures. Adjusted EBITDA should not be considered in isolation or as a substitute for a GAAP
measure of operating performance. A reconciliation of adjusted EBITDA to the closest equivalent GAAP measure, operating profit, is provided in note 2 Segmental analysis to the consolidated financial statements and to Profit for the
financial year, below.  2014 £m


Restated
2013
£m


Restated
2012
£mAdjusted EBITDA


11,084



11,466



11,737Depreciation and amortisation


(7,098
)


(6,502
)


(6,516
)Share of results in associates and joint ventures


324



626



1,166Adjusted operating profit


4,310



5,590



6,387Impairment loss


(6,600
)


(7,700
)


(4,050
)Restructuring costs and other


(355
)


(311
)


(144
)Amortisation of acquired customer bases and brand intangible assets


(551
)


(249
)


(280
)Other income/(expense)


(717
)


468



3,705Operating (loss)/profit


(3,913
)


(2,202
)


5,618Non-operating income and expense


(149
)


10



(162
)Net financing costs


(1,208
)


(1,291
)


(1,312
)Income tax credit/(expense)


16,582



(476
)


(705
)Profit/(loss) for the financial year from continuing operations


11,312



(3,959
)


3,439Profit for the financial year from discontinued operations


48,108



4,616



3,555Profit for the financial year


59,420



657



6,994






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##### Table of Contents

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|202 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|    |  | Non-GAAP information
(continued)                  






Restatement of adjusted EBITDA and adjusted operating profit In the year ended 31 March 2014 we have redefined adjusted EBITDA and adjusted operating profit to exclude restructuring costs and adjusted
operating profit to exclude amortisation charges in relation to acquired customer base and acquired brand intangible assets. This change was made to allow management to clearly assess ongoing internal performance, enable better comparability with
other companies and in relation to the adjustment for amortisation charges for acquired customer base and acquired brand intangible assets, to facilitate the comparison of the performance of acquired and non-acquired businesses. We have restated
comparatives to reflect this new presentation. Group adjusted operating profit and adjusted earnings per share Group adjusted operating profit excludes non-operating income of associates, impairment losses, restructuring costs, amortisation of customer
bases and brand intangible assets, other operating income and expense and other significant one-off items. Adjusted earnings per share also excludes certain foreign exchange rate differences, together with related tax effects. We believe that it is
both useful and necessary to report these measures for the following reasons:    g

these measures are used in setting director and management remuneration; and    g

they are useful in connection with discussion with the investment analyst community and debt rating agencies.   A reconciliation of adjusted operating profit to the respective closest equivalent GAAP measure, operating profit, is provided above and in note 2
Segmental analysis to the consolidated financial statements. A reconciliation of adjusted earnings per share to basic earnings per share, is provided in the Operating Review on page 45. Cash flow measures In
presenting and discussing our reported results, management basis free cash flow and operating free cash flow are calculated and presented even though these measures are not recognised within IFRS. We believe that it is both useful and necessary to
communicate free cash flow to investors and other interested parties, for the following reasons:    g

free cash flow allows us and external parties to evaluate our liquidity and the cash generated by our operations. Free cash flow does not include payments for licences and spectrum included within
intangible assets, items determined independently of the ongoing business, such as the level of dividends, and items which are deemed discretionary, such as cash flows relating to acquisitions and disposals or financing activities. In addition,
it does not necessarily reflect the amounts which we have an obligation to incur. However, it does reflect the cash available for such discretionary activities, to strengthen the consolidated statement of financial position or to provide returns to
shareholders in the form of dividends or share purchases;    g

free cash flow facilitates comparability of results with other companies although our measure of free cash flow may not be directly comparable to similarly titled measures used by other
companies;    g

these measures are used by management for planning, reporting and incentive purposes; and    g

these measures are useful in connection with discussion with the investment analyst community and debt rating agencies.   A reconciliation of cash generated by operations, the closest equivalent GAAP measure, to operating free cash flow and free cash flow, is provided
below.  2014




Restated 2013Managementbasis
£m


Presentationadjustments
£m


Reported
£m




Management
basis
£m


Presentationadjustments
£m


Reported
£mCash generated by operations


13,462



(1,315
)


12,147





13,727



(2,234
)


11,493Capital expenditure


(7,102
)


789



(6,313
)




(6,266
)


974



(5,292
)Working capital movement in respect of capital expenditure


411



45



456





71



3



74Disposal of property, plant and equipment


106



(27
)


79





153



(48
)


105Taxation


(3,547
)


98



(3,449
)




(2,933
)


363



(2,570
)Dividends received from associates


2,810



32



2,842





2,420



712



3,132Dividends paid to non-controlling shareholders in subsidiaries


(264
)






(264
)




(379
)






(379
)Interest received and paid


(1,471
)


156



(1,315
)




(1,185
)


127



(1,058
)Free cash flow


4,405



(222
)


4,183





5,608



(103
)


5,505 Other Certain of the statements within the section titled Chief Executives review on pages 12 and 13 contain forward-looking non-GAAP financial information for which at this time there is no comparable GAAP measure and
which at this time cannot be quantitatively reconciled to comparable GAAP financial information. Certain of the statements within the section titled Guidance on pages 13 and 39 contain forward-looking non-GAAP financial information which
at this time cannot be quantitatively reconciled to comparable GAAP financial information.






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##### Table of Contents

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|     |  |    






Organic growth All amounts in this document marked with an * represent organic growth which presents performance on a comparable basis, both in terms
of merger and acquisition activity and foreign exchange rates. We believe that organic growth, which is not intended to be a substitute for or superior to reported growth, provides useful and necessary information to investors and
other interested parties for the following reasons:    g

it provides additional information on underlying growth of the business without the effect of certain factors unrelated to the operating performance of the business;    g

it is used for internal performance analysis; and    g

it facilitates comparability of underlying growth with other companies, although the term organic is not a defined term under IFRS and may not, therefore, be comparable with similarly
titled measures reported by other companies. Reconciliation of organic growth to reported growth is shown where used, or
in the table below:  Organicchange%



Otheractivity pps
2


Foreignexchangepps



Reportedchange%



Presentationadjustmentspps



Reportedchange%31 March 2014GroupRevenue


(3.5
)


3.7



(2.1
)


(1.9
)


2.7



0.8Service revenue


(4.3
)


3.8



(1.9
)


(2.4
)


2.9



0.5Other revenue


4.9



2.7



(4.1
)


3.5



0.2



3.7Adjusted EBITDA


(7.4
)


3.8



(1.8
)


(5.4
)


2.1



(3.3
)EuropeRevenue


(9.3
)


4.7



2.5



(2.1
)


3.5



1.4Service revenue


(9.1
)


4.6



2.5



(2.0
)


4.0



2.0Other revenue


(10.8
)


4.4



2.5



(3.9
)


(1.8
)


(5.7
)Europe  mobile in-bundle revenue


3.1



0.4



2.6



6.1



(0.1
)


6.0Europe  enterprise revenue


(8.5
)


14.2



2.8



8.5



4.4



12.9Germany  service revenue


(6.2
)


9.0



3.6



6.4







6.4Germany  mobile in-bundle revenue


2.7







3.5



6.2







6.2Germany  mobile out-of-bundle revenue


(22.6
)


0.3



2.9



(19.4
)






(19.4
)Italy  service revenue


(17.1
)


2.2



3.1



(11.8
)


11.8



Italy  mobile in-bundle revenue


15.2



4.0



3.8



23.0



(23.0
)


Italy  fixed line revenue


(3.2
)


3.1



3.6



3.5



(3.5
)


Italy  operating expenses


7.1



(2.7
)


(3.5
)


0.9



(0.9
)


UK  service revenue


(4.4
)


31.9







27.5







27.5UK  mobile in-bundle revenue


0.6











0.6







0.6UK  mobile out-of-bundle revenue


(7.2
)










(7.2
)






(7.2
)Spain  service revenue


(13.4
)


(0.7
)


3.1



(11.0
)






(11.0
)Spain  mobile in-bundle revenue


(0.4
)






3.4



3.0







3.0Spain  fixed line revenue


(0.2
)






3.4



3.2







3.2Spain  operating expenses


9.4







(3.3
)


6.1







6.1Netherlands  service revenue


(5.6
)


(0.6
)


3.4



(2.8
)






(2.8
)Netherlands  mobile in-bundle revenue


3.4







3.5



6.9







6.9Portugal  service revenue


(8.4
)


(0.6
)


3.3



(5.7
)






(5.7
)Greece  service revenue


(14.1
)


(0.8
)


3.2



(11.7
)






(11.7
)Other Europe  service revenue growth


(7.1
)


(17.5
)


1.8



(22.8
)






(22.8
)Adjusted EBITDA


(18.3
)


5.6



2.5



(10.2
)


5.2



(5.0
)Germany  adjusted EBITDA


(18.2
)


10.2



3.3



(4.7
)






(4.7
)Germany  percentage point change in adjusted EBITDA margin


(4.3
)


0.8



0.1



(3.4
)






(3.4
)Italy  adjusted EBITDA


(24.9
)


2.2



2.8



(19.9
)


19.9



Italy  percentage point change in adjusted EBITDA margin


(4.8
)






0.1



(4.7
)


39.5



34.8UK  adjusted EBITDA


(9.8
)


26.9



0.1



17.2







17.2UK  percentage point change in adjusted EBITDA margin


(1.0
)


(0.4
)






(1.4
)






(1.4
)Spain  adjusted EBITDA


(23.9
)


(1.8
)


2.8



(22.9
)






(22.9
)Spain  percentage point change in adjusted EBITDA margin


(3.4
)


(0.4
)


0.1



(3.7
)






(3.7
)Other Europe  adjusted EBITDA growth


(14.0
)


(6.2
)


2.1



(18.1
)


(0.1
)


(18.2
)Other Europe  percentage point change in adjusted EBITDA margin


(2.1
)


3.6



0.1



1.6







1.6Organicchange£bn



Otheractivity £bn
2


Foreignexchange£bn



Reportedchange£bn



Presentationadjustments£bn



Reportedchange£bnReduction in European and common functions operating expenses


(0.3
)


0.5



0.1



0.3



0.2



0.5






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##### Table of Contents

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|204 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|    |  | Non-GAAP information
(continued)                  






Organicchange%



Otheractivity pps
2


Foreignexchangepps



Reportedchange%



Presentationadjustmentspps



Reportedchange%AMAPRevenue


8.4



0.7



(12.0
)


(2.9
)


1.1



(1.8
)Service revenue


6.1



0.7



(11.5
)


(4.7
)


1.2



(3.5
)Other revenue


27.4



0.6



(16.1
)


11.9



4.9



16.8India  service revenue


13.0







(11.7
)


1.3







1.3Vodacom  service revenue


4.1



(2.8
)


(13.7
)


(12.4
)






(12.4
)South Africa  service revenue


0.3







(16.2
)


(15.9
)






(15.9
)South Africa  data revenue


23.5







(20.3
)


3.2







3.2South Africa  mobile in-bundle revenue


9.7







(17.9
)


(8.2
)






(8.2
)Vodacoms international operations  service revenue


18.9







(3.8
)


15.1







15.1Turkey  service revenue


7.9



(0.5
)


(11.6
)


(4.2
)






(4.2
)Turkey  mobile in-bundle revenue


25.0







(14.1
)


10.9







10.9Egypt  service revenue


2.6







(11.2
)


(8.6
)






(8.6
)Ghana  service revenue


19.3



(0.2
)


(17.3
)


1.8







1.8Australia  service revenue


(9.0
)






(9.1
)


(18.1
)


18.1



Other AMAP  service revenue


2.8



4.0



(9.4
)


(2.6
)


4.0



1.4Adjusted EBITDA


16.2



1.0



(13.9
)


3.3



(4.5
)


(1.2
)India  adjusted EBITDA


26.4







(13.7
)


12.7



(5.1
)


7.6India  percentage point change in adjusted EBITDA margin


3.3



(0.1
)


(0.1
)


3.1



(1.3
)


1.8Vodacom  adjusted EBITDA


6.6



0.2



(16.1
)


(9.3
)






(9.3
)Vodacom  percentage point change in adjusted EBITDA margin


(0.3
)


0.8



(0.4
)


0.1







0.1Other AMAP  adjusted EBITDA


19.3



3.2



(10.7
)


11.8



(8.3
)


3.5Other AMAP  percentage point change in adjusted EBITDA margin


3.1



(0.2
)






2.9



(3.2
)


(0.3
)Australia  percentage point change in adjusted EBITDA margin


14.8







(0.2
)


14.6



(14.6
)


31 March 2013GroupRevenue


(1.4
)


2.8



(5.6
)


(4.2
)


2.2



(2.0
)Service revenue


(1.9
)


2.6



(5.6
)


(4.9
)


2.8



(2.1
)Other revenue


4.0



5.3



(6.3
)


3.0



(4.1
)


(1.1
)Adjusted EBITDA


(1.9
)


0.6



(5.8
)


(7.1
)


4.8



(2.3
)EuropeRevenue


(5.5
)


4.4



(4.6
)


(5.7
)


2.3



(3.4
)Service revenue


(5.8
)


4.5



(4.6
)


(5.9
)


2.8



(3.1
)Other revenue


(1.3
)


2.4



(4.3
)


(3.2
)


(3.0
)


(6.2
)Germany  service revenue


0.5



(0.1
)


(5.5
)


(5.1
)






(5.1
)Germany  mobile service revenue


1.3



(0.2
)


(5.5
)


(4.4
)






(4.4
)Germany  data revenue


13.6







(6.0
)


7.6







7.6Germany  enterprise revenue


3.0







(5.6
)


(2.6
)






(2.6
)Italy  service revenue


(12.8
)


(0.1
)


(4.9
)


(17.8
)


17.8



Italy  data revenue


4.4







(5.7
)


(1.3
)


1.3



Italy  fixed line revenue


(6.8
)






(5.1
)


(11.9
)


11.9



UK  service revenue


(4.0
)


(0.3
)






(4.3
)






(4.3
)UK  data revenue


4.2











4.2







4.2Spain  service revenue


(11.5
)


(0.2
)


(5.0
)


(16.7
)






(16.7
)Spain  data revenue


16.5







(6.1
)


10.4







10.4Spain  fixed line revenue


(2.9
)






(5.0
)


(7.9
)






(7.9
)Netherlands  service revenue


(2.7
)


(0.2
)


(5.4
)


(8.3
)






(8.3
)Greece  service revenue


(13.4
)


(0.4
)


(5.0
)


(18.8
)






(18.8
)Portugal  service revenue


(8.2
)


(0.2
)


(5.2
)


(13.6
)






(13.6
)Other Europe  service revenue growth


(5.2
)


22.4



(6.9
)


10.3







10.3Adjusted EBITDA


(8.1
)


1.8



(4.7
)


(11.0
)


4.3



(6.7
)Germany  adjusted EBITDA


(1.7
)


0.2



(5.2
)


(6.7
)






(6.7
)Germany  percentage point change in adjusted EBITDA margin


(1.0
)


0.1







(0.9
)






(0.9
)Italy  adjusted EBITDA


(19.3
)






(4.7
)


(24.0
)


24.0



Italy  percentage point change in adjusted EBITDA margin


(4.3
)










(4.3
)


4.2



(0.1
)UK  adjusted EBITDA


(6.8
)


0.4



(0.1
)


(6.5
)






(6.5
)UK  percentage point change in adjusted EBITDA margin


(0.5
)










(0.5
)






(0.5
)






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|     |  |    






Organicchange%



Otheractivity pps
2


Foreignexchangepps



Reportedchange%



Presentationadjustmentspps



Reportedchange%Spain  adjusted EBITDA


(9.8
)


(0.5
)


(5.3
)


(15.6
)






(15.6
)Spain  percentage point change in adjusted EBITDA margin


0.9



(0.1
)


0.0



0.8







0.8Other Europe  adjusted EBITDA


(3.7
)


8.1



(6.3
)


(1.9
)






(1.9
)Other Europe  percentage point change in adjusted EBITDA margin


0.1



(3.6
)


(0.1
)


(3.6
)






(3.6
)AMAPRevenue


6.0



0.7



(7.7
)


(1.0
)


0.3



(0.7
)Service revenue


5.5



(0.3
)


(7.5
)


(2.3
)


1.1



(1.2
)Other revenue


10.3



10.3



(9.7
)


10.9



(5.3
)


5.6India  service revenue


11.2



(0.1
)


(12.2
)


(1.1
)






(1.1
)India  data revenue


19.8







(13.5
)


6.3







6.3Vodacom  service revenue


3.1



(3.2
)


(9.8
)


(9.9
)






(9.9
)South Africa  service revenue


(0.3
)






(11.7
)


(12.0
)






(12.0
)South Africa  data revenue


16.1







(13.8
)


2.3







2.3Vodacoms international operations  service revenue


23.4







(1.2
)


22.2







22.2Turkey  service revenue


17.3



(1.8
)


(3.1
)


12.4







12.4Egypt  service revenue


3.7







(3.0
)


0.7







0.7Egypt  data revenue


29.6







(4.2
)


25.4







25.4Egypt  fixed line revenue


29.0







(2.9
)


26.1







26.1Ghana  service revenue


24.5







(19.2
)


5.3







5.3Qatar  service revenue


29.8







1.7



31.5







31.5Other AMAP  service revenue


3.8



2.1



(2.0
)


3.9



5.7



9.6Adjusted EBITDA


12.3



(0.1
)


(9.0
)


3.2



1.1



4.3India  adjusted EBITDA


24.0



(0.1
)


(13.4
)


10.5



2.6



13.1India  percentage point change in adjusted EBITDA margin


3.3



(1.0
)


0.1



2.4



1.1



3.5Vodacom  adjusted EBITDA


10.1



(0.1
)


(12.2
)


(2.2
)






(2.2
)Vodacom  percentage point change in adjusted EBITDA margin


1.5



1.0



(0.5
)


2.0







2.0Other AMAP  adjusted EBITDA


6.2



(0.1
)


(1.4
)


4.7



3.2



7.9Other AMAP  percentage point change in adjusted EBITDA margin


0.5



(0.4
)


0.1



0.2



(0.5
)


(0.3
)Verizon Wireless (VZW)Revenue


7.8







1.0



8.8



(8.8
)


Service revenue


8.1







1.1



9.2



(9.2
)


Adjusted EBITDA


13.6



0.1



1.2



14.9



(14.9
)


Groups share of result of VZW


29.8







1.4



31.2







31.231 March 2012GroupRevenue


2.2



(0.3
)


(0.7
)


1.2



0.8



2.0Service revenue


1.4



(0.4
)


(0.7
)


0.3



0.8



1.1Other revenue


12.3



0.9



(1.3
)


11.9



1.2



13.1Adjusted EBITDA






(0.3
)


(0.4
)


(0.7
)


1.9



1.2EuropeRevenue


(1.2
)


0.1



1.3



0.2



0.3



0.5Service revenue


(2.1
)






1.2



(0.9
)


0.2



(0.7
)Other revenue


13.6



1.8



1.0



16.4



0.5



16.9Adjusted EBITDA


(4.8
)






1.4



(3.4
)


0.4



(3.0
)AMAPRevenue


10.3



(0.1
)


(5.5
)


4.7



0.7



5.4Service revenue


9.6



(0.2
)


(5.5
)


3.9



0.6



4.5Other revenue


17.5







(4.8
)


12.7



4.0



16.7Adjusted EBITDA


10.7



(0.3
)


(5.5
)


4.9



2.8



7.7 Notes: 1
Management basis includes the results of the Groups joint ventures, Vodafone Italy, Vodafone Hutchison Australia, Vodafone Fiji and Indus Towers, on a proportionate basis. The statutory basis
includes the results of these joint ventures, using the equity accounting basis rather than on a proportionate consolidation basis. 2
Other activity includes the impact of M&A activity, the revision to intra-group roaming charges from 1 October 2011, and the impact of Indus Towers revising its accounting for
energy cost recharges. Refer to Organic growth on page 202 for further detail.






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##### Table of Contents

|    |  |                                                   
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|    |  |                                                   
|206 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|    |  | Form 20-F cross reference guide                   






This annual report on Form 20-F for the fiscal year ended 31 March 2014 has not been approved
or disapproved by the SEC nor has the SEC passed judgement upon the adequacy or accuracy of this document. The table below sets out the location in this document of the information required by SEC Form 20-F.  Item

Form 20-F caption

Location in this document

Page1

Identity of directors, senior management and advisors

Not applicable

2

Offer statistics and expected timetable

Not applicable

3

Key information3A Selected financial data

Selected financial data

213Shareholder information  Inflation and foreigncurrency translation

1843B Capitalisation and indebtedness

Not applicable

3C Reasons for the offer and use of proceeds

Not applicable

3D Risk factors

Principal risk factors and uncertainties

196 to 2004

Information on the Company4A History and development of the Company

History and development

190Contact details

Back cover4B Business overview

Financial highlights

3Our year

4 to 7Where we do business

8 and 9How we do business

10 and 11Crystallising value from Verizon Wireless

14 and 15Key performance indicators

16 and 17Market overview

18 to 20Strategy: Our strategy

21Strategy: Consumer Europe

22 and 23Strategy: Unified communications

24 and 25Strategy: Consumer emerging markets

26 and 27Strategy: Enterprise

28 and 29Strategy: Network

30 and 31Strategy: Operations

32 and 33Operating results

40 to 45Regulation

191 to 1954C Organisational structure

Note 32 Principal subsidiaries

167 to 169Note 12 Investments in associates and joint ventures

129 to 131Note 13 Other investments

1324D Property, plant and equipment

How we do business

10 and 11Commentary on the consolidated statementof financial position

99Strategy

21 to 33Commitments

1634A

Unresolved staff comments

None








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|     |  |    






Item

Form 20-F caption

Location in this document

Page5

Operating and financial review and prospects5A Operating results



40 to 45Operating results

and 96 to 97Prior year operating results

171 to 175Note 21 Borrowings

139 to 143Shareholder information  Inflation and foreigncurrency translation

184Regulation

191 to 1955B Liquidity and capital resources

Commentary on the consolidated statement of cash flows

103Note 23 Capital and financial risk management

146 to 151Note 22 Liquidity and capital resources

143 to 146Note 21 Borrowings

139 to 1435C Research and development,
patents and licences, etc

Strategy: Our strategy

21Strategy: Consumer Europe

22 and 23Strategy: Unified communications

24 and 25Strategy: Consumer emerging markets

26 and 27Strategy: Enterprise

28 and 29Strategy: Network

30 and 31Strategy: Operations

32 and 33Note 3 Operating (loss)/profit

113Regulation  Licences

1945D Trend information

Chief Executives review

12 and 13Market overview

18 to 205E Off-balance sheet arrangements

Liquidity and capital resources  Off-balance sheet arrangements

146Note 29 Commitments

163Note 30 Contingent liabilities

164 to 1665F Tabular disclosure of contractual obligations

Commentary on the consolidated statement of financial position  Contractual obligations and
contingencies

995G Safe harbor

Forward-looking statements

209 and 2106

Directors, senior management and employees6A Directors and senior management

Board of directors and Group management

50 to 536B Compensation

Directors remuneration

69 to 856C Board practices

Corporate governance

48 to 68Directors remuneration

69 to 85Board of directors and Group management

50 to 536D Employees

Our people

36 and 37Note 25 Employees

1526E Share ownership

Directors remuneration

69 to 85Note 27 Share-based payments

157 and 1587

Major shareholders and related party transactions7A Major shareholders

Shareholder information  Major shareholders

1847B Related party transactions

Directors remuneration

69 to 85Note 30 Contingent liabilities

164 to 166Note 31 Related party transactions

1677C Interests of experts and counsel

Not applicable

8

Financial information8A Consolidated statements and other financial information

Financials

96 to 170Report of Independent Registered Public Accounting Firm on the consolidated financial statements

92Note 30 Contingent liabilities

164 to 1668B Significant changes

Subsequent events

9

The offer and listing9A Offer and listing details

Shareholder information  Share price history

183 and 1849B Plan of distribution

Not applicable

9C Markets

Shareholder information  Markets

1849D Selling shareholders

Not applicable

9E Dilution

Not applicable

9F Expenses of the issue

Not applicable








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|208 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|    |  | Form 20-F cross
reference guide (continued)       






Item

Form 20-F caption

Location in this document

Page10

Additional information10A Share capital

Not applicable

10B Memorandum and articles of association

Shareholder information  Articles of association andapplicable English law

184 to 18710C Material contracts

Shareholder information  Material contracts

18710D Exchange controls

Shareholder information  Exchange controls

18710E Taxation

Shareholder information  Taxation

187 to 18910F Dividends and paying agents

Not applicable

10G Statement by experts

Not applicable

10H Documents on display

Shareholder information  Documents on display

18710I Subsidiary information

Not applicable

11

Quantitative and qualitative disclosures about market risk

Note 23 Capital and financial risk management

146 to 15112

Description of securities other than equity securities12A Debt securities

Not applicable

12B Warrants and rights

Not applicable

12C Other securities

Not applicable

12D American depositary shares

ADR payment information

C-113

Defaults, dividend arrearages and delinquencies

Not applicable

14

Material modifications to the rights of security holders and use of proceeds

Not applicable

15

Controls and procedures

Corporate governance

48 to 68Directors statement of responsibility  Managements reporton internal control over financial reporting

88 and 89Report of Independent Registered Public Accounting Firm on internal     control over financial reporting

9116

16A Audit Committee financial expert

Corporate governance  Board committees

5816B Code of ethics

Corporate governance  US listing requirements

6816C Principal accountant fees and services

Note 3 Operating (loss)/profit

113Corporate governance  Audit and Risk Committee External audit

6116D Exemptions from the listing standards for audit committees

Not applicable

16E Purchase of equity securities by the issuer and affiliated purchasers

Commentary on the consolidated statement of changes in equity  Purchase of own shares

101Note 22 Liquidity and capital resources  Share buyback

144programmes16F Change in registrants certifying accountant

Not applicable

16G Corporate governance

Corporate governance  US listing requirements

6816H Mine safety disclosure

Not applicable

17

Financial statements

Not applicable

18

Financial statements



96, 98, 100, 102Financials

and 104 to 17018A Separate financial statements requiredby Rule 3-09 of Regulation S-X

Financials

B-118B Report of Independent RegisteredPublic Accounting Firm

Financials

B-319

Exhibits

Filed with the SEC

Index to Exhibits






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|                           |  |    
|-------------------------- |  | ---
|LOGO                       |  | 209
|Forward-looking
statements |  |    






This document contains forward-looking statements within the meaning of the US Private
Securities Litigation Reform Act of 1995 with respect to the Groups financial condition, results of operations and businesses and certain of the Groups plans and objectives. In particular, such forward-looking statements include statements with respect to:    g

the Groups expectations and guidance regarding its financial and operating performance, including statements contained within the Chief Executives review on pages 12 to 13, statements
regarding the Groups future dividends and the guidance statement for the 2015 financial year and free cash flow guidance on page 13 and 39, the performance of associates and joint ventures, other investments and newly acquired businesses
including CWW, KDG, Ono and Neotel and expectations regarding the Project Spring organic investment programme;    g

intentions and expectations regarding the development of products, services and initiatives introduced by, or together with, Vodafone or by third parties, including new mobile technologies, such as
the Vodafone M-Pesa money transfer service, M2M connections, Vodafone Red, cloud hosting, tablets and an increase in download speeds, Vodafone One-Net, mWallet, Smartpass and 4G/3G services;    g

expectations regarding the global economy and the Groups operating environment and market position, including future market conditions, growth in the number of worldwide mobile
phone users and other trends, including increased mobile data usage and increased mobile penetration in emerging markets;    g

revenue and growth expected from the Groups enterprise and total communications strategy, including data revenue growth, and its expectations with respect to long-term shareholder value
growth;    g

mobile penetration and coverage rates, mobile termination rate cuts, the Groups ability to acquire spectrum, expected growth prospects in the Europe and AMAP regions and growth in customers
and usage generally, and plans for sustained investment in high speed data networks and the anticipated Group standardisation and simplification programme;    g

anticipated benefits to the Group from cost efficiency programmes;    g

possible future acquisitions, including increases in ownership in existing investments, the timely completion of pending acquisition transactions and pending offers for investments, including
licence and spectrum acquisitions, and the expected funding required to complete such acquisitions or investments;    g

expectations and assumptions regarding the Groups future revenue, operating profit, adjusted EBITDA, adjusted EBITDA margin, free cash flow, depreciation and amortisation charges, foreign
exchange rates, tax rates and capital expenditure;
 g

expectations regarding the Groups access to adequate funding for its working capital requirements and share buyback programmes, and the Groups future dividends or its existing
investments; and    g

the impact of regulatory and legal proceedings involving the Group and of scheduled or potential regulatory changes.   Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as will,
anticipates, aims, could, may, should, expects, believes, intends, plans or targets. By their nature, forward-looking
statements are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, the following:    g

general economic and political conditions in the jurisdictions in which the Group operates and changes to the associated legal, regulatory and tax environments;    g

increased competition, from both existing competitors and new market entrants, including mobile virtual network operators;    g

levels of investment in network capacity and the Groups ability to deploy new technologies, products and services in a timely manner, particularly data content and services;    g

rapid changes to existing products and services and the inability of new products and services to perform in accordance with expectations, including as a result of third-party or vendor
marketing efforts;    g

the ability of the Group to integrate new technologies, products and services with existing networks, technologies, products and services;    g

the Groups ability to generate and grow revenue from both voice and non-voice services and achieve expected cost savings;    g

a lower than expected impact of new or existing products, services or technologies on the Groups future revenue, cost structure and capital expenditure outlays;    g

slower than expected customer growth, reduced customer retention, reductions or changes in customer spending and increased pricing pressure;    g

the Groups ability to expand its spectrum position, win 3G and 4G allocations and realise expected synergies and benefits associated with 3G and 4G;






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|210 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|    |  | Forward-looking
statements (continued)            






g

the Groups ability to secure the timely delivery of high quality, reliable handsets, network equipment and other key products from suppliers;    g

loss of suppliers, disruption of supply chains and greater than anticipated prices of new mobile handsets;    g

changes in the costs to the Group of, or the rates the Group may charge for, terminations and roaming minutes;    g

the impact of a failure or significant interruption to the Groups telecommunications, networks, IT systems or data protection systems;    g

the Groups ability to realise expected benefits from acquisitions, partnerships, joint ventures, franchises, brand licences, platform sharing or other arrangements with third parties,
particularly those related to the development of data and internet services;    g

acquisitions and divestments of Group businesses and assets and the pursuit of new, unexpected strategic opportunities which may have a negative impact on the Groups financial condition
and results of operations;    g

the Groups ability to integrate acquired business or assets and the imposition of any unfavourable conditions, regulatory or otherwise, on any pending or future acquisitions or dispositions;    g

the extent of any future write-downs or impairment charges on the Groups assets, or restructuring charges incurred as a result of an acquisition or disposition;    g

developments in the Groups financial condition, earnings and distributable funds and other factors that the Board takes into account in determining the level of dividends;    g

the Groups ability to satisfy working capital requirements through borrowing in capital markets, bank facilities and operations;    g

changes in foreign exchange rates, including particularly the exchange rate of pounds sterling to the euro, Indian rupee, South African rand and the US dollar;    g

changes in the regulatory framework in which the Group operates, including the commencement of legal or regulatory action seeking to regulate the Groups permitted charging rates;    g

the impact of legal or other proceedings against the Group or other companies in the communications industry; and    g

changes in statutory tax rates and profit mix, the Groups ability to resolve open tax issues and the timing and amount of any payments in respect of tax liabilities.
 Furthermore, a review of the reasons why actual results and developments may differ materially from
the expectations disclosed or implied within forward-looking statements can be found under Principal risk factors and uncertainties on pages 196 to 200 of this document. All subsequent written or oral forward-looking statements
attributable to the Company or any member of the Group or any persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. No assurances can be given that the forward-looking statements in this
document will be realised. Subject to compliance with applicable law and regulations, Vodafone does not intend to update these forward-looking statements and does not undertake any obligation to do so. The Companys independent auditors, Deloitte LLP have not compiled, examined, or performed any procedures with respect to the prospective
financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial
information.






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##### Table of Contents

|                    |  |    
|------------------- |  | ---
|LOGO                |  | 211
|Definition of
terms |  |    






2G

2G networks are operated using global system for mobile (GSM) technology which offer services such as voice, text messaging
and low speed data. In addition, all the Groups controlled networks support general packet radio services (GPRS), often referred to as 2.5G. GPRS allows mobile devices to access IP based data services such as the internet and
email.3G

A cellular technology based on wide band CDMA delivering voice and faster data services.4G/LTE

4G or long-term evolution (LTE) technology offers even faster data transfer speeds than 3G/HSPA.Acquisition costs

The total of connection fees, trade commissions and equipment costs relating to new customer connections.ADR

American depositary receipts is a mechanism designed to facilitate trading in shares of non-US companies in the US stock markets.
The main purpose is to create an instrument which can easily be settled through US stock market clearing systems.ADS

American depositary shares are shares evidenced by American depositary receipts. ADSs are issued by a depositary bank and represent one
or more shares of a non-US issuer held by the depositary bank. The main purpose of ADSs is to facilitate trading in shares of non-US companies in the US markets and, accordingly, ADRs which evidence ADSs are in a form suitable for holding in US
clearing systems.AGM

Annual general meeting.AMAP

The Groups region: Africa, Middle East and Asia Pacific.Applications (apps)

Apps are software applications usually designed to run on a smartphone or tablet device and provide a convenient means for the user to
perform certain tasks. They cover a wide range of activities including banking, ticket purchasing, travel arrangements, social networking and games. For example, the My Vodafone app lets customers check their bill totals on their
smartphone and see the minutes, texts and data allowance remaining.ARPU

Average revenue per user, defined as mobile in-bundle customer revenue plus mobile out-of-bundle customer revenue and mobile incoming
revenue divided by average customers.Capital expenditure (capex)

This measure includes the aggregate of capitalised property, plant and equipment additions and capitalised software
costs.CDMA

This is a channel access method used by various radio communication technologies.Churn

Total gross customer disconnections in the period divided by the average total customers in the period.Cloud services

This means the customer has little or no equipment at their premises and all the equipment and capability associated with the service is
run from the Vodafone network and data centres instead. This removes the need for customers to make capital investments and instead they have an operating cost model with a recurring monthly fee.Controlled and jointly controlled

Controlled and jointly controlled measures include 100% for the Groups mobile operating subsidiaries and the Groups share for
joint ventures. and the Groups proportionate share for joint operations.Customer costs

Customer costs include acquisition costs and retention costs.Depreciation and other amortisation

The accounting charge that allocates the cost of a tangible or intangible asset to the income statement over its useful life. This
measure includes the profit or loss on disposal of property, plant and equipment and computer software.Direct costs

Direct costs include interconnect costs and other direct costs of providing services.Enterprise

The Groups customer segment for businesses.Adjusted EBITDA

Operating profit excluding share of results in associates, depreciation and amortisation, gains/losses on the disposal of fixed assets,
impairment losses, restructuring costs and other operating income and expense. The Groups definition of adjusted EBITDA may not be comparable with similarly titled measures and disclosures by other companies.Fixed broadband customer

A fixed broadband customer is defined as a customer with a connection or access point to a fixed line data network.FRC

Financial Reporting Council.Free cash flow

Operating free cash flow after cash flows in relation to taxation, interest, dividends received from associates and investments and
dividends paid to non-controlling shareholders in subsidiaries but before licence and spectrum payments. For the year ended 31 March 2014 and 31 March 2013 other items excluded the income dividends received from Verizon Wireless and
payments in respect of a tax case settlement.FCA

Financial Conduct Authority (previously Financial Services Authority).HSPA+

An evolution of high speed packet access (HSPA) or third generation (3G) technology that enhances the existing 3G
network with higher speeds for the end user.Impairment

A downward revaluation of an asset.Interconnect costs

A charge paid by Vodafone to other fixed line or mobile operators when a Vodafone customer calls a customer connected to a different
network.ICT

Information and communications technology.IFRS

International Financial Reporting StandardsIP

Internet protocol (IP) is the format in which data is sent from one computer to another on the internet.IP-VPN

A virtual private network (VPN) is a network that uses a shared telecommunications infrastructure, such as the internet, to
provide remote offices or individual users with secure access to their organisations network.M2M

Machine-to-machine. M2M communications, or telemetry, enable devices to communicate with one another via built-in mobile SIM
cards.Mark-to-market

Mark-to-market or fair value accounting refers to accounting for the value of an asset or liability based on the current market price of
the asset or liability.






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|    |  |                                                   
|212 |  | Vodafone Group Plc
Annual Report on Form 20-F 2014
|    |  | Definition of terms
(continued)                   






Mobile broadband

Also known as mobile internet (see below).Mobile customer

A mobile customer is defined as a subscriber identity module (SIM), or in territories where SIMs do not exist, a unique
mobile telephone number, which has access to the network for any purpose, including data only usage.Mobile internet

Mobile internet allows internet access anytime, anywhere through a browser or a native application using any portable or mobile device
such as smartphone, tablet, laptop connected to a wireless network.Mobile termination rate (MTR)

A per minute charge paid by a telecommunications network operator when a customer makes a call to another mobile or fixed line network
operator.MVNO

Mobile virtual network operators, companies that provide mobile phone services under wholesale contracts with a mobile network operator,
but do not have their own licence of spectrum or the infrastructure required to operate a network.Net debt

Long-term borrowings, short-term borrowings and mark-to-market adjustments on financing instruments less cash and cash
equivalents.Net promoter score (NPS)

Net promoter score is a customer loyalty metric used to monitor customer satisfaction.Operating expenses

Operating expenses comprise primarily network and IT related expenditure, support costs from HR and finance and certain intercompany
items.Operating free cash flow

Cash generated from operations after cash payments for capital expenditure (excludes capital licence and spectrum payments) and cash
receipts from the disposal of intangible assets and property, plant and equipment.Organic growth

All amounts marked with an * represent organic growth which presents performance on a comparable basis, both in terms of
merger and acquisition activity and movements in foreign exchange rates. From 1 April 2013 the Group revised its intra-group roaming charges. These changes have had an impact on reported service revenue for the Group and by country and regionally
since 1 April 2013. Whilst prior period reported revenue has not been restated, to ensure comparability in organic growth rates, Group, country and regional revenue in the prior financial periods have been recalculated based on the new pricing
structure to form the basis for our organic calculations.Partner markets

Markets in which the Group has entered into a partner agreement with a local mobile operator enabling a range of Vodafones global
products and services to be marketed in that operators territory and extending Vodafones reach into such markets.Penetration

Number of SIMs in a country as a percentage of the countrys population. Penetration can be in excess of 100% due to customers
owning more than one SIM.Petabyte

A petabyte is a measure of data usage. One petabyte is a million gigabytes.Pps

Percentage points.Reported growth

Reported growth is based on amounts reported in pound sterling as determined under IFRS.RAN

Radio access network is the part of a mobile telecommunications system which provides cellular coverage to mobile phones via a radio
interface, managed by thousands of base stations installed on towers and rooftops across the coverage area, and linked to the core nodes through a backhaul infrastructure which can be owned, leased or a mix of both.Retention costs

The total of trade commissions, loyalty scheme and equipment costs relating to customer retention and upgrade.Roaming

Allows customers to make calls, send and receive texts and data on other operators mobile networks while travelling
abroad.Service revenue

Service revenue comprises all revenue related to the provision of ongoing services including, but not limited to, monthly access charges,
airtime usage, roaming, incoming and outgoing network usage by non-Vodafone customers and interconnect charges for incoming calls.Smartphone devices

A smartphone is a mobile phone offering advanced capabilities including access to email and the internet.Smartphone penetration

The number of smartphone devices divided by the number of registered SIMs (excluding data only SIMs) and telemetric
applications.SME

Small to medium-sized enterprises.SoHo

Small-office home-office.Spectrum

The radio frequency bands and channels assigned for telecommunication services.Supranational

An international organisation, or union, whereby member states go beyond national boundaries or interests to share in the decision-making
and vote on issues pertaining to the wider grouping.Tablets

A tablet is a slate shaped, mobile or portable computing device equipped with a finger operated touchscreen or stylus, for example, the
Apple iPad.Telemetrics

Telemetric applications include, but are not limited to, asset and equipment tracking, mobile payment and billing functionality, e.g.
vending machines and meter readings, and include voice enabled customers whose usage is limited to a central service operation, e.g. emergency response applications in vehicles. Telemetric customers are not included in mobile
customers.VZW

Verizon Wireless, the Groups former associate in the United States.VZW income dividends

Distributions (other than tax distributions) by Verizon Wireless as agreed from time to time by the Board of Verizon
Wireless.VZW tax distributions

Specific distributions made by the Verizon Wireless to its partners based on the taxable income.






---

##### Table of Contents

|                        |  |    
|----------------------- |  | ---
|LOGO                    |  | 213
|Selected financial
data |  |    






The selected financial data shown below for the years ended 31 March 2014, 2013 and 2012 is
presented on an IFRS basis, reflecting the Groups adoption of IFRS 11, Joint Arrangements and the revisions to IAS 19, Employee benefits, and includes the Groups joint ventures using the equity accounting basis as
detailed in note 1 Basis of preparation to the consolidated financial statements. The financial data for the years ended 31 March 2011 and 2010 has not been restated as it would involve unreasonable effort and expense. The financial
data for the years ended 31 March 2011 and 2010 therefore includes the Groups joint ventures on a proportionate consolidation basis, rather than on an equity accounting basis.  At/for the year ended 31 March

2014


Restated2013


Restated2012


2011


2010Consolidated income statement data (£m)Revenue


38,346



38,041



38,821



45,884



44,472Operating (loss)/profit


(3,913
)


(2,202
)


5,618



1,085



5,368(Loss)/profit before taxation


(5,270
)


(3,483
)


4,144



5,057



4,626Profit/(loss) for financial year from continuing operations


11,312



(3,959
)


3,439



4,566



5,537Profit for the financial year


59,420



657



6,994



7,870



8,618Consolidated statement of financial position data (£m)Total assets


121,840



138,324



135,450



151,220



156,985Total equity


71,781



72,488



78,202



87,561



90,810Total equity shareholders funds


70,802



71,477



76,935



87,555



90,381Earnings per share1,2Weighted average number of shares (millions) Basic


26,472



26,831



27,624



52,408



52,595 Diluted


26,682



26,831



27,938



52,748



52,849Basic earnings per ordinary share


223.84p



1.54p



25.15p



15.20p



16.44pDiluted earnings per ordinary share


222.07p



1.54p



24.87p



15.11p



16.36pBasic earnings per share from continuing operations


42.10p



(15.66p
)


12.28p



8.90p



10.58pCash dividends1,3Amount per ordinary share (pence)


11.00p



10.19p



13.52p



8.90p



8.31pAmount per ADS (pence)


110.0p



101.9p



135.2p



89.0p



83.1pAmount per ordinary share (US cents)


18.31c



15.49c



21.63c



14.33c



12.62cAmount per ADS (US cents)


183.1c



154.9c



216.3c



143.3c



126.2cOther dataRatio of earnings to fixed charges4


0.7



1.7



4.3



5.8



3.6 Notes: 1
See note 8 to the consolidated financial statements, Earnings per share. Earnings and dividends per ADS is calculated by multiplying earnings per ordinary share by ten, the number of
ordinary shares per ADS. Dividend per ADS is calculated on the same basis. 2
On 19 February 2014, we announced a 6 for 11 share consolidation effective 24 February 2014. This had the effect of reducing the number of shares in issue from 52,821,751,216
ordinary shares (including 4,351,833,492 ordinary shares held in Treasury) as at the close of business on 18 February 2014 to 28,811,864,298 new ordinary shares in issue immediately after the share consolidation on 24 February 2014.
Earnings per share for the years ended 31 March 2013 and 2012 have been restated accordingly. 3
The final dividend for the year ended 31 March 2014 was proposed by the directors on 20 May 2014 and is payable on 6 August 2014 to holders of record as of 13 June 2014. The
total dividends have been translated into US dollars at 31 March 2014 for purposes of the above disclosure but the dividends are payable in US dollars under the terms of the ADS depositary agreement. 4
For the purposes of calculating these ratios, earnings consist of loss or profit before tax adjusted for fixed charges, dividend income from associates, share of profits and losses from associates,
interest capitalised and interest amortised. Fixed charges comprise one third of payments under operating leases, representing the estimated interest element of these payments, interest payable and similar charges, interest capitalised and preferred
share dividends.  Vodafone, the Vodafone Speechmark, The Vodafone Portrait, Vodacom, M-Pesa, Vodafone One Net,
Vodafone Red, Vodafone Relax, Vodafone Cloud, Vodafone SmartPass, Vodafone Mobile mWallet and The Vodafone Way are trade marks of the Vodafone Group. The Vodafone Rhombus is a registered design of the Vodafone Group. Other product and company names
mentioned herein may be the trade marks of their respective owners. The content of our website (vodafone.com) should not be considered
to form part of this annual report or our annual report on Form 20-F. © Vodafone Group 2014
 Text printed on amadeus 75 silk which is made from 75% de-inked post-consumer waste and 25% virgin
fibre. The cover is on amadeus 100 silk, made entirely from de-inked post-consumer waste. Both products are Forest Stewardship Council (FSC) certified and produced using elemental chlorine free (ECF) bleaching.
The manufacturing mill also holds ISO 14001 accreditation for environmental management. Designed and produced by Radley Yeldar ry.com
 LOGO






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##### Table of Contents

LOGO



---

##### Table of Contents

Cellco Partnership

(d/b/a Verizon Wireless)

Report of Independent Registered Public Accounting Firm

Consolidated Financial Statements

For the years ended

December 31, 2013, 2012 and 2011



B-1



---

##### Table of Contents

Table of Contents

Cellco Partnership (d/b/a Verizon Wireless)



|                                                        |  |  |             | 
|------------------------------------------------------- |  |  | ----------- | 
|Report of Independent Registered Public Accounting Firm |  |  | B-3         | 
|                                                        | 
|Consolidated Statements of Income                       |  |  |             | 
|For the years ended December 31, 2013, 2012 and 2011    |  |  | B-4         | 
|                                                        | 
|Consolidated Statements of Comprehensive Income         |  |  |             | 
|For the years ended December 31, 2013, 2012 and 2011    |  |  | B-5         | 
|                                                        | 
|Consolidated Balance Sheets                             |  |  |             | 
|As of December 31, 2013 and 2012                        |  |  | B-6         | 
|                                                        | 
|Consolidated Statements of Cash Flows                   |  |  |             | 
|For the years ended December 31, 2013, 2012 and 2011    |  |  | B-7         | 
|                                                        | 
|Consolidated Statements of Changes in Partners Capital |  |  |             | 
|For the years ended December 31, 2013, 2012 and 2011    |  |  | B-8         | 
|                                                        | 
|Notes to Consolidated Financial Statements              |  |  | B-9 to B-28 | 



B-2



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Representatives of

Cellco
Partnership d/b/a Verizon Wireless:

We have audited the accompanying consolidated balance sheets of Cellco Partnership and subsidiaries d/b/a Verizon
Wireless (the Partnership) as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, cash flows and changes in partners capital for each of the three years in the period ended
December 31, 2013. These financial statements are the responsibility of the Partnerships management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Partnerships internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2013
and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

New York, New York

February 27, 2014



B-3



---

##### Table of Contents

Consolidated Statements of Income

Cellco Partnership (d/b/a Verizon Wireless)



|                                                                                   |  |                          |        |   |      |   |        |      |  |   |        |  
|---------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                                   |  | Years Ended December 31, |       
|(dollars in millions)                                                              |  | 2013                     |        |   | 2012 |   |        | 2011 | 
|                                                                                   | 
|Operating Revenue (including $102, $83 and $87 from affiliates)                    | 
|Service revenue                                                                    |  | $                        | 69,033 |   |      | $ | 63,733 |      |  | $ | 59,157 |  
|Equipment and other                                                                |  |                          | 11,990 |   |      |   | 12,135 |      |  |   | 10,997 |  
|                                                                                   | 
|Total operating revenue                                                            |  |                          | 81,023 |   |      |   | 75,868 |      |  |   | 70,154 |  
|                                                                                   |  |                          |       
|Operating Costs and Expenses (including $2,295, $1,949 and $1,708 from affiliates) |  |                          |        |   |      |   |        |      |  |   |        |  
|Cost of service (exclusive of items shown below)                                   |  |                          | 7,295  |   |      |   | 7,711  |      |  |   | 7,994  |  
|Cost of equipment                                                                  |  |                          | 16,353 |   |      |   | 16,779 |      |  |   | 16,092 |  
|Selling, general and administrative                                                |  |                          | 22,663 |   |      |   | 21,696 |      |  |   | 19,655 |  
|Depreciation and amortization                                                      |  |                          | 8,202  |   |      |   | 7,960  |      |  |   | 7,962  |  
|                                                                                   | 
|Total operating costs and expenses                                                 |  |                          | 54,513 |   |      |   | 54,146 |      |  |   | 51,703 |  
|                                                                                   |  |                          |       
|Operating Income                                                                   |  |                          | 26,510 |   |      |   | 21,722 |      |  |   | 18,451 |  
|                                                                                   |  |                          |       
|Other Income (Expenses)                                                            |  |                          |        |   |      |   |        |      |  |   |        |  
|Interest expense, net                                                              |  |                          | (65    | ) |      |   | (442   | )    |  |   | (610   | )
|Other income, net                                                                  |  |                          | 40     |   |      |   | 96     |      |  |   | 56     |  
|                                                                                   | 
|Income Before Provision for Income Taxes                                           |  |                          | 26,485 |   |      |   | 21,376 |      |  |   | 17,897 |  
|Provision for income taxes                                                         |  |                          | (150   | ) |      |   | (201   | )    |  |   | (947   | )
|                                                                                   | 
|Net Income                                                                         |  | $                        | 26,335 |   |      | $ | 21,175 |      |  | $ | 16,950 |  
|                                                                                   | 
|                                                                                   | 
|                                                                                   |  |                          |       
|Net income attributable to noncontrolling interests                                |  | $                        | 422    |   |      | $ | 304    |      |  | $ | 280    |  
|Net income attributable to Cellco Partnership                                      |  |                          | 25,913 |   |      |   | 20,871 |      |  |   | 16,670 |  
|                                                                                   | 
|Net Income                                                                         |  | $                        | 26,335 |   |      | $ | 21,175 |      |  | $ | 16,950 |  
|                                                                                   | 
|                                                                                   | 

See Notes to Consolidated Financial Statements.



B-4



---

##### Table of Contents

Consolidated Statements of Comprehensive Income

Cellco Partnership (d/b/a/ Verizon Wireless)



|                                                                     |  |                          |        |   |      |   |        |      |  |   |        |  
|-------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                     |  | Years Ended December 31, |       
|(dollars in millions)                                                |  | 2013                     |        |   | 2012 |   |        | 2011 | 
|                                                                     | 
|Net Income                                                           |  | $                        | 26,335 |   |      | $ | 21,175 |      |  | $ | 16,950 |  
|                                                                     |  |                          |       
|Other comprehensive income (loss), net of taxes                      |  |                          |        |   |      |   |        |      |  |   |        |  
|Unrealized gain (loss) on cash flow hedges                           |  |                          | (32    | ) |      |   | 21     |      |  |   | 3      |  
|Defined benefit pension and postretirement plans                     |  |                          |       |   |      |   |       |      |  |   | (1     | )
|                                                                     | 
|Other comprehensive income (loss) attributable to Cellco Partnership |  |                          | (32    | ) |      |   | 21     |      |  |   | 2      |  
|                                                                     | 
|                                                                     |  |                          |       
|Total Comprehensive Income                                           |  | $                        | 26,303 |   |      | $ | 21,196 |      |  | $ | 16,952 |  
|                                                                     | 
|                                                                     | 
|                                                                     |  |                          |       
|Comprehensive income attributable to noncontrolling interests        |  | $                        | 422    |   |      | $ | 304    |      |  | $ | 280    |  
|Comprehensive income attributable to Cellco Partnership              |  |                          | 25,881 |   |      |   | 20,892 |      |  |   | 16,672 |  
|                                                                     | 
|Total Comprehensive Income                                           |  | $                        | 26,303 |   |      | $ | 21,196 |      |  | $ | 16,952 |  
|                                                                     | 
|                                                                     | 

See Notes to Consolidated Financial Statements.



B-5



---

##### Table of Contents

Consolidated Balance Sheets

Cellco Partnership (d/b/a Verizon Wireless)



|                                                |  |                    |         |  |      |   |         | 
|----------------------------------------------- |  | ------------------ | ------- |  | ---- | - | ------- | 
|                                                |  | As of December 31, |        
|(dollars in millions)                           |  | 2013               |         |  | 2012 |  
|                                                | 
|Assets                                          |  |                    |         |  |      |   |         | 
|Current assets                                  |  |                    |         |  |      |   |         | 
|Cash and cash equivalents                       |  | $                  | 4,005   |  |      | $ | 1,354   | 
|Receivables, net of allowances of $399 and $350 |  |                    | 7,204   |  |      |   | 6,657   | 
|Due from affiliates, net                        |  |                    | 245     |  |      |   | 106     | 
|Inventories, net                                |  |                    | 990     |  |      |   | 1,044   | 
|Prepaid expenses and other current assets       |  |                    | 1,459   |  |      |   | 525     | 
|                                                | 
|Total current assets                            |  |                    | 13,903  |  |      |   | 9,686   | 
|                                                | 
|                                                |  |                   
|Plant, property and equipment, net              |  |                    | 35,932  |  |      |   | 34,546  | 
|Wireless licenses                               |  |                    | 75,796  |  |      |   | 77,642  | 
|Goodwill                                        |  |                    | 17,941  |  |      |   | 17,737  | 
|Other intangibles and other assets, net         |  |                    | 2,249   |  |      |   | 2,102   | 
|                                                | 
|Total assets                                    |  | $                  | 145,821 |  |      | $ | 141,713 | 
|                                                | 
|                                                | 
|                                                |  |                   
|Liabilities and Partners Capital               |  |                    |         |  |      |   |         | 
|Current liabilities                             |  |                    |         |  |      |   |         | 
|Short-term debt, including current maturities   |  | $                  | 41      |  |      | $ | 1,448   | 
|Accounts payable and accrued liabilities        |  |                    | 7,012   |  |      |   | 7,534   | 
|Advance billings                                |  |                    | 2,750   |  |      |   | 2,550   | 
|Other current liabilities                       |  |                    | 337     |  |      |   | 274     | 
|                                                | 
|Total current liabilities                       |  |                    | 10,140  |  |      |   | 11,806  | 
|                                                | 
|                                                | 
|                                                |  |                   
|Long-term debt                                  |  |                    | 5,231   |  |      |   | 8,665   | 
|Deferred tax liabilities, net                   |  |                    | 11,001  |  |      |   | 10,939  | 
|Other non-current liabilities                   |  |                    | 2,139   |  |      |   | 2,056   | 
|                                                |  |                   
|Partners capital                               |  |                    |         |  |      |   |         | 
|Capital                                         |  |                    | 114,979 |  |      |   | 106,119 | 
|Accumulated other comprehensive income          |  |                    | 52      |  |      |   | 84      | 
|Noncontrolling interests                        |  |                    | 2,279   |  |      |   | 2,044   | 
|                                                | 
|Total Partners capital                         |  |                    | 117,310 |  |      |   | 108,247 | 
|                                                | 
|Total liabilities and Partners capital         |  | $                  | 145,821 |  |      | $ | 141,713 | 
|                                                | 
|                                                | 

See Notes to Consolidated Financial Statements.



B-6



---

##### Table of Contents

Consolidated Statements of Cash Flows

Cellco Partnership (d/b/a Verizon Wireless)



|                                                                                                        |  |                          |         |   |      |   |         |      |  |   |        |  
|------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                                                                                        |  | Years Ended December 31, |        
|(dollars in millions)                                                                                   |  | 2013                     |         |   | 2012 |   |         | 2011 | 
|                                                                                                        | 
|Cash Flows from Operating Activities                                                                    |  |                          |         |   |      |   |         |      |  |   |        |  
|Net income                                                                                              |  | $                        | 26,335  |   |      | $ | 21,175  |      |  | $ | 16,950 |  
|Adjustments to reconcile net income to net cash provided by operating activities:                       |  |                          |         |   |      |   |         |      |  |   |        |  
|Depreciation and amortization                                                                           |  |                          | 8,202   |   |      |   | 7,960   |      |  |   | 7,962  |  
|Provision for uncollectible receivables                                                                 |  |                          | 703     |   |      |   | 634     |      |  |   | 689    |  
|Provision for deferred income taxes                                                                     |  |                          | 72      |   |      |   | 123     |      |  |   | 368    |  
|Changes in current assets and liabilities, net of the effects of acquisition/disposition of businesses: |  |                          |         |   |      |   |         |      |  |   |        |  
|Receivables                                                                                             |  |                          | (1,371  | ) |      |   | (1,238  | )    |  |   | (624   | )
|Inventories, net                                                                                        |  |                          | 54      |   |      |   | (137    | )    |  |   | 166    |  
|Prepaid expenses and other current assets                                                               |  |                          | (35     | ) |      |   | (107    | )    |  |   | 124    |  
|Accounts payable and accrued liabilities                                                                |  |                          | (120    | ) |      |   | 674     |      |  |   | (728   | )
|Other operating activities, net                                                                         |  |                          | (487    | ) |      |   | (419    | )    |  |   | 371    |  
|                                                                                                        | 
|Net cash provided by operating activities                                                               |  |                          | 33,353  |   |      |   | 28,665  |      |  |   | 25,278 |  
|                                                                                                        | 
|                                                                                                        |  |                          |        
|Cash Flows from Investing Activities                                                                    |  |                          |         |   |      |   |         |      |  |   |        |  
|Capital expenditures (including capitalized software)                                                   |  |                          | (9,425  | ) |      |   | (8,857  | )    |  |   | (8,973 | )
|Acquisitions of investments and businesses, net of cash acquired                                        |  |                          | (52     | ) |      |   | (188    | )    |  |   | (144   | )
|Acquisitions of wireless licenses                                                                       |  |                          | (14     | ) |      |   | (4,287  | )    |  |   | (26    | )
|Proceeds from dispositions of wireless licenses                                                         |  |                          | 2,111   |   |      |   |        |      |  |   |       |  
|Other investing activities, net                                                                         |  |                          | (873    | ) |      |   | 843     |      |  |   | (490   | )
|                                                                                                        | 
|Net cash used in investing activities                                                                   |  |                          | (8,253  | ) |      |   | (12,489 | )    |  |   | (9,633 | )
|                                                                                                        | 
|                                                                                                        |  |                          |        
|Cash Flows from Financing Activities                                                                    |  |                          |         |   |      |   |         |      |  |   |        |  
|Repayments of long-term debt and capital lease obligations                                              |  |                          | (4,960  | ) |      |   | (1,569  | )    |  |   | (4,862 | )
|Distributions to partners                                                                               |  |                          | (17,046 | ) |      |   | (25,681 | )    |  |   | (3,082 | )
|Other financing activities, net                                                                         |  |                          | (443    | ) |      |   | (328    | )    |  |   | (276   | )
|                                                                                                        | 
|Net cash used in financing activities                                                                   |  |                          | (22,449 | ) |      |   | (27,578 | )    |  |   | (8,220 | )
|                                                                                                        | 
|                                                                                                        |  |                          |        
|Increase (decrease) in cash and cash equivalents                                                        |  |                          | 2,651   |   |      |   | (11,402 | )    |  |   | 7,425  |  
|Cash and cash equivalents, beginning of year                                                            |  |                          | 1,354   |   |      |   | 12,756  |      |  |   | 5,331  |  
|                                                                                                        | 
|Cash and cash equivalents, end of year                                                                  |  | $                        | 4,005   |   |      | $ | 1,354   |      |  | $ | 12,756 |  
|                                                                                                        | 
|                                                                                                        | 

See Notes to Consolidated Financial Statements.



B-7



---

##### Table of Contents

Consolidated Statements of Changes in Partners Capital

Cellco Partnership (d/b/a/ Verizon Wireless)



|                                                           |  |                          |          |  |      |   |          |      |  |   |          | 
|---------------------------------------------------------- |  | ------------------------ | -------- |  | ---- | - | -------- | ---- |  | - | -------- | 
|                                                           |  | Years Ended December 31, |         
|(dollars in millions)                                      |  | 2013                     |          |  | 2012 |   |          | 2011 | 
|Partners Capital                                          |  |                          |          |  |      |   |          |      |  |   |          | 
|Balance at beginning of year                               |  | $                        | 106,119  |  |      | $ | 100,961  |      |  | $ | 97,399   | 
|Net income attributable to Cellco Partnership              |  |                          | 25,913   |  |      |   | 20,871   |      |  |   | 16,670   | 
|Contributed capital                                        |  |                          | (7)      |  |      |   | (32)     |      |  |   | (26)     | 
|Distributions declared to partners                         |  |                          | (17,046) |  |      |   | (15,681) |      |  |   | (13,082) | 
|                                                           | 
|Balance at end of year                                     |  |                          | 114,979  |  |      |   | 106,119  |      |  |   | 100,961  | 
|                                                           | 
|                                                           |  |                          |         
|Accumulated Other Comprehensive Income                     |  |                          |          |  |      |   |          |      |  |   |          | 
|Balance at beginning of year                               |  |                          | 84       |  |      |   | 63       |      |  |   | 61       | 
|Unrealized gain (loss) on cash flow hedges                 |  |                          | (32)     |  |      |   | 21       |      |  |   | 3        | 
|Defined benefit pension and postretirement plans           |  |                          |         |  |      |   |         |      |  |   | (1)      | 
|                                                           | 
|Other comprehensive income (loss)                          |  |                          | (32)     |  |      |   | 21       |      |  |   | 2        | 
|                                                           | 
|Balance at end of year                                     |  |                          | 52       |  |      |   | 84       |      |  |   | 63       | 
|                                                           | 
|Total Partners Capital Attributable to Cellco Partnership |  |                          | 115,031  |  |      |   | 106,203  |      |  |   | 101,024  | 
|                                                           | 
|                                                           |  |                          |         
|Noncontrolling Interests                                   |  |                          |          |  |      |   |          |      |  |   |          | 
|Balance at beginning of year                               |  |                          | 2,044    |  |      |   | 1,952    |      |  |   | 1,962    | 
|Net income attributable to noncontrolling interests        |  |                          | 422      |  |      |   | 304      |      |  |   | 280      | 
|Distributions                                              |  |                          | (403)    |  |      |   | (342)    |      |  |   | (280)    | 
|Other                                                      |  |                          | 216      |  |      |   | 130      |      |  |   | (10)     | 
|                                                           | 
|Balance at end of year                                     |  |                          | 2,279    |  |      |   | 2,044    |      |  |   | 1,952    | 
|                                                           | 
|                                                           |  |                          |         
|Total Partners Capital                                    |  | $                        | 117,310  |  |      | $ | 108,247  |      |  | $ | 102,976  | 
|                                                           | 

See Notes to Consolidated Financial Statements.



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Notes to Consolidated Financial Statements

Cellco Partnership (d/b/a Verizon Wireless)

1.
Description of Business and Summary of Significant Accounting Policies

Description of Business

Cellco Partnership (the Partnership), a Delaware general partnership doing business as Verizon Wireless, provides wireless communication services across one of the
most extensive wireless networks in the United States (U.S.) and has the largest fourth-generation (4G) Long-Term Evolution (LTE) technology and third-generation (3G) Evolution-Data Optimized (EV-DO) networks of any U.S. wireless service
provider. The Partnership has one segment and operates domestically only. References to the Partners refers to Verizon Communications, and its subsidiaries (Verizon) and Vodafone Group Plc, and its subsidiaries (Vodafone). At
December 31, 2013 Verizon owned 55% of the Partnership and Vodafone owned 45% of the Partnership. On February 21, 2014, Verizon acquired Vodafones interest in the Partnership and now owns 100% of the Partnership.

These consolidated financial statements include transactions between the Partnership and Verizon and Vodafone (Affiliates) for the provision of services and
financing pursuant to various agreements (see Notes 5 and 11).

Consolidated Financial Statements and Basis of Presentation

The consolidated financial statements of the Partnership include the accounts of its majority-owned subsidiaries and the partnerships in which the Partnership
exercises control. Investments in businesses and partnerships which the Partnership does not control, but has the ability to exercise significant influence over operating and financial policies, are accounted for under the equity method of
accounting. Investments and partnerships which the Partnership does not have the ability to exercise significant influence over operating and financial policies are accounted for under the cost method of accounting. Equity and cost method
investments are included in Other intangibles and other assets, net in the Partnerships consolidated balance sheets. All significant intercompany accounts and transactions have been eliminated.

The Partnership has reclassified prior year amounts to conform to current year presentation.

The Partnership has evaluated subsequent events through February 27, 2014, the date these consolidated financial statements were available to be issued.

Use of Estimates

The Partnership prepares its consolidated
financial statements in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates.

Examples of significant estimates include: the allowances for doubtful accounts, the recoverability of plant, property and equipment, the
recoverability of intangible assets and other long-lived assets, unbilled revenues, fair values of financial instruments, unrecognized tax benefits, valuation allowances on tax assets, accrued expenses, contingencies and allocation of purchase
prices in connection with business combinations.

Revenue Recognition

The Partnership offers products and services to its customers through bundled arrangements. These arrangements involve multiple deliverables which may include products, services, or a combination of products and
services.

The Partnership earns revenue primarily by providing access to and usage of its network. In general, access revenue is billed one month in
advance and recognized when earned; the unearned portion is classified in Advance billings in the consolidated balance sheets. Usage revenue is generally billed in arrears and recognized when service is rendered and included in unbilled revenue,
within Receivables, net in the consolidated balance sheets. Equipment sales revenue associated with the sale of wireless handsets and accessories is recognized when the products are



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delivered to and accepted by the customer, as this is considered to be a separate earnings process from providing wireless services. For agreements involving the resale of third-party services in
which the Partnership is considered the primary obligor in the arrangements, the Partnership records revenue gross at the time of sale. For equipment sales, the Partnership generally subsidizes the cost of wireless devices. The amount of this
subsidy is generally contingent on the arrangement and terms selected by the customer. In multiple deliverable arrangements which involve the sale of equipment and a service contract, the equipment revenue is recognized up to the amount collected
when the wireless device is sold.

The Partnership reports taxes imposed by governmental authorities on revenue-producing transactions between the
Partnership and its customers on a net basis.

Advertising Costs

Costs for advertising products and services as well as other promotional and sponsorship costs are charged to Selling, general and administrative expense in the periods in which they are incurred (see Note 9).

Vendor Rebates and Discounts

The Partnership
recognizes vendor rebates or discounts for purchases of wireless devices from a vendor as a reduction of Cost of equipment when the related wireless devices are sold. Vendor rebates or discounts that have been earned as a result of completing the
required performance under the terms of the underlying agreements but for which the wireless devices have not yet been sold are recognized as a reduction of inventory cost. Advertising credits are granted by a vendor to the Partnership as
reimbursement of specific, incremental, identifiable advertising costs incurred by the Partnership in selling the vendors wireless devices. These advertising credits are restricted based upon a marketing plan agreed to by the vendor and the
Partnership, and accordingly, advertising credits received are recorded as a reduction of those advertising costs when recognized in the Partnerships consolidated statements of income.

Cash and Cash Equivalents

The Partnership considers all highly liquid investments with a maturity of 90 days
or less when purchased to be cash equivalents. Cash equivalents are stated at cost, which approximates quoted market value, and includes approximately $3.5 billion and $0.7 billion at December 31, 2013 and 2012, respectively, held in money
market funds that are considered cash equivalents.

Inventory

Inventory consists primarily of wireless equipment held for sale, which is carried at the lower of cost (determined using a first-in, first-out method) or market. The Partnership maintained inventory valuation
reserves which were not significant as of December 31, 2013 and 2012.

Capitalized Software

Capitalized software consists primarily of direct costs incurred for professional services provided by third parties and compensation costs of employees which
relate to software developed for internal use either during the application stage or for upgrades and enhancements that increase functionality. Costs are capitalized and amortized on a straight-line basis over their estimated useful lives. Costs
incurred in the preliminary project stage of development and maintenance are expensed as incurred. For a discussion of the Partnerships impairment policy for capitalized software costs, see Valuation of Assets below. Also see Note
3 for additional detail of internal-use non-network software reflected in the Partnerships consolidated balance sheets.

Plant, Property and
Equipment

Plant, property and equipment primarily represents costs incurred to construct and expand capacity and network coverage on Mobile
Telephone Switching Offices and cell sites. The cost of plant, property and equipment is depreciated on a straight-line basis over its estimated useful life. Periodic reviews are performed to identify any



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category or group of assets within plant, property and equipment where events or circumstances may change the remaining estimated economic life. This principally includes changes in the
Partnerships plans regarding technology upgrades, enhancements, and planned retirements. Changes in these estimates resulted in an increase of $0.4 billion for the year ended December 31, 2011. Major improvements to existing plant and
equipment are capitalized. Routine maintenance and repairs that do not extend the life of the plant and equipment are charged to expense as incurred. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term
of the related lease.

Upon the sale or retirement of plant, property and equipment, the cost and related accumulated depreciation or amortization is
deducted from the plant accounts and any gains or losses on disposition are recognized in income.

Interest expense and network engineering costs
incurred during the construction phase of the Partnerships network and real estate properties under development are capitalized as part of plant, property and equipment and recorded as construction in progress until the projects are completed
and placed into service.

Valuation of Assets

Long-lived assets, including plant, property and equipment and intangible assets with finite lives, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual
disposition of the asset. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Wireless Licenses

The Partnerships principal intangible assets are licenses, which provide the
Partnership with the exclusive right to utilize designated radio frequency spectrum to provide wireless communication services. While licenses are issued for only a fixed time, generally ten years, such licenses are subject to renewal by the Federal
Communications Commission (FCC). License renewals have occurred routinely and at nominal costs, which are expensed as incurred. Moreover, the Partnership has determined that there are currently no legal, regulatory, contractual, competitive,
economic or other factors that limit the useful life of the Partnerships wireless licenses. As a result, the wireless licenses are treated as an indefinite lived intangible asset, and are not amortized. The Partnership reevaluates the useful
life determination for wireless licenses at least annually to determine whether events and circumstances continue to support an indefinite useful life.

The Partnership tests its wireless licenses for potential impairment annually. In 2013, the Partnership performed a qualitative assessment to determine whether it
is more likely than not that the fair value of its wireless licenses was less than the carrying amount. As part of the assessment, the Partnership considered several qualitative factors including the business enterprise value of the Partnership,
macroeconomic conditions (including changes in interest rates and discount rates), industry and market considerations (including industry revenue and EBITDA (Earnings before interest, taxes, depreciation and amortization) margin projections), the
projected financial performance of the Partnership, as well as other factors. Based on our assessment in 2013, we qualitatively concluded that it was more likely than not that the fair value of our wireless licenses significantly exceeded their
carrying value and therefore, did not result in an impairment. In 2012, the Partnerships quantitative assessment consisted of comparing the estimated fair value of the Partnerships wireless licenses to the aggregated carrying amount as
of the test date. Using the quantitative assessment, the Partnership evaluated its licenses on an aggregate basis using a direct value approach. The direct value approach estimates fair value using a discounted cash flow analysis to estimate what a
marketplace participant would be willing to pay to purchase the aggregated wireless licenses as of the valuation date. If the fair value of the aggregated wireless licenses is less than the aggregated carrying amount of the licenses, an impairment
is recognized. The Partnerships annual quantitative impairment test for 2012 indicated that the fair value significantly exceeded the carrying value and, therefore, did not result in an impairment. The Partnership evaluated its wireless
licenses for potential impairment as of December 15, 2013 and 2012.

Interest expense incurred while qualifying activities are performed to ready
wireless licenses for their intended use is capitalized as part of wireless licenses. The capitalization period ends when a license is substantially complete and the license is ready for its intended use.



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Goodwill

Goodwill is the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. Impairment testing for goodwill is
performed annually in the fourth fiscal quarter or more frequently if impairment indicators are present. The Partnership has the option to perform a qualitative assessment to determine if the fair value of the entity is less than its carrying value.
However, the Partnership may elect to perform an impairment test even if no indications of a potential impairment exist. The impairment test for goodwill uses a two-step approach, which is performed for the Partnerships one reporting unit.
Step one compares the fair value of the reporting unit (calculated using a market approach and/or a discounted cash flow method) to its carrying value. If the carrying value exceeds the fair value, there is a potential impairment and step two must
be performed. Step two compares the carrying value of the reporting units goodwill to its implied fair value (i.e., fair value of reporting unit less the fair value of the units assets and liabilities, including identifiable intangible
assets). If the implied fair value of goodwill is less than the carrying amount of goodwill, an impairment is recognized. The Partnership completed its goodwill impairment test as of December 15, 2013 and 2012. The Partnerships annual
impairment tests for 2013 and 2012 indicated that the fair value significantly exceeded the carrying value and, therefore, did not result in an impairment.

Fair Value Measurements

Fair value of financial and non-financial assets and liabilities is defined as an
exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes
the inputs used in the methodologies of measuring fair value for assets and liabilities, is as follows:

Level 1  Quoted prices in
active markets for identical assets or liabilities

Level 2  Observable inputs other than quoted prices in active markets for identical
assets and liabilities

Level 3  No observable pricing inputs in the market

Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The Partnerships assessment of the
significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

See Note 4 for further details on the Partnerships fair value measurements.

Foreign Currency Translation

The functional currency for all of the Partnerships operations is the U.S.
dollar. However, the Partnership has transactions denominated in a currency other than the local currency, principally debt denominated in Euros and British Pounds Sterling. Gains and losses resulting from exchange-rate changes in transactions
denominated in a foreign currency are included in earnings.

Derivative Instruments

The Partnership uses derivatives from time to time to manage the Partnerships exposure to fluctuations in the cash flows of certain transactions. The Partnership measures all derivatives at fair value and
recognizes them as either assets or liabilities on its consolidated balance sheets. The Partnerships derivative instruments are valued primarily using models based on readily observable market parameters for all substantial terms of the
Partnerships derivative contracts and thus are classified as Level 2. Changes in the fair values of derivative instruments not qualifying as hedges or any ineffective portion of hedges are recognized in earnings in the current period. Changes
in the fair values of derivative instruments used effectively as fair value hedges are recognized in earnings, along with changes in the fair value of the hedged item. Changes in the fair value of the effective portions of cash flow hedges are
reported in Other comprehensive income (loss) and recognized in earnings when the hedged item is recognized in earnings.



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Employee Benefit Plans

The Partnership maintains a defined contribution plan, the Verizon Wireless Savings and Retirement Plan (the Savings and Retirement Plan), for the benefit of its employees. The Savings and Retirement Plan includes
both an employee savings and profit sharing component. Under the employee savings component, employees may contribute a percentage of eligible compensation to the Savings and Retirement Plan. Up to the first 6% of an employees eligible
compensation contributed to the Savings and Retirement Plan is matched 100% by the Partnership. Under the profit sharing component, the Partnership may elect, at the sole discretion of the Human Resources Committee of the Board of Representatives,
to contribute an additional amount in the form of a profit sharing contribution to the accounts of eligible employees (see Note 9).

Long-Term
Incentive Compensation

The Partnership measures compensation expense for all stock-based compensation awards made to employees and directors based
on estimated fair values (see Note 6).

Income Taxes

The Partnership is not a taxable entity for federal income tax purposes. Any federal taxable income or loss is included in the respective partners consolidated federal return. Certain states, however, impose
taxes at the partnership level and such taxes are the responsibility of the Partnership and are included in the Partnerships tax provision. The consolidated financial statements also include provisions for federal and state income taxes,
prepared on a stand-alone basis, for all corporate entities within the Partnership. Deferred income taxes are recorded using enacted tax law and rates for the years in which the taxes are expected to be paid or refunds received. Deferred income
taxes are provided for items when there is a temporary difference in recording such items for financial reporting and income tax reporting.

The
Partnership uses a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. The first step is recognition: the Partnership determines whether it is more likely than not that a tax position will be
sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the
Partnership presumes that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. The second step is measurement: a tax position that meets the more-likely-than-not recognition threshold
is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences
between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund
receivable, a reduction in a deferred tax asset, or an increase in a deferred tax liability.

The Partnership recognizes interest and penalties accrued
related to unrecognized tax benefits in income tax expense.

Concentrations

The Partnership relies on local and long-distance telephone companies, some of whom are related parties (see Note 11), and other companies to provide certain communication services. Although management believes
alternative telecommunications facilities could be found in a timely manner, any disruption of these services could potentially have an adverse impact on the Partnerships business, results of operations and financial condition.

No single customer receivable is large enough to present a significant financial risk to the Partnership.

Recently Adopted Accounting Standards

During the first quarter of 2013, the Partnership adopted the
accounting standard update regarding testing of intangible assets for impairment. This standard update allows companies the option to perform a qualitative



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assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. An entity is not required to calculate the fair value of an indefinite-lived
intangible asset and perform the quantitative impairment test unless the entity determines that it is more likely than not the asset is impaired. The adoption of this standard update did not have an impact on the Partnerships consolidated
financial statements.

During the first quarter of 2013, the Partnership adopted the accounting standard update regarding reclassifications out of
Accumulated other comprehensive income. This standard update requires companies to report the effect of significant reclassifications out of Accumulated other comprehensive income on the respective line items in the Partnerships consolidated
statements of income if the amount being reclassified is required to be reclassified in its entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is
required to cross-reference to other required disclosures that provide additional detail about those amounts. See Note 12 for additional details.

During the third quarter of 2013, the Partnership adopted the accounting standard update regarding the ability to use the Federal Funds Effective Swap Rate as a
U.S. benchmark interest rate for hedge accounting purposes. Previously the interest rates on direct Treasury obligations of the U.S. government and the London Interbank Offered Rate (LIBOR) were considered to be the only benchmark interest rates.
The adoption of this standard update did not have a significant impact on the Partnerships consolidated financial statements.

Recent
Accounting Standards

In July 2013, the accounting standard update relating to the presentation of an unrecognized tax benefit when a net operating
loss carryforward, a similar tax loss, or a tax credit carryforward exists was issued. The standard update provides that a liability related to an unrecognized tax benefit should be offset against same jurisdiction deferred tax assets for a net
operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. The Partnership will adopt this standard update during the first quarter
of 2014. The Partnership is currently evaluating the consolidated balance sheet impact related to this standard update.

2. Acquisitions and
Divestitures

Wireless Transaction

On
September 2, 2013, Verizon entered into a stock purchase agreement (the Stock Purchase Agreement) with Vodafone and Vodafone 4 Limited (Seller), pursuant to which Verizon agreed to acquire Vodafones indirect 45% interest in the
Partnership, (and such interest, the Vodafone Interest) for aggregate consideration of approximately $130 billion.

On February 21, 2014, pursuant
to the terms and subject to the conditions set forth in the Stock Purchase Agreement, Verizon acquired (the Wireless Transaction) from Seller all of the issued and outstanding capital stock (the Transferred Shares) of Vodafone Americas Finance 1
Inc., a subsidiary of Seller (VF1 Inc.), which indirectly through certain subsidiaries (together with VF1 Inc., the Purchased Entities) owned the Vodafone Interest. In consideration for the Transferred Shares, upon completion of the Wireless
Transaction, Verizon (i) paid approximately $58.89 billion in cash, (ii) issued approximately $60.15 billion of Verizons common stock, par value $0.10 per share (the Stock Consideration), (iii) issued senior unsecured Verizon
notes in an aggregate principal amount of $5.0 billion (the Verizon Notes), (iv) sold Verizons indirectly owned 23.1% interest in Vodafone Omnitel N.V. (Omnitel, and such interest, the Omnitel Interest), valued at $3.5 billion and
(v) provided other consideration of approximately $2.5 billion. As a result of the Wireless Transaction, Verizon issued approximately 1.27 billion shares. The total cash paid to Vodafone and the other costs of the Wireless Transaction,
including financing, legal and bank fees, were financed through the incurrence of third-party indebtedness.



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Spectrum License Transactions

Since 2012, the Partnership has entered into several strategic spectrum transactions including:



| |  |  | During the third quarter of 2012, after receiving the required regulatory approvals, the Partnership completed the following previously announced transactions in
which the Partnership acquired wireless spectrum that will be used to deploy additional 4G LTE capacity:
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Partnership acquired Advanced Wireless Services (AWS) spectrum in separate transactions with SpectrumCo, LLC (SpectrumCo) and Cox TMI Wireless, LLC for which
it paid an aggregate of $3.9 billion at the time of the closings. The Partnership has also recorded a liability of $0.4 billion related to a three-year service obligation to SpectrumCos members pursuant to commercial agreements executed
concurrently with the SpectrumCo transaction.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Partnership completed license purchase and exchange transactions with Leap Wireless, Savary Island Wireless, which is majority owned by Leap Wireless, and a
subsidiary of T-Mobile USA, Inc. (T-Mobile USA). As a result of these transactions, the Partnership received an aggregate $2.6 billion of AWS and Personal Communication Services (PCS) licenses at fair value and net cash proceeds of $0.2 billion,
transferred certain AWS licenses to T-Mobile USA and a 700 megahertz (MHz) lower A block license to Leap Wireless, and recorded an immaterial gain.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | During the first quarter of 2013, the Partnership completed license exchange transactions with T-Mobile License LLC and Cricket License Company, LLC, a
subsidiary of Leap Wireless, to exchange certain AWS licenses. These non-cash exchanges include a number of intra-market swaps that the Partnership expects will enable it to make more efficient use of the AWS band. As a result of these exchanges,
the Partnership received an aggregate $0.5 billion of AWS licenses at fair value and recorded an immaterial gain.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | During the third quarter of 2013, after receiving the required regulatory approvals, the Partnership sold 39 lower 700 MHz B block spectrum licenses to AT&T
Inc. (AT&T) in exchange for a payment of $1.9 billion and the transfer by AT&T to the Partnership of AWS (10 MHz) licenses in certain markets in the western United States. The Partnership also sold certain lower 700 MHz B block spectrum
licenses to an investment firm for a payment of $0.2 billion. As a result, the Partnership received $0.5 billion of AWS licenses at fair value and the Partnership recorded a pre-tax gain of approximately $0.4 billion in Selling, general and
administrative expense on its consolidated statement of income for the year ended December 31, 2013.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | During the fourth quarter of 2013, the Partnership entered into license exchange agreements with T-Mobile USA to exchange certain AWS and PCS licenses. These
non-cash exchanges, which are subject to approval by the FCC and other customary closing conditions, are expected to close in the first half of 2014. The exchange includes a number of swaps that the Partnership expects will result in more efficient
use of the AWS and PCS bands. As a result of these agreements, $0.9 billion of Wireless licenses are classified as held for sale and included in Prepaid expenses and other current assets on the Partnerships consolidated balance sheet at
December 31, 2013. Upon completion of the transaction, the Partnership expects to record an immaterial gain.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Subsequent to the transaction with T-Mobile USA in the fourth quarter of 2013, on January 6, 2014, the Partnership announced two agreements with T-Mobile
USA with respect to its remaining 700 MHz A block spectrum licenses. Under one agreement, the Partnership will sell certain of these licenses to T-Mobile USA in exchange for cash consideration of approximately $2.4 billion, and under the second
agreement the Partnership will exchange the remainder of these licenses for AWS and PCS spectrum licenses. These transactions are subject to the approval of the FCC as well as other customary closing conditions. These transactions are expected to
close in the middle of 2014.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Other

During
2013, the Partnership acquired various other wireless licenses and markets for cash consideration that was not significant. Additionally, the Partnership obtained control of previously unconsolidated wireless partnerships, which were previously
accounted for under the equity method and are now consolidated, which resulted in an immaterial gain. The Partnership recorded $0.2 billion of goodwill as a result of these transactions.

During 2012, the Partnership acquired various other wireless licenses and markets for cash consideration that was not significant and recorded $0.2 billion of goodwill as a result of these transactions.

3. Wireless Licenses, Goodwill and Other Intangibles, Net

Wireless Licenses

Changes in the carrying amount of
Wireless licenses are as follows:



|                                          |  |   |        |  
|----------------------------------------- |  | - | ------ | -
|(dollars in millions)                     | 
|Balance as of January 1, 2012             |  | $ | 73,097 |  
|Acquisitions (Note 2)                     |  |   | 4,544  |  
|Capitalized interest on wireless licenses |  |   | 205    |  
|Reclassifications, adjustments and other  |  |   | (204   | )
|                                          |  |   |        |  
|Balance as of December 31, 2012           |  |   | 77,642 |  
|Acquisitions (Note 2)                     |  |   | 579    |  
|Dispositions (Note 2)                     |  |   | (2,195 | )
|Capitalized interest on wireless licenses |  |   | 540    |  
|Reclassifications, adjustments and other  |  |   | (770   | )
|                                          |  |   |        |  
|Balance as of December 31, 2013           |  | $ | 75,796 |  
|                                          |  |   |        |  

Reclassifications, adjustments and other includes $0.9 billion of Wireless licenses that are classified as held for sale and
included in Prepaid expenses and other current assets on the Partnerships consolidated balance sheet at December 31, 2013 as well as the exchanges of wireless licenses in 2013 and 2012. See Note 2 for additional details.

At December 31, 2013 and 2012, approximately $7.7 billion and $7.3 billion, respectively, of wireless licenses were under development for commercial service
for which the Partnership was capitalizing interest costs.

The average remaining renewal period of the Partnerships wireless license portfolio
was 5.1 years as of December 31, 2013. See Note 1 for additional details.

Goodwill

Changes in the carrying amount of Goodwill are as follows:



|                             |  |   |        | 
|---------------------------- |  | - | ------ | 
|(dollars in millions)        | 
|Balance at January 1, 2012   |  | $ | 17,528 | 
|Acquisitions (Note 2)        |  |   | 209    | 
|                             |  |   |        | 
|Balance at December 31, 2012 |  |   | 17,737 | 
|Acquisitions (Note 2)        |  |   | 204    | 
|                             |  |   |        | 
|Balance at December 31, 2013 |  | $ | 17,941 | 
|                             |  |   |        | 



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Other Intangibles, net

Other intangibles, net are included in Other intangibles and other assets, net and consist of the following:



|                                                |  |                      |       |  |                         |   |         |           |  |   |             |  |  |                         |       |  |           |   |         |  |  |   |       | 
|----------------------------------------------- |  | -------------------- | ----- |  | ----------------------- | - | ------- | --------- |  | - | ----------- |  |  | ----------------------- | ----- |  | --------- | - | ------- |  |  | - | ----- | 
|                                                |  | At December 31, 2013 |       |  | At December 31, 2012    |  
|(dollars in millions)                           |  | GrossAmount          |       |  | AccumulatedAmortization |   |         | NetAmount |  |   | GrossAmount |  |  | AccumulatedAmortization |       |  | NetAmount |  
|Customer lists (6 to 8 years)                   |  | $                    | 2,232 |  |                         | $ | (1,803) |           |  | $ | 429         |  |  | $                       | 2,187 |  |           | $ | (1,550) |  |  | $ | 637   | 
|Non-network internal-use software(5 to 7 years) |  |                      | 1,897 |  |                         |   | (802)   |           |  |   | 1,095       |  |  |                         | 1,462 |  |           |   | (589)   |  |  |   | 873   | 
|Other (2 to 3 years)                            |  |                      | 7     |  |                         |   | (1)     |           |  |   | 6           |  |  |                         | 26    |  |           |   | (21)    |  |  |   | 5     | 
|                                                |  |                      |       | 
|Total                                           |  | $                    | 4,136 |  |                         | $ | (2,606) |           |  | $ | 1,530       |  |  | $                       | 3,675 |  |           | $ | (2,160) |  |  | $ | 1,515 | 
|                                                |  |                      |       | 

The amortization expense for other intangible assets was as follows:



|      |  |                       |       | 
|----- |  | --------------------- | ----- | 
|Years |  | (dollars in millions) |      
|2013  |  |                       | $ 476 | 
|2012  |  |                       | 465   | 
|2011  |  |                       | 513   | 

Estimated annual amortization expense for other intangible assets is as follows:



|      |  |                       |       | 
|----- |  | --------------------- | ----- | 
|Years |  | (dollars in millions) |      
|2014  |  |                       | $ 434 | 
|2015  |  |                       | 360   | 
|2016  |  |                       | 279   | 
|2017  |  |                       | 192   | 
|2018  |  |                       | 146   | 

4. Fair Value Measurements and Financial Instruments

The following table presents the balances of assets measured at fair value on a recurring basis as of December 31, 2013:



|                                                        |  |         |   |  |         |   |     |         |  |   |       |  |  |   |     | 
|------------------------------------------------------- |  | ------- | - |  | ------- | - | --- | ------- |  | - | ----- |  |  | - | --- | 
|(dollars in millions)                                   |  | Level 1 |   |  | Level 2 |   |     | Level 3 |  |   | Total | 
|Assets:                                                 |  |         |   |  |         |   |     |         |  |   |       |  |  |   |     | 
|Other intangibles and other assets, net:                |  |         |   |  |         |   |     |         |  |   |       |  |  |   |     | 
|Derivative contractsCross currency swaps (Non-current) |  | $       |  |  |         | $ | 166 |         |  | $ |      |  |  | $ | 166 | 

Derivative contracts are valued using models based on readily observable market parameters for all substantial terms of the
Partnerships derivative contracts and thus are classified within Level 2. The Partnership uses mid-market pricing for fair value measurements of its derivative instruments. The Partnerships derivative instruments are recorded on a gross
basis.



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##### Table of Contents

The Partnership recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period.
There were no transfers within the fair value hierarchy during 2013.

Fair Value of Short-term and Long-term Debt

The fair value of the Partnerships debt is determined using various methods, including quoted market prices for identical terms and maturities, which is a
Level 1 measurement, as well as quoted prices for similar terms and maturities in inactive markets and future cash flows discounted at current rates, which are Level 2 measurements. The fair value of the Partnerships short-term and long-term
debt, excluding capital leases, was as follows:



|                                                    |  |                      |       |  |                      |   |       |                |  |   |            |  |  |   |        | 
|--------------------------------------------------- |  | -------------------- | ----- |  | -------------------- | - | ----- | -------------- |  | - | ---------- |  |  | - | ------ | 
|                                                    |  | At December 31, 2013 |       |  | At December 31, 2012 |  
|(dollars in millions)                               |  | CarryingValue        |       |  | Fair
Value           |   |       | Carrying
Value |  |   | Fair
Value | 
|Short- and long-term debt, excluding capital leases |  | $                    | 5,211 |  |                      | $ | 6,386 |                |  | $ | 10,105     |  |  | $ | 12,235 | 

Derivative Instruments

The
Partnership has entered into derivative transactions to manage its exposure to fluctuations in foreign currency exchange rates and interest rates. The Partnership employs risk management strategies which may include the use of a variety of
derivatives including cross currency swaps agreements. The Partnership does not hold derivatives for trading purposes.

Cross Currency Swaps

The Partnership previously entered into cross currency swaps designated as cash flow hedges to exchange approximately $1.6 billion of British
Pound Sterling and Euro-denominated debt into U.S. dollars and to fix its future interest and principal payments in U.S. dollars, as well as to mitigate the impact of foreign currency transaction gains or losses. A portion of the gains and
losses recognized in Other comprehensive income (loss) was reclassified to Other income, net to offset the related pretax foreign currency transaction gain or loss on the underlying debt obligations. The fair value of the outstanding swaps was not
material at December 31, 2013 or December 31, 2012. During 2013 and 2012, the gains with respect to these swaps were not material.

Concentrations of Credit Risk

Financial instruments that
subject us to concentrations of credit risk consist primarily of temporary cash investments, trade receivables and derivative contracts. The Partnerships policy is to deposit its temporary cash investments with major financial institutions.
Counterparties to the Partnerships derivative contracts are also major financial institutions. The financial institutions have all been accorded high ratings by primary rating agencies. The Partnership limits the dollar amount of contracts
entered into with any one financial institution and monitors its counterparties credit ratings. The Partnership generally does not give or receive collateral on swap agreements due to its credit rating and those of its counterparties. While
the Partnership may be exposed to credit losses due to the nonperformance of its counterparties, the Partnership considers the risk remote and does not expect the settlement of these transactions to have a material effect on its results of
operations or financial condition.



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##### Table of Contents

5. Debt

Changes to debt during 2013 are as follows:



|                                                                 |  |                              |        |   |               |   |        |       |  |        
|---------------------------------------------------------------- |  | ---------------------------- | ------ | - | ------------- | - | ------ | ----- |  | -------
|(dollars in millions)                                            |  | Debt Maturingwithin One Year |        |   | Long-termDebt |   |        | Total
|Balance at January 1, 2013                                       |  | $                            | 1,448  |   |               | $ | 8,665  |       |  | $10,113
|Repayments of long-term borrowings and capital lease obligations |  |                              | (1,460 | ) |               |   | (3,500 | )     |  | (4,960)
|Other                                                            |  |                              | 53     |   |               |   | 66     |       |  | 119    
|                                                                 |  |                              |       
|Balance at December 31, 2013                                     |  | $                            | 41     |   |               | $ | 5,231  |       |  | $5,272 
|                                                                 |  |                              |       

Outstanding long-term debt obligations are as follows:



|                                                                                         |  |                  |  |             |  |                       |       |   |      |   |        |  
|---------------------------------------------------------------------------------------- |  | ---------------- |  | ----------- |  | --------------------- | ----- | - | ---- | - | ------ | -
|                                                                                         |  |                  |  |             |  | (dollars in millions) |      
|At December 31,                                                                          |  | Interest Rates % |  | Maturities  |  | 2013                  |       |   | 2012 |  
|Notes payable                                                                            |  | 8.5 - 8.88       |  | 2015 - 2018 |  | $                     | 3,931 |   |      | $ | 8,635  |  
|Alltel assumed notes                                                                     |  | 6.80 - 7.88      |  | 2016 - 2032 |  |                       | 1,300 |   |      |   | 1,500  |  
|Capital lease obligations (average rate of 4.4% and 1.2% in 2013 and 2012, respectively) |  |                  |  |             |  |                       | 61    |   |      |   | 8      |  
|Unamortized discount, net of premium                                                     |  |                  |  |             |  |                       | (20   | ) |      |   | (30    | )
|Total long-term debt, including current maturities                                       |  |                  |  |             |  |                       | 5,272 |   |      |   | 10,113 |  
|Less long-term debt maturing within one year                                             |  |                  |  |             |  |                       | 41    |   |      |   | 1,448  |  
|Total long-term debt                                                                     |  |                  |  |             |  | $                     | 5,231 |   |      | $ | 8,665  |  

Verizon Wireless Capital LLC, a wholly-owned subsidiary of the Partnership, is a limited liability company formed under the laws of
Delaware on December 7, 2001 as a special purpose finance subsidiary to facilitate the offering of debt securities of the Partnership by acting as co-issuer. Other than the financing activities as a co-issuer of the Partnerships
indebtedness, Verizon Wireless Capital LLC has no material assets, operations or revenues. The Partnership is jointly and severally liable with Verizon Wireless Capital LLC for co-issued notes.

Discounts, premiums, and capitalized debt issuance costs are amortized using the effective interest method.

2013

During November 2013, $1.25 billion of 7.375% Notes
and $0.2 billion of 6.50% Notes matured and were repaid. Also during November 2013, the Partnership redeemed $3.5 billion of 5.55% Notes, due February 1, 2014 at a redemption price of 101% of the principal amount of the notes. Any accrued and
unpaid interest was paid to the date of redemption.

2012

During February 2012, $0.8 billion of 5.25% Notes matured and were repaid. During July 2012, $0.8 billion of 7.0% Notes matured and were repaid.

Term Notes Payable to Affiliate

Under the terms of a fixed rate promissory note with Verizon Financial
Services LLC (VFSL), a wholly-owned subsidiary of Verizon, the Partnership may borrow, repay and re-borrow up to a maximum principal amount of $0.8 billion. During July 2013, the maturity date of this note was extended to August 1, 2016 and the
interest rate decreased from 5.8% to 4.5% per annum. As of December 31, 2013, outstanding borrowings under this note, included within Other current liabilities on the consolidated balance sheet, were immaterial.



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##### Table of Contents

Debt Covenants

As of December 31, 2013, the Partnership is in compliance with all of its debt covenants.

Maturities of Long-Term Debt

Maturities of long-term debt outstanding at December 31, 2013 are as
follows:



|           |  |                       |           | 
|---------- |  | --------------------- | --------- | 
|Years      |  | (dollars in millions) |          
|2014       |  |                       | $      41 | 
|2015       |  |                       | 699       | 
|2016       |  |                       | 299       | 
|2017       |  |                       | 7         | 
|2018       |  |                       | 3,226     | 
|Thereafter |  |                       | 1,000     | 

6. Long-Term Incentive Plan

Verizon Wireless Long-Term Incentive Plan (Wireless Plan)

The Wireless Plan provides compensation opportunities to eligible employees and other participating affiliates of the Partnership. The plan provides rewards that
are tied to the long-term performance of the Partnership. Under the Wireless Plan, Value Appreciation Rights (VARs) were granted to eligible employees. As of December 31, 2013, all VARs were fully vested. The Partnership has not granted new
VARs since 2004.

VARs reflect the change in the value of the Partnership, as defined in the Wireless Plan. Similar to stock options, the valuation is
determined using a Black-Scholes model. Once VARs become vested, employees can exercise their VARs and receive a payment that is equal to the difference between the VAR price on the date of grant and the VAR price on the date of exercise, less
applicable taxes. All outstanding VARs are fully exercisable and have a maximum term of 10 years. All VARs were granted at a price equal to the estimated fair value of the Partnership, as defined in the Wireless Plan, at the date of the grant.

The Partnership employs the income approach, a standard valuation technique, to arrive at the fair value of the Partnership on a quarterly basis using
publicly available information. The income approach uses future net cash flows discounted at market rates of return to arrive at an estimate of fair value, as defined in the plan.

The following table summarizes the assumptions used in the Black-Scholes model for the year ended December 31, 2013:



|                         |  |                  
|------------------------ |  | -----------------
|                         |  | 2013End of Period
|Risk-free rate           |  | 0.11%            
|Expected term (in years) |  | 0.12             
|Expected volatility      |  | 43.27%           

The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the measurement date. Expected volatility was
based on a blend of the historical and implied volatility of publicly traded peer companies for a period equal to the VARs expected life ending on the measurement date.



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##### Table of Contents

For the years ended December 31, 2013, 2012 and 2011, the intrinsic value of VARs exercised during the period was
$0.1 billion, respectively.

Cash paid to settle VARs for the years ended December 31, 2013, 2012 and 2011 was $0.1 billion, respectively.

Awards outstanding at December 31, 2013, 2012 and 2011 under the Wireless Plan are summarized as follows:



|                               |  |         |        |   |                  |   |       |         |  |  |        | 
|------------------------------ |  | ------- | ------ | - | ---------------- | - | ----- | ------- |  |  | ------ | 
|                               |  |         |        |   | Weighted-Average |   |       |         | 
|                               |  |         |        |   | Exercise Price   |   |       | Vested  | 
|(shares in thousands)          |  | VARs(a) |        |   | of VARs(a)       |   |       | VARs(a) | 
|                               | 
|Outstanding, January 1, 2011   |  |         | 11,569 |   |                  | $ | 13.11 |         |  |  | 11,569 | 
|Exercised                      |  |         | (3,303 | ) |                  |   | 14.87 |         |  |  |        | 
|Cancelled/Forfeited            |  |         | (52    | ) |                  |   | 14.74 |         |  |  |        | 
|                               |  |         |        |   |                  |   |       |         |  |  |        | 
|Outstanding, December 31, 2011 |  |         | 8,214  |   |                  |   | 12.39 |         |  |  | 8,214  | 
|Exercised                      |  |         | (3,427 | ) |                  |   | 10.30 |         |  |  |        | 
|Cancelled/Forfeited            |  |         | (21    | ) |                  |   | 11.10 |         |  |  |        | 
|                               |  |         |        |   |                  |   |       |         |  |  |        | 
|Outstanding, December 31, 2012 |  |         | 4,766  |   |                  |   | 13.89 |         |  |  | 4,766  | 
|Exercised                      |  |         | (1,916 | ) |                  |   | 13.89 |         |  |  |        | 
|Cancelled/Forfeited            |  |         | (3     | ) |                  |   | 13.89 |         |  |  |        | 
|                               |  |         |        |   |                  |   |       |         |  |  |        | 
|Outstanding, December 31, 2013 |  |         | 2,847  |   |                  | $ | 13.89 |         |  |  | 2,847  | 
|                               |  |         |        |   |                  |   |       |         |  |  |        | 



|(a) | The weighted average exercise price is presented in dollars; VARs are presented in units. At December 31, 2013 all outstanding VARs had an exercise price of $13.89 and
substantially all of the VARs expire in March 2014.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31, 2013, the aggregate intrinsic value of VARs outstanding and
vested was $0.1 billion.

Verizon Communications Inc. Long-Term Incentive Plan

The Verizon Communications Inc. Long-Term Incentive Plan (the Verizon Plan) permits the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares,
performance stock units and other awards to Partnership employees. The maximum number of shares available for awards from the Verizon Plan is 119.6 million shares.

Restricted Stock Units

The Verizon Plan provides for grants of Restricted Stock Units (RSUs) that generally
vest at the end of the third year after the grant. The RSUs are classified as equity awards because the RSUs will be paid in Verizon common stock upon vesting. The RSU equity awards are measured using the grant date fair value of Verizon common
stock and are not remeasured at the end of each reporting period. Dividend equivalent units are also paid to participants at the time the RSU award is paid, and in the same proportion as the RSU award.

The Partnership had approximately 4.1 million and 4.7 million RSUs outstanding under the Verizon Plan as of December 31, 2013 and 2012,
respectively.

Performance Stock Units

The
Verizon Plan also provides for grants of Performance Stock Units (PSUs) that generally vest at the end of the third year after the grant. As defined by the Verizon Plan, the Human Resources Committee of the Board of Directors of Verizon determines
the number of PSUs a participant earns based on the extent to which the corresponding performance goals have been achieved over the three-year performance cycle. The PSUs are classified as liability awards because the PSU awards are paid in cash
upon vesting. The PSU award liability is measured at its fair value at the end of each reporting period and, therefore, will fluctuate based on the price of



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##### Table of Contents

Verizon common stock as well as performance relative to the targets. Dividend equivalent units are also paid to
participants at the time that the PSU award is determined and paid, and in the same proportion as the PSU award.

The Partnership had approximately
6.0 million and 7.0 million PSUs outstanding under the Verizon Plans as of December 31, 2013 and 2012, respectively.

As of
December 31, 2013, unrecognized compensation expense related to the unvested portion of the Partnerships RSUs and PSUs was approximately $0.1 billion and is expected to be recognized over a weighted-average period of approximately two
years.

Stock-Based Compensation Expense

For
each of the years ended December 31, 2013, 2012 and 2011, the Partnership recognized compensation expense for stock based compensation related to VARs, RSUs and PSUs of $0.2 billion, $0.3 billion and $0.2 billion, respectively.

7. Income Taxes

Provision for Income Taxes

The provision for income taxes consists of the following:



|                           |  |      |     |  |                       |   |     |      |  |   |     |  
|-------------------------- |  | ---- | --- |  | --------------------- | - | --- | ---- |  | - | --- | -
|                           |  |      |     |  | (dollars in millions) |  
|Years Ended December 31,   |  | 2013 |     |  | 2012                  |   |     | 2011 | 
|                           | 
|Current tax provision:     |  |      |     |  |                       |   |     |      |  |   |     |  
|Federal                    |  | $    | 47  |  |                       | $ | 106 |      |  | $ | 476 |  
|State and local            |  |      | 31  |  |                       |   | (28 | )    |  |   | 103 |  
|                           |  |      |     | 
|                           |  |      | 78  |  |                       |   | 78  |      |  |   | 579 |  
|                           |  |      |    
|Deferred tax provision:    |  |      |     |  |                       |   |     |      |  |   |     |  
|Federal                    |  |      | 60  |  |                       |   | 35  |      |  |   | 369 |  
|State and local            |  |      | 12  |  |                       |   | 88  |      |  |   | (1  | )
|                           |  |      |     | 
|                           |  |      | 72  |  |                       |   | 123 |      |  |   | 368 |  
|                           |  |      |     | 
|Provision for income taxes |  | $    | 150 |  |                       | $ | 201 |      |  | $ | 947 |  
|                           |  |      |     | 

A reconciliation of the income tax provision computed at the statutory tax rate to the Partnerships effective tax rate is as
follows:



|                                                                |  |                       |        |   |      |   |        |      |  |   |         | 
|--------------------------------------------------------------- |  | --------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------- | 
|                                                                |  | (dollars in millions) |       
|Years Ended December 31,                                        |  | 2013                  |        |   | 2012 |   |        | 2011 | 
|                                                                | 
|Income tax provision at the statutory rate                      |  | $                     | 9,270  |   |      | $ | 7,481  |      |  | $ | 6,264   | 
|State and local income taxes, net of U.S. federal benefit       |  |                       | 45     |   |      |   | 47     |      |  |   | 57      | 
|Other                                                           |  |                       | (28    | ) |      |   | 3      |      |  |   | (7)     | 
|Partnership income not subject to federal or state income taxes |  |                       | (9,137 | ) |      |   | (7,330 | )    |  |   | (5,367) | 
|                                                                |  |                       |        |  
|Provision for income tax                                        |  | $                     | 150    |   |      | $ | 201    |      |  | $ | 947     | 
|                                                                |  |                       |        |  



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##### Table of Contents

Deferred taxes arise because of differences in the book and tax bases of certain assets and liabilities. Significant
components of the Partnerships deferred taxes are shown in the following table:



|                                       |  |                       |        |   |      |   |        | 
|-------------------------------------- |  | --------------------- | ------ | - | ---- | - | ------ | 
|                                       |  | (dollars in millions) |       
|At December 31,                        |  | 2013                  |        |   | 2012 |  
|                                       | 
|Deferred tax assets:                   |  |                       |        |   |      |   |        | 
|Net operating loss carryforward        |  | $                     | 165    |   |      | $ | 122    | 
|Valuation allowance                    |  |                       | (89    | ) |      |   | (55)   | 
|Other                                  |  |                       | 207    |   |      |   | 134    | 
|                                       |  |                       |        |   |      |   |        | 
|                                       |  |                       |        |  
|Total deferred tax assets              |  |                       | 283    |   |      |   | 201    | 
|                                       |  |                       |        |  
|                                       |  |                       |        |   |      |   |        | 
|Deferred tax liabilities:              |  |                       |        |   |      |   |        | 
|Intangible assets                      |  |                       | 9,457  |   |      |   | 9,355  | 
|Plant, property and equipment          |  |                       | 1,407  |   |      |   | 1,445  | 
|Other                                  |  |                       | 354    |   |      |   | 264    | 
|                                       |  |                       |        |   |      |   |        | 
|                                       |  |                       |        |  
|Total deferred tax liabilities         |  |                       | 11,218 |   |      |   | 11,064 | 
|                                       |  |                       |        |  
|                                       |  |                       |        |   |      |   |        | 
|Net deferred tax asset-current(a)      |  |                       | 66     |   |      |   | 76     | 
|                                       |  |                       |        |  
|Net deferred tax liability-non-current |  | $                     | 11,001 |   |      | $ | 10,939 | 
|                                       |  |                       |        |  



|(a) | Included in prepaid expenses and other current assets in the accompanying consolidated balance sheets.
|--- | ------------------------------------------------------------------------------------------------------

At December 31, 2013, the Partnership had state net operating loss carryforwards of $3.6 billion. These net operating loss carryforwards expire at various dates principally from December 31, 2018 through
December 31, 2033.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows:



|                                                             |  |                       |     |   |      |   |     |      |  |   |       | 
|------------------------------------------------------------ |  | --------------------- | --- | - | ---- | - | --- | ---- |  | - | ----- | 
|                                                             |  | (dollars in millions) |    
|                                                             |  | 2013                  |     |   | 2012 |   |     | 2011 | 
|                                                             | 
|Balance as of January 1                                      |  | $                     | 306 |   |      | $ | 267 |      |  | $ | 393   | 
|Additions based on tax positions related to the current year |  |                       | 16  |   |      |   | 13  |      |  |   | 10    | 
|Additions for tax positions of prior years                   |  |                       | 9   |   |      |   | 72  |      |  |   | 53    | 
|Reductions for tax positions of prior years                  |  |                       | (48 | ) |      |   | (49 | )    |  |   | (187) | 
|Reductions due to lapse of applicable statute of limitations |  |                       | (73 | ) |      |   |    |      |  |   | (2)   | 
|Settlements                                                  |  |                       |    |   |      |   | 3   |      |  |   |      | 
|                                                             |  |                       |     |  
|Balance as of December 31                                    |  | $                     | 210 |   |      | $ | 306 |      |  | $ | 267   | 
|                                                             |  |                       |     |  

Included in the total unrecognized tax benefits balance is $0.1 billion, $0.2 billion and $0.2 billion as of December 31,
2013, 2012 and 2011, respectively, that, if recognized, would favorably affect the effective tax rate. The remaining unrecognized tax benefits relate to temporary items that would not affect the effective tax rate.

The after-tax accrual for the payment of interest and penalties in the balance sheet relating to the unrecognized tax benefits reflected above was not significant
for the years ended December 31, 2013, 2012 and 2011.



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##### Table of Contents

The net after-tax benefits (expenses) related to interest in the provision for income taxes were not significant for
the years ended December 31, 2013, 2012 and 2011.

The Partnership or its subsidiaries file income tax returns in the U.S. federal jurisdiction,
and various state and local jurisdictions. The Partnership is generally no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2003. The Internal Revenue Service (IRS) is currently examining
some of the Partnerships subsidiaries. As a result of the anticipated resolution of various income tax matters within the next twelve months, the Partnership believes that it is reasonably possible that the unrecognized tax benefits may be
adjusted. An estimate of the amount of the change attributable to any such settlement cannot be made until issues are further developed or examinations close.

8. Leases

As Lessee

The Partnership has entered into operating leases for facilities and equipment used in its operations. Lease contracts contain renewal options that include rent expense adjustments based on the Consumer Price Index
as well as annual and end-of-lease term adjustments. Rent expense is recorded on a straight-line basis over the noncancelable lease term which is generally determined to be the initial lease term. Total rent expense under operating leases amounted
to $2.0 billion in 2013, $1.8 billion in 2012 and $1.7 billion in 2011.

The aggregate future minimum rental commitments under noncancelable operating
leases, excluding renewal options that are not reasonably assured for the periods shown at December 31, 2013, are as follows:



|                                 |  |                 |       | 
|-------------------------------- |  | --------------- | ----- | 
|(dollars in millions) Years      |  | OperatingLeases |      
|2014                             |  | $               | 1,689 | 
|2015                             |  |                 | 1,518 | 
|2016                             |  |                 | 1,290 | 
|2017                             |  |                 | 1,043 | 
|2018                             |  |                 | 822   | 
|Thereafter                       |  |                 | 2,974 | 
|                                 |  |                 |       | 
|Total minimum rental commitments |  | $               | 9,336 | 
|                                 |  |                 |       | 

9. Supplementary Financial Information

Supplementary Balance Sheet Information



|                                      |  |                 |       |   |      |   |       |  
|------------------------------------- |  | --------------- | ----- | - | ---- | - | ----- | -
|                                      |  | At December 31, |      
|(dollars in millions)                 |  | 2013            |       |   | 2012 |  
|Receivables, Net:                     |  |                 |       |   |      |   |       |  
|Accounts receivable                   |  | $               | 6,228 |   |      | $ | 5,848 |  
|Other receivables                     |  |                 | 1,067 |   |      |   | 864   |  
|Unbilled revenue                      |  |                 | 308   |   |      |   | 295   |  
|                                      |  |                 |       |  
|                                      |  |                 | 7,603 |   |      |   | 7,007 |  
|                                      |  |                
|Less: allowance for doubtful accounts |  |                 | (399  | ) |      |   | (350  | )
|                                      |  |                 |       |  
|Receivables, net                      |  | $               | 7,204 |   |      | $ | 6,657 |  
|                                      |  |                 |       |  



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##### Table of Contents

|                                      |  |               |  |                       |         |   |      |   |         |  
|------------------------------------- |  | ------------- |  | --------------------- | ------- | - | ---- | - | ------- | -
|                                      |  |               |  | (dollars in millions) |        
|At December 31,                       |  | Lives (years) |  | 2013                  |         |   | 2012 |  
|                                      | 
|Plant, Property and Equipment, Net:   |  |               |  |                       |         |   |      |   |         |  
|Land                                  |  |              |  | $                     | 244     |   |      | $ | 244     |  
|Buildings                             |  | 20-45         |  |                       | 11,742  |   |      |   | 10,855  |  
|Wireless plant and equipment          |  | 3-15          |  |                       | 60,550  |   |      |   | 54,867  |  
|Furniture, fixtures and equipment     |  | 3-10          |  |                       | 3,700   |   |      |   | 3,603   |  
|Leasehold improvements                |  | 5             |  |                       | 4,728   |   |      |   | 4,310   |  
|Construction-in-progress(b)           |  |              |  |                       | 2,283   |   |      |   | 2,572   |  
|                                      |  |               |  |                       |         |  
|                                      |  |               |  |                       | 83,247  |   |      |   | 76,451  |  
|Less: accumulated depreciation(c)     |  |               |  |                       | (47,315 | ) |      |   | (41,905 | )
|                                      |  |               |  |                       |         |  
|Plant, property and equipment, net(a) |  |               |  | $                     | 35,932  |   |      | $ | 34,546  |  
|                                      |  |               |  |                       |         |  



|(a) | Interest costs of $0.1 billion and network engineering costs of $0.5 billion and $0.4 billion were capitalized during the years ended December 31, 2013 and 2012,
respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Construction-in-progress includes $0.9 billion and $1.2 billion of accrued but unpaid capital expenditures as of December 31, 2013 and 2012, respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



|(c) | Depreciation of plant, property and equipment was $7.7 billion, $7.5 billion and $7.4 billion, for the years ended December 31, 2013, 2012 and 2011, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                        |  |                       |       |  |      |   |       | 
|------------------------------------------------------- |  | --------------------- | ----- |  | ---- | - | ----- | 
|                                                        |  | (dollars in millions) |      
|At December 31,                                         |  | 2013                  |       |  | 2012 |  
|                                                        | 
|Accounts Payable and Accrued Liabilities:               |  |                       |       |  |      |   |       | 
|Accounts payable, accrued interest and accrued expenses |  | $                     | 4,176 |  |      | $ | 4,538 | 
|Accrued payroll and related employee benefits           |  |                       | 1,347 |  |      |   | 1,385 | 
|Taxes payable                                           |  |                       | 651   |  |      |   | 687   | 
|Accrued commissions                                     |  |                       | 838   |  |      |   | 924   | 
|                                                        |  |                       |       | 
|Accounts payable and accrued liabilities                |  | $                     | 7,012 |  |      | $ | 7,534 | 
|                                                        |  |                       |       | 

Supplementary Statements of Income Information



|                                  |  |                       |       |  |      |   |       |      |  |   |       | 
|--------------------------------- |  | --------------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                                  |  | (dollars in millions) |      
|For the Years Ended December 31,  |  | 2013                  |       |  | 2012 |   |       | 2011 | 
|Advertising and Promotional Cost: |  | $                     | 1,856 |  |      | $ | 1,826 |      |  | $ | 1,925 | 
|                                  |  |                       |      
|Employee Benefit Plans:           |  |                       |       |  |      |   |       |      |  |   |       | 
|Matching contribution expense     |  | $                     | 251   |  |      | $ | 247   |      |  | $ | 231   | 
|Profit sharing expense            |  |                       | 152   |  |      |   | 60    |      |  |   | 82    | 
|                                  |  |                       |      
|Interest Expense, Net:            |  |                       |       |  |      |   |       |      |  |   |       | 
|Interest expense                  |  | $                     | (720) |  |      | $ | (776) |      |  | $ | (954) | 
|Capitalized interest              |  |                       | 655   |  |      |   | 334   |      |  |   | 344   | 
|                                  |  |                       |       | 
|Interest expense, net             |  | $                     | (65)  |  |      | $ | (442) |      |  | $ | (610) | 
|                                  |  |                       |       | 



B-25



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##### Table of Contents

Supplementary Cash Flows Information



|                                          |  |                       |     |  |      |   |     |      |  |   |     | 
|----------------------------------------- |  | --------------------- | --- |  | ---- | - | --- | ---- |  | - | --- | 
|                                          |  | (dollars in millions) |    
|For the Years Ended December 31,          |  | 2013                  |     |  | 2012 |   |     | 2011 | 
|Net cash paid for income taxes            |  | $                     | 179 |  |      | $ | 245 |      |  | $ | 505 | 
|Interest paid, net of amounts capitalized |  |                       | 130 |  |      |   | 464 |      |  |   | 610 | 

10. Noncontrolling Interests

Noncontrolling interests in equity of subsidiaries were as follows:



|                                |  |                       |       |  |      |   |       | 
|------------------------------- |  | --------------------- | ----- |  | ---- | - | ----- | 
|                                |  | (dollars in millions) |      
|At December 31,                 |  | 2013                  |       |  | 2012 |  
|Verizon Wireless of the East LP |  | $                     | 1,179 |  |      | $ | 1,179 | 
|Cellular partnerships - various |  |                       | 1,100 |  |      |   | 865   | 
|                                |  |                       |       | 
|Noncontrolling interests        |  | $                     | 2,279 |  |      | $ | 2,044 | 
|                                |  |                       |       | 

Verizon Wireless of the East LP

Verizon Wireless of the East LP is a limited partnership formed in 2002 and is controlled and managed by the Partnership. Verizon held the noncontrolling interest of Verizon Wireless of the East LP at
December 31, 2013 and 2012. As per the agreement between the Partnership and Verizon, Verizon has not been allocated any of the profits of Verizon Wireless of the East LP.

11. Other Transactions with Affiliates

In addition to transactions with Affiliates in Note 5, other
significant transactions with Affiliates are summarized as follows:



|                                                          |  |                       |       |  |      |   |       |      |  |   |       | 
|--------------------------------------------------------- |  | --------------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                                                          |  | (dollars in millions) |      
|For the Years Ended December 31,                          |  | 2013                  |       |  | 2012 |   |       | 2011 | 
|Revenue related to transactions with affiliated companies |  | $                     | 102   |  |      | $ | 83    |      |  | $ | 87    | 
|Cost of
service(a)                                        |  |                       | 1,378 |  |      |   | 1,365 |      |  |   | 1,396 | 
|Selling, general and administrative expenses(b)           |  |                       | 917   |  |      |   | 584   |      |  |   | 312   | 



|(a) | Affiliate cost of service primarily represents charges for long distance, direct telecommunication and roaming services provided by affiliates.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Affiliate selling, general and administrative expenses include charges from affiliates for services provided, including insurance, leases, office telecommunications, and billing
and lockbox services, as well as services billed from Verizon Corporate Services, Verizon Sourcing LLC, Verizon Corporate Resources Group and Verizon Data Solutions for functions performed under service level agreements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Other Transactions with Affiliates

Accounts payable and accrued liabilities as of December 31, 2013 and 2012 include $68 million and $92 million, respectively, due to affiliates primarily comprised of costs associated with services provided in
the normal course of business and roaming services.

Distributions to Partners

In May 2013, the Board of Representatives of the Partnership declared a distribution to its owners, which was paid in the second quarter of 2013 in proportion to their partnership interests on the payment date, in
the aggregate amount of $7.0 billion. As a result, Vodafone received a cash payment of $3.15 billion and the remainder of the distribution was received by Verizon.

In November 2012, the Board of Representatives of the Partnership declared a distribution to its owners, which was paid in the fourth quarter of 2012 in proportion to their partnership interests on the payment
date, in the aggregate amount of $8.5 billion. As a result, Vodafone received a cash payment of $3.8 billion and the remainder of the distribution was received by Verizon.

In July 2011, the Board of Representatives of the Partnership declared a distribution to its owners, which was paid in the first quarter of 2012 in proportion to their partnership interests on the payment date, in
the aggregate amount of $10 billion. As a result, Vodafone received a cash payment of $4.5 billion and the remainder of the distribution was received by Verizon.

As required under the Partnership Agreement, the Partnership paid aggregate tax distributions of $10.0 billion, $7.2 billion and $3.1 billion to its Partners during the years ended December 31, 2013, 2012 and
2011, respectively. In addition to quarterly tax distributions to its Partners, its Partners have directed the Partnership to make supplemental tax distributions to them, subject to the Partnerships board of representatives right to
reconsider these distributions based on significant changes in overall business and financial conditions. During the year ended December 31, 2013, the Partnership made supplemental tax distributions in the aggregate amount of $0.9 billion,
which is included in the total distribution paid above.

During February 2014, the Partnership paid aggregate tax distributions of $1.8 billion to its
Partners.

12. Accumulated Other Comprehensive Income

Comprehensive income consists of net income and other gains and losses affecting Partners capital that, under U.S. GAAP, are excluded from net income.

Accumulated Other Comprehensive Income

The changes in the balances of Accumulated other comprehensive income
by component are as follows:



|                                   |  |                                   |     |   |                                                 |   |   |       |  |  |     |  
|---------------------------------- |  | --------------------------------- | --- | - | ----------------------------------------------- | - | - | ----- |  |  | --- | -
|(dollars in millions)              |  | Unrealized losson cash flowhedges |     |   | Defined benefitpension and
postretirement
plans |   |   | Total | 
|Balance at January 1, 2013         |  | $                                 | 80  |   |                                                 | $ | 4 |       |  |  | 84  |  
|Other comprehensive income         |  |                                   | 13  |   |                                                 |   |  |       |  |  | 13  |  
|Amounts reclassified to net income |  |                                   | (45 | ) |                                                 |   |  |       |  |  | (45 | )
|                                   |  |                                   |     |  
|Net other comprehensive loss       |  |                                   | (32 | ) |                                                 |   |  |       |  |  | (32 | )
|                                   |  |                                   |     |  
|Balance at December 31, 2013       |  | $                                 | 48  |   |                                                 | $ | 4 |       |  |  | 52  |  
|                                   |  |                                   |     |  



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##### Table of Contents

The amounts presented above in net other comprehensive loss are net of taxes and noncontrolling interests, which are
not significant. For the year ended December 31, 2013, all other amounts reclassified to net income in the table above are included in Other income, net on the Partnerships consolidated statements of income.

13. Commitments and Contingencies

Bell Atlantic, now known
as Verizon Communications, and Vodafone entered into an alliance agreement to create a wireless business composed of both companies U.S. wireless assets, as amended, which the Partnership refers to as the Alliance Agreement. The
Alliance Agreement contains a provision, subject to specified limitations, that requires Verizon and Vodafone to indemnify the Partnership for certain contingencies, excluding PrimeCo Personal Communications L.P. contingencies, arising prior to the
formation of the Partnership.

Where it is determined, in consultation with counsel based on litigation and settlement risks, that a loss is probable
and estimable in a given matter, the Partnership establishes an accrual. In none of the currently pending matters is the amount of accrual material. An estimate of the reasonably possible loss or range of loss in excess of the amounts already
accrued cannot be made at this time due to various factors typical in contested proceedings, including (1) uncertain damage theories and demands; (2) a less than complete factual record; (3) uncertainty concerning legal theories and
their resolution by courts or regulators; and (4) the unpredictable nature of the opposing party and its demands. The Partnership continuously monitors these proceedings as they develop and adjusts any accrual or disclosure as needed. The
Partnership does not expect that the ultimate resolution of any pending regulatory or legal matter in future periods will have a material effect on the Partnerships financial condition, but it could have a material effect on the
Partnerships results of operations for a given reporting period.

Verizon has entered into reimbursement agreements with third-party lenders that
permit these lenders to issue letters of credit to third parties on behalf of the Partnership and the Partnerships subsidiaries.

The Partnership
has several commitments primarily to purchase handsets and peripherals, equipment, software, programming and network services, and marketing activities, which will be used or sold in the ordinary course of business, from a variety of suppliers
totaling $15.6 billion. Of this total amount, $13.6 billion is attributable to 2014, $1.0 billion is attributable to 2015 through 2016, $0.5 billion is attributable to 2017 through 2018 and $0.5 billion is attributable to years thereafter. These
amounts do not represent the Partnerships entire anticipated purchases in the future, but represent only those items that are the subject of contractual obligations. The Partnerships commitments are generally determined based on the
noncancelable quantities or termination amounts. Purchases against the Partnerships commitments for 2013 totaled approximately $9.8 billion. The Partnership also purchases products and services as needed with no firm commitment.



B-28



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##### Table of Contents

20F Disclosure  Description of American Depositary Shares (Item 12D)

Fees Payable By ADR Holders

The Bank of New York Mellon,
the depositary, collects its fees for delivery and surrender of ADRs directly from investors depositing shares or surrendering ADRs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making
distributions to investors, including in connection with the payment of dividends, by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may generally refuse to provide
fee-attracting services until its fees for those services are paid.



|                                                                                                                                                                                           |  |  |  |                                                                                                                                                                                                                                 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Persons depositing or withdrawingshares must pay:                                                                                                                                          |  |  |  | For:                                                                                                                                                                                                                            
|$5.00 (or less) per 100 ADRs (or portion of 100 ADRs)                                                                                                                                      |  |  |  |          Issuance of ADRs, including issuances
resulting from a distribution of shares or rights or other property           Cancellation of ADRs for the purpose of withdrawal, including if the deposit agreement terminates
|                                                                                                                                                                                           |  | 
|$.02 (or less) per ADR (or portion thereof). The current per ADR fee to be charged for an interim dividend is $0.01 per ADR and for a final dividend is $0.02 per
ADR.                     |  |  |  |          Any cash distribution to ADR registered holders                                                                                                                                                                       
|                                                                                                                                                                                           |  | 
|A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADRs                                  |  |  |  |          Distribution of securities distributed to holders of deposited securities which
are distributed by the depositary to ADR registered holders                                                                           
|                                                                                                                                                                                           |  | 
|Registration or transfer fees                                                                                                                                                              |  |  |  |          Transfer and registration of shares on our share register to or from the name
of the depositary or its agent when you deposit or withdraw shares                                                                      
|                                                                                                                                                                                           |  | 
|Expenses of the depositary                                                                                                                                                                 |  |  |  |          Cable, telex, facsimile transmissions and
delivery expenses (when expressly provided in the deposit agreement)          Converting foreign currency to US dollars                                                    
|                                                                                                                                                                                           |  | 
|Taxes and other governmental charges the depositary or the custodian have to pay on any ADR or share underlying
an ADR, for example, stock transfer taxes, stamp duty or withholding taxes |  |  |  |          As necessary                                                                                                                                                                                                          
|                                                                                                                                                                                           |  | 
|Any charges incurred by the depositary or its agents for servicing the deposited securities                                                                                                |  |  |  |          As necessary                                                                                                                                                                                                          



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##### Table of Contents

Fees Payable By The Depositary To The Issuer

As set out above, pursuant to the deposit agreement, the depositary may charge up to $0.02 per ADR in respect of dividends paid by us. We have agreed with the depositary that any dividend fee collected by it is
paid to us, net of any dividend collection fee charged by it. For the year ended 31 March 2014, we agreed with the depositary that it will charge $0.01 per ADR in respect of any interim dividend and $0.02 per ADR in respect of any final
dividend paid during that year.

As at 31 March 2014, we have received approximately $31.4 million arising out of fees charged in respect of
dividends paid during the year. We also have an agreement with the depositary that it will absorb any of its out-of-pocket maintenance costs for servicing the holders of the ADRs up to $1,000,000 per calendar year. However, any of the
depositarys out-of-pocket maintenance costs which exceed the $1,000,000 annual aggregate limits will be reimbursed by us.



C-2



---

##### Table of Contents

SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.



VODAFONE GROUP PUBLIC LIMITED COMPANY (Registrant)/s/ R E S MartinRosemary E S Martin Group
General Counsel and Company Secretary


Date: 10 June 2014



---

##### Table of Contents

Index of Exhibits to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2014



|1.1 | Articles of Association, as adopted on June 30, 1999 and including all amendments made on July 25, 2001, July 26, 2005, July 25,
2006, July 24, 2007, July 29, 2008, July 28, 2009, July 27, 2010 and January 28, 2014, of the Company.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2.1 | Indenture, dated as of February 10, 2000, between the Company and Citibank, N.A., as Trustee, including forms of debt securities (incorporated by reference to
Exhibit 4(a) of Post Effective Amendment No. 1 to the Companys Registration Statement on Form F-3, dated November 24, 2000).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2.2 | Agreement of Resignation, Appointment and Acceptance dated as of July 24, 2007, among the Company, Citibank N.A. and The Bank of New York Mellon (incorporated by
reference to Exhibit 2.2 to the Companys Annual Report on Form 20-F for the financial year ended March 31, 2008).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2.3 | Eleventh Supplemental Trust Deed dated July 11, 2013, between the Company and the Law Debenture Trust Corporation p.l.c. further modifying the provisions of the
Trust Deed dated July 16, 1999 relating to a 30,000,000,000 Euro Medium Term Note Programme.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.1 | Agreement for US$4,015,000,000 five year Revolving Credit Facility dated March 9, 2011, among the Company and various lenders, subsequently amended when the
Company exercised an option to extend the agreement by one year (incorporated by reference to Exhibit 4.3 to the Companys Annual Report on Form 20-F for the financial year ended March 31, 2011).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.2 | Lender Accession Agreement with Bank of China Limited, London Branch, effective as of March 17, 2011 (incorporated by reference to Exhibit 4.4 to the
Companys Annual Report on Form 20-F for the financial year ended March 31, 2011).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.3 | Agreement for 4,000,000,000 five year Revolving Credit Facility dated July 1, 2010 among the Company and various lenders (incorporated by reference to
Exhibit 4.7 to the Companys Annual Report on Form 20-F for the financial year ended March 31, 2011).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.4 | Lender Accession Agreement with Bank of China Limited, London Branch, effective as of March 17, 2011 (incorporated by reference to Exhibit 4.8 to the
Companys Annual Report on Form 20-F for the financial year ended March 31, 2011).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.5 | Notice of cancellation dated March 27, 2014 in respect of the 4,230,000,000 five year Revolving Credit Facility dated July 1, 2010.
|--- | ------------------------------------------------------------------------------------------------------------------------------------



|4.6 | Agreement for 3,860,000,000 five year Revolving Credit Facility dated March 28, 2014 among the Company and various lenders.
|--- | ----------------------------------------------------------------------------------------------------------------------------



|4.7 | Vodafone Group 1999 Long Term Stock Incentive Plan (incorporated by reference to Exhibit 4.7 to the Companys Annual Report on Form 20-F for the financial year
ended March 31, 2001).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.8 | Vodafone Group 2005 Global Incentive Plan (incorporated by reference to Exhibit 4.8 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2006).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.9 | Service Agreement of Andrew Halford (incorporated by reference to Exhibit 4.16 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2006).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.10 | Letter of Appointment of Dr. John Buchanan (incorporated by reference to Exhibit 4.11 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2003).
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---

##### Table of Contents

|4.11 | Letter of Appointment of Anne Lauvergeon (incorporated by reference to Exhibit 4.22 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2006).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.12 | Letter of Appointment of Luc Vandevelde (incorporated by reference to Exhibit 4.22 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2004).
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.13 | Letter of Appointment of Anthony Watson (incorporated by reference to Exhibit 4.26 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2006).
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.14 | Letter of Appointment of Philip Yea (incorporated by reference to Exhibit 4.27 to the Companys Annual Report for the financial year ended March 31, 2006).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



|4.15 | Service Agreement of Vittorio Colao (incorporated by reference to Exhibit 4.22 to the Companys Annual Report on
Form 20-F for the financial year ended March 31, 2009).
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.16 | Letter of Appointment of Alan Jebson (incorporated by reference to Exhibit 4.23 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2007).
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.17 | Letter of Appointment of Nick Land (incorporated by reference to Exhibit 4.24 to the Companys Annual Report on
Form 20-F for the financial year ended March 31, 2007).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.18 | Letter of Appointment of Samuel Jonah (incorporated by reference to Exhibit 4.26 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2009).
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.19 | Service Agreement of Michel Combes (incorporated by reference to Exhibit 4.27 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2009).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.20 | Service Agreement of Stephen Pusey (incorporated by reference to Exhibit 4.28 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2009).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.21 | Letter of Indemnification for Andrew Halford (incorporated by reference to Exhibit 4.25 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2010).
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.22 | Letter of Indemnification for Michel Combes (incorporated by reference to Exhibit 4.26 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2010).
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.23 | Letter of Indemnification for Steve Pusey (incorporated by reference to Exhibit 4.27 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2010).
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.24 | Letter of Indemnification for Dr. John Buchanan (incorporated by reference to Exhibit 4.28 to the Companys Annual Report on Form 20-F for the financial year
ended March 31, 2010).
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.25 | Letter of Indemnification for Philip Yea (incorporated by reference to Exhibit 4.29 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2010).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.26 | Letter of Indemnification for Luc Vandevelde (incorporated by reference to Exhibit 4.30 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2010).
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.27 | Letter of Appointment of Renee James (incorporated by reference to Exhibit 4.35 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2011).
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.28 | Letter of Appointment of Gerard Kleisterlee (incorporated by reference to Exhibit 4.36 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2011).
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.29 | Letter of Appointment of Omid Kordestani (incorporated by reference to Exhibit 4.28 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2013).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4.30 | Letter of Appointment of Valerie Gooding.
|---- | -----------------------------------------



---

##### Table of Contents

|4.31 | Service Agreement of Nicholas Read.
|---- | -----------------------------------



|4.32 | Letter of Appointment of Sir Crispin Davis
|---- | ------------------------------------------



|4.33 | Letter of Appointment of Dame Clara Furse
|---- | -----------------------------------------



|4.34 | Stock Purchase Agreement dated September 2, 2013, by and among Verizon Communications Inc., Vodafone Group Plc and Vodafone 4 Limited.
|---- | --------------------------------------------------------------------------------------------------------------------------------------



|4.35 | First Amendment to Stock Purchase Agreement dated December 5, 2013 by and among Vodafone Group Plc, Vodafone 4 Limited and Verizon Communications Inc, amending the
terms of the Stock Purchase Agreement dated September 2, 2013.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|7. | Unaudited Computation of Ratio of Earnings to Fixed Charges for the financial years ended March 31, 2014, 2013, 2012, 2011 and 2010.
|-- | ------------------------------------------------------------------------------------------------------------------------------------



|8. | The list of the Companys subsidiaries is incorporated by reference to Note 32 to the Consolidated Financial Statements included in the Annual Report on Form 20-F
for the financial year ended March 31, 2014.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|12. | Rule 13a  14(a) Certifications.
|--- | --------------------------------



|13. | Rule 13a  14(b) Certifications. These certifications are furnished only and are not filed as part of the Annual Report on Form 20-F for the financial year ended
March 31, 2014.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|15.1 | Consent letter of Deloitte LLP, London.
|---- | ---------------------------------------



|15.2 | Consent letter of Deloitte & Touche LLP, New York.
|---- | --------------------------------------------------